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Author: 


United  States.  Courts 


Title: 


Federal  anti-trust 
decisions  2V. 

Place: 

Washington, 

Date: 

1907 


COLUMBIA  UNIVERSITY  LIBRARIES 
PRESERVATION  DIVISION 

BIBLIOGRAPHIC  MICROFORM  TARGET 


MASTER   NEGATIVE  * 


ORIGINAL  MATERIAL  AS  FILMED  -    EXISTING  BIBLIOGRAPHIC  RECORD 


wsmEss 
D22S 

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Federal  anti-trust  decisions. 

U.  SL    Courts, 

Federal  anti-trust  decisions.  Cases  decided  in  the  United 
States  courts  arising  under,  involving,  or  growing  out  of  the 
wiforcement  of  the  anti-trust  act  of  July  2,  1890  (26  Stat 
209)  including  a  few  somewhat  similar  decisions  not  based 
wpon  that  act,  1890-1899,  1900-1906.  Prepared  and  edited 
^  James  A.  Finch,  by  direction  of  the  attorney-general. 
Washington,  Govt  print  off.,  1907. 

2v.    23} cm. 

r!«£S!!*K"Tl^^»"?®^®^**  antitrust  decisions  ...  1899-1912  rf.  e  1911, 
Comp.  by  John  L.  Lott  under  the  direction  of  the  attorney-woeriL  In 
fotir  Tolumes ..."  (r.  1, 1890-1899,  published  19™)  ««>erai.   m 

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SCHOOL  OF  BUSINESS 


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^4^5.    FEDERAL 


ANTI-TRUST  DECISIONS 


CASES  DECIDED  IN  UNITED  STATES  COURTS 


ARISING  UNDER  INVOLVING.  OR  GROWING 
OUT  OF  THE  ENFORCEMENT  OP 


.*-.-"j'' 


THE  ANTI-TRUST  ACT  OF  JULY  2,  1890 

(26  Stat.,  209) 

INCLUDING  A  FEW  SOMEWHAT  SIMILAR  DECISIONS 
-      NOT  BASED  UPON  THAT  ACT 


1890-1899 


PREPARED  AND   EDITED   BY 

JAMES  A.  FINCH 

BY  DIRECTION  OF  THE  ATTORNEY-GENERAL 


VOL.   1 


WASHINGTON 

GOVERNMENT    PRINTING   OFFICE 

1907 


\;>^ 


k 


00 


CASES  REPORTED. 

VOLS.  1  AND  8. 


A,  Booth&Co.  V.  DaviP,  127  R,  875 2—318. 

131  F.,  31 2—566. 

Addyeton  Pipe  &  Steel  Co.,  U.  S.  r.,  78  F,  712 1—631 . 

85  F.,  271 1—772. 

175  U.  S.,  211 1—1009. 

Agler,  U.  S.v.,  62  F.,  824 1-294. 

Alexander  r.  United  States,  201  U.  S. ,  117 2—945. 

American  Biscuit  &  Manfg.  Co.  v.  Klotz,  44  F.  ^  721 I — 2. 

American  Brake  Beam  Co.  v.  Pungs,  141  F. ,  923 2—826. 

American  Preservers'  Co. ,  Bishop  v, ,  51  F. ,  272 1 — 49. 

ia5F.,  845 2-51. 

American  School-Furniture  Co. ,  Metcalf  v.,  108  F.,  909 2 — 75. 

113F.,ltJ20 2—111. 

122  F.,  115 2—234. 

Anderson  r.  United  States.,  82  F.,  998 1—742. 

171  U.  S.,604 1—967. 

Armour  &  Co.,  U.  S.  ?.,  142  F.,  808 2—851. 

Atchison,  T.  &  S.  F.  Ry.  Co.,  Prescott  &  A.  C.  Ry.  Co.  r., 

'73  F.,  438 1—604. 

84  F.,  21 3.. (note)  1—604. 

Atchison,  T.  AS.  F.  Ry.  Co.,  U.  S.  v.,  142  F.,  176 2—831. 

Barber  Anphalt  Paving  Co.,  Field  v.,  117  F.,  925 2—192. 

194  U.S.,  618 2-555. 

Bay  (Cincinnati,  Portsmouth,  Big  Sandy  and  Pomeroy  Packet 

Co.  y.),  200  U.  S.,  179 ' 2—867. 

Beef  Trust  cases.    See  U.  S.  r.  Swift,  and  U.  S.  r.  Armour  &  Co. 

Bement  v.  National  Harrow  Co.,  186  U.  S.,  70 2—169. 

Bishop  V.  American  Preservers'  Co. ,  51  F. ,  272 1—49. 

105  F.,  845 2—51. 

BliDdell  V.  Hagan,  54  F.,  40 1—106. 

56  F.,  696 1—182. 

Block  r.  Standard  Distilling  &  Distributing  Co.,  95  F.,  978 1—993. 

Board  of  Trade  r.  Christie  Grain  &  S.  Co.,  116  F.,  944 (note)  2—233. 

121  F.,608...' 2—233. 

125  F.,  161 (note)  2—233. 

198  U.S.,  2:36 2—717.5 

III 


410231 


0 


IV 


CA8E8    REWmTEl). 


Bobbs-Merrill  Co.  ,-.  Straus.,  13»  F.,  155 2—755. 

Booth  &  Co.  #.  Davis,  127  R,  875 2—318. 

131  F.,ai 2— 5««. 

Buthauan,  Fcwit  r. ,  113  F.,  156 2—103. 


l|  i 


f 


CamorB-McConnell  Co.  t\  McConnell,  140F.,  412 2—817. 

140  F.,  987 2-826. 

Carter-Cnime  Co. ,  Cravens  * . ,  92  F. ,  479 1— 9a'l. 

Carter-Crnme  C< >.  *•.  Peurriiiig,  86  F.,  439 1—844. 

Cas^kly,  U.  S.  *.,  67  F.,  698. ,,[[[  1—449. 

Ceotral  Coal  &  Coke  Co.  v .  Hartman,  111  F. ,  96 2—94. 

Central  Railroad  and  Bankinj?  Co.  of  (ia.,  Clarke  r.,  50  F.,  :i:^8. .  1—17. 

Charles  E.  Wisewall,  The,  74  F.,  802 1—608. 

86  F.,  671 .'...]."  l_85o! 

Chattanooga  Fonndry  &  Pif>e  Workn,  City  of  Atlanta  r., 

101  F.,  900 2—11. 

127  F.,  23 2—299. 

203  r.  S.,  —  (note)  2—299. 

Chesapeake  &  O.  Fuel  Ct».,  V.  8,  v.,  105  F.,  93 2—34. 

115  F..  610 2—151. 

Chicago  Wall  Paper  Mills  r.  General  Paper  Co.,  147  F.,  491 2—1027. 

Christie  Grain  &  8to<'k  Co.,  Bd.  of  Trade  r.,  116  F.,944 (note)  2— 23;i. 

121  F.,  608 2—233. 

125F.,  161. ...(note)  2—233. 

198  r.  S.,  236 2—717. 

Ciminnati,  X.  O.  <&  T.  P.  Ry.  (o.,  Thomas  i-.,  62  F.,  803 1—262. 

Cincinnati,  Portwmouth,  Big  Sandy  and  Pomerov  Packet  Co.  r. 

Bay,  200  U.  S.,  179 ....' 2-867. 

City  of  Atlanta  r.  Chattanooga  Foundry  &  Pipeworks, 

101  F.,  909 2—11. 

127  F.,  23 2—299. 

203  U.  S. —  ..( note)  2-299. 
Clarke  r.  Central  Railroa<l  &  Banking  Co.  of  (ia.,  50  F.,  :«8  ....  1—17. 

Coal  Dealers'  Association  of  Cal.,  U.  S.  r.,  85  F.,  252 1—749. 

Corner,  Waterhouse  r.,  55  F.,  149 1—119. 

C-onnolly,  Union  Se wer-Pi|)e  Co.  r. ,  99  F. ,  354 2— 1 . 

IMU.  8.,  540 2—118. 

C/ontinental  Tobacco  Co.,  Whitwell  r.,  125  F.,  454 2-271 . 

Coming,  In  re,  51  F.,  205 \  _33, 

Cravens  r.  Carter-Cnime  Co.,  92  F.,  479 1—983. 

Davis  etal.,  A.  Booth  &  Co.  i-.,  127  F.,  875 2—318. 

131  F,  31 ./...r.  2-566^ 

Debs,  U.  S.,  I.,  64  F.,  724 i_s22 

Debs,  In  re.,  158  U.  S.,  564 _  1—565. 

Delaware,  L.  &  \V.  R.  Co.  r.  Frank,  110  F.,  689 2—81. 

Delaware,  L.  k  W.  R,  Co.  /■.  Kutter,  147  F. ,  51 2—1021 . 

D.  E.  Loew  e  &  Co.  r.  I^wlor,  130  F.,  6;i3 2—563. 

142  F.,  216 2—854. 


CASES    REPORTED. 


i 

I 


»  ii 


Dennehy  t\  McNuIta,  86  F.,  825 1—855. 

77  F.,  900 (note)  1-856^ 

Dueber  Watch  Case  Mfg.  Co.  r.  Howard  Watch  and  Clock  Co., 

55  F.,  851 1-178. 

66  F.,  637 1—421. 

E.  C.  Knight  Co.,  U.  S.  r,  (JO  F.,  :^06 1—250 

«0F.,  934 1-258* 

156U.  S.,1.... l_379. 

E.  Howard  Watch  &  Clock  Co.,  Dueber  Watch  Case  Mfg.  Co.  r., 

o5F.,851 1-178. 

66  F.,  637 1-421. 

Elliott,  U.  S.  r.,  62  F..  801 1—262 

64F.,27 -....'.'.'.'.'"*.'.*.'  1-311.' 

Ellis  V.  Inman,  Poulsen  &  Co. ,  124  F.,  956 2—268. 

131  F.,  182 ; ."*'.'.'.'  2-577! 

Evans  v.  Lowenstein,  69  F.,  908 1—598. 


Farmers'  Loan  &  Trust  Co.  ?'.  Northern  Pac.  R.  Co. ,  60  F.,  803 1—257. 

Field  V.  Barber  Asphalt  Paving  Co.,  117  F.,  925 2—192. 

194  U.S.,  618 2—555. 

Foot  V.  Buchanan,  113  F.,  156 2—103. 

Frank  (Delaware,  L.  &  W.  R.  Co.  ?•.),  110  F..  689 2—81. 


Geiger  (Otis  Elevator  Co.  v.),  107  F.,  131 2—66. 

General  Electric  Co.  v.  Wise,  119  F. ,  922 .' '  2— 2a5. 

General  Paper  Co.   v.  Chicago  Wall  Paper  Mills,  147  F.,  491 ... .  2—1027, 
Gibbs  V.  McNeeley  ( Shingle  Trust ) ,  102  F. ,  594 2—25. 

107  F.,  210.... 2—71. 

118  F.,  120 2—194. 

Grand  Jury,  In  re,  62  F.,  840 1—301*. 

Greene,  In  re.,  52  F.,  104 '.....'..  1—54. 

Greenhut,  U.S.  r.,50F.,  469 ..."......  1— 3o! 

Greer,  Mills  &  Co.  v.  Stoller,  77  F.,  1 1—620. 

Griffin  &  Shelley  Co.,  U.  S.  Consolidated  S.  R.  Co.  y.,  126  F.,  364. .  2—288. 
Gulf,  C.  &  S.  F'.  Ry.  Co.  V.  Miami  S.  S.  Co.,  86  F.,  407 1—823. 


Hadley  Dean  Plate  Glass  Co.  v.  Highland  Glass  Co.,  143  F.,  242.  2—994 

Hagan,  Blindell  r.,54  F.,  40 1—106. 

56  F.,  696.... **"". 1—182 

Hale,Inre.,  139  F.,  496 \ 2—804 

Hale  v.Henkel,  201  U.  S.,  43 --".!.."...............  2—874! 

Harriman  v.  Northern  Securities  Co.,  132  F.,  464 2—578! 

134  F.,  331 '.'..!!!  2-613! 

„      ._,".,  A^7  U.S.,  244 2-669. 

Harrmgton,  Pidcock  r.,  64  F.,  821 1—733 

Hartman,  Central  Coal  &  Coke  Co.  n,  HI  F.,  96.*...!....'......"  2—94. 


0 


f.\ 


CASES   REPORTED. 

Hartiimn  r.  John  D.  Parks  k  Sons  Co.,  145  F.,  358 

Hench,  National  Harrow  Co.  r. ,  76  F. ,  667 ] . . . 

83F.,  36...........**.'.".'.'"."." 

84F.,226 

Henkel,  Hale  r.,  201  U.  S.,  43 

In  re  Hale,  139  F.,  496.. ]..!*]."[ 

Henkel,  McAlisterr.,  201  U.S.,  90....]^..  *][]..[".*]]]'.".*.   \'* 
Highland  Glass  Co.,  Hadley  Dean  Plate  Glass  Co.  r.,  143  F.'  242 

Hopkins,  U.  S.  #•.,  82  F.,  529 

84  F.,  1018 .-.-.-^^**....'''...*.... 

1/1  L .  S. ,  578. ---.-............... 

Howard  \VaU;h  k  Clock  Co.,  Dueher  Watch  Case  Mfg  Co.  V., 

55  F.,  851 .' 

66F.,  6;^7 


GASES   REPORTED. 


VII 


2—999. 
1-610. 
1—742. 
1—746. 
2—874. 
2—804. 
2—919. 
2—994. 
1—725. 
1—748. 
1—941. 

1—178. 
1—421. 


In  re  Corning,  51  F.,  205 :.. j_33 

In  re  Debs,  petitioner,  158  U.  S.,  .364 [ [  1 . " ......". 1—565 

U.  S.  r.  Debs,  64  F.,  724 ..!"""]*' 1—322 

In  re  Grand  Jury,  62  F.,  840 ...*!"^ 1—301 

InreGreene,  52  F.,  104 *.'*.*] i_54  * 

In  re  Hale,  139  F.,  496 ..........*].. •»— 804 

Haler.  Henkel,  201  U.S.,  43. [*..'[ 2-874 

InreTerrell,  51F.,  213 "!]"....*../        \    16 

Imman,  Poulsen  k  Co. ,  Ellis  r. ,  124  F. ,  956 . . . .  ...[.*]*  *  *  \  * "  \  ]  *  2_268 

131  F.,  182 2—577 

lola  Portland  Cement  Co.,  Phillips  r.,  125  R,  593 2—284] 

Jayne,  Loder  r.,  142  R,  1010 2—976 

JeIlicoMountainCoke&CoalCo.,U.  ar.,  43F.V898*''"]!]]!  1—1. 

46  R,  4:12 1—9. 

John  D.  Parks  &  Sons  Co.,  Hartnian  r.,  146  F.,  im  •»— 999 

Joint  Traffic  Association,  V.  8.  i-.,  76  R,  895 [[[[ I-^is" 

89  F.,  1020.... i^sml 

171  U.  K.,  505. l—sm. 

Kimey  Co.  r.  Board  of  Trade,  198  U.  8. ,  23« 2^71 7 

Klotz,  American  Biscuit  k  Manf  g  Co.  r.,  44  F.,  721      1—2 

Knight  Co.,  U.  S.  u.,  60  R,  306 1—250 

«OF.,9»4... ......*..'..'.';"."[.'.'.*  1-258. 

156  U.  8.,  1 ♦...  1 370 

Kutter,  Delaware,  L.  &  \\\  R.  Co.  ».,  147  F.,  61  *..*.**...'....*  t—mi. 

Lawlor,  I^oewe  r.,  130R,ai3... f— 663 

142  R.  216 r.;*'.r-^;;]*.**"r  t-854* 

Licorice  Riste  Trust.    St^  V..  8.  r .  MacAndrews  k  Forbes  Co 

Loder  I'.  Jayne.  142  R,  1010., '       2—976 


Loewe&Co.  v.  Lawlor,  130  F.,  633 2—563. 

LOeweetal.  v.  Lawlor,  142  F.,  216 2—854. 

Lowenstein  v.  Evans,  69  F.,  908 1—598. 

Lowry  v.  Tile,  Mantel  &  Grate  Ass'n,  98  R,  817 1—995. 

106F.,38 2—53. 

Lowry,  W.  W.,  Montague  &  Co.  v.,  115  F.,  27 2—112. 

193U.S.,38 2—327. 


McAlistert?.  Henkel,  201  U.  8.,  90 2—918. 

McConnell,  Camors-McConnell  Co.  ?;.,  140  R ,  412 2—817. 

140  R,  987 2—825. 

McNeeley,  Gibbsr.,  102  R,  594 2—25. 

107F.,  210 .*  2—71! 

118  R,  120 2-194. 

McNulta,  Dennehy  t;.,86  R,  825 1—855. 

Metcalf  V.  American  School  Furniture  Co.,  108  F.,  909 2—75. 

113  R,  1020 2—111. 

122  R,  115 2—234. 

Miami  S.  S.  Co.,  Gulf,  C.  k  S.  R  Ry.  Co.  v.,  86  R,  407 1—823. 

Milwaukee   Rubber   Works  Co.,    Rubber  Tire  Wheel   Co.  v., 

142  R,  531 2-855. 

Mines  v.  Scribner,  147  F.,  927 2— la^'> 

Minnesota  v.  Northern  Securities  Co.,  123  F.,  692 2—246. 

194U.  S.,  48 2-533. 

Montague  &  Co.  f.  Lowry,  115  R,  27 2    112. 

193U.  8.,  38 .'.'.".'.".".*.'  2-327. 

Moore  «;.  U.  8.,  85  F!,  466 1—815 


National  Folding-Box  &  Paper  Co.  v,  Robertson,  99  R,  985 2—4. 

National  Harrow  Co.  r.  Hench,  76  F.,  667 1—610. 

83R,  36 .'.'.'."  1-742. 

84F.,  226 1—746. 

National  Harrow  Co.  v.  Quick,  67  F.,  130 1—443. 

74R,443'. ;;;;.*.'  l_608! 

National  Harrow  Co.,  Bement  r.,  186  U.  8.,  70 2—169. 

National  Harrow  Co.,  Strait  r.,  51  R,  819 "......  1—52. 

Nelson,  United  States  v.,  52  R,  646 2—77. 

Nelson  f.  United  States,  201  U.  8.,  92 2-920. 

Northern  Securities  Co.,  Harriman  r.,  132  R,  464 2—587! 

134  R,  331 2-618! 

^,  _,,  107U.  8.,  244 2-669. 

Northern  Securities  Co.,  U.  8.  v.,  120  R,  721 2—215. 

193U.  8.,  197 2—338! 

Northern  Securities  Co.,  Minnesota  v.,  123  R,  692 2—246. 

194U.  8.,  48 2-533! 

Otis  Elevator  Co.  v.  Geiger,  107  R,  131  2—66. 


? 


^'^"  CA8B8   BEPORTED. 

Birki,  John  D  &  Sona  Co..  Hartnmn  r.,  145  F.,  m 2-999. 

Piitteison,  U.  S.r.,65F.,  605.. *  |_^' 

^^  59  F.,  280.. 1—244 

rtwrniiig,  Carter-Crame  Co.  ».,  86  F.,  439 1—844.* 

PhOlipe  r,  Portland  Cement  Oa.  125  F.,  593  ...  ] a_284 

Kdcockr.  Harrington,  64  F.,  821 "*".",'l*."  1-377* 

Preecott  &  A.  C.  R.  Co.  f .  Atchi»on, T.  AS.  F. Co.,  ' 

73F.,438 1_604. 

I^ngB,  Amenaui Brake  B«aiii  Co.  r.,  141  F.,  923  ...... .....^...  2II826 

[,  National  Harrow  Co.  r.,  67  F.,  130 1—130 

74F.,236 1—609. 

Bice  I.  8tandar«l  Oil  Co.,  134  F.,  464 •—OSS 

Bobertuon,     National  Folding-Box  &  pipe'r  Co]  V.  *  99  F.'  985   '  2-4    * 
Robin«on  t;.  Soburban  Brick  Co.,  127  F.,  804  . . .  "  2-m 

Rubber  Tire  Wheel  Co.  p.  Milwaukee   Rubber   Works"  Co.* 

142  F.,  531  ......  ^ 

2—855. 

ficribner,  Minee  ».,  147  F.,  927 *_iaS5 

Shingle  Trust    ^i*  Gibbe  r.  xMeNulty.      *" 

Southern  Ind.  Exp.  Co.  v.  United  States  Exp.  Co.,  88  F.,  659...  1-862. 

Southern  Railway  Co.,  Tift  r..  138  F.,  753 ^  ^*'  ^^' '  IZ^' 

Standard  Distilling  &  Distributing  Co. .  Block  p„  95  F.V978 l-^s* 

Standard  Oil  Co..  Rice  r.,mF.,  464 2-633* 

State  of  Minnesota  r.  Northern  Securities  Co.,  123  F.,  692.......  2—246. 

StoUer,  (Greer,  Mills  &  Co.  ..),  77  F.,  1 !^  ^'*  ®"  ^ |lff  * 

Strait  t.  National  Harrow  Go. ,  51  F. ,  819 .  l-'ig  ' 

Straus,  Bobbs-Merrill  Co.  r.,  139  F.,  155  ....        "**  o_7^ 

Suburban  Brick  Co.,  Robinson  v.,  127  F.,  804    «_qi9* 

Swift*  Co.,  r.S.,.,  122  F.,  529 ^IZ'^ZZZZ  2-237.' 

196  U.  S.,  375 J    /»ii 

Terrell,  In  re,  51  F.,  213. .     ,^ 

Thomas  r.  Cin.,  N.  O.  &  T.  P.  Ry.  Co.,  627.ym.',Z'''' 1I266 

Tift  1;.  Southern  Railway  Co.,  138  F.,  753  iyoo* 

Tile,  Mantel  &  Grate  Ass'n,  LowTy  r.,  98  F.,  817*.".".".'.'.'.;'.;;;;;;  i_995; 

_^  106  F.,  38 2— "S^ 

Tobacco  Trust  Cases.    See  Hale  r.  Henkel  and  McAlister^H Jnkel".  " 

Trans-Missoun  Freight  Ass'n,  U.  S.  *•.,  53  F.,  440 i_8o 

5«F.,58 .■.*.*.",■;.■;  i_i86. 

1«6U.S.,290 l™648. 


CASES    REPORTED. 


I 


Union  Sewer-Pipe  Co.  ? .  Connolly,  99  F.,  354 2— I. 

.     184U.S.,540 2—118. 

U.  8.  r.  Addyston  Pipe  &  Steel  Co.,  78  F.,  712 : 1—631. 

85  F.,  271....... 1-772. 

175U.S.,211 1—1009. 

U.  S.  V.  Agler,  62  F.,  824 1—294. 

U.  S.  V.  Armour  &  Co.,  142  F.,  808 2—951. 

U.  S.  V.  Atchison,  T.  &  S.  F.  Ry.  Co.,  142  F.,  176 2—831. 

U.  S.  r.  Cassidy,  67  F.,  698 1—449. 

U.  S.  r.  Chesapeake*  &  Ohio  Fuel  Co.,  105  F.,  93 2—34. 

115  F.,  610 2—151. 

U.  S.  V.  Coal  Dealers'  Association  of  Cal.,  85  F.,  252 1—749. 

U.  8.  r.  Debs,  64  F.,  724... 1—322. 

Inre  Debs,  158  U.  S.,  564 1—565! 

U.  S.  r.  E.  C.  Knight  Co.,  60  F.,  306 1— 25o! 

60  F.,  934 1_258. 

156U.  S.,  1 1-379. 

U.  S.  r.  Elliott,  62  F.,  801 1—262 

64F.,  27 y.y,y.[]...  isu. 

U.  S.  V.  Freight  Association.    See  U.  S.  v.  Trans-Missouri  Freight 
Association. 

U.  8.  r.  General  Paper  Co.  See  Nelson  v.  U.  S.,  and  Alexan  'er 
V.  U.  8. 

U.  8.  V.  Greenhut,  50  F.,  469 1—30. 

U.  8.  r.  Hopkins,  82  F.,  529 1—725 

84F.,  1018 .......VZZ  1-748.* 

171  U.  8.,  578 1—941. 

U.  S.  V.  Jellico  Mountain  Coke  &  Coal  Co.,  43  F.,  898 1—1. 

46  F.,  432 1—9. 

U.  8.  V.  Joint  Traffic  Association,  76  F.,  895 1—615. 

89  F.,  1020 [\  1-869! 

171U.  S.,  505 1-869. 

U.  8.  V.  MacAndrews  &  Forbes  Co.  (Licorice  Paste  Trust).  De- 
murrer overruled  by  Cir.  Ct.  for  Sn.  D.  of  N.  Y.,  Dec.  4, 1906. 
Opinion  not  yet  published. 

U.  8.  V.  Nelson,  52  F.,  646 i_77, 

U,  8.,  Nelson  /•.,  201  U.  8.,  92 ..!!!!].....!  2—920. 

U.  S.  V.  Northern  Securities  Co.,  120  F.,  721 2—215. 

193  U.S.,  197 2—238! 

U.  8.  V.  Patterson,  55  F.,  605 1-133. 

59  F.,  280 .!1]!...!....   1—244 

U.  S.  V.  Swift  &  Co.,  122  F.,  529 [[[  2—237 

196U.  8., 375 !!!!.!..*..!!!  2—641! 

U.  8.  V,  Trans-Missouri  Freight  Association,  53  F.,  440 1—80. 

58F.,  58 1-186. 

n  fi      „,    ,.  166  U.S.,  290 1-648. 

u.  b.  V.  Workmgmen's  Amalgamated  Council,  54  F.,  994.... 1—110. 

TT  n     ,,         ,  57F.,  85 1-184. 

U.  8.,  Alexander  v.,  201  U.  S.,117 2—945. 


# 


^  CASES   BEPORTED. 

U.  8.,  Anderson  v.,  82  F.,  998, .. .  |_- .„ 

mU.  S.,604...;i"l".',' 1     oft^' 

U.  8.,  Moore  r.,  85  F.,  465..... i-Ji^' 

V  8  Srrf'^  fK""-  '^•;  ''"^'^  ^'sidivb;;;  Y26  F.;3^-:  g-m 

u.  S.  hxp.  Co.,  Southern  Ind.  Exp.  Co.  v.,  88  F.,  659 i__862 

92  F.,  1022....;.".".".".'  i-_992.* 

Waterhouse  v.  Comer,  55  F.,  149..  .  i__iiq 

Whitwell  V.  Continental  Tobacco  C^^fm  ^'454" ^971 

Wise,  General  Electric  Co.  t;.,  119  F.,  922 o    t^' 

Wisewall.  The  Charles  E.,  74  F.,  802..  .  ffz' 

86F.,671....  !    ^' 

Workingmen's  Amalgamated  Coimcil,  U.S.  t.,  54  f"," 99*4* "'!'.'.'  l-m 

57F.,  85 l-_ig4." 


CASES  CITED. 


VOLS.  1  AND  a. 


A. 

A.  F.  Booth  &  Co.  >:  Davis,  127  F.,  875 2—820 

Ackerman  «.  Shelp.  8  N.J.  Law  125 **"".-..........  2— «i 

Adams  v.  Burke,  17  Wall.,  453 2—863 

Adams  v.  Palmer,  6  Gray,  338 .."!*."..!....  2-307 

Adams  r.  New  York.  192  U.  S.,  585 2—903 

Adams  r.  Wpod.«,  2  Craneh,  337 ."[.".....!!.*     1—353 

Adderley  r.  Dixon,  1  Sim.  «fc  S.,  607,611 1—109 

Addyston  Pipe  <t  Steel  Co.  v.  U.  S.,  175  U.  S.,  211 .....'.'.'*.'"  2-2,12,51,162,189. 

198,221.225,243. 
258,276,278,337. 
459,460,471,561 
666. 820, 822. 

228.229 a— 227. 

234 2-167. 

237 2-317. 

238 2-115,190. 

239 2-72. 

240 2_5i2. 

243 2_303. 

245.. 2— 166,276,286.:304 

246 2—63,998. 

248 2-31. 

229-233 2-998. 

237,241,245 2-168.         ' 

239,240,243,246 2—226. 

{See  aim  U.  S.  v.  Addyston  Pipe 

and  Steel  Co.). 

Adee  /•.  J.  L.  Mott  Iron  Works,  46  F.,  39 2—943 

Aikens  r.  Wisconsin,  195  U.  8.,  194,  206 2—662 

Alcock  r.  Giberton,  5  Duer.,  76 //.". 2—1008 

Aldridget.  Williams.  3  How.,  9,  24...  i_67o  ' 

Alger  t".  Thacher,  19  Pick.,  51, 64. [["', j.^gg' 

Allen  t-.  Pullman  Co.,  191  U.  S.,  171, 179, 180 a_^63 

Aiigeyerr.  Louisiana,  165  U.S..  578. 589 ;:;;;;;;:;;;:;:;;  1-934;  966, 1024: 

Allison  r  Corson,  88  F.,  581 2-^^^'^^' 

Alsbrook  r.  Hathaway,  3  Sneed,  454 2_3io' 

American  Biscuit  &  Mfg.  Co.  v.  Klotz.    See  Manufacturing  Co.  r.  Klotz 
American  Live  Stock  Com.  Co.  r.  Chicago  Live  Stock  Exchg.,  143  111., 

American  Steel  and  VVlri'coVr'.  Speed,' i^'u.s.rsOO.*"; IZ^' 

American  Strawboard  Co.  r.  Haldeman  Paper  Co.,  83  F.,  619. .  1-786-  "-lOi  l 

American  S^ufar  Refg.  Co.  r.  Louisiana.  179  V.  8..  89 ;;;:;  2-140.' 141. 146.  H7. 

* 

XI 


Il 


XII  ^ 

'^^  Casks  cited. 

Amey  r.  Long,  S)  Eaul,  473 

AmhewtAcademj  r.Cow«^6Piek..«  .ii f"^*' 

Ammunition  Co.  i.  Nordenfelt.    (See  MiximlxorfenVelt'oin.' nini 

Ammunition  Co.  r.  Xordenfelt.  [1898]  I  Ch    8801 
Anderaon  r.  Dunn.  6  Wheiit..  204... 

Andcnon  r.  Jett.  89  Ky    375  "* 1— 5W. 

Andenonr.  i.s..i7llT.'a.flM" l-«2,  202. 792.  796. 

.-.  1—1005.   1038:    *— 

117,225.226.298, 
31H,  837. 459, 460. 
. 612.  531,664. 

— 615 .:;;;; *-*"• 

616 5->«M032. 

Annie  *'.  Railway  Co..  I5i  r.  §.,  1 5^-276,277.286. 

Appleton  r.  Rrnubert.  45  F    281     1— 287;  S— 88. 

Annstrong  i-.  Tolf  r.  1 1  Wheat.,  258 — ^^' 

Amot  r.  Coal  Co.,  tl8  X  Y    .%« 1—854. 

«--«32.766,7»»,a58; 

m .  *-'-^6- 

AnjoC..M.,M<>„4Elmimr«.Co.   (.^'Arnoin  ci.rCo^fiHX;  v.;  '-^-  '-^' 

Arthur  i\  ( takeii.  68  p.,  sio 

824 I— 317,;{72. 

AalM»r  t.  Texas,  128  C.  s.,  m. "'•  '~''^- 

Anhleyr.  Ryan.  1581.  S..  436   440  44^ 1-737.805;  2-60. 

AMOciation  r.  Houi-k.  30  s.  w..  m  (88Tex  "i84» 2-50*..W. 

Aimiatlon  r.  Koclt.  14  U.  Ann    ^^'^''•'^>- 1-868. 

AnBociation  r.  Xiezerow»ki.  95  Win    129 1-90,798. 

AsBociation  r.  Walsh.  2  Daly  I '~^^- 

AtcheHonr.  Mallon.  43  X  Y    147 '~^^- 

Atchison.  T.  &  .<  F  Rv  Vn  "r  iLl^l^^V  '^'^'L ^-^*^ 

«— 321. 
1—342. 
1—590. 

*  ♦»             ^               "•  ^'*>  ''^  '•^"  ^''«ire.  37  WlH..  400  '.                  '*"  ""■  ■  I~^' 
Attorney-Genenil  r.  F,.rf>es.  2  Mvlne  &  Co    V*i         " 

lin:-T""1  '•  "^•■''»^""-  3c.  E.  Green  (i8N::r:Eq:;;4Vo i-**'-^^'^^.*^. 

Attomey-(ieneml  r.  Hunter.  1  Dev  Eq    12  ''«•'•  *^" 1-vW. 

A^ey^ieneml  ..  .Jamaica  Bmd  Aqueduct  ^Corpo'ration.'iW  Ma*;;  '"^' 

Attorney-General  r.  Johns^in.  2  Wilg  Ch  *  87 '~'^' ^^' 

Attorney-General  v.  X..r.  R.  r.,  2  C.  E.GiWnVlVN'Vpn'ri;;: \~^' 

Attorney-General  r  Xichol.  16  Ve.    ^'"^"  <"  ^''^qK  136 ,_690. 

aST^"^^'*™!  '    '^""^^^<>'nP«nie«,i6Wi«'.;*5i,V587: I~^'  him 

Attoraey-Geneml  r.  Richards.  2  Anstr    603  '  ''^^ 

Attomey-fieneralr.Terrv.  L.  R  9Ch"Vi *~^^- 

Attor„e.v-General  .  Tudor  U-e  Co..  104* Man^VaSJ,' 24^ J-^''"^' 

Attoniey-General  r.  Woods,  108  Ma*...  886 .  J~1f 

Austin  r.  Tennessee.  179  i:  8    849  1— '"»86. 

Ayerst  r  Jenkin..  L.  R.  16  Eq;,'275.il' :;;.;.': f-^^" 

*'"***' • » — 714. 


Ball  r.  Rutland.  93  F.,  516 

Bank  r.  Lamb,  26  Barb..  6961  !!.'''..*" " 

Bank  r.  Owens.  2  Pet.,  .'iSS 

Bank  r.  Schermerhorn.  9  Paige,  372,  375  ! 


«-75i. 
1-852. 
1—852. 
1-339. 


CA8E8    CITED. 

Bank  of  Australasia  r.  Breillat,  6  Moore.  P.  C,  152.  201 «_«74 

Bannon  r.  U.  S..  I.t  Sup.  Ct.,  4(i7  (1.56  U.  S.,  464) ]  i^^' 

Barber  Asphalt  Paving  Co.  r.  Hunt,  100  Mo.,  22 «-^560 

Barbier  r.  Connolly,  113  U.  S.,  27,  31 !.!!....".      2— i:}x 

Barthet  »•.  City  of  Xew  Orleans,  24  F.,  563 1—761) 

Beal  »•.  Chase.  31  Mich.,  490 


XIII 


518. 
521. 


"Beck  r.  Real  Estate  Co.,  65  F..  30 

Bells  Gap  R.  R.  r.  Penn.,  134  C.  S.,  232 .^! . . 

Belton  I'.  Hatch.  109  X.  Y.,  593 

Bement  r  Xationnl  Harrow  Co.,  186  U.  S. 


70 


1— 75.91,  ia^Tftl. 

1—702. 

1—96. 

2—92. 

i— 141,14«. 

1—630. 

2—293, 732. 8«B,  X*l\ 


70.  ^8.  89 2—208. 

70.88-91 2—209! 

70,88,92.93 2-78.5, 7«<i. 

70,92....   4_873. 

70.92.93 2-9»<. 

'0,91  2—803,801. 


Bensley  t:  Texa.s  &  Pac.  Ry.  Co.,  191  U.  g.,  492 2—573' 

Bessette  r.  Conkey Co..  194  r.S.,324 2—8.38 

Bibbr.  Allen,  119  F.  S.,  481 ...."..[^..^ 1—849 

Birch  r. Somerville,  2  Ir.  L»iw  R.,  N.  S..  243 ..-.'.......... 2—973 

Bishop  f.  Preservers' Co.,  157  III.,  284 ].""*  ]_7^-' 

Bishop  r.  Preservers' Co..  51  F..  272 

Black  River  Lumber  Co.  r.  Warner.  93  Mo.,  374,  388..!" 
Blaney  r.  Mar>iand.  74  Md..  153 


2—21. 
2—997. 


'"•••• •-••--•.......«»».,..  •• 809  894 

Blease  i\  Garlington.  92  l\  8.,  1 , 2-942* 

Bleistcin  v.  Donaldson  Lithographing  Co.,  188  r.  S.,  239.  2*49  250 2-731 

Blindell  r.  Uagan.  54  F..  40:  56  F..  «96 


Bloi'k  r.  Distributing  Co..  95  F..  978 

Board  of  Trade  r.  Christie  Grain  and  Stock  Co.,  198  V.  8.,  '2:^6.! 
Board  of  Trade  v.  C.  B.  Thompson  Commission  Co.,  103  F..  902 

Board  of  Trade  r.  Hadden-Krull  Co.,  109  F..  705. 

Boatmen's  Bank  r.  Fritzlen.  135  F.,  650  ............ !1......'.'..'..  2—850 

Bobbs-Merrill  Co.  r.  Snellen  burg,  131  F..  530 

BonsHck  Mach.  Co.  r.  Smith,  70  F..  386 

Bof)th,  A.,  &  C<).,  r 


1-379. 623,  S41.>;12, 

995;  2—79. 
2-79. 

2—863, 1007. 
2—731. 
2—731. 


...........   a — 804. 

^      .  2—824,1007. 

Davis,  127  F.,  875 2—820 

Bowen  r.  Matheson.  14  Allen,  499 

Bowman  r.  Chicago  &  X.  W.  Railway  Co.,  125  U.S..  465..... ....... ... 

u      -        .,..  -         465,497 

Boyd  r.  Gill,  19  F.,  145 

Boyd  r.  State,  19  Xeb.,  128 '. .^"^""^ "'.'.'. ..'. 

Boydr.  r.  S..  116U.S..616 


1—202. 
1—388, 1027. 
1—738, 739. 
1—627. 
1—363. 


Brady  r.  Dalv,  175  I 


Bram  r.  V.  S. 
Brawley  r.  U. 
Brennan 


fii«_«o.  2-813,902,912,973. 

-^^6-^^ 1-359. 

~^}^'^^ • 1-593;  2-917. 

^    .    •  2—13,307,308. 

''^ 2 — 17. 

]^  U.S.,  532 2_97., 

S..96U.  S..  16«,172 2—997 


»•.  City  of  Titusville.  153  U.S., 289 |_7; 


Brennan  r.  People,  15  111.,  511 . 
Bre.slin  r.  Brown,  24  O.  St.,  566 

Brewerr.Blougher,  14  Pet.,  178,198 \Z^' 

Bridge  Co.  r.  Hatch,  125  U.  S..  1  " 

Brinckerhoff  t-.  Brown,  7  Johns.  Ch..  217 
BrKsbane  r.  Adams,  3  X.  Y..  129 
«rown  r.  Houston.  114  U.  S    6'>2 

623 

Hrown  1:  .lacobs  Pharma 


37,  8a5;   2—60, 
241. 
1—374. 
1—803. 


l<  y  Co..  41  S.  E.,   55:1  (115  Ga.,4'29) 


1—345. 

1—212. 

1—803. 

1—68,978. 

1—741. 

2—276. 


fc — -^  t 

1 


'I 


.    ^^^  eABm  CITfCD. 

Brown  ^  Maryland,  12  Wheat.,  m..  , 

1—741,958.1023: 

...  2-466. 

ZZ >-3i4. 

***  • i i«i 

Brown  r.  Boun«aveIi,  78  111    589 >— 388. 

Brown  r.  United  States,  113  U.  8.^568.571 J -75, 206. 277. 279. 

Brown  f.  Walker,  161  U.  8  591  1—720. 

2—108.109.812.898, 

Brown  r.  WoMter,  113  F., 20 •  899,900,968. 

Brace  f.  Baxter,  7  Lea,  477 *— 943. 

Buchanr.  Broad  well,  8S  Mo.,  31  .^ «— 310. 

Buckr.  Buck.  60  III..  Ift5, 106  .      - 2—569. 

Budd  r.  New  York.  143  U,  S.^bll.... 1~^^- 

Bull  r  Loveland,  10  Pick.,  9.. *— *33, 738, 740. 

Bullard  r.  Bell,  l  Mason.  243!.".!!^.'.**.'."." *~*'^' 

Bnnnell's  Anpeal.  69  Pa.  St.,  59.... 2-311. 

Bnskirk  f.  KiuK.  72  F    22 1—344. 

Bntcher,' 4  Drovers'  »>ocl^Ya,^ci]::Lon^;;:-j;y '^ c^—  ^  f-f"'- 

• 

c. 

Cady  ,'.  Norton,  14  Fiek..  236. .. . 

c^Iifr' wT""'  Navigation  Co. ..  wrVghr6cai.;ii: :;;;;:: Iz^, 

Callan  »,  Wilson.  127  r.  8.,  ,540  556  — 

Callawayf.  MeMillian.  ll*Hei.vk   .557 *~~*^^' 

Campbell  r.  City  of  Haverhill.  15^  U.sV.^lO."." .■.■.■:.':.■:.:.■:::;:;:::::;;;  tlTie,  is  m 

Cammeyer  r.  Lutheran  Churches.  ^dLCh^.i-oil^ ?~fJ'- 

Oirbon  Co.  ik  McMillin,  119  N  Y    46  l-62b. 

Carew  r.  Rutherford,  106  Mass.,  1.14 1-745,766,799. 

Carleton  r.  Rugg.  149 Mass., 55(]L667 1-202,290. 

€amn*..Caroirs  Lessees,  16  How.,  275   " \~^^- 

Oarr  r  Fife,  156  U.  S.,  494 " ^-^l^.      . 

Carrol  r.  Green,  92  U.  8..  509  2-316. 

Cartwrights  Case,  114  Maas.,  230,*i38 2-22,311. 

^  of  the  Earl  of  Shaftesbur>'.  2  St.  Trials  615;  Is^c'l  Mod' 14^ t^' 

CHwe of  Greene,  52  F.,  104 -  '  •  ^- i  Moa.,  144  ....  I-.193. 

Case  of  Phelan,  62  F.,  803.        1—262. 

Case  of  the  State  Freight  TaxVlS  Wall.;  m  275 !~?f  !' 

Case  of  Yates,  4  Johns.,  314.  369 1-1/3,351,355. 

Casey  v.  Typographical  Union,  45  F.,  135  144 J~^^' 

Castner  r.  Coffman,  178  U.  8.,  168  183 1-108,290. 

""BlalcLl'^^^^^^  '*•  ^^*y--''^««t«l  Vulcanii^^ 

central  Ohio  SalVcoVrGuthrie.a^OhiosV'^^^    /■~^- 

Central  R.  R.  ,.  Macon,  110  F    871    ''''''' ^''^  *^'^^^ 1-403:3-470. 

Central  Stoik  and  Grain  Exch.  v.  Bd.  of  Trade"  196  lii  "s96 l~l^' 

Centml  Stock  YaMs  Co.  .  Louisville  ^  N.  R.  Co  .  m  f  ^23*  8>V  '828-  tLI' 

centra  Tran.sportationCo.r.  Pullman  Palace  Ca  Co.,  m  US    ;;!4t  M^  ,nos 
Champion  r.  Ames,  188  U.  S.,  321 . .  -s^-^rf.  a— 1006, 1008. 

Chandler  1.  Hanna,  73  Ala.,  390    2— '224. 

Chapin  r.  Brown.  83  la.,  156 '.".'.' ^~^^* 

Chapman  *•.  Kirbv,  49  111..  211   219 1—796. 

c^lZn  'w?'*'  ^"/'  '''■'  ^>-  ^■«''i^"mo7-«iV508;;:;;;:;:: tzZ 

Chappell  V.  Walerworth,  165  U.  S.,  102, 107  

Charge  to  the  Grand  Jury,  2  Sawy    667  • 2—547. 

Charles  E.  Wisewall  (The),  74  F    802     2—894. 

Charlotte,  etc..  R.  R.  r.  Gibbes,  142  u's  'sse' t~^^' 

Chemical  Works  v.  Hecker,  11  Blatchf.,  552... ".".V.'.' ".*.'*.' T"??^' 


OASES    CITED.  ^y 

Cherokee  Nation  v.  Southern  Kansas  Ry.  Co.,  136  U.  S.,  641,  667 1-354,357,687; 

^.  2 — 481 

Chesapeake  &  Ohio  Fuel  Co.  V.  U.S.,  115  F.,  610 2-203i278. 

619 .' 2 ^276 

Chicago,  Burlington  &  Q,  R.  Co.  v.  Chicago,  166  U.  S.  226  *_9i4 

Chicago  Gaslight,  etc.,  Co.  v.  People's  Gaslight,  etc.,  Co.,  121  nV.," 530."  1-206' 222  688  724 
Chicago,  etc.,  R.  Co.  v.  Pullman  8n.  Car  Co.,  139  U.  S.,  79 l-^m,m'TH, 

798. 

79,90...  2 481 

Chicago,  M.  «fe  St.  P.  Ry.  v.  Tompkins,  1 76  U.  S.,  1 73  ^_-,r^ 

Chicago  &  N.  W.  R.  R.  Co.  v.  Osborne,  52  F.,  914  ^JjTg 

Chicago,  St.  L.  &  P.  R.  Co.  V.  Cin.  W.  &  M.  Ry.  Co.,  126  IndV,  516 1-86?' 

Chicago,  etc.,  Ry.  v.  Minnesota,  134  U.  S.,  418 ■"  0^74074,^  7=j 

Chittenden  r.  Brewster,  2  Wall.,  191,  196 Z    7Z! 

Church  v.  Railroad,  78  F.,  626 "*' IZrT' 

Chinese  Exclusion  Case,  130  U.S.,  581....        J    „' 

Church  of  the  Holy  Trinity  v.  U.  S.,  UdU.  S.,'457 iZtny 

Cincinnati,  N.  O..  etc.,  Ry.  Co.  v.  Interstate  Commerce  Com.^  162  U."  sV 
184 ' 

Cincinnati     Siemens-LungreniJas" '  lil'uminating'co' '  "v  '  WesVern  '~^^'  ^^'  ^* 

Siemens- Lungren  Co.,  152  U.  S..  200.  205 ^-97 

City  of  Georgetown  v.  Alexandria  Canal  Co.,  12  Pet.  91  98 1    '^ 

City  of  Newton  v.  Levis,  79  F.,  715 . . .  IzT-' 

CityofSt.Loui8t'.Laughlin,49Mo.,559 l~^' 

CityofTltusvilIer.Brennan,143Pa.St..642         t^' 

Clark  r.  Fredericks,  1(.5  U.  S.,  4 rj^. 

Clark  f.  Kansas  City,  176  U.  S.,  114 ^^f^' 

Clause  i'.  Bullock  Ptg.  P.  Co.,  118111.,  612,  617  Li^' 

Clemens  r.  Estes,  22  F.,  899 »_ 

Cleveland  City  Ry.  v.  Cleveland,  94  F.,  409  .'.*."." ' I"!?!' 

Clews  V.  Jamiesou,  182  U.  S.,  461 J" 

ClothCo.  t-.  Lor8ont,L.  R.9Eq.,346 f"^^" 

3^  354 1-94,199,785,788. 

Coal  &  Coke  Co.  v.  Hartman,  111  F.,  96  !! l~^' 

CoalCo.tr.  Bates,  156  U.  S.,  677...     '       2—989. 

CoalCo.?;.  People,  214111.,  421"""!];  ! 1—739,741. 

Cockrillv.  Butler,  78  F.,  679.. ....!;;;.. * 2—1034. 

Coddingtou  r.  Webb,4Sandf.,639... 2—14,22,23. 

Coe  v.  Errol,  116  U.  S..  517  1—363. 

1—257,429,807. 

517-^20 2—198. 

^517  529  ^' 

Cohens  v.  Virginia,  6  Whekt.,  264^  340,  399 J^^^" 

zzS^'^" ""::::::::::::::::::::  2i:j^: 

413 2-710. 

Collins  v.  Locke,  4  App.  Cas    674       1-396,578,466. 

Columbia  Wire  Co. ..  Freem'an  wirecoV.Vi *F.V302::;;;;;:::::::::::::  Ji^;^; 

Commission  v.  Louisville  &  Nashville  R.  R  Co    m  F*  "fi^ 2-9, 296. 

Commonwealth  .  Carlisle,  Brightly,  ^  P    ^^         Z^Z^ZZ:  I'llt' 

^^ 1—202. 

^ 1—402. 

Commonwealth  v.  Green,  126  Pa.  St.,  531     ^^ 1"^^^' 

Commonwealth  r.  Grinstead  (Ky.),  63  S  W ''^'"niVi^v '^«; f"^' 

commonwealth  ..  Hunt,  4  Metc^^  Mass  ').  lii.lL  "'  ^^ '''li'T' 

Commonwealth  ..  Martin,  17  Mass.,  359,  362.         IZ^''"^' 

Commonwealth  n  Peaslee,  177  Mass    267  272  *~^^- 

Commonwealth  t'.  Shaw,  4  Cusb    m       '       2-531,663,668. 

Commonwealth  r.  Smyth,  11  Cush.,  473 *~^- 

'        2—894. 


I"     ri 


^^^  CASES  CITEB. 

€liiik  P.  RiiilitMid  Co..  1  Tenn.  Cm.,  409 

CSonnolly  ,.  iT„io„  sewer  Pipe  Co..  184  ij.'g.'m !~^'^^ 

€o^^Iidat«J  Rubber  Ti^Wh^^ 

€m,ti„e„tel  N^iionaVia'nk  ;:  B«fo«i:  WlilVaVni:  ] t~^- 

Cooley  f.  Board.  12  How..  298  S-646. 

Coosaw  Mining  Co.,.  south  Carolina' 144  Us  "^ J"^^" 

CoppeU  t.  Hall,  7  Wall.,  542 '  »«  "^  •  ».  350- l-«87, 619, 70&. 

Corson  v.  Maryland,  120  U.  S..  542 I— «47. 

Cortelyou  and  Another  and  Neobtvi^c«.^*^Kl..iII*^ 11 '~*°*=  *-^' 

Co.,  138  F.,  110  J^eobiyie  u>.  r.  Charles  Eneu  Johnwn  & 

Cutting  r.  Kansas  City  Stock  Y.  Co.,  188  U  8    79    " *~^*- 

COunselman  ,:  Hitchcock,  142  U  8    547    ^~^^'  '^9- 

2647-^";;;; «-io8.iw».8io.«ia 

517  586 1—859. 

County  of  Lane  r.  Oregon,  7  Wall    76     " 2-898,899. 

CouiityofMobiler.  Kimball,  102  r  8    mi *~^" 

1-354.366,787; 

-afi  *-466, 496, 504. 

— m: 1-^ 

-n.,  » — 224. 

702 

1—6".  302.  397.  439, 

Codington.  *e.,  Bridge  Co.  r.Kenttickr,  154  U.  8    204  .    f '' ^^' 

Craft  f .  McConough V.  79  III    346  •  •  '*^  ^-  »•.  -aH j.ygg  ^3^ 

'34»;350;;: I-«l.  202.  766,796. 

850  ■ ^-^^ 

Cialg  *•.  People,  47  III.  487  «-470. 

Cmndallr.  Nevada.  6  Wall.ri!.... *"*"• 

Cianford  »••  Tyrrull,  128  N.  Y.,  341  444 1—178. 

Craven.H,.  Carter-CrunieOo..92F    47i    * '""^ 

€r««eent  Mfg.  CO.  ..  Nel«on  Mfg.  6k.  lOOMoTi^m !~i^ 

(rook  V.  People,  16  111..  534,  537  «— 99/. 

Cross  I-.  North  Carolina.  132  U.  8.  131 '~^ 

Cmtcher  r  Kentucky.  141  u.  8   \i     " I— 173. 

'*jjjl 1—737,738. 

Cui,tinr.cilyofVinK,tta.67WK,8i4'fflO* *~^- 

i     IWll , 

B. 

..  I— a.**!. 
..  i— 973. 

.   1—93. 
..   1—342. 

I)e  Forest  r.  Thomp*.on,  40  F    375"  ^  '  ""  *""'  ^'^ *~-^*'- 

Delaware  &  Atlantic.  &e.,  Co.'n  Delaware  exreV '  etc  ar  h'V"  i^'  !"*" 
Be  Mattos  ..  Gib«on.    De  Oex  A  Jones,  m  '        ' '  ' "  **'  '''^  ^-  f-^^^ 

DeNeufviller.  Railroad  Co.,  81  F    10         *~^** 

I>ennehyr.  MeN«lt«.8«F.,8S» *-78,80. 

827  829 2-H21,1082. 

Benver&R.G.R.Co.  r.r.s..l24F'i.56i61 ^^'^'^■ 

Benver&N.O.  Ry.Co.i   .\tchison  V    ic  Vo"^ *-«>7.«I7. 

IV  Wit*  wt^  />!  *1  X         -^itmson,  r.,  &  S.  F.  R.  Co.,  15  F    650  1    o(v> 

we  Witt  Wire-Cloth  Co.  r.  x. .].  Wire-rioth  r«    1^  »t  v     ,'  '*" 1—202. 

Diamond  Match  Co.  r.  Roe»>er.  106  N  Y    473  '    ^^^"  ^'^"  "-201.202.795. 

Bier's  Case,  «  Year  Bof»k  5. 2  Hen.  V 1-702;  i--820. 

Dillon  /•.  Barnard,  21  Wall    430  437 1—699. 

Distilling  .%  cattle  Feeding  Co.'  r.  People!  ii*iii.:4ii"* J"?]?', 

'*** 1—745,766.799.858: 

Bodge.  P.  W.  Co..  1.  Construction  Information  Co    183  Ma«H   m  a    *~^-' 

Bower  r.  Richard.,.  151  U.  s..  6.58,666  "  ^ *-^^ 

S— 181. 


CASES    CITED.  XVII 

Drexel.r.  Tme,  74  F.,  12 ,_^^- 

Dr.  Miles  Medical  Co.  v.  Goldthwaite,  133  F.,  794  . . .  «    gaq' mia 

Dr.  Miles  Medical  Co.  v.  Piatt,  142  F.,  606 2—1020 

Dubowski  V.  Goldstein,  [1896]  1  Q.  B.,  478. .* "  i_7g6 

Dueber  Watch  Case  Mfg.  Co.  v.  E.  Howard  Watch, etc., Co.! 55  R, 851 ....  I-257! 357;  i-21. 

T.  w  .   ,=    w.  66  F.,  637....  l-6a5.'812.' 

Duncan  <-.  Missouri,  152  U.  S.,  377,  382....  2—139 

Dunlop  r.  Gregory  ION.  Y.,  241 .T-'.V.V.V.V.V.V.V.V.V.V.V  1-786;' 2-1011 

Dushaner.  Benedict.  120  U.S..  630,648 2—131 

East  Tennessee,  V.  &  G.  R.  Co.  r.  Interstate  Com.  Com.,  99  F.,  64 2—743. 

w,    ,              „^                                                                           181  U.S.,  1,27..  2-847. 
Eastmanr.  Sherry.  37  F.,  844,845 '  ^_g^2 

Easton  and  Amboy  Railroad  Co.  v.  Greenwich,  25  N.J.  Eq.,665 1—586 

Edison  Electric  Light  Co.  r.  Sawyer-Man  Electric  Co., 53  F.,'598 2-^q  82.1 

Edison  Elec.Lt.Co.r.U.8.Elec.Ltg.Co..46F.,55.59 2-94^ 

Edison  Phonograph  Co.  r.  Pike,  116  F.,  863 . .  2— "87 

Edwards. .Elliott,  21  whu..  532 '.**:.'.".';.';.';.*::::::;:  1-847: 

Egan..Hart.l65U.S..188 g.^^j 

Eilenbeckerr. Plymouth  Co.,  134  U.S., 31, 36 1-3,59  594 

Ellerman  t-.  Chicago  Junction  Rys.,  etc.,  Co.,  49  N.  J.  Eq.,  215  217 1-702' 

Ellimanr.Carrington,[1901]  2Ch.,275 '  "\    T^'imx 

Elliott  r. Osborne, I  Cal., 396 "  i~S 

Elliott  r.Peir8ol,lPet.,328,340 .'.■;;;; i~^'u^ 

Ely  r. Supervisors, 36  N.Y., 297 l~!f'^*- 

Emackr.Kane,34F..47 :;;;;;;::;; ;ij^ 

Embreyi..Jemi8on,131U.S.,336,348 2-127'79q 

Emert  r.  Missouri,  156  U.  S.,  296  ^    tfl' 

Emery  ..Ca„dleCo..47O.sr320:;;:: IlS'?^''''- 

Emery  1^.  City  of  Lowell,  127  Mass.,  138, 140  iJ^V 

Evans  r.  Hughey,  76  111.,  115. 120 i^Tqi 

Ewingn-Iohnson,  34HOW.  Pr.,  202...  .  ,'    ^' 

Ex  parte  Bain,  121  U.  S..  1  *— *3. 

Ex  parte  Brown,  72  Mo.,  83  \~    ^' 

Ex  parte  Buskirk,  72  F    14  — «««,  W8. 

ExparteCrowDog,109'u.S.V556;'570".'".".' f~i^n 

Kx  parte  Fisk.  113  U.  S..  713 ;;;."; i    ]t^\^^ 

7i«  iiQ  2—106,839. 

Ex  parte  Irvine,  74  F.,  954.  J-^^' 

Ex  parte  Mirzan,  119  U.S.,  584-586::::::::::::;:;:;: I'T 

Ex  parte  Neet,  157  Mo.,  627  l"^^' 

Ex  parte  Robinson,  19  Wall.,  505... 7^' 

Ex  parte  Reynolds,  15COXC.C.,  108, 119 l~^ 

Ex  parte  Rowland,  104  U.  8.,  604  J~:^' 

Ex  parte  sieboid,  100  U.S.,  371, 395 ;;;:;:.: r1z\^ .,« 

Ex  parte  Terry,  128  U.  S    289  '— <»4,  366,  578. 

!^Qan; 1-340,594;  2-839. 

Ex  parte  Watkins,  3  Pet.,  193  '^^• 

Ex  parte  Yarbrough,  110  U.S.,  661." !~S^' ^' 

Exchange  Tel.  Co.  v.  Gregory  &  Co.,  [1896]  1  Q.  b;  D.  "u7 il?^' 

Express  Cases,  117  U  S    1  vt.  j>.  1/.,  14/ 2—781. 

1—794. 

Factor  Co.  v.  Adler,  90  Cal.,  no 

Farmer  r.  Storer,  11  Pick.  (Mass.),  241 :;:::;;;; I'l^' 

IIZIZ  I"  f  l  ''"•  '■  ^'^^  «*•  ='•  ^'  «•  Co..  i73*ni.:;^;::;;; Izl^- 

rarmers  L.  &  T.  Co.  r.  Northern  Pacific  R.  R.  Co.,  88  F..  249.267 2-846; 

11808--VOL  1—06  M ^11 


i 


■iiiiiiiiiiiiiiiiniii 


iilM 


I 


^^"^^^  GABEB   CITED. 

Fanners'  &  Merchants'  Ins.  t^.  r.  Dc»bney,  1«9  U.  a,  801  *_ii7i 

Farrerr.  Close,  L.  R.  4  Q.B..  602.612...  T    ,',*      • 

Fan  1'.  Marsteller,  2  Cranch,  10. . .  .  I    ,„" 

Fayerweather  r.  Riteh.  89  P.,  r>29  ;~?^' 

Ficklen  r.  Shelby  Co.  Taxing  Dist.,  mihS.',T.'.Z ,Ia^f ' a-, 

Finney  I'.  Ackerraan,  21  Wif*.,271 ^^voo.vai. 

Fitegemld  r  Clmmpenys.  SOL.  J..N.  8.  Eq.;7^;'2}oh„9.*iHe,n*.;3ll54".  1-m 
Fong  1  ue  Ting  r.  United  States.  149  V.  S.,  698  ,    „"" 

Ford  I'.  Association,  155  111.,  166 ,~.l!" 

F06dicki'.Sehall,99U.S.,28ft.... J    '^• 

Fowie ..  Park.  mu.  8..  8« -■-•"":":::::::::;:::::  I J5. 197. 785.7«8; 

88,97 2-732,1008. 

Freight  Association  Case,   'sec  U.'sVr'Trani^Ml'iMiuriFreighVAs^^^^       '~^' 
Freight  Tax  Case.  15  Wall.,  232...  ,    -^ 

Frisble  I'.  United  States.  157  U  S    160  * J—^dS. 

Fuchs..8t.Loui8.i67.Mo..62o..:..  :::; - 1-935;  2-8O8.896. 

F.  W.  Dodge  Co.  i^.  Construction  Infonnation  Co;,' 183  M«;s.V62." .'."." .'.";.*  al^.' 

o. 

Gainewell.  etc..  Co.  v.  Crane,  160  Maas..  50....  a_^ 

Gardinerr.  Mor8e,25Me..  140.... ' ,~I^' 

Gar8tr.HaIl&  Lyon  Co.,  179 Mass,. 588.,.. .'.*.' »'~^'in,xi 

Oarstv.  Harri.s.i77Mas8.,  72.. «--5M.1020. 

Gelpcke  t'.  City  of  Dubuque,  1  Wall..  220 T"'?!^' ^^'*'' 

General  Electric  Co.  r.  Anchor  Electric  Co..  106  F.,'m.'.'. iJZ'iu 

General  Electric  Co.  r.  Wise.  119  F.,  922-924  l_ZZ' 

Georgia  v.Brailsfortt.  2  DalL,  402 *_Jn«'wo. 

Gibbons  v.Ogden,  9  Wheat    1 -  -— w»,»-4. 

Z'„ 1-1028,1024. 

iz '-^• 

:Z 1-388.411. 

ZZjiJ >-^"- 

is '-'"^ 

;^ 1-3M,396. 

l^ 1-^96.4S6. 

1-554,688;  2—224, 

465  471 

■ 1—645,388;  2—138, 

— ^ .J^f 

231  «— -t<i. 

Gibta  „.  Baittoore  G.,,  Co.,  lao  u^s-Vie;:::::.;:::::::::.;;::::;:;;;;  \:^-^  ^  ^ 

m ,_S''"''*'- 

^ 1-688,723. 

GibbflKMcNeeley.  107F.,2ll ZZZ^^^ 1-197,203,206,702. 

118  F    120  * 

Gibbs  «.  Smith,  115  Mass.iW ......... ..".''.'.'. *~^^'  ^'®- 

Gibaon  V.  Shufeldt,  122U.  S.,  27............... 1—803. 

Gibson  w.  Smith,  2  .4tk.,  I&2!.... 1—667. 

Gilbert  V.  Mickel.  4  Sandf.  Ch..  asiVmai.'p.'sS?)';.".'.' ,    ?f ' 

Gilman  v.  Philadelphia.  3  Wall.,  713 l~^^' 

724 1-348,354. 

!:* 1-585. 

Gla.%otti..Lang.3Myl.,AC..451,455.".';.*."! IZ^' 

Gloucester  Ferry  Co.  t'.  Penn..  114  U  8   196  ;~lr ' 

u.,xxmv.a.,um 1—737,740,767,960; 

2-515. 

'™* l-«7,302,  398,  439, 

459,1036;  2—116. 


CASES   CITED. 

Gloucester  Wnglass  &  Glue  Co.  v.  Russia  Cement  Co.,  154  Mass.,  92. . . .  1— 94, 793. 

94....  1—205. 

Goebel  i'.  Hough,  26  Minn.,  252,  256.  258 2—98 

Goldsmith  v.  State.  32  Tex.  Cr.  R.,  112 ".'.'... 2—973 

Good  V.  Daland,  121  N.  Y.,  1 ...].'.**.. •»- 100" 

Goodpaster  f  Voris,  8  Iowa.  334 2—972 

Goodridge  r.  Rogers,  22  Pick.,  495 .;";!"!..!!!!  2—307 

Goodyear  r.  Beverley  Rubber  Co.,  Cliff.  348-354 !.!!!!"!"  2—795 

Goodyear  Tire  &  Rubber  Co.  v.  Rubber  Tire  Wheel  Co..  116  F.,  363         2—859 

Gordon?'.  Gil  foil,  99  U.  S.,  168 _'         '"  2  -318  564 

Gorton  V.  Brown,  27111.,  489 i_oi 

Grant  r.  Raymond,  6  Pet.,  218,  241 "!!!.!!"!      2—187  208 

Grasselli  t'.  Lowden,  11  Ohio  St., 349 "!.!....!. 2—316 

Great  Southern  Fire  Proof  Hotel  Co.  v.  Jones,  177  U.S.'  449,  453  .!"!!!  2—546 
Great  Western  R.  Co.  i\  Birmingham,  etc.,  R.  Co.,  2  Phil.  Ch.,  597  2-606 

Gulf,  Colo.  &  Santa  Fe  R.  Co.  r.  Ellis,  165  U.  S..  150, 154 2-559906  914 

Green  r.  Williams,  45  111.,  206 '"*  glgg^' 

Greene's  case,  52  F..  104 1— 357 

Griffin  V.  Colver,  16  N.  Y.,  489,  491 --i^^l"........!.;..!;.         2— 97' 

Grove  r.  Grove,  93  F.,  865 2—89 

Gulf,  C.  &  S.  F.  R.  Co.  r.  Miami  S.  S.  Co.,  86  F.,  407......!"^.. !".!!!!.  1—867; 

420 1—995. 


XIX 


2—79. 


Gulf.  Colo.  &  S.  Fe  Ry.  v.  Ellis,  165  U.  8.,  1,50, 155, 159. 160, 166 2-140  145 

Gundling  r.  Chicago,  177  U.  S.,  183. 2—146'      ' 

Guy  n  Baltimore,  100  U.  S.,  434 1-739 


Hadden  r.  Dooley,  74  F..  429,431 g_^jQg 

Hagan  r.  Blindell.    .See  Blindell  r.  Hagan.  **" 

Hair  r.  Banies,  26  111.  App.,  580 a_Qx 

Haler.Henkel,201U.S.,43 .*.'.' .".'.■.'.'.'*.■ --944  96o  Ofis 

Hallr..DeCuir,95U.S.,485 ^.740" 

Hammerstelnv.  Parsons,  38  Mo.  App., 336, 337 1—630 

Hanchett  v.  Humphrey,  93  F.,  895-897 i—9-o 

Hanley  v.  Kan.sas  City  Southern  Ry.,  187  U.  g.,617.".".' 2-872' 

Hannar.People,  86111.,  243..  

Hannah  v.  Fife.  27  Mich..  172 

Hard  v.  Seele.v,  48  Barb.,  428  .  ^_^ 

Harriman  V.  Northern  Secur.  Co.,  197  U.  S.,  244 2— «TQ 

Harrison  r.  Glucose  Refining  Co.,  116  F.,  304  

807 

310 


1-374. 
1—803. 
2—1008. 


2—831, 1007, 1032. 

2—820. 

2—825. 


Harrison  v.  Maynard,  Merrill  &  Co. ,  61  F.,  689 . .     a_7«^  700 

Har^w  CO.  .•.  Bench,  83  P..  36 .:.■.■.".•::.•:.■.•;:::.•.•:.■  iJS'^;*-*,*,, 


Harrow  Co. 


Hathaway 


76  F.,  667 


198. 
2—8,69. 


V.  Quick,  67  F.,  130 "  i_^i^^ 


746;  2—8,9 


Roach.  2  Woodb.  «fe  M.,  63, 73 2_q79^" 

Hawesr.CityofOakland,  104U.S.,450..;.. 

Hawks??.  Lands,  2  Gilm.,  227,  232 

Hayesr.  Missouri,  120  U.S.,  68,71  ......  y „    ,„q     ,„ 

Hay-Press  Co.  t,.  Devol,  72  F.,  717 ;;".;;; ilfiS 

,         72J   722 
Hazlehurst  v.  Railroad  Co.,  43  Ga.,  13. .....".'].'.'."; .' l-^2i. 


2—78. 
2—131. 


Heath  r.  Wallace.  138  U. 


1—202, 799. 


„     ,  S., 573,584 1    -,. 

Heaton-Peninsular  Co.  v.  Eureka  Specialty  Co.,  47  U.  8.  App.,  m^eo'.  2-187. 


Hedrick 


77F.,288 

H.nb       '\ ^^^hison,  T.  &  S.  Fe  R.  R.  Co.,  167  U.  S..  673.  677. . . . 
Heckerr.  Mayor,  etc..  28 How.,  Pr.,  212.. 


....  2—784. 
....  2— 18L 
....  2-^86. 


^^  CASES    CITED. 

Henderson  r.M«yorol  New  York,  92  IT.  8.,  2S9 1-707  738  739- 

Henderson  Bridjre  Co.  t-.  K?..  im  U  8    iso  «— 466. 

Hendrick  ,..  Lindsay.  93  U.S..  1^  .1-738.740. 

Henry  Bill  Publishlntf  Co.  tt.Sm>'the.27F*"9i4l926 !~?fJ'*^^- 

Herreshoff  r.  Boutineau.  17  R.  I.  3        "•''"^*^ 2-'98. 

Hill  r.  Mining  Co..  119  Mo..  9-24       *-^^- 

Hilton  r.  Eckerslev,  6  El.  «fe  Bl    47       '~*^*- 

m    1-781,798. 

7.  *" 1-781;  2-1002. 

Hitchcock  r.  Anthony,  88  F.,  779.*       " ^-^^^ 

Hitchcock  r.  Colter,  6  Adol.  &  E    454 "'" 1-786:2-317,1011. 

Hinckley  r.Httsburg Steel  cro.,i21U*.S.Viii.':." 1~I^' ^^• 

Hodge  »'.  Sloan.  107  N.  Y.,  244  *~^' 

Hoet.  Knap,17P..2<M... 1-75,205.786,1011. 

Hoffman  r.  Brooke  11  WkVyVLawBnrii f-f' 

Hoganr.  State.  30  Wis..  428..  '~^^- 

Holder  tt.  A ultman.  169  T.  S.,  81  88 *~**^- 

Hooker  1.  Vandewater.  4  Denio.  349 *~''^- 

901,  SOi , 

353....  ,      '^• 

Hooper  F.  California,  155  U.S..  648  ^~'^^' 

ggg 1—739,965. 

Hopkins  w.  Oxiey  Stave  Co..  83  F  912 ^~*^- 

Hopkins  r.  U.S..  1711.  S..  578. ^-^- 

1—931,     975,     978. 

1038:  2-117,225 
226, 257. 337, 459* 
460,531,561,664, 

585 ^    **• 

son        2-^'ill. 

JZ '••- 2-242. 

«-276.     277.     286, 

m  '^^• 

Horn  t'.  Lockhart,  17  Wall    570 —  *-^.  282. 

Hornby  I..  Close,  L.R.  2  Q.B.  163 *~^' 

Homer  f.  Ashford,  3  Bing.,  32?      ** '~'*^' 

Homerr.Gnive«.7Bing.  735  1-94.97.786. 

--llyS 1-75,  786:  2-165. 

Homer  r.  U.S.,  143  U.S..  207..:::;;:;;:;;;:;;;;:: \~^\f^ 

.^,  1—47,58. 

5TO »-». 

Howard  v.  Mi,nnlHctnringCo:,'mv:i';m,'^Zl ilS* 

Hubbard  r.  Miller,  27  Mich.,  15  *~*^- 

:ll 1-94,785. 

Hnbbard  r.  Rogers.  64  111.,  434, 437 1-202. 

Hulsei'.Bon«ck  Machine  Co..  66  F'sei ^~^^^- 

Humes  1.  City  of  Ft.  Smith,  98  F  862      2-1008,1013. 

Huntington  1.  Attrill,  146  U.  8   667     *"^- 

Huntington ..  Attriii,  [1898]  App.  c;:s.;is;; :;:;;:; ■ f-]*'^ 

Huntonr  H.AH.Co..76N.W.,1041  (118  Mich.,  475)' t^ 

Huae  V.  Glover,  119  U.  S.,  543  ^"•,  «/oj 2—972. 

Hntchinsr.  Hutchin8.7Hin.io4::; 1-740,967. 

Hydev.  Woods.  2  Sawy.,  6661658: *  ^-4S6. 

1—630. 

* 

nMnoto  commission  Co.  r.  Cleveland  Tel.  Co.,  119  F   m  •   ^, 

Improvement  Co.  v.Glbney.  160  U.S    217  220  

In  Matter  of  Morse,  18  N.Y.Crim.  Rep..  312    1-1001,1002. 

In  re  Ayers,  128  U.  S.,  44S *~*^- 

2-889. 


CASES    CITED.  jXI 

In  re  Buell,  8  Dill.,  116 

InrecarJ^l0F.,622(note)....::;::::::* i~foV^'^'- 

In  re  corning.  51  F.,  205... ^^^- 

I213.  1-48,58.182. 

In  re  Counselman,  44  F.,  *268 *~^^- 

In  re  Coy,  127  U.S.,  731 :....::;;;;;; ^-^^■ 

lure  Debs.  158  U.S.,  564...  1-173,340. 

1-619,696,708,814, 

842,1026:2—166, 

m  re  Doig,  4  F.,  193 ,    ^^^• 

In  re  Doolittle,  23  F.,  544 1-47,68. 

In  re  Express  Companies,  1  IntereV.'com;'a)m;  R.i^i* ' Jl^' 

In  re  Green,  134  U.S.,  377....  *""*^- 

In  re  Greene,  52  F.,  104  1—173. 

111 1-182,257,430,812 

112::::;::;::: J-^^- 

113  2-508. 

115 1—737,738. 

llfi'm 1-218:2-276,279. 

'' 2-276. 

^^° 1     «nR 

119 1—205. 

In  re  Greene,  22  F.  194        1—642. 

InreGiice,79F.,627,644' ^-^^^ 

In  re  Higgins,  27  F.,  443,444     2-276,27y. 

In  re  Lancaster,  137  U.  S    193  1—59. 

In  re  Lester,  77  Ga.,  143    " *-^- 

In  re  Minor,  69  F.,  233 ;;;;;;;;'" 2-809,875. 

In  re  Neagle,  136 U.  S.,  i::;::::;; 1—739. 

In  re  Nevitt,  117  F    448  458 1—578. 

In  re  Pallisser,  136  U.  S.',  257*: ^-^^ 

InreQuarles,  149  U.  S.,'532..:::: *~^^- 

In  re  Rahrer,  140U.  S.,  545  1—578. 

555     2-465,739. 

In  re  Sawver,  124  U  S    200 1—388. 

^2201222";:::;;;;;; ;-«38. 

InreSwan,  150U.  S.,637.  1-340. 

In  re  Terrell  (U.S.t'.Greenhut);  51  f' 213 ^""^^ 

^216 1-58,182. 

InreWattsetal.,l90U  S   32  *~^*- 

India  Bagging  Assn.  ..  Koik,'l4  La;*A'nn"i68" *~^- 

Indianapolis  Gas  Co.  V.Indianapolis.  82  F    245 l-201,4a=^;  2-470. 

"Industry,"  schooner,!  Gall.,  114,117       '        ^-^• 

Ingramr.  Ingram,  49  N.C.,  188       2—486. 

Ingramr.  Lawson,  6Bing:*N  C    212 1—803. 

Insurance  Co.  v.  Clunie,  88  f'  167  170 ^^• 

Insurance  Co. .-.  Francis,  11  Wall.',  210, 216 *~^'^' 

intestate  Com.  Com. ..  Alabama  Mid!  R.  rVcoV.  74  ■F.;'7i5:::::;:;:::: « 

Interstate  Com.  Com.  v.  Baird,  194  U  S    25  ^^^'^'^^ 1-^.  * 

Interstate  Com.  Com.  v.  B.  &  O.  R.  Co   '145  u's'sfi-^o^; *-*^^'  ^'  ^^^ 

Interstate  Com. Com...  Brimso"  iM  U  8!'^7  f  ;!^:: 1-839,1025. 

I47K *    903,949. 

l^g «-^l- 

*!: 1-934 

SSSmr*^"%''^^''^'-'-^«'^«^^^'29^  2~^- 

iinereiate  Com.  Com.  t'.  Lake  shnrp  ^  M   o  »       ..    ,   *— 847. 


'WP' ''WP  «  IMF 


€A8E8  CITEB. 


f 


Iron  Mtn.  R.  R.  i .  Mempliii.,  96  F.,  122 ^nr^ 

Iweristible  (The).  7  Wheat .  561 7Z^ 

Irwin  t».  Willittr.  110  U.  8..  499 '"T?- 

lifael  I'.  Arthur,  152  D.  S.,  855 ]  »  T!?' 

J. 

Jack  r.  Kansas.  199  U.  S.,  372 a^ 

Jar?i8if.Knftpp,lllF.,34 a    ,T;  ,««. 

Janrisr.  Peek.  10  Paige,  125 LiZ 

Jerome  r.  BoiB.  7  John*.  Ch.,  388 "*!""'.!"'.*.'.T"  1-108 

Jersey  aty  r.  City  of  Hudson,  2  Beasley  (18 N.  J.  Eq.iTm  426  ...         I_o90 

Jewett  V.  Bowman,  27  N.  J.  Eq.,  171 **'"  ^Z^' 

John  D.  Park  &  Sona  Co.  v.  Whole»«le  Druggim^  Amn.,.m  S^Y^JiZ  i-m  lOW. 
Johnston  r.  Smith'n  A<lmr..  70  Ala..  108...  IZ^'     ^ 

i**!*"T  !!^'  ^^"^^  '**"  ^'*-  •••  ^'•'o^'h  «™«^"»>  S'^1  Co..  4*^F..'  1% 2-943" 

iom  TimHic  Aiwiclation  Cane  (Me  U.  8.  ^  Joint  Traflic  Assn..  171  U.  8  ' 

«•©).  '  '' 

J<»«i  r.  Clifford'fi  Exr.,  5  Fla.,  510,  615 |_2,«    • 

IflHei  r.  North.  L.  R.  19  Eq.,  426 jf^* 

Jonei  r.  Pope,  l  Saanders,  88. *Z^ 

jM^dr.  Harrington,  139 N.Y.,  105 '  .-!^-'""*][l!!...."...".T'  1-795 

Kearney  v.  Taylor.  16  How.,  494,  519 ,_,^ 

Keeler  r.  Standard  Folding  Bed  Co.,  167  u'  8.7659.'*."*".'.".'*** 4-794  «53 

Keeler  r.  Taylor,  68  Pa.  St.,  467 ,    L^^' 

Kelley  v.  Manufacturing  Co.,  44  F.,  19 ,    r. 

Kellogg  r.Larkin.  3  Pin..  123 .-^  ^, 

,60  I-'89.7»1. 

Keiiy.'..Faek«on,6Pet.,63i...;..:;;;;::;;'; '~:'^- 

Kenny  r.  collier.  79 G«.,  743 :;;;;: l-'''' 

Kentucky  &  ind.  Bridge  Co.  *-.  LoulBville  4  N.  R.  Co..  37  F..  567. . ....  I-tjrJ.  955. 

Kentucky  Railroad  Tax  Cases.  116  U.  8.,  321 i~^ 

Kerfoot  r.  People,  61  III.  App.,  409 ^ rT. 

Kerr  t».  New  Orleans,  126  F..  920 .'. IZV^' 

Kidd  I'.  Pearson.  128  C.  s..  i  ,..*'■ 

'     • 1— 6«,  257,409,411, 

♦'.80,  681,  808; 

1—390,398,439,641, 

74W,  1036. 

fi  • 1—390,  1023. 

g 1-390. 

«— 560.  668. 

^ *— 668. 

MM.  V.  Youmans,  86  N.  Y.,  329. . .  ,_..'  , 

Klrlnian  t-.  Philips'  Heirn,  7  Heisk..  222.  225'**' 1^  IZ}'^*"- 

King  tr.  Inhabitant  of  Hodnett.  1  T.  R.,  69  101  IJT-' 

Kingv.TheVaughan.2Doug.,516 ,["[[ "' ,_^ 

King  BridKe  Co.  r.  Otoe  County,  120  U.  S.,  226     " 2-546 

King  of  the  Two  SicilleH  v.  WilUox,  7  St.  Tr.  ( N.  8.*),'  1049.'  ioei'. 2-900* 

Kingman  r.  Wt-steni  Mfg.  Co.,  92  F..  486 a    007 

Kippr.Deniston,4J.»hn,s.,:M ~To 

Klelni'.  Insurance  Co.,  104  l.  S..  88.  91 ."."] ,__y=9 

Knappt'.  S.Jarvi8  Adams  Co.,  135  F.,  1008..  «_>W4 

Kramerif.Old.1(6aE.,8l8(U9N.C.l) 2^7 


CASES   CITED. 


XXIII 


Lafond  r.  Deem.«!.  81  N.  Y.,  507-614 ,_j^ 

Lake  Front  Case,  146  U.  S.,  387 ' 1Z347' 

Lake  Shore,  &c.,  Ry.  Co.,  t-.  Ohio,  173  U.'  8..  285,'3oi'. 2-481* 

Lake  Shore  &  M.  S.  R.  Co.  v.  Cin.  W.  &  M.  Ry.  Co.,  116  Ind.,578." 1-867" 

I^mb  r.  People.  %  111.,  74 t^^' 

Lamsonr.Boyden,  160111..  613,  620,  621.....".. 2— 

Land  Co.  v.  Peck,  112  111.,  408,439 

Lane  Co.  v.  Oregon,  7  Wall.,  71,  76 

Lange  v.  Werk,  2  Ohio  St.,  519,  520 

Lau  Ow  Bew  v.  U.  S.,  144  U.  S 
Leckie  v.  Soott.  10  La..  412. . . . 
Lee  V.  Angas,  L.  R.  2  Eq.  59. . .  _ 

Leeter.  State  Bank  of  St.  Louis,  115  Mo.,  184  ^^^ T^.' 

Legal  Tender  Ca.ses,  12  Wall. ,  457,  565  2-«4o. 

Lehman  r.  Graham,  135  F.,  39 

Leby..Hard,n,i35tj.a,,oo.....";;; ...:.;;::::::.".  T-a*,,  739, 768; 

2—61, 998. 


969. 
2—972. 
1—395,  .578. 

'*'•  ** 1—706. 

2—972. 

2—908. 

2-«45. 
1—578. 
2—826. 


107 
108 


1—736. 
1—741. 


Leloupr.  Port  of  Mobile.  127  U.  S.,  640,  647..  " ,_-.,-   ^    „.., 

Leonard  r.  Poole,  114  N.  Y.,  371,  377.  '^/.  -— bOJ. 

Leslie  v.  Lorillard,  110  N.  Y. 


,519... 
533... 


Lewis  V.  Board  of  Commissioners,  74  N.  C,  194 

Lewis  ».  Wilson,  121  N.  Y.,  284-287 *...... 

License  Cases,  5  How.,  504 
599 


**■*•••••>«•■•*•»» 


.   1—795.852. 

.  1—789,791. 

.   1—702. 

.  2-895. 

.   1—630. 

-   1—739. 

1—388. 

2—10. 

2 — 741 

Ry.  Co.,  63  F..  775 l-6ft5.866. 

.  1—866. 

.  1-359. 

1-108. 

^60 2—824, 


Light  Co.  V.  Electric  Co.,  .53  F..  598 

Lllienthal's  Tobacco  v.  U.  8.,  97  U.  8.,  268 
Little  Rock  &  M.  R.  Co.  v.  St.  Louis  S  W 
Little  Rock  &  M.  R.  Co.  v.  St.  Louis,  I.  M.  .fe's.  Rv.  CoVil  F  "5^" 

Littleton  V.  Fritz,  65  la..  488 *  '        * 

Livingston  v.  Livingston,  6  Johns.  Ch.,  500  501 

Liverpool  &  L.  ife  G.  Ins.  Co.  r.  Clunie,  88  F  

Lloyd  r.  Pennie,  60  F.,  4 

Loeb  V.  Columbia  Township  Trustees,"  ni'u's" '472' "477 '~^^ 

Logan  V.  Penn.  R.  R.  Co.,  132  Pa.  St.,  403,  410    '       ' 
Logan  r.  U.  S.,  144  U.  S.,  263 

Lonerganr.  Ruford,148U.  S.,581,59oir. ,    ^'^^*' 

Lord  Eldon's  Opinion,  7  Ves.,  257-259 ...  V ,    ZI' 

Lottery  Case,  188  U.  8.,  321,  355 1—^63. 

^348 t~^^' 

Loum-ille  Gas  Co.  v.  Citizens'  Gas  Co.,  *n*5u'.'s:,"6i".::::: r^' 

Louisville,  etc.,  v.  McChord,  103  F.,  220  " 

Louisville  &  Nashville  R.  Co.  v.  Behliner.'ns'uVs.',  '675 '. '. 

677.. 


2—124. 
2—951. 


Ix)wry  V.  Tile,  Mantel  &  Q.  Assn., 


2—754. 

...........  2 — 743. 

2-262,477,507,630. 

701 2—507,530. 


Loyd  V.  Malone,  23  111.,  41.,. 

Lumber  Co.  t».  Hayes,  76  Cal.,  387.".'."'.'.'.'.'*.".*.".".' ^~^^- 

................. ........_._^^^^^  J — ^201. 


766,799. 


|i 


XXIV 


CASES   CITED. 


McAlist«r  V.  Henkel.  201  V.  8.,  90  . . 

MeBlairr.  Gibbes,  17How.,286........... 

McCall  r.  California.  136  U.S.,  104.. 

McCool  I'.  Smith,  l  Black.  459.469 

McCredier.  Senior.  4  Paige.  378. 381. 882 , 

McCollochrMaryl«iM!,4Wheat.,316,40&.'.*.*.".';;.;." J~^'.- 

415,423 ...1. '^' 

421 


«— 1M4. 

1— «64. 

1— 737.963L 
1—198. 


424. 


1—409,578;  8— 466 

1—416. 

1— OS. 


1—198. 
l-«24. 
1—675. 
«— 915. 


MeCiiIlough  »■.  Brown,  41  8.  C.  220      1—678. 

McCullough  r.  Commonwealth.  67'pii*  "st."  80 ' "  *  *  l~^' 

McDonaldr.Hovey.  110  U.S..  619,628        — ***' 

McGreary  v.  Chandler,  68  Me..  538 . . . .  .*.' 

McKee  v.  United  States,  164  U.  8.. 287.!. 

McKlnleyi'.  Wheeler.  130 U.  8.,  630..! 

McMuJlen  r.  Hoffman.  174  V.  S    689  654 

69  F..  515.    2-128,819. 

MaeWIUiiim  r.  Conn.  Web  Co..  119  F    509 *~*^^' 

Machine  Co.  I'.  Smith,  70  F..  883  2—943. 

MachineryCo.  r.  Dolph,  138U.  S.,'6V7*'28"f"553' *"~^- 

MadisonAve.  Baptist  Church  "-Oliver  St.  Biptisichurehi'N'Vo^*  1~IT 
Magennis  v.  Parkhurst.  4  X.  J.  Eq    433  434  '  78 N.  \ ..  96.  2-79. 

Magoun  r.  Illinois  Trust  &  .Savings  Bank  170  u'  8  '  iV V~'^' 

Mail  Company  r.  Flanders.  12  Wall..  ISO  '        2-140.146.550. 

Maillard  r.  Lawrence.  16  How.,  251 ....  "' 2—558. 

Miillan  r.  May.  11  Mee.*;.  AW. 


,652. 
657. 
667. 


Manehester^etc.  R.  R.  ,..  concord  R.  R..  20  Atl.:3^"(;;'v' 
Manufacturing  Co.  r.  Hollis.  55  N.  W. 


H. 


1—363. 
1—784. 
1—205. 
1—75, 199. 
100)...   1-206,507. 


Manufacturing  Co.  v.  Klou  «  F    721  (^IM-nn..  22S) |_630. 

Market  Co.  r.  Hoffman,  101  r.  8.,  115 »- 64b. 


Marsh  v.  Russell.  66  N.  Y.,  288. 
Mason  r.  Dullagham,  82  F.,689 
Massie  r.  Buck.  128  F.,  31. . . 


1003.  1008. 


1-353. 
1-213. 
S— 89. 

Mast.  Fot>s&  Co.;.; Stiver  Mfg.' Co.Vm^^^  2-^20.826, 

Match  Co.  n  Roetier.  106  N  Y    473      "''•*'•' "^^'^ 2-707. 

1-^201,785.788 

Matthews  i..  Associated  Press  of  New  York,  136  N.  Y    333  340  i    -nl '  V^' 

Mattuig^-  .Northwestern  Va.  R.  R.,  i.58  U.  8..  53.  57        '        l~'^  '^'• 

Maxi™^"  J'"^^//*' ^^"'^'n^elt  r.  Maxim  Nordenfelt  Co.) ....  ^     «_ 

^S:1::^^:^^  ^"-  ^''■'  ^*'^-  -  ^'^-s  Patent  F.eam;.; 

Mayor  of  Georgetown  ,,  Alexandria  Ci;naVco7.'l2  Pei'  91  98* f ~^' 

Mayor,  etc..  of  Kn<,xville  v.  Africa  77  F    501    '^^"^'"^^'^ >-^'* 

Merz  Capsule  Co.  r.  l^.  8.  Capsule  Co.,  67  F.,  414  .*' 

71  F    7S7 

Metcalf  r.  Am.  School  Furniture  Co    mjf'iiK *~^"^' 

Metc«lfr.Watertown,l28U8    586  '  --*^- 

Mexican  Nat.  Railroad  r.  Davidson.  IsVu.a,  Ml.W !l2-' 

Miller r.Ammon,  146 U.S., 421  427  "«'^.^.-. S-64/. 

Miller  r.  Davi.s.  88  Me    454  '*'* 1-52:  j!-l28. 

Milwaukee,  etc..  Co.  r.\MiIwa«ke;,'8VF7.OT f~!?!' 

M  nnlT"' t^."^-  ''^-  ^^-  '••  B«<^kwith,  i29u.a;"26';:; flu 

Minnesota  r.  Barber.  136  U.  S.,  313 «— 914. 

Minnuci  r.  Phlla.  &  Reading  R.  Co.."V8N."j.'£iw  4^ l~^: 

Missouri  ex  rel..  etc.,  ,'.  Bell  Tel.  Co..  23  F.  589..!.      I 

■ »— 188. 


1—344. 

2—707. 
1—613; 


3-574. 


CASES   CITED,  XXY 

Missouri  v.  Lewis,  101  U.  S.,  22,  81 2—138 

Missouri,  K.  &  T.  Ry.  v.  Haber,  169  U.  S.,  613.  626.!!!!!!!!!!!!!!!!!!!!!  2_i38!466. 

613,626,627 2-476! 

MissouriPac.  Ry.  Co.t?.  Mackey,  127U.S.,205.... 2_9i4 

Missouri  Pac.  Ry.  Co.  r.  U.  8.,  189  U.  8.,  274 2-843,844,847. 

Mitchel  V.  Reynolds,  1  P.  Wms.,  181 1—203  700* 785  788 

190 ...!!!!  1-782. 

Mitchell  V.  Great  Works  Milling  and  ManTg.  Co.,  2  Story,  648, 653 ... .  1—673. 

Mitchell  r.  Ha wley,  16  Wall.,  544,  546,  647 2—795! 

Mobile  v.  Kimball,  102  U.  S.,  691 !!!!!!!!!  1—388! 960  1023 

697 J JQ27 

Mobile  V.  Louisville  &  Nashville  R.  R.,  84  Ala.,  115. 126 !  1— 592. 

Mogul  Steamship  Co.  v.  McGregor,  Gow  &  Co.,  21 Q.  B.  Div.,  554  ....".'.*  I— 75.204,  207,  629. 

689. 

23  Q.  B.  Div..  598 1—75, 204, 630. 689. 

[1892]  App.  Cas.,  25....  1—75,204,  689,  781, 

792. 
Monongahela  Mav.  Co. »-.  U.  S.,  148  U.  S.,  312 1—740-  2—914 

329,330 .".'.".".'  1-865.'  " 

336 1—934. 

Montague  &  Co.  r.  Lowry,  193  U.  8.,  38 2— 459, 460, 513,  .527 

w              «.  583, 663, 804, 998, 

Moore  r.  State,  96  Tenn.,  209 2—973 

Moores  i-.  Bricklayers'  Union,  23  Wkly.  Cin.  Law  Bull!,  48 1—287 

More  r.  Bennett,  140  111.,  69 ;  i_^^' 

Morey  r.  Light  Co.,  38  N.  Y.  Super.  Ct.,  185 2-98 

Morgan  r.  Louisiana.  118  U.  S..  455,  465 1—1027 

Morrill  r.  Railroad  Co.,  55  N.  H.,  531 !!!!!! i_9q.>  " 

Morris  &  Essex  Railroad  v.  Prudden,  6  C.  E.  Green  (20  N.  J!  Eq  )  530 

532 '       '  ,_^^ 

Monis  Run  Coal  Co.  v.  Barclay  Coal  Co.,  68  Pa.  St.,  173 i_9i,  201, 440, 613, 

745,     766,     795; 
2—276. 

184,186,187 1—401-  2—469 

Moi^e.  etc    Co.  r.  Morse,  103  Ma.ss..  73 2-831,'l007.     ' 

Mosher  r.  Railway  Co.,  127  U.  S.,  390 ^-88 

Mount  Adams  &  E.  P.  Inclined  Ry.  Co.  v.  Lowery  {see  Railwav"  Co*  r" 
Lowery). 

Mugler  V.  Kansas,  123  U.  8.,  623,  672 1— .594 

Mulcahy  v.  Reg.,  L.  R.  3  H.  L.,  306,  329 ."!.'!'! ,_247" 

Munnr.  niinois.94U.S.,113 1-433*738  740 

Murphy  V.  Christian  Press,  etc.,  Co.,  38  App.  Div.  426;  56  N.  Y.  Supp.,  597.  2-10-20.     '      ' 

Nathan  r.  Louisiana,  8  How.,  73 ,_«,-  ..^  -^ 

National  Benefit  Co.  v.  Union  Hospital  Co.,  45  M"inn!,"272!!!!! 11^2*  7^ 

National  Distilling  Co.  v.  Cream  City  Importing  Co.,  86  Wis..  352.355'!!  1-858'-  2-126 
Na  lonal  Enameling  &  Stamping  Co.  ..  Haberman,  120  F.,  416  2^8^  ' 

National  Harrow  Co.  t-.  Hench,  83  F.,  36  2_«i-^' 

National  Harrow  Co.  r.  Quick,  67  F..  130  oZ^' 

National  Phonograph  Co.  v.  Sehlegel,  128  F.,  733  ..! 2-«y>" 

National  Tel.  News  Co.  v.  Western  Un.Tel.Co.,  119  F.',"^!! *Im* 

Navigation  CO...  Winsor,20Wall..64 '. !!!!!!!!!  1-94  '204,  207.  786. 

^ 1-43L 

Nestert-.  Brewing  Co.,  161  Pa.  St.,  473!!!!!!!!!!! ]llt  74=  .^  .0^ 

Newburyport  Water  Co.  ..  Newburyport,  193  U.S..56l!!!!!! J;^3, 74.5, 766. 796, 

New  Memphis  Gas  &  Light  Co.  v.  Memphis,  72  F..  592 JZeo? 

New  Orleans  r.  U.S.,  10  Pet.. 662 'TZl' 

New  Orleans  Gas  Co.t-.  Louisiana  Light  Cx).,U5  u!s.;66i)*!!! '"  i-^* 


XXVI 


CA818   CITED. 


I 


» 


»;<;^^ 


127  III.,  168.. 
867 


Nonie„,eI.r.  M..,„,  x„r<i.„reU  a>..  [IfW]  App.  C.  ■saR.;:;: 

667 

Norfriiv  I.  \v  *»  ^         -.  [18981  1  Ch.,  680 

Wolk  &  Western  Ry.  ..  simg,  IMu'g  ^Y 1-737. 

Wmgtonr.  Wright,  115  U.S..  188. 2CM.*:  *-^^- 

NorthernSecuritle*Co.r.  U.8.,MSU  8    im  *~^^- 

- Z — .^86. 


«--1020. 
2—732. 
1—607. 
1—740, 957. 
2—920. 

1-700,785,788. 
1—786. 
2—1008, 1008. 


198. 
356. 


586,     634, 
746,  804. 

2— «20. 

2-627. 62a 

2—1002. 


666. 


o. 


0»te!  r.  Xational  Brnik,  lOO  U.  8.,  289 

OIlCo.  '.  Adoue,  83Tex.,650  1—707. 

Ollvemr.  Insurance  Go.,*3  Wheat   198  " 1—797. 

Ontario  Salt  Co.  t\  .Merchant*.'  «;«i#V«  '  tL*.V 1—316. 

Oregon  Sh„«  u„e  .  S^X.I^  u  •s^.lo"':^ *■■• "" t-^.m.7^ 


Oregon  Short  Line  &  IT.  N  Uvea  ^'kIUu        ^ 

51  F..465 ...     .[  Northern  Pm.  R.  Co..  61  F.,  168; 

Oregon  .^team  NiiTi«»tion"co."i" -." winKM-'/i  Wali.* M.l.'.Z " ' " ' 


08. 

88. 
70. 


0*orne  r.  Detroit,  32  F..  36         '—108. 

«KM»yani'.AnnsCo..l(i3rVs.V26il268""  * '~^^' 

*'.  Aiken.  s.e  Packet  Co.  r.  Aiken.  ~*^'- 


f-547. 

1-868. 

1—702;  2-^4,874. 

1011. 
1—400. 
2—317. 
2-296. 


Ouachita  Packet  Co. 

0.1ey  Stave  Co.  ..  V..^rii;;te^;—;\;2: 


of  N.  Ain«r.,TOF.0l5.  t-«9. 


■i^ltel  Cot  V.  Aiken,  121  € 

fmkm.  Co. 


S..  444 


mtet  Co.  t-.  Catlettsburg.  106  U.  a.  669 "* 

Bicket  Co.  r.  Keokuk.  96  IT.  8    80  • 

P»icketC^.  r  St.  Loui«,10or.a,4^ "  

^risian  Comb  Co.  r.  Exchange.  92  F    721 

l^atter^on  Case.  3.=»  P..  ,m,  629W 

Piitterwn  r.  Kentucky  97  r  g    50^ 

^«Ii.Viiginia.8Wan..l«8.iii.. 

ftucton  r.  Douglas,  16  Ve«.,  240,  a«  * 

fm  r.  Waggoner.  5  Ha.vw    19  

pearsaii  r.  Great  ^>nhernV  a.;.' i6i'u;8:.'ii;i7i* :::::::::;;; 

on  r.  Yewdall,  95  V.  8..  2»i... 

r.  Burr.  ION.  Y..  294 

r.  Saalheld,  fl892]  2  Ch..  I49  

Pembina  Mining  Co.  r.  Penn..  128  U.  s'l'si" 

Fennsylvaolar.  Wheeling,  etc.,  Bridge'c«.;i3Ho;.:.5li 


BefU»on 

Peekr 

Peels 


.  1—740,967. 

.   1—740,967. 
.   1—739. 

•  1-740,967. 
.  2—943. 

•  2-.8O4.1016. 
.  2—516. 

1— 3i4.740. 

1-739. 

1— a58. 

2—188. 

2-498.  .508. 

2—110. 

2—312. 

2--222,263,452,45 

461.488,50(1 
1—359. 
1—858. 
«^786» 
2-914. 
1—844. 


CASES    CITED. 


XXVII 


Pennsylvania  R.  Co.  t'.  Commonwealth,  7  Atl.,  368,  371 2—222. 

Pennsylvania  R.  R.  Co.  r.  Hughes,  191  U.  S.,  477 2—660. 

Pennsylvania  R.  R.  Co.,  r.  Knight,  192  U.  S.,  21 2-667. 

Pensacola  Tel.  Co.  r.  Western  Un.  Tel.  Co.,  96  U.  S.,  1 1—68,354,355,737; 

2—515. 

Pentleton  r.  Rieke.v,  32  Pa.  St.,  58,63 i— 5. 

People  r.  American  Sugar  Refining  Co.,  7  Rey.  &  Corp.  (Cal.).  83.* 1—257. 

People  V.  Batchelor,  22  N.  Y.,  134 1—624. 

People  v.  Barstow,  6Cowen,  290 2 ise. 

People  V.  Butler  Street  Foundry  Co.,  201  111..  236 2—1033. 

248 2—969. 

People  r.  Caldwell,  71  N.  Y.  Supp.,  66t 2—87. 

People  t'.  Chicago  Gas  Trust  Co.,  130  111.,  268,  292,  297 1—404,470,799: 

2—222. 

People?'.  Ferry  Co.,  6«  N.  Y.,  71 1—342. 

People  r.  Fisher,  14  Wend.,  1 1 443 

9 1—89,201.202. 

18 1-118. 

People  r.  Gillson,  109  N.  Y..  389.  398 2—276. 

People  r.  Mather,  4  Wend.,  230,  254 2—110. 

People  *'.  Milk  Exchange,  145  N.  Y'.,  267 1—799;  2—197. 

People  r.  Miner,  2  Lans.,  396 1—342. 

People  t'.  North  River  Sugar  Refining  Co.,  54  Hun.,  354 1— -202, 257. 

366 1—799. 

People  r.  Sharp,  107  N.  Y.,  427 2_969. 

People  r.  Sheldon.  139  N.  Y.,  251.  264 1—795. 

People  t'.  Vanderbilt,  26  N.  Y..  287 !^1!.]*!!  1^42 

2»NY.,396 .*.'.■;  1-341,342,586. 

People  ex  rel  Tyroler  r.  Warden,  157  N.  Y.,  116 2—87,88. 

Perkins  v.  Lyman,  9  Mass.,  522 1—204. 

Perkins  v.  Nichols.  11  Allen,  642 " "  "  i_2i2. 

"Permoli  v.  First  Municipality,  3  How.,  589 1— 8-2o! 

Petri  V.  Commercial  Bank  of  Chicago,  142  C.  S.,  644,  650 1—675! 

Perry  v.  Gibson,  1  Ad.  &  Ell.,  48;  3  Nev.  &  M.,  462 2—973. 

Petit  r.  Minnesota,  177  U.S.,  164 2—146 

Pettibone  v.  U.  S.,  148  U.  8.,  197 ".'".  l_266,286. 

203 1-455' 

Philadelphia  r.  13th  &  15th  Street  Passenger  Railway  Co.,  8  Phil.,  648.  1—586! 

Philadelphia,  etc.,  Co.  v.  Howard,  13  How.,  307,  344 2—997 

Phippen  r.  Stickney.  3  Mete,  384,  389 [[[['  i_2i3'  803 

Phipps  .'.  Jones,  69  Am.  Dec.  711  (20  Pa.  St.,  260) i_623 

Pickard  r.  Car  Co.,  117  U.  8.,  34 1—737 

Pidcock  r.  Harrington,  64  F.,  821 .................  1—623;  2—17.79.80, 

237. 
Pierce  v:  Fuller.  8  Mass.,  222 i_7j^ 

Pigot'sCase,llCo.Rep.,26b,27b !!!!!.!!!!!.'.'"!"!  2-^74^ 

Pine  River  Logging  Co.  v.  U.  S.,  186  U.  S.,  279:  89  F.,  907 2-997 

Pittsburg  Carbon  Co.  r.  McMillin,  119  N.  Y.,  46 i— 613 

Pittsburg  &  Sn.  Coal  Co.  r.  Bates,  156  U.S.,  577 1-978* 

Pittsburg  &  Sn.  Coal  Co.  r.  La.,  156  U.  S.,  590 ",,  1—739! 

697..... 1—957. 

p.  ,        „  598 i_98i. 

Pleasants  J..  Fant,  89,  U.  S.,  116 2_993 

Plnmley  t'.  Mass..  156  U.  S.,  461 1—739 

Porter  r  Sabin,  149  U.  S.,  478   '.!!!!!!!:!!!!!!:!  2-78.' 

^^^;i;\^'l«l^'S..583 2_8i3. 

Postal  Tel.  Cable  Co.  v.  Alabama,  155  U.  S.,  482,  487 2-546  547 

Powers  t'.  Hurmert,  51  Mo  ,  136-138 *_845' 

Pratt  V.  Paris  Gaslight  &  Coke  Co.,  168  U.  S.,  255,  258  ....".'."'." 2-548 

Prescott  &  A.  C.  R.  Co.  7-.  Atchison,  T.  &  S.  F.  R.  Co.,  73  F..  438 1-609.' 

"•inting, &c..  Registering  Co.  v.  Sampson,  L.  R.  19  Eq.,  462 1-688  708 


II 


I 


■xxvin 

CASES   CITED. 
^«ty  K  Draper.  2  Story,  199 

^Iman  Car  Co.  P.Missouri  Pic  C«    itVn';"*; «-915 

^terb««»h  ..  smith,  m  m^n     '      ^'  ^*  "^^  ^  ■ 2-222' 

" • . 

-•• 1—359. 

Qweeiir.Brye8,iB.&S.,311 

Qiieen  ...Hertford  college.  3  iB-i;;  WW *-«)0. 

1—673. 

^rj^on  &  Amboy  R.  Co..  62  N.  j.  La^  586 
MroadCo...Colll„B,40Ga..5^      ,_^ 

S^^r'''-£""^'"^«"'56o*-:;;;;; 1-202.799. 

K«^lroadCo.r.H«zen,84IlJ..36.. 2-515. 

Railroad  Co. ...  HuHen.  95  0.  8..  465;4TO.';.' 1-306. 

4gg       ••— t — jeg 

K<illK»d  Co.  r.  Mt^Jonnell.  82  P    65* *-998* 

railroad  Co.  r.  Richmond,  19  Wall.,  584 .;;.; 2-476.  503.  501. 

»atlw..r«         «  -689..  1— 6S8,  1029. 

H^w«yCo,r.Becker.32F..849....        1-1023. 

JMMlway  Co.  r.  Clark  r^  F    t«   -^  J" i    700 

Kailwav  Pn  I  n^lL    '^ '  ^^'^  '^  F..  362 '-739. 

«*iw«yCo.r.Goodridge,149U.8..68« 2-22. 

«^way  Co.  r.  Humes.  115  U.S.,  512      1-234. 

»«I  w«y  Co.  r.  LDwery.  74  F.,  4^..  2-18. 

^ flwr^**'    ''"^'^''^•^«U.8..127,i^' l-«46.990. 

2!"r*'^!:'-M^^hven,210hioSt..5^      '-^«>». 

K*ni««y  t.  Temple.  3  Lea,  253  2-19. 

««i»iief.Irvine,7Man.&G    m'i^ 2-310 

Raymond  r.Leavltt.  .6  Mich.;  4^         1-703 

R^?%f*™''^''^^°*Tru8tCo:,i;54'u'«-3;;' '-^• 

Kector  r.  Lip«comb.  141  U.  s..  557  '  ^^ 8-742. 

Red  ..City  Council,  25  Ga.,  386     '  "  ' 2-316. 

«^ '.Smith.  40  F.  s^2 '"^^ 1-665:  ST-SIS 

Reichc  » .  Smythe,  13  Wall.,  164  ''i'^'^ ,_2i3 

Rexr.  Eccle8.3Doug..3:J7.. 1-101 

Rex  i-.8baft8biiry,  8  Howell's  St.  TrVi"' '-440. 

Rexr.  Turner.  13  East..  228.  231        "  2-892 

Hjee  rjlailroad  Co..  1  Black,  379 1-441." 

^h«j^snAm.Desk<S:c.Co..87wir"508 '-353. 

«fchard«  , .  Hugh.  51  L.  J.  Q.  B.,  361  1-702. 

S*".    "•^"°^^«-»7Wi.s.,.503. 2-973. 

Richardson  r.  Buhl,  77 Mich.,632. ...■.";.■;;; 1-785. 

1—446,799:  2-197, 

Kiehard«„„..Mellish.^,.^.^^^^       ,^1 

RWdickr.  Governor.  1  Mo..  147...     1-198. 

Rio  Grande  Railroad  Co.  r.  Brownsville  46  t;,    ■«; ^-^^' 

Robbins  r.  Taxing  Dist..  120  U.  S..  m!,  '  ^ l-5«6. 

1-737.769,964: 

490..  2-59,60. 

498 1— 73«. 

494, 2—497. 

49?;' 1-397. 

1-68.805;  t-l98. 


XXIX 


CA8E8    CITED. 

.  Robertson  r.  Cease,  97  U.  8.,  646 ^    ^^ 

Robertson  r.  Parks,  76  Md.,  118,  135 "  »— Mb. 

Robin.son  «•.  Hibbs,  48  111.,  408.409  410 2—304. 

Roehm  r.  Horst.  178  U.  S.,  1,21 ^Sr-Ul. 

RollerCo.v.Cushman.  143  Mass.,  .-iM..!... 2—997. 

Rorke  t.  Board,  33  Pac.  881-883  (99Cal    196) 1-93,792. 

Roundtree  v.  Smith,  108  U.  8..  269.  1—630. 

Rousillon  17.  Rousillon.  14  Ch.  Div    351 i-^9. 

l'r;J l-78.'>.788 

sS;;;;::::;; *~^- 

Rowand  r.  Commonwealth,  82  Pa.  St    405 1—213. 

Rowe  V.  The  Granite  Bridge  Corporation.  2rpi;k.;  ■^;'347 J"!^' 

Rowena  Clarke  v.  Central  R.  R.  and  Banking  Co.  if  Ga    60  'f"338  " '    i^T-' 
Royer  r.  Coupe,  23  F.,  358 ....  '  ^^^  *•  33»..--  2-/4/. 

Rubber  Tire  Wheel  Co.  t^  Columbia  Pneumatic* Wagon  Co'  tlJJ' 

Rubber  Tire  Wheel  Co.  ..  Victor  Rubber  Tire  Co.,  m  F    8^  '  t^^' 

Rupp,  Wittgenfeld  Co.  v.  Elliott,  131  F    730         '    ^  "^  '  *^ 2-859. 

Russell  r.  Farley,  105  U.  S.,  433  438        -^^• 

Rutherford  r.  Metcalf,  5  Hayw.' (Tenn!)*,* 58; *61,*62: :.*;:;; f"^J- 

Ryder*'.  Holt,  128  U.S..  525  1—339. 

1—439. 

s. 

Saddle  Co.  v.  Troxel,  98  F.,  620 

St.  Louis  r.  St.  Louis  Gas  Light  CoV,  7'o*Mo"69 f"*^' 

St.  Louis  r.  W.  U.  Tel.  Co..  148  U   S    92  *-^- 

ft  J:^""'  v^'  I'  ""■  "^^  "■  ^-^' ^^  Mo:;:^;*265::;:;:: l:^,^'"'- 

^:  i^;^:;^^;,^^^vS^-r  1^  ^  -  --  -  -:  - :  1:^1: 

St.  Joseph  ..  Porter,  29  Mo.  App.,  ^5       "       ^"^^2. 

Salt  Co.  V.  Guthrie,  36  O.  St    666  '^~*^- 

Sandford  r.  Nichols.  133  Mass..  286 1-92,202,766,796. 

Sands  r.  Manistee  R.  Imp.  Co '  123  U  S    288*  ^4  "^r *~*^^-  ' 

Santa  Clara  Co.  v.  Southern  Pac.  R.  R    ns  U  s    w  qiLT  2-^07,824. 

Santa  Clare  Mill  &  Lumber  Co.  ..  Hay;s  76  Cal'  ^7  Z '-'''• 

Saratoga  Bank  t-  King  44  N  ^87'  ^-^''  *-^70. 

Saville  r.  Roberts,  1  Ld.  Raym    '378 *~"*^- 

Sawyer  V.  Hoag,  17  Wall.,  620   '  '-^35. 

Schooner  Exchange  ..  McF^dd'on;  7*  CrV.  'lie  "i^ J"? ^• 

Schooner  Industry,  1  GaU    114  117  1-^78. 

Schollenberger  v.  Penn.,  171  u's    1 *-^^- 

Schwalm  v.  Holmes,  49Cal    665 *~^^- 

Scott  r.  Donald,  165  U.  S    58 2—276. 

Scott  r.  Neely.  140  U.  S    106 ^-739. 

Searight  v.  Stokes,  3  How.,  151*169 ' *-^- 

Secort-  Railroad  Co.,  7  Biss    513      l-«46,582. 

Shafer  r.  Wilson,  44  Md    268*278  *"~283. 

Shaftfiburyr.Arrowsmith,4Ve8.**66 *-^- 

Seldon  etal...  Wabash  Ry.  Co..  105  F*.;?^' *-^- 

Shepard..  Milwaukee  Gas  Co..  6  Wis.,  639..* f"^' 

Sherlock  r.  Ailing,  93  U.  S..  99  1-^88. 

.'oq  *.m* 1—981. 

„,  100  1—408,957. 

Sherry  t.  Perkins,  147  Mass    212   '"^39. 

Shields^.  Barrow,  17 How.,  130  1—108.284. 

Shrewsbury  &  CheatPT  R  rL  ..'oi ^ 1—626 

•*».  •427;  ^.  ■  ''°-  "•  «'««"»»ury  E.  Co.,  1  Sim.  N.  8.,  MIO, 

Simmer  v.  City  of  St."  Paul;  m  Minn."  "■m'iio *"^- 

Stamens  Medicine  Co.,..  Simmons  irr^^" *-^- 

Singer,.,  vvalmsley,  Ked.  c.  ko.  .'^fi  Z^-^-S^;^--  t^S^. 


I 


^^*  CASES   CITEB. 

Sinnot  i\  Diiveiiport,  22  How. .  223, 238 

227  213 ^ — ^^' 

Slnsheimer  r.  Garment  Workers,  77  Hun  "  21 V  '^k  v  '^I :: *~^^'  ^^^• 

8.  Jarvi«  Adam«  Co.  r.  Kn*pp  lil  F    sT"                            '*^'  *^^  " '  •  '^-*^- 
Skinker  I'.  Heman,  14«  Mo    349         "      «— 820. 

sfautr,!?  w!:!'"' "r  ^*"^"'  **  ^'»-  "^pp"  '^"s^sV ::::;;; f-^-^ 

SJttUter  t\  Whiteloek,  12  Ind    338 1—202, 206. 

Smaney  ,..  Greene,  52  I».  2«    *-«73. 

Smithr.  Alabama,  124  tJ.  8..  Ififtim "-276. 

Smith  r.  Bivon.s  5(»F.,a«.        '        1—879,981;  2— 277 

Smith  f.  Oil  Co.,  86  F.,  359 *— 90. 

Smythr.  Ames.  169  r.'s..  466 *-«9. 

1544 «-90,74«.754. 

Smyther.  Fixke,  23  Wall..  374  380* *~-**^- 

Snow  r.  Wheeltr.  113  Mai««.   179  185 1-705,706. 

Soda  Founiain  C4».  r.  Green,  69  F.,  333 '~202- 

Sonth  Carolina  p.  Seymou  1 ,  168  IT '  g    3f  g  ^^7 *~^0'  ^9, 209. 

&>«then. Indiana  Exp. c«.  r.  V. 8.  ixp/c^^mF^m]:::::::::":"]  11^7. 

8«ithem  Pac,  Co.  iM>entou.  146  U  8    202  'kT^'^^^ *-^' 

SmmiefnPiie.Co.r.  l.krl,82F.,69o'    "'  «-1003.10O4. 

SaiBllitm  p«e.  Co.  r.  Hamilton  54  F    468 i-Wl. 

Speer  If.  Skinner,  35  III.. '282 2—993. 

SpringCo.  r.  Knowlton.iOSU  s"4i '"^l- 

5»rin*fleld  tr.  Connecticut  Rlver*k«ii;««dV4CiBi;"ii f-714,819. 

Stafford  r.  fnifersol  3  Hill   3«  <"«»"•  ^«»n.,  es l-^m. 

Stamford  ..  Stamford  Hor^;  RaVln^d  Co:.' iconn  "m '  \~^- 

Standard  Fire  Proofinif  Co.  t..  St.  Loui..Co.  177T0  '  ^ -  l-"^'"^- 

Stanton  r.  Allen,  5  Denlo..  434  .  ^  "  •  * ^ '  -^i"..  o59 2-1008. 

Stanton  f.  Embrv.  93  r  S    548 '—90.202,403,799. 

Star  Brewery  Co.  r.  United'  Brewerie«;  121  F."  m f"^^* 

Starrif.  Mayer.  60  Ga..  546  .  ***  i". /m 2-1032. 

Stater.  Adams,  70  Term..  647 ^^"^2. 

State  r.  Andemon,  5  Kan    90  114 *-«». 

Stater.  Ancker.  2  Rich.  Law' 246* '-*»• 

Stater.  Bryant,  90  Mo.,  534 1-626. 

Stater.  Dayton  A Southeastera  italiwiad/seoh^^^^  ■~^^- 

State  ex  rel.,  elc.. ...  Delaware,  etc..  cri7  F^  '-''^• 

State  r.Gliiiden,  as  Conn..  46  ••"-««» 2_i«a. 

.75 1- '290,411. 

State  tr.  Ooo«1night,  70  Tex    682 I— MO. 

State  r.GrKHlvvlIl,  108.  E.,  is.  »is8*WVamv '"'**• 

State  r.  Grant.  79  Mo.,  118._:.^^^^ ^~'^^ 

Stater.  Harper*  Ferry  Boat  ci*,"  WW  VaMA^'a^ *~^- 

State  r.  Hope.  100  Mo..  347    '^•' "*  "^^  ^••' **<•  »»»• 1-389. 

8tater.McCahill.30N.W.,fiMm'i;    m;  ' *-^ 

8tater.Ma|rrath.44K.XL.,227...     '         " *-'^*- 

8l«ter.  Mttidi,  lianas  (N.C.),  fiOi «— 8W, 

r.Xebrad«Iltetiuin|,Co;,29ifeb.77w' ?~^ 

r.  Qiwrles.  13  Ark    307  1— ♦46.799. 

•••lt«.8chnehinami,M8Mo"*iii *-^ 

8l»ltP.8mltli.l00N.w..4O42a24'ii**i^V'  ■ --^• 

State  ...Smith,  Meigs.  99  T^^'*"^ - •  ^m. 

ttattf.  Standard  Oil  C^.  49 o/stV/w.l* f"^* 

SI»te«.8tewart»fltVt.,27J 1-799:2-197. 

_280] 1—290,441. 

State  1.  Terry,  ao  Mo.,  368... *-*'<>• 

aiit«  t.  Thomas  9«  N.  C.  699  *-«W- 

State  ft  Woleott.  21  Conn.,  272.  io «— 900. 

State  IF.  Wentworth.  65  Milne!  an  ati •~"**^- 


CASES   CITED.  XXXI 

State  of  Pennsylvania  v.  Wheeling  Bridge  Co.,  13  How.,  518  564  |_fwfi  ^«7 

State  Freight  Tax  Case,  15  Wall.,  232,  275 '       '        Jl^'  fir 

272  1— <»68.  1023. 

Steamship  Co.  v.  McKenna,  30  F.,  48..."/'".. \l^' 

Steamship  Co.  v.  McGregor.    {See  Mogul  Steamship  Co.*  'r'.' McGregor.'        ^' 

Steams  Co.  r.  St.  Cloud.  Mankato  and  Austin  Railroad.  36  Minn  425  1-586 
Stephens  &  Condit  Transp.  Co.  r.  Centml  R.  R.Co..  34  k.  J.  ,2  2m"  --m 
Stevens  r.  Pratt,  101  111.,  2O6 '  ^^  Zj;^' 

Stewart  r.  Transportation  Co.,  17  Minn.,  372,391        7    .1'' „, 

Stilwellr.Wilkens,  .Jac,  280 l--'01,213. 

Stockardr.  Morgan,  185  U.S.,  27.. .. ". ^^' 

Stocktons.  Railroad  Co.,  50  N.J.  E(i.,  62] T"!??' 

Stockwellr.  U.S.,13Wall.,a51 i"'^' 

Stock  Yards  Co.  r.  Keith,  139  U.  S.,  128 •"  "T^^' 

Stoutenburg  r.  Hennick.  129U.  S.,  141        J"'^" 

Straus  V.  Amer.  Publishers'  A.ssn..'  177  N.  Y    473 l^'''  '~^- 

Strait  V.  Harrow  Co.,  18  N.  Y.  Supp.,  224, 233*        7     !lf ' ,.. 

Strait  r.  Harrow  Co.,  51  F    819  1— J46,74o. 

"        2-9.  69,   125,  800, 

Summers  v.  Moseley,  2  Cromp.  &  Mees.  477  „    ^' 

Supreme  Lodge  f.  Wilson,  66  F.,  788  —904,973. 

Swanr.  Chorpenning.  20Cal.,  182     1—630. 

Swan  V.  Scott,  11  Serg.  &  R.,  155      '~^^" 

Swann  r.  Swann,  21  F.  299  *— »&4. 

Swift  &  Co.  r.  U.S.,  196  U.S.,"  375,  "396 !~^- 

'        2—822,851. 

T. 

Taddy  &  Co.  v.  Stevens  &  Co.,  20  T.  L.  R   m  102  Fno-  c\^  n 

Tainter  v.  Clark,  5  Allen,  66  ^'^       '       ^'  ^^^  ^ --^020- 

Tallis  r.  Tallis,  1  El.  &  Bl.,  391  ^"^12. 

Taylor  r.Blanchard,  13  Allen  370  1-203,213,786. 

Telegraph  Co.  V.Crane,  160  M^ss    60* *~'^^- 

Telegraph  Co.  V.  Texas,  105  U.  S.,  460  464 *~^^^- 

Temperton  w.  Russell,  [1893J  1  Q  B    715  1—668,737. 

Temple  V.  Com..  75  Va.,  892 *      '        *-289- 

Tennessee  r.  Davis,  100  U.  S    257 sf— 110. 

Tennessee  r.  Union  &PlanteWBank,*152'u.  8* '454*^6*1 i"^"^* 

Texas  r.  White,  7  Wall.,  700  725  ^•»m4M,461 i_^^ 

Tenn.  Coal  Co.  r.  Waller,  37  F    54*5  M7 *~^'^- 

Texas  &  Pacific  Ry.  Co.  r.  Cody,  16iu.S.*,'606'608 f"^^' 

Texas  ^  Pac.  Ry.  Co.  .  Intestate  Comm'ere'^m:;-l^2  U.-8.rm  [i:::  ;:f96';840. 

Texas  &  P.  Ry.  Co.  r.  Southern  Pac  Rv  Cn    41  t      a     ^^^'  ^-  *-^^'^^- 

Texas  Standard  Oil  Co.  r.  AdTu ^S  ^ex    6^     ^'  ^^^^  ''' *-^- 

lJennometerCo.r.Pool,51Hun,157.163'         ^~^- 

Third  St.  &  Suburban  Ry.  ..  Lewis,  m  u! *S ' *457  460 J-H 200,205. 

Thomas  r.  Miles' Adm'r.,  3  Ohio  St.,  274       " ''^''"^ 2-548. 

Thomas  r.  Railway  Co.,  62  F    803    2—317. 

'  1- 817   ■ 1—537. 

.  000 1—467. 

o« 

101  U  S    71  1—468. 

Thomas  V.Richmond,  12  Wall*,  m  355 *-^- 

^ompson-Houston  Elec.  Co.  v.  Jeffrey  Mfg  "co  *  "83*  *F "  "fii'i ^~'^^^' 

Thomley  v.  U.  S.,  113  U.  8.,  313  '  '  ^^* 2-943. 

Thorpev.  Adams,  L.  R.  6  C  P    135 1—353. 

Tfcdalev.  Munroe,  3Yeig.,320*        * *" 710. 

Tode  r.  Gross,  127  N  Y    480      2—312. 

1—439. 


f 


CASES   CITED. 


Transportation  a>.  r.  Pttrkersbnrg,  107  U.  8.,  «M 1-957, 959. 

TrostCo.r.  Clark,  92  F.,  298, 296, 288 2—97. 

Tulk  r.  Mohay,  2  Ph..  774 «— 1020. 

Tuttle  r.  Matthews,  2S  F.,  98 l—hi. 

Tyroler,  People  ex  rel.  r.  Warden.  187  N.  Y.,116 «— 87,88. 

V, 

Union  Pae.  Ry.  Co.  r.  Wyler,  168  U.  8.,  288 , t-M7. 

U.  8.  V.  AddyHton  Pipe  &  Steel  Co..  78  F..  712,  716 1— 7S9,760. 

86F.,271 1—980,991,992; 

8—61,  62,  278,  817, 
676, 1004. 

279 1—1008:  8—161. 

281 2—323,820. 

28a 2-47. 

294 £—276. 

(See  aim  Addyston  Pipe  and  Sted 
Co.  V.  U.  8.) 

U.S.  r.  Amedy,  11  Wheat.,  892,  412 2—915. 

U.  8.  r.  American  Bell  Tel.  Co.,  159  U.  8.,  648,668 2-^7. 

U.  8.  r.  Bell  Telephone  Co.,  128  U.  8..  315, 367 t— 684,619. 

U.8.r.  Auon.21  F.,  761,  768 1—339. 

U.  8.  r.  Armstrong,  2  Curt.,  446,  248 1—64,198. 

U.S.  r.  Babcock,  SDill.,  686.... 1—456. 

U.S.  v.  Bell. 81  F.,880 2-972. 

0.  S.  r.  Bevans,  8  Wheat,  336 2—850. 

U.  S.  t'.  Brawner,  7  F.,  86 1—47,58. 

U.  8.  r.  Britton,  107  IT.  S.,  666,  670 1—65,176. 

U.8.r.  Britton,  108  U.  S.,  199-206 1—64. 

U.S.  V.  Cadwallader,  69  F.,  677 2—635. 

U.  8.  n  Cam,  106  U.  S.,  611 l_«5. 

U.  8.  V.  Clark,  Fed.  Cas.  No.  14806 1—304,536. 

U.  8.  v.  Coal  Dealers' AsBn.,  86  F.,  232 1—980,1007;  2—62, 

276,278. 

U.  9.  v.  Oo<didge,  1  Wheat,  418 i— 64. 

U.  8.V.  Coombs.  12  Pet,  ?2 , 1—363. 

U.  8.  V.  Coppersmith,  4  F.,  198 1—64,198. 

U.  8.  t<.  Cruikshank,  92  U.  8.,  542,  568 1-6.5. 

658 1-78. 

U.  8.  V.  Debs  (Me  0^  In  re  Debs)  64  F.,  763 1—459. 

764 1-662. 

724 1-842. 

fl6F.,211 1—662. 

U.  a  w.l,C.  Knight  Co..  60  P.,  806, 934 1-357. 

166U.  S.,  1 1—429,434,642,644, 

668,680,681,736, 
738,806,810,960, 
1081,  1083; 
2—62,  72,  168,  189, 
199,226,256,317, 
322,337,459,460, 
497,531,673,668, 
770,820. 
9 2—506. 

1« l-«)2,957;  2—116. 

585. 
" 1-601;  2-624,626. 


CASES   CITED. 


XXXIII 


D.  S.  V.  Elliott, 


62  F.,  801 ,  ^_^ 

64F.,27 • 

U.  8  t'.  Fowkes,  49  F.,  50 ......* 

U.  &  V.  Freight  As.sociation,  166  U.S.,  290.    (SCcU.srv.TranslMo 
Freight  Assn.) 

U.S.f.Greenhut  60F.,  469 j 

U.S.r.Hess,  124  U.S., 483 ....."... 

U.S.!'.  Hill,  1  Brock.,  156 !.!............ 

U.S. V.Hopkins,  82  F.,  529 

U.S.r.Howell,  11  Wall.,  436,437...*" \~\'-^ 

U.S.t».Hudson,7Cr.,32 ZIZIZIIZ^ 1-61594 

U.8.r.JellicoMtn.Cotil&CokeCo.,46F.,432 ]['"]    i_    ' 


1—361. 

1—47,  58. 


-257. 
1—173. 
2—892. 
1—771. 


U.  S.  V.  Joint  Traffic  Asn'i.,  171  U.  S,  505 


558. 


201,257,770,813, 
980, 1006;  2—276, 
278. 
2—61,  92,  189,  221, 
225,257.278,469, 
460,510,527,745, 
746. 
2—244,58.5. 

^^ 2—105. 

^^ 2-162,165,276,277, 

282,286,^82,783, 

840,866. 
569,671 2_^68 

'"'^^ 1—1025. 

,-  ^ 5/6,577 Q    97« 

U.  8.  V.Kane,  23  F.,  748 J"^'^' 

U.  S.  V.  Kilpatrick,  16  F.,  765 J"^*' 

U.  S.  v.  Kimball,  117  F.,  156, 161 ;;.' ,~?J^- 

U.S.t-.  Kirby.7WaIl.,482....  ™^- 

^^^  1—305,707. 

U.  S.  V.  Lee,  106  U.  S.,  li'6, 220 i"^'^^" 

U.8.r.  Moone.v,  116U.  S.,  104,107!... Z~V^' 

U.  S.  r.  Morris,  14  Pet,  464,  475 9'^' 

U.  S.  V.  Morsman,  42  F,,  448 2—486. 

U.  8.  V.  Nelson,  52  F.,  646 ...,, 1—^6. 

U.  S.  V.  N^irthern  Secur.  Co.,  li  F  "721 «-182,434. 

725 2-260,278,627. 


193  U.  S.,  197 


198 
356 
404 


2—276,286. 

2-586,634,666.746, 
804. 

2—820. 

2—627,628. 


U.  S.  V.  Northwestern  Exp.  Co.,  164  U.  S.,  eSsZ 1~IT' 

U.  8.  w.  Palmer,  3  Wheat,  610 2—915. 

m'.'.'.'.'.'.'Z]'," 1-4:^,705. 

631........ 1-706. 

U.  8.1;.  Patterson,  55  F.,  605  1— 7U5. 

U.S.  ».  Pridgeou,lT3U.S.,  48!. 1-291,302,469. 

V.8.V.  Reed,2Blatch.,4.35,419....'." *~^^- 

U.  S.  v.  Rogers,  23  F.. 658 [[[ 2—895. 

U.  S.  t'.  Saline  Bank,  1  Pet   ioo 1—47,58. 

U.S.  v.  San  Jacinto  Tin  Co.l  125  U."s"273,"285**" f"?^' 

l*.  a.  V.  Sanborn,  28  F.,  299,331  302  --1—583,619. 

U.S.v.Sauges,  144  U.S., 310.. '........"!!! 2—972. 

U.  S.  V.  Simraonds,96  U.S., 360 1-^8. 

U.  S.  V.  Speed,  8  Wall,  77  84 1— (6,173. 

U.  S.  V.Swift  &  Co.,  122  F.  534 ^-^7. 

U.  S.V.Terry,  39  F.  355  2-.m 

-  Ss — Oi 

11808— VOL  1—06  M III 


-835. 


i 


i;    ;i 


^^^^^                                     CASES    CITED. 
ll.a».Tmn».Ml8«,uriFrelirhtAiiH..88F..440. ,    ,«.,  ««,  «i« 

Ron     iTfi  *— iOA  ooU,  618. 

^*^"* 1-C6\430.605.618, 

647. 
M6  U.S..  290 1-735,731.842,852. 

923, 926,928,  £81, 
936:  2-51,  91, 
162,189,221,225, 
244,256,278,322, 
459,460,509,627. 

^*-  • 2-316. 

312 ,_74o. 

313.326 i_«i,. 

323 jj-157. 

327 1—762. 

328 2—586. 

329 2—873. 

331 2-638. 

382 2— 4>1  688. 

— -339,8J0,342 2-276,286. 

U.  8.  r.  Thomas,  55  P.,  381 "••  5^— 167,746. 

U,  8. «.  Thompson,  12Wwy.,'l56,  31  F.;  831 ".".;; l'^ 

U.  8.  V.  Trumbull,  46,  F.,  755 1—460. 

U.  8.  V.  Tynen,  11  Wall.,  96..]. *~*'^- 

U.S.*.  Union  Pacific  Railroad  Co.,  VlU.' 8..' iiVg':.'.*:"^^^^^^^^^ 1-i'n  67^  tor 

U.  8.  w.  Waddell,  112  U.  8  ,  76  '—1/7,673,706. 

U.  8.  V.  Walsh,  6  Dill.,  68 1-173,174. 

u.s.v.w.u.Tei.co..6op.Vi,';i";.r."'.";:r' i~s?- 

U.  8.  t».  Williams,  1  Cranch  C.  C.  178  .  «       ^• 

U.  8.  V.  Wiltbei^er,  6  Wheat..  76,  96 J^^^Z aZ!«* 

U.  8.  V.  Workingmen'8  AmalR.  Council  54  F   9cu ? 

«^MMmm.  wuacii,  M  J.,  994 1-202,266,291,860. 

^^ 1—302,459. 

*r 1^.. 1—202,469. 

U.  8.  Chemical  Co.  v.  Providem  Chemical  Co.^ti'pi'iie *~!f?'^'^- 

U.  8.  Consol.  Seeded  Raisin  Co.  ..  Griffin  &  Skelly  Co..  li* F.:364;::::  ll^]^ 

U.  8.  Exp.  Co.  t'.  Henderson,  69  la.,  40  .  ^ !~?S' 

Urmstonv.  Whitelegg.63L.T.(N.8.).466. f"1Z' 

Underwood's  Case,  2  Humph.,  48.  49 ,    !?r 

Union  Pac.  Ey.  Co.  v.  Chicago.  R.  I.  &  p.  Ry."^::*6VF.:'3;«;;iw:iii;;;  Jl^; 

V. 

Van  Horn  «.  Van  Horn.  62  N.J.  Law,  286 ^    ^, 

Veazie  ir.  Moor,  14  How..  568,  674 f~!^o^ 

Verdin  ».  St.  Louis,  131  Mo.,  26 *  '• 1-25., 392. 

Vicksburg  tr.  Tobin,  lOOU.  S..  430  !"."] 2—560. 

Victor  Talking  Machine  v.  The  Fair  128  P    424 i~^^^' 

Vickery  t.  Welch,  19  Pick..  523  2-786.868. 

Vidalt;.Girard'.sExra..2Hovv..lW,'i97.'l*;; f"!??®" 

Village  of  Pine  City  V.  Munch.  42  Minn,  342..    ,    fZ" 

Vnkan  Powder  Co.  «.  Hercules  Powder  Co.,  96  dalV,  sVo:.'..;.'.;:'.';;::  1-^2-808.1006 

t 
WW  • 

Wabash  R.  R.  Co.  v.  Defiance,  167  U.  8.,  88 . .  ,    ;^„ 

Wabash,  etc..  Ry.  Co.  t^.  Illinois,  118  U.S.  657. .'.''.".' :~Tl' 

'  ^^ 1-354,3: 

'^'^ 8-604. 


CASES   CITED. 


XXXV 


Waffle  «.  Vanderheyden,  8  Paige,  45 1—863 

Walker  V.  Collins,  167  U.  S..  57.  59 ........."."!.!  2^548. 

Walker  v.  Cronin,  107  Mass.,  585 1—284." 

Wall  V.  Thomas,  41  F.,  620 '.[..."  1—624 

Wallace  r.  Lincoln  Savings  Bank,  89  Tenn.,  631 2—310. 

Walling  t'.  Michigan,  116  U.  S.,  446 1—737,739. 

— ^^—  464 i^73g^ 

Walsh  V.  Dwight,  68  N.  Y.Supp.,  91 /..*".  2—1015,1017. 

93 ;j 277  279 

Ward  t'.  Byrne,  5  Mees.  &  \V.,  547 1—786. 

— 649 .7."!.;!'.;;.'!  1-75.' 

Ward  V.  state,  2  Mo.,  120 2—891 

Warew,  Curry,  67  Ala.,  274 2— 82L 

Warren  V.  Exchange,  52  Mo.  App.,  157-167 i—eso 

Warren  v.  Paving  Co.,  115  Mo.,  572,  680 2-660,562. 

Waterhouse  t;.  Comer,  55  F.,  149 '..'.'.'.'.'.'.'.'.  1—361* 

Watson  V.  Fuller,  9  How.  Pr.,  425 '*...."....!!  1—368 

Watson  V.  Jones,  13  Wall.,  679 ". .,."'...         2—565 

Watson  v.  Williams,  36  Miss.,  331,  341 ..........!!....  1— 694! 

Weare  Commission  Co.  V.  People,  209  111.,  528 2—729 

Wedding  t'.  Meyler,  192  U.  S.,  573 7.!!*!!!!!!!  2—872 

Weeks  v.  Smith,  3  Abb.  Prac.,  211-214 2—839 

Weirv.GasCo..  91  F.,  940 "*-.!!]!.!..]]!!.!      2—78 

Weiss  t'.  Herlihy,  23  App.  Div..  608;  49  N.  Y.  Supp.,  81. 2-92 

Welch  «.  People,  30  111.  App.,  399,  409 "  i_^ 

Welch  V.  Phelps  &  Bigelow  Windmill  Co..  36  S.  W.,  71  (89  Tex.,  653)       2-277 

Welton  ..  MLssouri.  91  U.  S..  275 .':  1-739;  960;  2-515. 

280...  t J i02S 

West  Viiginia  Transp.  Co.  t;.  Ohio  R.  Pipe  L.  Co.,  22  W.  Va.,  600....!!!  1-222,688,724,799. 

^^~'~~  625  j     oAfi 

Western  Union  Tel.  Co.  v.  Ann  Arbor  R.  R.  Co.,  178  U.  S..  2S9 . .'.'.'.".'.'.  i-5is[ 

243 2 — 555 

Western  Un.  Tel.  Co.  v.  Amer.  Un.  Tel.  Co.,  65  Ga.,  160 i_20';  206  688  724 

Western  Un.  Tel.  Co.  v.  James,  162  U.  S..  650,  6d6 l_i027 

Western  Un.  Tel.  Co.  v.  Penn.  R.  R.  Co.,  195  U.  S..  540,  547....:....".'.*;;  2-707  * 

120  F.,  981 ;;;  2-707; 

123  F..  33, 36  ...  9 a'mi  "^ivt 

Weston  r.  Ives.  97  N.Y..  222-228 i-l^' 

Wetmore  1-.  Mellinger,  64  Iowa * li;^ 

Whipple  V.  Cumberland  Cotton  Mfg.  Co.,  3  Story,'84 2-972 

White  V.  Brownell,  2  Daly,  329,  337.  342,  350;  3  App.  Prac.  (NVs;)",'3i8;;  l-63o' 

White  r.  Parkin,  12  East,  678 9!^' 

Whitehead  &  Hoag  Co.  v.  O'Callahan,  139  F.;  243 «~Lo' 

Whiteside r.Haselton.  110  U.S., 296 '" Z'^^'  ,    „^ 

Whitney  r.  Fairbanks,  54  F.,  9  i5. .  ' " "  i~:f'  *"^^*- 

Whitneyr.Slayton,  40Me.,  224...  " J^'^l 

whittaker  v.  Howe,  3  Beav.,  383 ;;;;;;;;;;;;;;;;;;;;;;;;;;;;;  rj,tm,  205. 786. 

Whitwell  t;.  Continental  Tobacco  Co.,  125  P..  464 ^Jife  lOl-i  loia 

Wickens  r.  Evans,  3  Younge  &  J.,  318 ,    !r^i2i  ' 

Ztir  xf?'  ''^'  '•  ''*^''*^^  *  ^-  »•  ^«-  73  Mo.",  m;;;;;;;;;;;;;;-  \zf^"^ 

Wight  v.  U.  8.,  167  U.  S..  516  .  t    ^w>,.aw. 

Wilbur  r.  How..  8  Johns.,  444 ..".".'.'.'.'. 2-1025. 

Williams  r.  Fears,  179  U.  S.,  270  1—803. 

Wilson  r.  Blair,  119  U.S.,  387.  *. ' l~^^- 

Wilson  V.  McNamee.  102  U.  S.,  572 f^?' 

Wilsonv.  Rousseau,  4  How..  645,  674....        «    ^' 

g^g 2—186. 

Windsor  I,.  McVeigh,  93u.s.,274',*282,"2i';;;;;;; ' !"!??• 

wisconsint;. Pelican  Ins. Co..  127 U.S., 265 ;;;;;;;;;;;;;;;;;;;;;  ain 


^^^^'  OASES   CITED. 

r!!J'"*!l'  ^^'  ^  ^^^"  »».  262  ..... . 

Woodward  r.  Alston.  T2  Hei8k..  681 >-a», 

Wootonw.  H!iikle.20Mo..290..        «-aW. 

Worden  r.  Searls,  121  U.  8.,  26 ** *-«)8. 

* S— 839. 

Y. 

Tl'^Xf -ft"'-''-  '^^*"*»«*  ^^*'«» .^^ 

rates  Case.  4  Johns,  317.  373 »-«21. 

Yatott.  TheQueon.14  Q.  B.  D    648 1-339. 

y<»ton  t.  U.  a,  5  Cr..  281 8-«e«. 

Ylck  Wo  t«.  Hopkins,  118  lJ.8.,"856.*86i" '-*'»• 

2—139. 


FEDERAL 
ANTI-TRUST  DECISIONS. 


VOL.  1 

1890-1899. 


1898]    UNITED   STATES   v.  JELLICO   MOUNTAIN 
COKE  &  COAL  CO.  ET  AL.« 

(Circuit  Court.  M.  D.  Tennessee.    October  13,  1890.) 

[43  Fed.,  898.] 

preliu.i„arrSrctl  wm  n^  T'"^  '^  'Jefendants'  affidavits,  a 

indemnifying  birLca^"'""*."^  T"*"^'  "'  P""°««  ^^^  -<> 
1    s  oona  in  case  the  injunction  should  be  dissolved.6 

In  Equity, 
the^ct  T  "''^  "°  "  **'"  ^^^^  ^^  *«  United  States  imder 

the  city  ohz^c^::^^:'7zi^'^'r!'''''''^  ^ 

made  parties  defendant     On  7hf  I.    i    *  ^^<=^*°g«'  ^^^e 
temporary  injunction  wa'  rl^    '    """"^   '"^^^  '^ 

Gl:aM?;SCg;-sX^-  ^-  ^«A  Acting  Atty. 


«  See  also  page  9  (46  Fed.,  432). 
Syllabus  copyrighted,  1891,  by  West  Publishing  Co 
11808— VOL  1—06  M 1 


iS  44  FEDERAL  REPORTER,  721. 

Syllabus. 

G.  N.  Tillman  and  W,  L,  Granheryy  for  defendants. 

Hammond,  J. 

This  is  an  application  for  a  preliminary  injunction  only, 
and  it  appears  to  the  court  better  to  await  the  hearing,  and 
determine  upon  plenary  proof  of  the  exact  facts  those  grave 
questions  which  have  been  suggested,  than  to  decide  them 
now  upon  the  bare  statements  of  the  bill  which  are  so  general 
in  their  character,  and  quite  too  barren  of  any  averments 
of  specific  facts  to  enable  the  court  to  determine  whether  the 
general  conclusions  of  fact  averred  are  true,  particularly  in 
view  of  the  affidavits  of  defendants  denying  some  of  the  most 
important  of  them;  and  in  this  view  it  is  unnecessary  to  hear 
any  counter-affidavits.  The  court  is  the  more  inclined  to 
this  course  since  the  bill  is  not  that  of  a  private  citizen, 
complaining  of  an  injury  to  him,  but  only  by  the  United 
States  [899]  on  behalf  of  the  public,  and  in  pursuance  of  a 
public  policy  of  enforcing  a  recent  act  of  congress  to  prevent 
combinations  in  restraint  of  trade  and  commerce.  It  is  mani- 
fest that  the  act  is  new,  and  this  a  most  important  appli- 
cation of  it.  It  would  more  injure  the  defendants  to  grant 
this  preliminary  injunction  if,  on  the  hearing,  it  should  turn 
out  that  the  case  does  not  fall  within  the  act,  than  it  would 
injure  the  public  to  withhold  the  injunction  until  the  final 
hearing;  and  the  more  since  the  United  States  gives  no  bond 
to  protect  the  defendants  against  that  injury,  as  a  private 
suitor  would  be  compelled  to  do.  When  this  is  the  situation 
of  the  parties  the  rule  is  to  refuse  the  preliminary  injunction, 
and  abide  the  hearing.  The  court  reserves  all  expression  of 
opinion  on  the  subject-matter  of  the  bill  until  that  time,  as 
the  best  for  all  concerned. 


[7211  AMERICAN  BISCUIT  &  MANUF'G  CO.  v. 

KLOTZ  ET  AL. 

(Circuit  Court,  B.  D.  Louisiana.    January  8,  1891.) 

[44  Fed.,  721.] 

Eeceivebs— Combinations  to  Restrain  Trade.— Defendant  and  his 
partner  sold  their  bakery  business  to  complainant  corporation,  re- 
ceiving payment  in  its  stock,  and  defendant  leased  to  it  the  prem- 


AMERICAN   BISCUIT  AND   MANFG.  CO.  V.  KLOTZ.  3 

« 

Opinion  of  the  Court. 
I't'^nT,  «^  *^  !:""°^'  '^'^  conducted,  and  contracted  to  carry 

nostue  claim,  for  an  accounting,  and  a  receiver.    Defendant   Ld 

for  fraudulent  representations,  and  tendered  back  the  stocit  c™^^ 
plainant  was  practicaily  a  "trust,"  organized  to  monSi.e  Te 
bus  nes^  and  bad  already  secured  control  of  35  leadlnrbaLies 
In  12  different  states.  UeW  that,  while  a  case  was  made  for  1 
receiver,  pending  litigation  between  ordinao'  parties  "he  nraver 
::Zi^tT^.r  «r""^  -*  -couTag^  a  "mbtaaUoTm 
X     "  T^\  """^  P"'"""y  '"^S"''  »"«ler  Act  Cong.  July  2 

1890,     to  protect  trade  and  commerce  against  unlawful  restraLt« 
and  monopolies,"  and  Act  La.  July  5.  1890.  lor  the  same  iu^r 

In  Equity. 

W.  S.  Benedict  and  Rome  <&  Grant,  for  defendants. 

Before  Pardee  and  Billings,  JJ. 

Pbr  Cumam.    This  cause  is  submitted  upon  an  aDDhV.a 

Klotz  and  J  itzpatnck,  his  partner,'  composing  the  firm  of 
B  Klotz  &  Co.,  sold  to  the  complainant  theif  biscuirand 
confectionery  manufactory  for  the  price  of  $259  0^  »„/ 
assumption  of  the  debts  of  B  KlSl  Po  V'  '*^  T 
84,000  hich  it  was  unde.tood^an?a^S-'sh3Sr?ai*S 
out  of  the  income  from  the  future  business     T^n^-  -ki 

C3  z  .tir '"  '^  °' '"« "~«"^  i' 

me  good-will  of  the  business  to  be  of  the  value  of  $'>00  000 
^timS  7t  ^f  T  ''''''  ''  *^^  complainant'  corpSl 

of  thetmirntft*:  sXVS^""^"^'  '""^  «^^"*    " 

continued  U,  carrv  StL  h    ■  ^ ^'  y**"*-    ^lotz 

■ !l^:^!':'7on^^hebusm^asa^^  complain- 

•  Syllabus  copyrigh^i;i^i;i^~i^^s^^;;^j^rj^ 


4  44  FEDERAL  REPORTEB,  722. 

Opiniou  of  the  Court 

ant  down  to  some  time  in  November,  when  he  repudiated 
the  sale  and  the  lease,  erased  the  name  of  complainant  from 
the  bakery,  as  agent,  transferred  the  policies  of  insurance 
from  the  complainant  to  himself,  as  an  individual,  then  to 
B.  Klotz  &  Co.,  and,  for  and  in  the  name  of  the  late  firm, 
resumed  the  possession  of  all  the  property  he  had  sold  to 
the  (XMnplainant,  and  the  conduct  of  the  business  of  the 
bakery  and  the  confectionery  establishment.  He  did  this 
without  resort  to  any  legal  proceedings.  He  thereafter 
held  possession  adversely  to  the  complainant,  and  excluded 
it  from  the  bakery.  In  this  state  of  things,  the  complainant 
filed  its  bill  for  an  injunction,  and  for  an  account  and  for 
a  receiver,  against  Klotz  and  W.  A.  Schall,  who  was  alleged 
to  be  co-operating  with  him  in  the  possession  adverse  to 
the  complainant.  Klotz  has  filed  an  answer,  and  he,  together 
with  his  former  partner,  Fitzpatrick,  who  intervened  by 
petition  pro  interesse  suo^  have  filed  a  cross-bill  asking  a 
rescission  of  the  entire  transaction,  i.  e.,  the  sale  and  the 
lease,  and  tendering  the  stock  which  had  been  received  by 
them  as  the  consideration  of  the  sale.  Numerous  exhibits 
and  affidavits  have  been  adduced  by  each  party  upon  this 
hearing.  The  recital  thus  given  shows  that,  in  an  order  in- 
verted from  what  would  be  expected,  we  have  before  us  a 
cause  in  which  a  party  who  has  sold  and  delivered  a  busi- 
ness to  another,  and  become  his  agent,  and,  as  such  agent, 
was  in  possession  of  the  property  sold,  sets  up  a  possession 
adverse  to  his  principal,  asks  for  a  cancellation  of  the  sale, 
and  the  purchaser  and  principal  asks  that  the  agent  shall 
account,  shall  be  enjoined  from  asserting  any  claim  hostile 
to  his  principal, — in  a  word,  for  a  confirmation  of  its  rights 
under  the  purchase. 

The  immediate  question  before  us  is,  what  disposition  shall 
be  made  of  the  res,  the  business  of  the  bakery  and  manufac- 
tory, pending  this  contest?  The  vendor  and  agent  asks  that 
he  be  allowed  to  remain  in  adverse  possession.  The  pur- 
chaser and  principal  asks  for  a  receiver.  It  is  clear  that,  as 
to  this  provisional  disposition  of  the  res,  the  defendant  Klotz 
cannot  be  allowed  to  gain  anything  by  his  ouster  of  his  vendee 
and  principal.  He  must  stand  with  those  equities,  and  none 
other,  which  existed  before  the  ouster.    The  case  as  to  tiie 


AMERICAN   BISCUIT  AND  MANFG.  CO.  V.  KLOTZ.  6 

Opinion  of  the  CJourt. 

!fffl"*?'^?*.*'f  .*  ?^'^*''  """*  ^  '^^^^^^'l  ''nd  determined 
wh   K  J     ^i^u^  '^'^  ^^  ^'"  averring  possession  as  agent, 
which  he  asked  to  have  changed  by  a  decree  into  a  poss^ion 
as  owner,  through  the  cancellation  of  the  sale  and  the  lease: 
that  IS  he  must  aver  a  legal  title  in  the  American  Biscuit  & 
Manufacturing  Company,  which  he  seeks  to  have  avoided 
and  annulled.    If,  as  m  this  case,  he  seeks  to  do  all  this  by 
reason  of  fraud    and  he  establishes  the  fraud,  a  court  of 
equity  will  not  refuse  to  hear  him.  He  would  not  be  estopped, 
for   fraud  vitiates  and   sets  aside  even  estoppels.    Herm 
>^top.  par.  22,  p.  244;  Pendleton  v.  Rickey,  32  Pa.  [723]  St. 

TJa  \  ,'  ^  ^^  ''  "***  ^'^^'PP*'^  fr""*  proceeding  to  set 
aside  the  sale  and  the  lease  by  reason  of  his  agency  Tnd  hk 

obligations  as  trustee,  he  comes  into  court  assailing  and  seek- 

s  that  of  the  complainant.  Under  these  circumstances,  until 
(he  hearing,  the  practice  in  the  courts  of  chancery  is  ^ot  to 
disturb  the  possession  under  the  legal  title  prior  to  the  find 

Sr;/;;^//   "T  •'Ir"^*--  -onj  -  establish^; 
^^Muell  V.  Wtlkem,  Jac.  280,  reported  in  full  in  Edwards  on 

Receivers,  p   28,  Ix>rd  Ei.don,  when  a  similar  question  wts 
presented,  observed :  Hue^uon  was 

for?;L\sr'trtL't*TntrZrso"'a^^  *•"'!?  rp*-^  ••«  -■« 

take  away  tbe  possession  from  Arsons  UoMi^iT,.*„'!f  "^f'^^  ''^  *» 
deeds  not  yet  set  aside  by  deeree."  ''<"<''ng  it  under  the  effect  of 

co,t't"  '%;:'^%'^''  "it  --«  not  the  general  habit  of  the 
^stronJ  t     >  """  r^?  '"'*"^*^*'"^'  ''"d  the  proof  was 

This  i?«  1    f  ^^"^  *'*^^  ^^'  interfered  with. 

Ihis  IS  a  leading  case,  and  gives  what  we  find  is  the  rule 

c^^iction  7h  t  t  f,  ""^  r  *^  ^''^  *he  court  to  the  fclear 
The  Sud  t  ""f  T  ^^'  ^""^  hearing,  be  established. 
terveZ-t  S  ^  T^  ""'^''^  "P*"^  ^y  the  defendant  and  in- 
tervenor  is  false  and  fraudulent  representations  bv  the  agents 
of  the  complainant  in  this:  that  they  represented  tf,!f?.. 
stock  was  fully  paid-un  sfn^t  „k  represented  that  the 

was  none  of  it  n^iH    "P.^**^'''  whereas,  m  truth  and  fact,  it 

and,  to  the    xt'ent  oTth  T^T  T^  '""'^  ^^'"^  »P  >»  ^^^^ 

bakeries  and  r^  S   !  P^'"''  ^^  *'''^"^^«'-  "^  P'ante  or 

eries  and  manufactories  at  an  estimated  value  as  capital 


I 


"  44  FEBEBAIi  REPORTEB,  723. 

Opinion  of  the  CJourt. 

The  stock  delivered  to  the  defendant  and  intervenor  was  not 
paid  up  until  it  was  issued  to  them,  and  was  paid  for  by  a 
transfer  of  the  bakery  and  good-will;  and  then  it  became 
paid  up,  and  they  were  discharged  from  all  liability  to  be 
made  to  contribute  as  shareholders  therefor.    The  testimony 
as  to  what  was  represented  by  complainant's  agents  about 
the  stock  being  paid  up  is  conflicting;  but,  when  viewed  in 
connection  with  the  circumstances  under  which  the  stock 
was  received,  fails  to  satisfy  us,  upon  this  preliminary  hear- 
mg,  that  any  false  representations  are  proved  to  have  been 
made.    The  case  of  the  defendant  and  intervenor,  set  up  in 
their  cross-bill,  whereby  they  oppose  the  appointment  of  a 
receiver,  is  that  of  parties  who  seek  to  rescind  a  deed  on  the 
ground  of  fraud,  which  upon  this  hearing  they  fail  to  estab- 
lish. 

So  far  we  have  considered  the  question  of  appointing  a 
receiver  of  the  property  in  controversy  inter  partes,  and 
mainly  from  the  stand-point  presented  by  the  defendant's 
showing,  and  thereon  such  appointment  seems  proper,  and 
we  should  accord  it,  but  for  an  aspect  of  the  case  originally 
suggested  by  the  defendant,  when  the  case  was  pending  in 
the  state  court,  apparently  abandoned  here,  but  sufficiently 
brought  to  our  notice  by  the  exhibits  of  both  parties.    We 
are  not  satisfied  that  the  complainant's  business  is  legiti- 
mate.   While  the  nominal  purpose  of  the  complainant's  cor- 
poration, as  stated  in  its  charter,  is  the  manufacture  and 
[724]  sale  of  biscuit  and  confectionery,  its  real  scope  and 
purpose  seems  to  be  to  combine  and  pool  the  large  com- 
peting bakeries   throughout   the   country   into   practically 
what  IS  known  and  called  a  "trust,"  the  effect  of  which 
is  to  partiaUy,  if  not  wholly,  prevent  competition,   and 
enhance  prices  of  necessary  articles  of  food,  and  secure, 
if  not  a  monopoly,  a  large  control,  of  the  supply  and  prices 
m  leading  articles  of  breadstuffs.     The  case  shows  that 
an  insignificant  number  of  shares  of  complainant's  stock 
was  unconditionally  subscribed  for,  apparently  enough  to 
quahfy  directors;  but  the  great  mass  was  taken  and  held 
by  irresponsible  parties,  to  be  used  in  parceling  out  as  full- 
paid  stock  to  such  leading  and  successful  bakeries  through- 
out the  country  as  could  be  induced  to  come  in  on  an  agreed 


a 


AMEKICAI.   BISCUIT  AND   MANPG.  CO.  V.  KLOTZ.  t 

Opinion  of  the  Court 

xitiui,  dna  pooled  the  business    of  ^^  t^^  +i.«  i     j- 

expressly  prohibits,  under  severeTenS  ^t  ™"'^<'P»1^««'" 
combination,  in  the  form  of  Trust  nrl/if'  ""^  ''""*'"^*'*' 
acy,  in  restraint  of  trlde  or  rS  "*''^''^^*'  «>•  <=°nspir- 
stat«s,"  and  declarL  punisLrw  '\^'"''' 

monopolize,  or  attemp?  to  mcSopoUzeVrT  "'*'  '^^" 
spire  with  any  other  person  oTpei  to  Z"  V'  '°"- 
part  of  the  common  tradp  nr  L  monopolize,  any 

states."  The  enf^riment  of  fV  T-""  ""^"^  *^»^  ^^^""l 
volved  upon  the  ci^T    °^*''''/«t  i«'  by  the  statute,  de- 

first  and  ^rdt  Sf  ^ i  "o   £  ^^^^ 

or  conspiracy  il'rttrS  oTt^deor '"°^*"'"  '°  *>=«  f«™  of  trust 
amount  or  quantity  of  any  arHcit  "^'^"'""^'•ce,  or  to  fix  or  Itmitthe 

=ir&  «.  p-Vcr^  ^KiLVtn^^.^^ 

mo.^^-,4?/^«;^7^  ^'^nsn?p"'  ^^'  monopolize,  or  atten.pt  to 
to  monopolize,  any  part  of  the  t?!!^'*"  ^"^  "*«  ^^^  or  MrsoM 
this  state,  shall  be  deemwi  euflil  nf  „  PT^eree  within  the  llmK 
thereof,  shall  be  punished  t^  a  fl„/  "'i^'lemeanor,  and,  on  conWction 
Punishm^"^  imprisonmm  not  ex~*  "^r"'"^  five'thoimnd  do" 
punishments,  m  the  discretion  of  t^cl>urt°°    ^^"'  °'"  "^  "<""  ««'<! 

w  crsi:iofai/m:f  r  ^'t  ^^*"*-'  -  -i^^e 

grant;  for  we  tWnk  "P  f  .7^'*  ^^'^*  ^^  ^^^sM\v, 
intended  to  1^  uidtitWf''"'**  T^"^^^^  "  camiot  be 
elusive  rightV  l^Jl    ^^"^""^  *^  ^^^  acquisition  of  ex- 

law-maker  ha,  us^S  tfriTf  ''''"""^•'"'  ''"*  '^^^  the 

used  the  word  to  mean  « to  aggregate  "  or 


e 


44  FEDERAL  BEPORTEB,   724. 


i; 


opinion  cf  the  Court. 

"  concentrate  "  in  the  hands  of  few,  practically,  and,  as  a 
matter  of  fact,  and  according  to  the  known  results  of  human 
action,  to  the  exclusion  of  oth-  [725]  ers;  to  accomplish  this 
end  by  what,  in  popular  language,  is  expressed  in  the  word 
"  pooling,"  which  may  be  defined  to  be  an  aggregation  of 
property  or  capital  belonging  to  different  persons,  with  a 
view  to  common  liabilities  and  profits.    The  expression  in 
each  law  "  combination  in  the  form  of  trust "  would  seem  to 
point  to  just  what,  in  popular  language,  is  meant  by  pooling. 
Now  it  is  to  be  observed  that  these  statutes  outline  an 
offense,  but  require  for  its  complete  commission  no  ulterior 
motive,  such  as  to  defraud,  etc.;  and,  further,  that  the  lan- 
guage is  altogether  silent  as  to  what  means  must  be  used  to 
constitute  the  offense.    The  offense  is  defined  to  "  combine 
in  the  form  of  trust,  or  otherwise,  in  restraint  of  trade  or 
commerce,"  and  "  to  mono|>olize,  or  attempt  to  monopolize, 
any  of  the  trade  or  commerce."    To  compass  either  of  these 
things,  with  no  other  motive  than  to  compass  them,  and  by 
any  means,  constitutes  the  offense.    One  just  and  decisive 
test  of  the  meaning  of  the  expression  "  to  monopolize  "  is 
obtained  by  getting  at  the  evil  which  the  law-maker  has  en- 
deavored to  abolish  and  restrict.    The  statutes  show  that  the 
evil  ^vas  the  hindrance  and  oppression  in  trade  and  conmierce 
wrought  by  its  absorption  in  the  hands  of  the  few,  so  that 
the  prices  would  be  in  danger  of  being  arbitrarily  and  ex- 
orbitantly fixedj  because  all  competition  would  bo  swallowed 
up,  so  that  the  man  of  small  means  would  find  himself  ex- 
cluded from  the  restrained  or  monopolized  trade  or  commerce 
as  absolutely  as  if  kept  out  by  law  or  force.     If  this  is  the 
meaning  of  the  defining  words,  does  not  this  corporation,  thus 
glutfed  with  the  35  industries  of  12  states,  disclose  an  "  at- 
tempt to  monopolize?  "    So  far,  therefore,  as  the  complain- 
ant's business  is  a  combination  in  restraint  of  trade,  or  is  an 
"  attempt  to  monopolize,  or  combine,  in  the  form  of  a  trust, 
or  otherwise,  any  part  of  trade  or  commerce,"  as  these  words 
are  properly  defined,  the  law  stami>s  it  as  unlawful,  and  the 
courts  should  not  encourage  it.    Aside  from  this,  the  com- 
plainant's business,  even  if  lawful,  being  of  the  kind  shown 
above,  is  not  of  that  meritorious  kind  that  it  should  be 
encouraged  by  a  court  of  equity.    The  appointment  of  a  re- 


U.  S.  V.  JBLLIOO  MOUNTAIN  COAL  &  COKE   00.  9 

Syllabus, 
ceiver  by  a  court  of  equity  is  not  a  matter  of  strict  right,  but 
of  judicial  discretion.    Fosdick  v.  Schall,  99  U.  S.  235.    It 
falls  withm  that  class  of  interlocutory  remedies  which  courts 
must  grant  or  withhold,  according  to  a  discretion  conscien- 
tiously exercised,  upon  a  consideration  of  all  the  facts  which 
a  cause  presents,  involving  the  rights  of  the  parties  and  the 
interests  ot  the  public.    The  attempt  to  accumulate  in  the 
hands  of  a  single  organization  the  business  of  supplying 
bread  itse  f  to  so  large  a  portion  of  the  poor,  as  well  as  the 
rich  people  of  the  United  States  should  not  be  favored  by  a 
court  of  equity     It  carries  with  it  too  much  of  danger"  of 
excluding  healthy  competition,  thereby  increasing  the  diffi- 
culty to  the  general  public  of  participating  in  a  most  useful 
business,  as  well  as  adding  to  the  possibility  of  multitudes  of 
citizens  being  temporarily,  at  least,  compelled  to  pay  an 
arbitrary  and  high  price  for  daily  food  ^^ 

UTiatever  we  may  feel  compelled  to  do,  on  the  final  hearing 
rL  tl  rr''        u"^"  recognizing  the  complainant's  legal 

Clear  that  at  this  preliminary  stage,  [726]  with  our  present 
impressions  of  the  character  and  general    cope  of  coiEn 

^^T:-^  T'-  ""^'^'  ""*'  ^-^  *•>«  aPPointZfof  a 
receiver,  to  aid  complainant  to  perfect,  and  peihaus  to  Pn 

large,  h.s  combination  or  trust;  and  the  refusal  o  appoint  a 

receiver  can  result  in  no  serious  and  lasting  inj  "rvT^L 

form  W  tt"' r  ""  ^'"T  ''  '"^'^  °*  -mpfainintcompZ 

hrrit.rrdrrtdiTr"""\^T'^«^ 

h.d  a.         Hty  for  any  ^^:2^!^;^^2^ 

LI  tl  rTuh   Tt" '^  niismanagement  of  the  prlperU-  "end- 
ing ti.e  suit.    The  motion  for  a  receiver  is  denied. 


im    UNITED   STATES    ..   JELLICO   MOUNTAIN 
COAL  &  COKE  CO.  ET  AL." 

(Circuit  Court,  M.  D.  Tennessee.    June  4,  1891.) 

[46  Fed.,  432.] 

•  See  also  page  1  (43  Fed.,  898)^  " 


■ 


I 


«  j 


10 


46  PBDIBAL  REPORTEB,  432. 


Opinion  of  llie  Court, 
and  dealers  In  coal  In  a    city  in  another  state,  creating  a  coal  ex- 
change to  advance  the  interests  of  the  coal  business,  to  treat  all 
parties  to  the  business  in  a  fair  and  equitable  manner,  and  to  estab- 
lish  the  price  of  coal,  and  change  the  same  from  time  to  time  by 
which  it  was  agreed  that  the  price  of  the  coal  at  the  mines  should 
be  4^  cents,  the  freight  being  4  cents,  and  the  margin  of  the  dealer 
should  be  41  cents,  making  the  price  to  the  consumer  13  cents,  and 
that,  whenever  the  price  of  the  coal  is  advanced  beyond  an  ad- 
vance  in  freights,  one-half  the  advance  shall  go  to  the  mine  owner 
and  the  other  half  to  the  dealer,  and  a  penalty  was  provided  by 
line,  of  any  member  selling  coal  at  a  less  price  than  the  price  fixed 
by  the  exchange,  and  by  which  it  was  forbidden  for  owners  or 
operators  of  mines  to  sell  coal  to  any  person  other  than  members  of 
the  organization,  and  for  dealers  to  purchase  of  miners  who  were 
not  members,  but  exempting  coal  used  for  manufacturing  and  steam- 
boat purposes  from  the  prices  prescribed  until  all  the  mines  tribu- 
tary  to  that  market  shoud  come  into  the  exchange,  or  until  the 
exchange  could  control  the  prices  of  coal  used  by  manufacturers. 
Is  within  the  language  of  Act  Cong.  July  2,  1890,  declaring  "  every 
contract  or  combination  in  the  form  of  a  trust  or  otherwise  or  con- 
spiracy  in  restraint  of  trade  or  commerce  among  the  several'  states  " 
and  also  the  monopolizing,  or  combination  with  another  to  monopi- 
liie,  trade  or  commerce  among  the  several  states,  a  misdemeanor.* 

In  Equity.    On  bill  for  injunction. 

John  Ruhm,  U.  S.  Atty.,  Lee  Brooch,  Asst.  Dist.  Atty., 
and  James  TrimUe,  for  the  United  States. 

Tillman  c§  TiUm^n,  Henderson  dk  Jourolman,  and  HiU  A 
Granherry,  for  defendants. 

[483]  Key,  J. 

The  petition  in  this  case  is  filed  against  the  members  of 
the  JSTashviUe  Coal  Exchange.  The  membership  of  the  ex- 
change  is  composed  of  various  coal  mining  companies  oper- 
atmg  mines  in  Kentucky  and  Tennessee,  chiefly  in  Kentucky 
and  of  persons  and  firms  dealing  in  coal  at  Nashville,  Tenn! 
It  IS  aUeged  that  the  purposes,  objects,  and  agreement  of  the 
defendants  are  in  violation  of  an  act  of  congress  approved 
July  2, 1890,  entitled  "An  act  to  protect  trade  and  commerce 
against  unlawful  restraints  and  monopolies,"  and  the  peti- 
tion seeks  to  restrain  and  prevent  the  violations  of  the  act 
by  injunction  under  section  4  of  the  law.    The  first  section 

«  Syllabus  copyrighted,  1891,  by  West  Publishing  Co~ 


V.  S.  V,  JELMCO   MOUKTAIN   COAL  &  COKE    CO.  H 

Opinion  of  the  Court 

"hetm  o/trtr  *r.'  "'"'^^  *="'^*^^''*  «^  combination  in 
tne  torn  of  trust  or  otherwise,  or  conspiracy  in  restraint  nf 

^ade  or  commer^  among  the  several  stetes.'^s  deS  Hie 

^1.      The  second  section  declares  that  "every  person  whn 

StrnsTt' "  r  "'"^  -  --P-  -thTncjr^r:^: 

also.    By  the  fourth  section  jurisdiction  is  conferred  unon 

violations  of  the  act,  and  it  is  made  the  duty  of  district  uttr.,. 
neys  m  their  respective  districts,  under  the  d  rtSn  of  thJ 

fntTJTf  ''  '^^  ^""^  ^"^^-^  ^  instS'roce^l' 
ings  in  equity  to  prevent  and  restrain  such  violations  T^ 
axticte  of  agreement  between  the  defendantsTrS  amln^ 
o  her  thmgs,  that  the  objects  of  this  exch^niriT-TT/. 
all  m  Its  power  to  advance  the  interests  ofZ^.  7'  k 
at  Nashville  tr,  f™of  „ii        1-   "*'^®*®®'*  "*  tl^e  coal  business 

^iny  memb?r  of  .f"""?'^''*'?-     None  others  are  eligible. 

and^St^^'tSrit^^^^^  fr-  i^ 

to  Nashville  shall  fnrf!;!! '»  Nashville,  or  ship  any  coal 
and  every  £fr  ''''*^'*  ^"1^  rehnquish  all  interest  of  any 

will  fr  m  tte  't^'^tTrist  k'TT'  "'  ^™''-    ^^^  ^-^anS 
sold  in  Nash,1lk     SaT?     /"T  "*  ''^'^  ^"^^  '^^^^  ^ 

the  mines  at  Scents  minit''''^  ""  ^Z"  '  *""  ^  ^^'"^"^  -^ 
lump,  and  fretht  £;"'  ]     "?  ^T  ^"^  ''"^*'^'  °*  ^^  P«"nds 

No.  2  to  be  v!l  td  atTcrnts  a7thr^- ''  T*^  ^'  ''"^^^^ 

'^-rfi^ihrz^^^^       "ceL^thrd: 

-e  owneitS  '^^X'^Sr  S^/H:^ 


46  FEDERAL  REPOBTER,  433. 


>l 


, 


Opinion  of  the  Court 

found  guilty  of  selling  coal  at  a  less  price  than  the  price 
toed  by  the  exchange,  either  directly  or  indirectly,  shall  be 
hned  2  cents  per  bushel  and  $10  for  the  first  offense,  and  4 
cents  per  bushel  and  $20  for  the  second  offense.    A  majority 
of  aU  the  members  shall  constitute  a  quorum  for  the  transac- 
tion of  busme^.    Owners  or  operators  of  mines  [434]  shall 
not  sell  or  ship  coal  to  any  person,  firm,  or  corporation  in 
Nashville,  or  West  Nashville,  or  East  Nashville,  who  are  not 
members  of  the  exchange,  and  dealers  shall  not  buy  coal  from 
any  one  not  members  of  the  exchange.   All  coal  used  for  man- 
ufacturing and  steam-boat  purposes  shall  be  exempt  from 
prices  made  by  the  exchange  until  all  mines  tributary  to  this 
market  shall  become  members  of  the  exchange,  or  until  the 
exchange  can  control  prices  to  govern  coal  used  bv  manufac- 
turers,   ^o  coal  shall  be  sold  in  any  month  to  be  delivered 
m  any  following  month  except  at  prices  fixed  for  the  par- 
ticular month  in  which  coal  so  sold  is  to  be  delivered.    Fines 
and  penalties  are  declared,  so  as  to  enforce  the  stipulations 
embodied  in  the  constitution  and  by-laws  of  the  exchange 

It  can  hardly  be  denied  that  such  provisions  as  these,  by  a 
body  of  persons  such  as  compose  this  exchange,  is  a  contract 
or  combmation  in  restraint  of  trade  or  commerce,  or  an 
attempt  between  different  persons  to  monopolize  a  part  of  the 
ti-ade  or  commerce,  between  parties  who  are  citizens  of  or 
reside  in  different  states.    It  is  shown  that  several  minin.' 
companies  in  Kentucky  engaged  in  raising  coal,  and  most  of 
the  coal  dealers  of  Nashville,  Tenn.,  have  entered  into  the 
foregoing  mentioned  arrangement.    It  is  insisted  for  the  de- 
fendants that  the  subject  of  agreement  is  not  interstate  com- 
merce; that  the  obligation  as  to  the  mining  companies  ends 
at  the  mines.    The  price  is  fixed  and  paid  at  that  point,  and 
consequently  controversies  in  regard  to  the  contract  as  to 
them  belong  exclusively  to  the  courts  of  the  state  of  Ken- 
tucky ;  that,  so  far  as  the  dealers  are  concerned,  the  price  of 
the  coal  is  fixed  for  its  sale  at  Nashville,  and  after  it  becomes 
their  property  by  delivery  to  them,  and  therefore  the  courts 
of  Tennessee  have  the  jurisdiction   as   to   them.     Various 
authorities  are  cited,  and  the  debates  in  the  senate  of  the 
United  States  are  read,  to  sustain  this  view  of  the  case.    As 


r 


tr.  S.  V,  JELLICO   MOUNTATTSr   nnxr     » 

JXLuuJsiAIN   COAL   &   COKE   CO.  13 

Opinion  of  tlie  Court 

iTtXC;,  ^:';^^  ;^  ^f  "<l-ts'  counsel  it  is 
July  2,  18?0  buJif  r  7^'"*'^«.«^  th«  t^^ms  of  the  act  of 
BecLs;  rc^nstku^^^^^^^  '  f"  "'*  ''  f  constitutional :  First 
States  in  ^.^^ITZ^i^r  "^""  *«' ^°"'^  "*  *^«  United 

«tizens  of  differ  SnLuCSZ~^--" 
contract  are  citizens  of  ri;ff„  f  !  !  ,  *""*  P'""*'es  to  a 
diction.    There  rstLf  '*"'  ^"^  ""'  •^"f"''  i»"s- 

<o  the  contracT  aZtll  "  !=''"/.''"^«'-«-^  »'«*«'«««  the  parties 
•he  contract  5  pal,  "  ^ft*"  "  "?t  *  '"""'^  '^'^'-- 
these  parties.  W.'lrf  Th«?.h  T"  '^'  ^^^'"•'""ent  and 
i-al  offenses,  ^Zt^H^XlZ^ ^t  tf  "T  Ti 

indThTsS  i\?rh:ir~ -» '-^ " " 

circuit  courts  of  the  UnUe.l  ?;  T    *'  *\'*  "'^^•"P*^  »«  Sire 
the  violations  of  the  act  '  '^^''^^^'  Jurisdiction  over 

the  proceedTng  authorLed   s  ""«"«''"«1-     I*  -  insisted 
.uitychaigif,^^^^^^^^^^ 

of  tht    w     Air  «:  '  'ir^^'""  °'  ^'^^  constitutionality 
tate  long  ^n^JZ^^SX^^^t^^  '^^^^ 

reasons  forTuch  a  dSonln   "r"^*'*"*^^'^*!-    The   [435] 
undeniable    If  ^11?^  *  *  ^''^  "''''"^^^  ^e  clear  and 

resol^eSt-  flttf'^ LTw""  Tr''^'  '""^  '^^''  ^^^'^  ^e  . 
validity  of  the  act  havrbrurled  ^^f.""'"*!  T'"^*  *« 
and  strength,  and  an  array  of  aShorS^^vfh''""'!/''^ 
sustaining  the  views  of  dffendaS  cotnserTr  "'^  '' 
of  defendants'  counsel  have  been  LTl^2  ^^\^'t''>^^ 
ability  by  those  representL^  gl'l^f  'T  '"' 

weighing  T:;X7ri::soT^:^'^'^  f -*-^  -^ 

tion  in  restraint  of  trade  or  commence  S::nZf^^^Z 


il 


! 


14 


46  FEDERAL  BEPORTEB,  435. 


Opinion  of  the  CJourt 

they  evidence  of  a  combination  to  monopolize  "  any  part  of 
the  trade  or  commerce  "  between  the  states  of  Tennessee  and 
Kentucky?    The  coal  mines  are  in  Kentuclty,  and  the  coal 
is  to  be  mined  there  for  a  certain  price,  and  the  agreement 
contemplates  its  shipment  to  Nashville.    To  be  sure  it  is  not 
to  be  transix>rted  thither  by  the  defendants  or  any  of  them, 
but  the  price  for  which  it  is  to  be  shipped  is  fixed  or  stated, 
and  becomes  a  part  of  the  price  for  which  the  coal  is  to  be 
sold  at  Nashville ;  and  when  the  prices  fixed  "  are  advanced 
in  excess  of  the  advance  in  freights,  the  one-half  of  the  ad- 
vance shall  go  to  the  mine  owners  and  one-half  to  the  deal- 
ers,"   In  making  the  agreement  the  transportation  of  the 
coal  from  Kentucky  to  Nashville  was  a  necessary  incident 
to  and  element  in  the  arrangement,  and  its  execution  would 
have  been  impossible  without  it.    The  instrumentality  of 
transportation  did  not  belong  to  nor  was  it  controlled  by 
them,  but  it  was  used  by  them  and  paid  by  them  for  services 
rendered.    The  contract  provided  for  the  sale  of  coal  in 
Kentucky,  its  shipment  to  Nashville,  Tenn.,  to  dealers  there, 
for  its  retail  to  consumers.    It  was,  to  all  intents  and  pur- 
poses, a  traffic,  trade,  commerce  between  states.    Was  the 
purpose  of  the  exchange  to  monopolize  a  part  of  this  trade, 
or  to  combine  in  restraint  thereof?    The  exchange  does  not 
propose  to  be  governed  and  controlled  by  the  public  markets 
arising  from  competition  and  the  operations  of  the  laws  of 
supply  and  demand.     On  the  contrary,  it  announces  that  its 
purpose  is  "  to  establish  prices  on  coal  at  Nashville,  Tenn., 
and  to  change  the  same  from  time  to  time  as  occasion  may 
require,"  and  in  carrying  out  this  object  it  asserts  that>— 

"The  exchange  will  establish  prices  at  which  coal  shall  be  sold  in 
NashTille,  subject,  however,  to  the  following  conditions  and  basis- 
Coiil  classed  as  No.  1  to  be  valued  at  the  mines  at  4i  cents  minimum 
price  per  bushel  of  80  pounds  for  lump,  and  freight  being  4  cents 
the  dealer's  margin  to  be  4|  cents,  making  the  price  of  lump  coal  13 
cents  per  bushel;  No.  2  to  be  valued  at  5  cents  at  the  mines,  No.  3, 
6  cents;  and  when  the  above  prices  are  advanced  in  excess  of  the 
advance  in  freights,  then  one-half  of  the  advance  shall  go  to  the 
mine  owners  and  one-half  to  the  dealers.  Any  member  found  guiltj* 
of  selling  coal  at  a  less  price  than  the  price  fixed  by  the  exchange 
either  directly  or  Indirectly,  shall  be  fined  2  cents  per  bushel  and  $l6 
for  the  first  offense,  and  4  cents  a  bushel  and  $20  for  the  second 
offense.*' 


IT.  S.  V.  JELLICO   MOUNTAIN   COAL  &   COKE   CO.  15 

Opinion  of  the  Court. 

[436]  These  provisions,  so  far  as  this  combination  could 
do  so   fixed  the  lowest  price  of  coal  to  consumers  in  and 
near  Nashville  at  13  cents  per  bushel,  and  prevented  coal 
bemg  sold  there  at  a  cheaper  rate,  no  matter  how  much 
less  It  might  cost  m  an  open   and   unobstructed   market 
JVor  is  that  all.    The  exchange  ordains  that  "  owners  or 
operators  of  mines  shall  not  sell  or  ship  coal  to  anv  firm 
person,  or  corporation  in  Nashville  or  West  Nashville  or  East 
JNashvi  le  who  are  not  members  of  this  exchange,  and  deal- 
ers shall  not  buy  coal  from  any  one  who  is  not  a  member 
of  the  exchange."    The  coal  trade  is  confined,  so  far  as  the 
market  supply  is  concerned,  to    transactions    between  the 
miner  and  dealer,  the  prices  are  fixed  by  them,  and  the 
mmer  and  dealer  only  are  eligible  to  membership.     The 
miners  of  the  concern  cannot  sell  to  any  dealer  in  or  near  ' 
Nashville  who  is  not  a  party  to  the  agreement,  nor  can 
such  dealer  purchase  coal  of  any  miner  anywhere  who  is 
not  a  member  of  the  body.     The  operations  of  both  are 
confined  withm  the  membership.    So  far  as  Nashville  is 

markets,  or  deal  with  those  who  would  give  more  favor- 
able  terms.  The  restraint  is  positive  and  undenTabTe 
Moreover,  in  the  first  section  of  the  by-laws  of  the  excInS 
1  IS  asserted  that  "  all  coal  used  for  manufacturrrand 
steam-boat  purposes  shall  be  exempt  from  prices  made  Ev 
this  exchange  until  all  mines  tributary  to  tMs  market  shaU 

?his  ckal^rr    .  ^T'^  '""^  ""''^  ^y  manufacturers^ 

2ed  in  In  if    .  ^"''  '^'^.'^  ^^  '^'  ^^^h^i"-  "market 
cou?d     thTtV.  ""^  r^    '^    steam-boats  whenever  it 

r  ex'   2  t'  r"''  '^  ''l^  '"^"'^^^  ^^  N^^h-lle  were 
UDonX  r^^"  "''"^^'"^  ^^  ^^^  exchange,  where- 

Zessarv    '  T  '^  T^  ^'"^^  ^'  ^^'^  absolutely,  'and  the 

m  that  market,  to  a  large  extent,  at  least,  and  that 


16 


46  FEDERAL  REPORTER,  436. 
Opinion  of  the  Court. 


I 


this  exchange  might  now  monopolize  the  business  of  deal- 
ing in  domestic  coal  in  the  Nashville  market,  and  in  the 
future  monopolize  by  and  confine  to  its  membership  the 
entire  trade  in  coal  at  that  point.  It  seems  to  me  that 
the  purposes  and  intentions  of  the  association  could  hardly 
have  been  more  successfully  framed  to  fall  within  the  pro- 
visions of  the  act  of  July  2,  1890,  had  the  object  been 
to  organize  a  combination,  the  business  of  which  should 
subject  it  to  the  penalties  of  that  statute,  and  that  there 
is  no  need  of  authorities  to  sustain  such  view  of  the  case. 
Regarding  the  act  as  constitutional,  I  see  no  way  for  the 
defendants  to  escape  its  condemnation. 

Proof  has  been  taken,  on  one  hand,  to  establish  that  the 
people  of  Nashville  have  been  and  are  being  injured  by 
the  high  prices  which  have  been  and  are  being  paid  for 
coal,  and  the  extent  of  the  injury.  On  the  other  hand, 
defendants  have  introduced  proof  to  show  that  the  higher 
freight  rates  to  Nashvillef  and  the  want  of  facilities  for 
transportation  by  railroad  and  water,  are  the  causes  for  the 
higher  prices  of  coal  at  Nashville  than  at  Louisville  or 
Memphis,  but  it  is  needless  to  enter  upon  this  branch  of 
dispute.  "  The  attempt  to  monopolize  or  combine  "  is  de- 
[437]  nounced  by  the  second  section  of  the  act,  and  the 
first  section  declares  that  "every  contract  or  combination 
*  *  *  in  restraint  of  trade  or  commerce  among  the  sev- 
eral states  *  ♦  *  is  hereby  declared  illegal."  The  at- 
tempt— the  contract  to  do  the  thing  prohibited — is  enough 
to  incur  the  penalties  of  this  law. 

I  conclude  that  the  defendants,  by  the  organization  of 
the  Nashville  Coal  Exchange,  and  their  operations  under 
it,  have  been,  and  at  the  time  of  filing  the  petition  in  this 
cause  were,  guilty  of  a  violation  of  sections  1  and  2  of  the 
act  of  July  2,  1890,  and  should  be  enjoined  from  further 
violations  of  the  law,  as  provided  by  the  fourth  section 
thereof. 

The  petition  will  be  dismissed  as  to  such  of  the  defendants 
as  are  not,  or  were  not,  members  of  the  exchange  at  the  time 
of  the  filing  of  the  petition. 


CLARKE    V,  CENTRAL  R.  R.  &  BANKING    CO.  OF   GEORGIA.      17 

Syllabus. 

[338]    CLARKE  v.  CENTRAL  RAILROAD  &  BANK- 
ING CO.  OF  GEORGIA  ET  AL. 

CENTRAL  TRUST  CO.  OF  NEW  YORK  ..  COMER 

ETAL.- 

(CJrcult  Court,  S.  D.  Georgia,  E.  D.    May  14,  1892.) 

[50  Fed.,  338.] 

Chase  a  iSy  o't^Z^^-ofZ^n^T^  Tf"^.  ''  T" 
U  afterwards  deposited  wUh  the  Ce^t^^LI"  ^^  „?  ^eTr'oV'and 
finally  transferred  to  the  Terminal  Pn    n  «xrof^  ' 

eral  competitive  lines  of  railroad     Thf;'      ^  composed  of  sev- 

of  the  Cent   R    r^l      ''^'^'^^^^'    ^his  company  created  a  directory 

K.  Co.,  and  provided  that  the  Rtnohr  /^^  f*.^  ^^°^* 

Terminal  Co  should  not  be  vot^iu   ,. .  TT"^  '""*""*^  "^  *"*' 
In  good  faith     Th^  Zll  .         ^'®**"'°  ""'*'^  transferred 

40MnJ2t  J  '°  ''"^^"°°  consisted  of  42,000  shar^ 

«,000  of  which  were  those  deposited  by  the  Ga  Co  „.th  ^ 
C.  Trust  Co.  and  transferred  to  the  Termfnai  r^  „'  ?'  """  *''^ 
der,  2.200  shares,  acquired  by  the  TermiZ  pw'  ^.*^  '■^""""• 
The  Terminal  Co.  and  the  Ga   Co  fl.L  """  ""'^''  ^'^'^■ 

Cent.  Trust  Co  any  rishf  th^'  ►..  ^"^^  relinquishing  to  the 
Heia.  no  lutei^t  in  the  stol^^      ^      ""'  *"  "°*"  ""''  '^^■ 

other  than  thaf^f'^  mere  rjhortlat"thf  T'  ^"^^  ^•• 
question  did  not  entitle  It  to  vote.  ^*  relinquishment  in 

Same— Incapacitating  Teust.— The  Cent   Tr,,^  n 
pacitated  to  vote  such  stock  by  the  fact  Sat  ,t  w  T  '"'°  ""*■ 
large  amount  of  indebtedness  of  the  Cent   r   n  ^<'\^»^i^  for  a 
Charter  apparently  gives  no  such  ^wer  ''°'  """•  '^'^'^'  '^^ 

expert,  was  engaged^n  an   'JL     ?!*  ?''*  ""  President,  a  financial 
Cent  R.  Co.  w°th  ^mLn^  lin  ""    ^".."'"'"^  '"^"*  «  "'•^'•S«r  of  the       ' 
and  Place  them  u^ef  the    0,^™"?!°  *'''''''«"' «««^«'«- 
trary  to  the  constitution  of  the  staTe  '"'  '''™'""'  ^-  «"- 

Same— CoMn-Y  between  the  States  —r-nr^tf^  i   *™ 

-  Syllabus  copyrighted.  1892,  by  West  PubHThVco ' 

11808— VOL  1—06  M 2 


I 


I 


18 


50  FEDERAL  BEPORTER,   338. 
Opinion  of  the  Ck»iirt. 


« 


Samb— Competing  Corporations— Acquisition  of  Stock.— The  fact 
that  the  charter  of  the  Cent  R.  Co.,  granted  before  the  adoption  of 
the  constitution  of  18T7,  permitted  municipal  corporations  to  pur- 
chase its  stocls,  would  not  authorise  a  competing  corporation  to  ac- 
quire such  stock  after  the  adoption  of  the  constitution. 

Same— DisQUALiFTiNQ  Interests.— The  fact  that  the  Terminal  Co.  has 
no  appreciable  interest  in  the  stock  of  the  Cent.  R.  Co.,  because  of  a 
mortgage  on  the  railroad  executed  by  the  Terminal  Co..  does  not 
remove  the  objection  to  its  voting  in  person  or  by  representative  in 
the  election  of  the  directors  of  that  railroad  company.  In  view  of 
the  fact  that  it  has  large  pecuniary  interests  in  two  directly  com- 
peting lines  of  railroad. 

[Same— Anti-Trust  Law.— Transactions  of  this  character  are  within 
the  spirit,  if  not  within  the  letter,  of  the  "  Sherman  Anti-Trust 
Law."    Act  of  July  2,  1890  (26  Stat  209).    See  page  2ai 

In  Equity.  Bill  by  Eowena  M.  Clarke  against  the  Central 
Railroad  &  Banking  Company  of  Georgia  and  others,  and 
bill  by  the  Central  Trust  Company  of  New  York  against 
H.  M.  Comer,  receiver,  and  others.  Motion  by  the  Central 
Trust  Company  to  modify  an  interlocutory  decree.  Motion 
denied. 

Butler,  StUlman  <&  Hubhard  and  H,  B,  Tompkins,  for  the 
motion. 

Lawton  d;  Cunningham,  Denmark,  Adams  db  Adams,  Dan- 
iel W,  Rountree,  Marion  Erwin,  and  A,  0.  Bacon,  opposed. 

Sfeer,  District  Judge. 

It  is  essential  to  a  clear  understanding  of  the  questions 

involved  in  this  motion  that  a  brief  statement  be  made  of  the 

[SS91   proceedings  heretofore  had  in  the  equity  cause  in 

which  the  motion  is  presented.    It  is  also  essential  to  direct 

attention  in  the  outset  to  paragraph  4  of  section  2,  art.  4,  of 

the  constitution  of  the  state  of  Georgia.    This  clause  of  the 

constitution  is  as  follows: 

••The  general  assembly  of  this  state  shall  have  no  power  to  au- 
thorize any  corporation  to  buy  shares  or  sto(*  in  any  other  corporation 
In  this  state  or  elsewhere,  or  to  make  any  contract  or  agreement  what- 
ever with  any  such  corporation,  which  may  have  the  eflTect,  or  be  in- 
tended to  have  the  effect,  to  defeat  or  lessen  competition  in  their  re- 
gpective  businesses  or  to  encourage  monopoly ;  and  all  such  contracts 
and  agreements  shall  be  ill^cal  and  void.*' 

The  constitution  in  which  this  clause  is  found  was  adopted 
in  the  year  1877.    It  was  evident  at  that  time,  and  has  be- 


CLABKE  V.   CENTHAL  K.  B.  *  BANKING  CO.  OT   GEOBGIA.   19 

Opinion  of  tlie  Court 
come  more  plainly  evident  since  then  thai  if  w,o  •  a- 

tendencies  which  conlH  n^f  u       \**^^^^^"ons  of  power; 
state,  and  which  threatpn  ^^  Lf^'  4.  cieated  by  the 

dimcull  ,0  ,™S,  Tn  ZZ  >■""*"■    "  ""M  be  peth.p, 

"  t  Lu  cApress  m  such  narrow  comnAcc  o  ««^^  •\'         » 

corporate  power  more  conclusive  TnTrhibitrrlffT  **' 
more  difficult  to  evailn  K„  fk^        Z  ^        inhibitory  effect,  or 

to  avoid  i  s  iLl  W   ^    r      "'^'^  ^'"'  *">'  '""^i^^  ^0"W  ^k 

^al'  b1.randTtertnrs  fit'/  ^t'  ^P"  «^-  Tht  ori^-' 
to  the  facts  of  the  cas^^Te  Sal  Tffect"  TT  ^"^  ^  '^^'^ 
provision  and,  further,  to  invS  hrdol LrfT'*"*^'''^^^ 
nounced  with  great  force  and  clearness  brir  J^^^Z; 
in  the  supreme  court  of  the  United  ^tL  .t  ^ 

Central  Transv   Co  v   P,  77        ,    n  ,     ^^^  "^  *•»«  <^*  of 
46,  11  Sup T£;  489;       '^'^^  '^"''"  '''"•  ^^•-  '''  U.  S. 

and  of  no  legal  effect.    The  obiectio?.  7n  ?i?^'^  """"^y^  ^"^  ^^^^Ily  void 

Further: 
SS^*'"'^™"- "  ~K^?V/a  '^o,r^^  ""<»  '--«"«« 

foJtI'lS  STofryT'sT^Lr'^  '^^^  ^'^^  -  -  ^- 
sign  to  obtain  cZtZi    t         ■'  •   ^''^  ^"^'''^  f«™ed  a  de- 

CeTtralTaTroTd  I  Ba^^^^^^^^  "'  ''''  f^''^'  ^^^  o^  the 

J'^is  «>n>pany  bat  J^'Znt'^:Zt'^r-    ^t 
lai.,  Its  capital  stoct  is  only  $r,5"of,(So"Xr  Xpl':^^ 


9(\ 


60  FEDEBAL  BEPORTEB,  340. 
Opinion  of  tbe  C3ourt 


retaining  an  exemption  from  state  taxation  granted  by  the 
original  charter  the  capitalization  of  the  stock  had  been  pre- 
served at  that  com-  [340J  paratively  low  figure.  From  this 
fact  it  became  relatively  an  easy  matter  to  obtain  a  majority 
of  the  stock  bearing  the  voting  franchise.  To  accomplish 
this  purpose,  D.  Schenke,  Samuel  H.  Wiley,  and  Thomas  B. 
Keogh  organized,  or  attempted  to  organize,  at  Hight  Point, 
in  North  Carolina,  a  corporation  bearing  the  significant  name 
of  "  The  Georgia  Company."  The  charter  was  granted  by 
the  clerk  of  the  superior  court  of  Guilford  county,  and  the 
business  of  the  company  was,  as  therein  stated,  ''to  pur- 
chase, acquire,  and  to  hold,  or  guaranty,  to  indorse  the  bonds 
or  stocks  of  any  railroad  company  in  this  or  any  adjoining 
state;  to  lease  any  railroad  in  this  or  any  adjoining  state; 
to  engage  in  the  business  of  transportation,  and  to  operate 
railroads  in  this  and  adjoining  states;  to  aid  any  railroad 
company  in  this  or  any  adjoining  state; '  except  building  any 
railroad,'  which  is  forbidden  in  said  statute."  The  charter 
does  not  appear  to  have  any  validity.  See  St.  N.  C.  Acts 
1885,  p.  70.  This  appears  to  be  both  a  banking  and  railroad 
corporation,  and  such  corporations  can  be  created  by  the 
legislature  only. 

It  appears,  however,  that  the  i^ersons  mentioned  in  the  orig- 
inal bill,  who  had  bought  about  40,000  shares  of  the  stock 
of  the  Central  Railroad  &  Banking  Company  of  Georgia, 
turned  over  their  entire  holding  to  said  Georgia  Company ; 
and  it  was  further  stipulated  and  agreed  that  this  stock 
should  be  held  in  a  block,  with  the  view  to  permanently  con- 
trol the  management  of  the  Central  Railroad  and  its  prop- 
erties. Thereafter  it  appears  that  the  Georgia  Company 
deposited  with  the  Central  Trust  Company  of  New  York 
its  entire  holding  of  this  stock,  aiid  had  issued  thereon  and 
sold  to  the  public  four  millions  of  the  bonds  of  said  Georgia 
Company.  In  the  mean  time,  by  virtue  of  its  majority  con- 
trol, it  had  taken  charge,  through  a  president  and  board  of 
directors  elected  in  the  main  by  this  block  of  stock,  of  the 
Central  Railroad  &  Banking  Company  of  Georgia.  There- 
after the  Georgia  Company  transferred  all  its  capital  stock 
to  the  Richmond  &  West  Point  Terminal  Railway  &  Ware- 
house Company.    This  latter  company  thus  came  into  control 


CLABKE   V.  CENTBAL.   R    w    ^    ba^t^,^ 

JNXBAL  B.  B.  A  BANKING   CO.  OP   GEOBGIA.      21 

Opinion  of  the  Court 

(as  w  dull  aUl  kt„SZL   Vt      /^'""'  C«mp.„y 

properties  under  its  control  ^^oiaings,  m  all  the 

the  Georgia  Comoa^v  VI     f^'^f'  ^  ^"'"^^  '^e  bonds  of 

whenevef  thrSna    rf      P"'"**'^  '"  ''''  """^^'^'Se  that 

Georgia  Coi:pn:;"Zc^S7r  Tr'^'  '"  '""'^  ''  ^^e 
in  lieu  thereof  a  bond  of^t  T  ^""^' ^^^pany  should  issue 

lions  of  the  bonds  oftheTtL^nrrol''''"^''"^-  ^^'«  """- 
l)osit  with  the  Central  r/Tn  ^""P^ny  ^ere  left  on  de- 
pose of  prZ^Xtl^L^rS):  t\^  ^^"^^^  p- 

of  stock  of  the  CenlrXZl/  i^''^'  *^«  ^2,000  shares 
cured  by  the  Tem  "'  n"^'  "^^""^  ^^^  "»*  ^^t  been  se- 
of  the  4el  ""is  aT"^''^*'•^  P^""  !««]  voters 
*  Banking  Coll.^7cZtrt  r  ?"*"'  ^"^'^--^ 
pany  thus  became  the  tru^'i^for  S'  T^  ^'■"^^  ^"'■ 
feature  of  which  was  thlZT    T       '  mortgage,  a  salient 

undivided  ownt;?;  S'theTntltlTar  fl  '"^'^'^  -'^ 
controlling  rival  lines  I«rLV,  k  ^"'^"^"^^^  by  a  company 
had  been  made  of  a  mL  if  ^>  '""'"'  ***  ^^'  ''«'  ^^ch 
this  contrac  or  votinTC*^  °'  ^*^  ^^^^^  ^^^'^  ^^  *  block  by 
to  obtain  $S,mltt  sS  TtZT'  ^  -'"P-^te  purpo^ 
$2,000,000.    The  Termini  rl  ^^T  '*  <=°ntrolled  for 

2,200  kares  of  stocrwl?7rr  ^''^  "^*"^"^  ^'^^^^^^re 
Central  Trust  Compa^vanS  'VJ^'^^'^^/^Po^ited  with  the 
thus  deposited,  nvasiTe.  T'^'.f  *'  ^"  ^^  '"^^  ''^^' 
scheme  that  its  voTfnV^  u  ^^  ^^^  promoters  of  the 

Georgia  Co:;;;:^7a^Zrdt:Llt^^^^^  'V'^ 
pany  absorbed  that,  by  the  latter     R  Terminal  Com- 

Power  the  Terminal  Compa^  ^as^^owThT  "'  ?"  'f  "^ 
destinies  of  the  fpnfroi  i>  -i    ^ /'as  now  the  master  of  the 

of  directors  t?Cl  a  S'  "'  ^^  P-^'^^-*  and  board 
aa  Decome  a  directory  which  was  in  the  control 


22 


60  FEDEBAL  BEPOKTER,   341. 


Opinion  of  the  Court. 

oil  Uic  Temiml  Compinj-,  .„d,  if  need  be,  rmovibie  b.  it 

most  disastrous  results  to  the  immense  a^Ttd  ^n  S 
which  U  had  thus  become  possessed.    This  W  atd  the 
proceedu,^  of  those  in  charge  of  the  contro  ofthe  Centra! 
Bjilroad  *  BanJcing  Company  are  attacked  byt'  oril" 
bill.    A  temporary  receiver  was  appointed.    While  thisTffi 
cer  was  proceeding  to  take  possessor,  «f  fK„        V    !    . 
f\xni^i  -D  -1       1  f  ^  possession  oi  the  assets  of  the 

Central  Railroad  &  Banking  Company  the  Georgia  Pac  fi! 
and  Richmond  &  Danville  Companies  threap  the  leal 
and  formally  abandoned  the  pos^^ssion  of  all  theVrtpert  e"' 
At  the  hearing  of  the  rule  to  show  cause  why  the  inWi'^n 
prayed  for  should  not  be  granted,  and  the  receiver  Snted 

^uTt  rjud^LT"*""  'T^'  *'''""^^  several  Ta^^he 
court  (Judges  Pakdee  and  Spker  presiding)  granted  an  in 

teriocutory  order  appointing  i-eceivers  to  tfkeTS  o    the 

properties  and  assets  of  the  Central  Railroad  &  Bar,ldt' 

pan  es  The  order  directed  an  election  for  a  board  of  Wire  t 
ors  to  be  held  on  the  16th  day  of  Mav  189*  7^1  ,  •  ,' 
the  Central  Railroad  &  BankinllLmiafv'  T  ""'■"""'' 
^vot.  of  the  42^.00  shareToHoc^rS, XX'^ 
nunal  Company,  and  held  by  the  Central  Trust  ("n.panv 
of  New  York.  It  provided,  however  that  in  Ml  ^^ 
nhnni/i  ki.  o  <^..    ^    V.  ,  ""n«5ver,  r,nai,  m  case  there 

Should  be  a  transfer  of  that  stock  in  good  faith  it  niiohr  hi 

C£;srtrr  -'  -- "-  -"••-"-- 

tha?:rS™'^"ir^  "^"'^  '""^  --'  '^  »>-ght  to  have 

d^^L     T       T"^  ^^  '°""*^  ^  «>«  «'«<=«««  on  Mon- 
day next.     The  motion  mvolves  the  control  of  the  Central 

Trust  IU2]  Company  ,s  a  party  defendant  to  the  original 


CLABKE   V.  CENTEAL  B.  E.  *  BANKING  CO.  OF  GEORGIA.      23 

Opinion  of  tlie  Court. 

bill,  and,  in  the  opinion  of  the  court,  miffht  well  h^  >,nU  f    u 
b«„nd  by  .h.  „„„  rfj„di».i„,    ,  Ji'„™'  ^  «^^ 
.t  lh«  h„™g.    Th.  c»u»  b.d  b«n  continued  in  L' ™ 

f  "J,  «y  jonn  A.  Kutherford,  second  vice  Dre^iHAnf     t^v. 
representations  both  recite  thp  ^^a.f     /^  PJ^^'^^'^^-     The 

g»  ."."ASS  K  Sf.Sj;S'a '?'  "■«•".".•»« 

any  right  which  it  possesses  or  n^^I/  ^  J'^?^'  transfers,  and  surrenders 
any  part  thereof,  K?1l,e  el^tfnn  nf  ??  *^'^^*^  "P^"  ^^^  said  stock  or 
Railroad  &  Banl.  „g  Co'Lanv  o?pf  "'?  shareholders  of  tlie  Central 

at  any  adjournment  theZf  'in  favor TA^  ^^-^^'^  ^^^^  16?  1892  or 
pany,  representative  of  tliP  «i?H  .  I.*^^,  *^®  ^^'^  Centi-al  Ti^st  Com 
owners  of  the  said  '  aU^shZ^s  ""^Xl^'^'j  '""^  }'.^-'  and^uiS)?; 
of  any  right  to  vote  upon  the  sViri  If^^T  iu  ^^  salving  this  surrender 
«ents  to  the  court  that  U  has  not  pnf.^1:,*?^  ^^''^'^  Company  reprl^ 
ga  n  or  understanding  of  anvkinSoi^n'f^  ^""^  arrangement  baT 
said  Central  Trust  Companr^n  rLsneot  tn^^  whatsoever  with  the 
IW)wer  upon  the  said  stock  bv  JLr^i  *^  *^^  exercise  of  the  voting 
or  endeavor  to  make  aiTsuch  h«/  "'^'"''y'  ^"^^  ^^^^  it  will  not  makf 
that  the  said  Cenhal  TrU  Comnn^^^^  «^  arrangement  and 

ent,  and  untrammeled  so  fS^Tf.'^t^^^^  ^^e  entirely  freS,  independ 
cerned,  from  any  direction  ^f*.rL.  ^^'^  Georgia  Companv  is  con 
it  Of  such  voting  pow^,"'  ^"^^^f^r^n^e,  or  control  in  the^xerciseX' 

The  representation  of  the  Terminal  n 
only  to  surrender  the  voting  rlhTbl ''ST"''  ^r^'^'^ 
Both  representations  restrict^he  traisfefo^  £Z  '*"t 
reserved  by  the  Terminal  CompanvLVh.  „i  .  !"?  "«''* 
on  Mav  16  1892  nr  «f  ^^^"".P^^y  *<>  the  election  to  be  held 
PnJf  tlJ  I  *°y  adjournment  thereof     It  i«  Hiffl 

cult  to  perceive  how  this  instrumpnf  H,fl>„     •  "' 

substance  from  an  ordinal  p'o^vTh    T'"^. '"'*'*'' *»* 
Georgia  Companv  of  if«  rZZ  F     I'  ,         transfer  of  the 

ered  W  f^         f  ^'^^  *"  """t^  the  stock  is  not  consid 

erea  by  the  court  as  material   for  that  „„  .     '^"^'" 

no  control  over  the  stook  tTlkT  ^^mpany  has  reallv 

oi  over  the  stock  to  which  a  court  of  equity  will  pay 


24 


so  PBDEBAL  BEPOBTEB,  342, 


Opinion  of  the  Court 
any  attention.    The  Geoi^a  Company  has  been  whnllv  „K 
Borbed  by  the  Tenninal  G^mpany!  but  Te  T^LLa,  L™" 

ST*"  *%""'''*'  ""^  tra,!sfer  of  the  riJtTvL  thJ 
40^000  shares  of  stock  in  question,  and  limits  its  Sp^lta 
tion  to  the  court  to  2,200  shares   whi.K  it  k       '^P'^^enta- 
acquired  from  ««.,.vw,  IT    7^      ' .     "^°  '*  ''^^  presumab  y 
"«I"'rea  irom  sources  other  than  the  Georria  f!omn«n«     t* 

follows,  therefo.^,  that  as  to  40,000  sha^rhtsS  thl 
condition  is  preciselv  thp  ««„-.  -»     u       f,  "^"^  '^'*® 

the  Central  £SS  h^^T  •  •  ''^'"  '''"  """'  *"J''»"«<J 

thereof,  for  tS  "as^n^^rt  Jn^7>i°''  ''"'^""^  ^*  ^"'^^ 
in  vi„l»t;„„    *  lu    ,  ''***  *^"  purchased  and  held 

m  violation  of  the  laws  and  constitution  of  Georgia      But  Ic 
we  have  seen,  the  transfer  of  f343l  the  T^if^'n 
relating  to  2,200  shares  is  nothint  Lor^  IT         ^""P*"^ 

luii  n  naiever  for  this  transfer.    The  Central  Trii*;f  P^,r. 
pany  of  ^ew  York  holds  this  stock  merely  asa^n^  T 

to  secure  certain  bond*?  f«n  ^k;  Tv    ^^^^  ^f  ^  "«^ea  trustee 

security     W  wh!    *i^^     u  ^^  '*  ""^^  P^"^^^^  *^«  collateral 
occuiuj.     ixow,  When  those  bonds  were  k«iia^  fk^    ,t    i   .1 

pledged  had  attached  to  it  no  votinTir.r     f  \    u'^'^"' 

the  Trust  Company  or  the  l^X  deThld  t'ht  ^h^^^^ 

^^^\h?^^""'i^  '"^^^'  *»>-'-  --7^r     ?  £ 
aecunty.     1  his  transfer  eiron  if  ;*  ^t««     ic      •  ^ieii 

the  voting  franchise  ffdl  the  stlToi^a^^^^^  '^  ''^""^ 
tempt  to  ingn^ft  upon  the  trust  a  tC  We^S  [hrbe^ 
eficiaries  of  the  trust  did  not  seek,  or  exoect  «f  Th„  V^  ^ 
creation.  '  The  voting  of  the  sto^kw!  '•  •  !  *.""^  °*  '*^ 
was  deem.1  by  the  cfurt  that  touTd  bZ'atu^"' m'* 
wrong,  the  gravity  of  which  cannot  well  tfoi^^  "  j^"'"'*' 
further  deemed  to  threatAn  ih^  «     *•  foretold.     It  was 

.(Kravation  of  thl  Se^  tSr^uTi'  h^d^T  *^- 
accomplished.    If  the  Central  Trnrf  r-  ^"^  ^^'^''^^ 

relieved  of  any  entangleme^lilSe  ^XTd  Inl  ^ r' 
condition,  which  the  voting  power  of  ttK  I  *  .  .  *°''*' 
the  iUegal,  reckless,  and  'SZ^l:^::^:^,^^'^''^ 
cise,  has  entailed  upon  these  proDertie-Ttl,"  !  '  its  e^er- 
then  hesitate  long  tefore  it^oSd  aS  th    ^''^  T'^^  ''^^" 

WJ.S  the  outcome  of  the  m^i„^;         ^ '"i  ""'*'""' ^^'^J* 
"iiie  01  tne  most  anxious  consideration  by  the 


CLABKE  V.  CENTBAL  B.  B.  &  BANKmo  nr,    «™ 

«  iJAJSKING  CO.  OF  GEOBGIA.      25 

Opinion  of  the  Court 

had  gratuitouTyiS?  tJ'JhrCsT'r '■""  ^^^'"^  ^^^'' 
which  the  latter' apparSyt5\Irdti^7-J  tje  P" 

in  no  sense  a  part  of  the  f«ntr».f     ..^^^^^°'  ^nd  which  was 
the  Central  Trust  00—  /*^  '*'  bondholders.    But 

view,  a  proper  ;artyJSlSk"  Ttr^"'""'  ^"  ^^ 
its  own  in  the  stock     7>  "c      ?  ^^^  ''*'  "°  '^terest  of 

.  -any  situations  J..;  eh  a^'nr^t'"'^^^^  ^^^^  «- 
becomes  inequitable  or  i  LartrTt  K  '"  '''T''  ''^^'  '* 
Pla<^  the  voting  Po.erot^XdsLi^lT  ,?^  '^" 
mortgagor,  even  where  therp  if .  **  P^^""^*"  <»• 

that  effect,  -^^/..^e^."  ^^^2  cLTlfTc  T.'t*'"  "T 
y.  Thompson,  3  Cranch  C  C  lioa  a  7  ,  ^-  "^'  ^"^'"^^ 
or  mortgagor'  is  di^uTlifiedt  vote  ^  T^'tV'"'  P'«^«- 
cation  extends  as  well  to  the  nW  ''^  *^'  disqualifi- 

Holr.es,  5  Cow.  426  1  W^ods"^  Kv^T  ""  'T"^'  ^^  ^-^"^^ 
ca-s  cited.  See,  als^,  it'^J  ^^6  'f '  ''"' 
V.  .<feZe^a«,  107  U.  S.  20,  2  Sup  Ct  rII.  in  r  '  ^'''■^^* 
be  doubted  if  the  chartpr  .?*?'  J^'  P"  ^"-  '*  '"'^y  well 
affords  any  authority  for  th-  )""'  '^™^*  ^^-^P^^v 

what  its  /ame  implfa  tuT"""  "^  '"*  *  P°"«^-  I*  i« 
•said  in  the  argument  of  one  ff  T^'"^'  ""•^'  «^  ^^«^  ^*'" 
Trust  Compaify  "Cin   °  L      ..'  '°""'^^'  '*  "^«  Central 

naked  trustL  i'nto  tre'SvtTpe  aSorS"  ^*''*'""  «^  '^ 
system,"  the  court  must  be  la  i  !^f  ^  ^^^^  """'''•oad 
by  law  to  do  so.  U  t  mJaoi  ff  "^  ^^^  ''"^'^""ty 
the  appointment  of  ev  yTffice'Vftis  v  ^  I*''"  ^'^  «'^* 
from  president  to  flag-  [uSZ^l.  *'!  7,«   railroad  system, 

important  powers  offhe  rauLT'  ^  ^"  *^"  ^''^t  «nd  most 
of  states  distant  from  hrS'ofT'n"  "'^'^'^  '""^  ^'P'^ 
Pany  are  profoundly  concerned  are  .  t  ^^'''^.  ^™^'  C^'"" 
trol.  It  is  moreover  the  TZi  "'''"  ^'*'>'°  ''«  •=«»- 
counsel  and  as  it  appears  fro^^  ^T'  '"***™«^  ^y  ^'^ 

millions  of  the  indEd:eJ7/^j^;;;trit^^^  'T'''''' 
agent  for  its  creditors     r«n  if     i      u      .   "^*  '^'  ^'i®"'  the 

debtor?  Ifso,itis^"lyp:iiithrt  ».*^\'^^"*  *"'  ^'^^ 
creditor  perceives  a  debt  toT^.  .f '''''"  *^"  «^«"t  «*  t^e 
may  make  default,  and  th^s^he  ?  r  '  '^'"*  ^°'  ^'^^  ^^^tor 
to  the  block.  In  s\.at4  tSL  ts^TbH^:  """'^''l  ^  '"•""^'^* 
tended  on  this  great  ^^^JS:^^CS!l^^Z 


i 


» 


I     1^ 


26 


50  FEDERAL  REPORTER,  344. 
Opinion  of  the  Court. 


permit  conflicting  trusts  or  conflicting  interests  to  be  reposed 
in  one  trustee. 

Besides,  it  appears  from  the  evidence  that  the  accredited 
president  of  the  Central  Trust  Company  is  and  has  been  con- 
cerned as  the  financial  expert  seeking  to  bring  about  a  con- 
solidation and  reorganization  of  all  the  railroads  which  are 
or  have  been  under  the  control  of  the  Terminal  Company. 
These  roads  operate  the  competing  lines  in  the  state  of 
Georgia,  and  in  the  statement  of  March  1,  1892,  addressed 
by  Mr.  Frederick  P.  Olcott,  president  of  the  Central  Trust 
Company,  to  the  holders  of  securities  of  the  Terminal  Com- 
pany, this  appears: 

"  In  view  of  the  pending  litigation  affecting  the  Central  Railroad  & 
Banking  Company  of  Georgia,  and  questions  which  are  before  the 
courts  undetermined  respecting  its  existing  lease,  and  considering  the 
legal  difficulties  attending  a  consolidation  embracing  that  company, 
the  committee  has  found  it  advisable  to  make  no  provision  for  the 
present  for  taking  up  the  outstanding  stocks  or  securities  of  the  Cen- 
tral Railroad  &  Banking  Company  of  Georgia,  but  the  interest  of  the 
Richmond  Terminal  Company  in  these  stocks  and  securities  will  vest 
In  a  new  corporation,  and  form  a  part  of  the  security  on  a  new  first 
mortgage  bond." 

The  East  Tennessee,  Virginia  &  Georgia  securities  will 
be  covered  by  the  same  mortgage,  and  the  two  roads  will 
be  under  the  same  control.  Can  it  be  denied  that  this 
avowed  purpose  would  have  the  effect,  or  be  intended  to  have 
the  effect,  to  defeat  or  lessen  competition,  and  to  encourage 
monopoly?  And  yet  with  the  voting  power  of  this  stock 
in  its  control  the  Trust  Company  can  accomplish  this  result. 
Not  only  is  this  true,  but  if  it  be  competent  for  the  Central 
Trust  Company  to  operate  one  railroad  system  of  which  it 
holds  securities,  if  a  few  words  from  the  mortgagor,  trans- 
ferring the  voting  power  of  stocks  pledged  with  it,  can 
give  it  control,  what  it  may  do  with  one  road  it  may  do  with 
another.  If  it  may  vote  the  stock  of  the  Central,  it  may  vote 
the  stock  of  the  East  Tennessee,  Virginia  &  Georgia,  the 
Louisville  &  Nashville,  and  all  the  others,  and  thus  the 
railroads  of  an  entire  section  may  be  the  playthings  of  the 
officers  of  this  corporation.  Surely  this  may  tend  to  defeat 
or  lessen  competition  and  to  encourage  monopoly.  But 
whatever  may  be  the  powers  of  the  Central  Trust  Company 
elsewhere,  it  certainly  cannot  exercise  such  powers  as  we 


I 


CLAKKE  V.  CENTEAL  B.  S.  &  BANKING  CO.  OF  GEOEGIA.      27 

Opinion  of  the  Court, 
have  described  within  the  state  of  Georgia.  A  corporation 
of  this  state  could  not  do  so.  Comity  between  the  states 
authorizes  a  corporation  to  exercise  its  charter  powers 
.  within  another  state,  but  it  does  not  permit  the  exercise  of 
a  pow-er  where  the  policy  of  [345]  that  state,  distinctly 
marked  by  legiSative  enactments  or  constitutional  provi- 
sion forbids  It.  Bunyan  v.  Coster,  14  Pet.  122;  McDonoqh 
V.  Murdoch,  16  How.  367;  Marshall  v.  Railroad  Co,  16" 
How.  314.  ' 

It  is  said,  however,  that,  by  the  charter  of  the  Central  Rail- 
road &  Banking  Company,  other  corporations  mav  own 
stock  in  that  company.  It  is  quite  evident  that  the  language 
upon  which  counsel  for  the  movant  rely  relates  to  corpora- 
tions of  the  classes  mentioned  in  the  charter.  The  cities  of 
Macon  and  Savannah  are  mentioned,  and  other  corporations 
are  authorized.  Under  a  familiar  rule  of  construction,  thic 
would  seem  to  mean  other  municipal  corporations.  Be  this 
as  it  may,  if  any  other  corporation  had  not  purchased  the 
fit.  5'  constitution  of  1877,  such  other  corporations 

cannot  since  then  buy  it,  or  hold  it  on  anv  contract  or  agree- 

riav!  t^rff  ''f'f'ff^'  h'-«  the  effect,  or  be  intended 
to  have  the  effect,  to  defeat  or  lessen  competition  or  to  en- 
courage monopoly.  This  would  be  especially  true  of  a  non- 
^sident  corporation,  which,  when  it  enters  the  state,  does  so 
with  submission  to  the  settled  policy  of  the  state.  The  court 
recognizes  the  soundness  of  the  authorities   cited   by  the 

ZTh  TT'^l  ^^^  '"''^'*"*  '"  ^'•^'"^"t-    It  i«'  however, 
trn!  tV.  .  S^      •""*  'PP'y  *^  "  ''^^  "'^^  this.     It  is  perhaps 
true  that  there  is  no  precedent  precisely  pertinent  to  the 
grave  issues  presented  by  this  controversy.    They  have  sprung 
into  existence  because  of  the  marvelous  railroad  development 
of  the  country,  and  because  of  the  ease  and  facility  with 
Avhich  a  trust  owning  a  bare  majority  of  the  stock  of  a  cor- 
poration can  nullify  and  deaden  the  vote  of  all  the  minority 
stock,  however  great  the  minority,  or  however  rightful  and 
intelligent  would  be  its  exercise.     The  alarming  effect  of  this 
power  may  be  illustrated  by  the  facts  of  this  case.     Fortv 
thousand  shares  of  stock  have  deadened  the  votes  of  32  000 
IS  I"        T  '"'"troUed  as  many  millions  in  values.    These 
40,000  shares  have  been  deposited,  and  bonds  issued  thereon' 


28 


50  FEDERAL  BEPORTEK,   345. 


I: 


Opinion  of  the  Court 
If  tlie  voting  power  of  the  stock  is  apportioned  among  the 
bonds,  20,100  shares  may  control  the  policy  of  the  entire  block 
and  these  20,100  shares  may  thus  control  all  the  millions  be- 
longing to  the  Central  properties,  and  yet  stockholders  who 
have  32,000  shares  have  no  voice  in  the  management  of  the 
properties,  in  which  perhaps  their  all  is  invested. 

Even  where  individuals  form  a  combination  to  control  the 
majority  stock  of  a  corporation,  and  agree  not  to  transfer 
their  shares  to  the  opposition  or  not  to  vote  against  the  com- 
bination, such  contracts  have  been  held  to  be  void  as  in  re- 
straint of  trade,  and  against  public  policy.  Ordinarily  any 
stockholder  may  withdraw  from  such  a  contract,  although  it 
is  expressly  agreed  that  it  shall  be  irrevocable.  1  Beach,  Priv. 
Corp.  §  305,  and  cases  cited. 

It  is  insisted  by  the  petitioners  that  the  Terminal  Company 
has  no  appreciable  interest  in  the  stock  of  the  Central  Rail- 
road.    The  interest  it  formerly  had  was  conveved  bv  the 
mortgage  of  1889.    The  bonds  executed  under  thai  mort<^ffe 
and  secured  by  the  Central  stock,  have  long  ago  been'sold' 
and  the  proceeds  appropriated  by  the  Terminal  Company 
But  that  company  has  a  substantial  and  large  pecuniary  in- 
terest in  the  [3461  Richmond  &r  Danville  and  the  East  Ten- 
nessee, Virginia  &  Georgia  Railroads.     These  roads  are  the 
natural  competitors  of  the  Central.    Is  it  surprising,  then, 
that  the  Terminal  Company,  controlling  by  this  "Voting 
trust "  the  management  of  the  Central,  should  make  the  road 
m  which  It  IS  not  interested  sutfer  for  the  benefit  of  its  rivals 
which  It  not  only  controls,  but  possesses?     It  is  not  difficult 
to  perceive  that  a  combination  of  corporations  which  produces 
a  condition  so  inequitable  cannot  be  sanctioned  by  the  law 
We  believe  that  transactions  of  this  character  are  Within  the 
spirit,  if  not  within  the  letter,  of  the  act  of  congress,  known 
as  the  "  Sherman  Anti-Trust  liaw."    Act  July  2,  1890,  (26 
St.  at  Large,  p.  209.)     It  certainly  is,  as  we  have  seen   ob- 
noxious to  the  law  of  Georgia,  and  it  was  certainly  as  obnox- 
ious to  the  common  law.    The  baleful  effects  of  such  an  un- 
lawful scheme  have  been  most  significantly  illustrated  by 
the  record  itself.    The  property  of  one  of  the  oldest  and  most 
renowned  railroads  in  the  United  States  has  been  brought  to 
the  verge  of  ruin.    These  stocks  were  once  so  solvent  and 


{ 


CLABKE  V.   CENTBAL  B.  E.  4  BAKKING  CO.  OF  GEOBGIA.   29 

Opinion  of  the  Court. 
-     reUable  that  trust  estates,  the  property  of  widows  and  o^. 
phans,  of  charitable  and  eleemosynary  institutions,  were  in- 
vested  in  them,  at  the  will  of  the  trustees,  without  an  order 
of  court  to  sanction  the  investment.    The  properties  have 
bom  impoverished  in  every  department.     Skillful  artisans 
and  mechanics,  who  from  their  apprenticeship  have  been  in 
the  service  of  the  companies,  have  been  turned  away.     Vast 
muldings  which  were  once  musical  with  the  whirr  of  machin- 
ery and  the  voices  of  prosperous  and  contented  workingmen 
earning  by  their  useful  and  valuable  labor  a  comfortable 
Jivelihood,  are  now  voiceless.    The  ashes  sleep  undisturted 
on  the  forge,  and  the  hammer  rusts  on  the  anvil.    Merchants 
and  tradesmen  who  have  depended  upon   the  purchasing 
lM)wer  of  these  operatives  have  been  threatened  with  ruin  • 
numberless  houses  once  occupied  by  their  happy  families  are 
now  vacant;  and  those  whose  all  is  invested  in  the  securities 
of  this  company  are  haunted  with  the  expectation  that  the 

hanlT''    f  "'*,  "P""  '''  obligations,  and  be  sold  under  the 
hammer  on  foreclosure,  and  the  provision  made  for  their  de- 
clining years  swept  from  existence.     But  this,  and  all  of  thi. 
IS  unimportant,  compared  with  the  greater  interest  of  the 

Tttr  T  "^'J*?'  ^'"'"''^  ^''^  *'^«  corporation  created 
by  them  and  granted  vast  and  valuable  franchises,  shall  be 
managed  as  a  railroad  upon  lawful  business  prindple  in 
aie  ransportation  of  freight  and  passengers,  and  for  the 
development  of  the  state,  and  that  it  shall  not  be  the  toy  S 
the  speculator,  and  that  the  franchises  which  they  granted 
for  nobler  purposes  shall  not  be  made  the  instrument  S  thS 

s^i       J^^""^^*'""  «*  th«  «tate.    The  possession  of  ij 
stodc  does  not  give  uncontrollable  right  in  the  management 

cornon       V^r'^^'r    ^'^^  ''^^'  «f  the  state  that  the 
corporation  should  conform  to  the  purposes  for  which  the 
law  created  it  is  wholly  paramount  to  any  and  all  rights  S 
stockholders.    It  may  not  be  doubted  that  the  values  repi^ 
sented  by  these  42,000  shares  of  stock  are  entitled  t^The^^. 
tection  of  the  court,  and  they  will  be  protected.    When  ftl^s 
offered  to  vote  them  with  the  ligitimate  purpose  for  wMch 
Uie  majority  of  shares  of  stock  in  a  corporation  may  be  law 
fuly  voted,  at  the  instance  [347]  of  parties  who  havVCl 
authority  to  hold  and  vote  them,  they  will  be  voteT  The 


30 


50  FEDERAL  BEPOBTEB,  469. 


Till 


1 


I 


Byllabvm, 
court  will  be,  moreover,  happy  to  entertain  any  proposition 
for  voting  them  which  wiU  result  in  the  management  of 
this  road  m  such  manner  that  it  need  not  be  wrecked ;  in  such 
manner  that  its  matchless  properties  may  be  utilized  to  pay 
Its  obligations  as  they  mature,  and  to  protect  its  values.     It  is 
weU  understood  by  the  court  that  the  mere  fact  that  this 
stock  may  not  be  voted  in  its  present  illegal  status  is  a  menace 
to  the  credit  of  the  Central  Railroad,  and  to  the  power  of  the 
court  and  of  its  receivers  to  redeem  it  for  the  benefit  of  all 
concerned.    We  have  no  doubt  that,  properly  managed  in 
accordance  with  the  law,  with  the  encouragement  of  those 
who  are  friendly  to  it,  which  its  great  importance  deserves, 
the  Central  Eailroad  &  Banking  Company  cannot  only  pay 
Its  obligations  as  they  mature,  but  rehabilitate  its  fortunes, 
imperiled  as  they  are  by  this  illegal  trust  voting  a  majorty  of 
the  stock,  the  exercise  of  which  the  court  has  enjoined.    Th.- 
court  is  quite  as  solicitous  to  protect  the  interest  of  the  credit- 
ors as  of  stockholders  of  this  great  property,  but  there  is 
nothing  in  this  motion  which  will  justify  the  court  in  chang- 
ing the  order,  which  was  mainly,  indeed,  we  may  say  abnost 
wholly  attributable  to  the  wisdom,  experience,  and  acumen  of 
the  learned  circuit  judge;  an  order  intended  to  preserve  the 
property  for  the  present,  to  gather  anew  its  dissipated  assets, 
and  to  restore  it  as  speedily  as  possible  to  the  lawful  charge 
of  those  who  may  be  found  legally  entitled  U>  its  management 
and  control.    Let  an  order  be  taken,  denying  the  application. 


[469]      UNITED  STATES  v,  GREENHUT  ET  AL. 

(District  Court,  D.  Massachusetts.    May  16,  1892.) 

[50  Fed.,  469.] 

Illegal  Tbusts  and  Monopolies— lNDiCTMENT.~Act  Cong.  July  2, 
1890,  (26  St  p.  209,)  "  to  protect  trade  and  commerce  against  unlaw- 
ful restraints  and  monopolies,"  provides,  in  section  2,  that  "  every 
person  who  shall  monopolize,  or  attempt  to  monopolize,  or  combine 
or  conspire  with  any  other  person  or  persons  to  monopolize,  anv  part 
of  the  trade  or  commerce  among  the  several  states,  or  with  foreign 
nations,  shall  be  deemed  guilty  of  a  misdemeanor,"  etc.  Held  that 
an  indictment  thereunder  which  fails  to  allege  that  defendants  mo- 
nopolized, or  conspired  to  monopolize,  trade  and  commerce  among 


UNITED  STATES   V.  GBEENHUT. 
Opinion  of  the  Court. 


31 


fvLThShirroes'a^^  t'^tt  ""T^'  ^^"^  '^  ''^'^  -  o^-- 
monopolize  t^etTmlT^^^^iTL'^  '"*'^"  ''''  ^''"^  ^°*-*  *<> 
and  that  they  have  destrov^  i        "^'"'^^  ^™^°^  ^^^  ^^^^^^^  «t«tes. 

Of  the  statesf  and  inerea^^^^^^^^  *"  ^"^^  *^^«-  '^  one 

na  mcreased  the  price  of  distilled  spirits  therein.* 

fof  ti'^ion'^rttr "'  -"""^^  ^-  ^'^^-'  -<*  °tte^ 

quashed  ^^^  "«"''*^*  monopolies.    Indictment 

Frank  D.  Allen,  V.  S.  Atty. 

Nelson,  District  Judge. 

This  is  an  indictment  under  the  second  section  of  the  act 
of  congress  approved  July  2,  1890,  entitled  "  A^  act  tZ 

the  defendants  ate  Mce^^'^rt™^?,,"*^  '""^^  *** 

the  UnitirSatef  and   w  vr  '"'^^'^^  '^'"'^^^'^^  within 

-naged,toSL'd  fndlSelS  d£  ^^"^'^';  ""**' 
nfactured  sixtv  siv  mill;  "        n  .  distilleries,  and  man- 

sold  the  prSt  litS  Xe  VnZ  t  f  ^*'"^'  T'*^'  ^^^ 
district  of  Massachui,  at  S  fSo^'firdV'.?  '°  *^ 
whole  being  seventy-five  ^  c^rofaS^h^l^letr'  '1" 
manufactured  and  sold  within  the  1^11^^*^  J  -P'"*' 
period;  that  all  said  acts  (excent  tW  ,,  *^  '^"""S  the 
of  the  distilleries)  werrdteTtl  !lf  "'f '?^  '"<*  '^"^^"^ 
to  the  company  the  ZlZu:ZT:^1^2mT'^'T 

MassachuseL  and Tf  S  1^^  1":"'/^  "*"^"^  '' 


32 


60  FEDERAL  REPOBTEB,   470. 


I  ii 


Opinion  of  the  Court, 
imts,  as  such  officers,  agreed  with  D.  T.  Mills  and  Co  and 
ottier  dealers  in  Massachusetts  thai,  if  such  dealers  would  buy 
all  their  supplies  6f  distilled  spirits  from  the  company  for 
SIX  months,  the  company  would  give  them  a  rebate  of  two 
cents  a  gallon  on  their  purchases;  that  by  means  of  the  rebate 
nijreements  and  by  their  control  of  the  distilleries,  and  of  the 
manufacture,  sale,  and  prices  of  seventy-five  per  cent,  of  all 
the  distilled  spirits  manufactured  and  sold  in  the  United 
,  States  during  the  period  named,  the  company,  and  the  de- 
fendants  as  its  officers,  had  made  large  sales  of  distilled 
spirits  to  D,  T.  Mills  and  Co.  and  other  dealers  in  Massachu- 
setts  at  prices  fixed  by  the  defendants  in  excess  of  the  usual 
prices  at  which  such  spirits  were  then  sold  in  that  state,  such 
spirits  having  been  manufactured  in  other  states,  and  trans- 
ported therefrom  into  Massachusetts,  and  had  unlawfully 
monopolized  to  said  company  the  manufacture  and  j^ale  of 
distilled  spirits,  and  had  increased  the  usual  prices  at  which 
distilled  spirits  were  then  sold  in  Massachusetts,  and  had 
lirevented  and  counteracted  the  effect  of  free  competition  in 
the  price  of  spirits  in  Massachusetts,  and  had  exacted  and 
procured  great  sums  of  money  in  said  district  from  D.  T. 
Mills  and  Co.  and  others.    To  this  indictment  the  defendant 
Greenhut  filed  a  motion  to  quash,  and  the  other  defendants 
demurred,  upon  the  ground  that  the  indictment  is  insufficient 
m  law,  and  does  not  charge  any  offense  created  by  any 
statute  of  the  United  States. 
The  second  section  of  the  act  is  as  follows: 

i«on.MZ^r**^niI^  Sf "  »^^"?r»t»»«'  «'•  attempt  to  monopolize,  or 
^^  nSff  nf  H??!?,'*'^^*'  ^"^  ""^^  ^'•***'°  ^"^  I^'^^"^  to  monopolize 
SSIiS!      Ii  "*®  *r?,^u'*''  «>'»™^rce  among  the  several  states,  or  with 

!lSf  52!^^  T'u^^  ^^^"^  ^•^^'  ^f  ^  misdemeanor,  and,  on  ^n 
vlrtfon  flwreof.  filiall  be  punished  by  a  fine  not  exceeding  five  thousand 
doUars,  or  by  imprisonment  not  exceeding  one  year,  or  by  l^th  aaW 
punishments,  in  the  discretion  of  the  court?'  »  w  oy  ootn  said 

An  indictment  framed  under  this  section  should  contain 
a  distinct  averment  in  the  words  of  the  statute,  or  in  equiva- 
lent language,  that,  by  means  of  the  acts  charged,  the  defend- 
ants had  monopolized,  or  had  combined  or  conspired  to  mo- 
nopolize, trade  and  commerce  among  the  several  states  or 
with  foreign  nations.  This  indictment  contains  no  such  aver- 
ment. It  does  not  charge  that  the  defendants  entered  into 
any  unlawful  combination  or  conspiracy.    Nor-  does  it  con- 


m  BE  COBNING. 
Syllabus. 


33 


tarn  any  averment  that  they  had  monopolized  trade  or  com 

merce  among  the  several  states  [471]  or  with  forpi^n  Ti 

It  avers  merely  that  by  means  of  tL    7^*"  ^f^^^f^  nations. 

monopolized  th'e  manuCur  anV t^^^ 

that  the  defendants  have  done  certain  things  with  intent^ 
monopolize  the  traffir.  in  ^;^4.;ii  j       •  •       ^  intent  to 

whether  the  acts  char^edrnl  w  ""P^^tant  questions 

within  the  n^ealto/  heTtu  :  a^S  '^'^^"''^"'o^T'', 
congress  has  the  constitutional  aithork.:  !  i  T  ''"'  ^'''*'^^'- 
to  be  unlawful  and  Prim;^  i       j"*''°"*3'  *»  declare  such  acts 

against  the  Sentry ^^Jt  :^^^^^^^^^^^^ 
poration  than  of  its  officers.    In^et'd  t  teT       '^'  '''- 
IS  only  necessary  to  remark  th.ttf  ^  questions  it 

character  as  to  requlr^  Zt  fJ,l  V  1^  ''""  *^  ^  ''^  ^"«h  a 
against  the  govS^ent  bv  1^1  f  7^^  °"*  ^'  ^''^^'^  fi"«»y 
-ved  for  tie  ^Zln^^ oTtZ',^^  ^^^m  be  re' 
presented  upon  an  indi..tmJf       ,''^^fPP'^"ate  court,  when 

law.    Indictment  quashld?/      °"'f  "'*  insufficient  in 

quashed.    Judgment  for  the  defendants. 

f*«5]  iif  Kjj  CORNING  ET  AL. 

UNITED  STATES  v.  GREENHUT  ET  AI. 

(District  Court.  N.  D.  Ohio.  E.  D.    June  U,  a892.)  " 

[51  Fed.,  205.] 
AfoNopoLiES— Criminal  Taw    t.. 

USOg-voi,  iJoe  M— i   "'°"°P''"«s.  averred  that  defendants, 


1 


51  MDEBAL  BBPOBTIB,  105. 


i 


Syllabus. 

to  pursuance  of  a  combination  to  restrain  trade  In  dlstlllerr  Drod- 
ucts  between  the  states  and  monopolize  the  traffic  therein,  acquired 
by  lease  or  pun^hase.  prior  to  the  passage  of  the  act,  some  70  dis- 

n  r/rj*?'"'''"'^  **"*  "'"•'**"  °'  *"«  distillery  products  of  the 
Cnlted  States,  and  that  th^  continued  to  operate  the  same  after 
the  passage  of  the  law,  and  by  certain  described  means  sold  the 
product  at  increased  prices.  Held,  that  no  crime  was  charged  in 
r^pect  to  the  purchase  or  continued  operation  of  the  distlUeries, 

^»  Hrir?"  ""  '"'*""^°'  *"*  lete^lants  obligated  the  vendors  o^ 
the  distilleries  not  to  build  others,  or  to  withhold  their  capital  or 
experience  from  the  business.' «  «^»piiai  or 

Same  -The  Indictment  further  averred  that  defendants.  In  pursuance 
of  the  combination,  shipped  certata  of  the  products  to  Massachu^ 
»ette,  and  sold  them  there  through  their  distributing  agents  to 
dealers,  who  were  promised  a  rebate  of  five  cents  per  gallon  on  their 
purchases,  provided  such  dealers  purchased  their  distlllerv  products 
exeluKlveiy  from  the  distributing  agents,  and  sold  them"  no  lower 
than  the  prescribed  list  prices,  said  rebate  to  be  paid  when  such 
dealers  should  sign  a  certificate  that  they  had  so  purchased  and  sold 
for  six  months ;  and  that  by  this  means  defendants  had  controlled 
and  increased  the  price  of  distillery  products   In  Mas.sachusetts. 
Held,  that  no  crime  was  charged  with  respect  to  such  sales,  since 
there  was  no  averment  of  any  contract  whereby  the  purchasers 
bound  themselves  not  to  purchase  from  others,  or  not  to  sell  at  less 
than  list  prices.  , 

Cbiminal  Law— Pedebai.  Cobiits— Removai  op  Prisoner— On  an 
application  to  a  federal  court  fbr  the  removal  of  a  resident  of  the 
district  to  a  distant  state  and  district  for  trial,  it  is  the  duty  of  the 
court  to  scrutinize  the  indictment,  disregarding  technical  defects 
but  to  refuse  the  warrant  If  the  crime  alleged  is  not  triable  in  the 
district  to  which  a  removal  is  sought,  or  If  the  indictment  fails  to 
charge  any  offense  under  the  law. 

At  Law.  Indictment  against  Joseph  B.  Greenhut  and 
others  for  violating  the  law  against  monopolies.  Heard  on 
application  for  a  warrant  to  remove  defendants  to  another 
district  for  trial.    Denied  and  prisoners  discharged. 

Allen  T.  Brinsmade,  Dist.  Atty.,  for  the  United  States. 

Elihu  Root,  Thos.  Thatcher,  and  S.  E.  Williamson,  for 
defendants. 


•  See  U.  S.  V.  Greenhut,  30  Fed.  Rep.  469  [ante  p.  30],  for  a  decision 
In  the  district  court  of  Massachusetts  on  motion  to  quash. 

•  S.vllabus  copyrighted,  1892,  by  West  Publishing  Co. 


IN  BE   COENING. 
Opinion  of  the  Court. 

Ricks,  District  Judge. 


35 


This  cause  comes  before  me  upon  the  application  bv  the 
district  attorney  for  a  warrant  for  removal  to  the  district  of 
Massachusetts  of  Warren  Corning  and  Julius  French   citi 
zens  of  this  judicial  district,  against  whom  is  pending  an 
indictment  preferred  by  the  United  States  in  Sie  disfrict 
court  for  the  district  of  Massachusetts.    A  certified  copy  o1 

UniLdST  '  *"^''^"  '''V""  ^^'"™  "^  ^-  J-  William's,  a 
S  ?hat  /r.'"?"'"''"  ^"^  '^'  "'™^*  ^''•"■t  of  this  d  s- 
trict,  that  said  defendants  refused  to  give  bail,  and  were  bv 

him  committed,  is  filed.    The  defendants  object  to  thel^nt 
ing  of  a  warrant  for  removal,  because  the  indictment  d^ 
not  charge  an  offense  against  the  laws  of  the  UntTd  Stat^ 
B«ng  residents  and  citizens  of  this  judicial  dis  rL    tS 
[206]  claim  the  right,  upon  this  application,  to  cha'lWe 
the  sufficiency  of  the  indictment,  and  insist  that  it  is  the  dT 
of  the  district  judge,  before  ordering  the  removal  o?  a  cittel 
o  a  distant  district  for  trial,  to  scrutinize  the  ind^cW 
and  to  refuse  the  warrant  in  case  it  appears  upon  the  faTof 

MlontdS?  ^''''"*"'^  '"-^  '""^  -^--*  '>*  --oval.  Jute 

the  prScre""  T^hfrnl^Xon^'r  '?  ^"^  ""''^^'"^  <^'«-ed  for  It  in 
of  tim  government  a  MindlmiZt'i'T,''."  "  "^'sh  Judicial  officer 
vast  extent  as  ours."it  is  not  a  HgM  mX^;  /"  "  '^'"'''^  «'  «'^h 
offender,  and,  ou  the  mere  order  of  nninf^;*^"^  to  arrest  a  supiwsed 
hundreds,  it  may  be  thousand^   Ll  ,'"«"0'"  magistrate,  remove  him 

provides  the  Previous  sanet  on  if  th^dfstr^l'    V'    ''^^  '•''^^  ^'^^ 
Mere  technical  defects  in  \n!„^fJz    ^'^''^'et  judge  to  such  removal 

a  dishict  ^«lge  Who  srul^oS'tte^rL^ovTof"".*  "^  -^^rdeS^  but 

lue  lemoval  of  a  prisoner  when  the 


r 


36 


51  FEDERAL  EEPOBTEB,  206. 
Opiuiun  of  the  Court. 


IN  HE  COENING. 


37 


I 


only  probable  cause  relied  on  or  shown  was  an  indictment,  and  that  In- 
dictment failed  to  show  an  offense  against  the  United  States,  *  #  ♦ 
would  misconceive  his  duty,  and  fail  to  protect  the  liberty  of  the 
citizen." 

Ordinarily,  where  an  offense  charged  was  committed  in  the 
district  where  one  or  more  of  the  several  defendants  reside, 
the  trial  of  the  accused  should  be  had  in  the  district  of  which 
he  is  or  they  are  inhabitants.  Where  an  offense  has  been 
committed  in  several  different  districts,  and  the  accused  re- 
side in  other  and  different  districts,  the  government  has  a 
right  to  elect  in  which  one  of  the  districts  the  prosecution 
may  be  conducted ;  and,  under  proper  conditions,  may  elect 
to  prosecute  them  in  a  district  other  than  that  in  which  they 
or  either  of  them  reside.  There  may  be  exceptional  condi- 
tions which  would  justify  prosecution  in  a  district  remote 
from  that  in  which  any  one  of  a  number  of  defendants  re- 
sides, or  far  remote  from  the  district  where  the  principal  busi- 
ness of  the  accused  is  conducted.  But  the  spirit  of  our  laws 
is  to  indict  and  try  offenses  in  the  district  where  the  defend- 
ants reside,  if  the  offense  was  committed  in  such  district,  and 
if  local  influences  and  prejudices  are  not  too  serious  ob- 
stacles to  be  overcome. 

I  am  moved  to  these  remarks  because  it  appears  in  this  case 
that,  if  the  indictment  sufficiently  charges  an  offense  in  the 
district  of  Massachusetts,  a  similar  offense  was  committed 
in  almost  every  other  district  of  the  United  States,  and  more 
flagrantly  in  the  district  in  which  some  of  the  accused  re- 
side, and  in  one  of  which  several  of  them  reside  and  conduct 
their  principal  business.  It  appears  from  the  indictment 
that  one  of  the  defendants  resides  in  the  southern  district 
of.  New  York,  where  [207]  many  transactions  similar  to 
those  averred  in  the  indictment  take  place ;  several  reside  in 
the  southern  district  of  Ohio;  several  reside  in  this  district; 
and  several  reside  in  the  northern  district  of  Illinois,  where  the 
corporation  was  organized  and  has  its  legal  residence,  and 
conducts  its  principal  business.  In  each  of  these  four  dis- 
tricts similar  offenses  were  conamitted. 

These  are  not  stated  as  reasons  why  they  should  not  be 
removed  for  trial,  if,  in  fact,  a  sufficient  indictment  is  pending 
against  them  in  the  district  of  Massachusetts,  but  rather  as 
justifying  a  closer  scrutiny   into  the  indictment  than  if  the 


Opinion  of  the  Court. 

only  offenses  committed  were  those  alleged  in  this  indict- 
ment, or  the  district  of  Massachusetts  was  the  only  place 
where  the  strong  arm  of  the  law  could  reach  them.  Does  the 
indictment  charge  an  offense  under  the  act  of  July  2,  1890, 
known  as  "  An  act  to  protect  trade  and  commerce  against 
unlawful  restraints  and  monopolies  ?  "  The  first  section  of 
the  act  declares  illegal  "  every  combination  in  the  form  of 
trust  or  otherwise,  or  conspiracy  in  restraint  of  trade  or  com- 
merce among  the  several  states,  or  with  foreign  nations." 
The  second  section  declares  that  "  every  person  who  shall 
monopolize,  or  attempt  to  monopolize,  or  combine  or  conspire 
with  any  other  person  or  persons  to  monopolize  any  part  of 
the  trade  or  commerce  among  the  several  states,  or  with  for- 
eign nations,  shall  be  deemed  guilty  of  a  misdemeanor." 

The  indictment  alleges  that  before  the  enactment  of  the 
law  in  question  the  defendants,  for  the  purpose  of  monopo- 
•  hzmg  and  restraining  the  trade  and  commerce  in  distillery 
products  among  the  several  states  of  the  nation,  combined 
with  others,  and  purchased  or  leased  or  otherwise  obtained 
control  of  70  distilleries,  which  had  theretofore  been  com- 
petmg,  separate  distilleries,  and  so  operated  them  as  to  pro- 
duce 77,000,000  gallons  of  distillery  product,  which  output 
comprised  about  75-100  of  the  total  production  of  the  dis- 
tilleries of  the  United  States;  and  that  the  condition  of 
trade  in  such  products  during  the  period  charged  was  such 
that  the  defendants,  by  means  of  their  combination,  were  able 
to  prevent  free  competition  on  the  actual  price  of  such  prod- 
ucts, and  thereby  control  the  price,  so  as  to  augment  and  in- 
crease the  price  thereof  to  consumers  in  the  district  of  Mas- 
sachusetts, and  to  restrain  trade  therein  among  the  several 
states. 

The  first  count  of  the  indictment  alleges  a  combination  on 
the  part  of  the  defendants  to  restrain  the  trade  and  commerce 
in  the  district  of  Massachusetts,  and  between  that  state  and 
other  states  of  the  Union,  in  distillery  products,  of  which  it 
charges  that  defendants  produced  75-100  of  the  entire  pro- 
duction of  the  United  States,  and  avers  that  on  October  3, 
1890,  they  sold  to  Mills  &  Gaffield,  in  Boston,  5,642.82  cal- 
lous of  alcohol,  said  alcohol  being  part  of  the  product  of  s^'aid 
distilleries,  and  made  in  Peoria,  111.,  and  intended  to  be  trans- 


If 

k4- 


38 


81  FEDEKAL  BEPOBTEB,   207. 


Opinion  of  tlie  Court 

ported  and  sold  to  said  Mills  &  Gaffield  in  Boston ;  and  with 
tlie  intent  to  restrain  the  trade  therein  they  fixed  the  price 
at  which  said  Mills  &  Gaffield  should  sell  the  same  in  the  dis- 
trict  of  Massachusetts,  or  for  transportation  to  the  other 
States,  and  did  compel  said  Mills  &  Gaffield  to  sell  said  alco- 
hol at  no  less  price  than  that  fixed  by  the  defendants ;  and, 
by  reason  of  their  com-  [208]  bination,  said  defendants  did 
control  the  amount  of  said  products  sold  in  said  district  or 
for  transportation  to  other  states,  and  did  counteract  the 
effect  of  free  competition  on  the  usual  price  at  which  said 
products  were  sold  in  Massachusetts  or  for  transportation 
to  other  states,  and  did  increase  and  augment  the  price  at 
which  said  products  were  sold  in  said  state,  and-  for  trans- 
portation to  other  states,  and  did  thereby  exact  and  procure 
great  sums  of  money  from  the  citizens  of  said  district,  and 
thereby,  and  by  other  means  to  the  jurors  unknown,  restrain 
the  trade  and  commerce  in  said  products,  between  the  state 
of  Massachusetts  and  other  states  of  the  Union. 

The  second  count  charges  the  defendants  with  combining 
and  monopolizing  to  themselves  the  trade  and  commerce  in 
distillery  products.    It  charges,  in  the  same  terms  set  forth 
in  the  first  count,  the  purchase  and  lease  of  70  distilleries, 
controlling  75-100  of  the  distillery  products  of  the  United 
States,  which  distilleries  had  been  before  that  time  compet- 
ing producers;  and  with  the  same  purpose,  to  monopolize  the 
trade  in  said  products,  they  made  75-100  of  the  entire  output 
of  the  distilleries  of  the  several  states ;  and  with  the  intent 
of  controlling  the  trade  and  price  of  said  products  in  said 
state  of  Massachusetts,  and  between  the  several  states,  and  of 
monopolizing  the  trade  in  said  state  and  between  said  states, 
did,  on  the  18th  day  of  September,  1890,  sell  to  C.  I.  Hood 
&  Co.,  of  Lowell,  in  said  state,  through  Webb  &  Harrison, 
as  distributing  agents  for  defendants,  526.52  proof  gallons  of 
alcohol,  and  with  intent  to  monopolize  said  trade  did  then 
and  thereby  promise  said  Hood  that  if,  for  a  certain  time 
agreed  upon,  said  Hood  should  purchase  exclusively  from  the 
defendants  his  supplies  of  such  goods  as  defendants  were 
then  making,  and  during  that  period  should  not  sell  such 
goods  at  any  lower  prices  than  the  list  of  the  defendants'  dis- 
tributing agents,  and  should  subscribe  to  a  certificate  that  he 


IN  BE   CORNING. 


39 


Opinion  of  tlie  Court 
had  purchased  all  such  supplies  from  defendants,  and  had 
not  sold  the  same  at  prices  lower  than  their  distributing 
agents  had  sold  the  same,  then  defendants  would  return  to 
said  Hood  ^ve  cents  per  proof  gallon  on  the  goods  so  pur- 
chased by  Hood.    On  September  23,  1891,  Kelly  &  Durkee 
having  purchased  from  said  Webb  &  Harrison,  as  distrib- 
uting agents  of  defendants,  85.54  proof  gallons  of  alcohol, 
said  defendants,  with  intent  to,  and  in  pursuance  of  said  at- 
tempt to  monopolize  the  trade,  etc.,  did  at  Boston,  on  said 
date  promise  Kelly  &  Durkee  that,  if  for  the  period  agi-eed 
on  they  purchased  exclusively  of  one  or  more  certain  dealers 
named,  their  supplies  of  goods  then  made  by  defendants,  said 
dealers  being  then  distributing  agents  for  defendants,  and 
should  not  sell  such  goods  at  any  lower  prices  than  such 
dealers    list  prices,  which  said  defendants  controlled  and 
hxed,  and  should  certify  that  they  purchased  all  their  dis- 
tillery  products  for  said  period  from  some  one  of  the  dealers 
so  named  by  defendants,  and  had  not  sold  any  goods  so  pur- 
tTtV,'"^  lower  prices  than  said  dealers'  list  prices,  with 

fl^  1^1  Til  ^^'^'  *^^^  '"^^  defendants  would  repay  to 
said  Kelly  &  Durkee  five  cents  for  each  proof  gallon  pur^ 
chased;  and  that  defendants,  in  pursuance  of  said  comC 
tion  did  make  other  promises  to  Hood,  to  the  [209]  same 
effect,  and  also  to  Kelly  &  Durkee,  and  did  thereby,  in  the 
way  charged,  attempt  to  monopolize  the  trade  in  said  prod- 
ucts^in  said  district,  and  between  the  several  states  of  the 

tr2\if'^  """"^^  '^''^''  ^  combination  in  restraint  of 
trade,  alleging  a  transaction  with  Hood  on  October  2.  1891 
mvolving  purchases  by  him  of  518.81  gallons  of  distillery' 
Lerrefi^Th        '''T"'''''''   ^"^stantially   the    same    as 
nrom^JV  ^T'^^  ^"^^^^^  ^^^^  defendants 

rXT      if'  "^  "^"^'^^  ^'""^  '^'  ^^^  ^f  ^-i^  Purchases, 
a  lebate  of  five  cents  per  gallon,  upon  conditions  similar 

to  those  averred  m  the  second  count,  and  averring  divers 

other  similar  contracts  with  Hood  in  the  said  district. 

1892   J^^  r^^   "T^  "^""^  *^"*  ^^  ^^'  ^^^  dav  of  May, 

stramt  of  trade  and  commerce  in  distillery  products  amon^ 
the  several  states,  and  especially  in  restraint  of    radra;! 


I 


I* 


*"  61  FEDERAL  BEPOBTEB,  200. 

Opinion  of  the  Court, 
commerce  in  Massachusetts  and  other  states   with  Tr^ii^  a 
D«rkee,  which  cou.i-act  was.  in  subsSnS  ^h^t   J^  tK     ^ 
pose  of         ring  the  continuous  itona^;  "u^eUir 

Kelly  &  Durkee  five  cents  per  proof  gallon  of  defendants" 
products  then  purchased,  upon  conditio^  that  sad  purchased 
or  their  successors,  from  date  of  voucher  or  purcharto  tiZ 
ofpayment,  shall  bu,  exclusively  slh  kindTg^l^tre 
produced  by  .lefendants  from  some  one  of  their  aZtl  de^^ 
nated,  and  shall  not  sell  the  same  at  prices  WMha.fsafd 

fenEs  "V"""''  r'  ^'^""  ^^'"y  ^  that  eject,  sdde 
fendants  acting  i„  the  name  of  the  Distillery  &  Ca  tie  Feed 

t7th?r.- '  ^".'^  ^"^  *'*«  22d  of  SeptLber     891    up 

nifr:  tijfot      *'n  "'"*"^"*'  ™-"f-'urers  of  said  'd^s' 
iiiiery  products  withm  certain  states  of  the  United  «;t«to 

other  than  Massachusetts,  and  the  kind  of  gLd^^ftrod  to 
m  said  contract  being  distiller,^  products,  satd  Ke«y  &  d* 
kee  hsLvms  on  the  ^airl  7th  r?«,r  ^*  njr  V^    ^         "^ 

tlie  condifL«  ^r  1  :  ^  ""^  ^^^  complied  with  all 
cue  conditions  of  said  contract  The  first,  third  and  fnnrfi, 
coinits  are  based  on  the  first  section  of  the  act  and  cC^^ 
a  corobmat  on  and  consnirnnv  ;^  ..    ,       x     ?'  charge 

the  second  count  chr^TUbn^i  to     '"'''  ,"'"'^ 
paj  of  the  tn.de  in  disTille;  Sees  SwlTeT ae^  '' 

struZ^'"'^  *"  '''^  '"**'*'^™»*  *•»«  »>"«dest  possible  con- 
struction; giving  to  the  facts  therein  set  forth  nnTV    ?u 
acts  committed  the  meanino-  ,,.^JV     set  torth  and  to  the 
*;-.„        1    .  •      .       'neaning  most  favorable  to  the  Dro<«vii 
tion,_what  IS  the  offense  charged?     It  is  th.ttLiT^' 
ants,  prior  to  the  act  of  July  2   1890  hv  I.  !'"^" 

acquiml  some  70  distillerts  fhm  Sl'.t  fh  »••  Purchase, 

^e  Union,  and  from  themTr:;3^;^i,^0rS^^^^^^^ 

dS  ""^"T  "'"^^^  *''™  '^«''^*>'"t-d  75-100  of  the  endre 
distillery  prorI„.,ts  of  the  United  States  and  tW  th! 

tinued  to  operate  said  distilleries  nn  th.    '  !    ^''  *'°"" 

nfto,  *i,       4. 1  u'-iiiienes  on  the  same  extended  soiIp 

after  the  act  became  a  law  •  that  narf  ^t  tu  "=""«"  scale 

•hrough  their  distributing  aiJtstoH     .^        <^,«f««dants, 
setts,  under  a  promise  on^heC  'of  thet?  '."  ^T'"" 
said  dealers  should  purchase  their  dtnf"^'  '^''  '* 
clusivelv  from  the  f'lOl  dlt.iK  !     ^'^"^^^^y  Products  ex- 
.       om  ine  i,i«j  distributing  agents  of  the  defend- 


IN  BE  COBNING. 


n 


Opinion  of  the  Court 
ants,  and  should  sell  the  same  at  prices  not  lower  than  the 
list  prices  of  such  distributing  agents,  and  should  at  the  ex- 
piration of  six  months  after  such  purchases  certify  that  they 
had  so  exclusively  purchased  from  defendants'  agents,  and 
had  so  sold  at  the  said  prices,  then  defendants  would  pay  to 
such  dealers  a  rebate  of  five  cents  per  gallon  on  all  their  pur- 
chases.   The  indictment  avers  that  the  price  at  which  said 
products  sold  was  higher  than  had  before  that  time  pre 
vailed,  and  that  by  said  arrangement  defendants  controlled 
and  augmented  the  prices  of  said  products,  and  by  said 
nieans  exacted  and  received  from  the  people  of  the  district 
of  Massachusetts  a  large  amount  of  money  over  and  above 
ttiat  usually  received  for  such  products. 
These  are  the  substantial  facts  relied  upon  to  constitute  the 

thT'n  ?u  ''""■''^^*  ''  '"'«'^'  *•*'»  ^^^  "^"'il  particularity, 
that  all  this  was  done  in  pursuance  of  a  combination  to  re- 
strain trade  between  the  states,  and  to  monopolize  to  the  de- 
fendants the  traffic  in  the  several  states  in  distillery  products, 

tTon  Ir  ^  .  ?  '"''".'  ""**  P"'"P"^''  *°  <=«""•«•  the  produc- 
tion of  said  articles  and  fix  the  prices  at  which  they  should 

be  sold.     But  It  IS  not  sufficient  to  charge  an  unlawf.fl  intent 
Lr.inT'f  t  ^°'"''"^«tion  or  a  course  of  business  is  in 

lestraint  of  traae,  or  a  monopoly  of  trade,  in  order  to  consti- 

stated.  A  combination  of  act  and  intent  is  needed  to  consti- 
tute a  crime.  No  averment  of  intent  alone  is  sufficient- 
neither  is  any  amount  of  act  alone;  the  two  must  combbfe  ' 
Assuming  an  unlawful  intent  and  purpose  of  a  combina- 
tion to  restrain  trade  and  monopolize  traffic  in  those  dltillerv 
products,  as  charged  in  the  indictment,  do  the  acts  s  f oS 
«ute  such  restraint  and  monopoly?     In  what  re  pec 

the  fl«r    T:^r  ^  '^^""■^^^'  ^^^t™'"  t-de  or  monopolize 
the  traffic  in  distillery  products  ?     These  terms,  as  used  in  the 

mon  laT^";  -''er  consideration,  are  well  definerft'om 
mon  law,  and  must  be  considered  with  reference  to  such 
^tabhshed  meaning.  The  indictment  was  prepared  w  th 
g-eat  care  by  the  district  attorney  of  Massachustttrand  t 
Z  t\  uT""^  *^**  ^"  ^^'  *=»'«''ged  therein  all  the  acts 
suming  this  to  be  true,  the  indictment  is  significant  in  what  U 


ill 


I 


51  FMBERAh  BEPOBTBB,  210. 
Opinion  of  tlie  Court 

they  obligated  tZtn^TotZtZ'  '.k"'  ''  **'^''"--. 
not  to  continue  in  the  dS^  t S  "^  I'f  "^"-'  - 
not  averred  that  defendan^^ttf^Tf -^  ^''^  *"*"'*•    It  is 

the  ve„d„,  to  withhSdri;is  o  "sy7or  "'•'•"•^ 

m  the  biisuiess  from  the  nnhl.v  :    7u    i  ""^  experience 

■  averment  that  the  drfenSants  '  L  '"*"'^-  ^'^^''^  ^^  •»« 
attempted  to  control  th^S  "s  ofthTrra'/ninf  "Z  ^''^t' 
of  the  distilleries  in  the  United  Stef  J  ^  **"*  *°"'^ 

tempted  to  limit  their  outDut  1  ^     '  "''  '"  '"^  ^"^  «*- 
control  the  price  at  wLnhetnL^/^""""'  '^^^'^  *»>«"> 
any  degree  LtraintS  tiTdef "^Stlf.  "^  r'*^'  ''^  " 
which  their  trade  should  extend     -k^  n^  ^"^^"^  "ver 
ments  in  this  respect  is  that  tefn-TK^ ,  "^^  "'  ^^^  ''^^'- 
congress  the  defend-  ISUjlntZ  fj'   'T'^"'  ^''"^  ^^ 
own  capital  three  foirthV  oT  h!  ?^^.f  "^"''"''^  ^'"»  ^''^'^ 
States,  and  that  they  prSuli^^t^'i^"«^  >«  *»>«  Unit«l 
1-y  products,  and  soId'S^tro^'r'r^hf  ""t  f  t"'" 
several  states  at  the  best  possible  priL    Ind  Th"??!'  "^  '^' 
tinued  so  to  own  and  operat*  said  H wn i  """^  **^  ^'n- 

their  products,  after  the  p™  t  ^  of  S'T' ^^^  '"  '°  ^«" 
without  any  attempt  at  an^ Z  hV  f ''•  ^^''  '^''^  '^'^ 
production  of  the  ^other "fst^^^^^r,  ™^'  .*»  «>n'-I  'ho 
they  should  sell,  or  without  any  J^^^^^^^^^  'j.  -hich 

m  any  way  restraining  trade  tZ  n  1  ,  ""''  "^'^^'^^^ 
my  judgment,  wholly  fey,  to  cSr^  ""'"''  •''^'•^*"^^' '" 
purchase  of  said  distUleS  or  tfe"  ^H'  '°  'f'^  *^« 
products  before  the  passage  of  J"'^  ""?""f««t"re  of  distilled 
as  they  are  charged  witEtin  ,1  f  "  ^on-^rn^-J,  or  so  far 
wiU  unlawful  iTt.n^ZTZTZ^  «- and  ope«te  them 

-le  of^'^ir^r^jrif;;:  :"^*^f-Sortation  and 
charged,  consC  t  "if  ^  ^  TH  «'  Massachusetts  ^ 
this  respect,  as  averred  areTa  ^  J  ".  ^''^^''"tial  facta  in 
ucts  in  Massachu^ttrthr^ugh  dSXt:  ""  ^^  P^^' 

^TiiotTn  Ti?  x-psr  ;3  o-^ -st; 

Chased  their  distil^  ^'^ts^^u:^  ^.^TefS 


IN   BE   COENING. 


43 


Opinion  of  the  Court, 
ants'  agents,  and  provided  they  sold  the  same  at  prices 
no  lower  than  the  list  prices  of  such  agents;   and  said  re- 
bate  was  to  be  paid  when  the  dealers  should  sign  a  certif- 
icate that  they  had  so  exclusively  purchased  from  defend- 
ant* agents,  and  had  so  sold  at  prices  no  lower  than  the  list 
prices  of  said  agents     The  indictment  in  these  averments 
IS  again  significant  for  its  omissions.     It  fails  to  charee 
a  contract  on  the  part  of  the  dealer  that  he  would  not 
purchase  distillery  products  from  other  distilleries,  or  any 

nrlUT  r^^  P?"*  ^^^^^  '^^^^  t°  ^^»  ^t  defendants^ 
prices  Such  dealers  were  offered  the  rebate  as  an  induce- 
ment to  purchase  exclusively  from  the  defendants,  and  to 
sell  at  the  prices  defendants  fixed;    but  there  is  no  con^ 

to  do  so.  In  what  respects,  then,  are  these  acts  char<^d 
differen  from  the  customary  efforts  of  manufacturers  or 
dealers  to  increase  the  sale  of  their  products  and  push  7h^r 
busmess  by  the  many  artifices  of  trade « 

There  are  no  contracts  averred,  as  between  the  defendants 
and  their  customers,  which  are  in  restraint  of  1^^  The t 
acts  are  rather  intended  to  increase  their  trldebuJ^'^'^ 

ofherf  if  r^  *\'  "f  ^*^  "^   '"^^    -^^--    to    dea?luh 

nnf\  i^  fK       ^'^^^^^^cts  are  illegal  and  in  restraint  of  trade 

we?i  L^"^  '"''''''".*'  "  ™^^"P«ly  "^^-^  this  act,  it  may 
well  be  denominated  an  act  to    rPQfrai,.    i     •^'      1  ^ 

ucts    as    se      f    .K™'""'u"^   "^""^^^  ^1««  of  their    prod! 
ucts,  as    set    forth    m    the    indictment,    the    act    i,  ZZ. 

sweeping  m  its  provisions  than  ever  contemplated  L 
gress,  as  manifestly  appears  from  Th/rw      •      ..  ^  *"""" 


1  JSBUllBl  Jl      ,        y  illrt 


61   FEDERAL  BEPORTEK,  212. 
Opinion  of  the  Court 
or  devices,  restrain  others  fm™  «.       •        . 
or  deprive  the  pubHc  W  el'^     "!f ^  '^'  ^"""^  ''"«"e^. 
fr«e  use  of  capital  In  IdTn  "?  "''  '^dr^inUges  of  the 
"n  therefore  of  th    o^ion  thZrrf.  "^  '=*''"P««t°--    I 
the  defendants  made  fte  sal^  of   .        '  T"""'"  ^"  ^^^^^'^ 

Star  *•"  -'  ""* "'  ^'^-n^i^^^^^^^^^^       f- 

of  trade  or  monopoly  shown,  and  there  i,.T    •       '^^*'""nt 
charged.    The  indictment  is  rerefo^  "  "^"T'*"**''^  "'• 

ieries  or  as  to  the  sale  of  their  products  *^'^*'*- 

n  was  contended  by  connLj  tu  /    ^ 

•  -ched  the  state  of  4^^?^ 'th^^L*"^  "^"'"''^^ 
owned  and  held  bv  th«  «q«*o  j  !  '  ^  became  property 
«tate,  and  what  was  donfSV'"^^  ''''  laws  of  thai 
that  Stat*  did  not  iS^^a^  iaytlaTet  ''"'^'''^  '""'''''^'^  i° 
states,  and  therefore  the  ^  0^.  commerce  between  the 

apply  to  such  sales.  It  was  furCSTh^f  T  *"  '^"^  ^° 
tended  to  say  that  the  acauiskl.7„71^    >*'  '*  ''""^^^^  in- 

chas^or  lease,  bythedeJSlrfoStf/'""'^^'''^?"- 
«  crmie,  such  act  was  rniconstSi™.!  I  ''^  "^"^  P*^^'^**'  ^^^ 
its  character.    It  w^^°  fhl  '  ^.'*"*  "*  ?'''*^  A''^'' in 

-eant  to  define  LZo^^;^:;^':'^;'^'^'  ''  '=""»-- 
the  acquisition  by  the  defendant  of  tf'  "'  "  *="■""- 
distiUeries  alleged  in  the  iSiT     ?      .    ^"^^  ""^ber  of 

or  cont^l  was  U^in'^sttil Sv" ''^  ''""^^^'^''' 
then  congress  exceeded  its  powe,?  Id  suctj  T''  V"'^' 
I  have  not  deemed  it  necessarvTo  Jl  ''*. ''  ''°'^-    ^ut 

I  have  ca^fuUy  considrXfl  ^hractsTnH  *'?  r^"^'^^- 
binatjons  set  forth  in  th^  ;L   *  ^""^  unlawful  com- 

Wh  counts,  2,  L  tL "etlt  "  *^/"*'  *'^''-'^'  -<1 

satisfied  they  are  ins^ffi  •  nt  tT   ^T""^^^'  ''^'^^^  ^  ««» 
prpri  K,,  tu    c    ^      'iisumcient  to  make  out  thp  r...;^„ 
ered  by  the  first  section  of  the  act  vi,    „        l         "^  '^''■ 
form  of  trust  or  otherwise  or!.^!:.^    '     •="™^"»«tion  in  the 
or  commerce  amongThe  ;e;e^rftr^ '° 'f*™'"*  °^  ^^^^^^ 
word  "monopoly  "1tri,mmon, at  ^''    ""^  ^^'"^  *"  «>« 
meaning  cong^ei  clearirrendedTTJ"'/:.^'  ''^''^  ''  "»« 
the  second  count  insuffideitlotV      f  *^  ""egations  in 
b.  the  s^ond  .ction  ofT  1^  rtltTt  H^^ 


IN  BE   CORNING. 


45 


Oj^inioii  of  the  Court. 

JtXrsZ: '""^^  ^"^  ^^^*  '''  ^'^^  ^-'^^  -  — ce  be- 
In  reaching  this  conclusion,  I  am  relieved  to  know  that  if  T 

"Pon  the  c,re„,t  com.  „,  ,he  UniW  State  to  .n  oi"  „rt  ° 
Sin  If^l,     ?;     •"°''"''''  °'  ""  f  "i""!  Sl.t«,  by  Lr 

c  ^peeaing  such  cases  to  an  earlv  hearinty  A  o..v 
of  this  nature  was  lately  instituted  in  the  uSd  iT 
circuit  court  [21,3]  at  Nashviiu  t^o        1     7,    United  States 

through  its  distrii  attor^eyTLd  ^S^^^^^^^  ^*- 

nopoly,  doing  business  ur,/.l  T  ?  •  "^^''^  ""o^'  ™°- 
from  Sis  casf,  an^JiS;  n^^f.'^^  tht"^^  ^^«^™^ 
enjoined  from  doing  business  a nS  ur  <=°'°Pany  was 
tected  against  the  highTrS^'fcla  wh  .'  '"  '""r'  ^"'*  P™" 
contract  held  illegal  under  d'is  17  t7/,  T"^*"''  ^''"'^  * 
ney  general  of  the  VniZ  S  .       ., "' *'^«'-«f«'-«.  the  al;tor- 

furthi  test  the\tsYroft£Ltrbu""  ^'  ^r  ^ 
fendants  in  this  case  is  «  n.  "^  ,  ^"^  *•»?  business  of  the  de- 

he  may  autho;Lni;ra"c^Ci"^^^^  ^f.^-de, 
and  by  such  suit  speedily  secure  an  ,^!.  .^  instituted, 
circuit  courts  as  to  the  Iffo  f  /  adjudication  from  the 
much  as  thie  deJendants  '",**  ''T  "*  '^^  '»<=*•  I°as- 
tended  busi^ss  S'L^^^^^  T^  -^^^^^  -  this  ex- 
would  be  fair  and  Dronlrl  T^"''  """^  P'^^*^'  ^t 
such  civil  suit  Thennhr  ^T."!*^  "^^"^*  t*'«'n  A'^t  by 
moreprom^^JbeLfite^t'^Jr'^  ^  5^«-  P-'-ted,  and 

be  ^peedily'leLratd  SrX"^^^^^^  ^"""  "  "'"''^ 
Junction  restraining  s:tL^:i^'^',S:^l^l\^-  ^■ 

nopply.  If  such  the  court  should  ad  iZ  TtoZVu"  "''' 
rant  for  removal  will  therefore  hJT  ■  ^  ,  "  ^^^  '^"'■- 
ants  discharged  from  f^Sf  ^I^t'dy.""''  ''''  *^^  ^^*-^- 


if    ( 

f 


V  f 


46 


51  FEDEBAL   REPORTER,   213. 
Opinion  of  the  Conrt 


f^^^i         IN  BE  TERRELL. 

UNITED  STATES  ..  GREEKHUT  ET  AL. 

(Cireoit  Conrt,  S.  d.  New  York.    June  28,  im,y 

ISl  Fed.,  213.] 

based  „p„„  a„  moietment  ta  dl^^f^  f'"*'^**'  «°<l«r  ^arraat 
pending  an  application  to  tbe  dlsW^L  j^"""*  •"^*^'^-  '«  "eld 
•noval  for  trial,  the  elrcnlt  court  of  the  mT,  °'  "  '"""'"■*  »'  «" 
has  anthority  on  ftaftea,  oC"  to  e^^,f„''''''^V"  '"'"'''  "«  '«  "^M 
release  the  prisoner,  if  m  ^,  i™,  *  *""*  indictment,  and  to 

Qoashed  on  dem„rm-a  ^"'^'"*  «■«  indictment  should  te 

ILLEGAL  Combinations— CoNTBAoxc  Ti,  t. 
^^T.-An  Indictment  unde^Z  act  nTT,'"^  "'  T.^-'-^Indict^ 
monopolies,  averred  in  the  fourth  Lutttatdi^f  2    1890.  relating  to 
Of  a  combination  to  restrain  tradX  d.^fn  '^^'^'"^'^ts,  in  pursuance 
states.  Shipped  certain  whisky  to  Ma^  "h''^„^''^'"='«  "^tween  the 
through   their    distributing   agents   t^^T"''  """  ""^  "  *"««•» 
Whereby  said  dealers  were  pr^mt^  .     k  !   **"    '^^^^   «   contract 
on  their  purchases,  providi^J^^r^  "  .^t"''  °'  "^^  «>"«  "«^  ««"<>" 
products  exclusively  from  tte  dTstrfbrnt    ''"'""'"^  "■«"•  <''«t'"eT 
lower  than  the  prescribed  Hst  prt^'"?,!/*'^'''  ""^  ^""^  «'«'"  "» 
"Hieh  dealers  should  sign  a  cert^rt;  ?h  *  ^""^  *°  "«  ^"'0  ^hen 
and  sold  for  six  monthV;   anTthaT  h  *?m   *""''  *""*  ^  P-^-^^ased 
controlled  and  increased  the  pricL  „f  ai!?,,^  ""^"^  defendants  had 
chusett^    ir«W.  that  no  crime  was  ehrr^"""'  F"^'"=*'  '"  ««««- 
sales,  since  there  was  no  a"erm"nt  T?      """^  '^"^^  *"  »"eh 
dealers  bound  themselves  not  to^^llT'  '"'''""''  ^^""^^^  the 
at  less  than  list  prices     /«  „  n^^    ^  '"""  ""''rs,  or  not  to  sell 

prices.    /„  re  Coming,  51  Fed.  Rep.  m.  approv^ 

^>^..  Tkaeker  and  ^.^.  /..../f,,  ^^^^^^^^^ 
l»l*J  Edward  Mitchell  Disf    Af^x        ^  ,. 
Assist.  Dist.  Atty.,  for  the  Un^J  Ste;;s  ""'"'''  ^^'"•^' 

I^COMBE,  Circuit  Judge. 

K-.^^  P«"^«««  ^^as  arrested  in  this  district  unn„  „ 

'  !"1  '!,"  ^"'*'^  ^^*«^  commissioner  hei"^"u!  """"'■''"* 
was  based  upon  an  aflSdavit,  whioh  wL  -f",.  T^  warrant 

_^vii^icjj  was  Itself  based  solelv 

•  Svllah™^,^;;«3IZrT^r:— »"ieiy 


IN  BE  TEBEELL. 


47 


Opinion  of  the  Court, 
iipon  the  fourth  count  in  an  indictment  found  by  the  grand 
jury  in  the  district  court  of  the  United  States  fo7the  dfs  net 

United  States  marshal  to  await  the  order  of  the  district 
judge,  under  Rev.  St.  §  1014,  for  his  removal  to  the  d Sr  c 
of  Massachusetts,  writs  of  haleas  corpus  and  certiora.^ 
issued,  to  wh,ch  returns  have  been  made.     It  is  not  disputS 

dJtt  of  tt1?T''  ''"*  ''  '^  ""*  ""Jy  '^'  "«h^-  b.^t   he 

ito  'the  indJ  /    "f  '""/*'  "^^"'^  "'•^^""^  '•<''"-'«l-  to  look 
into  the  indictment,  so  far  as  to  be  satisfied  that  an  offense 

against  the  United  States  is  charged,  and  that  it  i"  uch  an 

offense  as  may  lawfully  be  tried  in  the  forum  to  wliich  it"  s 

ckimed  the  accused  should  be  removed;  and  the  s:,me  r  gh 

fs  hefd  Ih"' «  "P°"  '"^"^.  '"'^'''^  ^^^*^-  «-  Petitioner 
IS  held  under  the  warrant  of  removal  issued  by  th«  district 
judge  whose  decision  is  Ihus  reviewed,  or  under^  le  « 

Th    l.tTT'''-"""'  i"  f  ""'*  '^''  '"''''"'  °f  the  district  judie 
Ihe  later  decisions  of  the  circuit  courts  abundantly  establSh 

^ep.Lya,  O.d.v.  Brawner,  7  Fed  Ren  Sfi-   //   <?  „   o 
Z.,      ^"P-/'f  ••   ^-  S.  V.  Fowkes,  49  Fed.  Rep.  50     This 
C    Ren  Zl"'7'^  •"  ""'  "'""'''''^  ''^  U.  S.  257,  10  S.^ 

ea..;  tZhfg  ?2:'tr- w^r^LTbe  li^ niTb^ 

3:  ol-;;- -  &w^, ;- -  .-:^  t 

^o.^«,  is  satisfied,  from  the  face  of  tfe  ndTcImi  twt'"* 

wotd  bTfgrL  a^^  o^thrSs  2  rcir^^"!  ^* 

tK„         1      «      .        '''^•tea,  ne  were  removable  to  a  diBtpi/.f 
thousands  of  miles  from  hio  hr.„.     *  aisrrict 

ment  fatallv  ^.fl!f  ^'  ^'^  ""^^e*"  to  an  indict- 

ment tataily  defective,  on  any  mere  theory  of  a  comitv  whi^h 

Tlv  inTh""  ')'  'f "'''''''  "*  *«  indktment  to  bl  re^  el 
«?-^^M  ...       particular  court  in  which  it  is  pending     Nor 
should  the  mere  novelty  of  the  points  raised  be  heM^o  n^ 
c^de  the  court,  before  which  comes  the  question  of  relS" 
from  passmg  upon  them,  when  it  has  no  doubt  as  toTow  u' 


48' 


51  FEDEBAL  BEPORTEB,  214. 
Opinion  of  the  Court. 


would  puss  upon  them  if  the  cause  were  pending  before  it 
If  the  questions  are  of  such  a  character  that  it  is  thought 
desirable  tliat  the  opinion  of  an  appellate  court  should  be 
obtained,  such  a  proceeding  as  this  is  the  more  appropriate 
way  in  which  to  raise  them,  for  a  decision  here  adverse  to  the 
government  is  reviewable  by  appeal ;  but  a  similar  decision 
on  the  trial  is  final,  as  the  government  cannot  appeal  from  a 
criminal  judgment.  U.  JS.  v.  Sanges,  144  U.  S.  310,  12  Sup. 
Ct.  Kep.  609. 

[Sllil  The  points  of  law  arising  upon  this  indictment  were 
all  carefully  considered  by  Judge  Ricks  in  his  opinion  (filed 
June  11,  1892,  N.  Dist.  Ohio)  on  application  for  a  removal 
in  Ee  Coming,  51  Fed.  Rep.  205.     In  that  opinion  I  en- 
tirely concur ;  and  the  district  attorney,  apparently  admitting 
its  application,  has  discussed  only  the  questions  arising  under 
the  fourth  count,  urging  that  the  learned  judge  did  not  fully 
apprehend  the  averments  of  that  count,  and  therefore  erred 
in  holding  that  no  contract  was  averred  by  which  the  dealers 
obligated  themselves  to  purchase  exclusively  from  defend- 
ants, and  to  sell  at  the  prices  defendants  fixed.    It  is  in- 
sisted that  the  paper  set  out  in  the  fourth  count  became  a 
contract  on  May  7,  1892,  when  ih^  purchasers  signed  it,  and 
that  it  is  distinctly  charged  that  defendants  made  such  con- 
tract "  in  restraint  of  trade  and  commerce  among  the  sev- 
eral states  "  on  May  7,  1892.    But,  though  it  be  conceded 
that  the  contract  set  forth  in  the  indictment  was  made  on 
that  day,  it  does  not  follow  that  it  was  a  contract  in  restraint 
of  trade.    The  only  trade  which  it  is  pretended  was  at  all 
curtailed  or  affected  in  any  way  was  the  trade  of  Kelly  & 
Durkee  in  distillery  products  between  September  23,  1891, 
and  May  7,  1892.    During  that  period  they  bought  such 
products  only  from  certain  named  dealers  in  a  limited  num- 
ber of  states,  and  sold  only  at  prices  fixed  by  the  defendants ; 
but  they  did  so  only  because  they  chose  to,— because  the  offer 
of  a  rebate  to  purchasers  who  would  thus  conduct  their 
business  was   an    inducement   operating   upon   their   self- 
interest.    No  obligation  of  any  kind  constrained  them  so 
to  do;  during  that  entire  period,  certainly,  no  contract  re- 
strained them,  for  there  was  no  contract  in  existence.    They 
were  entirely  free  to  buy  from  whom  they  pleased,  and  to 


BISHOP   V.  AMEBICAN  PBESEBVEBs'  CO.  49 

Syllabus. 

sell  at  any  price  they  chose.    The  statute  does  not  prohibit 

he  offering  of  special  inducements  to  such  purchasers  as 

t       ""n      f  '•'".'■  P"''*«^  from  a  single  concern,  and 
shall  sell  only  at  the  prices  fixed  by  it,  even  though  those 
inducements  be  so  favorable  as  to  accomplish  their  object 
oJ  L7\  *,;^''.<=^"''J '•"^traint  of  trade  (if  such  be  restraint 
of  trade)  that  is  made  illegal  by  the  statute,  but  the  making 
of  a  contract  m  restraint  of  trade,  of  a  contract  which  re 
strains  or  IS  intended  to  restrain  trade.    It  is  difficult  to 
understand  upon  what  principle  it  can  be  contended  that 
trade  ,s  restrained  by  a  contract,  when  no  contract  exists. 
That,  when  the  trade  in  distillery  products  which  Kelly  & 
Durkee  carried  on  between  September  16,  1891,  and  May  7, 
1892,  was  restrained,  (if  restrained  it  were,)  there  was  no 
contract  m  existence,  is  conclusively  admitted  on  the  face 
of  the  indictment  itself,  which  charges  the  statutory  offense. 

?S     %T^'Jf^  ^  T^'""*'  '^-  ^  committee^  on  May 
^1892.    The  petitioner  should  be  discharged. 


[272]    BISHOP   ,;.   AMERICAN   PRESERV^ICRS'   CO 

ET  AL.« 

(Circuit  Court,  N.  D.  Illinois.    June  8,  1892.) 

[51  Fed.,  272.1 

.n  restraint  oi  ^r.t.r.^^Zn^reTL^^Tr^LZT'^Tr 

suit.  Which  have  not  been  d^id^*  ^^  """^'"^  °'  *^o 

^Z^^2TZ7\  ''«^""-»"-  -  «»*  an  action  which  does  not 
tmch  h:Vain.sTLriu"r^'^*"''"*  ''  ''""°*"^'  '""'  '°  -'^*  « 

or  that  the  IZlTul'SZV.S^Zl  t  dfJ^  '^""'"'"^' 
In  restraint  of  trade  or  th«f  fil      ^l!'''^^  *^  ^^  "^'^^  «">'  conti-act 

states,  is  demurrage  "  ''^"''''  '^'  ''''''^'  ">'  ^'^erent 

At  Law.    On  demurrer  to  declaration. 
--f!*!!!!_^L^^^^  Pre- 

"  See  alsovoi.  2,  p.  5r(l^l^ed!7845)  " " 

^Syllabus  copyrighted,  1892, by  West  Publishing  Co. 
11808--VOL  1—06  M 4 


50 

51  FEDEBAL  BEPORTEE,   272. 
Opinion  of  the  Court. 

servers'  Company,  Bernard  E.  Ryan   «„rf  T   P   r,       ,. 

for  injuries  alleged  to  have  hirLtM  in\   T^""^' 

and  property  bv  reason  of  acts  of  f .,?!,]    j  "  business 

of  the  '^Wi-frust  W,"  (26  St  at  T  ^'^  ^'"'««»" 

act  makes  illegal  aU  combat  «  n  S.St  of  ^  J'** 
commerce  among  the  several  st-<tes  »  anrr^^  •  !.  "^'^  "' 
person  who  shall  be  injured  n  1;^  h?  ^  ''''"'  '^"^  "  ""^ 
any  other  person  or  corporation   Z  r  f  "'"P'^'''^  ''•^ 

bidden  or  declared  to  be  „raStv  r""  f  '"-"'^'"^  ^''^■ 
for,  and  recover  threefold  dim^,^     "  '"^'  '"'^^  ^"«  *'^«^«- 

Lyndon  Evans  and  /"..rf.,^,^  o,,,^  ^^^  ^j^  .^^.^ 

iTra^,,  yl/ayer  <fe  Stein,  for  defendants. 

BLODCErr,  District  Judge,  (orally.) 

cwLXihTieft'rntf trr "' -^  '^"""•-  •« «-  «Je- 

i-Jamtiff  charges  that  in  1888  he  was  on^-.'o^^rl  •     ►.     ,      • 
nessof  man-  [273]  ufacturing  fnSt  butter  Sit  "        ''"''" 
etc.,  m  the  city  of  Chicago,  and  S  ,t  tt ;    1      '  ^'f"^^^' 
engaged  in  the  same  businesril  .n't!     ^  f' *"'-"'  °^  '^"^^^ 
with  them  for  the  tor^lfZ.^   ^  '"*"  ""  "g'eement 

the  purpose  of  adva^  Ind  ^li^tSrthr'-'"^"^  '^^ 
g-ds,  and  that  a  trust  of  combb^S^X  Z"^^^^^^^  •"** 
Preservers'  Trust "  was  organized  for  f .   .  American 

plaintiff  became  a  memlS* Td  ^o  w  ^^^^^^^^^^^^ 
properly  and  plant  which  he  had  ILJZ     .^^^'".'^eyed  his 
afterwards  the  managers  of  ^  hi  '"'^  ''"''"**^''  "'"* 

m  more  manufac^rfra^V trZ^ri;  '1'1  ^"  ^'"^^ 
form  of  organizinc  .,n^«^  .    I    !   Property,  and  adopt  the 

of  West  ViS  Xth!  n  "'.  •^'■'"'"'''  "'"''''■  "^^  l'''-^ 

of  said  truS  h  t  he  aiSlTt'''^"  t  '"™ 
erty  used  in  said  busini  to^S^Sf  transferred  his  prop- 
Preservers'  Com,X??ne  of  thT'irr r{'  'u'  ^"'*"<^" 
afterhehadsotSnswluf  pt'lj^f'f  '^.r"'  *'"'*' 
company,  differences  arorKrhfmtlf  rA*""^ '"'^ 
gers  of  said  trust,  and  the  said l^stT^^w  .u^r^"" 

ican  Presen-ers'  Company  "  TreuS  I  ^H,  "'  ,*^'    '^^"■ 
of  the  courts  of  the  dty  of  cS^l  „„f,    ,'*'"'^^'"  '"  ''"« 

the  property  and  plant,  b^fa  'S   Im  J   T  •  "T'^""  «* 
.'  F  »«u,  DOCKS,  etc.,  which  plamtiff  had  used 


BISHOP   V.  AMEBICAN  PBESEBVEBs'  CO.  51 

Opinion  of  the  Court, 
in  the  management  of  his  business  in  connection  with  said 
trust,  and  that  said  defendant,  the  American  Preservers' 
Company,  has  also  brought  suit  at  law  in  this  court  against 
pJamtift,  claiming  to  recover  the  sum  of  $;5,000.  This  is  th« 
substance  of  the  declaration.  • 

It  iB  sufficient  for  the  purposes  of  this  demurrer  to  say: 
1.  This  declaration  does  not  show  that  the  suits  com- 
plained of  are  yet  decided.     It  may  on  trial  1^  shown  and 
deeded  that  the  defendant  has  the  right  to  maintain  bo"h 
these  actions  against  plaintiff. 

hrfn J^'  ^  '■"^^  ^"  ,^'"°"  ^*  ^^"^  '^^"'-"^  ^  .naintained  for 
bringing  even  a  false  and  fictitious  action  against  a  person 

The  commencement  of  a  suit  at  law  is  an  assertion  of  th^ 
right  in  a  manner  provided  by.  law,  and  persons  so  com-  ' 
menoing  suits  cannot  be  subjected  to  other  actions  or  Z- 
alties  by  reason  of  their  having  done  so,  or  for  asserdnfor 
pro^cuting  what  they  claim  as  a  legal  right.  S  medy 
sue  if'ult  hi.s"d1  "  '\<^^f-d-g  the  fuit,  and,  if  het 
damTIs     Iw'  ^'^T'  ^"  't'^'''''  '^''''  «»<*  ^-"^timcs 

£p  870  ""■  ^"^^^^^'•'  ^  I»^«.  741,  18  N.  w: 

ni?  ?#  k"""  ^f"""  *''"  allegations  in  this  declaration  that  the 
plaintiff  has  attempted  to  bring  this  suit  under  the  provisions 
of  the  act  of  congress  entitled  "  An  act  to  protect  JraTand 

=T„.?2,"2.;,"St;  n"r  rt  r-^"""  - 

cCnypL^nXt^^^^^^^ 

ngh    m  the  property  replevied,  as  against  plaintiff  and  te 

man  t    ,  ,,,  aSged^i^l; ^^^^2^^ ^ar^ 

had   ensued  between   plaintiff  and   the  other  memW  or 
officers  of  the  trust,  and  plaintiff  had  been  assaS  hv  ^ 

th"  It  iJlt ''  ""  7""'  f  '"''''^  ""<*-  '^^  statSe     Fur! 

itrb?s^-S5S--r/::ir 


52 

^  FEDERAL  BEPOBTBR,  ^9. 
Neither  ^.^  •.  ''''*"''"  ""'  '''  ''""^- 

Certainly,  as  it  seems  to^  *;„'*  '"  ^'^''^^t  oi  trade. 

complained  of,  plaintiff  has  su,t.  i  S      ^^'''''"  °'  ^^^  »»"« 
•    he  cannot  be  ad^uately  ZZtltS ^ .t""""^  '°'  ^'^''^'^ 

.«««  to  be  awarded  in  th^  dC^  ^  ^''^  '*^  •"»<»  *««»- 
;t  shaU  be  held  there  was  noSTf.-  '"""^  ''^^  '' 
^  an  megal  contract  brin^  sdt?  1,S^*=^""-  ^"^  ^  P^^y 
Ct  Bep.  884,  (decided  by  the  L  n,  ^'«'«''«,  12  Sup. 

Do  not  deem  it  necW^  ,*  ^       '  '**"^  ^"^  16,  1892  ) 
tj^e.    The  decl^^STifaS  Sir.*"/*  ?""''"''«*«"• 
-ng^the  eiti^n^hip  of  4:  part  e^^o  t  tr  "^  ""*  ''^^^- 
court  jurisdiction.    The  demurrer  isl^^e^       ^''""  '^' 

[819J  STRAIT  ETAL  v  WATTr^xr.. 

(Cir™.t  n    J  ^"  "•  NATIONAL  HARROW  CO- 

(Circuit  Court,  N.  D.  New  Tnrir      » 

"•  "ew  York.    August  10,  J89o ) 

PATEinB    p  fSl  Fed.,  810.] 

MowoPOLoa.— The  fact  that  a  ror,w.,„.,  "    Intonoeiient— 

opon  a  particular  kind  of  mlhin^"""  °'^°"'8  'otters  patent 
with  other  nu«ufact„„™  ^^^Z^  '""^  '"*"  »  """binatton' 
ftcture  and  sale,  and  to  ZTln^  T^"^  »  '"°°»I»'y  ">  Its  manu 
other  manufacturers  for  Se  e^H   T  ""^""^  ""  »«  rtghts  of 
■nieh  „u.chines  under  p„te„X  wn^^.  ""*  """  ™anufaoC  of 
combination  to  enjoin  fhe  ^o^   on  L™"."'  "  ^'"'»««'  *°  «h« 
•"""genent  against  him  or  hte  Sltome^"    ""^'"^  ""^  «"*«  '<"• 
^  In  Equity.    Suit  by  WiUi.m  «!*,„•.       ,     , 

i^r^cfenH-  <7^»6,,  for  plaintiffs 

f:''^'*''^-^%,  for  defendant. 
Waixace,  CSrcuit  Judge. 

TTiis  is  a  suit  wherpin  *k       i-  *  , 

injunction  to  restrain  ie  d^fe^^'t  S^'1?  "  ^'™''"^'^* 

ecutmg  any  action  in  any  .Jurt  oj  la^t        •*"*'"^  *"•  P^«^ 

•Not  decided  m^der  the  *^tl  t™^  7    —      "^"'^^  "^"^^  <*« 

commented  upon.  »Ml-tr„gt  ,a^_  ^^  occaalonaHy^^JSTiia 

»  Syllabus  copyrighted,  18B2.  hy  Weet  Publishing  Co. 


STBAIT  V.  NATIONAL  HAEBOW  CO.  53 

Opinion  of  the  Court 
plaintiffs  for  the  infringement  of  any  letters  patent  owned 
by  the  defendant  covering  improvements  in  spring-tooth  har- 
rows, or  from  instituting  or  prosecuting  any  such  suits 
against  any  person  using  the  spring-tooth  harrows  manu- 
factured  by  the  plaintiffs.  The  defendant  has  demurred  to 
the  complamt.  In  substance,  the  complaint  shows  that  the 
defendant  has  entered  into  a  combination  with  various  other 
manufacturers  of  spring-tooth  harrows  for  the  purpose  of 
acquiring  a  monopoly  in  this  country  i„  the  manufacture 

nn.  T  .,1  f'"^'/"*^'  ^  «n  incident  thereto,  has  ac- 
quired al  the  rights  of  the  other  manufacturers  for  the  ex- 
clusive sale  and  manufacture  of  such  harrows  under  patents, 
or  interests  m  patents,  owned  by  them  respectively  Such 
a  combination  may  [820]  be  an  odious  and  wicked  one, 
but  the  proposition  that  the  plaintiffs,  while  infringing  the 

United  States,  IS  entitled  to  stop  the  defendant  from  bring- 
ng  or  prosecuting  any  suit  therefor  because  the  defendant 
s  an  obnoxious  corporation,  and  is  seeking  to  perpetuate 

etLraTenf  ilf '  '\  ''""'"^f  "P°"  ''  "^^ '^  *^'e' »  tt 
nnrtrr       '     l"*"'"'  °°''  ^"^  ^""^^^y  unwarranted.    The 

are  good  or  bad,  and  he  is  not  required  to  give  his  rea 
sons  for  the  attemt  to  assert  his  legal  rights     «^l  • 

of  the  legal  right  cannot  be  affefted  bv  tbp  rJ^       T  u 
controls  it."    -^^  v.  r.«^.«,S  y  ^29  "  "'*'''' 

Js'Zltf wfthSt  no?^"*^^^'  ^'"<^  *^  "^^'^  P- 
of  the  defendanT    h.!f    '  "^""^^  ^"^  «*  *«  Patents 

13  Blatchf.  sZT  Goodyear  Dental  Vulcanite  Co., 

partT°s.  "whoever  S°es"le«er? m't'f  /"'!  '^"'^  P"-^'"""   "f  the 
received  thereby  a  ^ZfiZ^l^CTJ^?  ■  *"«    U°'t«>    State! 

t^^^r  XbViVbiiHr  -f •"--  ^-"^'""t «: 

prepared  to  -intaK^n^ThrcSlfrts^UntL^^r.ris"^^^ 


54 


S2  FEDERAL  REPORTEB,   m. 


W'oijld  eonvertthA  ^!«l".®  ®"^^  alleged  vIolafA^.     m,. 

"on   against   each   m£     •  1         The  defendLfi       ^"®^'  ^^hich  is 
8a«  the  whole  of  t^m  **^  ^^^se  indivrd„ai"     "  f  ^k  '  «  ''^Sht  o^  ac 
««(!  to  allow  th/  iJf  *"•     ^*  *»as  the  rlX  m  .  *   ^"^^   ^^^   right   to 

least  able  to   defpT!?  i  ,*®  seeking  the  feeblesf  nf  Ik"*^'   «»   «   "matter 
that  indiWdnal  shn  f  ^  to  imkl  f  ^^f^  ^H-the  one 

patents,  he  is   iLhi    '^^^*'*  *<>  have  infr  ni^  ""   '''^^''»   of  him      r? 

unable'to^^^  f  tn/.'li;^^^  '^'l  t^^ndanrs' 

«  greater  den-AA    ««?    /'~~**lthough   othPr«   »       ^  ^^^  he  poor  -^ 

«^l^ted  him Ts^ibrL"!^?'^^  ^^  may  condenfn  "l^  ^^^nde^   in 
he  doubted."         ''"^  Particular  defendant.    On  principle ^''^♦'*  '"'^^'^^ 

See,  also,  Asbestos  Felfi'nr,  n 
^^er  Felting  Co.,  13  £1^2^45^"?  f  f  ^*  ^  ^- ^«^- 
28  Fed  Rep.  98;  Kelley  y.  Manuft^f'  ■      T  ^-  ^"t^^ews, 
19;Chem^al  Works  AecZtTrd  f "'  ^  ^«<^-  ^^P 
If  the  defendant  had  hr^    ll    B'atchf.  552.  ^ 

founded  upon  the  combinatinn  j"'"''**"  ^^ '»«  alleged  rights 
c?me  pertinent  to  inquire  toth^'t"'*''*'  *''^"  it^ighfbi' 
fon    and  ascertain  Xther  t£         ?'^'"  '^^  ^''^  ««^Wna- 
r^hts  growing  out  of  it   Xt  in  «".  T"''  ''"^"'-'^  any 
fnnpjnent  of  a  patent  by  the  1    '""  '''•°"^'''  '"^  the  in 
the  behest  of  the  infringer  ll  ZT'  '"^  ^"«''  '"qinry   Tt 
">  "spect  to  the  morafSetIrT,  "T  "V'"^^'-*'"^"'  a?  one 
«  an  ordina,y  suit  for  tr^sn'r       ''t^'"*^ ''* ^^^^ Plaint.ff 

o^^plSe^^  t'^-''-  "^rbrS  tnCr^     ^^      ' 

"ness  it  was  removed  or  detr/''  *^'  ^''^^P'-^  "PonTt 
nmsance,  that  it  was  led  tZT  '"  ''''  ^'^PPressioHf  a 
Pation.    ^Zy  ,  S.p^Jj:^^^--S^  the  unlawful  occu 
The  demurrer  is  sustained.  ^^• 


no4j 


IN  RE  GREENE. 


tareuit  Conrt.  S.  D.  Ohio,  w  D     ^n  \ 

[52  F  '  *  ^^^^ 

Habeas  Corpus t»  -1^*3 

^  State,  eo««,^,„„,,  ,„  a^rL^r^^vrL: 


IN  BE  GRBEKE. 


55 


SyllaJ[)us. 
district  Judge  for  his  removal  to  another, district  to  answer  an 
ndictment,  it  is  the  right  and  duty  of  the  circuit  court  to  exlf^ 

the  C^'t  I"  "'^'^'"'  "'''"■^'  "  '""^^^  ->■  Offense  «t 
the  United  States,  or  whether  the  offense  comes  within  the  turll 

diction  of  the  court  in  which  the  indictment  is  pending"         ^ 

Z^Z.0.7^ZZ7"""     '""'"'     ^'"™''      STATES-^OMMO.-,-L.W 

s^rproff-:  :=eirthTreX:r:re"r 

common-law  oflfense  the  courts  may  nrooerlv  \na}    Z  .1 

CONSTITUTIONAI,        Law— InteESTATE        fTnuu™™,      ,, 

gress  has  no  authority    uXT.    *^''"™'^— ^""""OWES-^Jon- 

provision  of  the  Z^Z tTu:TZ:V^n  "^  '""  "*''^'- 

created  by  a  state  in  the  ac^u     rw.i  ...^     ^         '  "  '^'^■1»'-«"°>1 

tlon  Of  property  in  the  several     tates  and"'itT*"''  T  ^''''^''■ 
such  property,  or  the  Drort„„tc  «       T  ^  immaterial  that 

interstate  commerce     and  it  tin        '  T7  '^'""  *"«  ^""^^t^  <>' 
ison   i„  ,  .   "^^'™  •   ■*""  "t  's  apparent  that  by  the  act  of  Tniv  o 

species  of  ™  tv  as  to  enabirr""'""  "'  ''*'  '''''  '^  "••'«  »'  ••">-- 
therein  amongThe  Je™!  T^f  ''''°^'''  ^-^  ^-f"'  '"e  traffic 

MOKOPOUKS-R^sxt-To    ^l^r^r'lVr'"--"'  '"'^"^«- 

"monopoiizing,  or  attempting  tom«ze>t.de  ""'""  "" 
among  the  states   vxruu;..  +k  "i^uopoiize,     trade  or  commerce 

necessary^^ii:  t  ^rempTrV'  ^•""""  '  "'  '''''  '"'*•  "  ^ 
such  commerce  by  means  wWcb  win  ''""■^'  ""  ^'''^'"*""«  ''^^'  '" 
therein.  '^'"''''  """  """^^ent  other-s  from  engaging 

'tr^ns^ir^^tecTti^arr  -"^  ^-•"""  ^  -  ^--^  -  <>' 

one  count  alleged,  insubVn^l  2.  ""  ''^'""''*  "'"""PoUes. 

under  the  guise  ;f  the  D  Sng  1  p"h,T'""^  "'''  "^^-'l^nts. 
to  certain  persons  in  Bofton  "  auatfi^v  ,'  T"^'"^  ^"""''"'•^-  ^o'" 
and  that,  by  reason  of  he Mrtha  L?.  *"""•  '"^^  '"  """«>'«• 
manufacture  and  sale  of  75  7^1  ^n  of  .,^7??  '""*'■''"•''»  'he 
J-lli^^^^^^^^^-^-^endants  B^ed^  ;L^'ier,:;^'h7hercrseL" 
<■  Syilabus  copyrighted,  1893,  by  WesT^JiblisliingTTo.  - 


56 


^  FEDERAL   KEPOBTEB,  105. 


ehasers  "fa  «^ii      .1    ^*^^  alcohol,  and   "^i^ 

"■en..  it'Lt'::^^^-'  - '- pHc^tCc;  r'",  ""'• 

aeans  used  w^!  **  '"«'™«1  '">m  thL  r^""  °f  """PnWon. 

Same-Restraist  of  Tba.       w  res»->lnt  of  trade 

agents,  and  wonM  w  ^^^"'^^  Produtts   exc^«i  !,    ?"'^'  *''«}- 

of  trade,  ivitliin  ,11         '  ""^  "»*  «»i8tltule  a  en    .  ^    **  ""   *"« 

^"•Ution.  na.:eS7^/j;j  Tl  '^""'^  '»  «^  l^rLLt,. ""'!  "«^ 
Itee,"  or   "ii«  r  "'^  ®"<^^  arranireiHAnf    **'^'^^'^'^""ce  of  the 

•^thiatL .::«.."  "o'r'''  *"  -o-p^^,-  t^rrr  """"'o'- 

8A^l._.Vor  .varHe«lr"°"  ^  "'  ^'^  »et.     ""'''   ""-^    «">""«'«*. 
Pnrcliaser  oonmH«rt     f.^    ""^^"^^  ""der  the  8t«f..f 

"etire  effe^ "^  ^^^^ /^^ /«•  'or  s»c/i~«,  ^  hereby 
thereto.  "*"*•*  "  "«"<»  contract  betw^n  .?  ^'"''  '"'  «'«>• 

S^-E.-Even  if  the  „,«„„«.  """^  "«»' 

I^tween  the  p.«i^^^*  ""•"•  be  considered  as  a  hl„^. 
"«d  w«»onaWe  in^H       "*«♦«'«  thereby  iZo^a  *""•""»  ""'tract 
»»*  o'  the  g^L™,^/™*'^""'  »'  defrndarn-wr  ""'^  '^^"'" 
contract   in ^t"«i„?":;T  "'^^'^  to    "n't intl"""-  """  '^'" 

8ame-i.xdk.i.3,e„  op  «,        •  "PP^ved.  *-"•    '•   *cOre<,or. 

•ndlctinents  of  inrtu,"!  °?'"'°"«8  «»  Acts  „,  n 
«<*.  alleged  .o  c^"n'4  ^'""  !.  """-  the  saM  «a^.e^'""»''-I» 
by  a  corporatioT!.!         ''*°''«'"eai«eharJ«i;^',    *^'*  ""  'be 

««»-of  the'^isror-*  -^ «-"  --i  isiL^o'; 

At  I^w.    Petition  bv  Lo„k  it  r- 

^^/^i/.  to  release  him  W  ,1  ^^^  ^'^^«  ^^^  «  writ  of  ;j^7,.. 

niarslial    k,^  «.i.       ?        "^  ^^^  custody  of  tho  tt  •.   ,    ^^^ 

".ti,  Dy  whom  he  is  helrl  n«^      "^        ^"^  United  States 

otates  eoniiiifcci-^.  "  "nder  a  wamm^  «*      j^t^aces 

^^""iiisfeioiipr,  awaiting  «         ?  *^***^^nt  of  a  ITnitP/l 

the  district  of  Massach.Ze      f    "  "'^"''  '«'  h'""  t^n.ova    I„ 

»lJeged  violation  of  the  act  U"  ^""''^''  ""  '"'^•''""<'"    ^r  - 

nopolies     P-;^„.       ,.     *"  "'  July  2.  ison  .«i  *•  "^  "" 

P   'es.    i'risoner  discharged.       "^    '  ^'*^"' '^''•t'ng  to  mo- 


IN  BE   GBEENE.  kt 

Opinion  of  the  Court. 
John  W.Herron,  for  the  United  States. 
Ramsey,  Maxwell  c6  Ramsey,  for  Greene. 
Jackson,  Circuit  Judge. 

The  petitioner,  a  citizen  and  resident  of  Ohio,  havinir  been 
arrested  and  taken  into  the  custody  of  the  UniS   nS 
States  .narshal  of  this  district  upon'a  wat!::nf  ofa  S 
States  commissioner,  hei^  to  await  an  order  of  the  judge  of 
the  district  cotirt,  under  section  1014  of  the  Revised  sSe« 
for  his  removal  to  the  district  of  Massachusetts  for  trial  unon 
an  indictment  found  and  pending  therein  aga  n  t  hiiTm 
others  for  alleged  violatinna  «f  tiZ     4.    t      s""'*!^  "im  anti 
Julv  2  1800  enfitlli  "  A        .  !         "^^  °^  ""''^^^  approved 

dgama  unlawful  restraint  and  monopolies,"  has  annli^^  t^ 
this  court  to  be  discharged  from  such  custodv  cTaimfnwhlt 

ath.;"  Sm  i^rf  1  ^'^  "'>-'y '•  that-:'aS^^mL 

hi  aTrli;'  "n  %o  fi  r:   TsoL?!  J'--lnisetts,  on  which 

TisranS?  *^d  f^^^^!^^':^  ;^ij 

to  remove  him  there  for  trial  *  ''  ^"S''*  ' 

termine  whether  thp  ^J-  7^^'^ ^'^'^^  *«  consider  and  de- 
xi«  wneiner  the  indictment  pending  a^aincf  fu^  ^  ^• 
tioner  in  the  di-^fri^f  ^#  ti/t         i         "^*"g  against  the  peti- 

court.     It  is  well  sPttlpH  fk«f  ^^^c  jurisdiction  of  that 

of  removal  undt  sTt    n    Ou"K  T^^^T 'V"  ""'''' 
udge  may  properlv  look  intl^     *  J'-        '^''^"''*  «'"'■*  <>»• 

whether  a^  o'tfen^Te  igaS  the ^1^811"'"*  ['  «^*'^'*''- 
whether  the  court  tn  Jhi  11  ^*^^  '^  charged,  and 

-ved  has  u^l  :ntftetmri:^s\""^'*  If  ""  '^- 
exercises  something  more  than Tmexi^^^tTri:!  T  ^^"' 
involving  no  judicial  discretion.  Tre'liStf  oi  L  t  '"' 
and  his  general  right  to  be  tripH  ;„  oTk  ,  "^^  *''*'^®''' 
domicile,  itnposes%::;'Thf  Mge  t£ttv  "oV™/-'^'^ 
and  passing  upon  those  quesL?  SucKstenl/""^ 
form  practice  of  the  federal  courts.    Int  ^"^"D^i'  S: 


,^ 


I 


il 


Jf 


58 

®  ^EDEBAL  BEmXEB,  106. 

86;  V  S  vr^       ^P-  ^»3;  V.  8  v  n^ 

proved  by  JudJ^T  ^"""^  '*<'ently  been  fl'      ,®"P-  ^t 

^e  Terrell,  (^' J'  ^^  '"^'  ""^  by  Judt T^'  ?=  «■ 

--oval  P^c^difgs"  t'fj'^'^  ^^  Fed  t/tr'*  '" 
«™e,  indictment  affK  f  ^^  *^«  ^^^,  or  sub!f '  !•  .'.  "P"" 
^^eU  Case,  ^dt!  ^*  P^"'^'"?  "gainst  petittri^  ^''^ 
right  and  dntv  „f1  ^^"'"^  Properly  stat? '   u  ^"  '''« 

"nt  of  remJj-       ^  '^«  Petitioner  i«  K.ij  "*^  "Pon 

» "-  »s,rit  ij"  ""'"^  ^S  r,: :;: ."- 

to  await  the  n^f/       ^     ^  ^^^  warrant  of  fK  decision 

,/*  is  i:d  Sl^,i^«!-t  iudt  '  ''^  -"--oner, 
United  States  fi3  *^.•^'«trict  attorney   «„  u  u  . 

»- -et  by  r:;;t\:Vi*"''''*'"«"'^-i^^^^^^^   '^'^ 

"ceding  in  the  court  n  1.,    .'  "•■  '""«  other  annm?     f  """* 
'vould  be  subject  t^i  ^'"^ ''  '«  P«"d'n/and     r"*'  P'""" 

'•-contention  tha1"L£;  t^,  ^^^'  ^  -«ed  o"to  s^f:' 
sufficiency  of  fli^  ;  j-    ^^^^^  ^l>eas  coTm,^  support 

against  then,  t   t    ""'^''•''^  ""der  \^,^Z       "''**'*'-^  of 

^--g'VaSiedtthr"  '^'''"•^  '-  the  it^"'  r"'^'"^ 
court  their  ^Sion  1  '"P'^'"*'  «'"'•*  'or  leaved  fit'"*''  "^ 
gronnds  that  the  Itt  *  ^"*  °^  ^«S  J?Ji  ,  ^^'  '"  ^'''^ 
■gainrt  them  ;11    * "^"^  ""^  thinffs  StlT  '  ^^^^  the 

under  the  rM"o?'th'"rt''"^''*  ^'^  not^nsS"'  '''''"•^^^ 
cuit  court     «  Tn  I     ^""^^  States,  or  ^S    u?  '"'"•^  "'f*'"^' 

that  the  Xc  wf     '''"'  *"  interfere."  Tk  ""^  '''^  ^"P"»ne 
h-dtakenSdrr  '"  ^'^''^^  the  i„d^JtLtr""'''PP««'^ 

f  not  invokiu  J4  5 -«-hal  and  „o  reaS.X   ^Jf" 

ciencv  of  fJio  ;«!i-  .    •'""s^ent  of  saiVl  r.^.,  ,.  shown 

^       the  indictment.    The  sun^l     '^  "P°"  the  suffi- 

snpreme  court,  i„  decli„i^ 


IN  BE   GBEENE.  rg 

Opinion  of  the  Court 

original  JurTsdJ  t  oZX^wrnlrV"''^  "^^"'"  "^  ''' 

the  p'ropiillr  tha'  no  ore^i'lhrL't"'  '.° '^^  ^^- 
dictment  was  pending  couW  iX Lto  ^      «"  '^  ""  '"' 

indictment,  or  pass  LTILT   T^   ^  sufficiency  of  such 

offen.se,  or  was  SintL'  ''*•""  ^^'''^^'  ''  °^«'-g«d  an 
for  in  the  more  ret^;  ct?o7E"f  ^^  f.^^ -"-''• 
12  Sup.  Ct.  Rep.  410,  it  is  said:  '  "'^  ^^  ^-  2^*' 

petitioner  wa's  simply  helTtl?"u  ''''"  ^°""<^'  b"t  the 
jury,  and  prematurdy  solt  t'"'  '\'  '^''""  *'^  *•>«  ^^^nd 
ceedings,  the  quest^^n  Si  ''''' ''^^"^^'^*  ^'''"^"^  P^O" 
offense  had  been  ell  £  ™'"''^-'  whether  any 
essentially  different  «T  .    P^'^^t  proceeding   is 

by  Judge'  Latrbe.' wrindS'"  ^^"^  ?'^  ^'^**^  '»'•'- 
committed  against  theUnited  Si   '"\f ''^^  "»  offense 
petitioner  is  unlawfully  and  ilwS'  '"  *'''^»«l>usctts,  the 
erty  in  being  held  in  c'us  ^    „f  ^^•/"''^^^"'^'^  of  his  lib- 
moval  to  thft  district  for  trL       T    ""  °''^^'"  *«'•  ^is  re- 
measure  of  relief  as  thoul  .i'  '^  '"*'"^^  *«  the  same 
by  the  district  iudi     T'fri'hl  TT'  ''*'  ^"  ^^^''^--l 
the  petitioner  tried  in  the  lit'  !  *^/overnment  to  have 
the  indictment  is  pe^dinlt     1  "^  Massachusetts  where 

against  him  comes  under  irtion  73  Vft'^'l^  ''  '"^^  -- 
providing  that,  «  when  anv  oZc  •  ^"^'"''^  Statutes, 
is  begun  in  one  judSalTirc!^  T'"'*  '^'  ^"'*«<i  States 
it  shall  be  deemed  to  hatrr'  ^""^  <=ompleted  in  another, 
may  be  dealt  S  t^Z  ^\  "^T^  ^"  «'ther,  and 

'  "'*1"''*'*  of,  tried,  deter-  [108]  mined, 


60 


52  FEDEBAIi  BEPOBTEB,  108. 
Opiuion  of  the  Court. 


IN  KE   GREENE. 


61 


I 


and  punished  in  either  district  in  the  same  manner  as  if  it 
had  been  actually  and  wholly  committed  therein."  There 
is,  however,  nothing  in  this  provision  of  the  law  which  de- 
prives the  court  of  the  right  and  duty  to  look  into  the  indict- 
ment to  determine  whether  any  offense  against  the  United 
States  is  charged,  and,  if  so,  whether  it  was  either  begun  or 
completed  in  the  district  of  Massachusetts,  so  as  to  give  the 
federal  court  there  jurisdiction  of  the  case.  If,  in  cases 
like  the  present,  the  mere  pendency  of  an  indictment  against 
a  party  in  a  state  other  than  that  of  his  domicile  should 
be  held  to  preclude  all  inquiry  into  the  question  whether 
he  is  charged  with  any  offense  against  the  United  States, 
or  whether  the  court  wherein  such  indictment  is  pending  has 
Jurisdiction  to  try  the  accused,  the  rights  of  the  citizen 
would  be  open  to  serious  abuse.  We  are  clearly  of  the  opin- 
ion that  the  authorities  establish  a  different  rule,  and  we 
therefore  proceed  to  the  consideration  of  the  indictment 
against  the  petitioner,  to  ascertain  if  any  offense  is  charged 
against  him,  and,  if  so,  whether  the  district  court  of  Massa- 
chusetts has  any  jurisdiction  in  the  premises. 

The  indictment  is  based  upon  alleged  violations  of  sections 
1  and  2  of  the  act  of  July  2, 1890,  which  read  as  follows : 

**  Section  1.  Every  contract,  combination  in  tlie  form  of  tnist  or 
otherwise,  or  conspiracy,  in  restraint  of  trade  or  commerce  among  the 
several  states  or  with  foreign  nations,  is  hereby  declared  to  be  illegal. 
Every  person  who  shall  make  such  contract,  or  engage  in  any  such 
combination  or  conspiracy,  shall  be  deemed  guilty  of  a  misdemeanor. 
and,  on  conviction  thereof,  shall  be  punished  by  fine  not  exceeding 
five  thousand  dollars,  or  by  imprisonment  not  exceeding  one  year, 
or  by  both  said  punishments,  in  the  discretion  of  the  court.  Sec.  2. 
Every  person  who  shall  mono|)olize,  or  attempt  to  monopolize,  or 
combine  or  conspire  with  any  other  person  or  i^ersons  to  monopolize, 
any  part  of  the  trade  or  commerce  among  the  several  states,  or  with 
foreign  nations,  shall  be  deemed  guilty  of  a  misdemeanor,  aud  on 
conviction  thereof  shall  be  punished  by  fine  not  exceeding  five  thou- 
sand dollars,  or  by  imprisonment  not  exceeding  one  year,  or  by  both 
said  punishments,  In  the  discretion  of  the  court." 

The  indictment  contains  four  counts.  The  1st,  3d,  and  4th 
allege  violation  of  section  1,  and  the  2d  count  charges  a  vio- 
lation of  section  2.  The  1st,  2d,  and  3d  counts  recite,  in  the 
same  general  way,  that  on  the  11th  day  of  February,  1890, 
the  petitioner  and  other  associates,  in  the  states  of  Ohio,  Illi- 
nois, and  New  York,  engaged  with  each  other  in  a  combi- 
nation, in  restraint  of  trade  and  commerce,  in  distillery 


Opinion  of  the  Court 

products;  that,  for  the  purpose  of  restraining  trade  and  com- 
merce in  said  products  among  the  several  states  of  the  United 
States,  they,  in  the  form  and  guise  of  a  corporation  known 
and  designated  as  the  Distilling  &  Cattle  Feeding  Company, 
which  was  on  said  11th  day  of  February,  1890,  organized 
under  the  laws  of  Illinois,  thereafter,  and  prior  to  August  1, 
1890,  obtained  control,  by  purchase,  renting,  and  leasing,  70 
other  distilleries  within  the  United  States  used  for  the  manu- 
facture of  said  distilling  products,  which  products  were  on 
February  11,  1890,  and  continuously  thereafter,  up  to  the 
finding  of  the  indictment,  "  a  subject  of  trade  and  commerce 
among  the  several  states  of  the  said  United  States ;  "  that  each 
of  said  distilleries  were,  at  the  respective  dates  of  their  pur- 
[109]  chase,  renting,  or  leasing  and  running  under  said  con- 
trol, separate  and  distinct,  and  competing  in  the  manufacture 
and  sale  of  distilling  products  among  the  several  states ;  that, 
in  pursuance  of  said  combination,  they  used,  managed,  and 
controlled  all  said  distilleries,  and  by  means  thereof  did,  dur- 
ing the  period  last  mentioned,  manufacture  and  sell,  and  con- 
trol the  manufacture  and  sale,  within  the  United  States,  of 
77,000,000  gallons  of  said  distillery  products,  said  quantity 
being  75  per  cent,  of  all  the  distillery  products  made  and 
sold  within  and  among  the  United  States  during  said  period  ; 
that  the  condition  of  trade  and  commerce  in  said  products 
among  the  several  states  during  said  period  was  such  that, 
by  controlling  the  manufacture  and  sale  of  75  per  cent,  of 
said  distillery  products,  they  were  able  to  control  and  fix  the 
price  at  which  they  would  sell  such  products  to  dealers 
therem  m  the  several  states,  and  to  control  and  fix  the  price 
at  which  such  dealers  should  sell  the  same  to  citizens  of  the 
several  states  during  said  period ;  that  by  said  means  they 
mtended  to  control  the  amount  of  said  distillerv  products 
manufactured  and  sold  among  the  several  states,  and  to  con- 
trol and  fix  the  price  at  which  said  distillery  products  should 
be  sold  by  all  dealers  therein  among  the  several  states,  and 
m  the  state  of  Massachusetts,  and  to  prevent  and  counteract 
the  effect  of  free  competition  in  the  usual  price  at  which  said 
products  were  sold  among  and  within  the  several  states,  and 
to  mcrease  and  augment  the  usual  price  thereof,  and  thereby 
exact  and  procure  great  sums  of  money  from  the  citizens  of 


62 


52  FEDERAL  REPOBTER,   10». 


II 


Opinion  of  the  Court 
Jfassachusetts  and  other  states  purchasing  distillery  prod- 
ucts, and  to  secure  to  themselves  exclusivdv  the  trfdrZl 
commerce  in  said  distillery  products  and  hv  In  i 
aforesaid  unlawfully  to  restSiTthe  ti^d    «^  /  ""'"^ 

such  products  amo4  .he  .v^S  Ittrf^hruSdTtlT 

po^rn^dirt^s-rdrtht  t^m  ^t---  i  -^'"- 

tilling  &  Cattle  Fe^iif  SmtnTl  o  f T  f  '"''^  ^'^ 
.t  Boston,  within  the  lisS^of  Ma^^hts^;,  ^I.  ^^^^^^ 
«  sale,  and  did  sell,"  to  the  firm  of  D  fSf i\    Sot 

dealers  therein  at  Boston  Should'  J.j^  ?     .f^'T**"  ""^"^ 
within  said  Hist-L     *^t'        .         "*^  •^'^  ^^"  said  alcohol 
witnm  said  district  of  Massachusetts,  or  for  tran«n«rta*;^ 
into  any  other  <!tnto   «  o„j  jj  ,  transportation 

"^    ,  *f  ft®'     ana  did  compel  said  Mills  &  Co   tn 
sell  said  alcohol  within  saifl  Ai^t^Jt     t  nc         ,  *° 

use  in  said  distri  J  nr  f     7  ."*  Massachusetts  for 

the  VM  ?*  f      '  T     f  ^'^n^Portat'on  to  other  states  of 
Uie  United  States,  at  no  less  price  than  that  fiyprl  "  Kw^ 
accused;  that  by  this  means  thpv  J^^  »a1  ^  **** 

distilled  product^s  sold  3n  hfstZ  of  M  ^'^l"™"""'  «* 
did  fix  the  price  at  ^^<l^t;rXi:l'!:r£Zf  T' 
in  said  state;  that  they  therebv  ml^lf T  T  ^  '^^"'^'^ 
the  effect  of  free  comStTon  tj^tL  u^ *^^^^^^^^^  counteracted 
products  wei.  sold  Jithin  th"  strand'  dW  incTe^f  "'.' 

were  sold  in  the  state  of  Massachusetts  for  use  therein  i 
transportation  therefrom,  and  that  they  mTI^^^Z 
means  aforesaid,  did  "rJ-  fnoi  JtZ  h!  f  '^  .^  *^ 
mei^  in  said  di;tilli„g  pXJ  £wl'\\f  ^roJ  T" 
sichusetts  and  the  states  of  the  said  Unked  Statl  oth/r  5J  " 
the  state  of  Massachusetts,"  contrary  t  tjl  f  ''*'''V  «" 
statutes  in  such  case  made  a'nd "Sd       ''  '"™  **'  ^^ 

Feeding  Company;  and  ^^^^:^^^T.^'^: 


IN  BE  GREENE. 


63 


Opinion  of  the  Court. 
that  on  Septemoer  18,  1890,  C.  I.  Hood,  of  Lowell,  Mass 
purchased  from  Webb  &  Harrison,  as  distributing  agents  of 
the  accused,  526.52  proof  gallons  of  alcohol ;  that  the  defend- 
ant, in  the  form  and  guise  of  the  aforesaid  company,  prom- 
ised said  Hood  a  rebate  of  five  cents  per  gallon  on  the  pur- 
chase price  of  said  alcohol,  upon  condition  that  for  six 
months  from  the  date  of  the  promise  he  should  have  bought 
his  supply  or  supplies  of  distillery  products  exclusively  from 
said  company's  agents,  and  should  not  have  sold  any  "of  the 
products  so  purchased  at  less  than  the  company's  distributing 
agents'  list  prices,  and  should  furnish  evidenc^  of  compliance 
with  those  conditions  in' the  form  of  a  certificate.    This  count 
alleges  a  similar  arrangement  with  Kelly  and  Durkee  on  the 
sale  to  them,  September  23,  1890,  by  the  company's  distribu- 
ting agents,  of  85.54  proof  gallons  of  alcohol.     It  also  sets 
out  a  list  of  the  distributing  agents  from  whom  purchases 
oould  be  made,  and  the  agreement  of  the  company  as  to  the 
five  cents  per  gallon  rebate,  and  the  condition  on  which  it 
would  be  made.    It  is  alleged  that,  by  means  of  said  premises 
and  terms  of  rebate  to  said  purchasers,  the  accused,  under  the 
form  and  guise  aforesaid,  did  attempt  to  monopolize  to  them- 
selves the  trade  and  commerce  in  said  distillery  products 
among  the  several  states,  in  violation  of  law. 

The  third  count  is  based  upon  the  first  section  of  the  act 
it  alleges  an  agreement  made  by  the  aforesaid  company  with 
CI.  Hood,  at  Lowell,  Mass.,  on  the  sale  to  him  of  518.88 
gallons  of  said  company's  products,  made  October  2,  1890 
for  a  rebate  upon  the  same  terms  and  conditions  as  set  forth 

1  TT.  .?""*'  ^y  ""^'^  arrangement  and  promise  it  is 
charged  that  the  accused  "  did  attempt  to  execute  and  carry 
out  the  purpose  and  intent  aforesaid  to  restrain  the  trade  and 
commerce  in  said  distillery  products  among  the  several  states 
of  the  said  United  States,  and  especially  between  the  state  of 

JJr^StTetc.  '*'*"'  "'  '"'"  ^"*'^  ^*^*"'  "^^^^^ 

Ttl^t^  ^""7^^  ""f"* ''  ^'"^  *"""•*"'*  "P"''  ^«on  1  of  the  act. 
It  sets  out  a  contract  or  agreement  of  the  Distilling  &  Cattle 

£  27  as  a  ;;h,?  "^^^  '!'  '''''  P'''*'°^^''^S  ""  P«y  *e  latter 
SP4.27  as  a  rebate  of  6  cents  per  gallon  on  86.54  proof  gallons 


^  52  FEDEBAL  BEPOKTEB,   UO. 

Opinion  of  the  Court. 
Of  the  company  products  purchased  that  day,  upon  the  sam^ 
S«nts.'"andT''*T%"K'"^^^  ^"  *«  ionranS  S 

ised  to  make  or  pay  the  TZ^^Z.      u  ""V^  P"*""" 

contract  in  restr^'nt  of  t™l    ^^  ^     °"  ""  '■''"**'^  ^^"^  * 
provisions  ofThe  Satte  '  ""'  "™"^'-'"'  ^''h'"   »»»« 

in  mind^h"'tS""  "'  ''"  '"*''''*'"^"*  '*  *°«I''  «>«  ^orne 
States  are^  r^ir  \         u  «"t'iority  of  the  United 

77    c        »   y'»ncn,  dw,   </.  ^,  V.  Coohdge,  1  \'\Tieat    il*;- 
i7.^  V.  5„«o«,  108  U.  S.  199-206,  2  Sup.  Ct  Ren  531      ' 

«>..j         ^    «^""rts  may  properly  look  to  that  body  of  iiiri« 
prudence  for  the  true  meaning  and  definition  of  such  crim^' 

U  ??  r  T  '''"'''  '^^^"^^  ^  '^'^  »«t  creating  th"m 

£p^yisraTt'ffX"%st\STr^^^^"- 

dictment  i,  ha.d,  in  ^^cllriXtZ:^:!^!^!::: 

lheZ£7:rr  '"*""^  °'  *™^^  ""-^  commerce  w'n 
r  ti        ®°°  '""^'Sn  countries  were  not  onlv  ill,.orai    T^ 
should  constitute  criminal  offenses  against  thTundL 
goes  a  step  beyond  the  common  law,  in    hi.    thatln^  ? 
in  restraint  of  trade,  while  unlawful  werenoi  Li.!.  *^ 

or  indictable  at  common  law.  TadTpts  the  .1         '7"^ 

designated  trade  and  commerce  criminal  offenses,  and  creates 
«  new  cnme,  m  making  contracts  in  restraint  of  trade  ml 


IN   BE   GREENE. 


G5 


Opinion  of  the  Court. 

demeanors,  and  indictable  as  such.  But  the  act  does  not 
undertake  to  define  what  constitutes  a  contract,  combination, 
or  conspiracy  in  restraint  of  trade,  and  recourse  must  there- 
fore be  had  to  the  common  law  for  the  proper  definition  of 
these  general  terms,  and  to  ascertain  whether  the  acts  charged 
come  within  the  statute.  We  regard  it  as  well  settled  by 
the  authorities  that  an  indictment,  following  simply  the 
language  of  the  act,  would  be  wholly  insufficient,  for  the 
reason  that  the  words  of  the  statute  do  not  of  themselves 
fully,  directly,  and  clearly  set  forth  all  the  elements  neces- 
sary to  constitute  the  offense  intended  to  be  punished.  U.  S, 
V.  Cruikshank,  92  U.  S.  542;  V,  S.  v.  Simmonds,  96  U.  S. 
360 ;  U.  S.  V.  Carll,  105  U.  S.  611 ;  U,  S,  v.  BHtton,  107  U.  S. 
655,  2  Sup.  Ct.  Rep.  512 ;  U.  S.  v.  Timmhnll,  46  Fed.  Rep. 
755. 

Under  the  principle  established  by  those  cases,  the  several 
counts  of  the  present  indictment  must  be  tested,  not  by  the 
general  recitals  and  averments  thereof,  although  in  the  words 
of  the  statutes,  but  by  the  specific  acts  or  particular  facts, 
which  are  alleged  to  have  been  actually  done  and  committed 
by  the  accused.  If  the  particular  acts  or  facts  charged  do 
not,  as  a  matter  of  law,  constitute  contracts,  combinations, 
or  conspiracies  in  restraint  of  trade  and  commerce  among 
the  several  [112]  states,  or  a  monopoly  or  attempt  to  monopo- 
lize any  part  of  such  trade  or  commerce,  no  amount  of  aver- 
ments and  allegations  that  the  accused  "  engaged  in  a  com- 
bination," or  "  made  contracts  in  restraint "  of  such  trade  or 
commerce,  or  "  monopolized  "  or  "  attempted  to  monopolize  " 
the  same,  will  avail  to  sustain  the  indictment.  Whether  the 
accused  is  charged  with  an  offense  is  to  be  determined  by  the 
particular  acts  or  facts  set  forth,  and  not  by  the  conclusions 
of  the  pleader,  although  asserted  in  the  words  of  the  statute: 

Every  offense  consists  of  certain  acts  done  or  omitted 
under  certain  circumstances,  and  in  the  indictment  for  the 
offense  it  is  not  sufficient  to  charge  the  accused  generally  with 
having  committed  the  offense,  but  all  the  circumstances  con- 
stituting the  offense  must  be  specially  set  forth."  U  S  y 
^rM^A•Ma7l^,  92  U.  S.  542,  563. 

Do  the  particular  facts  set  forth  in  the  indictment  consti 

11808— VOL  1—06  M 5 


\ 


66 

S8  FEDEBAL  BEPOBTEB,  112. 

h,tP  v.;   I  .  OP""oa  Of  the  Conrt 

tute  violation  of  the  statiitp?     t 

the  provisions  of  the  act  to  fh  ™"'^t''"ng  and  apnlyinj, 
--t  be  aasunied  thattn^^^^'J  «f "-  <^^Zil 
enactoent  ehhei-  -t^mctivfTg t  j  iT  /V'"^«  "^^ 
«tion  and  effect.    \o  criminoiT  '"^  '"'^'^  A^^o  oner- 

^°  the  act.  of  the  alurL  tl^^';  "r'°-  "-  -£ 
nation  on  February  11.  iggj  ^r/       ''*'""  "'"'^'^  «"«"- 

Cattle  I.ee<?ing  Company,  a  (^L^H  ''"  ^stilling  & 

on   hat  day  under  the  law   of  iZ"?     "^"^"'''*'  ^^  '''«"' 
control  prior  to  the  passage  of  Vh       :"",''  "'  ««l"isition  and 
other  distilleries,  wlLrefaWed  lid    "'  '''''  "'  '«"«'  "'  '« 
tnre  and  sell  70.000,000  JCs  o^  ^  Tr"^  '°  "'"""^^c- 
-•d  quantity  being  fs  pef^n     ofalT;;    'r!";''-^'  P'"'^"<^' 
manufactured  and  sold  in  the  I  n^L  ,  U      """"'■>'  P'-«>"«te 
or  ^tes  of  a«,uiri„g  said  d^H leS  ■:S^^^^^^^^^^^^     "-  ^ate 
ndictment.    It  is  not  alleged  th«t  Tk  *  ''"'''"^  «'  the 

ro  of  the  70  other  distiller^  by  th  '  "''""'*'°"  ""^  «»«- 
t'Umg  &  Cattle  Feeding  ColaLL"'''""^  "'^  ''^^  ">«  Ws- 
large  production  was  secLd"  as  in '.n^  ""'"'•''  "'  '^'"•^''  this 
'« 't  alleged,  or  eyen  recifS  tW  u  ^  '^''''*  ""'""*"' '  »«r 
ro  other  distilleries  wei^e  al'u ^^^  wefT'"  '™"  ^•''-»  -»'d 
ft^ni  thereafter  e„gagi„„i;S"''f.,':>'«>ntract  restrained 
pnerally  or  partiafly!  Frl  i„vt""'"'-'  '""'"^^'  «ithS 
to  the  contrary,  it  niust  be  pr^r/d""?^^  or  recited 

the  defendants,  or  the  DiJ^TcZ  I"  Pf^^ing'  that 
in  whose  form  and  guise  theTcctS"'"  *!*^^"g  Company, 
were  in  the  rightf ul ^  ^^^'^jr*  '«  ^'d  to  haye  acted 

dtstilleries  employed  ^^TL  the  T"1  °'  *'*'  ""'"«'•«»« 
or  small,  can  m  no  way  affect  th..  SV^V^  whether  large 
dem  to  lawful  ownershi;  S>^^^m;'  t^'^'«»  -«^ 
and  limitations  upon  the  rio^h?  5^     "^  P'*"*  '^striction 

««anized  under  its  authoi^f  to  acoTr"''""'  ^"«^«^  ■"><» 
property,  ft  „,ay  gj^o  :„, 'L  "^""*'  "*'  and  dispose  of 
tions  upon  the  ciLen  i.  T^  T''^  restrictions  and  liniita- 

Privilege  or  '^nS  "nf^Vv^th:;;":^^'  "  ^^'^ 
congress  certainly  has  not  thTlZ. '  '  ^"V'^  ^'^tes.  But 
eonmiem,  clause,  or  .„v  other  ^  ■'"'  «"*'«»"ty  under  the 
to  limit  and  t^riet  the^S"? ^2";'  *'^  institution 

gnt  Of  corporations  created  by  the 


IN  BE   GBEENE. 


67 


Opinion  of  the  Court, 
states,  or  the  citi-  [113]  zens  of  the  states,  in  the  acquisition, 
control,  and  disposition  of  property.     Neither  can  congress 
regulate  or  prescribe  the  price  or  prices  at  which  such  prop- 
erty, or  the  products  thereof,  shall  be  sold  by  the  owner  or 
owners,  whether  corporations  or  individuals.     It  is  equally 
clear  that  congress  has  no  jurisdiction  over,  and  cannot  make 
criminal,  the  aims,  purposes,  and  intentions  of  persons  In 
the  acquisition  and  control  of  proi^ertv.  which  the  states  of 
their  i-esidence  or  creation  sanction  and  ,>ern.it.     It  is  not 
material  that  such  property,  or  the  pi-oducts  thereof,  may 
become  the  subject  of  trade  or  commerce  among  the  several 
states  or  with  foreign  nations.     Commerce  among  the  state* 
within  the  e.xclusive  regulating  power  of  congress.  -  consists 
of  intercourse  and  traffic  between  their  citizens,  and  includes 
the  transix>rtat.on  of  persons  and  j)iopertv,  as  well  as  the 
purchase,  sale,  and  exchange  of  commodities.'-      Co.wtv  of 
■Vobde  y  Kimball,  102  U.  S.  0.91-702;  Gloucester  Ferry  Co 
V.  Pe„ylrania,  114  U.  S.  203,  5  Sup.  Ct.  Rep.  826.    In  the 
application  of  this  comprehensive  definition,  it  is  settled  by 
he  decisions  of  the  supmne  court  that  such  commerce  in 
eludes,  not  only  the  actual   transportation  of  commodities 
and  persons  between  the  states,  but  also  the  instrumentalities 
and  processes  of  such  transportation.     That  it  includes  all 
the  negotiations  and  contracts  which  have  for  their  object 
or  involve  as  an  element  thereof,  such  transmis.sion  or  p~ 
from  one  state  to  another.    That  such  commerce  begi  is,  arfd 
the  «g„lating  power  of  congress  attaches,  when  fhe  com 
mod,  .y  or  thing  traded  in  commences  its  transportation  SI 
the  state  of  its  production  or  situs  to  some  ^her  state  Tr 

comSed  tY'tb  "'  '""""r  ^'^™  "^^  transportatiSi  Z 
completed,  and  the  property  has  become  a  part  of  the  gen- 
eral mass  of  the  property  in  the  state  of  its  destination 

tro?:hr"""r'r^"^  ^  '*'^™"-'*'  -^  ^y  the  d  r: 

acter  of  the  commodity,  nor  by  the  intention  of  the  owner 
to  ransfer  it  to  another  state  for  sale,  nor  by  his  p^paraTion 
of  for  transportation,  but  by  its  actual  delivery  to  a  com 
mo  carrier  for  transportation,  or  the  actual  commencement 
of  It  transfer  to  another  state.  At  that  time  the  powS-  and 
gulatmg  authority  of  the  state  ceases,  and  that  of^Tol^ 
attaches  and  continues,  until  it  has  ^.ached  another  stateS 


•  • 


i 


i\ 


£*0 

S2  FEDERAL   BEPORTER,   U3. 
Opinion  of  the*  Court 

merce,  a„,,  ,vhiel>  are  intended  LTaTl/fl-*'  "V""- 
izen«  of  other  states  nn-  thl  •       ^  "'"''"'  "'"»  "it- 

tation  fron.  the  state  Ze^ll^ST  '"  ^'"'  '"'"'^°'- 
to  the  co„u,.euce,ue„t?f  K"„H  "n  T"""*'"''"^-''  P^or 
thereof  to  another  st-ite  ^n  *  ?  f«"«f«r,  or  transmission 

which  con^eH^Ti:*  £  ~tt:  "'  "^"'"'^  ''^"'"'"•- 
further,  that  after  the  teSjt  "f  ifT^  ?^  '""^'"^'^'  '"'^' 
conunodities  or  articles  oJTrlffi    f         ^'  transportation  of 

and  the  -inglinrlrtrgin^th^^flThVr  *",  '""'"*^'; 
property  in  the  state  of  deftinatTon    th    Xdit^^^^^^^ 
and  consumption  thereof  in  the  latter  sLtpf  ''"'*"''"*"'"' 
of  hiterstate  commerce.   PerJro/„f,r         i^  ''"'  ""  l'"''* 

i/w.,  !»o  u.  o.  1 ,  Zf/'OM,!  V.  Houston,  114  IT  S  r.-w  ->  c 
Ct.  Rep.  1091;  Coe  v.  ^-^.^Z  ne  u  g'  5i7^:,^-«-i'  "  ^^"f 
Rep.  475;  Rohbim  [lU]  r  rZil  ^^    Ton  Vt   f  "''•  ^*- 
Sup.  Ct.  Rep.  592;  and  ELlypZZnmis  l\\  '"'nl 

citals  and  conclusions  of  uItZa  -T'  ^*'"*'™'  '"''- 

charge  any  real  offZ  aiiisr;T;:^S:it:d  sT  t"""'  ^'^ ' 
the  district  court  of  M!^^^^t^'^^]^Z^Z:^^^^t 
specific  offense  charged  in  the  first  count  s  S  tti  *  ^' 
ants,  under  the  form  and  guise  of  thfnl  tir  *'*^*^^*«"«'- 
Feeding  Comnanv    sold  „/^  *  u  Distilling  &  Cattle 

r>  m  ,?  '^'"Panj,  sold  on  October  3.  1890   t«  \f;iio  „  j 
Gaffield,  copartners  under  the  name  of  D  T  MUls  1  Po 
certain  quantity  of  distilled  products  then  in    h!  1?!'  1 
niinois;  that,  by  reason  of  said  Distillin^t  cJi^  ^  r 
Company's  controlling  the  nianuf^  tu  1  f.  d  ^^  e':/^^^^^ 
cent,  of  all  such  products  in  the  United  States  thev  fi    5  ff 
price  at  which  said  nni-nh^.        ^"'wu  oiaies,  they  fixed  the 
1-        »!-  wmcn  saw  purchasers  should  and  did  sell  «,iA  „i 
hoi  for  use  in  Massachusetts,  or  for  tramnnlr        ^     ''"" 
other  st«t«  «an/i  a; A  ,  "*  xor  transportation  into  any 

oiuer  siaie,     and  did  compel  said  Mills  «nd  Poffi  u         ^ 

partners,  to  sell  said  alcohol  at  no  le.  p^haiS 


IN  RE   GREENE. 


69 


Opinion  of  the  Court. 

by  them.    It  is  not  alleged  how  said  Boston  purchasers  were 
"  compelled  "  to  sell  at  the  prices  fixed  by  the  defendants, 
nor  how,  or  under  what  arrangement,  the  defendants  fixed 
the  price  at  which  the  alcohol  should  be  sold  in  Massachu- 
setts, or  for  transportation  therefrom.    Was  it  one  of  the  pro- 
visions of  the  contract  of  sale  and  purchase,  or  Avas  it  by 
a  combination  or  conspiracy  between  the  defendants  and  the 
Boston  purchasers  ?    The  means  described  by  which  the  de- 
fendants were  enabled  to  fix  the  price  at  which  the  purchasers 
should  sell  the  alcohol  was  certainly  not  a  "  contract,  combi- 
nation, or  conspiracy  in  restraint  of  trade  and  commerce 
among  the  states."    If  they,  by  force  or  duress,  "  compelled  " 
the  purchasers  to  sell  at  a  price  fixed  by  them,  such  compul- 
sion would  not  constitute  either  a  contract,  combination,  or 
conspiracy  in  restraint  of  trade.     It  cannot  be  assumed,  un- 
der the  language  employed  in  this  count,  that  there  was  any 
"  contract "  between  the  defendants  and  Mills  and  Gaffield 
which  by  its  terms  and  provisions  restrained  the  latter  in 
respect  to  the  price  at  which  they  should  or  did  sell  the  alco- 
hol.   The  count  certainly  charges  no  "  combination  or  con- 
spiracy," within  the  meaning  of  the  act,  between  the  defend- 
ants and  the  Boston  purchasers.     The  charge  is  too  vague 
and  general  to  show  a  "  contract "  in  restraint  of  trade,  such 
as  the  first  section  of  the  act  contemplates  and  declares  illegal. 
It  cannot  be  aided  by  presumption  or  intendments.     It  is  bad 
upon  its  face,  and  charges  no  offense  committed  in  the  state 
of  Massachusetts  of  which  the  United  States  courts  in  that 
state  could  take  jurisdiction. 

The  second  count  charges  an  attempt  on  the  part  of  defend- 
ants to  monopolize  to  themselves,  under  the  form  and  guise 
of  said  Distilling  &  Cattle  Feeding  Company,  the  trade  and 
commerce  in  distillery  products  among  the  several  states,  and 
between  the  state  of  Massachusetts  and  other  states;  the  spe- 
cial acts  on  which  this  charge  is  based  being  that,  [115]  on 
the  purchase  of  certain  quantities  of  alcohol  bv  C.  I.  Hood 
and  Kelly  &  Durkee,  (citizens  and  residents  of  Massachu- 
setts,) in  September,  1890,  from  certain  distributing  agents 
of  the  Distilling  &  Cattle  Feeding  Company,  the  defendants, 

r^^^i    r  r'"  f''^  ^"''^  ^^  '^^^  company,  agreed  and  prom- 
ised that  If  said  purchasers  would,  for  a  certain  designated 


•  » 


I 


70  ,, 

■  *'^EBAL  BKPORTEB,  115. 
Ol)iui„„  „f  tbp  (.^^^ 

period,  (six  months.)  buv  all  th„;- 

agents.  (two  of  whom,  as  an^L       *?"'P''"-^*'^  distributing 
-t  Boston.  Mass..)  and  «3     .       ^  "**""*'  ^^--^  'ocated 

;iji'jeopr.KhK.ti:'?.:c,ra:",i':  "'-'>"'  -  <'^'- 

lii't  prices  of  s„ch  distributing  al^lf        !r  ^'"'''  f'""'  *he 
proper  certificate  of  such  fact!  T     iJ""^  '"""^'^  "'"ke  a 
Cattle  Feeding  Conipa^^^ould  i  ''!,"'''  "'^t^'-^  & 
chasers  a  rebate  of  five  LTs Tl      u    """^  ^^^  '"  ^i*'  Pur- 
<*a«ed  by  them,    -^e  tS  Z  fT.  °"  '^'"''^  ^""o"  P"- 
«tantial]y  the  same  arranSnl,      T  '^"""^^  '^^  °"t  ^"b- 
payment  of  a  rebate  of  fiTcTtl  "n^^  *^'"*"'  "«  *«  "»« 
chasers-  compliance,  during  thTJii^  f /  T  "P°"  ^''^  P'""- 
-.d  ^nns  and  conditions  "aLdcC^  TtZf  l'"  l*"^- 
contracts  m  restraint  of  tradp  «„^  '"  '**''«  "^n 

states  within  the  purriew  of  tt  steLru"""  "'"°"«  ""^ 
-nsider  those  th.^  counts  to^t  W  "k  h'  T  ''"^••**°'^ 
«"t  forth  coiLstitute  either  «n  "Smnf  *  ^  ^""''^  *^''^'» 

and  commerce  in  distillery  orc^ZF  "'"""?•»''"«' "  trade 
«>ntracts  i„  ^^raint  of  If  ^adej  T""^  ""  ^^"*^^-  ^ 
what  cong,*.ss  meant  by  the  «e^„H  '"  ""'  ^^^-^  «'«««• 

July  2,  1890.  in  declaring  it  a    '^       *''*'""  «^  the  act  of 
-  "attempt  to  nionoS  «  rytr T/''  "  ~Po'i-," 
nierce  among  the  ^tat^or^ith  fo^!."        *'■'  *™''«  «••  """i- 
certam  that  congress  could  not   a"d  ^""'IT    }'  '«  '^^ 
ment,  attempt  to  prescribe  Cits  /„    l        '    '''  ^^''  «'"'^t- 
by  the  private  citizen  or  stTte^'n      .^"^  •«!"i«ition.  either 
might  become  the  subject  Jj  ST""'  "*  '""'"'^>-  ^^ich 
that,  when  the  accumulat  o„  or  SmI  T""''""'-  "^  ''^«''«* 
-ate  means  and  lawful  methods  "k  ",  ^^"^'^^  ^y  '^gi'i- 
proportions  as  enab  J  the  owner^r        ""''  '""^'•"''«  or 
traffic  therein,  or  anv  part  thereof  „     '*'"'T  '^  •^^""'••«'  ""e 
wal  offense  was  eonuifitred  bTsL      "^  '^'  '^*«*«^'  «  •"••i'"- 
Persons.  i.uli,  ich.allv  or  in  corL     »    '"'""'  "*•  »'*»«^'^-    All 
on  business  avocations  andTf^"'""'.'*'"«»"'='«ti<"'s.  '""rrvin-. 
chase   s,,,,  „r  e..ehanV:f' aTt  r r  tr^'^T  ^''^  P"- 
•nanufacture  of  commc^ties  whi "h^        ^  Production  and 
fierce,  will,  in  a  popular  ^„t  ^J"™  .''«  ^.''''i^t^  of  com- 
■nterstate  traffic  in  sJch  artWe^'orc^r    r  ^"'^  •'^^"*«  ""d 
Portaon  as  the  owner's  but^  Z  "l^^^  J"^  'l'  "^^ 

increased,  enlarged,  and 


IN  BE   GBEENB. 


71 


Opinion  of  the  Court. 

developed.  But  the  magnitude  of  a  party's  business,  pro- 
duction, or  manufacture,  with  the  incidental  and  indirect 
powers  thereby  acquired,  and  with  the  purpose  of  regulating 
prices  and  controlling  interstate  traffic  in  the  articles  or  com- 
modities forming  the  subject  of  such  business,  production,  or 
manufacture,  is  not  the  monopoly,  or  attempt  to  monopolize, 
which  the  statute  condemns. 

A  "  monopoly,"  in  the  prohibited  sense,  involves  the  ele- 
ment of  an  exclusive  privilege  or  grant  which  restrained 
others  from  the  exercise  of  a  right  or  liberty  which  they  had 
before  the  monopoly  was  secured.     In  commercial  law^  it  is 
the  abuse  of  fi^ee  commerce,  by  which  one  or  more  f  116]  indi- 
viduals have  procured   the  advantage  of  selling  alone   or 
exclusively  all  of  a  particular  kind  of  merchandise  or  com- 
modity U)  the  detriment  of  the  public.     As  defined  by  Black- 
stone,  (4  Bl.  Comm.  159,)  and  by  Tx)rd  Coke,  (3  Co.  Inst. 
181,)  it  is  a  grant  from  the  sovereign  power  of  the  state  by 
commission,  letters  patent,  or  otherwise,  to  any  person  or 
corporation,  l)y  which  the  exclusive  right  of  buying  selling 
making,  working,  or  using  anything  is  given.     Wien  this 
section  of  the  act  was  under  consideration  in  the  senate   dis- 
tmguished  meml^rsof  its  judiciary  committee  and  lawyers  of 
great  ability  explained  what  they  understood  the  term  "mo- 
nopoly^'  to  mean;    one  of  them  saying:    "It   is  the  sole 
engrossing  to  a  man\s  self  by  means  which  prevent  other  men 
from  engaging  in  fair  competition  with  him."    Another  sen- 
ator defiiied  the  term  in  the  language  of  Webster's  Diction- 
ary :      To  engross  or  obtain,  by  any  means,  the  exclusive 
right  of,  especially  the  right  of  trading,  to  anv  place  or  with 
any  country,  or  district;   as  to  monopolize  the  India  or  Le- 
vant trade."    It  will  be  noticed  that,  in  all  the  foregoing 
defimtions  of  "  monopoly,"  there  is  embraced  two  leading 
elements,  VIZ    an  exclusive  right  or  privilege,  on  the  one  side, 
and  a  restriction  or  restraint  on  the  other,  which  will  operate 

ZtZT  ""f"  "^  '  "^^'  "^  ''"^"^'y  -i--  '-  ^he  public 
before  the  monopoly  was  secured.     This  being,  as  we  think 

Ictir^f'  h"".tf  ''  '''  ''^"'  ^^  employed^n  the  second 
sec  ion  of  the  statute,  an  "attempt  to  monopolize"  anv  part 
Of  the  trade  or  commerce  among  the  states  must  be  an  attempt 
to  secure  or  acquire  an  exclusive  right  in  such  trade  or  com- 


f 


fi2  FEDERAL  BEPORTER,   U6. 
Opinion  of  tbs  ck>„rt 

sense  of  the  term,  for  the  al,c!^  "monopoly,"  i„  the  legal 
Feeding  Con,p„„  •  to  IwnT^,^?  *^*  ""^""'"^  *  Catde 
them,f,  whether  such  S«l tmo  S  ;-'*"«  P-^ucts 
large  part  of  what  was  produ«!ir?  ''^  ^''^  ^^''"le  ««•  » 

ership  and  control  of  su^^pS.  ts  t  T^'l'   T^*-  -- 
com„.erce,  is  not  what  the^t^'        ^  ^""^  "*  ^'-^-^^  «nd 
nopoly  or  attempt  to  mono^^  T    7' '  '"'  ^'^^  •"- 
commerce  therein.    In  this  Z.     v-         ""^'^tete  trade  or 
70  distilleries,  which  enablJT''""  ""'^  °P«™«°"  of  the 
A  Cattle  Feeding  Sm"  " lot  "T'*'  ''^  ^'^  "'^tilling 
«ale  of  75  per  cent,  of  the  LhIw"    "^l"'^  """^  '"•"^^°'  ^^^^ 
;  does  not  appear,  nor  1  IrS^^Z/'itlr '  '""^  ^"""*'-^' 
whom  said  distilleries  wer«  aZS',  ^  P'''^"^  *'^'" 

restraint,  by  contract  JZl^^^  ''^'^  P'«<*d  "nder  anv 

W  -tinLgrXgLTirs„r?  ''^^^''"'^'^  ^''^^ 
pei-sons  who  chose  to  en^Lf  thl  ''""^^-    ^^  «ther 

JJe  effort  to  control  theSS  ran^^*  "^-^-^  *"  ^"  - 
Wlery  products,  by  the  LuJl  \  ^  manufacture  of  dis- 
ness,  was  not  an  attemptTo  ZT""  • '^^  '^'^"^•"°  «*  ^usi- 
;n  such  products  withTn  he  raW  '7 /."':  ""'^  '="'"— 
WalThe"^  ''''  ""*  "'  '"'^herToSdlHr^"*^' ''"''  """^ 

-^r.tmTxrstorttdr'^" '-^^^^^^  as  to 

to  monopolize  any  part  o7?h  taT  '7'  '*"*'''  ""  ''"^'"P* 
f  f ^  in  distillery  products?    ui^^^.TT''  "'"""«  ''^^ 
inferml  fron,  anything  that  is  set/  ff  *'l"'"'  **  '*  *°  *>« 
cha«.rs  bound  themsell   or  entet/"?'  '^"^  '''^  P"'- 
fini  obligations  or  nnd^rsL^^n      .  T  ""-^  <^«ntractual 
supplies  exclusively  from  Tjl  frf 'k    •''"•''  *'**''•  ^^'^ti'l^y 
KstiUing  «  Cattle  F^TngJomnan      '"4.  ''^^"^^  "^  ^^^ 
perfect  liberty  to  purcW  f  hJ     ^u  -^-    ^'^^^  ^^'"'^  '««  at 
pleased.    Xo-contSSuaHr  o^""'  '"''"'''  "'"  ''•°'»  ^^om  they 

*em     Upon  ..rtattitrwrcH  ""  ^'"^^^  "''- 
tional  with  them  to  comply  witK     ~,  "^"^  ^"''"''.v  op- 

promised  by   the  seS^^  Such   an      """^''^'  »  ^"'"'^^  -«« 
amount  to  a  contract  to  nnl^  f  rangement  does  not 

tilling  company  o  "  ts  diSfuhW  ^^^^^^^       '^'""  -^<^  ^^- 
did,  there  was  nothing  rsuch^n^'^"*'-    ®"*'  «"PP«««  i* 

g  in  such  an  agreement  unlawful  or  in 


IN  BE  GREECE. 


73 


Opinion  of  the  Court 

contravention  of  the  statute.     The  promise  of  a  rebate,  as 
an  inducement  for  exclusive  trading,  certainly  does  not  con- 
stitute an  "  attempt  to  monopolize,"  when  the  purchaser  is 
left  at  liberty  to  buy  where  he  pleases,  and  when  all  other 
sellers  of  the  article  are  left  unrestrained  in  offering  the  same, 
or  greater,  inducements.     As   to   the  remaining  condition 
upon  which  the  rebate  was  to  be  payable,  the  same  observa- 
tion may  be  made.     The  purchasers  were  placed  under  no 
contractual  or  other  restraint  in  respect  to  the  price  at  which 
they  should  sell.     They  were  simply  offered  a  rebate,  as  an 
inducement  not  to  undersell  the  vendor's  distributing  agents, 
two  of  whom  were  located  at  Boston,  Mass.     The  arrange- 
ment relied  on,  considered  either  in  detail  or  as  a  whole,  in- 
volved no  "  attempt  to  monopolize  any  part  of  the  trade  or 
commerce  among  the  states."    The  rebate  promised,  upon 
condition  of  exclusive  purchases  and  not  underselling  the 
vendor's  distributing  agents,  was  a  legitimate  method  of  in- 
ducing trade;   but  the  means  thus  employed  in  no  way  op- 
erated to  prevent  or  restrain  others  from  offering  the  same, 
or  greater,  inducements.     The  condition  as  to  not  selling  at 
lower  prices  than  those  of  the  distributing  agents  may  have 
had  a  tendency  to  maintain  prices,  but  that  would  not  have 
been  an  attempt  to  monopolize  trade.     The  inducements  of- 
fered for  the  exclusive  trade,  and  to  sell  at  no  lower  prices 
than  the  price  list  of  the  distributing  agents,  was  not  preju- 
dicial to  the  public.     It  was  in  no  way  contrary  to  public 
policy,  or  an  unlawful  restraint  of  trade,  as  will  be  seen 
from  the   authorities  hereinafter   referred  to.     But,   aside 
from  this,  it  is  not  shown  that  said  arrangement  necessarily 
involved  or  related  to  interstate  traffic.     It  is  not  alleged 
that  Webb  &  Harrison,  the  distributing  agents,  from  whom 
Hood  and  Kelly  and  Durkee  made  their  purchases  of  alcohol, 
were  located  or  made  such  sales  in  some  other  state  than 
Massachusetts;    nor  that  the  alcohol  itself  was  beyond  the 
limits  of  that  state  when  purchased.    Neither  is  it  shown 
that  the  exclusive  purchases  thereafter  to  be  made,  as  one  of 
the  conditions  on  which  the  rebate  was  to  be  paid,  could  not 
have  been  made  in  the  state  of  Massachusetts,  it  appearing 
from  the  face  of  the  count  that  two  of  such  distributing 
agents  were  located  at  Boston,  in  said  state.    Without  dwell- 


i! 


I 


74 

52  FEDEBAL  BEPOBTEB,   Ul. 

»^  ft-ther  upon  ur'T  "^ '"""• 

opinion  that  CiT^trr,'  ^^  «"  ''^-'•Jv  of  the 

agy  the  petitioner.    '  """'  '*'^^  ^  ^^arge  any  offenj 

*»^«at  has  been  ahpiti^x^      •  i 
•nd  fourth  counts.    The  n^  ^^^  ^'"•g^lv  to  the  third 

"1  ^**assachusetts  and  nfh^      T       ^"   between   the 

V  ^"'^  they  should  .sell     T|,„'  *"*  P"ce  or  prices 

ducemeut  in  aspect  to  f I..       '^  ''^'■**  "^''nP'y  offered  an  ^ 
perfect  Jiberfi,  *  "'***  matters,  which  th  "" 

t"      II  iioerty  to  comply  with  «-  j   ',.  tnev  were  at 

retrained  by  any  contractli  oWi    !     "'^     '^'^^^  '^^'^  no 
l«ted  period.     The  aimJ„    !    °'^^'S»twn  during  the  stinn 
that  period     tt       "^«^'n«nt  was  wholly  unil.f     ^/'P"" 
lo^^  •      .  ■     ^P**"  compliance  wifK  /i!*    """«te«al  during 

iSjh  '''  ''*'""''  -""'■  Cwete  enrHT''''*">^  "^  «1 

a  valid  and  subsisting  contrJIT.!         °P«"«"on  to  create 
thereto,  or  during  the  p^"!.  fi  ^''"^'^  the  parties  prior 
of  the  promi.se  and  the  f^r       '"^•^*'">ng  between  theS 
-hich  the  rebate  was  totrif  T  "'*'  "'^  -ndi«:ns  on 
--  '-tween  the  parties  no^^t^a^"""^  *'"*  P"""'"^  ^^e" 
But  suppose  the  arran^emlr      1^*  '"  restraint  of  trade 
construed  into  a  con[:;'cTrwee?Hl  '"  T  ^-'O'"  ^t 
of  the  promise,  or  during  the  ^n.,    t  f  *'""  '"'n,  the  date 
he  held  to  be  a  contract  T   *'?"?'*''  P*'"°<'<  it  could  not 
deemed  necess«rv  T       ?     "  '^straint  of  trade     iT- 

•  necessary  to  reyiew  th*.  «..*!,      J      ™''*-    "  is  not 

of  contracts  in  i^straint  of  LZ  ""*''""*'««  "Pon  the  subject 
«hle.     It  is  well  ^.ttled  SiaS.  C  """''  '^  '^  «*  «"  P-fi  - 
5^de  are  eontraiy  to  p„bl1    p^  L?*^ '"  ^^neral  i^strahit  of 
J*e  arrangement   under  conCl    V        therefore  unlawful       ' 
"onsidemi  as  one  in  TnerT-  ,     ""°  """"°*  l>os.siblv  i^! 
-^"•int  is  partial,  eiC™  tm^^^''^'^.-     ^^^^^  th^i 

"me  or  place,  its  yalidity  is 


IN  BE   GREENE. 


75 


Opinion  of  the  Court 

to  be  determined  by  its  reasonableness  and  the  e.xistence  of 
a  consideration  to  support  it.    The  question  of  its  reasbnable- 
iiess  depends  on  the  con.sideiation  whether  it  is  more  injuri- 
ous to  the  public  than  is  required  to  afford  a  fair  protection 
(o  the  party  in  whose  favor  it  is  secured.     No  precise  bound- 
ary can  be  laid  down  as  to  when,  and  under  what  circum- 
stances, the  restraint  would  be  reasonable,  and  when  it  would 
be  excessive.    Navigation  Co.  v.   Wimor,  20  Wall.  64-68- 
Beal  V.  Chase,  31  Mich.  490;  Ward  v.  Byrne,  5  Mees  &  w' 
m;Ho7iier  v.  Graves,  7  Bing.  735;  Mallan  v.  May,  11  Mees! 
fn^;,*'*'^'  ^^''>'**'''^'^^  "■■  Howe,  3  Beav.  383;  Hodge  v.  Sloan. 
107  N.  \ .  244,  17  N.  E.  Rep.  335.     In  the  present  case,  the 
arrangement   treated   as  a   contract   was   founded    upon   a 
valid  consideration,  and  only  secured  to  the  vendors  a  rea 
sonable  protection  in  their  business.     It  was  not  an  unlawful 
contract  in  restraint  of  trade.     The  authorities  fully  support 
this  conclusion.     In  addition  to  those  referred  to  above,  we 
cite  the  following:  ^wj/'M  v.  Roumanell,  78  111.  589-  Fow-Ze  v 

^P,dhmn  South.  Car  Co.,  139  U.  S.  79, 11  Sup.  Ct.  Rep.  490: 
f7  A:      ,''•  ''•  ^t'^^^^gor,  [1892]  App.  Cas.  pt.  1.  p.  25, 
^decided  by  the  house  of  lords  in  December,  1891  )     In  this 
latter  case  there  was  a  combination  or  association  of  ship 
owners  who,  being  engaged  in  the  trade  with  China,  with  a 
view  of  obtaining  a  monopoly  of  the  homeward  tea  trade 
ajid  e.x-  fll91  eluding  the  plaintiffs  from  competing  with 
hem  for  the  same,  and  thereby  keep  up  freight,  offered 
to  rebate  or  repay  every  si.xth  month,  to  such  merchants  and 
shippers  ,n  China  as  should  have  shipped  their  tea  exclu- 
sively m  vessels  of  the  association,  5  per  cent,  on  all  freight 
paid  by  them.     The  plaintiffs,  as  rival  and  competing  shin 
owners,  were  thereby  excluded  from  this  business,  and  sued 
tor  damages,  and  the  question   (almost  identical  with  that 
nder  consideration)    was  pi^sented  whether  the  combina- 
tion and  arrangement  adopted  by  the  association  to  secure  the 
X  lusive  traiisportation  of  tea  trade  was  in  any  way  unlaw- 
rnl      It  was  first  passed  upon,  and  held  to  be  free  from  ob- 
jection, by  Lord  Coleridge.     21  Q.  B.  Div.  5.54,  4  Ry.  &  Corp 
I  -aw  ,;.  61 1.     His  decision  was  sustained  on  api>eal."  (23  Q.  b" 


't 


I    I 


62  FEDEBAI,  EEPOBTEB,  U9. 

">  II  iJie  Jiniits  of  this  onini^..  •  '^'^^  ^^"se  of 

»g  and  conclusions  the«  Zh^  J,™'"""-,    ^he  mson- 
-•o^s  j„  fhe  present  case.  ""'^  ""^^  «»«•  conclu- 

of  ^VtSiTnl^rL^-ri^^^^^^^^^    *«  »"  *'»«  -nts 
«nminal  offenses  were  as  d?!*''^  *"''  "»«tters  charged  as 

-ent,  the  act.  of  Z  CSr&T.^.'''"  «'  *'>^^«di,i- 

not  alJeged  what  relation  thf  .        **'  Illinois.    It  ;= 

t'on;  nor  does  it  ^^Z^CT  """  '*»  ^"'^  -^ra 
r/  ojher  than  that  „f  mTr^^^.-kCT"^^**''"  "»«^^'* 
defoliant  Greenhut.    By  Z  Zt!^     ?■'  ""^P'  ««  ^  the 
rt  K  provided  «  that  the  word  '  Lr     T*""'  •*'  «'«  statute, 
e^er  used  in  that  act,  sha^rJ.  f     ",   *"■  'P^^^ns '  wher- 
•ons  and  associations  e^sfin^  n„T^  '^  '"'^^"'^^  <^«'-pora- 
W  of  either  the  Unit^sTatTlT  "'*'""^«^  ''^  »he 
terntones,  the  laws  of  any  stat    '    ^     "'"'  "^  ""y  of  the 
«»untry."    If  ^^  .^^  ;;[«'»<«.  or  the  laws  of  any  foreign 

the  Distilling  &  Cattle  FS/^r*"**  *="'^"«1  offens^ 
^ho  has  conunitted  the  same %f?P?7j^  ">«  "P«'-«on" 
'^minal  jurisprudence  to  make^t..   ^  f  .^^  ""''««^<'  <"  « 
responsible  for  the  oor^Sn's  t' w^''"'''*"'"*  ^""""""y 
l^at  corporation  can  i^S  b^  reald    "/  '""^  ^*^'"'« 
the  government,  either  civiL  „r.         '"?.'^  Prosecuted  by 
ry  have  done  in  contravS  Z  "r.'"""-"'  *•"•  ^''«t  it 
">g  the  courts,  by  strain^  ^Ltrnr  ^"''i  ^'*''*'"*  requir- 
«tend  its  provisions  animX  f^     "  t^  ^''^  '*"'»"*'.  to 
mere  V  interest/^?  ;„      t  *®  them  embrace  all  ,.«„♦• 

offens;s  thil  •  ^""'^  corporation.    ExcentTn         '^    "^ 

"uenses,  there  is  no  criminaU*„  k„  ^^.cept  m  conspiracy 

not  d^„,ed  it  necessarTor  pro^rTT'**'""-  ^^«  ^ave 
^sk  of  defining  the  caL  to'^TS  LT:"'  '^^  '^''S^"'^ 
The  enactment  was  maniWl,     •  \       ^^*"t«  '^'i"  apply 

faons,- whieh  the  state  cou^  ha.^fi^^'^'^^'''''^  ""^  corpora- 
Illegal.  The  conclusion  oTthell'""'."''*""'^^  ^"^^'^^^ 
I*wis  H.  Gi^ene  should  be  dZC^.''  *^*  *'^«  Petitioner, 
so  ordered  and  adjudged      '^''''""^Sed,  and  it  is  accordingly 


UNITED   STATES   V.  NELSON.  77 

Opinion  of  the  Court. 

[646]     UNITED  STATES  i;.  NELSON  ET  AL. 

(District  Court,  D.  Minnesota.    October  10,  1892.) 

[52  Fed.,  (M6.] 

Monopolies— Sufficiency  of  Indictment— Words  of  Statute.— An 
indictment  under  tlie  act  of  congress,  "to  protect  trade  and  com- 
merce  against  unlawful  restraint  and  monopolies,"  (26  St.  at  Large, 
p.  209,)  must  contain  a  certain  description  of  the  offense,  and  a 
statement  of  facts  instituting  same,  and  it  is  not  sufficient  simply 
to  follow  the  language  of  the  statute.^ 

Same— What  Constitutes— Agreement  to  Raise  Price.— An  agree 
ment  between  a  number  of  lumber  dealers  to  raise  the  price  of  lum- 
ber 50  cents  per  thousand  feet,  in  advance  of  the  market  price, 
cannot  operate  as  a  restraint  uix>n  trade,  within  the  meaning  of  the 
act  of  congress,  "  to  protect  trade  and  commerce  against  unlawful 
restraint  and  monopolies,"  (26  St.  at  Large,  p.  209,)  unless  such 
agreement  involves  an  absorption  of  the  entire  traffic,  and  is  entered 
into  for  the  purpose  of  monopolizing  trade  in  that  commoditv  with 
the  object  of  extortion. 

At  Law.  Indictment  under  the  act  of  July  2,  1890,  (26 
St.  at  Large,  p.  209,)  "  to  protect  trade  and  commerce  against 
unlawful  restraints  and  monopolies."  Demurrer  to  all  the 
counts  sustained. 

The  United  States  District  Attorney, 
W,  E,  Hale^  for  defendants. 
Nelson,  District  Judge. 

In  the  case  of  United  States  v.  Benjamin  F,  Nelson,  Sum- 
ner T.  McKnight,  William  H.  H.  Day,  et  al,  a  demurrer  is 
interposed  to  the  indictment.  Pressure  of  business  in  court 
has  prevented  an  earlier  decision,  and  I  can  now  only  ffive 
my  reasons  briefly  for  sustaining  the  demurrer.    The  indict- 

""tv,  Tu ^'^^  ^  '^^^''^^  ^^^^^^^  ^^^^^  th^  act  of  congress 
entitled    An  act  to  protect  trade  and  commerce  against  un- 
lawful  restraints  and  monopolies."     This  statute  declares 
contracts,  combinations  in  the  form  of  trusts  or  otherwise 
and  monopolies  t»  restrain  trade  or  commerce  among  the 

«  Syllabus  copyrighted,  1893,  by  West  Publishing  Co. 


«2  FEDEIUI.  BEPOBTER,   c«. 

*-eral  states  and  J""'""  "'  ""  •^"*- 
offenses,  and  affixes  "^^..""^"^  "%«'.  and  n,akes  th. 
Porte  to  charge  the  TtJ^T'^"''^-     The  indicTmt, 
entering  i„to  f  '  ,   *'«'endants  with  violating  /^f  P"""' 

,^-o,f  in  Ve  Xr:  '  a^rr  ^^"^  ^^^^t  i^I^^ 

•'''-S  the  oirr  in^;,  *"?  -<^-tn,r  %?;  r.??  ^'••n^- 

others  ^f  ^  ^,    .  ^  ^'^®  ^anffuaffe  of  th      !  ^'  ^^""^s 

T„      ^"""'^  had  formerly  anni;„^  !         «>ntracts  which  thp 
to  order  tn  i.,i.«:  •  .      •'  "PP"ed  to  nrofpr.*  i„    i  •  "* 

wfc.*  •  ""minister  the  I«w    *k    *^  "'*"  ^wal  interests 

what  IS  an  unreasoii»Ki„     ^^'■'''  the  court  must  ,l»to     • 

«>mn.eree  by  o^J^eK^^!  ""f  ""'«''ful  lestraTnt  of  t    7'"' 
a  contrart  ,•;  •   .  '"/'^tS  trusts,  and  consn.V..  ^^^^^  or 

th^^tenedlel?"*^'  *"  "PP««'-  that  the  ir""'  '".''*"»'"™ 
tho  r     "  interests  of  the  n„Ki-         ,      ***  complained  of 

the  remedy  sought  to  be  ant r'^^"''  ""^  'his  is  true  wZthJ 
ceedings.  ft  is  urged  hv*t^^.^  '•"  ^-^  "''il  or  crb,i„„,  '' 
heing  statutory  t^T  ^  ""^  *''*"«*  "ttorney  th«T?K  Lp*""- 
that  it  is  ...ffi  ^'        ^*"*™^  rule  in  such  o.  '  ^^"^  "^ense 

Stat  ,t^,w  ^'"'f /"  ""ege  the  off^^t  th*^'  ***  '''*'  f«*'J 
that     T;     LT?'"  *''''  "-^t  six  co^^t,  *  i%^»"^"«ff«  of  the 

•"  of  tteLrn?""*  ""^  ""certainty  TaJb  ^^"r'^"  '""^ 

8      y  and  charge  the  accused  with         T  "  ^^ow  its  Hie- 

either  of  thTfi^r         '*'  ""h^ch  this  indfctnlf  !  '"'  »"**  « 
TV,  .V   '^*  hrst  SIX  counts,  and  tbo,/  "*  <^oes  not  in 

offSll  ri*t  forth  in  Jhe  ter"*  •*  ^"^t«'"«d- 
offense  .h.ch  the  statute  forbids /"ThTfir"?.?""""  «» 

or  these  counts 


UNITED  STATES   V,  KELSON.  79 

Opinion  of  the  Court, 
charges,  in  substance,  that  the  defendants  were  each  dealers 
in  lumber  m  the  United  States,  and  each  transactefbu  itS 

emr  Tra^rhT  > '  1 M-  •"  ''*'"^"*  ^*''*-'  -^  -"  p- 

lemoer  7th,  at  the  city  of  Minneapolis,  they  agreed  tn,rMhL 
that  they  would  raise  the  price  of  lumLr  sVlnS    'Sou 

tne  states  of  Wisconsin,  Minnesota,  Iowa,  lUinois  and  Mi« 

mere  raise  the  price  of  pine  lumber  50  cents  per  thousand 

How  "th       ;'  '""  ""''''  ^"  ^^hich  they  transacted  buref 
How  this  adyance  m  price  by  these  parties  in  the  seyTrIi 
states  mentioned  could  regulate  thereby  the  pr  ^  fX  al 
dealers  is  not  set  forth.     It  appears  that  the  IZ  of  the 

h  Uh™  'u*  ^""'"«'  "^^ t  l-tween  seyerS  dllt^ 
that  they  would  raise  the  price  of  the  lumber  owned  or  rn^.r 

some  of  the  other  deaS  Sight  nTZ  I  71  "^  *"'t  ''''' 
to  be  goyerned  by  the  pricffixe^Tn  ,J^  f '^.P"'"*'''^^'^ 
parties  to  the  agreement  an!^  Tf  ^"""''tv  by  the 

petition  in  the  SZolVii  J  Z^ZZ  tt"" '^!,'"'"- 
unless  there  were  fraudulL  or  l;Xe  mea^' '  s^^Td  toT' 

tesitSr^^^^^^^^^ 

An  agreement  between  a  number  of  rl^fi  j 

turers  to  raise  nrices   „„l!    T  ^"^  ^""^  manufac- 

entir^  con^Si^  .J^nof  7      ?  Practically  controlled  the 

nor  do.s  it  ^I'^Zrt,::  thelS"  Tl  *1^' 

entire  contro  ofTwftb  *K    V^""  P^'P^  °*  obtaining  the 

jectionable  to  the  stat  1 1  .^  '       *"  ''*''''''^"'  ''  ''  "»*  o^" 
^tifled  by  suci    an  ;i^'      ?^  "?'"'"'"•    Competition  is  not 

force  theVrtL?oX~LTt'otuat^^"^  T^''  -"" 
or  a  reasonable  price  at  W     wwf  l  **  ""''^t  ?"<•«' 


80 


S3  FEDEBAl,  BEPOKTEB,   440. 


I 


l\ 


Syllabus. 

trade  and  commerce  in  lumber  in  the  several  states  men- 
tioned.  The  allegations  are  too  indefinite  and  uncertain,  and 
the  demurrer  to  all  the  counts  is  sustained. 


[440]     UNITED     STATES     v.     TKANS  -  MISSOUEI 

FEEIGHT  ASS'N  ET  AL.* 

(Circuit  Court,  D.  Kansas.    November  28,  1892.) 

[53  Fed.,  440.} 

Cabjuehs—Combinations  to  Maintain  Rates.— An  agreement  be- 
tween  several  competing  railway  companies,  and  the  formation 
of  an  association  thereunder,  for  the  punK)8e  of  maintaining  just 
and  reasonable  rates,  preventing  unjust  discriminations  by  furnish- 
ing ade(iuate  and  etiual  facilities  for  the  interchange  of  traffic  be- 
tween the  several  lines,  without  preventing  or  illegally  limiting 
comi)etition,  is  not  an  agreement,  combination,  or  conspiracy  in 
restraint  of  trade  in  violation  of  the  act  of  July  2,  1890.  §  l  6 

SAMB~MoNopoLrES.~Nor  is  such  an  agreement  in  violation  of  section 
2  of  such  act,  as  tending  to  the  monopolization  of  trade  and  com- 
meree. 

Same—Public  Policy— Than sfeb  of  Fbanchise.— Where  each  com- 
pany, by  such  agreement,  maintains  its  own  organization  as  before 
elects  Its  own  officers,  delegates  no  powers  to  the  association  to 
govern  in  any  respect  the  operations  or  methods  of  transacting  the 
routine  [441]  business  of  the  several  competing  lines,  but  simply 
requires  that  each  company  shall  charge  just  and  reasonable  rates 
and  provides  for  certain  regulations  in  regard  to  changes  in  such 
rates,  such  contract  or  agreement  is  not  forbidden  by  public  policy 
as  amounting  to  a  transfer  of  the  franchises  and  corporate  powers 
of  such  companies. 

Same— Monopoues— Interstate  Commebce  Act.— It  was  not  the  in- 
tention  of  congress  to  include  common  carriers  subject  to  the  act  of 
FebruaiT  4,  1887,  within  the  provisions  of  the  act  of  July  2  1890 
which  Is  a  special  statute,  relating  to  combinations  in  the  form  of 
trusts  and  conspiracies  in  restraint  of  trade. 

In  Equity.  BiU  by  the  United  States  against  the  Trans- 
Missouri  Freight  Association,  the  Atchison,  Topeka  &  Santa 

«  Affirmed  by  the  Circuit  Court  of  Appeals,  Blghth^rcuit  (58  F^ 
58).  See  p.  186.  Reversed  by  the  Supreme  Court  (166  U.  S  20o/ 
See  p.  648.  '        ^' 

»  Syllabus  copyrighted,  1893,  by  West  Publishing  Co. 


UNITED  STATES    V,  TRANS-MISSOURI   FREIGHT   ASSN.      81 

Opinion  of  the  Court. 

Fe  Eailroad  Company,  and  others,  for  the  dissolution  of  an 
association  or  combination  alleged  to  be  in  restraint  of  trade 
m  violation  of  the  act  of  July  2,  1890,  and  for  an  injunction 
restraining  the  several  companies  from  carrying  into  effect 
the  agreement  under  which  the  association  was  formed, 
oill  dismissed. 

/.  W.  Ady  and  .S'.  R,  Peters,  for  complainant. 

George  R.  Peck,  B,  P.  Waggener,  Wolcott  c&  Vaile,  Wal- 
lace Pratt,  J.  P  Dana,  Spencer,  Bnmes  c&  Mosman.  /.  Z>. 
Strong,  W,  F  GuthHe,  J.  M,  Thurston,  A.  Z.  Williams,  N.  H. 
Loorms  R,  TF.  Blair,  John  R.  HawUy,  W,  F,  Evans,  M.  A. 
Low,  James  Hagerman,  and  T,  N.  Sedgwick,  for  defendants. 

RiNER,  District  Judge. 

,1^'^f  \^''\^  ^"^"^^^^^  '''■^"^^*  ^y  *^^  U^it^d  States  at- 
torney for  the  district  of  Kansas,  by  direction  of  the  attornev 

EsonVV       I  r'.  ''  '^'  .^"^^'^  ^'^*^^  ^^-^^^'  «^^  Trans- 
Missour     Freight   Association   and   18   railway   companies 

which.  It  IS  alleged  in  the  bill,  constitute  the  association.  ' 
The  object  and  purpose  of  the  bill  is  to  obtain  a  decree 
declaring  said  freight  association  dissolved,  and  enjoin W 
defendants,  and  each  of  them,  from  carrying  out  thetermf 
tLT7  --orandum  of  agreement  LL^lZC^^^ 
between  the  18  railway  companies  forming  this  association 

t^td  bfr' /'  '^  ^"^^^''  ^^  -^-^"^'  because  S 
tamed  by  said  railway  companies  in  violation  of  an  act  of 

TgS  miTatf  t  "t'  ^"^  *^  P^^*^^^  ^-^^  -^  ^^^^'^ 
against  unlawful  restraints  and  monopolies,"  approved  July 

commodi  iesT Vhf  '"''■''"^"  '"'^  transporting  freight  and 

of  tlJ  United  si.  ""^^  ""*^  '^''^■^"  ^^^  ^^^'•''1  '^t-tes 
-tater^^-Tf  f  •  ""'^  ^"'""^  """i  between  the  several 
states  and  terntones  of  the  United  States,  and  betweTn  the 

11808— VOL  1—06  M 6 


Qf) 

53   FEDERAL   RKPortkr,    4^1. 
Opinion  of  tlM>  <'(iiii-t 
«t"t.-    ami  k'iiit()ri<.s  of  til,.  TTi.ito,!  <.   , 
•'•'.'^;  a„.I  thnt  prior  .o  Ma  rh    f  s's  ,    ".'"'i  '"'■*"'^"'  ""'"- 

»-i  o„u...s.  ,.„..„.,,  tiu!  ::;t;;;;:s'''-''^r;'  *"  trace 

states,  ^pai-ac,  ,|i,H„,.t   .,,u}  f*'  "'«"'<'^  "f  the  United 

of  «jh- co„.,H.ti„^ lin'  f ;  T/;"*' *'"'•" ""•  '"""■fit 

the  .state.  a.,.l  territluC  u-  j  h'''  ""•.''"'""'  ■^^"•-  '">'I 
had  jn-a„te,I  »«.  the  defenda.Us  I,  "'/''-'"''?'  ''"'  ""'"tioned 
-eurities.  and  subsidies  7!:^!^^,^'"^^  '"'"'  ^"••'"^•^' 

hein,.  ™„te,.t  witl.     I      „  ;      f""    'T  ""•^-  '•"■■"l-"ies.  „ot 
vv»h  ftH..  e„n,,  ,.,i,i„„     nut  t  ,...''       /'''-■  '■""'''  '"'■^^^'^ 
'ntendin.  uniLtiv  and  ^Z-s      T     '"•  '"'*  '■"""ivinir  and 
tain  arbiti^rt  ran.     f      S"! iVr  "*''''"^''  "'"'  '"""'- 
interstate  eonnnen-e  thro.  £  .  ^''-''.^i'-'^-'i^'"   in   the 

'•<>-,.ire,c.o„federate/and3"^^^  '''''""•  '"''   -'l^'-. 

::■;;-•  i"to  a  written  .^^       'cS;:::'^"""^-  """  "'^ 
Mc"n.ora„dn.„  of  A,^reen.ent  of  the  t!    '    V i  •". '"  ''*'' 

Association."   by   the   tern.s  of    v  id,      h"?^'""'"'  ^'"'^'^ 

assoeiation   has  control   of  ,11   I       V.  ''^■*''*'"<'"t    the 

ix'ints  in  that  iv^non  of  conn. Iv  I    ""'   '"'^'   ''^•'"•««" 
fencing  at  the  niT.etv-fiftl  ,i  •"'^'  T'  "'  "  ''"•'  «>»«- 

""«'  -"ni..g  north  to  fh  R^  '  '  .  -.L*  T  "'"'  "'  ^'-'- 
ern   Iwmdarv  of  the  Indian  t'I  '''""^e  to  the  east- 

ea.s.ernline;.f...idt.S"Jn7'  '''«"-  «'-.^  the 
Kansas  Cit,.  Mo.;  thene  b^  t^Mi Uti"^''*'  "'  ^'""^'"^  *" 
of  intersection  of  that  ri  er  ^vhull  ^'''^'''  *"  "'«  P«int 

"f  Montana:  thenc-e  b  ■  sa  d  !«/  T'^"  ^'"""^''•'•>'  '*"« 
international  line  In-t  veen  hf  ™  """'''"■■^'  '"'"  '"  the 
i'oss....sio„s.     That  the  ^:,^T\    "1    "''^    «''^'«'' 

hy  each  con,pany  ap,,«inti„;  ^e-'Il^^  ••!"  ''"'"•'^  seated 
the   association,   and   that   the     evC^"  ^  '"'''''■"'""'  '"^  '» 

to  establish  and  maintain  rules  re^T*  "  *^^  P"'^*'' 

competitive  traffic,  throngh  a^/ff  S  ""f.  ''^^^  °"  «" 

fr       "u  locai,  \Mtliin  the  region  of 


1 


UNITED   STA'TES    V.  TRANS-MISSOURI    FREIGHT   ASSN.      83 

Oliiiiinu  of  the  Court. 

country  described  in  the  agi-eement;  and  that  said  associa- 
tion, by  the  terms  of  the  agreement,  is  given  the  power  to 
punish  by  fine  any  member  that  reduces  the  rate  fixed  by  the 
association. 

It  is  further  alleged  in  the  bill  that  the  said  agreement  took 
effect  on  the  1st  day  of  April,  1889,  and  that  ever  since  that 
time  the  said  railway  companies,  by  reason  of  said  agree- 
ment and  combination,  and  under  duress  of  the  finas  andljen- 
alti^s  prescribed  in  tho  articles  of  agreement,  have  put  in 
force  and  maintained,  and  now  maintain,  tariffs  and  rates 
ot  freight  fixed  by  .said  association;  and  that  the  officers 
and  agents  of  said  railway  comjianies  have,  ever  since  said 
agreement  took  effect,  refused   to  put  in   force  reasonable 
rates  of  freight,  based  upon  the  cost  of  construction  and  op- 
eration of  their  .several  lines  of  railroad  and  other  proper 
elements  to  be  considered  in  the  making  of  freight  rates;  and 
that  the  people  engaged  in  trade  and  commerce  within  the 
region  of  country  mentioned  in  said  articles  of  agreement 
are,  by  reason  of  said  combination  and  association,  deprived 
of  rates  of  treight,  benefits,  and  facilities  which  might  rea- 
sonably be  expected  U>  flow  from  free  competition  between 
.said  sev;eral  lines  of  transportation.     It  is  further  alleged 
n    he  bill  that,  notwithstanding  said  association  is  in  viola- 
ncel!  H  T   i  "^""gress  of  July  2,  1890,  said  defendants, 
since  the  date  of  said  act,  have,  and  still  continue  to  main-   • 
tain,  the  arbitrary  rates  of  freight  fixed  by  the  [443|  said 
rrans-Missouri  Freight  Association,  to  the  great   niury  and 

sE  Tl  t,r'"l  ''"'*  *"  '""^  P-Pl«  °*  the  Unked 
States     Then  follows  the  prayer  that  the  defendants,  and 

each  of  them,  be  enjoined  from  further  agreeing,  combini,  g 

•on.spiring,  and  acting  together  to  maintain  rufes  an  1  Zf 

ItrtoZTT'.  '"'^'*  "P"'  ""'"^  —1  lines  of  S 
Sis  of  H.e  n '/'^''.^"•"•^'•^^  •-t--"  the  states  and 
territoues  of  the  United  States;  and  that  they  be  enjoined 
from  contimiing  i„  a  combination,  association,  or  cons^^cv 

tte  sE  ndr^t  '"^'^n'  '"  '^"^  «"<^  --nerramong 
me  states  and  territones  of  the  United  States  of  such  fa 

w  !  T;  rtS'n:d"'.  '''r^^  -^  '^•^'^^*  ^-^^  transplaSnt 
will  be  attained  by  free  and  unrestrained  comnetition  1^ 

tween  said  several  lines  of  railroad;  and  that  rd'deSait 


M 


53   FEDERAL   REPORTER^  443. 

ODininii  of  tlio  ('ciirt 


I 


l>e  enjoined  from  affreeinfr  comhinin^  «        •  • 

togsther  to  monopfE  of^TSpZ   ""^'""^V""';"^*'"^ 

traffic  in  the  states  and  terr  oZ  „f  It  "^^.^^T  ^'^'^^'' 

that  all  and  each  of  the„rCS  W   "-  -"' 

«g,  conspiring,  and  acting  t^^lhT .         agreeing,  conibm- 

of  their  assocktes  in  ,«n^     ^      '  ^°  P^**^^"*  *«"■''  "^  »"v 

and  co.nn,o^S  ■  r  h:  ZTZf  '"■"  '^"'''•^"'^  '-«'•* 

states  and  territoriL  of  th"  UnSl  s/r"""  '"*""'"  ''^^ 

rates  as  shall  be  voluntarilv  LS^bwhfoffi ''  '""f  '"*  ''"''*' 

each  of  said  roads  acting  ind^^l^^^r '"''"';" ''''^' ''^ 

its  own  behalf.  "'dependently  and  *parately  in 

The  defendants  the  Missouri,  Kansas  &  Tev««  Tf  i 
Company,  the  Chicago,  Kansas  &  NebJasta  R^r  n'"*'' 
pany  and  the  Denver,' Texas  &  Ft  Worth  RaTlrTil  ?*"" 
pany  have  filed  answers,  denying  th-tih  Ra.lroad  Com- 
the  Trans-Mis.souri  Freight  W^.f  they  were  men,  I  .ers  of 
panies  have  each  m^~^'  ^u'  '''^''  ''  «"»■ 

substantiaUythesant^astorflTSlnotlT  '''''  "^^ 
to  refer  to  them  senarafplv    %C  ,  "°^  "^  necessary 

common  carrie"  J Ja^*  '„  t^^L^^L"  ""*  *""*  ^^  "^ 
ertv  afn,.»»  tu  .  «™n.sporting  [jersons  and  nron- 

eny  among  the  several  stat<>«  an^  ♦..—•r    •        .    .        I""P- 

States,  and  alle^  th„/   ,c        i       *''^"*«"««  "^  the  United 
,  nuu  allege  tnat    as  such  coninjoii  oan-u.i-     tu  . 

subject  to  the  provisions  of  the  act  nf '  "        ''  '"^ 

February  4,  1887,  entitled  '•Anaitorer:!!^"'  "'''"°'**^ 
with  the  various  amendments  the,if„n7J^v- "°'"'"«'-««'" 
and  that  «.id  act  and  thTateidrn  slnsS^ti:  *'T°' 
of  regulation  which  has  been  establltd  by  fo^r i  StT 
common  earners  subject  to  said  act;  and  thev  denvThlr.h 
are  subject  to  the  provisions  of  thp  «Mr^f         ^         '^^^ 
"An  act  to  protectLde  aTd  Imer^^^ag^irt^J  iT' 
straints  and  monopolies,"  approved  Tulv  2     si;^ 
answenng,  the  defendants  admit  that  Jh»;  ,f  "'•ther 

rruptr"^™*^  ^^-«*^  -^  ^iSn^t^rri^Cd 
nited  up  for  carrying  on  bnaini>w  no  «« ""'roaa 

ftwffht   indPi«.i.H<.„«         J  onamess  as  common  carriers  of 
^nt   independently  and  disconnectedly  with  each  other 
except  that  common  interest  exists  between  certain  nfK 
companies  named  in  the  answer     Tt  i«  IT^k      ^  ^^^ 

the  defendants  that  the  linT^  Ll*      ^^^T-  "'''"'"^'^  ^^ 
i;«««    i!  X  .  ^  ^^  ^^*^d  mentioned  in  thp  Km  o«^ 

™ffl  ''l*r"^P«'^««'>«  and  communication  engaged  in  Sr 
traffic  between  and  among  the  states  and  teSie"  JSe 


UNITKD  STATES   V.  TRANS-MISSOtTEI   FEEIGHT  ASSN.      85 

Opiaicn  of  the  Court. 
United  States,  and  are  through  lines  for  freight  traffic  in 
that  region  of  country  lying  west  of  the  Mississippi  and 
Missouri  rivers  and  east  of  the  Pacific  ocean,  but  deny  that 
they  are  the  only  such  lines,  and  [Ui]  allege  that  there  are 
several  others,  naming  them.     It  is  further  admitted  that 
prior  to  the  organization  of  the  freight  association  the  de- 
fendants furnished  to  the  public,  and  persons  enga^^ed  in 
trade,  traffic,  and  commerce  between  the  several  states  and 
territories  of  the  United  States  and  countries  named  in  the 
bill,  separate,  distinct,  and  competitive  lines  of  transporta- 
tion and  communication,  and  allege  that  they  still  continue 
to  do  so.    It  is  further  admitted  that  some  of  the  roads  men- 
tioned m  the  bill  received  aid  by  land  grants  from  the  United 
States,  and  others  received  aid  from  the  states  and  territories 
by  loans  of  credits,  donations  of  depot  sites  and  right  of  way 
and  ma  few  cases  by  investments  of  money,  and  the  people  of 
LrnTJi  !^  and  territories  to  a  limited  extent  made  invest- 

wSe  oH,P      /^K    r'"^  ^""^^  '"  ^*""^  "*  ^•<1  railroads, 
while  other  of  the  lines  mentioned  in  the  bill  were  almost 

entirely  constructed  by  capital  furnished  by  nonresidents  of 

Zi  ^'T-  /'  ''  ^''^''  ^^'"«<i  tl^at  the  purpose  of  said 
and  grants,  loans  donations,  and  investment^  was  to  obtain 
the  construction  of  competitive  lines  of  transportation  anS 
communicatmn,  to  the  end  that  the  public,  and  peop^en 
gaged  m  trade  and  commerce  throughout  said  region  of 
country,  might  have  the  facilities  afforded  by  railfays  b 

the  United  States,  and  with  the  worid,  and  denied  that  thev 

mit  the  formation,  on  or  about  March  15,  1889,  of  the  volnn 

Further  answering,  defendants  deny  that  thev  were  not 

Sr:  vllnlt  Sf"^  ''  '''  ''-  "^  agi^meTtrthS 
agreement  Z=f        a^       ^  '"'^''^^'^  '"''*•*«'  ""d  denv  that  said 

fixTd  orXrS   'th^^     "^..*'^''  ''''''^''  "^^^  J^--  been 
or  that  the  eX/  f?      "^  ^^^^  '''^^'  ^^^^  ^^  increased, 

the^l^X  pVrporinTe^  "f"  -'"^-^'ed 

J-    ny  puipose  in  the  formation  of  said  association 


86 

S3  FEDERAL   BKPOBTEB,  444. 
Ol)Iiii<)ii  of  tlie  C(»iirt. 
to  iiiono|)olize  the  freight  tr»m^  ^^ 

states  and  territorirf ' h  „  *«  rLTr^:- ^^T" "  '""^ 
biU,  and  deny  that  the  s^ida^^^^St  in  ?"'  '"  '^ 
unlawful  m„,lt  of  any  co  ifed^Ti  '"^  '^'P*''*  '*«* 

ther  answering,  defel.^ '^^  nitlhrr"^^-  T"" 
the  provisions  of  the  act  of  cnuf,."         ^  f *  '"''J**'*  *" 

1887,  entitled  «.\n  actto  «.2  """'"''"**  ^'"'^^""'^  *' 
ter  of  Hfi;.,.*;-         .  reffiilate  commerce,"  in  the  mat- 

ter  of  HdjiistLig  rates  on  their  several  roads  s<^  J\ 
unjust  discrimination  against  veZ"L»na\     V    '""T"' 
involves  an  adjustment  betwee^^ff  '*^«''*'««-  >^hich 

-ted  in  joint  rates.  1  doTg  btw      """'^r""^  •"'^'- 
country,  r«,„iring  preconS     Si  r  Jw:::f  jJ "1  1 

wornrri::^-:^  r  ^d"f  ":r  ^--  p'-^^^^^^^ 

chairman  of  thtT^    Jon^  ^^Se^To  f  "'l-  ^'^^   ^''^ 

cutting,  and  that  the  artides  of  «J1  „      ?  "'''^\'^^^  ^ate 

may  assess  fines  for  vTi  *  f g'*«'nent  provide  that  he 

T     ^-c»  nnes  tor  violations  thereof    lint  aii„„    *i    x 

attempt  has  l^n  made  to  enforce  the  cojlei  on  S,        •  " 

Sii/'t".  "Tr"'-  ^'-  '''•fendan" :  :.i'  ::;Tr 

principal  object  of  the  as«oeiaHnn  ,«  ♦..     ^  ui    .  *"^ 

rates,  rules,  and  regiila^^r  ,    f^i:S'?t  "''^"r'''' 
maintenance  of  UU]  such  r.t     "''  ^   f "  ^-affic,  and  the 

ner  pi^vided  bySaw^    Itl  W."""'„''''''T^  '"  *»>«  """»- 
ment  was  filed    v HMhe   nirstal      ^   ^^'  *'""  *'"  ''^- 
-luir^  by  .^tion  «  oVtt^fo  "'i^a^T';^ 
fendante  further  allege  that  it  is  n„.  th7p~  „/h  "     '^- 
ciation  to  pivvent  mpml^...  f  \        puipose  of  the  asso- 

the  rules  oJ  i.^l W  fi^JrtW  r^  T'  "'  ^^^""^"^^ 
the  terms  of  Uie  agreemeii  each  '  T  '"'  ""^^  ^'^"^  ^^ 
preliminary  required  Sl^^^^^^  '"^■^  ^'«  ««^-  ^he 

be  voted  lirat  thrn^leHn^^^^^^^^^^^  '  ^'"'^"'^^^  ^^^"'^'^'  ^^^«" 
if  the  proj:sal  is  i  07;^:^^^^^^^^^ 

posal  can  make  such  redSltp'*  T\  "'"/^"'^  '^'^  P'^' 
tion  of  the  other  lits  St  /h  "^^'^^^^'^^^^'^^'"^^  the  objec 
is  to  afford  oppLri  ;  fir  1        ^'"T^'  ^^^  '^"'^  ^'^'^^^ 

lines  iBtere  Ja^a':^^^^^^^^^^^  ^-^  ^^^^'«^-"  »>.v  all 

such  reduction  I  and  tha  td  '^^^^^  f^  ;;;:^.^  ^  ^^ ^"^"^  ^' 
in  many  instances,  through  s^Z^^t^T  ^'"  "^'^^ 
It  is  admitted  bv  the  answei  thaf V^i         ^  association. 

answei  that  this  agreement  took  effect 


UNITED   STATES   V,  TKANS-MISSOUEI   FBEIGHT   ASSN.      87 

Opinitm  of  the  Court. 

April  1,  1889,  and  that  it  has  since  remained  operative,  and 
that  the  rates,  rules,  and  regulations  proi^erly  fixed  and  es- 
tablished from  time  to  time,  under  said  agreement,  have  been 
put  into  effect  and  maintained  in  conformity  to  law ;  but  it 
is  denied  that  by  reason  of  said  agreement,  or  under  duress 
of  fines  and  penalties  or  otherwise,  the  defendants  have  re- 
fused to  establish  and  maintain  just  and  reasonable  rates,  and 
it  is  alleged  that  the  object  of  the  association  at  all  times  has 
been  and  is  to  establish  all  rates,  rules,  and  regulations  upon 
a  just  and  reasonable  basis,  and  to  avoid  unjust  discrimina- 
tion and  undue  preference. 

The  answer  further  denies  that  shippers  or  the  public  are 
in  any  way  oppressed  or  injured  by  reason  of  the  rates  fixed 
by  the  association,  but,  on  the  contrary,  it  is  alleged  that  the 
agret'^nent,  and  the  association  established  under  it,  have  been 
beneficial  to  the  patrons  of  the  defendant  railway  lines,  com- 
posing the  association,  and  the  public  at  large. 

A  copy  of  the  agreement  is  set  out  at  length,  and  attached 
to  the  answer  of  the  Atchison,  Topeka  &  Santa  Fe  Railway 
Company.!  The  case  was  set  down  for  hearing  on  bill  and 
answer,  and  the  pleadings  only  are  to  be  considered.  The 
answer,  therefore,  is  admitted  to  be  true  in  all  its  allegations 
of  fact,  even  when  not  stated  positivelv;  and  the  defendants 
only  aver  that  they  believe,  and  hope  to  be  able  to  prove, 
such  facts,  but  the  complainant  does  not  thereby  admit  con 
elusions  of  law,  nor  matters  concerning  which  the  court  takes 
judicial  notice. 

The  act  of  congress  of  July  2,  1890,  which  it  is  alleged  in 
the  bill  is  violated  by  the  agreement  to  form  and  the  forma- 
tion of  the  freight  association,  in  the  first  section  declares 
every  contract,  combination  in  the  form  of  a  trust  or  other- 
wise, or  conspiracy  in  restraint  of  trade  or  commerce  amona 
the  several  states,  to  be  illegal,  and  provides  for  the  punish 
"lent  by  fine  or  imprisonment  of  every  person  who  shall 
make  any  such  contract,  or  engage  in  any  such  combination 
or  conspn-acy.  Section  2  declares  that  every  person  who  shall 
monopolize  [M6]  or  attempt  to  monopolize  or  combine  or 
^^"^^^  ""^"^^^^^^^^  to  monopolize  any 

*  See  note  at  end  of  case. 


^  53  FEDEBAL  BEPOKTEB,  446. 

Opinion  of  the  Court 

part  of  tlie  trade  or  roniiiiert-**  mnnnnr  fi, 

xvitu   4      '  .       '  """"^rte  among  the  several  state*;  m* 

Te    ofS'rr"-  :""\'"  "^""'^  ^^'""^  «f  «  -   de- 
meanor. .,nd,  on  conviction  thereof,  shall  be  punished  bv  finP 

cue  :^z;^!^^jt:::^^^^  '-^r 

state,  and  lK>tween  the  DUtriot^tnT,     **"'*««•>'  ""d  » 

or  state.    Section  rconfoi^    ,1.^"  f    '"  ""'  ".  ^"^'■'•'•"••'^' 
.^iw..,;*  ^      ^    .      Winers  jurisdiction  upon  the  several 

circuit  conrts  of  the  United  State,  to  pievxL  uu\  ,T^^ 
violations  of  the  act,  and  makes  it  tL       1      /  "'" 

attorneys  in  the  resm'tive  dufri  f  ^  ^,"*  "'"  '"'*"*=* 

the  attm-nov  ^ei.^ral    to  ins.  t ,?  ''"  ""    r  '^"'  ^'•'■''^''"'»  »* 
prevent  and   r  ^^^at  iT^^t^tT  '"  '"•>"'*^'  *" 
for  bringing  in  other  ne;  L^^a  S«   ^"L^V  ''""f 
for  the  .eiznre  and  eondemnati  Tpl-optXl  Jd'r'f 
any  contract  or  combination  prohibiterbv  ui  ^^       . 
m  the  course  of  ti-ansportation  fro^^^le  state  t«  »     H  ^ 
to  a  foreign  country.    Section  7  giv"  ^11  !  Vaof  i       '""  "' 
pei-son  injured  by  violations  of  iract^  and  a!^r      ^"'' 
recovery  of  threefold  damages.    The  eSth  Ind       .      !'  " 
provides  that  the  word  "  ne,-so„  "  L  -  i*"*  ■'**'*'°" 

u«Kl  in  the  act,  shall  1^  con^^^^rd  to  nclir"'  I""""'" 
associations  existing  under  or  .thor  zed  K^^  ^7"""  m  "'" 
of  the  United  Stat^  or  of  the  te  rhories  or    )  "•''"'■ 

of  any  foreign  country.  "'  "^  '"'•^'  ^'^^^  or 

It  will  be  seen  from' an  examination  of  this  statute  th.t  -, 
purpose  was  to  reach  two  evils-  F,r=;         !  ^**  '*^ 

tions,  or  conspiracies  in  ^:^tt' ZTIm'^'^'Z 
monopolies.  It  was  urged  at  the  arguLnUh^t  the  ""T^l 
mentioned  in  the  bill  ar,A  tu^  "^gument  that  the  contract 
came  within  ft!  '  ?  *«  f^sociation  formed  thereunder 
came  within  the  provisions  of  this  act  of  Julv  o  ison  7 
the  reason  that  it  is  a  contract  or  agreement  S  Z!t  \  * 
trade,  in  that  it  prevented  free  com.S^H  '"'*«*'•""*  of 
transportation  of  freiJhV  IT.  '^'"f  *'*'"»  '"  ^he  matter  of 

the  4on  specildt  te  Z^l^JZlr^'  ""'^^" 
insisting  that  "  tr^A^  ar.A  counsel  for  the  government 

•*  o»  oongrea,  ,„d  that  no  M.„,^.-     Jf  rMr.med  by 


UNITED   STATES   V,  TRANS-MISSOURI   FREIGHT   ASSN.      89 

Opinion  of  the  Court. 

hand,  it  is  insisted  by  the  defendants  that  there  is  ho  fixed 
rule  of  law  by  which  to  determine  whether  any  given  con- 
tract is  in  restraint  of  trade,  but  that  in  determining  the 
question  the  courts  must  look  to  the  particular  circumstances 
of  each  case. 

In  disposing  of  this  branch  of  the  case,  I  will  first  briefly 
refer  to  some  of  the  decided  cases  cited  by  counsel  in  their 
briefs. 

The  case  of  Com.  v.  Carlisle,  Brightly,  N.  P.  36,  was  a  case 
where  certain  master  shoemakers  had  entered  into  an  agree- 
ment not  to  employ  any  journeymen  shoemakers  who  would 
not  consent  to  work  at  reduced  wages ;  the  purpose  being  to 
re-establish  wages  for  this  class  of  labor  which  had  prevailed 
before  that  time,  but  which  the  defendants  had  been  com- 
pelled to  advance  by  reason  of  a  combination  among  the 
workmen.    The  court,  in  deciding  the  case,  said : 

"  Wlure  an  act  is  lawful  for  an  individual  it  can  be  the  subiert  of 
conspiracy  when  done  in  conceit  only  where  there  is  a  dir^t  i  i^tio„ 
that  in-  [447]  jury  shall  result  from  it,  or  where  the  ob/^t  is  to  b^n 
efit  the  conspn-ators  to  the  prejudice  of  the  public  or  tl^  onnr^sTon 
of  individulas,  and  where  such  prejudice  or  oppression  is  the  n!?nr  i^ 
and  necessary  cons,  quence  flowing  from  the  act." 

The  case  of  People-  v.  Fisher,  14  Wend.  9,  was  an  indict- 
ment against  journeyman  shoemakers  for  conspirinor  to- 
gether to  fix  the  price  of  making  boots,  and  establishtng  a 
penalty  agamst  any  journeyman  shoemakers  who  should 
make  boots  for  a  less  rate  than  that  fixed  by  the  parties  to 
the  agreement,  and  also  agreeing  to  refuse  to  work  for  anv 
master  shoemaker  who  should  hire  a  man  who  reduced  the 
rates  for  makmg  boots;  and  it  was  held  in  that  case  that 

snch  ^r  i\T?''^5  ^^^^'^  *"^^"  "^^  commerce,  and,  as 
such,  prohibited  under  a  statute  providing:  "  If  one  or  more 
persons  shall  conspire  to  commit  any  act  injurious  to  trade 
or  commerce,  they  shall  be  guilty  of  a  misdemeanor."  In 
passmg  upon  the  case,  Savage,  C.  J.,  said : 

to'SVr  7^^:;^^';!^^  ^  *-^^ -r  — erce  is  not  obliged 
to  labor  for  an^^>arSr  n^  i^^^  Z  ''  *^^  »»eci,anic  obliged  by  law 
coarse  boots  for  less  thai  «Tm^^  "''''^,  ^^^  t^^^t  he  will  not  make 
that  no  other  mechanic  shln'^^f/r*'*'  .^"*  ,^^  ^^^  ^«  ^'^^^^  to  say 
<loes  not  possess  such  a  St  mir  tha^""  ^""^^^^S-  ^^  ^'"^  individual 
of  individuals  can  possesf such  nH^t^^I^n^*  ""^  '^°°*^^^'  "*>  «"»»t>er 
to  effect  such  an  oC  are  i  ibiHnnf  ^^   T^"  ,«>ml>inations,  therefore. 

tioularly  oppres.edXt%:\'hrSriaVg^^  '"  '"^  "^"'^^^"'-^^  ^^^ 


90 

53   FEDERAL   BEPORTEB,   447. 
Opinion  of  the  C€>urt. 

Hooker  v.  Vondewaier.  4  Thnia  %lq  «.„o 
pel  a  division  nf  naf  •       ?    '       '  ^^^  *^  ^^^lo'^  *o  com- 

Oswego  canals.    The  affreempnt  ».    Tf     T  "^  *"'^ 

mn  i.;„  r        i  .  "S™einent  was  that  each  party  should 

run  us  hne  of  boats  upon  these  canals  during  the  ,irS  S 
canal  navigation  in  1842,  at  rates  of  freighffi^S  Tv  tt^ 
selves,  from  which  neither  should  deviat!    and  f „  .    r  T 
the  interest  of  each  the  resi^nfJ™  i  '  °  'ndicate 

^k  amounting  L^'/i.Tb  '1  ^  AlTrreT'h"*" 
eqnaUy  i„  the  net  earnings  of  all  thTiin^ "  •     *"* 

the  number  of  shares  of  l^ch  stock  anit  '" /^"P^^^r  *" 
-nee  of  the  contract  a  "ommon  -/"'"'**''**  P*""*"™- 
whom  each  nartv  f^L  "^"*  '^»''  appointed,  to 

to  time  to  r^Sett^^s  of  thiT  '  ""'^  ".'"^  "''^  ^^^'^  *'"- 
*i:xt;i»e  returns  of  the  business  done  hv  t^anh  i;«« 

and  adjust  the  proportions  from  the  earniZ  due  to  eich' 

•nd  out  of  this  common  fund  to  pay  and    Sdat!  In       t 

amounted  T,;  -  '"  *'"'  ***  *'''•*  ^'^«  transaction 

amounted  to  a  conspiracy  to  commit  an  act  iniurions  to 
trade,  ^^d  was  therefore  illegal  and  void.  ^  " 

The  case  of  Sfnnfon  v.  A77,i,    5  Dpnin    s-^i 

ni>on  a  pm„i<so,v  note  driven    ■         /  ,  '^'  '^"'  "  '"'* 

.  ■    """^-  gii<'n.  as  stated  unon  thp  fn™  ,^t  «k„ 

note,  f.,r  jjercentage  on  tolls  fnr  H>.  "P""  "i*"  "'e  of  the 

■"  '""*'  '"r  the  season  of  1843      Tn  thU 

ease  an  agreement  had  been  entered  into  hv  f I  7  ! 

of  boats  on  the  Erie  nnrl  n.J  .  •    *''*"  P'""Pr'<>tors 

of  frei^hf  „.J  anfl  Oswego  canals,  to  regulate  the  price 

Z^^u  ''"T^  ^y  "  ""''""n  «"'!«'  to  be  fixed  by  a 

committee  chosen  by  themselves,  and  to  divi.le  th^  pn^fit! 

•  U^t  me  I';s7l^E;;^i "  ■"v't'"-'  •"••""•'•*- 

the  associati...  and  i:  Zf  SI  h"atT  ":entrof""::h 
an  «gre..„,e„t  „,.  .,  p^.   f^,  ^^^^  whoZmM^t      " 

t;thee.ectt;a:;o::7.'fSr;::r:^^ 

out  the  con.sent  of  a  mninrifx-  «„j  „        j-  ""^B'ng  with- 

for  P«ph  h.i„    *  •     ""."J"'"-^-  «na  providing  a  penalty  of  $10 
for  each  bale  of  bagging  sold  in  violation  of  the  agreement 
and  the  action  was  to  i^over  penalties  under  the  n^ZZm, 


» 

UNITED   STATES    V.  TRANS-MISSOURI    FREIGHT    ASSN.       91 

Opinion  of  tlie  Court. 

amounting  to  $7,400.  The  court  in  that  case  decided  that 
the  contract  was  a  combination  in  restraint  of  trade,  for 
the  reason  that  its  purpose  was  to  enhance  the  market  price 
of  an  article  of  prime  necessity  to  cotton  planters,  and  was 
therefore  contrary  to  public  policy,  and  could  not  be 
enforced. 

The  3Iorrw  Run  Coal  Co.  v.  Barclay  Coal  Co.,  QS  Pa.  St. 
173,  was  an  agreement  between  five  coal  companies  to  divide 
two  coal  regions  of  which  they  had  control,  and  to  appoint 
a  conunittee  to  take  charge  of  their  interests,  which  commit- 
tee was  to  decide  all  questions,  and  appoint  a  general  agent 
at  Watkins,  X.  Y.;  the  coal  mined  to.be  delivered  through 
him.     Each  corporation  was  to  deliver  its  proportion,  at 
its  own  cost,  in  the  different  markets,  at  such  time,  and  to 
such  persons,  as  the  committee  might  direct,  and  the  com- 
mittee to  adjust  the  prices  and  rates  of  freight.     By  the 
terms  of  the  agreement  the  companies  might  sell  their  coal 
themselves,  however,  to  the  extent  only  of  their  proportion; 
the  agent  to  have  the  power  to  suspend  shipments  of  either 
beyond  their  proportion.     Prices  were  to  be  averaged,  and 
payments    made    to    those    in    arrear    bv    those    in    excess. 
Neither  party  to  the  contract  was  to  sell  coal  otherwise  than 
specified  m  the  agreement.     The  action  was  to  recover  on 
a  bill  of  exchange  drawn  for  balances  under  this  contract 
It  was  held  that  there  could  be  no  recovery,  for  the  reason 
that  the  contract  under  which  the  balances  were  claimed 
was  void  as  against  public  policy. 

The  case  of  Craft  v.  McConoughy,  79  111.  346,  was  an  action 
tor  a  division  of  profits  under  a  contract  between  grain 
dealers  at  the  town  of  Rochelle,  in  Illinois,  in  which  it  was 
provided : 

founts    iv.v  fi,„.-  partiiei-sliip  in  apiwarance.  keen  their  ao- 

fro...   time  to  time  fs  SZZnt  *"  ^h'*"*"?  """  ^""^^  *»  "*  ^^^ 

busUel."  "^  "^  ""y  P-""'*-^  «t  «  '«^s  rate  than  2  eeuts  p^r 

The  court  held  the  agreement  void,  as  in  restraint  of  trade, 

trinlTrt"^  *"*.*,'  "**"'  "'**  "^^"«"t  "P°"  'ts  face  seemed 
to  mdicate  that  the  parties  had  formed  a  partnership  for 


M 


«l« 


53  FEDER.\L  BEPORTER,   448. 


Opinion  „f  tlip  Court. 
the  purpose  of  controlJii,<r  the  traH»  in  „    • 
teniis  of  tl...  contract  a„.f  o/k  "'.gram,  yet,  from  the 

appam.t  that  th  obi^  'l«,  !«  T  '"  *'"  •■^«"''-  ''  ^^"^ 
which  weld  stifle  a  1  ooZ^Hti  ".  "^'"^  combination, 

by  secret  aud  fraudu  „t  reStortro.  IT""''-  *'"'  P-"-"*^ 
cost  of  storage,  and  expenTof  s^i^"  /  .'  ^"'^  "*  «™''>' 
g«age  of  the  court:  ''hipment;  adopting  the  lan- 

a  town  ami  >.uri„iin,ii„g  ,-„„„try '•     "^  ^  ""*  '^"*"'<'  S™''"  trade  of 

f«9J  In  the  case  of  Salt  Co.  v  /?«/*«>  q«  ,.,  •      , 
the  contract  was  for  th^  .>„....„      '^•/'«**"«,  35  Ohio  St.  C66, 
•nn.  j„    t     ,.     l/""^  ">«  purposes  of  reguiatino'  tKo  .,-;  , 

grade  of  salt.    Bv  the  terms  «*  * u     ^"'"""g  '"e  prices  and 

of  the  association  was  nSTh.tL  /  ^^^^'^^  e«<^h  '"ember 

2  ^'^-ntinuancetfrii  a  r  ^7  T'!  •'"^; 
then  only  to  actual  consumers  at  Vh!  i  ^  ^.  '■"*^'''  «""* 
and  at  the  prices  fixed  bT^he  t,  !  ^  T  °^  n»an.,facture, 
The  action  was  t«  recover  tit  '"'  ^''"''  ''"'^  *°  '■">« 

-It  manufactured  iiX  he  coCr^T:'  ''T^^'^'^'-^  «^ 
Plamtiff's  right  to  recover.  stX  "TheT''  ^T"^  '^' 
such  an  agreement  was  to  estrw^fh  »  T  *^"'^'"'=-^  "^ 

stroy  competition  in  trade  »»nSf     f  "^"""Poly,  and  to  de- 

of  public  ^licy,  court   wm  not  a  ^in  £  T'  "'  ^''""'^^ 
The  case  of  Te^,^  ^  p  r^  nfl""'^  enforcement. 

41  La.  Ann.  9T0,  fi  Sonfh  Rep  888  '^''"'''^'^.'P«<^-  %•  ^o., 
performance  of  'a  contract  rdivid'e  net  "  ""'  '"'  ^'^^'^'^ 
competitive  points.  The  court  Zi  "f  "''"""'^  between 
force  the  conLct,  saybgl  '''"'*'  ***  specifically  en- 

?°}r^o"^°--t.C^^^  to  sti«e  competition  or 

^ng  the  niarlvet  value  of  Ztm^liHi  !  "*"'  ?'  "nreasonab  v  iuc^as 
contrary  to  p„Wic  jK.lic.v."        ^'*"'^  "'«  "Ka'nst  Puhlic  interest   and 


The  case  of  Anderson  v.  Jett,  (Kv  M2  «?  W  t,  . 
was  another  ca^  of  a  contract  to  S  n!t  earl^'"'  Tl 
was  there  held  that,  where  the  obiect  "f,  ?  ^'  ^^^  '* 
agreement  was  to  prevent  l.  7  ^^^  tendency  of  the 
tion  in  the  trade  Tnd  whe^  T  '  ^'"^  '"^  *«'''  ^o-nP^ti- 

have  that  tendei    v        ^t "S  "^T'"'"'  "'«'^*  '»  ^*<=t 
policy.  ^.  «  ^as  void,  as  being  against  public 

The  case  of  Gibbs  v.  Gnt  fn   iqnrr  o  ««„ 

553,  was  a  contract  for  a  ^^tlement  Utt     ''  '>  ^^^  ^^P' 

*^ujeinent  between  certain  gas  com- 


UNITED  STATES   V,  TRANS-MISSOURI  FREIGHT  ASSN.      93 

Opinion  of  the  Court, 
panics,  which  the  plaintiff  procured,  and  for  liis  services  in 
procuring  tlie  agreement  he  sought  to  recover.     The  object 
and  purpose  of  the  contract  was  to  regulate'  the  price  of  gas 
in  the  city  of  Baltimore,  and  provided,  among  other  things, 
that  the  rate  should  not  be  changed  except  bv  mutual  agree- 
ment of  the  parties,  and  that  the  entire  receipts  fronT  the 
sale  of  gas  should  be  proportioned  and  divided  between  the 
companies  in  fixed  ratios,  without  regard  to  the  gas  actually 
supplied  by  either;  and  also  prohibited  one  of  the  companies 
from  laying  any  more  pipes  for  the  purpose  of  supplyin*^ 
the  city  with  gas,  and  provided  that  in  the  future  all  pipes 
or  mams  should  become  the  propertv  of  the  other  company 
and  also  provided  that  either  party  violating  the  tenns  of  the' 
contract  should  pay  to  the  other  company  the  sum  of  $250,000 
as  hquidated  damages.    The  court  in  this  case,  speaking  by 
Chief  Justice  Fuller,  said : 

•'Courts   decline   to   enforce   contracts   wbicli    impo^ie   a    re^tnint 
thougli  only  partial,  upon  business  of  such  character  that  tlTw^h 
Lx^l  w.  f'  '"?"  '"  Pr-J»<iJ-i«l  to  the  public  hterest;  J  t  where  the 

Thus  it  will  be  seen  that  the  question  whether  or  not  the 
contract  is  prejudicial  to  public  interest  is  in  this  case  made 
the  test.  If  It  IS  prejudicial  to  public  interest,  then  it  cannot 
be  sustained  even  where  the  restraint  is  only  partial,  because 
m  «,ntravention  of  public  pol-  [450]  icy;  where  it  is  not,  it 
may  be  sustained.  It  has  been  decided  in  a  gi-eat  many 
cases  that  contracts  in  restraint  of  trade  wer!  perfectlv 
in  ti  r"  ^■'^^''t.t'f  y  W^^^r^i^  the  party  from  engaging 
in  the  business  which  was  the  subject-matter  of  the  contract 
within  the  entire  state  where  the  contract  was  made;  the 

Ir  notTw!        '^*^'  T''""^  "^^  ---^^-^^\-,  and  wh  ther 
or  not  it  was  prejudicial  to  the  public  interest. 

Holler  Co.  v.  Cushman,  143  Mass.  353,  9  N.  E.  Rep   6'>9- 

Davuv.  Mason,  5  Term  K.  120.     In  this  case  Ix,rd  Kenyon 

icing  ^rofof"  "^^""'^  T"'"'"^  ^  --•^-"  *--  P  - 
tmng  his  profession  within  five  miles  from  a  certain  town, 

«InJtL;'^tC'^r^rwafa"lit''rtv  I^  "^?-'-^  "-^  *"«  ««■•-"'-*. 
town."  iH^iwn  was  at  liberty  to  practice  as  a  surgeon  in  the 


94 

^^   FEDERAL  BEPOKteb,  450. 

Opiaioii  of  th.'  Court.  • 

m  parsing  „p„„  f,,,  ,„,iji      of  ,  '^^;  "■ ;' *-*!•  '^^''/J'e  ^ourt, 

winch  ....„„«,  „..,,„„...„  ,he\sr,:i,  ;,r:i.r '•"^"'' 

jil»l*»    ft.i.  *i.  '  """    I"'''<-.v.  unless  thev  jir#»  t.nf».    i  '   '''^  l><'iiig    n 

iiiiie.  un    tile  luotcctlon   ,>f  *i  S      '*^  "atuial.  ami  imf  n,,,.^.. . 

-  S,.,.    also.  n„l.l,ur,l  v.  J////™    27  Mid,    ^^.  TI 

/?«'^V,.,  lOfi  X.  y.  473     ,  V  K 'r       -      '""•■  "'"'''  '  "•  ^•• 
'l'«w,  20  ^A-all.  (-4     '  ■  "''^'-  *'**'  ^'"■'f/"f'o,  Co.  V. 

engaged  i„  navigati„;' h:  Z:i::^'Zi^'  "''"I  "  '"'-^^ 
«  St.........  to  otiH...  paries,  wi;  ;;:'e.V:S"'in         "'  """ 

the  CohiiHbia  liver,  in  Oreiron  a.uJ  «'    i  '^^         ""v.ffatn.g 

and  it  was  agreed  l.tw. "To    i::'":^!;'"  '"■'■'^"'•'«-^' 
of  the  steamer  sl.oul.l  „ot  emolo     i  I  ""  P"'-^l'"^«rs 

plow,!  for  10  vears  f,..T\t     ,^    *  *""  •'"•'^'''"  '^  *"  •*  e.n- 
;,  ,-,      .     ^"  i^^i^  noni  the  date  of  sal,,  i,.   . 

California.     Three  years  afterwJ.tj     n  T^'  ""*•"'■"  "^ 

this  contract.  soJd  ihV  laniel  '''**  P""*"'-'"'-^-  ".xler 

ing  P..,.H  sou...  sl^Zt^T^r'''"'  '"  ""^•'^«'- 
not  b.  r..„  or  en.pio^  oVl  '^  Sf/;:;,;'''  ^  "•""'^ 
bays,  or  waters  of  the  state  i.f  rTf  ""  *'»''  "^'^^s, 

river  and  its  trib..taries  tie  ^^  ;::i''y'^^       ^^""""'^■« 

supmne  court  held  the  contract  vaS     Mr    J  ,,r,T    .['^ 
speaking  for  ,|„.  ,,,„„   ^^j^.         »""•     ^"«-  -'"^t"'.'  H.a.lley, 


UNTTKD   STATES    /'.  TRANS-MISSOURI    FREIGHT   ASSN.       95 

Opiiiitiu  of  tlK-  C.mvt. 

or»ei-;ites  merely  in  partial  restraint  of  trade  is  j?ood,  provided  it  be 
not  un reasonable. ' 

Again,  in  the  same  case,  the  learned  justice  takes  occasion 
to  sav  that — 

•■  Cases  must   be  adjudged  according  to  tbeii-  circniiistances    and 
<an  OI.1.V  he   rig ,tl.v  Judgal   when   the  i-eason  and  grounds  for  t  ,e 
r.  le  a.-e  careful  y  considered.    The.-e  are  two  prim'Tpa    gTcunds  ox, 
vincli  the  doctrine  is  founded  that  a  contract    .1  .Jtraim  of  trade 
t  ^^  ««  "g«'''f  public  policy:    One  is   the  inlurv  to  the  imhlic 
by  l)e.ng  deprived  of  the  restricted  party's  industry ;    the  otiie  •    s 
tie  injury  to  the  party  himself  by  being  preclude,!   from   1  i  'rnin" 
his  ..c.„|,.,ti„n.    and   thus   Ihmiik   pievented    fron"mp"r^<,'  himself 
and  his  family.     It  is  evident  that  both  these  evils' o«n«-wIe.   The 
<j,n  rac    IS  gene.al  not  to  la.rsne  ones  trade  at  all   or  not    o  purst^e 
t     1  the  entire  realm  or  country.    The  country  suffers  the  loss  "u 
both  cases:    and  the  party  is  ,ieprive;I  of  his  ocrupatioii   or  is  «?X«1 
to  e.M.atri»te  himself  in  order  to  follow  it.     .i  c  ntr  1  t  that  is  of^ 
to  such   grave  »bje.-tion;   is   deail.v   .-igainst   public     oHct      But  If 
nei  lier  of  these  evils  ensue,   and   if  the  c-outra.t   is  foun'de.1  nl,   -f 
valid  consideration  and  a  reasonable  ground  of  lenetit  to  tb^  .!t Lr 
party,  it  Is  free  from  objction.  and  may  be  enfor.  ed.'  ^  """''^ 

I  tl.i.ik  the  cases  are  iiniforn.  to  the  effect  that,  where 
Ihe  ,o.,tract  .s  publicly  oppressive,  and  the  restrictions  are 
broader  tha..  are  necessary  for  the  legitin.ate  protection  of 
the  other  party  to  be  benefited  by  the  contract,  then  the 
co..tiact  IS  ..,.,easo,.able.-a  contract  i..  re.strai..t  of  trade  - 
an.l  therefore  void:  otherwise  ..ot.  Undoubtedly  all  con- 
tn.rts  wh.ch  have  a  direct  tendency  to  prevent  healthy  co.n- 
pet.t.o..  ai^e  detr...,ental  to  the  public,  and,  therefore,  to  be 
condetnned;    but  when  eo,.tracts  go  to  thl  extent  onlV  of 

fuLiisI,  the  public  with  adequate  facilities  at  fixed  a.id  rea- 
-nabe  pr.ces,  and  are  .nade  only  for  the  purpose  of  aver  - 
mg  personal  ru....  the  contract  is  lawful.  The  rule  of  law 
wh.ch  ...cogntzes  the  rights  of  the  public  to  have  tie  bene 

raul.ties  and  rea.soi.able  rates  shall  be  secured  to  all    does 

IZ .?;;:  ""'V"f  '"*^"'""  '•'••'^^-•^  eo.npanie.s  o  IS; 
ve  tS  sfr  e  ;  T  "  ""'^'*  *"'  '^'  ^^^  P-pose  of  p^ 
ItT       .       '  ""'^  P'^ventmg  financial  ruin  to  one  or  the 

nt::'ir..:rt^-;;i'Z"::.bH'^  fr  -'r'  -  ^^^ 


96 


53  FEDERAL   REPORTER,   451. 


Oniuion  of  the  Couir. 

Stil;!:  u"„f„"r,,r""*''"*  ^'"'^  '^'"'«'  t^^  ?••»•"«  b.  pre. 

veming  unjust  discrimination  amoiiff  shinnnrl   „..  i  ^T 

.    wg  equal  facilitios  for  the  interoh«nI     f*^    «         P'"'*'"'^- 

follow  the  uniis^ri'm"  S^^^^^^^      T""^  ^^'"'*  "«™ 
Plving  this  rule  toZTn^rlc    "  IV'     TiP"""'-    ^P" 
«t  bar.  can  it  be  ^aid  thnr^hl       *       P- "'"^  "^  '"  *''«  «'* 
not.    The  alle^  "'  I'/'fe^t  ^thr   "  ""'7 '"' '    '  *'''"'^ 
taken  as  true)  is  that  thl  !>!  •    .        ?""''*'"  ^''■'"•=''  '«  ««  be 
-nt  and  tht^l^l'll'^ytrVsiS'^  "'  *'!  "^- 
to  maintain  just  and  ven^nMe  ^^Tndl         """f"'  ^'' 
discriminations,  in  compliance  wiSlhe  terms  of rr^* 
latmg  commerce,  bv  funiishimr  enll  /    i         }      "''*  '■''^"- 
ehange  of  traffic  betwe      theJve?  It     h"  'T'"  "^•'^- 
be  said  that  the  fisoi  n,.Ki.-    ■    •   •  "*""'  '*>*'"•  '^an  i* 

agreement/   The  rl    '       ■    ''  "'J-nousIy  affected  by  this 
able  TnH       •    .     ,  *^'  *"■  *''""■««*  "«•«  ""'form  and  reason 
able    and  unjust    di.scriminations    are    prohibited      ^      ," 
facilities  for  the  interchanM  at  *.„«;  P'^*""?'**''-.      Equal 
hence  no  right  to  whlh  thf  nl.  '  "^  P™^"'«''   '«>'•; 

The  term  "  conHLkion  "  t.  T  .'  u'  '""""*^  ''  ""'"t^d- 
solelv  tn  tl.„  '?•  .  ""'^*  ""^  f^  construed  to  annlv 
so  ely  o  the  question  of  rates.  There  are  man,  /i?  ^^^ 
siderations  included  Vithin  the  ten.  Th  ^  .""  *^"- 
active  competition  l>etween  the^  ™i  "..?  "^  ''^'^'  ^  ^«^ 
question  of  rates,  vi..  rofferTnr  o  .T  ''"?  «"*-^'^«  «f  ^e 
in  the  matter  of  equipn^ntl'^Sfti  af  fe^S.^  Z'^'T 
the  proper  care  of  live  stock,  shorteninrof  r  "!,  ^f"" 

many  other  wavs  the  most  aoH^r  5  •      *""'''  ""*'  '" 

an  of  which  the  pubr;litl;Zro7.  Td  'T"' 
as  the  rate  char^nH]  h  fnir  ««^  fi         ^   ""^  ^  ^^^S 

answer,  which  mill  L  clUntrt:^^  "  ^*^*^'  '"  ">« 
fair  compensation  to  theTrCrll  ♦!  ""  """^  ''""'  *  " 

the  public  cannot  comiJain  '^'  '"^'•*-^  Performed, 

oIH  Jn^  {«"i5!*^  **  *^"^*®  as  MUCH  interested  in  tK^ 

citizens  in  their  various  avocntrnri«  ol  V*^        *°  *"®  prosperity  of  its 

Pe  ition.  The  latter  may  brini  low  nnl*  ''T  ^^""^^^^  ^e  in  their  co^ 
bring  them  so  low  th^  eaDitoi  hJ^  ^'^^'^^^  *^  Purchasers,  but  may  al^ 
fail,  to  the  l^neralTnTurTafTe^^unU^^^^  ^""^  businTs'I  me'S 


UNITED  STATES    r.  TBAN8-MIS80UEI   PBEIGHT  ASSN.      97 

Opinion  of  tlip  Court. 
bounds  of  reasonable  prosi^^rity  to  the  parties  engaged  in  it 
for  surely    he  citizen  investing  his  capital,  whethef t  ml 

whTh  V  7f?-  "  "'*'"«•*  *°  ^'^^  benefit  oflZ^tl 
which  affords  to  him  only  a  fair  protection  for  hisi  S 
ment,  and  which  does  not  interfere  with  the  ri^htl  of  tht 
pubhc  by  imposing  unjust  and  unreasonab l  cttes  o 
the  service  performed.  Such  contracts  as  was  ^.tIX7  T 
case  of  Homer  v.    Uhford  "arp  „ "r'"  .''^''^a■^  ^^a'^d  m  the 

sideS,  niylr4w;:;r;t^?  *•'•'  '■r™-^  -'- — 

bination,  ;r  Is^LTin  ^  trabt'of  7  '."  "^'^"'?''  """■ 

the  first  section  of  theLroHuirs!  IS^^^^  "  "''^^"^"  '^^ 

it  IS  further  urged  by  counsel  for  the  ffovernm^nf  ih  ,  .w 

aTd°:r:eraT?f  j^tr  ^  *« « -nfpXar  x:^: 

ond  sectio^f  the  a'cT  1T;T  1800  t " '^"  °'  ^  "- 
defined  by  Mr.  Justice  Story  J;  iL-an  7""P""y"  '« 
granted  to  a  few,  of  something  JLh  was  bJ^  "^''*' 
right ; "  and  by  Lord  Coke  to  L  "  !    ^^"""^  "'  '"""^nion 

by  his  grant,  cLmiiiS' :r*:ttrwTse't  a"'""  ''  *'*  '^•""' 
porations,  of  or  for  the  sole  burf^eilir  '^T'  "'  '"'- 
mg,  or  using  of  evervthinc  wh      k^'  ^'  ""aking,  work- 

tions  are  sought  trter^frt/d' of  ""'  TT  °^  •^'^''P"'-*- 
they  had  before,  or  hinSed   „  1     T^  *  "  ''"  "^'"^y 

it  is  undoubtedly  true  Zt  th^  ""T  ^7*"'  *'-«'^«-"  Wl'ile 
quasi  public  funct  ons  and  f^rTw"'""'"*  companies  perform 
to  the  public,  ye  after  a  '  '  .  ,  ''"'""  ''^^^  ^^^ain  duties 
tract,  I  must'ci'  that  r  h?  "l'"'"'"'"''*'""  "^  ^^is  con- 
[«3]  it  a  single  element  If  '^'"  """'''«  *«  ^i.scover  in 

at  common  lal^  ImJ^iiZ^Z^^T'^tf'  ^'  ^««-^ 
to  adequate  facilities  and  fl  T  f  !  ^  P"''''^  are  entitled 
hands  of  these  corporattn,  '  f  '""*  ""^"'^^^  '^'^^  ^^  the 
and  no  mot.;  and'traS^on'ofr"''''^'  ""■  ^"^*  *''«^' 
was  the  very  purpose  of  the^conTmct  t'  ^'^""""^  'I  '^''  '^^' 
tion,-which  is  to  be  taken  <.?'      "  "'^"^  °*  ^^is  allega- 

1180&-VOL  1-06  „ .  ■     *®'"^'  ^  ""^ate  a  mo- 


98 


53   FEBEBAL  REPORTER,  453. 
Opinion  of  the  Court. 


'I 


nopoly  when,  by  its  very  terms,  everything  to  which  the  pub- 
lic is  entitled  is  provided  for,  and  the  public  interest  fully 
protected.  But  it  is  urged  by  counsel  for  the  government 
that  this  should  be  held  to  be  a  contract  tending  to  mo- 
nopolize trade  and  commerce,  for  the  reason  that  its  tendency 
is  to  prevent  free  and  unrestricted  competition.  What  I 
have  said  in  reference  to  competition  in  discussing  contracts 
in  restraint  of  trade  is  equally  applicable  here.  My  own 
view  is  that  the  contention  of  counsel  is  altogether  too 
broad.  The  public  is  not  entitled  to  free  and  unrestricted 
competition,  but  what  it  is  entitled  to  is  fair  and  healthy 
compt»tition ;  and  I  see  nothing  in  this  contract  which  nec- 
essarily tends  to  interfere  with  that  right. 

Again,  it  is  urged  that  this  contract  amounts  to  the  trans- 
fer of  the  franchises  and  corporate  powers  of  these  railway 
companies,  4ind  that  the  contract,  therefore,  is  forbidden  by 
public  policy.  There  is  no  doubt  but  what  it  is  beyond  the 
power  of  a  corporation  to  disable  itself  by  contract  so  that 
it  cannot  perform  every  public  duty  which  it  has  undertaken. 
Mr.  Justice  Miller,  in  delivering  tJie  opinion  of  the  court  in 
the  case  of  Thomas  v.  Railway  Co,^  101  U.  S.  71,  says : 

"  Where  a  corporation,  like  a  railroad  company,  has  granted  to  it,  by 
charter,  a  franchise  Intended  in  a  large  measure  to  l>e  exercised  for 
the  public  good,  the  due  performance  of  those  functions  being  the 
consideration  of  the  public  grant,  any  contract  which  disables  the 
corporation  from  performing  those  functions,  which  undertakes,  with- 
out the  consent  of  the  state,  to  transfer  to  others  the  rights  and 
powers  conferred  by  the  charter,  and  to  relieve  the  grantees  of  the 
Imrien  which  it  imposes,  is  a  violation  of  the  contract  with  the  state, 
and  is  void,  as  against  public  policy.** 

Bui  wherein  the  principle  announced  in  this  case  can  be 
applied  to  the  contract  under  consideration,  I  am  wholly 
unable  to  perceive.  In  what  manner  are  the  franchises  or 
corporate  powers  of  any  of  these  railway  companies  trans- 
ferred to  this  association  ?  Each  company  maintains  its  or- 
ganization as  before,  elects  its  officers  and  operates  its  line 
in  exactly  the  same  manner  now  as  it  did  before  the  organi- 
sation of  the  association.  No  powers  whatever  are  given 
to  the  association  to  govern  in  any  respect  the  operations  or 
methods  of  transacting  the  business  of  any  of  the  lines. 
Each  line  is  left  perfectly  free  to  transact  all  of  the  business 
it  can  secure,  and  in  its  own  way.    True,  the  contract  re- 


UNTTED   STATES    IK  TRANS-MISSOURI   FREIGHT   ASSN.      99 

Opinion  of  the  Court. 

riT  ^^T  r''  '*""P''°y  "^^^  ''^'''•^^  J»«t  ««d  reasonable 
rS- buti/""*'T.!-P''"''^''"''  *"•■  '^^^^^^S  changes  in 

SL  intn  .r  r!i  '%* ''  *  '""■*"'^^''  ***  «"y  corporate  fran- 
chise into  the  hands  of  an  irresponsible  power  ?    The  contract 

provides  hat  this  association  shall  consist  of  a  repre^nS 
of  each  of  the  hnes.  This  representative  fliav  or  may  not  U 
an  officer  of  the  company.  Suppose  we  concede  that  he  "s  noT 
but  IS  a  person  appointed  by  the  officers  of  the  company  au- 
tL  a^nt^f^.      '"'^  appointment,  he  [454]  then  becomes 

fullv^c.         ?'  ^If  ^f  ^  ^""^  '^^'  P"'-P'^'  '"»<i  he  may  law- 
ful  y  act  on  Its  behalf,  and  hence  his  act  would  be  the  act 

of  the  company  through  its  duly-authorized  agent   and  the 
rate,  rule,  or  regulation  made  by  the  association^^nd  ;;t  il 

be  merely  the  rate,  rule,  or  regulation  of  the  association  but 
a  rate  rule,  or  regulation  of  the  company  itself  Vtin^ 
through  Its  proper  officers  or  agents,  andLnce  n'LiS 
or  transfer  of  any  corporate  power  conferred  upon  it  ^v  its 
ch^r;  nor  would  it  be  thereby  relieved  of  any'buln'i; 

i~iTr'  r;-  ^^^^  -l,lt^rit:iTw: 

It  intended  to  include,  combinations  or  affreement«  iJJ 
railway  companies  ?  It  is  urged  bv  thTdeSant!  twl 
aw  not  included  within  that  act    th^Af  *  ^^^^ 

•  act  operate,  and  were  intended  ;„  f  Provisions  of  the 

different  combinations  and  that  tV'T     '  "P""  "'^'^  ^''^ 

a  full  and  comp  ken   t  e^^d^^^^^^  *?  •^«"'«*«  -~e,» 

eled  on  the  n.osLffST  systems  ofl^J"  7^  "'^^ 

of  England     ThJc  Jo.t       ^^^^ms  of  the  different  states  and 

follow!  Tliat^h  XSr.''r'  ""^  *"  summarized  as 
common  carrier  or  !Ir^^T  5'  "'l'^^"  W'^  *<>  ''"y 
passengers  or  propertrilT/r    ?  *'  transportation  of 

road  arid  Partfy  ^1:'""^  t'StlaT  a^lt  '^  't 
services  shall  be  rea^jonaWo      jP™y<>f  that  all  charges  for 

tions  and  undue  or  ^^rL^K^r*'  'Y  ""J"^*  di^crimina- 
naue  or  unreasonable  preferences  shall  not  be 


100 


53   FEDERAL   REPORTER,  454. 


i 


Opinion  of  the  Court. 

made;  that  reasonable,  proper,  and  equal  facilities  for  the 
interchange  of  traffic  between  lines,  and  for  the  receiving, 
forwarding,  and  delivering  of  passengers  and  property  be- 
tween connecting  lines  shall  l>e  provided ;  that  there  shall  be 
no  discrimination  in  the  rates  and  charges  as  between  con- 
necting linas;  that  it  shall  be  unlawful  to  charge  a  greater 
compensation  for  a  short  haul  than  for  a  long  haul  over  the 
same  line,  in  the  same  direction,  under  substantiallv  similar 
circumstances;  that  there  shall  be  no  pooling  oi  earnings. 
The  act  provides  for  the  filing  and  publication  of  tariffs,  in- 
cluding joint  tariffs  of  connecting  roads,  and  also  provides 
for  TO  davs'  notice  of  anv  advance  in  rates. 

The  act  further  provides  that  any  combination,  contract, 
or  agreement,  exprass  or  implied,  to  prevent,  by  change  of 
time  schedules,  carriage  in  different  cars,  pr  by  other  means 
or  devices,  the  carriage  of  freights  from  being  continuous 
from  the  place  of  shipment  to  the  place  of  destination,  shall 
be  unlawful.  The  act  provides  penalties  for  violations  of 
its  provisions,  establishes  a  commission  of  hve  members  to 
exercise  a  supervisory  control  over  the  common  carriers  sub- 
ject to  the  act,  and  to  enforce  the  provisions  of  the  act.  It 
will  be  seen  from  an  examination  that  this  act  is  in  the  nature 
of  a  special  act,  being  confined  in  its  application  to  common 
carriers,  while  the  act  of  Julv  2d  is  clearlv,  bv  its  terms,  a 
general  statute.  It  includes  every  contract  or  combination 
in  the  form  of  a  trust  or  otherwise,  or  conspiracy  in  restraint 
of  trade,  and  every  person  who  shall  monopolize  or  attempt 
to  monopolize  any  part  of  the  trade  and  commerce  [455] 
ftoiong  the  states.  I  think  no  rule  is  better  settled  than, 
where  a  general  statute  has  been  enacted,  which  might  in- 
clude, in  the  absence  of  other  provisions,  a  subject-matter 
which  has  already  received  consideration  at  the  hands  of  the 
legislature  by  a  special  act,  that  the  general  act  will  not  be 
construed  to  embrace  the  subject  contained  in  the  special  act, 
unless  it  clearly  appears  from  the  language  employed  that  it 
was  the  intention  of  the  legislature  that  it  should  be  included. 
The  intention  of  the  legislature  should,  of  course,  be  fol- 
lowed, and  that  is  to  be  ascertained  from  the  words  "used  in 
the  statute,  and  from  the  subject  to  which  the  statute  relates, 
with  a  view  of  meeting  the  mischief  sought  to  be  remedied; 


UNITED   STATES    V.  TRANS-MISSOURI   FREIGHT   ASSN.      101 

Opinion  of  the  Court. 
and  in  doing  this  it  is  the  duty  of  the  court  to  restrict  th. 
meaning  of  general  words  whenever  it  is  satisfied  th.J  ^l 
hteral  meaning  would  extend  the  statute  to  cal  twch    h! 

StteD  "^^^".."^^^'^^d  ^  i-'ude.  As  stated  bf^ 
Just  ce  Davis  in  the  case  of  Reicke  v.  Sn^ytke,  13  Walh  lU: 

subjert-uiatter  to  wljich  it  relator  th-L-  °  **'^  statute,  and  the 
tbe  ii,eani»g  of  genera?  ,1 -rts  wheiiev^r  ft  t^f^*"!,'  ""^^  *"  ''«'«« 
so  m  order  to  carry  out  the  Ie^iKlati"e  fntintion  ""       °«*^'"^  ^  do 

such  rZsS;;:t£  hrr;rdt  ti'/^^.^r- 

FeZSyi   1887  "..'°'"r"  '"'■""'■^  ^"^^'^^t  t«  the  act  of 
2d «    I  Sink   t  J'  '', "'"  P'-^^i^'^n^  «*  the  act  of  July 

Th"t  r  T  '""^  -t-t'°n  orcon;:i'^ '"  ■"  "•"^'•^'*' 

hat  h     :~'„Ef  !J'  r''-  <'"ty  it  was  tJ  ^  fo   t' 

^en.,  with™;trcrrx7irits  t  rr- 

the  proper  r«g,dations  anZntTol  Z  the        "  '"""'''^'^  ^"^ 
have  provided  for  it  hv  In  .       ^  ^  carriers,  it  would 

including  it  in  r^ntrnT  ^Tf '''''''  °^  '^^*  """''  ^n^^ad  of 

which  wf u;VL  es^r  ,y  co?£^w^rV'^p^^^^    «' 

force  upon  a  subject  which  had  X  «.  ^^'''"Z'""  '^^'^  ^ 
consideration  of  conlei  IthtC/  "^'^''^  '^'  ^P^"'**! 
congress  to  remedy  a  v^  ll'^'K  '*  ^""^  *h«  Purpose  of 

number  of  comb^naVonr^the  l"  7!  *'^"  ^■^'^*'"^-  '^^ 
cies  in  n^straint  of  tralhad  sL  ''^ ''"'''  """^  "^^^^P^ra- 

were  dangerous  to  tTSmmeSS'^nt"^  ?  ''^  '"""*'^  ^''''^ 
steel-rail  trust,  cordageTLTthe  K  ?'*''  ^°'  "^^'"P^^'  ">« 
oil  trust,  dres;,d-bif  trTst    II    ^'I'^'^f  t"'«t,  the  Standard 

trust,  and  numerou7otheT ;iit"a^'"'t-  *""*'  ^'^^  ^- 

X;f  tiS:  --  %~  ri'nrsi^s: 


102 


53  FEDEBAIi  BEPOBTER,   4o5. 


Note — Memorandum  of  agreement. 

iBg  which  of  the  constituent  members  of  the  trust  should 
continue  operations  and  which  should  cease  doing  business; 
how  much  business  should  be  transacted  by  each,  what  prices 
should  be  [456]  charged  for  their  product,  and  in  fact  had 
the  power  to  direct  every  detail  of  the  business  of  every  cor- 
poration  forming  the  trust.  It  was  to  combinations  and  con- 
spiracies of  this  sort  that  the  act  of  July  2, 1890,  was  directed. 
I  conclude,  therefore,  that  the  bill  should  be  dismissed,  and 
it  is  so  ordered,  but  not  at  the  cost  of  the  complainant. 

NOTE. 

Memorandum  of  agreement:  "Memorandum  of  agreement  made 
and  entered  into  this  fifteenth  day  of  March,  1889,  by  and  between 
the  foliowing  railroad  compauies,  viz.:  Atchison,  Topelia  &  Santa 
Fe  R.  R..  Chicago,  Rocii  Island  &  Pacific  Ry.,  Chicago,  St.  Paul, 
Minneapolis  &  Omaha  Ry.,  Burlington  &  Missouri  River  R.  R  in 
Nebraska,  Denver  &  Rio  Grande  R.  R.,  Denver  &  Rio  Gran<le  Western 
Ry.,  Fremont,  Elkhom  &  Missouri  Vallev  R.  R..  Kansas  City  Ft 
Scott  &  Memphis  R.  R.,  Kansas  City,  St.  Joseph  &  Council  Bluffs  r[ 
R.,  Missouri  Pncific  Ry..  Sioux  City  &  Pacific  R.  R..  St.  .Joseph  & 
Grand  Island  R.  R.,  St.  Louis  &  San  Francisco  Ry.,  Union  Pacific  Ry., 
Utah  Central  Ry..  aad  such  other  companies  as  mav  hereafter  l)e- 
ceme  parties  liereto.— witues^tth.  for  the  purpose  ofiimtual  protec- 
tion, by  establishing?  and  maintaining;  reasonaiile  rates,  rules,  and 
regulations  on  all  freight  traiiic.  ln.tli  throujjh  and  local,  the  sub- 
scribers do  hereby  form  an  association,  to  be  known  as  the  Trans 
Missouri  Freight  Association.  an<l  agree  to  be  governed  l)y  the  fol- 
lowing provisions : 

"Article  1.  The  traffic  to  be  included  in  the  Trans-Missouri  Freight 
Association  shall  be  as  follows:  (1)  All  traffic  competitive  iK-tween 
any  two  or  more  memliers  heret>f.  passing  between  pnints  in  the 
following  describeil  territory:  Commencing  at  the  Gulf  of  Mexico, 
on  the  Olth  meridian,  thence  north  to  the  Red  river:  thence  via  that 
river  to  the  eastern  boundarj-  line  of  the  Indian  Territorv :  thence 
north  by  said  boundary  line  and  the  eastern  line  of  the  state  of 
Kansas  to  the  Missouri  river  at  Kansas  Citv :  theneo  via  the  said 
Missouri  river  to  the  point  of  intersection  of  that  river  with  the  east- 
em  boundary  of  Montana;  thence  via  the  said  eastern  boundary  line 
to  the  international  line,— the  foregoing  to  be  known  as  the  '  Missouri 
River  line ; '  thence  via  said  international  line  to  the  Pacific  coast  • 
thence  via  the  Pacific  coast  to  the  international  line  between  the 
United  States  and  Mexico:  thence  via  said  international  line  to  the 
Gulf  of  Mexico):  and  thence  via  said  Gulf  to  the  point  of  beginning 
Including  business  between  iK>ints  on  the  boundary  line  as  described' 
<2)  All  freight  trattic  originating  within  the  territory  as  defined  in 
the  first  section  when  destinefl  to  points  east  of  the  afoVesaid  Missouri 
river  line.  lOxeeptious :  (a)  The  D.  &  R.  G.  and  the  D.  &  R.  G.  W 
except  their  business  to  and  from  points  in  Colorado  west  of  tlie  D 
&  R.  G.  line  l)etween  Denver  and  Trinidad;  also  business  via  their 
lines  between  points  in  Colorado  and  points  in  Utah.  All  local  busi- 
ness lietween  Denver  and  Trinidad  and  intermediate  points-  all 
local  busi^ness  of  the  A..  T.  &  S.  F.  between  Pueblo  and  Canon  City. 
Colo. ;  all  stone  traffic  having  both  origin  and  destination  within  the 
state  of  Colorado.    The  jurisdiction  of  this  association  in  so  far  as 


UNITED  STATES   V,  TRANS-MISSOURI  FREIGHT  ASSN.      103 

Note— Memorandum  of  agreement, 
the  business  of  th**  Tiont'tii.  9  m^  ^ 

Rio  Grande  We^er^^^iZay'^^nm^^^^^  ^"^^  '^^  I>-»^er  & 

lowing  traffic,  namely :  AH  'fr^TAffic'trf/"^'  "^^^"^  '^^  '*>'" 
common  or  nmction  points  in  the  sSt^s  o?'  t^Ik'"'  i^""  ^^''^''^^  «" 
and   the    Indian    Territorv    orfJ^offnt   ^^  Nebraska  and  Kansas 

Colorado  Springs,  Puellf'or  Sdad  In'' w^h^"?'  ^^  ^"^^^• 
Ogden,  Spanish  Fort  and  infVr,?.L^-  ;  All  freight  traffic  between 
and  to.  from,  or  th^u-irnoinVs  in  ^'''"^^  ^'"^'"  ^'^  ^^^  one  hamf 
of  the  10.3d  meridian  on  the  other  hTn^  t  "L'^'^l^*-^  "P^"  ^'  ea«t 
eluded  under  the  annlicntion  nf  fh  I'  ^-^^^^  ^^'^^"^^  may  be  ex- 
delivered  to  or  recel'^^''?rom  the  Denve'i'?  i^L'p^^  T""  '•»«  Vv  ^ 
Denver  &  Rio  Grande  Western  R  nil  wax  *n^  ""^^^^  ^""^^  Railroad  and 
Trans-Continental    and    Inten^ationnT  LJ  -  included  in  the 

Ing   between   points   in   Kansaf  or^^^^^^^^^  ^^^  ^'^^^^  P«^s- 

^Ints,  Carondelet  and  soX  nl%  t^^ffie  nn^'c/"*^  k^^'^^'^^^PP^  ^iver 
Kansas  or  Nebraska  nnrl  Tv.i'r./J  •  I.  Passing  between  po'nts  in 
Mississippi  rivei^and  ^^uth"^  o?  the\n??HT'^"''"  ""'^''^^  ea.sTof  the 
gnia,  regardless  of  ti?e"*,Ue  bv  Ti  eh  Th.^1  "".""^^^^^  ^''^  Vi'- 
Mississippi  or  Ohio  rivers  M^Trnffi.  ^^.  *^"«^ness  crosses  the 
river  points  and  points  Tn  Oie  r4571  tet^-Lf "'?  ^^^^^^^"  Ml.ssonri 
All  traffic  to  noint^j  nn  +1!^  i?  hl^  -^  territory  east  of  said  river      /IV 

and  to  Sioux  C\ty.  Council  Bluffs  "^i  pJ"«'^'?*^''  """l  Nebraslca. 
Josepli.  Kansas  Citv  or  Ro^uoii  Ar-  ^"'^"''^  Junction.  Iowa  St 
traffic  with  the  C./lorado  Miril«n;.  -Ti'""'-  "»  The  intercSe  of 
from  AsfH-n.  Colorado  GIenwo^''snHl?"n'',  ^"'"'  <^o™Panies  ?o  oj 
l>omts.  including  coal  biaXs  thpr«flT-  ^^^  <"•''<'<>•  and  Intern ediate 
and  r*advillp.  Colorado  nt  therefrom,  and  Buena  Vista  Colorndr. 
rado.  b.v^all  lines      ""•     ^"  "*"«'"«««  *»  »nd  from  Florenc^.^Sf^ 

a  eha''irni!in''o?"be  orglnLMr'""""  ^^a"-  "y  unanimous  vote  elect 
wthirds  vote  Of  thfm^mbers  ^^  ^"t;"'""  "'^^  "e  remov^  bl^ 
ings  of  the  association  .nt  Kansns  r/t  ^^?''''  ^^"  be  re^larni^t" 
by  the  chairman  that  the  business  t?  ^'  T'"^^  "»"<■«  ^b«\\  ^  Sren 
calling  the  members  togethe?  vhw,*L^?  transacted  does  not  wafrint 

f?r"'o?"C?'^*''«  day  s^t  Vr  he  nSfnt'"!.!^  ''""^  ■«>»  '-«'  'ban 
lar  01  special— is  convened  it  shVii  k!  ■  ^^  ?  ''*°  «  nieeting— reeu- 
hereto  to  be  represented  br  some  iffi       'n«imbent  upon  each   nartl 

SM^tb""".-""'  ""««"»"«  toTcSasWer^*""^'''^  *"  "'•^  •''fln^t^ 

p.i;vttT™r  tc  ^oT-S--^"  ^"Werrii^i 


freight  tra/Hc-  ellh?^'^'""'^^   '"   any  rule  or   re^.i  .""^  Proposed 

Colorado  or  Uf;h^«^'"-'L:'  '°  ^  f»r  asapp^L^^f '«''«n   Soverning 

Shall   consider  aS,,   ?^-  ^-  ^^  ^^ch  monthly  m^«Lti.^"  *"'"<=  «' 

and  vote  „.K>n  „„  changes^p?J,S.  *of  S^d^^ 


104 


I  ■ 


53   FEDERAL   REPORTER,   457. 
Note — Memoraudiim  of  agreement. 


notice  has  been  given,  and  all  parties  shall  be  bound  bv  the  decision 
or  the  association,  so  expressed,  unless  then  and  there  the  parties 
fehall  give  the  association  definite  written  notice  that  in  10  days  there- 
after they  shall  make  such  modification,  notwithstanding  the  vote  of 
the  association :  provided  that,  if  the  member  giving  notice  of  change 
shall  fail  to  be  represented  at  the  meeting,  no  action  shall  be  taken  on 
Its  notice,  and  the  same  shall  be  c-onsldered  withdrawn.     Should  any 
member  insist  upon  a  reduction  of  rate  against  the  views  of  the  ma- 
jority, or  if  the  majority  favor  the  same,  and  if.  in  the  judgment  of 
Buch  majority,  the  rate  so  made  aflfects  seriously  the  rates  uiwn  other 
traffic,  then  the  association  may,  by  a  majority  vote,  ui>on  such  other 
tninic  put  mto  effoit  corresponding  rates,  to  take  effect  on  the  same 
*     1"    .7    ""i>»""<>"s  coiKseiU.   }iny   rate,   rule,   of   regulation   relating 
to  freight  traffic  may  be  modified  at  any  meeting  of  the  association 
Without   previous   notice.     Sec.   6.  Notwithstanding   anything   In  thiB 
article  contained,  each  member  may.  at  Its  i^eril.  make  at  any  time, 
without  previous  notice,  such  rate.  rule,  or  regulntion  as  may  l)e  neces- 
sary to  meet  the  coniijetition  of  lines  not  members  of  the  asstx-iation 
fiTing  at  the  same  time  notice  to  the  chairman  of  Its  action  in  the 
prem  ses.    If  the  chairman,  ui>on  investigation,  shall  decide  that  such 
rate  is  not  necessaiy  to  meet  the  direct  competition  of  lines  not  mem- 
bers of  the  assmiation.  and  shall  so  notify  tlie  road  making  the  rate 
Jt  shall  immediately  withdraw  such  rate.    At  the  next  meetinc  of  the 
association  held  after  the  making  of  such  rate,  it  shall  be  reported 
to  the  association :  and  if  the  association  shall  deiMde  by  a  two-thirds 
vote  that  such  rate  was  not  made  in  good  faith  to  meet  such  compe- 
tition, the  memljer  offending  shall  be  subject  to  the  |»enalty  provided 
in  section  8  of  this  article.    If  the  association  shall  decide  bv  a  two- 
thirds  vote  that  such  rate  was  made  In  good  faith  to  meet  such  com- 
petition, it  shall  be  considered  as  authority  for  the  rate  so  made.     Sec 
7.  x\ll  arrangements  with  connecting  lines  for  the  division  of  through 
"■"Ir  *;^"^*P*^.***  ^^^^^  covered  by  this  agreement  shall  be  made  by 
authority  of  the  [45a]  assocljition :  provided,  however,  tliat  when  one 
n>ad  has  a  proprietary  interest  in  another,  the  divisions  l)etween  such 
roads  shall  be  what  they  may  elect,  and  shall  not  be  the  property  of 
the  association :    provided,  further,  that,  as  regards  traffie  contracts 
at  this  date  actually  existing  l>etween  lines  not  having  common  nro- 
prietary  interests,  the  same  shall  l>e  reported,  so  far  as  divisions  are 
€oneerne<l.  to  the  asswiation.  to  the  end  that  divisions  with  competing 
lines  may.  if  .thought  advisal>le  liy  them,  be  made  on  equallv  favorable 
terms.     Sec.  8.  It  shall  be  the  duty  of  the  chairman  to  investigate  all 
apparent  viola tion.*^  of  the  agreement,  and  to  report  his  findings  to  the 
managers,  who  shall   determine  by  a  majority  vote  (the  member  again.st 
whom  (tmi|>laint  is  made  to  have  no  vote)  what.  If  any   i>enaltv  shall 
be  assessed,  the  anxMint  of  eadi  fine,  not  to  exceed  one  hundred  dollars 
to  be  paid  to  the  association.     If  any  line  partv  hereto  agrees  with  a 
shipper  or  any  one  else  to  secure  a  reiluctlon  or  change  in  rates  or 
change  in  the  rules  and  regulations,  and  it  is  shown  upon  investiga- 
tion by  the  chairman  that  such  an  arrangement  was.  effected,  and 
traffic  thereliy  seinireil.  such  action  shall  l>e  reported  to  the  managers 
who  shall  determine,  as  above  provldetl,  what,  if  any.  r»enalty  shall  be 
aitesse*!.     Sec.  0.  When  a  penalty  shall   have  been  declared  against 
any  memlier  of  tins  association,  the  chairman  shall  notify  the  manag- 
ing oflicer  of  said  c<nui»any  that  such  fine  has  been  assessed,  and  that 
within  ten  days  thereafter  he  will  draw  for  the  amount  of  the  fine- 
and  the  draft,  when  presented,  shall  be  honored  by  the  company  thus 
assessed.    Se<*.  10.  All  fines  collected  to  be  used*  to  defray  tiie  ex- 
penses of  the  association,  the  offending  party  not  to  be  benefited  by 
Ihe  amounts  It  may  pay  as  fines.    Sec.  11.  Any  member  not  present 


UNITED   STATES    V,  TRANS-MISSOURI   FREIGHT   ASSN        105 
Notfr-Memorandum  of  agreement 

fTei'gl!^SKt^^/X.h'^^^^^^  -  «^*«»  meetings  of  the 

shall  be  fined  one  doHar  to  be  assess^  !'TL  ^""^  ^^'  ^^°  ^^'^^ 
shall  have  previously  fil^  with  the  r^nfrmin  *  ^1?  ^^^P^^^^'  "niess  he 
present  or  represent^  chairman  notice  of  inability  to  be 

Seiiuon'i.  h'I  Tn\TSe'TaU  '^^J^^'^'^^''  «^«"  ^  -«  ^-"ows: 
make  and  keep  a  record  the?L?n^/*"'^^  ?^  *^^  association,  and 
ceedings  as  may  be  necessarV^^^  1nl/''**'T."^^^*^  ""^'^  «^  ^^^^  Pi^ 
action  taken  by  the  assS  on  ^s^""?"  J*"^  P*^^"^*^  hereto  of  the 
and  publish  for  th|  uTe7'ZJmbef.  ^%'n^'"  "'  ***"  ^*^^«  »^^P 
rules,  and  regulations  prevailing  on  all  h- A  J""  T''''^  ^^  ^^^  ^ates 
ness  covered  by  this  agi^eS  nni  ^^  ^V^'^""  *^^''^to  on  busi- 
agrees  to  furnish  sucli  number  of  r^nfo«  .^.^  ^^  ^^'^  ^^"-^'^^  hereto 
lations  issued  by  It  as  "he  ch^iirmarf  ?^  ^  the  rates,  rules,  and  regu- 
construe  this  agreement    nnd-iiro    ^^^  require.     Sec.  3.     He  shall 

construction  to  be^Sig  until    InZ^^^  ""^-^^^^  thereunder ;Ws 

elation.  Sec.  4.  He  shall  Z'lsh  ?|1  n^^  ^majority  vote  of  the  Asso- 
regulations  which  are  general  in  fhif.  i?  ^  ^r""  "*"  ^^^es,  rules,  and 
the  territory  of  the  ISatioi  a^f^h^^^^fi^^'  ^\»d  apply  throughout 
above,  such  rates,  rules,  or  reL^^ations  m^l^.^"^^'"?'  ^"  ^^^  "^^^"er 
two  or  more  lines  as  maV  be  a-reed  nnnn  i^^^^^^^^  *'*'^^^*  common  to 

He  shall  be  furnished  wit^S  Xn  Lvl^'n^^"^  ^"^^^^^  ^^'^^ 
under  this  agreement,  whenTanli  for  nn/l"  n  ^1^  ^''^'^^^  ^''^"ied 
tistics  as  may  l,e  nec^ss;^^  t^gi^e  Semhe.  •  L^"*"  ^"'^^"^  ^"^'^  «ta- 
to  the  traffic  moved,  subject  to  the  nrl,  1^  ""  general  information  as 
merce  Ijaihvay  Assiclatl'ou  agr^nie^iT.s  T r ^  *^^  Interstate  Com 
Sec    G.  He  shall  render  to  each  meXr  of^^^  members  thereof, 

statements  of  the  expenses  of  the  ^.«^«5  V  ^^  ^t^  a.ssociation  monthly 
due  from  each,  and  sLnllnife  drafron^^^^^^^^^  '^T^°^  **^«  Proport  ons 
amounts  thus  shown  to  be  due  Sec  7  rI  1  '"f^^^^^^'s  for  the  different 
charges  of  violations  of  th"s  aJSnipn?  '  h'"  ^^^^^^  ^^^  determine  all 
pose  of  the  fines  for  such  vto  aS  "s  nrovi^'S^f '  ^"^•^'  ^''^  ^is- 
The  chairman  shall  be  empowered T'o'^fi^^'^"^.^  ^^'*  herein.  Sec.  8. 
to  meet  the  rates  of  anot^rXelr^otSer^^^^^^^^^^  ^^  *^^  associ^ion 

Li  •*"*^^»'"*^»t  such  action  is  Justified  hxt  the  association  when 
however,  not  to  act  in  aiiv  xvnv  .J  •  S  "^  *^^  circumstances-  this 
rate  made  by  any  ZZr" %e\"VTir''''\^'  ""'^  unauthir  z^i 
vote  upon  questions  arisin-  nndp;  ?,?^^  *^^  P'^^"^^  interested  shall 
doubt  the  chairman  shaTde'eide  t  to^^i '*f,''^"^^"^'  «»d  in  a,se  of 
ested  or  not.  subject  to  appeal  as  dJovSh^^^"  ^""^  P^^^^^'  »«  ^  i^ter 
the  agreement.  '       '  ^^  Provided  by  section  3,  article  3   of 

wrm4^eia^'^ertil'!'^Crbi"ooLM  "!i^''*«'  <"•  """"g  of  freight  .t 
meut ;  >.nu  the  mles  r4591  n?,,,    "^"',*':?<*  "  violation  of  thiV  nff„^ 

X«  '"r'-t'""  ^"--etu  a^''^,t^^f?'«^<>'?«  of  any  weighing  aslSIt 
officers  ana  agents,  shall  be  «>iwlrtBr!^i  ^  V?  '*'  °'"  "»  enforced  bv  its 
this  agreement,  and  any  wiUfuf  vfniff^"""."*^  ""''«■•  the  pro%^i„ns  of 


106 


<f 


54  FEDERAL  REPOKTER,   40. 
Statement  of  the  Case. 


BLINDELL    V,  HAGAN. 


107 


( 


li 
III 


"Art.  7.  In  caae  the  managers  of  the  lines  parties  hereto  fall  to  agree 
mpon  any  question  arising  under  this  agreement  that  shall  be  brought 
btfore  the  association,  it  shall  be  referred  to  an  arbitration  board, 
whieli  sluill  consist  of  three  members  of  the  executive  board  of  the 
Interstate  Commerce  Railway  Association:  provided,  however,  that 
111  ease  of  arbitration  in  which  the  members  of  this  association  only 
are  interested,  they  may,  by  unanimous  vote,  substitute  a  special 
board. 

"Art.  a  This  agreement  shall  take  effect  April  1,  1889,  subject 
tliAreafter  to  30  days'  notice  of  a  desire  on  the  part  of  any  line  to 
witMraw  from  or  amend  the  same." 


[401     BLINDELL  ET  AL  v,  HAGAN  ET  AL.« 

(Circuit  Court,  E.  D.  Louisiana.    February  9,  1893.) 

[54  Fed-,  40.] 

COMBINATIONS    IN    RESTBAINT    OF    TbADE— EQUITY    JURISDICTION.— The 

Statute  against  unlawful  restraints  and  monopolies  (Act  1890,  26 
St  p.  209)  does  not  authorize  the  bringing  of  injunction  suits  or 
suits  in  e*iuity  by  any  parties  except  the  goveniment.& 

Same. — The  jurisdiction  of  the  circuit  court  to  entertain  a  suit  to  en- 
join a  combination  of  persons  from  interfering  with  and  preventing 
shipowners  from  shipi>ing  a  crew  may  be  maintained  on  the  ground 
of  preventing  a  multiplicity  of  suits  at  law,  and  for  the  reason  that 
damages  at  law- for  interrupting  the  business  and  intercepting  the 
profits  of  pending  enterj^rises  and  voyages  must,  in  their  nature,  be 
conjectural,  and  not  susceptible  of  proof. 

Same — Injunction  Pendente  Lite — Evidence. — Evidence  that,  by 
reason  of  the  action  of  a  combination  of  per-sons,  the  crew  left  com- 
plainants' ship  as  she  was  about  to  sjiil,  and  that  another  [41]  crew 
could  not  be  procured  for  nine  days,  and  then  only  with  the  assist- 
ance of  the  police  authorities  and  the  protection  of  a  restraining 
order,  while  other  vessels  in  the  vicinity  had  no  difficulty  in  getting 
crews,  is  sufficient  to  jiuthorze  the  court  to  enjoin  interference  with 
the  business  of  the  complainants  by  such  combination,  pendente  lite. 

In  Equity.  Bill  by  Blindell  Bros,  against  C.  Hagan  and 
others  to  enjoin  interference  with  their  business  as  shipown- 
ers.  On  application  for  an  injunction  pendente  lite.    Granted. 

Henry  P.  Dart  and  F.  B.  Earhart^  for  complainants. 

/.  Ward  Gurley^  jr.^  and  /.  Z>.  Grace^  for  respondents. 


•  Affirmed  by  the  Circuit  Court  of  Appeals,  Fifth  Circuit  (56  Fed., 
096).    See  p.  182. 
»  Syllabus  copyrighted,  1893,  by  West  rublishing  Co. 


Opinion  of  the  Court 

Billings,  District  Judge. 

ter  affidavit     Trsta^cfof  rt,?  '®'^^'*^  ""^  -"- 
the  complainants  r'^enTCsX^cTsTS^^^^ 

steamship   "^thlt^^^nl^lT^^  ''''''' 
trade  between  this  port  and  Jverpool-Xt  £  ''""•'"^ 

t^rra— r^ftir^^^^^ 

that  this  nnl^Jf^^t2:,ZT^^Tf'f  '"^^  *=*'"^' 
rupting  the  business  0^^  f         defendants  is  inter- 

persons  engaged  ?nt\!  ^<"»Pla»'«nts,  which  is  that  of 

andLiveS  andisdoin'T^  ''''^'  '^*"^'^  New  Orleans 
injunction's'  t.n!St\^\  "T"''^^  '^''^'-  ^he 
(26  St.  p.  209,)  Wvn  as  "in'  ^t'  ""''''"  '^^  ''^^  «'  ^^^^ 
merce  against  'unTa wll  ^trtfn^f  ^  ^™^^'  ''"'"^^  ""^  ^o*"' 
makes  all  combinatlT  ,wS"of  "7^ """•"  '^^  '^ 
lawful,  and  punishes  thenTb^  fin.  ^' °' *=*"""'"•<=«  ""' 
authorizes  suits  at  law  rtrtle  dl  ""P"^"""^"^  and 
but  it  gives  no  new  riffht  to  h -in  T-^^  ^"''  '^^  ^'«"^i«n. 

ful  study  of  the  ac^  fa  toS^.r  o'th'"'*"'  ^^  ""  ''^• 
suits  in  equity  or  injunction  11   I       ^  e<»»clus'on  that 

govemmen;  of  the  Unhed  St.?        ^/"'  "'^'^  *^^"  ^^e 
This  brings  me  to  X  f  *"■'  "•"*  authorized  bv  it. 

junction  is  aid  Thl  citTzTsJi^^^^K  "P**"  ^'^-'^  ^he  in- 
the  United  States  circuit  cSt?'       '^l'"'''''  ''  ''''^  ^hat 

Plainants  may  urge  1:1"^'"  l^^  tf ""' ''"'  '''  ''^"'■ 
they  may  have  in  law  or  P«.,iH  in  ^  grievance  which 
the  courts  of  a  state  ThTZ  ''  "^^'  ''  '^^^  "^«"'d  do  in 
«  suit  at  law  is  co^ed  bv M     T^}'""^''^'  "»>'  "maintain 

The  prohibition  in  The ttatte  of"l789  "  '°''  '""^  '«^«-'-'-- 
m  the  courts  of  the  vJtlTl!  ^^^*!  "^^'n^t  suits  in  equity 

plain  and  adequate  rS/edy  attw'  T^'T  ''''  ^'^'^''^  '»«  '» 
to  enunciate  or  introdZ ?  ,'  ''^'  ^^^  ^epeatedlv  held 

"gi%  by  the  clTs  o;r^:rtedt;r  ^*  ■*  '^  -*-«^ 

-  ^-^y  is  allowed,  the  tfeit^?r;?^r  j:;5 


108 


84  FEDERAL  REPORTER,   41. 


'Illi 


Upiniou  of  the  Court. 
of  trial  by  jury,  which  is  by  the  constitution  of  the  United 
States  guaranteed  to  him  in  all  common-law  cases  involving 
upwards  of  $20.    There  can  be  equity  jurisdiction  onlv  when 
the  case  in  question  belongs  to  one  of  the  recognized' classes 
of  cases  over  which  equity  has  jurisdiction.    The  [42]  ques- 
tion, therefore,  is,  does  this  case  belong  to  one  of  those  recog- 
nized classes?     If  it  does,  it  is  because  the  nature  of  the  al- 
leged injury  is  such  that  it  would  be  difficult  to  establish  in 
a  suit  at  law  the  damage  of  the  complainant,  and  because  to 
entertain  it  would  prevent  a  multiplicity  of  suits.     Undoubt- 
edly Chancellor  Kent  lays  down  the  correct  rule  in  Jerome 
V.  Robs,  7  Johns.  Ch.  333,  that  cases  of  ordinary  trespass  are 
not  withm  the  cognizance  of  equity;  but  in  Limnggton  v. 
Livmgston,  6  Johns.  Ch.  500,  501,  he  adds  a  qualification 
which  shows  the  ground  of  discrimination  between  such  tres- 
passes as  equity  will  enjoin  and  those  which  will  not  ■  "  There 
must  be  something  particular  in   the  case  of  a   trespass, 
or  to  make  out  a  case  of  irreparable  mischief,"  in 
order  to  authorize  equity  to  interfere,  and  an  injunction  to 

In  Laiissats'  notes  to  Foublanque\s  Equity,  at  page  3,  he 
lays  down  the  principle  which  is  the  fundamental  one,  con- 
curred m  by  all  the  writers  upon  equity  as  the  basis  of  equity 
jurisdiction  in  cases  of  trespass,  as  follows:    "The  founda- 
tion of  this  jurisdiction  of  equity  is  the  probability  of  irrep- 
arable mischief,  the  inadequacy  of  a  pecuniary  compensa- 
tion, and  the  prevention  of  a  multiplicity  of  'suits."    The 
difficulty  has  been  in  applying^  this  principle.    ^^Tiere  there 
IS  a  large  combination  of  persons  to  interfere  with  a  party's 
business  by  violence,  the  equity  jurisdiction,  if  maintainable 
at  all,  is  maintainable  on  either  of  two  grounds,— the  nature 
of  the  injury,  including  the  difficulty  of  establishing  in  a  suit 
at  law  the  amount  of  actual  damages  suffered,  or  the  pre- 
vention of  a  multiplicity  of  suits.    The  jurisdiction,  for  these 
reasons,  was  maintained  in  the  following  cases:   Emack  v 
Kane.U  Fed.  Rep.  47;   Casey  v.  Typographical  Union,  45 
Fed.  Rep.  135,  144;    GilheH  v.  Mickle,  4  Sandf.  Ch.  381 
(marg.  p.  357;)   Shet^y  v.  Perkins,  147  Mass.  212,  17  N.  e! 
Rep.  307.     In  O.hon*  v.  Bank,  f>  Wieat,  845,  the  court  says': 

'•In  those  cases  [ wrongful  transfer  of  stocks  and  other  seiiiritiesl 
the  Injured  party  would  have  bis  remedy  at  law ;     •     ♦*    but  it  is 


BLIl^DELL  V.  HAGAN. 
Ophifun  of  the  Court. 


109 


the  province  of  a  court  of  ormif.-  i„  ...  ■ 

and  prevent  the  wroM     Tli^^mJ,     •"'■''  ™^  ^^  "'"'^t  »»>«  injur%- 

than  the  law  can  glve/^  ^^  '"  """"^  "eneflcial  and  compile 

With  reference  to  another  class  of  cases,  courts  of  equity 
have  sometnnes  taken  jurisdiction  for  the  reason  whiTii 
quires  that  they  should  take  jurisdiction  here,  viz.  thoi  caSs 
for  specific  performance  when  there  could  be  no  adeq^a" 
compensation  in  damages.  In  Taylor  v.  ^^evaf.,  cS  by 
Lord  Hardwicke  in  Buxton  v.  Lhter,  3  Atk.  383,  a  specific 
performance  was  decreed  of  a  contract  of  a  sale  of  sKn^ 

t::\lV'Zf  ^"'  P"'*^  ^'^  -  «  -tain  numt  oJ 
because  tii°f"'°^"*^-  ^^"'t^  -J^in^  in  such  cases, 
oecause,  though  the  injured  party  may  have  his  suit  at  law 

oim.  &  b.  607,  611.    So  m  cases  of  trespass,  where  a  bnsinl« 
IS  interrupted,  and  the  profits  of  pen^ling  ent  rpritanl 

recovenng  full  compensation,  for  his  damages  must  at  l«w 

Zlty   T^t^X      r'^l  ^'  "''y'  "^y  -  i"J-«'tion'^  in 
equity,  arrest  the  threatened  wrongdoing,  and  prevent  the 

l^lr^m:'::^^:^' :  i™diabie,T:i^l; 

proof.  P™''*-'  '''^'*  ""^  "°t  susceptible  of 

iurisdiction,  in  that^J  ire  21ert"e  ttXlT  ^^'^ 
are  irremediable  at  law  as  well  1?        threatened  damages 

will  prevent  a  multS;  Tf  su^""'  "'*^"  *^^  ^"'^^  -i* 

metirtCaseTalu;2Sl"Vn-  ^'''"'  '^^  ^^"^ 
a  summary  of  each  of  The  7^  I-  "'''^**"'  *^  ^^'^  «Pin'«n 
"f  proof  WaEEe^  ttt  ttTvT  ?«  P'^Ponderance 
arrived  at  this  port^romV     V       'f  steamship   Violante 

on  the  30th  th!  ^^'"^  ^'^^  November  29,  1892  and 

vii  ine  tjutn  the  crew  was  naiH  r^ff    a  +  *i,  ^  x-         ,    '  ^ou^,  ana 

no  complaint  regardi^t  the  1  !' .1^*  *^*  *"°"  *•>«  "^^  """^e 
ment,  or  the  saff^  of  fh  '  ^!^^^^^^  ^'^ ^1'  *"•  '"^'^  '^^■ 
until  about  noon  of  D^^t  *£  if  lC"!j  ''V'"'  *^"*'- 
except  that  some  of  the  crTw  had  ,1  ^ '.r*"""*  "''"PJaint, 
they  would  be  n«iH  W       ?       '        ****  ^^^  <*PtaJn  whether 

y      a  oeen  lymg  at  the  wharf,  to  which  he  answered 


110 


54  FEDERAL   REPORTER,   994. 


•I 


Syllabus. 
1892,  after  thp  .hil  ,    ,  .  ^""^  J^*^  ^^'P-     On  December  15, 

ber   iliii  «^*  J  .  ^^  ^®^'  ^"  t^«  15th  of  Decern- 

Sis  alrle  'Tr    '"  ^"^"^  "^  '^'^^  ""»"  December^, 

of  nine  day,  the^S      tilts' Zf  Sed':'^  ^"'l 
went  to  the  assistance  of  the  mastera^d  agSi If  T"'  '"1 
m  getting  a  cr«w:  that,  while  other  raStthlviT 
had  no  difficulty  in  e»ttinir  Prpw=  7.  ^'*'"'"«'^  '"the  vicinity 

protec-tion  of  the  ^straining  orde.^C  hTlrt"  fth    C 
the  ev,den<»  .^tablishes  that  the  inaWlitv  „TT    I       . 

SHnltr  "'^"^^  ''^'^'^  a?dtTilSy1^or 
the  case,  upon  the  question  of  facts,  as  well  as  laT I  with  f 


<l 


rmj  UNITED  STATES  v.  WORKTVr Mi^^.e  *«.t 
GAM  \TFn  rvkiTv/^TT  >VT^  "'^JKK.ixM  OMEN'S  AMAL- 
^AM  A 1  fci>  COUNCIL  OF  NEW  ORLEANS  ET  AL.» 

(Clnmlt  Court.  E.  D.  Lonfeiana.     March  25.  im.) 

[54  Ppd..  !)tt4.] 

Injunction  Is  asked  aealnst  th»^J  ?  CoMBiNATioss.-Where  an 

to  ended  a«,  labor  resumed  sin^e  t^Xof  tbe"blin,*„*''*  '*""' 
for  rerustn,  tbe   ,nJ„^«o„.    Tbe   .nvasfo:' oT Sr^i^^at 

85rt:t  V  ""■"•"''  "™'*  »'  ^»-"'-  ^'"-  C.«.u>t  (5t¥S: 


X^Nmo  STATES   t;.  WOBKINGMEK'S  AMAI^G.  COr«OIL.       Ill 

Opinion  of  the  Court 
n^ZZLT'""^  "'  "■«  '"^"^'^  '«  -*  •"-"■"ed.  authorize* 

'Tu:^^l:ZtZ::^:iZ^  "^  0-H._Wbere  the  bU.  for  ,„- 
denying  all  the  eq„i«4  of  he  l^r'^^'''^-  "^  ""^'^er.  under  oath, 
equity  rule  «.  truseTat  th«  h  '• ''"°'  ""*'*'"  *'«'  amendment  to 
affidavit  alone  wSer  the  mw^-^  ^'l"*  P'""'"'"^*  '""^  »'  an 
tennlned  by  the  wholIt.deneelC::!''''""  '"""^  '""^*  "^  "^ 

"«c  •errnrcro7fo=«::r  ^rr-^'-^  -  ^--- 

wise  in  restraint  of  trade  0?^^!  *"'  '"^  "'  *™«*>  »'  »ther- 
with  foreign  nations  "(t  s/Tr'«  """""e  the  several  states  or 
tions  Of  laborers  astell  «'of  ^S.^"-  ^'>  "''P"-  *«  --"'-. 

Ta-brz^-^-7Z"^riga::;s^*"  t'-  ^-"^  — - 

Of  interstate  commerce  thrZ,n^>„/  """"matiou  in  restraint 

matter  of  history,  tbe  'offlc  ar^n "t^oTof  "^t^  '"  ■*^^'"'^"<^'  "« 
ment  officers,  and  also  newsnan^:  !^      .  *''*'  ''*"■'•*"*  S«^e™- 

eontaining  manifestoes  and  dXatoHf  7""*"*  "^  '""•'''^'*» 

Same-Lawful   Coubikations   T,m»;  "^  respondents. 

The  fact  that  a  combCrn  of  m"  i^n  ^ "'"'  P™pos.s.- 
purposes  innocent  and  lawful  is  im^Z,  V  .  1  '""^"'  ""**  S^neral 
bination  is  [995,  turned  to  thruXtln"™^  "■'^«"  *''<' «•- 

g  taterstate  and  foreign  Commerce  '^    '^''  °'  restraining 

Z  e^Zr^ZT;-^  bTulTonle"/ ,"'"  *"  ^-"^'^  "'  «>»''- 
restraint  of  interstate  commerL  "ithin  th^""^  ^  oombination  in 
When,  in  order  to  gain  its  endsl't  ^^tV  r^""'"^  "'  *"«  ^^»*^ 
by  Violence  and  intimidation  a  d^„r  '"""•  """^  '"'^  «"'o^«e. 
Partments  of  business,  including  thT.'^''  "*  ""«'•  '"  «"  1'^ 
state  to  state,  and  to  and  fr^m  f^rIS.l"°~«<"'  <"  ^oods  from 

_  • 

In  Equity.    Suit  bv  the  Jlmt^A  q^  ^ 

f-  B.  Earhurt,  United  States  Attorney 

BttLiNGS,  District  Judge 
^7^;r7— ~~~^ ^^nswer^nd  numerous  affida- 

•  Syllabus  copyriehtwi   le^kT^T^Tir^ 

Pyrignted.  1893.  by  West  Publishing  Co.  ^ 


112 


54  FEDERAL   REPORTER,   995. 
Opinion  of  tlie  Court. 


i 


vits  and  exhibits.  The  bill  of  complaint  in  this  case  is 
filed  by  the  United  States  under  the  act  of  congress  entitled 
"An  act  to  protect  trade  and  commerce  against  unlawful 
restraint  and  monopolies,"  (26  St.  at  Large,  p.  209.)  The 
substance  of  the  bill  is  that  there  is  a  gigantic  and  wide- 
spread combination  of  the  members  of  a  multitude  of  sep- 
arate organizations  for  the  purpose  of  restraining  the  com- 
merce among  the  several  states  and  with  foreign  countries. 
It  avers  that  a  disagreement  between  the  warehousemen  and 
their  employes  and  the  principal  draymen  and  their  sub- 
ordinates had  been  adopted  by  all  the  organizations  named 
in  the  bill,  until,  by  this  vast  combination  of  men  and  of  or- 
ganizations, it  was  threatened  that,  unless  there  was  an  ac- 
quiescence in  the  demands  of  the  subordinate  workmen  and 
draymen,  all  the  men  in  all  of  the  defendent  organizations 
would  leave  work,  and  would  allow  no  work  in  any  depart- 
ment of  business;  that  violence  was  threatened  and  used  in 
support  of  this  demand ;  and  that  this  demand  included  the 
interstate  and  foreign  commerce  which  flows  through  the  city 
of  New  Orleans.  The  bill  further  states  that  the  proceedings 
on  the  part  of  the  defendants  had  taken  such  a  vast  and 
ramified  proportion  that,  in  consequence  of  the  threats  of  the 
defendants,  the  whole  business  of  the  city  of  New  Orleans 
was  paralyzed,  and  the  transit  of  goods  and  merchandise 
which  was  being  conveyed  through  it  from  state  to  state,  and 
to  and  from  foreign  countries,  was  totally  interrupted.  The 
elaborate  argument  and  brief  of  the  solicitors  for  the  defend- 
ants- presents  six  objections. 

The  defendants  urge  (1)  that,  the  strike  or  cessation  of 
labor  being  ended,  and  labor  resmned  throughout  all  branches 
of  business,  there  is  no  need  for  an  injunction.  I  know  of  no 
rule  which  is  better  settled  than  that  the  question  as  to  the 
maintenance  of  a  bill,  and  the  granting  of  relief  to  a  com- 
plainant, is  to  be  determined  by  the  status  existing  at  the  time 
of  filing  the  bill.  Rights  do  not  ebb  and  flow.  If  they  are 
invaded,  and  recourse  to  courts  of  justice  is  rendered  neces- 
sary, it  is  no  defense  to  the  invasion  of  a  right,  either 
[§96]  admitted  or  proved,  that  since  the  institution  of  the 
mat  the  invasion  has  ceased.  With  emphasis  would  this 
be  true  where,  as  here,  the  right  to  invade  is  not  disclaimed. 


UNITED   STATES   V.  WORKINGMEn's  AMALG.  COUNCIL.        113 

Opinion  of  the  Court 

ITie  question,  then,  is,  what  was  the  state  of  facts  at  the  time 
of  and  prior  to  the  filing  of  the  bill?  or  whether,  if  the  facts 
alleged  m  the  bill  were  true  at  that  time,  there  was  need  of 
an  injunction. 

The  defendants  urge  (2)  that  the  right  of  the  complain- 
ants depends  upon  an  unsettled  question  of  law.    The  theorv 
of  the  defense  is  that  this  case  does  not  fall  within  the  pur- 
view of  the  statute;  that  the  statute  prohibited  monopolies 
and  combinations  which,'using  words  in  a  general  sense,  were 
of  capitalists,  arid  not  of  laborers.     I  think  the  congressional 
debates  show  that  the  statute  had  its  origin  in  thf  evils  of 
massed  capital;  but,  when  the  congress  came  to  formulating 
the  prohibition  which  is  the  yardstick  for  measuring  the  com 
plainants  nght  to  the  injunction,  it  expressed  if  in  th^ 
words:  "  Every  contract  or  combination  in  the  form  of  tru^ 
or  otherwise  in  restraint  of  trade  or  commerce  among  the 

t^  lUegal.      The  subject  had  so  broadened  in  the  minds  of 
the  legislators  that  the  source  of  the  evil  was  not  regarded  as 

maTtt  'f  ?.'"'•  '"  '^  ^"*"^ty  '«  <i-lt  with.     They 
made  the  interdiction  include  combinations  of  labor  as  weH 

as  of  capital;  in  fact,  all  combinations  in  restraint  ofclm 

merce  without  reference  to  the  character  of  the  iLns  who 

entered  into  them.     It  is  true  this  statute  has  not  beTn  much 

expounded  by  judges,  but,  as  it  .seems  to  me,  its  merin7a^ 

far  as  relates  to  the  sort  of  combinations  to  whTcl  it  £  L 

apply,  IS  manifest,  and  that  it  includes  combinations  which 

«re  composed  of  laborers  acting  in  the  interact  of  £re^ 

oatlanHH     "*'  T'   ^'^   *'^**'  "^^  ^"^-^r  beingTnder 
oath,  and  denying  all  the  allegations  of  the  bill   tha  ;.!! 

"c,zTJ:z,  .^'T.""*'"™  «'^- — 3,t 

tice  th.T     r      1      ^"'*y'  '*  ^*^  *  ™le  in  chancery  nrac- 

tt  eq'u  Li^iirr"  "^^  r'''  ''^^'^'  ^^^ '»--'«« 

since  in  this  case  the  o,^  '.T""*'""  ''^""^'^  ^  '•^^"^d;  but, 
bill,  their  anrw^r^^^^^^^^^  Tf  *!,"  "^^^^^  ^"  *"« 

with  the  probative  force  of  an  affi.  >  T^  "*  '^^  '^^''""g 
has  necessarilv  fZ.ff\^  ^^'''*  *'^"^'  """^  "»  longer 
solicitors!       ^         ^""^  ''"™^  ^«'-  't  by  the  defendants' 

11808— VOL  1—06  M 8 


114 


54   FEDERAL   REPORTER,   996. 


I 


li 


r 


Opinion  of  the  Court 

The  defendants  urge  (4)  that  the  proofs  in  the  case  are 
vague,  and  insufficient  to  establish  the  allegations  of  the  bill. 
When  I  consider  the  affidavits  of  individuals,  and  the  procla- 
mations of  the  governor  of  the  state  of  Ijouisiana  and  the 
mayor  of  the  city  of  New  Orleans,  and  the  statements  in  the 
public  journals,  supported  by  testimony,  and  the  affidavits 
filed  in  this  cause,  I  find  the  material  allegations  of  the  bill 
fully  sustained.  Not  only  was  the  flow  of  commerce  through 
the  city  of  New  Orleans  purposel5^  arrested,  but  even  the 
transportation  of  the  goods  and  merchandise  from  the  gov- 
ernment warehouses  to  the  landings  was  forcibly  stopped. 
The  following  exhibits  in  the  case,  consisting  of  proclama- 
tions of  the  governor  of  Louisiana  and  the  mayor  of  New 
Orleans,  taken  from  the  official  journals,  manifestoes,  and 
the  recitals  of  the  sayings  of  [997]  the  defendants,  taken 
from  the  public  newspapers,  which  have  not  been  disproved 
by  the  respondents,  show,  as  matter  of  history,  the  vast  pro- 
portions of  the  interruption  caused  by  the  defendants  to  the 
prosecution  of  all  the  branches  of  business  within  the  city  of 
New  Orleans,  and  the  purpose  with  which  it  was  done,  to  wit, 
that  no  business  was  to  be  transacted  till  the  demands  made 
by  the  employes  of  the  warehousemen  and  the  subordinate 
draymen  were  complied  with : 

**A   Qeneml  f^trike   Ordered   by   the  Amalgamated   Council   for  To- 
Morrmc,  Vnlem  the  Merchants  E^cognize  the  Union  this  Evening, 

•*  PBE8IDENT  LEONABD'S  STATEMENT. 

**  When  the  people  of  New  Orlealis  awake  to-morrow  morning,  they 
will  probably  find  thaj  one  of  the  lar^st  strikes  that  has  ever  taken 
place  'n  this  city  has  been  inau^nirated.  To-day,  at  12:30  o'clock, 
President  Leonard,  of  the  Amalgamated  Council,  made  his  promised 
statement  to  the  members  of  the  press  relative  to  last  night's  meeting 
of  the  council.  Mr.  Leonard  said  that  it  had  been  decided  at  the  meet- 
ing to  order  a  general  strike  for  to-morrow  morning,  unless  the  mer- 
chants ask  for  a  conference  this  afternoon.  The  unions  were  deter- 
mined to  compel  the  employers  to  recognize  them,  and  they  took  this 
step  to  force  this  recognition,  if  possible.  Mr.  Leonard  further  said 
that  every  trade  and  line  over  which  the  council  has  jurisdiction  will 
go  out,  barring  none.  If  at  any  time  during  the  strike  the  merchants 
manifest  a  desire  to  recognize  the  unions,  the  men  will  be  ordered  to 
return  to  work,  and  a  conference  committee  appointed  to  meet  a  simi- 
lar committee  from  the  merchants.  The  committee  of  fifteen  of  the 
Amalgamated  Council  will  remain  in  session  for  some  hours  this  even- 
ing, and  the  employers  will  thus  be  given  their  last  chance  to  accede 
to  the  demands  of  the  strikers.*' 


UN.TKD. STATES    ..  WOBKINGMEN's  AMAI,G.  COUNCI,. 

Opinion  of  the  Court. 
"the  strike  ordebed. 


115 


^i^i'  AM.VLGAMATED  COUNCIL, 

^  "At  a  meeting  of  presidents  of  fhfi  k "''  ^oven.her  4. 1892. 

to  represent  the  entire  fSvtn^  .i?  ^'^^  ""^  ^^^  ^«^t  that  thev  claim 
and  emphaticaliv  tha?  S  vvnf  n^."^^"*  "'  ''^^  ""'^^  «»d  cla in   broadly 

to  prevent  otljer  emnJovers  frn^l  A^  ""^^^^  ^^^  endeavor  bv  their  flr^« 

SirL"^^^^^ '"^  ^'  ^- ^he^b^t^trrrs"^^^^^^^^^       reeo,iLl!;ru„t^ 
rerram  from  working  for  anv  *.Tr,.7i«  ^^  organized  labor  that  w-a 

men  have  no  rights  that  they  are  ^J^\  ^"^P^oyers  that  the  laboring 

mmmMmsm 

lue  iaiK.1  unions  are  united. 

'A.   JM.   Keir, 
..  James  E.  Porter, 
JOH.V  M.  Callagiian, 

"  'Committee.' " 


[998] 


"  WILL  THE   STRIKE  BE  GENERAL? 

"meeting   of   the    amat«. 

THE   AMAIX^AMAra,    COUNCIt   THW   EVENI=,a. 


man  who  was  w?th  ^''J^  "eterminedto  w  n  fhS^cf'^'  f  "^«  "'"I'M 
strike  will  hp  J!i''  ^^-  Porter  is  represenT^  ""s  struggle.    A  union 

unless  The  SniSTs  trt  l"^"'^."'  *•>«  KnfelaLei':*,  S'**  *"«  the 
imagined.  Mr  Po^fi'/f'^Snized.  there  will  iSZL  £■*''!  "^^^  "n* 
•^'n  by  nea^  f  orter  is  reported  to  have  n^n  i^^,  Woodshed  than 
Will  b^  e^p^V^  .'^^  ^«° :  bnt,  if  we  are'^Uh^^o  tT"  ''"^'^  ^ 

met  la^t  nigM  and*d^-^*ij^  oomiltteS  of  ?b?  s?rR  •*'"'«•  The  joiS? 
merchants  with  re,^"^  *»  P«y  no  attention  to  fh°^  Ofsanizationg 
merchants  d«.n„e t^'^*" •  *"«  P'^Wsed  tXnal     i?'**''""''"  '"' the 

£rri°S=ra*'i«--i;^^^^^^^ 


116 


54  FEDERAL   REPORTER,   998. 
Opinion  of  the  Court. 

ANSWEB  TO  PROPOSITION   OF  THE  GOVERNOR. 


"  Nov.  8th,  1892. 
"  To  His  Excellency,  Gov.  M.  X  Foster. 

"  Dear  Sir  :  According  to  agreement,  we  were  to  give  you  an  answer 
this  morning  in  regard  to  certain  propositions  that  you  have  sub- 
mitted ;  but,  after  consideration  by  the  committees,  we  found  that  the 
propositions  would  have  to  be  first  submitted  to  the  executive  com- 
mittee of  the  merchants'  body,  and  we  have  not,  up  to  the  present  time. 
heard  what  action  was  taken  in  regard  to  the  matter.  In  consideration 
of  these  facts,  we  now  have  these  propositions  to  submit,  and  will  have 
to  stand  on  them:  First.  We  are  willing  to  arbitrate  on  wages. 
Second.  We  are  willing  to  arbitrate  on  hours.  Third.  We  want  the 
question  of  'none  but  union  men  to  be  hired  when  available,  from 
and  after  the  final  adoption  of  tariff  and  hours,'  to  be  accepted  without 

arbitration. 

"  James  Leonard,  Chairman, 
"John  Breen. 
"  A.  M.  Keir. 
"John  Callaghan. 
"  James  Porter." 


«« 


proclamation. 


*•  ^Iayoralty  of  New  Orleans,  City  Hall,  Nov,  9,  1892. 

"Citizens  of  New  Orleans:  The  time  has  <k)me  when  I,  as  your 
mayor,  feel  that  the  forces  placed  at  my  command  are  inadequate  to 
further  protect  peaceable  citizens  and  their  property,  owing  to  the 
many  demands  made  on  them.  I  am  then  compelled  to  call  upon 
all  good  citizens  desirous  of  the  welfare  and  safety  •of  the  city.  I, 
therefore,  as  your  chief  magistrate,  do  hereby  issue  this,  my  procla- 
mation, commanding  all  law-abiding  and  law-loving  citizens  to  attend 
at  the  city  hall  to-morrow,  (Thursday,)  Nov.  10,  1892,  and  then  and 
there  to  be  sworn  in  as  special  ofl!icers  to  aid  and  assist  the  organ- 
ized police  force  of  this  city  in  their  duties  incumbent  upon  them. 

**  Given  under  my  hand  and  seal  of  office,  this  ninth  day  of  Novem- 
ber, in  the  year  of  our  Lord  1892. 

"  By  the  Mayor,  "  John  FrrzPATBiCK. 

"  Clark  Steen,  Secretary." 

,       "proclamation  of  the  governor. 

"  New  Orleans,  La.,  No^.  10/92, 
**To  the  People  of  New  Orleans: 

"  The  condition  of  affairs  prevailing  in  your  city  during  the  past  ten 
days;  the  danger  to  the  peace  and  good  order  of  this  community 
arising  from  the  paralysis  of  industry,  trade,  and  commerce,  and 
from  the  suspension  of  the  usual  means  of  trasportation ;  the  inse- 
[998]  curity  of  life  and  property  caused  by  the  perturbed  state  of  the 
public  mind,  aggravated  by  the  closing  of  the  gas  and  electric  light 
works,  thus  holding  out  an  Incentive  to  criminals  to  ply  their  vocation 
in  darkness, — have  not  escaped  my  attention,  and  have  caused  me  the 
deepest  solicitude.  I  therefore  request  all  peaceable  citizens  not  to 
congregate  in  crowds  upon  the  streets  and  thoroughfares,  and  I  urge 
upon  them  to  discountenance  all  undue  excitement  and  acts  of  vio- 
lence, and  to  make  known  to  the  officers  intrusted  with  the  adminis- 
tration of  the  law  any  breaches  of  the  peace.  I  hereby  declare  that 
the  people  of  this  city  must  and  shall  be  protected  in  the  full  enjoy- 
naent  of  all  their  constitutional  rights  and  privileges.    All  the  power 


Vmr^  STAT.S   ..  W0BKXKGME.'S  AMAT^.  eoa.CI..        117 

Opinion  of  the  Court 

the  protection  of  the  lives  ^a^r^^r^^lr^^^J"^  O"*--  ^ 

"  MuBPHY  3.  B-osTEH,  Oovent^-  ot  Louisiana." 

Mued  to  the  militia,  and  that  Xr^hl^"*'.'  *""  ""^^^^  ""^  b^"ng 
'8  over,  an  effort  w  II  be  madP  tn  «f  *  railroad  presidents'  meSinf 
panies  are  expected  to  furrsh  th^  iT*  '"^  '""^t  cars.  The  cim^ 
force  of  the  state,  with  the  bodiB«  ^  I^""^'  """^  ^^^  entire  milita^ 

worthy  their  gener  uiaet  ^:t  \  "'^  r''^'  »»- 
unlawful  combinations  and  wh^rfv.  V""^'"  ^^''^^^  ^'^"^ 
lished,  cannot  escape  labilltv  on  tf  "'^l  ''  ^""^  ««*«»>- 
mendable  general  charactei  t  del^"""''  "*  '""''^  '=»'«- 
of  sufficiency  of  proof  of  »n  '^^t^^'mng  the  question 

worth  in  the  accu^ L  tl  b.  ^""^TT  ***  ""^^^^ "1  "'tent,      ' 
of  the  charge  is  s^deM  ir^t*^? ' . ''"*  ^h^"  the  proof 
original  purpose  of  an  asiS^^nt^^'^'^g'.V  sufficient,-the 
as  a  ground  of  defense  '''°"'**'°"  ^^'  ««a«ed  to  be  available 

The  defendants  urge  (6)  that  th.         u-       • 
or  compel  the  employment  J  I  combination  to  secure 

the  restraint  of  co^rr  iTl'^L^T.r''  '^  »«*  ^ 
sition  urged  as  a  defense  can  TTT  ^  ^*^^'"  *'^«  P^PO" 
must  first  be  stated  as  it  5  2^  ^^X  ^"^  ^^^  '^^^  the  case 
The  case  is  this:  tZ  combTnat In     V"'  "*^''"^''<^'^  ^-ts. 

compel  the  employment  of  no^etnt         "^  **"*  ''^  ^^'''c  ""d 
ncss,  as  a  means  to  eSeettht.         ''T"'^'''''^^^^^  busi- 
a  discontinuance  of  laEr  i  *   ,  r^'?"'  '^"'•"•^  ^"forced 
the  business  of  transprrtluo"  of       1  '"^'"*^^^'  '"'^^"ding 
which  were  in  transit  tWh?..     ^"^'1  """^   '"erchandij 
«tate  to  state,  and  to  and  frfm  t"''  ^'  ""'^  ^'•'^'•»«'  ^o"" 
case  IS  thus  stated,-and  it T  .I^  countries.     Allien  the 
facts  here  proven,ll  do  nL^'V^!.'"  '"^"^^  *"  embody  the 
but  that  the  combination  of   hi    ?  ""  ""  ^^^  ""^^tion 
of  commerce.  *  ^^^  defendants  was  in  restraint 


118 


54  FEDERAL  REPOBTEB,  999. 


H 


Opinion  of  the  Court. 

I  have  thus  endeavored  to  state  and  deal  with  the  various 
grounds  of  defense  urged  before  me.  I  shall  now,  as  briefly 
as  possible,  state  the  case  as  it  is  established  in  the  voluminous 
record. 

A  difference  had  sprung  up  between  the  warehousemen  and 
their  employes  and  the  principal  draymen  and  their  subor- 
dinates. With  the  view  and  purpose  to  compel  an  acqui- 
escence on  the  part  of  the  flOOO]  employei*s  in  the  demands 
of  the  employed,  it  was  finally  brought  about  by  the  em- 
ployed that  all  the  union  men — that  is,  all  the  members  of 
the  various  labor  associations — ^>vere  made  by  their  officers, 
clothed  with  authority  under  the  various  charters,  to  dis- 
continue business,  and  one  of  these  kinds  of  business  was 
transporting  goods  which  were  being  conveyed  from  state 
to  state,  and  to  and  from  foreign  countries.  In  some 
branches  of  business  the  effort  was  made  to  replace  the  union 
men  by  other  workmen.  This  was  resisted  by  the  intimida- 
tion springing  from  vast  throngs  of  the  union  men  assem- 
bling in  the  streets,  and  in  some  instances  by  violence;  so 
that  the  result  was  that,  by  the  intended  effects  of  the  do- 
ings of  these  defendants,  not  a  bale  of  goods  constituting 
the  comuierce  of  the  country  could  \ye  moved.  The  question 
simply  is,  do  these  facts  establish  a  case  within  the  statute? 
It  seems  to  me  this  question  is  tantamount  to  the  question, 
could  there  be  a  case  under  the  statute?  It  is  conceded  that 
the  lal>or  organizations  were  at  the  outset  lawful.  But, 
when  lawful  forces  are  put  into  unlawful  channels, — i.  e. 
when  lawful  associations  adopt  and  further  unlawful  pur- 
poses and  do  unlawful  acts, — the  associations  themselves  be- 
come unlawful.  The  evil,  as  well  as  the  imlawfulness,  of 
the  act  of  the  defendants,  consists  in  this:  that,  until  cer- 
tain demands  of  theirs  were  complied  with,  they  endeavored 
to  i)revent,  and  did  prevent,  everybody  from  moving  the 
commerce  of  the  country.  What  is  meant  by  *'  restraint  of 
trade  "  is  well  defined  by  Chief  Justice  Savage  in  People  v. 
Fisher  J 14  Wend.  18.    He  says :  , 

"The  iiitHlianic  is  not  obliged  by  law  to  lal)or  for  any  particular 
p*iee.  He  may  say  tliat  he  will  not  make  coarse  boots  for  less  than 
one  dollar  i>er  i»air;  but  he  has  no  right  to  say  that  no  other  me- 
chanic shall  make  them  for  less.  Should  the  Journeymen  bakers 
refuse  to  work  unless  for  enormous  wages,  which  the  master  bakers 


WATEBHOUSE   V,  COMEK. 
Syllabus. 


119 


bmations  would  l>e  productivp  «/ ^      ^^  ^^^  description.     Such  ^m' 
certainly  must  be  injurious  ^^trade/''"^  ««^  confusiorwS 

It  is  the  successful  effort  nf  fi,«         i.- 
fendants  to  i„ti„,idate  anJterawe  or      f  °°  ""'  *^«  '^- 
m  conducting  or  carrying  Z2  '  ^^"^  ^^""^  «*  ^<>rk 

in  which  the  court  fiKl  "'"'"f^  "^  '^'  -""^T, 
the  statute.  One  of  the  i^^  T*""  ^"'^  *'>'''•  ^'ol^tion  of 
action  was  the  CeVt^S'^J^r/S  ""'  ''^'^  ^'""'^'-^ 
flowed  through  New  Orlefns  Th  !  commerce  which 
tion  are  none  the  less  „„S,,  k        '"*?"*  """^  combined  ac- 

scope  the  paralysis  o    aScSL  T'^'-''^^^"'''"'^*'^  '"  *»>-•• 
well.  •  ''"  ""'er  business  within  the  city  as 

For  these  reasons  I  think  the  injunction  should  issue.    ^ 
n*9]       WATERHOUSE"E7rL.  ..  COMER 

[55  Fed.,  149.] 

AanrsTMENT   BY    TH..    o  ^^*^®~-A)lFriCULTIES    WITH     P»,„. 

nthn..  "^  <^0URT.— Wherp  tho  ^  I^mployes— 

other  corporation  i.s  being  ndmin   !  P^«I>erty  of  a  railway  or 

«ntendingpowerof  Tew    Of  by  a   receiver  under  the 

COMMERCE-Ano  'DJUriOUS    tO    the 

«t.KCE— Agreements  t^i  »=.« 
TiONs  OF  Employes  Zi^i   Rf strain-Act  July  2    iSQO-n 
«eers,  styled  the  "^^^1^!  ^  "^  ^^  as.sociation  of  l^L^'''''''''^- 
I>^-ovides  "  that  hereaC  wh^  ''  "^^-^-^-^^-e  Eng~s  rVb'^!- 
grand  chief    nn^  **^**rrer,  wlien  an  issue  has  h^r.    ^^^^^^     which 


* 


120 


55  FEDERAL.  REPORTER,   150. 
Opinion  of  the  Court. 


road»  to  handle  the  property  belonging  to  said  railroad  or  system 
in  any  way  that  may  benefit  said  company  with  which  the  Brother- 
liood  of  Locomotive  Engineers  are  at  issue,  until  the  grievances  or 
issues  or  differences  of  any  nature  or  kind  have  been  amicably  set- 
tled/*—is  plainly  a  rule  or  agreement  in  restraint  of  trade  or  c(Mn- 
merce,  and  violative  of  section  1  of  the  act  of  congress  of  July  2, 
1890. 

Same — Conspibacy— Rev.  St.  §  5440. — Construing  several  clauses  of 
the  interstate  commerce  law  recited  in  the  opinion  with  section  5440 
of  the  Revised  Statutes,  it  follows  that  a  combination  of  persons, 
without  regard  to  their  occupation,  which  will  have  the  effect  to 
defeat  the  provisions  of  the  interstate  commerce  law,  inhibiting  dis- 
criminations in  the  transportation  of  freight  and  passengers,  and 
further  to  restrain  the  ti-ade  or  commerce  of  the  country,  will  be 
obnoxious  to  the  penalties  therein  prescribed. 

Same— Receivebs — Advice  of  Court. — In  this  case,  the  movants  hav- 
ing avowed  their  purpose,  in  open  court,  to  submit  to  the  construc- 
tion to  be  made  by  the  court  relating  to  rule  12  of  the  brotherhood, 
the  receiver  is  directed  to  enter  into  an  appropriate  contract  with 
them,  subject  to  the  general  operation  of  this  decision  with  refer- 
ence to  said  rule. 

(Syllabus  by  the  Court.) 

In  Equity.  Petition  by  Waterhoiise  and  others,  styling 
themselves  the  "  Committee  of  Adjustment  of  the  Brother- 
hood of  Locomotive  Engineers,"  against  H.  M.  Comer,  re- 
ceiver of  the  Central  Railroad  &  Banking  Company  of  Geor- 
gia, asking  that  the  receiver  be  directed  to  make  a  contract 
with  the  locomotive  engineers.    Granted. 

E.  W.  Patterson^  for  the  motion. 

Lmrfon  c^  Cunninghom  and  Marion  Erivin,  opposed. 

Speer,  District  Judge. 

Cases  are  frequent  where  persons  intrusted  with  corporate 
properties  have  applied  to  the  courts  for  the  prevention  or 
redress  of  grievances  threatened  or  inflicted  by  labor  organi- 
zations. This  is  the  first  instance  of  which  we  have  any  in- 
formation where  members  of  such  an  association  have  by  con- 
certed action,  in  an  orderly  way,  sought  the  arbitrament  of 
a  court  to  adjust  a  controversy  relative  to  the  wages  and  con- 
ditions of  their  employment.  The  recent  application  to  this 
court  of  the  Order  of  Eailway  Telegraphers,  with  similar 


WATERHOUSE   V,  COMER. 


121 


Opinion  of  the  Court, 
purpose,  was  an  attempt  of  this  character.    It  was  defeated 
in  limine.    The  telegraphers,  as  a  body,  had  abandoned  the 
service  of  the  receiver  before  they  presented  their  petition. 
In  the  mean  time,  other  telegraphers,  with  equal  [151]  right 
to  employment  by  the  receiver,  had  been  engaged,  and  were 
performing  the  functions  the  striking  telegraphers  had  sur- 
rendered, and,  notwithstanding  the  solicitude  of  the  court  to 
spare  a  large  number  of  intelligent  young  men  the  distress 
resulting  from  their  indiscreet  action,  it  was  found  to  be 
impracticable.     The  members  of  the  Brotherhood  of  Loco- 
motive Engineers,  who  have  presented  this  petition,  have  a 
proper  standing  in  court.     There  are  250  locomotive  engi- 
neers m  the  employment  of  the  receiver,  upon  the  various  di- 
visions of  the  Central  Railroad  &  Banking  Companv  of 
Georgia.    Of  these  211  are  members  of  the  Brotherhood  of 
Locomotive  Engineers,  and  the  petitioners  are  a  committee 
from  that  membership.     They  recite  in  their  petition  the 
facts  that  they  have  been  for  several  years  working  under 
contracts  made  between  a  general  committee  of  the  brother- 
hood and  the  officers  of  the  railroad.     Since  the  1st  dav  of 
December,  1891,  they  have  been  working  under  the  contract, 
of  which  they  attach  a  copy,  and  since  that  time  the  proper- 
ties have  been  intrusted  to  the  control  of  Hugh  M.  Comer  as 
the  receiver  of  the  court.    This  contract  expired  on  the  \st 
day  of  December,  1892.    A  few  days  prior  to  that  time  thev 
gave  notice  to  George  D.  Wadley,  general  superintendent  of 
he  company,  that  they  desired  certain  changes  in  the  con- 

Irv  ^JTi.  '  ^""^^''  '^"^  '^'y  ^^^^  r^«^^i^^^^  i"  the 
service  of  the  company,  although  the  superintendent  and 

receiver  refused  to  enter  into  any  new  contract  or  consider 
the  old  contract  longer  in  force,  unless  ordered  so  to  do  by 
the  court.  ^ 

Pending  the  adjustment  of  the  controversy,  which  was 
postponed    or  00  days  by  virtue  of  a  clause  in'   he  contrlct 
wh.ch  e.mt  ed  the  receiver  to  notice  for  that  period, td  5 

conrrLJintr'  ^'^  '^"^'*'  ''''  '^''^  "^^  -"^--'^  '^^ 
der  tr  tllr  ''"''"*  """'"u  ^""f*'^""'^  between  the  i^- 
agreement  might  follow.    This  expectation  has   been  de- 


12^ 


• 


56  FEDERAL   EBPORTER,   151. 


Opinion  of  the  Court, 
feated  by  a  strike  on  the  Savannah,  Americus  &  Montgomery 
Eailroad,  the  refusal  of  one  of  the  engineers  to  haul  a  train 
to  which  a  car  of  that  company  was  attached,  his  immediate 
discharge,  and  the  friction  between  the  receiver  and  the  en- 
gineers which  resulted  therefrom.     The  engineers  then  ap- 
plied to  the  court.    They  set  forth  the  objects  of  their  order, 
the  advantages  of  a  contract  with  their  employers,  and  that 
such  contracts  are  of  force  upon  a  very  large  proportion  of 
the  principal   railroads  of  the  country.    Thev   state  that 
since  it  has  been  shown  to  them  that  the  proi>erties  in  the 
hands  of  the  receiver  are  embarrassed  financially,  they  are 
content  to  work  in  his  service  without  anv  increa4  of  wages, 
although  they  insist  that  the  rate  is  less  than  that  paid'^by 
competing  and  connecting  lines,  and  they  pray  that  the  re- 
ceiver be  directed  to  continue  in  force  the  c()ntract  under 
which  they  were  working  at  the  time  the  receiver  was  ap- 
pointed, subject  to  such  modifications  and  changes  as  may  be 
made  by  the  order  of  the  court.    They  annex  a  copy  of  this 
contract. 

The  recei^'er  answers  i'  First.  That  the  Grand  National 
Brotherhood  of  locomotive  Engineers  is  not  incori)orated, 
and  that  many  of  its  rules  and  regulations,  which  have  a 
bearing  upon  any  con-  [153|  tract  its  members  might  make, 
are  witliheld  from  the  public.     This  places  him  at  a  disad- 
vantage, and  renders  nncertain  the  attitude  of  the  brother- 
hood in  any  difficulty  which  might  arise  in  connection  with 
the   contract.     Second.  That   a    number   of   the   locomotive 
engineers  onij)loyed  by  him  are  not  membei-s  of  the  brother- 
hood, and  tliat  it  is  not  proper  for  him  to  contract  in  this 
way  with  certain  employes,  while  others  are  employed  with- 
out sudi  a  contract.     Third.  That  such  a  contract  renders 
it  impossible  for  the  officers  charged  with  the  operation  of 
the  property  to  have  such  freedom  in  its  administration  as 
IS  necessary  to  its  prompt  and  efficient  management.     Fourth, 
As  a  common  carrier,  the  railroad  under  his  control  is  liable 
for  damages  whicli  may  result  from  the  disorganization  of 
Its  service.     That   the   Brotherhood   of   Locomotive   Engi- 
neers is  bound  by  secret  obligations  to  withdraw  from  the 
service  of  railroad  companies  in  a  body,  causing  great  dam- 
age.    Fifth.  That  he  should  be  at  fufl  liberty  to  select  the 


WATERHOUSE   V,  COMER.  123 

Opinion  of  the  Court, 
best  men  and  means  of  managing  the  business,  without  i-e- 
gard  to  organizations  of  any  kind.    That  his  superintend- 

fo    Z  ^"""T    '  rr  '*^*^"'^  °*  ^'"g*^  ''"d  Editions 
foi   the  employment  of  engineers  and  firemen,  a   copy  of 

which  IS  attached.    Sixth.  If  he  should  contract  with"  the 

brotherhood,  it  would  be  holding  out  a  premium  for  his  em 

p%es  to  become  members  of  that  order,  which  respondent 

states  IS  not  to  the  interest  of  his  trust.     That  the  Cher 

hocK,  render,,  it  impossible  for  the  officei-s  of  the  r  iSl 

S  ce  Vh",f""""/'  -  necssary  to  good  and  efficient 
ZT  A  "°  ''°"*'''"'*'  ^""^^  ^««»  '■"te'-«d  into  with  the 
Order  of  Ka.lway  Conductors  and  the  Brotherhood  of  Lo 
comofve  Kiremen,  and  that  he  has  had  no  difficulty  wid. 
the  conductors  and  firemen.  He  denies  that  it  is  ^  ual  anS 
custo„,ary  for  railroad  companies  of  the  United  State«  to 

It  will  be  observed  that  much  of  the  receiver's  «..«»•».  ; 
an  argument  against  the  propriety  and  policv  of  c^uJ- ct! 
o    any  character  between  the  officers  of  ra\lwaj  corZ  io. 
and    he  representatives  of  labor  or<ranizations     ™, ''*'"*'°"=' 
and  impo.tance  of  the  consider-itin^,?  f  ^™''*y 

cewliiifflv  or,-p.,f      T,      *'0"'''7'^'«t'°»s  thus  presented  are  ex- 

the    o£  s   „f  ;    T     'T""^-  ""'^*'"  '"'y  «rcumsta„ces.  bv 
ine  comts.  of  contracts  between  representative    nf  t\. 
niense    va  ues  inves/a,!    =.;*i  t"«^eni,.nve,  of  the  im- 

dangerous      It  f  '' "  Z'""''*'''*  «PP«ar  to  many  as  novel  and 
uniigerous.     It  n  well,  however,  to  c«nsi,lo..  ;* 

vision,  by  appeal  to  the  courts  in  f^pX  .    '"""J'"'"  P^"" 

tive  conflicts  Ltwe.„  ogSd  caphau3"'  ""'  ^'^- 
will  not  afford  the  si.nnlll         'fP'*'^'/"^  organized  labor 

■nethod  for  the  ett  emS  %  l'"'''*"'^*"''-^  «»''  ^ff''<tive 
the  only  meth'oS  by  "S  ^e^^^t  TrT!.^-  '^  ''  ^^ 
thems..lves,  can  bl  protected  fLm  'the  '  '"^f^l  """  P*"^'*" 
and  loss  which  all  mLt  ZT  /  ,  inevitable  hardship 
strikes  ?  •"*  '"''"'■"  ^'-o'"  tbe  frequently  recurring 

-  relations  of  \;-:;  ^  " -£  ^^^  -ng«in 


56  FEDEBAL  KEPOBTEB,  163. 
Opinion  of  tlie  Court. 

occasioned  by  the  phe-  [153]  nomenal  development  of  com- 
merce and  the  prevalence  of  labor  organizations.    We  are 
in   this   case   directly   concerned   with   a   corporation   and 
a  labor  organization,  and  both  engaged  in  railway  trans- 
portation ;  and  in  this  department  of  industry  it  is  reported 
by  the  interstate  commerce  commission  that  there  is  invested, 
in  the  United  States  $9,829,475,015,  or  nearly  eight  times 
the  entire  national  debt  of  the  country.    Last  year  the  rail- 
roads transported  530,000,000  passengers,  or  more  than  eight 
times  the  entire  population  of  the  United  States.    The  oper- 
atives employed  by  them  number  784,000,  and  it  is  no  trifling 
testimony  to  the  faithfulness  and  efficiency  of  this  mighty 
army  of  railroad  employes  that  of  the  vast  population  trans- 
ported under  their  care  only  293,  or  less  than  one  twenty- 
thousandth  of  1  per  cent,  lost  their  lives.    It  is,  moreover, 
true  that  no  operatives  of  a  railroad  more  than  locomotive 
engineer  are  charged  with  the  preservation  of  life  and  prop- 
erty, and  when  we  are  advised  by  the  proof  that  32,000  of 
the  locomotive  engineers  of  the  United  States,  more  than 
80  per  cent.,  belong  to  the  brotherhood,  it  is  difficult  to 
believe  that  their  membership  lessens  efficiency  to  employers 
or  fidelity  to  their  supreme  duty  to  the  public.    But  whether 
these  facts  and  other  facts  equally  significant  will  justify 
judicial  control  of  contracts  essential  to  the  uninterrupted 
transportation  of  the  country,  in  which  the  public  is  so 
vitally  concerned,  it  is  clear  that  where  the  property  of 
railway  or  other  corporations  is  being  administered  by  a  re- 
ceiver, under  the  superintending  power  of  a  court  of  equity, 
it  is  competent  for  a  court  to  adjust  difficulties  between  the 
receiver  and  his  employes,  which,  in  the  absence  of  such  ad- 
justment, would  tend  to  injure  the  property  and  to  defeat 
the  purpose  of  the  receivership.    Indeed,  the  power  of  the 
court  to  direct  a  contract  between  its  officers  does  not  appear 
to  be  questioned.    The  power  of  the  court  has  always,  on 
proper  occasions,  been  exercised  to  protect  the  properties 
from  the  damaging  and  unlawful  results  of  a  strike  of 
the  laborers  in  its  employ. 
In  the  case  of  The  TeUgraphera  v.  Comer ^^  (decided  at 

*Not  reported,  as  the  present  case  is  controlling  on  the  questlonsln 
issue. 


WATEBHOUSE   V.  COMEB.  125 

Opinion  of  the  Court 

the  receiver  I„d  rules  w'^^'  T"'*'""^'  "'^  «'»P'«y««  «' 
were  char^'d  with   "  rfVT'''  "«'''"^'  '"dividual;  uho 

Ho..ra£eS.;  t^^^^^;^'^  "^  ^^^  -uit.  the 

ert7L'ir^-,™„'«Jf «  wljoe.^^^  interferes  with  p,^,.  ' 

and   I   regard   It  as  equal^    1 1    «Si«L  '*?  contempt  of  that  court. 
Interferes  with  oiiieers  and  aeenlrnfltl^   that   whoever   unlawfuHv 

court,  IS  guilty  of  a  contemot  of  r^»if  ^?^'  *°  *^®  custody  of  the 
this  unlawful  interfereu^  comes  Tnth^^  '*  ^^  ^^inaterial  whether 
by  intimidation  and  threats  ThP  in.^,^  ^^""^  ^^  ^^^ual  violence  or 
pro  hac  vice  offioPr««  )^  tH         7^  employes  of  the  receivpr    aiil;       I 

aoiy  and  decently.     Where  th<.„  \^^-^ '  ""'  ^^^^  niust  onit  nen^.. 
or  without  notice,  wiVh  the  r  1/41  „hw    *"!?  """«»"■«  toTnul^S 

^^rtamly,  it  follows,  then    tliof  ;f  •     •      . 
court,  in  the  interest  o    Sic  tl"  !  If  Z**^  T"^^  «*  ^^e 
of  the  property  under  its  contrli  .    ^'    ^  ^'"'  ^^^  Protection 

ment  with'its'en.pt  f  oroffieerf  tT  ^7'''''''  ™^- 
and  conditions  of  their  emplovmTni       ??      '  compensation 
an  interruption  of  theinfcnrl '7.   *^  T'^'  ^^  P^^^ible, 
astrous  to  the  trust  and  inwLs  fo"^?^'  1^'^  "'"  ^  ^is- 
rea.son  why  the  receiver^J" "  "^u"^  '^"^  P""'«-    There  is  no 
ducted  in  a  manner  d.fferW  L     . J^'^ *'  ^'"""^  be  con-  ' 
of  the  successful  and  pSr^r™^'  ^'^^  Preponderance 
It  appears  from  the  prtjf  tw  I  TIT^'  "^  ^^^  '^""fy. 
roads  of  the  United  States  ll"   ?  ^''  *=^"*-  "^  ^^e  rail- 
rates  and  regulations  for  he  1  ?  '°"*'""'=*^  "'^  ^«'>«dules  of 
^vhich  are  ajreed  to  hv  ti?   """P'^y^^nt  of  their  operatives 
We  are  s.S H^'t^^TTf'^'  "*  both'partS: 
under  proper  restrictls  are  W       '*  f  ""^  arrangements, 
Joth  parties,  and  we  therefore  27"' /^  ''"'  ^-^-J  *« 
d>rect  the  i^ceiver  to  entefwo  tn      "      '°"^''''  ^""''^'^  *« 
-bedule  of  rates  and  regTirns^rt^f^-;--^^^ 


55  FEDERAL  REPORTER,   154. 
Opinion  of  the  Court. 

contract,  however,  will  not  be  restricted  to  members  of  the 
Brotherhood  of  Ijocomotive  Engineers,  although  membership 
of  that  order  is  and  will  be  no  disqualification  to  service  on 
railroads  under  the  control  of  this  court  so  long  as  the  rules 
and  regulations  of  the  order  are  treated  as  subordinate  to 
the  law  of  the  land.  The  contract  will  comprehend  all  engi- 
neers employed  by  the  receiver,  whether  members  or  non- 
*  members  of  the  brotherhood. 

This  brings  us  to  the  consideration — First,  what  is  an  ap- 
propriate contract :  and,  second,  whether  there  is  anything  in 
the  rules  and  regulations  of  the  brotherhood  and  its  relations 
to  these  properties  which  is  inconsistent  with  the  law,  and 
which  would  make  it  improper  for  the  court  to  place  its  re- 
ceiver in  a  position  where,  in  his  exigent  duty  to  carry  on  the 
business  of  transportation,  for  which  the  railroad  was  char- 
tered by  the  state,  he  may  find  himself  in  the  power  of  an 
organized  body  of  his  operatives  who  will  be  able  to  paralyze 
the  operations  of  the  properties.  The  appropriateness  of  the 
contract  depends  solely  upon  the  arrangement  of  details. 
There  is  no  difference  between  the  engineers  and  the  receiver 
upon  the  question  of  compensation.  There  is  an  apparent 
dispute  about  the  effect  of  seniority  of  service  of  an  engineer 
as  affecting  promotion.  The  court  will  provide,  however, 
that,  where  merit  and  ability  are  equal,  seniority  of  service 
shall  prevail,  and  will  arrange  a  fair  tribunal  for  the  purpose 
of  testing  the  merit  and  ability  of  various  candidates  for  pro- 
motion, w4th  the  privilege  of  either  party  in  cases  not  recon- 
cilable to  appeal  to  the  court.  There  are  other  instances  of 
minor  disagreement  which  the  court  will  take  time  to  adjust 
and  to  perfect  the  agreement. 

-We  have  noted  with  gratification  the  repeated  statements 
made  in  judicio  by  the  engineers  and  their  counsel  that  they 
wDl  accept  [155]  as  final  and  satisfactory  of  every  difference 
the  conclusion  and  decision  of  the  court.  The  receiver  has 
also  expressed  more  than  once  his  purpose  to  abide  the  deci- 
sion. This  submission,  so  unlike  the  violent  and  irrational 
course  pursued  by  either  party,  as  their  interests  might 
prompt,  and  without  the  slightest  regard  to  the  rights  of  the 
public,  in  many  conflicts  between  what  are  popularly  called 
"  capital  and  labor,*'  is  considerate,  judicious,  and  strongly 


WATERHOUSE    V.  COMER.  ^^1 

Opinion  of  the  Court 

constituted  a„th;r£ro;  tLi  "^1  't  ?" ''^  '"  '""^ 
be  for  our  country  if  future  differTis^f  .  T\  ^''"  '* 
may  be  settled  bv  a  metbn,7  ".'"*■'  "*  «  similar  character 

mission  of  the  ^linTt,^:T::u.  Z  ''''■  ■'^'^'^  -«>- 
most  important  difference  Cl  fu  ^^^  remaining  and 
the  effect  upon  the  d^ To  ^^oT  l^T"^^^  "'"^  ^^at  is 
the  rule  of  the  brothe^Ld  which"  '!f  *°  ''''  ^''^''y  »* 
to  be  as  follows :  '  ^'"^  ''  ""derstood  by  the  court 

motive  EngS/ni*"  ?'"'""'y  «'»"  wblohThe  n  "thi^i"  ?  '"^  '"^^ 

A.  B.  Youngson,  the  asskttn.    f    *    "  *"'  t««timonv,  Mr. 
mitted  thaTSe  Effect  ^    tt lie'      '""^T^^  ^^""^'^  -^- 
ert.es  in  the  hands  of  the  reLl"'  ''/PP''^<J  to  the  prop- 
employ,  would  be  as  follows    iT  inl J'''  '''^''''''  '"  ^- 
business  of  a  common  carrier    with      Z  P'"^"«»<*  of  the 
charged,  it  should  become  X;sa'.         "^  *^"  ""^'^'^  '^ 
of  the  Central  Railroad  a  cITS  '"  ""^^^^  °^«'-  the  lines 
Pany  on  which  there  was  a TtrS  ?!2!  *°  "  ''""^"'•d  ^om- 
would  be  the  duty  of  the  brott?^     f  ***"  ""^"««'^'  that  it 
the  receiver  to  refuse  to  haS^r^""^  •"««  '"  ^he  employ  of 

and  if  the  officers  of  thl  rid  iS'Jh  ^T'"'"^  ™*  -r!. 
•fd;  loyalty  to  the  brothTrhZ  ^*  ^^^  "^^  ^^^ould  pro- 

«hovdd  at  once  resign  hTs  stadrn  ""TT^  '^""^  '•»«  «"gineer 
•"•ght,  he  stated,  «  he  thoSt'  n"'  '''"'""  '^'^  ^^'y  He 
the  terminal  point.  ^  *  ^'^P^'"'  carry  the  train  to 

-iv^rs.:^s:  tzz  f  r  ^  ^^  ^^-^^  ^y  ^^^ 

Ameneus  &  Montgomery  SSd'^l-'?  ""  '^'  Savannah, 
JHh  a„,  i,  ^^.J^^  ^  y  Ka^road  which  runs  in  com.ection 

Brotherhood  of  Locomotive  ESters^f"^'"  ^'^en  of  the 

gineers,  m  the  employ  of  the 


I 


128 


56  FEDERAL   REPORTER,   155. 


Opinion  of  the  Court. 

receiver,  was  directed  to  carry  a  car  of  the  Savannah,  Amer- 
icus  &  Montgomery  road  between  two  stations  on  the  Central 
Eailroad.  He  declined  to  do  so,  and  was  at  once  discharged. 
A  committee  of  the  brotherhood  have  insisted  on  his  rein- 
statement. This  the  receiver  has  refused,  and  it  is  certain 
that  but  for  the  pendency  of  the  proceedings  now  under 
consideration  by  the  court,  there  would  be,  as  a  result  of  En- 
gineer Arden's  construction  of  his  duty,  and  the  receiver's 
action,  a  strike  of  the  [156]  engineers  upon  every  line 
of  the  Central,  with  all  the  calamitous  results  to  the  public, 
to  the  road,  and  to  the  engineers  which  would  inevitably 
ensue.  The  receiver  relies  upon  this  as  (he  main  and  con- 
trolling reason  why  he  should  not  be  required  to  enter  into  a 
contract  with  the  brotherhood,  when  this  rule  12  will  neces- 
sarily be  written  into  the  contract.  Now,  there  can  be  not  a 
doubt  that  this  rule  of  the  brotherhood  is  in  direct  and  posi- 
tive violation  of  the  laws  of  the  land,  and  no  court,  state  or 
federal,  could  hesitate  for  a  moment  so  to  declare  it. 

It  is  plainly  a  nde  or  agreement  in  restraint  of  trade  or 
commerce.  Section  1  of  the  act  of  July  2, 1890,  known  as  the 
'•  Sherman  Anti-Trust  I^aw,"  provides : 

"  Every  contract,  corabinatlon  in  the  form  of  trust  or  otherwise,  or 
conspiracy  in  restraint  of  trade  or  commerce  among  the  several  states, 
or  with  foreign  nations,  is  hereby  declared  to  be  illegal.  Every  person 
who  shall  make  any  such  c<»ntract  or  engage  in  any  such  combination 
or  conspiracy  shall  be  deemed  guilty  of  a  misdemeanor,  and,  on  con- 
viction thereof,  shall  be  punished  by  a  fine  not  exceeding  $5,000,  or  by 
Imprisonment  not  exceeding  one  year,  or  by  both  such  punishments,  in 
the  discretion  of  the  court." 

Section  7  of  the  act  of  February  4,  1887,  entitled  "An  act 
to  regulate  commerce,"  provides — 

"  That  it  shall  be  unlawful  for  any  common  carrier,  subject  to  the 
provisions  of  this  act,  to  enter  into  any  combination,  contract,  or  agree- 
ment, expressed  or  implied,  to  prevent,  by  change  of  time  schedule,  car- 
riage in  different  cars,  or  by  other  means  or  devices,  the  carriage  of 
freights  from  being  continuous  from  the  place  of  shipment  to  the 
place  of  destination;  and  no  break  of  bulk,  stoppage,  or  interrup- 
tion made  by  such  common  carrier  shall  prevent  the  carriage  of 
freights  from  being,  and  being  treated  as,  one  continuous  carriage 
from  the  place  of  shipment  to  the  place  of  destination,  unless  such 
break,  stoppage,  or  interruption  was  made  In  good  faith  for  some  nec- 
essary purpose,  and  without  any  intent  to  avoid  or  unnecessarily 
Interrupt  such  continuous  carriage,  or  to  evade  any  of  the  provisions 
of  this  act." 


WATEBHOUSB   V.  COMER. 
Opinion  of  the  Court. 
Section  8  of  the  same  provides^ 


129 


act  s™1f  '£>:!ZTl  T,Z!  ^"^^"j^  ♦»  t-«  P-visions  „,  this 
thing  m  this  act  prohibited  or  SeehZ  tn  ^^T  """^  «'^'-  matter  or 
to  do  any  act,  matter,  or  thing  in  tht^  w^  "niawful,  or  shall  omit 

J?™"°V?r'^''"''«"  be  liable  to  the  mrson^  to  be  done,  sS 

for  the  full  amount  of  damages  snVfJtS^"  '^  Persons  injured  therebv 
violation  of  the  provision  of  thi^.^f'*"'  «>"^equence  of  an"  such 
counsel  or  attorneV's  teetl  hi  «    ^  ^"^^  together  with  a  reason?M» 

"Sec  3  (n)  TT  H  '  '  P^^^^^es: 

common  cnvHerl^X^J^^^^  ''  «^«"  ^'^  unlawful  for  anv 

any  imdue  or  unreasonable  vrlZZT''''^  ^i  *^^«  ^^^^^^  to  make  or  give 

.^SSnTfTSe  fn"a"nS    Hi  '^^^^^^^^  ^^^^ 

^sf So7a-to«S3" --»^^^ 

Shall,    according   to   their   re^^pet^^i.L*''  ^^^  Provisions  of  this?  act 
"  Sf»p    ^n   r»^     ix.  ^".^«i»ea  in  like  busl- 

suSfer  or  per  Ht  n,./^"'!""'^  *"  ^  lone   o™^'„J«  <>«  "°.v  act,  matter. 

demeanor    and   .T.'^M  "^^  "'e-'ein.  shal?  be  aJ^uL  ""^^^^^^  of  thl^ 
Of  the  VnlZ^^tl^h  "'?!'"  w-nvlction  thereof'  f*l5""t^  of  «  mis- 


U808— VOL  1—06  M— 


-9 


130 


56  FEDERAL  REPORTER,   157. 


Opinion  of  the  Court. 

The  laATs  of  the  United  States  (section  5440  of  the  Revised 
Statutes)  provide: 

"  If  two  or  more  persons  conspire  either  to  commit  any  offense 
against  the  United  States  or  to  defraud  the  United  States  in  any 
manner  or  for  anv  jmrpose,  and  one  or  more  of  such  parties  do  any 
act  to  effect  t lie  object  of  conspiracy,  all  the  parties  to  such  con- 
spiracy shall  be  liable  to  a  penalty  of  not  lesss  than  one  thousand 
dollar:?,  and  not  more  than  ten  thousand  dollars,  and  to  imprisonment 
not  more  than  two  years." 

Construing  these  several  enactments  together,  it  will  be 
seen  that  a  combination  of  persons,  without  regard  to  their 
occupation,  which  will  have  the  effect  to  defeat  the  provisions 
of  the  interstate  commerce  law  inhibiting  discriminations 
in  the  transportation  of  freight  and  passengers,  and  further 
to  restrain  the  trade  and  commerce  of  the  country,  will  be 
obnoxious  to  severe  penalties.  This  will  apply  with  even 
greater  force  to  persons  in  the  employ  of  the  railroads  con- 
cerned. 

Now,  it  is  true  that  in  any  conceivable  strike  upon  the 
transportation  lines  of  this  country,  whether  main  lines  or 
branch  roads,  there  will  be  interference  with  and  restraint 
of  intei-state  or  foreign  commerce.    This  will  be  true  also 
of  strikes  upon  telegraph  lines,  for  the  exchange  of  tele- 
graphic messages  between  people  of  different  states  in  in- 
terstate commerce.    In  the  presence  of  these  statutes,  which 
we  have  recited,  and  in  view  of  the  intimate  interchange  of 
commodities  between  people  of  several  states  of  the  Union, 
it  Avill  be  practically  impossible  hereafter  for  a  body  of 
men  to  combine  to  hinder  and  delay  the  work  of  the  trans- 
portation company  without  becoming  amenable  to  the  pro- 
visions of  these  statutes.    And  a  combination  or  agreement 
of  railroad  officials  or  other  representative  of  capital,  with 
the  same  effect,  will  be  equally  under  the  ban  of  the  penal 
statutes.    It  follows,  therefore,  that  a  strike,  or  "  boycott," 
as  it  is  popularly  called,  if  it  was  ever  effective,  can  be  so 
[158]  no  longer.    Organized  labor,  when  injustice  has  been 
done  or  threatened  to  its  membership,  will  find  its  useful 
and  valuable  mission  in  presenting  to  the  courts  of  the 
country  a  strong  and  resolute  protest  and  a  petition  for 
redress   against   unlawful   trusts   and   combinations   which 
would  do  unlawful  wrong  to  it.    Its  membership  need  not 


131 


WATERHOUSE  V.  COMER. 
'  Opinion  of  the  C!ourt 

doubt  that  their  counsel  will  K.  i,       / 
exact  justice  will  be  adminLred  !h^'  """"  '^"^  ^^^^^^  ^^^ 
jurisdiction.    It  will  fXw  1^     7  '''''^^''  ^^^^  ^«"^ts  have 
troversies  it  will  be    om^^t^^"^^^^^^^  *'^V^  ^'^  -^h  con 
for  the  courts  to  prese/ve  tie  riZsZ\t'''^  ^^  '"^^  --' 
spare  them  hardship,  and  at  th.  *^^  operatives,  to 

public  the  unmerited  uJl^^T: ':r  '^  '^^'^  '-'^- 
such  conflicts  in  the  past  jf  wn  k  "^  ^"'  ^"^^^^^  ^om 
such  methods  organ  zeTlabo/ will  h'  '''^  '^""^  ^^^^  ^^ 

antagonism  it  now  encounters  an^       !  '^'"'^  "^"^^  ^^  ^^^ 
?t  will  have  the  sympaS^y  of  X^^^^^^^^       T'^'  ^o  the  courts 

^t  has  their  opposition.  a/dltT^t '  "'^"'  ^^  ''^  ^'^^^^ 

■»^ut,  It  there  were  nn  cfof,,^ 
Ject,  no  court  of  equi";  could  •fsr^K^"*'^  "?"'*"-  «ub- 
to  enter  into  a  contract'^with  «  bodv  f  ^  ^''^'  '''  '"^^i^er 
selves  bound  to  repudiate  their  f  """"  ''^"^  ^^^'^  them- 
grave  public  dut/because  of  reaT:"'',.^"'  '"^^^-'^  « 
^h'ch  some  other  person  or  corno '  .i  ^^      grievances, 

contract,  inflicts  or  is  alleL  S  ,'  ""'  "  P^''^'  *»  *!»« 

Z:TT\^'''  upon  soSbod;  e£'  T  "^'''^  ^  ^'^'y  ^ 
ceiver  to  do  this  would  be  mnncf     ^^^-    ^o  compel  the  re- 

-1^0%  just,  consideratlhumrnf r    '^'^^.  '^'^^^  -ay  be 
engmeers  in  his  employ,    ^hey' mav '''v.'"''"'^^"''  *°  ^^^^ 
h'm  not  only  as  their  kindly  eL?^^'  T'*  '"'''^"n'  regard 
The  people  of  Georgia  "„v  T^^''^^'''  ^"'  ««  '^eir  friend 
"eeded  evidence  of  fy^^y  X,^''"'"^^"^  *<>  ^hem  eT^ry 
ample;  their  future  as  Eht'  <=''°»P«nsatio„  may  b^ 

energetic,  and  courag^us  mthr/'^'''''^  fo'"  intelligent 
difficulty  with  or  wifhou  caui  ,11^ ^^^*'  ^«ause  of  1' 
or  Minnesota,  they  will  abanSrthA^^  .*'"«'°«t««  in  Maine 

ticpations,  and  bring  dismav  «n^   f     *""  ''^"  ''"Peful  an- 
^">%  and   sympathetirSpra'^^^^' l^  ™in,  upon  the 
This  IS  almost  the  inevUaWel         ""^   '^^""^   they   live 
's  m  evidence,  and  is  ^aj !  T'^"''"^  ot  this  rule,    ft 

n-ssity.    The  i^tetrof^Ttbll    ^'J  ^^  »  ^^-'"^e 

'  ''"P  '^^  --^Pid  transit  demand  "     Th'  *^  ^''^^'^ 

inandit.    There  are  1.200,000 


132 


55  FEDERAL  REPORTER,   153. 
Opinion  of  tlie  Court. 


1 
II 


cars  upon  the  railroads  of  the  United  States.  There  are 
168,400  miles  of  railroad,  or  more  than  seven  cars  per  mile. 
The  Central  Eailroad,  according  to  the  recent  report  of 
the  superintendent,  has  less  than  two  cars  per  mile.  It  is 
therefore  indispensable  that  it  should  use  the  cars  of  other 
lines ;  but,  if  it  were  otherwise,  it  would  be  impossible,  under 
the  present  system,  to  deny  to  the  cars  and  freight  of  other 
lines  transit  over  the  lines  of  the  Central  without  violation 
of  the  law.  The  receiver  cannot  violate  the  law,  and  the  en- 
gineers cannot  compel  him  to  do  so  without  themselves  be- 
coming obnoxious  to  the  criminal  statutes.  And  the  court 
[159]  does  not  doubt,  from  their  bearing  and  testimony  in 
the  case;  that  they  only  need  to  be  advised  of  these  facts, 
when  thev  will  immediately  recede  from  the  unlawful  and 
most  dangerous  attitude  in  which  this  rule  has  placed  them. 
It  is,  indeed,  a  rule  which,  more  than  all  othei*s,  has  given 
strength  and  comfort  to  the  enemies  of  organized  labor. 

It  is  true,  however,  that  the  learned  counsel  for  the  peti- 
tioners, when  his  attention  had  been  called  by  the  court  to 
the  insuperable  difficulty  in  the  way  of  a  mutually  beneficial 
contract  presented  by  this  rule,  while  insisting  that  it  ought 
not  to  stand  in  the  w^ay  of  a  contract,  hastened  to  aflford  ad- 
ditional evidence  of  the  good  faith  of  his  clients,  by  stating 
unreservedly  that  upon  this,  as  upon  all  subjects,  they  were 
willing  and  anxious  to  take  the  direction  of  the  court.  This 
declaration  is  authoritative,  and  the  court  will  act  upon  it. 
It  is  binding  upon  the  engineers  of  the  brotherhood,  who 
are  officers  of  the  receiver,  and  who  w^ere  represented  by  the 
committee  and  their  assistant  chief  engineer,  Mr.  Youngson, 
all  of  whom  were  in  the  presence  of  the  court  when  it  was 
made.  It  is  accepted  as  made  in  good  faith,  and  as  a  condi- 
tion of  the  contract  which  the  court  will  direct  the  receiver 
to  make.  While,  therefore,  any  engineer  may,  at  any  time, 
exercise  his  right  as  an  individual  to  leave  the  services  of 
the  receiver,  he  may  not  do  so  in  such  manner  as  to  injure 
the  properties  or  impede  its  proper  management. 

In  case  of  any  issue  with  the  management  in  which  the 
brotherhood  or  its  members  are  concerned,  and  the  members 
in  the  employ  of  the  receiver  shall  desire  to  leave  his  services, 
in  a  body  or  otherwise,  in  such  manner  as  may  in  any  way 


UNITED  STATES   V,  PATTERSON.  ^^ 

Syllabus, 
impede  the  operations  of  the  road,  they  will  be  m,uir^  ,„ 
do  so  upon  such  terms  and  conditions  as  toThl.!    ^^^^  to 
proper  for  the  protection  of  the  nSnf  th.         "*?  "^"^ 
the  maintenance  of  justice  and  iZl^  T^''^^^'  ^""^ 

In  the  mean  time  th^  0^.2^^.^.^^^^'''^ 
ways  under  the  general  operation  of  thil  dell"  i^h     V 
ence  to  rule  12  of  the  brotherhood,  unti  the  ir^  1^1'"'"" 
contract  are  definitely  settled  by  the    ourt^^d  it  ^^mT 
specially  directed  that  no  engineer  \rliL  "  ^ 

employ  of  the  Central  RailroaS  Z  f  I  ^T°  "  '^" 
way  injured  in  his  station  on  accot  L  of  f  ^^^^  "^J '"  ""^^ 
any  step  taken  in  regard  to  l:^^^^ ^'2'^^^'^  "' 

[605]  UNITED  STATES  ..  PATTEESON  ET  AL.- 

(Circuit  Court.  D.  Ma^achusetts.    February  28.  1893.) 

[55  Fed..  605.] 

1890.  c.  64T.  declares  .^^^?.tl~t"  J"^^  ""'  ^^-^^  ^J.  S. 
«n  restraint  of  tade,  and  maresTf  m>T    °'"°°''  "'  «'°«P'racle8 
make  or  engage  In    hem  ^  t?  In  ""^f^'"^"''"'-  f<"-  any  person  to 
with  others  to  monoS,  any  p^rt  ofThf  ^  "I  ""*'"''*  "^  «'"«'P'«' 
the  several- states  or  with  forel^  n«t.        ^J"  "'  «"^'«roe  among 
ment  under  this  chapter  It  7^1  TmT\  f ''*  *^'  '°  «"  '°<"^ 
Of  the  statute,  but  the  mLns  whe^t  u  1  °  '"".T  '"  *"«  ^^""^ 
the  market  nrnst  be  set  out  so  as  tt  -  V       °"^"  *"  ■"onopollze 
they  are  Illegal.!.  ^  ""'^  *°  «"«""«  the  court  to  see  that 

Same.-  -Allegations  of  what  was  rtnn«  i„ 
Mracy  are  Irrelevant  In  an  .ndlcta'"  P"'r°'^  °'  =""  ""^^^  <»»- 
Of  no  avail  either  to  enlarge  or  rrvl"lf'',*"  '"•*"'«•  «"«'  «« 
allegations  as  to  the  element  "of  t^Z'  "'«-  »'  ^^^  necessary 
SAME— Scope  of  the  Statute— Tho      ""'"^^• 
used  In  the  act,  are  synonymous  "'t^     *™^*  ""^  oommerce,"  as 
first  section  does  not  eniaree^e^      ,      ""*  "'  '~*''  *«™s  ^  the 
employed  In  the  ^.m^oX  e™ loT  °' «■?*"*"**  "^'-^  '^^ 
trade."  as  they  are  analogous  to  Z'  ,*=°°*^''«  '■>  restraint  of 
the  second  section  of  theart     tI  t  ZT     """'"PoH^e."  used  In 
Of  the  statute,  and  hen^,  an  iZZTl^T'''  '""^  '""'*«'<"> 
-raint  by  engrossing  or  -noSLT  XrthrmX" 

(5rC'S;;rr2:l''~^^  -"-•^  -"  «'—  overrmea 


134 


m  F£0£BAL  BEPOBTEB,  605. 
Statement  of  the  Case. 


135 


I ' 


It  Is  Eot  sufficient  simply  to  allege  a  purpose  to  drive  certain  com- 
petitors out  of  the  field  by  violence,  annoyance.  Intimidation,  or 
otherwlse-o 

Same — ^Acts  of  Violence. — Where  counts  in  such  indictment  allege 
a  purpose  of  engrossing  or  monopolizing  the  entire  trade  in  ques- 
tion, acts  of  violence  and  Intimidation  may  be  alleged  as  the  means 
to  accomplish  the  general  purpose. 

At  Law.  Indictment  in  18  counts  against  John  H.  Patter- 
son and  others  for  violating  the  act  of  July  2,  1890,  entitled 
"An  act  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies,"  (26  St  p.  209,  c.  647.)  Heard 
on  demurrer  to  the  indictment.  Judgment  overruling  the 
demurrer  as  to  counts  4,  9,  14,  and  18,  and  sustaining  it  as 
to  the  others. 

The  sections  of  the  statute  immediately  in  question  here 
are  the  following : 

[606]  "  Section  1.  Every  contract,  c-ouibination  iu  the  form  of  trust 
or  otherwise,  or  conspiracy,  in  restraint  of  trade  or  commerce  among 
the  several  states  or  with  foreign  nations,  is  hereby  declared  to  he 
illegal. 

**  Sec.  2.  Every  person  who  shall  nionoiK)lize,  or  attempt  to  mo- 
nopolize, or  combine  or  conspire  with  any  other  person  or  persons 
to  monopolize,  any  part  of  the  trade  or  coniinerce  among  the  Feveral 
states  or  with  foreign  nations,  shall  be  deemed  guilty  of  a  misde- 
meanor, and,  on  conviction  thereof,  shall  be  punished  by  fine  not 
exceeding  five  thousand  dollars,  or  by  imprisonment  not  exceeding 
one  year,  or  by  both  said  punishments,  In  the  discretion  of  the  court" 

The  first  ten  counts  of  the  indictment  are  for  engaging 
in  a  conspiracy  in  restraint  of  trade  and  commerce  among 
the  several  states  in  violation  of  the  first  section  of  the  act. 
The  last  eight  counts  are  for  a  conspiracy  to  monopolize  a 
part  of  the  trade  and  commerce  among  the  several  states, 
in  violation  of  the  second  section  of  the  act. 

The  first  half  of  each  set  of  counts  allege  the  conspiracy, 
setting  forth  the  means  with  various  degrees  of  particularity, 

«See,  however,  the  case  of  17.  flf.  v.  Workingmen^s  Amalgamated 
Council  of  New  Orleans,  54  Fed.  Rep.  994,  decided  in  the  circuit  court 
for  the  eastern  district  of  Louisiana  by  Judge  Billings,  March  25, 
1893,  In  which  it  was  held  that  the  statute  included  combinations  of 
workmen,  who,  by  means  of  a  strike,  combined  with  threats,  intimi- 
dations, and  violence,  caused  a  cessation  of  business,  which  resulted 
in  delaying,  interrupting,  and  restraining  Interstate  and  foreign 
commerce. 


UNITED  STATES  V.  PATTEBSON. 
Statement  of  the  Case 
but  without  alleging  overt  apt«     ti,         "    , 

set  repeat  the  allegaLs  5  the  Ltwr^^?  """'^  "'  ^** 
tions  of  overt  acts  "'  ^^^^S  also  allega- 

trade,  and  in  the^lnd  ^  Jfco  *  ^,  t'"""*'  ""  ''''''^'  «* 
not  by  means  of  any  contrTct  or  1  k  ^"'''"''P^li^e  trade,) 
the  parties  to  the  coSracvth  !"'*'?  "P^^*'"^  »?«« 
destroying  „r  prev^rS  tS"of"l'"*  "^  "^^''^  «^ 
trade  to  be  restrained  was  otLl  t.      f,''*'^*'^;    so  that  the 

nopoly  sought  was  to  bl  rutd  W-' ^  '''^"'  '"**  *^'  '"'^ 
of  business.  ^"^"^  ^^  '^"^"'g  other  people  out 

coi^'rwr"  airpiisfthr^-  ^^  ^'^  "•^i-  <>' 

representation,  deceitXea  i-""^.  ^^  ^^^  and  mis- 
-nolestation,  a^d  oth^r  unlajf^  T  *'""'  •'''^^"'^tion,  and 
means;  the  second  charrs  Si  w^Tr^'  """^  ^'""^'^^^^ 
venting  other  persons  f^^eat;  „"  k  """''  '^  ^^ 
that  U  was  to  be  attained  by  rreventWoth"''"?''"  '^^  '^^^^ 
m  business  by  means  of  th-L;       ."    •  ^  ^^^^''^  ^o™  engaging 

that  it  was^o  ra?tfiitrg;t'::„t"\t-'  ''A''^' 

rymg  on  business  by  means  „?T.^  "^^"^  ^^m  tar- 
ing competitors,  by  threatening  ^r''"!^  ""'^  ^"^^^dat- 
and  their  agents  to'^be  a  iS  aid  ti '^T'"^  *'»-' 
their  agents  and  emploves  VnL.l'''^^'  ^^  inducing 

-ploying  spies  to  obSwietrof'^r-  7^^™*'  by 
by  harassing  and  intimidatinT  DufZ  u  ''"''""^  '^'^^^^ 

chasers  to  break  their  conSL^Z     T'    ^  '"'^"'^''^  P*"- 
•ng  to  competitors,  by  a^e^to  .^      ^  '"  ^'^  ^"""^  «^- 
persons  so  refusing  to  Sv  in  Z    /f^'''  ""**  maintaining 
them,  by  delaying^and  Sedin^b     '"*  ''  ^"^*^  «^««t 
threatening  prospective  SZ    tT^'''  "*  ^»'t^'  ^y 
tat.on,  and  injury  in  the  even    of  T     ''""«y«"««.  mole^ 
competitors,  by  causing  persons  LI,       '  P"'-'=hasing  from 
repeatedly  and  unnecef saSy  "  t    " vT" '"*  P'"-^'^^^'^ 
suading  and  persuading  thL  frn    ^/    ^'"'  *™^'  ^^^  dis- 
tors,  by  causing  great  n^f^™  tZ  ^T"^  ^""^  ««™P«ti. 
actions  for  the  infringement  n7.!    f'*'""'  ^"'^  oppressive 
-eh  [607J  Purchase~hrlCfn:*^'']'-''"'«^*'^^^^ 
^0.  competitor  with  .4  Sn^gCer^KtS 


136  65  FEDERAL  REPOKTER,  607. 

Argument  for  United  States. 

thereby,  and  by  other  similar  means,  making  it  impossible 
for  competitors  to  continue  business;  the  fifth  count  of  the 
first  set  gives  the  names  of  certain  competitors  who  are  en- 
gaged in  interstate  trade,  and  sets  forth  with  still  greater 
particularity  the  means  by  which  it  was  the  object  of  the 
conspiracy  to  destroy  the  business  of  those  competitors. 

Frank  Z>.  AlUn^  United  States  attorney. 

IIBBT. 

Meaning  of  the  Act. 

In  HeydofCs  Case,  3  Coke»  7,  the  barons  of  the  exchequer  lay  down 
the  following  rules :  "  For  the  sure  and  true  interpretation  of  statutes 
In  general,  be  they  penal  or  beneficial,  restrictive  or  enlarging  of  the 
common  law,  four  things  are  to  be  discerned  and  considered:  (1) 
What  was  the  common  law  before  the  making  of  the  act?  (2)  What 
was  the  mischief  and  effect  against  which  the  common  law  did  not 
provide?  (3)  What  remedy  the  parliament  hath  resolved  and  ap- 
pointed to  cure  the  disease  of  the  commonwealth,  and  (4)  the  true 
reason  of  the  remedy." 

These  questions  will  be  discussed  in  their  order  as  relating  to  the 
statute  now  under  consideration. 

(a)  state  of  the  law  befobe  the  passing  of  the  act. 

Two  questions  naturally  present  themselves  here:  (1)  What  was 
the  common  law  in  regard  to  the  subject-matter  of  the  statute?  and 
(2)  what  was  the  relation  of  the  United  States  government  and  of  the 
United  States  courts  to  that  law? 

The  terms  in  the  statute  which  naturally  call  for  comment  in  this 
case,  are  the  following:  (a)  "Contract,"  (b)  "combination,"  (c) 
"conspiracy,"  (d)  "restraint  of  trade  or  commerce,"  (e)  "trade  or 
commerce  among  the  several  states  or  with  foreign  nations,"  (f) 
"  monoiK)lize." 

(a)  "Contract."  The  meaning  of  this  word  is  elementary,  and  It 
Is  not  necessary  to  discuss  it,  except  in  connection  with  the  following 
words,  "  in  restraint  of  trade." 

(b)  "  Combination."  This  word  is  used  in  the  statute  in  a  broader 
sense  than  the  words  "  contract "  on  the  one  hand  and  "  conspiracy  " 
on  the  other.  It  has  no  technical,  legal  signification;  and  the  words, 
"  combination  in  the  form  of  trust  or  otherwise,"  are  intended  to  cover 
broadly  any  sort  of  a  union  of  different  persons,  even  though  such 
union  may  not  be  suflScient  to  answer  to  the  technical  term  "con- 
^Iracy,"  and  may  not  include  a  binding  contract.  As  modified  by  the 
subsequent  words,  "in  restraint  of  trade,"  it  refers  to  that  class  of 
cases  where  there  is  no  binding  contract,  and  perhaps  includes  certain 
cases  in  which  there  are  no  legal  means  contemplated  so  as  to  make 
It  a  conspiracy,  and  no  sufficient  union  or  agreement  to  make  either 
a  monopoly  or  a  contract. 

(c)  "Conspiracy."  This  is  a  word  of  well-known  legal  significa- 
tion. It  is  sometimes  used  to  indicate  simply  the  comirg  together 
and  agreeing  of  i)ersons,  but  in  a  penal  statute  is  clearly  to  be  con- 
strued as  including  the  idea  of  illegality,  created  either  by  the  illegal 
character  of  the  ultimate  object  sought  to  be  attained,  or  by  the  illegal 


UNITED   STATES   V,  PATTEBSON. 
Arg^ument  for  United  States. 


137 


character  of  the  mean<!  hv  wKi^u  -,4.  • 

Insult  Shall  be\~,i^^J^^^\^^  IS  contempt         that  the  desired 

settled  at  common  law  a^^^^^^  ""^  ^^^^?  together.     It  is  well 

cies  to  accomplish  a  thfng  iUegaMn  UsSf'^nn^  'T'^  **^^*  «>°«P^^^- 
accomplish  a  thing  lawful  in  ilefhvnnf'  ^  ?  ""^^  conspiracies  to 
In  U.  8.  V.  Lancaster  44  F^  Sen  SQfi  th^^"^'"^^"^'  ^^^  criminaL 
Is  an  unlawful  confederacy  or  ^mbination^n?^twi '^^  ^  ""^^  conspiracy 
do  an  unlawful  act;  or  Lve^a?coS^hp^^  n^""  or  more  persons  to 
Com,  V.  Hunt,  4  Mete  (MassTiJ^^^L  ^  ^  ^"^  unlawful  purpose." 
Spies  V.  [608]  People  vMluV^^^^  v  ^"^'  ^  ?^^«-  ^t-  Tr!  519; 
S98;  3  Greeil.  Ev  §  189  Washh  Prln,^;  ^'  ^%-  ^'  ^^  ^'  E-  Rep 
is  unnecessary  to  enter  with  nJrPtv  in?  ?  *  ^'*'^'  ^^^  ^^•>  ^2,  etc.  It 
or  means  are  sufficilntrv  \ni la^^^^^^  the  question  of  just  what  ends 

since  it  is  quite  Sthntn  IT     •  ^"^  ''^""^^^  ""  conspiracy  criminal 
for  its  accoXLl^inent  fhr^^^  in*  the  means 

assaults,  the  maintenancrof  act^Ls  nmw^^^^^  ^^^  committing  of 
under  contract  to  break  their  contiaoA  i«  ^.•^*'-®  inducing  of  parties 
is  it  necessary  to  endeavor  fn^i«f!?'  \^  ^5""»°^i  i»  character.  Nor 
spiracles  which  «re  S^X  ,ctLX  carefully  between  con 

since  it  is  obvious  that  a  orimfno?  ^.^  ""^^  ^^'""^  ^^i^i^  are  criminal 

if  anything  is  done  undef  U  rL^^^^  '^  ^^«''  ^^^^^^  actionable 

plaining.  "*^^   *^  lesultmg  in  injury  to  the  party  com- 

connection  with  the  word  ''  rntraet  °?i,ev  r^infT 'P'^T"  '^"^^'^  '» 
conception  viz.  "contract  in  restra  nt  o(  trSSl -  a''  '^f'"''?"'""  'egal 
effect  of  which  is  to  restrain  trade  is  roid"  h..t  if  .T"*™*'*-  *"«  '"tal 
the  trade  of  one  party  to  the  onnJrn„?  i^  '  "*  ''  *''®  restraint  upon 
to  protect  some  i.iterest  ^fheTher  •.c^ir."/^  «*■■  *"»"  '«  necessS^ 
dent  that  the  contract  enoourLeotL  S^  ^''-''•^  ^^^  contract,  it  is  evl- 
restrains  that  of  the  othe^  and  ifen^  he  nnhH^.^  ""I*^  »«  "'»<'''  »»  " 
-tract  is  vaiid.     rpon  ibis''g^Si%S 'ir.VKd^"r„^ 

tIe^\'l,e't;\o"irvaiM'if'",L!fti,'"^fr'"*  "'.  "^«  ^'''^^  "^  ^ne  of  the  par- 
Of  the  trade,  to  w  ,^t  is  reaM^  !,fJ"'^L^^'^^'  "P^'^-  «»«>  the  extent 
^  (2)  An  agreenient  forTe  r^traint  of  th»  t  T"'f''"'*«  °'  «>«  ^^ 
thereto  is  invaJid  unless  so  li[,m«l  **  *™^^  °'  °°«  »'  t^e  parUM 

Rep  658;  Craft  v.  i/XouZ  TO  in  litfi"'^.^^/  ^r^'  ^'  »  S»P-  Ct 
Burlington  <6  8.  W.  By.  Co  ii  VoVi  L  ,'  ^^'^ern  Union  Tel.  Co.  v 
erslev,  6  Ei.  &  Bl  47  66  -Ifnllin  ^fP'  ^'  ""<*  ""te ;  Bilton  v  EcL 
lins  V.  iocfce.  L  R  4  Add  cT^yl"  I,  ^O""'""".  M  Cl^.  Div.  351  •  Cat 
Palmer  y.  8teii^sa^^^^i,%^J^^  ^°"'"'  ^-  ^"V'  "  Mees.  &  w!  ^'j 

proviSons'^oflhlT^^^r^t'^t^e'i  T^  ?f  *"«  ^^'"'^  '«  ■•-t-">«l  "y  the 

more  Of  the  parties  to  the  Set     A  conHfh  ii""^  *""*«  °f  °°e  »' 

.w  "\  "'1^°*  'tseif,  restrain  the  trade  of  ri**^!*'S  ^-  ""^  »•  ™n- 
restraln  the  trade  of  C     h„i  „,  i.      ^  ^-    ^'  "id  B.  may  aeree  ta 

restrain,  not  a  cJnti^a^t'ln  restrS  ofVdrT'.  '^  "  ^""-^  *" 
mTf  "/h        "^  may  be  laid  down  '     ^  *°  ^''^  »  contract 

nar  to  that  "to'^i^^Z^J^J'^SXZZ'^'^'''^^.  «'  '"«'■•  own  s.m- 
the  contract  is  illegai.  and  a  TOnsDlrac^  n^?  ?  intended  to  promote, 
trade  without  the  ins  lfl™ti7>,r„f  ^'  .°°*  ""'?  because  it  restralna 
because  from  thrnaCl'^of the  casl"!? rnn  f  '"'^  "*''«^  trade, 'bTa^ 
^,o?  w«"<='ously  and  without  cause  ^Sreement  to  do  another  an 

(2)       A.  and  B.  enter  into  an  agreement  for  the  principal  purpose 


ill 


138 


56  FEDERAL   REPORTER,   608. 


Argument  for  United  States. 

of  promoting  and  extending  their  own  business  by  none  but  lawful 
means,  and  witliout  any  intention  to  create  a  monopoly,  such  agree- 
ment is  valid,  although  it  have  for  its  natural  and  expected  result  the 
Injury  and  destruction  of  the  business  of  C. 

Such  a  contract,  even  when  carried  out,  does  not,  on  the  whole,  and 
viewed  in  its  entirety,  restrain  trade  at  all,  since  it  only  operates  to 
restrain  C/s  trade  in  so  far  as  it  operates  to  promote  the  trade  of  A. 
and  B. 

(3)  If  A.  and  B.  enter  into  an  agreement  for  the  purpose  of  pro- 
moting and  extending  their  own  business  by  restraining  and  desti-oy- 
Ing  the  business  of  C.  by  the  use  of  unlawful  means,  such  agi-eeinent 
is  illegal,  and  a  conspiracy,  whether  said  unlawful  means  be  of  a  crimi- 
nal nature  or  not. 

Such  a  contract  is  illegal  and  a  conspiracy,  both  because  of  the  Ille- 
gal means  contemplated,  and  because  it  does,  when  viewed  in  its 
entirety,  contemplate  a  restraint  of  trade.  The  restraint  of  C.'s  trade 
In  this  case  is  not  simply  the  [609]  result  of  the  promotion  of  the  tride 
of  A.  and  B.,  and  coextensive  with  it,  but  the  extent  of  the  restraint  is 
wholly  independent  of  the  extent  of  the  promotion,  and  may  be  abso- 
lute and  entire,  without  any  promotion  at  all.  This  must  be  true  w  hen- 
ever  the  means  are  other  than  such  as  are  intended  and  calculated  to 
Increase  the  trade  of  the  contracting  parties.  Hence  it  was  properly 
decided  in  Mogul  Steamship  Co.  v.  Macgrcgor,  Oow  rf  Co.,  15  Q.  B.  Div. 
476.  23  Q.  B.  DIv.  598,  [1892,]  App.  Cas.  25,  that  an  agreement  to  drive 
a  competitor  out  of  business  by  lowering  prices  is  not  illegal.  In  this 
case  shipping  compnnfes  formed  an  agreement  by  which  they  endeav- 
ored to  get  the  business  of  a  certain  port  in  China  by  placing  their  rates 
so  low  that  another  company  could  not  compete  with  them,  and  was 
bbliged  to  give  up  the  business.  The  house  of  lords  held  that  this  was 
not  an  unlawful  restraint  of  trade;  that  a  trader  could  not  be  pre- 
vented from  charging  what  be  pleased,  although  he  did  it  with  a  view 
of  getting  the  trade  himself,  and  of  driving  a  competitor  out  of  the 
business ;  but  it  was  also  laid  down  as  unquestioned  law  that  any  such 
restraint  efTecteii  by  unlawful  means  would  make  the  restraint  ille- 
gal, and  that  a  conspiracj'  to  enforce  restraint  by  such  means  would  be 
criminal.  In  the  queen's  l>ench  division.  Bowen,  L.  J.,  (23  Q.  B.  DIv. 
614.)  after  stating  that  a  merchant  may  lawfully  compete  with  another 
by  lowering  his  own  prices  to  any  extent  even  with  the  intention  of 
driving  tlie  other  out  of  business,  and  then  raising  his  own  prices, 
says: 

"  No  man,  whether  trader  or  not.  can,  however,  justly  damage  an- 
other In  his  conunercial  business  by  fraud  or  misrepresentation.  In- 
timidntion.  obstruction,  and  molestation  are  forbidden.  So  Is  the 
intentional  procurement  of  a  violation  of  individual  rights,  contractual 
or  other,  assuming  always  that  there  is  no  just  cause  for  it.  The  inten- 
tional driving  away  of  customers  by  a  show  of  violence,  the  obstruction 
of  actors  on  the  stage  by  preconcerted  hissing,  the  disturbance  of  wild 
fowls  in  decoys  by  the  firing  of  gims.  the  impeding  or  threatening  serv- 
ants or  worlvmen,  the  inducing  persons  under  personal  contracts  to 
break  their  contracts. — all  are  instances  of  forbidden  acts." 

On  page  616  he  defines  an  "  illegal  combination  "  as  "  an  agreement 
by  tme  or  more  to  do  an  unlawful  act,  or  to  do  a  lawful  act  by  unlawful 
means,"  and  cites  two  criminal  cases  in  support  of  the  proposition. 
On  page  618.  after  stating  that  in  cases  where  there  is  no  intimidation, 
molestation,  or  other  forms  of  illegality,  acts  may  be  done  intentionally 
which  will  injure  others  In  their  business,  provided  they  are  done 
bona  fide  "  in  the  use  of  a  man's  own  property,  in  the  exercise  of  a 
man's  own  trade,"  he  continues :  "  But  such  legal  justification  would 
not  exist  when  the  act  was  merely  done  with  the  intention  of  causing 


UNITED   STATES   V.  PATTERSON. 
Argument  for  United  States. 


XtSIf 


-       --.....    I. n lieu  Ktates. 

support  of  that  part  of  i,?i       •  •  *''®  '^^^  c'ted  by  Bowen   r    t    . 
oases  are  all  quot^  again  In  fhTI"  """<^''  "^^^  be^n  qS     thp^ 

McGawley,  Peake  270   (Ar^    quoted.     These  cases  are  •    Tn^i^l 

G.  200.  (preconcert^  hissing  Tdetov^  ^.Z^"'"-  "■  'B'-«"*«'<cft.  6  Ma?  A 
5(1,  and  Keeble  r.  ff/efcmw;;  v!,  2i.'>  (^"rntigton  v.  Taylor  11  p.-f 
in  decoys;)    Oiure" y  TZVl  r^;.  ?*•  ■«>*«•  ^isturbant^  of  wild  W^ 

breaic.  L.tSts  \Z  tb^^f ^'''  ('"•'"■•'".  Persons  'M.^^^^f, 

la  v,  however,  that  a  conspikicy  nied  "of  ^^T''"'''^-    ^^  '^  elementary 
The  mere  agreement  in  a  common  nn.r?     "'''^''^  ''^^^  binding  contract 
moreover    thnf-  fii«  ,       «^"uimon  purpose  is  suffipi^nf      t*  •  '-""^racr. 

Plate  tbe  acquisition  of  a  benefit  i,„«,       ^  conspirac.v  mar  couteni- 

V^X^'l  ""'""■'"'  burtlfet^^ct^barin!,'^*"'''  ""'  th'«  '«  not 

Places  injury  to  anollier     A  mnf-oAV  ^^  '^^^^  necessarily  contpm 

aey  to  restrain  trade  hlV'J!*'^  "'''"S  "n.i"*^tifiable     cieawt  <^°"^l"™<-y 

Kay,  Contract.  Lim.  334-411      *„     '       ^^right.  Grim.  Cons   144-^ «?" 
^Z.    b^o^U'^i'bTtbr"^^" -Wecro"""C;^U."ie:''?  ^^^n^tZl 


Mnmi 


140 


55   FKDEKAL   REPOKTER,   610. 
Arguiueut  for  United  States. 


It  Is  true  that  most  of  the  cases  in  the  books  are  cases  of  intimida- 
tion on  the  part  of  workmen  against  their  employers  or  agrainst 
other  workmen,  or  of  employers  against  their  workmen.  Bnt  the 
laugnage  of  the  statutes  and  the  principles  of  decision  apply  with 
eqnal  force  to  conspiratcies  by  any  persons  against  the  trade  of  other 
persons. 

<e>  "Trade  or  commerce  among  the  several  states  or  with  foreign 
nations."    This  subject  will  be  discussed  later. 

(f)  "Monopolize."  "Monopolies  are  much  the  same  offenses  in 
other  branches  of  trade  that  ingrossing  is  in  provisions,  being  a  license 
or  privilege  allowed  by  the  king  for  the  sole  buying  and  selling, 
making,  working,  or  using  of  anything  whatsoever,  whereby  the 
subject  in  general  is  restrained  from  that  liberty  of  manufacturing 
or  trading  which  he  had  before.  They  are  said  to  differ  only  In  this : 
that  monopoly  is  by  patent  from  the  king,  ingrossing  by  the  act  of 
the  subject,  between  party  and  party,  and  have  been  considered  as 
both  equally  injurious  to  trade  and  tlie  freedom  of  the  subject,  and 
therefore  equally  restrained  by  the  conmion  law.  By  the  common  law, 
therefore,  those  who  are  guilty  of  this  offense  are  subject  to  fine  and 
Imprisonment,  the  offense  being  malum  in  se.  and  contrary  to  the 
ancient  and  fundamental  law  of  the  kingdom ;  and  it  is  said  that  there 
are  precedents  of  prosecutions  of  this  kind  in  former  days.  And  all 
grants  of  this  kind,  relating  to  any  known  trade,  are  void  by  the  com- 
mon law."    1  Russ.  Crimes,  350. 

"  It  is  said  that  all  grants  of  this  kind,  relating  to  any  known  trade, 
are  made  void  by  tlie  common  law.  as  being  against  the  freedom  of 
trade,  and  discouraging  labor  and  industry,  and  restraining  persons 
from  getting  an  honest  livelihood  by  a  lawful  employment,  and 
putting  it  in  the  power  of  particular  persons  to  set  what  prices  they 
please  on  a  commodity;  all  which  are  manifest  inconveniences  to  the 
public'  Hawk.  P.  C.  c.  79,  p.  203.  East  India  Co.  v.  Sandys,  Skin. 
224. 

"  Hence,  aldo,  it  seems  that  the  king's  charter  empowering  particular 
persons  to  trade  to  and  from  such  a  place  is  void,  so  far  as  it  gives  such 
persons  an  exclusive  right  of  trading  and  debarring  all  others ;  and  It 
[611]  seems  now  agreed  that  nothing  can  exclude  a  subject  from 
trade  but  an  act  of  parliament"    Hawk.  P.  C.  293,  note  2. 

In  the  Case  of  Monopolies,  11  Coke,  84,  it  was  held  that  a  grant  by 
the  crown  of  the  sole  making  of  cards  within  the  realm  is  void ;  and  It 
is  said  that  "  there  are  three  Inseparable  Incidents  to  every  monopoly 
against  the  connnon wealth,  i.  e. : 

(1)  "That  the  price  of  the  same  commodity  will  he  raised,  for  he 
who  has  the  sole  selling  of  any  commodity  may  and  will  make  the 
price  as  he  pleases. 

(2)  "That  after  the  mouoiioly  granted  the  commodity  is  not  so 
good  and  merchantable  as  it  was  before,  for  the  grantee,  having  the 
sole  trade,  regards  only  his  private  benefit,  and  not  the  commonwealth. 

(3)  "  It  is  done  to  the  impoverishment  of  divere  artificers  and 
others,  who  before,  by  the  labor  of  their  own  hands  in  their  art  or 
trade,  had  maintained  themselves  and  their  families,  who  now  will  of 
necessity  be  constrained  to  live  In  idleness  and  beggary." 

See,  also.  Proprietors  of  the  Charles  Rives  Bridge  v.  Proprietors  of 
the  Warren  Bridge,  11  Pet.  607:  Slaughterhouse  Cases,  16  Wall.  102. 

As  used  in  the  statute,  however,  the  word  "  monopolize "  clearly 
does  not  refer  to  grants  by  the  goveniment,  but  to  the  accomplishment 
of  the  same  result  by  private  endeavor ;  and  the  word  "  monopoly,"  In 
the  meaning  it  had  at  the  passing  of  the  act,  and  has  now.  Is  not  con- 
fined to  grants  by  the  government.  The  essential  idea  of  an  unlawful 
monttpoly  is  fuund  not  so  much  in  the  creating  of  a  very  extensive 


UNITED  STATES   V,  PATTERSON. 
Argument  for  United  States. 


141 


business  m  the  hands  of  a  single  control  n«  in  fH«  -^        . 

all  other  persons  from  engaginl  in  «nri? V?  •      *^®  '^^^  ^^  preventing 

competition.    The  evi    of  the  Ir-  ntf  ?   ^"^"ess,  and  thereby  stiflinl 

that  they  gave  to  the  gmntee^^^^^^^^^^^^^ 

in  the  fact  that  thev  prevei^^^^^  manufacture  and  sell,  but 

selling  the  same  arL'^e     Thf  evU  is  ^orth'^  ^         manufacturing  and 

son's  trade,  but  the  destruction  of  tie  ?rade  of  ^/rir"^"^  ^^  ^^^  ^"■ 

same  commodity.  '^^^  ^^  ^^'  ^^her  persons  in  the 

pmiLl^ot'cvliit  Tmononnir.  ^^'^r""'  *^  '^'''^'^  t^ade  for  the 
by  liuying  out  all  connLtS^  ^ ^:^'^  ""  competition,  either 
agreement  is  illegal  mid  void      ^  ^  ^^^""^  """^  ^^  business,  such 

i.i^  ^<^^^:u{^!:^i:^^^  'r  ^,r^-e  of  creat. 
an  unlawful  means,  whether  crimin/l  or  ^^^^^^  '''."  ^^'"Petition  by 

It  is  clear  tliat  ninnoS/i  ivi   '         otherwi.se,  is  Invalid. 

law.    The  difficulty  iinst'm  ""^/^^^'^"^  ^^  ^«"^"»«n 

and  lawful  rivalry  in  business  Thp  fniV^  •  """"'^  ""lawful  monopolies 
distinction  :  StoLu  Twen    5  De^ui^  4^^^^^^  ^"*  '^'^  ''»«  ^^ 

Ohio  St.  066;  Morris  Run  Con)  %.  T  n  '^^ '  /''''  ^^-  ^'-  Outhrie,  35 
Craft  V.  MeConoughp  79  i^^^^  ^'««'  C'o.,  68  Pa.  St.  ut; 

N.  W.  Rep.  1W2;  l^anUl'.  Tahro^'7o^''^\  I  ^"^i'  ''^  ^'^^^^'  ^32,43 
Vmon  Tei,  Co.  v.  BurWmon  Ts   T Ru'cJ^  ii^pJ^S'  ^V  ^^^'^'^ 

721 ;  More  v.  '^n^l  ^^'  ^^^^^7 ^  ^ot.,  44  F^'r^ 

SECOND. 

Relation  of  the  TlNirrn  vs'TAmr-c   ^ 

aud  with  foreign  nations    and  w?h  th*  "J?*?:^"  *^^  ^e'wal  states, 
power  over  commerce  evcnJ  «..„7        ■       Indian  tribes,    it  has  no 

stitutlon,  and  the'unitedXes  turts' h-tve'  ^T"  *"  "  "/theU" 
diction  over  aiiv  offenses  n?ni,T«t^^„  ''^®'  """1  <>an  have,  no  iuris- 

gress  is  given  the  po^?r  tf  relSTn7;"°.'T  "  ^^  ™eh  as  eon- 
Fed  Rep.  104.  regulate  and  control.     /«  ,e  Greene    5-> 

be^n'mThel^  th^'The"^-rgi''4"^to"''""'""  '»  '^'""■««--.  't  ba*' 

cwimerce  is  exclusive,  and  fmltes  a  m^l.?hitT^''^''.  *°  ■'«'«""»«  «"ch 
upon  such  coumierce.    This  i.rnhiMM        '"*"*°  agamst  any  restraints 

SniSftttSlulS^'^^^^^^^^^^ 

Tcr-  -^?^  ^^^^t^X^^  a 
8|ige  of  the  act  he.^  uS  discussfo^  l*^  ^'**«'-  P"<"-  to  the  pS^ 
Blon  of  the  United  Stat^  m'nbh,t  ^'  *''^''*  '"■""»  "«>  statutory  nrorl- 
sp  racies  in  restraint  of  ^  t"  mononoTr?*f '  «"nbina«ons.  VZ,. 
crimes  against  the  United  States  so  tKl?„  '°t«''^t«te  or  fore  gn  trade 
have  no  jurisdiction  over  thaf 'sub llctn.?«  ^°"^  States  courts  S 


142 


55  FEDEKAL  KEPORTEB,   612. 
ArguiueDt  for  United  States. 


cotubiiintioii8,  or  ewuspiraeies  upou  the  sole  ground  that  such  contracts, 
combinatious.  or  conspiracies  aflfected  interstate  or  foreign  trade  or 
comiuerce;  and  such  courts,  therefore,  had  only  such  jurisdiction 
over  these  matters  as  might  vest  in  them  by  reason  of  other  circum- 
Ktanc»s,  sucli  as  differences  in  citizenship. 

(4)  Under  tlie  power  to  regulate  commerce  among  the  several 
states  it  has  been  held  that  congress  has  the  power  to  regulate  the 
transiK)rtation  of  individuals,  of  proi)erty,  and  of  communications, 
and  also  all  instruments  of  such  transiwrtation  and  communication; 
and  that  trausi)ortation  of  property  begins  when  the  property  is 
delivei-eil  to  a  conunon  carrier  for  ti-ansportation  to  another  state, 
and  does  not  end  until  such  property  has  completed  its  transportation, 
JUd  has  become  a  part  of  the  general  i)roperty  of  the  state  to  which 
It  is  sent.  And  a  state  may  not,  even  for  the  puriwse  of  supposed 
self-protection,  interfere  with  transportation  into  or  through  the 
state  beyond  what  is  absolutely  necessaii-y  for  its  actual  self-protection, 
and  within  the  scope  of  its  police  power.  See  Henderson  v.  Mayor, 
etc.,  92  r.  S.  259 ;  Raitrmd  Co.  v.  Huscn,  95  U.  S.  465,  472.  The  ex- 
tent of  this  grant  to  the  federal  government  is  further  seen  in  the 
following  cases:  Gibhmts  v.  Off  den,  9  Wheat.  1;  Welton  v.  8taie  of 
Missouri,  91  U.  S.  275:  Walling  v.  People  of  Michigan,  IIG  U.  S.  446, 
6  Sup.  Ct  Rep.  454;  Robbins  v.  Taxing  Dist.,  120  U.  S.  489,  7  Sup. 
Ct.  Rep.  592;  Leisy  v.  Hardin,  135  U.  S.  100,  10  Sup.  Ct.  Rep.  681; 
III  re  Rahrer,  140  U.  S.  545,  11  Sup.  Ct.  Rep.  865;  Trade-Mark  Cases, 
100  U.  S.  !»; ;  Philadelphia  d  Southern  S.  S.  Co.  v.  Pennsylvania,  122 
U.  S.  326,  7  Sup.  Ct.  Rep.  1118. 

It  seem?;  clear  that  what  would  be  a  regulation  of  commerce 
within  the  implied  prohibition  of  the  constitution,  if  attempted  by  a 
state,  would  be  a  sulticient  ol>ject  of  a  conspiracy  by  individuals*  to 
make  it  "  in  restraint  of  trade  among  the  states."  Clearly  it  would 
be  obnoxious  to  the  prohibition  of  the  constitution  for  a  state  to  pass 
a  law  that  certain  nonresident  cash-register  companies  should  not 
be  allowe€l  to  sell  cash  registers  in  the  state.  If  this  would  be  un- 
constitutional when  done  by  a  state,  clearly  it  would  be  a  restraint 
of  trade  among  the  states  when  attempted  by  individuals  so  as  to 
make  a  conspiracy  to  acctimplish  it  a  conspiracy  in  restraint  of  trade 
among  the  states.  The  (conspiracy  in  the  present  case  was  to  prevent 
certain  corporations  from  carrying  on  the  business  of  manufacturing 
and  selling  cash  registers;  and  it  is  alleged  that  said  corporations 
were  carrying  on  this  business  among  the  several  states,  so  that 
the  prevention  would  operate  nei'essarily  and  directly  to  restrain 
interstate  trade  in  such  cash  registers  in  the  same  way  that  the  state 
fCgulation  did  in  Leisy  v.  Hardin  and  Rohhins  v.  Taxing  DisL,  supra. 
This,  however,  i«||i  qu<^tion  to  be  determined  at  the  trial. 

(B)    EVILS  TO  BE  REMEDIED. 

Undoubtedly  a  prominent  evil  to  be  remedied  in  the  minds  of  the 
framers  of  the  statute  was  the  concentration  of  the  entire  business  of 
the  country  in  certain  articles  in  such  a  manner  as  to  prevent  others 
from  engaging  in  the  same  business,  and  thereby  to  prevent  and  stifle 
comiietition.  As  stated  in  the  [613]  title,  it  aims  to  "protect  trade 
and  commerce  from  unlawful  restraints  and  monopolies ;"  and  the  evil 
of  a  monopoly  lay  in  the  prevention  of  others,  either  by  prohibition 
from  the  sovereign  power,  or  by  power  of  individuals,  from  exercising 
the  same  trade.  When,  therefore,  the  statute  made  it  criminal  to 
conspire  to  monopolize,  it  did  not  intend  to  make  it  criminal  for  two 
or  more  pei*sons  to  unite  in  developing  their  own  business  by  lawful 
means,  nor  for  one  person  to  sell  out  his  business  to  another  or  to 
others,  provided  that  the  prevention  of  others  from  engaging  in  the 


UNITED  STATES   V.  PATTEBSON. 
Argument  for  United  States. 


143 

"  *"^  L'liirea  States 

fortiori,  it  ism^nfl^^^^^''^  ^^'«'»  engaging  ?ntL/  k  "^  business  by 

(C)    THE  BEMEDY  PROVIDI  D. 

I.  Tlie  most  narrow  effect  fhn* 


e;   _ 
they  __^ 

Kep.  997.  ""•  >.    ue^erve,  154  AfivsiiT'  '/-"'*  "^""^ 

-i^«=r  -"" '"  -  ••--.«..  t.t  a  e  :,1: : " 

(1)  Personal  violenn**  o„^  ^,  '^  unlaw- 

As  toniaintenance  seo  i„ f  La"-  J-  C.  P.  307:  Si  ^',"-"''f>'  ^-  Oye, 
,,(3)  By  bringing  „^rt"f  ^?""-«c'-  TAm.  293  et«^'  ^"f'  '^  «•  155. 
the  purobasers^and  wosnP.tf '""""S  to  briu^  veVa^:' ^'"1  ?««««  cited, 
^ruse,  Lamson.  Boston  ?n?r^  •""'■'^''''sers  of  cash  .»^-  /"'*'  ••'8»""'t 
J«e.  5C7;  Kellevvi!  "*!  '^"'»"  Compani«  ?t  '®?"'f"-s  from  the 
Cash  Renisipl%    '  '"""Kfacturing  Co    Xf  „,  ?""'«'  "■  Taylor  civ, 

's  clear  fvomTbeZTtu,^"^^'"^  "'"'-e  brSv Vh!  '^?""°»  '«»•. 

s  *>r  trade  or  commerce 


I'M.. .MM 


55  FEDEBAL  BEPOBTEB^  dU. 
Argument  for  United  States. 


Iietween  the  »>ev»'riil  states  or  with  foreign  nations,  criiufi^  against  the 
United  States.  therel»y  giving  the  United  States  courts  jurisdiction 
over  them.  This  oonstmction  again,  how-  [614]  ever,  is  not  broact 
enough,  since  to  suit  the  statute  it  also  would  practically  eliminate  the 
words  "  contract "  and  "  c«)uibination."  since  neither  a  i-ontract  nor  a 
comltination  in  restraint  of  trade  is  civilly  jictionable  at  common  law. 

III.  The  net  jroos  still  further,  and  makes  contracts  and  combina- 
tions which  are  illegal  in  the  sense  of  nonenforceable  at  common  law, 
crimes  against  the  United  States  when  directed  to  the  restraint  or 
monoi)f»lizing  of  trade  or  cummerce  among  the  several  states  or  with 
foreign  nations. 

That  all  thi*ee  of  these  effects  v\cre  intended  appears  from  the 
act  itself,  since  in  no  other  wjiy  can  all  the  terms  of  the  Jict  he 
given  eflTect.  and  may  also  be  shown  by  a  reference  to  the  debates 
in  congress  wlion  the  bill  was  pending.  In  the  debates  in  the  senate 
a  number  of  cases  jire  cited  as  showing  what  was  meant  by  "  restraint 
of  trade  "  and  **  monopoly,"  all  of  which  were  civil,  and  not  criminal, 
cases,  and  include  the  i>rinciple  of  the  third  jiroposition  above  laid 
down.  Among  these  cases  were  Richardson  v.  Buld,  11  Mich.  632, 
43  N.  W.  Rei>.  1102;  Vrnft  v.  McCononghy,  79  111.  346;  Handy  v. 
Raitrmd  Co.,  ;U  Fed.  Rep.  680;  F<mle  v.  Park,  131  U.  S.  88,  9  Sup. 
Ct  Rep.  658. 

(»)    THE  TBUl  B1A80N  OF  THE  ACT. 

It  thus  appears  that  the  trae  purpose  and  eflfeet  of  the  act  were 
to  remedy  the  injurious  effects  of  unlawful  restraints  and  monopolies 
nimn  trade  and  commerce  so  far  as  congress  had  the  iK)wer  so  to 
do;  that  is  to  say,  so  far  as  they  were  directed  against  interstate 
or  foreign  commerce.  Its  purpose  being  correctly  stated  in  the  title 
of  the  act,  namely,  "An  act  to  protect  trade  and  commerce  from  un- 
lawful restraints  and  monopolies." 

Sufficiency  of  the  Indictment. 

I.  So  far  as  charging  a  conspiracy  is  concerned,  the  language 
follows  the  ordinary  language  used  for  that  purpose,  and  is  sufficient. 

II.  The  general  allegation  of  threats,  intimidation,  and  molesta- 
tion is  sufficient.  Reg.  v.  Roulauds,  17  Q.  B.  671 ;  Com.  v.  Dyer,  128 
Mass.  70.  When  the  charge  was  that  the  defendants  "unlawfully, 
fraudulently,  and  deceitfully  did  conspire,  combine,  confederate,  and 
agree  together  to  cheat  and  defraud,"  it  was  held  sufficient  Rex  v. 
Be  Berenger,  3  Maule  &  8.  67;  Wood  v.  State,  47  N.  J.  Law  461,  1 
Atl.  Rep.  509;  Com.  v.  Fuller.  I.'i2  Mass.  563;  Com.  v.  Andrews.  Id. 
263;  Res  v.  QUI,  2  Barn.  &  Aid.  204;  V.  8.  v.  Stevens,  44  Fed.  Rep. 
132;  V.  S.  V.  Gardner,  42  Fed.  Rep.  829;  Sydserff  y.  Reg.,  11  Q.  B. 
245 ;  Latham  v.  Reg..  9  Cox.  Crim.  Cas.  516. 

The  gist  of  the  offense  is  the  conspiracy.  The  unlawful  object  or 
means  merely  give  character  to  the  conspiracy  itself,  and  show  it 
to  have  been  unlawful.  Rex  v.  Journeymen  Taylors,  8  Mod.  11 ;  State 
V.  Olidden,  55  Conn.  46,  8  Atl.  Rep.  890.  Hence  the  offense  is  com- 
plete though  nothing  be  done  in  execution  of  the  conspiracy.  Rex 
V.  Spragg.  2  Burrows,  993 ;  Rex  v.  Rispal,  3  Burrows,  1321 ;  Collins 
V.  Com,,  3  Serg.  &  R.  220;  Com.  v.  Warren,  6  Mass.  74;  The  Poul- 
terers* Case,  (1011,)  9  Coke,  55,  Moore,  813;  Rex  v.  Edwards,  (1795.) 
2  Strange,  707;  Rex  v.  Eccles,  (1783,)  1  Leach,  274;  Rex  v.  Gill, 
(1818,)  2  Barn.  &  Aid.  204.  Hence,  also,  it  Is  unnecessary  to  set 
out  the  means  when  the  end  itself  Is  unlawful.  People  v.  Barkelow, 
37  Mich.  455;  Cmn.  v.  Eastman,  1  Cush.  190;  State  v.  Stewart,  59 


UKmo  STATES  V.  PATXEESOK. 
Arguiuent  for  United  State* 


145 

Vt.  273   9  AtJ   R      7" """""'  ''*''  ^°^**ed  States. 
,   They  thus  Show  tim'"Tf ""' <^^"''''0"la«        ''*'"  """'"■■".  "con- 


them  A".''r""S  the  worJVnf  ''«'^'«<''y  the  same  re,,,  t-   ""  «>">- 
fo  as  to  read*??eou^"rf;"r--'  '"  '^^fah^  o/ 'r'^dt"""'"*'"*'''  --^^^ 

III.  The  imi'rnf    ''*P-  -^^l-  "°"Mw  v.  RmnadellTm  r  '  »• 

'»wf«l  o^s^"^,^  ."'«»'  luffleiently  alleges  that  th»    , ,  ' 

«&',,..  ft^J-tain  o]  {he"i^4t''Sra,;"  ""^  '-«-««  «f  th« 

trk  K-  'I'^^iJea  on  bv  tlipm  •  A^i  .    ""siness  of  sjniH  ^  ^^  ^^g  con- 

to  hinder  and  pre^ntfiV    "'^  ^"  ^^^er  counts  tho^'^^/^^^-'^tions,  then 


imaJlttUiii 

TanrT 


146 


55  FEDEBAL   BEPOBTER,   615. 
Root  and  Liudsay,  in  support  of  indictment 


trade,  and  charge  that  the  object  of  the  conspiracy  was  to  restrain 
the  trade  then  carried  on  by  said  named  corporations  in  cash  re{,'ister8 
among  the  several  states.  This  language  is  clear,  and  as  definite  as 
the  nature  of  the  case  will  allow. 

The  statute  was  intended  to  cover  a  conspiracy  the  object  of  which 
was  a  general  restraint  or  monopolizing  of  any  trade  which  was  of  an 
Interstate  character.  The  conspirators  would  not  naturally  in  such 
a  case  specify,  even  to  themselves,  tlie  specific  interstate  transactions 
which  it  would  be  their  object  to  restrain  or  monopolize,  but  would 
formulate  the  general  intention  and  plan  to  restrain  and  monopolize 
all  the  trade  among  the  states  in  a  certain  given  subject-matter;  for 
example,  cash  registers.  The  allegations  are  sutticient  to  show  that 
the  restraint  and  monoiK)lizing  contemplated  were  unlawful ;  that  is, 
that  tliey  contemplated  the  prevention  and  destruction  of  trade  by 
means  which  would  not  involve  the  corresponding  encouragement  of 
the  trade  of  otiiers.  It  is  not  material  whether  it  appears  on  the  faco 
of  the  indictment  that  the  means  alleged  are  naturally  calculated  to 
affect  interstate  trade  or  not.  It  is  distinctly  alleged  that  it  was  the 
Intent  of  tlie  consi)iracy  to  restrain  and  monopolize  interstate  trade. 
The  means  are  only  alleged  to  show  the  unlawful  character  of  the 
restraint  contemplated,  not  to  show  the  object  of  the  conspiracy  to 
have  been  against  interstate  trade.  It  is  submitted,  however,  that  the 
means  alleged  are  such  as  would  naturally  afl'ect  interstate  trade  when 
directed,  as  in  this  cas-e,  against  corporations  engaged  in  interstate 
trade,  and  that  the  fact  that  they  would  also  affect  domestic  trade  is 
immaterial;  and  this  upon  the  same  principle  ui)on  which  it  is  held 
that  a  state  cannot  tax  interstate  connnerce  even  tiiough  at  tlie  same 
time  it  tax  domestic  connr.erce  to  tlie  same  extent.  J^ci.sy  v.  Hardin, 
135  U.  S.  100,  10  Sup.  [616]  Ct.  Rep.  C81 ;  Robhins  v.  Taxitiff  Dist, 
120  U.  8.  489,  7  Sup.  Ct  Rep.  592.  The  means  alleged  are  such  as 
would  necessarily  prevent  tlie  curijorations  engaged  in  said  cash- 
register  business  from  transiwrting  said  registers  from  one  state  into 
another,  and  selling  them  in  the  latter  state. 

All  the  elements  required  by  the  statute  are  therefore  sufficiently 
alleged. 

Elihu  Boot  and  John  D.  Lindsay,  (also  in  support  of  the 
indictment,)  in  the  interest  of  certain  private  individuals. 

FIBST. 

In  conspiracy  the  gist  of  the  offense  Is  the  combination ;  and,  when 
conspiring  to  do  a  particular  thing  is  made  criminal  by  statute,  a 
charge  of  a  conspiracy  to  do  that  thing  is  a  complete  and  sutticient 
description  of  the  offense.  Neither  the  means  by  which  the  conspir- 
ators intend  to  do  the  tiling  nor  overt  acts  towards  the  doing  of  It 
need  to  be  alleged.  Neither  means  nor  overt  acts  enter  into  the 
description  of  thjs  offense  unless  expressly  made  an  element  of  the 
offense  by  the  statute.  If  the  statutory  description  of  the  crime  is 
conspiring  to  do  a  thing  by  unlawful  means,  then  the  unlawful  means 
must  be  set  out  If  the  statutory  description  is  a  conspiring  to  do  a 
thing  and  an  overt  act,  then  the  overt  act  must  be  set  out.  In  the  one 
case  the  unlawful  means,  and  in  the  other  the  overt  acts,  are  elements 
of  the  offense  which  necessarily  enter  into  its  description,  and  must 
be  averred ;  otherwise  they  need  not  be  averred.  The  rules  upon  this 
subject  are  very  fully  discussed  in  Corn.  v.  Bavger,  37  Leg.  Int.  274, 
July  2,  1880,  by  Hare,  P.  J.  See,  also,  Com,  v.  Hunt,  4  Mete.  (Mass.) 
125;  Rem  v.  mil,  2  Bam.  &  Aid.  204;  2  Whart  Grim.  PI.  (4th  Ed.) 


^mrm  states  v.  pattebson. 

Root  and  Lmdsay.  ft,  ^p^.^t  of  indictment 


147 


C25.  028-  V   S   .    n  "^       "'  Indietn.ent. 

ni  T""'  ''  <^°«'>-  514.  '      -■  ^'""-  ''•  ■^«*"»«''-  "cist  1!^ 

-  SECOND. 

rest,M°rP°'y  which  is  the  obVert  oAhi'"*  "'^  .■•'''^'■•»''>t  of  S  ^ 
restraint  or  the  kinri   r^f       ""J*^t.t  ot  the  consp  racv    f«  fh«  i  I    ,     \. 

nounee.    To  thusmale^ap^.^S'^e-';";!;  -f  er'ia'^enStl"  o'al' 

Sa"  «"'K  tr.-^  IISHHSS 

THIBD. 


•>-.... .wutui  rraue  with  n  the  intent  nf  Vi.I  .  "tanner  described  is 

of  the  act  which  mak-es  a  consn!?a5fn  t^^^  ^^  the  first  Section 

I.  To  ascertain  what  constu^  fo5  ^  restraint  of  trade  crimi^m 
splracy  in  restraint  of  tS3f  re  n„^  ^"^"^^t'  ^combination  Tr  o* 


148 


65  FEDERAL  RBPOBTEB,  617. 
Hoot  and  LImlsay,  in  support  of  indictment. 


■J 

I 


tracts  in  restraint  of  tmao-  th\  rv..i.Ki»»*;^ •     x.     - 

or  otherwiFe  in  restraint  of  triaf^    «v  ^*  *'"^*"  ?**®  ^*''*"^  ^^  *™8t8 
trade.  «-«traint  of  trade;   (c)  conspiracies  in  restraint  of 

Each  one  of  tliese  points  to  n  Kf^nnmtti  «ti.i  .n^**     i.    . 
whicli,  prior  to  the  Dai^Llf  if  fCf      !  **?»*'  distinct  class  of  cases  in 
America  Had  c^ndemn^  a^  iJ^f  "''t'  "l^  ^""^'^^  ^^  ^"^''«"d  «nd 
of  tlielr  effect^iSrtr^e^n*  f^^^  ^?."'^  ^J"^*^^  "^t^^'^^t'  l>ecause 

ttoe  jcronnd  of  Senmn^^^^^^  17*°^  ^^^^  ^^  ^^<^'^i«»  and 

pul>Iic's  riglu  to  Ii  ve  tm^^^^^  l!l?^  M^^^  interfered  with  tlie 

Stricted.  ^  ^^^'"^^  **'"*  competition  in  trade  free  and  nnre- 

contracting  parties  tbereln^H-m'pn^^^^  *      *^^*  because  some  of  tlie 

occupations/and  UieSc  w^nthl^A^^^^^^^  Dursuing  their 

the  competition  therein  "^  deprived  of  their  contribution  to 

Cof.!^"^e^^  ^  —  in  A«.V;«.on 

that^^.S.{^:;  ^l^  ^^^^  wliu^l,  the  doctrine  is  .>unded 
One  is  the  injurl'  trtl?e  Llfllc  hv  ^.^^"^^^^  .''"^'V""*  ''"'^^'^  '^'^^.^^ 
party's  industry ;tl4ote^^^^^^^^  fnlu^v  t.  i^'"''^'  ^^.  ^''^  'estricted 
precluded  f.-ourpursirrhis  ~  ^^'"^  "'?^^^'^  ''>'  •^^^"g 

from  snpiwtins?  himself  and  hi^fZiv  if  ^  'i*^  .^'^•"*^  prevented 
eWls  occur  when  tircoVt "  c-t  s  ^eni-Vl  iUV'^^^''''^  "•''*  ''^^^^  *'»««« 
all.  or  not  to  pursue  it   n  t lie  enH^riiilm  J^^^^  ""'^^^  ^^'"^'^  ^* 

suffers  the  loss  in  both  case"    n mi  h J  A  li    \  country.    Tlie  country 

pation,  or  is  obllVd  to  eTn^iriatl  MuZ'^l  '"  ^^^''l^  "^  ^''^  *^«^- 
coBtract  that  Is  open  to  meh^lt  n  wf,^  ^".  *''*?^**  *^  ^'^'"^^^  '^-  A 
policy,"  '       ^  """^^^  ^"^^  objections  is  clenrly  apihist  public 

(2)  The  second  division  of  thp  «fnui*^    „:„ 
form  of  trusts  or  other wke  in  re«.trnfn/^  combinations  in  the 

of  cases  which,  whi  ^It  inav  InchuiA  t^i  «  ^P*^i^'  ^"'"^'^  ^^  «  ^^"^s 
»reat  number  of  combinations  di^  nLVjf  f  ^^  '^^^''-  '"^'"^^*^**  «>«*>  « 
in  restraint  of  fa-ade  Iw  fhrnL  h!  ^i^5^^  ^^^^'^  ordlnnry  contracts 
binatlons  0  which  the^^^^  IsTo  mntrn^t^^'T-T'^?.'  ^^^^''^  «»•«  *^«^"- 
terms  or  by  Implica^l^i^^nr  t^ '^^mV^^^^^^^^^  lt«  express 

hi3  trade,  or  not  to  compete  freely  wl [rot hPr^hV^f  i /?  exercise 
dared  by  the  courts  In  violation  of  mln?  ^/n^  ^^'^"****  ^^^  ^^- 

pllsh  the  effect  of  preveiU  nrfie^lom  of  fr^^?'  *T''"'^  ^^^''  •'^^^"™- 
a  rule  the  agreements  and  ^arrangements  bv^^^^^^  .  ^« 

tlons  are  formed  are  themsAiv^a   li  Vk^I    *    •    ^'"^"- these  comblna- 

effect  alone,  upon  the  miWIo  lntpro«V  ..  w„i  f''^*'^*-  •'"'^  fJ® 

dared  asainst  public  no^li,^  The  toHnwinJ'  ™"n?  *'"""  *°  •»  <le- 
cJass:   ffootCT-T.  Vandet"?tcr  4  n»n?-I  .So^^?""^  "lustrations  of  this 

Coke  Co..  4«  Fed   Rep   43^^b/,;;,»^  »„     ^^"^f  ^^<"'"""''  Cofi!  <« 

So  long  as  the  arrangement^  or  a^m^  emsin  r;^-.rrt  t.  f,..,         . 
by  a  combination  produce  the  ln1urioi«  llfo^  „^  f       *^  ^"""^  ""<!« 

devise  to  produce  that  eff«^  ruttt^^Us  to  ISal  r.*"'"'*  °' 
Quences.  ^  «vaii8  to  escape  the  conse- 


UNITED   STATES    V.  I^.TTERSOK.  149 

(3)  The  lIlT  ""'  ''"'"'•  '"  """"''*  "^  '"'«^f»-t. 

An  es.^entinl  element  in  fi,  ^'^'^' 

iujuries  to  t  »  J^  ^  ""'■■"'■  means,  which  ov!;i'~'"''  *■•»»  the 
to  deSroy  „.  inw°°  "^^^  fade  is  XL^*  ,*?.?' p"^'  '?''^''t« 
been   action,,bIo'"^"a-T'^f^  »•"«"!««■'  ">•  «"c^irea^s  &  r^'^ 

Conspiracies  mi..^,.     ,  ,  '    ^^^^-')    App. 

to  PrevU^othe;  S-e"''r'''  *"  ''^y^"".  ^  coerce  their         , 
this  priucinl,.     «:„  ?,  "^  fo™  worlfins,  are  fni.,ni       •■^'^  employers. 

■  1  Moody  &  R  iil^n"'  ''■  ^''^^•'<'«'  1  iSach  2?4^"?i'  '»»«tratio«s  of 
RowlaiMs  h^-  ^^f-  ''■Druitt,  10  Coy  Cr?m  r?"^' i*'^ ;  Reg.  y. 
People   v:^Jf^  ^"t-i.^r-  *^-  ''^^^e  X    Fisl?eT\f^^r  «^^-   ^• 

St.    Rep.    17 .    ;h"     •   '«•.  8  Atl.  Rep.  gflO ;  P%^:  i  ^««\  15" !  «<ff<e 

Hun  10  3  ^;  yXx^ei  ^'•'■'"-  ^-w.  •^oo;^;^;j,^f^.J4N.  r. 

^^J   It   ;ipj)ears   from    ti.^   #  .  ^^'t^r,    &i 

act  now  under  conslcdtlnn  ^^*"*^-^»'g  i-eview  that  ^t  th«  ., 
to  the  law,  xvas  n rmL^  i-     "  ^''•'''  I^^^^cd  restraint  nf  f    ^^^  ""'^  ^^^ 
That  this  DiovpnH      "^'"^  ^'"V'  one  from  f rpp  I  ^  '^*^^'  '"^^  ^'Qown 

it  dep  "v4d 'i?;e  "   J"!;  ''?  ^^^^1  to  be  Ti,&,f^^*-^^«J»g  l>is  trade 

Si^sri  rSrr- -vv^^^^^^^ 


H 


xou 


55  FEDEEAL  REPOKTER,   618. 
Root  and  Lindsay,  in  support  of  Indktiueiit. 


otT^u:^IL^TZ:e%^yr'':'*'^  1"  *"«  state  Of  New  Tork 
violent  and  danKeror„L7,n,,,  ',.'„*  ™"'l*t'tois  out  of  business  by 
attcn.pt  the  d«.tTuot^on  f/  t^l  "^  ^''^P'rafors  going  so  far  as  to 
EvrrJxt.  51  16191  Hnn  in  4  ^-'Jl'"'*""- s  I.roperty.  See  J'copte  v. 
that  oaie  was  fo-  »clJLt  /Ji  Supp    G12.    The  indictment  In 

""nt-^r?^^  ^  -'""Vt'ara-;',^„  r.rr.rSdJ'^ "'  '"^^  "^^^^  ^••'* 

reJeVrji^^c^^-r/eTh^ri^T^-iT 

that  in  all  these  statTcoibl,^^^^^  "^  ^"''^«  *«  ^^'^^^''^^e 

lawful  ,nea,.s  ^n^i^uZ^^^  1^^  ."''%"'^  '-^"^^  ^^^^^  ^^  "^- 

law,  and  l,v  ali4n  y  elis   n"  TulfJ^   ^  "''.T'^^'  criminal  at  eoninion 
making  i.  a  eiin    ml  "  eon"^^  ^^^  ^^''l^^^e  of  New  York, 

commerce."    It  was   tliSeki,r  ,innl  '^  j^''^  injurious  to  trade  or 

existing  statntLcTftbl^d^^^^^^^^  ^^«*^«  ^^'^'^1^  l^'-^d 

jnehide  in  their  aet^  L  gne  ^  n  thrm-otx^^^^  ^''T  **» 

in  iirovisions  aflfecting  siicl  mn«.nirorlf  1^  J^  ^''^^  competition 

indictments,  ^  conspiracies  as  are  shown  in  the  present 

But  whoii  congi-es8  undertook  to  assert  over  !nfpr«fnf«  «^. 
same  protection  which  the  crmnrmi  Hxv  nt?^  f^     .f^?*®  commerce  the 
states  gax-e  to  connnerce  with     thLJ  .1'^^  ^^  ^^'^  ""^'^^^^^ 

rant  wha (ever Tor  "ni4iat"«m^^^^^^  '""''^  ^^^*^^'^  '^  "«  '''^^^ 

field  as  l>roadIv  as  the  Tvho^o  h^^^  ^^  "I*"'*""  ^'^  ^^'''^»*  ^^^^  ^"^Ire 
the  respeeti.?s  ues  .^^4ed  withln'thPi?  ^'''''  'T^^^  't^««''>tion  in 
word  "  conspiracy  "  i^TpS^Hntelv  mldP^  tn  ^T^^^^'^'l  ^""'^'-  ^^^ 
and  " con.hinatioii  in  fom  of  tniRt  n^l^lf  ^  *^»  .'''^'^'^^  "contract" 
complete  design.  "^"^  **'  othenvlse,"  to  arcomplish  this 

^^^ ^^^^Z'l^ ^^."Z:"!^^^     '"  «"^«^-ee  between 

specifiLlly  thi  n.^.nrt  wS  th^JrnS^^^^^^^  '''%  "ot  inclnde 

element  of  agiwment  is/ii.  eod   co  fm  '^'    '^^^''^ 

in  the  first  section  of  the  not  iriTf^h^  ?ll  ^^^^S'''^''  denounced 
the  combination,  and  rthfconspi  ^e^es'fherrdtc"  i  >'e^  "u  1^^*" 
ever,  the  only  contractual  eleme  it  wliich  is  esSVWn  IJ'J^T 
offenses  described  'n  tljif  sor^Hnn  n.wi  Vi «  essential  to  any  of  the 
must  iieceasanrbe  si  mx^^^  '""^. contractual  element 

the  authorities  which  bad  d^lam^  t^  e  Hw  nV"A'"'    conspiracy     All 

«.ngress  "evWhS  la  rt^e  "4?  o^n.hlnn'tion''..  "T^?''  ''"^'"^^• 
that  same  evil  by  n.eans  «1  reaV  r^»  ^  Swh  l"  Vr'^^'^l 
Is  asked  by  the  defendants  to  deprive  anxnre^snh^tnnt/./  •*"";* 
sion  of  the  slatnte  of  all  meaning  whateve"  t^siy  thTu  "^M J  noMn'; 
to  the  other  provisions  of  the  statute,  for  the  pnr^^  of  i.^ta-ring  tin t 


UNITED  STATES   V.  PATTERSON. 
Koot  and  Lindsay.  In  support  of  Indictment 


151 


rnfinTcrp^tiHo't^L^^'s^r  *°  P'^r^'  *"«  Siven  resnit  of  pre- 
crin.infi  to.S.o!irthtsre"L"u?t^-rn7o'^e4^"^^^^^^^^^        " 

FOUBTH. 

manner  described  is  i  .Lnn^w^    ?«.•  ^,*™?^  °'  competitors  in  the 
Hist.  Crime,  p.  10^    Tnd  1.  |t^9^    t      *"■  ,^''"°'  *'"•'"'<'•"    2  Pllce, 

"*s^oj^L"?b%^:A1^»'«^^  '  '*• "' 

«tion"o?SetX  excru^iorof'oM,!"""';?'!  *°  '"-^""^^  ^'"  "PP^Prl- 
ever,  that  froni  the  ann  1^1101^  of    hn«.    "  '?  ^"""y  ">«'"fest,  how- 

appropriation  of  tradeTo^he  exclusir^f7tw.°"r-  ^-  ^^'""^  "" 
warrant  of  law    such   ns  ti,„  ..k*  "  •       "l"^'®  "•"<^''  '»  ''"ne  under 

patent,  the  ob  "inlng  of  a  „,otno  v  bv'tbe  "i/  '"''"•"""•^'  "^  '-^"^^s 
erty,  tlie  obtaining  of  a  uh  3v  hv  n.I  nr,?r'''""'"^  purchase  of  prop- 
petition  and  trade  as  tie  r3t -.7 „       ordinary  process  of  fair  com- 

activlt.v.  St.Sg  wit  the  "  •  4,l.rwe7l"L';*^'l'"!,""^'  ""l"''*'^-  «>■ 
leceived  meaning  of  the  word  nlJ^  .„,.7  •  ^^??'''*"'"'  ^'^  commonly 
we  find  that  there  renntns  nfin^l^f'^'^'^"^,^'''^  ^''"''^^  <"  exclusion, 
have  of  recent  ;iarrbe"o„;e!^rr/,mnMr''fY"''  ""''■''  *"«  ^""^ 
without  warrant  of  law  iuich  In™  n n  i.  1  T""  '■"■!  T^'^fel  "-UoHv 
the  injurious  effects  of  the  fomn.,^  f  .?  <^'^<''™':tei-istics  and  all 

time,  .nnd  which  are  acco  mi^s  «  l,"  ""''''''''^'  °f  Q"^'"  Elizabeth's 
of  the  rules  above  c™"irmln^.!^L^-..i  Z'"'.''^."^.  l**^^  O'^rt  violation 
condenniation  of  such^  mononoHe,  i,  'tf '"«•"*  «'  t"<'e-  The  judicial 
relating  to  restraint  of  trade     Th»  ,  f..       f*?"l""^  »t  the  principles 

evn  resulting  fronfre^Sof  ^r'^drupr'/l'rlr^^^fe'"^  ""  "^*'-""« 

the  nccomplishn  ent  of  the  effer^-  If  /"  ^?/  *'''"  "  ""««  '"elude 
constitute  "an  uXwf^i^  re^S'o/pr^veS'rtrll^e""-^  '"''  '^'"<^'' 

FIFTH. 

s  f:,£s  ,r;£»  =r,?  "-"""•■' ~«r'"js 


152 


55  FEDEBAi  BEPOBTEB,  620. 


ants— fh«+  "'^^nt  from  tlie  vieu-  tni-An  k,. /•  ^^^  Propos  t  ons  Is  tA 
render  the  nernw^i^  "f  interfering  nith  inter«t^Il  "^  ''<^'-  '^o"'- 
othenvisa    lt?s  not  nLr"^"'^"'  "^e  hUerferenof  w ,?  ,"!?''^"'  '"«  «« 

«  restraint  of  tr«X  nl  *^***'  *"  <»nfeini,lnt}on  of  Hxv  "T,  ^^^'^»  of 
to  that  effect  would  h  "'**»'>P«'y.  within  tl  e  ine  ,n  »<;  ?lV^  <*on^tItute 
^  In  «nsw:f  tX  .!^,S^  "'''^**^"^*  '^^  ctef^,;  '::'"^"^  «^  the  act.  proof 
head,  it  is  onw  r^f  *®'"'^'"'ng  portion  of  defenii.in#^» 

of  the  laws  of  ^^r  I  ?^^'««^^'e-  An  act  nm^^^l  °  ""^  f'^^  ^^^^^^^ 
no-Ittecl;  a^d  u'does  n'^oT  ,1^'?^  "«^»  ^^  the"s  ate^who^'^U'r  '^^^ 
the  defendants  intendA.i 'i5^*  "*®  Question  of  fpderni  inV7.,f  "^  <^'»- 
entlon  under  ^^^"S^^^^  -«a»^  themselves  X'  S"on>m^' 

SIXTH. 

the  several  i'tatS  •!'«.""  '^'f'"''"'  »'  the  offe,  ^|  '""f."'''f  "'  *"« 
court  of  the  UniTed  kt^^^^T  <''''«-'-i''«l  an.l  ,lem  ed  hv  .f  "^  """""S 

There  Is  not  one  ki^'?'''i'';  *"  ""  t>->«Ie  <-on.iV.R  wilhin  ..  '^  .'*"*"'«  ot>- 

intended  ,o  app  W"  Z ''••""''  """"'«'•  > 'ml  to  whUM''"'"  '"-^ 
■*»«"!  to  this  ek-nient  „f  T  'V"  "n«>'-t.>intv  or  „,  pn„i,  """^ '~* 
element  of  the  offenifn/,  *''*  '"f<""*-  the  oh,.?..p    ,,     it"'"/""''-''*  '" 

states.  I,„t  tliat  it  u  ,J  I  .  '. ''■"•'^  '•""'  «>uin.eroe  „nm..^  ..  "  **"■ 
that  trade  l.v  nraVt  ^*°,;  f';'''''-'''  *"«  *"'«'e.  'Zuu^t  ??.,  "l"  f """ 
«»n«itute  the'^^^itr,^,",""^^';:  ""''«■■  the  Princlpys  a^  e  ;hJ:,.""'*T 

which  the  oonspin  to  -^Imir,  ""'?*'■  *•"»  statute  whether  ti. 
accomplish  the'Sru't '™  ^?  fi^"^  '^^^^  ««'c<I"^-'te  or  apnmmiljrT 
»een.  the  n.oans  are",;    "  ,"' .*'^"'',?  ;'"""'«  the  stated    'fr""'"^  *° 

«o  .on.  as  the  -i™^n't''ta:^^^--|U«r£-~^^^ 

'-""feress  Had  in  niind» 


UNITED  STATES   «;.  PATTEKSON. 
Chaplin,  for  defendants. 


J.Oo 


i^Erf^™-^^^^^^^^^      H  was  in  fact  posslhle  that  intestate 

have  or  e,^1.~J  ^  *';,«  co'>spirator.s  took  pface  "yJIherl!'^'"^ 
Each  of  the  tSr^  S~s'nf 't/^'^Ji'^''-  ""^J^^t  "'''''''  '•"^^  «^«^ 


ff'  W.  Chaplin,  for  defend 


ants. 


COMAIERCE   Amonp    the    c, 

^^^'  THE  Several  States. 


„„  .  ^    —  ri^iiAi.   STATES. 

-in's  act  must  rp«f  i^«  ^^i 

«^^ir^-  rrl*^  "~^^^^  "^" 

n^an'^./Tfilo^'^rf '4'""  '^  a^S/S  *".« -'«»'  states.- 
merce.'-  it  is  ot  ..r/"'  '"  ""=™  Englis","  Xd,  m '■''°*  "■«•"  the 
iuter,,u,rso  of   n,,v    •?'''''''•'■  '''"■**  I'^Micularlv  to  di,.?^  "?■"''  "«>m- 

vVall.  JOS   is-j.  .<,,.,       "^ef  Couimeree   n   in-  bV.  . 
"G  U.  S  517  p  ■«      "':  '■  -fi^''"'*"",  102  U    S    mi    -,!'-/  '•   T'''ff''"«.  8 
Sup.  Ct    ,11;  'Vlri'V     ■/^'^P-  -"^^  r.el„y.%^^^„"f^.<:?^y-  t^nol 
HoMaus.  m  US   4q.  T,  '■   Oi/'to,.  9  Wheat    if. '«i-®;,'*»'  i" 

Etfi^i'  sup.  ,.,  .pp.  .^73!^z&  ^'%t;:;,T^-^  f "^^^^^ 
Moreover,  it  is  rrno  n^         .  .  '  ^  ^"P- 

federal  constitution   fi;*-"A"^*'  ^^  "ot  all,  of  the  «'i"inf«  ^f> 
and  fixed  bv  m-inc/n]i«  ^^''^  definition  of  thm  is  nnt      f"'"'^''  "^  ^he 


154 


I 


mi 


ii 


S5  FEDERAL  REPOBTEB,  622. 
Chaplin,  for  defendants. 


fat'r?s"a%'i;r„°;rV.t^t^te°\h°^?^[.-rf=    "-•  '--  *"«  'act 

teTn-Kr-tr;^^^^^^^ 

»•"»  °?t  as  a  Citizen  Of  h?,''^'^,Te"  "^i"'  ^'/'f "  of  tl.e  United  stZ 
In  that  range  and  Beld  of  his  ife  n„H  .«  -'^  •:""  I""*"^'  'li'"  only 
himself  as  a  eitl;con  of  his  state  „„dno?^f";i  '"r,"'-'."*""  "«  P'^"^ 
line  between  bis  federal  and  hi.  .*  i     .  *  of  the  United  States     tHb 

and  often  a  hazy  ^TlLXmeUnTnmltTl'  ''  ""  ''"'"^  '^"'t 
of  pro.ximlty  or  remoteness.    Nevmhe?^.   -f  P'^'^*  "  ""«  of  desre^ 

V.  /few,  02  U.  S.  214 ;  V.  8.  v.  //«,r,>  joo  ,,  ^  roS"'  ^'■'*'^-  ^-  ■»• 
Wl,  t;.  s  T.  Cn,H«l,a,a;  02  U  S  ^o.  rr  i^'  **??■  ^  S"''-  Ct.  Rep. 
£0ff«.»  V.  V.  8.  144  U.  S.  2Gb.  ^2  Sup!  «.  Re^"  GlV.'^'       ''  "*  "•  ^-  '^^^S 

CONTKACTUAl  ChaBACTEB  OF  THE   STATUTE 

but  the  distinction  l)et\veei/ w^T?f- ^  ^  *?^  ^''^*^^"'  some  at  cnnital 
against  eapitnl  has  nhv  .Ti,4TX'^^  ,;;^,  "f  *  h.bor  and  legi^;!;[jon 
The  ancient  legishition  again^mo;  or^n^s  "  "\^  ^''''^  ^^  ^he  statutes, 
lation  against  capital.      "  ^nonopoliziug  and  engrossing  was  legisl 

The  act  of  July  2,  1890,  is  directed  nf  r.^..u  i     , 
very  generally  supposed  to  InvP  Ht^l      S'^P'^al.    it  aims  at  dangers 
Pitions  of  capita  I.     It  aims  nt  ^I  fi/  '''J'^"  ^"^  ^^  enormous  nggre 
comlunatlons  of  capitXts   nn/    "'^'  effected,  or  to  be  effected    hv 
aimed  at  in  legisl'uk^  ^^„^  ^^^f^j^f^tmns  oj  capital.    The   e^ 

oTf'  "f ,""  ''-'^  *>^  H^er^frand  o^r  'io^nol'"  ?r\  '"  ^^"^^'-'^t"^'!  ehar- 
call  for  federal  protection  aeainS  nl  I  il  S^\  ^^'^''^  ^^^s  no  general 
act  of  1890  was  ain^ntflrnu  I      7^^""^  *^^  '•'»^^<^r  character     The 

^i;t  c^Uract,  Ir^^l^r^^MlS^T^l^t^  ^^"^11^^'^"  ^  ^ 
was  at  this,  only,  that  tho  imrido*!!  ""^  '^"^  publ  c  snfetv     it 

Which  its  words'ire  ?o  h^  cin;True^^  ^'""^I^ '   «"^  ^^  ^«  this^only 

by  mei-e  fraud  and  viol^Krit  s  thus  Z^^rt  f  "f/*'^"  "^^»  commerce 
This  statute  is  not  a  Kn-Klux  nrt  ^^;  .?  *  ^?  ^^^^  '^^''^^^^  to  punish. 
Bopolizing"  of  the  statute  are  contr-iTt^a  f.''/"^."V'  ^"^"^  "'«  "'"o* 
ing.-not  mere  interference  >Wtno  nmoi-rl  ^^  .^^^^^^  '1"'^  monopoliz- 
ehainperty,  bringing  of  suits^^  or  oS  forn.«  .^' /?^^^*"y'  ^^^^^^^^ 
vexation.  '  "*^  ""^^^  forms  of  violence,  fraud  or 

The  indictment  proceeds  nnmi  +k«  <i.i 
monopolizing  of  the  sSe  ,-U?e, , tit  tr''*"  ^l""*  ""«  restraint  and 
substantially  equivalent  to  inteXenewir;"'  T^''  "'  '"e  act,  are 
terference  with  the  trade  of  rVvfil  I  "^  l^''^.  or  at  least  to  in- 
spiracy  to  interfere  "tth  or  f.  i,'  »  J^""'^  "^  "'«  ""U'lts  allege  wn- 
apparently  intended  to  I^ deser  he  1  ,«  -i'"',"  V""  '""""o^s  of  f^rS^^^s 
or  other  "oncontraotual  n.eanV  The"  ,I"'''  "^ '""«  "-"ud,  violent' 
means.  They  therefore  ft  rtoi'llLp^^nf*"^  ?"'."^  "o  "Ot  specify  the 
l«.s  completely  missed  the'true-'XTud^eS:!  of  The  stItStf  "''^ 

CoRTBACT  Crimes. 

pIa«^4w"tSrr;.rt"oeem.™"'  '4j:'T'"*°,^,'««'^«'  «*  tl^«  outset  the 
characteristics  of  thoS  Ss  wS^ch  Z"^' nin"";'  ""''  *"  «">«!"«•  thi 
tract  crimes.  ^  ^*'""*  """y  apHy  be  designateil  as  con 

lni^lllx"rg^a'"To  mak^^^  '^'''■''^'  '«  "'«  ""'awful  sell- 
sale  must  have  U  ^n^e^Tthl^eSs-'X'^!' -.firL^i 


UNITED  STATES  V.  PATTERSON. 
Chaplin,  for  defendants. 


155 


j'T^an?  arofTrSaf  laT\-nf  b'"  t'^'*  "r  ^  <'^'-""«'. 
the  law  of  contracts.  The  Questk>'n«  nf  ^^  *''*  ordinary  principles  of 
«nd  agent,  of  delivery,  for  efa.nn1e,~"H-'''*°*™^t"«'  «' P'tacipal 
I  qnor  prosecutions  prkisely  as  ta'^^Wi^ctf 'T'^'^  ""''  ««ttled  in 
•  icirsaT'f^Ti;'„o;sf,^T"-'^^«^"^  ^o- T-  We.«o„. 

statute   a  "sale""trh  n^"i?   n  "fact'ailr^'' -^f  "'^""'^  «e'«ng 
knowledge,  he  is  buving  for  ai   nrtn^t    ""''oug'i  nithout  the  vendor! 

t^  eases  xlJJon  ttf  S^^l^^,^^-?;;!  ?f ""^'  ^«  well  illustrated 
feit  money  to  a  confederate  Th!f^i  ^^  "putting  off  "  of  counteV- 
tiuguished  from  the  crfme  of  n/f.v-^^"'-^  ^^  "  P""'"^  off "  is  dis- 
c.minal,nuistbeniade^  an  uttenng.  Vt 

imply  a  contract,  wi,i]e  a  -  nut^n  "  Vi  »  ^  2"^  '^*^^^  '^^^  necessarily 
true  contract  of  sale,  gift  or  bir  ir  ff  k  ^^^^^'^^^  Paper  implies  a 
sale,  gift  or  barter.  In  /?c^  y  Arf//r.  .A?..^'*il^^'"^^^^  ^^^^  a^J  other 
tlie  indictment  (fran.ed  o  It  8  &Twin  ttV  ^^  S;'>  ^^'^^•-  S»PI>  ^ 
off'  counterfeit  money)  chai-ed  thnJ  «  "^-  "*•  -^*-  ^  ^''  ^or  "puttinc 
paid  and  put  off  for  two  si  ]  4.  tL  '^^  counterfeit  shillingV"  erf 
hngs  were  sold  for  half  a  cro^n      "^tP"''^^  ^'^"  ^^'""^  ^''^  bad  shi] 

meeting  ofSni^  ;^'vIHc,.  ncSiv'"'"'''''"^  "«  I  "o  or  Jo'^i.o  "ffecTa 
I  represent  to  a  vendo  •  h.'t  I  ;nf  r^r.^  ".l^"  "'  o"  the  one  Imnd 
me  goods  upon  credit  tl X  i«  n  I  '  ""''  "'creby  induce  him  to  <ili 
voidable,  indce<l.  at  the  venrto.-^  T  ""]''■«»  of  sale  bet "eeu  us 
less  a  true  contr.nct  „n  it  toid^rt  '/'i^''  "'^  ''a"",  but 'mne  th^ 
goods  by  fal.ce  pretenses"  ■\\''"i'^---'^nd  my  offense  Is  "obtninin^ 
representing  that  I  n m  i  •=  '  ""  "'o  other  hand.  I  get  »nn?i"I!^ 
me  to  buy  !u:'Zl  Z  4n  S't^'t  the"'  "'••"  ^-  ""'  ^mStneS 
to  A.,  there  is  no  meeting    f  ,nin,i=^t  »   *'"  '"*'  ""on  a  sale  upon  credit 

."eri^..^'i'n  t^^^S^-  «'«^  --et'"^,,!;-',"" ?    ^ 
titK.  or  thinks  tl"uh?L^*^^^^,t-<-P-^  vendor  '."ten^ to  V>a 
tuJl'"  'l"l>posed  purchaser  intends  or  T  f..?    l"1"  "''  "ot  what  he 
No  ~n?f'  ?  ""^""S  of  minds  in  rontrnctiv  **"*   '"   "'«'•<'•   or   is 

Tins  Statute  a  Statute  oe  Contu..ct  Ckime. 

i-estrainrno?ta?tf"monopoiSze*"nrL.u"*'''''?  '^'■'"'^-  Neither  in  its 
thing  else  than  (a)  the  i  nkw  Pjo  1°°^  ^'^^  '*  aim  to  punish  -inv 
conspiring,  or  atte  npt?ng  ?o  nfa,"^'  T^^'^l'  *""  «"  the'^^mbin  Se" 
tracts ;  or,  possibly,  (c)  the  comhiM.^  *"  ^**"^'  *''«  making  of  ^f ' 
to  supjx>rt  or  enforce  contorts  i/f,  ""■  <^onspiring  or  attempHng 
*''?*  a/ontrart  be  made,  or  thTt  contLtrS^^^^^^^^^  to  guilt  under  if 
rh.s  is.  .„  .uhstance,  the  view  w^i^  hTs^iS^n^rktu-'o"?- the  act  ,„ 


156 


55  FEDEBAL  BEPORTEK, 


623. 


Chaplin,  for  defendants. 

no  one  of  tliose  cases  is  a  d^islonnf  "'^  decisions.  Since,  howeTIr' 
binding  prec^lent  „,«„  tWs  com  or  's'^^n"", ?',"""  ^^^o"-  «^'s  a 
^n^  '/if  defendants'  counsel    n„rH,.fi„?  "."  '"*"'•''  "i""  tlio  case 

at  pro„er  ,«!„.«  inlue'discSn!'"  '"""''  ""'  ""«>  »«  reL?^ to 

TkcII.Mcal  TeBJIS  in  the  StATUTE. 

The  use  of  ffir*tiii{i^.>t  ^ 

necessitate.  ti^e'c'SScS^!;::,':. J^f  A"  ,*•"  ^'^'^  '«  «->^  «» 
Of  htatutiirj  c-oiist ruction  th-if    .v  . !  ^^  *®  ^  familiar  nrineln  a 

phrases  ah-eady  hav  nL  a  settled  ^I^^^^  '''•  T''  ^^«^"t«  "^es  words  ^jr 
these  word«  or  M,ra.<ef  hi  thl  ^fn/T^'"'"^^''^  signification  in  the  hm- 
nieal  sense,  unleis  the  co    evt  ,n,!;^"*^  ^""^  ^^^  ^^  taken  in  "uch  t^h' 
"  iMw  of  nations  -     ,   TV  c  '  ?f  '!"'^''  *^  '•^«ding  inipossiWe     If  ^ 

"^ihS;;;es^>vr^^^^ 

A  Miniiar  conj-ervativ#»  nriiw>t..i    .    *   '     JJaji.  oOo. 
expressions  horrovved  froi     t.i  !f!l£''""^J"  ^he  rule  that  statutorv 
to  he  taken  in  the  ineanin"  of  t^.oi     "^''^  ''f  *''"«"»«»•  Jurisdiction  a^ 
by  judicial  eonstnictio,      1>« -^/^.^^^  ^^^'"ieile,  U  defined  there 

ado;,'t,:;;::v;Sn™t  fe  ?f  ?/;;:!. ';';"r""''^'«f^ 

snunnar,-  refcronco    'ml  ofte,^  hv  IZ  ""^T"'  ^'"KJects.  bv  a  mere 
a  complete  title  or  Ue»a  of  tlm  *  J,?  '"  "V'  """Pt'e  designation  ^ 

mary  adoiition  in-  feder.1  ITHnJ^"  f  **'^^  Principle  that  the  sum 
law.  civil  or  criniinnl   i. w  L     ^"/w  .^^  "  I>='rticular  head  or  tlfiaT; 
ma  all   its  exce  Ss    :  it    h.  ^l   **'^^  ^^  ^«^''  wi?haints  details 
the  same  reading  whi  .i/     \vo;  L  ^.^  "^^^^^^  »^««   i"   law  precisely 
tailed  Code,  rehearse  at  leLfh     li  **'?'  ^'*^"^*'  ^t.  as  would  ad/ 

p"r  -^n^t^inf..'  S^S  =r'^'  ^^ti^nri"^ 
-".V  .as  .eld  to^  ,:^--  »L''Sa?^,;'li;SnI%t 


UNITED   STATUS   V.  PATTERSON. 
Chaplin,  for  defendants. 


157 


a  T«''-'^no«'n.  settLl"a"d  tect,ic^!"?t'h"   ?■''*   ""^^'^  "   -ord   has 

i°  *"«  'r-.  ""*  '■'  t"e  language "f  a  tr  de*"  nr'*^''"*'    ■"«••> ""'S-not 
the  word.  In  a  new  statute    win  L     "''de.  or  in  common  speech  — 

Laheti.  fMiV.S.W-    |  /),,,:  "    ',  ''*'. ^''^''  i^»*^  meaning,      i  ■,/;„"• ,. 
rich.  101  U.  S.  278  "  '■  •'""■'"""•  M.  108:   Orccf/ca.f  ;' „oo^: 

ErF»:cT  OF  Worn.  "t«a„k"  ,x  rnrs  Statcte. 

«oT!f  trS  i'/muTOworwLrf'l,'-   '"..'*'  '"^■'•""'«  «■"  »«   individual 
G,Mo».,  V.  Off,,,;,,  n  wWt    1    lio      r,?™""'"-^*--"    ^Marshall    a   J 
therefore,   in   this   statute    NoitS,'   .  '"^■■-  ^""^'t'  <"■  ».'   and  there- 
Even  if  it  were  a  bro.aS  word  tinn  "I  ""''"'""*   "'"'   "  wmn.er^^' 
more  broadi.v  than  " commeiTe "    ,T tl,i«    f "iT^"  "  '"""'d  "ot  operTte 

therefore.   In   this  statute    is  eitw   '  ^^'^  ^^e  word  "  trade " 

or  narrower  than  it.  .™d  in  ertIervi?u"T  •'''"''  ^'"'   "  """"ler^.-" 
word,  surplusage  In  the  st-it.,t«     .i-..  '*,  ''•  ""  a  mere  Individual 

be  given  effect,  if  pS.sshiewl^  .    n   r'""     t^de"  must.  ho«4vlr 
Cov.  Hoffman.  wTv  sn->  '  '^"'"'""^  ^o-  ^  ^-  «•  iSlUarkei 

^trahrt'oV'tlT^ff^I  connnon','^^-"'?-^  ^'l  ""-*'-  '■«-  'ar  the  "  re- 
.  io..  b.v  its  application  1^  1™"/",";:%?.""'^^  '°  '*«  "^"J  «'  "I^r^ 
«>nu„erce"  n,ay  be  broader  than^^ade- "o'"™^^^"  '"  ^  'aV  a, 
indictment  comes  under  the  henVl  i.f  „'^''"«'  f"T.  if  an.vthing  In  this 
the  head  of  "  trade."  Noth'n^"  fn?«'"^''?/.'  '*  ""^  """es  onde? 
those  outl.ving  zones    If  nnv  ^?  „  "'   '"  *is  indictment  lies  In 

confines  of  trade        '       ''"^'  °'  f^-^merce,  which  extend  beyond  the 

Teohnical  MEANmo  or  "  Resteaini  of  Tbade." 

common  law  b.v  "  restrainrof  *U^e ?""'*"'"  "'  ""»*  ''  "'«ant  °J  Si 

This  phrase.  like  main- others  hns'.f  . I 
mean  ngs._a  broader  and  a^arrower     Th''"  k""^  '«''  *^»  technical 
Includes  .III  technical  "  restraint  of  trade  "-r^"""'^'"  '"  «^"«'-'''-  and 
and  includes  only  unlawful  "  res^riin?  of  f  '7^e„na'-rower  Is  specific, 
vers   no  obnoxious  sugeestion     -r^J      "'  *™''®-      The  broader  con 
nlficntion.     In  both  lt^S  the  nhrosf ''""■*'■  "   "'  obnoxiofis  X 
and  only  contractual   res"St     resJT,-  i"t''°^ '^"''•aetual  restraint 
contract.    Both  the  broader  anTJhenJ"*  ^^  »>r,tr»ct,  and  only  by 
forth  by  Greenh.  Pnb.  Pol  l&s       *"«  '"'"''^«'-  meaning  are  wen  ^ 

oomnfonTrm'  oon?ert?^°*5 ,^"lf "  '«  almost  always  used  in  the 

queutl.y,  "combination  "In  It,  Ls*"*  """■"  "contract,"  or!  Ie4^ 

"  conibination,"  the  Phras J  mere  ^'^  ndlca7^°  tC ^T* 'T"  ^''''  '^^^ 

apl  niV'^'Tv*"  P«'"'«"'s  In  a  contrart '  Mm'mn„  ^'"°^^'"  "f  ^  eonsldcr- 
ally  ail  of  them.    When   as  ,^ft«„  I,      "™'ting  one  or  more  bnt  nan 

do'Lr VrV"-^  in  "  rest^^lnf^Tt^ad'T."^;, T.f  Z^^'^  *°  «  -"«"^«"- 

^"ntrctni,V''o&*nh''rt^°  /-- '  -^  xr-ent-  r 

o.  a  stauehoider,  wbr^rL^ro„rtr4tt--£f  |n| 


i 


X«)o 


56  FEDEBAL  BEPOETEE,  826. 
Chaplin,  for  defendants. 


I 


it 


applies  in  an  e°ce%i«,ml  4  J  „L  '  m?''  "^^1''"".'*"'  «I'<*^H  "ow 
word  "trust."  As  to  1^1X1^}!™^  ]„  ".''f«"e  signification,  the 
^j^^^        I.      .\8  to  couililnations  in   restraint  of  trade,  see  Id. 

C0NSP1B.»CV    IN    ntSTRAINT   OF   TbADE   IN   THE   CbIHINAI,  LAW. 

It  reiiitiins  to  be  consfdeiwl  wiw.fii«..  *u^     i 
trade,"  eiti.er  alone  or  in  com.e^thn   witl   thi' ^''"'^     '"  '■^*''"""  »' 
any  otiier  word,  bad  in  tiie  c"  S  I-  «    ,  V^i    -I     <»"S|)iraoy,"  or 
tHan,  or  dl,rere,-,t  fron.!  Its  t«l      "  n^n'ngln  the'd^^'ni"?  ""^^  " 

SuiU  separate  technical  meaning  In  the  orh..innl  i..w   ,    k""  -    ^ 
here,  wonid  have  to  be  a  nieaniiig  ce,,erMfli-\^l?.i  ]i?'  '",'*  eflfectnal 
a  matter  of  pei-sonal  or  o.-^n»l,;.f.,f  ..  .      •  iT"^'"''^'  "'"'  '">'  merely 

existed  in  th'^'c;:Sl'na  K  I  woZ  •;;,!"  r'tn  /.f/"*^"  "  '"f""'"« 
boolts,— old  and  new  In  tiio  »„ii„.. ..  "f  . .'"  ""^  nPProved  text- 
phras^,  " rostr  lit  of  tr  de ■'  .nd  ■?  "^ > text-boolcs  the  words  and 
do  not  u.,«.r    ,     e°s   n  1^'ne  «mt„^,"?!.M"^^.,"'  V'^tralut  of  trade," 

ri:^^rv '"  ^^f'^^^'i^  '•co^r.?<^"-*-';.irorh' 

spiracy  in  rostTaif.t^'T'tr^de':'"  4  Bl  "cS  'Twk'  ^''^'^'i'TS" 
Crini.  Pr.  &  PI. ;  Chit  Crini.  LawrRob  Crm'^t-^^,^n^;'  'V'^''''- 
Paley,  Conv.;  Carr.  Crin,.  LawrBlsh  CriV.r  I  mvRui  %?■'"'•  ^''"'• 
Whart.  Crini.  Law:  \vi,art  CHin  w V  i,.;.  )i  •,  ^'*''- *^'*''"-  I^"""*^- = 
Ij.«-;  Maugh.  Law  li.w is.'"  [MeT  "«',  f^e-^wS  n"!"'  ?^""- 
May,  Criin.  Law;  tovis,  U  S  Crini  ■.vii^^.V."?'''*-,*^'^''"-  '^'"': 
Crl.„.  Law:  Gabh.  Crin..' U  w  i  Fist' Crin/ Dii'V' i^r.""-,//r  =  "^ 

Tlie  on  y  Instances  of  the  nw  of  tL  ..i.-V.     .T '        . '  "'*"•  Crime, 
of  trade."  or  "  rostrahit  oVi^l  -  fnl'^TT   ,<^"«l'i'"'<y  i"  restraint 
tl»  defendants- twiiiecSn  le-,rn  ,,1^?.?';'.'""'  '""l^oKs.  as  far  as 
coe-8  Criininall^MenceT  Stent  '  S     •   ''^  ?"'''*''*"  «""<"'  «'  Rog- 
Tnjde  yu.    Th^ViJillle^r  \li  'n'^^'^o'f-  '•  C  ns.^lJ^ie^ 'f,ritUrlT''f 

K  "KtT'tt  •'^..f.iriifrra^Mn  «r  ^r  "'^"^  « 

James  Stei.hcn  had  then  i^^nenife^  f.  r  „',Iv„  ^'^  ^^^J''  ^•>     ^Ir 
study  of  the  erimlnairw  ftL  ""c^ntmcrfnt  n?'!i^**  ^^'"'^  '"  *"* 
With    referem-e    to    legislaHo"      sVei^  "„  ^t 'V°rin     r  mw"^^'!*:^: 
preface.    What  be  wrote  in  Ro<w»  wn,  Inhlk^.h,"!,      ,  J*'    "*^>' 
Wm  In  Ills  "  History  of  the  Crln^i  i^    subsequently  elaborated  by 

The  nomenclature^.  ^L*splraci'S'"S'  uSiinVo^"  Trade  "'in  ^'""^^ 

J^rs  ?«n^\-L.^Tortrtte^Stf 'H^^^  "= 

the  past,  and  of  such  pr.bnc';rnd°s^Sol 'Sr^sitfon  a"  to  .^"^HH^' 

X'-.ot^v^:  i"f  r«ch"auro'f'^:;sV3riir  "^^^^ 

does  not  make  his  phrase  a  "technir rm^i^'tu're 'SlV^c^^^^ 

But  what  he  there  says  begs  the  question  hmv  f^vini  ?°l*  ^*- 

considered  In  the  matter  of  "  rertralnt  of  trade  "  '^""^  '"  *°  "^ 

It^d^°Sonr^^sTo"Kmr^uTrlV'  fL"*?*  "  *^^*  '"~'''  »*  «"• 
fectly  at  llbe^  to  use  ^pu^i^l^lSlftul'^UZC.'  I?"^  '^^ 


UNITED  STATES  V,  PATTEBSON. 
Chaplin,  for  defendants. 


159 


wntten  in  support  (if  a  theory  as  to  freedom  of  trade  at  the  common 
law,-a  theory  which,  as  Mr.  Justice  Stephen  shows,  is  erroneous 

An  examination  of  the  English  Statutes  relating  to  offenses  ag-iinst 
trade  fails,  with  the  exception  of  one  preamble,  to  detect  tS  use  in 
a  criminal  sense,  of  the  phrase,  "  in  restraint  of  irade  "  ' 

(1<20,)    t  Geo.  I.  St.  1,  c.  13;   (1725,)   12  Geo    I    c   34-   n740  ^  99 
?f^JJ-o^-  -^'  ^^''-'>  ^2  Geo.  ill.  c.  71:   (17??,')   17  GeV  IH    c^^l 
(1795.)  3G  Geo   III   c.  Ill ;  (1800,)  39  &  40  Geo   III   clOG,  repeal 

Preamble:  "  Wliereas.  it  is  expedient  that  such  statutes  Ffore- 
8ta  ling  and  rcgrating,]  and  other  statutes  made  in  hS^m^  nudln 
7tvl\'''  'J:'^^*';,^^  repealed."  (1859,)  22  Vict.  c.  34  WS  )  3? 
&  39  Vict.  c.  .Si;.     Here  "restraint"  is  plainly  contractual. 

Teciimcal  Meaning  of  "Monopolize." 

The  word  "inonoi>olize,"  and  its  noun,  "monopoly,"  have  in  the 
In  J'  'Vlf  in'V'*  the  time  of  the  passage  of  the  act.  a  techSl  min 
ing.  In  so  far  as  they  implied  any  exclusive  privilege  not  resting 
uiK)n  a  government  franchise,  or  upon  individua  ownership  of  nro^ 
erty  they  involve  the  idea  of  contract.  4  Bl.  Comm  159.  R.?v  'coS^ 
tract.  Lim.  210-24.-; :  Greenh.  Pub.  Pol  G70  et  sea  Rir^s  T^'/«  .; 
Conmig,  51  Fed.  Kep.  205.  .^"    *^^' '  '^"  ^"  '"^ 

It  is  not.  in  the  legal  sense,  "monopolizing,"  to  raise  unon  one's 
?r.^rT^  '"  '  '^  T"  y'  '''''^'''  ^«^-  t^^  subsi;;tence  of  a  c?mnnunUy 

tr'de"  "monon;.lv-^^^^  if  *'"''^"'"  ^'^"^  "  ^-^^'"'^^t  in  restra^  o^i 

craue.       monopoly     has,  in  the  common  law,  a  broader  and  f-ivoi-ihlA 
sense,  including  just  and  rightful  monopolies  such    fj  a?ents  or^^^^^^ 
Hghts,  and  a  narrower  and  obnoxious  Fen..e   enibracii  g  only  ,1Z'^ 
les  counter  to  law  or  public  policy.     "  Monopoly  "  is  limited    in  ite 

cSfct''Tf';?r''"  '""'"'  'V'''''''  ^^•^"»^-^"'^^'  I>i-ivate  rnersh  p.  or 
conti.  ct.     In  Its  muiower  and  obnoxious  sense,  it  is  limited  to  un- 
lawful contractual  means.     It  is  not  monopolizing  for  a  band  of  des 
peradoes  to  invade  an  i^solated  community   and  i^ob  it  of    ts  winter's 
stoie.     lie  only  monopt,llze.s,  in  the  invidious  legal  sense  of  the  word 

^"i^r:nf^L'::^i  'r  "^^  '^  ^^«-"i>t«  to  buy  uif  thrxil' 

or  suostantially  the  whole,  ot  a  given  commodity  in  a  given  loc-ilitv 
or  at  le.-is  contracts,  or  attempts  to  contract,  t'or  the  con?rorof  it 
Case,  c'tcd  ;ibovp.  Section  2  of  the  statute,  therefore?  mX-tkes  to 
punish  nothing  but  the  making  of  a  particular  form  [627]  of  ^n- 
tract.-usuaiiy  a  contract  of  imrchase.-and  conspiracie J  and  At- 
tempts to  make,  or  to  promote  the  making  of,  or  perhaps  to  e  for^ 
such  contracts.  This  effect  of  these  technical  woi^  hi  the  Statute 
has  been  repeatedly  recognized.  U,  8.  v.  Greenhut,  50  Fed  Rep  409 
In  re  Corning,  cited  al)ove;  U.  S,  v.  Grccnhut,  51  Fed.  Rep  •>05  •  /n  re 
Orccne,62  Fed.  Rep.  104;  In  re  Terrell,  (U.  8.  v.  GreeZtT^lF^^^ 

The  mere  fact  that  England  and  the  several  states  have  varied  in 
details,  or  uiK,n  the  shades  of  meaning  and  the  precise  scope  of  tech 
nical  expressions,  does  not  make  it  improper  for  congrS^to  emnlov 
them.    At  the  times  of  enactment  of  the  various  federj^T  p^Ll  stTtu^^^^^ 
England  and  the  several  states  have  differed  somewl  at  upl  the  dl^ 
tails  of  the  various  offenses.     None  the  less,  there  was  a  generillt 
understood  crime  of  "murder,"  "forgery,"  '^obbery,'^ 'Vra^y  "  etc 
settled  in  its  outlines,  and  in  most  of  its  details,  to  such  a  degf^  that 
the  federal  courts  could  have  no  difficulty  in  fixing  by  its  definition 
the  meaning  of  those  words  in  the  federal  statutes.     Ball  y    US 
cited  above ;  Jlf oore  v.  U.  8.,  91  U.  S.  270.  '  ^" 


mmm 


It 


55  FEDERAL  BEPOfiTEK,   627. 

suv.ti««  ,.    .  ,.  oMowN  Bi   Section  fi 

nndor  anv  contra; f,    '"  luostioii  hrovidp^-  "... 

spinuv.     anS  M  i.  u   "''  il"^  w.nhi, ;,«;,"" ^ •    '^»>;  I'^Jfrty  owned 

this  act,    .i.d  beTni*',,!  M  """^^^  "-oieof . )  "i.emiS  L^i   '"'  *°  ""^  «">- 
anotber    <     to  „   ,"'.""^  "'"'••'e  of  tmiis.  J,  .t.;  °  *'?  "'  "action  1  of 

those  nrovi<lfti  h,.  i     ^^""^   ""d  condemned   i?v   i  i       *"   ""«  United 

Narrower  .^fEANiNo  of  "  11... 
It  lias  l)een  remarict%ri  ok^ 

s  to  be  takpn  •  „  1  r.  ""^  "-irrower  sense  ..f  ti.Jl  .  "^  *<*  eons  der 
monop^lie,!",^;  J'f  ■!"  «>?  «tatnte  conSaU  ^f  *I7"". '»  the  law 
restraint  or  nionomw  '""''^''"l  «t  tbeZ.mtou  ,,«^'''-*''"'^  ""'>  «» 
In  eltber  Zi^'ll^\  "*  ^'^s  nnlnwful  at  1^^?.  '""*"■  °"'J'  such 
and  thereT'^othli^*  ^^^L"  *"«  '^^traln?  or  nionoDS?'""""'  '""'.-since 
Hon  of  tbe  bmnder^..?f  "?^  """  '»  the  indictmenr^r?  ~".f«<-t""l. 
the  widesnre^id^'?^™  meaning  would  Justify  .,s,vni„.^  ®.'.'"^«  ""^  "dop- 
defeud2^;^^XP^^"«'«''?'.<-lon  of  uncoasVi,mio„    jf^  „?  b  "*'  f"°^^°' 

tectoloal  c^S.  natorv  L'--"?'  ^'"•'*^"'«'e»ce  e  "?,  and  nnr*'  ?"l^ 

to  e-xtend  thos2  pH  'c  p1l°"sliST  ?'  """"^  "'"■•^^  »nd'^s'"?22S?'y;  '" 
ootlylng  zones  if  ••  <^mo,p''£',','y  '^y'»°«5  the  realm  of  "TAdp®??^f^'^J' 

s:no-^K£~^ 

federal  consti^tloi    nwn''?  f*^'*"'  J'"-'-''"ictTon    to  th„^-t    **'''*"*^- 


UNITED  STATES   ?;.  PATTEKSOX. 
f'haplin,  for  defendants. 

THE   KOBEOOINO   THE   ONI.V   PbactIC^  Co.SXB.CTIO.V. 


161 


and  nn"""  '4^""^  part  of  such  LZ"r^"*'C'""'  ""  «>n^PiraciS' 
and  uncjualifled.    But  at  the  dote  if  «.  **  language  is  sweeniue 

Isted,  under  constitutional  nrntp.;f.  '  ^"^  Passage  of  the  act  tliere  « 
im^nal  liberty.  deSlenr?orthei'rTx  ttn^'^'''^  «'  P~I^r^  and'of 
terstate  monopoly  and  restnirit  ^il^  eiisteme  upon  a  complete  in- 
r'ght  rights,  not  only  t^e  rigbts  of  natenS^  "^^^  •^"t*"  aSd  ^py. 
but,  as  necessarily  incident  ti,t™t  Patentees  and  copyright  holder 
absolute  monopoly  and  restraint  ^^'  ,«>"°t'e8s  derivative  rightfof 
Machine  Co.  v.  Mo,  J,  m  Mas,  7?- rTJ"  J"'"'^'  ^«  «o^-  *^7  494- 
Pullman's  Palace  Car  CoTmij' ^  ii^S^i.h  ^^""■'"  ^rannp.  Co.  y' 
E.x,sting   rights  of  this  eh.-,rictef  "h^tK"  ®."P-  ^  R«P-  478 

p^^!;r.^^r™--^^;^^  n^  tKn/h"t^  fhir^,- 

ar-m-on^-Sir^^^^  SV  f-  «"-"'=Ci^ 

:s;tt-i«^'io  ^srlS-'-^C?-"- -""■^'" "  '^^ 

a  statute  ought,  if  nossihip  Vn  5  '''*'"^^  ^  unconstitutional-  ana 
^Uutional.  U  J,  ~^;;  ;;^^e^^^  -nstru^  as  to  iSake 'i^'  ^^^ 
580 ,  Pflfr«r>,ig  y.  Bcaford,  3  Pet  4^^-  »;/      ^-  ^-  ^52,  6  Sup.  Ct.  Ren 

Central  Pac,  R.  Co.,  lis  U   S%f*  rf^'^  0."^^^^  ^^P'  ^25:  U.  8   y 
Congress  could  not,  therefore  h^     ^."?-  ^*-  '^^P-  ^^38.  ^* 

ButV".  '".r^  »-ad,*?rt'e^Sleit''  ^'^'^^^-^  *«  "^  the  words  of  the 

tect^^b^^r  c^:?^^^^^^^^  r^h'r^r^-    ^^^«  -  -tte.  not  pn>- 
nevertheless  many  forms  of  rp«^trd^  ?^  Property  or  liberty,  there  am 

aXt^- -:-t  tL€KV?"--*- X  rthS 

busmess,  (Co/?m..  ;.  LocL   L   R   i^  a     ^^^^^^^^e  agree  to  "  ^ua  S' 
unreasonable  and  ruinous  'comrSiition^^;.?^'' ,^'^^'>  ^^  *<>  reZain  In 

'    ^Tri^t^-altf-  i;-  ^h£^^^^^^^^  ~^^  "^'  '•  ^" 

Assuming  tharSg-L™  ^^^^^^^^^  T*^«i°t  is  reasonable  or  not 
such  restraints  and  mononolie^s  n  «*''/^^'*^^  *^*^^'  «nd  to  m^-e  aM 
Wonally  protected  rightTTXVrV'l  S.f  anS"^  "^  «<>*  ^^^ti^- 
Plam  that  congress  meant  no  nnohthll^  rV^^  P^"^'**'  ^t  is  perfectly 
make  it  illegal  and  penal  for  a  sm«n  /'  .  ^^  «>ugress  had  ^we?  to 
state  commerce  to  se  1  out  Ms  littl?  hlL-''*'^^^  ^""^^^^  ^n  loc^  inter 

thing  of  the  sort.  Nor  did  cnncriLo  •  ?  J  ^*^  "^^  intend  to  do  anv 
most  of  those  restraint  'Jna^^^^^?°^^"^  ^^  interfere  at  nil  w^^h 
alwaye  b^„  regard^'^^s  rigmTnTl^nuT^^  ^  *^^  «*-^tes  h'ave 
ment  of  the  publisher  of  an  edition  h1'  1  '^*''  {''''  example,  as  an  agree- 

Of  a  tra^ecret,  loo.ng  ^t^^p^J^ar  Tliis-s^--  ^ 
11808— VOL  1—^  :a n  ' 


i 


C! 


162 


I 


fl 


55  PEDEKAL   REPORTER,   628. 
t'hapli,,,  for  tlefeiKlanta 


fAl  "'"">  other  similar  >.*rt.«« 

This  Ccnstr,. -r.       *  *"  <oiu,„on  hm. 

The  act  iii  oi,esti,»„  ,.  ..  -^isiwiTioN  of  Many  Htates. 

ban  Zi  #  1.  ^^  ^*'*'  modern  "  tnisf  "  ''^'f^uJar  agitation  axra[n«f  +h« 
"«s  Jed  to  the  Da«sin*r«  ^i*    •    ..  '"^^-  — "ii  a;'itjiti«iii  «-i.-  •    "?a*"^t  the 

to  i-efer  to  tbeSlTt ,nii^  """'''"•  «^«*"te8  in  manv  'fr.i''''-/'"'"^  1'*^^' 
of  «o«greHs  iTth^f  t;!^^**'  '*'*  throwing  lig ,"  umn  fi!^^**'  ^^  ^»  Proper 
«•    All  LaininaHi    Tff  ^^  ^''^^  act     PlattT^Vn^^    Probable  intent 

<lec.larato'i^"';^7heTom  ^-  »• 

«>iitraet8  to  Hniit  e^n  L  t"  '''"'  ^«  ^^  Iiave  seen  nf  *"  **"*-*  "*«^n 
t  on,  were  ilie«^,  ^r  ifi^V*"'!-  ""*'»'>^  »^ise  prlcS  '  J'LT"*"^^"  'a^, 
cfple  to  fonibiii  Hn»i  ^  «tatntes,  in  tern.s  sinmlV  5^^"^'^  produe- 
Ject  beinHo  m^^^^^^  to  maie  "„    f  .^    ^^  ^*^*«  P'''«- 

»>inding(tnt^^aeft  T'l?  ***^  Practical  difficim  nf  '  ^^;''^^'t«'  ^^^  «»>- 
"tnistt'  tht  ciS  .  ;;i^tr,r^^-  '"  -^-^  or'S^e^'e^r,"^  •'^"  '•^^•^"aJ 
justice.    The8em^K«„    l^^"^  ^*ewme  a  great  o  >tn??^*^  """""""ding 

^avvs  Ala.  im-im  74'  f T*^  '^""l^-     The  sh  tntes  refr^,  T"^^*^' 
ni«  act  of  Jiiiv  *>    ittcMk   t  X      ,  -^"»-i,  c. 

UNia^IZ"        ""*   "■  *'^*^''-^«  ALMOST 

rect  and  unrontVm^nf"?  '"f/esnlts  naturally  flowinf.r'*/'""  <""«t 

Violence  a"r"w/d'Th  a"^^^"«  »•  '"  f"&*^u«rH'''''"-  "«"- 

It  is  another  g^ne*a/rut  ""cLr  i'*?* "  "«*"«  fo   mLrJe?'"'  '""^^" 

«>nSS'„^«„*^»--. «".!  that  the^^xr„'orre'rrri 


UNITED  STATES   V.  PATTERSON. 
Chaplin,  for  defendants. 


163 


they  are  orinm.allynaWe^i*,"t  ^"^  "J  '''""'^''J'  "nlawfn  o^ter 
which  they  oomniit :  m^^I  fn,  ^"^  ■'"^*  *^'"<^'>  they  intend  and 
third,  for  indirect  res,!u?-  n..?  /  «>»sPiraey  to  commit  that  irt* 
natural,  although  unintended  "esnU^'^u  f"n  "  "-"^P'^acy' t„  ^Cut 
persons  i-onnnit  an   act  of  m.,„i  J*  follows  that  if  two  or  mn~ 

store-burning.  chanVrtv  "or  ""lnte';V.':r'""'T.  '"''^'^'y'  ^l-op  b?ea"r 

tCaS\?';;!fcrt!nri     !^ 

-^pe.  if  the  -tnteUdVrirr;-rm^.e-t'--i 

a.ra°Lrge'Xortt;';;'SrSi;r  criirr"''  "■""  ""^  «••«  -voiced. 
siraint      of   interstate   tradP   -inri    iX  ^"""^^^^i^e.     If.   therefoi-e    "  r<»- 
brpadly  interference  witl    it    it  fni.^"'"!?''?   "^    ""*«   statute   mea^ 
bring  witliin  the  federal  in, .J^riiH''^  "'^^  this  statute  oi>erates^ 
very  large  proj>ortimiTfV,T  he  ^e^^^^^^        "^^  ^"'^e  of  "  consp7ra^'» 'a 
Furthermore,  where  eoigress  t.deTfnri'T.^'^        ^^^  states^'     *" 
mnies    its  jurisdiction  is  exvhi.i  e  .f  th^^'^'l'^^"  "^  '»  ^*v^»  range  of 
takes  jurisdiction,  not  stricdv  of  tti^    ^■'''^  ""^  ^be  states.     Where  ^t 
of  the  crimes,  th^n  acts  n  av  le  nunlshPd'^?  '•"'  ^^  ^  federal  a spe^ 
of  state  law ;   again,  as  a  b^L    of  Zw^?  twice,-once,  as  a  breach 
from  the  government's  theo,;  of  thf^"^?'!^  ^'*''-    I*  follows,  thereforp 

t.™.  _nnder   this   .tat„te,'t";,r,SrZ;^^^^^^^^^^^ 

These  singular  resiilfv*  r,f  «.„  * 

■snfliciently  condemn      at  ^be^rv  ^X''"'"^"''?.  "'""'J-  «'  the  statute 
I'y  the  supreme  t^urt  upon  "question  nf       ™.'  f"  '■""'««  «'  reason™« 


Question  of  Constitutionauty. 


THE  DEFENDANTS-  FOBEOOINO  CONSTEUCTION  E8SENT,.,    ^ 

ALrrV,  FEOM   SEVEHAI.  POINTS  OF    "ew  ™-"'«™W»N- 

oJ^J^Z'!  Sr  oTt;""^,,*?.  '-'"•'«.  -n  one  indiscriminate 

V.  licese,  92  U.  S.  2  4    T  S   r   J„  ''•''^'„'' ''«"'  *='«««««  of  acts     U   I 

Trade-Hark  Cases,  100  n  4  s->  •  t/?'  •^••^^*-  '^  ^up.  Ct.  Rep  650  7(«  • 

U  Si'^^l'l'  I  ^""P-  «    Re'p.'9'21.'^2'"'L&?  ^''*?-  '"  ^S.  2to: 
U-  S>  047,  8  Sup.  Ct.  Ben    l<{Sft     "77 '  ^^'""P  v-  Port  of  Mobile    iW 

say  the  supreme  court,  bTS  C  .T  l^r?  S^'**""'^  "«  dangerous"" 
at  page  221,  "  if  the  legislature  cn,,M 'J?  ^-  '*•  ''•  ««"^«<'.  92  0  S  "li. 
all  possible  Offenders,  and  le?,^  itiithf  ^  "f  *  '«'"««  enough  to  e.rtch 
who  could  he  rightfully  deS^  Vnd  whr^"'.*"  ^^^  '°«'de,  and  say 

In  other  words,  when  congress  Pntl..    ^'■"•°'''  "«  ^^t  at  large  "    ^ 
over  whicli  it  has  partial  power  ft  ^   T  "  ^'ven  field  of  legWitinn 
part  of  the  field  it  proposS  to  o«uT  ar?.'^  '°  "«  iegislatfon  what 

irS  wittnl*^  ooLtitutronauSch".-"  *'^  ""'  ^^  ^I'«''«e'i  -ust 
goes  without  sayng  that  a  statute  cannot  be  saved  from  the 


H 


d 


It 


164 


S5  FEDERAL   REPORTER,   630. 
ChapHn.  for  defendants. 


Operation  of  thi«  m^i^  w 

In  part  nncoMtitutlonaT  of  ^iIhI''.'''"  ""tute.  in  part  constltnMnn.i 

At  the  date  of  the  parage  of  fhV«  ^\^lf '  «*  P««e  221.       '      *"P-  ^*- 

mlft^.^^^"'^^'"t«*  <^"n--el  have  no  o«ii  . 

literal  suffidency  mereJv  hv  f Jw  *         ^°"^'   ^^'^^n  a   stahito  in^to 
^e  courts  „,a.v  read  words  i„^",?  !^''^  «°^  ^"'Ptical  in  expression 

Pet  72 :  Brewer  vm^  '  l^'fffor4.  3  Pet  43SUfl'  ^'  n       ^.  ^"P' 

U.  a  235,  6  sip  St^ep  I'Z  '^'  ^^  ^'  -'  cZra7aVk  ^0^11^ 
The  defendant**'  fn^I  •    ^*  '  ^^^ 

""T^hrvrn.''""*^  Sa^Cfnr  ^'"'^-  '«  --»««,  to  conBtltutlon- 

xorowing    out    of    ronsiMAi-nH^^     ^ 
monopolies   and    r^tf,  a  «!       T;'^"'    ^*>»'    ^»ie   moment     fii^.«    i*     .. 
nrotPof^wi    ♦».         '^^"aints   which    arp   v*i«f^         ,   '    ^"^'*^    lawful 

Which  it  is  absurd  to  sudiio^p  /hoT         ^^^^^  ^^^  commerce    ni    nJ 

tended  to  ™t  .^Ti.„^f  restraints,  not  all  of  v.m1  ""''*  "  "«^ 

,  From  still  anotherTmrnt  of  ;lL^.^'■'"*""""^••  oitTabove        ^"" 

Congress  cannot  punish  all  art/' J    '""*°»"t""onaI  "*" 

commerce,  however  remote     it  1^      ?'  '"terference  with   lnter»f.* 

degree.    This    Is   peculiarly   true   in    in[S.''^^*  *«  ^  '"atter 

juteistate   commerce.    The 


UNITED   STATES   V,  PATTERSON. 
Chaplin,  for  defendants. 


165 


and  ^XTing 'linf'and  'the  mll^l^'l  Jurisdiction  is  an  arbitrary 
upon   it     The  line   fix^   brtRenl^^^^^^^^  constantly  divided 

although  a  practical  line,  is  a  nnrPlv  «rh^-.''^  ^^.  ^^^^'"^^   Package, 
tional    power    of    congressional    wfj^f'^^'^'*.^'*'^  "^«-    The  constihi 
begins   with   a   vanishing  linf  JhShln"!?    '^    interstate   commer™ 
some  point  upon  that  line  "^n  S  cHsf  n^J*^*^  commerce.    M 
T^  r.  f.^^'itrary   point    between    in te^^^^        transactions,  must  be 
Technical  "restraint  of  trade"  and  "mn^       i  "^^^    ^*'**^   commerce, 
senses  of  those  words,  would  be  wthi^T^^!'     ^"  ^^^  unfavorable 
iress ;    but  not  all   interference  Zll^  -  ?^  interstate  power  of  eon 
would   be  within  the  Sffntlonn.      '^^^^^^tate  trade  or  commer^ 
would  be  at  the  sta'e  end  of  tSe  vd'.  ^^P^n^ress,   bec^uTu 
when  properly  construed,  ftseif  prmTd^  nn^  ^^"%  "  ^^^  statute 
within  which  it  pronoses  tn  n^f    i  V  ^."^  ^^"'^  ^^  fixiug  the  field 
ference  with  inteSrconLe^^'Thpr^f^^^'^  *^  cover^n  inter 
as  is  too  remote  for  federal  nA^;  it  covers  such  interferemi 

mate.    It  embraces   therefore   wth'  '"".r"  «'  ^^^^  ^^h^^h  is  prox^ 
St  tutionally  deal  with   nmttlrs^^^^^^  '"'^''^^  ^«n^»-^««  can  ^n- 

with,  and  therefore  follows  under  ^h«*  ''^''^^}  eonstitutionally  ^al 
being  discussed.  The  s  atute  can  hi  •  institutional  principle  now 
and  too  great  generality  of  r^-^ou  •  'P^^^'P^^ted  out  of  vagueness 
restricting  it  to  technical  iuilZ^'  J''^*'  constitutionality,  only  bv 
nical  monopoly,  inThe  Sav?rlTe'^en^^^^^^^^  ^^  trade,"and  U"^ 

It  is  further  esspnfini  f^^l         ^en^es  of  those  words 

there  be  read"in?rif  rhVi-eXm^nf  o?^^^^  ^^^  ^^^tnte  that 

nterstate  commerce,   as   such    and   Lr5  L?'^'''^^  '"*^nt  to  invade 

interstate  commerce   in  so  furore     ^n^^wledge  of   its   character   as 

conscious  intent       '       '''  ^""^  '^^  ""^^  knowledge  is  essentialto  this 

It  has  been  stated  above  thit  hxr  fi,« 

iir^r^"?^  «>-e  erlmlnally  liawl    Sot^on.v" 7  ""if  <"  "^e  crhninal 
direct,    and    even    unconteninlitw!     „„^  ^^  ''"'  •"'"'^t.  but  for  In- 

rZn^  i"'  ™"«'>"-«cv"toTm.^t  sur?;;^,;s'an/'  *'"^"-  '°'''° 

s.v^f:;rofTc!,t;;ir^cv%o^^*"'^- ^' ^^^^^^^^^ 

nece,s.saril.v  require  orTmprS.n^  tZ  ""  ■"l!?""''  *"'"«.  [838]  doe,  not 
intent  to  do  that  particular  thj^j"'  K^^^'  "'"  *•  «»'«<-ious.  s^fac 
robl.er.v.  conunit  murder   wlthonflnLn^^"  "i**"'  ""^^^^i  in  a  phm  of 
is  a  natural.  althouRh  u WeZlntif  ri^^,^  f*""""  '^  and  mu?der 
the.v  are  guilt.v.  witliin  the  meS  '  r«  "  ?'  *''^'''  P'«"  "*  robben 
conunit  murder.    This  stihile    thT^ ,"'  ^^^  '"""•  "i"  a  conspiracv  t,; 
cases  where  persons  (at  l™sl„h^'^^'"™'  t""^'™   literally,  (ivCT?  an 
reach    without  knowing  it    an^  wiH.T.^*^  '"  •"'»  «^t  -nalZ^ln  ^) 
which  amounts  to  resfrainV  nr  1  "^'*'^'',"t  contemplating  it.   a   result 

Burmos't"  ^:^£^^^si'^  "^ziz^^v'S 

."S  o^dl^cr- ll^^tHHFv   ---n/-f'tS 
Instance   of   robberp     h.„.^i       '^'^  "P*""  federal  rights   as%.,r.h  T^ 

breaking,  cham&  or  ofher^c?""""?'" "  *"««•  «hop-bSrn™g  '  stl7 
t7«  «r  more  Participants?  which  ba^'T'  '°  f '  '"  which  there  are 
piated,  of  restraining  or  monon«ri,S.  -^^  '■^^"'t-  although  unconteiT 
by  the  act  within  the  fSaf  uSirt  ^ *"*^•*'""'^'■<"^• '"  bTugS" 
ff  ?„'3'vr"'^  «''«'>•  ^ch  Joint  actiiZ^f:  ""*'*'■'  *"«  S»ise  of  Sm 
JL^I  *  '^  conspiracy  is  not  merl^Tn'^VS  '^  «"?«Piracy  to  comm?t 

tion  ^  t  .T"*"*  "'  '"t^"t  and  knowi^*   tb^ref"'^**^  '"^'-    ^'""out 
tion  of  the  serious  crime  of  the  counto?may  tf  nnn,  I  ''J'"^"  "™'»r- 

i  may  he  punished  under  this 


I 


166 


55  FEDERAL   REPORTER,   632. 
Cliaplia,  for  defendants. 


Of  the  federal  courts.    S      raiL     f  tL^ 

niously  extended  l,y  the  goUrnnu'nt^  Ll^^  *'^'''/"*^  ''""^^^  ^  ^nor- 
ot  the  phrase,   rre^traint^f  t?a  i    '• '  "^  ^^^  ^«"«^  n.eaning 

meaning,  and  under  the  min^defsf.tJ^  k  "'''""^'^'^^•"  Under  that 
to  the  extennion  of  fedenilSin  i^^  «»>ove  no  Ihnlts  could  be  set 
act.  lecieraj  trlnnnal  jurisprudence  eflFected  l)y  this 

This  reasoniuir  forct»><  iw  tr.  *k^  .     . 

Is  nni«nstitutl,>m,l  "  r  Zt   „   rtrh-         I""  V'^'^'  *""'  ""e  statute 
cjHc  Intent  t,.  Inva  le  fe rteral  riS',  Z"!"     "'   '^"""•leage  and  spe 
fl'"T,x.   I,„;  ,-,  s.  ,12!..  1  Sun    C-t    Rm.  ^^f     *   '■*"*'    """   "•      V.   «.   V. 

U.  S.  263,  12  Snp.  Ct.  Ue„  617  "^^  ^*-  "^''-   '"  =  ^"^O"  v.  U.  S..  144 

eie«"ir;:;;';r;:^„To^*;;r<u;:-^';;/'!;ri*;""' -  ■"-•  t..en  rea„  ••oons,.,™. 

the  part  of  tlio  rriuiinal  to  restrain  i.t^rL*    ^  '^'""^  '""  '"tention  ou 
that  such  nas  the  intent"n?of^i^',  ""tL   ''«l«''''''rT     »  '«  -vl'Ient 
•  coHspiracj-  to  nionopoli/e  "  show  fJTh.f        '•'"."  ^  "'  ""'  •'<''  re-xli^. 
8  an  el..n,e„t  of  the  l-rint^     It  i^,  ft       ,  ..Ih;';,*"!"""  ♦"  "''"'"Pollze 
to  sivr  a  «i<U.r  »,.oik>  to  !<e<tion  I      T  l''*^  V'"  •^■'Sress  intemled 

eonKpira.y  to  restrain  "  The  f-  i.f  ti  ^  ""t"'"'  expression  would  be 
this  natural  fonn  of  words  ,rnd'h„»n"  TT^"  '"""  "<^"»"«1  'rom 
restraintof  trade."ete  Is  ,',.,t  L  %  "^^  """  **'""-  "wnspiracv  in 
P«rt  of  this  brie;.  .!«;;«;."  ,"'tl?i  words  '''T  '■'"""'""«  "'  "»-«'" 
were  used  because  of  thelV  wei'l^kfi^inSnieii' n"!::*:;;;^*  "'  '™<"'-" 
Aside  from  Oifstioiv  «»v  <'«%t«-.„ 

v^ir.rtiiUiX    Ot    *^  ONSTITUTIONAT  fTv     ITiw^t.^.^  r. 

A  fifth  Hinitarion  nnisf  Iw  im*  «.i^.,.  i.i. 
terms,  it  cnvers  actn     f  tl  e  cW^^^^^^        ?^  Tr't  ^^  "^''  «^«^'*e.     In 
gnilty  knowletlffe  or  no       TIum';   ^  .^.  V\*^T*^        whether  ,lone  with 
which  a  knowleihre  (."the  f ,  ts  L  w  ''"^*^^''  ^'''"•^'  I»^>'i^'^'  ''ffenses    n 
oocasionally  a  statute  "4iti  il;  «^^^^  •'•'sential  to  crin.inalit.-.  and 

peiise  with  the  rt.piiren  e  t    ?  LmyiZL'''T  '^"%"^"  "^'^^  ^^»  ^^i^" 
however.  are  few  and  exc-epLin^^^^^^^  "^^  "^  ^''^  '^^^^  class, 

against  a  stnuijr  disj-ent  mi.  i^  i./V  l  ''''^  .''^'"  '"•»*^^-  »'«  '«  imle 
sliidlar  statutes;  ararinv.  riu^h  v  "»M^*^'^»'^  *>f  authority  upon 
knowledge  is  held  t/>  he  iVs  , e  s  Ji  u  !' 'T  ^''*^  >-^auiren.ent  of  ^,  Uy 
rested,  not  u,Kn.  a„v  rl,  'h  e  o? l.  I  '?'."  "^^*^"^^'  ^''^  *^^^'«^"  « 
knowledgi>.  hit  u,K,n  ,     n^-e  U*^  •    ;  r  ""  !?•  ^^•«l'^'"^i»>^'  with 

view  of  supposed  rt.purenientrorm^^^^^^^  the  particular  statute.  In 

feasibility.  i„  the  imrtia    fr  natte?^  '"  ?"  ^••■'^*'^  "I>«"  the 

saiT  knowledge,  and  the  l»n>pZt  th  r  fom  ^n '  ,^/  l*'»^'»'-'i"S  "H  neces- 
aetion.  of  i"M»osJng  upon  one  ;XJut  to  t  h.1  ''*  P«'-ti^"lar  field  of 
ing  Into  the  facts,  and  of  mth^'  t  L^  Jh^  r^^sp-nsibJllty  of  i„c,uir- 
this,  the  decisions  and  the  oni  ot.«  in  ^*  ^-  w^''  '"  ^lustration  of 
472.  as  <„,npared  with  Zi^vT,^  4^'  .V  KrJV  '  ^'^''-  <^^^a«s.) 

i?;«/m|,,  5  Q.  R.  i>iv.  2r»j».  14  CoV  rrin     'ns  4m     •.  :?^'  •''^^'^-  ^^^'  ^•• 

of  recent  Eu::Ii>h  ,as,.s  upon  the  sub  i^.f  lt\.  '  T","^  ^^'^  *'"^^«"«  «^»-'*^s 
Won.  /^.VA  V.  Oiifirr.  lu  Tox.  C>lnfc^I  *1S  "^j'^^^-^  ?^  '''^^  "•  »»hUic- 
Cr.  t^s.  1.H4.  11  Cox.  (>in.    fVi.r"iiV.  //ri?  ;     w^'*  ''  '^''^''^'■'-  '-  «•  ^ 

I  he  opinions,  and  the  confliof^  ..*» ;.  •   • 
above,  aflford  a  striking  1™^™^!  of  thl'''-  W"'!"*  '"  "'«  ""'<''<  ^'ted 
ne.-e».saril.v  drawn  In  t-^ntS  I  for"L"'*  flV?^^  !?*"  «•"'<•'•  »»«  '« 

the  «ene™i  «.„.„.„..,..„.  t-iuif.^e^„t''rrirt'irtruX"'.:„'^T 


IS 


UNITED   STATES    V,  PATTERSON. 
Chaplin,  for  defendants. 


167 


^owedlv  s^^'n/^n  ^^r^^?^"^  ^««e«  (Which  are  all  exceptional,  and 
Ssize  thf  fact  oH.^^^'^'^  exceptional  grounds)  only  serve  to  em- 
fhe  c?,Vii,^l  ?nl  f^  ^?T^^'  ^.°^  ^^^"^t  universal  requirement  in 
rdi'ieTn^^^^^  ^^  *^«  ^'-^^t^-     <^Pi«ions  ^  ««PIx>rt  of 

apoloX  in  lan^^^g^         requirement   of   knowledge   are   invariably 

of'^gunt  'an  1  thThi'sf.fn?"^^  ^"^"^^^^  ^^  the^facts  asTn  :s'Jntiai 
offends  or  cre;rivp  nf  no  °^^"^^«'  whether  adoptive  of  common-law 
be  refd  iZTlffsV^tn/o  •/  T'l?^^'  ^'^  ^^^"i^'^^'^nt  of  knowledge  is  to 
oe  leaa  into  the  statute,  if  uot  there,  see  (K  8.  v.  Carll  105  TT  S  fill  • 
Com.  y   Fabun^  119  Mass.  297,  (cited  with  appmv^l  in  U  F\    Caf^i 

P  r  4-    Vli  V    r      '';  ^f'^  ^  ^•'''•-  *  ^*'  -^^Q;    ^^^^^*'*  ^^^^^^  1  Hale 

nV-      :        •^'  ^-  ^^^^Ofonl,  Car.  &  M.  002.  G05. 

1  his  statute  was  never  intended  to  punish  persons  who  loin  to^ethpr 
under  an  innocent  mistake  of  fact,  to  enforc^\vhat  thlv  b^?Lve  t^  1^  a 

e?re  "l  eii^^^^^^^^^^  t  '^T    ''  '""^  '''''"^''''  of'L  ane^ecMi^d^ 

or  trustee  who  iol  ?it  tn  1  • ''''    ^^^^T^*;  «"d  Relieves  that  an  executor 
or  Tiustee  \Mio  sold  it  to  him  had  a  right  to  sell  it,  and   if  he  attPmnta 

t  heTfi^o;  withfn'tK  'TW""^  "  ^'""^^"^  contract,  or  to  mon^e 
he  is  w  thii  t  thin  '  "^'V^"^,^^'^»  though  mistaken  iu  his  facts.  If 
ne  IS  >\ithin  it,  then  an  indictment  will  lie  against  everv  n-itpntoA 
who  a  tempts  to  enforce  his  patent,  if  in  fact  1  is  pat^^^^ 
through  prionty  or  some  other  fact  unknown  to  hm;^and  no  patent^ 
can  atteinpt  to  enforce  his  rights  except  at  his  peri  .  and  a  the  r  st 
of  on  infamous  punishment  in  case  he  turns  out  to  have  been  ig^ioiant 

^L"?."-  ^T''  T^'  ^'"^^^  ^'^  ^«"»<^  not  Ivv  the  strictest  d  Si  fe  have 
ascertained,  or  have  supposed  to  have  be^n  made.  ^"^'^^"^^  ^«^e 

now  Tn  Lesll'^riTU/'^*'.''  "'"^  knowle<lge  required  under  the  statute 
now    in  (jue.stn)n   is  almost  necessar  Iv  a   knowled^'e  of  -i   r^«ir.i,i«ir..T 

t^,S^:?a^^ts^irrti^-=^- 

It  IS  to  be  further  observed  that  the  knowledge  reauired   is   nnt 
knowledge    hat  the  defendants  are  eoinbining  and  ac  i^g  l^coneert 
but  knowledge  of  the  facts  which  make  their  combinine:  or   ict^n^^' 
concert  penal.     Persons  acting  in  concert,  but  Tcti ig  fnimc4nHv^  hv 

l^^^^-lmttha?  ;^n^1r  T^T^?^^'  '^"^'  l^u'l^^^^'li^in^ 
in  conceit,  but  that  is  not  the  knowletlge  which  the  law  reauires 

ed^e  Tl  f  H;4"ih^^  ""^^^  ^^'^  «^'^^"t^'  "^»^t  clpZe^iowl- 

eage,  also,  that  the  trade  or  commerce  proposed  to  be  restroinpH  «r 

monoi»olized  is  of  a  lawful  character,  and  lawful  in  the  h^nds  of  the 

rivals  who  carry  it  on,  or  are  to  carry  it  on,  and  iLVwledge  «iat  IZ 

commerce  to  be  interfered  with  exists,  or  is  to  exist! 

On  General  Principles,  Wrongful  Intent  Essential 

fi^^!l!  1*"?^  "'''*'^  '""^^  ^  ''^'''^  '"to  this  statute:    nanielv    intent  to 
?o=^inTuro'r  d'ef^rd&J?!*"^  '"^"''^  "'  "^«  >-'^"-  ^  '"■-"- 

rn^un-ntemT.t'a-s^i'^tt^At""'   ''"'  '*  ""'""'  --   '""-"I 


168 


66  WDHML  BBPOBTEB,  684. 


A8  to  th  '"""""■  '""■  '^'«'<ta°te. 

nearly  univeraai  «riw.*i    ^*  ^'  ^«<<^we«,  13  Cox  r-S^t'/?^  *   Reynolds 

It  b  «  .-K^  '""'""'"  "^"^"-^  «--TM. 
*5  '«  a  further  essAnfini   „  ^ 

trade,  bnt  a  "  riS™?^-  ^'"^  '♦"tute  Puulslies  Lf?^?'  - '  ^"'e  spe- 
Hone,  Implies  T^nf .  "'  *'''<'«•  «nd  "  ^}S„?°  c  '"^tT'^^renee  w  th 
Implies  a  wrsonTiff'T   '*'"efl<'lary.  ^   »"  .^L' *'"«<'e."  ex  deflnl- 

»»onopon"e'X°"e«e^ma.r^'"."'"y  to  mot'pon^^  ^1  T"'"*'' 
satbers  trade  intn  hi.       "*?*  *™^e.  bat  onlv  ho  ™1'    ^^  •'<*"  not 

«>n«rt  With  hta     iLr"  '""!?«•  <"■  'nto  the  hand?nf '^"*"'*^*"'>"y 

tlonal  monopolC     """^  ^""  ^  «>  »"»<'P<>"^lng  witbouTaa  Ttel" 

The  »t  t  '"""'  "  ""  "^""""^  °'  ^«  ^- 

"^T^the  perl  "'""^  "*  "*  *"^--"^  '«ate 

3«n^i^p£"S5  fet—  -  -  .t. 
^t™et"'or'^r^':^    ♦••«^«    tSat"tbe''S''L':f  "  contractual  re- 

6.  That  the  defenrtlnf    ^'n^eree.  "*  '^'"ained  or  monop- 

PrlTies  have  no  naSft  i-*  ^u*"®   <«)    knowledge  thnt  ti. 
commerc^e  prC,.^ To  Z  "*''f  exclusive  titleT  rf^ht  tl^^^'  "'"  "^elr 
tJwt  the  trad^'^rlLmn,^,  restrained  or  monon^Hili"  *"  ^''e  trade  or 

«tral„t  or  n.ono^,;"''  ™"«<^'<'"«  »*neflcia,y  of  the  contemplated  re- 

The  Indictment. 
«  ^?®  indictment  avers  nnn**  «#  *i. 
r  Th"e 'alli^***  «^«^  o^e  of'/hJ'.^Co'?  n?'^?'  ""»«  above  set 

t^wn  trad^or  traded  nionopoly,  but  a  mere  rudr''°i^  '"J^  ""t  «>»- 
•"■  traders  by  force,  fraud,  libel.  Ind  slander    ^^''*''  """* 


•J' 


UNITED  STATES  V.  PATTERSON. 
Chaplin,  for  defendants. 


169 


acy"as.°if'^a?riK?wSuwt7„T„l"/  !?^""8  *"«  P^Po^ed  consplr- 
or  monopoly  of  intei^tT»  if'ji  ""^  "^^"drng  of  the  statute,  a  r^h-X* 
set  forth  noVeLs  at  a^,Vif°^.«''n'nerce.    Some  of  the  c^'^iS 

derSi-?r  *?t'^  f  ««>'  c  <^  this"^?^r  Th^r  ^'^  ""-^  ^<^°~ 

aertake  to  set  forth  means  Pnfiroilr%«iV^  :    Those  counts  which  un- 
HDd  things  alleged  to  have  b^n  nroS^t  J^*'"!"^  ^^^  P^''^^^.  matter 
definition  of  "  interstate  mmmprn^MP^^I^  *^  ^®  ^^alt  with  within  tS 
w  thia  the  federal  or  Tnt^rTt^te  Isn^Vorn  "^  instruments.^ 

things,  as  distinguished  from  the?r  sT^^^.  «  ^^""^  P^^^^°^'  matters    or 
because  one  is  engaged  in  iXrsfnJp  r^l    ^^^^^'     ^^  *^oes  not  follow 
him,  or  upon  any  pJrt  of  hf/ If  ^  commerce,  that  every  attack  uZ,' 
commerce     The  ^tfack  ma '^L'upoT^  j  Th?"^^'^  n?on  intsTte 
of  the  state,  and  upon  his  matters  or  thin^       ?^^.  ^^^^  ««  •'^  ««biect 
matters  of  mere  state  commerce     TL^nT^^^  ^°  ^  ^^^  «»  they  aVe 
son  engaged  in  interstate  commerpIf«  ^f  ^^f  tment  assunies  that  a^^r 
has  no  other  aspect  than  that ^^^  V    ^^^^"«^^ely  engaged  in  it  ind 
merce.  and  that  an  in?erference  wifh'l.?  ^"^'^^^  ^"  interstate  cSm 
matters  or  things    is  an  inff^     ^***  *^''^^'  <>r  with  anv  part  of  I !« 
Burning  it  to  be  f^J^hTt   Sr'eTls  wit'h  T'^'''''  -mSU"  M^ 
or  thmgs,  concerned  in  local  onmn^^        ^^  ^  person,  or  with  matters 
nection    with    certain^nte,^tTJ^^^^ 

ui2)n  interstate  comnierce  thP  r^nn^?™^'*''^'  ^^  Proximate  attacks 
dflc  allegations  of  the  tn^ctn^  f  ^V?^  "'"^^  ^^  established  b"  sr^ 
Ihdictment  in  this  resr^ct^s  pn?^5  J*  ^^  "^*  *«  be  inferred.  T^p 
the  St  t  te,  ,,^  indfcCntrwrf  L'^Tn  "n  "  '^^^'^^^^  "Po^whTch 
V.  Hams,  and  C7.  .S-.  v.  Fo^  •  nnn.o?^^u  F"  ^^^  ^-  (^rniksliank,  U  8 
federal  aspect  brings  i  person  nTA/^^  ^^"^^'^  ^^^^t  the  having  a 
federal  protection  in  all  tlfeiraspee^f     '"  '""^'"^  '^"^  ^^^"^  within 

def^ndantThad'orTere  actingVnXr*  ^'  ^''^  indictment  but  that  the 
right  to  all  trade  and  con  merfe  or  o  n  •  "f  ^"^  ^'^^^  ^ad.  an  exc^usivl 
among  the  states,   at  leaS   ,'    «^^^^ 

fendants  may  have  had  nTof^^.^^^'^'*^*  ^^^  alleged  rivals     Tho^i' 
which  the  corporations  n?m^''*  "^''^"^"^  ^^^  ^^«h  registers"  if  anv   In 
they  did  denl,  or  the  defeSt^'^'  Proposed  to  be  attached  dealt'  I? 
have  had  exclusive  patenUice^^^^^        T^  ^'^^  P^^^^  witSlhem   may 
from  the  various  corSions    or  frn""*^""*^*^  ^""^^^  ^^  «nch  registers 
claimed  title,  or  the  Sdants    or  T  ""  ^^^^^^^^  "^^^^r  whom  ail 
ha^-e  bought  out  a  good  wfll  or  V  uLT''^  ''^^  P^^^  ^ith  them    mav 
or  from  some  one  under  whom  nil  no^^''^^  ^^'^"^  *hese  i.^rpora'tlons 
registers,  if  any,  de.-l^^?  irby  s  "/^coi^n  "l^^"^^^'  ^^vering^ie  cash 
the  same  terms  as  this  indi^t.non^  corporations.     An   indictment  in 
patentee  in  the  country   and  hf"^,"L^^^^        ^'^  ^^-^^^  againsT  every 
hsher  and  legatees ;  a^iinsf  e^erro'' 'wh''^^^^*^"^      EmersonVpub"^ 
will ;  against  every  owner  of  «  tr oL        7^^  ^^«  bought  out  a  eood 
Who  owns  anything  wh^h  ?s  tie  subTcfof'l^?  '^f'  ^^^^^^^  eve^^^^ 

4.  It  is  not  averred  that  thJrlf     "^  ^  ^^  interstate  commerce 
proposed  to  be  carried  on    t  ??^"^«r^^'  if  any,  being  car H^*  on   or 
tional  Company,  wT^t  l^wfSf  c^ml'^T '^^""^^  ^^^^'  than1h:\:! 
tion  of  a  limited  and  lawful  cont^^r^nt^^^K^"^^  ^^^^  been  in  viola- 
of  division  of  territorv.  «>ntract  made  by  them,  of  restraint  or 

dictio?al  IS:1^  TaS  %'f:T'  ^^  '^'^  -*-,  and  a  Juris- 

h/'nrn'/  ^^r^^^or,  ai^  for^he  couTto '^  ^i  '''''■  ''  ^^"'^« 
the  prosecutor  considers  interstitP  r^^  '  ^  ^^*^®  whether  what 
merce,"   and  of  the   statute^   eh«r..fT"'^''''^   ^«    "interstate  ^m- 

Wale'c  J    \7^  ^^  ^^^eS^ied'^^^^^^^  ^   ^*"*   "'^  - 

waite,  C.  J.,  U.  S.  y.  Cruikshank,  cited  aboTe  Prosecutor." 


II 


I 

I 


170 


^55  FEDERAL  REPORTER,   635. 
Chaiiliii,  for  clefonclaiits. 


phrase,    'oonmierc*  among  the  sevenU  states"'  Ts^^mexprl^slonol 

e?asrof  thinU    h.ff  iV.f  *  T'^^^%  '*  ^*''*^"*^  ^^'^^«'  ^n  terms,  a  whole 

^»,.4.  :     ^1  "^        *      "  tiiiege  interstate  coiumerce  in  jin  inriir**- 

ment  is  the  way  attempted  In  the  [636]  first  four  «uuH  of   m  in" 

f^"'^^'r'' """.'y  '""""  'n  t«"«  <"«flrt  against  thJ^defLdnnts" 

isters.  There  are  articles  hi  which  the  c^.iirt  mav.  perl  ans  te  sdd 
to  k.i..w.  a«  ma  ter  of  law,  that  there  is  at  all  tii.ies^ieirc';,,  ne^'ce 
VV ith  cash  re*?isters  "  it  is  different  It  is  verv  Xiihtftii  i/n  1  ^ 
can  he  said  to  know  what  a  "  cash^ist^  '  K  U  ^cm^i  dv  hS 
to  see  Imw  the  .-ourt  eaii  know  in  what  sense  the  tmn  is  sir/  h^^^^ 
^^.m.,t  rotU  lately  the  only  n.ennh.^^'/^i^hX  ;i  n^  wc^ 
hujTffest  IS  that  ..f  an  an-cmnt  bi.ok  fvv  cMsh  entries  \ow  n  so  f.  r 
as  the  indirtnjent  n.ay  he  deen.ed  to  refer  to  h,!ol  of  iasl/ediv  tl  e 
-onrt  eannot  know  that  there  was  at  the  time  in  quest  on  inte^tnte 
•o. .  nene,  or  exj.eetecl  or  „r.,rK,sed  interstate  <()mn?e,ve  Blan^^^^^^^ 
lj^K>ks  ,i,ny  lie  all  manufactured  and  sr.ld  within  the  h>g.,l  in  itV  of 
state  co,.,n.erce.     The  absence  of  a   siK^cifi,-  a     U  h)n  of   i     erlt.i?p 

wou;d';:;*f,^r;"';r;J"   '**'^  ^"eanin^  of  the  tenn   "cash   r^V^" 
would  l)e  fatal     If  the  court  should  take  th«  expression  "cash  reels- 

certinnly  to  1...  ,„,pris,..l  whether  it  is  ,,  r  n  n  ene  ii   m/w;  ±v     f  n 
.•..nunon-,.    ,,  uUuU  h.,.,ks.  that  ti«,v  ,,re  H.  r^rt  ,  it       ttn^^^^^ 

fess  to  exist  under  letters  patent:  that  the  different      aS 
elann  un<ler  patent  rights:  and  that  the  questio  i^.Tfre^  or  /e^^^^^^^^^^ 

act  of   li";/^  "'^*^  '*^  routrover.y  never  contemplated  by  the 


UNITED   STATES    V.  PATTERSON 
Chaplin,  for  defendants. 


171 


mecee  of  the  statutory  character  in  them,  also  apply  judicial  knowl- 
edge of  the  fact  of  a  lawful  monopoly,  and  an  exclusive  right  to  com- 
merce in  them,  or  at  least  a  bona  fide  claim  thereto,  not  to  be  tried 
under  a  penal  statute? 

These  counts  present  also  the  defect  (which  exists  in  the  other 
counts)  of  failing  to  allege  that  the  commerce  was  proposed  to  be 
continued.  It  is  future  transactions  which  a  conspiracy  contemplates, 
and  there  is  no  allegation  that  the  connnerce  of  these  counts  was  pro- 
posed to  be  continued  from  and  after  the  time  of  the  alleged  con- 
spiracy. It  is  fatal  to  a  conspiracy  indictment  that  the  object  of  the 
conspiracy  may  have  been  a  myth. 

7.  No  count  of  the  indictment  h;is  any  averment  of  knowledge  or 
intent.  If  the  offense  necessarily  involve  knowledge  and  intent,  they 
must  be  alleged.  An  indictment,  for  example,  for  conspiracy  to  com- 
mit burglary,  must  aver  a  conspiracy,  not  merely  to  break  and  enter  a 
dwelling  house  in  the  nighttime,  but  a  conspiracy  to  break  and  enter 
with  intent  to  steal. 

S.  No  count  alleges  a  proiK)sed  contractual  beneficiary  of  the  con 
templated  restraint  or  monopoly.  It  dees  not  appear  that  the  defend- 
ants were  in  the  business,  or  had  any  control  of  the  business,  or  that 
the  National  Cash  Register  company  was  a  party  to  the  conspiracy, 
or  knew  of  it,  or  would  consent  to  profit  by  it.  It  is  not  made  a  de- 
fendant, although  the  statute  contemplates  corporations.  It  .stands, 
upon  the  restraint  counts,  (counts  1  and  2,)  as  a  mere  unconscious, 
passive,  proinjsed  beneficiary,  without  whose  acceptance  and  co-oi)era- 
tion  and  indorsement  there  can  be  no  restraint.  It  [637]  is  not  al- 
leged that  the  defendants  conspired  merely  to  extinguish  the  trade  of 
the  other  corporations.  It  appears  that  they  cond)ined,  if  at  all» 
merely  to  subordinate  their  trade  to  that  of  the  National  Company; 
but,  in  the  absence  of  averments  bringing  in  the  National  Company  as 
a  willing  beneficiary,  this  restraint  wjould  be  impossible.  The  aver- 
ments of  the  restraint  counts  are  therefore,  in  this  resi>ect,  imperfect 
absurd,  and  impossible. 

The  crime  of  monopoly  implies  a  conscious  monopolizing.  A  con- 
spiracy of  several  mtn,  without  any  knowledge,  to  drive  all  the  trade 
in  town  into  my  shop,  out  of  love  for  me,  or  out  of  h.itred  of  my  rivals, 
but  without  my  knowledge,  and  without  benefit  to  the  conspirators, 
is  an  unlawful  conspiracy,  under  state  laws,  against  the  right  of  my 
neighbor  to  live  a  pea(  eful  life,  but  it  is  not  a  conspiracy  to  monopo- 
lize. It  is  not  averred  here  that  the  defendants  were  In  a  iwsition 
to  or  expec^ttd  or  intended  to  monopolize  into  their  own  personal 
pockets.  There  is  a  faint  hint  that  the  intended  monopolizer  was  the 
National  Company,  but  only  a  hint 

Acceptanc  e  of  a  benefit  may  indeed  sometimes  be  presumed  by  law ; 
but  a  corporation,  any  more  than  an  individual,  will  not  be  presumed 
to  have  accepted  itself  into  a  criminal  combination. 

It  is  a  universal  rule,  as  to  those  crimes  which  consist  in  contract 
or  combination,  or  meeting  of  minds,  that  there  must  be,  not  a  mere 
fictitious  api>earance  of  a  meeting  of  minds,  but  an  actual  contract, 
or  other  meeting  of  minds,  as  in  civil  transactions. 

Where  the  statute  siieaks  of  monopolizing  "a  part  of  the  trade," 
it  must  mean  the  whole  of  a  specific  part ;  while  the  word  "  monopo- 
lize" is  not, to  be  taken  in  a  mathematically  exact  sense,  requiring 
that  a  monoiX)list  of  tlour  should  have,  or  intend  to  have,  every  tea- 
spoonful  of  flour  in  the  United  States,  it  does  mean  a  substantial 
control  of  a  gi-eat  part  of  any  one  given  article,  or  enough  to  enable 
him  to  dictate  to  the  market  The  monoix)ly  alleged  in  counts  5  to  II 
and  15  to  18  is  merely  a  monopoly  of  the  business  of  five  cori)orations 
namefl.     It  does  not  appear  how  much  business  they  did,  or  what 


172 


56  FEDEBAL  REPORTER,   637. 
Chaplin,  for  defendants. 


UNITED   STATES   V.  PATTERSON. 


173 


l^^'^^s^^e^^^^^^^  in  cash  registers, 

and  that  to  secure  the  ,Xif oj*^^"!,,*,^^*  l*  was  extremely  trifling, 
monopolizing.  Men  camiot  b^  indi^.ri^  ""^  constitute  the  oflfense  of 
wheat  by  a  mere  aver  ent  that  thl^  1  ^ k*"-  ^"^bi^^ng  to  monopolize 
wheat  when  owned  b^A  B  Nnt^^  ^"^^'"^  *<>  monopolize  certain 
a  criminal  ease.  The  names  o?the  nvn^"^'"^  ^^  *^  ^^  ^^^"'n^'  *" 
the  conrt  does  not  know  thafthev  "J  .«^,^n^P«««es  sound  well,  but 
business.  The  defendants  for  nlr^Lf  n  """^  appreciable  amount  of 
Mm  Partingtons  attei?p?ing  to  sw^f  "E  ?^  »«dictment,  a«. 

Bhould  have  been  shown  that  f hi  !?„  ^K'*'®  Atlantic  ocean.  It 
alleged  rival  ct>mpan?erwould  havp  «^^  V  ?^.  ^^^  ^""^"^^'^  ^^  the 
the  business  in  cash  resistors  MnrL*™''"''*^  ^"^  ^  monopolizing  of 
counts,  a  mou<,ponrf  weThavP^^^^^^  upon  the  language  of  these 
ment  that  the  Nation^^SlRelis^r  rnr'"'^^^*  ^^^^  ^«  "^  «^er- 
with,  and,  for  all  that  apS^arf  ft  w„«  nnt  f  "*''  ''''^  ^^  ^^  interfered 
It  may  well  have  been  ei^^eT^  LZ  %  not  known  to  the  transaction. 
the  National  Company  f^^^^o^^^i""^^^,  the  defendants,  if  they  left 
ter  business,  evenTtteyT^ono^lTzZ^^  monopolize  the  cash  regis- 
panies.    Perhaps  it  h acl  flS^  ^^0^0?^  nfMi^^'T^  ^J  *^^  ^t^^**  «>°>- 

T'^^h^^is-rp:^^^^^^  '' "' 

statute,  to  t,7%S*com  ove^s^f  to  •n'uZ  ^^*'"^^';   ""^^^   ^^s 
An  indictment  might  unXubtwiiJ^  L   ,"^"^'  *°  ^  criminal  court 
into  a  criminal  Jne  ajAaln^/ .^.^  f"""'"  ^^  P'^^I^^^J-  to  bring 
defendants  claim^  under  a  patent  ?J?t  I'T  *^  *^^  ^^^^  that  thf 
show  of  a  patent,  anrheld  no  l^tt^r^  mt^^^^^^  »o  pretense,  color,  or 
any  letters  patent.    But  here  some  ^  fhi      '  "V^  ""^  ^'^'^^^  ""^^r 
fendants  justify  under  letter?  pTntThere^rnn  "'""  '^"^  ^^^  *^^ 
patent  claim  is  not  valid    and  thp'n,.!.^      ^  no  averment  that  the 
must  therefore  resolve  itself  into  «  nnf!  """  ''^'^  ^^  these  counts 
stniction,  or  both    of    he  let"e^   Da?ln^Vh^  '*''"^'^'  ^^  ^^^  ^^°- 
seem  calculated  to  launch  thTmurt^intn«    ^^^^  '■''"°^^'   therefore, 
over  a  complicated  tiCe  of  nn?m?  1    \^  controvei-sy  before  a  jury 

long  time  in  triaL    This  was™r  imendili''    wL'^  ™'^*'^  ^^^^P^  ^ 
to  an  indictment  as  nn   in;on?i       '"tended,     ^\hen  patents  appear 

atiouldbeaSth^tTL'crim  ^t  ^gls]' 

claim,  and  onlv  colorable  ^  "^  **^®*"  *^  "  *"®''e  sham 

c^nSt  dcL  •f!:;!;:^^,!:^^  /^  n.gneness  and  uncertainty,    m  no 
by  the  conrtsif    he  UnU^  States    «n:l'''"^""*.^  '  ^^'^''^'"^•^  ^^l^^^ed 

In  some  of  the  counts  tho  rWon/i-,«*J'  ^"'*^*''«WA'%  cited  above, 
splrimr  to  re.stn.ln  or  to  nionm^fnlj  °^  '^"'»*^-^  ^*^''^'"^^d  ^'»th  con- 

states it  was,  by  wbLTcre^  rn'or  ~^^^^  ^'"?""^  ^^'^^^ 

where  or  how  to  be  restrained  or  mmuL]  3  h  ^^  *'^  "^'"'^'^  ^»'  ^r 
close.  The  other  counts  .Sfv  tT.P  tT.  1^*  ^*'^'^  "^""^  *^«  n«t  dis- 
ried  on  by  four  corpora  ti.ins  name*?  *"'*  ^^mmerce  as  being  car- 

these  counts  do  not  S^  N^/ir^  .hi'T'  ""^'  ""'^"^  ^^«t  states, 
inters"  ap,M>,„,  We^^"they  m«cE  or  lor'^  ^^  ^'^^  "^««*>  ^•^^- 
Tested  by  the  reauireme  t  thnt  Vii  ^%  ^  ^'^"-^   ^yoards,   or   Ixioks? 

apprised 'of  the  SroTthl'  ,  a rg^  ZT.rttuT^J^lin''''^''^ 
prepare  tor  trial,  all  the  contonts  ar^^d  In  n  «  v  IV*"^"^.*^ 
cited  above,  one  was  charged  hnvino. "!.       \       ,  ^'  ^'  ^-  Sinunonds, 

of  orimlnal  pleading,  to  knon-  whom  hi  ^.Tk'  *"!  reiulremenfa 
caused  or  procured  to  use  the  stUI  '  '"''"^^  '"^^^  ''«'''°« 

or  commerce  of XStorf  cSaS?   "'"'"•  "  "PP^^'-We  amom^t 


Opinion  of  the  Court. 
Putnam,  Circuit  Judge. 

I  do  not  think  there  is  any  constitutional  question  in  this 

tion(rI!^/lf'  °J  ^'T  "^'"'"^'•'^^  ^«"t«d  by  the  constitu- 

/  rej^A^  7-0^  15  Wall.  232)  permits  broad  legislation /and  in 

Son  s'SsTonr^*"''  "I'T"  ^^  *^«  ^--"^  Statutes  (se^^ 
^on  5o08)  on  the  principle  of  construction  applied  to  the  lat- 
^r  in  U.  S.  V.  Waddell,  112  U.  S.  76,  5  Sup.  Ct.  Reo  35  S«. 
Logan  y.  V.  S.,  144  U.  S.  263, 12  Sup.  cl  Rep  cTt  ThS 
may  be  practical  difficulties  in  applying  the  statute  in  S 
way  as  to  prevent  conflicts  with  state  jurisdiction,  but  th  ^ 
can  only  arise  on  the  development  of  the  facts  at  the  trilu 
a  particular  case,  and  even  then  the  court  will  have  the  guid 

Ct  Ren  t^T""  ""T  T  ""'  """'^  '^'  U.  S.  731,  slup. 
tt.  Rep.  1203;  Cross  v.  North  Carolina,  132  U.  S.  131, 10  Sup 

586     Th'  ""^  \''  '''■'"''  ''*  U.  S.  377,  10  Sup.  Ct.  Rep.' 

iicf ofTuJStr ''-' '''-'  "^^  "**^  ~^^^  ^' 

This  statute  is  not  one  of  the  class  where  it  is  always  suffi 
«ent  o  declare  in  the  words  of  the  enactment,  as  iXs  not 

L  i^'  u  '  ''^*'*.  P^'-t'^'  attempt  to  engross  the  market 
by  furnishing  the  best  goods,  or  the  cheapest.  So  that  or- 
dinarily a  case  cannot  be  made  under  the  statute  unless  the 
means  are  shown  to  be  illegal,  and  therefore  it  is  o"dLar Hy 

ZsTn?  '"'r  *'t~^  '^  "^*  '*  '«  intend  "oen^ 

rZof  nlTT^    f'  '^'  ""1'^''-    ^"'^  ^y  *e  well-settled 
rules  of  pleading  it  is  not  sufficient  to  allege  the  means  in  ^en 

eral  language   but,  if  it  is  claimed  thatihe  mea^sused  Ir^ 
llegal,  enough  must  be  set  out  to  enable  the  court  to  ^tSat 
they  are  so,  and  to  enable  the  defense  to  properly  p^,^t 
meet  the  charge  made  against  it.  y  prepare  to 

I  regard  the  rule  laid  down  by  the  supreme  court  in  U  ,<? 
y.  Hess,  124  U^a  483,  8  Sup.  Ct.  Rep.  57?,  as  appTyVnl  to  thh 

L   S.  360,  IS  easily  distinguished.     If  it  is  not,  the  later  ^.sc 
will,  of  course,  control.     In  reference  to  the  suggestion  of 


I 


174 


55  FEDERAL  REPORTER,  639. 


7 

J 


Opinion  of  the  Court. 

the  counsel  for  the  United  States,  as  to  cases  at  common  law 
alleging  conspiracy  to  prevent  a  man  from  pursuing  his 
trade,  it  is  sufficient  to  say  that  to  conspire  to  prevent  a  man 
from  pursuing  a  trade  which  he  is  entitled  to  pursue  is  in 
itself  illegal.  But  the  case  at  bar  is  not  at  common  law,  and 
the  proceedings  under  this  statute  are  peculiar  to  the  statute. 
I  think  the  rules  laid  down  in  U,  S.  v.  Hess  distinguish  this 
indictment  on  this  point  from  all  the  cases  and  principles  of 
law  relied  on  bv  the  United  States. 

The  allegations  of  what  was  done  in  pursuance  of  the  al- 
leged conspiracy  are  under  this  particular  statute  irrelevant, 
and  cannot  be  laid  hold  of  to  enlarge  the  necessary  allegations 
of  the  indictment,  and  are  of  no  avail.  I  think  it  was  so  con- 
ceded at  the  argument.  If  not,  there  is  no  question  about 
the  law.  The  foregoing  considerations  dispose  of  counts  1,  2, 
3,  6,  7,  8, 11,  12, 13,  15,  16,  and  17. 

That  the  means  are  alleged  with  "  reasonable  precision  " 
in  the  remaining  counts,  appears  from  the  practical  applica- 
tion of  the  rules  of  pleading  appropriate  to  this  case  made  in 
U.  S,  V.  Waddell,  112  U.  S.  76,  5  Sup.  Ct.  Rep.  35.  Some  of 
the  allegations  in  each  count  may  be  insufficient,  but  these  are 
only  surplusage. 

Counts  14  and  18  seem  sufficient  under  the  second  section 
of  the  statute,  as  will  appear  from  what  I  have  to  say  here- 
after. The  remaining  counts,  4, 5, 9,  and  10,  are  laid  under  the 
first  section.  Counts  4  and  9  allege  an  intent  to  hinder  and 
prevent  all  persons  and  corporations,  except  the  corporation 
controlled  by  the  defendants,  from  engaging  in  the  trade  and 
commerce  described  in  the  indictment,  while  counts  5  and  10 
cmly  allege  a  purpose  to  destroy  the  competition  of  the  four 
corporations  named,  without  setting  out  any  purpose  of  en- 
grossing or  monopolizing  the  business  as  a  whole,  or  any  like 
purpose. 

The  court  does  not  feel  at  all  embarrassed  bv  the  use  of  the 
words  "  trade  or  commerce."  The  word  "  commerce  "  is  un- 
doubtedly, in  its  usual  sense,  a  larger  word  than  "  trade,"  in 
its  usual  sense.  Sometimes  ''  commerce "  is  used  to  em- 
brace less  than  "  trade,"  and  sometimes  "  trade "  is  used 
to  embrace  as  much  as  "  commerce."  They  are,  in  the 
judgment  of  the  court,  in  this  statute  synonymous.    The 


UNITED   STATES    V.  PATTERSON.  175 

Opinion  of  the  Court, 
court  is  well  aware  of  the  general  rule  which  has  been  several 
nne.  (twice  certainly)  laid  down  by  the  supreme  court  of  the 
United  States,  that  in  construing,  a  statute  every  word  must 
have  Its  effect,  and  the  consequent  presumption  that  the 
statute  does  not  use  two  different  words  for  the  same  pur- 
pose; but^  this  rule  has  its  limitations,  and  it  is  a  constant 
practice  for  the  legislature  to  use  synonyms.    A  word" 
..sed  which  It  IS  thought  does  not  perhaps  quite  convev  the 
Idea  which  the  legislature  intends,  and  it  takes  another  word 
which  perhaps  has  to  some  a  little  different  meaning,  with- 
out intending  to  more  than  mnke  strong  the  purpos;  of  the 
expression  in  the  statute. 
In  the  legislation  of  congress  analogous  to  this  under  con- 

Kev.^St.  §  .5438,  [640]  uses  the  words  "  false,  fictitious  or 
fraudulent;"  then  the  words  "  anv  false  WlI^ipT 
voucher;'  then  the  words  •' agreemenl.  combination.  oHo^n 

oZ['''  ma"/'"  '""'''  "'^"^••^'  '— -"•  -todv    or 

vvord  conspire,  m  section  3440,  means  all  that  the  thre^ 
corresponding  synonyms,  "  agreement,  combination,  or  con- 
spiracy," mean  in  section  .5438.  Rather  as  a  natter  of 
cnnosity    han  because  they  particularlv  impress  my  mind 

statute  cited  in  U.  S.  v.  BHUon,  107  U.  S.  670,  2  Sup.  Ct  Ren' 

m  u.ses  the  words  "  secular  labor,  business,  ^r  emplov  nen'^^ 

1  he  words  •'  false,  forged,  and  counterfeited  "  are  u4d  over 

and  over  again  in  U.  S.  v.  Ho.ell,  11  Wall.  4.36.  43  ;"  Zl 

1  or  and  hawker "  are  in  constant  use  in  criminal  law  • 

drinking  house  or  tippling  house  "  is  of  frequenT™  in  the 

tatutes ;  so  are  "  goods  and  chattels."    These  are  aU  ^  er Jed 

10  in  Bishop  on  Statutory  Crimes  as  synonymous     There^^ 

tZr^rTl'^T'''''  'he  eri„i„,,^,tatute  co^tZed 
uie  woras     ram,  ewe,  sheep,  and  lamh-"  a^A  u  in- 

^e,.  ..McCulley,  2  Moody,  £.  cl^  tLt''  hel^"  h^p" 
covered  the  two  preceding  words,  and  thev  might  1^  reSd 
as  surplusage^  Sutherland  on  Statuto,^'  Con^structi^n  tys 
that  words  which  are  meaningless  have  sometimes  beeiiT 
jected  as  redundant  or  surplusage.    So  in  this  statute  I  thiSc 


II 


176 


55  FEDEKAL   REPORTER,   640, 


I 


I 


1    t 


Opinion  of  the  Court. 

the  words  ''  trade  or  commerce  "  mean  substantially  the  same 
thing.  But  the  use  of  the  word  "trade"  nevertheless  is 
significant.  In  my  judgment,  it  was  probably  used  because 
it  was  a  part  of  the  common-law  expression,  "  in  restraint  of 
trade,"  as  has  been  carefully  pointed  out  by  the  counsel  for 
the  defense.  This  has  become  a  fixed,  well-known,  common- 
law  expression;  and  by  the  rule  of  interpretation  as  given 
again  in  Sutherland  on  Statutory  Construction  (section  253) 
it  has  been  here  used  in  the  sense  in  which  it  has  been 
used  generally  in  the  law.  And  these  words,  "  in  restraint  of 
trade,"  lead  up  directly  to  what  I  think  is  the  true  construc- 
tion of  this  statute  on  this  point. 

I  think  it  is  useful  to  analyze  the  statute.  Separating  it 
into  parts,  we  have—First,  contract  in  restraint  of  trade; 
second,  combination  in  restraint  of  trade;-  and,  third,  con- 
spiracy in  restraint  of  trade.  There  can  be  no  question  that 
the  second  and  third  parts,  as  thus  put,  receive  color  from 
the  first.  Moreover,  it  is  imi>ortant  to  note  the  rule  that  this 
whole  statute  must  be  taken  together.  The  second  section  is 
limited  by  its  terms  to  monopolies,  and  evidently  has  as  its 
basis  the  engrossing  or  controlling  of  the  market.  The  first 
section  is  undoubtedly  in  pari  materia,  and  so  has  as  its 
basis  the  engrossing  or  controlling  of  the  market,  or  of  lines 
of  trade.  The  sixth  section  also  leads  in  the  same  direction, 
because  it  provides  for  the  forfeiture  of  property  acquired 
pursuant  to  the  conspiracy.  Undoubtedly  the  word  "  con- 
spiracy "  in  that  section  has  reference  to  the  same  subject- 
mattcT  as  in  the  first.  If  the  intention  of  the  statute  was 
that  claimed  by  the  United  States,  I  think  the  natural 
phraseology'  would  have  been  "  to  injure  trade,"  "  to  restrain 
trade." 

[6411  We  are  now  at  the  point  where  the  paths  separate.: 
Careless  or  inapt  construction  of  the  statute  as  bearing  on 
this  case,  while  it  may  seem  to  create  but  a  small  divergence 
here,  will,  if  followed  out  logically,  ext^^nd  into  very  large 
fields:  because,  if  the  proposition  made  by  the  United  States 
IS  taken  with  its  full  force,  the  inevitable  result  will  be  that 
the  federal  courts  will  be  compelled  to  apply  this  statute  to 
all  attempts  to  restrain  commerce  among  the  states,  or  com- 
merce with  foreign  nations,  by  strikes  or  boycotts,  and  by 


UNITED  STATES   V.  PATTERSON.  I77 

Opinion  of  the  Court. 

ti^7  fttltl  'f^'^-"- by  way  of  violence  or  intimida- 
txLaZ  "°*.*"^.^,P'-««'™«d  that  congress  intended  thus  to 
extend  the  jurisdiction  of  the  courts  of  the  United  Stat« 

tTetarrTW^T^"^-  f  r  ^^"-^"^^«  ^^"  -'  fi' ^  in 
me  statute     Therefore  I  conclude  that  there  must  be  alle^^ed 

implied  in  the  coimnon-law  expression,  "  contract  in  restraint 

section.    1  think  this  is  the  basis  of  the  statute.    It  must  in 
pear  somewhere  in  the  indictment  that  the  e  was  aeon-' 

or  Zirr"'  1  ^'^  ""'  '^^'^''-^  -  monopolizTng 
or  giaspmg  the  market,  and  it  is  not  sufficient  simply  to 
allege  a  purpose  to  drive  certain  competitors  out  of  tTfield 
by  violence,  annoyance,  intimidation,  or  otherwise 

Something  has  been  said  in  this  connection  touching  the 
debates  in  congress.    It  is  apparently  settled  lawThat  we  Jn 
not  take  the  views  or  purposes  expressed  in  debate  a  supX 

laid^^^t^trLT^^^^^^^^^       --fr 

gress,  as  he  can  from  any  other  source,  the  history  of  thl 
evil  which  the  legislation  was  intended  to  remedy  ThI 
debates  on  this  point  are  very  instructive ;  butThe/faiUo 
point  out  precisely  what  incidents  or  detail  of  the  iat  Iv^l 
under  consideration  were  to  be  reached  by  this  leiSn 

What  I  have  already  said  disposes  of  counte  5  aid  io 
which  do  not  allege  any  purpose  except  to  desloy  the  com' 
petition  of  four  corporations  named;  and  they  le^ve  for  Z" 

its  letter  does  not  surest  to  tfr  1-  ^  <^'^*'.n«t'«n«  ^hich 
and  intimidation  :^T2^l^Z  Sief^SX 
statute  as  negotiations,  contracts,  or  purchaseT  The  former 


I 


178 


5*)   FEDEBAL  REPORTER,  851. 


Syllabus. 

applies  to  both  the  first  and  second  sections,  and  finds  a  suffi- 
cient place  for  every  word  in  each.  I  find  in  aU  the 
counts  which  I  allow  to  stand,  allegations  of  an  intent  to 
engross,  monopolize,  and  grasp,  and  of  means  clearly  unlaw- 
ful, and  adapted  to  accomplish  this  intent. 

[6421  I  have  examined  all  the  cases  which  have  been  cited 
to  me  as  referring  to  this  statute,  and  I  believe  that  counsel 
have  cited  me  every  case  which  has  been  decided  in  connection 
with  it;  but  none  of  them  meet  the  issue  which  is  raised  here. 
Therefore  all  the  expressions  in  them  supposed  to  touch  this 
case  are  to  be  regarded  as  mere  dicta.  The  result  is  that 
counts  4,  9,  14,  and  18  stand,  and  the  others  are  quashed. 


mi]  DUEBER  WATCH  CASE  MANUF'G  CO.  v.  E. 
HOWARD  WATCH  &  CLOCK  CO.  ET  AL.« 

(Circuit  Court,  S.  D.  New  York.    May  22,  1893.) 

[55  Fed.,  851.] 

Combinations  in  Restbaint  of  Trade— Action  for  Damages— Plead- 
ing.—An  action  to  recover  damages  alleged  to  have  been  caused  by 
acts  done  in  violation  of  the  statute  prohibiting  monopolies  and 
combinations  in  restraint  of  trade  (26  Stat.  209)  cannot  be  main- 
tained when  the  complaint  fails  to  show  that  plaintiflf  is  engaged 
in  interstate  commerce,  and  no  such  showing  is  made  by  an  aver- 
ment that  plaintiff  is  engaged  in  "manufacturing  watch  cases 
throughout  all  the  states  of  the  United  States  and  in  foreign  coun- 
tries."* 

Same— Construction  of  Statute.— An  agi-eement  by  a  number  of 
manufacturers  and  dealers  in  watch  cases  to  fix  an  arbitrary  price 
on  their  goods,  and  not  to  sell  the  same  to  any  persons  buying  watch 
cases  of  plaintiff,  is  not  in  violation  of  the  statute ;  and  a  complaint 
which,  on  the  last  analysis,  avers  only  these  facts,  without  averring 
the  absorption  or  the  intention  to  absorb  or  control  the  entire 
market,  or  a  large  part  thereof,  states  no  cause  of  action. 

At  Law.    Action  by  the  Dueber  Watch  Case  Manufactur- 
ing Company  against  the  E.  Howard  Watch  &  Clock  Com- 

oAffirmed  Circuit  Court  of  Appeals,  Second  Circuit  (66  Fed.,  637). 
See  p.  421. 
»  Syllabus  copyrighted,  1893,  by  West  I»ul>lislilug  Co. 


• 


ME.EB  WATCH  CASE  M,0.  CO.  „.  HOWARO   WAtCH  CO.     17<J 

Statement  of  the  case. 

demur  to  the  complaint.    bLL^ZLS  "''"*' 

Statement  by  Coxe,  District  Judge  : 

£'W  ^^^^^  16,  1887,  the  Plaintiff 

of  the  United  States  and  in  foreign  on„nf.?  *^^^"?»^out  all  the  states 

ber  of  skilled  artisans  who  u^^rl  f nd  n ro  'Lf '  .^"^P^^J'^ng  a  large  num- 

-     cases  per  month.     That  prior  fo^.l/n  ?^^fu*^  ^^^"^^  25,(K)0  watch 

market  for  its  goods  throughou?  the  Unltpd'^^^^  ^.''^'''^  "^^"^^  ""  '^^^^ 
realized  a  profit  of  at  least   «i7r  rSS  ^^^^^^  States  and  Canada    and 

16  1887,  the  ^efeX'ntwVwlr^^^  7»>^t  on  NovemlSr 

and  watch  cases,  mutuall/alr^  Id  w^fi£f^i°  «^»i^g  ^^atches 
throughout  the  United  States  aid  CanaSa  in.V,?H^  *^^  ^'^^^^  ^^^'^^ 
tiff's  customers,  "  that  thev  would  wtifj  *°l"^'ng  ^ome  of  the  plain- 
faotured   by   them   to   an/ Sn    fir^^^ 

whatsoever  who  thereafter  sKrthn^'  association,  or  corporation 
by  [852]  this  Plaintiff ''That  "b'^in'/fni^^^^^  manufactur^ 
a  large  number  of  dealers  whn^ni^^  informed  of  said  agreement 
goods  withdrew  their  natr^nr^P.nS'^  Previously  purchased  plai^Uff^s 

That  the  defendants  reteertf  self th^^^^^  ^.'"^^°  P^^-^^^^^'^  ^Z^^ 

giving  as  a  reason  that  thp  ^pfn  If  "^  ^^^^  *^  Plaintiff's  customers 
and  defendants  decIinJ^'?o  have  anv'Sn^"""  ^/^  Plaintiff's  g^^' 
unless  they  would  agree  not  to  dpn7,n  "^k°^^1  relations  with  them 
prior  to  November  16   1887  the  de?pnrn/^^  Plaintiff's  goods.     That 
that  they  would  maintain Vn  arbSr^v^^'^  ^T''^  themseh4' 
and  pursuant  thereto  they  have  fiS^  ^nn/^  ^T^  ^^^  ^^eir  goods, 
price  which  the  public  must  Dfl  J  fnrft^-^^  maintained  an  arbitrair 
of  November  16,  1887  was  for  ^im  ^i?^'"*  ^^^^«-    That  said  agreemeS 
to  Join  with  the  d^fenXts  'in  The?r%S'n!  Z'  compel ling'^Sff 
TJTi''  l^bitrai-y  prices  for  watch  cfsesTu«T^^^°t  to  fix  and 
the  defendants  were  for  the  purS)se  of  If  T.v^*i  ''"  ""^  ^^'^  ^^ts  of 
watch  cases,  their  object  beinV^  m^  .tn?l  ^^tablishing  a  monopoly  in 

plaintiff  from  the  busfness    unless  hrfoin^^.t'^''^°  ''''^  ^^^^^  th^ 
the  defendants  by  their  affrppmorffl  •  f  •'^^^^  the  conspiracv.     That 

the  Plaintiff  and  d'Lprfveit^^a^^^^^^^^  «>  imWer^'h 

the  defendants  have  used  the  extpndi^  breakup  its  business.   That 

of  the  combination  fomed  between  ^hem^t.^^^  ^'^"^"^  ^^  ^a«on 
natural  y  would  purchase  plaints  wati?i  iL^'^T''^  P^'"^^^^  ^^o 
the  plaintiff  and  have  threflfPnAd  L^  ^  ^^^^  ^^^m  dealing  with 
plaintiff's  goods  they  woufdlSf  them  ^T^''''^  **^^*  ^^  ^^^^  bought 
credit.    That  such  coWtandlLaf^^^^  ^°^  ^'^^  them  no 

resulted  in  the  ostracism  of  plaintfff  from  ^//^?P^^^^  "^^^^ott  and 
lawful  and  ordinary  comDetitinn  Vn  k^  *^®  *^^^^'  preventing  the 
right  to  enjoy.     That  S    he  plL^^^^^  P^^^^tiff  had  a 

entitled,  "An  act  to  nrot^t  fLS^^  ^^  ^^  *^®  ^^t  of  July  2  1890 
restraints  and  mUUes^1hrp?ain«ff^  ^  against ^unlal^i 

tomers  and  re-established  ts  busfness  hLw^^^i'^^  regained  its  cus- 
date  ratified,  confirmed,  renew^  and  ^nt?nni?1  ^^/^''^^"^^  «*°^^  tha^ 
tracts,  agreements  and  combinations  ^^  "^J°  ^^^<^®  the  said  con- 
all  the  dealers  in  plaintS?  g^r  ^ha?  hvTf  "^*^^  *^^^^f  "Pon 
and  continued  threats  said  deSs  haveS^n^^'*'"  ?/  ^^'^  renewals 
purchase  plaintiff's  goods  to  ite  daLaee  tn^r  „?'''"P?".^  **^  ^^^^e  to 
mentals  demanded  for  three  timt^hf  ^^^^Vrua^^^^^^^ 

The  defendant  above  named  demurs  on  the  ground  that  the  court 


180 


55  FEDEKAL  KEPORTER,   852. 
Opinion  of  the  Court. 


has  no  jurisdiction  of  the  defend-inf  ni^  ♦».«  »  •  x 
action,  and,  on  the  tunher  ermmfthnfL  ^  subject-matter  of  the 
facts  snfficient  to  conS  tute  j^  can  J  nf  n 't- ''''"'PifJ^*  ^^^«  "«*  «tate 
act  of  July  2,  1890.  Vhich  a?e  dr^^^^^  ^^f  "^^^^^°^  «^  ^^^ 

mry  to  quote  them,  are  L  foIkrwr-Se^otfon^^  ^^'  ^"  '}  '^  °«^- 

bination  in  the  form  of  trust  r«tho..^f^  ^'  ^^^^^  contract,  com- 
of  trade  or  cMimmerce  aiii^^^^^^  or  conspiracy,  in  restraint 

tions,  is  hereby  de^l'afe^rS  Segaf  TJ^ 'o^'lf '  ^  l''''  '''V^\^^- 
monopolize.  or  attempt  to  monopolfze  or  ^n7»\iS^^  ^''^'?"  '''^^  ^^«" 
other  person  or  persons,  to  moToXeaTp;?^^  XT?^  ^''^  ""^ 
merce  among  the  several  states    or  with  f^^f-       ^^^..^i^t^e  or  com- 

deemed  guilty  of  a  misdemeror!"  etc  ^' Sec  7  An  "'"''*'"''  l^'*^"  ^^ 
be  injured  in  his  business  or  Dronert^*  h^r  «nt  ;».  "^  ^^''*''''"  ^^^  «^^a" 
tion  by  reason  of  anvtlin^  fn  IS^  ^  any  other  person  or  corpora- 
this  act,  may  we  therefor  fnn^^^^  •?''  ^^^^''^^^^  to  be  unlawful  by 

the  distkc   i^n  whicHhe  d^^^^  ^^""t  ^^  the  United  States  in 

to  the  amount  7nc?ntmTersrnn^  "^^  '"  t?""^'  ^'•"^^"t  '^^l^<^^ 

by   him   8ustaine^?aiul     he  col'o^^ 
attorney's  fee."     .  *^^  ^^"^*'    including  a    reasonable 

Wilber  c§  Oldham  and  /?o&<?rjJ  /S'ettie??,  for  plaintiff. 

W  f  f 'r  1  ^^'-^^'^^^,  IF.  /.  Curtis,  and  ^rf..a.^  5.  ffin 
for  defendants.  ' 

CoxE,  District  Judge,  (after  stating  the  facts  as  above. ) 
An  examination  of  the  complaint,  in  the  light  of  the  provi- 
sions of  the  «A  of  July  2,  1890,  and  the  decisions  construing 
that  act   leads  to  the  conclusion  that  the  complaint,  in  ite 

ftTif T  "!    "■'*:  Tri^  '"^*""^-    The  statute  makes 
It  Illegal  to  enter  mto  [853]  a  contract  or  conspiracy  in  re- 
straint of  interstate  trade  and  also  to  monopolize,  or  attempt 
to  monopolize,  or  combine  or  conspire  with  others  to  monopo- 
ize,  such  trade.    There  is  no  allegation  in  the  complaint  that 
the  plaintiff  is  engaged,  or  has  at  any  time,  since  the  passage 
of  the  act,  been  engaged  in  interstate  trade  and  commer^. 
Ihere  is  an  aUegation  that  the  plaintiff  is  engaged  in  the 
buaness  of  manufacturing  watch  cases  throughout  all  the 
stat«s  of  the  United  States  and  in  foreign  countries.    This 
aUegation  is  probably  a  mistake  of  the  pleader,  but  if  it  were 
true  It  would  not  be  a  compliance  with  the  requisites  of  the 
law.    A  corporation  may  have  an  operating  manufactory  in 
every  state  of  the  Union  and  yet  not  be  engaged  in  interstate 
commerce.    There  is  no  allegation  that  the  defendants  are 
or  that  any  of  them  is,  or  was,  engaged  in  interstate  trade! 
or  that  the  articles  made  by  them  are  used  in  such  trade,  or 
that  the  rights  of  the  general  public  have  been  invaded  or 


DUEBEB  WATCH  CASE  MPG.  CO.  V.  HOWABD    WATCH  CO.     181 

Opinion  of  the  Court. 

lf*'tS1^/**T"'''^  injuriously  affected  by  any  of  the  acts 
of  the  defendants  as  described  in  the  complaint     Th!    ^ 

were  evenVmStTo  retaffm'"^'',""-  *'^*  *^^^ 
United  States,  oJ  tha"^  Se  prici  fiLTv'th  "^'^  "'  *^' 
than  the  goods  were  worth  ^^T  ^  ^^'^  ^^""^  ™°" 

is  no  statfment  Sthe  goods  irbvXd  7'T  .  ^'^" 
•nade  by  them  exclusiverS  That  such  lod'"*'"."" 
pensable  to  plaintiff's  cuLmeiL ;  non  eonit  Th  '"^T 
could  have  been  furnished  by  the  plahiHff  "i  ?  ^*?^' 
than  the  defendants.  Plaintiff  or  dealers  other 

■    .  ^^**'  *hen,  is  the  accusation?    When  analv^o^  u     ■»  . 

goods  to  plaintiff's  cuTtom^*  l^d  th^  rM"  ""  '""^^ 
plaintiff's  customers  of  thrdeSinatt^^^^^^^         T"^'^ 

rifisrjsihi';,,^-  -'  -nTrthi:Cirs; 

ants  wer^lawS  i  tclld  n!tT'T"i'  T^'  ""^  '""^  ^'f'^^- 
of  their  exiW  Bot  of  thT  :n^^^^^^  """^  *'^^  ^'^'^ 
made  before  July  2  So  th!  ^^\f^^^  agreements  were 

befo.thepasstV2t;i:t\^^^^^^^^^ 

acts  of  the  defendants  which  by  any  possSv "        k!  ^^ 

strued  as  a  violation  of  the  statute  wertSr"*^  •=°": 

f ave  regained  '^^^l^lt^tr""''  '''  ""^"^  -"'•* 

the'st:tt*rtVrto;:'dT  \--«*"*-  -lation  of 
for  their  gooJs /  No'. ^^T-.f'"'  *"  ^^  '"^  ^'^^'^^y  P^ee 

ing  that  fuch  a  tr^t"  J  th:!r  *"  *r^*^"*  "*  '^«^*^- 
illegal.  '  ""  **'^  ^''^'^"ce  of  other  facte,  is 

The  second  question  i<s-  To  ;<■  »„  ;ii      , 
visions  of  the  law  i^  queJioi  ?o.  ^  '"*'  ^'"^'^  *^«  ?«•»- 
agree  among  themseLnfat  4';  Jiir^  7?  *'f  ^^  *« 
who  prefer  [854]  to  purchase  thelod  of  altr.   T""  *''"^ 
trader  in  the  same  business?    Maf;ti?lj?fe^SS 


■  I 


lo2 


56  PBDEEAL  BEPOBTEB,  698. 
Syllabus. 


sons  might  be  suggested  for  snot,  «„ 
a  combination  to  monopolizl.  7^Z  r"""'"''  "  '^  "*>* 
of  facts  tending  to  shoi!  that^t  p  rueed  "1"  T^T 
present  case.  Indeed,  it  would  £L^  *  w  .  "^^'^  '"  *^« 
a  contra,^  effect.  There  las  t^  .1-  '^  ""'*  ^''^^  ^"^ 
plaintiff  from  sunn W  7,  ^}^  "°*'''"«  '«  P'-«^«nt  ^he 
which  the  defendaSSined  to  tZ?  ""''  ^'^'^^^  *•"«« 
its  trade  and. stimulate  X'Sof'  T^XtS'r  ^"'^^^ 

Dusiness.     So  were  all    others.     The  olaintifrr      T      ^ 
^re  free  to  purchase  of  the  plaintiff  of  th  *  f  *  V""''' 
of  any  other  manufacturer.    The  c^l flf  itr  '"''' ""' 
one  m  restraint  of  trade  within  anv  of  fh!^  «    .     ""^  "*** 
thorities  which  have  been  examfn  !,      *5«.  •^^""'tions  or  au- 
the  defendants'  act?  a^  n^        k  i  ?^  ''  '^  ^'•""Sht  that 
law  in  questl     ife     ""/'T^'*^  ^^  '"^  ^•="'>»  ««  the 
plaintiff 'wouW;.„Sr  :T7lC .TT'"'  '"'^  ''•^  '»»« 
indictment  not  only,  but  would  ml       T^^'i?*.'  """*'  *"  "^ 
combination  by  wh Lh  t^^     T     ""^"^^'  "''""^'t  «^«'-v 
their  inffuence'antlt  ,hl^  p^rSt^t  ,d  Tl 
to  every  agreement  wherfA    and  R    .      ".^  "'"^  ^'^'*'' 
not  sell  goods  to  those  who  buy  of  C     ItT  l/\  *^^  ^'" 
agr^ments  by  which  honest  enterSiseltTeltr'''  "'  "" 
I   isThtlTiHT^  dishonXmp:Sf  '"  ^™^-* 

de^^onf  rflV'c:iitTon"r  ""  r  '=""'^™'*^  -*  the 
Greene  52  F«?  »  iL  r,*™"'^  *^  ««t  of  1890.  In  re 
T^W.  *^*^;i^P-  10*;  U-  S.  V.  ^e&on,  Id  646-  U^  7 
Tmns-Mtssouri  Freight  As8\  53  Fed  Ren  44n  /  '  Vr  ' 
:ng,  51  Fed.  Rep.  205;  /„  re  krr^UuilS^iT  ^""^ 
IS  sustained.  '  "     ^"®  demurrer 


[696]    HAGAN  ET  AL  v.  BLINDELL  ET  AL.- 

(Circuit  Com  of  Appeals,  Fifth  Circuit.    May  29.  1893.) 

[56  Fed.,  (JOG.]  * 

Combinations  in  Restbaint  nu.  t»»,x»    i:. 
Jurisdiction  of  the  cl^«  Zrt  T  ei^f^"'  '''""«''«=-'0''-The 

^<^jonrt  to jntertam  a  «ult  to  enjoin  a 

•Injunction  pendente  lite  granted  bv  r'i~..,7r7r ' 

trict  of  I^oisiaua  (54  Fed..  4^   t^l  ,^""  ^"«'  ^»«tem  Dl,- 


i 


HAGAN   V.  BLINDELL. 
Opinion  of  the  Court. 


183 


preventing  a  n,uSi^  of  J^^'f,"'''''''"'"^  "^  ^"^  ground  of 
damages  anaw  [697  for  teCotl  2  Tt  '"'  '""  "■"""""  *"''♦ 
the  proms  Of  Pending^nteSrsrfndCi'—  TtT'^''''^ 

iziT'' '"'  "°*  --^«"«  -  -Of"'  s  'rr  k:^":^; 

'r^^n^ThraXTTcot'r;""''^''^^--^^'^--    «"•*•    »- 
complalnan  «•  shin  a.^  ,h/  combination  of  persons,  the  crew  left 

oouW  not  ^p™  for  nZ  ?""*  '°  '^"'  ""^  *""*  "'"'*•'<''  '™" 
ance  of  the  ^^^  f„thoriti«  nT;."""  *'"°  ""'^  '^'*''  *"«  "^'^t' 
order.   white^  her  veLe^s  Tn   thV      ■''^i''"'*"  °'  "  ''^'''^"'"'' 

getting  crews,  is  sufflr^ra„\Li^t;.eco:rt^     ''"'^'''   ''^ 

the^Srn^Xtit  s^s:;iSr "  "^  ^"^^^^  '^--  ^- 

In  Equity.    Bill  of  Blindell  Bros.  &  Co.  and  others  against 

bus  ni"  T  "^'  "''^'•^  ''  ^"J"'"  interference  wlE 
business  as  shipowners.  From  a  decree  granting  an  ininnT 
tion  pendente  lite,  (54  Fed  Ren  4n  \  Tr  j^  !  ^  *'" 
Affirmed.  ^  *  ^^ea-  «ep.  40,)  defendants  appeal 

John  D.   Grace  and  /.    Wara   Gurlc',!     i^     tn    i 
Mpllnm  /.„  fv,„  u  •  J!  \  ,.  ^runey    Jr.,    (Gurlev  dt 

meuon,  on  the  brief,)  for  appellants. 

^.  5.  ^arAa^^  and  ^.  P.  Dart,  for  appellee. 
MiNtitriiTd^r  ^^^--'«-it  Judges,and  Toxn. 

TotJLMiN,  District  Judge. 

The  only  practical  question  presented  hv  ti,.  j   • 

whether  the  court  below  had  iurislSnlnf  *^  ''^''''^  "^ 

by  the  bill.    We  concur  in  th"         ^       ^  ^*'^'  "'  '"«<'« 

learned  Judge  who  SdThetseXwXs  e^r^idt  £ 
opinion,  and  which  is  made  a  n«rf  ^f  ,u     ^^^^^f  ^^^  '^  ^^^ 


1 


II 


184  «. 

51  FEDEBAL  KEPOBTEK,  85. 
Opinion  of  the  Court, 
case  satisfies  us  that,  under  all  the  facts  beforP  it  th 
no  error  ^n  the  court  awarding  a  preli"  na;"i^>  ^^^^^^^^^  -- 
The  decree  is  therefore  afBrmed  ^  injunction. 


' S  SSS  CT*^"^""-"  COUNC.r. 

uxij.ii.Ai\fe  ET  AL.  V.  UNITED  STATES.- 
(Ciroilt  Court  of  Appeals,  Fifth  Circuit.    June  13,  I893.) 

[57  Fed.,  85.] 

ClBCUIT    COUBT    OF   AppEAI8_W«.,rT»«, 

Joentory  order  granting  or  Z^Z^^^TtT  ""*  '^^"'"^  *"  '"*•"- 
less  It  Is  clearly  shown  that  thl  .1^  temporary  Injunction  m- 
and  is  hurtful  to  the  apS.  Jt'         "  ""'  '»P-vldently  granted, 

thtTl^Z  .^'^.^  Circuit  Court  of  the  United  States  for 
tne  Jiastem  District  of  Louisiana. 

in  Equity.    Suit  by  the  United  States  against  the  WnrV 
ingmen's  Amalgamated  Council  of  New  QrleanV  t  «  i 

others,  to  restrain  the  defendant,  ft!l  •  .  ?'  ■^■'  ""'^ 
interstate  and  foreign  commerr  AnT-,""^"""^  "'*'' 
the  court  below  grandntTT^I  ■   .^^''  "^"^  '""^^  i" 

Rep.  994,)  and  dSendlnl  «         w?'^i"^""'=*'""'  (^4  Fed. 
f      ■*,)  ana  defendants  appeal  therefrom.    Affirmed. 

M.  Marks,  {A.  H.  Leonard  and  Fi>n«.  ^   n 
brief,)  for  appellants.  ""**  '^  ^'"'«-  «»  *« 

^.  5.  ^ar^«r<,  for  the  United  States. 

Before  McCormick,  Circuit  .Tii<l«»    .„j  t. 
trict  Judge.  ^'  ""<^  TouLMix,  Dis- 

McCoRMicK,  Circuit  Judge. 

November  10, 189'>  ihe  A\<^^,^  .** 

trict  of  Ix)uisiana  aci  1/  *  u  ^™^^  *°''  *^"  "''^''^'-n  di^- 
i^uisinjid,  acting  under  the  directinn  «f  *i,„    u. 

general,  in  the  name  of  the  United  q^f         ul^  '"^''"'^y 

circuit  court  for  said  eas^SJt  of  S  "^•'^'"'^^'^J"  ^^e 
_  ^  "Mu^ustnct  of  Louisiana  a  bill  for 

-Temporary  injunction  gra"nted  by 'the'cirpn.;  n      .  7 

I^nislana  (54  Fed.,  994).    See  p  lio  "  '"'  *="«*«"» 

»  Syilabus  copyrighted.  1«M.  by  We'st  Publishing  Co. 


I.UUJNCIL   «;.  UNITED  STATES.        185 
Opinion  of  the  Court, 
injunction  under  the  act  of  conOTP«  f«  ^-..*    ^.     , 
merce  against  unlawful  re JraS Id  ZT    r^'  '"''  *'"'"- 
.       209.    The  circuit  court  exSd  W      T^"''"'-    ''  ®'^*- 
fpondents  ample  time  ioSZt.^t^ZllvlS:'  ^ 

a^^d%rrai^-^^irwr7^"^^^^^^^ 

the  27th  ZTl  1m  when  r"'  'T  ""^  "^  '^'  ^^^ 

opinion  of  the  iudm,  of  tC  .^°'^  °^  '»  the  very  able 

oree  now  sou^i  'tf  l^'ltr^eT'^Thr*  t"  ^"f  *^  *''«  '^«- 
sented  to  and  considered  bvh'^  """"'■'  ''^  '«^  P^e- 

appellants,  respondent  betv  Id  t^e"'  "f  ''•''^"  '^  ^'^^ 
to  that  effect  was  correct  TlTpI^n  "'^•^"■7'*  <=o"rt's  ruling 
the  statute,  and  the  p  adfnt  '  t'?'''*'*^ '^ '''^'''•'-^ -'^^in 
«"ch  as  [86]  to  requirf  h  Sutl  of  T''''^'^''  ^^^e  not 
porary  injunction.^  The  volume  of  «  f""^''  ^""^  *  *<'"- 
affidavits  was  large  and  th?       fl-  /  foisting  and   counter 

and  emphatic,  sufh'aTm:  t  T^n: LlfofT^''"-^'  '""''^    ' 
variant  impressions  on   the  mini     ^  ^^    ^^  "^"^^  ""''^« 
to  the  facts  shown     The  .LT        *   .  '^'^"^"*  J'^^^^^  as 
opinion  of  the  i^d-^e  of  thr     'v  "^  '^'  P"""^  '"'"^^  i"  the 
by  the  record,  and^  shows  thTth  """"^  "  '''''^  ^"PP-te<l 
support  the  allegati^nsof    hf  bm"  tT?  ^''^'^i.^-'^-g  ^o 
or  an  appeal  from  an  interlocu torv  oJdT""'  .'"^  ^'  ^'"^ 
junction  certainlv  clothe,  th.  °    I    J      ^'^  granting  an  in- 

and  charges  it  ^'itl^T^^TJ^:^^^^^^^^ 
case  reversing,  the  action  of  the  ^rk^t     .    '"  '  ^'''^' 
such   injunctions;  but   as   to   issues  Tf   f    .      '"  ^™"""S 
hey  only  can  be  presented  in  s„l  casef  hiT/^'   " 
the  facts  expressed  or  implied  in  th       .       '  ^^  Endings  of 


58   FEDERAL  BEPORTER,  58, 
Syllabus. 

"•eld  :.JSr!tt'4'd;T  ^f  r^  P^^^^-  ^^-^  not  be 
provident  an^d  Wfu,"  t^pi^ir  if  S"^'  ^''^  t 
most  that  can  be  ure«d  ai~incf  *k  ^  .  ''*'^  *'"'*  *''*' 
the  state  of  the  prSis^hTt  i.      ''"^''  ''''""«  '^'''"^'^  '» 

X    luc   piooi    IS   mat    it    was    linnAPaafc:o«.ir        Ti.  1 

enjomed  the  appellants  from  doinrpendint  Th7'    •!    T'^ 

the  statute  forbids  and  provides  S^  hi  ^         /".L '''"'* 

unction.     On    this    ii^J^l  '    ^    Prevented  bv  in- 

whichweaffirn     ieCi/Z/"    '"^f-^'-y    o^der, 
further  p,-„gress  and  fi^?i  t  "'^'^'^'-y  to  anticipate  the 
Dression  ^i*"^'"  ?"^  fi*^"!  heanng  of  this  case  by  an  ex 
pression  or  our  views  ac  tn  tK«  *..ii  ,      •^         ^^" 

struction  of  this  ^^nt  and    m  J       7"'  '"*^  "^""^  °°»- 
of  the  circuit  c.„^s  Iffiif^'^"*  ^*"*"*«-    ^he  order 

IS8J    UNITED     STATES     v.     TRANS    Mrs«n,TT>r 
FREIGHT  ASSOCIATIoFeT  Al"        ''''' 

(Cmilt  court  Of  Appeals.  Klghth  Cl«^t    October  2.  1893.) 

rss  Fed.,  58.] 

"r^L^rr^^^^  ^  -a.  10  t.e  H.M  oC 

eiiai.tii,ent>  ^"*^  *"**J^*  *"  ^*''-<*  «t  the  time  of  its 

Rami— €biminal   Laws—Commaw  t  *«,    -r. 

OH.ss.-Where  -ng^sXtToVlea^r"  ^""'i''  "^  ^- 
and  in  doing  so  uses  terms  which  h^^  «  common-law  offense, 
meaning  by  Judicial  IntemretatL  !L  ''"''^  "  "'^''-''lerstood 
tenns  were  ™ed  In  that  se^  ,„"",' „^^^^  '-  that  the 

decisions  lnterr,reting  t^nTtortCl^ZI otZJ'  "'°''  '"  "''"' 
definition  of  the  offense  where  there  1«^!,!^k    V«     ***■""  ""^  ""-* 
«o»oPor.n.8-RKSTE«»r  o,  i^"  ^""  °?"  "*^«"'"°°  '"  the  act 
combinations  In  the  ft>rm  of  ^Toth^r^r^'T'"''   "*"*""*^ 
re^ralnt  of  trade  declared  tH^  ine^I?i7r;"f  ."'"''""«='"»  '» 
tlonal  commerce  by  the  act  of  JnlyT^ini  J„/!^'  "  ""''  ""«™«- 
tect  trade  and  commerce  a^ln«t  .™,  T,     *  "^    ■^"  «<^'  to  pro- 
oHes."  (26  Stat  :.-09.^  WT^^eTs"   Snn.?'-::?!™'"^  ""<»  ""'»«'> 
combinations,  and  conspiracies  In  LraZ  if;!  T  '"'  ~"'™'*'' 
declared  l^r  the  courts  to  be  ^^JTlu       ?'  ''"''*  *""'  ""<»  "een 
_«»nmonJaw  beforeThe  palgT'oTKl^'""''  """  ^°"'  "'«'«'  "« 


^syllabus  copyrighted.  im"b;\ve;^-^;„1^?„,  ^  "^  '^ 


UNITED  STATES   V    TBiioo  „,„ 

t.  TEANS-MISSOXrEI  PBEIGHT  ASSN.         187 

„  Syllabus. 

!>AME.— The  test  of  the  vaiirtit.,    .. 
not  the  existence  of  restriAtn     ^"""^  "'"t^'^ts  or  comblnaUons  i, 
but  the  reasonablenesro  *^7r:Ctr'"*'""°  "»'">-<'  «-«"bv 
cnmstances  of  each  particular  cTse     p7h."     "'  *""  ''"^'^  '"«'  <='- 
sidered,  and,  if  the  contra?*  1         .,.    ""'*'  '^^"'"'^  '»  first  con- 
n;ade  for  a  Just  and  hon S  Jur^oTar th"  '"""''"  '"  "'•-  "^^ 
not  specially  injurious  to  the  D^i.  .h  •       ^^'™'°*  "P""  trade  is 
taction  of  the  legitimate   nterrt  "tf  "k  *'  ""*  "^^''^  '"«"  the  pr^! 
restraint  is  imposed  reasonaWy^.^.ui,''!^^'^  ""  "">»««  ta^or  the 
Is  not  illegal,    shiras,  District  C      h'     ^  ''°°*™<^'  "r  combination 
t'.'s  rule  is  not  ^PPl^^Tt^''^l^'Z:''\'>n  tUe  ,rouna  tZ 

duties.  "   corporations  charged   with  public 

[Ml    Same-common-Law   Rule     Th. 
Classes  of  contracts  and  co^i~ti 'L  ^""""^    ""    ^'''"''    <*--taln 
"eld  illegal  at  common  law  w"s  tha  Th  >       '■'''""°*  "'  ^^''^  '-e** 

P«^«c  Poucv-How  DETEB^rEo  T^e  Jhr'  "'''"''  """"<=  Po"<^- 
must  be  determined  from  ite  ^nsTrt.?  ^^  ^'"^  "'  ">«  "atlon 
clsions.  ■"  '^  constitution,  laws,  and  Judicial  de- 

SaME-IntebstatE  COMMEKCE.-The  act  nf  P-  K 

An  act  to  regulate  commercJ"  Uelnl  T''"''''^  "'  ^^^'  '^"titled 
the  date  of  the  passage  of  t^at  act  it  t  h'  *'"  ''''  *""  '~"' 
ot  this  nation  to  regulate  that  , art  'J  ^?  "^^  *"«  P-bllc  policy 
consists  Of  transportation,  and  7/' "';"«^«t«te  commerce  which 
freight  and  pas.,enger  ratJL  "  '■^''*'"'<^'  competition   in 

therein  as  shall  be  Le^^''  '"*"^°  '•"""'ad  «,mpanieT  engag^ 
reasonable,  uniform,  aTste^fl!"  Zl  ""'"  '"'''  "P^"'  P"hS 
and  undue  preferences.  ^'   ""''   '"  Pr^'cnt  discriminations 

Rqwty-Heabing  on  Bui.  *»„  a 
heard  on  bill  and  answer  the  ot'T~'=""™'^^-^''en  a  suit  is 
denied  in  the  answer  Tr^  i„  be  ta^?";  "'  '''''  '"  *"«  hill  that  a.!^ 
Same  !_w."  ""  ""^"^^  «'«"<'  » d^^t^!,     '"''"'''^' '""''  «>«  "ferments 

--  its  -rrrs.iierirort""^^''"-  ---  - 

are  denied  by  the  answer,  and  meZ  f^  "'"tained  in  the  bill 
honest  purpose,  tendency,  and  11^"^  '""f  "^  *^  ^''"'^  a  Just  and 
contained  In  the  answer  st^nd'tom^"^^'  ""  "'""'•  "^^rments 
presumed  to  have  been  made  fo  an  I^l  *"''  *"*  «'''t^»<^t  will  be 
unless  the  provisions  of  the  a^J      ?    '  ""'^  legitimate  pun,os,. 

n  the  examination  of  sue,'  a  c^t  ^^^^T"  ^"^^  "<«  --^a^: 
to  be  presumed.  contiact.  fraud  and  illegality  are  not 

(;oNraACTs-.p„Buc  PoLicr.-Preedom  „f  .    » 

SaAIE— UesTBAINT    of    TBADE-AxTTr^r 

railroad  companies  forming  a  TrefZ  .tfr^  ^"^^^^^  »>-t^^'een 

S  a   freight  associatiou   that  they  wlJl 


58  FEDERAL  REPORTER,   59. 
Statement  of  the  Case. 


( 


establish  and  maintain  such  rates,  rules,  and  regulations  on  freight 
traffic  between  competitive  points  as  a  committee  of  their  choosing 
shall  recommend  as  reasonable;  that  these  rates,  rules,  and  regula- 
tions shall  be  public;  that  there  shall  be  monthly  meetings  of  the 
association,  composed  of  one  representative  from  each  railroad  com- 
pany; that  each  company  shall  give  five  days'  notice  before  some 
monthly  meeting  of  every  reduction  of  rates  or  deviation  from  the 
rules  it  proiwses  to  make ;  that  it  will  advise  with  the  representa- 
tives of  the  other  members  at  the  meet4ng  relative  to  the  proposed 
modification,  will  submit  the  question  of  its  proposed  action  to  a 
vote  at  that  meeting,  and,  if  the  proposition  is  voted  down,  that  it 
will  then  give  ten  days'  notice  that  it  will  make  the  modification 
notwithstanding  the  vote  before  it  puts  the  proposed  change  into 
effect;  that  no  member  will  falsely  bill  any  freight,  or  bill  any 
at  a  wrong  classification;  and  that  any  member  may  withdraw 
from  the  association  on  a  notice  of  thirty  days,— appears  to  be  a 
contract  tending  to  make  competition  fair  and  open,  and  to  induce 
steadiness  of  rates,  and  is  in  accord  with  the  policy  of  the  inter- 
state commerce  act.  Such  agreement  cannot  be  adjudged  to  be  a 
contract  or  conspiracy  in  restraint  of  trade  under  the  anti-trust  act 
when  It  is  admitted  that  the  rates  maintained  under  the  same  have 
been  reasonable,  and  that  the  tendency  has  been  to  diminish,  rather 
than  to  enhance,  rates,  and  there  Is  no  other  evidence  of  its  conse- 
quences or  effect.  Shiras,  District  Judge,  dissenting.  53  Fed.  Rep. 
440,  aflirmed. 

Same.— No  monopoly  of  trade  or  attempt  to  monopolize  trade  within 
the  meaning  of  the  anti-trust  act  is  proved  by  such  a  contract. 

[00]  Same.— The  railroad  companies  who  are  parties  to  such  a  con- 
tract do  not  thereby  substantially  disable  themselves  from  the  dis- 
charge of  their  public  duties 

Appeal  from  the  Circuit  Court  of  the  United  States  for 
the  District  of  Kansas.    Affirmed. 

* 

Statement  l>y  Sanborn,  Circuit  Judge : 

This  is  an  appeal  from  a  decree  of  the  circuit  court  dismissing  a 
bill  brought  by  the  United  States  against  the  Trans-Missouri  Freight 
Association  and  18  railroad  rompanies,  under  the  provisions  of  the 
act  of  congress  of  July  2,  1890,  entitled  "An  act  to  protect  trade  and 
eommeree  against  unlawful  restraints  and  monopolies,"  commonly 
known  as  the  "Sherman  Anti-Trust  Act,"  (26  Stat.  209,  c.  647:  Rev. 
St  Supp.  762.)  to  dissolve  the  association,  and  enjoin  the  railroad 
companies  from  fulfilling  an  agreement  with  each  other  to  have  and 
maintain  joint  rules,  regulations,  and  rates  for  carrying  freight 
between  competing  points  upon  their  several  roads.  The  ease  was 
heard  on  the  bill  and  the  answers  of  the  several  defendants. 

The  bill  alleges  that  the  defendant  railroad  companies  were  corpora- 
tlons  and  common  carriers,  and  that  they  owned  independent  and 
competing  lines  of  railroad  in  that  part  of  the  United  States  west 
of  the  Mississippi  and  Missouri  rivers;  that  they  were  engaged  in 
transporting  freight  among  the  states  and  to  and  from  foreign  na- 


I 

I 


UNITED   STATES   V.  TRANS-MISSOURI   FREIGHT   ASSN.      189 

Statement  of  the  Case. 

tions,  and  that  they  had  been  encouraged  to  construct  and  maintain 
these  competing  lines  of  railroad  independent  of  each  other  by  sul^ 
sidles  and  grants  of  lands  from  the  United  States  and  the  people  of 
nnl,ci  .tf  .^""^  territories  west  of  these  great  rivers.  The  bill  then 
olleges  that,  not  being  content  with  the  rates  of  freight  thev  were  re- 
?^r Puffer t°n?/°^  oppressively  to  augment  those  rates,  to  counteract 
the  effect  of  free  competition  upon  them,  to  establish  and  maintain 
arbitrary  rates,  and  to  procure  large  sums  of  money  from  the  i^eople 
onfl  T-  ^l^^^^  ^"^  territories  engaged  in  interstate  commerce  they 
moS,"^ieV^"  S"'"'  ^"  ''"-^^  '''  ^^^'  ^'^^^^^  -  subsequently 

"  ^^r"?^^".^""J„*;^  agreement,  made  and  entered  into  this  fifteenth 
day  of  March,  1889,  by  and  between  the  following  railroad  companies 

P«;m^*? -f "'  '^^^^"  *  ^'"°^^^  ^^^  ^''^"^^^d,  Chicago.  Kock  I^lSl' 
Pacific  Railway,  Chicago,  St.  Paul,  Minneapolis  &  Omaha  Railwav 
Pri'n^f  ?f  .,*  Missouri  Rivcr  Railroad  in  Nebraska.  Denver  &  Rio 
Grande  Railroad,  Denver  &  Rio  Grande  Western  Railway,  Fremont 
Eli^horn  &  Missouri  Valley  Railroad,  Kansas  City,  Ft.  Scott  &  "lem- 
phis  Railroad  Kansas  City,  St.  Joseph  &  Council  Bluffs  Railroad 
Missouri  Pacific  Railway,  Sioux  City  &  Pacific  Railroad,  St  Joseph 
&  Grand  Is  and  Railroad,  St.  Louis  &  San  Francisco  Raiwav,  Union 
Pacific  Railway,  Utah  Central  Railway,  and  such  other  c-i^mi^Jinres 
as  may  hereafter  become  ]>arties  hereto.  Witnesseth,  for  the  our- 
pose  of  mutual  protection,  by  establishing  and  maintaining  reasonable 
rates  rules  and  regulations  on  all  freight  traffic,  both  through  and 
llfV''  \»^«^"»^^^«  do  hereby  form  an  association,  to  be  knSwn  as 
the  Trans-Missouri  Freight  Association,  and  agree  to  be  governed 
by  the  following  provisions :  "«^  »u\eiiieu 

"Article  I. 

tio;?ht,rbe"^s'fol"^"''^  ^"  *'^  Trans-Missouri  Freight  Associa- 
"1.  All  traffic  competitive  between  any.  two  or  more  members 
hereof  passing  between  points  in  the  following  described  territorv 
commencing  at  the  Gulf  of  Mexico,  on  the  95th  meridian ;  thence  north 
to  the  Red  Rn-er;  thence  via  that  river  to  the  eastern  boundary  line 
of  the  Indian  territory ;  thence  north  by  said  boundary  line  and  the 
eastern  line  of  the  state  of  Kansas  to  the  Missouri  ri?er.  at  Kansas 

of  fh'o  vk'.^.  "'V^^.  '^^^  ^'''T"'  ^'^^^^  *^  «^«  P«^"t  ^f  intersection 
of  that  river  with  the  eastern  boundary  of  Montana:  thence  via  the 

said  eastern  boundary  line  to  the  international  line,— the  foreeoine 
l?nL'%  r"S^  *«^  '  Missouri  River  line; '  thence  via  said  international 
line  to  the  Pacific  coast;  thence  via  the  Pacific  coast  to  the  inter- 
national line  between  the  United  States  and  Mexico ;  thence  via  said 
international  line  to   [61]   the  Gulf  of  Mexico,  and  then^  via  said 

fiJl L '  A^  ^' v"^  ""^  beginning,  including  business  between  points  on 
the  boundary  line  as  described. 

*k"  «  '^"  ^x^^^^*  ,*^^^f  originating  within  the  territory  as  defined  in 
the  first  section  when  destined  to  points  east  of  the  aforesaid  Missouri 
river  line.  i^xioowuu 

"  EXCEPTIONS. 

fn'nni  P^  ^'  .^?-.^V.''?^  *5^  ^-  ^  ^'  ^'  W.,  except  their  business 
to  and  from  points  in  Colorado  west  of  the  D.  &  R  G  line  between 
Denver  and  Trinidad ;  also  business  via  their  lines  between  points  in 
Colorado  and  points  in  Utah. 

"All  local  business  between  Denver  and  Trinidad  and  intermediate 
points ;  all  local  business  of  the  A.,  T.  &  S.  F.  between  Pueblo  and 


190 


58  FEDEBAL  BEPORTEK,   61. 
Statenient  of  the  Case. 


Railway  Companies  Is  r^ncerned^^,!^!?''.tr/f^^  ""  ^*™"i*'  ^^««t«« 

"All  freight  traffic  to    f?Jm'n?^.h^.,;?K    ",V''"'°«f  t"""™^'  nnmely: 

points  In  the  stat^  of  Nehr^Si  oL^"^**  »"  «>mniou  or  junction 

irlgimitlng  ar  or  d^S  to  Um-,^'' n".'  ""!?  *^^  "'<''«°  Territory, 
Trinidad.  "es"ned  to  Denver,  Colorado  Springs,  PueDlo.  or 

poim"  in^'lle'one  hand^anTtoXS;  'r?.!^''  ^S'""'  »»'«  '«e™ediate 

"^^'S-fffiVT  S'  -«»'  "'«  "o^  -r!S>  ^on'-Jh^^L^^^^  - 

.s  onT"Scra?.Tb^X^  ^^t\±''rr^^^'^^  ■">»- 

Hlo  Grande  Railroad  and  Yten^  and  Rio^r^n^'w"  I"^  ^''*'«''  * 

'•(b)  Traffic  included  in  the  Trans  nLntinIn??f  o^^'f?  """^W. 

Association  irans-Continental  and  International 

Miss?slip;i""rvr ',SSfts'''&de7Jt"*and"  ''T *"  ."'  ^«''™'"^''  ""-J 
between  I»iutsm  Kansas  or  N^rLkf  and  .^'.n".!'",  *  h""=  ^"^^'"8 
rtates  east  of  the  Mississippi  X"  and  sonth^Lf  thl"  .^"Jft,  T*''*'^ 

ter7ifoW'^fs"Ts^i"^^|J'''"  *"*'"'"•  ^™'  P"'"'"  »"«•  P««»t«  '■>  fe 
wayf  '^"  *""''  *"  P°'"**  °"  '"^  Northern  Pacific  and  Manitoba  Rail- 
«V\  "^^^  *"  P"'"*»  '"  Arkansas. 

to  J^lL''ri^arsa%?n'dSL'^"aSrii"ourcr"?  ""'.'^^''i''' 

"'. wS?  TH-'"?n'»";  '°'^«'  sr&""Kansas' cfty^oWsweli'  M^^' 
(h)  The  Interchange  of  traffic  with  thA  rniAroH^  aJT^  '  ^        ^ 

South  Park  Companies  to  or  from  As^n  Cofor«do  r?on  ^^*^J"c  ^  .^"^ 

(1)  Bnsiness  to  and  from  Florence,  Colorado,  by  all  lines. 

"Abticlb  II. 

^r^^'iJi^-  The  "ssoclaHon  shall,  by  unanimous  vote,  elect  a  chair- 
SJrvo^o??4"'^rers'''"'  '""""""  """'  ^  reJ;.T^y\''Zl 

«»:^.u^rtt'U'^,iT^v^^ry'\rc°h'af^arte'tth"*^''"- 

to  be  transacted  does  not  warranrcallfng  thfSers  toLM?er"wSSS 
notice  shall  be  given  not  less  than  fouf  days^fore  the  div  sS  i^r 
tte  meeting.    When  a  meeting,  regular  or  siiclaTis  Vnven^^  it  sh«n 

s^utart^-iS"  drnif:ru;s;;"^°  ^  wsHfr"^^^ 

l^rson  shall  be  present^t  aU  ?^^ar  m^tings  w^^^ 

shall  represent  his  road,  unless  a  ^perior^officefi^T►rP«*.Tff     i5    '  \°i^ 

to  attend,  he  shall  send  a  substitute   with  writteranthnri^  tT^H 

Tu  £l'i5^""°^  ^^^^^  °^«y  arisrand  the  ^^c^'^^^^^^ 

tliallbe  binding  upon  the  company  he  represents.  suostitute 

««^^  f^J^  committee  shall  be  appointed  to  establish  rates    rules 
and  reg'  [€tt]  ulations  on  the  traffic  subject  to  this  association 'n!S?n 

tion  of  outside  lines.    Their  conclusions,  when  unanimous!  sSXJe 


I 


UNITED  ST..TES   t;.  TB..NS-MISSOURI   FEEIGHT  ASSX.      19l 

Statement  of  the  Case 

^^i^^fl>l^:^^'^^^^^^  the  question  at 

iXV-«-«  it  Shan  be  a^tS^rtinn^rpS^"^? 

meettng  tha1f  i^'given'thrchoTr','!'""  ?'"*  P^'"'"  '^  «"eh  ninthly 
rates,  or  change  in  any  roie  o?  re^l?'  ■■'"''  P'"""***'*  reduction  n 
eight  days  in  so  far  as  annHnahii  T^'"!'""  governing  freight  traffic- 

"Sec.  5.  At  eacL  Srmeetine%h?"'°^^'?'»'-«"'"»^ 
and  vote  upon  ail  chang^^prow«S  of  wM„T!f *'""  """"  «>°sider 
given,  and  all  parties  shall  bTCi^  hv  7^1^  ^"^  """'"<'  "»«  been 
tion  so  expresmi,  unless  then  m.ri  thi^     *k  «'«<^'«'on  of  the  associa- 
association  definite  wri  ten  notic^  that  ?„*?«„  P^"^"  '""'"  «"■«  the 
shall  make  such  modification    no^vth,t,n^"  ^"^'^  thereafter  they 
elation :    provided,  that,  if  tile  memi^r  ^^i** "'^  *''^  ™te  of  the  ass<^ 
shall  fail  to  be  represented     t  flTn^t- ^"''"^  """^"o  "'  the  change 
on  its  notice,  and  the  same  shnnt^^*'"?;.  ""  "''"«■>  «hall  be  takin 
any  member  insist  ipon  "    rXttonTf^rt'""^  withdrawn.     ShouW 
the  majorit.v.  or  if  thrmajorifv  fa™r  th»  «  ^  ''^'""^'  the  views  of 
nient  of  said  majority,  the  rate  ^  „,.,il     i"":  •■'"•'  "•  '°  the  Judg- 
npon  other  traffic  then  the  as"cil?ion  mL"?^'"  seriously  the  iatls 
such  other  traffic,  put  into  eff^    ~nnL^'  "  T^°'^''^>'  ™te  upon 
upon  the  same  dav     Rv  nn»„i™       eoriespondiug  rates,  to  take  effect 

relating  to  freight"  tra&cmarbe"mrZ%T^n"'^-  '''j!^-  "'^  ''s"'«"S^ 
ciat.on  without  previous  notice      '"""'"^  "t  any  meeting  of  the  asso- 

menfl^;  If  *7'*'f ^f/°e  «yth<ng  in  this  article  contained    each 
such  rate,  role,  or  rSt?,^n  L      ''"y  time,  without  previournotf^ 
petition  of  lin«i  no    memte?s  of  flfi'  ^  "f^^^'s^ry  to  meet  the  c^m^ 
tme  notice  to  the  cSman  of  Its  Sn"*"*?:  ^'"'"^  "'  the  same 
chairman  upon  investleatton  8h„ii  !f  '  S*'".'^  '"  the  premises,    if  the 
sary  to  meet  the  d  rfrt  ~  l^lf  n^.  ^p"*  ^""^  "te  is  not  ne<^ 
association,  and  shall  so  Sv  fV«     »'  ''nes  not  members  of  ^e 
Immediately  withdraw  such  raff     A*  T'^  """^'"^  the  rate,   It  shall 
tion  held  after  the  mak"ng  of  such  rite  ifW.f  1'"^  "^  ^^^  ^^^a' 
association,  and,  if  the  asL^atim,  =i    ,.  J*  .'''^""  ^e  reported  to  the 
that  such  rate  was  not  madTfn  Zh  ?i  .k^'^^  "^  «  two-thirds  vote 
the  member  offending  s"an   ^  ^^f.i?'?  *?."'^t  such  competition 
section  8  of  this  article,      f  tte  asi^cLnL*"!  ^pif't-'"  P^^'ded  in 
thirds  vote  that  such  rate  wfl«  moJ^     *""*  ^""a"  <Jecide  by  a  two- 
petition,  it  shall  be  con^der^^L  authowtf  ?"  \f'^  '"  ""^t  «»'*  ^^■ 
"  Sec.  7.  All  arrangementrwmf^r.?  *{/"■■  ""*  ''"te  so  made. 

made  by  authority  of  the  assnAtat^,.  ^.  ^^'^  agreement  shall  be 

one  road  has  a  proprietary  iSest In  CJl^^l,^'"''^^'''-  that  when 
such  roads  shall  be  what  thev  mav  eWt  f  ?^  divisions  bet^veen 
erty  of  the  association:  prOTidSl  ftt^thJ'"*^..^'"'"  °°t  be  the  pk^ 
contracts  at  this  date  actuaUy  exisHnl  ^/^"  ".?  "^^'^^  traffic 
common  proprietary  Interests  ti.<f^o^  between  lines  not  havine 
divisions  are  eoncefnTto  he  assod^tU'^'f'  ^  '"^P""^-  «>  '»'  af 
with  competing  lines  may,  if  thoS  "iw^  1<^  *?«  ^"^  that  divisions 
equally  favorable  terms.  ^^*  advisable  by  them,  be  made  on 

Sec.  8.  It  shall  be  the  dntv  nt  ti,»  •.  . 
apparent  violations  of  the  agr^u?ent  Lh  .'™*°  *°  investigate  all 
the  managers,  who  shall  de  erS  hv  t  ^  T^Port  his  findings  to 
against  whom  complaint  is  m^de  t^  LT^""^  ''<'**'  (the  member 
penalty  shall  be  assessed,  the  amo.int  ^f  ^u"^  '""te)  what.  If  any 
hundred  dollars,  to  be  paid  to  ?2f  ^s^l^?-  ^''^- ""t  to  exceed  om 
hereto  agrees  with  a  shiU.  *^r  X  S^r-^o  IL^^/'Z^f^Z 


A 


192 


58  FEDEKAL  REPORTER,   62. 
Statement  of  the  Case. 


I  i 


or  change  in  rates,  or  change  In  the  rules  or  reguhitions,  and  it  is 
shown  n[X)n  investigation  by  the  chainnan  that  such  an  arrangement 
was  effected,  and  traffic  thereby  secured,  sucfr  action  shall  be  reported 
to  the  managers,  who  sliall  determine,  as  above  provided,  what,  if  any, 
penalty  shall  be  assessed, 

*•  Sec.  9.  When  a  penalty  shall  have  been  declared  against  any  mem- 
ber of  this  association,  the  chairman  shall  notify  the  managing  officer 
of  said  com-  [fiS]  pany  that  such  fine  has  been  assessed,  and  that 
within  ten  days  thereafter  he  will  draw  for  the  amount  of  the  fine; 
and  the  draft,  when  presented,  shall  be  honored  by  the  company  thus 
assessed. 

*•  Sec.  10.  All  fines  collected  to  be  used  to  defray  the  expenses  of  the 
association,  the  offending  party  not  to  be  benefited  by  the  amounts 
it  may  pay  as  fines. 

"  Sec.  11.  Any  member  not  present  or  fully  represented  at  roll  call 
of  general  or  special  meetings  of  the  freight  association,  of  which 
line  and  proper  notice  has  been  given,  shall  be  fined  one  dollar,  to  be 
assessed  against  his  company,  unless  he  shall  have  previously  filed 
with  the  chairman  notice  of  Inability  to  be  present  or  represented. 

"Abticle  III. 

"  The  duties  and  power  of  the  chairman  shall  be  as  follows : 

"  Section  1.  He  shall  preside  at  all  meetings  of  the  association,  and 
make  and  keep  a  record  thereof,  and  promulgate  such  of  said  proceed- 
ings as  may  be  necessary  to  inform  the  parties  hereto  of  the  action 
taken  by  the  association. 

**  Sec..  2.  He  shall  at  all  times  keep  and  publish  for  the  use  of 
the  members  a  full  record  of  the  rates,  rules,  and  regulations  prevail- 
ing on  all  lines  parties  hereto  on  business  covered  by  this  agreement, 
and  each  of  the  parties  hereto  agi-ees  to  furnish  such  number  of  copies 
of  the  rates,  rules,  and  regulations  issued  by  it  as  the  chairman  may 
require. 

•*  Sec.  3.  He  shall  construe  this  agreement  and  all  resolutions 
adopted  thereunder,  his  construction  to  be  binding  until  changed  by 
a  majority  vote  of  the  association. 

**  Sec.  4.  He  shall  publish  in  joint  form  all  rates,  rules,  or  regula- 
tions which  are  general  in  their  character  and  apply  throughout  the 
territory  of  the  association,  and  shall  also  publish  In  the  manner  abovo 
such  rates,  rules,  or  regulations  applying  on  traffic  common  to  two 
or  more  lines  as  may  be  agreed  upon  by  the  lines  in  interest. 

••  Sec.  5.  He  shall  be  furnished  with  copies  of  all  waybills  for  freight 
carried  under  this  agreement  when  called  for,  and  shall  furnish  such 
statistics  as  may  be  necessary  to  give  members  general  information 
as  to  the  traffic  moved,  subject  to  the  provisions  of  the  Interstate  Com- 
merce Railway  Association  agreement  as  to  lines  members  thereof. 

*'  Sec.  G.  He  shall  render  to  each  member  of  the  association  monthly 
statements  of  the  expenses  of  the  association,  showing  the  proportions 
due  from  each,  and  shall  make  drafts  on  members  for  the  different 
amounts  thus  shown  to  be  due. 

"  Sec.  7.  He  shall  hear  and  determine  all  charges  of  violations  of 
this  agreement,  and  assess,  collect,  and  dispose  of  the  fines  for  such 
violations  as  provided  for  herein. 

"  Sec.  8.  The  chairman  shall  be  emi)owered  to  authorize  lines  in  the 
association  to  meet  the  rates  of  another  line  or  other  lines  in  the  as- 
sociation when  in  his  judgment  such  action  is  justified  by  the  cir- 
cumstances; this,  however,  not  to  act  in  any  way  as  an  indorsement 
of  an  unauthorized  rate  made  by  any  member. 

"  Sec.  9.  Only  parties  interested  shall  vote  upon  questions  arising 


I 


Statement  of  the  Case. 

provided  by  sectio^^3  oTarticTe  3"ofX1g?Lmeit!'"'^^*  *°  ""^^^  " 

"Article  IV. 

rules  and  regulations  of  any  ww/hin»    *°°.°'  *'"'«  agreement,  and  thf 

™  vocation  ff-X  -.rrs2/ecf  tf  lle-SsS 

"Abticle  v. 

UelTnltSfrrr^rtts^^^'^bl'^x^b'!  ?h^  '"r?  ''^  «■«  — •  Par- 

sx'i^  --•  -- -.  r  dS  t  r^'o-t.!?dT-^ll 

"Abticle  VI. 

el^t^'b^  unanl,^ous°voT"Thfrr™il*^  <*'  '^''^  "members   to  be 
ment  and  salaries  of  nlcetar^  l^S"""^^  "'"'"  ^PP^ve  the  apwin^ 
and  authorize  all  disSZeSts   'l^i1;.«^'*P*  *""*  <«  *«  cha^S 
be  unanimous.  "ements.    All  action  of  this  committee  SaJI 

"  Abticle  VIi. 

anj'quSo^aSTundeV'thi's''?  """^'^  «■«-*»  '«"  *»  agree  upon 
Cti^^^^'L^^^'^'  «f  three  meinbe^  'of  1.*"  '"..^fi"^"'*'?  boak 


r„^'^^  «i"al,  ronsrsro7/^r^"r.ele'',^''o7the*°  ^"  ^^'t^tTon-S 
5re  interested,  the.  Z;X'^:^J^'^-  "^^T^S 


"Abticle  VIII. 


r^'^f^^'rX^'^'Z.^^^^tr  \-  ''^'  -"^-t  thereafter 
from  or  amend  the  same."  °°  *•"*  P"""'  <*  »ny  "ne  to  withdraw 

18^f  thai  S;it"S%.i''j:*  *f'«  "^■•^■'^ent  took  effect  April  t, 

compelled  to  pay  thi  arbltrtrf  f|?J°  f  /^'■■'*.\*''  commerce  Ce  b«^ 

arbitrary  rules  and  regulation.,  iff  ?.'.  ^J^'Sbt,  and  to  submit  to  thS 

association  formed  untoX  /gr^^bllshed  and  mainta?nS*by  tSe 

llSO^voL  1-06  M jg'**"*"*-  «"«  ""^^  been  and  are  T 


194 


58  FEDERAL   REPORTER,   64. 


I*  • 


Statement  of  tbe  Case. 

prlved  of  the  benefits  that  might  be  expected  to  flow  from  free  comi)e- 
titioii  between  the  several  lines  of  railroad  of  the  defendant  com- 
panies, and  that  in  this  way  the  defendant  companies  have  combined 
in  restraint  of  trade  and  commerce  among  the  states,  and  have  at- 
tempted to  monopolize,  and  have  monopolized,  a  part  of  this  commerce 
Ihree  of  the  railroad  companies  were  not  members  of  the  associa- 
tion, and  will  not  be  further  noticed.  The  answers  of  the  15  compa- 
nies who  were  members  of  the  association  are  substantially  the  same, 
ihe  first  defense  in  these  answers  is  that  the  interstate  commerce 
AT  a5  ^^l^i?*"*^ J'  ^^"'  entitled  "An  act  to  regulate  commerce," 
(24  Stat  379,  c.  104;  Rev.  St.  Supp.  529,)  and  the  acts  amendatoi^v 
thereof,  constitute  a  complete  code  of  laws  regulating  that  part  of 
commerce  among  the  states  and  with  foreign  nations  which  relates 
to  transi>ortation,  and  that  the  act  of  July  2,  1890,  is  not  applicable 
to,  and  does  not  govern,  them  or  their  actions. 

Coming  to  the  merits  of  the  suit,  these  defendants  admit  that  they 
are  common  carriers ;  that,  with  some  exceptions  not  imixjrtant  here 
they  owne<l  independent  and  competing  lines  of  railroad  in  that  part 
of  the  United   States  west  of  the  Missouri   and   Mississippi   rivers 
and  that  they  were  engaged  in  the  transi)ortation  of  frtight  among 
the  states  and  territories,  and  to  and  from  foreign  nations    in  that 
region,  but  they  deny  that  they  owned  the  only  through  lines  of  rail- 
road engaged  in  that  business  there;  and  allege  that  there  were  sev- 
eral others,  to  wit,  the  Northern  Pacific  Railroad  Compnnv,  the  Great 
Northern  Railway  Company,  the  Southern  Pacific  Railroad  Company, 
and  the  Texas  Pacific  Railroad  Company.    They  admit  that  some  of 
them  were  assisted  and  encouraged  to  construct  and  maintain  through 
competing  lines  of  railroad,  independent  of  each  other,  bv  subsidies 
hind  grants,  and  donations  from  the  United   States,  and  from  the 
people  of  the  various  states  and  territories  west  of  the  great  rivers 
They  admit  that  they  entered  into  the  agreement  March  15,  1889,  and 
that  rules,  regulations,  and  rates  of  freight  have  since  l)een  fixed  and 
r221*^   ..^^  *^®  association  thus  formed,  and  that  they  have  complied 
[65]  with  and  maintained  them.    They  deny,  however,  that  at  the 
ttme  they  entered  into  the  agreement  they  were  dissatisfied  with  the 
rates  of  freight  they  were  receiving.    They  deny  that  they  intended, 
in  connection  with  the  formation  of  the  association  or  otherwise   to 
unjustly  or  oppressively  augment  such  rates,  or  to  counteract  the 
effect  of  free  competition  on  prices  or  facilities  of  transportation   or 
to  establish  or  to  maintain  arbitrary  rates,  or  to  prevent  any  one  of 
the  defendants  from  reducing  rates,  or  to  procure  unreasonably  sreat 
sums  of  money  from  the  people  of  the  states  and  territories  west  of 
the  great  rivers  engaged   in   Interstate  commerce.    They  deny  that 
the  formation  and  operations  of  the  association  have  had  any  such 
effects,  but  aver  that  they  have  tended  to  decrease  rates,  and  to  bene- 
fit the  people  and  the  roads.    They  deny  that  they  had  any  inten- 
tion by  the  formation  of  the  association  to  monopolize  or  attemnt  to 
monopolize  the  freight  traffic  of  the  region  affected  by  it,  and  deny 
that  it  has  had  any  such  effect.    They  allege  that  they  were  subject 
to  the  provisions  of  the  act  of  congress  of  February  4,  1887  entitled 
An  act  to  regulate  commerce,"  and  the  acts  amendatory  thereof' 
They  aver  that  under  that  act  they  were  required  to  make  all  charges 
reasonable  and  just ;  that  they  were  prohibited  from  making  any  un- 
just discriminations,  or  any  undue  or  unreasonable  preferences  o/from 
giving  any  undue  advantages,  and  that  they  were  required  to  estab- 
lish a  classification  of  freight  and  rates  of  freight,  and  to  publish  and 
file  with  the  interstate  commerce  commission  schedules  showing  this 
classification  and  these  rates,  and  then   to  abide  by  and   maintain 
them ;  that,  in  order  to  comply  with  this  law,  consultation  l)etween 


"  P 


UNITED    STATES    V.    TRANS-MISSOURI    FREIGHT   ASSN.      195 

Opinion  of  the  Court. 

and  concerted  action  of  the  railroad  companies  conductmg  the  trans- 
portation business  west  of  the  great  rivers  was  essential ;  and  that 
they  made  this  agreement  and  formed  this  association  in  order  that 
they  might  more  effectually  comply  with  the  provisions  of  this  law 
than  they  could  do  acting  independently.  They  allege  that  the  rates  they 
have  established  and  maintained  have  been  reasonable  and  just- 
that  since  the  organization  of  the  association  more  than  200  reduc^ 
tions  of  rates  have  been  made  through  its  action ;  that  their  agree- 
ment forming  the  association  was  filed  with  the  interstate  comnTerce 
commission  under  the  act,  and  that  the  rules,  regulations,  and  rates 
they  have  established  and  maintained  have  been  in  strict  conformity 
to  the  provisions  thereof.  They  deny  that  the  people  have  been  de- 
prived of  the  benefits  which  might  be  expected  to  flow  from  free 
competition  m  the  business  of  transportation,  and  allege  that  the 
utmost  freedom  compatible  with  obedience  to  the  interstate  commerce 
t^i  on  "^'^5  lu^  Preservation  of  the  existing  agencies  of  competition 
prevails  and  they  insist  that  their  association  and  action  under  this 
contract  constitute  no  combination  or  conspiracy  in  restraint  of  inter- 
state or  international  commerce. 

re^rte7in'53  Fe^.  R^^l^"^'*  '"^"^  ^^^^^  *^"  ^"^  "^«  ^''^'^^  *« 

/.  W.  Ady,  for  appellant. 

George  R,  Pech  and  Joel  F.  Vaile,  {A,  L,  WUliams,  N,  H, 
Loomis,  R,  W.  Blair,  John  M.  Thurston,  O,  M.  Spencer^ 
C.  A  Mosmmi,  J,  D.  Strong,  and  TF.  F.  GuthHe,  on  the 
briefs,)  for  appellees. 

Before  Sanborn,  Circuit  Judge,  and  Shiras  and  Thayer, 
District  Judges. 

Sanborn,  Circuit  Judge,  after  stating  the  facts  as  above,' 
delivered  the  opinion  of  the  court. 

Contracts  between  competing  corporations,  commonly 
termed  "  pooling  contracts,"  to  divide  their  earnings  from 
the  transportation  of  freight  in  fixed  proportions,  have  long 
been  held  void  by  the  courts  as  against  public  policy.  Such 
contracts  do  not  simply  restrict  competition,  they  tend  to 
destroy  it;  and,  if  they  do  not  effect  that  result,  it  is  only 
because  they  do  not  completely  accomplish  their  [66]  maik 
purpose.  When  acting  independently,  the  spur  of  self-inter- 
est  drives  each  corporation  to  furnish  the  people  with  the 
best  accommodations  and  the  safest  and  most  rapid  trans- 
portation  at  the  lowest  profitable  rates,  in  order  that  it  may 
attract  larger  patronage  and  gather  increased  gain.  But 
under  the  operation  of  a  pool  this  incentive  to  exertion  is 


I 


196 


58  FEDERAL  REPORTEB,  66. 


I 


Opinion  of  the  Court 

withdrawn.    Each  carrier  finds  it  to  its  interest  to  enhance 
the  price  of  carriage,  and  finds  that  its  profits  are  not  sensi- 
hlj  diminished  by  furnishing  poor  facilities  for  transporta- 
tion and  inexpensive  and  mean  accommodations.     In  1887 
congress  recognized  and  adopted  this  rule  of  public  policy, 
and  by  section  5  of  "An  act  to  regulate  commerce,"  com- 
monly called  the  « Interstate  Commerce  Act,"  (24  Stat.  379, 
c.  104;  Rev.  St.  Supp.  529,)  prohibited  such  contracts  be- 
tween common  carriers  engaged  in  interstate  or  international 
commerce.    That  act,  however,  prohibited  contracts  for  the 
pooling  of  freights  of  different  and  competing  railroads  only; 
it  prohibited  contracts  that  thus  destroyed  competition ;  it 
did  not  prohibit  all  contracts  that  in  any  way  restricted  or 
i^gulated  competition.    By  the  act  of  July  2,  1890,  entitled 
"An  act  to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopolies,"  commonlv  called  the  "Anti-Trust 
Act,"  (26  Stat.  209,  c  647;   Rev.  St.  Supp.  762,)  congress 
provided  that: 

••Section  1.  Every  contract  combination  In  tiie  form  of  trust  or 
otherwise,  or  conspiracy,  in  restraint  of  trade  or  commerce  amone  tlie 
several  states,  or  with  foreign  nations.  Is  hereby  declar^  to  ir  legal 

Sl!UnStf^"  "^^^  '^'?"  "'^^^  «"y  «"^»^  contract  or  engage  Yn  any  such 
conib^ation  or  conspiracy,  shall  be  deemed  guilty  of  a  misdemeanor. 

»ec.  z.  Every  i)erson  who  shall  monopolize,  or  attemnt  to  monono- 
Hze.  or  combine  or  conspire  with  any  other  person  or  jwsons^ 
monopolize,  any  part  of  the  trade  or  commer^  among  the  sev^raj 

meanor."'  ^"^^^  "****'"**  *^""  ^  ^^^"^^  ^"^^  «^  '^  »"J^e- 

i«riSi^  •Tk^^^JS^.^*'^**  "^"^^  ^^  ^^  U°"ed  States  are  hereby 
2S?  Jurisdiction  to  prevent  and  restrain  violations  of  this 

The  government  bases  this  suit  on  these  provisions  of  the 
latter  act.  It  claims  that  the  contract  in  question,  and  the 
a^ociation  formed  under  it,  are  illegal  on  three  grounds: 
First,  because  the  contract  prevents  free  and  unrestricted 
competition  between  competing  lines  of  railroad ;  second,  be- 
cause it  tends  to  create  a  monopoly ;  and,  third,  because'  the 
railroad  corporations  have  through  this  contract  abandoned 
the  discharge  of  some  of  their  duties  to  the  public. 

The  first  ground  stated  is  chiefly  relied  on,  and  it  presents 
questions  of  deep  interest,  the  decision  of  which  must  havp 
a  far-reaching  and  important  influence  on  the  transporta- 
tion system  of  the  nation.    The  government  does  not  claim 


UNITED   STATES   V,  TRANS-MISgOURI   FREIGHT   ASSN.      197 

Opinion  of  the  CJourt 
that  the  contract  and  association  assaUed  effected  a  pooling 
of  freights,  or  that  they  tend  to  retard  improvement  in  the 
facihties  afforded   for  safe,  quick,  and  convenient  trans- 
portation, or  that  they  are  obnoxious  to  any  of  the  provisions 
of  the  interstate  commerce  act;   but  it  insists  that  the  anti- 
trust act  prohibits  all  contracts  and  combinations  between 
competing  railroad  corporations  which  in  any  manner  re- 
strict  free   competition.     The  argument  is,   the   anti-trust 
act  prohibits  any  contract  between  competing  raih-oad  com- 
panics  that  restricts  com-  [67]  petition.    This  contract  re- 
stricts  competition;    therefore  it  is  iUegal.     Is,  then,  every 
contract  betA^een  competing  railroad  companies  that  in  any 
manner  imposes  a  restriction  upon  competition  a  "  contract 
m  restraint  of  trade  "  and  illegal  within  the  meaning  of  the 
anti-trust  act?    Is  the  existence  of  restriction  upon  compe- 
tition the  standard  by  which  the  legality  of  these  and  all 
other  contracts  must  be  measured  under  that  act«    and   if 
not,  by  what  standard  shall  their  legality  be  determined? 
These  are  questions  that  the  position  of  the  government  com- 
pels us  to  consider  before  we  can  determine  whether  or  not 
this  contract  is  void.     Their  determination  demands  a  care- 
tul  examination  and  construction  of  that  part  of  the  anti- 
trust act  which  declares  that  "every  contract,  combination 
in  the  form  of  trust  or  otherwise,  or  conspiracy,  in  restraint 
of  trade  or  commerce  among  the  several  states,"  is  ilWal 
No  definition  of  these  terms  is  found  in  this  act,  but  the 
terms  are  not  new.     For  more  than  200  years  before  it  was 
passed  the  courts  of  England  and  America  had  from  time  to 
time  declared  that  certain  classes  of  contracts  in  restraint  of 
trade  were  against  pubUc  policy,  and  therefore  illegal  and 
void  under  the  common  law.    The  line  of  demarcation  be- 
tween these  Illegal  contracts  and  the  innumerable  vaHd 
agreements  that  are  daily  made  in  the  business  world  had 
been  drawn  by  long  lines  of  decisions,  and  had  been  re- 
peatedly pomted  out  by  the  supreme  court  of  the  United 

Eep  553;  Fo^Ie  v.  Park,  131  U.  S.  88,  9  Sup.  Ct.  Rep  658. 
I  wo  years  before  its  passage  congress  had  enacted  the  inter- 

r  lies  IT'T^rr:.    ^^'^  ^^^  '^'''  P^^^^^^^  ^  ^^^  of 
rules  and  established  a  commission  for  the  express  purpose 


n 


198 


58   FEDERAL  BEPOBTEB,   67. 


I     , 


11 


•  Opinion  of  the  Court. 

of  regulating  that  part  of  interstate  and  international  com- 
merce which  relates  to  transportation.  Under  these  circum- 
stances, three  well-settled  rules  of  construction  must  be  ap- 
plied to  ascertain  the  meaning  and  scope  of  the  act : 

(1)  It  must  be  read  in  the  light  of  all  general  laws  upon 
the  same  subject  in  force  at  the  time  of  the  passage  of  the 
aci> 

(2)  Where  words  have  acquired  a  well -understood  mean- 
ing by  judicial  interpretation,  it  is  to  be  presumed  that  they 
are  used  in  that  sense  in  a  subsequent  statute,  unless  the 
contrary  clearly  appears. 

(3)  Where  congress  creates  an  offense,  and  uses  common- 
law  terms,  the  courts  may  properly  look  to  that  body  of 
jurisprudence  for  the  true  meaning  of  the  terms  used,  and, 
if  it  is  a  common-law  offense,  for  the  definition  of  the  offense 
if  it  is  not  clearly  defined  in  the  act  adopting  or  creating  it. 
U.  8.  V.  Armstrong,  2  Curt.  446 ;  U.  S.  v.  Coppersmith,  4 
Fed.  Eep.  198;  In  re  Greene,  52  Fed.  Rep.  104,  111;  Mc- 
Cool  V.  Smith,  1  Black,  459,  469 ;  McDonald  v.  Eovey.  110 
U.  S.  619,  628,  4  Sup.  Ct.  Rep.  142. 

Thus  we  are  brought  to  a  consideration  of  the  statutes 
in  force  and  the  decisions  that  had  been  rendered  when  this 
act  was  passed  to  determine  what  contracts  in  restraint  of 
trade  were  then  illegal,  for  it  is  clear  both  from  the  rules  to 
which  we  have  referred  and  from  the  title  of  the  act,  viz. 
"An  act  to  protect  trade  and  commerce  against  milawful  re- 
straints and  monopolies,"  that  it  was  [68]  such  contracts, 
and  such  contracts  only,  that  congress  intended  to  declare 
unlawful  and  criminal  in  interstate  commerce. 

Under  the  common  law,  the  ground  on  which  contracts 
in  restraint  of  trade  were  declared  unlawful  was  that  they 
were  against  public  policy.  But  when  it  becomes  necessary 
to  consider  grounds  of  public  policy  in  the  determination 
of  a  case,  it  is  well  to  bear  in  mind  the  oft-quoted  remarks 
of  Justice  Burrough  in  Richardson  v.  Mellish,  2  Bing.  252, 
that  public  policy  "  is  a  very  unruly  horse,  and  when  you 
once  get  astride  of  it  you  never  know  where  it  will  carry 
you.  It  may  lead  you  from  the  sound  law."  Public  policy 
changes  with  the  changing  conditions  of  the  times.  It  is 
hardly  to  be  expected  that  a  people  who  are  transported  by 


r 


. 


UNITED   STATES   V,  TRANS-MISSOURI   FREIGHT   ASSN.       199 

Opinion  of  the  Court 
Steam  with  a  rapidity  hardly  conceived  of  a  century  ago, 
who  are  in  constant  and  instant  communication  with  each 
other  by  electricity,  and  who  carry  on  the  most  important 
commercial  transactions  by  the  use  of  the  telegraph  while 
separated  by  thousands  of  miles,  will  entertain  precisely  the 
same  views  of  what  is  conducive  to  the  public  welfare  in 
commercial  and  business  transactions  as  the  people  of  the 
last  century,  who  lived  when  commerce  crept  slowly  along  the 
coasts,  shut  out  of  the  interior  by  the  absence  of  roads,  and 
hampered  by  an  almost  impassable  ocean.     In  1415  a  writ 
of  debt  was  brought  on  an  obligation  by  one  John  Dier,  in 
which  the  defendant  alleged  the  obligation  in   a  certain 
indenture  which  he  put  forth,  and  on  condition  that  if  the 
defendant  did  not  use  his  art  of  a  dyer's  craft,  within  the 
city  where  the  plaintiff,  etc.,  for  half  a  year,  the  obligation 
to  lose  Its  force,  and  said  that  he  did  not  use  his  art  within 
the  time  limited.     Hull,  J.,  said :  "  In  my  opinion,  you  might 
have  demurred  upon  him  that  the  obligation  is  void,  inas- 
much as  the  condition  is  against  the  common  law :  and,  per 
Dieu,  if  the  plaintiff  were  here,  he  should  go  to  j    Ison  till 
he  paid  a  fine  to  the  king."    Y.  B.,  2  Hen.  V.  fol.  i  ,  pi.  26. 
In  1841,  Lord  Langdale,  master  of  the  rolls,  heici  that  a 
contract  made  by  a  lawyer  not  to  practice  his  profession  in 
Great  Britain  for  20  years  was  not  against  public  policy, 
and  that  it  was  valid.     Whittaker  v.  Howe,  3  Beav.  383. 
In  1843,  the  court  of  exchequer  held  that  an  agreement  not 
to  practice  as  a  surgeon  dentist  in  London  or  in  any  other 
town  where  the  plaintiffs  might  have  been  practicing  was 
reasonable  and  lawful  so  far  as  it  related  to  London,  but 
against  public  policy  and  void  as  to  the  other  towns.     Mallan 
V.  May,  11  Mees.  &  W.  652,  667.    In  1869,  Vice  Chancellor 
James  sustained  a  contract  by  vendors  not  to  carrv  on  or 
allow  others  to  carry  on  in  any  part  of  Europe  the  manufac- 
ture or  sale  of  certain  kinds  of  leather  so  as  in  anv  way  to 
mterfere  with  the  exclusive  enjoyment  by  the  purchasing 
company  of  the  manufacture  and  sale  thereof,  and  issued 
an  injunction  to  enforce  it.    Cloth  Co.  v.  Lorsont,  L.  R.  9  Eq. 
345.     In  1889  the  supreme  court  of  New  York  sustained  a 
contract  not  to  manufacture  or  sell  thermometers  or  storm 
glasses  throughout  the  JJnited  States  for  10  years     Ther- 


:. 


200 

58  FEDERAL  REPORTER,  68. 
Opinion  of  the  Court 

Ana  m  1891  the  supreme  court  held  thnf  o  ««  *      f  ?^' 
joad  corporation  giving  thrp^llfn  SouX^;^^^^^^^ 
[«»J  pany  the  exclusive  right  to  furnkh  »ii  !i       •      ^'°' 
and  sleeping  cars  r«,„ired  by  that  r^H  /    '^''''"'^  "^"^ 
15  years  was  not  an  illegal  Sstti^tTf  f ;^T^  I  ^"'^  "' 
It    CA»ca<70,  etc.,  R  cf^  ft  w         o     ''^'''  ''"''  sustained 
U.  S.  79,Tl  Sup.  Ct  So  ;^^r  ^""u^  ^'''-  ^''•'  139 
of  to-day,  as  mSl^Vlb^lTf  *\P"''«<'  P<"-y 
cisions,thatwehaven^tod^    1"^^  *"*^  ^"'^''^^^^  <i«- 
we  .  .  not  to  be  gove^^t^  ^^  Z^tTt^  '"^1  ^''^'^'^ 

^e  people,  or  by  general^o^^aCs  ll't^r' 
What  pohcy  would  Drnhnhi^r  k^      •  i«naing  to  show 

*.nd.S  oJ  detZiL  t  L^htrul,"""^  ^"•^  " 
by  the  personal  views  of  th«  3  v.  "°«»»^">usly  varied 
The  puMic  poirif  1  na  it^  who  constitute  the  court, 
constitution,  W  and  iuS^  T  ■  ^  ^^^^^^^^^d  bj  its 
disclose  it,  t  is  ourpri^^^Vr""""-.  ^°  '''  ^  "^^^ 
yond  that  it  is  Z^ZZ^^  '""'■'^  *°*'  ^"'^^'^  it?   be- 

4"s::^^tSdrt'rtt^~^^^^^^^^  -it  ha. 

^rZ  the  SSr  t^retS  ^ ~  P'^-  neC 
enhance  thriTpri^   p^Jll*  "'  monopolize  their  supply  or 

tween  such  P  Ju^s'?r'lirrjiviLT''"''*T  ^- 
certain  fixed  proportions  and  ^r  *  ^^^"^  ^'^"^^  »»> 

tions  between  c^  S         ^  "^  '''""■'•'=*^  ">'  <'<'"'^i^<^- 

between  employers  or  ZLen  toT    't  ?:;"'"''i"«ti»n« 
prices  for  labor  or  ^r^r^!"  t      r J"*^  "'"^''  ''^  ^^''^^ 
but  become  illegaf  ^stZts  of  *    /     .  '"  '^'''  '"•=«P''«"' 
tions  fonned  .mlrSuT  nLflrwIZhtTV'^  T*"'"" 
who  are  not  members  to  refu^  toaS '  !    i'*''''""  "^  ^^'^ 
employ  or  be  employed  arothTr  ^J^t  l''"''"  ^''''^-  ''  *» 
•nations  undertake  io  prevent  L^^'  I  "^"^f  ^^^'^  «"«b  *««)- 
property  or  their  laCrX^T ^r   tT  "'"^  ^''•^''• 
pose  of  contracts  of  these  classes  LTare  U^uIhelHr  T' 
to  suppress,  not  simply  to  rem,]«il    ~  """^ff^  '"egal  is 

•fiy   lo  regulate,  competition;  and,  if 


Vmr^  STATES  z;.  TBAKS-MISSOtmi  ^BEIGHT  ASSN.      201 

Opinion  of  the  Court 
suppression  is  not  effppt^d  if  ;c  u 

accomplish  thefr  pur2^  '  t  J"""  *^"  "'°*™*=*«  ^^^  «« 

difference  betwin  s^^  ^  '' *^**'"*  ^''^^  ^ «  ^^  ^  wide 
which  is  to^Te^il  ^v'*'  ""**  **^  **»«  Purpose  of 

and  healthy  and^te^tSr  '"'*  •*  "*^  "^  '"^^  «P«°' 
that  which'is  necir,  rlcclrsrh-*  "  '"^'*' ''"'  ""^^ 
not  necessarily  follow  th«t.Tr.     }^  P"''P°^-    I*  ^oes 

f  t„te  illega/reS:tstf\  rb:lt  t^^^^^^^^^^^  '^"- 
classes  do.  because  those  of  the  former 

comLrc^JSrslLrr^'?"  *'**  ^"^  ^«"*™<=^  ^t-en 
an  illegal  r  It  o  t^de  tL""''  ?^"  "  ''"^  '^^^  ^^ 
has  cited  numerous  ca^s'L  T""^  *""■  '^^  g-^^^rmnent 
lowing  are  found  •:  roSsTflh^r"- ^ '"^  ^t 

the  law  forbids  any  a—eS  or  /"^k^'^'"**  ^•""^"'^'  «»d 
price  is  removed  beyS  the  i^t^  T*'""  ''^'''^y  *»»«* 
competition."  Be  Wmwl^lt'rT  7''  1  '^^*''"«^« 
Cloth  Co.,  (Com.  PI.  N.  Y  )  WN  Y  r-  ^^./^''^^y  Fir.- 

is  against  the  general  poli^Uth^ia^tP^^^-      '"^  "  ^* 

with  free  competition" or  to  permit  sTich  S    7  "^  '"^''"''""^ 
struction."    Stewart  4    r^!  .    ■        ^"^erference  or  de- 

(Gil.  348.)     "CombinatirnrT  "''"'?  ^"'^  ^^  ^imi.  372, 
price  of  any  articTe  of   ^H  '"1. '=''"^P"'''«««  to  enhance  the 

jhe  public.'^  p£;i:\''iii^iT^::^r'^zr'' 

A  careful  ^nd  patieft^rjua^l^Tflr '''"'"''''' ^«^- 
ever,  discloses  the  fact  that  the  tn*  .  '"'"'  *''*"'''  '^<'^- 
cases,  which  are  not  of  donlf  ,      .  ™'*'  *=»n«idered  in  those 

classes  to  which"  havl twd  o""*^'/"*^  "'  "^"^  "^  ^'^^ 
ground  than  the  existence  nf?;  I  '"^'^  "P°"  ^''"^  «*er 
They  were  cases  inS;?coLraf "  r  "P*^"  ^^'"Petition. 
or  dealers  to  limit  the  su^nlv  *  ^  u^  ^'"P^ting  producers 
monopolize,  stap  e  commoS  '"f.^^/^^^  the  price  of,  or  to 
Barclay  Coal  t.,  7^8^73^'?^^/'''^  ^'"'^  ^^  ^ 
5.  >5r«^*  <&  Co.,  U  La  Ann   lfi«    '/"f""  '^'^^^'^^  -4**'n  v 

76  Cal.  387,  18  Pac   £«   S^'  ^^^^.""^^'^  Co.  v.  i7ay,,, 
'  ''•  ^^P-  ^^1  ••  D^  Witt  Wire-Cloth  Co    y 


202 


58  FEDEBAl,  SEPOBTEB,   70. 


Opinion  of  the  Court 
New  Jersey  Wire-Cloth  Co.,  (Com.  PI.  N.  Y  )  14  N  Y  Supp 

TjtKt  ^V-  ^t^T^  ^  ^^'*»  ^^-  ^^^'  »"<*  'people  y. 
North  Rtver  Sugar  Refining  Co.,  54  Hun,  354,  7  N.  Y  Supp 

406;    or  cases  involving  pooUng  contracts,  like  Craft  v.  Mc- 

Cmoughy,  79  Dl.  346;  Hooker  v.  Var^ewater,  4  Denio,  349; 

Stanton  y.  Allen,  5  Denio,  434;  A,ide,-son  v.  Jetl,  (Ky.)  12 

il\f^^f\^t  ;•  '^'^  ^"-^ '''''  U-  S.  396,  9  Sup.  Ct. 
Bep^  5^;  MorrtU  v.  Railroad  Co.,  55  N.  H.  531 ;  Denver  d 

fi^n    ;  Jw""/-  i^'^T''  ^-  "^  ^-  ^-  ^-  ^o-  ^5  Fed.  Rep. 
^50;^nA  Woodruff  v.  Berry,  40  Ark.  252;  or  cases  involving- 

combinations  of  workmen  which  compelled  nonmembers  to 
abide  by  the  prices  for  kbor  which  they  had  fixed  or  to  aban- 
don their  employment,  like  People  v.  FisJ^,  14  Wend.  9,  and 
«:,   ;IJ  ^^"^"*^'*  ^^'igamated  Council,  54  Fed.  Rep. 
994,  1000;  or  cases  where  the  contracts  were  ultra  vires  the 
corporations,  and  their  purpose  «nd  effect  was  to  monopolize 
??'  ^'^«/«'^''''«''  Co.  V.  Collin,,  40  Ga.  582;  Ha^lehurst  v. 
Ratlroad  Co    43  Ga.  13;  and  W.  V.  Tel.  Co.  v.  Am^an 
Unta^  Tel.  Co.,  65  Ga.  160;  or  cases  of  questionable  author- 
ity, like  Com.y.  Carlisle,  Brightly,  N.  P.  36, 39.     See.  contra, 
Snow  y- ^heeler,  US  Mass.  179, 185;  Bowen  v.  Uatheson,  14 
Allen,  499;  Skratnka  v.  Scharringhausen,  8  Mo.  App   522- 
and  Care,,  v.  Rutherford,  106  Mass.  1, 14.    It  was  natural  that 
m  the  discussion  of  contracts  of  these  classes  the  courts  should 
«>ndemn  m  unmeasured  terms  the  suppression  of  competition, 
but  m  none  of  these  cases  were  they  required  to  l)old,  and  in 
none  of  them  did  they  hold,  as  we  understand  the  opinions 
when  read  m  relation  to  the  facts  of  the  cases  respectively, 
that^e^ery  restriction  of  competition  by  contracts  of  compet- 
ing dealers  or  carriers  was  illegal.    These  decisions  rest  upon 
broader  ground,-on  the  ground  that  the  main  purpose  of  the 
obnoxious  contracts  was  to  suppress  competition,  and  that 
they  thus  tended  to  effect  an  unreasonable  and  unlawful  re- 

wkhTn  1'""^";,  'h  T*  T  '^'  ^^•^"■^^"'•'d  rules,  and  come 
vrithin  the  well-defined  classes,  to  which  we  have  above 
referred. 

[71]  A  more  extended  view  of  the  authorities  strengthens 
this  conclusion,  and  makes  plain  the  line  of  demar^tion 
which  separates  legal  contracts  that  incidentally  restrict 
competition  from  illegal  contracts  in  restraint  of  trade     The 


\ 


UNITED  STATES   V.  TBANS-MISSOUBI  FREIGHT  ASSN.      208 

Opinion  of  the  C!ourt 
decision  in  the  leading  case  upon  this  subject,  {Mitchd  v 
Reyr^Us  1  P   Wms.  181,  1  Smith,  Lead.  Cas     7th  tnel' 

k  th/f  '' P-;''^')  *\«  '^^  -hi«t  Chief  Justice  FuUef^^ 
IS  the  foundation  of  the  rule  in  relation  to  the  invalidity  Jf 
contracts  m  restraint  of  trade,  (Gibbs  v.  Gas  Co.,  130  U  S 

restictedTo''*-  ^T  ''''^  '^''^  '''''  '  -»*-<=*  t^at  clSrty 
restricted  competition  was  not  an  illegal  restraint  of  trade 

ihe  action  was  upon  a  bond  the  condition  of  which  was  that 

the  obligor,  who  was  the  assignor  of  a  lease  of  a  bakehouse 

and  messuage  m  the  parish  of  St.  Andrews,  Holborn,  would 

yearr  Th".  '"t"t  "'  I'f^  "'*'^^"  '''''  P^^^^  for  thr^ 

yea^     The  contract  was  held  valid,  and  the  action  sustained. 

rhis  decision  was  rendered  in  1711.    Chief  Justice  Parker, 

,f  trtr""^  It,  deeiared  that  contracts  in  partial  restrain 

of  trade  were  valid  if  made  upon  sufficient  consideration,  but 

hat  contracts  in  general  restraint  of  trade  were  ilkgal 

be  ause  they  deprived  the  party  restrained  of  his  livelihSd 

memW  '"S!       ^^^^  ^^'^  ff-^'y-  ""^  the  public  of  a  useful 

tklr^J'       ^"FT^^i  ''*"^"y  ^'"''^''^^  *^«*  «>"tr««ts  in  par- 

lal  restraint  of  trade  may  be  sustained,  has  been  uniformlv 

appro.^d,  but  in  the  development  of  the  law  applicaWr tl 

ttt  tlTJ^l'  '"  """  f'^'  *°  ''  '"^^  furthr'condi  ion 
tha    the  restriction  imposed  must  be  reasonable  in  view  of 

;  marl  of  CwiTTTI  ''  ''"''  P^^*'«"'«^  ^^    ^he 
lemark  of  Chief  Justice  Parker  that  contracts  in  general 

restiaint^of  trade  are  illegal-a  remark  that  was  notTe^ 
sary  to  the  determination  of  the  question  before  himTs 

stns"     tZ*        't ••  ^'"''l'  ""'^^^^^  •'y  '-^^-^-t  deci- 
Jmidiate  Z  ''  '  "    r  ^'"^'"•'•^  '"  *^  '»*^'-  authorities  to 
rXlw  clnf  1'7P°^'*'°"  t^«t  th«re  is  any  hard  and  fast 
rule  that  contracts  m  general  restraint  of  trade  are  illegal 
and   to  apply  the  test  of  reasonableness  to  all  contracts' 

Jalhs,l  El.  &  Bl.  391,  the  court  of  queen's  bench  held,  in 
1853,  that  a  covenant  restricting  competition,  which  bound 

Usher  in  London  or  within  150  miles  of  the  general  oost 
office,  or  m  Dublin  or  Edinburgh,  or  within  50  mEof  eitC 

hJ\T^  ?  Kr  u   ""  "'^^"'  ^^^  covenantee  or  his  successors 
had  an  establishment  or  might  have  had  one  within  six 


^^  58  PEDEBAL  BEPOBTER,   71. 

Opinion  of  the  Court, 
.nonths  preceding  was  not  an  illegal  restraint  of  trade,  and 

f^o.,  n  g   B  Thy.  544,  certain  shipowners  engaged  in  the 
carrying  trade  between  London  and  China  had  formed  an 
^lation  for  the  purpose  of  keeping  up  the  rate  of  freights 
in  the  t«,  trade  and  securing  that  trade  to  themselves.    They 
accomplished  this  purpose  by  allowing  a  rebate  of  5  per  cen< 
o^lv   alTfl''  P"d  by  shippers  who  shipped  in  their  vessels 
only,  and  thus  partially  or  entirely  excluded  the  plaintiffs 
who  were  competing  shipowners,  from  the  tea-carrying  trade! 
The  latter  brought  suit  for  an  injunction  and  damages,  but 
notwithstanding  the  obvious  restriction  upon  free  competi- 

an  unlawful  combination  in  restraint  of  trade,  and  gave  iude- 
ment  for  the  defendants.    This  decision  was  rendered  in  1888 

IffiZVK'^lul^  *""  appeal,  (23  Q.B.Div.698,)  and  finaUy 
•ffirmed  by  the  house  of  lords,  (App.  Cas.  1892,  p.  25.)     In 
I^ktmy.  Lyman  &  Mass.  522,  the  supreme  judicial  court  of 
Ma^acjusetts  held,  in  1813,  that  a  contract  by  a  merchant 
not  to  be  interested  in  any  voyage  to  the  northwest  coast  of 
Amen«i  was  not  invalid  as  in  restraint  of  trade.    In  Match 
Co.  ylioeber,  106  N.  Y.  473.  13  N.  E.  Rep.  419,  a  contract  of 
a  match  manufacturer  never  to  manufacture  or  sell  anv 
friction  match««  in  the  District  of  Columbia,  or  in  any  part 
of  the  United  States  except  Idaho  and  Montana,  was  sus- 
tained and  enforced.    In  Navigation  Co.  v.  Wimor,  20  Wall 
64,  decided  in  1873,  a  contract  between  two  steam  navigation 
companies  engaged  in  the  business  of  transportation  on  the 
rivers,  bays,  and  waters  of  California,  and  on  the  Columbia 
river  and  its  tributaries,  respectively,  was  declared  by  the 
supreme  court  not  to  be  in  restraint  of  trade,  although  it 
prdiibited  the  use  of  a  certain  steamer  in  the  waters  of  Cali- 
fornia for  10  years.    And  in  1890  the  supreme  court  of  New 
Hampshire  in  an  exhaustive  and  persuasive  opinion  held  that 
contracts  by  which  a  railroad  corporation  leased  its  road  and 
rolling  stock  to  a  competitor  for  many  years  were  not  neces- 
sarily against  public  policy  or  void  at  common  law,  when  the 
purpose  of  the  contracts  and  combinations  did  not  appear 
to  be  to  raise  the  rate  of  transportation  above  the  standard  of 
fair  compensation,  or  to  violate  any  duty  owing  to  the  pubUc 


t 


UNITED  STATES   V.  TRANS-MISSOUBI   FREIGHT   ASSN.      205 

Opinion  of  the  Court 
hy  noncompeting  companies.    Manchester,  etc     R    Co    y 
(onc^dR.  Go.  (N.  H.)  20  Atl.  Rep.  383     If 'further  "au 
tl.ority  IS  wanted   for  the  proposition  that  it  is  not  th: 

;."  oTthat*''  'r^^f  '^-P^"^'-'  »>"'  tie  lible 
ness  of  that  restriction,  that  is  the  test  of  the  validity  of 
ontracj  that  are  claimed  to  be  in  restraint  of  trS  ,  U  J 
lie  found  in  Fowle  v.  Park,  131  U.  S  88  97  9  S„n  rt  NT 
m;  GiUs  V.  Gas  Co.  130  U.  S.  396, 1'sl'p   Ct^R^"  S^: 

L,     ■     e',.i'   ^^<'k^  V.  Evam,  3   Younge  &  J    318- 
Ontano  Salt  Co.  v.  Merchar^ts  Salt  Co.,  18  oLt  Ch   540  ^ 

^  ±5eav.  383;  Kellogg  v.  Larkin,  3  Pin.   123    150-  /?W  J 

Uep.  335;  Brown  v.  Roumavell,  78  111    589  ^^,'    rrf 
foTdh  Ex\  5  Fla.  510,  515.  '     ^*  ^-  ^^*^' 

From  a  review  of  these  and  other  authorities,  it  clearlv 
appears  that  when  the  anti-trust  act  was  passed  the  rule  ha  J 
become  firmly  established  in  the  jurisprudence  of  S^laJd 
and  the  United  States  that  the  validity  of  contracts  restrict 

JthTre'Sr  Tth^  '^*^™^  ''^  *^«  ~Slni 

ovitabj^r  a  l^:ir:x^;::^x^ 

tion  or  create  a  monopoly,  it  was  illegal     If  a  cont^m 
posed  a  restriction  that  was  unreasonably  injurious  to    he" 

TntrestTS  r  t  '^1^  '''''  -'g-ter  "tha^    h 
interest  of  the  party  in  whose  favor  it  was  imno^rl  ^„ 

manded,  it  was  illegal.     But  contracts  made  fo7aTawfoi 
Sr  a"  d"'v  r-""*  -reasonably  injurious  tTthe  pubU 
welfare,  and  which  imposed  no  heavier  restraint  upon  trade 
<han  the  interest  of  the  favored  party  required    had  Z! 
uniformly  sustained,  notwithstanding  their  tendency  to  ^ 


^)6 


58  FEDERAL  BEPOKTEB,  73. 


Opinion  of  tbe  Court, 
extent  to  check  competition.    The  public  welfare  was  first 
considered,  and  the  reasonableness  of  the  restriction  deter- 
mined under  these  rules  in  the  light  of  aU  the  facts  and  cir- 
cumstances of  each  particular  case. 

But  it  is  said  that  railroad  corporations  are  quasi  pubUc 
corporations,  and  any  restriction  upon  their  competition  is 
against  the  public  policy  of  the  nation.  It  is  not  to  be 
denied  that  there  are  some  expressions  to  be  found  in  ad- 
judged cases,  notably  in  Gibha  v.  Gas  Co.,  130  U  S  396 
409,  9  Sup.  Ct.  Rep.  563;  West  Virginia  Tramp.  Co.  y. 
Ohio  htver  Pipe  Line  Co.,  22  W.  Va.  600,  626;    Chicago 

S*-Tn  ,f  xf^i'i""-  ^-  ^'"P^'  ^"'^'^^^^  ^'  Cohe  Co..  121 
ni.  i^W  13  N.  E.  Eep.  169;  and  II'.  V.  Tel.  Co.  v.  Av^rican 
Lmon  lei.  Co.,  66  Ga.  160,-to  the  effect  that  where  a  busi- 
ness is  of  such  character  that  it  cannot  be  restrained  to  any 
<«tent  whatever  without  prejudice  to  the  public  interests 
the  courts  decline  to  enforce  or  sustain  contracts  imposing 
such    restraint,   however   partial.    But    the    language   em 
ployed  by  the  courts  in  these  cases  should  be  read  in  the 
light  of  the  circumstances  under  which  it  was  uttered   and 
with  due  reference  to  the  point  actually  adjudicated.    Thus 
m  the  ^rliest  of  these  cases  (W.  U.  Tel.  Co.  v.  American 
hmon  Tel.  Co.)  it  was  held  that  a  contract  between  a  rail- 
road company  and  a  telegraph  company  by  which  the  former 
granted  to  the  latter  the  exclusive  right  to  construct  a  tele- 
graph line  along  its  right  of  way,  necessarily  excluded  all 
other  telegraph  lines  from  the  use  of  a  right  of  way  that  by 
condemnation  had  been  devoted  to  public  uses,  and  was  void 
because  it  was  in  restraint  of  trade,  and  tended  to  create  a 
monopoly.    In  West  Virginia  Tramp.  Co.  v.  Ohio  River 
Ptpe  Line  Co.  it  was  held  that  an  owner  of  2,000  acres  of 
oil  land  could  not  grant  to  one  pipe  line  companv  an  ex- 
clusive right  to  lay  a  pipe  line  across  said  lands,  because  the 
legislature,  by  authorizing  pipe  line  companies  to  condemn 
lands  for  the  construction  of  such  lines,  had  thereby  declared 
that  the  public  had  an  interest  in  their  construction,  and  that 
a  c«mtract  which  precluded  such  companiep  from  laying  a 
line  across  an  extensive  tract  of  land  was  necessarily  opposed 
to  public  policy.    In  Chicago  Gaslight  <&  Coke  Co.  v.  Peo- 
ple's Gaslight  &  Coke  Co.  the  court  held  that  a  gas  com- 


■ 


«! 


UNITED  STATES   V.  TBANS-MISSOUKI   FREIGHT  .ASSN.      207 

Opinion  of  the  Court, 
pany,  which  had  accepted  a  charter  authorizing  it  to  lav 
Srr?.*°  «"PPly  gas  throughout  the  entire  limits  of  Z 
uty    could  not  disable  itself  from  the  performance  of  the 
Sloti^  '*      '^  undertaken  by  entering  into  a  contract 
with  another  company  not  to  lay  pipes  and  supply  <,as  in  a 
large  section  of  said  city.    And  in  GiUs  v.  Z  k  a  iL 
contract  by  one  gas  company  with  another  to  abandon  the 
discharge  of  public  duties  which  had  been  devolved  upon  it 

public  policy  and  void,  and  to  be  void  on  the  further  ground 

irL  *';\'""*'"^«*  -^^^  ^»  0P«n  violation  of  a  statute  which 
prevented  the  company  from  "  entering  into  a  *  *  * 
contract  with  any  other  gas  company  whatever  " 

«o  doubt  can  be  entertained  that  the  contract  involved  in 

for  ;tf  IT.'  ^f  '■'^''■'■'•^  ^  ^^^  »g^in«t  Public  policy 
for  Its  marked  tendency  to  create  a  monopoly,  and  to  sup 

press  healthy  competition.    Two  of  the  contracts  were  alL 

^^T  •?   ,/  r^""*  ''"'*  *^"  corporation  had  attempted  to 
disable  Itself  from  exercising  powers  which  had  been  con 
ferred  upon  it  for  the  public  advantage.     But  weVhTnk  Tn 
view  of  the  state  of  facts  on  which  the  decisions  we  e  ^.^ 
atted   and  the  points  actually  adjudicated,  it  wouM  run- 
wise  to  deduce  an  unbending  rule  that  any  and  everrco^- 
ract  between  two  railway  companies  which  enjoins  or  Zn- 

Sf  SrT"''  °'  "^""^  '"^  *^  ™*"-  of'estabUsMi 
freight  or  passenger  rates  between  competitive  points  i= 
against  public  policy,  and  an  unlawful  r^traint  S  lade" 

ctrHhaTth'rt"' '"  ^1  ^""^  *°  ^'^^^  -'-*'  -  "-■ 

i"  bv  ra  it  of'T  ?  *'-*"^PO'-ti°g  freight  and  pas^n- 
un^n  J  '^"\!!."*  ^fJi  Character  that  no  restraint  whatever 
upon  competition  therein  is  permissible.    On  the  contract 
contracts  between  common  carriers  which   impord  some 
Ty  rSrc  r  ^^*^*r.'-«  been  frequentlyTusta^^' 

s.am.h,p  co'::iZllXlXl^^'TA^7:t- 

Manch^ter,  etc.,  R.  Co.  v.  Concord  R.  Co.,  (N.  H.)  s'i  ^l 


208 


58  FEDEBAL  BEPORTEK,   74. 


Opinion  of  the  CJourt 
Eep.  383;  Wiggins  Ferry  Co.  v.  Chicago  cS;  A,  R,  Co.,  73 
Mo.  389.    But  even  if  such  an  extreme  view,  as  is  above  in- 
dicated, was  once  tenable,  we  fail  to  see  how  it  can  well  be 
maintained   since  the  passage  of  the  interstate  commerce 
law,  and  the  action  that  has  been  taken  thereunder  by  the 
government  commission  which  was  created  to  enforce  its 
provisions.     The  interstate  commerce  law  imposes  several 
important  restrictions  upon  the  right  of  railway  companies 
to  do  as  they  please  in  the  matter  of  making  and  altering 
rates,  and  congress  has  thereby  expressed  its  conviction  that 
unrestrained   competition  between   carriers   is  not,   at   the 
present  time,  and  under  existing  conditions,  most  conducive 
to  the  public  welfare,  but  that  other  things  are  quite  as  es- 
sential to  the  public  good.    Mark  the  difference  in  public 
policy  towards  merchants  and  railroad  companies  exhibited 
by  the  common  law  and  by  the  interstate  commerce  act. 
Merchants  may  refuse  to  sell  their  wares  at  all,  they  may 
refuse  to  transact  any  business ;  but  railroad  companies  are 
common  carriers;    they  must  furnish  transportation  when 
requested;    they  must  operate  their  roads  or  forfeit  their 
franchises ;  merchants  may  charge  any  price  they  see  fit  for 
their  wares,  but  railroad  companies  are  restricted  to  reason- 
able and  just  charges  for  transportation,  (Interstate  Com- 
merce Act,  §  1;)  merchants  may  sell  articles  of  like  charac- 
ter and  value  for  as  many  different  prices  [75]  as  they  have 
different  customers,  but  railroad  companies  are  restricted  to 
the  same  charges  to  all  their  customers  for  like  services, 
(Id.  §2;)   merchants  may  give  to  any  customers  or  any 
localities  any  preference  or  advantage  they  choose  over  other 
customers  or  localities,  but  railroad  companies  are  prohibited 
from  giving  any  undue  preference  or  advantage  to  any  party 
or  place,  (Id.  §3;)  merchants  may  sell  articles  of  inferior 
value  for  higher  prices  than  those  they  charge  and  receive 
for  those  of  greater  value,  but  railroad  companies  are  pro- 
hibited from  charging  or  receiving  a  greater  compensation 
for  a  short  haul  than  for  a  long  haul,  (Id.  §4;)  merchants 
may  keep  their  prices  secret ;  railroad  companies  must  pub- 
lish their  rates  for  transportation,  and  are  prohibited  from 
charging  or  receiving  a  greater  or  less  compensation  than  that 
specified  in  the  published  schedules,   (Id.  §6;)   merchants 


raiTED   STATES    V,  TKA2^S-MISS0URI   FREIGHT   ASSN.      209 

Opinion  of  tlie  Court, 
may  change  their  prices  instantly  and  without  notice,  rail- 
road  companies  are  prohibited  from  increasing  their  rati 

except  after  three  days'  public  notice,  (Id.  §6:)  men;hanS 

Tre  subkct  to  th        «"'^™"«"V    ''"*   '^'^'"^^   ^o'^P^ni^^ 
are  subject  to  the  supervision  of  a  commission,  established 

T^J      ,     -  enforcement  of  these  restrictions,   (Id    S  lo  ) 
These  restrictions  relate  almost  exclusively  u>  rates  for  Th! 
transportation  of  freight  and  passengers   ' They  at  « 
ous  radical,  and  effective.    Th^v-  beca'^e  opertle  by    'n  a'^ 
of  congress  three  years  before  the  anti-trust  act  was  Das«^? 

rolicvTtr't ''^""'*  ^'^^^  '''^'  *'-"  ^'-^  dlte  the^puS 
policy  of  the  nation  was  that  competition  between  railroad 

If  we  turn  now  to  the  published  reports  of  the  inti>r<=t«f. 

STI^dtTr '"""'  "'*'"  ''P'"'-  -  such  matte'lrl^ 
tainly  entitled  to  great  consideration,  we  find  the  v\.J^ 
more  clearly  expressed  that  it  was  the  Durnll    7 
.  to  place  important  restraints  upon  comSoT  thlr"^"^ 
trolled  struggles  for  natrnno^. V    *'*'?'P***"°n'  that  uncon- 

quently  detfme^M  TZT^c  ^^Se  X^  T  ^ 
are  especially  injurious  to  the^ulel  inte^ste  of  The  "'" 
try  and  contrary  to  the  snirit  «f  -.  ".'^."'terests  of  the  coun- 

In  the  fourth  annual  rpnnrf  r.f  fk«  •    • 

we  find  the  following  stateCt  "'""'^""'  "*  ^"^^  ''^ 

It  is  thus  seen  at  evpi-p  tm..,  *».  *  ...^  ' 

consideration  of  the  ne^i.ninn,;         I.  *  ^""^  regulation  of  rates  on  . 

and  without  a  s^eTT'^I 2^TZ,TT'"'  "'  ^'^  «-«'«  ^"d" 
business  may  be  affected    «nrt  .vLTi         ®'*'  "'  operations  wherebT  !ti^ 

in  respect  to  that  rol^dl'ay  te^fmUedM^fr'"""  *''"*  whatTsLn^ 
antagonistic  to  all  prinelnleT nJ-  ioM  V*  consequences,  is  entirelv 
road  managers  have*^  Sfed  this  K  transportation.  The  S 
because  they  have  pcrcelv^  this  thn?^  thl''*  J"^  ^^^'  *""•  't  i* 
f Ml^'S""*  themselt^s  into  rai  road  as^lati^nr  ,^"  «>n>PClIed 
[78]  of  agreeing  upon  classiflcattons  anTraJr  ^^S"".,^^  ^"'^^ 
11808-voi.  1-06  M 14  '"^"   ^  ^^^ 


38   FEBEBAL   REPORTER,  76. 
0|>riilf»ii  of  tile  Court. 

terl::',^,,;■^;;r„v;Hir,;];.^.™:l;;:l«  ';;„l".r„",";:"r'^  -( c,...au..,ing  „.. 

petltive  forces."  i'Ukiim^.  .i,„i  .,||  |,„.s|,„>j,„  affetted  l».v  oom- 

And  oi>  page  21  of  the  same  report  the  following: 

fa;;\"..ur;jr?,rrr.!?t;.:;StZ.rn7if^":^  ^"  the  „„aouMea 
pushed  to  ruinous  extrwii«  S^  Ih,.i  T  railroiul  conipaiiles  l«  often 
the  «•,„•  of  yeo^r  ne  oh^  !^;  '"i^  JSf  i  *^^  "'•«'«•■•'<•<•«  <liffleiiltle«  in 
When  «.m,«>tItTo  rt^era™^  ?o^ti  "'  """«'*  "■'"*"  '«  "^'«  '"«• 
to  the  husine*.  of  thr^.unm.Jth^  ..''"■••  ."•^''  '"■*'  ""  ""^-ttling 
and  the  spin,  of  the  eSg^aw  U^il-ahrs,'"',:^' ••''"''  '"  '"-  ■'•'•'•'*'•''• 

ot^thl^L^^'f  '-,"""1  "^P""^  •*"  P"«"'  25,  when  speaking 
Of  the  unity  of  railroad  interests,  the  commission  uses  this 
language: 

w^uT.^^.rrs'^nrtr'rrn^.^irvr^^^ 

»notLs  to  tber„;^t„r.^:;;^s[s«ir,^^^^^^^^^  ■ 

And  in  the  same  i-eport.  on  page  23.  we  find  the  following: 
**A  short  road  may  BometiineK  mnkp  it«»if  nffi«  k«**     *i 

ua.e«.\o;':L™'^p!S.  .f?^xto'^.o.  'f.ri;';'U'Ss'i!;r'\hrev''''t  ""^ 

exercise  of  any  nu-h  .»,^r     R-lT  »f  ■•^«t<*  ««  HK'«i>««t  the  prolmble 

it  goeH  to  the"^  ™tobn'sZent  T.^T^mLT^LiZ^Z.''^''  '"'^^ 
of  roaite  as  will  lead  to  the  extenshn.  of  th»^,.M?S?  *•■*  '"«'">8e>* 
with  mutnal  reHponKil.ilitieT  w  ?.    V,.  '."'"''■  ^Tnnge'iients 

tbe  public  may  tave  In  ^e  ^nl^  ,^rfon2?  in  ir'^l""'-  '^  """ 
conveniences  that  m  ght  be  e^^^  i^  J^f^,^',  '  *'""  '*'"'"*''  ""1 
Uon.  There  Is  nothiiTe  in  the^Jfn  *i  „?  l?,"^i  '""'  «*"*""  '«'^'«- 
1.  at  all  Inconsistent  wi  2  earnes  ZLntZ  '  """"««■»«"«  ''hid. 
conveniem*  to  the  oarrle?/^  we  1  Trthe  ";«bM^L^,,"''.  ^"f"' 

S?'..1fff"'"r  """■  ^  '""""^  tor  nnti  in  the  s  rife  t^twSn  ^d»" 
«ie  limits  of  competition  are  passed,  and  warfare  l«Bn7»!^  " 

But  In  order  to  form  them  erent  in..h..,i "„",■*  '"  entered  upon, 
pensable.  and  such™  nc^SioSTare  Kv  tr.T*""".   '"^.  """"  '"<»'»- 

furthefJdT* """"  T^  ™  p"«^  ^'  *''•'  ----'- 

"To  iiuike  railroads  of  the  sreateflt  nnRMihin  ^^t^  *    *^ 
contract  relations  would  he  StTal  ^auL ThJ:^  ***  ^^^  ^""*^' 
be  Joint  tariflfs.  joint  nmnlng  ammgeine^rn^d^nr    h''"^'^  °^  *«> 
•nd  a  giving  of  credit  to  a  laJge^xtent  somp  n^^^^^^  ^'  ^«''»' 

iM^yond  the  reach  of  c^mpuL'o'^^SaZ?  r.U'^enXtSe^ri^ 


tty^ 


UNITED   STATES    r.  TRANS-MISSOUKr_  PBEIGHT    ASSN.      21] 

Opinion  of  the  Court, 
not,  could   be  I»est  spttlwi         i 

fixed,  by  the  voluntary  cation  of 'tL^n^rHo'^.^"*"  ^'^^  Qualifications 
respectively.      Agi-eenient   upon   tlieie  ^m      l'h  T^^^*  «^  ^he  roads 
therefore,   a    settled   policv    and    ^hn,.;     ?  ^'"^red   matters   became, 
seemed  to  lose  their  Sdentiti     and  to  hJ^''^'^^'"*^"*    ^'"^^   ^^   road 
lines,  and  associations  were  fornZ  uhi/T^^K   ^^'•*"  ^^  ^'^^t  trunk 
of  roads  in  a  state  or  «ectioi?  of  1 1.      ""*'  embraced  all  the  mana-eii 
were   remitted  nianrqueSs  ,>/  Ir'""^'"^.'     ^"^  ^^'^^  associajFo^ 
as  are  above   referrW  ^^   Clwslfi.^H""'''"    '"^*^''^'^^-    ^"eluding   S 
associations,   it   heinrevMent  «^t  nfi?"   ''"''  ^'^^  ^'^"fi^l^   to   siich 
serious   obstacles   t<>   a    harmonic. ^  differences   in  classification   were 
traffic^       But   what    ^.t  7 Z^^  ^^^r':::^i^''   interchang^^ 
[77]    the   formation   of  snAh    «lo!;  •  J-  anything    else    influencpfl 

them  Of  large  authorUy.'"^  th^^lblmv  ^  '''^^'^^'-^•^TuX 
minent,  that  destructive  wars  S  r- i«  '  '  .T**'^*'  "'*^-^  <-onstantlv  im- 
Peting  roads  to  the  ^erLri^jSrv  oftbr"^  "'*  »>etweencC 

turbance  of  business.  AccordSV  LI  %^iV'^"'^  '"^^  ^^^  general  dis- 
a^ociations  has  been  the  fix  "f  of  Zt  ""^  ^^'%  ''^'^^  functions  of  such 
Whereby  their  several  membe?.f  <^u.  e  ;.onn'  .V' i  **"^'^''^^  "^  "»*^«s 
serve  the  rates  when  fixed  "  compelled  or  induced  to  ob- 

Carrie,  .mder  thfo  LliroTr^'rohZ'T  ^^"^'^^ 
ful  execution,  as  pointed  o„t  by  The"  nterstL  """"''" 

mission,  seems  to  some  extent  f^  interstate  coimnerce  eoin- 
cert  of  action     It    '   l.t  """*'  "'"^^-^nce  «nd  con- 

the  rea-sons  why  ^ilro  d  I^  """^T'^ry  for  us  to  state 
privilege  of  iini  into,  P'"'''  '''""^'*  ^  ^''^^d^d  the 
which  m^y  to  Z!  e^^  T'^^r"*-'  ^^''^  «">^^  ^'•npanies 
to  that  e£t  haTbin'teteT  vi'  competition.     Jasons 

suasiveforcei.iSt£t  Jto  w^fh  ''"'^  ""''  ^'■ 
-ferred,  notably  in  ^ait^,^  S^ZT  '"^^I 
Oo.,  supra     But    wifV.^  4.       .    -        '        ^^-  ^'  Concord  R, 

is  sufficfent  to  say  7£t         •'T  '"^  "^''*  ^'^"^-«»'  i* 

and  fast  rule  ^fo^'wherthl  Tf'  *'^"  "''^  ""  ''^^ 
which  made  very  Z^  J.,  t..    **  anti-trust  act  was  enacted 

on  grounds  or^ubHcX^'^r  ""'•"'  ^*^'"P'^"'«^  -'<» 
petition.     In  oJr  ^2     he  ""  '"^  "'"^  ***^^  ^'"^ 
then  prevailed,  espeJalTy  1'  ^el  071"'""^ *  ^'^*"''' 
the  interstate  commerce  act   tw       u       ^'^''*  P*^«g«  »* 
if.  judged  in  the  Sfof  all  the  ""'"'''"'''  "^"^  ^^'^J' 

tions  under  which  fhey te^  idr'tr*'""'  ""**  <""'''- 
stricted  competition.  '  ^^-'^  ""i^asonably  re- 

in view  of  the  foregoing  nrinrinlec   .f  •       . 

gwuig  principles,  it  remains  for  us  to 


919 

58  FEDERAL   REPORTER,    77. 

Opinion  of  the  Court 

inal  statute,  and  it  sh^i^ot  ^'Lt;;Sitt  T  ^ 
persons  to  the  DenaltiV*;  fKa^K    •        construed  as  to  subject 

-plained  of  ^^:^r^urzz'itrt:!: '^'''-''i 

suppress  competition,  enhance  rates  of  S    tV  '  """"  ^ 
lize  the  traffic.    The  answers  denv  tvT       ^    '  monopo- 

leffP  that  *K„  answers  deny  these  averments,  and  al- 

lege that  the  purpose  of  the  contmM  .«/i  ■'=''  »"«  ai- 

to  carry  into  effect  the  provisions  nf  ft  f  «f  °«'at»on  was 
act.  and  to  malce  rati  SrL  stead rSfhrr" 
that  the  effect  of  the  contract T^-  ■  ^'"  *"*g«^ 
raise  the  rates  of  WhT^K  .r  ''^'='t'«n  has  been  to 
wie  laies  or  Ireight  above  those  which  thp  mihli^  .^;   Ui. 

have  reasonably  expected  to  obtain  from  frit  TomoetTtf 
The  answers  deny  this  allegation,  and  averThaTT    ff    J 
has  been  to  maintain  reasonable  rates  «.,frr/  !  ^'^"^^ 

reductions  of  rates  have  C  effl^L  th        wf '''""  ^^ 
tion.    Unon  » hB«n;„„    \-V,      ^  through  the  associa- 

containedTn  ttr  huf  "^  ^  ""'^  ''"'^^'-  '^'  «^«™«nt«  of  fact 
couiamea  in  the  bill  are  overcome  bv  the  denials  r7Sl  ^f 

the  answer,  and  the  averments  of  f«;t  in  *u  ^  ^  "* 

adifiitted.     Tainter  v.  67^.?  5  Allen    r«     ^  '"T""  ''""•* 

"Th7'i:s„t?:-t?^  T'  ^^^^^^nt;^ 
rests':pLriv;„rcttit~:tctS?ti"  -r"- 

tained  under  it  have  not  be^  Ireasonabt    '^YT:"'^''" 
reductions  have  been  niade  iXri    ti:^^^   xhe'T 
nary  ru  es  of  interpretation  must  then  TappH  d  tltllT 
giiage  of  this  contract,  and,  if  it  aDnearrfW   /  *"" 

tendency  were  to  unr  asonaWy  31^'^^   '  T  '""^ 

be  declared  ilWal      «,77„       ^  restrict  competition,  it  must 
^'"lea  Illegal.    /Mlon  v.  Barnard,  21  Wall   4Sn  4<i7. 

.'^fsrnX  ct.  ie^^r  ^-^  ^--  -  '■  -  "•' 
tha^f^rsurr  Jirt^'-  ^  r-'^-'^ 

the  purpose  of  the  LtrLtTs  ttt  whTchTcleTri;  I'mf ! 

iTrSlat  wur^^^  ^- ^^^-^M^AtetfruntS 
remark     that  wherever  such  contract  stat  indifferenter,  and 


UNITED  STATES   V.  TRANS-MISSOURI   FRFrP„^ 

ij^ouum    FREIGHT   ASSN.      213 

Opinion  of  tlie  Court, 
for  aught  appears,  may  be  either  good  or  bad  th^  i 
sumes  It  prima  facie  to  be  bad  "71  L  '^.^  '""^  P**' 
Parker.  This  seems  to  L  thertr^l  %'""  ^''^  J"^*'<* 
every  man  is  presumed  to  t  inn'Stt  'tH  r^""'""  '"^^ 
be  guilty.  It  has  long  bTn  ZS,  f  k  u  '  P'"*'^''^  *° 
England  and  America     tZ  ^^f'^^^  ^y  the  courts  of 

seekstoputariTraS^uZfb   X^  ''  **"  *^  1'"^'^  ^ho 

it  plain  J  and  oSLrcCth^^thT  l'  r  ^  ''^  '"'"^^ 
pub  ic  policv  and  th^  tZ       i      J^       ^  contract  is  against 

fraud  nor  SkiC^ ^  jt      ^''"f  r*'""  i«  ^hat  nf ither 

be  a.umed  toliitTCml/eTS  ItrT^^'  ^^  " 
which  appears  on  the  face  nf  if     T     .      .       ^^^  puqiose 

other.  ^e,isieHn/ooT8l':::'iZ  ^tT''''  '''  '^^ 
V.  rallu,  1  El.  &  Bl  391  pTT  '  ^^  ^^  ^'i'  ^^^'  ^««« 
35T    ^d'i.  «.,  '  ^"^^'^^on,  V.  Romillon  14  Oli   ni^ 

^<«c>fc««y,  3  Mete.  (Mass.)  384  389  '  '^'^'^'^'•'   ■»•• 

declaration  that  the^aL';!^  ^  s'^:^^^^^^^^^     f?  '^  » 
tection   by  establishing  and  nJnS  """*""'  P"^ 

rules,  and  regulations   b^h  nrr?  '•"^^Mable  rates, 

declares  that  fubstrtal^l^^.ffl^^  *"''  '°'''"  'Article  1 
or  more  members  tS^p^'/'^^^^^^^^^  between  two 
the  Mississippi  and  UiX^  I  ^"'**^  "^^^"^  '''^tween 

shall  be  governed  by  th  ^o  iaT  T-  ''''  ^'"''^^^  ^^ 
cle  2  that  the  assocfation  sh«l  ^*  ''  P''"^''^^'^  by  arti- 

mous  vote;  that  theJe  sha  f  h  T  '  *''''''""''"  ^^  »"«ni- 

the  associa'tion,  i^whifhl Lt  Z'^  1^ !?'  '"*^''"^-  <>' 
by  some  responsible  officer  a,.fj.l        ,  f  ''^  represented 

questions  to\  consXTd  tW  ''"^  '"  "'*  ^'^""''^^y  °"  «» 
pointed  to  establSi  r«t!  '  ,  **  *«'"n>'ttee  shall  be  ap- 
traffic,  and  that  tht  S'h  .'  ""'*  '*«"'"'«'-  ^^  the 
road  company  may  Jvf fiv.H  ''"  '"*^  ''^'''''  '^^'  «">■  rail- 
-onthly  meeW  o?  Lv  'r  T^"  """"  P™"*  *«  ""J 
change  of  r„les,^3nd  eight  E  ."'"*=*'""  °*  '«**«  ""• 
Colorado  or  Utih  •  tCtiL^  t**  "'  ^  ^^^^  ^affic  of 
shall  be  considered  a^  ^TT""  '^'  '^•^"^*'^»  ^'  change 
179]  the  next  mo  thl^  J  l      ""''"  ^^  '^^  association  S 

bound  by  the  dTcisW ofTheT  '     .''"  """'^"  ^'^''"  «- 

cision  of  the  association  "  unless  then  and 


^^^  ^   FEDEBAL  REPORTER,  79. 

Opinion  of  the  Court 
there  the  i>artieH  shaJl  give  the  association  definite  written 
notice  that  ,n  ten  days  thereafter  they  shall  make  such  modi- 
fication notwithstanding  the  vote  of  the  association;"  that 
any  member  may  without  notice,  at  its  peril,  make  anv  rate, 
rule  or  regulation  necessary  to  meet  the  competition  of  out- 
side lin..s.  subject  to  a  liability  to  pay  a  penalty  of  $100  if 
the  association  decides  by  a  two-thirds  vote  that  the  rate, 
rule,  or  regulation  was  not  necessary  for  that  purpose-  that 
all  ar^ngements  with  connecting  lines  for  the  E;.    oj 
through  rates  relating  to  traffic  covered  bv  the  ag.-ecment 
shall  Ix.  made  by  authority  of  the  as.sociation.  aiuHha    tJe 
chairman  of  the  association  shall  punish  violations  of  the 
S'r*'!!  V"*^  "ot --^^eeding  $100  in  any  case.     Article 
3  makes  the  chairman  the  executive  officer  of  the  association 
requires  him  to  publish  and  furnish  to  the  members  of  the 
association  the  rates,  rules,  and  i-egulations  established,  and 
all  changes  in  them,  and  requires  him  to  enforce  the  provi- 
sions of  the  c-ontract.     Article  4  prohibits  under-billing  or 
billing  at  a  wrong  classification.    Articles  5  and  6  provide  for 
the  appointment  of  the  necessary  employes  and  the  pavment 
of  the  nm-ssary  expenses  of  the  association.    Article  7  pro- 
vides for  arbitration  in  case  the  managers  of  the  parties  to 

t    ITT/   f  '"  ^f^  "P*'"  ""-^  •»"«''*•""  rising  under 
LTi  8  P™vides  that  any  member  may  withdraw 

trom  the  association  on  ?0  days'  notice. 

It  is  obvious  at  a  glance  that  this  agreement  is  not  affected 
by  any  of  the  vices  of  an  ordinary  p<x)ling  contract     The 
income  of  each  member  of  the  as.sociation  under  the  terms  of 
the  agreement  is  still  measured  by  the  amount  of  frei<rht  and 
the  number  of  passengers  it  carries,  and  it  is  stillto  the 
uiterast,  of  each  member  of  the  «ss,K-iation  to  make  that  pat- 
ronage as  great  as  pos.sible.  by  affording  to  the  public  supe- 
rior fac.  it.es  for  safe,  speedy,  and  convenient  transportati^. 
T  nder  the  operation  of  the  agreement,  each  company  must 
still  compete  with  its  associate  memlx>,s  In  the  character  of 
Its  roadbed,  quality  of  its  equipn.ents.  length  of  route,  con- 
venience of  Its  terminal  facilities,  and  i„  the  efficiency  of  its 
management,  for  all  of  the...  considerations  will  necessarily 
have  a  marked  niflnence  upon  the  amount  of  its  patronage 

In  other  of  its  feature.,  also,  the  contract  is  not  subj^tto 


UNITED   .STATES    V.  TRANS-MTSSOURI   FREIGHT   ASSN.      215 

Opinion  of  the  Court. 
critici.sm      In  these  days,  when  persons  engaged  in  minv 
.  other  callings  and  avocations  are  in  the  habif  S  m^ti^H 

r  e'ndlv  '  "l  T^'^'T'  ^^  ^^e  purpose  of  cultivating  1^^ 
fiiendly  relations  and  establishing  regulations  conducive  t^ 
the  general  welfare  of  the  trade,  it  is  difficult  to  sT  m J^ 
what  just  pounds  representatives  of  railway  conlo^e^^e^; 
be  denied  the  right  of  forming  associations"  for  XpLpl^ 
of  friendly  conference  and  to  formulate  rules  and  Sf 
tions  to  govern  railway  traffic.     The  fact  that  the  buXt 
of  railway  companies  is  irretrievably  interwoven    tha    t^y 
niterchange  cai-s  and  traffic,  that  they  act  as  agems  fo    each 
other  m  the  delivery  and  receipt  of  freight  [Sofand  h   ,>" 
ng  and  collecting  freight  charges,  and  that  coiLodtli 
ceived  for  transportation  generally  pass  through  the  hands 
of  several  earners,  renders  it  of  vital   imijorlaiK^  to  S 

S"  tldtT  ™>rrV^^"'''*'°"^  .overnii'ig  ran,;: 
iramc  sliould  be  framed  by  those  who  have  a  practical  «; 

quaintaiK-e  with  the  subject,  and  that  thev  slo iddT  pJI' 
niulgated  and  faithfully  observed.  The'  adv  abiHty  S 
establishing  such  rules  and  regulations  in  the  mor.b.^^  if 
dicated,  particularly  for  the  uniform  classificat"o„  of  f^ilh  " 
has  been  frequently  pointed  out  in  the  reports  of  theT^'^ 

^  t  frorm,ir"'"r-  '''''''■  '"^^  •--«'« «-'-  "* 

form  tv  in  .1,      .     "1  '"  "'  ""'  reg"l«tions.  and   from  uni- 
lormity  in  the  classificat  on  of  freight  s^Pm  tn  ..  i 

that  we  need  not  stop  to  enumeratXm  "  "  "''~ 

\U  are  of  the  opinion,  therefore,  that  the  stipulations  of 

resentatives  of  the  various  members  of  the  association    ,nH 
he  appointment  of  a  committee  to  formulate"!   Jj;,^, 

ned  oui,  wiiVtK  r^X/Si^;;.^^^^^^^^^   7- 

obvious,  we  think    thaf  fi.      ^-      |  '      "^  interests,     it  is  also 

written  „oti«,  of  a  ^otV  Id     t     "  '""''""^  ^^^  ^»-^«' 
and  of  itself    render  ?r       f '^"''*'""  '"  ^''^^^  does  not.  in 

that  a  contract  Jot  J      T    '''  ""'''"*"'•     ^'  '«  ^^^ain 


II 


^^^  58  FEDERAL   REPORTER,   80. 

Opinion  of  the  Court. 

prevent  competitors  from  resorting  to  secret,  unfair    and 
mnous  methods  of  warfare,  to  make  competi'tion  f  5  a^d 

r  ;  ^r*"'  ^PP*'^  *«  """^^^  th^  "ction  tJ  suU 

the  commg  changes.    There  is  no  purpose  of  the  provision 

tf  ^otttt^'"^  that  dictated  it,  th'at  Luld  not  b^TS; 

petition  in  rates,  and  is  therefore  unlawful.     That  it  does 

trCr  ^^T^  *^  '^'^  competition  in  that  respect  w^ 
not  be  demed;  but  that  the  restraint  imposed  is  slight  tha 
there  IS  abundant  room  within  the  terms  of  the  aS^me^t 
for  the  play  of  all  the  healthy  forces  of  competition^TiSZt 

to":;"  rre,';aS;::anXrS;  szf "  ^"  V"^'"  ^"^ 

.K  4.  ^"«".v  maniieht.     it  is  not  reasonable  to  supoose 

that  any  member  of  the  association  which,  by  virtue  of  iS 
sanation,  can  really  afford  to  transport  freight  or  passe™ 
between  any  ,w,.  competitive  points  for  a  fubsta.U  alTy  k^ 

Ztat'thlf  m-*'"'  "'^  •"  ""^^^  *«  ^«-g«  tbe  ad 
vantage  that  its  situation  gives  it,  even  under  the  operation 

o2' ti"ofrr  "  '^  ""'''^  """^  P'^^"'"^  »'-t  under  Z 
optiation  of  the  agreement,  as  under  the  influence  of  free 

competition,  the  rates  between  competitive  pointT  Jill  fe 
J«gely,  If  not  entirely,  based  upon  the  rate  which  the  oa^ 
having  the  shortest  line  and  best  facilities  esteems  fair Tnd 
reasonable  compensation. 

[811  It  will  be  observed  that  under  the  terms  of  the  a^ree- 
governed  by  a  rate  fi.xed  by  a  vote  of  the  majoritv  for  a 

Zf^aZt  nS  ^rn^**"  *^  """^^y  --«i  -^ 

succeeding  its  notification  of  a  proposed  change  in  rat^-  an,9 
for  that  reason  the  limitation  impLd  by  thf  cont™^;;:' 

^t^^stsifitr^^^iUt^rtf""" "  ''""''r^ » 

111  i»  ver>  siignt,  and  the  power  reposod  in  th« 
^lation  IS  correspondingly  small.    We  fail  to  see    L« 
fore  that  the  natural  or  probable  effect  of  this  contr  ct  Si 
he  to  sensibly  raise  either  fi-eight  or  passenger  rates  above 
•he  level  which  they  would  attain  under  the  influence  15 


1 


UNITED  STATES   V.  TEAN8-MISS0UBI  FKEIGHT  ASSN.      217 

Opinion  of  the  Court. 
what  is  termed  "  unrestricted  competition."    On  the  other 
hand.  It  seems  highly  probable  that  the  contract  in  t^^n 
will  prevent  sudden  and  violent  fluctuations  in  freTght^r 

mitres  r\?  '"^'"^^^  -^^»^''^--  of3r:™m: 

munities,  and  that  this  was  one  of  the  main  reasons  which 

suaded  that  it  will  have  a  sensible  tendency  to  inducVa 
more  uniform  system  of  classification  throughout  flT        ! 

stealth'y,  -ret^nTtfiitU^TwSar?  nd  t""T 
he  strife  for  patronage  among  the  meZ^of  te  asTi^^ 

ri:^nie':;rt  e'ZetrrittJtf  '^t  --  ^^^^^ 

act  and  an  intellig^t'pu JfcToHcV      "'^"^'^^  — 

Ar^       .  the  situation  of  the  parties  theret/, 

does  not  impose  such  unreasonable  restraints  nn  .^    ' 

as  will  warrant  us  in  holding  that  it  Is  onllf  ^h  <=»'°P«t»tion 
or  conspiracies  in  restraint  of    radeaJ  1  ""'"'*'' 

'or  ,b.  b.;J::;z'^srprtT"  -^" 

ployes.     It  has  hppn  «n^  •  ^,^  oncers  and  em- 

"P-  disputed  ^tont  rbS/'bftr'*'  '''  "^'"•-^^ 
consideration.  So  far  as  ZTu  f  ^  ^^^  *'**"*'^*^t  to  its 
each  member  of  the  1„  •  !  ^^^'"'^  *'"«"»  t^«  """tract, 

in  its  territi  ^tl^   .7^^^^^^^  ^^"^  -"^  othe'r     • 

to  divert  from  the  l-itt^r  ^''^^^^^  the  association  or  not. 
trade.     There  aifp^^v.^rt  fhf'"  ^  ''t'  ^"  P°^«'"*" 


218 


58  FEDERAL  REPORTER,  81. 
Opiutou  »f  the  Court. 


peril ;  but  these  provisions  were  necessary  for  the  prot«;tion 
of  members  of  the  association  against  the'attacks  of  nonmem- 

7ur  u  Vu!  ""*  P'"«"«'on«  unreasonably  low  rates  es- 
tablished by  the  latter  would  draw  away  the'busi-  [82]  ness 
of  the  members,  and  deprive  them  of  the  opportunity  to 
compete  on  equal  terms.  The.>*  provisions  give  no  company 
»nv  higher  right  or  greater  power  than  it  had  before  the 
contract  was  made,  but  simply  reserved  to  each  the  privilege 

^vI^ni'T.^r  "'■•^""'  '■'?''*  '"  "'"'^  com,3e,ition  withoS 
giving  the  15  days  notice  in  case  of  a  warfare  upon  it  bv 
a  nonmember.  i "  ■  "  u\ 

A  monopoly  of  trade  embraces  two  essential  dements: 
rlL  I  ""'"'f «»  °f  «n  «^dusive  right  to.  or  the  exclusive 
Z^L.'  k!  *"•.*'"'  """^  (^>  ^^'  «-^<'l"'^>o"  of  »"  others 
tract  indicating  any  purpose  or  attempt  to  obtain  such  a 
^ZT^  ?**  ^"'  transportation  systems  of  the  Great 
Northern  Railway  Company,  the  Northern  Pacific  Railroad 

?e3p''«^?"r'''T/''"^'=  K*ilroad  Company,  and  the 
Texas  Pacific  Railroad  Company  were  operated  in  the  region 
subject  to  the  regulation  of  this  association,  but  none  of 
these  companies  were  members  of  it;  and,*ven  if  they  had 
been,  there  would  still  have  been  no  evidence  of  any  attenmt 
to  monopolize  trade  here,  because  each  member  is  left  to 
compete  witib  every  other  for  its  share  of  the  traffic.  In  re 
Greene,  52  Fed.  Rep.  104,  116. 

The  position  that  these  railroad  companies  have  .so  far 
disabled  themselves  from  the  performance  of  their  public 
duties  by  the  execution  of  this  contract  as  to  give  ground 
for  the  avoidance  of  the  contract,  and  for  a  forfeifure  of 
their  franchises,  cannot  be  successfully  maintained.  It  is 
well  settled  upon  principle  and  authority  that,  where  a  cor- 

Ci  1^1  Lt/**"*™'*  '°*^^^  7  ^bstantially  disables  itself 
from  the  performance  of  the  duties  to  the  public  imposed 
upon  It  by  the  acceptance  of  its  charter,  the  contract  is  void 
and  Its  franchise  may  be  forfeited.  The  reasons  for  this 
rule,  and  some  of  the  limitations  of  it.  were  stated  by  this 
court  in  i7niW  Pac.  Ry.  Co.  v.  Chicago,  R.  I.  &  />.  Ry  Co 
51  Fed.  Rep.  309,  317-321,  2  C.  C.  A.  174,  230-235;  and  it  is 
unneces.sary  to  repeat  them  here.     It  goes  without  saying 


! 


Iltttki 


1*. 


' -^-.TED   ST.TKS    ..  XRAKS-MlHSOtTR,    PRBrGHT   ASS^.       219 

Opinion  of  the  Court 

'^p^iZ^:^^  ^-^  a  .r^ration 

subiL^'f  «cXn  r^rrs'olt '^'^r^^  "''""  ^'^^ 
empower  him  or  them  tn  «     *^         *^'^''*  "P*"  i*"^  ^^^. 

theSifor40da;::intd.^  S^cSyte  t^  "''^"^''^" 

the  rates  andr„CgS"r  cTsSta^'l  °"^"^"^  ^^'^ 
on  rates  and  rules  of  f^ffi.  ?  ^^^^""^  committee 

mate  knowledgfof  thfnlr:7tr;'  ""'  "'*""  '"«" 
character  and   quantitL  !^f  t^  T^'  """^  »*  '^e 

through  the  dita  i^rtions tf  T^^'f   '""^'^^^'^ 
by  these  railroads   anH  „k  L         ^^^^  ""^  traversed 

of  various  SiL^tr  ""^^  experience  in  the  effect 

the  busi"nrs  hTcX^nir  fitth'r  °'  ^  ''"""^  -^ 

consider   and    wisely   eSt         .^^  '^^"  *«  carefully 

•     throughout  this  Mo^     ?\  ^"'*    ""•*    '^^^"'•ble   rat^ 

acting  independeXS;,.  ?"*  "  committee  each  company 

the  .me  men  to  eilbStt^^XXTrT '1%^''''°^"* 

Moreover,  the  power  deWateH  t^  tv, 
mittee  and  chairniaii.  is  s^  S  Lh      ^^'/^^'^t'O"'  its  corn- 
in  time  that  it  is  h Jrd l  ^hv  of"  "    "'  '"'^  ^°  "^'"'"'^ 
the  ground  for  the  avoidanT  f  """'  ««"«ideration  as 

of  aSranchise.     TheTte,         \T'''''  ""'^  '^'  ^^'-^^ture 
"ally  cho.sea   to  e  talE     f  "*!**  *°  ^^^  '^""""'"ee  origi- 
'imitation  upon  ^30^1       .  ™'''/"^   "''•^'^  "-^Pi"^   bv 
association .. 'the    xmtr^yth"  "'  ^^^^drawal  fn>,„  the 
"•edifications  and  chal'    in  t\'"'"r'"'''"  '*'*'^  ^"^  P^e^ent 
ceases  after  15  days"  m,  iL  1/  "''''  ""''  '•"'"^  established 
"modifications  and  chants  Tnt..*"!  '"*'"*'""  *«  ""^e  the 
true  that  there  t.Z^i^^f'T'''''^  '''  «^"«"-     "  i« 
agreement  that  regul  r  mSnii  !,  """"^  "'''''''^  «*  *»»« 
held,  "unless  notic^  shallTgife„1;i~*-"  ^»  ^e 
business  to  be  transacted  does  J?    ■  chairman  that  the 

hers  together,"  but  tie  remark  "«t  -a-ant  calling  the  mem- 
remark  of  the  counsel  for  the  govern- 


I    ! 


220 


58  FEDERAL  KEPORTEB,  83. 


Shiras,  J.,  diggentiog. 
ment  that  this  gives  the  chairman  power  to  prevent  the 

ti^  tnnn?t    ^  ^  ^  t'  P^^^^^^ing  a  meeting  of  the  associa- 

Sn  J    ?    '  '  *'°"'P""y  S'^«^  notice  of  a  proposed 

change  of  any  importance,  the  meeting  shall  be  held  ^h 

a  not.ce  presents  business  to  be  transac^d  that  dL    warta^ 
calling  the  members  together     If  nnrler  .,,1  ^f  ™nt 

Si  tr-  ^^^^  "°^^-  ^"*  s^^trsth'^urr  s 
avoiivioft;  it^a'r  '^ "'  "*"^  ^^ ""  ^"""*'  ^-  - 

The  result  is  that  neither  this  contract  nor  the  association 
formal  u„d«.  at  can  be  held  to  be  obnoxious  to  the  p^^W 

laSLr"  ^''*  "*^  ^"  ^^"  *»*  *^«  *««*«  "d'nitted  by  the 
Irfeadings  m  this  suit,  and  in  the  absence  of  other  evidenc! 
of  their  consequences  and  effect  evidence 

Many  of  the  considerations  to  which  we  have  referred  «rp 

riT  r.T  T"  "r"*"*  "'  ^'^'^  question  .;::;r:r  no" 
the  anti-tnist  act  applies  to  or  in  anv  Avav  governs  transnor 

^«1^^T  *  """""eroe  which  consists  solely  of  the 
transportation  of  persons  and  property,  in  view  of  the  virx! 
substantial  regulation  of  this  part  of  imme'iplvtd  J  bT 
the  interstate  commerce  act.  The  views  we  hJr^„Z^ 
render  it   unnecessary  to  determine  this  quesdon    and'^ 

ground  that,  if  the  anti-trust  act  applies  to  and  aZ.Zl 

rn:j:r^„:t^riaron"oi^:^^'""  ^^-  ^"  ^-«- 

The  decree  below  is  affirmed,  without  costs. 


Thayer,  District  Judge,  concurs. 


[84]  Shiras,  District  Judge,  (dissenting.) 

I  sm  unable  to  concur  in  the  conclusion  reached  hr  fh^ 
majority  of  the  court  in  this  cusp   «„<^  reacned  by  the 

reasons  for  such  nonl^i"'"'  ''""^  "^  '*"**  '''' 


I 


m* 


vmr.r>  states  ..  trans-m.sso™  .rhioht  assk.     221 

All:'  •»  *#  A 

Shlras,  J.,  diasenting. 
Assuming  that  the  anti-trust  act  of  July  2  1890  ,•«         r 
cable  to  mterstate  railroad  companies  anXV       '      ^P^*'" 
acted  by  them,  it  ^ms  to  me'Srcfear  thatT"  '?'^ 
entered  into  by  the  railw»^  .„  •      ,  *  *®  contract 

Missouri  Freight  AsSL^^"'''  ^"™^°^  '^^  Trans- 
statute,  in  that  U  dtpTv  :  Xe  "  bl  Tlr^ '""  «*  *•»« 
competition  between  "associatd  •?  '  '^"'^*  *»*  *^^ 
thereby  subjects  the  commerS  If  th.  '^  """P^"'*^'  ^'"^ 
these  lines  of  railway  to  thf,^    Vv^  "^^""^  ^"''"^'"•y  *« 

of  paying  incr^  XtX^X'^f'  '' Tl''''  ^^^^'^'^^ 
over  the  same.  transportation  of  freight 

tracts  affectfng  th^^usi;^,  triSl  tpri  vl^ ?  ^^  '=''"■ 
corporations,  when  the  same  is  e^ZZ^J  V  ''*'^°'  **"' 

and  only  indirectly  affectTthe  S!  '.  1  ^  ^T'*^  "**"^' 
out  in  the  opinion  of  the  court^l  T '    "^^  '^  P"'"*^^ 

tricity  in  connection  with  tSf'*'  "^,°*  ^*«'*'"  «"d  elec- 
business  of  the  world  Ss  so  '  ?m  *''"  ""**  commercial 
for  commercial  intilul  thT  ^"'T"'"'*  *^"  **<="'««« 
ago  would  have  binTn  f H  ''"''*''''^*'  '"^'<='^  ^  century 

trade  in  its  Z^oSitio^wTulTT"'''^^  '•"*"<=*'^'^  "P"^ 
«sult,  and  hence  wouldTotTu  tS^  ^'''^'''^  '^"^  ^'•'"^ 

the  principle  which  del"   unla^Sall  ;  T "^t™"-  «' 
nations  which  work  an  ,ml!=      ui  <=ontracts  or  combi- 

and  commerce.  TL^rbcTr^frf"''*'^'^  "P*"^  ^^d* 
W  at  the  common  Ce ^^  iTr^Jard  tT  "^"^  ^" 
prises  which  deal  only  with  mat^rTf*  •  "''"^''  ^^t^''- 
only  incidentally  affect  Thl.  *  P"''^*^  '""^^'^^r  and 

day  a  distinction  JtVc^^ZTS  ''  ''"'^'-  ^*  ""  ^^7 
the  rules  applicable  rbSVui^or"  ^7  '^^'^"^ 
nature  and  those  connected  4hmatLd  ^T'^  P"^''*^ 
the  community  at  larffe-  as  forLf  .  "^^'^  affecting 

n^odities  forming  tl^l^^cS^L:^^^' '^J'^'!'^  '^  -- 
nations  tending  to  create  «  r^        ,     ■  ^"tracts  or  combi- 
^ere  condemned  as  co^?«rt  ?      ff^  '°  ^''^  ''*««'•  "Nicies 
facts  affecting  other  SSft'^'f  P°"^^'  "'»^"  ^^^  <=on- 
and  the  same  yndpk  holds  fT^.r'"'  ^'^^  '"  ^  ^^«<^'- 

other  distinction  w£h?   now  fi  V^'  P"^^"*  *'>»«•    ^- 

wnich  IS  now  firmly  established  and  en- 


2*>9 


58  FEDERAL   REPORTEB,   84. 


SIifni8,  J.,  (liHMeiitJng 

An  individuafor  a'^.S:  C^S  '"^^'^^'  *'^«^«*«- 
private  enterprise  may  lawfSri.     T^"^"^  '"  "  P"'*^^ 

lUegal  ,f  the  business  was  of  a  public  natlre^nr.        """^ 
ration  was  created   for  the  nnr^     *       '    ^  *^^  '"'"'^^ 

Thus  in  oms  V.  6^«,  I,  So  u TSel  ^T^'"^  *"-«- 

the  supreme  court,  speaking  bv  M;    rhiS^T  ^.-  ^t'  '^*' 
declared  tiiat—  ^    •  *""'®'  Justice  Fuller, 

^pt  a-flSSie^net^'ir'-llIf  n^t^iV''  ".-'»-  <>'  «  Pub"c  nature 
narj'  cwporation  eneaeed    n  fhi  ,         ^  business  like  that  of  an  orJli 

Jnstlj  urged  that  those  nilJL  whiro,    i  '  .k  /  H^n^e-    while    it    is 

public  policy  should  notT^^H»Hr  HI*   ^^.^^  "  ^^''^»  ^«°traot  is  against 

^  W^T^  :^J[  ^-«traet!^(^^^^^^^^^^  ^^^  *«  interferTw^h 

*^-v)  yet  in  the  in^ton<^^  ;t.<»  y^^iyini/  L/O.  v.  Sampsoth  L    R    iq  tj^« 

«m.ml.I.v  oannot  l,e  rlXainil  to 'r^'  "'.  ''""''  ''••aracter  thai  H  p^" 
dice  to  the  ,,„hll,.  inwi^t   l,nliTJ  l?'*^"*  whatever  without  nrelT 
to,et.s  i„,p.«,-„g  „,,„  r^rrai,rh"owerer"nrlf ",''•■■'"  '"•  ™''ta'"  ^" 
tlon   of  puhllc   lOTlifv      ti.1u\..,k-   \.    .'  '"'a'- lipcause  in  contraven 
authorities  cited    In  West  iw  ^*^'t  "   "'"*^''   considered    and   the 

Hon..  anions  tho.so  e„gag^^„''bul>e  "  '"^  P>oi>o«ition  that  oombina^ 
quas.  public  character,  wl^b" re  m'niw?""'*^*^'^  ""'"  a  public  or 
'nterest,  cannot  be  upheld."  manifestly  prejudicial  to  the  public 

In  West  Virginia  Transp.  Vo  y  Oh:^  PS        »•      , . 
22  W.  Va.  600,  it  is  said ./     ^'^^  ^'^"'  ^"''^  P'Pe  Lirw  Co., 

ca^'Je*'';^tr^n''Jtol°'e^?f!?Th:?"='*  '"""  '^^  P«™"ar  character 
public  interest,  then  the  c^J^"*!^,",^*?!*''  ""''.''"t  Prejudice  "rSS 
contract  imposing  any  rrah-alnt  hi  ^  compelled  to  hold  void  anv 
business,  provided.  7f  co^  ft'h^r''*'"  P""«''  o"  this  peculiar 
business  thus  atteijpte^to  b4  res^^in^'^f.  ^'^'''''y  *»"«  ^^^  S  ar 
any  restraint  upon  It,  however  mSi  1^.,"*  k^  ""<'''  *  character  that 
"8  prejudicial  to  the  public  InteS"'         '  ^  ™«"*'^  ^^  t^e  court 

In  Chicago  Gaslight  dk  Cohp  On    ^    j>       7  ,    ^    , 

^«>*.  6V,  121  III.  53?,  13  N  E  R^  le^li''''^*,'''"]''^^'  '^ 
.  '  •'"•  ^P- 169.  It  IS  declared  that— 

not  Sl^'aJIS&nripi^^^^-ctB  in  partial  restraint  of  trade  are 

because  they  were  X^taTZ^Z^^^^f  «PP«"ant  and  appelte^ 

that^whlch  was  a  maKf '^ubV-^cer {^i  ^,^^£1^*1 

It  is  not  necessary  to  extend  the  citation  of  authorities 


J^itiras,  J.,  dissenting 
upon  this  general  proDomtinn    k  ^  •.  • 

between  private  individuds  or  clrnl  ?  '  '"  ""'^  P'"-*i«''«r 
nary  business  avocation  «„"  '.r'  '"  "'^"^•^'^  '"  "''di- 
m  the  performance  of  a  i,„h  i  <'<»'l'oration.s  engaged 

f't  of  building  and  ;   '':7;  f^-'-'tal  dut,^  iS 
form  of  a  railway  line  ^       ''"'''"'  '^'^h^Xv  in  the 

From  tl,e  earliest  day.s  the  dutv  of         .        ■ 
taming  the  p,,,,,,-,  ,^,l  „,  {  '2^^^^'''''^^  "'«'  '"ain- 
one  .„e,„„I.„t  ,.„„„  .^e  gov^im     t      t^*^"  '''''^''■^  «« 
;Struct,on  „f  „  raihvav  nmninj  ,      °  '*'""'*^  ^be  con- 

'n^ividuals,  the  right  "of  "^.T''  "«  P'-°Perty  of  many   ■ 
exercise,  and  thus^the  cha";":"!??""^""-^*  "^  '•''"^'^  ^^J 
pr^s^d  upon  it  both  by  l^atn  of  tl.  ^      ''  '"**'"P"««  *«  i™- 
to  subserve  and  by  reaLf.^ "he  In     ''''"'"''^  ''  ''  '"^^nded 
^^sed  in   its  creation  and  mainLT      ""'T"''"  P"""^'-  ^^er- 
tions  created  for  the  purpo.4  "f  i   "d  ""    ^^  ''''•  ™'''"''"- 
h>ghways  in  the  form  of  iXads   "^ '"/ "P''''''*'"^  P''Wic 
not  prnate.  corporations,  bJ-lX  ,h    '  ""^  'T'^''^  P"Wic. 
purpose  of  engaging  i„  ti .      T       ^^^^  "'•«  formed  for  the 
operating  „  b.^.rw';?  Vl^^l^  ""  T-"'^'^^^^^^ ^^^ 
because  they  are  authorised  toTalf  J^    ^"^^^  "*  '"'•««•  an^J 
nienta    right  of  eminent  donl  ,   '       •'kT''''''*  '^'  g«-«™- 
lawfully  conferred  upon  a  S"'  *  "«^''*.  '''»'*  cannot  be 

mze   the   dLstinction   existing   ^t '!„  ^'''  *"'''"•«  *«  recog- 

[86  J  carried  on  by  indiviH„»i  "   P^^'^te   enterprises 

P"blic  duties  perftJed  tJ"  :rtr"*"  -r,K>rationl  Z 

Porations,  i„  .„^  judgment  Si     /.f"'^"  °^  P"''"«  «or- 

tbe  conclusion  announced  in  fte*''"  '^"•""^  ■»  "'achin.r 

As  applied  to  private  asl «»« /"ajor.ty  opinion. 

undoubtedly  sustain  tSprZSrV'^""^^™  -*-ties 

t  IS  not  the  existence  of^Se  r^trl      '^''i  ^''^  '^"'^'  "  that 

the  reasonableness  of  that  restn  *h     '?.  ***  eompetition,  but 

vaMity  of  contracts  that  Zf  ""'***  >«  tbe  test  of  the 

t^de;  »  but  that,  in  mytd^l:':""^^  ">  ^  «  restraint  S 


11  . 


58   FEDERAL  REPORTER,  86. 
Shims,  J.,  4is»entiBg. 
public  in  connection  therewith.    They  may  limit  or  enlarge^ 
Ltinue  or  discontinue  the  business,  as  they  please,  and  may 
charge  exorbitant  prices  or  the  contrary.    In  these  part.cu- 
Lrs  Sey  owe  no  special  duty  to  the  public,  for  they  are  nc^ 
exercising  any  sovereign  or  public  powers  >«  carrymg  on 
such  private  enterprises,  nor  a,^  they  charged  ^  *  the  per^ 
formance  of  a  public  duty.    Hence  they  are  at  hbeity  to 
enter  into  contracts  with  other  private  parties  .engaged  in 
like  pursuits  which  may  tend  to  regulate  or  restrict  the  busi- 
ness carried  on  by  them,  subject,  however   to  the  ™le  that 
restrictions  unreasonably  affecting  the  f^^om^f  trade  and 
commerce  cannot  be  sustained,  because  thereby  the  publ^ 
interests  are  affected.    Touching  con  racts  between  pnvate 
mrties  in  regard  to  pursuits  essentially  private  in  their  na- 
C  the  test^of  validity  we  thus  find  to  be  the  -toal  effec 
ther^^of  on  the  public  welfare.    In  regard  to  such  private 
enterprises  the  public  has  no  voice  in  the  management  thereof, 
nor  anv  right  of  dictating  what  shall  or  shall  not  be  done 
Jv  the'owners  thereof,  nor  have  the  latter  become  bomid  to 
c;rry  on  the  business  in  the  interest  or  for  the  benefit  of  the 
pubUc  primarily.    The  contrary  is  true  ^»th  regard  to  pubhc 
Lporations,  clothed  with  the  power  to  *« fl  Pf  «  f  "*' J 
and  engaged  in  enterprises  the  purpose  of  which   so  dis- 
charge a  governmental  duty,  and  which  require  in  their  per 
formTnce  the  exercise  of  the  sovereign  right  of  eminent 

^"such*  public  corporations  owe  primarily  a  duty  to  the 
community,  and  the  relations  existing  between  them  and  the 
public  are  in  many  Particulars  radicaUy  different  from  those 
J^rtaining  to  private  corporations  Neither  e^  «"^«d  argu- 
Lnt  nor  the  citation  of  authorities  is  ^ "^f  *«  /"'^^J^* 
the  business  of  railway  transportation  is  one  of  »  Puhli" 
character,  and  which  reaches  and  affects  the  businej  intcr- 
'^^iiU  entire  community.  When  a  highway  m  the  form 
of  a  railroad  is  constructed  and  put  in  operation,  all  parties 
Kving  in  the  regions  adjacent  thereto  are  dependent  upon  the 
Sad  for  thi  carrying  on  of  all  business  which  mvov^ 

the  transportation  of  persons  or  f^^^^^'^^^Z 
therewith.  The  farmer  is  compelled  to  use  the  r^lway  for 
the  transportation  of  the  products  of  his  farm  to  market 


UNITED   STATES   V.  TKANS-MISSOURI    FRKIGHT   ASSN.       225 

Shiras,  J.,  dissenting. 

The  merchant  must  use  the  same  agency  in  bringing  to  his 
place  of  business  the  merchandise  in  which  he  deals.  Prac- 
tically the  business  of  the  community,  whether  [87]  in  con- 
nection with  articles  of  prime  necessity,  like  food  or  fuel,  or 
the  other  articles  which  are  produced  or  dealt  in  by  the  peo- 
ple at  large,  becomes  of  necessity  wholly  dependent  upon  the 
facilities  for  transportation  furnished  by  the  given  rail- 
way. As  to  the  majority  of  the  community  living  along  its 
line,  each  railway  company  has  a  monopoly  of  the  business 
demanding  transportation  as  one  of  its  elements.  By  reason 
of  this  fact  the  action  of  the  corporation  in  establishing  the 
rates  to  be  charged  largely  influences  the  net  profit  coming  to 
the  farmer,  the  manufacturer,  and  the  merchant  from  the 
sale  of  the  products  of  the  farm,  the  wqrkshop,  and  manu- 
factory, and  of  the  merchandise  purchased  and  resold,  and 
also  largely  influences  the  price  to  be  paid  by  every  one  who 
consumes  any  of  the  property  transported  over  the  line  of 
railway.  There  is  no  other  line  of  business  carried  on  in  our 
midst  which  is  so  intimately  connected  with  the  public  as 
that  conducted  by  the  railways  of  the  country. 

Certainly,  if  it  be  true,  as  held  in  Gibbs  v.  Ga^  Co.,  supra, 
that  the  supplying  of  gas  for  illuminating  purposes  is  a 
business  of  a  public  nature,  because  it  supplies  a  ])ublic 
necessity,  and  that  it  is  of  such  a  character  that  contracts 
between  companies  engaged  therein,  looking  to  a  regulating 
of  competition,  cannot  be  sustained  because  inimical  to  the 
public  welfare,  then  it  must  also  be  true  that  the  furnishing 
facilities  for  the  transportation  of  the  products  of  the  coun- 
try by  means  of  railways  is  likewise  a  public  business,  and 
one  of  such  character  that  contracts  or  combinations  be- 
tween the  corporations  engaged  therein,  ihtcnded  to  limit  the 
effect  of  free  competition  upon  the  rates  charged  the  public, 
must  be  held  to  be  prejudicial  to  the  public  interests,  and  there- 
fore to  be  invalid.    It  is  said  in  the  opinion  of  the  court  that— 

tfm,]^  %''"'*,*'"'*  "  ^^^  '""S  '^°  "ett'e*!  «>«*  contracts  or  comblna- 
to  tL  niJfni.T''^  "';  '^^i"*''""  '"  ''"'P'^  ^-""""Odities  of  prime  neoess^S' 
nr!^  S  .<;  "  ''f*T*  "'■  '"«»0P»"=^e  tbeir  supply  or  enhance  their 
dSrsT  fi^'J  f"''*'  «'„  combinations  between  such  produc^ers  or 
nnnir,  /         ^'^  w*"^  P™"'^  '"  Certain  fixed  proportions  and  pooliui; 

me^^Mttrllinr^'r^r'  ''^'^^■^"  «>'"l««ng  comi^on  carrie  W  are 
Illegal  restraints  of  trade,  and  void." 

11808 — VOL  1 — OC  SI 15 


-•J' 


226 


38   FEDERAL   REPORTER,   87. 


r •! 


Sliiras,  J.,  dissent  iiig. 

Are  not  railway  companies  engaged  in  the  transportation 
of  articles  of  prime  necessity  to  the  people?  Do  they  not 
handle  the  food  products  of  the  country,  the  fuel,  and  all 
the  other  necessaries  of  life  ?  Do  not  the  rates  charged  for 
the  transportation  of  the^e  articles  have  as  much  to  do  with 
determining  the  prices  paid  by  the  connnnnity  as  the  rates 
charged  by  those  engaged  in  buying  and  selling  the  same 
upon  the  open  market  ?  If  combinations  among  the  dealers 
in  such  articles  to  avoid  competition  and  enhance  the  cost 
to  the  consumer  are  illegal  and  void,  why  are  not  combina- 
tions among  conmion  carriers  engaged  in  the  transporta- 
tion of  the  same  articles,  tending  to  enhance  the  cost  to  the 
consumer  by  avoiding  the  effect  of  competition  upon  the 
rates  of  transportation,  equally  void  ? 

If  I  correctly  understand  the  opinion  of  the  majority,  it 
is  therein  admitted  that  it  is  the  settled  law  that  contracts 
or  combinations  between  producers  or  dealers  in  staple  com- 
modities of  prime  neces-  [88]  sity  to  the  people,  tending  to 
monopolize  the  supply  or  enhance  the  price,  are  contrary  to 
public  policy  and  therefore  void;  and  yet  it  is  maintained 
that  public  corporations  like  railway  companies  may  com- 
bine to  hx  the  rates  to  be  charged  for  the  transportation  of 
the  like  conmiodities,  which  of  necessity  affects  the  cost  to 
the  consumer,  as  well  as  the  value  to  the  producer,  and  that 
contracts  thus  arbitrarily  establishing  the  rates  to  be  charged, 
and  avoiding  the  effect  of  competition  thereon,  cannot  be 
held  to  be  invalid,  unless  it  be  clearly  shown  that  the  rates 
thus  fixed. are  unreasonable.  It  seems  to  me  the  two  propo- 
sitions are  clearly  at  variance. 

The  right  to  freely  contract  and  combine  possessed  by 
private  parties  engaged  in  private  pursuits  is  limited  and 
denied  when  they  come  to  deal  with  staple  conmiodities,  be- 
cause the  whole  community  is  interested  in  these  articles  of 
prime  necessity,  and  any  contract  affecting  them  affects  the 
public;  and  clearly  public  corporations  are  under  a  more 
stringent  rule  in  this  particular. 

Unlike  private  parties  engaged  in  private  pursuits,  which 
only  incidentally,  if  at  all,  affect  the  public  welfare,  corpora- 
tions created  for  the  purpose  of  constructing  and  operating 
the  modern  form  of  public  highways  owe  primarily  a  duty  to 


UNITED   STATES    t'.  TKANS-MtoaorTor    „ 

t-   i«AJNh-MrsSOURI   FREIGHT    ASSN.      227 

SUiras,  J.,  dissenting. 

the  public.    They  are  created  to  subserve  a  nnhl.V 
to  wit,  to  furnisli  the  mean<.  fnr  7   7        '  P'Tpose, 

people  and  property t  Z^^t^^^^^^^^^^  "^  the 

stant  obligation  to  h^p  ih^\  '  ^  ^^^  "^^^^^  ^^^- 

powers  have  been  derived.  ^^^ 

The  right  to  demand  transportation  for  nnp-   ..i* 

performance  thereof  the  nnhlin  La-  "^  l'™?*'' 

proper  perfonnan<i  of  thl^  *  f  f'"*"^  "'^^"^'-    The 

is  a  question  il  which  fhelhr  T'^V''^'"''^'  ""^  '»"« 
portant  interes"  and  «1I  ^f  .  '"'  "  '^""*^*^'  "»''  "'"^t  im- 
to  affect  2  2'te  o  t  Z  'tj  T''"^''°"^  »'*-^«d 
welfare.    Clearly^  t^ef^'S^^l^Zi''  ^^ 

~  tx^jir  r"^" '''  i^rr  rs:,;is; 

iduguage  ot  the  supreme  court  in  GM,^  ,-   /'      ^ 
w-prcu  are  of  such  a  public  charaofor  A  .  "*  ^"'^ 

cannot  be  restrained  t^a  '■  ex4.t  whl^^    Pr-umably  they 
dice  to  the  public  interest  ''"''  ""'*""'  P'^J"" 

tharttt'sarfrLlmt'T^f  ''  '^  ^-^•^■-"^  — cl 
possessed  ty  ^ZX  "°"*'"''*=V''^  ^'""^bine  with  others  is 

transportation  i  be W    T^*^'''^'''"^  ^^g^ged   in   railway 
vate  pursuit!    ft  doeTnot  J""''  ^""^'^  '"^'•^*^'  '"  J^"' 
ciple  or  authori  y     PrijLr  c         '" ^^  '''^''  "?*>"  P"-^- 
for  the  priman.  pLose  of  ft  7^'^'T'  '""^  ""*  ^^^eated 
este,  no;  do  th^'^aTre  tL  nS""^        ^"''"^  ^^^^  '"^^^- 
Conducting  priLrerertirfr'"''  "'  "  ^""'^  ^'"*y- 
no  presumption  that  S"et  *-n  ^ ffT,,^'"' J''^^^  *« 
fare,  and  hence  their  fridom  „f        .     !     *''"  P""'*=  ^«1- 

to  be  limited  or  den  ed  unt  ™  ?   T"^'""''^  ""'*  «*=t'°n  ^^  "«» 

aenied,  unless  it  clearly  appears  that  the  in- 


228 


58  FEDERAL  REPORTER,  89. 


Slilras,  J.,  fllsseiiting. 

terests  of  the  community  will  be  injiiriouslv  affected  by 
the  action  proposed  to  be  taken.  On  the  other  hand,  in  the 
case  of  public  corporations  engaged  in  carrying  on  a  public 
enterprise,  it  is  apparent  that  every  course  of  action  in- 
tended to  affect  the  business  transacted  bv  the  corporation 
must  of  necessity  affect  the  public  interests. 

A  railway  corporation  engaged  in  the  transportation  of 
the  persons  and  proi^erty  of  the  community  is  always  carry- 
ing on  a  public  business,  which  at  all  times  directlv  affects 
the  public  welfare.     All  contracts  or  combinations  entered 
into  between  railway  corporations,  intended  to  regulate  the 
rates  to  be  charged  the  public  for  the  service  rendered,  must  of 
necessity  affect  the  public  interests.    By  reason  of  this  marked 
distinction  existing  between  enterprises   inherently   public 
in  their  character  and  those  of  a  private  nature,  and  further 
by  reason  of  the  difference  between  private  persons  and  cor- 
porations engaged  in  private  pursuits,  who  owe  no  direct 
or  primarj^  duty  to  the  public,  and  public  coqjorations  cre- 
ated for  the  express  purpose  of  carrying  on  public  enter- 
prises, and  which,  in  consideration  of  the  public  powers 
exercised  in  their  behalf,  are  under  obligation  to  carry  on 
the  work  intrusted  to  their  management  primarily  in  the 
interest  and  for  the  benefit  of  the  conmiunity,  it  seems  clear 
to  me  that  the  same  test  is  not  applicable  to  both  classes  of 
business  and  corporations  in  determining  the  validity  of 
contracts  and  combinations  entered  into  by  those  engaged 
therein. 

In  the  case  of  railway  companies  engaged  in  the  public 
business  of  transporting  persons  and  proj>ertv  from  state 
to  state  over  the  highways  of  the  country,  it  is*  in  my  judg- 
ment, clearly  contrary  to  the  public  welfare,  and  therefore 
illegal,  for  these  public  corporations  to  enter  into  contracts 
and  combinations  intended  to  limit  or  nullify  the  effect  of 
free  and  unrestrained  competition  upon  the  rates  to  be 
charged  the  public  for  the  services  rendered  in  the  trans- 
portation of  persons  or  property  over  the  public  highway. 
So  far  as  the  national  goverament  has  dealt  with  this  ques- 
tion, it  has  as  yet  not  undertaken  to  declare  by  statute  what 
rates  shall  be  charged  by  the  railway  companies,  nor  has  it 
established  a  fixed  maximum  or  minimum  limit.    In  this 


I^XIXED   STATES    r.  TKAXS-MISSOCKI   FHEIGHX   ASSN.       229 

Shiras,  J.,  dissenting. 

Hence  itTtS  a  i  iSot'of  1 "'''"  "^"'"^'"^  '^-<1- 
striven  to  secure  tl  e  !^,  7    ?    *^«/«"n^i-y  have  so  eagerly 

has  not  felt  the  need  of  JuZ  aceei  Z  ri'rr""^  '"^^ 
portation,  in  order  fhat  it  ""S  access  to  rival  lines  of  trans- 
ition in  'redu  hi  TrST^T  ""  '""^"^^  "'  ^'''^■ 
railway  companies     1/.^  Passenger  tariffs  of  the 

or  taxation  eCSd  ^U  "  "•"'""'"ity  has  by  donations 

of  a  ^coi  dffe  of  r  ilS  T"^  ""'""^  '^^  construction 

io.vi«g  the  benetitrlf  tStS ;  '^  r:;;eTt:  th:^^-  t 

way    coiporatinn^    fr.   «^    i  •  -' ^^  ^P^^^  to  the  two  rail- 

f 90]  esta'blS'r  a,?ff  Jitr^S'"^./"'   ""'   ^'""^^'^ 
liberty  to  denart  ft-l,     I  ,  "''"'''''"  companv  is  at 

thereby  deprS  of  i^  n  ''  f '""  *'""*  '^''  connnunity  is 
theprotectiona^Ltl^r  'r*^'  's  ab,„,„t,,y  ^,,^j^,J^^ 
and  unrestrained  0^1^?', T'  ^^'?^'  ''  ^^'''^'^  ^y  free 

in  the  transpo^llrr  inTss'^^r  ZZ'ZT  ^"^"^^ 
tract  or  combination  which  is  intenr^l  1 7  ?  '■  ^  ''"'^  ''''"■ 
in  this  particular  is  in  m  c,l^l  ^k  ,  r '^""^  *^"™''"*'*'"'> 
tlierefore  illegal.  ^^^  P"''''^  ^■«"'-"-^-  and  is 

In  the  opinion  of  the  majority  of  the  court  \t  ; 
substance,  that  it  is  lawf.il  f„     1  *  "*  '"'««'•  »n 

upon  competition  and  that  V  T  '  'T^"'"*'''  '••'^^"'"'i"" 
case  is  whether  Uierestrcti  \  'T  '^^  'l""^**""  i"  «ach 
suits  in  the  impoiion  of  ""Tf  "P*"'  con.petition  re- 

ndered. 'STz  2t:::^,t-  *-  ^'-  --« 

gaged  in  private  nursn  /«  1"^^'*^  **»  P^vate  parties  en- 
It  is  unreasonable  and  fho  >.,  i  r    i  pubhc  unless 

endeavoml  l„  m.i„l,i„.  j„  ,,„    '     „7™, Vi         ?       ''*" 

of  necessity  affect  tha  or,f;  .        ^^  charged,  must 

public  inteLtt  the  ra"  la?r?f*!-    ^  ^^"  ">'  *»>« 

the  public  highway  and  in  tl     l      **'"  l^^^^P^^ation  over 

gnway,  and  in  the  absence  of  legislation  afford- 


S8  FBDKRAL  REPORTER,  90. 
Sbiras,  j..  dlmnitlBg: 
mg  other  iiieans  of  ,,rotecJion,  the  co.nmunitv  cannot  be 
deprived  of  the  safeguard  secured  by  free  and 'unrestricted 
conHK>t..,„„  lH.tw.^.n  the  ditferont  lines  of  railway  without 
placing  the  welfare  of  the  public  in  subjection  to  "the  inter- 
ns or  supposed  interests  of  those  managing  these  corpora- 
tions, which  certainly  cannot  be  lawfully  done 

But  it  may  be  argued  that  due  protection  in  this  particu- 
kr  IS  ..ffor.led  by  holding  that  reasonable  r«-tri,-tinn  upon 
compo  ition  as  to  rates  will  be  sustained,  and  unrensonable 
restrictions  will  U^  held  invalid.     T  a,,proh,.nd  that  no  other 
meaning  can  Ik>  given  to  this  proposition  than  that,  if  the 
rates  estabhs  u-d  un.ler  a  given  re.<.triotion  upon  competition 
are  reasonable,  then  thev  will  l,c  sustained:  otherwise  not 
The  reasonable  rat.-s  which  the  .onnnunity  is  entitled  to 
enjoy  are  those  which  iv  nU  from  fn-e  and  unreslrained  com- 
petition, and  not  those  which  are  agreed  upon  by  the  railway 
companies  in  the  absence  of  competition.     In  tiie  absence  of 
Igislation  establishing  a  standard  for  reasonable  rates   and 
.n  the  absence  of  rates  fixed  by  free  competition,  what  prac- 
ticable entenon  is  there  for  determining  whether  a  tariff  of 
rates  agreed  upon  by  railway  companies  is  or  is  not  reason- 
able with  reference  to  the  public?     If  it  be  the  law  that  rail- 
way companies  may  combine  together,  and  by  contract  agree 
upon  th.-  schedule  of  rates  to  be  charged,  and  bin.l  themselves 
iinder  penalties  not  to  depart  from  the  schedule  thus  estab- 
lished, and  if  the  individual  citizen  can  obtain  no  relief 
against  the  exaction  of  rates  thus  fixed,  unless  he  can  in  .Mch 
instanc-e  prove  to  a  court  and  jury  that  the  rate  charged  is 
nnreasonablc.  then  he  is  in  fact  wholly  without  remedy    The 
great  f»l  J  cost  and  other  evils  of  litigation  of  this  character 
uould  ordinarily  deter  the  private  citizen  from  the  effort  to 
maintain  his  rights  by  an  appeal  to  the  courts. 

But  if  the  citizen  should  as.«ume  these  burdens,  and  -hould 
contest  the  rightfulness  of  the  charges  complained  of.  he 
would,  under  the  view  advanced  in  the  majority  opinion 
be  compelled  to  establish  by  competent  evidence  that  the' 
rate  complained  of  was  unreasonable.  By  what  criterion  is 
the  question  ofthe  reasonableness  of  the  'rate  charged  to  be 
determined?  The  article  shipped  is  perhaps  a  car  load  or 
two  of  live  stock  or  of  wheat  or  other  like  products.    Is  the 


i 


®*i'ras,  J.,  dissenting 

c^^^hf^LT^mpa::  TT  "^  ''-^  -'^^^  **  -»V 
inquiry  to  embrfcerStrgaCint  H"^  ""•  '^  '"^^ 
struction  of  the  road    of  the  «n  *^^  "'''*  «'  *•>«  «»«- 

operating  the  road  Jn  the  one  LJTT^/'^t-^'''"^'  '""^  «*■ 
and  character  of  the  businel^     '  7^  ',"*"  ^^"^  *«*^1  amount 

amounts  received  tltrefZ  ^ tT  ^^  '^'  ™''''  '^^  "*  *he 
relation  exists  hetZnZliZ^''^:'^''^^h'^thevadue 
must  be  apparent  to  any  o„e    h^t '"'  .^T"'''*"-^    It 

is  to  itined  t^r:""'^"^  '''  '"^^  -t*'  charged 
for  like  services  by  o  Lr  So""  tT'  ^  "*^^  ^•"-^«'» 
as  the  standard  of  "comoari^n  T  !' .      "  ^^^  '"''*««  "^^^Pted 

of  ^- competitioirErrj  id^ii^r^*^  ''^  ^'^""* 

standard  rates  fixed  by  a  comhinoT  1  ***  ''"^'^P*  »«  a 
frnown  that  these  rates  ar7tT  u'  ^'''  '*  ^°"'«'  "«>*  be 
standard  would  be  wUhouT  ''f  ''  ""'^  '^^  P'-^Po^d 

culties  that  would  of  netsslt"'  "  ''''''"^^-  'r''«  diffi- 
in,  establishing  the  i  nreasoJ^M  ™'=°""i«'-'^d  by  any  citizen 
charged  him  are  such  as  to  renS  **^  "  P'"'*^'^"'^'-  rate 

of  no  value,  and  hence  i  is  tS'  ".  T'^^  ""^  '''''  "'«">«d 
entitled  to  the  protection  Vn^  f .'"  '"""^  '^'^  ^^i^izen  is 
competition  U^T^^^^^'^J^^  '"."^  ^.v  absolutely  free 

combination  which  tend  tedUTy!f :.""%•  ^""^  '^^'^^<^'  or 
tion  thus  afforded  him  is  contrj  „  '  Tv""''  ''^  '^'  ?«•«*««- 

In  the  opinion  of  thi  ma  "^  *"  ^"^^'^  P«"«^ 
analysis  is  made  of  tie  vSis  t  *  "''^  *""  '""^  «'"-eful 
entered  into  by  the  defenlanT    P'"^''^.'""^  ^i  the  contract 
to  be  derived  Lrefrom  at  Ir^"'?'  ''"''  *•»«  •^'-'5*. 
that  in  many  respects  the  p^v^:     "t    '  '''  "**'  ^-''^ 
ned  out,  would  operate  \Z^T   T  .    ^^'^  contract,  if  ear- 
without  injury  to^^^b        b^  L"V'^"'"''''"'"  '^' 
ract,  in  my  j..dgment,  lies   n  the  flr.K?"''*^  ^^  '^^  '^i,- 
;s  to  protect  the  comp  n S  from  the    ff/  ''!"'""'  P"^P°* 
tion  in  reducing  the  rate!  t„  fT         ^^^^^  °^  ^^ee  competi- 
tion of  freight^tr  5^?H„e^,7"^t''*''•*'^^*'•-«P-ta- 
contracting  corporations.     Sabirt^^f  .^^I^'"^  ^>'  '^'^ 

^rtamly  the  defendants,  if  they 


232 


58  FEDERAL  REPORTER,   91. 


] 


. 


Shiras,  J.,  dissenting. 

considered  themselves  bound  by  this  agreement,  were  no 
longer  at  liberty  to  compete  with  each  other  in  the  matter 
of  rates  to  be  charged  the  public. 

[921  '^he  rates  juv  to  be  established  jjy  a  committee,  and 
are  to  be  observed  by  all  the  contracting  parties,  with  a  lia- 
bility to  a  penalty  for  any  breach  of  the  contract.  It  is 
clearly  evident  that  the  defendants  enteretl  into  this  coo- 
tract  in  the  expectation  that  thereby  a  schedule  of  rates 
would  be  fixed  which  would  differ  from  those  which  would 
prevail  in  the  absence  of  such  concerted  action. 

The  several  companies  are  no  longer  left  free  to  fix  rates 
based  upon  considerations  pertaining  to  their  own  lines  of 
railway,  the  cost  of  operating  th?  same,  and  tiie  fticilitie. 
possessed  for  handling  the  business  If  the  making  and 
enforcement  of  this  contract  would  not  have  the  effect  of 
establisliing  a  schedule  of  rates  other  and  different  from 
what  would  obtain  in  the  absence  of  the  contract,  wliat  in- 
duced the  companies  to  enter  into  it  ? 

I  can  phice  no  other  construction  upon  this  contract  than 
that  its  main  object  was  to  remove  the  question  of  rate^  from 
the  field  of  comj^etition.  In  my  judgment,  it  is  not  necessary 
to  enter  upon  a  minute  examination  of  the  averments  made 
in  the  bill  and  denied  or  admitted  in  the  answer.  The  bill 
charges  and  the  answer  admits  that  the  defendant  companies 
entered  into  the  contract  in  question,  and  the  main  issue  in 
controversy  is  as  to  the  validity  of  the  contract.  As  I  con- 
strue it,  the  invalidity  thereof  is  a])parent  upon  its  face,  in 
that  it  clearly  appears  that  the  purpose  of  the  contract  was 
to  establish  by  agreement  a  schedide  of  rates  which  was  to 
bind  all  the  contracting  companies,  and  which  each  company 
was  bound  to  enf(»rce  as  against  its  patrons;  thus  depriving 
the  public  of  the  protection  residting  from  free  and  imre- 
strained  competition  between  these  public  corporations.  It 
matters  not  that  the  particular  rates  now  enforced  under  this 
contract  may  be  wholly  reasonable.  That  is  not  the  <|ues- 
tion.  The  point  to  be  decided  is  whether  these  public  cor- 
porations, engaged  in  a  public  enterprise,  have  the  right  to 
agree  that  they  will  cease  to  compete  with  each  other. 

Whether  these  corporations  shall  or  shall  not  be  relieved 
from  the  effects  of  free  and  fair  competition  in  the  carrying 


i 

t 


UNITED   STATES    U.  TRANS-MTSSOURI    FREIGHT   ASSN.      233 

Shiras,  J.,  dissenting. 

41 

on  of  the  public  work  they  are  engaged  in  is  a  question  to  be 
decided  by  the  people,  acting  through  the  proper  govern- 
meiital  agency.  It  is  not  for  the  railway  companies  to  decide 
when  they  will  compete  with  each  other  and  when  they  will 
not.  The  public  welfare  demands  that  they  should  remain 
always  subject  to  the  operation  of  this  principle  of  free  com- 
petition, unless  they  are  freed  therefrom  by  legislative  action, 
whereby  other  safeguards  are  substituted  for  that  afforded 
the  public  by  the  operation  of  the  principle  named. 

If  I  correctly  apprehend  that  portion  of  the  majority 
opinion  which  deals  with  the  effect  of  the  interstate  com- 
merce act,  it  is  therein  argued  that  this  act  radically  changes 
the  rights  of  the  railway  companies  and  the  public  in  this 
particular,  and  that  it  was  intended  thereby  to  free  the  com- 
panies from  the  effects  of  free  competition.  With  all  diie 
deference  to  my  brethren,  I  must  yet  be  permitted  to  say 
that  it  seems  to  me  that  the  opinion  always  [93]  loses  sight 
of  the  distinction  existing  at  the  common  law  between  par- 
ties following  jn-ivate  pursuits  and  public  corporations  en- 
gaged in  public  enterprises. 

The  interstate  commerce  act  did  not  materially  change  the 
rights  pertaining  to  the  public.  It  created  certain  machinery 
for  the  better  enforcement  and  protection  of  the  public  in- 
terests, but  the  rights  to  be  protected  were  already  in  exist- 
ence, and  the  statute  in  this  respect  is  only  declaratory  of  com- 
mon law  principles.  Before  the  enactment  of  that  statute, 
railway  companies  were  recognized  to  be  public  corpora- 
tier*,  chiTrged  with  the  duties  and  obligations  pertaining 
thereto.  As  common  carriers  they  were  under  legal  obli- 
gation to  deal  with  the  public,  and  to  afford  equal  facili- 
ties to  every  citizen,  and  they  were  only  entitled  to  demand 
reasonable,  and  not  exorbitant,  con.ipensation  for  the  services 
rendered  by  them.  The  purpose  of  the  interstate  commerce 
act  was  not  so  much  to  change  the  legal  rights  of  the  common 
carriers  and  of  the  public  as  it  was  to  compel  a  change  in 
the  practices  of  the  railway  companies,  and  to  enforce  com 
pliance  on  their  part  with  the  duties  and  obligations  which 
rested  upon  them  under  the  principles  of  the  common  law. 
The  line  of  argument  followed  by  the  majority  seems  to 
assume  that  the  main  purpose  of  the  interstate  commerce 


"^  58  FEDBJRAL   REPORTER,   93. 

Shira«,  J.,  flit«Mentiiig. 
act  is  to  regulate  the  relationsr  between  the  competing  lines 
of  railway  and  to  protect  the  weaker  lines  of  railway  and 
the  capital  invested  therein  from  being  absorbed  by  the 
stronger  competitor.  That  there  are  evils  of  this  nature  of 
great  magnit..de  is  not  to  be  denied,  but  the  interstate  com- 
meroe  »ct  was  not  enacted  for  their  eradication. 

Ihe  j.nnuMy  purpose  of  that  act  was  to  deal  with  the 
relations  exisiing  lK.tween  the  common  carriers  and  the  pub- 
Jic.  and  to  enforce  the  rights  of  the  latter.     E.xperience  had 
shown    that   railway   companies  had.   in   manv   instances, 
favored  particular  l,«alities  „r  particular  |,arties  or  par- 
ticular classes  of  busiueas  at  the  e.xpen.se  of  the  community 
at  large,  an.l  the  act  was,  in  the  language  used  by  the  su- 
preme court  in  Railwa},  Co.  v.  GoorMdffr.  14»  U.  S.  (i80,  13 
Slip.  C  t.  IJop.  <)70.  intended  "  to  cut  up  bv  th,.  roots  the 
entire  system  of  rebates  and   discriminations  in   favor  of 
particular  l«.,lities.  sp.ecial  enterprises,  or  favored  crpora- 
tions.   and   to  put  all   shippers  on  an   absolute  equality" 
The  uniformity  an.l  equality  of  rates  sought  to  be  secured 
by  that  act  are  not  between  the  schedules  of  rates  charged  by 
the  several  companies,  but  between  the  charges  actually  made 
by  each  railway  company  to  it.s  patrons.    The  act  does  not 
m.u.re  the  schedule  of  rates  adopted  by  one  company  to 
conform  to  that  of  a  rival  comj.any.     What  it  does  deinand 
of  ea<-l,  company  ,s  that,  in  dealing  with  its  customers,  it  shall 
make  no  unjust  di: crimination,  but  shall,  for  the  like  '^rvicc' 
raTcIo".;'    "T^""  7"'il»r  <-inumstancos   charge   the   same 
rate  to  all.     The  act  provides  that  all  charges  for  the  trans- 
portation of  poisons  or  property  from  state  to  state  shall 
be  reasonable  and  just,  but  no  standard   for  ascertaining 
the  act'"  "  ^""""  """'^  ''  '■'""'"""'''''  "'■  ""'  '^  e.stablished  by 

th.^  ;"'|-/''7*;!'«- 1«  Pf«eive  the  force  of  the  argument  that 
the  |«4|  adoption  of  the  interstate  commerce  act  worked  a 
radical  change  in  the  relations  existing  between  railway 
companies  and  the  public,  and  that  one  effect  thereof  was 
to  authorize  the  former  to  combine  together  for  the  purpose 
of  escaping  the  effect  of  competition  upon  the  rates  to  be 
charged  the  public  for  the  services  rendered.  Before  the 
adoption  of  that  act  the  community  was  certainly  entitled 


TINITEO   STATES    V.  THAN«-MisS0URI  FREIGHT  ASSK.      235 

Shiras,  j.,  dissentiug. 

to   the   protection   derived    fmm    f^^ 

the  linp^  nf  .oil         """^^^^   ^^^"^   free  competition   between 

safetniorr?      T].«f       ^       vvmcu  aeprives  the  public  of  thi*^ 

the  public  by  warfares  over  r,  „    i  '    <=»">Panies  and 

that  are  gained  inmaLrr/        u^"'  ""^  *^^  aclvantages 
concert  of  action  ZZ^Z  ^\^''''^'  *=''"*«'•«»-  «n<^ 

entirely  true  that,  T:f'^:.7irlr''''T-  "  ™«>'  "e 
policy  of  public  control  oy'L;"a'wr:ffi"''TT'  ''  *"^ 
devised  and  put  in  operation  hv  i  ^,  r^*^^'  "'''^^"^^  ^'»  be 
by  railway  cmnpanies  ,nd  7  ''^ 'f?'^'"*"'^  enactment  where- 

the  evils' ar^ng~nnr!rT*^^'"«^^^^^ 

rate  wars  whi^uilirrtl  Tk"^*'^  """'"P'*'"*'"  «"<*  from 

I  fail  to  perSv^ri: :  nra^iutrtnr '  "^"^ 

in  tariff  rates,  CZ:TLX:^\^T^^^  ^ -^-tions 

nity  of  the  benefit  of  IZT'ouin    7"'"  ""  '^'"'""- 
rates  for  the  transDort«t;J    /Vu       •"*"''"'&  reasonable 

Competition,  freeTnT.    re  trtt^/  S^"'  ""  J^^"  r^"'^' 
governs  all  the  ordin«rv  h  '  ^''"*"'  "''e  «hich 

of  life.  EvUs  as  wSTs  h  fif  P"''"'*"  ""''  transactions 
fierce  heat  of  c^mpltft  on  thTf  '  '^'"'*  *''*""''*^»'»-  I«  «>« 
out  the  weaker^  Ct  'nslr^"  '"""P'^"*"'  "'''^  --'> 
result  in  wreck  and  d  salr  1.  Z^  -^  "^  "'"'^  '''^' 
against  the  evils,  the  laTof  e«  Z"^  *''  '^'''^''  '^^ 
trolling  element  in  the  businerworii  TW%"'  ''  ^  ^"- 
restricted  competition  in  the  mattir  of  T  .  *?'  ''"'*  """ 
be  productive' of  evils  do^  no"  mH  t«t     ""**•  ^'''"'^''^ '""•'^ 

that  such  is  the  law  now  goverSwhlt-T'^f  '^^  '"'^ 
be  enacted  nor  system  hfZTA^       f "*'^®"'*-    ^«  ^"^  can 

affai.  that  in  reTfo^.mrdoe'rnl  ^^ "^^  '''  '^"'"- 
-Its,  no  matter  how  beneficial  itTgerraCr^yt' 


236 


58  FEDERAL   REPORTER,   94. 


I 


Shiras,  J.,  dissenting. 

There  are  benefits  and  there  are  evils  which  result  from  the 
operation  of  the  law  of  free  competition  between  railway 
companies.  The  time  may  come  when  the  companies  will  be 
relieved  from  the  operation  of  this  law,  but  they  cannot,  by 
combination  and  agreements  among  themselves,  bring  about 
this  change.  The  fact  that  the  provisions  of  the  interstate 
commerce  act  may  have  changed  in  many  respects  the  con- 
duct of  the  companies  in  the  carrying  on  of  the  public  busi- 
es] nese  they  are  engaged  in,  does  not  show  that  it  was  the 
intent  of  congress  in  the  enactment  of  that  statute  to  clothe 
railway  companies  with  the  right  to  combine  together  for 
the  purpose  of  avoiding  the  eiffects  of  competition  on  the 
subject  of  rates. 

There  are  three  general  methods  by  which  these  rates  may 
be  established.     It  may  be  done  by  direct  legislative  enact- 
ment,  (whereby  either  fixed  rates  or  a  maximum  or  mimi- 
mum  limit  are  enacted  by  the  statute  or  by  provisions  for 
the  adoption  of  rates  by  a  commission,)  or  the  rates  may 
be  adopted  by  the  independent  action  of  each  company,  act- 
ing under  the  spur  of  self-interest,  and  controlled  by  the 
effect  of  free  competition,  or  the  rates  may  be  fixed  by  means 
of  agreements  or  combinations  between  the  rival  lines  of  rail- 
way, wheroby  each  contracting  company  is  bound  to  charge 
the  rate  thus  fixed  and  agreed  upon.    Congress  has  not  yet 
undertaken  to  establish  a  standard  of  rates,  either  directly 
or  through  the  action  of  a  commission  or  the  equivalent. 
Neither,  in  my  judgment,  has  congress,  in  enacting  the  inter- 
state commerce  statute  and  the  amendments  thereto,  con- 
ferred upon  the  railways  the  right  to  enter  into  combina- 
tions for  the  purpose  of  compelling  the  members  to  charge 
the  rates  fixed  by  a  committee  of  the  association,  in  whose 
deliberations  the  public  have  no  part,  and  the  avowed  pur- 
pose of  which  is  to  evade  the  operations  of  the  law  of  com- 
petition, which  is  as  yet  the  only  safeguard  upon  which  the 
public  can  rely  for  the  securing  of  the  adoption  of  reasonable 
charges  upon  interstate  traffic.     I  had  always  supposed  that 
the  enactment  of  the  interstate  commerce  statute  was  the 
result  of  a  pojudar  demand,  which  insisted  upon  relief  being 
given  to  the  community  as  against  the  methods  pursued  by 
the  railway  companies  which,  in  some  particulars  at  least, 


UNITED   STATES   V.  TRANS-MISSOURI  FREIGHT   ASSN.      237 

Shiras,  J.,  dissenting. 

were  deemed  to  be  inimical  to  the  public  interests.    Looking 
a  the  causes  which  brought  about  the  enactment  of  this  stat 

that  ifis'lVolf^  '''  "'JV*  "^^  ''""^'''  '^  d-  -m  ct^ 
that  It  IS  wholly  wrested  from  its  purpose  when  it  is  held 

aa  It  creates  numerous  radical  and  effective  cha"  ges  „  tte 
pubhc  pohcy  of  the  nation  touching  competition  tetwln 
railroad  conipanie.  engaged  in  interstate  conCr   fTvTZ 

;  "-' . ,  *,  ''^''tein  of  discriminations  in  favor  of  localitipf 
ndiyiduals,  or  classes  otbusiness  which  had  co  me  intoviu!^' 
he  interstate  commerce  act  was  intended  toItrXefad' 

railway  corporafions  In^^ tbTn  ^ ^^^^^^^^         '^^ ^^ 
argument  of  the  majority  is  that  even  if  ff^j  . 

that  under  common-law  prhiciole.  Ilf       .      T  '''"""*** 
nations  between  public  co:^Z  !  /r  Ltrte  VZ^'t 
ment  of  rates  would  be  held  to  be  contrarv  to  n^H        r 
nevertheless  the  enactment  of  the  ilrs^^t.   ^  P"^"^' 

revolutionized  the  law  in  thi.       ,     '"*®'^^^''*«  commerce  act 
way  companies  to  enf^'  Particular,  and  authorized  rail- 

railway  compants  t^St  r'-t  '.'  *"  ""'"  "^""^ 
which,  under  the  pr  ncipKf  ^b.  ""^  «>inbinations 

illegal,  because  coStr^Sy  to  DubHc  T""  ^^T'  ^"""^'^  ^ 
of  the  court  is  to  the  effect  that  '^r  ■'^-  ^''"  "'"^"'"^ 
law  imposes  several  im^?   !  ^^  interstate  commerce 

railwayTmS^  o  raT\revT"  "^^".  ^"^^  "^'^^  "^ 
making  and  altering  ..?  5  ^^^^  "*  *«  matter  of 

pressef  it^tn^  Tt  ZxZfZ  ""''  '''^^'y  - 
tween  carriers  is  not  at  the  p^^^^^y^.'^^'P^*'*'""  ^- 

public  welfare,  and  that  other  SI  a"  Tro"'"'  r  !''' 
the  public  good "  ^  ™"'^''  essential  to 


238 


58   FEDERAL  BEPOBTER,  96. 


L  t  f 


ShIraM.  J.,  flj«sentiiig. 

«ti"  "BiJlowT  •"  *^;r«-  «'  ">«ki„g  and  altering 
rat*s.    But  how  does  that  fact  tend  to  show  that  the  act 

Ss  ,yf)l  -^  ^'^"^  ""*y  P''"^*'  restrictions  upon  the 
PUW  c  bn  .h'"]  ?T."""'P'""*''  ""^  "P°»  »he  rights  of  the 
EitelL  t      r       '  'k"'  """^^  '""y  «"»«*  laws  which  are 

of  S^nX     «  r/"^/"*  necessarily  .strict  the  rights 

"Sin  "f  r'*™'"^    •'*  "'**"*«*«  -•"■"-ce  act,  and  the 
TZ  ■!        ™'"'""^'r  «««ted  thereby,  it  can  be  held  that 

*  jr      ,       "     r^  "'^"  *•'"'  ''*^***»"  «*  interstate  com- 
merce, so  long  as  the  same  are  reasonable.-which  is  the  do3 
.on  of  the  co„rt.-then  would  it  not  follow  tha    the  riS 
h^s  created  by  the  interstate  commerce  act  is  abrogated! 
the  later  «,actment  found  in  the  anti-trust  act    «hich  ex 

fi^f  or  "'?•%•  "*  ^""^  ""'"--"^  contric^tmLt 
tions,  or  restrictions  are  illegal,  but  that  ever;  contract 

t^ZmZ''':  ''"^' "'  *™^  "^  ''*---'  or-'conspi™:;' 

llSr  i,  *[«f«  »■•  j^f^erce  among  the  several  stites  is 
Illegal?  The  statute  declares  that  restraint  of  interstate 
commerce,  all  restraints,  every  restraint  of  such  trade  and 
comme^  brought  about  by  contracts,  combiSion't  the 

Ihe  statutory  declaration  in  effect  is  that  interstate  trade 

3lS;Tth?  ^  ^"""^/^  fro-  -triction.  The  " 
UecJaration  of  the  court  is,  m  effect,  that  railway  companies 
engaged  ,„  uiterstate  commerce  may  place  restrictions  uZ 
such  commerce;  that  the  right  so  t«  do,  if  not  exisirX 
the  common  law,  is  conferml  upon  railway  compa^i^  by 
he  provisions  of  the  interstate  commerce  act;  that  such  ^ 
^nctions  cannot  be  held  to  be  illegal  unless  it' is  shown  thTt 
they  are  um^nable,  and  the  presmnption  is  in  favor  of 

ltveMr*"f  *T  """^  "*"^"*"*  '«««"ty.  I  cannot  b^ 
heve  that  such  is  the  meaning  of  the  inter^ate  commerce  and 
^  «t»-teus^  acte.    When  the  latter  act  was  adopted,^  SJd 

be  the  law  that,  with  regard  to  the  classes  of  b„sine*.s  that 


--n.n  SX.XKS  ..  x„..s-M,sso™r  .b.,ohx  .ss..     239 

Shims,  J.,  dissenting 

ne:e^it;?o!:Sac?im'  ^^^  ""'^'  **"  ^  '"^^  «  P-^ic 
ever  partial,  caimol  2afne7l>r""'^  *'*'"""•  ''<'- 
of  public  policy.  It  eJTCt^Zwl  ^T"T''"" 
railway  companies  engaged  in  Tn^f.,  ^.^"r*'""'*^  *'''" 
merce  are  carrying  on  f  h..       "'**'?^*«  ^""^^^  and   com- 

acter  as  of  ncSty  p L^TtTn  1  "1  '  T'^'^  •='"«^- 
the  supreme  court  to  (T  of  Lh  '  !  *'**''"^  ^^ 
restraint  thei^of,  however  oarti,  I  "    "'*"'*    "'"'    "« 

familiar  principle  thTlf ?  '  ''  P«»i"««ible-  It  is  a 
-ference  i  andt  ^^iS^.^:]^  ^  ^-^-d  with 
of  their  enactment.  Thus  reading  M  T'l'"^  "'  *''«  *'"t« 
the  first  section  thereof  inTntd  o'cT  "'''  '"*'  '^  "•** 
statutory  form  the  nrinrinlo  j     .    ^"^y  enunciate  in 

by  the  -Preme  3  "T£  Sate"'^'"'  *^  *"  *'*«  '»^^- 
trust  acts  were  passed  for  the  pil^SonTr'";  "''  "'"■ 
enforcement  of  the  rights  nf  T        u?-  **  interests  and 

thereof  in  the  opinion  of  th/./'^^^'f  '^^'^  ^'«^  ^ken 
rights  of  the  puLc"  d  i.  eXin'T'^'  '"  ""^'''"^^  '^^ 
companies.  If  the  law  be  as  slT^-  ''w  T'"''  "*  '"'^'"'y 
public  corporations,  engaged  in  .^  ^^^^''^'  *«"  ^^^ 

of  constructing  and  opS,"  Z^Zlu:  ?7""'^  '^"^^ 
which,  of  necessity  nearlv  fhf  .  P  ^  highways,  over 
must  be  carried,  a^  at  libfrtw  "^-  ''^^^  "^  '^'  «>»ntry 

mine  in  secret  condave  hel^  combine  together  and  deter- 
Public  for  the  servirrlnde'^  I  ""^^  ''''°*"'*  ^o*"  the 
of  the  schedules  thirfixeS  bTin  if  "*"'"'''  '^'  ""P°^'^i<>« 
party  to  the  combinadon  whicf  ""  ^"^"^  «^>»«t  ^^7 
schedule,  and  the  i^Mdu^ttt7  1""'  '''"'  '""^  '^^ 
rates  thus  fixed,  unless  he  rnsatf?  "'  ""  '^""^  '^'^^^ 
the  rate  charged  is  unreaLrbi       "^     "'  •^"'•'  "'  ''"-^  '^at 

in  iesSorrslmfiEtr  Tr"  ''^'  '"^^  -*-t 

but  it  is  said  the  restraint  is  slii^t^'J  competition  in  rates, 
the  natural  tendency  is  to  I.  ?'  *"*^  ^^^'^^^'^  lawful.  If 
of  rates,and  top'Iare^riftrTf ""  ^°  *^«  >»»tter 
freedom  of  inte^ta^  trSc  wh„^."f  ^"  '"^''*'  "?»»  the 
when  the  proper  boundary  1,7  t  "^""*'  '^  *°  ^^^t^rmine 

5,^ndard  is^hrlait^„^it^^^^^^^  r  '^  ^^"^ 

The  legal  con^uence  of  the  positir:;\re  l^T  tSI 


240 


58  FEDERAL  BEPORTER,   »7. 
Shiras,  J.,  dissenting. 


railway  companies,  by  combinations  between  themselves,  may 
fix  the  schedule  of  rates  to  be  charged  the  public,  and  may 
bind  themselves  under  penalties  not  to  depart  from  the  rates 
thus  agi-eed  upon,  and  the  citizen  is  bound  to  pay  the  tariff 
thus  established,  unless  he  can  satisfy  a  court  that  the  sum 
charged  is  unreasonable.  It  may  sound  well  to  say  that  the 
courts  are  open  to  the  citizen,  and  that  they  will  afford  him 
protection  against  the  exaction  of  unreasonable  rates,  but  we 
know  that  the  supposed  remedv  would  only  aggravate  the 
original  wrong.  It  is  said  in  the  opinion  of  the  court  that 
there  is  nothing  in  the  contract  described  in  the  bill  which 
indicates  any  purpose  or  attempt  to  obtain  a  monopoly  of 
the  trade  of  the  region  traversed  by  the  defendant  corpora- 
tions:  that  the  systems  of  the  Great  Northern,  the  Northern 
Pacific,  the  Southern  Pacific,  and  Texas  Pacific  Railway 
Companies  are  operated  in  the  region  subject  to  the  regula- 
tions of  the  defendant  association,  but  thev  are  not  members 
of  it,  and  therefore  the  defendant  companies  cannot  monopo- 
lize the  entire  traffic  of  the  region.  The  great  [98]  majority 
of  the  patrons  of  the  several  lines  of  railway  represented  in 
the  association  in  question  do  not  live  at  competitive  points. 
As  to  each  of  them  the  line  of  railway  nearest  to  them  has,  of 
necessity,  an  absolute  monopoly  of  the  carrying  trade  belong- 
ing to  the  business  in  which  they  are  engaged.  Of  what  ad- 
vantage to  a  farmer,  a  merchant,  or  a  manufacturer  doing 
business  at  or  adjacent  to  a  station  upon  a  given  line  of  rail- 
way is  the  fact  that  20  or  50  or  500  miles  from  his  place  of 
business  there  is  another  railway  line?  The  distance  is  so 
great,  and  the  cost  of  reaching  the  same  is  so  great,  that  he  is 
practically  debarred  from  making  use  of  the  same,  and  he  has 
no  choice  in  the  matter.  Parties  doing  business  at  competitive 
points  may  have  free  choice,  and  as  to  them  it  may  be  true  that 
neither  competing  line  has  a  monopoly  of  the  business  trans- 
acted at  places  where  competition,  being  free  and  unrestricted, 
may  work  out  its  legitimate  results,  but  this  is  not  true  of 
persons  engaged  in  business  at  noncompetitive  points.  As  to 
them,  the  control  of  the  railway  company  adjacent  to  them 
is  practically  absolute.  Of  necessity,  in  such  case  the  railway 
company  has  a  complete  monopoly  of  the  entire  transporta- 
tion traffic  of  the  region  in  which  there  is  in  fact  no  compet- 


t'mT.D   STATES    ..  XBAKS-MISSOUBI   KKErOHX  ASSX.      241 

^'"'■as.  J.,  dissenting. 
ing  line.    Against  the  evil  tendpnr.iB=  «*  *k- 
tection  is  afforded  to  the  cSn  i?  -       '  '"^""^°'^'  ^"^ 
restrained  competition  l^t^e^thl^uT'"''^^  ^^  "°*^  '^- 

several  points  ^r  localiti  The  t  they  in  r/"''"  '''''' 
active  comnetition    n^^    >  ,7      ^  ^"  ***^*  come  into 

secui^d  at  C  n;il '    !T'''''  '''''  ^^''""S  thus  bZ 

which  it  mayZ  JSi^e  '  '1X1:^'  T"11  ^^ 
iiitermediate  noncomnetiH™  \f     <.  ^^^  charged  from 

and  the  provisions  oTtheW    T^''  '"^  i^«^onable  or  not. 
u  greater'^c-harifL  a  strtP^TK**''  T""'"^  '''  ^^'^^^^^S 
lar  circumstants  LVt  tvSiyt^"'"''  ""^^^  ^'"^ 
poitionate  relation  between  hrrats  at  ^1' ."/''"P''''  ^'^^ 
competitive  points.    If,  however  the  H^"^^''''^'  ^^^  "on- 
combine  together  to  fiv  f^!   T    x    ,     ^"^^^  companies  may 

points,  tl^uf^^SZlZSe:  ^f  T''^  ''  ^"-"P^""- 
fares  it  with  the  cidfens  relS"'  Th''"'''""""'  ^"" 
point?  By  the  very  necessitLTof  hi  L  Lr^^""^^ 
from  choosing  the  line  of  railway  he  w^  nT^  ^^-T^ 

compelled  to  avail  himself  JZt    T  T-  •  P^t'^onize.    He  is 

line  nearest  him.    ThTriilwaf  th^f '"/"'""••^^'^  ^^  *^« 
monopoly  of  the  transnoS,  ^  tbereiote  has  the  absolute 

the  ciken.    It  iSrhal^L"  fT™"^  *"  '""^  ^"-"«^  "f 
to  be  charged-  andTfTh7  ''^f'^^  '=*'""^'  «f  *«  rates 

nations  wiS  the  o'h  r  bes^r^^'  '^  '=""*"^^  '^^  -»«- 
n^gion,  may  fr^  itseTf  from  1^  7^  T'^''''^  ^"  '^^  ^^^ 
competition,  what  t  lackL  .  •■*^*"?.''"'»^  -horded  by  free 
absolute  monopoly  of  t£  tfaloT?"*l  '^  '^'^^''^  ""<* 
pendent  upon  ^  gi^*  i^^S^^^^^^^  ^e- 

necessary  consequence  of  ih^        railway^     The  direct  and 

defendant  comp^fefis  to  eJte  Tnl  '"*T'  '''''  ^^  '^'^ 
monopoly  in  each  of  the  contractL".?"''^''*  "°  ^'^^'l^^ 
the  business  carried  over  ^h?     ^  P*""''^'  "''^'"  **»»*  Pa^t  of 
from  that  portio^  ofTe  ^ir^'^'Z^^''  which'^comes 
active  operation  a  ^  n^J  t  "  S  Tnd    "'  *'"^  '^  '^*'*  '" 
which  are  so  situated  that  oL'  !•'*•'  ^^^"^  *'  *«  ''^gions 
absence  [99]  of  ci^c^s  SSg^tX*  ^  \f  ^'^  '""^ 
like  monopoly  is  created  hvthly         ^^*^  ^^^^^of'  « 
defendant  companies  '""*  ^^"^  ^°t«  ^y  the 

In  the  matter  of  rates,  competitive  points  are  thn^     ^ 

11808-voL  1-00  M 16  ^  ""^^"^ 


I '  I 


!| 


242  58   FEDERAL  REPORTEB,  9!). 

Shlras,  J.,  dissenting. 

A«  fransDortation  business  of  the  locality  is  sought  by  t^o 
the  transportanon  ^^^^  ^^  property  at 

or  more  competing  Imes.    In  me  p^o- 

public  auction,  it  '«  *^/"  J -f  *' ^^^  that  they  will  not  bid 
posed  P«^l»»^'^:  ^^t^^L,  proSrty  *all  be  bid  off  at  an 
;^d%rt'£':l^o„^St  of  ;il  tl.  cc.ntractijg 

f r' -  ^"£nt  ;^Lr  bT  :cL^  loitar  t, 

all  fair  competition  is  Pr®^^"^''"    /.       u„siness  of  a  given 
the  competitors  for  the  transportation  b«  ot      . 

locality  agree  that  there  ^^l^.  *".  ;^^,^7;i''„^^^  the  same 
them  on  the  subject  of  rates  to  be  charged  does  n 

evil  result?    In  the  one  case  it  is  7g5^*".*f/X%,h,e  that 
«f  his  Dropertv,  without  paying  to  him  the  fair  vamej 
luM  ?Xbly  be  bid  in  case  c-petition  was  not  s^^^^^^^ 
the  agreement  between  the  purchasers.    In  t^^.*'';*»^7"^.  ,, 

result  of  free  competition,  but  are  the  resuii 

and  mutual  agreements  entei^d  into  for  A    e^^^^^^^ 

of  eliminating  competition  as  an  ^l^"*;"^  ^J''^^^  i„,3iitift, 

*T  j'are^coCttti  :  t^t^s^^^t^^  "^^^^  ^- 
which  are  compeiiuve  -"  ^     b  K,,cir.p«5Q  of  the  region 

«  «r>*ylA  line  of  railway  within  his  reach,     mus  is  luui 

Slrr S  trl^rtaLroTthe  property  of  the  commu- 
S;«erd^  a  lulling  influence  over  the  question  of  the 

^IZZ:  failure  of  tiie  various  ^f^^^^^tZZ, 
t;nn<!  uDon  which  the  dtizens  are  dependent  for  a  "veimou  , 
anTmS^-r,  it  directly  affects  and  controls  the  cost  to  the 

public  of  all  the necessamsof  We^^  ^^^^  ^^^^^ 

The  declaration  found  m  arucie  i  oi  "> 
apon  its  face  the  main  purpose  of  the  combination,  it  being 


UNITED   STATES   V.  TBANS-MISSOUBI   FREIGHT  ASSN.      243 

Sliiras,  J.,  dissenting. 
therein  recited  that  « the  traffic  to  be  included  in  the  Trans- 
Missouri  Freight  Association  shall  be  as  follows:  (1)  AU 
traffic  competitive  between  any  two  or  more  members  hereof 
passing  between  points  in  the  following  described  territory  » 
etc.    Does  not  this  clearly  show  that  the  main  purpose  of  the 
contracting  parties  is  to  deal  with  that  traffic  which,  in  the 
absence  of  combinations  between  the  railway  companies, 
would  be  controlled  by  the  results  of  competition,  and  to  d^ 
with  It  in  such  manner  that  it  will  cease  to  be  competitive 
traffic  and  become  the  subject  of  combinations  and  a<Tee- 
mente  whereby  the  rates  to  be  charged-which  is  the  essential 
ele-  [100]  ment  in  which  the  public  has  a  vital  interest- 
is  removed  from  the  protection  derivable  from  free  and  un- 
restrained competition,  and  is  left  to  the  determination  of 
committees  appointed  by  the  railway  companies,  whose  ac- 
tion IS  binding  upon  the  members  of  the  association,  and 
against  which  the  individual  citizen  is  without  adequate 
remedy,  no  matter  how  unjust  the  rate  fixed  by  the  committee 
may  in  fact  be? 

i^.t^'u^l  *««*"'•«  observable  on  the  face  of  this  contract  is 
that  by  the  exceptions  contained  in  article  I  the  traffic  be- 
tween many  points  and  in  some  classes  of  freight  are  ex- 
cepted out  from  the  operation  of  the  agreement,  and  thus  it 
appears  that  it  13  the  express  purpose  of  the  defendant  com- 
panies to  carry  on  part  of  their  business  subject  to  the  r«- 
sults  flowing  from  combinations  between  the  carriers,  and 
other  portions  are  not  to  be  affected  thereby.     Is  it  not  the 
natural  result  that  the  public  will  be  subjected  to  different 
burdens  and  that  differences  in  rates  will  be  charged,  which 
n  effect  wiU  result  in  discriminations  for  or  against  par- 
ticular localities?     But  I  shall  not  dwell  upon  this  and  oSier 
pomts  of  minor  importance.    As  I  view  the  subject,  the 
inherent  and   fatal  vice  existing  in   the  combination   and 
agreement  entered  into  between  the  defendant  railway  com- 
panies is  found  in  the  fact,  patent  upon  the  face  of  the  con- 
tracMhat  it  is  the  main  purpose  of  the  contracting  parties 
to  stifle  competition  in  the  matter  of  rates  to  be  charged  the 
public.    The  illegality  of  such  purpose  is  not  dep^ndenJ 
upon  the  extent  of  the  restraint  placed  upon  the  freedom  of 
the  public  busines-s  but  upon  the  fact  that  the  avowed  in- 


1 


I 


1 1 


244 

^   FEDERAL  BEPORTER,  280. 
8yllubii8. 

^l^^^^^  3V^  ^f  upon  a 

nature,  and  touching  which  thnli^      .         !^''  "'  "  ?»"'« 

common  and  statutfr^"  is  that  ittn-f "'  "'  ""'''""'  '^«» 
and  unrestricted     If ^1  ZZ  '*.'""=^t  ^^ain  wholly  free 

ft«e  co™petitio.tc".^:.Sd"S  n^Set  H^  '"'^  *"^ 
combinations  such  as  are  contSDlaL  1  nf  --'  /T "'  ''^ 
the  opntract  entered  intTbwhlTi  ^  '^  Provided  for  in 
the  only  safemia^Zw^     ^  defendants  in  this  case,  then 

J'  saieguara  against  unreasonab  e  rati^  irJii  u ,  „.  •  i 
down,  and  thus  interstate  commerce  Si  fT    k'  ^"  "'"^l^^" 
««twi"ts  and  injuries  flowinTfr^  l"-      ^^*'"*^  *"  *'>^ 
rates  agreed  upon  by  the  comjal  ri^rCnr  V""* 
of  which  the  public  has  no  HiiLf       TV,    ^  estrtblishment 

"L'r'.  'h""""-  "■»"*  '5::  .S-:  rrs:- 

state  commerce  is  a  riaht  wh^^!^i  "^!"^  ""  '"*«••- 

which  it  cannot  be  de^L  ex  ept  bv"!!:  f  *''  """''='  "' 

even,  contract  or  comLadon  ttC^hermiblT""'  ""' 
tions  which  tends  fn  rnn.^,,^  *i.     '     .  "  ^"®^^  public  corpora- 

from  the  inS:j:rz^^^^:::]<-ff  r  "-^ *''«•» 

public  of  this  right,  ofTecSt^^'^rd'^  tTSJiL  TJt'^t? 
commerce  to  burdens  which  ar* -a  repaint  fi.  ^*"** 
imical  to  the  public  welfare,  is  IL^  to  "  .bHc T.i'  ''  '"^ 
m  contravention  of  both  th^  langual^and  Sf  o'i  l^'  "l'*^ 
trust  act  of  July  2, 1890.  ^       *^^  *''*  ""*'■ 


1280]  UNITED  STATES  v.  PATTERSON  ET  AL.. 

(Circuit  Oonrt.  D.  Massachnsett*.    Jnne  1,  1893.) 

159  Fed.,  280.] 

canoot  be  reached^  <i^^^^:^2"T  '°  »"  ">«llctment 
"luned  that  a  special  demn^Twrn  aay  character;  bnt,  if  it  be  a- 
language  object  to,  aTnTr^"  ~  '  "  ""?*  '^"'*  "'"  *'"'  ^P^^'Oc 
through  the  indictment  for  wh^taHTT  ""''  *'"'  ~"«  *»  "^^ 


UNITED   STATES   V,  PATTERSON. 
Opinion  of  the  Court. 


245 


2,   1890. — ^An  Indictment  for 

commerce  in  cash  registers  no-T?*  ^"'^  *°  monopolize  interstate 

ents  by  defendants,  or  aler  tS^th;   ""'"'""  ""*  "'^''^^'''P  »f  Pat^ 
on  is  a  lawful  one.  '"^  commerce  proposed  to  be  carried 

oAME — ^AvebMENTS  - It  Ic 

tions  supposed  to  constiti"te"^^,7J"  "^^  °"*  '"  ^"^^^  ^'^  <>Pe™- 

U  is^ufflcient  to  „.  thetn'^^rofTerare  ^"  '"  '"'^  -^'-' 
OAME.— It  is  unnecessary  to  allp^  fi,«      •  ,  '^"^^®- 
defendants  conspire  to  monSi^  r'.'.""*  "'  ^  <^'°"«'<=«  '^"ich 
Buish  between  strangling  a^^^!!'"^  the  statute  does  not  dlstln- 

venting  the  birth  of  ^a  ^mmerrXh  f"  "'"  ''^"  '^"''  ""<'  P«- 
SAUE._The  Indictment  n^ZTI  ^'^  °°'  ^'^'^t- 
^Piracy  was  to  grasp  T ^1:^:  ^^f  ''^"^^  of  the  co.. 
defendants,  or  that  defendantsTere  Vt™  •"'"'^  °'  ""«  <"  «>« 
for  whose  benefit  they  eonspir^  „r  ^w  '"  ***"*"  "^  ""«  P«rty 
such  party.  ^  conspired,  oi  what  were  their  relations  to 

At  Law.    Indictment  of  John  H  P«tt» 
conspiracy  to  monopolize  intersta^  fn  "  '"''  ""'^"^  *«>• 

tei.,  in  violation  of  L  act  of Tufy ^TsT"  "  "^'  "^^■ 

mku  Root  and  ^.  Z>.  Allen,  for  the  United  States. 

B.  W.  Chaplin,  for  defendants. 

Putnam,  Circuit  Judge. 

is^du^gTeS J  cisS--  r-^  -' 

quashed,  and  the  defendanT  '"'*'""''^'  ""*'  *•»«  ^"^ts 
demurt^'rs  to  the  cott  Tust  Jn"^  ^''"i  'T'  *"  «'«  ^P^'i"! 
so-called  special  [281 1^!*^ '  ""**'  *'*'•«''  7,  1893,  a 
allowed  theS  '^^J  /^'»""«'-  ^"s  filed,  within  the  time 

court,  and  ZrTdurinJtrsa  "?'*  V""'  ""«"*'-  »'  *" 
In  the  opinion  han^fi^  same  term.  May  6. 1893. 

occurred  T         ^""'^'^  ^'''''  ^'^'^<^^  28th,  the  following 

-r  ™- -  ^^^^^^^^  the  aii^ 

Again; 

be"en^o*ss*^«  ""m^SSf  a^^riS?  "^  -""^^  *•"«  -arket  was  t» 
-  remaining  counts%-L7ro"''r  pCti^TpteS 


246 


1 1 


59  FEDEBAL  REPORTER,  281. 
Opinion  of  the  Court. 


p  1^^ 


U^l  ^rs'^Sn^'f^'T"'*!  *°  «"'«  <'««e  made  In  V.  8.  y.  Waddell. 
hi  inlnfliJ^f  K  P'.P*-  ^-  ^™®  "'  '•"«  allegations  In  each  count  mav 
t>e  insuffldent,  but  these  are  only  surplusage."  ^ 

Notwithstanding  this  surplusage,  there  was  sufficient  in 
each  of  the  four  counts  which  the  court  sustained  to  render 
them  vahd;  and  the  surplusage  is  largely  of  such  a  charac- 
ter that  It  IS  entirely  disconnected  from  the  essential  allega- 
tions, and  may  be  disregarded  at  the  trial.    The  pleadin*^ 
however,  are  very  voluminous,  and  there  may  be  difficulty  in 
siftuig  out  the  insufficient  allegations,  especially  those  touch- 
ing the    means  "  referred  to,  from  those  which  are  sufficient, 
and  in  determining  what  is  thus  to  be  regarded  as  surplus- 
age; and,  as  to  this,  thei-e  may  prove  to  be  at  the  trial  differ- 
ences of  opinion  between  the  counsel  for  the  United  States, 
the  counsel  for  defendants,  and  the  court.     As  the  indict- 
ment runs  against  many  parties,  scattered  through  several 
states,  at  remote  distances  from  each  other  and  from  the 
place  of  trial,  and  as  its  subject-matter  is  complex,  and  in- 
volves a  great  number  of  transactions,  it  appeared  to  the 
court  that  the  trial,  at  the  best,  would  be  burdensome  and  ex- 
pensive, both  for  the  United  States  and  the  accused,  and  that 
on  this  account  it  was  important  to  minimize  this  by  settling 
in  advance,  if  it  could  be  done,  what  should  be  held  to  be  sur- 
plusage.   The  court  was  well  aware  that  what  are  ordinarily 
spoken   of  as  special  demurrers  find   their  origin   in  the 
statutes  27  Eliz.  and  4  &  5  Anne,  and  have  been  held  to  be 
limited  to  proceedings  in  the  nature  of  civil  suits;  but  it  had 
in  thought  that,  independently  of  these  special  demurrers  by 
statute,  there  was  at  common  law  a  special  demurrer  lyini 
against  surplusage,  which  reached  also  indictments  and  crim- 
inal informations.    Such  the  court  understands  to  be  the 
statement  of  the  law  in  Chit.  PI.  (7th  Eng.  Ed.)  253     The 
«)urt  had  no  intention  that  the  questions  which  had  been 
Mly  raised  and  carefully  argued  under  the  general  demurrer 
should  again  be  brought  to  its  attention,  and  no  other  inten- 
tion than  that  of  assisting  in  simplifying  the  course  of  the 
tnal  as  above  explained.    The  court  is,  however,  now  forced 
to  the  conclusion  that  surplusage  in  indictments  cannot  be 
reached  by  demurrer  of  any  character.    Such  is  positively  laid 
down  as  the  law  in  Steph.  PI.  (3d  Amer.  Ed.)  365;  Heard 


I 


UNITED  STATES   V,  PATTERSON. 


247 


Opinion  of  the  Court 

Crim.  PL  140,  271 ;   and  is  also  stated  by  Lord  Cranworth 
in  Mulcahy  v.  Reg.,  L.  E.  3  H.  L.  306,  329.    If,  however, 
the  law  is  otherwise,  and  surplusage  and  irrelevant  matter  in 
indictments  may  be  [282]  made  the  subject  of  a  special  or 
limited  demurrer,  what  has  been  filed  by  the  defendants  in 
this  case,  under  leave  granted  February  28th,  would  be  suffi- 
cient, because  it  is  expressed  in  general  terms,  and  requires 
the  counsel  for  the  United  States  and  the  court  to  search 
through  the  indictment  for  what  is  claimed  to  be  demurrable, 
when,  by  all  the  rules  of  pleading,  it  ought  to  set  out  the 
specific  language  objected  to,  and  ask  the  ruling  of  the  court 
on  that  alone.    The  reason  touching  this  proposition  stated 
m  Story,  Eq.  PI.  §  457,  applies  everywhere.     Clearly  is  this 
so  in  this  case,  because  this  so-called  special  demurrer  is 
expressly  to  the  entire  4th,  9th,  14th,  and  18th  counts. 

It  seemed  to  the  court  that  there  must  be  some  way  by 
which,  as  a  matter  of  right,  parties  brought  in  on  a  complex 
and  voluminous  indictment  may  have  settled  in  advance  of 
the  trial  what  portions  of  it,  if  any,  are  surplusage.     It  has 
been  frequently  said— certainly  with  reference  to  civil  pro- 
ceedings—that surplusage  might  be  rejected  on  summary  mo- 
tion, and  the  pleadings  left  to  stand  as  though  it  had  been 
struck  out  or  never  inserted.     Gould,  PL  (4th  Ed.  c.  3,  §  170  • 
Chit.  PL  (7th  Eng.  Ed.)  252;  and  many  other  authorities! 
It  has  also  been  understood  that  in  criminal  cases  it  might 
be  disposed  of  to  a  certain  extent  by  a  nolle  prosequi,  and 
that  this  would  apply  to  a  separable  part  of  anv  one  count, 
as  well  as  to  the  whole  of  a  count,  or  to  an  entire  indictment 
Bish.  Crim.  Proc.   (3d  Ed.)   §  1391.    The  general  expres- 
sions, however,  of  the  opinion  in  Ex  parte  Bain,  121  U.  S. 
1,  7  Sup.  Ct.  781,  are  sufficient  to  cause  this  court  to  proceed 
no   further  with  these  suggestions,  unless  the   subject  of 
them  IS  formally  brought  to  its  attention  and  counsel  are 
duly  heard. 

On  the  whole,  therefore,  the  court  is  compelled  to  conclude 
that  the  permission  which  it  gave  to  defendants  to  file  a 
special  demurrer  was  perhaps  inadvertent,  and  certainly  has 
proved  ineffectual  for  the  purposes  which  the  court  had  in 
mmd.  The  counsel  for  the  defendants,  however,  have  availed 
themselves  of  this  permission  to  reargue  several  of  the  propo- 


"^B* 


^  FEDEKAL  BEPOBTEB,  282. 
Opinion  of  the  CJourt 

9R*K.      ""'  nonced  m  its  opinion  passed  down  FebruarJ 
28th,.  and  they  also  present  at  least  one  additional  pn,ZT 

a^oreSx  ?;ra  fsrir^^r^;  r  -■"«  *>^ 

«he  court  touching  eveA  au-Sl^T  k"  ''*  "*''  ^'"'^^  "^ 
wou^d  have  resnuiiraropE^::  L'Xrj--^^ 

Acuicuj  uv  appeal.     Iherefore  the  court  toiir>Ko/i  ;«  ;*        • 

The  claim  that  the  indictment  should  negative  fh»  «w„ 
slup  of  patents  by  the  defendants,  and  aKt  out  thTl" 
wmmerce  carried  on,  or  proposed  to  be  Lried  on   bv  It 
National  Cash-Begister  [283]  Company,  wis  a  kwfufot' 
and  perhaps  some  other  mattpp«  «f  Vt.  7    u        .  "*' 

on  the  hypothesis  Zti^  !n      J  that  character,  proceeds 
every  inte^  ^.,11  I    ^*'""'  ^""'"^  ^  ^^^ain  to 

hhJ    A^sSa™  mliiSoTfr  ""'^  ''^  ^'^"^  '"  «»'»^- 
by  the  proseZr  **'  •'''''"^'  "***  *«  ^  «"««P«ted 

anrilw^!,.*^**  *^*^  "*""*«  '"ft  '*  fo"-  the  prosecutor 

cause,  so  far  as  this  fpafi.K.  «*  *k    •  j-  .  "'"™'^»™aoJe,  be- 
if  ;.    1      .         Jr.     ^^™'*  of  the  indictment  is  concernpH 
t  IS  clearly  sufficient,  according  to  numerous  dSonT^f 
Ae  supreme  court,  which  need  not  be  cited,  to  ShT  aS 
g«age  of  the  statute.    The  suggestion  of  the  co^   in  ^1 
opinion  passed  down  February  28th  th«t  thl  T*  /  ^ 
«.e  of  a  class  where  it  is  suicTent  to  d^rfr^wor^J 

of  knowledge,  on  the  part  of  the  a^::d:rtll£^^ 


'l^piw 


\ 


r 


4- 


UNTTED   STATES   V.  PATTERSON.  249 

Opinion  of  the  Ck)urt. 

say  that  those  counts  which  do  allege  the  existence  of  such 
commerce  also  allege  positively  knowledge  on  thT  part  S 
the  defendants ;  and  those  which  do  not  aUege  such  eSn^ 
are  sufficient,  because  neither  the  letter  of  the  statate  Z 

fh-^.Ttj'"^^'^^^  '"*^--  strangling  a  tommer" 
which  has  been  bom  and  preventing  the  birth  of  a  coZZ 

Much  'oi  whf  ""*•!?  r  *'^  ^''"^«S«  "*  *•»«  «***"" 
Much  of  what  IS  said  by  the  defendants  about  judicial 

faiowledge  touching  cash  registers  and  patents  has  no  appS 

sTd^'f^hrorr'^ir"^"'"^'  '^^^-'^y  -  ^^^  ^rfSai 

uprthU  '  ■  ''"'  *'^  *=""•*  "•"  "''^  ^-'^^  «-  to  -large 

or^JefrSTh""  'ly    T  ''"""*  ^"^^^  «°  ^''tent  to  injure 
relates^o  LtL^"^     .'^^  '"'''"^  '^'  P"*=«'  «'  otherwise, 

this  at  bar       r.       "*  '"  '"*'^'y  '^^ff^^^-'t  character  from 
tnis  at  bar,  and  to  conspiracies  which  are  iUe^l  i„  thTr. 

essence,  without  reference  to  the  means  ^ontT 

plish  their  purposes.  "P*^*^  ^o  accom- 

As  to  the  proposition   that  the   National  Cash-Re«rister 
Company  is  not  alleged  to  have  been  a  nartv  k?  ,7^'='^'*'^ 

phy  of  pleading  conspiracies  requii^  that  it  should  a pX 

ttMsTCeTttl^^'  "^TT^-^  -  ^-p  ^^ 

fendants  wereTtelld  rSaw'/te'  "/'?  *^'*- 
benefit  they  combined  tn  L         v  P*'^^  ^^r  whose 

indeed,  w/atTet tllrX  To  S""'  T  ^r'  "^' 
the  statute  should  finally  beheld  to  hlr-f//"*^-  ^^'"  '* 
to  engross,  monopolize,tt;  p  il^^^^^^^  '"  ^'"'Wnations 
r2«n  «^^u-     X-         '      fe^^^P  J^  Dehalf  of  some  partv  to  th** 

of  lalTwT-""'  ^'*  ^"^^'^  ^^•"'^^^  *"«  well-LSn  rile 
ot  law  that  it  is  unnecessary  to  indir-f  all  fk«  • 

volved  in  a  conspiracy     o/J  .V         *®  P^'^^ns  in- 

conspiracy.    Of  course,  the  court  would  have 


■A 


250 


60  FEDERAL  BEPORTER,  30«. 


Syllabus. 

SeJrtwt'  '"  "^"''"^  '^^  **J^«°  «  it  l'»<J  been 
alleged  that  the  corporation  named  was  a  party  to  the  con- 

spiracy,  or  if  the  relations  of  the  accused  to  it,  or  sTme 

other  matter  of  a  kindred  character,  had  been  set  out.    K 

may  be  that,  when  the  proofs  are  developed  at  the  trial 

Sn"fTr/'*f '^  "'"  »""'  -h'<=l»  "-<*  not  now  bi 
antic  pated;  but,  on  the  whole,  the  court  concluded  that  this 
objection  was  not  well  taken. 

edlv  rid  It^t  t^r  *^«*«°^«nts'  exceptions  may  be  undoubt- 
edly saved  at  this  term,  the  general  demurrer  having  been 

o^  tZZr^  fif-^  t  T""  ^Pe«fi««"y  the  points  taken 
mS    r  Zh       '    '"  .«"^^«°  ^'th  the    motion    filed 

^ittL\rLiin^s;rr '^"- "  '^'"^^"^'  -^  *^^  ^•-'^ 

Fet^I^l8*'TR.t*'"*'"f  .*"  ^'  'P^'^^"'  '^^'""-er  granted 
February  28,  1893,  annulled  as  inadvertent.    Petition  of  de 

fendants  for  rehearing  on  general  demurrer  granted     Order 

«  ^n^27-f  '         '  """""ed.    Matters  set  out  in  the  so-called 

special  demurrer"  are,  by  leave  of  court,  assigned  as  ad 

ditiona    causes  for  demurrer  under  the  g^neraf demumr' 

.?rtuT*%''''"""^^  ""^  *°^  '""^  U"'ted  Stat^TZd' 
Zrl*         ^^  ^""""*"  *"  *=«"°ts  4,  9,  14,  and  18.    De 

ZrT«     "^fu"'  ''^  *°^  •^''""ts;   defendants  to  answer 
over,  as  provided  by  statute. 


[306]  UNITED  STATES  v.  E.  C.  KNIGHT  CO.  ET  AL.- 

(Circuit  Court,  E.  D.  Pennsylvania.    Januaiy  30. 1804.) 

[00  Fed.,  306.] 
''T^'^L^"^'^^"^   COMMEBC.-SUOAE   TEUST.-Act   COUg    July 

2  1^,  declares  "everr  contract,  combination  In  the  form  of  a  tra^ 


" 


UNITED  STATES  V.  E.  C.  KNIGHT   CO.  251 

Opinion  of  tlie  Court 

Il'SlrCer  trcTr/'r  """'  ^*''*-'  -  -""  'o-'«n  na- 
Violations  o  he  act  flrthT*'  """  ^"'^'^Uo"  *«  rSrata 
to  enable  a  .ingte  o^Lf,!,  J  *""  ^  fon^binatlon  whose  object  is 

of  refining  an7^iZs„I  *  hT"'^'"'  ""''  «"''™'  «»«  "uslness 
m  the  United  sTa^^  ^^i  in  !"'i'?  ""  ""  '^""^""S  """^^''^ 
constitntes  no  restriction  noon  „r  °,'"  *"''  ^'"'"'^^    '"^  '* 

the  states,  but,  at  most  "r'.  .  '"?°'~'^  '*''  <*""°«^<*  "^tween 
of.e^.mbI^^^^^ 

Z^An  6^.  Johmon  and  ^.  ^.  .Vc.V«r^W.,  for  defendants. 
BuTLEB,  District  Judge. 

The  bill  charges,  in  substance,  as  follows- 

pany,''FrSfin's?rS  ^''t^'^'  ^"^^^  Refining  Co„,. 

Sugl;  HoJi  we"e  Inf  "'"^  ^r^'^^  ''"'^  the  Delaware 
6  1  nouse,  T\ere,  until  on  or  about  Marrb  d   laoo   •  j 

pendently  engaged  in  the  manufacture  and  A     f'  f^^ 

were  engaged  in  trade  with  the  several  stJtU^      ?1  i'^^ 
eign  nations     That  tv.     a        ■    -e^eral  states  and  with  for- 

the  sugar  refineri  s  fn  the  Uni'teS  S      '"^.T"^  ''  ^" 

of  the  Revere,  of  Boston.  anS   he  fefinerieT  f  t  "df"° 
defendants.     That  thp  R^„„  renneries  ot  the  said  four 

per  cent..,  and  the  sS  fZl  f??'^  ''"""^"y  ''^out  2 
of  the  total  amoun  of  sZr  fi  !"*'  ""^"*  ''  P^""  "^ent. 
That  in  orderZt  thp  aT  ""^  o  **  "*  the  United  States, 
might  obtain  eXltet^™  f"^'"  ^Aning  Company 
of  refined  sugar  in  the  TTnT^  L  .  ^  P'^^^tion  and  price 
Jr.,  acting  f^i  enL^Sil  "'  f ''"/  ''"''"  ^^  ^e-les, 
scheme  to1>urchal  th^  tk  I'ofTb  """i  /" '  ^'"'^"'-t 

?ittN:frsSf^r--=-^^^^^^^^ 

trade  the^  amonr I  ^l^^^^^ ^^^^^ 

°  Syl'-bus  copyrighted,  1894,  by  West^^blisil^T^ 


li 


I 


252 


I  I 


If 


II 


n 


H 


60  FEDERAL  BEPOBTEB,  306. 


Opinion  of  tlie  Court, 
of  this  scheme,  on  or  about  March  4.  1892    Tohn  T?   «      i 
Jr.,  entered  into  a  contract  with  thelfendant  Knthf  P      ' 
pany  and  individual  stockholders  named  fori      ^u  ^""l 
all  the  stock  of  thp  caiH  .„  .  '^®  purchase  of 

to  the  sa^  def^^nZts   re2n"^Vh"'T""^ 
American  Sugar  ReSlg  ComtT     TW  "^  '"""'I  '''  *^^ 

same  [307]  time  the  said^SeaXZtere^Ltr  "'  "m°"*  '^' 
tract  with  the    Sn«.^lr»u  V^  e^ered  mto  a  similar  con- 

holders  and  mldfnSrSnrcTwUh'tJrf '';:?'  ^^•'^''■ 
P-ny  and  stockholders  and  wTh  thl  d11«  ^™"'^''"  ^o™- 
and  stockholders.  Delaware  Sugar  House 

CanT^^oX^rra^ufatSr^^ 

^gar  in  the  UiSted  StaSiTm^s  1  "  '  "*."'"**' 

with  the  othef  dettnTs  n^eT^  ^Srld'  ^^T^ ^^"^ 

monopolize  the  ma^f:rt".;  a^^ale  SreTnfd  """"^""^   *** 
the  several  states.  '*®"***  '"««''  '^'n^ng 

The  material  facts  proved  ar«  that  the  American  S.,^r 

rrf  o?Se:ii;td^ifraT  i^  ^-•^^^^^  '-^^ 

and  sell  sugar    tSLpili^e"*"*^  **»  ?""*''"'*'  "'fi"*. 

Knight  Compknv    the  Sn^r  1"^'  ^^"^'y'  *»>«  ^^  «. 
Delaware  S^Cw        ^P"*'^?'^  Sugar  Refinery,  and  the 

orp2;i^.r,  a^ruthrjr:T;rse";r  ^'"7 

S  iX?ad  !T  '""T  ^--Sr^mS  ii"  wl' 

the  Unitefst^      \,       ^'  """""^  "'  «"««'•  i^fined  in 

^eridn  Sn^^'l^    "'"n^  ""^^^  competition  with  the 
^encan  Sugar  Refining  Company  and  with  each  other 
selling  their  product  wherever  demand  wa9  f^»^A  t      -1 
^roughout  the  United  States;   thrpriorte  S^r'h     892 

IS^fn  ^SrdSphiran^ti^frr^T'^^  ^^^ 
in  Boston,  the  lattL  pVodu^'^S^'^^,  "^IZr^lZ 


UNITED  STATES  V.  E.  0.  KNIGHT  CO.  253 

■    Opinion  of  the  Court 

(on  different  dat^SSTTu'"**"^^  ^"*«  ^^n'^acts 

■        Philadelphia  cSptlti'n'nltdf"'?"  "'  ^^^  "^  **>« 
stock,  paying  ttZT^  t^^^^lY^^ }' P^^^^^^^^  their 

that  the  American  Suga^-  SSZ  rf  ""  I*"  '=°'«P»ny.- 
possession  of  the  PhiladelnWrrpT  ^^"7  ^^"'  "^t^'^^d 
that  each  of  the  purchat  w '  "fr"!^.  '"'^  '^'''  ^'''^^'^' 
Sugar  Refining  ComtaTv  „T.tL  '"''J""'  *"  '"^^  ^^ri^^n 

stock  $25,000,(So  tZrthifal  ?^  ""^'^^''^y  *"  "^«r«»^  its 
and  the  i™  m  de  JL  r./"  ^""^"^^  obtained 
concert  of  action  bet«Jn  J?  Tf  ""  understanding  or 
Philadelp,,,  co^pa^ni^r^sXtttS  l^l^J  ff^ 
of  each  company  acted  inde^ndenVof  the;  of  tt  1  **^ 
and  in  ignorance  of  what  was  \»iri  a        u  °^^^^' 

that  the  stockholder.,  J  oil  -^  ''**"^  ^^  ^"ch  others; 
each  otherXn^^LtZt^rri''*^^  »  -^"^^rt  with 
and  prope  ty  ofThe  cILI  ^^S"^  '^"'  ""  '^"  "'"^^ 
tract  of  Win  ea^  insSetThe  5,  "''V  ''^*  ^^^  *=- 
other  refineries  and  continu!  Z  ^      '"""':'  ^""^  *«  ««tehlish 

fit  to  do  so,  and  IZT^noto:^::'''  '""^  ^'''"^^  ^ 
commerce  in  sugar,  and  that  1  respecting  trade  or 

this  subject  hJl>^nJ^^Z:e"Tr"'''r'^'''''^'^ 
the  Delaware  Sugar  House  liSy  ISmlT  ?'  P"^'"^"*' 
in  conjunction  with  the  SprecketS!'  ^"^  '^P^'"**"** 
Knight  Refinery  in  connSt  h^f  S„Sn  'JT-  ^^  ""• 
bmation  being  made  apparently  for  reaso^s!!^'  *^"- 

conducting  the  business-   th,t  fu        "^^sons  of  economy  in 

in  Philadflphia  has  S  i«'  sm*  **'  ^T^  "^"^'^ 
the  price  has  been  slio'htlv  o^  T^  ^^^  purchases;  that 

still  lower  tharJ^had  £  fnr''*^  ''"'"  '^'''  ^^«°*'  ^ut  is 
within  a  few  month  'of^h"  "thr^vl^T'""'  '""^  "P  *« 
the  sugar  refined  and  sdd  n  Th.  n  f^"e  ^^  P"'"  <*"*•  »* 
in  other  refineries  thSn,  ^'"*^**  ^^"^  is  refined 

Sugar  RefinTnrilanv  Thr*"""""*'^  '""^  ^-i<=an 
produced  in  I^uSHnd  sot  ""T  "'''*^"°"'''  ^"S*'  is 
but  the  amount  is  nrLrin^Xrint-^f  ^-  Europe. 

Ihe  object  m  purchasine  the  Phiio^  i  u-        „ 
to  obtain  a  greater  inflner.!^  *      Philadelphia  refineries  was 


I   I 


1 1 


! 


\     I 


254 


60  FEDERAL  REPOETEB,   308. 
Opinion  of  the  Court. 


Are  the  defendants'  acts,  as  above  shown,  prohibited  by 
the  statute  of  18<J0,  relating  to  trade  and  commerce?  The 
provisions  involved  are  as  follows : 

"Section  1.  Every  contract,  combination  in  the  form  of  trust  or 
otlien\'is€,  or  conspiniey,  in  restraint  of  trade  or  commerce  among  the 
several  states,  or  with  foreign  nations,  is  hereby  declared  to  be  illegal. 
Every  person  who  shall  make  any  such  contract  or  engage  in  any  such 
combination  or  conspiracy,  shall  be  deemed  guilty  of  a  misdemeanor, 
and,  on  conviction  thereof,  shall  be  punished  by  a  fine  not  exceeding 
five  thousand  dollars,  or  by  imprisonment  not  exceeding  one  year,  or 
by  both  said  punishments,  in  the  discretion  of  the  court. 

**  Sec.  2.  Everj'  person  who  shall  monopolize,  or  attempt  to  monopo- 
lize, or  combine  or  conspire  with  any  other  person  or  persons,  to  mo- 
nopolize any  part  of  the  trade  or  commerce  among  the  several  states, 
or  with  foreign  nations,  shall  be  deemed  guilty  of  a  misdemeanor, 
and  on  conviction  thereof,  shall  be  punished  by  fine  not  exceeding  five 
thousand  dollars,  or,  by  imprisonment  not  exceeding  one  year,  or  by 
both  said  punishments,  in  the  discretion  of  the  court. 

"  Sec.  4.  The  several  circuit  courts  of  the  United  States  are  hereby 
invested  with  jurisdiction  to  prevent  and  restrain  violation  of  this  act; 
and  It  shall  be  the  duty  of  the  several  district  attorneys  of  the  United 
States,  in  their  resi)ective  districts,  under  the  direction  of  the  attorney 
general,  to  institute  proceedings  in  equity  to  prevent  and  restrain  such 
violations.  Such  proceedings  nmy  be  by  way  of  petition  setting  forth 
the  caFe  and  praying  that  such  violations  shall  be  enjoined  or  other- 
wise prohibited.  When  the  parties  complained  of  shall  have  been  du^ 
notified  of  such  i)et!tion  the  court  shall  proceed,  as  soon  as  may  l)e, 
to  the  hearing  and  determination  of  the  case;  and  pending  such  peti- 
tion and  before  final  decree,  the  court  may  at  any  time  make  such  tem- 
porai-y  restraining  order  or  prohibition  as  shall  be  deemed  just  in  the 
premises." 

The  principal  questions  raised  are: 

First,  do  the  facts  show  a  contract,  combination  or  con- 
spiracy to  restrain  trade  or  commerce,  or  a  monopoly  within 
the  legal  signification  of  these  terms  ? 

Second,  do  they  show  such  contract,  combination  or  con- 
spiracy to  restrain  or  monopolize  trade  or  commerce  "  among 
the  several  states  or  with  foreign  nations?  " 

Third,  can  the  relief  sought  be  had  in  this  proceeding? 

In  the  view  I  entertain  the  first  and  third  need  not  be  con- 
sidered. The  second  must  receive  a  negative  answer,  and  this 
will  dispose  of  the  controversy. 

[309]  The  federal  government  possesses  no  jurisdiction 
over  the  contracts,  business  or  property  of  individuals  within 
the  states — except  to  collect  revenue  for  its  support.  lis 
powers  are  derived  exclusively  from  the  constitution.  It 
has  none  other  than  such  as  are  directly  or  impliedly  con- 
ferred by  that  instrument;   and  the  latter  contains  no  sug- 


i 


UNITED   STATES  V,  E.  C.  KNIGHT   CO. 
Opinion  of  the  Court. 


255 


gestion   of   authority   to   intermeddle   with   such    property 
rights.     By  the  eighth  section  of  article  first,  congress  is  em- 
powered "to  regulate  commerce  with  foreign  nations  and 
among  the  several  states,  and  with  the  Indian  tribes."     In 
pursuance  of  this  power  the  statute  of  1890  was  enacted; 
and  as  the  terms  employed  show,  congress  was  duly  careful 
to  keep  within  the  limits  of  its  authority.     It  is  "  trade  and 
commerce  among  the  several  states  and  with  foreign  nations  " 
that  the  statutes  seek  to  guard  against  restraint  or  monopoly. 
The  contracts  and  acts  of  the  defendants  relate  exclusively 
to  the  acquisition  of  sugar  refineries  and  the  business  of 
sugar  refining,  in  Pennsylvania.     They  have  no  reference 
and  bear  no  relation  to  commerce  between  the  states  or  with 
foreign  nations.     Granting  therefore  that  a  monopoly  exists 
in  the  ownership  of  such  refineries  and  business,  (with  which 
the  laws  and  courts  of  the  state  may  deal,)  it  does  not  con- 
stitute a  restriction  or  monopoly  of  interstate  or  international 
commerce.    The  latter  is  untouched,  unrestrained  and  open 
to  all  who  choose  to  engage  in  it.    The  plaintiff  contends, 
however,  that  such  monopoly  in  refineries  and  refining  in- 
cidentally secures  a  monopoly  of  commerce  among  the  states. 
This  position,  however,  is  unsound ;    the  deduction  is  un- 
warranted.     The  alleged  control  of  refining  does  not  of  itself 
secure  such  commercial  monopoly ;  and  at  present  none  exists. 
The  most  that  can  be  said  is  that  it  tends  to  such  a  result ; 
that  it  might  possibly  enable  the  defendants  to  secure  it', 
should  they  desire  to  do  so.    Whether  it  would  or  not  de- 
pends on  their  ability  with  this  advantage  to  control  such 
commerce.    They  have  not  tested  this  ability  by  attempting 
to  control  it,  nor  shown  a  disposition  to  do  so.    They  sell 
their  product,  and  purchasers  may  use  it  in  such  commerce, 
or  otherwise  as  they  choose.    At  present  the  defendants 
neither  have,  nor  have  attempted  to  secure,  such  commercial 
monopoly.    As  before  stated,  if  they  have  a  monopoly  it  is 
in  refineries  and  refining,  alone^-over  which  the  plaintiff 
has  no  jurisdiction.    If  they  should  retire  from  business, 
close  their  refineries  or  devote  them  to  other  purposes   the 
plaintiff  could  not  object.    This  might  and  doubtless  would 
indirectly  produce  some  disturbance  of  or  interference  with 
such  commerce,  but  it  would  not  bring  the  defendants  or  their 


li 


11 


256 


60  FEDERAL  REPORTER,  309. 


Opinion  of  the  Court. 

property   within   the   jurisdiction   of   congress.    Numerous 
instances  might  be  cited,  where  contracts,  business  arrange- 
ments and  combinations  indirectly  affect  interstate  and  inter- 
national commerce  without  bringing  the  parties  to  them  or 
their  property  within  this  jurisdiction.    It  is  the  stream  of 
commerce  flowing  across  the  states,  and  between  them  and 
foreign   nations,   that   congress  is   authorized   to   regulate. 
To  prevent  direct  interference  with  or  disturbance  of  this 
flow  alone,  was  the  power  granted  to  the  federal  govern- 
ment.    Congress  has  therefore  no  authority  over  articles  of 
merchandise  or  their  owners,  or  contracts  or  combi-  |310] 
nations  respecting  them,  which  have  not  entered  into  this 
stream,  or  having  entered,  have  passed  out.     It  may  prohibit 
and  punish  all  acts  which  are  intended  and  directed  to  re- 
strain or  otherwise  interfere  with  or  disturb  such  commerce, 
but  it  can  go  no  further.    To  extend  its  authority  to  business 
transactions  which  have  no  direct  relation  to  this  commerce, 
but  which  may  incidentally  affect  it,  and  to  ownership  and 
rights  in  property  not  involved  in  such  commerce,  because 
it  may  possibly  become  so  involved,  w^ould  be  unwarranted 
by  the  terms  of  the  constitutional  provision,  or  the  statute.— 
would  draw^  within  the  jurisdiction  of  congress  most  of  the 
business  transactions  and  property  of  individuals  within  the 
states,  and -would  oust  the  jurisdiction  of  the  states  accord- 
ingly.   A  large  proportion  of  the  contracts  which  men  enter 
into,  and  of  the  changes  which  they  make  in  their  business 
and  business  relations,  may  and  probably  do  affect  such  com- 
merce.   The  diminution  or  increase  of  production  in  agri- 
culture or  manufactures,  changes  from  one  branch  of  busi- 
ness or  trade  to  another,  all  incidentally  tend  to  this  result. 
State  legislation  prohibiting  or  restraining  the  manufacture 
or  sale  of  certain  articles  of  merchandise,  or  increasing  their 
cost  by  exacting  license  fees,  have  the  same  indirect  tenden(!y. 
Such  legislative  restraint  of  the  manufacture  or  sale  of 
poisons  and  alcoholic  liquors,  and  even  the  increase  in  the 
cost  or  price  of  property  by  taxation,  could  only  be  sustained 
by  favor  of  the  federal  government,  in  a  different  view  of 
its  power. 

The  discussion  need  not  be  extended;  the  question  is  not 
new.    It  was  fully  considered  in  a  case  which  arose  under  the 


t 


JABMBBS' L.  4  T.  CO.  t;.  KOETHEEN  PAC.  B.  B.  CO.       257 

Statement  of  the  case. 

statute— /w  re  Greeiie.  52  Fed    104 »T,ri   tk„       •  • 

Jarlrwm    T     /„„       i!  ii  ^"4— and  the  opinion  of 

Jackson  J.,  (now  of  the  supreme  court,)  is  so  clear  anrl 
sa  isfactory  that  I  am  restrained  from  quoting  wha  ISe  iv« 
onty  by  the  desire  to  be  brief.  F.«.^  v'j/^  T*  How  S^ 
674;  Coe  v.  Errol,  116  U.  S.  517  [6  Sup.  Ct  4751  y^f!' 
Pearson,  128  U.S   1  TO  Sun  n  k\  ^t-  *'»J,  iCtdd  v. 

The  cases  of  Tl  ?  ,  >>  ?'  ^*-  ^^'-are  to  the  same  eifect. 
Ing  sT  J^d  £  ^- ^r^'*^^.  50  Fed.  469,  and  /„  ..  Com- 
Xk  v^w'ra  LI'  '  *»»«  plaintiff,  are  in  affirmance 
bination  Zk  ^^^Z^^^^^^^:!^ 
ments  under  consideration  there.    It  wa^h  ^howetrlhai 

interstate  or  international  commerce  being  charged     Thl 

Dueler  Watch  Case  Manufa  Co   -^r   P    n  ,\,r  ' 

Clock  Co.,  55  Fed.  851,  £/ by  the  ^i.^mt      "'1''' 
was  not  considered  or  raised.  P'^'nt'^'  this  question 

(cZ^k^'  i.'^r'T  ^"^'''"  ^'fi'^^ff  Co.,  7  Rey  &  Corp 
354  [7  NY  Su.^'  4(Si  '  ^  ••®"PP-  ^^^^  '  "-  «*  «"». 

The  bill  must  be  dismissed  with  costs. 

[8031  FARMEES'^DOA^Ttk^^sT  CO.  v.  NORTHERN 

PAC.  R.  CO.  ET  AL. 

(Circuit  Court.  E.  D.  Wisconsin.    April  6.  1894.) 

[60  Fed.  803.] 

This  case  was  not  based  upon  the  anti  t-.c*  i 
a  petition  by  Thomas  F.  Oaki  and  Si  '    ^*  '^''^ 

property  of  the  Northern  SSc  £ilroaIi;"'"rK  "'  '""^ 
against  that  company  by  the  Ftrnt^^^^llVJ^l^^^'^* 
pany  st^g  that  their  employees  con^lat^d  IZtS'Z 

11808 — VOL  1 — 06  If 17 


258 


60  FEDEBAL  REPORTER,  934. 
Statement  of  the  Case. 


the  purpose  of  preventing  a  reduction  of  wages,  and  praying 
that  they  be  enjoined  therefrom.  The  only  portion  of  the 
decision  relating  to  the  anti-trust  law  is  found  on  page  823 
of  the  opinion,  and  is  as  follows : 

«„r.?^  ?^  of  Congress  of  July  2,  1890  (26  Stat  c  647),  every  combl- 
*^^^tn  """f^^i  <>^  commerc-e  among:  the  several  states  is TleH^vd 
to  be  UlegaJ,  Under  this  act  It  was  held  by  Judge  Speer  In  Water- 
honse  V.  Comer.  55  Fed.  149.  that  a  strike,  if  it  ev^waSctive  c^ 
mnZJl'*,  ^Tk^"*'  and  this  view  seems  to  have  been  held  by  Judge 

Ss  V^'  ^'  I  ^  *.^  ^}^^  ?*^°**'  ^^^^^  Putman.  In  U.  8.  v.  Patterson, 
55  Fed.  605  Is  inclined  to  the  view  that  the  statute  has  no  i-elation  to 
labor  organizations.  I  do  not  find  it  needful  to  enter  into  this  field 
of  discussion,  or  to  express  an  opinion  uiK)n  the  subject,  belne  content 
to  rest  my  conclusion  upon  the  grounds  discussed." 


[934]  UNITED  STATES  v.  E.  C.  KNIGHT  CO.  ET  AL.« 

(nnuit  Court  of  Appeals,  Third  Circuit.     March  26,  1894.) 

ICO  Fed.,  934.1 

Monopolies— Contracts  in  Uestraint  of  Inierstate  Commerce.— 
The  purchase  of  stock  of  sugar  refineries  for  the  purpose  of  ac- 
quiring control  of  the  business  of  refining  and  selling  sugar  in  the 
United  States  does  not  involve  monopoly,  or  restraint  of  interstate 
or  foreign  commerce,  within  the  meaning  of  the  act  of  July  2, 1890,^ 

Api>eal  from  the  Circuit  Court  of  the  United  States  for 
the  Eastern  District  of  Pennsylvania. 

This  was  a  bill  in  equity  filed  by  the  .United  States 
against  the  E.  C.  Knight  Company,  the  Spreckels  Sugar  Re- 
fining Company,  the  Franklin  Sugar  Refining  Company,  the 
Delaware  Sugar  House,  the  American  Sugar  Refining  Com- 
pany, and  numerous  individuals,  to  have  canceled  and  de- 
clared void  certain  contracts  made  by  the  American  Sugar 
Refining  Company  with  the  other  defendants,  as  being  the 
r^ult  of  a  combination  or  conspiracy  to  monopolize  or  re- 
strain interstate  and  foreign  commerce.  There  was  a  de- 
cree for  defendants  in  the  court  below,  and  complainant 
appeals. 


•  BiU  dismissed  by  the  Circuit  Court.  Eastern  District  of  Penn.syl. 
▼tula  (60  Fed.,  306).  See  p.  250.  Decree  affirmed  by  the  Supreme 
Court  of  the  United  States  (156  U.  8..  1).    See  p.  37a 

»  Syllabw  copyrighted.  1894.  by  West  Publishing  Co. 


J. 


UNITED  STATES  V.  B.  0.  KNIGHT  CO.  259 

Opinion  of  the  Court. 
ElleryP,  Ingham  and  Samuel  F.  Phillips  (Robert  RoLs^ 
J^,  Assistant  United  States  Attorney,  on  the  brief),  for 
the  United  States.  ^ 

John  G,  Johnson  {John  E,  Parsons  and  Richard  C  Me- 
Mvrtne,  on  the  brief),  for  appellees. 

iS^z^tzr '"'  ''""^'-  ^'^'^"'^  •^"^^^'  -^  «--• 

t?  * 

Dallas,  Circuit  Judge. 

There  are  three  assignments  upon  this  record.    The  first 
two  aver,  m^  general  terms,  that  the  court  below  erred  in 

reZT^  u"  ''"'  '1  ''""P'^'"*'  '^"'^  '"  -t  granting  th^ 
rehef  thereby  prayed.    The  third,  alone,  specifies  tht  al- 

eged  error  with  particularity,  and  is  in  these  words:  "That 

the  court  erred  m  holding  that  the  facts  in  this  case  do  not 

show  a  contract,  combination,  or  conspiracy  to  restrain  or 

monopohze  trade  or  com-  [9.35]  merci  among  the  iveral 

states  or  with  foreign  nations."    This  assignmL  corrl^Uv 

•^  tT  K-  ,  «rJ^  ^"''*'''"  ^^'''^  the  case  Evolves.  " 

The  bill  filed  on  behalf  of  the  United  States  is  founded 

«' t  actT      :  r/V""^"^  '^  •^"ly  2,  1890,  endtlS 

An  art  to  protect  trade  and  commerce  against  unlawful 

res  raints  and  monopolies."    Proceedings,  such  as  hare  Wn 

instituted  and  pursued  in  this  instance,  "to  prevent  IndT 

^fourth  section;  and  these  defendants  are  charged  with 
violation  of  its  first  two  sections,  which  are  as  follows: 

v.lse^^'°oS„U::7irrS?rIi^"f 'r^^^^^^  *'^  '°"°  °'  *"■«'  or  other- 
eral  states,  or  with  "oreT™  ^tlons  I  hPri^'T^^  ^'"'"'S  the  sev- 
Every  person  who  shan  mfke  any"uoi^^nt™^'*^'"**'  *°  ^  '"«»"• 
combination  or  oonsniraCT  <,lmn  il^L^"'^.."'^  *'"S"Se  in  any  such 
and,  on  conviction  thS  shn  ^  nSlf  k"^  °/  *  misdemeanor. 
Ave  thousand  doilars  othV  imlu,^  punished  by  a  fine  not  exceeding 

by.ix,tt.  -M  puniSeSWZfeK^^eru'^^  ""*  '^''  ^ 

..ze.'^-  'coS  rrnspi'i:  t?^Tnv""^^^'  °'  «""-«•*  *»  "»-•- 
monopolize  any  part  of  the  trade  n^'^^  *''*'  P*"^°  <""  P^^som,  to 
states,  or  with  foreigrnations  sLn  hT'Sr'^^  ^'".^''S  the  several 
meaner,  and,  on  conviction  the^WfiL^f  ^"'^^  F"!^^  <"  «  a'sde- 
ceeding  five  thousand  dXr^^V  tapri^nmenf^t*'^  ^^^  •'^- 
year.  or  by  both  said  Puuishn;ents.ln're'drcJ^ron°of  t^Turt5'""* 


260 


I   ! 


It 


[ 


i 

1 

60  FEDEKAL   BEPORTER,   935. 
OiiIiiHai  (if  th-  Court. 


These  sections  relate,  respectively,  to  restraint  of  trade  and 
to  monopoly,  but,  as  to  both,  with  respect  only  to  « trlde 
or  coimnerce  among  the  several  states,  or  with  foreign  na! 
tions;  'and  upon  the  application  of  this  restrictive  Wua" 
rf  the  law  to  the  facts  of  this  case  we  base  our  judgment 

states,  m  the  opinion  filed  by  him,  that : 

Sugar  Refinery,  and  the  DeliJJl^S;.^,;'^^*  ^«-   ^^e  Spreckels 
under  the  laws  of  PeumyW-ln^^^^  ^'^T  '^'^^^  incorporated 

and  sell  sugar;  that  the  frrinfw   p^^^  *^  Purchase,  refine, 

located  in  Philkdelnhin    nn^  L    "?  Pennsylvania   companies  were 

thlrty-three^r  c^^^^^^^  CZ  IVunV^  '^^^  P'*^"^^  «*>«»* 

United   States,  and  were  in  aX  ~titiL' u^^^^^^  '".^^^ 

Sugar  Refining  Co    and  with  ro«il  ««?    ^  ».  "   ^^^^  ^^^  Amer  can 

ever  demand  was  found  for  it  throni'*  f  ^  L^^/.^^^'"  P^*>^"^t  ^h^r- 
prior  to  March,  ISO^the  African  w^^^^  S*"*^«'  «»at 

control  of  all  refineries  in  The  TTnftPrt  «J  .^°'"^  ^'''  ^""^  obtained 
located  in  Philadelphia  and  that  of  til  i.''^^'*'  ^-^^^P^i'^S  the  four 
latter  producing  almut  twfper  Ln  of  t^T'fu  ^^;  ^^S^^^t^"-  the 
countrj^-  that  in  March  l«)o  Thi  xLl!^-  "2""^  ''^""^^^  '*»  t»*i« 
entered  into  contracts  (on  dlff^-ont  ch^t^r^HH  ^n^^'.  ^^^"^"^  ^o. 
each  of  the  Philadelnhi«  nnr^Jo*?  *^^  ^''"'  *''^  stockholders  of 
their  .stock    pay    g  theref^T^^^^^^^^^  7^'^'^^^  ^'  purchas^ 

that  the  AieVi^n^Sug^^^^^^  i°  ^ts  company; 

Philadelphia  refineries  and  fheirbu^P.^^^^^  Po/session  of  the 

was   made   subject   to  the   AmoH^fi    I  '  *^«*  ^2^1»  ^f  the  purchr.ses 
authority  to  inclose  its  stoc^SS^  ^^^-   ^^'^''^^'^S 

quently  obtained,  and  the  increS^^^^^  th„V?il^  ^'*''^"*  ^''"«  «»^««- 
standing  or  couce^^  nf  «!^i^^  yl^      made,  that  there  was  no  under 

company  acted  independentlVof  ttoso  ^rtS'  JS.^  *'"'^  """*"'  "'  «"><■>> 
of  what  was  being  done  by  such  «tS^°M=t  ^l^^'^'  'll^  '"  'gnoiance 
company  acted  In  concert  with  of^S^h  *^"*  *»»  stockholders  of  each 
totending  that  a?!  Tbe^toc"  and  prowr^Jr' oTth'f*'  derstauding  a>Ml 
sow :  that  the  contract  of  snie  !n^^^  7'  *"* ,«2™I'«ny  sI,o„|,i  i^ 
to  establish  other  reflner?es  «nrt  ~.^h       °1*"".'«  '*"  t^e  sellers  free 
see  lit  to  do  so  a^  ronta1;,«?  n^^"°"*,  *''*  business.  If  they  shouM 
merce  In  sugar  and  thitnnl^r,^^  Provision  respe<thig  trade  or  corn- 
has  been  S  sfnce-  that  sin«  «.^™*  or  provision  on  this  subject 
House  refinery  has^none^tS  ^  P»f««'ase  the  Delaware  Sugar 
Refinery,  and  the  B.  C  KuKreflnerv  .n^"'"'"""./^'*''  *"«  Spreckels 
Iln.  this  combination  betagmad^"»S~n,?*'°?*^*'°°  '^'*''  «'e  l.'nink- 
In  conducting  the  bnstn^s"  thst^ht  „    ^  'S""  ^"**°«  *"  economy 
Philadelphia  has  been    "SeasSsin^thf'T',."'  ^"S*""  '•^""ert   In 
has  been  slightly  advan^  stS2e  thft  eren^    h.^t"^/,  ?"*  *^.  P""'^ 
had  been  for  some  years  before   «n!f„^f'  PJi*.  **'"  '""'«'■  than  It 
the  sales ;  that  about  terpe^^i  „f  th?.,*"  ''"•'i"  "  '««'  ■»<"'"'«  of 
United  States  is  refin^Iu^thTreflneHt,  J^^  J^*"***  """^  «"^  '■>  tli^ 
American  Sugar  Refining  (^'l.^^^"aSn'rsurr"s'a^^ 


UNITED  STATES   t;.  E.  C.  KNIGHT  CO. 
Opinion  of  the  Court 


261 


la"r^  in 'e1?hV?n'sS  '^  """"«"  '™"'  ^""-"I-.  «"*  the  amount  is  not 

a  pef  SinclTrntf  ^^rf^'t'So/^  '^T.'^-  ^^  *»  «''tal- 
fining  and  selling  sugar  in  thKunt^  "     '  "*"  *"*  ""^'"^  »'  «" 

This  Statement  of  the  facts  is  quoted  at  length  merelv  for 
the  purpc^e  of  showing  the  general  nature  of  the^a^^  the 
only  essential  fact-and  of  that  there  is  no  doubrb^L^thtt 

TO  our  view  of  the  law,  concern  interstate  or  foreign  com 
merce^    There  is  no  evidence  whatever  that  thf  2d3s' 

con"  tT'^rT"""'  *"•  ^^^«  ''««-P*«'^'  combted  o^ 
conspired  to  directly  monopolize,  any  part  of  the  trade  or 

commerce  among  the  several  states  o/ilth  fl^  TatZ 
or  that  they  have  contracted,  combined,  or  coTspiJed  L' 

"rt^  r*  It""  i^^^  ^^ «'"—  The Tj^ftha" 

can  be  said-and  this,  for  the  present  purpose  mav  be  ,« 
sumed-is  that  they  have  acquired  control  o^e  buLt  of 
refining  and  selling  sugar  in  the  United  States     BuHoL 
this  involve  monopoly,  or  restraint  of   #«„„•  • 

commerce?    We  are  o]lZJ7t         ■     '  /^'^  '"'  interstate 
„  _i-     .      ,  clearly  of  opmion  that  it  does  not     Th» 

particular  language  of  the  act  which  is  now  undrcoide^ 

ttn  bT  rf "*'^  '^^"^^^  fr«-  '^^  ciaurof  L  zS: 

rjx-  xri^j -~J3 - 

exchange  of  commodities  »  purcnase,  sale,  and 

conclusion  m  this  case  has  been  reached,  and  we  do  not 


III  I 


262 


62  FEDERAL  REPOBTEK,  801. 


f! 


1 1 


m 


»i 


Opinion  of  the  Court, 
deem  it  nece^ry  to  say  more,  inasmuch  as  the  subject  has 

^eene  52  Fed.  [937]  104,  by  Judge  Jackson  (now  one  of 
flie  justices  of  the  supreme  court),  in  whose  opinion  the 
earher  cases  are  sufficiently  referred  to. 
The  decree  of  the  circuit  court  is  affirmed. 


[801]     UNITED  STATES  v.  ELLIOTT  ET  AL.« 

(Circuit  Court.  E.  D.  Missouri.  E.  D.    .Tuly  «,  im.) 

[62  Fed.,  801.] 

«™^  r""    f,""""  '^^^^  P"""^  »«««*  '»  to  arrest  the^m- 
tlon  Of  the  r.MIroad8  whose  lines  extend  from  a  great  cL^nto 

Sn  thr  wi::tr"'  t.  """^  "*^«  *»  certam  demani^jrj: 

upon  them,  whether  such  demands  are  in  themselves  reasonahlA  Z 
unreasonable,  Just  or  unjust,  is  an  unlawful  eonsXrr.^t  alnt 

?L^  V"i  """'"'"^  ""»"«  *•*  «"♦««•  """in  the  ac  Of  July  2 
1^,  and  acts  threatened  in  pursuance  thereof  may  be  r^t™i„«i  ht 
injunction,  mider  section  4  of  the  act»  -strained  by 

olJ'i  r"V"  "'"'^^  "''  ^"''^  ^'"'^^  ««*i"«t  M.  J.  Elliott, 
George  B  Kern,  Eugene  V.  Debs,  George  W.  Howard,  L.  R 

Rogei^   Sylvester  Kelliher,  the  American  Railway  Un bn 
Suncttn.'""^-    ^-P'--^  --«!   ^or  a  prelimina^ 

1F»7Z»«»»  J7.  f'fo;>to„,  United  States  Attorney. 

Thater,  District  Judge  (orally.) 

TJie  unusual  chai-acter  of  the  bill  filed  bv  the  govermnent 
!k  lu^'""^'  *'"'*  '^'  ^^"'^  ^h°»W  «ta  te  briefly  thrr^- 

.Demurrer  overruled  (84  Fed..  27).    See  p.  311. 
»  Syllabus  copyrighted,  1894,  by  Wert  Publishing  Co. 


r 


UNITED  STATES   V.  ELLIOTT.  .  263 

Opinion  of  the  Court 
lawftil  restraints  and  monopolies,"  declares  in  its  first  section 

or"Sr.TTr^^^r:tt±  '^  '""^  "'  '"^'  -  "'"erwise. 
states  or  with  foreim  nations  Wh^JZ  ^"■"^''i^.  """""S  the  several 
person  who  shall  SennvRn^h  ^Zf^  declared  to  be  illegal.  Every 
bination  or  oonspiro«r  sh^^l T  rtSmi?'''  or  engage  In  any  such  corn- 
on  conviction  thlr^T  sha  te  pSed^hv^n'  "  '"'^^'"eanor  and 
thousand  dollars  or  bv  imnri^onM^Pnr^f  J  ^- ""^  exceeding  five 
both  said  PunishmentrirtSe  mSL"°of  tte'^i?!"""^  "'^'  °^  *" 

eauS'Z^^  V"  ''"^''  ^"^'"^  """'  ^^P^'^i*"*  for  a  court  of 
ihat  are  m  themselves  crimes.  The  regular  course  of 
judicial  procedure  requires  that  persons  accused  oHi^e 
Swii  ^Tr"^'  by  information  or  indictment,  and  no 
to  thTJule  m  "''  ^""''''■'  ^^"-^^teblished  exceptions 
liable  to  i;  '  '"Tr**^  '"'  ''  threatened,  which  is 

wS^h  w  T''""  '"^P^^^b'^  '"i"'7  to  private  persons,  or 
which  would  give  rise  to  a  multitude  of  suits  at  law  to  re- 
dress the  wrong,  if  committed,  a  court  of  equitv  mlv  is«ue 
an  mjunc  ion,  at  the  in.stance  of  an  individual,  aga^^It  par 
hes  wlio  threaten  to  commit  the  wrong.  But  the  ^ur^L 
not  called  upon,  in  this  instance,  to  consider  whether  t'^  pro 

emitr  Bv  tri"  1'  --i'-ry  jurisdiction  of  a  courHf 
equity.    By  the  fourth  section  of  the  act  of  Julv  2    1890 
which  IS  above  referred  to,  congress  has  declared  fhat: 

wi';h^tlS!,n''rp*re^e"„?a"nV  r^sY-^aT  ^^^  "«  -^-^^  '--t^J 
It  shall  be  the  duty  ofthe  ^verTfllZ.Z- °' «'™'  "'  *'«  "<=':  «"« 
States  in  their  respective  dfstrirtsnndprthi  »."<"-neys  of  the  United 
general  to  institute  proc^in-S  ir^nif^t'''''^*'''"  ""^  *''«  ^tto^ey 
such  violations.  Such  p^^J  rsM,^  *"  k^T^"*  «"<^  ■•^^"•ali 
setting  forth  the  cas-e  aM^'lvi^J^h  i  '^."^  "'"•''  <"  Pe"tion 
Joined  or  otherwise  prohibitidwLntL"*'^"  ^^"^  ^  en- 

have  been  dulv  notified  of  ^iPh.^tffJl*"'^  complained  of  shall 
"oon  as  may  I^  Tthe  heLZ  ,'^  H»t°J''-^  T"^  *"■«"  P™*^  as 
pending  such  Petition  andTJoVfinnld^Tiel^."  "'  V"'  <="««:  •"«» 
time  malce  such  temporary  restrain?ni  n^If  *  "^JJ""'  "^^  «*  an.v 
be  deemed  Just  in  the  premisS^"        ^      "'^^  *"■  Prohibition  as  shall 

.1  J?''  "^^i?"  ***  *^^  ^''^  "'"'^^  *•»«  jurisdiction  of  the  court 
t:  trcoui'th-'.T'  ^"^'^■^•^--tt^r,  if  the  bill  noil 

Of  the  attorney  general,  shows  the  existence  of  a  conspir- 
acy among  the  defendants  to  restrain  trade  or  comS^ 


264 


62  FEDEKAI,  BEPOBTEB,  808. 


^11 


i     I 


Opinion  of  the  Court 

ance  of  the  alleged  Zn^rZ  n  •^**«"*^?t«  '°  further- 
grounds  of  publlfpoZ  S;  ^"«r^  ^'^  ^^  fit.  on 

government VaprZ'^tr'V'i"  '*^  ^^^^^"^  «'  t^e 
1 .1,  .  appeal  to  the  courts  of  thp  tTtiU^j  c^  x     i 

a  bill  in  equity  filed  in  behalf  oftl,;  ^nit^d  States  by 
States,  to  arrest  bv  wr.r^*  •  *  ^^^'^  °'  ^^^  ^^nited 
eommiUn^tt^^^S  al"^"""*'?  "^  Prohibition,  the 

flow  of  connne^Utt  Z  ^1^"'^*"'^*  ^'^^^  *- 
the  power  of  con£rrp««  f  I  '    ^  "^  ^^®  ^^  ^oubt 

pn,p<,dUon  which  .dSTTi' ,       ^  (""P*^  -  ' 
plenary  and  paramount  *  '*^P^'=*  ^"^ 

lines  extend.  The  bill  Srthfr  tjSl  Zl'^t  *''"'"  '*''^^™' 
fendants  named  therein  h- J  S^  .**"*  ^''^  ^^«™J  de- 
induce  persons!  fhrempl^or^S^iSl'd  '""^'"'^  *« 
leave  the  service  of  their^ip^i^e  1"^*^  ""T"'""  '" 

vent  them  from  securing  ot^^C-atrs^thr'h*"?  *."  P'"" 
conspiracy  being  to  v^vent^^.-J'        "^^^^  "*  '"<* 

hauling^rtain  c!rs  w?X«  e^^^m'ari^^' JK^  -'T 
transaction  of  thpiV  hnciT^^o        •    "  "^"•y  "®®^  ^y  them  in  the 

and  Passen;t^XtT^.l:';Ss^^^^"  "'  ^^^'^'^^ 
divers  and  sundry  acts  by  somTofl^^Sf  JSaZr/TK  '' 
ance  of  the  obiects  of  *h^  ^*         • !    aerenaants  m  further- 

o™P.ni.  .ho  ^Ti»  t  ZX^tZCltj^tl 


If 


265 


UNITED   STATES   V.  ELLIOTT. 
Opinion  of  the  Court 

ice  they  are  emKd  ?  ["^''^"5^" '^^  '^  -'»<'^  -- 
defendants naSfnthehniL  "^^'^f  ^'^^^  '^''^^  «*  *»»« 
they  will  tie  uTanrparS TeT'*'?  "' *'"*^°*' *«* 
railway  companies  whkh^C'^To^r  °'r^  "*  "^* 
demands  made  upon  them  T„Tl„/l'  l^^  ^  "^^^"^ 
object  of  the  defendant,  I'  '*  '"  ^^^  ?'"•?«««  «nd 

such  threats,  t^ltb^^^irdSppT sS  ^u"  T  "'^'^ 
nies  as  to  orevpnt  fh^r^  4  ^"Ppie  said  railroad  compa- 

mon  c.iC:it3.Z  r/"'°™^"f  ^'^-^  <l"t-  as  corn- 
several  states  to  S  the  li-'"'^^'^''  '^^^  ^""'^  '"  '^'' 
also  charged  in  the  bin  t  .     '"*  ^°^"*"  «^t«»<J-    It  is 

and  objecf  of  ?hf  de$i"ntrwr^^  ***  **  '^  '""^  P-P«- 
said  coLpiracy  to tcm-eT„  ,K        T  '"^^S^**  i"  ^^e  afore- 

interstate'com^erce'Se^:  TS^i  ^s't^^"^  T™^  <>* 
in  other  states  to  which  the  Ll!  /  J  "''  ""'^  P"^"*« 
companies  mentioned  in  the  biW  X.  ^  the  several  railroad 
Pi^vent  the  persons  owning  ^  d  '^.'^'r**  *°  '''''"''''  «"•* 
independent  control  Zreof  TnZf  T  '^"'"^'^''^e  «"y 
business.    The  court  S<f  if    the  transaction  of  interstate 

of  the  bill,  whiT  have  tt,  hT"''"'*  '^'''  '^'  ''"^^''^'""s 
show  the  exisSe  of  «         ^"  ^"^^  imperfectly  stated, 

and  commerrong  theTCri'^^t*  1  ^""^^ 
guage  and  the  fair  intr,t      ^T  •      ^'  '^'*"'  *•»«  lan- 

1890"  A  comlil":!:^  pr"^^^^^^^^^  t'  t-  "*  "'  '^"^^  2' 
opemtion  of  railroads  whoTe  U^J  el^J?  ^'  "^  ""^^  '^' 
into  adjoining  states  ..nfil  t  i!  ?  ^*""  "  ^'■«'*  «tv 
demand  mad!  upon  them  wW. '^'*^\""'="<^^  '°  "^^^^^ 
themselves  reaLTbTe  i  u'kTinabTe  W  '^"''"'^  «^  '» 
tainly  an  unlawful  con^r^  t  tiinT  "o?"*'  '^  "'- 
among  the  states.  Under  the  lawsorthe  United  ^^T""** 
well  as  at  common  law  ^  ^^vc  oi  me  United  States,  as 

a  lawful  puZs^^;r'r:,T  ""*  •^"^P"'*  *«  «<=-«Plish 

148  U.  S.  197^13lup  Ct  S^"''"'-  '^'"*'""  "•  ^  ^■' 
111.    The  cokstrS^n  fh      '  •    '^^  ^^  '^""^'  *  Mete.  (Mass.) 

is  not  a  new  iTtSol  if  Zs  1 '''.  '^'=*  "*  ''"'^  2'  1«^« 
interpretation  in  Ser  drcuite  afteT^r""^'  ''''  ^"« 
particularly  by  the  circ^it^rrtrthf^  ^tSt^- 


I   I 


F^ 


li 


(1  i 


266 


62  FEDERAL  REPORTER,  803. 


Syllabus. 
the  fifth  circuit  in  the  case  of  V,  S.  v.  Workingmen^s  Amal- 
gamated Council  of  New  Orleans,  54  Fed.  994,  and  6  C.  C.  A. 
2558,  57  Fed.  85. 

The  result  is  that  this  court,  acting  on  the  ground  herein 
^ted  will  grant  a  preliminary  injunction,  restrainincr  the 
defendants  during  the  pendency  of  this  suit,  and  untirtinal 
Heanng,  from  doing  the  acts  threatened,  in  pursuance  of  the 
alleged  conspiracy. 


rSOai    THOMAS  V,  CINCINNATI,  N.  O.  &  T.  P. 

BY.  CO.       • 

IN  EE  PHELAN. 

(Circuit  Court,  S.  D.  Ohio,  W.  D.    July  13,  1894.) 

[G2  Fed.,  803.] 

CONTEMPT-lNTEBFERENCE     WITH     ReCEIVEB-ImpEDINO     OPERATION     OF 

RAiLBOAD.-Auy  Willful  attempt,  with  knowledge  that  a  railroad  is 
in  the  hands  of  the  court,  to  prevent  or  impede  the  receiver  thereof 
appointed  by  the  court  from  complying  with  the  order  of  the  court 
In  running  the  road,  which  is  unlawful,  and  which,  as  between  prl- 
vate  individuals,  would  give  a  right  of  action  for  damages,  is  a  wn- 
tempt  of  the  order  of  the  court.** 

[804]      SaME-IRSTIOATINO     STBIKE-UNLAWFUL    OOMBINATION.-MaU- 

clously  inciting  employes  of  a  receiver,  who  Is  operating  a  railroad 
under  order  of  the  court,  to  leave  his  employ,  in  pursuance  of  an 
unlawful  combination  to  prevent  the  operation  of  the  road,  thereby 
inflicting  Injuries  on  Its  business,  for  which  damages  would  be  recov- 
erable  If  it  were  operated  by  a  private  corporation,  Is  a  contempt  of 
the  court.  ^ 

SamE-CoNSTITUTIONAI.  GUABANIT  OF  RiGHT  OF  ASSEMBLY  AND   FBEI 

SPEECH—Such  inciting  to  carry  out  an  unlawful  conspiracy  Is  not 
protected  by  constitutional  guaranties  of  the  right  of  assembly  and 
.  free  speech,  and  is  not  less  a  contempt  because  effected  by  words 
only,  if  the  obstruction  to  the  operation  of  the  road  by  the  receiver 
is  unlawful  and  malicious. 
Conspiracy-Combination  to  Compel  Breach  of  Contract.-A  com- 
bination to  Inflict  pecuniary  injury  on  the  owner  of  cars,  operated  by 
railway  companies  under  contracts  with  him,  by  compelling  them  to 
give  up  using  his  cars,  In  violation  of  their  contracts,  and  on  their 
refusal,  to  Inflict  pecuniary  Injury  on  them  by  Inciting  their  em- 
ploy^ to  quit  their  service,  and  thus  paralyze  their  business,  the 


o  Syllabus  copyrighted,  1894.  by  West  Publishing  Co. 


r 


.. 


" 


THOMAS   V.   CmciNNATI,   N.   0.   &  T.   P.   RY.   CO.       267 

Opinion  of  the  Court 

Same-Boycott.-A  combination  by  emploves  of  r^iiwa. 

lawful  or  otherwise  P"n>ose  is  effected  by  means  usuaUy 

"egal  every  cntroot,  oo„.b.„atIon.  or  ^JZcl'    TrJ^T^ 

Ne^Orieans  7^7  ^T"'/"^"^'  '^''^''  **»«  Cincinnati, 
Samud  M  F^Jn  ^^^^^^  R^»^»y  Company,  in  which 
KlT      ^:-      }       '"''  appointed  receiver.     The  receiver 

tempt,  and  for  an  injunction  against  him. 
Harmon,  Colston,.  Goldsmith  d-  Hoadly,  for  receiver. 
Cogan  <&  Shay,  for  Phelan. 
Tapt,  Circuit  Judge. 

Samuel  M.  Felton  was  appointed  receiver  in  the  above 
entitled  cause.  March  is  irqq  »«j  u  •  aoove- 

"iu«5,  jjiarcn  is,  1893,  and  has  ever  since  been  [805] 


1 

I   1 


I 


I 


Ml 


M 


I 


«2  FIDBBAL  BEPOBTEB,  606. 

'  Opinion  of  the  Court 
^'^gaged,  under  the  order  of  the.  ^^„«*   • 

«>ad  of  the  CincinnatrNet  OrC'&V"^^^^^^       "••"- 
way  Company,  which  4  Z!  f  ^^^"^  ^"^'^c  Rail- 

filed  an  interveninff  netidon  .„^.  ^*'°*^»y' /"ly  2,  1894,  he 
he  stated  that  dSwh?  **"«""'^  '"'*'°°'  '«  ^h'^h 

filing  the  ion  hf  wasSrir",'  IT'  "l^''^  '^«  «' 
of  the  road  by  a  s  rike  of  w^  i  '^  '"  *''"  operation 
of  other  railrid  In  h/ci  vrf^i"^^^  *'"''.  "*  *•>«  ^^^P^^y^ 
vented  from  receitU  f^S^  t  ^"''''^^^}^'  who  wer«  p«. 

freight  carriedTrit^ied"! '^"^T"«  *«  ''- 
strike  was  the  result  Tt  f^  •  ''''  "'»«'''  *»»»*  said 
Phelan,  now  i„^Sl„  **  """f  ""acy  between  one  F.  W. 

othe^/toi^ ;;  'h^oTd  V^tHs^hT"/-  ^•'^  --^ 

well  knew,  by  the  DetitinLT         '  ■       ^  ^'*^  conspirators 

the  weste^  li^:.T^l2TZL'"' rf^'  ''^'^  '" 
mands  or  alleged  erievaL  .#  f  ?  '  """'  '^''^'''n  Re- 
employ of  the  SivSr^r        ?u'*'""  .P"^"^  "°*  i-^  the 

with  the  managen^ent  of  anf^Jf J  ^?  .^T.  TT*'*^*' 
that  the  demand  of  the  emJo^T^  n  ^"'****  ^^^^'^ 
or  the  Pullman  Pa  W  r^r  *  ^'"^'"S"  ^-  ^""•»'"'. 

higher  wages  was'^d"  wl^-J^S^if]  SrSe/"'  '"^ 
others,  members  of  an  oreaniz^ii^hT     ^^' ^'^e''"*,  and 

.  Railway  Union,  combinTaTl^r^d  Stf'  ""r?" 
and  wiO,  sundry  persons,  who  llame  me^'be^;"'.  tl  "*''•' 
zation  for  the  purpose,  to  compel  the^u"  mrfilT"'- 
comply  with  the  demands  of  its  employfe  3  ^17^^*^ 
purpose  of  injuring  the  Pullman  (W^V  "nd  of  tf  k' 
forcing  from  it  the  concession  demand^  D^fe  Ph!,,^"*''J 

«iCr  wrrkim '^  ""^•'•"•'  ^'^^  owners  of^ott:; 
though  the^-r^xirctTd^r&r  ''-'-^ 

of  said  conspiracv  Phekn    «     '  ,/  f^'^^**  ^^  P^^'^^'^ce 

Cincinnati  a  U^beftt;^';^^^^^^^^  *<> 

foot  and  incited  a  strike  among  the  empLrfe  of  th^         *"" 

and  of  other  railroad  companies  wh^r  *•  '■^'''*''' 

einnati;   that  on  June  m^l^  at  oXIT  '""  '."*"  ^'°- 

'  ""''  "t  other  times  and  places, 


THOMAS   v.  CINCINNATI    N    n    *    m  'r. 

-^JSAii,  N.  O.  &   T.  P.  BY.  CO.        269 

Opiuion  of  the  Court 

a^rhe^tSlSrr  ifV ^^^^^^^^^       -  ;-^e" 
and  to  prevent  oui^  tm  :!^i::i^^CZ  ^"  "^' 

fering  with  he  eS  ?"  thT„  "^  *^%^*"'^«'  ^^  i«ter- 
as  a  result  of  the  ZpTracv  an^T'^ '?[:  "^  *^  '••'*^'  ^'"'t 
obliged  at  <rreat  e^^ZT  "''"  *''"  '■**=«'^«'-  ^^^  been 

tion  of  arm:ner  fS,      'T'"^  '""^  '"'''"'«'"  ^^^^  P^otec- 

going  constUutT;  contempSThl'  "V'^'Z"  °'  ^'^^  '»- 
for  committing  Phekn  aTd  fn.  *'*!^'=""'•t' and  a  ground  both 

uance  of  said  fete  ^"'"'"^  '^'"^  *''«'"  '^  «>ntin- 

for''S:S:the"crtemt'^*'?"  ?.  ^"-•^-''*  -  i-ed 
July  he  wa   arrets  TTk        T/'^"  '"*'™''>g  »*  the  3d  of 

admWto  barand'at  the""^  l^*""  ""  ''''''■  ««  -- 
of  the  court  frlm  ^tS L  as  Tf  ^'-/T  '"^^''"^^  ^^  -<*- 
with  others,  incitin;reneo-;U  olSer^t"^;"  "'"''"''"''" 
other  manner  causing  the  emplovfe  of  L  ■  ^' '"' '"  ^"^ 
employ  with  intent  to  oScTth.  "  '^'''^''■'  "^* ^'' 
and  thereby  compel  him  n^to  fulfill  v"'?  ***  ^''  '''^^' 
Pullman  cars,  gn  Thurday? iufsS;'  T"^^'/-^  f-y 
receiver  for  Phelan'^  Pnm,r,;f      ^  ^        '    "^  ™*'tion  of  the 

week  has  sincetrtarn"u^;Tth:SV:f':  't^^^''  ^"'  ' 
argument.  ^  ^^^^^^  ^^  testimony  and 

applicable  to  them.  *°  consider  the  law 

the;servLSi:t^3'iro:^f ^^^^^^^^^     ^--  ^ 

ized  in  June,  1893.  On  Mav  11  i«or  T^  ,.  *  ^"^  *""«'"»- 
employes  of  'the  Pullman  pi"'  S*pf  ^"'^*"'  "1'  *»»« 
manufacturing  railway  cars  o?Tll  v  ^^P^^'  engaged  in 
cars,  left  the  Lpal^irpW  L^  ''  T'"**'"^  ^'^^P^^ 
«tore  wages  which  ha'd  Z^ed^d  luring  t^^^^  ^l^' 
year,  and  the  works  were  then  cj  On7fnfn,^St! 


270  62  F£D£BAL  BEPOBTEB^  806. 

Opinion  of  the  Court. 

general  convention  of  the  American  Railway  Union  met  at  Chi- 
cago, and  decided  that  the  American  Railway  Union  would 
take  measures  to  compel  the  Pullman  Company  to  resume 
business  and  to  re-employ  its  employes  who  had  left  its  service 
on  terms  to  be  fixed  by  arbitration.  It  does  not  appear  that 
at  this  time  the  Pullman  Company's  employes  were  members 
of  the  Railway  Union,  or  eligible  as  such.  At  the  June  con- 
vention of  1894  there  were  present  representatives  from  450 
lodges  of  the  union,  and  the  number  of  members,  as  estimated 
at  that  time,  was  250,000.  It  is  said  that  the  local  unions 
had  voted  for  the  Pullman  boycott  before  the  convention 
met.  The  question  where  the  boycott  originated  is  not  very 
material,  but  it  may  be  said  that,  as  the  Pullman  strike  oc- 
curred but  a  month  before  the  convention,  and  as  it  had  been 
deemed  necessary  by  the  union  to  send  men  all  over  the  coun- 
try to  explain  to  its  members  the  merits  of  the  Pullman  con- 
troversy during  the  boycott,  it  is  obvious  that  the  boycott 
had  its  real  origin  in  the  union  convention  at  Chicago,  where 
the  subject  was  brought  before  it,  presumably  by  its  board  of 
directors. 

The  chief  governing  body  of  the  union  is  a  board  of  direc- 
tors, which  elects  a  president,  vice  president,  and  secretary, 
who  are  the  chief  executive  officers  of  the  union.  Eugene  V. 
Debs  is,  and  has  been  since  its  organization,  the  president. 
Section  6  of  the  constitution  of  the  union,  as  adopted  in 
June,  1893,  provides  that  "  the  board  is  empowered  to  pro- 
vide such  rules,  issue  such  orders,  and  adopt  such  measures 
as  may  be  required  to  carry  out  the  objects  of  the  order,  pro- 
vided that  no  action  shall  be  taken  that  conflicts  with  this 
constitution."  By  section  11  of  the  same  instrument  the 
president's  powers  are  thus  described: 

"It  shall  be  the  duty  of  the  president  to  preside  over  the  meetings^ 
of  the  board  and  the  quadrennial  meetings  of  the  general  union.  He' 
shall  at  each  annual  meeting  of  the  board  and  at  each  quadrennial 
meeting  of  the  general  union  submit  a  report  of  the  transactions  of 
his  office,  and  make  such  recommendations  as  he  may  deem  necessary 
to  the  welfare  of  the  order.  He  shall  enforce  the  laws  of  the  order, 
sign  all  charters,  circulars,  reports,  and  other  documents  requiring 
authentication.  He  shall  decide  all  questions  and  appeals,  which  de- 
cisions shall  be  final,  unless  otherwise  ordered  by  the  board.  He 
may,  with  the  concurrence  of  the  board,  deputize  any  member  to  per- 


THOMAS   V.  CINCINNATI,  N.  O.  &   T.  P.  BY.  CO.         271 

Opinion  of  the  Court. 

form  any  required  service,  issue  dispensations  not  inconsistent  with 
the  constitution  [807]  or  regulations  of  the  order,  and  perform  such 
other  duties  as  his  office  may  impose;  and  he  shall  receive  such  com- 
pensation for  his  services  as  may  be  determined  at  the  time  of  his 
election." 

Phelan,  when  on  the  stand,  said  that  these  were  sections  of 
the  old  constitution,  but  that  he  understood  the  constitution 
had  been  generally  changed.  He  would  not  say  that  exten- 
sive or  material  changes  had  been  made,  but  siuiply  that 
general  changes  had  been  effected.  He  was  in  attendance  as 
a  delegate  only  during  the  last  five  days  of  the  convention, 
and  this  is  his  explanation  for  not  knowing  what  the  changes 
Avere.  Phelan's  answers  on  this  subject  had  really  no  effect 
to  sliow  that  the  foregoing  sections  are  not  still  in  force,  but 
simply  illustrated  the  evasiveness  and  verbal  quibbling  to 
which  the  witness  was  continually  willing  to  resort  under 
examination.  It  is  certainly  strange  that  if  he  was  here,  as 
he  says,  as  a  representative  of  the  union,  he  should  not  know 
the  changes,  if  any  really  material  ones  had  been  made  in  the 
constitution,  under  which  he  was  initiating  men  into  the 
union,  and  was  receiving  orders  from  his  superior  officers. 
We  shall  see,  as  we  progress,  that  the  two  sections  of  the  old 
constitution  are  still  in  force,  if  we  can  judge  at  all  from 
the  actual  authority  exercised  by  the  officers  of  the  union 
during  the  present  boycott. 

The  plan  of  the  boycott,  as  shown  by  the  evidence,  was  this: 
Pullman  cars  are  used  on  a  large  majority  of  the  railways 
of  the  countrv.  The  members  of  the  American  Railwav 
Union  whose  dut}^  it  was  to  handle  Pullman  cars  on  such 
railways  were  to  refuse  to  do  so,  with  the  hope  that  the  rail- 
way companies,  fearing  a  strike,  would  decline  further  to 
haul  them  in  their  trains,  and  inflict  a  great  pecuniary  in- 
jury upon  the  Pullman  Company.  In  case  the  railway  com- 
panies failed  to  yield  to  the  demand,  every  effort  was  to  be 
made  to  tie  up  and  cripple  the  doing  of  any  business  what- 
ever by  them,  and  particular  attention  was  to  be  directed  to 
the  freight  traffic,  which  it  was  known  was  their  chief  source 
of  revenue.  As  the  lodges  of  the  American  Railway  Union 
extended  from  the  Allegheny  mountains  to  the  Pacific  coast, 
it  will  be  seen  that  it  was  contemplated  by  those  engaged  in 
carrying  out  this  plan  that,  in  case  of  a  refusal  of  the  rail- 


■"""!53I5i'*!]Jj!F;;i"''S«!K 


i 


t'i 


11 


^1 


li 


I  H 


I II 


272 


W  FEDEBAL  BEPOBTEB,  807, 


Opinion  of  the  Court. 
way  companies  to  join  the  union  in  its  attack  upon  the  Pull- 
man Company   there  should  be  a  paralysis  of  all  railway 
twffic  of  eyeiy  kind  throughout  that  vast  territory  traversed 

Sllr  "^S  ^"""'"J  «=«^  It  was  to  be  accomphshed,  not 
only  by  the  then  members  of  the  union,  but  also  by  prc^ur- 
Zt  T^^  Persuasion  and  appeal,  all  employes  not  mem- 
oers  either  to  jom  the  union  or  to  strike  without  joininff,  bv 
pjarantying  that,  if  they  would  strike,  the  union  would  not 
•ilow  ooe  of  Its  members  to  return  to  work  until  thev  also 

Tn  1  w w       c  *"!•    *^f  "^y  P'*^"*  P"rP«^'  it  i«  sufficient 

^  TZ  ^1**"  T***^'  "^""^  ^*'^'  ^^^^"'^  ^'""«  t«  Cincinnati 
as  the  authorized  representative  of  the  president  .,nd  board 

of  directors  of  the  union,  to  enforce  and  carry  out  the  con- 
templated boycott  and  paralysis  of  business  on  all  railway 
lines  running  into  Cincinnati  which  used  Pullman  cars  untH 
they  should  cease  to  use  them. 

[8081  I  am  aware  that  Phelan  denies  that  such  were  his 
authority  and  instructions,  but,  as  in  the  case  of  his  answers 
in  respect  to  the  con.Utution  and  its  provisions,  his  denials 
do  not,  in  view  of  the  overwhelming  proof  of  the  circum- 
stances not  denied,  and  his  previous  admissions  not  denied 
show  the  fact  to  be  otherwise,  but  only  decrease  the  reliancJ 
which  can  be  placed  on  any  sUtements  made  by  him  in  this 
case.    He  says  that  he  came  here  with  no  direction  except  to 
visit  the  employes  of  the  Pullman  Company  at  a  branch 
factory  at  Ludlow,  to  explain  to  them  the  merits  of  the  con- 
troversy between  their  employer  and  their  fellows  at  Chi- 
cago, and  then,  if  they  struck,  to  see  that  they  appointed 
committees  who  should  keep  order  among  them,  and  look 
after  the  sick.    At  another  time  he  says  he  was  directed  to  be 
in  Cincinnati  during  the  boycott,  but  he  strenuously  denies 
he  was  here  for  the  purpose  of  laying  on  the  boycott  or  in- 
citing a  gcnei^l  strike.    He  would  have  the  court  believe  that 
what  occurred  was  wholly  spontaneous,  and  not  through  his 
•gency,  and  that  his  business  was,  if  there  should  be  such 
coincidental  spontaneity  resulting  in  a  strike,  to  prevent  dis- 
order, and  to  look  after  the  sick.   This  hardly  accords  with  his 
first  telegram  to  Debs,  his  chief  officer,  dated  noon,  Tuesday, 
June  2«th,  as  follows:  "Pay  no  attention  to  press  reports 


1 


" 


THOMAS   V.  CINCINNATI,  N.  O.  &  T;  P.  BY.  CO.        273 
Opinion  of  the  Court. 
To  be  effective,  was  compelled  to  postpone  action  until  seven, 
Wednesday  morning."    On  Sunday,  June  24th,  after  Phe- 
lan s  explanation   of  the   Pullman   troubles,   the   Pullman 
employes  at  Ludlow  determined  to  strike,  and  did  so  Monday 
morning  at  7  o'clock.    Phelan  says  he  did  not  advise  them  to 
strike,  but  just  explained  the  situation,  and  then  a  strike 
followed.    Wien  he  had  explained,  and  organized  commit- 
tees among  the  strikers,  after  the  strike  had  occurred,  through 
no  agency  of  his.  his  mission  was  endod.  so  far  as  his  instruc- 
urns  went.     And  yet  we  find  him  on  Tuesday,  June  26th,  at 
12  o  clock  noon,  telegrajjhing  his  chief  that  he  wns  obliged  to 
postpone  action  until  Wednesday  morning  at  7,  in  order  to  be 
effective     Now,  what  action  was  this  which  he  hoped  to  make 
effective?    Can  any  one  doubt  for  an  instant  that  the  action 
hus  foreshadowed  was  that  referred  to  in  Phelan's  dispatch 
to  Debs  of  June  28th  following,  when  he  said,  -  The  tie-ur. 
IS  successful  »  ?    On  Tuesday  night,  June  26th,  there  was  a 
meeting  of  all  the  switchmen  of  Cincinnati  at  Wuebler's  Hall 
There  is  no  direct  evidence  how  this  meeting  was  called,  but 
the  c.rcunistances  lewe  no  doubt.     Phelan,  having  brought 
out  the  Pullman  men,  then  set  to  work  u,>on  the  railway  men. 
and  hence  the  meeting.    The  telegram  of  June  26lh  indicates 
that  Debs  expected  him  to  have  the  meeting  and  action 
eariier,  but  that  he  was  not  able  to  secure  an  ^ttendanrar 
any  earlier  meeting  sufficiently  general  to  make  the  action 
taken  effective.     Indeed,-  when  the  Tuesday  night  meeting 
was  held   It  was  found  that  action  must  be  stillfurther  d. 

rfh'r  /r"""*  """"^'"^  ^°''  Wednesday  night  was  called. 
At  l^th  of  the^  meetings  Phelan  explained  and  discussed 
the  Pullman  trouble,  and  announced  the  Pullman  boycott 
Now  what  was  his  object  ?     Was  it  for  the  purpose  of  indu": 
ing  the  men  whom  he  addressed,  and  others  not  present 
whom  he  urged  them  to  talk  to,  to  demand  of  the  railwax- 

Sf 'r'.'Tu* *"'*  '"  boycotting  Pullman,  and,  on  refusal, 
1809J  to  tie  them  up,  or  was  it  simply  for  their  general  in- 

fwh?"?      ? -^Prf^  "Pon  the  stand  with  much  emphasis 
that  he  at  no  time  advised  any  man  to  strike.    What  was  he 

?*T^]m      !  '^'^!'^  """^  *"  ^'"^^  '<'  that  end,  and,  even 
If  he  did  not  use  the  word  "  advise,"  his  conduct  was  exactlv 
11808— VOL  1—00  u 18 


I 


27^ 


62  FEDERAL  REPORTER,  809. 
Opinion  of  the  Court. 


the  same  as  if  he  had.  His  trifling  with  the  truth,  and  his 
attempt  to  seek  shelter  again  behind  verbal  quib])les,  simply 
disparages  him  as  a  witness,  without  concealing  the  facts. 
Now,  what  was  done  at  these  meetings  of  Tuesday  and 
Wednesday  night  after  or  during  Phelan's  speeches?  A  city 
committee  was  appointed,  consisting  of  one  employe  of  each 
of  the  great  railroads  entering  the  city.  This  connnittee 
Phelan  continually  refers  to  in  his  testimony  as  "  my  com- 
mittee," and  the  term  was  properly  used,  for  it  seems  to  have 
spent  all  its  time  in  his  company,  and  doing  his  bidding.  On 
this  committee  was  J.  Madison,  a  switchman  in  ihe  receiver's 
employ.  The  first  duty  of  each  member  of  the  committee 
was  on  Wednesday,  June  2Tth,  or  on  the  next  day,  to  notify 
the  yard  master  of  his  road  that  the  switchmen  and  members 
of  the  American  Railway.  Union  would  not  handle  Pullman 
cars  because  a  boycott  had  been  laid  on  them.  Madison  duly 
notified  McCarty,  the  yard  master  of  the  receiver.  The  nec- 
essary result  was  that  three  switchmen  on  the  Cincinnati, 
Hamilton  &  Dayton  Railroad  were  discharged  or  relieved  of 
duty  on  the  afternoon  of  Thursday,  June  28th,  and  within 
six  hours  a  general  strike  of  all  the  switchmen  and  yard  men, 
including  yard  engineers  and  firemen,  on  all  the  roads  coming 
into  Cincinnati,  took  place.  This  was  exactly  in  accordance 
with  the  plan  which  Phelan  had  outlined  to  Westcott,  a 
reporter  for  the  Enquirer,  on  Tuesday  or  Wednesday  before 
the  strike,  in  a  conversation  which  he  does  not  deny.  Begin- 
ning with  Tuesday  night,  June  26th,  Phelan  has  made 
speeches  every  night  since,  in  which  he  has  continued  to  ex- 
plain the  Pullman  trouble  to  audiences  of  railroad  men,  and 
has  read  telegrams  from  Debs  of  a  character  calculated  to 
incite  and  encourage  all  railway  employes  to  quit  their  places, 
to  assist  in  the  Pullman  boycott.  He  says  he  has  made  as 
many  as  20  speeches.  Two,  at  least,  were  made  at  Ludlow, 
Ky.,  a  railroad  town,  the  inhabitants  of  which  are,  or  were, 
many  of  them,  employes  of  the  receiver.  It  is  in  evidence 
that  when  the  meetings  began  the  number  of  the  receiver's 
employes  who  were  members  of  the  American  Railway  Union 
was  150.  And  yet  Phelan  denies  that  he  is  in  any  sense 
responsible  for  the  strike  of  the  receiver's  employes,  or  of 


THOMAS   V.  CINCINNATI,  N.  O.  &   T.  P.  RY.  CO.         275 
Opinion  of  the  Court. 

view  tTr-""'  *f  ^'^''"'^  '^^  '^^^"•"^  ^"«l»  "  Po-^ion  i" 
v^ew  of  the  circumstances  and  his  own  declarations  Take 
the  evidence  of  Wentmt*  *k.  v.^  ■  "■""la..     laKe 

evidentlv  nf  ^l  '*«^*«'**'  ttie  Enqmrer  w^wrter,  a  witness 

Phelan  in  any  wa,:  K.  JlT^^^^  ^l^^^'i:^: 
and  seems  to  have  found  Phelan  his  best  souL  of  inf^mt' 
ton.  He  made  notes  of  everything  at  the  time,  and  piepa"  d 
them  afterwards  for  publication.  Phelan  has  'not  atteSd 
to  deny  anything  he  says.    Westcott  testifies  that  Phelan  Sd 

[810]  to  enforce  a  boycott  against  PuUman  cars,  by  tvine  un 
every  road  m  C mcinnati  for  the  American  Kai  waySon^ 

tS  tttiTdtv  "'  --ten^repeated  the  statement  Zl 

tftey  intended  t«  tie  up  every  road  in  town,  and  keep  them 

led  up  until  they  refused  to  handle  Pullman  cars;  tS  aft" 

the  strike  on  Thursday  he  said  he  had  most  of  the  American 

mLi^t  th„t   r  \"  ^'"^  "°*  **"*  ^""^'J  ^  »"t  the  next 
morning,  that  after  his  arrest  he  explained  that  his  course 

had  been  to  tie  up  the  freight  trains,  and  not  so  much  to  stoD 

Si     tb  rp'-^'""  *^^  "^^"^y  --  -  the  fre  ght  b.S 
ne^.    Schaff,  Gibson,  and  Bender,  officers  of  the  Bi^  F^„r 

ilailroad,  testify  that  Phelan  saik  to  them  on  Thu^^ 
afternoon  when  they  met  him  for  the  purpot  of  S 
whether  the  "embargo,"  as  Phelan  and  Debfe^piS  "t 
^uld  not  be  lifted  from  the  Big  Four  Caui Tw  ' 
Wa^er  sleeping  car  line,  that  he'pri^Sed^o  tfe  up  evLJ 
hne  m  town,  and  was  in  a  hurry,  becaus^  he  must  go  o^er  aS 
tie  up  the  Pan  Handle  and  the  C.  &  O.  befo,^  sunsef  and  that 

m";  e  oflhTB-^'f  "'''*  "":  ^^"'-^  '^^  ^«  ^^^  -Sd  ou?  some' 
more  of  he  Big  Four  employes.    Phelan  and  those  memb^ 

of  the  city  committee  who  accompanied  him  to  thl^s  mlt=n^ 

save  that  their  loyalty  to  their  chief  is  greater  than  the  r  « 
gard  for  the  sanctity  of  their  oaths.    Westcott  the  Fn^ 
^porter,  talked  with  Phelan  about  thi^^S  £S  3 
Phelan  said  that,  as  Schaff  tried  to  "bluff"  him? he" had 


.^ 


I 

t       'i 


•1 

i 

1 

1 

i       1 

f 

1      \ 

I 


276 


62  FEDEBAL   REPORTER,   810. 


Opinion  of  the  Court, 
called  out  s(„ne  more  of  his  men,  to  show  that  he  had  no 
Hard  feelings:  and  when  Westcott  expressed  surprise  at  that 
way  of  showing  friendliness,  Phelan  said  that  was  the  way  the 
American  Railway  Union  showed  its  friendliness  in  a  fight 
On  June  28th,  the  day  of  the  strike,  Debs  telegraphed  Phelan 
to  let  the  Big  Four  alone,  if  not  handling  Pullmans,  to  which 
Phelan  answei-ed :  ^'  I  cannot  keep  others  out  if  Big  Four  is 
excepted.    The  rest  are  emphatic  on  all  together  or  none.    The 
tie-up  IS  successful.    Once  more  will  Big  Four  be  let  alone." 
If  Phelan  was  not  the  chief  agent  and  inciter  of  the  general 
tie-up  m  Cincinnati,  he  has  been  most  unfortunate  in  the  use 
of  the  language  in  his  telegrams.      \Vliat  he  here  said  nee- 
essarily  implied  that  he  had  induced  all  the  employes  to  go 
out,  and  was  trying  to  keep  them  out,  and  that  theV  threat- 
ened to  return  if  the  Big  Four  line  was  exempted  from  the 
tie-up. 

Wliat  I  have  said  of  the  credibility  of  Phelan  in  reference 
to  his  agency  m  enforcing  the  boycott  and  tie-up  applies  with 
^ual  force  to  nearly  all  his  witnesses,  esi^eciallv  to  those 
from  his  city  committee.     They  would  have  the  court  believe 
that  Phelan  was  merely  a  peacemaker  in  this  community, 
with  no  responsibility  for  the  strike,  and  no  purpose  to 
incite  it  or  continue  it.    Take  Bateman.    He  was  a  switchman 
of  the  receiver,  and  on  the  subcommittee  of  the  road.     Debs 
had  been  applied  to  by  the  president  of  the  stock  yards  to 
allow  the  cattle  cars  to  be  unloaded,  and  Debs— presumably 
m  the  exercise  of  the  dispensing  power  given  him  by  the  con- 
stitution—had directed  T»helan  to  have  this  done  if  no  in- 
jury to  the  cause  resulted.    Pending  this  matter,  Westcott 
was  inquir-  [811]  ing  into  the  outcome,  and  applied  to  Bate- 
man  as   a   subcommittee    for   information.     Westcott   says 
Bateman  told  him  the  stock  matter  was  in  Phelan's  hands, 
and  that  the  cattle  could  not  be  handled  without  Phelan's 
orders;  that  "whatever  Phelan  says,  goes."    Phelan  told 
Westcott  substantially  the  same  thing,  and  a  telegram  from 
Phelan  to  Debs  is  in  evidence,  in  which  he  says,  "  I  am  hav- 
ing stock  unloaded."    And  yet  Bateman  denies  his  conversa- 
tion with  Westcott,  and  another  member  of  the  city  commit- 
tee says  that  Phelan  had  nothing  to  do  with  it,  and  only 
applauded  when  it  was  done.    Every  committee  man  who 


i 


4 


THOMAS  V.  omcn,»»Ti,  ».  o.  ,  T.  ,.  „.  ^      277 

Opinion  of  the  Court 

teZeT"  t^'  '*T*^  ^''"'^  '^'y  '"'"^^  the  majority  of  con- 
temners witnesses)   tried  to  give  the  impression  thJthl 

and  yet  his  complete  command  is  so  apparent  that  it  cannot 

eTpTssSr-  "^^^  '''^^'^"  forgot'Lself  he  nld  S 
TandT'  and  ""^  :'"'""?'"ee,"  "I  instructed  them  to  do 
so  and  so,  and  occasionally  such  telltale  words  would  creeo 
into  the  evidence  of  all  his  witnesses.     Another  khid  of  s,^^ 

tTttllftL;- ^  ^''''''-  '•"•' «"  «^  ^^^Z 

to  tne  eflect  that  these  committees  were  organized  solelv  for 
«ie  purpose  of  keeping  the  peace,  and  assisfing  the  2k  pJo 
v.ding  for  parades,  and  hiring  halls;  but  nft  oL  ford  is 

the  employ  of  the  various  railroads,  and  vet.  if  Phelan's 

n  unction  was  followed,  persuasion,  explanation,  and  arg" 

ment  were  to  be  used  with  all  who  did  not  join  the  caui  at 

Phi   ?mT'"'""'  ^"'^  subcommittees  Jr.  7o  in  Sk," 
Phelan  told  Westcott  at  one  time  that  he  had  to  vis    "aT 
road  yards  with  his  committee;  at  another  time  that         "m 

stX't  ^^kT\l"^  ""''  "'^•^'''^  *•>«  "'->  -ho  remained 
still  at  work,  for  the  purpose  of  inducing  them  to  quit-  and 

this,  though  not  mentioned  by  a  single  Witness  for    L  de 

S'J::  doubtless  one  of  the  chief  reasons  for  ^  ^ 

With  the  intention  of  showing,  that  he  has  been  guiltv  of 

court  PhT"  r''  ""  •'""P""''*  -'*h  the  ordei-r  o    this 
court,  T  helan  said  upon  the  stand  that  he  knew  the  Southed 

Railroad  was  operated  by  a  receiver  appointed  bv  tWs  co,^ 

and  was  therefor,  anxious  to  avoid  interference  wi,""' 

in  thH  "!!?  """"Z*'^  ''''  """•"«  «"t  °f  the  coach  cleanl 
in  the  Ludlow  yards  on  this  account.    Mo«K>ver.  Buelte  ^ 
his  city  committee,  testifies  that  the  Cincinnati  South"„  wL 
especially  excepted  from  the  operation  of  the  bovcott^oZ 
because  it  was  in  the  hands  of  the  court.    Ancui"?.  e^v 
night,  ,n  the  preparation  for  the  boycott  and  ir  ke  Sch 
was  to  be  put  into  eflfect  on  Thursday  following,  thi^;    ht 
action  of  committees  in  respect  to  which  Phelan  hi,3f  2 
m  ts  he  made  suggestions,  and  which  were  appointed  unSer 
his  supervising  eye,  a  switchriian  from  the  receiver  s"^^      • 


ri  I       *  'I 


M 


hi   II 


|»l 


II 


(I 


278 


82  FEDERAL,  REPORTER,  811. 
Oiiininn  of  the  Court 


aUies  to  notify  the  receiver's  yard  master  of  the  boycott, 
file  notice  was  given,  and  the  strike  occurred  earlier  among 
the  receiver's  employfe  than  among  those  on  some  of  the 
other  roads.    Phelan  told  Westcott  on  Thursday  afternoon 
that  the  men  were  aU  out  on  the  [812]  Southern,  and  yet  this 
was  the  road  he  wished  to  save  from  the  boycott,  because  it 
was  in  the  hands  of  the  court.    What  did  he  visit  Ludlow 
for  on  Friday,  and  address  a  meeting  of  railwav  employes, 
.f  he  intend^  to  be  careful  about  interfering  with  the  opera- 
tion of  the  Southern  Railroad  by  the  court?    There  are  no 
railway  employes  in  Ludlow  but  those  of  the  receiver.    What 
was  Bateman.  the  committee  man,  doing  in  that  place  in  at- 
tendance at  two  other  meetings,  if  the  respect  of  Phelan  and 
his  committi-e  for  the  court's  orders  was  so  great «    The  pur 
pose  with  reference  to  the  Southern,  as  with  respect  to  everv 
other  road^s  so  clearly 'shown  by  the  telegrams  between 
Dete  and  Phelan,  that  it  could  hardly  be  more  certain  if 
Phelan  had  admitted  it. 
Debs  to  Phelan : 

"  June  ''T  1894 
fo^'^'Td^^jV-  •'"'*  ""  "'"*"™  '"^  "'"  '*  '"^  "P  -"Oly  be- 

Phelan  to  Debs  : 

« T  *  ,  ,  "June  28,  1894. 

I  cannot  keep  otliers  out  if  Rij?  Four  is  ext-entecT     Tho  ««♦  «,« 
emphatic  on  all  together  or  none.    The  tie-up  irsuSLftU.^' 

Debs  to  Phelan : 

**tK    ^    »«    tt  *  "June  2D,  1894. 

bloelmle'  "**'''    Parnlyzed.     More    following.    Tremendous 

Del)s  to  Phelan : , 

"  XT      1    .X  .    .^  "July  2.  1894. 

Knoeic  it  to  them  liard  as  i>ossibIe.    Keep  B|e  Four  out   nn*i  hoin 
get  them  out  at  other  places."  ^      ^  *^"^'  """  "®*P 

Phelan  to  Debs  : 

../^  .  ,     ,.  "July  2,  1894. 

Going  out  all  around.    Firemen  a   unit.     Will  soon  he  an  avn 
Ifinche  to  us.     Working  outside  points."  "     *^*" 

Debs  to  Phelan : 

«•  TT  1 1  »>  "July  2,  1894. 

Hold  Big  Four  solid.     Going  out  to-dav  at  everv  nninf     no4«i«« 
ground  rapidly.'*  ^  ®*^  ^^^^'    <5aliilng 


4r 


4 


THOMAS  V.  CINCINNATI,  N.  O.  A  T.  P.  RY.  CO.        279 


Debs  to  Phelan : 


Oplnjou  of  the  Court. 


..»j  I        ,  "JULT  2,  1884. 

more  anTjjI"  pin '^'»  *",, '"T  ""/  P"''"°"  strengthened.     Baltl- 
~     -d^l^oh^^-CeSriire^^^^^^^      ^t  ?r  S^^t 

I  have  now  gone  over,  more  at  length  than  necessarv. 
perhaps,  the  evidence  concerning  Phelan's  connection  with 
the  boycott  and  strike,  his  purpose  in  coming  to  Cincinnati, 
and  what  he  did  here,  and  I  find  the  fact  to  be  that  he  came 
here  deputed  by  Debs,  president  of  the  American  Railway 
Union,  and  its  board  of  directors,  to  enforce  a  bovcott  against 
the  cars  of  the  Pullman  Company  by  inciting  all  the  em- 
ployes of  the  railroads  running  into  Cincinnati   to  leave 
their  employ,  and  thereby  to  tie  up  everv  road,  and  [8131 
paralyze  all  traffic  of  every  kind  until  all  of  the  railroads 
should  consent  not  to  carry  Pulhnan  cars  in  their  trains;  and 
that  his  plan  and  his  actions  were  directed  as  much  against 
the  Cincinnati  Southern  road  in  the  hands  of  the  receiver  of 
this  court  as  against  every  other  road  in  the  citv;  and  that 
he  knew   when  he  inaugurated  the  boycott  on  the  Southern 
road  and  incited  the  receiver's  employes  to  strike,  that  the 
road  was  in  the  hands  of  the  receiver,  and  was  being  oper- 
ated under  the  order  of  this  court. 

We  come  now  to  consider  the  question  of  fact  whether  Phe- 
lan m  any  of  his  speeches  advised  intimidation,  threats,  or 
violence  m  carrying  out  the  boycott.     He  is  charged  with 
rr^/^^  ^  1"  Thursday  night,  June  28th,  at  the  meeting 
at  West  End  Turner  Hall,  that  the  strike  was  then  declared 
on;  that  it  was  the  duty  of  every  A.  R.  U.  man  to  quit  work, 
to  induce  and  coax  other  men  to  go  out,  and,  if  this  was  not 
succe^ful,  to  take  a  club,  and  knock  them  out.    He  is  charged 
with  having  said,  on  the  same  or  another  occasion  during 
the  same  week,  that  the  committees  should  be  appointed  t« 
persuade  men  to  go  out;  that,  if  they  would  not  go,  then  the 
committee  should  get  round  behind,  and  kick  them  out     The 
meeting^  at  which  these  remarks  were  said  to  have  been  made 
were  behind  closed  doors,  and  no  newspaper  reporters  were 
permitted  to  be  present.    Only  A.  R.  U.  men  and  railroad 
employes  made  up  the  audience.     The  first  charge  is  sup- 


I" 


i 


I 


I 

i    I 

i  ! 


i 


' 


1 1 


^^  62  FEDEBAL  REPOBTER,   813. 

Opinion  of  tlie  Court. 
ported  by  the  evidence  of  oua  T  n   c 
of  the  Big  Four  Railway  ZAel  JTa7'  «  *"»«^ri- 
shows,  a  wholly  iisinte^tTXl    ,17 ^^  T  ^"?"^^ 

a""ate  an^-  th^^'shtuvTf  "^  ^"^  r "^'^  ^''^^'^^"^  ™-" 
them-  to  be  law  abidin?  L  Z"^''  '*''^'«"  «<i^i*d 

makes  an  TJu^  .        ^  ^'*'^^"^     ^o  this  charge  Phelan 
manes  an  explanatory  answer  as  follows:  »  "«*ian 

niK.i,  sever"l"^!!Lion8"m  tUls'cItv'' hn™''..«'^''^'"'^  """''  ""-V''«h1.v.  I 
siou  alwnt  In  the  same  line  wUht,«tfil"T'  '"'*•'"*  "'"»  <>"e  ex^res- 
this:  I  l,ave  told  the  bovsl^iffeJent  „nl!^,H''"'»<*  "'  ^''hleh  is  „I,ont 
deinamis  npnn  me  to  go  aTraml  anH  ^i^*"'"®!*  ""■-'  "  K<«><1  <leal  of 
Pnllnian  ti-.ml.le.  I  ^s Torrle,?  fn  T  t^'J.'^'ly  "»<l  explain  this 
«»nstitme  yourselves  iT«mnX«  -  p       '""*'^  *     *     I   snid.   •  \v,u 

peopl,._t„o  .•"mmunlSr7n  wh  ^Tvn,  Ml'^'n"  "/  >""■  """  go  to  the 
their  .loiualntances.— and  evnliill  !"","'<'•  «"  to  the  hoys.— I  luean 
about  it  nesee,h  t,.e^to^iiten'',^."'^^"r  7':»^^  "^""^  *<>  S 
before  they  would  condemn  nsalH^?*  ,  .J",'"  '"*""  ♦"  ^''t  the  idea 
knock  then,  in  the  bead  al«)nt  it"  U  "'  ""  ""^  *<'^^  «  <-I"b,  and 
elicited  applause,  hnt  1 1  f.^  'iV  .var't^lk-eTttXrlvi^-  ^^"^ 

evilt^JTw  Vlr:i:^Zf  i*  is  -ppo^ted  by  the 
it  An  aceotmt  of^hn^^in^tS  U  tX ^1"^'^ 
occurred  was  published  in  the  Cincinnati  Enqu.Ver  of  W 
29th,  and  read  to  Phelan  bv  counsel  f^-  ti.  ^  .  °*  '^""e 
as  follows:  «"  "J  counsel  for  the  receiver.    It  was 

in"thtsmS;-;:''!;^irt"" rd\?ir,",'""-'-^-  •  "«• »"« '*•  -or  with  „« 

in  scathing  tones  <litbe  l^m^.^V  •{vr^'}"^^'  Then  he  s|K>ke 
vlduals  with  us :  we  want  war  C^  •  ?,*  V""*  "o  weak-kneed  ndi- 
«n  eloquent  denunciation  of  Or     d   Master    /"'«"  *"""  ""'"'•""'  "'to 

locou.otive  engineers.     '  He  Ls  no    the  ^nra^f  ;."d  "^^  '""'  '"■'"^'  "' 

'V  lut?  njurage  to  declare  a  strilce  * " 

»HS~;s^;--"  ss  K  sr 

to  tile  i.itter  eucl."^       "*'  ""  "'^^'*  "*«  ^^^  west  will  standby  yon 

said  ^:.Ji  :t:^^X';^^j'T:^:r/' 

not  to  go  back  to  work  till  the  Lke  ':Ztlll  oT whiS 


V,, 


I; 

it 


THOMAS   t;.  cmciXXATI,  N.  O.  ^  T.  P.  Rv.  CO.        281 
Opinion  of  the  Court 

"  Mr.  Phelan  then  resuniPd  •     ♦  wr^ 
this  hour  of  trial.  m,d   i™^uy  Xr.«  fo'*''"'l  ""'""J'  t'^^t"^--  '" 
Of  strikers.  .ei.e  then,  hy  thlKi  ol^ ^n^^.^^^d  t^^lXroil't''-'^ 

Upon  this  passage  the  examination  was  as  follows- 

t^i,p !z 2; ^i'-t i't,^",* n"^/-  *  ^^"' •-"  -o" to 

Q-  Will  you  swear  vou  did  noiV  i  ',  "°"  *   recollect  of  saying   it 
Q.  That  is  as  n.uch  as  von  w"n  sTA  '  "^l » /^""'eet  of  sayini 
««}••     I  will  state  this,  however  Tf  JZi         ^""^  '"  ""  "'"<•"  «»  I  will 

tainly    if  he  did  no    LT  V  "*  "''^  ^"^  »»*  '"t^n^.     Cer- 

-a^Mt"u"„1o;tureL™^  ^"^^--^^^^^  ^-^  ^^'^^ 
An  attack  i.s  made  on  the  credibility  of  Dormer      He  ^ 

otherwise  tl  an  bv  .bo^-      '!"''**"'  ^*"'  ""'  ^»   «"acked 
xYvise  man   Dy  snowine:  his  assnmnfio«   ^#        ^  i 

pearance  and  name.    There  is  evidZf       ,      ""     "'•■*  ^P" 
willingness  on  his  ..art  t^      ^  evidence  tending  to  show  a 
sucsB^n  nis  pait  to  involve  some  of  his  fell^„    t  -i 

m  a  trespass  on  the  company's  property  buM      J      r"^ 
say  that  his  accuracy  «= \^        property,  but  I  am  bound  to 

the  meeting  which  L, ft   Tf*^'"^  '^^  that  occurred  at 

evidence  of^Phe^n  and  h   '    t"'  '"  """  '^""'^  «"*  •'•^'  th« 
ing  to  recollect     Av"e  ,h      i!"*'  "'  ^''  «^  *''«>'  ««•«  '^i"" 

de^ndent  "rDorm    ^stltfn'T  T  '"  f*"^'^"'^  '''"^-^ 
them   sufficient   weiX    .f  **"'«"*  «'«»«■'  I  should  not  give 

Phelan;  butTll S^^ierw^rZLr^"'^-  '^'l  ^<"» 

cannrSa  ^  ^HrdntendT^  ^""^'^  '"^«"'"^'  -"^'^  ^ 
of  inciting  viole,rthat  hTs  ""^'^  *"  ^'"''^  °*  '^'  ^^g- 
Had  his  efidei^STnd  thl    f  ^    """^  •'''•■'  misunderstood. 

issues  in  tlds  Tse  „„t  h  '"V""""'"**'  ""«"  *he  main 

tiiis  ca.se  not  been  most  evasive  and   wanting  in 


AH2 


62  FEDERAL   REPORTER,   814. 


Opinion  of  tile  Court 
sincerity,  I  should  still  be  inclined  to  give  Phelan's  e^nla 
nations  credit,  and  give  hi™  the  benefit^f  a  douTtorfi?; 

Apparent  fact^n  S  *"  T**"'  ""^  P^^^^^*  the  most 

apparent  fcct  m  the  case,  namely,  that  he  instigated  en^* 

cinnati  from  begmning  to  end.    After  this  his  denials  and 
evasions  can  be  given  little  wmdht     it  •    7    .  ""'^  *"** 

that  Phelan  did  S  Ws  men  JlTi        ll  ''**"''"*^  *"••* 
*-ii  ii.       .  ™®°  "•  ''«  law-abidine.  that  he  dJH 

tdl  them  to  stay  out  of  saloons,  and  off  the  co^ny's  prop 

w  f  tiH»inselves  to  the  punishment  of  the  law.    W^cott 
^es  to  this,  and  so  do  Dormer  and  Sweeney,    nJS  ! 
hM  doubtless  prevented  many  open  assa..lf«  »n/ 
But  I  do  not  doubt  that  at  tie  ZeZ  "he  el„3S1^„ 

their  fellows  who  d,d  not  join  with  them  in  this  bovcott  bv 
expressions  of  the  kind  testified  to  by  Sweeney  andSLf 

Jh^eyr^rgl^    tie  ln^'"^f  ^^  ^^'^  ^»  -"- 
J      uiu  oe  given  a  double  meaning  if  questioned. 

i  he  expressions  were  for  the  purpose  of  bringinir  into 
operation  that  secret  terrorism  which  is  so  effectivf  for  T- 

Sfi^VhrrdTo"/'"™'"'"^  ''''  ''-'''''-'  P^«-'  ^ 
nicn  IS  so  hard  to  prove  m  a  court  of  justice  unless  it  «. 

fliif  '1:T  r  "'*•    '''''''*  ^''«'-  «P«"'y  .lis^rajil  cot 
flict  with  the  law  is  to  his  credit  as  a  strike  organizerfor  he 

wislied  public  sympathy;  but  that  he  wished  TaW  of  thl 

^at^tSt  tt  •^•'f  *"^"  "'  ^•«^'«^  h««  b^^n  in  such  a 
state  that  the  receiver's  employes  who  live  there  have  been 

'T  r*  ^r'-    '^^'"^  ^"^"^^'^  h«ve  left  the  town  S 

ployes  within  guarded  pr^incts.  It  has  been  shown  that 
storekeepers  of  Ludlow  have  refused  to  .sell  goods  to  the 
receiver^  employes  because  they  were  bovcott^^  Thread 
have  been  made,  and  an  assault.    Insulting  and  agiSe 

Of  tlie  nver.    Threats  are  hard  to  prove.    If  effective  thev 

ness  from  the  stand.    The  receiver  has  been  obliged  to  keep 


i 


THOMAS   V.  CINCINNATI,  N.  O.  &   T.  P.  BY.  CO.        283 
Opinion  of  the  Court. 

sidLTf  ^hT  "'  *'  y"'*^.  ^"^^^  ''^P"*^  """^hals  on  both 
S^    1-  r  ^'''^  ^"  ^'^  ^"^°««  «nd  trains  in  order  to 

induce  his  employ^  new  and  old,  to  remain  in  his  ser^iJT 
I  cannot  presume  that  such  protection  was  invoked  b™ 

c^Sdoo^  ti  th  f^P'^««'o»«  in  his  speeches  behind. 

Closed  doors  to  the  employes  of  the  receiver  which  were  cal- 
ciilated  to  induce  intimidation  is  not  of  primarv  important 

with  the'"'''  T'  ''^  r "  ^^'•^''^''  "^  ^"'  his  interfere;^ 
with  the  operation  of  the  Southern  road  by  the  instigatio^ 
and  maintenance  of  the  boycott  and  strike  again.st  the'^oaS 
was  the  main  contempt  of  this  court.    The  suggestions  Zd 

Spt;  rtr  ^^"'^  ^"'^  ^  «^^--^-  ^^ 

Section  725,  Rev.  St.  U.  S.,  provides  that: 

PowIXTrntra^d  adnfinSer''.n°ni''*  ™'«<*  ^""'^J  ^^all  have 
flne  or  Impri^uu.ent  at  the  discre  on^«.?'  ""?"  ""•*  *°  P""'""  by 
authority:  nrovldwl    that  !.,^if"„         ^'  ^^  "'""''ts  contempt  of  their 

be  conJmJ^Z'ifteTL  Tny  eS  ex^„T?ifi'  <^r^""'t«  '"•«"  ■»* 
person  In  their  presence  or  so  nAaTth^.S^  *''!  ""^behaviour  of  any 
of  said  courts  In   their'  nfflWnW      "'•''eto  as  to  obstruct  the  oflicere 

dlen<*  or  resStanJ^^'anrsuch'Sr  "oTI;  """  *"*  f"«J  <"««^ 
ness,  or  other  person,  to  ."nvrawfiH^wV  ^^  '"'"•''  ^^'^^  J"™"-'  »«- 
or  command  of  the  said  roSrls  "  '  "'■'^^^'  '"^^''  "•"'«•  <J«"ree. 

r/*  7"  kS"  nf  i^'  i'^"^^''  Drummond  in  Secor  v.  ^«,7,-.a./ 
Co.,  7  IJiss.  013,  Bed.  Cas.  No.   12fi05.  that  any  unlawful 
.nterfeience  with  the  operation  of  a  road  in  th^     atll  o 
a  recener  ,s  a  contempt  of  the  court,  because  it  is  a  dis 

tttr  ";■"' •^""k  \ "  p™  ^°  '^  '-^"1  -<!-  of 

Treatin  V/    I     "7  ^''  ^^"  *^'^^"  ''•^'  J^^^S^^  brewer  and 

Id  044;  and  by  Judge  Pardee  in  Re  Higgin.,  27  Fed Ifv 
T  .se  authonties  show  that  any  willful  aJLi^t  by  any  ^ 
with  knowledge  that  the  road  is  in  the  hands  of  the  court' 
to  preven  or  impede  the  receiver  from  complying  with  he 
order  of  the  court  in  running  the  road,  when  Sfe  attempi 

a  right  of  actu.n  for  damages,  is  a  contempt  of  the  ordef  If 
the  court     The  rights  of  the  receiver  with  referenJ to  hi 

are  1?;"/""^^"^  ''-''  ^">™«^  "»^-  ord"    oTthe  cou 
are  not  different  in  any  respect  from  tho^  of  a  private  3 


Ill 


1 1 


IR^Ba 


^'^  .  62  FEDERAL  REPORTER,   816. 

Opinion  of  the  Conrt. 

whTchTr"^!""-    r^  T'^  ^^'''""^  -^  '"  the  remedy 
li^J^l       "t ''''"  'PP'y  ^'^  P^^«"t  »r  to  punish  a  viola 
tion  of  them  when  such  a  violation  prevents  or  impedes  the 
openition  of  the  road,  and  is  intended  to  do  so. 

There  is  no  doubt  that  Phelan  intended  to  prevent  utterly 
the  operation  of  the  Southern  road  by  calling  out  the  re 

nT'■'„:STh^   ";  ^''''^'  ^'^"^  *'  Paralfj'his  bui" 
n^s.     He  did  the  trust  a  very  substantial  injury  by  stopping 

to  pa.>   lieavy  exj^nses  for  unusual  police  protection    and 

crndd  he'...  '  '  "  "^r'  '''''  "  P"^«t-  corporftion, 
the  buste  "f  ^h  T  ^  \'?^  '"^■'"••^  ^l"-  '"«i<^ted  on 
en^e  u,th  the  business  of  another  by  inducing  his  employes 
to  leave  h.s  servK^e  is  an  actionable  wrong  and  -ubrr^f 

franm   10,  Mass.  ;,5o.  ,t  was  held  that  a  count  in  a  declai-a 

Shoes,  and  for  the  prosecution  of  his  business  it  was  necessarv 
for  hmi  to  employ  many  shoemakers;  that  the  deJendanTs 

auft.l  ".'"  ""■'■•^'"^  ""  ^>'l  ''"«n*««.  with  the  un- 

inent   a  K   o  .""•'  ^'^'^^^-.s  who  wei^  in  his  employ- 

Sout  his    r  ?"  ?"'  "'""'*  *"  ""*•"•  't.  *«  abandon  it 

he  ptin^  ff  ]  "    ;;   ""'  "^""^^  ''•^  "'"'•  «"'!  *»"«'  thereby 
ine  plaintiff  lost  their  .services  and  profits  and  advanta«.; 

a  ^  was  put  to  gi.at  expense  to  pr,K,L  other  IknlulTk- 
>"en,  and  was  otherwise  injuretl  in  his  business  -ZJT, 

The  real  question,  therefore,  is  whether  the  act  of  Phelan 
mi  icior  Th  •    ''"t^'thout  lawful  excuse,  and  therefore 

trial  under  the  erimkal  tw  1.  Thltht  l^T'  ""' 
lawful  in  the  sen.se  that  he  c;uld  te  11  .^  "''7''  ""' 

for  the  loss  occasioned.     Of  ^uil  ifTh        .    P*-^, /«""'^'« 

^fi  course,  if  the  act  would  subject 


THOMAS   V.  CINCINNATI    N    o     (    ,.    t>    „ 

"--All,  K.  o.  &   T.  P.  BY.  CO.        285 

Opinion  of  the  Court 

be  a  contempt  without  being  a  crime  '  "'' 

of  thTriS  iTadTrrSh^tr  ''""^^  ^''"  '''  -P'">-^« 
labor  union  which  Ih  mid  S  "I^""  ■'*  '"*°  *"•  ^^  J"'"  « 
of  employment  It  soJ  h ':  r?  T"""  ''^  *"  ^^eir  terms 
that  laborers  shou W  „ite  tZ  ""  ""^  *"  '""^  """- 
lawful  purposes     TI  Ivt         w    "'"™""  '"t*^'*"^*  «"d  for 

together!  th^^ofttf able  a/rlT^J"  *"■    "  ^''^>'  «*'""' 
prices  for  their  iZ,   h!         i         ^*''"'  ^°  ''"""nand  better 

employers,  ZlJt^^'^^:^^^'^-?  f^^^'^  -" 

compel  hin,  to  accept  an^^r^'  ffe^d^ir'Vh?^'  T 
tion  of  a  fund  for  Hi^  «..,      ^     ^^^^^  mm.     Ihe  acciimiila- 

wages  offered  are  b^f^.^rft^  ■''*'"  "'''  ''^^  *•»«*  ^he 
niate  objects  of  such  1:  ^r^^Lf^^T  T^V  '\*  '«^'*'- 
to  appoint  officers  who  ^haU  aZllTh  ^  ''^'■*'  '''"  ""ht 

be  taken  by  them   in  thpH      i  "  "'  '''  '^e  course  to 

Theymayu'nite::?th:t  '  „:f  "Siel'c  ^'t  ^'"''"'•^^^• 
or  any  other  pei.on  to  whom  Zy  c^ "  ^l"  ^^  "^P""*' 
Vise  them  a^  to  thp  ..-^  ^  cjioose  to  listen,  may  ad- 

«gard  to  their^^mp  o'y^r  oTiTtht  "^  ''''''  ''  ^^^  "' 
authority  in  any  one  mav  orH^  fK  ^  "^  '"  ''^P*'*  ««ch 
from  their  union  CTblJf^  ""'  .T  ^'^  ^'^  ^^P'"-"" 
e-nployer  because  arofi^Tt  Li:;,''  *""P'''-"  ''^  ^^eir 
unsatisfactory.     It  follows  thl^       .  ''""  ^'"P'^yment  a«, 

which  win  be'uii;:!^;;  hir  ?  PhS^?r  '""^*"'*^- 

«ty  when  the  receiver  reduoln    K  ''***  "^""^  *«  ^^is 

by  10  per  cent.,  and  Id  S  1  ""^f  "^  ^''  ^'^P'-^y^^ 
succeeded  in  ma'intai;;:g  2^  C^^^^  f  ^^«'  -^  had 
receiver  would  not  be  ^onnH  fl  .^  ''"""*^  »*  the 

Phelan  would  not  have'C^'^iifM  T^'""^  ^^"^'^^^  «-l 
strike  much  impeded  the  o^.,.  *  u  """'^^P*  «^«n  if  the 
of  the  court.  uStctionZT''  1  ™'"^  ""•*^''  '^^  "''d^'- 
order  based  on  unsSs^tlf  ^is'oVem  ?  ""'  '""'"^  ^ 
have  been  entirely  lawful      RiH  *™P^"y"«nt,  would 

advice  t«  the  Southern   R«,l  ^"'"^  here,  and  his 

Ployes  of  other  roads  To  ^1^^  T.  '""f^^'^'  "^  ^o  the  em- 
terms  of  employment     Til    '  ^'"^  """^^""^  *«  do  with  their 

«rvice  or  ther;!"      P 'e LT  "''!  ^T'''^'^  ^^h  their 

pay.     Fhelan  came  to  Cincinnati  to  carry 


illt 


II 


m 


286 


62  FEDERAL   REPORTER,   817. 


Opinion  of  the  Court, 
out  the  purpose  of  a  combination  of  men,  and  his  act  in  in- 
citing the  employes  of  all  Cincinnati  roads  to  quit  service 
was  part  of  that  combination.  If  the  combination  was  un- 
lawful, then  every  act  in  pui-suance  of  it  was  unlawful,  and 
his  instigation  of  the  j^trike  would  be  an  unlawful  wrong 
done  by  him  to  every  railway  company  in  the  city,  for 
which  they  can  recover  damages,  and  for  which,  so  far  a^h» 
acts  affected  the  Southern  Railway,  he  is  in  contempt  of  this 
court. 

Now,  what  was  the  combination  and  its  legal  character* 
•liLr  '*'**^^'^  conspiracy?     I  do  not  mean  bv  this 
an  iBdHtable  conspiracy,  because  that  depends  on  the  statute- 
but  was  it  a  conspiracy  [818]  at  common  law?     If  it  was' 
then  injury  inflicted  would  be  without  legal  justification,' 
and  malicious.    A  conspiracy  is  a  combination  of  two  or 
more  persons,  by  concerted  action,  to  accomplish  a  criminal 
or  unlawful  purpose,  or  some  purpose  not  in  itself  criminal 
or  unlawful,  by  criminal  or  unlawful  means.    Pettihom  v. 
U.  S.,  US  U.  S.  197,  13  Sup.  Ct.  542.     WTiat  were  the  pur- 
poses of  this  combination  of  Debs,  Phelan,  and  the  American 
Railway  Umon  board  of  directors?    They  proposed  to  in- 
flict pecuniary  injury  on  Pullman  by  compelling  the  railway 
companies  to  give  up  using  his  cars,  and,  on  the  refusal  of 
the  railway  companies  to  yield  to  compulsion,   to   inflict 
pecuniary  injury  on  the  railway  companies  by  inciting  their 
employes  to  quit  their  services,  and  thus  paralvze  their  busi- 

fi!^'i>  n  "^""^^  "^*  ^*''®  ^"^  unknown  to  the  ^mbiners  that 
the  Pullman  cars  were  operated  by  the  railway  companies 
under   contracts   with   Pullman.    Such   large   transactions 
are  never  conducted  without  contracts  saving  the  rights  of 
both  sides,  and  the  combiners  had  every  reason  to  believe  that 
It  would  be  a  violation  of  those  contracts  for  the  companies 
to  refuse  further  to  haul  Pullman  cars  in  their  trains.    One 
purpose  of  the  combination  was  to  compel  railway  companies 
to  injure  Pullman  by  breaking  their  contracts  with  him 
The  receiver  of  this  court  is  under  contract  to  Pullman] 
which  he  would  have  to  break  were  he  to  yield  to  the  demand 
of  Phelan  and  his  associates.    The  breach  of  a  contract  is 
unlawful.    A  combination  with  that  as  its  purpose  is  unlaw- 


'  N.  O.  &   T.  P.  RY.  CO.        287 
-  ^Pi»«on  of  the  Court 

milwa.v  companies  had  no  srSZ  ^-'P'oves  of  the 

Handling  and  hauling  ^LTrar'T/  '''''^  ""P'"-^"-" 
services  any  more  burden  ome  Ti  u  "°*  •*'"'«•  »''">• 
against  the  Use  of  P,S,a.  '  r"  '''  ^"^  ""  ^™'P'«i"t 
no  «atnral  relation  with  P  „,  «'^;  ^^ '^.V  '^'^f  --  into 
paid  them  no  wages.     He  d  d  ,  1  .    '"^  ^''^  '^'-'-    He 

I"  any  way  detennine  their tlX.T'',  "•"""  ''""'«•  «'• 
■n  l»s  business,  they  were Tn^'d?- ,  ^"^^^^  ^"  "'i-r-  hhn 
•he  railway  companies  To  SI  '"''  encouraged  to  compel 
thR,ats  of  quitting  the  r  "i^'^'"'':  '^"^t*""   fron.  him  bv 

-vice.    This  inflfctf^'Ln^-  ";  Z  r'"'''''  '"""'"^  '^ 
very  great,  and  it  was  unla  "f  d  h  ^''''npa'Hes  that  was 

ful  excu.se.    All  the  e^W  J  hadTh"  ''  T  "'*^*'"*  l-" 
employment,  but  they  hJdTo  rhrt^    "^^^  *°  ''"'*  ^heir 
order  thereby  to  compe    their  ^fn.         ?"''^""  *"  <!'"*  "' 
a  mutually  Profitable'^latbn  3  ?1-*",  "'*^'''-«^^'  ^'^«^ 
purpose  of  injurinff  thJthf  .         *  ^^'""^  P«''«>n  for  the 
thus  ^ught  to  beiotlt  d    P^'T'/'r  '''^  -•««- 
character   or   reward   of  thl   T        '*  ''■^^t'^y'^r  on  the 
.for  quitting,  and  the  end  tlhTir  k'*  "   ^'^^   ">««- 
injury  inflieted  unlawfulanT  tt  .T''^'.  *'»''*  '""ke  the 
'«  effected,  an  unlawful  compfra^^^^^  combination  by  which  it 
an  ordinary  lawful  and  pTaSe  T  1  ^'^^'"^"on  between 
obtain  concessions  in  the  Srif  the  ^t    ^'f  ^   "P°"  *» 
and  a  boycott  is  not  a  fanc.fJl  onV  ""'"^  employment 

power  of   fine   distinctio^  to   dJ'  *"  **"'  ''^'"^  "««»«  the 
Every  laboring  man  rer^^i,?   f  termine   which   is   which 

f  19]  ly  as  th^e  lawvTrT riudr'  "tV^^  "*^^  ^  ^-^^■ 
^er  discussion  was  a  boycott     n  "  combination  un- 

Phelan,  and  all  engaged"7n  it  R  """".."^  "^"^"^  ^y  D«bs, 
panied  by  violence  of  intfm  dati!  T  "^  *'**'"^''  """ccon,- 
unlawful  in  every  st.T^^teZnuT^^''  P'-""«"--'         ' 


t 


:  j 


tri   ► 


«o8 


FEDERAL  BEPORTER,  819. 


Opinion  fif  the  Court. 
Ciiicinimti  got  into  a  controveisy  with  Parker,  a  boss  brick- 
layer, concerning  apprentices  and  other  matters.    The  union 
bDvcottcfl  Parker,  and  notified  all  material  men  that  any  one 
selling  him  material  would  themselves  l)e  boycotted.    Moores 
lie  Co.  continued  to  sell  Parker  lime.    Thereupon  the  union 
notified  all  of  plaintiffs'  customers  and  probable  customers 
that    none   of   its   members    would    work    Moores   &    Co.'^ 
niaterials,  and  seriously  damaged  the  business  of  Moores  & 
0>.     1  here  was  no  violence,  actual  or  threatened,  in  the  case. 
Moores  &  Co.  sued  the  Bricklayers^  Union  and  some  of  its 
prominent  members  for  the  damages  caused  bv  the  boycott. 
This  case  was  tried  before  a  jury  in  the  superior  court  of  Cin- 
cinnati, and  resulted  in  a  verdict  for  the  plaintiffs  of  $2,500. 
The  motion  for  a  new  trial  was  reserved  to  the  general  term, 
^Nhen'   the   case   was   fully   considered,   and   the   conclusion 
reached  that  the  verdict  must  stand,  because  the  combination 
to  injure  Moores  &  Co.  was  an  unlawful  conspiracy.     The 
-  case  was  then  carried  by  r.rit  of  error  to  the  supreme  court 
of  Ohio,  and  the  judgment  of  the  superior  court  was  affirmed, 
without  opinion.     By  the  common  law  of  Ohio,  therefore^  " 
boycotts  are  illegal  conspiracies.     I  quote  from  the  opinion  of 
the  superior  court  in  that  case  two  passages,  which  seem  to 
me  to  state  the  gi-ound  for  holding  boycotts  illegal : 


«« 


We  are  dealing  iu  this  case  with  common  rights.    Every  man   be 
lie  ejipitalist.   mercliant.   einployi^r,   Inlsoier.   or   professional   man'   is 
entitled  to  invest  his  capital,  to  carry  on  his  business,  to  bestow  his 
lalM.r.  or  to  exenise  his  calling,  if  within  the  law.  according  to  his 
pleasure.    Generally  speaking,  if.  b  the  exercise  of  such  a  right  bv 
one,   another  suffers  a   less,  he  has  no  ground  of  action.    Thus    if 
two  merchants  are  in  the  same  business  in  the  same  place,  and  the 
business  of  the  one  is  injured  by  the  c<)mi)etition,  the  loss  is  caused  bv 
the  others  pursuing  his  lawful  right  to  carry  on  business  as  seems 
best  ^  him.     In  this  legitimate  clash  of  c^^mnon  rights  the  loss  whicli 
!s  suffere<l  is  damnum  absque  injuria.     So  it  mav  reduce  the  emplover's 
profits  that  his  workmen  will  not  work  at  former  prices,  and  that  he 
Is  obligeil  to  pay  on  a  higher  scale  of  wages.    The  loss  which  he  sus- 
tains. If  It  can  be  calletl  such,  arises  merely  from  the  exercise  of  the 
workm:urs  lawful  right  to  work  for  such  wages  as  he  chooses   arid 
to  get  us  high  rate  as  he  can.     It  is  caused  by  the  workman    but  it 
gives  no  right  of  action.    Again,  if  a  workman  is  called  uiwn  to  work 
with  the  material  of  a  certain  dealer,  and  it  is  of  such  a  character  as 
either  to  make  his  lalxir  greater  than  that  sold  bv  another  or  Is  hurt- 
ful to  the  person  using  it,  or  for  any  other  reason  is  not  satisfactorv 
to  the  workman,  he  may  lawfully  notify  his  emplovers  of  his  objec- 
tion, and  refuse  to  work  it.    The  loss  of  the  material  man  in  his  sales 
caused  by  such  action  of  the  workman  !s  not  a  legal  injury    and  not 
the  subject  of  action.    And  so  It  may  be  said  that  in  these  respects 


T 


THOMAS   V.  CINCINNATI.  N    O    ^    t^    » 

-  ^-  O-  *   T.  P.  BY.  CO.        '>«9 

what  on  OP'n'on  of  the  Conrt. 

c^n^^^iS'^i?^^^^^  °-^  -">"ne  to 

everv  ono  if  in.S",,''"  *•"»  <^omn'on  Iround  of  ^  "^"'"^t  ♦""^e  who 
loWs  suffer^'"„^l"Jl  struggling  to/S  fsMl^IIir"  '''^^*^-  '^"ere 
<>y  another  in  thl^l  be  borne,  there  are  losses  wiiifn^"^'  '"»<*  "'''ere 
'-m  .ln,p,e'"n,r;--,lo.  What  other^ffenvr^.T^^.to  one 

securing  TtoteJttrm/'?"'  '"^™«°n  of  the  ?S  LTl"«'  *«  *"« 
^•"ch  terms.  .  .  *^™?  /^f  ''eftising  to  contract  to  I,  J"'^'"  '^  '"e 
for  him  e.Yc-ent  on  i.Bt  J  *"■*  norljmen  of  .in  euminxL  ^"^  ^^^P*  "n 
cause  great  lossMl**"'  ^^''■"S'  at  a  time  vhen  Ih?  '  V^*"^  to  work 

relation  betw^n  pTatatifl^T  T.  """Petition  or  ^  *ihL'  "**'%'  *^™« 
naturally  oppose/  Thif  •"■".''  "^efenclants  where  ?hSi!*'*"""'"'t»al 
was  not  oni  which  i^fj'^"  "'  ^''^  Plaintiffsto^Sr  i,"*?''^**  ^ere 
fllct  with  the  righ/s^P  t?  r<"-<-Ise.  brought  t^lmi^f"  ,^^^'J  material 
chose.    The  ronflinf      '  defendants  to  dSnosp!^  1?*?  'eg'timate  con- 

nse  PlaintJffsvlgit  J'';' ^/""^"t  «bout  by^he  effort*^';  '"""'•  ««  fey 
of  this,  to  use  RhinHffi™"®  **'  '"-fore  Parker  B^°JJ^'^''<i«"t^  tb 
Such  elTort  cannol  h*^  oustomere'  right  of  trn^  V  "^^-  "P»°  failure 
iust  cause    ,w"1*  ^,  '"  /"^e  bona  flde  exerdt  of^'^i''''^'  Plaintiff^ 

defendants' here  x^is  to  1""'%  •"""•^'""s  The  inlldl^*'-  '^  «'"'«'« 
and  disa.,ter  necSsarUv  f!?.?"  '°  ""«  building  wor^^J^^  '""tire  of 
remote  motive  of  wshrn/i'^K^  "  ^efiancl  of  thei?  d.  '""i'^'""^"* 
ac-quired  will  not'  as  wrfhinl  "^"l""  *"«»•  eondition  bv  t^"""-  "^^ 
oation  for  defendants-Yct^""^  "'^  '^"^  ^h""",  make  aVteusH^ 

-at"a„rtS"al!:^^^  between  P„„. 

the  companies  becauL  thevTo  Jn  Jt"  '"k"^'  "^  '"i"- 
cause,  and  malicious,  and  is  unl«wV7"'  ^""  '^  ^'t^out 
injury  is  inflicted  me;ely  by  littl  ^  '  T"   *'^°"«'»   *»>« 

remperion  v.  RvsseU  (mTin^  employment, 
quite  like  the  case  just  cited     t?'   ^^    ^^''  ^^^   «   <^^ 
refused  to  obey  certaii  rules  Tat  dl^^K  '  k^™  ''^  ^"'"ers 
connected  with  the  build W  tide  Ttw'jr  '''^''  ""'»»« 
joint  committee  of  the  nni^      u       ^*  ^""-    Thereupon  a 
that  is,  they  ^tt.LZiZZetTl'i  '""^  b„ildin/fi:L 
materials  by  notifybg  material"         ^T  P''"^"""^  «ny 
on  pain  of  being  thfrnTelvri  ""'  *^  f"™ish  them 

material  man,  reflisIdToXwK   7'^  ''^"''^'^^ 
unions  then  demanded  of  hTslZ^,  "'  '*^'"«"'^'  '•"d  the 
H80S-vor.  1-00  M-!:ir  ^^  '"'"  ""*  *^  furnish 


h^ 


290 


6ii  FEDERAL  KEPOBTER,   820. 


Opinion  of  the  Court. 
him  any  material,  with  the  threat  that,  if  they  did  so,  their 
workmen  would  quit.    The  result  of  this  was  that  contracte 
for  supplies  to  the  plaintiff  were  broken,  and  others  who, 
l>nt  for  the  threats,  would  have  made  contracts,  were  deterred 
from  doing  §o.    It  was  held  that  the  boycott  was  an  unlawful 
conspiracy,  and  that  the  joint  committee  of  the  unions  who 
were  sued  were  liable  in  damages  for  a  malicious  interfer- 
ence with  the  plaintiff's  business.    There  was  no  violence 
or  threatened  violence  in  this  case.    The  case  was  decided 
by  the  court  of  appeal  of  England,  consisting  of  Lord  Ester 
master  of  rolls,  and  Lopes  and  A.  L.  Smith,  lord  justices.    ' 
In  Carew  v.  Rutherford,  106  xMass.  1,  a  contracting  stone 
mason,  contrary  to  the  rules  of  the  union,  sent  some  of  his 
material  out  of  the  state  to  be  dressed,  and  his  men,  members 
of  the  union,  re-  [821]  fused  to  work  for  him  any  longer 
unless  he  paid  a  fine  to  the  union,  and  did  not  return*  until  he 
paid  the  fine.    This  was  held  to  be  illegal  conspiracy  for  the 
purpose  of  extortion  and  mischief,  and  the  emplover  was 
given  a  judgment  for  the  recovery  of  the  fine  and  damages. 

Boycotts  have  been  declared  illegal  conspiracies  in  State  v. 
GMden,  55  Conn.  46,  8  Atl.  890;  in  State  v.  Stewart,  59  Vt. 
273,  9  Atl.  559;  Steamship  Co.  v.  MeKenna,  30  Fed  48- 
Casey  v.  Typographicdl  Union,  45  Fed.  135 ;  Toledo  4  A 
cfe  N  31.  Ry.  Co.  v.  Penmylmnia  Co.,  54  Fed.  730,  738;  and 
m  other  cases. 

But  the  illegal  character  of  this  combination  with  Debs 
at  Its  head  and  Phelan  as  an  aasociate  does  not  depend  alone 
on  the  general  law  of  boycotts.    The  gigantic  character  of 
the  conspiracy  of  the  American  Railway  Union  staggers  the 
imagination.    The  raUroads  have  become  as  necessary  to  life 
and  health  and  comfort  of  the  people  of  this  country  as  are 
the  artenes  on  the  human  body,  and  yet  Debs  and  Phelan  and 
their  associates  proposed,  by  inciting  the  employes  of  all  the 
railways  in   the   country   to   suddenly   quit   their   service 
wthout  any  dissatisfaction  with  the  terms  of  their  own  em- 
ployment, to  paralyze  utterly  all  the  traffic  by  which  the  peo- 
ple live,  and  in  this  way  to  compel  Pullman,  for  whose  acts 
neither  the  public  nor  the  railway  companies  are  in  the 
slightest  degree  responsible,  and  over  whose  acts  they  can 


THOMAS   V.  CIKCINKATl,  K.  O.  &  T.  P.  BY.  CO.        291 

Opinion  of  tlie  Court. 

lawfully  exercise  no  control,  to  pay  more  w«d-ac  i^  k* 
ploves.     The  merits  nf  fi..        .      ^     ?         ^^^  ^  ^^^  ^^- 

tamly  the  starvation  of  a  nation  cannot  be  a  lawful  puro^i 

Every  person  wlio  sila  I  ,u?kpSnv  «■?  1^   '^  ^^"^^^  declared   illegal 

and  ou  conviction  thereof  shall  h^  n.t^ufl,^"'-''  "'  ^  misdemeanor, 
flre  thousand  dollars,  o? V  imnr^ZZ  w**^  "  1°^  ""*  exceeding 
both  said  punishments,  in  the  d^scS  of  tSe  c^u^'"«  °°«  ^^'-  »' 

wiJit\hTttatutr^'?"""  '!  ''''  ''''  ""•^''^  <li«="^ion  is 

Biiii^y'oVSirinT'/:-^  r.^^^^^^i  '^  ^^^^ 

^ated  Council  of  Ne:  'or^J,  54  ^ Lm'^S  ^T 
been  followed  by  the  circuit  ,n^„J   f?u-  ^  ^'^'^  ^^^ 

past  10  days,  by^udgrWoid^ljll  'and  p"*  "'*'":  *^ 
seventh  circuit,  and  by  Judr^o  sSn  of  Jh       1.?.^  ^'  *^' 

Ian   1ST'  *  ^^^^  '^  ^^^  ^^^  Purpose  of  Debs  Phe 

ian,  and  their  associates  to  paralyze  the  inf^rcfof 

of  thiQ  n«iir>f«     •      1  F^Adij^ze  ine  interstate  commerce 

kno,^  of  alll"  shown  conclusively  in  this  case,  and  S 
unlawful  purr;  .^  ""  '^'''  '^"•"bination  was  for  an 
cit«d.         ^    P      '  """^  '^  ^  conspiracy,  within  the  statute 

It  could  also  be  shown,  if  it  were  necessarv  th^t  tu- 
bmation  was  an  nnlawf..!  •        "f*^®*s'«^y»  that  this  com- 

tended  to  stJo  «»  ^!^^   conspiracy  because  its  members  in- 

delay  and  Sard  manvT'  '^"'"  '^  ''''''  *^'''"«'  -^  ^^ 
St   TT  S    J^   r-        ^'  ■"  eolation  of  section  3995    Rev 

^  or  retarding  the  passage  of  the  mail. 


L 


1 


M' 


292 

«2  FEDEBAL  BEPORTEB,  822. 
Opfnioji  of  the  Court 

»«« of  q..itting;."n:lat!  z  TrL:"*?."" 

to  do  with  thp  tArmu  ^#         1  "»a"s,  and  had  nothing 

lu  nun  me  terms  of  employment.  ^ 

strange,  indeed,  if  thaVriihTcJ     rultLlT^  "^ 
rying  out  of  such  an  unlawful  and  ^im^.i  ^  '""'' 

have  seen  this  to  be     It  I«!n  K    T^^        conspiracy  as  we 

one  fro™  proJuti^n  or  suiirforsW  "^T'  *"  P^''*^*^* 

many  n,alicious  and  toLu    „  rri  J;£h7h  "^  ''"^  1  '""^ 
tongue  has  been  «»  „ft"     ^""*^,^'"<^'»  ^^e  agency  of  the 

«tructinn  7n  ^  •       ^'npl^yd  to  inflict.    If  the  ob- 

struction to  the  operation  of  the  roarf  h^  tK»         • 

unlawful  and  malicious  it  u\Ti  ^    ^  '^'^^''  ^»^ 

instrument  wh"h  he  uld  to  Iff  'f^/  ^^nt^Pt  because  the 

than  his  hand.  "^  ''^*''=*  '*  ""'  ^^'  t«"^'«-  rather 

i«  vrrVdtrThrS'^  *"  """^  *'^  ''"«^*'«"  f-^her.    It 
»oiy  Clear  tnat  Phelan  came  here  to  caprv  n,.f  „„    n       I 

conspiracy,  in  the  course  of  which  anH  t     ^  .  •'"^^''' 

he  attempted,  and  DartiaHv  «„       7^       Pursuance  of  which, 

ern  RailLd   operated  bvaT'*'  '"i^'"«  "P  *»>«  ^outh- 

court,  as  he  Jknlw     H  "  ""'^"'"  ''"  '"•<^«'-  «*  this 

ploye  of  tLlouttrrp^"'  ^^"^  '"  ^^"'"^  "»*  'he  em- 
F    j'ra  oi  me  southern  Railroad  was  unlawful  hv  tK«  i         t 

Ohio  and  the  laws  of  the  United  ^t«*l     u  '^  "''  "' 

prevent  entirely  its  operation  H»  In  "^  '"*^"'^**^  '" 
he  subjected  the^eceitr  to  ^,t«pj;2""^  T':^'f  -^ 
occasioned  by  his  acts.  ^^  reducing  the  loss 

It  follows  that  the  contemnor  is  guilty  as  ch«r.«.^  ^  •. 
cjnly  ren^a  ns  to  impose  the  sentence^f  tLlt'^TH "  ■  * 
the  discretion  of  the  court  tn  K»  ^^      •    ?  ^"'^  '^  '" 

in  reference  to  the  co^SS  J^^Hwch "th""  "'T.^""" 
to  be  reliable.  The  court  wo^^i!.^  ^  """''*  ^^'^^'^^ 
leniency  in  this  cTi  if  tl ""^^^1^  T  '"P'*"'  '" 
shown  the  slightest  regard  frhZderlS..'  ""''''  ^'^ 
the  receiver  was  attemntinn  ,     ^  *^  '^'"'*  ^^^c'' 

tion  of  the  road  EvTfi'^did  notf  T/*'  V""'  ''^'''■ 
sition  in  which  he  had  p,7t  hi^s^lf  /^  '"'"^  *''^  P"" 
order  of  the  court  to  the  iliveT?  \  'T''  *''  *'"' 
Railroad,  his  arrest  and  fh?^  *  to  operate  the  Southern 
,  nis  arrest,  and  the  service  of  the  intervening  peti- 


THOMAS   V.  CINCINNATI,  N.  O.  *   T.  P.  BY.  CO.        293 
Opinion  of  the  Court 

-d  s^^scit  t;rr"  r-'  t-^^  ^-  <iuict- 

regard.  It  was  hTs  dutv  thfT^  T  "^  ^''  *'"*y  ^"  *^'« 
tions  with  referent  ^"L  Set  tht  X wtLh'  T^" 
in  any  way  affect  the  operation  of  7h!  ""'^^  ^^'^"'J'^co^W  ^ 

whether  by  inciting  emSHo  leave  I "^  '^"'"^-^' 
preventins'  fSaqi  Ui        ^^"J®^  ^o  'cave  the  receiver  or  bv 

So?  S^Hf itUTorr*-"' "''"'  "^^^  '''^  »*' 
leave  his  employ  r;?rsiroV^sit;irr"^'^ " 

there  has  been  no  change  whatever  in  hk  I  conspiracy, 
pursued  by  him  before  his  arrest      Rv  T"^  ''""'"  *^** 

the  court.  intention  of  disregarding  the  order  of 

4':ror:rtoter;rzfit\*^^  r  ^^^^^-«^'« 

court  cannot  shrink.  If  orTe'rs  of  t  J  .  ''""  ''^''^  *« 
the  next  step  is  unto  anarchv  It  TT.T  "°*  '''^y*^^' 
the  administration  of  ?usHcf '  fh\      "^^"t^^^  «««ential  to 

power  to  punish  cLeUraL'?w:r'\''^°"'''  ^''^^  '^'^' 
the  enforcement  oHh^    ^f  *  ^^^^  ^^''''^^  "^  it  when 

is  only  t:~re  pi'anT  ?t'^^'"'"^  '''^'-    «"*  ^^ 

orders  that  the  powLTlen'.ndtTt""^""""  "'*  ^*^ 
commensurate  with  crhfeH;  !.  7  *^  '""^"^  punishment 

the  course  of  the  l^T^,  Zi^'f^ZT ^'''''^'''f  '° 
ent  tribunal  or  in  this  court  Zf^?  ««gnizable  in  a  differ- 

I  have  no  right,  and  do "r^^t^'S  f"*^  ''''^'  ^^  i-^ 
the  havoc  which  he  and  hif  ?      *  ^^^  contemner  for 

business  of  this  couX  ^n/r-""^ '"'''  "^""^^^^  ^  ^^e 

labor  and  capitaUliKr  for  th     '"'""''  ^''^^  ''''^^  ^'>^'  to 
P       alike,  or  for  the  privations  and  sufferings  to 


294 


62  FEDEBAL   REPORTER,  824. 


Syllabus. 
which  they  have  subjected  innocent  people  even 'if  fK 

co.plia„rXhe''i''7  th^  ''r  *"r""  *"*- 
-ill  JI  and  unlawful  .iSrctilster^r  ^"'  *"  ^^^^^"^ 

^posing  upon  the  contemner  the  tnahvof  ""* 

ITie  sentence  of  the  court  is  that  F^ant V  pTerr^"' 

and  safely  convey  ^^^ t^S^.^  ™^- -^^•^' 


im  UNITED  STATES  ..  AGLER. 

(Circuit  Court,  D.  Indiana.    July  ,2,  ,894.) 
r82  Fed.,  821.] 

IHJONCnoN  AGAINST  COMBINATIONS  IN  Restb*,^.  „     T 

MEKCE— JlmsDicTloN  — CndAr  W   T    ,    ''*™*'-''T  "f  INTEBSTATE  Com- 

contains  no  prayer  toTpZ^ti^^'  "  "'"  ^"^  ""'=''  '"J"°<'«0" 
although  It  render,  the  bl^„?,abte '"f  "  -"^  ♦«<'huleal  defect, 
tlon  Of  the  court  or  render  thnni™.  f    ?    ""'  ""'^  ««*  J"'-'«'J'<=- 

An  injunction  for  ^ulTrZlt^::^Z!Z^"  ^"^  '™'"^''*- 
named  in  the  bill,  and  notVe^«^^TtH  k  ^'  "'  "^"^"^  ""e  "ot 
tlon  order  Is  served  «n  hi  a7te  'f  th  "^r"-  "''"'  ""«  '"J"°<'- 
terred  to  In  the  bill.  °'  *^*  unknown  defendants  re- 

Same— Proceedings  to  Punish  Vmi  ..„,„,.  .  . 
Violation  of  s«.b  an  I„i„„ctIon  oMe"  whTcrf«lI«T'".'r  *** ''"°'«'' 
order  was  a  lawful  one.  In  the  lan«»l  ,  !^  '"  *"*^  «>"'  the 
person  charged,  not  nam^  ^^ZTr  1  '  '^''*"*''  "'  *"«'  «» 
parties  referred  to  therein  or  tlTat  .uh  Z  ""*  "'  "■«  nnlcnown 
•^  was  engaged  in  "MlngVe  oollfS^'J;';:^  °^  "'^  '"^'• 

•  »'"«^'^^^'^^^^i^i^^^^^ri8^:^  westpuw       — - 


UNITED  STATES   t'.   AGLER,  295 

Opinion  of  the  Court 

tijf  orco^^t  t'^xtyi^rr*  '^''':-  ^'- '-  - 

moved  to  quash  the  infomS        "'''"'''""    ^*«''^''"' 
^.  B.  Burke  and  ^-rfWn  Con-,  for  the  United  States. 
McGvXlough  <&  Spmn,  for  defendant 
Bakeb,  District  Judge  (orally). 

ject-matter  scorrmnl  ?/'"''".*  Jurisdiction  of  the  sub- 
in  an  the  biTand  S  :;S"in"tt  '"',•  ^'^»*  '^  *^-" 
preme  court  of  the  UntTS-^     i  Judgments  of  the  su- 

defendant  has  caSed  Sfattentt  of  tf'  ""''"'  '*"•  ^h" 
the  question  whether  or  nnt^l  °  *  ^''^  '^•""^  *»•  Now, 
Stati  had  iuSSon  '  °?         ''''"*  **"••*  «*  ^^^^  United 

for  the  ^^^^T^:sz:is^:^f^^^^^^ 

law  that  authorized  fha  n^„  *  •    ,.  .  ,^^  ^^  ^^ot  there  is  any 
of  the  sort  of  acSttat  S  fortT^^f.  ***  ^^•'^^  '"^'-'>- 

Prior  to  the  2d  day  of  Jut  £  Tt     "  ^^'t"  **^  ''^ 
the  United  States,  as'a  muS^aXptirn  ^  "'"'  ^'^ 
either  by  petition  or  bill   to  L  i^l^^^         '    ***  "^  P*^*""' 
the  United  States,  and  invok^  th!     5'  T[^  "*  ^l^^ty  of 
their  restraining  nower  IT         ^  ""*  ***  *^*^  «>urts,  by 

ria^  of  the  mtLTStSrarotr^^^^^^^ 

Prior  to  that  time  th^  c..]  ^^^^  ^^  ^^*^®rstate  commerce. 

of  the  cour^^^  Z^Ct^^^^  Tu""  *^  '^^^'  ^^- 
as  a  government  co^d  nrl  .  ""^'"^  *''''  U°'*«<J  States, 
interfered  with  the  ea^iC^f'  T^''*"'^  "*  '"^^  '^^  ^^^ 
with  the  instrumentaS  :^Jd  Tnt  "  'f "  ^'^'^  '''^ 
commerce,  was  by  indictment  or  nf  T*^"'*  ***  '°*^'^t*' 
side  of  the  court- but  hi  1    *'//°f'""™«t'on  on  the  criminal 

and  the  coiiivt  rbrli;^^^^^^ 

or  the  purpose  of  enforcLtby  s  rTkesTr  i  '""  '^^ 
they  conceived  to  be  their  iutt  JJ.,^^\  otherwise,  what 
of  things  that  in  the  ,^?7JL  V  !  '"'  ^''^  '^  *«  '^  condition 

tive  tha^  tKrof  thTSi'^s'JT"'  "''•^^  '*  •-!-- 
that  the  nation  it«,lf     iL.l        States,-m  other  words, 

mails  of  the  countr7i:rd  L  th/"'''^  "*.  P''"*^""^  *« 
passenger  and  ^eig^tttB^.l^ ^^  "iCl^^tj 


»  •  ' 


.^' 


I 


M 


296 


62  FEDERAL  REPORTER,  825. 
Opinion  of  tlie  Ckmrt 


have  the   right  to  invoke   not   only   the   criminal   juris- 
diction of  the  court  by  fines,  or  by  sending  to  the  penitentiary 
those  who  were  gailty  of  violations  of  those  laws,  but  that 
the  government  should  also  be  clothed  with  the  power— or 
rather  the  courts  of  the  United  States  should  be  clothed  with 
the  power— of  laying  their  strong  hands  on  these  men,  and 
not  waiting  until  crimes  had  been  committed,  but  restrain- 
ing, not  for  the  purpose  of  preventing  people  from  doing 
what  is  lawful,  or  to  prevent  their  getting  better  wages,  but 
for  the  purpose  of  saying  to  everybody  that  civil  liberty 
cannot  exist  where  combinations  of  men  undertake  by  force 
and  violence  to  arrest  the  peaceable  and  orderly  conduct  of 
business  among  the  states.    With  that  view  of  national  duty, 
on  July  2,  1890,  congress  enacted  a  law  that  enlarged  the 
jurisdiction  of  the  federal  courts,  and  authorized  them  to 
apply  the  restraining  power  of  the  law  for  the  purpose  of 
checking  and  arresting  all  lawless  interference  with  the 
peaceable  and  orderly  carriage  of  mails,  and  with  the  peace- 
able and  orderly  conduct  of  railroad  business  between  the 
states.    This  law  was  intended  to  lay  its  ^strong  hand,  not 
only  upon  the  capitalists  or  monopolists  who,  by  combina- 
tions, undertook  to  interfere  with  the  business  and  commerce 
of  the  country,  and  subject  them  to  punishment,  but,  on  the 
other  hand,  it  also  undertook  to  say  to  the  laboring  men  of 
the  country  that  "  you  shall  not  enforce  your  rights,  how- 
ever just  they  may  be,  by  violence  and  by  lawlessness." 

Civil  order  cannot  exist  where  men  undertake  by  strong 
hand  to  enforce  rights,  whatever  their  rights  may  be.  In 
civilized  and  organized  society  there  is  only  one  avenue  that 
is  alike  open  to  the  rich  and  the  poor— that  is,  the  avenue  of 
the  courts— for  the  purpose  of  settling  disputes  between  men. 
No  man  has  a  right,  even  though  he  has  been  wronged,  even 
though  he  may  have  been  oppressed,  to  take  the  law  into  his 
own  hands,  and,  by  force  and  terrorism  or  threats,  redress 
his  wrongs.  It  means  a  condition  of  things  that  would  be 
absolutely  intolerable  in  civilized  society,  and  it  was  in  order 
that  the  peaceable  and  quiet  and  orderly  processes  of  the 
law  might  be  applied  to  men  who  are  thus  engaged,  whether 
they  were  monopolists,  on  the  one  side,  or  laboring  men,  on 
the  other,  that  the  law  was  enacted  for  the  purpose  of  ar- 


4 


i 


UNITED   STATES   V,   AGLER. 
Opinion  of  tlie  Court 


297 


resting  lawlessness,  composing  these  disturbances,  and  bring- 
ing about  that  orderly  and  peaceful  condition  of  affairs  that 
is  essential  to  the  life  and  happiness  of  the  commimity. 

[826]  Now,  there  is  no  doubt,  in  my  judgment,  that  this 
act  of  July  2,  1890,  did  clothe  the  circuit  court  of  the  United 
States  with  this  new  and  enlarged  power.    That,  however, 
does  not  answer  the  entire  contention  of  the  counsel  for  the 
defense.    He  insists  that  the  affidavit  and  information  filed 
in  this  case  does  not  reach  and  bind  the  defendant  as  charged, 
because,  as  he  alleges,  the  bill  does  not  contain  a  prayer 
for  process;    and  he  reads  from  an  authority  which  is  un- 
doubtedly sound  that  a  bill  in  equity  without  containing  a 
prayer  for  process  which  shall  embody  the  names  of  the 
defendants  against  whom  process  is  prayed  would  be  de- 
murrable.   That  is  undoubtedly  the  law.    That,  however, 
does  not  settle  the  question  that  is  before  the  court.     The 
question  is  whether  or  not  if  an  injunction  is  issued  by  a 
court  which  has  power  to  issue  the  injunction  upon  a  bill, 
provided  the  bill  is  not  demurrable,  is  the  injunction  void 
because,  on  investigation,  the  court  believes  that  a  demurrer 
might  have  been  sustained  to  the  bill  if  it  had  been  inter- 
posed?    In  other  words,  does  a  mere  defect  that  could  be 
reached  by  demurrer,  in  a  bill  of  which  the  court  has  juris- 
diction,—over  which  the  court  has  been  given  jurisdiction 
by  the  express  terms  of  the  statute,— is  the  injunction  order 
a  nullity,  and  can  it  be  treated  with  contempt  because  the 
bill  is  defective,  so  that  a  demurrer  might  be  sustained  to 
it?      On    that    proposition    the  court  entertains  no  doubt. 
There  is  not  an  authority,  in  the  judgment  of  the  court,  that 
can  be  found  in  the  books — certainly  the  court  is  aware  of 
non^in  which  it  has  ever  been  held  that  a  man  who  was 
enjoined  and  had  violated  the  injunction  could  escape  pun- 
ishment by  alleging  that,  at  the  time  the  writ  of  injunction 
was  issued,  the  bill  was  demurrable. 

There  is  no  doubt  but  what  a  number  of  men  are  named 
expressly  by  name.  Eugene  V.  Debs,  Howard,  and  some  men 
here  in  this  state  are  named  by  name.  If,  in  the  prayer 
for  process,  their  names  had  been  repeated,  or  if  it  had 
been  simply  stated  in  the  prayer  for  process  that  the  com- 


298 


62  FEDEKAL  BEPORTEB,  826. 


Opinion  of  the  Court 
plainant,  the  United  States,  prays  process  against  the  parties 
above  named,  the  bill  would  have  been  technically  sufficient 
Wow,  then,  I  assume  that  process  of  subpoena  was  issued 
against  these  men  by  order  of  Judge  Woods,  without  their 
having  been  named  in  the  prayer  for  process.    It  is  a  mere 
technical  defect    It  is  one  that  does  not,  in  the  language  of 
the  supreme  court,  go  to  the  jurisdiction  of  the  court.    The 
jurisdiction  of  the  court  depends  upon  the  law  of  the  land 
W  or  do  I  think  It  is  necessary  in  this  sort  of  cases  for  the 
government  to  file  what  is  technically  known  as  a  "  bill  in 
equity  "on  the  chancery  side  of  this  court  as  in  a  civil  case. 
The  right  at  all  to  file  this  sort  of  a  proceeding  is  a  new 
statutoi^  right,  and  courts  cannot^they  would  be  derelict 
m  the  discharge  of  their  duty  if  they  did-^isregard  the 
purpose  and  object  of  the  enactment  of  the  law.    I  do  not 
undertake  to  sit  in  judgment  on  either  capitalists  or  labor- 
uig  men.    I  have,  as  a  magistrate,  nothing  to  do  with  that 
I  am  simply  bound  as  a  judge  to  take  notice  that  a  condition 
of  things  had  grown  up  in  this  country  of  strikes,  of  inter- 
ruption of  mails,  and  intei-ruption  [827]  and  interferences 
with  interstate  commerce;    that  it  provoked  comment,  and 
had  created  feeling;  and,  in  order  that  labor  troubles  should 
be  settled  without  interfering  with  the  commerce  and  the 
happiness  of  millions  of  innocent  people,  it  was  determined 
that  the  national  government  should  clothe  its  courts  with 
power  on  the  civil  side  to  stop  these  things  without  waiting 
until  crimes  had  been  committed,  and  then  send  men  to 
the  penitentiary  for  the  crimes  so  committed.    That  is  the 
reason  of  it    Jt  was  intended  to  be  a  preventive  remedy. 
That  was  the  sole  purpose  of  it    So  far  as  this  phase  of 
It  is  concerned,  it  is  true  there  are  other  sections  that  au- 
thorize men  who  do  these  things  to  be  punished  by  fine  of 
not  more  than  $6,000,  and  imprisonment  for  a  year  in  state 
prison;    but,  so  far  as  the  civil  side  of  it  is  concerned,  it 
was  intended  to  meet  an  emergency  and  a  public  exigency. 
It  could  not  sue  until  the  mails  had  been  interfered  with, 
or  until  the  commerce  of  the  country  had  been  lawlessly 
stopped  but  It  was  not  intended,  in  my  judgment,  in  order  to 
invoke  the  judgment  and  jurisdiction  of  the  court  that  all 


UNITED   STATES   V.    AGLEK. 


299 


1^ 


1» 


" 


Opinion  of  tlie  Court 
of  the  old  nicety  of  pleading  and  practice  of  the  Enelisli 
chancery  courts  should  apply.  The  courts  would  lie  power- 
less if  that  were  the  case,  to  accomplish  Die  beneficent  pur- 
pose of  the  law,  because  it  is  a  beneficent  purpose.  It  is 
a  praiseworthy  purpose,  in  the  midst  of  tumult  and  ex- 
citement, when  lawlessness  seizes  upon  the  arteries  of  the 
commerce  of  the  nation,  for  the  courts  of  the  land,  in  their 
peaceable  and  orderly  way,  to  lay  their  hands  on  these  men, 
and  bid  them  cease.  It  is  a  lawful  thing,-a  commendable 
thing.  The  law  gives  them  that  power.  So  much,  then,  on 
the  question  of  jurisdiction. 

I  think  that  in  this  proceeding  the  court  (Judge  Woods 
as  judge  of  the  circuit  court)  had  jurisdiction  to  issue  this 
wnt    Now,  this  party  defendant  is  not  named,  and  to  sav 
now  that  process  of  injunction  may  not  be  issued,  to  be  bind- 
ing upon  men  who  are  not  named,  or  shaU  not  be  bindin» 
until  they  are  actually  served  with  subpoena,  as  they  are  on 
the  civil  side,  on  the  equity  side,  of  the  court,  it  would  de- 
feat the  purpose  of  the  law.     It  is  not  within  the  language  of 
the  statute  itself.    I  think  the  injunction  as  against  un- 
known defendants  is  valid  and  binding  when  the  injunction 
order  is  served  upon  them,  although  they  are  not  at  the  time 
parties  to  the  suit     Indeed,  I  think  an  injunction  that  is 
i^ued  against  one  man  enjoining  or  restraining  him,  and  all 
chat  give  aid  and  comfort  to  him,  or  all  that  aid  and  abet 
him  is  valid  against  everybody  that  aids  or  gives  countenance 
to  the  man  to  whom  it  is  addressed.     I  do  not  entertain  any 
doubt  about  that. 

Now,  then,  the  court  having  decided  that  it  thinks  the  in- 
junction was  properly  issued,  and  that,  if  it  was  actually 
served  on  this  man  as  one  of  the  unknown  defendants,  the 
injunction  would  be  good,  that  brings  us  to  the  question  of 
the  techmcal  sufficiency  of  the  affidavit,  because  in  this  sort 
of  proceeding,  in  my  judgment,  it  is  not  essential  that  an 
information  shall  be  filed,  although  there  is  no  harm  in  doincr 
that.  The  essential  thing  is  the  filing  of  a  statement  or 
charge  that  shall  show  clearly  and  distinctly  that  the 
1838]  restraining  order  has  been  served  on  the  defendant,  or, 
If  It  has  not  been  served  on  him,  that  he  had  notice  or  knowl- 
edge of  its  contents. 


n 


IM 


300 


62  FEDERAL  REPORTEK,  828. 


Opinion  of  the  Court. 

of  fKo  efo*  4.      ""s^^*^^^  was  a  lawful  one,  m  the  lanffua^e 

man  did  was  not  done  to  give  i  lor  Sm?l  „  ""  *^'' 
inent  to  the  object  of  arresting  theirif1tw«T"T" 
pendent  erin.e  the  n,an  ^n.^c^^^^^^Ti:;^'^^^ 
commit  arson  or  robberv    with™.*  1,0   •  wanted  to 

with  thesp  mpn  *Kof^        • '  "^""f  V*  ^"^'"g  "ny  connection 
merL.  Z  T    *^''*  r*"*  «"g«g«d  i"  the  interruption  of  com- 
merce then  he  would  not  be  within  the  terms  of  the  restrT 
mg  order  nor  within  the  law,  which  has  been  read  htrS 
the  law  of  July  2, 1890.    Now,  it  is  not  charged  ThouS'i 
has  been  assumed  all  the  wav  thrnn^v.     V  a«nough  it 

adduced  would  go  to  show  that     thf^^    """^^  '^^  ^""^^ 
ihc  «.Ji™«         •  T       t'latj— that  he  was  connected  with 

™LI!i^  ^k"  • "'"'  ""•*  ***"*  ^''  '"=''  ^«r«  acts  that  were  cal 
St^  "l^"''  ""*"'*  ^  «*^«  "'•J  «"d  <=omfort  to  tho  irike 
that  has  been  earned  on.    If  those  facts  were  prov^   why 
they  would  be  sufficient  to  satisfy  the  court  that  his  mind  was 
T^il  «>'n»>ination  with  the  minds  of  Debs  and  othl^ 
or  that  they  we,«  engaged  in  the  common  purpose,  and  henTe' 
ft.    they  were  in  the  conspiracy  that  is  mentioneS  in  ?h^ 
statute,  provided  the  things  that  thev  were  trvino-  t«  T. 
would  naturally  i^ult  in  delaying  or  interrupting  the  It 
Sht'^ln"^  "  interrupting  the  carriage  of'pain^  "and 
freight  from  one  state  to  another.    I  think  that  in  these  nar 
ticular.  the  affidavit  is  insufficient    I  think  t^^  charge  E 

m«rr«!  ''"*'7^«°  »*  »«  sho^u  by  an  affidavit  that  thi« 
man  was  engaged  m  the  combination  or  conspiracy  with 
other  railroad  men  in  aiding  and  assistino-  f«  o!l  I  ?u^  •. 
and-interstate  commerce.  f^LZZT^^ZllTsZ': 
cause  of  action  against  him,  and  then  it  would Te^ndrnn 
the  proof  whether  or  not  the  offense  was  made  out  "P"" 


1^ 


301 


IN  BE  GRAND  JUBY. 
Charge  to  the  Grand  Jury. 
[8*0]  IN  RE  GEAND  JUEY.- 

(District  court,  N.  D.  California.    July  13,  1894.) 

[62  Fed.,  840.] 

CoNSPraACY— Obsteuction  op  Intembtatf  P«w.,™ 
Hon  or  conspiracy  on  the  nnrtif         ,  ^""^K:E.-Any  combina- 

and  IntinUdaTn  prevent  ZZ       "^    r  "^  '"^°  ""o  "^  ^""«°«' 
;nte.t,e  eonrer^c^T,?:^^;^  J^v  riZ'lT-  " 

eiaring  it  an  oilenfrto Ino^  *„;  /.^^t /Zm'  T.  ^\  '  '^'  ''" 
the  passage  of  the  innli    J,  .  willfully  obstruct  or  retard 

Any  negligence  in  fhi<\l      !  ^  appliances  witbin  reach. 

^  ti  jeapiroTbi: ';rx  ::nre:^^"^"  '^  '^-^-^  •''«-- 

ri,frLi^:zr:rer^tirr:::r^  r -*  *-  --  - 
=:.r;ther.t7  --  ==oirrdS"rf 

'ruLrh:;;^  griz™;;thatntrr  "r  "-^  •- 

would  warrant  a  conviction  "^  ^"''^°'*  ''^'"■•«  *"«« 

Charge  to  the  grand  jury  by  Morrow,  District  Judge: 
[841]  Gentlemen  of  the  Grand  Jury:  You  have  been  sum 

ur .  "If  r? "'  ^^^'^'^  ^"^''^  «*  th«  district Tourt  ofT; 

United  States  for  the  northern  district  of  California      It 

UnitTd  L'Lr"^'  "''°"  ^"  ^^^--  -<^-  *^e  '-  of  ti^ 

The  extraordinary  occurrences  in  this  state  during  the  oast 

t_woweeks^^quire  yourmimediate  attention,  and  fall  for  t 

"The  charges  to  the  Grand  Jury  t^uM'l^~e2jeA    ^«^~^^~r 
not  relate  to  the  anti-trust  law  and  are  ther^f^^e^tCnt^       ' 
"  S.yllabus  copyrighted,  1894.  by  West  Publishing  Co 


I 


302 


62  FEDEBAJL.  BEPOBTEB,  841. 


Charge  to  the  Grand  Jury. 

thorough  and  sweeping  investigation.  It  is  a  matter  of 
public  notoriety  that  during  this  time  a  great  railroad  strike 
has  prevailed ;  that  the  most  important  channels  of  trade  and 
commerce  carried  by  railway  service  have  been  closed,  the 
business  operations  of  the  state  paralyzed,  and  the  passage 
of  the  mails  seriously  retarded  and  obstructed  at  several 
points  in  the  state.  The  constitution  of  the  United  States 
provides  that  congress  shall  have  power  to  regulate  com- 
merce among  the  states  and  establish  post  offices  and  post 
roads.  Pursuant  to  the  first  of  these  provisions,  congress 
has  provided  by  the  Act  of  July  2,  1800,  that 

"  Eyery  contmet,  wmbiniitiou  in  the  form  of  trust  or  otherwise  or 
conspiracy,  fn  restraint  of  trade  or  commerce  anions  the  several 
states,  or  with  foreign  nations,  is  hereby  declared  toTilleg^il  K 
person  who  shall  malse  any  .^uch  contract  or  engage  in  any  such 
coinbinaticn  or  conspiracy  shall  be  deemed  guilty  of  a  misdemeanor 

miTJT'''^''''-  **'^"^^  ^*'«"  ^  punish^  by  fine  iJ^re^eethug 
^5.000  or  by  imprisonment  not  exceeding  one  year,  or  by  both  said 
punishments  In  the  discretion  of  the  court "        •^'^    •  "^  "^  o""i  sani 

Trade  "  has  been  defined  as  "  the  exchange  of  commodi- 
ties for  other  commodities  or  for  money;  the  business  of 
buying  and  selling;  dealing  by  way  of  sale  or  exchange." 
The  word  "  commerce,"  as  used  in  the  statute  and  under  the 
terms  of  the  constitution,  has,  however,  a  broader  meaning 
than  the  word  "  trade."    Commerce  among  the  states  con- 
sists of  intercourse  and  traffic  between  their  citizens,  and 
includes  the  transportation  of  persons  and  property,  and  the 
navigation  of  public  waters  for  that  purpose,  as  well  as  the 
purchase,  sale,  and  exchange  of  commodities.     County  of 
Mobile  V.  KimhaU,  102  U.  S.  702 ;  Gloucester  Ferry  Co,  v 
Pennsylvania,  114  U.  S.  203,  5  Sup.  Ct.  826.    The  primary 
object  of  the  statute  was  undoubtedly  to  prevent  the  de- 
struction of  legitimate  and  healthy  competition  in  interstate 
commerce  by  individuals,  corporations,  and  trusts,  grasping, 
engrossing,  and  monopolizing  the  markets  for  commodities 
U.  8.  V.  Patterson,  55  Fed.  605.    But  its  provisions  are  broad 
enough  to  reach  a  combination  or  conspiracy  that  would  in- 
terrupt the  transportation  of  such  commodities  from  one  state 
to  another,  and  in  this  view  the  scope  and  purpose  of  the 
statute  have  been  the  subject  of  consideration  in  the  courts, 
notably  in  the  case  of  U.  S.  v.  Workingmen's  Amalgamated 
Council,  54  Fed.  995.    That  action  was  brought'  by  the 


'* 


IN   BE   GHAND   JUBY. 


303 


Charge  to  the  Grand  Jury. 

li!' w  t^*^'  '"',  *'^!  ^"^"^  ^'"*"<'*  «*  Louisiana  against 
the  Worlnngmen's  Amalgamated  Council  of  New  Orleans, 
La.,  and  others,  to  restrain  the  defendants  from  interfering 
with  interstate  and  foreign  commerce.    The  facts  were  that  a 
disagreement  had  arisen  between  the  warehousemen  and  their 
employes  and  the  pnncipal  draymen  [842]  and  their  sub- 
ordinates concerning  the  recognition  that  should  be  accorded 
by  the  employers  to  the  demands  of  certain  labor  organiza- 
tions m  New  Orleans,  and  it  was  threatened  that  unless  there 
was  an  acquiescence  m  these  demands  all  the  labor  organiza- 
tions would  leave  work,  and  would  allow  no  work  in  any 
department  of  business,  and  violence  was  threatened  in  sup- 
port of  the  demands.    In  some  branches  of  business  the  effort 

Thk  Z  ."?  r  u  ^"  ""^''°  ""^^  ^y  «ther  worlonen. 

thZTjT*^  ^'  '^'  intimidation  springing  from  vast 
throngs  of  the  union  men  assembling  in  the  street,  and  in 
some  instances  by  violence,  so  that  the  result  was  that  by  the 
intended  effects  of  the  doings  of  the  defendants  not  a  bale 
of  goods  constituting  the  commerce  of  the  country  could  be 

brought  It  withm  the  provisions  of  the  statute.  In  other 
words.  It  was  determined  that  a  combination  of  men  who  by 
violence  and  mtimidation  restrained  trade  and  commer^ 

n  violation  of  this  law,  notwithstanding  they  may  have  had 
m  view  .ome  other  purpose  in  relation  to  their  employment 
You  will  observe  that  in  this  case  the  elements  of  LiS-' 
tmn  and  violence  were  present.  It  was  not  a  case  where 
the  men  merely  quit  work,  putting  their  emplovers  to  no 
ofter  inconvenience  than  of  securing  other  men  to  fill  their 
pkces,  but  It  was  a  case  where  force  and  intimidation  were 
used  to  prevent  any  one  in  that  locality  from  engaging  in  S 

county.  The  order  granting  an  injunction  in  that  cas^ 
was  -^ffi-d  by  the  circuit  court  of  appeals  in  the  fiThZ 
cmt.    6  C.  C.  A.  258,  57  Fed.  85.    The  law  as  thus  declared 

S  ?n  S  ^  ^f^^'^oi  the  circuit  court  of  this  dis"- 
Which  I  am  now  directing  your  attention.    This  law  de- 


I 


tl 


304 


62   FEDERAL   REPORTER,   842. 


Charge  to  the  Grand  Jury. 

termines  that  any  combination  or  conspiracy  on  the  part  of 
any  class  of  men  who  by  violence  and  intimidation  prevent 
the  passage  of  railroad  trains  engaged  in  transporting  the 
interstate  commerce  of  the  country  is  a  violation  of  the  act 
of  July  %  1890. 

Another  agency  of  the  government  is  involved  in  the 
transportation  of  the  mails,  and  to  protect  and  secure  the 
efficiency  of  that  branch  of  the  service  it  has  been  enacted 
that  all  railroads  or  parts  of  railroads  which  are  now  or 
hereafter  may  be  in  operation  are  established  as  post  roads 
(Rev.  St.  §  3964) ;  that  the  postmaster  general  shall  in  all 
cases  decide  upon  what  trains  and  in  what  manner  the  mails 
shall  be  conveyed  (section  B,  Act  March  3,  1879;  20  Stat. 
358) ;  and  every  railway  company  conveying  the  mails  shall 
carry  on  any  train  which  may  run  over  its  road,  and  without 
extra  charge  therefor,  all  mailable  matter  directed  to  be 
carried  thereon,  with  the  person  in  charge  of  the  same  (Rev. 
St,  §  4000).  It  is  further  provided  in  section  3995  of  the 
Revised  Statutes  that  "  any  person  who  shall  knowingly  and 
willfully  obstruct  or  retard  the  passage  of  the  mail,  or  any 
carriage,  horse,  driver  or  carrier  carrying  the  same,  shall 
for  every  such  offense  be  punished  by  a  fine  of  not  [843] 
more  than  $100."  This  statute  has  also  been  before  the 
courts  in  cases  where  bodies  of  men  operating  as  labor  organi- 
zations have  prevented  the  passage  of  trains  carrying  the 
mails.  In  the  case  of  V.  S.  v.  Clark,  in  the  district  court  of 
the  United  States  for  the  eastern  district  of  Pennsylvania 
(23  Int.  Rev.  Rec.  306,  Fed  Cas.  No.  14,805),  the  defendant 
was  one  of  a  number  of  persons  who  assembled  at  the  depot 
of  the  Ijehigh  Valley  Railroad  at  South  Easton,  Pa.  On 
the  arrival  of  the  mail  train  at  the  depot,  the  defendant, 
who  had  no  connection  with  the  train,  said  to  persons  having 
charge  of  it  that  the  mail  car  could  go  on,  but  not  the  rest 
of  the  train.  The  defendant  afterwards  got  on  the  train, 
and,  with  others,  placed  it  on  a  siding,  where  it  remained 
for  several  days.  Judge  Cadwallader,  in  charging  the 
jury  upon  these  facts,  said : 

"The  defendant  is  charged  with  retarding  the  transportation  of 
the  mail.  *  *  *  The  mall,  in  point  of  fact,  was  retarded,  as  the 
postmaster  testifies,  two  or  three  days.  The  occurrence  which  re- 
tarded it,  according  to  the  tendency  of  the  proofs,  was  that  several 


IN^   BE   GflAKD   JURY. 
Charge  to  the  Grand  Jury. 


305 


^TndXt^r ^?:  o?^th^erUar^T4V^  ^ ^.r" 

to  a  siding.  If  thaTwas  thl  fapt  f^^^^^^^  ""^  ''^^^^"^  "'  ^«  ^hey  did 
train  which  transpoi^i  the  mail  ft  ^t^^"'^?  ^^"  *^  "^^^^  ^^^ 
whether  they  vvere  or  were  no?  wfiiiL^w  ?k  '''**'  ^°  ^'""^  <>f  ^^w. 
car  or  the  pa^rticuL'veS  ca1^1!ftle^\^f 'sL^d^gH^^^  ^^^^^^^ 
The  learned  judge  then  quotes  with  approval  the  opinion 
lowl"        ^^"'""^««*i  of  Chicago  upon  the  subject,  as  fol- 

roldl^tfsli^e  Shan't '^^^^^^^^^^^  -f «  J^^  -eans  of  rail- 

defendants  were  wUliiig^thn tt^^^^  *?  *^*«  ^«««  that  these 

borne  In  mind  tL^the  maU  car  can  onL''^'  '^^"^t  ^^'  "^"^  '^  ^"^^  ^^ 
the  railroad  to  tranRDoi!f  1  ip  mnfi  u^  ^V  ^"""^  ^  ^^y  ^^  to  enable 
panying  it.  It  is  nornra^^rfowr^  ^^^""^  ^^^f^  ^''^  ""^^^"^  ^>-s  «ecom- 
transport  a  mai  car  bvTsef^^bt^^^^  fhT^^  *?J°^'  ^^^  ^  ^^"'^ad  to 
ous  IcJss;  so  thatThi^i^omLl^Xy  p^^^^^^^  nf.n""'^^^  '^  ''''- 
really,  by  preventing  the  transit  of  nfW  i^ol  ^^'^  ''^''  *^  «^'  ^^'^^ 
with  the  transportatfon  of  the  mails/'  ^^^^^sers  cars.  Interfere 

an^rj'".''^'''?  ''''\'^"  ^"^  ''  applicable  to  the  case  of 
an  obstruction  mterposed  for  a  purpose  other  than  that  of 
retarding  the  mails.     This  was  decided  to  be  the  law  by  the 

me  case  of  U.  *.  v.  Airby,  where  it  was  said- 

uniaw^t  the  Intenti^S't  Srucr;iu'n'^"'".J'*  '°  *"*'»««'-<» 
although  the  attainmmt  nf  ^JsT.  »  i"  *^  '"Puted  to  their  author, 
object."    7  WalKl^      *        °*''^'^  *"''*  ""»y  ^^''^  been  his  prlmair 

tation  of  the  mails  had  been  obstructed  by  some  persons 
acting  under  the  influence  of  a  strike.    JuL  JackCL 

business  which  is  carS  on  ^t  ^r*  '^U°''  ""'^e'talce  to  stop  the 
which  is  the  mainsprVng  t "  the  ^cL^s  n?T^'  of  the  country,  and 
all  this  is  done,  thei  yoi  sten  nn^Sf Xhf  ^/P^'^^'y  "ke  ours.  If 
to  Interfere  with  I  mnto  th^  ^""I  "^ich  you  have  no  right 
occasion  wkh  a  hoii  Zt  i  i^!  general  remarks  on  [844]  this 
masses,  ttat  they  Zy^  at  on^  ^.  ***  f.""  "'  *'«'  '"telligen? 
Rely  not  upon  comblna^n  and^frSL* T""  ^^^  ""«  '«"e°  '■■to. 
They  are  disastrous  sCp"nryourm!fte*"„„Tit?  your  Interests, 
prises  and  business  of  the^LLun"?y  whfeh  l^irnfshTh^^  *"*  ^°**'- 
the  means  to  sunnort  his  hmno     t^„    ""'*'■■  rurnlsh  the  wage-earner 

stop  our  manufiXres  our  mins  ^r  f^  i*^"  *"  ^"""^  measures  to 


■T' 


306 


62  FEDERAL  BEPOHTEB,  844. 
Charge  to  the  Grand  Juo'. 


mSf  SS^rir^foiU'  S^h'^^d:,";^;"*  "^  «"«  ^"It  that 
olrcnmiS^  that  mSS  S^riT^mDaSlTt  S!!^  ""^.i"'",  "' 
to  enter  Into  the*  combtoattoTalS  ."S^^H?"'  '*'  ^""  """'"  '*'"«' 

_  That  the  passage  of  the  mails  over  certain  lines  of  railroad 
in  this  state  has  been  retarded  and  obstructed  there  is  no 
question.    The  regular  receipt  and  dispatch  of  mails  over 
the  roads^of  the  Southern  Pacific  Company  have  in  fact  been 
suspended  at  the  San  Francisco  post  office  for  a  period  of 
about  t>vo  weeks.    Who  is  responsible  for  this  state  of  af- 
fairs T    The  strikers,  the  railroad  company,  or  both?    The 
mlway  is  a  great  public  highway,  and  the  duty  of  the  rail- 
road company  as  a  common  carrier  is  first  to  the  public 
^e  road  must  be  kept  in  operation  for  the  accommodation 
of  the  public,  if  It  is  possible  to  do  so  with  the  force  and  an- 
phances  within  reach.    Any  negligence  in  this  respect  is 
not   excused   by   temporary    difficulties   capable   of   being 
promptly  removed.    The  damage  and  interruption  caused  by 
the  elements  usually  receive  prompt  attention,  that  traffic 
may  not  be  suspended  longer  than  is  absolutely  necessary. 
The  same  energy  and  good  faith  should  be  observed  with 
respect  to  the  removal  of  labor  and  other  difficulties.    RaU- 
road  Co  y  Hazen,  84  HI.  36.    The  present  controversy  be- 
tween the  Southern  Pacific  and  its  employes  appears  to  be  in 
relation  to  the  movement  of  Pullman  cars.    Both  parties  to 
this  controversy  have  announced  in  the  public  press  that 
they  have  been  ready  and  willing  from  the  first  to  move 
freight  cars  and  passenger  trains  without  Pullman  cars     In 
my  opinion,  the  situation  has  been  of  such  an  extraordi- 
.nary  character,  and  the  interruption  to  commerce  and  the 
transportation  of  the  mails  so  serious  and  long-continued 
as  to  have  required  of  the  railroad  company  to  temporarily 
waive  qu^ions  concerning  the  make-up  of  regular  trains 
(as  the  officers  of  the  company  claim  to  have  done),  and  em- 
ploy such  resources  as  the  company  had  in  the  movement  of 
other  trams  m  an  eflFort  to  relieve  the  prevailing  congestion 
and  distress.    This  obligation  I  believe  to  have  been  a  public 
duty,  and  a  willful  faUure  to  perform  this  duty  with  respect 
to  the  movement  of  the  mails  and  interstate  commercTis 
therefore,  m  my  judgment,  within  the  purview  of  the  statute 


IN  BE  GBAND  JUBY. 


307 


Charge  to  the  Grand  Jury. 
I  111  T^a'^II  *"  determine  this  question  under  the  law  ^ 

yo  f  i  P''«^"t'«°-  In  this  inquiry  you  will  not  limit 
your  examination  to  the  conduct  of  any  particular  class  of 
per«>ns,  but  carefully  scrutinize  the  acis  of  all  partS  con! 
cerned,  whether  they  are  officers  of  the  railroad  Z^ZTl^ 
employes,  and  without  fear  or  favor  or  influence 'S^^any 
kind  point  out  m  the  proper  manner  the  persons  who  hive 
^ansgr^ssed  the  law  and  imperiled  the  besfinterests  of  th" 

S  estv  !f  tl     ''  '"'/"*^  '°  "P^*'^*^  '^  ''"thority  and 
S  f  '  T'^  "^  ^"^  ^*  *•»"*  tho^  ^ho  have  vio- 

ilr  of' -Xr""^'  "'"^^'  *^^  "''^  *^'  «-  •'-"ght  to  the 
In  your  inquiry  you  may  find  that  parties  have  so  asso- 
ciated themselves  together  in  their  conduct  as  to  bring  Zi 
withm  the  law  of  conspiracy.  The  statute  of  the  uS 
States  upon  that  subject  is  as  follows : 

<^^t\^fSZ  aga..;;t"thrnn,?iS%rr°-  --P*-  «'ther  to 
United  States  In  an^  manner  or  for  nnt^n^*"**^'  *"■  *»  "^'^u^  ^e 
snch  parties  do  any  aS  to  effe^  the  ^hL^  T*1f '  ^"^  °"«  *"■  ■"««  of 
ties  to  such  conspiracy  sha?Ib?li«hi»i!  '  the  conspiracy,  nil  par- 
ten  thousand  doLl^^'^or  to  tapr?sonmentT;'^„,'''  •'°'  ""■*  ««« 
.vears,  or  to  both  fine  and  ■mprison^'^'InTrth/discrtioro^ti^.lJ.n^S 

The  elemente  of  this  offense  are  the  combination  or  con- 
spiracy to  violate  the  law,  and  the  overt  act  or  acts  to  ca^ 
the  conspiracy  into  effect.  Where  several  persons  are  proved 
to  have  combined  together  for  the  same  illegal  purpoi  ai^ 
act  done  by  one  of  the  parties  in  pursuance^f'ZSS 
concerted  plan,  and  with  reference  to  the  common  oS  i 
m  the  contemplation  of  the  law,  the  act  of  the  whole  Srt^ 

a'^y  of 'thel*''  ^T'  "'  ^"^'*  ''''  ^'^'  "^  evidence  aS 
It  is  al=^f    7w  °  ""T  ""«"^^<*  ^  «»«  «"««  conspiracy, 
tii  during  r      i  "°^  declaration  made  by  one  of  the  par- 
ties during  the  pendency  of  the  iUegal  enterprise  is  not  onlv 

pJovel'  al  ;«  *'  r  ^"^'  ^''*'  ^^^"  *«  combination  is" 
STmsflvr  ^'""^.f^P^n^ible  as  if  they  had  done  the  act 

of  Zw2i7?  "'■^]  ''^r'  ^  ^^  comiection  that  the  act 

t  ZcZlT*     ^"''*'  *•*"  ''**"*«  ^^  '^'  important  element 
m  the  cnme  of  conspiracy.    The  law  regards  the  act  of  un- 


i^sF 


308 


62  FEDERAL   REPORTER,   845. 


Charge  to  the  Grand  Jury. 

lawful  combination  and  confederacy  as  dangerous  to  the 
^ace  of  society,  and  declare  that  such  combination  and  con! 
federation  of  several  persons  to  commit  crime  requires  an 

the  '.^Z  "^"'"i*"  '^^'.  P«>^de<l  for  the  commission  of 

the  crime,  and  makes  criminal  the  conspiracy,  with  penal- 

les  and  punishments,  distinctive  from  those  prescr^Tfor 

itnSewh  'r.'^^  °'  *^^  •"'"P^^^'^y-  You  can  readiT^ 
3^!l  ^  .!! ''  *™'-  ^  «'"«Pi"'<'y  becomes  powerful 
and  effective  m  the  accomplishment  of  its  illegal  purpose 
in  proportion  to  the  numbers,  power,  and  streLh^fT 
combination  to  effect  it.    It  is  also  true  that,  as  it  involvela 

aTw  tTthl'^lft-^^^^^r'  '*  '^  P-Po^ionally  dim  r 
1-  t  fn?  ^«»-»*^ng  "ind  character  of  the  men  engaged 
wl,  1  ??'  "?  ,*"*°^"«»<».  to  the  safety  of  the  communttv  to 
^neilS  ^ ''"«,, Th«  ^t^t^tes  I  have  cited  indicate'the 
general  character  of  the  mvestigation  you  will  be  required  to 
make  concerning  the  affairs  of  the  railroad  company  in  the 

commerce.    With  the  merits  of  the  controversy  between  the 
raib^d  company  and  its  employes  you  have  notWngto  do 
except  m  so  far  as  the  facts  relating  thereto  may  funifsh 
evidence  as  to  the  actual  parties  engaged  in  violating  theTaws 
of  the  United  [846]  States.    The  right  of  labor  to  prgaS 
for  Its  own  benefit  and  protection  is  not  questioned   ThS 
flie  same  right  in  this  respect  as  any  other  assocTation  anS 
perhaps,  m  some  respects,  its  freedom  is  properly  ^;ater 
^e  laboring  man  is  entitled  to  the  highest  wagi  a^d    he 

terfere  with  the  rights  and  property  of  others,  and  bv  force 
or  other  unlawful  means  seize  upon  the  appWs  of ™ 

T^e  rii  o7 wol"*  '*  'f '""  *'*  ^""^  '''  *^«  govemm?nl 
ihe  nght  of  workingmen  to  quit  work,  either  singly  or  in  a 

body  (subject  only  to  the  civil  obligations  of  contract  is  not 
pSLfd  '^ff  r  the  abandofment  of  ser^^tlZ:' 
fh^nL^  P^*^'/"^  orderly  mamier;  and  here  again 
«ie  privilege  or  freedom  must  be  exercised  without  inter 

t7i  7t  ^l  "f  *"  ""^  P'-'P^^y  «*  "thers.    It  maT  te . 
said  that  this  freedom  or  pri^nlege  accorded  to  the  laboring 

IS  thereby  prevented  from  securing  the  protection  he  ought 


" 


IN   RE   GRAND   JURY. 


309 


Charge  to  the  Grand  Jury. 

to  have  for  his  labor,  and  the  power  to  redress  his  grievances. 

of  labor  to  capital  present  a  difficult  problem  for  solution 
but  It  seems  to  me  that  the  inteUigence  of  the  people  ougS 
to  so  ve  this  question  in  a  peaceful  and  proper  manner  It 
certainly  camiot,  with  the  consent  of  the  Lrts,  be  Sid  bv 
violence  or  any  unlawful  means.  ^ 

It  will  appear  to  you  from  what  I  have  said  that  a  verv 

jurors  of  this  court.     Your  oath  requires  you  to  dililentlv 

nquire  and  true  presentments  .nakr"of  such  articled  maZ 

ters,  and  things  as  shall  be  given  you  in  charge  or  otLwt 

come  to  your  knowledge  touching  the  present^J^'iS"    ^ 

■     T\Tt     "I  '^'  ""P*"^'*!  ^P^"t  ^ith  which  your  dutiS 
should  be  performed.     You  are  to  present  no  one  from  enw 

Seint  an  7h'        f' ?'  ^"P"  ***  "^^^^"^  "••  «*'»'  but  should 
according  to  the  best  of  your  understanding.    In  each  iudi 
aal  district  there  is  a  United  States  attorney,  apjSed  by 
he.  president  to  represent  the  interests  of  the  grv^rmnenl 
in  the  prosecution  of  parties  charged  with  the  fomSon 

UnS  Sttf "".:  '^""')  ''''  '^"^ '''  *«  United  Star  tS 
United  States  attorney  for  this  district  will  therefore  appear 
before  you,  and  present  the  accusations  which  the  g^remZJ 
may  desire  to  have  considered  by  you  He  wilf  Z^^  . 
to  you  the  laws  other  than  those'  I  have  men^lrwhS 
«^e  government  deems  to  have  been  violated,  and  wiirsul 
poena  for  your  examination  such  witnesses  as  he  may  ^n 
s^der  important,  and  also  such  other  witnesses  as  yS  Ty 

evidence,  to  the  exclusion  of  mere  reports,  suspicions   and 

^TvTallXe   "^-     ^"'^■^^*  *^  '''''  qualification,  yoTSll^ 

ceive  all  the  evidence  presented  which  may  throw  lio-ht  nr!l 

he  matter  under  consideration,  whether  ft  te^d  tll^E 

he  innocence  or  the  guilt  of  the  accused.    And  more  if  J 

IrToth  r'^V"*'"""  ^''"  ''''''  ^~  ^  '^«-  tha" 
mere  is  other  evidence  not  presented  to  you  within  vonr 

-ach,  which  would  qualify  or  [847]  explai/ai;  the  cha^^' 


.^ 


310 


«8  FEDEKAL  BEPOBTEB,  310. 


Charge  to  the  Grand  Jury. 

cient  to  render  the  truth  of  the  charge  prTble     B^  J 

f'^Tin  "  ""•*  J"^  •''d  '»«'«ft'l  ruTe  n^  prevail?  T^ 
^usUfy   he  finding  of  an  indictment  you  mZl^^Z' 

^r u'nlei     ^/ouTfud'^nrt*  "^*"  ^**  "^  -'^^<'' 

unexplained'andr^ireSS:  wo^rwranff?  ^°"' 
tion  by  a  petit  iurv     T«  a„*k  '.      "^^  warrant  a  convic- 

j  »  ptsuc  jury,     lo  authorize  you  to  find  nn  in/i^o* 
ment  or  presentment,  there  must  h/  a  "^^" 

least  12  of  your  numhpr     o  *>«/.  concurrence  of  at 

-c  ux  your  number, — ^a  mere  maioritv  will  n/.f  o,,ffl 
lou  are  to  ke^n  vmi^.  ^«i;k      x-         "»J"*i«'y  wm  not  suffice. 

to  questii:  '^;  rLt?r"rr.rn '  ^t^^^^-  - 

your  associates  on  the  grand  iu^  ^ 7h  "  "*iP''  *»' 

examinations,  should  ^^U>i^lriJVn^^^^''j'''' 
may  desire  further  instructions  frlX™;!.^'?  -^"^ 
come  into  court  for  that  Duroosp  «t,^  tK  i  **".^'  y»»  may 
explained  to  you  with  rLrecf  riV-tttr "  "^  '^^^^ 

[8101     AKTHUR  ET  AL.  ..  OAKES  ET  AL. 

(Cir«„t  Com  of  AppeaJi^  Seventh  Clmilt.    October  1,  18M., 

'      [63  Fed.,  310.] 

injections  ?iJ^tl\T    '*  T.""  "PI^l  froni  certain 
the  decision  the  courTsaid :]  '    ^  ^^  ^^  «>' 

»f"^nSSrTA"2  "'^"entmr  r "*"^  ^«»  "-le  to  the  act 
c^merce  against  ™TiwfT'rSr«  t^.^/'^  *°  ^""^^^  trade  and 
209.)  It  18  not  uece«^^  ,„  JSr^"«?,n'!?  """"J^'le*'  (2C  Stat 
meaning  of  that  statute,  the  acts  a^dJn.h'^**^^  whether,  within  the 
Injunction  was  aimed  wonld  have  Sl^S  '°"."T  "^-'-^^  "hloh  the 
uierce  among  the  several  states  Th^^^  restraint  of  trade  or  com- 
act  The  questions  now  i^fore  thJ^^,^  ^  """2  ""*  ""^^l  "Po"  that 
out  reference  to  the  above  art  «nrt^^  ^^J^  •**»  determtoS  wlth- 
contro,  the  exercise  Am^iT^Tr.r^,r^^^F'-<^^^>^^  tLat 


UNITED  STATES   V.  ELLIOTT.  311 

Opinion  of  the  Court. 

127]      UNITED  STATES  v.  ELLIOTT  ET  AL.- 

(Circuit  Court,  E.  D.  Missouri.    October  24.  1894.) 

[64  Fed.,  27.] 
CoNSPiBACY  IN  Restraint  op  Interstate  Commerce    Wt...  n 

rr7f"arrrei;r"  ^'"'•'"^^" -^^^^^ 

hauiing  ears,  and  secnrtn.,  n,^        "-""ymg  freight  and  passengers, 
ers,  and  to  ind"^  SL  to  1^^'^  !'  T"""  "'""^  *»«"•  ^trik- 

struct  and  destroy  int!^?!!^  combinations  and  conspiracies  to  ob- 
compllsh^  te  nof  v^lH^  commerce,  before  such  objects  are  ac 
such  pi^fui  "  ""^'  "'  "^"^^  '»  '^"^^  to  authorize 

^j"^' iZTr  Off-P^^o-'^  "or  Named  «  BBx._Under  Act 

be  in^or<^  rd^Sn^C  u^^Tr^r  h^"  "  ^'"'" 
[88]  the  terms  of  the  order  where  it  ,i^„'.^  ""*  ""*  '^*"" 
ative  on  all  persons  actog  TZuLnZT;^ '"f  "  '*  ''P*'' 
splrators.  though  not  name^  to  t^  wHt  Ifter  V^  1  """ 
some  act  by  them  in  furtherance  of  7hlJ  ^  commission  of 
the  writ  on  them.        ™"''^"*"<*  »'  the  conspiracy,  and  service  of 

Bm  by  the  United  States  against  M.  J.  EUiott  and  others 
to  restram  a  conspiracy  to  obstruct  and  destroyTnterete^ 
commerce  m  violation  of  Act  July  2,  1890  (ae  Stet  ?<Sf 
A  preliminary  injunction  was  granted. Ta  Fed  8w'  S' 
fendants  demurred  to  the  bill.    Demurrer  ove^ied 

Wm.  H.  Clopton,  United  States  Attorney. 

defindL^'^'*'  ^-  ^-  "^'"^^  ^^^  ^-  ^-  ^^«-^-,  f«r 
Philips,  District  Judge  (oraUy) . 

to^'i\rby":r>tf's?er^?^"'^  *^«  '^«'""-"  ««^ 

J^'^^y^ertainof^hedefendants.    The  district  attor- 

•  Prellmina^lijii^on  eranted~?«2  Fort    ann — ^ :;;=r 

'  syllabus  copyrighted.  I^.  brw^  ^tisMng  Co""  "^  "^ 


312 


«*  FEDEBAL  REPORTER,  28. 


Opinion  of  the  Court 
ney  submitted  the  same  on  the  pleadings-  and  th»  -i  *    ^ 
ante,  on  the  pleadings  and  an  extfndv^rief  ^l !  •.  '"'^" 
out  of  the  recent  «strik«  "  «„-i  ♦»!   I-.,  ""^  ^"'*  8^^ 

of  the  United  Staib;  2^ .!  ^'l^  ''*'  ^'^  »"  ^^^alf 
rection  of  the  attor^;  ^Z  oJ^SeV-.TZ'  "°'^'-  •*•" 
join  the  defendantTZ-f /I  ^°'***^  ^*«*«s,  to  en- 

conspiracy  whT^th^T     ,  r^^r^'^tio"  of  an  organized 

inteLte^colne^'Se  ?eS.r '^'  T '  '''*^'*^""^  -*^ 
the  material  allegations  o?  ttTbiT'th.f  f""'^'/^'-''^  «» 
are  well  pleaded     tCJ^  '  **'  '^  *"  '^cts  which 

follows:  iSr J?b  sZr^^r^'"  "'^""^«*»  »« 
-bined  and  ^n^^Z^ZS^f^Ti^^^^s,...^ 

radroads  named  in  the  biU,-Lng  aLt  ^Tlf  ^K  "^^"^^ 
nnportant  roads  coming  into  the  fitv  nf «/  r  '  """"^ 
which  are  engaged  in  ^rr^ng^  United  Sta^""'  ^'T 
in  interstate  commeriv.    n.™5  ^***®^  ""^^'^  a^^ 

X  wio  union,  ana  foreiorn  countripc?     n  ;c  a  «i.i- 
charged  that  said  a«f<.«^„  *    x.       ^"""iries.    it  is  further 

toinfuce  J;LTsin  t^^^pW^^^^  ^  ^•'"^^'^^^ 

service  of  toeir  resJrtll.^    ■      ^  "'»'' «ids  to  leave  the 

panies  from^Sfrrrero?"!^  '"""^  ^'^^  •^"'- 
place  of  those  induced  tn  „,!?f ^u      u-        ^"^  P*"^°^  "»  the 

being  to  p^venf  r/^1a  "^^  tZlS^^^ 

i^?i>zsr^^:^  ^"  the^necessar;r;iro^ 

spirators  in  furthZrof  tie  o^i  of\l  !  1T'  "*" 
Among  other  things,  it  is  alle^J  tKLt  oTthSTT 
ante,  under  the  leadership  of  one  Dete  h»i  f  ^^"/^^f^' 
and  directions  to  Derson,  ir,  fj.  ,     '  .       '^"^"^  "•"•^ers 

act  subject  to  the^lSii  1^''^''  "'f^  '^^^^°*'^^  *° 
been  coUianded  and  Sr^  Tn  ""  T^  "^^^""^^  ^^^' 
respective  railroads     I^^lt^  "T  *T  ''^'"'^^  'be 

said  defendante  We  Sr^tet^S  ^Tth^lr^  ""^ 
tions  of  trains  of  such  of  said  ^^m^  •  ^  .  ^'^^^^^  ^P®^*" 
certain  demands  rnl'^lZS^lZZf:^  ^7^ '^  *« 
«p.™cy,  and  that  it  is  the  p„rp«.  a'nd  oljSt  :7the  ctfe^-" 


^ 


UNITED  STATES   V.  ELLIOTT.  313 

Opinion  of  the  Court 

same  for  food   anH  Tc  oi  ,  *^  Preparation  of  the 

from  which^int  tteS  fZ  I      T  •»T*««turing  center, 

tides  are  distribuldrvl„lrpi%r'  T"'^''*""^  - 
States,  and  other  necislrCrn/iT     *^^"gbout  the  United 

-ntial  to  the  —"^"^^^th  U'^^"  '"''**"^  ^^- 
country,  and  for  ite  domI«H^T*  '     .   .^^e'^e'opment  of  the 

terference  with  Ihe  f^nT  f  ^  *'  "T*^  *"*  **»«  ^fo'^said  in- 
public  detrll^i'^X  \T  "*  '^^  ^"PP"««  '«  *  great 
to  aU  the  prpTe  ;fThe  ?ril",^^^^^  '>{''^fOO  people^ut 

and  efforts  of  this  distSfng  ^Th^'b^tf  ^"'''•*'" 
business,  have  becomp  larc^ni,,^    ^'         '  ^^  ^^®  <^"rse  of 

supply.  The  ^Zo^^tmTlT  T"  ''"'^  ""^^  •'^ 
their  aiders  and  abettors  enil^       ^^  ^^^  P"^'^'  a'^d 

further  prosecution  of  thefrul  <.'f  '■''*''"°^'^  ^"^^  *be 
ous  conspiracy.  unlawful  purpose  and  danger- 

thiltuiwlTutL*'  r*^""  "'  '""^  ^---^-ti-  of 
States  to  Eg  su?S  r  ;*"•'  ^'^^  "^'^^  "'^  ^^e  United 
gestions  are  made  of  m  n„  ^"^  ^1  '°^  ^^"^"^  ''^'^^^  «»«- 
temporary  order  of /nZT  ''"l^',**"*^-    ^s  raited  in  the 

suit  was  iLSutLTuS^^^  'Lf  "^^  ^=^-«'  *•>« 

of  the  United  States  a^d^LhS^  **'  *^'  ""''^^^  g«°«™J 
usual  form.    I  S>  L  °    *JL   "  ''  ^'^^'^^  «^«™  <o.  in  the 


314 


64  FEDERAL  REPORTER,   29. 
Opinion  of  tlie  Court 


of  commerce  among  the  states  of  the  Union,  and  with  for- 
eign nations,  is,  by  the  federal  constitution,  reposed  exclu- 
sively in  the  congress  of  the  United  States.  The  felt  neces- 
sity of  this  federal  jurisdiction  was  the  one  great  impelling 
cause  that  led  to  the  formation  of  the  federal  Union,  and  the 
adoption  of  the  federal  constitution.  As  early  as  1778  this 
question  was  pressed  upon  the  consideration  of  congress  by 
a  memorial  from  the  state  of  New  Jersey,  and  in  1781  Dr. 
Witherspoon,  one  of  the  statesmen  of  that  day,  presented  a 
resolution  which  declared  that  "it  is  indispensably  neces- 
sary that  the  United  States,  in  congress  assembled,  should 
be  vested  with  a  right  of  superintending  the  commercial 
regulations  of  every  state,  that  none  may  take  place  that  shall 
be  partial,  or  contrary  to  the  common  interests."  And  in 
1786  Virginia  adopted  a  resolution  appointing  commission- 
ers to  meet  with  like  commissioners  from  other  states,  and 
the  resolution  to  that  effect,  formulated  by  Mr.  Madison, 
recited  in  the  preamble  that  "  Whereas,  the  relative  situa- 
tion of  the  United  States  has  [80]  been  found  on  trial  to 
require  uniformity  in  their  commercial  regulations,"  etc 
That  great  jurist.  Chief  Justice  Marshall,  in  Brown  v.  Mary- 
land^ 12  Wheat.  445,  most  aptly  presents  this  matter,  as 
follows: 


••  I 


The  oppressed  and  degraded  state  of  conmierce  previous  to  the 
adoption  of  the  constitution  can  scarcely  be  forgotten.  It  was  regu- 
lated by  foreign  nations  with  a  single  riew  of  their  own  interests, 
and  our  disunited  efforts  to  counteract  their  restrictions  were  rendered 
Impotent  by  want  of  combination.  Congress.  Indeed,  possessed  the 
power  of  making  treaties,  but  the  inability  of  the  federal  government 
to  enforce  them  had  become  so  apparent  as  to  render  that  power,  in  a 
great  degree,  useless.  Those  who  felt  the  Injury  arising  from  this 
state  of  things,  and  those  who  were  capable  of  estimating  the  in- 
fluence of  commerce  on  the  prosperity  of  nations,  perceived  the  neces- 
sity of  giving  the  control  over  this  important  subject  to  a  single 
government.  It  may  be  doubted  whether  any  of  the  evils  proceeding 
from  the  feebleness  of  the  federal  government  contributed  more  to 
that  great  Revolution  which  introduced  the  present  system  than  the 
deep  and  general  conviction  that  conmierce  ought  to  be  regulated  by 
congress.  It  is  not,  therefore,  matter  of  surprise  that  the  grant  should 
be  as  extensive  as  the  mischief,  and  should  comprehend  all  foreign 
commerce  and  all  commerce  among  the  states.  To  construe  the  power 
so  as  to  impair  Its  efficacy  would  tend  to  defeat  an  object  in  the  attain- 
ment of  which  the  American  public  took,  and  justly  took,  that  strong 
Interest  which  arose  from  a  full  conviction  of  Its  necessity."  "  What, 
then,  Is  the  Just  extent  of  a  power  to  regulate  commerce  with  foreign 
nations,  and  among  the  several  states?"    "The  power  Is  coextensive 


i^^ii' 


•' 


UNITED  STATES  V.  ELLIOTT. 
Opinion  of  the  Court 


315 


intereoursa    One  of  its  m^^ o^^Z.^'^^^.^^^Xrm^'^''''^  '' 

wiSh  r:iT«  tdT'  ^rT'  *"  *"^^*  '"^^  p'*  fro- 

our  feet  werplafi  bv  thT  "^  1"^--^  "Pon  which 
constructed  the  fabric'  of  I  ^""^  '"''*  P"*""***'  ""^^  ^^'^ 
re^date  ccn^rfi;    Z  Z^^^  ^^  TS  Z 

tive  pS  in  ;r'^-^  T""*^***  *****  *•*«  controlling,  1^ 
uve  point,  m  the  mind  of  conm-p««  ,«  ^„o  ^-       xi  •  '' 

was  to  suppress  what  a^  ll^s^  W    "L  «'  '*'*"'*' 

Z  ^ifi  J  restramt  of  trade  or  commerce  amonff  the  statP^ 
or  with  foreign  nations,  is  forbidden      TV..  "^^  ' 

bination  or  confederatiL    ™'^'^^'''    Therefore,  any  com- 

£^fTpt5],^!;---XrSS 

interstate  commerce,  which  Drevpnt<=  tx.        V*'^"®'^  <>*  1<»1 1 
OUvera  v.  Insurance  6-^  3  Xi    m     T^'°  "P*™*'""'     " 

W  to  prevent  and  4^^^^ l2"lXran:?r 


!'  \ 


316 


M 


64   FEDERAL  REPORTER,  31. 
Opinion  of  the  Cowrt 


binations  to  interfere  with  the  operation  of  such  commerce. 
Accordingly,  section  4  of  said  act  provides  that : 

T^t^lTIITri  J!'??"*  ^"""^  °'  *^  """'ted  states  are  hereby  In- 
IS?1!  oK.li  i"'^l?"rt'0D  to  prevent  and  restrain  violations  of  thl7«rt. 

Sftii  .n  Ik*?  "■*  ^"*y  *"  *^  ««''«"•  dl'trlct  attorneyHf  the  Un»li 
SSl^I  to*^  mX^ei^ffi'-^-  }-«  <i'«c..orof1he''it?o°rn^ 
Tlolatlo^  ftich  cr^^«  mis  S?^*'  *"  ""-''*"*  "'"'  "-estraln  such 
the  caae  and  pray^S^at^.pTJ.IfJL^'Y  «' J^"*'™  "^Wlng  forth 
wise  prohibit^"    "When*  Z  Jii^"""  ^1"'  ^  enjoined  or  other- 

be.  to  the  hearii^  anHe  emilmiti^n  .f  ♦hi  P""'^'  «»  ««<>n  «8  may 

petition  and  before  flMld"''^"""^  *i^*™f  in""?,  "*"""?«  ""'^ 
temporaiT  restralnlnr  Ardl,^' »^£^i^.  ^  "*  ""^  ""'e  make  such 
tbel^^i^  PWUbltlon  as  shall  be  deemed  Just  In 

It  was  pureuant  to  this  statute,  inter  aUa,  that  Judge 
iHAxm  issued  the  temporary  restraining  order  in  this  ca^ 
I  am  unable  to  perceive  the  force  of  the  argument  against 
the  power  of  congress  to  authorize  such  civil  proceedings  in 
equity  to  suppress  and  restrain  combinations  and  conspir- 
acies to  accomplish  the  obstruction  and  destruction  of  inter-  - 
state  commerce  and  trade  before  it  is  accomplished.    It  was 
just  as  competent  for  congress  to  provide  this  civil  remedy  of 
prevention  as  it  was  to  provide  for  punishment  in  a  criminal 
proceeding  for  the  unlawful  conspiracy  entered  upon  or 
consummated.  '^ 

It  is  urged  by  counsel  for  defendants  that  courts  of  equity 
will  not  interpose  by  injunction  to  prevent  the  commission 
of  an  act  which,  when  done,  would  be  a  crime  penally  pun- 
ishable.    This  is  an  « old  saw."     It  is  a  general  rule  of 
equity  jurisprudence  that  courts  of  chancery  will  not  inter- 
pose where  there  is  an  adequate  remedy  at  law,  nor  will 
they  ordinarily  interpose  to  prevent  the  commission  of  a 
crime.    A  well  and  long  established  exception  to  this  rule> 
IS  that  where  parties  threaten  to  commit  a  criminal  offense, 
which  if  executed  against  private  property,  would  destroy 
It,  and  occasion  irreparable  injury  to  the  owner,  and  esp^ 
cially  where  such  destruction  would  occasion  a  multiplicity 
of  suits  to  redress  the  wrong  if  committed,  courts  of  equity 
may  interpose  by  injunction  to  restrain  the  threatened  in- 

IT  7^"  '  f  ^*^,*^"»  *«  m"'  ''ould  be  very  imperfect, 
and  indeed  impotent,  if  a  number  of  irresponsible  men  could 
conspire  and  confederate  together  to  destroy  my  property 


.. 


UNITED  STATES   V.  ELLIOTT. 


317 


Opinion  of  the  Court 
to  demolish  or  bum  down  my  house,  that  I  should  be  re- 
mitted alone  to  the  criminal  statutes  for  their  prosecution 
after  my  property  was  destroyed.  Most  generally,  such  law- 
breakers who  engage  in  such  conspiracii  are  a  lot  of  pro- 
fessional agitators.  They  have  no  property  to  respond  hi 
damages.  Their  tongues  are  their  principal  stock  in  tead^ 
and  inasmuch  as  imprisonment  for  debt  is  abolished    and 

^uldtauite"''  'T""^f  ""^  P^'*'''^^^^'  -  -'-ti- 
would  be  quite  unavailing.     It  certainly  presents  a  case  that. 

m<.t  strong  y  appeals  to  the  strong  arm'  of  a  court  o"^S 

only  means  of  conserving  the  rights  of  private  property 
It  IS  now  a  well-recognized  office  of  a  court  of  LiVto 
conserve  and  preserve  the  rights  of  private  propertH'ad^ 
vance  of  its  molestation  and  appropriation,  whe^,  from  Jhe 

EM  Arthur  wa^t'  """"'  '"''  ^"  ^'»^^''««'  i°  -hich 
al  763  Fed  ,Tm  '^'^T'l  ^^^'^^  Thomas  F.  Oakes  et 
ai.    (b3  Fed.  310),  Mr.  Justice  Harlan,  in  reviewing  the 

ally  niet  this  objection,  and  presented  the  law  resoectin^ 
unlawftil  conspiracies  with  a  force  and  cleamei  tTw^ 
Z  ^'"If  f  ^""^  ^^  rest.  It  may  not  be  out  of  plaHZ 
to  say  that  no  public  decision  has  perhaos  l^n  t  k 
misunderstood  or  ignorantly  or  intenS^tlfy  iS'  'LTtS 
and  perverted,  as  that  of  the  distbguish^  W^ S 

zations,  ,n  the  absence  of  a  contract  binding  the  employ^ 
to  a  g^ven  term  of  service,  whenever  they  becole  disrtfsfild 
with  their  employment  or  their  wages    t«  n.^wi!  • 

of  the  pmnin™-  „.*i,  ,  "^*6^'  to  quit  the  service 

Sve  a  St  t;  n  ""P""*"'^  "^^  «°U«<=ti^ely;  and  they 
nave  a  right,  by  preagreement  or  preconcert  n*  »-.♦;        / 

unite  together  for  taking  peaceful' Id  Sfut  m^'  Z 
secure  an  increase  of  waMs-   tn  mitkj  means    to 

a  body,  from  the  sTrvilTf 'tht    '''^^•^'•«^'  fParately  or  in 


318 


64  FEDEBAL  KEPORTEB,  32. 


i 


' 


Opinion  of  the  Court 
nounces  the  further  proposition  that  such  men  have  no  risht 
to  conspire  and  combine  together,  not  only  for  the  purSe 
of  securing  better  conditions  and  wages,  and  quit^S 

X?iipl  JT  "P/^"«  ''''  P^**=«^  ^"^'ted  with 

pal    th^^ttA      "■'  '^"u^  ""^  ^"""S  *«  t«k«  their 

toS;r tr  th  ^        '  "°  r^***  *^  *=*'™'''"«  ""'i  confederate 
together  for  the  purpose  of  wantonly  injuring  and  destrov 

proDert^     it  ^'^,'^"""7n  °^f  and  control  of  his  private 
telawl^I  ^v  .1         "^'- '*  '^*'°"  ''y  "°  individual,  may 
taken  to  L  7  ^""^  •^"'i''  *  •^'^^'^"*  thing  when  under 
taken  to  be  done  by  a  confederation  among  many   ha^mr 

tt  iroSrof "  '^  T^'-  <"  iBJuring^and  I'stS 
me  property  of  another,  by  preventing  him  from  r,roJrJ 
ng  his  business  by  taking  into  his  sefvice  othrtHuppt 
the  places  of  those  who  vnliiTitanii,.  u  ""^*^^s  w  supply 

learned  justice  saTs:         '^''^""'""^^  ^"^^  ^^^«  ^"^-    So  the 

c^nspir:^;'^';,*'^^^^.^^^^^  that  any  combination  or 

has    for    its    objeot    t^  crinni  th^  '''^"^^  ^  "^^S*^'  ^^^^ch 

receivers,  and  to  embm.r««lTh!  *^®  Property  in  the  hands  of  the 
inanagementrelther  ^y  SLwfn^^""  ^^  ^^"^  railroad  under  their 

gines,  cars,  ir  other  iWrt^  Sf  th-i^S^^!;^"^  "°^^  ^«''  "^e  the  en- 
their  possession,  oT  TSil^  o^truc^i?^*  ?h  i^^  '"^^^^^ring  with 
ageuient  of  the  property  ^hv  n«J«?^  ^  ^^^^^  ^"^^^^^  ^r  man- 
or other  wrongful  m^th^saM^«rfhf  /^^'  intimidation,  threats, 
against  employ^  remain^g  iTtLefr  servlTo^hl  ^' .''^"iT.  "^'^^«'  «^ 
to  cause  employ^  to  quit,  or  prevent  Jr^WJ^  methods 

the  service  in  place  of  thaZ  }^nZJ^^\^  ^^^^L  ^^^^^^  ^^^^  entering 
acter  disturb  theZceotZilT^J^  "'  ^Z?  °"*^^'*?  ^'  ^^^^  ''^^^ 
They  imperil  the  interests  rail  o??h!^  m  schievous  in  the  extreme, 
demand  ^at  the  f^ ^urse  of  tLZlnu^'''  A**^^*'  ''^^^  rightfully 
structed.  Thev  endan^r  th5™c.^  1^*^"  "^*  ^  unreasonably  ob- 
liberty  of  inlviduat  *^who  ,n^fS°"i  "^.''"^^  ^'^^  ^^^^  I^rLnal 
privilege  of  cho(^?ing  the  terms  uS^n  whTni'V  ^'^f.^''  inalienable 
or  attempt  to  enter  the  se^S^  T  t hlo  ""^  ?^?  "^"^  ^"^^^^  enter 
binations  are  aimed.  And  a7  arts  of  tS^ho^"^?"*  '^^^'^  «"^h  com- 
have  defeated  the  proror  fdmini«frn\^  ^^^^r^Jl^r  referred  to  would 
Inflicted  irreparable  ^nW  n^n  it    il^*""  n'^'  ***®  ^^"st   estate,   and 

of  the  publi?,  the  rcS^  ^t  pCrrVramSS'^.f  ^r.  *^^  ^^^^^^^ 
as  to  restrain  all  such  acts  m  hflVf  c^^a  n  T®^  ^*®  injunction  so 
as  combinations  and  ^Z>Zde^^  K.'^Vi^  ^?  ^*  ^«^»^'  ««  well 
physically  injuring  the  orOT^  nr^i^li*"?,  ""^^^^  «°d  intent  of 
regular,  eontiiuouf  oMrS'thrrailrS^S^'^  interfering  with  the 

Further  on,  he  says : 

"  In  our  consideration  of  this  case  wa  ti««A  «^4.         i    , 
«-a«on  or  counsel  ,„  reBp^.'^Tu^^'J'^Ta^  S^uXl^pt 


" 


LSITEIi  STATES   V.  ELLIOTT. 
Opinion  of  the  Court. 


319 


v^ent^  wrong  wl.icl.  If  committed,  u.ay  be  otherwise  reached  by  the 

eQuitv"'shtld  t"'"'i?  '^''  *^'^  jurisdiction  of  a  court  of 
equity  should   be  cautiously  and  conservatively  exerci.sed, 


it  ;;"fi"jii^t7Kord:s'Lr^'«rr'ir*  ,*■'''*  *•'«  --  -'««> 

lasting  injury  about  to  bl  done& X^"?"^.  '"J'""«^-  <"•  S^^at  and 
court  owes  it  to  its  suitors  and  i^«"-"'    •  =  ^"*^''  "  "^^  ^^^ 

only  remedy  the  law  a?tows  to  ureL^tTh-."""''"?'^?  *"  "'''""'ister  the 
aqthorltles  all  agree  that  a  c^u*;?!,*"**^?,  ">""!'??'«'' «£  the  act.  The 
this  power  when  the  circuu..sti.wl^\,?'ii^  ^''?."'''  ■"**  h^ltate  to  use 
quire  it  to  be  done,  in  oS  to  'L?  .fl""^"""-  <=»««  >»  hand  re- 
irrepar.nble  damages  by  wrougdi..rs  "  ^"'^  '''"'*  P'T*''*-''  "ga'n^t 

•'rL\^''Tt  '™'"  *"•■•  '^"^'••^  Story,  the  following: 
tion  is  mSs^lU'spSb^rr  thT  "P^''"""^  "^  ^>^""  '"J""c- 

reiyTfn^'hTtr-'";'*'  '""^  ^^^"-^  *»»«*  -  o^l^- 
condftLi^of  S  r  ^SSd'"  "  w"f  extraordinary 
of  ehe  property,  an^d^^l^l^  p^TS/r.t^^^^^^^^^^^ 
"Lt^nhrettten^t-^^^^^ 

doer?to*aSSL"/oJ  damageri^'rcrr  "^'i""'"""^  ^^OJ*-'  the  wrong- 
fore  in  itself.  deterSnefhe  question  a«°?i  "^T*^""""'  ""'^  »<>*  thert 
I(  the  acts  stop  at  crlm^r  invX  ml^Piv  f  •^'"^"'^^  ""^  injunction, 
threatened  could,  if  done  be  id^InnSf^  ^  '"™^-  ""  "  the  Injury 
eqnity  would  not  inter?ere.  But  T?he^n.^°i?^°'?*^  '»  damages 
irreparable  injury  to  and  dtstrn^H™    ?    ^'^*^  threatened  Involve  the 

country."  "  ^  '***^°'  '^  a  great  failure  of  justice  in  this 

.^As^said  by  Judge  W«h  in  granting  this  provisional  in- 

j;aj™ar^'h"i*:Tln:s'ST?rr  ^i!^*  ^^cf^^^^*  ^  <"--"-  «>' 
until  such  roads  accede  to  certain  ^Lfo^*  ^^^  ****<*  adjoining  states 

such  demands  are  in  themS  reaSfnnhi.'"'^  "^^^^  *^^'"'  ^^^^^her 
unjust,  is  certainly  an  uXwftiT  f^n«iSro^^ ,''''  unreasonable,  just  or 
among  the  states;  and  under  the  l^wsTf  tL  Hnu!??/.^*  ^^  commer^ 
at  common  law,  men  may  not  mnsn^^l  JL  ®  ^°**®^  ^^^tes,  as  well  as 
by  unlawful  mians."    ^         '^''^P*'^®  *^  accomplish  a  lawful  purpo^ 


1  "iji— 'irif|iii^«iif|| 


1^ 

^1 

320 


It 


64  FEDERAL  BEPORTEB,  34. 


Opinion  or  the  Court 

in  atJuntiJ^Mti^^'^*'  "  '"°!*  """""alous  state  of  affairs, 
m  a  country  like  this,  if  men,  because  of  some  supposed  or 

be  permitted  to  confederate  and  conspir*  together  for  the 

mar^a^dT"^  ^'^  T '"^^^  in/accedin^t'thJr  al 
mands,  and,  as  a  means  to  a  specific  end,  tie  up  and  ston 

S^nTh  ™"r^  f  ^^"'^'"^  '-"^  *»»«  Pacific  LTt  tots 
J^LoL  *r1?  '^^.  •'°'*^^^*'  '^^•*«°  «"  "»«  engines  on 
Sn»St^i  T^^  intercepting  the  transportation  of  pas- 

another,  and  stop  the  shipment  of  cattle,  sheep,  hogs,  com 

in  language  the  far-reaching  destructiveness  and  ruin  of 
such  a  scheme  if  permitted  to  proceed  to  accomplishment. 

Of  mterstate  commerce.  Large  communities  of  peVple  are 
dependent  for  the  necessaries  of  life  upon  the  aSuurS 

Sr^"!?"'"*"^""'''"-  While  we  have  a^tatehe;; 
w^th  a  productive  energy  and  capacity  for  producing  nearly 
aU  the  necessaries  of  hfe,  yet,  because  of  the  fact  that  othi 

supplies  Uian  the  local  community,  people  forbear  giving 
attention  to  the  production  of  articles  which  they  can  thuf 
obtam  more  cheaply  and  readily,  and  depend  therefor  upon 
other   commumbes,    and    the    railroads    for    transporting 
such  suppbes  from  one  state  to  another.    If  persons  may 
oombme  and  confederate  together  to  stop  the  railroad  trains 
from  passing  from  one  city  and  one  state  to  another,  it  is 
ea^  to  be  seen  how  quickly  and  readily  they  could  pi^uce 
rum,  famine,  and  death  in  our  great  cities.    They  could  cut 
off  snch  necessaries  for  the  sustenance  of  life  as  an  adequate 
ripply  of  coal,  and  in  one  month,  or  less,  produce  a  coal 
famine  m  city  and  country.    It  certainly  ought  to  be  per- 
missible to  the  government,  representing  the  whole  people, 
to  interpose  to  preserve  and  protect  the  public  life  and  the 
public   health.    The   framers  of  the   federal   constitution 
builded  wisely  when  they  gave  to  congress  control  over  our 
inteistate  commerce.    With  prophetic  eye,  they  looked  far 
into  the  future  of  their  country,  and  foresaw  the  develop- 
ment of  Its  commerce,  and  the  absolute  necessity  of  the  free- 


321 


UNITED  STATES  V.  ELLIOTT. 
"P'"!""  of  the  Court. 

gress  did  not  enaft  tlTZZT"^''-  ^^'  '««'  ^^at  con- 
no  argument  against  the  1"^'!^  ^^'"^  "^"^  ''""'  '^ 
powers  lodged  by  the  constiH.f  ".*  '*"  P«^«'-     Many 

ment  long  fie  do^rmtt  ^ t?  "  '""^  ''^''^''^^  ^^P^^' 
them  into  activity    A^\^Tu  ^t  *^S«°cy  arises  to  invoke 

"  •  w2' ''  ''^'^■'^'  '''"''  '"  ^"^^^ 

objection  to  such  J  n?"^  fxigencles  of  this  bn^i^^  '^f'  Principles 

-uM  not  LT,i^rsi^'^' " '« nii'rrh^e  ^iicc^, 

Congress  passed  the  act  of  irqa  • 
necessities.    And  as  the  seouel  nrn    a  '"^T"'^  ^  *!»«  P"Wic 
to  which  the  comitiy  IT^Sul '"  ''''  ^'  ««ty 
of  the  law  "builded  wiir  San  if"'"'""'"'  '^'  ^'^'^^^ 
a-saults  made  on  the  i^eraUS^^"■  ^^'^■"    '^^^  ^"rious 
with  this  trouble,  for  grasoL  !^-  ^^'^'^^^  '"^  connection 
warranted,  in  vie;  of  Se^^^Jt"'^'"'  '''  "J^«"y  "«- 
by  said  act  of  congress     tK^  ''T'"''^^  ^'^««  *he  courts 
of  the  federal  conSS  Jtd  1?  """"^  '''  '^«  --'"on 
thereof.    It  is  their  offi^t  e"!!   '!,' '""^^ '"  P^'^uance 
They  possess  just  such  powers    "h'  1wk°''  "''^''  '^'  ^-^^■ 
diction,  as  are  conferred^r^hl  I    'u'  P^^^""  «"d  i"ris- 
the  land.    And  when  they  cSme^t^^  '"P'''"'  '^^  "* 

diction  with  which  thevT«™T       ,  *  ^-^^''^'^^  »*  the  juris- 
of  the  federal  legisllTe^?d  ^a"„t t^'  ^  ^°  '^^^  -^ 
last  summer,  against  unlawful^ol    ^'^"'''""''  *^  '^'^  did 
stram  and  prevent  the  opIr^ionToH?""'  "*  '°^°'  *«  ^- 
unappeasable  spirit  of  the  mob  in  .».         !  ""'^^^'ning  and 
dom  of  trade  and  commit  tnh     ^  P^^^^'on  of  the  free- 
Public  highways  so  a?STe'nl'';!! J  f*^^  ^^^'^-des  on  the 
tion  of  the  United  States  mail?  «T^  """^  *^"  transporta- 
esses  the  healthful  glow-art'      ^  "^'''^  ^^  civil  proc 
they  come  as  servitoS"li?hfn  fh?        '  ""*^°"'^  ~™<*. 
to  the  federal  constitut  on  « to  it  mT'"^  "*  '^^  P'^'^ble 
«erve  the  public  welfare    in  Ih  offl'l.^"^'^^'"  «»<*  *«  -on- 
mendation  of  all  good^ie^  7l     V^'^  "^^^^^  ^^e  eom- 
cisms  to  which  they  have  Wn?f'°  *^"  '^"rtful  criti- 
crisis,  that  the  Am^^JeTSd  be''  ''  "f ' '°  ^'^^  « 
»«»-vo.  i_^  u-I^  '^"""'^"^  tJ'**  this 


s4 


322 


64  FEDERAI,  BEPORTEE,  1U. 


Syllabus. 

I'ffirTl'"'"'  "'  •"^'  ""''  ""'  "'  **'«  tunu,lt„ou.s  assembly 
controlled  by  one  spint  to-day,  and  by  another  to-morrow. 

thS  r  /'  "'"^*  •"  **^  demurrer  and  the  brief  of  counsel 
that  the  restraining  order  granted  in  this  case  went  against 
parties  jjot  named  specifically  in  the  bill  and  the  restraining 
order  The  language  of  the  provisional  order  in  this  respect 
IS  as  follows:  ^ 

named  In  sa^d  bin  '  "  •in,!  S.»ll  r'?"£*"^  defendants  as  are 
ants  whose  nanies  are  not  stnt^i  Jf  **  ^""'"'^  "P"»  ^'"^^  ^efend- 
order."  '*"•*'•  ''"*  "''o  "■*  ^itliin  the  terms  of  this 

The  order  further  directed  that  the  injunction  should  be 
operative  upon  all  j^rsons  acting  in  concert  with  the  desig- 
nated conspiratoi^,  and  under  their  direction  and  control 
and  where  parties  were  not  named  especially  in  the  writ,  but 
were  found  to  be  acting  in  concert  with  and  under  the  direc- 
tion of  the  alleged  conspirators,  and  commit  some  act  in 
fartherance  of  the  conspiracy,  then  the  marshal  should  serve 
tte  wnt  upon  them,  and  if,  after  service  of  the  writ  upon 
them   they  did  any  act  in  violation  of  the  injunction,  they 
would  come  withm  the  terms  of  the  restraining  order.    This 
1  think.   It  IS  competent  for  the  court  to  do,  under  section  5 
of  the  act  aforesaid,  and  that  it  was  conformable  to  the  cus- 
tom and  usage  of  courts  of  equity,  where  there  are  engaged 
such  large  numbers  of  unknown  persons  in  such  unlawful 
conspiracy.    As  the  order  of  injunction  was  not  to  become 
operative  upon  them  until  served  with  a  copy  thereof    it 
does  not  lie  in  their  mouths  to  question  the  regularity  of  the 
proving.    My  conclusion  is  that  the  bill  is  sufficient,  and 
the  demurrer  is  overruled. 


[72*]         UNITED  STATES  v.  DEBS  ET  AL.» 
UNION  TRUST  CO.  v.  ATCHISON,  T.  &  S.  F.  R.  CO. 
(Circuit  Court,  N.  D.  Illinois.    December  14,  1894.) 

[64  Fed.,  724.] 
Cohtempt-Pkoceedino   in   Equity-Conciusiveness  op  Answeh.- 
In  proceedings  tor  contempt  In  equity,  a  sworn  answer,  however  full 

•Writ  of  habeas  corps  denied  (168  U.  8.,  664).    See  p.  565     Debs 

^"2W)'°%t^d':l!?, ""''?  'Z'^"'^'""^  *°  ""^'^  '^'  "«"«  <«5 
Fed.,  210).    That  decision  not  rq)rinted.    Anti-trust  law  not  considered. 


UNITED  STATES   V.  DEBS. 


323 

S.TllabuR. 

Same— JusTmcATio'._r,.o„  '^°  violated." 

t<on  Of  a„  mjnneti'on  ^  rnTd^'^T'^!::!^  "  -"«  "»<»  Jurlsdlc 
Irregularity  or  error  inLv^„T  *""^  '*^  ^"^^'^  f^reiu.  no 
obedience  of  the  writ.  ""^"'^  »••  ■■>  the  order  can  Justify  dis- 

lliSJ  Same.— In  a  mwpe.iii,o.  *„  .      ■ 

t'on   the  sumciency  of^^e miortThl  '."•,'"-''^^'»«  -  'nJ-c 
matters  of  form  and  averment  mZ.  '"Junction,  m  i-espeet  to 

*jQmTv   JuaisDioTioN-RE^Trlr    ^'  •"'"""*  ^  'luestioned. 

Jurisdiction  to  restrainrr    Ln^-  b^.r^-^r'^""'*^   "^ 
by  the  proper  officer,  on  behilf  ne  «  "^  information  filed 

CONTEMPT-TaiAL  BV   CWBT -Thn     T^r"^"' 

tempt  and  a  crime,  the  contempt  ma  *,1  T"^  "'*  """'"*"««  •••  <^°- 
curt.  ^"""1  niaj  be  tried  and  punished  by  the 

'Pf  ^O--™.^^^^^^^^^^  OE  .HE 

Ing  Illegal  "every  contract    comirin.H  ^*''*-  ^''  §  '•  0«^'ar- 

otherwise,  or  conspiracy  "in  IT'    *    f  '"  *"«  '""»  »'  trust,  or 
the  states,  or  with  foreign  "nttn.  *'''"'"  •"•  """"'^'^^  ««o,^6 

and  combinations  of  a  ^nt^cZ'  "  T'  "'""^  •■"*  ^'''P'fa'  ""erely 
title.  "An  act  to  protec.tTade?nJ  T  ''  """■"  "'^  '"''^^  «"  the 
«traints  and  monopolies"  Tre  iZmT''"".'"""''  """•-''>'  - 
declared  unlawful,  the  words  •'Tn1il°,T  /'  *"*  ~"«^  ""ve 
connection  with  the  words  "conTr.^^'  :^  ?5  *™''«"  '"a-'"8.  I" 
common-law  significance  but  t^^!  .  "  combination,"  their 
well-settled  legal  n.e.2,  LVtZ"!" ''T"'''' "  ''  ^'^  '"  '  » 
merce,  if  to  be  accomplish«l^v!vl    -^  '"•^tralnt  of  trade  or  com- 

SAME-CONSXBUCTION.JrheCft.r'''"''"^'  ''  '""'"^'"'• 

by  the  use  Of  the  Phrase -.tareCnt  o'f  /'V^r^-'^  '«  "»*  ''ff-ted 
the  Phrases  "  to  injure  trade  "  or  "  to    "  Z™'''''    '""^"^'^  *'*«''  <>-«  of 
SA«E-<;OMMEBCE.-The    word    "L  "'"  *^'">«" 

synonymous  with  "  tradl^as  uZ7„T"  '"  ^"^  ^*^*"*«'  '«  "ot 
straint  of  trade,"  but  has  the  me^,^"  tbe  eommon-law  phrase  "re- 
the  constitution  which  grant,  t!!!  ^*  "''"■•'  'n  that  clause  of 

^AME-ioBFEITCBE  OF  PbopebtV       Th. 

8  6.  for  forfeiture  of  "  „„7^  ^^™*  Provision  of  Act  July  2  l«oo 
any  ^nibinati!:^^^  or  pnZantT'"*^  """'^  """«'  ""^  "'"^ac''  orT' 
Ject  thereof)  mentlonTlnTh.s  1*17^^ ""^  ^""^  -^'-^  ^^e  aub 
Portation  from  one  state  to  anothi  ^'"^  '"  '"^  ">"'^  of  trant 
not  Imply  that  only  casl  ta  ^h  !''  °'"  *°  "  "*«'sn  «>untry  ■  uc^ 
to  forfeiture  shall  L Tm^  ZtT'^'"'^  '"«"  "«  'ound^subj::^ 

EQUITT  Jt«ISDlCT,ON-Rr^it>     '^   '      -   '"''*  "'  *"«  ''^- 

2.  1^,  to  Circuit  coufte  "  o^revZT^'  T^'  ^'^*»  "^  ^-^^  ^-'^ 
_!!!lil!!if^vas,on  Of  the  rTJht  of  trlaThv?  '"""'"""  "  "'  "'« 


I 


324  «. 

o*  FEDERAL   BEPORTER.    725 
Statement  of  the  Ca«e 

ta  combination  wIth^Xr.nr  ^^^  '^*'"'™"  ""'"^-y  ""'«"• 
to  boycott  P»llu.an  c«^  t  „^^'^*^;2  "'^^-^  '"  "  «>°^'™«y 
entered  Into  a  conspirart   to^L?„  Z  j  ■""."  '"'  *""*  ""'P"'* 

engaged  in  the  strike  nse^  thr^,!  f  ,  ^**'^'-  "*"'^'  ""^""^'y 
means  of  Interference  w^tl.l^^*.,''"'"'"'*'  ""^  »'•«"•  ""'"'r'"' 
or  respecting  an  Cn^Uon  IS  ^.^L' t  Z^";  ""^  r^^" 
their  purpose,  without  essential  olJn^''„[^  J"  f '!!'''•  '^'^'^ted  In 
ot  contempt.  ^-miige  or  oondact.  they  were  gqllty 

Same— IntERFESENCE      with      Rmnv>»         t. 

with  the  management  of  a  r.^!^?T  . ''■  '""""'""■  interference 
contempt  of  the  conrf-s  am  ^"^1 1  .!  ""^  "'  '■"*"-^"  "  " 
the  receivers,  and  enjo.n.n'g"^:::^^"™:.'^  tie'Tr  Ilr """"'' 

of  the  UnitPd  r7^i  ""L'T      T  '*'"^'^'  ""*  *•"  complaint 
m«iveS^Jfhi!?J-®***^'  ""*'  ^^'  °'''«^  ""  Petition  of  the 

SSC^  "     '•^""'^  *"«*  -"O  by  the  Union 

^,^^  informations  were  filed  July  „,  ,8M.    Tta  „u«tance  of  the 

«nong  other  things,  that  tl^iSfeXntTEuLne  "'"'^l""*  ^"anjing. 
Howard,  h.  w.  Rogers.  STlvMt^r^Ivii.r'r^u*  ^-  ''*'"'•  Georse  W. 
Onion,  and  others,  «?re  e^iS  !n  f  ^i*"^;  '"*  American  Railway 
fere  with  and  to  prevent  tl^Sf^s^rt^nr'",".?'  ""'"wfully  to  Inter- 
conunerce  over  and  upon  thl  8^ver^?.^ii,2.'.?'  '^^  "'""*  ""^  l>iter<t..te 
and  praying  an  InjSon  Tha[  on  thnTrt.fvT^  i"  '"«  ™">Pl"lnC 
a  writ  of  Injunction  was  duly  Issn^  v^^i\u^  S'^^'^  "'  "»e  court 
persons  combining  and  c^n^piri.^  witS  ^bem^nd  ",1  r^"'""'**-  "'«'  »" 

«t.i.VtI„^?r  '  WngTn;-ofX"*S„l^|^^"«„  w, t^ndeTlng.  oh- 
name*!  railroads:  Atchison  TonStii  a  L  ?  ^X^"^  ''^  ^'^e  following 
&  Ohio  Railroad     Chi^l^'JlCn  nJ^^^^^  Baltimorl 

nois  Railroad;    Chicago  &Erilnnn^?'^*^i.P^''"S**  *  ^^  H"- 

Indiana  RailroalT  Chicago  B^lfZnnirf  ^'^''^'^^^  *  Wpstern 
Great  Western  Railwa^^'hS^m  *  Chicago 

Chicago.  Rock  Island  &kcIfirRailwlvV'''rr  ?  ^}'  ^«"*  R«"wayi 
Cligo  &  St.  Lonis  RailwayTlIlInois  rinf;„r\7n"°^;  Cincinnati.  Ch|l 
Michigan  Sonthern  RaUway  ;""^'„,^?,  ^"^  N^"^:^'  ^"'^^  «'^^^  * 
««",^«y  J    Michigan   Central 'RanroaT  New   Yor^^^  ^^i^«« 

Louis  Railroad;    Pennsylvania  Comnlinir.    wi     ^^.'   ^^^^Ko  &   St 

Wabash  Railroad;    t^nlon  S^t^ikaT TraTsrd p^Hs"^^! 


VmTED   STATES   t;.  DEBS. 
Statement  of  the  Case. 


325 


^ef^Ster-  -"  --^-^^  -^-een  or  among  any  stat. 

foppjng  Zy  ZnlZZ  'expiSs'-ir""'  """'-"■S-  obstructing  or 
freight  or  passenger,  eng^g^F^^tJ^lT'  '"'  o*"*^  trains?  whe^he? 

any  trains  car°vin7tb"mafran°d'f5*''°-«  with,  hindering,  or  stopolne 

railroads  for  X"  pufnZ'V^ntf?"?'*'  <"•  Premises  of  any  of  said 
or  stopping  any  of  sZ  niaU  tmlnrn!  J'*"'  hindering.  obstractlSl 
gaged  in  interstate  commerTi  1? VJ,  VPT^^*''  or  freight  trains  en 

ferlng^'f.'th'"^'*''  "r  amfn^'th     ?a  e'l,  o^^fTt^^"-  <"  ---""e^" 

.r^rVJ^VrnSio"n'-^rS'i;&r  " '^^^^ 

<.on  of  passengers  or  Z^Z  ^XT^^'"^:,  °'  *"«  transS 

(6)  From  -injuring  or  destmrir^  „^       among  the  states ; 
or  road,  or  Permanent  strurtures  of  «,^5  '^^  *"  *"«  frocks    roadbed  • 
destroying,  or  in  anv  way  interfepfnl   ™"roaas,  and  from  inJ,S 
switches  of  any  of  said  raTlroads  !nrt®>wr"'^..^°y  of  the  signals  or 
ing  any  of  the  signals  of  any  o-  ^1/?,f,  "'T""^'"*  or  extinguish 
locking,  or  in  anv  mannpr  f..it„^'>       "  railroads,  and  from  snlkfn^ 
said  railroads,  and  from  un^unZr."?^  °*  ^^e  switcheHf  any"f; 
structing  the  control  b)  any  of  JiSJ.''..*"^.'"''^  hampering  o/ot 
engines,  or  parts  of  trains  of  nL^i     railroads  of  any  of  the  ca« 
State  comn,erce,  or  in  ?he  t?answr?atio''n1.r"~'"'^  engaged  In  iS 
JfZ  ?•'"  ?:T'^  fe  states  Te^^g^°i°'Pi|!?engers  or  freight  bl 
rM7i  "  *^ '  engaged  m  carrymg  any  of  the  mails 

{niuce,\i'&s:  rn?i'S"tir  SutL%"««'"''"°^ 

the  employes  of  any  of  siirt  ron,.JP^I    5^*^"'  ^^^^^^  or  violence   anv  nf 

Of  their  dnties  as  emXy^roranv  0/^1/^'??^  ^"  '""  *^  PeSVni 'any 
the  interstate  businek  or  commerce  ofl.-^'*"''^^^'  ^^  connection  with 
of  the  United  States  mail  by  such  rnn- '^^  railroads,  or  the  carriage 
passengers  or  property  bet^Ln  or  amonf  «;  ^'.^^^  transportation  S 
(8)  From  comnellfnfr  ««  ilT  -       among  the  states: 

by  thi^ats.  mZ  dition   ?or^"or"fin7  ""^^Pt'^S  to  <i.mpel  or  induce 

3r^c  ,= -  -SSS"  ^rr/uch -aiS ! 

^'ir -JS"*"'-*™^^^  ^ith^/f^Kr-  of  any  conspiracy 
oe'--  in  the  fn.  and  nnblnde^  "c^nZl  aTSd^f^l^rsVl 


I 


326 


64  FEDERAL   REPORTER,    727. 
Statement  of  the  Case, 


t 


^rr:„aTel^^;  ^:i  rd\rnTtt  T.  ^^  ^--Portatton  Of 
(11^  Fivim  r....t«-!  "*^^*;*^"  V  "  ^niong  the  states:  and 

the  acts  aforesaid."       ^  '  "*"""*  *"  «""■""  ""V  »■•  e'ther  o( 

which" Va''.fy'';:;:,tuS  "u^;f .!",'"".'''  *  ^"•""t-'y  association,  of 

Debs  Is  tue  president  of  ihe  ^"tlou  "GeL'iL''w  ",t""  ^"«"°«  '^• 
president:  Sylvester  Kelllicr  »BP^t«rv  A..^^^  ^^-  """""d.  Its  vice 
one  of  the  directors  •  and^l'nf^^SS  "J"*  t™"**"""- :  L-  W.  Rogers, 

That  the  avowed  p^rpSt  of  s.ld„nf,rnl"'?,"''Sf  """*  "«  'J'^***'"-^' 
still  Is.  to  prmure  all  of  tl>^  1...M?,  -  ?  i.*^  '"•''*'^  """s  ''een,  and 
nmted  StatL  to  4inie  member '^i^d"'t„''L''*'  r'l""^^  ^'""°  ""O 
Jurisdiction  of  the  union  nd  ItTn-Ji^Kl  ™"S?"t™te  the  power  and 
with  authoritv  to  oJdcr"  tr»fei^.^T^^'^  .l"*'^''  ""«  "»<='•••'  ««itrol. 
such  eniplovos  wi?™a„v  -^f  tl.^  ",  ''^■"''"""'"'«'  "'  ""e  service  of 
States,  at  any  tline  when  the  ™im  u"''.  ""'.'I'"'"^  of  the  United 
officers,  should  e  ™  t  a.  to  do  wIM.  1  '*''.'*""•  »'  directors  or  other 
on  the  •J.Jti,  or  27th^in   of  7^^.    .   T'"""*!'  sufficient  cause.    That 

the  b Hi  the  i^luiugVfhe^^^t  '^f'iSlr'""',.*"  ""«  """«  »' 

board  ..f  directors  or  other  fffl^Vs  Vuin'uT  '^'^"°i'"''  »■•  "« 
directed  and  ordered  nil  It.!  ,..^1.?       ""'""'"g  the  •defendants,  had 

Illinois  Central  n^K  Co,nm.^,w.l"?'^^'  '"/''.^  ^'^"''^  «'  «•* 
and  of  interstate  (•«.  n  en e  nd  ^  ,/ii..  r"'-'"''''''''™  «'  ""e  mails, 
at«l  by  that  ooni,.a^.  „\'",'i ''";", ^  *"'"'' •^«»tj""«l  and  ope^^ 
and  before  the  writ  of  Infnm^lL  f  "  >'  '**'""•<'•  That  thereafter. 
Issued  to  the  einiXyf^  of  thet  I ,  i  ""  '''^"^''-  """""«■  '"•'lers  wer^ 
of  ™inplain^  Zl  Vhat    i     num^.  ""^'■"l^^^  '»  the  bill 

wlH,  were  members  ?'tl.e  InS  7.,' n  '"'*,J'''?'^'^-  ""  ^'-Ploy^s 
leave  li.e  service  of  «il,l  ,.,ii„..,  "a  l"ay  Union  did  In  a  body 

of  hI«.Ie^in^^  preveuti*^  a,  S,;,;;  "Vh^'*^-  'T- *''*'  "™««"  i»"T>oZ 
In  the  transinlrtatlo,  of  .  e  „  u  «•' "  d  ferr.';i"""  "'  '™"'^  •^"S«S«J 
order  of  injunction  was  ,!l  lis]  «,  ,  theT.n  «>'""'eroe.  That  the 
me  n.or..Ing  of  July  .!  I.sw  ThTit  e  ,ch  of  !  e-.l;?'^?""/  ^^^""^^  »» 
edge  tl..-.t  the  onlcr  had  lee..  ulveteL  1,  .^"f""'' '''"'' ''"°«''- 
<wpy  was  served  hih).i  the  ilefenli„..f  o  '"  """'  *''""^-    That  a 

and  u|K,„  the  deS  „  "p^^re  f  IMfH^Hv  ""f  ?^  ""^  '"  ''»''' 
July  4th.  and  uim.i  the  defe.,,.    ft .  , .  "<'"'.V''^'y  on  the  morning  of 

Kellher  on  the  4  av  of  j  i  *,8.;!''''^Ti.^?-  /.'""?'••*  »""  Sy'^««'" 
Union,  prior  to  the  21  day  .ff  iiiiJ^nV,  ^'""  •*''*;  -^■"erltan  Railway 
upon  substai.tiallv  aS  tC  ra  [roa.-^in";L"'?'';!'''^  ""»»>•  '-x^a'  "Dions 
California.   Includlns  snbsta  tTniu^   ?.i   .^  ""rtliwest,  from  Chicago  to 

coast,  and  at  the  ^^^..^t  „«  '  "se.l.i?*'.  ''""'"'••^  *»  t"*  P«<-'flc 
upon  the  main  lin^  of  road  extend  n^*'T.  '"  "'•^•'"''"•'g  "oeal  unlong 
coast :  and  that  the  woJTof  oi^n^fn  "'  ^?""«'''  '"  *«  Atlantic 
continued  without  change  or  lntSnton'*"nf'le:'  ,f  t«°«'«°  »««  f^MJ 
Junction  for  the  avow«l  m.rpo^  T  °";f;VHL^LrtL'?  "'."'^  '"" 
thorlty   to  order  strikes  m,.,..    oii     *  •■  ^  "'"*"  'he  union  au- 

local  unions  *.on!.l  b^o^S  '""   '""'"■"'   "**   '"""">•   «"   ""e 

a  ^";  tt"se!^vL'Vlt' '.Vl'lroa?:  .?"  ™"««-V. -'PJ-.v*.  to  leave  In  « 
as  well  as  other  .ai  roads  »^il  t^f  11'*^  '"  "'♦'  ^"^  <>'  complaint, 
from  the  defendanr^te  to  the  offl-rs  i^r  r""''',V'''"'^  '*-^-  '«'^S'-«» 
at  the  ,nost  Important  railway  «nt™re  and  clTl«'4r."'  '?™'  '""°°» 
of  such  telegrams  and  ordera  «.  i«of.i?  k  il  " .  T""*'  "*»'«»  <•'  »ome 
before  and  after  the  servl^  of ^iMt  ^^f  ^St  defendant  Debs,  both 
Berted.  for  the  purpose  of  sbowlnethlt^hi^""''*""-  """^  ''«''«'n  '"- 
t.on  did  not  arrel^^ohan'gel?.:';:^,,:?"^/^^---  tlfe XV.,"&s 


UNITED   STATES   V,  DEBS. 
Statement  of  the  Case. 


327 


relative  to  said  strikp*  hn^  i^u^*. 
tinned,  notwithstanding  ?he  oJderTf  h^  TK^^'^'}^''  defendants  eon- 
violation  thereof,  to  dir^t  the  e^nnlnvr"?'.?''*^  '"^  ^^''^^  and  open 
named  in  the  writ  of  injunction  aTwil  n.  n.h^^  "^^^^^^^  companies 
to  leave  the  service  of  the  SantHn  Tu^}^''  ""^'^'"''y  ^ou^Pauies. 
delay,  and  prevent  the  disSr  nf  M  ?  ^^^^'  ^""^  ^^^"^^^y  ^ind^ 
especially  the  discharge  of  thPirH?,.?^  **'^^^  ^^"ty  to  the  public,  and 

the  transix)rtation  of  !L  La^S'  s^^^^  ^-^f*"  ^^  '^^  government  ?n 
said  telegrams,  and  hundred,  of  of iZVaf  ^'^^^^'^tate  commerce.  That 
character,  were  sent  by  fhe  defendJnf  ?£.?  ".'^"^^  ^»  ^o""  and 
authority,  and  approval  of  each  n mi  nii  f^L  ^"^"^  ^^^  knowledge, 
well  as  other  diilctors  of  the  Ameri^  ^'^^^Z  defendantsT^ 

service  wpon  them  of  the  writ  of 7n  nnnf- ^'^'^'^'*^''  ^"^^»>'  after  the 
of  said  orders  and  directions  minv  .f  T '  """^  *^^^t,  in  pursuance 
railways  named  vvere   nduced  t^^^^^^^^  employes  of  the  several 

way  strikes  "  prevailecl  Sram  ni^,?  H^r '^^'  ^°^  ^'^^"^  "  ^all- 
railway  companies,  and  thrt^nLX^nn  %  l\"^'  ^^  "^^'^^'^^  ^^  «aid 
commerce  was  therebv  greatly  Sri^^r,!  *^  °'^"«  «»d  interstate 
upon  some  lines  for  seveni  1  days  '  delayed,  and  prevented,  and 

That,  as  a  direct  rpsnit  ^f  \u^      ^ 

lines,-notably  u^n  the  UHno  s  Cenfi^' ^  "'"^^  "^"^^  ^^  '^^ 

Island  &  Pacific  the  Ch  S  BuX^on '^ '?^^^  the  Chicago,  Rock 
Alton,  the  Chicago  &  Western  Ti^dinnV  "^  Q«»ncy,  the  Chicago  & 
Company's  Iines,-there  w4  ivp.v.?cl?  '  ''"''  ."^^^  ^^^  Tennsvlvania 
strikers  or  ex-emploj4s  o^the  r  u^. .T"  ^^^  P'-"''  «^  »"«nr'of  the 
open  violence.      TV.t%mplo4s  ,X  ^e/ns^^^^^^^^  and 

others  who  had  been  emploved  bv  thl  r.1?^  ""  *'''*"  '"^  ^^^  ^^^^e,  and 
Xlilaoe  of  strikers,  and  were  Tn  the  no^f.  ""^'^  companies  to  t.ake  the 
wei^e  assaulted  and  intimfdati"  bv  thp  ^  l  '^'•^'•^,*>f  the  companies. 
Dost  of  duty,  either  by  Dhvsio?  vLil  ^^^'^^P^  and  driven  from  their 
That,  during  the  5th  fith  and  -Hy^^"'*''.''^^  ^^''^^^"^  ^^  personal  injury 
acting  in  sympat.K^  tS,  tU  ^' ?.n'{"^^'  "*^  '^''^^^^'^^  and  otS 
roads  within  and'adja^nt  to  2eVi?v  of^P^r^'"^^"  ^^  ^^"^«  ^^  thi 
force,  prevented  the  mss-^J  J  Z.-^  ^  Chicago,  and,  by  physical 
commerce.    That  engi^fes  and  tr-n^^^^  "^«"«  and  inirsteti 

senger  trains  were  alsaiLl  with  stonpf  .nT  ^'^  ^^emilea,  and  pas- 
the  employes  in  charge  of  such  tragus  •^nd''*''*'''  '"*^""^"'  ««  ^^'^^i  as 
the  passenger  cars  and  engines  werpfivLi     "^  "'  '''''^^  instances  both 
both  of  employes  and  Sn^rs  ^S  TJ^'  ^"dangering  the  livc^ 
instances  led  by  the  strikers  of ex-emo^oL^i^^^^  "'^^•?.  ^^'^^'^  "»  »»a«y 
who  had  gone  out  of  service  uwnthp'n^^      ^^%  'l^"'''^*^  companie^ 
officers  of  the  American   Railway   Union  ^'  f  "'^  defendants  as 
strikers  and  others  were  massif  ^f.iSr  '    V'"^   '"^''^   composed   of 
ferent  lines  of  road    witinn  «nH  „  ?}  different  points,   upon  the  dif- 
such  numbers  as  to  b^^loiiTthl  ''^T*.  *^  *^^  "^'^y  of  Chica^    i^ 
and  municipal  authomie^^  That  at  S''  rSi^'^T'^'-^^^^"*'  ^t'at^ 
to  the  railway  ct*mpanies   some  of  Vhf.h  ^'^  ^''^''gbt  cars  belonging 
merchandise,  were  set  on 'firrand  dr«?i^  J^^t,.*^^^^^  '^''^^  interstatf 
appurtenances  of  the  railwavs  Ll^fV''-^^',   ^'^"'^^  ^""'^'^''^  and  other 
way  companies  who  refused  tn  .V^^k"**"^*     Employes  of  the  raU 
other  officers  of  tSe  AnS  f  RaTfwn  v%^' •  ^^^^^  '''  the  defendants  and 
to    the   discharge   of   their   rlnlt^^   '""."^^  '^"^  remained  faithful 
and  bruised,  and  in  some   nsHn^c      ''^   violently    assaulted,    beateS 
from  their  engines    a^  kep/l^rhour  in"'"'^*/  ""''^''^^  ^^^  ^^^^ 
lives  were  also  sacrificed  !!-aIl  of  wh  oh  «.  f""^"^?"^"*-     ^hat  many 

vloWacts'u,i>'n%t%°a1.r^^^  ?l\'."!l  ^""^^^^^^  '^-^  ----y  of  such 
--  had  t^n  ^-^^Z-:^^  or^en^oy.  J  the£ 


328 


64  FEDERAL  BEPORTBB,  "J^. 
Statement  of  the  Case. 


ylrt'vS^^^^  ^-tbe^-  knowledge  that 

daily  and  continuously  and  in  wn  f»?  of  a  similar  character,  thev 
the  injunction,  issu^  their  orSerTina  j/^'^,V<>n  ««er  the  service  of 
the  railways  to  qu?t  service  ?n  f  ^v'^n^^i'^t'^"^  ^^^*  ^^^  employes  of 
while  the  mobs  were  in  pa^tia^  SS^Ls  oVnftr"'^^  ^"^^  «^^^^ 
gaged  in  forcible  resistanc^  of  the  or^*.l j^i  ?L  ^^^  "-^'^^oads,  and  en- 
That  the  strikes  were  m>t  order^i  nn  ^^  ***^!  "^"'^  ^""^  ^^^  officers, 
of  the  railroad  compLnils  or  Tth^r  nSi  '^'^T'*  ^^  «"-^  wrongful  act 
the  American  Railwav  Union  nr^^L.''*''*^'?'  towards  the  membeis  of 

panies:    but  on  th7^„trZ  the^^^v^^^^^  ""^  *^^  '''"'*'"^  «^»«- 

tbe  Railway  Union,  incluS  fht^Jl'i^  l'"'^^'^  ^^  *»^^  direetoi-s  of 
lawfully  to  establish  a  b^veott^^^^^^^  wrongfully  and  un- 

were  used  in  great  numlmVbv  th!  rniil  ^"""^""  sleeping  cars,  which 
iBg  the  mail  and  passengers  traveHn^  irnnf  ^^T'^?"^^"  '"  ^'^'^''^  ^^-^^-^r- 
the  several  states-  rnd  tn  ^Jif  .1^'^^'"  ^*^^®  ^"^  state,  and  through 
the  AmericafRanWay  Un'on   ?nc^^  ^^^/««J'  ^^e  directo^o? 

no  trains  or  cars  of  any  k^nd  or  ci^^^^^^^^  ^'"^^^•^  that 

of  aiiy  road  within  and  adiacent  to  ihl  if  "J'lP'?^^  ^^''  the  tracks 
of  Pullman  cars  bad  b^n  abSn^  hv  «n"^/^  .^^'^^^^^  "'^til  the  use 
That  the  board  of  dirmo^  "f^u^^  ?"  "*'  ^^^  railroad  companies, 
eluding  the  defendants  a ^il^  nln  *,  American  Railway  Union.  In- 
Ity  and  ixTwerand  as  ^mnl^irn?''i^u^^  ""^^l'^^'  ^'"'"»^«  the  author- 
power,  to  ord;r  strikesTnd^^^^^^^^^  ^^?  ^""  «"thority  and 
iinder  the  rules  Of  the  lUrfcaSwWuliion^  the  same. 

union,  and  addre^ed  to  thl  Ln^r      '  ""^  Keliher.  as  officers  of  the 
of  Which  thrfS^gls^a  Jpy  r^  managers,  on  the  12th  of  July! 

"  To  the  Railwrny  Managers—  "  ^"'^^^^^o-  ^^^V  1^.  1891 

Gentium  EN :    The  existin*'  fpmihi^o  „-..    t 
strike  having  assunfed  «)nt  nentTn^^^^^  '!?*  ""^  ^^^  Pullman 

dlcatian  of  relief  fmnXw?dl^^^^  and  there  being  no  in- 

distress  Incident  th™etotLrnZ^  business  demoralization  and 

directors  of  the  American  ItJ^^^^^^^  ^^^^'^^^^^  the  board  of 

lowinpi^,>ositiora7irsisof"et«e'^^^^^^   respectfully  make  the  fol- 

shau  t%Sed\''ttTr  f^r^ef  ^^  ^-^'  ^-^'^^'e^  they 

in  cases,  if  anv  there  be   wlTr^  th^     "^  T**^*""^  prejudice,  except 
"This  proiJitimt  lining  t^an^^^^  ?^°  convicted  of  crime, 

isting  strike  on  all  linTof  Vihv«v  iT  n^/>h^,r''r"""*  ^^  *»»«  «^- 
serve  the  public  good.  The  str  ke  smni  nln  '  ''  1\»»-P*>se  to  sub- 
tant  in  its  ineepUou    has  evteul^i  ?n  i  ^^paratively  unimpor- 

involves  or  thriate"s  ii^t  onirev^rv^S^  "«I"  »«^'  it 

security,  and  prosperity  of  our  c^>miuof  Lntr^r^^^n^^^^  ^^f  J^«^' 
waged  fieivelv.  It  has  exteiX«i  f,!.  il  ..J*'  ^^^  contest  has 
originally  in^lveJl  and  haMal^hS^d  o^'^fas  ''n.  "?^^^'  ?'.  ^"^^^««^« 
and  enten.rises  i„  „o  wise  rifpou^^^^^^^  **^  industries 

agreements  that  led  to  the  trouble  F«.Snl^  «  m  '^^^^^^"^^^^  and  dis- 
been  silenced:    wid^pread  demor^ 

Of  multiplied  thousaXTf  ,>^X  are^^^  ^pY/'    ^^^  '""^^'^^^^ 

Is  seriously  menaced.  The  Kc  ^a4  mf^  ?£*  ^?«  f^n^iiion  welfare 
Grave  apprehensions  for  thrfuturrpTevait  '^«"^"""^>-  «r«  ^"^Poriled. 

"This  being  ti-ue,— and  the  statement  will  nnf  k^  «.  * 
we  conceive  it  to  be  our  duty  as  e  tlyAn«  n^        ^  ^.  controverted.— 
dinary  efforts  to  end  the  existinl  ^trf;.  ^^**  ™®"'  *^  "^^^^  extraor- 
whose  Shadows  are  even  now  u^n  u«     '}?**,„^P£r*>«<^»»*«^calamities 
However  serious  in  some  of  TtsTn"s^U'cLr«^.^  ^^^^t  Zl^n 


/' 


/  . 


A 


UNITED  STATES   V.  DEBS. 
Statement  of  the  Case. 


329 


tTons.  InT^'^if^7sUrsha^'b;'t"*  *?f^K^"'  ^^^^^  t^^^^*  ^^o^P^^a- 
now  so  widX  depS  wiH^^L^^^^  1^"^^ *  ^^  experience,  the  troubles 

the  years  to  ^mT  T^e^iUences^t^^^^^  ""^  l^'^r^JoT''^^  ^''^^"^  *° 
complications  need  not  now  brSnls^  a.^'V  ^^^^^  ^^^  ^^'^^t 
every  consideration  of  duty  and  pLtr"ot,^«  dtL*ni'  ^^^l^"^^  Juncture, 
existing  troubles  be  found  and  nnrJi^rp2^™''°^f  that  a  remedy  tot 
their  pirt  by  meeting  thlt  enmffr^^^^  employes  propose  to  do 

they  do  not  im^e  af v  slriou^S^?.mtfn^  .^'''^^•i  ^*  ^*  ^  stated  that 
be  returned  toXIrTrmer  pos"   TheV^^^^^  *^^*  '""^^ 

of  their  organization  or  an7or^\^S;tio'i!:'^  ^"  °"'  "'^  **^^  recognition 

spec«^it'^°y^/t\j^Tirh'"tr^^^^^  r  ^"«*'  ^*  '^  - 

in  the  prompt  resunn«on  of  Lffif  .»!     *  \*^  acceptance  will  result 
restoration  of  jSTnd "i^^^^^^^^         ^      ''^''^^^^  ^^  ^°^"'*'^'  ^"^  the 
"Respectfully,  |b.  y.  Debs,  Pre.irfenf, 

^  G.  W.  HowABD,  Vice  President, 

JiYLVESTEB    KeLIHEB,    Sec'p, 

rru^4.  4.1         ..      .  " ^'merican  Railway  Union" 

ment  of  iy»l^!;  shown  M  all  n J?, '^'■^"''.^°'-  ""^''''♦"^  *°  t^e  move- 
18H  of  Which  the  fonoTing  is  a  ^py  •  "'""^  ""  *""  ^  "^^  «'  J"'y- 
'To  /Ae  Panhandle  Yard  Men—Greeting- 

Issued. by  order  oAhe  rard  of  ^rJL''''"  ^  ?  "''«  «*««"°-  This  is 
health.  "™  *"  •J'fectore.  m  the  interest  of  public 

That  th^  f  .,      •  "  *^"''^^'=  V-  Debs,  President." 

^^^t.^^  -^ndant  Debs 

butrrLrin\"erSL^-t,^^^^^^^^  ^or  -nths.     Nothing 

out  that  great  stretch  of  coL^A   ^t  ^  ^}''^'''^  ^^  trains.    Through 
river  our  men  arrsteadf^s^nn^wnr^  '^^^*  ^^  the  Mississippi 

You  will  not^^tha    it^s  im"LTw^  wait  until  the  bitter  end. 

coast  in  Chicago  to  dav  L^^tVvlLl^^'l  ^^^""^^^  *^  ^^^  Pacific 
over  which  no  Pullnian^!^^?  are  ?^  the  Great  Northern  Road, 

possible  grievance  This  sLw,  f ho  ^.-^  ^^^^""^^  ^**^<^*^  ^^  ^^a^e  no 
paign  is  to  be  carried     WeT.lll^^^^  ^'^^^'j  ^"^'  ^"ture  cam- 

the  air  is  purer  and  wholfvfr^  ff^  *^f  ^^"^  ^^  *^®  ^est,  where 
line  with  our  Meas  We  sLll^rsT  li?*"*^"^^^^  combinations,  in 
throughout  the   East     As  flrLi?  t        "u"""^  '^^'"^  ^^  organization 

unorganized  by%Tfai,s1nVlinT  we^^s^^^^^^^  l^l  TTl  ^^^»^^^- 
keep  on  doing  this  until  the  verV^n^^i  S?  IJ*  ^^^'  ^^^  ^e  shall 
struggle,  basid,  as  "?  is  on  motives  whnn  ^^^^^\  ^^  «"^  P^«^»t 
cessful,  there  is  no  wag;  earn^?  n  thr^,^"^  disinterested,  be  suc- 
beneficent  effects  bef^re^the  year  cLes  And  Tf"^  th^"-^  T*  '^'  '"^ 
the  command  of  the  so-called  ♦nrtAH!!..^.  ^  *^^^  *^  true,  when 

hands,  and  the  trades'  unon«  whlnh^  ""^  commerce '  falls  into  our 
reciprocation  fro^iis  w^and^^  J?oni'^«''.t  ^'"^^^  "'  "^"^^^^  '^"^'^ 
material  assistance  ™s  ^s  an  txiom  '«n^  x''^!.,^^^*'^"  *^  ^^^^  them 
agree  with  me."  *^^^™'  ^"^^  ^  h^WevQ  no  one  will  dis 

ANSWER   OF    DE«S,    HOWARD,    ROGERS,    AND    KELIHER 


L 


I 


330 


«4   FEDERAL    REPORTER,    730. 
Statement  of  the  (*as*». 


tin^f  t'lf  P'"'''"**  "'  ";e  American  Railway  Union  w«s  the  nrotee- 

.  S'Joe  H<^r:.^x=  ^?L-.-at -r=ii  i 

wiis  t<>  iiotifv  the  nieniliPrs  nf  fii^  ^«i.v«^i  *"  **^'*i'*^\  ^  »«"a  matter, 
€,M«i.  «*  Vi      \.  i.     '"«?'>">^rs  or  tlie  hqioh  in  the  serviee  coneeme*!  in 

any  r.nUM-.  direction,  or  control  of  the  An.erlc^n  Ra"h^      r,  fo^^^^^^ 

offlcers  or  dlrwlors.  or  of  tliero  defendants,  or  any  of  ttaii     "  rfn^n 
roans  of  nafd  comiMiiiles"     Timv  •*  *1a«,.  ♦!»«*.     ^^      1.  ie»i»ecnve 

rl'J'K"'  '","1  ■"."♦''•'™"  ««"»■">•  l^n'"n    lt«  orders  or  dfrmo™ 
ornen^lse.  but,  on  the  contrary,  a  lese  that  dtriu-pa  rv^ni/i  k«       i    zl 

opflers  to  strike  were  at  anv  th  ia  nr  in  «.;,  "®^  ^^^^  ^^^^ 

aT/o?':^!h"e^»H^^^ 

t«  „„i!5  •  /         .^     *^"*'  *^  ^"'<^  ***<^«J  unions,  or  any  of  them  as  niiocraii 

In  said  information  or  otherwise."  alleged 

•*  The  defendants  deny  that  any  one  of  the  telem-am.*  sef  f^^u  i« 
said  information  was  sent,  or  caised  to  be  sent  1^  thL^  ^^  * - 
them,  or  that  they  authorized  or  ap^ro^ed  X  Jame^V 
thereof,  except  a  certain  tBlegram  dat«l  .Tulyfi    1^   in  the  *wo?^ 


UNITED   STATES   V.  DEBS. 
Statement  of  the  Case. 


331 


and  figures  following :  •  We  have  assurance  that  within  fortv-eieht 
hours  every   abor  organization  in  this  country  will  c^me  to  our  retcul 
Whatever  hapi>ens,  do  not  give  credence  to  rumors  and  nAw« 
paper  reports,'-which  said  telegram  defendan?s  admU  was  ^nt    or 
fi^^\^^^  '^°*'  ?y  ^^^  defendant  Debs,  as  in  said  informatton  al^ 
Knt"nn'?:^  ^^'  hereinbefore  admitted,  defendants  allege  that  they 
nr  n?  .H  '''^^^.^^/'''  T''^^  whatever  of  the  sending  of  said  telegra^ 
or  of  the   contents   thereof,    until   the   filing  of  said   informftfo^' 
They  deny  that  any  other  telegrams  similar  in  form  and  chamcJ^r 
to  those  in  said  information  set  out  were  sent  by  the  defendant  Debs 
or  any  of  the^  defendants,  with  the  knowledge,  authority,  of  a  p^^^^^ 
of  any  of  said  other  defendants,  at  any  timi  after  the Tervfc^ of^Ifd 
writ  of  injunction  upon  said  defendants,  and  deny  that  anyln?plo?^8 
?L  "^  ?^  "'^  ^^"'^^'*^  companies  named  in  said  information  were 
induced  by  reason  of  any  telegram  sent,  or  caused  to  te^nt   by  Se 
defendants,  or  any  of  them,  by  threats,  intimidation,  for^,  w- viofen^ 

tfoi  o7t  ^nri^^f  r^^  ''^''''^  companies,  or  that  th^  tkus^: 
tion  of  the  United  States  mails  and  interstate  commerce  was  therebv 
m  any  way  hindered,  delayed,  or  prevented."  "  The  defendants  admit 
that  upon  some  of  said  lines  of  railway  there  was  evercS  uS^n 
^e  part  of  some  persons  ^o  the  defendants  unknown  v^oleni  agS 
persons  and  property.  They  deny  that  they,  or  any  of  theuHave  any 
knowledge  or  information  sufficient  to  form  a  belief  as  to  t  e  comm?s 
sion  of  the  specific  acts  of  violence  in  said  information  ^t  forth  or 
any  thereof;  and,  upon  information  and  belief,  they  de^y  thlt  kny 
member  of  said  American  Rail-  [732]  way  Union  in  any  n^nner  paT 
ticipated  in  said  acts  of  violence  or  any  of  them."  "  tL"  dem  that 
in  vio  ation  of  the  order  of  the  court,  they  daily  and  continuously  or 
at  all  issued  any  orders  or  directions  for  the  employes  of  said  railway 
companies  or  any  of  them,  to  leave  such  service  in  a  IkkIv   as  allelS 

"ian    tinle^r^u"  «%f»r'?^    They  deny  that  arsaid  tine!^:? 
at  anj  time,  they  knew  that  violence  and  unlawful  conduct  ne^-essarilv 
followed  from  strikes  of  the  kind  mentioned  in  said  informatton   and 
deny  that  such  is  the  fact,  but.  on  the  contrary,  allege  tlmtS»  far 
as  said  American  Railway  Union,  or  the  members  thireof   ar^con 
cerne<l,  said  strike,  and  all  strikes  of  a  similar  charac?er.^n  emp^te 
nothing  more  than  the  quiet,  peaceable,  and  lawful  cassation  of  work 
by  such  memliers  when  and  for  such  periods  as  they  shall  for  them- 
selves determine.     Defendants  expressly  deny  that  thev   or  any  one 
of  them,  did  at  the  time  mentioned  in  said  information  or' at  any  other 
time   order,  direct,  counsel,  advise,  recommend,  or  approve  the  acts 
of  violence  in  said  information  set  forth,  or  any  of  them   or  any  vU 
lence  or  unlawful  acts  of  any  kind  or  character,  but,  on  the  contrary 
allege  that  they  did  at  all  said  times  counsel  aiW  advise  all  meXre 
of  the  said  American  Railway  Union  with  whom  they  were    n(^i? 
ZrHuTf  *^  /**  ;?",.«"^^«  abstain  from  violence,  threats,  int^Tda- 
"Z'o.    ?        ?.*  all  times  respect  the  law  and  the  officers  thereof." 
The.v   deny  that  the  l>oard  of  directors  of  said  American  Railway 
Union,  or  it.s  offlcers,  or  these  defendants,  or  either  of  them,  at  any 
time  assumed  the  authority  and  power,  or  have  now  or  ever  have  had 
any  autliority  or  power  whatsoever,  to  order  strikes  and  boycotts,  or  to 
dto>ntinue  the  same."    "They  admit  that  on  the  12th  day  of  July 
1894,  the  communication  set  out  in  said  information  was  addressed  to 
the  railvv-ay  managei-s,  and  Signed  by  the  defendants,  whose  names  are 
affixed  thereto,  but  allege  that  so  much  of  said  communication  as 
implies  or  assumes  any  right,  power,  or  authority  in  said  defendants, 
or  either  of  them,  to  discontinue  said  strike,  was  unauthorized,  and 
that  said  defendants  had  no  other  power  or  authority  in  said  matter 
than  to  im>mmend  to  the  meml>ers  of  the  said  American  Railway 


332 


^   FEDERAL   REPORTER,    732. 
Statement  of  the  Case. 


/: 


union  the  adootion  «#  *i 

admit  the  sending  of  t hi !!  P^^P^««Js  therein  stated  "    ••  r^,    . 

set  forth  in  said  infill  l*^'"™"°'<?atlon  to  the  P^Tho  ^.^^endants 

rS^:f™^  "tiS^-SnV^^^^^^^       «to^erra„ro??^d 

J«Jnred/oV  de8trov;J^^^^^  ^«  «ny  'nanneT^nterfer^^^^^^ 

engaged  in  or  for  mSotlotlr^r^^^^^  ^^  «"^^  of  saMiroid^^^ 
Slon  S^n^"^^^«^^  "'^^«»«i"^  -;th-lnterstateZ'' 

ises  of  any  of  said  railroads  ?or  ?h  "*^'^^  "P^"  *he  ^oiZaormZ 
dering,  obstructing,  or  Xfninriv^  ^"''^,^'^  ^^  Interfering  w^Hj^'h^: 
freight  trains,  [7S8]  engS  fn  in^  ""V?^^  ™«"  drains,  pLenL    °" 
Portatlon  of  passengers  or  fritLfT^^^    commerce,  or  in  the  frnn/ 

£or  the  imn>ose  of  rnterfe?[nf w^^^^^^^^  ^^  among  tie  stat^   nr" 

^roijerty  .o  engaged  liforn^eV/^^^^^^^^^         ^fi^^troylng'.nTof  J^' 

or  the  transport  Ion  of  paRTengerror  n.  ""^  7'^^  interstate  commerce 
states ;  or  that  thev,  or  elthc?  of  Th2n  ^i'^^^'^y  »>otween  or  among  the 
part  of  the  tracks,*  rondr>Xor  ro^^^^^^^^  ^"J"^'^  or  destZ^^any 

railroads;  or  that  they,  oTeitL?of\Z^r'''''T^  «tnictnres'of  «,"d 
In  any  way  interfered  with  any  of  Vhi?/  ^""^^^  ^°-^"^^'  ^estroved  or 
said  ra  Iroads;  or  that  thev    or  LtSer  n^^.V*  ^''  ^^^^^^^^^  of  any  of 
extinguished  any  of  the  siSi*,  L  «        i'^  *^*®n»'  have  displaced  nr 
they,  or  either  of  theml^a  ?'« '^^  Tll.%  '"'^''''^  ^-ailronds ;  o^^hat 
any  of  the  switches  of  said  ran ro^ds^orth^^^  Ik  ^"^  '"anner  fasten^ 
have  uncoupled  or  in  anv  waYhmllLr.Z  ***«*  *hey,  or  either  of  them 
any  of  said  railroads  or  any  of  the  i«rf  ^^«hstructed  the  control  of 
any  of  said  railroads  engag^  L  ,1?/^  f"^*"^^'  ^^  Parts  of  trains  of 
portation  of  passongerror  frei  J?^^^^^     eonnnerce.  or  in  the  t^ans 
engaged  in  eariTing^a,^-  of  Klnl^  nf/J  ^^,  "^ng  the  states    or 
they,  or  either  of  them   have  wmr^n J?^  *^f  F"^^^  Spates ;  or  that 
compel  or  induce,  by  threats   l^tTS L?/  ^Z^'^'^i  ^^  attempted  to 
iT^lf'^y  ""^  *^^  employes  of  any  of  sJirt  VJTi      r^"*"'  ^^^^'  or  vio- 
to  perform  any  of  their  duties  as  emninS^  railroads  to  refuse  or  fail 
connection  with  the  interstotTbusiS  or  ..1^°^  ^^  ««*^  railroads  In 
or  the  carriage  of  the  United  St^^ m^^i^rS  otjuc^ra^^o^^ 


UNITED   STATES   V,  DEBS. 
Statement  of  the  Case. 


333 


o^'lX^^^       'SZ^TZ^T^'y  ^^--  or  among  the  states* 
tempted  to  compel  or    nduce   i^*  have  compelled  or  induct    or  «/ 
lence,  any  of  the  employes  ^fLM'^^^?'  intimidation,  for^'or  vto 
such  railroads  and  engS  in  ff«  ?  ^f  broads  who  ar^  em^ov^T.; 

t'hl'nnT;  r  Jf  *^^  'p-^^^^n'of^n^^^^  «>nd«et  of  ?n?eM 

tinn    J^*^"*  States  or  doing  interstate  h.,«i«^''^  carrying  the  mail  of 
tlon  of  passengers  and  frei^hf  ^7        busmess,  or  in  the  transnort« 
the  service  of  such^^ur^fs  ^  S^  th^^f  ""^^'^^  ^he  states,  to '^ave 
prevented  any  person  wh^tov^'r  bv  thrL?^^'  .^  ^'^^^"^  of  then?,  havl 

control  and  handling  of  interstaTmt^    ^  ^^^  ^^^  and  unhindered 
railroad,  and  of  transportatf^  nf  ^^nimerce  over  the  lines  of  said 
among  the  states;  or  tCt  thev   ^.  ^i?*'''**  ^""^  ^^^ight  be^e^n  and 
aided,  assisted,  or  abetted  in  nnl"^  ^^^^^''  ^^  ^hem,  ordered   dTr^?^ 
sons  to  commit  any  or ^tk";  of  X'^ol  '^"f'^^^'  ««>'  Person  oT^! 
defendants  each  for  hiuiself  d^«     ?  ^5*^  aforesaid."    '^nd  the^id 
he  is  not  guilty  of'aSyTlifh'^r  o^r'aU  !?f 't h'  '""'f  Intormatfon  ttS 
or  of  any  contempt  of  the  orders  of  Ihfi    ^^  l^^  ^^*«  therein  charged 
fendants  further  allege  that  aft^^.h^^t  "^"^''^  ^°  ^^^  Premises."    "ot' 
them,  they  forthwith  «>nsultedcnm.i.^^^^        ^^  ^^^^  injunction  up^ 
and  duly  authorized  and  Seeded  t^?f*^°J  ''^"°^^'  ^^arned  in  the"^ 
at  law  in  the  courts  of  the  Unlfe^S^t.^^^^^^     ^'  ^"^^^^  «»d  counselor 
to  him  all  the  facts  in  the  proS^[f/^.*f*/^'  ?^^:  ^"^  and  fairly  stat^ 
the  court  made  herein    «ni'  ^I^^  exhibited  to  him  the  ordlr  ^ 
might  rlghtfull^  anTlaW^ultyrfufhe^eJ?^  ^^".  -« ^o' wha^^They 
the  order  of  the  court  or  contemnf  «J  Premises  without  violation  of 
have  since  that  time  in  «ii  fS-     ^*  ^^  **^  authority;  and  that ThoJ 
duct  in  regard  to  sSd    trike  andfhe^^"^^^'  ^°  '""^'^  «^^  ^nd  '^l 
accordance  with  the  advice  of  the  ««Mn?/''  engaged  therein,  in  strict 
And  the  said  defendants  each  for  hil^  fT^^  "^  ^^  ^hem  consiifti^^ 
any  way  to  violato  the  injunction  of  thii  r^^T'  *^^*  ^^  intended^ 
or  contempt  of  its  authorityTn  aSv  Llnir  *^  ^^<^  »n  defiant 

ther  allege  that  by  the  organ  7«fw    %^^'^9^-    ^nd  the  defendants  furl 
and  by  custom  and  usage^fnffnr^^?^  ""^/^'^  American  Railway  Union 
at  all  the  times  in  sa  dTnFo^iS  men^'lS"^^"^  Prevaillng^there^n' 
usage  had  the  force  and  eff^rof  and  «t!^f '  iT*^*^^  ^^^^  custom  and 
American  Railway  Union    «nH  h^  1  *^^  ^n  lieu  of.  by-laws  of  said 
consent,  delegation.  an^acq'ieLe^'f  ?^^^^^^^    and  unanimous' ^li*^ 
officers  and  directors  of  sniri  a^;^"-     ^x?"  *he  members  thereof  thp 
ng  these  defendants,  4ro  at  aTl  thrtin'^'"^^  ^ ^^*^  Union'Tnclud 
tioned  fully  authorized,  emi^wered  Inc^Trl'J^^^^  information  men- 
of  the  members  of  said  AmpHno^'i?  •,  ^^^^^ted  to  act  as  the  agents 
and  all  the  separate  untiHhPrrf  ^^^^^^'^^  Union,  and  all  of  them 
lal>or  had  been  deternS  ui^rbv''s«M''^''  V'""^  ^'  cessation Tf 
either  of  them,  to  intornrand^^dvf«o  .i?  members  of  said  union   or 
and  prospects  thereof,  and  the  condftinn^'^  concerning  the  condUIon 
local  unions  engaged  therein    «nH?^^f  ^^^  attitude  of  the  several 

peaceful  and  ialfi^nXTs  pt'u*^  ^  tiem  t"^""^  *^"^ 
of  grievances  complained  of  by  them  and  S?^  ^  secure  the  redress 
them,  subject  to  their  ultimate  ratificatfon  witlT!?.*,^"^  negotiate  for 
settlenient  or  adjustment  of  the  causes^  i^^^^^  for  a 

no  right,  power,  or  authority  to  ?n  In vwiv^  *h  ^^^^  ^^^^^'  hut  had 
Of  said  members  In  respect  "oV^  o^sJa^l^rt^^  r.uTt^^^^ 


334 


«4  FEDEBAL   BEPORTER,   734. 
Statement  of  the  Case. 


»trtkf5S''8!;j'd^^Sa^t^„VnH2fJT  "^  *"«■"  ■»  '^^•"•enc-e  to  the 
ttereln.  was  done  in  pnreuan^  „?  ^^Ah  "^  '""■'  *"  ""«  Pereons  engaged 

not  guilty  of  coiiteiunf  thtt^hL     ^7  .      ^  ^^^y  "lay  be  adiud^Pd 

^'^^^^na'^^^^^^^^  answer,  denying 

and  every  part  thereof  ;'nV«/f  intoriuation  cx>ntained,  and  Jach 
expressly  admitted  oT^deS."     "'*^  '"'^^"  '^'^  '»  "^^^^  forme  "answer 

SECOND    IXFORMATION. 

in  the"cau^,  direrfetJ^af^In^f  ^A  "  "??^"^'  lufoniiation  was  presented 
Goodwin.  J.  F    Mr\w^  i  f/ i'T^  "«^«»'  William  E.  lirnZ   n    m 
the  filing  Of  tlie  or  glnitln^^^^^  '^'^^«  i "forma ti^"''/edt^ 

therein  named  npon  the  vrHf  m u^^^^^^^  ^^  '''^  defendant 

the  i>ersan8  nametl  were  dlrectoi-s  of  thi  !       T"^'  *^"*^'  alleging  that 

r«*  27. 1804,  the  officers  and  directors  of  Thfi.,-  ^*'"^  ^"  ^^  «bout 
entered  into  a  combination  and  ^s^rnL  tnt"!^''^'T  Hallway  Union 
ders,  their  advice,  their  cminsS  n^?i  .      ^  ^^  **''*"«  "*^«t.  by  their  or- 

more  Particularly  d^!ri^"rLrifoS^^  V'"  ^^'''^^^  «»<1  b^^e^tt 

the  better  to  (induct  the  buslneli  of ^  h^^^  ^•'^njplalnt;  and  that 

and  to  more  eflTectualh  anage  tL  vast  n  J''^'"*"  ^'"^  conspiracy; 
«ienil»ers  of  said  American  KaUwiiv  nm^f  "'J""*^**  ""^  lyevmm  being 
eomblnatlon  ami  cons^nicy  said  ^ffi^r''"'*  'W^  ^"«««^»  ^»  «"eh 
divided  up  the  ^vork  of  S  manLeme^r^n  1^  *>'   director 

mlttees.    That  under  said  arm 'i^S^  «"'«»&  «>m- 

direitors.  Debs  and  Howard  wSJ^nva  "f^l?'  ""^  ^^®  ^^a^-d  of 
have,  charge  of  the  work  of  nnhiSl  ^^^\  '^""^  thereafter  they  did 
and  GoK>dwin  haTclTrgelt^^''^^^^^^  R^^ers.  /urns 

ganiaitlon  of  lodges;  and  Hogan  p1?hir^'L  ^  speakers,  and  the  or- 
diPeetors,  had  chaw  of  cor?eC'nfii^^^^^^  ?^  ''''  ''"**  ^^hers  of  the 
celving  of  letters  ^d lelTgran  ^  o^a^^^^^^^  'kV"  ^^"*^^°^  «»d  re 

That  each  of  the  directors  is  resLisihrA  J^"^^^''^^«»>le  portion  thereof, 
to  be  done  by  all  or  any  of  tKw  fiJ^'/''^^*'  "'**  ^^^"^  ^"^  ou^^tted 
or  agents  In  ^onnec^tlo/ wurthrbu.in^^^^  «»•  ^^^^«»tK 

That,  by  arrangement  or  agreement  of  tIL  i^  s^-^ld  strike  or  lioycott. 
was  to  have  charge  of  edltlnrand  n.l  n,?h^?**^  ""^  directors,  Rogers 
paper  called  the  "  Rai  wTy  ti^^  "  ivhil'  "'^!°^.^^  «  ^^'"t^i"  news- 
of  the  American  Rall>vay  UnTon'  Thnf\u''^  *^  ^  "^«  ""^^^^''l  organ 
the  city  of  Chicago  by  Ro^^^  ind^hL  in  ^''^l'''^^  published^  in 
piper  the  directors  counsel^^nc,"^^^^^  ««Jd  news- 

the  Anierlcan  Railway  Union  and  fn'Jh  ^^""^^  the  members  of 
eluding  the  employr^  of  the  ralhvL  Ji..  ^'''^f  ''""^«3^  employ^,  m- 
c-omplaint.  to  dls^TiiS  «?id^^e?^n^Tw.^^^  '»  "»^  bill  of 

orders  and  directloL  of  The  offl^L  oi^r^^^^^^^  ""^  injunction,  and  the 
tlvely.  That  said  officers  LddfiLn^/^"^  ^"^*^  railroads,  respec- 
spiracy,  did,  on  different  dates  in  t^mlA"  PJ^f^^"^  ot  said  wn- 
cause  to  be  sent  each  and  nif^i^K* '?^°**^*  ^^  J"»e  and  July.  1894 

infornuUlon.to\?ilch  the  name  ?f  lfiT^\'  ?*  *^"*  ^»  ^^^  orlgrn^i 
the  several  following  tel^amrwhfchal^t'  l«  «««<^hed,  and  also 
hundred  other  telegfamsTf  Sk^  pS wrt  a^  wi^^^^^^  «^^  «^«^ 

pn^rt,  copies  of  which,  sent  to  diffwe^t  rwji^l?  ^^'"^"^  '"*^°^  ^^ 


UNITED  STATES  t;.  DEBS. 
Statement  of  the  Case. 


-        336 

ANSWKR  OK  HOCAN  ANI,  „t„ebs. 

«^ntianf  dWerenrft'Z"?!;'  "'*»  t""  «'«e  filed  a  Joint   , 
Sft't„ro/X£:-?-^  Vn^%^-,  --.or  at  an. 

giving  such   idvL  •'"■,''*  "'   ""eir  e-MoyeJ    ,l!i^'  Pfx^ably,  and 

either  of  them    Jo ^1^.?*  '''".'  ^^  «>inpelllng  the  rnL^^     ^^^  Purpose, 
any  person  X'  tZn^  f^^  the  AmeriSin  L'w'^^^^^^  «^ 

whatsoever   and  dl^  !l  I"   '*"^^'  '"egal   bovcott    n^  •^'''"'  ^"^  ^'th 

cars  of  said  Pullman  %ioL-    ""^^  conspiracy  or  reftii  .     company 
otherwise,  or  that  To li  ^^^Pjn^Car  Company    wbeth^t.     ^"^  **^"'  ^^e 

or  otherwise.    On  thf  ^^'^^.^'"^t^o'^  was  to  b^  ^rs  ^fl,  ^^  """^^^  «r 
thev  wpro  „*^    V.     the  contrary  thereof    fi.«  i^   '^^ed  m  as  alleffcd 

American  Ralltay  U^?      .r""*'^'^-*'   '"''"d^ng  Jhl" ^,„t  "'"'^  ■*- 
and  successively    thev   ?;P*'°.^''<=''«' the  lines  of  rni^i*"^  °'  t^e 
property,  and    nfln»n^  V"®  ""road  oompanles   nnm  "*^f  separately 
bers  of  the  AmerS^.n  '""^^^''t  the  empCfe^'*',':.!,*''^""  <^'''^l 
the  wages  werf  t?  hi^"""'*-^  Union,  upon  each  of  fi",'?*'  *''«  •"em- 
against  the  a«ton„?^,r"*^'''e'y  ■•«<&    Som  ^ht  V"^  "'''ereon 
unlawful  «.n"DiraV  *5,«  railroad  compares  i?>n,"'"'""e  "^ess 
and  united  acHontA  S""  P^Posed  and  iSdi   E^'»?l^?<*  "'  ^neh 
ana  Pea«able  Zi8te„r'"^"'«  «"<^«s8ively  an^„'l  thfir  combined 
make  to  the  red^I?^^  l'"**  the  employ^  °,  .„^**2"  *'«'  'awful 
and  teliefT  t£f  Sefenda^''*',';  <=°"'Pe''«at^^'    ind 'i.^'L  *-'n"''  ""«" 

*""'"'*'  ""«»'  *«t  «uch  eon^lrarrasT''J!S 


336 


64  FEDERAL  BEPORTER,   735. 
Statement  of  the  Case. 


f^nocd  at  said  time  with  the  intents  and  for  the  purposen  hereinbefore 

didVn  goS^f^i[b"tX  &e%eirv^r  --  ^"^---1  -^ 

pany,  a  «>rporation  orgLiz^^^  Pullman  Palace-Car  Com- 

and  engaged  in  the  bml^mof^Z^Zi'''^''  ^^  ^^^  «*^*^  «^  I»i«ois, 
upon  the  lines  of  s^^  raVoaZ  rwh^Ji"^  ^ITS^f.'  «"^  ^^her  ear^ 
Company  liad  various  tLt^aotrfinH^^'^^  Pullman   Palace-Car 

and  each  of  thenr^r The  u^  ofTtin^i'^  "5*^  '^""**^^  «>mpanies, 
of  and  party  to  said  cSLpl^acy  and  all  Ti.f  iT'V  ^^"  ^  ^"^™t>^'- 
thereof;  and,  upon  informathMf '  «n^  i^n  J*^®,  *?tents  and  purposes 
8och  was  the  fart  in  "eS  thereto  "  T  f/^  ^^efendants  allege  that 
of  the  employes  of  the  I^Hman  pl?a^  r^Zn^  """^^^  *^«*  ^^''^  ^^'^y 
the  said  American  Rai  wTnion  nt^h^  .^  Company  were  members  of 
tloned,  and  for  some  nTonths  D^of  t^^^^^^^^^  ^^  information  men- 

They  deny  that  they,  o^either  of  thin!  J^  ^""^  ^"  ^"^'^  members. 
that  any  such  acts  were  r-erta^n  In  i  ^""Z^'  '*'*  ^"^^  *»ave  known, 
reasonably  to  be  exi^[«i  T^^fn'^iJ''  J^'"^^*  ^^''tain  or  probable  oi^ 
Of  labor,  or  thai  tK^were'^^rnv^^  such  strike  or  cessation 
by  or  resulted  naturalirorofhervvi^'I  "'«""  V^  ^^  «^  occasioned 
counsel,  or  advice  exacts   or  ekSthl^^^^   the  orders,  directions, 

^^P^Jr^^^^^  railroad  cm- 

o7Sd*^^if.^y^Ctr^^^^^^^^  r  o!;  ofTheT^M 

pose  of  protecting  tSselves^nd^?^^^^  f^H^'^^  ^^^^^^'  ^^^  the  pur- 
their  own  pur^sfs  and  to  si>nrp  th^f ''"  ''*«*^*« /"^  interests,  and  for 
directions,  coS  (Wnsel  !fr«^^^^^^^^  own  ends,  without  any  orders, 
either  of  thSn  AmTthev  «nLf  ^^^^^i^  ^"^"^  *^«^  defendants,  oi 
railway  eom^nii.  and  e^^^^^  information  and  belief,  that'the 

and  for  the  Purpos^Tmaintaini'n^^^^  conspiracy, 

pany  in  its  dispute  with  its  ««m  i«  i  ?  Pullman  Palace-Car  Corn- 
overcoming  the  resisrance  of  thPir  T^  ^""^  '^^  **»«  Purpose  of 
and  contemplated  by  them  as  «?Zo«mP^''T.  ^^  ^^^  ^^^s  threatened 
employes  the  linaltfes  of  law  and  pn.f'  «°^  ^  t>''^««  down  upon  said 
ployes  the  action  of  tSe  ^ms  of  tt  nLj^,*"^^^^  ^^^^^^^^^  ^^^  ^^' 
efforts,  contribute  lareelv  to  ?hl  h?L    ,    ^°*!f^  ^**'*^®«'  did,  by  their 

portation  of  m'l/its'aM^^ttr  '^^Z""'  ^f^  ^f^^" 

companies  could,  had  thevhAAiiJnHto!!!!  it*  i^  "**^*  ^^"d  railway 
duties,  under  the  laws  of ^e  Unl  T^nV'^^'^t  ^"Ji^  Performed  their 
allege  that  they  and  each  of  thinl^  ^^''^^!'.  *°  **^«*  ''^sard.  They 
and  at  all  timTs  in  s,^d' Vt  tion^  m  c^nsistentlj^ 

advised  a  great  nun.ber  of  s^id  aSZ  Ramvnw^^°^  '^''^^'"S, 
and  ail  persons  actinc  with  ti mm    ^L  ;         Railway  Union  members, 
methods,  and  to  refrain  from  «^^  fo   "'^  ^°  ^  P^^^^ble  and  lawfu 
duct  whatever,  and  from  any  XSn  ^  ^'  "-'^^^^^^"^  '^''^ 

1^^  any  of  the  states  t^reoTo^a^  tdl^/oiTe  ^^u^s%o"^^ 

thin^urrgatr  E^Sg^^^^^  Of  contempt  had  In 

Keliher.  and  L.  W.  Roglre  and  adSJit'  th^^^^  Ya  Howard,  Sylvester 
such  pei-sons  it  wis  Sed  tha??l  Iv  hn^ ""  «*'*^d  information  against 
telegrams,  and  that,  in  tS  aSsJp^^  thf  "T^}:?  ^  ««»*  ^^''tain 
said  telegrams  cxc^t  a  c^r'aironrdatM        '^l<^''%'i.^  ^'  «" 

Railway  Union  except  Sj  ^teC^^r  a^d".^it't^nrlhrt  Tn^fhTleT 


UKITED  STATES   V.  DEBS. 
Statement  of  the  Case. 


337 

~v«.^x«cut  or  tne  Case. 

information,  or  am   sll,  m"  '^^**'  divisions  of  work  Ttnf^^r'"  ?'' 
a  lege  tUat  in  thi  „  *     .     <l'^'sions  or  devartmJ^Z     /^^ted  in  said 

men,l,ers  of  said  Amer?c-in  Rn.V*''*"''?'  «>"ferred  rn^n  thlm  hx.'^f^ 
^^J_wt,         r  p  ^^^  ianaSnt^ZUr-- 


338 


64   FEDERAL   REPORTER,    Vll. 
Statement  of  tlie  Cast,'. 


extends  through  a  number  of  states,  and  is  an  hnportant  line  of  com 
merce,  using  Pullman  sleepers  under  contract;  that  on  the  22d  of 
June,  1804,  the  defendants,  being  officers  of  the  American  Railway 
Union,  entered  into  a  conspiracy  to  boycott  Pullman  cars,  and.  upon 
the  refusal  of  the  receivers  to  submit  to  their  dictation,  proceeded  to 
employ  substantially  the  same  modes  of  interference  as  nre  charged  in 
the  information  presented  in  the  other  case  in  the  name  of  the  United 
States. 

In  addition  to  the  order  made  when  the  receivers  were  appointed,  it 
is  also  shown  that  on  June  29,  18»4,  this  (X)urt  issued  an  additional 
order,  for  the  protection  of  the  receivers  in  the  management  of  the 
property,  whereby  "all  persons  were  enjoined  and  restrained  from 
interfering  in  any  manner  with  trains,  cars,  switches,  or  other  prop- 
erty, and  from  interfering,  by  intimidation,  threats,  violence,  or  in  any 
other  manner,  with  the  employes  of  said  receivers  in  the  performance 
of  their  duties  " ;  that  this  order  was  published  in  the  evening  papers 
of  Chicago  on  June  29th,  and  in  morning  papere  of  the  30th;  and 
that  on  July  2d  an  injunction  was  issued,  upon  the  petition  of  the 
United  States,  enjoining  the  defendants,  and  others  in  conspiracy  with 
them,  from  interfering  with  the  railroads  named,  including  the  Atchi- 
son, Topeka  &  Santa  F6;  that,  notwithstanding  these  orders  and 
injunctions,  the  defendants  persisted  in  "  their  illegal  acts  and  doings, 
without  change  or  abatement,''  etc. 

The  defendants  Debs,  Howard,  Keliher,  and  Rogers,  w!k)  only,  in  the 
first  Instance,  were  named  in  this  information,  filed  an  answer,  differ- 
ing In  no  respect  which  need  be  pointed  out  from  their  answer  in  the 
other  case.  The  names  of  Hogan,  Burns,  Goodwin,  McVean,  and  Elliott 
were  afterwards  [738]  inserted  in  the  information,  by  leave  of  court ; 
and  it  was  agreed  that  they  should  have  the  benefit  of  the  answer 
already  filed  by  Debs  and  others  as  if  it  were  their  own.  ^he  two 
cases  were  heard  at  the  same  time,  upon  an  agreement  that  they  should 
be  considered  to  be  separate  hearings,  but  that  any  evidence  intro- 
duced in  either  case  might  be  considered  In  the  other,  if  relevant 

Edwin  Walker  and  T.  E.  MUchtkt,  United  States  District 
Attorney,  for  the  United  Statoa 

E,  A,  Bancroft  and  John  S.  MiUer,  for  receivers. 

IF.  IF.  Erwin,  Clarence  S.  Darrowy  and  S.  S.  Gregory^  for 
defendants. 

The  attorneys  for  the  receivers  presented  the  following 
propositions  and  citations  of  authorities : 

"Any  interference  with  property  in  tbe  custody  of  the  court  is  a  con- 
tempt. Richards  v.  People,  81  III.  551 ;  Noe  v.  Gibson,  7  Paige,  513 ;  In 
re  Sowles,  41  Fed.  752.  Such,  also,  is  any  act  of  Interference  by  force 
or  threats  with  employes  in  charge  of  such  property.  Secor  v.  Toledo, 
P,  d  W,  R,  Co.,  7  Biss.  513,  Fed.  Cas.  No.  12,605 ;  King  v.  Ohio  d  M.  R, 
Co.,  7  Biss.  529,  Fed.  Cas.  No.  7,800 ;  In  re  Wabash  R.  Co.,  24  Fed.  217 ; 
In  re  Higffim,  27  Fed.  443 ;  in  re  Doolittle,  23  Fed.  544 ;  V.  8.  v.  Kane, 
Id.  74a  See,  also.  In  re  Chiles,  22  Wall.  157;  McCaulay  v.  Sewing 
Mim^.  Co.,  9  Fed.  608;  Sherrif  v.  PerMns,  147  Mass.  219,  n  N.  E.  307. 
Wliere  tbe  court  has  jurisdiction  of  the  person,  a  disobedience  of  the 
court's  order   is   contempt,   though   committed   in   another   district 


I 


UNITED   STATES    V.  DEBS. 
Opinion  of  the  Court. 


3;^9 


borne,  14  How  Pr  If'-  ^'.  *'/""*  ""■  it<"tm,  21  Ga   121'  kJJ^'*T* 
^  Wooos,  Circuit  Judge,  after  making  the  foregoing  state- 

^eatXri';Tsl^:r.iJf  of  le.  .ome^t,  the  verv 

be  overlooked.    To  trstlZot'^CrC^y  '^""''^  '''' 
time  than  could  well  be  sn,rL  *  .    ^'"'^  ^^^^^'^^  more 

to  counsel  to  say  that  thf  1,1  ^T  o^^'"  duties.  It  is  due 
painstaking  as  ft  ha<=  bLn\l'  t  ''''  '""*'  ^'"''^^'^'^^  «»d 
contributions  of  earnin^r'  ^  ^'°  ^^^^^  "^''^^ed  by  the 
the  discussion  mTtWnrr,''*  "'^''''  *«^^'  •''''"g^t  t 
J>  the  question  o^ie  va  iSuyTft:.^^'^^^^^  ""  ""*  "-' 
defendants  are  charged  wit  J^i  r  '°J""<=t'o»  '^bich  the 
inquiries  which  in  sofe  relil  k  ""^  ^""^  "«  ^"^olved 
1-bed  or  unquestion"  p":St^"  '"^°"'  *'^  ""^^  ^'  ^^b' 

tied  to  be  discharged  withoutTr;  defendants  were  enti- 
authorities  seem  to  ^a^ld  T^"'"^ '"'*' ^'^^  ^«*'^-  The 
ruled,  District  Judge  Gros^cl'.'''"'^'°«'-^  '^'  «»»-f 
that,  in  a  proceeding  for  cremS?r'''*f^  '"  ''''  ^^^'^^^' 
however  full  and  unequTv^l  T^  ^  ^T^'  ^  '^o™  ^^^wer, 
f-^^^A^n,  2  Doug  S  Sf  r:J,T^"^^^«-  ^^ingy.Th^ 
Rutherford  v.  Metcalf,  slS^Tr*    T.l  ''"'"P^"  *«'  ^^'^ 

Ferry  Boat  Co.,  16  W  Va  gW  8^ '  T'  f '^^  "•  ^-?-'* 
534,  537;  Buck  [J39]  \  Buck  m  w"t  ""■  ^"''^^'  ^^  !"• 
People,  30  111.  App.  399  4^^^^^.,  ^n  ^^^'  ^'^'  ^'^'^^  ^. 
Johns.  317,  373;  £-S,w '/''^  f^  ^^^"''  ^h-  J.)  4 
Bank  y.  SckerrLrkorntV.i^^^^^  ^«1'  ^83; 

Fed.  761.  768.  ^^'^'^^^'^'^  U.  S.  y.  Anon.,21 


340 


64   FEDERAL  BEPORTEB,  739. 


Opinion  of  the  Court. 

the  evidence.    A  great  body  of  evidence,  consisting  of  the 
testimony  of  witnesses,  telegrams,  and  other  documents,  has 
been  adduced  to  show  the  guilt  of  the  accused.    The  de- 
fendants, claiming  the  constitutional  privilege  against  self- 
incrimination,  refused  to  testify  at  the  instance  of  the  prose- 
cution, and  have  offered  no  evidence  in  their  own  behalf,  ex- 
cepting parts  of  certain  documents  which  were  allowed  to 
be  read  in  connection  with  other  parts  offered  by  the  prose- 
cution.    Besides  denying  that  any  violation  of  the  injunc- 
tion has  been  proved  against  them,  the  defendants  now 
reassert  and  insist  that  the  injunction  is  invalid,  on  the  two 
grounds  that  the  court  had  no  jurisdiction  to  hear  and  de- 
termine the  case  in  which  the  injunction  was  ordered,  and 
that,  though  possessed  of  such  jurisdiction,  the  court  lacked 
organic  power  to  make  the  particular  order  in  question. 
Reference  is  made  to  Ex  parte  Fisk,  113  U.  S.  713,  718 
719,  5  Sup.  Ct.  724 ;  In  re  Smoyer,  124  U.  S.  200,  220-222, 
8  Sup.  Ct.  482;  Ex  parte  Terry,  128  U.  S.  289,  9  Sup.  Ct 
77;  Windsor  v.  McVeigh,  93  U.  S.  274,  282,  283;  Kerfoot  v. 
People,  51  111.  App.  409.    If  the  injunction  was,  for  any 
reason,  totally  invalid,  no  violation  or  disregard  of  it  could 
constitute  a  punishable  contempt;  but  if  the  court  acquired 
jurisdiction,  and  did  not  exceed  its  powers  in  the  particular 
case,  no  irregularity  or  error  in  the  procedure  or  in  the  order 
itself  could  justify  disobedience  of  the  writ    Elliott  v.  Peir- 
»ol,  1  Pet  340;  Ex  parte  Watkins,  3  Pet.  193:  In  re  Coy, 
127  U.S.  731,  8  Sup.  Ct  1263.    The  considerations  of  public 
policy  on  which  this  rule  rests  are  too  plain  and  well  under- 
stood to  need  restatement. 

Was  the  case  one  of  which  the  court  had  jurisdiction  ?  No 
question  is  made,  or  could  be  made  in  a  proceeding  for  con- 
tempt, of  the  sufficiency  of  the  petition  for  the  injunction  in 
respect  to  matters  of  form  and  averment  merely.  In  Coy^s 
Case,  supra,  the  court  said : 

nnlli^^LT^^^'  When  the  qnestlon  of  jurisdiction  Is  raised,  the 

S?  .fr!^«^  ^^i^??  ^^  Ti^l^^i  *^n  ^^  *>^«  Jurisdiction  of  that  ilass 
of  offenses  If  the  statute  has  Invested  the  court  which  tried  the 
prisoner  with  Jurisdiction  to  punish  a  well-defined  class  of  offe^es  - 

ilfJ*^^  ^^  ***  '*^°^®'  ^"^  ^""^^^  *^  **8  court8.-Its  Judgment  as 'to 
what  acts  were  necessary  under  these  statutes  to  constitute  th^ 
crime  is  not  reviewable  on  a  writ  of  habeas  corpus."       "^"^"^^^  ^ 


i 


341 


■ 


UNITED  STATES   V.  DEBS. 
Opinion  of  the  Court 

of  the  remedy  by  injuncdr  ""  "   "^^"'^  ^"""-^  ^^mite 

■nltlrrit.^^^^^^^^^^^^^^  -e  Char. 

■        Chicago,  by  mfans  and  TnamaZe^Z  "''T-f  ^  ^-*--g  - 
recognized   definitions    a  12^  '^•'"^*^t"t«.  within  the 

"anything  that  unlatf  lirtttT/o?-  th',"'""'"  '^ 
venience  or  damage  "    S  Ri  r^  J     ^  ^^^  ^^"''t'  incon- 

is  such  an  inconSenc!  ft^T  '''■    "^  P"''"^  »"'-«<« 
whole  community  nTnerJ^^ZJ""r  ''^f"^  ^'  «»"«y«  the 
person."    Id.  ij.    SdeS^^/'tZ '"'''\^^- Particular 
38),  "  a  public  nuisanc^  is  a  vt,^-     "^i'  ""^  ^"'^«"*=*^  (Page 
bv  a  direct  encrofc  W  Jron  ^uwfc  "  ?t'"  "-"'^^' ^'^'^^^ 
or  by  doing  some  act  which  tenSs^o,         ^  *"  .*""  ^'"P^''^' 
omitting  to  do  some  act  whS  th«  1'""""""  '"^■"'•"'  ''  ^^ 
■    and  which  it  is  the  duty^Tp^^Tr  ^"^  '"'^'"'^^ 
Mon  to  do  which  result,  iJ    •   ^         ^  *^'*'  and  the  omis- 
of  public  nuis  n^of  ;S7'"  ^  '"  *''  P""'*=-"    "^  fo™   ■ 
thecourtsof  equiTy  inSan^T'^-'^'''  ^"  t«k^n  by 
"Purprestu,.,'?  wh'i eh    stSn^TtT^  '""^'^  '^  ^""^^ 
upon  lands,  or  rights  and  e^T     .  ""  encroachment 

longing  to  the  m^^ ZtT^Ti^r:^' ^''''''''  '^- 
of  access  or  of  eniovmpnf  „  ^  ^  ^^^^^^  have  a  right 

streams."  "  The  ~'  J^^  TZr^'T'  "^^^  "-'^"e 
information  in  equity  at  the  suit'ofT  T'  ''•"^^•^''  '^  "^ 
other  proper  officer."    wL    1"  ^"""""y  «'»''«'l  <>' 

In  Kerr  on  Injunctions  (page'sPS)'^  Lt-d 
fA'  tU^i'arSr  eft^CV  •''"^'-*"«  ««<>  a  nuisance. 


342 


¥\ 


64  FEDERAL  BEPOBTEE,   740. 
Opinion  of  the  Court 


^eSZ  1^1Z:TZ:^  t.""""'  '''■«*''-  't  -"'  be  more 
erection  to  remain  aTdbe  a?^'ed    UT/fhl"''^  °'  *°  *"««■•  »« 

te^^'Jrf  cuid  t'T*'?^'*''  ^"'^  ""-~  decisions  and 

2  Wils   Ch    87.^'//     '      ^'  ^^^^'^'^^  ^^^^^'^^  ^'  Johnson, 
nZ  Af,       ^^^/^^^^y  Oeneval  v.  F<yrhes,  2  Mylne  &  C 
12d,  Attorney  General  v.  r^/rt/    0  PK     a         ^no      . 
w^v  General  \r    »•      •      i        ^^'       ^'^-  ^PP'  ^23;  ^«^. 
',f    ^^^^^«^  V.  Birmingham.  4  Kav  &    T    ^o«.   z>      7 

/>aw*  V.  Mayor,  etc.,  UN    Y     ^o7    d      ^  *   ^^' 

win  oe  lound  to  be  determinative  of  other  aiiPsHonc  r.\.\  k 
have  come  under  discussion.  questions  which 

Story  says: 

eo^s'o?  ^uW^^if  r^^^^  Jurisdiction  of 

jurisdiction  is  aDnlicablP    nnf  ^„i    ^^  ancient  date.     ♦     ♦     ♦    The 

stood  to  L"ea'n\r^'°rsrt"i  StH^?  '"  -  »S: 

part  of  1,1s  demesne  landsoTuMn  H^.„c,  ^^**'  '''°«'  <"'»'er  upon 
crown  of  the  public,  such  asTi^n  1.^S.  ""^  easements  held  by  the 
streets  etc.,  and  other  public  acXmort^*Hn3?'  ^^"'<'  ^'"^^-  '»'tg. 
V.  y.  8..  10  Pet.  662;  J/oAa,rr«wZ.  Jl  *•  ^^''^  "^  ^^'o  Orlemi 
Paige,  534;  .4«or„e»  OeWo"  v   CoW»  Bw/"  ^"''''  <*  ■»•  «•  Co..  6 

Section  923 :  "  In  casTs  nf  ^'J^m-     '  "/"'"^  *^°-'  «  Paige,  133. 
an   indictment   li^'  toTbate   them    and'i:;'^'  P'^>1«'>/ ^  oailed, 
but  an  information  also  lies  in  m.'.ii^  1  -  ^''""*^'"   ""*   offenders 
JJ'ay  of  injunction.    The  instane^of^hl  .  f'^^-  ^^^  Srievance  b^ 
however,  are,  it  is  said   rarT  „n^  ■     t''®.  '"teriwsition  of  the  court 
seeking  prev'enti,;'"r^1ie?'%C  ST.IT  "°".'"^  ">  Informations 
maintained  against  a  public  nuiiin^h^V"^.  '°  ^fl""''  have  been 

Section  024;  "The  i«)und  of  thi^lnH^  r":?'"^  2  highway." 
n  cases  of  purpresture,  as  well  as  of  ni^n^  ". "'  """^^  "'  «^""y 
Is  their  abilitj-  to  give  a  more  co,»n^»fr  „  h*^  nuisances,  undoubtedly 
attainable  at  law.  m  or^er  to  Zvint  ?^  ^"^^  '"^'^^'y  «!>»»  is 
a  so  to  suppress  opp.-ess"e  and  ?exItto„s  T^?"7,'"">  ""«'■•"«''  s°<l 
place,  they  can  interpose,  where  thl^nrt.l.ii^"'"'*-  1°  "^e  first 
«d  prevent  such  nuisani^  whlc^a^^t^^S  oTa"^*',  ^"p-;'^ 


I 


UNITED   STATES   i;.  DEBS. 
Opinion  of  the  Court 


343 

^  *"""'"  "A  ine  Uourt 


So  Pomeroy,  in  section  1349,  says: 


Wood  (volun,.  1    .    ,o.^  ■  "  """'•  5^«- 


Wood  (volume  1,  p.  124)  says- 


abafemenf^rS'  I"l-'««»'«ion  ov-eTt'^e*  w'?teS'''^H'^'^^^^^he 
McLean,  Vf^^s"X™3%T"    ^~-^^'  ^^ZZ^.'^O 
High  says; 

Section    I554  •  "  Who 

between   till  ^™'^n,  as  to  the  necessitv  nf  Zt.  ■     *^^^  ""'e  acting,  a 
in  behalf's?  t'he^'n^biic"  '^''^""■■•t'on"^,^'  ^by  ^2f  "L^f*""'  '"Jwy' 

-%  eo  stop  .e  -sc4.:LTtri^rtre^^^^^^^^^^^^  - 


64  FEDEBAL   BEPOBTER,  742. 


Opinion  of  tlie  Court 
At^  ZZ;'''';"?,"*^  '"  «"PP«rt  of  the  text  are 

69  Pn    St    Kn     c        ,  ^-  2°2;  Bunnell's  ApDeal 

tJn^:,  r:       1  ^  '^^'^'  ^'^  ^-  ^«''?'^.  47  111   487^^/' 
tom<y  (reneral  v.  ^«,7r«>«<Z  Companies  S'iWi.^or     J .7 

'"'y^^eneraly.Citj,ofEauClaiS?^t'^S'-  '^^'  ^«- 

«gain.t  obstructing  the  naWa^^Z   'i   "^ ""«'«»  ^''«  """ght 
court  said :  navigation  of  the  Potomac  river,  the 

^f^^^y  toke"Sic"U""l'„  "cai,"3  ^f^  t»"t  «  court  «t 

hnv-T".:?!"'"  «'^  »'  fe  attorney  «S  ^Tillf  ","."!'*'«^'   "y  an 
have  been  acted  on  with  canVinn  f^  ?^   ..^"^^  jurisdiction  seems  to 

of  the  court  were  conaMd  a^  rar^  ^e  r^"'^H  *"^  *"*  'uten)ositlon 
antliorlty  on  the  subject   to  whatho-iK  '^f^fed.  as  to  the  prlncloal 
chequer  upon  the  dl«Son  Tf  ?Mh^",  If"  !?  '"«  ">"«  <>'  «' 
some  species  of  information    to  L**  1  ♦k''*  """'•ney  general,  by 
court   relief  as  to  nalsanc*  and  ^An^L*^,.*?""'"''^  "'Oe  of  the 
to  .4«or*,e|/  General  v.  r<toi  /^  ^/5^    o'^t  '^^"^'-    Chancellor  Kent     ■ 
the  equity  Jurisdiction  In  ^sm  ^f  "'.'hn  ''"''f '  ^''-  382,  remarks  iSit 
JL1^*"2  "  ""«  »««>  ezer^^^ftta'i  ?J  •,„"'i'*""'^"'  *"«  ""'y  casS 
SL"?.C*  f  ">•  '»'»  '"'n  domanrJor  1;  ~ntr,^  of  encroachment  on 
torn  Charlea  I.  down  to  the  year  1705^  v2  i°^  .*  ■""'  <»'«>*  «». 
been  finally  sustained  upon  the  nHnT-i^i  Vk^*'  *''*  Jurisdiction  has 
adequate  and  con.plete  reUef  than  ™n  L    ,'.  ^""^  ™"  -^'^-e  more 
therefore,  it  is  admitted  bv  all  th^t  ,t,  "^  obtained  at  law.    While 
and  a«x>rdingly  the    ^taJce"iMt  i-.T'^T^'y  "»«  "^  <lel'ca<^ 
may  be  exercised  In  those  oiseT  in  «  m  J^f ''^'"''''^  »■*  rare,  yet  it 
irreparable  mischief  bef^^t  Sirre^^rtal^  tTrZl^r^''^  "' 

See,  also,  the  opinion  in  Pennsvlranin  v    ir^    7- 

./       t^.,  lo  now.  018,  where  a  bridge  aorn^jc  iU^  rw.- 
river  was  held  to  be  »  nuKi;^       •       "'*"^^  across  tJie  Ohio 

atthesuitof  thrstat^ofStSr  ""'  "''•^•^"  '•'''''^' 

Union  is  not  nndlto^lT^t  S  smitedT  '*"'?/  '''^ 
defendants,  they  do  insist  that  fn Tk  1  ^  '''*""'^^  '•"■  t^** 
by  congn,^  eoniS^g  t ttCit^tJeTr  1  '*■-""'""**" 
do  nothing  for  the  P^tecti^rof  "he'hfltvT  /T'  ''"" 
commerce,  whether  upon  land  or  late  ."^'S  t^^^'^T 

Innuj,.  Co.  V.  Cty  of  Parkershurg,  107  U.  S.  691, 2  Sup.  a! 


UNITED  STATES  V.  DEBS. 
Opinion  of  the  Court 


345 


732,  in  which  Pennsylvania  v.  Wheelinr,   m.     »   -j       ^ 
U  ma,  be  observed,  isUred  tol'^a  ^e^.^:;  i:^^.    '^^ 

by  w2r."?o"S  fcZVi^bMr ,"%-«-«»'  to  «--«- 
they  are  attached  to  the  land-  thp^^.*^'  "°^  «  clear  riyer.  But 
estate;  and  thev  are    prlinarflv  «t  i  ^  ^^^   VmsAe   property,— real 

aws.  Congress-has  never  ye  'Tnterfe^^'tr''^^  ^o  the  loc?l  stefi 
tration ;  it  has  hitherto  ln«  thiL        .  ^  *°  supervise  their  admlnls- 

llttie  doubt  howevef  ?hat  c^Sgrel^'^'r;;''?;!?/*'*  '^^'^-    ^hS-e  's 
prevai  ing  abuses  In  the  manSSof  wh  JJ*'^  '"'L^*'  '°  cases  of 
rially  interfering  with  the  prosecution  n^^»  Property.-abuses  mate- 
and  make  regulations  to  prevent  such  ih^^'"^''S.^ir'"''s'"t  -nterpose 
done  so  it  will  be  time  enoiiJh  2,,.  «       "''uses.    When  it  shall  have 
into  effect  by  Judi.^fp^SUTpXHv'lLti.'JIS-"  '^  regulation! 
gress  has  acted,  the  courts  of  the  UuK  ill      *"***'  ''"*•  until  con- 
over  the  subject  as  a  matter  of  fti»i^f      ^'?*^^  ^'"'"ot  assume  control 
not  the  Judicial  departu"nt   to  whici  t'iS'',t'°*i1-.  J*  "  «'"S'-«««.  a^d 
power  to  regulate  commerce  wHlTforeiinn^?^"'""""  """^  S^'on  the 
era   states.    The  courts  can^^r  teVSi^on^rsVute: 

SlMhetLt^^.^''-  -  ^^^'^  ^'^  U.  S.  1,  8  Sup.  Ct 

conuuon  law  of  the  Unitwl  4tof^    "k.^?  ^""^  «uch  law,  there  Is  m. 
nuisances  In  navigable  rtlLuniSs'lt'^'  ^r"""'-^  obst^ctlns  and 
tered  by  the  c-ourts  of  admlrlity  aSd  maHti  n»  i""."".""*  '"w.  admini^ 
dent  however,  exists  for  the  enforce^f/nt"!  ^""^'ction.    No  prece- 
such  law  could  be  enforced  (a  SThim?'""^  ^"^  ""*■:   «nd,  if 
decide)    it  would  not  avail  to  su^tnh,  h.L  i>-n®. ""  °°'  undertake  to 
original  case.    There  must  be  a  dTrtt  J.fnt '"  ,'".K^""y  ^'od  in  the 
order  to  bring  within  the  swL  of^Js  ifj^!*  °'  *^^  ^""cd  States  In 
«»urts  of  law  and  equity    o3rnpfi„^c       !;  "^  administered  by  the 
streams  within  the  states'    Snnh  «w      ?-"**  nuisances  in  navigable 
reuses  against  the  laws  of  tSe  states" wSr  """J  "uisances  arf  of 
watei^  He,  and  may  be  lndict«l  or  nrohiW  iT,'^""^^.  *«  navigable 

rh"S^-i-ha?-to-.1-^^^ 

the^S^;rC^^^^^^^^ 

it  was  sough  to  rl^ove  Is  nl^^*  "^  '''''  '""^  ^""^g«  -hich 
States,  inihe  absenrof~  e^sfSr  "^*  *'^  ^"'*^'* 
tions  and  nuisances  in  naSl  sS  v^^'"^  "'''*'•"*'- 

national  law.  "avigable  streams  withm  the  scope  of 

tofhe'^arottLXf^re^'^^^^^^^  '-'--- ^^  -'^e 

March  2,  1889  S  St  H'?'  'i""""^^*^  ^y  '^^  »«*  «* 

(25  Stat.  855) ;  and  it  is  contended  that  by 


346 


64  FEDERAL  REPORTER,   143. 


Opinion  of  the  Court. 

th™  *^^  provisions  of  that  statute,  passed  in  exercise  of 
ttie  power  conferred  on  congress  by  the  constitution  "  to  i^gu- 

?a.  Wn"""?  TT^  *•""  ''^*™^  '^*^"  *»»«  »'«tional  control 
has  been  extended  over  the  channels  and  agencies  of  inter- 
state commerce,  including  railways  as  well  as  navigable 
waters  and  that  out  of  this  legislation,  whatever  hadten 

ttlTn'o^^r^;  "r"  ^^  "***^^'"^  implication  the  juris- 
dic  ion  of  the  federal  courts,  in  accordance  with  the  prin- 
oples  of  equity  to  protect  that  commerce  against  interfer- 
ence or  obstruction.  The  right  of  the  federal  government  to 
obtam  the  injunction  is  also  asserted  upon  the  ground  of 
property  right  in  the  mails. 

dispute  and  that  ,t  pays  large  sums  amiually  for  the  carry- 
ing of  the  mails  upon  the  railroads  is  well  understood.  In 
Seanffht  y.  Stokes,  3  How.  151,  where  the  question  was 
whether  vehicles  carrying  the  mails  were  "  laden  with  the 
property  of  the  United  States,"  and  therefore  exempt  from 
court"  S!  ^"™^'-'«"<^  '•-•i'  in  Pennsylvania,  the  s^ipreme 

min^^Thov*„S°!.*®?  ®*"*^  """^  ^questionably  a  property  m  the 
as  well  as  that  otltecmSn^<^^nHfJ"^  guarding  its  own  property 

tnre.onpuh.icser.i^^rfi'^eSn^trrattr'.jrpX"^^^^^^^^ 

It  is  said,  on  the  contrary,  to  be  easy  "  to  show  that  at 
common  law,  jurisdiction  of  the  chancery  on  information  of 
the  attoraey  general  to  restrain  a  purpresture  or  nuisance  rests 
on  the  idea  that  the  king  owns  the  land  whereon  it  exists  » 
It  IS  doubtless  true  that,  in  the  cases  where  the  jurisdiction 
was  invoked   the  tang  was  the  owner  of  the  land,  because 
the  land  under  navigable  waters  in  England  has  alwavs  be- 
gged to  the  crown;  but  the  object  of  the  suits  has  alwavs 
been,  not  to  vindicate  the  title  to  the  land,  which  could  ha^e 
been  done  by  the  action  of  ejectment,  but  to  prevent  or  re- 
move obstructions  to  navigation,  which  required  the  prompt 
and  efficient  methtHls  of  equity;  and  it  is  not  to  be  believed 
that  If  m  England,  as  along  the  fresh-water  rivers  of  this 


%s 


II 


347 


UNITED  STATES   V,  DEBS. 
Opinion  of  the  Court 

exercised  for  the  protection  oTtrtK '''*"^'*  ""*  ^^^^  been 
The  public  inteZtTlZ^rn^T^l''  "^'^^  °'  navigation. 
the  water,  and  it  is  stictarrtf.         ^  "^obstructed  use  of 
to  protect  that  use  1  deZden    '  ""^^^  ''^  '^''  the  right 
underlying  soil.    If,  howeTer    *  r^""  't  *'^"^^'^'P  «'  ^he 
must  be  held  to  i^stupritliS"*""  ^"  ^"'''^  ^^ 
^hich  by  fiction  shall  be  dimed  to  u  '  or  property  right, 
protection,  or  to  afford  a  £  of      ""^'^^^  "^  ^""^^^^le 
tectmg  incidental  rights   ,t  t.L       ^""sd'ction   for  pro- 

Which  the  governmeufh^^LrdedaSl?*  the  prope'rty 
and  Its  unquestioned  ownershin  „T  m  ^^""^  '"  ^^^  niails 
deemed  sufficient  for  the  p^oi  T?'^."^^'^*  "«»  ^ 
V.  S.  V.  W.  V.  Tel  Co  \ll^  L  "'*'*=*  ■^'•«wer  said  in 
always  the  test  S la  'interlf-  l!'  *'^  "^'^^  '^''"-  -  no? 
ficed  if  anything  of  higher  vTh  1  ^^ T^ J^'''^''^^  ^  «««ri- 

"  But,"  say  counsel  "tM/u,'^  ^^^^^^^  attained." 
to  the  questL  in  ^is  :ei.n'"Vf  ^i^:  "^^^'^^  ^g-. 
railways.    They  are  free  to  «JI  .„  Waterways  are  not 

Ject  of  private  ownersh^  nor   0X0^  T  T  ""*  '"^^  ^b" 
regulation  by  public  authoritv      A  z.'  t    ""'"^  "^  municipal 
387  13  Sup.  Ct^io.    The  SVol  oftl     '"/  '''"^'  ^*«  U.\ 
with  the  company  that  owT  a^  ol    T''^''^ ''  ^"'"^"ly 
interests  are  entirely  able  to   ope  wS?       "^    ^^'''  ^^' 
their  property.    If  they  be  heW  in      k    {  '"""^^^^^^'^  with 
*or  the  public,  why  should  eouitv      ^^^  .''"^'  «^  trustees 
beneficiaries  of  this  trSunSf  "."■■"'"  "  •^"'*  ^y  the 
recreant?    These  companies  own  tt  /'T'^^  ""^^^  Proved 
J'nes  run,  or  a  right  of  wavin  "^  ^^^'^  "^^'^^  their 

charged  with  publfc  dudes  are  1^^'"^'^'  ^"'^'  ^^ough 
porations  operated  for  g2  A  to  ^n7'*  P'*'""'^'^  <^«r- 
the  speed  of  trains,  stuping  '"f  "^^  "^««^^'  ^•-• 
tracks,  and  things  of  th«V  I      \  crossings,  elevation  of 

Jo-I  or  state  4il„'*  Snr'.>  *•"  ^"''i-*  to 
power  of  congress  exclusive  afL  7  T  ^  ^^^«  *»»« 
rates.  Wabash,  etc.,  Hy.  XU^^Z  *''"  "*"«••  «*  interstate 
U.  S.  557,  7  Sup.  Ct.  4."    It  *  L  ^'"^^  °f  ^^^^^,  US 

-  -  railways;   that  the  lautTnTlllrttlo^tTa^^ 


348  64  FEDERAL  BEPOBTER,  745. 

Opinion  of  the  Court, 
under  them  are  owned  and  controUed,  under  legal  limita- 
tions  by  companies  which  operate  them  for  gain;    but  so 
ai»  the  boats  which  ply  the  rivers  and  lakes  of  the  country 
and  I  see  no  reason  in  any  of  the  suggestions  advanced  for 
saymg  that  the  courts  may  give  to  commerce  on  the  rivers 
a  protection  which  they  may  not  extend  to  commerce  on 
the  railways.    The  railroad"  companies  are  clothed  with  the 
power  of  eminent  domain,  to  enable  them  to  acquire  lands 
necessary  for  their  purposes,  because  the  proposed  use  is 
for  the  public  benefit    To  the  extent  of  the  share  which 
the  companies  have  in  interstate  commerce  they  hold  their 
lands  and  rights  of  way  for  tBe  benefit  of  the  general  public 
and  subject  to  the  national  control.    « For  this  purpose » 
to  use  the  expression  of  the  supreme  court  in  Gilman  v. 
PMadelphia,  3  WaU.  713,  in  respect  of  navigable  waters, 
they  are  the  public  property  of  the  nation,  and  subject  to 
all  the  requisite  legislation  of  congress." 

But  wliile  the  reasons  to  justify,  on  the  grounds  considered, 
the  issuing  of  the  injunction  for  the  purpose  of  protectino- 
against  obstruction  or  interruption,  either  the  mails  alon^e' 
or  interstate  commerce,  of  which  the  carrying  of  the  mails 
IS  a  part,  are  strong,  and  perhaps  ought  to  be  accepted  as 
convincing,  there  seems  to  be  no  precedent  for  so  holdine 
and  the  responsibility  of  making  a  precedent  need  not  now  be' 
assunied. 

AVhile.  however,  the  point  is  not  decided,  the  authorities 
on  tlie  subject  have  been  brought  forward  so  fully  because 
m  part,  of  their  bearing  upon  the  question  now  to  be  con- 
sidered^-whether  or  not  the  injunction  was  authorized  by  the 
act  of  July  2. 1890.  It  was  under  that  act  that  the  order  was 
asked  and  was  granted;  but  it  has  been  seriously  questioned 
in  this  proceedmg,  as  well  as  by  an  eminent  judge  and  bv 
lawyers  elsewhere,  whether  the  statute  is  bv  its  terms  ap- 
plicable, or  consistently  with  constitutional" guaranties  can 

bnefe  for  the  defendants,  and  the  authorities  already  quoted 
?Tnl  -^  "i^onstrate  "that  were  congress  to  declare"that  the 
United  States  might  maintain  a  bill  to  enjoin  the  obstruc- 
tion of  interstate  commerce  on  railroads  engaged  therein, 


t 


1- 


nmrm  states  v.  debs.  „,,. 

Opinion  of  the  Court 

^^.^d  trS:  rr  ^  ^»  -^-^  on  a  public  high, 
admissible."  Such  a„  act  nT'  ^"^/^^'^'''tion  would  b^ 
nnlty  jurisdiction  in  E  Ind  atT^. '^^""^  *''«  '^^  ol 
constitution  was  adopted  hi.  „,1  *™1  ^^«"  '^^  ^deral 
to  the  objection  that  it  ';  Vn  inv  """l'^  "''*  ^  obnoxious 
na>  law  which  involved  ^0—""^.'  't  ""^'^  ''  -™'- 
by  jury.    The  jurisdiction  of  t^  *''  *^'  "^^*^  of  trial 

"nphcation  their  right  to  nunthf  '""'"''  ^*  ^"''y,  and  by 
by  the  constitutionrequaT  wUht  '""^P*' '''  ^^^^^ish  J 
«nd  so  Jong  as  there  is  „„  ,ff        .  ^  "^'^^  of  trial  by  jury 

-bjects  not  prope;,;^:;:  sf  i^n"' ^""^^'^^^^^  oTi 

^ound  for  the  assertion  ZtteZZ?'  ''''''  '=''"  '^  "o 
taken  away  or  impaired.  The  saf  V"'^  '""^  ^^'  been 
eonteiript  and  a  crime.  But  the  l!  '  ""^^  ^""««tute  a 
crime  another;  and  the  punisImer^^P'  '^  ''"^  ^^ng.  the 
rW6]  cation  of  the  punishment  Ti  ""'  '^  "ot  a  dupli- 
can  be  tried  and  punfshefoX  bv  th      '"''''•    ^he  contempt 

Thnra^^r  r  ^^^  '  ^""' '"' '''-'' 

(26  Stat.  .09),tefd  :^fot;r  °'  '''  ''''  ^'  '^'y  2.  1890 
Section  1  •  ••  Rvpi^ 

°^'tZ'^.ZT£^"^^^^^^^^^^^^^^^  '«™  <"  trust  or 

combination  or  TOnill„'""''t«"y  ''"di  wntrert  or^i*""^  *°  ^  '"egal 
Wd  on  conviction  Xr^;  \^«"„'^  <Jeem^l^  ,?!  '^TrJV^  «"<^'' 
five  thousand  dollars^^ '  ?'"'"  ^  Pnnlshll  hY  «i  ^  ""^demeanor, 

to  which  reference  will  Kde^l      f '  '^^P*  *«  A 
of  the  defendant,  in  .^s^cUo  hSSut  "^-    '^^  ^^^^on 

""'"  ^^''ti'te,  as  stated  in  one  of 


W  FEDERAL  REPORTER,   W]. 
Opinion  of  tlio  Coiiil. 

the  briefs,  is  that  it « is  directed  at  capital,"  «  at  dangers  verv 

S-Mhat^fh'r'/"'^*  ^"^  ^»^  aggregatiisTf  IpT 
ter'  a„5  L.  .  r  """'f  "*  '^  ""«  °'  «  contractual  charac- 
ter  and  not  of  force  and  violence."  In  another  bri^f  if  L 
said  more  definitely:  •  "  """""^^  ""«*  i*  JS 

the7t^^te'1?KXon':X™?h^r  *''^*''«''  "  '«  «PP«'»t  ^at 
BbonW  be  engrossed   a^TZa^vt-Zu"""'""^  "^  ^'""<^"  trade 
ployed  and  secured,  but  Vat  oven  LIm*"  «  foPe^y  should  be  em- 
rtlll  the  statute  do^  not  "nL  a  riX  nn  /^i"  "'"tention  be  denied. 
under  the  direction  of  tte  »ttn^Ll„      ".  V'^  Kovemment  to  proceed 
existing  m   a   hlghn-ny   o?  intef|t«fe"'^i  *"  """K"  P"''""^  ""'^""^ 
section  4,  to  prevent  and  restrain  bylnSHnlT'.  ,"1-  generally,   by 
Btatnte.    It  Is  thought,  therefore'  tLl   „    k  ??'  7'°'"«ons  of  a  penal 
y.  8.  r.  Patterson,  ^F^mm^LZ  ?*"*  "Jf  i^^'Se  Putnam  in 
then  It  |8  unconstitutlon^affi  atlpnmt  I^  ''"lPP"c«ble:  but,  if  it  Is, 
equity,  and  not  a  jusWflaWe  author^rnr ?""■**  ".?^°'"'  ^t"'"'*  '» 
equity,  and,  under  congressionnlnnVh^Hlt    a  proceeding  familiar  to 
courts  in  the  name  of  the  gov^.ln^t."''''*^'"'^'*^'"^  '"  *"«  ^^^^ 

The  very  elaborate  arguments  presented  in  support  of  these 

SalTen^t'h  -^r^'  "  '""^  """'  -  -re  made  an?^ 
ported  at  length  m  the  case  referred  to  (U.  S.  y  Patterson) 

«nd  therefore  need  not  be  restated.    Re  erence  wafmTde  ii' 

■  SiThii:!'"  """  ""'^  '-^  *'^'  *»  *^«  debates'Stn 
S-Ind   tl trr"  ^'\^^''  consideration  in  that 
wwy,  and,  though  it  is  conceded  that  we  cannot  take  thr. 
>.ews  or  purposes  expressed  in  debate  as  suppj^ng  he  c^n 
truction  of  statutes,  it  is  said  we  may  gather  XheT 

JJoubtless,  that  is  often   [747 j   true;  and  in  this  instance 

IZTn^r  "TT  **•«*  *»»«  o"gi"''l  "measure,  as  J^ 
posed  in  the  senate,  «  was  directed  wholly  against  trusts  «nA 
not  at  organizations  of  labor  in  ajiy  for^  "    S   t  „i  ' 
pears  that  ^fore  the  bill  left  thfsenat  its  a  e  h  f  bl' 
changed,  and  material  additions  made  to  the  text;  and  itTs 

s^^l  re  ;^L:dTippi:  -t  r  ''^ ''-  -^ 

agreements  or  combinalnt  Si^betweeTlLrs^^^:;^ 
^ew  of  lessening  hours  of  labor  or  of  increasing  the"  laL 
nor  to  any  arrangements,  agreements  or  combinations  TS 
persons  engaged  in  horticulture  or  agriculture  rde™h 
the  view  of  enhancing  the  price  of  a^icultureHr  hS 


U»IXED  STATES  V.  DEBS 

—  p^ducts,":::'::'^"^ 

--mSJs^S'^  o^rS  T.  rr- 

the  offerin..  „.  .r^^gements  of  the  kinH  T   .       «^clude 

ncerned,  was  not  overiookerf      p  t  .      ^'"■"^'^  should  be 

f--ional  KStriT""""'  -  -port  /in  hTcf' 
^o-'ng  statement:  ^     '"""^  '^'  ?*•  «'  P-  4089).  made  t  fo"\ 

cl„r.  t!,'/     "»'"MuaI  character-?     i? •''<»"'» 

TJ.  *  •     .atever  form  found  it  tu      l        "^  ^orm  of  trusts 

J  hat  IS  the  effect  nt  tu        '      ^'^^y  ^  n  restrainf    ,  .        ' 

that  those  words  sho„S\''T'^^  "«'  otherwS™    n  ^  *™**"- 

«ke  characteTlrr  *^'"""^  '«  incjr'onl    *"*•''  '^ 

mg  words.    It  is  har^i  ^f  f "^  independently  of  th  °" 

*rr;;"-  «Sp^  tit"  "-''^  -^-"^o; 


352 


64  FEDEKAL  BEPORTEB,   747. 


Opinion  of  the  Court. 

trade  or  commerce ;    but  that  construction  is  controlled  by 
the  title,  which  shows  that  only  unlawful  restraints  were 
intended.    But  what  constitutes  an  unlawful  restraint  is 
not  defined ;   and,  under  the  familiar  rule  that  such  federal 
enactments  will  be  interpreted  by  the  light  of  the  common 
law,  I  have  no  doubt  but  that  this  [748]  statute,  in  so  far 
as  it  is  directed  against  contracts  or  combinations  in  the 
form  of  trusts,  or  in  any  form  of  a  "  contractual  character," 
should  be  limited  to  contracts  and  combinations  sucli,  in 
their  general   characteristics,  as  the  courts  have   declared 
unlawful.     But  to  put  any  such  limitation  upon  the  word 
"conspiracy"  is  neither  necessary,  nor,  as  I  think,  permissible. 
To  do  so  would  deprive  the  word,  as  here  used,  of  all  signifi- 
cance.   It  is  a  word  whose  meaning  is  quite  as  well  established 
in  the  law  as  the  meaning  of  the  phrase  "in  restraint  of  trade," 
when  used— as  commonly,  if  not  universally,  that  phrase  has 
been  used— in  reference  to  contracts.      A  conspiracy,  to  be 
sure,  consists  in  an  agreement  to  do  something;  but  in  the 
sense  of  the  law,  and  therefore  in  the  sense  of  this  statute, 
it  must  be  an  agreement  between  two  or  more  to  do,  by  con- 
certed action,  something  criminal- or  unlawful,  or,  it  may  be, 
to  do  something  lawful  by  criminal  or  unlawful  means.    A 
conspiracy,  therefore,  is  in  itself  unlawful,  and,  in  so  far  as 
this  statute  is  directed  against  conspiracies  in  restraint  of 
trade  among  the  several  states,  it  is  not  necessary  to  look  for 
the  illegality  of  the  offense  in  the  kind  of  restraint  proposed ; 
and,  since  it  would  be  unnecessary^  it  would  be  illogical, 
to  conclude  that  only  conspiracies  which  are  founded  upon, 
or  are  intended  to  be  accomplished  by  means  of,  contracts  or 
combinations  in  restraint  of  trade,  are  within  the  purview 
of  the  act.    It  would  be  to  make  tautologous  words  which 
have  distinctly  different  meanings,  and  to  deprive  the  statute, 
in  a  large  measure,  of  its  just  and  needful  scope.     Any  pro- 
posed restraint  of  trade,  though  it  be  in  itself  innocent,  if 
it  is  to  be  accomplished  by  conspiracy,  is  unlawful.    A  dis- 
tinction has  been  suggested  between  the  phrase  "  in  restraint 
of  trade  "  and  the  phrases  "  to  injure  trade  "  and  "  to  restrain 
trade."    Though  perceptible,  the  distinction  does  not  seem 
to  me  so  significant  that  the  use  of  one  expression  rather  than 
the  other  should  vary  the  interpretation  of  this  statute.    Any 


353 


UNITED  STATES   V,  DEBS. 
Opinion  of  the  Court 

-  "  to  i„i„re  "  or  "  to  restm^  "i2"\      "''*  *«  '^^^ 
tion,  or  conspiracy  in  restraint  of  7"  /.'=°"t'-a«t,  combina- 
tract,combination:or  conS!^^,l::^«  '«  t^^-^fo^  a  con- 
It  would  not,  I  snpposeXTn^„^f '•!•">«'•  to  iniu^  trade, 
charge  conspiracy  in  restr,in^  .7?^  '  •'"  ''"  indictment,  to 
f  tute,  but  it  would  be'el/J^^ 
.      ^traint  be  shown  to  be  in  iS TnT  1  ^  '^^  P^P^^d  re- 
means  intended  to  be  used  in  orl     !"  '  I'  ""^^^  *e  illegal 
^d  whether  the  means  stouS  ^aT.      f'''  ''''  ^'''-'^■^ 
.  'n  restraint  of"  or  "to  riti^n  »Tl  *^  ^^^^  ^^^  »^ 
"nportant.    There  are  manTl?      7'"^'*"  '''"'^^  hardly  be 
™le  that  every,  word  of  a  JaJr.  "t'^'  ''^  -^-^  ^he 
inapphcable,  because,  whe^  tl^"  "'""''^  ^  ^iv^n  effect  is 
court  is  powerless  to  ^Z  SZ'Z'''  T^'  '''  "^*J'  ^^e 
,^^^"  ^^«rds  of  different  si  Jffil^;!'''^"'  T^'^^^'    ^ut, 
forbids  that  the  scope  of  thl  staLl  u    ""'^^''^'^'  '^'^  ™>« 
'  tin'r""."'  the  narrower  word     "it- rP'^^^^d  ^i^in 
.  t'Pphng  house  »  are  neces^^Tn  -^"^^^^'ng  house  »  and 

'n  ^eff.  y.  MoCulle^VuZ^'l  T'  '"'^  ''  ^'^  ^«"  hdd 
sheep,  and  lamb  »  were  an  J^^''  ^*'  ^^^t  «  ram  ewe 

but,  if  the  words  hld^"  Z"'^^  '^'  '""^  ^^'^  "*-?'• 
W  been  a  plain  violaMon  of  th';  'T  "''  ^'^^P'"  ■*  -"uld 
comprehensive  word  « sW  "l  ^  "■"'"  *°  '*J«''  [7*91  the 
;;ere  not  included.    ^^7;   ^„«^.,^y  jhat  lambs  or  we  hll 

2  Cranch,  10;  Adams  v.  Woods  jf^!^  '/''''  ^-  ^^^^feller, 

Boifman,  lOl  IJ.  §.  II5    rT^/^  ^°^-  251;  Market  Co  v 
Sup-  Ct.  491.    And  ,> 7'  ^'^'^^  ^-  V.  S.,nz  n  s  \^k  k 
-d.-cnspirf^^/:  :  "^Cl  'l^'Ti""-^  ^'^e      i. 
stnpitofitswell-settlej^^^ii'f,^^  1?"^  the  same  thing 
withm  forms  of  contract  TlTl^'T^'^'"^  ^^  «>nfining  %         ' 
trusts.    For  like  reasons  1 1  ?.   '^°^*"°««ons  in  the  form  of 
fncrce,"  in  this  statut^as  svnn  ""  '^^'^  *«  word  Tom 

«  the  common-law  phras^  "V"?^™""^  ^'^^  "  trade,"  as  S" 

">&  but  Its  chief  use  is  "  to  denoSlLl  ''''''*"^  '''  <'««I- 
"8(»-vot  1-06  M— 23  ^'^'^  **'"  P'"-'=base  and 


Of/Sk 


64  FEDEBAIi  BEPOBTEB,  749. 


Opinion  of  tlie  Court 

sale  of  goods,  wares,  and  merchandise,  either  by  wholesale 
OP  retail,"  and  so  it  is  used  in  the  phrase  mentioned.    But 

commerce  "  is  a  broader  term.    It  is  the  word  in  that  clause 
of  the  constitution  by  which  power  is  conferred  on  congress 

to  regulate  commerce  with  foreign  nations,  and  among  the 
several  states,  and  with  the  Indian  tribes."  Const.  U.  S. 
art.  1,  §  8.  In  a  broader  and  more  distinct  exercise  of  that 
power  than  ever  before  asserted,  congress  passed  the  enact- 
ments of  1887  and  1888  known  as  the  "  Interstate  Commerce 
J^w.  The  present  statute  is  another  exercise  of  that  con- 
stitutional  power,  and  the  word  "  commerce,"  as  used  in  this 
statute,  as  it  seems  to  me,  need  not  and  should  not  be  given 
a  meaning  more  restricted  than  it  has  in  the  constitution. 
Ihat  meaning  has  often  been  defined  by  the  supreme  court 
Gtbbom  V.  Ogden,  9  Wheat.  195,  197;  Oilman  v.  Phila^ 
delphm,  3  Wall.  713;  The  Daniel  Ball,  10  Wall.  557;  The 
Case  of  the  State  Freight  Ta^,  15  WaU.  232,  275;  Pensacola 

S  Q  o;7*o^*'-  ^'  ^''^-  ^'^-^  ^^'  ^-  ^-  1'  ^^^  Varte  SieloU,  100 
U.  fe.  iJ71,  395;  County  of  MohUe  v.  Kimball,  102  U.  S.  691- 

Wabash,  etc.,  Ry,  Co.  v.  Illinois,  118  U.  S.  569,  7  Sup.  Ct! 
4;  Cherokee  Nation  v.  Southern  Kansas  Ry,  Co  135  U  S 
641,  657,  10  Sup.  Ct.  965.  I  quote  passages  which  wiU 
serve  mcidentally  to  dispose  of  a  number  of  points  raised  in 
the  course  of  the  argument,  witliout  referring  to  them  more 
directly : 


(• 


^tion  wiiin^o  nna?/^^?*''*^'  "^ff  ""known,  "comprehends  navi- 
Snli-ifS^lr  t  ,^^  ^^  ®^^^  «*a*e  in  the  Union,  so  far  as  that 
J^I^  «n.f  "^  ^'  ^  ^"^y  "^^""^'•'  connected  with  •(^nimeri  witii 
^J£^„^««*»^«'  «-•  '^'"ong  the  several  states,  or  wiTh  ?2e  inSiaS 


In  Gihnan  v.  Philadelphia  it  is  said : 


nniJo^P  I^3f >;***.  f««"Jatecomnieree  comprehends  the  control  for  that 
thJnnl;^  1!?  the  extent  necessary,  of  all  the  navigable  waters  of 

In  the  case  of  The  Daniel  Ball,  a  steamer  employed  on 


UNITED  STATES   V.  DEBS. 
Opinion  of  the  Court 


355 

^  .  ^i^^^i^u  or  the  Court 

^rand  river  between  Granr^  T?o    -a 

Hon  of  congress     Sh/^*  '^"^'  ^^  'ar  as  it  Cnt  Ih^^*!^  *'''''*  -^m- 

of  trade  fronf  one  't«  J?"""''"?  ^as  te^n  to  "  i"  "^  *•"•*  «>'»- 
between  tlie  states  !,!.»  '"  another,  coameroe  Tlf  ^  *"  artiolo 
and  independent  iJin*^"""*"***!.  The  tad  th^^  ""**  eoniniodity 
"■odity,  some  actiDfent',>!.."7  ^•"P'oy^  S   trains J^':^™'  "ITer^S 

aoiy  tlie  transportatinn  „»     J"'^  ^as  never  ht^n  hJ.  C?  ?'  '^  a  oon- 
""as  the  prom  nenf  M    "'  artioies  of  trade  frn^    doubted,  and  prob- 

tution  wLntoZJrZ  '"  "'«  """<»«  of  theframf  ^^"^^  *«  another 
•Ufroe  anions  thT^^^^  '^as  committed  thl     "aniers  of  the  eon«H 

;:estrietioTf/a  .tat?™'  '*^'^-  "  Xer  to'*:;!'-  *»  •''"Snlate  C-' 
by  the  same  words  a„7?'  *?^  *""&  deslr^*°  C^"*  embarrassing 
power  to  rewilatp'  ^^  "■  ^^^  same  elauseh^  .  •  'I""'*''  ""as  giren 
absurd  to  snppo3h»7T'^''^«  "'«»  foS  L^-'""^  ""as  conferred 
tbe  state  to  the  buverM"*,  """"''""ss'on  o^The  m-m"';  "  would^ 
was  not  ^.ntenfpla"^"',"^  ff?"  «'«  Place  of  n^"^.^*^"'  t^de  from 
trade  either  with  fm^Li"'^  without  that  there  m^SK""  *°  ""e  niarljet. 

on  the  «>nsti^'t  on  °s'Xr,n?2?  °^  a-"""  g  Se  st«eS°  eonsnmmat^ 
in  wh  ch  the  wmvi  \^^"on  1057),  Judee  <5fnl!I     states,     in  his  wort 

this  interchange  of  comm.^^?''  ^°^  "  nialce  au^J^^  ^"^'^  to  the 
case,  the  hrlngine  ^S^/Podities  Is  by  land  or  hi  '^^'"'"'ee  whether 
commerce."       "'"^  °^  '"e  goods  fr^i   the  LuL  '^ater.    m  eifhir 

In  Pensacola  Tel.  Co.  v.  W  T7  T.7  ^     , 
Waite,  speaking  for  the  conH.Srrl-^'-  ^^ief  Justice 
of  the  constitution,  says:  '    ""^ '^^'^'^g  the  provisions 

fc'SpS  S?^"^"  "^--r  ,*»  r  'r~'a"«es 
•«  -ese  -  ;^^Kr^c^,--HH^|Hi-S 


f  I 


356 


64  FEDEBAL  REPORTER,   750. 
Opinion  of  the  Court. 


and  under  all  cIreuin«tai,op«  w  »•.!?  ^^^"'^  }^^  ""^'ate'  »*  «"  times 
governuient  for  the  good  o?«,ptntf^^^,r^^^^  intrusted  to  the  general 
duty,  of  congress  to^s^  to  it  t  at^nWn..^*  ""'^  »"«  ''^ht,  but  the 
the  triinsml^lon  of  IntelMeenoe  arJ^^f  „  ?  '■"."""«  ""^  »*«♦«»  »°a 
hindered  by  state  legiXtion  "  *  obstructed  or  unnecessarily 

In  Counij,  of  MohUe  v.  Kimhall,  in  reference  to  the  power 
of  congress  over  the  subject,  it  is  said : 

shall   be  conducted  between   ^S  ^?        commerce  in  all  its  forms 

Jects  of  other  ^umrles  and  between  t^^citr**  "i*  ,''""=«°«  "■•  ^u"- 

.    -d  to  adopt  measures  to7ro^o^7s  *^;'ra"nriL*S^eTsrfet-"- 

[751]  In  Wa>a8h,  etc,  Ry.  Go.  y.  Illinois,  Justice  Miller 

in  the  course  of  an  exhaustive  discussion,  says :  ' 

tr:n|^rtr  5^  r  "S^,  o7'tr  cSCri"?:  fht  --r  °f  «>°"-«' 

in  modern  times  to  that  f re«iivm  n7L^  ^  Z^  ^^®  ^^^^^  ^^  essential 
the  state  might  ch<SS  tol^""^^'^^^^^^^ 

was  intended  to  secure  Thio  ri«„fi^  x\  *"^*  **^®  commerce  clause 
to  regulate  comme^'';mong%h^^^^^^^^^  ^^^  ^^^r 

as  this  court  has  said  before  was  fman^  ??  ^^^}  •^'"''^'^  ^''^^^^^s, 
subjects  which  prompt^  the  Vormatfnnni.?H  "^^'^M^Portant  of  the 
Pennsylvania.  97  U.  S.  566  57?  TiLZ  /  15^  ^institution  (CooA-  v. 
446)  ;    and  it  would  be  a  ve^'ffh  r*  \  ^^^V^^^^d,  12  Wheat.  419, 

hot  poorly  adapt'eSl^ec^ur;7he'rn«re7rtd^^^^^^^^  Z'''''  P^^^^^*^'^' 
the  states  which  was  deemed  essentifll  ?^*^^"'  «^  commerce  among 
the  framers  of  the  constiSn  ff  «I  LI  *  P'''''®  P^^^^^*^  ""^on  by 
tion  of  goods  and  Vhatte?^  tSviL^^K^^^^  ^^""^^  ""^  ^^^  transporta- 
whose  limits  a  S  of  this  tra^r^??n«^^  '^^''^^P'  *^^  ^^^^^  within 
regulations  conSng  the  Dri^^c^m.^n«fH '^  ^^  *^?°^  ^^"^^  ^«^P«se 

?^^.^.s'S:Le'^/'«-  '"-^^^^^  s=l-  IC 

cou,?^Jilid^  "^^  ""^  ^■"'^^'  ^  ^^  P"'*^  «'«^1«^'  *« 

menrof  tt^U^It^lta'S^T^*^'"''*""*  P^-^^'P'*  ""^t  the  govern- 
through  Ite  offldi?  agente    el^lTZ^^  P^^i*"'  '"^^  ««r^'^ 
the  powers  and  ftmrttons  ttlTbeione  toTt   '^h.'"  '^'"^■■'™°  «°" 
Tolves  the  power  to  command  obedi^fp?n  L  7^^  ne<»ssarily  In- 
power  to  beep  the  peace  to  that^m?  ^hi      ""'^'  """*  ''«°<*  ""e 
laws  and  to  exercise  Ite  tancaLT\t  \„  ^'^  P**"®'"  *»  e°'«'-<»  Its 
from  the  power  of  tte  stoteTo  ix^rt?  .?,",  P""*!  ?^^  °°t  1«~gate 
to  the  same  places.    The  one  doS^t  «M„1  fV*  ^^  '"""«  *""«  ""^ 
both  cannot  be  executed  at  tteZn^tlmATn  thtf''^'"'  !?<=«P'  wl>e« 
the  constitution  Itself  show  whteh^l,  V^tt.M    ^^^l'^'^'  ^^  "'""'s  <>' 
JJI  laws  Which  Shall  be  mde  In  pnreu^S*  LlS''^«>?«",t"«9n,and 
the  supreme  law  of  the  land  •    ?""5""J<*  tnereof    •    •    .    shall  be 
cute  its  powers,  or  It  Is  no  government     Tt  »    f ''^'•""e"*  must  exe- 
land  as  well  as  on  the  se??  TS^,  wenTsl^^L.'S^'"  »"  *« 


357 


POTTED  STATES   V.  DEBS. 

In  /r*        ,  ^^^'"^  °^  *•"«  Court 

speaking  by  Mr   hZ    ^f  "''^'^^  ^an.  Jiy  Cn    tu 
"Congfess  has  ^'''^"'  ^y^""  '^"^ 

Th        ^  i2  control  and  rego- 

"g^  cnat  as  emplovpf^  in  fi,  ^   see  no  reason    fnt. 

circuit  .urt  o"f  ?;p:^-^i^-2;  -d  in  on^^rns^-ni  ^a 
Fed   r7A?,  f '"»«'■<=«•    For  instance    ^.?'"  P'-^duction  of 

supreme  court"    sl'    ?'"  *=*"«  ^«  Pending  on  ann'  f    ^**'- 
V   A-    rr      ■  ^  also,  ZJwc^i.^  XT  ..  ,  ^Ppea]  m  the 

I;  f .  ^''^'^rd  Watch  &  'cuSZ  ^f'^'^^'^e  Manufn  Co 
decisions  are  riffht  r,  ^.^^'^''*  ^''•,  55  Fed.  851     t#1 
ion^    If  *  II      ^      '*  P"'"*  upon  wJ.,Vi>  t  "  *hese 

Jon;,  It  follows  that  the  art  in        T-  *''*  ^  «^Press  no  onin 

oTm^         -^ — — ____  ^uisse  ot  move- 


k. 


«fdo.. 


di  VBDEBAL  BBPOBTEB^  752. 
Opinion  of  tlie  Ck>iirt 


ment  among  the  stetes,  and  to  the  agencies  or  means  of 
transportation ;  and  if,  as  is  contended,  and  as  seems  to  have 
been  decided  in  V.  S.  v.  Patterson,  supra,  it  covers  only  con- 
tracts, combinations,  or  conspiracies  '^  intended  to  engross 
or  monopolize  the  market,"  it  is  an  act  of  very  narrow  scope. 
Why  should  it  not  be  construed  to  embrace  all  conspiracies 
which  shall  be  contrived  with  intent,  or  of  which  the  neces- 
sary or  probable  effect  shall  be,  to  restrain,  hinder,  inter- 
rupt, or  destroy  interstate  commerce? 

The  argument  to  the  contrajy,  drawn  from  the  sixth  sec- 
tion of  the  act,  is  not  controlling,  nor,  as  it  seems  to  me,  even 
strongly  persuasive.  That  section  provides  for  the  forfei- 
ture  of  "any  property  owned  under  any  contract  or  by  any 
combination,  or  pursuant  to  any  conspiracy  (and  being  the 
subject  thereof)  mentioned  in  this  act,  and  being  in  the  course 
of  transportation  from  one  state  to  another,  or  to  a  foreign 
country";  but  it  does  not  say  nor  unply  that  only  cases, 
whether  of  contract  or  combination  or  conspiracy,  in  which 
property  shall  be  found  subject  to  forfeiture,  shall  be  deemed 
to  come  within  the  scope  of  the  act.  The  force  of  the  section 
is  the  same,  I  think,  as  if  it  read :  "  If  in  any  case  there  shall 
be  found  any  property  owned,"  etc.,  "  it  shall  be  forfeited," 
etc. ;  and  so  read  it  neither  expresses  nor  implies  any  limita- 
tion of  the  provisions  of  other  sections. 

At  this  point  is  interposed  the  constitutional  objection 
which,  it  is  urged,  forbids  a  construction  that  goes  beyond 
trusts  and  monopolies  to  include  conspiracies  to  employ  force 
or  violence  in  restraint  of  trade  or  commerce.  The  argument 
was  employed  and  amplified  in  the  Patterson  Case,  56  Fed. 
605,  629-632.  It  was  contended  there  "  that  if  two  or  more 
persons  commit  an  act  of  murder,  robbery,  forgery,  shop- 
breaking, store-burning,  champerty,  or  maintenance,  which 
in  fact  has  a  natural,  though  unintended,  result  of  interfer- 
ence with  interstate  commerce,  they  are  liable  criminally  for 
a  conspiracy  to  interfere  with  interstate  commerce,  if  the  stat- 
ute broadly  covers  conspiracy  merely  to  interfere  with  it." 
This  proposition  is  built  on  the  assumption— which  I  believe 
is  supported  neither  by  authority  nor  reason— that  co-con- 
spirators are  responsible  as  conspirators  for  the  natural, 
though  unintended,  results  of  the  commission  or  attempt  by 


(I 


II 


' 


UNITED  STATES  V.  DEBS. 


359 


Opinion  of  the  Conrt. 
one  of  them  to  commit  the  particular  offense  [7531  oriei- 
nal  y  agreed  upon  or  intended.    It  is  a  fundamental  and  S- 
sen  lal  prmciple  of  law,  and  of  social  order,  that  all  engaged 
Ti/^  '="r:'^'»"  of  ^  particular  crime,  whether  as  counilors, 

cnrn',n    5       iJ""  **« ''■'^^^'  ^'•*  i"di^d«aUy  responsible 
cnminally.for  other  offenses  which  insult  naturaUy  from  the 

commission  or  attempt  to  commit  the  crime  intended;  but  as 
agreement  and  intent  are  of  the  essence  of  a  consp  racy  a 
conspiracy  to  commit  a  particular  offense  can  hardly  bJ 
deemed  io  include  another  conspiracy  to  commit  another  of- 
fense, unless  the  latter  was  the  necessary  result  of  the  com- 
mission or  attempt  to  commit  the  crime  intended,  or  to  such 
a  degree  the  probable  result  that  it  could  itself  be  chargJln 
the  indictment  to  have  been  intended.    But  if  it  were  possi- 

eiLnd'.L?"'^/*  ^^^^'''^  "•^''^""^"g  ^""^  refinement,  to 
expend  the  law  of  conspiracy  to  all  crimes  known  to  the  aw 

PutSm'LirT  ^T  T  '™P"-ted.  it  would,  as  Judge 
Putnam  held,  not  mvolve  the  constitutionality  of  this  art 
which  IS  limited  to  the  field  of  interstate  commerce,  wheiS 
power  of  congress  is  unrestricted  and  supreme. 

The  question  here,  however,  is  of  the  validity  of  the  fourth 
rather  than  of  the  first,  section  of  the  act    It  is  urged  tha^ 
the  power  given  by  that  section  « to  prevent  and  restrain 
vio  ations  "of  the  act  is  an  unwarranted  invasion  of  tTS, 
of  trial  by  jury  and  in  support  of  the  proposition  are  cited 

i         T/AJ-  ^'^''*'  ^^1  ™-  1^^'  23  N.  E.  428;  CarletZy 
Rugg,  149  Mass.  550-557,  22  N.  E.  55;  Littleto^  y  Fritz  m 

Iowa,  488  22  N.  W  ^1;  Eileniecker  v.  PlyZliK^'S, 

^\    ^^V^  ^'ZT  ^-  ^^""^^^  ^^  U-  S-  294;  Boyd  v. 
Bttclwook,  142  U.  S.  647-^82, 12  Sup.  Ct.  195. 

Little  need  be  added  to  what  has  already  been  said  upon 
^at  sub^t.  The  same  act  may  be  a  crime  and  a  contempH? 
court.  If  an  as^ult  or  murder  be  committed  in  the  presence 
of  a  court  the  offender  wiU  be  punishable  both  for  the  crim^ 

fn  t^«w       wi!^^"?*'  ^""^  ^  ^'^^  ''"y  «*«••  a«t  committed 
m  violation  both  of  a  crmiinal  statute  and  of  an  injmiction 

or  order  of  court.    Within  the  proper  subjects  of  iuitabte 

cognizance,  as  established  when  the  constitution  was  adopted, 


'I  ! 


360 


64  FEDERAL  REPORTER,   753. 


Opinion  of  the  Court 
it  was  competent  for  congress  to  vest  the  courts  with  the  juris 

dS"ofT"*'**  ^^  *^'  '^*''*°'  »°**  **»  ^P«*  "P°°  them  the 
duty^of  Its  exercise  m  proper  cases.    Just  as,  in  construing 

the  first  section  of  the  act,  its  general  words  are  limited  by 
force  of  the  title  to  unlawful  restraint,  and  the  words  "  in 
IS^^I^^  |f«d«>"  in  their  comiection  with  the  words  "con- 
tract and  combination,"  are  to  be  given  their  common- 
law  significance,  so  the  jurisdiction  in  equity,  though  <nven 
in  brmd  and  general  terms,  will  be  deemed  to  be  limited  so 
as  not  to  ex  end  to  a  case  which  is  not  of  equitable  cognizance. 

f,l     '  V^t.T'^  *'*^''"  "*  *^«  ^'^^  ""'y  legitimately  t 
used  m  aid  of  the  construction  of  the  first  section,  the  fourth 

s^ion  warrants,  if  it  does  not  require,  that  the  fir^t  section  be 

r^ted  to  cases  ,n  which,  in  accordance  with  established 

wo«Jd  not  be  ^ntially  uncertain  or  of  difficult  application, 

ilfn/  kT    '^?  t*  °'**'^^  ^  *J^«  upholding  of  the 

statute,  might  weU  be  adopted.  r  s  "» 

That  this  ca^  is  one  of  equitable  character  is  clear,  and, 
LJ  ™"^"'f»"*^'  ^^  °«>t  been  questioned  by  counsel;  their 
contention  being  that  neither  by  this  statute,  nor  upoL  gen- 
eral principles,  IS  the  case  within  the  jurisdiction  of  a 

L  ZJ  Z.^""^"^^  inconsistent  with  the  jurisdiction  here 
«ercis^   jae  case  of  U.  S.  v.   Trans-Musonri  FreioZ 

reWn  Z""-  T'  ".•'  ^  ^-  ^-  ^-  1^'  5«  Fed.  58,Ihad 
f„  ^  k!!  "  *'"".*"^"*  ^*^'^"  '""•^"'J^'  ^hi«h  was  alleged 
to  have  b^n  made  in  violation  of  the  act,  but  was  held  to 

Amalgamated  Oonnca  of  New  OrUam,  54  Fed.  994,  the 
ate  Judge  Billings,  under  this  statute,  granted  an  in  unc- 
tion upon  facts  which  made  the  question  of  jurisdiction 

™LT'  T  •'  ^"*'  ""'^  ^°  "^^  ^  t>^»t  question  his 
ruling  and  opinion  were  distinctly  approved  by  the  cireuit 

F^f  «n^  "^-^^  '  '*"■  '^^/'^  «^'=''^t  <«  C.  C.  A.  258,  67 
*ed.  85).    The  court  said:  ' 

granting  of  said  iXnction  Th^r  .^  ?  """*  """•*  "^''"'st  the 
and  di8|o8edTinbr*e^aWe1nIni^n7;fi'rT."'*^*  <"8«°««ed, 
ronrt  who  passed  the  d^^7ee'''^„VJSirh?  ?o  ^^^v1?t^'  ^^L^'^! 


I 


J 


t 


UNITED  STATES   V,  DEBS. 
Opinion  of  the  Court. 


861 


See,  also   the  opinioa  of  Judge  Speer  in  Waierhouse  v. 
Corner,  55  Fed.  149. 

In  the^o^e  of  PhMan,  62  Fed.  803,  who  was  charged 
with  contempt  of  the  United  States  circuit  court  at  Cin- 
cinnati, growing  out  of  the  strike  of  last  summer,  and  in- 
volving facts  essentially  identical  with  the  facts  of  this 
case  Judge  Taft  declared  the  combination  to  be  « in  the 
teeth  of  the  act  of  July  2,  1890,"  and  after  quoting  from  the 
act  and  referring  to  the  rulings  of  other  judges  in  accord 
With  his  own  view,  said : 

Lurton  and  I  cannot  ^n^  i^h'  f^l'  ""^^  .coMWeration,  Judge 
Indffff     Tho  A^tJti,^  ^""    "■*   reasoning   of  that   leamml 

shown  conclusively  in  thrca°T„d*r«  ^r""*""*?  ?f  *"'"  """"t-^  Is 
their  combination  was  for  «n^;„^?  i  .''°"^°  "'  ""  °>«°-  Therefore, 
within  the  statafe  cit^"         "  '^'^'"'  P"'^"«'  '"'<'  '«  «  conspiracy! 

PWHn!''/?''*  "''"•.***  ^-  ^-  ^-  ^^''^*'  ^  ^^-  27,  Judge 
I'hilips  declares  similar  views. 

The  facts  of  this  case  suggest  iUustrations  of  the  impro- 
priety as  well  as  inconsistency  of  putting  upon  the  statute 
«^e  restrictive  construction  proposed.    If,  for  example,  the 

sTol  enli^th  ?T  "'"P""^  *"'"'  ^'^  '''^'  -^^  i-teVest, 
SoS  J  f  •!  ^'^'"??  ""^  switehmen  or  other  em- 
bS    L  "^^  "'**'"'■  ^^Ji^idually  or  in  associated 

bod  es,  ,n  a  conspiracy  to  prevent  or  restrain  the  use  of 
Pullman  sleepers,  by  refusing  to  move  them,  by  secretJv 

aXT  Tfssi  "tl ''''"  ^-'"^^^^  '"^*"^'  ^^-^  monopolLTcS 
^r.K  ,vf  U^  conspiracy  would  be  so  evident  that,  even 
on  the  theory  that  the  statute  is  aimed  at  contracts  orCm" 
binations  intended  to  engross  or  monopolize  the  markeHt 

Tsuch  a  '^"  V.'if  *  *i^  ^^^'^^  ""«'^*  *« »-  Puni^ablf  Bu 
m  such  a  case  if  the  officers  or  agents  of  the  car  companies 

who  might  or  might  not  be  capitalists,  would  be  individual 
Z^the  b  'r  ^"^''"'^g  *«  statute,  upon  what  princf^  " 
could  the  brakemanorswitehmanbeexempt?    Canworking- 
«nen,  or,  if  you  will,  poor  men,  acting  by  themselves,  upon 


CI 


362 


64  FEDERAL  REPOBTBB,  751, 


Tf' 


Opinion  of  tlie  CJourt 
aeir  own  motion  and  for  their  own  purposes,  whether  avowed 
or  secret  do  things  forbidden  by  the  statute  without  criminal 
responsibility  and  yet  be  criminaUy  responsible  for  the 
same  t^gs  done  at  the  instance  and  to  promote  the  pur- 
l^ot  others?  Or  wiU  it  be  said  that  under  this  statute 
one  who  ,s  not  a  «»pitalist  may,  without  criminality,  assist 
capitabste  in  the  doing  of  things  which  on  their  part  ar« 

rrf      '.*?!.*  ^-  "'J  *'•"•'  "  "  «'P"»"^t  -d  -e  wh" 
IS  not  a  capitahst  join  in  doing  things  forbidden  by  this 

statute,  neither  can  be  punished,  because  one  alone  cannot 
be  guilty  of  conspiracy.    The  persistent  effort  of  the  de- 
«Mdants  as  the  proof  shows,  was  to  force  the  railroad  com- 
panies-the  largest  capitalists  of  the  country_to  co-operate, 
or  at  least  to  acquiesce,  in  a  scheme  to  stop  the  use  of  PuU- 
man  sleepers;  and  for  a  time  they  had  the  agreement  of  a 
manager  and  other  officers  of  one  road  to  quit  the  use  of 
the  obnoxious  cars,  and  perhaps  a  qualified  submission  of 
the  officers  of  another  road  or  two  to  the  same  dictation: 
lioes  the  guilt  or  innocence  of  the  defendants  of  the  charge 
of  conspiracy,  under  this  statute,  depend  on   the  proof 
there  may  be  of  their  success  in  drawing  to  the  support 
of  their  design  those  who  may  be  called  capitalists,  or  does 
It  depend  upon  the  character  of  the  design  itself,  and  upon 
what  has  been  done  towards  its  accomplishment  by  them- 
selves and  by  those  in  voluntary  co-operation  with  them, 
from  whatever  employment  or  walk  in  life? 

I  have  not  failed,  I  think,  to  appreciate  the  just  force  of 
the  argument  to  the  contrary  of  my  opinion,-it  has  some- 
fames  entangled  me  in  doubt,-but  my  conclusion  is  clear 
that,  under  the  act  of  1890,  the  court  had  jurisdiction  of  the 
case  presented  in  the  application,  and  that  the  injunction 
Ka  '"^  ""*  ^^^"""^  authority  of  law,  nor  for  any  reason 

This  brings  me  to  the  question  of  fact:  Did  the  defendants 
vidate  the  injunction?  The  evidence  upon  the  question  is 
voluminous,  but  need  not  be  reviewed  in  detail.  The  iniunc- 
bon  ifflued  July  2d,  and  on  the  8d  and  4th  was  served  upon 
the  defendants  Debs,  Howard,  Rogers,  and  Keliher.  It  was 
not  served  upon  the  other  defendants,  and  in  one  of  the 
taief  s  It  IS  contended  that  only  parties  to  a  biU  can  be  charged 


(f 


0HITED  STATES  V.  DEBS. 
Opinion  of  the  Court 


363 


ynth  violating  an  injunction ;  that  while  strangers  to  a  suit  in 
chancery  may  be  liable  for  wiUful  interference,  their  cases 
stand  upon  the  same  footing  as  ordinary  criminal  contempts, 
and  their  answers  are  conclusive.  Authorities  cited :  WaL^ 
y.  Fuller  9  How.  Pr.  425;  Eip  v.  Deniston,  4  Johns.  24; 
Boyd  V.  State,  19  Neb.  128,  26  N.  W.  925;  Lord  EUorCs 

pTT'  7r  ^^'^-'^^'^  ^^  ^-  ^«^«'^,  5  Kan.  90,  114: 
V  !t7-  f^lf?*'  ^  ^^  ^^-■'  •^^«'^«  ^-  Bowman,  27  N.  j! 
i!-q.  171;  [756]  Coddington  v.  Wehh,  4  Sandf.  639.  In 
another  brief  the  weight  of  authority  is  conceded  to  be  that 
one  who  has  actual  notice  of  an  injunction  is  bound  by  it 

eS^  w'i^''°*^'^P*'/^'  ^'^^'"^  ^-  ^"^"^0^^  34  How.  Pr. 
^02     Waffle  v.  VanderJmyder,,  8  Paige  45.    I  know  of  no 

authority  and  perceive  no  reason  for  treating  the  answer  of 

l^^Tl  Xu"  ^"'  "'  '='"*''^"^'^'''  ^^^'  th«  «°«wer  of  a 
party  to  the  bill  is  not  conclusive. 

±1^  t^t™ony  of  newspaper  reporters  shows  that  on  July 
4th  Debs  said  to  one  of  them :  ' 

Again,  on  the  7th,  that: 

«-nwa.^n.on  ^X^^^X^.^^^ llX^^-<^^-^ 
To  another,  on  July  2d,  he  had  said,  in  substance- 

Jnnrtlon  ^^r^rdonr^ttof  for'*  ?^^"^  J-'y-  »'  »'  "-y  ta. 
American  Railway  oXn  wn.  ?-f  Z^  enjoined  against,  and  that  tho 
they  had  commln^"        ^""^^  continue  the  fight  on  the  same  lines 

July  3d  the  defendant  Bums,  who,  it  should  be  observed. 
m  responding  jomtly  with  his  codefendants  Hogan  and 
others  to  interrogatories,  had  asserted  that  they  were  not 
informed  of  the  injunction  until  near  the  end  of  the^riJ^ 

rutTLfd?  ™  °*  *'^  "^"*'  ^^**  *«y  ^•^-I'j  ^<^ 


4t 


way'^Uki;^?Srl|L'S''''th«?LvVJ5"  '^T'^^'^^'  «>«  the  Rail- 
had  «,t  interfered  ^^'t^t^i^?.^.^' ^^^^T^Z^^iT, 


II 


364 


«4  FEDEBAL  KEPOBTER,   756. 
Opinion  of  the  Court 


II 


tlil4^nS^^ry''r'?h?"S^^  'i*^«t  «>«y  had  not  done  any- 

peaceably."  ^®  injunction;  that  they  had  a  right  to  strike 

aid  or  not  is  immaterial  horo     Tk  •  .  ^vneiner  they 

tinn   oT.ri  *k  '"""^^^"a^  'lere.    Their  conduct  only  is  in  aum 

««.  but  finlHsThTL    P'*^«ft  *e  use  of  PulLn 
woSd  be  thwart! d  bv  h7^    J  ™'",«'>''t«'y.  that  that  aim 

the  day  after  Si  tKcS^atSL^d  Z'"^  "  """^  ''*'' 
strike;  and  from  that  til„  f„  5.      T    '  ^  '^"*  "'^e's  to 

ability',  they  ZVuZ^Za^^tk  ^  Vf"  ^  1  ^''^'^ 
sistent  consistency  of  pur^  f  S^Sl  f"^^  "^'^^  ^'■ 
of  action.    Whatthev  d^d^'fl!^  7    .""*'''*"Sed  ^^^hods 

each  su.J^X^t^:^tt^^:i^^l^^^^^^ 
nat«  very  closely  between  what  was  do^rSf^  f  T'" 
after  service  of  the  injunction  '^*'''"  """^  ^'^«» 

qufs^rfStthfltdanT  h^""'^  ^"•""'  ^*  '^  '-•-^•J 
strike,  ^idin,*:  tty  toT the"  mC^^^  oT^  "^  ^'^^ 
t^vely  enpged.  Is  it  [757]  true,  aXfairt  thrthTv" 
dad  nothing,  and  advised  or  instioatp^  Lf^  '  ,  -^ 
and  nothing  contrary  to  the  SSfonrr'"^'-  ""''''^^'' 
'iew  for  the  moment  the  ruletW  ■   ^"^""^  <»"*  «* 

sible  for  the  deeSs  of  each  JSer  1^^""!^"  ^  ^"P«°- 
the  common  design,  Ts  it  true  that  th    ,,'^  *f'*'™"<'^  "' 

exercise  of  their  aTtoowedS  ladLtinHr*^'"'''  '"  *•»« 
advise  a  peaceable  ^rike  oft  thd  aw  1  '^  "^  ^'"^ 
from  railroad  serviVp  n,.  ^i^  J""«rawal  of  their  followers 

violent  andtS;2ntX~J  rr^"*'^^  ^'''='' 
prevent  the  equipment  and  mov^g  oFtrlin^?  ^^TT  "" 
of  the  information  that  they  kne  J  « that^-!l  ^"""^ 

follows  all  strikes  of  a  simikrTara^ter  »  £?  '"''"?  u^ 
denying  that  "they  knew  that  XC'anSim^ 


UNITED  STATES  V.  DEBS. 
Opinion  of  the  Court. 


365 


duct  necessarily  follows  from  c!triV«=  „*  n,    i  •    , 

When,  at  an  early  sta^e  ofTh!  1    ^  ^'""^  mentioned." 

sponsive  to  the  inform«H^  T  ^  ^  ^''^^'^  ^''^  !>«*  re- 
was  emp,oyed,\ifrr^':,t^;,L'd  TcV^ITf -^" 
been  inadvertent,  and  leave  was  tek  ^  ^  a^nlb"    L^l 

the  infor;:tt\nre?htd  ::t";  tr™r  '•-^  p^^^^  *>' 

pr^ssly  admitted  or  denied  "On  V  ^''T'"  ''"'^«'-  «^- 
other  defendants  to  trsecond  ,„&•"''  "^T"  ""'^  *^« 
Plicitly,  denying  "  that  thTor  e  £  of'Sm'r  ^  """  ^"- 
have  known  that  anv  ^noh  olt  .^"^  "^^^  «r  could 

or  prboable  or  libTy\:t  IJ^T  ^.f^f  '*^'^^'^' 
strikes  or  cessation  of  laL  "  Siwh'  ■  ^  ^'""^  '"*''» 
be  equivocal  or  evasive  it^Lm    u     ^'^  '^  °"*  perceived  to 

ligent  men  fam  SHitt  htS  c^  ""T^"''  '^"'^  ^^^l" 
P-sumed  to  have  been,lw  hont  ^  affi^^Tt  "s"  T'  ^ 
railroad  employes  have  not  been  inWnTon,;  ^^ 

th,s  countiy,  and  the  testimony  of  th7o„p  w.V  ^^^^  ^^^^  "» 
on  the  subject,  and  whose  expe^ence  TdTn  T  "''°  '^''^' 
him  apparently  auite  mm^.f„  7  V  .     intelligence  made 

I  supp?.  to  be^omLrK:  i"  Thft'trt  "'S  ^•'^^ 

tended  generally  if  nnf  ;„  ""^'^''f®'— ^bat  they  have  been  at- 
intimidftion  oTfor^  Tj'Jf  '"'*''*':'  ^""^  ^'"^  *«™  «* 

ception.    Under  reondSorrC    ""'  ^^"  "*  "'^  - 
were  many  idle  men  seeWnr      ,  ^''^^^r,  when  there 

that  a  strfke  whXairi  a^t  T'^'^r''  ''  "«^  ^""P^^ible 

upon  the  railroads  Se  11?^^  T'*""  ""'  •'"^^'^^ 

violence;  and  it  is  not  to ^^1^  ta^tl'dTH^^"* 
tered  upon  the  execntinn  ^^  fu  •       ,  ^  defendants  en- 

ing  the  fact,  aL  ShouThav^„:'L?'"'  !?^"*  ^PP^^^*" 
it.    The  inference  therefore  i^^«f'"***  ^"'^  *«  ^^^  ''^^ 
evidence  to  the  point  £^^1        '  T!'  '^'^^  *^*""  direct 
this  strike  shouirdtffe^iom  ^or'^'*^^  '"**  '"*^'^'*«*^  *''»* 
design  and  boldness  ;reScutioi?;l^".'"*^'*""*«  «* 
accessories  of  intimidation  ?^'  ^       *^**  *^  accustomed 
found  essential  toTucSw„^,u'''lT'  ^  ^""^  ''  '«^^  »« 
much  the  striking  woSerlf""*  ^  T'"'^'    ^'^^  *!»«*      " 
--interest,  ^ithL  "^X^^  ^f  su^^^anl 


? 


I  I 


il 


366 


64  FEDEBAL  REPOBTEB,   757. 


Opinion  of  tlie  Court. 

even  in  spite  of  admonitions  to  the  contrary,  may  ordinarily 
be  counted  on.    Such   admonitions  against   violence  were 
[758]  sent  out  occasionally  by  the  defendants,  but  it  does  not 
appear  that  they  were  ever  heeded;  and  I  am  not  able  to 
believe  on  the  evidence  that,  in  the  fullest  sense,  it  was  ex- 
pected or  intended  that  they  should  be.    I  am  able  and  quite 
ready  to  believe  that  the  defendants  not  only  did  not  favor, 
but  deprecated,  extreme  violence,  which  might  lead  to  the 
destruction  of  property  or  of  human  life;    but  they  were 
not  unwilling  that  coupling  pins  should  be  drawn;  that 
Pullman  cars  should  be  "  cut  out "  and  side  tracked ;  that 
switches  should  be  turned  and  trains  derailed;    that  cars 
should  be  overturned  and  ^tracks  obstructed;    that  false  or 
contradictory  signals  should  be  given  to  moving  trains ;  that 
the  strikers  and  lawless  rioters  should  wear  a  common  badge, 
and  should  assemble  together  upon  the  tracks  and  yards  of 
the  companies  to  obstruct  business;  that  engineers  and  fire- 
men should  be  pulled  from  their  cabs,  if  by  persuasion  or 
threats  they  could  not  be  induced  to  leave  them;    that  the 
unemployed  should  be  deterred  by  threats  or  abuse  from 
taking  the  places  of  strikers;    and  that  engines  should  be 
"plugged,"  or  otherwise  "killed."    These  things,  and  the 
like  of  them,  were  done  daily  in  Chicago  and  elsewhere  by 
members,  and  sometimes  by  officers,  of  the  local  unions,  with- 
out protest  or  condemnation,  and  some  of  them  at  the  instiga- 
tion of  the  defendants,  who,  it  can  hardly  be  doubted,  were 
well  aware  of  what  was  going  on.    When,  therefore,  in  his 
address  of  June  29th,  "  To  the  Railway  Employes  of  Amer- 
ica," Debs  said:   "I  appeal  to  the  strikers  everywhere  to 
refrain  from  any  act  of  violence.    Let  there  be  no  interfer- 
ence with  the  affairs  of  the  companies  involved,  and,  above 
all,  let  there  be  no  act  of  depredation.    A  man  who  will 
destroy  property  or  violate  law  is  an  enemy,  and  not  a  friend, 
to  the  cause  of  labor.    The  great  public  is  with  us,"  etc,— 
the  chief  aim,  I  am  convinced,  was  to  secure  the  good  will 
of  the  public.    To  that  end  the  warnings  against  acts  of 
depredation  or  visible  destruction  of  property,  it  may  well 
be  believed,  were  sincere;  but  their  followers  did  not  under- 
stand, and  the  court  cannot  believe,  that  it  was  intended  to 


. 


i 


UNITED  STATES   V,  DEBS. 
Opinion  of  the  Court 


367 


assumed  to  be  nof  iinia«r#  1      t_  reason,  it  seems,  were 

powerful  corpon^tions  »  bT ITwhat^t  ""^  1  ^^  *"•* 
duty  they  were  governed  miihfKu..""^'  ***  ^"^  «°<i 
haps,  if  in  that  nf  TJ?^      ^      ^  ^"^'"  understood,  per- 

H=>,  "in  mat  part  of  the  answer  which  allpm.=  «  tk  / 
the  service  of  the  iniiir,r.f ;^„  *i,    j    ""J™  alleges     that  upon 
tent  counsel  Wd°fr  ,     *^"*«"d«°^  consulted  compe- 

statement  of  the  fects  in  th      '  '"^'  "P''"  ^  *""  ^^^  ^^^ 
what  they  might  SfiH  *''%Pf«™'^.  ^ey  were  advised 

i«g  the  oJderff  th?court  andl  7'""^'°  "^*'^°"*  ^'^'^t- 
in  all  things  proS^ '"^  ?"*  ''""^t^^^  t™«  ^^7  have 

had  discloSd  rthev  oUr^  r'  ""^'^  *'^"*  «''^''=«'"  they 
mentof  thefacSthevmSl  ^''^^<^°»«'  J^^t  what  state- 
-ceived.  Without  sLrdLluT";."'  "'.l'  ^^^"^  ^^^^^ 
the  proof,  the  alleged  Lvi'S  nSer  Tfi°  '^'  '"''"^''  "'• 
a  wrong  or  error  -nnnittrd  in "lli^^^^^^^^^^^^ 
raises  rather,  a  presumption"  that  rfSll  f^o/t?'  ^''* 
would  not  be  advanta^eonc     v      \  ''^**I  statement 

the  testimony  of  T'£Z-oniT,^i\7T  "?^f ''"^  °^ 
commission  appointed  bv  th«  P  -^  .  "^'*  '^*<"*  the 
other  things,  he  said :  ^'^'dent,  wherein,  among 

«-e  were  arrested,  and  taken  Lmt^l^  'he  employes  found  Tu^ 

strike.  It  was  sfmply  the  United  «f2l  "'"'t'"erhoods  that  ended  the 
Our  men  were  In  a  p8sltion  thnt  nl  *®^  "I""^  ""at  ended  the^ikL 
any  circumstances,  if  we  had^n  If  '^^."'^  "»"«  ^^  sliaben  u^det 
anions  them.  On<^  wlwere  t^en'l""'".^  *»  '*"'al°  upon  tt;e  a^^ 
strained  from  sending  teSm^^r  tT  ""*  ^''^  <"  action,  and  rS 
tlons,  then  the  minions  of  ?S^SfJ!™L?8  "'"d*'^  <"•  answer  neauM 
•  •  •  Our  headquartere  were  fS:?r""^f  *''°"'^  ^  Put  tS  X^ 
w?r^'a"n1Z^"''\"°t"^«-^''Ly'S'.S;ef  ''S™"^  ""^  Xa^ 

V  •  •  not'byXVrr ari-  ^^^^  ^^'^eTasTr^k'Tul? 
and  solely  by  the  action  of  ?he  nnft,^^B?^  "*■""■  ^^^^'  but  simply 
^m^d^schar^ln,  our  duUe^as^S^rf '^^^  ^PrLi^ta^^ "£1      ' 


368 


64  FEDERAL  REFOKTER,   76». 
Opinion  of  tlie  Court 


If 


In  answer  to  an  inquiry  what,  if  anything,  he  did  to  ascer- 
tain whether  his  men  were  concerned  in  violence,  he  said : 

"We  did  that  [by]  our  committee,  which  called  at  headquarters 
every  evening  and  advised  us.  They  were  instructed  to  guard  the 
company's  property,  if  they  were  near  it  at  all,  and  to  apprehend  any- 
one that  might  be  caught  destroying  proi)erty.  This  instruction  was 
given  again  and  again  to  the  central  committee  that  went  out  from 
headquarters.  We  said  we  knew  that  if  there  was  trouble,  if  there 
was  disorder  and  riot,  we  would  lose,  because  we  knew  enough  by  ex- 
perience in  the  past  that  we  had  everything  to  lose  by  riot,  and  nothing 
to  gain.  We  said  that  man  who  incites  riot  or  disorder  is  our  enemy, 
and  we  liave  got  to  be  the  first  to  apprehend  and  bring  him  to  justice. 
So  we  called  upon  our  men,  and  advised  them,  urged  them,  to  do 
everytliing  in  their  iiower  to  maintain  order,  because  we  felt  and  knew 
that  if  there  was  perfect  order  there  was  no  pretext  upon  which  they 
could  call  out  the  soldiers,  or  appeal  for  the  intervention  of  the  court, 
and  we  would  win  without  a  question  of  a  doubt." 

One  or  two  reflections  upon  these  statements  will  be 
enough:  First,  with  all  that  is  said  about  guarding  prop- 
erty, keeping  the  peace,  and  being  the  first  to  arrest  offend- 
ers, not  one  was  arrested,  and  no  effort  was  made  by  strikers 
or  members  of  the  Kailway  Union  to  preserve  the  peace  or 
to  protect  property.  On  the  contrary,  many  of  them  were 
leaders  in  scenes  of  violence  and  disorder.  Second,  if  this 
strike,  like  others,  was  understood  to  be  war,  not  necessarily 
of  blood  and  bullets,  but  a  conflict  between  contending  inter- 
ests or  classes  of  interests,  in  which  strategy  had  to  be  em- 
ployed to  keep  the  men  in  line,  it  was  more  than  a  peaceable 
strike,  or  mere  cessation  from  work.  Had  it  been  only  that, 
the  injunction,  instead  of  being  a  hindrance,  would  have 
been  in  their  hands  the  very  weapon  they  needed  to  enable 
them  to  suppress  the  violence  and  disorder  in  which  alone, 
they  say,  they  saw  possible  danger  to  the  success  of  their 
cause. 

"When  the  trouble  began,"  said  Mr.  Debs  again,  in  his 
testimony  before  the  commission,  "  there  were  thousands  of 
telegrams  and  communi-  [760]  cations  pouring  in,  and  it 
was  impossible  for  me  to  see  them  all  personally,  because  I 
was  out  among  the  men,  meeting  with  committers,  meeting 
at  different  cities,  and  addressing  meetings,  and  all  that  kind 
of  work;  so  it  was  really  impossible  for  all  those  telegrams 
that  were  coming  in  to  come  under  my  personal  notice.  So 
then  the  work  was  apportioned  by  the  board  to  its  members. 
This  young  man  named  Benedict  (who  had  been  employed 


369 


UNITED  STATES  V.  DEBS. 
Opinion  of  the  Comt 
»s  an  assistant  secretary)  answ^npH    hr,  ■    .       ■ 
board,  some  telegrams  and  in  17  '  ^  ""^t^ct'^n  of  the 
was  all  absent,  he  answe^H T.        '  "*'"''  ^''^^  *»»«  board 
when  he  had  anLe^rXSTa^H  T^^^^  J'''''^''^ 
would  answer  without  instructions"    Th.        '''""'=^''  '^'^ 
these  statements  with  the  averments  of  th  '°*="'>^'^*«''«y  «' 
defendants  to  the  original  ;„*         !•       ^^^  *"«'^«''  <»*  the 
bility  for  the  telegi^S  s^lt  .nd         "'.^'"^'"^  ••^^P""^*- 
need  comment,  buf they  a^au J^l  r"''*'  '^  '"^  «^'*^^"t  *» 
out  the  discrepancy  as  to  shnw  .t^  ""*  '"  ""'^*»  *«  ^^^ 

intimate  connection  with  tt  Ind!  TVl  "'  ^'-  ^'>«'  ^^ 
sequently  his  direct  vZoZh^^  *  °*  *''"  ^*"^«'  «nd  con- 
his  admission,  he  wa  3Tmn  ^,  "^  ^''"*  '^''^  '^"n^-  Bj 
tees,  and  addressi^H^etrr^  S^"^"' "^^'^"^ -»-t^ 

^stimony  of  two  of  I"e  S„esL  th^t^'^.K'"  ""'  *^« 
June  29th  he  and  Howard  Ih  vTu  **"  ****  "'gbt  of 

of  the  local  union  at  Z.  lT  Y'^^'J^^^^^^^  a  meeting 
the  line  of  the  Ck  IsTand  l  P^^/  '^^"""^  ""^  ^'^^^^  ol 
Howard  each  adS^d  the^n"'"''"*"'^'  ^^at  he 'and 
strike;  that,  uJ^^^^X^Z'  "^^"V'^^-  ^o  join  the 
the  men  "ought  to  sZd  M  T'         *""  ^^^  "'  ^hem  said 

that  if  othe/eam:^:tke  E';Lr4r    'V  "^'^'^ 
them  walk  the  plank  "    Jn  iZ  .  ^^  ^'"S^*  *<>  make 

"They  told  thelrkmen  ?he?e%tef  1  ''''  ^''^^^ 
the  orders  of  the  general  m«n!  ""^^  ^^^  to  resist 

of  the  men  in  dSl'rdXT""! '"""  ^'^^  ^^ 
njonsly  organizing  and  standitby  ,Tt  T  '^  -""'^- 
Debs  told  them  not  to  moles    Lm"!^!  1  l^  '''^'^^'■ 

witness  puts  it,  "not  to  YeTth.  P  n  ''"''  '*"*'"  ««  '^e 
ha^ards."  How'ard  "  al  S  t  men^t  T/"''  ^*  "^^ 
lence,  or  anything  like  that  h..t  ?!  .       *"  ^^  ""^  ^«- 

to  man,  and  they"  wo^ld  win  tt*  ^0^1' « "1 S'^  •*"^'  -" 
not  to  commit  any  violen^P   \.S    f  ^^^^-         Howard  said 

ears  to  run,  at  no^ha^"^'  «"4tidXT  ''T.  ^""'"^'^ 
go  out  and  stay  out,  and  heln  fh»^  u  ^"^  *''''*  ^^^^'^ 

out  of  trouble,  will  have  to  w„ll  .^  ^""^  '^'"-^  "^  P«<>Ple 
These  speeche    did  not  mean    i.       ^''"^  '"  '^'  ^^^■" 
the  men  to  whom  th:;^"  e'iddrlldl  ml  ""'r'"''  "^  ' 
distance  should  be  made  by  them  to  S  I.  '  .*"''  "°  ••"■ 

Msoa-voL  1-06  ^-I^  ^^  """^'"^  »f  Pullman 


370 


I 


64   FEDEBAL  REPORTEB,    760. 


Opiuion  of  the  Court 

that  night  to  join  the  strL       /        f"""^-    ^hey  voted 

!»;'  did  not  believe  could  eSt^-  ^i'tj  ""T"^  ^''^''"^ 
P*lly  ex-em  ploves  of  th»  il!^,  x  .  .  ^^^  °*  ""«"'  Pnnci- 
thmtened  Ife^ce  and  tS^'^  '1*"*^  ™«^'  blockaded  traffic, 
dition,  only  wo^'  jl^t  ."J^  *^;  ^f  "    "  The  same  con-' 

forts  of  the  United  St^iLLhe.K"'""'^"'^  '^"^  '^- 
and  otherwise,  to  auJ^T  H'  I  "^""^"'^  ^^^  injunction 

1761 J  complTsked  Su  tie  5th  o7tT'  'f'''''^  ^^  - 
diers  arrived.  With  tharl!.  '^"'^'  '"''""  *«<1«™J  ^ol- 
to  be  moved  and  tL  tf  "'"t''"'*'  *'"*""^'^  "•""«  began 
sumed  on  ^e  ?th  o^Stl  hT^"*'""  "^  ^'^^  ™«"«  ^««  re- 
trace on  that  Z  If U  ioTS  "  Tht"tH'^  ^t,*"^  *^»* 
followed,  and  in  large  measu^  T  !J'   J  .^  ''""^  '^^'"^".^ 

to  ^y,  were  the  natu^lTJp^ba  ttL^f  "^"^""' •'' 
mde  and  counsel  given  to  the  men  by  Ss  aJd  R  "'^^'^ 
the  meeting  on  the  night  of  the  29th  «J  p.  ""'', '^"^'"•d  «* 
;Iar  s^gestions,  calculated  to  incS  to  StTof  "t  ^™- 
intimidation,  were  contained  in  manv  ottTj  '^  ""' 

were  sent  out  over  the  name  of^M         .  tflegrams  which 

withstanding  the  avermen  J  of  thl'  ""**  '"''  ^'•'*>'>'  "o^- 

tr.^,  it  is  fo  lon^:  pSCr aT  ofTrS ^r^- 
evade  some  measure  of  responsibilitt  t  .  i«'«°d«nts  to 
them,  commencing  June^S :  ^"       *"""^  ^^'^  "  '«^  «* 

P.iita.^'r,l''a«4^°^''-'a^'^ap,p«t  the  Pu.toan  Con,pa„y.  and  no 
ln«  to  handle  PnUman  mm  77.,^  "  ■™^°  «'«  dlscharg^  for  rew 
service  of  the  compMy."'*'^'  *™'^  ^'"P'^y*  should  at  olS  Irare  ^ 

June  28th; 

at  all  on  yonr  system  "    •• -pi-  "y"'  "■«»  will  handle  anv  tr»T^ 

cott  Do  not  m  a^-  can,  i^oSfZfP*  "?**  I^»""e.  trenfor^*^'" 
move  a  train  of  anv  W^  S^ """'  *™'°8-  ^nt  no  loyal  man  wm 
tojin  came  souti  S  "o™in'^'^„f^^  »»<»•«<>»«•""  p"^nll^ 
^m  ,L.s  Vegas.)     ..  Xf  yo„  J.^ ^^'lii^  I'o't^^'SWiS'an^^l 

June  29th : 
PnH«.  with  SIC.  passe^^r  ^^l/SS^^pS^WS  s^C.^W.^^ 


UNITED  STATES  t..  DEBS. 
Opinion  of  the  Court. 


371 


vri/iuiou  Of  t[jg  Court 

"^^^o^^^^'F'^o'^SllZ'Zre^'  oPP-'on.  and  we 

'ere  with  n.ai,  tralL'Ta'-^^?'^  "'«-  'n"tL:.-^''-:<S^».«n„r 
July  1st: 

They  sh^w  a  iJ^ttlr^^^^f  .**^^^  «»  Possible  "    '•  r. 
Grand  J«ncLn  ofhous^n^^^^^^     *^^°  ^'»     *    ^  ^'  Td^  ''T^  «™- 
.July  2d :  "  '"''^^'^^^  ^^  autoerat^.^''^^^  ^^^ 


l7.1ir?L«  ..^"Lhaul  your  car  to  its  destin.f 

rs.  Inland  sKdrV.^'J,^\P^^«^"tation  of 
t-anded  as  scabs."       '^       ^"  ^^<>  work  duri^ 


thio  *  f  ^^^^"^  w"J  haul  VI 
inis  telegram."     (To  Mii  V  T"'  "^^  ''^^ 
present  strike  will  ^  br^; Jf,^*'*^  Stan] 

"  oe  branded  as  scabs. 


July  3d : 

Of  red.    We  have  rlf^^^'^y  »"*•"    -^Wear  *  ^h"^  *^i"  inJuncttons 
"I^t  everyCr^ear'"^*^'  ^.^k""  ^^'^-I^  to  wear  whltl"^'"?;  '"^tea^ 

-".our  P.aees^-,-«-- -aw       ^- „X  »- ^a^ 
[762]  July  4th:  *    »ont  be  siiiy.~ 


o^Stivl  SJ"  ~n«  -".T^  i»^a  f-  ".-'-ed  war. 

a«er  locals  on  ^'?>  ads.  t"^  X'^Sf  sT'^«  ~'«     *    '  '^'""^ 
July  8th:  "^  "'"^  *"« 'fonsest  card  left"  '^^ 

me7^r"ehllSfsh'^  *^.'^»"<»  '»  a  minute     IV.      . 

«oa  to  newsparr^tan*to*.;s4S,?PPear  T^  p^m^Ul^  »J-. 

July  10th: 


« 


J^^fu'*5!!:»'?Kellher,  Rogers,  In  iall     r<». 

?    ^«.  ~'?<>™tfon8.    Oir  ™„i**?„^Pft  to  so.    Thto 
t    [Signed]    Hogan."  *  "*  ^"8*-    Victory 


is  the  last  aot  nf»  ♦kV — "''  **"«««, 
tain.    Stand%'af  KiJ5>™«^ 


oer- 


372 


H 


64  FEDERAL  REPOBTBB,   782. 
Opinion  of  the  Court. 


Julv  14th: 


"All  negotiations  off.    Stand  to  a  finish  now." 
The  «,nditioii  as  it  was  on  the  liJth  of  July  is  aptly  de- 
scnbed  m  the  letter  of  that  date  signed  by  Debs,  Howard, 

;33,^'f'T'  fTf  •'^t;^'"""'^"  ^""""-^  Union,  and 
addressed,  -To  tlie  Railway  Managers."    It  is  set  out  in  full 

as  a  part  of  the  information,-  and  if  more  convincing  evi- 
dence of  the  nature  of  the  strike,  and  of  ihe  direct  pen^nal 
and  oftcial  responsibility  of  the  defendants  for  what  was 
done,  and  for  the  results,  were  neetled.  it  is  found  in  that 
document. 

But  the  defendants  are  not  entitled  to  be  judged  solely 
by  the  rules  which  determine  the  responsibility  of  one  who 
has  acted  without  combination  or  agreement  with  another, 
rhe  bill  u,>on  which  the  injunction  was  ordered  charged 
them  with  coiKspiracy,  as,  under  the  statute,  it  must  have 
done,  in  order  to  bring  them  within  the  cognizance  of  the 
court.    (  onfomnng  to  the  allegations  of  the  bill,  the  in- 
junction, in  sulistance,  commanded  them,  and  all  combining 
or  conspiring  with  them,  "  to  desist  and  refrain  "  from  in- 
terfering with  the  business,  rolling  stock,  and  other  property 
of  the  roads  named;  from  using  force,  threats,  or  persuasion 
to  induce  employes  of  the  roads  to  neglect  duty;  from  usinir 
force  or  threats  to  induce  employes  to  quit,  or  other  persons 
not  to  enter,  the  service  of  the  roads;   from  doing  anv  act 
in  furtherance  of  a  conspiracy  to  interfere  with  interetate 
commerce  on  the  roads;  and  from  ordering,  aiding,  or  abet- 
ting any  pei-son  to  do  the  forbidden  things.    It  is  not  neces- 
sary to  consider  whether  this  injunction,  when  properly 
construed   forbids  or  whether  it  might  lawfully  have  teen 
made  to  forbid,  the  employes  of  the  railroad  companies  to 
quit  work  m  furtherance  of  the  alleged  conspiracy,  or  to  for- 

Sll  ?"''''  -r  "1"*  *•""  conspiracy,  to  persuade  or  advise 
th^  to  quit  The  order  was  not  intended  when  issued. 
1 7t»]  and  will  not  now  be  construed,  to  go  so  far.  In  the  re- 
cent «»se  of  Arthur  vOakes  (C.  C.  A.,  7th  Cireuit),  63  Fed. 
310  It  was  decided,  with  my  full  concurrence  in  the  opinion, 
titat  a  conrt  of  equity  will  not  "  underj^^circumstances.  by 

•Ante,  p.  310. 


UNITED  STATES  V.  DEBS. 


373 


• 


Opinion  of  the  Court 
what  wa    2    nTh  T  ""  ^T"*  """^''^'y  ^^^  "^ding  to 

or  iUsMliiv     "  ™™i'""om  than  the  ,„,„  wrairfulma, 

.rhi.„.io„  S  «^"„7-;m,"°',:r!:  "■  ■  '-"^ 

the  25th  of  June-  thlton^K         !  !  ^°^'=*'"-  ^^journed  on 


374 


U   FEDERAL   REPORTER,    763. 
Opiuiuii  of  the  Court. 


Ill 


IF  I 


the  union :  '•  June  26, 1894, 1 :  30  p.  m.  Boycott  against  Pull- 
man cars  in  effect  at  noon  to-day.  By  order  of  convention. 
E.  V.  Debs,"— and  that  on  the  same  day  the  following  tele- 
gram was  sent  to  the  general  officers  of  labor  organizations 
throughout  the  country : 

dflv^  i^niin  ^f  "f ^  the  Pullman  CJompany,  to  take  eflfect  at  noon  to- 
day  haH  beep  declared  by  the  American  Railway  Union.  We  ear- 
aSinV^?"^ir;?7^'^^''°^  co-operation  in  the  %ht  of  organized  laZ- 
^nZJi  wuh  ^"\""**  oppressive  monopoly.  Please  advise  if  you 
can  meet  with  us  in  conference,  and.  if  not,  if  you  will  authorize 

SSgLrv.'UrPr^iS^^^^  "^'^  ™«"*^''-  ^^'^^  '^'  ^«^^»«-^  «»-^- 

Pullman  cars  in  use  upon  the  roads  are  instrumentalities 
of  commerce,  and  it  follows  that  from  the  time  of  this  an- 
nouncement, if  not  [764]  from  the  adoption  of  the  resolu- 
tion by  the  convention,  the  American  Railway  Union  was 
committed  to  a  conspiracy  in  restraint  of  interstate  com- 
merce, in  violation  of  the  act  of  July  2,  1890,  and  that  the 
members  of  that  association,  and  all  others  who  joined  in  the 
movement,  became  criminally  responsible  each  for  the  acts 
of  others  done  in  furtherance  of  the  common  purpose,  whether 
mtended  by  him  or  not    The  officers  became  responsible 
for  the  men,  and  the  men  for  the  officers.     While  I  do  not 
accede  to  the  proposition  which  was  advanced  in  Patterson^s 
Case,  for  the  purpose  of  invalidating  or  of  putting  a  narrow 
construction  upon  the  statute,  that  a  conspiracy  to  commit 
a  specified  offense  includes  a  conspiracy  to  commit  any  other 
offense  which  may  result  and  does  result  from  an  attempt  to 
conmiit  the  offense  intended,  the  rule  is  well  settled,  and  I 
suppose  well  understood,  that  all  who  engage,  either  as  prin- 
cipals or  as  advisers,  aiders,  or  abettors,  in  the  commission 
of  an  unlawful  or  criminal  act,  are  individually  responsible 
for  the  criminal  or  injurious  results  which  follow  the  com- 
mission or  an  attempt  by  any  of  their  number  to  commit  the 
mtended  crime  or  wrong.    It  is  by  the  same  rule  that  co- 
conspirators are  responsible  for  the  acts  and  declarations  of 
each  other  in  the  furtherance  of  their  unlawful  purpose. 
Brennan  v.  People,  15  111.  511;    Banna  v.  People,  86  111. 
243;   Lamh  v.  People,  96  111.  74;  Wliart.  Gr.  I^w,  §  1405; 
1  Bish.  Cr.  Law,  636 ;  Hawk.  P.  C.  c.  29,  §  8.     I  quote  : 

^C.T^Z}^^^  ^"'**^  ^S^^  Hawkins,  supra],  it  has  been  adjudged 
that  where  persons  combine  together  to  stand  by  one  another  in  the 


UNITED   STATES   V.  DEBS. 
Opinion  of  the  Court. 


375 


sons  combine  to  do  an  unlawftil  thini'  if Th^n;*   ^^^'  therefore,  per- 
In  State  v.  McCahUl  (Iowa)  30  N.  W.  563,  the  court  said- 

Tbese  defendants  were  the  directors  and  general  officers  of 
the  American  Kailway  Union,  and  had  practical  control  of 
the  organization.    They  procured  the  adoption  of  the  resolu- 
tions by  which  the  boycott  of  the  Pullman  cars  was  declared 
and  authority  given  themselves  to  begin  and  control  the  move- 
ment.   They  put  themselves  at  once  in  telegraphic  communi- 
cation with  the  officers  of  local  unions,  advising  them  of  the 
action  of  the  convention,  and  that  no  Pullman  cars  were  to  be 
hand  ed ;  but,  it  appearing  very  soon  that  men  who  refused  to 
handle  Pullman  cars  were  being  discharged,  they  determined 
to  prevent  the  running  of  all  trains  upon  all  the  roads  until 
the  companies  should  accede  to  their  demands,  including  the 
reinstatement  of  men  who  had  been  discharged.    Later  the 
Pullman  strikers  were  abandoned,  and  only  the  re-employ- 
ment of  1765]  railroad  men  insisted  on.     As  earlv  as  the 
2<th  of  June  they  sent  out  telegrams  directing  men  to  quit 
work  If  the  running  of  Pullman  cars  was  insisted  upon,  and 
unless  discharged  men  were  restored  to  their  places,  and  by 
the  28th  It  had  become  the  distinct  policy  "  to  get  the  meii 
out    ;     to  tie  up     or  paralyze  the  roads;  to  promise  full 
protection  to  all  who  joined  in  the  strike;  to  denounce  as 
scabs,  or  as  traitors  to  the  cause  of  labor,  all  who  refused  to 
go  out  and  all  who  should  consent  to  take  places  which  others 
had  abandoned,-and  later,  the  form  or  substance  of  expres- 
sion became :  «  All  employes  of  all  roads  wiU  stand  together  " : 
^  one  will  return  until  all  return."    By  this  course  the 
original  conspiracy  against  the  use  of  Pullman  cars  became  a 


t 


i 


'  ^  FEDEBAI.  BEPOBTUR,  765. 

Opinion  of  the  Court 

unionc    ..", "7"   ««^hority,   without   consulting   tJi«   local 

mininir  „f  «  h"; J       T    f  **'  "  "'"•''•"S  Pin  and  the  under- 

when  the  intermitTnT^f^K  «"^'^»t'««s  which  prevailed 

the  LT  "'''",™  '""  "*  "»«  court  was  asked,  and  Avhich   in 
the  end   «,„.p,i,ed  the  employment  of  military  for^  to  re 
establish  ijeace  and  start  again  the  uctWifJ     * 
The  evidence  leaves  no  feE  „f  ,''*"'*'*'r  "^  conuuer,*. 
substan.  of  it,  briefly  "iJ^Z  SL^:SZ^l    '"" 
bination  with  the  members  of  the  ^eri«.nT  i     '    tt    '"' 
and  others,  who  were  Drev«,l,.l7  ™'*^"  Railway  IJ»,on 
■«>  «ere  prevailed  upon  to  co-onerat^   m..i...  „.> 
gaged  m  a  conspiracy  in  restrain    or  hindrlncTof  iZ  V 
conuuerce  over  the  railroads  entering  Chic  "o     m    i    t 

wer::-ng  ;;;t?-'n  ^'^^  «f  4-  engage:,-  iT the":,    e" 

bterfZfe '  tWT.^r::;i„rs'o?t^  ""'r'"'  "-'^"^  °^ 

injunction  they  we;e:r:red  to  tiTtt "•"'.''/': 
superior  force  '         ''   «""'P«"«d   »«  jieW   to 

evident  that  these  things,  whatever  the  facts  nnVh     hi 
been  proved  ..  imagined  to  be,  could  furniS^tithfr    u^  fi' 
ction  nor  pa  l.ation  for  giving  up  „  citv  to  disorder  a    1^- 
paralyizing  the  industries  and  commer<;  „f  th„  . 

My  conclusion  in  the  case  on  ZZt         I        TT^'^'' 

States  implies  a  liL  clXsI  ,n  »V     7k        "  "^  "'"  ^'"'*«''    • 
1  ime  LiiiKiusion  in  the  other  c»«m»  frm.4  «f  *u 

same  tm.e  and  upon  the  same  evidence,  "1",^;  ^ ^u    i' 

load,  the  defeiulaiits  were  chttrottxA  «.;fK  ^  i 

iiiterfemK^  with  the  ^3^ 

strike      Th«^  fi  1   'P'*'*;*^"  «^  ^hat   road   pending  the 

ttfevideTI"  «     ''  f'^  '"'";^''^  **^  '^^^^^^^  '«  -'-Wished  by 
the  evidence  already  considered.     Though  viohition  of  the 


377 


PIDCOCK   V.  HABBINGTOir. 
Statement  of  the  Case 

being  in  the  c.ldTo'  i^rrt  ;';  ^"""'  ^''^  P'^^^^^ 
with  its  manage-  f  Tfifil  rT  T^'-  ^  ""P™l^r  mterfemice 
contempt  of  the  couS^a.T'r  "  "'"  ^"^^'  ^^'-'ituted  a 

order  'ppointinr  he  r^?^:;^';^''""^^^  '"  """^"'^  "- 
with  their  control     TJ,1T  enjoining  interference 

Caldwell  h^  in  ^tfetlTo  ''b  ?*'^«;.'f"-'  "^  J»dg« 
nized  the  right  of  emnh!,'.  '.''"*'    "^^'^^    *•»«*    ^^eog- 

it  containef  I  o  CrtfLr"  S  ''^  7""  ''^  *'"^  '^«"-- 
who  were  willing rL,  'f  ""'dating  or  abusing  those 

terferingdrrec"v  a^/he  ,7"^"'""*'  """  *°^  «*h«"^i*  "'- 
;Wth  Jman^itr ;:r;^^^^^^  Sl!^ tf '^^^  '^'l 

each  of  the  cases     The  li        ?       contempt  as  charged  in 


rSSlJ      PIDCOCK  ,..  HARRINGTON  ET  AL. 

(Clnuit  Comt,  S.  U.  Ne«-  York.     December  20,  im., 

['W  Fed..  821.) 

MONOPOUKS-SUIT  BV    PbIV^te    rNDIVIDUAL-Tbe    Ut   "  f..  .        . 

«nd  .«„„„e,.,.e  „g.,i„st  unlawful   restr-.infs  n..'^  "™^''*  •™''* 

C«"«.  Jnly  2.  1890)  (infers  no  rUT!,.!;  """  n«o.io,x.lies  •    (Act 

m  e.,nitj-  for  the  LtZ„7n^t^!    T,    "  '"'"'''**  '"divulual  to  h„c 

vate  ,K.rson«,  and  the  riX    o  brin^lf  """"^^  ""'^'"•'•'  '"'•  '"- 
the  aistrle,  attorneyH  otuL  rninTstaTs.:"  '''"'"'  '*'"«  '*""""  '" 

ri.S^.::ro£s'lfan"  ^  ^'"r"^  ^^«'"^*  ^^""^  "ar- 
fendantsden^t'tlHirbm.'"'"*""  "''  ''^^°""*'"^-     I^^ 

«"^7'™»i'«'ofVi^j«;';,,i!ill^«^^ 

on  the  Riounrt  that  the  defend-intl  h       "'Junction  and  an  aceountinL- 
°  Syl'abuK  <-"Pyrighted;i^6r^Westl^„bli;ii^7^^ 


378 


U  VEDEBAL  BEPOBTEB,  822. 
Opinion  of  tlie  Court. 


I 


plalnant  and  have  tlireatened  to  cease  deallriR  with  people  who  deal 
m^  l"HViJ*!r***''*^^"J^  founded  upon  the  ;i.t  of  coiigresH  of  July  2, 
Jm),  entitled  An  act  to  protect  trade  and  commerce  njjniust  unlawful 
restraints  and  uionopoliea"  (26  Stat.  209). 

WMiam  F,  Eandeh  for  complainant. 
Edward  (\  Bdardmmi,  for  defendants. 

CoxE,  District  Judge. 

At  the  argrument  the  counsel  for  the  complainant  was  asked 
whether  he  sought  to  maintain  this  action  under  the  general 
equity  principles  of  the  common  law  or  under  the  provisions 
of  the  act  of  July  2,  1890.  He  answered  that  it  was  foundetl 
solely  upon  the  statute.  It  is  unnecessary,  therefore,  to  dis- 
cuss the  proix>sition  whether  or  not  the  action  can  be  main- 
tained independently  of  the  statute.  The  demurrer  chal- 
lenges the  jurisdiction  of  this  c^urt  to  maintain,  under  the  act 
in  question,  a  bill  in  equity  filed  by  a  private  individual  and 
his  solicitor.  It  is  clear  that  the  right  to  maintain  such  a  suit 
is  not  expressly  conferred  by  the  act.  Indeed,  such  right  is, 
by  implication,  denied— First,  because  a  private  person  is 
given  (section  7)  the  right  to  maintain  an  action  at  law;  and, 
8«?cond,  tlie  district  attorneys  of  the  United  States,  under  the 
direction  of  the  attorney  general  (section  4),  are  charged 
with  the  duty  of  conmiencing  suits  in  equity.  If  it  were  the 
intention  of  the  lawmakers  to  vest  in  every  irresponsible  in- 
dividual, who  may  deem  himself  aggrieved,  the  right  to  in- 
voke the  drastic  and  far-reaching  remedies  conferred  by  the 
act,  is  it  not  reasonable  to  suppose  that  they  would  have  said 
so  in  unambiguous  terms?  The  first  three  sections  are  penal 
statutes.  They  give  no  civil  remedy.  Section  4  vests  the 
right  to  institute  proceedings  in  equity  in  the  district  attor- 
neys of  the  United  States,  and,  together  with  section  5,  pre- 
scril)es  the  procedure  in  such  suits.  Section  6  provides  for 
the  seizure  and  forfeiture  to  the  United  States  of  property 
illegally  owned  under  the  provisions  of  the  act.  So  far,  then, 
the  act  is  a  public  act  providing  no  private  remedy.  If  it 
ended  with  section  6  there  would  probably  be  no  pretense  that 
it  sanctioned  a  suit  like  the  one  at  bar.  What  follows,  how- 
ever, in  no  way  strengthens  the  complainant's  position.    The 


UNITED  STATES   V.  E.  C.  KNIGHT   CO.  379 

Syllabus. 

to  be  nnlaw?urbnKt  mav  «rZ^^^  orae,Li^ 

nmted  States  In  tte  dlstrlrt  in  „hlrh  th^^^^^  '"''""  <*"■■*  »'  «>« 

without  resnect  to  ti.»  om^,„^  ■       °  !?®  defendant  resides  or  is  found 

fold  the  daC«I  by  him  sZ„  Se^^iJi^r^'  """^^  «"''"  ^^ver  thiS 
reasonable  attorney's  f^.'?"'"*^'    "*  ""*  ™**«  "^  S"'*-  iueluding  a 

But  for  this  section  no  private  person  would  have  anv 
s  anch.^  tn  court,  and  as  the  only  right  conferred  bv- kl  tS 
ngh   to  sue  for  damages  in  a  court  of  law.  it  foUow's  that  th! 
point  presented  bv  the  demurrer  is  well  founded     it,,  t 
cse  question  was  decided  in  favor  of  the  views  here  expLS' 

A  se  tI:\  '"''' ''  ^.f  •  ''^  *'«™*^ ''  ^^-  «^mTS 

A.  8t).     Ihe  demurrer  IS.  allowed.  -  '     '^  '^• 


[1]  UNITED  STATES  ..  E.  C.  KNIGHT  COMPANY.. 

APPEAL   KROM    THE  riHcmx  COURT  OK   APPEALS   «)R   THE   THIRD 

CIKCLIT. 
No.  675.     Argued  Octol>er  24,  1894.^Declded  January  21,  1895.      ' 

[15«  U.  S.,  1.] 

restraints  and  monolZ  -  !  *  ^  eommeroe  against  unlawful 

national  trade  oT«l!^^  Td  noT'''''^'^  '"  '"*"''''''  """»  '"»<^- 
Of  a  u^ssarv  of  iTfe"       '  ^"^  ""'  "  """""•^'^  '"  ">«  ""anufacture 

malorltv  of  th!  .  "  ^^''^^'  "^'"S  '■"  control  of  a  large 

eries.  such  disposition  ovU^h  ""  '"""■  P'"'«<le'PWa  refln- 

United  StatrrgreitI  *"««!.  7°"'a<^to'-ies  throughout  the 

He.  that  the  1^:,  'L\z':^L7::t^ ^^  r:r 

nopoly  In  the  msinnfar^^^^^  ^*  creation  of  a  mo- 
1-1 '^^^^"fa^ture  of  a  necessary  of  life,  which  could  not 

<*  Bill  dismissed  by  Circuit  Pmn-f  i;^^   r,  ^ 

p.  250.  Decree  afflLrbyar^'t^„rton-^'*'/'^-'^^-  ^ 
(80  Fed.,  934).  See  r  2M  ZIS  k  °1  ^PP««'«'  Third  Circuit 
D.  S.,  1).  '^'  ^-    ^™e<l  by  the  Supreme  Court   (156 

^^Syiiabas  and  abstract  of  argument  copyrighted.  18«5.  by  Ban.s  * 


I 


i!l 


III 


380 


156   UNITED  STATES  REPORTS,   1. 
Statemeut  of  the  Case. 


^TTs^rt^""?  «»«  P«>vi^ons  Of  the  act  of  J„Jy  2.  1890.  c 
restraints  and  monopolies,-  In  the  mode  attempted  in  this  suit- 
"l™«on^„T'trH  1  ™""'^"""''  '««"*'-  "^  a  N^jS 

[8]  This  was  a  bill  filed  by  the  United  States  against 
*T  Vt  ^'Fl  ^*""P»»y  "nd  others,  in  the  Circuit  Court  of 
the  United  States  for  the  Eastern  District  of  Pennsylvania, 
charging  that  the  defendants  had  violated  the  provisions  of 
an  act  of  Congress  approved  July  2,  1890,  c.  (547,  entitled 
An  act  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies,"  2(5  Stat.  209,  "  providinff  that 
every  contract,  combination  in  the  form  of  trust,  or  other- 
wise, or  conspiracy  in  restraint  of  trade  and  commerce  among 
the  several  States  is  illegal,  and  that   persons  who  shall 
monopolize  or  shall  attempt  to  monopolize,  or  combine  or 
conspire  with  other  persons  to  monopolize  trade  and  com- 

Zr„.'''""x1  '^^rr^  ^"^"^^  *""  ^  «"''ty  of  a  misde- 
W  V  R  fi  n  ""'^"•^  "'"*  *''"  defendani,  the  American 

Si^a,   Refining  Company,  was  incorporated  under  and  by 
virtue  of  the  laws  of  New  Jersey,  whose  certificate  of  incor- 
poration nametl  the  places  in  New  Jersev  and  New  York  at 
which  Its  principal  business  was  to  be  transacted,  and  sev- 
eral other  states  in  which  it  proposed  to  carry  on  operations, 
and  stated  that  the  objects  for  which  said  companv  w^ 
formed  were  "the  purchase,  manufacture,  refining;  and  sale 
of  sugar,  molasses,  and  melads,  and  all  lawful  business  inci- 
dental thereto ;  ■  that  the  defendant,  E.  C.  Knight  Companv 
was  inc-orporated  under  the  laws  of  Pennsylvania  "  for  the 
purjiose  of  importing,  manufacturing,  refining  and  dealine 
in  sugars  and  molasses,"  at  the  city  of  Philadelphia ;  that  the 
defendant,  the  Franklin  Sugar  Company,  was' inc;rporaLd 
under  the  laws  of  Pennsylvania  "for  the  purpose  of  the 
manufacture  of  sugar  and  the  purchase  of  raw  material  for 
that  purpos^,"  at  Philadelphia;  that  the  defendant,  Spreck- 
els  Sugar  Refining  Comjiany,  was  incorporated  under  the 
laws  of  Pennsylvania  "for  the  purpose  of  refining  sugar, 
which  will  involve  the  buying  of  the  raw  material  therefor 


UNITED  STATES   V.  E.  C.  KNIGHT   CO. 
Statement  of  the  Case. 


381 


and  selling  the  manufactured  product,  and  of  doing  what- 
ever else  shall  be  incidental  to  the  said  business  of  refining," 
at  the  city  of  Philadelphia;  that  the  defendant,  the  Dela- 
ware Sugar  House,  was  incorporated  under  the  laws  of 
Pennsylvania  "  for  the  purpose  of  the  manufacture  of  sugar 
and  syrups,  and  preparing  the  same  for  [3]  market,  and  the 
transaction  of  such  woik  or  business  as  may  be  necessary  or 
proper  for  the  proper  management  of  the  business  of  manu- 
facture." 

It  was  further  averred  that  the  four  defendants  last  named 
were  independently  engaged  in  the  manufacture  and  sale  of 
M^r  until  on  or  about  March  4,  1892;  that  the  product  of 
their  refineries  amounted  to  thirty-three  per  cent  of  the  sugar 
refined,  m  the  United  States;  that  they  were  competitors 
with  the  American  Sugar  Refining  Company ;  that  the  prod- 
ucts of  their  several  refineries  were  distributed  among  the 
several  States  of  the  United  States,  and  that  all  the  compa- 
nies were  engaged  in  trade  or  commerce  with  the  several 
States  and  with  foreign  nations;  that  the  American  Sugar 
Befinmg  Company  had,  on  or  prior  to  March  4,  1892   ob- 
tained the  control  of  all  the  sugar  refineries  of  the  United 
States  with  the  exception  of  the  Revere  of  Boston,  and  the 
refineries  of  the  four  defendants  above  mentioned ;  that  the 
Kevere  produced  annually  about  two  per  cent  of  the  total 
amoimt  of  sugar  refined. 

The  bill  then  alleged  that  in  order  that  the  American 
^uga^  Refining  Company  might  obtain  complete  control  of 

Tu^Te     f^""  '"  *^  ^"•*^*'  ^*«t«^'  that  company,  ana 
John  E.  Searles,  Jr.,  acting  for  it,  entered  into  an  unlawful 

and  fraudulent  scheme  to  purcha.se  the  stock,  machinerv 

and  real  estate  of  the  other  four  corporations  defendant,  bv 

which  they  attempted  to  control  all  the  sugar  refineries  for 

the  purpose  of  restraining  the   trade   thereof  with   other 

btates  as  theretofore  carried  on  independently  by  said  de- 

mTl\to  «"  P,"'"'"'^'  «*  '^'^  ^l^^-^^'  «»  ««■  about 
March  4,  1892  Searles  entered  into  a  contract  with  the  de- 
fendant Knight  Company  and  individual  stockholders  . 
named,  for  the  purchase  of  all  the  stock  of  that  company, 
and  subsequently  delivered  to  the  defendants  therefor  in 
exchange  shares  of  the  American  Sugar  Refining  Company 


382 


156   UNITED  STATES   REPORTS,   3. 


Ill     I 


Statemeiit  of  the  Case, 
that  on  or  about  the  same  date  Searles  entered  into  a  sim- 
ikr  contract  with  the  Spwckels  Company  and  individual 
stockholders,  and  with  the  Franklin  Company  and  stock- 
ho  ders,  and  with  the  Delaware  Sugar  House  and  stock- 
holders.    It  was  further  averred  that  the  American  Sugar 
Rehning    Company    monopolized     the    manufacture    and 
14J  sale  of  refined  sugar  in  the  United  States,  and  con- 
trolled the  price  of  sugar;  that  m  making  the  contracts, 
Searles  and  the  .\merican  Sugar  Refining  Company  com- 
bined and  conspired  with  the  other  defendants  to  restrain 
trade  and  commerce  in  refined   sugar  among  the  several 
States  and  foreign  nations,  and  that  the  said  contracts  wei^ 
made  with  the  mtent  to  enable  the  American  Sugar  Refining 
Company  to  restrain  the  sale  of  refined  sugar  in  Pennsyl- 
vania and  among  the  several  States,  and  to  increase  the  reg- 
ular  price  at  which  refined  sugar  was  sold,  and  thereby  to 
exact  and  secure  large  sums  of  money  from  the  State  of 
Pennsylvania,  and   from   the   other   States  of  the   United 
States,  and  from  all  other  purcliasers,  and  that  the  same 
was  unlawful  and  contrary  to  the  said  act. 
The  bill  called  for  answers  under  oath,  and  prayed— 

r  ^'  I^^  *l*  *"^  ^^^^  ^^  ^**«  »aW  unlawful  aereements  made  imii 
entemi  into  by  and  between  the  said  defendante^^on  or  Stout  the 
foiirth  day  of  March.  1882.  shail  be  delivered  up  eancened  and  d^ 
dared  to  be  void;  and  that  the  said  defendants, ^theSl?knSu«a^ 

2f "  S^  ^TIT?  "^^  ^''^''  ®-  ^^^^  J"-"  be  ordered  to  denver  to 
the  other  said  defendants  reqjectlvely  the  shares  of  stoelTr^iv^  b? 

ttem  in  performance  of  the  said  contracts:  and  thatThe  Xr^id 

2±1^"«  ^^  **r?^'^  *°  ^^"^^'^  ***  ^^^  ^^^  defendants,  the  American 
Sugar  Reflnnig  Company  and  John  E.  Searles,  Jr.,  the  shares  of  stock 
received  by  them  respectively  in  performance  of  the  «ild  ^nt?act8 
*i  7^}  *"  Injunction  issue  preliminary  until  the  final  determina- 
ttoE  of  this  cause,  and  peipetual  thereafter,  preventhig  and  rei^^l 
lug  the  Mid  defendants  from  the  further  ^Vformancl  of  thTte?mS 
and  conditions  of  the  said  unlawful  agreements. 

11^^'^*^*^!  *"  Injunction  may  issue  preventing  and  restrainine  the 
aaid  defendants  from  further  and  continued  violations  of  the  ^ Id  act 
of  CJongress.  approved  July  2,  1800.  "*  ^^ 

In'it.  premi^^I"  ""**  ''"****''  "*"*'  ""  "^""^^  ^''^  ^"«"^  ™«y  ^^^^ 

Answers  were  filed  and  evidence  taken,  which  was  thus 
[5]  sufficiently  summarized  by  Judge  Butler  in  his  opinion 
in  the  Circuit  Court: 

"The  material  farts  proved  are  that  the  American  Sugar  Refinlne 
Co..  one  of  the  defendants,  is  incorporated  under  the  laws  of  New  Jer^ 


UNITED  STATES   V.  E.  C.  KNIGHT   CO. 
Statement  of  the  Case. 


383 


Kefinery,  ami  the  DSare%n'^«V  h^'^^*  "^^  ^he  Spreckels  Siij^ar 
thelawVof  PennsvlvauiriL^^^^^^^^  were  incorporated  under 

sugar;  that  the  fim^TtieTvem^Z'f^^  ^?  Purchase,  refine,  and  sell 
Philadelphia,  and  prioi   to  ALarc^h    r>^^"    n^^^^^^  ^^^'^^ed  In 

per  cent  of  the  total  amount  of  su^^^^^^^^  thirty-three 

and  were  in  active  comoptition  vvifh  f i  ^^°"*^?  *"  the  United  States, 
and  with  each  other^U^Tth^^^^  ^"^"'*  Refining  Co., 

for  it  throughoirthe  U  med  stX^  th  Y^^T^^^  ^^^mand  was  found 
American  SugarKefliiin^  Co  h«d  n?;  -^^^  P^^^'*  ^o  March,  1892,  the 
the  United  Ss  ex^^^^^^^  ""^  «''  refineries  in 

of  the  Revere  Co  ^XZ  ?he  ?.ft^r'n?'^,  '",  ^^^^^^^^^^P^^i^^  and  that 
of  the  amount  refined  In  VhT«  !^  ^  Producing  about  two  per  .^ut 
American   SugL-  Refining  Co    e^^^^^^^^^  '»   ^^^''''^'    1«^2,    the 

dates)  with  the  stockholder^ of  In^Tnf  iS\uTr''^''  ^^»  ^"^^^^nt 
named,  wherebv  it  mi"  S  tLif  il  ^^^  Philadelphia  eoi-poratlons 
of  stock  in  It^itinu  nv  thnt^b  f'^'^^^'^y^S  therefor  by  transfers 
obtained  Poss^sZ  ^o  "'lue  Pbil^^^^^^  ^"^^^"^  ^^^^^^^^  ^«-  thus 

that  each  of  The  pm^baS^s^^^  f^^^^^  ^"^  their  business; 

Refining  Co.  obtai^rg'a^'ho^ity  Zt^^X^ ^^Z^Tl 

holders  of  the  seveiit  I    Mo^ib  i?  ^^  ^^'tioii  l»etween  the  stock- 

but  that  tbo^  o7  each  con  natv  «  '  Ji*^^  respecting  the  sales, 

othei-8,  and  in  ^-iXiic^  of  wLt  ^  independently  of  those  of  the 
that  the  stockbSs "o?  eth^^t  wa«  ^  ^^  «»-h  others; 

other,  understanding  and  Intendh^^  S  .  n  ^  "^  T^"^  ^'^th  ,each 
the  company  should  be  8oblth«tfh  !"  tfie  stoc-k  and  property  of 

left  the 'sellers  f^  to  S  .iliisli  otbprTir''-  ^^^,*^  ^^  ^^^'^  "^«tance 
business  if  they  should  ?ee  fit  to  dnJL  ^^^'*'^l  ^^^  '''"^  continue  the 
Bpecting  trade  or  c^mJi'^^n^^^^^^  ^«  P^^*«»«»  re- 

vision on  this  subject  has  l^n  Sl'«?nl*  I*  no  arrangement  or  pro- 
Delaware  Sugar  Hous^Se^hni^**'^*  ^"'^  the  purchase  the 

with  the  Spr^les  Sefv'^anTthe  E  ^KnTht'I^fi  '"  conjunction 
tion  with  the  Franklin    this  omnhinnH^,;' k  i  ^  t  Refinery  in  connec- 

reasons  of  economy'ln 'cond^iSg^?^^^^^^^  tTr^^^^'^J 

sugar  refined  in  PhiladPinhia  hoo  k         "usiuess,  tbat  the  amount  of 

that  the  price  LsiSnly^ht.vL^'' ^^^^^^  '*°^  the  purchases; 

lower  than  iVhad  iwn  for^^a  .r^^  ^^'^»t,  but  is  stil 

months  of  the  4les^?hfl?  nZ^f  T*"^^  *^^^''^'  ^"^  »P  to  within  a  few 
sold  in  the  Uni^  states  is^Pfinin^-^^^^^^  ^£  the  sugar  refined  and 

trolled  by  the  TmS  Lgar  Xfi"n?ng^^^^^^^^  '^"^  '"iT  ^^'^- 

sugar  is  produced  in  Loiii^imVn  f^^^    ^  Co.,  that  some  additional 

but^heal«nt;i^no},^r^rre\ge"rlSe!f  '"""^'''  '"»"  ^'>-'-- 

iag  and  selling  sugar  in  Jws'lSjrT  *^^  ""^'"^"^  °'  '^''^■ 

tr,'?"  ^''•^"^*  9«"'*  ''^W  that  the  facts  did  not  show  a  con- 
tract, combination,  or  conspiracy  to  restrain  or  monopolize 
trade  or  commerce  "  among  the  several  States  or  with  forei«m 
nations,"  and  dismissed  the  bill.    60  Fed.  Rep.  306     tS 

SS"L.  :h  ^*'''  ^'T*  ^«'*»*  Appeals  for  the  Third    " 
Circuit,  and  the  decree  affirmed.    60  Fed.  Rep.  934.    This 


tJO^ 


! 


156   UNITED  STATES  REPORTS,   ©. 
Statement  of  tlie  Case; 


appeal  was  then  prosecuted.     The  act  of  Congress  of  July  2 
1 890,  c.  047,  is  as  follows:  ^    ' 

a«7i«r''''  ''"*'" '""'  ^•*^"""*^''^  "^«*"«^  "»>'^-^"'  «--«t«-«^»t« 

wiRif''nr^J;I!r  *"*"*.*'^***'  c.oiiibinati,>n  in  the  form  of  trust  or  other- 
wise, or  eouspini -y.   in   restraint  of  trade  or  commerce  among  the 
jeveral  States,  or  .vith  foreign  nations,  is  hereby  deelarecl  to  be  nfegal 
EveiT  I)prs(m  who  shall  make  any  such  contract  or  eng.^e  hi  any  such 

mTTZrZlTT'"'^'.'  T\\  ^  *^^"^^  ^"'^t>'  Of  a  inisilemea'^^^^^ 
am   on  conviction  thei-eof.  shall  be  punished  by  a  fine  not  exceeding 

^i^li^'rr^^^-f  "^''■^.'*''  ^^'  i»»P'-i«onment  not  exceeding  one  flTyear 
or  by  both  said  pmiishments,  in  the  discretion  of  the  c4rt 

SEC.  J.  hvery  person  who  shall  monopolize,  or  attempt  to  monoDo- 
lize.  or  combine  or  conspire  with  any  other  person  or  per^nst^ 
mcnn,»olize  any  part  of  the  trade  or  commerce  among  the^v^ra^ 
States,  or  with  foreign  nations,  shall  be  deemed  guilty  of  a  m^S^ 
meanor,  and,  cu  c^nvi^tion  thereof,  shall  be  mmlsh^  by  fine  not 
exceeding  five  thousand  dollars,  or  by  imprisonment  not  exc^^fng 
""""tn^VV^  '*'^^  ^*^'  pmiishments,  in  the  discretion  of  the^urt 

Sec.  a.  Everj'  i-ontract,  combination  in  form  of  trust  or  oS 
wise,  or  conspiracy,  in  restraint  of  trade  or  commerc^  Tn  any  Terr^ 

HS^m^ir^^'V"  '''"'^^  "'.  '''  '^»"  ^'^^^^^-^  ^'  ColumWa,  or  in  ri- 
straiut  of  trade  or  commerce  between  any  such  Territory  and  another 
or  I.etwet;n  any  such  Territory  or  Territories  and  any  State  o?  States 

Di.tH./^lf  r"'i  *'^,V«'""»?'«*  -r  ^vlth  foreign  nations'^  orTtween  the 
District  of  CJolumbia  and  any  State  or  States  or  foreign  nations  is 
hereby  declared  illegal.  Every  person  who  shall  iiiakP  a  v  su  h  eon 
tract  or  engage  in  any  such  combination  or  conspiracy  shnni^"deeme^^ 
guilty  of  a  ini^demeaiior.  and,  cm  conviction  theVeof/shal  L  pu^shed 
^^\13^^  ''''^  exceeding  five  thousand  dollars,  or  by  imprisonment  not 
th?^u?t  ""^^  ''*^"''  ''"  *'''  ^""'^  ""'*^  punishments.  L  the  diXtL  oJ 
i«r  ^f^  ^-  ,7*»«,^y^faJ  Cir^^uit  Courts  of  the.  United  States  are  hereby 

ic^ml  Tt '^hiiVt'^l'i!'"",  I"  ''7'^^'''  «"^^  ^-^^^^^^^  violations  of  this 
?t1;  ,  L^^*'®^'  ^^J^^  '^"^-^  *^^  **>«  «^^«*»'«l  <li«trict  attorneys  of  the 
United  States,  in  their  respective  districts,  mider  the  direction  of 
the  Attorney  General,  to  institute  proceedings  in  ecpiitv  to  prevent 
and  restram  such  violations.  Such  proc-eedmgs  may  be  bv  wav  of 
petition  setting  forth  the  case  and  pr.ying  that  such  violation  shaH  be 
enjoined  or  othervvise  prohibited.  When  the  parties  complaint  of 
shall  have  been  duly  notified  of  such  petition  tl5e  court  sha  I  priced 
as  soon  as  may  be.  to  the  hearing  and  determination  of  the  ca^' 
and  pending  sucli  petition  and  before  final  decree,  the  court  may  at 

r-"".  n'L!"?*'*'  ""T^  temporary  [8]  restraining  order  or  prohibition 
as  shall  be  deemed  just  in  the  premises. 

S^^']'^''  ^^'*»t"''''*'*' .1*  *'*"^"  *Pl'^*''  **^  the  court  before  which  any 
pr(.ceeding  under  section  four  of  this  act  may  be  pending,  that  the 
ends  of  justice  re«iuire  that  other  parties  should  be  broi^ht  before 
the  t-ourt  the  court  may  cause  them  to  be  summoned,  whether  they 
reside  m  the  district  in  which  the  court  is  held  or  not;  and  subpcenas 
to  that  end  may  be  sened  in  anj^  district  by  the  marshal  thereof 

Sec.  (..  Any  property  owned  under  any  c-ontract  or  by  any  com- 
bination, or  pursuant  to  any  conspiracy  (and  being  the  sublet 
thereof)  mentioned  in  section  one  of  this  act,  and  b^ing  in  the  cou^ 
of  transportation  from  one  State  to  another,  or  to  a  foreign  coTtrf 
shall  be  forfeite<l  to  the  United  States,  and  may  l^  ^iz^and  con- 
demnetl  by  like  proceedings  as  those  provided  by  law  ^r  the  fo?- 


UNITED  STATES  V.  E.  C.  KNIGHT  CO. 
Opinion  of  the  Court 


385 


te's"[rSn?r"a1^Z?aw"'"^"   ''  ^'^^^   -Ported   into   the 

ert/^y  Iny^^^^^^^^^^  in  his  business  or  prop- 

bidden  or  declared  to  be  milawfu?  bv  fh-^  ''f''^''''  ^f  anything  fo^ 
any  Circuit  Court  of  the  Unit^  itnLc*"'^  fu"^*'  '"^^  ^ue  therefor  to 
defendant  resides  or  if  found  wfthol'^^  ?*'*''^^*  *°  ^^ich  the 
controversy,  and  shall  recover  t^reefoM  ,1^^^  *^  ^^^  ^"»«"«t  in 
tained,  and  the  costs  of  siUt  incliidhtf  o  1  ^^  da^iages  by  him  sus- 
"  Sec.  8.  That  the  word  ♦  np?«nn  >  ^.^  reasonable  attorney's  fee 

act  Shall  be  deemed T'fnclSToVp'omt'fons?  u^seVl^'this 

under  or  authorized  by  the  l^Z^nf^uu  1  ^°^  associations  existing 
of  any  of  the  Territorlet  tieTa>vs  of  anV'Jf.^^^^'^  ^^^^^«'  '^^  '^^^ 
foreign  country."    2fj  Stat.  209,  c  G47.    ^  ^^^^'  ''''  ^^^  ^^^^^  of  any 

Mr.  Solicitor  General  and  J/*-  R  w  v*i.'n' 

bill  ch„^  'i..rs:ei.z«.  td"„"':S'^  '''■"*  j>- 

that  m  entering  into  them  th»  A^t    T  ^^'^^*'  o*  trade,  and 
spired  to  r^trf  in  the  t^dt  !.?d  r  """^^""^  """^  '^''^ 

among  the  several  Stat^td  ^^thT^i^  "t  "'"^'  ^"^^ 
to  the  act  of  Congr^  of  July  2  189^     ^  ""*'""''  "'°*™^ 

The  relief  sought  was  the  cancellation  nt  f».. 
under  which  the  stock  was  transferSTh!    ^^^''^^^^'^^ 
stock  to  the  parties  resn«.H?J?  .7 '      f  "^^J^l'very  of  the 

the  further  perfomanTe^L^'  """*  '"  ^^J^ction  against 
tions  of  the  act     As  Zaf  i    ^^'^^'^^s  and  further  viola- 

lief,  but  only  such  Si  S'L''"*'  '  f^^''  ^""^  «*"««•*'  «" 

as  would  be  aSSaMelT  **"!'*'*^  ""^^'-  *«t  prayer 

«xv*  uc  agreeable  to  the  case  mad  a  hv  fli«  k;ii       j 

llWti — VOL  1 — 06  M-        — 


156   UNITED   STATES   REPORTS,  9. 


Opinion  of  tlie  Court, 
monopolize  interstate  or  international  trade  or  commerce  and 

«*  the  act,  could  be  rescinded,  or  operations  thereunder  ar- 

In  commenting  upon  the  statute,  21  Jaa  1,  c  3  at  thp  r-nm 

A^inst  Monopolists,  Propounder.,  and  Projectors,"  rx>rd 
Coke,  m  language  often  quoted,  said : 

to  define  what  a  wnnop,,/'  i^'"*"'"""-     ^ud  tlieret-.re  it  is  necessary 

tlqiie.  or  corporate,  of  or  ^r  the  tnl^  Tin,  K*'^'*^'^"''•  '»''<*'<'«  P""" 
working,  oruWof  anvthinJ  »h.f^^^  "^'"^  buyins.  sellins.  malting. 
pollti.,ue.  or^^orat^a.^ ^ult  '^.''L''f  £"?'".  "■•  P'''«"n«-  "  >diS 
or  liberty  that  they  tad  b^fo^nrhVL^?*!!!";*^'  "'  "»>'  freedome. 
" For  the   wort  monXS    •dT,?'""'^  ■"'  "'^"" .'»»"'"  fade. 

rt«i,e»»;  hereof  vou  may  remi  .f.nrr^,  V  P*"^"""  "^  »'"<»»  /«-6«tt», 

E..Z.  Lib.  „.  f.  84.  ^?.  .^:^r::,::xii  %  r*  -ss-  ™"- « 

deSS  oTth"*"  *^"*  this  definition,  as  explained  by  the 
aenvation  of  the  word,  may  be  applied  to  all  cases  in  which 

thiflg,  so  that  only  he  can  continue  to  sell  it,  fixing  the  price 
at  his  own  pleasure,"  whether  by  virtue  of  legislative  S 
oJ  "(C:°*'  *^V  *%-<>°<>PoH-tion  referrJ^to  n  th?aS 
^^J?T^ /'•""'  "*°^""*^  '"  *•*«  *=«'"""«''  >*^  sense  of  the 

^loTl^r?  '"•r'T''  ^""*"'>'  "^y  »"thoritv,  of  one 
brand!  of  industry  without  legal  right  of  any  other  ^rson  to 

interfere  therewith  by  competition  or  othem^  SuTZt  U 

includes  engrossing  as  weU,  and  covers  controlling  the  market 

r/Z~i'  A-  «'"^'<Jen»We  portion,  of  a  particular  kind 

^nd  S  r  "■■  7"^'^''  ***  ^'^'^  detriment  of  the  pub  ic ; 
and  that  such  contracts  amount  to  that  restraint  of  trade 
or  commerce  declared  to  be  illegal.  But  the  m2poly  Tnd 
^raint  denounced  by  the  act  ara  the  monopol^and  ^ 
stoaint  of  interatate  and  international  trade  or  immer" 

result  of  the  transaction  complained  of  was  the  creation  of  a 
monopoly  m  the  manufacture  of  a  necessary  of  life. 


387 


trmXED  STATES   V.  E.  C.  KKIGHT  CO. 

.  Opinion  of  the  Court 

•In  the  view  which  we  takp  «f  *i, 

whether  because  the  tentacFes  whtrr'  IV'"^  ""*  discuss 
enes  into  the  dominant  cotorltioi? w''''  '^'  ''""^'"^  >•«««- 
therefore  there  was  no  combfna t^  T'  ^P^'-'^^l-V  put  out, 
cause,  according' to  Dolit,vT°  '"  monopolize:  or   be 

tal  may  reduce  price':SoTtr?'  ^?^^'^^^«<'-  "^  -P^- 
of  power  is  relieved ;  or  iZ^^Jlf  ^^<^''""  '-  concentration 
ni  free  to  go  i„t;  th  bu'b^ss  t  T"  *'^^'^t'-%  left 
onginal  stockholders  of  the  pSd/.  ^  "f  '"^'"•-  «"<»  ^^e 
•coming  stockholders  of  the  ImeriL  ^  "  ""^"""^^  ^^^r  be- 
competition  with  themSvt^  o"         T^^''^  ""'^'^^  go  into 

might  set  up  again  for  tSmseC  T"^^  ^''^  '''''  ^'ock, 
restraint  was  imposed.  ''  ^^^'^^'"'^  no  objectionable 

-iJeUTatXlt^^^^^^  conceding  that  the 

evidence,  that  monopofy  canT^f     ^  ''  ^^^^Wished  by  the 
act  of  Congress  in  the  mode  mITA""''^''''^  ""'Jc-  the 

It  cannot  be  denied  that  th       ^    **  ^^  ^^'^  ''"I- 
«-^  health,  and  proX^r:.".^ -State  to  prot 
good  order  and  the  pubhc  morl     T''  '"*^  *«  P'^^rve 
men  and  things  withinVws  St  f'  ^''''  ''^  ^°^c™ 
originally  and  always  belonSff  to  th  T"'""'"  '^  '^  ^''^ 
dered  by  them  to  the  generate  *  ^'''^'  "''t  ««"-ren- 

strained  by  the  Constitudon  of  fhJT^'^''  "'''•  '^'''^c^  "- 
tially  exclusive.    The  rS  of^L     ?*^  ^*^^«^'  ''"d  eLn- 
from  the  burden  of  monopoly  and  the    T  "'  ^"^^  ^tate 
the  r^ tramt  of  trade  among  such  citt '"^     '''""'"^  ^'•'"° 
States  to  deal  with,  and  this  court  h  """^  ^"^  ^'th  the 

session  of  that  power  even  to  2      f  f^^ognized  their  pos- 
employment  or  busineLLried  ,nt  "*  "'  '^''^^'"^  that'^an 
when  It  becomes  a  matt^^of ll  ,1,?" '""^  individuals, 
Portance  as  to  create  a  common  pJ/'  ;"*^'^*  «nd  im- 
citizen;  in  other  words,  wE°?  t^^^  "'  »'"^den  upon  the 
0  y,  to  which  the  citizen  itmlS?''  '  P'^^"*'^^  '"onop- 
of  which  a  tribute  can  liTS^l*^  'T'  '"*^  ''^  ">«««« 
subject  to  regulation  by  sta^  it  -^T  *'  community,  is 
other  hand,  the  power  of  P^  legislative  power.    On    he 

among  the  several'StetL  Is  afer  *"  "^^^^'^  <=«°^et   " 
does  not  p^o^ij,  ^^^     ^  '«  J^  exclusive.    The  Constituti^ 

^y  the  grant  of  this  e.clusSTor tT^  te" it^t;  ^ 


i 


ooo 


156  UNITED  STATES   REPORTS,   U. 


» 


Opinion  of  the  Conrt. 
free  except  as  Congress  might  impose  restraints.    Therefore 
It  has  been  determined  that  the  faih.re  of  Congress  to  exer- 
cise  his  exclusive  power  in  any  case  is  an  expression  of  its 
wiU  that  the  subject  shall  be  free  from  restrictions  or  imposi- 
tions upon  It  by  the  several  States,  and  if  a  law  passed  by  a 
btate  'n  the  exercise  of  its  acknowledged  powers  comes  into 
conflict  [12]  with  that  will,  the  Congress  and  the  State  can- 
not  occupy   the  position  of  equal   opposing  sovereignties, 
because  the  Constitution  declares  its  supremacy  and  that  of 
the  laws  passed  in  pursuance  thereof;  and  that  which  is  not 
supreme  must  yield  to  that  which  is  supreme.    «  Commerce 
undoubtedly,  is  traffic,"  said  Chief  Justice  Marshall,  "but 
It  is  something  more;    it  is  intercourse.    It  describes  the 
commercial  intercourse  between  nations  and  parts  of  nations 
m  all  Its  branches,  and  is  regulated  by  prescribing  rules  for 
carrying  on  that  intercourse."    That  which  belongs  to  com- 
merce IS  within  the  jurisdiction  of  the  United  States,  but 
that  which  does  not  belong  to  commerce  is  within  the  juris- 
dirtion  of  the  police  power  of  the  State.     Gibbons  v.  Oqdeti, 
9  Wheat.  1,  189,  210;  Brown  v.  Maryland,  12  Wheat'  419 
448;  The  License  Cases,  5  How.  604,  599;  Mobile  y.  /fm- 
i^'tt*^  ^J'  f  ^'  ^'««»««  y-  Ohieago  dk  If.  W.  RaUway, 

S  S'  Q  f^Khf^  ^-  ^'^^^^  ^^^  U-  S- 100;  Ir,  re  Rahrer, 
140  U.  S.  645,  665. 

The  ar^ment  is  that  the  power  to  control  the  manufac- 
ture of  refined  sugar  is  a  monopoly  over  a  necessary  of  life. 
to  the  enjoymfflit  of  which  by  a  large  part  of  the  population 
Of  the  United  States  interstate  commerce  is  indispensable,  and 
that,  therefore,  the  general  government  in  the  exercise  of  the 
power  to  regulate  commerce  may  repress  such  monopoly 
directly  and  set  aside  the  instruments  which  have  created  it. 
But  this  argmnent  cannot  be  confined  to  necessaries  of  life 
merely  and  must  include  all  articles  of  general  consumption. 
Doubtless  the  power  to  control  the  manufacture  of  a  given 
thing  involves  in  a  certain  sense  the  control  of  its  disposition, 
but  this  is  a  secondary  and  not  the  primary  sense;  and  al- 
though the  exercise  of  that  power  may  result  in  bringing  the 
operation  of  commerce  into  play,  it  does  not  control  it,  and 
aflf«jts,it  only  incidentally  and  indirectly.    Commerce  suc- 
ceeds to  manufacture,  and  is  not  a  part  of  it.    The  power  to 


389 


UNITED  STATES  V.  E.  C.  KNIGHT  CO. 
Opinion  of  the  Court 

c':il^3rSJottT:n^£T'^^*'^.-«'ebywhich 
the  power  to  supprL  1™^;!'  B.^^l^^'^f'!''  »* 
pression  of  monopoly  whenever  thattmriCth  '°  T 
by  which  commerce  is  governed  or  wkT  i         ^  ™'^ 

is  i^lf  a  monopoly  of  S™!?  "''"^^^''  *^«  ''^^^'^- 

pollL'5  7^X  ;t.ttdt:r  '"^^--r^^ 

them,  however  sometimes  pSeWsLtr^     \^^^^ 
nized  and  observed,  for  wS^S  J^'^u      ?'  ^  ^S' 
bond  of  union,  the  otheH   e^X?  JT^^  *^«  '"'^^^'^ 
the  autonomy  of  the  Bi.i^ ^^^^^^'JITlf'''  **f 
govermnent;    and  acknowledg^?S  h„w  *"'™  **' 

urgent  they  may  aonear  tn Tu  ^  I    '  '^'^'^^^e^  grave  and 

risk  be  run',  X^n\^:;^,^'Z^ ^^''''^  '"'^''.^^ 

t:sr ''  ^^"  - --dfiro/t::'  tjz:.  ~ 

thaulf po':en?S3inr  f r'"'''^  *^«  P-P-'«-  is 
exercised'TlL  lenT^^^.r''  '  '""""^"^^  ^^^^  '»«y  ^ 

iBtemationaV^::^  Z^^'V^Tr'  "^"^^^  - 
regulationofcor^apDLll'?^  "*'"'**•*•  ^^^^ 
and  not  to  matters  oTStTa  '  L^'^^^f*!  "'  ''"'^^'^ 
or  exchange  goods  tl  hT^!  ^  Contracts  to  buy,  seU, 

States,  theTrafSortaL     'l^^^  "^'"^  '^^  ^^^^al 
cles  bought  sJJi^r^*2      Vf  ""f '""mentalities,  and  arti- 

sit  amof^fte  StaL  2  ;S     T.*"'  "^'^^  *>'  ^^^  ^^n- 

regulated^  but  fhisis  L^l^  ^  ^^il^lnH  t 
«"*!  or  comimree.    The  hoi,  t.l,.,  L    T  ,^-  interstate 

for »p<.« to  .„„,her Stttel^«° ,"*,?," T»"''«""'' 


3 


390 


156   UNITED  STATES   KEPORTS,   13. 


Opinion  of  the  Court, 
of  the  court,  said :  «  Does  the  owner's  state  of  mind  in  rela- 
tion to  the  goods,  that  is,  his  intent  to  export  them,  and  his 
partial  preparation  to  do  so,  exempt  them  from  taxation! 
This  IS  the  precise  question  for  solution.  .  .  .  There 
must  be  a  point  of  time  when  they  cease  to  be  governed  ex- 
clusively by  the  domestic  [14]  law  and  begin  to  be  governed 
and  protected  by  the  national  law  of  commercial  regulation, 
and  that  moment  seems  to  us  to  be  a  legitimate  one  for  this 
purpose,  in  which  they  commence  their  final  movement  from 
the  State  of  their  origin  to  that  of  their  destination." 

And  again,  in  Kidd  v.  Pearson,  128  U.  S.  1,  20,  21,  22, 
where  the  question  was  discussed  whether  the  right  of  a  State 
to  enact  a  statute  prohibiting  within  its  limits  the  manufac- 
ture of  intoxicating  liquors,  except  for  certain  purposes, 
could  be  overthrown  by  the  fact  that  the  manufacturer  in- 
tended to  export  the  liquors  when  made,  it  was  held  that  the 
intent  of  the  manufacturer  did  not  determine  the  time  when 
the  article  or  product  passed  from  the  control  of  the  State 
and  belonged  to  commerce,  and  that,  therefore,  the  statute, 
in  omitting  to  except  from  its  operation  the  manufacture  of 
intoxicating  liquors  within  the  limits  of  the  State  for  export, 
did  not  constitute  an  unauthorized  interference  with  the 
right  of  Congress  to  regulate  commerce.    And  Mr.  Justice 
Lamar  remarked :    "  No  distinction  is  more  popular  to  the 
common  mind,  or  more  clearly  expressed  in  economic  and 
political  literature,  than  that  between  manufacture  and  com- 
merce.    Manufacture  is  transformation— the  fashioning  of 
raw  materials  into  a  change  of  form  for  use.     The  functions 
of  commerce  are  different.    The  buying  and  selling  and  the 
transportation  incidental  thereto  constitute  commerce;    and 
the  regulation  of  commerce  in  the  constitutional  sense  em- 
braces the  regulation  at  least  of  such  transportation.     . 
If  it  be  held  that  the  term  includes  the  regulation  of  all  such 
manufactures  as  are  intended  to  be  the  subject  of  commercial 
transactions  in  the  future,  it  is  impossible  to  deny  that  it 
would  also  include  all  productive  industries  that  contemplate 
the  same  thing.    The  result  would  be  that  Congress  would 
be  invested,  to  the  exclusion  of  the  States,  with  the  power  to 
regulate,  not  only  manufacturers,  but  also  agriculture,  horti- 
culture, stock  raising,  domestic  fisheries,  mining— in  short, 


UNITED  STATES   V.  E.  C.  KNIGHT  CO.  891 

Opinion  of  the  Court. 

every  branch  of  hmnan  industry.    For  is  there  one  of  them 
that  does  not  contemplate,  more  or  less  clearly,  an  interstate 
or  foreign  market?     Does  not  the  wheat  ^ower  of  ^ 
Northwest  or  the  cotton  planter  of  the  [15]  South   plairt 
Wi  """"i  '^T?'^  ''^P  ^''"^  -  «--  -  the  prill' 
vested   in    Congress   and   denied   to   the   States,   it   would 
follow  as  an  inevitable  result  that  the  duty  would  devolve  on 
Congress  to  regulate  all  of  these  delicate,  multiform  and  ^S 
mterests-interests  which  in  their  nature  are  and  ^7^ 
l«cal  in  all  the  details  of  their  successful  management  '^ 

ITie  demands  of  such  a  supervision  would  require,  not  uni- 
form legislation  generally  applicable  throughout  the  United 
States,  but  a  swarm  of  statutes  only  locally  applicable  Ind 
utterly  inconsistent.    Any  movement  toward  the  establS 
ment  of  rules  of  production  in  this  vast  country,  with  Uc 
many  different  climates  and  opportunities,  could'Lnryt  ^ 
the  sacrifice  of  the  peculiar  advantage  of  a  large  parV  of 
the  localities  in  it,  if  not  of  every  one  o^f  them.    On  th^e  o  her 
hand,  any  movement  toward  the  local,  detailed  and  incon- 
gruous legislation  required  by  such  interpretation  wouW T 
about  the  widest  possible  departure  from  the  declared  object 
of  the  clause  m  question.    Nor  this  alone.    Even  in  the  e^ 
ercise  of  the  power  contended  for,  Congress  would  be  confinTd 
to  the  regulation,  not  of  certain  branches  of  industrv   ZZ 
ever  numerous,  but  to  those  instances  in  each  and  everSra^h 
where   the   producer   contemplated   an   interstate   maS 

b  "tllUht;"  T''!  •"  ^'""^  ^"«"^**''  -  -«  have  s,.: : 
but  still  there  would  always  remain  the  possibility,  and  often 

c  r  ke't'  LTf^'  ^  P"-^"*^^  contemplated  a  d^mS 
cuteTw  he  ^V^  ""!  *u'  ^."P^'^^*"^  power  must  be  e.xe- 
cuted  by  the  State;   and  the  interminable  trouble  would  be 

exercise  the  au  hority  in  question  would  be  determined  not 
by  any  general  or  intelligible  rule,  but  bv  the  sTr^t  and 
changeable  intention  of  the  producer  in  each  and  ev^^acJof 

errand      "*"'"""  """"^  P^"'y^'"S  '^  *•>«  «t 'C-    • 
ernments,  and  more  provocative  of  conflicts  between  the  gen- 

eral  government  and  the  States,  and  less  likely  to  have  £n 

what  the  framers  of  the  Constitution  intended,  it  ZluZ 


I 


392 


156  UNITED  STATES  REPORTS,   15. 


11 


i 


Opinion  of  the  Oonrt. 

difficult  to  imagine."    And  see  Veasie  v.  Moor,  14  How  568 
674.  ' 

In  GtT>bons  v.  Offden,  Brovm  v.  Maryland,  and  other  cases 
1 161  often  cited,  the  state  laws,  which  were  held  inoperative, 
were  instances  of  direct  interference  with,  or  regulations  of, 
interstate  or  international  commerce;  yet  in  Kidd  v.  Pearson 
the  refusal  of  a  State  to  allow  articles  to  be  manufactured 
withm  her  borders  even  for  export  was  held  not  to  directly 
affect  external  commerce,  and  state  legislation  which,  in  a 
great  variety  of  ways,  affected  interstate  commerce  and  per- 
sons engaged  in  it,  has  been  frequently  sustained  because  the 
interference  was  not  direct. 

Contracts,  combinations,  or  conspiracies  to  control  domestic 
enterprise  in  manufacture,  agriculture,  mining,  production  in 
all  its  forms,  or  to  raise  or  lower  prices  or  wages,  might  un- 
questionably tend  to  restrain  external  as  well  as  domestic 
trade,  but  the  restraint  would  be  an  indirect  result,  however 
inevitable  and  whatever  its  extent,  and  such  result  would  not 
necessarily  determine  the  object  of  the  contract,  combination, 
or  conspiracy. 

Again,  all  the  authorities  agree  that  in  order  to  vitiate  a 
contract  or  combination  it  is  not  essential  that  its  result 
should  be  a  complete  monopoly;  it  is  sufficient  if  it  really 
t«ids  to  that  end  and  to  deprive  the  public  of  the  advanta«i 
whidi  flow  from  free  competition.  Slight  reflection  wiU 
diow  that  if  the  national  power  extends  to  all  contracts  and 
combinations  in  manufacture,  agriculture,  mining,  and  other 
productive  industries,  whose  ultimate  result  mav  affect  ex- 
ternal commerce,  comparatively  little  of  busines^  operations 
and  affairs  would  be  left  for  state  control. 

It  was  in  the  light  of  well-settled  principles  that  the  act  of 
July  2, 1890,  was  framed.  Cwigress  did  not  attempt  thereby 
to  Msert  the  power  to  deal  with  monopolv  directly  as  such ;  or 
to  hmit  and  restrict  the  rights  of  corporations  created  by  the 
States  or  the  citizens  of  the  States  in  the  acquisition,  control, 
«  disposition  of  property;  or  to  regulate  or  prescribe  Oie 
price  or  prices  at  which  such  property  or  the  products  thereof 
should  be  sold ;  or  to  make  criminal  the  acts  of  persons  in  the 
acquisition  and  control  of  property  which  the  States  of  their 
residence  «•  creation  sanctioned  or  permitted.    Aside  fwrni 


UNITED  STATES   V.  E.  C.  KNIGHT   CO. 
Opinion  of  the  Court 


393 


the  provisions  applicable  where  Congress  might  exercise  mu- 
I17jnicipal  power,  what  the  law  struck  at  was  combinations, 
contracts,  and  conspiracies  to  monopolize  trade  and  commerce 
among  the  several  States  or  with  foreign  nations;   but  the 
contracts  and  acts  of  the  defendants  related  exclusively  to 
the  acquisition  of  the  Philadelphia  refineries  and  the  business 
of  sugar  refining  in  Pennsylvania,  and  bore  no  direct  relation 
to  commerce  between  the  States  or  with  foreign  nations. 
Ihe  object  was  manifestly  private  gain  in  the  manufacture 
of  the  commodity,  but  not  through  the  control  of  interstate 
or  foreign  commerce.     It  is  true  that  the  bill  alleged  that 
the  products  of  these  refineries  were  sold  and  distributed 
among  the  several  States,  and  that  all  the  companies  were 
engaged  in  trade  or  commerce  with  the  several  States  and 
with  foreign  nations;  but  this  was  no  more  than  to  say  that 
trade  and  commerce  served  manufacture  to  fulfil  its  function 
Sugar  was  refined  for  sale,  and  sales  were  probably  made  at 
I'hUadelphia  for  consumption,  and  undoubtedly  for  resale 
by  the  first  purchasers  throughout  Pennsylvania  and  other 
states,  and  refined  sugar  was  also  forwarded  by  the  com- 
panies to  other  States  for  sale.     Nevertheless  it  does  not 
follow  that  an  attempt  to  monopolize,  or  the  actual  monopoly 
of,  the  manufacture  was  an  attempt,  whether  executory  or 
consummated,  to  monopolize  commerce,  even  though,  in  order 
to  dispose  of  the  product,  the  instrumentality  of  commerce 
was  necessarily  invoked.    There  was  nothing  in  the  proofs 
to  mdicate  any  intention  to  put  a  restraint  upon  trade  or 
commerce,  and  the  fact,  as  we  have  seen,  that  trade  or  com- 
merce might  be  indirectly  affected  was  not  enough  to  entitle 
complainants  to  a  decree.    The  subject-matter  of  the  sale 
was  shares  of  manufacturing  stock,  and  the  relief  sought  was 
the  surrender  of  property  which  had  already  parsed  and  the 
suppression  of  the  alleged  monopoly  in  manufacture  bv  the 
rKtoration  of  the  status  quo  before  the  transfers;  vet  the  act 
of  Congress  only  authorized  the  Circuit  Courts  to  proceed  bv 
way  of  preventing  and  restraining  violations  of  the  act  ik 
r^pect  of  contracts,  combinations,  or  conspiracies  in  restraint 
of  interstate  or  international  trade  or  commerce 

The  Circuit  Court  declined,  upon  the  pleadings  and  proofs, 
II»J  to  grant  the  relief  prayed,  and  dismissed  the  bill,  and 


394 


156  UNITED  STATES  REPOBTS,   18. 


F 


Dissenting  opinion :  Harlan,  J. 

we  are  of  opinion  that  the  Circuit  Court  of  Appeals  did  not 
err  in  affirming  that  decree. 

Decree  afflrmed. 
Mr.  Justice  Harlak,  dissenting. 

Prior  to  the  4th  day  of  March,  1892,  the  American  Sugar 
Refining  Company,  a  corporation  organized  under  a  general 
statute  of  New  Jersey  for  the  purpose  of  buying,  manufac- 
turing, refining,  and  selling  sugar  in  different  parts  of  the 
cmmtry,  had  obtained  the  control  of  all  the  sugar  refineries 
in  the  United  States  except  five,  of  which  four  were  owned 
and  operated  by  Pennsylvania  corporations— the  E.  C.  Knight 
Company,  the  Franldin  Sugar  Refining  Company,  Spreckels' 
Sugar  Refining  Company,  and  the  Delaware  Sugar  House— 
and  the  other,  by  the  Revere  Sugar  Refinery  of  Boston. 
These  five  corporations  were  all  in  active  competition  with 
the  American  Sugar  Refining  Company  and  with  each  other. 
Th^product  of  the  Pennsylvania  companies  was  about  thirty- 
three  per  cent,  and  that  of  the  Boston  company  about  two 
per  cent,  of  the  entire  quantity  of  sugar  refined  in  the  United 
States. 

In  March,  1892,  by  means  of  contracts  or  arrangements 
with  stockholders  of  the  four  Pennsjdvania  companies,  the 
New  Jersey  corporation— using  for  "^ that  purpose  its  own 
stock— purchased  the  stock  of  those  companies,  and  thus  ob- 
tained absolute  control  of  the  entire  business  of  sugar  refin- 
ing in  the  United  States  except  that  done  by  the  Boston  com- 
pany, which  is  too  small  in  amoimt  to  be  regarded  in  this 
discussion. 

"  The  object,"  the  court  below  said,  « in  purchasing  the 
Philadelphia  refineries  was  to  obtain  a  greater  influence  or 
more  perfect  emUrol  over  the  hmness  of  refining  and  selling 
sugar  in  this  country:'  This  characterization  of  the  object 
for  which  this  stupendous  combination  was  formed  is  prop- 
erly accepted  in  the  opinion  of  the  court  as  justified  by  the 
proof.  I  need  not  therefore  analyze  the  evidence  upon  this 
point.  In  its  consideration  of  the  important  constitutional 
question  presented,  this  court  assumes  on  the  record  before  us 
[19]  that  the^  result  of  the  transactions  disclosed  by  the 
pleadings  and  proof  was  the  creation  of  a  monopoly  in  the 


UNITED  STATES   V,  E.  C.  KNIGHT   CO.  395 

Dissenting  opinion :  Harlan  J 

otic  statesmen  fho  Wd  tL  ^  !"!  "f^'"''  '*'"*  '^^  P^*"" 
the  necessity  of  TnvestWti.f '*"*'*'"  ^'^  °«*  ^°^«^ 
to  deal  w; tJ,  J:  .  •  ^  "^*"'°^'  government  with  power 
10  deal  with  gigantic  monopolies  holdin«r  in  ^i,„i 

and  injuriously  controlling  in^he  r  own  "LL  S  T^' 
trade  among  the  States  in  food  produor^hrf        '  "f"* 

the  comfort  of  every  household  ZtXT  ""  ''^""'"^  '"^ 

the  nation  and  t^^lvZ^^^ ^i\::"^r]  T"  "' 
that  the  Union  be  sfren^f^!  J  *.  .  ®***^^'  **»  *^^  ^n^ 
States   preser'd     In   fflt^f  ^'^^  r~^^  ^*  *« 

No  greater  calamity  could  befall  nnrftL-Tx-        «"">try. 
destruction  of  that  aSor^^vK     ^,^ '"''''"*'*•"'  ^^^"^  t^e 

-It  might  be  ^cl:S^^Xt^:LTT  -"^^  ^  ^; 

this  court  has  ^^\A  "  fk  ,  ^ itnout  the  States  in  union," 

the  United  Sat-;    lT  T'^^  ""  ^"'^'^  P''''*'-'  ^o^v  as 
But  it  is  etfat  t'ue  thaUh^r  ^  "  ""/'"^^  '  ™-  ^'-  '^^ 
ity  of  theVJe  aTooJlLl'n"^^^^^^^ 
safety  of  the  States  arrtrattaii^of  ?,  "*'"  *^  '''' 

would  be  fatal  to  iu  ;:!j^j';^::i,x  T'''^''' 

people.    The    Constitution    whic^  nm^frat's   tL  "" 

^^rpretation  t  S^:li?a^  ^T  nt^ttft  t  ^" 

by  Chief  Justice  Marshall  safd  tha    "f '  )^  '°"'■^  '"^^""^ 
"  converted  their  league  into  a    201  „  """^""^  ^'"""^^ 

converted  their  Confess  oflmh!    f  ^'T'"''  ^^^"  '^''^  ' 

erate  on  their  coS Toneerns  a^toT:;    '^"''^  *'  '^''■'■ 

of  general  utilitv  ,„f«  „?      w  recommend  measures 

g  utility,  into  a  legislature  empowered  to  enact  laws 


396  138  UNITED  STATES  BBPOBTO,  20. 

DissentiDgopinloii:  Harlan,  J.  " 
OB  the  most  interesting  subjects,  the  whole  character  in  which 

must  be  determined  by  a  fair  consideration  of  the  instrument 
^which  that  change  was  effected."    "What  do  gentlemen 
mean,    the  court  inquired,  "by  a  strict  construction?    If 
ttey  contend  only  against  that  enlarged  construction,  which 
would  extend  words  beyond  their  natural  and  obvious  import, 
one  might  question  the  application  of  the  term,  but  should 
not  controvert  the  principle.    If  they  contend  for  that  nar- 
row  construction  which,  in  support  of  some  theory  not  to  be 
found  m  the  Constitution,  would  deny  to  the  government 
th^  powers  which  the  words  of  the  grant,  as  usuallv  under- 
stood, import,  and  which  are  consistent  with  the' general 
views  and  objects  of  the  instrument^for  that  narrow  con- 
Jruction  which  would  cripple  the  govermnent,  and  render 
It  unequal  to  the  objects  for  which  it  is  declared  to  be  insti- 
tnt^,  and  to  which  the  powers  given,  as  fairly  understood, 
r«ider  ,t  competent-then  we  cannot  perceive  the  proprietv 
of  this  sfa-ict  construction,  nor  adopt  it  as  the  rule  by  which 
the  Constitution  is  to  be  expounded."    p.  188.    On  the  some 
octaaon  the  principle  was  announced  that  the  objects  for 
which  a  power  was  granted  to  Congress,  especiallv  when 
those  objects  are  expressed  in  the  Constitution  itself,'  should 
have  great  influence  in  determining  the  extent  of  any  given 

Congress  is  invested  with  power  to  regulate  commerce  with 
foreign  nations  and  among  the  several  States.    The  power  to 
regulate  is  the  power  to  prescribe  the  rule  by  which  the  sub- 
ject regulated  is  to  be  governed;    It  is  one  that  must  be  exer- 
cised whenever  necessary  throughout  the  territorial  limits  of 
the  several  States.    Cohens  v.  Virginia,  6  Wheat.  264,  413 
The  power  to  make  these  regulations  » is  complete  in  itself, 
may  be  exercised  to  its  utmost  extent,  and  acknowledges  no 
Lmitataons,  other  than  are  prescribed  in  the  Constitution." 
It  18  plenary  because  vested  in  Congress  «  as  absolutely  as  it 
IW]  would  be  in  a  single  government  having  in  its  constitu- 
ttoH  the  same  restrictions  on  the  exercise  of  the  power  as  are 
found  in  the  Constitution  of  the  United  States."    It  may  be 
exercised  «  whenever  the  subjects  exists."    Oibbofu  v.  Ogden, 
9  Wheat  1, 195, 196.    In  his  concurring  opiniwi  in  that  case, 


UNITED  STATES   V.  E.  C.  KNIGHT   CO.  397 

Dissenting  opinion :  Harlan,  J. 
Mr.  Justice  Johnson  observed  that  the  grant  to  Congress  of 
the  power  to  regulate  commerce  carried  with  it  the  whole  sub- 
ject, leaving  nothing  for  the  State  to  act  upon,  and  that  «  ^f 
there  was  any  one  object  riding  over  every  other  in  the 
adoption  of  the  Constitution,  it  was  to  keep 'commerckl  n 
tercourse  among  the  States  free  from  all  inLious  anTpi;- 
taal  restraints."    p.   231.    « In   all  commercial   regulatC 

2„r  T  ?u^  '^^  ^"^  P«"P'«"    Mr.  Justice  Bradky 
speaking  for  this  court,  said  that  the  United  States  ai  bT 

St  T'  ^  n -^  •'  *"  '"^^'^'^^^  «'""'"«r--    I^ohUns  v. 
^i^elby  Taxing  District,  120  U.  S.  489  494 

thir^ol'^fT™"'''  "T"^  '^"^  ®*«*^^-     The  decisions  of 

edlvTs  Iffi^hTr'  '^^  r^'^""    "  ^^--<^^  undoubt- 
edly, IS  traffic,  but  It  IS  something  more :  it  is  intercourse     It 

does  not  embrace  the  completely  interior  traffic  of  the^  pec 

rve  States-that  which  is  «  carried  on  between  man  and  man 

in  a  State,  or  between  different  parts  of  the  same  State  Tn J 

which  does  not  extend  to  or  affect  other  States  "-but  U  d^ 

Te  UnTt  dTf  ^P^^/f.—e-al  intercoui^"  be  w^ 
the  United  States  and  foreign  nations  and  among  the  States 
and,  there  ore  it  includes  such  traffic  or  trade,  Lying  set' 
ing.andmterchangeof  commodities,  as  directly  kffectso^'  ^ee 

^Cimm:;:  "  ?  "**"^^  °*  ^'^^  ^-P^^  ofVlted  iat^ 
uniT^^n^^'  *'  ^7"'^  '^  "^**  '"^  *^«  Constitution,  is  a 
uni  ,  and  cannot  stop  at  the  external  boundary  line  of  each 
State,  but  may  be  introduced  into  the  interior^'  "The" 
Tacitrr  "'  ?'.  "'**'^  government  seem  to  be,  th^^t 
nation  1L^«   "^^'f  *"  *?  ""''  *^^  ^"**™''»  «'"«*™«  of  the 

These  principles  were  announced  in  Gihhom  v.  Ogden  and 

mi  tr.^°;^T'^^-  '*  '^  ^•'^  -*"-i  doctrine  of  ?ht 
ifoi  r  .K  *  "''''^*'''"  «""'"«^**  ^•^braces  something 
more  than  the  mere  physical  transportation  of  articles  of 
property,  and  the  vehicles  or  vessels  by  which  sSch  Li 
portetion  is  effected.  In  County  of  ^i^t'/^S^Tc^^ 
U.  S^  691,  702,  It  was  said  that  «  commerce  with  fo^ign 
countries  and  among  the  States,  strictly  considered,  consist 
m  intercourse  and  traffic,  including,  in  these  terms^  navj 


I    ll 


398 


156   UNITED  STATES   REPORTS,   22. 


Disseuting  opinion :  Harlan,  J. 

tion  and  the  transportation  and  transit  of  pei-sons  and  prop- 
erty, a^  well  as  the  purchase,  sale,  and  exchange  of  commodi- 
ties."   In  Gloucester  Fen^y  Co.  v.  Pennsylvania,  114  U.  S. 
196,  203,  the  language  of  the  court  was :  "  Commerce  among 
the  States  consists  of  intercourse  and  traffic  between  their 
citizens,  and   includes  the  transportation  of  persons  and 
property,  alid  the  navigation  of  public  waters  for  that  pur- 
pose, as  well  as  the  purchase,  sale,  and  exchange  of  com- 
modities.   The  power  to  regulate  that  commerce,  as  well  as 
commerce  with  foreign  nations,  vested  in  Congress,  is  the 
power  to  prescribe  the  rules  by  which  it  shall  be  governed, 
that  is,  the  conditions  upon  which  it  shall  be  conducted ;  to 
determine  when  it  shall  be  free,  and  when  subject  to  duties 
or  other  exactions."    In  Kidd  v.  Pearson,  128  U.  S.  1,  20, 
it  was  said  that  "  the  buying  and  selling,  and  the  transporta- 
tion  incidental   thereto   constitute    commerce."     Interstate 
commerce  does  not,  therefore,  consist  in  transportation  sim- 
ply.   It  includes  the  purchase  and  sale  of  articles  that  are 
intended  to  be  transported  from  one  State  to  another— every 
species  of  commercial  intercourse  among  the  States  and  with 
foreign  nations. 

In  the  light  of  these  principles,  determining  as  well  the 
scope  of  the  power  to  regulate  commerce  among  the  States  as 
the  nature  of  such  commerce,  we  are  to  inquire  whether  the 
act  of  Congress  of  July  2,  1890,  c.  64T,  entitled  "An  act  to 
protect  trade  and  commerce  against  unlawful  restraints  and 
monopolies,"  26  Stat.  209,  is  repugnant  to  the  Constitution. 

By  that  act  "  every  contract,  combination  in  the  form  of 
trust  or  otherwise,  or  conspiracy,  in  restraint  of  trade  or  com- 
merce among  the  several  States  or  with  foreign  nations,"  is 
declared  to  be  illegal,  and  every  person  making  any  such 
contract,  or  engaging  in  any  such  combination  or  conspiracy, 
[23J  is  to  be  deemed  guilty  of  a  misdemeanor,  and  punish- 
able, on  conviction,  by  a  fine  not  exceeding  five  thousand 
dollars,  or  by  imprisonment  not  exceeding  one  year,  or  by 
both  said  punishments  in  the  discretion  of  the  court.  §  1.  It 
is  also  made  a  misdemeanor,  punishable  in  like  manner,  for 
any  person  to  "monopolize,  or  attempt  to  monopolize,  or 
combine  or  conspire  with  any  other  person  or  persons  to 
monopolize,  any  part  of  the  trade  or  commerce  among  the 


UNITED   STATES   V,  E.  C.  KNIGHT   CO.  399 

Dissenting  opinion :  Harlan,  J. 

^6m'«/^^a^.,  or  with  foreign  nations."  §2.  The  act  also  de- 
clares illegal  "  every  contract,  combination  in  form  of  trus^ 
or  otherwise,  or  conspiracy,  in  restraint  of  trade  or  com- 
merce in  any  Territory  of  the  United  States  or  of  the  District 
r!  ^^^7^^^'  ^^  ^^  ^^^tr^i^t  of  trade  or  commerce  between 
any  such  Territory  and  another,  or  between  any  such  Terri- 
tory  or  Territories  or  any  State  or  States  or  the  District  of 
Co  umbia,  or  with  foreign  nations,  or  between  the  District  of 
Columbia  and  any  State  or  States  or  foreign  nations,"  and 
prescribes  the  same  punishments  for  every  person  making 

con'^pT^^^^^^^^  "  '"^'^'"^  '"  ^"^  ^"^^  combination  of 

Tbe  fourth  section  of  the  act  is  in  these  words:   "Sec  4 
The  several  Circuit  Courts  of  the  United  States  are  hereby 
invested  with  jurisdiction  to  prevent  and  restrain  violations 
of  this  act,,   and  it 'shall  be  the  duty  of  the  several  distric 
attorneys  of  the  United  States,  in  their  respective  distSts 
under  the  direction  of  the  Attorney  General,  to  ir^tiuS 
proceedings  in  equity  to  prevent  and  restrain  such  violation. 
Such  proceedings  may  be  by  way  of  petition  setting  forth 
the  case  and  praying  that  such  violation  shall  be  enjoined 
slSrT  P^f  !^^*^^-.,^en  the  parties  complained  of 
shall  have  be^n  duly  notified  of  such  petition  the  court  shall 

oTtrt::Tr  "^/  '^'  ^^  ^^^  ^^^^^^^  -^  deteri::fnatn 
llTl  '  .  '^^'"^'''^  '""^  P^^^*^^^  ^^d  before  final  de- 
cree, the  court  may  at  any  time  make  such  temporary  .estraS- 

"rfmS:-  '^  ^^^^^^^^-^-  «^^"  ^  deemed  ^iTZ 

JvZtnrT'  *^.^/^f  P^^^bl^  that  no  comUnati^n  of 

3aS ts  Ln  .^f  ^  r'  'f  ^^^^'  i'^Po^  unlawful 

restramts  upon  interstate  trade,  whether  upon  transportation 

tTanrryitorr^^^^^^^^^  ^^*~^^^  apdUrarpitd^ 

trans-  [34]  portation,  any  more  than  it  can,  of  riaht  imno^ 

oTrStf  ^Sr^^  "r  ^'^  --P^^^ely^nSl^^^^^^^ 
oi  a  btate.  The  supposition  cannot  be  indulged  that  thJ« 
general  proposition  will  be  disputed.    If  it  bf  true  that  ^ 


400 


166  UNITED  STATES  KEPOBTS,   24. 


|l 


Dissenting  opinion :  Harlan,  J. 
one  primary  object  of  the  Union,  which  was  to  place  com- 
merce among  the  States  under  the  control  of  the  common 
government  of  all  the  people,  and  thereby  relieve  or  protect 
it  against  burdens  or  restrictions  imposed,  by  whatever 
authority,  for  the  benefit  of  particular  localities  or  special 
interests. 

The  fundamental  inquiry  in  this  case  is.  What,  in  a  legal 
sense,  is  an  unlawful  restraint  of  trade  ? 

Sir  William  Erie,  formerly  Chief  Justice  of  the  Common 
Pleas,  in  his  essay  on  the  Law  Kelating  to  Trades  Unions, 
well  said  that  "  restraint  of  trade,  according  to  a  general 
prmciple  of  the  common  law,  is  unlawful;"  that  «  at  common 
law  every  person  has  individually,  and  the  public  also  have 
colkcttrely,  a  right  to  require  that  the  course  of  trade  ^ould 
be  kept  free  from  unreasonable  obstruction;  "  and  that  "  the 
right  to  a  free  course  for  trade  is  of  great  importance  to 
commerce  and  productive  industry,  and  has  been  carefully 
mamtained  by  those  who  have  administered  the  common 
law."    pp.  6,  7,  8. 

There  is  a  partial  restraint  of  trade  which,  in  certain  cir- 
cumstances, is  tolerated  by  the  law.    The  rule  upon  that 
subject  IS  stated  in  Oregon  Steam  Nav.  Co.  v.  Winsor,  20 
Wall.  64,  66,  where  it  was  said  that  "  an  agi-eement  in  general 
restramt  of  trade  is  illegal  and  void ;  but  an  agreement  which 
operates  merely  in  partial  restraint  of  trade  is  good,  provided 
It  be  not  unreasonable  and  there  be  a  consideration  to  sup- 
port It.    In  order  that  it  may  not  be  unreasonable,  the  re- 
straint imposed  must  not  be  larger  than  is  required  for  the 
necessary  protection  of  the  party  with  whom  the  contract  is 
made.    Homer  v.  Graves,  7  Bing.  735,  743.    A  contract, 
even  on  good  consideration,  not  to  use  a  trade  anywhere  in 
England  is  held  void  in  that  country  as  being  too  general  a 
restraint  of  trade.'* 

[261  But  a  general  restraint  of  trade  has  often  resulted 
from  combinations  formed  for  the  purpose  of  controlling 
pnoes  by  destroying  the  opportunity  of  buyers  and  sellers 
to  deal  with  each  other  upon  the  basis  of  fair,  open,  free 
competition.  Combinations  of  this  character  have  frequently 
been  the  subject  of  judicial  scrutiny,  and  have  always  been 
condemned  as  illegal  because  of  their  necessary  tendency  to 


401 


vmmn  states  v.  k  c.  kkight  co. 

Dissenting  opinion :  Harlan  J 
restrain  trade.    Such  comh;.  *• 

and  are  crimes  agains    tt  2"'  "t  ''''^''  '=*'"--  "^^t 
that  character  it  will  be  wellttfer      ""'  "*  '""^  '^^  °* 

in  Morris  Bvn  Coal  Co  v  »      f 
173,   184,   186,   x^,,  tL  princtlfT  ""'f  "'"•'  '^  ^^^  ^^■ 

;ahdity  of  a  contract  made  See„  I"".  ^""^  ""^  *«  ^- 
Pennsylvania,  by  which  thev  di^Z,  k  !  '""'  ^''''PO'-ations  of 
coal  regions  of  which  thev  ha^^h      ^'''''"  themselves  two 
the  case  found  that  tE  col'^- '""'^'"-     The  referee  in 
arrangement  the  power  treoZur  "T'"''  ""'^^'-  ^he" 
«>nous  coal  i„  the  northern  part  oftr^^w  '^^'^''  ^^'  ^itu- 
bination  was,  therefore,  a  reiLnt  *"*''  ""^  *«r  com- 

Pubhc  policy.  In  response  to?he  "^"'^  '''^'  ^""^  against 
P'-rpose  of  the  combiiation  was  toT^^*'«"  ^^^at  the  real 
vance  the  quality  of  coal  and  1  ^  r'"^""  ^^P^n^'S  to  ad- 
'ntended  to  be  supplied  in  the  be  J ord  7  'I"  *^«  -"-tets 
Supreme  Court  of  Penn«vl7  .^^''  *°  ^^e  consumer  the 

the  defendants;   but  it  2.7^.  "^^    "  This  is  denied  by 

these  positions  are  sustaiX- not     Vl  •'"'"**^™'  whether 
ness,  ,t  does  not  follow  thaT  T    ^^'"'"ing  their  correct- 
contract  from  the  obnoxi^S    e^!f  ''^^""^"^^^  redeem  the 
by    he  referee.    The  imporTant^r     ^  f  ""^'"^'^  P'-e^ent  J 
control  this  immense  coaSd     tt    V  *\'  '""'^  «°"'Panies 
supply  of  bituminous  coal  to  \l    J^  ''  *"  ^''^at  source  of 
arge  territories  westward    that tv  fv ''  "'  ^^^  ^^''^  and 
the  price  of  coal  in  this  exten.    ^      '  ''*"*™'=t  they  control 
^ms  it  would  not  c^mmSTleT^'V"^  ^'^''^  ^riS 
trade;  that  it  concerns  an  arl!   f  ^  ^'^^  ""'"''al  laws  of 

corn      .  ^''^  "^  *=°al  as  a  fuel  and  th  '"^^  '■^^'«"-  and 

combination  of  all  the  comnanie  "  '!  accomplished  bv  a 

bnsiness  [26]  in  ^he  hrT^l^l  T^'^  '"  '^^'  branch  oJ 
combination  is  wide  in  scope  f^^"  ?'"'  ^^^  "P^'-ate.    The 
jurious  in  effects.     TheseT'inT!    J''  '*'  '"^"«"««'  and  in- 
agamst  public  policy, 1w"f  'ts  features,  the  co;tract  Js 
;n  the  same  ca^:  «  The  effe' ,       '?''"''"•«  ^«'d-"    Agai^ 
tere^s  lead  to  the  con^de'S  of     ''7^  ^^^  *'^«  P"Wif  b ' 
^eight  in  determining  thlilL     .  f  '""*''"'•  ^«ature  of  great  " 
^he  combination  resorldt  byCfif  *'^  ''-^-''  ^o^^- 
11808-vo,.  1^  „__2fl  ^  companies.    Sin<.lv 


402 


156  UNITED  STATES  REPORTS,  26. 


Dissenting  opinion :  Marian,  J. 
each  might  have  suspended  deliveries  and  sales  of  coal  to 
suit  Its  own  interests,  and  might  have  raised  the  price,  even 
though  «i,s  might  have  been  detrimental  to  the  public  in- 
terest.   There  is  a  certain  freedom  which  must  be  allowed  to 
every  one  in  the  management  of  his  own  affairs.    AVhen 
competition  is  left  free,  individual  error  or  follv  wUl  een- 
erally  find  a  correction  in  the  conduct  of  others."    But  here 
IS  a  combination  of  all  the  companies  operating  in  the  Bloss- 
huTg  and  Barclay  mining  regions,  and  controllinff  their  en- 
tare  productions.    They  have  combined  together' to  govern 
the  supply  and  the  price  of  coal  in  all  the  markets  from  the 
Hudson  to  the  Mis.sissippi  rivers,  and  from  Pemisylvania 
to  the  lakes.    This  combination  has  a  power  in  its  con- 
federated form  which  no  individual  action  can  confer     The 
pub  ic  interest  must  succumb  to  it,  for  it  has  left  rfo  com- 
petition free  to  correct  its  baleful  influence,    men  the  sup- 
ply  of  coal  is  suspended  the  demand  for  it  becomes  importu- 
nate, and  prices  must  rise.    Or  if  the  supply  goes  forward, 
the  price  fixed  by  the  confederates  must  accompany  it.    The 
domestic  hearth,  the  furnaces  of  the  iron  master,  and  the  fires 
of  the  mannfactnror,  all  feel  the  restraint.-while  manv  de- 
pendent hands  are  paralyzed  and  hungry  mouths  are  stinted. 
The  influence  of  a  lack  of  supply  or  a  rise  in  the  price  of  an 
article  of  such  prime  necessity  cannot  be  measured.    It  per- 
meates the  entire  mass  of  community,  and  leaves  few  of  its 
members  untouched  by  its  withering  blight.    Such  a  combi- 
nation IS  more  than  a  contract ;  it  is  an  offence.    '  I  take  it ' 
said  Gibson  J., '  a  combination  is  criminal  whenever  the  act 
to  be  done  has  a  necessary  tendency  to  prejudice  the  public 
^werT?r  '"'l'^:'^"'''^'  by  ™i»^«y  subjecting  them  to  the 

the  [27]  latter  whether  of  extortion  or  of  mischief.'  Com- 
monroealh  v.  CarlisU,  Brightly,  (Penn.,)  40.  In  all  sul 
combinations  where  the  purpose  is  ipjurions  or  unlawS 
^e  gist  of  the  offence  is  the  conspiracy.  Men  can  often  do 
by  the  combination  of  many  what  severallv  no  one  could 

L^t  "  ^  "'J^*"**  '"'"  "•^"^  ^^^"  •^°"«  ^y  *»»«  ^«"W  be  inno- 
wWh  ♦.,    f"*  '"  a  potency  in  numbers  when  combined, 

qi^nt "  ''^""^'^^'  ^^^"^  ^J"^  '«  the  conse- 


T* 


r 


.» 


t 


UNITED   STATES   V.  E.  C.  KNIGHT  CO.  403 

•  Dissenting  opinion :  Harlan  J 

to  give  one  of  them  the  monopoly  of  the  tr«Ho    ^^^^n  was 

tracts  desiimpri  Z  "'^^''r    ?    ^^^  P«blic,  and  that  all  con- 

tained,  the  prices  of  articks  of  pure  nee  sjitv  su  h  "t 
flour  and  other  indispensable  —S  ^^  Jir'^T^.^r'^ 
cially  raised  to  a  ruinous  ex-tent  fn,.  .        1-      ^  ''^' 

Booker  v.  Vandewater,  4  Denio  35]  %^9     c      .       ^*^  "^ 
5  Denio,  434;  SaraU.a  ^anTv.'Skl!'/??  "  ^^^' 
In  Central  Ohio  Salt  Co.  v.  GMrie,  35  Ohio  It  666  679 
the  principal  question  was  as  to  the  Walitv  of  1  '  f-    ' 

of  substantially  all  the  manufactrreiof  fait  inVr'"''*^? 

and  to  ^^^^z:t::^-:^^i^^ 

cheaply  as  possible    anH  7/       ^^''^'^^^  *»  t^e  consumer  as 

tend'to  advaC  LVefp^L:^^  '°  """T^'  '^'^•^^ 
public.     [281  Thl  f '     .     !  '"^""^  ''^  *be  general 

-nt  is  ti  esLlish  a  mol  ran? rj  1  "^>^  *"*  ^^- 
in  trade,  and  for  that  rZ^^nltltlTlT^'f''' 
the  courts  will  not  aid  in  its  enforTment  It^f  ^  '^' 
to  say  that  competition  in  th  '"^r^^^^'  "  '^  ^o  answer 
stroyed  or  tZ  ttl      •       ^."'^*  *''**^^  ^»«  ««*  in  ^ct  de- 

degree  of  imWinfl?!^?  T  '^^  *°  ^"*1"'^«  ««  *«  the 

know  thatThe%e"?^h?  .   ^r  *'  ^""ic;   it  is  enough  to 
rious  to  ?he  puMc"      '    *'"''"'=^  **'  ^"^^^  contracts  is  inju- 


404 


156   UNITED  STATES   REPORTS,   28. 


DiHsenting  opinion :  Harlan,  J. 

In  Craft  v.  McConoughy,  79  Illinois,  346,  349,  350,  which 
related  to  a  co^obination  between  all  the  grain  dealers  of  a 
particular  town  to  stifle  competition,  and  to  obtain  control 

«li^?  ^"^^  ^^  ^*^^"'  *^®  Supreme  Court  of  Illinois  said : 
While  the  argument,  upon  its  face,  would  seem  to  indicate 
that  the  parties  had  formed  a  copartnership  for  the  purpose 
of  trading  in  grain,  yet,  from  the  terms  of  the  contract,  and 
the  other  proof  in  the  record,  it  is  apparent  that  the  true 
object  was,  to  form  a  secret  combination  which  would  stifle 
all  competition,  and  enable  the  parties,  by  secret  and  fraudu- 
lent means,  to  control  the  price  of  grain,  cost  of  storage,  and 
expense  of  shipment.    In  other  words,  the  four  firms,  by  a 
shrewd,  deep-laid,  secret  combination,  attempted  to  control 
and  monopolize  the  entire  grain  trade  of  the  town  and  sur- 
rounding country.    That  the  effect  of  this  contract  was  to 
restrain  the  trade  and  commerce  of  the  country,  is  a  propo- 
sition that  cannot  be  successfully  denied.    We  understand 
It  to  be  a  well-settled  rule  of  law,  that  an  agreement  in  gen- 
eral restraint  of  trade  is  contrary  to  public  policy,  ille<ral 
and  void,  but  an  agreement  in  partial  or  particular  restr  iTnt 
upon  trade  has  been  held  good,  where  the  restraint  was  only 
partial,  consideration  adequate,  and  the  restriction  reason- 
able."   « While  these  parties  were  in  business,  in  competi- 
tion  with  each  other,  they  had  the  undoubted  right  to  estab- 
lish their  own  rates  for  grain  stored  and  commissions  for 
shipment  and  sale.    They  could  pay  as  high  or  low  a  price 
for  gram  as  they  saw  proper,  and  as  they  could  make  con- 
tracts with  the  producer.    So  long  as  competition  was  free 
the  interest  of  the  public  was  safe.    The  laws  of  trade   in 
connection  with    the  right  of    competition,  were    all  'the 
[S9]  guaranty  the  public  required,  but  the  secret  combina- 
tion  created  by  the  contract  destroyed  all  competition    and 
created  a  monopoly  against  which  the  public  interest  had 
no  protection." 

These  principles  were  applied  in  People  v.  Chicago  Gas 
Trust  Co.,  130  Illinois,  269, 292, 297,  which  involved  the  valid- 
ity of  a  corporation  formed  for  the  purpose  of  operating  gas 
works,  and  of  manufacturing  and  selling  gas,  and  which,  for 
the  purpose  of  destroying  competition,  acquired  the  stock  of 
four  othor  gas  companies,  and  thereby  obtained  a  monopoly 


'. 


UNITED   STATES   V.  E.  C.  KNIGHT   CO.  405 

Dissenting  opinion:  Harlan,  J. 
in  the  business  of  furnishing  illuminating  gas  to  the  city  of 
Chicago  and  Its  inhabitants.    The  court,  in  declaring  the  or- 
ganization of  the  company  to  be  illegal,  said :  «  The  fact  that 
the   appellee,   almost  immediately   after   its   organization, 
bought  up  a  majority  of  the  shares  of  stock  of  each  of  these 
companies,  shows  that  it  was  not  making  a  mere  investment 
of  surplus  funds,  but  that  it  designed  and  intended  to  brimr 
the  four  companies  under  its  control,  and  by  crushing  Zt 
competiiion  to  monopolize  the  gas  business  in  Chicago.'' 
Of  what  avail,"  said  the  court,  "  is  it  that  anv  number  of 
gas  companies  may  be  formed  under  the  general  incorpora- 
tion law  If  a  giant  trust  company  can  be  clothed  with  the 
power  of  buying  up  and  holding  the  stock  and  property  of 
such  companies   and,  through  the  control  thereby  attained, 

c'otbt'L""  "^"*""^  ^"^^  "^'^  ^'^^  -*o  «-  ^-^ 
So,  in  India  Bagging  Association  v.  Koch,  14  La.  Ann 
168  where  the  court  passed  upon  the  legality  of  an  associa- 
tion of  various  commercial  firms  in  New  Orleans  that  were 
engaged  in  the  sale  of  India  bagging,  it  was  said:  «  Th^ 
agreement  between  the  parties  was  palpably  and  unequivo- 

T^JJ      T        /"  '■"f'""'"*  °*  *™<*^'  ''"d  to  enhance 
the  price  in  the  market  of  an  article  of  primary  necessity 
o  cotton  planters.      Such  combinations  are^ontr^yTpuK 
he  order,  and  cannot  be  enforced  in  a  court  of  justice." 

fori  38?  £r  If-'i  ^;  "^r '^^  ^"^  ^-  ^-^^Z-,  re  Cali- 
fornia   38  i,  390,  which  related  to  a  combination,  the  result 

fonn^r  r.f '"  u-  """"^  '"'^""  manufacturers,  the  court 
tound  that  the  object,  purpose,  and  consideration  of  those 
contracts  was  to  form  a  combination  among  all  the  manufac- 
turers of  lumber  [30]  at  or  near  a  particflar  place  for  ti^e 
«o  e  purpose  of  increasing  the  price  of  that  artkle,   imUing 

the  Teat  1fi«i        ."l^^u"  ™«»"f''<=t„red  near  that  place  for 

tZ  «^;«         *t     *•"'  ^"'"bmation  to  be  illegal,  obLving 
tihat     among  the  contracts  illegal  under  the  common  law 

co^^^Cj      f\  '""''■'•^*'  ^'^'^'^  individuals  to  prevent 
competition  and  keep  up  the  price  of  articles  of  utility." 


406 


156  UNITED  STATES  BEPORTS,  30. 


f      ( 


Dissenting  opinion :  Harlan,  J. 

It  further  said  tliat  while  the  courts  had  nothing  to  do  with 
the  results  naturally  flowing  from  the  laws  of  demand  and 
supply,  they  would  not  respect  agreements  made  for  the  pur- 
pose of  "  taking  trade  out  of  the  realm  of  competition,  and 
thereby  enhancing  or  depressing  prices  of  commodities." 

A  leading  case  on  the  question  as  to  what  combinations  are 
illegal  as  being  in  general  restraint  of  trade,  is  Richardson 
V.  Buhl,  77  Michigan,  632,  035,  657,  660,  which  related  to 
certain  agreements  connected  with  the  business  and  opera- 
tions of  the  Diamond  ^latch  Company.  From  the  report  of 
the  case  it  api>ears  that  that  company  was  organized,  under 
the  laws  of  Connecticut,  for  the  purpose  of  uniting  in  one 
corporation  all  the  match  manufactories  in  the  United  States, 
ahd  to  monopolize  and  control  the  business  of  making  all 
the  friction  matches  in  the  country,  and  establish  the  price 
thereof.  To  that  end  it  beciime  necessary,  among  other 
things,  to  buy  many  plants  that  had  become  established  or 
were  about  to  be  established,  as  well  as  the  property  used  in 
connection  therewith.  Chief  Justice  Sherwood  of  the  Su- 
preme Court  of  Michigan  said  :  "The  soJe  object  of  the 
corporation  is  to  make  money  by  having  it  in  its  power  to 
raise  the  price  of  the  article,  or  diminish  the  quantity  to  be 
made  and  used,  at  its  pleasure.  Thus  both  the  supply  of  the 
article  and  the  price  thereof  are  made  to  depend  upon  the 
action  of  a  half  dozen  individuals,  more  or  less,  to  satisfy 
their  cupidity  and  avarice,  who  may  happen  to  have  the  con- 
trolling interest  in  this  corporation — an  artificial  person, 
governed  by  a  single  motive  or  purpose,  which  is  to  accumu- 
late money  regardless  of  the  wants  or  neces-  [31]  sities  of 
over  60.000,000  people.  The  article  thus  completely  under 
their  control,  for  the  last  fifty  years,  has  come  to  be  re- 
garded as  one  of  necessity,  not  only  in  every  household  in 
the  land,  but  one  of  daily  use  by  almost  every  individual  in 
the  country.  It  is  difficult  to  conceive  of  a  monopoly  which 
can  affect  a  greater  number  of  people,  or  one  more  extensive 
in  its  effect  on  the  country,  than  that  of  the  Diamond  Match 
Company.  It  was  to  aid  that  company  in  its  purposes  and 
in  carrying  out  its  object  that  the  contract  in  this  case  was 
made  between  those  parties,  which  we  are  now  asked  to  aid 
in  enforcing.    Monopoly  in  trade,  or  in  any  kind  of  business 


UNITED   STATES   V,  E.  C.  KNIGHT   CO. 


407 


f 


Dissenting  opinion :  Harlan,  J. 

in  this  country,  is  odious  to  our  form  of  government.  It  is 
sometimes  permitted  to  aid  the  government  in  carrying  on 
a  great  public  enterprise  or  public  work  under  governmental 
control  in  the  interest  of  the  public.  Its  tendency  is,  how- 
ever, destructive  of  free  institutions  and  repugnant  to  the  in- 
stincts of  a  free  people,  and  contrary  to  the  whole  scope  and 
spirit  of  the  Federal  Constitution,  and  is  not  allowed  to 
exist  under  express  provisions  in  several  of  our  state  con- 
stitutions. .  .  .  All  combinations  among  persons  or  cor- 
porations for  the  purpose  of  raising  or  controlling  the  prices 
of  merchandise,  or  any  of  the  necessaries  of  life,  are  mo- 
nopolies and  intolerable ;  and  ought  to  receive  the  condemna- 
tion of  all  courts." 

In  the  same  case,  Mr.  Justice  Champlin,  with  whom  Mr. 
Justice  Campbell  concurred,  said :  "  There  is  no  doubt  that 
all  the  parties  to  this  suit  w^ere  active  participants  in  perfect- 
ing the  combination  called  '  The  Diamond  Match  Company,' 
and  that  the  present  dispute  grows  out  of  that  transaction, 
and  is  the  fruit  of  the  scheme  by  which  all  competition  in  the 
manufacture  of  matches  was  stifled,  opposition  in  the  business 
crushed,  and  the  whole  business  of  the  country  in  that  line 
engrossed  by  the  Diamond  Match  Compam\  Such  a  vast 
combination  as  has  been  entered  into  under  the  above  name 
is  a  menace  to  the  public.  Its  object  and  direct  tendency  is  to 
prevent  free  and  fair  competition,  and  control  prices  through- 
out the  national  domain.  It  is  no  answer  to  sav  that  this 
monopoly  has  in  fact  reduced  the  price  of  friction  matches. 
That  policy  may  have  been  necessary  to  crush  competition. 
[32]  The  fact  exists  that  it  rests  in  the  discretion  of  this 
company  at  any  time  to  raise  the  price  to  an  exorbitant  de- 
gree. Such  combinations  have  frequently  been  condemned 
by  courts  as  unlawful  and  against  public  policy."  See  also 
Raymond  v.  Leavitt^  46  Michigan,  447,  and  Texas  Standard 
Oil  Co.  V.  Adoue^  83  Texas,  650. 

This  extended  reference  to  adjudged  cases  relating  to  un- 
lawful restraints  upon  the  interior  traffic  of  a  State  has  been 
made  for  the  purpose  of  showing  that  a  combination  such  as 
that  organized  under  the  name  of  the  American  Sugar  Refin- 
ing Company  has  been  uniformly  held  by  the  courts  of  the 
States  to  be  against  public  policy  and  illegal  because  of  its 


408 


156  UNITED  STATES  BEPOBTS,  32. 


'      ''  Mi 


U  / 


Bissenting  opinion ;  Harlan  J 

Z7HYi^7i^  i-Pose  unproper  restraints  upon  trade. 
S,rt^r;i,  T^!  '>7"°^"l  ^  «>«  judgment  of  any  Circuit 
Court  of  the  Umted  States  in  a  case  between  parties  in  Xch 

ments  of  the  state  courts  rest  upon  general  princinles  of  law 
and  not  necessarily  upon  statutoiy  provisionrexpreilV  ^ 
demmng  restraints  of  trade  impisTd  by  TSiS  fZ" 

rLTr.  ?'  "''"^' '"  ^e- o'  the  auth^  itis  it  ;m 

not  be  doubted  that  it  would  be  comoetent  f„r  «  «*  f'       J 

P^  of  protecting  Its  people  against  fraud  and  injusticf  to 
make  it  a  pubhc  offence  punishable  by  fine  and  impri  1^'  t 
for  individuals  or  corporations  to  make  contract  ^7^ 
bina  ions,  or  engage  in  conspiracies,  which  unduly  r^aTn 

rorsr;::StuTs;Xoriitf^^'  -^  ^-^ 

or  restraming  such  combinations  and  conspiracies.  ^ 

npnnTo     T* «,      u  ,       ,  country,  and  we  are  one 

Ke  Un  t?d%^'^''':^^  •'^  ""'^  ''PP"*='"'>«  *«  e-ery  part 
Tk^   •        J-  //"^^^^^®  With  the  enforcement  of  such  thIaq 

among  the  StatU    ^natever  kind,  to  the  free  course  of  trade 
*h^  «      *  ;    ^"  ^  *^""'&  1*  would  not  interfere  with 

the  'autonomy  of  the  States,"  because  the  power  dms  to  nrl 

Sf  trstt^rr  ;^  ^^^--'^  ^- br^peo^iHf 

aLi'uLlyl^,  etep?:  ^Sr'"'  *"'^'  ""''''''«''=  '^ 
may  be  iLden'tallyT  indi^^i;":^!^ ^  ^'T 

^'iumg,  ys  U.  b.  99,  103.     It  is  thft  rAncfUi,*,*^     xi. 

i.w  .,  ,h,  U„a,  ..ioh  i„e,i  SnST'Sr^otT'^' 


Oj 


409 


UNITED  STATES  ».  E.  C.  KNIGHT  CO. 
Dissenting  opinion :  Harlan,  J. 
tect  commerce  among  the  States  against  burdens  and  exao 

lt:  ™iuS"  ""'7/"'  ^"'••''^'^  ^^  what^i^authrr  *;■ 

TeSunLTtyiJ^tirof  thl  ^"*^'  '^  ^'^^^  ^'^*™ 

ins^ument  creates.^  trr^ii^SXtft  r 

urbs  or  unreasonably  obstructs  freedo^  in  buySg  and  ^11 

ing  arhcles  manufactured  to  be  sold  to  persons  inXr  StTt^' 

such  an  U  i/Jild  :nlylt  rrSUT  oltTfitdt 
a  government  which,  this  court  has  said,  wfs  The  g"  e« 

tS  ZTV7T  f  ^^^^^  ^^  ^"'  -pi  i7at 

acting  tor  all.    McCulloch  v.  Man/land,  4  Wheat  316  4nn 
of  difflnT^rr '  *'L** ^ '"'"^-^«- l^twS co'ptatioi 

what  shall  and  what  shall  nnlT.        authority  to  say 
States      rwi  A^^^       a  ^  ^'^nufactured  in  the  several 

oiates.     [«f4j  /jf^^^  y  Pearson.  12fi  11  d  i  ™»„    m  j  • 

intoxicating  liquors  inn  s/  f  ^''^  manufacture  of 

respective  Ju^dSrs'^s'^eJerrSf  thS'^^  ""'^"  ''^''' 
never  surrendered  to  the  natToITgoJ^Lrnt'' J^^  ^T""' 
for  the  health,  morals,  and  safety  of  tlTp:;^,:'  '""'"^■ 

monorolirthrSf:?  "rr^""  ^^  *«  ^  l:We<,.  to 

to  be'sold  if  other  Stated!;;""*:  ~*''^*""'^  '^  ^«- 
n  otner  btates-no  question  as  to  combinations 


410 


156  UNITED  STATES  REPORTS,  34. 


Dissenting  opinion :  Harlan.  J. 

in  restraint  of  trade  as  involved  in  the  buying  and  seUing  of 
articles  that  are  intended  to  go,  and  do  go,  and  will  always  go, 
into  commerce  throughout  the  entire  country,  and  are  used  by 
the  people  of  all  the  States,  and  the  making  or  manufacturing 
of  which  no  State  could  forbid  consistently  with  the  liberty 
that  eveiy  one  has  of  pursuing,  without  undue  restrictions, 
the  ordinary  callings  of  life.  There  is  no  dispute  here  as  to 
the  lawfulness  of  tlie  business  of  refining  sugar,  apart  from 
the  undm  rmtramt  which  the  promoters  of  such  hnsmess, 
who  have  combined  to  control  prices,  neek  to  put  upon  the 
freedom  of  interstate  tn/fffc  hi  that  mtif  le. 

It  may  be  admitted  (hat  an  act  which  did  nothing  more 
than  forbid,  and  which  had  no  other  object  than  to  forbid 
the  mere  refining  of  sugar  in  any  State,  would  be  in  excess 
of  any  power  granted  to  Congress.     But  the  act  of  1800  is  not 
of  that  character.     It  does  not  strike  at  the  manufacture  sim- 
ply of  articles  that  are  legitimate  or  recognized  subjects  of 
commerce,  but  at  eomUnations  that  unduly  restrain,  because 
they  monopolize,  the  huylng  and  ftelling  of  artJrhs  which  are 
to  go  into  interstate  commerce.     In  State  v.  Stewart,  59 
Vermont,  273,  286,  it  was  said  that  if  a  combination  of  per- 
sons "seek  to  restrain  trade,  or  tend  to  the  destruction  of  the 
material  prop-  [35]  erty  of  the  country,  thev  work  injury 
to  the  whole  people."    And  in  State  v.  Glidden,  55  Connect- 
icut,  46,  75,  the  court  said :  "Any  one  man,  or  any  one  of 
several  men  acting  independently,  is  powerless;  but  when 
several  combine  and  direct  their  united  energies  to  the  accom- 
plishment of  a  bad  purpose,  the  combination  is  formidable. 
Its  power  for  evil  increases  as  its  numbers  increase. 
The  combination  becomes  dangerous  and  subversive  of  the 
rights  of  others,  and  the  law  wisely  says  it  is  a  crime."    Chief 
Justice    Gibson  well  said    in    Commonwealth  v.   Carlisle 
Brightly,  (Penn..)  36,  41:  "There. is  between  the  different 
parts  of  the  body  politic  a  reciprocity  of  action  on  each  other, 
which,  like  the  action  of  antagonizing  muscles  in  the  natural 
body,  not  only  prescribes  to  each  its  appropriate  state  and 
.-action,  but  regulates  the  motion  of  the  whole.    The  effort  of 
an  individual  to  disturb  this  equilibrium  can  never  be  percep- 
tible, nor  carry  the  operation  of  his  interest  or  that  of  any 
other  individual  l)eyond  the  limits  of  fair  competition;  but 


ifh 


*  f  > 


if 


UKITED  STATES  V.  E.  C.  KNIGHT  CO.  411 

Dissenting  opinion :  Harlan,  J. 
tlie  increase  of  power  by  combination  of  means,  being  iu 
geometrical  proportion  to  the  number  concerned,  an  assS=i^ 

SSl     b  t  *'  t'  '"^  '""P"'-'  "•'^  -'^  oppreS^  to 
ndmduals   but  nusch.evous  to  the  public  at  large;  and  it 

1^11? """'■"*,""  ^"^'"^  ^"  P°"'''-*"l  -d  danger- 
role"    Tf  '7'"'"''1'*>'  t«  «"  «<=t  th^t  would  be  perfectly 

vidua]  These  principles  underlie  the  act  of  Congress 
which  has  for  its  sole  object  the  protection  of  such  traSfand 
commerce  a.  the  Constitntion  conges  to  national  Jurol  a'd 

he  question  ,s  presented  whether  the  oomhlnation  assailed  by 
this  suit  IS  an  unlawful  restraint  upon  interstate  trade  in  a 
necessary  article  of  food  which,  as  every  one  know  ,  has 
alu-ays  entered,  now  enters  and  must  continue  to  enter  in 
vast  quantities,  into  commerce  among  the  States 

In  Ktdd  V.  Pearson  we  recognized,  as  had  been  done  in  nre- 
vmus  c.ses,  the  distinction  between  the  mere  transport  a  £" 
of  articles  of  interstate  commerce  and  the  purohaLTZ 
semng  that  precede  transportation.    It  is  sfid  thaTmanu' 
facture  precedes  commerce  and  is  not  a  part  of  it.    Bu"  U  is 

th^t  bT,r.  ^  }    n    "'"*  ■^'^'"""^  '^  ^"''i«'='  of  commerce: 
that  buying  and  selling  succeed  manufacture,  come  into  ex 

istence  after  the  process  of  manufacture  is  completSp^- 

cede  transportation,  and  are  as  much  commercial  interl^r^ 

where  articles  are  bought  to  he  carried  from  one  State  To 

another    as  xs  the  manual  transportation  of  such  artcl^ 

after    hey  have  been  so  purchased.    The  distinction  wa^ 

recognized  by  this  court  in  Gihlon.  v.  %c/.«,  where  thlrin 

«pal  qiiestion  was  whether  commerce  included  naSaC 

Both    he  court  and  counsel  recognized  buying  and  selZ 

said  that  the  mind  can  scarcely  conceive  a  system  for  r*i 
lating  commerce,  which  was  "  confiru^d  to  prescribing  ™l^ 
for  the  conduct  of  indivuals  in  the  actual  emplovment  ff  bu^ 
mg  and  selling,  or  of  barter."    pp  189  190 

frSLTsuch  "^r^"'  '"'T  '«'d'p'-ot^''t«  the  absolute 
freedom  of  such  intercourse  and  trade  among  the  States  as 

may  or  must  succeed  manufacture  and  precede  transporta  ion 
from  the  place  of  purchase.    This  would  seem  to  be  conceded ; 


419 

156   UNITED  STATES  BEPOBTS,   36. 
DimeutlnK  opinion :  Harlan  J 

'nay  be  regulated,  but  this  is  W«S     .  *  ''*^'  °*  *'"^"«'t' 

which  the  settled  doctrines  Tf  ?h/«      ^   adnussion-^ne 
tracts  to  buy  and  11^™,^.  •  ^'''V*'"'^  J«stify-that  con- 

Each  part  of  such  tp«H»  ;=  Vk  '"*f  ^***«  trade  or  commerce, 
gress. ^ AnSy^tby ?he  opiS  a"n1"  ?'  P"'^*^*'""  *"  ^- 
I  do  not  misIp^XS  II  Z' ':  T;"  til"  T  ""'  •' 
protect  the  commercial  intercZS  tL  vT     ^T""  *^ 

necessarily  involves  asainstZ     T   ■         ^'"''*   purchasing 

nothing  more  nor  less  than  aTmrlt^K      \  TT*'"'  '*  '^ 
chase  what  [371  thev  A^JtlT^        ^^"^  '^"^  ""''  P^- 

right  to  go  in  uerson   n^  =1  j      j  Missouri  has  the 

New Jersfyfortoe^^;"       *    "'1"^'  *"  Pennsylvania  and 
of  whatTiHs^L^ri^X'*  r'''^'' t^  '^^"^•^  ^"g^'--    But 

■p  my  judgminit,  th,  cllUms  of  th«  seven!  c,.,„ 

states  cannot  coexist  with  such^mSots  meT^  '\ 
of  trade  I  mean  the  buying  and  celZJ  nf  7}  \  ^^""^ 
kind  that  are  recognized  aSefof  if  Tf""  "*  ^^^'^ 
Whatever  improper^  obst.^ctt  tT^^^^^^:^^ 


UNITED   STATES   t;.  E.  C.  KNIGHT   CO.  4] 3 

Dissenting  opinion :  Harlan,  J. 

•intercourse  and  trade,  as  involved  in  the  buying  and  selling 

of  articles  to  be  carried  from  one  State  to  anoLrmay  te 

reached  by  Congress,  under  its  authority  to  regulatT^m^ 

as  to  make  trade  among  the  States,  in  all  recognized  articles 
of  commerce,  absolutely  free  from  unreasonaWe  or  Tl  ega 
restrictions  imposed  by  combinations,  is  justified  by  an  S 

SeTfarrof  ..  T,"  *"  ''""^^^^  ^"^  ^^'^  -^^-n^  "  the 
Tvelfare  of  the  whole  country.     I  am  unable  to  perceive  that 

any  such  result  would  imperil  the  autonomy  of  the  Stai^ 
especially  as  that  result  cannot  be  attained  through  the^-' 
tion  of  any  one  State.  ^  ^ 

Undue  restrictions  or  burdens  upon  the  purchasing  of 
goods,  m  the  market  for  sale,  to  be  transported  to  ler 
the  Wd"       f  "nP-«d  even  by  a  State  without  viola  ,„g 
the  freedom  of  conmiercial  intercourse  guaranteed  bv  th! 
Constitution      But  if  a  State  within  whose  limits  the  busi- 
ness of  refining  sugar  is  exclusively  carried  on  may  not  Z 
titutionally  im    [38]  pose  burdens  upon  purcha  J  of  sugar 
to  be  transported  to  other  States,  how  comes  it  that  combina- 
tions of  corporations  or  individuals,  within  the  same  State 
may  no   be  prevented  by  the  national  government  f"om  put' 
nng  unlawful  restraints  upon  the  purchasing  of   haTTrScle 

made?    If  the  national  power  is  competent  to  repress  State 
action  in  restraint  of  interstate  trade  as  it  may  beTvoS    • 
m  purchases  of  refined  sugar  to  be  transported  f^^m  one 
State  to  another  State,  surely  it  ought  to  be  deemTsuffi 
cient  to  prevent  unlawful  restraints  attempted  tor^'J 
by  combinations  of  corporations  or  individuals  u^oTSS 

Orations''"     r'J  ''^••"^^'  '"^g^'  combination"^,  of  c^ J 
porations  or  individuals  may_so  far  as  national  power  Td 

n"otrcrdr  ^  -'-  eoncemed-^o,  with  impuL^Xt 

the^Unked  Stel  '  '"'  -ere  brought  in  one  of  the  courts  of 
the  United  States-jurisdiction  being  based,  it  may  be  alone 

X^Montir  "'?r"*'P  "'  theVrties-te  ^nft'ce t 
to  acau  re  th.  '         '"''  agreement,  which  had  for  its  object 
llJZ7i  I      P«™on  of  all  the  sugar  refineries  in  the 
United  States,  in  order  that  those  engaged  in  the  combina! 


f. 


I 


^1^  156   UNITED  STATES  REPOBTS,   38. 

Dissenting  opinion :  Harlan,  J. 

[t".??*,?*"'"  """  """"^  '^•'"^••^l  «'  *»>«  business  of  refin- 
ing and  selling  sugar  throughout  the  country,  and  thereby 
o  increase  or  diminish  prices  as  the  particular  interns  of 
the  combination  might  require..  I  take  it  that  the^urt 
upon  recognized  principles  of  law  common  to  the  jurirpru- 

relief  asked  and  dismiss  the  suit  upon  the  ground  that  the 

Ti  to  the  Stl"     TPj-!u'^'^*  '''''*  "«^  '''""P'^t^'-v  inter- 
nal to  the  State  m  which  the  parties  resided,  but  trade  and 

commerce  among  all  the  States,  and  was,  therefore  agajS 
public  policy  and  illegal.    If  I  am  right  in  thkvZ   t 

a'iutT  r/r""^'  "r*^^""^^'  '''^'  Congress  lldTn'a 
a  statute  forbidding  such  combinations  so  far  as  they  affected 

interstate  commerce,  and  proyide  for  their  suppress^  fs 

well  through  ciyil  proceedings  instituted  for  that  purpoi 

•"  by  penalties  against  those  engaged  m  them.  '    ^      ' 

li;     ^^  na  ions  and  among  the  several  States,  the  Con- 

ZtZ^,  "1  ^'^:  '^'  "^"^  '^'  "^y  be  employedto 
protect  the  freedom  of  commercial  intercourse  and  traffic  es 

wisely  forbore  to  mipose  any  limitations  upon  the  exercise  of 
hat  power  e.x^pt  tho.se  arising  from  the  general  natu.^  of 

^a™„Z"Tr',  ""r'^r  ■'•^  ^'"^'^'^^  '"  the  fundamental 
guarantees  of  liberty  and  property.    It  giyes  to  Congress  in 

express  words,  authority  to  enact  all  laws  necessa^and 

proper  for  carrying  into  execution  the  power  to  regulate  com- 

rS t7w?  r r  "*='  **'  ?"^^^'  P-*^-**  toLompli^h 
tlS^i  "^  ""*  «f '"'  government  is  competent,  is 

withm  the  power  granted,  must  be  determined  by  the  rule 
amiounced  through  Chief-Justice  Marshall  three-quartet  of 
a  centuiy  ago,  and  which  has  been  repeatedly  affirmed  by  this 
c«urt.    That  rule  is:  «  The  sound  co^ructfon  of  the  Sn^  ! 

iith  IS  *  r  *"  """  u""*^*""'^  legislature  the  discretion 
w^th  respect  to  the  means  by  which  the  powers  it  confers  are 
to  ^  earned  into  execution,  which  will  enable  that  body  to 

h!!!  fi™i  ?%v^''  ''"i'""  "'"'S"'^  **»  »*  *"  «»«  °»«nner  most 
beneficial  to  the  people.    Let  the  end  be  legitimate,  let  it  be 

within  the  scope  of  the  Constitution,  and  all  means  which  are 


ilf  •■■■* 


UNITED  STATES   V.  E.  C.  KNIGHT   CO.  415 

l>is»entiiig  opinion :  Harlan,  J. 
appropriate  wWch  are  plainly  adapted  to  that  end,  which  are 
not  prohibited,  but  consistent  with  the  letter  ands^i^of  S 
Constitution,  are  constitutional"     Vrr«77n.i,  ,.  ^""'7™*^ 
4  '\Vheat  .Sifi  491      tu        j  -^^icVulloch  v.  Maryland, 

the  a^nf  ?«o^     !u  ^""^  P^'^'P^^d  ^  be  accomplished  by 

the  act  of  1890  is  the  protection  of  trade  and  commerce  amo2 

Ub^tZ\T/  fl  means  are  not  appropriate  to  at- 

St'l!  ;      1  "*,  ^''"^  commercial  intercourse  among  the 
States  from  burdens  and  exactions  imposed  upon  it  by  combt 
nations  which,  under  principles  Ion?  reco<rnizeH  in  tl 
trv  fl<!  woii  oo  „+ *i,    rj«i      ^  "e  recognized  in  this  coun- 

It  may  be  that  the  means  emploved  bv  rnnorr-nc.  ^ 

^  not  all  or  the  best  that  could  have  been  devised  Uutr 
gress,  under  the  delegation  of  authority  to  eTact"  laws  nS' 
say  and  proper  to  carry  into  effect  a  power^lnJed  T  nt 
restricted  to  the  employment  of  those  means  "wUhout'  wWh 
the  end  would  be  entirely  unattainable  "  «  Tn  ? 
scribed  the  means,"  this  court  has  ^id  "  h  Z  u  *"  ^'^' 
ment  should   in  ill  fntn^ri  '     ^^  "^^ich  govern- 

!.,„  k      ""','n  ""  *nt"re  time,  execute  its  powers   wouM 

date  its  leirkl»f,nn  L    ."■^'''^^'^  "s  reason,  and  to  accommo-  - 
uaie  Its  legislation  to  circumstances."    ^gain-  "Whpro  fi,o 
aw  .not  prohibited,  and  is  really  calcu£  to  eff^  any  of 
the  objects  entrusted  to  the  government,  to  undertfShe^e  to 


416 

M6  VmTm  STATES  BEPOBTS,  40. 
^*««*^«ting  opinion:  Harlan,!. 
S"ir  *rS:'  ;tr^.^^  r '^  be  to  pass  the 
Wheat.  316,  415,  423  McCulloch  v.  Maryland,  4 

of,)  mentioned  i/s^^S'oi'l'l'eT  1'^?^"^'''^-- 
course  of  transportation  from  LTZ  T  '  "^'"S  '"  "»e 

foreign  co,.„try  "  ft  was  n^t  T  ^  '°  '"'**'^^"'  »'•  *»  * 
property  to  forfeiture  i  in^rt^'^K!*'  '''^^'  ^"'''' 
ended.    If  it  be  suggestS  A»t  r  ^  °  "^^^  '''"  "*'«'•  i* 

ited  the  ..«„,^^S^^^"*  Congress  n.:ght  have  prohib- 

ufact,.red  of  any  articlS^Sl  wh  '"  ""^'^^  ^^^^  '^  ""»n- 

that  had  been  [«]  truWlTerbHoTw^  "T  ''^"^'' 
monopolize  some  des,gn„ted^art  „Tf  J^  °'  ^°"""*^  '° 
among  the  States,  my  a^wer  U^K  *  ?  ^   '*'"  ^on^merce 

tions  of  the  indicia^  to  ad  „d^  th  t  r  ""'  "'*'"  ^l^^  *""«- 
particular  means  in  e«lff  ^"^'^  ^''""  «">?% 
c^use  such  means  ^.^'Tn  *^he  ^If  T  ?T'''  "'"P'-^  «- 
conduciye  to  the  end  JLhtJ^^  °'  *^^  '^""^s,  best 
in  the  exemse  of  Us  S^Un  t  rT"^'^^-  '^'^^^ 
duciye  to  an  end  to  which t^  '^"'**  "'  ■"«»»«  <">"- 

reach  that  end  through  :t^I  ^r^"^*'^"*'  ^'''^'-^  *<> 
vent  or  restrain  thes^  oSuHlZ  Z"'"*"*'^  '"  P'*' 
tempts  to  burden  interstarcrmer^ty  Z  V"'"'  ''■ 
mt^rfere  in  advance  of  transpZ^^tZ  ^th  1  .  ""'  ^^'^ 
of  trade  between  the  people  of  th„  ^^  r  *  ^'^  <=*'"^ 
Cong^ss  sought  to  preCt  he  eotinl  iS;  '";*"  "*"-^^ 
bmations,  the  purpose  or  tendeZ  ^f  Xh  "?  "*  *=°™- 
u.Jawf„l  restraints  upon  inters^  ^n^n tt ""  *°  ^'"^'^ 

There  is  nothing  in  conflict  wifiT*!!^  • 
^'^^?,  116  U.  S.  517  529  t1  1  ""  ^""'"'^  •"  ^"^  ^• 
certain  logs  cut  in  nI;  Ham J^"  ItrtT  ""  "''^*''- 
they  might  be  transportedTo  anoThe,!  ^  '*'  '"  "  '''"'  ''»»* 
taxed  in  the  former  State  be w!  ?  *^'  ^'"'''^  "«"«  '«  be 
latter  State  begTn    ^^  !!.t  ??^""1  transportation  to  the 

ta.^  while  thefLa^rnteZe'tftitLo^-  "^ 

of  the  general  mass  of  property  the-?  *r!«/'^'"  "'  P^*"' 


417 


UKITED  STATES   t;.  E.  C.  KNIGHT   CO. 
I>i«^nting  opinion :  Harlan,  J 

following  clause  in   ".  „   ®'''.''*°  ^«  clearly  indicated  by  the 

at  the  place  of  entrenot  fn.  *  T'  '  <^^P«>sited  or  stored 

the  regular  way  as  S  ort"^^  ^^Portation,  be  taxed  in 

answef  is  plai.^     ifcan  L  ,  ^T'*^  "^  ^^^  ^tate?    The 
taxed,  in  th'e  Place  wh    ^  i     .  t^n/^f  ^t "  '''''''''  '^ 
taxation  in  the  usual  manner  in  whiK       ^        *""  '''^''"'^  *«'" 
and  not  singled  out  to  be  «lt  iS  ^"^"'^  "  '^"^^' 
exceptional  manner  l«cause  of  Its"^.  t^^^^^^^^^^ 
now  no  question  as  to  the  taZt^T  7""'^,"-      As  we  haye 
by  one  of  the  combinatinn!       f      "f  "'"''^^^  manufactured 
and  [42 1  as  no  on^J        '^""^^'^ned  by  the  act  of  Congress 

long  as  they  remained  withi^"  s  Sf!  ,7  f  ^'""^'•^^  ^« 
tation  of  them  to  other  Stat-  hi  f'  '"'^  ^^"'^  ^'^^^P^^^- 
stand  how  the  case  Sre  u  ca'T'ff  T/.'  '  '*'"  ^"^  ""^«- 
personal  property,  whTle  it  rZi„?  .f'l''^  "  ''*<''«'°"  ^h** 
although  it  is  tot  sent  at  TZ       r     '  ^^^'^^  *•*  '^'^  "^gin. 

within  the  iurisdict^oTof^ltrr7tat:r''^^  ''''''  '' 
taxation.  ^^mier  ^tate  for  purposes  of 

intl^iniietr^l?  "^*"'"*^  "P-  ^'^^  ^-dom  of 
«ons.  After  thetuinSS' it  "^^t'  ^^•"^- 
bestow  upon  this  important  qS^Sj  l  ^f^f  .•^°  ''"e  to 
refuse  my  assent  to  this  proposSn  'm^.  '*  '"'^''^^'  *« 
do  to  protect  its  completely  °S;  ^m  "  ^  ^''''  "''^ 
unlawful  restraints  the  JenJT  "  *""  ^''^'^^  against 

do  for  the  protection  of  £  oToirTTf  '^  '^P^^-^^d  to 
purpose  one  people^fgainHlw^  *^'  ^'"*^^*^'-  ^his 
upon  interstate  traffic  oJSf  in  ?  ,  J^^t^^^nts  imposed 
commerce  among  the  i;^  g  "^1?  T  f"  ^^  ^"^^^  ^"'» 
State  may  prevent  or  supnre^a  ..  \'  *' '''^^^J'  shown,  a 
which  is  to  subject  its  dresStradTtoT'"^';'^^  ^^^"^^  <" 
sarily  arising  from  their  obtaimni  .i!    u    ,  ""^^t^iuts  neces- 

sale  of  a  particular  arLe  J  ^^iltutt"!^  ""*^"'  '^^  ^'^^ 
there  ought  to  be  no  hesitat;/         .,        ^^  *^^  community," 

right  to  suppress  rs^ZSr^IZt''.  ^^''"^^^  '^^ 
11808-voL  1-06  M X7         ^^^  that  imposes  a  like 


II 


41o  156  UNITED  STATES  REPORTS,   42. 

Disseatiug  opinion :  Harlan,  J. 

article.    While  the  States  retain,  because  they  have  never 

In^nart  !f  r'^'A''^  '^'  ''■'""^'"  ''^  *«  Constitution  that 
^IrTfn  '"^"''^"'"'^'''^  ^''""^^  •'«  «^«'"ded  from  the 
EtW        T^'^'V  ^''''''  ^'"'^  ^"^  '*«•='»  »°<1  «"PPress  com 

whfl  th  r  ?"■ "?  '^''^  ""'""*""^  '■^'™'"  't^  '"terior  trade, 
while  the  national  government  may  reach  and  suppress  them 

"mile  tt^  "'"''"'f/,  '••^*--  t-^«  -ong  tE^sStt 

the  act  of  t«TrV  *^'  """''  ^°  '^''  '^  •^"^^  "°t  declare 
IbLt  J  i  K  ?  '''  "^constitutional,  it  defeats  the  main 
object  for  which  it  was  passed.  For  it  is,  in  effect  held  that 
^e  statute  Would  be  unconstitutional  if 'inte^eS  s  t! 
[43]  bracing  such  unlawful  restraints  upon  the  purchasing 
of  goods  in  one  State  to  be  carried  to  another  State  as  neces 
sarily  arise  from  the  eanstence  of  combinations  formed  forThe 
purpose  and  wth  the  effect,  not  only  of  monopolizin"  he 
ownership  of  all  such  goods  in  eveiy  part  of  the  count^P,  Sj 

lr!:i'^f "^  *^'  fr  '^'^  *^«"  ^"  «"  the  States.  ^Thi 
view  of  the  scope  of  the  act  leaves  the  public,  so  far  as  na- 
tional power  IS  concerned,  entirely  at  the  mercy  of  combina- 
faons  which  arbitrarily  control  the  prices  of  articles  purla^d 

fs^t  ToTf  ^""V"'  ^'"'^  *°  '"•'*'^«'-  State.  I  cannot 
assent  to  that  view.    In  my  judgment,  the  general  govern- 

men  is  not  placed  by  the  Constitution  in  such  a  condSon  of 

while  capital  combines,  under  the  name  of  a  corporation  to 
destroy  competition,  not  in  one  State  only,  butThroui^^ 

etecTa^;?  tr"**^'  "  ''^  '^"^  '^'^^  ^"^  «*  -tiSe^ 
especially  the  necessaries  of  life-that  go  into  commerce 

among  the  States.    The  doctrine  of  the^autonomv  oT  the 

St^ri^r      TT'^  ^  ^"""^'^  *°  J"«tify  a  denial  of 
power  in  the  national  government  to  meet  such  an  emergencv 
involving  as  ,t  does  that  freedom  of  commercial  InZIZ^ 

TS.  It,?."?/'"'  ''''  ^™^*''"*'-  -"g^t  to  aS 

It  IS  said  that  there  are  no  proofs  in  the  record  which  in- 
dioite  an  zntentton  upon  the  part  of  the  American  Sugar  Re- 
fining Company  and  its  associates  to  put  a  restraint  upon 

Zli   *T  nr*^-    ^"•'  '*  "^^""^  that  formal  proof  b! 
made  that  the  persons  engaged  in  this  combination  admitted 


419 


VN,TEDSXAXES,t;.E.C.  KNIGHT   CO. 
Dissentiug  opinion :  Harlan  J 
m  words,  that  they  intended  to  restrain  tr«-i 
I>'d  any  one  expect  to  find  in  fh.         f    ^^  '"*  ^on^erce? 
resulted  in  the  formation  of  tM     ""T"  ^^^-"^^ts  which 
.       pression  of  a  purZL  t^  1^'  combination  a  distinct  es- 
merce?    Men  i  fom  and  tT  TT''''  '^'^^  '^  ^om- 
too  cautious  and  la  J"o  malZ*t  ^S'^  combinations  are 
writing.     Why,  it  islncel^tha.lh    T ^'""^  "''''"y  »'  i" 
nation  was  to  obtain  «  of  th.  k'  "^^^''^  ''^  '^^'  combi- 
selling  i^fined  sugar  ttrotlout  S      7"^  "'  '"«'^'"«  «»<» 
interested  in  its  operations  SllL.Tf  *=*"'"*''y-    ^hose 
than  to  have  the  41  Zl">  "/a     '  ""'  ""''^^"^  1«- 
them.    That  object  [i4?TdiSn.i  '''  ^'^  ^"^""^  to 

the  transactions'  desirib^d  in  thf  jj  "Tf  •!  ^"^  '"'"'  "' 
•ndeed,  it  is  conceded-thl!  tlf  1-  f  1**  '*  ''  P™^«<1- 
Plished  to  the  extent  that   hf*  ^^''^  ^^^  "^n  «ccom- 

pany  now  contSs litt^f,^'™'''  ^""^^  ^^^"'"g  Corn- 
fining  business  in  he  counfrv  T/Tk  "'/"  ''''  '^^'^  re- 
price of  that  article  ve";;£eiwT»f""  ""^^''^^  *»>« 
of  a  combination  having  Zhln  „hT  T'  ^^  '^''^  '"^^"^ 
e:ttraordinary  power  "s  it^ff  ^''*  ""*^  Possessing  such 
law-there  l^in^  JJ^-^^J  J  ^^  T^  ^^'^^^^  «* 
country-a  direct  restraint  of  tr»^  .t  "'"'"'"y  '»  this 

control  of  the  sales  of  S  in  thi!  '".  ""'  *"*^<=^«  *<"•  the 
was  organized.  And  2  re^™  V"""*^  *'^''*  combination 
for  the  reason,  known  L  all  1  X  ar^f  "  ''"  ^"^  S*^*-' 
was  intended  to  go    and  n,,S     i  ^'^^  '"  *l"^tion  goes, 

among  the  severaf  StatS  Td  i.f    ff  .^*''  '"*"  '^•"""^rce 
every  condition  of  life  **  '"'*'  *«  ^^^^^^  «*  People  in 

coult^lCS^tf riit  St""  "^.  ~--^  -t^- 
from  one  State  to\noth"f  l^h  "I  f  "^^  ***  '^  transported 
by  unlawful  r^strair  iiP^Jd  t      ''"?^^^^«'ng  burdened 

tions  or  individuals,  To  fTfrl  LTv"'"""^  "*  '^'"'^^ 
would  tend  to  preserve  fh/„  *      <l»sturbing  or  endangering, 
tect  the  peopleTail  tS  SteS"™^.'^'  '"?  ^^^tes,  a/d  pro^' 

tous  as  to  exL  app^fo^tTrfe to^o  ".r**- 
It  this  be  not  a  sound  intprnmfol-       ^   ^  ^^  ^"^  liberties. 


•-  — -^p^lfBS 


■^^ 

^ 


420 


ISe  UNITED  STATES  BEPOBTS,  44. 


•-f 


Dissenting  opinion :  Harlan,  J. 

absolute  control  of  overshadowing  combinations  having 
financial  resources  without  limit  and  an  audacity  in  the 
accomplishment  of  their  objects  that  recognizes  none  of  the 
restraints  of  moral  obligations  controlling  the  action  of  in- 
dividuals; combinations  governed  entirely  by  the  law  of 
greed  and  selfishness— so  powerful  that  no  single  State  is 
able  to  overthrow  them  and  give  the  required  protection  to 
the  whole. country,  and  so  all-pervading  that  they  threaten 
the  integrity  of  our  institutions. 

We  have  before  us  the  case  of  a  combination  which  abso- 
lutely controls,  or  may,  at  its  discretion,  control  the  price  of 
all  [46]  refined  sugar  in  this  country.  Suppose  another 
comhiTiation^  organized  for  private  gain  and  to  control 
prices,  should  obtain  possession  of  all  the  large  flour  mills 
in  the  United  States;  another,  of  all  the  grain  elevators; 
another,  of  all  the  oil  territory;  another,  of  all  the  salt- 
producing  regions;  another,  of  all  the  cotton  mills;  and 
another,  of  all  the  great  establishments  for  slaughtering 
animals,  and  the  preparation  of  meats.  What  power  is 
competent  to  protect  the  people  oif  the  United  States  against 
such  dangers  except  a  national  power — one  that  is  capable 
of  exerting  its  sovereign  authority  throughout  every  part  of 
the  territory  and  over  all  the  people  of  the  nation? 

To  the  general  government  has  been  committed  the  control 
of  commercial  intercourse  among  the  States,  to  the  end  that 
it  may  be  free  at  all  times  from  any  restraints  except  such 
as  Congress  may  impose  or  permit  for  the  benefit  of  the 
whole  country.  The  common  government  of  all  the  people 
is  the  only  one  that  can  adequately  deal  with  a  matter  which 
directly  and  injuriously  affects  the  entire  commerce  of  the 
country,  which  concerns  equally  all  the  people  of  the  Union, 
mud  which,  it  must  be  confessed,  cannot  be  adequately  con- 
trolled by  any  one  State.  Its  authority  should  not  be  so 
weakened  by  constniction  that  it  cannot  reach  and  eradicate 
evils  that,  beyond  all  question,  tend  to  defeat  an  object  which 
that  government  is  entitled,  by  the  Constitution,  to  accom- 
plish. "  Powerful  and  ingenious  minds,"  this  court  has 
said,  "taking,  as  postulates,  that  the  powers  expressly 
granted  to  the  government  of  the  Union,  are  to  be  contracted 
by  construction  into  the  narrowest  possible  compass,  and  that 


DUEBEB  WATCH  CASE  MFG.  CO.  V.  HOWABD  WATCH  CO.     421 

Syllabus. 

the  original  powers  of  the  States  are  retained  if  any  possible 
construction  will  retain  them,  may,  by  a  course  of  well 
digested,  but  refined  and  metaphysical  reasoning,  founded 
on  these  premises,  explain  away  the  Constitution  of  our 
country,  and  leave  it,  a  magnificent  structure,  indeed,  to 
look  at,  but  totally  unfit  for  use.  They  may  so  entangle  and 
perplex  the  understanding  as  to  obscure  principles  which 
were  before  thought  quite  plain,  and  induce  doubts  where. 
If  the  mmd  were  to  pursue  its  own  course,  none  would  be 
perceived."    Gibbons  v.  Ogden,  9  Wheat.  1,  222. 

While  a  decree  annulling  the  contracts  under  which  the 
146]  combination  in  question  was  formed,  may  not,  in  view 
of  the  facts  disclosed,  be  effectual  to  accomplish  the  object  of 
the  act  of  1890,  I  perceive  no  difficulty  in  the  wav  of  the 
court  passing  a  decree  declaring  that  that  combination  im- 
poses an  unlawful  restraint  upon  trade  and  commerce  among 
the  States,  and  perpetually  enjoining  it  from  further  prose 
cuting  any  business  pursuant  to  the  unlawful  agreements 
under  which  it  was  formed  or  by  which  it  was  created.     Such 
a  decree  would  be  within  the  scope  of  the  bill,  and  is  appropri- 
ate  to   the  end   which   Congress   intended   to   accomplish, 
namely,  to  protect  the  freedom  of  commercial  intercourse 
among  the   States  against   combinations   and   conspiracie.. 
which  impose  unlawful  restraints  upon  such  intercourse 

For  the  reasons  stated  I  dissent  from  the  opinion  and 
judgment  of  the  court. 


[637]   DUEBER  WATCH-CASE  MANUF'G  CO    v    E 
HOWARD  WATCH  &  CLOCK  CO.  ET  AK^  * 

(Circuit  C!oiirt  of  Appeals,  Second  Circuit.    March  5,  1895.) 

[66  Fed.,  637.] 

«>nrt  i^r^;^    ..  ^'^  '"°"^''*  "■  *•"«  P°««<»  States  circuit 

court  for  the  Southern  district  of  New  York  by  a  manufacturing 
company  against  numerous  competitors,  in  various  states   a'Sl 


r 


422 


66   FEDERAL  REPORTER,  637. 


Syllabus. 

the   formation   of   a   combination,   and   an   attempt   to   create   a 
monopoly,  "  in  violation  of  the  statutes  of  this  state  and  the  United 
States,''  whereby  plaintiff's  business  was  injured.    The  formation 
of  the  combination  was  laid  on  and  prior  to  November  16,  1887, 
but  it  was  alleged  that  after  the  passage  of  the  act  of  congress  of 
July   2,   1890,   defendants   ratified,   renewed,   and  confirmed   their 
previous  contracts,  combinations,  etc.    Judgment  was  demanded  for 
treble  damages  "under  and  by  virtue  of  the  statute."     Plaintiff 
was  not  a  resident  of  the  district  where  the  action  was  brought,  and 
the  case  was  heard  upon  the  demurrer  of  a  defendant  who  was 
also  a  nonresident,  but  was  "found"  within  the  district;   thus 
making  a   case  in  which  Jurisdiction   is  expressly  conferred  by 
section  7  of  the  said  act  of  July  2,  1890.    The  demurrer  was  sus- 
tained, and  in  all  the  assignments  of  error  it  was  contended  that 
the  facts  charged  in  the  complaint  made  out  a  case  under  that  act 
Held,  that  the  at?tion  nmst  be  deemed  to  be  founded  upon  the  said 
act  ojf  July  2,  1890.o 

Same.— In   an   action   brought  by   a  manufacturer  of  watch  cases 
against  numerous  other  manufacturers  thereof,  residing  in  various 
states,   to  recover  treble  damages  under  the  act  of  congress  of 
July  2,  1890   (26  Stat.  209),  prohibiting  unlawful  restraints  and 
monopolies  of  interstate  commerce,  the  complaint  alleged  that  the 
plaintiff  operated  an  extensive  factoiy,  first  in  Kentucky  and  after- 
wards in  Ohio;  that  previous  to  November  16,  1887,  it  sold  all  its 
goods  to  a  great  number  of  dealers  "  throughout  the  United  States 
and  Canada  " ;  that  prior  to  that  date  defendants  had  agreed  with 
each  other  to  maintain  arbitrary  and  fixed  prices  for  their  watch 
cases;  that,  for  the  purpose  of  compelling  plaintiff  to  Join  with 
them  therein,  defendants  on  said  date  mutually  agreed  that  they 
would  not  thereafter  sell  any  goods  to  persons  who  bought  or  sold 
goods  manufactured  by  plaintiff;  that  they  caused  notice  thereof 
to  be  served  upon  the  many  dealers  [688]  in  such  goods  throughout 
the  United  States  and  Canada,  who  had  formerly  dealt  in  plaintiff's 
goods,  whereupon  many  of  such  dealers  withdrew  their  patronage 
from  plaintiff;  that  after  the  passage  of  the  act  of  July  2,  1890, 
defendants  ratified,  renewed,  and  confirmed  their  previous  agi-ee^' 
meuts,  and  served  notice  of  such  ratification  upon  all  said  dealers 
in  plaintiff's  goods,  whereby  said  dealers  were  compelled  to  refuse 
to   purehn?e   plaintiff's    watch    cases.    HeU,    that   the    complaint 
failed  to  state  a  cause  of  action  under,  the  statute;  Lacombe,  Cir- 
cuit Judge,  holding  that  no  monopolizing  or  combination  to  mo- 
nopolize interstate  commerce,   contrary   to  the  second  section  of 
the  act,  was  shown,  for  the  reason  that  the  allegations  did  not 
preclude  the  inference  that  each  defendant  may  have  sold   his 

entire  product  In  the  state  where  It  was  manufactured;  and  that 


•  Syllabus  and  statement  copyrighted,  1895,  by  West  Publishing  Co. 


DUEBER  WATCH  CASE  MFG.  CO.  V.  HOWARD  WATCH  CO.     423 

Statement  of  the  case. 

the  contracts  did  not  produce  an  unlawful  restraint  of  trade,  under 
the  first  section,  because  the  combination  and  agreement  to   fix 
arbitrary  prices  did  not  appear  to  include  all  manufacturers  of 
watch  cases,  but  was  only  a  partial   restraint  in  respect  to  an 
article   not   of   prime   necessity,    and   therefore   came   withm   the* 
recognized  limits  of  lawful  contracts;  and  that  the  further  agree- 
ment not  to  sell  to  customers  of  plaintiff  was  a  lawful  means  of 
enlarging  and  protecting  the  business  of  the  defendants.    Shipman, 
Circuit  Judge,  concurring  on  the  more  technical  ground  that  the 
acts  of  the  defendants,  whether  viewed  as  an  attempt  to  create 
a  monopoly  or  as  a  contract  in  restraint  of  trade,  were  not  shown 
to  concern  interstate  commerce,  because  there  were  no  allegations 
showing  the  residence  of  any  dealers  who  withdrew  their  patron- 
age from  complainant,  and  it  therefore  did  not  directly  appear 
that  any  of  them  resided  outside  of  the  state  where  plaintiff's 
goods  were  manufactured.     Wallace,  Circuit  Judge,  dissenting  on 
the  ground  that  the  allegations  were  sufficient  to  show  that  the 
attempts  to  monopolize  and  restrain  did  operate  upon  interstate 
commerce;  and  that,  while  the  contracts  might  not  be  unlawful 
in  themselves,  yet  the  purpose  for  which  they  were  alleged  to  be 
.made,  namely,   to  compel  plaintiff  to  Join  in  the  agreement  for 
fixing  arbitrary  prices,  and  to  injure  and  destroy  its  business  if 
It  refused  to  do  so,  was  oppressive  and  unjust,  and  rendered  the 
acts  of  defendants  unlawful  under  both  sections  of  the  statute. 

This  was  an  action  by  the  Dueber  Watch-Case  Manu- 
facturing Company  against  the  E.  Howard  Watch  &  Clock 
Company  and  numerous  other  individuals  and  corporations, 
to  recover  damages  alleged  to  have  been  caused  to  plaintiff's 
busmess  by  the  alleged  unlawful  acts  and  combinations  of 
defendants.  The  case  was  first  heard  in  the  circuit  court 
upon  the  demurrer  of  the  E.  Howard  Watch  &  Clock  Com- 
pany to  the  first  amended  complaint,  and  the  demurrer  was 
sustained,  the  opinion  of  the  circuit  court  therein  being 
reported  m  55  Fed.  851.  A  demurrer  was  afterwards  sus- 
tained to  the  second  amended  complaint,  but  no  opinion 
was  written,  and  plaintiff  now  brings  error  to  review  this 
latter  judgment. 

Robert  Sewell^  for  plaintiff  in  error. 

Edward  B,  Hill  and  Elihu  Root,  for  defendants  in  error. 

Before  Wallace,  Lacombe,  and  Shipman,  Circuit  Judges. 


i 


1 


i 

I 

if 


' 


424 


66  FEDERAL  BEPOBIEB,  S38. 
Opinion  of  the  Court. 


Lacombe,  Circuit  Judge. 

The  complainant  corporation  is  a  citizen  of  Ohio,  the  de- 

"Sint  r*  "''^f """  "  '"^^"^  "^  Massachusetts, 
engaged  m  the  business  of  manufacturing  and  selling  watch 
movements,  and  having  a  place  of  business  in  the  city  of  New 

a^^;  't^''  "'  f^Jr'^    ^'  '""^  "'-'-"  othe/defend 
ants  ten  are  individuals  whose  citizenship  is  not  set  forth 

m  the  complaint.    It  is  averred  that  they  are  engaged  in 

business,  two  of  them  in  New  York  City  under  fnf  firm 

name,  two  others  in  [639)  Philadelphia  and  New  Yolk  C  ty 

under  ahother  firm  name,  three  others  in  the  city  of  Nw 

^«  un"der"str  ':.''^  """''  ""'^  **^'^  "'^^^  '^  Cincin- 
frnHl.  ""****'■  ^^  """*"•    The  nine  remaining  de- 

fendants are  corporations,  two  of  them  citizens  of  Massa- 
^nsetts,  two  citizens  of  New  York,  two  citizens  of  Conn^- 
cut,_^wo  citizens  of  Illinois,  and  one  a  citizen  of  Pennsyl- 

crS^"^!!!^^"  w"*  "''''!.*'"'*  P'"^*^*  '^  »  corporation  duly 
seated  and  existing  under  the  laws  of  Ohio,  and  engaged 

^sl  Sr::  :l  --"^-t-ng  goW  and  silver  wafch 
T^      f  ■.  *™^'  "nentioned   in  the  complaint  it 

Th  f  H       T^"'"^  ""  ^^**"'''"^  *"«=t«'3^  "t  Newport,  K,^ 

Lme'tZT  -'  "*  '''"^.T  ?''"'  *^-*  '*  maintained  the 
rnTnff!T  ^^P!"**:  ""«*  h'd  the  capacity  to  manufacture 
•nd  offer  for  sale  m  the  open  market  25,000  watch  cases  mr 
month.     In  the  third  paragraph  it  is  Iverred  "  hat  X 

™.t  ^Tt  f  i^'"'^'  P'«'"*"'  "^^  «  r««^'y  market  throS' 
out  the  United  States  and  Canada  for  all  the  ffoods  it  mfw 
manufact.jre  and  in  fact  sold  all  of  said^cST^o  a  Slt 

m2i^'  T:1  ""^  r""^  ^'^  •*^"  »  substantial'  I'egiS 
mate  profit  of  at  least  $75,000  per  annum."    Next  foUow 

averments  as  to  the  incorporation  and  partnershTp  of  the 
several  defendants,  who,  it  is  stated  are  respect"    1  a 

in  the  business  of  manufacturing  or  selling  walches^Tafch 
cases,  or  watch  movements.    In  the  eighteenth  parai-a?ht 

'^r:^T  T  -»'-"*  November'lC,  1887,'t^Snd! 
ants,  and  others  to  plamtiff  unknown,  at  and  ik  the  oitv  nf 
New  York,  mutually  agreed  together  Uftwmilft* 


DUEBER  WATCH  CASE  MFG.  CO.  t;.  HOWARD  WATCH  CO.     425 

Opinion  of  tlie  Court 

all  the  others  that  « they  would  not  thereafter  seU  any 
goods  manufactured  by  them  to  any  person,  firm,  associating 
or  corporation  whatsoever  who  thereafter  should  buy  or  =el 
any  goods  manufactured  by  this  plaintiff."  It  is  further 
averred  that  thereafter  defendants  caused  notice  of  hb 
agreement  or  compact  to  be  given  to  the  many  dealers  in 

S  r«rf '^  T^'  '"^  ""'"'^  -"-'^-^nt^  throughout  ti^ 
TJmted  States  and  Canada ;  and  gave  said  notices  to  "  many 

of   he  then  and  theretofore  purchasers  and  dealers  in  plaTn 

ml'h!"  ;  "'T'^^'r''  ''  ''"'^'''^  "'•  -hereupon. a  lar^ 
number  of  such  purchasers  and  dealer,  withdrew  their  DaT 
ronage,  and  ceased  there„;^n  entirely  to  purchase  and  deal 

Sieges  t^afte''"";'xr'^  ''^'-  ^'^^  ^^-P^--^*  ^''^-^ 
alleges  tnat  arter  said  Novembpr  Ifi    lea?    j„<„  j     ^ 

f«=!er1  ^f^  c^ii  *k  •  ^^■'"veniDer  lb,  Ib87,  defendants  re- 

,  .  ..I,  '^"  ^^^'''  S°°<Js  to  purchasers  of  and  dealers  in 
plamtifl-s  goods  who  had  offered  to  buy  defendants'  gLs 
stating  as  the  reason  for  their  refusal  that  said  delimit' 
bought  and  sold  and  dealt  in  plaintiff's  watches,  notffying 

to  deS'-f  Stiff'  '"'r  V'"*  '*  *^^^  ^^-»<^  p--'-  -^ 

to  deal  in  plaintiff's  goods,  then,  and  so  long  as  thev  kent 
such  premise,  they  might  purchase  the  goods1,f   he  defend 
ants  or  either  of  them;  otherwise  not.    In  the  twenttthS 
paragraph  it  is  alleged  that  prior  to  November  1M887    ie 
t±^:i:tr^'  among  themselves,  "and  ^hich 's  W 

eSr  sTnl     hat  ^J  '"  °r''^""  ^"^  ^'^^'^^  "^'^^^  ^hem 
ever  since   that  they  would  agree  upon  and  affree  to  main 

tarn  an  arbitrary  fixed  price  to  the  public  for^Uhe  3." 

manufactured  I^-  them,  and  in  pursuance  of  said  agL^r^ 

DrL  and  fi    ",'rr  ""'^  '^^   f«*«l   "P»»  «n  a^b  trary 
fh  m  "    The  "T  'r  ""  *«  goods  manufactured  bv 

toT;  "  .  J*'",  «f  ^°'««t  of  November  16,  1887,  is  alleged 

compiling  this  plaint-rrir ^S   tmt ''^firsf 
to  hatrnZe  "  f''"th'^"  ^^^  **'  defendan"  are  ll^ 

tate- ni  t  '^^zit:^^.:':^^^:^^^ 

from  any  participation  in  such  business  unless  UjoS  in 


426 


W  JPEDEBAL  BEPOBTBB,  640. 
Opinion  of  the  Court 


T"' 


It 


S  It?  "f  ^■"'7'  r°"P'™<=y'  «nd  the  acts  of  defend- 
ants thereunder,  m  furtherance  thereof,  as  alleged  and  to 
orush  com,^tition,  and  enable  the  defendants  to  ^aTnta^ 

tJeir^rr  ^V  "  -^u-^  P'*^^*^  ^y  t^*""  ««  aforesaid  1^ 

m^t  TTfir  ""'^  ""^"^  ""^y  *"  t'^^'^  private  emoh,- 
m^t  and  profit,  contrary  to  the  benefit  of  the  public-  the 
said  defendants,  by  the  said  combination,  conspkacy'  and 
agreements  and  acts  thereunder,  malicio,  slv  intendL  to 
Zr^^t  P'"'""^' -d  ''"ve  it  out  of  business  and  prl- 

S  htr« H  Ir  '*'  "l'*^^  '''^"  ''"■  It  -  ^'rther  al- 
leged that  "by    he  extended  influence  and  power  acquired 

by  the  combination  over  the  trade"  defendants  forcTa^d 
pre  ^nted  persons  from  dealing  with  the  plaintiff,  oi  p  "r 

liaJ  5  P"^«'>*^=«'^.-  that  said  threats  were  effectual, 

would  h^rK  ^',*  ""'"•'^'-  "*  P«^"«  -ho  otherwise 
would  have  purchased  large  quantities  of  the  goods  of  the 

plaintiff  from  purchasing  the  same,  and  did  effect  in  fact 

against  the  plaintiff  a  complete  boycott  and  ostraciU  frl 

he  trade,  and  prevented  the  lawful  and  ordinary  comitt 

tion  of  business  which  plaintiff  had  a  right  to  enjoy     The 

concluding  paragraph  of  the  complaint  alleges  that  after  the 

passage  by  congress  of  the  act  of  July  2, 1890, "  all  the  former 

dealers  ,n  watch  cases  were,  as  plaintiff  is  informed  and 
Mieve^  r^ady  and  willing  to  buy  large  quantities  of  said 
plaintiff  s  goods,  and  this  plaintiff  would  have  regained  all 
prlverbvT;'  ;''  r'^^.f  r*  -^^ei^of  it  had  bJn  de 
de^ndal  V  ..  '"^'""'  °*  defendants;  but  that  said 
defendants,  after  the  passage  of  the  said  act  of  oon<rress 
ratified,  confirmed,  renewed,  and  continued  the  cSSc? 
a^ements,  and  combinations  hereinbefore  alleged,  anSin 
like  manner,  and  with  the  same  intention  as  hereinbefore 

tT^suL  „1,  "^^'TT  "*  •""•'  agreements  and  combina- 
tions upon  all  said  dealers  in  plaintiff's  watch  cases,  whereby 
said  dealers  have  continued  to  this  dav,  forced  bv  laid^^ 
newed  threats  of  defendants,  and  compelled  thei^by,  and  not 
otiherwise,  to  refuse  to  purchase  plaintiff's  watch  iks,  or  to 
deal  anywise  therein,  whereby  the  said  defendants  ilkgally 


DtTEBBB  WATCH  CASE  MFG.  CO.  V.  HOWABD  WATCH  CO.     427 

Opinion  of  tlie  Court, 
and  maliciously  damaired  thp  nlair^fiff  •     ^i. 

r-:  Judgment  is  '^^^etTCL'So^'T'; 
"  under  and  bv  virtiiP  «#  *k„  \  ^\       .  *150,000,  but, 

hemnbefore  SeS  to  for  tJ,  r  '  °\'^''  ^""«**  States 
ages  so  sustained  bv  it  ?nfK  ^^^^.^^^^  ^^^  amount  of  dam- 
$150,000."  ^      "  '^'  P'^™'^'  t«  ^it.  for  the  sum  of 

[6*1]  The  federal  statute  of  July  o  imn  loa  o.  .  f,«„x 
declared  upon  in  the  complaintis  entitS  4        t"  '  ^^^' 

wlse,T°S,ipf,^o^  Z'^rTti.ZtT:"'^  '"  'o™  »'  ^^^  <•'  other-  ' 
several  states    or  with  foreiS,  nn?f  "^''?* .°'"  commerce  among  the 
legal."    [Then  follow  provlS  Z^Z^  •»  hereby  declared  to  be  1* 
providing  for  punishment]  ^«<='«"'>g  the  act  a  misdemeanor,  and 

Uze  f  ^mterSpi-'^ft'h'LrXr"^^  »'  "««""•*  t«  -o°oPo- 
nopolize  any  part  of  the  trade  or  ^m^^"^  P*""*""  <"  Persons  to  mo- 
or with  foreign  nations  sha"be^i?t^rn'^f«T°^  *■>«  ^^^^r"'  «to?^ 
low  provisions  as  to  punishmentTherefor  X  ""«'*«'"^»n<"-."    [Then  fol- 

other'^ersonT/eo^oUion  Tl^.  '"%*^  '°  •"«  business  by  any 
clared  unlawful  in  tZ  act  may  Z°t1/'/°^.*'""S  forbidden  or  d/ 
the  United  States  in  tlie  disSct  In  th^wS''  L°  ""y  '''••<™it  court  df 
found,  without  respect  to  tte  amount  1^  .L?*  defendant  resides  or  te 
three  fold  the  damages  by  hlm^Zajn^^nH^ir"'^'  *"«*  «"«"  recover 
Ing  a  reasonable  attorney's  f^"^  ""^  ""^  •'"^ts  of  suit,  iuclnd- 

expressly  given  by  the  seventh  section      n  ^     u  u  ! 

festlyunfair  to  permit  a  plaintir/o  bring  a  dTfindtrT 
this  court  on  a  comnlninf  ^^  i     •  ^     aetendant  into 

thereafter,  whrnTcf dlndlT  hfs  Ed^ "j^  ^*''*"^  »»<* 
jurisdiction  under  the  stat,,t«  !f^  f  *"  'V^estion  its 

the  case,  to  transfo m  tt^l"; J  ^1"''??'''  ^~"^  '° 
law,  and  insist  that  detTnt  hL^  We^nroJle^r  t^ 
the  jurisdiction.    Moreover  althono-h  tl,.  i  ?^,^^"^^  ^^ 

«  concluding  p.„g„pH,  j,  „.^  ^  ^,^^  ben  LSIS 


428 


66  FEDERAL  BEPOKTER,   64). 


Opinion  of  the  Court, 
in  consequence  of  the  «  renewed  threats  "  of  defendants  (that 
^   hose  renewed  after  the  passage  of  the  acIrwhS  ^^^. 
pel  ed  dealers  to  refuse  to  purchase  plaintiri  wateh  c^^ 
or  to  deal  ,n  any  wise  therein.    Mor^ver,  jud^enTis  d? 

Enff         "^^  ^^  "^"^  •^^  ^^^  ^^^^"    The  counsel  for 
plaintiff  m  error  asserts  in  his  filed  brief  that  "the  action  b 
founded  solely  upon  the  act  of  congress  passed  July  2  TJw 
the  [seventh]  section  whereof  expressly  pLfdes  tS  the  c^^' 
cmt  court  of  the  United  States  shall  haJe  ex^siv^   „riX 

eZr     ^"^"•'^r';    ^^^'^  '•'*  ^  -P''™*^  assi^rente  of 

Zied  intr'  "Vr'^t ''  "^  «'"*«°*'«<^  ^l^^^the  Tact! 
W^  TK  i  *^"P>"»t  n>«ke  out  a  case  under  the  act  of 
1890.    Therefore,  unless  the  complaint  sets  forth  a  cause  of 

?at:r  " '"' "'  •*' '''''  ^'^^  •*—  shouid^r^jL 

The  only  acts  of  defendants  as  to  which  plaintiff  can  in 

ru„twft.irr.'  *'"*  ^^  ""  "forbidden^or  LlZ  to 
be  unlawful  by  this  act"  are  those  done  after  its  passa^^ 
They  are  set  forth  in  the  twenty-seyenth  paragraph,  rda^  ' 
as  follows:  (1)  Defend-  [648]  ants  " ratified,^onfirmed  r^ 
newed    and  continued"  an  agreement  betwin  themSyl 

t«t  fi'T"-'*  r^/P^"  »»<i  ««^  to  maintain  an  aS 
trary  fixed  price  to  the  public  for  all  the  goods  manufac- 
tured by  them.  (2)  They  "  ratified,  confirmed,  renewed  and 
oo^inued  "  an  arbitrary  price,  and  fixed  the  Sme  for  aU 
^s  manufactured  by  them.     (3)   They  "ratified,  con 

would  not  thereafter  sell  any  goods  manufactured  by  them 

S^?he  pwfff'    m  ^''"^  '■"  ^"  ""^  Soods  manufactumi 
Dy  the  plamtiff.    (4)  They  served  notices  of  such  ratification 
confirmation,  renewal,  and  continuant,  of  these  thr^TJ^ 

Stir"""  ?l*^"^  ^™  "'^^  -«-  former  d^leTTn 
paintirs  watch  cases.    The  remaining  averments  of  the 

twenty-seventh  paragraph  refer  not  t«  IfendTni  acJs  Mt 

to  the  consequences  of  those  acts;    the  principal  con«e- 

tirs  wath^  '"'*'  "^l  Wr  purchasers  and  dealeS  L  S- 
tiffs  watch  cases  and  other  dealers  in  watch  cases  were  com- 
pelled to  refuse  to  purchase  plaintiff's  goods. 


DT7EBEB  WATCH  CASE  MFG.  CO.  V.  HOWABD  WATCH  CO.     429 

Opinion  of  the  Court 

ohzmg    or  as  an  "  attempt  to  monopolize."    m^tev  r  d"f " 

monopohze  any  part  of  such  trade  or  commerris  sit  forJ^ 

itrSh  f  •  J""'  '''-^'  -nufacturr?e£nSnf  at 
charged  with  an  attempt  to  secure  to  each  of  them  a  sale^ 

his  or  Its  own  products  to  the  exclusion  of  those  of  the  p kin 
no^'s^ShisT?  "1'"^  *°  ''''''  *'^«*  -<=»»  defendant  dcS 

manutactured.    The  sale  withm  a  state  of  articles  mam.fao 

tured  in  the  sarae  state  is  no  part  of  interstatVfrf^ 

mprm     77   (?  „   c>  ^    t^  .  ,  mierstate  trade  or  com- 

of  trade  from  one  state  to  another  that  commerce  in  that^n„ 

-^y^^o.L%^  ^ails 

The  complaint  alleges  that  the  acts  of  defendants  sub 
^uent  to  j„ly  2  1890,  have  forced  and  comS^rLt 

;Stiff ^soTd^^gL^^^^^^^  aXS"  *^''*'^T'^^  ^^'  ^'«^' 
throuffhnnf  fl,l  rf TI  o.  ^  *^  ^^''^  ""'»l>e'"  <>*  dealers 
throughout  the  United  States  and  Canada,  plaintiff  mam, 

o£''Tr)  ^Tit  '"*  ''^  ^^'^*"«'^'  -d^trwarTsl. 
Ohio.    And  plaintiff's  counsel  contends  that  this  sufficiently 


430 


I  I   t 


66  F£D£BAL  BEPORTER,  ©43. 


Opinion  of  tile  Court. 
.  charges  such  a  restraint  of  interstate  and  international  trade 
as  IS  obnoxious  to  the  first  section  of  the  statute.    The  phrase 
used  m  the  act  of  1890,  vys.  "  restraint  of  trade,"  is  no  new 
one.     It  had  theretofore  been  used  by  courts  applying  the  doc- 
trines of  the  common  law  in  determining  the  validity  of  con- 
tracts.   It  is  to  be  presumed  that  the  lawmakers,  when  they 
chose  this  phrase,  intended  that  it  should  have,  when  used  in 
the  statute,  no  other  or  different  meaning  from  that  which 
had  always  been  given  to  it  in  judicial  decisions  and  in  the 
common  understanding.    The  title  indicates  that  the  phrase 
IS  so  used,  for  the  act  is  described  as  one  "  to  protect  trade  and 
commerce  agamst  imlawf ul  restraints  and  monopolies  "  ;  and 
though  the  title  to  an  act  cannot  control  ite  words,  it  may 
furnish  some  aid  in  showing  what  was  in  the  mind  of  the 
l^slator.     U.  S.  y.  Palmer,  3  Wheat.  610.    The  "  restraint 
of  trade  "  which  is  obnoxious  to  the  provisions  of  the  first 
section  must  be  of  such  kind  as  was,  before  the  passage  of  the 
act,  recognized  as  unlawful.   In  re  Greene,  62  Fed.  104 ;  U.  S. 
V.  Trans-Missouri  Freight  Ass\  58  Fed.  58,  7  C.  C.  A.  I5] 
It  may  be  assumed  that  the  total  amount  of  any  given  com- 
modity which  will  be  purchased  by  a  community  is  limited 
and  when  several  sellers  of  such  commodity  enter  into  a  com- 
bination m  the  form  of  a  partnership,  and  by  ingenious  ad- 
vertismg,  or  by  the  devices  of  business  competition,  or  by  the 
offer  of  favorable  terms  to  buyers,  enlarge  their  own  trade 
m  such  commodity,  they  restrain  to  some  extent  the  trade 
of  one  or  more  of  their  competitors  therein.    But  no  one, 
not  even  the  plaintiff  in  error,  contends  that  the  statute 
forbids  any  such  acts,  although,  if  the  words  be  taken  with 
absolute  literalness,  the  phrase  "  restraint  of  trade  "  is  broad 
enough  to  cover  them.    A  most  elaborate  discussion  of  the 
meaning  of  this  phrase  "  restraint  of  trade,"  with  a  careful 
review  of  all  the  leadmg  authorities  bearing  upon  the  ques- 
tion, IS  found  in  the  opinion  of  the  United  States  circuit  court 
of  appeals  for  the  Eighth  circuit  in  U.  S,  v.  Trans-MissouH 
Freight  Ass\  58  Fed.  58,  7  C.  C.  A.  15.    The  conclusion 
reached  by  that  court— and  on  that  branch  of  the  case  there 
was  no  dissent— is  that  where  it  is  a  question  as  to  private 
parties  engaged  in  private  pursuits,  and  not  dealing  in  staple 
commodities  of  prime  necessity,  "  it  is  not  the  existence  of 


/ 

i 

'•I 

I, 


DUEBEE  WATCH  CASE  MVr    f^r,    ., 

MFG.  CO.  V.  HOWARD  WATCH  CO.    431 

Opinion  of  the  Court 

the  restriction  of  competition   hnf  .i, 

restriction,  that  is  the  Sof  I'^l^uroT"^''""^  °'  '''''' 
claimed  to  be  in  restraint  of  tridi  »  V  J'T'"""*'  *'^«* '»'« 
fnade  for  a  lawful  purpose  S  ^^  '^^^  "contracts 
injurious  to  the  publfc  wdS'^a^?  J^  ""'  ""'*''««««% 
'er  restraint  upon  the  trade  than  tJ  .  ""^^'^'^  "»  ^'^^- 
partj  required,  had  been  Si  w".  '"'*.'""'*  "^  *^»«  ^^^o^ed 
ing  their  tendency  to^omee^^V?'*'!"'*'' ""^-''^stand- 
A  like  statement  of  tleTw  TT    '^  '^''^  competition." 

that  "  an  agreement  Weh~!  "^?'"'  ""'"'■'  holds 
straint  of  trade  is  go^rLSd  I  "^^''^  '"  ^''''^^  ^- 
and  there  be  a  consiSation  to  1  !^  "*'*  unreasonable, 

that  it  may  not  be  unrea  o„ab,e  '  T'';*'-  ^ ®**1  '^  "^d-r 
not  be  larger  than  is  ^ifd  V,  t^^^  "'^"^  '^'^ 

ciiiains  only  to  inquire  whether  th^  ^    ^ 
nation  set  out  in  the  comDlairt  ^"*'"*'=*  •»•  «»•««- 

or  international  trade  31^/"  T^'  "^  ^t^r^^te 
stramt  of  trade  "  is  n«.H  ;!  !t  ^^'"^  *e  phrase  "re- 

neged unlawful  aclr'f  deftdan?'  T'    ""'^^  ^'  ^- 
subsequent  to  the  passage  of  thf,.     "^'^"^  "P«»  the^ 
firmation  of  an  a^eemfnt  am^    1  ''  *  '""^^«J  "nd  con- 
an  arbitrary  fixedStothS-^"'"^'"^^  *«  """"ntain 
factui^d  by  them,"  ^d  a  car^r^    '  ^Z  ""  *«  ^^^  '«'«nu- 
by  thus  fixing  akd  maintlS^  **"*•'*  ^''^  ^g-ee^ent 
qu^ion  are  not  articleToftrSeL^'r-    ^'"^  ^'  ^ 
coal,  and  other  staple  commEL  'T^^*^'  *'  ^*"*  ^^'  «°"r, 
cays  cited  upon  the  arg^ent    no^    "^  ***  ^  """y  «'  the 
defendants  engaged  in^^^^^^.^T  *'  T"^''^*""'^ 
as  were  the  railroads  or  the  Is  L?  ^"*''  P"''"*'  *'»««c^ 
to  in  other  cases.    Each  one^f   f  *!,"?  '=*""P^'»ic«  inferred 
doubted  right  to  determinrfo/ht    u?^'""''  """^  «"  ""- 
he  would  sell  the  goods  he  mad.       ?u  *'  ^""^  «*  ^hich 
^se  that  right  by  deciding  to  til  ll    ,?.'''""^^  ^"^  »«* 
which  a  dozen  or  so  of  hi! comr!.?^  V^^  ^'"^  P^ce  at 
they  make.    Collectively  LSJw  "*"  *^^  ^'  ^hich. 
one  of  their  competitor^  to  rtlfatt  "^' ""  *'"*-^  *"  ^^^ 
<he.r  goods  so  as  not  to  interSwfh  Ji!  ^"^  ^^'^  ^^  ^«^ 

^•^  -•  And  it  i.  di.cuittr;:r^ -Si-- -: 


\ 


UNI 


432 


66  FEDERAL  REPORTER,  644. 


I 


Opinion  of  the  Ck>urt. 

ously  affected  by  any  such  agreement  between  the  combining 
manufacturers.  If  the  price  so  fixed  is  the  normal  and  usual 
one  theretofore  prevailing,  certainly  the  public  cannot  com- 
plain; still  less  if  the  price  be  reduced.  If  a  combination 
of  the  capital  and  business  abilities  and  factory  appliances 
of  many  different  manufacturing  establishments  enables 
them  to  produce  an  equally  good  output  at  a  reduced  cost, 
flo  that  they  can  sell  such  output  cheaper  than  any  single 
manufacturer  could,  surely  the  public  does  not  suffer.  If, 
on  the  contrary,  the  combining  defendants  fix  the  price  too 
high,  they  restrain  their  own  trade  only;  the  public  will  buy 
the  goods  it  wants,  not  from  them,  but  from  their  competi- 
tors. There  are  no  averments  in  the  complaint  to  show  that 
the  defendants  are  all,  or  even  substantially  all,  of  the  manu- 
facturers of  watch  cases  in  the  United  States,  or  even  in  any 
single  one  of  the  different  states  wherein  their  manufactories 
are  located.  For  aught  that  appears,  they  represent  but  a 
small  part  of  the  watch-case  industry,  and  there  is  nothing 
to  prevent  the  number  of  their  competitors  from  increasing 
to  whatever  extent  the  public  demand  for  such  goods  may 
require.  This  is  no  such  case  as  that  presented  in  Amot  v. 
Coal  €a,j  68  N.  Y.  558,  where,  as  was  said,  "  the  region  of 
the  production  of  [anthracite  coal]  is  known  to  be  limited.'* 
There  is  nothing  in  the  complaint  nor  in  common  knowledge 
to  show  that  the  production  of  watch  cases  may  not  be  prac- 
tically unlimited.  An  agreement,  therefore,  between  some 
of  the  makers  of  watch  cases  to  sell  their  commodities  at  a 
uniform  price,  which  they  fix  upon  with  regard  only  to 
their  private  emolu-  [645]  ment  and  profit,  is  not  an  agree- 
ment in  general  restraint  of  trade,  or  unreasonably  injurious 
to  the  public  welfare,  within  the  authorities. 

The  other  contract  or  combination  which  plaintiff  con- 
tends to  be  unlawful  is  the  agreement  of  defendants  not  to 
sell  goods  of  their  manufacture  to  any  one  who  thereafter 
should  buy  or  sell  goods  manufactured  by  the  plaintiff.  To 
the  extent  that  such  refusal  to  deal  with  those  persons  who 
dealt  with  plaintiff  induced  such  persons  to  cease  dealing 
with  the  plaintiff,  and  to  buy  watch  cases  from  one  or  other 
of  the  defendants,  the  agreement  did  not  operate  in  general 
restraint  of  trade,  the  total  amount  of  purchases  and  sales 


DtJEBEB  WATCH  CASF  titi.^    ^ 

'  ''"'■  "°-  '■  ««^ABB  WAXCH  CO.     433 
.    .  <'»""»"  of  the  Court, 

remaining  constant,  .««  far  as  th.  ..      .  • 
no  doubt,  operate  in  partial  «straint  7  "!J'  "^'''''-    ^'  ^^^^ 
^ome  part  of  plaintiff's  trade  ,„?u         ''''''  "'^-  *«  ^^train 
factn^d.    But  it  does  ml  ftoZtt  T'^  ^*^^  '*  '»«»- 
reasonable,  nor  heavier  than  tlVelf     !"'^  '^''^'''''  '^"^  ""- 
J-equired.    An  individuairanl"/         ^'^  '^^  ^''^'''''^  Pa^tv 
buy  from  or  sell  to  whom  he  nl!""  ""  ''^^'''  «««>'  surely 
to  buy  from  or  to  -sell  tHny  ol"S«"f  "^  "'"^"-^  -*"- 
promote  his  business  interesHo  f/      *" ''"  ^'^''''^^ '*  ^i" 
«nt.rely  a  matter  of  his  pr  le  .       *  '"  '"•^«-     That  is 
ernmental  paternalism  haf  not  1?™'  ''''^  '^'""^  gov- 
except  when  the  propertv  h^n        ^**  '°"^'»*  ^o  interfere 

-hich  the  public  has':;*^^.::"  r ;  '*'r^ '» « «-  ^- 

•n  the  use  has  as  yet  been  fou 'd  .  '  ""^  ?"'''•«  inte^^t 

2,1''"  I'  P"-  -eesrfty  X:  Tf.^'^'y  '«  ^^aple  com- 
Sndd  V.  New  York,  143  U  S  5i7  ,o  i'**"!^'  ^*  ^-  »•  "S; 
business  device,  probably  as  old  'h  ''^  ^'^  '''•  ^'  '«  * 
to  increase  the  number  of  on2s  c.L'"'^  '*^'^'  to  seek 
of  their  purchases,  by  iv^^^^^  T    T^^  ^^^  the  extent 

f-come  exclusive  c;st4.S'*"clrS,t'"^^^^^  those  who 
lawful  or  unfair  in  the  stnt«.„    f!     "^  ^^^""^  ''*  nothing  un- 

of  any  kind  of  merdand   e  "  S  .  *:  "f  '^^'^'^  ^y  the  m^aker 
<hose  who  will  buy  from  m!'      ^  S*^*^*  *"*  f«r  sale  onlv  to 
tbe  case  is  in  no  la^TiZZ  r^'''  ""*  '"^  "thers."    Lj 
pbine  into  a  partn^e's^H  fnlim  '  ^''^^^"  '"'^-''^-'' 
bme  into  a  corporation,  and  adont    h      "^  '"^ividuals  com-      ' 
large  their  business.     If  Jl  t         '  'T'  "^^^^od  to  en- 
which  we  are  referred  h^lds  tol    '""""'^  '^^  *"thority  to 
to  see  in  what  respect  it  i  tn LlV;"*''^^^'-''  '«  ^-ffieuU 
"manufacturers  to  enter  into  ^  hI      ^"^  ^  ^''^  «*  different 
a  es  of  their  own  goods,  or  to  icl'so  "^T "*  *^  P"^'^  the 
themselves  by  increasing  the  nnmfl      T  ''""•"^''  benefit  to 
tomers,  when  there  is  foth^"?    .'  ""^  ^^''^  ^^'^^'nsive  cus- 
-mbining  constitute  suCnS;^';""  that  the  parties"    • 
the  manufacturers  of  such  ewds  L    '"'  r^"  *  "majority,  of 
-here  their  factories  areTcatin '^^t''^"-^'"-'"  ^^tes 
manufacture  is  open  to  all     n     '  ^^  ^''""  the  field  for 
enterprise  for  sellers  to  ^LL''  ""*  '"  "'^'«^^I  busineS 
•ndrndu,!  buyers,  and  antg^Ct'U'^  ^""'«  ^^^"^  «" 
"808-voi  1-^  ^ 2S  ^^"*"*  ^tween  sellers,  who 


434 


66   FEDERAL  BEPORTER,   645. 


I  ! 


Shipuian,  J.,  t.*uucurring. 

wish  to  confine  their  dealing  to  such  buyers  only,  not  to  sell 
to  others,  is  not  an  unfair  or  uni-easonable  measure  of  pro- 
tection for  such  trade.    \or  can  it  be  claimed  that  such  an 
agreement  between  sellers  who  represent  but  a  part  of  the 
trade  is  injurious  to  the  pjiiblic,  which  has  all  the  rest  of  the 
trade  to  deal  [646]  with.    ''  Unless  an  agreement  involves  an 
absorption  of  the  entire  traffic,    *    ♦     ♦    it  is  not  objection- 
able  to  the  statute  (of  1890].    Comi>etition  is  not  stifled  by 
such  an  agreement,  and  other  dealers,  would  soon  force  the 
parties  to  the  agreement  to  sell  at  the  market  price,  or  a 
reasonable  price,  at  least."     U,  S.  v.  Nehan,  52  Fed.  646. 
It  is  difficult  to  see  wherein  the  agreement  complained  of  is 
injurious  to  the  public.     Certainly  it  is  not  one  in  general 
restraint  of  trade.    It  seems  to  be  a  reasonable  business  device 
to  increase  the  trade  of  one  set  of  comi>etitors  at  the  ex- 
pense, no  doubt,  of  their  business  rivals,  who  are  equally 
free  to  avail  of  similar  devices  to  secure  their  own  trade.    As 
such  it  is  not  obnoxious  to  the  statute.    The  agreements  or 
contracts  complained  of  being  not  unlawful,  the  giving  notice 
to  the  world  of  their  existence  is  no  oifense.    The  judgment 
sustaining  the  demurrer  should  be  affirmed. 

Shipmax,  Circuit  Judge  (concurring). 

I  concur  with  Judge  Laoombe  in  the  conclusion  that  the 
circuit  court  proi>erly  sustained  the  demurrer  of  the  E.  How- 
ard Watch  &  Clock  Company  in  the  above-entitled  cause.    I 
am  not  now  prepared  to  adopt,  as  a  reason  for  that  conclu- 
sion, what  I  understand  to  be  Judge  Lacombe's  opinion,  that 
the  agreement  and  conduct  of  the  combined   defendants, 
whk'h  are  set  forth  in  the  complaint,  do  not  constitute  a  vio- 
lation of  the  first  or  second  sections  of  the  act  of  July  2, 1890. 
My  reason  for  regarding  the  complaint  as  demurrable  is 
the  more  tecjhnical  one  that  the  allegations  in  regard  to  the 
acts  which  the  defendants  committed,  or  in  regard  to  the 
facts  which  are  charged  to  have  existed,  do  not  show  that 
the  defendants  restrained  any  interstate  commerct*,  or  monop- 
olized any  part  of  such  trade  or  commerce.    What  the  statute 
struck  at  was  "  combinations,  contracts,  and  conspiracies  to 
monopolize  trade  and  commerce  among  the  several  states  or 
with  foreign  nations"  (U,  S,  v.  E,  €,  Knight  Co.  [Jan.  21. 


'] 


DUEBER   WATCH  CASE  MVr     nr.    ., 

CASE  MFG.  CO.  V.  HOWARD  WATCH  CO.     435 

Sliipmaii,  J.,  concurrmg 

an  injury  of  some  ^tttt^'Sif^'"'?'''''  ''^'''^  '" 
It  should  therefore  appear  Itft  "  '  d  Tr'"'"  "^"""^ 
-ce,  that  the  acts  of  the  Snts  o"  h  •'  ""•'  "*  '"'^" 
"'""opoJi^e  fnterstHte  co„„„erS  t  , hed  i  7  """"P'^  ^ 
mo,.opo]y.  to  the  plaintiff's  inTurv  //  //' '  '""*'""'  ""• 
7  H.  ,,  m.  .'An  iction  will  Zt  fof  tt  "  ' "  ""'""'"''^ 
«fy  imaginable  if  nothing  iJ      1  "'"^  ^'ea'^'*  conspir- 

I-ty  be  damaged,  rSo  :.:?,;:  'T^'"^:  '"■*'  ^^'^^ 
lows  that  the  damairr  ,„  tu        '"'V*^-    ^  '<"»  wiience  it  fol- 

•*g=..<I  (..  the  conZ'of  L         ,™T^°*  allegations  in 
re^^ults  of  the  acts  are  that  ."'•''  ''^^^'^ants  and  the 

sive  watch-case  manXoU  LTt'?"'  '''''''  «»  «»- 
i"  Ohio,  and  had  the'apacitv  t„  /'''  '"^  ^"''^quently 

«ale  25,000  watch  cases  per  „2,,?  '""I'-'fcture  and  offer  for 
Ifi,  1887,  it  sold  all  of  saw  S    '     "  '^'*  '^^"■•«  ^'«-«'«»'er 
<le!.Ier.s  throughout  the  United^fT        ,  "  ^'^^^  ""'"''^'-  ^^ 
be  ad„.itted  tLtt-hi   subs  lit  Inln  ""''  F'''''^"'    ^'  '»av 
ant  engaged  in  interstate  cCeieTrisV  ^''^-^-P'-"- 
the  defendants  ag,^d.  on  or  abort  1 1  i        f"  ""'^"^  *»»«' 
"<'t  thereafter  .seTl  anv  ^Zu,T  T    ''"''''  "'"*  """^  ««"W 
P-on  who  should  blCtl      "     "''r'  ""^  »•'«'"  *«  a"v 
;he  complainant,  and  Lt^      nl/d^J  '"-'"^-^'-d  by 
throughout  the  United  States  .ndr        .  "'  '^^^'^  '"a^ 

the  complainant^s  exi.tin!  and  i^^  "       ""''  '"'"'*  "'"">'  «* 

fied  of  this  agree„.en     fh,    „n  «"*^*°'»"--.  were  noti- 

l«r^e  number  ff  the  then  and  T"  rf'"'  "^  ^"*  '^tice  a 
plaintiff's  watch  cai  w  hd'l  tT     "'  '''"''^"''''  «*  ""'^ 
thereuj,o„  entirely  toZraflV'V''''^""^''  and  ceased 
tiff  «  goods;  that-  all  the  tt    J.l'    ,"i  "'■^'  ""'^*  '"  ?»«">- 
and  performed  for  th    pur;^^''^'"';;^''"*^  '^^'^  ^«- 
■n  the  supply  of  ..vatches  to  STp.^^M.^  "'"'f'''"^  *  "«">»P«ly 
of  the  law,  and  in  violation  ofiir.'        "'""■>'  *"  "'«  P^'iev 
Vork  and  of  the  uS\sta       ^1  .T  H?'  ""t"^^  "'  "''''^ 
-^'•"-ving  eu.tomer  is  alleged:    S: 'IC^^^ith  i^ 


436         i»^  . 

^  ^  FEDERAL  REPORTER,  647. 

Shliiman,  J.,  coucnirriug. 

Jh^wm  T""""'"'"'  ■'  ''"*^"-  '"""'P^  ^^y  i"'^'-ri„g  ,l.at  some  of 

ind:  nir,;;5  rrrnr*^  ^",  "-"'^r  ^^'♦^  ">«"  ^^^'" 

*-«  ;     .  f>o»gnt  the  coiiiplainant-s  ffood^    infpr^tilfr^ 

vember    6  Tss-     "T  'i'  P"?"""''''"  "*  '^'  ««"^P»'^t  of  lo- 

«eie  done  foi  ti.e  puri,ose  of  establishing  a  luonouolv  in  fl... 
.supply  of  watches.  i„  violation  of  the  ^tntnt  I^^^  V  '    v 
and  of  the  United  States   is  nL     "'^f'"*''^''*  "*  ^ew  \ork 
^strained,  or  tha    UratteLt  «  ?  n  ^^''*'°"  "'"'  ^'"^  ""*'' 
state  trade  or  colete     '    ^*    '*"""-'  "-"P^^-^l-  inter- 

IsS '  "".If  theT'*  ***"*  "**f  "^^  P-^S"  °f  "«  «ct  of  July  2, 
tiff's'  w»f  h  "^f  purchasers  and  dealers  in  said  plain 

nl!in Ji?        '^"^  ""^  ''^''^^  ''^«'«'-«  "'  -«'cl'  cases  we^e   as 
plaintiff  IS  informed  and  verily  believes  rpa^„  .  T    » 

buy  large  quantities  of  said  pl^l^X^^^^^ 
Moiild  have  a    once  regained  all  the  businels  and    he  Zfit! 

Kendal' btftlS"  '^7^'^  '"^  '"'^^  «^°--'^  «*  'h-t 
sr^rf™  *  %  ^"^  defendants,  after  the  passage  of  the 

.aid  act  of  congress,  ratified,confirmed,  renewedfand  c^tim  ed 

S;^^,?^    5'  """T'  ""**  ^'**'  '^'  ^"-"^  "'tention  as  here- 
inbefore alleged,  served  notices  of  their  said  ratification  cZ 
firniation    renewal,  and  continuance  of  the  sa  ra—ienls 
.    and  combinations  upon  all  said  dealers  in  plaintiff '^1 
oises  whereby  said  dealers  have  continued  to  this  day  W 
by  said  renewal  threats  of  defendants,  and  con  penSherrv 
and  not  otherwise,  to  infuse  to  purcha^  plaiSst  t S' 
or  to  deal  in  any  wise  therein."    The  allegation  is  that  S 
former  purchasers  and  dealers,  who  wer«  intimidated  bv  the 

were  foi  by  the  r^^Z  ^ ^"2:^;^:^^ 
plaintiffs  watch  cases.  The  names  of  the  states twhl,! 
Oiese  intimidated  persons  resided  are  not  given      No  „ew 

terstate  commerce  are  alleged.    Admitting  that  the  com 
plaint  sufficiently  avers  renewed  acts  of  the  defendants  there 
.s  the  ^me  absence  of  allegation  that  any  customer  old  oj 
new,  outs.de  of  the  state  of  Ohio,  refused  to  purchase  or  h^ 


JJUEBEB  WATCH  CASP  i^r^r. 

^-  ^O^ABD  WATCH  CO.     437 
JJlterstat  Wallace,  j.,  aisseut. 

^a%  of  cou7S,'"„'orba'I^^  interfered   with.     The  complaint 
™nd  that  the  statut^iEd    ''  '''"»^'^  '"  "-  pSSs 
a  eon-sequent  injury,  wCh  'r  fe  ZTo""''''  ~ ^-^ 
l>zed  was  domestic  or  interstate   hM      commerce  monopo- 
cautious  in  regard  to  aveS^  tL/'  k  '  '^'"'  *«  ^^^^  b^n 
had  affected  interstate  com^efce        *  ^  ''''''P'^  "^^-opoly 
upon  a  statute,  especiallv  ..rl      •'     ^^""^  ^  P'aintiff  declares 
Pos  ng,  as  this'  one  S  f  tE  timTif  ''^  '''  eharact::  1^ 
punishment   for  offenses   a^-    ?"*""*='"'»' d^'nagesara 
PJaint  should  contain  eSicT'"'*  '''  P^«^'«'o«%   htZ 
controverted,  bring  hi;?auSoTr^r:;.-h-h  would,  if^t 
of  the  statute.    The  pleader  i„  ih^  '*'""  ^^^  Provisions 

aver  that  trade  bet witw"  ""*  ^"^  '""^'^  *«  thL 

has  been  restrained  by  acUo„  f/tt  7  ^"^  '"'"^gn  co.mtri^ 
uieiit  of  the  circuit  cLrt  ^ustJnt'  ^t'^^'^'-^  and  the  juT- 
m.V  opinion,  be  affirmed  '"^  '^'  ''^-n^rrer  should   fn 

Wallace,  Circuit  Judce 
I  ■  "^  " 

must  bUeTmi  ^tj^^T"^^  «'  ^e  court  that  this      .• 

^hat  the  complaint  does  It 'setir'  "[*""  '"^^  -nclS 
Br  efly  ,t^t^^^  ^^^  avermentsTf  5       '"''*'  *  -^"^  «f  action 
to  the  time  of  the  enacS  ^f  t*  T^^^^'  ^'^  that  pn  "^ 
en^ged  in  manufacturil  «„/ *t  '*«*"*«  the  plaintiff'^^L 

ttir.f^^'^'^^^  h^vi^g^a  tT4T'r  ^  ^'^^  ^'^^^ 

we  United  States,  and  sellinn.  u  ,     therefor  throuehoiit 

dealers  in  other  states;  tt  "the  1?*^^  *°  ^  great  num£  of 
ers  of  watches,  had  B^Z\n,J'^^'  ^^"^  manufactnr 
arbitrary  fi,ed  price  "f^anZ^  '^'T^''''  *«  maintai^  an 
order  to  compel  plaintiff  0/0:^'  ^*  "'^-fte^-  in 
prevent  ,t  from  selling  its  In".        , ""  '"  ^''''t  compact   and 
ants  combined  in  an  ag^^Sf/t  ^  ''  "^^  «»'  '^^^  deC 
by  any  of  them  to  anyTaTe^  wT  ^  """  ""^  ^«tches  mTde 
he  plaintiff,  and  notified  thfdrV  *""^*^  ^^''^^fter  buTof 
'''  ^""ed  States  of  the'a^eet  ^7  -  r-f  es  througCt 

'   .  ^^  thereafter  the  de- 


r 


438 


66  FEDERAL  REPORTEB,   648. 
WalJiKv.  J.,  iliKHoiit 


fendants  did  n-fuse  to  .sell  such  dealers  as  had  bought  of 
plaintiff,  and  thereby  they  prevented  a  great  number  of 
dealers  from  buying  of  plaintiff,  and  effected  a  complete  boy- 
cott  of  Its  trade;  and  that,  after  the  statute  was  passed,  the 
Mme  wmbination  and  acts  were  renewed  and  continued  bv 
the  defendants,  with  the  malicious  purpose,  and  with  the  re- 
suh,  of  suppressing  plaintiff's  trade.    The  complaint  does 
not  e.xplic.tly  allege  that  this  combination  was  entered  into 
or  these  acts  were  done  by  the  defendants  for  the  purpose  of 
preventing  the  plaintiff  from  selling  to  customers  in  other 
states;  but  from  the  facts  alleged  the  conclusion  is  irresisti- 
Die  that  this  purpose  was  comprehended  in  the  [6491  con- 
spiracy of  the  defendants,  and  the  law  presumes  that  they 
contemplated  the  ordinary  and  natural  consequences  of  their 
■CT.S.     JIM-  Statute  <leclares  various  acts  affecting  trade  or 
commerce  among  the  several  states  or  with  forei^  nations 
criminal  some  of  them  being  acts  which  are  not  criminal  at 
common  law.     It  also  gives  a  civil  remedy,  cognizable  bv  the 
federal  courts,  to  any  jjerson  or  corporation  injured  by  rea- 
son of  such  acts.    The  statute  can  have  no  application  to 
acts  affecting  purely  infra-state  trade,-the  commerce  only 
between  citizens  of  the  same  state,-not  only  because  its  lan- 
guage does  not  permit  it,  but  because  the  power  of  commer- 
cial regulation  given  to  congress  by  the  constitution  is  re- 
stricted to  interstate  commerce,  foreign  commerce,  and  com- 
merce with  the  Indian  tribes.    By  one  section  it  declares  it 
to  be  a  misdemeanor  to  monopolize,  or  attempt  to  monop- 
oh^,  or  combine  or  conspire  to  monopolize,  anv  part  of  the 
trade  or  commerce  among  the  several  states  or 'with  foreign 
nations:  by  another  it  declares  illegal  every  contract,  com- 
bination II,  the  form  of  trust  or  otherwi.se.  or  conspiracy  in 
restraint  of  such  trade  or  commerce.    The  same  punishment 

the  case  are  whether  such  a  combination  or  conspiracy  as  is 
set  forth  in  the  complaint  operates  upon  interstate  tr^de  or 
commeree.  and  whether  it  is  in  restraint  of  trade,  within 
the  meaning  of  that  term  as  used  by  congress  in  the  statute. 
I  cannot  doubt  that  a  combination  intended  and  adapted  to 
strangle  the  trade  between  the  dealer  who  sells  his  goods  in 
one  state  and  his  customers  in  other  states  of  the  Union  who 


DUEBEB  WATCH  CASE  MFG    CO    V    wnw.„r. 

MJ'O.  CO.  V.  HOWABD  WATCH  CO.     439 

Wallac-e,  J.,  disseut. 

'a"ion':?^:2;  if  "^  ^^^^^^y  »-l-  the  transpor- 
and  adapted  to'ffctir^^'**'  '^  '""*'^'-'-'^  '^'^^^ 
Within  th'e  scope  oXS^ :iTsrut  ^  Vh':^^''''^- 

the  transittrtdtaTSr  S^  T  "*  "^"^ 
the  legislation  of  cong^eTs  Trtlrd  Ift  '",  "''r*'**  ''^ 
original  trade-mark  statute  wasTJd  to  Z  T^^''  '^^'^ 
was  intended  to  embrace  tZ^lTut,7n  i^a^  ' 
commerce  as  well  ««  in  ,\,^     ^  j.  mfra-state 

Oa.ses,  100  US    22  \Z  ''  '''"»'"«rce.    Trade-Mark 

statut;  protectint' trade  ^«T"^''^'^"«'■"''  ^"^^  »n«ther 
nations'  or  w  th  they'd tf  TJ"  T""'"^  "^^"^  *"-•«« 
diction  of  suits  t.  tttruc"^^^^^^^^^^ 
eral  courts  congress  decJarprl  fi.„^       T  ^^  ^^^  ^^^' 

trade-mark  has  Lt  ll         V    ^"^  *  """"^^  although  the 

polled  or  in'::„r  o'n;n"^rt"a?I  "t  Tf'  ''''- 
128  U.  S.  525,  9  Sup  Ct  145?^  k  ^'^''  ""■  ^''^^' 
in  the  opinion's  of  £  2^1  court'th^"  "^''*'''^  ^'^ 
the  states,  as  that  term  is  u2d  in  tl  TT"^  """""^ 
sion  which  ve«f«  ;„  ,  ^  constitutional  provi- 

the  b^yti  Td  sSlhLTflm' ^7:^ **' ^'^'^''''^^  -Sudes 
tion  incidfntal  tErl     r^T    j*',^'  '"**  '^'  transporta- 

I  Mvj  oyi   ^U2,  trioucester  Ferry  Co  v  Sifnt.>  ^t  d 
sylvanm,  114  U  S.  196-203,  5  Sup   Ct   896  i  i  JS  ^  ^^'"'" 
son,  128  U.  S.  1-20,  9  Sun  Ct  6     TK  V  ^^      '^^  ""■  ^^^''- 
d.affirmthepropo;itiot^.?i,^t^^^ 
Case  decides  is  that  a  combination  to  control  the  t       / 
ture  of  a  product  within  a  single  «tate  kn^f  •        '""'**'" 
interstate  commerce,  notwithstaSingThrfS  th  J     T"'  "' 
merce  may  be  indirectly  affected  bv  it     Ti?  ""''  "'"'"■ 

the  fact  that  an  article  is  m»nnf  .  h  ^^  "''''^  '"'^  *•»«* 
state  does  not  of  YtSlf  mT^  .  "'^'^  ^"^  ''''^^^  *«  «"»ther 
merce,  and  tJe  Lt^S^of  X>  %"  '"■"'^'"  "*  '"*«^t«t«  «>«»- 
the  ti;e  when  tL  i  tSfo™  f ""''  ^"^  ""^^  ^^'^^'^^ 
of  the  state  and  belont  Z  '^  *  ^""^"^  ^™'"  *»»«  ^'ntrol 

and  belongs  to  commerce.    But  the  court  also 


,^ 


f  i 


440 

"^^  m  FEDEBAL  BEPOBTEB,  650. 

Wallace,  J.,  dissent 

bj^use  they  fonn  part  of  intiTte  Sde  t'  ^^^L" 
adapted  to  impinge  upon  the  "  contracts  to  buv  seU  „r^ 

::rct?arei™^^^^^ 

.^^  or .  eLr -he:t«thi^Lr-  ^^^:x^z 

goods  or  othenvise  to  drive  the  corporation  luZ  bu2t  ■ 

£.  many  sTt^s  !f  J     ^.°''''"^;  '^^'^'"^  «»  ^''^i'"  business 
in  many  states,  of  the  untramme  ed  exercise  of  thpir  ri„i.* 

whi'h'a'rnat'^r'^-    "^^  "^^^  '^^^n  l^ZZ't 

£  decC    o  tet'"  T^  ""  ^  •'"^^^  ««■  ^««'tion  ha^ 
"Bcii  ueciarea  to  be  in  restraint  of  trade   althnii<ri.  tu^ 

tract-^^as  only  to  t^rfct  tlie  covenantor      l^  .  °" 

.Vorrh  R„7,  r^„i  n  n      ,   covenantor.     As  is  said  in 

" -^n      if    i      •  ^-  ^"''''^y  ^"^  <^o.,  68  Pa.  St   173 

^nt.ct,  bet,v.n  SSS;  t Jt^rat    ^ Tti^t^^ 
performing  a  business  or  emplovment "    ^^ 
aimed  at  th^^  *..«^^  «"ipio\ment.       ho   conspiracies 

ainiea  at  the  trade  or  occupation  of  a  single  neiNon  ha^^ 

.    ,.  ^'Tiy  case  or  /fea;  v.  Eccles  A  Tirmir  qqt  tu 

indictment  alleffed  that   thn  A^t^  a    \    I  "*,    ""S-  ^37,  the 
« A^y.r.\„^       1  1  -J     ,7  defendants  had  conspired  to 

deprive  and  hinder  "  one  "  from  following  and  exeJS^^ 
his  trade  as  a  hatter;  and  Lord  Ellenborough  alluded  to  it 
as  one  for  conspiracy  "in  restraint  of  tradf  anH  t  # 
conspiracy  to  do  an  unlawful  act  affeclg  t'pubhc^'  Ij 

m 


r 

I 


DXTEBEB  WATCH  CASE  MFG.  CO.  V.  HOWABD  WATCH  CO.     441 

Wallace,  J.,  dissent 

t'mriT' If "?'  ""'•'  ""'•    ^""^*'^'  ^"  P-J^ibidng  con- 
tracts or  combinations  m  restraint  of  trade  it  was  the  int^^n 

^n  of  congress  to  prohibit  only  those  which  wrptv^oulTJ 
recognized  at  common  law  as  belon^no.  tr.  th,f      *  ^ 

s.  ily  in,ur,o„  coBp.dtion,  ev«  tho„^  their  i„d,wr^ 
think  the  coB,bm,l,„  «  forth  in  the  eompUint  en  Z  T 

.."^i  "CiS  ™*  "r*""-"-  "o  w,  of"  .nn,r 

L*"'  d'o  .0°  'IT  "»  '■"™  '"  "«  '«  of  uf,i 

i;\?hS' rh;';^:?  rLt'oS -!r  hS 

:s:^oro;°r,tttt;.:rno""  "-^F'  ^• 

»».her.iner,«...    *:.  J.^SL    '.  S!  n"?'.^..",;"    ' 

Ss  behalf  Tt  rr  ^^""^  '=""''"*^  *"  «"--  J^i^  «hoice?n 
KKa      rpu       '^.®,"^^'^^-       ^^^te  V.  Stewart,  59  Vt  273   9  4tl 

rLs::.=tv:r;;2oSt:tsr 

*.»cy,  whenever  0,.  .et  to  be  don.  'h„  tie  l^Z^. 


^  ji 


442 


66  FEDERAL   BEPORTER,   651. 


Wallace,  J.,  dissent 
ency  to  prejudice  the  public,  or  to  oppress  individuals  by 
unjustly  subjecting  them  to  the  power  of  confederates,  and 
giving  effect  to  their  purposes,  whether  of  extortion  or  of 
mischief.  The  doctrine  of  some  of  the  adjudications  that  a 
conspiracy  is  not  criminal  unless  its  object  is  to  compass 
some  criminarl  purpose,  or  some  purpose  not  criminal  by  crim- 
inal means,  is  not  the  prevailing  opinion.  It  suffices  to 
quote  the  language  of  Chief  Justice  Shaw  in  Com.  v.  HnnU 
4  Mete.  (Mass.)  Ill,  123,  as  follows : 

"  Without  attempting  to  review  and  reconcile  all  the  ca^es  we  are  of 
opinion  that,  as  a  general  description,  though  perhaps  n?t  a  praise 

more'^^fnt  t^°'*'^°'  ^  ^^^^l^^^^^  n^"«t  be\a  combinatron  of  u'^  or 
more  persons  by  some  concerted  action  to  accomplish  some  criminal 
or  unlawful  purpose,  or  to  accomplish  some  punx)se  not  in  tse?f 
criminal  or  unlawful  by  criminal  or  unlawful  means  We  use  the 
terms  crim  nal  or  unlawful'  because  it  is  manifeVt  that  ma  v  acts 
are  unlawful  which  are  not  punishable  by  indictment  or  other  VbHc 
prosecution ;  and  yet  there  is  no  doubt,  v^e  think,  that  a  combination 

aLTtdlctmtt'"""  """^^  *"  «°  ""^"^^^"'  ^^'^''^^  Xl^" 
The  statute  upon  which  this  action  is  founded  discriTni- 
nates  between  combination  and  conspiracv,  and  it  not  only 
makes  both  [652]  criminal,  but  it  makes  contracts  in  which 
there  is  no  element  of  a  conspiracy  or  combination   also 
criminal  if  in  restraint  of  trade.     It  is  therefore  quite  im- 
material whether  the  acts  charged  in  the  complaint  are  suffi- 
cient to  constitute  a  criminal  conspiracy  at  common  law.    It 
suffices  if  the  combination  set  forth  is  oppressive  in  its  nature, 
and  mischievous  in  its  effects.     I  do  not  question  the  right  of 
the  defendants  to  combine  for  their  own  protection  against 
unfair  competition,  and  in  that  behalf,  their  commodity  not 
being  one  of  prime  necessity,  to  agree  not  to  sell  to  those 
who  do  not  buy  exclusively  of  them,  or  who  buy  of  the  com- 
plainant or  some  other  obnoxious  competitor;  but  I  repudiate 
the  doctrine  that  they  can  combine  to  induce  the  customers  of 
a  rival  manufacturer  not  to  deal  with  him  unless  he  will 
join  their  combination.    Upon  the  avennents  in  this  com- 
plaint, which  are  of  course  to  be  taken  as  true  for  the  pur- 
poses of  the  demurrer,  this  case  is  one  in  which  the  defend- 
ants are  acting  not  from  motives  of  self-protection,  but 
oppressively,  and  are  actively  concerting  to  destroy  the  busi- 
ness of  a  rival  by  inducing  other  dealers  not  to  trade  with 
him  because  he  will  not  sell  his  goods  at  their  prices.    In 


NATIONAL   HARROW   CO.  V.  QUICK. 
Syllabus. 


443 


People  V.  Fhher,  14  Wend.  1,  the  defendants  were  indicted 
under  a  statute  making  it  criminal  for  two  or  more  persons 
to  conspire  to  commit  any  act  "  injurious  to  trade  or  com- 
merce." They  were  journeymen  shoemakers,  and  had  con- 
certed together  to  fix  the  price  of  making  coarse  boots,  agree- 
ing that  if  a  journeyman  shoemaker  should  make  any  such 
boots  at  a  compensation  below  the  rate  established  he  should 
pay  a  penalty,  and,  if  any  master  shoemaker  should  employ 
a  journeyman  who  had  violated  their  rules,  that  they  would 
refuse  to  work  for  him,  and  would  quit  his  employment.  In 
sustaining  the  indictment,  and  declaring  such  acts  criminal, 
the  court  used  this  language : 


i(    T% 


The  man  who  owns  an  article  of  trade  or  commerce  is  not  obliged 
to  sell  it  for  any  particular  price,  nor  is  the  nieclianic  obliged  l>y  law 
to  labor  for  any  particular  price.  He  may  say  that  he  will  not  make 
coarse  ix)ots  for  less  than  one  dollar  per  pair,  but  he  has  no  right  to 
say  that  another  mechanic  sliall  not  make  them  for  less.  The  cloth 
merchant  may  say  that  he  will  not  ?ell  his  goods  for  less  than  so  much 
per  yard,  but  has  no  right  to  say  that  another  merchant  shall  not  sell 
for  a  less  pric6.  If  one  individual  does  not  iwssess  such  a  right  over 
the  conduct  of  another,  no  number  of  individuals  can  iiossess  such  a 
right.  All  combinations,  therefore,  to  effect  such  an  object  are  in- 
jurious not  only  to  the  individual  particularlv  oppressed,  Init  to  the 
public  at  large.  ♦  *  ♦  The  interference  of  the  defendants  was 
jurious  not  only  to  the  individual  particularly  oppressed,  but  to  the 
public  inconvenience  and  embarrassment." 

This  language  exactly  fits  the  present  case.  For  these 
reasons  I  think  the  complaint  states  a  good  cause  of  action, 
and  the  judgment  sustaining  the  demurrer  should  be  reversed. 


[130]  NATIONAL  HARROW  CO.  v,  QUICK  ET  AL.° 

(Circuit  Court,  D.  Indiana.    March  2.3,  1895.) 
[r,7  Fed.,  lao.] 

Monopolies  and  Combinations — Control  of  Patents — Public  Pol- 
icy—Equity.— A  corporation  organized  for  the  purpose  of  securing 
assignments  of  ail  patents  relating  to  "spring-tooth  harrows,"  to 
grant  licenses  to  the  assignors  to  use  the  patents  upon  payment  of 
a  royalty,  to  fix  and  regulate  the  price  at  which  such  harrows  shall 
be  sold,  and  to  take  charge  of  all  litigation,  and  prosecute  all  in- 
fringements of  such  patents,  is  an  illegal  combination,  whose  pur- 


«  Rehearing  denied  April  1.%  1895;  affirmed  by  Circuit  Court  of 
Appeals  May  4,  1896  (74  Fed.,  236),  but  the  questicn  of  unlawful  com- 
bination was  not  considered. 


:i 


^   I 


1^  I 


I 


A  A  A 


67   FEDERAL  REPORTEB,   130. 
Opinion  of  the  CJonrt 


poses  are  iMintrary  to  public  policy,  and  which  a  court  of  eoultv 

"r  z:iiy  ^"^"«^"^-  ^--~  -"« ChrinX"^ 

Patents— Invention— Pbiob     Abt— SmiTwn   t/.^^™     » 

conslstlug  substantially  In  tte  adjostment  of  T  cn^rtooTTa 
cunred  seat  on  the  harrow  frame,  ami  fastened  thX^o  byTL^ed 

^ta^rn^th"""'  '^^-  **"  '"""'  '"  "«'«""'<*  to  Prior  deoTstons 
snsteining  the  same,  although  the  court  was  of  oolnlon  that   7n 

^L^  bv  wl         "r*^  "'"""^  '"'»  that  It  is  therefore  n^ 
NrS&  *  *°  accordance  with  the  Miller  patent. 

F^C  o"^  I  ^^.^l  *i'  ^'*^°^'^  H""'>^  Co'^Ponv  against 
Frank  Quick  and  E.  Lindahl  for  infringement  of 'a  Jatent 
relating  to  spnng-tooth  harrowa 

If.  H.  Stuart  and  Howard  <&  Boos,  for  complainant 
V.  H.  Lockwood,  for  defendants. 
Baker,  District  Judge. 

This  is  a  bill  in  equity  to  recover  damages,  and  to  re- 
strain Uie  alleged  infringement  of  letters  pafSt  No  SotoS 
^ed  Apnl  2, 1878,  to  Dewitt  C.  Reed,  for  alleged  n^w  and 
useful  improvements  in  harrows,  which  compfainant  ^^w 
holds  by  divers  mesne  assignments. 

M^'k'^f  rr'  ^*f  P^<1  '"»'l  ^i«d  on  at  the  hearing  are: 
ill  ^\f^  ^-nplainant  is  a  combination  or  trust  attempt- 
ing  to  hold  and  use  its  naked  legal  title  as  assignee  for  pur- 
poses contrary  to  public  [131]  policy,  and  that  a  court  of 
^ty  ought  not  to  aid  its  unlawful  purpo^s  by  entertain 

ZiS  hvT  T\  ^V  ""*  ^"^  «"«««<^  improvements 
tt!TJ  J  t^P"**"*  '^^  "***  ^^ol^«  invention;  (3)  that 
the  defendants  do  not  infringe. 

The  complainant  is  a  corporation  purporting  to  be  or- 

purpose  of  its  organization,  as  shown  bv  the  proofs,  is  to 
become  (he  ass.gncH,  of  all  the  patents  held  by  the  different 

•  Syllabns  copyrighted,  1805.  by  West  Publishing  Co.  " 


NATIONAL,    HARROW    CO.  V.  QUICK. 
Opinion  of  the  Court. 


445 


corporations  and  business  firms  in  the  United  States  which 
are  engaged  in  the  manufacture  and  sale  of  spring-tooth 
harrows;    to  grant  licenses  to  such  corporations  and  firms 
to  use  the  patents  so  assigned  upon  the  payment  by  them  of 
a  royalty  of  one  dollar  for  each  harrow  manufactured  and 
sold;   to  take  charge  of  all  litigation  of  its  licensees  in  rela- 
tion to  such  patents,  and  to  prosecute  all  infringements  of  any 
patent  so  assigned ;    to  pay  all  costs  and  expenses  of  such 
litigation;   and  to  fix  and  regulate  the  price  at  which  such 
harrows  shall  te  sold  by  its  licensees.     The  complainant 
corporation  is  not  organized  for  the  manufacture  and  sale 
of  harrows  under  the  patents  assigned  to  it,  nor  has  it  ever 
engaged  in  their  manufacture  and  sale.    A  majoritv  of  all 
the  corporations  and  firms  engaged  in  the  manufacture  and 
sale  of  spring-tooth  harrows  in  the  United  States  have  as- 
signed the  patents  owned  by  them,  resijectivelV,  to  the  com- 
plainant and  have  received  from  it  licenses  to  manufacture 
and  sell  harrows  under  the  patents  severally  assigned  by  them 
to  It.    The  patent  in  suit  is  one  of  those  so  assigned  to  the 
complainant  by  D.  C.  &  H.  C.  Reed  &  Co.,  who  have  received 
an  exclusive  license  from  the  complainant  to  manufacture 
and  sell  harrows  under  that  patent  practicallv  in  all  the 
territory  covered  by  it.    So  far  as  I  can  perceiVe,  the  com- 
plainant IS  organized   to  receive  assignments  of  the  leo^l 
title  of  harrow  patents,  to  grant  back  licenses  to  their  As- 
signors to  use  and  enjoy  the  same,  to  collect  from  each  mem- 
ber of  the  combination  or  trust  one  dollar  as  a  license  fee 
for  each  harrow  manufactured  and  sold,  to  regulate  and 
control  the  price  at  which  harrows  may  be  sold  by  the  mem- 
bers of  the  combination,  and  to  prosecute  and  defend  all 
suits  involving  the  alleged  infringement  of  such  assigned 
patents.  ^ 

It  seems  to  me  that  such  a  combination  is  illegal,  and  that 
Its  purposes  are  violative  of  sound  public  policy.  The  com 
mon  law  forbids  the  organization  of  such  combinations, 
composed  of  numerous  corporations  and  firms.  They  are 
dangerous  to  the  peace  and  good  order  of  society,  and  the v 
arrogate  to  themselves  the  exercise  of  powers  destructive 
of  the  right  of  free  competition  in  the  markets  of  the  coun- 
try, and,  by  their  aggregate  power  and  influence,  imperil 


f  I 


n 


I 


44fi  . 

«■    FEDERAL   REPOKTEB,   131. 
Oiiiuinn  of  the  Court. 

the  free  ami  pure  a<liniiii.t,ation  of  iusti.-P      ?/..  v       « 
row  Co.  (Sup.)   18  X    y    s,,  ""  ^J""^^*;    ^f"^"'*  ^-  '^^«'- 
77  Mich,  jgo;.,;   \   W  imtT         '  f,''<";dxon  V.  B„M, 
St.  320.  24  X    E   im-  l  /'       v7  ''■,^'"*'^'"  ^''■'  *7  Ohio 

Complainant  says  that  if<  t'u]^  f .  *i 
m,««„  by  a  s, .  nje^;,.  ::.l,';f  J   °  ^ts  protection  from 

poses  of  the  eo.nbinrtiol/Sf        "Ltltf'T^  tT'  Ik""" 
han,l,  the  «lefen<]ai,l>  cmen.l  t  J     '''':^''™  ^-  .«»  the  other 

woMhl  Ik.  to  .rive  «i    tl  11  ,"  ^"'''  '*'  '"'''  Protection 

«#v  lu  ^i\e  aid  to  tlie  unlawful  mir    I1Q91  j.  ,i 

combination.     I„  suit,  n  l-.w  it  !    Vin'        '  ''*'*^  "^  "»« 
«.«„]  •  •  '''^  "  IS  doubtless  true   n«  n  «..., 

eral  pwjjosition.  (j,at  a  wi„n.T,l„er  will  n-,t  .  .    ? 

dispute  the  iesr-il  titio  -.*    '""«"« »  "'1  not  be  permitted  to 

quiVed;  or  thaV  the  own  '  Jn^s  t        .""  ""'""  '""^  "" 

-  i»-est.n,d:bt:ret?tKd:::.:i;;r::.^^^ 

conscience  ^  ill  move  the  court  to  siPf  T^k«  i-  ^  **  o""^ 
re«,nted  bv  the  complain::  ^Je  J  ^^f^""  "^■ 
except  that  the  law  will  not  lend  its  S  T  ""  '^"'^' 
nient  of  its  nurnosp*     T^  V^  ***  ""'  accomplish- 

oi  us  pu^po^«s.    The  conunon  law  does  not  nrni,;K;* 

.. ;...!.. »,  z  ;t  :rx,,''";i  ""'"''•  ">■  ■"""■« 

not  Ie„,l  X  •         •    *"  '■^'*'''«  "  •"  s"ch  a  way  as  will 

powers,  ought  to  discountenance  and  repress  then, 
ve.ftio™'"rfl..t"r  ^'"'^"*  '"  '•"^^"""'  -  «"^'"^  ^he  "i„. 

springteethoro   i.il:^*'^"l:^r"   ""  *'"^''  '"•- 
in  a  novel  means  for  adiitin^W^r^rhT/stS 
to  Us  ,-,on.t  a  gn..ter  or  less  depth  of  cut,  which  f'effeS 


'I 


■•    > 


r 


447 


--10.^  H.BROW  CO.  ...  ,,,,,. 
bvmafc;;     .K  °P'n'™  Of  the  Court 

Instead  of  employing  a  clt        ^^''  "'"">  '^«  curved  seat 
upon  the  tonth\„      .        ''""tmuous  din    that  ***• 

its  ends  for  the  ^^  ^'^  ^•'"Ply  a  bar  o  Vat  .rf  '"^''"^ 

snugly  by  nutl      ^''''''^"  ^^^  '">Jte,  which  l,r'"^°'''"^«^  »* 

^est  uDon  «  «         1      -^  invention  beino-  f^o^    ^"'-^^^es,   the 

*vnat  1  claim  is •  (i\  tu  .     ^  ^™e  m  my  invo,. 

frame  and  harrow  t»oth  ^  ^^^  combination,  with  a  V 
longitudinally  adb.st  w    ^""''"^  ^h^reon,  [13^,,  '^  '''"■'•«^ 
cribed,  wherebv  ?f  ^'''  "^  *  ^^^^ninff  cl/ "f^  "^''^  t«  be 

of  a  curved  tnnfi       ?     ^'^^'"^  provided  wUh     ^      ^  ''^'^' 

-d  :rc::  "Tr""\  ^-"«'  'hL'Xenr  "^" 

'^elf  was  tn  a  r  \  ^^  Problem  which  h»     ^'"*"*«  '^as  old 

*"  ^'^"^'  '^  ^d  tooth  tit  harroX*'  '''  '^■^ 

narrow  beam  so  that 


UJL^-':- 


\ 


448 


87   FEDERAL  REPORTER,  133. 


Opinion  of  the  Court. 

it  could  be  readily  moved  in  the  direction  of  its  length,  and 
thus  elevate  or  depress  the  point  of  the  tooth.  The  inven- 
tion consists  in  resting  the  harrow  tooth  upon  a  curved  seat, 
and  fastening  it  in  place  with  an  adjustable  curved  or  con- 
cave clip  having  biting  edges.  In  view  of  the  prior  state 
of  the  art,  disclosed  in  the  record,  and  which  may  be  found 
fully  set  out  in  Reed  v.  HmttK,  40  Fed.  882, 1  am  of  the  opin- 
ion  that  the  adjustment  of  a  curved  tooth  to  a  curved  seat  on 
the  harrow  frame,  and  fastened  thereto  by  a  curved  clip  hav- 
ing biting  edges,  does  not  amount  to  invention.  It  seems  to 
me  that  a  skillful  mechanic,  familiar  with  the  construction 
of  harrows,  could  have  devised  the  method  of  adjusting  and 
fastening  the  tooth  covered  by  the  patent  by  the  simple 
exercise  of  mechanical  skill.  While  such  is  my  opinion,  I 
feel  bound  to  hold  this  patent  to  be  valid  out  of  deference  to 
many  formef  adjudications  in  which  it  has  been  sustained. 
It  ought  not,  however,  to  receive  a  construction  broader  than 
the  very  terms  of  the  specification  and  claims  require. 
As  said  in  Reed  v.  Smithy  supra : 

"  We  find  it  impossible  to  escape  the  conclusion  that  the  clip,  which 
lies  at  the  foundation  of  tlie  platntirg  patent,  is  limited  to  a  curved 
clip  with  biting  edges,  designed  to  hold  the  tooth  rigidly  to  Its  seat" 

The  patent  then  embraces  a  curved  clip,  having  biting 
iKlges,  in  connection  with  a  curved  tooth  and  a  curved  seat 
for  the  same.  The  specification  declares  that  "  the  principal 
feature  of  the  invention  is  that  the  tooth  shall  rest  upon  a 
curved  seat." 

The  defendants  are  alleged  to  have  infringed  by  the  sale 
of  harrows  manufactured  under  letters  patent  No.  444248, 
dated  January  6,  1891,  issued  to  Huson  V.  Miller  for  an 
alleged  improvement  in  spring-toothed  harrows.  In  this 
patent  the  harrow  beam  has  a  channel  crossing  its  under- 
face,  in  which  channel  a  fiat  metal  plate  is  fastened  by  a  pin, 
and  the  tooth  is  placed  in  the  channel,  and  rests  against  the 
metal  plate  at  its  outer  edges,  and  is  fastened  by  an  ordinary 
flat  clip,  which  comes  in  contact  with  the  tooth  at  a  point 
situated  centrally  in  relation  to  the  edges  of  the  plate,  and 
upon  its  convex  side.  When  the  clip  is  drawn  down  upon 
the  convex  side  of  the  tooth,  it  presses  the  concave  side  of  the 


UNITED   STATES   V,  CASSIDY. 


449 

Syllabus. 

is  to  ^\igmfz,^t^::^T\  1  *'^^  p^^^^"'-^  »f  *»>«  clip 

by  a  curved  SptibiZfr''  T."  "  ""^'^  '^  Pl*"- 
dentiv  considered  rfiffl^  u^"''  ^^^  P'*""*  "«<*  «^- 
^ubstantial  that  the  m1  it  l^  'T'"""  *'^  '^'  ^'^<-^  ^ 
infringement  of  ^^L^X^S^Zr  '''''''''  ^  ^ 

gard  the  MiSfr  p^alt tTS™"*''  P^'^"*'  ^  ^'  "»*  ^■ 
and,  as  that  deZ tl^Tlf^/^^f  ^J^^^^^^^  device; 

defendants,  thev  cannot  !e  Ldd  ^iW    r^""' '"''' ^^  *^ 

The  bill  is  therefore  dlSedtr  wanJ  orec't^r"*" 
plainant's  costs.  "*  equity,  at  com- 

I698J     UNITED  STATES  ..  CASSIDY  ET  AL 

(I>.«tr.ct  court.  N.  D.  Ca,«orn,a.    S,m  I  an.  2,  :895.,       ^ 

[67  Fed.,  698.] 

against  the  United  Sta^  (Rel^s*°S';«^«'  *<>  «>mmit  offenses 
'"'Ich  are  necessary  to  confttate  tho^^  '""*''°'  *•»■««  «l«n'ent8. 

Offense  against  the  United  Sto?«  A1  ^^**''=  <2)  to  conunlt  any 
Of  one  or  more  of  such  wrtlel^o'lnl  L  "^*"  ""*■  »'  *^  «'«°<«t 
the  conspiracy.^  ^°'°^  ""^  «<=*  ^  effect  the  object  of 

^or'^i^e^^^s  ^Z^n^  S'T  '"  "  ^■"''inatlon  of  two  " 

nniawfnl  purpose,  ortre^i^  not  1^7"^"  "  «'"""«'  »' 
Inai  or  unlawful  means.  Pe««^,  n  I  1*^"  ""»»°al.  by  crlm- 
203.  cited.  ^*  "^^ ''•*••  18  Sup.  Ct  542, 148 u!s. 

Same— Manneb  of  CoNspn.i»n  _rrh-.  -„ 
tbe  cha^e;  but  It  Is  ^Z^^  ZIT  """*"  "  *''«  '^"'^  of 
meet  together,  and  enter  IntTl^ct^V  "?'"  "^'^"^  «"<»"'» 

«  Syllabus  and  state^e«^^^j^,i3~^^rT-— __ 


40l/ 


67   FEDERAL  BEPORTEB,   698. 


Syllabus. 

D^^^r^^thl""*  *""  """"''"'  '^'"'"'*  '«"  t»  »»'  ""-J  fe  details  of  the 
Plan  or  the  means  by  which  the  unlawful  combination  was  to  be 

ner  or  through  any  contrivance,  positively  or  tacitly    come  to  « 
^Tvl^rllT'  '"  '"=~-^"^"  «  -—  a»d  -lawruraes^Tga' 

^  ~^;,  K^     1     """^  P*"^""-  "•*'««*  '>y  toe  «>«"non  Purpose 

oJ  th?Z"   ,T  V  '""^  ''''*  *"«**''«'■  '»  «°y  ''"y  ">  furthera^^ 
of  the  unlawful  scheme,  every  one  of  said  persons  becomes  a  mem- 

^s  f  ^ho^rr"^'  '"•"'"«''  ^"^  I»«  ""^""^  ^<^'  to  take  the»Tn 

C"the"rerclU"lU'rs^'"  *°  '^  "-"'«^  "  "^  ^-0*^  <«Btance 

SUMt-Any  one  who.  after  a  conspiracy  Is  formed,  and  who  knows  of 

ttatlw^  .iT.**:"'?'  "^""^  •"  -uch  a  party  thertto T^m 

^^^^^T^^^^^"^  "'  ^"^  P*"^-Where  several  persons  are 
proved  to  have  combined  together  for  the  same  Illegal  purpo^  a,^ 
act  done  by  one  of  them,  ,n  pursuance  of  the  orlglnaf  conceZTplZ 
TtZl«      fr°!!  "i  *"*  ~"""**°  ""l^*-  '«•  '"  the  contemplation 

such  act  win  be  evidence  against  any  of  the  others  who  were  engaged 
In  the  conspiracy.  v  "cic  engagea 

^♦k'"'?^"*'™''*  ""^  PABTiE8.-Any  declaration  made  by  one  of 

e^rd^^'^at'^r^r  rt"*^ "'  "■"  "'^'  -*«^''- ''-"  - ' 

Tho  ,^.^H  IT"'  ""*  ''«*'°^*  ""  ♦'"e  other  conspirators. 

»!h  J  ,      «"  """"'""tlon  is  proved,  are  as  much  responsible  f7; 

wrnsn^«t^r  ^  Ti  "^'^  ™"  "P'""^  *°  *"«  declaration  of  a 
co-consplrator,  although  he  may  not  himself  be  under  prosecution 

^"^J!!™""^  ^''  ^"^"^  OFKE«sE.-The  law  Je^IX^he  act 
^  unlawful  combination  and  confederacy  as  dangeroTt^bf  La^ 

^  ^"Z'  T  ""^"•'^  **"*  «"*  combination  and  If^^c^ 
to  commit  Crime  requires  an  additional  restraint  to  those  provIdS 
for  the  commission  of  the  crime  Itself.    It  therefore  ma^^  cri^^^ 

S   ,  ?H  *^~  '*  """'**'  *»  "■*  «•"»«  which  may  be  tto 

object  of  the  conspiracy.  ' 

Same-Means  Cortemh.atei>-Ali4sgation8  and  PsooFs.-It  is  not  In 

n:° indiZi^  '"^r  *°  ""'•'  *"' ""  *-  -"ni'^f  j:,- 

in  the  Indictment  were  In  fact  agreed  upon  to  carry  out  the  con 

LbeT^  thfindipL^n.  .*"*  """  °'  -""^^  »'  the  means  de- 

scrlboain  the  Indictment  were  to  be  used  to  execute  that  Duroose 

8AMi^^0vB,r  Acrs-Whlle  at  common  law  it  was  not  ne^'Tr^^^^er 

or  prove  an  overt  act  in  furtherance  ef  a  conspiracy  IT  undlth- 

s^ame  relating  to  conspiracies  to  commit  an  2nL\,Zn^  Z 

united  States,  the  doing  of  some  act  In  pursuance  of  The  ^^J™^ 


UNITED  STATES   V.  CASSIDY.  451 

Syllabus. 

that  one  or  more  of  thpip  .^^^  '     "*  '*  '^  """fic'ent  to  show 

in  furthera„"7f  "the  Z^r^aor  ''^'  ""'  """*  "  ""^  *>- 

'^Z7r:Zr:7n'^rs^T^S-  '  r^-A.though  the  law.  which 
Obstruct  and  i"  ta^  the  i«f '  "T  r"""  """^'"^  "  an  offense  to 
originally  pas^  nrior  to  ?h  ^^  '"^  """^  ^'^es  mails,  was 
Of  the  u^eth'^TtrT::^!?^"  r"T"  '"*°  ''^  ^""^^  states 
of  the  law  conforms  to  i^nf.r        ^  '''""■'""''•  ""^  *"«  Phraseology 

3.  1S25,,  yet  Ur^u^lly^rbleTr^^irsyr  T'' 

"tsrprr^^drthi^M^T""'""""^^^^^^ 

o . ,        ™^  ''iprBSB     ana  by  the  old-fnshioned  staspcnn^h 
SAME.-The  statute  applies  to  all  persons  w^o  "fnT  ?    , 
fully"  obstruct  and  rptnrrt  n,J  "^'^"^  "ho     knowingly  and  wlll- 

carrylng  the  sLef  thltl   to  thoS"',"'  ^  """^  "'•  *"«  «^«"'- 
formed,  however  Innm^nt  th"  i!"  """"'^  *""  the  acts  per- 

e-fect  Of  obstruTtirr 're  XThetaTL'^wh:'"  ^  '"^ 
acts  with  the  Intent  that  such  shall  h^f hi'.  '^''°™  ""* 

Sirby.  7  Wall.  485,  cited  *'""  "Pe^tlon.    p.  «.  y. 

^'^^'^n.U^V^CTrZT'^r  '"''  -"^'"^  '-  ''-  the 
have  the  erect  Of  obstrockeTrV'^r"™  "''""^'°'  "««•  '^hich 

in  such  case,  a^  .nto^   'l^ r^^tr"^, "'  '"^  """^^ 
Pntea  to  the  authors  of  th»  nnu   ,  ,  ^  """'  "'"  "e  'm- 

of  other  ends  ma7  have  bl  th!lT^  "?»»«"  the  attainment 

7  Wall.  485,  cited.  ^""""^  ""^^t.     P.  S.  v.  Kiriy, 

'irrViTe  uTinX-^t^n:;  riy'rm^r^r  "^  -^ — 

-n  ear  Is  a  ^art^nrr^iaTir  p^brrre'r  %*''^ '^"■ 

Should  p.cjTf  ?heT,iirr"wU*  iTberr/r  *-*  ■"-" 

SAME.-Any  train  which  Is  carrying  mall   „n2,  Tk 

postal  authorities.  Is  a  mall  train  mth!"  J  ?^  *^'"^'°°  "'  the 

Same-Intent  —it  i.  n!>*  '      *''®  ^^^  °'  the  law. 

Which  they  ha^e  :  teiued  and^rsare^"  0?,^  '^'^  "'  "  *™"' 
chargeable  with  an  [700]  Intent  to^'  ww  T*^""^'  *'^'  '■"* 
and  natural  consequence  of  tbeir  acte  and  TJ"  !"'  '^~'"""* 
railways  postal  routes  of  the  Vn.^^.^"  ^auiZ^Z:^ 


<W  FEDERAL  BEPORTER,  700. 


Syllabus. 

one*8  knowledge  that  a  large  portion  of  the  passenger  trains  carry 
mail,  it  is  to  be  presumed  that  any  person  obstinicting  one  of  those 
trains  contemplates,  among  other  intents,  the  obstruction  of  the 
mail.    U.  8.  v.  Debs,  65  Fed.  211,  followed. 
Combinations    to    Obstbuct  Intkbstate  CoMMEBCB^— Act    July    2, 
1800.— The  word  "  commerce,"  as  used  in  the  act  of  July  2,  1890,  to 
protect  trade  and  commerce  against  unlawful  restraints  and  monop- 
olies,  and  in  the  constitution  of  the  United  States,  has  a  broader 
ineaning  than  the  word  "  trade."    Ck)mmerce  among  the  states  con- 
8^ts  of  intercourse  and  traffic  be^veen  their  citizens,  and  includes 
the  transportation  of  persons  and  property,  as  well  as  the  purchase, 
sale,  and  exchange  of  commodities. 
Same.— While  the  primary  object  of  the  statute  was  doubtless  to 
prevent  the  destruction  of  legitimate  and  healthy  competition  In 
interstate  commerce,  by  the  engrossing  and  monopolizing  of  the 
markets  for  commodities,  yet  its  provisions  are  broad  enough  to 
reach  a  combination  or  conspiracy  that  will  interrupt  the  transpor- 
tation of  such  commodities  and  persons  from  one  state  to  another. 
U.  8.  V.  Workingmen'8  Amalgamated  Council,  54  Fed.  995,  cited. 
Samu— Pullman  Cabs.— Pullman  cars  In  use  upon  railroads  are  In- 
strumentalities of  "  commerce."    U.  8.  v.  Debs,  04  Fed.  763  cited. 
Oonspibacies-Combinations   of  Railboad   Empi^ye^-Unions   and 
PuoTiCTivK  Associations-Stbikis.— The  employes  of  railway  com- 
panies have  a  right  to  organize  for  mutual  benefit  and  protection 
and  for  the  purpose  of  securing  the  highest  wages  and  the  best 
conditions  they  can  command.    They  may  appoint  officers,  who  shall 
advise  them  as  to  the  course  to  be  taken  in  their  relations  with 
their  employer,  and  they  may,  if  they  choose,  repose  in  their  officere 
aiithority  to  order  them,  or  any  of  them,  on  pain  of  expulsion 
from  their  union,  peaceably  to  leave  the  employment  because  the 
terms  thereof  are  unsatisfactory.    But  it  is  unlawful  for  them  to 
combine  and  quit  work  for  the  purpose  of  compelling  their  employer 
to  withdraw  from  his  relations  with  a  third  party,  for  the  purpose 
of  Injuring  that  third  party.    Thomas  v.  Baihcap  Co.,  62  Fed.  817 
followed.  ' 

Same.— A  strike,  or  a  preconcerted  quitting  of  work,  by  a  combination 
of  railroad  employ^,  is,  In  Itself,  unlawful.  If  the  concerted  action 
Is  knowingly  and  willfully  directed  by  the  parties  to  It  for  the  pur- 
pose of  obstructing  and  retarding  the  passage  of  the  mails,  or  In 
restraint  of  trade  and  commerce  among  the  states. 

GuMiNAL  I^w— Reasonable  Doubt.— a  reasonable  doubt  Is  one  aris- 
ing out  of  the  evidence;  not  an  Imaginary  doubt,  a  fanciful  con- 
lecture,  or  strained  infterence.  but  such  a  doubt  as  a  reasonable 
man  would  act  upon  or  decline  to  act  upon  when  his  own  concerns 
are  involved.-a  doubt  for  which  a  good  reason  can  be  given, 
which  reason  must  be  based  upon  the  evidence  or  want  of  evidence. 

8am*~Pbovince  of  Juby— Cbedibilitt  of  WrrNEssEs.— The  jury  are 
the  ezclnsiTe  jvOgm  of  the  credlbUlty  of  the  witnesses.    A  witness 


4 


1 


^ 


UNITED  STATES   V.  CASSIDY. 
Statement  of  the  Case. 


453 


tuTrit  *°  '^"^  *"*  *"*"•  »>"*  t"«  presumption  may  be  re- 
^I  ed  by  the  mamier  In  which  he  testifies,  by  the  character  o^  Z 

STIZwr:  evMence  affecting  his  character  '^1?  h„^ 

^'Z^T»,L    "  "'«  """t';^'  "'<l  fy  contrary  evidence.    But 

arbl^r   nil  T    "    "'^  °'  *^  "^^^  »'  «^"»<«<*  »«  not 

This  was  an  indictment  against  John  Cassidy,  John 
S;  'off  "*^'^'  -^-,Kev  St.  §  5440,  for  consp^kj  to 
commit  offenses  agamst  the  United  States,  namely,  th/of- 

and  the  offense  of  combining  and  conspiring  to  restrain 
^ade  and  commerce  between  the  states  If  th!  VnlZ^Z 
^eat  p'Z  •=7°*"«\.The  pi^secutions  grew  out  of  the 

f^94  !iM"''''  "'^'"^  ^""'•'■"•^  "^"""g  J-n^  and  July, 
throlhl  ''^''^.^''  '"^i^ly  supported   and   carried   on 

Union       1  he  charge  delivered  by  Judge  Mobbow  in  this 

c";  r„  ttr'  ':  '^  *^'''"r'  ^^^^  ^''^'^  - «  -i^^ 
case  m  this  country,  and  only  exceeded  in  any  case  by  the 

^a?^M•^''^^*'"*  -^"^"^  Cockbum  in  the  xTchborne 
Case  \yh.le  only  two  of  the  defendants  were  tried  the  ca^ 
was  reated  as  a  test  case,  both  by  the  governmen  and  bv 
the  strikers,  and  ,t  involved,  as  a  practical  result,  the  dispi^ 
«tion  of  some  132  other  cases.  Most  of  the  defendants  we™ 
recognized  leaders  of  the  strike  in  California.    The  cha" 

m^l  If'  f '":^«r^^n«Pi'-««y  to  retard  the  United  States 
mails  and  restrain  interstate  commerce-brought  up  the  en- 

Za  T'  7  w  *'  ''''  ^'''''''  '""'^  ^««  concern^.  Two 
hundred  and  sixteen  witnesses  were  examined,  and  the  trfal 

occupied  five  months,  beginning  November  12, 1894,  and  end! 
mg  April  (,  1895.  The  testimony  covered  nearly  6,000  paces 
of  typewritten  matter,  and  was  practically  a  rec;r.d  of  S 
the  incidents  relating  to  the  strike.  The  charge  was  Seli  " 
ered  on  April  1  and  2, 1895.  S«  »  as  aeuv 

S^f.i  J<"^^^' Special  Assistant  United  States  Attorney,  and 
Samuel  Kmght,  Assistant  United  States  District  Attorney. 

Oeo.  TF.  Monteith,  for  defendants. 


454 


«  I'EDEBAL  BEPOBTEB,   701. 


Charge  to  the  Jury. 

MoBBow,  District  Judge  (charging  jury). 

Gentlemen  of  the  Jury:  I  congratulate  you  on  the  ao- 
llTi^^  temination  of  this  case.  For  five  months  you 
have  been  required  to  give  your  constant,  and,  I  might  L, 

LL  '  ^i!  f*  '•'"  '^^  protracted,  but  I  am  not  pre- 
w.?!  J!  ^  "'/"^  ^*^  *'"«  •»««  ^^  occupied  than 
rnvTS7L."r  /^'  circun,.ctances,  to  secure  the  to^ti- 
u^Ll    ^    21«  '''taes^  who  have  appeared  before  you 

fmdants  now  on  trail,  covering,  as  they  do.  the  whole  field 

Lriv  inv  r  *f ";''  "'  '"^  ^'""'"«'-  '"  *'^  district,  neces 
S£  T  r     '  ""^"^^'^'^y  into  every  feature  of  that 
Mftir     In  this  examination  you  have  displayed  a  patient 
interest  of  such  a  commendable  character  I  to  call  for   he 
mlaV'^u       "^^T'  ***  '^  "'"rt-    You  are,  indeed,  en! 

munL  for  :h^"*'*-f  **'  '^'^  «"^  "*^-"  «*  the  ^om- 
ke  ™Lt  *«^^.«^.<^««  y««  »«  making,  and  for  the  serv- 

iuty  ""^ '"  **'"'  performance  of  a  public 

mv  duTJ'S*^  *^"  !!*.."  ^"'""  «>»-<^«'^«on,  it  becomes 
my  duty  to  call  your  attention  to  the  character  of  the  charges 

Tf  .r  t'"^  Pf^*-"*!**"  IS  being  conducted.  It  is  the  duty 
of  the  court  to  declare  the  law;  it  is  your  exclusive  proving 
and  responsibility  to  apply  the  law  so  declared  to  the  facS 

""Si'C^T- ?"*'""•*'  '^"""^  *'^«'"  t«  ^  established. 

17«^J  The  indictment  contains  two  counts,  which,  in  een- 
^1  terms  diarge  that  the  defendants  consp'ired,  o^mbifeS, 
«Bd  agreed  together,  and  with  divers  other  persons   to  oh 
st^ct  and  retard  the  paasage  of  the  United'^Tt::;  ma ^ 
and  the  earner  carrying  the  same,  and  also  that  they  en 
gaged  m  a  combination  and  conspiracy  in  restraint  of  haJe 
and  commerce  ,mong  the  several  states  of  the  United  Stes 
ai^with  foreign  countries.     The  crime  of    conspiracy  is 
b^  upon  section  5440  of  the  Revised  Statutes  of  the  Uniti 
States,  which  provides  as  follows :  e  u  niiea 


UNITED  STATES  V.  CASSIDY. 
Charge  to  the  Jury. 


455 


aTreffe5""thToE'S  tSe  Z  "^  "''"'  ?'  ^^^  P-^les  do  any 
conspiracy  shalf  be  liaWe  t  a  .tnX^'^'"'^  *"  *"«  ^""^^^  *«  «»«& 
dollars,  or  to  imprisonment  ^o^w^  ?u  """"^  *'""'  *«"  thousand 
«ne  and  imprisoXent  ^t  dLretioT^  the  Urt"^'""  "'  *"  '~''' 

To  make  this  statute  as  clear  to  you  as  possible,  I  will 
call  your  attention  to  its  three  essential  provisbns.  The  S 
cjement  is  the  act  of  two  or  more  persons  conspiring  to^^' 

btates,  and  the  third  is  what  is  termed  the  «  overt  act »  or 
the  element  of  one  or  more  of  such  parties  doing  any  acJ 
to  effect  the  object  of  the  conspiracy."^  With  re^/JZ  ie 

asactr„;  "'  ^J'f  '''''  '  ^''"^P'"^^  •>-  been  descri^ 

to  ac^omlS  a"  r  '""'"t  P''^""^'  ^^  ^*'»-^t«d  motion, 

to  accomplish  a  criminal  or  unlawful  purpose,  or  some  nur 

pose  not  in  itself  unlawful  or  criminal,  by  criminTor  im 

lawful  means.    PetHbone  v.  U.  S.,  148  U.  S  203    3  Sup  a 

M2     The  common  design  is  the  essence  of  the'char^^S[ 

while  It  IS  necessary,  in  order  to  establish  a  conspirfcy   to 

prove  a  combination  of  two  or  more  persons,  by  concfrt^ 

action,  to  accomplish  the  criminal  or  unlawful  puloTu 

IS  not  necessary  to  constitote  a  conspiracy  that  two  i  moi^ 

persons  should  meet  together,  and  enter  into  an  e^vLTTr 

formal    agr^ment  for  an  unlawful  scheme,  o^    ha       hel 

should  directly,  by  words  or  in  writing,  stat^  what  the  un 

lawful  ^heme  was  to  be,  and  the  details  of  the  plan  or  me^Js 

it  IS  sufficient  if  two  or  more  persons,  in  any  manner    op 
through  any  contrivance,  positively  or  tacitly  come    to    I 

S:   "L  1^"'"^^  ^7™P"*  "^  common'and  unlawfu 
fr^\  ^ .     ^^  """"'^^^  ^^^'^  «n  unlawful  end  is  «ouffht 
to  be  effected,  and  two  or  more  persons,  actuated  by   h;  Z^ 

under  .  common  piit|,o«!  to  .ccomplisi,  u,e  end  de.i  Ji 
An,  on.  ,ho,  .ft.r  .  eo„.pi„.,  ^.  formed  -nTthtC 


I 


i 

I 


456 


67   FEDERAL  REPORTEB,   702. 


Charge  to  the  Jury. 
of  its   existence,  joins   therein,  becomes   as  much  a  party 
thereto,  from  that  time,  as  if  he  had  originally  conspired. 
U.  S.  V.  Babcock,  3  Dill.  586,  Fed.  Cas.  No.  14487.    Further- 
more, where  several  persons  are  proved  to  have  combined 
together  for  the  same  [708]  illegal  purpose,  any  act  done 
by  one  of  the  parties  in  pursuance  of  the  original  concerted 
plan,  and  with  reference  to  the  common  object,  is,  in  the  con- 
templation of  the  law,  the  act  of  the  whole  party,  and 
therefore  the  proof  of  such  act  will  be  evidence  against  any 
of  the  others  who  were  engaged  in  the  same  conspiracy.    It 
IS  also  true  that  any  declaration  made  by  one  of  the  parties 
during  the  pendency  of  the  illegal  enterprise  is  not  only 
evidence  against  himself,  but  is  evidence  against  the  other 
parties,  who,  when  the  combination  is  proved,  are  as  much 
responsible  for  such  declarations  and  the  acts  to  which  they 
relate  as  if  made  and  committed  by  themselves.    This  rule, 
you  will  understand,  applies  to  the  declaration  of  a  co- 
conspirator, although  he  may  not  be  under  prosecution,  his 
declaration  being  equally  admissible  with  those  of  one  under 
indictment  and  prosecution. 

The  confederacy  to  commit  an  offense  is  the  gist  of  the 
criminality  under  the  law.    The  law  regards  the  act  of  un- 
lawful combination  and  confederacy  as  dangerous  to  the 
peace  of  society,  and  declares  that  such  combination  and  con- 
federacy of  two  or  more  persons,  to  commit  crime,  requires 
an  additional  restraint  to  those  provided  for  the  commission 
of  the  crime,  and  makes  criminal  the  conspiracy,  with  penal- 
ties and  punishments  distinctive  from  those  prescribed  for  the 
crime  which  may  be  the  object  of  the  conspiracy.    You  will 
readily  understand  why  this  is  true.    A  conspiracy  becomes 
powerful  and  effective  in  the  accomplishment  of  its  illegal 
purpose  in  proportion  to  the  numbers,  power,  and  strength  of 
the  combination  to  effect  it.    It  is  also  true  that,  as  it  involves 
a  number  in  a  lawless  enterprise,  it  is  proportionately  demor- 
alizing to  the  well-being  and  character  of  the  men  engaged  in 
It,  and,  as  a  consequence,  to  the  safety  of  the  community  to 
which  they  belong. 

The  second  essential  element  in  the  offense  described  by 
the  statute  is  the  purpose  of  the  conspirators  to  commit  an  of- 
fense against  the  United  States.    The  indictment  charges 


T 


4 


UNITED   STATES   V,  CASSIDY. 


457 


4 


Charge  to  the  Jury, 
that  the  defendants  conspired  with  others  t«  commit  two  of- 
fense against  the  United  States,— one  to  obstruct  and  retard 
tlie  passage  of  the  United  States  mail  and  the  carrier  carry- 
ing the  same;  and  the  9ther,  that  they  engaged  in  a  combina- 
tion and  conspiracy  in  restraint  of  trade  and  commerce 
among  the  several  states  of  the  United  States  and  with  for- 
eign countries.  The  first  charge  is  based  upon  the  provisions 
of  section  3995  of  the  Eevised  Statutes,  which  provides  as 
follows : 

tbl'^DassT^p"!!?  u^""  '^•^"  knowingly  and  willfully  obstruct  and  retard 
tlwj  passage  ot  tne  mail,  or  any  carriage,  horse,  driver,  or  carrier  car- 
rylng  the  same,  shall,  for  every  such  offense,  be  punlshabl^bV  i  toe 
of  not  more  than  one  hundred  dollars."  ^  ^y  ^  "ue 

This  section  of  the  Revised  Statutes  was  originally  section 
9  of  the  act  of  March  3, 1825  (4  Stat.  104),  and,  having  been 
passed  prior  to  the  introduction  into  the  United  States  of  the 
method  of  transporting  mail  by  railroads,  the  phraseology  of 
the  law  conformed  to  the  conditions  prevailing  at  that  time, 
but  it  is  equally  applicable  to  the  modern  system  of  convey- 
ance, and  protects  alike  the  transportation  of  the  mail  by  the 
"  limited  express,"  as  it  does  the  carriage  by  the  old-fashioned 
stagecoach.  There  are,  however,  certain  [704]  provisions 
of  law  directed  specifically  to  the  transportation  of  the  mail 
by  railroad  trains,  to  which  I  desire  to  call  your  attention. 

Section  3964  of  the  Revised  Statutes  provides  as  follows : 

"The  following  are  established  post- roads:  ♦  ♦  *  \ii  nuiroad<» 
or  parts  of  railroads  which  are  now  or  hereafter  may  be  in  oiiiXn  " 

^^  Section  3,  Act  March  3,  1879   (20  Stat.  358),  provides 
that  the  postmaster  general  shall,  in  all  cases,  decide  upon 
what  trains  and  in  what  manner  the  mails  shall  be  conveyed." 
Section  4000  of  the  Revised  Statutes  provides  that : 

TrTof'?^:'!lr^r^  '^  "^  ^'^-^^  ^^--"'  With Ve'^lIerA  fn^ 

There  is  still  another  provision  of  law  applicable  to  the 
transportation  of  mails  on  the  Pacific  railroads,  which  is  as 
f oUows : 

comoanv  ^^Lu^^^*^^T^^  ''''^  made  upon  the  condition  that  said 
company  shall  ♦  ♦  ♦  transport  mails  ♦  ♦  ♦  upon  said  rail- 
road  for  the  government,  whenever  required  to  do  so  by  any  depart- 
ment thereof,  and  that  the  govern nent  shall  at  all  times  have  the 


T 


I 


»0o 


«7  FEDERAL  BEPOBTEB,    704 
Oliarge  to  the  Jury. 


? 


preference  in  th«k  ii«o  **#  ♦!» 

toir  aud  rea^nmTtntL^ ^Z.nZ?"  *"*  P-^P^^s  aforesaid  (at 

£?«»•?  Pr'vate  parties  for1h~STnd"of"^rll  *^'*«>  ""«  """o™" 
satlon  for  services  rendered  to  ^«  li        '  service),  and  all  eompen- 

Becon-ing,  now,  to  section  Sftfls  «*  *k„  t>    •     ,  ^ 
ni-ldng  it  an  offend  to  obSjJct Td  ^t.^:^  ^f"^"^  ^*'*'"^' 
mails,  and  you  wUl  ob^^e  Sf  ^k  ^f    *''*'  P^'^S*  «'  ^^e 

the  passage  of  the  mails,  or  the  onmL  °'^*'^V''*  ""*^  f«tard 
fl»t  is  to  say,  to  those  ;ho  £ow  Z  r^^^  ^^t  ^'"«' 
however  innocent  they  may  oSZi^^  wlu  ht'T.  ""S^' 
of  obstructing  and  ,4tardi„g  trSfs^f^e  S  th  %'^'^. 
ttey  perform  the  acts  with  The  LenS  t^ft, .?  T^u ',f  ""^ 
their  operation  Z^.  ^.  v.  Kirby,  T  WaU  48^"*  «  jf  *""  J^ 
•no  defense  under  this  statntP  »  «U  •  *  '^°"'*^  ** 

"cent  case,  "thatThe  ob2^.tJ  ""  T""°*  ^""^^^  ^  " 
quitting  en^ploymLt  wSSf^tSe  mo«re  'ZnL''  "^"'^ 
retard  the  mails,  and  had  nothLHo  do  'irth "?  ''"'  '^ 
employment  TAoma^  v  ff»,7  V  ^  *"  *''®  *«™^  of 
Tk/  *  *  X    ^"°^'^  ^-  iiatlway  Co.,  62  Fed  8^2 

vie?  hrrm;thr^:;:^^"*  '^•-^  '^'•'^^  ^^-^  ^^ 

M  acts,  which^vtr  eiro7o^b:SgT„rrr- 
str:xtrth:;igt?^iri*^^^^^^^^^^^^ 

the  autho..  of  the  unfawTuf  at    altho'uS  Th    Tt™""*^'  *°    " 
other  ends  may  have  b«.n  f^!;  ""'^°"^''  ''^e  attainment  of 
KMy,  supra  *^'''  P™'"^  "*'J«<'t.     j;.  ^.  v. 

wrtie'o^jetttrtS  :?«:'•  '*  '^  '''•"^^  •"  *«  -'^-t™-*, 

commercellgtie^e3''rf'  ^'!,*«. "Strain  trade  and 
This  offense  is  le^JbTb  ^tt ""/  "'*'^  '""''^  "»*>»"«• 
act  to  protect  Se  and  cl^  """^''^  *°*'"«<^  "^ 
straints  and  monoDoIii"  «n  ^^'^tT'""*  "°'"^^"1  "- 
«»),  which  p^es^folTsT"'  """'^  ''  ^'^  (^«  S^t- 

«.  s«c.  cou..l„„tlo„  or'^t.Xri.-a^rd^-rX  S« 


UNITED  STATES  V,  CASSIDY. 


459 


Charge  to  the  Jury. 

"  Trade"  ha^  been  defined  as  "the  exchange  of  commodi- 
ties for  other  commodities  or  for  money;  the  business  of 
buymg  and  selling;  dealing  by  way  of  sale  or  exchange." 
The  word  «  commerce,"  as  used  in  the  statute  and  under  the 

tZ\t  ^T"*"*'?'  ^^'  ^•*^«^«'-'  '^  broader  meaning 
than  the  word  "  trade."  Commerce  among  the  states  con" 
sists  of  intercourse  and  traffic  between  their  citizens,  and 
includes  the  transportation  of  persons  and  property,  and  the 
navigation  of  public  waters  for  that  purpose,  as  well  as  the 
purchase,  sa k  and  exchange  of  commodities.  Gormty  of 
Mobile  y.  Ktmhall,  102  U.  S.  702;  Gloucester  Ferry  Co  v 
Pennsylvania,  114  U.  S.  203,  5  Sup.  Ct.  826.  Pullman  cars 
m  use  upon  the  roads  are  instrumentalities  of  commerce. 

l:f'     ?  ll  ^    "^^  ^^^-    ^^  P"™^^  ''•'J^^t  «f  th«  statute 
was,  undoubtedly,  to  prevent  the  destruction  of  legitimate 

and  healthy  competition  in  interstate  commerce  by  Individ- 

uals,   corporations,   and   trusts,   grasping,  engrossing,   and 

monopohzmg  the  markets  for  commodities.    VS.  v.  Patter- 

««n,  55  Fed    605.     But  its  provisions  are  broad  enough  to 

reach  a  combination  or  conspiracy  that  would  interrupt  the 

transportation  of  such  commodities  and  persons  from  one 

rl      7  T^a\.  ^-  ^-  ^-    ^orkingmen^s  Amalgamated 
t/OMre«Z,  54  Fed.  995,  1000.  • 

We  come  now,  to  consider  the  third  element  involved  in 
the  crime  of  conspiracy,  as  it  is  declared  in  the  statute  under 
consideration ;  that  is  to  say,  the  overt  act,  or  the  element  of 
one  or  more  of  the  parties  to  the  conspiracy  doing  any  act  to 
effect  Its  object.  At  common  law,  it  was  neither  ne  Jsary  to 
aver  nor  to  prove  an  overt  act  in  furtherance  of  a  conspiracy 
Bannon  v.  V.  S.,  16  Sud  Ct  4fi7     Ti,»  „ff  -""^piracy. 

»K»„  *u        1     ^  V       P'  '■    ^''^  offense  was  comp  ete 

when  the  unlawful  concert  and  agreement  was  entered  into 
and  concluded,  although  nothing  was  done  in   pursuanc^ 

n  .^"'^.^  ?"^  ''  '"""  '^'''-  I*  --  «"«  of  the  few  ca^ 
m  which  the  law  undertook  to  punish  criminally  an  unext 

nSti  «;^  ^'"-  ^"^  ^^^^^-  ^"*'  ""d^'-  th«  statute  of  The 
United  States  now  under  consideration,  the  doin<.  of  some 
act  in  pursuance  of  a  conspiracy  is  an  ingredient  of  the  crime 


460 


67   FEDERAL   REPOHTER,    705. 


4^ 


! 


Glmrge  to  the  Jury. 

and  must  be  established  as  a  necessary  element  of  the  offense, 
although  the  act  need  not  be  in  itself  criminal  or  amount  to 
a  crime.    V.  S,  v.  Thompson,  12  Sawy.  155,  31  Fed.  331. 

With  this  general  statement  and  explanation  of  the  statute 
involved  in  this  case,  I  will  proceed  to  consider  the  allega- 
tions in  the  indictment,  which,  as  I  said  before,  contains  two 
counts. 

The  first  count  charges  that  the  defendants  conspired  both 
to  obstruct  and  retard  the  passage  of  United  States  mails, 
and  to  unlawfully  engage  in  a  combination  and  conspiracy 
m  restraint  of  trade  and  commerce,  while  the  second  count 
charges  a  conspiracy  in  re-  [706]  straint  of  trade  and  com- 
merce  alone.  Otherwise,  both  counts  are,  in  substance  and 
form,  identical.  In  general  terms,  the  two  counts  charge: 
(1)  Formation  of  the  conspiracy;  (2)  legal  corporate  exist- 
ence  of  the  Southern  Pacific  Company,  and  its  means,  man- 
ner, and  methods  of  transporting  the  mails  and  interstate 
commerce;  (3)  means  conspired  to  be  used  in  effecting  the 
object  of  the  conspiracy;  (4)  overt  act  charged;  (5)  con- 
cludmg  with  an  allegation  of  unlawful  intent. 

Bearing  these  general  features  of  the  indictment  in  mind, 
you  will  now  be  able  to  understand  the  meaning  of  the 
various  allegations  of  the  indictment,  as  I  proceed  to  refer 
to  them  somewhat  more  in  detail. 

Taking  up  the  first  count:  The  formation  of  the  con- 
spiracy is  alleged,  and  it  is  charged  that  John  Cassidy,  John 
Mayne,  Fred  Clarke,  and  James  Rice,  with  divers  others, 
names  unknown,  did  conspire  to  obstruct  and  retard  the 
passage  of  the  mails  of  the  United  States,  and  to  restrain 
trade  and  commerce  among  the  several  states  and  with  for- 
eign nations.  (2)  The  legal  corporate  existence  of  the 
Southern  Pacific  Company,  and  its  means,  manner,  and 
method  of  carrying  the  mails  and  interstate  commerce,  are 
set  out.  It  is  averred  that  the  Southern  Pacific  Company 
was  a  railroad  corporation,  duly  organized  and  existing 
under  the  laws  of  the  state  of  Kentucky,  engaged  in  the 
business  of  a  common  carrier  of  the  mails  of  the  United 
States,  and  of  passengers,  freight,  express  matter,  and  other 
commodities,  comprising  and  constituting  trade  and  com- 
merce, within  the  meaning  of  the  act  entitled  "An  act  to 


< 


UNITED  STATES  V.  CASSIDY, 
Charge  to  the  Jury. 


461 


protect  trade  and  commerce  against  unlawful  restraints  and 
monopolies,  approved  July  2,  1890."    The  lines  of  railroad 
over  which  it  carried  on  its  mail  and  interstate  commerce; 
the  manner  and  means  employed  and  necessary  to  its  doing 
so,  viz.  yards,  depots,  tracks,  trains  of  cars,  and  other  equip^ 
ment  suitable  for  the  transportation  of  the  United  States 
mails,  passengers,  freight,  and  express  matter,  and  other 
commodities,— are  also  set  out.     (3)  Then  follow  the  means 
conspired  to  be  used  in  effecting  the  object  of  the  conspiracy. 
These  are,  briefly:   First.    By  forcibly  taking  and  keeping 
possession  and  control  of  all  yards,  depots,  tracks,  and  trains 
of  cars  upon  said  lines  of  railway,  and  by  forcibly  holding 
and  detaining  the  same.    Second.   By  causing  to  be  assem- 
bled, and  assembling  with,  large  crowds  of  persons  in  said 
depots  and  yards  of  said  Southern  Pacific  Company,  at 
various  points  and  places  upon  said  lines  of  railway,  in  said 
state  and  Northern  district  of  California,  to  wit :    1.  At  the 
city  and  county  of  San  Francisco.    2.  City  of  Sacramento. 
3.  City  of  Oakland.    4.  City  of  San  Jose.    5.  City  of  Stock- 
ton.   6.  Town  or  Red  Bluff.    7.  Town  of  Dunsmuir,  county 
of  Siskiyou.    8.  City  of  Vallejo,  county  of  Solano.    9.  Town 
of  Lathrop,  county  of  San  Joaquin.    10.  Town  of  Palo  Alto, 
county  of  Santa  Clara.    By  gathering  in  great  numbers  in 
said  yards  and  depots,  and  other  places,  around,  in,  and  upon 
the  trains,  cars  and  engines  of  the  said  Southern  Pacific  Com- 
pany, and  upon  the  tracks  of  the  railways,  preventing  the 
movement  and  passage  of  said  engines,  cars,  and  trains. 
Third.  By  threats,  intimidation,  personal  assaults,  and  other 
force  and  violence,  to  prevent  the  engineers,  firemen,  con- 
duct- [707]  ors,  brakemen,  switchmen,  and  other  employes 
of  said  Southern  Pacific  Company  from  discharging  their 
duties,  and  from  moving  and  operating  said  engines,  trains, 
and  railways.    Fourth.  By  forcibly  disconnecting  air  brakes 
upon  such  trains,— mail,  passenger,  and  freight.    Fifth.  By 
putting  out  the  fires  in  the  engines  drawing  the  same.    Sixth. 
By  throwing  switches,  in  order  to  prevent  the  passage  of 
such  trains  through  depots  and  stations.    Seventh.  By  open- 
ing drawbridges  over  navigable  and  other  streams,  upon 
which  drawbridges  the  tracks  of  said  railway  cars  were  situ- 
ated.   Eighth.   By  burning  and  destroying  bridges,  trestles, 
and  culverts,  over  which  such  trains  necessarily  and  usually 


f 


462 


e7   FEDEBAL  BBPOBTBB,  707. 


, 


Charge  to  the  Jury. 

would  pass.  Ninth.  By  loosening,  removing,  and  displacing 
the  rails  of  the  tracks  of  said  railroads.  Tenth.  By  greasing 
the  rails  of  the  said  tracks.  Eleventh.  By  stopping  trains 
upon  railway  crossings  and  upon  switches,  and  by  forcibly  re- 
fusing to  allow  such  trains  to  be  hauled  from  such  crossings 
and  switches.  Twelfth.  By  compelling  the  employes  of  said 
railroad  company  to  leave  their  trains,  shops,  and  the  work 
of  said  company,  while  in  the  performance  of  their  duty. 
Thirteenth.  By  using  all  such  other  forcible  means  as  to 
them  should  seem  expedient  to  prevent,  for  an  indefinite 
period,  the  use  of  the  said  railways  for  the  transportation 
of  the  mails  of  the  United  States  and  interstate  commerce. 

It  will  be  well  to  observe,  at  this  point,  that  the  indictment 
does  not  charge  that  the  defendants  did,  in  fact,  use  or  put  in 
operation  the  means  herein  set  out,  in  effecting  the  object  of 
the  conspiracy;  the  charge  is  that  such  were  the  means  con- 
spired to  be  used  for  that  purpose.  Now,  when  you  come  to 
consider  the  testimony,  you  will  probably  find  that  some  of 
it  tends  to  show  that  certain  persons  did,  in  fact,  use  such 
means  to  pfvpent  Hw  mttmmmk  of  railway  trains.  This  tes- 
timony was  admitted,  not  to  prove  that  such  acts  had  Im» 
committed,  but  because  of  the  relevancy  of  such  testimony 
to  the  charge  in  the  indictment,— that  such  means  were  to  be 
used  in  effecting  the  object  of  the  conspiracy.  In  other 
words,  it  tends  to  show  that  a  conspiracy  was  formed  to  ob- 
struct and  retard  the  passage  of  the  United  States  mails, 
and  to  restrain  trade  and  commerce  among  the  several  states 
and  with  foreign  nations,  and  that  such  means  were  to  be 
used  to  carry  the  conspiracy  into  effect. 

This  brings  us  to  a  feature  of  this  charge  of  conspiracy 
which  you  will  bear  in  mind.  It  is  not  incumbent  upon  the 
prosecution  to  prove  that  all  of  the  means  set  out  in  the  in- 
dictment were,  in  fact,  agreed  upon  to  carry  out  the  con- 
spiracy, or  that  any  of  them  were  actually  used  or  put  into 
operation.  It  will  be  sufficient  if  it  be  established  to  your 
iitisfaction,  and  beyond  a  reasonable  doubt,  that  one  or  more 
of  the  means  described  in  the  indictment  were  to  be  used  to 
execute  that  purpose. 

After  stating  the  means  by  which  the  conspiracy  was  to  be 
effected,  the  indictment  then  sets  out  the  overt  acts ;  that  is 


1 


0  / 


UNITED   STATES   V.  CASSIDY.  4(^3 

Charge  to  the  Jur}\ 

to  say,  it  charges  the  doing  of  certain  acts  to  effect  the  object 

of  ?„rZT-.?'^  '"  ''  '*'"''"^=  That  on  the  Itta^ 
ot  July,  1894  the  defendants,  at  Palo  Alto,  (1)  forcibly  took 
po^ssion  and  control  of  the  yards,  depote  L  Iding    tracte 

sembled,  and  a^en^b^^XXil^rj^J^^ - 
sazd  depots,  buUdings,  and  yards  of  the  SouierTSc 
Company;  and  by  gathering  with  said  crowds  of  persons  7„ 

aforesaid  trains,  cars,  and  engines,  and  upon  the  tracks  of 
the  railways.    2.  Bv  threats  ;nHm,!i„*-  iracKs  of 

or  other  acts  of  f ntL      !     '  '°*™'?at»«ns>  personal  assaults, 

en^n  Jr,  fi  ''f  ^"'^^"'=^' '"'  "P'*"'  and  towards  the 

engineers,  firemen,  conductors,  brakemen,  switchmen  a^nTs 
and  other  employ^  of  said  company  ha^in^  ^1°'  „f  ^' 
depot,  buildings,  and  other  property    et^    t  T  f ,   ^ 
charged  (2)  that,  on  the  6th  day  S  jSv  r8<)4  1  !  ^    f 
ants  at  Valrx  Au^  a      ui         ,  "^  ^'  ^^*^*'  ^^^^  defend- 

or  through  the  town  of  Palo  Alto-  1    -R^  Jh.    ■     ^ 
crowds  Ptr.     o   R„  „i    •         ,     .  ^"  ^y  gathering  m 

Sck     3    Rv  ;.^^  P    *'"'!  P^^''*'"'  obstructions  upon  said 
track     3.  By  displacing  the  switches.    4.  By  forcihlv  «r,^ 

•  n^T^  """''*^!'  *^-t--g>  and  intimidating""'^,^'* 
n«^rs,  firemen  conductors,  brakemen,  switchmen  Ss. 3 
other  employes,  while  engaged  as  aforesaid     5   B™?.n 
luig  the  cars  of  said  trains  and  discomiectmg  the  saTT 
By  removing  said  cars  from  said  tracks    7   TUr  ^t^       ■ 
the  water  from  the  boilers  and  ^nS'J'    -J  ^'^^^'"'''"^S 

putting  out  and  remoyingThetstSeSi    8   bT?""^'  "' 

atpTti^ortiirair^/f- 

of  the  rails  of  said  ."S^^rLTto^^^ 

sion  and  control  of  said  vnr^c  L    ,    f  ®^,  ^^^  ^^^^  Passes- 


464 


^   FEDERAL  BEPORTER,  708. 


Ill 


Charge  to  tlie  Jury. 

cluding  July  6  to  and  including  July  lo,  1894 

Jhe  same  observation,,  which  I  have  just  made  to  vn„ 

o  ,'^«^;«*    ^      -1.      ;  ^nargea.    It  is  not  necessary  to 

a  .erdict  of  guilty  that  you  should  find  that  each  and  eTeir 
one  of  the  overt  acts  charged  have  in  f^oi  w«  -./Y 

If  \an  ^^  o«*;  «  J  1,      ^,     "*^®'  ^  ract,  been  committed. 

moi  of^..         !?  ^^T^  "  '«««>°»We  doubt  that  one  or 

"rSonfin  S  ?.^"  *^"""'"^'^'  ■">•*  *''«^  they 

were  done  m  furtlicrance  of  the  conspiracy  alle-ed  to  have 

been  entered  into  by  and  between  these  defendants   and  to 

carry  out  or  effectuate  in  some  way  the  object  of  Ihel^ 

spiracy,  that  is  all  that  the  law  r^^uires.    lie  Vndictr;; 

^ndudes  with  allegations  of  intenrviz.:  That  tie  deS 

^ts,  by  the  acte  and  means  aforesaid,  knowingly  and  willfuUy 

obstructed  and  retarded  the  passage  of  the  maik  and  the  car^ 

SmThTZ of  T  r;'  ""f  .«1^«-<i  interstate  comme^ 
ftom  the  Oh  of  July  to  and  including  the  10th  day  of  Julv 

Sto  J  *^-    ^'  •^"'"^  "'""t'  "«  ^t«ted  above,  is  con-' 

fined  to  charging  a  conspiracy  to  restrain  trade  and  commer^ 

ffihtl'n  t    Tfii*  "  '^'''''^  ^  '""^  -«!  ««bstanc2 
witn  the  count  just  elaborated  upon. 

Having  directed  your  attention  to  the  different  provisions 
of  law  involved  in  the  charges  against  these  defendTnte  and 
having  also  stated  to  you,  in  brief  terms,  the  seCl  aCa 

SSn^  .h!  u"" '''  P^P"""  "«•»*'  ^•"'  the  purpose  of 
deternunng  the  guilt  or  innocence  of  the  defendants-   but 

ir^a"' 1''^  ^ti-ny  you  will  distinctly  unSttand 
that  you  are  the  exclusive  judges  of  the  facts,  and  that  it  is 
not  my  province  or  purpose  to  intrude  upon  your  jurist" 
tacm  in  any  particular  or  to  any  degree.    If,  fn  anfof  mv 

Jdicate  that  any  controverted  fact  has  been  estabEhS,  or 
If  I  now  assume  or  appear  to  consider  or  treat  any  fact  Z 
proved,  unless  it  may  be  an  admitted  fact,  you  wiKlr" 
sudi  assumption,  and  act  entirely  upon  ^ur  own  judS 
and  conscience  m  determining  the  facts  of  the  case  ^^^^* 
From  what  has  been  stated,  it  wiU  appear  to  you  that  you 


: 


UNITED  STATES   V.  CASSIDY.  4^5 

Charge  to  the  Jury. 

are  brought  to  the  consideration  of  three  auestionc      k-  u 
may  be  pronerlv  sno-irocfo^  t„  •  questions  which 

\±f  nas  tne  government  proved  the  Piri«f^r.^^     * 
conspiracy  alleged  in  the  indictmL «     (2Tir  f  T^^  ^^  f 
were  any  of  the  a]Ufra/i  o^f  "^«"^.     {^)  If  it  did  exist, 

parties  t^o  tLtn  pSy"    ^1^'"'  °"^  °^  """^  '''  *»»« 
wer.  the  defendanfspaTties  to  it"   "'  "  ""^^'"''^  «^'^*-»' 

sidlfSht^irSl^-'  "  *'r  •'^'^'•'  y-  -'"  first  con- 
been  ertaSthed  "'"""'  ^''"'^^  '»  the  indictment  has 

GENERAL  CONSPIRACY. 

as  the  co„rt':nrH4  '  u  ™'  T""'"''  ***  ^"''^  ^"'^  «'la- 
rect  conclusion  Th  ev"d  ^r'f  ^  '"  •'•'""^S  **  »  «>-■ 
cumstantial,  and  invoS T  "    T"  T"*  ^'  ^'"■^^1^  «'•- 

members  of  the  Am^^^lt^  ^^^0^-  It  "*^  1 
methods  of  the  sQcnniof^^  •  v  •'^  ^mon,  the  course  and 
and  sub^nXt^^^l'l  ^^^tting  the  Pullman  cars. 
Pacific  CompS  and  ^^  *  ,f  "'^f  ^S^i*^*  the  Southern 
of  the  striETnd  thi/ T'^'-^^  *"'tude  and  conduct 
the  strike  wa?  i^oplrXn     "^  ^^'^^  *'*^"  ^"""^  *»>«  *-« 

AMERICAN  RAILWAY  UNION. 

Ployes  below  a*'™  i^Se  -^^^^^^^  f  -1-ad  em' 
sociation  are  located  at  S.o  m  ^T^T""'^''  <>*  the  as- 
Eugene  V.  Debs  was  ite  pSn" ;  J° '^^  -"?  ''''' 
president;  and  Sylvester  Keliher, 'secS.  J'  Sr*^'  ^" 
divided  up  into  local  unions  ll,ih?.\7!^^  "°'°°  '" 
order,  introduced  in  evident   the  n^    T*'*"*'"''  "'  the 

-  far  as  they  are  pert^tTt;  ^^s'S^o/"'  '"^' 
stated  as  follows :  leature  of  the  case,  are 

"  It  Is  a  self-evident  truth  thof  •  i_       . 
conversely,  without  union  weaknLn~±?  ^'^^  '«  «twngth.'  and 


11808— VOL  1—06  M- 


-30 


p     j 


466 


67  FEDEBAL  BEPOBTEB,  710. 
Charge  to  the  Jury. 


ment  must  be  the  rphmn  JH-  „«  7  1  *^*''^  wages  and  proper  treat- 
Such  a  poli^  In™.S  harmonloS.  «nr^"'*^'  /""Wully  pi^ormed. 
The  onlCT,  while  plSg^  to  i^Z^i'J"'"*  "I'.**  satisfactory  results, 
huiublest  if  its  mSre  In  e^^H^ih^h'"^"''^!-  """  »'«*«*  «» 
while  the  rights  of  memli«  »m  ^  right  he  can  Justly  claim ;    but, 

demand  or  un^a«>Se  SoSs  tL^  wm'^J""?^'  T  ">t««^rate 
tlons  will  not  be. permitted  toS^tthr      »>«  entertained.    Corpora- 
organization  will  tW?th^     i^l*!  organization  better  than  the 
mating  spirit,  and  even  Sanded  Inifl^tSf  of  honor  must  be  the  anl- 
Thoroughly  organized  fnevCT^dcnartolnf  wf^^"?"*  *"  ^  ''"«'°«^ 
right  wherever  found    it  l^^„fl5t„f?K',^'*'L"  •*"*  ^S^'^  '<>r  the 
may  be  satisfLtorih'  adinstS"   tw ^h '^'"'''r'  *''«*  «"  differences 
established  and  maintaini?^  J?»V  ^\  harmonious  relations  may  be 
proved;   and  "h^t  the  nl^l?^  flrM-ta '""  TT  *?  '"^'k-l-Wy  !■" 
black-list,  alike  dlsasfroutT employer  i^d  ZV^^'"'^  ^^""^  "^ 
"^l^nd^J'nr "■"*.*"  "■«  P»Wirwlirfor:"?dTskp"^1,r'  '^'P**"'" 
fbreln^h^SV'XX?  "/^"e^'si^^^  Q»estionreoo„omy  Is 

Therefore,  tC  bring  the  °xf,?n4S  „fT.*'  """?'t^  «'*''*•  "^e  barred. 
of  all  is  the  one  thing  rwui^  «  .^Hr^""'"""?."  "'"""  *•>«  fe"*!' 
settled  before  th<ie  #ho  s?a^'™it'  ^  '°'"^."'"^*'°°  """eh  must  be 
benefits  to  be  derived  •he.^t.^*  '"  IT^  *''"■  Participate  in  the 
tlcal  point  iVa  d«^^  stripy  ta^^'^'I^Pl  ♦»  *"«  '«^est  prac 
elpies  of  cconomy™^any  moreLi?^.!'*''  ?*  '""damental  prin- 
♦"..PJJt'^Pate  in^he  ^^t  "n7hflS'*m^f,?,tr^?u  ^rTvo";''  '"'  "" 
Of  wh".  ■?  wTteX"X"Z^Z  ?  "-^'  «?^epa'Snts.  each 
In  a  practical  way  1^  by  prartT»f  m-fth'^^S'/"'?..*"  ?*  membership 

sr^^tS^i'rnoT&S?r"- o '-^^^^^^ 

may  be  obtained  iffs  doubtft^^^^  If  f  ^r?  f^^'?™»^,  '"'*'«  ''°* 
be  suggested.  It  evIdencS  ?^SerMI^^1^•SR',L'^?*  '^"t"™  <»»« 
lence  without  alloy."  fraternal  regard  without  a  fee,  benevo- 

n^'T  f^,*!f«T'  «'"^*i*"t'«''  o*  the  American  Railway 
k^nJ'^u.if  A^"'  ."'  ^"t^^^^"")  provides  for  what 

the  generall£«Sd^  SiSSTlf  thel^stem  o^i"  1'  **  '  '^!^^'  »' 
are  employed.  The  general  Tart  ^mfflon  siSn  'SJ:'""'  k**"^ 
m«.  and  sect«.„.    The  general  b^rt'S"m^,a't'^S^'  t^l  ^uj^^ 


UNITED  STATES  V.  CASSIDY. 
Charge  to  the  Jury. 


467 


o$^^eTa'd?n^hTc,rL!nrnU^rfo^^?H'  ".'  «>«  headquarters 
business  that  may  emanate  frnm?i??^'  ^°l  *''^  transaction  of  such 
complaints  and  adjaSnts  iH  i»nJ^'"„'^'"''^  "^  mediation.  AU 
by  the  general  boaK  mldlatio/^°In  l^''^?*!'  "*""  ^  ^^^ 
must  be  taken  up  first  by  t^loSS'  n^on^?/"""*^*  ^"^  adjustments 
vote,  it  shall  be  referr^  to  thP^^T^  •.,"-*"*P*«^  "^  »  majority 
ment;  and.  if  failing  tte  ease  sh^fL'^^K^  of  mediation  for  adju^ 
the  general  board  of  meSiation^  fti^„.*"i''""*tf  u*°  *«  cbalrmM  of 
the  president  of  the  general  iVZ;  »i!i  1  S  "''"<^'''  ^''ey  s^all  notify 
able  member  of  the  boaM  r71lTn7^V^""  «»thorlze  the  most  av«l^ 
the  general  chaiman  of  thl  "  art  of '^1^^.-*°  ^'«'t  """J  ""eet  with 
structions  as  will  be  prlufgat^^E^  the  d^4tr°"  '"^  '"'"^  ''^''  ^■ 

thiflw*  0*  employes  o^  railway  companies  to  organize  in 

Mtio^Zr  "^  *^  f'  ^^^'''  ^««^  *"d  the  best 

conditions  they  can  command,  and  they  may  organize  an 

association  or  union  for  that  purpose     Tl,Pr«  i^  . 

versy  on  this  point.    It  is  a  S  to  ^t"  a^d  itTn^t 

T^ft       k        ^^**  ""•  ^«^«'«y  ^''•,  62  Fed.  817,  Judge 

em  diSr^t^Tm*  """"^  'J  ''''  ^"'^^"^  «***««  *-  the  South! 
ern  district  of  Ohio,  speaking  of  the  relation  of  railway  em- 
ployes to  the  American  Railway  Union,  says;  ^ 

Of "tbem*'t^  i.mmaS'tt  S  fofttT;  /"k*^  ^  »««»  «•"«■  «" 
singly  with  rich  employers   bSause  thl  .1       ^^  *''*°  '^•'«"  Oeal'^g 
ployg  may  compel  him  to  acce^  nnv  l^L    ^^^'^'^^  "^  *e  single  em- 
lation  of  a  fuSd  for  the  sSrt  L*t^^  °"l''^  "■"■    The  a^n- 
offer^a  are  below  market  prK  Is  „n«''^TK''".'*?'  *"«*  «>«  «'«ges 
such  an  organization.    They  hive  the  ri/ht  to  '*«"'!"?*«  objects  "of 
shall  advise  them  as  to  the  coiir«o  flL  I  . *  **l  aPPoInt  officers  who 
tlons  with  their  employer     The^m^^.nif  ^°  •??  ^^^  '°  «>«"■  ^'a- 
offlcers  they  'iPPoinllranTfleTLZn%T^^*^L'"'^'"^'^^'' 
Isten,  may  advise  them  as  to  the  prSST^n^  t^T  1"?^  '^'■°°se  «<> 
In  regard  to  their  employment  or   l^^L  .Sf^  *".'**  ^^^^"^  *>y  them 
thority  in  any  one,  they  m?y  order  them  ^n^n*^^  to  repose  such  an- 
their  union,  peaceably  to  leave  the  emSnv^  fS'  °  "'  expulsion  from 
any  of  the  terms  of  Llv  ^ml^e7^rlZltSlaoZ7"''  '^'""^ 

lim^tiorlTS  T  '''"'  Y  '^'''  ''  "^  '■"^*  -^  -»«'°able 

errLniS7XLrof-ut?n^:siSs^^^^^^ 

a^  not  entitled  to  interfere  with  the  rightf  a"d  p^ert^S 
others   and  by  force  and  intimidation  compel  a  Sr  of 

operations  of  such  necessary  and  lawful  businessYor,  t^ 


IP'  ,r 


i 
if 


ftlKJ 


67   FEDERAL  REPORTEB,    711. 


Charge  to  the  Jury, 
state  the  proposition  a  little  more  exactly,  they  have  no  privi- 
lege or  nght  to  violate  a  law  of  the  United  States. 

Now,  with  H^pect  to  the  general  charge  of  conspiracy 
contained  m  this  indictment,  I  will  direct  your  attention 

*    Tu.   u*?.^  testimony  which  the  government  claims  tends 
to  establish  that  element  of  the  case. 

■HMB  WHEN  THE  BOTCOTT  TOOK  EFFECT. 

vention  of  the  American  Railway  Union,  assembled  at  Chi- 
cago, resolved  to  boj^cott  the  PullAian  Company;  this  boycott 
to  take  effect  in  five  days,  should  the  difficiilties  existine 
between  that  company  and  its  employes  not  be  settled  at  the 
expiation  of  that  period.  On  June  26,  1894,  the  president 
ofthe  general  umon  sent  the  foUowing  telegram,  which  was 

r^  It  Vh  ^^'^  ^'^•'°  ^S«'  J^^o^n  as  «  Local 
union  JSo.  310,    having  its  headquarters  in  Oakland :  "  PuU- 

man  boycott  in  effect  to-day  noon,  by  order  of  convention." 

The  telegram  was  signed  by  E.  V.  Debs,  the  president  of  the 

ITiT*  ^  •.  ^'^''P'  ^x^t^fy  o'  local  union  No.  310,  at 
Oakland,  identifies  [7121  this  telegram.  The  boycott  was 
therefore  declared  at  noon  of  June  26,  1894,  which  fell  on  a 
Xuesday. 

Mr.  Knox,  who  was  an  employe  of  the  Southern  Pacific 
Company  at  Sacramento,  and  a  member  of  the  American 
R«lway  Union  at  that  place,  being  called  as  a  witness  for  the 
defense,  testified  that  he  was  chairman  of  the  mediation  com- 
mittee; that  the  duties  of  the  committee  were  to  settle  the 
differences  between  the  employfe  and  the  corporation.  He 
relates  the  circumstances  connected  with  the  commencement 
of  the  boycott,  as  follows : 

ordered  to  call  at  Mr  Wriehrs  offlrS     f mJ*  'ne<lI«tlon  committee  were 

sr;e*?,  ."{^^:m^^k  -  :*i"r„r.e'^-^^^^^^^ 


UNITED   STATES   V,  CASSIDY. 
Charge  to  the  Jury. 


469 


e"rar^t^'e^^L?'r  "f"?"  *^'  fa^LVr^'  Z'S  ^'seT 
S;l^°r^i'bfet^ ''\rSi:^,„Tar"ea"lirr o^^^^^^^^ 

consuItfngwl?h  tbebaLrof  th??'J^t  T"""  '"'t<=>'  *»«  cars.  'After 

to  let  the  Pullmau  cars  on  2  4  ^n^il^l'T  <*°ri"**'  '*  "'^^  ^^'^^ 
without  boyeottine  thim  wt'  t^M  ]■  ^  *'"^"e'>  «>  their  destinations 
stead  of  him  wf  did"ot  ^k  hin,  ^^Z^  "-o"'^  ««"tch  the  cars  In- 
of  the  27th,  about  8 -30  iJ^  f  h^  i  ^1 ""?  "'<""''-  ^n  the  morning 
many  shopL.en  belon^UK  to  our  nn'Jfn  *".*'  ^^ops.-there  were  a  great 

^J^  ^Z^^S^f?q^-%^'^^  hTeottJ^ 

weva^d™^-".-^^^^^^^ 

in  the  morning,  known  as  'No  ^  '  Vh^  ,^  '^"^4^  l^^""^  *^^^«  «^  !<>  -25 
2.  that  comes  fC  Chicago  ^nd^noth^  ^^  ^^  ^^^ 

mento.  There  is  a  flrs^cfak  car  nnt  n^^^  ^f%  ^"^  ""?  *^'^'*^  ^*  ®^^^^- 
a  tourist  car.  The  one  that  rmiii  ?L  *  ^.^^r^^^^t^-  The  other  Is 
loaded  and  the  other  onl  was  emn^  w"""^?  J^??"  Sacramento  was 
handle  the  Pullman  car  Suse^iW^I^f.^'?^  *^^  switchmen  not- to 
sary  for  it  to  go     We  th^X  i  Z!  ^"'^*^'  ^""^  '^  ^^^«  »<>*  ^eces- 

Pullmans.  Thef  re^^dWt  Puirm^aVS'^^^^  MHlniP'  '"^S'^ 
came  to  us,  and  said  he  would  tniTa  inl       •  1    ^^-  ^laHoran  then 

we  should  come  ud  and  Lk  hi.«  n  J^.®  ^''^'''^  ''"^  ^«  *«  ^«»P»e  on,  and 

not  want  hlTto  scabL  us   anfl  hi  t  ^^"P'^«°'  ^"d  tell  him  w;  did 

else  to  put  on  the  Pullman  cars  h^T«^  ^xT^^^i?  °^*  ^«*  ^^^^^  <>«« 
men.'  Mr.  Jones  said  ^Cannot  vou  hl^  J"*'  ^^^^  f*^  ^"  ^-  R'  ^' 
•  No ;  they  are  all  A  R  TJ  mpn  '  ^Th«f  J?  ^''"'f  ''''^  ®^^'^ '  He  said, 
time.  Then  it  started  to  n.^i^'f  ^^2*  ^^l*''  ^*^d  t^^^^e  until  leaving 
lengths  out?  ant^'^  one'^^an'Sown'^^u^^^^^^  '""f  ^^  «^«  <^^ 

plug  on  the  hind  end  of  tL  air  hnl^  ^  {  ^^^  **®*^^'  ^^^  turneid  the 
backed  up  to  the  denot  and  JtJ^^^  ^""^  ^^^^^^  *^^  t^^«°-  ShTwas 
refused  to  allow  thTen^^ne  Tl  wt'h  ^T .t  ^^^^^  ^^  ^««»^«-  They 
tried  to  induce  Mr  Wr?lht  to  ipfhr^^^'^K  *^^  P""nian  car  on.     We 

car  go  on  104,  ^^■>^'^e"^,:^:r:^e^:.T.:rr:^^!  ^'t  ^^ 


470 


67   FEDERAL  REPORTER,   713. 
Charge  to  the  Jury. 


He  said  they  would,  and  they  switched  the  loaded  tourist  car  off  of 
84,  and  put  it  on  104.  That  Is  about  all  that  happened  on  the  27th. 
♦  ♦  ♦  That  train  was  made  up  at  Sacramento.  It  runs  between 
Sacramento  and  Oakland,  by  Tracy,  and  around  that  way.  The  Pull- 
man cars  go  to  Los  Angeles.  They  carry  the  Pullmans  down  to 
Lathrop,  and  then  they  go  to  Los  Angeles.  The  balance  of  the  traiik 
comes  into  Oakland.  It  starts  from  Sacramento.  The  Pullman  car, 
though,  that  goes  through,  that  comes  from  Chicago, — that  loaded 
one, — the  tourist  car.  They  sent  it  out  on  another  train  at  night, 
5:30.  *104*  it  is  called.  Sent  it  out  in  the  evening, — on  the  same 
day.  There  was  nothing  left  of  that  train,  then,  except  the  mail,  bag- 
gage, express,  and  passenger  cars.  There  was  no  one  in  the  passenger 
cars.  They  went  off  on  the  next  train, — the  passengers ;  the  through 
passengers  from  Chicago  that  went  on  the  next  train.  There  were  a 
good  many  of  the  local  that  went  on  the  next  train,  too.  That  only 
runs  to  Tracy.  It  does  not  come  clear  around  to  San  Francisco,  but 
stops  there.  Know  C.  A.  Newton.  I  had  a  conversation  with  him  on 
the  night  of  the  20th,  and  I  might  have  had  on  the  28th.  I  would  not 
say  for  certain.  Had  a  conversation  with  him  on  the  night  of  the 
26th,  at  which  I  showed  him  a  telegram.  The  telegram  read :  *  Boy- 
cott declared  on  Pullman  cars.    E.  V.  Debs.* " 

C.  A.  Newton,  called  for  the  United  States,  night  yard- 
master  at  Sacramento,  for  the  Southern  Pacific  Company, 
contradicts  Mr.  Knox  on  this  point,  and  says  that  Mr.  Knox 
handed  him  a  telegram,  which  he  read.  That  the  telegram 
read :  "  H.  A.  Knox,  Sacramento.  Boycott  declared  against 
Pullman.  Hold  all  Pullmans.  E.  V.  Debs."  That  he 
handed  the  telegram  back  to  Knox,  who  left  the  room  where 
they  had  met,  with  the  exclamation,  "That  is  hell."  The 
witness  Knox  further  states : 

"  About  12 :30,  I  think  it  was,  on  the  morning  of  the  28th,  I  received 
a  message  from  I^s  Angeles,  saying  that  some  men  were  discharged 
for  refusing  to  handle  Pullman  cars,  and  saying  that  the  Los  Angeles 
Union  had  decided  to  strike  for  the  reinstatement  of  those  men,  and 
asked  us  to  participate  in  the  strike.  The  committee  having  full 
power  to  act,  we  considered  the  matter,  and  came  to  the  conclusion  it 
was  a  just  fight,  and  we  would  take  it  up  and  help  them  out.  In  that 
message  from  Los  Angeles  they  asked  us  if  we  would  notify  all  con- 
cerned, which  we  did.  I  went  down  to  the  depot,  and  that  special 
that  Mr.  Newton  was  testifying  about — the  officers'  siiecial — was  just 
pulling  out  of  the  depot.  I  had  had  a  conversation  with  the  engineer 
and  the  fireman  before  that,  and  they  told  me  if  there  was  any  strike 
they  wanted  a  finger  in  the  pie,  so  I  ran  up  and  got  on  the  engine,  and 
told  the  engineer  and  fireman  about  what  had  occurred.  They  said, 
•Well.*  Some  one  stopped  them;  I  don't  know  who.  They  were 
stopped  from  the  hind  end  of  the  train,  and  they  said,  *Cut  us  off. 
and  we  will  go  to  the  house,*  so  somebody  cut  the  engine  off.  I  don't 
know  who  it  was.  No  one  was  with  me  on  the  cab  of  the  engine, — only 
the  engineer  and  fireman.  Did  not  offer  any  threats  or  intimidation 
or  violence.  ♦  •  *  The  [714]  engine  was  cut  off,  and  the  engineer 
was  taking  it  around  to  the  roundhouse.  I  was  in  the  depot  by  that 
time.  Mr.  Wright  wanted  to  know  what  was  the  matter  with  the 
^lecial.    I  told  him,  as  near  as  I  could  find  out,  the  engineer  was 


4¥ 


T 


UNITED  STATES  V.  CASSIDY. 


Charge  to  the  Jury. 


471 


going  to  strike  with  us.  He  had  Mr.  Newton  stop  him  there  In  front 
of  the  depot,  and  he  had  a  conversation  with  the  engineer,  and  they 
finally  agreed  to  go  on  with  the  special,  and  asked  us  if  we  would 
couple  on.  We  told  him,  *Yes;  if  they  wanted  to  go.'  I  told  Mr. 
Wright  I  thought  it  was  foolish  for  them  to  go.  They  would  go  just 
as  far  as  Rocklin,  and  that  was  no  place  to  stay.  There  were  no  ac- 
commodations there  at  all.  He  said,  *  For  Grod's  sake,  let  them  go  out 
of  Sacramento,  if  they  don't  get  over  the  American  river  bridge.*  I 
thought  to  accommodate  him.  We  would  not  ask  the  conductor  and 
brakeman  to  boycott  the  officers*  special.  We  would  let  them  go  as  far 
as  Rocklin.  I  knew  they  would  not  get  any  further  than  that,  be- 
cause the  men  had  already  qult^up  thera  I  got  on  the  engine,  and  rode 
up  through  Sixth  street  yard  with  them,  to  see  that  the  switches  were 
all  set,  and  everything  ready  to  go.  I  rode  with  the  engineer  on  the  en- 
gine. After  I  got  back  from  Sixth  street  the  committee  then  went  up 
to  the  Western  Union  &  Postal  Telegraph  C!ompany,  and  we  sent  a 
good  many  dispatches  notifying  them  that  we  had  struck." 

(These  telegrams  will  appear  further  on.) 

Newton  testified  as  follows  with  relation  to  the  special 
car, — or  officers'  special,  as  it  was  called, — and  with  reference 
to  the  statements  made  by  Knox  at  the  time : 

"  I  know  Mr.  Knox  personally.  He  used  to  work  for  me.  Mr. 
Mullen,  I  knew  him  personally,  too.  Mr.  Compton  I  did  not  know 
until  after  the  strike.    I  saw  Mr.  Knox  about  the  26th  of  June. 

*  ♦  ♦  The  first  train  that  came  into  the  yard  after  that  con- 
versation I  had  with  Mr.  Knox  (referring  to  above)  was  a  special 
that  came  from  Oakland.  It  got  in  about  12:25  on  the  morning  of 
the  29th.  It  was  a  siiecial  passenger  train,  that  ran  out  of  its  ordi- 
nary time.     It  was  composed  of  two  officers'  cars  and  the  engina 

*  ♦  ♦  Saw  Mr.  Knox  on  the  arrival  of  the  officers'  train,  a  little 
while  after  it  got  in,  when  it  got  ready  to  leave.  Knox  came  run- 
ning through  the  depot  and  hollered  out :  '  Stop  that  train !  Stop 
that  train !  Not  a  son  of  a  bitch  of  a  wheel  will  turn  on  the  systeuL* 
This  was  on  the  morning  of  the  29th,  al)out  12 :25." 

This,  it  will  be  observed,  flatly  contradicts  Knox  as  to  what 
occurred  at  that  time. 

The  witness  Newton  testifies  further  as  to  Knox's  attitude, 
as  follows : 

"Did  not  have  any  direct  conversation  with  Knox.  When  No.  .3 
came  in,  going  east,  there  was  quite  a  number  of  shopmen  around 
there,  standing  in  groups,  I  guess  to  the  extent  of  forty  or  fifty. 
They  came  in  charge  of  United  States  Marshal  Long.  This  was 
along  in  the  morning,  about  daylight,  probably  four  o'clock,  on  the 
29th.  That  was  a  mail  train, — ^the  regular  Eastern  overland, — the 
Atlantic  express;  the  'fast  mail,'  they  call  it.  After  No.  3  pulled 
out,  the  groups  got  moving  towards  the  depot, — after  she  pulled  out, — 
and  some  one  in  the  groups  made  the  remark  to  Mr.  Knox  why  he 
did  not  hold  the  train, — what  he  let  her  go  out  for.  He  said  he 
did  not  have  force  enough  to  hold  her,  but  when  seven  o'clock  came 
he  would  call  out  the  shop  men,  and  he  would  have  force  enough  to 
hold  anything  that  came  along." 


■f 


472 


67   FEDERAL  REPORTER,   714. 
Charge  to  the  Jury. 


IKmox  itsstifies  that : 

..  rpij^  strike  was  formally  declared  about  12 :30  or  1  o'clock  on  the 
morning  of  the  2dth  of  June  by  the  I^s  Angeles  Union.  In  Sacra- 
mento it  #88  left  In  the  hands  of  the  coiumittee.  The  committee  had 
full  power  to  act.  The  committee  decided  to  strike  to  have  those 
men  in  Los  Angeles  reinstated.  As  soon  as  they  got  the  message 
they  consulted  probably  for  25  or  30  minutes,  and  went  on  and  did 
as  requested  by  the  message,  to  notify  all  those  concerned.  That 
was  about  12 :30  or  1  o'clock  on  the  morning  of  June  29th.  Had  not 
at  that  time  received  any  notification  from  Oakland.  Did  not  act 
£71ft]  on  anything  but  the  notification  from  Los  Angeles.  The  mem- 
bers that  were  out  on  the  road, — we  notified  all  the  unions  along, 
Truckee,  and  Rocklin,  and  Dunsmuir.  and  all  over  the  system, — we 
notified  them  that  we  had  struck;  that  we  had  ordered  a  general 
strike  In  Sacramento,  and  those  In  Sacramento — the  shop  men — were 
all  notified  the  next  morning  after  they  went  to  work,  perhaps  8 
o'clock  or  8 :30." 

The  attitude  of  the  mediation  committee,  as  representa- 
tives of  the  American  Eailway  Union,  is  stated  by  Knox  ss 
follows : 

••Mr.  Baldwin  and  Mr.  Knight  wanted  to  know  our  position  that 
we  had  taken  in  the  matter,  and  between  us  we  explained  It  as  thor- 
oughly as  possible  to  them,  and  told  them  that.  In  the  first  place,  we 
had  boycotted  the  Pullman  cars  on  legal  advice;  and,  if  I  am  not 
mistaken,  I  told  them  who  our  advice  was  from, — Mr.  Ingersoll ;  and 
Mr.  Knight  said  that  a  Pullman  car,  as  long  as  it  was  attached  to  a 
mall  car  regularly  made  up,  was  part  of  a  mail  car.  Of  course  we  had 
an  opinion  from  a  very  eminent  lawyer  and  attorney,  and  we  thought 
he  knew  as  much  about  It  as  Mr.  Knight  did.  Consequently  we  told 
him  we  would  not  handle  any  trains  with  Pullman  cars  attached  dur- 
ing the  boycott,  and,  now  that  the  strike  had  been  ordered,  we  would 
not  handle  any  trains  at  all,  except  mail  trains,  until  those  men  that 
had  been  discharged  had  been  reinstated.  That  was  about  the  gist 
of  our  conversation  all  the  way  through.    It  was  rei)eated  several 


AgaiBhesays: 


**I  told  Mr.  Baldwin  our  men  would  not  work  on  Pullman  cars. 
That  is  all  I  told  him.  •  ♦  •  We  were  doing  nothing  with  refer- 
ence to  preventing  the  movement  of  trains ;  only  quit  work,  that  is  all. 
•  ♦  ♦  We  were  trying  to  induce  the  men  that  showed  up  to  strike 
with  us.  That  was  the  understanding  between  Mr.  Wright  and  my- 
self. *  *  *  I  told  Mr.  Baldwin  that  our  men  would  not  work  on 
PulUnan  cars.  Did  not  make  the  statement  that  we  would  not  allow 
Pullman  cars  to  move." 

As  to  the  power  possessed  by  the  mediation  committee, 
Itnox  says: 

"  The  committee  had  full  power  to  act  The  union  had  given  them 
foB  power  to  act." 

On  cross-examination  Knox  testifies  as  follows: 

**  We  discriminated  between  Pilllmans  that  were  full  of  passengers 
and  Pullmans  that  were  empts',  on  the  27th  and  28th  of  June.    After 


UNITED  STATES  V.  CASSIDY. 


Charge  to  the  Jury. 


473 


the  strike  was  ordered,  we  did  not.  All  Pullmans  were  treated  alike, 
and  everything  else,  except  mall.  It  grew  from  the  Pullman  cars  to 
every  other  form  of  cars  except  the  mall  cars.  After  those  men  were 
discharged  It  did ;  did  not  matter  what  the  destination  of  the  cars  was. 
We  thought  that  we  could  control  the  A.  R.  U.  organization,  and  we  did. 
Anything  that  we  knew  anything  about  we  controlled  their  action, 
through  the  strike.  Anything  that  was  done  by  any  of  the  officers  of 
the  A.  R.  U.  organization  during  the  strike  was  done  with  the  full  con- 
sent, and  was  under  the  policy  of  our  organization,  as  far  as  Sacra- 
mento was  concerned.  We  were  given  full  power  to  act.  That  power 
has  never  been  taken  away  from  us  yet.  Had  control  on  the  3d  of 
July,  but  do  not  know  whether  there  was  an  A.  R.  U.  man  who  moved 
the  Pullman  cars  on  that  day  or  not.  Could  not  swear  to  it.  I  do 
not  think  there  were  very  many  of  them. 

It  appears  that  on  July  5th,  and  during  the  strike,  Knox, 
Compton,  and  Mullen,  of  the  mediation  committee,  appeared 
before  the  Citizens'  Protective  Association  of  Sacramento, 
and  made  a  statement  concerning  the  attitude  of  the  Ameri- 
can Railway  Union.  Cornelius  C.  Howell,  who  was  pres- 
ent at  the  meeting,  testifies  as  follows : 

"  Was  In  Sacramento  the  latter  part  of  June  and  the  early  part  of 
July  last.  I  was  employed  by  the  Industrial  Improvement  &  Manu- 
facturers' As-  [716]  sociation  of  Sacramento.  I  was  looking  up  man- 
ufacturers' Industries  to  locate  at  Sacramento  for  that  company  or  as- 
sociation. Became  a  member  of  the  Citizens'  Protective  Association, 
I  believe  on  the  3d  of  July.  That  association  formed  for  to  get  to- 
gether and  see  If  they  could  not  do  something  to  open  up  the  commerce 
connected  with  the  city,  and  such  other  business  as  might  be  neces- 
sary, owing  to  the  condition  that  things  were  In  at  that  time  from  the 
cause  of  the  strike  that  had  been  ordered  on  the  29th  of  June,  or  the 
strike  that  occurred  on  the  29th  of  June.  I  was  secretary  of  the  or- 
ganization fi'om  the  day  that  we  organized,  up  until,  I  think,  the  15th 
or  20th  of  July;  somewhere  along  there.  Performed  the  duties  of 
secretary  at  meetings.  Recollect  a  meeting  held  on  or  about  the  5th 
day  of  July  last.  It  was  called  by  the  association  to  see  If  they  could 
not  do  something  in  order  to  open  up  the  commerce.  Members  of 
the  mediation  committee  of  the  A.  R.  U.  were  present  at  that  meeting. 
They  were  Mr.  Knox,  Mr.  Compton,  and  Mr.  Mullen.  After  discussing 
the  ways  and  means  to  adjust  matters,  It  was  decided  that  It  would 
be  better  to  bring  these  people  before  the  association,  this  mediation 
committee,  and  find  out  the  condition  of  affairs, — what  the  causes  were 
of  all  the  trouble, — and  see  If  we  could  not  do  something  to  adjust 
matters ;  and  In  that  connection  It  was  agreed  that  we  would  admit 
them,  and  see  what  they  had  to  say;  they  having,  I  believe,  made  a 
proposition  to  some  member  of  the  association  that  they  would  like 
to  come  before  the  association,  as  the  mediation  committee  of  the 
American  Railway  Union.  They  came  before  the  meeting  and  made 
a  statement.  Parts  of  their  statement  were  reduced  to  writing.  This 
Is  a  part  of  the  record  of  the  meeting  of  the  Citizens'  Protective  Asso- 
ciation held  on  the  5th  of  July.  Not  the  entire  statements,  but  I  took 
down  part  of  what  they  said,  and  then  we  dictated  It  out,  and  took  the 
minutes  to  Mr.  Knox  In  his  room.  Mr.  Compton  was  present  when  I 
went  there  with  the  minutes.  I  asked  him  to  read  them  over,  and 
see  If  they  were  correct ;  that  I  did  not  wish  to  have  them  quoted  as 
saying  something  before  the  association  that  they  did  not  say,  and. 


/; 


JT 


474 


67   FEDERAL  BEPORTEB,   716. 
Charge  to  the  Jury. 


SS"  Sl'^rteSr  lIS.TttLP"'?  »'tn ««>'«.  I  wanted  them  to  see  It 

Compton  signed  It  in  my  pr^<»--*Sth  nf  fh«m  .^  *^  '**  "°^  "'• 
left  the  paper  with  thS  S^fS^  mieht^w,  itTI  ?ff  m^I",  * 
another  member  of  tho  /v^m«7i*f  Jt     tt    ^^     °*^^  "  ^*^  ^"^-  Mullen, 

r^s{s?di^*2?rir  ?lw"^^^^^^^ 


This  document  reads  as  follows: 


-  virt^r.  *•.  ...  "  Sacbambnto,  Jnlv  7th,  189i. 

'^rZ^*^tlft%^^?^y,'''t  ?«•*  '"t'oduoel  the  mediation 

that  the  orlginai  c"ij  for    W?^s?rTk^'waTlZ?n?f*n?  fll'^™"*** 

k^nl  i'^  T^.^'  **"*  **^^*  °^  passenger  ears  or  freight  cars  of  anv" 
^"^'d»eVarha^|  S"- if^^^^^^^^ 

«^*1lp^*re„ro"f*?hTte,!im*^n^''^ef^^^"'^^ 

rti^^;fr.e™^ent'lrsee''?rth^?'i„1M'''^:t^^e"^r'^*f'^^ 
fh^r'  to  accommodate  the  busiS  rthe^*untr  *He"?id  tC 
that  would  help  us  out.    'We  arp  in  thie  aJkI  +  ^*.      ?    '^*"  *"** 


., 


f 


UNITED   STATES  V,  CASSIDY. 
Charge  to  the  Jury. 


475 


but  will  not  until  this  question  is  settled  as  I  have  outlined.  There 
is  a  revolution  going  on  in  this  country.  To-day  it  is  a  principle 
that  we  are  contending  for.  Should  we  give  up,  they  would  malie  us 
crawl  on  our  bellies  after  them.'  Mr.  Compton  stated,  among  other 
things,  that  the  A.  R.  U.  organization  would  not  resort  to  any  des- 
perate means,  so  long  as  the  Railroad  Co.  would  deal  with  them 
without  using  armed  force.  That  their  organization  was  composed 
of  law-abiding  citizens,  and  would  not  commit  any  overt  acts.  At 
this  point  Mr.  Ray  tried  to  have  his  resolution  read,  but  was  de- 
clared out  of  order,  and  the  resolution  remained  on  the  table.  Several 
attempts  were  made  by  others,  but  without  efltect;  whereupon  Mr. 
Avery  moved  that  a  vote  of  thanks  be  tendered  this  committee  for 
having  made  this  association  of  business  men  so  frank  and  fair  a 
statement  In  relation  to  their  position  with  the  railroad  company  and 
this  general  boycott.  The  motion  being  seconded,  it  was  unani- 
mously carried,  after  which  the  committee  retired. 

"  We  have  read  the  foregoing  statement  of  the  records  kept  by  Mr. 
Howell  of  our  statements,  and  certify  to  their  correctness. 

"Committee:  H.  A.  Knox,  Chairman. 
"Thos.  Compto^ 
"  Jas.  Mullen." 

Mr.  Knox  was  askei  if  he  signed  the  statement  produced 
by  Howell.  He  said  he  did;  that  there  were  some  altera- 
tions, but  they  were  not  material. 

Continuing,  Howell  further  stated : 

"Saw  Knox  after  the  7th.  I  had  no  conversation  with  him,  al- 
though I  saw  him  a  number  of  times,  after  the  time  I  went  to  his 
room  and  he  signed  that  paper,  until  the  9th  of  July.  I  saw  him  then 
before  the  executive  committee  of  the  Citizens'  Protective  Association, 
at  the  Orangevale  office  in  Sacramento.  George  B.  Katzenstein,  Mr. 
Van  Vorhees,  Gen.  Llewellen  Tozier,  Mr.  Frank  Miller,  Mr.  J.  V. 
McClatchy,  of  the  Sacramento  Bee,  and  I  am  not  sure  but  I  think 
Senator  Cox  was  present  at  that  meeting.  The  executive  committee 
was  comiK)sed  of  nine  members,  but  they  were  not  always  there.  Mr. 
Knox  was  there.  I  was  there.  I  think  Mr.  James  Mott  was  there. 
He  is  the  manager  of  the  Crocker  Company  up  there.  During  the 
time  of  this  strike  we  were  in  the  habit  of  meeting  every  day,  some- 
times twice  a  day,  and  we  had  received  information  from  some  source 
that  the  government  was  going  to  take  charge  of  affairs,  and  we  had 
heard  a  good  many  rumors.  We  sent  for  Knox.  We  brought  him 
there  to  see  what  position  he  was  going  to  take  in  view  of  the  fact 
that  the  troops  were  to  be  expected  there.  This  was  the  9th  of  July. 
These  gentlemen  met  Mr.  Knox  in  the  capacity  of  the  executive  board 
of  the  Citizens'  Protective  Association.  Mr.  Katzenstein,  the  chair- 
man of  the  executive  committee,  asked  Mr.  Knox  some  questions  in 
relation  to  the  position  that  his  [718]  association  expected  to  take  or 
that  he  expected  to  take  after  the  troops  got  there.  My  recollection 
is  that -Mr.  Katzenstein  in  one  of  the  questions  said  that  it  was  re- 
ported, and  so  published,  that  Mr.  Debs,  of  Chicago,  had  issued  a 
proclamation  advising  all  men  to  keep  away  from  these  public  places, 
from  collecting  at  the  depots,  and  so  forth,  and  he  asked  him  why 
that  rule  could  not  be  enforced  by  the  A.  R.  U.  here.  Mr.  Knox 
handed  Mr.  Katzenstein  a  telegram.  The  telegram,  as  near  as  I  can 
remember,— the  substance  of  the  telegram, —  was  about  this :  To  pay 
no  attention  to  newspaper  rumors ;  that  they  were  sure  to  win ;  that 
everything  was  progressing  all  right  in  their  interests,  or  words  to 


I 


I 


476 


67  FEDEBAl,  BEPORTEB,  718. 
Charge  to  the  Jury. 


iS**view^f  ti^%«^f  ^w^^l^*  r^^  ^^  *^*«  ^^^^^^  question :  That 
W'obabTvLtLrf  **,"***  the  troops  were  ordered  there,  and  would 
probably  be  there  the  next  day,  or  the  morning  after    and  as  thP 

iTvi;?AKetof  tTVr^  **^"  ''^''  authorities Vthe'milUaix  and 
in  view  of  the  fact  that  he  was  a  citizen,  the  same  as  the  balance  of 

in  w^E^I.^^  ^5^  ^^'"^  *^^^*«  ***  °»^t,  what  position  he  would  t?ke' 
to  which  he  said,  as  near  as  I  recollect,  that,  so  far  as  he  xva^  nnn 
cerned  himself,  he  could  not  do  anything,  fo?  there  we?e  two  of  th?^" 

^ISf  w^  o^^^'o^\  ?">  «^  '«^  ««  ^^«  menTlre^n^rne^ 
wMch  was  over  2,000,  he  had  no  control  of  them,  and  he  did  not 
believe  they  would  allow  any  train  to  go  out  of  the  deZt  with  pSll 

r?  ca'r^e^Xf  •   ^""T  fM^^'^^'h  ^^Jer  askTwm.^^^^^ 

a»  1  can  recollect,     •     •     •    that  in  view  of  the  fact  of  the  militirv 

ojm,ng  there  and  if  it  would  be  a  question  betw^n  the  pHncTn  es  of 

t^tu^'^^L  T^  ^^  protection  of  the  citizens  and  his  fan  ily  and  so 

tSrLT?n?trrp%rY!l,Pr"«-  ^e  said  that  the  p^n'^lp?^  o? 
the  order  of  the  A.  R.  U.  stood  first  with  him  in  relation  to  this  busi- 
ness, or  in  relation  to  this  strike.  Mr.  Katzenstein  as  near  as  T  o«n 
remember,  called  his  (Knox's)  attention  tH^e  proclamation  as  it 
JSL^?n"'?^i  in  the  paper.  I  don^t  remember  Mr^  KnTsaAng  any! 
JSiZim  ^^?."''"  *^  ^^^  ^**S'^.^'  *^«  proclamation.    He  produced  ?hat 

^mf  Train  .iTf  ''^^^'  "^  ^T^^  ^*  «"*'  «»^*^  talked  in  about  the 
same  strain  that  was  expressed  in  the  language  of  the  telegram  I 
would  not  undertake  to  repeat  what  he  said.  I  remember  (Wstrnctlv 
he  stated  you  could  not  depend  on  the  proclamation.  He  d  d  not 
believe  there  was  any  truth  in  it.  and  used  this  telegram  as  evideS^ 
to  corroborate  his  statement"  ^^K^tui  «»  eviaeuce 

V.  S.  McClatchy,  called  on  behalf  of  the  United  States, 
testified: 

Bj^,^S^ramentV»^^  proprietors  and  business  manager  of  the  Evening 


A  paper  being  shown  the  witness,  he  said : 


i>«.wiif  r     !  a  statement  made  by  the  secretary  of  the  Citizens' 
Frotective  Association,  under  Instructions  from   its  executive  com- 

S  fi!f*r-i«  .  rK-^^iP^P!*"  ^^^  **^"^"  "P  ^y  Mr.  Howell,  secretary 
of  the  Citizens'  Protective  Association,  under  instructions  of  its  execu- 
tive committee,  and  purported  to  embody  the  statements  made  by  the 
mediation  committee  of  the  American  Railway  Union  before  the  Citi- 
es Protective  Association  at  its  meeting.  I  think,  of  Julv  5th.  Mr 
Howell  was  instructed  to  draw  this  paper  up  and  present  it  to  the 
mediation  committee  for  their  approval  and  signature  •  ♦  •  f 
JSri*  ^^^  ^?  ^'^J  gentlemen.  I  did  not  see  the  third  member  of 
the  committee  si^  it  ♦  ♦  ♦  Mr.  Knox,  who  was  chairman  of  the 
committee,  signed  it  and,  as  certain  as  I  can  be  at  this  time  the 
second  one  was  Mr.  Compton.    The  third  member,  who  I  think  was 

names  signed  Mr.  Howell  was  present  He  then  left  it  with  Mr.  Knox 
who  was  to  obtain  the  signature  of  the  third  gentleman  •  •  ?  f 
lifJliSv^'^  possession  anotter  statement  signed  by  Knox,  relative  to 
the  stoike.     ♦     ♦     •    Mr.  Knox  made  certain  statements  before  the 

!J^*\!L*^K™^^^  **'  l^^  ^^"^^"«'  Protective  Association,  I  ihin^ 
about  July  9th.— I  do  not  want  to  be  certain  of  the  date.— and  under 
instructions  I  prepared  a  report  of  Mr.  Knox's  remarks  before  the  com- 
mittee or  some  of  them,  and  submitted  it  to  him  for  approval  prior  to 
its  being  published  in  the  newspaper.  Mr.  Knox  approved  it  after 
minor  amendments,  and  It  was  published.    •    •    •    Mr  Knox  sI^S 


'■ 


f 


■• 


.. 


UNITED   STATES   V.  CASSIDY. 
Charge  to  the  Jurj\ 


477 


it  in  my  presence.  *  ♦  ♦  Mr.  Knox's  signature  was  obtained  in  the 
afternoon,  shortly  before  the  Bee  would  go  to  press.  In  order  to 
insure  its  publication  [719]  that  day,  it  had  to  be  cut  up  in  what 
prmters  call  'shorttakes'  ♦  *  *  It  was  signed  before^being  cut 
up.    It  can  be  readily  pasted  together." 

After  further  testimony  tending  to  identify  the  document, 
it  was  introduced,  and  is  as  follows: 

4.J'  ^^^**'?f  ^ J^;  ^-  ^^^^'  ^^  *^®  Sacramento  mediation  committee  of 
tne  A.  R.  U.,  had  a  short  conference  this  afternoon  with  the  executive 
V«i?iS  ^^k""^  the  Citizens'  Protective  Association,  at  the  request  of  the 
latter.  Ihe  work  of  the  committee  so  far  had  been  directed  towards 
preventing  a  confl  ct  at  Sacramento  that  could  only  result  in  blood- 
shed, without  settling  the  main  issue,  and  to  this  end  had  brought 
influence  to  bear  on  both  the  Southern  Pacific  Companv  and  its 
striking  employes  to  prevent  any  aggressive  measures  on  either  side. 
The  position  of  the  United  States  government,  however,  in  ordering 
the  opening  of  the  road  and  the  use  of  federal  troops  for  such  purpose 
has  practically  taken  all  discretion  out  of  the  hands  of  the  railroad 

^fZ^nl  ??^.H*^?r  H^*^.  f^^^^^  "'^^''^^^-  Mr.  Knox  was  asked, 
therefore,  if  the  United  States  government  insisted  on  taking  charee 
at  Sacramento  and  running  trains,  would  the  A.  R.  U.  permit  it  to  be 
^ffl^t  7  ""^l  obstacle  or  would  it  oppose  by  force  the  government 
officials  and  troops?  Mr.  Knox  stated  that  personally  he  would  do  all 
he  could  to  prevent  a  conflict  with  the  government  and,  if  it  moved 
trains,  would  not  oppose,  whether  with  Pullmans  attached  or  not  and 
would  so  advise  his  men.  He  said,  however,  that  if  the  government 
insisted  on  moving  Pullmans  without  a  settlement  of  the  main  question 

ol^  t''''^  Tk'*?^*u®  ™^°  "'^^^^  *^*™'  »s  they  had  notified  him-ove^ 
AOOO  strong— that  they  would  not  obey  orders  in  that  event,  and 
would  engage  the  troops.  He  said  the  position  of  the  A.  R.  U.  was  in  no 
way  changed.  It  would  not  permit  the  running  of  any  trains  unless  the 
demands  of  the  organization,  as  outlined  at  a  former  conference  with  the 

« lw^°^f'i?°'^^"^V.^''^.P"^i^^*'^  *°  ^^^  ^^  <>^  Friday  last  were  com- 
?r  ^  ^^^^  F^l  attention  being  called  to  the  declaration  of  Eugene 
V.  Debs,  head  of  the  A.  R.  U..  calling  on  all  members  not  to  attempt 
interference  with  trains  or  railway  property,  Mr.  Knox  said  that  he 
had  not  received  oflicially  any  such  notice,  and  had  been  warned  by 
Debs  to  pay  no  attention  to  newspaper  reports,  unless  officially  re- 
ported to  him.  He  could  not  therefore,  take  any  notice  of  the  procla- 
mation referred  to,  and  doubted  its  genuineness.     [Signed]    H.   A. 

Mr.  Knox  denies  having  signed  the  statement  produced  by 
Mr.  McClatchy.    In  this  regard  he  testifies  as  follows : 

SJ  ^®Tf^  signed  that  statement  in  the  world.  That  statement,  or 
part  of  it  was  when  they  called  me  before  their  committee  in  the 

n^rf  nnrfnV  H*^^"^'  ^!  ^^?  ^^-      "  ^^«  ^^^^^  ^^^^  ^^^bally,  part  Of  it! 

and  part  of  it  was  not    I  never  signed  the  statement,  and  they  have  got 

r^°nn«r  ^^^"i  I  ^""^i  "^*5-  *  •  *  The  statement  is  abfut 
cowect,  until  we  get  down  to  where  it  says :  •  He  said,  however  that 
if  the  government  insisted  on  moving  Pullmans  without  a  settlement 
^L    I  T\?^l^^lT'  ^^  "^"^^  ^<**  «»°tr<^^  t*Je  men  under  him,  as 

^^Ir^M  ?2?i^^  ^'i""'  ''l^'^  2'?^  «*^'^^'  **^^t  t^^y  ^<>"ld  not  obey 
orders  in  that  event,  and  would  engage  the  troops.'  I  never  made 
any  such  statement  as  that." 


r 


478 


I 


67  FEDERAL  REPOBTEB,   719. 
Charge  to  the  Jury. 


Barry  Baldwin,  the  United  States  marshal  for  the  North- 
em  district  of  California,  was  at  Sacramento  during  the 
stake,  and  testifies  as  follows  respecting  statements  made  to 
him  by  members  of  the  mediation  committee  and  others,  in 
relation  to  the  attitude  of  the  American  Railway  Union : 
w!!J!iJ^°T  *•'•?""»•  Mr.  Compton,  and  Mr.   Mallen     Know  Mr 

and  T  KpHaJf  S?*  ^'  F**®^  ^*^  present  and  also  Mr.  Worden 
S5.Jt^  ,11  ^^'  Compton,  and  Mr.  Mullen,  and  several  othP^i 
TJ^Zl  ^r  *  ^^*^^»--?^d  not  recognize  at  the  time.    •    ^   •    i  S 

S^k^  me  wlfJJIS^%5n'  ""^''^  ^  ^^^  ^"^"^  *«  Sacramento,  and  thl^ 
Kn^waufn   *^^^  Pullman  cars  were  to  be  moved  with  the  traih 
S^ta  7f^J^^  spokesman,  and  did  most  of  the  speaking     The  others 
spoke  a  little,  some  of  the  others  and  p<;niv>in]iTr  jSZ^ZZa^  auc  otners 

SrfS,in%  ^"^^  ^^""^  ^^'^^^^  **>  I^llinarSrs  S  fnov^ 
m«!^^!,i^*i*^^  "^^^  ^""'^^  ">«*  t*»e  trains  should  go  with  the 
If^li^^u^i^^l  passenger  ears,  but  not  with  Pullman  carT    Thpv 

S  a'S?[l''^tIn^^l'^ni^1,*  '^"'"""^  ^^^^  ^«  P^^  of  a  t?ain!-no  pa^ 
w  iT  oL^  \  ^°^  ^^"^y  ^"^®  °^«  t<>  understand  that  they  would 

^l^d'i^''1'hatfS^t  '^r.^r^  J^^y  '^'^  they  had  en^neit 
*Wi  aavice.    That  they  had  paid  $250  for  the  advice.    Thev  did  nAf 

state  who  had  advised  them.  ♦  •  •  i  told  them  thpt  t  «h«,^?i 
perform  my  duties,  and  see  that  the  trains  were  mo^    I  told  tS 

iS!:«*  ««L*h'fi'*\''*^^l?  ^  ^^^«*  ^^  often  armld7u^with^n,nan 
Wo  "^:?^  Y^^^  *^  ^^«  customary  to  place  them.    I  told  them  that 

Hr.!S?-?  •"*  ^'  ""I  "P  '"'"  «»  caboose  out  ^crolT^he  tra^ta 
He  asked  if  we  knew  who  he  was  nnd  t  f»»^T»  ««,♦  «v-xvoo  Lue  iracKs. 

He  «aid  that  Ms  "ame  was  wr.Sen?that^ve,^  ™e''Sw  h^^  ?r^ 

™i  5L'?^P'T'°«"«y  ~°"««t«<»  With  theZvement  ."?  **7t 
"^S.^Sf  ^  **•  ^-  P«>P'e  *«t  ''«»  organized  there  Thev  wero  thi 
mediation  committee  of  the  A.  R.  0.  ^They  were  ihe^^  JS^.*f 


UNITED  STATES  V.  CASSIDT. 
Charge  to  the  Jury. 


479 


^tyov^^t"""^  "  '^•'""  °'  *«  ""o^^^e^t-^tenslble  leaders 

The  same  witness  further  testifies,  as  to  the  action  and 
attitude  of  the  mediation  committee,  substantiaUy  as  foUows- 

the  mediation  committee  of  thp  a    w    tt     rryZl     ^**"^*'  ^"  see  me  as 
U.  S.  marshal.     They  c?me  to  se^me'ayVhJr^  ""T^  *^  ?^  "^^  ^^ 

not  offer  any  fesistance  •  tt?t  i  ^«l  i  ""^^  *."*'  ""«  «*■•*«■•«  """"d 

this;  It  was  C  du?y  to  do  It     ¥heS   w»''L  ri"l.''"*''"''*y  *»  <*» 
Thpv  snM  fhn^-^i,^     u  y^  "•     -*^"®'*  ^®  talked  the  matter  over 

Ktr  A-^n.' vS!?  E-5?"  Irr-"'  -'» - 

sistent,  and  would  not  oontinn^'7^?oi2  f  as  they  were  not  too  per- 

SirtS^m^Thari-^^-iEtiSHv"^ '--"  -"" 

o^j^=tirar\^^^tr  £HHi?*  f ^^^^^^^^^ 

tlon  to  It,  as  lon?^s  ttey  md  it  l4eSSJy!™'  '  *"•*  °°*  ^  ""^  obje.^ 

caJL^s^Sulsf  ^^^^^'^y-  ^«**"^  «^  -t--w  in  the 

we'tad  tel'^^n  flS^m^Jtter^'a'fS^brrr  «»  "^""^  <>"  PO«'«on  that 
oughly  as  poss  ble  toZ^  '»?S  t^iH'lti°  °?  we.  explained  It  as  thor- 
boycotted  the  PuflmM  cSs  on  l«»i^f,'  *°  ^^^^  P'ace.  we  had 
taken,  I  told  them  who  ouradvii^wi/^^'  ^^\"  ^  «■"  "»*  ""«" 
Knight  said  that  a  PunZn  car^s^oniTiT"""-  "PP^"'  """J  «'• 
car  regularly  made  npTas  nart  of  »  n,tn"  '^"s  a^ached  to  a  mall 
an  opinion  from  a  veZ  eminent  i«wtf,  *i'  '^'-  ^  ~»™e'  ^e  •>«« 
he  knew  as  much  Ito^tTt  as  Mr  InLh?  dM**""*^'  ""*  ^«  t'-'^S"^ 
him  we  would  not  handle  anffra^M  with^^^"™"'  ''*  *°" 
during  the  boycott,  and.  now  that  tto  ^^»^",'"k°  '^^  attached 
would  not  handle  any  tralM  It  all  «^f™^n^"?  '^^  o'^^™^-  ^e 
that  had  been  dischirg^Z^*  SL''^rSS*sS^*",lS|i-«'  ZZ'Z     ■ 


480 


i! 


67   FEDERAL  BEPORTER,   721. 
Charge  to  the  Jury. 


gist  of  our  conversation  all  the  way  through.  It  was  repeated  sev- 
Cfai  times. 

T.  W.  Heintzelman,  master  mechanic  in  the  employ  of  the 
Southern  Pacific  Company  at  Sacramento,  called  for  the 
United  States,  testified  as  follows: 

♦k"  ^  J^?,**^  ^^^^  ^^^  Compton.  They  were  out  on  a  strike.  Before 
the  strike,  Knox  was  a  switchman,  and  Compton  was  a  machinist 
working  In  the  shop.  ♦  ♦  ♦  I  was  present  during  a  part  of  a 
CMiversation  between  Knox  and  Mr.  Small  at  the  roundhouse  on  June 
^h.  Mr.  Small  was  the  superintendent  of  motive  power  ♦  •  • 
I  heard  Knox  remark  that  they  were  In  the  strike  to  win  *  and  thev 
were  going  to  win  by  any  means," 

E.  C.  Jordan,  locomotive  engineer  at  Sacramento,  called 
for  the  United  States,  testified  to  attending  a  meeting  on 
June  29, 1894,  at  which  Knox  was  present,  as  follows: 

•*  In  relation  to  a  telegram  he  said  he  would  get,  it  was  asked  him 
as  to  what  his  jurisdiction  was  in  this  matter ;  and  he  stated  that 
his  jurisdiction  extended  from  Sacramento  to  El  Paso  and  to  Port- 
land and  to  Ogden,  out  of  Sacramento.  ♦  ♦  *  There  were  three 
orders  present,— Conductors,  the  Engineers,  and  Mr.  Knox,  of  the 
A.  R,  U.  *  *  ♦  The  meeting  was  held  for  the  purpose,  as  I 
understood  it,  of  taking  some  action  to  bring  the  strikers  or  the 
A.  R.  U.  men  and  the  company  together,  in  order  to  devise  some  means 
by  which  the  strike  could  be  adjusted  in  some  manner  to  start  the 
road. 

The  following  telegrams,  purporting  to  have  been  signed 
and  sent  by  H.  A.  Knox  to  various  unions  within  his  juris- 
diction, respecting  the  state  of  affairs  at  Sacramento,  and 
transmitting  advice  to  other  local  unions  with  reference  to 
the  action  they  should  take,  were  in-  [722]  troduced  by  the 
prosecution  for  the  purpose  of  showing  the  concert  of  pur- 
pose and  action  among  the  different  branches  of  the  Ameri- 
can Railway  Union. 

"  June  27, 1894.    To  I.  B.  Hoffmlre,  Portland,  Or. :  Stop  all  Pullman 
sleepers.    Answer.    H.  A.  Knox." 

"June  27,  1894.    To  B.  V.  Debs,  Pres.  A.  R.  U.,  Chicago:   Will  we 
stop  loaded  sleepers?    Ans.    H.  A.  Knox." 

"  June  27,  1894.    To  W.  H.  dune,  Los  Angeles :   Sto^  all  Pullman 
sleepers.    Answer.    H.  A.  Knox." 

"  June  27,  1894.    To  J.  M.  Wagner,  Ogden,  Utah :   Stop  all  Pullman 
sleepers.    Answer.    H.  A.  Knox." 

"  June  28,  1894.    To  M.  C.  Roberts,  Dunsmuir,  Cal. :  Be  ready  to  tto 
out  at  moment's  notice.    H.  A.  Knox." 

"  June  28.  1894.  To  E.  V.  Debs,  Chicago,  111. :  The  ORG  and  BRI 
are  going  to  take  train  out  to-night.  We  are  going  to  stop  everything 
Answer.    H.  A.  Knox."  ^* 

"  June  28,  1894.  To  J.  M.  Wagner,  Ogden,  Utah :  Be  ready  to  go 
out  at  moment's  notice.    H.  A.  Knox." 


UNITED   STATES   V.  CASSIDY. 
Charge  to  the  Jury. 


481 


«ny,';;o:  hL'"^.  ."^V^ox"^.  «^^^^«'  I>-«n.uir:   Don't  know,  but  if 

H.7.Tno^:"^'^-    ^'"^  ^-  ^'  ^"^-^'  «ocklin:   Yes;   stay  In  RockUn. 

^2p.  1i.TKno;^,,^-  ^-  '^^^"'^^-^^  T-e^-,  cal.:    Hold  Nos.  4 

ther?"'R  a:  Zl3',  ^*  ^^"^«^y'  Wadsworth,  Nev. :   Hold  No  4 
"June  29.  1894     Tn  i?    r»    rx     j  ^ 

tie  «yo?dfr^'t'^S.'??|,t^;„0*s   Pres.  A.  R.  v.,  Chicago:   General 

June29]8<M     Tn  p  Tr  tI' u     i   "'•     H.  A.  Knox" 
tiling  on  svstlnr'atst'.^dl;.!?^^  ^'^-  ^-  ^-  ^-  d'icago.  III. :  Every. 
to-nigI,t.     H.  TKnov  "      '^"'-     Company  makes  their  death  sZt^le 

h'.'IT^^}-''''-    ^^  ^-  ^>'»-.  S"»»'t.  Ca,.:    no;    stop  at  once. 

Pullnmn  boycott  be  reinstated  "J^arrnl^  ^l?  *"''^''  »«"  '"  *«"« 
charged  for  same  cause.     Pullman  h^tli^'^*^'^^"  T°  '™°  *  "e  dig- 

»srr  s^d'e.  T.^^^r^^-^'^^'r^'^ol  ^a^X. 

engineers  and  conductor  sta^  ^il  "^ aZf^rS''^l,f'Z'2 
"July  2,  1894.     To  E.  V.  Debs    Prp«    a    x>    rr    V,^. 

^"?.T1![y%T^^'^VW^'^5^^^  ""'■    ""' 

Davis,  notbTsacraSe^io^'  ^'""'^'''  D»°«'»nir,  Cal. :  She  can  go  Tta 

..e;'"'ltLJ1^m;'';e"ar^:  ""j^T^^  TiZl'^  ^"'^  '""»'"  »«""« 

end«eS  r;^°er:^'*rtX'!'^B?,»  g^^kTT  ^^^^ 
11808— VOL  1-— 06  M 31 


r^' 


482 


en   FEDERAL  REPORTEB,   723. 
Charge  to  the  Jurj'. 


A«^«^^L  '  ^  1S..^*  ^^  Walthere,  Dunsmulr.  Cal. :  One  thousand 
^yalrymeii  and  militiamen  here.  CJome  with  whole  outfit  by  train, 
without  orders,  at  once.    H.  A.  Knox.*' 

JLV"^^  *;t^?^*  I^  ^'  ^  Walthers,  Dunsmulr,  Cal. :  Don't  close  the 
Western  Union  office.  That  will  hurt  our  cause.  And  talce  guard 
away  from  the  Postal  office.    H.  A.  Knox." 

"  July  4  18W.  To  E.  V.  Debs,  Pres.  A.  R.  U.,  Chicago.  111. :  We 
have  the  troops  on  out-  side.  They  have  refused  to  obey  commands. 
""i\''?  ^l^  ^}^f^  '~"^  "^'«y  back.~bound  to  succeed.  H.  A.  Knox.'' 
«,^ii"^*  \^^;  ^"^P:  ^  McCllntock,  Truckee,  Cal.:  Please  allow 
merchants  to  take  perishable  freight  from  cars,  but  agent  must  check 
It  to  them.     H.  A.  Knox." 

•t^l?"'*L^'  '^^-  '^^  Madden  &  Turner,  Dunsmulr,  Cal. :  All  quiet 
liere.    We  are  sure  to  win.    H.  A.  Knox." 

rJ^jfZ  «  ^^'  J^  ^*  V.  Debs,  Pres.  A.  R.  U.,  Chicago,  111.:  It  is 
reported  the  U.  S.  marshal  and  Gen.  Dimond,  of  state  troops,  has 
turned  our  affair  over  to  Washington  Have  attorney  there  to  work 
on  it.  \ye  have  eveiTthing  cur  own  way.  and  have  not  broke  the  law, 
only  by  keeping  about  5,0C0  men  in  sight.  Please  advise  us  what  to 
do.    Not  a  wheel  moving.    H.  A.  Knox." 

"July  6,  1894.  To  E.  V.  Debs,  Pres.  A.  R.  U..  Chicago,  111. :  Any 
truth  In  reiiort  of  strikers  and  soldiers  having  battle  in  Chicago? 
Please  ans.     We  are  as  fli-m  as  rock.     H.  A.  Knox." 

"7/7/18W.  To  J.  M.  Wngiier,  Ogden,  Utah:  All  quiet.  Stand  Ann. 
H.  A.  Knox." 

"July  7,  1894.  To  Wni.  O.  Leary.  Pres.  Miners'  Union,  Virginia 
City,  j\ev. :  Resolutions  received,  and  return  thanks.  We  are  bound 
to  win.     We  are  as  solid  as  rock.     H.  A.  Knox,  Chairman'." 

"July  8,  1804.    To  W.  H.  Clune.  Los  Angeles,  Cal.:  Force  them  to 
stop,  or  tell  them  when  we  settle,  their  firemen  will  run  their  engines 
We  done  that,  and  you  bet  it  brought  them  to  time.     All  quiet  here. 
We  are  solid  as  rock.    H.  A.  Knox." 

"  July  9,  1894.  To  W.  H.  Clune,  Los  Angeles,  Cal. :  Everything  very 
quiet  here.  Nothing  moving  here.  How  Is  things  there?  Stand  firm. 
and  don't  let  nothing  go.    H.  A.  Knox." 

"July  9,  1894,  To  Chas,  Fink,  Oakland,  Cal. :  We  sent  Geo.  Hale  to 
Yallejo,  but  if  there  at  Oakland  he  is  O.  K,     H,  A.  Knox," 

"July  11,  1894.  To  W.  G.  Boyce,  Pres,  Miners'  Union,  Silver  City, 
Nev. :  Thanks  for  sympnthy.  We  are  under  heavy  expense.  Finan- 
cial aid  would  be  gratefully  received.     H.  A.  Knox,  Chairman." 

"July  11,  1894.  To  Chick  Featherson,  Sunmiit,  Cal.:  I  received 
orders  from  E.  V.  Debs  to  order  strike  on  entire  system.  Hence  mv 
order.    Sacto.  is  solid  yet    H.  A,  Knox." 

"  July  11,  1894.  To  E.  V.  Debs,  Pres.  A.  R.  U.,  Chicago,  111, :  Sorry 
you  are  in  jail,  but  be  strong,  and  we  will  carry  the  strike  on  if  they 
put  all  of  you  in  Jail.  I^ts  of  soldiers  here,  but  everything  quiet  so 
far.    Every  man  out  here,  but  a  few  scab  engineers.     H.  A,  Knox." 

"  July  11,  1894.  To  J,  S.  Walton,  Oakland,  Cal. :  Adopt  code.  Lots 
of  soldiers  here,  but  everything  quiet  yet.    H.  A.  Knox," 

"  July  12,  1894.  To  J,  Balder,  Truckee,  Cal. :  Train  of  soldiers  get- 
ting ready  to  leave  here  for  Truckee.  Everything  quiet.  H.  A. 
Knox." 

"  July  12,  1894.  To  E.  V.  Debs,  Pres.  A.  R.  U.,  Chicago,  111. :  I  will 
stand  [7»4]  by  A.  R.  U.  as  long  as  life  lasts.  I  refused  to  run  for  rail- 
road commissioner,  because  I  thought  so  much  of  the  fight.  We  are 
doing  nothing  but  what  is  proper.  We  are  going  to  fight  it  out  on  this 
line.  We  have  1,800  soldiers  here,  but  no  trains  out  yet  H.  A. 
Knox." 

"  July  13,  1894.    To  Chairman  A.  R.  U.,  Truckee.  Cal. :  Reports  all 


hr 


A. 


UNITED   STATES   V,  CASSIDY. 
Charge  to  the  Jury. 


483 


t'S^  Easl"^  H  TkuoT'^'"'  ^'"  ^"'''  "^^"^  P^^*^"^'^  ^'  «o^dlers,  for 

■  '^^^!T"'J  ^^^^  "^^  introduced  purporting  to  have  been 
a^ed  by  H.  A.  Knox,  addressed  to  E.  V.  Debs,  at  Chicago 
and  to  other  persons,  in  relation  to  the  strike,  dated  July  I4th' 
and  subsequent  dates;  but  KnOx  testifies  that  he  was  arrested 
on  July  14th,  and  was  in  jail  for  three  weeks,  and  he  denies 
specifically  having  signed  the  11  telegrams  dated  July  22d, 
which  bear  his  name.    It  is  possible  that  some  member  of 
«»e  mediation  committee,  or  other  officer  of  the  American 
Railway  Union  at  Sacramento,  acting  for  the  committee, 
may  have  signed  these  telegrams  in  the  name  of  Mr.  Knox- 
but  as  the  testimony  in  the  case,  and  particularly  the  tele- 
grams sent  out  by  T.  H.  Douglass,  who  appears  to  have 
been  chairman  of  the  mediation  committee  after  July  14th 
indicate  that  the  strike  was  declared  off  on  July  21st   tele' 
grams  purporting  to  have  been  signed  by  Knox,  and  dated 
after  July  14th   and  particularly  those  dated  July  22d,  are 
certainly  discredited,  and  I  wUl  not,  therefore,  refer  to  them 

t^rCrtant^'^''^"  '"  ^"^  ^'^^'  *^^^  '^  ^^  ^PP«- 
George  Vice  testified,  on  the  part  of  the  defense,  that  he 
had  been  a  locomotive  fireman  for  the  Southern  Pacific  Com- 
pany in  June  last ;  that  he  belonged  to  the  American  Railway 
Union  at  Sacramento;  was  the  vice  president  of  it;  thinks 
he  was  present  the  night  that  the  telegram  came  frU  £ 
^go,  announcing  the  fact  that  there  was  going  to  b^  a 
Pulhnan  boycott.    He  admits  signing  the  following  Sle 

Ta;i,1>!*AVlf:Vliem'^of'^olLf^^^^^^^  Master  Cactus  Lodge,  94. 
man:  260.  143,  m|  S?.  ^  19  58^  ^^«°"iof  ^»'*-  ^-  *°  ** 
you  tie  division  up,  will  ^aran^'ft^'  ^L^^'  "".'*  Roseburg.  If 
a  Wheel  turned  her^or  .li^T^J^.r'^^^y,^^  ^aSer^aeo^ 


I  li 

I  it  I 


^^  6*7  FEDEBAL  REPORTEB,  724. 

Charge  tq  the  Jury. 
Also  the  following: 

"Sacrameuto,  Cal.,  July  16,  1894.    J.  Friant    Fremio    r-ni  •    u^i^ 
men  here  stand  flmi.    Scabs  scarce.    We  a,e  wfnnerrG^^^ 

Also  the  following : 

men^here'  nuUu    ^T'u  ^*^-  ^-  ^^^"^^^^^>''  Wadsworth,  Nev. :    Fire^ 
G^.  \Zl-  ^^''^^  '^"'*'*-    ^^'^'^^  ^^^"'>«'-«-    You  stand  firm; 

[725]  He  also  admits  sending  the  following- 

The  witness,  being  questioned  about  the  wording  of  the 
telegram,  testified  further  as  follows : 

"A  Juror :    Q.  What  did  you  mean  by  *  tie  un  everything '  ?     a 
Leave  their  work     Q.  You  said,  *Quit  and  tie  up  evei^nl  ?  Whai 

ZZv    q' YouC* ^.  Zr''^.'''}^^ '  •     ^-  ^"«*  to'^en^e  work.  "^The^ 
S^your  LIZn  for  ^^IKT^  a%"^  everything.'     •  Quit '  seems  to 
.^  •*»       V^lrJ        **^^    "®  ^^-     A.  I  meant  the  same  thine  bv  it     o 
Quit'  and  'tie  up'  are  the  same  thing?    A.  Y^    sir     Mr   Knieht-* 
Q.  By  •  .e  up  everything/  you  mean  ieave  work  ^om  evemhingv^  A 
Leave  the  service.    Q.  From  everything?    A.  Yes    sir     Q   WMt  t 

^TZZe^'ther^^^^^^^^  ^^"  '''^'  '  tif  up  ^veSg' 

wui*  ?^'  there  is  a  whole  lot  of  meaning  to  •everythine'  O 
What  s  your  meaning  in  that  connection?  A.  If  a  man  is  on  i  lob 
according  to  that,-if  he  is  on  an  engine,-he  will  leave  his  work.''     ' 

He  also  admits  sending  the  following  telegram : 

"  Sacraniento.  Cal.,  July  17,  18»4.    J.  J.  Brennan,  Rocklin-    Stand. 
^  not  allow  anybody  to  report  for  work.     Stronger  hSe  than  ever 
We're  sure  winners.    Geo.  Vice." 

The  witness  states : 

"  When  this  telegram  was  sent,  it  was  only  meant  for  the  flrpmon 
There  were  lots  of  liremen  that  did  not  belong^^the  A.  R.  u.^' 

Admits  writing  and  sending  this  telegram  : 

Niv^TtiTfll^^i/.''".^  V'  \^;    ?^-  ^-  r^^°d««y'  Wadsworth, 
wev. .    htill  firm,  and  will  stay  to  last.     Sure  winners     Gainine  vol 

miits   from   scabs.    Fillmore   weakening.    He   interviews  m^^ftiot 
board,  and  makes  concessions.    Geo.  Vice."  '^^'v'ews  meaiauon 


Also  this  one : 


ti 


«f«f!*of2™!f****  ^rShJ'^^y  ^®'  ^^-  »•  F-  Michaels,  Tucson,  Ariz.: 
dn  ««„fi*?wr  J*?^  "?  ^^"^  *^Shter  than  ever.  Use  all  means  to 
do  same  there.    We're  winners.    Geo.  Vice.'* 


Also  this  one : 


nZ^^'^^'^T^;  Cal.  July  18,  1894.    W.  J.  Featherson,  Summit.  Cal.: 
Quit  immediately,  and  tie  up  everything.    Come  to  Sacrkmento     We're 


sure  Winners.    Answer.    Geo.  Vice." 


» 


f 


Also  this  one : 


UNITED  STATES  V.  CASSIDY. 
Charge  to  the  Jury. 


485 


Extern  BT'^^.S'e'n  faKi^n/v^-  «^''*'  T«™  «■"><»■  ^»<>-  = 
will  not  re-employ  us  Til.  Jii'^t.  ^°l  *^  «  ^^^'  *»"«  »«•  »•  ^^ 
Vice,  Master  m"  ""^""^  *"  **''«  "»•    Answer.    Gea 

The  witness  states  that  he  had  no  authority  to  send  tele- 
grams for  the  Amenuip  Railway  Union;  that  he  sent  them 
by  virtue  of  his  being  a  master  of  the  Brotherhood  of  Loco- 
motive Firemen.  He  admits,  however,  that  he  was  also  an 
ofccer  of  the  American  Railway  Union,  being  its  vice  presi- 

♦w\^'  ^""^f  *"/«l*^'  ^''Ued  for  the  United  States,  testified 
that  he  was  chief  train  dispatcher  for  the  Sacramento  Divi- 
sion of  the  Southern  Pacific,  at  Sacramento;   that  he  knew 

?*wi    To'^A  *^*  ""^  ^^^  ***  ^«"g»''^  ^»s  connected 
with  the  A  R.  U.  during  the  recent  strike,  because  Douglass 
appeared  before  Mr.  Fillmo,^,  or  in  his  rooms,  on  one  or  two 
occasions,  m  connection  with  the  strike;    [726]  that  on  one 
occasion  Douglas  came  in  an  official  capacity ;   that,  when 
he  did  come  m  an  official  capacity,  Douglass  announced  that 
they  had  decided  to  deckre  the  strike  off.    This  was  in  the 
latter  part  of  July.     Douglass'  position  in  the  American 
Railway  Union  was  a  member  of  the  mediation  committee. 
Douglass  was  not  a  member  of  the  mediation  committee  right 
^ough   the   strike.     The   witness   understood   that   they 
(Douglass  and  the  two  men  who  accompanied  him  on  the 
occasion  just  referred  to)  took  the  place  of  the  original  me- 
diation committee  at  Sacramento.    On  the  occasion  referred 
to  they  came  into  the  rooms  of  Mr.  Fillmore,  and  requested 
the  stenographer  who  was  present  to  prepare  upon  the  type- 
writer a  stat^nent  to  that  effect,  which  was  read  to  them  by 
the  stenographer,  and  was  signed  by  them.    The  witness  was 
present  when  this  was  done.    Witness  knows  the  handwrit- 

EiingX^ram's  •^""'^^^  ^^  ^^^''*""  ***  ^''^^^  -  «^« 

settlemeat?    Ans^S    T   tt'l^gtass"''    ^"^  ^""  ""^  "*»'*'  " 

Debf'^mtu'atu'Ve^Vhe^  'gJ^^TitST''''^*''"-  =  ""^^^  '"»» 
T.  H.  DouglaML"  ^^^'^''^^'^  8<^-    Switchmen  have  all  quit  here. 


( 


li    I 


\  I 


)■ 


II  I 

I  I 


486 


67   FEDERAL  REPOBTEB,   726. 
Charge  to  the  Jury. 


fr«in«';i!^   ^^Kl\^^'    '^^^   ^'   ^'    Battenfleld,   Rocklin:     Four 

«  SLVr*  ?^t  "*.  J*^.?''^*-     N<^  ^^«^«  t<>  ™«^e.     T.  H.  Douglass." 
from  K„,;  •^''i^i/ifv^^^-    To  E.  V.  Debs,  Chicago.  111. :   Scab!  coming 
from  East.    With  few  exceptions,  men  solid  here.    T.  H.  Douglass." 

Cal^  SiHr«i::'»^«'  ?i*^^  ^^\'T-  '^^^  ^-  ^-  B^ttenfleW,  Rocklin. 
Cal  Situation  better  than  yesterday.  Prospects  brighten  every  hour 
lo  A.  K.  u.     T.  H.  Douglass. 

.nC^n  I J''^^^  ^?^  }^-  '^'^  ^-  "  B«ttenfleld,  Rocklin:  Did 
aiKf  train  leave  Rocklin  this  morning?    T.  H.  Douglass  " 

Sacto    July  18th,  1894.    To  W.  Balder,  Truckee,  Cal. :    Received 
tT  Douglass?'™^  H«^"-    He  states  situation  firm  eveJyThe^ 

nJ  Pw'ik/"'^^^^*'' J5^'  u^*  ^'  »'**'"«"'  Rocklin :  Situation  has 
not  changed.    No  work  for  shopmen.    T.  H.  Douglass." 

minZ^ku^^  ^^*?'  \^;,nF^  ^-  ^'  ®«^^"-  ^Sden,  Utah:    Com- 

mirfirr"^  H.'^D^ugfass/' ""^"-    ^^^^'^"^^   -tisfactory.    Men   re- 

"  Sacto.,  July  19,  18»l.    To  G.  W.  Lindsay,  Wadsworth,  Nev  •    No 

change  in  situation  here.    Remain  firm.    T.  H.  DouglasV "  ' 

Sacto.,  July  20,  1804.    To  James  Hogan,  Chicago,  111  •  Trup  sltiift- 

D^uglal^."'''*'''*'"*"^  *"  '"''"^  ^**'*^'    ^^""^  ''^"^  '"'^''^  affairs.    T.H. 

Rtrifrwii  K?5  ^^}^^'J^^  .I""  ^'  ^  <^^'  «««»^»n'  Cal.:  Probably 
strike  will  be  declared  off  at  2  p.  m.    T.  H.  Douglass  " 

"Sacramento,  Cal.,  July  21st,  1894.     To  W.  Balder  *  Truckee   Hnl  • 
Expect  strike  to  be  settled  by  2  p.  m.    T.  H.  DoiSs.'' 
ic^  ®*'Tk?®?*^'  *^^J'  -^"'y  2l8t.  1804.    T6  G.  W.  Lindsay.  Wadsworth 
D^ugla™^       ^^  ^^^^"""^^  ^^^''^  ^^'^  ^'''  "n«"i»^o»«  vote     T   a 

"  Sacto.,   .July  21,   1804.    To  S.   J.   Brennan.   Rocklin,   Cal  •    This 
lodge  has  declared  strike  off.    T.  H.  Douglass" 

H*!!i^**^r'"?!l*''  ?"V'  -^"^y  ^1'  ^^-  To  W.  Balder,  Truckee,  Cal  • 
Strike  has  been  declared  off  Pacific,  unconditional.    T.  H.  Douglass!" 

T.  H.  Douglass,  called  for  the  defendants,  testified :  That 
he  was  a  brakeman  last  June  and  July,  running  between 
Sacramento  and  Truckee.    That  he  belonged  to  the  Ameri- 
can Railway  Union  and  Order  of  Railway   Conductors. 
That  he  acted  as  chairman  of  the  mediation  committee,  he 
thinks,  from  the  12th  or  13th  or  14th  [727]  of  July.    That 
the  occasion  of  his  so  acting  was  because  the  original  mem- 
bers on  that  coimnittee  were  arrested.    That  John  Hurley 
and  G.  H.  Hale  were  on  the  committee  with  him.    That  he 
continued   in  that  capacity  until  the  strike  was  declared 
off.    That  he  does  not  remember  the  day  when  the  strike  was 
declared  off,  but  he  thinks  it  was  the  25th  day  of  July.    He  at- 
tended a  meeting  of  the  American  Railway  Union  on  the  26th 
of  June.    There  was  a  message  read  from  E.  V.  Debs,  de- 
claring a  boycott  on  Pullman  cars.    The  union  took  action 
on  the  matter,  and  declared  a  boycott.    Was  in  Truckee 
when  the  strike  was  ordered.    First  heard  of  it  about  6 :  30 


1 


UNITED   STATES   V.  CASSIDY.  487 

Charge  to  the  Jury. 

in  the  morning.  "  The  train  master  asked  the  crew  if  they 
would  go  out  on  No.  20.  They  told  him,  '  Yes.'  After  he 
[the  train  master]  left,  seven  or  eight  men  came  in,  and 
told  us  there  was  a  strike  ordered,  and  had  not  better  go. 
Well,  we  did  not  go."  Douglass  admits  having  received 
and  sent  a  number  of  dispatches  during  the  strike. 

BEGINNING  OF  THE  STRIKE  AT  OAKLAND. 

Thomas  J.  Roberts,  a  witness  for  the  defendants,  testified 
that  he  resided  in  West  Oakland ;  that  he  had  been  employed 
for  six  years  as  a  locomotive  engineer  for  the  Southern  Pa- 
cific Company ;  that  he  was  president  of  local  union  No.  310, 
of  the  American  Railway  Union,  which  was  organized  in 
May,  1894;  that  the  first  he  knew  of  any  trouble  was  a 
communication  he  received  from  Mr.  Worden,  who  was  dele- 
gate to  the  convention  in  Chicago.  He  says  : 
"  I  received  a  letter  from  him  stating  that  the  Pullman  boycott  had 

.^°T>  ?,^^'*^A  ^"^  ^""^^  ^^^*  *^  fi^®  <^*y«'  ""less  the  trouble  betn  een 
the  Pullinan  Company  and  their  employes  was  settled.    On  the  sam«» 

9ft?K^*  ^^^iu"  ''^''^'' ,i^^'^  in  om-  meeting— that  was  Tuesday,  June 
Jbth— from  the  president  of  our  general  union,  saying,  '  PuJhnan 
Doycott  in  effect  to-day  noon,  by  order  of  convention.' " 

He  further  says : 

"  It  was  the  evening  before  we  received  the  telegram,  and  that 
bemg  our  regular  meeting  night,  the  secretary  held  the  telegram  until 
the  meetmg  opened ;  and  after  the  meeting  had  opened,  and  we  got 
through  with  our  preliminary  work,  the  telegram  was  read,  and  the 
matter  was  discussed,  and  I  think  the  telegram  said  the  Pullman  boy- 
cott was  In  effect  that  day  at  noon.  Still  we  did  not  want  to  take  any 
snap  judgment  on  the  company,  and  we  decided  not  to  put  it  into 
effect  until  12  o'clock  the  following  day,  June  27th.  That  would  be 
Wednesday.  A  motion  was  put  and  carried  to  that  effect,  and  our 
secretan^  was  instructed  to  notify  the  Southern  Pacific  officials  that 
after  Wednesday,  June  27th,  at  noon,  we  would  not  handle  anv  Pull- 
man cars,  or  do  any  Pullman  work." 

Continuing,  the  witness  testified : 

"  June  27th  the  boycott  took  effect,  at  noon.  That  afternoon  we  had 
some  trouble  in  the  passenger  yard  where  I  was  employed.  Some  of 
the  boys  that  were  cleaning  cars  were  instructed  bv  some  foreman 
that  they  were  working  under  to  clean  some  certain  Pullman  cars  and 
they  refused  to  do  so.  They  told  him  that  they  belonged  to  the  Ameri- 
can Railway  Union,  and  that  there  was  a  boycott  in  effect,  and  that 
they  could  not  clean  the  Pullman  cars.  He  told  them  that  if  they  did 
not  want  to  do  that  there  was  nothing  else  for  them  to  do,  and  that 
they  could  go  homa" 

The  men  were  reinstated  at  his  request.  They  went  on 
with  their  customary  work.     The  strike  was  to  take  effect 


488 


67  FEDERAL  REPORTEB,  728. 


Charge  to  the  Jury, 
the  morning  of  the  29th,  at  12:30.    It  was  for  the  reinstate- 
ment of  the  men  who  had   1738]   been  discharged.     By 
strike,    he  means  that  the  men  were  aU  to  withdraw  from 
the  semce  of  the  company,  and  refuse  to  work.    In  case  the 
mm  were  reinstated,  they  would  be  returned  to  work.    By 
tte  men,    he  means  the  strikers.    There  was  no  resolution. 
Ihat  was  the  understanding,— his  understanding.    The  sec- 
retary was  instructed  to  notify  all  the  unions  on  this  system, 
or  in  this  state ;  he  is  not  sure  which.   All  the  action  that  was 
token  was  that  they  advised  the  men  to  try  and  keep  men 
from  going  to  work  and  taking  their  places;    to  persuade 
those  that  were  at  work  to  quit.    «  Tie  up  "  is  all  railroad 
phrasft    It  means  to  cease  work.    It  is  used  by  officials  and 
tram  dispatchers.    Perhaps  a  train  at  Port  Costa  may  get 
orders  "  ^^jn  No.  18  will  tie  up  at  Tracy."    That  means 
that  they  will  not  go  any  further. 

The  witness  was  shown  a  number  of  telegrams,  among 
others  the  following,  which  he  admits  having  sent : 

"West  Oakland,  Gala.,  June  28,  18M.  To  F  P  Saiwnt  T»r,» 
Hante:  Firemen's  lodge  here  indorsed  Pullman  toyrott  ^17^? 
bandle  their  cars.    T.J.Roberts"  ui  man   noycott.     win   not 

"  Oakiand,  CaL,  June  30,  1804.    To  W.  H.  Russell,  Secretary  B   R 

?:' J^terttl-'         •  ^'"'*  "  ««»""»•"    Define  poslt^Ta  R.  T. 

"Oakland,  Cal.,  June  30,  1804.    To  H    A    Knoi    A    B    tt     a.«-, 

"'"o^S'nd=  ?:^,*'^'*  "5i  °?^~'"  l3en>.%TRo^rt^:"'''  ""="" 
Oakland,  CaL,  June  29,  1894.    To  E    H    r.i»on    ^nn   t/^oa    n«i  . 

Firemen  ont  here.    Do  not  Work.    ciL  hom;.    T  J  Robert?^'  ^''^- ' 
"West  Oakland,  July  14,  1894.    To  F.  P    Sareent    Twre*  H«i,tP 
Ind^:  Authorized  American  Railway  Union  strTkeTJ^.ShllirL 
F.  men  work  during  strike?    T.  J.  Roberts." 

West  Oakland,  July  18,  1894.    To  F.  B.  Porter,  Reno   Nev  •  Solid 
here.    Da  not  waver.    Victory  is  ours.    T.  J.  Roberts/^  '        ^ 

He  was  in  frequent  correspondence  with  the  officers  of  dif- 
ferent lodges  of  the  American  Kailway  Union  throughout 
the  state,  and  in  some  instances  with  the  American  Railway 
Union  headquarters  at  Chicago,  during  the  strike.  Does 
not  know  particularly  that  he  sent  them  by  virtue  of  his 
official  position  as  president  of  the  American  Railway  Union 
in  Oakland.  It  was  merely  for  information.  The  union 
sent  a  great  many  official  notifications  of  the  strike  through- 
out  the  state.  He  did  not.  The  secretary  sent  them.  The 
union  ordered  the  secretary  to  notify  the  different  local 


t 


UNITED   STATES   V.  CASSIDY. 


489 


Charge  to  the  Jury, 
unions  in  the  state  of  the  strike  here.    They  had  no  authority 
to  send  them  m  his  name.    They  related  to  the  strike.    He 
got  some  messages  from  Knox,  of  Sacramento,  and  sent  him 
some. 

G.  D.  Bishop,  called  for  the  defense,  testifies  that  he  was 
the  secretary  of  the  American  Railway  Union  at  Oakland. 
The  secretary  was  instructed,  the  night  of  the  boycott,  to 
notify  other  unions  in  reference  to  the  boycott. 

BEGINNING  OF  THE  STRIKE  AT  RED  BLUFF,  TRUCKEE,  AND  DUNS- 

MUIR. 

John  Kelly  testified,  as  a  witness  on  behalf  of  the  govern- 
ment, that  he  went  out  on  strike  on  June  28th  or  29th ;  that 
he  had  been  a  fireman  for  the  Southern  Pacific  Company 
that  he  went  out  at  Red  Bluff;  that  he  was  a  meml>er  of  the 
American  RaUway  Union;  that  that  had  to  do  with  his  ffoine 
out  on  a  strike. 

.u'l'  u'  r^«i?^'  ^  '^'^''^^^  ''•^"^^  ^^^  *^^  defendants,  states 
that  he  [739]  went  to  Red  Bluff  from  Sacramento  on  June 
28th ;  that  he  lived  at  Sacramento,  and  belonged  to  the  Sac- 
ramento lodge  of  the  American  Railway  Union;  that  he  had 
been  brakmg  for  the  Southern  Pacific  Company;  that  there 
was  no  American  Railway  Union  organization  at  Red  Bluff 
He  testifies  as  to  being  advised  of  the  strike  bv  a  telegram 
from  Mr.  Knox;  that  he  had  asked  Mr.  Knox  if  there  was  a 
strike  ordered,  and  the  latter  had  replied,  "Yes,  there  is  a 
general  strike  ordered  by  Eugene  V.  Debs."    The  witness 
states  that  he  was  appointed  chairman  of  a  committee  at  Red 
Bluff     The  committee  were  composed  of  railroad  employes 
who  had  struck.    Although  the  witness  is  very  uncertain  as 
to  the  purpose  of  the  meetings,  and  the  appointment  of  the 
committee  of  which  he  was  chairman,  he  admits  that  at  least 
one  of  Its  objects  was  in  order  that  there  might  be  some  au- 
thorized person  to  receive  and  send  dispatches  for  the  men 
out  on  strike  at  other  points,  and  be  a  channel  of  communi- 
cation between  Mr.  Knox  and  the  men  at  Red  Bluff     He 
received  quite  a  number  of  dispatches  from  Mr.  Knox,  and 
from  other  places.    Although  Heaney  admits  having  re- 
ceived a  great  many  telegrams,  his  recollection  as  to  their 


^> 


i 
1 

; 

1  / 

1 

1 

' 

*^  67  FEDERAL  BEPORTER,    729. 

Charge  to  the  Jury, 
contents  is  extremely  vague.    B«t  one  of  these  telegrams  wa. 
introduced  on  the  part  of  the  prosecution.    It  is  as  follows : 

Ca?-Jack  Seaney^-  ^winffwSIh^i  ^'"-   ^?1'^«<'  »*  Sacramento, 
by  three  thouS^Tf  H.  T  Knot"  "^  ""'"'"•    '^"''^  '**'»*^ 


One  from  Heaney  reads  as  follows: 


Mrs.  Stanford's  specialT  H^U^Sl  l^^.  ""^^l^.  «°  "««"  "'"> 

iJ!ll-^''^7^V^^^ ^"^"^  ''**•"  Dunsmuir,  purporting 
tobesignedbyM.  C.  Eoberts:  * 

"Dunsmuir.  Cal..  June  28th    isfti     «    a    ir_        ..    „   _ 

Mr.  Knox  replied : 

From  Truckee  comes  the  following  telegram  : 

"  Truckee,  Cal.,  July  4.  1804      H    A    iTn/^'.^   e««  .     t., 
!«?    Tram  on  „,n.l  ule  r^tJ'doaTAnt^/'"'  ^""  "«"* 

Mr.  B[nox  replied ; 

f.:if"Xin^^m'^,Ut"*^^:rLs?.*"'  ^  =  ^-  -«-♦ 

^e  foUowing  tel^ram  purports  to  have  been  sent  by 
* .  H.  Almus  to  Mr.  Knox :  ' 


It 


COm^^t^*'  ^V"    wm  f''*-  .^""^  ^"°^-  Chairman  of  A.  B.  0 

Ahnus  testified  for  the  defendants,  and  stated  that  he  wa«. 
a  member  of  the  American  Bailway  Union.  Knox's  reply 
isasfoUows:  '^•' 

ttiTno^:-'"^     '"'  *•  ^""™'  S"--'*'  C-l-=    No.    Stop  at  once. 


•       J  ,   ^f   following  telegrams  are  from  Los  Angeles, 
signed  by  W.  H.  dune:  ^ge.es, 


*i 


aift'^w^^Yf   i^s  Angeles,  Cal.    G.  D.  Bishop,  Secretary  A   R   n 
810,  W.  Oakland,  Gala. :     Stand  firm     Will  iwvc^^n^*  «V  t        I     * , 
this  p.  m.    W.  H.  Clune,  Sect.  No.  B^hty!^      ^     *  "*  ^  "^"^^'^ 


t 


. 


•' 


UNITED  STATES  V.  CASSIDY. 
Charge  to  the  Jury 


491 


nlnety-seven  are  wTh  us  to  till  ^,p  »n/.  "'l?  "•""•""^^  engineers  here. 
Shopmen,  section  ra\"ridt*:i'e*!:iS;^.  "^"rSu^r^'tyT'""'' 

STMKE  IN  SAN  FRANCISCO  BV  A.  K.  U.  LODGE  345. 

It  is  admited  by  the  defense  that  the  defendants  John 
Mayne  and  John  Cas.sidy  were  members  of  this  lodge  at  the 
ime  of  the  strike     Eice  and  Clark,  the  two  other  defend- 
ants charged  in  the  indictment,  but  who  are  not  on  trial 
were  also  members  of  the  same  lodge.     Charles  Ault,  called 
for  the  government,  testified:  That  he  was  a  member  of  the 
Amencan  Railway  Union.    That  the  number  of  his  lodge 
was  345,  San  Francisco.    It  was  the  same  lodge  to  which  the 
defendants    belonged.     One    Bradley    was    president,    and 
another  person  by  the  name  of  Elliott,  was  on  the  executive 
committee.     This  lodge  went  out  on  the  strike,  as  a  body  on 
June  29th,-the  night  of  June  29th.    It  al.so  ^pj^eare^from 
the  t^timony  of  H.  J.  Bederman,  a  witness  for  defendant 
hat  one  J.  E.  R.ordan  was  its  secretary.    McClintock  was 
also  a  member  of  this  lodge.     The  purpose  which  prompted 

its     ?  T  rJ'^  ^*"^^  ''  '"''^'^  "y  *'»«  *-*---  aTfol 
lows      T.  J.  Roberts,  president  of  the  Oakland  lodged  Ameri- 
can Raihvay  Union,  testified  that  the  union  of  whrch  hTwas 
president  authorized  the  secretary  to  send  telegrams  to  dif- 
lerent  unions,  as  follows: 

eff:^tTwl?ve  f^Z  ^."'r^i^yT?  '•-<»■-'  t-  O-lared  striice.    Tal.es 

Mr  Roberts  when  examined,  said  that  he  had  not  per- 
sona ly  authorized  the  sending  of  telegrams  of  such  purpS, 
nd  knew  nothing  about  them.  Some  21  others  of  a  similar 
tOiaracter  were  sent  to  different  places. 

Mr.  Bishop,  the  secretary  of  the  same  organization,  tes- 

■fied  that  these  telegrams  were  .sent  out  by  direction  S  Z 

umon.    They  were  authorized  by  the  union.    It  wiU  be 


492 

«  FKDEBAL  REPOBXEB,  730. 

CwiW  to  tbe  Jnry 
noticed  that  the  dispatch  clain««i  k.  .x. 
been  «,nt  to  Riordan!  o7  llS  ^^  ***.  «»^«™'»«nt  to  have 
the  defendants  were  mZb^  uJm^'T  "T "'  "'  ^^»'«=h 
This  witness  -cknowS^ifL  ^  /  .^  "*'"'  '^"^ 
purporting  to  come  fro^.TSln':  '""^  '''•^'"' 
San  Francisco,  June  aft  itMu.     r%  t^ 

He  testified  that  he  authorized  the  sendin.rn*  fK   *„     • 
tdegr^  to  J.  E.  Biord«,  on  June^Tisw^  "'  ^''^  '*'"°""'8 

longidtiliS'sa^  '-'"^'".""'"y'  *'•«*  he  be- 
way  UnionT?St  the  deL^w"^'  ***  '^'  ^-"^"-^  ««'- 

that  the  occasion  ^f  thtS^iXtLTnilVw^  ""^  '"*^^^'- 
of  some  of  the  members  hJZ.  /■  T  °  ^"^  ""  account 
Pullman  cars:  thraTe^l?""^^''^  *"""  "«*  h«»d«n« 

appointed;  thitte  :rrh:d'^L!rofT™"^  '"' 
thing  concerning  the  strike  of  fhll  *f  ■'"'^*  ^''^'y- 
•-longing  to  hif  union  itjed'^nTe'  StT  -  ^"^  T" 
the  committees  were  appointed  on  th-  •  ^/'«'«n;  that 
that  all  the  power  re^XI^h!  ^t*^*""'^  «>'  June  29th; 
executive  coZiitLT^  tS  ^  '""  ^"'  •'*^*«'"«'J  ^o  the 
the  strike;  did  noritcoJ^l  ~'«-  '"<*  ^^'^''^^^  »' 
a  division  when,  there  wei^e  no  S2-^  '"  ''"'^'"«  "" 

of  sympathy;  thev  were  LmbS' Ah ""'''•  '"*  "  'J"^^*'**" 
supposed  to  do  what  was  2ht  k  """*"'■  ^''^^  *«'« 

was  discharged  for  a  ca?^  h^t[  ^^  T*^  "^'^her;  if  one 
try  and  protect  him  tntl  ."*^i"*^  "'^'  '^ej  would 
was  se«;tary  ofTe'unLr      ^     "^"^  **"""'  ^-  ^'O'^*" 

thetSdS^^iirKsTf^^^  •^"^  r  *  -^'"-  '- 

senger  yards  of  the  SoJth^ VS  r  ''''*''""'"  ^'^  *he  pas- 
Townsend  streets;  that  1^  ^S  ^"^r^' "*  ^""^^  and 
Union  (Lodge  345  San  F«nV^  ***  American  Railway 
of  June  or  tfe^h;  tLfrE.rV'*'  "«''*  **'  *•»«  ^Dth 
«ve  committee;  that  this^  ^j!^-  ^r.^tSg 


UNITED  STATES  V.  CASSID^.  493 

Cliarge  to  the  Jury, 
that  was  to  be  done  in  connection  with  the  strike;  they  had 
full  power;  the  question  of  Pullman  cars  never,  to  his  knowl- 

nw'  'T.T/^u^  '*™"''  *•''•  *he  reinstatement  of  em- 
tZ\  1  \^i  *^"  discharged.  On  cross-examination 
he  states  that  he  struck  because  of  the  discharged  em- 
ployes; he  beheves  some"  were  discharged  in  Los  Aneeles 
and  some  m  Sacramento;  simply  struck  to  see  j^  tic^dol' 
On  redirect  examination,  he  said  that  he  first  got  rmeTn 

S";?;;,:  B*/'"  ^*"'^^^^•''"  *^^-  Bederm!n;rarhe 
believes  that  Bederman  read  a  message  to  him;  he  doesn't 

Ednard  F.  Gerald,  a  witness  called  for  the  government 
gave  test,„^„y  tending  to  prove  the  handwriting  of  Mr 
Riordan  He  states,  respecting  the  following  tfle~s 
that  he  "  thmks  they  are  all  Mr.  Riordan's  signafurl  -         ' 

ColV.^r'ii'^U^'Z:,'^- J^,,^«-  E.  Bradley.  Engineer  S.  P. 

Notify  San  Jos«  and  alongX  Vne"^    tT'  m'^'^  """-i"'   ^-"'"o   »««•>■ 
June  ^    ifiQA     IT"  V.-1I  :i    J    ®"    **•  ^'  Riordan." 

strike"  or^eVed'^nn.fedS'teh"'  tI"  ^n'^  ""'T,'  «•  ^-  ««•  Cabo.se: 
Secretar.y    .m.  A.  R  u "     * '       '^   ""   e^eothing.    j.    E.    Riordan, 

der,^"Tn,^e.S„.    Tie''un'""e1e^th'""'  ^1"°^'  »•  ^^  ^O- :  Strike  or- 
#345,  A.  R.  U."     •  ""   everything.    J.    B.   Riordan,    Secretary 

ae';^""i!,„?e<lf„*^V.  "^Tie-  Tr^-erv^ilf  «T%  ^^  ^-  ^^  S'^"^-e  o^- 
#346.  A.  a  U."  "^   everything.    J.   e.   Riordan,    Secretary 

Strike'ord^ed*  ta„,e^iat^iv^*^rin^'.^"^*r^y'"«  station,  S.  P.  Co!: 
retary  #34.5,  A.  R.  ^I?""*'-^-    ^'e  «P  everything,    j.  e.  Riordan,  Sec^ 

ImmStet  ''^e  up  eLythmg'  Y'S  ^n.^.^-  =  ^'^"'^  '^^-^ 
A.  R.  u."  *    t-veiymmg.     J.    E.    Riordan,    Secretary  #845 

[782]  "F.  W.  Clark,  Pac.  Grove-  Greer  O  K-     ir 
Tie  up  strong.    J.  E.  Riordan  "       *  "'  ^'    ^^P  ^"^  g«>d  work. 

San  Francisco,  6-30   18<U     n   rk   t>j«u        ^ 
Committee  out  oi  ^anSe  S«S:.w  n"*^'  ^^^^^°^  ^ard  S.  P.  Co. 
quired.    J.  E.  Riordan.^^      ^  ^""^"^  ^^"«^-    Your  assistance  re^ 

It  is  admitted  on  the  part  of  the  defendants  that  the  fol 

**  San  Fran.,  7/1,  1894     Tn  w  mu^*^   *    x      ^ 
ing  between  116.4  anT^hicago "   It  f^o^f  SJh?"'-  =  *'"*  «  ""<*'  t°™- 
posted.    George  Elliott,  Chalman  "  ^"^  *""*•    ^'"  keep  yon 

7/2,  1894.    To  Ed  Stan  wood,  Caatrowile  Station:  Everything  Is 


f  I 


494 


©FEDERAL   REPORTER,   732. 
Cbarge  to  the  Jury. 


Elliott,  Chairman  A  RU^'    *=''«'Tt'"'»8  is  coming  our  way.    George 

a^TMS'  r.,Kv£^<^ -j«  r^  as 

"  7/3,  18W.    To  W.  H.  French,  Aptos :  You  are  all  in  to  clear     Fn 
^:<^^eVZr^!Ci:j:"  •>-'-"-    X.e'^^l^e^ig^a"t 

»v^^'Se  l^ilh^'b^^^lTi!^:-  "^'^^  '«  »--  -^  win  .e 
</3,  18iM.    To  W.  Johnson.  San  Jos^,  Care  Eureka  Hotel  •  Tin  nnf 

Deh^'wIrnatVwiM"^*^'^^^  ^-  «-  «  *>'-^<^- 

I  have  now  directed  your  attention  to  some  of  the  testi- 
mony that  tends  to  show  the  communications  that  passed  be- 
tween the  various  lodges  of  the  American  Railway  Union 
and  their  members  concerning  the  boycott  and  strike,  and  the 
concert  of  action  that  was  had  in  pursuance  of  such  com- 
munications.   I  have  also  called  your  attention  to  some  of 
the  statements  of  Knox  and  others  as  to  the  purpose  of  the 
boycott  and  strike,  and  the  purpose  they  had  in  view  in 
taking  the  action  they  did.    To  review  all  the  testimony  in 
the  case  bearing  on  this  point  would  take  too  much  time,  and 
will  not  be  necessary,  in  view  of  the  argument  of  counsel  for 
the  defendants,  who  admits  the  concert  of  action  claimed  by 
the  government,  but  denies  that  it  involved  a  criminal  pur- 
pose.   With  respect  to  these  telegrams,  and  the  testimony  I 
have  referred  to  in  connection  therewith,  you  will  bear  in 
mind  that  many  of  them  have  been  admitted  in  evidence  with 
the  consent  of  counsel  for  defendants;  the  genuineness  of 
others  has  been  denied;  and  the  testimony  as  to  still  others 
is,  by  reason  of  the  contradictory  nature  of  the  testimony, 
involved  in  more  or  less  uncertainty.    As  you  are  the  sole 
judges  of  the  credibility  of  the  witnesses,  and  of  all  the  evi- 
dence introduced  in  the  case,  whether  it  be  oral  or  written  or 
documentary,  you  will  determine  the  genuineness  of  such  of 
these  telegrams  as  are  in  controversy,  and  this  you  will  do 
from  all  the  circumstances  in  the  case.    In  passing  upon  the 
telegrams  not  admitted  as  genuine,  you  will  be  justified  in 
resorting  to  all  [733]  those  facts  and  circumstances  in  the 


Af 


m' 


united  states  v.  cassidy. 

Charge  to  th(?  Jury. 


495 


case  which  will  tend  to  establish  their  genuineness,  or,  on  the 
other  hand,  serve  to  show  their  want  of  genuineness.     For 
example,  you  may  consider  the  occasions  and  occurrences  to 
which  the  telegrams  purport  to  relate ;  whether  they  would 
have  been  sent,  but  for  such  occurrences;  the  relation  they 
bear  to  the  events  which  you  may  deem  the  evidence  estab- 
lishes to  your  satisfaction,  and  beyond  a  reasonable  doubt; 
their  tenor  and  subject-matter;  the  fact  that  the  sender  or  the 
recipient,  as  the  case  might  be,  was  connected  with  the 
American  Railway  Union.    In  fact,  all  those  circumstances 
and  incidents  which  may  be  rationally  and  naturally  con- 
nected may  be  considered  by  you  in  passing  upon  their  au- 
thenticity, and  the  probability  of  their  having  been  sent  and 
received  by  the  parties  whose  names  appear  upon  said  mes- 
sages.    The  importance  and  materiality  of  these  telegrams 
as  showing,  or  tending  to  show,  that  the  conspiracy  charged 
in  the  indictment  did  in  fact  exist,  is  for  you  to  determine. 
There  are  two  important  facts,  however,  to  which  it  is  proper 
for  the  court  to  call  your  attention,  in  your  consideration  of 
this  question,  and  these  are  that  most,  if  not  all,  of  these  tele- 
grams were  sent,  or  purport  to  have  been  sent,— whether  they 
were  or  not  is,  as  I  have  stated,  for  you  to  determine,— by  and 
to  members  of  the  American  Railway  Union,  and  in  the 
greater  number  of  instances  by  those  in  authority  in  that  or- 
ganization, and  who  the  testimony  T  have  referred  to,  and 
other  evidence  adduced  during  the  trial,  tends  to  show  were 
actively  concerned  in  the  strike,  and  took  part  in  it  with  the 
avowed  purpose  of  preventing  the  movement  of  all  Pullman 
cars.    Another  significant  circumstance,  to  which  I  call  your 
attention,  is  that  you  are  to  consider  whether  these  telegrams 
related  to  any  of  the  facts  charged  in  the  indictment  as  con- 
stituting the  conspiracy  to  commit  the  acts  with  which  these 
defendants  are  accused,  and  whether  they  had  any  bearing  or 
connection  in  any  way  with  the  acts  charged  in  the  indict- 
ment as  means  to  effect  the  object  of  the  conspiracy,  and  with 
reference  to  which— or  some  of  which— acts  the  prosecution 
has  introduced  evidence  showing,  or  tending  to  show,  the 
conspiracy  and  overt  acts,  and  the  connection  of  these  de- 
fendants with  such  conspiracy  and  acts.    If  you  are  satisfied 
from  the  evidence  that  these  messages  related  to,  formed  a 


496 


67   FEDERAL  BEPORTER,   733. 


Cbarge  to  the  Jury. 

part  of,  or  had  any  bearing  upon  the  object  of  the  conspiracy, 
and  the  means  to  effectuate  such  object,  charged  in  the  indict- 
ment, and  the  overt  acts  alleged  to  have  been  committed  in 
furtherance  of  such  conspiracy,  it  is  a  circumstance  which 
you  may  consider  in  determining  the  existence  of  such  con- 
spiracy.    You  will  consider  whether  they  establish,  or  tend 
to  establish,  the  concert  or  purpose  and  action  which  consti- 
tute important  elements  in  this  case  as  to  the  existence  of 
the  conspiracy  charged ;  particularly,  where  a  number  of  tele- 
grams of  similar  purport  and  tenor  are  sent  to  different 
places  at  or  about  tlie  same  time,  and  all  proceeding,  or  pur- 
porting to  proceed,  from  the  same  person  or  local  lodge  of 
the  American  Railway  Union.    Thus,  the  telegrams  sent  by 
Knox,  who,  as  testified  to,  was  chairman  of  the  mediation 
committee  at  Sacramento,  [734]  and  whose  jurisdiction  as 
such  extended  over  a  good  part  of  the  Pacific  coast,  or  of 
Eoberts,  the  president  of  the  Oakland  lodge  or  union,  or  of 
Bishop,  its  secretary,  or  of  Douglass,  Vice,  Elliott,  Riordan, 
and  such  others  as  the  evidence  shows,  or  tends  to  show,  sent 
telegrams  of  the  same  general  character,  these  persons  being 
officially  connected  with  the  American  Railway  Union,— 
whether  these  show,  or  tend  to  establish,  a  unity  of  design,  a 
community  of  purpose,  an  express  or  tacit  understanding  to 
do  the  acts  charged  in  the  indictment. 

It  is  claimed  by  the  defendants  that,  while  there  may 
have  been  some  concert  of  action  on  the  part  of  the  mem- 
bers of  the  American  Railway  Union  with  respect  to  the 
boycott  and  strike,  the  purpose  of  such  concerted  action  was 
merely  to  advise  members  of  that  organization  to  quit  work 
until  the  controversy  between  Pullman  and  his  employes 
should  be  settled.  As  I  have  explained  to  you  before,  even 
this  purpose  would  become  a  criminal  conspiracy,  if  the 
concerted  action  were  knowingly  and  willfully  directed,  by 
the  parties  to  it,  for  the  purpose  of  obstucting  and  retarding 
the  passage  of  the  mails  of  the  United  States,  or  in  re- 
straint of  trade  and  commerce  among  the  several  states. 
The  government  claims,  however,  that  the  concerted  action 
on  the  part  of  the  American  Railway  Union  had  some- 
thing more  to  it  than  merely  advising  its  members  to  quit 
work.     It  is  claimed  that  the  language  of  the  telegrams, 


UNITED   STATES   V.  CASSTDY. 


497 


Chtirge  to  the  Jury 

to  which  reference  has  been  m^de,  indicates  that  it  was 
the  purpose  of  the  strikers  to  prevent  the  movement  of 
.    railway  trams  belonging  to  the  Southern  Pacific  Company, 
by  actua    and  unlawful  obstruction;  and  in  this  connection 
the  question  will  arise  in  your  minds,  if  these  telegrams 
were  intended  merely  to  advise  members  of  the  American 
Railway  Union  to  quit  the  service  of  the  company,  why 
did  thay  not  so  state  that  purpose  in  plain  language?     It 
would  have  been  an  easy  thing  to  have  said,  "  We  advise 
you  to  quit  work."    IVhy,  then,  telegraph  such  instructions 
^Wn^r?'"'!^^^^^^  telegrams  were  sent:  "Stop  all  Pulhnan 
sleepers  Tie   up   everything."     "  Hold   Nos.   4  and   2 

sure.  Tie  up  strong."  Furthermore,  if  it  were  simply 
the  purpose  of  the  American  Railway  Union  to  advise  its 
members  to  quit  work,  why  did  Mr.  Knox  use  this  langua<re 
m  his  statement  of  the  situation  to  the  Citizens'  Protective 
Association  of  Sacramento  on  July  7th,  last?  «Mr  KnoT 
Jben  stated  that  he  would  allow  the  mail  and  ^.v^Tto 
be  moved,  but  that  no  passenger  or  freight  cars  of  any 
kind  or  description  would  he  consent  to  have  moved  until 

mv^M  't^™^  ^t"^''^^'  ^"^  ^^'^  '^^^^-^  with." 
Why  did  Mr  Mullen,  on  the  same  occasion,  say  "that  this 

was  a  fight  between  capital  and  labor,  and  that  from  the 

chief  justice  of  the  United  States,  down  through  aH  the 

branches-judicial  and  legislative  departments-of  the  ffov 

emment    they  were  corrupt,  and  that  labor  could  not  get 

Hs  just  dues,  and  that  his  association  had  taken  this  way 

of  forcing  justice  to  assist  their  fellow  men  in  obtaining 

tov  honest  labor  a  proper  compensation"?     And  why  did 

Mr.  Compton,  at  the  same  time,  say  "that  the  A.  R    U 

long  as  the  railroad  company  would  deal  [735]  with  them 
without  using  armed  force"?  Was  this  iLguage  used  on 
^ose  occasions  consistent  with  the  peaceful  anf la Jful  meth 
ads  of  procedure  now  claimed  by  Mr.  Knox  to  have  been 
«ie  purpose  and  action  of  the  members  of  the  American  RaT 
way  Union  during  the  period  of  the  strike « 

the  liJ  ''  '?"'"'?  ^^  *^'  prosecution  that  the  purpose  of 
the  strikers  to  interpose  actual  and  unlawful  obstructions 

11808— VOL  1—06  M 32 


Ill 


498 


m  FEDERAL  BEPORTER,  735. 
Glmrge  to  the  Jary. 


to  the  movement  of  railway  trains,  both  passenger  and 
freight,  is  further  shown  by  certain  acts  alleged  in  the 
indictment  and  concerning  which  testimony  has  been  intro- 
duced. I  will  therefore  now  direct  your  attention  to  that 
feature  of  the  case. 

One  of  the  means  alleged,  in  the  indictment,  that-  was 
adopted  to  promote,  carry  out,  effect,  and  execute  the 
conspiracy,  was  (1)  that  the  conspirators  were  to  "  forcibly 
take  and  keep  possession  and  control  of  all  yards,  depots, 
tracks,  and  trains  of  cars  on  said  lines  of  railway  and  to 
forcibly  hold  and  detain  the  same." 

SACRAMENTO. 

The  following  testimony  relates  to  what  occurred  at  Sacra- ' 
mento,  and  it  is  claimed  that  it  tends  to  prove  the  feature  of 
the  charge  now  under  consideration : 

Felix  Tracy,  agent  of  Wells,   Fargo  &   Co.   at  Sacra- 
mento, called  for  the  government,  testifies  on  direct  examina- 
tion that:  On  the  27th  of  June,  train  No.  84,  which  ran 
from  Sacramento  to  San  Francisco  by  the  way  of  Stockton, 
on  which  the  express  was,  was  held  in  Sacramento,  and  not 
sent  out.    The  main  office  in  Sacramento  was  at  Sixth  and 
K.    He  went  down  to  the  depot  office  to  ascertain  why  it  was 
not  sent  out.    He  ascertained  that  the  train  was  not  going  out, 
and  that  the  express  was  held  there.    The  express  was 
taken  out  of  the  train  and  held  until  they  could  send  it  away 
by  different  modes  of  conveyance.    The  express  matter  was 
destined  for  points  between  Sacramento  and  San  Francisco, 
also  Los  Angeles ;  and  matter  for  New  Orleans  also  goes  out 
on  that  train,  connecting  at  Lathi-op  or  Tracy.    He  could 
not  tell  positively  whether  there  was  or  not  any  express 
matter  on  that  train  for  New  Orleans  without  examining  the 
record.    On  the  morning  of  the  29th,  the  express  on  train 
No.  4,  which  is  the  overland  train  from  the  East  by  the  way 
of  Ogden,  was  held  at  Sacramento,  and  he  transferred  the 
express  from  this  train  to  the  steamer.    Sent  it  from  Sacra- 
mento; that  is,  that  portion  of  it  for  San  Francisco,  down 
on  the  steamer  from  Sacramento.    This  train  was  held  at 
Sacramento  about  10  o'clock  in  the  morning.    His  recol- 


UKITED  STATES   V,  CASSIDY.  499 

Charge  to  the  Jurv. 

'^^  r»r.  zrr  ^s^  «r.r  z 

relates  the  manner  in  which  he  transferred  this  exprS! 

•  about  ten  oV-KKk  :  tlm  uf  t5?e  re^l,*; Tw  ^  '"'"■"  Sl*^™-"*"*"  w!I 
going  to  get  that  express  to  «.^ V^  • '  *  ""^  satisfied.  If  I  was 
quickly.  !  did  noT'Sw  Vbe  Iier  X"*^;  *"'■"  ^  ">"«*«<=*  ^e^ 
mitted   to   leave,   or   nhether    f  ^Lm    .  ^*«amer    would    be    pcr- 

tbe  exp.-ess  from  tbis  «rr  to  tlie  ste-TuZ  o^n '*™'*I^  *°  f=>"«fe«- 
wagons-tbe  large  two-borS  "^-on  nnd  «.  •^'^"^"^utly  I  ordered  two 
exi.re.is  car,  with  the  idea  tl. >t  li i^  "\ 9"  ®'"S'^  wagon— to  [7381  the 
andK.  •  .  •  I %dn J  ;lM^."''^'''<'-''"y  *•'•'>*  express  ip  to  Ott 
state  to  them  wha  fiT^oilT^r wJZ^'JS''!?'''-  '  ^'^  °^ 
we  could,  and  took  the  express  wer  fo  ti.J^.  J*""*^  "  '"  ««  <I»'<=k  as 
to  the  steamer.  There  Tvas  a  ^t.f  wl  ?  «t«a'"e'-,  and  transferred  It 
depot  and  the  steamer  fandlL  ?h»n,H®'"  *"  f-^'-'tement  both  at  the 
ask  the  employes  of  The  steimer  no^'to  go^'oSt"*  '""  '*"'""'~«*  •«°<»"^ 

FrlL'sr^^n^^he'str  iT'  ^'"*/  *''""  "^'^'^  '^^  San 
j^iancisco  on  the  28th  of  June  was  delayed  at  Eocklih      W» 

back   o  Sacramento,  and  he  saw  himself  that  ther^  wTs  S 
press  there  going  to  Ogden,  and  east  of  that  from  SarPr!«' 
CISCO  and  other  points.    He  saw  the  wayb  17  Wifh  ^t 
ence  to  the  detention  of  train  No  84  on  the  Trth  ^  t 
testified  to  above  by  Tracv   Mr   ir  .  "^  '^""*'  *^ 

version  «f  t^r      ^  /•!  T'  ^-  ■'^<"^  Siy^  the  followinff 

Xred  tot  anoTh       '*'  ^'''"''°"'  "'^''^^  ^  '^-^  ^eretofoif 
Z1Z7  *7",*'"«the''  connection:  He  states  that  there  was  a 
train  due  to  leave  there  at  10:25,  known  as  m   M     tI 
asked  the  switchmen  not  to  handi;  the  PulLn  caf  Ja'^i 
t  was  empty,  and  it  was  not  necessary  for  it  toTo     Thf 

hlZt  tLe    ?""Tf ''  T    '^^^'  *^*'°  '^  there  until 
ih.  ^ffi   "^^/f^  lengths  out,  and  some  one  ran  down  out  of 

train  No.  4  on  the  29th  Mr  l^n      i    r!       *^^  detention  of 
Mr  SauIn«,io^h  7k        '•  ,  *"'  *^t^&^,  in  substance,  that 

mr.  oaulpaugh,  the  engineer,  declined  to  im  n„t  „„  tu   I    ■ 

and  that  the  fireman  alS>  refi^sed  to  ^o  with  the  P  V  "' 

and  that  this  was  the  cause  of  ite  nofgoTng  ot  '^""'"''"  ""^ 
Barry  Baldwin,  United  States  marshal,  who  was  at  Sacr, 
mento  from  the  1st  of  July  until  the  middle  of  A^.ti" 


500 


en   FEDERAL   BEPORTER,    736. 


Chiirge  to  the  Jury. 

for  the  United  States,  testified,  on  direct  examination,  upon 
being  asked  in  what  condition  the  tracks  and  the  cars  and 
engines  in  and  about  the  depot  at  Sacramento  were  on  the 
evening  of  Sunday,  July  1st,  that  they  were  in  gi-eat  disorder. 
Engines  were  driven  head  to  in  places,  and  wheels  blocked, 
and  obstructions--car&— placed  across  the  tracks.  The  cars 
were  placed  in  such  a  manner  as  to  impede  the  business. 
Saw  no  steam  arising  from  any  of  the  engines.  They  were  in 
such  a  position  that  the  trains  and  engines  could  not  have 
free  movement.  Mr.  Knox  denies  the  truth  of  this  state- 
ment, and  in  answer  to  the  question :  «  Q.  Wliat  was  the  con- 
dition  of  the  yard?  "  says: 

w  In J"^  ^^^^^7  *^***°^  ''•'^*^  ^"  ™"  '»  t**^'^*  «»*!  the  men  refused  to 

reiiistatetl    and  tliey  simply  died  on  tlie  track  of  their  oun  free  will. 
No  one  injured  them  at  all.     So  far  as  any  obstruction  on  the  trick 
there  were  none  at  all,  excei)t  that  one  block  I  spoke  of  under  that  en- 
gine to  keep  her  from  ninning  down  hill  into  another  engine." 

Mr.  Baldwin  further  testified  on  his  dii-ect  examination 
that  the  depot  was  constantly  overrun  with  men;  that  it  was 
in  the  possession  of  the  strikers.     Mr.  Knox  stalos  that  this 
is  not  correct ;  that  the  depot  was  in  the  possession  of  the  rail- 
road officials  all  the  time.     [737]  Mr.  Baldwin  further  states, 
in  relation  to  the  effort  made  on  July  5th  to  couple  the  engine 
to  delayed  train  No.  4,  that  it  was  standing  on  the  track.    It 
had  come  in  there  and  had  been  stopped  there.     In  the  morn- 
ing before  commencing  at  all,  he  went  to  the  mail  car,  and 
saw  the  postal  clerk  there,  and  made  him  open  the  car,  and 
went  into  the  car,  and  saw  that  the  mail  was  there  in  the  car, 
and  that  it  was  the  mail  that  was  ordinarily  carried  on  that 
train,  and  had  come  down  from  the  post  office,  and  that  is  the 
way  he  ascertained.    The  crowd  surged  in  through  the  depot. 
The  crowd  was  heaviest  around  the  engine,  and  standing  in 
the  way  of  the  engine,  and  obstructing  its  coming  up  to  the 
train.    He  had  to  get  down  and  move  them  foot  by  foot  to 
get  the  engine  through.    He  got  on  the  engine  again,  and  it 
was  moved  up  to  the  train,  and,  just  as  they  reached  the  train, 
the  crowd  broke  past  and  swept  through  the  depot,  and 
broke  the  train  and  rolled  back  the  cars,— the  passenger 
coaches.    There  were  some  seven  cars  rolled  back.    Possibly 
500  people  took  part  in  rolluig  back  these  coaches.    Thev 


UNITED  STATES   V.  CASSIDY. 
Charge  to  rho  Jury. 


501 


cuU?  theTe  w '^  "'  ""''  "^i^  '^^^^  ^^^^^'  -i^^-"t  any  diffi- 
tiiity,  there  were  so  many  of  them. 

G^enlaw  a  witness  for  the  defendants,  testifies :    That  he 

depot     ThTf  '"'  ?!;"'""^  *^''""  «*  '"^^  «-t  -d  of  tJ: 
depot    That  he  went  down  there.    That  when  he  got  the.^ 
the   Pullman   cars   had   been   uncoupled.    That  th^.;  wa^ 
it^h  '='-°"i''--<i  Marshal  Baldwin  when  he  tt  the" 
Ihat  he  saw  they  were  trying  to  get  at  Baldwin  and  hi  Z* 
In.  best  to  defend  him.    That  a^ fellow-he  tL"    Uws 
Jack  Harns-picked  Marshal  Baldwin  up  and      arted  to 
carry  him  out  of  the  crowd.    While  he  was  „n  in  Th 
Jack  Harris'  shoulder  he  drew  hi    revo L     V^  ^^''''Z 
;ne  down"    Jack  Harris  let  him  down  Tthe  Lound   a^d 
he  shoved  the  pistol  up  under  Greenlaw's  noL     oSnlaw 
states  that  he  said:  "  Don't  point  that  thing  at  me    Tha^ 

irV ';''^'"'r"    Marshal  Bald^^nl'd:  "  i  w," 

Mr   rln         kT  '^''  ^^^'  '"^  ^»«"d  on  me."    Just  th«. 

Mr.  Galhner  broke    nto  the  crowrl      ,  „„„„*    i 

and  he  =iid  ■  -\Vh«r    n        ««D^^(l,_a  great,  large  man,— 

"itw        .."  ,,  ,?     '  *''**  '"*''"**^'  Marshal  Baldwin?"  or 
Baldwin."    Baldwin  said-  "Tk^o^   u  ,     .  ' 

alonp"    r,ii-        .,  .,  '**^®  ''°y^  ^^'ont  'eave  me 

j«r4ur£„  ;t  w";^  fa/rir  r'"-'  ™i' " 

fK„„         XI  .       ^***s^^  croAvas  at  the  Sacramento  denot 

cieanmg  ,,p  the  yard ;  no  work  had  been  done  from  th^ 

nTarda^bTtr  "  T.^™^"    ^'''  '^^  «"-P»  ^    -at 
Th,t  ,f  H-    y         "'^'^'^  ***  *"''"  possession  of  the  depot 

w  s  St  1     SVr™"*""  "V^^  ™"'"'''^  «ff-^^  '*-  depot 

Timer  i:  z  srrju^iVt ih^^- '''-'  t  *'«^ 

pounds,  and  tracks  anVytds'^ritdT' d^fwetl' 
the  possession  of  the  strikers     T].o  ^.rU         r^        . 
fn,>  fi.^  1  J!  -trixeis.     ihe  witness  Greenlaw,  called 

for  the  defense,  contradicts  Mr  Baldwin'c  f.  f  !  • 

point. „.  «...  ,ta  ,„,„  w™*„tT„iiSTL°C 

to  r7q«Jl  ^r^    *v,         ^^^S'— woking  on.     No  effort  was  made 
to  [738]  keep  them  out.    They  just  stood  there  in  the  de^t 
He  did  not  see  the  militia  make  any  effort  to  gei  in  ^L* 


502 


67  FEDERAL  BEPORTER,  738. 


Charge  to  tbo  Jury. 

relation  to  the  stoppage  of  the  movements  of  all  trains  be- 
tw^n  the  3d  and  11th  days  of  July,  Mr.  Baldwin  states 
that  there  was  nothing  moved  out  (of  the  Sacramento  depot) 
between  those  dates. 

BED  BLUFF. 

The  following  testimony  relates  to  the  possession  taken  by 
the  strikers  of  the  yard,  depot,  and  trains  at  Red  Blnff: 

Joseph  C.  Day,  roundhouse  foreman  for  the  Southern  Pa- 
cific Company  at  Red  Bluff,  called  for  the  government,  testi- 
fied as  follows:  That  he.  was  roundhouse  foreman  at  Red 
Bluff  for  the  Southern  Pacific  Company  in  the  months  of  - 
June  and  July  last;  that  he  recollects  an  attempt  to  move 
ttie  Sacramento  local  No.  12  from  Red  Bluff  on  or  about  the 
29th  day  of  June  last;  that  it  was  composed  of  the  day 
coach,  ^oker,  and  mail  car;  that  he  and  Mr.  Jones  and  Mr. 
Kobb,  the  conductor,  endeavored  to  move  this  train.  After 
explainmg  the  position  of  the  train  on  the  track  by  means  of 
a  diagram  on  the  blackboard,  he  states : 

We  II?tte7Z4''f^^^f„!"  *"*  "^L'  «>'--"'y«e't  Mr.  Jones,  and  Robb. 
we  set  tne  levers  to  couple  on.     When  we  got  very  near  tht-ra  Mi.  n™^ 

SnX??*  ^^^  '^^^"2  '""'"  •»"*«  »he  <^aU  7o  that  we  ™um  not 

SLtelTS^^ltT  ''w^h^H"^/""'*''  ""^  «''«'"«'••    He  toM  „s  we 
n^K.t  r.     "  "P-     '*®  ""^  ^one  our  part,  and  thev  wonlrt  An  th^ip. 

m»^*,w~"'^  °1'  """"«  «">*  f»ln  tiether.    Sfelder  wis  the 

wwV   lir°'n„\h'"'*  'r'T-    ^^  "t"''-^  there  a^  talked ^ulte  I 
wniie.    Mr.   Robb  made  the   remark   thcv   were  too   m-inv  for  „= 

IfJ°?H*  "",*  ""IJ*  't  "P-    ^e  "-""'I  have  to  g  re  H  up     The  engine 
rtood  there  for  about  an  hour,  and  the  engln4r  brought  her  biok  ?o 

^Xno'tX  J.?"  ""•"  ™'  "^^^^^  *"--  t^f^"'i^'fr:^\^ 

J.  P.  Heaney,  a  witness  called  for  the  defense,  testified: 
Ihat  he  was  a  brakeman  for  the  Southern  Pacific  Company 
in  June  and  July  last.    That  he  belonged  to  the  Brotherhood 
of  Railroad  Brakemen  and  the  American  Railway  Union  at 
Sacramento.    That  he  went  to  Red  Bluff  on  the  28th  of  June. 
The  following  morning  (the  29th)   he  went  to  the  depot. 
As  he  turned  the  corner  he  saw  no  engine  there.    He  walked 
along  leisurely,  and  when  he  got  down  to  the  depot  he  in- 
quired why  the  engine  was  not  out.    He  was  told  that  a  strike 
had  been  dec  ared.    He  saw  the  fireman,  and  asked  him  what 
he  thought  about  it.    The  latter  said  he  did  not  know     The 
witness  said :  «  Will  we  go,  or  will  we  not  ?  "  and  he  told  the 


UNITED  STATES   f.  CASSIDY. 
Charge  to  the  Juty. 


503 


fireman  that  he  would  like  awful  well  to  go,  but  that  he  would 
nate  to  go  into  Sacramento  and  have  the  boys  holler  «  Scab  " 
at  hm  when  he  got  there.  That  he  would  not  do  that  for  all 
the  jobs  he  ever  saw.  That  they  talked  around  there  a  little 
while,  and  finally  concluded  not  to  go  out.  He  took  off  his 
cap  and  uniform  and  gave  the  job  up  then.  He  was  told 
that  they  were  obstructing  the  mail;  that  that  was  a  maU 
states-        '"''"'''  *"  '^^  1"^^t'°°.  "  Who  told  you  that?"  he 

mail  ear.  'a^d  nothing  elseH  msf  fn^^  17^ '\^  ^"'  ^^  ^^^^h  the 
60.-that  I  would  go  with  ?Le  mnilcir  t  ini '  ^.^"f^  ^S^  ^^^-  ^""^^ 
it,  and  asked  him  whit  he  tho^^h^'^^^^p^^,^^^^  ^^^  ^^^^^^^^  ""^^^ 
with  the  mail,  anyhow '  I  asSiL  tn  Lf  fn  '  ^^^'  "^^  ^"-^^  *«  SO 
get  the  engine  came  down      f  hn  *?n^  ^"^  ^^*  *^^  ^''^*°®-     He  started  to 

J.  C.  Shepler,  called  for  the  defense,  admits  that  he  was 
present  upon  the  occasion,  on  the  morning  of  the  29th  of 
June,  related  by  the  witness  Day.  He  states  that  he  had 
nothing  to  do  with  the  uncoupling  the  mail  from  the  rest  of 
the  tram,— the  Sacramento  local  No.  12 

The  persons  Ray  and  Clodtfelder,  who  are  implicated  bv 
Day  m  the  uncouphng  of  train  No.  12  on  the  29th  of  Jun^ 
were  not  caUed  as  witnesses.  ' 

Day  further  testifies,  with  relation  to  the  stoppage  of  the 
Oregon  express,  train  No.  15,  on  the  1st  day  of  July-  That 
he  was  not  down  at  the  train  when  she  came  in.    After  she 

ritnn%w  dT ':  ^^^  •^"^''- «« --  ^'^^  ^^^^^ 

r  He  went^  I  *.?"*  P""*^  "^'^  ^««  somewhere  about 
h;,m  w  T  ^  *''"  "■""•■  '"•*  °*  *«  t^^in  to  see  Mr.  Kil- 
„ve?n..  "^"^  .7"  sleepers  were  cut  off  and  backed  down 
over  one  crossing,  the  two  coaches  and  a  tourist  car  were  cut 
m  another  section  and  standing  on  the  crossing,  andThe  two 
mail  cars  and  engine  standing  in  front  of  the  depot,  on  tie 
mam  track.  At  the  south  end  there  were  two  Pullmans' 
next  came  a  tourist  car,  day  coach,  and  smoker,  and  ZZl 


504 


67  FEDERAL  BEPOBTEB,   739, 


Charge  to  the  Jury, 
press  car  and  baggage  car  was  with  those  coaches  and  smoker, 
and  the  next  was  two  mail  cars  and  engine,-one  a  mail  car 
and  the  other  a  box  car.    Men  were  working  there  taking  off 
the  apphances  for  connecting  the  train.    He  saw  Mr.  Shade 
there  at  work;  also  saw  Richard  Roe,  and  a  fireman  of  the 
name  of  Hill.    Hill's  first  name  is  Joe.    Mr.  Heaney  was 
around  there.    He  did  not  see  him  doing  anything.    There 
was  probably  a  couple  of  dozen  around  there.    He  saw  Mr 
Shade  and  Clodtfelder  cut  the  hose  and  the  Miller  hooks 
Ixshind  the  mail  car.    They  did  that  in  his  presence,  when  he 
went  down  to  get  the  engine  to  pull  her  uj).     He  looked  at  the 
couplings  m  the  afternoon.    He  saw  the  safety  chains  taken 
oif,  and  the  nuts  and  keys  at  the  back  of  the  Miller  hooks  had 
lieen  taken  off. 

J.  C.  Shepler,  the  same  witness  whose  testimony  has  been 
previously  referred  to  on  the  part  of  the  defense,  denies  that 
he  assisted  in  taking  any  nuts  or  chains  or  bolts,  or  in  anv 
way  interfering  with  the  Portland  e.xpress  which  came  in  on 
tJie  1st  of  July ;  that  he  saw  no  one  in  any  way  interfering 
with  the  couplings  or  brake  chains,  or  anv  of  the  nuts  or 
bolts  connected  with  the  train.  He  admits,  however,  that 
he  saw  ^x  couple  of  chains  lying  on  the  ground  there.  He 
admits,  also,  that  he  was  at  the  station  when  the  train  came 
in  and  that  there  was  a  crowd  about  the  train.  He  states 
that  he  does  not  know  who  uncoupled  the  train 

Jo^ph  B.  Hill,  called  for  the  defense,  and  the  person  re- 
ferred to  by  the  witness  Day  as  the  fireman  who  was  engaged, 
with  others,  [740]  in  taking  off  the  appliances  for  connect- 
ing the  Portland  express  on  July  1st,  states  that  he  was  pres- 
ent when  the  express  train  came  in ;  that  there  was  quite  a 
crowd  about  there.  He  denies  that  he  ever  did  anvthing 
to  prevent  the  coupling  of  the  engine  and  mail  car  'to  the 
coaches  of  the  Portland  express. 

J.  P.  Heaney,  called  for  the  defense,  testifies  that  he  was 
around  the  depot  on  the  1st  of  July  when  the  Portland  ex- 
press came  in,  or  sliortly  after  it  came  in.  He  gives  the  fol- 
lowing version  of  the  uncoupling  of  the  train  • 


m 


J  J 


UNITED   STATES   V.  CASSIDY. 
Charge  to  the  Jury. 


505 


would.      He  went  up  there  and  told  the  eneineer      Affor  h^  ♦^i^  *., 

Wniiam  H.  Jones,  agent  and  train  master  of  the  Southern 
Pacific  Company  at  Red  Bluff,  testified  that  on  June  29th 

W^i  T^  T' "''"^^  *°  '"*'^'  *^"  ^^  Bl"ff  ^^^  Sacramento 
local.    This  train  carried  coaches,  the  ordinary  baggage  car, 

w'p  ".  nr"«  ^'  ''"'"^  ""^  '^''P'"'-  This  train^  due  to 
leave  Red  B  uff  at  5:15  in  the  morning.  He  attempted  to 
move  the  tram^  The  strikers  had  cut  the  train  in  two.-^ut 
the  mail  car  off.    He  could  not  say  who  cut  it  off.    He  did 

start  the  train  m  regular  form.    Mr.  Clodtfelder  and  Mr 
Ray  prevented  him  from  coupling  it.    Mr.  Day  and  Mr' 

Vn^l  T  '^'*'"':  ^''''*'^  •>™  '»  t'-y'^g  *°  P"t  that  train 
together  Mr.  Day  is  the  foreman  of  the  roundhouse.  Thev 
backed  the  tram  together.  He  set  the  Miller  hooks  to 
couple;  set  one  of  them  to  couple,  and  stepped  over  to  the 
other  platform  to  couple  the  otiier  hook.  Threw  the  lever 
doint'^t  ""  m'    g'^^tf'^l^'^''  h<"ld  it  and  prevented  liim  from 

WWh!'  f,  ,  ^^  ^"'r*"  '^^  ""'^'^  P'"***'™  «"d  threw 
back  the  other  lever^  so  that  it  would  not  couple.    The  effect 

of  this  was  that  they  could  not  couple  the  cars  together. 
They   were  endeavoring  to   couple  the  mail   car   and   the 
coaches.    Ihe  mail  and  express  and  baggage  were  all  in  the 
one  car  at  that  time.     He  knows  that  that  train  had  not 
been  cut  m  two  m  tliat  manner  under  the  authority  of  the 
company.    At  the  time  that  he  endeavored  to  put  this  train 
oge  her    Clodtfelder  told   him:  "You   cannot' col^lS 
train.    You  have  made  your  attempt.     You  have  done  vour 
part.    Now  we  will  do  ours."    The  witness  told  him  thaJh  s 
overpowering  force-there  were  50  to  2  of  them-prevented 
hem  from  coupling  it.    There  was  quite  a  large  crold  about 
at  tha    time.    They  were  all  opposing  the  rail«,ad.    They 
sympathized  with  the  men  who  were  stopping  the  trail 
They  refused  to  assist  the  witness  in  starting  the  train, 
although  he  called  on  quite  a  number  of  them.    Thev  said 
they  would  not  move  any  trains  until  the  matter  was  Settled 


506 


67   FEDEBAL  BEPOKTER,   740. 


Gliarge  to  the  Jury, 
aodtfelder  and  Ray  said  that  the  mail  car  coald  go.    He 
thinks  It  was  C3odtfelder  who  said  that,  or  Denunick     Dem- 
mick  was  one  of  the  leaders.    They  said  the  mail  car  could 
go  by  Itself;  no  other  cars  of  any  kind,-Pullmans  or  day 

rj^if7^^,''"*J^'  "^^  **'•  I'"l  Knows  a  man 
MmedJoeftll.  He  was  a  fireman.  He  was  on  strike  at 
that  time.    He  went  to  couple  this  train  together  on  the 

'^^r^.^!^"^^  ™^  "^^  *«'''  "°  motive  part  in  pre- 
venting tha  As  they  started  the  engine  and  mail  car  to 
couple  onto  the  coaches,  Hill  tried  to  apply  the  air.  By  "an- 
plying  the  air"  the  witness  means  that  he  opened  the  auto- 
mtic  air  valve  of  the  air  hose  at  the  rear  of  the  mail  car. 
That  would  set  the  brakes  if  there  had  been  air  enough  on 
tto  w,  but  there  was  not  enough  pumped,  and  they  went 

As  previously  stated.  Hill  denies  that  he  interfered  with 
this  tram  in  any  way. 

It  is  to  be  noticed  that  this  testimony  of  WiUiam  H.  Jones 
IS  corroborative  of  that  of  J.  C.  Day,  the  preceding  witness. 

SOUTH  VALLEJO. 

The  following  testimony  related  to  the  possession  by  the 
stnkere  of  the  yard,  tracks,  and  trains  at  South  Vallejo  • 

Michael  Keefe,  yard  engineer  for  the  Southern  Pacific 
Company  at  South  Vallejo,  called  for  the  United  States, 
testified  as  follows: 

lol7an/"i?th®l/*1**/^'^^  ^^  *^«  Southern  Pacific  Company  on  the 
10th  and  llth  of  July  were  not  in  a  condition  for  serviV^  All  th! 
engines  were  killed;  there  was  no  steam  in  thm/'  ^ 

The  same  witness  further  testifies : 

SomI  mert'S^^hf  p3„??°^  "?'  ^'''  ^'  '*  ^««  «  ^^^^tch  engine, 
oome  men  took  the  engine  away  from  me.    One  of  them  was  Thomim 

ran  It  «fr  thi  V.H.^     -rS*"  """  *"*  ^''^'''e  off  an  open  switch.    They 

Ttev  tKnn7p^VhJ  sL'^fAI.'^^'"''  J"'y  lot";  about  that  timl 
±aey  tnen  banled  the  flre,  let  the  water  out  of  the  holler  ohnf  «.« 
engine  down,  let  the  water  out  of  the  tank,  aSd  «s^L^K  hoi  " 

It  would  be  hard  for  him  to  state  the  particular  parts  each 
man  played.    He  did  not  exactly  locate  them  at  the  time,  or 
what  they  were  doing,  because  he  was  talking  with  them 
He  tned  to  get  on  his  engine.    He  got  on  the  side.    Thev 


'" 


I 


UNITED  STATES   V.  CASSIDY. 
Charge  to  the  Jury. 


507 


Z  i  ?         !^  ^*  "^-   ^'  ^^^ ''  ^*«  Smith  who  would 
not  let  him  get  on.    He  prevented  him  getting  on.    Kelly 

stake.  He  was  out  on  strike.  Laurie  also  went  out  on 
^e.  He  was  a  fireman.  Smith  was  a  stranger  to  him. 
He  was  the  man  that  came  there.  Smith  and  Hale  were 
the  ones  that  came  to  Vallejo  and  made  that  trouble  D^ 
not  know  where  Smith  came  from.  Thinks  Hale  told  h?^ 
he  came  from  Folsom.  Thinks  Hale  said  he  was  a  ba^ 
virThVr^T-  Hf  <J^d  not  say  why  he  camel 
WW  H, V  \  ?i!-  T''"'"'  *"'^''''"  *"^*««^  tJ>«*  «"  the  fol- 
SoT,fh^  V  n'  •       of  ""^  '*  ^^''  ""Sine  1,190  was  kiUed  at 

Sh^nnlff '^**-   w '•  '"'"'  *■"'"  ^''^^^g^  that  morning, 
bhe  pulled  a  mail  train.    Does  not  think  that  there  were  anv 

Pu  Iman  cars  on  that  train.    He  saw  the  engine  killed     He 

was  on  the  engine.    He  ran  the  engine.    Smith  came  there! 

with  a  good  many  others,  and  took  the  engine  away  from  him 

Ihey  put  the  fire  out  also  disconnected  the  hose,  and  let  the 
water  out ;  also  out  of  the  boiler. 

SAN   JOSE. 

The  following  testimony  relates  to  the  possession  taken 
San  jL!  *''  ''P'**'  ^"'•^'  '^^*='^^'  ^^^  trains,  at 

James  Hewitt,  called  for  the  United  States,  testified:  That 
he  was  the  engineer  of  the  San  Jose  train  No.  19,  running 
between  San  Francisco  and  San  Jose.  That  he  left  San 
evSr  ?ha?',  '^'^  <^"^?'  «-  J-  ''t  7  o'clock  in  th^ 
3  a^nH  '""^.  l"""''  *'•''•"'  "^"^'"g  *  combination 

J-uUmans.    That  he  arrived  on  time.    Going  into  the  vard 

ri  "tht  tr  *'^  'r  -^"^^  ^'^-^  *-^'  ^^^'^'^ 

the  denot     tL  ^^T    ""^r}  *^  "'  "^  *^t  this  side  of 
the  depot.    The  people  nished  up  the  track,  and  he  had  to 

top  or  else  run  over  them.    Knows  a  man  named  McCiin! 

Mr  McClintl\'  '""  "''"^'  ^""y^'^-    ^-  ^^  ^topiS, 
Mr.  McClmtock  came  up  on  the  front  part  of  the  enXe 

and  came  through  the  window  on  the  left-hand  side    ?Le 
ana  says.     I  wiU  take  charge  of  this  engine,  Jim."    Then' 


508 


W  FEDEBAL  KEPOBTEB,   742. 


Cbarge  to  the  Jnry. 
Hewitt  said  to  him:  "Hany,  you  have  got  the  main  track 
blocked.    This  IS  as  far  as  I  am  going.    Let  me  put  this 
tram  on  the  side  track  and  put  the  engine  in  the  round- 
iiouse.      Mr.  Eunyon  stepped  up  and  said :  «  No,  sir.    We 
will  kdl  her  right  here."   'During  this  time  there  was  a 
deputy  United  States  marshal  on  the  engine  with  the  wit- 
ness,-one  on  each  side  in  the  gangway.     They  tried  to 
keep  the  crowd  off.    They  overpowered  the  one  on  the  "left- 
hand  side.    McClintock  asked  him  what  business  he  was 
doing  ther^,  or  what  he  was  doing  there.    He  said  he  was 
r,  deputy  United  States  marshal,  and  showed  him  his  badge. 
At  that  time  they  were  trying  to  get  hold  of  the  fireman. 
McChntock,  after  he  asked  him  to  show  his  authority,  which 
he  did   says:  "We  can't  help  that.    Boys,  take  him  away." 
Ihey  took  the  fireman  off  of  the  engine.     That  left  the 
witness  and  McClintock  and  Runyon  on  the  engine,  and  a 
lot  of  boys  came  up  over  the  baggage  car  and  came  up  on 
the  tender.     After  that  the  witness  had  some  conversation  with 
McChntock  with  regard  to  putting  the  engine  away  and 
puttmg  the  tram  on  a  side  track.    He  told  him  they  had  the 
main  track  blocked.    It  was  not  necessary  to  hold  him  there. 
Wells-Fargo  s  agent  stepped  up  on  the  right-hand  side,  spoke 
lo  McChntock,  and  asked  liim  to  pull  the  train  down  to  the 
crossing,  where  they  could  get  out  their  express,  mail,  and 
^"^"n.-^*  ^ys:  "All  right.    Boys,  cut  off  tlie  baggage 
car."    Which  they  did,  and  pulled  down  to  the  crossing  or 
over  the  crossing,  right  in  the  front  part  of  the  depot,  and 
stopped  the  engine  there.    One  of  the  gang  says:  «  No  one 
diall  move  this  engine  but  McClintock."    The  witness  sat 
down  on  the  fireman's  side,  and  took  hold  of  the  bell  cord 
They  got  down  to  the  depot.    McClintock  told  him  he  had 
better  get  off  and  go  home;  that  he  would  not  be  responsible 
for  his  life.     The  witness  said:  "You  never  mind  about 
my  life.    I  guess  I  can  take  care  of  myself."    They  got  the 
engine  as  far  as  they  could  get  her. 

[743]  WS.  Eunyon,  the  person  referred  to  by  witness 
Hewitt  in  the  testimony  just  quoted,  was  called  on  behalf 
of  the  defendants,  and  testified,  in  brief,  that  he  was  a  loco- 
motive  fireman  in  the  employment  of  the  Southern  Pacific 
Company  m  June  last;  that  he  belonged  to  the  Brotherhood 


UNITED  STATES   V.  CASSIDY.  599 

Charge  to  the  Jury. 

tIJTTw'k  ^''■'"''"'  ""'^  "'^°  *«  '^'^  '^«"<=«n  Railway 
Union;  that  he  was  a  member  of  the  e.-tecutive  committ^ 
.  of  the  American  Railway  Union  in  San  Francisco;  that  du^ 
mg  the  strike  he  went  to  San  Jose,  on  the  evening  of  Juty 
5th;  that  he  went  there  of  his  own  accord,  to  suppress  anv 
acts  of  violence  or  any  deeds  of  violence  that  migh  possibly 
be  committed  there,  as  he  understood  there  werf  slme  ven^ 
troublesome  people  in  that  locality.  His  statements  alto 
wha  took  place  at  San  Jose,  and  his  connection  therewith 
m  his  own  words,  are  as  follows:  ' 

we  got  to  San  Josf^^    a"  Ve  ,veie  '  "in- ^"^  ""''  "'^^  """' 

train  slowed  up  slight^  nnd  wi.»/Lhi^  J  -5^  ^'""'^  "'  ^'"'  J"^-  '"e 
House  at  Sau  JoTand  the  dennf  ^h^*  °"''"'Y  ^^'"'^'^  '^^  "^""l- 
people  in  the  ccaoL  ^„,u'^|„e^?t  ™t  oSr  /".n"  '*'""''""•  '"^"^ 
ilr.  JIcQiiade,  of  the  Soutlieri,  P.,;^fi^  *  }•  '"  """Pany  with  a 
delegation  of  people  on  the  t,.,^f•.  ^*  "".*•  ™«''e  "-"s  a  large 
was  done?  State  whitvon^nwH.l.'''"'  T"'"'  ""^  <J«P»t-  Q-  What 
the  train  stopped  igjrof.rhVr'^"''"*  "-'r'"^^  ^-  As  I  said, 
stood  on  the  SSirts  of  the  crowd ""'};;'!"?  Z^  V^'  M<^Q"ad«.  ««><» 
fling  around  one  place  and  inot  «.r  nn  it!?,  -^'^  *L'"°S  "  '"*  "^  ^^■ 
a  remark  was  made  that  trfwonwi^i  ""•.»"''  '"  *"•  "»''  8'""'^ 
had  charge  of  the  tr.-i in     1  «i™h  °  "'^"■'"  "!'•— the  man  who 

the  near  vicinity  I  saw  a  rnm^f.^  "'^'  "7  ''"'<"'«''  tie  crowd.  lu 
on  their  coat  "IWis  1  sa  d  Ch  em  .'".^"  "■""  ^'"*  '""^  «""t«^  "-ibbons 
a  ;•  striker,"  anH  nien^i  of  the  a  R  T  ?/*  ^°"  ordinarily  term 
vyith  us  I  should  like  to  get  your  tsM^u-.  f^T"  '"'*  «.vmpathizers 
that  might  be  perpetrated  on  Mr  Sl^^tt^  i  oppress  any  violence 
and,  as  I  did,  those  gentlemen  folim^.^,  ^^*  "P  *"  "^^  engine. 

'You  need  not  hare  mw  fea?oi?H^^^  '"^-     '  ^"^'^  *»  **•••  Hewitt 
Mbly  lend  you  aTassl'San'c^   Ishtl   SnlTdo'"--  V  •"""  P^ 

to  a  crossing  or  st^Setlu.^  north  oTfh"/^^"^'''^/™     '""^  '•°°  ^»^ 
off  all  the  <5aches,  with  the  exeeDtionnfr.*-    3"^^  stopped,  and  cut 
Imve  for  baggage  and  VelLf  a'^oTm„tter   'Ift^r'Vl^  ™'  "■"*  '"^^ 
connection  between  the  baggage  and  Ser  thf       *^^  severed  the 
car  went  on  the  south  side  of  the  deX?  to  leave  1?.'■"^'""'  '"'S8'''S« 
clear.    Mr.  Hewitt  changed  h  s  overnu^     wi,      f  '^'*  ''^™  crossing     . 
stepped  down  behind  him     As  I  did  «i  Vh.  ^h°  ^^  '«"  •"«  engine  I 
the  white  ribbons  on,  and  who  I  nlf-^Vl     °*^'"  sent'emen  who  had 
and  we  walked  a?o »  of  A^r    iwVrmT^ '"^- '^••'■"®  "'""^ 
crowd,  and  then  he  l?ft     Alie  he  wo«  w^it  •     ^i  «"*  through  the 
they  jeered  at  him  some   but  thert  !.«  "^""^'"8  '•'■•ough  the  crowd 
•Mr.  Hewitt  got  awav  there  was  nt^lt^      ""k"*"**  "*  violence.     After 
of  the  engine,- Je/  aMboys  -?"po„  whTf/  ?'  ""*?  ""  *"«  '<"'<^^' 
board.-    I  got  them  to  dlspeil^and'Te"  ve "thl  "n^raTonl""   '™"""« 

ti  J^  '^^"^^^^dmits  seeing  Mr.  McClintock  ther«  at  that 
time.  The  testimony  of  Mr.  Hewitt  as  to  what  took  p C 
at  the  engine  being  read  to  him,  he  stated  that  some  of  th^ 
statements  were  correct  and  others  not.    He  states  that  Mr 


i 


\ 


i 

li 


510 


67   FEDERAL   HEPOKTER,   743. 


Charge  to  the  Jury. 

Hewitt  suggested  putting  the  train  on  the  side  track.  He 
testifies  that  the  statement  said  to  have  been  made  by  him, 
viaj. :  "  No,  sir.  We  will  kill  her  right  here,"— is  false.  He 
states  that  there  were  several  thousand  people  at  that  time 
there.  In  answer  to  the  question :  "  Q.  Hewitt  states  here 
that  you  and  McClintock  were  trying  to  get  hold  of  the  fire- 
man,"—he  replied :  "  He  is  a  liar.  I  did  not.  I  had  nothing 
to  do  with  the  fireman,  and  [744]  did  not  see  any  one  pull 
him  off  the  engine  at  all.  The  fireman  was  off  of  the  engine 
five  or  six  minutes  before  I  got  on  the  engine." 

Another  of  the  means  alleged  in  the  indictment  to  promote, 
carry  out,  effect,  and  execute  the  conspiracy  is  (2)  "by 
causing  to  be  assembled,  and  by  assembling  with,  large 
crowds  of  persons  in  said  depots  and  yards  of  said  Southern 
Pacific  Company,  at  various  points  and  places  on  said  lines 
of  railway,  in  said  state  and  Northern  district  of  California, 
and  by  gathering  in  great  numbers  in  said  yards  and  depots, 
to  wit,  *  *  ♦  and  other  places  around,  in,  and  upon  the 
trains,  cars,  engines  of  the  Southern  Pacific  Company,  and 
upon  the  tracks  of  the  railways,  preventing  the  movement 
and  passage  of  said  engines,  cars,  and  trains." 

SACRAMENTO. 

The  following  testimony  relates  to  the  assembling  of 
crowds  at  Sacramento : 

Felix  Tracy,  the  agent  of  Wells,  Fargo  &  Co.,  testified  on 
direct  examination :  That  there  were  no  trains  moving  after 
the  29th  of  June.  He  saw  a  good  many  men  down  there  at 
the  station  that  were  not  at  work,— railroad  men.  He  saw 
them  there,  and  he  saw  them  in  other  parts  of  the  city. 
There  were  more  people  at  the  depot  from  the  28th  or  29th 
of  June,  up  to  the  time  of  the  United  States  soldiers  going 
there,— some  time  about  the  10th  or  11th  of  July,— than 
usual,  a  good  many  more  than  usual.  There  were  more  there 
on  the  3d  of  July,  more  there  on  the  4th  of  July,  than  it 
was  customary  to  see  there.  He  noticed  that  whenever  he  went 
down  there.  It  will  be  remembered  that  Mr.  Baldwin's  testi- 
mony that  there  were  crowds  around  the  station  is  to  the 
same  effect.  On  the  other  hand,  Mr.  Knox  denies  emphatic- 
ally that  the  depot  was  in  the  "  possession  of  the  strikers." 


UNITED   STATES   V,  CASSIDY.  51J 

Charge  to  the  Jury. 

with  peopIe-neoDle  in  T       u  '""'^^  ^'^'^'^  "^^^run 

oft  ^c^af^jj^irstr  ^r '''  — "- 

their  coming  there  anything  to  do  with 

A^:ZntraflS  etrn'-rn^'  '''''''  ''''  ''^ 
an  office  on  the  29th  of  June  """'^  °"'  "^  "'^  "^'^  »^ 

Mr.  Baldwin  further  testifies  as  t«  fh»  j 

layed  train  No.  4,  on  July  3  18^4  t.^^  T""^  ^"''"'^  **«- 
track  and  across  the  Ll  ,  !,  1  '  "*  ^^^^  '^^''^  «»  ^^e 
the  way  of  th^  t^  f 'nf  had 'tTl'  T  '"T  ""^  «* 
engine   and  get   in   front   of   ih.         ^  7°   ^'"'"'  *'^« 

back  and  moy,  them  back  Ind  T""  ""^  P"*  ''"'"' 
by    foot.    They    werf  Zl.l  ^"^'°^   '^^^^    f««t 

a  rock  at  them     ^'    ^^'^^^>^^^g,    and    one    man    thr«w 

he  was  at   thrdel^t  ^Z  "'"'T  '"'"""'•  '^'"'^^  ""at 

the  strikers  cttinuTdtoerpHL  d    'l''   '''   ""^   *^"* 
asked  how  he  knew  £yTel^  ^^T'^^'^'f'-    B««S 

that  there  was  a  crowd  The^e     He  4        ""'*"?  '***^ 

these  men,  and  they  were  constandy^f  T""'^    "'"^"S 

were  strikers -that  fu!,'^""^ '"^"'•"ing  him  that  they 

[745]  com;T;yluton  aVr   He"'^'^  ***  '""^  ^^"-^ 
with  them,  and  walkino-  ,.^1      lu        ^^^  constantly  taUdng 

bin.  and  U\ZTllZt^''''^^rT''''^ 
ascertained  that  they  were  s  rS  T  J  Z  "''  ^"^  ^'^ 
There  was  always  more  or  less  of  „  ^  "T^f  ""^'''  '"^• 
night  and  day.  With  referenrtnl  T""^  "*  ""'"  *^«^' 
that  was  there  late  i^  fi;!^.        ^^  character  of  the  crowd 

states  that  they  we"  striW^T  "'  *'/  '.*'  ''  "^"^y'  ^^^ 
were  there  to  prVt  he  "^p^Hy  oTtL  f"!,  "'**  *'»^>' 
and  take  care  of  if  „J  fk?    ^       ^^^  railroad  company, 

it  was  the  same  crewd  in  '■h'  "'^'  "■"""*'  ""  '^'  "'''' '^^ 
men.    The  ca"  of  tl»  '\^^''T^^''  ^^cep*  that  they  were 

pied  by  ^eCby  sSce"     slrr.?  ""^  "'^'"^  -- 

apparently  for  sLp^Huartr  t1  ""  "'-^^  '^"P'«^ 

on  the  tracks  in  the  yard  ^^  *^'"P'^  '="''«»«« 

Thomas  Compton,  one  of  the  mediation  committee  .t 


-aim 


512 


! 


i  t 


I 


I 


67   FEDEBAL   REPORTER,  745. 
Charge  to  the  Jurj'- 


Sacramento,  called  for  the  defense,  testified  that  they  "  had 
our  men  stationed  from  one  end  of  the  yards  to  another,  to 
see  that  the  men  did  not  get  excited  and  do  any  damage  to  the 
property,  and  re(] nested  other  men  who  came  in  on  trains  not 
to  go  out  any  more." 

C.  E.  Tjconard,  a  city  trustee  of  Sacramento  last  June, 
and  in  the  employ  of  the  railroad  company  before  the  strike, 
testifies  that  there  was  a  very  large  assemblage  of  people  at 
the  depot  of  the  railroad  company  on  the  3d  of  July. 

SAN   JOSE. 

The  following  testimony  relates  to  the  assembling  of 
crowds  at  San  Jose: 

Frank  Arnold,  a  railway  postal  clerk  on  the  route  from 
San  Francisco  to  San  Luis  Obispo,  testifying  as  to  the  crowd 
at  San  Jose,  says  on  direct  examination  that  there  were  sev- 
eral thousand  people  around  the  train  that  came  in  on  July 
5tb.  They  were  all  around  the  train, — inside  of  it,  on  the 
[>latform,  swarming  all  over  it.  On  cross-examination  he 
says  that  they  were  occupying  all  the  spaces  in  the  depot,  on 
the  railroad  car  platforms,  and  so  on. 

Another  of  the  means  alleged  in  the  indictment  to  promote, 
cany  out,  effect,  and  execute  the  conspiracy  is  (3)  "by 
threats,  intimidations,  personal  assaults,  and  other  force  and 
I'iolence,  to  prevent  the  engineers,  firemen,  conductors,  brake- 
men,  switchmen,  and  other  employes  of  said  Southern  Pacific 
Company  from  discharging  their  duties,  and  from  moving 
and  operating  the  said  engines,  cars,  trains,  and  railways." 

SACRAMENTO. 

The  following  testimony  relates  to  threats,  intimidations, 
and  acts  of  violence  at  Sacramento : 

Mr.  Baldwin,  speaking  of  the  strikers  at  the  Sacramento 
depot  on  July  3d,  testified  on  direct  examination  that  they 
were  threatening,  and  there  was  one  man  that  threw  a  rock 
at  them.  It  struck  the  cab  of  the  engine,  just  below  where 
Mr,  Clark  was  standing — ^between  Mr.  Clark  and  himself. 
He  further  testifies  that  there  were  crowds  around  the  sema- 
phore. The  crowd  was  demonstrative  at  this  time.  There 
were    men    threatening    them    as    they    took    the    engine 


UNITED   STATES   V,  CASSIDY.  513 

Charge  to  the  Jury. 

himLlf  to  th!  X'  that    inS  »-  P-t.cuIarly  addressing 
H.rd  expression,  of  l^  t^^^^r^^^  Zt'' 
Respecting  this  testimony  of  Mr  RalHwi^  n        ,        ^ 
fies  that  there  was  a  good  \:1  ^'.X:^?^^!  '^'" 
^l-oUenng."    But  he  did  not  hear  a"/ threat's  made  ^Z 
onhe  trT "V:":;''^^  rr  "^^  ^^  p'-ntt  Taking  o! 

thing  that  day,t"L?t'L;«Tr^S  '"  '*'  ^"^- 

While  it  is  to  be  observed  that  Mr   ji^ia    • 
employe  of  the  railroad  company  v^^th/r  """' ^""^  "" 
i^  significant  with  resnoct Tfh  ^'/         !  testimony,  if  true, 
rinrlr  fK.        •  P        °  *'*"  ^'^t^o^s  of  the  crowd  towards 

Claric  the  engineer,  and  the  others  on  the  engine 

Anthony  Green,  called  for  the  defense  tP«Hfi^^'  *i,  .  .. 
captain  of  police  of  tho  cifv    "  «  ®*^"^'  testified  that  he  was 
June  and  July  k<=t-  tZf\'        S«'Tamento,  and  was  such  in 

but  he  admits,  on  cro<=s-evamTnrf ;  ^'^'^  ^^i  «"*^  committed, 
cars  actually  sWed  b^™  Lt^o^^^^H^^  T  '"^ 

heard  the  crowd  yelling  at 'tht  X  werf„Thfclf.^ 
engine  that  was  being  moved  from  ti!!  i^   ^  "*  **** 

delayed  train  No  4-  tLtTu       ,      ^*  roundhouse  to  the 

"  Stand  by  one  ano^he;  ''  "  iS.?'    ^  ""^V^""'  *'^'"  <*"*'" 
the  places  of  those  men' who  ,'•''"'''"  "^°"''  ^^-- 

there;"  « Don'  you  7Z  H  .  "'•^^«'•^^'°g.•"  "Come  out  of 
engin;-  "I "Leal  L  v  '"^'"^  °"*'"  "^"'^'t  ^re  that 

there;'' «Don?L  out  /  T  "  T"'"  "^"^^  ^^^^  o"t  of 
ing  t;  themTthTtt^~stX  St^^^r'^^^'^PP-'- 
-mings  and  nights;  Z  '^.  tdt  t^  oT^'  '^''^ 

RED  BLUFF. 


Ill 


514 


67   FEDERAL   REPORTER,    746. 


Cbarge  to  the  Jury. 

Pacific  Company  at  Red  Bluff,  testified  that  he  was  not  at 
libeiiy  to  go  on  the  engine.  Ho  was  told  to  keep  away  from 
the  engine  and  let  it  alone.  A  brakeman  by  the  name  of 
Harper  and  two  or  three  other  men  told  him  that.  He  does 
not  know  them.  He  thinks  Harper  was  on  strike.  He  was 
out  with  them.  This  occurred,  according  to  the  witness' 
testimony,  on  July  1, 1894.  The  same  witness  further  states, 
after  describing  how  engine  No.  1248  was  killed  by  Van 
Devinter,  Richard  Roe,  and  Harper,  that  he  had  a  conversa- 
tion with  Van  Devinter  about  the  matter.  He  told  him  he 
was  doing  very  wrong,  and  Van  Devinter  said  he  did  not 
think  it  was  any  of  his  danmed  business  what  he  was  doing. 
They  told  him  if  he  did  not  get  out  of  the  roundhouse  they 
iifould  have  him  carried  out  on  a  board.  Harper  made  that 
remark.  Richard  Roe  and  Van  Devinter,  and  one  or  two 
others  he  did  not  know,  were  present.  This  was  at  the  time 
they  were  killing  engines. 

l«*«J  SOUTH  VALLEJO. 

The  following  testimony  relates  to  what  occurred' at  South 
Vallejo : 

Jeff  Gage,  passenger  conductor  for  the  Southern  Pacific 
Company,  runnmg  out  between  South  Vallejo  and  Santa 
Rosa,  whose  engine  was  killed,  testified  as  follows :    That  on 
the  12th  day  of  July  last  he  was  stopped  between  North  and 
South  Vallejo,  and  his  engine  killed.    This  was  near  7 :30  or 
7:35  in  the  morning.    It  could  not  have  been  far  from  that. 
H©  was  running  the  train,— conductor.    He  left  North  Val- 
lejo, and  between  North  and  South  Vallejo  he  found  an  en- 
gine on  the  main  line.    The  engine  was  called  a  "  killed  " 
engine, — ^no  steam  in  it.    As  they  pulled  up  near  that  engine, 
a  crowd  of  men  came  out  and  fixed  theirs  the  same  way. 
They  were  obliged  to  stop  by  this  "dead"  engine.    He 
thinks  he  must  have  been  very  near  on  time.    He  makes  con- 
nection, with  passenger  and  mail  cars,  with  a  boat  that  runs 
between  North  and  South  Vallejo  and  Vallejo  Junction.    At 
Vallejo  Junction  connection  is  made  with  the  San  Ramon 
passenger  train.    It  is  a  mail  train  that  runs  between  San 
Ramon  and  the  Oakland  pier.    He  asked  a  man  named 


UNITED   STATES   V.  CASSIDY. 


515 


Charge  to  the  Jury. 

Smith  to  let  him  couple  on  and  push  the  dead  engine  on  the 
sidmg,  so  that  he  could  get  the  train  down  to  the  df^t.    TWs 

Td^r  rV"  'V*'  "^^^  ""'  "«^  *'^«-  -<i«r  orders,  and 
had  to  obey  his  orders  to  stop  the  train  where  it  was.    Smith 

showed  h.m  a  card  with  his  (Smith's)  name  on  it,-an  A.  R 

William  James,  fireman  of  one  of  the  Alameda  local  trains 
^t^ed,  m  answer  to  the  question,  «  Did  you  have  a^  trouble 
at  tower  No.  2  that  day?"  as  foUows:  "The  train  wa^ 
stopped  by  a  mob  of  men,  and  I  was  taken  off  the  engine." 

e^l"  Th'*'''" *'^* •"""*  ''  "'  ^^ -- ^* -  f-"S"he 
3s  rt  '""^"^r^fl^^  ^'•'"'^  *^*y  g»^«  him  the  stop 
wSl  i  I  ,  'T  '^"  °*  '^""''  S**^"  «ign»k.-all  those  that 
Zl  I  i'  t  .^^  *=""'**  "«*  ^  ^^"^  they  were.  They 
took  him  through  the  crowd,  and  wanted  him  to  go  and  job 
the  A.  E  U.  They  took  him  half  way  to  the  roundhouse  ie 
would  judge  about  400  feet.  Engineer  Willard  came  ourind 
told  them  It  was  a  free  country,  and  he  would  go  where  he 
wanted  to,  and  with  that  they  let  go  of  him 

Many  witnesses  on  both  sides  have  testified  as  to  the  per 
sonal  assault  claimed  to  have  been  made  on  Mr.  Jame      The 

Z!m  fi  I  "'''  ^''^^^''''  ^^^  ^^^t""*  «*  the  case  is  suffi- 
ciently fixed  in  your  minds  to  enable  you  to  determine  the 
actoal  facts  of  the  case  without  any  extended  comments  frl 

waiw  *taLr"Vl'^°"''°°  *"  '^'  ^■"^'  ''^  adiou^ent 

When  the  court  adjourned  last  evening,  I  was  directing 

spired  to  be  used  m  carrying  out  the  conspiracy.  First  I 
called  your  attention  to  the  testimony  tending  to  show  or  to 
approve,  that  the  con-  [748]  spirato^forcibty^faldC 
possession  and  control  of  all  yards,  depots,  tracks,  and  traS 

tamed  the  same;  second,  that  they  caused  to  be  a.ssembled 


516 


67   FEDEEAL  KEPORTER,  748. 


f' 


Charge  to  tlie  Jury, 
aod  assembled  with,  large  crowds  of  persons  in  said  depots 
and  yards  of  said  Southern  Pacific  Company  at  various 
pomts  and  places  on  said  lines  of  railway  in  said  state  and 
Northern  district  of  California,  and  by  gathering  in  great 
numbers  in  said  yards,  and  depots,  to  wit,    *    *    *    and 
other  places,  around,  in,  and  upon  the  trains,  cars,  engines  of 
the  Soutliern  Pacific  Company,  and  upon  the  tracks  of  said 
railways,  preventing  the  movement  and  passage  of  said  en- 
gines, cars,  and  trains;  third,  that  by  threats,  intimidations, 
personal  assaults,  and  other  force  and  violence,  they  prevented 
the  engineers,  firemen,  conductors,  brakemen,  switchmen,  and 
other  employes  of  said  Southern  Pacific  Company  from  dis- 
charging  their  duties,  and  from  moving  and  operating  the 
said  engines,  cars,  trains,  and  railways.    I  will  now  proceed 
to  direct  your  attention  to  the  testimony  tending  to  show  other 
means  conspired  to  be  used  in  carryuig  out  the  conspiracy. 

Another  of  the  means  alleged  in  the  indictment  to  pro- 
mote, carry  out,  effect,  and  execute  the  conspiracy  is  (4) 
"by  forcibly  disconnecting  air  brakes  upon  such  trains  — 
mail,  passenger,  and  freight."  ' 

RED  BLUFF. 

The  following  relates  to  what  occurred  at  Red  Bluff: 
William  H.  Jones,  agent  and  train  master  of  the  South- 
ern Pacific  Company  at  Red  Bluff,  testified  on  direct  ex- 
amination that  the  Oregon  express  reached  Red  Bluff  about 
4:30  or  4:35  in  the  morning  of  July  1st  last;  that  it  comes 
from  San  Francisco,~Oakland.    Portland,  Or.,  is  its  des- 
tination.   She  was  on  her  regular  trip.    She  was  stopped 
at  Red  Bluff.    The  train  was  cut  in  two.    The  train  came 
into  the  station,  and  they  cut  it  in  two;  that  is,  they  un- 
coupled  it  and  uncoupled  the  hose.    He  was  just  passing 
there.    He  did  not  see  the  man  who  did  it.    There  was  a 
mob  of  men  there.    He  elbowed  his  way  through  the  crowd 
As  he  passed,  he  heard  the  air  holes  pump  as  they  do  when 
they  are  open.    The  air  was  cut  behind  the  mail  car     The 
local  care  followed  first,  then  the  baggage  car,  the  express 
car,  smoker,  coaches,  and  Pullman.    That  is  the  way  the 
tram  is  made  up.    They  aU  follow  the  mail  car     They 


i 


.. 


UNITED  STATES  V.  CASSIDY.  517 

Charge  to  the  Jury, 
were  all  in  the  rear  of  the  part  cut  oflf.    The  effect  of  that 
cut  was  to  stop  the  movement  of  the  train.    That  was  about 
o :  dO,  a  few  minutes  after  they  arrived. 

Without  repeating  the  testimony  given  by  the  defense, 
It  IS  sufficient  to  say  that  the  witnesses  on  their  behalf,  with 
reference  to  the  Red  Bluff  occurrences,  deny  having  had  any- 
thing to  do  with  the  stoppage  of  the  Portland  express. 

SOtTTH  VALLEJO. 

VaTlt  v"""'''"^  testimony  relates  to  what  occurred  at  South 

Michael  Keefe,  yard  engineer  of  the  Southern  Pacific 
Company  at  South  Vallejo,  testifying  as  to  what  occurred 
to  his  engine  on  [749]  July  10th,  says  that  they  hauled  the 

fr'i  !  ^^^'  °^*  "^  ^^^  ^^^''^  ^li"t  the  engine  down, 
kt  the  water  out  of  the  tank,  and  discomiected  the  hose. 
They  ran  the  engine  off  the  open  switch.  The  testimony  of 
this  witness  respecting  what  occurred  to  engine  1,190  on 
the  following  day  has  already  been  referred  to  under  a 
previous  head. 

Another  of  the  means  aUeged  in  the  indictment  to  pro- 
mote, carry  out,  effect,  and  execute  the  conspiracy  is  (5) 
^b^juttmg  out  the  fires  in  the  engines,  and  drawing  S 

SOUTH   VALLEJO. 

soufh  vt;l^:;""  ^^'""-^^  '^'^"^  "^  -^^^^  — «» at 

Jeff  Gage,  passenger  conductor  for  the  Southern  Pacific 
Company,  running  between  South  Vallejo  and  Sa^ta  Rol 

Tn  jXfS  "1,?f  •t"""  ^""•^'^  --^  South  ValS 
on  July  12th,  called  for  the  United  States,  testified  with 
reference  to  putting  out  the  fires  on  his  engine,  as  fol W 

Jorth'andS    ?k''^  n'."'"'^  '*^*  ""'  ^^  Wped  betwin 
UA  »nd  South  Vallejo,  and  his  engine  killed      Thev 

firet  in  the  tank  valve,  and  started  to  pull  the  fire  out  He 
asked  them  to  turn  the  water  back  first,  and  then  ^uil  the 
fire  on  the  engine,  which  they  did.    He  asked  them  to  do 


518 


67  FEDEBAL  BEPOBTEB,   749. 


Charge  to  the  Jury. 
tl«t  to  keep  from  burning  the  engine.    The  effect  of  let- 
ting Ae  water  out  of  the  engine  with  the  fire  in  it,  he  thinks 
would  be  apt  to  bum  the  bricks  considerable.  ' 

WEST  OAKLAND. 

^e^following  testimony  relates  to  what  occurred  at  West 

n  w^"j".*"'F?**''  foreman  of  the  railroad  shops  at  West 
a^f  2  ^"i  '^'  "  °"™^^  "*  '^-Sines  werf  killed^ 

Zrt  „^T  1    t  '^''^'"  *^'  ^'""''  P*"-*  °*  J""^  *"d  early 
part  of  July  last.    He  could  not  give  the  numbers.    There 

were  8  or  10  engines  with  fire  in  them,  and  the  fire  was 

ft,irl"f       "I;  tf  ""  .*''*  ^"8i"^  ^^'^  """Ptied  that  were 
fiilJ,  that  IS,  all  the  engines  that  were  about  the  place  were 

bTt  stir ^'-"''*^^ ''''  ^"*  "^  *'^«'"-  "^^  -^  <'- 

Another  of  the  means  alleged  in  the  indictment  to  pro- 
mote  carry  out,  effect,  and  execute  the  conspiracy  is  (6) 

by  throwing  switches,  in  order  to  prevent  the  passage  of 
such  trams  through  depots  and  stations." 

BED   BLUFF. 

RlIJ*'  5!'"^;"^  testimony  relates  to  occurrences  at  Red 
Bluff  with  reference  to  delayed  train  No.  15  on  July  3d  last: 

„f  «w  IT  .  n '*'^''*  *'  *°  *''^  ^'^^^'"S  ''"d  spiking 

of  switches  as  follows:  That,  after  the  Portland  expreJ 

which  anved  at^Red  Bluff  on  July  1st  stood  there  a  while. 

the  engineer  said  he  wanted  coal,  and  Mr.  Day,  the  foreman 

at   he  roundhouse,  and  the  witness,  took  the  engine  and  the 

ma  1  car,  as  it  was  coupled  on,-two  mail  cars,-there  was  a 

freight  car  which  they  said  contained  mail.     [760]  It  was 

with  ^e  mail  car.    It  had  United  States  mail  locks  on  it. 

He  did  not  see  the  inside  of  it.   Mr.  Monteith:  "We  will 

,wl  V\'  ^"^  """•"  '^'  '^'t^^^'  continuing,  stated 
that  they  took  it  to  the  coal  pile  to  give  the  engine  coal. 
They  passed  over  one  of  the  switches  in  the  yard,  Ind  while 
they  were  gone  the  switch  was  thrown  and  spiked  to  the 
side  track  so  that  when  the  train  backed  down  it  could  not 
back  to  the  balance  of  the  train.  It  was  forced  to  go  to 
the  siding.    The  switch  was  opened.    It  was  thrown  off  the 


UNITED  STATES  V.  CA6SIDY. 


519 


ii 


4' 


Charge  to  the  Jury, 
main  track  to  the  siding,  and  spikes  driven  to  hold  it  there, 
and  the  switeh  blocked.  They  could  not  have  passed  ove^ 
It  If  It  had  been  spiked.  It  was  a  switch  in  which  the  car 
could  not  go  off  the  track.  They  could  not  have  gone  over 
It.  It  was  not  the  case.  The  target  was  in  its  proper  pla«, 
and  position    No  orders  were  given  by  the  railroad  company 

Such  1  r  "  "^^^  "*  *'  '''''^^  "'•  '«^g  the  swUch"^ 
Such  orders  would  come  through  him 

fipf  tr'f/'  ^'"^^*^<1«'-.  c^'Ued  for  the  United  States,  testi- 
fies that  he  saw  Hehorn,  Shade,  Bay,  and  othei^  spiking  a 
switch  on  July  1,  1894.  f    "•*,  ■ 

thnTh!^"  ^^'If  *■'  ''•'*'.*  ''^*"'''  **''■  th«  go^ermnent,  testified 
can  identify  as  having  participated  in  the  spiking  is  Hehorn 

thaJhe":.  V''*J.""f  '"••  ^'^^  United  States,  teSfi^' 
that  he  saw  the  spiking  of  the  switch.  He  identifies  Hehorn 
as  the  person  who  held  spikes  in  his  hand;  Shade  is  the 
man  who  drove  in  the  spikes;  and  that  Ray  was  in  the 
crowd  with  them.  ^ 

John  Kelly,  a  witness  called  for  the  United  Stntes  also 
testifies  as  to  the  spiking  of  the  switch.  He  states  thatiS 
was  a  member  of  the  American  Railway  Union ;  th.H  he  wa^ 
a  fireman  for  the  Southern  Pacific  Companv;  hat  he  w!^ 
out  on  strike    t  Red  Bluff;  that  he  did  Jobe^aut  be  wa" 

Tohn  ^V.  ".       "■  "V"'"?"  ^''^^"^y  Union.    He  identifies 
John  Shade  as  just  in  the  act,  when  he  saw  him,  of  leaving 

with  a  spike-hammer  and  a  couple  of  spikes  in  his  hands 

Ihis  switch,  he  states,  connected  with  the  main  line     There 

were  30  or  40  men  around  there  at  that  time.    He  gives  the 

S'ofl"'*'"!'  ^'""^  '''''^''  "^'^  ^'^  i"  tJ»«  neighbor! 

and  Clodtfelder     He  states  that  Roller  locked  the  switch 

t„  tL  I  f  T.!"*-  ^'  ^  *'*"  '■"'«*^*'"  these  persons  bore 
1^  rt'!^:  '''*"'''  '""^^'^  that  Roller  was  a  brake- 
man^  and  that  he  was  on  strike  at  that  time.    H,.  was  an 

AK  U.man.  Ives  was  a  car  foreman  up  there.  He  was 
llso  on  strike  and  an  A.  R.  U.  member.  Clodtfelder  and 
Shepler  were  on  strike  at  that  time.  They  are  members  of 
me  A.  K.  U.  Knows  a  man  named  Demmick.  Knows  a 
man  named  Harper.    He  (Harper)  was  there  that  morning. 


• 


, 


M 


I 


w 


520 


67  FEDBBAL  BEPOBTEB,   760. 


Charge  to  the  Jury. 

f^ ir^^r^'*^"''  "'*'  *  '"''""'*'•  "'  *«  ^'K-  U.,  and  out 
Lit    ^-- r-- -»«i  Heaney.    He  did  not  «« 

T^e  pem>ns  referred  to  by  the  witnesses  for  the  prosecu- 
c«t  on  as  having  participated  in  the  spiking  of  the  switch, 
which  prevented  the  engine  and  mail  car  of  the  Portland 
express  from  getting  back  to  the  passenger  and  Pullman 
nS  7'  '"r,^«=tly  ^P^alring,  those  [751]  who  have 
t^ed  deny  that  they  have  been  guilty  of  the  acts  charged. 

SOUTH  VAI.LEJO. 

Valk  V*'"'*'''"^  testimony  relates  to  what  occurred  at  South 
Michael  Keefe  yard  engineer  of  the  Southern  Pacific  Ctom- 

Z'on  T  rU''^^'^"""^  '"'  ''''  government,  testified 
ttat  on  July  12th  last  he  was  making  up  a  passenger  train 
for  Calistoga  and  the  vicinity;  that  it  was  a  mail  trein,  and 
that  It  did  not  cany  any  Pullmans.  He  took  the  engine 
and  made  up  the  tram  with  it,  to  get  ready  to  go  out  again. 
He  was  going  to  the  roundhouse  with  the  engine.  He  saw 
a  gang  of  men  He  thought  that  he  would  get  to  the  shops 
before  they  took  the  engine  away  from  him.    The  switch  was 

1  l"""  K  !  fv  ^  *"**•  "^  ^""''^  ^^^  g«t  t»  the  shop,  he 
^nks,  but  th,s  man  closed  the  switch  on  him,  so  he  stopped. 
Had  he  gone  on  he  would  have  run  off  the  track.  It  was  an 
open  switch  The  crowd  remained  there.  The  engine  was 
killed  after  that,  and  was  there  a  day  or  two. 

Another  of  the  means  alleged  in  the  indictment  to  pro- 
mote, carry  out,  effect,  and  execute  the  conspiracy  is  (7)  «  bv 
opening  drawbridges  over  navigable  and  other  sireams,  upon 
which  drawbridges  the  tracks  of  said  railways  were  situated." 

8ACKAMKNlt>. 

Sa^m/nti*^'''"^  testimony   relates   to   what  occurred   at 

*K?'«^:.."*''°i^^^-^'");  "  ""^^'"  mechanic  in  the  employ  of' 
the  Southern  Pacific  Company  at  Sacramento,  called  for  the 


UNITED  STATES  V.  CASSIDY.  521 

Charge  to  the  Jury. 
United  States,  testified  that  he  experienced  some  difficulty, 
on  June  29th,  in  attempting  to  get  train  No.  4,  which  is  a 
mail  train,  and  came  from  Ogden,  out  of  Sacramento,-in 
attempting  to  get  her  through.  He  testifies  that  he  was  re- 
quested by  h.s  superintendent,  Mr.  Wright,  to  back  up  the 
^gme  and  mail  car  ahd  express  car,-he  thinks  it  was  cou- 
pled to  the  eng.ne,-to  couple  on  to  the  balance  of  the  train 

Se  dfd"      l.;^ -^  ir  ^^'■''  ^"'^  P""  ''  ^-^-  the  dS^t 
SL  .u^'^""  P""'"^  *•*"  *■•«'"  <^«^^"  '«  the  depot,  some- 

thing was  thrown  at  him  while  he  was  on  the  engine.    After 

he  saw  what  it  was,-it  proved  to  be  a  monkey  wrench,-he 
got  the  tram  down  to  about  its  usual  stopping  place  and 
stopped  there  After  considerable  persuasion  ht  got  the  en 
gineer  and  a  fireman  on  the  engine,  and  got  the  train  started. 
Ihe  tram  had  not  moved  a  great  ways-about  50  yard^ 
t!.  1!  ^^^^bridge  was  swung  open,  and  the  train  had 
riv.r  '^T J  '  "  *^'  drawbridge  across  the  Sacramento 
JfK    K    7^  ""f  "**  ^'''''  '"  ''«ht  to  occasion  (he  openin.. 

11  ti"t  "^^  ?. w  *^P^"''  °"'y  *°^  the  purpose  of  stop"! 
ping  the  tram  at  that  tune.  There  was  quite  a  crowd  run- 
nmg  down  by  the  drawbridge  just  prior  to  the  time  it  was 
Opened. 

Mr.  Knox  gives  the  following  version  of  what  transpiml 
respecting  the  opening  of  the  drawbridge:    He  savs  that  on 

m  about  6  o  clock,-somewhere  around  there.     She  came  in 

wi r^T'  r"'  ^^-  ^'^'1  ^''^«'  --^  -P--  -  h: 

went  to  Mr.  Saulpaugh,-he  was  the  engineer  that  was  going 
out  on  that^tra,n,-and  asked  him  if  he  was  going  to  do  anv 

^Iti?  "';  f  f'^-'he-asnot;  they  wo^uld  have  to 
get  some  one  else  to  do  their  switching.  Mr.  Wright  came 
down  there  when  they  were  talking,  and  asked  Wm  iT  he 
would  back  up  to  Sixth  or  Seventh  street,  he  believes  he 
said,  and  get  the  balance  of  the  train.    Mr.  SaulpZh  sut 

Ml  Hemtzelman  to  do  that.  They  sent  for  Mr.  Clark.  The 
witness  here  stated  that  before  this  strike  was  ordered  it  wa! 
an  understood  thing  with  Mr.  Wright  and  the  commiZ 
^at  they  should  do  all  in  their  power  to  prevent  any  dama^ 
being  done.    On  his  (Wright's)  side  he  was  to  iveThem 


i 


I!, 


522 


67  FEDERAL  BEPOBTEB,  752. 


Charge  to  the  Jury. 

Z^^ITk''^^  *"  *^*  *"*''^'  ''"^°«*'^>  conductors,  Rre- 
S^v'^J  .r       '^A,""*^  ^  "  ^'^^y  «'"1"^  ind"'^  them  to 

S!.LT  .  St-  .•^*°  ^'-  ^'''^  «""«  «^er  they  had  the 
nght  to  talk  to  h,m  to  see  if  they  could  induce  iL  not  to 

back  up  to  get  the  cars.    After  they  talked  with  him  a  while 

he  turned  around  and  said  he  did  not  want  any  of  this  in  it 

They  simply  asked  him  if  he  wanted  to  scab  on  his  own  «,n 

His  son  was  working  there.    He  said  he  did  not  want  to 

away.  Heintzelman  came,  after  some  time,  got  up  on  the 
engme,  and  the  first  thing  Knox  saw  was  a  monkey  ™h 
coming  out  of  the  engine,  which  pretty  nearly  hit  him.  They 
^cked  up.    While  they  were  up  there,  he,  with  the  balani 

^W  rh""?"^  f '7u"*  '^"""S'*  ^^^  ^•'^P^'  to  notify  the  men 
that  the  strdce  had  been  decided  on.    mile  they  were  going 

Zr*t  t    u^l "  ™""  """^  *°*  °^«'-  «fter  them  to  tell  them 

i  if^Lv"''  u^.'"''  °P'"'  """^  *"  ^'^  '^'"^  to  come  and 
see  If  they  could  not  get  it  closed.    He  ran  over  there,  and 

Td  Mrrr  7*  'V  '^''*  *°  '^'^  *^«  bridge,-Mr.  Hatch 
S  fu'  """^  *'"'  *"^  *•*"*«  ™ore.    They  closed  the 

Sf'  ""  ^*  ^ent  back  and  told  Mr.  Saulpaugh  that  the 
bridge  was  closed.  After  the  bridge  was  closed,  he  told  Mr. 
Hatch  to  go  up  to  Mr.  Wright's  office  and  get  a  lock,-a  Yale 
iocfc,-and  put  It  on  there,  so  that  the  bridge  could  not  be 
opened  Mr.  Hatch  went  and  got  the  lock  and  locked  it  on 
the  bridge,  so  that  they  couldn't  open  it. 

*.?K*'J  »****  """*  •^^^^"''^  corroborated  Knox  with  respect 

I^^  w  .  ri    "v*""'"*  *^"*  ^^  ^"*  t^*""  to  close  the  bridge, 

fnif"      '/^  '"'  f '  '^  *"  ^'^^  '^"^  P'^'^'^  «t  Knox's 
instance,  and  being  placed  by  Hatch  on  the  bridge 

Another  of  the  means  alleged  in  the  indictment  to  pro- 
mote  carry  out,  effect,  and  execute  the  conspiracy  is  (8) 

by  burning  and  destroying  bridges,  trestles,  culverts,  over 
which  such  trains  necessarily  and  usually  would  pass." 

TRESTLE  NO.  2,  NEAR  SACRABIENTO. 

The  foUowing  testimony  relates  to  the  wreck  of  train  No 
4  at  trestle  No.  2,  near  Sacramento : 

Jfr.  Baldwin  who  saw  the  wreck  of  the  delayed  train 
No.  4  at  trestle  No.  2  about  two  hours  after  it  occurred,  testi- 


" 


UNITED   STATES   V,  CASSIDY. 


523 


Charge  to  the  Jury. 

w!i*"'<r*!r;*  examination  that  the  baggage  and  mail  cars 
v^  off  the  track.    When  he  says  «  baggage,"  it  might  have 
been  express  cars  with  the  baggage.     [753]  One  maU  car 
was  badly  damaged;    also  a  baggage  car  badly  damaged; 
also  two  mail  cars  slightly  damaged.    These  cars  weifon 
the  side    smashed  over.     Some  of  them  had  reached  the 
water.    He  made  an  examination  of  the  trestle.    The  engine 
apparently  had  gone    probably  three  or    four  car  lenlths 
before  it  went  off  the  trestle.    The  trestle  is  about  300  or^ 
feet  in  lenght.    He  found  that  the  east  end  of  it,  especially 
the  north  side,  was  badly  smashed  in,  as  though  the  bridge 
had  been  weakened  and  smashed  do^vn;  the  bents  slivei^d  up, 
the  ties  all  broken  very  much  more  on  that  end  of  the  bridge 
than  further  along,  right  at  once  where  the  engine  struS 
the  bridge.    The  trestle  was  very  badly  crushed^n  on^^ 
east  side    towards  Sacramento,  immediately  where  it  joins 
the  track,  the  embankment,  two  or  three  car  lengths  from 
where  the  engine  lay  in  the  water.    Then  the  train  lay^U 
along  the  trestle  on  to  the  embankment.    The  trestle,  where 
It  joined  the  embankment,  was  very  badly  slivered;    there 
was  only  a  piece  of  about  six  or  eight  inches  where    he  ties 
were  solid  enough  to  walk  on.    The  trestle  was  all  crushS 
in  below  the  ties  at  that  corner.  trusnea 

The  testiniony  of  Mr.  Baldwin  tends  to  show  that  the 
trest  e  was  blown  up,  and  that  delayed  train  No  I  was 
wrecked     I  will  not  take  up  your  time  in  reading  tt  ^^i 

^o!  tW  1!!°"^  '''!f^^<^^  by  the  prosecution  tending  to 
show  that  the  trestle  was  blown  up  by  members  of  the 
American  Eailway  Union,  and  was  a  part  of  the  conspiracy 
to  obstruct  and  retard  the  mails,  and  restrain  interstate  com 
merce,  nor  such  testimony  as  has  been  put  in  by  the  Si  W 
contradictory  of  such  design,  or  as  to  the  participanLeT 
^ged  in  such  affair,  or  as  to  being  or  playing  any  part 
m  the  policy  or  plan  of  the  members  of  the  American  RdJ 

tT.?P  n""  '"  '"'■'■^'"^  ""  ^'^^  ^*"1^«  between  themselves  and 
the  Pullman  cars.    The  details  of  this  unfortonate  cates 
teophe,  as  told  by  the  witnesses  on  the  stand,  are  doubt  i 
fe.sh  in  your  minds.    The  testimony  tends  t^  show  Zt^ 
tram  was  made  up  m  Sacramento  on  July  11th  last  for  Oak 


* 


524 


67   FEDERAL  BEPORTEB,   753. 


Charge  to  the  Jury, 
land,  to  be  sent  by  the  way  of  DavisviUe.    It  left  Sacramento 

^3.)^°"*!!  r'*  ^?  "'''*^^'  ""*'«'•  *«rg«  of  Conductor 
Eeynolds,  with  Samuel  Clark  as  the  engii^eer  and  Danicamp 
for  fireman  On  the  train  was  postal  clerk  J.  A.  Brown 
in  charge  of  the  United  States  mail.  Lieut.  Skerrev  and 
LZt  ;"*  U""«^St«tes  soldiers  were  on  the  tZ  f^r 
te  protection  some  of  the  troops  being  on  the  engine.    The 

and  a  Pullman.  About  two  miles  west  of  Sacramento  in 
crossing  trestle  No.  2,  the  engine  and  four  of  the Trfwe^ 
thrown  from  the  track  into  the  slough.    Clark,  theTngirer 

terdlv  ,ff'-^?l'''  '''"'  r"*  ^'"'y  "*  '°"^''«'  i»  this  das- 
taidly  affair  belongs  to  the  state.    It  is  only  for  you  to  as- 

TZ^  ^,  "*J!  '^  ^""^'^  ***  *''«  *=°"^P'™'y  that  brought 
about  this  tumble  result,  that  you  may  determine  who  were 

r/rS  «?'''''  ""T"  "*^"*^  '"^°'^«d  in  the  stoppage  ol 
the  United  States  mails  and  interstate  commerce.  You  wUl 
recall  the  testimony  of  the  boy  Sherburn,  who  drove  The 
wagon  carrying  Worden  and  others  out  to  a  point  near  trestle 
No.  2  just  prior  to  the  time  [754]  the  wreck  occurred,  and 
ttie  testimony  of  Knoblauch,  Reed,  and  Winney  as  to  the 

iSsT"h  """^  '°""^'"^*  "'  '^'  P"^'^  "•'«'  the  testimony 
tends  to  show    were  sent  out  by  the  American  Railway 

Umon  a  ong  the  line  of  the  road,  and  for  a  purpose.    What 
was  that  purpose?    To  guard  the  road,  or  to\reck  th! 
train  ?    It  is  for  you  to  determine. 

Another  of  the  means  alleged  in  the  indictment  to  promote 
cany  out,  effect,  and  execute  the  conspiracy  is  (9)  «  byW 

^d^iZdT^'  "'  '"^'"'"^  ^'^  "'"^  •»'  «>«  t^  o' 

TRESTLE  NO.   2,   NEAR  SACRAMENTO. 

I.v^'\^"^*^v°'7^  *f '^""^  ^^*  •»«  ^"^  the  wreck  of  de- 
K.^""".  »;  *.^"'*^^  '^'  *^«  catastrophe,  testified  tha^ 
he  made  a  little  diagram  of  the  position  of  the  rails.  The 
north  rail  was  swung  over  across  the  south  rail.    It  appar- 


t 


UNITED   STATES    r.  CASSTDV. 


525 


Charge  to  the  Jurj'. 

ently  had  been  forced  over,  lifted  over.  He  found  there, 
right  at  the  joint  a  nut,  three  washers,  and  two  spikes  Thev 
were  loose.  "^ 

m 

RED  Ur.UFF. 

Bluff^  ^""""^'"^  '"^^  *'''"''^*'  ***  "*  ''"^'"^  occurred  at  Red 
Joseph  C.  Day,  roundhouse  foreman  for  the  Southern  Pa- 
cific Company  at  Red  Bluff,  testified  that  the  spikes  and  the 
bolts  were  pulled  out  of  a  rail  on  the  main  line.    This  was 
between  1  and  2  in  the  morning  of  Julv  1st  last.    He  went 
to  the  coal  bin,  just  a  little  ways  from  the  turntable,  to  see 
If  the  coal  bm  was  all  right,  and  there  were  four  men  ri-ht 
across  the  other  side  of  the  fence,  working  at  the  rail     Thev 
had  shovels  there.    Hewent  to  the  turntable,  and  stood  tliere 
talking  to  the  fireman,  when  the  four  men  came  down  with 
those  tools  m  their  hands.    They  came  right  from  the  direc- 
tion where  the  rail  was  tampered  with.    He  could  hear  them 
working  with  shovels,  scratching  away  dirt  and  covering  it 
up.    He  was  not  there  more  than  a  con,)le  of  minutes.  ^He 
went  back  to  the  roundhouse.    He  saw'  John  Shade,  John 
Salstrum   Robert  Lang,  and  George  Werhing  coming  from 
this  direction.    Mr.  Shade  had  a  claw  bar  in  his  hand!    Sal- 
strum  and  Lang  had  a  shovel  apiece.    He  did  not  see  any- 
thing m  Werhmg's  hands.    A  claw  bar  is  a  long  bar  made 
n  the  shape  of  a  claw,  for  drawing  spikes.    He  examined 
that  rail  an  hour  afterwards,  and  found  the  spikes  pulled 

T,  I?  ^"'^  ^.^'''*'  *'  ''"'ts  tal^en  from  the  fishplates 
and  left  lying  on  the  ground.    He  put  the  bolts  back  himself. 

J.  F.  Heaney,  called  for  the  defense,  who  was  at  Red  Bluff 
on  the  occasion  detailed  by  the  preceding  witness,  with  ref- 
tT'V,?  i  displacing  of  the  rail  states  that  he  may  know 
ZZ  f  i  Salstrum  Lang,  and  Werhing,  but  he  does  not 
Imow  them  by  name;  that  he  is  pretty  sure  that  they  did  not 

ttnTit"  Mm^thL^-  "  *'"  '"-'-^  *^»*  ''-'  '^'  -  ~- 
Another  of  the  means  alleged  in  the  indictment  to  promote 
carry  out    effect,  and  execute  the  conspiracy  is   (10)   "bv 
greasing  the  rails."  ^        ^     '       ' 


1 

I 


526 


[755] 


«7  FEDEKAL  BEPOBTEB,  755. 

Charge  to  the  Jury, 

BED  BLUFF. 


U.  testifies  on  direct  examination,  as  to  the  part  he  took  wi^ 

Ked  Bluff,  that  on  July  1st,  at  about  3  o'clock  in  the  morning 
he  was  about  four  miles  north  of  Red  Blui"  that  he  was 

Hill,  Clodtfelder,  and  Archie  Montanya;  that  Montanva  U 
a  member  of  the  A  Tt  TT  •  tk.f  i,  i"at  Juontanya  is 

»„„*    u    x^  :.       ^•'  *""*  '^^  ^«s  on  strike;  that  thev 

wen   about  four  miles  further  than  Red  Bluff,  aid  ^a«ed 
«ie  track,  coming  towards  Red  Bluff,  for  abou't  three'^ui 
This  was  done  with  engine  oil.    Both  rails  were  greased 
They  ,u J  rubbed  it  on.    ITiere  is  a  down-hill  ^adTfrom 
Red  Bluff,  going  north,  for  about  a  mile,  and  theffor  abS 

l^u^  7l.TV^"^,  ^r**  "»«  ™"^  fro""  the  roufd- 
2r'~^T  !  "  *"'.*'"''^''-  ^«y  ''»<^  oil  cans  from  the  en- 
gines and  buckets  with  which  to  carry  it.  They  ^t  throurf. 
g^asm^about  4  o'clock.   There  was S^t  any  ootft  ilteff 

The  witnesses  J.  C.  Shepler,  William  Sheehan,  and  J  B 
aW  Ir  *^"*  they  participated  in,  or  kno;  anything 

Another  of  the  means  aUeged  in  the  indictment  to  Dro 

niote,  carry  out  effect,  and  execute  the  conspira^  i^  m ) 

by  stopping  trains   upon   railway  crossing,   and   upon 

switches  and  by  forcibly  refusing  to  aUow  suS  trains  toT 

hauled  from  such  crossings  and  switches." 

SACRAMENTO. 

'nie  following  testimony  was  given  as  to  what  took  place 
at  Sacramento  with  reference  to  obstructing  one  ofJeS 
way  crossings;  ^  ®  "^^ 

C.  A.  Newton,  night  yardmaster  for  the  Southern  Pacific 
Company,  called  for  the  United  States,  testified  onTirS  ;;! 


UNITED  STATES   V.  CASSIDY. 


527 


Charge  to  the  Jury, 
amination  that  the  three  main  tracks  leading  into  the  Sacra 

rto^hrithl?T''r'trf  ;^"'°^  ^"^  'ngines  tmTe 
of  IV  ,      ?  ,  JuIy,-blocked  east,  west,  and  south.    One 

«So.?th."  r^;  '^"^  *^^  ^^«^t«^«   Division,  called 

«!«?.  T  i^^'l^  "^^  Sacramento  Division  called 
t^J  ■'  T ^1"  "^  *■*""  **»«  California  Pacific,  «  West  »- 
that  IS  called  the  "California  Pacific  Division.''  These 
tracks  lead  both  in  and  out.  The  roundhouse  S  situat^ 
north  of  the  depot.  There  are  several  tracks  leading  frlm 
he  roundhouse  to  the  main  track.  There  is  one  track^direS 
to  the  roundhouse  from  the  main  track,  that  one  can  go  to 
the  roundhouse  straight  from,  without  doing  any  switchU 

track,  and  there  are  several  switches  to  throw  to  get  to  the 

IT^^'^Z  ?T°f  *'^"  '^^•^'^^  --«  Mocked  befween  the 
1st  and  nth  of  July.  By  «  blocked  "  he  means  trains  and 
engines  were  on  the  tracks.  The  engines  wei^  dead  thej  h^d 
no  steam  in  them..  Some  of  the  t^ins  were  mad^  u^  aJd 
some  of  them,  that  were  coming  into  the  yard,  [JsJulat 

the  yard  was  ,n  such  a  condition  that  trains  could  not 
pass  through  the  Sacramento  depot  east  or  west.  SeLZl 
the  exact  condition  of  the  tracks  on  the  1st  of  July  l^t 

t?the  r  S!*  'T  ''''  ^"^  ""'^^  "°  the  crossing  kadLg 
o  the  roundhouse.  No.  4  engine,  just  about  to  enter  The  croi 
mg  to  go  to  the  roundhouse.    Then  there  was  an  engine  tl^t 
came  in  on  No.  69,  on  the  29th  of  June.    Both  pil^Tdml 
together  right  on  the  crossing.    That  blocked  the  mdn  tm^ 
to  the  roundhouse  and  another  track,  that  we  use.^^to  1^ 
freight  trains  up  and  down  on,  called  the  «  old  main  track '' 
erasing  Washington,  which  is  on  the  other  side  of  the  Xt 
n  Yolo  county,  the  coaches,  the  smoker,  and  the  mail  ^S 
the  baggage  car  stood  there  in  Washington.    One^f  ^e 
coaches  was  shoved  part  of  the  way  in  on  a  siding,  and  Se 

S^'thrwe't'"  n ""  '^'^:'  •*•  '^^'  '''^^'^  that  tral 
On  the  Western  Division  there  were  some  three  or  four 

^  part  o^  ^'^^■'"  *'?'"  *'"""  "'^  *^«  "''^^  track,  miZ 
up,  part  on  a  siding  and  part  on  the  main  track.  On  the 
Sacramento  Division  the  cars  were  sandwiched  in  ev^ 
way,-^ff  the  track  and  on  the  track,  coaches  among  sleepe^ 


528 


67  FEDEBAL  JIEPOETEB,   756. 


1 


I 


Charge  to  the  Jury. 

"mite  Ts'  "Ir'^f  "f  1"-    '^'^"^  """^^  ^l^^  "-kade 
com  jete.    As  night  master  he  has  control  of  the  movement 

of  all  trams  and  engines  in  the  Sacramento  yard. 

tion  anJ?».  ?*l    A*^  ''*"^  "*'*^'"^  *»  <^«  ^"h  this  obstruc- 
nanct  nor  was  in  any  way  responsible  for,  it. 

-^  .*'»  «"«ci,  ana  execute  the  conspiracy  is  (12)  "W 
compelling  the  employes  of  said  railroa^d  com;Ly lo'leaS 
their  trains,  shops  and  the  work  of  said  company  whikln 
the  performance  of  their  duties." 

OAKLAND. 

Ian?'  ^"""""'"^  *''*™°''^  ""'"*"'  *°  ''^^  'x^u^ed  at  Oak- 

OaklL"""i'i^"r^  'u '*'"'"'  *»*  *^«  '•'»"'-°«d  shops  at  West 
Oakland    called  for  the  United  State*  testified  on  d W 

Sr/rolc^"^"  '"  '^^  ^"''^  -re UeSted  from  S 
u»g  any  work.    He  cannot  name  any  of  the  parties  who  dm- 

"Xt  S  "^r^  rf  "^'  ""*  *^«y    '«<*  a  machiS 

Zwd  fhl^  '  •    ..  "  '""'P'"'  '"**  ^^'^y  ^«™  t«t«>  out  by  a 

crowd  that  came  ,n  there.    He  could  not  now  recognize  anv 

Sed  thattT«  "'  *'.'  T'-    '^'  ^^'  -*"-  f  uX  t^S" 

hal  to  wi^r  ^^"^  ?•""  '"  ^"''^  «"*  *»»«  ">«"  that  they 
had  to  work  there,-pushed  them  out  of  the  shops,-thev  took 

no  tl  *""/'•  '  *'"'•  '•'""^^  «"<^  *-«<l  them  out  S 
;;  ofT»r  "I  ^'"n"*'  •*"  ^'^•'"*'^  ""y  «»«»  ^ho  were  foi^ 
Cannot  iLr^'.f"  were  forcibly  prevented  from  workiSS 

He  .w  the  -«l"^'Sne^%ren'Zt:"Xt\r 
rounded  by  a  gang  that  wer«  forcing  him  out-telZ  Z, 
togetout^  They  put  their  hands  on\im.  twlgfoth" 
prsons  who  thus  prevented  the  men  in  the  shops  f^m  work 

should  judge  about  300  came  in,  and  so'it  was.    The^tere 


! 


UNITED   STATES    i.\  CASSTDV.  529 

Charge  to  the  Juiy. 
small  bodies  coming  in  frequently.    The.se  crowds  wei*  com- 
posed partly  of  strikers.-he  would  not  say  largely. 

RED  BLUFF. 

Blur  **'"*"^'"^  testimony  relates  to  what  occurred  at  Red 

tZZT"  ^'  '^'^""f'^gf  t  and  train  master  of  the  Southern 
f!!f  f  ^^  ?*"^.''*  ^'^^  ^^"*'  "'"■^d  for  the  United  States, 
testified  that  on  the  4th  of  July  he  did  not  remain  in  the  col 
tmued  occupancy  of  the  telegraph  .office  at  Red  Bluff  The 
telegraph  office  is  his  office.    It  is'under  his  char^     ut 

the  railroad  company.    Mr.  Clodtfelder  and  Mr.  Demmick 
took  possession  of  the  office,  and  ordered  him  and  his  opera 
U      t  A  Tu     ""l'  '*  ^  -^^  *»*  "*«  '"<'™ing  ot  the  4th  of  July 

cl(^  this  office,  and  we  want  you  to  get  out,"  and  they  locked 
It  up.    He  immediately  had  the  operator  cut  out  the  iustru 

Clodtfelder  are  operators,  and  have  run  both  stations.  Thev 
were  on  the  strike  at  the  time.  Before  the  strike  they  ^Z 
brakemen.  He  regained  possession  of  the  telegraph  offiS 
at  6  o'clock  ,n  the  evening.  They,  Clodtfelder  and  ^^ 
mick,  opened  it  for  their  own  use  at  about  1  o'd^k  He 
was  notified  that  he  could  come  back  to  the  office  Mr '  m" 
per,  another  brakeman,-a  striker,-also  a  leader  notified 
him  that  they  had  opened  the  office  for  their  own  benefit  or 

St'uXd"  "H'e^"'/'  "^t^  ^"^  ^^--^  -<*  ^  -thi^g  ;L 

disturbed.  He  did  so.  He  went  down  after  about  half  an 
hour.  Mr.  Demmick  and  Mr.  Clodtfelder,  Mr.  ShTpler  Mr 
Heaney  came  in  at  one  time.  Tho^  th;t  remained  Ihei* 
aU  the  time  were  Clodtfelder  and  Demmick.  They  used  tl^ 
office.    His  operator  was  telegraphing  for  them.    Th7lini 

office  tZ  ^)  J  ""  ^"  '*'"'*'  ^^^^  P^^i*"^  «f  the 
onTt  e^TftJrK^'^'''^''-    The  night  operator  comes 

Slf  paslo  ot  10  ^K  ^''^'""  °*  '^'  ''^^  ""^til  pn>bably 
half  past  9  or  10  of  the  evemng,  when  another  gang  came  in 

and  said  they  had  decided  to  close  the  office,  Z^Tl^ 

11808— VOL  1--06  M 34 


' 


r 


530 


67   FEDERAL   BEPOBTEB,   767. 


Charge  to  the  Jury, 
went.  The  other  gang  were  Frierson  and  RoUer.  Both 
were  brakemen.  They  were  on  strike.  He  thinks  there 
were  others  tiere  with  Frierson  and  Roller  at  that  time. 
There  were  about  17  there  after  the  station  train  had  left 
for  Sacramento,-about  15  or  17.    He  does  not  recollect  who 

They  ^,d:  "T^e  have  decided  to  close  your  office."  He 
f  ^t  ""!•  "''^"^  7-"' "'  They  could  not  give  any  reas";; 
at  fin,t.  They  went  out  and  consulted  together,  several  of 
them  outs.de  on  the  platform.  They  held  a  meeting.  They 
<an,e  back,  and  he  said,  "•  Have  you  decided  why  vou  are  go^ 
mg  to  close  me  up  ?  "  or  "  that  you  are  going  to  clc^^e  me  up  ?" 
Ihey  said,  ^  es.  we  are  going  to  close  you  up  for  the  same 
reason  that  you  were  closed  this  morning."  That  is  all  the 
reason  they  gave. 

(758J  J.  C.  Shepler,  called  for  the  defense,  admits  that  the 
telegraph  office  was  taken  possession  of  by  the  men  who 
were  out  on  stnke  that  day,  and  that  he  may  have  been  there 
while  It  was  m  the  exclusive  control  of  those  men,  but  he 
denies  that  he,  with  others,  put  Jones  out,  or  told  him  he 
had  to  get  out. 

Finally,  the  indictment  charges  that  it  was  sought  to  pro- 
mote, carry  out,  effect,  and  execute  the  conspiracy  "by 
using  all  such  other  forcible  means  as  to  them  should  seem 
«ped,ent  to  prevent   for  an  indefinite  period  the  use  of 

S'r^  «w     '^  ,'°'  '^^  transportation  of  the  mails  of  the 
united  states  and  interstate  commerce." 

KBD  BLUrF, 

The  following  testimony  relates  to  Red  Bluff: 

IflLLiai  HOOKS. 

John  Kelly,  previously  referred  to  as  one  who  went  out 
on  the  strike  at  Red  Bluff,  and  who  had  been  previously  em 
ployed   by   the   Southern   Pacific   Company   as  a   firemai; 
cUed  as  a  witness  for  the  government,  titified  on  7Zl 
examination  that  he  recollects  tmin    Kr.    ik  •        •  ; 

^  Bluff  about  half  past  ^Toftj  fsUa").'^  ThTt^ 
was  prevented  from  going  on.    The  bolts  were  taken  out  of 


UNITED   STATES    V.  CASSIDV. 


531 


Charge  to  the  Jury, 
the  Miller  hooks.    He  only  noticed  Will  Rav,  Richard  Roe 
(Joe  Hill)  engaged  in  doing  this,  and  he  was  there  himself 
He  noticed  what  they  were  doing.    These  men  whom  he  has 
mentioned  were  members  of  the  A.  R.  U.     They  were  amon.' 
the  strikers.     Th^y  took  the  bolts  out  of  the  Miller  hooks 
so  that  they  could  not  pull  the  train,  and  marked  them  aU.' 
and  put  them  in  a  sack. 

Joseph  B.  Hill,  the  person  referred  to  in  the  testinionv  of 
the  witness  Kelly,  just  quoted,  was  called  for  the  defense, 
and  stated  that  he  was  present  when  the  Portland  express 
came  in;  that  he  did  not  see  any  safety  chains  or  brake 
chains  taken  off,  nor  did  he  see  any  one  at  work  taking  off 
bolts  or  nuts  from  that  train.  He  states,  however,  that  all 
this  could  have  been  done  without  his  knowing  it;  that  there 
was  quite  a  crowd  around  the  station  at  the  time  the  train 
came  in.  He  states  that  he  did  not  see  Ray  there,  nor  Rich- 
ard  Koe. 

DUN8MUIB. 

The  following  testimony  relates  to  Duiismuir : 

EJECTED   FBOM    TEIJMBAPH   OFFICE.        . 

pi''Sr/5'?\?P*""*^"'^*"*  "*  *h«  Shasta  Division,  from 

Red  Bluff  to  Ashland,  Or.,  called  for  the  United  States  ter 

fied  as  to  his  being  dispossessed  from  the  telegraph  office  at  the 

ation  as  follows:  That  he  has  a  telegraph  office  at  the  sta 

ion  at  Dunsmuir;  that  on  the  4th  of  July,  from  10:30  until 

^^  ^i  ^''        "^^^  dispossessed.    After  detailing  how  a 

Tt     .f  f  n"'/'  ''"'^''"  ™^^^  '"*«  *he  office,  the  witnei 
Jates  that  Conductor  Seyler  was  the  man  who  did  the  talk- 
ng.     He  said :  "  We  are  in  here,  and  we  have  got  to  have 
this  office."    He  (witness^  sairl  •  «T  ri^^^v  e,  ^  ^  "<ive 

r^fsoi  A    iu-   ,,    V"""»ess;  said.     1  don  t  see  how  you  can 
[759]  do  this."    Seyler  replied:  «  We  have  got  to  have  it  » 

You  had  better  go  home.  It  seems  they  want  the  office, 
and  I  guess  they  are  going  to  have  it."  He  went  out.  Agler 
passed  out,  and  went  upstairs  to  the  resident  engin^r's 
office,  and  was  upstairs  there  25  or  30  minutes.    The  witness 

tZ  fT,^  *''■  '^*"  "'^'^  ^*^  *«"'  »»**  ^J^^ther  those  per- 
sons had  been  in  the  employ  of  the  railroad  company,  ^o 


m   FEDERAL   KEPOBTER,  751). 

Oliarge  to  tbe  Jury, 
the  question,  «  Q.  Were  these  men  who  came  into  your  office 
at  that  time  then  in  the  employ  of  the  Southern  Pacific  Com- 
pany ?    he  answers,  "A.  No,  sir;  they  were  not.    Q.  Of  what 
class  was  the  crowd  made  up?    A.  Employes;  train  men, 
car  men,  machmists  of  all  the  different  departments.    There 
was  a  large  crowd  of  them.    A  Juror :  Q.  Men  who  had  been 
m  the  employ  of  the  company?    A.  Yes,  sir.    Q.  Thev  were 
not  at  that  time?    A.  No,  sir."    The  witness  furthe/ states 
that  after  going  upstairs  he  saw  these  people  get  the  engine 
No.  1762  out  of  the  roundhouse,  which  pulled  the  irregular 
train  out  of  Dunsmuir.    At  12:15  he  was  notified  bv  them 
that  they  were  ready  to  turn  the  office  back  to  him.    He  there- 
upon  went  to*  the  office.    At  12 :  20  they  pulled  out. 

DUNSMUIR. 

The  following  testimony  also  relates  what  took  place  at 
Dunsmuir : 

IBBEGULAB   TEAIN   FROM    DUNSMUIB    TO    SAt'KAMKNTO. 

The  same  witness  ( Agler)  testifies  as  to  this  irregular  train 
substantiaUyas  follows:   That  on  the  4th  of  July  a  train 
went  from  Dunsmuir  to  Sacramento.    Did  not  know  who 
ordered  it  out.    Saw  the  engine  getting  out.    Saw  the  train 
made  up.    It  was  not  a  regular  train.    Had  an  engine  and 
two  cars.    The  instructions  from  the  railroad  officials  con- 
cerning the  movement  of  trains  came  to  no  other  person  than 
himself.    He  states  that  he  received  no  instructions  from  his 
superiors  in  the  Southern  Pacific  Company  concerning  the 
movement  of  this  train.    The  train  went  without  his  au- 
thority.   Witness  knew  a  good  many  men  that  went  on  that 
train.    Some  45  left  Dunsmuir  on  it.    He  saw  one  Seyler 
Littlefield,  Walthers,  Roberts,  Price,  Parrish.    These  men 
had  been  employes  of  the  railroad  company  up  to  the  28th  of 
June.     H.  L.  Walthers  was  running  the  engine.    Conductor 
Seyler  seemed  to  be  in  charge  of  her.    He  noticed  guns  in 
the  car.    He  had  a  conversation  with  Seyler  just  before  the 
train  pulled  out.    He  explained  to  him  that  the  coach  and 
engine  that  was  carrying  Mrs.  Stanford  from  Eed  Bluff  to 
Dunsmuir  had  the  right  of  way,  and  that  he  did  not  want 


'■■ 


i 


VNITED  STATES   V.  CASSIDY. 


533 


Charge  to  the  Jury, 
him  to  leave  there  with  a  train  that  he  had  no  right  to     Sev- 
er ^ephed,  "We  have  received  a  message  from  Sacramen'to 
and  must  go  there,  and  are  going."    Then  they  pulled  out 

In  this  connection  it  might  be  well  to  refer  to  the  followinir 
telegram,  Exhibit  No.  687,  which  reads :  ro"owmg 

cavai^J-^rueuTd  mTutLen  ™*  ComewSS"' h^'"  =   <>?«  ^oasand 
without  ordei-s,  at  once     H  AKnox."  "^^'^  """*  "^  *™'°- 

saSv'lhlf  Iv'  ""'^1  "'"'  *'"'  '^'*«™"'  '-^  'l^ted  on  the 
Dmisrauir  "''"^^  '"  "'^'""^  "*  Walthers  left 

Walthers,  who  was  called  for  the  defense,  admits  that  on 
the  morning  of  July  4th  a  message  arrived  in  Dunsmuir,  pur- 
porting to  have  come  from  Mr.  Knox  at  Sacramento  ask- 
ing the  men  to  come  down,_asking  their  assistance.-to  come 
to  Sacramento.     Walthers  testified  as  follows: 

n:e7a'„TerplS^"TnSal"andr.vPT°,*-  '^^'^^^  ""^  ""t^"'-'^. 
going.    The/anraidthrwouir^*aud?wSM!f„*^','"  '"*""*"'"  "' 
there,  prepared  an  engine  and  to^i,   m«t  fS      *.'"  "  *""•'''  *"«°t  ^"^^ 
we  were  gbing  to  Sacramento   T,^^;m  t^.  !  ?""  "S*"*-  «''<'  to'^  htm 
a*ed  hln^  to|o  wU^uToT  whetheTh'e%r  tt *Son7'"  """'''«'•  "" 
He  states  that  they  had  a  number  of  guns  on  the  train,- 
perhaps  35.     He  states  that  the  train  was  running  without 
any  oi-ders  at  all.    The.^  wex-e  no  orders  from  the  companyTo 
run  the  tm„.     He  further  states  that  he  does  not  think  Mr 
Agler  could  have  stopped  his  train. 

M.  C.  Roberts^  who  was  the  secretary  of  the  -Werican  Rail- 
way Union  at  Dunsmuir,  of  which  Walthers  was  president, 
testifies  to  substantially  the  same  facts  as  Walthers 

^ou  will  also  recall  that  there  is  testimony  with  i-eferenoe 
to  an  irregular  tram  from  Truokee  to  Sacramento,  which  ar- 
med at  the  latter  place  about  July  4th;  and  an;ther  from 
i^athrop  to  bacramento,  on  the  night  of  July  10th.     You  will 
observe  that,  so  far,  I  have  not  alluded  to  the  testimony  tend- 
ing to  Hhow  acts  committed  by  the  defendants  at  Palo  Alto 
on  the  6th  of  July  although  the  indictment  brings  that  place 
within  the  range  of  such  testimony  as  I  have  referml  to  tend- 
ing to  show  the  means  to  be  employed  in  carrying  out  the  con- 
spiracy.   I  have,  however,  deferred  referenceto  this  tesitmonv 
until  we  reach  the  consideration  of  the  overt  acts  charged 


534 


fl  FEDERAL   REPORTER,   760. 


Charge  to  the  Jury, 
to  have  lieeii  coniniitted  by  the  defendants,  wlien  such  testi- 
mony niay  then  l)e  considered  in  the  double  aspect,  namely, 
as  tendini?  to  show,  not  only  the  overt  acts  required  to  be 
established  by  the  statute,  but  also  as  tending  to  show  the 
means  whereby  the  conspiracy  was  to  be  carried  out. 

T  have  now  directed  your  attention  to  the  testimony  which 
it  is  claimed  by  the  prosecution  tends  to  establish  the  means 
whereby  the  conspiracy  was  to  be  promoted,  carried  out, 
f  ffected,  and  executed ;  that  is  to  say.  it  is  claimed  that  such 
means  were,  in  fact,  used,  and  were  part  and  parcel  of  the 
conspiracy:  that  the  acts  concerning  which  testimony  has 
been  given  were  unlawful  acts,  which  entered  into  and  became 
part  of  the  crime  of  coiuspiracy  to  prevent  the  use  of  the 
Southern  Pacific  Railways  in  this  district  for  the  transporta- 
tion of  tlie  United  States  mails  and  intei-state  conunerce.     I 
liave,  however,  not  attempted  to  exhaust  the  testimony  pre- 
si'uted  for  the  pi-osecution  and  defense,  nor  are  you  to  con- 
chide  or  assume  that,  in  your  delil>erations  upon  these  mat- 
ters, you  are  confined  to  the  testimony  referred  to  by  me.     T 
have  merely  attempted  to  classify  the  general  features  in 
such  a  way  that  you  may  l)e  able  to  apply  the  law,  as  I  shall 
give  it  to  you,  to  the  facts  as  you  may  find  them.     It  is  for 
you  to  determine  beyond  a  reasonable  doubt,  not  alone  from 
the  testimony  T  [761]  have  alluded  to,  but  from  any  and 
all  parts  of  the  evident'e,  whether  any  one  or  more  of  such 
JU!ts  as  have  l)een  referred  to  was  or  were,  in  fact,  connnitted; 
and,  if  you  should  so  detennine,  whether  any  one  or  more 
of  them  was  or  were  the  means  conspired  to  lie  used  to  ])ro- 
mote,  carry  out,  effect,  and  execute  the  object  of  the  con- 
spiracy, as  charged  in  the  indictment.     For,  after  all,  the 
i-eal    question    is    not    whether    these    acts    were,    in    fact, 
committed,  but  whether  thest-  acts,  or  some  of  them,  was 
or  were  the  means  to  l)e  used  to  carry  out  the  conspiracy. 
You  will  observe  that  it  is  not  necessary,  to  establish  this 
element  of  the  conspiracy,  that  you  should  find  that  all  the 
means  charginl  were  to  be  used  in  carrying  out  its  purpose. 
If  you  find  beyond  a  i-easonable  doubt  that  there  was  a  con- 
spiracy to  commit  the  offense  charged,  it  will  be  sufficient  if 
you  also  find  beyond  a  reasonable  doubt  that  one  of  the  acts 
charged  was  to  be  the  means  for  canying  out  and  executing 


r^^A^ 


I 

4 


UNITED   STATES    V.  CASSIDY. 


535 


Charge  to  the  Jury, 
that  conspiracy.     We  have  now  arrived  at  a  stage  of  the  case 
wliei-e  we  may  properly  refer  to  the  law  applicable  to  the 
conditions  which  it  is  claimed  prevailed  during  the  occur- 
rences now  under  consideration.     With  the  merits  of  the  con- 
troversy between  the  railroad  companv  and  its  employes  you 
have  nothing  to  do,  except  in  so  far  as  the  facts  delating 
thereto  may  furnish  evidence  as  to  the  actual  parties  engaged 
m  violatmg  the  laws  of  the  United  States.     Moreover   it  is 
no  defense  in  this  case  to  say  that  the  railroad  company  ob- 
structed and  retarded  the  passage  of  the  mails,  or  entered 
into  a  conspiracy  m  restraint  of  trade  and  commerce.     If  the 
railroad  company  violated  the  law,  it  should  l^e  punished 
but  we  are  here  now  charged  with  the  sole  and  only  duty  of 
determining  whether  these  defendants  at  the  bar  have  been 
engaged  in  a  conspiracy  as  charged  in  the  indictment;  and 
the  testimony  to  which  I  have  referred,  bearing  upon  this 
question,  suggests  certain  questicms  of  law,  to  which  I  will 
now  direct  your  attention. 

The  testimony  tends  to  show,  as  you  will  remember,  that 
the  boycott  of  the  Pullman  cars  was  declared  by  Debs  at  Chi- 
cago on  June  2(>th,  to  take  effect  at  noon  on  that  day      It  did 
not,  however,  take  effect  at  Sacramento  until  about\nidnight 
or  early  on  the  morning  of  the  27th,  and  its  first  oi>eration 
in  this  district  appears  to  have  been  to  stop  train  No.  84  at 
Sacramento,  due  to  leave  there  at  10 :  25  in  the  morning  for 
Oakland  by  the  way  of  Tracy.     This  train,  when  regularly 
made  up,  carries  a  Pullman  car  which  comes  from  Chicago 
to  Sacramento  on  train  No.  2.     The  Pullman  car  is  destined 
for  Los  Angeles,  and  is  carried  from  Sacramento  to  Lathrop 
where  it  is  attached  to  the  train  for  Los  Angeles.     The  mem- 
u  ""V*"^  American  Kail  way  Union  at  Sacramento  refused 
to  handle  this  car,  by  reason  of  the  boycott  declared  by  Debs 
at  Chicago  the  day  before.     This  train  carried  the^nails. 
Knox,  speaking  of  this  train,  says  • 

He  says  further: 

•'That  train  stood  there  imtil  leaving  time,  when  it  started  to  nnU 

SoL' out'^o^^^lart^^  'r  "^  ^'^  -r^ngths  out  and^™^^^^ 
<lown  out  of  £762]  the  office  and  turned  the  plug  on  the  hind  end  of 


t 


If 


536 


67   FEDERAL   KEPORTEK,  762. 
Charge  to  the  Juiy. 


Ind  «lLJS*tLrrf/''^'^  the  train.    She  was  backed  up  to  the  depot, 
and  stood  there  for  a  couple  of  weeks/* 

A  mail  train  is  a  train  as  usually  and  regularly  made  up, 
including,  not  merely  a  mail  car,  but  such  other  cars  as  are 
usually  drawn  in  the  train.  If  the  train  usually  carries  a 
Pullman  car,  then  such  a  train,  as  a  mail  train,  would  include 
the  Pullman  car  as  a  part  of  its  regular  make-up.  The  obli- 
gation which  the  railway  company  is  under,  as  a  common 
carrier,  to  employ  such  resources  as  it  can  command  in  the 
transportation  of  paasengers,  mails,  express,  and  freight, 
without  unnecessary  delay,  is  one  thing.  The  claim  that  the 
employes  of  a  railroad  company  have  the  right  to  say  what 
cars  shall  constitute  a  train  is  quite  another  thing.  It  is  not 
for  the  employes  of  the  railroad  company  to  say  whether  a 
Pullman  car  shall  constitute  part  of  a  mail  train  or  not. 

In  the  case  of  U.  S.  v.  Clark,  in  the  district  court  of  the 
United  States  for  the  Eastern  district  of  Pennsylvania  (23 
Int.  Eev.  Rec.  306,  Fed.  Cas.  No.  14805),  the  defendant  was 
one  of  a  number  of  persons  who  assembled  at  the  depot  of 
the  Lehigh  Valley  Railroad  at  South  Easton,  Pa.  On  the 
arrival  of  the  mail  train  at  the  depot,  the  defendant,  who  had 
no  connection  with  the  train,  said  to  persons  having  charge 
of  It  that  the  mail  car  could  go  on,  but  not  the  rest  of  the 
train.  The  defendant  afterwards  got  on  the  train,  and, 
with  others,  placed  it  on  a  siding,  where  it  remained  for  sev- 
eral days.  Judge  Cadwallader,  in  charging  the  jury  upon 
these  facts,  said : 

J^iT^%^^!^''*^''}J^  charged  with  retarding  the  transportation  of  the 

m««L  wifil  f^^  '"^'^h'"  ^'}''^  ^^  ^''''^^  ''««  retarded,  as  the  post- 
master testifies,  two  or  three  days.  The  occnirrenee  which  retarded 
It  according  to  the  tendency  of  the  proofs,  was  that  seven,!  perso^ 
were  assemhled  at  the  depot  at  Easton  for  no  lawful  purpose,  and  that 
one  or  more  of  then,  declared  that  the  mail  might  go,  but  the  pas- 

Z^^L^'^f^''^':^^^  ""*•  ^**^^^  unc^upleci  the  mail,  and  afterwaZ 
coupled  it  for  the  puriK)se  of  carrying  it,  as  they  did,  to  a  siding 

tin«^rJIi  Ih!  """^  n  ^^^  *^f/  P"^^^^  ^««  *^  '•«^«'-*l  the  train  which 
transported  the  mail,  it  matters  not,  in  point  of  law,  whether  thev 
were  or  were  not  willing  that  the  mail  car  or  baggage  car  6r  the 
particular  vehicle  carrying  the  mail  should  go."  ' 

The  learned  judge  then  quotes  with  approval  the  opin- 
ion of  Judgo  Drummond  of  Chicago  upon  the  subject,  as 
follows  : 

rol*d«''  H^?«**fSnl'*tH«t  *y"^«l^'"t««on  of  the  mails  by  means  of  rail- 
roads,  it  Is  true  that  it  appears  by  the  evidence  In  this  case  that 
these  defendants  were  willing  that  the  mail  car  should  g^  but  It  must 


I 


#* 


UNITED   STATES   V.  CASSIDY. 
Charge  to  the  Jury. 


537 


enable  the  railroad  to  transport  the  mail  where  there  are  other  cars 
to  accompany  it     It  is  not  practicable,  as  a  general  thing,  for  a  rail 
road  to  transport  a  mail  car  by  itselt  because  that  would  be  at- 
tended by  serious  loss ;   so  that,  while  nominally  they  permit  the  mall 

^«i«  ?,.PV  ^^''  .^rV?'  ?^  preventing  the  transit  of  other  passenger 
cars,  interfere  with  the  transportation  of  the  mails." 

The  law  as  thus  declared  by  two  learned  judges  many 
years  ago  is  the  law  to-day.    Apply  that  law  to  this  case  as 
you  find  the  facts  to  be  in  relation  to  train  No.  84  at  'Sacra- 
umitx)  on  June  27th;   and  also  to  train  No.  2  at  Sacramento 
on  June  29th ;  and  train  No.  4  at  Sacramento  on  June  28th, 
29th,  and  July  3d,  4th,  and  11th;    train  No.  69,  from  Red 
Bluff  to  Sacramento,  on  June  29th,  stopped  at  Broderick; 
train   No.    16,    from    Portland   to   San   Francisco,   stopped 
f7631  at  Dunsrnuir,  June  28th;  train  No.  15,  from  San  Fran- 
cisco to  Portland,  stopped  at  Red  Bluff,  July  1st:   train  No. 
42,  Santa  Rosa  to  South  A^allejo,  stopped  at  South  Vallejo, 
July  12th;    train  No.  19,  from  San  Francisco  to  San  Jose, 
July  .5th;    train  No.  13,  stopped  at  Palo  Alto,  July  6th; 
tram  No.  33,  known  as  the  "  San  Ramon  Train,"  stopped 
at  Sixteenth  street  station,  Oakland,  July  3d;    and  train 
No.  1,  known  as  the  "  Santa  Cruz  NarroV-Gauge  Train,'^ 
at  Alameda  pier,  July  4th.     I  do  not  understand  that  the 
testimony  tends  to  show  that  there  was  any  mail  or  express 
on  the  three  local  trains  stopped  in  the  vicinity  of  tower 
No.  2,  West  Oakland,  on  July  4th. 

It  is  contended  on  l>ehalf  of  the  defense  in  this  case  that 
the  boycott  declared  by  the  American  Railway  Union  on 
June  26th,  and  the  strike  declared  on  June  29th,  were  in 
themselves   lawful.     The   logical   effect   of   this   contention 
would  be  that,  if  any  unlawful  acts  were  committed  during 
the  pendency  of  the  boycott  and  strike,  they  should  be  sepa- 
rated from  these  general  and  admitted  acts  of  the  American 
Railway  Union.     This  feature  of  the  case  calls  for  the  most 
careful  consideration  of  the  law  as  declared  by  the  courts 
In  Thomas  v.  Railway  Co.,  62  Fed.  803,  Judge  Taft,  in  the 
United   States   circuit   court   for   the   Southern   district  of 
Ohio,  determined  that  the  boycott  of  the  Pullman  cars,  as  it 
was  enforced  in  Ohio,  was  unlawful.    The  facts  in  that  case 
were  substantially  the  same  as  in  this  case.     He  said: 

"The  employes  of  the  railway  companies  had  no  grievance  aeainst 
their  employers.     Handling  and  hauling  Pullman  cafs  did  n^t  lender 


5-     ^ 


^oo 


67    FEDERAL    REPORTER,    76;]. 
VUnrfse  to  tli«»  Jurj*. 


<11<1  not  regnliitt.  their  hoiirJ  1^  i.,  "®  I""'^  "^"'  •'<>  »«ges.    He 

Simply  to  injure  hfm  In  Ws  bu«iueL"%r/  ""*"'?"'!''  «>elr  Services! 
aged  to  i-ompel  the  railway  oonipa^  ^iu^^  "^^^^  '"^  «"«»»■ 
by  threats  of  nuittinc  their  s»r,^  .  i    withdraw  custom  from  him 

ice.    This  lulllrted  m  injun- u^i^hf^J?*''"^ 'y  3"'«'°«  ^eir  ser" 
and  it  was  unlawful.  SauseT  was  wTthn.?t  .?  Vl*  """^  ^'"'^  sreat. 
employes  had  the  right  to  unit  thet^  LT>         *  '"*'"'  *'^™»e-    All  the 
to  combine  to  quit  ( heir  emDiovminf  T  '*^^'^°I;. ''"'  ^^^^  ^^  "o  right 
employer  to  withdraw  froZth^m.!v.?,?"'^'"  P^''^''^  *«  «»"I^1  their 
third  person,  for  the  puVZe^  lnU^,l^i\^'?^^^'^  '*'"">''»  with  a 
relation  thus  sought  tob^mkl«'l«^^  that  third  person,  when  the 
character  or  rewani  o?  thelr^^  c^""  rTwH'  "■^'!*^^*''  '"»"  the 
and  the  end  sought  thereby  that  m^^  A!    ,  \^  "°"™  '*""  lultting 
and  the  combination  bv Thich  it  h^  i^I  1  '"•""'"y  invoired  unlawful. 
The  distinction  I*  ve^n  an  ordi  ,a^^^'/."  °°'"«''n'  combination 
entered  u,«n  to  obt«iT<x,t^^tons  'S"  tirfo''  ""1  If •«««hle  strike, 
ployment.  and  a  bovrott.  is  S^.  fanc^f 'V  J*"""  "'  *"*  strikers'  em- 
power Of  hne  distinction  to  S>™'ne  wh  ch  Is  wnfT  ''V"^  "^^  t^e 
man  recopnizes  tlie  one  or  the  otlirif  ^       ,  'f  ,'^'>'<"li-     Every  laboring 
Judge.     The  ".n.binat"m,  uiX  diirjsi.r'f '^  "'!"«  '""'y^'-  «'  thi 
though  unac(„„„«,nie,l  by  v  oLtlonTor7ntlmfI«  *"'?"•     Boj^otts, 
nounced  unlawful  in  everv  stnte  o?thJi,  .'.""J^S*'""*-  ""o^e  »>een  pro- 
lion  has  arisen.  u..uJ  ilTe  Minu^ta      Thit?*  States  where  the  ques- 
in  Kugland.     •     .     .     {.„;  „'"^„     ";    T^^y  '""e  lield  to  be  unlawful 
with  Debs  at  Its  bed  ad  Phean^ai  nf"'^**"'"-  1*  ""«  oomblnaTion 
alone  on  the  general     ,w  of  l«v^«s     rVT^'T  "r'  "»'  "^t*"'' 
conspir.i,y  of  the  -Xmerican  llnflw-  v  T'„T^^  glg'mtlc  character  of  the 
The  railmads  have  iKMom^ as  nel^',  '  "tL"?,,!^''*«f ™  *,"?  """S'natioiv 
of  tlie  pe,.,,le  of  this  conntr^  Lf^  V\    ■"''^^''"*'  ''<""*'>  '""1  «>i»fort 
-vet  I>el«  and  Phelan  -md  t*Kir  a"«.i''S^''''l'"J5«,''"™«n  body,  and 
employ**  „r  „||  the  railUrvs  i     ,^  Proposed,  by  inciting  all  the 

service,  without  am  dteaiw.  .ti„    wm"'|  '  ^*"'  """"'«'">•  ""»  their 
ployment.  to  paraiVze  nTterlv  nlV  th^^^^^  **"■""*  "'  ^heir  own  em- 

and  in  this  wav  t.\t,„  "rii,lh    .n   fl^^       "^  *'""<^''  ^^  P«>ple  live, 
nor  the  railway  cvnu"  !  1^  ?,'^''  rthe'^i^.^^'^yliiV  "ff"-  "">  I'ubHc 
sible,  and  over  wliose  a.ts  thev  can  lawft  li  J       '  ?**  *'^'"**  ■"^P""- 
pay  more  wages  to  his  eiuDlovl   ^Jl    ^   ^  •'=«/"'se  no  control,  to 
Iween  Pullman  and  hL  Z'loZ  ^^ '"f/l"'  *"<'  ^ntroversy  be- 
legality  of  the  "mibinatlon  eff«"te.    IL™?„i    »k  "*;  'Whatever  on  the 
Union.     TlH>  punH..se,  shor  ly  ^a/^    wnHn    /"^  American  Railway 
panics  and  the  public  into  iS,,r,^ii^:.  1>  n*"  "^""^  *''«  railroad  com- 
they  had  no  I«>i?^lrigSTiS,l,!,"  '"'»''  V".^r"""S  ""Ich 
tion  of  a  nation  cannot  l4  a  l-m^,n^.„.i^      I""     <^''tainly  the  starva- 
utterly  Innnaterlai  ,X  her  / be  ^ZT^  1"  ^'iT!:'"'"'''"-  ""-J  "  •» 
lawful  or  otherwise.     More  tian  th?.   «J    effected  by  means  usually 
of  the  act  of  Julv  2  1^  which  matk.  »  '•""'^nation  Is  in  the  teeth 
state  .•ounnerce.-'    82^.  821  "°  "'^^'^  *"  restrain  inter- 

^flL^'  *■  r  ^"'"f '  '•*•  ^^'  ^''^^  Thayer,  in  the  United 

"A  coiiibiiiatioii  whom*  i»rof(^HMi  tiiiio^.f  i^  ♦ 
railroads  whose  lines  SS  fiTnVa  ^^^^^^^  ^*'^  oi»eiatio,i  of 

until  such  roads  acvede  tr^rtaTn  demaZ  ^^^  ^°*^  adjoining  states 
such  demands  are  in  theni^hes  i^Z^laT.^®  "^^^  ***^'»-  ""^^^^^ 
unjust  is  eertainl.  an  u«la;^;:^,r^ra!!l^rrS^^^^^^^^^^ 


-^t 


UNITED  JSTATES    V,  CASSIDY. 
Charge  to  the  Juty. 


539 


' 


among  the  states.     Under  the  laws  of  the  United  ^taft^  ««  «r^ii  ««    * 

rurw^.rn=.Tero^rrr;%~H^^ 

Com.  V.  Hunt.  4  Mete.  (MaS.f  lil  "     '  ^^  ^®^'  ^*  ^"P"  ^  ^^ 

In  4r<A«r  v.  <?a>!;e»,  11  C.  C.  A.  209,  63  Fed.  324,  Mr.  Jus- 
tice Harlan  of  the  supreme  court  of  the  United  States,  sitting 
in  the  circuit  court  of  appeals  for  the  Seventh  circuit,  stat^ 
the  law  m  the  following  terms: 

conspirr;' m«n "The  ™4'-„fT"  ""'i""'.**-  ""•*  '"«'  ««»blnation  or 

ment!p';ZX*?4rS' or"  ^U^ln'^'uXforure  rifn^ 
and  Other  property  in  their  hands,  or  by  interfering  with  th?iV^ 

«LlnJt  Hi  ''''^'-  '''"'"'^^*'^"'  threats,  or  other  unlXfuf  method! 
aga  nst  the  receivers  or  their  agents,  or  against  employ  ™remrin?^ 
in  their  service  or  by  using  like  methods  to  cause  the  eSv^s^oZt 

^ea?h?r;r  T^I^'  ^Z*^^^  ^^^^^  ^^^^^^^^^  ^^^  service  in  i^uf^o? 
ltof\  ^    V     <^oml)inations  of  that  character  disturb  the  neace  of^ 
eiety.  and  are  mischievous  in  the  extreme     Thev  imrXr  w^  i  * 

ortrade':./r"'*'/?^^''  ""'^^  nghtluUy  ™LanSThlr?Ce  ^ 
of  trade  shall  not  be  unreasonably  obstructed     Tiiev  endam^  f^ 
I^n^onal  security  and  jK^rsonal  liberty  of  indVv^uals  who   in  th^^^^^^ 
flZ    ^    n7'.  "^«"^"«l>»e  privilege  of  choosing  the  terns  Z>nwWch 
they  shall  labor,  enter  and  attempt  to  enter  the  service  .St  WnJaTiS 
whom  such  comr»inations  are  specially  aimed  "  ^^'"^^ 

The  right  of  labor  to  organize  for  its  own  benefit  and  pro- 
tection, as  I  have  before  explained  to  you,  is  a  substantial 
right,  which  the  laboring  class  is  entitled  to  enjoy  to  the 
greatest  extent  consistent  with  the  rights  of  others  The 
limitation  is  that  in  the  exercise  of  this  right  the  property 
and  rights  of  others  must  be  resi^ected.  It  remains  for  vou 
to  apply  this  law  to  the  facts  in  the  case  at  bar. 

I  will  now  direct  your  attention  to  the  overt  acts  charged 
against  these  defendants. 

OVERT   ACTS   OF   DEFENDANTS. 

Oeorge  Cornwall,  an  engineer  on  train  No.  13,  going  down 
towards  San  Jose,  and  No.  «,  coming  up,  on  the  Gth  of  July 
testified  to  what  occurred  at  Palo  Alto  as  follows:  That  he' 
wa^  the  engineer  on  [765]  train  No.  13  on  the  6th  dav  of 
July  last;  that  they  took  x\o.  6's  time  in  coming  back.'  It 
was  express  train  No.  13,  from  San  Francisco.  It  went 
down  as  far  as  this  side  of  Santa  Cruz  crossing:  They  car- 
ried the  mail  and  had  a  mail  car.     He  saw  some  mail  on 


540 


87   FEDERAL  BEPORTEB,  765. 


m 


i 


Charge  to  the  Juiy. 

going  along.  Left  San  Francisco  at  3:15,  he  thinks  W« 
returned  towards  San  F«ncisco.  He  back;d  „p  a  tmin  to 
l«awreiice's  Station      Ko  i.«r.  „«        i   ^  ^  "P  «  tram  to 

and  pulled  it  S  Si^i  dCth e  ^17  *''  "''"  ^"J' 
».;«j.     1.      I  v.viiij5  uown,  tne  mail  car  was  on  ha. 

nmd ;  when  he  was  cnininir  k.«l-  ;*  •     .  ^ 

enmne     H»  K«l   i  f      *  '*  "^"^  ">  ^'O"''  "ext  to  the 

ftTlh"*^  "?  *™"*  Lawrence's  Station  towards 

J-alo  Alto  station,  at  the  switch  there.     Reached  P«I«  AU^ 
somewhere  about  5  o'clock.     It  was  ^H^rT      J 
when  h    ,„  ,,,.,  ,,^,.^     „/t^-     ^i:t3;"Th'e' 

Cassidy.     *     *     *     He  first  iT        ^iu^'**' ***^"*' ''"** 
This  was  at  Palo  £    hIT  f"*  "'/^em  on  his  engine. 

turntable    dn;  ^'  *  u  ,.*  '"  ***  *"™  '"'"""d  «"  the 
luimaoie.    iie  got  about  half  way  turned  nrm.nrl    „„j 

saying  something  to  the  brakJiin     k!  *       .'    ^  ^'^ 

i^ju  nun.      uont  break  it  off.    TalrA  tK«.  .««„i 
wrench  and  unscrew  it "    RJpp  ««„!  u-      !u  monkey 

told  Mavne  to  go  under  it  iZ  f  "  ^'l*  '''^"<'*''  *""* 

did.  May,,  th^n  went  i  tS::  7ZT^' ''  *^"  '^ 
of  the  tank ;  shook  the  fire  twn.  X""  el  fZti  T 
Rice  did  most  of  the  shaking     M«^„  1.      "^^ 

He  said  he  would  take  charl  „f  ^rf'  T  **"  *^'  ""«'"«• 
init  the  ^fltP«    V,  ^     ,Y^  "' her,  and  commenced  shak- 

knows  a  man  named  Clark  hnt  ic.  ..^*  "    ^'^Aayne.     He 

much.  Believes  he  kSw^him  W  si?  cS  1*  ''" 
whether  Clark  was  there  with  thLle„  o^n^  "'S.  T' 
was  u„«>upled.  One  side  was  u^o^d  by  ^^aj^;.'^.^ 
other  side,  he  could  not  say.    The  1.1  wa7„nco"Sd  ^. 


^. 


VNITED   STATES    V.  CASSIDY. 


541 


Charge  to  the  Jury. 

tw^i  the  tank  and  the  engine.     The  eflFect  of  uncoupling 
that  hose  was  to  let  the  water  all  out  of  the  tank  if  the  valve 
was  open  on  top.     *     •     *    It  is  necessary  to  go  under  this 
engine  to  unscrew  the  nut.     He  handed  Mayne  the  wrench, 
and  saw  him  go  under.    The  turntable  was  then  turned  half 
around.     Cornwall  wanted  them  to  turn  it  around,  that  he 
might  clean  the  fire  out  of  the  ash  pan,  so  that  it  would  not 
burn  the  gratis.    Some  one  did  turn  it  around,  and  he  ran 
her  over  the  pit  where  they  put  out  the  ashes.    Then  the 
boys  vvent  up  to  the  other  engine,  and,  as  everything  was  aU 
quiet  down  there,  he  put  his  coat  on,  and  went  up  too.    He 
had  a  talk  with  Mayne  about  the  mail.    He  called  him  to 

r  r7««r''/'^f'  *"  '""•    ^"^  ''''^■-  "Mr-  Mayne,  aren't 
Till/  ^**"  '"'"  ^*  '"^  ''""bl^  by  stopping  the 

mai  ?  "    Mayne  said :  "  Damn  the  mail.     You  ain'^  g^t  no 
mail.      Cornwall  said:  "  You  have  fired  on  this  train  long 
enough  to  know  we  do  carry  the  mail  ail  the  time."    And 
then  Mayne  went  away,  and  that  is  the  last   Cornwall 
saw  of  him  to  speak  to  him.     *     *    *    There  is  very  seldom 
a  Pullman  car  on  that  train.     His  engine  was  killed  at  that 
time.     After  these  men  left  his  engine,  they  went  up  to  Mr. 
Mmatt  s^engme  and  killed  that  one.    He.saw  what  was  go- 
ing on  there     He  saw  her  blowing  off,  and  some  one  backed 
her  on  a  split  switch  in  front  of  the  ticket  office,  and  blew 
the  steam  right  into  the  ticket  office.    The  back  drivers  were 
partly  off.     It  would  take  five  minutes  to  get  her  on    if 
they  had  another  engine  there  to  do  it.    Could  not  see  who 
was  on  the  Mmatt  engine  from  the  time  it  was  moved  from 
Its  position.    There  was  too  much  steam.    He  could  not  say 
that  these  same  men  were  there.    Supposes  they  were.    He 
believes  he  heard  some  of  them  say:  «  Come  on.    Let  us  go 

tZ  wV         .  f/^^"'"    *    *    *    On  cross-examination 
the  witness  stated  that  he  did  not  tell  those  men  that  they 

were  interfering  with  the  United  States  mail  train  when  he 

was  on  the  turntable  there,  for  the  reason  that  there  were 

so  many  around  there  he  did  not  think  of  it     *    *    • 

Nothing  said,  to  his  knowledge,  at  the  time  that  engine  was 

mrtv'  "if  h  H  "'"^  *"  '*"  ^'"«  *  '"*"  *'*'"'  ^y  either 
party.     It  had  a  mail  car  on,  though,  and  mail  in  it  going 

north  and  south.     *    *     *    This  convei^tion  that  he  had 


542 


67   FEDERAL   REPOBTER,    766. 


Charge  to  the  Jurv. 

e^'e  ils     X      ''"»/««»«  «ide,  close  by  where  Minatt's 
engine  w»s     No  one  else  heard  it.    Is  sure  that  no  one  else 

Si  nn^K  '■'  *''^  *'"^y  convenmtion  he  had  with  him. 

^.^in,,  ft        f*"  "t?"*  y°"  ^'"  ««t  ""o  trouble  about 
^ppingthemail?"    Mayne  said :  «  No.    I  did  not  know 

L"r  thf„%t^r:"  T^t  *     '     *    ^hinl^^  ther^^e.^ 
•    *!.  X         ,?  About  seven  or  eight.     Somewhere 

Se    lrr:'"f  •,  "^  '•"•^  -^"^  ^™'^~  and  aTret:" 
He  thinks  he  was  helping  turn  around.     He  did  not  offer 

Kiri^r  r  Sr™-     '''^^  '^"•^  -  '^^  -  i"ly  th^ 
he  did  not  think  about  much  of  anything.  ■ 

"  •  R-  Sowers  testified  that  he  was  a  brakenian  in  the  em 

ploy  of  the  Southern  Pacific  Company.     That  he  «;"    u  ,  o 

r  U„ ts  I  ri  "^  '"' «  "■'"'. '"  "»^  ""  ^^-d-t-  Go-W'^ 
hit  t^in  k"- ^^^"^  "'"•*  ''""'""^■'^  ♦"  the  engine  of 

Uto    "  .'     f  ^T'"*"-     ^^^"^^  *'^^"^  -•»«  in^  Palo 

'^inZZ^:    "%''"•/''  '"  ""  *"''  "'^-  off  from  the 
S  Ld  U  T,  "  *'''  '"™*«^'*'  ''"^'  ^^t"--*-'  to  turn  it. 

S..  hvforTTff       r  "  '"'"^  *"'-"^'^  *'°""'''  -'-"  there 
iTor  SIX  Hiff       \       "'  P^''"'  ''""'  ^'•°'"  o^*"-  the  i5eld.- 
thl  cJ  h,  t   ""*  '"•'?•    ^'r-^-  "^'^  »"  '"S«ther,  as  close  as 
they  could  be  coming  towards  the  engine.    Thev  came  over  ' 
and  proceeded  to  kill  the  engine.     One  of  the  gent  erne    in  thl 
crowd  spok,  to  him  and  said :  "  You  don't  nefd  to  t^  t  a 'j 
further.     >  on  rema.nin  Palo  Alto  over  to-night.     Yon  ha  v.. 
run  far  enough  to-day."    Does  not  know  who^hat  ma^  Z 
He  was  a  tall  gentleman,  with  a  black  mustache.    He  would 

ttTtSne   h    '"'  r?'"^"  *•"•*  "«"'  I'«''  -'th  them    t 

•^    .  «  «nd  Ca«,,dy  being  directed  to  stand  up.  the  witness 
Identified  them  both.)     After  one  of  these  men'l.ld  him  th^ 

in  Palo  Alto,  the  light-headed  gentleman   (Mr    Cassidv^ 

uncouple  the  hose  between  the  tender  and  engine.    He  could 
not  .see  who  was  on  the  other  side.    Did  not  notice  who  was 


UNITED   STATES    t'.  CASSIDV.  543 

Charge  to  the  Jury. 

Jng Ititnf '■  .*'"•""  r  '"  '"^  «"''  ""'  -hat  he  was  do- 

aTthat  tin^     \t.        T  "'"'''  "  *=^"P'"^  "^  "thers  in  the  cab 
of  „,!  u    1"^  *'**  occurred,  that  he  knows  of,  outside 

of  uncoupling  the  hose  between  the  tender  and  the  e^SnT 
letting  the  water  out.  and  blowing  the  steam  o*f     slw  the 
^a".  escaping.     Water  escaped  from  the  boiled'    Th";  1^ 
gnie  was  killed  a.  tl.at  time.     The  fire  was  .shook  ,low„      He 
supposes  It  was  all  out.     *     *     *     Mr  \f..l.l  / 

;;efore  tbese  men  reached  the  caK^'S^^l.ti  1^ 

wneie  IK  «as  After  thoy  killed  the  engine,  these  men  went 
from  hi.s  engine  om-  to  Palo  Alto  station.  *  ^  "  "\"' 
weix.  going  at  a  „„„h.rate  little  trot.  They  wore  not  ru^ 
ning  very  ast,  or  anything  like  that.  •  *  *  VZ' 
quainted  with  the  signals  that  are  used  on  passenger  tLns" 
This  was  a  regular  train  "gei  riains. 

^I^Z^^^r  '""""  ""  '""^  •'"^"■'"'  "f  -hich  Cornwall 
^>ah  engineer      He  was  present  when  rr^t.,.,..,!!' 

killed,  but  he  is  unable  to'^ident  f  ^  tl^  d^™!"     T"'  T 
persons  who  assisted  in  killing  tt  e/X'  the     7  ': 

headed  <^e  nth  ^  u"^'""  "'""""•l'  because  she  was 

Is  soon    s  th        ^'"^'  ""''  '^''  ^'""-^  ^""'^  to  San  Francisco 
As  .soon  as  the  engine  stopped  on  the  turntable  he  crr.t  „ff  Ik 

enguie,  to  help  push  the  engine  arounf  *    '^''^ He^^t: 

ita:  "eSt^L^js  r-r  Tt  t:;  ^"r 

Drettv  fflcf      G^,.  .        &^"*^*     ^'^^y  were  walkiiiflr 

pretty  fast.     Some  were  running  a  few  stens      Smn.  ^i^  fK 


67   I1DERAL   REPORTER,    7»j7. 


Charge  to  the  Jury. 
P-rUj-  anmnd  a  little  ways.  Mulder  got  up  on  his  seat,  aud 
sat  down  to  see  what  was  going  „„.  Cornwall,  the  engi^r 
at  the  t,me  he  (Mulder)  got  up,  was  sitting  on  the  seaX^: 
(h..  ,.f  ,1,  «ng»^«  was  killed.  Saw  the  squirt  hose  used. 
One  of  the  men  said  to  him,  "  Turn  that  squirt  hose  oT" 

oi^i  tL  dr^^'.^i' 'T"'  *"™'"^  '*  -  •»--»•    They 
f  T^f  A    fi  .  ^!'^,,^  '^*'  »"^  ^"•'^«d  the  water  over 

1768]  the  fire,  and  killed  it.    They  had  already  shaken  the 

Sr  Vr   '  "*''"*'*  '*•*  «^  ^'^  »«*  -""gather  shaken 

wT' ff  l'*'^"  7"'  *^"«  ''^*1'  «  Pi<*  to  open  the 
blow-off  cock,  and  the  engineer  told  him  it  could  not  te 
opened  that  way;  he  would  have  to  take  a  wnmch  and  ^ 
unden^th  and  loosen  the  nut  before  he  could  turTit  tS 
engineer  handed  him  a  monkey  wrench.    One  of  the  mo„ 

watti  out  of  the  lK.iler  and  out  of  the  tank.    Thenj  were 
engaged  in  that  work  at  least  si,,  if  not  seven.    He  thTnJ! 
there  were  seven,-thr«e  behind  the  tank  when  he  left  there 
ana  tour  m  the  cab  when  he  got  up  there. 

0«™i:n^  ^'*  "If  *  brakeman  on  Uie  train  pulled  by 
Oomwall  s  engine.    He  accompanied  the  engine  to  the  turn 
tobl.,  to  assist  m  turning  it  around.    He  saw  the  killing  of 
the  «,gine,  but  is  unable,  like  Fireman  Mulder,  to  identify 

disabling  of  the  engine.  He  noticed  some  of  the  men  com- 
mg  down  in  the  train  with  him.  He  recognizes  c"Sdy^ 
bemg  a  member  of  that  party.  Cannot  sayVs  to  Mayne^o^ 
as  to  Rice  and  Clark.  *     ' 

h«  S  S  ^"""^  ^"^  «°g"'««''.  ^"8  killed.  He  states  that 
he  left  San  Franasco  on  July  6, 1894,  at  8 :  05,  on  train  No. 

teS^TJ^'  tT  ^'■'^'  ''"f  '^'y  """^  '»'  ''^P'  to  take 
to  San  Jose.  It  was  a  mail  train,  having  a  mail  car.  He 
had  ^^ge  and  express  and  mail,  smoker,  and,  he  thinks, 
two  or  three  c<«ches.  He  had  no  Pulhnan  cars,-no  PuU- 
man  sleeper.    He  went  as  far  as  Santa  Clara  crossing,  left 

S  tS  V    r;""*'  '^^"^  immediately  as  No.  6;  th  t  is, 
on  train  No.  6's  time.    Those  were  his  orders.    It  w4  a  mai 
train  returning.    I*ft  Santa  Clara  crossing  at  5:16  p  m 


i 


UNITED   STATES    V.  CASSIDY.  545 

Charge  to  the  Jniy. 

Reached  Palo  Alto  at,  a  •  nti     ti,„  »     •      i     ,  . 
the  W9V  fr„,r,  «     ;   ^!  ■  *  ^"^'"^  ^^^  "^n  backed  all 

^e  way  from  Santa  Clara  crossing,  there  being  no  turntable 
l^tween  that  place  and  Palo  Alto.    Arrived  at'palo  I   o  he 

;f thrtrabi:,  *t^  tr \:rt\a?rTt  -.  -^'  - 

would  come  first.    He  toV ll/s  meft    gt.'p':  thleT^ 
neer  and  fireman  and  turn  the  engine,  fh  iThe  welt  to  tt 
depot  to  get  orders,  if  there  weie  any  to  obtain      Tt  J    L 
.ntention  to  take  that  train  right  Zugh'o  tlie  0^7  Did 
not  n>te.ul  to  stay  at  Palo  Alto  more  thfn  abo      i?  min.U  s 

n"  t^:rd7retSnf T  hVd  r  f  -'  -r-  ^^ 

^ffi^«     u  ^"gme.     He  had  just  arrived  at  the  ticket 

office  when  some  one  san^  out  to  him   "  T  «aw 

^:        J.  -.  ^  iiiiii,      1  saw  some  nna  rnr» 

Sckl  o;"''  SZ  T"""    "^  ■•-  to  *•>«  -/-  from    he 

rhrnK;achedit    T  '^'  ''"'*,  ^^^"«  -"und  the  engine 
nen  ne  reached  it.     Rice  was  shaking  the  grate.    The  W 

of  the  engine  was  cut ;  that  is,  it  was  uncoupled.    That  is  t^ 
hose  between  the  tender  and  the  eno-ine      n;^       .  r® 

cut  it.    mile  examining  thet^L  ^^ieS  SJ^: 

a "fair/rom  Sal  7'  '" '''"^    ^^'  ^'^  J"^'  «--«d  with 
a  tram  trom  ban  Francisco.    He  followed  them  ud     When 

he  arrived,  it  a  so  had  been  killed      Witi   Vu        ^' 
seeinir  Rine  r7«Qi    I.  i  ."^",'^"'®d.    With  the  exception  of 

ZTL  ^  f  1  ''*.*^'"^  *'^*'  ^«te,  he  did  not  see  anv  of 

the  acts  connected  with  the  killing  of  the  two  engines     Tn 
answer  to  the  aiiessHnn  «  n;j         i.  "'"  ^wo  engines,     in 

Mr  Rice  and  T P.    i  ^''"  ''*''"  ^^^  conversation  with 

stated.  ""  """P""*  *"  t'*'^  ««t?  "  the  witness 

««ii^Sdtt"w;,"rLd"l^'„*do^'i''  't^P"  •"««  «"1  """fled  the 
track  to  go  to  mr  train  wWch  w,".  ^^V^^  ''"^'■-  ^  P«''«'  down 
protect  it.  and  I  met  m^  Rlc^  a^  m^  n^.■"'""  *"<"^  '«'»«'.  to 
ticket  office.  I  said  to  Mr^«r  «„^  «  "^^  •^'"'"S  towards  the 
tied  us  up.'  Hesaid:  "y^  W^lv^^Tfr-./'l'JfJ.  ""^e"-  mi  hare 
unlawful  act.  and  von  ha™ ^!.  .  I  said:  ' This  Is  a  verv  wrong 
Southern  raciflc  14^'^,.^«„;  „„""  othe/r"^  """t^^^"-  "S^inS  tTe 
Of  them  as  the  A.  R.  r.?/  T^?s  ?"tV""'"''=  f"*  '«•  '=I*«king 
railroad  companies  whip  Pullman  or '  in  „^i,  '*  ""'•'^  *">  '"al^e  the 
th^r^terms..    „e  stateJ:    '"'^Z.^'^r^lr^'^^Zs:  a^Xe^"^a*: 


I 


546 


67   PEDER.\L  BEPORTEB,  769. 


Charge  to  the  Jury. 
Alto  about  20  or  30  iiiinutes.  Possibly  it  might  have  been 
more.  There  were  no  other  engines  at  Palo  Alto  save  those 
two.  They  laid  there  until  the  next  morning,  until  they 
got  another  engine  to  pull  these  engines  to  Menlo  Park 
and  filled  them  with  water  and  got  up  steam,  so  that  they 
were  able  to  make  the  trip  out.  Got  back  to  San  Francisco 
about  half  past  10  or  11  o'clock  the  next  morning.  Were 
due  m  San  Francisco  the  night  before. 

Edward  J.  Kincaid,  assistant  agent  at  Palo  Alto,  called 
for  the  United  States,  testified  that  his  attention  was  at- 
tracted  to  Cornwall's  engine  by  hearing  some  one  holler. 
They  have  got  it."    He  was  then  in  the  ticket  office,  and 
ran  out,  and  saw  four  or  five  men  coming  from  the  field  be- 
tween the  county  road  and  the  railroad  track.     He  saw  the 
men  climb  over  the  fence  and  climb  up  on  the  engine     The 
engine  was  half  turned  around  on  the  turntable,  and  he 
did  not  see  what  they  were  doing  to  her,  but  he  states  that 
steam  soon  began  to  issue  from  the  boiler,  and  the  engine 
was  turned  clear  around  and  run  onto  a  side  track,  and 
there  the  steam  was  blown  off.     This  crowd  remained  around 
the  engine  probably  about  six  or  seven  minutes.     They  then 
went  to  Minatt's  engine,  and  climbed  up  on  the  engine  and 
told  them  to  get  out,— told  the  fireman  to  get  out.    They 
then  let  the  steam  and  water  out  of  the  engine.     Knows 
Rice,  Clark,  and    Cassidy  by  sight.     Does  not    know  the 
others.    He  saw  them  there  at  the  time  these  two  engines 
were  killed.    Saw  them  mingling  with  the  crowd.    The  only 
one  he  saw  on  the  engine,  to  recognize,  was  Rice.     Did  not 
see  either  Clark  or  Cassidy  on  the  engine.     But  they  could 
have  been  on  the  engine,  and  still  he  might  not  have  seen 
them.    Could  not  see  what  they  were  doing.    On  redirect 
examination  he  states  that  he  could  see  that  the  hose  between 
the  engine  and  tender  was  uncoupled,  hanging  down,  and 
he  could  see  under  this  hose  where  the  water  had  run  out 

Robert  Dannenburg,  station  agent  at  Palo  Alto,  also  agent 
for  Wells,  Fargo  &  Co.,  and  Western  Union  operator, 
called  for  the  prosecution,  testified  that  he  saw  some  hve 
or  SIX  men  coming  from  the  county  road  towards  the  railroad 
track  east,  at  a  sort  of  dog  trot;  that  they  went  to  Corn- 
waU's  engine;    that  he  saw  them  stop  the  turntable  when 


.. 


" 


UNITED  STATES   V.  CASSIDY. 


547 


Charge  to  the  Jury, 
about  half  way  around,  but  he  could  not  dis-  [7701  tinffuish 
who  It  was  that  stopped  the  turntable.  He  saw  steam  es- 
caping from  the  engine,  and  shortly  after  they  (the  crowd) 
turned  the  enpne  clean  around,  and  ran  over  the  ash  pit. 
Kan  her  off  the  turntable,  right  ont«  the  track.  He  could 
not  see  any  particular  thing  that  was  done  on  the  engine 
from  where  he  was.    The  crowd  then  went  over  to  Minftt's 

m'f„""AlWh'^K  ^'""  ^"•■•^  '^^'  ""^'°«'  «"d  also  another 
man.    All  that  he  saw  with  reference  to  Minatt's  engine  was 

S  7f   t     rT  '''rtr  ''''  ^"^"^-    "^  ^'^  -^-  the 
rest  of  it     But,  probably  two  or  three  minutes  after  these 

e"iM:t  ?'  T"'^'^ ""  '"^^  '"^^'"^  "ff  *-™'^ 

ZTL    /I        ''''^'  ^*y"^'  ^^^'^'  «"«» Iii««  in  the  neigh- 
borhood of  those  engmes  at  these  times.    Distinguished  them 

near  Muiatt's  engine,  but  could  not  see  what  they  wei.  dS^ 

E.  F.  Minatt,  called  for  the  United  States,  testified  that  he 

the  r^^T^- '  °"  '^u'  ®""*''^^'^  P'^^'ifi*'  ^^tem,  running  on 

t?l  f  ^^  .    ,   ,  ^'  """"^  *»*  *"•  N«-  17  »««rding  to  the 
time  card,  which  leaves  San  Francisco  at  4:25  in  the  after 

puiM  :?%*'"^  't'  ^^'^ ''  --t-  late  oi  ttt  i:;: 

Pulled  a  local  tram  between  San  Francisco  and  Palo  Al«i 
He  reached  Palo  Alto  that  day.  He  was  to  return  fromiS 
Alto  the  next  niornmg  at  6: 40.  Four  of  the  boys.-two  of 
them  fired  for  him  before,  and  he  pulled  the  other  wo  Z 
brakemen  (Cassidy  and  Mayne,  they'^both  fired  f^him  and 
a  fellow  named  Rice,.a  brakeman,  and  Clark) ,-thev^mc 

He  tlinT "p-  ""V^-  ''"""  ""  *^«  ^'"""-i  -d  they  go  ™! 
He  thuiks  Kic^he  is  not  sure-commenced  to  iL  the 
fire  out  of  the  grates  down  into  the  ash  pan.  CaSS^  and 
Mayne  co„,^enced  to  uncouple  the  hose.^  Thev  wantd  "« 

itTh  s  tim!  r"*  "'  *'*  '""^'•'  ""**  '''  ''  »"*  0*  the  t  nde^ 

«  Bnt«  n  r  '""'"  f ''""'''  ""^  the  witness  said  to  him. 

Boys   don't  damage  the  engine."    They  said  they  wS 

S'ttf    Ther'"  ""^"'  *'^  '""^^-  ""^  tender -Id  tS 
am  that.    There  was  such  a  crowd  around  there  ih«t  hi 

could  not  tell  how  many  there  were.    Ca^id^.^n^Ri 

and  Clark  were  actively  taking  part  and  kilLgl^^enS' 

Joosening  the  blow-off  cock.    The  witness  gave  them  . 


548 


67   FEDERAL  KEK)RTER,   770. 


'/     i 


Charge  to  the  Jury, 
wrench  to  do  it^o  „„lo<^n  the  blow-off  cock.-and  they 

£iJr     ^  '^  ^"^ .""''"  **•*  ^"^^^  Partly  out  of  the 

boilei^he  water  was  about  out  of  the  tender,-the  younir 
man  Clarf.  got  up  and  backed  her  out  through  an  oZ 
swuch.    W,tn^  hollennJ  to  hin,,  and  told  hinf  the  sw'S 

rr  T"^-  •  "*  ^*  '^'  **""*^^  «"t  and  the  back  drivers  out 
Zn  *  swud,  then  I...  undertook  to  run  her  »head  on  the 
mau,  track,  and  derailed  her.  She  stood  ther*  like  that  until 
they  sent  a  man  from  San  Francisco  to  pull  her  on     •    »    • 

for'lTRT'''Tt'"'*'""'  "".*'•'  '^  "^'P'  J^'P'  hurrah 
»r  tne  A.  R   U.      There  was  such  a  crowd  around  ther«_ 

ltd"  'TirT  ^"  .^."'^  "***  ^'  ***  ♦'^^  «"g'»«  f-m  the 
Z^i    ^° 't^-^. '»''l 't  he  don't  know.    The  only  man 
that  he  saw  at  the  time  of  the  hurrahing  was  Clark:    The 
mter  was  on  the  engine  after  he  derailed  her.    He  did  not 
*e  Mayne  or  €a«sidy  or  Rice  at  the  time  the  hip.  hip.  hur- 
rahing  «-as  gon.g  on.    After  the  excitement  |7rr|  was  over, 
ne  sav>    the  parties  going  towards  Menlo  Park.     He  saw 
Mayne,  Ca^.dy  Rice,  and  Clark  going  towards  Menlo  Park. 
Mward  C.  Murray,  a  witness  for  the  United  States,  testi- 
fied that  he  was  the  railway  postal  clerk  who  ac.o.npanied 
train  .\o    13.  coming  back  on  the  same-train.-it  comine 
hack  as  No.  (i;   that  is.  on  No.  6's  time.    He  testifies  as  to 
te  being  a  mail  train.    He  did  not  see  the  engine  killed.    He 
testifies  as  follows : 

were  „>,,  due  .it  San  Frauelsco  with  that  nmll?    A.  6:  ^■"  "* 

AS  TO   CONVERSATIONS  HAD  WITH   CLARK. 

R.  M.  Donne  states  that  he  was  a  conductor  on  the  Coast 
Division,  and  that  he  was  at  San  Mateo  on  the  evening  of 
the  Wh  of  July,  and  the  morning  of  the  rth.  He  saw 
Cassidy,  Rice,  and  Clark  there  that  night  (the  6th).  Also 
aw  a  gentleman  with  them  who  weighed  about  180  pounds- 
had  a  smooth  face;  was  heavy  set.  He  had  a  talk  with 
Clark  that  night.    He  spoke  to  him  outside  of  the  ticket 


; 


UNITED   STATES    i\  CASSTDY.  549 

Charge  to  the  Jury. 

her  1       /""*■■•  r^  '^^'  ''*  ^^■«"'''   '"Produce  him  to 

heir  assis  ant  general  passenger  agent,  and  several  others 

He  acceded,  and  came  in.     F.  S.  Douty.  the  ^cretarv  of  the 

lacihc  Improvement  Company:   H.  R.  J„dah.  the  aListanI 

general  passenger  agent;    L.  H  Fuller,  an  emplove         he 

n.        ;:  I   bi^  ^T«f  •-"»=    the  station  agent    Mr.  Peck 
lan,      ,n.l   his  assistant,  Mr.   Elines.-were  present     He 

.    testifies  as  to  the  conversation  as  follows: 

tlmt  the  Iw.vM  „„  the  other  side T»r»,  ^""f  .P»'«">''-     Well,  he  .said 

taking  „n,-,«irt  in  tbtZ^r-    tZZT^ul'iVT  '""^K  ""*'"'  ""' 
also  tlie  Xarrovv  r.ausre   in.!  thm"  h.i  /    .      *'"'  "*''*■■  *"<•«  tied  up, 

Q.  no  yon    rec.m«:^%tbTL  farther  thnf"  *''""•'♦'!''■«  «»  this  side! 
A.  XothliiK  more    ev«.nt  fhof  ["""^'^  that  was  said  at  that  time' 

grievaMc-es^Sr^tX^^lVr^f  ofvisZ:  ""^f  '"^^^Y"'  "^^^  ^<^^  "»> 
not  partienlarly.- ••  division.     He  replied  hy  saying.  'No; 

F.  S.  liouty,  a  witness  on  the  i)art  of  the  .rovernment 

I  think  the  <'<iiiver.s;iti(in  with  \ri.    ^i .  1 
were  over,   hy  nsUiug  hi^  rea^^^^^  ^'^^  introductions 

formation.  He  said  that  the  Pu^?n,«^  n  ""  -tnke^-to  get  some  iu- 
boys  right,  so  that  thev  had  to  stX  oTlT^  *"V^  "^^  ^''^^^^^  ^^^ 
were  u.sed.  I  suggested  that  no  Pn/hn-.n  ''"''^  '''''''^  ''^^^''^  Pullmans 
He  said,  in  effect :    '  \^      but  the  hnv  T^^  "^^^  ^"  ^^'^  division, 

to  the  Oakland  side)  ?are  kick^tJ    thin^  ^*^r^^^'*  "^^^ '   (referring 
enough  here;    so  we  ha4  to  k^"' tii  p iV"^  ^^'V^  '''^  «'*^  »«^  ^^^^^S 
have  to  keei>  your  end  up?'^WeS    we  beJ;  n<.  f"^"  '  ^^'*^*''  ^*«  ^^^ 
where  we  have  taken  an  oath  to  stiml   tnZ^  ^*'  ''I'  organization 
If  we  don't  win  this  fight,  I  will  so  t^  Chinn?^^?^'*' '.  ^"^   ^^  «^^«J' 
any  complaint  to  make  against  thfs  Co-S  n^Vi  -  ^V^^  l"''^'^  J-^"  «<>* 
there  is  no  kick  mning.'         «sM  him  if  it   '"'"•.  "^  "*'»^^'  '^o; 
s^^nipathetic   strike ':    if   he   was   st-aii      •  ''''**  '''^'^^  '»^  «i"ed  a 
_Ye8,;   he   thought   that   wis   suSLn  ia  iv^  iJ"  Tr'""''     "^   ^'»*^' 

othr  plYr^^^^^  ^  ^^"^^  ^-^  ^^^  —  of  anv 

another  C  ''  ''  "^"^  ^"^  ^'^  -"^<i  C-i^K 

ontLrMi:DoXT^^^^^^  --^^ 

of  it:  Uark^thiis  gives  his  version 

in  V^P^I^n^V^l'S^i"  <S^"^^^  -.ersation,  and 
their  tying  „p  the  Coast  Divisfon  *  *  I  T*'^*  '''^^  ^^^  ^^J^t  of 
language.  I,ut,  according  to  my  recollection   at  J  ^^'f'  *^'*''^  ^'^^  ^^^^<^*t 

6  lu  m3  recoiJection,  Mr.  Clark  replied  that  the 


550 


67   FEDEKAL  REPORTER,  772. 
Charge  to  the  Jurj-. 


men  on  the  other  side  (having  reference  to  the  Oakland  side)  had 
^niphuued  that  nothing  had  been  done  on  the  Coast  Dhision  in  the 
way  of  tying  up  trains,  and  that  they  felt  it  necessary  to  do  sorn^ 

mnu  /C'*''*^/^  ^^'""^  "*^^*>-  'r^>«"  Mr.  Douty^sked  him-1^ 
think  that  wag  the  next  question  that  was  asked-why  the  Coast 

wltTthe  tH^lty/l?^^"^  ?"''  r^  '"^^^^^  '"^y^  entirely  dis^nnSt^* 

fl!^.r"i«  f^:  J}  vephea,  in  substance,  that  that  did  not  cut  any 
?SV  ♦k"  ^^^  ™*'"?  *"*  **'"*  ^*™^ '  *^^t  tliey  were  into  this  fight,  and 
i^twIL^T^.^^"^  ^Z  "*"*^  '^''^^^  *^'  «"^'  furthermore,  S  tha t 
Ls  conn^v  ^h'^**""^  ^^  "^f  ^^""^  *^  China,-he  would  not  live  in 
this  country.  Ihe  convei-sation  was  carried  on  by  all  of  us  Ones 
tions  would  be  asked,  but  I  cannot  recall  every  single  question  th^t 
was  asked,  or  every  answer  that  was  given.  In  substance  it  ^s  the 
same  as  Mr  IX>uty  has  given,  and  Mr.  Peckham.  My  memory  might 
be  refr^hed  if  some  questions  were  asked  of  me,  but    in  th^  main 

to  mV  n;;^'?i^rr/*^"  ^T";  .  ^^  ^"^«^'  ^  ^o^  ^ "al'wasTal^d 
f?.o3^'i?  fV  ^^  ^  ?,"**  persuade  him  to  have  the  men  cease  on  the 
Coast  Division ;  to  allow  that  to  be  an  exception,  as  there  did  not 
exist,  in  fact,  any  cause  for  complaint  on  the  part  of  those  emnlov^ 
on  the  division,  and  if  they  continued  in  blockiifg  the  traffic  it  ZsTte 
ZJ^^T""^  of  sympathy,  and  nothing  else  Then  Mr  cCk  r^ 
Iw  If  ~'"  ^""i*'  ^.^  '•e^t^'-ated  on  two  or  three  occasion  J:the  fart 
that  they  were  in  this  fight,  and  they  proposed  to  see  it  through  " 

The  witnesses  Peckham  and  Elmes  testify  substantially 
to  the  conversation  between  Clark  and  Douty  as  detailed 
above. 

On  page  644,  vol.  8,  of  the  testimony,  appears  the  follow- 
ing admission : 

"  Mr.  Monteith :  We  will  admit  that  both  of  these  defendants  are 
members  of  lodge  No.  345  of  the  American  Railway  Union   l(Jatld[S 
San  Francisco.    Mr.   Knight:  Q.  In  the   latter  part  of  jS    Mr 
Monteith :  In  all  of  June,  and  all  of  July  last.    Mr   Foote    I>t  th«f 

We'hate  nofwn.f '  '^'''''f'L  ^f.""'  ^^""  anyt^hing^^'f  th^t^k^'nd* 
We^have  nothing  to  conceal  about  it.    Our  side  of  the  case  is  an  open 

TESTIMONY  ON  BEHALF  OP  DEFENDANTS. 

The  defendant  John  Mayne  testified :  That  he  was  a  loco- 
motive  fireman  on  the  Coast  Division  last  spring.  That 
he  was  hostler  at  San  Francisco  at  the  time  of  the  strike.  He 
had  charge  of  the  engines  after  they  came  in  off  the  road, 
put  the  necessary  supplies  on,  put  the  engines  in  the  house, 
and  got  other  engines  out  to  go  out  on  the  road.  Had  been 
employed  on  the  railrpad  about  six  years.  Understands  all 
the  duties  of  a  fireman.  Was  familiar  with  the  rules  of 
the  company  at  the  time  of  the  strike.  Belonged  to  the 
Brotherhood  of  Ix)comotive  Engineers  and  the  American 
Eailway  Union.    That  he  attended  meetings  of  the  A.  R.  U. 


UNITED-  STATES   V,  CASSTDY. 


551 


Charge  to  the  Jury. 

in  the  last  part  of  June.  He  belonged  to  the  San  Francisco 
lodge.  He  attended  a  meeting  on  the  night  of  the  29th  of 
June.  The  lodge  met  on  Mission  street,  between  Fifth  and 
Sixth.  After  the  admission  of  members  there  was  a  message 
read  stating  that  the  members  of  the  local  union  310,  in  Oak- 
land, had  declared  a  strike  on  account  of  the  discharge  of 
[773]  men.  He  identifies  Exhibit  No.  296  as  the  message, 
as  near  as  he  could  remember.    It  reads  as  follows  : 

RoomTl  \  18^'  Oakland  Calif.  To  J.  E.  Riordan,  118  Sixth  St., 
Snv^  ;  f  ^-  A»"T''^''  Railway  Union  three  hundred  ten  has  de^ 
pSent'  ""  ^^^''  ^""^^''^  ^^'"^  '"•  "»•  ^^-^^y-    T.  J.  Rohertt 

He  further  states  that  he  thoroughly  understood  the  cause 
of  the  strike.    His  union  never  participated  in  the  boycott 
against  the  Pullman  cars.    With  regard  to  the  strike  at 
Oakland,  a  motion  was  made,  and  a  standing  vote  taken, 
that  they  indorse  the  action  of  the  Oakland  Union  in  strik- 
ing, and  that  a  strike  be  declared  by  their  lodge  for  the  re- 
instatement of  the  discharged  employes.     So   far  as  this 
lodge  was  concerned,  there  was  no  other  purpose  in  strikin<r 
than  the  reinstatement  of  these  men.     After  the  strike  was 
declared,  the  next  action  of  the  meeting  was  the  appointment 
of    an    executive    committee.     Harry    Bederman,    George 
Elliott,  Pete  Farrel,  and  W.  S.  Runyon  were  appointed  on 
that  committee.     They  had  full  power  to  manage  the  strike, 
and  all  the  business  connected  with  it.    The  union  did  not 
reserve  any  authority  to  itself.    After  the  appointment  and 
authorization  of  this  committee,  the  next  business  transacted 
was  a  discussion  in  regard  to  handling  the  mail.    This  was 
on  the  night  the  strike  was  ordered.    The  meeting  of  the 
29th,  some  one  made  a  motion  (he  thinks,  Mr.  Achom)  that 
the  lodge  take  a  vote  as  to  whether  they  were  willing  to 
handle  the  mail  or  not.     A  standing  vote  was  taken.    Every- 
body in  the  hall  stood  up,  in  favor  of  handling  the  mails  at 
all  times.     He  did  not  hear  any  reference  to  interstate  com- 
merce.   After  that  they  held  a  meeting  every  day,— some- 
times twice  a  day.    He  thinks  he  attended  all  meetings  up 
to  the  afternoon  of  the  6th.    Does  not  remember  anything 
that  was  done,  except  routine  business  connected  with  the 
admission  of  new  members,  and  so  forth.    He  was  in  San 


i'l 


552 


67   FEDERAL   REPORTER,    773. 


Cbarge  to  the  Jury. 
Francisco  o„  the  5th  of  July.     Saw  Cassidy  every  day.    Ha, 
known  h„n  about  six  years.    For  the  last  three  years  he  has 
lieen  almost  a  constant  companion  of  Cassidv.    They  roomed 
together,  boarded  together,  and  were  together  evenings,  and 
«     the  time.    Saw  hun  on  the  5th.    On  the  morning  of  July 
oth,  Cassidy  and  he.  after  breakfast,  attended  a  meeting  of 
the  union     After  the  meeting  they  went  around  town,-he 
dt«s  not  know  ,„st  where,  now;  and  in  the  afternoon  they 
went  to  Valencia  street,  and  took  the  train  bound  south.- 
bound  for  San  Jose.     He  invited  Cassidy  to  go  down  with 
hm.  to  San  Jose,  to  see  his  folks,  on  the  morning  of  the 
.th.     He  had  been  with  him  all  the  morning  from  the  time 
they  got  up.    He  asked  the  agent  if  there  would  be  a  train 
along  ,n   the  afternoon.    The   latter  informed   him   there 

7r\i-  t  '"***^  ^™  *"■•  t^**  ^'"'^''^^  to  S«n  Jos^-  He  no- 
tihed  hmi  they  were  only  carrying  passengei-s  as  far  as  May- 
field.  He  bought  two  tickets  for  MayfieJd,  and  handed  one 
to  Cassidy.    He  thinks  it  was  about  3 :  30  o'clock  when  he  got 

Z!^lr^-  I^  7'/"  '''''""'"7  '™'"-  There  was  a  mail 
car  on  the  hind  end  of  it.    Next  t«  the  mail  car  there  was  a 

car  load  of  passengers.    He  tried  to  get  into  the  car.  and  did 
not  know  what  was  in  it.  and  the  brakeman  refused  him  ad- 
mission.   Ho  then  took  the  car  immediately  ahead  of  that 
Cassidy  did  not  get  in  at  the  same  time  he  did.    He  saw  Clark 
and  Rice  on  that  day.     [774]  When  he  got  on  at  Valencia 
street,  he  was  reading  a  newspaper.    When  he  finished  with 
the  paper,  he  went  into' the  smoking  car.     AVTien  he  arrived 
there,  thei-e  were  quite  a  few  people  in  the  smoking  car. 
There  he  saw  Rice  and  Clark,  and  he  believes  Caasidv  was  in 
the  smoker  at  the  time.     Rice  and  Clark  and  a  number  of 
pa.s.seng..,s  were  talking  to  a  captain  of  the  militia.-he  «un- 
P<«es  It  was  a  captain ;  he  had  stripes  on  his  uniform.    JuU 
before  they  got  to  Redwood,  the  captain  left  the  car,  and 
went  back  through  the  train.     Fred   Clark  came  and  «at 
down    alon^de   of   him.     They   chatted    along   the   way. 
Mayne  a.sked  h.m  where  he  was  going.    He  .said  he  intended 
wif  1  Jose   but  he  only  had  a  ticket  for  Mayfield. 

When  they  got  to  Mayfield  he  and  Cassidy  got  off,  and  Rice 
and  Clark  also,  and  a  great  number  of  the  other  passengers. 
J  he  first  thing  they  did  was  to  look  for  a  conveyance     He 


t 


• 


UNITED  STATES   V.  CASSIDY. 


553 


Ji 


Charge  to  the  ,Tury. 
found  nothing  there;  no  wagons  around  the  depot.     They 
talked  the  matter  over,  and  finaUy  concluded  to  go  back  to 
Fa  o  Alto.     There  are  a  couple  of  crews  which  run  in  there, 
and  they  thought  they  could  get  definite  information  of 
whether  tram  19  was  coming  out  that  afternoon  or  not     If 
there  was  no  way  of  getting  to  San  Jose  they  would  have 
come  back  to  the  city.    They  walked  up  the  county  road  very 
leisurely     Stopped  just  outside  of  Mayfield,  and  looked  at 
the  cavalry.    Ihere  was  a  company  of  cavalry  camping  just 
outside  of  Mayfield.    Walked  up  the  county  road  to  almost 
opposite  Palo  Alto.     Cassidy  complained  that  his  shoes  were 
hurting  hiin,  and  wanted  them  to  wait  a  moiAent.     They 
jumped  over  the  fence;  sat  down  under  a  tree  in  UniversitV 
l-ark.    They  stayed  there  10  or  15  minutes.    While  they 
were  sitting  there  an  engine  came  in  on  the  turntable.    The'y 
all  got  up  and  looked  at  it.    He  does  not  know  whether  he 
Huggested  that  they  go  and  kill  it,  or  whether  Rice  did.     He 
knows  that  Rice  and  he  got  over  the  fence,  and  went  ovei- 
and  killed  the  engine.     Rice  and  he  were  in  advance  of  the 

M   ■.,  ,.      ^',    T*  ^''"'^  ''■'*^'''*''  *'^«  !•««*  ^■e'*  coming  or  not. 
He  did  not  look  around  to  see.     They  got  to  the  engine  first. 

He  went  up  on  the  left-hand  side,  over  the  timber  of  the  turn- 
table, and  thinks  Rice  went  on  the  right-hand  side.    When  he 
got  on  the  engine.  Engineer  Cornwall  was  standing  up  with 
his  head  out  of  the  window.    There  was  a  fireman,  a  man 
with  overalls,  and  a  man  in  citizen's  clothes,  turning  the 
turntable     Cornwall- was  saying:  «'A  little  ahead.    How  i< 
that,  paid ?     A  little  ahead,' -rej^ating  that  remark  two  or 
three  times.     He  (Mayne)  said  to  him,  "That  is  all  right 
George;  she   is   all   right   where   she   is."    Cornwall   >^id 
W  hat  are  you  going  to  do  ?  "    Mayne  replied,  "  Nothing  in 
particular."    Cornwall  then  stated,  >'  Don't  hurt  my  enJiie 
boys."    To  which  Mayne  replied,  "  We  have  no  intention  of 

caught  hold  of  the  grates,  and  started  to  shake  the  fire  out. 
He  tried  o  shake  the  fire  out.  It  was  in  such  a  condition- 
it  was  an  chnkered-that  it  would  not  go  through  the 
gj^tes^  He  was  about  to  give  it  up,  when  the  idea  struck 
him  that  he  could  put  it  out  with  a  squirt  on  the  left-hand 
injector.    He  put  on  the  injector,  turned  the  water  into  the 


MMMII 


554 


W   FEDEKAL  BEPOBTEH,  775. 


Cbarge  to  the  Jury, 
fire  box,  and  drowned  the  fire  out.    *    •    •    About  the 

0.7  li  !^r^!  ^"?L'*  ^°"'^  ^  ^«*«  t«  '«t  the  wafer 
out     The  latter  stooped  down,  looked  into  the  fire  box,  and 

said  he  thought^it  was  all  right.  Then  Mayne  took  the  coal 
n^hr?  .k'  . "!!  ^^"^"^  '^'^-  "«  ^"gg««ted  to  the  engi- 
»Z.„t  firK," •*  '^i**''  "'"  '•*"  ^''g^"^  »ff  the  turntable,  on 
.  .rSl  ^  hl«w-off  pipe  coming  against  the  timber  of  the 
turntable,  and  it  would  8cald  the  paint  on  the  engine.  He 
approved  of  that,  arid  the  table  was  turned  back  for  the 
straight  track,  and  the  engineer  ran  the  engine  off  over  the 

!!i'^t     ^"''""'  ^"^  *^'*  "*''"■*'*  *"^'^'  """*  he  could  not 
open  It    The  engineer  told  him  he  would  have  to  get  down 

IT^rt!!*  ^'^\  «  monkey  wrench,  and  loosen  up  the  nut 
Z  \  ^r  "*•*'  •*•'•  ^•^^""  «*^  him  the  monkev 
rJT  *  ^'"yn*  jumped  down  on  the  ground.  It  was  nefc"- 
e^ry  for  him  to  get  under  the  engine,  so  he  took  off  his  hat 
»nd  coat,  and  handed  it  to  the  engineer.  The  latter  held 
his  hat  and  coat  while  he  opened  it,  and  until  he  got 
bade  on  the  engine  .  •  •  There  was  nothing  said,  4- 
Iher  than  what  he  has  stated.  The  engineer  requested  them 
not  to  hurt  his  engine.  He  said:  "Boys,  don't  hurt  my 
engine.    I  like  my  engine."    And  he  repeated  that  remark 

two  or  three  times,  and  that  was  all  that  was  said  •  •  • 
Just  before  he  finished  killing  the  engine.  Rice  came  back 
from  up  towards  the  depot,  and  after  he  let  about  four  inches 
of  wat^-  out  of  her  he  went  back  into  the  cab,  and  opened  the 
blow-off    cock      Then   he  stood   by  the  water  glass,   and 

Th!'\  ',  Zli  'uf  """'r  ^*"*  ''''*  «*  ^«ht  in  the  glass. 
Then  he  closed  the  blow-off  cock.  He  did  not  know  but  what 
the  fire  might  kindle  up  again,  and  he  was  not  taking  anv 
chances  on  it.  He  shut  the  blow-off  cock  as  soon  as  th^ 
water  went  out  of  sight.  After  they  killed  the  engine.  Rice 
and  he  walked  up  to  the  depot.  There  was  a  crowd  of  20 
people  up  there,  he  supposes.  Just  before  they  reached  the 
depot,  the  other  engine  that  Minatt  was  running  was  blowing 
out  agamst  the  side  of  the  station-house,-*  little  statioiK 
SIX  by  SIX.  He  said  to  him  (Rice) :  «  That  won't  do.  You 
don  t  want  to  spoil  the  paper  in  there."  He  mentioned  the 
I>aper  and  instruments.    Rice  went  up  on  one  side,  and  he 


■ 


" 


■' 


UNITED   STATES   V.  CASSIDY. 


555 


Charge  to  the  Jury. 

on  the  other.     They  moved  the  engine  ahead  a  foot,  so  that 
she  would  clear  the  building.     Rice  was  moving  the  engine 
and  lie  had  hold  of  the  brake  wheel.    About  the  time  they 
moved  a  foot,  some  one  hollered,  "  Whoop !   you  are  off  the 
track."    They  stopped  immediately.    The  water  was  all,  or 
nearly  all,  out.    He  kicked  the  blow-off  cock  shut,  and  <rot 
down  off  the  engine.    He  had  nothing  whatever  to  do  with 
the  killing  of  Minatt's  engine.     He  got  up  there.    The  fire 
was  all  out,  and  the  water  abnost  all  out.     He  had  a  talk 
with  Engineer  Cornwall  just  before  they  left  Palo  Alto 
Cornwall  was  up  at  the  station.    Cornwall  called  him  over 
and  said  to  him:  "  Pard,  don't  you  think  you  have  done 
something  pretty  serious,  in  stopping  the  mail"?  "    Mayne  re- 
plied :   •'  No,  I  don't  think  so.    Even  so,  this  is  a  hell  of  a 
time  to  tell  us  of  it  now,  when  it  is  all  over."    Mayne  then 
turned  round  and  walked  off.    He  denies  having  made  th,> 
statement  testified  to  by  Cornwall,  as  follows :  "  I  says  '  Mr 
Alayne.  aren't  you  afraid  you  wiU  get  into  trouble  by  stoo- 
ping the  mail? '    He  [Mayne]  said,  '  Damn  the  mail.     You 
!un  t  got  no  mail.' "    Cornwall  replied,  "  You  have  fired  on 
this  tram  long  enough  to  know  [776]  we  do  carry  the  mail 
all  the  time."    He,  on  the  contrary,  affirms  that  statement 
was  just  exactly  as  he  gave  it,  word  for  word.     He  further 
states  that  he  had  no  knowledge  of  any  mail  train  coming 
along  at  that  time,  and  before  he  killed  the  engine;  did  not 
know  that  a  mail  train  was  due  at  that  time  on  the  schedule, 
is  familiar  with  the  surroundings  at  Palo  Alto.    The  train 
could  not  be  seen  from   that  turntable.    He  remained  in 
Palo  Alto  about  40  minutes;  then  went  over  to  Menlo  Park 
Cassidy  told  him  he  had  heard  that  Haydock  had   tele- 
graphed to  the  constable  at  Palo  Alto  to  arrest  them.    The 
hi^t  thing  they  thought  of  was  to  move  over  to  Menlo  Park 
They  stayed  in  Menlo  Park  an  hour,  or  may  be  an  hour  and 
a  half.    Ate  supper  over  at  the  hotel.    TheA  they  tried  to  ^t 
a  rig     The  livery  stable  man  wanted  too  much.    He  suo-- 
gested  to  the  boys  that  they  walk  over  to  Redwood;  there 
was  a  friend  of  theirs  over  there  who  would  drive  them  up. 
ihey  walked  to  Redwood,  got  a  rig  there,  and  they  were 
taken  as  far  as  San  Mateo.    Got  to  San  Mateo  between  half 
past  10  and  11  o'clock.     Did  not  do  anything  in  particular 


^^  67   FEDEBAL  REPORTER,    776. 

Charge  to  the  Juiy. 

U;^fe"()n'o«>'  P'"***'""  «"'>  .'""'-l  -itl>  the  bo,s  around 
t  leie  On  cross-examination  the  defendant  Mavne  testified 
hat  he  bonght  his  ticket  as  far  as  he  could  go  in  th>  itc 
ion  of  ^.ng  hon.e.-to  San  Jose.  The  distance  from  mTv- 
field  to  i5an  Jose  is  16  miles.  He  was  thei-e  when  the  ra  n 
left  He  made  no  effort  to  get  „„  and  buy  a  ticket  f romT 
conductor,  and  proceed  on  his  journey,  wllen  he  saw  it  In" 

Jose     He  did  not  think  they  wei-e  carrying  passenirers  anv 

f ..rthcr  than  Mayiield.    He  supposed  1.;  w^dd^S le  ^ 

dar  Palo  Alto  ci-ews  at  Palo  Alto.     He  knew  that  two  tiS 

laid  oyer  at  Palo  Alto  at  night.     From  where  he  wis    he 

on mg     He  was  oyer  200  yards  from  the  r,«,d.     He  admits 

hat.  although  he  neither  heard  nor  saw  the  train  conT  n 

he  suddenly  started  oyer  to  kill  a  live  engine.    He  had  IS 

m  that  tram.    He  knew  that  Cornwall  sometimes  went  ou 

hat  engine     He  knows  all  the  engineers  on  the  Coast  Diyi- 

Mon      He  states  that  he  did  not  know  what  engine  wa-  on 

the    ™in  th.U  he  went  up  on,  but  he  admits  tlfat  he  Lew 

^peat  t  le  circumstances  under  which  he  jumped  up  and  ran 

,ts*v!t  r^Ti  ';  ^"u"  ^'"•^  ^^•'""  "-  -i-  -"-  over 
llie  s„  ,teh.  just  before  she  came  on  the  tunitable  the  cylinder 

c.Hks  were  opeiu.!.  and  made  a  lot  of  noise.-steam  lilowing 
off.  They  got  u|,  and  looked  at  the  engine.  He  don't  know 
now  whether  he  suggested  to  Ric..  or  the  latter  sug^este  to 
h»n.  •  Le  s  go  and  kill  he."  They  did  not  debatele  1^ 
tioii  at  all.     They  went  and  killed  her. 

ing  Hnnemng,  I  .„,>,.,se.  We  wS  ,  fro  .  n^  nlV"*^  ^''  '*^  ^^■ 
that  a  live  engine  mild  nuH  a  trTi,  v  l  'r  Jf"  I^^*' .^o"  "ot  know 
one  mild  not?  \  Vd  i  .iJi  I"  A' J  *"'^-  ^-  And  a  dead 
kill  that  engine  bec;u,s  von  di^  n^r  ^T^ll  "*^^-  ^  ^'^  y«»  not 
did  not  know  one  wr«    he  e  afthrtinr"V'n';V'""  '"  ?r'    ^^'  ' 

not    know    that    to    kUI    thnf    h,t«    ^.    i  '     "*      *«•    ^^^    .vou 

pulling  a  train.  1  I  di^  Q  Yet  ^^^"li.Y'T  -^  ^""^*^^^  ^*  ^^^"^ 
ix)8e?  A.  I  did  not  know  there  wal  ^,  ?r Jh l^^  '^'  ^'"^^  ^^'^  '^  P^^- 
thought  it  was  a  light  en  17771  eine  if  ?I"  ^^T'^'  attached  to  it.  I 
want  anything  about  custonarv  T t.nf  ^"ft""^«0-  Q.  I  do  not 
Now.  Mn  Mayne.  dUl  3«t  know  tha?t;yui..*H'''V^^^^^  '''^'  ^^"^«"««- 
render  it  iuii;.ssible  to  take  a  tTJn  ?h^^^^^^^^  "''^'  ^"S»»«  ^^"^d 


UNITED   STATES    V.  CASSTDY 
Charge  to  the  Jury. 


557 


up  there  out  of  pure  devilfrrv     a    v«„      ,        ^ 

whether  there  was  a  trai.  or  not  o? wh^n'"-  ^^  ^''"  "'"*  ""t  ^'^^ 
n>ail,  or  not  anv  mail  and  von  km«i  h  ^''^'je''  <>'■  "ot  there  was  auv 

not  debate  it.  'l  thouX  it  w as  f  /ih^l^^- •'"'"^  ^r"^'^'  -^  '  <>« 
aurt  killed  her  for  no  rcln^l,  whateve?  o  fifn'  ""**  r"*  °''^'  ""«■•« 
reason?  A.  For  deviltry'  o  y»«  V..  *^-  ^^'<' J»"  "ot  do  it  for  that 
and  deviltr,-.    A.  I  Ju^^  vo,',  n?t'i..      "  "  ,'.""*  ''"'"t  <"'  n«i«chier 

Without  caring  what'ThTr^sZ  vfs^'  ^  That  T'  '*  *"!?*  ««>-  «• 
aB  any."  "  '^  ^^**^-     ^-  That  Is  as  good  an  answer 

Keferring  to  the  conyersation  he  had  with  Cornwall  about 

effl     w  •     ^'>e  «'gine  was  killed.     He  made  no 

effort  whatever  to  repair  that  which  he  was  told  was  a    iola 

CIark!^Crd;;ndyr  "  "'"^""^  ^^^'^  ^'^^  — 

stantll^tw"; ,"''  "'""Z  '*^**'"'^''"^  ""  trial,  testifies,  sub- 
S   CWanvLrr  '    "T  ^"P^^y^**  ^-^  t''^  Southern 

ci2  years    Sat  1 1?'^ '  *'''"  '"  ^'^  '^^  -"^^^  *-  «bout 
„w;      1^     '  ^•*'"S'  *"  the  Brotherhood  of  Loco 

«iotiye  Firemen,  and  San  Francisco  Lodge   \o   MSof  t^" 
American  Railway  Union,-  that  he  attended  the  miinVo 

IS    he  oJl  T,'"   '■'"**.  ""^""t  t''*  0»'^'»nd  strike,  or 
about  the  Oakland  boys  going  out  on  a  strike   and  we  in 
dor.sed  their  action     *    *     *    w^    n  j    . /V     '      '       e  '"" 
.i  4.     ^1    /*"-"""•  We  all  decided  to  strike "    W« 

states  that  most  of  the  members  nf  kJo      • 
nn  tK^  ri„    i  T-.-   •  •        ""eraoeis  of  his  union  were  enmloved 
on  the  Coast  Division  •  tliaf  ot  J k„j.         ^-        ■         °  ^'"P'oyea 

a  strike   thev  tilt     '    ^*  *•*,*  ™^t'"S' '^^i'^^s  ordering 
a  strike,  they  took  in  a  number  of  new  members   and  an 

witness  further  -statoc  ♦!,„*  u     n    .  lesiimony.     ihe 

r.ilv  „,/""''«'^  fates  that  he  first  saw  Rice  and  Clark  on 

inat,  after  an  meffpptnal  Qff/^^,A  j.  ^cues 

San  Jose-       '""""^t""'  ««««"?*  to  secure  a  conveyance  to 

I.rto"^'"inata!^^r*eom,„P«'»  ^'^    ^'^  «-*  '««'^  to  Pa,o 
opposite  Palo  Alto%n  thfwTurf  t^r^^'    ^^"  "^^  ^ot  up  abo,u 

lue  way  up,  there  was  some  cavalry  marcbing 


558 


11 


67   FEDERAL  REPORTER,   17!, 
Charge  to  the  Jury. 


back  from  Santa  Cruz ;  mme  regular  troops.  Thev  were  In  the  ApM 
We  stopped  and  talked  with  them  for  quite  a  while     We  wniked  on 

IS^'Vr.^^  ^PP^"**^  ^«^«  ^"«-  1  1>«S  «  new  pair  of  sh^es  o^  i 
told  the  fellows  they  could  go  on  the  rest  of  the  way,  if  they  wanted 

^J  ITt^iP^  ***  ^^  "^y  «*»«^  ^fl^'  I  ^^"^nbed  over  a  fence  l„X; 
park,  took  off  my  shoes,  and  laid  down  in  the  grass  Thev  a  1?  eot 
OTer  the  fence,  too.  We  were  sitting  there,  or  llXg  there  tellfne 
stori^  and  yarns,  for  about  ten  or  fifteen  minutes,  when  we  hVrd  thf 
cylinder  cock  of  an  engine  blowing  off.  Some  of  the  boys^got  ud  ami 
looked  over  the  fence,  and  saw  an  engine.     Sonie  one  savs-  There  is 

8t>:s°^n%'nVY.Sr"''"'  ^'^^  they  Itarted  for'it'^^^'^d^o'^p'uTmy 
8hws  on,  and,  I  believe,  my  coat.     Somebody  else  had  their  coat  off 

as  I  could,  after  I  got  my  shoes  and  coat  on.    There  were  two  or  threo 
in  the  cab  of  the  engine.     I  went  around  to  the  lef t.  and  start^  to 
take  off  or  uncouple  the  tank  hose.     [778]  I  turned  around   and  hiin 
pened  to  see  Minatt's  engine  up  the  track,  ind  I  quU  my  job'  and  wen^ 
up  to  Mmatt's  engine.     Q.  What  did  you  do  with  Minatt's  eiJne' 

M-^^iw^"  ?^*"^"  «"^  ™y«^*''  ^^'«  loosened  the  blow-off  ^cl^^^ and 
blew  the  water  out  The  fire  was  already  out  of  it.  I  had  to  crawl 
under  the  engine  to  do  it.  The  tank  valve  was  open,  and  the  watir 
TnJ^''^^^:^'  «i  *^^tank.  Q.  Did  Minatt  off^r  'aSy  r^istln^? 
A^  No ;  he  stood  off,  and  seemed  tickled.  He  gave  me  a  wrench  to 
A>  It;  told  me  where  I  could  get  one.     I  had  to  lay  down  fl^t     Ther? 

unSerft'  ^(^  Wnf.f  '^^MT^'  "S^  ^  ^^^  *«  ^^^  ^^^'»  A^^'  «nd  crawl 
No  s^r  n'^u  '"'-'Tk  ^^T  ri**"  y^"  ^^'•^  *^"'»»g  that  engine?  A. 
n«Vk  «n^^T  .^J^?w  ^4  l^®^?  ^^^^  ^^'^^^  «»^  .yourself?  A  I  think 
Clark  and  I  did  that  Job.     I  am  pretty  sure  Clark  was  there." 

Upon  being  asked  by  his  counsel  if  he  knew  what  the  in- 
dictment charged,  he  states  that  he  does,  but  that  he  never  did 
anything  except  to  let  water  out  of  that  engine.    Respecting 
the  cause  of  his  leaving  Palo  Alto  that  night,  he  states  that 
somebody  in  the  crowd  told  him  that  the  division  superin- 
tendent, Haydock,  had  ordered  the  constable  at  Palo  Alto  to 
arrest  them ;  that  they  thereupon  went  over  the  county  line 
to  Menlo  Park,  and  subsequently  to  San  Mateo.    On  cross- 
examination,  being  interrogated  as  to  his  motive  in  running 
towards  ComwalFs  engine  to  assist  in  killing  her,  he  states 
that  he  went  because  the  others  did ;  that  he  helped  kill  the 
engine  because  the  rest  of  them  were  killing  it;  that  he 
simply  wanted  to  be  with  the  crowd,  or,  to  use  his  own  Ian- 
guage,  *^  I  suppose  I  wanted  to  be  in  the  swim."    Respecting 
the  killing  of  Minatt's  engine,  he  states  that  he  thinks  he 
was  the  first  man  to  reach  it ;  that  when  he  did  he  got  up  and 
looked  mto  the  fire  box;  the  fire  was  out  of  her;  he  started 
m  to  open  the  blow-off  cock;  that  the  effect  of  this  was  to  let 
the  water  out ;  that  he  let  nearly  all  of  the  water  out ;  that  the 
effect  of  this  was  to  kill  the  engine.    He  also  states  that, 
while  engaged  in  killing  Minatt's  engine,  he  heard  some  one 


UNITED   STATES    V.  CASSIDY. 


550 


Charge  to  the  Jury, 
holler,  "  Three  cheers  for  the  A.  R.  U."  Being  asked  to  give 
his  reason  for  killing  Minatt's  engine,  he  states  that  it  fvas 
to  have  a  good  tune."  He  states  that  he  would  done  what 
he  could  towards  killing  CornwaU's  engin*  if  the  other  engine 
(Minatt  s)  had  not  been  there.  Further,  that  he  did  not 
think  of  any  consequences  that  might  ensue,  from  the  killing 

hf^  ri.M'JT"''  ^  ''•  "'  '•''*  **  °"'y  '^^^'n  that  prompted 
^  w  "^i  ®°^'"^'  "^"^  "  *<*  '^^P  my  hand  in." 

f  •  W  Clark,  one  of  the  defendants  in  the  indictment,  but 

hlr  i"!  I '"'"  '^"^  **«■  *•*«  defendants,  and  testified, 
briefly,  that  he  was  a  brakeman  on  the  Coast  Division  of  the 
Southern  Pacific  Company,  and  had  been  such  for  about  two 
years;  that  he  was  braking  between  San  Francisco  and  Mon- 
terey, on  the  freight  trains;  that  he  knows  Rice;  that  he  met 

W.  Z  ^  TT^  ***  *^'  ^*  *»*  J"'y  **  *«  A.  R.  U.  meet- 
u.g,  that  after  the  meeting  adjourned.  Rice  asked  him  to  go 

forl«n  ?'"'  "^  7^^  ^^'  '^^'  '^'y  "^"'d  "«t  g«t  tickete 
for  ban  Jose,  and  they  went  as  far  as  Mayfield.  On  cross- 
examination  he  states  that  he  met  Cassidy  and  Mavne  on  the 
train  between  San  Mateo  and  Redwood  City;  that" he  staved 

2fftTu  I  '""u  "''"'  ""'"  *^y  ^'  •^'^^  t«  S-»  Mateo; 
and  that  he  finally  came  to  San  Francisco  with  them.    He 

states  that  when  they  got  opposite  University  Park,  Cassidy 
complamed  that  his  shoes  were  hurting  him.    Th;y  theS 
upon  chmbed  over  the  fence  [779]  of  the  park,  and  ^t  down 
under  the  shade  of  a  tree.    After  they  had  been  sitting  the^^ 
about  10  minutes,  he  heard  a  noise  of  steam  blowing  out  of  a 
cylmder  cock  of  an  engine.    He  rose  up,  and  looked  over,  and 
^w  an  engine  going  on  to  the  turntable.     Either  Mayne  or 
Rice  said  :  "There  is  an  engine.    Let's  kill  her."     Thev 
jumped  over  the  fence.    He  followed  them  over  to  the  en- 
Tr^ti,    ,^^°i"  reached  there,  Mayne  got  up  on  the  engine.- 
on  the  left  side,-and  Rice  on  the  right  side.    He  got  up  be- 
hind Rice.    Cornwall  was  standing  by  his  lever.     He  had 
his  head  inside  the  cab  when  he  (Clark)  first  got  up.    Then 
he  stuck  hjs  head  out,  and  said  to  some  one  in  front  of  the 
engine:  "  What  do  you  want?    A  little  more  ahead.     I   1 

"  Sh'et  ',f      r  ^'  "^"'"^^  ''  ^^'  ^'y^'  -ho  replied, 
HW  v^J'^  *  ':t^  '^^  '''  ^^''•S*-"    Cassidv  was  some 

distance  behind.    The  witness  stayed  on  Cornwall's  engine 


t  r 


560 


67   FEDERAL   REPORTER,  779. 


'I 


' 


li 


Charge  to  the  Juiy. 
abm,t  a  couple  of  „,i„„tes,  ,nd  then  went  over  to  Minatt's  en- 

r«<^iH.  r".  •'' ,  r'*  "^''•-  ^'«'  «"t  «"  the  engine,  and 
CaBsidy  did  also  The  witness  got  up  behind  Caiidy. 
rheiv  was  ,„>  fire  ,»  the  fire  box:  the  witnL  took  o„t  a  ham- 

Zl  Zv  I^  ^'^V^'  "V*""  **"'^'  ""•^  «li«connected  the  hose, 

put  the  hook  and  hammer  and  strainer  back  in  the  box  Re- 
speoting  the  conversation  he  had  with  Douty.  Jndah,  Donne. 
and  others  .n  the  station  at  San  Mateo,  he  testifies  that  he 
was  called  by  Conductor  Donne,  who  said  to  him-  "There 

H  '''T  r?«n,'"  ''^''  '"•*"  '^""'  *«  ''»^«  a  talk  with  you." 
He  asked:  "^o  are  they?"  Donne  said  :  "  Doutv  and  Ju- 
dah.    They  want  to  talk  with  you  aboirt  the  strike.    This  is 

He  sH;r^.w  k"  '"'*  •'""  •"  "  '^''''''  "^  '"'yt'''"^  "ike  that." 
Vndi  tI  L^^  ""''"•  '"'  •■""'  '""^  introduced  to  Doutv  and 
1  r ..  ^  ^  T^  '*  "^"^  ^"ty  ^l^"  a*^  them  "what 
Ilnl    1?  f,l     :?•'■•  u"'  ***'''  *'^*'"  '"^"''^'•^  "f  the  Oaklnnd 

car^nd"i^.K  ''"^^  ^''''  ""*'"'"«  to  handle  Pullman 
caix  and  that  the  union  over  there  had  ordered  a  strike,  and 

Union  345,  in  San  Francisco.-the  union  he  was  a  member 
of,-indoi^d  the  action  of  Union  310,  and  thev  struck. 
Douty  said:  "What  do  you  want  to  strike  on  the  Coast  Di- 
vision  for?  They  are  not  hauling  any  Pullman  cars  here." 
And  he  wanted  him  (Clark)  to  go  back  to  San  Francisco 
«id  declare  the  strike  off.  dark  told  him  (Doutv)  that  he 
could  not  declare  the  strike  off.  Respecting  his  motive  in 
participating  in  the  killing  of  the  engines,  the  testimonv  is 
as  follows: 

Q.  You  were  witlX'^Srs.Ud  hS  ttm'' T  Yet  ^fJ'^o*''^ 
you  h«d  no  Idea  In  the  worUl  as  to  «Lt  the  object  wS?  T  ^o  st"" 

This  concludes  the  review  of  the  testimony  relating  to  the 
overt  acis  charged  as  having  been  committed  by  the  defend- 
ants at  1  a  o  Alto.  It  is  for  you  to  say  whether  it  establishes, 
to  your  satisfaction  and  beyond  a  reasonable  doubt,  that  the 
defendants  committed  any  of  the  following  acts  charged  in 
the  indictment,  to  wit :  ^ 


t( 


giiies 


(1)  Forcibly  taking  posseRHion  and  control  of  the    ♦     ♦     ♦    en- 
s  of  tlie  Southern  Pacific  Company,  by   (1)     ♦    ♦    i 


UNITED   STATES   V,  0AS8IDY. 
Charge  to  the  Jury. 


561 


(2)  threats,  intiniidatinn«  r7ftm  ^^-^ 
force  and  violence  In,  Zn  a^^St^T'.K'"^""''-  »'•  ''^^^  "«8  of 
ductors,  brakenien  swuSen  aLZ?/^.  *5^  engineers.  fl,-en>en.  con- 
company  having  cha^e  of  said  ^    ^'  ? "  °ther  employe,  of  said 

of  Palo  Alto,  by  (!)  gathlr  ng  rncrCds  etc  ^^k '''?"?•'  '^  ^"^ 
obstructions  upon  said  track  •  (31  hTrtf^ni  .;■'  ^1  ^^  Placing  physical 
forcibly  and  violently  assai.lVint  ^^  "4"''  <^"»S  the  switches ;  (4)  by 
engineei-s.  flieineu,  ZdSS  brakem;^;  T'".^',  «'°'>  ">tlmidatln«  'said 
en.„lo.vfs  while  enga«^  „s  Tforesafd^^^^  V^^^^^  ''P"*^'  «•"»  "t^er 

"tua  trains,  and  disronnec'lng  tS.  R,n.e  'rfiT  r'*"^'"'?  »"*  °'«  »' 
from  said  tracks;  (7)  by  ulthdratvlnTth.  ^  ^ ''•''.'■*"'<"''''8  ««'1  «"« 
tanks  of  said  engines  and  nuttii,.  n?,f  i""^^  «"•*«■•  '«>m  the  hollers  and 
[I  call  your  particular  attentton  to  ^htf"! '■™'°'""«  **""  ^^  ">erem 
Mng  to  the  overt  acts  ,fX  tS^s  headi^^fsf",''  '"f-  7'"*°^  «" 
removing  valves,  pins,  bolts  nlntJ.  LS  .V  '  **>  ^^  displacing  and 
of  the  machiner;  of  saia^e„ginlsfnd°  .«"*''*'.  "?»'«»<*»  «n«l  Portion" 
ways,  thereby  loosening  said  rails  •  (9)  bv°th«  '^''.'■''"'  "'  «"•*  ™"- 
unlawful  acts  and  n.eaL,  to%he'i:and^X?^*''„'i.notn  "  '°""'"*'  ""<* 
As  I  have  before  explained  to  you,  it  is  not  necessarv  th«t 

wool's  tt.  sxLt:*",;'"  •«  "^*'^ 

tiS„„,  „,  Mr.  L.„,i„g  upon  th"„i„t  L  ,u  ** 

*..  .h..  a,,  train' c„3'.hT^.ij^:a^rr  "k*-  " 

cmri  over  p«,.  „„,.  k,x  neoS.'    m  tt    "  ""  ^i"* 

1180S— VOL  1—06  M 36 


It'  i. 

i. 


562 


67    FEDERAL    REPORTER,   1m, 


C^harjre  to  the  Jur.v. 

It  is  claimed  by  counsel  for  the  defendants  that  an  intent 
to  obstmct  and  retard  the  passage  of  the  mails  cannot  be  in- 
ferred against  these  defendants  unless  they  had  knowledge 
that  the  mails  were  on  board  the  train  when  they  killed  the 
engine  on  the  turntable.  In  the  language  of  Judge  (Jross- 
cup  in  the  case  of  U,  S.  v.  Debs  (in  the  United  States  district 
court  of  Illinois)  65  Fed.  211 : 

.JJ  ^tl^""^  ^^P*""*'  '"  ****^  ^*®^^-  The  defendants  aie  proi)erly  charee- 
aWe  with  an  intent  to  do  all  the  acts  that  are  the  rXmable  and 
natural  conm,uence  of  the  acts  done.  The  laws  make  all  thrra  Iways 
post  routes  of  the  United  States,  and  it  is  within  every  one's  know! 
ttJ^u  %  r^^  ?*'''"^"  "^  "*^  passenger  trains  on  the^e  roads  cX 
the  mail.  There  is  no  stretch,  therefore,  either  of  law  or  common 
seme,  to  presume  the  person  obstructing  one  of  those  trains  contm 
plates,  among  other  intents,  the  obstnietion  of  the  mail."  »^«""em 

[7811  And  in  U.  S.  v.  Debs,  U  Fed.  764,  Judge  Woods,  of 
the  circuit  court,  uses  the  following  language : 

wh7en^e,''^^^Jm.rl^^!^^'  T*^  ^  ^"PP^  ^^"  understood,  that  all 
Who  engage,  either  as  principals,  or  as  advisers,  aiders,  or  abettors  In 
the  commission  of  an  unlawful  or  criminal  act,  are  individual  y 
responsible  for  the  criminal  or  injurious  results  which  folow  the 
^S^S**"",  *''*  **"  ""^*"P*  ^y  ^'^y  «'  their  number  to  c^mmU  thi 
i~  ±l'''"^fKf  ^^  ''TS"«'  ^*  *«  *»y  the  same  rule  that  co-conspirators 
are  responsible  for  the  acts  and  declarations  of  each  other  in  the 
furtherance  of  their  unlawful  purpose.     ♦     •    •    'A  man   may  bl 

Tit  oL'IaTo'Jf  '^n^''^  ^^  ^^"^  ''***  specifically  intend  (says  Bishop), 
if  it  came  naturally,  or  even  accidentally,  through  some  other 
specific,  or  a  general,  evil  purpose.  When,  therefore,  persons  combine 
to  do  an  unlawful  thing,  if  the  act  of  one.  proceeding  and  growing 

Zll  *w  t^l.«>V»'non  PJ«n'  terminates  in  a  criminal  result,  though 
not  the  particular  result  meant,  all  are  liable.'  "  i"ougn 

But,  aside  from  this  responsibility  which  the  kw  imposes 
upon  those  who  commit  unlawful  acts,  the  testimony  of  the 
defendants  Mayne  and  Cassidy  may  throw  some  light  on  the 
real   motive  that   actuated   the  defendants  in   ktlling  the 
engine  at  Palo  Alto.    When  asked  by  Cornwall  if  he  did  not 
think  he  had  done  something  serious  in  stopping  the  mail,  he 
admits  that  he  replied :  "  Even  if  I  have,  this  is  a  hell  of  a 
time  to  come  and  tell  us  of  it,  after  it  is  all  over."    And, 
hearing,  soon  after,  that  an  officer  was  after  them,  the  de- 
fendants fled  from  that  place.     Was  the  motive  "  deviltry," 
as  Mayne  says;  and  the  consequences,  whatever  they  might 
be?     Was  the  motive  "  to  be  in  the  swim,"  as  Cassidy  says; 
and  the  consequences,  whatever  they  might  be?     If  so,  how 
can  they  avoid  responsibility  for  such  consequences? 
In  considering  the  testimony  relating  to  the  whole  case,  it 


t 


UNITED   STATES   V.  CASSIDY. 


563 


Charge  to  the  Jury 

the  members  of  L  ImeSn  VS  ^^"^™"?«"*'  *"^«lving 
bination  and  concert  of T.H       .       ,  *-"  ^"'""  '"  «  «»™- 

of  trade  and  commerce  and  Ih^tr^     '  Tf  "i  '^*'^'"'' 
memlK-rs  of  that  con  J'raev    but  t^  defendants  were 

case,  under  this  indiot^^rr     •.,,    ^       ^^■'  "'""  '""^^'^^'  the 

passage  of  the  Unhid   sVl?  obstructing  and  K^tarding  the 

trade  and  co.mner"   L  in  !  "'"   '  "^   '"  '"'''''"'  *** 

•  they  committed  r'o:e"rt  atTwCl:"'  ""^^'^^^ 

turntable;  and  if  von  h^hl? t         fu    ^         ^"^'"^  <»>  ** 

reasonabi;  douJ^  Z^^^tj^tTI'  ''""''  '^ 
spiracv  to  commit  «n^i.  a  ""^^  ^^^^^  »  con- 

they  dM  in  pTsuance  of  "tl"f "'  '"'  ''"^'''^^  '^^  «»«* 

dut^  to  find  rdXda'ts'tirrr'f  "t""'  ^  ^^-^ 

that  occurence  aJone.  withorilrd  to  tt'^  T^""^  '° 
lating  to  occurrences  elsewher"  testimony  re- 

REASONABLE   DOUBT. 

in  W^o?  tttfenZts  ''a   '"""P^""  ""  -"«*-  ^ 
mony,  i„  a  crimtal  case  ^  not  "^Z' P'^^^^^^'^-r^ce  of  testi- 

tion,  and  it  musl  nro  J!  ^        ^^^^  ''  "P°"  ^^  P^ose^u- 

ehe  guilt  o5  rhfderdU:  t^  ^Ti^'^'r^ 

reasonable  doubt.     The  decree  nfTfw!-""'  ^^'"''^  * 

-luir^  is  not  absolui  S  tilTc^Svt  tT"*^ 
dence  must  produce  thaf  »ff»  *       or  certainty,  but  the  evi- 

ndual  jurors  s^  that  «1  .  "".*''"  '"'"*''  "*  ^^^  ^di- 
of  his  oathrCe  !o  ^   ^*!,f«"f' '^^'-ation,  he  can,  in  view 

accused.  Bv  '  reaiab^^rt '  x"''*  "*  *^'  ^^'*  "^  *»»« 
arising  out  of  tTe  "^cf  fnd  n„r"-"  '""""''"«  ^'^'>' 
a  fanciful  conjecture  or  seined  .nf        ""t^"""^  '*""•»*'  « 

«-^ « --b,e  man  '^:£::t-t:2^i::^:  ^ 


564 


«7  FEDERAL  BEPORTER,  782. 


Charge  to  the  Jury. 
whMj  his  own  concerns  are  involved,-a  doubt  for  which  a 
good  reason  can  be  given,  which  reason  must  be  based  on 
the  evidence,  or  the  want  of  evidence.  When  such  a  doubt 
exists  the  accused  is  entitled  to  its  benefit,  and  should  be 
acquitted.  But  where  the  evidence  is  satisfactory  to  the  im- 
partial mind  that  the  crime  was  committed;  that  the  de- 
fendant committed  it  as  chai^,-when  the  mind  comes 
naturally  and  reasonably  to  this  conclusion,  from  a  fair  con- 
sideration of  the  evidence,  properly,  there  can  be  no  reason- 
able doubt,  and  the  prisoner  should  be  convicted. 

iVKT  BOLE  JVDGE8  OF  CBEWBILITY  OF  THE  WITNESSES. 

Now,  in  relation  to  all  the  testimony  in  this  case,  vou,  gen- 
ttemen  Of  the  jury,  are  the  sole  judges  of  the  credibility  and 
ttie  weight  which  is  to  be  given  to  the  different  witnesses  who 
have  testified  upon  this  trial.     A  witness  is  presumed  to 
speak  the  truth.    This  presumption,  however,  may  be  re- 
pelled by  the  manner  in  which  he  testifies;  by  the  character 
of  his  testimony,  or  by  the  evidence  affecting  his  character 
tor  truth,  honesty,  or  integrity,  or  his  motives;  by  contrary 
evidence^    And  you  are  the  exclusive  judges  of  his  credi- 
bility    In  judging  the  credibility  of  the  witnesses  in  this 
case  (and  their  testimony  is,  to  some  extent,  conflicting), 
.you  may  believe  the  whole  or  any  part  of  the  evidence  of 
any  witness,  or  may  disbelieve  the  whole  or  any  part  of  it 
^  may  be  dictated  by  your  judgment  as  reasonable  men.' 
You  should  carefully  scrutinize  the  testimony  given,  and  in 
doing  so  consider  all  the  circumstances  under  which  anv 
witness  has  testified,  his  demeanor,  his  manner  while  on  the 
^and,  the^  relations  which  he  bears  to  the  government  or 
tiie  defendants,  the  manner  in  which  he  might  be  affected 
by  the  verdict  and  the  extent  to  which  he  is  contradicted  or 
^rroborated  by  other  evidence,  if  at  all,  and  any  construc- 
Jon  that  tends  to  shed  light  upon  his  credibility,  and  to 
J  .nnir^    ^'  "mount  of  credence  to  which  each  statement 
18  entitled  at  your  hands,  as  reasonable  and  intelligent  men- 
but,  in  this  respect,  you  must  remember  that  vour  nower 
and  duty  to  judge  the  effect  of  evidence  is  noi  arbitrary 

ilr*    .^  "T*^  "^f  ^'^'  discretion,  and  in  subordina- 
tion to  the  rules  of  evidence.    This  is  a  government  of  law, 


365 


IN   RE   DEBS,  PETITIONER. 
Syllabus. 

gation  we  owe  to  societv     tk.  i  highest  obh- 

affords  protection  St  ilel^^^ZZ^I  adininistered, 
and  the  poor.    Popular  clamor  tuTd'not  d^^f^l/t 

the  court,  and  it  is  t^thS    .  *«  «»*  P-^^ented  to  you  by 
and  intelligent  IndVlT'^T  ,T^^«"'*  ^^  y*>"«-  reason 

appreciate  ^theXortldutrimt^'r'  *'"*  ^''"  '^'^"^ 
--Ms  to^yourlSrd-^  -„-  -  ^ 

JKWe.  and  4in-,/cha»^'"'^™""«  T^.""?*  and  nights,  failed  to 
?tVTr"nra„ranV/«J^^ 


[564] 


IN  RE  DEBS,  Petition 

OBIGINAL. 


No.  11.    Origrlnal.    Argued  March  25   2«   ifio«     r. 

25.  26,  1895.-Declded  May  27,  1895. 
[158  U.  S.,  564.] 

nient  or  deeree.ft  imprisonment,  was  not  a  final  judg- 

The  government  of  the  ITnitivi  «*„*«„  t. 

Of  soil  within  Its  tetltorrand  al  r  ^r"""^'°"  "^"^  '^^^  ^* 
While  it  is  a  government  of 'enumertt  h        '''  "•*"  ""^  ^'"^«»- 
Of  sovereignty  Within  the  imTofthl'^''""'  "  ""^  '»»  "tWntes 

[565,  power  over  ^nt^:^'^!^^^^^''^^''"^''''^^ 
mission  of  the  malls.  """"en*  and  the  power  over  the  trans- 

ment  f?r  sTmornhMW  TTTa  fT^^^'^^^^^to  ^^^^^ 
^^Syllahns  and  abstract  of  argmnent  oopyHghted.  1««.  h.v  Banks  * 


566 


158    UNITED   STATES   REPORTS,  565. 
Statement  of  the  Case. 


The  powers  thus  coaferred  are  not  dormant,  but  have  been  assumed 

and  put  into  practical  exercise  by  Congressional  legislation. 
in  the  exercise  of  those  powers  the  United  States  may  remove  every- 
thing  put  upon  highways,  natural  or  artificial,  to  obstruct  the  pas- 
sage of  Interstate  commerce,  or  the  carrying  of  the  mails 
While  it  may  be  competent  for  the  government,  through  theexecutlve 
branch  and  in  the  use  of  the  entire  executive  power  of  the  Nation,  to 
forcibly  remove  all  such  obstructions,  it  is  equally  within  its  com- 
petency to  appeal  to  the  civil  courts  for  an  inquiry  and  determina- 
tion as  to  the  existence  and  the  character  of  any  of  them,  and  if 
TOch  are  found  to  exist  or  threaten  to  occur,  to  invoke  the  powers 
of  those  courts  to  remove  or  restrain  them,  the  jurisdiction  of  courts 
to  interfere  in  such  matters  by  injunction  being  recognized  from 
ancient  times  and  by  indubitable  authority. 
Such  jurisdiction  Is  not  ousted  by  the  fact  that  the  obstructions  are 
accompanied  by  or  consist  of  acts  in  themselves  violations  of  the 
criminal  law,  or  by  the  fact  that  the  proceeding  by  injunction  is 
of  a  civil  character,  and  may  be  enforced  by  proceedings  in  con- 
tempt; as  the  penalty  for  a  violation  of  such  injunction  is  no  sub- 
stiUite  for.  and  no  defence  to,  a  prosecution  for  criminal  offences 
committed  in  the  course  of  such  violation. 
The  complaint  filed  in  this  case  clearly  shows  an  existing  obstruction 
of  artificial  highways  for  the  passage  of  interstate  commerce  and 
the  transmission  of  the  mails,  not  only  temporarily  existing    but 
threatening  to  continue,  and  under  it  the  Circuit  Court  had  power 
to  issue  its  proc-ess  of  injunction. 
Such  an  injunction  having  been  issued  and  served  upon  the  defend- 
ante,  the  Circuit  Court  had  authority  to  inquire  whether  its  orders 
had  been  disobeyed,  and  when  it  found  that  they  had  been  dis- 
obeyed, to  proceed  under  Rev.  Stat.  8  725.  and.  to  enter  the  order  of 
punishment  complained  of. 
The  Circuit  Court  having  full  jurisdiction  in  the  premises,  its  findings 
as  to  the  act  of  disobedience  are  not  open  to  review  on  hahean 
corpus  in  this  or  any  other  court. 
The  court  enters  into  no  examination  of  the  act  of  July  2    1890   c 
647,  26  Stat.  20»,  on  which  the  Circuit  Court  mainlv  relied  to  sus- 
tain its  jurisdiction ;  but  it  must  not  be  understood  that  it  dissents 
ftrom  the  conclusions  of  that  court  in  reference  to  the  scope  of  that 
'   act,  but  simply  that  it  prefers  to  rest  its  judgment  on  the  broader 
ground  discussed   in  its  opinion,  believing  it   important  that  the 
principles  underlying  it  should  be  fully  stated  and  fully  affirmed. 

On  July  2,  1894,  the  United  States,  by  Thomas  E.  Mil- 
Christ,  district  attorney  for  the  Northern  District  of  Illinois 
nnder  the  direction  of  Eichard  Olney,  Attorney  General^ 
filed  their  [S66]  bill  of  complaint  in  the  Circuit  Court  of 
the  United   States  for  the  Northern  District  of  Hlinois 


■  I 


IN    RE   DEBS,  PETITIONER.  5^7 

Statement  of  the  Case, 
against  these  petitioners  and  others.    This  bill  set  forth 
among  other  things,  the  following  facts:  It  naif twtt' 

ZJ'lTrf  r"^'"''^'  ^"^  ''  ^"^^^^  ^hat  they  were! 
gaged  m  the  business  of  interstate  commerce  and  su^ect  to 
the  provisions  of  the  act  of  Congress  of  February  4    lis? 

known  as  "  the  Interstate  Commerce  Act  "  anT^n  fif'  ,  ' 
of  the  TTnifnri  G*  4.         1    r"""^**^^c6  ^ct,    and  all  other  laws 

ner  that  the  freight  so  carried  into  and  out  of  the  citv  of 

TTnitprI  «5f.t       *{'  X    r,        ^''^  carrying,  the  mails  of  the 
United  States;  that  all  were  by  statute  declared  post  roads 

Sr7rceVof7e  Unit^'d  ST  "^  ""•^'  '"^^  '''^^^^^^ 
ly  i«rces  ot  the  United  States,  and  provision*^   mnr.,' 

The  bill  further  averred  that  four  of  the  defendants  n«m 

arS:rheTattft-tS^^:it-^^^^^^ 
that  thereafter  the  four  office^^Z  r«i  "'"P'"'^^ 

^^^L,i.      ^^  ''"^'""  *«'•'"«*  P""n'»n  sleeping  cars  by 
causing  strikes  among  employes  of  all  railroads^tlmp^ij^ 


i 


158   UNITED  STATES  REPORTS^  567. 
StatemeDt  of  the  Gate. 

to  haul  the  same.    It  charged  knowledge  on  the  part  of  the 
defendants  of  the  necessity  of  the  use  of  sleeping  cars  in  the 
operation  of  the  business  of  the  railroads  as  common  carriers, 
of  the  contracts  for  such  use  between  the  railroad  companies 
and  the  car  company,  of  the  contracts,  laws,  and  regulations 
binding  the  railway  companies  and  the  receivers  to  the  carry- 
ing  of  the  mails;  also  of  the  fact  that  sleeping  cars  were  and 
of  necessity  must  be  carried  upon  the  trains  of  said  carriers 
with  cars  containing  the  mails;  that  with  this  knowledge 
they  entered  into  a  combination  and  conspiracy  to  prevent 
the  railroad  companies  and  the  receivers,  and  each  of  them, 
from  performing  their  duties  as  common  carriers  of  inter- 
state commerce,  and  in  carrying  into  execution  that  con- 
spiracy did  induce  various  employes  of  the  railway  companies 
to  leave  the  service  of  the  companies,  and  prevent  such  com- 
panies and  the  receivers  from  securing  other  persons  to  take 
their  places;  that  they  issued  orders,  notifications,  etc.,  to 
the  members  of  the  railway  union  to  leave  the  service  of  the 
companies  and  receivers,  and  to  prevent  the  companies  and 
I«ceivers  from  operating  their  trains;  that  they  had  asserted 
that  they  could  and  would  tie  up,  paralyze,  and  break  down 
any  and  every  of  said  railway  companies  and  receivers  which 
did  not  accede  to  their  demands;  that  in  pursuance  of  the 
IHBtructions,  commands,  and  requests  of  said  officers  large 
numbers  of  the  employes  of  the  railway  companies  and  re- 
ceivers left  their  service. 
Then  followed  these  allegations: 

"ADd  your  oKitor  further  ehar»?e«  that  fiald  defendants  aimed  and 
intended  and  do  now  aim  and  Intend  in  and  by  the  said  conspiracy 
and  eoml»ination.  to  secure  unto  themselves  the  entire  control  of  the 
interstate,  indu'^trlal  and  cumnienfal  bushiess  in  which  tlie  population 
of  the  dty  of  Chicago  and  of  the  other  communities  along  the  lines  of 
road  of  said  railways  are  engaged  with  each  other,  and  to  restrain 
any  and  all  oth  »r  p?r8t?ns  from  anv  lndei>?iident  control  or  manage- 
ment of  such  Interstate.  Industrial  or  commercial  enterprises  save 
according  to  the  will  and  with  the  ct)Ur>ent  of  the  defendants. 

[568]  "  Your  <iintor  further  nvers  that  In  pursuance  of  said  combi- 
nation ana  coun>lracy  and  to  acct)mpllsh  the  purpose  thereof  as  here- 
inbefore set  forth,  the  said  defendants  Debs.  Howard,  Rogers.  Kellher 
and  others,  officers  of  nald  American  Railway  Union,  Issued  or  caused 
to  be  Iss-ied  the  orders  and  directions  as  aliove  get  forth,  and  that  In 
obedience  of  such  orders  and  in  pursuance  of  said  consplracv  and  com- 
bination, numerous  employ^  of  said  railroad  companies  and  receivers 
Unitedly  refuted  to  obey  the  orders  of  said  employers  or  to  perform  the 
usual  duties  of  such  service,  and  many  others  of  such  employ^  quit 


r 


IN   BE   DEBS,  PETITIONER. 
Statement  of  the  Case. 


mu 


such  service  with  the  common  purpose,  and  with  the  result  of  prevent- 
ing said  railroad  companies  and  receivers  from  operating  their  said 
railroads  and  from  transporting  the  United  States  mails,  and  from 
carrying  on  or  conducting  their  duties  as  common  carriers  of  inter- 
state traffic. 

"Your  orator  further  avers  that,  pursuant  to  said  combination  and 
conspiracy,  and  under  the  direction  as  aforesaid  of  said  officers  and 
directors  of  said  American  Railway  Union,  said  other  defendants  and 
other  persons  whose  names  are  to  your  orator  unknown,  proceeded  by 
collecting  together  in  large  numbers,  by  threats,  intimidation,  force 
and  violence  at  the  station  grounds,  yards  and  right  of  w^ay  of  said 
railroad  companies,  respectively,  in  the  State  of  Illinois,  to  prevent 
said  railroad  companies  from  employing  other  persons  to  fill  the 
vacancies  aforesaid ;  to  compel  others  stUl  employes  of  said  railroad 
companies  to  quit  such  employment  and  to  refuse  to  perform  the 
duties  of  their  service,  and  to  prevent  the  persons  remaining  in  such 
service  and  ready  and  willing  to  perform  the  duties  of  the  same,  from 
doing  so. 

"Your  orator  further  avers  that  said  de''endants,  in  pursuance  of 
said  combination  and  conspiracy,  acting  under  the  direction  of  said 
officers  and  directors  of  said  American  Railway  Union,  did  with  force 
and  violence  at  divers  times  and  places  within  said  State  of  Illinois 
and  elsewhere,  step,  obstruct  and  derail  and  wreck  the  engines  and 
trains  of  said  railroad  companies,  both  passenger  and  freight,  th«i 
and  there  engaged  in  interstate  commerce  and  in  transijorting  United 
States  mails,  by  locking  the  switches  of  the  railroad  of  said  [5691 
railroad  companies,  by  removing  the  spikes  and  rails  from  the  track 
thereof,  by  turning  switches  and  displacing  and  destroying  signals,  by 
assaulting  and  interfering  with  and  disabling  the  switchmen  and 
other  employes  of  told  railroad  companies  having  charge  of  the  sig- 
nals, switches  and  tracks  of  said  companies,  and  the  movement  of 
trains  thereon,  and  in  other  manners  by  force  and  violence,  depriving 
the  employes  of  said  railroad  companies  In  charge  of  such  trains  of 
the  control  and  management  of  the  same,  and  by  these  and  other  un- 
lawful means  attempted  to  obtain  and  exercise  absolute  control  and 
domination  over  the  entire  operations  of  said  railroads." 

The  bill  further  set  forth  that  there  had  become  established 
in  the  city  of  Chicago  a  business  conducted  under  the  name 
of  the  Union  Stock  Yards,  at  which  for  many  years  immense 
numbers  of  live  stock  from  States  and  Territories  beyond  the 
State  of  Illinois  had  been  received,  slaughtered,  and  con- 
verted into  food  products,  and  distributed  to  all  quarters  of 
the  globe,  and  that  all  the  large  centres  of  population  in  the 
United  States  were  in  a  great  degree  dependent  upon  those 
stock  yards  for  their  food  supply  of  that  character;  that 
for  the  purpose  of  handling  such  live  stock  and  the  product 
thereof  the  company  conducting  such  business  operated  cer- 
tain railroad  tracks,  and  that  in  pursuance  of  the  combina- 
tion and  conspiracy  aforesaid  the  four  defendants,  officers 
of  the  railway  union,  issued  orders  directing  all  the  em- 
ployes handling  such  railroad  tracks  to  abandon  such  service. 


570 


158   UNITED  STATES  REPORTS,  569. 
Statement  of  the  Case. 


To  this  .was  added  the  following: 


"And  your  orator  further  alleges  that  in  pursuance  of  a  like  com- 
bination  and  unlawful  conspiracy,  the  said  defentots  and  ot?Z. 
combining  and  conspiring  with  them  for  the  pu^^^  of  stiU  fimS 
restraining  and  preventing  the  conduct  of  suchb^s?ne^    have  bv 

S^i^rsV^tX^'th^"  n,i^""^i^^^^  ^T^^*^  ^^«  employment  or'ther 
persons  to  take  the  place  of  the  employes  quitting  the  service  of  said 
company  so  operating  said  Union  Stock  Yards. 

comh!n«Hnr«n!?!Cr  ^"'^^^'*  ^^''''-^  ^^''^  ^^  ^^^^^  ^t  Said  uulawful 

TOder  the  Lnnlv^?'^^^  ''J'1  '^/^^"  «"^  ^^'"^^  «^«^-*'««J^  there- 
««WK    5?-    '^Py «^^  ^^^  *"^  ^"^^  ^or  consump-  [5701  tion  throuffh- 

tebles  fnlT^lftl''*^^^^V^"  ^'^^^^  ^"^  ^^  ^«»i  bread't^iffs Tell 
laples.  fniits,  meats  and  other  necessaries  of  life,  has  been  c-iit  off 

interrupted  and  interfered  with,  and  the  market  therefor  Se  iargef; 

unavailable,  and  dealers  in  all  of  said  various  produces  S^^"d  the^n^ 

tSIn  amX'the'^irV'^^f  "^  ^"^"^^'  and^raTmfd  ^'1^0 
de^t^y^"     *"  *''*^^  ^''^  ^'^'^  restrained,  obstructed  and  largely 

The  bill  alleged  that  the  defendants  threatened  and  de- 
clared that  they  would  continue  to  restrain,  obstruct,  and 
interfere  with  interstate  commerce,  as  above  set  forth,  and 
that  they  "  will  if  necessary  to  carry  out  the  said  unlawful 
combmation  and  conspiracy  above  set  forth  tie  up  and  para- 
lyze the  operations  of  every  railway  in  the  United  States, 
and  the  business  and  industries  dependent  thereon."  Follow- 
ing these  allegations  was  a  prayer  for  an  injunction.  The 
bill  was  verified. 

On  presentation  of  it  to  the  court  an  injunction  was  or- 
dered commanding  the  defendants  "  and  all  persons  combin- 
ing and  conspiring  with  them,  and  all  other  persons  whom- 
soever, absolutely  to  desist  and  refrain  from  in  any  way  or 
manner  interfering  with,  hindering,  obstructing  or  stopping 
any  of  the  business  of  any  of  the  following  named  railroads," 
(specifically  naming  the  various  roads  named  in  the  bill,) 
"  as  common  carriers  of  passengers  and  freight  between  or 
among  any  States  of  the  United  States,  and  from  in  any  way 
or  manner  interfering  with,  hindering,  obstructing  or  stop- 
ping any  mail  trains,  express  trains  or  other  trains,  whether 
freight  or  passenger,  engaged  in  interstate  commerce,  or 
carrying  paasengers  or  freight  between  or  among  the  States; 
and  from  in  any  manner  interfering  with,  hindering  or  stop- 
ping any  trains  carrying  the  mail ;  and  from  in  anv  manner 
interfering  with,  hindering,  obstructing  or  stopping  any 
engines,  cars  or  rolling  stock  of  any  of  said  companies  en- 
gaged m  interstate  commerce,  or  in  connection  with  the  car- 


IN   RE   DEBS,  PETITIONER. 
Statement  of  the  Case. 


571 


nage  of  passengers  or  freight  between  or  among  the  States; 
and  from  in  any  manner  interfering  with,  injuring  or  de- 
stroying any  of  the  property  of  any  of  said  railroads  en- 
gaged in  or  for  the  purpose  of,  or  in  connection  with,  inter- 
state commerce  or  the  carriage  of  [571]  the  mails  of  the 
United  States  or  the  transportation  of  passengers  or  freight 
between  or  among  the  States;   and  from  entering  upon  the 
grounds  or  premises  of  any  of  said  railroads  for  the  purpose 
of  interfering  with,  hindering,  obstructing,  or  stopping  any 
of  said  mail  trains,  passenger  or  freight  trains  engaged  in 
interstate  commerce,  or  in  the  transportation  of  passengers  or 
freight  between  or  among  the  States,  or  for  the  purpose  of 
interfering  with,  injuring,  or  destroying  anv  of  said  property 
so  engaged  in  or  used  in  connection  with  interstate  commerce 
or  the  transportation  of  passengers  or  property  between  or 
among  the  States;  and  from  injuring  or  destroying  any  part 

of  the  tracks,  roadbed,  or  road,  or  permanent  structures  of  said 
railroads;  and  from  injuring,  destroving,  or  in  anv  way  in- 
terfering with  any  of  the  signals  or  switches  of  anv  of ^ said 
railroads;  and  from  displacing  or  extinguishing  a  Ay  of  the 
signals  of  any  of  said  railroads,  and  from  spiking,  ^locking, 
or  in  any  manner  fastening  any  of  the  switches  of  any  of 
said  railroads,  and  from  uncoupling  or  in  anv  way  hamper- 
ing or  obstructing  the  control  by  any  of  said  railroads  of 
any  of  the  cars,  engines,  or  parts  of  trains  of  anv  of  said 
railroads  engaged  in  interstate  commerce  or  in  the  trans- 
portation of  passengers  or  freight  between  or  among  the 
States    or  engaged   in  carrying  any  of  the  mails  of  the 
United  States;  and  from  compelling  or  inducing  or  attempt- 
ing to  compel  or  induce,  by  threats,  intimidation,  persua- 
sion, force,  or  violence,  any  of  the  employes  of  anv  of  said 
railroads  to  refuse  or  fail  to  perform  anv  of  their  duties  as 
employes  of  any  of  said  railroads  in  connection  with  the  in- 
terstate business  or  commerce  of  such  railroads  or  the  car- 
nage  of  the  United  States  mail  by  such  railroads,  or  the 
transportation  of  passengers  or  property  between  or  amon<r 
the  States;  and  from  compelling  or  inducing  or  attempting 
to  compel  or  induce  by  thrfeats,  intimidation,  force,  or  vio 
lence  any  of  the  employes  of  any  said  railroads  who  are  em- 
ployed by  such  railroads,  and  engaged  in  its  service  in  the 


672 


158  UNITED  STATES  REPORTS,  571. 


I 


Statement  of  the  Ciuie. 
conduct  of  interstate  business  or  in  the  operation  of  any  of 
Its  trains  oirrying  the  mail  of  the  United  States,  or  doin* 
mtersut*  business,  or  the  transportation  of  passengers  and 
freight  Ustween  and  among  the  States,  [572]  to  leave  the 
service  of  such  railroads;  and  from  preventing  any  person 
whatever,  by  threats,  intimidation,  force,  or  violence  from 
entering  the  service  of  any  of  said  railroads  and  doing  the 
work  thereof,  in  the  carrying  of  the  mails  of  the  United 
States,  or  the  transportation  of  passengers  and  freight  be- 
tween or  among  the  States;  and  from  doing  any  act  what- 
ever in  furtherance  of  any  conspiracy  or  combination  to  re- 
stom  «ther  of  said  raib^d  companies  or  receivers  in  the 
free  and  unhindered  control  and  handling  of  interstate  com- 
nierce  over  the  lines  of  said  railroads,  and  of  transportation 
of  persons  and  freight  between  and  among  the  States;  and 
from  ordering,  directing,  aiding,  assisting,  or  abetting  in 
•ny  manner  whatever,  any  person  or  persons  to  commit  any 
or  either  of  the  acts  aforesaid. 

in.'m.I'?.  "  'l'?,^''*^  ordered  that  the  aforesaid  Injunction  and  writ  of 

or  bj  readme  the  same  to  them  and  the  serrice  upon  thlm  reswctlvelv 
of  the  writ  ot  8ubi>ieua  herein,  and  shall  be  blndin"unon^iTXf^^^^ 

:^:.:;f^Cenr.,^vredr/„.ro^S 

of  toiid  injum-tlon."  ™'^'^  "'"'  ">*  existence 

This  injunctitjn  was  served  upon  the  defendants-at  lea«=t 
upon  those  who  are  here  as  petitioners.    On  July  17  the 
district  attorney  filed  in  the  office  of  the  clerk  of  said  court 
an  information  for  an  attachment  against  the  four  defend- 
ants, officers  of  the  railway  union,  and  on  August  1  a  similar 
information  against  the  other  petitioners.     A  hearing  was 
had  before  the  Circuit  Court,  and  on  December  14  these 
petitioners  were  found  guilty  of  contempt,  and  sentenced  to 
1678]  imprisonment  in  the  county  jail  for  terms  varyinir 
from  three  to  six  months.    64  Fed.  Rep.  724.    Having  been 
committed  to  jail  in  pursuance  of  this  order  they,  on  Janu- 
ary 14, 1895,  applied  to  this  court  for  a  writ  of  error  and  also 


" 


IN  RE  DEBS,  PETITIONER.  573 

ATRoment  for  petitioners, 
one  of  habeas  corpus.    The  former  was,  on  January  17  de- 
2  '  T  .     f '""^  '''"*  '^'  '"'^''^  «'  *»»«  Circuit  irt'was 


Mr.  Lyman  TrumbuU  for  petitioners. 


I.  The  extraordinary  proceeding  under  which  the  orison 
ei^  were  deprived  of  liberty,  was  commenced  by  t^e  fiErof 
a  bill  in  equity  m  the  name  of  the  United  State^^  bv  aZtrict 
a  torney,  under  the  direction  of  the  Attorney  (kneral     The 

tion,  so  far  as  the  record  shows,  with  the  case,  stating  that 
he  has  read  the  b, IK  and  "  believes  the  statements  thereiS  co^ 
nulr     ™'-      T'l^»>\»^««  filed  July  2.    The  same  davTn 

prisoners  and  unknown  persons,  and  the  next  day  was  served 
railrr  "^"»^rT^-    Th«  bill  states  that^wenty-two 

fttock  ■'^ard  and  Transit  Company,  were  chartered  and  or- 
ganized for  the  purpose  of  continuously  doing  the  businl  of 
common  earners  of  passengers  and  freight  genera  Hnd 
were  doing  such  business  among  the  differant  Stat^    So  far 

atd^TranTp"'*^  P""^""  *"  ^"^^^^'  ^he  Union  Stock  Ya^ 
and  Transit  Company,  one  of  the  roads  named,  wa..  organizS 
for  the  purpose  of  locating  and  conducting  s  ock  yaSs  aS 
connecting  them  by  rail  with  railroads  entering  cScl  on 
the  south  side,  and  transporting  between  said  cattleTrdT 
<«ttle  and  live  stock  and  persons  accompanying  the  iS 
and  by  the  11th  section  of  its  charter  it  is'^dec^lar^d :  «  nTS- 

ferring  upon  the  company  hereby  created  any  power  or  an 
thonty  to  maintain  or  operate  a  'railroad  f or  thfrnv^aJ^ 

the  amount  Jb  "''"*  °V^'  "'"  '^  ^'^'"''^  *«  *  ^-^-"^^-t  of 
the  amount  of  business  done  at  the  Union  Stock  Yards  the 

quitting  of  work  by  the  employes  of  the  company  the  lian 
dhng  of  live  stock  and  its  conversion  into  food^S^'  °' 

The  bill  states  that  the  prisoners  are  officers  and  member 


574 


158    UNIThlD    STATES    REPORTS,  574. 


Argument  for  petitioners. 

of  an  organization  known  as  the  American  Railway  Union; 
that  m  May,  1804,  a  dispute  arose  between  the  Pullman  Pal- 
ace Car  Company  and  its  employes  which  resulted  in  the 
employes  leaving  the  service  of  the  company;  that  the  pris- 
oners,  offi(-ers  of  the  American  Railway  Union  combining 
together,  and  with  others  unknown,  with  the  purpose  to  com- 
pel an  adjustment  of  the  said  difference  and  dispute  between 
said  Pullman  Co.  and  its  employes,  caused  it  to  be  given  out 
through   the   newspapers   of  Chicago,   generally,   that   the 
American  Railway  Union  would  at  once  create  a  boycott 
against  the  cars  manufactured  by  said  Pullman  Palace  Co., 
and  that  in  order  to  make  said  boycott  effective,  the  members' 
of  the  American  Railway  Union  who  were  some  of  them  em- 
ployed as  trainmen  or  switchmen,  or  otherwise,  in  the  service 
of  the  raihoads  mentioned,.which  railroads  or  some  of  them 
are  ^.ccustomed  to  haul  the  sleeping  cars  manufactured  by 
the  Pullman  Palace  Car  Co.,  would  be  directed  to  refuse  to 
perform  their  usual  duties  for  said  railroad  companies  and 
receivers  in  case  said  railroad  companies  thereafter  attempted 
to  haul  Pullman  sleeping  cars. 

Such  is  the  gist  of  the  bill.    All  that  is  subsequently  al- 
leged as  to  what  was  done  by  the  prisoners,  was  for  the  pur- 
pose  of  compelling  an  adjustment  of  the  difference  between 
the  Pullman  Company  and  its  employes.    To  accomplish  this, 
the  American  Railway  Union  called  upon  its  members  to  quit 
work  for  the  companies  which  had  persisted  in  hauling  the 
Pullman  cars.     Was  there  anything  unlawful  in  this?     If 
not,  then  the  prisoners  and  the  memjbers  of  the  American 
Railway  Union  were  engaged  in  no  unlawful  combination  or 
conspiracy.     The  allegation  that  the  prisoners,  officers  and 
directors  of  the  American  Railway  Union  did  issue  and  pro- 
mulgate certain  orders  and  requests  to  the  members  of  the 
union  in  the  service  of  certain  railway  companies  in  pursu- 
ance of  said  [575]  unlawful  purpose  or  conspiracy,  did  not 
make  the  purpose  unlawful,  when  the  facts  stated  in  the  bill 
show  that  the  purpose  was  not  unlawful.    AU  that  the  prison- 
ers are  charged  with  threatening  to  do,  or  having  done,  was 
for  the  purpose,  primarily,  of  bringing  about  an  adjustment 
of  the  differences  between  the  Pullman  Company  and  its 
employes.    It  is  only  incidentally  in  pursuit  of  this  lawful 


IN   RE   DEBS,  PETITIONER.  5^75 

Argument  for  petitioners. 

Jt  ^'r*."'  "■"  ■^""""'  ""i""  "". "  '*«  bill  shows 
J«  to  otetrocl  o.„,„.^,  b,„  ,„  „  „a„|j.  j„^  ~; 

equity  has  jurisdiction;  if  not  th^n  ih/-   ■       f  ^  "* 

chancery  of  England  «t  tZ7-  ^^"^^^  ''^  **»«  ^igh  court  of 
stitution',  or  haf  i^ltrd  ;';t"*'-  "^^'^^  ^- 
Milh  V.  Cohn,  150  U  S  2ot  ^  ^^  Congn^. 

roads.     It  is  im  b^thfl  °*  ^"^  °"*  «^°  ^^^  ™»- 

ence  with  the  prfi  Utrjtr  v*"  ^T^"*  ^*«^^«'- 

f~  rest^iS  ^i!:ri:^:s^:  '-^  '-'^^- 

alludrngTolh/  ntraf''  ^^'^'^'  ^'^  Oases,  5W.llm,) 
States:^"  Over  tttZr"™;^''**  *"•  ^"'"^"*'  '^^^^  «*  the 

sively  to  the  sLZ    %       !  h    ^'^  ^''^'^  •^'""g^  exclu- 
businL  ofcitt%ratacr;'Srn  'l S^u"^  ^'^  '''. 

nniterStaTrrany-^^^^^^ 


r 

JL. 


11 


576 


158  UNITED  STATES  REPORTS,  576. 


' 


▲rgnment  for  petitioners, 
portation  of  the  mails,  the  laws  provide  for  their  punish* 
ment;  but  equity  has  no  jurisdiction  to  grant  an  injunction 
to  stay  proceedings  in  a  criminal  matter.    "  If  they  did, 
said  Chief  Justice  Holt,  "  the  court  of  Queen's  Bench  would 
break  it,  and  protect  any  that  would  proceed  in  contempt  of 
it"    Accordingly,  in  the  case  of  Lord  Montague  v.  Dudman, 
Lord  Hardwicke  allowed  a  demurrer  to  a  bill  for  an  injunc- 
tion to  stay  proceedings  on  a  mandamus  issued  to  compel 
the  lord  of  a  manor  to  hold  a  court.    "  The  court,"  he  said, 
"has  no  jurisdiction  to  grant  an  injunction  to^tay  proceed- 
ings on  a  mandamus,  or  on  an  indictment,  or  an  information, 
or  a  writ  of  prohibition."    3  Perkins'  ed.  Darnell's  Ch.  Pr. 

1721.  . 

III.  It  is  not  in  the  power  of  Congress  to  confer  upon  a 
court  of  equity  jurisdiction  unless  of  an  equitable  nature, 
which  jurisdiction  over  crimes  is  not.  The  Constitution 
recognizes  and  confers  upon  the  judicial  department  juns- 
diction  in  certain  cases  in  law  and  equity,  and  provides  that 
trial  of  all  crimes,  except  in  cases  of  impeachment,  shall  be 
by  jury,  and  in  common  law  cases  preserves  the  nght  of  trial 
by  jury.  It  is  not  competent  for  Congress  to  break  down 
this  distinction  between  law  and  equity  by  conferring  upon 
courts  of  equity,  jurisdiction  of  criminal  and  common  law 
cases  and  thereby  deny  parties  the  right  to  a  jury  trial. 

The  act  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies  does  not  apply  to  the  case  stated 
in  the  bill.    If  it  does,  then  it  is  unconstitutional.    If  a 
court  of  equity  is  authorized  to  restrain  and  prevent  persons 
from  the  commission  of  crimes  or  misdemeanors  prohibited 
by  law,  it  must  have  the  power  to  enforce  its  restraining 
order.    In  this  case  some  of  the  parties  are  sentenced  to 
imprisonment  for  six  months,  and  for  what?    For  doing 
some  of  the  things  forbidden  by  a  criminal  statute.    If  they 
have  done  none  of  the  [677]  things  forbidden,  fhey  have 
not  violated  the  injunction,  for  it  could  only  restrain  them 
from  doing  what  the  law  forbade.    It  follows  that  by  indi- 
rection a  court  of  equity  under  its  assumed  jurisdiction  to 
issue  injunctions  and  punish  for  contempts,  is  made  to  exe- 
cute  a  criminal  statute  and  deprive  persons  of  their  liberty 
without  a  jury  trial.    This  a  court  of  equity  has  no  power 


577 


IN   BE   DEBS,  PETITIONEB. 
Opinion  of  the  Court 

^^^Assise^nt  Attorney  General  WKitney  for  the  United 

^r.  xS.  ^S.  ^Vejrory  for  the  petitioners. 
^^- Edwin  Walker  iovthe\]mteASUii^ 
Mr.  Attorney  Ger^al  for  the  United  States. 
Mr.  O.  S.  Harrow  for  the  petitioners. 

o^to'Tz^::r'  '"^^  ^""^^  '"^^  --'  <^«"--d  the 

propefty,  as  weU  as  rctii^^^^^^^^  ^•^"■'^  «"'^ 

structed,  and  that  a  coXadon  «nH  ''•'' ^""''''''-^  «»'- 

subject  the  control  of  7^hZT  ?f •  *^""P"^«y  ^^^ists  to 
conspirators,  ap^d  o  one  "fT"''""  ***  "'^  ^"^  «*  ^he 
court  of  equity  for  an  in,-  !•  *^"'  '=*'"'^^'  «'"ing  as  a 
and  preveSHLyfnSXr  '"k'^*'"""  ^"*=^  ^'^'^-'^'^ 
^  of  ^rn,ortI.:\T^^^^-TZtJl  T"^ 

•ferenL  to  p^vtnt  a  f"  Jbl'lr  T^'T*  ^"^^  ^"^- 
If  authority  exists,  LShoritv'^'*'-**^'"^*-  Second, 
plies  both  ^wer  and  dS  h^l  "  ^7'T'''^'''^  ^^air.  im- 
to  issue  an  injunction  in  Sd^fttr  ,  °*  "^""''^  Jurisdiction 
[6781  Firsl  What  retel^t  i^fSr "  °'  T'^  ^'''^■ 
ment  to  interstate  iSmmerS  ^nd  th!  f  ^  ^"''^'  ^"^*"'- 

mailsf    They  di^e  thoj^rdir^ct  su JrT'"''*"*""  "*  '""^ 
managemeht;    While  nnrlo.  tK    j  ^"P^'^'^sion,  control,  and 

with  u^  the  po^r^^of  ~n       ?   ''''^'"  ''^'"^  P"^^"'^ 

^  State  and%hrN:LrrdTh  i:if sse"*^'  •^*-- 

.  *^led  a  governn,ent  of  enumerated  ,^  "  P''''P«'''y 

-Imits  of  such  enunierationTa  1llTr;/K  "'*'^'"  *« 

ereignty,  and,  in  the  exerci^  of  thi  ««"butes  of  sov- 

-acts  dirwtly  upon  the  0,^^         ^         enumerated  powers, 

mediate  f^gLyZ  the  st^"'  '"'**""*  ^^^^^  '^^  i'^*^- 

11808--VOL  1—06  M -37 


578 


158  UNITED  STATES  REPORTS,  578. 
Opinion  of  tlie  Court. 


The  goTeninient  of  the  Union,  then,  1«,  emphatically  and  truly 
agovenmient  of  the  people.  In  form  and  in  substance  it  euianatw 
from  them  lt«  powers  are  granted  by  them,  and  are  to  be  exercised 
directly  on  them,  and  for  their  benefit." 

"No  trace  is  to  be  found  in  the  CJonstitution  of  an  intention  to 
create  a  dependence  of  the  government  of  the  Union  on  those  of  the 
states,  for  the  execution  of  the  great  ijowers  assigned  to  it.  It« 
means  me  adequate  to  its  eiids;  and  on  those  means  alone  was  it  ex- 
S^^  tl!^  ^^  i^^  ^^^  accomplishment  of  its  ends.  To  imiwse  on  It 
the  necessity  of  resorting  to  means  which  it  cannot  control,  which 
f.'^^^f  government  niay  funiish  or  withhold,  would  render  its  c«ourse 
precmrlous  the  result  of  its  measures  uncertain,  and  create  a  depend- 
ence on  other  governments,  which  might  disappoint  its  most  important 
rhifriJ*;?  »« JiK-ompatible  with  the  language  of  the  Constit'^tlon '' 
4^  424  ^^«r8hall    in   McCMM-h   v.    Maryland,   4   Wheat.   316, 

♦^♦'i^^'^'V^K®  ^*"\^^  *?^  ^^^  ^""^^^  ^♦^^^^  e^*»^e<^  before  the  Consti- 
tution.  The  iieople,  through  that  instrument,  established  a  more  per- 
fect union  by  sul)stitutiug  a  uational  government,  acting,  with  ainnle 
power,  directly  upon  the  citizens,  instead  of  the  confederate  govTi^ 
Sltf '  :!'^]^}'^  ^""i^  /'"*^  P**^'^'"*'  greatly   restricted,   only  upon   the 

«f  t^  ^tt!^    J^.  ""  incontrovertible  principle,  that  the  government 

?hm^h  It.  I  ffi  f  i"**^  !""^'  **^'  "^^^"^  ^^  P^^>'^^^«»  f^''^'^'  exercised 
through  Its  offic  n»l  agents,  exc<  ute  on  every  foot  of  American  soil  the 

^J^r.?"^  functions  that  belong  to  [»79]   it.     This  necessarily  ll 

^Zlt  .  t  '^'^If  **"  ^-o*""'""^  obedience  to  its  laws,  and  hence  the 
IJower  to  keep  the  peace  to  that  extent. 

"  This  power  to  enforce  its  laws  and  to  execute  its  functions  in  all 
Fit^nf  T  "^^  ^t^^sate  i^m  the  power  of  the  State  to  execute  its 
i?  ^  at  the  same  time  and  in  the  same  places.    The  one  does  not  ex- 

tw^  T«  il!*^'  ^"""^H^  "^^^""^  ^^^  *^«'^»**^  ^  executed  at  the  same 
time.  In  that  case,  the  words  of  the  Constitution  itself  show  which 
Is  to  yield.  Jhis  Constitution,  and  all  laws  which  shall^  made 
in  pursuance  thereof,  .  .  .  shall  be  the  supreme  law  of  the  land '" 
Mr.  Justice  Bradley  in  Em  parte  SHhold,  100  U.  S.  371.  395     See  also 

'Xr74i:^rZ/\^S^T'''';  7  Cranch,  116.  136;'  Cohens  vvt^ 
jjiila,  6  Wheat.  264,  413;  Leffal  Tender  Cases,  12  Wall  467  M5- 
Tennessee  v.  Dams,  100  U.  S.  257:  The  Chinese  Exclusion  Owe,  m 
IL  S.  581 :  In  re  beagle,  135  U.  8.  1 :  Logan  v.  United  States,  144  U.  a 
!Si  ^^^  ^*^  ^'''^  ""'  '^''^'^  ^*^'«'^*'  ^4»  U.  S.  698;  /n  re  QuarlZ. 

Among  the  powers  expressly  given  to  the  national  gov- 
ernment are  the  eontfol  of  interstate  commerce  and  the  crea- 
tion  and  management  of  a  post  office  system  for  the  nation. 
Article  I,  section  8,  of  the  Constitution  provides  that  "  the 
Congress  shall  have  power.  .  .  .  Third,  to  regulate 
commerce  with  foreign  nations  and  among  the  several  States, 
and  with  the  Indian  tribes.  ...  Seventh,  to  establish 
post  offices  and  post  roads." 

Congress  has  exercised  the  power  granted  in  respect  to 
interstate  commerce  in  a  variety  of  legislative  acts.  Passing 
by  for  the  present  all  that  legislation  in  respect  to  commerce 


IN    RE    DEBS,  PETITIONEB.  579 

Opinion  of  the  Court. 
rLJ"^"'  T^  '^''^^^'i^S  only  that  which  bears  upon  rail 

statutes  as'sectir i'  I'h  pr?;idr '  "*"  '''  ^^^ 

several  States,  to  establish  vZi  r!,^H  ^"'"i""  ^""•"'er.e  among  the 
.mules:  Therefore,  ft- 1  e„aS iH^' r^S^  *°  ™'^  «■><!  «npport 
Kefiregentatives  of  the  I^ttZ  Jl,  ^  }*^^  Senate  and  Uousi  of 
sembled.  That  eviry  .^ilr^ad  eon  nnnt  "-^  ^^"^'*«  '«  C<»men  ^. 
roml  is  operated  by  steam,  to  suSL^  «n,.  ^^  ■  ^  "'^^  «»«'*'  '''^ 
mithorlzed  to  carry  u,«n  knd  ov^7o^h ',^!f.'^^' •'?• '""»  '»  "ereby, 
all  passengers,  troops  government  s.m^^  ^''^t  '•^"'«**-  *"«"  'ewles 
erty  on  their  «-av  from  anVstflLtF:. '"""*'•  '"^'slt.  and  prop- 
<-ou.peusation  tberefS^  and  to  ~?  wi«  "*■■  f  *"*!•  «"<»  *«  ««>'« 
as  to  form  eontlnuous  lln^  for  X  1^1 1"'' Z^*'''  "'  "t^"*-'-  States  so 
I'lac-e  of  .lestination."  trausixjitation  of  the  same  to  the 

Second.  That  of  March  3,  1873  c  252  17  <4*»t   -^a    /i> 
Stat.  §§  4386  to  4389,)  which  reSlateslL  t  ^**'.(R«^- 

live  stock  over  inters  ite  rl  IrS  S  Th?Tt["°  *" 
1884,  c.  60,  8  6,  23  Stat  si    ^9         un,  ^"^  ***  ^"^  ^' 

portation  by^ailfoad";!^^^^^^^^^  T^'''''  *-- 
gious  or  infectious  disease.  Srth  Jw  ^XT  •^""**- 
1887,  c.  104  24  Stat   -^TQ       Ji^  ^  "*  February  4, 

1889   c.  Si  2  Stt   sS'  ^'**'Jitt«'»«»d'nents  of  March  2 

a  commikon  was  cited"S  ,    '""""''■*='  ''^*'"  ""^  "'»'«'> 

and  control  of  intetj^ 'orLiTrS^slnTtr "" 
teen.th  sect  on  of  which  act  m^^c  *  A.  "'^*'***'''  ■*"«•  *««  six- 
States  power  to  en  W  the  oXsoVfhe  ""*'*"' *'^  ^'''^^ 
That  of  October  1,  1888  c  T(«3  9/ ^ttT!f  "•'"*"•  ^''^^■ 
arbitration  between  raLadTtlft  !  ^^'  P'"""'*''"«  '«' 
employes;  and  3xth  th!  T  ^f^  companies  and  their 
Stat  531  ZwJ^h.  .  ***  ^'''"'^  2'  1893,  c.  196,  27 

state  ^^^^z^::ztcTz::^r^'-  -  ^- 

mission  to  enforce  ite  provisfons  Commerce  Com- 

-ne.,de^-:;2'-rrt:s.t;^^^^^^^^^^^ 


580 


158  UNITfeD  STATES   REPORTS,  581. 
Opinion  of  the  Court. 


prices  of  carriage,  and  also  prescribing  penalties  for  all 
offences  against  it. 

Obviously  these  powers  given  to  the  national  goveniment 
over  interstate  commerce  and  in  respect  to  the  transportation 
[581]  of  the  mails  were  not  dormant  and  unused.  Congress 
had  taken  hold  of  these  two  matters,  and  by  various  and  spe- 
cific acts  had  assumed  and  exercised  the  powers  given  to  it, 
and  was  in  the  full  discharge  of  its  duty  to.  regulate  interstate 
commerce  and  carry  the  mails.  The  validity  of  such  exercise 
and  the  exclusiveness  of  its  control  had  been  again  and  again 
presented  to  this  court  for  consideration.  It  is  curious  to 
note  the  fact  that  in  a  large  proportion  of  the  cases  in  re- 
spect to  interstate  commerce  brought  to  this  court  the  ques- 
tion presented  was  of  the  validity  of  state  legislation  in  its 
bearings  upon  interstate  commerce,  and  the  uniform  course  of 
decision  has  been  to  declare  that  it  is  not  within  the  com- 
petency of  a  State  to  legislate  in  such  a  manner  as  to  obstruct 
interstate  commerce.  If  a  State  with  its  recognized  powers 
of  sovereignty  is  impotent  to  obstruct  interstate  commerce, 
can  it  be  that  any  mere  voluntary  association  of  individuals 
within  the  limits  of  that  State  has  a  power  which  the  State 
itself  does  not  possess? 

As,  under  the  Constitution,  power  over  interstate  com- 
merce and  the  transportation  of  the  mails  is  vested  in  tlie 
national  government,  and  Congress  by  virtue  of  such  grant 
has  assumed  actual  and  direct  control,  it  follows  that  the 
national  government  may  prevent  any  unlawful  and  forcible 
interference  therewith.  But  how  shall  this  be  accom- 
plished ?  Doubtless,  it  is  within  the  competency  of  Con- 
gress to  prescribe  by  legislation  that  any  interference  with 
these  matters  shall  be  offences  against  the  United  States, 
and  prosecuted  and  punished  by  indictment  in  the. proper 
courts.  But  is  that  the  only  remedy  ?  Have  the  vast  inter- 
ests of  the  nation  in  interstate  commerce,  and  in  the  trans- 
portation of  the  mails,  no  other  protection  than  lies  in  the 
possible  punishment  of  those  who  interfere  with  it?  To 
ask  the  question  is  to  answer  it.  By  article  3,  section  2, 
clause  3,  of  the  Federal  Constitution  it  is  provided :  "  The 
trial  of  all  crimes  except  in  cases  of  impeachment  shall  be  by 
jury;   and  such  trial  shall  be  held  in  the  State  where  the 


IT 


i 


. 


IN   RE   DEBS^  PETITIONER. 


581 


Opinion  of  the  Court. 

said  crime  shall  have  been  committed."  If  all  the  inhabit- 
ants of  a  State,  or  even  a  great  body  of  them,  should  com- 
bine to  obstruct  interstate  commerce  or  the  transportation 
[682]  of  the  mails,  prosecutions  for  such  offences  had  in 
such  a  community  would  be  doomed  in  advance  t»  failure. 
And  if  the  certainty  of  such  failure  was  known,  and  the 
national  government  had  no  other  way  to  enforce  the  free- 
dom of  interstate  commerce  and  the  transportation  of  the 
mails  than  by  prosecution  and  punishment  for  interference 
therewith,  the  whole  interests  of  the  nation  in  these  respects 
would  be  at  the  absolute  mercy  of  a  portion  of  the  inhabit- 
ants of  that  single  State. 

But  there  is  no  such  impotency  in  the  national  govern- 
ment. The  entire  strength  of  the  nation  may  be  used  to 
enforce  in  any  part  of  the  land  the  full  and  free  exercise  of 
all  national  powers  and  the  security  of  all  rights  entrusted 
by  the  Constitution  to  its  care.  The  strong  arm  of  the  na^ 
tional  government  may  be  put  forth  to  brush  away  all  ob- 
structions to  the  freedom  of  interstate  commerce  or  the 
transportation  of  the  mails.  If  the  emergency  arises  the 
army  of  the  Nation,  and  all  its  militia,  are  at  the  service  of 
the  JNation  to  compel  obedience  to  its  laws. 

But  passing  to  the  second  question,  is  there  no  other  alter- 
native than  the  use  of  force  on  the  part  of  the  executive 
authorities  whenever  obstructions  arise  to  the  freedom  of 
interstate  commerce  or  the  transportation  of  the  mails «     Is 
the  army  the  only  instrument  by  which  rights  of  the  public 
can  be  enforced  and  the  peace  of  the  nation  preserved* 
Irrant  that  any  public  nuisance  may  be    forcibly    abated 
either  at  the  mstance  of  the  authorities,  or  by  any  individual 
suffering  private  damage  therefrom,  the  existence  of  this 
right  of  forcible  abatement  is  not  inconsistent  with  nor  does 
It  destroy  the  right  of  appeal  in  an  orderly  way  to  the  courts 
for  a  judicial  determmation,  and  an  exercise  of  their  powers 
by  writ  of  injunction  and  otherwise  to  accomplish  the  same 
result.    In  Stamford  v.  Stamford  Horse  Radlroad  Co.,  56 
^Connecticut,  381,  an  injunction  was  asked  by  the  borough  to 
restrain  the  company  from  laying  down  its\rack  in  a  street 
of  the  borough.     The  right  of  the  borough  to  forcibly  re- 
move the  track  was  insisted  upon  as  a  ground  for  question- 


582 


158   UNITED  STATES  REPORTS,  583. 


Opinion  of  the  Court. 
ing  the  jurisdiction  of  a  court  of  equity,  but  the  court  sus- 
tained the  injunction,  adding:  "And  none  the  less  so  because 
of  Its  right  to  remo^^  [5881  the  track  by  force.    As  a  rule, 
injunctions  are  denied  to  those  who  have  adequate  remedy 
at  law.     Whei-e  the  choice  is  between  the  ordinary  and  the 
extraoi-dmary  processes  of  law,  and  the  former  are  sufficient, 
the  rule  will  not  permit  the  use  of  the  latter.     In  some  cases 
of  nuisance  and  in  some  cases  of  trespass  the  law  permits  an 
individual  to  abate  the  one  and  prevent  the  other  by  force, 
because  such  permission  is  necessary  to  the  complete  protec- 
tion of  property  and  person.    When  the  choice  is  between 
redress  or  prevention  of  injury  by  force  and  bv  peaceful 
process,  the  law  is  well  pleased  if  the  individual  will  con- 
sent to  waive  his  right  to  the  use  of  force  and  await  its 
action.     Therefore,  as  between  force  and  the  extraordinary 
writ  of  injunction,  the  rule  will  permit  the  latter." 

So,  in  the  ca.se  before  us,  the  right  to  use  force  does  not 
exclude  the  right  of  appeal  to  the  c-ourts  for  a  judicial  deter- 
mination and  for  the  exercise  of  all  their  powers  of  preven- 
tion.    Indeed,  it  is  moiv  to  the  praise  than  to  the  blame  of 
the  goveiTiment,  that,  instead  of  determining  for  itself  ques- 
tions of  right  and  wrong  on  the  part  of  these  petitioners  and 
their  associates  and  enforcing  that  determination  by  the  club 
of  the  policeman  and  the  bayonet  of  the  soldier,  it  submitted 
all  those  questions  to  the  peaceful  determination  of  judicial 
tribunals,  and  invoked  their  consideration  and  judgment  as 
to  the  measure  of  its  rights  and  powers  and  the  correlative 
obligations  of  those  against  whom  it  made  complaint.     And 
it  is  equally  to  the  credit  of  the  latter  that  the  judgment  of 
those  tribunals  was  by  the  great  Ixxiy  of  them  respected,  and 
the  troubles  which  threatened  so  much  disaster  terminated. 
Neither  can  it  he  doubted  that  the  government  has  such  an 
interest  in  the  subject-matter  as  enables  it  to  appear  as  party 
plaintiff  in  this  suit.    It  is  said  that  equitv  only  interferes 
for  the  protection  of  property,  and  that  the  government  ha- 
no  property  interest.    A  sufficient  reply  is  that  the  United 
States  have  a  proi>erty  in  the  mails,  the  protection  of  which 
was  one  of  the  puri>oses  of  this  bill.    Searif/ht  v.  Stokes.  S 
How.  lol,  169.  arose  upon  a  compact  between  the  United 
States  and  the  State  of  Pennsylvania  in  respect  to  the  Cmn^ 


Wf 


^^ 


IN   BE  DEBS,  PETITIONER. 


583 


Opinion  of  the  Court 

berland  Road,  which  provided,  among  other  things,  "  that  no 
t«ll  shall  be  [684J  received  or  collected  for  the  passage  of  any 
wagon  or  carriage  laden  with  the  property  of  the  United 
States;  "  the  question  being  whether  a  carriage  employed  in 
transporting  the  mails  of  the  United  States  was  one  "  laden 
with  the  property  of  the  United  States,"  and  it  was  held 
that  It  was,  the  court,  by  Chief  Justice  Taney,  saying:  "  The 
United  States  have  unquestionably  a  property  in  the  mails. 
They  are  not  mere  common  carriers,  but  a  government,  per- 
forming a  high  official  duty  in  holding  and  guarding  its 
own  property  as  well  as  that  of  its  citizens  committed  to  its 
care;    for  a  very  large  portion  of  the  letters  and  packages 
conveyed  on  this  road,  especially  during  the  session  of  Con- 
gress, consists  of  communications  to  or  from  the  officers  of 
the  executive  departments,  or  members  of  the  legislature 
on  public  service,  or  in  relation  to  matters  of  public  concern. 
.    .    .    We  think  that  a  carriage,  whenever  it  is  carrying 
the  mail,  is  laden  with  the  property  of  the  United  States 
within  the  true  meaning  of  the  compact." 

We  do  not  care  to  place  our  decision  upon  this  ground 
ftlone.    Every  government,  entrusted,  by  the  verv  terms  of 
Its  being   with  powers  and  duties  to  be  exercise'd  and  dis- 
charged for  the  general  welfare,  has  a  right  to  apply  to  its 
own  courts  for  any  proper  assistance  in  the  e.xercise  of  the 
one  and  the  discharge  of  the  other,  and  it  is  no  sufficient 
answer  to  its  appeal  to  one  of  those  courts  that  it  has  no 
pecuniary  interest  in  the  matter.    The  obligations  which  it 
IS  under  to  promote  the  interest  of  all,  and  to  prevent  the 
wrongdoing  of  one  resulting  in  injury  to  the  general  wel- 
fare, Js  often  of  itself  sufficient  to  give  it  a  standing  in  court. 
This  proposition  in  some  of  its  relations  has  heretofore  re- 
ceived the  sanction  of  this  court.     In  United  States  v.  San 
Jactnto  T,n  Co    m  U.  S.  273,  285,  was  presented  an  appli- 
cation  of  the  United  States  to  cancel  and  annul  a  patent  for 
knd  on  the  ground  that  it  was  obtained  by  fraud  or  mistake. 
The  ngh    of  the  United  States  to  maintain  such  a  suit  was 
affirmed,  though  it  was  held  that  if  the  controversv  was  really 
one  only  between  individuals  in  respect  to  theiV  claims  to 
property  the  government  ought  not  to  be  permitted  to  in- 
terfere, the  court  saying:   "  If  it  be  a  question  of  property 


584 


158  UNITED  STATES   REPORTS,  585. 
Opinion  of  the  Court 


a  ^se  must  be  made  in  which  the  court  can  afford  a  remedy  in 
1686]  regard  to  that  property;  if  it  be  a  question  of  fraud 
which  would  render  the  instrument  void,  the  fraud  must 
operate  to  the  prejudice  of  the  United  States;  and  if  it  is 
apparent  that  the  suit  is  brought  for  the  benefit  of  some  third 
party,  and  that  the  United  States  has  no  pecuniary  interest 
in  the  remedy  sought,  and  is  under  no  obligation  to  the 
party  who  will  be  benefited  to  sustain  an  action  for  his  use; 
in  short,  If  there  does  not  appear  any  obligation  on  the  part 
of  the  United  States  to  the  public  or  to  any  individual   or 
any  interest  of  its  own,  it  can  no  more  sustain  such  an  action 
than  any  private  person  could  under  similar  circumstances." 
l-his  language  was  relied  upon  in  the.  subsequent  case  of 
United  states  v.  Bell  Telephone  Company,  128  U   S   315 
367,  which  was  a  suit  brought  by  the  United  States  to  set 
aside  a  patent  for  an  invention  on  the  ground  that  it  had 
been  obtained  by  fraud  or  mistake,  and  it  was  claimed  that 
the    United   States,  having  no  pecuniary  interest  in  the 
subject-matter  of  the  suit,  could  not  be  heard  to  question  the 
validity  of  the  patent.    But  this  contention  was  overruled 
the  coMTi  saying,  in  response  to  this  argument,  after  quoting 
the  foregoing  language  from  the  San  Jacinto  case:  «  This 
language  is  construed  by  counsel  for  the  appellee  in  this 
MSB  to  limit  the  relief  granted  at  the  instance  of  the  United 
States  to  cases  in  which  it  has  a  direct  pecuniary  interest. 
But  It  IS  not  susceptible  of  such  construction.     It  was  evi- 
dently m  the  mind  of  the  court  that  the  case  before  it  was 
one  where  the  property  right  to  the  land  in  controversy  was 
the  matter  of  importance,  but  it  was  careful  to  say  thkt  the 
^ses  m  which  the  instrumentality  of  the  court  cannot  thus 
be  used  are  those  where  the  United  States  has  no  pecuniary 
interest  in  the  remedy  sought,  and  is  also  under  no  obliga- 
tion to  the  party  who  will  be  benefited  to  sustain  an  action 
for  his  use,  and  also  where  it  does  not  appear  that  any  obliga- 
tion existed  on  the  part  of  the  United  States  to  the  public  or 
to  any  individual.    The  essence  of  the  right  of  the  United 
States  to  interfere  in  the  present  case  is  its  obligation  to  pro- 
tect the  public  from  the  monopoly  of  the  patent  which  was 
procured  by  fraud,  and  it  would  be  diflScult  to  find  language 
more  aptly  used  to  include  this  in  the  class  of  cases  which 


1 


IN   BE   DEBS,  PETITIONEE. 


585 


i 


Opinion  of  the  Court 

are  not  «tcluded  [586]  from  the  jurisdiction  of  the  court  by 
want  of  interest  in  the  government  of  the  United  States." 

It  IS  obvious  from  these  decisions  that  whUe  it  is  not  the 
province  of  the  government  to  interfere  in  any  mere  matter 
of  private  controversy  between  individuals,  or  to  use  its 
great  powers  to  enforce  the  rights  of  one  against  another, 
yet,  whenever  the  wrongs  complained  of  are  such  as  affect  the 
public  at  large,  and  are  in  respect  of  matters  which  by  the 
Constitution  are  entrusted  to  the  care  of  the  Nation,  and 
concerning  which  the  Nation  owes  the  duty  to  all  the  citi- 
zens of  securing  to  them  their  common  rights,  then  the  mere 
.  fact  that  the  government  has  no  pecuniary  interest  in  the 
controversy  is  not  sufficient  to  exclude  it  from  the  courts,  or 
prevent  it  from  taking  measures  therein  to  fully  discharge 
those  constitutional  duties. 

The  national  government,  given  by  the  Constitution  power 
to  regulate  mterstate  commerce,  has  by  express  statute  as- 
sumed jurisdiction  over  such  commerce  when  carried  upon 
railroads.  It  is  charged,  therefore,  with  the  duty  of  keeping 
those  highways  of  interstate  commerce  free  from  obstruction, 
for  It  has  always  been  recognized  as  one  of  the  powers  and 
duties  of  a  government  to  remove  obstructions  from  the  high- 
ways under  its  control. 

As  said  in  Gihnan  v.  Philadelphia,  3  Wall.  713,  724:  «  The 
power  to  regulate  commerce  comprehends  the  control  for 
that  purpose,  and  to  the  extent  necessary,  of  all  the  navigable 
waters  of  the  United  States  which  are  accessible  from  a 
btate  other  than  those  in  which  they  lie.    For  this  purpose 
they  are  the  public  property  of  the  nation,  and  subject  to  aU 
the  requisite  legislation  by  Congress.    This  necessarily  in- 
cludes the  power  to  keep  them  open  and  free  from  any  ob- 
struction to  their  navigation,  interposed  by  the  Stat^  or 
otherwise;  to  remove  such  obstructions  when  they  exist :  and 
to  provide,  by  such  sanctions  as  they  may  deem  proper, 
against  the  occurrence  of  the  evil  and  for  the  punishment  of 
offenders.    For  these  purposes,  Congress  possesses  all  the 
powers  which  existed  in  the  States  before  the  adoption  of  the 
national  Constitution,  and  which  have  always  existed  in  the 
Parliament  m  England." 
See  also  the  foUowing  authorities  in  which  at  the  instance 


! 


158  UNITED  STATES  BEPORTS,  587. 


Upbiion  of  the  Court 

whif  ?iUIl\!*"'t!'"  "'  y?*  municipality  thereof  within 
whose  linute  the  obstructed  highway  existed,  a  like  power 

^XSI'  f^l/^'^P^  ^-  VanderMt,  28  N.  Y.  396;  State 
iff^Z     *'^f^'«*^  ^"il'-oad,  36  Ohio  St.  434 ;  Spring. 

General  v.  Woods,  108  Mass.  436;  Eastan  and  Amhoy  R„l 

J«o   ^W^  ^a,7r<«.rf  Go.  v.  Z?r^«^„.%,  45   l^xas    88- 

nis.nT4  m'f'  '^:,ff'^f^^  «'  »  highway  is  a  public 

S^XTh     k    ?r-  u^^'    """^  "  P"''"*'  "»'^"<*  has  always 
^n  held  subject  to  abatement  at  the  instance  of  the  govern- 
ment   Attorney  General  v.  Tudor  Ice  Co.,  104  Mass   239 
^;  -^orney  General  ^.Jamaica  P^ A^r^du^ZpTa- 
^.  133  Mass.  .361;  .Village  of  Pin^  City  y  Mnnch  42  E 
n,«ota,  342;  State  v.  Goodnight,  70  Tex^  682 

r,v!  r/^"**  ^  "'"'''  ***  ""*''*  •  **^  «'  the  leading  cases. 
f^^ty  of  Georgetown  X.Alexandria  Caned  Co    12  Pet  91    9S 

aTaiulT  '^  '\r'^''  ^  '^™-  thei^ctl^f 
facts  oflw  ""^the  Potomac  River.    While  under  the 

fS!l  -1  fl  ^^  '*'"'^  P'^y*^  *"■•  ^««  denied,  yet,  the 

rSST  of   he  court  was  sustained.     After  ref;ing  to 
Ihe^nght  to  maintain  an  action  at  law  for  damages,  it  las 

formation  ai«l  by  O^Mto^Iv  c^J    ^^}K  nolsance,  by  an  In- 

s^  lefts  H^^-^'"^'"^"^^-^--"'  ivirj^^z 

could  realh  It."  '"^P"™"'®  '"l«l>lef  before  the  tarrtiness  of  the  law 

[688]  ;S<afe  0/  Pennsylvania  y.  Wheeling  Bridge  Co  13 
How.  518,  was  a  biU  filed  by  the  State  of  Pennsyrvanta  to 
»Jo.„  the  erection  of  a  bridge  over  the  Ohio  River  1^^ 
lunits  of  the  State  of  Virginia.  As  the  alleged  obst^ct  on 
was  not  within  the  State  of  Pennsylvania,  itTSgS?!  £ 


' 


IN    RE   DEBS,  PETITIONER.  537 

Opinion  of  the  Court. 

was  only  that  of  an  individual  in  case  of  a  private  nuisance 
and  It  was  said,  on  page  564 :  nuisance, 

the  jurisdiction  is  mlde^S  thf  s^mr«^^^  ***^  ^^^^  ""^^^ 

the  obstruction  be  uiifawfnl    andThTint^t '•  ^'"Wic  prosecution.     If 
common  law,  the  idjur^  parf^niav  ci«^i?5.^  ^^  «  «"»*  at 

tlon  of  a  court  of  chaiiSiT  ^  extraordinary  protec 

an"'rrna?/KlroV^i>\S^^^^^^^^  ^-m  difficulty  as 

waste  or  trespass.  The  oweS  of  a  cS^T^'"^  ^^  *^'''  ^'^  ^«  «tay 
adapted,  and  as  effectual  for  l^elief  in  thpll  ^J^^^^^rj'  ai^  as  well 
as  in  either  of  the  cases  nan^  aL  •  ^  '*^.''  ''""'^^te  nuisance, 
these  powers,  it  is  T?o  rnwanl^wf^/iT^H  '^  ''^  ex^r^ise.of 
over  which  the  bridge  irthrown  ^  1 1  n^^^*"''  t**^  ^astem  channel, 
State  of  Virginia      The  nh^  w.  ^  ^^""^^^^  ^^^hin  the  limits  of  the 

the  <«mmerciT*^  J.*^^f^cXt?^nd"o;i^"''t,l^^^    ^^^^^^^  ^^ 
been  exerted,  if  the  river  br^tfiU^^     J^.  "^^^^^  **»«*  power  has 

merce  upon  it,,  which  extends  To  other  r.^^I'*^  ^^  ^^'^^^'^^^'  ^he  c^m- 
diction ;  con*<^uenth ,  If  the  ac?  of  Vir^fni^^'  ^L''''^  ^'****^  »ts  juris- 

bilf  filTbf  ;rC  "  ^""^f-"'^'  144  U.  S.  550,  was  a 
d  Lw      •         ^*'*  "*  "'"^  ***  '^  "^n  «>"rts  to  enjoin  the 

m  the  bed  of  a  navigable  river  within  ite  territories  The 
case  was  removed  by  the  defendant  to  the  Federal  Zi*  ^, 
m  that  court  the  ..lief  prayed  for  was  gm^S  tUc^ 
of  the  Circuit  Court  was  sustained  by  this  court  anH  Tn  T 
opinion  by  Mr.  Justice  Harlan,  the  mat  e  «?;. dt^tr^^^^^ 
.on  IS  discussed  at  some  length,  and  several  caSd  a^^ 

^-^Xr         '   ^^^.^"^^^   3«1.      From  Attorney  General  v 

K..  5  f  c«ses  might  have  been  produced  in  which  the  court 
has  nterfered  to  prevent  nuisances  to  public  ri^^rs  and  t^ 
public  harbors;  and  the  Court  nf  i?  *^r  ^*'^''  *"<^  *" 
thifi  ^/...^       *•  i^urt  of  Exchequer,  as  well  as 

jurisdiction,  upon  a  proceeding  by  wav  of  infnrn,,f        7 
prevent  nuisancs  to  public  harbofs  InJ  ^uwf  Zdl   "..i" 
in  short,  generally  to  prevent  public  nuisances"     ^..^'ft 
Atto^y  General  v.  Jan^i.a  Pond  42^ these  IriTi 
the  Supreme  Court  of  the  State  of  MaLchuse^teT"  Th";  • 
another  ground  upon  which,  in  our  opinion,  this  inforSon 


i 


588 


158  UNITED  STATES  REP0BT8,  589. 


Opinion  of  the  Court, 
can  be  maintained,  though  perhaps  it  belongs  to  the  same 
general  head  of  equity  jurisdiction  of  restraining  and  pre- 
venting  nuisances.    The  great  ponds  of  the  Commonwealth 
belong  to  the  public,  and,  like  the  tide  waters  and  navigable 
streams,  are  under  the  control  and  care  of  the  Commonwealth. 
The  rights  of  fishing,  boating,  bathing,  and  other  like  rights 
whidi  pertain  to  the  public  are  regarded  as  valuable  rights, 
entitled  U>  the  protection  of  the  government.  ...    If  a 
corporations  an  individual  is  found  to  be  doing  acts  with 
out  nght,  the  necessary  effect  of  which  is  to  de.stroy  or  impair 
these  rights  and  privileges,  it  furnishes  a  proper  case  for  an 
information  by  the  Attorney  Qpneral  to  restrain  and  prevent 
the  mischief."    An  additional  .case,  not  noticed  in  that  opin- 
T^^iT^o.        ^  referred  to,  Attorney  General  v.  Terry, 
""l  Ch.  423,  in  which  an  injunction  was  granted  against 
extending  a  wharf  a  few  feet  out  int«  the  navigable  part  of 
a  nver,  MeUish,  L.  J.,  saying:  « If  this  is  an  indictable 
nuisance  there  must  be  a  remedy  in  the  Court  of  Chancery 
and  that  remedy  is  by  injunction,"  and  James,  L.  J.,  adding- 
I  entirely  concur.    Where  a  public  body  is  entrusted  witii 
the  duty  of  being  conservators  of  a  river,  it  is  their  duty  to 
take  proceedings  for  the  protection  of  those  who  use  the 
nver. 

It  is  said  that  the  jurisdiction  heretofore  exercised  by  the 
nahonal  government  over  highways  has  been  in  respect  to 
[690]  waterways-the  natural  highways  of  the  country- 
and  not  over  artificial  highways  such  as  railroads;  but  the 
occasion  for  the  exercise  by  Congress  of  its  jurisdiction  over 
the  latter  is  of  recent  date.  Perhaps  the  first  act  in  the  course 
of  Mich  legislation  is  that  heretofore  referred  to,  of  June  14 

!r«'  -TJ^l  *'"^'''.  "P**"  ^^'""^  '■«^*''  it«  jurisdiction  over 
artificial  highways  is  the  same  as  that  which  supports  it  over 
the  natural  highways.  Both  spring  from  the  power  to  regu- 
late commerce.  The  national  government  has  no  separate 
dominion  over  a  nver  within  the  limits  of  a  State;  its  juris- 
diction there  IS  like  that  over  land  within  the  same  State. 
Its  control  over  the  river  is  simply  by  virtue  of  the  fact  that 
It  IS  one  of  the  highways  of  interstate  and  international 
commerce  The  great  ease  of  Gibbons  v.  Ogden,  9  Wheat.  I, 
19  k  in  which  the  control  of  Congress  over  inland  waters  was 


"W 


IN   HE  DEBS,  PETITIONER.  5^9 

Opinion  of  the  Court:. 

a^rted,  rested  that  control  on  the  grant  of  the  power  to 

regulate  commerce     The  argument  of  the  Chief  JuSice  was 

that  commerce  includes  navigatioii,  "  and  a  power  to  recoHate 

addXl^th"  "  7^^''  ^''f^'^  ^  ''  '"^^  **™  had  £ 
added  to  the  word    commerce.' "    In  order  to  fully  regulate 

conimerce  with  foreign  nations  it  is  es^ntial  that  L  ^wer 
of  Congress  does  not  stop  at  the  borders  of  the  nation,  and 
equally  so  as  to  commerce  among  the  States : 

l.m.te'ofTefv  "4teTt?e  u'SonTr'''°'!fH  "''^'^««"  "'t"'"  ^e 
in  any  m-^nniv.^^^^^t^'J'irJ^-J^^'^'l^t  navigation  may  be. 

among  the  several  States  orivith  JhlTS^  T  *k   '?'«'«>»  nations,  or 

sequence,  pass  the  jSctUil  li,fp  'f°l2°  v"^^      "  '""y-  "'  «>"- 

ver^  waters  to  ,vhU  thf  priifc'„r  „X  rs^raS  Z 

it  trslT/t^'  "•  ^'''^^P'^^^  3  Wall.  713,  725,  in  which 

he  Ler  of  ^^'T"  '  '"'^*''"*="  "-"""S  '^'^  ^tutes  '  goes, 
^UhT,  of  the  nation,  as  represented  in  this  court,  goe^ 
with  it  to  protect  and  enforce  its  rights  " 

Up  to  a  recent  date  commerce,  both  interstate  and  inter- 
national was  mainly  by  water,  and  it  is  not  strange  "hat  both 
the  legislation  of  Congress  and  the  cases  in  the  courts  hate 
boen  prmcpally  concerned  therewith.  The  fact  thatTn  ret^J 
1591]  years  interstate  commerce  has  come  mainly  to  bJ  SI 
ned  on  by  railroads  and  over  artificial  highways  has  In  no 
.-.nanner  narrowed  the  scope  of  the  constitutional  provilio^  ^r 
abridged  the  power  of  Congr^s  over  such  Zmeir  '(J^ 
he  contrary  the  same  fulness  of  control  exists  in  thf^e  c2 

?:om%tr::rmt  xr^- '^  ~ --^"^ 

extends  ri'  ''T"""'  'r  °*  ^'^^"««'  ^"*  ♦»»«-  operation 

haWtsof  life  Jtr  "".''  '^'  '"'^^  "*  b-i»«««  ^n'J  the 
habits  of  life  of  the  people  vary  with  each  succeeding  genera- 
tion.   The  law  of  the  common  carrier  is  th^  ««n^.  f  j 

tion  if  ^/..,..K„„       J  "i"ijg  vessel,  yet  in  its  actual  opera- 

tion It  touches  and  regulates  transportation  by  modes  the^. 
unknown,  the  railroad  train  and  the  steamship.'  iul t  s  U 
with  the  grant  to  the  national  government,  of  »nw  ' 

terstate  commerce.  The  ConstfuZn™  no  ZZr^Z 
power  IS  the  same.  But  it  operates  to-day  upon  ^es^f 
interstate  commerce  unknown  to  the  fathers;  and  it  Ti^Jer 


r" 


I 


O^KI 


158   UNITED   STATES  BEPORTS,  591. 


! 


Opinion  of  the  Court. 

toll^rair'bf  in'r^'^r  •*"''  '^^^  "•"'•'*  -""■"^'^  jurisdiction 
ekh?  ,1^  '"J""*:*'"" '»  f  "s  brought  by  the  government, 
eUher  ,tate  or  national,  obstructions  to  highways    either 

M«i  1^  that  the  necessity  for  such  interference  has  onlv  been 
occasional.     (  rdinarily  the  local  authorities  havTteS,  ftJu 

or  m  some  k  iidretl  way,  have  secured  the  removal  of  the  ob 
struc  ion  and  the  cessation  of  the  nuisance.    As  sai^  Yn  /«t 

The  ,., .....diction  of  courts  of  equity  to  redress  the  grievance 
established;  but  it  is  well  settled  that,  as  a  general  rule 

3  Vafeilntf^d-  ^'^"^  'i'  "'^•^*  ^"^  -  »>  "- 
weji  attained  m  the  ordinary  tribunals.    Attorney  General 

V.  .\e,r  Jer^  Railroad,  2  C.  E.  Gr«,n,  (17  N  J   L  TtZ- 
Jer^y  City  v.  City  of  Hudson,  2  Bea^ lev    (13  N    T    F„  ^ 

C  F  fits ^U  v'  f  T*.**  ^"^^  ^"'■^'•'^  ^-  'P'-«'''/««,  5 
?52i  W  £!  "^^  •':.^'^  "^^  -'^^^  "'«h  «»  Injunctions, 
cio"  cJnrts  ^""*/''«  ?'»«^y  by  indictment  is  so  effica- 
cious, courts  of  equity  entertain  jurisdiction  in  such  casp, 
with  great  reluctance,  whether  thir  intervention  slnvrk^ 
a  the  instance  of  the  attorney  general,  or  of  a  priJateTiT 
oit'C  "tr-"'*Tr"'^  >»i-y  therefix.™  distinct  fr  m  that 

t  T.^^  ?:^  "'"  ""'^  ^^  ^  ^''*'-  t''-  appears  to 
^  a  necessity  for  their  interference.    Rov'e  v.  The  Granite 

/W  *.  /'^•,,./rf«i,  supra.  The  jurisdiction  of  the  court  of 
chancery  with  regard  to  public  nuisances  is  foui^eron  the 
n-reparable  damage  to  individuals,  or  the  great  pS  "njury 
w  hich  IS  hkely  to  ensue.    3  Daniell's  Ch.  fr.  3d  ed.  Perkins^ 

i  has  Se  ^;:*  T  •"  !f  T*'  *'"'*  '"  -  -"-eonsiderd 
case  has  the  power  of  a  court  of  equitv  to  interfere  bv  ininn,. 

tion  m  cases  of  public  nuisance  bLn  denied,  tbconly  del,' 
Eq.  Jnr.  §§  921,  923,  924;  Pomeroy's  Eq.  Jur.  «  1349-  High 


IN   BE  DEBS,  PETmONEB.  591 

Opinion  of  the  Ciourt. 

Z'JTm,:  ^^  '''  ''"'  ^'^'  '  ^--"-^  Ch.  P,.  and  Pr. 
That  the  bill  filed  in  this  case  alleged  special  facts  callinir 

question.    The  picture  drawn  in  it  of  the  vast  interests  in^ 
volved,  not  merely  of  the  city  of  Chicago  and  the  State  of 

ment,  and  the  threatened  continuance  ff  such  intasCs  of 

DUl,  and  we  need  not  turn  f^^  *k«      V^•    i  •  ^"'^^"^^  oy  tms 

Which  oni,  rea^Tli;™  rtZtti^r  ^^  at^t^:^' 

The  difference  between  a  public  nuisance  and  a  privftenur 

same,  and'tL  juV^S^of  t^coTrt  ov:r  It'  ^"T  '^  '""^ 
the  same  principles  and  goes  o  thT^l^Iten't^'"  S^t"*"" 
circumstances  may  exist  in  one  ca«e  ^hW-CT  \         ^*"^' 

u  rrofitajr  sr'  ''*  ^""'*'  '"^••*-«'  --'« ^ 

individual  Z  by  the  Srto' """  ^"^  ''"  •'^""^'»*  ''^ 
•re  two  reasons  f 0^  this  Fi^  k  ^  ^"f  '"''""""""'  ''"*  *»»«'* 
ous  of  privTtCn  „f     ^1    '     '  '"'*""**'  "^  "^«re  numer- 

that  whSTsti tcuJbli  "  """""''•  '"^''  ^^'^""^'  often 
of  a  private  ilS  if  itse "X To^r^"^^  f  *^  ^"* 
a  special  injuiy  resulting  t^reX*"     '"'  """^  '"'""*  "' 

a  ^rof'ii^r^ttnS  1'^  "'^''^ "'  ^'^^  ^■""^^•'=«-  «* 

as  a  genera^proUroCrstqrSnT  A  r^^„  ™^' 
no  criminal  jurisdiction      ^^J^fu  A  chancellor  has 

1.    l»"y  »"■  "gUM  o(  ,  pecunr.!,.  nature,  but  when 


592 


158   UNITED   STATES  BEPORTS,  593. 
•  Opinion  of  the  Court. 


such  interferences  appear  the  jurisdiction  of  a  court  of  equity 
arises,  and  is  not  destroyed  by  the  fact  that  they  are  ac- 
companied by  or  are  themselves  violations  of  the  criminal 
law.  Thus,  in  Cranford  v.  Tyrrell^  128  N.  Y.  341,  an  injunc- 
tion to  restrain  the  defendant  from  keeping  a  house  of  ill- 
fame  was  sustained,  the  court  saying,  on  page  344 :  "  That 
the  perpetrator  of  the  nuisance  is  amenable  to  the  provisions 
and  penalties  of  the  crmiinal  law  is  not  an  answer  to  an  action 
against  him  by  a  private  person  to  recover  for  injury  sus- 
tained, and  for  an  injunction  against  the  continued  use  of 
his  premises  in  such  a  manner."  And  in  Mobile  v.  Lonvt- 
mUe  (&  Nashville  Railroad,  84  Alabama,  115, 126,  is  a  similar 
declaration  in  these  words:  "The  mere  fact  that  an  act  is 
crimins^l  does  not  divest  the  jurisdiction  of  equity  to  prevent 
it  by  injunction,  if  it  be  also  a  violation  of  property  rights, 
and  the  party  aggrieved  has  no  other  adequate  remedy  for 
the  prevention  of  the  irreparable  [594]  injury  which  will 
result  from  the  failure  or  inabilitv  of  a  court  of  law  to  re- 
dress  such  rights." 

The  law  is  full  of  instances  in  which  the  same  act  may  give 
rise  to  a  civil  action  and  a  criminal  prosecution.  An  assault 
with  intent  to  kill  may  be  punished  criminally,  under  an  in- 
dictment therefor,  or  will  support  a  civil  action  for  damages, 
and  the  same  is  true  of  all  other  offences  which  cause  injury 
to  person  or  property.  In  such  cases  the  jurisdiction  of  the 
civil  court  is  invoked,  not  to  enforce  the  criminal  law  and 
punish  the  wrongdoer,  but  to  compensate  the  injured  party 
for  the  damages  which  he  or  his  property  has  suffered,  and  it 
is  no  defence  to  the  civil  action  that  the  same  act  by  the  de- 
fendant exposes  him  also  to  indictment  and  punishment  in  a 
court  of  criminal  jurisdiction.  So  here,  the  acts  of  the  de- 
fendants may  or  may  not  have  been  violations  of  the  criminal 
law.  If  they  were,  that  matter  is  for  inquiry  in  other  pro- 
ceedings. The  complaint  made  against  them  in  this  is  of 
disobedience  to  an  order  of  a  civil  court,  made  for  the  protec- 
tion of  property  and  the  security  of  rights.  If  any  criminal 
prosecution  be  brought  agamst  ^em  for  the  criminal  offences 
alleged  in  the  bill  of  complaint,  of  derailing  and  wrecking 
engines  and  trains,  assaulting  and  disabling  employes  of  the 
railroad  companies,  it  will  be  no  defence  to  such  prosecution 


598 


IN    RE   DEBS,  PETITIONER. 
Opinion  of  tlie  C!ourt 

court  by  Mr  Justi^Tn    ^i  „  declaration  made  for  the 

■  for  the  IsS;  1,  %:itoi2  1  ""'^  ''.  ''  ^^^^'^^"^ 
steahhy  encroachmen;^ thereon  rf""'  "?  "^""'^  '"'^ 
carried wif hT;.  P'"''"'"  ""^  *  <=*'"'■*  *«  make  an  order 

ofZ:i  Vnd  tZT   ^°""  *°  P™^'^  '^^  «  disobedient 

that  a  court  may2pllUeSirtotsTrd  "  >     '"  ".^'^^^ 
-    -2'Tot«^^^^^^ 

Yates,  4  Johns  3U   voT-     '*%«ffi«ency.    In  the  Case  of 
tice  of  thfsujre^  'S;t?;Sf- f ^t^J^en  C^^^^  j  J 

"In  the  Case  of  TheEZof^ZSl    ^T  ^""^^^  ^"'^^^ 
S.  C.  1  Mod  144  ^aZJ    ^^"^■^'f^'-y^  2  St.  Trials,  615; 

lit  r.t— n;^Sr  ^^-' 

which  they  never  have  ^.ZlJw.  *  Principle  from 

the  due  administTattn  of -uSe'   Th"  "'"'".  """*^^^  *« 
conrt,  at  least  of  the  superior  W  ^\^T"'^^'  '^'^'  '^^^'^ 
is  placed,  must  be  tke  Zljute^nn^fT'''  ""'''^"'=« 
tempts  arising  therein   is  mn^  !'    r  If     f  '■*'°'^'  °*  «>°- 
emphatically  "enforid' in  ^/V^'P^''^'"^  ^'^^^  and  men, 
Q^'ecny.PaljandTtfjs^^LTl  'ff^^^^^  cases  of  the 
"gain,  on  page  371, "  Mfjusle  R.  '5r^  "^  ^'-''^'^"    ""^^ 
train  of  otvati^n,  a^d  1   Ire^tS^^^  P"""'''  "^^  ^^' 
he  meant  to  include\be  tJo  houL  ^  j"  r''%'-"  "''^'» 
11808-voi.  1-^  „_«.       ^'  "^  Parliament,  and  the 


I 

i 


594 


158   UNITED   STATES  REPORTS.  595. 


>l| 


•I 


Opinron  of  the  Ck>urt. 
courts  of  Westminster  Hall,  could  have  no  control  in  matters 
of  contempt.    That  the  sole  adjudication  of  contempts,  and 
the  punishments  thereof  belonged  exclusively,  and  without 
interfering,  to  each  respective  court."    In  Watson  v    ir«7- 
hams,  3C  Mississippi,  331,  341,  it  was  said:  "The  power  to 
fine  and  imprison  for  contempt,  from  the  earliest  history  of 
jurisprudenee,  has  been  regarded  as  a  necessary  incident  and 
attribute  of  a  court,  without  which  it  could  no  more  e.^ist 
than  without  a  judge.    It  is  a  power  inherent  in  all  courts 
of  record,  and  coexisting  with  them  by  the  wise  provisions 
of  the  common  law.    A  court  without  the  power  ^flFectually 
to  protect  Itself  against  the  assaults  of  the  lawless,  or  to  en- 
force Its  orders,  judgments,  or  decrees  against  the  recusant 
parties  before  it,  would  be  a  disgrace  to  the  legislation,  and 
?r««'f"*   "P**°   ^^^   "Se   which   invented    it."    In    Cart- 
[596]  vniffht^s  Cose,  114  Mass.  230,  238,  we  find  this  lan- 
guage:     The  summary  power  to  commit  and  punish  for 
contempts  tending  to  obstruct  or  degrade  the  administration 
of  justice  IS  inherent  in  courts  of  chancery  and  other  superior 
courts,  as  essential  to  the  execution  of  their  powers  and  to 
the  maintenance  of  their  authority,  and  is  part  of  the  law  of 
the  land,  within  the  meaning  of  Magna  Charta  and  of  the 
twelfth  article  of  our  Declaration  of  Rights."    See  also 
rZ\     foi"^  V  Z7«rf,^,  7  cranch,  32;  Anderson  v.  Dunn, 
6  Wheat.  204;  Eai  parte  Robinson,  19  Wall.  505;  Muoler  v 
Kans^,  12.3  U.  S  623,  672;  Ea,  parte  Terry,  128  U.  S.  280;' 
EtUnhecJcer  y  Plymouth  County,  134  U.  S.  31,  36,  in  which 
Mr.  Justice  Miller  observed:   "If  it  has  ever  been  under- 
stood that  proceedings  according  to  the  common  law  for 
contempt  of  court  have  been  subject  to  the  right  of  trial  bv 
jury,  we  have  been  unable  to  find  any  instance  of  it;  "  Inter- 
state Commerce  Commission  v.  Brimson,  154  U  S  447  488 
Ir.  this  last  case  it  was  said  "  surely  it  cannot  be  supposed  that 
the  question  of  contempt  of  the  authority  of  a  court  of  the 
Umted  States,  committed  by  a  disobedience  of  its  orders. 
IS  triable,  of  right,  by  a  jury."  ' 

In  brief,  a  court,  enforcing  obedience  to  its  orders  by  pro- 
ceedings for  contempt,  is  not  executing  the  criminal  laws  of 

A-  A    A  .,    ""  ^  fl™'''"^  *•*  '"'*"'^  tl'^  "ghts  which  it  has 
adjudged  them  entitled  to. 


/ 


IN   RE   DEBS,  PETITIONER. 
Opinion  of  the  Court. 


595 


Further,  it  is  said  by  counsel  in  their  brief: 

hoc  k""  ^'^^^^^^'}  pe  ^'^^  ^vbere  sucli  a  bill  in  behalf  of  the  sovereien 
has  been  entertained  against  riot  and  mob  violence   though  occur  ,!^ 
on  the  highway.    It  is  not  such  fitful  and  tempora?^  obScth^n  tiat 
constitutes  a  nuisance.     The  strong  hand  of  executive  Dower^^^ 
quired  to  deal  with  such  lawless  demonstrations  ^  ^" 

The  courts  should  stand  aloof  from  them  and  not  invade  execiitivA 
prerogative   nor  even  at  the  behest  or  request  of  the  ex^utive^atl! 

no    bl'supSdTln^  '^"^'^  authority.'l'^ifob^'In! 

vl?ted!  a^^sLn?et^^n^^^^^^^^  "^^  ^^"  '''  ^^^^-«  ^  tried,  con- 

"  It  IS  too  great  a  strain  upon  the  judicial  branch  of  tho  rii07i  »^« 

We  do  not  perceive  that  this  argument  questions  the  juris- 
diction of  the  court,  but  only  the  expediencv  of  the  action  of 
the  government  in  applying  for  its  process.'  It  surelv  cannot 
be  seriously  contended  that  the  court  has  jurisdiction  to  en- 
join the  obstruction  of  a  highway  by  one  person,  but  that  its 
jurisdiction  ceases  when  the  obstruction  is  bv  a  hundred  per- 
sons.   It  may  be  true,  as  suggested,  that  in  the  excitement  of 
passion  a  mob  will  pay  little  heed  to  processes  issued  from  the 
courts,  and  it  may  be,  as  said  by  coimsel  in  argument,  that  it 
would  savor  somewhat  of  the  puerile  and  ridiculous  to  have 
read  a  writ  of  injunction  to  Lee's  army  during  the  late  civil 
war.    It  is  doubtless  true  that  inter  arma  leges  silent,  and  in 
the  throes  of  rebellion  or  revolution  the  processes  of  civil 
courts  are  of  little  avail,  for  the  power  of  the  courts  rests  on 
the  general  support  of  the  people  and  their  recognition  of  the 
fact  that  peaceful  remedies  are  the  true  resort  for  the  cor- 
rection of  wrongs.    But  does  not  counsel's  argument  imply 
too  much?    Is  it  to  be  assumed  that  these  defendants  were 
conducting  a  rebellion  or  inaugurating  a  revolution,  and  that 
they  and  their  associates  were  thus  placing  themselves  beyond 
the  reach  of  the  civil  process  of  the  courts?    We  find  in  the 
opinion  of  the  Circuit  Court  a  quotation  from  the  testimonv 
given  by  one  of  the  defendants  before  the  United  Stat4 
Strike  Commission,  which  is  sufficient  answer  to  this  sue- 
gestion :  ° 

"As  soon  as  the  employ^  found  that  we  were  arrested   nnd  tm-^n 
uever  would  have  been  shaken,  under  anrciro,™stauL^,1f' we  had 


J 


596 


ii 


!l 


158   UNITED   STATES   REPORTS,  597. 
Opinion  of  tlie  Court. 


been  peiiuitted  to  remain  upon  the  field  among  them.    Once  we  were 
■     taken  from  the  scene  of  action,  and  restrained  from  s^ndin^t^emn^ 
or  issuing  oilers  or  answering  questions,  th^  tJ^e  mSi^^^^^^^^ 
porations   would   be  put   to   worli.  [5M]     ...     Our   headm^artera 
were  temporarily  demoralized  and  abandoned,  and  we  coKot  an 

Sm'k;r;rtt:'.?riK^^^'  ^^^  T'  *^^^^  ^^  ^^^^^'  and'he  ranks le^ 
DTORen,  and  the  strike  was  broken  up.    .    .     .    not  bv  the  armv   mui 

??Jf.tS  »?y  "t"'^'-  P^r-"-  •"■»  «"»P'>  "no  solely  by  ihe  actfon  of  the 

offl^re  ^nd  m^rift  H.'T*''?'"'"-  "^'"""  <>'^haVging  our  duties  as 
omeers  ana  lopiejaentjuives  of  our  employees." 

Whatever  any  single  individual  may  have  thought  or 
planned,  the  great  body  of  those  who  were  engaged  in  these 
transactions  contemplated  neither  rebellion  nor  revolution, 
and  when  in  the  due  order  of  legal  proceedings  the  question 
of  right  and  wrong  was  submitted  to  the  courts,  and  by  them 
decided,  they  unhesitatingly  yielded  to  their  decisions.  The 
outcome,  by  the  very  testimony  of  the  defendants,  attests  the 
wisdom  of  the  course  pursued  by  the  government,  and  that 
It  was  well  not  to  oppose  force  simply  by  force,  but  to  invoke 
the  jurisdiction  and  judgment  of  those  tribunals  to  whom  by 
the  Constitution  and  in  accordance  with  the  settled  conviction 
of  all  citizens  is  committed  the  determination  of  questions  of 
right  and  wrong  between  individuals,  masses,  and  States. 

It  must  be  borne  in  mind  that  this  bill  was  not  simply  to 
enjoin  a  mob  and  mob  violence.  It  was  not  a  bill  to  command 
a  keeping  of  the  peace ;  much  less  was  its  purport  to  restrain 
the  defendants  from  abandoning  whatever  employment  they 
were  engaged  in.  The  right  of  any  laborer,  or  any  number  of 
laborers,  to  quit  work  was  not  challenged.  The  scope  and 
purpose  of  the  bill  was  only  to  restrain  forcible  obstructions 
of  the  highways  along  which  interstate  commerce  travels  and 
the  mails  are  carried.  And  the  facts  set  forth  at  length  are 
only  those  facts  which  tend  to  show  that  the  defendants 
were  engaged  in  such  obstructions. 

A  most  earnest  and  eloquent  appeal  was  made  to  us  in 
eulogy  of  the  heroic  spirit  of  those  who  threw  up  their  em- 
ployment, and  gave  up  their  means  of  earning  a  livelihood 
not  in  defence  of  their  own  rights,  but  in  sympathy  for  and 
to  assist  others  whom  they  believed  to  be  wronged.  We 
yield  to  none  in  our  admiration  of  any  act  of  heroism  or  self- 

Tk^"^'  ^."^  "^^  ""^y  ^  permitted  to  add  that  it  is  a  lesson 
(59»J  which  cannot  be  learned  too  soon  or  too  thoroughly 
that  under  this  government  of  and  by  the  people  the  means  of 


,. 


f 


f 


IN   BE  DEBS,  PETITIONEE. 


597 


Opinion  of  the  Court, 
redress  of  all  wrongs  are  through  the  courts  and  at  the  ballot- 
box,  and  that  no  wrong,  real  or  fancied,  carries  with  it  legal 
warrant  to  invite  as  a  means  of  redress  the  cooperation  of  a 
mob,  with  Its  accompanying  acts  of  violence 

We  have  given  to  this  case  the  most  careful  and  anxious 
attention,  for  we  realize  that  it  touches  closely  questions  of 
supreme  importance  to  the  people  of  this  country.     Sum- 
ming up  our  conclusions,  we  hold  that  the  government  of  the 
United  States  is  one  having  jurisdiction  over  every  foot  of 
soil  withm  Its  territory,  and  acting  directly  upon  each  citi- 
zen; that  while  It  IS  a  government  of  e/Sumerated  powers,  it 
has  within  the  limits  of  those  powers  all  the  attributes  of  sov- 
ereignty; that  to  it  is  committed  power  over  interstate  com- 
merce and  the  transmission  of  the  mail;  that  the  powers  thus 
conferred  upon  the  national  government  are  not  dormant, 
but  have  been  assumed  and  put  into  practical  exercise  by  the 
legislation  of  Congress;  that  in  the  exercise  of  those  powers 
it  IS  competent  for  the  nation  to  remove  all  obstructions  upon 
highways,  natjiral  or  artificial,  to  the  passage  of  interstate 
commerce  or  the  carrying  of  the  mail;  that  while  it  mav  be 
competent  for  the  government  (through  the  executive  branch 
and  m  the  use  of  the  entire  executive  power  of  the  nation)  to 
forcibly  remove  all  such  obstructions,  it  is  equallv  within  its 
competency  to  appeal  to  the  civil  courts  for  an  inquiry  and 
determination  as  to  the  existence  and  character  of  any  alleged 
obstructions,  and  if  such  are  found  to  exist,  or  threate^ 
occur,  to  invoke  the  powers  of  those  courts  to  remove  or 
restrain  such  obstructions;  that  the  jurisdiction  of  courts  U> 
interfere  m  such  matters  by  injunction  is  one  recognized  from 
ancient  times  and  by  indubitable  authority;  that  such  juris- 
diction IS  not  ousted  by  the  fact  that  the' obstructions  Ire 
accompanied  by  or  consist  of  acts  in  themselves  violations  ol 

temlt  trat?  T  """^^  '"'"'•'=**'  ^y  proceedings  in.con- 
tempt,  that  such  proceedmgs  are  not  in  execution  of  the 

IbW]  injunction  is  no  substitute  for  and  no  defence  to  a  pros- 
ecution for  any  criminal  offences  committed  in  the  couiie  of 
such  ,aolation;  that  the  complaint  filed  in  this  case  clearly 
showed  an  existing  obstruction  of  artificial  highwavs  for  the 


!|i'!WpWI«w»"«l't;!i iffci 


598 


m  FEDEBAL  BEPOBTER,  908. 
Syllabus. 


passage  of  interstate  commerce  and  the  transmission  of  the 
mail— an  obstruction  not  only  temporarily  existing,  but 
threatening  to  continue:  that  under  such  complaint  the  Cir- 
cuit  Court  had  power  to  issue  its  process  of  injunction;  that 
It  having  been  issued  and  served  on  these  defendants,  the  Cir- 
cuit Court  had  authority  U,  inquire  whether  its  orders  had 
been  disobeyed,  and  when  it  found  that  they  had  been,  then 
to  proceed  under  ^tion  725,  Revised  Statutes,  which  grants 
power  "  to  punish,  by  fine  or  imprisonment,  .  .  dis- 
obedience,  by  any  party    ...    or  other  person, 

to  any  lawful  writ,  process,  order,  rule,  decree  or  command," 
and  enter  the  order  of  punishment  complained  of;  and, 
hnally,  that,  the  Circuit  Court,  having  full  jurisdiction  in  the 
premises,  its  finding  of  the  fact  of  disobedience  is  not  open  to 
review  on  habeas  corpus  in  this  or  any  other  court.  Ex  parte 
Watktns,  3  Pet.  193 ;  Ex  parte  Yarhrongh,  110  U.  S.  651  •  Ex 
parte  Terry,  128  U.  S.  289,  305;  In  re  Swan,  150  U.  S.  637- 
Umted  States  v.  Pridgean,  153  U.  S.  48.  ' 

We  enter  into  no  examination  of  the  act  of  July  2  1890 
€.  647,  26  Stat.  209,  upon  which  the  Circuit  Court  relied 
mainly  to  sustain  its  jurisdiction.  It  must  not  be  understood 
from  this  that  we  dissent  from  the  conclusions  of  that  court 
m  reference  to  the  scope  of  the  act,  but  simply  that  we  prefer 
to  rest  our  judgment  on  the  broader  ground  which  has  been 
discussed  in  this  opinion,  believing  it  of  importance  that  the 
principles  underlying  it  should  be  fully  stated  and  affirmed. 
The  petition  for  a  writ  of  habeas  corpus  is 

Denied. 
[9081         LOWENSTEIN  i;.  EVANS  ET  AL. 

(Circuit  Court  D.  Soutli  Carolina.    October  9,  1895.) 

[69  Fed..  908] 

Monopolies  and  Trusts— Monopoly  by  State.— The  act  of  Julv  2 
1890  (26  Stat.  209.  c.  647),  to  protect  trade  and  commerce  against 
unlawful  restraints  and  monopolies,  is  not  applicable  to  the  case 
0*  a  state  which,  by  its  laws,  assumes  an  entire  monopoly  of  the 
traffic  in  intoxicating  liquors  (Act  S.  C.  Jan.  2.  1895).  A  state  is 
neither  a  "person "  nor  a  "corporation."  within  the  meaning  of  the 
act  of  congress.** 


.. 


■f 


i 


LOWENSTEIN   V,  EVANS. 


599 


Syllabus  copyrighted,  isa5,  by  West  Publishing  Co. 


Complaint 

Same-Necessaby  Pabties-Jubisdiction  op  Fedebal  Coubts  — 
Where  a  person  brings  an  action  under  section  7  of  the  anti-trust 
law  of  July  2.  1890.  against  the  officials  of  a  state,  to  recover  dam- 
ages  for  acts  done  under  authority  of  a  state  statute,  which  gives 
Al/o  *^  ^"^  ^''**'*^  monopoly  of  the  traffic  in  intoxicating  liquors 
(Act  S.  C.  Jan.  2,  1895),  the  state  itself  is  a  necessary  party  thereto 
and  consequently  the  federal  courts  would  have  no  jurisdiction  of 
the  action. 

This  was  an  action  brought  under  the  seventh  section  of 
the  act  of  congress  of  July  2,  1890,  entitled  "An  act  to  pro- 
tect trade  and  commerce  against  unlawful  restraints  and  mo- 
nopolies." 

The  complaint  was  as  follows: 

The  complaint  of  the  above-named  plaintiff  resnectfullv  showQ  t, 

r«  «  •  ^  *  I  ^^i^  Carolina,  and  is  engaged  in  business  in  StatPsvlllA 
in  said  state,  under  the  name  and  style  of  Lowenstein  &  O^     (2)^11^ 

L-arolina      (3)  That  the  defendants  John  Gary  Evans    D    H    TVmin- 

^°f  J»  ^""^  ^^^^l  ^°^^'^'  ^t5^"^g  themselves  a  "  State  Board  of^^ 
trol,"  and  the  defendant  Frank  M.  Mixson,  styling  hiSf"Ste?; 
Commissioner,"  together  with  divers  other  persons    to  the  nHinttff 

?endTautSorrtv*nf  *^'  "^  ^^^^^^^^^r  me^tion^;  under  the  p^ 
«!.^^trn  i?^^*'^  ^^  ^  certain  act  of  the  legislature  of  the  s^ti^Tf 
South  Carolina,  entitled  "An  act  to  further  declare  the  law  in  rpfpr 

nf  L  ?H  n'^^f '*^''''  ""^  alcoholic  liquids  or  liquors  within  the  stat,^ 
of  South  Carolina,  and  to  police  the  same,"  approved  Jam  aiT^  1^5 
combined  to  monopolize  a  certain  nart  of  fhl  fr-Ti^  „„",  ^    '  "®^' 
among  the  states  a'^d  forei Jnat'ioSfto'U^hT^"^^^^^^^ 
hquids   and   liquors,    including   whiskys,   brandies,   w^nLn^esnnd 
beer   to  prevent  the  purchase  of  such  whiskys   brandies   win^   aZ 
and  beer  from  citizens  of  other  states  and  foreign  nations  Ind  to  nS 
llf^'^  in^Portation  thereof  into  this  state  in^est^a  nt  of  the  trad^ 
and  commerce  between  the  states  and  foreign  nations   and  tndl^nr?^ 
inate  against  the  products  of  other  states^nd  the  d«"enl  o^f  ^^^ 
states,  in  favor  of  the  products  of  the  state  of  South  CaroZa  and  ?hP 
citizens  of  said  state,  which  said  legislative  ena^ent  the  nlaintS? 
s  advised  and  therefore  alleges  is  null  and  void  ?n^s    that  the  lame 

^«I?nH^^/^°*^*'''  ^^  ^°.^^*  ^^  ^°^^«««  entitled  '^n  act  to  protS? 
IT^^/?^,  ^^™™erce  against  unlawful  restraint  and  mononolv  "  ^ 
proved  July  2  A.  D.  1890,  in  that  the  said  legislative  enTctSunde?' 
takes  to  and  does  create  a  monopoly  in  the  traffio  in  ni^i^n«  V 
and  operates  as  a  restraint  upon  the  yade'Lml^^^^^^^^  feS 

?imiTJ°,'"2'  *'^®^1:   ^^>  T^^*  ^^^  plaintiff  now  is   and  was  a^th^ 
time  hereinafter  mentioned,  engaged  in  the  hiifiinoBo  Vvi  „        at  tne 

in  exercise  Of  fht  r  liff '   ^^^l  '°  Pursuance  of  his  said  business,  and 
in  exercise  of  the  rights  conferred  by  and  reserved  in  the  constitu- 


■Mljlik 


iSjilliBiuisSL 


ilittt^^^^^^^^^^ 


600 


III 


69  FEDERAL   REPORTER,  909. 
Opinion  of  the  Court. 


LOWENSTEIN   V,  EVANS. 


remained  inThepIain«ff  rS^TS  nn^n^^oo/i^***  «**^  property  still 
while  the  said  barrel  of  whilw^«?ii**?  ^^^^.^^^  ^'  ^^y-  ^'  ^'  1895, 
state  of  Sonth  Sina  Tnd  w^tWn  thl^n^.'^*'/*  Columbia,  in  the 
the  plaintiff  unk^noW  wittonT  wirrnnJ^  ff'^^''^'  "^^^^^  ^^''s^^S'  *« 
the  Common  canler^i  TnS^  Tn  thw?'  ^*'^'  .^'^^''^  **^^  ^«^«  <>' 
and  of  interstate  wmmerSflSd  thi  tn^.'Jf^'*^**^''  ^^  "^'^  ^^isky 
and  carried  the  same^w^'  aSd  tSp?Pn?w  ^^Tf  ^''^S  ^^^  ««^^  ^^^^^y 
Whisky  to  be  deC^^'unto  tL  S^^  '^^^ 

thereupon,  and  in  furtheranop  nf  ««1h  ^  5  ^^  ^-  ^ixson,  who 
and  In^traint  of  thTtrade  an^^^^  """^  monopoly. 

and  in  furtheran^  of  tte  monthly  afoZaT^nrt^^        oombtoatlon 

and    /,o„  dollars,  for  a  reasonable  attornev's  fPP  nn^  J/tt  ki«       Y 
provided  in  the  act  of  congress  aforesaid!  ^  ''^'*^'  ^^ 

Murphy,  Farrow  <&  Legare,  for  plaintiff. 

^m^.  ^ar^er,  Attorney-General  of  South  Carolina,  and 
6.  Z'.  lowmend,  Assistant  Attorney-General,  for  defendants. 

SiMONTON,  Circuit  Judge. 

This  is  an  action  brought  under  the  seventh  section  of  the 
act  of  congress  approved  July  2,  1890,  entitled  "An  act  to 
protect  trade  and  commerce  against  unlawful  restraints  and 
monopolies  (26  Stat  209,  c.  647).  The  section  is  in  these 
words : 

an?^t'L^'^rlir*!?r!^^^  *^  ***«  ^^^^  «r  business  by 

alfi«^^L^         ,^^  corporation  by  reason  of  anything  forbiddPn  nr 

^^it'^t^.*TTn'l?i3''?;''/^'*^^«  ^^^  '"^y  «"«  therefor  ^inaoTcf^^^^^ 
22L  fr.  \%  ^"^i^  f^^^  ^"^  *^®  d^^t^'ict  in  which  the  defendant  re- 
sides or  is  found,  without  respect  to  the  amount  in  controversy   and 
shall  recover  three-fold  the  damages  by  him  8U8tflin«?  «nS  th/'J?  * 
of  the  suit,  including  a  reasonable  So^n^l  f^"  ""  **^°^  ^°^  ^^^  ^«*« 


i 


601 


Opinion  of  the  Court. 


The  act  declares : 


•'  Every  contract,  combination  In  the  form  of  trust  or  otherwi«.  nr 
conspiracy  in  retraint  of  trade  or  commerce  Mionrthe  My«^^t^ 
or  with  foreign  nations  Is  hereby  declared  Illegal  "  several  sutea 

The  cause  of  action  set  out  in  the  complaint  is  on  this 
statute  of  1890,  and  seeks  the  special  remedy  provided  in  the 
statute     The  rehef  is  sought,  not  because  the  rights  of  the 
plaintiff  were  violated,  but  because  they  were  violated  in 
order  to  enforce  and  perpetuate  a  monopoly  declared  illegal 
by  this  statute.    The  defendants  interpose  a  demurrer  on 
two  grounds:  P'irst,  that  on  the  face  of  the  complaint  this 
court  has  no  jurisdiction  of  the  matters  and  things  forming 
the  subject  of  this  action ;  second,  that  from  the  face  of  the 
complaint  it  does  not  state  facts  sufficient  to  constitute  a 
cause  of  action  cognizable  in  this  con  it. 

["**'l  THE   JURISDICTION-. 

The  first  ground  of  demurrer  was  sustained  in  argument 
because  this  is  an  action  against  the  state,  and  the  state  is  a 
necessary  party  thereto.    The  act  of  1890  strikes  at  contracts^, 
combinations,  and  conspiracies  in  restraint  of  or  to  monopo- 
lize trade  and  commerce  among  the  several  states  or  with 
foreign  nations.     V.  S.  v.  E.  C.  Knight  Co.,  156  U.  S.  17, 
15  Sup.  Ct.  249.    The  complaint  charges  that  the  defend- 
rif  .     r^'  Tompkins,  and  Norton,  styling  themselves  a 
^^  State  Board  of  Control,"  and  Mixson,  styling  himself 
State  Commissioner,"  together  with  divers  other  persons 
to  the  plaintiff  unknown,  under  the  pretended  authority  of 
an  act  of  the  legislature  of  South  Carolina,  "giving  the 
title  of  the  act,"  combined  to  monopolize  a  certain  part  of 
the  trade  and  commerce  among  the  states  and  foreign  na- 
tions, to  wit,  the  trade  in  alcoholic  liquids  and  liquors  with 
citizens  of  other  states  and  foreign  nations,  to  prevent  their 
importation  into  this  state,  and  to  discriminate  against  the 
products  and  citizens  of  other  states  in  favor  of  the  products 
and  citizens  of  the  state  of  South  Carolina.    This  act  of  the 
legislature  of  South  Carolina,  the  complaint  avers,  is  void 
as  in  contravention  of  the  act  of  1890. 
Does  this  act  of  the  legislature  of  South  Carolina  authorize 


M 


!  I 


602 


«»  FIDBBAL  KEPORTEB,  910. 


Opinion  of  the  Court 

contracts  or  combinations  in  form  of  trust  or  otherwise,  or 
conspiracy  in  restraint  of  trade  or  commerce  among  the 
several  states  or  with  foreign  nations?     Does  it  create  a 
monopoly,  and  in  whom?     The  answer  to  this  question 
must  be  found  in  the  act    It  is  entitled  "An  act  to  further 
dedare  the  law  in  reference  to  and  further  regulate  the 
use,  sale,  consumption,  transportation  and  disposition  of  alco- 
holic hquids  or  liquors  within  the  state  of  South  Carolina 
and  to  police  the  same,"  approved  January  2,  1895.    It  is 
impossible  after  examining  this  act  to  avoid  the  conclusion 
that  it  declares  in  the  state  the  monopoly  in  the  purchase 
and  sale  of  alcoholic  Uquors.    Not  only  so,  but  it  protects 
this  monopoly  in  the  state  in  every  way  possible  and  by 
the  most  drastic  methods.    Every  attempt  to  interfere  with 
this  monopoly  by  the  receiving,  keeping,  vending,  giving 
away,  or  mercantile  use  of  alcoholic  liquors,  is  made  an 
offense  against  the  state,  punishable  by  criminal  proceed- 
mgs  m  her  name  in  her  courts.    The  governor,  secretary  of 
state,  and  comptroller  general  are  officially  charged  with 
the  direction  and  entorcement  of  this  monopoly.    The  mo- 
nopoly is  not  given  to  them.    They  have  no  pecuniary  in- 
terest whatever  in  it    All  the  profits  of  the  monopoly  go 
to  the  state,  to  be  used  and  applied  for  public  purposes,— 
mcrease  of  her  revenue.     The  close  analysis  made  of  the 
net  by  the  counsel  for  the  plaintiff  shows  that  this  was 
their  conviction.     They  find  that  its  manifest  object  is  to 
raise  revenue,  and  not  to  prevent  the  consumption  of  liquor, 
except  that  owned  and  furnished  by  the  state ;  that  $50,000 
was  appropriated  from  the  public  treasury  for  the  purpose 
of  purchasing  liquors  and  to  enable  the  state  to  go  into 
the  business  of  buying  and  seUing  intoxicating  liquors:  that 
liquors  are  not  contraband,  except  when  not  purchased  from 
n  dispenser,--that  is,  one  who  holds  and  sells  for  the  state  • 
that  the  act  creates  a  monopoly.     So,  also.  Chief  Justic^ 
Mclver,  speaking  for  the  majority  of  the  supreme  court 
[»Ilj  of  South  Carolina,  in  McCullough  v.  Brown,  41  S.  C. 
220,  19  S.  E.  458,  dissecting  the  dispensary  law,  says: 

"Tlie  manifest  object  of  the  act  is  tliat  the  state  shall  mononnn^o 
the  entire  traffic  in  intoxicating  liquors,  to  the  ent  ?e  exc  uTiZ^  an 
l^rsons  whomsoeyer.  and  this,  too,  for  the  purpose  of  profit  "otSe  state 


# 


LOWENSTEIN    V,  EVANS. 
Opfuiou  of  the  Court. 


603 


and  its  governmental  agencv.  *  *  *  wp  think-  if  caf^  f^  c.«  *»,  * 
It  is  an  act  forbidding  tl,e  .innufactnre  o7sa  e  of  intoXtm  '  lUSS 
as  a  beverage  within  tbe  limits  of  this  state  by  X  nr Ivate  Ind? 

Jlt"^}\'"'^  T*.'"^  *"^  '■'«"*  to  maiwfacture  and"Lch  ZuorsTn 
the  state  exclusirely,  through  certain  designated  officers  and  agents  ° 

This  act  of  the  legislature  of  South  Carolina  evidently  does 
not  create  in  nor  give  to  any  individuals  the  monopoly.  It 
gives  It  wholly  and  entirely  to  the  state. 

Now,  the  question  to  be  decided  is  not  as  to  the  constitu- 
tionality of  this  act.  nor  whether  it  be  in  the  lawful  exercise 
of  the  police  power,  but  whether,  in  declaring  and  asserting 
this  monopoly  in  herself,  and  in  assuming  and  controlling  its 
enforcement,  the  state  comes  within  the  provisions  of  the  act 
of  congress  of  1890.    That  act,  as  has  been  seen,  declares 
Illegal  every  contract,  combination  in  the  form  of  a  trust  or 
otherwise,  or  conspiracy  in  restraint  of  trade  or  commerce 
among  the  several  states  or  with  foreign  nation.s.    But  by 
this  act  the  state  makes  no  contract,  enters  into  no  combina- 
tion or  conspiracy.    She  declares  and  asserts  in  herself  the 
monopoly  m  the  purchase  and  sale  of  liquors.    The  section 
of  the  act  of  1890,  sued  upon,  gives  a  right  of  action  for  anv 
injury  by  any  other  person  or  corporation.    The  state  is  not 
a  corpoi-ation.    A  corporation  is  a  creature  of  the  sovereign 
power,  deriving  it^  life  ft-om  its  creator.    The  state  is  a 
sovereign  having  no  derivative  powers,  exercising  its  sover- 
eignty by  divine  right.    The  stete  gets  none  of  its  |K.wers 
from  the  general  government.     It  has  bound  itself  by  com- 
pact with  the  other  sovereign  states  not  to  exercise  certain  of 
Its  sovereign  rights,  and  has  conceded  these  to  the  Union 
but  in  every  other  respect  it  retains  all  its  sovereignty  which 
existed  anterior  to  and  independent  of  the  Union.    Nor  can 
It  be  said  that  the  state  is  a  person  in  the  sense  of  this  act. 

?v"  rr.u  ^^^  ''"'''  "'  *•>*  monopoly  now  complained  of 
IS  that  of  the  state,  no  relief  can  be  had  without  making  the 
state  a  party,  and  this  destroys  the  jurisdiction  of  this  cturt. 
No  opmion  whatever  is  expressed  as  to  the  right  of  the  plain- 
tiff for  violation  ot  his  common-law  rights.  In  this  pro- 
ceeding and  under  the  act  of  189t  he  must  seek  his  remedy 
against  the  holder  of  the  monopoly;  and,  as  in  the  present 
case  the  monopoly  is  in  the  state,  this  court  has  no  jurisdic- 


'4 


^^  73  FEDERAL  REPORTER,  438. 

Statement  of  the  Case. 

tion.     The  demurrer  is  sustained,  and  the  complaint  is  dis- 
missed. 

As  this  case  has  gone  off  on  the  demurrer,  a  copy  of  the 
complaint  is  filed  as  an  exhibit  to  the  opinion. 


[438]  PKESCOTT  &  A.  C.  E.  CO.  v.  ATCHISON,  T  & 

S.  F.  R.  CO.  ET  AL.«  * 

(Circuit  Court,  S.  D.  New  Yoric.    .Tanuary  8,  189G. 

[73  Fed.,  438.] 

^rr.l'T^r'*''?^-'™''   ""^  COMPLAINT-DEMUBREB.-A  Complaint 

Railboad  Companies-Abbanoements  fob  Thbouoh  Billing  —There 
is  no  principle  of  common  law  which  forbids  a  single  railroad  cor- 
poration, or  two  or  more  of  such  corporations,  from  selecting,  from 
two  or  more  other  corporations,  one  which  they  will  employ  as  the 
agency  by  Which  they  will  send  freight  beyond  their  own  lines,  on 
through  bills  of  lading,  or  as  their  agent  to  receive  freight  anS 
ransmit  It  on  through  bills  to  their  own  lines,  and  without  breaking 
bulk;  and  the  right  to  make  such  selection  is  not  taken  away  by 
the  in  ei^tate  conimerce  law.  New  York  d  N,  Ry.  Co,  y.  New  York 
d  N.  E.  R.  Co.,  50  Fed.  867,  explained. 

CoNTBACTs  IN  Restbaint  OF  Tbade-Act  July  2.  1890.-A  contract  by 
"^^  .  „"  ^^^'"'"''^  coniPany  arranges  with  another,  to  the  exclusion 
of  still  others,  for  the  interchange  of  passengers  and  freight  by 
through  tickets  and  bills  of  lading,  is  not  a  contract  in  unlawful 
restraint  of  trade,  within  the  meaning  of  the  act  of  July  2,  1890. 

This  was  an  action  by  the  Prescott  &  Arizona  Central  Rail- 
road Company  against  the  Atchison,  Topeka  &  Santa  Fe 
Railroad  Company  and  other  railroad  corporations  and  indi- 
viduals for  aUeged  unlawful  discrimination  in  refusing  to 
accept  freight  from  the  plaintiff  company,  on  through  biUs 
oi  ladmg,  while  such  freight  was  accepted  and  carried 
on  through  biUs,  under  a  contract  with  other  railroad  com- 
panies.   The  case  was  heard  upon  a  motion,  by  all  of  the 

•Appeal  to  Circuit  Court  of  Appeals,  Second  Circu^  dismissed^ 

T^ZT  ^f.  *""*  ''^^^^''  '*^  '"*'''**'"  ^^^  «"*^  *>^  ^'•te^^al  Judgment 
(84  Fed..  213).    Not  reprinted.     Merely  a  matter  of  practice. 

6  Syllabus  and  statement  copyrighted,  1896,  by  West  Publishing  Co. 


PKESOOTX  A  A.  O.  E.  CO.  V.  ATCHISON,  T.  &  S.  P.  B.  CO.       605 

Opiuiou  of  the  Court 
defendants  save  one,  to  direct  a  verdict  in  their  favor  upon 
the  pleadings  and  opening,  the  remaining  defendant  asking 
judgment  m  his  favor  on  demurrer. 

C.  N.  Sterry,  for  the  motion. 

Deloa  McCurdy,  opposed. 

Lacombe,  Circuit  Judge  (orally). 

In  this  case  I  have  examined  the  authorities  submitted 
yesterday  by  the  parties  on  both  sides,  and  have  reached  the 
conclusion  that  the  motions  to  .dismiss  must  be  granted  I 
am  unable,  however,  in  so  brief  a  time  to  formulate  any 
elaborate  opinion;  and  it  will  be  sufficient  to  indicate  that 
the  lines  of  thought  which  lead  to  this  conclusion  may  be 
ascertained  by  reference  to  the  cases  of  V.  S.  v.  Tram-Mis- 
souri Freight  Ass\  7  C.  C.  A.  15,  58  Fed.  58,  Little  Bock  db 
MR.  Co.  V.  St.  Louis  S.  W.  Ry.  Co.,  11  C.  C.  A.  417,  63  Fed. 
775,  and  the  Dueber  Watch-Case  Co.  Case,  14  C.  C.  A.  14 
66  Fed.  637;  all  three  being  opinions  of  circuit  courts  of 
appeals. 

All  legislation  interfering  with  the  right  of  the  individual, 
whether  he  be  a  natural  person  or  a  corporation,  to  enter  into 
contracts  or  to  exercise  his  preferences  as  to  the  persons  with 
whom  he  shall  do  business,  should  be  cautiously  construed. 
It  IS  legislation  of  a  novel  character,  and  should  not  be  ex- 
tended beyond  the  plain  import  of  the  language  used  by  the 
lawmakers.    Stripped  of  the  adjectives  and  of  the  averments 
as  to  conclusions  of  law,  the  gist  of  this  complaint  is  the 
making  of  the  particular  contract  known  as  "  Exhibit   \  » 
and  [439]  the  carrying  out  of  that  contract  according  to' its 
terms  coupled  with  the  further  set  of  facts  that,  in  carrying 
out  that  contract  according  to  its  terms,  the  parties  theMo 
necessarily  ceased  to  continue  with  the  plaintiflf  corporation 
the  relations  which  had  existed  before.    That  contract  con- 
templates, and  the  acts  of  the  parties  defendant  set  forth  in 
the  complamt  show,  that  what  was  done  was  to  institute  a 
system  of  interchange  of  freight  and  interchange  of  passen- 
gers by  the  new  corporation  to  and  with  the  other  four  de- 
fendant corporations,  and  to  cease,  from  and  after  the  execu- 
tion of  that  contract  or  some  subsequent  date,  the  further 


I<~I" 


II 


1 


73   FEDERAL  BEPORTEK,  439. 
OpinioD  of  the  Court. 
interchange  of  freight  and  passengers  on  through  bills,  nnd 
by  through  tickets,  with  the  plaintiflf  corporation.    Now,  it 
IS  true  that  the  complaint  contains  a  single  clause,  at  the 
close  of  the  sixty-ninth  paragraph,  which  uses  the  words  «  by 
utterly  refusing  to  receive  or  deliver  freight  or  passengers 
to  or  from  it."    That  language,  taken  in  its  full  scope,  im- 
ports a  refusal  to  receive  freight,  that  had  its  origin  on  the 
Jine  of  the  Prescott  &  Arizona  Central  Railroad  Company, 
wherever  and  under  whatever  circumstances  it  was  tendered. 
But  It  IS  a  fair  rule  of  pleading  that  the  complaint  is  to  be 
interpreted,  even  upon  demurrer  and  upon  motion  to  dismiss, 
as  a  whole;  and  examining  it  a  second  time,  after  the  argu- 
ments yesterday,  with  great  care,  I  am  constrained  to  the 
conclusion  that  the  case  which  it  makes  out  is  the  case  stated 
in  general  terms  in  the  sixty-ninth  paragraph,  but  set  forth 
specifically  and  distinctly  in  the  seventy-eighth  paragraph, 
namely,  'that  the  defendants  have  refused  to  acceptor  de- 
liver local  and  interstate  freight  at  said  Seligman  [or  Pres- 
cott Junction]  upon  through  bUling  from  or  to  the  line  of 
the  plaintiff,  m  conjunction  with  the  lines  of  said  defendants, 
although  the  said  defendants  now  accept  and  deliver  frei<rht 
upon  through  billing  from  or  te  the  said  defendant  the  Santa 
Fe,  Prescott  &  Phoenix."    And  the  illustrative  cases  which 
are  given  under  another  of  the  paragraphs,  the  seventy-first, 
mdicate  quite  clearly  that  the  ground  of  complaint  and  the 
case  made  by  the  bill  is  the  refusal  to  deliver  freight  on 
through  bills,  and  without  breaking  bulk,  to  the  plaintiff 
corporation,  or  to  receive  freight  from  the  plaintiff  corpora- 
tion without  breaking  bulk,  and  without  rebilling,  and  the 
same  with  regard  to  passengers,-the  refusal  to  send  passen- 
gers on  through  tickets,  or  to  accept  through  tickets  with 
passengers. 

Now,  I  know  of  no  principle  of  common  law  which  forbids 
an  individual  railroad  corporation,  or  two  or  three  or  more 
corporations,  from  selecting  as  to  which  one  or  two  or  more 
corporations  they  will  employ,  as  auxiliary  to  their  own 
ines,  as  the  agency  by  which  they  will  send  freight  beyond 
their  own  lines,  or  as  their  agent  to  receive  freight  on  the 
auxiliary  line  to  be  transmitted  to  their  own  line  upon 
through  bills,  and  without  breaking  bulk.    And  I  do  not  find 


PBESCOTT  *  A.  C.  B.  CO.  V.  ATCHISON,  T.  *  S.  F.  B.  CO.       607 

Opinion  of  the  Conrt 

dudonlr":;:  r-"--- 1»-  sufficient  to  warrant  the  con- 

Thislrt  «ii^         .^"^  '^•^  ''^'"'^^  ^  *»»»*  particular. 
Ihis  court,  sittitig  m  May,  1892,  at  a  term  where  the  oresent 

extent  induced  by  toe  waT?*!^.  ,*  1?^^  '''^  ***  ^'P'* 
the^court,  after  ^tl^ LfilZ:^^^:: SZ!: 

amT,H      °°* ''^^"  «t  that  time  so  exhaustive  a  judicial  ex- 
amination and  exposition  of  the  terms  of  the  intei^taS  com 

SLifor  "'  T  ^'  '"  '""^  ""^'•-*-'  nSy  in  the" 

restra S  i:  rSi"-'  "°*  '  T^*  '^  -^^-^'-^ 
1890  fnr  Vh  '       .        *"**  meaning  of  the  act  of  July  2 

iSmad    ^brrinti't""  "°*  "  ''*  ""^^  >-'  -- 
act  of  18or«?-    1   "'}T^^^''  commerce  statute,  and  that  the 

£FiSSiT-""-^-^^^^ 

support  of  their  motio^;  ttoe^tTpJIS  puuf  T 
cision  in  this  case  upon  the  broader  grounf         ^"'  '''  ^" 

indiXl  rS  ;5^^t"'  *°  ''^'"-  -  t«  John  J.  McCook 

peka  &  Santa  Fe'  a?  „T'  ""  "^'^''  "*  '^"'  ^'<=J"«'»'  To- 
ft r.„  Vl^"^*  ^  f'  "s  to  the  same  as  receiver  of  the  AtU^ti. 

Baring,  ^:SvSra5n;::ScSoT"  dT'  "  '"^  ^^^ 
utors  of  Georrrp  r  \r  J»cCook  and  Crane,  as  escc- 

director  of  onfor  m^1,TH'  ""*""'  '?  '^"'^"  ^-  McCook,  as 

and  the  demurrer  of  Gelt  Tc^tT't'  ''"  ^^''^' 

ground  that  it  does  nottlTrtwSfffi-^'  ''"''  °"  "'"^ 
a  cause  of  action,  is  suSined  T  ?  !"°*  ***  "°"^""*« 
rected  in  f«™.  "*  7i  ^"^t""^***-  Judgment  is  therefore  di- 
rected in  favor  of  the  moving  parties  for  dismissal  of  Z 


' 


608 


74  FEDERAL  REPORTER,   802. 
3jllabu& 


complaint,  and  the  ordinary  form  of  order  on  demurrer  will 

tt  Sot  J"  r""l'''-  ^  ^^^P"«'»  -  e^-'«d  as  to 
the  ^ho  e  disposition  of  the  case,  and  exceptions  separatelv 
as  to  each  one  of  the  separate  motions  will  be  recorded  Stay 
of  30  days  to  plaintiff.  ' 


[2301    NATIONAL  HARROW  CO.  v.  QUICK  ET  AL. 

(Circuit  Court  of  Appeals,  seventh  circuit    May  4,  ISOO.) 

174  Fed.,  23a] 

ri^ree  of  the  Circuit  Court  (67  Fed.,  130)  dismissing  the 
bill  for  want  of  equity  affirmed,  but  not  upon  any  «ro,.nd 


[802]         THE  CHARLES  E.  WISEWALL.- 

(District  Court,  N.  D.  New  York.    June  12.  ISOft) 

[74  Fed.,  802.] 

tZ  t  ,"  "^'«"'"'"«  ^••'"»«  <"  fe  services  rendeVed.  on  the  g3 
that  the  tug  owne.-s  are  members  of  an  association  which  IsTlS 
under  the  act  of  July  2,  181)0.  relates  to  Uusts  and  minoiiilT 

This  was  a  libel  in  rem  by  certain  tug  owners  against  the 
steam  dredge  Charles  E.  AVisewall  to  recover  the  value  of 

SnTal^h^r'^^^'^  ''  '''-  '^^  ^°  '^^'-^  '^«  ^^ 

Joseph  A.  Lawson  and  Isaac  N.  Laicson,  for  libelants. 
IV.  FrotJdngham,  for  claimant. 
«  r»ecree  nffiniied  by  Circuit  Pmii^^*  a«^  i    I~       ~  ~~ — 

r..     I     If^         '     '^^*    ^*^  P-  S^'  ^'i^ere  tbe  case  is  entitwi  "ti.^ 
Cbnrles  E.  Wiswall."  eniitied     Tbe 

^  6  Syllabus  copyrlgbted,  ISOC,  by  West  Publlsbing  Co. 


609 


THE   CHABLES  E.  WISE  WALL. 
Opinion  of  the  Court. 
CoxE,  District  Judge  (orally) . 

The  proof  shows  conclusivplv  tK„*  j     ■ 
1895,  the  tugs  mentionS    „  ;L  rt,  """^  **""  ^'"°™«''  «' 
the  claimant?  d^dgriTsl.,'         '  !*"'^^^*'  '^'^'^  to 
dollars.    The  claimfnt^eks  to  a^^i^   "^  ^'''''  '''^'^^ 
;oes  thus  requested  and  ateptd  bj  .f'^^"*  '"''  ^'^^  ^- 
that  the  tug  owners  were  ZS  ^  .      '  "P*'"  *•>«  g«>"nd 
was  illegal  and  ^oi^ZTl^Z^' T,  r*^"*^""^  "'^^<=h 
courts  have  found  it  very  d  ffic.^f ,      "^"^  ^'  ^«^<'-    T^e 
generalities  of  this  act  tlVtTj"  '^^'^  *^^  '''^'^^*- 
cod  c&A.C.S  Co  V   4,7-        l     *°^  S'^^n  case.    Pr«. 
438,  and  cases  cited.    Assumino.  I^ '  •      '  ^''•'  ^^  ^ed. 

argument,  that  the  agrletert  wr  w','"  "'"^^^  *°  «-°W 
to  act  in  unison  was  prTSed^h!'  I*  *'^«  *"««  ™dertook 
straint  of  trade,  my  prelntT.  '"  **'*'  *'  ^'''^^  '"  ^- 

tion  will  not  aid  the  Eant  W^'^'k"  f  *'^"*  '^^  ~P- 
to  repudiate  his  just  dTtrtl  ^^  '^""'^  ""*  ^«  P^^^tted 
their- association  Ts  iZS  \*J«.  "'d'V'dual  tugs  because 
ices,  and  having  accented  fi  ^T^  '^^^'^  ^"'-  ^^eir  serv- 

Counsel  for  the'claSritf  aVd^l^    ^'"^""^  P^^' 
to  present  authorities  to  establiX  fK  *™^  '°  ^'''ch   • 

towage  contracts  were  void  a'ld  Tn       f  P^P^^^^tion  that  the 
the  agreement  by  whichThe  lut  Z       *'"'"*  ***  ^''^'^^  because 
that  reason.    The  au    fSO^    f    !'**  "^""^ted  was  void  for 
judgment,  to  meet   he  poSil  2  r  '"T'^*^  *«'''  '-  ^l 
confound  the  two  contr^ci    'l'^""^*'''"-    I*  i«  a  mistake  I     . 
flower  to  tow  the  dredgr?^;ewan  T'""'"*  ''^  *^^  ^''g  ^ay 
Albany  to  Troy,  is  nft  vo  ?2ut  fheT "f  ^  ^'^'  '^""^ 
ciated  with  other  tugs  to  rp^^mf    ^^^^Aower  is  asso- 
Albany.    Should  the  claLI'f  ^'*"  *^  P"'^^  »'  towing  at 
at  an  Albany  clothing  Jop "e  wS  fi".  \  ?'^  ''  *"•— 
paying  their  actual  market  vat"  K     "^  '*  '^'®'="^*  *«  avoid 
other  tailors  of  that  dty  hid  tlt^f  f'  ^^"'^^'^  ««<» 
So  when  he  employs  the  Albany^"    ^'^.  *"  '^'^^P  »P  P^ces. 
and  receives  ^rvices  worth  Ynl^!;^"""^  '"  «°«'*  ^ason 
$900,  he  should  not  be  pe^itteST  ?  P''^^^"*  Proof,  over 
tjons  upon  a  pretext  so  mS   %f  7^  "«  i"st  obliga- 
the  dredge  shall  pay  any  moS  tt    I  '  *"^  ^'^  °«*  «^fe  that 
"««-vo.  1  Jl  ,.:!^r  --— actually 


610 


76   FEDERAL    REPORTER,  667: 


Opmlon  lit  the  Court. 

worth.  If  they  are  worth  less  than  $924  demanded  in  the 
libel,  it  is  still  open  for  the  claimant  to  show  it.  But  it  is 
unnecessary  to  pursue  the  subject  further.  Above  and  be- 
yond every  other  consideration  stands  the  indisputable  fact 
that  the  tugs  rendered  valuable  services  to  the  dredge  at  her 
request.  These  debts  she  should  pay.  To  i^ermit  her  to 
escape  would  be  aiding  a  scheme  of  repudiation.  The  tugs 
are  entitled  to  a  decree.  Unless  there  is  a  reasonable  prospect 
that  the  claimant  can  produce  testimony  reducing  the  amount 
proved  to  be  due,  a  reference  would  seem  unnecessary.  How- 
ever^  if  the  claimant  desires  it  a  reference  will  be^  ordered 
The  Ubelants  may  amend  the  libel  in  the  resj^ects  heretofore 
suggested  if  on  reflection  they  desire  to  do  so. 


[667]     NATIONAL  HARROW  CO.  v,  HEXCH  ET  AL.« 
(Circuit  Court,  E.  D.  Pennsylvania.    August  25,  1896.) 

[76  Fed.,  mi.] 

Monopolies- Combination  of  Patent  Owners.— A  coniblnntlon 
among  manufacturers  of  sprlng-tooth  harrows,  by  wbicb  eacb  manu- 
facturer assigns  to  a  corporation  organized  for  the  purpose  the 
patents  under  which  he  Is  operating,  and  takes  back  an  exclusive 
license  to  make  and  sell  the  same  style  of  harrows  previously  made 
by  him,  and  no  other,  all  the  parties  being  bound  to  sell  at  uniform 
prices,  held  to  be  an  unlawful  combination  for  the  enhancement  of 
prices,  and  in  restraint  of  trade.* 

EMey,  Rohimon  <&  Love^  for  complainant. 

Strawhridge  (&  Taylor  and  Jahn  G.  Johnson,  for  defend- 
ants. 

AcHESON,  Circuit  Judge. 

The  plaintiff,  the  National  Harrow  Company,  seeks  an 
injunction  restraining  the  defendants,  Hench  &  Dromgold, 
frran  selling  float  spring-tooth  harrows,  harrow  frames,  and 
attachments  applicable  thereto,  upon  more  favorable  terms 

-Affirmed  by  Circuit  Court  of  Appeals,  Third  Circuit  (83  Fed.,  36). 
See  p.  742.  A  similarly  entitled  case  (84  Fed.,  226),  p.  746,  is  another 
suit,  brought  In  the  Circuit  Court,  N.  D.  of  New  York. 

*  Syllabus  copyrighted,  1896,  by  West  Publishing  Ck>. 


NATIONAL   HARROW   CO.  V,  HENCH.  611 

Opinion  of  the  Court 

specific  enforcement  of  saTd  contrLts  ^^^^^^    ^"^'"^  '*^^*''« 
at  the  rate  of  five  dollars  fJTlt   '    "'^  *°''  *°  accounting 

Mmly,  UiM  these  1,",^     ,     f  ''*  ""  "'  "'•B, 

.taint  «(  l"i  „j  r      T  ;"*  '"  '"  ""™»»>l.l«  »- 
■»«„]  tU  „.„u6«„^'lf  "  *"  "»'"'"'  "»l.in«io„  to 

mintai.  high  pric,^'"  Th.  N«to,irS    '*  pI"'' "'' 
.    coi-porelion  of  the  a,lS>  of  Ne«  y"  """"'.  C»"P«"y.  • 

the  good  will  of  ?h^fr  h  ^  spring-tooth  harrows,  and 

woufd  notX^eaSrC;^^^^^^^^^ 
of  such  harrows,  except  IstTl  or  l^^L^fof  £"  '""  "'•* 
tion;  that  the  corporation  should  LVp^^T  T"*- 

and  corporations,  respectivdr«>aT*i*^P™^'.  «™^ 
patents  and  the  ff^d  ^H  Iti^  f>  ^ss  gning  to  it  their  said 

to  manufacture  TdJll  ,1  h '""''"''''  '^"'"^^^^  ^^^^ 
uniform  terms  aTd  condE, T  "^"  '*=•="*"*'  ^"^J^*'*  *« 
which  they  were  making  anT^n        •'""^  "'^^^  ***  ^^""'^^ 

ment,  and'iha  rcoSSlti'lf  '"^f"""  "^  ''''  '^- 
and  sell  anv  stvlJ  T™'°"  '^^'f  ^ould  not  manufacture 

every  float  SDrinTtlfh^/  corporation  one  dollar  on 

such^icens^n/d-rt  ^7X7^^^  ""^^  ^''  '' 
transferring  to  the  corpora  tionTeg^o/VofTSr 
sprmg-tooth  harrow  businP<5Q    or.^   «:  •  ®^^  °^^* 

«  ^  upon  0.  „  ,,J4  .H,i^'-'-  'X«^X' 


612 


76   FEDEHAL   REPORTER,  668. 
Opinion  of  the  Court. 


the  corporation.  The  agreement  in  the  first  instance  was 
signed  by  six  different  manufacturers,  but  the  contract  con- 
templated and  provided  that  others  should  come  into  the  ar- 
rangement and  become  parties  thereto.  Accordingly,  other 
manufacturers  of  float  spring- tooth  harrows  soon  joined  the 
combination,  which  then  embraced  22  different  persons,  firms, 
or  corporations.  Thus,  almost  the  entire  output  of  float 
spring-tooth  harrows  made  in  the  United  States  was  brought 
under  the  regulation  and  control  of  this  organization,  its 
licensees  manufacturing  and  selling  at  least  90  per  cent, 
thereof. 

The  defendants  were  the  owners  of  two  United  States  let- 
ters patent  relating  to  float  spring- tooth  harrows,  under 
which  they  had  been  manufacturing  and  selling  harrows. 
They  joined  the  combination,  and,  agreeably  to  the  provi- 
sions of  the  above-recited  agreement,  they  assigned  to  the 
New  York  corporation  their  patents,  and  that  corporation 
then  issued  to  the  defendants  a  license  to  manufacture  and 
sell  their  old  style  of  harrows.  The  New  Jersey  corporation, 
which  was  formed  in  furtherance  of  the  general  scheme,  is- 
sued to  the  defendants  ji  second  Ecense  on  terms  and  condi- 
tions substantially  like  the  former  license.  These  are  the 
two  license  contracts  here  sued  on.  The  following  stated 
provisions  are  common  to  both  licenses:  The  defendants 
agree  not  to  sell  float  spring-tooth  harrows,  float  spring-tooth 
harrow  frames  without  teeth,  or  attachments  applicable 
thereto,  at  less  prices  or  on  more  favorable  terms  of  payment 
and  delivery  to  the  purchasers  [669]  than  as  is  set  forth  in 
the  schedule  annexed  to  the  license,  unless  the  licensor  should 
reduce  the  selling  prices  and  make  more  favorable  terms  for 
purchasers,  and  that  the  defendants  will  not  directly  or  indi- 
rectly manufacture  or  sell  any  other  float  spring-tooth  har- 
rows, etc.,  than  those  which  they  are  thus  licensed  to  sell  and 
market,  except  for  another  licensee,  and  then  only  of  such 
style  as  he  is  licensed  to  manufacture  and  sell.  They  agree 
to  pay  to  the  corporation  one  dollar  upon  each  float  spring- 
tooth  harrow,  etc.,  manufactured  and  sold  by  them  agreeably 
to  the  terms  of  the  license,  and  the  sum  of  five  dollars  as  liqui- 
dated damages  for  every  harrow,  etc.,  manufactured  or  sold 
by  them  contrary  to  the  terms  and  provisions  of  the  license, 


NATIONAL   HARROW   CO.  V,  HENCH. 


613 


' 


Opinion  of  the  Court. 

and  the  corporation  agrees  to  defend  all  suits  for  alleged  in- 
fringement brought  against  the  licensees.  All  the  licenses 
issued  by  the  corporation  are  upon  the  like  terms  and  condi- 
tions. . 

It  will  be  perceived  that  the  corporation  through  whose 
instrumentality  the  purposes  of  the  combination  are  effected 
is  simply  clothed  with  the  legal  title  to  the  assigned  patents, 
while  the  several  assignors  are  invested  with  the  exclusive 
riglit  to  manufacture  and  sell  their  old  style  of  harrows 
under  their  own  patents;   but  all  of  them  must  sell  at  imi- 
form  prices  and  upon  the  same  terms,  without  respect  to 
cost  or  the  merits  of  their  respective  styles  of  harrows,  and 
all  the  members  of  the  combination  are  strictly  forbidden 
to  manufacture  or  sell  any  other  style  or  kind  of  float  spring- 
tooth  harrow  than  they  are  thus  licensed  to  make  and  sell. 
Now,  it  is  quite  evident  to  me,  as  well  by  the  papers  them- 
selves as  from  the  testimony  of  witnesses,  that  this  scheme 
was  devised  for  the  purpose  of  regulating  and  enhancing 
prices  for  float  spring-tooth  harrows,  and  controlling  the 
manufacture  thereof  throughout  the  whole  country,  and  that 
the  combination,  especially  by  force  of  the  numbers  engaged 
therein,  tends  to  stifle  all  competition  in  an  important  branch 
of  business.     I  am  not  aware  that  such  a  far-reaching  com- 
bination as  is  here  disclosed  has  ever  been  judicially  sus- 
tained.    On  the  contrary,  the  courts  have  repeatedly  ad- 
judged combinations  between  a  number  of  persons  engaged 
m  the  same  general  business  to  prevent  competition  among 
themselves,  and  maintain  prices,  to  be  against  sound  public 
policy,  and  therefore  illegal.    Morris  Run  Coal  Co  v  Bar- 
<^^yCoal  Co    68  Pa.  St.  173;  Pittslurg  Carhon  Co.  v.  Mc^ 
milm    119  N.  Y.  46,  23  N.  E.  530;  Merz  Ca^mle  Co.  v. 
United  States  Capsule  Co.,  67  Fed.  414;  Nester  v.  Breiving 
Co.,  161  Pa.  St.  473,  29  Atl.  102. 

I  am  not  able  to  concur  in  the  view  that  the  principle  of 
these  cases  is  inapplicable  here,  because  the  agreement  in 
question  involves  patents.  It  is  true  that  a  patentee  has  the 
exclusive  control  of  his  invention  during  the  life  of  the 
patent.  He  may  practice  the  invention  or  not,  as  he  sees 
fat,  and  he  may  grant  to  others  licenses  upon  his  own  term<= 
But  where,  as  was  the  case  here,  a  large  number  of  inde- 


614 


76  FEDEKAL  REPOBTEB,  670. 


Opinion  of  the  Court. 
pendent  manufacturing  concerns  are  engaged  in  making  and 
selling,  under  different  patents  and  in  various  forms,  an  ex- 
tensively used  article,  competition  between  them  is  the  nat- 
ural and  inevitable  result,  and  thereby  the  public  interest  is 
pro-  [670]  moted.    Therefore,  a  combination  between  such 
manufacturers,  which  imposes  a  widespread  restraint  upon 
the  trade,  and  destroys  competition,  is  as  injurious  to  the 
community,  and  as  obnoxious  to  sound  public  policy,  as  if 
the  confederates  were  dealing  in  unpptented  articles     To 
the  present  case  may  well  be  applied  the  remarks  of  the  su- 
preme court  of  Pennsylvania  in  Morrh  Run  Coal  Co    v 
Barclay  Coal  Co,,  supra:  "  This  combination  has  a  power  in 
Its  confederated  form  which  no  individual  action  can  con- 
fer."   By  the  united  action  of  more  than  a  score  of  different 
manufacturei-s,    natural    and    salutary    competition    is    de- 
stroyed.   To  sanction  such  a  result,  because  accomplished 
by  a  combination  of  patentees,  would  be,  I  think,  to  pervert 
the  patent  laws.    Moreover,  it  is  to  be  noted  that  under  these 
license  contracts  the  licensees  can  only  make  or  sell  their  own 
specific  form  of  harrow.    All  other  forms,  whether  patented 
or  unpatented,  are  prohibited  to  them.     For  this  interdiction 
there  is  no  justification.    In  the  case  of  Harrow  Co.  v.  Qvick, 
76  O.  G.  1574,  07  Fed.  130,  Judge  Baker  expressed  the 
opinion  that  this  combination  was  unlawful,  and  against 
sound  public  policy.    I  am  constrained  to  regard  the  license 
contracts  sued  on  as  part  of  an  illegal  combination,  and  in 
unwarrantable  restraint  of  trade.     I  must,  therefore,  deny 
the  plaintiff  the  relief  sought.    The  other  defenses  I  need 
not  consider. 

The  matter  of  the  cross  bill  was  not  much  noticed  by  coun- 
sel, if  discussed  at  all.  My  conclusion  is  that  the  plaintiffs 
therein  have  not  shown  themselves  to  be  entitled  to  affirma- 
tive rehef.  They  entered  into  this  combination  voluntarily. 
The  preliminary  agreement  does  not  remain  executory  in 
any  particular.  These  cross  plaintiffs  do  not  owe  any  duty 
or  service  to  the  public,  the  performance  of  which  is  hin- 
dered  by  an  improvident  and  unlawful  contract.  No  special 
ground  for  equitable  relief  is  disclosed  by  the  cross  bill,  i^nd 
the  plaintiffs  therein  do  not  require  a  decree  of  cancellation 
m  order  to  defend  against  suits  based  upon  the  license  con- 


.. 


. 


615 


UNITED   STATES    V,  JOINT   TRAFFIC   ASSN. 
Statement  of  the  Case. 

tracts.  The  cross  bill  will  be  dismissed,  without  prejudice 
to  the  nght  of  the  plaintiffs  therein  to  defend  against'suij 
or  their  nght  to  maintain  a  bill  should  circumstances  S 
exigencies  arise  to  justify  equitable  interposition  • 

Let  a  decree  be  drawn  in  conformity  with  the  views  ex- 
pressed in  the  foregoing  opinion. 


[895],    UNITED  STATES  ..  JOINT  TRAFFIC 

■     ASS'N." 

(Circuit  Court,  S.  D.  New  York.    May  28,  1896.) 

[76  Fed.,  895.] 

Railboads-Joint     Traffic     Associations-Interstate     Tomw™™ 
Law._a  combination  of  railroad  companies  intrLlnt  t^fZ 
ciat^o^s  under  article,  of  a^eemeut  ^y  .^Te^ZnZLlZ^Z 

against  unlawful  restraints  and  monoloC"  ^  ^^ 

Same— Jurisdiction  of  Federal  Courts- Th»  nmt^  o*  * 

iStnl  !  f°  agreement  alleged  to  be  Illegal  under  the 

Charter  of  r.T'*  '""•  "'^^°  "  "'''^^  *•""  "  lid  notTrant  the 
Charter  of,  and  has  no  proprietary  interest  In,  any  of  the  i-ofld«     it. 

r.ght  .s  to  prosecute  for  breaches  of  the  law.  not  to  prov^:  ^/^ 

the™irTraffi"  A  ''"• 'f'  ^'"^  ^^  '^'  U"'*^*^  States  against 

theiitr.^tl         ^^^'^f  «">  t«  «"i»in  alleged  violations  of 
tne  interstate  commerce  law. 

TFaZZace  J/ac/arZa>ie,  United  States  Attorney.  - 

James  €  Carter  and  Edward  J.  Phelps  {George  F  Ed- 
»!wn&,  on  brief),  for  defendants.  J^'f-aa 


V^"T.  "''  ^i""'""  *^""  Of  "Appeals,  Second  Cireuit  (^' F^ 
1020).     Memorandum  decision      Spp  n    »aq      r>  ^^   \o^  rea., 

court  united  States  (171  V.  l£  'see^f  sj""""*  ''  """«""« 

"  Syllabus  copyrighted,  1896,  by  West  Publishing  Co. 


616 


76  FEDERAL  REPOBTER,  896. 
Opinion  of  the  Court. 


i     ' 


Wheeler,  District  Judge. 

The  interstate  commerce  law  (24  Stat.  379)  provides : 

-,.K„^'''"  '•  ^^''^'■y  <-ontract,  ccmblnatlon  In  the  form  of  tn^t  n, 
otnenvise,  or  oonsnlrafv  in  rn:fr<iii>f  ,  ••  »-„.i.  inist  or 

aevernl  «t«to<,  «.  ..  iVi   .  '"/c-i™mt  <,t  trade  or  coimnerce  among  the 
several  states,  or  with  foreign  nations  Is  hereby  declared  illegal." 

The  32  railroad  companies  defendants,  immensely  engaged 
m  competitive  interstate  commerce,  have  made  an  arrange- 
ment forming  this  Joint  Traffic  Association,  with  a  board  of 
mne  managers,  consisting  of  one  each  from  the  Baltimore  & 
Oluo  Chesapeake  &  Ohio,  Erie,  Grand  Trunk,  Lackawanna, 
Lehigh  Valley,  Pennsylvania,  Vanderbilt,  and  Wabash  sys- 
terns;  and  with  jurisdiction  over  competitive  traffic  which 
passes  to,  from,  or  through  the  western  termini  of  the 
farunk  hnes,  viz.  Toronto,  Can.,  Suspension  Bridge,  Niagara 
FaUs,  Tonawanda,  Black  Rock,  Buffalo,  East  Buffalo,  Buf- 
lalo  Junction,  Dunkirk  and  Salamanca,  N.  Y. :  Erie   Pitts- 
burgh, and  Allegheny,  Pa.;  Bellaire,  O.;  Wheeling,  p'arkers- 
burg,  Charleston,  and  Kenova,  W.  Va.;  and  Ashland.  Ky  • 
and  such  other  points  as  may  hereafter  be  designated  by  the 
managers  as  such  termini.    The  arrangement  provides  as  to 
rates,  fares,  charges,  and  rules  (article  7) : 

.„'^^'°".'-  The.'Ju'y-PnWIsliedschednlesof  rates,  fares  andchnr<rp« 
and  the  rules  applicable  thereto,  now  In  force,  and  au^ori^ed  hv  S 

iS?t~S?  '^"?  V^  interstate  commerce  commission  as  to^S  Sf 
MM  traffic  38  Is  Intf  rr^tate)    are  herohv  r<u>nim..^ Tl  *u  . 

^S'Z  r  a^^Klatio//  „„T  tK^-Sr^rtWeiX Tin 
mLiiL^"  ^"P  "O"""  ""«  nereement  be^mes  effective   aTi  with  the 

Z'X"rnS''.1pi;U'.'el2^?etr«'"'-  °'  ™'--  "-^   ''^<^^^ 

»t  h  r  ="F '"-- - -- ^^^^ 

2,«^»      -i"",^  necessary  for  governing  the  traffic  covered  by  thlsTCT«! 
Sffl  th^",^.,"""  ""teft'ne  tte  Interests  of  the  parJli  hereto  ihereta 
S  .Si*  '1"""*  to  «»>8erve  such  recommendations  by  any  Mrty  hereto 
•»  and  when  made  shall  be  deemed  a  violation  of  this  ag?^men° 


f 


i 


<> 


UNITED   STATES    V.  JOINT    TRAFFIC    ASSN.  617 

Opinion  of  the  Court. 
Sli^f^^r^  ^^""^^  u^^''^*^  «*^^"'  f'^rough  any  of  its  officers  or  agents 

t^^^nL^te:  rr^-vi^Ji^trTt^etn-tL'Tat:^ 
It  also  provides,  as  to  competitive  traffic  (article  8)  • 

be  employed,  Is  g"  ven  to  the  ma^a^"rs  "    '  "'""'^'"  "'  '"''''  "«^"«  *» 

This  bill  is  brought  at  the  request  of  the  intei-state  com- 
merce commission,  under  the  direction  of  the  attorney  gen- 
eral, by  the  district  attorney  of  the  United  States  for  this 
district,  against  this  agreement,  as  made,  without  countin.r 
upon  any  statutes,  or  alleging  anything  actually  done  under 
;^  to  be  of  Itself  unlawful  otherwise  than  because  so  done. 
Ihe  answer  denies,  as  a  conclusion,  any  illegality  within  or 
under  the  agreement;  and,  as  a  matter  of  fact,  anything  un- 

!^  v.''"km?'  °i  *"■  ''^y*'"''  '*•  The  case  has  been  heard 
upon  the  bill  and  answer,  and  so  is  made  to  turn  upon  the 
question  of  the  legality  or  illegality  of  the  contract,  and 

If  J  '  1  a  'y^^-  '^^^  P'^^'^'""^  "*  the  contract 
stated  are  understood  to  be  the  ones  challenged  as  being  con- 
trary to  the  statutes  quoted.  ^ 

The  restraint  and  monopoly  act  expressly  authorizes  such 
u  proceeding  in  equity  as  this  to  prevent  its  violation,  and 
this  suit  IS  well  maintained  if  this  contract  is  within  it 
Kailroads  are  not  expressly  named  in  this  act,  and  are  said    ■ 
m  argument  not  to  be  within  its  terms.    No  one  is  so  named  • 


618 


T6   FE    EBAL    REPORTER,  897. 


Opinion  of  the  Court 
but  it  applies  to  all  contracts  and  combinations  in  restraint 
of  trade  or  commerce  among  the  states.    Railroads  do  not 

^irr^  S'  ''"*'''  ^"*  '^'^  "''•^  *»^  those  who  do; 
and  what  would  restram  their  so  carrying  would  seem  to  b^ 
a  restramt  of  such  commerce. 

in  JlT  P^ri"^**"/  ""^  *•»«  «>ntract  do  not  provide  for  lessen- 
ing the  number  of  carriers;  nor  their  facilities;  nor  for  rais- 

^iw^""  7*f '  ^f^P*  ^P'^'y  ^y  '^^  ^^'  not  contrary 
to  law,  and  therefore  not  beyond  what  are  reasonable.    The 

interstate  commerce  law  (section  1)  requires  all  rates  to  be 

reasonable,  and  the  making  of  reasonable  and  lawful  rates 

upon  carnage  in  any  traffic  cannot  be  any  restraint  in  law 

lioiHn„    *      '.       •  ^-  ^-   ^^'  ^®  ^«J-  58.     The  so- 

liciting of  custom  IS  no  part  of  the  duty  of  common  carriei-s, 

and  dispensing  with  soliciting  agents,  or  with  the  control  of 
them  cannot  be  illegal,  nor  an  agreement  to  do  so  be  an 
Illegal  contract.  As  this  case  rests  wholly  upon  the  con- 
tract as  made,  and  not  upon  anything  actually  done  under 
color  of  or  beyond  it  and  each  road  is  left  by  it  to  carry  on 
Its  own  business  within  lawful  limits  as  before,  no  unlawful 
restraint  of  commerce  seems  to  be  provided  for  by  it;  and  no 
ground  for  rebef  under  that  statute  of  1890  is  made  out 

Wo  provision  is  made  by  the  interstate  commerce  law  for 
enforcing  its  provisions  in  equity,  except  to  carry  out  orders 
of  the  commission;  and  authority  for  this  suit  to  restrain 
.    any  violation  of  that  law  must  appear  otherwise,  or  fail. 
That  governments  and  states  exercising  general  municipal 
control  over  the  people,  their  property,  their  rights  and  their 
convenience,  may,  by  their  law  officers,  maintain  suits  in 
equity  to  restrain  actual  nuisances  to  ways,  parks,  commons, 
and  the  like,  which  are  injurious  to  the  common  rights  of  all 
to  their  enjoyment,  is  not  to  be  questioned.    The  United 
States  government  is  limited  in  such  control  to  such  particu- 
lar subjects  as  are  committed  to  it,  which  include,  of  course, 
interstate  and  foreign  commerce,  car-  [898]  rying  the  mails, 
and  such     These  railroads' are  not  federal  instruments,  al- 
though  they  may  be,  and  probably  are,  engaged  in  the  busi- 
ness of,  and  are  within  control  of  the  laws  of,  the  govern- 
ment to  some  extent.    As  so  engaged,  no  nuisance  would  be 


'>'*' 


^1      m    ■! 


UNITED   STATES    l\  JOINT   TRAFFIC   ASSN.  619 

Opinion  of  the  Court. 

federal  till  it  should  become  actual  by  obstructing  these 
functions.  In  re  Dehs,  158  U.  S.  564, 16  Sup.  Ct.  m  This 
contract  if  illegal,  is  intangible,  and  is  not  aUeged  or 
claimed  to  have  obstructed  the  roads  for  government  pur- 
poses in  any  manner  whatever. 

The  United  States  may  maintain  a  bill  in  equity  to  repeal 

^73,  8  Sup.  Ct.  SoO),  or  a  patent  for  an  invention  (U.  S.  y 
dmencan  Bell  Tel.  Co.,  128  U.  S.  315,  9  Sup.  Ct  90)  and 
a  state  to  protect  its  interest  in  components  o'f  tte  scS  ^nder 

144  L.  S.  550,  12  Sup.  Ct.  0.89),  or  to  prevent  abuse  of 
charters  granted  by  it  {Attorney  General  v.  Railroad  Com- 
pames,  35  Wis.  524),  because  of  the  interest  in  the  propeX 

UniteTstT'  "  "  ^.r  "*  "^  "^  P»^y  *«  '*•  But'heTE 
United  States  are  not  alleged,  or  understood,  to  have  granted 

oi,tZ  ^  '/'  '"  ''^^"  ""^  proprietary  interest  in,  any 
of  these  railroads;  or  to  have  any  other  concern  about  them 
m  any  respect  involved  here,  but  to  have  its  prohib  torv 

;  Id  oh  '°7T''*'"^  •"'"-  "'^'^^^  the  state^s^S 
and  obeyed,  ilie  same  as  those  against  counferfeitina,  or 
anpering  with   the  mails,   should   be.     Breaches  of  sucl^ 
statutes  are  misdemeanors  punishable  by  indictmenror    n 
formation,  and  that  merely  such  are  not  preventaWe  b  1  ty" 

^™3  r.  ,r"""''"  P"»«ii»8.  in  such  c.i  Id 
Sfmi.  M  to  .ulhonze  any  Ih.l  ,«„  a„k„„„  be,„„     n»," 

2tf  trp^:Se^ii— t:  -^^ '-  ^--^-^^-> 

a«nts^3re  prohiSSts  ^l  ttheTo^rg^^ir 
or  dmding  aggregate  or  net  proceeds  of  earnfngs.  So  Ir 
as  this  agr^ment  goes,  each  road  carries  the  freiSts  it  mav 
get,  over  Its  own  line,  at  its  own  rates,  however  fixi"^ 
and  has  the  proceeds,  net  or  other,  of  the  4rnings  to  it^' 
Very  able  judicial  opinions  and  learned  commeSa  Lf^d 


J 


■^ 


620 


11  FEDERAL  REPOBTEB,  1. 


1 1 


Syllabua. 

wS""',!!^"  ^^^^'  *«»  """««>««  for  separate  notice 
hemn,  have  been  referred  to,  but  none  make  it  LTude  whS 

^leftm  wholly  separate  channels.  Provision  forTasonlble 
although  equal  or  proportional,  rates  for  each  TrrTerTfl; 
a  )ust  and  proportional  rate  for  each  caS  TZ'      ■  1 

This  statement  of^ftViTs'o^^t?"^;  "  ''"^  """• 
vprv  fnii  „.,j    ui  '™»"ns  se^ms  quite  inadequate  to  the 

very  fuU  and  able  argument  upon  which  this  case  h«<=  nn  o.„i! 

as  they  appear  to  be  sufRdfnf  L  th  "dislsS"  f  ^^  ""'' 
no  mor«  is  attempted.    Bill  dismiss^    ^      "  "^  '^'  '"''' 


1 


[11  GREER,  MILLS  &  CO.  v.  STOLLER  ET  AL. 

(Clmilt  Coart.  W.  D.  Missouri.  W.  D.    November  6,  1896.) 

[77  Fed.,  1.J 

^^-^^^J^^ZT^'r^"^"''  °^  D,sx.:cx-Mo.oPo- 

elation  on  the  ^nnd  ttof  thf  *  ""  '*'■*•■""  "''-"''"  «'  *"«  «««>- 
Of  trade  and  co^^l  1*^^^.* :::  '"'^'"'  "^  **'»«  '"  ^^'"'"t 
of  July  2,  1890   (^I'ta^^,^  L"!^,r"  *^  "^^'Tr""  Law " 

thereof  to  brine  suits  f«^  In,  «  ,  ^  "'^^^  ^^'^^^  ^  «ect'on  4 
behalf  Of  the^vlrL^ent     Th      r  '' i""""^  *°  «""^  '"""^^t^J  <>» 

5.  to  bring  'n  n™~eLI'T^j  ree^irrS^^"  "'  ^"°'' 
prirate  suits,  and  the  coJt  ^„  7  '        ""*  **  '""'"«<'  <>'  «>" 

All  the  director  of  ^nZTn^^^rsT'^^^ilZ^tT'''"''''''- 
partles  to  a  suit  iimlnst  it  „r,=i„„      /   -  asNocIatlon  are  necessary 

though  „  less  nuXfaU  a„rr^"*b:^r!.''r'^''!.™'''"°"^-  '^'^ 
business.  aumouzed  by  the  association  to  transact 

TrXvrZ'a°^f«rhrL"'  M.«„»3.-Where  a  n,e.- 
for  nonpayn^ent  7t  IZt^.^^t^JT^^f  ''  '^  "'^*°" 
be  restored  to  the  privlleees  of  mlmil  t  ^  ^■''''™'  "'*  "<=*''"'  «» 
tract  between  hS Im  1  :^h«o„  T^t  "'*°  *"«  ~- 
accept  In  Its  entirety  or  Znrtl!t»^  ^     '  ""'"'''  ^  """«*  «'"»«• 

Of  a  stranger  .0.::^";^ arof^clfrparer''^  '''  '^"""' 
•  Syllabng  copyrighted,  1896,  by  West  Publishing  Oo.  ~ 


T 


GREEB,  MILLS  &   CO.  V.  STOLLEB. 
Statement  of  the  Case. 


621 


This  IS  a  biU  in  equity  seeking  to  enjoin  the  defendants 
from  doing  certain  specified  acts.  The  complainant  is  a  non- 
resident of  the  state.  The  respondents  constitute  the  board 
of  directors  of  the  Kansas  City  Live-Stock  Exchange,  a  vol- 
untary  business  association  of  this  district. 

ass?cLtfor aVe^^'lo'r  tl^l'  ^^^<^^'^tlou,  as  declared  in  its  articles  of 
bSS  exchaLp   nnt^^^^^^  ^^  organizing  and  maintaining  a 

action  of  buslnP?^'  hnt  \  P^^^^j^^^y  P^'^fit  or  gain,  nor  for  the  tr^s- 
wifi?  fhi  ous  »ebs,  but  to  promote  and  protect  all  interests  connect*^ 
with  the  buying  and  Felling  of  live  stock  at  the  Ssis  rihT^tn^ 

Mills  SmUh&HoUs,  Lathrop,  Morrow,  Fox  dk  Moore, 
and  Albert  H.  Horton,  for  complainant 


■  mrr. 


I    ( 


:f 


^2  n  FEDERAL  BEPORTER,  2. 

Opinion  of  the  Court 

Philips,  District  Judge  (after  stating  the  facts). 

The  defendant  Hanna  being  a  nonresident  nt  th.    *  . 
this  court  can  acquire  no  iurifdir-f, •„?!.,  ^.*  '****' 

consent,  unless  it  cLn  beZ^MZtZ     Z  "^''"'*  ^'' 
cable  of  the  act  of  oontZT^^  tmTjm^,  "r"'" 
to  protect  trade  and  Sinnierce  agist  u^S^^^^ 
and  monopolies."    26  Stat  209     n^t^  clu        •  '^^''^'nts 

^t,  the  «.„rt,  whenevSX  ?nds?f  tst^rrurit '  ^'^'^ 
bnng  before  it  other  parties  bv  m,mrn!.  ^^  ,  *'  ""^ 
r^ide  in  the  district  in  wlS^htc:  ^s^Sd  oT  ^    "  Sj 

s  fsr'  -  --X"dir  i- -a/- 

lenses  against  the  government  of  the  TTnif/.^  «*.*         -k 
the  fourth  section,  the  jurisdiction  i!        *       !    '^'^     ^^ 
circuit  courts  of  the  United  Stll"/  ""^  "P°"  ^^^ 

the  violations  of  this  act  « aS  t^t  if  T.u*  ""'^  '■^"•^^'^ 
several  district  atto™:;s\f''S?e  UnS  Staf  '"?k°'  ^'^^ 
spective  districts,  under  the  direction  olth^tf  '"  *^'''  '*■ 
to  institute  proiedin,^  in  Z^^l    .  attorney  general, 

such  violationsT^^X^2^l,!°  LT" *  ''"*'  '•^^^^«'" 
setting  forth  the  ca2  I^'aXXttt  "'T  ?'  P^"*^"" 
J«  enjoined  13,  or  otherw^L^fwh  ted"' ^"e:S^^^^ 

^  any  other  person  or  corporation  by  reason  of  iT^K^  ^ 
forbidden,  or  declared  to  be  unlawful  V"  act ''7^2 
to  sue  in  a  circuit  court  of  the  Jlr,it.^  l\  i     ■    !,'    *  "^^* 
m  which  the  defendant*^^!"";?!^  tS  Irlf  fS 
damages  by  him  sustained.    The  stat  L  il"      u'  ^^'^^''^^ 
in  its  character,  must  be  stStlycon^t'r^d  ^  an^ '/"'"' 
created  a  new  offense,  and  imposed  new Tab1lit.iL    '  5T^ 
lug  provided  the  modes  of  redressT  th7     m  '  ""^l^"^- 
private  citizen,  by  establi.L^  T      /^  P""'*'  """^  *« 
remedies  are  e'iTeTajf  o SS  '''sTTT'  '""'^ 
f^M  399;  umiak  v.  fir^.^^!  Mo  147  ^S^  ^^ 

While  there  has  been  some  contrariety  of  'opinion  amonj 


*?!* 


GREER,  MILLS  &   CO.  f.  STOLLER.  023 

Opinion  of  tlie  Court 
judges  as  to  whether  or  not  th^  r.in.v.f     *  •    • 
private  citizen  is  accorded  L^Ws^-t  f  '"'""'=*'""  *«  « 
is  that  the  Hffht  is  limi^p!?  hi    I      1"*^'  "^  conclusion 

tion  at  the  Stion  of  th.  J-        .       ^'^  '^"""  *°  '"J""'^- 
seventh  section  gtes  to  the  nt^aT    f  ""l^'  *""*  '''^'  *»>« 

Fed.  696-    P^'/7rn^h  ^r    rr       -     I       ,    /«^.,  o  o.  C  A.  86,  56 

u.  oifo,    t-iacock  V.  Harrington,  64  Fed    821      Tho^^i 
Hanna  has  a  ri^ht  to  in^i«f  fLf  .  iherefore 

residence.  ground  of  his  non- 

partVr  T^e  K^nrail     -vtsroerEr  '^  ^  "^'^^^''^'^ 
corporated   volnntarv   .Z      \  Exchange  is  an  unin- 

members     sTcr SliZn '    7  T^"^""  "*  «^"*  ^00 
their  rights  and  Till    i^  '"dividuals,  in  respect  of 

p-ersV'^tilt'rs  :afors:?i;r "  ^^  ™^- 

those  of  its  directors  or  ma—  %^t'Ih'',"'''  P'""'"^^^'  ■^"t  only  bj 
and  that  it  is  not  dissolved  bv  'thl  i??""^^^  '"  '*  ««>  transferable  • 
etc.,  Of  its  individual  members." '^  Pa|e  749'^'"*'"'  ^'^'^'  •'anlcnip?^; 

As  said  in  P^;,,  v.  Jones,  69  Am.  Dec.  711  • 
ifefir^  V.  Moulton,  SOMai^^^"''''^  ^"^  ^^  affecting  such  interest 

consent  to  the  articles  of  aSL  1  k  *'  *'^  '"''y'  ''^ 
right.  In  the  absence  of  sTcra^M  2'"™"''"^  ^"^'^ 
of  the  associates  could  bind  th^Ti'  ^  7^""  *  "'''  ""t^ 
judgment  would  remafn  SpendeS  ^  "T'"'"-  «^ 
fore,  to  control  the  action  S'lnd  Wndir""^- ?'  ***'"- 
be  directed  against  the  whnLT  T  J^^^  associates,  must 
gain.t  the  whole  membership.    But  where,  as 


624 


77 


*  1 


I-  r 


FEDERAL  REPORTEB,  4. 


Opinion  of  the  Cuurt. 

in  this  instance,  the  executive  administra-  [4]  tion  of  the 
business  affairs  of  the  association  is  by  articles  of  agreement 
committed  to  a  designated  board  of  less  number  than  the 
whole,  It  may  be  conceded  that  a  judicial  proceeding  against 
tihe^i^ssociation  may  be  maintained  by  summons  against  such 

Rule  1  of  the  association,  referred  to  in  the  bill  of  com- 
plaint, vests  the  government  of  the  exchange  in  a  board  of 
11  directo,^,  composed  of  the  president  and  vice  president  of 
the  association,  ,  members  of  which  shall  constitute  a  quorum 
for  the  transaction  of  business.    Unquestionably,  but  for  the 
provision  clothing  the  number  7  with  the  functions  of  gov- 
ernment It  would  require  the  presence  and  co-operation  of 
the  whole  11  to  transact  any  business.    But  this  7  must  not 
only  be  pr^ent,  assembled  as  a  beard,  to  perform  any  official 
act  {Hay-Pres8  Co.  v.  Bevol,  72  Fed.  loc.  cit.  721,  722)    but 
they  are  clothed  with  the  functions  of  acting  for  and  repre- 
senting the  board  only  for  the  transaction  of  business  of  the 
associatiOT,  and  not  for  any  other  purpose.    It  does  not  au- 
thorize affirmative  action  against  the  association  by  notice  to 
seven  of  the  directors.    As  to  third  persons  moving  against 
the  association  to  bind  the  constituent  members,  notice  must 
be  given  to  all.   As  said  in  People  v.  Batchelor,  22  N  Y  134  • 

See,  also,  1  Mor.  Priv.  Corp.  (2d  Ed.)  §§  479-539 

In  McGreary  v.  Chandler,  58  Me.  538,  which  was  an  action 

served  on  a  portion  of  the  directors  of  a  voluntary  asssocia- 

tion,  the  court  said : 

"The  Macblas  Mining  Company  Is  a  volnntarv  assoplntinn  n*  i^hi 
vldnals,  and  not  a  corporation   under  the  law?  of  the  s?«t«      S-^^ 
defendants  are  n.einbers,  and  assume  to  act  as  its  dir^tnrf;n7 

rn^bers.    In  the  present  case  It  Is  against  tSit  of"fhiTss^'iat« 

The  question  under  consideration  was  passed  upon  in  Wall 
r.  Thonuu,  41  Fed.  620.  The  suit  was  by  a  member  of  an 
unincorporated  association,  whose  management  was  intrusted 


"' 


" 


GREER,  MILLS   &   CO.  V.  STOLLER. 
Opinion  of  the  Court. 


625 


and,  indeed,  esseXTtf  the  p'^ot^SonTf^^^^^  '""?V  ^"^^  a«th7ri^ 
management  of  which  the  tinist^f  «^p\?5.  *^f,^.**  interests  with  the 
according  to  the  averments  of  tte  SIu  thiTJi  •  "  *'  "^*  ^««"S^  **>«*' 
and  a  breach  of  trust  becaiisA  th^oK  '  A^^  ^^^^^^^  ^^e  unauthorized, 
beard  before  these  aV^menfs  a'retken  l?S  ^^"?  '^"  ''^'''  ^^^ 
they  cannot  be  assumed  to  be  tnfe  a^  tha  L  ^^^  "^^'"^*  **^^'»-  And 
those  who  have  a  right  to  XiLntf  ^i!^  ^^^^^  ^^^  ^  ^^^^  until  all 
tnnlty  to  do  so.  A  centra ,^^'^?|^^^^^^^^  ^T?"^'^  ^*^^°  ^'^  «PP^" 
minority  of  unfaithful  trustees  bv  r^n-iri^.  ^°  ^^^  Power  of  a 
whose  interests  might  not  Ih^  Vm,  ^^^"^'^'l  f^l  ^ith  a  beneficiary 
defeat  the  performance  of  plinio*  ^^"^^  ""^  ''^^^''  beneficiaries  to 
faithful  trustees.'  ^  ^egitmiate  and  exigent  official  dutlS  by 

The  logic  of  the  opinion  clearly  shows  th«t  if  i.  .•    .       • 

.th:  d^SSsta'^at's^Xir  frl's*?  S"  ^  «*"■<>««  »««  o-^  that 
tees  have  done  so.  and  todee^  tTift'^SL^if  "■."*  ^^  "bsent  trus- 
Pose  to  do  Is  unauthorlz^  anHuiaw  J  Whn  "ii"*"*  *™^t<^  P">- 
would  not  be  bound  by  such  a  dw^  it  J^^'^^  t'^f  '"'>*«■>*  t™«tees 
embarrassing,  and  perhaps  defeats?' thli?iir*  ^  '""•'^  «"'«'»* 
cause  it  would  deprive  th^em  ofX°!i4^TatC We^co^^^^ee^ 
The  court  then  proceeds  to  arffue  that   if  n,»  ;   •       .• 

attempt  b/  indWW"  to  cotrlrtt '  '"*  """"  ^  '^" 
trust  fund  without  giving  some  of  ttlT*^'"'"*  ^'  * 

with^^edutyof  man^Sg^rn^htSt  ht^d^  ^'"^^ 
inis  IS  a  wholesome  rule      A^  sir^r^i;^^  +    u     • 

quired  «u^  all  a*ts  of  such  trustees  affecting  the  property 

11808— VOL  1—06  M 40  r     f      J 


624 


77   FEDERAL   EEPOBTEB,  4. 


I    i 


III 


ill     I 


;-l 


M 


III 


i     i 


ii 


Opinion  of  the  Court 
in  this  instance,  the  executive  administra-  [4]  tion  of  the 
business  affairs  of  the  association  is  by  articles  of  agreement 
cominitted  to  a  designated  board  of  less  number  than  the 
whole,  It  may  be  conceded  that  a  judicial  proceeding  against 
the  association  may  be  maintained  by  summons  against  such 
board.  " 

Eule  1  of  the  association,  referred  to  in  the  bill  of  com- 
plaint,  vests  the  government  of  the  exchange  in  a  board  of 
11  directoi^,  composed  of  the  president  and  vice  president  of 
the  association,  7  members  of  which  shall  constitute  a  quorum 
for  the  transaction  of  business.    Unquestionably,  but  for  the 
provision  clothing  the  number  7  with  the  functions  of  gov- 
ernment  It  would  require  the  presence  and  co-operation  of 
the  whole  11  to  transact  any  business.    But  this  7  must  not 
only  be  pr^nt,  assembled  as  a  beard,  to  perform  any  official 
act  {Hay-Press  Co.  v.  Devol,  72  Fed.  loc.  cit.  721,  722),  but 
they  are  clothed  with  the  functions  of  acting  for  and  repre- 
senting the  board  only  for  the  transaction  of  business  of  the 
associatiOT,  and  not  for  any  other  purpose.    It  does  not  au- 
thorize affirmative  action  against  the  association  by  notice  to 
seven  of  the  directors.    As  to  third  persons  moving  against 
the  association  to  bind  the  constituent  members,  notice  must 
be  given  to  aU.   As  said  in  People  v.  Batchelor,  22  N.  Y.  134 : 

♦hlVl  '*  ""*  ""'^  ?  ''■'''°  •'''^"te  of  reason,  but  a  general  rule  of  law 
that  no  prnier  or  fnnctlon  Intrusted  to  a  body  conflstlne  o7n  nnm^T; 

See,  also,  1  Mor.  Priv.  Corp.  (2d  Ed.)  §§  479-532 

In  McGreary  v.  CUndler,  58  Me.  538,  which  was  an  action 

served  on  a  portion  of  the  directors  of  a  vojuntary  asssocia- 

tion,  the  court  said  : 

•'  Tlie  Macbiag  Mining  Company  is  a  voluntary  association  of  indl 
viduais.  and  not  a  corporation  under  the  law"  o?the  "tate     The 
defendants  are  members,  and  assume  to  act  as  Its  rtwtnr«   „„/ 
such  to  bind  the  association.    If  they  havebound  tl^^^HtZ   a» 
they  purport  to  have  done,  all  Its  members  are  bound  bt  nnrt  n^hu 

members.    In  the  present  case  It  Is  against  three  of  the  associate 

The  question  under  consideration  was  passed  upon  in  Wdtt 
y.  ThornoB,  41  Fed.  620.  The  suit  was  by  a  member  of  an 
unincorporated  association,  whose  management  was  intrusted 


GKEEB,  MILLS  A   CO.  V.  STOLLER. 
Opinion  of  the  Court. 


625 


iTent 'of  *r;    7"  ''"*  "'.^'■^  ^"^^  '^^'"^  -'th  misman- 
Sction    S^iw"^  "\  u'  "^i^tio"'  ««d  asked  for  In 

stLrai^rSer^--  ---  -  -  -" 

and,  indeed,  essential  to  the  prote^lon  n/fhf  ^""^^^  5^*^  authorized, 

manasreinent  of  which  the  trust^rl  .h   ^^IF^?^  interests  with  ttS 

according  to  the  averments  of t^  bill   thi^^thn"  ''  "^'  ^"^"^*^  *^«^ 

and  a  breach  of  trust,  because  the  absent  t^?«.^l^  ^""^  unauthorized, 

heard  before  these  averments  are  talpn  n?.  ^  ^^""^  ^^^  ''^^^t  to  be 

they  cannot  be  assumed  to  be  w  as  th/L  -"^^  "^^^""^  ^'^^^^^     And 

those  who  have  a  right  to  ch«nrrir  *k^  ^^^'^  ^^^*  ^  decree  until  all 

tnnity  to  do  so.     A  eonh-an    i^^^^^^  ^^''^  ^^"  S»^«°  an  opp^r- 

niinority  of  unfaithfuT tnisSa«   l,  ''^H^<^.P"t  it  in  the  power  of  a 

whose  interests  night  , lot  H^^^^  ^'"1>  a'benefidar^ 

defeat  the  performance  of  le^itTma  J  3  o^  other  beneficiaries,  to 

faithful  trustees."  legitimate  and  exigent  official  duties  by 

The  logic  of  the  opinion  clearly  shows  that  it  is  iust  a.  \r. 

tees  have  done  so,  and  to  decr^  ZwSnf  If  ^^^^  ^^^  ^^^""^  t^is- 
pose  to  do  is  unauthoriz^  and^niawful^^'^^^^^^  P^" 

would  not  be  bound  by  such  a  d^r^  it  ,v.Yih  ^  ^^t  ''^^''^  ^^^^ 
embarrassing,  and  perhaps  defea«n?' thli?^  T*  ^  "^^^^  ^*thout 
cause  it  would  deprive  th^em  olr"£>.*^Tatr^^^^ 

The  court  then  proceeds  to  arffue  that   if  ih^  ^^-     ^- 
would  prevent  the  absent  trustees'S^JLiity  S' U 
should  not  be  granted  without  giving  suchXnt  nfw?' 

trawTtJrrvi:;re"s\itT^---^ 

withthedutyof man^ginf  irrri^h'tStnt^d^r  ^^^^ 
This  IS  a  wholesome  rule.    As  applied  to  business  comon. 

f  L:^r:ir^T  '^^"'"^'^^  committeTToXM 

quireJS'a  r,T'^  "f  ^^yi^^lding  decision,  have  «- 

quired  that  all  a«ts  of  such  trustees  affecting  the  property 

n808-voL  l-OC  M 40  ^ 


626 


77   FEDERAL  REPORTER,  5. 


1 
I 


Opinion  of  tlie  Court. 

of  the  corporation,  and  aU  acts  of  an  administrative  char- 
acter should  be  performed  by  them  when  assembled  as  a 
board  so  that  their  action  should  be  a  unit,  and  the  result 
of  deliberation  with  that  mutual  interdependence  of  jud..- 
ment  which  comes  from  consultation  one  with  another 
Cammeyer  y.  Lutheran  Churches,  2  Sandf.  Ch.  208-2O9- 

7^^ I' f.T'^^'J  ^'''^-  ^'''  2*^5  ff^y-Press  Co.  y.  Devol, 
U  *ed.  717;  Htll  y.  Mining  Co.,  119  Mo.  9-24,  24  S  W  203 

If  a  suitor  may  proceed  against  less  than  the  whole  number 
of  trustees  to  bmd  the  association,  against  how  many  and 
which  of  the  number  ?  Shall  he  select  them  ?  He  might  omit 
those  from  the  summons  whose  wise  counsel  and  staid  judg- 
ment would  be  most  valuable  and  reliant  to  the  bodv  in  de- 
fendmg  m  court.  While  section  739,  Rev.  St  US  de- 
clares that,  where  there  are  several  defendants  in  any  suit 
at  law  or  m  equity,  and  any  number  of  them  are  not  in- 
habitants of  nor  found  in  the  district  where  suit  is  brought, 
and  do  not  voluntarily  appear,  the  court  may  proceed  to  ad^ 
•  judication,  yet  it  is  the  recognized  construction  of  this  stat- 
ute that  It  has  reference  only  to  instances  of  mere  formal 

^r:.*^!"  ^^^"^  ^^  cause  may  be  determined,  and  justice 
satisfied     without  essentially  affecting  the  interests  of  absent 
parties     ;   as  where  the  interests  of  the  parties  absent  are 
separable  from  those  before  the  court    But  where  persons 
have  not  only  an  interest  in  the  controversy,  but  such  an  in-- 
terest  that  a  final  decree  would  affect  it,  or  leave  the  contro- 
versy to  be  fought  over  in  subdivisions,  in  order  to  conclude 
the  rights  and  measure  out  the  equities  of  all.  they  are  indis- 
pensable parties  to  the  exercise  of  jurisdiction.    Shields  v 
Barrow,  17  How.  130;  Wall  v.  Thomas,  supra.    The  defend-' 
ant  Hanna,  both  as  trustee  and  member  of  the  association,  has 
a  direct  personal  interest  in  and  important  official  relation  to 
the  management  and  [6]  property  of  this  association.    There 
IS  not  only  committed  to  his  keeping,  by  the  rules  of  the  as- 
sociation the  responsible  duty  of  assisting  and  managing  its 
affairs,  but  in  the  custody  and  management  of  the  $12,000 
of  assets  which  the  bill  alleges  to  be  now  in  the  treasury  of 
the  association,  as  also  in  the  management  and  disposition 
of  the  $1,000  fine  assessed  against  the  complainant,  the  col- 
lection or  enforcement  of  which  the  bill  seeks  to  enjoin 


«BER,  MILLS  &   CO.  V.  STOLLER. 


627 


.. 


X 


Opinioa  of  the  Court. 
And  as  a  member  of  the  board  of  business  managers  he  is 
entitled  to  a  voice  in  deciding  whether  ori»t  the  board  shaU 
resist  or  accede  to  complainant's  demand.  To  enable  the 
complainant,  therefore,  to  proceed  to  judgment  against  the 
segment  of  the  managing  board  of  trustees  before  the  court. 
It  must  be  held  that  the  suit,  in  its  legal  effect,  presents  the 
instance  of  an  a<:tion  ex  delicto  by  a  party  wrongfully  in- 
jured  in  his  property  rights  by  the  tortious  acts  of  sevei-al 
persons,  in  which  case  the  injured  party  may  proceed  jointly 
or  seyeraUy  against  the  tort  feasors  for  satisfaction.  Boyd 
y.  Gill,  19  Fed.  loc.  cit  145. 

This  brings  us  to  a  consideration  of  the  character  of  the 
case  presented  on  the  face  of  the  bUl,  around  which  is  cen- 
tered the  real  battle  between  the  contending  parties.    What 
IS  the  real  gravamen  of  the  bill?     Do  the  facts  alleged  con- 
stitutive^of  the  cause  of  action  depend  upon  a  contractual 
relation  between  the  complainant  and  the  association,  or  does 
It  occupy  the  attitude  of  a  stranger  injured  by  the  act  of 
co-trespassers?     If  the  cause  of  action  is  dependent  upon  a 
contract  between  the  parties  sustaining  inter  sese  the  relation 
of  co-partners,  the  rule  of  equitable  procedure  seems  to  be 
well  established  that  all  the  partners,  or  at  least  all  the  board 
of  trustees,  representing  the  association,  must  be  made  par- 
ties.   The  bill  alleges  the  existence  of  a  voluntary  business 
association,  and  sets  out  or  refers  to  in  appropriate  form  the 
articles  of  association  and  its  by-laws.    It  appears  that  the 
complamant  became  voluntarily  a  member  thereof,  and  sub- 
scrited  to  the  articles  of  agreement,  and  thereby  became  en- 
titled to  share  in  and  enjoy  the  privileges,  rights,  and  bene- 
hts  of  the  busmess  organization.     Reduced  to  its  actual  es- 
sence, the  complaint  is  that,  although  the  complainant,  in 
becoming  a  member  of  the  association,  agreed  that  its  board 
of  managers,  for  any  infraction  of  the  established  rules  of 
business  ethics,  might,  in  its  discretion,  visit  upon  the  offend- 
ing member  a  fine,  to  be  enforced,  if  not  paid,  by  suspension 
and  expulsion,  with  a  further  disability  of  being  refused  by 
other  members  of  the  a^ssociation  recognition  in  their  dealing 
as  live-stock  commission  men,  so  that,  so  far  as  they  are  con- 
cerned, he  would  be  proscribed  in  the  dealings  of  the  associa- 
tion,— it  then  complains  that,  by  reason  of  the  visitation 


628 


Tl  FEDERAL  BEPOBTER,  6. 


Opinion  of  the  Conrt. 
upon  it  of  the  penalty  of  these  regulations,  it  is  barred  the 
prrnleges  and  benefits  accn.ing  to  a  n.emb;r  of  the  .I^k^;! 
tion.  It  complains  that  it  is  practically  prevented  from  col- 
kc  ing  Its  commissions  on  live  stock  sold  at  the  stock  yards, 
whidi  a«  secured  to  it  by  the  articles  of  association.  ^  And 
among  the  grievances  complained  of  it  is  alleged  that  a  fine 
was  imp<^  upon  it  by  the  board  of  directors  for  a  violation 

order  of  sus-  (7]  pension  was  made  and  published;  and  that 
-nong  Its  regulations  is  one  providing  that  no  h^  1  £ 
sold  on  the  exchange  unless  the  same  have  been  "  docked,"- 

Z;  '"'/•^  ^"".*''  ""'•**  ^^  *••"  inspector  of  the  associa  ion 
d^gnated  therefor  as  to  the  average  weight  of  the  hogs,- 
and  that  by  reason  of  the  refusal  of  the  managing  boa^  to 
have  hogs  consigned  to  it  for  sale  « docked  "  it  is  unable 
to  make  sales  thereof  on  the  exchange;  whereby,  in  connec- 
tion with  other  efforts  of  the  board  to  visit  upon  it  the  pen- 
alty of  disbarment,  a  practical  « boycott ''  is  put  in  force 
agams^  it.  The  bill  then  alleges  that  so  much  of  the  by-lZ 
as  aiithorizes  the  board  to  impose  such  fine,  to  suspend  and 
expel  the  complainant,  is  contrary  to  sound  public  policy 

l!ri'%"ir*"""*  **'  ^""^^  •"«*  ^^""^^  t«  gi^«  the  other  mem- 
bers of  the  association  a  monopoly  of  such  business  at  the 

sUKk  yards  m  question,  and  that  this  complainant,  having 

notified  the  board  of  its  withdrawal  and  its  assent  to  such 

rules  and  regulations  when  it  became  a  member,  it  is  now 

entitled  to  have  the  same  nullified,  and  its  rights  as  a  member 

recognized  by  the  board.    It  thus  is  quite  apparent  that  the 

whole  predicate  of  the  action  has  its  root  in  the  contract  by 

which  complainant  became,  and  yet  claims  to  be,  entitled  to 

*1!'?^  ^  '  T'^^''  ***  *^''  association.  In  substantive 
effect  It  seeks  to  be  restored  to  aU  the  rights,  privileges,  and 
benefits  of  a  membership  in  the  live-stock  exchange,  the  de- 
privation of  which  is  the  sole  gravamen  of  the  complaint. 
The  right,  for  instance,  to  have  the  hogs  consigned  to  it  for 
«.Ie  on  commission  «  docked,"  whereby  it  may  be  able  to  seU 
them  on  the  exchange,  is  wholly  dependent  upon  its  oon- 

^ww?u**!f^  *"...*^* ''*^''"*"-  The™  is  no  ckim  in  the 
biU  that  the  "docking"  regulation  is  vicious,  as  conflicting 
with  any  public  policy  of  this  state  or  at  common  law 


.. 


. 


GBEEB,  MILLS  A   CO.  V.  STOLLER.  (^29 

Opinion  of  the  Court. 

tSs  of  1r  .*'!^'=«'"P'«in«nt  complain  that  the  general  ar- 
ticles of  the  joint  association  to  which  it  subscribed  is  con- 
trary to  law,  or  that  the  limitations  in  the  articles  of  ag,^- 
ment  and  by-laws  fixing  a  minimum  commission  at  whSi 

Zhrh-r  f '"  ^u  ''"I^'^'^  *'PP^*^  t«  this  market,  and 
«  o^thf  "^/^  "^r^""  ^"^  conducting  here  such  business 
on  the  outside,"  are  m  restraint  of  trade,  or  tend  to  create 
a  monopoly.  So  that  the  complainant  occupies  in  thisTon 
trover^y  the  anomalous  attitude  of  claiming  the  prtilTl 
and  benefits  attaching  to  and  ensuing  from^the  aSti?^ 

the  irttr^'"^  "'.  '"'^"^  ''"'^  inoperative  that  portion  of 
the  articles  designed  to  make  the  combination  effLtive  and 
obligatory  on  the  associates.  It  may  be  conceded  that  in  re- 
spect of  a  certain  character  of  contracts  thev  mav  be  ffood  in 
part  and  bad  in  part,  so  that  the  court  may  enforSll" 
which  IS  valid  and  reject  that  which  is  vicio^;  l^^That  ^ 
not  this  case  The  rights  of  the  complainant  being  Lt 
tomed  on  its  having  become  a  member  of  the  association  by 
subscribing  to  its  articles  and  its  body  of  by-laws   can  it 

fellowship,  while  rejecting  a  part  of  the  creed  of  the  order* 
As  said  by  Chief  Justice  Coleridge  in  SUamship  Co.  y  Z'. 
Gregor,  21  Q.  B.  Div.  544:  "  It  is  a  bargain  which  peris 
in  the  position  of  the  defendants  here  have  a  riSo'^S 

So,  waiving  any  question  of  whether  or  not  certain  pro- 
^sions  of  the  articles  of  agreement  and  by-laws  are  contrTy 
to  public  policy  the  fact  remains  that,  had  the  complainant 
declined  when  it  applied  for  admission  into  the  association 

It  would  not  have  been  admitted  to  membership.  In  such 
contingency  it  would  hardly  need  the  citation  of  authorS 
to  command  the  assent  of  the  learned  counsel  represTnS 
this  complainant  to  the  proposition  that  no  court  wouw"S 
a  mandatory  injunction  compelling  the  admission  of  uchT^ 

£r,       r'"'?'^'*'^'  **»••  ''''  P''^P'''>'«  --«>n  that  it*s 

a  Si^r  ^^  "*  ""*''*=*'  '"'^  '*  "^^"^  *"»  Parties  to  make 
a  contract;  and  courts  ought  never  to  undertake  to  make  a  • 
contract  between  two  free,  responsible  persons.    It  do^  Sm 


1 


630 


77   FEDERAL  BEPORTEB,  8. 


Opinion  of  the  Court. 

to  me  that  this  complainant  must  choose  to  be  either  in  or  out 
of  this  association.    It  cannot  be  half  in  and  half  out.    If  a 
member,  and  the  contract  of  membership  be  what  is  some- 
times inaptly  termed  "  illegal,"  but  is  simply  one  in  contra- 
vention  of  a  sound  public  policy,  as  said  by  Lord  Justice 
Bowen  in  S^mship  Go.  v.  McGregor,  23  Q.  B.  Div.  698,  619, 
it  is  one  which  the  courts  do  "  not  prohibit  the  making  of," 
but  which  they  will  sunply  «  not  enforce."    And  the  converse 
of  the  proposition  must  hold  good,— that,  if  he  be  outside  of 
such  an  association,  he  cannot  appeal  to  a  court  of  equity  to 
reinstate  him  after  expulsion;  nor  can  he  base  any  right  of 
action  on  the  alleged  illegal  character  of  part  of  the  articles 
of  association  of  the  exchange  or  its  by-laws  (American  Live- 
stock Commission  Co.  v.  Chicago  Live-Stock  Exchange,  143 
m.  210,  32  N.  E.  274),  so  long  as  he  insists  upon  the  rights  of 
^  member.    A  member  is  entitled  to  the  privileges  and  rights 
inhering  in  a  membership  so  long  only  as  he  keeps  his  part  of 
the  contract,  expressed  in  his  subscribing  to  the  articles  and 
by-laws  of  the  association.    1  Beach,  Priv.  Corp.  §§  19, 83, 84, 
309;   Boone,  Corp.  §  333 ;  Supreme  Lodge  y.Wilson.WQ.Q. 
A.  264,  66  Fed.  788 ;  Hammerstein  v.  Parsons,  38  Mo.  App. 

336,  337;  Warren  v.  Exchange,  52  Mo.  App.  157-167. 

It  is  a  general  rule  of  law,  applicable  to  such  voluntary 
associations,  that  a  member  must  either  submit  to  its  rules  or 
surrender  his  membership.    White  v.  Brownell,  2  Daly,  329 

337,  342,  350;  M,  3  Abb.  Prac.  (N.  S.)  318;  Hyds  v.  Woods, 
2  Sawy.  655-659,  Fed.  Cas.  No.  6,975;  Lafond  v.  Deems,  81 
N.  Y.  507-514 :  Weston  v.  Ives,  97  N.  Y.  222-228 ;  Leiois  v. 
WiUon,  121  N.  Y.  284-287,  24  N.  E.  474;  Belton  v.  Hatch, 
109  N.  Y.  593,  17  N.  E.  225;  24  Am.  Law  Rev.  538.  The 
member  has  his  option  to  retain  his  membership  by  comply- 
ing with  the  by-laws,  or  cease  to  be  a  member  by  refusing  a 
compliance.  Manufacturing  Co,  v.  Hollis  (Minn.)  55  N.  W. 
im-ll%l',Rorke  v.  Board  (CaJ.)  33  Pac.  881-883. 

But,  without  undertaking  to  enter  upon  any  discussion  as 
to  the  legality  of  this  association,  and  its  right  to  continue  its 
organization  and  prosecute  its  business,  and  accepting  the 
averments  of  the  bill  that  the  relation  of  the  complainant  to 
the  association  rests  upon  a  mutual  contract  between  the  asso- 
ciates, my  conclusion  is  [9]  that  this  court  cannot  proceed 


i 


UNITED   STATES   V,  ADDYSTON   PIPE   &   STEEL  CO.       631 

Opinion  of  the  Court. 

to  judgment  in  this  action  for  the  want  o*  jurisdiction  over 
all  the  necessary  parties  to  a  fuU  and  final  determination. 
Therefore  the  motion  to  dissolve  the  injunction  must  be  sus- 
tained.   Decree  accordingly. 


[712]    UNITED    STATES    v.    ADDYSTON    PIPE    & 

STEEL  CO.  ET  AL." 

(Circuit  Court,  E.  D.  Tennessee,  S.  D.    February  5,  1897.) 

[78  Fed.,  712.] 

""  JnIyTl89^"L!"'r'r'  CoMMKBCE.-The  act  of  congress  of 
July  2,  1890,  commonly  Icnown  as  the  "  Anti-Trust  Act,"  does  not 
and  could  not  constitutionally,  affect  any.  monopoly  or  ^t°art 
in  restraint  Of  trade,  unless  it  interferes  directly  ^d  subsZaUy 

C.rf  WH       *"  "•"""«■•<*•  "^  «"""'«rce  with  foreign  nations.. 

easurl  rjr"".""'""''''"""'  ""^«^  '"  *•■«  manufacture  of 
east-iron  pipe  formed  an  association  whereby  they  agreed  not  to 

compete  with  each  other  in  regard  to  work  done  or  pirfur^l^ 
m  certain  states  and  territories,  and,  to  make  effectual  th^Xte 
of  the  association,  agreed  to  charge  a  bonus  upon  all  work  don^ 
and  pipe  furnished  within  those  states  and  territories,  which  b^Z 
was  to  be  added  to  the  real  market  price  of  the  pipe  s^d  by  ft^ 
companies,  this  combination  was  not  a  violation  of  the  anti-tr^ 
act,  as  ,t  affected  interstate  commerc*  only  incidentally 
SAME.-In  the  examination  of  such  a  contract,  fraud  and  illegality  are 
.»t  to  be  presumed,  but  must  be  proved,  as  in  all  other  ca!^  ^    " 

,rJ;\. "  '""  ""<="  ««  «"«.  m  the  name  of  the  United  States. 
jur.sdict.on  depends  alone  upon  the  act;    and  the  court  is  o™ 
cern^l  with  no  case  between  private  persons  or  «>rpo.^rons  wh^^ 
Jurisdiction  depends  on  other  «>nditions,  and  in  which  pv^Z 
a  common-law  remedy  might  become  available.  P'-o««Ung 

James  H.  Bible,  for  complainant. 

Brovm  <&  Sjmrlock  and  W.  E.  Spears,  for  defendants. 

[713]  Clark,  District  Jjidge. 

This  suit  is  brought  on  behalf  of  and  in  the  name  of  the 
Lnited  Statesagamst  six  named  corporations.    The  state  of 

TT^^^yCi^^-^itC^^oTTpp^anr^l^^  Circuit  (85  Fea,  271^: 
»  Syllabus  copyrighted,  1897,  by  West  Publishing  Co. 


632 


78  FEDERAL  BEPOBTEB,  713. 


II   H' 


Opinion  of  the  Court, 
creation  and  the  chief  place  of  business  of  the  several  defend- 
ants are  as  follows:  Addyston  Pipe  &  Steel  Company,  Cin- 
cinnati, Oh,o.    Deimis  Long  &  Co.,  Louisville,  Kv.    How- 
ard-Harrison   Iron    Company,    Bessemer,    Ala.      Anniston 
lipe  &  Foundrj'  Company,  Anniston,  Ala.     South  Pitts- 
bijrg  Pipe  \\  orks^  South   Pittsburg,  Tenn.     Chattanooga 
Pipe  &  Foundry  Works,  Chattanooga,  Tenn.    The  petition 
charges  that  the  defendants  are  practically  the  only  manu- 
facturers of  cast-iron  pipe  within  the  following  states  and 
territories:   Alabama,  Arizona,  California,  Colorado,  North 
Dakota    South  Dakota,  Florida,  Georgia,  Idaho,  Kansas, 
Kentuclqr,  Louisiana,  Mississippi,  Missouri,  Montana,  Ne- 
braska   Indian  Territory,  North  Carolina,  South  Carolina, 
^ew  Mexico,  Minnesota.  Michigan,  Tennessee,  Texas.  Illinois, 
Wj^mi^g,  Indiana,  Ohio,  Utah,  Washington,  Oregon,  Iowa 
West  Virginia,  Nevada,  Oklahoma,  and  Wisconsin.     It  i« 
further  charged  upon  information  that  the  defendants,  in  or- 
der to  monopolize  the  trade  in  cast-iron  pipe  in  the  above- 
named  states  and  territories,  entered  into  a  contract  or  associa- 
tion known  a.s  the  Associated  Pipe  Works ;  that  the  purpose  of 
the  association  was  to  destroy  all  competition  within  said  ter- 
ritory, and  to  force  the  public  to  pay  unreasonable  prices  for 
the  cast  iron  pipe  manufactured  and   sold  by  said  com- 
panies; that   for  such   purposes  each  company  .selected  a 
representative;  and  that  these  representatives  con.stituted  an 
executive  committee.    It  is  charged  that  the  defendants,  bv 
the  terms  of  said  association,  agreed  not  to  compete  with 
each  other  in  regard  to  work  done  or  pipe  furnished  in  the 
states  and  territories  above  named,  and,  to  make  effectual 
the  objects  of  the  association,  a  bonus  was  agreed  to  be 
charged  upon  all  work  done  and  pipe  furnished  within  said 
territory,  and  the  petitioner  charges  that  this  bonus  was  put 
upon  the  real  market  price  of  the  pipe  sold  by  these  com- 
panies, and,  to  that  extent,  increased  the  price  to  the  pur- 
chasing public;  that  the  amount  of  this  bonus  ranged  from 
Sa  to  $9  per  ton;  that  the  purpose  of  the  association  was  thus 
to  force  up  the  price  of  cast-iron  pipe  to  an  exorbitant  and 
unreasonable  extent.    It  does  appear  from  the  bill,  as  well  as 
the  answer  and  the  proof,  that  upon  what  may  be  called 
"  stock  goods,"  regularly  sold,  there  is  a  fixed  bonus,  and  that 


tmiTED  STATES  V.  ADDYSTON   PIPE   &   STEEL  CO.      683 

Opinion  of  tlie  Court 

upon  goods  supplied  by  special  contract  the  bonus  is  deter- 
mined as  follows:    When  bids  are  advertised  for  by  any 
municipal  corporation,  water  company,  or  gas  companv,  the 
executive  committee  determines  the  price  at  which  the  bid 
IS  to  be  put  in  by  some  company  in  the  association,  and  the 
question  to  which  company  this  bid  shall  go  is  settled  by  the 
highest  bonus  which  any  one  of  the  companies,  as  among 
themselves,  will  agree  to  pay  or  bid  for  the  order.     When 
the  amount  is  thus  settled  the  company  to  whom  the  right 
to  bid  upon  the  work  is  assigned  sends  in  its  estimate  or  bid 
to  the  city  or  company  desiring  pipe,  and  the  amount  thus 
bid  IS  "  protected  "  by  bids  from  such  of  the  other  mem- 
bers of  the  association  as  are  invited  to  bid,  and  by  the  bid- 
ding in  all  instances  being  slightly  above  the  one  put  in  by 
the  company  to  whom  the  contract  is  to  go.     There  are 
within  the  36  states  and  territories  what  are  called  "  reserved 
cities,"  by  which  it  is  [714]  agreed  that  particular  members 
of  the  association  shall  have  the  work  at  particular  cities 
imd  on  this  they  pay  the  regular  bonus,  just  as  on  stock 
goods  when  sold  otherwise  than  by  special  contract  obtained 
by  bidding.     It  appears,  too,  that  by  far  the  larger  part  of 
the  work  done  with  goods  furnished  by  these  companies  is 
under  special  contract  with  municipal  corporations  and  gas 
and  water  companies,  as  above  stated.    Practically,  all  the 
profitable  business  is  thus  done.    The  general  pubfic,  so  far 
as  affected  by  the  business  at  all,  is  affected  mainly  throu«^h 
municipal  corporations.     All  of  the  states  of  the  United 
States  outside  of  the  states  and  territories  above  named 
are  called  "  free  territory,"  and  the  states  named  are  dis- 
tinguished as  "pay  territory."     Settlements  are  made  at 
stated  times  of  the  bonus  account  debited  against  each  com- 
pany, where  these  largely  offset  each  other,  so  that  small 
sums  are  in  fact  paid  by  any  company  in  balancing  accounts. 
Ihe  aggregate  annual  manufacturing  capacity  of  the  6 
companies  belonging  to  the  association  is  220,000  tons  with  a 
daily  capacity  or  output  of  about  650  tons;  there  are  9  other 
companies  or  corporations  engaged  in  the  manufacture  and 
sale  of  cast-iron  pipe  within  the  pay  territory,  with  an  aggre- 
gate daily  capacity  of  about  835  tons,  though  most  of  thase 
are  small  concerns;  and  there  are  10  companies  or  corpora- 


• 


634 


78  FEDEBAL  KEPORTER,  114. 


( 


1 1 


I' 


Opinion  of  the  Court  • 
tions  engaged  in  the  same  business  located  within  the  free 
territory,  as  above  explained,  with  a  daily  capacity  or  output 
of,  say,  1,560  tons.    It  appears,  also,  that  members  of  the 
Associated  Pipe  Works,  while  they  do  not  compete  with  each 
other,  are  subjected  to  competition  by  the  other  companies 
and  corporations,  both  within  and  without  the  pay  territory 
though  just  to  what  extent  and  with  what  effect  this  compe-' 
tition  IS  carried  on  does  not  clearly  appear.    It  does  appear, 
however,  sufficiently,  that  the  companies  within  the  associa- 
tion have  so  far  not  been  able  to  raise  or  maintain  prices  above 
what  IS  reasonable,  compared  with  the  prices  at  which  similar 
goods  and  similar  work  may  be  obteined  from  the  companies 
outside  of  the  association.     It  now  appears  that  all  corpora- 
tions, with  one  or  two  unimportent  exceptions,  which  have  let 
contracts  to  the  members  of  this  association,  are  satisfied  with 
the  prices,  and  make  affidavit  to  the  fact  that  they  are  reason- 
able, and  that  the  prices  furnished  are,  in  the  main,  consid- 
erably below  the  estimates  made  by  the  expert  engineers  of 
such  companies  prior  to  advertising  for  the  bids.    The  proof 
shows,  too,  that  the  defendant  companies  have,  at  least  in  cer- 
tain instances,  made  quotations  on  goods  to  be  delivered  in 
the  free  territory  below  corresponding  prices  within  the  pay 
territory.    It  is  said  by  the  defendants  that  this  is  explained 
by  reason  of  the  difference  in  the  cost  of  goods  manufactured 
under  contracts  obteined  by  bidding,  and  stock  goods  which 
are  sold  on  general  orders,  and  consisting  of  goods  which 
have  been  rejected  as  not  coming  up  to  the  specifications,  and 
goods  manufactured  during  the  winter  season  in  order  to 
keep  men  and  machinery  from  becoming  idle,  during  which 
period  there  is  practically  no  demand  by  companies  which 
purchase  goods  on  special  orders,  and  contract  by  bids. 

[7151  I  think  it  does  sufficiently  appear  that  the  average 
prices  obtained  by  this  association  since  its  formation  are 
above  what  was  obteined  before,  though,  as  above  steted,  the 
proof  IS  not  sufficient  to  show  that  the  ruling  prices  are  now 
above  what  is  reasonable,  as  determined  in  the  markete  and 
by  competition.  The  defendants,  in  their  answer,  denv  the 
purpose  attributed  te  the  association  by  the  plaintiff's  peti- 
tion. On  the  contrary,  they  say  and  set  up  that  prior  to  the 
association  they  were  engaged  in  reckless  and  ruinous  compe- 


t 


UNITED  STATES   V,  ADDYSTON   PIPE   &  STEEL  CO.      635 

Opinion  of  the  Court 

tition  among  themselves,  as  a  result  of  which  their  business 
was  not  prosperous,  and  under  which  condition  of  things  it 
was  certein  that  some  or  all  of  them  would  fail  and  leave  the 
entire  field  to  such  as  might  be  able  to  survive.    It  is  set  up 
that  what  is  called  the  "  bonus  "  does  not  affect  the  price  to  the 
purchaser  at  all,  but  that  the  association  determines  in  the 
first  place  what  the  market  price  should  be,  having  regard 
also  to  the  competition  to  which  it  is  likely  to  be  subjected 
by  other  companies  not  in  the  association,  and  that  the  price 
is  not  at  any  time  unreasonable,  and  that  the  bonus  is  merely 
a  mode  of  determining  as  between  themselves,  to  an  extent, 
who  shall  secure  the  work,  but  chiefly  to  make  it  certein  that 
each  company  does  its  fair  share  of  the  business,  by  making 
the  bonus  burdensome  to  such  companies  as  might  undertake 
to  do  more  than  their  reasonable  share  of  the  business  within 
the  territory  named.    It  is  further  said  that  under  the  asso- 
ciation the  business  has  been  fairly  divided  between  the  com- 
panies, and  that  they  have  been  enabled  to  keep  all  of  the 
plants  in  operation,  their  operatives  at  work,  and  the  machin- 
ery from  becoming  idle.     I  think  it  could  be  safely  stated 
that  in  some  instances  prices  have  been  above  what  was 
probably  fair  or  reasonable,  but  the  proof  fails  to  show  that 
the  average  prices  have  been  so.    The  leading  witness  for 
the  government  was  for  some  time  a  stenographer  in  the 
service  of  the  defendant  CJhattanooga  Foundry  &  Pipe  Works, 
and  in  that  position  did  the  work  of  the  association,  became 
familiar  with  all  of  the  deteils  by  which  the  business  was 
conducted,  and,  after  giving  up  his  position,  made  known  to 
the  government's  law  officer  all  the  facts  of  the  case,  and  has 
persistently  and  industriously  corresponded  with  persons  who 
had  dealings  with  members  of  the  association,  and  has  done 
all  in  his  power  to  instigate  suits  by  purchasers  from  these 
companies  against  the  associated  companies,  and  has  offered 
to  become  a  witness  in  their  behalf  in  such  suits;  always 
making  the  condition  that  he  was  to  be  liberally  compen- 
sated, exacting  generally  a  very  large  per  cent,  of  what  might 
be  recovered.    A  complete  exposure  of  all  the  business  de- 
tails of  these  companies  has  been  thus  made.     So  far,  he  has 
not  been  able  to  cause  any  suit  to  be  institutedr  But,  upon  the 
facts  laid  before  him,  the  district  attorney,  under  the  direc- 


636 


T8  PEDEBAL  KEPOBTER,  716. 


Opinion  af  the  Ctonrt 

iJ^f  ?'*  ''  '^'^  "P*>°  **>«  «ct  of  July  2   1800  «  f„ 

(26  Sfat  2^,T647  sLn  i^  ""c"^  *^"  "Anti-Trust  Act " 
provisions  of  the  f^  L  S  ^^^  ®*-  ^^  ^''>-  ^"ch  of  the 
ation  are  as  f o W  *'  "'*'*'  "^"^  »»«^«'-  ««"«ide- 

?eTeraI  states,  or  with  forSJ^natlol  L^j'\"'"  i^'nn'erce  among  the 
ETery  person  who  shal)  malS^anv  „^A  Is  hereby  declared  to  be  lllesal 

Sec.  2.  Every  person  who  shall  mXn^.!?ii*^^  ^'  ^  misdemeanor, 
or  combine  to  inspire  wi?h  ^y  oTher^'.^n''"  *"^°^P*  *^  monopolize 
me  any  part  of  the  trade  or  ^mmil     ^^^^  or  persons,  to  monono- 

l^-ed  w.th  Jur.sd.ot«'p^'JSt1n«''r  ^^Z'.YZ 

has  taken  a  w We  «Z,"  JS  u  '""'"''''i  **"  *'»'^  '»««""' 
that  the  enti«  le  hi  Cn  o^.tf  Tt*^  ^^  '''^  •»*«'« 
as  could  be  done  Tnon  f .^"^     *.    '^  developed  as  much 

Therecord,soferarirupTS**iXe  'tv"'  '^"^^^• 
affidavits,  and  exhibits  the^to     A  tm^,?,' P**'*'°"' »»«^«-. 

in  the  answer  of  the  defe^a^fa  tn^TT/'  "«=*»-P«™t«d 
two  grounds-  (U  Th«f Tk  '  ^^  **  '^*^*"*  ^^^ts  upon 
the  p^Sns  of  L^  /  5'  ««soc,ation  is  not  one  subject  to 

thisLsr/h^and ;  ns  "*  ^"'**'-"  "•^'^'^  "'-« 

poses  and  mode  of  dolL  K    -        ^  1'*^"*'*'"' '" '*«  P'»r- 

^Poly,  aTd  talTiiSrof 't^d  "'''  r  "*"^  " 
be  unlawful  at  the  com^o^It  u  -f,*^!'  '""''  »"  ^'>"I<' 
solution  of  the  first  0^?^  .,  '"'"  ^''^^'^^  "P«n  the 
will  become  n^^'irlr  """'f."'  *^  "''^*''«'-  «»•  »«*  ^t 
whether  this  irr^oSatfr'^V'''  "T"**'  "^^  'l"«««o" 
visions  of  thel'  of  ^^ "^  as  subjecte  it  to  the  pro- 
act,  like  wtri:*^'o:;rThrr-'^rc^r*^-  h 
-  new  and  experimental  legislationTl^^^e^dt 


f 


UNITED   STATES   V.  ADDYSTON   PIPE   &   STEEL  CO.      637 

» 

Opinion  of  the  Court, 
cussion  which  attended  the  passage  of  the  act  by  congress, 
as  shown  by  the  records,  makes  it  plain  that  the  ablest  and 
most  thoughtful  jurists  of  that  body  experienped  much  of 
the  same  difficulty  which  has  since  been  felt  by  the  courts 
in  the  attempt  to  enforce  the  act.    It  was  recognized  that 
congress  was  restricted  in  anything  that  it  might  do  upon 
the  particular  subjects  named  in  the  act  to  a  very  narrow 
field;  that  the  constitutional  validity  of  the  legislation  was 
doubtful  as  a  whole.    Up  to  the  date  of  the  enactment  of  the 
interstate  commerce  law,  and  of  the  act  now  under  consider- 
ation, the  interstate  commerce  clause  of  the  constitution, 
under  which  le^slation  of  this  character  is  justified,  has 
been  considered  by  the  courts  almost  entirely  with  relktion 
to  state  legisation,  and  its  constitutional  validity.    Never- 
theless It  will  be  profitable  to  refer  briefly  to  the  doctrine 
announced  m  some  of  these  cases  before  making  anv  more 
particular  reference  to  cases  in  which  this  act  has  be^n  con- 
sidered.    It  has,  of  course,  been  recognized  from  the  begin- 

legislate    upon    domestic    commerce,    or   commerce   wholly 
within  a  state,  than  it  was  within  the  power  of  the  legisla- 
ture of  a  state  to  legislate  upon  the  subject  of  intestate 
commerce  or  tnide.    In  Nathan  v.  Louisiana,  8  How.  73,  a 
tax  was  [717]  imposed  on  every  money  or  exchange  broker, 
and  this  legislation  was  objected  to  upon  the  ground  that  the 
sole  business  of  the  defendant  in  that  case  was  the  buying 
and  selling  of  foreign  biUs  of  exchange,  which  were  inS 
ments  of  commeree,  and  the  act  was  repugnant  to  the  consti^ 
tutional  power  of  congress  to  regulate  commerce  with  foreign 
nations  and  among  the  several  states.    It  was  admitted  bv 
the  court  tha   foreign  bills  of  exchange  were  instruments  of 
commerce,  but  the  court  also  said,  in  effect,  that  the  products   • 
of  agriculture  or  manufacture  were  in  like  mamier  instru- 
on^.t:^r-    ^•'^"^-M<'^-.^^ng  the  opinion 

comSerl^rS"^  '^n^Sr^.h".\l'"PP'y*°8  »»  Ihstrnment  of 
Whose  l^^r^oJ^ZZ^^^V^^^rj^^-^^'^-^'  '^'"'»« 

The  court  further  pointed  out  that  domestic  bills  or  prom- 
issory notes  were  as  necessary  to  the  commerce  of  a  state  as 


inBiiwiiiiiii 


!} 


»  it 

9    f   . 
i 


538 


78   FEDERAL   REPOBTER,  717. 


Opinion  of  the  Court. 

foreign  bills  were  to  the  commerce  of  the  Union.    In  the 
State  Freight  Taw  Cases,  15  Wall.  272,  the  court  observed : 

"The  transportation  of  artlclefl  of  trade  from  one  state  to  another 
was  the  prominent  idea  in  the  minds  of  the  framers  of  the  constitu- 
tion, when  to  consress  was  committed  the  power  to  regulate  commerce 
among  the  several  states.  A  power  to  prevent  embarrassing  restric- 
tions by  any  state  was  the  thing  desired." 

In  Railroad  Co,  v.  Richmond,  19  Wall.  584,  a  contract  had 
been  entered  into  between  the  Dubuque  &  Sioux  City  Rail- 
way Company  and  the  Dubuque  Elevator  Company,  both 
created  corporations  by  the  laws  of  Iowa,  by  the  terms  of 
which  contract,  among  other  things,  the  elevator  company 
was  to  erect  an  elevator  on  land  leased  from  the  railroad 
company,  to  be  situated  at  Dubuque,  for  the  purpose  of 
receiving,  storing,  delivering,  and  handling  all  grain  that 
should  be  received  by  the  cars  of  the  railroad  company,  not 
otherwise  consigned,  and  to  receive  and  discharge  at  Du- 
buque, for  the  company,  all  "  through  grain  "  by  which  was 
meant  grain  transported,  by  the  terms  of  shipment,  through 
that  place  to  points  beyond,  at  a  certain  stated  price  per 
bushel.    The  railroad  company  stipulated  on  its  part  that 
it  would  not  erect  a  similar  building  for  receiving,  storing, 
or  delivering  grain  at  Dubuque,  and  would  not  lease  to  any 
others  the  right  to  erect  any  such  building;  that  the  elevator 
company   should   have   the   exclusive    right   to   handle   all 
through  grain  at  Dubuque  at  the  stipulated  price  per  bushel. 
The  railroad  company  having  leased  its  road  and  property 
to  the  Illinois  Central  Railroad  Company,  the  latter  com- 
pany disregarded  the  contract ;  and  suit  was  brought  in  the 
United  States  court  to  enforce  the  same  on  behalf  of  the 
elevator  company,  and  the  defense  was  that  the  contract  was 
repugnant  to  the  constitution,  as  violating  the  interstate 
commerce  clause.    This  defense  was  overruled,  and  decree 
entered  in  favor  of  the  elevator  company,  and  the  case  was 
taken  to  the  supreme  court  of  the  United  States.    The  ruling 
of  the  lower  court  was  affirmed,  and  the  supreme  court,  in 
doing  so,  enunciated  again  the  controlling  rule  upon  this 
subject,  by  saying: 

"The  power  to  regulate  commerce  among  the  several  states  was 
vest^  in  congress  in  order  to  secure  equality  and  freedom  in  com- 
mercial intercourse  against  dlBcrimlnatlng  state  legislation     It  was 


t 


,.. 


i 


UNITED  STATES  V.  ADDYSTOK  PIPE   *  STEEL  CO. 


Opinion  of  the  Court 


639 


provisions  designed  for  theCrs;cuS?ofi1- Tfr* 
passengers  on  board  vessels  prop^STn  Ln.  ''  °*  ^^^ 

^team,  and  the  contention  waS  as  ann^H  l'  "'' '"  P"""'  ^^ 
the  act  was  invalid,  as  interferW  ikSl  . "'""'  '"'"'"' 
tion  of  comnier<><.  v»«t.^  ^  °*  exclusive  regula- 

discussing  Z  nit  aSdtr  ""'"^'^-  ^^  J"^«««  ^ield, 
the  following  iLTl^-  "'^™^ '«  P-™  d-i-ons,  used' 

<»uA"a?^Trb;SL,l'tt  e-SI^XtTr?"^  "-'^'0-  <"  this 
lation,  place  burdens  upon  commt,^   *H.k'  P"  ^^"'^  ««nnot.  by  leei^ 
the  several  states.    Thrdecl^C, '^  ^"''Ik  ?"■*'«"  ""tions,  or  aSe 
ness  Is  not  questioned      ^.f     ^  ^°  '"  *">«*  extent,  and  their  aminH 
Which  they  were  Serel    t  "■!?",  ""^^^minatioi  of  the  ca^°f„ 
Judged  invalid  lmpot^^a^i,,"„^^'  ^/?"f  """*  "e  leglslatfoTad" 
merce   or  exacted  a  license  fT?nl^ '"5™'°«"*  <"•  «»bject  of  com- 
pureults,  or  created  an  iSini^t  J^?hf  ?"'^*  ^^''Saged  in  eommerc"l 
waters,  or  prescribed  eoumtim^TuV^  J"^  navigation  of  some  pub  ic 
particular  articles,  as  ^tw^n  narH^^'*''"*?  '^"''  «'I'i<^I>  comme,^  in 
conducted.    In  all  the  ca^whS       ^"/■'T  P'"«S'  ^as  required  to  hS 
■•ectly  upon  .H)n.mer«%Xr  bv  waf  nt"'""  «>nden»ed  oSeS^  di 
upon  Its  pursuit  in  part IcutL  chrnLi     *"^  "P""  '*«  busInU,  I^^ni 
on.    Thus,  in  the  p£s^Z  Lt^>?u'  «^ conditions  for  carry  Sru 
and  Massachusetts  exartl^  a  tax  fr^n  fT-  ^'  ""«  '""^^  of  New  York 

te5l"ero'h1o-1ftr^Sf^^^^^^ 

X";ti»'-,fetr^^^^^^^^^^^^ 

for  carrying  on  the  coasting  tSdP  1^  f?^'     ^^  *^"«  ^'"Po^^  condit  o^ 
t  on  to  those  prescrib*^  hH;         *"  *^®  ^^^ers  of  the  statP   in  n^^i 
legislation  of^aXte^s^i^'nS  'Vl'  *^^  -ther'^ease  Vhere 

91  U  S  It^^Th'^T  T^"^  ^'«*^*   12  Wall  1^  L^Tir^^  ^2  Wheat. 
^7^.      ^'  ^^^'  the  leg  slation  erPflfpri   {«  +1,      '  ^^^  Welton  v.  Missouri 

fered  with  its  freedom."  ™erce,  or  in  some  way  directly  inter- 

And  in  the  further  proffres^  nf  fi. 
observed:  Progress  of  the  opinion  the  court 


ri 


640 


78  FEDEBAL  BEPORTEB,  718. 
Opinion  of  the  Ck>nrt 


I 


relating  to  tli«  hwilth,  life,  and  safety  of  their  citizens,  though  the  legis- 
lation might  indirectly  affect  the  commerce  of  the  ^unti^  I^glfla- 
tlon  m  a  great  variety  of  ways,  may  affect  commerce  and  pers^s  en- 
ff^^e  ^istTtufio^^^^  *"  regulation  of  it.  within  th^  mining 

It  will  be  readily  seen  that  the  cases  recognize  the  distinc- 
tion between  the  subjects  of  commerce  and  commerce  itself, 
as  well  as  between  the  instruments  and  aids  to  such  commerce, 
and  the  actual  business  of  commerce.    In  regard  to  state  legis- 
lation,  it  has  been  declared  from  the  beginning  that,  to  render 
such  legislation  subject  to  constitutional  objection  under  the 
conunerce  clause,  the  effect  of  the  legislation  upon  interstate 
commerce  must  be  direct,  and  not  incidental  or  indirect. 
This  general  statement  of  the  law  so  often  repeated  has  been 
illustrated  by  the  varying  facts  of  many  cases,  but  it  would 
extend  this  opinion  beyond  reasonable  limits  to  now  refer  to 
[719]  these.     It  has  often  been  observed  that  the  line  of 
demarkation  between  state  and  federal  jurisdiction  and  regu- 
lation is  a  delicate  one,  and  at  times  grows  dim  and  shadowy. 
In  considering  a  question  of  this  delicate  nature,  proper  and 
practical  distinctions  become  extremely  important.    A  par- 
ticular business  must  be  distinguished  from  the  mere  subjects 
of  the  business,  and  from  mere  incidents  to  or  instruments  by 
which  the  business  is  carried  on.     It  is  hardly  conceivable 
that  any  large  industrial  or  manufacturing  establishment 
could  be  carried  on  without  shipping  products  from  one  state 
to  jfnother,  and  such  would  certainly  be  the  course  of  busi- 
ness contemplated.     Nevertheless  the  business  of  such  an 
establishment  would  be  related  to  interstate  commerce  only 
mcidentally    and  indirectly.   Commerce  would  not  be  the 
main  business,  nor  within  the  main  purpose  of  the  ordinary 
manufacturing  establishment.     Interstate  commerce   would 
be  altogether  an  incident.    There  is  no  direct  relation  between 
the  two.    It  is  probably  true  that  every  wholesale  establish- 
ment within  the  limits  of  the  larger  cities  is  engaged  in  such 
mode  of  business  as  that  it  is  known  that  the  business  can  be 
conducted  only  by  the  method  of  interstate  commerce  in  part. 
Such  commerce  is,  however,  not  directly  affected,  and  least 
of  all  impeded  or  restricted.     If  every  private  enterprise 
which  is  carried  on  in  part  or  chiefly  by  interstate  shipments. 


UNITED   STATES   V,  ADDYSTON   PIPE   &   STEEL  CO.      641 

Opinion  of  the  Court, 
or  by  a  modeof  business  which  makes  this  necessary,  is  to  be 
regarded  as  thereby  so  related  to  interstate  comnSd  as  to 
come  withm  the  regulating  power  of  congress,  it  1  obvLl 
that  this  power  could  at  once  be  extendi  to  almost  eC 
form  of  busmess  m  the  country  which  is  conducted  onln^ 

t  this  wlu  T"'r  ^''-  ««  «»--l  -  interpretatl 
as  this  would  obviously,  m  a  large  sense,  obliterate  the  lines 
Mween  federal  and  state  jurisdiction/and,  as  an  act  o1 
congress  ,s  paramount  in  authority,  would  s  rike  down  thf 
autonomy  of  the  states.    The  ^LiJl^^^^^Z ^ 

it::;grats:w.^~"'  ^^«  ^-  «•  ^^«'  ^  ^up.  a.  lo,  i. 

ufacture  and  commer^    Manufirtni^l^  .*"'^'  i*"""  *""*  '**«'«en  wan- 
ing of  raw  materials^nto  a  Se^f  f^r'?™""""'-*''*  '»«'"<«'■ 
of  commerce  are  different    The  hntint  1„T'   m'  "^-    ''"«  funotlona 
tatlon  Incidental  thereto   constth,?/^!"'  *®"'°^-  ""'I  t"""  transpor- 
at  least  such  transS«or  int  ..Th^rtrv"*?^  *"«  regulation  of 
regulation  of  all  such  manufa rtn^^s  aie  ln?i*j!^*f"S  '°^'"<'««  '"e 
of  commercial  transactions  InThe^Cre  ft  ,^*r^  -.,'*  ^^^  ^''^Jert 
>t  would  also  Include  all  productive  l^dn^tifi^VJI'l'''''^  *»  ^^'*  *>«•* 
same  thing.    The  result  would  hi  ti..,*"^  *""*  contemplate  the 
to  the  exclusion  of  the  stages   with  thl  *^"*™'!  "'•'""'  "^  '""ested, 
manufactures,   out  aZ.   agrl^l^,^  ^lUflf^  *«  --^'"te.  "ot  on1& 
mestic  fisheries,  minlne— in  «h««  1'   ""rtjcuiture,   stock-raising,   do- 
For  is  there  one  o?  "hem  that^'nT  n^/™"**  "*  '«^''°  "««»«try. 
clearly,  an  Interstate  or  forei™  rnaXt"     i^L'*'"?'!^  """•«  »••  '«» 
of  the  Northwest,  or  the  cotti?  ul«^ttl\f^J"'V^  ''^^^  g~wer 
and  harvest  his  crop  wItT  an  ev^nn  M*"*.^""*"'  •"""♦•  cn'tivate. 
York,  and  Chicago?    The  powerXfn^  ^^JS,'\'^  ^*  Liverpool,  New 
to  the  states,  It  would  fol^wL„n^il  1*^*1.'°  <»"K'*ss  and  denied 
would  devolve  on  congressT.  .^o?,?.*  *^'.*'"'i*  '■^^"'t  »at  the  duty 
form,  and  vital  rntSeste!!i«eroste' which    In'  f^  """"^'^^  ""'t^ 
.must  be  local  in  all  the  details  of  n.»T,.L^.;J°  i",*'""  "*»*""■«•  are  and 
demands  of  such  a  suplrvtsfon  wonM  ^^f**^^*".'  «'«°«g<'ment.    The 
generally  applicable  "KghoutTi  U^t^'^W^n"!"'^'".""  '«8'«'8«o» 
statutes  only  locally  appllMble   and  nt?lrw  i^    ^^:  .""*  "  ''»""™  <>' 
movement  towards  the  e^^hli=h!lIL„<.^^.'""*°^'**ent.     Any  [7201 

vast  country,  with  its  mC  SST*  °/  ^'^  «'  Production  in  thU 
<»nld  only  S'at  the  s^criK  th™  iar  -T**".  '""'  opportunities, 
of  the  localities  In  it.  If  not  of  everv  m  i  nJ  fh /""^^i^  "^  «  '""^  Part 
any  movement  towards  the  lo«fr,^taiiL  .  ^*?-  °"  **•«  "♦''cr  baud, 
required  by  such  InterpretaH^n  wonid1^%"^  Incongruous  legislation 
departure  from  the  declar«l  obirct  nf  ^  *?"'  *^^  ^'^^^  P»ssiWe 
this  alone.  Even  In  the  exIrcNe  of  thf  .1^  *''*'"'^  '°  "»"«»«<'•»■  Nor 
would  be  confined  to  the  %^Tatfon  n^'^S"'  ^"t™''*^  '"r,  congress 
dustry,  however  numerous  ^St  to  tho^  •  I  '*''*"'°  "ranches  of  In- 
branch  where  the  pro=rteSpl^^  "ntStJ^rkr  ^ 
11808— VOL  1—06  M 41 


■Miiiiiiap 


642 


78  FBDERAL  BEPOBTEB,  720. 
Opinion  of  tlie  Court. 


7 


I?ni?J^^  ''^*'"'^  be  almost  Infinite,  as  we  hQire  seen;  but  still  there 
would  always  remain  tlie  possibility,  and  often  it  would  be  the  case 
^at  the  producer  contemplated  a  domestic  market.     In  that  case  the 

wiTou'SlI  TonfJ  r'*  *^  "f  Tlr^  »^^'  ^^^  «*«^«'  «»^  the  intermina- 
«IL  K  .  ^^^^^  }^  presented,  that  whether  the  one  power  or  the 
other  should  exercise  the  authority  in  question  would  b^  determln^ 
JwettenL^nr'fhr  intelligible  rule,  but  by  the  secret  and Tan^ 
fi^fol?  ^^'^  ""^  the  pi-oducer  in  each  and  every  act  of  production.  A 
l^fiZ  T"^  J]!ir"^r*°^  ***  ^^^  «^«*^  governments,  ind  more  pro^ 
IS?W*?iL-T  .^^l^^^''^"*  t^l««''e'-«>  government  and  the  states, 
and  less  likely  to  have  been  what  the  framers  of  the  constifntinn 
Intended,  it  would  be  difficult  to  imagine."  constitution 

The  distinction  before  refen-ed  to  between  commerce  and 
the  subjects  of  commerce,  and  between  the  direct  and  indi- 
rect effect  of  the  business,  or  mode  of  doing  business,  upon 
interstate  commerce,  is  here  clearly  recognized  and  declared, 
as  was  also  done  in  U.  S,  v.  E\  C\  Knight  Co.,  156  U.  S.  1,  15 
Sup.  Ct.  249,  in  which  the  opinion  in  Kidd  v.  Pearam  ia 
expressly  referred  to,  and  the  ruling  reaffirmed.     It  was  easy 
to  anticipate  that,  when  called  upon  to  enforce  the  provisions 
of  the  anti-trust  act,  the  interpretetion  would  be  in  harmony 
with  the  construction  of  the  commerce  clause  which  had  been 
unifowily  given  in  considering  state  enactments  alleged  to 
infringe,  or  supposed  to  be  an  infringement  upon,  thi's  pro- 
vision of  the  constitution.    In  re  Greene^  52  Fed.  104-119,  is 
the  first  case  in  which  the  act  in  question  was  extensively 
treated.    The  question  arose  upon  a  petition  for  a  writ  of 
habeas  corpus.    The  defendants  and  others,  under  the  form 
of  what  was  called  the  Distilling  &  Cattle-Feeding  Com- 
pany, a  corporation  organized  under  the  laws  of  Illinois,  had 
obtained  possession  and  authority  over  such  a  number  of 
distilleries  that  the  company  controlled  the  manufacture  and 
sale  of  75  per  cent,  of  all  distillery  products  in  the  United 
States,  and  the  defendants  had  fixed  the  price  at  which  the 
purchasers  should  and  did  sell  the  products  of  the  distil- 
leries.   Sales  were  made  to  agencies  established  in  Massa- 
chusetts and  other  places,  and  one  of  the  questions  con- 
sidered  was  whether  this  was  a  combination  subject  to  the 
provisions  of  the  anti-tnist  act,  under  which  the  defendant 
had  been  indicted,  and  Judge  Jackson  (afterwards  Mr.  Jus- 
tice Jackson)  ruled  that  it  was  not.    Discussing  the  point  of 


UNITED   STATES   V,  ADDYSTON   PIPE   &   STEEL  CO.      64S 

Opinion  of  the  Court. 

whether  the  whisky  trust  was  subject  to  the  act,  the  eminent 
judge  observed  : 

Jl^}  is  certain  that  congress  could  not,  and  did  not  by  this  enact- 
^rtvnV/^r^*  *^  prescribe  limits  to  the  acquisition,  either  by  t?e 
?hi  «nhw^T-''y  ^^f%  corporation,  of  property  which  might  become 
the  subject  of  interstate  commerce,  or  declare  that,  when  the  accu 
maf2n'rj''H^°*^*'^K''^   property   by    legitimate   means   and   lawful 
.     methods  reached  such  magnitude  or  proportions  as  enabled  the  owner 
ILZl^^  1^  control  the  traffic  therein,  or  any  part  thereo?   among 
the  states,  a  crimmal  offense  was  committed  by  such  owner  or  own- 
ers.   All  persons,  individually  or  in  corporate  organizations   carrvine 
on  business  avocations  and  enterprises  involving  the  purchase  Ta?^^ 
or  exchange  of  articles,  or  the  production  and  [721]  manufachii^of  ' 
commodities  which  form  the  subjects  of  commerU  will,  in  a  p^lar 
^^^'  monopolize  both  state  and  interstate  traffic  in  such  art  cles  or 
commodities   just  in  proportion  as  the  owner's  business  is  increl^^ 
enlarged,  and  developed.     But  the  magnitude  of  a  party's  busing 
production,  or  manufacture,  with  the  incidental  and  indirect  noweri 
thereby  acquired   and  with  the  purpose  of  regulating  prices  and  con- 
^m"^?  interstate  traffic  in  the  articles  or  commodities  forming  the 
subject  of  such  business,  production,  or  manufacture,  is  not  the  mo- 
Fed^lis*^^  attempt  to  monopolize,  which  the  statute  condemns."    52 

And,  speaking  somewhat  more  specifically,  it  was  further 
said : 

/JllJ"''  certainly  not  a  'monopoly,'  in  the  legal  sense  of  the  term, 
for  the  jK-cused  or  the  distilling  and  cattle-feeding  companv  to  own 
seventy  distilleries  and  the  products  thereof,  whether  ZchprX^ 
aniounted  to  the  whole  or  a  large  part  of  what  was  prodS  to 
the  country  Their  ownership  and  control  of  such  product  as 
subjects  of  trade  and  commerce,  is  not  what  the  statute  condemns 
^t  the  monopoly  or  attempt  to  monopolize  the  interXte  trad^  or 
commerce  therein.  In  this  acquisition  and  operation  of  the  ^vlnty 
distilleries,  which  enabled  the  accused  or  said  distilling  andlattl^ 
0^11'!?^,^,^''°*^  ^"^  manufacture  and  control  the  sale  of  75  per  cent 

?s  it  iiwi^^Th  n^"''*"  ^^  *^^  ^""^'•y'  *t  ^«««  not  apiJTar,  nor 
IL  ,  ^^^^^'  ^^""^  ^^^  I»ersons  from  whom  said  distilleries  were 
acquired  were  placed  under  any  restraint,  by  contract  or  other^i^ 
nil''^  IT^K*^  ^^^"^  ^"^"^  continuing  or  r^ngaging  in  suchTuS 
?o1o  s^  ThfJffn'S^-^.'  who  chose  to  engage  thirein  were  at  liberty 
to  do  so.  The  effort  to  control  the  production  and  manufacture  of 
distillery  products  by  the  enlargement  and  extension  of  buSneS 
was   not   an    attempt   to   monopolize   trade   and   commer^   in   sudh 

RTi^'^nn^  7*?^K*^^  '"^^^^^^  «^  t^«  «t^tnte.  and  may  tS^reforlte 
left  out  of  further  consideration."  "^leiure  oe 

Much  of  the  discussion  in  the  opinion  is  devoted  to  show- 
ing that  the  trust  arrangement  there  considered  was  neither 
a  monopoly  nor  a  contract  in  restraint  of  trade,  according 
to  the  common-law  sense,  which  it  was  held,  in  that  and 
subsequent  cases,  must  be  allowed  to  settle  the  question  of 
what  is  a  monopoly  or  contract  in  restraint  of  trade,  in  the 


614 


78   FEDERAL   REPORTER,  721. 


Opiuiou  of  the  CJourt. 

absence  of  any  definition  in  the  act  of  congress.  In  the  pre- 
vious case  of  In  re  Terrell,  51  Fed.  215,  Judge  Lacombe 
liad  declared  that: 

"It  is  not  the  actual  restraint  of  trade  (if  such  be  restraint  of 
trade)  that  is  made  illegal  by  the  statute,  but  the  making  of  a  con- 
tract in  restraint  of  trade.— fjf  a  contract  which  restrains,  or  is 
intended  to  restrain,  trade." 

The  statute  came  before  the  supreme  court  of  the  United 
States  for  the  first  time  in  U.  S.  v.  E.  C,  Knight  Co.,  156 
U.  S.  1,  15  Sup.  Ct.  249.  The  American  Sugar-Refining 
Company,  a  corporation  existing  under  the  laws  of  the  state 
of  New  Jersey,  being  in  control  of  a  large  majority  of  the 
manufactories  of  refined  sugar  in  the  United  States,  ac- 
quired, through  the  purchase  of  stock,  four  other  refineries 
in  Philadelphia,  and  thus  obtained  such  disposition  over 
these  refineries  throughout  the  United  States  as  gave  it  a 
practical  monopoly  of  the  business,  and  it  was  held  that 
the  result  of  the  transaction  was  the  creation  of  a  monopoly 
in  the  manufacture  and  sale  of  a  necessary  of  life;  but  it 
was  nevertheless  distinctly  held  that  the  monopoly  was 
not  one  which  could  be  suppressed  under  the  provisions  of 
the  act  of  congress  now  in  question,  and  that  the  business 
of  sugar  refining  in  Pennsylvania  bore  no  direct  relation  to 
commerce  between  the  states,  nor  with  foreign  nations.  And 
the  doctrine  upon  this  subject,  and  the  distinctions  before 
adverted  to,  which  pervade  all  of  the  previous  cases,  are 
again  declared  in  the  opinion  with  great  clearness.  Mr. 
Chief  Justice  Fuller,  speaking  for  the  court,  said: 

[m]  "The  argument  is  that  the  power  to  control  the  manufacture 
of  refined  sugar  is  a  mon(i[Kjly  over  a  neeessai-y  of  life,  to  the  en- 
joyment of  which  by  a  large  part  of  the  population  of  the  United 
States  mterstate  commerce  is  indispensable,  and  that,  therefore  the 
general  government,  in  the  exercise  of  the  power  to  regulate  com- 
naerce,  may  repress  such  monopoly  directly,  and  set  aside  the  in- 
struments which  have  created  it.  But  this  argument  cannot  be 
confined  to  necessaries  of  life  merely,  and  must  include  all  articles 
of  general  consumption.  Doubtless  the  power  to  control  the  manu- 
facture of  a  given  thing  involves,  in  a  certain  sense,  the  control  of 
its  disposition,  bqt  this  is  a  secondary,  and  not  the  primary  sense- 
and,  although  the  exercise  of  that  power  mav  result  in  bringing 
the  operation  of  commerce  into  play,  it  does*  not  control  it,  and 
affects  it  only  incidentally  and  indirectly.  CJommerce  succeeds  to 
manufacture,  and  is  not  a  part  of  it.  The  power  to  regulate  com- 
merce is  the  power  to  prescribe  the  rule  by  which  commerce  shall 


ir 


•>« 


UNITED   STATES   V.  ADDYSTON   PIPE   &   STEEL   CO.      645 

Opinion  of  the  Court. 

l)e  governed,  and  is  a  power  independent  of  the  power  to  suppress 
monopoly.     But  it  may  operate  in  repression  of  monopoly  whenever 
that   comes   within   the   rules   by   which   commerce   is   governed    or 
whenever  that  comes  within  the  rules  by  which  commerce  is  gov- 
erned,  or   whenever  the  transaction   is   itself  a   monopoly   of  com- 
merce.    It  IS  vital  that  the  independence  of  the  commercial  power 
and  of  the  police  power,  and  the  delimitation  between  them,  how- 
ever  sometimes   perplexing,    should   always   be   recognized   and   ob- 
served,  for,   while  the  one  furnishes  the  strongest  bond  or  union, 
the  other  is  essential  to  the  preservation  of  the  autonomy  of  the 
states,  as  required  by  our  dual  form  of  government ;  and  acknowledged 
evils,  however  grave  and  urgent  they  may  appear  to  be,  had  better 
be  borne,  than  the  risk  be  'run,  in  the  effort  to  suppress  them    of 
more  serious  consequences,  by  resorts  to  exi)edients  of  even  doubtful 
constitutionally.     It  will   be  perceived   how  far-reaching  the  propo- 
sition IS  that  the  power  of  dealing  with  a  monopoly  directly  may 
be   exei-cised    by    the    general    government    whenever    interstate   or 
international  commerce  may  be  ultimately  affected.*' 

After  r^erring  with  approval  to  Gibhom  v.  Ogden,  9 
Wheat.  1,  210,  Brown  v.  Mai-yland,  and  other  previous  cases, 
the  opinion  was  concluded  by  saying: 

.o!l?*  ^^^  I'*  ^^^  "^^^  ^^  well-settled  principles  that  the  act  of  July  2. 
1890,  was  framed.    Congress  did  not  attempt  therebv  to  assert  the 
power  to  deal  with  monopoly  direct,  as  such;  or  to  limit  and  restrict 
the  rights  of  corporations  created  by  the  states,  or  the  citizens  of 
the  states,  m  the  acquisition,  control,  or  disposition  of  property  •    or 
to  regulate  or  prescribe  the  price  or  prices  at  which  such  property, 
or  the  products  thereof,  should  be  sold ;  or  to  make  criminal  thracts 
of  persons  in  the  acquisition  and  control  of  property  which  the  states 
of  tlieir  residence  or  creation  sanctioned  and  permitted.    Aside  from 
the  provisions  applicable  where  congress  might  exercise  municipal 
power,  what  the  law  struck  at  was  combinations,  contracts,  and  con- 
spiracies to  monopolize  trade  and  commerce  among  the  several  states. 
^IioT  ,        f  ^  nations;  but  the  contracts  and  acts  of  the  defendant 
o«^V^  exclusively  to  the  acquisition  of  the  Philadelphia  refineries, 
and  the  business  ot  sugar  refining  in  Pennsylvania,  and  bore  no  direct 
relation  to  commerce  between  the  states  or  with   foreign  nations. 
The  subject-matter  of  the  sale  was  shares  of  manufacturing  stock,  and 
the  relief  sought  was  the  surrender  of  property  which  had  already 
passed,  and  the  suppression  of  the  alleged  monopoly  in  manufacture 
by  the  restoration  of  the  status  quo  before  the  transfers ;   yet  the  act 
of  congress  only  authorized  the  circuit  courts  to  proceed  by  way  of 
preventing  and  restraining  violations  of  the  act  in  respect  to  contractaL 
t^a'Se  of  cZmerct"'''''^'*^'  in  restraint  of  interstate  or  intematioiS 

It  is  a  doctrine  expressly  stated  and  clearly  implied  in 
these  cases  that  the  act  of  congress  does  not,  and  could  not 
constitutionally,  deal  directly  with  a  monopoly  or  a  contract 
in  restraint  of  trade,  as  such,  according  to  the  common-law 
definition  of  these  terms;  and,  as  has  been  seen,  the  act  of 
congress  gives  no  definition  of  its  own.    To  do  so  would  be 


f 


I 


646 


78  FEDKRAIi  BEPOBTER,  IM. 


Opinion  of  tbe  Court 

clearly  to  trench  upon  the  exclusive  jurisdiction  of  the  states. 
Federal  authority  exists  only  when  a  monopoly  or  a  contract 
in  restraint  of  trade  assumes  such  form  or  has  such  effect  as 
to  go  beyond  any  common-law  conception  of  these  terms,  and 
interferes  di-  [723]  rectly  and  substantially  with  interstate 
commerce  or  commerce  with  foreign  nations;  and  this  it 
must  do  directly,  and  not  incidentally.     Now,  I  am  unable 
to  perceive,  in  the  light  of  these  cases,  that  the  act  of  con- 
gress can  be  regarded  as  applicable  to  the  association  under 
consideration.     It  cannot  be  suggested,  and  has  not  been,  that 
this  association  had  in  contemplation  as  one  of  its  purposes 
the  subject  of  interstate  commerce,  any  more  than  any  ordi- 
nary manufacturing  establishment  would  have,  where  the 
products  of  such  manufactory  must  find  a  market  in  other 
states  as  well  as  in  domestic  markets.     It  seems  to  me  evident 
that  private  gain  was  the  object  of  the  association,  just  as 
was  observed  in  regard  to  the  sugar  trust  in  V,  S,  v.  E,  C. 
Knight  Co,    Nor  does  the  mode  in  which  the  association 
conducts  its  business  have  any  direct  relation  to  interstate 
commerce,  so  far  as  I  can  see.     The  sugar  trust  was  con- 
fessedly a  monopoly,  in  the  common-law  sense,  and  in  a  com- 
modity of  prime  necessity.    And  the  extent  to  which  inter- 
state commerce  would  be  used  in  carrying  on  its  busine>ss 
would  be  in  magnitude  out  of  all  proportion  to  a  similar  use 
made  by  the  association  in  question. 

The  learned  district  attorney  has  leveled  most  of  his  criti- 
cism at  the  bonus  feature  of  the  association,  but  it  has  not 
been  pointed  out,  and,  I  think,  cannot  be,  how  the  manner  of 
using  the  bonus  operates  in  restraint  of  interstate*  commerce. 
The  object  of  the  bonus  and  of  the  association  really  is  not  to 
prevent  all  members  of  the  association  from  furnishing  and 
shipping  their  manufactured  products,  but  to  determine 
among  themselves  which  one  of  them  shall  do  so.  and  it  is 
really  contemplated  that  some  one  will  do  so.  There  is  cer- 
tainly no  restraint  in  this,  as  the  supply  in  such  case  is  regu- 
lated by  the  demand,  so  far  as  shipment  is  concerned.  It  has 
not  been  argued  that  the  fact  that  certain  cities  are  reserved 
to  a  particular  company  would  bring  the  association  within 
the  provisions  of  the  act.     It  is  true  that  generally  one  of  the 


rf 


.. 


■  I 


UKITBD  STATES  V.  ADDYSTON   PIPjs   *  STEEI.  CO.      647 

Opinion  of  tlie  Conrt. 
reserved  cities  is  that  in  which  the  company  has  its  chief 
place  of  business.    For  example,  the  Chattanooga  Foundry 
&  Pipe  Works  is  allowed,  under  the  arrangement,  to  supply 
the  cities  of  Chattanooga  and  New  Orleans.    If  it  be  argued 
that  this  prevents  companies  in  other  states  from  shipping 
goods  to  Chattanooga,  it  would  be  merely  to  follow  a  theory 
having  no  practical  bearing  on  the  cafe,  because,  in  the  ab- 
sence of  an  association,  the  entire  freight  charges  being  in 
favor  of  the  local  company,  and  the  disposition  to  patronize 
a  local  concern  being  in  its  favor,  it  would  easily  furnish  tbe 
supplies. 

It  remains  to  remark,  as  should  have  been  done  before,  that 
upon  the  bill  and  answer,  where  the  contract  of  the  associa- 
tion IS  admitted  in  the  answer,  as  is  virtually  done  here,  but 
the  allegations  tending  to  show  its  sinister  purpose,  tenden- 
cies, and  effects,  contained  in  the  bill,  are  denied  bv  the 
answer,  and  averments  are  made  in  the  answer  tendi'ng  to 
show  a  just  and  equitable  purpose  and  effect,  the  averments 
m  such  answer  upon  this  application  stand  admitted,  and 
the  contract  must  be  presumed  to  have  been  made  for  the 
purposes  honestly  as  stated  in  the  answer,  unless  the  pro- 
visions of  the  agreement  and  the  mode  of  doing  business 
clearly  show  the  contrary.     In  examination  of  such  a  con- 
tract   fraud   and   illegality   are  not  to  be  presumed,  but 
17-44J  must  be  proved  as  in  all  other  cases.     U.  S  v  Tram 
Missouri  Freight  Ass\  7  C.  C.  A.  15,  58  Fed.  58.     It  may  be 
further  observed,  to  prevent  misconstruction,  that  in  a  suit 
such  as  this,  in  the  name  of  the  United  States,  jurisdiction 
depends  alone  upon  the  act  giving  jurisdiction  to  enforce  its 
provisions,  and  the  court  is  concerned  with  no  case  between 
private  persons  or  corporations,  where  jurisdiction  depends 
on  other  conditions,  and  in  which  proceeding  a  common-law 
remedy  might  become  available.    Having  reached  the  con- 
clusion that  the  defendant  association  is  not  subject  to  the 
provisions  of  the  act  of  congress,  according  to  the  ruling  in 
Re  Greene  and  in  U.  S.  v.  E.  C.  Knight  Co.,  I  do  not  feel 

"^  JIi"?m1  *"  f^'P*^  "*'  ^^^  ''**'*'•  '^''"««  n*"*!*  Jn  this  ca»., 
and  the  bill  is  therefore  dismissed. 


'i 


'^  m  vmrm  states  reports,  290. 

Syllabug. 

cm,    ^ITED    STATES  ..  TRANS-MISSOUEI 
FREIGHT  ASSOCIATION.' 

APHEA.  ™oM  XHK  CIBCmx  CX>Xn«  or  APTKAI^  ^H  THE  EIGHTH 

cmcuiT. 

No.  «7.     Argned  December  8  o   isoa     *^  .^ 

*/wsinoer  ».  9,  1896.— Decided  March  22,  1897. 

ciee  u.  a,  29a.] 

The  dissolution  of  the  fteljrht  aR«v»inf  i^«  ^ 

merits ;  as.  where  parties  have  TtelTlto^l'""^, '"^ '"^  ""  '«« 
and  are  acting  under  It.  and  ILr"  fJl  ndl  /  ^''"'  "»'«*•"«■'* 
and  the  Jnrlgdiction  of  the  ^uTlLJ^  i^fTl  "**  """'^  "*  ""'• 
to  restrain  such  or  like  a,^l      ^  '^  "^  *"*  «""«  «'  »  bill 

trial  has  been  had  a.^aJdl"."!''  "  """"  «er«>ment,  and  a 
of  this  court  is  «,t^t{!^T;"'  TT-  *'  "•"*""*«  J»risdlctlon 
tlon.  effected  snCuent  f  to  th!     7  '  "'^^o'^Ion  of  the  as^^rfa- 

^.e  the  statutor^aruTtir  aTa'^lt^rrT^^JT!  '^ 
veray.  yet  the  fact  that  It  is  so  nA«i  L*  *^  '°  *^°*''*>' 

N.  sl^wn  to  the  satlsfa'ln  o^  rrt."""^'  '"  '"^  "'"•  "«  -' 

foreign  ^r^^S  Z^ZZ t^^l':^  ^ZTZ'''^  Z  ""- 
protect  trade  and  commerce  aeniZtZZ    ^  .       '    ^'  ''•  ^^'  "  t<^ 
ones,"  apply  to  BBd  corir  r  ar^^^^^^^^ 
tract  between  them  in  restrainf  ^^      \.  ?  ^  "^a^road;  and  a  con- 

bihlted.  even  tho^^hlr^^^e^'relr  In^o  17""  '^  ""- 
lug  railroads,  only  for  the  mimn«.  ^f  ♦•       u  »^tween  compet- 

for  the  transportation  rpiZTand'Jr'TS"'''^'"'  *"""''  ™*** 
The  act  of  February  4   irst  ^   irvi    ..  /^™i^"y- 

.neon.  f«»,3  slst7ntt.T;,:-r,;,i--^«  TsTZ'"  '^  ""* 
fer  upon  competing  railroad  miim«ni  J  J  "  *^^  not  con- 

tract in  restriint  o'f  trrdTa'nrZml^LT^^^       "'"  ^"*^  ^  "^'^- 
the  subject  of  this  suit  ^''""^erce.  like  the  one  which  forms 

Debates  in  Congress  are  not  appropriate  sonr^K.  «#  i  * 
which  to  discover  the  meaninV3  «!  ,  '  Ji^formatlou.  from 

by  that  body.  ^  ""^  "*^  ''^"^"S*^  «^  «  statute  passed 


•Bill  asking  the  dissolution  of  the  ns«nni«*i««       ^T  . 

to  restrain  the  several  comnnniL  7  ''^^'''"«°  «°<J  ^^r  an  injunction 

i»ent  was  dismS^^lrtTcir^„n  T'^^  ^'^'^  ^^"^*  ^'^^  ^^ 
the  Oistrict  Of  Kansa'%*^^  ^^^^^r"^^^^^  for 

eee  P-  im.    Reversed  by  the  SuDreme  Cnn^  i«  ♦!.  '  ^'' 

U.  S..  290).  supreme  Court  in  the  present  case  (106 

»  Syllabus  copyrighted,  1897,  by  Banks  &  Btob, 


ft 


J 


UNITED  STATES  V.  FREIGHT  ASSOCIATION.  649 

Statement  of  the  Case. 

The  prohibitory  provisions  of  the  said  act  of  Jnlv  9  iBor. 
contracts  In  restraint  nf  ■nf^-.n  f       ^    '  ''**'•  "PP'^  *"  all 

without  exoep'on  or  ItaitaHr    L"    ""'f  *"'*  "'  ~""-«"» 
Which  the  restraint  L  ~1 '«:"'  "*  °"*  ™"'^"*  *"  '"^  «» 

"rrag— :it  i^r^rr :=ii"tr-'  *-  '•-- 

-raining  trade  or  «,n,n>er..  ,f  mrmns^^-^:^- 

''t:'^he"L*o7fn,;TC"  r%'^'""*'  "■•*«'  -  «■«  >- 
^tfrst  rg-r:r -hrrTt:iir  r- 

are  proved,  an  injunction  should  IkJ  '^''  """^ 

^?^  ?1^tt"*-  "^"^y'  ^^^<''  *"  »«*  ^"s  passed  by  the  Con 
gress  of  the  United  States,  entitled  "An  act  to  protect  trade 

_^tat.^9^^^    This  ac^iBgivenm  full  in  the  margin." 
and'^o:::io*nr*"'  *™'"'  """  '=''"""*""*  aga<ns7^mu;;;f„r..^i7u. 
fiiro    1    ri  ^'ficrtca  tn  Congress  assembled, 

w.L:^o;;Sarrr:;srrr:d:orcor^^  '-«*  -  -- 

eral  States,  or  with  foreim  nafinL  •  \,  ™'"™«'^<*  among  the  sev- 
Every  person  who  J^ZZZ' Z^^JT"^  '"  "^  "'*^'- 
such  combination  or  conspiracy  sLnt  T^  !^  ""■  ^"^"^^  '°  "^ 
meanor.  and,  on  conviction  hereof  ^L^,"^.^"*^  ""  "^  ""«»«- 
ceedlng  Ave  thousand  dZrs   or  hi  t     .     ''"°'"'*^  "^  «"*  "»'  «^- 

..r^r^com^ii^irwiTrr  "^  ''"'""•''  *^  --«- 

monopolize  any  part^rthe  t™d»  "  "^  ^''  "^^^  "'  P*™""^'  »» 
States,  or  with'  Le\^  ulSl^  T^Z  2^  T  "'•*"" 

w.r;r',»t7n.cTT:tnnf oir :."  ^"^ '°™  <"  tmr„roti.er- 

tory  Of  the  united   St^el  or  „,  .t     v."""  """"""^  '"  ""y  Terrl- 
restraint  Of  trade  or  clmlr^  h  .         °"*"*='  »'  Co'»'»'>la,   or  tn 

other,  or  between  any Tu^T^rrr^''^''^  ''''''  '^"""'"^  "<»  «•>- 
States  or  the  DlsS  ^fMr  k?  ^  "'  Territories  and  any  state  or 

tween  the  ntsSct  o^  (^.u^i?"""";  "'  '"""  'o-*'^  ">a"on«-  or  be^ 

nations,  Is  heS  d^ia^" "eial"  P>  ""^  ^*"*  "'  ^'«*^  «■•  '»"'8° 

Buch  contract  or'enga^t  "^ uch^^XZ  T^^^^^Z 


650 


166  UNITED  STATES  EEPOBTS,  892. 


Statement  of  the  Case. 
[8981  On  the  15th  day  of  March,  1889,  aU  but  three  of 
the  defendants,  thb  railway  companies  named  in  the  bill, 

to  olTr^ThlV  '  '»"«'«"'«'"«"'  "'J.  0°  conviction  thereof,  shall 
be  punished  by  fine  not  exceeding  five  thousand  dollars,  or  by  Im- 
prlsomnent  not  exceeding  one  year,  or  by  both  said  punishments.  In 
the  discretion  of  the  court  oumeuts,  m 

Sec.  4.  The  several  Circuit  Courts  of  the  United  States  are  hereby 
^^    :^,TJT^T''  *"  ""'""''  '""  ^''-  vlolatior  of  ^ta 

A«^™i^  .  T  .  '"^"^^  ""^''^t''.  ""<!«•  tte  direction  of  the 

Attorney  General,  to  institute  proceedings  In  eqnltv  to  prevent  and 
restrain  such  violatlona    Such  proceedings  n.a7  be  by  waTof  Jlu 

^T„,r^  ■*  'T  T  "^  "•"'  ""-^'"^  *«t  '^<^  -'option  shalf^ 
^H  .      °U    !r:'"*  P™"'*"*""-     When  the  parties  complained  of 
Shall  have  been  duly  notified  of  such  petition  the  court  shall  proceed 
as  soon  as  may  be.  to  the  hearing  and  determination  of  the  ca«,^ 
pending  snch   petition  and   before  final   decree,   the  court   may   at 

Z/^rt«"^  ««ch  temporary  restraining  order  or  prohibition  as 
Shall  be  deemed  Just  in  the  premises. 

Sic    5.  WheneTer  it  shall  appear  to  the  court  before  which  any 
proceeding  under  section  four  of  this  act  may  be  pending,  that  the 

T\"nJTur  "T'""  *'*'  "'^"'  ^^"*^  «^«"^^  "^  ^^««Sbt  before 
the  court,  the  court  may  cause  them  to  be  summoned,  whether  they 
reside  In  the  district  in  which  the  court  is  held  or  not;  and  ^l 
poBuas^  to  that  end  may  be  served  in  any  district  by  the  marshal 

Sec.  iJ.  Any  property  owned  under  any  contract  or  by  any  combina- 
tion or  pursuant  to  any  conspiracy  (and  being  the  subject  thereof) 
mentioned  in  section  one  of  this  act,  and  being  in  the  course  of  trans- 
portation from  one  State  to  anotHer.  or  to  a  foreign  comitry,  shall 
be  orfeited  to  the  United  States,  and  may  be  seized  and  condemned 
by  like  proceedings  as  chose  pi-ovided  by  law  for  the  forfeiture  seiz- 
ure and  condemnation  of  property  imported  into  the  United  States 
contrary  to  law. 

Sec.  7.  Any  ,«r>«,n  who  shall  be  injured  in  bis  business  or  property 
by  any  other  |*r«on  or  corporation  by  reason  of  anything  forbidden 
or  declared  to  be  unlawful  by  this  act.  may  sue  therefor  in  any  Circuit 
Court  Of  the  United  States  in  the  district  In  which  the  defendant  re- 
Sides  or  is  found,  without  respect  to  the  amount  iu  controversy,  and 
shall  recover  threefold  the  damages  by  him  sustained,  and  the  costs 
of  suit.  ln<  Inding  a  reasonable  attorney's  fee 

thu"^*^  7'?!' L*"."  *""*  "person,"  or  "persons,"  wherever  used  in 
this  art  shall  be  deemed  to  Include  corporations  and  associations  ex- 
isting under  or  authorized  by  the  laws  of  either  the  United  States  the 
laws  of  any  of  the  Territories,  the  laws  of  any  State,  or  the  law. 
of  any  foreign  country. 
Approved.  July  2,  1890. 


'i  V;> 


*/ 


UNITED  STATES  V.  FBEIGHT  ASSOCIATION.  651 

Statemoit  of  the  Case, 
made  and  entered  into  an  agreement  by  which  they  formed 
themselves  into  an  association  to  be  known  as  the  «  Trans- 
Missouri  Freight  Association,"  and  they  agreed  to  be  gov- 
erned by  the  provisions  contained  in  the  articles  of  a^ 

The  memorandum  of  agreement  entered  into  between  the 
railway  companies  named  therein,  stated,  among  other 
things,  as  foUows:  "  For  the  purpose  of  mutual  pJtection 
by  establishing  and  maintaining  reasonable  rates,  rules  and 
regulations  on  all  freight  traffic,  both  through  and  local,  the 
ubscnbers  do  hereby  form  an  a^ociationlo  be  know^  ^ 
the  Trans-Missour.  Freight  Association,  and  agree  to  be 
governed  by  the  following  provisions." 

"Abticle  I.  . 
tlo7^"airr as*?on:4r'""'*'  *"  "•"  T.-a.«-Missourl  Freight  Ass«;ta. 

h!5?lf,  'passtnLtet^reen'oX^'Tn'T^T'!,"''?  *"»  »'  '"»'«  "'«"''>e™ 

Commendng  a^t  the  0^^''^  Mc"i*%n  tZ'^Q^h'""'''''':?  *"""="y  = 
north  to  the  Red  River  •  thmcav^^^'.*    .       .  ^}^  m<'ridian,  thence 

line  of  the  In^an   Te^r  ?„^y'^  I^enTn '7h   h  ^""^^ 

and  the  eastern  line  of  th^  <s't»^  ^/ .?    *  ''*   ^'*'  banndaFy  line 

aforesaid  Missouri  River  line "  destined   to   points   east  of   the 

Article  II  provided  for  the  election  of  a  chairman  of  the 

TSt  ^rr-^^  *"'■•  ^y  ^*'*'«"  2  of  that  article  each 
road  was  to  designate  to  the  chairman  one  person  who  shaU 
be  held  personally  responsible  for  rates  on  that  road.    Such 

sible,  and  shall  represent  his  road,  unless  a  suj^r  or  officers 


652 


i    ' 


166  UNITED  STATES  BEPOBTS,  m. 


Statement  of  the  Case. 

Sfn'    !1  ""f  "f  *"  "**"•"*  ^^  *""  ^»<i  «  Substitute  with 
written  authority,  to  act  upon  all  questions  which  may  ari^ 

ptytrpir;"*"'t  ^'""  ^  ''^'^'^^  "^"'^  *^^  -^- 

Section  3  provides  that:  "A  committee  shall  be  appointed 
to  establish  rates,  rules  and  regulations  on  the  trafficS^ 

make  ruS^o  *""'  T'  "l  '^'^'^'^  '^'^^^^  therei^    a^d 
HMke  rules  for  meeting  the  competition  of  outside  lines 

Their  conclusions,  wh^n  unanimous,  shall  be  made  effective 

snail  be  referred  to  the  managers  of  the  lines  parties  hereto- 
and  If  they  disagree  it  shall  be  arbitrated  in  the  mZier  pro 
vided  in  article  VH."  "'anner  pro- 

By  section  4  it  was  provided  that:  "At  least  five  davs' 
written  notice  prior  to  each  monthly  meeting  shall  be  dven 

nv  tlLT"  "'  Tl  ^'""^  '^"*'*'"»  »  ™^-  or  Chanel; 
any  rule  or  regulation  governing  freight  traffic;  eight  days 

sTct-rr.TTo'*'  '"  '^'  ^'•"^'^  of  Colorado  of  TJtaS 
follow"        '    '  '"  ''  ''  ''  """^  "  ''  »«•">«  "  -d  - 

and  an  parties  «han  b?"^^bv  thprt^.i""  ""."fi!  """^  •"*"  «'"««. 
expressed,  unless  then Vl  thnre  f«M?  fh^  ^L"^,"'  ^^^  association,  as 
elation  definite  written  Sothirtat^n  t.n  r"'tl'""'"  «'^''  ""^  "«»<>- 
make  such  modlflcati™  not^ith^La^  n^the  fnf^T?!'"-  *''«'^  «»>«" 
Piwided,  That  If  the  member  eWta^lrfti^    J"*.f  "'  ^"^  association: 
represented  at  the  meeMn"  no  f m  ?^   k*  f k°'  '""""Se  shall  fall  to  be 
the  same  shall  te  Sde^eSV&l""  ^unfJtr  ""  "*  "o*"^-  «»<* 
upon  a  reduction  of  rate  nSIiw Ih^^'    ^'i»"''>  ""y  member  Insist 
majority  favor  the  same  and  If  m  ft  ''^H"  "'  ^""^  majority,  or  If  the 
rate  so  made  aK  Slrlo^ll SLe  ™t^'^*°'*"*  "'  "»'•''  "'nJority,  the 
association  mav.  t^a  mSltr  vnt.  n^,  "Pm  other  traffic,  then  the 
effect  corresponding  ?aKo  tiki  effpT'"  ^^^  "^^^^  """"'^  P"*  mto 
mous  consent  any  rate   rnfe  nrrTf^,.      ""^  '^"'^  *"y-    ^^  "nanl- 
may  be  modified  at™S^  m^tin- orthV  ^«  '^  ".V"^  *"  "*'^"  traffic 
notice.  ^  meeting  of  the  association  without  previous 

mLter  ma^''aTK"rfl'°Sa'Lrat'^v'°tl,:.'"'  '1^^'''^  ">"*-'"«>•  «-" 
such  rate,  lile  op  reKulations  „  *„"°V''"'^'  "'^''ut  previous  notice, 

petition  of  lines  no"  member  o?  r/.^r^'^.*"  "'«*'  the  eom- 
time  notice  to  the  chalman  rf  l?s  itfJT^l""""-  ^'^'''K  «*  ">e  same 
man.  upon  investUt^rshaS  d^Mi'fh»l°  '"t  P'!"'**  «  the  chair- 
meet  the  direct  TOmpetitlon  of^Ll  ^  »  such  rate  Is  not  necessary  to  * 
and  shall  so  notiT  tte  r^ad  makl^  °?1  members  of  the  association, 
withdraw  such  rata  At  the  next  m^fi^^*  J^^  "  «'"'"  l>">n«liately 
the  making  of  such  rate  It  shan  h??Bn^£j  the  association  held  after 
the  association  shall  dS^lde  by  a^Shf^  *"  '"e  association,  and  If 
not  made  h.  ^  faith  T^l^^^^^^Tt^^^J^^^^  ™^^  w^s 


t 


4^ 


UNITED   STATES   V.  PREIGHT   ASSOCIATION. 
Statement  of  the  Case. 


653 


*K '  ^^*i;  ^"  f"  i"angemento  with  connecting  lines  for  the  division  of 
through  rates  relating  to  traffic  covered  bf  thU  agrement  sha^f  ^ 
made  by  authority  of  the  association :  ProvLdho^et^^ri^lL^ 

sLVroa^"s\t..Te''r&A°rff  '"  """r^'  the  mtCions'^blt;^ 

contracts  at  this  date  actually  cxistii^  betWn  lines  not  h«v7n»-!P,M:^ 
mon  proprietary  Interests,  the  same  shall  brreport^  so  far  af  d^" 
sions  are  concerned,  to  the  association,  to  the  lud  that  divisLns  tZh 

SXiratler^s"   ""•"«"   ''<^^"-"«   by 'thl' . ^ Tamo's 

P^^L^tr^f^th^ag^r'^^^^^^^^ 

manaj^ers    Who  shall   determine,   by  a  majority  vote    (the  mpn.Sr 
X'^'hSY^^'"  complaint  is  made  to  have  no  vote ),  what  Tfa^v^^ 
alty  sha     be  assessed,  the  amount  of  each  fine  not  t^elee^  on^  hnn' 

&3'ir.  ate'i  ri.-r Ts,.-^  rJsSH" 

the  traffic  thereby  secured,  such  action  shall  be  renarted  to  thP  m^ 

sfiifbra^^scr:]  ''^**"™'"''' "« «"»-  '"-""^-  wh^rr'a^'^nX 

be^Jftl^s  L^S'la"tlS»  Sim^TsS  „ttff%/^tlU7oS 
of  said  company  that  such  fine  has  been  assessed  Ami  thnf^t^?!,-     f^ 

"Sec.  11.  Any  member  not  present  or  fully  represented  at  rnli  nnii 

S^d-^^rraX!a"?.v1n!^sirrfi^T^^^^ 

sessed  against  his  company,  unless  he  shafi  K  prevfouL^' fifed  w?tt 

ArtMeri' bTL'?/-  ^T'"^  *"  ^  P'^*"t  »'  reprlZt^"^  ""^ 
mjtnftfl  ™.  '     """^  J  ^?°tttin  appropriate  provisions  for  the  carrvhie 

°s?t%trfo?t"hTdeteIK'' '"'■'''"^"*'  ""'  "  '«  -*  ne«J?ryX'Ze^ 


[297]  Article  IV  reads  as  follows: 


"AaiicLE  IV. 
i^^reaTasrtaS'^'".-,r„ra^  -!i^l^%-^^^^^ 

Article  VIII  provides  that  the  agreement  should  take  effect 
Apnl  1,  1889,  subject  thereafter  to  thirty  days'  notice  of  a 
desire  on  the  part  of  any  line  to  withdraw  from  the  same. 


1- 


654 


I  I 

M 

i! 

M 

I  I 


II 


166   UNITED  STATES  REPORTS,  297. 
Statement  of  the  Case. 


On  the  Gth  of  January,  1892,  the  United  States,  as  com- 
plainant,  filed  in  the  Circuit  Court  of  the  United  States  for 
the  District  of  Kansas,  through  the  United  States  attorney 
for  that  district,  and  under  the  direction  of  the  Attorney 
General  of  the  United  States,  its  bill  of  complaint  against' 
the  Trans-Missouri  Freight  Association,  named  in  the  agree- 
ment above  mentioned,  the  Atchison,  Topeka  and  Santa  F6 
Kailroad  Company,  and  some  seventeen  other  railroad  com- 
panies, the  officers  of  which  had,  it  was  alleged,  signed  the 
agreement  above  mentioned  in  behalf  of  and  for  their  respec- 
tive companies.  The  bill  was  filed  by  the  Government  for 
the  purpose  of  having  the  agreement  between  the  defendant 
railroad  companies  set  aside  and  declared  illegal  and  void, 
and  to  have  the  association  dissolved. 

It  alleged  that  the  defendant  railroad  corporations,  signing 
the  agreement,  were  at  that  time  and  ever  since  had  been 
common  carriers  of  all  classes  and  kinds  of  freight  and  com- 
modities which  were  commonly  moved,  carried  and  trans- 
ported by  railroad  companies  in  their  freight  traffic,  and  at 
all  such  times  had  been,  and  then  were,  continuously  engaged 
in  transporting,  freight  and  commodities  in  the  commerce, 
trade  and  traffic  which  is  continuously  carried  on  among  and 
between  the  several  States  of  the  United  States,  and  among 
[298]  and  between  the  several  States  and  Territories  of  the 
United  States,  and  between  the  people  residing  in,  and  all 
persons  engaged  in  trade  and  commerce  within  and  among 
and  between,  the  States,  Territories  and  countries  aforesaid; 
that  each  of  the  defendants  was,  prior  to  the  15th  day  of 
March,  1889,  the  owner  and  in  the  control  of,  and  that  they 
were  respectively  operating  and  using,  distinct  and  separate 
Imes  of  railroad,  fitted  up  for  carrying  on  business  as  such 
carriers  in  the  freight  traffic  above  mentioned,  independently 
and  disconnectedly  with  each  other,  and  that  said  lines  of 
lailroad  had  been  and  then  were  the  only  lines  of  transporta- 
tion and  communication  engaged  in  the  freight  traffic  be- 
tween and  among  the  States  and  Territories  of  the  United 
States  having  through  lines  for  said  freight  traffic  in  all  that 
region  of  country  lying  to  the  westward  of  the  Mississippi 
and  Missouri  rivers  and  east  of  the  Pacific  Ocean ;  that  these 
lines  of  railroad  furnish  to  the  public  and  to  persons  engaged 


mp 


I 


UNITED   STATES   V,  FREIGHT   ASSOCIATION. 
Statement  of  the  Case. 


655 


in  trade  and  traffic  and  commerce  between  the  several  States 
and  Territories  and  countries  above  mentioned  separate,  dis- 
tinct and  competitive  lines  of  transportation  and  communica- 
tion extending  along  and  between  the  States  and  Territories 
of  the  United  States  lying  westward  of  the  Mississippi  and 
Missouri  rivers  to  the  Pacific  Ocean,  and  that  the  construc- 
tion and  maintenance  of  said  several  separate,  distinct  and 
competitive  lines  of  railroad  aforesaid  had  been  encouraged 
and  assisted  by  the  United  States  and  by  the  States  and  Ter- 
ritories in  the  region  of  country  aforesaid,  and  by  the  people 
of  the  said  several  States  and  Territories,  by  franchises  and 
by  grants  and  donations  of  large  amounts  of  land  of  great 
value,  and  of  money  and  securities,  for  the  purpose  of  secur- 
ing to  the  public  and  to  the  people  engaged  in  trade  and  com- 
merce throughout  the  region  of  country  aforesaid  competitive 
lines  of  transportation  and  communication,  and  that  prior  to 
the  15th  day  of  March,  1889,  and  subsequently  and  up  to  the 
present  time^  each  and  all  of  said  defendants  have  been  and 
are  engaged  as  common  carriers  in  the  railway  freight  traffic 
connected  with  the  interstate  commerce  of  the  United  States. 
It  was  then  alleged  in  the  bill  as  follows  : 

[299]  "And  your  orator  further  avers  that  on  or  about  the  fifteenth 
day  of  March,  1880,  the  defendants  not  being  content  with  the  usual 
rates  and  prices  for  which  they  and  others  were  accustomed  to  move 
carry  and  transport  propertj-,  freight  and  commodities  in  the  trade 
and  commerce  aforesaid  and  in  their  said  business  and  occupation,  but 
contriving  and  intendUig  unjustly  and  oppressively  to  increase  and 
augment  the  said  rates  and  prices,  and  to  counteract  the  effect  of  free 
competition  on  the  facilities  and  prices  of  trasporation.  and  to  estab- 
lish and  maintain  arbitrary  rates,  and  to  prevent  any  one  of  said  de- 
fendants form  reducing  such  arbitrary  rates,  and  thereby  exact  and 
^Z^^^^J^^i  sums  of  money  from  the  people  of  the  said  States  and 
Territories  aforesaid,  and  from  the  people  engaged  in  the  interstate 
commerce,  trade  and  traffic  within  the  region  of  country  aforesaid 
and  Irom  all  persons  having  goods,  wares  and  merchandise  to  be 
transported  by  said  railroads,  and  intending  to  monopolize  the  trade 
traffic  and  commerce  among  and  between  the  States  and  Territories 
aforesaid,  did  combine,  conspire,  confederate  and  unlawfully  agree 
together,  and  did  then  and  there  enter  into  a  written  contract,  comh 
bination,  agreement  and  compact,  known  as  a  memorandum  of  agree- 
^«oH  f  ^^%  Trans-Missouri  Freight  Association,  which  was  sign^  by 
each  of  said  above-named  defendants."  s    -«  "j 

The  bill  then  set  forth  the  agreement  signed  by  the  various 
corporations  defendant 
It  was  further  alleged  that  the  agreement  went  into  effect 


656 


168   UNITED   STATES    REPORTS,  299. 


Statement  of  the  CaRe. 
on  the  1st  day  of  April,  1889,  and  that  since  ihat  time  each 
and  all  of  the  defendants,  by  reason  of  the  agreement,  have 
pat  into  effect  and  kept  in  force  upon  the  several  lines  of  rail- 
roads the  rules  and  regulations  and  rates  and  prices  for  mov- 
ing, carrying  and  transporting  freight  fixed  and  established 
by  the  association,  and  have  declined  and  refused  to  fix  or 
establish  and  maintain  or  give  on  their  railroads  rates  and 
prices  for  the  carrying  of  freight  based  upon  the  cost  of  con- 
acting  and  maintaining  their  several  lines  of  railroa.i  and 
the  cost  of  carrymg  freights  over  the  same,  and  such  other  ele- 
""^wo^^'i""^*^  ^  considered  in  establishing  tariff  rates  upon 
each  [800)  particular  road,  and  the  people  of  the  States  and 
remtories  subject  to  said  association,  and  all  pei-sons  en- 
gage.! m  trade  and  commerce  within,  among  and  between  the 
different  States  and  Territories  had  been  compelled  to  and 
were  stiU  compelled  to  pay  the  arbitrarv  rates  of  freight  and 
submit  to  the  arbitrary  rules  and  regulations  established  and 
maintained  by  the  association,  and  ever  since  that  date  had 
been  and  still  were  deprived  of  the  benefits  that  might  be 
expected  to  flow  from  free  competition  between  said  soveral 
hnesof  transportation  and  communication,  and  were  deprived 
of  the  better  facilities  and  cheaper  rates  of  freight  that  might 
be    reasonably   expected    to   flow    from    fiw    competition 
between  the  lines  above  mentioned,  ^nd  that  the  ti-ade,  traffic 
and  commerce  in  such  region  of  country,  and  the  ft  eight  traf- 
ficrn  connection  therewith,  had  be^  and  were  monopolized 
and  restramed,  hindered,  injured  and  retarded  by  the  defend- 
ants by  means  of  and  through  the  instrumentality  of  such 
association. 

The  bill  further  averred  that  notwithstanding  the  passa<^ 
of  the  act  of  Congress  above  mentioned  on  the  2d  dav  of 
Jnly  1890,  the  «  defendants  still  continue  in  and  still  en-a-e 
m  said  unlawftil  combination  and  conspiracy,  and  still  m^'ain- 
tain  said  Trans-Missouri  Freight  Association,  with  all  the 
powers  specified  in  the  memorandum  of  agreement  and 
articles  of  association  hereinbefore  set  forth,  which  said 
agreement,  combination  and  conspiracy  so  as  aforesaid  en- 
tered into  and  maintained  by  said  defendants  is  of  great 
mjnry  and  grievous  prejudice  to  the  common  and  public 


UNITED   STATES  V,  FREIGHT  ASSOCIATION.  657 

Statement  of  the  Case, 
good  and  to  the  weif       ^f  ,^^  ^^^^^  ^^  ^^^  ^^.^ 

The  prayer  of  the  bill  was  as  follows : 
ha;e^Satrrrfl^Te%?S^r^^  can  only 

that  B^lXls^:ourFre^^  f^^^^^^^^  ^^^"^ 

said  defendants,  and  all  and  each  of  Xm  h.  ^  dissolved,  and  that 
from  further  a^eeing  combining  nJit^'  be  enjomed  and  prohibited 
toniaintainrule¥^df;/natiii'J^^^^^  ^^^  acting  together 

.  upon  their  several  SofrXoa^^^^  ^^°^^  ''""^  ^^^^^^^^ 

tween  the  States  and  Territories  of  th^  ri  ?.^^  o?*^^  ""'"'^  commerce  be- 
each  of  them  be  enjoined  and  nrnhfh-.  ^°i*^^  ^*^*^^'  **«<^  that  all  and 
in  a  combination  aTociat^nn^nr'*^-^^^""  entering  or  continuing 

or  attempt  to  mcnopolize  the  frPtohArnm?  °*K°^f '""f  "^  *»  '^"'^opoHze 
bet^veen  the  States' anri^rrltS  of  thP  nn?»l  «?1^  ""*"  commerce 
and  each  of  said  defeudint«  hf  ^i  •    5    '^S'^^  ^*"*^''-  "••<>  «>at  all 

any  of  their  associatTfrom  nn?rvfni^f  together  to  prevent  each  and 
trade  and  commerce^tw^n  ?h«  «tif  "^^'Sht  ana  coniuiodities  In  the 
Pbites  at  such  ratei  as  sh^n  uf  v^**!  "?,•*  Territories  of  the  United 
agents  of  each  of^iS  roads  tti^l"^T'^^  ^"""^  ^^  *"«  «'B<*'-s  and 
Its  own  behal°"  ***'"«  independently  and  separately  in 

.n^'^.i'^l"!!^*"*'  """"^  '■*^''''""<*  *«  «°^«'-  f""y.  etc.,  each 
and  all  of  the  matters  charged  in  the  bill,  but  such  an«wS 

Sn™"^,r"'  '''^  "^^^  -^>^'  -  ---  undrois 

oemg  specially  waived. 

The  Chicago,  Kansas  and  Nebraska  Railway  Company  the 
Missouri,  Kansas  and  Texas  Railway  Company  and  the  Den 

SilTthf  ''"*  :^°'^V«,-'-J  ComU  deni*eS\^:g 
partieo  to  the  association.  The  other  fifteen  companies  filed 
separate  answers,  each  setting  up  substantiall/ the^I:^ 

They  admitted  they  were  common  carriers  en^ged  in  the 
transportation  of  persons  and  property  in  the^Xt  and 
Territories  mentioned  in  the  agreement,  and  they  Se^d 

Sn'olte^r'Tr'"""  *'^^  "^^^  ^"^^'-^  ^  the;?o 
Visions  of  the  act  of  Congress,  approved  Februarv  4   i««7 

^04  24  Stat.  379,  entitled  "in  act  to  1^:^:1^^^ 

r8021  andT"',r^'r"*^  "^'^^  and  additions  thereto. 
[802]  and  they  aUeged  that  that  act  and  the  amendments  con- 

^  11808— VOL  1—06  M 42 


658 


106   UNITED   STATES   REPORTS,  302. 
Stiiteiiiimt  Iff  tlif»  OiisK*. 


^^  TB 


stituted  a  system  of  regulations  established  by  Congress  for 
common  carriers  subject  to  the  act,  and  they  denied  that  they 

They  admit  that  they  severally  own.  control  and  operate 
wparate  and  distinct  lines  of  railroad  constructed  and  fitted 
for  carrying  on  business  as  common  carriers  of  freight  inde- 
pendently and  disconnectedly  with  each  other;  except  that  a 
common  interest  exists  between  certain  companies,  named  ii ' 

i^riT*.  ^?V*^'t  "»«*  '^^  lines  of  railroad  mentioneS 
in  the  bJl  furnish  lines  of  transportation  and  communication 
to  persons  engaged  in  freight  traffic  between  and  among  the 
Stat«s  and  Territories  of  the  United  States,  having  through 
hnes  for  freight  traffic  in  that  region  of  country  lying  to  the 
westward  of  the  Mississippi  and  Missouri  rivei  and  east  of 
the  Pacific  Ocean,  but  deny  that  they  are  the  only  sucli  lines, 
and  allege  that  there  are  several  others,  naming  them 

They  further  admitted  that  prior  to  the  organization  of  the 
freight  association  the  defendants  furnished  to  the  public  and 
to  persons  engaged  in  trade,  traffic  and  commerce  between 
the  several  States  and  Territories  named  in  the  agreement, 
separate,  distinct  and  competitive  lines  of  transportation  and 
comniumcation,  and  they  allege  that  they  still  continue  to 
uo  so* 

They  admitted  that  some  of  the  roads  mentioned  in  the 
bm  received  aid  by  land  grants  from  the  United  States,  and 
others  received  aid  from  States  and  Territories  by  loans  of 
credits,  donations  of  depot  sites  and  rights  of  way,  and  in  a 
few  c»ses  by  investments  of  money,  and  that  the  people  of 
the  States  and  Territories  to  a  limited  extent  made  invest- 
ments m  the  stocks  and  bonds  of  some  of  the  roads,  while 
others,  mentioned  in  the  biU,  were  ahnost  exclusively  con- 
stmcted  by  capital  furnished  by  non-residents  of  that  region 

It  was  also  admitted  that  the  purpose  of  the  land  grants! 
loans,  donations  and  investments  was  to  obtain  the  construc- 
tion of  competitive  lines  of  transportation  and  communication 
to^e  end  that  the  public  and  the  people  engaged  in  trade 
[3^  and  commerce  th«,ugho„t  that  region  of  country 
might  have  facilities  afforded  by  railways  in  communicating 


t 


1 


,    UNITED   STATES  V.  FEEIGHT  ASSOCIATION.  659 

Statement  of  the  Case, 
with  each  other  and  with  other  portions  of  the  United  St«.«« 
and  the  world,  and  denied  that  thev  wen,  oLnt^l 
other  purpose.  "  granted  for  any 

Is'^JjsflTfr*'  f""''"^  "^^  '''™>''*i"«  on  «r  about  March 
IL  "  t!'  tr  ''"'""**'^  "^■''ociation  described  in  the  Su^ 
the     rrans-Missouri  Fmight  Association."  ^ 

the^L  r„dtrtf  ^^''*T  '""'''"^^y  --  -t  content  with 

they  deni^l4TLrt;"uir^  ''''  "'  '""^  «^— *' 
tha^the  ^^LntSJ-^tZTorT^^iS^ 

r St  ZS^r^tSfrattdr  -'^^^^  -- 
that  the  effect  of  free  como^tiHn     i    ^  k     "  »'«^'*''*d'  or 

and  Territories  wkhintf;  """^"'^"'  ''^*^**°  *»»«  States 
they  deniedXtthe  ;  iTrr^^"^  '"  ^^  ''"=  ""^ 
result  of  any  unlawfuSrratr risXl  Th^T' 
fendants  alleged  that  the  proper  object  oTthT'     J^^  ^^ 

ch-n^a^  tl  'it  p™;srr ,::  -s.  r "'" 

ment  was  filed  with  tha  T..f.   !  .    V.        '      ^  *^^  ^S^' 

tiie  terms  of  the  agreement  each  member  might  do  ^ \l 
prehmmary  requirement  being  that  til   Zx      ^  ^'  *•"* 
should  be  vot«d  ..nnr.  .*    "^"^S.  »"»*  the  proposed  change 

which  itZ  ^,       '  '"^^'^^  of  the  association  after 

wftich,  if  the  proposal  was  not  a<nwd  fn  th^  r  .   '       , 


660 


166   UNITED   STATES   REPORTS,  304. 
Statement  of  the  Caae. 


the  rates,  rules  and  regulations  jfixed  and  established  from 
time  to  time  under  said  agreement  had  been  put  into  effect 
and  maintained  in  conformity  to  law ;  and  it  was  denied  that 
by  reason  of  the  agreement  or  under  duress  of  fines  and  penal- 
ties, or  otherwise,  the  defendants  had  refused  to  establish  and 
maintain  just  and  reasonable  rates;  and  it  was  alleged  that 
the  object  of  the  association  at  all  times  had  been  and  was 
to  establish  all  rates,  rules  and  regulations  upon  a  just  and 
reasonable  basis,  and  to  avoid  unjust  discrimination  and  un- 
-  due  preference.  They  denied  that  shippers  or  the  public 
were  in  any  way  oppressed  or  injured  by  reason  of  the  rates 
fixed  by  the  association,  but  on  the  contrary  they  alleged  that 
the  agreement  and  tiie  association  established  under  it  had 
been  beneficial  to  the  patrons  of  the  railway  lines  composing 
the  association  and  the  public  at  large.  These  in  substance 
were  the  allegations  in  the  various  answers. 

The  cause  came  on  for  hearing  on  bill  and  answer  before 
the  Circuit  Court  of  the  United  States  for  the  District  of 
Kansas,  First  Division.    That  court  dismissed  the  bill  with- 
out costs  against  the  complainant.    53  Fed.  Eep.  440.    The 
Government    duly    appealed    from    the    judgment    to   the 
United  States  Circuit  Court  of  Appeals  for  the  Eighth  Cir- 
cuit, and  that  court  after  argument  affirmed,  in  October, 
1893,  the  judgment  of  the  Circuit  Court,  without  costs, 
Shiras,  District    Judge,    dissenting.     19    U.    S.    App.  36, 
From  that  judgment  the  Government  appealed  to  this  court. 
A  motion  was  made  upon  affidavits  to  dismiss  the  appeal. 
The  affidavits  show  that  on  the  18th  of  November,  1892,  a 
resolution  was  adopted  by  the  Trans-Missoui  i  Freight  Asso- 
ciation, one  of  the  defendants,  providing  that  the  organiza- 
tion should  be  discontinued  from  and  after  the  19th  of  No- 
vember, 1892,  and  the  secretary  was  instructed  to  wind  up  its 
affairs  at  as  early  a  date  as  possible.    It  further  appeared  by 
the  affidavits  that  the  Trans-Missouri  Freight  Association  was 
[305]  actually  dissolved  and  its  existence  ended  on  the  above 
date,  November  19,  1892,  and  that  it  has  not  since  that  date 
been  revived,  nor  has  it  since  that  date  had  any  activity  of 
any  kind,  "  and  that  it  has  not  conducted  or  been  engaged  in 
any  operations  or  business  whatever,  but  that  it  has  been 
dead  and  out  of  existence." 


UNITED   STATES  V,  FREIGHT  ASSOCIATION.  661 

Statement  of  the  Case. 
It  also  alleged  as  another  ground  for  dismissing  the  appeal 
that  the  matter  in  controversy  does  not  exceed  $1000,  and  that 
the  case  does  not  come  under  any  other  provision  of  the  act  of 
1891,  allowmg  an  appeal  from  the  Circuit  Courts  of  Appeal 
to  this  court.    In  opposition  to  the  motion  it  appeared  upon 
the  part  of  the  appellant  that  at  the  same  meeting  at  which 
the  resolution  above  referred  to  was  adopted,  the  following 
resolution  was  also  adopted:  '' Resolved,  That  a  committee  of 
seven  be  appointed  by  the  chairman  of  this  meeting  to  draw 
up  a  new  agreement  for  the  conduct  of  business  now  substan- 
tially covered  by  the  Trans-Missouri  agreement  and  to  make 
a  report  to  all  lines  in  the  Trans-Missouri  Association  at  a 
meeting  to  be  called  in  Chicago  on  December  G,  1892  "    A 
committee  of  seven  was  accordingly  appointed,  which  adopted 
a  resolution  calling  a  meeting  for  the  6th  of  December,  1892, 
of  the  lines  formerly  members  of  the  Trans-Missouri  Associa- 
tion and  representatives  of  other  interested  lines  for  the  pur- 
pose of  considering  any  changes  in  the  tariffs  and  of  business 
which  was  under  the  jurisdiction  of  that  association  and 
which  might  be  submitted  to  the  parties  at  that  time,  and  to 
further  consider  the  organization  of  one  or  more  rate  commit- 
tees to  govern  the  manner  of  making  rates  on  such  traffic  untU 
some  permanent  organization  could  be  effected.     In  the  earlv 
days  of  December,  1892,  the  meeting  so  called  was  held  and 
was  participated  in  by  most  of  the  railroad  companies  which 
were  parties  to  the  Trans-Missouri  agreement,  and  at  that 
meeting  an  agreement  was  made  upon  the  subject  of  rates  of 
freight,  and  a  West-Missouri  freight  rate  committee  was  ap- 
pomted,  the  duties  of  which  committee  were  to  establish  and 
mamtain  reasonable  rates  in  the  territory  described,  and 
other  lines  not  therein  represented  but  interested   in  the 
freight  traffic  of  such  territory  were  to  be  invited  to  become 
members.    A  plan  for  [306]  the  establishment  of  subrate- 

therein  set  forth  and  agreed  to.  The  agreement  was  to  be- 
come  effec  ive  on  the  1st  of  January,  1892,  and  to  remain  in 
force  until  the  following  April,  during  which  time  it  was 
supposed  that  a  new  and  permanent  association  to  provide 
for  an  agreement  relating  to  rates  of  freight  might  be 
founded.     It  does  not  appear  whether  such  permanent  asso- 


I 


1 


I 

t 


I 


662 


me  UNITED   STATES   REPORTS,  306. 
Gounwl  for  Partiei. 


elation  has  been  formed  or  that  the  t-emporary  agreement  has 
been  actually  terminated. 

In  answer  to  the  motion  to  dismiss  on  the  gromid  that  the 
matter  in  controversy  did  not  amount  to  over  a  thousand 
dollars,  the  parties  have  stipulated  as  follows:  "  It  is  hereby 
stipulated  for  the  purpases  of  this  case  and  no  other,  and 
without  waiving  any  right  to  question  the  legal  effect  of  such 
fact,  that  the  daily  freight  charges  on  interstate  shipments 
collected  by  all  the  railway  companies  at  points  where  they 
compete  with  each  other  were,  at  the  time  of  the  agreement 
mentioned  in  the  pleadings  herein,  and  have  been  since,  more 
than  one  thousand  dollars." 

To  the  motion  made  to  dismiss  the  npp^tkl  for  want  of  juris- 
diction, briefs  were  filed  as  follows: 

Mr.  W,  F,  Guthrie  filed  a  brief  on  behalf  of  the  Burlington 
and  Miasouri  River  Railroad  Company  in  support  of  the 
motion. 

¥r.  Lloyd  W,  Bowers  filed  a  brief  on  behalf  of  the  Atchi- 
son, Topeka  and  Santa  Fe  Railroad  Company,  the  Chicago, 
Rock  Island  and  Pacific  Railroad  Company,  the  Fremont, 
Elkhorn  and  Missouri  Valley  Railroad  Company,  The  Sioux 
City  and  Pacific  Railroad  Company  and  the  Chicago,  St. 
Paul,  Minneapolis  and  Omaha  Railway  Company  in  support 
of  the  motion. 

Jfr.  Attorney  General  and  Mr.  Assistant  Attorney  General' 
Whitney  for  the  United  States  filed  a  brief  opposing  the 
motion. 

[307]  At  the  hearing  on  the  merits  one  hour  additional 
time  was,  on  motion  of  Mr,  DtUon,  allowed  to  each  side. 

Mr.  Attorney  General  for  the  United  States,  appellants. 

•  Mr.  John  F.  DUlon  for  the  Freight  Association,  appellees. 
Jfr.  A.  Z.  Williams^  Mr.  Harry  Hvhhard  and  Mr.  John  M. 
JMtton  were  on  his  brief. 

Mr.  Jrnnes  C.  Carter  for  the  Freight  Association,  appellees. 

Mr.  E.  J.  Phelps  for  the  Freight  Association  and  the  New 
York  Central  and  Hudson  River  Railroad  Companv,  ap- 
peDees, 


" 


t  i 


UNITED   STATES   V.  FREIGHT   ASSOCIATION. 


663 


Opinion  of  the  Court. 

Mr.  Attorney  General  concluded  for  appellants. 

Mr.  W.  F.  Guthrie  filed  a  brief  on  behalf  of  the  Burlington 
and  Missouri  River  Railroad  Company. 

Mr.  Lloyd  W.  Bowers  filed  a  brief  for  the  Fremont,  Elk- 
horn  and  Missouri  Valley  Railroad  Company  and  the  Sioux 
City  and  Pacific  Railroad  Company. 

Mr.  Justice  Peckham,  after  stating  the  facts,  delivered 
the  opinion  of  the  court. 

The  defendants  object  to  the  hearing  of  this  appeal,  and 
ask  that  It  be  dismissed  on  the  ground  that  the  Trans-Mis- 
souri Freight  Association  has  been  dissolved  by  a  vote  of  its 
members  since  the  judgment  entered  in  this  suit  in  the  court 
below.  A  further  ground  urged  for  the  dismissal  of  the  ap- 
peal is  that  the  requisite  amount  (over  one  thousand  dollars) 
is  not  m  controversy  in  the  suit,  and  that  as  an  appeal  would 
only  he  to  this  court  in  this  character  of  suit  under  the  act 
of  March  3,  1891,  c.  517,  28  Stat.  826,  where  that  ammmt  is 
m  controversy,  the  appeal  should  be  dismissed. 

As  to  the  first  ground,  we  think  the  fact  of  the  dissolution 
of  the  association  does  not  prevent  this  court  from  taking  cog- 
nizance of  the  appeal  and  deciding  the  case  upon  its  merits 

[308]  The  prayer  of  the  bill  filed  in  this  suit  asks  not  only 
for  the  dissolution  of  the  association,  but,  among  other  things, 
that  the  defendants  should  be  restrained  from  continuing  in 
a  like  combination,  and  that  they  should  be  enjoined  from 
further  conspiring,  agreeing  or  combining  and  acting  to- 
gether to  maintain  rules  and  regulations  and  rates  for  carry- 
ing freight  upon  their  several  lines,  etc.    The  mere  dissolu- 
tion of  the  association  is  not  the  most  important  object  of  this 
litigation.    The  judgment  of  the  court  is  sought  upon  the 
question  of  the  legality  of  the  agreement  itself  for  the  carry- 
ing out  of  which  the  association  was  formed,  and  if  such 
agreement  be  declared  to  be  illegal,  the  court  is  asked  not 
only  to  dissolve  the  association  named  in  the  bill,  but  that  the 
defendants  should  be  enjoined  for  the  future. 

The  defendants,  in  bringing  to  the  notice  of  the  court  the 
fact  of  the  dissolution  of  the  association/ take  pains  to  show 
that  such  dissolution  had  no  connection  or  relation  whatever 


"*^ 


664 


166   UNITED   STATES   REPORTS,  308. 
Opinion  of  the  Court. 


with  the  pendency  of  this  suit,  and  that  the  association  was 
not  terminated  on  that  account  They  do  not  admit  the 
illegality  of  the  agreement,  nor  do  they  allege  their  purpose 
not  to  enter  into  a  similar  one  in  the  immediate  future.  On 
the  contrary,  by  their  answers  the  defendants  claim  that  the 
agreement  is  a  perfectly  proper,  legitimate  and  salutary  one, 
and  that  it  or  one  like  it  is  necessary  to  the  prosperity  of  the 
companies.  If  the  injunction  were  limited  to  the  prevention 
of  any  action  by  the  defendants  under  the  particular  agree- 
ment set  out,  or  if  the  judgment  were  to  be  limited  to  the 
dissolution  of  the  association  mentioned  in  the  bill,  the  relief 
obtained  would  be  totally  inadequate  to  the  necessities  of  the 
occasion,  provided  an  agreement  of  that  nature  were  deter- 
mined to  be  illegal.  The  injunction  should  go  further,  and 
enjoin  defendants  from  entering  into  or  acting  under  any 
similar  agi*eement  in  the  future.  In  other  words,  the  relief 
granted  should  be  adequate  to  the  occasion. 

As  an  answer  to  the  fact  of  the  dissolution  of  the  associa- 
tion, it  is  shown  on  the  part  of  the  Government  that  these 
very  defendants,  or  most  of  them,  immediately  entered  into  a 
substantially  similar  agreement,  which  was  to  remain  in  force 
for  [309]  a  certain  time,  and  under  which  the  companies 
acted,  and  in  regard  to  which  it  does  not  appear  that  they 
are  not  still  acting.  If  the  mere  dissolution  of  the  associa- 
tion worked  an  abatement  of  the  suit  as  to  all  the  defendants, 
as  is  the  claim  made  on  their  part,  it  is  plain  that  they  have 
thus  discovered  an  effectual  means  to  prevent  the  judgment 
of  this  court  being  given  upon  the  question  really  involved 
in  the  case.  The  defendants  having  succeeded  in  the  court 
below,  it  would  only  be  necessary  thereafter  to  dissolve  their 
association  and  instantly  form  another  of  a  similar  kind,  and 
the  fact  of  the  dissolution  would  prevent  an  appeal  to  this 
court  or  procure  its  dismissal  if  taken.  This  result  does  not 
and  ought  not  to  follow.  Although  the  general  rule  is  that 
equity  does  not  interfere  simply  to  restrain  a  possible  future 
violation  of  law,  yet  where  parties  have  entered  into  an 
illegal  agi*eement  and  are  acting  under  it,  and  there  is  no 
adequate  remedy  at  law  and  the  jurisdiction  of  the  court  has 
attached  bv  the  filing  of  a  bill  to  restrain  such  or  any  like 
action  under  a  similar  agreement,  and  a  trial  has  been  had, 


UNITED   STATES  V.  FREIGHT   ASSOCIATION. 


665 


. 


Opinion  of  the  Court 

and  judgment  entered,  the  appellate  jurisdiction  of  this  court 
is  not  ousted  by  a  simple  dissolution  of  the  association, 
effected  subsequently  to  the  entry  of  judgment  in  the  suit. 

Private  parties  may  settle  their  controversies  at  any  time, 
and  rights  which  a  plaintiff  may  have  had  at  the  time  of  the 
commencement  of  the  action  may  terminate  before  judgment 
is  obtained  or  while  the  case  is  on  appeal,  and  in  any  such 
case  the  court,  being  informed  of  the  facts,  will  proceed  no 
further  in  the  action.  Here,  however,  there  has  been  no  ex- 
tinguishment of  the  rights  (whatever  they  are)  of  the  public, 
the  enforcement  of  which  the  Government  has  endeavored  to 
procure  by  a  judgment  of  a  court  under  the  provisions  of  the 
act  of  Congress  above  cited.  The  defendants  cannot  foreclose 
those  rights  nor  prevent  the  assertion  thereof  by  the  Govern- 
ment as  a  substantial  trustee  for  the  public  under  the  act  of 
Congress,  by  any  such  action  as  has  been  taken  in  this  case. 
By  designating  the  agreement  in  question  as  illegal  and  the 
alleged  combination  as  an  unlawful  one,  we  simply  mean  to 
say  that  such  is  the  character  of  the  agreement  as  claimed  by 
[310]  the  Government.  That  question  the  Government  has 
the  right  to  bring  before  the  court  and  obtain  its  judgment 
thereon.  Whether  the  agreement  is  of  that  character  is  the 
question  herein  to  be  decided. 

We  think,  therefore,  the  first  ground  urged  by  defendants 
for  the  dismissal  of  the  appeal  is  untenable. 

We  have  no  difficulty  either  in  sustaining  the  jurisdiction 
of  this  court  in  regard  to  the  second  ground,  that  of  the 
amount  in  controversy  in  the  suit. 

The  bill  need  not  state,  in  so  many  words,  that  a  certain 
amount  exceeding  one  thousand  dollars  is  in  controversy  in 
order  that  this  court  may  have  jurisdiction  on  appeal.  The 
statutorv  amount  must  as  a  matter  of  fact  be  in  controversv, 
yet  that  fact  may  appear  by  affidavit  after  the  appeal  is 
taken  to  this  court,  Whiteside  v.  Haselton^  110  U.  S.  296; 
Red  River  Cattle  Co,  v.  Needham^  137  U.  S.  632,  or  it  may  be 
made  to  appear  in  such  other  manner  as  shall  establish  it  to 
the  satisfaction  of  the  court.  A  stipulation  between  the  par- 
ties as  to  the  amount  is  not  controlling,  but  in  the  discretion 
of  the  court  it  may  be  regarded  in  a  particular  case,  and  with 
reference  to  the  other  facts  appearing  in  the  record  as  suffi- 


iJiii 


^^  186  UNITED  STATES  REPORTS,  310. 

Opinion  of  tlie  Court. 

able  rates  to  be  received  bv!IT^      maintaining  reason- 
amement    «n7 tiTl-     ,  {•  «>mpany  executing  the 

■grcement,  and  the  stipulation  entered   into  between   th» 
parties  hereto  shows  that  thp  <l«ii„  f^     u^    ■      °^'"^"  ^'^^ 

agreement  somade,  the  Government  alleges  is  ill!ri      xS 

representee!  in  the  agreement.    Such  a  n^uU   if  ic.    i  •     T 

agreement  or  in  the  rLl^tl         •  ?•        ™«ntenance  of  the 
'A^V  1  *"*  *"  maintain  it  or  something  lite  it 

amount  to  over  a  thoi.  J„r1  Zn       ■  '   "  ''**  aggregate, 

is  sufficient  iT^re^T^^^^Zl  r  '"^  ''"  '^^^^    ^''^ 

involved  in  this  suit  the  validkv  and  tt  ^^7/^        '"^ 
ment,  or  one  similar  to  it     0.f  n*  .k  **"''  ''«^- 

springs  the  ability  as  well  as  tS2h/t      '??"'"'  ^^''^^^ 
.n<i  ^„k  .    .  *  "Sht  to  maintain  these  rat«j. 

and  each  company  is  interested  in  maintaining  theTaliSS 

alattT"'"*  '"  '""^  ^""^  ^^♦«"*  -  *"  the  othe"     2 
■gainst  the  agreement  the  Government  reDresentrlt 

terest  of  the  public,  and  tiius  the  parllToppl, 'i;; 


UNITED   STATES   V.  FREIGHT   ASSOCIATION. 


667 


Opinion  of  the  Court. 

each  other— the  one  in  favor  of  dissolving  and  the  other  of 
maintaining  the  agreement. 

Unlike  the  case  of  Gibson  v.  Shufeldt,  122  U.  S.  27,  and 
the  cases  therein  cited  in  the  opinion  of  the  court  delivered  by 
Mr.  Justice  Gray,  the  defendants  here  are  jointly  interested 
in  the  question,  and  it  is  not  the  case  of  a  fund  amounting  to 
more  than  the  requisite  sum  which  is  to  be  paid  to  different 
parties  in  sums  less  than  the  jurisdictional  amount 

For  the  reasons  above  stated,  we  think  the  jurisdictional 
fact  in  regard  to  each  defendant  appears  plainly  and  neces- 
sarily from  the  record  and  the  stipulation,  and  that  the  duty 
is  thus  laid  upon  this  court  to  entertain  the  appeal. 

Coming  to  the  merits  of  the  suit,  there  are  two  important 
questions  which  demand  our  examination.  They  are,  first, 
whether  the  above-cited  act  of  Congress  (called  herein  the 
Trust  Act)  applies  to  and  covers  common  carriers  by  railroad ; 
[312]  and,  if  so,  second,  does  the  agreement  set  forth  in  the' 
bill  violate  any  provision  of  that  act? 
As  to  the  first  question : 

The  language  of  the  act  includes  every  contract,  combina- 
tion m  the  form  of  trust  or  otherwise,  or  conspiracv,  in 
restraint  of  trade  or  commerce  among  the  several  States  or 
with  foreign  nations.    So  far  as  the  very  terms  of  the  statute 
go,  they  apply  to  any  contract  of  the  nature  described.    A 
contract  therefore  that  is  in  restraint  of  trade  or  commerce  is  ' 
by  the  strict  language  of  the  act  prohibited  even  though  such 
contract  is  entered  into  between  competing  common  carriers 
by  railroad,  and  only  for  the  purposes  of  thereby  affecting 
traffic  rates  for  the  transportation  of  persons  and  property. 
If  such  an  agreement  restrain  trade  or  commerce,  it  is  pro- 
hibited by  the  statute,  unless  it  can  be  said  that  an  agree- 
ment, no  matter  what  its  terms,  relating  only  to  transporta- 
^on  cannot  restrain  trade  or  commerce.    We  see  no  escape 
from  the  condusion  that  if  any  agreement  of  such  a  nature 
does  restrain  it,  the  agreement  is  condemned  by  this  act      It 
cannot  be  denied  that  those  who  are  engaged  in  the  transpor- 
tation of  persons  or  property  from  one  State  to  another  ai« 
engaged  m  interstate  commerce,  and  it  would  seem  to  follow 
that  if  such  persons  enter  into  agreements  between  thera- 
f»elves  in  regard  to  th^  compensation  to  be  secured  from  ihm 


t 


668 


166  UNITED  STATES  REPORTS,  312. 


I 


Opinion  of  the  Court 

owners  o*  the  articles  transported,  such  agreement  would  at 
least  relate  to  the  business  of  commerce,  and  might  more  or 
less  restrain  it.    The  point  urged  on  the  defendants'  part  is 
that  the  statute  was  not  really  intended  to  reach  that  kind  of 
an  agreement  relating  only  to  traffic  rates  entered  into  by 
competing  (H)mmon  carriers  by  railroad ;  that  it  was  intended 
to  reach  only  those  who  were  engaged  in  the  manufacture  or 
sale  of  articles  of  commerce,  and  who  by  means  of  trusts,  com- 
binations  and  conspiracies  were  engaged  in  affecting  the  sup- 
ply or  the  price  or  the  place  of  manufacture  of  such  articles. 
The  terms  of  the  act  do  not  bear  out  such  construction. 
Railroad  companies  are  instruments  of  commerce,  and  their 
business  is  commerce  itself.     State  Freight  Tax  case,  15 
Wall  232,  275;  Telegraph  Go.  v.  Texas,  105  U.  S.  460,  464. 
[3131  An  act  which  prohibits  the  making  of  every  contract, 
etc.,  in  restraint  of  trade  or  commerce  among  the  several 
States,  would  seem  to  cover  by  such  language  a  contract  be- 
tween competing  railroads,  and  relating  to  traffic  rates  for 
the   transportation   of   articles   of   commerce   between    the 
States,  provided  such  contract  by  its  direct  effect  produces  a 
restraint  of  trade  or  commerce.    What  amounts  to  a  re- 
straint within  the  meaning  of  the  act  if  thus  construed  need 
not  now  be  discussed. 

We  have  held  that  the  Trust  Act  did  not  apply  to  a  com- 
pany engaged  in  one  State  in  the  refining  of  sugar  under 
the  circumstances  detailed  in  the  case  of  United  States  v. 
E.  0.  Knight  Company,  156  U.  S.  1,  because  the  refining  of 
sugar  under  those  circumstances  bore  no  distinct  relation  to 
commerce  between  the  States  or  with  foreign  nations.  To 
exclude  agreements  as  to  rates  by  competing  railroads  for 
tiie  transportation  of  articles  of  commerce  between  the 
States  would  leave  little  for  the  act  to  take  effect  upon. 

Nor  do  we  think  that  because  the  sixth  section  does  not 
forfeit  the  property  of  the  railroad  company  when  merely 
engaged  in  the  transportation  of  property  owned  under  and 
which  was  the  subject  of  a  contract  or  combination  men- 
tioned m  the  first  section,  any  ground  is  shown  for  holding 
the  rest  of  the  act  inapplicable  to  carriers  by  railroad  It 
IS  not  perceived  why,  if  the  rest  of  the  act  were  intended 
to  apply  to  such  a  carrier,  the  sixth  section  ought  necessarily 


UNITED   STATES  V,  FREIGHT  ASSOCIATION.  669 

Opinion  of  the  Court. 

to  have  provided  for  the  seizure  and  condemnation  of  the 
locomotives  and  cars  of  the  carrier  engaged  in  the  trans- 
portation between  the  States  of  those  articles  of  commerce 
owned  as  stated  ,n  that  sixth  section.  There  is  some  justice 
and  propriety  in  forfeiting  those  articles,  but  we  see  none  in  » 
forfeiting  the  locomotives  or  cars  of  the  carrier  simply  be- 
cause  such  carrier  was  transporting  articles  as  described 

fW  .r^  ?^u  *"  """*''"''  ^^^"  *^°"S^  *»>«  ««"ier  knew 
that  they  had  been  manufactured  or  sold  mider  a  contract 
or  combination  m  violation  of  the  act.  In  the  case  of  a  sim- 
ple^ transportation  of  such  articles  the  carrier  would  be 
mv  fK  "**  r1il*,*T  "*  ^°y  ''^  ^'^^  provisions  of  the  act. 
<2\  M '  ^^*t'  ^°'*'  '''"»'•*  ^*  *"""^  *at  the  sixth  sec- 
tion should  provide  for  the  forfeiture  of  the  property  of  the 

To  subject  the  locomotives  and  cars  to  forfeiture  under  such 
circumstances  might  also  cause  great  confusion  to  the  gen- 
eral business  of  the  carrier  and  in  that  way  inflict  unmerited 
punishment  upon  the  innocent  owners  of  other  property  in 
the  course  of  transportation  in  the  same  cars  and  drawn  by 

I"^  !f"'V*^«"«t'^««-  K.the  company  itself  violates  the 
act  the  penalties  are  sufficient  as  provided  for  therein. 

But  It  IS  maintained  that  an  agreement  like  the  one  in 
question  on  the  part  of  the  railroad  companies  is  authorizeS 
by  the  Commerce  Act,  which  is  a  special  statute  applicable 
only  to  railroads,  and  that  a  construction  of  the  Trust  Act 
(which  IS  a  general  act)  so  as  to  include  within  its  provi- 
sions the  case  of  railroads,  carries  with  it  the  repeal  by  im- 
plication of  so  much  of  the  Commerce  Act  as  authorized  the 
agreement.    It  is  added  that  there  is  no  langua^  b  the 
Trust  Act  which  is  sufficiently  plain  to  indicate  fpurpt 
to  repeal  those  provisions  of  the  Commerce  Act  which  S 
mit  the  agreement;  that  both  acts  may  stand,  the  speciafor 
Commerce  Act  as  relating  solely  to  railroads  aM  theS 
proper  regulation  and  management,  while  the  later  and  gen- 
eral act  will  apply  to  all  contracts  of  the  nature  therein  de- 
scribed, entered  into  by  any  one  other  than  competing  com- 
^fTraTr  ^""'■''''  *""•  tJ'^P-PO-of  estabUshinlrrs 

.ssaTd  that  if  r^       '.;"!;•  •  ^°  ^^  ""«  ^^^^^  ^^^  reasoLgit 
IS  said  that  if  Congress  had  intended  to  in  any  mamier  aff^t 


■     i 


670 


166  UNITED   STATES   KEPORTS,  314. 


Opinion  of  tlie  Court. 

the  railroad  carrier  as  goveraed  by  the  Commerce  Act,  it 
would  have  amended  that  act  directly  and  in  terms,  and 
not  have  left  it  as  a  question  of  construction  to  be  deter- 
mined whether  so  important  a  change  in  the  commerce  stat- 
ipite  had  been  accomplished  by  the  passage  of  the  statute  re- 
lating to  trusts. 

The  first  answer  to  this  argument  is  that,  in  our  opinion, 
the  Commerce  Act  does  not  authwize  an  agreement  of  this 
mature.    It  may  not  in  terms  prohibit,  but  it  is  far  from 
conferring  either  directly  or  by  implication  any  authority 
to  make  it.     If  the  agreement  be  legal  it  does  not  owe  its 
[815]    validity   to  any   provision   of   the   Commerce   Act, 
and  if  illegal  it  is  not  made  so  by  that  act.    The  fifth  sec- 
tion prohibits  what  is  termed  "pooling,"  but  there  is  no 
express  provision  in  the  act  prohibiting  the  maintenance  of 
traffic  rates  among  competing  roads  by  making  such   an 
agreement  as  this,  nor  is  there  any  provision  which  permits 
it.    Prior  to  the  passage  of  the  act  the  companies  had  some- 
times endeavored  to  regulate  competition  and  to  maintain 
rates  by  pooling  arrangements,  and  in  the  act  that  kind  of 
an   arrangement  was   forbidden.    After  its  passage  other 
devices  were  resorted  to  for  the  purpose  of  curbing  compe- 
tition and  maintaining  rates.    The  general  nature  of  a  con- 
tract like  the  one  before  us  is  not  mentioned  in  or  provided 
lor  by  the  act.    The  provisions  of  that  act  look  to  the  pre- 
vention of  discrimination,  to  the  furnishing  of  equal  facili- 
ties for  the  interchange  of  traffic,  to  the  rate  of  compensation 
for  what  is  termed  the  long  and  the  short  haul,  to  the  attain- 
ment of  a  continuous  passage  from  the  point  of  shipment  to 
the  point  of  destination,  at  a  known  and  published  schedule, 
and,  in  the  language  of  counsel  for  defendants,  "  without 
reference  to  the  location  of  those  points  or  the  lines  over 
which  it  is  necessary  for  the  traffic  to  pass,"  to  procuring 
uniformity  of  rates  charged  by  each  company  to  its  patrons, 
and  to  other  objects  of  a  similar  nature.    The  act  was  not 
directed  to  the  securing  of  uniformity  of  rates  to  be  charged 
by  competing  companies,  nor  was  there  any  provision  therein 
as  to  a  maximum  or  minimum  of  rates.    Competing  and 
non-connecting  roads  are  not  authorized  by  this  statute  to 
make  an  agreement  like  this  one. 


-'--i 


I  ,% 

f  i 


UNITED  STATES  V.  FREIGHT  ASSOCIATION.  671 

Opinion  of  the  Court. 
As  th^e  Commerce  Act  does  nnt  Q«*k^  •      xi  • 

It  IS  plain,  also,  that  an  aniendiDent  of  thVn 
would  not  be  an  appropriate  «  etld  of  entS^h'T  '^^ 

of  or  oonibStSstt  i'SadVa'd  ""  J/'"  '^"^'**'*^ 
[316]  prohibition  of  ot£,r  .^  ."racis  h^,H      f^"^  *"  '^' 

to  transportation.    The  omisin    thp    f      '  ""^'""^ 

Commerce  \ct  fiimil"    """*'''*"''  therefore,  to  amend  the 

statute  Zinl^ZSToVr^J"!''  '^'"'"'"^  ''^''  ^^e  later 

the  regulation  and  government  Xn     Z  '  ^"'''''  '^'^  *«•• 
treated  of  therein    it  1?    !  k      '^"''"^"^^  VP«n  the  subjects 

a  complete  a  r^ertcTr  of  J^^^        '''''  '*  *""•-^''- 

.re  to  govern  them  i  «„  ca^s  and  th"f  "^'f ""  ^"^'''^ 
in  relation  to  them  mus  ,  S'"',^^*  fj;"^-^"^"'  act 

repeal  some  provision  of  hat  stat^ft!  tk  f^^  "'"^"'^  '>' 
cover  all  cases  concerning  trans^rt^n^^^^^  sta  ute  joes  not 
contracts  relating  thereto  ?"!P<'"'''i«n  by  railroad  and  aU 
an  extensive  field.  ^'^  "*»*  ^""^^  *«  ""^er  such 

bll^tTcSi^rtTe  r""-:  *-  *^'^  ^-  -^  ^-e 

Act,  although  wT  a^lt  «w  V  P""^**  *«  Commerce 
agreement  !f  tZ  kTnd  had  .T'  ^  '^"^  ''""'^^  *•"»*  «> 
known  prior  to  the  pis  we  of  tl%^"  '""'*"  *"•*  P^W'^'y 
had  been  known  to  S«-ti  ST  ^"""'"'^  ^'''-  ^^  ^^  ^^ 
that  time.  wWle  proS^'  he  Zw  a"  P"''''*  ''  »* 
no  reason  for  assuming  that  when  ^  arrangements,  is 

meant  to  except  aU  clnfraSoT  r    .  ^"T"^  '^"^  '^^^^  ^^t  i* 

to  traffic  rates^fromr  :;rt Lro'rst^^^^^        ^'^  ^^/^ 
Its  own  reasons,  even  if  aware  „f  fk        ■.  Congress  for 

-nts,  did  not 'see  fit  Ihl^  pV^d 'tST  ""'  "^'^  ''^'-- 
prohibit  them  with  re^rd  J     n      .        Commerce  Act  to 

the  act  was  not  In  a3tkte  S      r™''"""  *'""''  '"^*' 
on  the  subject.    And  af Z^til^^  f*""  ^"""^^  legislation 


672 


1«8  UNITED  STATES   REPORTS,  316. 


Opinion  of  the  Court, 
subject  at  all.     Finally  it  passed  this  Trust  Act,  and  in  our 
opinion  no  obstacle  to  its  application  to  contracts  relating  to 
teansportation  by  railroads  is  to  be  found  in  the  fact  that 

proWbiS.''""^  "*'''  '"'•'  agreements  was  not  in  terns 
dollj'tw  r^.  *''"*  '^'  •'"•^^^  ^  ^"g^  "ho'^  beyond  a 

iS  hiL^  Z  ^^l^^f  •'<'«°t«  "^^'^r  in  considerable  detail  to 
t^  S7  *!  *T  °'  ^''^  int«>d»<=tion  in  the  Senate  to 

tli^T"^^  -^^  *u"  '"*  ""^"""y  P«^  th«  Senate  the 
statute.    On  Its  receipt  by  the  House  that  body  proposed  an 
amendment,  by  which  it  was  in  terms  made  un  WuTtTente? 
»to  any  contract  for  the  purpose  of  preventing  competition 
.    t^nsportation   of  pei-sons  or  property.    As  thu" 
amended  the  bUl  went  back  to  the  S^naS,  which  it«J? 
amended  the  amendment  by  making  the  act  ap^ly  to  anysiTch 
attract  as  tend^  to  raise  prices  for  transporUtionXve 
what  was  just  and  reasonable.    This  amendment  by  the  Sen! 

hwh.fl!^"'^^*"*  P™P*^^  **y  ^^"^  H""^^  ^««  disagreed  to 
by  that  body.  The  amendments  were  then  considered  by  con- 
ference committees,  and  the  firrt  conference  committee  re- 
Th?™2  "^- '"  ^''T  ""^  "*"  <"nendment  of  the  Senate, 
lin. Jl^  K-  T^  *^'T^  ^'^  ""'*  ""<'*''«'•  committee  ap- 
rveiln!  "fr^  t^^t-^e  out  both  amendments  and 
leave  the  bill  as  it  stood  when  it  first  passed  the  Senate  and 
that  report  was  finally  adopted,  and  the  bill  thus  passed 

bil^i!"v!/*  *?K  ''f "'"'  *^"""«  *''"  '^""""^  ^^^  ^hen  the 
bill  was^fore  the  Senate  and  the  House,  both  on  its  original 

parage  b>  the  Senate  and  upon  the  rep;rt  from  JheZf" 

^^rH  ?Tk  T' '  '.'  "^^  *'''•*  ^""""^  ^^'^^  ^«™  declared  in 
regard  to  the  legal  import  of  the  act    Some  of  the  membei^ 

S.IM^T,''"^*!"  P'"**'^  ^^"""^  ^*'"*'*  «^  «'^1  that  con- 
tracts m  relation  to  the  transportation  of  persons  and  property 

r^":^*   1"/''  ''"•    ^""^  *''»"^^''^«  amendmenfu? 
necessary  as  the  language  of  the  act  already  covered  it  and 

some  refused  to  vote  for  the  amendment  or  for  the  bill  if  the 

amendments  were  adopted  on  (he  ground  that  it  would  then 

interfere  with  the  Interstate  Commerce  Act,  and  tenS  to  ci^ 


UNIIEIi   STATES   V.  FREIGHT   ASSOCIATION.  673 

Opinion  of  the  Court, 
ate  confusion  as  to  the  meaning  of  each  act.     Senator  Hoar 
who  was  a  member  of  the  first  committee  of  confei^n^  fa^m 
the  benate)   when  reporting  the  insult  arrived  at  by  the  juSi 
ciary  committee  recommending  the  adoption  of  L  nli 
amendment,  said:  "The  other  clause  of  the  House  amenT 

pose  of  [318]  preventing  competition  in  the  transportation 
iTTu  Z  r^^"''  *'•'""  "»*^  State  or  Territory  into  t 

asmul  Lh  "*  ''*'■  *^'**  '"'  '^'''  t^«n«Portation  is 

^le  of  J.^       '  '"T'''''  "'"^'"^  '^^  ^^^••'''  St«te«  «s  the 
sale  of  goods  in  one  State  to  be  delivered  in  another   and 

Uierefore,  that  it  is  covered  already  by  the  bill  as  it  stands' 

But   here  is  no  harm  in  agreeing  in  an  amendment  wh  ch  e7 

pressly  describes  it,  and  an  objection  to  the  amendment  milt' 

we;s:;i« '' ''-  y-'-  -"^ — ^^^  ^^ 

Looking  simply  at  the  history  of  the  bill  from  the  time  k 
was  inh-odnced  in  the  Senate  until  it  was  finally  pa^T  L 
«-dd  be  impossible  to  say  what  wei^  the  views  of  a  mjoritv 
of  the  members  of  each  house  in  relation  to  the  meTnii  "5 

'ot  riee  wirr  t  ^t'  ^'^*  -  """^-''^  »^  bo^hriTd  i 

lot  agree  w  th  Senator  Hoar  in  his  views  as  to  the  construe 
tion  to  be  given  to  the  act  as  it  passed  the  Senate    lu  Zt' 

members  had  various  views,  and  we  are  left  to  determine  t},« 
neaning  of  this  act,  as  we  determine  the  meaning  o    ot^er 
acts  from  the  language  used  therein.  ^ 

Rmlroad  Company  91  TT   S   7o   Ta     au  •,    ^'""^^^otfic 
?.  How  0  24  Tn    nV  ;  T       '       '  ^^<l'^<iffe  v.  Williams, 

V^;T    J  i/      T^'  ^'^^  '^"'*'**'"  ^f'i'^^^Jl  y-  Great  Works 
Mtllniff  rf.  Manufacturing  Company,^  Storv  648  6lT  O, 
V.  Hertford  ColUge,  3  Q.  B.  D.  693  707  '        '  ^^"^ 

The  reason  is  that  it  is  impossible  to  determine  with  cer 


Ifl»(f"l(1(llf 


674 


166   UNITED  STATES   REPORTS,  319. 
Opinion  of  the  Court. 


of  a  legislative  bcxly  that  pa^^sed  it  by  resorting  to  the 
speeches  of  individual  members  thereof.  Those  who  did  not 
speak  may  not  have  agreed  with  those  who  did:  and  those 
who  spoke  might  differ  from  each  other;  the  result  being 
that  the  only  proper  Avay  to  construe  a  legislative  act  is  from 
the  language  used  in  the  act,  and,  upon  occasion,  by  a  resort 
[319]  to  the  history  of  the  times  when  it  was  passed.  (Cases 
cited,  sttpra.)  If  such  resort  be  had,  we  are  still  unable  to  see 
that  the  railroads  were  not  intended  to  be  included  in  this 
legislation. 

'  It  is  said  that  Congress  had  very  different  matters  in  view 
and  very  different  objects  to  accomplish  in  the  passage  of  the 
act  in  question ;  that  a  number  of  coinbinations  in  the  form  of 
trusts  and  conspiracies  in  restraint  of  trade  were  to  be  found 
throughout  the  country,  and  that  it  was  impossible  for  the 
state  governments  to  successfully  cope  with  them  because  of 
their  commercial  tliaracter  and  of  their  business  extension 
through  the  different  States  of  the  Union.  Among  these 
trusts  it  was  said  in  Congress  were  the  Beef  Trust,  the  Stand- 
ard Oil  Trust,  the  Steel  Trust,  the  Barbed  Fence  AVire  Trust, 
the  Sugar  Trust,  the  Cordage  Trust,  the  Cotton  Seed  Oil 
Trust,  the  Whiskey  Trust  and  many  others,  and  these  trusts 
it  was  stated  had  assumed  an  importance  and  had  acquired  a 
power  which  were  dangerous  to  the  whole  country,  and  that 
their  existence  was  directly  antagonistic  to  its  peace  and  pros- 
perity. To  combinations  and  conspiracies  of  this  kind  it  is 
contended  that  the  act  in  tjuestion  was  directed,  and  not  to 
the  combinations  of  competing  railroads  to  keep  up  their 
prices  to  a  i*easonable  sum  for  the  transportation  of  persons 
and  property.  It  is  true  that  many  and  various  trusts  werA 
in  existence  at  the  time  of  the  passage  of  the  act,  and  it  was 
probably  sought  to  cover  them  by  the  provisions  of  the  act. 
Many  of  them  had  rendered  themselve  offensive  by  the  man- 
ner in  which  they  exercised  the  great  power  that  combined 
capital  gave  them.  But  a  further  investigation  of  "  the  his- 
tory of  the  times  "  shows  also  that  those  trusts  were  not  the 
only  associations  controlling  a  great  combination  of  capital 
which  had  caused  complaint  at  the  manner  in  which  their 
business  was  conducted.  There  were  many  and  loud  com- 
plaints from  some  i)ortions  of  the  public  regarding  the  rail- 


. 


UNITED   STATES   V.  FREIGHT  ASSOCIATION.  675 

Opinion  of  tlie  Court. 

roads  and  the  prices  they  were  charging  for  the  service  they 
rendered,  and  it  was  alleged  that  the  prices  for  the  transpor- 
tation of  persons  and  articles  of  commerce  were  unduly  and 
improperly  enhanced  by  combinations  among  the  different 
[330    roads.     Whether  these  complaints  were  well  or  ill 
founded  we  do  not  presume  at  this  time  and  under  these  cir- 
cumstances to  determine  or  to  discuss.    It  is  simply  for  the 
purpose  of  answering  the  statement  that  it  was  only  to  trusts 
of  the  nature  above  set  forth  that  this  legislation  was  di- 
rected, that  the  subject  of  the  opinions  of  the  people  in  regard 
to  the  actions  of  the  railroad  companies  in  this  particular  is 
referred  to     A  reference  to  this  history  of  the  times  does  not, 
as  we  think,  furnish  us  with  any  strong  reason  for  believing 
that  It  was  only  trusts  that  were  in  the  minds  of  the  membeii 
of  Congress,  and  that  railroads  and  their  manner  of  doing 
business  were  wholly  excluded  therefrom. 
Our  attention  is  also  called  to  one  of  the  rules  for  the  con- 

tW  r,  ."'"lu'1.  ^''"*  ^^'  been  approved  by  this  court; 
that  wh.  e  ,t  IS  the  duty  of  courts  to  ascertain  the  meaning  of 
the  legisla  ure  from  the  words  used  in  the  statute  and  the 
subject-matter  to  which  it  relates,  there  is  an  equal  duty  t« 
restrict  the  meaning  of  general  words,  whenever  it  is  found 
necessary  to  do  so  in  order  to  carry  out  the  legislative  intent 

frr:;-^/-"^'"; "  ^^*-  ^''^  ^^«'-  ^^^«  -  ^~S 

Bank  of  Chicago,  142  U.  S.  644,  650;  McKee  v.  Vnited 
States,  164  U.  S.  287.  It  is  therefore  urg^d  that  if,  bv  a  s"  rS 
construction  of  the  language  of  this  statL  it  mav 'be'made  to 
inch.de  railroads,  yet  it  is  evident  from  other  considerations 

IZldtTTri'^'''  '^V'^^  '"^''"'"^  -^f  *he  legislatui* 

exied  7  T^'ru.  '^'^  ™"^*  *">•  that  i^son  be 
excluded.  It  IS  said  that  this  meaning  is  plainly  to  be  in- 
ferred, because  of  fundamental  differences  both  in  an  eco- 
nomic way  and  before  the  law  between  trade  and  manufoc- 

CnVthrd'T''  ^"'  ""T'  transportation  on  the  oter. 
Among  these  differences  are  the  public  character  of  railroad 
business,  and  as  a  result  the  peculiar  power  of  control  a^d 
regu  ation  possessed  by  the  State  over  railroad  comp Lies 
The  trader  or  manufacturer,  on  the  other  hand,  carries  on  an 
entirely  private  business,  and  can  sell  to  whom  he  pleases  he 
may  charge  different  prices  for  the  same  article  to  ditfe;^nt 


676 


166   UNITED  STATES   REPORTS,  321. 


Opinion  of  the  Court. 

individuals;  he  may  charge  as  much  as  he  can  get  for  the 
article  in  which  he  deals,  whether  the  price  be  reasonable  or 
[SiSl]  unreasonable;  he  may  make  such  discrimination  in 
his  business  as  he  chooses,  and  he  may  cease  to  do  any  busi- 
ness whenever  his  choice  lies  in  that  direction ;  while,  on  the 
contrary,  a  railroad  company  must  transport  all  persons  and 
property  that  come  to  it,  and  it  must  do  so  at  the  same  price 
for  the  same  service,  and  the  price  must  be  reasonable,  and  it 
cannot  at  its  will  discontinue  its  business.  It  is  also  urged 
that  there  are  evils  arising  from  unrestricted  competition  in 
regard  to  railroads  which  do  not  exist  in  regard  to  any  other 
kind  of  property,  that  it  is  so  admitted  by  the  latest  and  best 
writers  on  the  subject,  and  that  practical  experience  of  the 
results  of  unrestricted  competition  among  railroads  tends 
directly  to  the  same  view;  that  the  difference  between  rail- 
road property  on  the  one  hand,  and  all  other  kinds  of  prop- 
erty on  the  other  hand,  is  so  plain  that  entirely  different  eco- 
nomic results  follow  from  unrestricted  competition  among 
railroads  from  those  which  obtain  in  regard  to  all  other  kinds 
of  business.  It  is  also  said  that  the  contemporaneous  indus- 
trial history  of  the  country,  the  legal  situation  in  regard  to 
railroad  properties  at  the  time  of  the  enactment  of  this 
statute,  its  legislative  history,  the  ancient  and  constantly 
maintained  different  legal  effect  and  policy  regarding  rail- 
way transportation  and  ordinary  trade  and  manufacture, 
together  with  a  just  regard  for  interests  of  such  enormous 
magnitude  as  are  represented  by  the  railroads  of  the  country, 
all  tend  to  show  that  Congress  in  passing  the  Anti-Trust  Act 
never  could  have  contemplated  the  inclusion  of  railroads 
within  its  provisions.  It  is,  therefore,  claimed  to  be  the  duty 
of  the  court,  in  carrying  out  the  rule  of  statutory  construc- 
tion, above  started,  to  restrict  the  meaning  of  these  general 
words  of  the  statute  which  would  include  railroads,  because, 
from  the  considerations  above  mentioned,  it  is  plain  that 
Congress  never  intended  that  railroads  should  be  included. 
Many  of  the  foregoing  assertions  may  be  well  founded, 
while  at  the  same  time  the  correctness  of  the  conclusions 
sought  to  be  drawn  therefrom  need  not  be  conceded.  The 
points  of  difference  between  the  railroad  and  other  corpora- 
tions are  many  and  great.    It  cannot  be  disputed  that  a  rail- 


UNITED   STATES  V,  FREIGHT   ASSOCIATION. 


677 


S 


Opinion  of  tlie  Court. 

road  [322]  is  a  public  corporation,  and  its  business  pertains 
to  and  greatly  affects  the  public,  and  that  it  is  of  a  public 
nature.  The  company  may  not  charge  unreasonable  prices 
for  transportation,  nor  can  it  make  unjust  discriminations, 
nor  select  its  patrons,  nor  go  out  of  business  when  it  chooses, 
while  a  mere  trading  or  manufacturing  company  may  do  all 
these  things.  But  the  very  fact  of  the  public  character  of  a 
railroad  would  itself  seem  to  call  for  special  care  by  the  legis- 
lature in  regard  to  its  conduct,  so  that  its  business  should  be 
carried  on  with  as  much  reference  to  the  proper  and  fair  in- 
terests of  the  public  as  possible.  While  the  points  of  differ- 
ence just  mentioned  and  others  do  exist  between  the  two 
classes  of  corporations,  it  must  be  remembered  they  have  also 
some  points  of  resemblance.  Trading,  manufacturing  and 
railroad  corporations  are  all  engaged  in  the  transaction  of 
business  with  regard  to  articles  of  trade  and  commerce,  each 
in  its  special  sphere,  either  in  manufacturing  or  trading  in 
commodities  or  in  their  transportation  by  rail.  A  contract 
among  those  engaged  in  the  latter  business  by  which  the 
prices  for  the  transportation  of  commodities  traded  in  or 
manufactured  by  the  others  is  greatly  enhanced  from  what 
it  otherwise  would  be  if  free  competition  were  the  rule,  af- 
fects and  to  a  certain  extent  restricts  trade  and  commerce, 
and  affects  the  price  of  the  commodity.  Of  this  there  can 
be  no  question.  Manufacturing  or  trading  companies  maj"^ 
also  affect  prices  by  joining  together  in  forming  a  trust  or 
other  combination,  and  by  making  agreements  in  restraint  of 
trade  and  commerce,  which  when  carried  out  affect  the  in- 
terests of  the  public.  Why  should  not  a  railroad  company 
be  included  in  general  legislation  aimed  at  the  prevention  of 
that  kind  of  agreement  made  in  restraint  of  trade,  which 
may  exist  in  all  companies,  which  is  substantially  of  the  same 
nature  wherever  found,  and  which  tends  very  much  towards 
the  same  results,  whether  put  in  practice  by  a  trading  and 
manufacturing  or  by  a  railroad  company?  It  is  true  the 
results  of  trusts,  or  combinations  of  that  nature,  may  be  dif- 
ferent in  different  kinds  of  corporations,  and  yet  they  all 
have  an  essential  similarity,  and  have  been  induced  by  mo- 
tives of  individual  or  corporate  aggran-  [3231  dizement  as 
against  the  public  interest.    In  business  or  trading  combi- 


678 


166  UNITED  STATES   REPORTS,  323. 


Opinion  of  the  Couit. 
nations  they  may  even  temporarily,  or  perhaps  permanently, 
reduce  the  price  of  the  article  traded  in  or  manufactured, 
by  reducing  the  expense  inseparable  from  the  running  of 
many  different  companies  for  the  same  purpose.    Trade  or 
commerce  under  those  circumstances  may  nevertheless  be 
badly  and  unfortunately  restrained  by  driving  out  of  busi- 
ness the  small  dealers  and  worthy  men  whose  lives  have  been 
spent  therein,  and  who  might  be  unable  to  readjust  them- 
selves to  their  altered  surroundings.    Mere  reduction  in  the 
price  of  the  commodity  dealt  in  might  be  dearly  paid  for 
by  the  ruin  of  such  a  class,  and  the  absorption  of  control  over 
one  commodity  by  an  all-powerful  combination  of  capital. 
In  any  great  and  extended  change  in  the  manner  or  method 
of  doing  business  it  seems  to  be  an  inevitable  necessity  that 
distress  and,  perhaps,  ruin  shall  be  its  accompaniment* in  re- 
gard to  some  of  those  who  were  engaged  in  the  old  methods. 
A  change  from  stage  coaches  and  canal  boats  to  railroads 
tlirew  at  once  a  large  number  of  men  out  of  employment; 
changes  from  hand  labor  to  that  of  machinery,  and  from 
operating  machinery  by  hand  to  the  application  of  steam  for 
such  purpose,  leave  behind  them  for  the  time  a  number  of 
men  who  must  seek  other  avenues  of  livelihood.     These  are 
naisfortunes  which  seem  to  be  the  necessarv  accompaniment 
of  all  great  industrial  changes.    It  takes  time  to  effect  a  re- 
adjustment of  industrial  life  so  that  those  who  are  thrown 
out  of  their  old  employment,  by  reason  of  such  changes  as 
we  have  spoken  of,  may  find  opportunities  for  labor  in  other 
departments  than  those  to  which  they  have  been  accustomed. 
It  is  a  misfortune,  but  yet  in  such  cases  it  seems  to  be  the 
inevitable  accompaniment  of  change  and  improvement. 

It  is  wholly  different,  however,  when  such  changes  are 
effected  by  combinations  of  capital,  whose  purpose  in  com- 
binmg  is  to  control  the  production  or  manufacture  of  any 
particular  article  in  the  market,  and  by  such  control  dictate 
the  price  at  which  the  article  shaU  be  sold,  the  effect  being 
to  drive  out  of  business  all  the  small  dealers  in  the  commodity 
and  to  render  the  pubUc  subject  to  the  decision  of  the  com- 
13S41  bination  as  to  what  price  shall  be  paid  for  the  article. 
In  this  light  it  is  not  material  that  the  price  of  an  article 
may  be  lowered.    It  is  in  the  power  of  the  combination  to 


IJNlTiiD   STATES   V,  FREIGHT  ASSOCIATION. 


679 


i 


Opinion  of  tlie  Court. 

raise  it,  and  the  result  in  any  event  is  unfortmiate  for  the 
country  by  depriving  it  of  the  services  of  a  large  number  of 
small  but  independent  dealers  who  were  familiar  with  the 
business  and  who  had  spent  their  lives  in  it,  and  who  sup- 
ported themselves  and  their  families  from  the  small  profits 
realized  therein.     AAliether  they  be  able  to  find  other  avenues 
to  earn  their  livelihood  is  not  so  material,  because  it  is  not  for 
the  real  prosperity  of  any  country  that  such  changes  should 
occur  which  result  in  transferring  an  independent  business 
man,  the  head  of  his  establishment,  small  though  it  might 
be,  into  a  mere  servant  or  agent  of  a  corporation  for  selling 
the  coniniodities  which  he  once  manufactured  or  dealt  in, 
having  no  voice  in  shaping  the  business  policy  of  the  com- 
pany and  bound  to  obey  orders  issued  by  others.     Nor  is  it 
for  the  substantial  interests  of  the  country  that  any  one  com- 
modity should  be  within  the  sole  power  and  subject  to  the 
sole  will  of  one  powerful  combination  of  capital.     Congress 
has,  so  far  as  its  jurisdiction  extends,  prohibited  all  con- 
tracts or  combinations  in  the  form  of  trusts  entered  into  for 
the  purimse  of  restraining  trade  and  commerce.     The  re- 
sults naturally  flowing  from  a  contract  or  combination  in 
restraint  of  trade  or  commerce,  when  entered  into  by  a  manu- 
facturing or  trading  company  such  as  above  stated,  while 
differing  somewhat  from  those  which  may  follow  a  contract 
to  keep  up  transportation  rates  by  railroads,  are  neverthe- 
less of  the  same  nature  and  kind,  and  the  contracts  them- 
selves do  not  so  far  differ  in  their  nature  that  they  may  not 
all  be  treated  alike  and  be  condemned  in  common.    It  is  en- 
tirely appropriate  generally  to  subject  corporations  or  i^er- 
sons  engaged  in  trading  or  manufacturing  to  different  rules 
from  those  applicable  to  railroads  in  their  transportation 
business;  but  when  the  evil  to  be  remedied  is  similar  in  both 
kinds  of  corporations,  such  as  contracts  which  are  unquestion- 
ably in  restraint  of  trade,  we  see  no  reason  why  similar  rules 
should  not  be  promulgated  in  regard  to  both,  and  both  be 
covered  in  the  same  [325]  statute  by  general  language  suffi- 
ciently broad  to  include  them  both.    AVe  see  nothing  either 
in  contemporaneous  history,  in  the  legal  situation  at  the  time 
of  the  passage  of  the  statute,  in  its  legislative  historv,  or  in 
any  general  difference  in  the  nature  or  Idnd  of  these  trading 


sssa 


680 


166  UNITED   STATES   REPORTS,  325. 


Opinion  of  the  Ckmrt 

or  manufacturing  companies  from  railroad  companies, 
which  would  lead  us  to  the  conclusion  that  it  cannot  be  sup- 
posed  the  legislature  in  prohibiting  the  making  of  contracts 
m  restraint  of  trade  intended  to  include  railroads  within 
the  purview  of  that  act. 

Neither  is  the  statute,  in  our  judgment,  so  uncertain  in  its 
meaning,  or  its  language  so  vague,  that  it  ought  not  to  be  held 
applicable  to  railroads.    It  prohibits  contracts,  combinations, 
etc.,  in  restraint  of  trade  or  commerce.    Transporting  com- 
modities is  commerce,  and  if  from  one  State  to  or  through 
another  it  is  interstate  commerce.    To  be  reached  by  the 
Federal  statute  it   must  be  commerce  among  the  several 
States  or  with  foreign  nations.    When  the  act  prohibits  con- 
tracts m  restraint  of  trade  or  commerce,  the  plain  meaning 
of  the  language  used  includes  contracts  wliich  relate  to  either 
or  both  subjects.    Both  trade  and  commerce  are  inchuled  so 
long  as  each  relates  to  that  which  is  interstate  or  foreign. 
Transportation  of  connnodities  among  the  several  States  or 
with  foreign  nations  falls  within  the  description  of  the  words 
of  the  statute  with  regard  to  that  subject,  and  there  is  also 
included  m  that  language  that  kind  of  trade  in  commodities 
among  the  States  or  with  foreign  nations  which  is  not  con- 
fined  to  their  mere  transportation.    It  includes  thc'ir  purchase 
and  sale.    Precisely  at  what  point  in  the  course  of  the  trade 
m  or  manufacture  of  commodities  the  statute  mav  have  effect 
upon  them,  or  upon  contracts  relating  to  them,  mav  be  some- 
what  difficult  to  determine,  but  interstate   transportation 
presents  no  difficulties.     In  Umted  States  v.  E.  C.  Knight 
Co,  156  U.  S.  1,  heretofore  cited,  it  was  in  substance  held, 
reiterating  the  language  of  Mr.  Justice  Lamar  in  hidd  v 
Pearsm.,  128  U.  S.   1,  that  the  intent  to  manufacture  or 
export  a  manufactured  article  to  foreign  nations  or  to  send 
It  to  another  State  did  not  determine  the  time  when  the 
article  or  product  passed  from  the  control  of  the  State  and 
[8S«1  belonged  to  commerce.    The  difficulty  in  determining 
that  question,  however,  is  no  reason  for  denying  effect  to  lan- 
giiage  which,  by  its  terms,  plainly  includes  the  transportation 
of  commodities  among  the  several  States  or  with  foreign  na- 
tions, and  which  may  also  be  the  subject  of  contracts  or 
combinations  in  restraint  of  such  commerce.    The  difficulty 


UNITED   STATES   V,  FREIGHT   ASSOCIATION. 


681 


, 


J 


. 


Opinion  of  tlie  Court, 
of  the  subject,  so  far  as  the  trade  in  or  the  manufacture  of 
commodities  is  concerned,  arises  from  the  limited  control 
which  Congress  has  over  the  matter  of  trade  or  manufacture 
It   was  said   by  Mr.  Justice   Lamar  in  Kidd  v.   Pearson 
(svpra) :  "  If  it  be  held  that  the  term  "  (commerce)   "  in- 
cludes the  regulation  of  all  such  manufactures  as  are  intended 
to  be  the  subject  of  commercial  transactions  in  the  future  it 
IS  impossible  to  deny  that  it  would  also  include  the  productive 
industries   that   contemplate   the   same   thing.     The   result 
would  be  that  Congress  would  be  invested,  to  the  exclusion  of 
the  States,  with  the  power  to  regulate,  not  only  manufactures, 
but  also  agriculture,  horticulture,  stock  raising,  domestic  fish- 
eries and  mining— in  short,  every  branch  of  human  industry." 
In  the  Knight  Company  ease  {supra)  it  was  said  that  this 
statute  applied  to  monopolies  in  restraint  of  interstate  or  in- 
ternational trade  or  commerce,  and  not  to  monopolies  in  the 
manufacture  even  of  a  necessary  of  life.     It  is  readily  seen 
from  these  cases  that  if  the  act  do  not  apply  to  the  traiispor- 
tation  of  commodities  by  railroads  from  one  State  to  another 
or  to  foreign  nations,  its  application  is  so  greatlv  limited  that 
the  whole  act  might  as  well  be  held  inoperative.^ 

Still  another  ground  for  holding  the  act  inapplicable  is 
urged,  and  that  is  that  the  language  covers  onlv  contracts  or 
combinations  like  trusts  or  those  which,  while  not  exactlv 
trusts,  are  otherwise  of  the  same  form  or  natui-e.  This  is 
clearly  not  so. 

While  the  statute  prohibits  all  combinations  in  the  form  of 
trusts  or  otherwise,  the  limitation  is  not  confined  to  that  form 
alone.  All  combinations  which  are  in  restraint  of  trade  or 
commerce  are  prohibited,  whether  in  the  form  of  trusts  or  in 
any  other  form  whatever. 

i^l\  *^"'^''  ^^^^"^  "^  ''^''^^"^  examination,  that  the  statute 
ld^7 1  covers,  and  was  intended  to  cover,  coimnon  carriers  bv 
railroad.  -^ 

Second.  The  next  question  to  be  discussed  is  as  to  what  i^ 
the  true  construction  of  the  statute,  assuming  that  it  applies 
to  common  carriers  by  railroad.  What  is  the  meaning  of  the 
language  as  used  in  the  statute,  that  "every  contract,  com- 
bmation  in  the  form  of  trust  or  otherwise,  or  conspiracy  in 
restraint  of  trade  or  commerce  among  the  several  Stat^  or 


682 


166   UNITED   STATES    REPORTS,  327. 


Opinion  of  the  Court 
with  foreign  nations,  is  hereby  declared  to  be  illegal"  ?  Is 
It  confined  to  a  contract  or  combination  which  is  only  in  un- 
reasonable restraint  of  trade  or  commerce,  or  does  it  include 
what  the  language  of  the  act  plainly  and  in  terms  covers  all 
contracts  of  that  nature  ?  ' 

We  are  asked  to  regard  the  title  of  this  act  as  indicative  of 
Its  purpose  to  include  only  those  contracts  which  were  un- 
lawful at  common  law,  but  which  require  the  sanction  of  a 
Federal  statute  in  order  to  be  dealt  with  in  a  Federal  court 
It  IS  said  that  when  terms  which  are  known  to  the  common 
law  are  used  in  a  Federal  statute  those  terms  are  to  be  given 
the  same  meaning  that  they  received  at  common  law,  and 
that  when  the  language  of  the  title  is  "  to  protect  trade  and 
commerce  against  unlawful  restraints  and  monopolies"  it 
means  those  restraints  and  monopolies  which  the  common  law 
regarded  as  unlawful,  and  which  were  to  be  prohibited  bv 
the  Federal  statute.    We  are  of  opinion  that  the  language 
used  m  the  title  refers  to  and  includes  and  was  intended  to 
include  those  restraints  and  monopolies  which  are  made  un- 
lawful m  the  body  of  the  statute.    It  is  to  the  statute  itself 
that  resort  must  be  had  to  learn  the  meaning  thereof,  though 
a  resort  to  the  title  here  creates  no  doubt  about  the  meaning 
of  and  does  not  alter  the  plain  language  contained  in  its  text 
It  is  now  with  much  amplification  of  argument  urged  that 
the  statute,  in  declaring  illegal  every  combination  in  the  form 
of  trust  or  otherwise,  or  conspiracy  in  restraint  of  trade  or 
commerce,  does  not  mean  what  the  language  used  therein 
plainly  imports,  but  that  it  only  means  to  declare  illegal  any 
such  contract  which  is  in  unreasonable  restraint  of  trade 

ri^ilTi  ^^^"'"^  ^"  ""^^^'"^  unaffected  by  the  provisions  of  the 
[838J  act;  that  the  common  law  meaning  of  the  term  "  con- 
tract in  restraint  of  trade  "  includes  only  such  contracts  as 
are  in  imreasmiahle  restraint  of  trade,  and  when  that  term  is 
used  m  the  Federal  statute  it  is  not  intended  to  include  all 
contracts  m  restraint  of  trade,  but  only  those  which  are  in 
unreasonable  restraint  thereof. 

^  The  term  is  not  of  such  limited  signification.  Contracts 
m  restraint  of  trade  have  been  known  and  spoken  of  for 
hundreds  of  years  both  in  England  and  in  this  countrv,  and 
the  term  includes  all  kinds  of  those  contracts  which  in  fact 


' 


UNITED   STATES   V,  FREIGHT  ASSOCIATION. 


688 


Opinion  of  the  Court, 
restrain  or  may  restrain  trade.     Some  of  such  contracts  have 
been  held  void  and  unenforceable  in  the  courts  by  reason  of 
their  restraint  being  unreasonable,  while  others  have  been 
held  valid  because  they  were  not  of  that  nature.    A  contract 
may  be  m  restraint  of  trade  and  still  be  vaUd  at  common  law 
Although  valid,  it  is  nevertheless  a  contract  in  restraint  of 
trade,  and  would  be  so  described  either  at  common  law  or 
elsewhere.     By  the  simple  use  of  the  term  "  contract  in  re- 
stramt  of  trade,"  all  contracts  of  that  nature,  whether  valid 
or  otherwise,  would  be  included,  and  not  alone  that  kind  of 
contract  which  was  invalid  and  unenforceable  as  bein<r  in 
unreasonable  restraint  of  trade.    When,  therefore,  the  body 
of  an  act  pronounces  as  illegal  every  contract  or  combination 
m  restraint  of  trade  or  commerce  among  the  several  States, 
etc.,  the  plain  and  ordinary  meaning  of  such  language  is  not 
limited  to  that  kind  of  contract  alone  which  is  in  unreason- 
able restraint  of  trade,  but  all  contracts  are  included  in  such 
language,  and  no  exception  or  limitation  can  be  added  with- 
out placing  m  the  act  that  which   has  been   omitted   bv 
Congress. 

Proceeding,  however,  upon  the  theory  that  the  statute  did 
not  mean  what  its  plain  language  imported,  and  that  it  in- 
tended in  Its  prohibition  to  denounce  as  illegal  only  those 
contracts  which  were  in  unreasonable  restraint  of  trade,  the 
courts  below  have  made  an  exhaustive  investigation  as  to  the 
general  rules  which  guide  courts  in  declaring  contracts  to  be 
void  as  being  in  restraint  of  trade,  and  therefore  against  the 

Fqooi''  "^f^""^  ""^  ^^^  country.    In  the  course  of  their  discussion 
ld^»  j  of  that  subject  they  have  shown  that  there  has  been  a 
gradual  though  great  alteration  in  the  extent  of  the  libertv 
granted  to  the  vendor  of  property  in  agreeing,  as  part  con- 
sideration for  his  sale,  not  to  ent«r  into  the  same  kind  of  busi- 
ness for  a  certain  time  or  within  a  certain  territorv.     ^o  long 
as  the  sale  was  the  hona  fide  consideration  for  the  promise 
and  was  not  made  a  mere  excuse  for  an  evasion  of  the  rule 
Itself,  the  later  authorities,  both  in  England  and  in  this  coun- 
try exhibit  a  strong  tendency  towards  enabling  the  parties  to 
make  such  a  contract  in  relation  to  the  sale  of  propertv,  in- 
cluding an  agreement  not  to  enter  into  the  same  kind  of  busi- 
ness, as  they  may  think  proper,  and  this  with  the  view  to 


I 


if 


684 


166   UNITED  STATES   REPORTS,  329. 
Opinion  of  the  Court. 


make  thp  .^»r,  believing  that  such  alteration  would 

::;:«nr^;ratret':i -r  ^^^^ ''-  ^--^  °^  ^^«  >- 

bra?clTthf  "^  k'  ^'^u  '"■^•"''"*  '"^  '»>«  defendants  on  this 

.  ™hf  alldl^'''''''  •?"  ***  ^''*''''  •*  P^^^'ble,  some  reason 
m  ine  attendant  circumstances,  or  some  t»ot  «v;.»:„         !u 
nature  of  railroad  Drooertv  »n^  K    •  «x'*'t'nff  m  the 

the  claim  th«f  oUk    T  u'    .     ''"SMJess  upon  which  to  found 

™n,,«  prta  .nd  (or  ,h.  „.™.«  m,TS  t  « 

».  for  z^' *i^™?,'''r"T ""°'» I*  •"•«! '» 

«  ijr  uiiier  purpose,  at  least  without  such  ln«Q  qc  «,«„ 
fairly  be  called  destructive;  that  competiL  wiiirpelZ 

of  rL^  k"  """  ""''  insolvency,  and  to  the  operation 

of  ^"  ^"'^X'^'''"^ '"  *••"  •"'"'^t  »'  »*'•'  creditors  instead 
of  m  that  of  Its  owners  and  the  public ;  that  a  contest  hZln 

.  receiver  of  an  insolvent  corporation' and  one  whSi  i  "S 


\    .    4 


ft 


1   »•;:'> 


1 


mm 


UMIHD   STATES  V.  FBEIQHT  ASSOCIATION.  685 

Opiuion  of  the  Court 

telTt*/"!?  ';  "■"'"  '^'  ^'''"''  *^'"P«"y'  ^'Wle  being  of  no 
benefit  to  the  former;   that  a  receiver  is  onlv  bound  to  pav 

anTnrlt  T*  '"  r*  **°""  *«  P"*'^^  incompatible  wiTh 
any  profit  for  the  work  done,  and  until  ruin  overtakes  it  to 

:?tirbrrnti;r^"^  -'-''^^'-^  -^  ^^^  ^™-^-- 

^  To  the  question  why  competition  should  necessarily  be  con- 

conSLed  r  ''**"'  ''  *«  '■•'^"'*  ^"  this  relenflei  Td 

or  all  of  the  companies  mdulging  in  it,  the  answer  is  made 

waVIfT^*"?  '^"'*'''*^  """?«"'*'«  •*  '-ft  -bject  t^  the 
sway  of  free  and  unrestricted  competition  the  results  above 
foreshadowed  necessarily  happen  from  the  nature  of  the  ^sl 

^  trh'ettn^t'l"?  ''^  '■"'^'  ^"^•^  ^"-"P-^  -"  -k  bul' 

orTer  to  12;         '  ''"T'  *"^  ^'"  ""'^^'''''d  '««  ^ival  in 
order  to  get  the  business,  and  such  underbidding  will  act  and 

react  upon  each  company  until  the  prices  are  so  reduci  as  t^ 

make  it  mipossible  to  prosper  or  live  under  them;   t^t  it  t 

00  much  to  ask  of  human  nature  for  one  company  to  insit 

Sn   an!  whf  t""^  '^'^^  ^  «^"'^  ^  — ^«"'  ^n 
sation,  and  while  doing  so  to  see  its  patrons  leave  for  rival 

roads  who  are  obtaining  its  business  by  offeringLi  rate  for 

doing  It  than  can  be  afforded  and  a  fair  profit  obSe"  it 

ertswi'SllL"  T"'T  ™'"  ^^^^  --«  --iti-, 
enorts  will  [331]  be  made  m  the  direction  of  meeting  the  un 

SI  t  fsl;?  r'  T '''''  **"  «"^ '"  ruin!' VeV  ry 

retuge  It  is  said,  from  this  wretched  end  lies  in  the  power  of 
competing  roads   agreeing  among  themselves   tT  keep   up 

selvesZm  thp       ,    «*»"Pf "'««  may  be  allowed  to  save  them- 
selves from  themselves,  and  to  agree  not  to  attack  each  oth^r 

perfLr  "f  .'**^"f  «  -<!  l-ing  rates  for  the  seS 

^^^dtt^igEt^iitllSL^-- 

ir=£^--hS-^^ 

have  intended  to  include  all  contract  or  comS?S  tn  ^ 


686 


166  UNITED  STATES  KEP0BT8,  331. 
Opinion  of  the  Court. 


I 


straint  of  trade,  and  as  a  consequence  thereof  to  prohibit  com- 
peting railways  from  agreeing  among  themselves  to  keep  up 
prices  for  transportation  to  such  a  rate  as  should  be  fair  and 
reasonable. 

These  arguments  it  must  be  confessed  bear  with  much 
force  upon  the  policy  of  an  act  which  should  prevent  a  gen- 
eral agreement  upon  the  question  of  rates  among  competing 
railmid  companies  to  the  extent  simply  of  maintaining 
those  ratos  which  were  reasonable  and  fair. 

There  is  another  side  to  this  question,  Jiowever,  and  it  may 
not  be  amiss  to  refer  to  one  or  two  facts  which  tend  to  some- 
what modify  and  alter  the  light  in  which  the  subject  should 
be  regarded.    If  only  that  kind  of  contract  which  is  in  unrea- 
sonable restraint  of  trade  be  within  the  meaning  of  the  stat- 
ute and  declared  therein  to  be  illegal,  it  is  at  once  apparent 
that  the  subject  of  what  is  a  reasonable  rate  is  attended  with 
great  uncertainty,    mat  is  a  proper  standard  by  which  to 
judge  the  fact  of  reasonable  rates?    Must  the  rate  be  so  high 
as  to  enable  the  return  for  the  whole  business  done  to  amount 
to  a  sum  sufficient  to  afford  the  shareholder  a  fair  and  rea- 
sonable profit  upon  his  investment?     If  so.  what  is  a  fair 
and  reasonable  profit?    That  depends  sometimes  upon  the 
risk  incurred,  and  the  rate  itself  differs  in  different  locali- 
ties: wh.rh  IS  the  one  to  which  reference  is  to  be  made  as  the 
standard?    Or  is  [88S1  the  reasonableness  of  the  profit  to 
be  limited  to  a  fair  return  upon  the  capital  that  would  have 
been  ^ifficient  to  build  and  equip  the  road,  if  honestly  ex- 
pended?   Or  IS  still  another  standard  to  be  created,  and  the 
reasonableness  of  the  charges  tried  by  the  cost  of  the  car- 
riage of  the  article  and  a  reasonable  profit  allowed  on  that* 
And  ,n  such  case  would  contribution  to  a  sinking  fund  to 
make  repairs  upon  the  roadbed  and  renewal  of  cars  etc    be 
a^umed  as  a  proper  it«m?    Or  is  the  reasonablenei  of'the 
charge  to  be  tested  by  reference  to  the  charges  for  the  trans- 
portation of  the  same  kind  of  property  made  by  other  roads 
similarly    situated?    If  the  latter,  a  combination    among 
such  roads  as  to  rates  would,  of  course,  furnish  no  means  of 
answering  the  qu^ion^  It  is    quite    apparent,  therefore, 
aiat  It  IS  exceedingly  difficult  to  formulate  even  the  terms  of 
the  rule  itself  which  should  govern  in  the  matter  of  deter- 


UNITED  STATES  V.  FREIGHT  ASSOCIATION.  687 

Opinion  of  the  Court, 
minmg  what  would  be  reasonable  rates  for  transportation. 
While  even  after  the  standard  should  be  determined  there 

A     I  A    1  !  '•^'°!"'b'«  »•«♦«'  n«  matter  what  standard  is 
adopted    that  any  individual  shipper  would  in  most  casi 

alTo  ?  r^'""  ""  *''"■'  '"  ''''''"  ^''^  '~"able  cTaT 
acter  of  a  charge,  sooner  than  hazard  the  great  expense  in 

.me  and  money  necessary  to  prove  the  fact,  and  atTeZZ 

ings  «,th  1  .  To  say,  therefore,  that  the  act  excludes  agree- 
ments which  are  not  i„  unreasonable  restraint  of  trlde Td 
which  tend  simply  to  keep  up  reasonable  rates  for  trans^r 

^e^lt  II  ""'^^''""'"'•^  '-  '--  the  question  of  reaCwe- 
ness  to  the  companies  themselves. 

It  must  also  be  remembered  that  railways  ar«  public  cor- 

fninchises  and  privileges,  among  which  the  right  to  take  the 
private  prq^rty  of  the  citizen  in  inrit.nn  i.s  not  the  least 

Ml,  ho, ,   that  many  of  them  are  the  donees  of  large  tracts 

Sons  a"d  tW^^'  °H^''*^  '''  """^'^  •'•^  numicipalSi  :;; 
tions  and  that  they  all  primarily  owe  duties  to  the  public  of 

?o'l'f^T  ""^r  T"  than  that  of  earning  large  diviEds  for 
[33.31  their  shareholders.  The  business  whinh  fhJ'-if 
do  is  of  a  public  natu.,  closely  T^g^tw^a  f  elT^^ 

thaT^TrS;  uJ^rT'"'  "P°"  ''''  P*"-*  "*  '^^  ^«*«ndants 
dtiaW    .T        ^    *'"'  '""'"^"'^  ***  railroads  will  not  be  nreiu- 

ror     easonable  rates   for  transportation  and   prevents  the 
dead  y  competition  so  liable  to  ..suit  in  the  ruin^^llhe   oaj 
and  to  thereby  impair  their  usefulness  to  the  public  aid  in 
that  way  to  prejudice  the  public  interest      U.Ji!     \u 


688 


m   UNITED  STATES  REPORTS,  333. 


il 


I 


Opinion  of  the  Court. 

defend  its  intei-ests  both  in  and  out  of  Congress     Con.np 
tition,  thev  iiree,  is  a  necessitv  f«,.  f k«       '^""gress.     i.onipe- 

the  end  just  an^d  propeTT^!'  """""^  "'  "''"""^  '" 

It  w-assaid  in  Gibbs  r.  Baltimore  Ga»  Company  130  I'  S 
396   at  page  408,  by  Mr.  Chief  Justice  Fulle.    as  followf: 

The  supplying  of  ilhuninating  gas  is  a  busi  I's  Z  !      n 
nature  to  meet  a  public  nece«sitv     T?  "      ?     f       ""  ''"'''"' 

MUwankee  0„s  Co.,  6  AVisconsin   «o •  tn      ^^■^^^''^P"''^  ^■ 
St  LoHh  V  7t  rl  ■  n     /.  t  '^'  ^"^^  ^''^  ^21  Illinois.  530: 

,  i  •  .;  .  "^!i'*''^^^nff  Co.  y.  Sampson.  L  R  1Q  V«  jp.o 
.vet  m  the  instance  of  business  of  such  a  char^ctt  ISX  ' 
sumably  cannot  be  restrained  to  any  e.xtent  S  .t^l   ,1'"; 

[m]   s^tain  contracts  imposing  such  restraint,  howeve 

SjL-r^r!    *'*"^f  ^'  "nd  the.  authorities  cited  in  7  ^ 
W^yI  ^rX  "'""/"•  "•  ^'^  ^''•-  P'P^  rjne  Co.i 

^«;r>5«;it:65^rgia^t^:^^  '-•  -  '— 

court  ifmalffor^;X'S^^^^^^  of  th^ 

ejist.  J^tween  a  prii  T.tXr^:^:^:-^^^, 
Of  a  piiblic  corporation  which   whilo  a  J     u     •  ^ 

mune^tion,  is  y^t  so  con3  in  ittrji'rthr  1?  "■ 

while,  m  the  absence  of  a  statute  prohibiting  them  ^^rlt 


11 


'I 


UNITED  STATES  V.  FREIGHT  ASSOCIATION.  689 

Opinion  of  the  Court, 
of  private  individuals  or  corporations  touching  upon  i-e- 
stramts  in  trade  must  be  unreasonable  in  their  nature  to  be 
held  void,  different  considerations  obtain  in  the  case  of  pubUc 
corporations  like  those  of  railroads  where  it  well  may  be  that 
any  restraint  upon  a  business  of  that  character  as  'atrecting 

The  plaintiffs  are,  however,  under  no  obligation  in  order 
to  maintain  this  action  to  show  that  by  the  common  law  all 
agreements  among  competing  railroad  companies  to  keep  ud 
rates  to  such  as  are  reasonable  were  void  as  in  restraint  of 
rade  or  commerce^^  There  are  many  cases  which  look  in 
that  direction  ,f  they  do  not  precisely  decide  that  point, 
borne  of  them  are  referred  to  in  the  opinion  in  the  Balti- 
more  Go,  Company  case,  above  cited.  The  case  of  the  A/oqul 
Steamship  Company  v.  McGregor,  21  Q.  B   D   54-1  •    oq  o 

t,  ^-  ''V  ,i''''  ^PP-  C^^-  25'  l"'^  •-««  «ted  by  L  cfurte 
be  ow  as  holding  in  principle  that  contracts  of  this  nature  are 
valid  at  common  law.  The  agreement  held  valid  there  was 
1^35]  an  agreement  fqr  lowering  rates  of  transportation 
among  the  parties  thereto,  and  it  was  entered  into  for  the 
purpo^  of  driving  out  of  trade  rival  steamships  in  order  that 

Stf  r.f '  ™'"  ""'^^^  ^  '"^^""•"''-  The  English  courts 
he  d  that  the  agreement  was  not  a  conspiracy,  and  that  it  was 

the  field,  because  so  long  as  the  injury  to  such  rival  was  not 
the  sole  reason  for  the  agreement,  but  self-interest  the  pre- 
dominating motive,  there  was  nothing  wrong  in  law  with  an 
a^«nt  of  that  kind.  But  assuming  thft  agreemlte  Tt 
this  nature  are  not  void  at  common  law  and  that  the  various 
cases  cited  by  the  learned  courts  below  show  it,  the  Tswer 
to  the  statement  of  their  validity  now  is  to  be  foundTn The 
terms  of  the  statute  under  consideration.  The  pr^L  S 
the  Interstate  Commerce  Act  relating  to  realaWeTte/ 
discriniinations,  etc.,  do  not  authorize  such  an  agreement  as' 
Jhis,  nor  do  they  authorize  any  other  agreements  ^r^T^^a 
be  inconsistent  with  the  provisions  of  this  act 

foTIl^-^'T!^  ^^"^  *"•■  ^"'*""«  agreements  of  this  nature 
to  be  invahd  even  at  common  law,  on  the  part  of  railroad 
companies  are  quite  strong,  if  not  entirely  conclusive 
1180&— VOL  1—06  M^ U 


I 


690 


X66   UNITED  STATES   REPORTS,  335. 
Opinion  of  the  Court. 


T 


Considering  the  public  character  of  such  corporations,  the 
privileges  and  franchises  which  they  have  received  from  the 
public  in  order  that  they  might  transact  business,  and  bear- 
ing in  mind  how  closely  and  immediately  the  question  of 
rates  for  transportation  affects  the -whole  public,  it  may  be 
urged  that  Congress  had  in  mind  all  the  difficulties  which  we 
have  before  suggested  of  proving  the  unreasonableness  of 
the  rate,  and  might,  in  consideration  of  all  the  circumstances, 
have  deliberately  decided  to  prohibit  all  agreements  and  com- 
binations in  restraint  of  trade  or  commerce,  regardless  of  the 
question  whether  such  agreements  were  reasonable  or  the 
reverse. 

It  is  true  that,  as  to  a  majority  of  those  living  along  its 
line,  each  railroad  is  a  monopoly.  Upon  the  subject  now 
under  consideration  it  is  well  said  by  Judge  Oliver  P.  Shiras, 
United  States  District  Judge,  Northern  District  of  Iowa,  in 
his  very  able  dissenting  opinion  in  this  case  in  the  United 
States  Circuit  Court  of  Appeals,  as  follows : 

[888]  "As  to  the  majority  of  the  comimmlty  llvinj?  along  its  line, 
each  railway  eompau>'  has  a  monopoly  of  the  husineRs  demanding 
trans[)ortat km  as  one  of  its  elements.     By  reason  of  this  fact  the  ac- 
tion of  this  corporation  in  establishing  the  rates  to  be  charged  largely 
inllnences  the  net  profit  coming  to  the  fanner,  the  mannfactnrer  and 
the  merchant,  from  the  sale  of  the  products  of  the  farm,  the  workshop 
and  manufactoi-y,  and  of  the  merchandise  purchased  and  resold,  and 
also  largely  influences  the  price  to  be  paid  by  every  one  who  consumes 
any  of  the  property  transi>orted  over  the  line  of  railway.    There  is  no 
other  line  of  business  carried  on  in  our  midst  which  is  so  intimately 
connected  with  the  public  as  that  conducted  by  the  railways  of  the 
country.    ...    A  railway  corporation  engaged  in  the  transporta- 
tion of  the  persons  and  property  of  the  community  is  always  carrying 
on  a  public  bushiess  which  at  all  times  directly  affects  the  public  wel- 
fare.   All  contracts  or  combinations  enteretl  into  lH-twc»en  railway  cor- 
porations intended  to  regulate  the  rates  to  be  chai-ged  the  public  for 
the  senrice  rendere<l,  must  of  necessity  affect  the  public  interests.    By 
reason  of  this  marked  distinction  existing  between   enterprises  in- 
herently public  In  their  character  and  thtme  of  a  private  nature,  and 
further  by  reason  of  the  difference  between  private  persons  and  cor- 
porations engaged  in  private  pursuits,  who  owe  no  direct  or  primai-y 
duty  to  the  public  and  public  corporations  created  for  the  express  pur- 
pose of  carrying  on  public  enterprises,  and  which,  hi  consideration  of 
the  imblic  powers  exercised  in  their  behalf,  are  under  obligation  to 
carry  on  the  work  intrusted  to  their  management  primarily  in  tlie 
interest  and  for  the  benefit  of  the  community,  it  seems  dear  to  me 
that  the  same  test  is  not  applicable  to  both  classes  of  business  and 
corporations  in  determining  the  validity  of  contracts  and  combinations 

entered  into  by  those  engaged  therein In  the  opinion  of 

the  court  are  foimd  citations  from  the  reports  of  the  luierstate  Com- 
merce Commission  hi  which  are  depicted  the  evils  that  are  occasioned 
t«i  the  railway  companies  and  the  pnblic  by  warfares  over   rate 


■ 


*<  i 


UNITED   STATES   V,  FREIGHT  ASSOCIATION.  691 

Opinion  of  the  Court. 

of  the  poIi<y  of  public  ^St^oi^v^rLT  f'^^J'^  the  developmait 
devised  and  put  in  oj^mtou'^  Sa«ve  ZnWn;  T""^'  ^''"  "* 
companies  and  the  ^blic  may  b?»ted  a^^n«t  l^''"^?  '■"!"'«y 
from  unrestricted  comnptitinn  ori^  f.  '^^ea  against  the  evils  arismg 

business  of  "tecommunUv   but  I  f«u  l"^  """'-^  '"'""^•'  "»*«'«  *•»! 

argument  that  becX  ra  ,'way*cJmnauiS  ^^,Z  f^.'  """^  *"  *■* 
cause  evils  to  themselves  and  th*  nilwi^  k  ""?!'«'*  '*««'"  own  actio* 
tlons  in  tariff  rates  the/mSst  terrm^.^  sudden  changes  or  reduc- 
of  the  benefit  of  comnptiHnn  r„  „    Permitted  to  deprive  the  community 

portatlon  of  the  Z^cuZ  heTiS?^'"' rT'""?.':""^  '"'  *«  ^>^ 
stricte<l,  Is  the  geneial  rule  »hi^    ^"    Competition,  free  and  uure- 

pursuite  and  trf u^rtLns  Of  life  iwl™  *"  *?.^  """""^  business 
therefrom.  In  the  fler«  heat  of^om^ttf"^  ^I*"  ."^  '^''^^^  result 
may  orush  out  the  wla?er  •  flncf.^,^?!  •*""  ■*''^  stronger  competitor 
result  in  wreck  and  mSer"w  hi  "•  ^"'^  "^^  be  caused  that 
the  evils,  The^aw  of  ^mprtmon  rem.  n"""^  '"^  '^"<^«'^  ««  "S^'Mt 
the  business  »"rl<L  r/^t  V,^  „  T"'"'  **  ^  eontrolling  element  In 
matter  otVin^t.ba^^:,' ,^^i^l^X!nZ'^'^  .competition  in  the 
against  the  fact  that  sSch  is Yhp  1?^^  „"^"^^  °'  *T"*  ^"««  "o*  militate 

law  can  be  enact^  nrsystem  bl^evlZiTr  ?h"^  *^^  T^^^  ^^ 
affairs  that  in  its  enforcement  rt^=„T»  i  ^""^  control  of  human 
matter  how  beneflcJal  its  Sr-.1^Lr>„*  ^"'^"'^  ^""^  «""  "^«"'ts,  no 
and  there  are  evils  whchresulffZ?Z  """•"  ^-  '^"^'^  ^^  benefits 
competithm  bet,v^n  rall«!^y  i^m^^,!^^  "^"V""  "'  ^^  '"'^  <»'  ^^ 
the  companies  will  be  reliev^  ^^J^^  .?  *'™**  ™*y  ">me  when 

about  this  change.  The  fact  tli« tTf  I  ™  =  themselves,  bring 
Commerce  act  mfy  have  chinLrt In  i?!'''^"''^'""*  "^  the  Interstate 
companies  In  tte  car?vin^  n„  nf  fi        ^-  ''pPeets  the  conduct  of  the 

m  does  not  show  tSTlas  the  taten?of'p"n'""^  ^•"'^.'"^  «"^««^ 
of  that  statute  to  clothe  tXayrSntes  wTthT»  ?•  "f  enactment 
together  for  the  purpose  of  avoidiM  ?h»  fw^I  ^"^  ^'^^^  ^  combine 
subject  of  rates."  avoiding  the  effects  of  competition  on  the 

[338]  The  whole  opinion  is  a  remarkably  strong  presenta- 
tion o    the  views  of  the  learned  judge  whoLote  ij 

btiJl,  again,  it  is  answered  that  the  effects  of  free  comne- 
tition  among  railroad  companies,  as  described  by  the  coun^l 
for  the  companies  themselves  in  the  course  of  their  argumeS 
are  greatly  exaggerated.    According  to  that  argument    the 
moment  an  agreement  of  this  nat««  is  prohibited  tie  'rat 
roads  commence  to  cut  their  rates,  and  they  cease  only  with 
heir  utter  financial  ruin,  leaving,  perhaps,  one  to  raii  ra  tS 
ndefimtely  when  its  rivals  have  been  driven  away.    It  is  S 
that  this  IS  a  most  overdrawn  statement,  and  that  while  abso- 
utely  free  competition  may  have  in  some  instances  and  for  a 
time  resulted  m  injury  to  some  of  the  railroads,  it  is  not  at 
all  clear  that  the  general  result  has  been  other  than  beneficial 
to  the  whole  public,  and  not  in  the  long  run  detrimental  to 


1 


I 


(I 


692 


166   UNITED   STATES   REPORTS,  338. 


" 


Opinion  of  the  Court, 
the  prosperity  of  the  roada  It  is  matter  of  common  knowl- 
^  edge  that  agreements  as  to  rates  have  been  continually  made 
of  late  years,  and  that  complaints  of  each  company  in  regard 
to  the  violation  of  such  agreements  by  its  rivals  have  been 
frequent  and  persistent.  Rate  wars  go  on  notwithstanding 
any  agreement  to  the  contrary,  and  the  struggle  for  business 
among  competing  roads  keeps  on,  and  in  the  nature  of  things 
wiU  keep  on,  any  alleged  agreement  to  the  contrary  notwith- 
i^ding,  and  it  is  only  by  the  exercise  of  good  sense  and  by 
the  presence  of  a  common  interest  that  railroads,  without 
entering  into  any  affirmative  agreement  in  regard  thereto, 
will  keep  within  the  limit  of  exacting  a  fair  and  reasonable 
return  for  services  rendered.  These  agreements  have  never 
been  found  really  effectual  for  any  extended  period. 

The  Interstate  Commerce  Commission,  from  whose  reports 
quotations  have  been  quite  freely  made  by  counsel  for  the 
purpose  of  proving  the  views  of  its  learned  members  in  re- 
gard  to  this  subject,  has  never  distinctly  stated  that  agree- 
ments among  competing  railroads  to  maintain  prices  are  to 
be  commended,  or  that  the  general  effect  is  to  be  regarded  as 
beneficial.    They  have  stated  in  their  fourth  annual  report 
that  competition  may  degenerate  into  rate  wars,  and  that 
such  wars  are  as  unsettling  to  the  business  of  the  country 
[839]  as  they  are  mischievous  to  the  carriei-s,  and  that  the 
spirit  of  existing  law  is  against  them.    They  then  add: 
"Agreements  between  railroad  companies  which  from  time  to 
time  they  have  entered  into  with  a  view  to  prevent  such 
occurrences  have  never  been  found  effectual,  and  for  the  very 
sufficient  reason,  that  the  mental  reservations  in  forming 
them  have  been  quite  as  numerous  and  more  influential  than 
the  written  stipulations."    It  would  seem  true,  therefore, 
that  there  is  no  guaranty  of  financial  health  to  be  found  hi 
entering  into  agreements  for  the  maintenance  of  rates,  nor  is 
financial  ruin  or  insolvency  the  necessary  result  of  their 
absence. 

The  claim  that  the  company  has  the  right  to  charge  reason- 
able rates,  and  that,  therefore,  it  has  the  right  to  enter  into 
a  combination  with  competing  roads  to  maintain  such  rates, 
cannot  be  admitted.  The  conclusion  does  not  follow  from  an 
admission  of  the  premise.    What  one  company  may  do  in  the 


"' 


UNITED  STATES  V.  FEEIGHT  ASSOCIATION.  693 

Opinion  of  tlie  Court, 
way  of  charging  reasonable  rates  is  radically  different  from 
entering  into  an  agreement  with  other  and  competing  roads 
to  keep  up  the  rates  to  that  point.  If  there  be  any  competi- 
tion the  extent  of  the  charge  fqr  the  service  will  be  seriously 
affected  by  that  fact.  Competition  will  itself  bring  charg^ 
down  to  what  may  be  reasonable,  while  in  the  case  of  an 
agreement  to  keep  prices  up,  competition  is  allowed  no  play 
It  is  shut  out,  and  the  rate  is  practically  fixed  by  the  com- 
panies themselves  by  virtue  of  the  agreement,  so  long  as  they 
abide  by  it.  "^ 

As  a  result  of  this  review  of  the  situation,  we  find  two  very 
widely  divergent  views  of  the  effects  which  might  be  expected 
to  result  from  declaring  illegal  all  contracts  in  restraint  of 
trade,  etc.;  one  side  predicting  financial  disaster  and  ruin  to 
competing  railroads,  including  thereby  the  ruin  of  sharehold- 
ers, the  destruction  of  immensely  valuable  properties,  and  the 
consequent  prejudice  to  the  public  interest;  while  on  the 
other  side  predictions  equally  earnest  are  made  that  no  such 
mournful  ^tesulls  will  follow,  and  it  is  urged  that  there  is  a 
necessity,  m  order  that  the  public  interest  may  be  fairly  and 
justly  protected,  to  allow  free  and  open  competition  among 
railroads  upon  the  subject  of  the  rates  for  the  transportation 
of  persons  and  property. 

[840]   The  arguments  which  have  been  addressinl  to  us 
against  the  inclusion  of  all  contracts  in  restraint  of  trade  as 
provided  for  by  the  language  of  the  act,  have  been  based  u^n 
the  alleged  presumption  that  Congress,  notwithstanding  the 
language  of  the  act,  could  not  have  intended  to  embra^  all 
contracts,  but  only  such  contracts  as  were  in  unreasonable 
restraint  of  trade.     Under  these  circumstances  we  are,  there- 
fore, asked  to  hold  that  the  act  of  Congress  excepts  contracts 
Which  are  not  in  unreasonable  restraint  of  trade,  and  which 
only  keep  rates  up  to  a  reasonable  price,  notwithstanding  the 
language  of  the  act  makes  no  such  exception.     In  other 
words  we  are  asked  to  read  into  the  act  by  way  of  judicial 
legidation  an  exception  that  is  not  placed  there  by  the  law- 
making branch  of  the  Government,  and  this  is  to  be  done 
upon  the  theory  that  the  impolicy  of  such  legislation  is  so 
clear  that  it  cannot  be   supposed   Congress   intended  the 
natural  import  of  the  language  it  used.    This  we  cannot  and 


694 


leC  UNITED  STATES   REPORTS,  340. 


f 


Opinion  of  the  Court 

ought  not  to  do.    That  impolicy  is  not  so  clear,  nor  are  the 
reasons  for  the  exception  so  potent  as  to  permit  us  to  inter- 
polate an  exception  into  the  language  of  the  act,  and  to  thus 
materially  alter  its  meaning  and  effect.     It  may  be  that  the 
policy  evidenced  by  the  passage  of  the  act  itself  will,  if  ear- 
ned out,  result  in  disaster  to  the  roads  and  in  a  failure  to 
secure  the  advantages  sought  from  such  legislation.     Whether 
that  will  be  the  result  or  not  we  do  not  know  and  cannot 
predict.    These  considerations  are,  however,  not  for  us.    If  the 
act  ought  to  read  as  contended  for  by  defendants,  Congress 
IS  the  body  to  amend  it  and  not  this  court,  by  a  process  of 
judicial  legislation  wholly  unjustifiable.    Large  numbers  do 
not  agree  that  the  view  taken  by  defendants  is  sound  or  true 
m  substance,  and  Congress  may  and  very  probably  did  share 
in  that  belief  in  passing  the  act.    The  public  policy  of  the 
Government  is  to  be  found  in  its  statutes,  and  when  they  have 
not  directly  spoken,  then  in  the  decisions  of  the  courts  and 
the  constant  practice  of  the  government  officials ;   but  when 
tlie  lawmaking  power  speaks  upon  a  particular  subject,  over 
which  it  has  constitutional  power  to  legislate,  public  policy 
in  such  a  case  is  what  the  statute  enacts.    If  the  law  prohibit 
any  con-  [341]  tract  or  combination  in  restraint  of  trade  or 
commerce,  a  contract  or  combination  made  in  violation  of 
such  law  is  void,  whatever  may  have  been  theretofore  decided 
by  the  courts  to  have  been  the  public  policy  of  the  counti-y 
on  that  subject. 

The  conclusion  which  we  have  drawn  from  the  examina- 
tion above  made  into  the  question  before  us  is  that  the  Anti- 
Trust  Act  applies  to  railroads,  and  that  it  renders  illegal  all 
agreements  which  are  in  restraint  of  trade  or  commerce  as  we 
have  above  defined  that  expression,  and  the  question  then 
arises  whether  the  agreement  before  us  is  of  that  nature. 

Although  the  case  is  heard  on  bill  and  answer,  thus  mak- 
ing it  necessary  to  assume  the  truth  of  the  allegations  in  the 
answer  which  are  well  pleaded,  yet  the  legal  effect  of  the 
agreement  itself  cannot  be  altered  by  the  answer,  nor  can  its 
violation  of  law  be  made  valid  by  allegations  of  good  inten- 
tion or  of  desire  to  simply  maintain  reasonable  rates ;  nor  can 
the  plaintiffs'  allegations  as  to  the  intent  with  which  the 
agreement  was  entered  into  be  regarded,  as  such  intent  is 


*« 


UNITED   STATES   V,  FREIGHT   ASSOCIATION. 


695 


,. 


. 


Opinion  of  the  Court. 

denied  on  the  part  of  the  defendants;  and  if  the  intent 
alleged  in  the  bill  were  a  necessary  fact  to  be  proved  in  order 
to  maintain  the  suit,  the  bill  would  have  to  be  dismissed.     In 
the  view  we  have  taken  of  the  question,  the  intent  alleged  by 
the  Government  is  not  necessary  to  be  proved.    The  question 
is  one  of.  law  in  regard  to  the  meaning  and  effect  of  the  agree- 
ment itself,  namely:  Does  the  agreement  restrain  trade  or 
conunerce  in  any  way  so  as  to  be  a  violation  of  the  act?     We 
have  no  doubt  that  it  does.    The  agreement  on  its  face  re- 
cites that  it  is  entered  into  "  for  the  purpose  of  mutual  pro- 
tection by  establishing  and  maintaining  reasonable  rates, 
rules  and  regulations  on  all  freight  traffic,  both  through  and 
local."    To  that  end  the  association  is  formed  and  a  body 
created  which  is  to  adopt  rates,  which,  when  agreed  to,  are 
to  be  the  governing  rates  for  all  the  companies,  and  a  viola- 
tion of  which  subjects  the  defaulting  company  to  the  pay- 
ment of  a  penalty,  and  although  the  parties  have  a  right  to 
withdraw  from  the  agreement  on  giving  thirty  days'  notice 
of  a  desire  so  to  do,  yet  while  in  force  and  assuming  it  to  be 
lived  up  to,  there  can  be  no  doubt  [342]  that  its  direct,  un- 
mediate  and  necessary  effect  is  to  put  a  restraint  upon  trade 
or  commerce  as  described  in  the  act. 

For  these  reasons  the  suit  of  the  Government  can  be  main- 
tained without  proof  of  the  allegation  that  the  agreement  was 
entered  into  for  the  purpose  of  restraining  trade  or  commerce 
or  for  maintaining  rates  above  what  was  reasonable.  The 
necessary  effect  of  the  agreement  is  to  restrain  trade  or  com- 
merce,  no  matter  what  the  intent  was  on  the  part  of  those 
who  signed  it. 

One  or  two  subsidiary  questions  remain  to  be  decided. 

It  is  said  that  to  grant  the  injunction  prayed  for  in  this 
case  IS  to  give  the  statute  a  retroactive  effect;  that  the  con- 
tract at  the  time  it  was  entered  into  was  not  prohibited  or  de- 
clared illegal  by  the  statute,  as  it  had  not  then  been  passed; 
and  to  now  enjoin  the  doing  of  an  act  which  was  legal  at  the 
time  It  was  done  would  be  improper.^  We  give  to  the  law  no 
retroactive  effect.  The  agreement  in  question  is  a  continuing 
one.  The  parties  to  it  adopt  certain  machinery,  and  agree  to 
certain  methods  for  the  purpose  of  establishing  and  main- 
taming  m  the  future  reasonable  rates  for  transportation. 


696 


1116  t^NITKD  STATES   REPORTS,  342. 


Dissenting  Opinion:  White.  Field,  Gray,  Shlras,  JJ. 

Assuming  such  action  to  have  been  legal  at  the  time  the  agree- 
ment was  first  entered  into,  the  continuation  of  the  agreement, 
after  it  has  been  declared  to  b©  illegal,  becomes  a  violation  of 
the  act  The  statute  prohibits  the  continuing  or  entering 
into  such  an  agreement  for  the  future,  and  if  the  agreement 
be  continued  it  then  becomes  a  violation  of  the  act.  There  is 
nothing  of  an  ex  post  facto  character  about  the  act.  The 
civil  remedy  by  injunction  and  the  liability  to  punishment 
under  the  criminal  provisions  of  the  act  are  entirely  distinct, 
and  there  can  be  no  question  of  any  act  being  regarded  as  a 
violation  of  the  statute  which  occurred  before  it  was  passed. 
After  its  passage,  if  the  law  be  violated,  the  parties  violating 
it  may  render  themselves  liable  to  be  punished  criminally; 
but  not  otherwise. 

It  is  also  argued  that  the  United  States  have  no  standing 
in  court  to  maintain  this  bill ;  that  they  have  no  pecuniary 
interest  in  the  result  of  the  litigation  or  in  the  question  to  be 
decided  by  the  court.  We  think  that  the  fourth  section  of 
[S48]  the  act  invests  the  Government  with  full  power  and 
authority  to  bring  such  an  action  as  this,  and  if  the  facts  be 
proved,  an  injunction  should  issue.  Congress  having  the 
control  of  interstate  commerce,  has  also  the  duty  of  protect- 
ing it,  and  it  is  entirely  competent  for  that  body  to  give  the 
remedy  by  injunction  as  more  efficient  than  any  other  civil 
remedy.  The  subject  is  fully  and  ably  discussed  in  the  case 
of  In  re  Dels,  158  U.  S.  564.  See  also  Cincinnati,  New  Or- 
ham  <&€.  Railway  v.  Interstate  Commerce  Commission,  162 
U.  S.  184;  Texas  cfe  Pacific  Railway  v.  Interstate  Commerce 
Commission^  162  U.  S.  197. 

For  the  reasons  given,  the  decrees  of  the  United  States 
Circuit  Court  of  Appeals  and  of  the  Circuit  Court  for  the 
District  of  Kansas  must  be 

Reeersed,  and  the  case  remanded  to  the  Circuit  Court  for 
further  proceedings  in  conformity  with  this  opinion. 

Mr.  Justice  White,  with  whom  concurred  Mr.  Justice 
Field,  Mr.  Justice  Gray  and  Mr.  Justice  Shiras,  dissenting. 

It  is  unnecessary  to  refer  to  the  authorities  showing  that 
although  a  contract  may  in  some  measure  restrain  trade,  it  is 
not  for  that  reason  void  or  even  voidable  unless  the  restraint 


49 

1 


i 


united  states  v.  freight  association. 


697 


Dissenting  Opinion :  White,  Field,  Gray,  Sliiras,  JJ. 

which  it  produces  be  unreasonable.    The  opinion  of  the  court 
concedes  this  to  be  the  settled  doctrine. 

The  contract  between  the  railway  companies  which  the 
court  holds  to  be  void  because  it  is  found  to  violate  the  act  of 
Congress  of  the  2d  of  July,  1890,  26  Stat.  209,  substantially 
embodies  only  an  agreement  between  the  corporations  by 
which  a  uniform  classification  of  freight  is  obtained,  by  which 
the  secret  under-cutting  of  rates  is  sought  to  be  avoided,  and 
the  rates  as  stated  in  the  published  rate  sheets,  and  which,  as 
a  general  rule,  are  required  by  law  to  be  filed  with  the  Inter- 
state Commerce  Commission,  are  secured  against  arbitrary 
and  sudden  changes.  I  content  myself  with  giving  this  mere 
outline  of  the  results  of  the  contract,  and  do  not  stop  to 
demonstrate  that  its  provisions  are  reasonable,  since  the  opin- 
ion of  [344]  the  court  rests  upon  that  hypothesis.  I  com- 
mence, then,  with  these  two  conceded  propositions,  one  of 
law  and  the  other  of  fact,  first,  that  only  such  contracts  as 
unreasonably  restrain  trade  are  violative  of  the  general  law, 
and,  second,  that  the  particular  contract  here  under  consid- 
eration is  reasonable,  and  therefore  not  unlawful  if  the  gen- 
eral principles  of  law  are  to  be  applied  to  it. 

The  theory  upon  which  the  contract  is  held  to  be  illegal  is 
that  even  though  it  be  reasonable,  and  hence  valid,  under  the 
general  principles  of  law,  it  is  yet  void,  because  it  conflicts 
with  the  act  of  Congress  already  referred  to.  Now,  at  the 
outset,  it  is  necessary  to  understand  the  full  import  of  this 
conclusion.  As  it  is  conceded  that  the  contract  does  not  un- 
reasonably restrain  trade,  and  that  if  it  does  not  so  unreason- 
ably restrain,  it  is  valid  under  the  general  law,  the  decision, 
substantially,  is  that  the  act  of  Congress  is  a  departure  from 
the  general  principles  of  law,  and  by  its  terms  destroys  the 
right  of  individuals  or  corporations  to  enter  into  very  many 
reasonable  contracts.  But  this  proposition,  I  submit,  is  tan- 
tamount to  an  assertion  that  the  act  of  Congress  is  itself 
unreasonable.  The  difficulty  of  meeting,  by  reasoning,  a 
premise  of  this  nature  is  frankly  conceded,  for,  of  course, 
where  the  fundamental  proposition  upon  which  the  whole 
contention  rests  is  that  the  act  of  Congress  is  unreasonable,  it 
would  seem  conducive  to  no  useful  purpose  to  invoke  reason 


f 


698 


166   UNITED  STATES  REPORTS,  344. 


-  Dissenting  Opinion :  White,  Field,  Gray,  Shlras,  JJ. 

,T^h-  K  "'  ^  '^^  T  «">*«>"»&  the  construction  of  a  stat- 

question  then,  is,  is  the  act  of  Congress  relied  on  to  be  so 
mterpreted  as  to  give  it  a  reasonable  meaning,  or  is  it  to  to 
oonjrued  as  being  unreasonable  and  as  violative  of  L  elt 
mentary  principles  of  justice  ? 

th^^  '"•«"'n«f t  npon  which  it  is  held  that  the  act  forbids 
Jose  reasonable  contracts  which  are  universally  admitted  to 
be  legal  is  thus  stated  in  the  opinion  of  the  court,  and  I  quote 

s  -rrv^sf """  "*^*  '"'"''**'^  "^p"^"-  *»>«  *•>-«»»* 

term  IneludlTSl  kiKf^^^l'iS''  ''^-  I.".*"'"  eo.mtry,  and  the 
Some  of  such  contracts  havnT.fh^M^M''''  L"  '*'^'  '■«''"''"°  t^le- 
courts  by  reason  of  their^iirtot  J^fnJ.''*  """^  ""enforcible  in  the 
have  been  held  valid  h«^^th^'  ^^„"^^^^^^^-  """"e  others 
tract  may  be  to  r^raSt^f  teadr^d"°i„f  *?"»*  "»t°^!-  A  con- 
law.  Although  valid  It  l«  Lvlwh^i  "  "*  ^""'^  at  common 
trade,andwonldbesodeserIb!^Im?lr*"  "'"*™'=*  '"  restraint  of 
By  the  simple  use  of  the  tem  ' ™nJr»^t  ?*  ""1^™  '""'  ""•  <?'«e«here. 
tracts  of  that  Mture.  whetter  ^Hd  nr  i?h'"^**"'-"'  °'  ♦™"*-'''  «"  <=«"- 
and  not  alone  that  fciml  „f  ^Ifif  ?    otherw.se.  xvoiii.l  Iw  included, 

forcible  as  being  In  u^reasouaW^i^fl?^?*'^"''/  "'^'"">  ""1  ""<--"' 
the  body  of  an  act  pronoSXa  a«  liul^l  *  "'  "■""*•  ^•«'''-  therefore. 
to  restraint  of  tra^^r  co^ulr^''^"' ^5^  "*"*"'?'  "■•  """"Wnation 
plain  and  ordinary  meaXro??noh?i?  ^^  ^''^'■'"  ^^''^'  etc  the 
kindof  contract  aline  which  is  InTnJ.^^"''.^*  '*  ?"*  ""'*«*  *«  that 
all  contracts  are  taciud^  to  such  ran™^?*^'*/**'™'"*  "'  *'"'»''*•  "« 
tatlon  can  be  added  ™tooutDbiclnTfSfK'  ""^  S?  e^<*Pt'on  or  ihnl- 
omltted  by  Congress."  "'"^'"^  '"  *"«  ""^  that  which  has  been 

nelw'!!!^  th6  proposition  in  the  form  in  which  it  was  ear- 
n^Uy  pressed  m  the  argument  at  bar,  it  is  as  follows:  Con- 
men  t  hi?  """"^  "°"*™*'*  •"  '^*™°*  «*  t™d«  i«  illegal. 
When  the  law  says  every,  there  is  no  power  in  the  courts  if 

Jrw^rd"^^  interpret  and  apply  th^tatute,  to  sS   ^ te 

liry  *  TI  ^'■  *^"  '^'"^  "  •'^^'•y-"  M  Congress  had 
meant  to  forbid  only  n^traints  of  trade  which  were  unrea 

^"^31"""  ^^^-'.-«*-^  »f  doing  th"  it  has 

Sts  wWh  '  """'u.*'*  ""'^^'^"ty  embraces  both  con- 

tracts which  are  reasonable  and  unreasonable 

Is  the  proposition  which  is  thus  announced  by  the  court 
»d  which  was  thus  stated  at  bar,  well  founded?  i  the  S 
question  which  arises  for  solution.    I  quote  the  title  and  the 


^ean>' 


t 


UNITED   STATES  V.  PBEIGHT  ASSOCIATION.  699 

Dissenting  Opinion :  White,  Field,  Gray,  Shiras,  JJ.    * 
first  section  of  the  act  which,  it  is  asserted,  if  correctly  inter- 
preted, destroys  the  right  to  make  just  and  reasonable  con- 
tracts : 

8tr&'n^m«fr"^  """^^  '^^  """"^"^  '»««•"«*  '"•"-^  "- 

"  Every  contract,  combination  in  the  form  of  trust  or  otherwl«.  nr 
conspiracy  fc  restraint  of  trade  or  commerce  among  thrseverTstoC 
or  with  foreign  nations,  Is  hereby  declared  to  be  illlg^     EvI^  nS^ 

sand  dollars,  or  by  imprisonment  not  exceeding  one  year  or  bv  iwrfh 
said  punishments  to  the  discretion  of  the  court"  ^ 

Is  it  correct  to  say  that  at  common  law  the  words  "  restraint 
of  trade  '  had  a  generic  signification  which  embraced  all  con- 
tracts which  restrained  the  freedom  of  trade,  whether  reason- 
able or  unreasonable,  and,  therefore,  that  all  such  contracts 
are  within  the  meaning  of  the  words  «  every  contract  in  re- 
straint of  trade  »  ?     I  think  a  brief  consideration  of  the  his- 
7uTt  <i^^«l«P'n«nt  of  the  law  on  the  subject  will  not  onlv 
establish  the  inaccuracy  of  this  proposition,  but  also  demon- 
strate that  the  words  «  restraint  of  trade  "  embrace  only  con- 
tracts which   unreasonably  restrain   trade,  and,   therefore, 
that  reasonable  contracts,  although  they,  in  some  measure, 
restrain  trade,"  are  not  within  the  meaning  of  the  words. 
It  IS  true  that  in  the  adjudged  cases  language  may  be  found 
referring  to  contracts  in  restraint  of  trade  which  are  valid 
because  reasonable.     But  this  mere  form  of  expression,  used 
not  as  a  definition,  does  not  maintain  the  contention  that 
such  contracts  are  embraced  within  the  general  terms  every 
contract  m  restraint  of  trade.    The  rudiments  of  the  doc- 
trine of  contracts  in  restraint  of  trade  are  found  in  the  com- 
mon law  at  a  very  early  date.    The  first  case  on  the  subject 
IS  reported  in  6  Year  Book  5,  2  Hen.  V,  and  is  known  1^1 
Dtersca^e     That  was  an  action  of  damages  upon  a  bond 
conditioned  that  the  defendant  should  not  practiS^hiJ  tr^de 

r  17T  ri  !  J*f  *r''"'  P''*=^  *^""°«  '^  "-nited  period,  and 
It  was  held  that  the  contract  was  illegal.  The  princinle 
upon  wh,ch  this  case  was  decided  was  L  described  asTne 
forbidding  contracts  in  restraint  of  trade,  but  was  stated 
to   be  one   by   which   contracts   restricting  the   liberty  of 


f 


700 


166  UKITED  STATES  EEP0BT8,  347. 


DlMentlng  Opinion :  White,  Field,  Grsy,  Shlras,  JJ. 
[847]  the  subject  were  forbidden.    The  doctrine  declared  in 
that  case  was  applied  in  subsequent  cases  in  Englan.Urio^ 

^  .r^      i^'"^  P"'*'"'  restraints  was  first  definitely  for- 
mulated and  It  was  held  that  a  contract  creating  a  partial 

nT'^^eThL^^oVplr  T""^  "i^"^-'  -'«•'"  -' 
hv  il..;      tfteoiy  of  partial  and  general  restraints  established 

ii  how^r  wi  b"7:J  "  """^  '^"•''^  «*-  '»  ^-^-'-M 
r^n  the^;Zf    •       '  «>"«^»«^  of  the  differonce  be- 

questioned,  until  the  matter  was  set  finally  at  rest  hv  tv,^ 

House  of  Lords  in  A^orrfen//.// V  r*.  w     •     »t    ^     .  ,  •    ""^ 
^j  A  .7.  oraenfeit  \.  Ihe  Maanm  Nordenfelt  Gua» 

and  Ammunition  C<,..  reported  in  (1894)  App  Cas  535  T^ 
that  case  it  was  held  that  the  distinction  betwee^p^S  an3 
general  restrant  was  an  incormrt  criterion,  but  thartjether 
.contract  was  invalid  because  in  restraint'of  trade  ,n.'de 
pend  upon  whether,  on  considering  all  the  circumstances  the 
contract  was  found  to  be  «asonable  or  un^asonable  Tf  Mt 
sonable,  ,t  was  not  a  contract  in  restraint  of  trad;  and  if 
unreasonable  it  was.  '  " 

fo™'*f  wi*"!!***.*^' ^*'"«"'  «'»^  substantially  con- 

staunt  has  been  either  expressly  or  impliedly  admitted  the 
rabje^  of  discussion  and  varying  adjudication.    And  al- 

toade  and  yet  valid,  it  results  from  an  analysis  of  all  the 
A^am  cases,  as  it  does  from  the  English,-that  these  e^! 
pressions  m  no  way  unply  that  contracts  which  were  valid  be- 
cause Uiey  only  partially  restrained  trade  were  yet^ns^de^ 

of  trade.  On  the  contrary,  the  reason  of  the  cases  whe~ 
STbeTaSd""  ^Z"""^'  ^r*^"  ^^'^  excepted^  W 
^int  of  t«de  in  the  legal  meaning  of  those  words.  Re- 
ferring to  the  modem  and  Ameri-  [848]  can  rule  on  the 


tC" 


r 


UNITED   STATES   V.  FREIGHT  ASSOCIATION.  701 

Dissenting  Opinion :  Wliite,  Field,  Gray,  Shiras,  JJ. 

subject,  Beach  in  his  recent  treatise  on  the  Modern  Law  of 
Contracts,  at  section  1569,  says: 

The  fact  that  the  exclusion  of  reasonable  contracts  from 
the  doctrine  of  restraint  of  trade  was  predicated  on  the 
conclusion  that  such  contracts  were  no  longer  considered  as 
coming  withm  the  meaning  of  the  words  "  restraint  of  trade  " 
IS  nowhere  more  clearly  and  cogently  stated  than  in  the 
opmion  of  the  Court  of  Appeals  of  the  State  of  New  York 
in  tl^  case  of  Matthews  v.  Associated  Press  of  New  York 
T.u    J*/^^'    ■^'^  «>nsidering  the  contention  that  a  by-law 
of  the  defendant  association  which  prohibited  its  members 
from  receiving  or  pubUshing  "  the  regular  news  dispatches 
Of  any  other  news  association  covering  a  like  territory  and  or- 
ganized for  a  like  purpose  "  was  void,  because  it  tended  to 
restrain  trade  and  competition  and  to  create  a  monopoly,  the 
learned  judge  said  (p.  340) : 

nevertheless,  valid  contracts,  and  ZiTtnforcld^thXL*!^^  "''*' 

by-laws  must  also  be  limitwi  hv  fhl  oJ.^:        ^         autnonty  to  make 
atloTi      T  fhi«r +».•     "™/«-^  py  the  scope  and  purpose  of  the  assooi- 

^^  of^ad^^s  .nu^  r JK  r  .r.!5.  '■* '"  • 

This  lucid  statement  aptly  sums  up  the  process  of  reason- 
ing by  which  partial  and  reasonable  contracts  came  no  longer 


r 


li! 


1       I 


702 


166  UNITED  STATES  BEPOBTS,  349. 


Dlssentrng  Opinion :  White.  Field.  Gray.  Shlras.  JJ 

!trattTf1r!7'  ^}^'^^^^^  in  the  words  contracts  in  re- 

So^ition  tht  "     J^T  t"^'  ^""•''y  ^-bodied  in  the 
^position  that  contracts  which  were  held  not  to  be  in 

TTT  t'?^'  "'"^  y***  '^^'^  "^y  the  wordst  Sst^ilt 
of  trade;  that  ,s  that  although  they  were  not  such  c^lnTct" 

ot  the  by-law  the  opinion  proceeds  as  follows  (p  341)  • 

other  than  that  of  the  paSne^wr^^th.?"'**  S"^"'*  *"  ^^^  "ustoe^ 
mmt  agree  not  to  do  anTXr  iusC™  LT''  P"/*"r  """  '=»'"«  «" 
bos  ness  as  he  had  theretofore  done  Z^rl""**  «"'^  "P  ^11  such 
be  in  reatraint  of  trade  althomrh  1?f  ,ii£!!»  - "  agreement  would  not 
to  eome  extent  the  trad^  whWad'b^S^*on^^'  ""^'"  "^  '»  '««^'"" 
This  adds  cogency  to  the  demonstration,  and  shows  in  the 
n,(«t  conclusive  manner  that  the  words  contracts  i^TLt™ 2 
of  rade  do  not  continue  to  define  those  contracts  wS"^ 
BO  longer  covered  by  the  legal  meaning  of  the  words 

non  between  partial  and  general  restraints,  but  ha^  nl«« 

eff^rbVt  i?  t J         r^^'n*"" '"  **  '"*«'^"'*  't  P'-^duces  such 
effect,  but  whether  under  all  the  circumstances  it  is  reason 

68;  Crtbhs  V  Baltimore  Gas  Co.,  130  IT.  S.  396,  W    As  it  is 

rsX'pen'dTn^r"*^'  '"*"  "  f""^  -minationt/tV 
S^he  stT       I       T"^'"  "  '^f«'-«n«e  to  decisions  of  some 
of  the  state  courts  and  to  several  writers  on  the  subiect  of 

Twitn'thTlTtf  V  *™'^'  ^J  ^'"^  *^«  do:t2Ts  r:' 
viewed  and  the  authorities  very  fully  referred  to.' 

-i^^ll!!!i^:!^!_^l^!^^i^gf^'|^^^  common 

0^*0000  j^tu>:^u^Z:.c::^^'rzi:^,'^^  Tr^  '• 

tracts,  p.  748;   Note  to  Angier  yWeiL  ^  a™   r2^  T'  "°  ^°- 

plemental  Note.  9th  Am  ed  Tift  l^asul\.^  7  ^^  '**•  ""'^  ^"P- 
Eaton  m  4  HarV.  Law  Ke^ew  p  i^  io^*^L*  V  ^"^  "'  ^  "• 
of  Trade  (18M).  '^^         "***^  =  Patterson  on  Restraint 


UNITED  STATES  V.  PBEIGHT  ASSOCUTION.  ,         703 
Dissenting  Opinion :  White,  Field,  Gray,  Shiras.  JJ. 
law  contracts  which  only  partially  restrain  trade,  to  use  the 
precise  language  of  Maule,  Justice,  in  Rannie  v   Irvine   7 

rule     that  IS,  the  rule  as  to  contracts  in  restraint  of  trade, 
and  that  the  exception  is  in  furtherance  of  the  rule  itself  " 

tClT'-     T'  '"f?**^*'^  *«t  the  further  development  of 
the  dottrme  by  which  it  was  decided  that  if  a  contract  was 
reasonable  ,t  would  not  be  held  to  be  included  within  con! 
tracts  in  restraint  of  trade,  although  such  contract  might  in 
some  measure  produce  such  an  effect,  was  also  an  e.x^ption 
to  the  general  rule  as  to  the  invalidity  of  contracts  in  re- 
Tilf^  T         The  theory,  then,  that  the  words  restraint 
of  trade  define  and  embrace  all  such  contracts  without  refer- 
ence to  whether  they  are  reasonable,  amounts  substantiallv  to 
saymg  that,  by  the  common  law  and  the  adjudged  American 
cases  certam  classes  of  contracts  were  carved  out  of  and  ex- 
cepted from  the  general  rule,  and  yet  were  held  to  remain 
embraced  within  the  general  rule  from  which  they  were 
removed.     But  the  obvious  conflict  which  is  shown  by  th! 
contradictory  result  to  which  the  contention  leads  rests  not 
upon  the  mere  form  of  statement  but  upon  the  [3511  reason 
of    hings     This  will,  I  submit,  be  shown  by  a  veiyTrkf 
analysis  of  the  reasons  by  which  partial  restraints  were  held 
not  to  be  embraced  in  contracts  in  restraint  of  trade,  and  by 
which  u  timately  all  reasonable  contracts  were  like^i^^^ 

b.t"l    ..r  ""'"^"^-    ^''  ''  *«  ^y-  '^'^'  the  reason- 
ng  by  which  the  exceptions  were  created  conclusively  shows 

the  error  of  contending  that  the  words  contracts  in  restraint 
of  trade  contmued  to  embrace  those  reasonable  contracts 
Which  those  words  no  longer  described 

res't™inr„'J'tr  T^^'''  *]>«  P^nciple  by  which  contracts  in 
restrain    of  the  fr^dom  of  the  subject  or  of  trade  were  held 

whi^h  n^  "T  ''"'  ""'*^'^'"'"*  *«  ^'"hrace  all  contract, 
which  in  any  degree  accomplished  these  results.  But  as 
trade  developed  it  came  to  be  understood  that  if  contracts 
which  only  partially  restrained  the  freedom  of  the  subS 
or  of  trade  were  embraced  in  the  rule  forbidding  colaS 
n  restraint  of  trade,  both  the  freedom  of  contracf  an"  Se 
tself  would  be  destroyed.  Hence,  from  the  reason  of 
things,  arose  the  distinction  that  where  contracts  ojJ^ted 


704 


166   UNITED  STATES  REFOBTS,  351. 


Ill 


Fil 


}i 


Dissenting  Opinion :  White,  Field,  Gray,  Shiras,  JJ. 

only  a  partial  restraint  of  the  freedom  of  contract  or  of 
trade  they  were  not  in  contemplation  of  law  contracts  in 
restraint  of  trade.    And  it  was  this  conception  also  which, 
in  its  final  aspect,  led  to  the  knowledge  that  reason  was  to 
1)6  the  criterion  by  which  it  was  to  be  determined  whether  a 
contract  which,  in  some  measure,  restrained  the  freedom  of 
contract  and  of  trade,  was  in  reality,  when  considered  in  all 
its  aspects,  a  contract  of  that  character  or  one  which  was 
necessary  to  the  freedom  of  contract  and  of  trade.    To  de- 
fine, then,  the  words  "  in  restraint  of  trade  "  as  embracing 
every   contract  which   in   any   degree   produced   that  effect 
would  be  violative  of  reason,  because  it  would  include  all 
those  contracts  which  are  the  very  essence  of  trade,  and 
would  be  equivalent  to  saying  that  there  should  be  no  trade, 
and  therefore  nothing  to  restrain.      The  dilemma   which 
would  necessarily  arise  from  defining  the  words  "  contracts 
in  restraint  of  trade  "  so  as  to  destroy  trade  by  rendering 
illegal  the  contracts  upon  which  trade  depends,  and  yet  pre- 
supposing that  trade  would  continue  and  should  not  be  re- 
strained, is  shown  by  an  argument  advanced,  and  which  has 
been  com-  [852]  pelled  by  the  exigency  of  the  premise  upon 
which  it  is  based.     Thus,  after  insisting    that    the  word 
"  every  "  is  all-embracing,  it  is  said  from  the  necessity  of 
things  it  will  not  be  held  to  apply  to  covenants  in  restraint 
of  trade  which  are  collateral  to  a  sale  of  property,  because 
not  "  supposed  "  to  be  within  the  letter  or  spirit  of  the  stat- 
ute.   But  how,  I  submit,  can  it  be  held  that  the  words 
'""every  contract  in  restraint  of  trade  "  embrace  all  such  con- 
tracts, and  yet  at  the  same  time  be  said  that  certain  con- 
tracts of  that  nature  are  not  included  ?    The  asserted  excep- 
tion not  only  destroys  the  rule  which  is  relied  on,  but  it 
rests  upon  no  foundation  of  reason.     It  must  either  result 
from  the  exclusion  of  particular  classes  of  contracts,  whether 
they  be  reasonable  or  not,  or  it  must  arise  from  the  fact  that 
the  contracts    referred    to  are  merely  collateral  contracts. 
But  many  collateral  contracts  may  contain  provisions  which 
make  them  unreasonable.    The  exception  which  is  relied 
upon,  therefore,  as  rendering  possible  the  existence  of  trade 
to  be  restrained  is  either  arbitrary  or  it  is  unreasonable. 
But,  admitting  arguendo  the  correctness  of  the  proposi- 


. 


• 


UNITED  STATES  V.  FBEIGHT  ASSOCIATION.  705 

Dissenting  Opinion:  White,  Field.  Gray,  Shiras,  JJ. 
tion  by  which  it  is  sought  to  include  every  contract,  however 
reasonable,  within  the  inhibition  of  the  law,  the  sM^Z 
sidered  as  a  whole,  shows,  I  think,  the  erro;  of  the  con  tac- 
tion placed  upon  ,t.     Its  title  is  "An  act  to  protect  trade  ^nd 
commerce  against  unlawful  restraints  and  monopolies  "  The 
word   "  un  awful "  clearly  distinguishes  between  contract 
in  restraint  of  trade  which  are  lawful  and  those  which  at 
not.     In  other  words,  between  those  which  a.*  unreasonably 
m  restraint  of  trade,  and  consequently  invalid,  and  th^ 
which  are  reasonable  and  hence  lawful.    When    therefT 
n  the  very    itle  of  the  act  the  well-settled  distinction  bl' 
tween  lawful  and   unlawful  contracts  is  broadly  marked 
how  can  an  interpretation  be  correct  which  holds  that  al 
contracts,  whether  lawful  or  not,  are  included  in  L  prol 

used  to  destroy  the  plain  import  of  the  language  found  in  its 
body,  yet  when  a  literal  interpretation  will  wfrk  out  wrftng 
or  injury,  or  where  the  words  of  the  statute  ai.  ambi— 
the  title  may  be  resorted  to  as  an  instrument  of  constrifctbn 
^-VM  States  [353]  v.  Paln,.er,  3  meat.  610.  where  cT-' 
eral  language  found  in  the  body  of  a  criminal  statute  tls 

SZhaVLT  ''"'  n"r  ■"^""•"^'  ^'•-  Chief  jL^^ 
Marshall,  in  the  course  of  the  opinion,  said  (p.  631) :  "The 
title  of  an  act  cannot  control  its  words,  but  may  furnil 
some  aid  m  showing  what  was  in  the  m  nd  of  the  iSf 
ture.  The  title  of  this  act  is  'An  act  for  the  punisWof 
certain  crimes  against  the  United  States.'  ft  w^U  im 
that  offences  agamst  the  United  States,  not  offences  agJS 
he  human  race,  were  the  crimes  which  the  legidatuS  Sf 
tended  by  this  law  to  punish."  «gisiature  m- 

.?was  Lid  tW  S  ''T^"^*'""  °f  -  statute  was  invol^ 
tTrntlV:-  f'^P^'^'i--  adopted  was  supported 

Se^had  1;  v^  r"^-  '^'  ^'"^••^^  P^'-Po^^  which  Con- 

gress  had  in  view  m  adopting  the  law  under  consideration 

''irr^t^,^  r!jr-  ''^  *»>«  ^^^^  -not  be 


1 


r 


I  > 


:f 


I! 


1 

1 

1 

1 

1 

706 


166  UNITED   STATES   REPORTS,  353. 


Dissenting  Opinion:  White,  Field,  Gray,  Shiras,  JJ. 

denied  that  the  words  "  restraint  of  trade  "  used  in  the  act  in 
question  had  long  prior  to  the  adoption  of  that  act  been  con- 
strued as  not  embracing  reasonable  contracts.  The  well- 
settled  rule  is  that  where  technical  words  are  used  in  an  act, 
and  th6ir  meaning  has  previously  been  conclusively  settled, 
by  long  usage  and  judicial  construction,  the  use  of  the  words 
without  an  indication  of  an  intention  to  give  them  a  new 
significance  is  an  adoption  of  the  generally  accepted  meaning 
affixed  to  the  words  at  the  time  the  act  was  passed.  Particu- 
larly is  this  rule  imperative  where  the  statute  in  which  the 
words  are  used  creates  a  crime,  as  does  the  statute  under 
consideration,  and  gives  no  specific  definition  of  the  crime 
created.  Thus  in  United  Statea  v.  Palmer  (supra),  Mr. 
Chief  Justice  Marshall,  referring  to  the  term  "robbery" 
as  used  in  the  statute,  said  (p.  G30) :  "  Of  the  meaning  of  the 
term  '  robbery,'  as  used  in  the  statute,  we  think  no  doubt  can 
be  entertained.  It  must  be  understood  in  the  i^ense  in  which 
it  is  recognized  and  defined  at  common  law." 

[3o4]  If  these  obvious  rules  of  interpretation  be  applied, 
it  seems  to  me  they  render  it  impossible  to  construe  the  words 
every  restraint  of  trade  used  in  the  act  in  any  other  sense  than 
as  excluding  reasonable  contracts,  as  the  fact  that  such  con- 
tracts were  not  considered  to  be  within  the  rule  of  contracts 
in  restraint  of  trade,  was  thoroughly  established  both  in  Eng- 
land and  in  this  country  at  the  time  the  act  was  adopted.  It 
is,  I  submit,  not  to  be  doubted  that  the  interpretation  of  the 
words  "  every  contract  in  restraint  of  trade,"  so  as  to  embrace 
within  its  purview  every  contract,  however  reasonable,  would 
certainly  work  an  enormous  injustice  and  operate  to  the  un- 
due restraint  of  the  liberties  of  the  citizen.  But  there  is  no 
canon  of  interpretation  which  requires  that  the  letter  be  fol- 
lowed, when  by  so  doing  an  unreasonable  result  is  accom- 
plished. On  the  contrary,  the  rule  is  the  other  way,  and 
exacts  that  the  spirit  which  vivifies,  and  not  the  letter  which 
killeth,  is  the  proper  guide  by  which  to  correctly  interpret  a 
statute.  In  Smythe  v.  Fiske^  23  Wall.  374,  380,  this  court 
declared  that  "  a  thing  may  be  within  the  letter  of  the  statute 
and  not  within  its  meaning,  and  within  its  meaning,  though 
not  within  its  letter.  The  intention  of  the  lawmaker  is  the 
law."    In  Lau  Ow  Bew  v.  Tlie  United  States,  144  U.  S.  47, 


UNITED   STATES   V.  FREIGHT  ASSOCIATION.  707 

Dissenting  Opinion :  White,  Field,  Gray.  Sliiras,  JJ. 

Of  me  Holy  Trinttyy    uZTsmel  m" u" S  "S?  "t"<,  *'*""'* 
Mayor  of  New  York  92  TT   <J    ^a-  VrJi,^  ^'x  "•'  *°' '  Henderson  v. 

482;  oJes  v.  HatZnalBanki(^v:£%"  ^""'*  ^^  ^*'^''-  ^  ^»"- 

In  all  the  cases  there  cited  the  literal  language  of  the 

statute  was  disregarded,  in  order  to  restrict  it.  fperat  on 

within  reason.     To  those  cases  ™ay  also  be  adde7"S 

bv  tt  r  ;    ;  M^'  Vl^-  ®,-  '^'  "'^^"^  '*  ^^'  «<>"tended  that 

vested   wth  ?  f'  ''^''  "  ''^'  '^^  C''-<="it  Courts  were 

vested  with  jurisdiction  concurrent  with  District  Courts 

Znir  "n  ■    ''''  ^'T"^"^'^  «*  t'^^  argument,  baS 
upon  the  literal  language  of  the  statute,  was  conceded  bv  the 

court,  but  the  [355]  results  which  would  follow  from  sus 

taming  the  construction  contended  for  were  pointed  out  by 

the  court,  and  it  was  observed   (p.  107) :  "A  construction 

Jhuc^  evolves  such  results  was  clearly  nit  contem^ted  S; 

Indeed,  it  seems  to  me  there  can  be  no  doubt  that  reason- 
able contracts  cannot  be  embraced  within  the  provisioTof 
the  statute  If  it  be  interpreted  by  the  light  of  the  ZTeme 

ried  out  and  it  must  be  so  construed  as  to  afford  the  remedv 
and  frustrate  the  wrong  contemplated  by  its  enactment 

Ihe  plain  intention  of  the  law  was  to  protect  the  libertv  nf 
contract  and  the  freedom  of  trade.    Will  tS  i tenttnVo 
aUea"tt^',  '•'  construction  which,  if  it  does  not  destr^; 

Itractld  ttTT'  ^^  *^'  '^""^  «*  *^«  '"<Ji^dual  to 
contract  and  the  freedom  of  trade  ?    If  the  rule  of  reason  nn 

LXs  tTS%"^'; ""'  *^  ^'^^'^'^-^  *«  -^-t  o 

secures  the  validity  of  contracts  upon  which  ivA^a  A^r..r.A 

ot  ireedom  of  contract,  it  seems  to  me,  is  so  interpreted  as  to 
^avely  impair  that  freedom.  ProgreL  and  noTSon  tS 
the  purpose  of  the  act  of  Congress.    The  constnictiTnow 


..,^j^|^p|||^^_^ 


ll' 


li 


708 


166  UNITED  STATES  BEPOBTS,  355. 


DIssenanB  Opinion:  White.  Field,  Gray.  Shlras.  JJ. 
pven  the  act  disregards  the  whole  current  of  judicial  au- 
thority and  tests  the  right  to  contract  by  the  conceptions  of 
that  right  entertained  at  the  time  of  the  year-books  instead 
of  by  the  light  of  reason  and  the  necessity  of  modern  society. 
To  do  this  violates,  as  I  see  it,  the  plainest  conception  of 
public  policy;  for  as  said  by  Sir  G.  Jessel,  Master  of  the 
Itolls,  mPrmtmff  <&c.  Company  v.  Sampson,  L.  B.  19  Eq. 
462,     if  there  is  one  thing  which  more  than  another  public 
policy  requires  it  is  that  men  of  full  age  and  competent  un- 
derstanding shall  have  the  utmost  liberty  of  contracting,  and 
their  «,ntracts  when  entered  into  freely  and  voluntarily  shall 
be  held  sacred  and  shall  be  enforced  by  courts  of  justice  " 

Ihe  remedy  intended  to  be  accomplished  by  the  act  of  Con- 
gr^s  was  to  .hiold  against  the  danger  of  contract  or  combi- 
1856]  nation  by  the  few  against  the  interest  of  the  manv  and 
to  the  detriment  of  freedom.  The  construction  now  given,  I 
think,  strikes  down  the  interest  of  the  many  to  the  advantage 
and  benefit  of  the  few.  It  has  been  held  in  a  case  involvin.. 
a  combination  a.nong  workingmen,  that  such  combinations 
are  embraced  in  the  act  of  Congress  in  question,  and  this  view 

^IL^KK    ?«  fr  ^l  *^''  '^"'^    ^'^  '•^  ^^^''  64  Fed.  Rep.  724. 
?Wf    '     I  Y-u^\f^i    '^'  interpretation  of  the  slatute, 
therefore,  which  holds  that  reasonable  agreements  are  within 
Its  purview,  makes  it  embrace.every  peaceable  organization  or 
combination  of  the  laborer,  to  benefit  his  condition  either  bv 
obtaining  an  mcrease  of  wages  or  diminutipn  of  the  hou.^ 
of  l?bor.    Combinations  among  labor  for  this  purpose  were 
treated  as  lUegal  under  the  construction  of  the  law  which  in- 
<dud«l  reasonable  contracts  within  the  doctrine  of  the  invalid- 
ity of  contract  or  combinations  in  restraint  of  trade,  and  they 
were  only  held  not  to  be  embraced  within  that  doctrine  either 
by  statutory  exemption  therefrom  or  by  the  progress  which 
made  reason  the  controlling  factor  on  the  subject.    It  fol- 
in    1  !  !  '^''l*™*'*'""  ^Wch  reads  the  rule  of  reason  out 
of  the  ^atute  embraces  within  its  inhibition  ever,,  contract 
or  combination  by  which  workingmen  seek  to  peaceably  better 
their  condition.    It  is  therefore,  as  I  see  it,  absolutely  true 
to  say  that  the  construction  now  adopted  which  works  out 
su(^  results  not  only  frustrates  the  plain  purpose  intended 
to  be  accomplished  by  Ongress,  but  also  makes  the  statute 


UNITED  STATES  V.  FREIGHT  ASSOCIATION.  709 

Drssentlng  Opinion :  White,  Field.  Gray.  Shlras,  Jj. 
tend  to  an  end  never  contemplated,  and  against  the  accom 
phshment  of  which  its  provisions  were  enacted. 
But  conceding  for  the  sake  of  argument  that  the  word, 
every  contract  m  restraint  of  tradeT"  as  used  in  the  Tct  of 
Congress  in  question,  prohibits  aU  such  contracts  however 
r^sonable  they  may  be,  and  therefore  that  all  that  great  l^dv 

viduals  or  corporations  and  which  promote  and  develoD  tradl 
and  which  have  been  heretofore  considered  as  lawfo^are  no 

i~S;nTof""t'"^  ''"^  '''''  «^---^^  -"«^^nto 
dition^Ser  bv  1^"':^'"«"«'>  *«  P««««aWy  better  their  con- 
amon  either  by  obtammg  an  increase  or  preventing  a  decrease 
[357J  of  wages,  or  by  securing  a  reduction  in  the  ho^^ol 
labor,  or  for  mutually  protecting  each  other  froni  u.d.rt 

S.Ttrem?'"  t"  "^r"'^  ^"••P"-'  havetZ-! 
ac7of  ison  f  T''^*"  ^^^*'»«'-  *»»«  provisions  of  the 

?ln  frr  e"?orT:'''  '"  "PP'^/"  ^S— nts  made  ^ 
hit    ^"^^^  ^"^  *l>e  purpose  of  classifying  the  freight  in 
be  by  them  carried,  or  preventing  secret  cutting  ofThfti 
hshed  rates;  ,n  other  words,  whether  the  termsSf  (h!  1^?" 

into  for  the  purpose  of  securing  fairness  in  thl    i    i 

»«..  ih.„.o,  »n™.„„  ta,„w„  rs  S  ?,'^'^::t 

a  controlled  by  the  interstate  commerce  law.    The 


H 


|{ 


710 


166  UNITED  STATES  REPORTS,  357. 
Dissenting  Opinion:  White.  Field,  Gray,  Shlras,  JJ. 


statute,  commonly  known  as  the  Interstate  Commerce  Act, 
was  a  special  act,  and  it  was  intended  to  regulate  interstate 
commerce  transported  by  railway  carriers.  All  its  provisions 
directly  and  expressly  related  to  this  subject.  The  act  of 
1890,  on  the  contrary,  is  a  general  law,  not  referring  specif- 
ically to  carriers  of  interstate  commerce.  The  rule  is  that 
a  general  will  not  be  held  to  repeal  a  special  statute  unless 
there  be  a  clear  implication  unavoidably  resulting  from  the 
general  law  that  it  was  the  intention  that  the  provisions  of 
the  general  law  should  cover  the  subject-matter  previously, 
expressly  and  specifically  provided  for  by  particular  legis- 
lation. The  doctrine  on  this  [358]  subject  is  thus  stated  in 
Em  forte  Crow  Dog,  109  U.  S.  556,  570 : 


M  « 


JThe  general  principle  to  be  applied,'  said  Bovill,  C.  J.,  in  Thorpe 
V.  Aaams,  L.  R.  6  C.  P.  135.  *  to  the  construction  of  acts  of  Parliament, 
18  that  a  general  act  is  not  to  be  construed  to  repeal  a  previous  par- 
ticnlar  act  unless  there  is  some  express  reference  to  the  previous 
legislation  on  the  subject,  or  unless  there  is  a  necessary  inconsistency 
in  the  two  acts  standing  together.'  'And  the  reason  is,'  said  Woo<L 
V.  C,  in  Fitsfferald  v.  Champenys,  30  I^  J.  N.  S.  Eq.  782 ;  2  Johns.  & 
Hem.  dl-54,  that  the  legislature,  having  had  its  attention  directed 
to  a  special  subject,  and  having  observed  all  the  circumstances  of  the 
case  and  provided  for  them,  does  not  intend  by  a  general  enactment 
afterward  to  derogate  from  its  own  act  when  it  makes  no  special 
mention  of  its  intention  so  to  do.' " 

These  principles  thus  announced  are  treated  as  elementary 
by  the  text  writers.  Endlich  on  Interpretation  of  Statutes, 
§  223;  Sedgwick  on  Statutory  Construction,  §§  157,  158; 
Sutherland  on  Statutory  Construction,  §  157. 

Does,  therefore,  the  implication  irresistibly  arise  that  Con- 
gress intended  in  the  act  of  1890  to  abrogate,  in  whole  or  in 
part,  the  provisions  of  the  act  of  1887,  regulating  interstate 
commerce  ?  It  seems  to  me  that  the  nature  of  the  two  enact- 
ments clearly  demonstrates  that  there  was  no  such  intention. 
The  act  to  regulate  interstate  commerce  expressed  the  pur- 
pose of  Congress  to  deal  with  a  complex  and  particular  sub- 
ject which,  from  its  very  nature,  required  special  legislation. 
That  act  was  the  initiation  of  a  policy  by  Congress  looking 
to  the  development  and  working  out  of  a  harmonious  system 
to  regulate  the  highly  important  subject  of  interstate  trans- 
portation. 

Conceding  arguendo  that  the  debates  which  took  place  at 
the  time  of  the  passage  of  the  act  of  1890  may  not  be  resorted 


■' 


UNITED   STATES  V.  FBEIGHT  ASSOCIATION. 


711 


Dissenting  Ophiion :  White,  Field,  Gray,  Shh-as,  JJ. 

to  as  a  means  of  interpreting  its  text,  yet  a  review  of  the  pro- 
ceedings connected  with  the  passage  of  the  act  of  July  2, 1890, 
through  the  two  houses  of  Congress,  it  seems  to  me,  leaves  no 
room  for  question  that  the  act  was  not  designed  to  cover  the 
particular  subjects  which  had  been  theretofore  specially  regu- 
lated by  provisions  of  the  interstate  commerce  law. 

[359]  Prior  to  the  passage  of  the  act  of  1890,  various  re- 
ports had  been  made  to  Congress  concerning  the  operations 
of  the  Interstate  Commerce  Act,  in  which  the  commission 
pointed  out  the  desirability  and  necessity  of  contracts  be- 
tween railroad  companies  in  the  matter  of  classification, 
stable  rates,  etc.    After  the  act  of  1890  had  been  adopted  in 
the  Senate,  it  was  amended  in  the  House  of  Representatives 
so  as  to  specifically  include  among  the  contracts  declared  law- 
ful "  contracts  for  the  transportation  of  persons  or  property 
from  one  State  or  Territory  into  another."    Cong.  Rec.  vol. 
21,  part  5,  pp.  4099,  4144.    On  the  return  of  the  bill  to  the 
Senate  the  amendment  was  agreed  to  with  the  added  pro- 
vision that  the  contracts  for  transportation  to  be  prohibited, 
"  should  only  be  such  as  raise  the  rates  of  transportation 
above  what  is  just  and  reasonable."    lb.  4753.    The  House 
refused  to  concur  in  the  Senate  amendment.    A  conference 
committee  was  appoint-ed  by  both  bodies,  which  recommended 
that  the  House  of  Representatives  recede  from  its  disagree- 
ment to  the  amendments  of  the  Senate  and  agree  to  the  same, 
modified  by  the  addition  of  the  provision  that  "  nothing  in 
this  act  shall  be  deemed  or  held  to  impair  the  powers  of  the 
several  States  in  respect  to  any  of  the  matters  in  this  act 
mentioned."    In  a  statement  accompanying  the  report,  Mr. 
Stewart,  for  the  conferees  on  the  part  of  the  House,  said : 

"A  majority  of  the  committee  of  conference  on  the  part  of  the 

k"^.^u  t^e  disagreeing  votes  of  the  two  Houses  on  Senate  bill  one. 

submit  the  following  statement :  ^ 

"In  the  original   bill   two  things  were  declared   illegal,  namely 

Xation'o?  sTchTad:'  "'^""^'^  '^^"^  ^^  ^^'"-^^-'  ^^  ^^^  ^^^^ 
"  Its  only  object  was  the  control  of  trusts,  so  called,  so  far  as  such 

FJSe^r I'egTslaUon  '''^*''^  *"  ^*"''*^*"  *'^^"  ^^^  ^"'^^^  '^^'^^^ 
"The  House  amendment  extends  the  scope  of  the  act  to  all  aCTee- 
ments  entered  into  for  the  purpose  of  preventing  competition,  either 
m  the  purchase  or  sale  of  commodities,  or  in  the  transportation  of 
^rlSS?  «"*  P^'^P^'^ty  ^'ithin  the  jurisdiction  of  Congress. 

[860]     It  declares  illegal  any  agreement  for  relief  from  the  eflPects 


f 


712 


166  UNITED  STATES  REPORTS,  360. 
Dissenting  Opinion :  White.  Field.  Gray,  Shiras.  JJ. 


UNITED   STATES   V.  FREIGHT   ASSOCIATION. 


713 


!  |i 


Of  competition  in  the  two  industries  of  transportation  and  merchan- 
dising  however  excessive  or  destructive  such  competition  mayT 

The  amendment  reported  by  the  conferees  is  the  Senate  Vmend 
ment  with  the  added  proviso  that  the  power  of  the  Stetes  oveTthe 
snbjeets  embraced  in  the  act  shall  not  b^  impaired  thereby 
tr«nf«  ?i^J  r  ^"^'^  t^^  House  amendment  the  clause  relating  to  cou- 

Elausebv  making  ^^^  "^^'^^^  the  traVspoX 

lion  Clause  by  making  unlawful  agreements  which  raise  ratps  nhnvo 

what  is  just  and  reasonable."  Con|.  Rec.,  vol  21.  part  tp  6^.  "^ 
The  House  rejected  the  report  of  the  conference  committee 
and  adhered  to  its  amendments.  A  new  conference  com- 
mittee  was  appointed,  and  the  recommendation  of  that  com- 
mittee that  both  houses  recede  was  concurred  in,  and  the  bill 
as  It  originally  passed  the  Senate  was  adopted.  Conff  Rec 
vol.  21,  part  9,  p.  6212. 

It  thus  appears  that  the  bill  was  originally  introduced  in 
the  form  m  which  it  now  appears;  that  this  form  was 
thought  not  to  be  sufficient  to  embrace  railroad  transporta- 
tion,  and  that  a  determined  effort  was  made  by  the  proposed 
amendment  to  include  such  contracts,  and  that  the  effort  was 
unsuccessful.    The  reports  to  Congress  by  the  commission 
and  by  the  conference  committee  being  facts  proper  to  be 
noticed  m  seeking  to  ascertain  the  intention  of  Congress 
Church  of  Holy  Trinity  v.  United  States,  143  U.  S.  457  it 
would  seem  to  be  manifest  therefrom  that  there  was  no  in- 
tention by  the  act  to  interfere  with  the  control  and  regulation 
of  railroads  under  the  Interstate  Commerce  Act  or  with  acts 
of  the  companies  which  had  therefore  been  recognized  as  in 
conformity  to  and  not  in  conflict  with  that  act. 

That  there  was  and  could  have  been  no  intention  to  repeal 

by  the  act  of  1890  the  earlier  "  act  to  regulate  interstate  com- 

merce    is  additionally  evidenced  by  the  fact  that  no  reference 

IS  made  in  the  later  act  to  the  prior  one,  and  that  no  language 

IS  attained  in  the  act  of  1890  which  could  in  any  way  be  con- 

imi}  strued  as  abrogating  any  of  the  rights  conferred  or 

powers  called  into  existence  by  the  Interstate  Commerce  Act. 

JVowhere,  contemporaneous  with  the  act  of  1890,  is  there  any- 

^mg  indicating  that  any  one  supposed  that  the  provisions  of 

that  act  were  intended  to  repeal  the  Interstate  Commerce  Act. 

The  understanding  of  Congress  in  this  respect  is  shown  by  the 

circumstance  that  the  Interstate  Commerce  Act  has  been 

amended  in  material  particulars  and  treated  as  existing  since 

the  adoption  of  the  act  of  1890;  and  this  conception  of  the 


1 


Dissenting  Opinion :  White,  Field,  Gray,  Shiras,  JJ. 

legislative  department  of  the  Government  has  also  been  that 
entertained  by  the  executive  and  judicial  departments,  evi- 
denced by  the  appointment  of  new  members  of  the  commis- 
sion, and  by  decisions  of  the  courts  enforcing  various  pro- 
visions of  that  act,  and  treating  it  as  still  subsisting  in  its 
entirety.  The  two  laws  then  coexisting— is  the  agreement  of 
the  carriers  to  secure  a  uniform  classification  of  freight  and  to 
prevent  secret  changes  of  the  published  rates,  in  other  words, 
to  secure  just  and  fair  dealings  between  each  other,  sanctioned 
by  the  act  to  regulate  interstate  commerce,  and,  therefore,  not 
within  the  inhibition  of  the  act  of  1890? 

The  Interstate  Commerce  Act  provided  for  the  appoint- 
nient  of  a  commission  to  whom  was  to  be  confided  the  super- 
vision of  the  execution  of  the  law.  Without  going  into 
detailed  mention  of  the  provisions  of  the  statute.  l\dopt  and 
quote  the  summary  statement  of  the  leading  features  of  the 
original  act  contained  in  the  first  annual  report  made  to  Con- 
gress by  the  commission,  as  i^uired  by  tlie  act.  It  is  as 
follows : 

"All  chai-ges  made  for  services  by  carriers  subject  to  the  act  must 

^nhfh'fT^^^.  T^.  •'"?•  ^^^^  "^•''"^t  and  unriasonable  c^r^^s 
prohibited  and  declared  to  be  imlawful.  ^"«rse  is 

"  The  direct  or  indirect  charging,  demanding,  collecting  or  receivine 
for  any  service  rendered  a  greater  or  less  compensation  from  X  one 
or  n  ore  persons  than  from  any  other  for  a  like  and  contemporaneous 

"^^Th;  I'lvlrJ^nf^  '^  *^"r^'"^'  discrimination  and  is  prXE 

Ihe  giv  ng  of  any  undue  or  unreasonable  preferences  as  between 
persons  or  localities,  or  kinds  of  traffic,  or  the  subject  [Ssl]  tag^ 
Zl^Lt^V^^^^r  -~^^»^  P-^"^^-  oi  diLvlnfageTs 

^o'li^^K^?^^*^^^\.^^^P^^  ^"^^  ^"^*  facilities  for  the  interchange  of 
traffic  between  lines,  and  for  the  receiving,  forwarding  and  deh^ring 
of  passengers  and  property  between  connecting  lines  is  rSu^red   and 

™dr'"^  .'^  '^'''  "^^  '"'^'^'^  ^'  »>-*-^-  connec'^ng'^'es "i2 
"It  is  made  unlawful  to  charge  or  receive  any  greater  comoansatlon 
if  nnL^^f^^^^*.^  ^^'  ?^  transportation  of  passen|era  or  ^e  Hke  kM 
fnrPl^lK  "^1^  "*  substantially  similar  circumst^ces  and  conditions 
for  a  shorter  than  for  a  longer  distance  over  the  4itip  linl  i«  ??f 
same  direction,  the  shorter  behig  includ^  within  thelSigefdisL^' 
Contracts,  agreements  or  combinations  for  the  Doolinrof  fS^h?« 
of  diffei^ent  and  competing  railroads,  or  for  dividing^et^^n  th^^h^ 

^ffS^^J^r.'^l*  ^^7^^^«  ^^  «"^1^  railroads  or  any  porZi  th^r^f 
are  declared  to  be  unlawful.  portion  luereoi, 

^^r^K  carriers  subject  to  the  law  are  required  to  print  their  tar!ff« 
for  the  transportation  of  persons  and  propertTand  to  keen  iLm  fJ? 

?aniL'  in  r^tesTs  not'l'Z.^'^'.'  "^  «^"^  ^^  tSeir'ro^Sr'^  '^- 
K,^?^  ~i   ^.      ^?  ^^^  ***  ^  "^ade  until  after  ten  days'  oublic  notlT^J 
but  a  reduction  in  rates  may  be  made  to  take  effect  at  on?^  the  ^otw 
of  the  same  being  immediately  and  publicTy  giver  Thrrates  publl^^ 


714 


166  UNITED  STATES   REPORTS,  362. 
Dissenting  Oplnlrai :  White,  Field,  Gray,  Shlras,  JJ. 


ll    ij 


S2'/^lf^«.n"L*"J;?  *JSS  "'»="°"™  "8  well  as  the  minimum  charges 

;j£!|t?e^rnr^^-rhe°LSS^^^/°'  *•*  »"'-  -BP-fvelyT 

whioif ?i^f  1^  all  tariffs  are  required  to  be  filed  with  this  commlsslan 

Xe  LmT  rt  ^oT.'J^'^S^"^.^  ^^  ^"  ^^^^^««  that  shXS  ma^e 
S  S  «^?       T    ,  ^**^^*  ^^^^s  of  connecting  roads  are  also  reaulr^d 

time  schedules^  carriage  In  different  cars,  or  by  other  means  of  d^ 

^iiJCLTraperd^'iSSoS^i-^  ^ 

[863]  These  provisions  substantially  exist  in  the  act  as 

«I ""  '  ^'''^P*  *•"*'  •'y  "»  amendment  made  March  2, 

1889,  It  was  provided  that  rates  should  not  be  reduced  by 
earners  except  upon  three  days'  public  notice  of  an  intention 
so  to  do. 

This  summary  of  the  act,  which  omits  reference  to  a  num- 
ber of  its  provisions  relating  to  the  power  of  the  commission 
and  the  mode  in  which  these  powers  are  to  be  exercised,  will 
snflice  for  an  examination  of  the  matter  in  hand. 

Now,  a  consideration  of  the  terms  of  the  statute,  I  submit 
makes  it  dear  .that  the  contract  here  sought  to  be  avoided 
as  Ulegal  is  either  directly  sanctioned  or  impliedly  authorized 
thereby.    That  the  act  did  not  contemplate  that  the  relations 
of  the  earner  should  be  confined  to  his  own  line  and  to  busi- 
ness going  over  such  line  alone,  is  conclusively  shown  by  the 
faet  that  the  act  specifically  provides  for  joint  and  continu- 
ous lines;   in  other  words,  for  agreements  between  several 
roads  to  compose  a  joint  line.    That  these  agreements  ai« 
to  arise  from  contract  is  also  shown  by  the  fact  that  the  law 
provides  for  the  filing  of  such  contracts  with  the  commission. 
And  It  was  also  contemplated  that  the  agreements  should 
cov«-  joint  rates,  since  it  provides  for  the  making  of  such 
joint  tanffs  and  for  their  publication  and  filing  with  the 
ronmission.    The  making  of  a  tariff  of  this  character  in- 
cludes necessanly  agreements  for  the  classification  of  freight 
as  the  freight  classification  is  the  essential  element  in  the 
making  up  of  a  rate.    That  the  interstate  commerce  rates, 
aU  of  which  are  controlled  by  the  provisions  as  to  reason- 
ableness, were  not  intended  to  fluctuate  hourly  and  daily  as 
competition  might  ebb  and  flow,  results  from  the  fact  that 
the  published  rates  could  not  either  be  increased  or  reduced 


y 


UNITED  STATES  V.  FEEIGHT  ASSOCIATION.  715 

Dissenting  Opinion :  White,  Field,  Gray,  Shlras,  JJ. 
except  after  a  specified  time.    It  foUows,  then,  that  agree- 
ments as  to  reasonable  rates  and  against  their  secret  reac- 
tion confonn  exactly  to  the  terms  of  the  act.    Indeed,  the 
authority  to  make  agreements  on  this  subject  not  only  re- 
sults from  the  tenns  of  the  act  just  referred  to,  but  from  its 
mandatory  provisions  forbidding  discrimination  against  or 
preference  to  persons  and  places.    The  argument  that  these 
provisions  referred  to  joint  lines  alone  and  not  to  competi- 
tive I'nes  IS  without  force;  since  joint  rates  necessarily  relate 
to  and  [364]  are  mfluenced  by  the  rates  on  competitive  lines. 
To  Illustrate,  suppose  three  joint  lines  of  railroads  between 
Chicago  and  New  York,  each  made  up  of  many  roads.    How 
could  a  joint  rate  be  agreed  on  by  the  roads  composing  one 
of  these  continuous  lines,  without  an  ascertainment  of  the 
rate  existing  on  the  other  continuous  line?    What  contract 
could  be  made  with  safety  for  transportation  over  one  of 
the  lines  without  taking  into  account  the  rate  of  all  the 
others?    There  certainly  could  be  no  prevention  of  unjust 
discrimination  as  to  the  persons  and  places  within  a  given 
temtory,  unless  the  rates  of  all  competing  lines  within  the 
terntory  be  considered  and  the  sudden  change  of  the  pub- 
lished rates  of  all  such  lines  be  guarded  against. 

I  do  not  further  elaborate  the  reasons  demonstrating  that 
classification  is  essential  to  rate  making,  and  that  a  joint  rate 
to  be  feasible  must  consider  the  competitive  rates  in  the  same 
territory,  since  these  propositions  ai-e  to  me  self-evident,  and 
their  correctness  is  substantiated  by  statements  found  in  the 
reports  of  the  Interstate  Commerce  Commission  to  Congress 
of  which  reports  judicial  notice  may  be  taken.  Heath  "v 
Wallace,  138  U.  S.  573,  584. 

I  excerpt  from  some  of  these  reports  of  the  commission  to 
Congress  statements  bearing  on  these  subjects,  as  well  as 
other  statements  indicating  that  agreements  among  carriers 
competitive  as  well  as  connecting,  for  the  purpose  of  securin.. 
a  uniform  classification  and  preventing  of  undercutting  of 
rates,  underbilhng,  etc.,  existed  prior  to  the  Interstate  a>m- 
merce  Act  were  contmued  thereafter,  and  were  deemed  not 
to  be  forbidden  by  law,  but,  on  the  contrary,  were  considered 

AVhilst  It  IS  doubtless  true  that  in  a  recent  report  the  com- 


•  ' 


tl 


(! 


H 


I 


I 


.716  loa  UNITED  STATES  REPORTS,  364, 

Dissenting  Opinion :  White.  Field,  Gray,  Slilras,  JJ. 
mission,  as  now  constituted,  has  said  that  agreements  between 
competitors  to  prevent  the  undercutting  of  rates  may  operate 
to  cause  carriers  to  disregard  the  lawful  orders  of  the  com- 
mission, this  fact  does  not  change  the  legal  inference  to  be 
deduced  from  the  construction  placed  upon  the  law  by  those 
charged  with  its  administration  in  the  period  immediately 
following  its  adoption  and  which  was  then  reported  to  Con- 
gress. 

[365]  On  the  subject  of  relative  rates,  the  commission,  at 
page  39  of  their  first  annual  report  said :  "  Questions  of  rates 
on  one  line  or  at  one  point  cannot  be  considered  by  themselves 
exclusively;  a  change  in  them  may  affect  rates  in  a  consid- 
erable part  of  the  country.  .  .  .  Just  rates  are  always  rel- 
ative ;  the  act  itself  provides  for  its  being  so  when  it  forbids 
unjust  discrimination  as  between  localities."  That  is  to  say, 
if  one  continuous  line  made  joint  rates  and  fixed  and  pub- 
lished them,  and  the  other  then  made  a  different  rate,  not 
only  would  the  first  jomt  rate  be  injurious  to  the  interests  of 
the  railroads  making  it,  during  the  period  in  which  it  could 
not  be  changed,  but  would  also  be  against  the  interests  of 
the  public  and  of  those  who  had  contracted  to  ship,  since  it 
would  create  among  shippers  and  the  receivers  that  inequal- 
ity which  it  was  the  express  purpose  of  the  act  to  prevent. 

In  the  same  report  of  the  commission,  at  page  33,  not  only 
the  expediency  but  the  necessity  of  contractual  relations  be- 
tween railroad  companies  is  pointed  out  in  the  following 
language : 

"  To  malje  railroads  of  the  greatest  possible  service  to  the  country 
contract  relations  would  be  essential,  because  there  would  need  to  be 
johit  tariffs,  joint  running  arrangements,  an  interchange  of  cars  and  a 
giving  of  credit  to  a  large  extent,  some  of  which  were  obviously 
beyond  the  reach  of  compulsory  legislation,  and  even  if  they  were  not 
could  be  best  settled  and  all  the  incidents  and  qualifications  fixed  by 
the  voluntary  action  of  the  parties  in  control  of  the  roads  respectively." 

Also  at  page  35,  after  referring  to  the  fact  that  the  former 
railroad  associations  had  been  continued  in  existence  since 
the  enactment  of  the  interstate  commerce  law,  though  pool- 
ing had  been  prohibited,  among  other  objects,  for  the  "  mak- 
ing of  regulations  for  uninterrupted  and  harmonious  rail- 
road communication  and  exchange  of  traffic  within  the  terri- 
tories embraced  by  their  workings,"  the  conmiission  observed 


ck 


UNITED   STATES   V,  FREIGHT  ASSOCIATION.  7l7 

Dissenting  Ophiion :  White,  Field,  Gray,  Shiras.  JJ. 

that  "  some  regulations  in  addition  to  those  made  by  the  law 
are  almost  if  not  altogether  indispensable." 

On  the  same  page  the  fact  is  emphasized  that  classification 
had  not  been  taken,  by  the  act,  out  of  the  hands  of  the  car- 
riers, [366]  and  it  was  observed  that  classification  was  best 
made  by  the  joint  action  of  the  railroads  themselves.  In  its 
second  annual  report  the  commission,  in  commenting  upon 
the  evils  arising  from  the  want  of  friendly  business  relations 
between  railroads  and  the  injury  that  a  short  road  might 
cause  by  simply  abstaining  from  extending  accommodation 
that  could  not  be  lawfully  forced  from  it,  said  (p.  28) : 

^.vZ?!^''^^''''  ^"^^  u"  interest  in  being  protected  against  the  probable 

ft  toP«  to  tTfJ"^'  f "kk  E^"^^^:     ^"*  '^^  *^*^^^«t  ^«^«  f"^'ther  than  this ; 
it  goes  to  the  establishment  of  such  relations  among  the  managers  of 
roads  as  will  lead  to  the  extension  of  their  traffic  arrangements  with 
mutual   responsibility.  Just  as  far  as  may  be  passible,  so  that  the 
pub  ic  may  have  in  the  service  performed  all  the  benefits  and  con 
veniences  that  might  be  expected  to  follow  from  general  federatToS 
There  is  nothing  in  the  existence  of  such  arrangements  which  is  at  aU 
hiconsistent    with   earnest   competition.    They    ar^  of^ener^^ 
vemence  to  the  carriers,  as  well  as  to  the  pulilic  and  their  vo?unta^ 
ex  ensicn  may  be  looked  for  until  in  the  strife  between  the  roiTs  ?h^ 

in  ordPr  tnT^'^Hr  '''"^  ^""^^^  ''*°^  ^^'•^^^-^  i«  ^^t^red  upon.     Bu? 
*  ioK?  }^  ^T""  *^^'"  ^''^'^^  '""tual  concessions  are  often  indisneii- 

??iendir''hnrn/^''Tr\'  ^'^  '''^^'^  *^  »^^  ^^'-^^^  ^^^^  relatTons'^; 

At  page  29  of  the  report  the  existence  of  traffic  arrange- 
ments between  railroads  is  called  to  the  attention  of  Congress 
m  the  following  language : 

"  While  the  commission  is  not  at  this  time  prepared  to  recommend 

tTonO^'^^^'^^^r^  *^^^"^'  *^^  establishment  and  promotion  oT^efa 
fhnn  ^^t^^^^/?  the^'-iiTiers  that  shall  better  subserve  the  public  interest 

to  th.  n'n^oih-?^^'*?  now  common,  it  must  nevertheless  look  forward 
imnol?  ^^'^*^\^  ""^  something  of  that  nature  becoming  at  some  time 
imperative,  unless  a  great  improvement  in  the  existing  conditioHf 
things  IS  voluntarily  inaugurated."  ^uuuiuon  or 

So,  also,  the  existence  of  traffic  associations,  between  com- 
petitive roads,  for  purposes  recognized  by  the  act  as  lawful, 
[367]  and  their  favorable  tendency  seems  to  be  conceded  in 
the  fourth  annual  report  of  the  commissioners,  where,  at  paffe 
29,  It  is  said:  »  '      f  s 

tions^w?rp''nn?fnriT^  "^^^""^  ^^^  established  by  the  railroad  associa- 
res^T^vpIv  fh.^  ^'  «J\e^en  generally,  observed  by  their  members, 
respectively,  there  would  be  little  difficulty  in  enforcing  a  rule  of 

[herwoufd'p'S  '^'  f,^e  competition  betw^n  thrr^ds  wSich  even 
then  would  exist  would  be  such  as  would  prevent  the  establishment 


p?!«pi|sp»!|!if!i||||i| 


II 


t 


^1 


718 


166   t-XITED  STATES  BEPOBTS,  367. 
Dissenting  Opinion:  White,  Field.  Gray,  Shiras,  JJ. 


obsened."  satisnea  that  the  rate  sheets  were 

^  The  character  of  associations  such  as  that  under  consider- 
ation IS  alluded  to  at  page  26  of  the  same  report,  wE  hi 
discussing  the  subject  of  how  best  to  secure  a  uSt^of  rki?^ 

nfttle  oTt'  !,*  "T'^^'-^^J  "without  legislatio/to  favor 
It  little  can  be  done  beyond  the  formation  of  consulting  and 
advisory  a^ociations,  and  the  work  of  these  is  not  S  n^ 
^^J^defective,  but  it  is  also  limited  to  a  TcumscXd 

The  significance  of  the  statement  that  to  obtain  uniformity 

was  es  JntS  '•^""'"'%'**''"^  '^'  "'^''•»«<J«  themselves 
was  essential   is  apparent  from  the  fact,  frequently  declared 

by  the  commission  in  its  reports,  that  unifomity  of  clS 

n^r^solf  7r^T^^  ""'  uniformity  of  rats      1 
Ann.  Kep.  30,  36;   2  Ann.  Rep.  40;  3  Ann.  Rcd   51    W-  d 

s1l,-  ^T  f    T'*^  ''''  ^*  WortalT  of u'nifo^m  and 
Jabk  rates  has  also  frequently  been  reiterated  in  theTports 
of  Uie  commission.    Thus,  at  page  6  of  the  first  ann3  « 
port  m  reviewing  the  causes  which  led  to  the  adoptbn  of 
the  Interstate  Commerce  Act,  it  is  said:  ""Pf'on  or 

to  e^™Cr:^g:'ge"  to  bTsta^e^"  iL**  "!  ^•"^.'"^''  "»P»^t"°oe 
contracts  were  lotted  ventiZf^  ??  »?.  T'  *'"'*  "'"'«>'"  "  business 
lutesuinoftliemone^cK^exaclll  for  ti!:j  Perceived  that  the  abso- 
beyond  the  bounds  of  reaso^  wa,  of  ^nw  T"''*'''"-  "  ■>»*  «'«arly 
son  with  the  obtatoing"?  raterthflt  «h„h.Ti;  ""?»«»■«*  'n  compari- 

Jnst  [368]  as  betweeSVaeS^ndag  steady  a^l^T'  ^r''  """'^^'^ 
was  practicable."  steady  as  in  the  nature  of  things 

iurl^.!!  T'*"" •  ".•*'  '^*'''""  competing  carriers  lead  to  in- 

«l"^\Z"^^,^.  '^"e»«y  oPerattag  to  cause  compl.tata 

More  Often,  ^rharZ^ng^„"tol?SL2^1SeX"^l^"**^  •  ' 
companies,  which,  when  they  becoin»  SK^"®  ''  between  compettog 

rates  between  th«in.  Ware  of  ra£^  w^Ii  '  "Y.'-esult  in  wars  of 
purpose  in  view,  as  Is^Sethn^s  tte^«  '""'J"^""^  '«  *"«  '='"e' 
to  their  immediate  '^tl^u^t^^^JZ  Thln"'^  "'Ischievous 
business  community  whose  ca^ulaW^s'^and  ViSis  mnrt  "fS?  aTSe*b^ 


a 


•jt   I 


^1   ii 


UNITED   STATES   V.  FREIGHT  ASSOCIATION.  719 

Dissenting  Opinion :  White,  Field,  Gray,  Shiras  JJ 

?i!frfiX^&s^of^h^xzf!f^^^^^^^^^^^^ 

The  evil  effects  of  shifting  rates  was  also  treated  of  at 
page  22  of  the  second  annual  report,  where  the  commission 
inserted  a  letter  received  from  a  business  man  of  Kansas 
Uty,  not  connected  with  railroads,  who  said  • 

?frS  '1Z^^  n=  S£--^^^^^^^^^^^ 

So,  also,  in  the  fourth  annual  report  it  was  observed  that 
shifting,  unstable  rates,  by  competing  roads,  was  contrarv 
to  the  purpose  of  the  Interstate  Commerce  Act,  and  ham- 
Jage  21       ''P^'"''*'""'  "*  "^^  commission.    It  was  said  at 

the  business  of  the  count^  ««  th»t  .^      :  *u?^  """^  ^^  unsettling  to 
and  the  spirit  of  elisUng'lTwTs  againrthTi'^''''"""'  *"  "^^  "^"''"^ 

In  addition  to  the  text  of  the  law  heretofore  commented  on, 
the  section  which  forbids  pooling  adds  cogency  to  the  con 
stniction  that  the  law  could  not  have  been  intended  to  forWd 

Sr^At       r  "^"''^  *"•■  '^'  P"''P''^  «*  preventing  the 
doing  of  those  things  which  the  law  forbade.    For,  as  I  have 

said  It  cannot  be  denied  that  at  the  time  of  the  passage  of  the 

act  there  existed  associations  and  contracts  between  carriers 

for  other  purposes  than  the  pooling  of  their  earnings.    Whilst 

the  e^act  scope  of  these  contracts  is  not  shown,  tS  fact  that 

face  of  the  act,  since  it  requires  that  agreements  and  contracts 
be^een  earners  shall  be  filed  with  the  commission.    M^Je 

X;  o  s.'\  rr^""*'  "*  *^'  commission,  as  I  have  shown, 
s^i  i  T     r.^'  «g'^'»ente,  and  state  that  after  the  pas- 
sage of  the  act  they  continued  to  exist  as  they  had  existed 
before  ebminating  only  the  pooling  feature. 
In  view  of  these  facts,  when  the  act  expressly  forbids  con- 


r 


720 


166   UNITED  STATES  REPORTS,  369. 


Dissenting  Opinion:  Wblte.  Fleid,  Gray,  Shiras,  JJ. 

tracts  and  comhinatiom  between  railroads  for  pooling,  and 
makes  no  mention  of  other  contracts,  it  is  clear  that  the  con- 
tinued existence  of  such  contracts  was  contemplated,  and 
they  are  not  intended  to  be  forbidden  by  the  act.  The  ele- 
mentary rule  of  expressio  itnius  entirely  justifies  this  im- 
plication. 

And  it  is,  I  submit,  no  answer  to  this  reasoning  to  say  that 
the  record  does  not  show  the  terms  of  these  contracts,  since 
judicial  notice  may  be  taken  of  the  reports  made  by  the  com- 
mission to  Congress,  from  which  reports  the  nature  of  the 
contracts  is  sufficiently  pointed  out  to  authorize  the  con- 
clusion that  they  were  of  the  general  character  of  the  one 
here  assailed. 

Whilst  the  excerpts  from  the  reports  of  the  commission 
which  have  been  heretofore  made,  serve  to  elucidate  the  text 
[370]  of  the  act,  they  also,  I  submit,  constitute  a  contempo- 
raneous construction  of  the  provisions  of  the  act  made  by 
the  officers  charged  with  its  administration,  which  is  entitled 
to  very  great  weight.  Brown  v.  United  States,  113  U.  S. 
568,  571,  and  cases  there  cited. 

The  rule  sustained  by  these  authorities  receives  additional 
sanction  here,  from  the  fact  that  the  construction  at  the  time 
made  by  the  commission  was  reported  to  Congress,  and  the 
act  was  subsequently  amended  by  that  body  without  any 
repudiation  of  such  construction. 

It  is,  I  submit,  therefore  not  to  be  denied  that  the  agree- 
ment between  the  carriers,  the  validity  of  which  is  here 
drawn  in  question,  seeking  to  secure  uniform  classification 
and  to  prevent  the  undercutting  of  the  published  rates,  even 
though  such  agreements  be  made  with  competing  as  well  as 
joint  lines,  is  in  accord  with  the  plain  text  of  the  Interstate 
Commerce  Act,  and  is  in  harmony  with  the  views  of  the  pur- 
poses of  that  law  contemporaneously  expressed  to  Congress 
by  the  body  immediately  charged  with  its  administration, 
and  tacitly  approved  by  Congress. 

But,  departing  from  a  consideration  of  the  mere  text  and 
looking  at  the  Interstate  Commerce  Act  from  a  broader  as- 
pect, in  order  to  discover  the  intention  of  the  lawmaker  and 
to  discern  the  evils  which  it  was  intended  to  suppress  and  the 
i-emedies  which  it  was  proposed  to  afford  by  its  enactment,  it 


UNITED  STATES  V.  FREIGHT  ASSOCIATION.  721 

Dissenting  Opinion :  White,  Field,  Gray,  Shiras,  JJ 

r.r/''-r.J''^  '^'''  *^^*  ^^^  ^^^*^«t  ^^  question  is  in 
accord  with  the  act  and  should  not  be  avoided  ^^  '^  "^ 

It  cannot  be  questioned  that  the  Interstate  Commerce  Act 
was  intended  by  Congress  to  inaugurate  a  new  v^TTov^, 
purpose  of  reasonably  controlling  interstate  commeL  rat 
and  the  dealings  of  carriers  with  reference  to  such  i^t^ 
Two  systems  were  necessarily  presented:  the  one  a  prohS 

S  toTif  '  :  T'""n^'  ""''  ~-aWe  rates  and  sub- 
ject to  this  restriction,  aUowing  ih^  hourly  and  dailv  plav 

of  untrammelled  competition,  resulting  in  inequality  M^^^ 

aTsTnrwkS  t"  ^"^^--^  ^  '^^  d-tyl  ^  --at 
rates,  and  whilst  allowing  competition  subject  to  this  limita- 
tion preventing  the  injurious  consequences  arising  fri  a 
[371]  constan  and  daily  change  of  rates  between  cLecSnJ 
or  compehng  lines,  thus  avoiding  discrimination  and  p2 
erence  as  to  persons  and  places.  ^ 

o  J!!!-T.'''^  Z^  ^^^"^  '^'^^^^  ^^'  I  submit,  plainly  the  one 
embodied  m  the  Interstate  Commerce  Act  At  the  outlet 
reasonable  rates  are  exacted,  and  the  power  to  stride  down 
rates  which  are  unreasonable  is  provided.  In  the  subLue^t 
provisions  discrimination  against  persons  and  a^a STaS 

requiring  pubhcation  of  rates  and  forbidding  chan4  of  the 
pubhshed  rates,  whether  by  way  of  increase  or  fed^ct  on 
Jd^r  ^"t^.*'-f:    To  hold,  then,  the  contract  undertn 

cJassification  and  seeks  to  prevent  secret  or  sudden  changes 
in  the  published  rates,  would  be  to  avoid  a  contract  covS 
by  the  law  and  e^^^^^  uJXl\Zit 

correctly  said  that  whilst  the  avowed  purpose  of  he  coS 

LT!r;t""'r'^  ^'^  foregoing  objects,  irulSr 
mtent  was  to  brmg  about  results  in  conflict  with  the  inSr 
state  commerce  law.  The  answers  to  the  bill  of  ™ W 
specially  denied  the  allegations  as  to  the  improper  motiv^'^f 
ttie  parties  to  the  contract,  and  also  expressly^^^eSX 
lawful  and  inno<.nt  intention.    As  the  ^case  was  Wd  ^pon 

dnlif    r    •     :  tb«,  opinion  of  the  court  sustains  this  view 


I 


I 


-  I* 


•  A  A 


166  UNITED  STATES  REPORTS,  371. 


Dissenting  Opinion :  White,  Field,  Gray,  Shiras,  JJ. 
holds  that  the  validity  of  the  contract  must  depend  upon  its 
face,  and  deduces  as  a  legal  conclusion  from  this  premise  that 
the  contract  is  invalid,  because  even  reasonable  contracts  are 
enabraced  within  the  purview  of  the  act  of  1890.    To  my 
mind,  the  judicial  declaration  that  carriers  cannot  agree 
among  themselves  for  the  purpose  of  aiding  in  the  enforce- 
ment of  the  provisions  of  the  interstate  commerce  law,  will 
strike  a  blow  at  the  beneficial  results  of  that  act,  and  will 
have  a  direct  tendency  to  produce  the  preferences  and  dis- 
criminations which  it  was  one  of  the  main  objects  of  the  act 
to  frustrate.    The  great  complexity  of  the  subject,  the  nu- 
merous interests  concerned  in  it,  the  vast  area  over  which  it 
|372]  operates,  present  difficulties  enough  without,  it  seems 
to  me,  its  being  advisable  to  add  to  them  by  holding  that  a 
contract  which  is  supported  by  the  text  of  the  law  is  invalid, 
because,  although  it  is  reasonable  and  just,  it  must  be  con- 
sidered  as  in  restraint  of  trade. 

Nor,  do  I  think  that  the  danger  of  these  evil  consequences 
is  avoided  by  the  statement  that  if  the  contract  be  annulled, 
these  dangers  will  not  arise,  because  experience  shows  that 
contracts  such  as  that  here  in  question,  when  entered  into 
by  railroads,  are  never  observed,  and  therefore  it  is  just  as 
though  the  contract  did  not  exist.  How,  may  I  ask,  can 
judicial  notice  be  taken  of  this  fact,  when  it  is  said  that 
judicial  notice  cannot  be  taken  of  the  fact  that  there  are  such 
contracts?  How,  moreover,  may  I  ask,  can  it  be  said  on  one 
branch  of  the  case  that  the  contract,  although  reasonable, 
must  be  avoided,  because  it  is  a  contract  in  restraint  of  trade, 
and  then  on  the  other  branch  declared  that  contracts  of  that 
character  never  do  restrain  trade  because  they  are  never 
carried  out  between  the  parties  who  enter  into  them? 

There  is  another  contention  which,  I  submit,  is  also  un- 
sound, that  is  the  suggestion  that  it  is  impossible  to  say  that 
there  can  be  such  a  thing  as  a  reasonable  contract  between 
railroads  seeking  to  avoid  sudden  or  secret  changes  in  reason- 
able rates  because  the  question  of  railroad  rates  is  so  complex 
and  is  involved  in  so  much  difficulty  that  to  say  that  a  rate  is 
reasonable  is  equivalent  to  saying  that  it  must  be  fixed  by 
the  railroads  themselves,  as  no  mind  outside  of  the  officials  of 


UNITED   STATES   V.  FREIGHT  ASSOCIATION.  723 

Dissenting  Opinion :  White,  Field,  Gray,  Shiras,  JJ 

iDJe  or  not.    But  this  proposition  absolutely  conflicts  with 
he  methods  of  dealing  with  railroad  rates  adoptedin  En^ 
land  and  expressly  put  in  force  by  Congress  in  the  InterSafe 
Commerce  Act  and  by  many  of  the  States  of  the  Union     FoJ 
years,    he  rule  m  England  was  reasonable  rates  eSLdbT 
judicial  power,  and  subsequently  by  enactment  sec^SuS 
re^asonable  rates  by  administrative  authority.    T^Wstat 
Commerce  Act  especially  provides  for  reaLable  rates  Ind 
v^ts  primarily  in  the  commission,  and  then  in  the  courts  tSe 
power  to  enforce  the  provision  and  like  machinery  isXlded 
[373]  m  many  of  the  States.    Will  it  be  said  that  p!^!^ 

and  created  the  machinery  to  enforce  them,  when  wheth« 
?thisTro«:sr"K  '"'  "''*  "  '""^^^'^  of'ascerteSen't" 

:'rntr?4^4^;:^r^  ;he  — .,oi:-Lr^ 

correct?  railroad  to  be  unreasonable  was 

it  t  rdmiSVr''?  ^"^^^  ''''  P"P*'«'t'«"  th«t  though 
It  be  admitted  that  contracts,  when  made  by  individuals  or 

aT^n  r:sZror'7'^"  '■"""^•''^'  -"'  -^  be  clTder^^ 
as  in  restraint  of  trade,  yet  such  is  not  the  case  as  to  nnhli-! 

corporations,  because  any  contract  made  bTthem  in  a^^ 

Z  hl'Ai,      !     V  '"  *'"  proposition  consists  in  overlook- 
such  a^orporation  which  is  assaiS  tJl  Xlt  ^ 

Fuller  in  oZZ  R^r  *=""''*  ^^P-^f  ^^  by  Mr.  Chief  Justice 
uiier  m  Otbis  v.  Baltimore  Gas  Co.,  130  U.  S.  396,  408- 

Buu.ISr;ia"nl'o^t  'S^1^,1iXZ''LZ^  a  Character  that  It  pre- 
d-oe  to  the  p„h„e  .nteres,..1o^"rtr^rLrr?rronXW„": 


r 


724 


166   UNITED  STATES  REPORTS^  373. 
Dissenting  Opinian :  White,  Field.  Gray,  Shlras,  JJ. 


tracts  imposing  such  restraint,  however  partiai,  because  in  contra- 
^®??°^  ?^  P"^"*^  policy.  This  subject  is  much  considered,  and  the 
authorities  cited  in  West  Virginia  Transportation  Co.  v.  Ohio  River 
Pipe  Line  Co,,  22  West  Va.  600;  Chicago  dc.  Gas  Co,  v.  PeopWs  Gas 
Co,,  121  Illinois,  530;  Western  Union  Telegraph  Co.  v.  American  Union 
Telegraph  Co.,  65  Georgia,  160." 

But,  manifestly,  this  language  must  be  construed  with 
reference  to  the  facts  of  the  case  in  which  it  was  used.    What 
the  facts  were  in  that  case  is  shown  by  the  statement  in  the 
[»74]  opinion  (p.  406)  that  the  contract  there  considered 
"  was  an  agreement  for  the  abandonment  by  one  of  the  com- 
panies of  the  discharge  of  its  duties  to  the  public."    It  is  also 
to  be  remembered  that  it  was  this  character  of  contract,  that 
is,  one  which  was  nUra  vires,  which  was  held  to  be  illegal  in 
the  West  Virginia,  Illinois  and  Georgia  cases,  which  were 
cited  in  the  Gihhs  case  in  support  of  the  excerpt  just  quoted. 
That  the  language  in  the  Gibhs  case  referred  to,  conditions  of 
fact  like  that  there  passed  upon,  that  is,  contracts  ultra  vires, 
is  shown  by  the  subsequent  case  of  Chicago  dsc.  Railway  Co, 
V,  Pullman  Car  Co,,  139  TJ.  S.  79,  where  a  contract  of  the 
railway  company  was  assailed  as  in  restraint  of  trade,  and  the 
court  held  that  although  by  the  contract  the  company  had 
restrained  itself  for  a  long  period  of  years  from  using  other 
than  certain  drawing  room  and  sleeping  cars,  the  contract 
was  yet  a  valid  and  proper  contract.    Manifestly,  this  de- 
cision is  utterly  irreconcilable  with  the  view  that  in  the  case 
of  a  railroad  company,  every  restraint  imposed  by  contract 
upon  its  freedom  of  action  is  necessarily  injurious  to  the 
public  interests,  and  hence  invalid.    Indeed,  the  proposition 
that  any  restraint  of  its  conduct  which  a  railroad  may  create 
by  contract  is  invalid,  because  such  road  is  a  public  corpora- 
tion, is  demonstrated  to  be  erroneous  by  the  Interstate  Com- 
merce Act,  which,  in  the  provisions  heretofore  referred  to, 
not  only  expressly  authorizes,  but  in  some  instances,  com- 
mands agreements  from  which  restraint  of  the  action  of  the 
corporation  necessarily  arises. 

I  am  authorized  to  say  that  Mr.  Justice  Field,  Mr.  Jus- 
tice GBAYy  and  Mr.  Justice  Shiras  concur  in  this  dissent. 


UNITED  STATES  V.  HOPKINS. 
Syllabus. 
[629]    UNITED  STATES  v.  HOPKINS  ET  AL.. 


725 


(Circuit  Court,  D.  Kansas.  First  Division.    Septeml»r  20,  1807.) 

[82  Fed..  529.] 
"trZr'  \""  «f  ^'^■'"  »■'  TBADE.-In  a  suit  to  restrain  alleged 

affecting  interstate  commerce,  the  existence  of  an  illeeal  comh? 
nation  among  the  defendants  Is  to  be  determined  no  i^mm 
what  appears  on  the  face  of  the  preamble,  rule^  "nd  bSws^ 
tteir  association,  but  from  the  entire  situation,  and  the  praltic^ 
working  and  results  of  their  methods  of  doing  busings    as  d^ 
closed  by  the  evidence.*  "usiness,  as  dls- 

Same-Live-Stock  ExcHANGE.-The  defendants  were  members  of  . 
voluntary,  unincorporated  exchange  or  association  at  Ka^™  cL 
and  had  agreed  to  be  bound  by  Its  articles  of  asl^«on  ru  S' 
«nd  TZ^-    '''""  ""^'"""^  *=<'°^'«*«*  '"  '■«<=e'^'ng.  buying  semni' 

Kansas  C,t"/'st"r'"T'r  '"^'^•""'*^'  "^*'  «*»*  "-^'v^  «  tte 
Kansas  City  stock  yards  from,  and  sold  for  shipment  to    various 

awe  n  T,     '"■'^'"'-     "^"^  ""^  y-^O^  '"™'*^  the  only  avan 

TncL,         ""■'■*'  '"'  *■"•*  "'"•P"^^  '»'  "-  exceedingly  large  a^ 
.noluding  many  states  and  territories.    One  of  the  ru^  of  Ti 

association  fixed  a  minimum  rate  of  commissions  toTcharl 
by  members  of  the  association,  and  prohibited  the  empio™ 
by  any  commission  firm  or  con>oration,  of  more  than  thZ  ~r 
sons  to  travel  and  solicit  business,  and  prohibit^  the  ^ZnTaf 
prepaid  telegram  or  telephone  messages  quotinglhe  marrete  .„^ 
another  rule  shut  out  all  dealings  and  business  intercTribeiw^n 
members  and  nomnembers.    Persons  attempting  toTrS^on  LT 

-n7  ^S^'a^^r  T''"^  -e  syUatical^lucklSi" 
ana  boycotted,  and  thus  effectually  prevented  from  seeurlna.  nr 
fran«'<^ting  business.    BeU,  that  the  association  was  an  XaTU 

Same— Reasonableness  of  Restraints  — Tho  o/»f  ^#  ^ 
against  al,  restraints  of  .nterstr^mL^Ln:    UsT^clLtto 

rnrsrrarZbfnrnf  r^'"  ■*«  --"-: 
nopoiies  whatieve^.  ~::Zabi:nr  ?f  tr.^^:::!:' In": 

given  case  is  immaterial.  resrnctions  m  a 

Commerce  between  the  Statjts ^T«h^  ^o«*  *u  ^  ^»- 

Memorandum   nomtlon^'' 7  tT  pl'*1"T  <"*  ^^-  ^''^«>- 
with  dlr^tlons  to  d.smlss^e  b^ill^Sl  VJ^T.^'  ^;^^  ^^^ 
"  Syllabus  copyrighted,  1898,  by  West  Publishing  Co 


-      f 


726 


82  FKDEKAL   REPORTER,  529. 


Statement  of  the  Case. 
Btot^  i8  In  Itself  of  no  material  Importance  In  determining  whether 

J^!  ''"^'"^  T'"™,'^*'^  "'  "  ''  ^"""^''^  "^t-**-  «>e  «atL 

^:r^        .T°*'  "'  ""*  '"^'^  ''»■"  8«"^«"'  ^"-'e™.  and  traders 
In  varlons  states  and  territories  to  the  defendants  was  solicit^  by 

the  latter  chiefly  through  personal  solicitation  of  traveling  aeente 

.       and  through  advertisements.    The  course  of  business  InvXTfJ^ 

gages  on   herds,  and  frequent  drafts  drawn   by  shlDoers  on   th» 

IZ,!  ♦    ^  °'  shipment  attached  thereto.    Shipments  were 

made  to  Kansas  City,  and  the  loans  or  drafts  paid  from  pro<^ 
of  sale,  and  the  balance  remitted  to  the  shippers  Sales  at  [^s 
City  were  made  for  shipment  to  markets  In  other  sta  es,  as  well 

Immense  proportions,  and  defendants  were  active  promoters    and 

^^Z  tL  ^'  T";  '^  "^^  ""^  '"^'^  ""««  ""d  regulations 
covered  the  entire  business,   and   extended  over  the  whole   fleld 

^t^^  the"-  t?"'   T  •'^''^"•'""*^  '^■^"^  -^"^•^   "■   """•"-^ 
of  July  2.  1890,  against  trusts  and  monopolies 
Subjects  of  Intebstate  CoMMEHCE.-The  live  stock  shipped  to  defend- 

^    «  ^  m«rL  r  f.f  ?"'  '•"■  '•«^'"P"'™t  t°  [»«>]  other  states 
or.  If  the  market  should  be  unsatisfactory,  for  reshipment  for  sale 

toteZf       °  ""■''  '*"*^-  ""^  ""*  ''»'^''  to  be  "he  subj^t  of 
Interstate  commerce  as  soon  as  it  reaches  Kansas  City  or  Is  there 
unloaded,  nor  until  It  has  been  so  acted  upon  that  it  has  become 
tocor^rated  and  mingled  with  the  mass  of  property  In  the  statr 
,^!r  '^^'^""^  iNTEBsrATE  CoMMEBCE.-Llve  stock  shipped  from 
various  states  to  the  yards  of  a  stock-yards  association  In  anothe" 
Tt  t^  ^  solicitation  and  procurement  of  the  members  them,f! 
to  be  there  sold,  or  to  be  reshlpped  to  other  states.  If  the  marke 
Should  be  unsatisfactory,  does-  not  cease  to  be  a  subject  of  iuTer 
state  commerce  as  soon  as  It  reaches  such  yards  and  is  there  nn- 

^n^^'thT  "  ""'  '^•'  ^""•^  "<='-•  »P-  -  as  to  bLme 
mingled  with  the  mass  of  property  In  the  state. 

ITie  biU  in  this  case  is  presented  under  the  act  of  congress 
of  July  2, 1890  (26  Stat  209) .  ^ 

mi^l^raTa^^lLTi  °'  I"*  defendants,  about  300  In  number,  are 
^^rs  1  ••as''c."^'l?v^^J^rBThar"'a'Lrr  ""•^^'^i 

tx««n»er ;  Its  p,a«>  of  busIneLfs'?n^a\ulMInSlt^  "n  the  ■JiAe^^^ 


i 


f 


UNITED   STATES  V.  HOPKINS. 
Statement  of  the  Case. 


727 


tween  the  states  of  Missouri  and  Kansas,  and  that  defendants  tran.*- 

stltial  ran'lf/Vt^  '•"  '*"^  ^'^^  ^^^"^  '"^  the  oth^rr  haf^b 
stantially  all  of  the  business  transacted  in  the  matter  of  receiving 

buying,  selling^  and  handling  live  stock  at  theTaSas  CiTst^k 
Yards  18  carried  on  by  defendants  and  other  members  of  said  exchange 
as  commission  merchants;  that  a  large  proportion  of  such  live* stock  f^ 
shipped  from  the  states  of  Kansas,  Nebraska,  (>)rorado!Texas  Missouri 
NeT  M^'xIcfaMTs  sold  bvMf^^'^^^  ^^  Oklahoma',Trtzonran1 

^it^       1  '  "  Kansas  City  market  is  a  public  market    nnri  «iir^. 

and  shippers  of  livrstoc^th^onivin/^^^^^  ^""''^^  ''^^''^^  ^«  ^^"^^s 
handling  selling  and  res hipKi^I?^^^^^^  ^*  *^^^  ^^^^  ^^^ 

uation,  said  Kansas  Citv^fonif  vlt/  '  !?^*'  ^^'  ""^^^^^  ^  ^^s  sit- 
market  for  the  purchase  f nd  sal  ^/  ull  *^  Ti^  available  public 
large  territory  of  the  TTr^t Ad  «f^i  i'lf  ^^^^^  ^""^  ^^  exceedingly 
the  exchang7of  interSa^^^^^^^  ^^""''^^  ^^^"^"^^^  ^^^'^^  ^or 

named,  theltock  beng^d  in  *fd  ^arT?^*,^^  f^'ZT^  territories 
of  the  Union;  that  it  irthe  rntw  n  *"*  l>e  shipped  to  other  states 
growers  and  ship^rs  wL^nsL^H^^^  ?  large  n«u,ber  of  cattle 

Yards  to  draw  drafts  on  Hip  ^n  »  •  ^•^'"''^  ^"^  "'^  ^^^^^^^  City  Stock 
stock  is  consf^ed  and  att^hin?^  mT  j^^^^'^^^t^  to  whom  such 
rier  therefor,  to  draw'™  on  ^?n^L°fV%^^  *f""^  ^^  ^^  ^' 
when  presented  to  thi  c^Se^  s«  d  dr5^^  ^^^^'^  ^^^^  ^''"^^^  ^''^ 
in  Kansas  and  Missour?  and^;  nrlfS^"^  are  paid  by  [531]  them 
the  various  towns  anrckeswh^^^^^^  *^^  ^^"^^  i« 

by  reason  of  the  fact  that  L^^.!  ^^  Hve  stock  was  shipped;  that 

and  Kansas,  and  tL  live  stock  ha nrfiL''''^*''  *?/  "*^*^  «^  ^iisouri 
In  Kansas,  and  at  otLrrin  M^^sonH  l^d^''^  f  ^^  ^^'^^^^'^  ^«  «t  times 
ent  states  to  be  sold  and  shlnn^  t^  V^°**  ?''^  transported  from  differ- 
state  in  character! Vnfca'n^^nl.  fV^^^^" 

as  a  part  of  commerce  between  thP  2LfI  ^u^^.,.^?*®^^^  legislation, 
that,  if  the  person  or  partnershin  to  whf*  r^**^  ^*"  ^"""^^^"^  ''^^^sei 
Kansas  Cit/  is  not  a  Siber  of  said  .v^J^''^  "l^^'K  '^  consigned  at 
to  sell  or  dispose  of  such  live  stock  on  th^S^^'  ^^  ^"  ^^^^  permitted 
the  reason  that  the  defendants  ..h  n  ^^1  ^^^^^  City  market,  for 
doing  and  contro  lingTe  Sess  at'^sL  merchants 

rules  of  said  exchany  to  rSf  to  Lt  n  ^^""^  .^''^  required  by  the 
deal  With  a  person  ^'^oV^^^ :^e^Z'Z\!^re.l^ 


728 


82  FEDERAL  REPORTER,  531. 
Statement  of  the  Case. 


Yards;  and  tliesale  of  ttP^,^f.*hf.*K°*K.*^*''*  ^«"^«  City  Stock 
expend  and  toss  ^tall^  to  th*  «S?^^  ^^*'''^  """^  ^^^"^^^  ^^ 
npon  the  mark^nTo?  mve  tt^'^^hit'^nVn"  "'ift™^'"-  P'«eed 
government  of  said  excSn^  are  t^^^ollowinr  ™  *"  ""  *^ 

"RuuB  IX. — Commissions, 

tlon^'^I,?i/5?e~SS'li^M  ni'lS^  "^r""*"  »'  *'«  «»»<Ma. 
rates :  *  ^**  *"""  "°*  "*  '«««  *«>»  the  following  named 

or'sE^R^and  ten^dZi^^rLJ-'f^f/  '^^^Je-aeck  car  loads  of  hogs 
same:  provlikA  mlmt^rTJ^^Z}^^ ^'''^  •'""''le-deck  car  loads  of  tte 

mission?  aJ  atoV?pro^l^  ™!f  r^l*'^  T^'  "««'  <=''W8'n8  «»»- 
yards  a  sum  ofmoneJ^ZSn  JS?  '  !!f  L"""  '5*^P  salesman  on  these 

twen'^fonr^^^m^e^^n^m'^eV^'nrif  "'/'.I  ««-     '"  -r'S  of 

aollaS  per  si-^H:*  c^r^Cds^aSd^IlgK 

car  load  of  veal  calves.  eigoteen  dollars  per  double-deck 

^^^^^'J"^  ^ie^Lt^VrilT]^'  1""  t'-«°ty-fl-e  cents  per 

load.  Six  dollars  per  slnlle^eck  car  in^rT^..  k^  -^  **?"'''*^  ^'^^  ^^'^ 
dollars  per  dp„ble-d^k  car^d  iVpurcS^'s^TaM  tTL''''^  '*^° 
mission  house  or  shipDine  clearanr^  mnSn  k?         ^  i?  »**?  ^^  *  ^™- 

p-r^-^-^r'^^  '^^  "'^^"rprv^'eS" """  *""  •"  "'^-«» » 

!« l^bU'J^'rr  f^"d%?r"h,^Xrh<l"*L?d^\r  "r  •'»"''" 
•^'lir*','^"  for  hogs  boughtTy  fhl'  head^'  "°**  "<"  '«»  *">"•>  *»"«« 

hereK^li  2o%1Si'^L%ora'va^°?  "r  "■■  «"-'X.ratlon  represented 
missl^-  tZ  ?or  1^  th-rl^f..*"^  ""t'"?^  "'  »  nonresident  com- 


r 


UNITED   STATES   t;.  HOPKINS. 
Statement  of  the  Case. 


729 


n  !2l^  T"^  .^^  *°y  *'*''®''  P*^*y  <^^  parties,  or  who  is  actively  enea^ed 
^r^nf.!?."''''^!'  ^'^^^  ^«  provided  in  section  2  of  thirrule)  mIS^ 
bers  of  this  exchange  must  file  with  the  secretary,  within  five  days  of 
employment,  the  names  and  addresses  of  their  solicitors  More^Ln 
three  solicitors  shall  not  be  employed  at  one  time  by  a  <^mmiss^^ 
^^^'^'^^^^^^^^^^on.  Members  of  a  commission  firm  or  coS^ratfon 
resident  or  nonresident  of  Kansas  City-may  travel  as  S^^^Siors  Si;; 

T'i  ^1  ';i^"*^''f1  ^«  ^'^^  «^  tJ^e  three  aUow^Vach  firm  ofSStio^^ 
It  shall  be  a  violation  of  this  rule  for  any  solicitor  r^oiSinl^ 
claiming  to  represent  a  commission  firm  or  c^^Sion  ^n  anv  ofhpr 
market  to  solicit  for  any  Kansas  City  firmrand  mem^rs  sLh^ 
of  soHo'S^nf .n*'^^  1^^  **l^^^*"  ^^  «°y  ^^^^^^or  who.  rdefthe  g^i^ 
^rat^n  ^     '  ""  *''^''''*'  ^^"'^'  ^"^'^^^  ^^'  ^  K^^^^s  City  firm  orTr 

rol'.!r*  }i-  ;^°^.  '"e^^^er  of  this  association  or  firm  or  cornoration 
Ifftf!^^  ^^''^"''  '^"^^'^^  «^  ^^"^^°«  to  be  sent  a  IJrepaiTtSam 
?L  ^^J^?.""^  message  quoting  the  markets,  giving  information  St^ 

tSlnT^'''"Tf^L?/f  ^^t'  '^^"  ""'  ««^  not^less^than  llXor  moie 
man^SOO.     If  said  fine  be  not  paid  within  three  davs   said  firm  r.^ 

member  shall  be  suspended  until  said  fine  is  pail^  providS  howe^^^^^ 
that  prepaid  messages  may  be  sent  to  shipperf  quot^nracSil  sa^e^^^^^^ 
fhlLr^th^^r.!,^^^  "'^-^^^^  ^'-^  '^  parties  ^desirinVttarelur^ 

J^SSJE^  -  -  ^=r^  th^ 

f  «fl  h""S  "^  """Pended  from  membership  untU  same  ifnaid      F^r 

Sec.  14.  For  the  purpose  of  making  effective  s«v»fmn  io  «*  4.u«„      , 
J^  such  special  assessments  in  such  amounts  as  will  kL  a  ^?nd  n? 

penalty  imposed  for  violation  of  the  foS?S  iha  ^hP  nn  iil?'*  /""v 
such  uartv     If  nnt  nnfri  «T{fi.<»  4.1k    ^"^J6"*"s  snail  oe  on  account  of 

doing's  busin°sL^shall^viv  i?i"^  ^'^'  *"«  ^^  "  corporation 

si'r  .sii  ES^  ~S -"HKivs 

"  Rule  XYl.—Limitatious. 


I 

I 


730 


82  FEDERAL  REPORTER,  532. 
Statement  of  the  Case. 


of  congress  approved  July  2.  1890  entitl*ii  "  aJ!  IIV  ♦     ^  ?   .^  °5* 

buying  and  selling  the  sf ml^nd  have  ftrtter  in^^Zt^oZ^Z 
uud  eoinnierce  hptw^An  fh^  a4-<>4-»«      »c  runner,  m  resiraint  or  trade 

and  resJl^inThe  fr^Tr^^^^^^  *^^^*^?r  *«  Prevent 

of  tlie  market  by  ^\egr:^^Mcm^^  regarding  the  state 

employment  of  agents  and  soliSslnVh^^^  restricted  the  free 

said  stock  ynrdsfthat  [538]  t^^^^^^  f  ^"«^»^««  «t 

SI^  ""'p^r^  ^«  ^'^  P^^^'"^  theTl^iSnf  o^anTC 

Kansas  City  market,  unless  shipped  to  the  Kansas  rut  ?S  t    ^^^ 

and  to  defendants  or  other  memberB  of  said  ex chaLe  */^^^^^^ 

purpose  was  to  compel  shippers  to  nav  to  dPfpn^nnf«  J^^  the  further 

ciates  the  commissions  prodded  fo^lnri,ipQ?H  T'^  ^^^^"^  "^^^^ 

of  the  same  on   tlie  niarlset  at  Knni.no  Af„     Zf  '°  *''^  ^"'^ 

plalnant  pravs  for  a  <  e  m>  disLvrn^  ..m    ^-  J^^'^^"!^"   the  cohi- 
JuiKtion  against  ^id  UeV^d'nfs^'r^t^raTnfng^tte^^^^  f "  '"■ 

£d|S«trL"=LlLTnr  ••  „"X*  ■^^KVn^r.^rL-iv-e' 

not  to  .««triet  the  sa„,e.'  The  pJ^mble  o(  tLTr^^g^n^XHs'^^  toi* 
lows:  "We,  the  undersigne<l,  for  the  purpose  of  o'|anlz1ng  and  mafn' 
taming  a  business  exchange,  not  for  pecuniary  profit  or  cfiSnn^fn; 
the  transaction  of  business,  but  to  promote  and  Dmt^trii'i„,^     7 
conn«rted  with  the  buying  and  selling  of  live  stoSc  at  the  Ku  ms 
Caty  stock  Yards,  and  to  promulgate  and  enforce  nnmn^oV  th»    '^^''''^''s 
correct  and  high  moral  principleTin 'ISe  fJlfns^c«o7ofL*s'^^^^^^^^ 
assocmted  ourselves  together,  under  the  name  of  •  Kansas  S'  T  iv? 
flnu.  f,^^^r^^''  ^"^  hereby  agree  each  with  the  other  that  we  im 
faithfully  observe  and  be  bound  by  the  following  rules  and  bv  iflw« 
Z^  ""^^  rT  I"?^"'  additions,  or  amendments  as  mfy  from  time  to 
time  be  adopted    n  conformity  with  the  provisions  ther^f   from  th2 
date  of  organization,  by  the  election  of  a  board  of  directors /nHtw 
officers,  as  prescribed  by  rule  1/'    The  deSnte  de^'That  thrl^^^^ 
their  membership  substantially  all  of  the  business  of  bVing  and  ^!l 
ing  live  stock  at  Kansas  Cit>'  is  carried  on.    On  the  contrarf  any  Sr- 
son  desiring  to  se  1  live  stock  at  said  city  is  under  no  obHga?ionTo 
employ  a  commission  merchant,  but  is  at  full  llbertv To  nnt  fr..  ?»,!. 
self,  and  the  stock-yards  compaiy  extends  to  sucKson  all  thP  nri^' 
leges  and  facilities  afforded  by  it;  and  pe^L  dSg  to  purS^e 
live  stock  at  the  yards  may,  and  they  constantly  do,  purchas^dirS? 


t 


UNITED   STATES   V,  HOPKINS. 
Statement  of  the  Case. 


731 


'^Pe^'^lrlZTnXZu^t^^^^  of  the  cattle  pur- 

f  ion  merchant.  The  oX  restriction  11^^^'"'^?'^°*  ^f  any  commis- 
is  that  contained  in  rule  16  v^  tha?tw°  ^f'^bers  of  the  exchange 
as  a  commission  merXnt  who'v^otnfio  fH'^*"i''^*  ^^^*  ^***>  «  P^^s^^ 
7,ho  %^  suspended  or  expelTed  JemK^^  t^^^^^'  ^^ 

that  the  Kansas  Citv  market  is  3  n  r:„Kii  V^  ^^  further  averred 

vate  character  merely  Defendants  ft,.?H^"''  ™^'*^^*'  ^"^  ^«  «f  a  prl- 
tion  of  the  firm  of  Greer  Si  ^^^^^^^^^^  that  with  the  ex^ep- 

membership  in  the  ex7han^P  fnr  ^;'  ^^^"^^  "^""^  ^^st  suspended  fr^ 

Violation  of  the  rules  the^^^^^^  ""k  ^  ^°^  ^"^^'^  ^or^ 

withdrew  from  said  exchln^'  nU  J^ul"  subsequently  voluntarily 

said  yards  are  members  of  Hi^  ILZ    *^^  commission  merchants  at 

that,  whenever  d^aSs  are  draw^i  fr^^^'T'    .^f  ^^^'-^^ts  further  aver 

paid  either  at  the  place  where  'ava^.fr^  merchant,  they  are 

presentation  to  the  drawer-and  tS  ^L?/.?*'^  ^^J"""  *^^^^^'  ^r  <>« 

in  the  state  of  Kansas  or  Mfs^our    acmr^in^iT  ?h  P^'^'^^"*  ^«  e**^^^ 

action  is  closed.    Defendants  are  in?ZfJ5^K^^  *^^  particular  trans- 

that  the  exercising  of  their  oe^Dat?on«^n?^  '^""'^*'  ''^"^  ^^^''^^  e- 

states,  within  the  meaning  of  ?SecoZi^,H^*  cx)mmerce  between  the 

States:  that  it  is  not  true  that  a  roS'[^!?n^  IJ^^'r  ^^""l  ^^  *^^  ^"^^^^ 

mitted  or  cannot  sell  the  same  1?  4^-S  l^n.^    ""^  Kl^  ^^^ck  is  not  per- 

said  exchange  refuse  to  dpn^wHHo^  ^^^^l'  ^r  that  the  memberrof 

that  any  pefson  sh  pp^ng^  Tsatd"  vT  h*^""^!     ''  ''  ^^^t  tr^e 

to  employ  a  member  of  R«MLfi?o     ^^  said  yards,  and  refusing  [534] 

to  some  otheT  market     Sefendan^^^^^^  *^  '^'^'^  ^^e  ^^^ 

combination  among  them  or  thnrnnv^^  *^^*  *^^^^  ^^  ^^-^  unlawful 
ing  stock  to  the  KansaTci^  ^tnhi  -^^^^  is  prevented  from  deliver- 
hindered  or  de'ayeror  ex^^ensr^^  '^^^  t^^^eof  is 

any  obstruction  or  embargo  ninoPd  n^n  h  "'^  1"^^^^  entailed,  or 
Stock.  Defendants  dert'tat'Lnrof  th^  r,  !f.  'T'^'fl'''^  "^  '•^"•^'  "^^ 
in  restraint  of  commerce  lletw^n  /hi  !f?  ""^  ^^^^  association  are 
ants  deny  that  tZ:^  have  ^f^^^  otherwise.    Def end- 

laws  of  the  United  Stntlc  ^"^^^^atecl  together,  in  violation  of  the 

selling  live  sYo^ci^ltl';' rya^n^^^^^  ^^  ^"-^^"^  ^^^ 

for  buying  and  selling  such  fve  stoci  Hvf^U''  ^  minimum  price 
mission  of  information  resn Jtinir  fh^^^^^^  ^^i  f^^^train  the  free  trans- 
by  telegraphic  me™'  ™^^^^  ^ity  market 

solicitors  in  said  bucinpss  •  thnf  II.L  •  ^  employment  of  agents  or 
cess  of  such  an  organization  i^^  ^^^  '^'^^' '^  *h«*'  to  the  suc- 

be  a  uniform  sSr^fcommiiion^^^ 

observe  the  same;  and  tlmt  b"  'er^Vf^n^  *^'''*- ^"  members  shauld 
such  schedule,  a  ^nditiof  is  cUtii  1  v  wh?Jh '.'^"'  ^^  violations  of 
might  and  would  bring  Tout  aTtftf o^Lh^l^H/"'^'JJ?"*-^  P^^'^«^ 
a  practice  unfair  to  shimevs  ^nT^fJL  ^^^^^I  ^"^^''^^  ^f  prices.— 
ble  persons  who  carr^Sn  thp  n.^.^^^^^^^^  '*"'°ous  to  responsi- 

fairly.  They  have  no  des"re  to  r^^^JutZ  ""^  commission  merchants 
commission  merchant  at  KansL^cT  ^.'o»"  «<^ting  as  a 

to  the  interest  of  the  public  or  shto^r«tn"'^^,^^'"**  ^^*  **  *«  «ot 
that  individually  and  collectivelf  tV^^^^^^^^^  and 

association  are  invoked  forth^^^  ^f  their  articles  of 

any  competitor   eitherin  hi^fffn^fl    S^  Preventing  the  success  of 

ThTlFr^^"^''"^  su^h'Ses^fi^mTh^^Sfrd  ^'  ^^ 

The  act  of  congress  of  July  2  1890  <2fi  <5tot  Sm\       1        ?.  . 

pro<^ing  is  brought,  provides  as  Mlows  *'  ^^  ""''"'  """^'^  *•"» 
otheS,°or  eo^n^7rari^'^.S"'„f  T  !?  *«  '»""  <"  *"»«♦  »' 
the^severa,  states.  Mt^o-i^rn^atroyrhe^^brd^-edT SI 


li 


ll 


732 


82  FEDERAL   REPORTER,  534. 
Opinion  of  tlie  Court. 


^ii„5  I?^-^  ^^'^  ^^^  ^^*"  monopolize,  or  attempt  to  monop- 

olize or  combine  or  conspire  with  any  other  person  or  persons  to 
monopolize  any  part  of  the  trade  or  commerce  among  the  several 
states,  or  with  foreign  nations,  shall  be  deemed  guilty  of  a  mis- 
demeanor.     ♦      »      ♦  »♦  O         J  ».    ixiio- 

Section  4  gives  to  circuit  courts  of  the  United  States  jurisdiction 
to  prevent  and  restrain  violations  of  the  act,  and  makes  it  the  duty 
?  JS®.**^**'"*^*  attorney,  under  directions  of  the  attorney  general,  to 
Institute  proceedings  in  equity  to  restrain  such  violations. 

W.  C,  Perry y  United  States  Attorney. 

Karnes,  Holmes  <&  Krauthoff,  McGrew,  Watson  db  Watson, 
and  Hutchings  <&  Keplinger,  for  defendants. 

Foster,  District  Judge  (after  stating  the  facts). 

It  will  be  observed  that  the  answer  of  the  defendants 
denies  and  puts  in  issue  the  allegations  of  the  bill  charging  a 
combination  or  conspiracy  or  contract  in  restraint  of  trade  or 
commerce,  and  denies  any  monopoly  or  attempt  to  monopo- 
lize or  combination  to  monopolize  any  part  of  the  trade  or 
commerce  among  the  several  states,  and  denies  that  the  busi- 
ness for  which  the  exchange  was  organized,  and  in  which  its 
members  are  engaged,  comes  under  the  class  of  commerce  or 
trade  among  the  states. 

The  first  question,  whether  there  is  any  combination  in 
restraint  of  trade  or  commerce,  or  a  combination  to  monopo- 
lize any  part  of  trade  or  commerce,  on  the  part  of  the  defend- 
ant association,  is  to  be  determined,  not  alone  from  what 
api)ears  upon  the  face  of  its  preamble,  rules,  and  by-laws, 
but  from  the  entire  situation  and  the  prac-  [535]  tical  work- 
ing and  results  of  the  defendants'  methods  of  doing  busi- 
ness,  as  disclosed  by  the  testimony  in  the  case.    The  defend- 
ant association  is  located  at  Kansas  City,  on  the  line  between 
Kansas  and  Missouri,  in  the  immediate  vicinity  of  the  Kan- 
sas City  Stock  Yards,  and  in  close  association  therewith, 
being  tenants  of  said  stock-yards  company.    Said  yards, 
with,  perhaps,  the  exception  of  the  yards  at  Chicago,  are 
the  largest  in  the  country,  and  handle  great  numbers  of  live 
stock.    These  yards,  the  packing  houses,  and  this  exchange 
are  all  situated  at  the  gateway  through  which  flows  the  great 
stream  of  conamerce  of  several  states  and  territories,  and 
among  all  the  business  tributary  to  this  locality  probably 


UlflTED   STATES   V,  HOPKINS. 


733 


Opinion  of  the  Ck)urt. 

none  is  as  important  as  the  live-stock  business  and  the  vari- 
ous industries  connected  therewith.    The  defendant  associ- 
ation is  entirely  voluntary  in  form,  and  does  not  directly 
require  any  person  engaging  in  the  live-stock  commission 
business  to  become  a  member;   but  it  will  be  observed  that 
rule  16  prohibits  any  member  from  dealing  with  any  person 
violating  any  of  the  rules  or  regulations  of  the  exchange,  or 
an  expelled  or  suspended  member,  after  notice  of  such  sus- 
pension has  been  issued  by  the  secretary  or  board  of  directors. 
In  practice,  as  amply  appears  from  the  testimony  of  many 
witnesses,  this  rule  shuts  out  all  dealings  and  business  inter- 
course between  members  and  nonmembers  of  the  association. 
It  is  shown  beyond  cavil  that  the  entire  membership  of  the 
association  regards  a  commission  merchant  attempting  to  do 
business  at  the  Kansas  City  Stock  Yards  without  joining  the 
exchange  as  one  violating  this  rule,  and  treat  him  accord- 
ingly.   And  this  construction  is  a  natural  one,  for  a  compli- 
ance with  the  rules  of  the  exchange  requires  a  party  to  sub- 
scribe to  its  rules  and  by-laws,  and  to  pay  a  membership  fee 
(which  is  now  $2,500),  to  pay  his  assessments,  and  observe 
all  other  requirements,  including  the  fees  and  commissions 
fixed  for  handling  live  stock;   and  it  may  well  be  said  that 
any  dealer  or  broker  does  business  in  violation  of  these  rules 
who  does  business  at  all  and  fails  to  join  the  association. 
The  testimony  discloses  several  instances  of  parties  attempt- 
ing to  enter  the  field,  and  do  business  there,  without  joining 
the  exchange;  and  in  every  instance,  unless  protected  by  the 
courts,  they  have  been  <jompelled  to  abandon  the  undertaking. 
All  parties  now  engaged  in  the  business  are  members  of  the 
exchange,  except  Greer,  Mills  &  Co.,  who  are  making  a  fight 
m  the  courts  to  maintain  their  business,  and  are  temporarily 
protected  by  injunction.     It  appears  from  the  testimony  tha*t 
any  person  or  partnership  attempting  to  carry  on  business 
independent  of  the  association  is  invited  to  apply  for  mem- 
bership, and  if  he  fails  to  do  so,  or  if  rejected,  and  attempts 
to  proceed,  his  name  is  written  on  a  blackboard  kept  for 
public  use  in  the  exchange  building,  and  all  members  are 
warned  against  dealing  with  him.    This  admonition  is  strictly 
obeyed,  and  such  person  is  boycotted.    The  outcome  is  in- 
evitable.   The  combined  opposition  of  three  hundred  men 


734 


82.  FEOEKAL  BEPORTEB,  536. 


Opinion  of  the  Court. 

tgainst  one  can  produce  but  one  result.    Almost  everv  nnr 
chaser  or  vendor  of  live  ^fn^ir  i««i  a-      ^r^^^^  ^^^^y  P"^- 

members  of  the  exchani/p     T«\r„;     j    "J  "^^se  merchants, 

offer  .UractivTCrtbffor  L      ,    *^  '^'^  ^'^^^  dealer 
*k  11  ,       **  pargains  for  the  sale  or  purchase  of  <?trv.t. 

J^firn.     Th       *    .   'P  "'"''  ''"*'''  *«  ''^'^  boycotted  broker 

tlfr:*     ^""^  *"*'*'  "•*  established  and  amplified  by  a  mZ 

tude  of  witnesses.     The  object  and  purpose  of  the  IchZL 

IS  written  across  its  face,  where  all  can  r^ad.    It  is  tTctS 

sTc^kTrK"  *^« -^.'>»--  of  buying  and  seHi  gS 
stock  at  the  Kansas  City  Stock  Yards.    It  is  clearly  a  c^mW 
nataon  to  restrict,  control,  and  monopolize  that  dass  ofTade 
and  commerce.    The  defendants  declare  that  the  r  les  rel- 

and  fair  and  for  the  best  interests  of  buyer  and  seller     Po« 

fnt^L  t's"o;  uS'  ft"^'  ''  ''  "''^  "P^'  looking  at  ^he" 
if  sSStUf  l""^  grower  or  purchaser,  why  the  number 
otsolicitors  of  business  should  be  limited  to  three  for  eaoh 

WH  "'^  ;'T  ^''"'•^  •"  "  ^^*"«"on  on  telerraphic  in 
forma  on  as  to  the  state  of  the  market,  or  why  he  should  be 
compelled  to  pay  a  commission  of  50  ^nts  a  head  on  cattl^ 
when  he  paid  25  cents  before  the  exchange  was  or^nfzei 

indX'^suLlS^"*'  '""'  "•*^  ~«<lable  zeal  and 
iMustry,  submitted  for  our  consideration  the  rules  of  . 

great  number  of  exchanges  and  boards  of  trade  thrrugLt 

^^f  Tivft':  J"""?  ^**^  '"""^  -  corporarstt 
^ns   hve  stock,  and  various  other  things,  and  contend 

that  they  are  essential,  if  not  indispensable,  to  the  comme^ 
and  business  interests  of  the  count^,  and  that  to  ZTZ 

S3 1^ ""  T'^^'"^'  dibiow  ofti:Sit 

tions.    Courts  cannot  shut  their  eyes  to  the  results  of  their 
udicial  conclusions,  but  how  far  such  results  should  «,ntrol 
Aoee  conclusions  depends  on  several  conditions,  not^^ 
sary  to  discuss  here;  nor  would  it  be  proper  to  c<;nsider  1^^ 


UNITED  STATES  V.  HOPKINS. 


735 


Opinion  of  tlie  Court, 
what  effect  this  act  of  congress  may  have  on  these  organiza- 
tions or  any  of  them.    I  may  be  permitted  to  say,  however, 
that  the  methods  and  aims  of  many  of  these  exchanges  and 
boards  of  trade  are  not  altogether  beneficial  to  the  business 
and  commerce  of  the  country.    That  they  are  beneficial  to 
the  members,  and  perhaps  to  the  locality,  may  be  admitted 
It  must  also  be  admitted  that  a  properlv  conducted  agency  or 
medium  through  which  the  vendor  and  vendee  may  readily 
sell  and  buy  everything  that  enters  into  commerce  or  trade  i= 
demanded  by  the  business  interests  of  the  whole  countrv ;  but 
this  agency  should  not  be  permitted  to  tamper  with  or  in  any 
way  impede  or  restrain  the  natural  flow  of  the  stream  of 
industry  or  commerce.    The  crying  complaint  of  to-day.  and 
the  great  menace  to  the  welfare  of  the  people,  is  the  tendency 
of  wealth  to  monopolize  and  control,  by  trusts  and  combina- 
tions, the  products  and  industries  of  the  country;  and  it  must 
be  confessed  by  every  thoughtful  observer  that  many  of  the 
so-called  stock  and  produce  exchanges  are  among  the  most 
potent  instruments  for  the  accomplishment  of  these  purposes 
by  speculators  and  adventurers.    Men  who  add  nothinff  to 
the  productive  wealth  of  [537]  the  country  grow  rich  or 
poor  by  gambling  on  the  wealth  produced  by  others.    Men 
are  daily  selling,  through  these  exchanges,  mUlions  of  bush- 
els of  corn,  wheat,  and  other  produce,  who  neither  have  nor 
expect  to  have  a  bushel;  and  others  are  buying  millions,  who 
never  expect  to  receive  a  bushel.    Both  sides  are  tampering 
with  the  normal  prices  fixed  by  the  law  of  supply  and  de- 
mand, and  attempting?,  by  false  and  dishonest  means  and 
methods,  to  serve  their  ends.    The  courts  have  uniformly 
condemned  this  class  of  business  as  illegal,  and,  though  it  is 
under  the  ban  of  the  law,  it  still  flourishes.    The  remedy 
must  be  looked  for  in  legislation,  and  not  in  the  courts  alone. 
^Ihis  act  of  congress  is  aimed  against  all  restrictions  of 
mterstate.  commerce,  and  we  need  not  discuss  the  reasonable- 
ness of  such  restrictions.    It  is  evidently  the  purpose  of  the 
law  to  permit  commerce  between  the  states  to  flow  in  its 
natural  channels,  unrestricted  by  any  combinations,  con- 
tracts, or  conspiracies,  or  monopolies  whatsoever.    U.  S.  y 
Tram-Mzsaouri  Freight  Ass\  166  U.  S.  290, 17  Sup.  Ct.  540:' 
U.  S.  y.  E.  C.  Knight  Co.,  156  U.  S.  1,  15  Sup.  Ct.  249; 


736 


82  FEDERAL  REPOBTEB,  537. 


Opinion  of  the  Ciourt. 
Leisy  V.  Hardin,  135  U.  S.  107, 10  Sup.  Ct  681;  Walling  v. 
M^a«,  116  U.  S.  454,  6  Sup.  Ct  454;  Bobbins  v.  Taxing 
Dtsf.,  120  U.  S.  490,  7  Sup.  Ct  592. 

But  one  material  question  remains  in  the  case:    Is  the 
business  in  which  the  defendants  are  engaged  commerce  be- 
tween the  states  ?    'Die  circumstance  that  their  place  of  busi- 
ness IS  located  on  both  sides  of  the  line  between  the  states  of 
Kansas  and  Missouri  is,  in  my  opinion,  a  fact  of  no  material 
importance  in  the  solution  of  this  question ;   no  more  than 
would  be  the  fact  that  the  business  of  a  farmer  or  manu- 
facturer was  so  located,  and  that  he  passed  from  one  state 
to  the  other  for  his  convenience  in  the  transaction  of  hi« 
usual  business.    The  method  of  business  of  the  defendant- 
is  as  follows:  The  shipment  of  live  stock  from  growers, 
dealers,  and  traders  in  Kansas.  Colorado,  Nebraska,  Missouri 
Texas,  New  Mexico,  Arizona,  Oklahoma,  and  other  states 
and  territories  iy  solicited  by  the  commission  merchant  in 
various  ways,  but  largely  by  the  personal  solicitation  of 
agents  who  travel  about  the  country  and  interview  the  stock 
men.    Frequently  the  commission  man  makes  loans  of  money 
on  the  herds,  secured  by  chattel  mortgage.    The  consignment 
rf  the  stock  is  made  to  the  commission  man  or  firm  at  the 
Kansas  City  Stock  Yards,  and  there  unloaded.    Frequentiy 
the  shipper  draws  on  the  consignee  through  his  local  bank 
with  the  bill  of  shipment  attached;  and,  when  the  stock  is 
sold,  the  loan  on  the  cattle,  or  the  draft  on  the  consignee  as 
the  case  may  be,  is  paid  out  of  the  proceeds,  and  the  balance 
remitted  to  the  shipper.     While  the  broker  is  soliciting  con- 
signments of  stock  for  sale,  he  is  also  on  the  alert  for  pur- 
chasers    He  sells  the  stock  without  .regard  to  its  destina- 
tion.   Some  is  reshipped  to  other  markets  in  other  states 
notably  t«  Chicago  and  St.  Louis.    Much  of  it,  especially 
hogs,  IS  slaughtered  at  the  large  packing  houses  near  by,  in 
Kansas  and  Missouri.    Is  this  business,  so  conducted,  inter- 
state commerce,  or  merely  an  incident  or  aid  to  such  com- 
merce f 

Commerce  among  the  states  has  been  defined  as  follows: 

•^•'Commerce  with  foreign  conntrles  and  among  the  states  kMmw 
considered,  consists  In  Interconrse  and  traffic  IndudjSe  In  tl^ 
terms  n.-,vlgatIon  and  [S38]   the  transport^lon  and  t^r^lt  of  il^ 


y 


UNITED  STATES  V.  HOPKINS. 
Opinion  of  the  Court. 


737 


^zzyj^^zz  nr.rv.^'rs  T.Jirs^srf.'- 

cester  Ferry  Co.  v.  Penmyl^ma,  114  U.  S   196,  5  Snp!  Ct.  tX'  *"""' 
In  Re  Greene,  52  Fed.  113,  Judge  Jackson  says: 

the  d:<SXr^illi'°",„te^|  S?hr''^•'^«"'«<'°•  "  '^  ^««'^  by 
only  the  actual  transportXn  "f  c^mm^JfL™'"'^^'"'*  '"^'"O^'  ■«>* 
the  states,  but  also  thriustrnmpnt«^?J?<^^  *■  *^  """^  '*''^°»  between 
portatlon  that  t  indud^  aTX  ll^*'''!?  PWc-esses  of  such  trans- 
have  for  their  object  or  ^volv»«  „„^?*"'*"!?^  ""<!  «>Btraets  which 
sion  or  passage  fS  o^'ZlrtoYnotheT-'"'  *''""'"''  '"^^^  "•""*'"'«- 

Mr^PM ^t  t'  f •■  ^i^?/^^^  ^''•'  156  U.  S.  13, 15  Sup.  Ct  254, 
Mr.  Chief  Justice  Fuller,  speaking  for  the  court,  savs- 

changed  for  the  DurooT^f  «nih  t;.^^?.  »vtK\eii  bought,  sold,  or  ex- 
the  lay  of  such^trrsH,  may"  be  St^""Z  thtl"'^"'  ""*  «° 
form  part  cf  interstate  tradj  or  Sner™.'"  ^  '^""'^  "■*' 

It  has  been  repeatedly  held  by  the  supreme  court  that  a  per- 
son soliciting  orders  for  goods  or  freights  to  be  shipped  fr^m 
one  state  to  another,  and  express  agfnts  transport^^gZ^ 
from  state  to  state,  are  engaged  in  commerce  betwln^; 
states,  and  a  local  tax  or  license  cannot  be  imposed  for  trans- 
acting such  business.     Walling  v.  Michigan;  m  U   S   wS 

63?"^^?. ''*'  ?'''^'"''  "  ^'^^  ^''•'  "^  U.  S.  34,  6  Sup.  a 
635;  Robhrns  v.  Taking  Dist,  120  U.  S.  489,  7  Sup  Ct  592 

S   mTs  lo?-  fo  ?'  '  n'"P-  ^'-  ' '  ^^<^-^- 
T&mta,  136  U.  S.  104,  10  Sup.  Ct  881 ;  Norfolk  d-  W  R 

Co.  V.  Pennsylvania,  136  U.  S.  114,  10  Sup.  Ct.  951-^7 

Cher  y.  Kentucky,  141  U.  S.  47,  11  Sup.  Ct.^851 ;  B^nnaTv 

Czy  ofTrMU,  153  U.  S.  289,  14  Sup.  Ct.  829     vLJ" 

T  \  i"T'  '•''  ^-  ^-  ^1^'  1«  Sup.  Ct  862.    It  hfs  a^ 
been  held  that  telegraphy  between  the  states  is  int^rsJate 

57380%^''"^  Vr'  "^  ''''''^^^  12'  U.  S.  640  8  Sup 

(Y^n  ;/ '  ^f^'-^'P^  ^^-  ^-  Tezae,  105  U.  S.  460.    The  qii 

protected  by  the  constitution,  and  that  which  is  merelv  an 

incident  or  aid  to  such  commerce,  and  exempt    rom  federal 

control,  has  been  much  conside«>d  by  the  federal  courts  and 

31808— VOL  1— OC  M- 


II 


738 


82  FEDERAL  REPORTEB,  538. 


I'  . 


Opinion  of  the  Court. 

sometimes  the  line  of  distinction  is  difficult  of  discernment. 
Having  a  watchfid  regard  for  the  police  powers  of  the  states, 
and  the  right  of  taxation,  the  federal  courts  have  carefully 
discriminated  in  these  cases,  so  that  the  general  government 
should  take  nothing  to  itself  not  fairly  delegated  by  the  con- 
stitution.   Nathan  v.  Louisiana,  8  How.  73 ;  Crutcher  v.  Ken- 
tucky, 141  U.  S.  47, 11  Sup.  Ct.  851 ;  Budd  v.  New  York,  143 
U.  S.  517,  12  Sup.  Ct.  468;  Kidd  v.  Pearson,  128  U.  S.  1-20 
9  Sup.  Ct.  6;  U,  S,  v.  E,  C.  Knight  Co.,  156  U.  S  1.  15  Sup 
Ct.  249;.il/ww7*  V.  Illinois,  94  U.  S.  113;  In  re  Greene,  52 
Fed.  113;  Henderson  v.  Mayor,  etc.,  92  U.  S.  259;  Coving- 
ton d'  C.  Bridge  Co,  v.  Kentucky,  154  U.  S.  204,  14  Sup.  Ct. 
1087;  Henderson  Bridge  Co.  v.  Kentucky,  166  U.  S.  150  17 
Sup.  Ct.  532.  ' 

Perhaps  a  fair  test  of  the  character  of  defendants'  rules 
and  by-laws  would  be  presented  by  these  questions :  Could  a 
state,  by  leg-  [539]  islation,  impose  on  this  traffic  the  re- 
strictions and  regulations  demanded  by  these  rules  and  by- 
laws?    Could  it  limit  the  number  of  agents  a  merchant 
should  have  soliciting  business  in  other  states?     Could  it  re- 
strain telegraphic  communication  between  points  in  different 
states  ?    Could  it  make  a  discrimination  in  rates  for  handling 
stock  shipped  from  different  localities  outside  of  the  state? 
It  is  indisputable  that  all  the  live  stock  shipped  to  these 
defendants  for  sale  from  states  other  than  Kansas. and  Mis- 
souri, after  it  has  entered  the  current  of  commerce  between 
the  states,  continues  and  remains  the  subject  of  such  com- 
merce until  the  transportation  is  terminated,  and  the  prop- 
erty becomes  a  part  of  the  general  property  of  the  state.    It 
is  also  well  settled  that,  while  this  property  is  the  subject 
of  interstate  commerce,  no  state,  municipality,  or  other  power 
but  congress  can  impose  taxes,  restrictions,  or  regulations 
upon  it,  except  so  far  as  is  proper,  in  the  exercise  of  police 
regulations,  for  the  protection  of  the  health,  morals,  and 
person  of  the  citizen,  and  except  for  proper  charges  and 
regulations  for  the  use  of  local  instruments  as  aids  or  inci- 
dents to  such  commerce,  such  as  docks,  bridges,  wharves, 
elevators,  ferries,  pilotage,  etc.,  when  congress  has  not  acted 
in  the  matter. 

In  the  case  of  Bowman  v.  Railway  Co.,  125  U.  S.,  at  page 


UNITED   STATES   V.  HOPKINS. 
Opinion  of  the  Court. 


739 


I 


497,  8  Sup.  Ct.  704,  Mr.  Justice  Matthews  lays  down  this 
principle  m  the  following  language :  J        wn  mis 

onl^Va/^^^w'hVh'^^^^^^^  -  tr^  ^°"^^^*^'  *^^*  «>« 

affected  by  state  la w^Ts  when  T.f^fl^  states  can  be  legitimately 

tablishment  anl7e^la«on  oJ  h.^^^^^       commerce,-8uch  as  the  S 
feiTies,  and  other  SmmerHHlfnniif^^^  railroads,  wharves, 

to  seci^re  thrdue^^aXTnd  r^ir^'  *?^  ^^^^^^^  «^  inspection  laws 

direct  y  connert^  w?thfnrfia^       employments  pursued  therein    not 

regulations,  a  state  ean^t  kiinnslta;..      '  '"^  "taking  such  internal 

the  state,  or  coSng  int^i^^Si/^f  a  ^Zln^IT'  ^"'^''^^  ^^^^"^^ 
if  connected  with  interstate  or  forl^L^?.?^^*^  Purpose,  especially 
such  taxes  upon  proS  immrtS  fnfn  f  hnT?"^ '  """^^  ^^^  **  ^^^ 
another  state  anH^  vet  Sm^'^lt^,^^  ^^«°»  abroad,  or  from 

erty  therein ;  and  no  dLcrlu^SSon  c.n  be  l^?h '"''°  "'^^.^^  P^^^- 
tions  adversely  to  the  nersonvf  nr  r.^!^^?L™^.^®  ^J  ^^^  ^^^^  ^egula- 
reguutions  can^  ^"mX'^S/affS^er^taT^^rr^.?''"'  "» 

w!l'i^l  r"":  ■^'"''~'  8  How.  73;  Freight  Too,  Case,  15 
Wall.  p2;Letsy  v.  Hardin,  135  U.  S.  100,  10  Sup.  Ct.  681 
{Or^ff^ml  Package  Case) ;  Henderson  v.  Mayor,  92  U    S 

Co  V   »   f '  ^«  V:,  ^'^^*'«'^^>  100  U.  S.  434;  RaUwap 
vl>I/    f  ■  1^'^  f  T  ^*-  ^^'  ^""'■"^^'^  cfe  (7.  Bridge  Co. 

P^Ve&  Steel  Co    78  Fed.  712;  Packet  Co.  v.  KeolJlc,  95 
L.  b    80   (wharfage);  Welton  v.  Missouri,  91  U    S    275- 

U  ?t'.^n  ?•  ^-^^^l  ^'  ®"P-  C*-  «5;  In  re  Rahrer,  140 
v'D^b   iiT   o*-  ^^^'  ^'^ ""'  ^'"^^  69  Fed.  233;  ScoU 

Cn^lT  '  l^--  ^-  '''  '^  '*^"P-  ^-  265;  Pittsburg  &  S. 
Coal  Co  v.Lonmana,  156  U.  S.  590, 15  Sup.  Ct  469;  Hooper 
V,  Caltfomia,  155  U.  S.  648,  15  Sup.  a.  207;  EmertVTil 
souri,  156  U.  S.  296, 15  Sup.  Ct  367 


M 


740 


f 


82  FEDERAL  REPORTEB,  540. 
Opinfon  of  the  Court. 


Counsel  for  defendants  contend  that  their  business  is  only 
an  aid  or  incident  to  commerce,— something  in  the  nature  of 
personal  service;  but  it  is  not  apparent  that  a  combination 
for  services  may  not  be  a  restraint  or  monopoly  of  commerce 
under  the  act  of  congress.     U,  S.  v.  Trans-Missouri  Freioht 
Ass\im  U.  S.  312,  17  Sup.  Ct  540.    But  the  business  of 
defendants  is  more  than  personal  services;  it  is  not  merely 
a  local  instrumentality  in  aid  of  commerce.    Defendants 
are  active  promoters,  and  frequently  interested  partes,  in  this 
immense  traffic.    They  reach  out  over  many  states  and  ter- 
ntories  by  their  solicitors  and  advertisements,  and  gather  in 
for  sale  and  slaughter,  millions  of  cattle,  sheep,  and  hogs' 
and  their  rules  and  regulations  cover  the  entire  business,  and 
extend  over  the  whole  field  of  operation.    Touching  the  ques- 
tion of  what  are  aids  or  incidents  to  commerce,  as  Well  as  po- 
lice powers  of  the  states,  the  following  cases  are  in  point- 
Packet  Co.  V.  .9^.  Louis,  100  U.  S.  423;  Vicksburg  v.  Tobin, 
Id.  430;  Packet  Co.  v.  Catlettsburg,  105  U.  S.  559;  Parkers- 
burg  &  O,  R,  Tramp.  Co.  v.  City  of  Parkersbnrg,  107  U.  S 

??!'tt  o"^*  ^^'  ^^^'  (Gloucester  Ferry  Co.  v.  Pennsylvania. 
114  U.  S.  196,  5  Sup.  Ct.  826;  Huse  v.  Glover,  119  U  S  543 
T  Sup.  Ct.  313;  Hall  v.  De  Cuir,  95  U.  S.  485;  Cooley  v. 
Board,  12  How.  298;  Packet  Co.  v.  Aiken,  121  U.  S.  444,  7 
Sup.  Ct.  907;  Sands  v.  Improvement  Co.,  123  U.  S.  288*  8 
Sup.  Ct.  113;  Monongahela  Nav.  Co.  v.  U.  S.,  148  U.  S  312 
13  Sup.  Ct.  622 ;  St.  Louis  v.  W.  V.  Tel.  Co.,  148  U  S  92' 
13  Sup.  Ct.  485 ;  Munn  v.  Illinois,  94  U.  S.  113 ;  Budd  v.  New 
York,  143  U.  S.  517,  12  Sup.  Ct.  468;  New  York,  L.  E.  d: 
TT.  R.  Co.  V.  Pennsylvania,  158  U.  S.  431,  15  Sup.  Ct.  896; 
Henderson  Bridge  Co.  v.  Kentucky,  166  U.  S.  150  17  Sun' 
Ct.  532.  ,     •  oup. 

The  defendants  further  contend  that  when  this  live  stock 
reaches  Kansas  City,  and  is  unloaded  into  the  stock  yards  it 
ceases  to  be  the  subject  of  interstate  commerce.  This  prop- 
osition, however,  covers  but  one  point  in  the  controversy  for 
several  of  the  rules  and  by-laws  of  defendants  have  more 
than  a  local  operation,  and  extend  beyond  state  lines.  Does 
this  stock,  once  upon  the  stream  of  commerce,  cease  to  be  such 
when  unloaded  at  Kansas  City?  Could  the  state  of  Kansas 
tax  these  cattle  in  the  stock  yards? 


m 


{ 


UNITED   STATES   V.  HOPKINS. 


741 


Opinion  of  the  Court. 

The  defendants  cite  the  case  of  Brown  v.  Houston,  114 
U,  S.  623,  5  Sup.  Ct  1091,  and  Coal  Co.  v.  Bates.^  156  U.  S. 
577, 15  Sup.  Ct.  415.  In  the  former  case  the  coal  which  was 
subjected  to  taxation  had  reached  its  destination,— i.  e.  the 
state  of  Louisiana,— and  was  there  offered  for  sale  in  great 
or  small  quantities  to  suit  the  purchaser.    The  court  says: 

[541]  "  It  might  continue  in  that  condition  for  a  year  or  two  veara 
or  for  only  a  day.     *     ♦    *    We  do  not  mean  to  say  thatlfTta^ll^: 

ck^of'NPw^Vn^i.'*^*'^''!^  ^*,.r^  ^«^ry  ^^d  railroad  dep^t  1^  Se 
city  of  New  York,  charged  with  the  duty  of  collecting  a  ta^on  every 

P  ;T fhi^H  "*"  T  ^??  ^^  P"^^"^^  «»•  merchandise  brought  ^nto  S^ 
city,  that  it  would  not  be  a  regulation  of  and  restraint  upon  mteretate 
commerce,  so  far  as  the  tax  should  be  imposed  on  aX?es  Sht 
from  other  states.  We  think  it  would  be,  ^nd  that  it  would  b^an 
encroachment  upon  the  exclusive  power  of  congress. 

Bearing  upon  this  question  is  the  case  of  Brown  v  Mary- 
land, 12  Wheat.  419 ;  also,  Leisy  v.  Hardin,  135  U.  S.  108,  10 
Sup.  Ct.  684.  In  this  case,  Air.  Chief  Justice  Fuller,  speak- 
mg  for  the  court,  says : 

"That  the  point  of  time  when  the  prohibition  ceases,  and  the  dowot 
ll,l^\t^^^  to  tax  commences,  is  not  the  instant  when  the  a^^ 
enters  the  country,  but  when  the  importer  has  so  acted  upon  it  th^  it 
has  become  incorporated  and  mixed' up  with  the  mals  Tprope^  in 
the  country  which  happens  when  the  original  package  is  nri^^!^ 
fnt.^r^.^nt'l''.^^^' '  *?^*  **^^  distinction  is  obviousC^f n  a  t^  S 

w^fh  tTi  intrT'''*  ^%^°  ^™P?2  ^^  "^  ^«y  to  *>^'°e  incorpoTatS 
1^1  i  1  ^^"^"^^^  ^^^^  ^^  property,  and  a  tax  which  finds  the  article 
already  incorporated  with  that  mass  by  the  act  of  the  im^rter." 

This  live  stock  is  shipped  from  different  states  for  imme- 
diate sale,  and,  if  the  market  at  Kansas  City  is  not  satisfac- 
tory. It  IS  to  be  shipped  to  another  market.    I  cannot  believe 
It  ceases  to  be  the  subject  of  interstate  commerce  when  un- 
loaded into  the  stock  yards.    Sections  4386  and  4387  of  the 
Revised  Statutes  humanely  prohibit  any  railroad  company 
whose  road  forms  any  part  of  a  line  over  which  animals  are 
r^onveyed  from  one  state  to  another  from  confining  them  in 
cars  over  28  consecutive  hours  without  unloading  them  for 
rest,  water,  and  food  for  at  least  5  consecutive  hours.    Under 
the  act  of  congress  of  May  29,  1884,  establishing  a  "  Bureau 
of  Anrnial  Industry,"  and  the  act  of  March  3,  1891,  for  the 
inspection  of  live  cattle,  hogs,  etc.,  the  general  government 
has  established  inspectors  at  the  Kansas  City  Stock  Yards 
assuming  that  such  stock  comes  within  the  purview  of  said 
acts  of  congress.    While  realizing  the  importance  of  the  issue 


1    I 


1  1 


-••» 


_  ; 


742 


83  FEDERAL  REPORTEB,  36. 


Syllabus. 

involved  in  this  case,  and  the  responsibility  of  making  ap- 
plication of  the  "Anti-Trust  Act "  to  a  new  order  of  facts,  I 
am  impelled  to  the  conclusion  that,  under  the  facts  and  the 
law  applicable  thereto,  the  prayer  of  this  bill  should  be 
granted. 


1998}      ANDEKSON  ET  AL.  v.  UNITED  STATES. 
(Circuit  Court  of  Appeals,  Bightli  Circuit) 
[82  Fed.,  998.] 

Certified  to  Supreme  Court  for  instructions  upon  certain 
questions,  under  the  provisions  of  section  6  of  the  act  of 
March  3, 1891.  ^ 

[Copyrighted,  1898,  by  West  Publishing  Co.] 

[Decision  in  the  Supreme  Court  (171  U.  S.,  604).  See  p.  967.  Case 
in  the  Circuit  Court  not  reported.] 


[36]    NATIONAL  HARKOW  CO.  v.  HENCH  ET  AI..« 

(Circuit  Court  of  Appeals,  Third  Circuit    October  29,  1897.) 

[83  Fed.,  36.1 

Restraint  of  Tbade— Combination  of  Patentees.— Numerous  manu- 
facturers, under  various  United  States  patents,  of  float  spring-tooth 
harrows,  agreed  to  organize  a  corporation,  to  assign  to  it  all  the 
patents  thus  owned  or  thereafter  to  be  acquired,  and  the  good  will 
of  their  business,  and  not  to  be  interested  in  the  manufacture  or  sale 
of  such  harrows  except  as  agents  or  licensees  of  the  corporation ; 
that  the  corporation  should  license  them  to  manufacture  and  sell, 
for  their  own  account,  subject  to  uniform  terms  and  conditions, 
their  respective  makes,  and  should  not  itself  manufacture  or  sell ; 
that  each  licensee  should  pay  one  dollar  for  each  such  harrow 
manufactured  and  sold  by  him,  and  should  receive  paid-up  stock 
in  return  for  the  patents  and  good  will.  Those  who  entered  the 
agreement  represented  70  per  cent  of  the  total  manufacture  and 
sales  of  the  United  States.  The  corporation  was  formed  and  the 
aasigmnents  made.    The  licenses  issued  also  bound  the  licensees  not 


•  Suit  originally  brought  hi  the  Circuit  Court  for  the  Eastern 
District  of  Pennsylvania  (76  Fed.,  667).  See  p.  610.  A  similarly 
entitled  case  (84  Fed.,  226),  p.  746,  is  another  suit,  brought  in  the 
Circuit  Court,  Northern  District  of  New  York. 


■K  r.» 


i 


NATIONAL   HARROW   CO.  V,  HENCH. 


743 


Opinion  of  the  CJourt 

to  cut  prices,  not  to  sell  other  float  spring-tooth  harrows  except 
under  the  licenses,  and  provided  liquidated  damages  for  every 
breach.  Held,  that  the  arrangement  was  an  unlawful  combination 
in  restraint  of  trade.** 

Same.— Though  the  fact  that  several  patentees  are  exposed  to  litiga- 
tion, justifies  them  in  composing  their  differences,  they  cannot  make 
the  occasion  an  excuse  or  cloak  for  the  creation  of  monopolies  to  the 
public  disadvantage. 

[37]  Appeal  from  the  Circuit  Court  of  the  United  States 
for  the  Eastern  District  of  Pennsylvania. 

W.  P.  Quinn,  for  appellant. 

John  G,  Johnson^  for  appellees. 

Before  Dallas,  Circuit  Judge,  and  Butler  and  EIirkpat- 
RiCK,  District  Judges. 

BuTLEri,  District  Judge. 

The  essential  facts  are  well  stated  by  the  circuit  court,  as 
follows : 

vnrt  ^^f^^^i?'*^^  Harrow  Company,  a  corporation  of  the  state  of  New 
York,— to  whose  contract  rights  and  general  purposes  the  olainUff   a 

na^S^/J.'^*^^  r^*"*^  ^^^  ?l^^'^  corporation,  hS^l^c^^J^^^fig* 
nated  in  a  written  agreement  between  a  number  of  leading  and  distinct 

^X  t^thT  "^^^'^  1^'^^k""  .^^"^  States  letters  patent,  S  flo2 
spring-tooth  harrows,  whereby  it  was  agreed  that  they  would  organize 
a  corporation  under  the  laws  of  New  York  and  would  assig^  to  tol 
corporation  ail  United  States  letters  patent  which  they  reS^tivS^ 

hafrowr^r.i^^^"^*^%?"r  "^^^^^  relatfngTo  floTt  sp?K1S 
?w  fw  ^  *i^^  good  will  of  their  business  in  such  harrows,  and 
that  they  would  not  thereafter  be  interested  in  the  manufacture  or 
sale  of  such  harrows  except  as  agents  or  licensees  of  the  corpo^tton  ; 
that  the  corporation  should  issue  to  the  persons,  firms  and  corporations 
respectively  so  assigning  to  it  their  said  patents  and  the  Jood  will 
of  their  business  exclusive  licenses  to  manufacture  and  sell  noon 
their  own  account,  subject  to  uniform  terms  and  conditions,  the 
same  style  of  harrows  which  they  were  malting  and  selling  just 
EriS^/^*^®  agreement,  and  that  the  corporation  itself  would  not 
manufacture  and  sell  any  style  of  harrows  covered  bv  its  li^nses  • 
that  each  licensee  should  pay  to  the  corporation  one  dollar  o^^fri 
float  sprmg-tooth  harrow  manufactured  and  sold  by  such  licen^ 
and  that  each  person,  firm,  or  corporation  transferring  to  the  i^^- 
tion  the  good  will  of  their  float  spring-tooth  harrow  businS?^nd 
their  patents  relating  thereto,   should  deceive  In  payment  tSrefor 

^^^.tT^^^^"^^  ^'  ^^J^  "P^°  ^^  *«  fl^^  *>y  arbitration,    f  ptid- 
up  stock  of  the  corporation.  ^ 

"  The  agreement  in  the  flrst  instance  was  signed  bv  six  different 
manufacturers,  but  the  contract  contemplated  and  provided  that  others 
f«»i"  ^^™®  into  the  arrangement  and  become  parties  thereto.  Accord- 
ingly other  manufacturers  of  float  spring-tooth  harrows  soon  joined  the 
combination,  which  then  embraced  twenty-two  different  pei-sons,  firms 

«  Syllabus  copyrighted,  1898,  by  West  Publishing  Co. 


744 


83  FEDERAL  REPORTER,  37. 
Opinion  of  the  Court 


NATIONAL   HARROW   CO.  V,  HENCH. 


746 


and  control  of  this  or«mlMtl«?^a  n^  ^^"^^^  under  the  regulation 
mg  at  lea^t  m^^Zftt^?'  *^  ""^""^  manufacturing  and  sell- 

relaSng  *\o  ^SSf^LX^  wh  T  ^''  ^^  *^^  ^^*^  states  letters  patent 
«rl««#^^.  ^^  spring-tooth  harrows,  under  which  thev  had  h«»n 
manufacturing  and  selling  harrows.  They  Joined  the  <J.mhin«H^tf 
and,  agreeably  to  the  provisions  of  the  atove-r^i^  aL^^enr^^^^^^^ 

tag  stated  provisions  are  common  to  l»U,  11^^  •    The  drfendin^ 

t^^ti^T,^'  «p.lngtootb  harrows.  floaTTprln^^ft'CSS 
mmes  witbont  teeth,  or  attachments  applicable  thereto  at  lew  nruZ, 

San"  r^t  forth  ?n  JK-Sll"?"^"'  ^  dellvei^T'the*  pu^chC'^ 
uiuu  IS  ser  roitn  in  the  schedule  annexed  to  the  licenap   nnioaa  fh^ 

IL^fL'^*'"'**K"*^'*^  *^*^  «*'"°«  prices  and  makemore^^^^^^^^ 
fn^f?"^  purchasers,  and  that  the  defendants  will  nS:  dir^tlv  or 
Indirectly  manufacture  or  sell  any  other  float  spring  tooth  harrows 
etc..  than  those  which  they  are  thus  licensed  to  sell  and  ma'rketeS 

mLX?:ro"a^^ll  '  Thl^""^  '"''K  ''  «"^^  «^'«  ««  heTslicenlSTo 
?Z  each  float  rl^snHn^^^  ^^^  \^^^  corporation  one  dollar 

upuu  eacu  noat  i9S}  spring-tooth  harrow,  etc.,  manufactured  nnd  snia 

by  them,  agreeably  to  the  terms  of  the  license  and  the  sum  of  fl!e 
tt?,  T  ";?»*<**^«i  ^^^^ses  for  erery  harroW,  etc.  manSfactu?^ 
Zlft^^  them^-ontraiy  to  the  terms  and  provisions  of  the  limi^ 
and  the  corporation  agrees  to  defend  all  suits  for  aUeged  infrins^np^t 
brought  against  the  licensees.  All  the  licenses  issuS  by  the  Sm 
tion  are  upon  the  like  terms  and  conditions."  ^         corpora- 

It  is  manifest,  as  well  from  the  contract  as  from  the  proofs 
outside  of  it,  that  the  purpose  of  the  parties  was  to  form  a 
combmation  between  the  various  manufacturers  of  these 
harrows,  to  prevent  competition  in  business  and  enhance 
pnces;  and  such  is  the  effect  of  their  agreement.    The  cor- 
poration, provided  to  hold  the  legal  title  of  the  several  pat- 
ents, is  merely  an  instrument  to  effect  this  object.     The 
prior  owners  are  still  the  beneficial  owners,  with  right  to 
continue  their  business,  subject  only  to  the  restraint  in  its 
management  imposed  by  the  contract.     The  provision  for 
licenses  is  made  necessary  by  the  transfers  of  title,  and  is 
simply  another  part  of  the  scheme  for  combination  and  con- 
trol of  the  business  of  the  several  patentees.     The  result 
would  be  the  same  in  legal  contemplation  if  the  corporation 
and  hcenses  had  been  dispensed  with,  and  the  contract  had 
provided  simply,  as  it  does,  for  combination  and  restraint 
of  competition.    That  such  a  contract  would  be  unlawful 


•W 


Opinion  of  the  Court, 
seems  clear.    While  it  is  true  that  all  contracts  in  restraint 
of  trade  are  not  prohibited,  and  it  is  sometimes  difficult  to 
determine  whether  a  particular  one  is,  there  is  no  room  for 
doubt  that  such  a  contract  as  this,  which  provides  for 
general  and  unlimited  restraint,  is  unlawful.     To  justify 
restraint,  reason  for  it  must  be  found  in  the  nature  of  the 
property  or  the  situation  of  the  parties,  as,  for  instance,  in 
the  sale  of  a  business  or  professional  good  will,  and  other 
similar  cases.     Even  then  the  restraint  must  be  confined 
within  such  reasonable  limits  as  the  circumstances  require 
Here  there  is  nothing  to  justify  retraint,  and  that  imposed 
IS  without  any  limitation  whatever.     The  fact  that  the 
property  involved  is  covered  by  letters  patent  is  urged  as 
a  justification ;  but  we  do  not  see  how  any  importance  can 
be  attributed  to  this  fact.     Patents  confer  a  monopoly  as 
respects  the  property  covered  by  them,  but  they  confer  no 
right  upon  the  owners  of  several  distinct  patents  to  com- 
bine for  the  purpose  of  restraining  competition  and  trade 
Patented  property  does  not  differ  in  this  respect  from  any 
other.     The   fact  that  one  patentee  may   possess  himself 
of  several  patents,  and  thus  increase  his  monopoly,  affords 
no  support  for  an  argument  in  favor  of  a  combination  by 
several  distinct  owners  of  such  property  to  restrain  manu- 
facture, control  sales,  and  enhance  prices.     Such  combina- 
tions are  conspiracies  against  the  public  interests,  and  abuses 
of  patent  privileges.    The  object  of  these  privileges  is  to  pro- 
mote the  public  benefit,  as  well  as  to  reward  inventors.     The 
suggestion  that  the  contract  is  justified  by  the  situation  of 
the  parties— their  exposure  to  litigation— is  entitled  to  no 
greater  weight.     Patentees  may  compose  their  differences 
as  the  owners  of  other  property  may,  but  they  cannot  make 
the  occasion  an  excuse  or  cloak  for  the  creation  of  monopolies 
to  the  public  disadvantage.     We  do  not  see  anything  to 
distinguish  this  case,  in  principle,  from  Nester  v.  Brewing 
Co.,m  Pa.  St.  473  [29  Atl.  102] ;  Oarhon  Co.  v.  McMtUin, 
119  N.  Y.  46  [23  K  E.  [89]  530] ;  Morris  Run  Coal  Co,  v. 
Barclay  Coal  Co,,  68  Pa.  St  173;  Distilling  <&  CatUe  Feed- 
ing Co,  V.  People  [111.  Sup.]  41  N.  E.  188;   Strait  v.  Har- 
row Co,  [Sup.  I  18  N.  Y.  Supp.  233.    The  last  of  these  cases 


■^1 


?T 


»i 


746 


84  FEDEBAL  REPOBTEE,  226. 


Opinion  of  tiie  Court 
arose  out  of  this  contract  under  circumstances  substantiaUy 
like  those  of  the  case  before  us.  A  similar  conclusion  wi» 
w«ched  by  the  court  in  Harrow  Go.  v.  Quick,  67  Fed.  130, 
where  this  contract  was. involved.  The  doctrine  of  these 
oises  IS  not  new,  and  we  feel  no  hesitation  in  applying  it  to 
the  contract  before  us.  ^^r  j    & 

The  judgment  is  therefore  affirmed. 


[226]  NATIONAL  HABEOW  CO.  v.  HENCH  ET  AL. 
(Circuit  court,  N.  D.  New  York.    Jannaiy  3,  1898.) 

[84  Fed.,  226.] 

Moi.opouEs-CoMB,NXTioN  OF  Patont  Ownebs-Iniwnoement  Suit - 
A    combination    among   manufacturers    of    gprlng-tootH    liarrows. 

r^^''  %  '=?,'^"'*'°"'  »'8«'"^  tor  the  purpose,  becomes  the 
asagnee  of  ail  patents  owned  by  the  various  manufacturers,  and 
executes  licenses  to  them,  so  as  to  control  the  entire  buslnesi  and 
enhance  prices,  is  void  both  as  to  the  asslgmnents  and  licenses,  so 
that  the  corporation  cannot  maintain  a  suit  against  one  of  its 
assignors  who  violates  the  agreement,  for  tafrlngemenf 

This  was  a  bill  in  equity  by  the  National  Harrow  Com- 
pany against  Samuel  N.  Hench  and  others  for  alleged  in- 
fringement of  a  patent. 

RUley  &  Love,  for  complainant 

Cookinham,  Sherman  <&  Martin  and  Strawhridge  (&  Tay- 
lor, for  defendants.  ^ 

CoxE,  District  Judge. 

This  is  an  equity  suit  for  the  infringement  of  letters  pat- 
ent, granted  to  the  defendants  and  by  them  assigned  to  the 
complamant.  The  bill  is  in  the  usual  form.  The  demand  is 
for  an  mjunction  and  an  accounting.  The  plea  alleges  that 
the  defendants  assigned  the  letters  patent  in  question  to  the 
complainant  as  part  of  an  unlawful  agreement,  which  was 
void  as  m  restramt  of  trade  and  as  against  public  policy,  and 
•  Syllabus  copyrighted.  1888,  by  Wert  PnUisUng  Oo. 


'1 


NATIONAL  HAEEOW  CO.  V.  HENCH. 
Opinion  of  the  Court 


747 


ttiat  It  was  declared  void  by  the  [227]  circuit  court  for  the 
Eastern  district  of  Pennsylvania,  and  by  the  circuit  court  of 
appeals  for  the  Third  circuit,  in  a  suit  between  these  parties. 
The  plea  has  been  set  down  for  argument.    In  the  previous 
litigation  the  Pennsylvania  court  decided  that  the  agree- 
ment between  these  parties,  and  other  manufacturers  and 
venders  of  harrows,  was  an  unlawful  combination  to  en- 
hance pnces  and  prevent  competition;  that  one  of  the  means 
used  to  further  this  conspiracy  was  the  creation  of  the  com- 
plainant as  a  convenient  instrument  to  take  and  hold  the 
legal  title  to  the  patents  owned  by  the  members  of  the  com- 
bmation,  the  equitable  title  being  still  in  the  prior  owners. 
In  short,  It  was  held  that  the  organization  of  the  complain- 
ant, the  assignment  to  it  of  the  patents,  and  the  license  from 
the  complamant  permitting  the  assignors  to  continue  to  make 
and  sell  harrows  under  the  patents  so  assigned,  were  all  steps 
in  a  general  scheme  to  create  a  monopoly,  and  that  the  trans- 
action was  unlawful  in  its  conception  and  purpose,  as  a  whole 
wid  m  all  of  Its  parts.    These  decisions  will  be  found  in 
Harrow  Co.  v.  Hench,  76  Fed.  667,  and  83  Fed.  36. 

The  bill  is  based  upon  the  theory  that,  holding  the  legal 
title  to  the  patent  in  controversy,  the  complainant  can  sue 
the  owners  of  the  equitable  title,  not  as  licensees  but  as  in- 
fringers.   The  assignment  of  the  patent  was  but  one  step 
in  the  combmation.    The  license  was  another  step.    Both 
were  necessary  to  carry  out  the  illegal  scheme.    In  the  Penn- 
sylvania circuit  the  complainant  declared  upon  the  license- 
now  It  declares  upon  the  assignment.    Both  are  invalid  un- 
der the  Pennsylvania  judgment;  the  one  as  much  as  the  other 
10  place  any  other  interpretation  upon  the  decision  is  to 
make  it  a  mere  brutum  fuhnen  leading  to  results  so  illogical 
and  inequitable  as  to  border  on  the  grotesque.    The  complain- 
ant was  created  solely  to  effectuate  the  purpose  of  the  com- 
bination the  patent  in  suit  being  transferred  as  part  of  the 
unlawful  scheme.    Can  it  be  possible  that,  based  upon  such 
a  title,  the  complamant  can  levy  tribute  upon  the  defendants 
and  thus  accomplish  by  indirection  the  very  object  of  the 
monopoly  more  effectuaUy  than  if  the  court  had  not  declared 


748 


M  nCDEBAI,  BEPOBTEB,  1018. 


Opinion  of  the  Ooort 
the  whole  transaction  void?    If  as  a  result  of  the  Pennsyl- 
■noM  tatigatoon  the  oomphuiiant  can  seize  the  defendants' 
profits  and  also  enjoin  them  from  operating  mider  their  own 
P«t«it8  t^  yictory  might  better  have  been  a  defeat    In 
escaping  ScyUa  they  are  hopelessly  caught  in  the  vortex  of 
ChaiybdM.    It  certainly  never  was  the  intention  of  the  par- 
ties tht  the  defendants  should  assign  their  patents  to  the  com- 
phunwit  with  no  righte  reserved.    The  assignment  was  in 
consideration  of  the  license  back  and  was  part  of  the  one 
agreement.    The  complainant  has  no  tiUe  except  such  as  it 
got  through  t^  agreement  and  this  agreement  has  been  de- 
cla«d  void.    The  complainant  contends  that  the  assignment 
of  the  patent  was  a  distinct  and  separate  transaction,  and  that 
the  bill  can  be  supported  upon  the  assignment  alone,  which 
was  an  innocent  proceeding  in  itself.    But  as  before  stated 
the  Penngrivama  decision  treated  aU  these  steps  as  part  of 
on«iUegpdsch^^    When  the  foundation  upon  which  this 
•Mee  stood  was  shattered,  the  entire  structure  fell.    The 
judicial  bolt  struck  the  keystone  of  the  arch.    Neither  party 
can  build  upon  the  fragments  that  remain.    As  both  were 
eqnaUy  involved  in  the  [888]  prohibited  scheme  the  court 
left  them  where  their  own  acts  placed  them,  declining  affirma- 
tive rehef  to  one  as  against  the  other.    The  plea  is  allowed. 


[10181    HOPKINS  ET  AL.  v.  UNITED  STATES. 

(CIrenIt  Coort  of  Appeals,  Eighth  Circuit    December  27,  18OT.) 

[84  Fed.,  lOl&J 

Appeal  trom  the  Circuit  Court  of  the  United  States  for 
the  District  of  Kansas.  Questions  certified  to  the  supreme 
comrt,  on  D«»mber  8, 1897,  under  the  provisions  of  section  « 
of  the  act  of  March  3,  1891.    Cause  removed  to  the  supremo 

nruXsklp'tiTf  ^ ''  ^^'•'  '"^  f ^P-  ^^^>'  •"" 

[Copyrlglitecl.  1898,  by  West  I^ubHsliliiif  Co.] 


? 


7. 


4 


UNITED  STATES   V.  COAL,  DEALEKS'  ASSN.  749 

Statement  of  the  Case. 

[262]  UNITED  STATES  v.  COAL  DEALERS'  ASS'N 

OF  CALIFORNIA  ET  AL. 

(Circuit  Court,  N.  D.  California.    January  28,  1898.) 

[85  Fed.,  252.] 

Monopolies-Anti-Tbust  Law-Restraining  OaDEB—Under  section 
4  of  the  anti-turst  law  of  July  2,  1890,  a  restraining  order  may  be 
Issued  without  notice,  under  the  circumstances  sanctioned  by  the 
established  usages  of  e<iuity  practice  in  other  cases  « 

Pabties  in  Equity-Unincorporated  Association.-Iu  a  suit  in 
equity  to  restrain  an  alleged  unlawful  combination  acting  as  an 
unincorporated  association,  it  is  sufficient  that  the  association  to- 
gether with  a  large  number  of  its  members,  as  individuals  and'offi- 
cers  of  the  association,  are  made  parties  defendant 

Monopolies-Combinations  in  Restraint  of  Trade-Anti-Tbust 
Law  -Under  the  anti-trust  law  of  July  2,  1890,  a  contract  or  com- 
bination which  imposes  any  restraints  whatever  upon  interstate 
commerce  is  unlawful ;  and  it  is  immaterial  whether  or  not  the 
restraint  is  a  fair  and  reasonable  one,  or  whether  it  has  actually 
resulted  in  increasing  the  price  of  the  commodity  dealt  in 

Same-Interstate  CoMMERCE—Where  coal  is  brought  from  other 
states  and  foreign  countries  to  a  certain  city  by  importers  and 
dealers,  who,  by  a  combination  with  a  local  coal  dealers'  associa- 
tion, regulate  the  retail  prices  arbitrarily,  and  provide  against  free 
competition,  such  combination  is  one  in  restraint  of  interstate  com- 
merce, in  the  meaning  of  the  act  of  1890. 

In  Equity. 

Bill  by  the  United  States  against  the  Coal  Dealers'  Associition  nf 

«    l^nln'V^"?  ?%  '"r^^^^  ^^  tb«  association,  and  am  Charl^ 
R  Allen  Central  Coal  Company,  R.  D.  Chandle^,  Geor^Fritch  J  C 

tTouTomp^nV^'w^'r  '"^^J'Tt  ^.^^^^^^^  Ore^^ToaT  &  Nkvigal 
lion   company,   w.   G.   Stafford,   trading  as   W    G    Staff ord   a   n^ 

R.  Dunsmuir's  Sons,  John  Rosenfeld,  LoSis  Rosenfeld  aS  HeS^ 
Rosenfeld,  partners,  trading  as  John  RosenfeldXns  The  Wn^ 
brought  to  secure  the  dissolution  of  the  Coal  Dealers'  Assocfat^in  o? 
Snn^''''!^*^;.^"!*^  '^*  ^«^d^  ^°  agreement  betweerthe  Sm  as^^^^^ 
tion  and  the  other  defendants,  relating  to  the  sale  of  «»af  in  fhf^i^ 
and  county  of  San  Francisco,  alleged  to  be  in  r^trflinTn>T.o5  ^ 
commerce,  in  violation  of  the  act  of  jSv  2  1«S^  12^  i-^  *^^^^.  ^""^ 
tion  restraining  the  defendant?  from  furtheragr^ing  ^mbVn?^^ 
fnTrJ  °^'  ^5^  ''?^^''^  *«^^*^«r  ^'^  maintaining  rSfef^l'  r^^on^' 
and  rates  and  prices  for  coal  brought  from  British  Cohunhtrwl^h 
iagton,  and  Oregon  to  San  FranciscS,  for  d™meX  pur^as  S 

r  ^//r^^'.  V""'*^^  ^*^*^^  ^^'*^^^^  Attorney,  and  Alfred 
L,  Black,  Spmal^ssistant  United  States  Attorney. 

«  Syllabus  copyrighted,  1808,  by  WestPubllshtag  Co!  * 


85  FEDERAL  REPOBTEB,  252. 
Opinion  of  the  Court. 

D^ ie J  fX'JrM^^'^J'''''^^  *"'  respondents  Coal 
W  O  St^ff  /  CaWornia^Oregon  Coal  &  Navigation  Co.. 
W.  I,.  Stafford,  and  E.  D.  Chandler. 

pj*""  f  ,f  "^'^/f  ^"w.  'Of  respondents  Central  Coal  Co.,  John 
Rosenfeld,  Louis  Rosenfeld,  and  Henry  Rosenfeld  miC^ 
trading  as  John  Rosenfeld  Sons.  ^o^nie'^-  Partners 

J.  t  Wifson^'l'S  ''"'  ^^'"^^  ^-  ^^-'  *-  -Pon«^-ts 
FrkcL  ^'"'^''"'  **"  '^'P*'"^*"*^  C^'^ries  R-  Allen  and  George 

MoRBow,  Circuit  Judge. 

This  is  a  bill  in  equity,  brought  by  the  United  States 
attorney^  upon  the  authority  of  the  attorney  ^eral  Tn 
l2o3]  he  name  of  the  United  States,  against^the  Col" 
Dealers  Association  of  California  and  the  members  of  the 
association  and  certain  firms  and  corporations  doi^g  bu^! 

Z^  '^^r  ^^r^""^.'  '"'  *•'«  P"^P°*  of  dissolving  X 
t^.  i  Association,  as  an  unlawful  combination^  and 
to  set  aside  an  agreement  between  the  said  association  and 
the  other  defendants,  alleged  to  be  in  restraint  of  trade  ^d 

"Tr^tlT^*'""  1  *'*'  '^  '''  "^^^^  -«"«<i  "^ 
act  to  protect  trade  and  commerce  against  unlawful  re- 

s^ramts  and  monopolies,"  approved  July  2,  1890      It^s 

aUeged  m  the  bill  that  the  Coal  Dealers'  ALcialonand  the 

officers  and  members  thereof  are  an  unincorporated  orgjniza- 

fon,  «.mpo^d  of  retail  dealers  in  coal,  rJdents  inTeTy 

of  San  Francisco,  and  of  miners  and  shippers  of  coal  who 

are  residents  of  and  are  carrying  on  buLss  in  the  dt> 

of  San  Francisco;  that  R.  Dunsmuir's  Sons  are  the  ageS 

the  Wei  ington  colliers  of  British  Columbia,  from  whi^ 

SrTntTr?."*.*?'  '°'^  '^^^^  fr"-"  British  Colum- 
bia, that  R.  D.  Chandler  is  a  wholesale  coal  dealer  in  the 
city  of  San  Francisco,  and  imports  and  brings  and  d^  in 
and  seUs  coal  brought  from  the  state  of  WaThingtonTttiS 


UNITED  STATES   V.  COAL  DEALERS '  ASSN. 
Opinion  of  the  Court. 


751 


J.   C.  Wilson  &  Co.   deal  in  coal  brought  from   British 
Columbia;  that  the  Oregon  Coal  &  Navigation  Company 
own  coal  mines  in  the  state  of  Oregon,  and  import  and 
bring  coal  to  the  state  of  California  from  said  mines,  and 
sell  the  same  at  wholesale ;  that  W.  G.  Stafford  &  Co.  import 
and  bring  coal  from  the  state  of  Oregon ;  that  the  defendants 
and  their  associates  comprise  all  the  wholesale  dealers  who 
handle,  brmg,  and  import,  and  sell  coal,  used  in  San  Fran- 
cisco for  domestic  purposes  as  fuel;  and  that  the  said  de- 
fendants, combined  together,  can  absolutely  control  the  price 
charged  for  coal  for  domestic  purposes  as  fuel  at  said  city 
of  San  Francisco,  by  reason  of  the  fact  that  San  Francisco 
is  located  at  such  a  distance  from  all  coal  mines,  other  than 
those  controlled  by  the  defendants,  that  the  rates  of  trans- 
portation are  prohibitory,  and  make  it  an  impossibility  to 
import  or  bring  coal  as  fuel  for  domestic  purposes  from  any 
place  or  places  or  mines  other  than  the  mines  owned,  oper- 
ated, and  controlled  by  the  defendants,  or  some  of  them; 
that  all  the  coal  mined  in  the  state  of  California  that  is  used 
as  fuel  in  said  San  Francisco  is  owned  and  controlled  by  the 
defendants,  or  some  of  them.    The  bill  further  alleges  that 
the  city  of  San  Francisco  is  a  city  of  290,000  population  and 
upward;  that  the  inhabitants  generally  use  coal  as  fuel  for 
domestic  purposes,  and  that  it  is  to  them  one  of  the  prime 
and  common  necessaries  of  life;  that  they  use,  as  fuel  for 
domestic  purposes,  about  800,000  tons  of  coal  annuaUy,  of 
which  amount  more  than  700,000  tons  are  mined  in  British 
Columbia  and  in  the  states  of  Oregon  and  Washington,  and 
imported  and  brought  to  San  Francisco ;  that  the  small  per- 
centage of  about  50,000  tons  is  mined  and  produced  in  the 
state  of 'California;  and  that  this  domestic  product  has  no 
practical  effect  on  the  market  price  of  coal  in  San  Francisco. 
It  IS  further  alleged  that  in  the  year  1895  there  were  in  the 
city  of  San  Francisco  divers  and  numerous  persons  engaged 
111  the  retail  coal  business,  supplying  coal  as  fuel  for  domes- 
tic purposes  to  the  inhabitants  of  said  citv;  that  said  coal 
came,  m  large  part,  through  the  agency  of  the  dealers  men-^ 
tioned  m  the  [254]  bill,  from  British  Columbia,  the  state 
of  Washington,  and  the  state  of  Oregon;  that  the  retail 


{ 


752 


85  FEDERAL  REPORTER,  254. 


Opinion  of  the  Court. 

[m"rl^'r  "  combination  with  certain  wholesale  dealers  and 

.Tnlw      Tk  *''""  ^"^'^^  ^^"'"bia,  and  those  bring 

otL^ Lf*""  '^•'*'*^  *•'  Washington  and  Oregon,  an^ 

Ss^  ntn         '".""^'''i^*'  '^ith  intent  to  form  a  Sn  ract! 

cf  O^ln       5  ^•'"nb.a,  the  state  of  Washington,  the  state 
of  Oregon,  and  the  state  of  California,  and  with  intent  to 

"S  To'  '"'  '"  f'^^t  "^  """"P^"-'  -<1  oomWne  an<l 
i^een   Kritish  Columbia,  Washington,  Oregon    and   r.li 

usco  as  fnel  for  domestic  purposes,  did  associate  themselves 
together  ,n  the  state  of  California,  and  on  the  11th  X  of 
^epte„.ber.  1896,  adopted  a  constitution  and  by  laws  the 
provisions  of  which  a«  set  out  in  full  i„  the  bill.    Fo;  the 

xWH  T'^J  '*  "'"  ^'"'y  •^  """^^  t«  n»ti«e  the  foLw! 
mg  articles  and  sections : 

CONSTITUTION. 

Ptece  of  business  to  sSTftmS^  Thf  iPh'?,"J*-'  """^  »'""<='»»' 
the  ftimishiDK  of  IntormatuS,  to  iJ  nL  V*'"''"  ''*''*  '<"■  "»  object 
made  by  whotesale  altera  to  tte  retail ^^^i^*  "%  ^  ""'^  "'  <»«' 
to  consumers,  and  also  tte  namw  of  ^tfJ  S  ?"**  by  retail  dealers 
gnllty  of  Tlolattag  am  of  the  r««  r,J^..u^'*".'^^°  ""''«  ''««» 
time  by  this  orgailzatlon  and  thP  ft.rnUh.  **  i""^^  '"»"  """e  *» 
as  possible  of  ^Inquent  io^mp^  «nS  ^if  °.l "'  «>mP'ete  a  list 
be  decided  upo™  ^nromers,  and  such  other  matters  as  may 

to"^^le^/*e^»«J*?^^«„°*«>«-  (a)  ^^y  person  who  engage. 
Bhall  own  and  ^rate  Tf^ard  Sl^  an"^Sl>*"  "?'.?«""'•  '^"o 
sign.  Shan  be  r^arded  as  a  reto?I  dMS>r  ^k/??.  '''^P'"^*'*  " 
shippers  shall  bel^iglble  to  memt^«hi„  ^'!k,  <•*>  ■*"  ""'"ers  and 
■och  miner  and  sUpwr  shaTi  n«?^iL  -*•"*  association,  provided 
.t_retaiI.atIessprloe''SJan?he'Utandea'llrs".''"''"^  of  selling  coal. 

mem^hlp^l^te"?^tS^"T^/Sin'^''*  a<tolttenc-e  fee  for 
accompany'^the  appflcntfon  tbf  Thf  2m™n"."'/5^  ""«  Invariably 
cents  i»r  month.  payaWeqnartert^lnT^v„„'*'  ^"J  *•"'"  ^  «"? 
the  first  day  of  the'^Sh  foHowtog  t^  montS7;  Im  h^k""*^  '™°' 
was  admitted,  (e)  AssessmentTmly  U  tevlS  bv  ,  ^^^m^*""^ 
of  the  members  present  at  a  reeu^r  m^H^J  h„»V,  t^o-thlrds  vote 
when  the  Interests  of  the  asaSl tl«n  ^  .  J*^'."""  **"''  '"  ^°ch  cases 

(d)  No  assessment  shaTb^1^|^'°°j^V?«»,T  ""^^^  "^"'^^  **• 
of  meeting  that  '  a  resolution  to  wl  f  ^P""^^^  'n  the  notice 
introduced.'"  resolution    to    levy    an    assessment    will    be 

"Art.  &  Failure  to  P.,  Dues.  Assessmrats.  or  Flnee-Charges- 


a 


1 


UNITED   STATES    V.  COAL   DEALERS'  ASSN.  753 

.    Opinion  of  the  Court. 

nif^*  ^K^^^^^'  ^^^  ^^  ^"y  member  shall  neglect  or  refuse  to  nav 
the  monthly  dues  and  assessments  as  provid^  in  the  constitution 
and  by-laws  of  this  association  within  three  davs  afterthe  same 
have  become  due,  he  or  they  shall  no  longer  be  considered  mem^ 
oll^t  f  ««^;a«on  or  participant  in  its  benefits.  Tnd  shaH  surrTn^" 
^nl^2ft»,°^  membership;  but  a  written  or  printed  notic-e  must  te 
sent,  at  the  expiration  of  said  time,  to  all  those  members  who  are 
delinquent  and  may  be  reinstated  within  ten  days  thereafter  by 
paymg  in  full  all  dues."  ^      mereaiter   oy 

BY-LAWS. 

"  Sec.  3.  Officers  and  Their  Duties.  ♦  ♦  *  (c)  The  secretarv 
prior  to  taking  his  office,  shall  be  required  to  give  a  bond  for  the 
talthful  performance  of  his  duties,  in  the  sum  of  one  thousand  (1 000) 
do  ars,  with  two  sureties  qualifying  for  the  sum  of  five  hundred  (500 

^^^^airSn^l  «^««^j;^*«^  to  tl^e  board  of  directors.  He  slSall 
collect  all  dues,  issue  all  communications,  notices,  and  other  corre- 
spondence not  provided  for.     He  shall  keep  a  register  of  all  member 

^LT  TTk^*^.^^'  *^^^t^^^  ^"»^  ^  regular  set  ofTooL  for  h^pYoS? 
conduct  of  business;  receive  all  moneys  due  the  association  and ^v 
the  same  over  to  the  treasurer ;  sign  all  orders  on  thrtreasurer  ?or  the 
payment  of  such  [255]  bills  as  may  be  approved  by  a  maToritar  of 
the  finance  and  certificate  purchasing  committees.  He  shall  km)  a 
record,  in  a  book  provided  for  the  purpose,  of  all  transfers  of  c^tifi^ 
cates  of  membership ;  be  the  custodian  of  all  properties  of  the  as^ 
ciation;  receive  all  charges  made  of  violation  of  ^the  card  ratls^ 

,^  f '  T^  '^nf  *^^  ^^^^  *^  t^^  grievance  committee  for  act'onafS? 
using  due  diligence  in  securing  such  facts  in  the  case  as^sShit 
He  shall  devote  his  entire  time  to  the  associatiUTnd  uX  io 
eircunistaiices  is  he  allowed  to  be  associated  In  any  manner  with  aS? 
other  business.  He  shall,  on  receipt  of  findings  of  the  grilvance  c^^ 
mi  tee,  notify  the  wholesale  dealers  of  such  report,  and  r^^st?n 
writing,  that  they  impose  the  penalty  for  such  violation.  His  ci)m° 
pensation  shall  be  fixed  by  the  board  of  directors  *  *  ♦ 
Jl^.%^\t'  ^^''^"^^"S  Committees,  (a)  A  grievance  committee  consist- 
ing of  three  persons  shall  be  appointed  by  the  president  from  thL 
board  of  directors,  on  the  first  Monday  of  everrmS,  t^serve  wit^ 

nlliirH'^r"^**^"  ""^"  *^^  fi^"^*  ^^^^^^«y  o«  tt^e  following  month,  or 
until  their  successoi-s  are  appointed.  They  shall  assemble  whenever 
requested  to  do  so  by  the  secretary,  and  receive  and  invLtlgate  all 
charges  of  violation  of  card.rules  or  rates  preferred  aga^n^  aV^coa 

fw5finV''^^^.*  ^V^^  ^**y^"**  «^""ty  of  San  Francifco,  and  re^rt 
tw  1?°?.'"!.^  Ik  *^^  secretary.  They  shall  have  the  pow^r  to  fix  the 
time  limit  for  the  payment  of  any  fines  imposed  by  them      *     *     ♦  " 

Sec.  9.  Advertising,  Circulars,  etc.  (a)  Dealers  in  advertising 
coa  are  not  permitted  to  state  prices  without  adding  the  n7mi  of 
coal  to  be  had  for  the  prices  named;  both  names  and  prices  to  c^rr^ 
spond  exactly  with  those  on  rate  card,  (b)  Anv  circu  arl  noTter? 
dodgers  cards,  or  signs  conflicting  with  the  card  rates  or  ^XdS 
played,  found  on  the  streets  or  circulated  in  anv  manner  whatsoever 
shall  subject  the  dealer  or  agent,  who  caused  thiir  disti-tbution  tTthe 
pena  ties  as  are  provided  in  section  13  of  these  by-laws  for  selline 
coal  in  violation  of  card  rates  or  rules.  seiimg 

"  ^^'}P'  ^^^'0  or  More  Yards.  A  member  having  two  or  more  vards 
cannot  dispose  of  his  certificate  of  membership  in  the  sale  of  one 
yard,  and  retain  his  membership  in  the  association. 

11808— VOL  1—06  M- 


754 


»5  FEDERAL  REPORTEB,  255. 
Opinion  of  the  €k>iirt 


**  Sec.  11.  New  Yards.  Any  member  oneniiifi:  a  new  vnrd  or  vania 
after  June  14th,  1805,  in  addition  to  the  oie  that  se^rld  l?Is  admissi^ 
in  the  association,  shall  be  liable  for  an  additional  t^rhund?edS? 
dollars  admittance  fee  and  monthly  dues  for  each  yardT  oi^nedli 
ass^iaUon'"'**  '^"'*'  "'  '^"^  ***  participate  in  the  berTeflT of  tiS 

mom^o;  IL  fw**fi^  ^^"^^i  and  Weights,     (a)  No  dealer  shall  give 

tT!XniT  1  SS^^^  ^"'l*^.^''  ^  f**^^'   ^  I^"°^«  ^«  5  sacks,  or  f 
ton  (short)  :   1,000  pounds  to  10  sacks,  or  i  ton  (short)  •  2  000  nmindJ 

to  20  sacks,  or  1  ton  (short)  ;   2,240  p;>unds  to  1  toMIong)      (b)  All 

long  tons  must  be  delivered  in  bulk.    Names  of  coal  must  appear  on 

k"  v^k'^J  \"^  "*^y  ^^«^  **«  »*«^^  ^«rd.  A  load  of  coal  deliveml  ^n 
bulk  sha  1  be  per  ton  of  2,240  pounds.  If  handled  after  arr?>'?l  at 
customers  place,  an  additional  charge  of  fifty  cents  per  ton  must  be 
S:'o?;notnr.i«  T^  delivered  in  twenty  sacks,  and  put  in  bin,  shall 
De  -.000  pounds.  No  premiums  or  presents  are  permitted  to  be  offered 
as  inducements  for  purchasers  to  buy  coal,  (c)  Dealers  shall  be 
permitted  to  sell  and  deliver  fifty  pounds  of  ial  T(1^7-half  card 
rates  for  one  hundred  pounds,  but  in  no  case  shall  they  be  allowed  to 
oiindT     "  1""^^i*i«s  ranging  between  fifty  pounds  and  one  hundred 

"Sec.  13.  Violations— Penalties,  (a)  If  a  dealer  or  agent,  member 
or  non-member,  be  found  guilty  of  selling  coal  in  violation  of  the  card 
rates  or  rules,  he  shall  be  subject  to  a  fine  of  not  less  than  ten  (10) 
dollars  nor  more  than  one  hundred  (100)  dollars  for  first  olfense,  not 
less  than  twenty-five  (25)  dollars  nor  more  than  two  hundred  (200) 
dollars  for  second  offense;  if  a  member  of  the  association,  be  sus- 
I>euded  and  compelled  to  pay  retail  prices  for  third  ofl*ense  until 
restored  to  membership  in  good  standing  by  the  board  of  directors. 

WWW 

"  Sec.  14.  Agreement.  The  following  agreement  between  the  whole- 
sale coal  dealers  of  the  city  and  county  of  San  Francisco,  Cal.  and 
this  association,  is  hereby  embodied  in  this  section,  and  made  a  part 
and  parcel  of  the  by-laws  of  this  association : 

**  *  This  agreement,  made  this  first  day  of  June,  A.  D.  1896,  by  and 
between  the  Coal  Dealers'  Association  of  California,  an  association 
and  the  undersigned  wholesale  coal  dealers,  witnesseth*  (1)  That 
the  purposes  of  this  agreement  are :  [256]  First,  protection  to  con- 
sumers in  receiving  full  amount  and  kind  of  coal  purchased ;  second 
protection  to  dealei-s  in  obtaining  suflicient  margin  to  carry  on  a  safe 
business  with  justice  to  consumers.  (2)  That  said  wholesale  dealers 
wlH  not.  nor  will  any  or  either  of  them,  during  the  continuance  of 
this  agreement,  sell  coal  at  trade  rates  to  anv  one  not  having  an  estab- 
lished yard ;  nor  will  any  or  either  of  them  sell  coal  at  less  than  card 
rates  to  consumers,  except  in  such  cases  as  may  be  provided  for  by 
agreement  among  said  wholesale  dealers  themselves.  (3)  That  said 
wliolesale  coal  dealers  hereby  acknowledge  the  request  of  the  Coal 
Dealers'  Association  of  California,  made  to  them  on  the  sixth  day  of 
May,  1890,  to  charge  one  dollar  ($1.00)  per  ton  additional  over  present 
trade  rates  for  all  coal  sold  by  said  wholesale  dealers,  or  any  or 
either  of  them,  to  the  retail  dealers  in  the  city  and  county  of  San 
Franci.sco,  who  are  not  members  of  said  association,  and  hereby  agree 
to  comi>ly  with  said  request,  and  will  during  the  continuance 'of  this 
agreement  charge  one  dollar  ($1.00)  i)er  ton  additional  over  trade 
rates  for  all  coal  sold  to  dealers  carrying  on  business  in  said  city  and 
county  who  are  not  membei*s  of  said  association.  (4)  That  upon 
receiving  proof  from  the  Coal  Dealers'  Association  of  the  violation  by 
any  retail  coal  dealer  of  any  of  the  rules  of  business  printed  on  the 
rate  card  issued  by  said  association,  and  being  satisfied  that  the 


i 

I] 


UNITED  STATES   V.  COAL  DEALERS '  ASSN.  7.55 

Opinion  of  the  Court. 

have  paid  such  i^asoSle  S^  beTm";^^^  "''*"  ^.^  ^^S" 

said  association      (.5)  Thn/ Thl  f^iiL  •  ^^      i  imposed  upon  him  by 
enforced  dur  ng  the  conti^^^^  ''"^^'  ^°^  ^^*««  ^hall  he 

factorily  made  by  such  debtor  and  creditors.     (8)  That  inl^e  l?ent 

That,  after  the  application  of  the  proceeds  of  such  sale  to  thP  ^vm^; 

ment  shnll  continue  in  full  foro«  S  effect  fir  VhJ^*-*^'^  2^" 

" '  In  witness  whereof,  the  parties  hereunto  set  their  hnnrts  tho  rt„„ 

to  nSpn?'  "IT"'^  ^V'*^"-  ""'-^  <^"'  Dealers'  LsocIation«gCy 
Its  piesident  and  secretary,  thereunto  authorized  by  resolution  of  laid 


■» 


756 


85   FEDERAL   REPORTER,  257. 
Opinion  of  tlie  CJourt 


tt  % 


association  duly  passed,  and  said  wbolesale  coal  dealers  signing  tlieir 
respective  names. 

"*  [Signed]  Coal  Dealebs*  Ass'n  or  Califobnu, 

•*  •  By  P.  Lynch,  President, 
**  *  By  E.  K.  Cabson,  Secretary. 
"*  Charles  R.  Allen. 
** '  Central  Coal  Co., 
" '  By  J.  J.  McNamara. 
" '  R.  D.'  Chandler. 
"  *  Geo.  Fritch, 
"  *  Per  J.  Homer  Fritch. 
"  *  C.  WU-SON  &  Co. 
"*  Oregon  Improvement  Co., 
"*JoHN  L.  Howard,  Manager. 

*  Oregon  Coal  &  Navigation  Co., 
ByC.  M.  GooDALT.,  Vicc-Pres. 
"  *  W.  G.  Stafford  &  Co. 
"  '  R.  DuNSMUiR  &  Sons, 
"  *  By  C.  H.  Jouett.' 
**  Sec.  15.  Agencies  or  Offices,     (a)  Any  member  having  agencies  or 
offices  otlier  than  those  located  at  his  yard,  for  the  sale  of  coal,  shall 
be  compelled  to  have  a  certificate  of  membership  for  each  of  said 
agencies  or  offices,     (b)  In  the  event  of  the  failure  of  any  member  to 
secure  a  certificate  of  membership  for  each  agency  or  office,  as  re- 
ferred to  in  paragraph  (a)  of  this  section,  within* five  days  after  a 
written  notice  shall  have  been  sent  him  by  the  secretarv,  he  shall  im- 
mediately cause  the  same  to  be  closed,  or  subject  himself  to  a  fine  of 
not  less  that  ten  (10)  dollars  nor  more  than  one  hundred  (100)  dol- 
lars for  each  agency  or  office  that  is  known  to  be  operated  by  him  or 
for  his  benefit. 

"  Sec,  16.  Sales  to  Nonmember  Dealers  or  Agents,  (a)  No  member 
of  this  association  shall  be  permitted  to  sell  dealers  or  agents,  who  are 
nonmembers,  coal  for  less  than  consumers'  prices.    •  .  •    *.*» 

The  bill  further  alleges  that  the  constitution  and  by-laws, 
since  their  adoption,  have  been,  and  now  are,  in  full  force 
and  effect,  save  as  amended  by  making  the  fee  of  membership 
$500  instead  of  $200,  as  provided  in  article  4  of  the  consti- 
tution, and  by  amending  subdivision  3  of  the  agreement,  set 
out  in  section  14  of  the  by-laws,  by  changing  the  words  "  one 
dollar  ($1)"  to  "two  dollars  ($2),"  where  the  same  appears 
in  said  paragraph,  and  by  changing  the  schedule  of  rates 
from  time  to  time,  so  that  the  schedule  of  rates  and  rate  card 
are  as  set  forth  in  the  bill.  The  terms  of  the  agreement  be- 
tuoen  the  Coal  Dealers'  Association  and  the  importers  and 
wholesale  dealers  in  coal,  as  set  forth  in  the  by-laws  of  the 
Coal  Dealers'  Association,  are  made  the  subject  of  still  fur- 
ther allegations  of  combination,  conspiracy,  and  confedera- 
tion between  the  coal  dealers  in  the  establishment  and  mainte- 
nance of  arbitrary  rates  for  coal  in  San  Francisco,  and  in 
depriving  tiie  residents  of  San  Francisco  of  the  benefits  of 


.>!» 


■i 


H 


UNITED  STATES   V.  COAL  DEALERS '  ASSN. 


757 


Opinion  of  the  CJourt 

free  competition  between  owners,  importers,  and  dealers  in 
coal    from    British    Columbia,    Washington,    and    Oregon, 
whereby  the  trade,  traffic,  and  commerce  in  this  article  has 
been  monopolized  and  restrained,  and  dealers  in  coal  who 
have  been  refused  or  were  unable  to  become  members  of  the 
Coal  Dealers'  Association  have  been  compelled  to  desist  from 
said  business,  and  have  been  restrained  from  carrying  on 
their  trade,  business,  and  dealing  in  coal  in  the  ^  city  of 
[258]  San  Francisco  brought  from  British  Columbia,  Wash- 
ington, and  Oregon.     The  prayer  of  the  bill  is  that  the  Coal 
Dealers'  Association  be  dissolved ;    and  t^at  the  agreement 
between  said  association  and  the  wholesale  dealers  be  set 
aside;   and  that  the  defendants  be  enjoined  and  prohibited 
from  further  agreeing,  combining,  conspiring,  and  acting 
together  to  maintain  rules  and  regulations  and  rates  and 
prices  for  coal  brought  from  British  Columbia,  Washington, 
and  Oregon  to  San  Francisco,  for  domestic  purposes  as  fuel! 
to  hinder  trade  and  commerce  between  said  states  and  for- 
eign countries;   and  that  all  and  each  of  them  be  enjoined 
and  prohibited  from  entering  and  continuing  in  the  combina- 
tion, association,  and  conspiracy  to  deprive  the  people  of  the 
city  of  San  Francisco  of  such  facilities,  rates,  and  prices  for 
coal  brought  from  British  Columbia,  Oregon,  and  Washing- 
ton to  the  city  of  San  Francisco,  in  the  state  of  California, 
as  will  be  afforded  by  free  and  unrestrained  competition  be- 
tween the  owners,  operators,  importers,  and  dealers  of  said 
coal  used  from  said  places  in  said  city  of  San  Francisco,  for 
domestic  purposes  as. fuel;  and  that  all  and  each  of  said  de- 
fendants be  enjoined  and  prohibited  from  agreeing,  com- 
bining,  and  conspiring  and  acting  together  to  monopolize,  or 
attempt  to  monopolize,  said  trade  and  commerce  in  coal  be- 
tween said  states  of  Oregon,  Washington,  California,  and 
said  foreign  country  of  British  Columbia ;  and  that  all  and 
each  of  said  defendants  be  enjoined  and  prohibited  from 
agreeing,  combining,  and  conspiring  and  acting  together  to 
prevent  each  and  any  of  their  association  from  importing 
dealing,  and  delivering  coal  from  British  Columbia,  Wash- 
ington, and  Oregon  to  the  city  of  San  Francisco,  state  of 
California,  and  from  dealing  in  the  trade  and  commerce  of 
the  same  between  said  states  and  said  foreign  countrv  at 


11 

I 


n 


I 
i: 


'^^  85  JPEDERAL  REPOKTEB,  258. 

Opinion  of  the  Court 

such  rates  as  shall  be  fixed  by  each  of  said  defendants  acting 
independently  and  separately  on  its  own  behalf. 

Two  affidavits  supporting  the  material  aUegations  of  the 
bill  were  filed  with  the  bUl  on  December  16,  1897.    One  of 
these,  made  by  a  retail  coal  dealer  in  San  Francisco,  who  is 
not  a  member  of  the  CJoal  Dealers'  Association,  alleged 
ainong  other  things,  that,  by  reason  of  the  fact  thai  the  L- 
stitution  and  by-laws  of  the  Coal  Dealers'  AssociaUon  and 
the  agreement  between  the  wholesale  dealers  and  said  as,so- 
mtion  prohibited  the  sale  to  him  of  coal  brought  from 
Washmgton,  Oregon,  and  British  Columbia  except  at  ad- 
vanced prices,  he  had  been  greaUy  restr^ned  and  hindered  in 

^uSLT  J^n*^!"  *"^^«'  '^'  *=»"'*  ^^^^  «°  order 
requmng  the  defendants  to  show  cause,  on  the  first  Monday 

m  Januwy   1898,  why  an  injunction  should  not  be  issued 

Zrj      !r  '^  ?' J'"^'  P""'*'"^  *«  "t'g^tion.  ^nd  in  the 
meantime  the  defendants  were  restrained  and  prohibited 

from  charging  or  collecting  from  persons  engaged  in  the 
retail  eoal  trade  in  the  city  of  San  Francisco  a  pri^  in  exci 
ofthe  «.me  charged  and  collected  from  members  of  the  Coal 
D«,lers  Association  for  like  purchases,  in  quantity  and 
quality,  of  coal  imported  or  brought  from  British  Columbia 
Sr  STsS'  T^  ?  Washington  and  Oregon.  On  Decem-' 
fa!  Jr  A  .v**  *^^*':'?'^«»*«  appeared  specially,  and  moved 
to  set  aside  the  preliminary  restraining  order,  upon  the 
grounds  that  the  order  was  made  without  notice  12591  to 

!Jl.  K  If '^  *^'*  "^  irreparable  injury  had  been  shown 
to  be  probable  by  reason  of  the  conduct  of  the  defendants  in 
the  particulars  in  which  they  are  sought  to  be  restrained  in 
iatT«T?'^  .restraining  order,  nor  in  any  particular; 
that  the  restraining  order  was  not  in  accordance  with  the 

S«  ;  ^^^^  ^""•nonly  fenown  as  the  "Anti-Trust  Act," 
does  not  provide  for  any  preliminary  injunction  or  restrai.^- 
ing  order.  The  hearing  of  this  motion  was  noticed  for  De- 
cember 28,  1897,  and  afterwards  continued  to  the  first  Mon- 

ifh'^  7"^'  ^f*'  "^''^  •*  ""'  ^'^'^  »t  the  same  time 
:^LtdX;Lr '^"^-    ^— tt^rs  wm  now  be 


,. 


. 


T 


f 


) 


UNITED  STATES   V.  COAL  DEALEBS'  ASSN.  759 

Opinion  of  the  Court 
Section  4  of  the  act  of  July  2,  1890,  provides  as  follows- 

shall  be  the  duty  of  thr^verai  di?H^^^^  *^'^  ^^*'  ^°<^  '* 

in  their  respective  dis^^tsundprfhl  ^t^^^jeys  of  the  United  States, 
eral,  to  institute  proce^dfnV^^^  ^^  ^^^  ^"^'•"^y  sen^ 

violations.  Such  proce^  nS  m«fl  ^  ^"^  P''®''®"*  ^"^  restrain  such 
the  case  and  praying  thft^if^h  11^^  ^^  T.?  ^^  P^*^^^«°  netting  forth 
prohibited.     WhJn  the  Dartres  Pnm^^^  ^'^j^^"^  «r  otherwise 

fled  of  such  petitTon  K^^^^^  ^^«"  ^«^«  ^^  duiy  noti- 

hearing  and  determinat^nf  the  ciS^?^'  ^^  %'^''''  "^  '''^^  ^'  *«  ^^^ 
before  final  decree,  the^urt  inav  nt  «nv  .-P^''^'"?  '"^**  P^"tion  and 
restraining  order  'or  pSitZI  as  shall  T  T^^  T^  temporaiy 
premises."  "*uiuoii   as   shall    be   deemed   just    in   the 

Under  s^tion  718  of  the  Revised  Statutes,  the  court  or 

an  injunction,  to  grant  an  order  restraining  the  act  sought 

o  be  enjoined  untU  the  decision  upon  the  motion,  wher^  th!re 

soTr':,*:^,''"^"  of  irreparable  injury  froiL  delay.     l" 

so  far  as  the  language  of  the  anti-trust  act  differs  from  the 

intention  of  congress  to  provide  a  more  direct  and  summarv 
proceeding  m  reaching  the  mischief  which  it  was  the  pTp^ 
of  the  sta  ute  to  remedy  than  had  prevailed  before  und^ 
the  general  rules  of  equity  practice.     I  am  therefore  cWy 
of  the  opinion  that,  under  section  4  of  the  anti-trust  act   a 
restraimng  order  may  be  issued  by  the  court  or  j„Z  wUh 
out  notice,  under  the  circumstances  sanctioned  bl  thTeltab- 
hshed  usages  of  equity  practice.    That  practice  Uuirf  as 
a  general  rule  that  notice  of  an  applicatL  for  a  tempTra^ 
restraining  order,  as  well  as  for  an  injunction,  shall  lI^Z 
to  the  person  against  whom  it  is  desired;  but  in  very  pre^ 
mg  cases,  where  the  mischief  sought  io  be  prevTnteHs 
serious,  imminent,  and  irremediable,  the  courts  will  Sjnt  a 

tTe  mrfcttf"-*'*'"*^'*'^'  '"^^  *«y  -»  -^o  so^i 
the  mere  act  of  giving  notice  to  the  defendant  of  the  inten- 
tion to  make  the  application  might  of  itself  be  pr^icti^e 
of  the  mischief  apprehended,  by  inducing  him  to  a^Sfte 
he  act  m  order  that  it  might  be  complefed  beforeTe  t  me 
for  making  the  application  has  arrived.    Fost.  Fed.  Si 

thS  the^t  I  ^Tf  T""  *''"  ^'  "o  »"^S«t'o°  i"  the  bill 
that  the  retail  coal  dealers  or  coal  consumers  of  San  Fran- 
cisco, for  whose  benefit  it  may  be  assumed  the  action  is 


'«■  w 


II 


760 


f^o  FEDERAL   REPORTER,  260. 


Opinion  of  the  Court 
brought,  will  suffer  irreparable  injury  by  delay;  but  the  anti- 
trust act  does  not,  in  terms,  require  such  a  showing  to  jus- 
tify the  court  in  issuing  a  restraining  order,  and  it  mav  well 
be  doubted  whether  such  a  showing  would  be  [260]  required 
even  under  the  general  rules  of  equity  practice  in  a  case  in- 
volving a  question  of  monopoly  and  restraint  of  trade.    Bar- 
thet  y.City  of  New  OrUans,  24  Fed.  563;  U,  S,  v.  Addyston 
Ptpe  <&  Steel  Co,,  78  Fed.  712,  716.    It  will  not  be  necessary, 
however,  to  pass  definitely  upon  this  question  in  this  case, 
since  It  IS  my  purpose  to  consider  and  determine,  without 
further  delay,  the  questions  presented  upon  the  order  to  show 
cause  why  an  injunction  should  not  issue  pending  the  litiga- 
tion.   But,  l)efore  proceeding  to  that  feature  of  the  case, 
there  is  a  further  objection  to  be  noticed. 

It  is  contended  that,  as  the  Coal  Dealers'  Association  is 
an  unincorporated  company,  it  cannot  be  brought  into  court 
by  making  it  a  party  defendant  by  that  name.    In  equity, 
the  action  must  be  against  the  individuals  comprising  such 
an   association:    but   there   is   this  exception:    Where  the 
parties  are  numerous,  some  of  them  mav  be  brought  in  as 
representing  the  whole  association.    The  title  of  this  case 
IS  against "  The  Coal  Dealers'  Association  of  California,  and 
All  the  Members  of  Said  Association,"  and  also  against  17 
individuals,  who  are  designated  as  "  Members  and  Officers 
of  said  Association."    The  return  of  the  marshal  shows  that 
all  these  individuals  have  been  served;  that  the  president  of 
the  association  has  been  served  as  an  individual,  and  as 
president  of  the  association;  and  he  has  appeared  in  the 
capacity  of  president  in  the  affidavit  filed  bv  him,  as  has 
also  the  secretary  of  the  association.    This,  I  think,  is  suf- 
ficient, under  the  rule  requiring  sufficient  parties,  to  represent 
all  the  adverse  interests  in  the  suit. 

In  response  to  the  order  to  show  cause,  affidavits  have  been 
interposed  by  the  defendants  for  the  purpose  of  disproving 
the  equity  upon  which  the  motion  is  founded;  also  a  de- 
murrer to  the  bill  and  parol  exceptions  to  its  legal  sufficiency. 
The  affidavits  tend  to  show  that  the  statement  in  the  bill, 
that  800,000  tons  of  coal  are  used  annually  as  fuel  for  domes- 
tic purposes  by  the  inhabitants  of  San  Francisco,  is  not  true ; 
that  the  number  of  tons  so  used  does  not  probably  exceed 


•ft* 


[ 


i 


UNITED  STATES   V.  COAL  DEALERS'  ASSN. 


761 


Opinion  of  the  Court 

400,000  tons,  and  the  amount  imported  and  brought  into  San 
Francisco  annually   from   British   Columbia,   Washington, 
and  Oregon,  and  used  for  domestic  purposes,  is  not  in  excess 
of  300,000  tons;    that  the  defendants  named  in  the  bill  as 
wholesale  dealers  and  importers  of  coal  are  not  all  the  whole- 
sale dealers  who  handle,  buy,  and  import,  and  sell  coal  used 
m  San  Francisco  for  domestic  purposes ;    that  the  Black 
Diamond  Coal  Company  is  a  corporation  which  handles, 
brings,  and  imports  and  sells  coal  used  as  fuel  for  domestic 
purposes,  and  that  this  corporation  is  not  associated  with 
any  of  the  defendants,  nor  a  party  to  the  agreement  with 
the  Coal  Dealers'  Association  of  California ;   that  the  price 
and  cost  of  mining  and   transporting  coal   from   British 
Columbia,  Washington,  and  Oregon  have  not  been  materially 
cheapened  within  the  past  few  years,  but  have  lately  been 
increased,  owing  to  the  mine  owners'  inability  to  procure  a 
sufficient  number  of  miners  since  the  exodus  to  the  Alaska 
gold  fields,  and  also  by  reason  of  the  high  rate  for  transport- 
ing coal  from  the  above-mentioned  places,  due  to  the  great 
demand  for  vessels  in  Alaska  trade;  that  before  the  organi- 
zation of  the  Coal  Dealers'  Association,  and  before  the  ac^ree- 
ment  mentioned   [2G1]   in  the  bill,  the  prices  of  all  coals 
sold  m  the  city  and  county  of  San  Francisco,  except  British 
Columbia  coal,  used  as  fuel  for  domestic  purposes,  were 
largely  in  excess  of  the  prices  now  charged ;    that  in  May, 
1896,  one  month  previous^  to  the  organization  of  the  Coal 
Dealers'  Association,  British  Columbia  coals  were  $9.50  and 
$10  per  ton,  Washington  coals  were  $8  per  ton,  Oregon  coals 
$7.50  per  ton;    and  a  few  months  after  said  organization 
Washmgton  coals  were  reduced  to  $7.50  per  ton,  and  fluctu- 
ated from  that  price  to  $8,  $7,  and  $7.50,  which  is  the  highest 
price;   Oregon  coals  were  reduced  to  $7  per  ton,  then  $6  50 
and  $6.25,  and  now  is  $6.55;    British  Columbia  coals  have 
not  changed  m  price,  notwithstanding  the  dutv  on  coal  has 
been  increased  40  cents  to  67  cents  per  ton ;  that,  prior  to  the 
organization  of  the  Coal  Dealers'  Association,  there  were 
many  persons  engaged  in  the  retail  coal  trade  in  the  city  of 
San  Francisco  who  practiced  dishonest  methods,  in  giving 
short  weights,  substituting  lower  grades  of  coal  for  better 
grades,  and  in  omitting  to  pay  the  amounts  due  from  them 


\  « 


ii 


762 


85  FEDERAL  REPORTER,  261. 


^     Opinion  of  the  Court. 
to  the  wholesale  dealers,  to  the  injury  of  the  wholesale  deal- 
ers  as  well  as  to  the  retail  trade.    It  is  alleged  that,  in  order 
to  discourage  these  evils,  the  Coal  Dealers'  Association  was 
formed  and  the  agreements  entered  into  between  the  associa- 
tion and  the  wholesale  dealers,  and  it  was  in  consideration  of 
this  partial  security  that  the  wholesale  dealers  agreed  to  sell 
to  members  of  the  association  at  a  price  less  than  that  charged 
to  nonmembers;  that  the  agreement  was  entered  into  only 
for  the  purpose  of  dealing  with  and  affecting  coal  in  the  state 
of  Cahfomia  and  city  and  county  of  San  Francisco,  and  not 
for  the  purpose  of  monopolizing,  conspiring,  or  attempting 
to  monopolize  or  restrain  the  coal  trade  and  commerce  be- 
tween  British   Columbia,  Washington,  Oregon,  and   Cali- 
fornia.    It  is  further  alleged  that  no  sale  of  coal  imported 
from  any  other  state  or  territory  is  made  to  any  member 
of  the  Coal  Dealers'  Association  until  after  the  same  has 
been  imported  and  delivered  to  the  wholesale  dealers,  and 
bulk  broken.    The  affidavits  contain  other  allegations   in 
relation  to  the  coal  business,  which  it  will  not  be  necessary 
to  notice,  m  the  view  I  take  of  the  matters  proper  to  be  con- 
sidered on  this  motion. 

The  title  of  the  anti-trust  act  indicates  the  comprehensive 
scope  and  purpose  of  the  statute.  It  is  "An  act  to  protect 
trade  and  commerce  against  unlawful  restraints  and  monop- 
olies. It  IS  not  limited  to  contracts  and  agreements  that 
were  unlawful  at  common  law,  nor  to  restraints  and  monopo- 
lies  in  violation  of  state  statutes. 

In  U.  S.  V.  Trans-Missouri  Freight  Ass\  166  U.  S.  290- 
m,  17  Sup.  Ct.  540,  the  supreme  court,  referring  to  this 
title,  said: 

••The  title  refers  to,  and  includes,  and  was  intended  to  inHndA 
The  first  and  second  sections  of  the  act  are  as  follows: 


it 


Section  1.  Every  contract  combination  in  the  form  of  trust  or 
otherwise,  or  conspiracy,  in  restraint  of  trade  or  c^mm^ceamXtSe 
several  states,  or  with  foreign  nations,  is  hereby  d^Tar^to^iUe^^^^^ 
Every  person  who  shall  make  any  such  contract  or  ^igLe  in  f  Sv 
such  combination  or  conspiracy,  shall  be.[26a]  de^m^^^flt}  o?  a 


•  ■  '^  f 


UNITED  STATES   V.  COAL  DEALERS '  ASSN 
Opinion  of  the  Ckiurt. 


763 


on  conviction,  thereof,  shall  b^  n^n^hp.^  h?^ «    ^  misdemeanor,  and, 

J^!!'^  f^'^^^.  ^f^  ^'^'  '"P"""'  "  ^»«  contended  that 
A^  statute  in  declaring  illegal  every  combination  in  the 
form  of  trust  or  otherwise,  or  conspiracy  in  restraint  of  trade 
or  commerce,  did  not  mean  what  its  language  imports,  but 
«iat  It  only  meant  to  declare  illegal  any  such  contract  which 

,nl/T?r!^  '  '*'*':''^"*  "^  ^'"'^^'  ''^^^  l«^^g  aU  others 
unaffected  by  the  provisions  of  the  act.  The  court  discusses 
this  question,  and  arrives  at  the  conclusion  that: 

eou;;y/A^"or"rbh;S,„*i",„'''^,,;'', --"^^^^^^^^^^^  -  '"«««'  e.ery 

several  states  etc    tho  niai„  tli      i-      *™''®  "'■  «>i''iuerce  among  the 

restraint  of  trade,  but  all  contrTol'^nJTI  JY^  '^  '"  unreasonable 
no  exception  or  Ihuitation  Sn  ^  nrtrtlS  mcluded  in  snch  language,  and 
which  has  been  omiffiy  Z^-^s."  "*  '""""«  '"  *"«  '"'^  »"« 

alkJdtor*"''  w*'"*Tu*'*  *  •='^"*'-''<'*  «"•  combination, 
alleged  to  be  m  violation  of  the  act,  to  say  that,  in  view  of  all 

the  circumstances  and  conditions,  the  contract  or  combina- 
tion imposes  only  a  fair  and  reasonable  restraint  upon  trade 

ThatrrTTf  J^'  '^''^''^  '^  ^^  it  -P«-  any'restrlin 

mav  r  i  •  J^^l  "°  '"^***'"  ^'"'  "*"«  «^  i^asonable  it 
may  be,  it  is  within  the  prohibition.  This  interpretation  is 
in  harmony  with  the  other  provisions  of  the  statute  which 

anl  litTftl"/  ^  ^P**""'  ^^  ^**^™P'  t"  --P»^' 
nrli^w  "5^  *"■  '=°'"'n«rce  among  the  several  states 

tL  FreiSTT  '  "T"  ?'  "*"*'"'=*  ""'^^  consideration  Z 
the  Freight  Ass'n  Case  related  to  traffic  rates  for  the  trans- 
portation of  pei^ons  and  property  by  competing  common  ear- 
ners by  railroad;  but  the  doctrine  of  the  casef ppli  J^a"  well 

k  d*^,l".^    r"""T-*^  ^"''i^^*  "*  transpLation-a 
indTJ?-  "^  of  transportation  itself;  and  the  clear 

and  positive  purpose  of  the  statute  must  be  understood  to  be 
that  trade  and  commerce  within  the  jurisdiction  of  the  fed- 
eral government  shall  be  absolutely  fr^,  and  no  contract  or 


7f)4 


8a   FEDERAL  REPOBTER,  262. 


Opinion  of  the  Court. 

combination  will  be  tolerated  that  impedes  or  restricts  their 
natural  flow  and  volume. 

Under  the  law  as  thus  interpreted,  two  questions  arise  upon 
the  facts  in  the  present  case.  First.  Do  the  constitution  and 
by-laws  of  ^he  Coal  Dealers'  Association  and  the  agreement 
of  the  association  with  the  importers  and  wholesale  dealers 
operate  in  restraint  of  trade  and  commerce,  or  monopolize 
any  part  of  the  trade  or  commerce  of  San  Francisco  ?  And, 
^  if  so,  second,  does  this  restraint  or  monopoly  extend  to  any 
part  of  the  trade  and  commerce  carried  on  between  this  state 
and  Oregon,  Washington,  or  British  Columbia  ? 

There  is  no  difficulty  in  arriving  at  a  conclusion  with  re- 
spect to  the  first  question.    The  constitution  of  the  Coal 
Dealers'  Association  provides,  among  other  things,  that  its 
object  is  to  furnish  information  [263]  to  its  members  as  to 
sales  of  coal  made  by  wholesale  dealers  to  the  retail  dealers, 
and  by  retail  dealers  to  consumers,  and  also  the  names  of  any 
dealers  who  have  been  guilty  of  violating  any  of  the  rates  or 
rules  made  from  time  to  time  by  the  organization.    A  retail 
dealer  is  defined  as  any  person  who  engages  in  the  sale  of 
coal  as  regular  business,  buying  to  sell  again,  who  shall  own 
and  operate  a  yard,  keeping  an  office,  and  displaying  a  sign. 
All  miners  and  shippers  shall  be  eligible  to  membership^ 
the  association,  provided  such  miner  and  shipper  shall  not 
make  a  practice  of  selling  coal  at  retail  at  less  prices  than 
the  retail  dealers.    The  admittance  fee  for  memljership  is 
$500,  but  the  association  assumes  the  jurisdiction  over  dealers 
who  are  not  members,  and  imposes  fines  upon  those  found 
guilty  of  selling  coal  in  violation  of  card  rates  or  rules.     The 
fine  is  not  to  be  less  than  $10  nor  more  than  $100  for  the  first 
offense,  and  not  less  than  $25  nor  more  than  $?0C  for  the 
second  offense;  and,  if  the  nonmember  shall  neglect  or  refuse 
to  pay  any  fine  within  the  time  limit  fixed  by  the  grievance 
committee,  the  secretary,  at  the  expiration  of  the  time,  shall 
notify  the  wholesale  coal  dealers  to  charge  the  person  so  de- 
faulting consumers'  prices  for  coa!^  and  the  wholesale  deal- 
ers agree  to  comply  with  the  notice.    The  board  of  directors 
of  the  association  may  employ  detectives  lo  purchase  coal  at 
retail  through  any  citizen.    The  purpose  of  this  provision 
appears  to  be  to  discover  those  dealers  who  sell  coal  at  other 


•  f ' 


UNITED  STATES  V.  C0.4L  DEALERS '  ASSN.  765 

Opinion  of  the  Court. 

than  card  rates.  A  grievance  comiuittcp  is  provided  to  as- 
semble whenever  requested  to  do  so  bv  the  secretary,  to  re- 
ceive and  investigate  all  charges  of  violation  of  card  rule*  or 
rates  preferred  against  any  coal  dealer  or  npent  in  the  city 
and  county  of  San  Francisco,  it  will  be  observed  that  the 
jurisdiction  of  this  committee  is  not  limited  to  the  investi- 
gation of  charges  against  members  of  the  association,  but 
includes  aU  dealers.    Dealers  in  advertising  coal  are  not  per- 

r  u^  ^^  '*''*^  P™^'  '^"*'°"*  "'^'^'"g  t^«  name  of  the  coal  to 
be  had  for  the  prices  named.    Both  names  and  prices  to  cor- 
respond exactly  with  those  on  the  rate  card.    Any  circulars 
posters,  dodgers,  cards,  or  signs  conflicting  with  the  card 
rates  or  rules  displayed,  found  on  the  streets,  or  circulated 
m  any  manner  whatsoever,  subjects  the  dealer  or  agent  who 
caused  their  distribution  to  the  penalties  for  selling  coal  in 
violation  of  card  rates  or  rules.    No  dealer  in  coal  is  permit- 
ted to  ^ve  more  or  less  than  certain  weights  in  selling  coal 
m  specified  quantities  from  sacks  to  tons.    A  charge  is  fixed 
for  handling  coal  at  customer's  place,  and  no  premiums  or 
presents  are  allowed  to  be  offered  as  inducements  for  pur- 
chasers to  buy  coal.    The  agreement  with  the  wholesale  deal- 
er is  made  part  of  the  by-laws  of  the  association.    The 
wholesale  dealers  agree  not  to  sell  at  trade  rates  to  any  one 
not  havmg  an  established  yard,  and  not  to  sell  coal  at  less 
than  card  rates  to  consumers,  except  in  such  cases  as  may  be 
provided  for  by  agreement  among  the  wholesale  dealers 
themselves.    They  agree  to  charge  two  doUoars  per  ton  addi- 
tional over  current  trade  rates  to  retail  dealers  who  are  not 
members  of  the  Coal  Dealers'  Association,  and  consumers' 
rates  to  dealers  who  violate  any  of  the  rules  of  the  associa- 
tion.   A  schedule  of  rates  is  adopted  for  the  different  quaU- 
ties  and  classes  of  coal  sold  in  San  Francisco. 

[264]  It  is  claimed  on  the  part  of  the  defendants  that  the 
Coal  Dealers  Association  is  a  beneficial  organization ;  that 
It  protects  the  coal  consumers  from  the  dishonest  methods 
of  some  of  the  coal  dealers  in  giving  short  weights  and  in 
substituting  lower  grades  of  coal  for  better  grades;  and  that 
It  also  protects  the  wholesale  dealers  in  enabling  them  to  col- 
lect their  bills  from  the  retail  dealers.  All  this  may  be 
true,  but  it  is  clear  that  the  power  of  the  association  extends 


'.'I 


I 


; 
M 

t  9 


t 


P  i 


766 


85  FEDERAL  REPORTER,  264. 
Opinion  of  tlie  Court 


much  further,  and  that  it  has  another  purpose.  It  establishes 
arbitrary  rates  for  coal,  from  which  the  dealer  is  not  per- 
mitted to  deviate  in  any  particular.  It  stifles  all  compe- 
tition between  retail  dealers,  restricts  trade  within  prescribed 
limits,  and  establishes  a  monopoly  of  the  most  odious  char- 
acter in  an  article  of  daily  consumption  and  prime  necessity. 
In  Nester  v.  Brewing  Co.,  161  Pa.  St.  473,  29  Atl.  102,  the 
supreme  court  affirmed  the  judgment  of  the  court  of  common 
pleas  of  Philadelphia,  holding  that  a  combination  among  a 
niunber  of  brewers  of  that  city  to  control  the  price  of  beer 
within  the  city  was  illegal,  being  in  restraint  of  trade.  The 
agreement  under  which  that  combination  was  formed  is  of 
the  same  character  as  the  one  now  under  consideration,  and 
this  is  what  the  trial  court  had  to  say  about  it: 

"Where  a  price  is  fixed  arbitrarily  for  which  a  manufactured 
article  may  he  sold,  it  necessarily  limits  the  production  of  that  article 
to  the  amount  that  can  be  sold  for  that  price.  An  increased  price  put 
upon  an  article  restricts  its  sale,  and  the  restricted  sale  necessarily 
reduces  the  i)roduction.  It  is  no  answer  to  say :  '  We  do  not  restrict 
your  jiroduction.  You  may  produce  any  amount  you  like.  We  only 
restrain  your  sale  of  it.*  Is  this  not  practically  a  limit  to  produc- 
tion? Where  a  pool  or  combination  reserves  the  right  to  regulate 
prices,  they  can.  by  the  manipulation  of  prices,  drive  their  competi- 
tors out  of  business,  create  a  mouoiwly,  and  enhance  at  their  pleasure 
the  prices  to  eont?umers." 

This  is  precisely  the  attitude  of  the  Coal  Dealers'  Associa- 
tion, and  it  is  no  answer  to  the  charge  of  arbitrary  power, 
which  it  can  and  does  exercise  under  its  organization,  that 
it  has  not  increased  the  price  of  coal  in  San  Francisco,  or 
wholly  monopolized  the  source  of  supply.  The  terms  of  the 
organization  and  the  agreement  between  the  association  and 
the  wholesale  dealers  clearly  constitute  a  restraint  of  trade, 
which  is  injurious  to  the  public  interests,  against  public 
policy,  and  therefore  unlawful.  Amot  v.  Coal  Co.,  68  N.  Y. 
558 ;  Salt  Co.  v.  Gutlme,  35  Ohio  St.  666 ;  Carbon  Co.  v. 
3IeMillin,  119  N.  Y.  46,  23  N.  E.  530 ;  Morris  Run  Coal  Co. 
V,  Barclay  Coal  Co.,  68  Pa.  St.  173;  Craft  v.  McConoughy, 
79  111.  346 ;  Ltimler  Co.  v.  Hayes,  76  Cal.  387,  18  Pac.  391 ; 
Distilling  c§  Cattle  Feeding  Co.  v.  People  (111.  Sup.)  41 
N.  E.  188 ;  Ham^mo  Co.  v.  Bench,  83  Fed.  36. 

The  next  question  is  as  to  whether  this  restraint  or  mo- 
nopoly extends  to  the  trade  or  commerce  among  the  several 
states  or  with  foreign  nations.    In  other  words,  do  the  facts 


UNITED  STATES   V.  COAL  DEALERS '  ASSN.  767 

Opinion  of  the  Coiirt. 
in  the  case  bring  it  within  the  jurisdiction  of  the  national 
government,  under  the  provisions  of  the  anti-trust  act  ?    The 
retail  prices  for  coal  at  San  Francisco  established  by  the 
Coal  Dealers'  Association,  and  agreed  to  by  the  wholesale 
dealers,  are  for  different  quantities  of  the  following  named 
coals,  used  as  fuel  for  domestic  purposes,  namely :   Welling- 
ton (Dunsmuir),  Wellington   (Southfield),  Roslyn,  Seattle, 
Bryan^  and  Coos  Bay.    The  Wellington  coal  is  imported 
from  British  Co-   [265]   lumbia;    the  Roslyn,  Seattle,  and 
Bryant,  from  Washington;  and  the  Coos  Bay,  from  Ore<ron 
No  card  rate  appears  to  have  been  fixed  for  coal  produced 
m  this  state,  probably  because  this  quality  of  coal  is  not 
generally  used  for  domestic  purposes.    We  start,  then,  with 
the  fact  that  the  article  which  is  the  subject  of  the  contro- 
versy IS  the  product  of  other  states  and  a  foreign  country 
and  IS  brought  from  such  other  states,  and  imported  from  the 
foreign  country,  by  dealers  and  importers  engaged  in  that 
business,  and  that  these  dealers  and  importers  have"  entered 
into  an  agreement  and  combination  with  the  Coal  Dealei-s' 
Association  whereby  the  business  in  dealing  in  this  article 
s  regulated  and  its  retail  prices  in  San  Francisco  fixed  arbi- 
trarUy.    The  statement  of  these  facts  seems  to  be  sufficient 
to  determine  the  question;  but  it  is  contended  very  earnestly, 
on  the  part  of  the  defendants,  that  the  case  presented  by 
he  bill  IS  not  withm  the  law,  and  that  the  line  dividing 
local  from  federal  authority  excludes  it  from  the  jurisdic- 
tion of  this  court. 

What  then,  is  trade  and  commerce  among  the  several  states 
and  with  foreign  nations?  «  Trade,"  in  a  business  sense,  has 
been  defined  as  the  exchange  of  commodities  for  other  com- 
modities or  for  money;  the  business  of  buying  and  selling; 
dealing  by  way  of  sale  or  exchange."  The  word  "  Com- 
merce, as  used  m  the  statute  and  under  the  terms  of  the  con- 
stitution, has,  however,  a  broader  meaning  than  the  word 

7.  ffi  Commerce  among  the  states  consists  of  intercourse 
and  traffic  between  their  citizens,  and  includes  the  transporta- 
tion of  persons  and  property,  and  the  navigation  of  public 
waters  for  that  purpose,  as  well  as  the  purchase,  sale,  and 

TT  a  "£>^^?"^°**'*'^'-    ^""-''^y  "f  ^^"^'^  ^-  Kimlall,  102 
U.  b.  702;  Gloucester  Ferry  Co.  v.  Penmylmnia,  114  U  S 


J 


!|i 


! 


l\ 


i.  t 


768 


85  FEDERAL  REPORTER,  265. 


Opinion  of  tbe  Court 

» 

196,  5  Sup.  Ct  826.  Commerce  among  the  states  can- 
not stop  at  the  external  boundary  line  of  each  state,  but  may 
be  introduced  into  the  interior.  Gihhona  v.  Ogden^  9  Wheat. 
1,194. 

In  Lewy  v.  Hardin,  135  U.  S.  100,  10  Sup.  Ct..681,  the  su- 
preme court  held  that  a  state  statute,  prohibiting  the  sale  of 
intoxicating  liquors,  except  for  certain  purposes  and  under 
license  from  a  county  court,  was  unconstitutional  and  void 
when  applied  to  a  sale  by  an  importer  of  liquors  brought 
from  another  state  in  the  original  packages,  because  the  op- 
eration of  the  law  was  repugnant  to  the  power  of  congress  to 
regulate  commerce  among  the  several  states.  The  court,  in 
passing  upon  the  question,  said : 

"  Tbe  power  vested  in  congress  *  to  regulate  commerce  with  foreign 
nations  and  among  tl»e  several  states  and  with  the  Indian  trib^  *  is 
the  power  to  prescribe  the  rnle  by  which  that  commerce  is  to  be  gov- 
erned, ami  is  a  [wwer  complete  in  itself,  acknowledging  no  limitations 
other  than  those  prescribed  in  the  constitution.  It  Is  co-extensive 
with  the  subject  on  which  it  acts,  and  cannot  l)e  stopped  at  the  exter- 
nal boundary  of  a  state,  but  must  enter  its  interior,  and  must  be  capa- 
ble of  authorizing  the  disposition  of  those  articles  which  it  intro- 
duces, so  that  they  may  become  mingled  with  the  common  mass  of 
proi>erty  within  the  territory  entered." 

Again,  to  make  this  limitation  on  state  authority  over  in- 
terstate commerce  more  clear,  the  court  said : 

**  It  is  only  after  the  importation  is  completed,  and  the  property  im- 
ported has  mingled  with  and  become  a  part  of  the  general  property  of 
the  state,  that  its  [266]  regulations  can  act  upon  it,  except  so  far  as 
may  be  necessary  to  insure  safety  in  the  disposition  of  the  import 
until  thus  mingled." 

If  a  law  of  a  state,  regulating  the  sale  of  intoxicating 
liquors,  so  as  to  prohibit  their  sale  except  for  certain  purposes 
and  under  license  from  a  county  court,  is  unconstitutional 
and  void  when  applied  to  a  sale  by  an  importer  of  liquors 
brought  from  another  state  in  the  original  packages,  because 
the  law  in  that  relation  is  in  restraint  of  trade  and  commerce 
"  among  the  several  states,"  what  shall  be  said  of  the  consti- 
tution and  by-laws  of  the  Coal  Dealers'  Association,  and  the 
agreement  of  that  association  with  the  wholesale  dealers  re- 
specting the  sale  of  imported  coal  in  San  Francisco  under 
the  anti-trust  act?  If  one  is  in  restraint  of  commerce,  is 
not  the  other?  The  claim  that  the  coal  is  not  sold  until  im- 
ported, delivered,  and  bulk  broken  is  not  sufficient.     The 


UNITED  STATES   V.  COAL  DEALERS'  ASSN.  769 

Opinion  of  the  Court 

principle  of  the  original  package  does  not  apply  to  the  sale  of 

<«al.  Itnxustbemanifestthatthearbitrai^rulLrdtwWch 
the  combination  of  wholesale  and  retail  dealers  conduct  thet 
business  affects  the  sale  and  disposition  of  coal  immediately 
upon  Its  arnva   at  San  Francisco,  and  that,  as  aTTrdSf  of 

STd  ,       ''"'""V"  ^^^^'-^^^^^  «"d  tampered  at  the 

tr  buted  by  sale,  and  mingled  in  the  common  mass  of  proo- 
erty  in  the  state.  But  the  agreement  of  the  importers  3 
wholesale  dealers,  which  alone  gives  life  and  forSo  h^c^m 
bnation  IS  directed  specifically  to  the  maintenance  of  ^^ 
rates  for  certain  imported  coals  by  name;  and  it  is  this 
agreement,  and  what  may  be  accomplished  under  it  W  the 
ombmation,  that  is  te  be  considered,  and  not  what  the'^par! 
ties  to  It  may  be  doing  at  any  particular  time. 

it  wLteWbr;/'""^  ''"'•'  '''  U-  ^^-  ^«^'  ^  S«P.  Ct.  592, 
quiring  that  all  drummers  and  all  persons  not  having  a  rLu- 

^'uirotri  ""f  "'  'r^"  '"  ''''  *«^'"^  ''i^t-t  o^f  sSy 
Z   hL     T^        ?''  "'  ^"'"«  ^'^'^  ^^^^^  or  nierchan 

sum  ofTlO     '  '""?''  '^r'**  P**^  *°  '"^^  ^•'""ty  trustee  the 
sum  of  $10  per  week,  or  $25  per  month,  for  such  privilege 

Stat?  a  rl  I  .         ?^'  '*'■  ^'"^^  ^"""'^  ^"^"'^^-^  in  another 
state,  a  regulation  of  commerce  among  the  several  states 

This  case  also  arose  before  the  passage  of  the  anti-trus   a^ 

and  was  considered  as  coming  withinfhe  established  dtt^^^ 

that  congress  had  the  exclusive  power  to  regulate  comm^^ 

under  the  constitution  of  the  United  Stat^.    Now   if  Z 

doctrine  IS  applied  to  the  facts  of  the  present  cas^^l  ow  can 

a  be  said  that  the  rules  and  regulations  imposed  bj^   he  cJd 

Dealers'  Association  upon  retail  coal  dealers  of  San  FrT^ 

CISCO,  selbng  imported  coal,  is  less  an  obstruction  teZ 

merce  than  the  law  of  Tennessee,  imposing  a  liceni  tax  uTn 

drummers  soliciting  the  sale  of  go^ds  ffom  anoTherstate" 

Mamfestly,  a  court  could  not  consistently  condemn  the  latter 

and  excuse  the  first.    Suppose  the  state  of  CalifornL  were 

to  provide  by  statute,  a  fixed  price  for  the  sale,  at  reJlZ 

San  Francisco,  of  Wellington,  Roslyn,  Seattle,  Brvant   and 

11808— VOL  1—06  M 49 


I: 

if 


ii! 


770 


85  FSDERAL  BEPORTER,  267. 
Opinion  of  the  Court 


Coos  Bay  coal,  and  require  that  all  retail  dealers  in  such 
coals  should  i)ay  a  license  to  the  state  of  $500  for  the  privilege 
of  dealing  in  such  coals  at  the  established  rates,  and,  to 
secure  the  [367]  enforcement  of  such  a  law,  should  impose 
penalties  on  dealers  who  did  not  comply  with  the  statute. 
Would  there  be  any  question  as  to  the  validity  of  such  a  stat- 
ute? Would  it  not  be  so  plainly  in  violation  of  the  consti- 
tution and  laws  of  the  United  States  that  no  court  would 
hesitate  for  a  moment  to  declare  it  void?  With  what  com- 
placency, then,  should  the  court  view  the  terms  of  the  agree- 
ment of  the  wholesale  dealers  with  the  Coal  Dealers'  Asso- 
ciation, and  the  regulations,  fees,  dues,  assessments,  fines, 
and  penalties  provided  by  the  latter  association  for  the  pur- 
pose of  controlling  all  coal  dealers  engaged  in  dealing  in 
these  imported  coals? 

In  the  Sugar  Trust  Case,  156  U.  S.  15  Sup.  Ct.  249,  it 
was  held,  substantially,  that  contracts  relating  to  commodi- 
ties, to  come  within  the  range  of  federal  jurisdiction,  must 
he  subsequent  to  production,  but  it  was  also  said  that  con- 
tracts to  buy,  sell,  or  exchange  goods  to  be  transported 
among  the  several  states  form  part  of  interstate  trade  or  com- 
merce. A  case  entirely  in  point  is  that  of  U.  S.  v.  Jellico 
Mountain  Coal  db  Coke,  Co..  46  Fed.  432,  brought  under  the 
anti-trust  act,  in  1891,  against  the  members  of  the  Nashville 
Coal  Exchange.  The  purpose  of  the  agreement  in  that  case 
was  to  establish  the  price  of  coal  at  Nashville,  and  to  change 
the  same  from  time  to  time.  Members  found  guilty  of  sell- 
ing coal  at  a  less  price  than  the  price  fixed  by  the  exchange, 
either  directly  or  indirectly,  were  fined  2  cents  per  bushel 
and  $10  for  the  first  offense,  and  4  cents  per  bushel  and  $20 
for  the  second  offense.  Owners  or  operators  of  mines  were 
not  to  sell  or  ship  coal  to  any  person,  firm,  or  corporation 
in  Nashville  who  were  not  members  of  the  exchange,  and 
dealers  were  not  to  buy  ooal  from  any  one  not  a  member  of 
the  exchange.  It  appeared  that  several  mining  companies 
in  Kentucky  engaged  in  raising  coal  and  most  of  the  coal 
dealers  of  Nashville  had  entered  into  this  agreement.  The 
court  held  the  agreement  was  in  restraint  of  trade  and  com- 
merce, and  that  the  defendants,  by  the  organization  of  the 
Nashville  Coal  Exchange,  and  in  their  operations  under  it, 


UNITED   STATES    V,  COAL   DEALERS^  ASSN.  771 

Opinion  of  the  Court 

had  violated  the  law;  and  they  were  accordingly  enjoined 
from  further  violations  of  the  law  In  TJ  S  7  ^^^^^^ 
82^Fed.  529,  the  Kansas  City  Liv.StSk'^ihang^Ttl' 
untary  unincorporated  association,  adopted  articlesff  ass^  - 

would  flhS  "h  '^"''"!  r'^^'*'^^  *^«y  ^'^  tj^a'rv 

th^  roll  for^lj  "■"'  ""**  ^  •^""'^  ^y  *e  same.    ,Wng 
the  rules  for  the  government  of  the  exchange  were  fixed  ratj 

SonT^dTr:^?:•  *''  *"""^*''^"  «*  ^-^"-'  -dHmS 
lions  and  prohibitions  upon  its  members  in  dealing  with 

tions  of  the  exchange;    these  rules  and  regulations  S^n^ 

St  I  *''?,*'"«'"«^  transacted  in  the  matter  of  «- 

Stv  I'  l"^"?'  ^""'^'  ''"^  '^''"•^""g  "^«  ^t<^k  at  Kansas 
City  stockyards  was  carried  on  by  the  members  of  the  eT 

change  as  commission  merchants.    A  large  oroportLn  of  th!« 
SoS  W  T'  ^"i  '""^  ^'^  of  Kal? nXi^  i^^ 

rkorii  of  Sh!^"^r-  ^""'''  ""'^  ^^'^''"^«'  -d  th«  ter- 
JTrZ  *^  "^'*^*""*'  /"zona,  and  New  Mexico,  and  was 

b  Kansas  cSr^r  "'  ?  u  !f  ""^  *«  "^^  P-^^'W  houi 
m  Aansas  City     It  was  held  that  the  association  (2681  was 

tieScrmrr "  '^"^"'  "'"-^•^-'  -'^  -t^i 

ini*witrth?r''''T'  "'"^I'^y  to  multiply  authorities  deal- 

era!  states  and  with  foreign  nations  must  be  abso"Stefy  f^" 

^  Srr  ?;T^*  ".'*  ""''  ^  regulated  by  It 
ST:  that  no  state  taw,  with  certain  exceptions  not  neces- 
say  to  be  here  stated,  will  be  allowed  to  interfere  wi^hlt 

directly,  to  hinder  or  restrain  its  natural  current  or  volume 
In  the  hght  of  the  authorities  and  the  principles  thev  itX 
thMTr  K  "^  *^*  "^^  constitution  aS  Saws  o^ 

Lle^ie^tS  Irr*'**"  "^"^  ^•^^  «^™-t  of  the  whole 
sate  dealers  with  that  association  come  within  the  nrohihi 

Wur    Ate?  '''  '""'^  ''  ''''^  *"*»  '"^^y  a-  t<S-C  ut 
inl'tth^^htSor  "'^''""'^  ^"^  "^  P-P-^  -  --"•- 


I 


*  ■ 

r 


7T2  85  FEDERAL  KEPORTES,  271. 

Syllabus. 

[271]    UNITED    STATES    f».    ADDYSTON    PIPE    & 

STEEL  CO.  ET  AL.« 

(Circuit  Ck>urt  of  Appeals,  Sixth  Circuit    February  8,  1888.) 

[85  Fed..  271.1 

MOlfOPOIJES— CONTBACTS     IH     RlSTKAIirr    OF    TRADE— COMBINATIONS. — 

Contracts  tbat  were  in  unreasonable  restraint  of  trade  at  common 
law  were  not  unlawful  in  tbe  sense  of  being  criminal,  or  as  giving 
rise  to  an  action  for  damages  to  one  prejudicially  affected  thereby, 
but  were  simply  Toid,  and  not  enforceable.  The  effect  of  the  anti> 
trust  law  of  1890  is  to  render  such  [S78]  contracts,  as  applied  to 
interstate  commerce,  unlawful  in  an  affirmative  or  positive  sense, 
and  punishable  as  a  misdemeanor,  and  also  to  create  a  right  of  civil 
action  for  damages  in  favor  of  persons  injured  thereby,  and  a 
remedy  by  injunction  In  favor  both  of  private  persons  and  the  public 
against  the  execution  of  such  contracts  and  the  maintenance  of 
such  trade  restraints.^ 

Same — Restraints  Lawful  at  Common  Law. — ^No  contractual  re- 
straint of  trade  is  enforceable  at  common  law  unless  the  covenant 

.  embodying  it  is  merely  ancillary  to  some  lawful  contract  (involving 
some  such  relations  as  vendor  and  vendee,  partnership,  employer  and 
employ^),  and  necessary  to  protect  the  covenantee  in  the  enjoyment 
of  the  legitimate  fruits  of  the  contract,  or  to  protect  him  from  the 
dangers  of  an  unjust  use  of  those  fruits  by  the  other  party.  The 
main  purpose  of  the  contract  suggests  the  measure  of  protection 
needed,  and  furnishes  a  sufficiently  uniform  standard  for  determin- 
ing the  reasonableness  and  validity  of  the  restraints.  But  where  the 
sole  object  of  both  parties  in  making  the  contract  is  merely  to  re- 
strain competition,  and  enhance  and  maintain  prices,  the  contract 
is  void. 

Bamb — ^**Anti-Tru8t  "  Law. — ^A  number  of  companies  manufacturing 
iron  pipe  In  different  states  formed  a  combination  whereby  the 
territory  In  which  tliey  operated  (comprising  a  large  part  of  the 
United  States)  was  divided  into  "reserved**  cities  and  **pay" 
territory.  Tlie  reserved  cities  were  allotted  to  particular  members 
of  the  combination,  free  of  competition  from  the  others,  though  pro- 
vision was  made  for  pretended  bids  by  the  latter  at  prices  previously 
arranged.    In  the  iwy  territory  all  offers  to  purchase  pipe  were 

•  Bill  asking  for  a  preliminary  injunction  was  dismissed  by  the  Cir- 
cuit Court  for  the  Eastern  District  of  Tennessee  (78  Fed.,  712).  See 
p.  631.  Decree  reversed  and  defendants  perpetually  enjoined  by  the 
Circuit  Court  of  Appeals,  Sixth  Circuit  (85  Fed.,  271),  which  latter 
decree  was  modified  and  affirmed  by  the  Supreme  Court  (175  U.  S., 
211).     See  p.  1009. 

»  Syllabus  and  statement  copyrighted,  1896,  by  West  Publishing  Ck>. 


ii' 


TJOTTBD  STATES   V.  ADDYSTON  PIPE  &  STEEL  CO.      773 

Statement  of  the  Case. 

submitted  to  a  committee,  which  determined  the  price,  and  then 
awarded  the  contract  to  that  member  of  the  combination  which 
agreed  to  pay  the  largest  "  bonus  "  to  be  divided  among  the  others. 
Held,  that  this  was  an  unlawful  combination,  both  at  common  law 
and  under  the  act  of  1890,  against  trusts  and  monopolies.  78  Fed. 
712,  reversed. 

Same-Contbacts  in  Restraint  of  Interstate  CoMMERCE.-^ntract8 
which  operate  as  a  restraint  upon  the  soliciting  of  orders  for.  and 
the  sale  of,  goods  In  one  state,  to  be  delivered  from  another,  are 
contracts  In  restraint  of  interstate  commerce,  within  the  meaning  of 
the  act  of  July  2,  1890.  V,  8.  v.  E.  C.  Knight  Co.,  15  Sup.  Ct  Lo, 
156  U.  S.  1,  distinguished. 

Same-Suit  in  Equity-Forfeitute  op  GooDs.-In  a  suit  in  equity 
brought  by  the  United  States  to  enjoin  the  carrying  out  of  a  con- 
tract  or  combination  In  restraint  of  Interstate  commerce,  under  the 
act  of  1890,  there  can  be  no  seizure  of  goods  In  course  of  transporta- 
tion pursuant  to  the  unlawful  contract.  Such  seizure  can  only  be 
made  under  the  sixth  section  of  the  act,  which  authorizes  seizures 
and  condemnation  by  like  proceedings  to  those  provided  in  cases  of 
property  Imported  Into  the  United  States  contrary  to  law. 

,,f^PP^f^  ^?r? /he^if cuit  Court  of  the  United  States  for 
the  Eastern  District  of  Tennessee. 

mercc  m  sued  pipe,  m  violation  of  the  so-called  "Anti-Tni«t  row" 

ptorl  ^t^i"?!^'  -""^  -;  '^-    The  defendant  wt"e  thriddvston 
Pipe  &  Steel  Company,  of  Cincinnati.  Obio :  Dennis  Li.^  *  o«  ^? 

M^^fll^:-."^^-'.  the  Howard-Harrison  Irin  ComZv  of  ^Sier 
^^4  ».«  k""*"^.^'!*  *  Foundry  Company,  of  Anniston  Ala^  tte 
South  Pittsburg  Pipe  Works,  of  South  PIttsbure  Tenn  •  «nrt  iSf 
Chattanooga  Foundry  &  Pipe  Works,  of  Chartan«.?a  TeSn  '  Th^  Jff 
Hon  prayed  that  all  pipe  sold  and  transpor^^^Lm  one  stotfto 
another  nnder  the  combination  and  conspiracy  de"?^ther^n  S 
S^^iVlt'lildr/;  T^  "^  ^^ir*  """^  co^fls^alSl^  the  ma"nn^ 

Sel'r"re",The'"de/en3an^'  nt  '^^  T'' f  '^^-    '"  -^^tlTtl%^ 
thev  admitted  the  «v1=f^„        /  ^*""*  """^  separate  answer.  In  which 

puj^TfvofdfnrJbrgVt'  cir?s  r^ouroZ,^^r  !zi^ 

^^"at?or£LT=KTr*^^^^^^^ 

fte  ai^tlw  *"/T*«  "  «<"«'I«>Iy.  and  denied  It  w^  a  Violation  It 


I 


■spuv 


I  I  I 


'   I 


774 


85  FEDERAL  REPORTER,  273. 
Statement  of  the  Case. 


was  agreed  that  the  final  hearing  might  be  had  thereon.  Judge 
Clarlv,  who  presided  in  the  circuit  court,  dismissed  the  petition  on  the 
merits.    His  opinion  Is  reported  in  78  Fed.  712. 

From  the  minutes  of  the  association,  a  copy  of  which  was  put  In 
evidence  by  tlie  petitioner,  it  api>eared  that  prfor  to  December  28, 
1894,  the  Anniston  Company,  the  Howard-Harrison  Company,  the 
Chattanooga  Company,  and  the  South  Pittsburg  Company  had  been 
associated  as  the  Southern  Associated  Pipe  Worlcs.  Upon  that  date 
the  Addyston  Company  and  Dennis  Long  &  Co.  were  admitted  to 
membership,  and  the  following  plan  was  then  adopted : 

"  First.  The  bonuses  on  the  first  90,000  tons  of  pii)e  secured  in  any 
territory,  16"  and  smaller,  shall  be  divided  etiually  among  six  shops. 
Second.  The  bonuses  on  the  next  75,000  tons.  ."^O"  and  smaller  sizes. 
to  be  divided  among  five  shops.  South  Pittsburg  not  participating. 
Third.  The  bonuses  on  the  next  40,000  tons,  36"  and  smaller  sizes, 
to  be  divided  among  four  shops,  Anniston  and  South  Pittsburg  not 
participating.  Fourth.  The  bonuses  on  the  next  15,000  tons,  con- 
sisting of  all  sizes  of  pipe,  shall  be  divided  among  three  shops, 
Chattanooga,  South  Pittsburg,  and  Anniston  not  participating.  The 
above  division  is  based  on  the  following  tonnage  of  capacity:  South 
Pittsburg,  15,0(X)  tons;  Anniston,  30,000  tons;  Chattanooga,  40.000 
tons;  Bessemer,  45,0<)0  tons;  Louisville,  4.5,000  tons;  Cincinnati. 
45,000  tons.  When  the  220,000  tons  have  been  made  and  shipped, 
and  the  bonuses  divided  as  hereinafter  provided,  the  auditor  shall  set 
aside  into  a  reserve  fund  all  bonuses  arising  from  the  excess  of 
shipments  over  220.000  tons,  and  shall  divide  tlie  same  at  the  end  of 
the  year  among  the  respective  companies  according  to  the  percentage 
of  the  excess  of  tonnage  they  may  have  shipped  (of  the  sizes  made 
by  them)  either  in  pay  or  free  territory.  It  is  also  the  intention  of 
this  proposition  that  the  bonuses  on  all  pipe  larger  that  3(>  inches 
in  diameter  shall  be  divided  equally  between  the  Addyston  Pipe  & 
Steel  Company.  Dennis  Long  &  Co.,  and  the  Howard-Harrison  Com- 
pany." 

"  It  was  thereu[>on  resolved :  First.  That  this  agreement  shall  last 
fortwo  years  from  the  date  of  the  signing  of  same,  until  Decem- 
ber 31,  1896.  Second.  On  any  question  coming  hetove  the  association 
requiring  a  vote,  it  shall  take  five  affirmative  votes  thereon  to  carry 
said  question,  each  member  of  this  association  t>elng  entitled  to  but 
one  vote.  Third.  The  Addyston  Pipe  &  Steel  Company  shall  handle 
the  business  of  the  gas  and  water  companies  of  Cincinnati,  Ohio, 
Covington,  and  Newport,  Ky.,  and  pay  the  bonus  hereafter  men 
tioned,  and  the  balance  of  the  parties  to  this  agreement  shall  bid  on 
such  work  such  reasonable  prices  as  they  shall  dictate.  Fourth. 
Dennis  I^ng  &  Company,  of  Louisville,  Ky.,  shall  handle  Louisville, 
Ky.,  JeflfersonvlUe.  Ind.,  and  New  Albany,  Ind.,  furnishing  all  the 
pipe  for  gas  find  water  works  in  above-named  cities.  Infth.  The 
Anniston  Pipe  &  Foundry  Company  shall  handle  Anniston,  Ala.,  and 
Atlanta,  Ga.,  furnishing  all  piiie  for  gas  and  water  companies  in 
above-named  cities.  Sixth.  The  Chattanooga  Foundry  &  Pipe  Works 
shall  handle  Chattanooga,  Tenn.,  and  New  Orleans,  La.,  furnishing 
all  gas  and  water  pipe  In  the  al)ove-nanied  cities.  Seventh.  The 
Howard-Harrison  Iron  Company  shall  handle  Bessemer  and  Birming- 
ham, Ala.,  and  St.  Louis,  Mo.,  furnishing  all  pipe  for  gas  and  water 
companies  in  the  above-named  cities;  extra  bonus  to  be  put  on  East 
St.  Louis  and  Madison,  111.,  so  as  to  protect  the  prices  named  for 
St  Louis,  Mo.  Eighth.  South  Pittsburg  Pipe  Works  shall  handle 
Omaha,  Neb.,  on  all  sizes  required  by  that  city  during  the  year  of 
189."i,  conferring  with  the  other  companies  and  co-operating  with  them. 
Thereafter  they  shall  handle  the  gas  and  water  companies  of  Omaha, 
Neb.,  on  such  sizes  as  they  make. 


ft 
I 


J 


UNITED   STATES    V,  ADDYSTON   PIPE   &   STEEL   CO.      775 

Statement  of  the  Case. 

t^^^'^^^oJ^Jn  ^  a.,  members  of 

panics  Of  the  cities  set  apart  f  "Ah\T^i„%.%f-^^^^^^ 

Jultla  '^e^^Tln^ai^ZZ  cTverf nTri^  '^^  ***5  ^^^^^^^  «^*- 
or  sewerage  nuriwses  on  19-  oL  Vo      *  ^^.^  ^^  ^^^  ^^r  any  drainage 

Htory  Shan  payTbonSs  of  Ifoo  ^Sf /^^'^'^^PP^  ^^*«  ^^^  t^ 
and  shipped  into  •  Ss  torrUo^ '^or^Th*  ^°  ^"  «^^^  ^^^'^  12" 
there  shall  be  a  bonus  of  $2  W^rTon  P^rpones  above  named. 


Mobile,  Ala i  OO 

Arizona  Ter 3  oO 

California i  oO 

Colorado ]  2  00 

Jnd.  Ter 3  00 

North  C 1  00 

Tenn.,     East     of 
C'laud 2  00 

Tenn.,  Middle  and 
West 3  00 

Illinois,       except 
Madison       and       • 
East  St.  Louis, 
as       previously 
provided 2  00 


J.  12  00 

Ky 2  00 

i? 3  00 

Miss 4  OQ 

Mo ;;;  2  00 

Montana 3  qq 

Nebraska [  3  oq 

J^-^ex 3  00 

o.  0 1  OQ 

Mmn 2  00 

Utah 4  00 

Indiana 2  00 

Iowa .'  2  00 


List  of  Bonuses. 

B&Aia:::::1SS  &„'"« *t««  ^-^ 

Annieton,Ala....  2  00    Ohio.   1  g5 

|\^.-: 2  00 

i'londa 1  00 

9^oi^ia 2  00 

Atlanta,  Ga 2  00 

Ga.  Coast  Pts 1  00 

Idaho 2  00 

Nev ]*  3  00 

Oklahoma .*  3  oo 

^^»8 2  00 

Texas,  Interior. . .  3  00 

Texas  Coast 1  oO 

Wash 'ton  Ter...     1  00 

Michigan 1  50 

WestVa 1  00 

"  All  other  territory  free 

ten-ltory.  in  ^biXtem^tB^^rlll' r^  distinguished  from  "free" 

restriction  and  without  pav?ng  Iny  l^nnL   '^^^k"','"^^  ««'*«  ^'t^out 
an  auditor  of  the  assoi-intiln   „I.^  Donns.    The  by-laws  provided  for 

the  business  doni  by^ci  shoo  iTh  t*^  "  ^'^  *"  ^^^  »«»»°t  »' 
the  1st  and  leth  of  eacTmonth  h^^       ""':  "'"'  ''««  territory.    On 
"a  statement  of  all  shipments' r^noTfLT"!^*^  *°  ^""^  *"  ^«<^»'  ^^op 
with  a  balance  sheet  showfn^tK*^    "  ^""^  P^vlous  half  mont^ 
Shipments,  the  dfvi^on  o^tLe  slme  «n^  ^"^^r*  °i.  *•>«  Pr-mlums  on 
company."    The  STStem  «f  ^n^,?f '  ^"^  '*^'"*-  "<^"-  balance  of  each 
petition  and  maintatamgpr&Tfls^Lf  '"«'»"%»'  restricting  corn- 
therefore  made  by  which  nrS  ZllJ^l  successful.    A  change  was 
by  the  association    and    «^^t  Z        "  "^  ^^^  '"■"  «ach  contract 
detennined  by  competuTve  bMdini Vllf""^  1'"^'   *"«   "Idder  was 
to  give  the  highest  blnus  for  dl4?on  amZr^^h""''  .V"^  ""^  "^'"8 
contract.    The  plan  was  embodied  n^,^?°^  ^""^  "^^^s  getting  the 
In  the  words  following  :™erea°  ?heTiw°  ^""^  ""y  27,  1895. 
this  association  of  having  a  fix «i  hon,,«  .^'^th       """'  '"  »l'eration  In 
In  its  operation,  resulted  in  ti!?  ^T        °  ^^^  ^^*''"a>  states  has  not. 
as    was   antioipat'e^""^^?  '^  r^vTtm^'' '""^  "'"^  "'  ^'^^ 
action  is  imperatively  neeessarv  in^JJo    .       **'    *"*^   ^"^    further 
Which  this  association  ^sTL^Thpr^fn^rSiP'^"''  *"*'  ^"^  '»■■ 
from  and  after  the  first  day  o?T„n»thff*'.,  "^  '*  resolved,  that 
P.pe  lettings  shall  ta.e  platM^The  t^io^u'^  '^^"^^^Vt 


on  all  city  work  as 


paid  into  the 


1 


■I 


11^ 


776 


85   FEDERAL  BEPOBTER,  274. 
Statement  of  the  Case. 


the  said  letting.  To  accomplish  this  purpose  it  is  proposed  that  the 
six  competitive  shops  have  a  representative  board  located  at  some 
central  city,  to  whom  all  Inquiries  for  pipe  shall  be  referred,  and 
said  board  shall  fix  the  price  at  which  said  pipe  shall  be  sold,  and  bids 
taken  from  the  reE9»ective  shops  for  the  privilege  of  handling  the 
order,  and  the  party  securing  the  order  shall  have  the  protection  of 
all  the  other  shops.'*  In  pursuance  of  the  new  plan,  it  was  further 
Agreed  "that  all  parties  to  this  association,  having  quotations  out, 
shall  notify  their  customers  that  the  same  will  be  withdrawn  by 
Jime  1,  1805,  If  not  previously  accepted,  and  upon  all  business  ac- 
c^ed  on  and  after  June  Ist  bonuses  shall  be  fixed  by  the  committee." 
At  the  meeting  of  December  19,  1895,  it  was  moved  and  carried  that, 
upon  all  inquiries  for.  prices  from  **  reserved  cities  **  for  pipe  required 
during  the  year  of  1896,  prices  and  bonuses  should  be  fixed  at  a 
regular  or  called  meeting  of  the  principals.  At  the  meeting  of 
December  20,  1895,  the  plan  for  division  of  bonuses  originally  adopted 
was  modified  by  making  the  basis  the  total  amounts  shipped  into 
••  pay  **  territory  rather  than  the  totals  shipped  into  "  pay  "  and  "  free  '* 
territoiy. 

[175]  To  illustrate  the  mode  of  doing  business,  the  following  ex- 
cerpt from  the  minutes  of  the  meetings  of  December  20.  1895,  Febru- 
ary 14,  1896,  and  March  13,  1896,  Is  given :  "  It  was  moved  to  sell  the 
519  pieces  of  20"  pipe  from  Omaha,  Neb.,  for  $23.40,  delivered.  Car- 
ried. It  was  moved  that  Anniston  participate  In  the  bonus,  and  the 
jiil>  be  sold  over  the  table.  Carried.  Pursuant  to  the  motion,  the  519 
pieces  of  20"  pipe  for  Omaha  was  sold  to  Bessemer  at  a  premium  of 
18."  "Moved  that  *  bonus*  on  Annlstcm's  Atlanta  Waterworks  con- 
tract be  fixed  at  $7.10,  provided  freight  is  $1.60  a  ton.  Carried."  An 
illustration  of  the  manner  in  which  "  reserved  "  cities  were  dealt  with 
may  be  seen  in  the  case  of  a  public  letting  at  St.  Ix>uis.  On  Fel)ruary 
4,  1886,  the  water  department  of  that  city  let  bids  for  2.800  tons  of 
pipe.  St.  Louis  was  "  reserved  "  to  the  Howaird-Harrison  Company,  of 
Bessemer,  Ala.  The  price  was  fixed  by  the  association  at  $24  a  ton, 
and  the  l>onus  at  $6.50.  Before  the  letting,  the  vice  president  of  this 
company  wrote  to  the  other  members  of  the  association,  under  date 
of  January  24,  1896.  as  follows :  **  I  write  to  "say  that,  in  view  of  the 
fact  that  I  do  not  as  yet  know  what  the  drayage  will  be  on  this  pipe, 
I  prefer  that,  if  any  of  you  find  it  necessarj'  to  put  in  a  bid  without 
going  to  St.  I^uis.  please  bid  not  less  than  $27  for  the  pipe,  and  2f 
cents  per  pound  for  the  specials.  I  would  also  like  to  know  as  to 
which  of  you  would  find  It  convenient  to  have  a  representative  at  the 
letting.  It  will  l»e  necessary  to  have  two  outside  bidders."  Tlie  con- 
tract was  let  to  the  Howard-Harrison  Company,  of  Bessemer,  at  $24, 
who  allowed  the  Shiclde,  Harrison  &  Howard  Company,  a  pipe  com- 
pany of  St.  liouis,  not  in  the  association,  but  having  the  same  presi- 
dent as  the  Howard-Harrison  Company,  of  Bessemer,  to  fill  part  of 
the  order.  The  only  other  bidders  were  the  Addyston  Pipe  &  Steel 
Company  and  Dennis  Long  &  O).,  the  former  bidding  $24.37,  and  the 
latter  $24.57.  The  etidence  shows  that  the  Chattanooga  Foundry 
could  have  furnished  this  pipe,  delivered  in  St.  I^uis,  at  from  $17  to 
$Mk  find  could  have  made  a  profit  on  it  at  that  price.  The  record  Is 
full  of  instances  of  a  similar  kind,  in  which,  after  the  successful 
bidder  Iiad  l)een  flxeil  by  the  "  auction  pool."  or  had  been  fixed  l^y  the 
arrangement  as  to  "  reserve  "  cities,  the  other  defendants  put  In  bids 
at  the  public  letting  as  high  as  the  selected  bidder  requested,  in  order 
to  give  the  appearance  of  active  competition  between  defendants. 

In  January,  1896,  after  the  auction  pool  liad  l)een  in  oi)eration  for 
more  than  six  months,  the  Chattanooga  Company  wrote  a  letter  to  Its 
representative  in  the  central  committee  to  outline  its  policy  for  the 
new  year,  and  the  statements  of  the  letter  cast  much  light  on  the 


UNITED    STATES    V.  ADDYSTON   PIPE    &   STEEL   CO.      777 

Statement  of  the  Case, 
prices  bid  and  the  character  of  bonime<j  Ay/wi      rru^  i  ^      .     ^  .   , 

for  1896,  m  bidding  on  pipe,  we  have  had  this  matter  under  con^idPi^ 
iTfi'  alV^r^^T  ^"^  ^''^^  that  Howard-Harrison  Ii^n  Co     Cinc?n 

$14  25  af  shop;    on^^'%nT36"°?aida:^  te"°hte  ts"^  T^^'^'^A 
under  lieht  weights  «i4Pui  fr.  «i.i  ^-    V^  ,      weignts,  $13,    on  16"  and 

over  $1^14  25  and  «14^  1^1'^?  ''*4^''P'    ^^^^  ^«'  ^^^  ^i»  bid  all 

it  will  be  satisfactorf     ??  th.  Z?^^'    ^^  ""t  ^^*  ^^^*^  «*  ^^^  P'-i^. 

denmiHl  should  reach  ^o6o  ton«    w^^h  "'  ^r°.y«»  "bove.  If  the 
4nniv>  tnno   „»    -J  J    -«'.<JW»  tons,  which  would  give  us  our  piitirA 

Sirs  LS  IS=:fFS"=«.Tt 


•     ;     I 


••'•^ 


778 


8u  FEDERAL  REPORTER,  276. 
Statement  of  the  Case. 


bid  the  Anniston  Company  in  spite  of  difference  in  freights.  All 
the  bids  had  been  rejected  as  too  high,  and,  upon  a  second  letting, 
Anniston's  bid  was  $1.25  a  ton  less,  and  the  job  was  awarded  to  It 
The  charge  was  then  made  by  Atlanta  persons  that  there  was  a 
"trust"  or  "combine."  This  was  vigorously  denied.  The  letter  of 
the  Chattanooga  Company  evoked  by  this  difficulty  was  dated  Feb- 
ruary 25,  1896,  and  read  as  follows :  "  Gentlemen :  We  are  in  receipt 
of  a  carl>on  copy  of  your  favor  of  the  24th  instant,  to  F.  B.  Nichols, 
V.  P.,  in  reference  to  Atlanta.  Ga.  We  certainly  regret  that  the 
matter  has  assumed  its  present  shai)e  and  that  R.  D.  Wood  &  Com- 
pany should  make  a  lower  bid  by  one  dollar  a  ton  than  the  Southern 
shops.  You  know  we  have  always  been  oiiposed  to  special  customers 
and  '  reserved  cities.'  We  do  not  think  that  it  is  the  right  principle, 
and  we  believe,  if  the  present  association  continues,  that  all  special 
customers  and  reserved  cities  should  be  wii)ed  out.  There  is  no  good 
reason  why  we  should  be  allowed  to  handle  New  Orleans;  you, 
Atlanta;  Howai-d-Harrison  Iron  Co.,  St.  LkiuIs;  or  South  Pittslmi-g. 
Omaha.  We  are  not  in  the  business  to  award  special  privileges  to 
any  foundry,  and  we  believe  that  the  result  would  be  more  benefit 
to  all  concerned  if  all  business  was  made  competitive.  It  is  hardly 
right,  and  we  I)elieve,  if  you  will  think  over  the  matter  carefully,  you 
will  concede  it,  for  us  to  be  put  into  a  position  of  being  unable  to 
make  prices  or  furnish  pipe  for  the  city  of  Atlanta,  when  we  have 
always  heretofore  had  a  large  share  of  their  trade.  We  cannot  ex- 
plain our  position  to  the  Atlanta  people,  and  we  consider  it  is  detri- 
mental to  our  business,  and  think  no  combination  should  have  the 
liower  to  force  us  into  such  a  iKwition.  The  same  argument  will 
apply  with  you  as  to  New  Orleans,  St.  Louis,  and  other  places.  We 
think  this  matter  should  be  considered  seriously,  and  some  action 
taken  that  will  result  in  re-establishing  ourselves  (I  mean  the  four 
Southern  shops)  in  the  confidence  of  the  Atlanta  people.  Wistar, 
R.  D.  Wood  &  Company's  man,  has  no  doubt  told  them  all  about  our 
association,  or  as  much  as  he  could  guess,  and  has  worked  up  a  very 
bitter  feeling  against  us.  The  very  fact  that  you  have  been  protected, 
and  have  hiid  all  their  business  for  the  past  two  years,  is  proof  to  them 
that  such  a  'combination'  exists;  and  they  state  that,  if  they  find 
out  positively  that  we  are  working  together,  they  will  never  receive  a 
bid  from  any  one  of  us  again.  We  cannot  afford  to  leave  these  people 
under  that  impression,  and  something  ought  to  be  done  that  would 
disprove  Mr.  Wistar's  statement  to  them.  We  believe  that  all  busi- 
nefls  ought  to  be  competitive.  The  fact  that  certain  shops  have  cer- 
tain cities  '  resened '  is  all  based  upon  mere  sentiment,  and  no  good 
reason  exists  why  it  should  be  so.  We  l»elieve  that,  as  a  general  thing, 
we  have  had  our  prices  entirely  too  high,  and  especially  do  we  be- 
lieve this  has  been  the  [277]  case  as  to  prices  in  reserved  cities. 
The  prices  made  at  St.  Louis  and  Atlanta  are  entirely  out  of  all  rea- 
son, and  the  result  has  been,  and  always  will  be,  when  high  prices  are 
named,  to  create  a  bad  feeling  and  an  agitation  against  the  combina- 
tion. There  is  no  reason  why  Atlanta,  New  Orleans,  St.  Louis,  or 
Omaha  should  be  made  to  pay  higher  prices  for  their  pipe  than  other 
places  near  them,  who  do  not  use  anything  like  the  amount  of  pipe, 
and  whose  trade  is  not  as  desirable  for  many  other  reasons.  There 
is  no  sentiment  existing  with  us  in  reference  to  Atlanta,  as  we  would 
as  soon  sell  our  pipe  anywhere  else,  only,  as  stated  above,  it  Is  wrong 
In  principle  that  we  should  be  forced  to  give  up  Atlanta  or  any  other 
point  for  no  good  reason  that  we  know  of." 

It  appears  quite  clearly  from  the  prices  at  which  the  Chattanooga 
and  the  South  Pittsburg  Companies  offered  pipe  in  free  territory  that 
any  price  which  would  net  them  from  |13  to  $15  a  ton  at  their  foun- 
dries would  give  them  a  profit.    Pipe  was  freely  offered  by  the  de- 


UNITED   STATES   V.  ADDYSTON   PIPE   &   STEEL   CO.     779 

Statement  of  the  Case. 

af  £rprr^?Tha*n"the.7  "pr^SSll^h^';?  I™^  *«'^  '«-<>"« 
let  in  ciHes  In  pay  terrlto^  n^i^^  tl  h^^  1*f^  •"■'<*«  '»■•  i<^ 
miles  or  more.  The  defSn?«  »h5.  ^^*^^^^^^'  foundries  by  300 
type,  chiefly  from  ?^r^nt°^i°A,«^''^»«?J'  affidavits  of  a  foraial 
and  other  companl«^h„^^fit^  ^  ''"''"'*^  P'"®  '''•»°»  defendants 
at  Which  the  pi^ISd  C  X^b?  deffSs  X^ ^fX"''*^ 

rde'r^rc^^^r-eo^r^Hr^s  *f -^4""  -"-^ «" -i^ 

a  single  case  w^e  the  sn^i^in^LS^"';'"'"  "J"*  '"'^'Sbt,  and  In  not 
-    petitioner  disput^     Threvide^c?  aTVf Z"  "^  »?e^'<Jenee  for  the 
ants'  mills  is  by  no  meBn»  I«t,vJ^t  Si^  capacity  of  the  defend- 

based  on  an  aLreefte  vLh^  f  **"?•  .^*  *'^'«'<»n  »'  bonuses  was 
averments  in  ?hf  aSwe/Zt^ZZl  "f h«??kT  *"""•  »>"*  '"^'^  «™ 
Of  the  actual  Hmit  of%*aX  but  was  nnii''iL'''''  ""^  "  statement 
restricted  output  upon  which  tSLV  1  *  ^  ^^^^  "^  «  standard  of 
bonuses.    NowhereT  tha  ii,».      calculate  an  equitable  division  of 

ment  of  the  j^r  diem  caDacf^„r-,i'/  ^""'r.'*"  '"  ^^^'"^  ""y  state 

Sprrd"en7of^r„£lX^«^^^^^^ 

was  a  member  of  thi  fssriltifn.  ind  i?"!         Bessemer,  Ala.,  which 

by  the  Bessemer  min  nf«fT.'  ^°^  **  appears  that  an  order  taken 

m^ll.  Vhr Xr  ^X.V^^Z  Terrifor^v  ^  ^""^  '^  *^^  «**  ^»^« 
Ohio,  with  an  annual  capacit^  of  In  ^  ^^5  ^^^""^  ^^^^^  **  Columbus, 
of  60,000  tons ;  on^at  N^wmrnp^^^w  f''''^ '  .?''^  ^*  Cleveland,  Ohio, 
tons;   and  one  at  Detro^rS    oH^'o^"^^^^^  ^^^^'  ^^  ^'^ 

annual  capacity  W2^n^^tonflf^JT''  f^^.^^heir  aggregate 
one  mill  in  eastern  VireiniT^wYfh  .«  o  ^^^  ,^^^  territory  there  was 
four  mills  in  Srn  PennsV^lnin    ^^^^^^  ''^^^''>^  ""^  ^^'^  tons ; 
three  mills  in  4w  Jerspr^^th  T  '        ^.  ^  capacity  of  87,000  tons 
mills  in  New  Yor^  one lt'u«c«    .IT'^'^L''^  ^^^'^  t^'^^'   ««<!  two 
gregate  capacity  of  35  CKX)  tons    '  Thf  .^"^^^^^^  ^*  ^"^^*«'  ^'^th  an  ag- 
of  freight  upo^iron  Pi^s  bu?"  enm^^if r'^l^'^J'T  "^"^^  ««  to  ratis 
vanta^  in  freight Tates  wh.Vh  fh?^!?  ^^P^-f^^  to  show  that  the  ad- 
foundries  in  New  York  elsteraPpnn^^^^^^  ^^?  ^^^^'^  ^^^  J^^ge  pipe 
ding  on  eontrapTs  trde^rver'^ip^e'^rne^^^^^^  ^"  »'^^- 
varied  from  $2  to  $6  a  ton  acSrdin^  tn  ?i.  ^i    \^^  ^^^  ^^^  territory 
filed  the  affidavits  of  their  Zn^i^^JV^    ^^^.t*^'*-    The  defendants 
generally  that  the  obJectTf  t^eh?assoc?a^,^^^^      "^^/^.^^  ^^^^  ^^^^^ 
beyond  what  was  reSable    bi,t  onw  f        ^^^  P^*  *^  '"^^^^  P^**^ 
tion  between  defendants   whth^^S.^u*'*  P^^^^eut  ruinous  competi- 

a  reasonaWe  «  that  the  boTusS  ch?r.^''^"^  ^'^^«  ''^'  ""^^^ 
profits  and  additions  to  a  reasoSHri^  ,f ^  .k  ^""^  '^^^^  exorbitant 
from  a  reasonable  pri(^  fn  «fe^^l,l  ^^^'  ^"t  they  were  deductions 
to  curb  the  Ztural  dS;osm^^  If^IX""^  ^  ^"^^^^  ^^  ^"^^^^  intended 
possible,  and  more  th^  h is  d^faT  "^T^^""  *^  ^^*  ^"  the  business 
by  the  associadon  were  a^wavs  rp^/^^  M^^  i*^^*  **»^  P^**^^  ^^^ 
as  they  must  have  b^n  with  if  ^^"f^^^^  ^''^  ^^^'"^  always  fixed, 
of  other  pS  manuSrl^  fo^^vP^^^^^  the  ve  .^.^^  cx>i;ipetition 
sold  pipe  at  so  mSS  cSer  ratPsTn^?hJ  /^^^t  the  reason  why  they 
[«78]  pay  territory  was  b^auspthev  ,^/'"^.»ff'*''"^'^  *^««  ^'^  the 
to  keep  their  mills%oinVr1S  th^  to^i^op^S;  Vaf  thi  V^ 


780 


85  FEDERAL  BEPORTER,  278. 
Opinion  of  tlie  Ck>urt 


ii 


at  a  city  like  St.  Louis  In  which  the  specifications  were  detailed  and 
precise,  were  higher  because  pipe  had  to  be  made  especially  for  the 
Job,  and  they  could  not  use  stock  on  hand.  The  defendants  devoted 
a  good  deal  of  evidence  to  showing  that  the  stenographer  who  fur- 
nished copies  of  the  minutes  of  the  association  and  of  the  correspond- 
CTce  between  the  members  had  a  pecuniary  motive  In  thus  betraying 
the  confidence  of  his  employers ;  but  no  evidence  was  ofl'ered  by  them 
to  contradict  any  statements  made  by  him,  or  to  Impeach  the  accuracy 
of  the  copies  he  has  produced.  On  one  point  alone  was  he  contra- 
dicted, and  that  was  in  his  statement  that  the  bonuses  represented 
the  increase  over  and  above  a  reasonable  price  made  possible  by  the 
combination  of  the  defendants. 

/.  E.  Bible  and  Edward  B,  Whitney^  for  the  United 
States. 

Frank  Spurlock,  for  appellees. 

Before  Harlan,  Circuit  Justice,  and  Taft  and  Lurton, 
Circuit  Judges. 

Taft,  Circuit  Judge,  after  stating  the  case  as  above,  de- 
livered the  opinion  of  the  court. 

The  first  section  of  the  act  of  congress  entitled  "An  act  to 
protect  trade  and  commerce  against  unlawful  restraints  and 
monopolies,"  passed  July  2,  1890  (26  Stat.  209),  declares 
illegal  "every  contract,  combination  in  the  form  of  trust 
or  otherwise  or  conspiracy  in  restraint  of  trade  or  commerce 
among  the  several  states  or  with  foreign  nations."  The 
second  section  makes  it  a  misdemeanor  for  any  person  to 
monopolize,  or  attempt  to  monopolize,  or  combine  or  con- 
spire with  others  to  monopolize,  any  part  of  the  trade  or 
commerce  among  the  several  states.  The  fourth  section  of 
the  act  gives  the  circuit  courts  of  the  United  States  jurisdic- 
tion to  hear  and  determine  proceedings  in  equity  brought  by 
the  district  attorneys  of  the  United  States  under  the  direc- 
tion of  the  attorney  general  to  restrain  violations  of  the  act. 

Two  questions  are  presented  in  this  case  for  our  decision: 
First.  Was  the  association  of  the  defendants  a  contract, 
combination,  or  conspiracy  in  restraint  of  trade,  as  the  terms 
are  to  be  understood  in  the  act?  Second.  Was  the  trade 
thus  restrained  trade  between  the  States? 

The  contention  on  behalf  of  defendants  is  that  the  associa- 
tion would  have  been  valid  at  common  law,  and  that  the 


UNITED   STATES   V.  ADDYSTON   PIPE   &   STEEL   CO.      781 

Opinion  of  the  Court. 

federal  anti-trust  law  was  not  intended  to  reach  any  agree- 
ments that  were  not  void  and  unenforceable  at  common  law. 
It  might  be  a  sufficient  answer  to  this  contention  to  point 
to  the  decision  of  the  supreme  court  of  the  United  States  in 
U.  S.  V.  Tram-Missouri  Freight  Ass'n,  166  U.  S.  290,  17  Sup. 
Ct.  540,  in  which  it  was  held  that  contracts  in  restraint  of 
interstate  transportation  were  within  the  statute,  whether 
the  restraints  would  be  regarded  as  reasonable  at  common 
law  or  not.    It  is  suggested,  however,  that  that  case  related 
to  a  quasi  public  employment  necessarily  under  public  con- 
trol, and  affecting  public  interests,  and  that  a  less  stringent 
rule  of  construction  applies  to  contracts  restricting  parties 
i^!  sales  of  merchandise,  which  is  purely  a  private  business, 
having  in  it  no  element  of  a  public  or  quasi  public  character! 
Whether  or  not  there  is  substance  in  such  a  distinction,— a 
question  we  do  not  decide,— it  is  certain  that,  if  the  con- 
tract of  association  which  bound  the  defendants  was  void 
and  unenforceable  at  the  common  law  because  in  restraint  of 
V219]  trade,  it  is  within  the  inhibition  of  the  statute  if  the 
trade  it  restrained  was  interstate.     Contracts  that  were  in 
unreasonable  restraint  of  trade  at  common  law  were  not 
unlawful  in  the  sense  of  being  criminal,  or  giving  rise  to  a 
civil  action  for  damages  in  favor  of  one  prejudicially  af- 
fected thereby,  but  were  simply  void,  and  were  not  enforced 
by  the  courts.    Mogul  Steamship  Co.  v.  McGregor,  Gow  ct* 
Oo.,  [1892]  App.  Cas.  25;  Hornby  v.  Close,  L.  R.  2  Q.  B. 
153 ;  Lord  Campbell,  C.  J.,  in  Hilton  v.  Eckersley.  6  El.  & 
Bl.  47,  66 ;  Hannen,  J.,  in  Farrer  v.  Close,  L.  E.  4  Q.  B.  602, 
012.    The  effect  of  the  act  of  1890  is  to  render  such  contracts 
unlawful  in  an  affirmative  or  positive  sense,  and  punishable 
OS  a  misdemeanor,  and  to  create  a  right  of  civil  action  for 
damages  in  favor  of  those  injured  thereby,  and  a  civil  rem- 
edy by  injunction  in  favor  of  both  private  persons  and  the 
public  against  the  execution  of  such  contracts  and  the  main- 
tenance of  such  trade  restraints. 

The  argument  for  defendants  is  that  their  contract  of 
association  was  not,  and  could  not  be,  a  monopoly,  because 
their  aggregate  tonnage  capacity  did  not  exceed  30  per  cent, 
of  the  total  tonnage  capacity  of  the  country;   that  the  re- 


iTT' 


fi 


782 


85  FEDERAL  BEPORTER,  279^ 
Oplnlan  of  the  CSourt 


f 


^mts  upon  the  members  of  the  association,  if  restraints 
they  could  be  called,  did  not  embrace  all  the  states,  and  were 
not  unlimited  in  space;  that  such  partial  restraints  were 
justified  and  upheld  at  common  law  if  reasonable,  and  only 
proportioned  to  the  necessary  protection  of  the  parties;  that 
m  this  case  the  partial  restaraints  were  reasonable,  because 
without  them  each  member  would  be  subjected  to  ruinous 
competition  by  the  other,  and  did  not  exceed  in  degree  of 
stringency  or  scope  what  was  necessary  to  protect  the  parties 
m  securing  prices  for  their  product  that  were  fair  and 
reasonable  t»  themselves  and  the  public;    that  competition 
was  not  stifled  by  the  association  because  the  prices  fixed  by 
it  had  to  be  fixed  with  reference  to  the  very  active  competi- 
ticm  of  pipe  ccHnpanies  which  were  not  members  of  the  asso- 
ciation, and  which  had  more  than  double  the  defendants' 
capacity ;  that  in  this  way  the  association  only  modified  and 
restrained  the  evils  of  ruinous  competition,  while  the  public 
had  aU  the  benefit  from  competition  which  public  policv 
demanded. 

From  early  times  it  was  the  policy  of  Englishmen  to  en- 
courage  trade  in  England,  and  to  discourage  those  voluntary 
restraints  which  tradesmen  were  often  induced  to  impose  on 
themselves  by  contract.  Courts  recognized  this  public  policy 
by  refusing  to  enforce  stipulations  of  this  character.  The  ob- 
jections to  such  restraints  were  mainly  two.  One  was  that 
by  such  contracts  a  man  disabled  himself  from  earning  a 
livelihood  with  the  risk  of  becoming  a  public  charge,  and 
deprived  the  community  of  the  benefit  of  his  labor.  The 
other  was  thai  such  restraints  tended  to  give  to  the  covenantee, 
ttie  beneficiary  of  such  restraints,  a  monopoly  of  the  trade' 
from  which  he  had  thus  excluded  one  competitor,  and  by  the 
same  means  might  exclude  others. 

Chief  Justice  Parker,  in  1711,  in  the  leading  case  of  Mitchel 
V.  Reynolds,  1  P.  Wms.  181,  190,  stated  these  objections  as 
follows: 

"  First  The  mischief  which  may  arise  from  them  (1)  to  the  party  by 
the  loss  of  his  llyelihood  and  the  subsistence  of  his  family ;  (2>  to  tS 
pnbllc  by  depHyIng  it  of  an  nsefal  member.  Another  reai)n  is  the 
great  abuses  these  voluntary  restraints  are  liable  to;  as,  for  Instance 
from  coiyorations  who  are  perpetually  laboring  for  exclusive  advan- 
tages in  trade,  and  to  reduce  it  into  as  few  hands  as  possible  " 


UNITED   STATES   V.  ADDYSTON    PIPE   &   STEEL   CO.      783 

Opinion  of  the  Court 

[880]  The  reasons  were  stated  somewhat  more  at  length  in 
Alger  v.  Thacher,  19  Pick.  51,  54,  in  which  the  supreme 
judicial  court  of  Massachusetts  said : 

"  The  unreasonableness  of  contracts  in  restraint  of  trade  and  busi- 
ness is  very  apparent  from  several  obvious  considerations :     (1)  Such 
contracts  injure  the  parties  making  them,  because  they  diminish  their 
means  of  procuring  livelihoods  and  a  competencv  for  their  families 
They  tempt   impi-ovident   persons,   for  the  sal^e 'of  present  gain,   to 
deprive  themselves  of  the  power  to  make  future  acquisitions;   and 
they  expose  such  persons  to   imposition  and  oppression.     (2)  They 
tend  to  deprive  the  public  of  the  services  of  men  in  the  employments 
and  capacities  in  which  they  may  be  most  useful  to  the  communitv 
as  wel  as  themselves.     (3)  They  discourage  industry  and  enterprise, 
and  dimmish  the  products  of  ingenuity  and  skill.     (4)  Thev  prevent 
competition  and  enhance  prices.     (5)  They  exiwse  the  public'to  all  the 
evils  of  inonopoly ;  and  this  especially  is  applicable  to  wealthy  com- 
panies and  large  corporations,  who  have  the  means,  unless  restrained 
by  law,  to  exclude  rivalry,  monopolize  business,  and  engross  the  mar- 

1*1-    tf'^T^^  ^Y"^  ^'^^  th^se,  wise  laws  protect  individuals  and  the 
public  by  declaring  all  such  contracts  void." 

The  changed  conditions  under  which  men  have  ceased  to 
be  so  entirely  dependent  for  a  livelihood  on  pursuing  one 
trade,  have  rendered  the  first  and  second  considerations 
stated  above  less  important  to  the  community  than  they  were 
in  the  seventeenth  and  eighteenth  centuries,  but  the  disposi- 
tion to  use  every  means  to  reduce  competition  and  create 
monopolies  has  grown  so  much  of  late  that  the  fourth  and 
fifth  considerations  mentioned  in  Alger  v.  Thacher  have  cer- 
tainly  lost  nothing  in  weight  in  the  present  day,  if  we  may 
judge  from  the  statute  here  under  consideration  and  similar 
legislation  by  the  states. 

The  inhibition  against  restraints  of  trade  at  common  law 
seems  at  first  to  have  had  no  exception.  See  language  of 
Justice  Hull,  Year  Book,  2  Hen.  V.,  folio  5,  pi.  26.  After  a 
time  It  became  apparent  to  the  people  and  the  courts  that  it 
was  m  the  interest  of  trade  that  certain  covenants  in  restraint 
of  trade  should  be  enforced.  It  was  of  importance,  as  an 
incentive  to  industry  and  honest  dealing  in  trade,  that,  after 
a  man  had  built  up  a  business  with  an  extensive  good  will,  he 
should  be  able  to  sell  his  business  and  good  will  to  the  best 
advantage,  and  he  could  not  do  so  unless  he  could  bind  him- 
self by  an  enforceable  contract  not  to  engage  in  the  same  busi- 
ness m  such  a  way  as  to  prevent  injury  to  that  which  he  was 
about  to  sell.     It  was  equally  for  the  good  of  the  public  and 


784 


85   FEDERAL   REPOKTER,  280. 


♦• 


Opinion  of  the  Court 

trade,  when  partners  dissolved,  and  one  took  the  business,  or 
they  divided  the  business,  that  each  partner  might  bind  him- 
self not  to  do  anything  in  trade  thereafter  which  would  dero- 
gate from  his  grant  of  the  interest  conveyed  to  his  former 
partner.    Again,  when  two  men  became  partners  in  a  busi- 
ness, although  their  union  might  reduce  competition,  this 
effect  was  only  an  incident  to  the  main  purpose  of  a  union  of 
their  capital,  enterprise,  and  energy  to  carry  on  a  successful 
business,  and  one  useful  to  the  community.    Restrictions  in 
the  articles  of  partnership  upon  the  business  activity  of  the 
members,  with  a  view  of  securing  their  entire  effort  in  the 
common  enterprise,  were,  of  course,  only  ancillary  to  the 
ihain  end  of  the  union,  and  were  to  be  encouraged.    Again, 
when  one  in  business  sold  property  with  which  the  buyer 
might  set  up  a  rival  business,  it  was  certainly  reasonable  that 
the  seller  should  be  able  to  restrain  the  buyer  from  doing  him 
an  injury  which,  but  for  the  sale,  the  buyer  would  be  unable 
to  inflict.     [281]  This  was  not  reducing  competition,  but 
was  only  securing  the  seller  against  an  increase  of  competi- 
tion of  his  own  creating.    Such  an  exception  was  necessary 
to  promote  the  free  purchase  and  sale  of  property.    Again, 
it  was  of  importance  that  business  men  and  professional  men 
should  have  every  motive  to  employ  the  ablest  assistants,  and 
to  mstruct  them  thoroughly;  but  they  would  naturally  be 
reluctant  to  do  so  unless  such  assistants  were  able  to  bind 
themselves  not  to  set  up  a  rival  business  in  the  vicinity  after 
learning  the  details  and  secrets  of  the  business  of  their 
employer. 

In  a  case  of  this  last  kind,  Median  v.  May,  11  Mees.  &  W. 
652,  Baron  Parke  said : 

"  Contracts  for  the  partial  restraint  of  trade  are  upheld,  not  because 

™«L''ra^''^^''^^fr"'  ^^  ^^^  individual  with  wholn  th^  cont^ctH 
made,  and  a  sacrifice  pro  tanto  of  the  rights  of  the  communltv  hiif 
because  it  is  for  the  benefit  of  the  public  at  large  tLTey  ^ouid  Se 
enforced.  Many  of  these  partial  restraints  on  trade. are  vertecSv 
S^n*1Sn*J^S  P"Wic  convenience  and  the  general  interest!  a'^d  ^ve 
been  supported.     Such  is  the  case  of  the  disposing  of  a  shop  in  a 

?«rii*'''.r/l^'^^'  "^"^.K*  *^"*'*^^*  ^'^  ^^^  P^'-*  *>'  «>e  vendor  not  to 

^J^ui  «  /^%  '"  *^^  ^"^""^  P*""*^-  ^*  *»'  ^°  «ff«^t'  the  sale  of  a 
good  will,  and  oflfers  an  encouragement  to  trade  bv  allowinir  a  nartv 
to  dispose  of  all  the  fruits  of  his  industry.  ♦  *•  •And  such  1^ 
the  class  of  cases  of  much  more  frequent  occurrence,  and  to  which 
this  present  case  belongs,  of  a  tradesman,  manufacturer,  or  profes 
sional  man  taking  a  servant  or  clerk  into  his  service,  with  a  contract 


UNITED   STATES   V,  ADDYSTON   PIPE   &   STEEL   CO.     785 

Opinion  of  the  CJourt 

that  he  will  not  carry  on  the  same  trade  or  profession  within  certain 
limits.  *  *  ♦  In  such  a  case  the  public  derives  an  advantage  in 
the  unrestrained  choice  which  such  a  stipulation  gives  to  the  employer 
of  able  assistants,  and  the  security  it  affords  that  the  master  will 
not  withhold  from  the  servant  instruction  in  the  secrets  of  his  trade, 
and  the  communication  of  his  own  skill  and  experience,  from  the  fear 
of  his  afterwards  having  a  rival  in  the  same  business." 

For  the  reasons  given,  then,  covenants  in  partial  restraint 
of  trade  are  generally  upheld  as  valid  when  they  are  agree- 
ments (1)  by  the  seller  of  property  or  business  not  to  com- 
pete with  the  buyer  in  such  a  way  as  to  derogate  from  the 
value  of  the  property  or  business  sold;   (2)   by  a  retiring 
partner  not  to  compete  with  the  firm;    (3)   by  a  partner 
pending  the  partnership  not  to  do  anything  to  interfere,  by 
competition  or  otherwise,  with  the  business  of  the  firm ;    (4) 
by  the  buyer  of  property  not  to  use  the  same  in  competition 
with  the  business  retained  by  the  seller;   and  (5)  by  an  as- 
sistant, servant,  or  agent  not  to  compete  with  his  master  or 
employer  after  the  expiration  of  his  time  of  service.     Be- 
fore such  agreements  are  upheld,  however,  the  court  must 
find  that  the  restraints  attempted  thereby  are  reasonably 
necessary  (1,  2,  and  3)  to  the  enjoyment  by  the  buyer  of  the 
property,  good  will,  or  interest  in  the  partnership  bought, 
or  (4)  to  the  legitimate  ends  of  the  existing  partnership- 
or  (5)  to  the  prevention  of  possible  injury  to  the  business 
of  the  seller  from  use  by  the  buyer  of  the  thing  sold;    or 
(6)  to  protection  from  the  danger  of  loss  to  the  employer's 
business  caused  by  the  unjust  use  on  the  part  of  the  em- 
ploye of  the  confidential  knowledge  acquired  in  such  busi- 
ness.    Under  the  first  class  come  the  cases  of  Mitchel  V. 
Reynolds,  1  P.  Wms.  181;    Fowle  v.  Park,  131  U.  S.  88 
9  Sup.  Ct.  658;    Nordenfeldt  v.  Maxim  Nordenfeldt  Co!, 
[1894]  App.  Cas.  534;   Rousillmi  v.  Rousillon,  14  Ch.  Div. 
351 ;    Cloth  Co.  V.  Lorsont,  L.  R.  9  Eq.  345 ;    Whittaker  v! 
Howe,  3  Beav.  383 ;  Match  Co.  v.  Roeher,  106  N.  Y.  473,  13 
N.  E.  419 ;    Tode  v.  Gross,  127  N.  Y.  480,  28  N.  E    469  • 
Real  V.  Chase,  [282]  31  Mich.  490;   Huhhard  v.  MilUr,  27 
Mich.   15;    National  Ben.  Co.  v.   Union  Hospital  Co,  45 
Minn.  272,  47  N.  W.  806;    Whitney  v.  Slay  ton,  40  Me.  224; 
Pierce  v.  FulUr,  8  Mass.  222 ;   Richards  v.  Seating  Co.,  87 
Wis.  503,  58  N.  W.  787.    In  the  second  class  are  Tallis  v. 
11808— VOL  1—06  M— 50 


786 


85  FEDERAL  BEPOBTER^  282. 
Oplnloii  of  tbe  Court 


TaMU,  1  El.  &  BL  391,  and  Lmge  v.  Werk,  2  Ohio  St.  520. 
In  the  third  class  are  Machinery  Co,  v.  Dolph^  138  U.  S. 
617,  11  Sup.  Ct  412,  Id.,  28  Fed.  553,  and  Matthews  v.  Aa- 
Bociated  Press,  136  N.  Y.  333,  32  N.  E.  981.  In  the  fourth 
class  are  American  Strawhoard  Co.  v.  Haldeman  Paper  Co,, 
83  Fed.  619,  and  Hitchcock  v.  Anthony,  Id.  779,  both  de- 
cisions of  this  court;  Navigation  Co,  v.  Winsor,  20  Wall. 
64;  Dunlop  v.  Chregory,  10  N.  Y.  241;  Hodge  v.  Sloan, 
107  N.  Y.  244,  17  N.  E.  335.  While  in  the  fifth  class  are 
the  cases  of  Homer  v.  Ashford,  3  Bing.  322;  Holder  v. 
Graves,  7  Bing.  735;  Hitchcock  v.  Coker,  6  Adol.  &  E. 
454;  Ward  v.  Byrne,  5  Mees.  &  W.  547;  Duhowski  v.  Gold- 
stein, [1896]  1  Q.  B.  478;  PeeU  v.  SaalfeU,  [1892]  2  Ch. 
149;  Taylor  v.  Blancliard,  13  Allen,  370;  Keeler  v.  Taylor, 
53  Pa.  St.  467 ;  Herreshojf  v.  Boutinemu  17  R.  I.  3,  19  Atl. 
712. 

It  would  be  stating  it  too  strongly  to  say  that  these  five 
classes  of  covenants  in  restraint  of  trade  include  all  of  those 
upheld  as  valid  at  the  common  law;  but  it  would  certainly 
seem  to  follow  from  the  tests  laid  down  for  determining  the 
validity  of  such  an  agreement  that  no  conventional  restraint 
of  trade  can  be  enforced  unless  the  covenant  embodying  it  is 
merely  ancillary  to  the  main  purpose  of  a  lawful  contract, 
iind  necessary  to  protect  the  covenantee  in  the  enjoyment  of 
the  legitimate  fruits  of  the  contract,  or  to  protect  him  from 
the  dangers  of  an  unjust  use  of  those  fruits  by  the  other 
party.  In  Homer  v.  Graves,  7  Bing.  735,  Chief  Justice  Tin- 
dal,  who  seems  to  be  regarded  as  the  highest  English  judicial 
authority  on  this  branch  of  the  law  (see  Lord  Macnaghten's 
judgment  in  Nordenfelt  v.  Maxim  Nordenfelt  Co,,  [1894] 
App.  Cas.  535,  567) ,  used  the  following  language : 

"We  do  not  see  how  a  better  test  can  be  applied  to  the  question 
whether  this  is  or  not  a  reasonable  restraint  of  trade  than  by  con- 
sidering whether  the  restraint  is  such  only  as  to  afford  a  fair  protec- 
tion to  the  interests  of  the  party  in  favor  of  whom  it  is  given,  and  not 
io  large  as  to  interfere  with  the  interests  of  the  public.  Whatever 
reftraint  is  larger  than  the  necessary  protection  of  the  party  requires 
tan  be  of  no  benefit  to  either.  It  can  only  be  oppressive.  It  is,  in  the 
t'ye  of  the  law,  unreasonable.  Whatever  is  injurious  to  the  interests 
|f  the  public  Is  void  on  the  ground  of  public  policy." 

This  very  statement  of  the  rule  implies  that  the  contract 
nust  be  one  in  which  there  is  a  main  purpose,  to  which  the 


1* 


UNITED   STATES   V.  ADDYSTON   PIPE   &   STEEL   CO.      787 

Opmlon  of  the  Ck)urt 
covenant  in  restraint  of  trade  is  merely  ancillary.    The  cove- 
nant is  inserted  only  to  protect  one  of  the  parties  from  the 
mjury  which,  in  the  execution  of  the  contract  or  enjoyment 
of  Its  fruits,  he  may  suffer  from  the  unrestrained  competi- 
tion of  the  other.    The  main  purpose  of  the  contract  suggests 
the  measure  of  protection  needed,  and  furnishes  a  sufficiently 
uniform  standard  by  which  the  validity  of  such  restraints 
may  be  judicially  determined.     In  such  a  case,  if  the  re- 
straint exceeds  the  necessity  presented  by  the  main  purpose 
of  the  contract,  it  is  void  for  two  reasons :  First,  because  it 
oppresses  the  covenantor,  without  any  corresponding  benefit 
to  the  convenantee;  and,  second,  because  it  tends  to  a  mo- 
nopoly.    But  where  the  sole  object  of  both  parties  in  making 
the  contract  as  expressed  therein  is  merely  to  restrain  compe- 
tition, and  enhance  or  maintain  prices,  it  would  seem  that 
there  was  nothing  to  justify  or  excise  [283]  the  restraint, 
that  It  would  necessarily  have  a  tendencv  to  monopoly,  and 
therefore  would  be  void.     In  such  a  case  there  is  no  measure 
of  what  is  necessary  to  the  protection  of  either  party,  except 
the  vague  and  varying  opinion  of  judges  as  to  how  much, 
on  principles  of  political  economy,  men  ought  to  be  allowed 
to  restrain  competition.     There  is  in  such  contracts  no  main 
lawful  purpose,  to  subserve  which  partial  restraint  is  per- 
mitted, and  by  which  its  reasonableness  is  measured,  but  the 
sole  object  is  to  restrain  trade  in  order  to  avoid  the  competi- 
tion which  it  has  always  been  the  policy  of  the  common  law 
to  foster. 

Much  has  been  said  in  regard  to  the  relaxing  of  the 
original  strictness  of  the  common  law  in  declaring  contracts 
m  restraint  of  trade  void  as  conditions  of  civilization  and 
public  policy  have  changed,  and  the  argument  drawn  there- 
from IS  that  the  law  now  recognizes  that  competition  may  be 
so  ruinous  as  to  injure  the  public,  and,  therefore,  that  con- 
tracts  made  with  a  view  to  check  such  ruinous  competition 
and  regulate  prices,  though  in  restraint  of  trade,  and  having 
no  other  purpose,  will  be  upheld.    We  think  this  conclusion 
IS  unwarranted  by  the  authorities  when  all  of  them  are  con- 
sidered.    It  is  true  that  certain  rules  for  determining  whether 
a  covenant  in  restraint  of  trade  ancillary  to  the  main  pur- 
pose  of  a  contract  was  reasonably  adapted  and  limited  to 


788 


85  FEDERAL  REPORTER,  283. 


P^lHHIi:' 


Opinion  of  the  CJourt 

the  necessary  protection  of  a  party  in  the  carrying  out  of  such 
l)nrpose  have  been  somewhat  modified  by  modem  authori- 
ties.   In  Mitchel  v.  Reynolds,  1  P.  Wms.  181,  the  leading 
early  case  on  the  subject,  in  which  the  main  object  of  the  con- 
tract was  the  sale  of  a  bake  house,  and  there  was  a  covenant 
to  protect  the  purchaser  against  competition  by  the  seller  in 
the  bakery  business,  Chief  Justice  Parker  laid  down  the 
rule  that  it  must  appear  before  such  a  covenant  could  be 
enforced  that  the  restraint  was  not  general,  but  particular 
or  partial,  as  to  places  or  persons,  and  was  upon  a  good 
and  adequate  consideration,  so  as  to  make  it  a  proper  and 
iiseful  contract.    Subsequently,  it  was  decided  in  Tlitchcoch 
V.  Goher,  6  Adol.  &  E.  454,  that  the  adequacy  of  the  con- 
sideration was  not  to  be  inquired  into  by  the  court  if  it  was 
a  legal  one,  and  that  the  operation  of  the  covenant  need  not 
be  limited  in  time.    Mdre  recently  the  limitation  that  the 
restraint  could  not  be  general  or  unlimited  as  to  space  ha?: 
been  modified  in  some  case  by  holding  that,  if  the  protec- 
tion necessary  to  the  covenantee  reasonably  requires  a  cove- 
nant unrestricted  as  to  space,  it  will  be  upheld  as  valid. 
Whittaker  v.  Howe,  3  Beav.  383 ;  Cloth  Co,  v.  Lorsont,  L.  K. 
9  Eq.  345 ;  Bousillon  v.  Rouaillon,  14  Ch.  Div.  351 ;  Norden- 
feldt  V.  Maxim  Nordenfeldt  Co,,   [1894]    App.   Cas.   535. 
See,  also,  Fowle  v.  Park,  131  U.  S.  88,  9  Sup.  Ct.  658 ;  Match 
Co,  V.  Roeber,  106  N.  Y.  473,  13  N.  E.  419.    But  these  cases 
all  involved  contracts  in  which  the  covenant  in  restraint  of 
trade  was  ancillary  to  the  main  and  lawful  purpose  of  the 
contract,  and  was  necessary  to  the  protection  of  the  cove- 
nantee in  the  carrying  out  of  that  main  purpose.    They  do 
not  manifest  any  general  disposition  on  the  part  of  the 
courts  to  be  more  liberal  in  supporting  contracts  having  for 
their  sole  object  the  restraint  of  trade  than  did  the  courts 
of  an  earlier  time.    It  is  true  that  there  are  some  cases  in 
which  the  courts,  mistaking,  as  we  conceive,  the  proper 
limits  of  the  relaxation  of  the  rules  for  determining  the 
unreasonableness  of  restraints  of  trade,  have  [284]  set  sail 
on  a  sea  of  doubt,  and  have  assumed  the  power  to  say,  in 
respect  to  contracts  which  have  no  other  purpose  and  no 
other  consideration  on  either  side  than  the  mutual  restraint 


UNITED   STATES   V,  ADDYSTON   PIPE   &   STEEL   CO.      789 

Opinion  of  the  Court 

of  the  parties,  how  much  restraint  of  competition  is  in  the 
public  interest,  and  how  much  is  not. 

The  manifest  danger  in  the  administration  of  justice  ac- 
cording to  so  shifting,  vague,  and  indeterminate  a  standard 
would  seem  to  be  a  strong  reason  against  adopting  it  The 
cases  a^mning  such  a  power  in  the  courts  are  Wickeru^  y. 
Evari^,  3  Younge  &  J.  318 ;  Collim  v.  Locke,  4  App.  Cas.  674 ; 
Ontario  Salt  Co.  v.  Merchants^  Salt  Co,,  18  Grant  (U.  C.) 

ri.tSx:  S: '  ^'''  ''"^  "-^^  ^-  ^-''-'^  ''^ 

In  Wtckem  v.  Evans,  three  trunk  manufacturers  of  Enff- 
land,  who  had  competed  with  each  other  throughout  the 
reahn  to  their  loss,  agreed  to  divide  England  into  three  dis- 
tricts,  each  party  to  have  one  district  exclusively  for  his 
trade,  and,  if  any  stranger  should  invade  the  district  of 
either  as  a  competitor,  they  agreed  "  to  meet  to  devise  means 
to   promote   their   own    views."    The   restraint   was   held 
partial  and  reasonable,  because  it  left  the  trade  open  to  any 
third  party  m  either  district.     In  answer  to  the  suggestioi 
that  such  an  agreement  to  divide  up  the  beer  business  of  Lon- 
don  among  the  London  brewers  would  lead  to  the  abuses  of 
monopoly,  it  was  repHed  that  outside  competition  would  soon 
cure  such  abuses,-an  answer  that  would  validate  the  most 
complete  local  monopoly  of  the  present  day.     It  may  be,  as 
suggested  by  the  court,  that  local  monopoHes  cannot  endure 
long,   because   their   very  existence  tempts  outside  capital 
into  competition;  but  the  public  policy  embodied  in  the  com- 
mon law  requires  the  discouragement  of  monopolies,  how- 
ever temporary  their  existence  may  be.    The  public  interest 
may  suffer  severely  while  new  competition  is  slowly  develop- 
ing.   The  case  can  hardly  be  reconciled  with  later  cas^, 
hereafter  to  be  referred  to,  in  England  and  America.    It  is 
true  that  there  was  m  this  case  no  direct  evidence  of  a  desire 
by  the  parties  to  regulate  prices,  and  it  has  been  sometimes 
explained  on  the  theory  that  the  agreement  was  solely  to  re- 
duce  the  expenses  incident  to  a  business  covering  th^  realm 
by  restricting  its  territorial  extent;  but  it  is  difficult  to  escape 
the  conclusion  that  the  restramt  upon  each  two  of  the  thi^ 
parties  was  imposed  to  secure  to  the  other  a  monopoly  and 


w,,. 


790 


85  FEDEKAL  BEPORTEB,  286. 
Opinion  of  the  Oourt 


power  to  control  prices  in  the  territory  assigned  to  him, 
because  the  final  clause  in  the  contract  implies  that,  when  it 
was  executed,  there  were  no  other  COTipetitors  except  the 
parties  in  the  territory  divided. 

CoUim  V.  Locke  was  a  case  in  the  privy  council.  The  ac- 
tion  was  brought.to  enforce  certain  articles  of  agreement  bv 
and  between  four  of  the  leading  master  stevedore  contracting 
firms  m  Melbourne,  Australia,  who  did  practically  all  the 
busmess  of  that  port.  The  court  (composed  of  Sir  Barnes 
Peacock,  Sir  Montague  E.  Smith,  and  Sir  Robert  P.  CoUier) 
descries  the  scope  and  purposes  of  the  agreement  and  the 
view  of  the  court  as  follows : 

"The  objects  which  this  agreement  has  in  view  are  to  narcel  out 
the  stevedoring  business  of  the  port  among  the  parti^  to  ^tTnd  2^ 
1 1"^""'  ^^Petition,  at  least  among  themseK^llso.  it  may  l^ 

~Pec?l*tr/^.*^  "^  P"^^  '^^  *^^  ^^^^-  Their  lo^dshlpl  ™re\ot 
S«^?fir  iir  iJS'*!*''  agi-eement  having  these  objects  is  invalid  if 
carried  into  effect  by  proper  means,— that  is,  by  £2851  oro  vision  J 
reasonably   necessary   for  the  purpose.-though  the  effectTf  S 

No  attempt  is  made  to  justify  the  view  thus  comprehen- 
sively  stated,  or  t»  support  it  by  authority,  or  to  reconcile 
It  with  tlie  general  doctrine  of  the  common  law  that  con- 
tracts restraining  competition,  raising  prices,  and  tending 
to  a  monopoly,  as  this  is  conceded  by  the  court  to  have  been, 
are  void.  The  court  ignores  the  public  interest  that  prices 
shall  be  regulated  by  competition,  and  assumes  the  power  in 
the  court  to  uphold  and  enforce  a  contract  securing  a  mo- 
nopoly if  it  affect  only  one  port,  so  as  to  be  but  a  partial  re- 
straint of  ti-ade.  The  ca^e  is  directly  at  variance  with  the 
decision  of  the  supreme  court  of  Illinois  in  More  v.  BennM 
140  111.  C.9,  29  N.  E.  888,  hereafter  discussed,  and  cannot  be 
reconciled  in  principle  with  many  of  the  other  cases  cited. 

The  Canadian  case  of  Ontario  Salt  Co.  v.  Merchants'  Salt 
Co,  is  another  one  upon  which  counsel  for  the  defendants 
rely.  That  was  the  decision  of  a  vice  chancellor.  Six 
salt  companies,  in  order  to  maintain  prices,  combined,  and 
put  their  business  under  the  control  of  a  committee,'  and 
agreed  not  to  sell  except  through  the  committee.  It  was 
held  that  because  it  appeared  that  there  were  other  salt 
companies  in  the  province,  and  because  the  combiners  denied 


H 


UNITED   STATES   V.  ADDYSTON   PIPE   &   STEEL   CO.      791 

Opinion  of  the  Court 
that  they  intended  to  raise  prices,  but  only  to  maintain  them, 
the  contract  of  union  was  not  in  unlawful  restraint  of  trade. 
The  conclusion  and  argument  of  the  court  in  Salt  Co    v 
Guthrie,  35  Ohio  St.  666,  hereafter  stated,  would  seem  to  be 
a  sufficient  answer  to  this  case. 

Kellogg  V,  Larhin,  3  Pin.  123,  was  an  early  case  in  Wiscon- 
sin, m  which  the  action  was  on  the  covenant  of  a  warehouse- 
man m  a  lease  of  his  warehouse,  by  which  he  agreed  to  de- 
vote  his  services  to  the  lessee  at  certain  compensation,  and 
not  to  purcliase  or  store  wheat  in  the  Milwaukee  market. 
The  covenant  was  held  valid.     Had  nothing  else  appeared  in 
the  case,  the  conclusion  would  have  been  clearly  right,  be- 
cause such  a  covenant  might  well  have  been  reasonably  nec- 
essary to  the  protection  of  the  lessee  in  his  enjoyment  of  the 
warehouse  and  the  good  will  of  the  lessor.     But  it  further 
appeared  that  this  lease,  with  the  covenant,  was  only  one  of  - 
many  such  executed  by  the  warehousemen  of  Milwaukee  to 
the  umted  grain  dealers  of  that  city,  to  enable  the  latter  to 
obtain  absolute  control  of  the  wheat  market  in  Milwaukee. 
The  court  held  the  latter  combination  valid  also.     The  de 
cision  cannot  be  upheld,  in  view  of  the  more  modern  authori- 
ties hereafter  referred  to. 

The  case  of  Leslie  v.  Lorillard,  110  N.  Y.  519, 18  N  E  363 
would  seem  to  be  an  authority  against  our  view.     In 'that' 
case  a  stockholder  sought  to  restrain  the  payment  of  an  an- 
nual  payment  about  to  be  made  by  the  Old  Dominion  Steam- 
ship Company  under  a  contract  by  which  it  bought  off  the 
Lorillard    Steamship   Company   from   continuing   in   coni- 
petiti^  with  it  m  carrying  passengers  and  freight  between 
New  York  and  Norfolk.     The  contract  was  held  valid,  al- 
though  It  had  no  purpose  except  the  restraining  of  compe- 
tition,  and,  so  far  as  appears,  the  obtaining  of  the  complete 
control  of  ih^  business.     The  case  is  rested  on  Match  Co  v 
Roeher,  106  N.  Y.  473,  13  N.  E.  419,  which  was  a  case  of  ihe 
purchase  of  property  and  good  will.     It  proceeds  on  the 
12861  general  proposition  "  that  competition  is  not  invari- 
ably  a  public  benefaction;   for  it  may  be  carried  on  to  such 
a  degree  as  to  become  a  general  evil,"  and  thus  leaves  it  <(» 
the  discretion  of  the  court  to  say  how  much  competition  is 
desirable,  and  how  much  is  mischievous,  and  accordingly 


792 


85  FEDEBAI.  BEPORTEB,  285. 


I 
'IIPPI 


Opinion  of  the  Ck>iirt. 

to  determine  whether  a  contract  is  bad  or  not.  The  case  is 
directly  opposed  to  Anderson  v.  Jett,  89  Ky.  375,  12  S  W 
•  670,  hereafter  cited.  It  should  be  said  that  nothing  appeara 
m  the  report  of  the  case  to  show  directly  that  the  purpose  of 
the  contract  was  to  reserve  the  entire  business  to  the  Dominion 
Company,  or  to  secure  to  it  the  power  of  regulating  prices, 
but  this  natural  inference  from  the  terms  of  the  contract  is 
not  negatived. 

The  case  of  3fognl  Steamship  Co,  v.  McGregor,  Goto  d  Co,, 
[1892]  App.  Cas.  25,  has  been  cited  to  sustain  the  position  of 
the  defendants.    It  does  not  do  so.    It  was  a  suit  for  dam- 
ages, brought  by  a  company  engaged  in  the  tea-carrying 
trade  at  Hankow,  China,  against  six  other  companies  engacred 
m  the  same  trade,  for  loss  inflicted  by  an  alleged  unlawful 
conspiracy  entered  into  by  them  to  drive  the  plaintiff  out  of 
the  trade,  and  to  obtain  control  of  the  trade  themselves.     It 
appeared  that  the  defendants  agreed  to  conform  to  a  plan  of 
association,  by  which  they  should  constantlv  underbid  the 
plaintiff,  and  take  away  his  trade  by  offering  exceptional 
and  very  favorable  terms  to  customers  dealing  exclusivelv 
with  the  members  of  the  association,  and  that  they  did  this  to 
control  the  business  the  next  season  after  he  had  been  thus 
driven  out  of  competition.     It  was  held  by  the  house  of 
lords  that  this  was  not  an  unlawful  and  indictable  conspiracy 
pvmg  rise  to  a  cause  of  action  by  the  person  injured  thereby ' 
but  It  was  not  held  that  the  contract  of  association  entered 
into  by  the  defendants  was  not  void  and  unenforceable  at 
common  law.    On  the  contrary,  Lord  Bramwell,  in  his  judg- 
ment (at  page  46),  and  Lord  Hannen,  in  his  (at  page  58) 
distinctly  say  that  the  contract  of  association  was  void  as  in 
restraint  of  trade;  but  all  the  law  lords  were  of  opinion  that 
contracts  void  as  in  restraint  of  trade  were  not  unlawful  in 
a  criminal  sense,  and  gave  no  right  of  action  for  damages  to 
one  mjured  thereby.    The  statute  we  are  considering  ex- 
pressly  gives  such  contracts  a  criminal  and  unlawful  char- 
acter.     It  is  manifest,  therefore,  that  whatever  of  relevancy 
the  Mogul  Steamship  Co.  Case  has  in  this  discussion  makes 
for,  rather  than  against,  our  conclusion. 

Two  other  cases  deserve  mention  here.    They  are  Roller 
Co,  V.  Cushman,  143  Mass.  353,  9  N.  E.  629,  and  Gloucester 


' 


UNITED  STATES  V.  ADDYSTON  PIPE  &  STEEL  CO.     793 

Opinion  of  tlie  Court. 
Isinglass  d;  Glm  Go.  v.  Russia  Cement  Co.,  154  Mass   92 
27  N.  E.  1005.    In  these  cases  it  was  held  that  contracts  in 
restraint  of  trade  are  not  invalid  if  they  aflfect  trade  in 
articles  which,  though  useful  and  convenient,  are  not  articles 
of  prime  or  public  necessity,  and  therefore  contracts  between 
dealers  made  to  secure  complete  control  of  the  manufacture 
and  sale  of  such  articles  were  supported.     In  the  first  case 
the  article  involved  was  a  fastening  of  a  certain  shade  roller, 
and  in  the  other  was  glue  made  from  fish  skins.     We  think 
the  cases  hereafter  cited  show  that  the  common  law  rule 
against  restraint  of  trade  extends  to  all  articles  of  merchan- 
dise, and  that  the  introduction  of  such  a  distinction  onlv 
furnishes  another  opportunity  for  courts  to  give  effect  to  the 
varying  economical  opinions  of  its  in-  [287]  dividual  mem- 
bers    It  might  be  difficult  to  say  why  it  was  any  more  im- 
portant to  prevent  restraints  of  trade  in  beer,  mineral  water, 
leather  clcth,  and  wire  cloth  than  of  trade  in  curtain  shades 
or  glue     However  this  may  be,  the  cases  do  not  touch  the 
case  at  bar  because  the  same  court,  in  TeUgraph  Co.  v.  Crane 
160  Mass.  50,  35  N  E.  98,  held  that  fire-alarm  telegraph  "- 
struments  were  articles  of  sufficient  public  necessity  lo  Lder 
unreasonable  restraints  of  trade  in  them  void,  and  certainty 
such  articles  are  not  more  necessary  for  public  use  than 
water,  gas,  and  sewer  pipe. 

1*1? wLT  ,"*''"'■  'T  "P*'°  ^'^'^  *''*""^1  «*  defendant 

^  if  Th.v  ,:       ""'  '1'^^""*'  ^''^^  °"  ^«"°g  »"  the  issue. 

sS/i      n       ''  *"*  "^'"'■'^  ^'*^"  '^^  '•"'^  ^«  have  already 
stated.    One  is  a  case  in  which  a  railroad  company  made  a 

agreed  to  do  the  sleeping-car  business  of  the  railway  com- 

otW  Z  "  °"'"^'"  t  r '*"^°"^'  «"«  «*  ^hi«h  ^as  that  no 
other  company  should  be  allowed  to  engage  in  the  sleenimr 
ear  business  on  the  same  line.  Ckicagl  ft.  l2  TlT 
Co^  v.PuTlman  Southern  Car  Co.,  139  U.  S.  79, 11  Sup.  Gt. 
490.  The  mam  purpose  of  such  a  contract  is  to  furnish 
deeping-car  facilities  to  the  public.  The  railroad  company 
may  discharge  this  duty  itself  to  the  public,  and  aUow  lo 
one  else  to  do  it,  or  it  may  hire  some  one  to  do  it,  and  to 
secure  the  necessary  investment  of  capital  in  the  discharge 


It 


794 


85  FEDEKAL  BEPORTER,  287. 


w 


! 

I 


i 


Oplniou  of  the  Court. 

of  the  duty,  may  secure  to  the  sleeping-car  company  the 
same  freedom  from  competition  that  it  would  have  itself  in 
discharging  the  duty.    The  restraint  upon  itself  is  properly 
proportioned  to,  and  is  only  ancUlary  to,  the  main  purpoi 
Of  the  contract,  which  is  to  secure  proper  facilities  to  the 
public.    Exactly  the  same  principle  applies  to  similarly  ex- 
clusive contracts  with  express  companies,  and  stock-yard  de- 
livery companies.    Exprest  Oases,  117  U.  S.  1,  6  Sun.  Gt 
5^,628;  Stock-Yards  Co.  v.  Keith,  139  U.  S.  128,  11  Sup! 
r*.;  i'  ^''^^^*'  **  Covers'  Stock-Yards  Co.  v.  Louisville 
f«     rf  •  ^f-'  ^}  ^-  ®-  ^PP-  252, 14  C.  C.  A.  290,  and  67  Fed. 
35.    The  fact  is  that  it  is  quite  difficult  to  conceive  how  com- 
petition would  be  possible  upon  the  same  line  of  railway 
between  sleeping-car  companies  or  express  companies.    Such 
contracts  involve  the  hauling  of  sleeping  cars  or  express 
cars  on  each  express  train,  the  assignment  of  oflSces  in  each 
station,  and  various  running  arrangements,  which  it  would 
be  an  intolerable  burden  upon  the  railroad  company  to  make 
and  execute  for  two  companies  at  the  same  time.    And  the 
same  is  true  of  contracts  with  a  stock  delivery  company. 
Ihe  railway  company  could  not  ordinarily  be  expected  to 
have  more  than  one  general  station  for  the  delivery  of  cattle 
m  any  one  town.    It  would  only  be  required  by  the  nature 
of  its  employment  to  furnish  such  facUities  as  were  reason- 
ably sufficient  for  the  business  at  that  place.    There  is  hardly 
more  objection  on  the  ground  of  public  policy  to  such  a  re- 
striction upon  a  railway  company  in  cases  like  these  than 
there  would  be  to  a  restriction  upon  a  lessor  not  to  allow  the 
subject-matter  of  the  lease  to  be  enjoyed  by  any  one  but  the 
lessee  during  the  lease.    The  privilege,  when  granted,  is 
hardly  capable  of  other  than  exclusive  enjoyment.    The  pub- 
lic interest  is  satisfactorUy  secured  by  the  requirement,  which 
may  be  enforced  by  any  member  of  the  pubUc,  to  [288]  wit 
fliat  the  charges  allowed  shaU  not  be  unreasonable,  and  the 
business  is  of  such  a  public  character  that  it  is  entirely  sub- 
ject to  legislative  regulation  in  the  same  interest 

Having  considCTed  the  cases  upon  which  the  counsel  for 
the  defendants  have  relied  to  maintain  the  proposition  that 
contracts  having  no  purpose  but  to  restrain  competition  and 
maintain  prices,  if  reasonable,  will  be  held  valid,  we  must 


I 


UNITED  STATES   V.  ADDYSTON  PIPE  &   STEEL  CO.     795 

Opinion  of  the  Court 
now  pass  in  rapid  review  the  cases  that  make  for  an  opposite 

In  People  v.  Sheldon,  139  N.  Y.  251,  34  N.  E.  785,  all  the 
coal  dealer  in  the  city  of  Lockport,  N.  Y.,  entered  into  a 
contract  of  association,  forming  a  coal  exchange  to  pre- 
vent competition  by  constituting  the  exchange  the  sole  au- 

tT^  1  ^^T  "^  ^  "^^^^  ^y  "^^^bers  for  coal 

sold  by  them,  and  the  price  was  thus  fixed.    The  court  ap- 
proved a  charge  to  the  juiy  that  even  if  this  was  merely  a 
combination   between  independent  coal   dealers  to  prevent 
competition  between  themselves  for  the  due  protection  of  the 
parties  to  it  against  ruinous  rivalry,  and  although  no  at- 
tempt was  made  to  charge  unreasonable  or  excessive  prices 
It  was  inmiical  to  trade  and  commerce,  whatever  might  be 
done  under  it,  and  was  within  the  state  statute  making  a 
conspiracy  injurious   to  trade  indictable.     Said  Andrew* 
C.  J.  (page  264, 139  N.  Y.,  and  page  789,  34  N.  E.)  ,^^'' 

ar;'"  L^aT^J^rrtrtoTa^e'^riXr;""*  T"^""""  '"  •"■"^ 
.    agreements  of  that  character     If  the^vlndlfvTf*^  'f  *"  •"'<"'"'"  «" 

u^-sff he%^n.te^rr '"^^^^^^^^^^ 

'U^TT'lJ^t"  T'  '^"f  *'  '^'"^'^  ^-  ^"^^ffion,  139  N.  Y.  105, 
d4  l^  K  790;  Leonard  v.  Poole,  114  N.  Y.  371,  21  N  E  707 

f^oiTpn'^f/v't  ^"^   '■  ^^^  "^^-^   Wire^lolJo: 
(Com.  PI.)  14  N.  Y.  Supp.  277. 

_l^Jlf orris  Bun  Coal  Co.  v.  Barclay  Coal  Co.,  68  Pa.  St 
173  five  coal  companies  controlling  the  bituminous  coal  trade 
in  Northern  Pennsylvania  agreed  to  aUow  a  committee  to  fix 

PiW  ?"™f  *'*'«"  ^"^  not  destroyed,  because  the  anthra- 
cite coal  and  Cumberland  bituminous  coal  wei^  sold  in  com- 

held  void,  as  in  illegal  restraint  of  trade  and  competition 
and  tending  to  injure  the  public.  In  Ncsfer  v.  Brewina  Co 
161  Pa.  St.  473, 29  Atl.  102, 45  brewers  in  Philafelphkmade 
an  agr^ment  to  sell  beer  in  Philadelphia  and  Camden  at  a 
certain  price  to  be  fixed  by  a  committee  of  their  nimiber 
Though  beer  could  hardly  be  said  to  be  an  article  of7r£^ 
necessity  like  coal,  yet,  as  it  was  an  article  of  merchaSd^ 


, 


796 


85  FEDERAL  REPORTER,  288. 
Opinion  of  the  Ck>urt 


the  contract  was  held  void,  as  in  restraint  of  trade,  and  tend- 
ing to  a  monopoly. 

In  Salt  Co,  V.  Guthrie,  35  Ohio  St  666,  the  salt  maniifac- 
tiirers  of  a  salt  producing  territory  in  Ohio,  with  some  excep- 
tions, combined  to  regulate  the  price  of  salt  by  preventing 
ruinous  competition  between  themselves,  and  agreed  to  sell 
only  at  prices  fixed  by  a  committee  of  their  number.  The 
supreme  court  of  Ohio  held  the  contract  void.  Judge  Mcll- 
vaine,  who  delivered  the  opinion  of  the  court,  said : 

[t8»]  "  The  clear  tendency  of  such  an  agreement  is  to  establish  a 
monopoly,  aud  to  destroy  competition  in  trade,  and  for  that  reason. 
on  the  ground  of  public  policy,  courts  will  not  aid  in  its  enforcement 
It  is  no  answer  to  say  that  competition  in  the  salt  trade  was  not  in 
fact  destroyed,  or  that  the  price  of  the  commodity  was  not  unreason- 
ably advanced.  Courts  will  not  stop  to  inquire  as  to  the  degree  of 
Injury  inflicted  upon  the  public.  It  Is  enough  to  know  that  the  inevi- 
table tendency  of  such  contracts  is  injurious  to  the  public." 

Other  Ohio  cases  which  presented  similar  facts,  and  in 
which  the  same  rule  was  enforced,  are  Emery  v.  Candle  Co,^ 
47  Ohio  St.  a20,  24  N.  E.  660,  and  Hoffman  v.  Brooks,  11 
WMy.  Law  Bui.  258. 

In  Anderson  v.  Jett,  89  Ky.  375,  12  S.  W.  670,  two  owners 
of  steamboats  running  on  the  Kentucky  river  made  an  agree- 
ment to  keep  up  rates,  and  divide  net  profits,  to  prevent  ruin- 
ous competition  and  reduced  rates.  The  contract  was  held 
void. 

In  Chapin  v.  Brown,  83  Iowa,  166,  48  N.  W.  1074,  the 
grocerymen  in  a  town,  in  order  to  avoid  a  trade  in  butter 
which  was  burdensome,  agreed  not  to  buy  any  butter  or  to 
take  it  in  trade  except  for  use  in  their  own  families,  so  as  to 
throw  the  business  into  the  hands  of  one  man  who  dealt  in 
butter  exclusively.  The  agreement  was  held  invalid,  because 
in  restraint  of  trade,  and  tending  to  create  a  monopoly. 

In  Craft  v.  McCononghy,  79  111.  346,  ^y^  grain  dealers  in 
Rochelle,  HI.,  agreed  to  conduct  their  business  as  if  inde- 
pendent of  each  other,  but  secretly  to  fix  prices  at  which  they 
would  sell  grain,  and  to  divide  profits  in  a  certain  propor- 
tion. This  was  held  void,  as  in  restraint  of  trade,  and  tend- 
ing to  create  a  monopoly.  In  More  v.  Bennett,  140  111.  69, 
29  N.  E.  888,  articles  of  association  entered  into  by  only  a 
part  of  the  stenographers  of  Chicago  to  fix  a  schedule  of 
prices,  and  prevent  competition  among  their  members  and  a 


UNITED   STATES   V.  ADDYSTON   PIPE   &   STEEL   CO.      797 

Opinion  of  the  Court 
consequent  reduction  of  prices,  was  held  void.    The  court 

^^^nZ'T^^: ir^ll^r^^l^l^^^.'^-^'^^f  ^  a  particular 
diminish  prices  to  a  ooint  nho^r^  fli  '  "."^  tliereby  to  enhance  or 
to  the  influence  o?  S^rest"r?^t^  °' ^i^)^,,':''''*. '"^^  f"""!  be  it  ieft 
policy.  Contracts  in  parOal  r^rata?^??^^^.'  I.'^ll™'^  *<*  P>"»lie 
are  those  entered  Into  by  a  Vendor  „?  „  k     ■  ""^  ^»«tains 

With  its  vendee,  by  which  the  vendor  agr^'^not"?^'en^  "?  ^^  ^"' 
business  within  a  limited  territory  -nnTil^  I  ■  ^"S^se  ">  the  same 
be  no  more  extensive  ^an"reTs;>n?hlv^r^*™'"*;  *°  "^  "«""•  ""^t 
or  the  vendee  in  the  enJo^nent'^'JX^tsinr prcha^^/?  •'™'"=""" 

V  ^''Lfrt^!^'^''}'^  "^  ''  '"  '^''•^t  conflict  with  Collins 

39  N  E  iX:  "  ^.T^l'  '"  ^'"•'^  "  Association,  155  111.  iZ, 
N  E.'  Ss         ""       ^  ^^  ^.Preservers  Co.,  m  111.  284,  41 

In  Association  v.  Niezerowski,  95  Wis.  129,  70  N  W  Ififi 

he  suit  was  on  a  note  given  in  pursuance  of  the  secret  ruies  of 

an  association  of  60  out  of  the  75  master  masons  in  Milwau 

b.,  by  which  all  bids  for  work  about  to  be  let  were  firTmade 

to  the  association,  and  the  lowest  bidder  was  then  required  to 

^in  "f.  '"  '"  '^'''  ^"'' ''  '""^  ^'^  --  -<>-  than  8  pl; 
cent   below  the  next  lowest  bidder,  more  than  C  per  ce^ 

might  be  added.    Each  member  was  requited  to  pf;  to  the 

association  6  per  cent,  of  his  estimates  when  due,  for   "ib^! 

ql.^«,t  distribution.    In  declaring  the  contract,  void,  thelurt 

stSalThI  Sste':?  'thoTof^hif  "^l^^l  '"  P"''""^  P°«<^y-  «"0 
between  whom  and  toe  assodaHon  „r  tL''""''=K^^''"'°2  '<>  ""'M.  «"« 
no  contract  reiations/'  ^*^"'*'<"'  °'  tbe  members  thereof  there  exist 

In  F«fc<z^  /.<,«,rf«.  Co.  V.Hercules  Powder  Co.,  96  Cal. 

th«;  ^'';  h'*"Jf  P"^'^"'"  «»'«P«ni''«  of  California  agr^d 
that  each  should  sell  at  a  price  to  be  fixed  by  a  committee  of 
their  representatives,  and  should  pay  over  i  the  oSers  thf 

Sallaks'Th"""."'  r'"  T'  ^  ''^^  P-P-t'o«  «*  the 
total  sales.    The  contract  was  held  void 

In  6>*7  Co.  V.  Adoue,  83  Tex.  650, 19  S.  W.  274,  five  owners 

a  Z7r^  :'™"^  "7^^''^  ""'^^  -  ^g^— t  not  o"; 

?he  four  „r  ".'^'!'^  P"*="-  ^"-^  ^'^'^'^'^^  profits  to 
was  heW  y^TL  r^-^''  ^••*'"«'^*  ""  the  guaranty.  It 
was  held  void,  as  restraining  trade,  and  tending  to  a  monop- 


798 


85  FEDERAL  REPORTER,  290. 


i 


!    ' 


i    I 


Opinion  of  the  Ctonrt. 
oly,  even  though  the  evidence  failed  to  establish  that  it 

effected  a  monopoly. 

In  Association  v.  Kock,  14  La.  Ann.  168,  eight  commercial 
firms  in  New  Orleans  holding  a  large  quantity  of  cotton  bag- 
ging entered  into  an  agreement  by  which  they  stipulated 
that  for  three  months  no  member  should  sell  a  bale  except  by 
a  vote  of  the  majority.  It  was  held  that  the  contract  was 
"  palpably  and  unequivocally  a  combination  in  restraint  of 
trade,  and  to  enhance  the  price  in  the  market  of  an  article  of 
primary  necessity  to  cotton  planters.  Such  combinations  aro 
contrary  to  public  order,  and  cannot  be  enforced  in  a  court 

of  justice." 

In  Hilton  v.  Eclcersley.  6  El.  &  Bl.  47,  it  was  held  that  an 
agreement  between  18  cotton  manufacturers  to  submit  to  the 
control  of  a  committee  of  their  number  for  12  months  the 
question  as  to  prices  to  be  paid  for  labor  and  the  terms  of 
employment,  in  order  to  resist  the  aggressions  of  an  associa- 
tion of  workingmen.  was  void  and  unenforceable,  because  in 

restraint  of  trade. 

In  Ui^ston  V.  WMtelegg,  63  L.  T.  (N.  S.)  4.55,  a  case  m 
the  queen's  bench  division,  before  Day  and  Lawrence,  JJ., 
the  action  was  brought  to  enforce  a  penalty  under  the  rules 
of  the  Bolton  Mineral  Water  Manufacturers'  Association, 
which  recited  that  the  object  of  the  association  was  to  main- 
tain the  price  of  mineral  water,  and  bound  the  members  for 
10  years  not  to  sell  at  le^^s  than  9d.  a  dozen  bottles,  or  at  not 
less  than  any  higher  price  fixed  by  the  committee,  on  penalty 
of  £10  for  each  violation.    Day,  J.,  said : 

"  If  a  contract  for  raising  prices  against  tlie  public  interest  is  a  con- 
tract in  restraint  of  trade,  this  is  undoubtedly  such  a  contract.  Dur- 
IS  the  laS  "^^  years'great  changes  have  taken  place  in  the  views 
of  the  public,  of  the  legislature,  and  therefore  of  the  J"^ges  on  the 
matter,  and  many  old-fashioned  offenses  have  disappeared ;  but  the 
1-11  G  still  obtains  that  combination  for  the  mere  purpose  of  ra  sing 
pr  ces  s  not  enforceable  in  a  court  of  law.  This  contract  is  illegal 
Kelense  of  not  being  enforceable  It  is  ^otneo^^^}^''^  " 
should  be  such  as  to  form  the  ground  of  criminal  proceedings. 

In  the  foregoing  cases  the  only  consideration  of  the  agree- 
ment restraining  the  trade  of  one  party  was  the  agreement  of 
the  other  to  the  same  effect,  and  there  was  no  relation  of  part- 
nership, or  of  vendor  and  vendee,  or  of  employer  and  em- 
ploye.   Where  such  relation  exists  between  the  parties,  as 


fi 


UNITED  STATES   V.  ADDYSTON   PIPE  &  STEEL  00.     799 

Opiulon  of  the  Ctourt. 

already  stated,  restraints  are  usually  enforceable  if  com- 
mensurate only  with  the  reasonable  pro-  [291]  tection  of 
the  covenantee  in  respect  to  the  main  transactions  affected 
by  the  contract  But,  in  recent  years,  even  the  fact  that  the 
contract  IS  one  for  the  sale  of  property  or  of  businass  and 
good  will,  or  for  the  making  of  a  partnership  or  a  corpora- 
tion  has  not  saved  it  from  invalidity  if  it  could  be  shown 

hat  It  was  only  part  of  a  plan  to  a<Miuire  all  the  propertv 
used  m  a  business  by  one  management  with  a  view  to  estab- 
lishing a  monopoly.  Such  cases  go  a  step  further  than  those 
already  considered.  In  them  the  actual  intent  to  monopoli7.e 
must  appear.  It  is  not  deemed  enough  that  the  mere  ten- 
dency of  the  provisions  of  the  contract  should  be  to  restrain 

IZ^TT        n  "^'^   "^   '^^   '■^^^'•"'"t   "f   competition 
ceases  t^  be  ancillary,  and  becomes  the  main  purpose  of  the 

con  ract  and  the  transfer  of  property  and  good  wiU,  or  the 

partnership  agreement,  is  merely  ancillary  and  subordinate 

to  that  purpose.    The  principal  cases  of  this  class  are  Rich 

f        .^    J     '"^^^  ^-  ^^^^'"-''^^  ^^^  54  Hun,  366,  7  N.  y' 

N  ToTQ  '■  nr      /■  ^'^'''^''"^  ^'^  ^''•'  ^^  Ohio  St.  137,  30 
,■',7-      I  i  ^^''"«/««''««'»^  Co.  V.  /{lots,  44  Fed.  721-  Dis- 
*^^^'^9<&  Cattle  Feeding  Go.  v.  People,  156  111.  448,  41  N.  E 
188;  Carhon  Co.  v.  McMillin,  119  N.  Y.  46,  23  N.  E   530- 

Pat  39?:  ■       '■       '^*'''  ''''•  ""■  ^"y^"^  ^«  <^»I-  387!  18 

tain"thf  if'""  *f  "'^  ''T  "^***^'  ^^^'^  «••«  "^hers  which  sus- 
ta  n  the  general  principle,  but  in  them  there  exists  the  ad- 
ditional reason  for  holding  the  contracts  invalid  that  the 
parties  were  engaged  in  a  quasi  public  employment.  Thev 
are  6^.65,  ^.  Gas  Co.,  130  U.  S.  396,  9  Sup.  Ct!  563;  Peol 
J.  Chicago  Gas  Trust  Co.,  130  111.  268,  22  N.  E  798  •  Stoch 
ton  v.  Railroad  Co.,  50  N.  J.  Eq.  52,  k  Atl.  £4 ;  ^frt" 
Tramp.  Co.  v.  Ohio  River  Pipe-Line  Co.,  22  W   Va    600- 


1 1 


800 


as  FEDERAL.  REPORTER,  291. 


Opinion  of  the  Court 

Upon  this  review  of  the  law  and  the  a^t^f '*;««'/".  ^"' 
have  no  doubt  that  the  association  of  the  defendants,  how- 
ever reasonable  the  prices  they  fixed  however  ^^f^^'^ 
petition  they  had  to  encounter,  and  however  great  the  neces 
Sy  for  curbing  themselves  by  joint  agreement  from  commit- 
ing  financial  suicide  by  Ul-advised  f'-P/Wion,  was^vo  d 
,t  ^mn,on  law,  because  in  restraint  of  trade,  and  tending   o 
I  monopolv.    But  the  facts  of  the  case  do  not  ^^^J^  ^^'^ 
go  so  far  as  this,  for  they  show  that  the  attempted  ]U^fica- 
tion  of  this  association  on  the  grounds  stated  is  without 

"xheVefendants,  being  manufacturers  and  vendors  of  cast- 
iron  pipe,  entered  into  a  combination  to  raise  the  Pnc^J"' 
pipe  for  all  the  states  west  and  south  of  New  1  ork,  Penn 
^fvania,  and  Virginia,  constituting  <=^--^-^}^y^^'^^^^l 
three-quarters  of  the  territory  of  the  United  States,  and  sig 
nificantly  caUed  by  the  associates  "pay  temtory.      Theu 
J,int  anil  output  was  220,000  tons.   The  total  capacrty  of  all 
he  other  cast-iron  pipe  manufacturers  m  the  pay  f  rr.tor> 
was  170,500  tons.    Of  this,  45,000  tons  was  the  ca-  [89^1 
Icitv  of  mills  in  Texas,  Colorado,  and  Oregon,  so  far.  re^ 
S  ?«.m  that  part  of  the  pay  territory  where  the  demand 
was  considerable  Ihat  necessary  freight  -^es  exduded Jhem 
from  the  possibility  of  competmg,  and  12,000  tons  was  the 
J^Sbie  aLal  capacity  of  a  mill  at  St.  I--' -J^^ J^ 
practically  under  the  same  management  as  that  of  one  of 
the  defendants'  mills.    Of  the  remainder  of  the  ^d  s  m  pay 
territory  and  outside  of  the  combination,  one  was  at  Colum- 
ST  So    two  in  northern  Ohio,  and  one  m  Michigan. 
Their  ag^egate  possible  amiual  capacity  was  about  one- 
half  thelSial  annual  output  of  the  defendants'  mills.    They 
were   it  wUl  be  observed,  at  the  extreme  northern  end  of 
r^ay  territory,  while  the  defendants;  mills  at  Cincinnati, 
Wsi,  Chattanooga,  and  South  Pittsburg   and  Anms- 
ton  and  Bessemer,  were  grouped  much  nearer  to  the  center 
S  tie   pay   territory.    The   freight   upon   cast-iron   pipe 
Lounts  to  a  considerable  percentage  of  the  prioe  a  twhid. 
manufacturers  can  deUver  it  at  any  great  distance  from  the 
pl^  of  manufacture.    Within  the  margin  of  the  freight 
Jer  ton  which  Eastern  manufacturers  would  have  to  pay  to 


UNITED  STATES   V.  ADDYSTON   PIPE  &  STEEL  CO.     801 

Opinion  of  the  Court 
deliver  pipe  in  pay  territory,  the  defendants,  by  controlling 
two-thirds  of  the  output  in  pay  territory,  were  practically 
able  to  fix  prices.    The  competition  of  the  Ohio  and  Michi- 
gan mills,  of  course,  somewhat  affected  their  power  in  this 
respect  in  the  northern  part  of  the  pay  territory ;    but    the 
further  south  the  place  of  delivery  was  to  be,  the  more  com- 
plete the  monopoly  over  the  trade  which  the  defendants 
were  able  to  exercise,  within  the  limit  already  described. 
Much  evidence  is  adduced  upon  affidavit  to  prove  that  de- 
fendants had  no  power  arbitrarily  to  fix  prices,  and  that 
they  were  always  obliged  to  meet  competition.    To  the  ex- 
tent that  they  could  not  impose  prices  on  the  public  in  ex- 
cess of  the  cost  price  of  pipe  with  freight  from  the  Atlantic 
seaboard  added,  this  is  true;    but,  within  that  limit,  they 
could  fix  prices  as  they  chose.    The  most  cogent  evidence 
that  they  had  this  power  is  the  fact,  everywhere  apparent 
in  the  record,  that  they  exercised  it.    The  details  of  the  way 
in  which  It  was  maintained  are  somewhat  obscured  by  the 
manner  in  which  the  proof  was  adduced  in  the  court  below 
upon  affidavits  solely,  and  without  the  clarifying  effect  of 
cro^-exammation,  but  quite  enough  appears  to   leave  no 
doubt  of  the  ultimate  fact.    The  defendants  were,  by  their 
combination,  therefore  able  to  deprive  the  public  in  a  large 
territory  of  the  advantages  otherwise  accruing  to  them  from 
the  proximity  of  defendants'  pipe  factories,  and,  by  keeping 
prices  just  low  enough  to  prevent  competition  by  Eastern 
manufacturers,  to  compel  the  public  to  pay  an  increase  over 
what  the  price  would  have  been,  if  fixed  by  competition  be- 
tween defendants,  nearly  equal  to  the  advantage  in  freight 
rates  enjoyed  by  defendants  over  Eastern  competitors.    The 
defendants  acquired  this  power  by  voluntarily  agreeing  to 

^^  I  ^^^'?^  ^""^^  ^y  ^^^'^  committee,  and  by  allowing 
the  h'ghest  bidder  at  the  secret  "  auction  pool  "  to  become  the 
lowest  bidder  of  them  at  the  public  letting.  Now,  the  re- 
straint thus  imposed  on  themselves  was  only  partial.  It 
did  not  cover  the  United  States.  There  was  not  a  complete 
monopoly     It  was  tempered  by  the  fear  of  competition,  and 

tf^f^,  7f  *  r'*  ***  *^^  P"*^-  B"*  ^^^  •'^'-tainlv  does 
not  [393]  take  the  contract  of  association  out  of  the  an- 

11808— VOL  1—06  M 51 


800 


m  FEDERAL  REPORTEB,  291. 
Opinion  of  the  CJourt 


Upon  this  review  of  the  law  and  the  authorities,  we  can 
have  no  doubt  that  the  association  of  the  defendants,  how- 
ever reasonable  the  prices  they  fixed,  however  great  the  com- 
petition they  had  to  encounter,  and  however  great  the  neces- 
sity for  curbing  themselves  by  joint  agreement  from  commit- 
ting financial  suicide  by  ill-advised  competition,  was  void 
at  common  law,  because  in  restraint  of  trade,  and  tending  to 
a  monopoly.  But  the  facts  of  the  case  do  not  require  us  to 
go  so  far  as  this,  for  they  show  that  the  attempted  justifica- 
tion of  this  association  on  the  grounds  stated  is  without 
foundation. 

The  defendants,  being  manufacturers  and  vendors  of  cast- 
iron  pipe,  entered  into  a  combination  to  raise  the  prices  for 
pipe  for  all  the  states  west  and  south  of  New  York,  Penn- 
sylvania, and  Virginia,  constituting  considerably  more  than 
three-quarters  of  the  territory  of  the  United  States,  and  sig- 
nificantly called  by  the  associates  "  pay  territory."  Their 
joint  anual  output  was  220,000  tons.  The  total  capacity  of  all 
the  other  cast-iron  pipe  manufacturers  in  the  pay  territory 
was  170,500  tons.  Of  this,  45,000  tons  was  the  ca-  [292] 
pacity  of  mills  in  Texas,  Colorado,  and  Oregon,  so  far.  re- 
moved from  that  part  of  the  pay  territory  where  the  demand 
was  considerable  that  necessary  freight  rates  excluded  them 
from  the  possibility  of  competing,  and  12,000  tons  was  the 
possible  annual  capacity  of  a  mill  at  St.  Louis,  which  was 
practically  under  the  same  management  as  that  of  one  of 
the  defendants'  mills.  Of  the  remainder  of  the  mills  in  pay 
territory  and  outside  of  the  combination,  one  was  at  Colum- 
bus, Ohio,  two  in  northern  Ohio,  and  one  in  Michigan. 
Their  aggregate  possible  annual  capacity  was  about  one- 
half  the  usual  annual  output  of  the  defendants'  mills.  They 
were,  it  will  be  observed,  at  the  extreme  northern  end  of 
the  pay  territory,  while  vhe  defendants'  mills  at  Cincinnati, 
Louisville,  Chattanooga,  and  South  Pittsburg,  and  Annis- 
ton,  and  Bessemer,  were  grouped  much  nearer  to  the  center 
of  the  pay  territory.  The  freight  upon  cast-iron  pipe 
amounts  to  a  considerable  percentage  of  the  price  at  which 
manufacturers  can  deliver  it  at  any  great  distance  from  the 
place  of  manufacture.  Within  the  margin  of  the  freight 
per  ton  which  Eastern  manufacturers  would  have  to  pay  to 


UNITED   STATES   V.  ADDYSTON   PIPE   &   STEEL   CO.      801 

Opinion  of  the  Court 

deliver  pipe  in  pay  territory,  the  defendants,  by  controlling 
two-thirds  of  the  output  in  pay  territory,  were  practically 
able  to  fix  prices.     The  competition  of  the  Ohio  and  Michi- 
gan mills,  of  course,  somewhat  affected  their  power  in  this 
respect  in  the  northern  part  of  the  pay  territory;    but,  the 
further  south  the  place  of  delivery  was  to  be,  the  more  com- 
plete the  monopoly  over  the  trade  which  the  defendants 
were  able  to  exercise,  within  the  limit  already  described. 
Much  evidence  is  adduced  upon  affidavit  to  prove  that  de- 
fendants had  no  power  arbitrarily  to  Rx  prices,  and  that 
they  were  always  obliged  to  meet  competition.     To  the  ex- 
tent that  they  could  not  impose  prices  on  the  public  in  ex- 
cess of  the  cost  price  of  pipe  with  freight  from  the  Atlantic 
seaboard  added,  this  is  true;    but,  within  that  limit,  they 
could  fix  prices  as  they  chose.     The  most  cogent  evidence 
that  they  had  this  power  is  the  fact,  everywhere  apparent 
in  the  record,  that  they  exercised  it.     The  details  of  the  way 
in  which  it  was  maintained  are  somewhat  obscured  by  the 
manner  in  which  the  proof  was  adduced  in  the  court  below, 
upon  affidavits  solely,  and  without  the  clarifying  effect  of 
cross-examination,  but  quite  enough   appears  to   leave  no 
doubt  of  the  ultimate  fact.     The  defendants  were,  by  their 
combination,  therefore  able  to  deprive  the  public  in  a  large 
territory  of  the  advantages  otherwise  accruing  to  them  from 
the  proximity  of  defendants'  pipe  factories,  and,  by  keeping 
prices  just  low  enough  to  prevent  competition  by  Eastern 
manufacturers,  to  compel  the  public  to  pay  an  increase  over 
what  the  price  would  have  been,  if  fixed  by  competition  be- 
tween defendants,  nearly  equal  to  the  advantage  in  freight 
rates  enjoyed  by  defendants  over  Eastern  competitors.     The 
defendants  acquired  this  power  by  voluntarily  agreeing  to 
sell  only  at  prices  fixed  by  their  committee,  and  by  allowing 
the  highest  bidder  at  the  secret  "  auction  pool  "  to  become  the 
lowest  bidder  of  them  at  the  public  letting.     Now,  the  re- 
straint thus  imposed  on  themselves  was  only  partial.     It 
did  not  cover  the  United  States.     There  was  not  a  complete 
monopoly.    It  was  tempered  by  the  fear  of  competition,  and 
It  affected  only  a  part  of  the  price.     But  this  certainly  does 
not  [293]  take  the  contract  of  association  out  of  the  an- 
11808— VOL  1—06  M 51 


802 


m  FEDERAL   REPORTER,  293. 


i 


»■ 


Opinion  of  the  Ciinrt. 

iHilliiig  effect  of  the  rule  against  monopolies.  In  U.  S.  v. 
E.  C.  K,*i(jht  Co,,  150  U.  S.  1,  1€>,  15  Sup.  Ct.  255,  Chief 
Justice  Fuller,  in  speaking  for  the  court,  said : 

"Again,  all  the  authorities  agree  that,  in  order  to  vitiate  a  contract 
or  combination,  it  is  not  essential  that  its  result  should  he  a  complete 
monopoly.  It  is  gufficicnt  if  it  really  tends  to  that  end,  and  to  de- 
prive the  public  of  the  advantages  which  flow  from  free  competition." 

It  has  been  earnestly  pressed  upon  us  that  the  prices  at 
which  the  east-iron  pipe  was  sold  in  pay  territor}'  were  rea- 
sonable. A  great  many  affidavits  of  purchasers  of  pipe  in 
pay  territory,  all  drawn  by  the  same  hand  or  from  the  same 
model,  are  produced,  in  which  the  affiants  say  that,  in  their 
opinion,  the  prices  at  which  pipe  has  been  sold  by  de- 
fendants have  l)een  reasonable.  We  do  not  think  the  issue 
an  important  one,  l)ecanse,  as  already  stated,  we  do  not  think 
that  at  common  law  there  is  any  question  of  reasonableness 
open  to  the  courts  with  reference  to  such  a  contract.  Its 
tendency  was  certainly  to  give  defendants  the  power  to 
charge  unreasonable  prices,  had  they  chosen  to  do  so.  But, 
if  it  were  important,  we  should  unhesitatingly  find  that  the 
prices  charged  in  the  instances  which  were  in  evidence  were 
unreasonable.  The  letters  from  the  manager  of  the  Chatta- 
nooga foundry  written  to  the  other  defendants,  and  discuss- 
ing the  prices  fixed  by  the  association,  do  not  leave  the  slight- 
est doubt  upon  this  point,  and  outweigh  the  perfunctory 
affidavits  prwluced  by  the  defendants.  The  cost  of  produc- 
ing pipe  at  Chattanooga,  together  witli  a  reasonable  profit, 
did  not  exceed  $15  a  ton.  It  could  have  been  delivered  at 
Atlanta  at  $1?  to  $18  a  ton,  and  yet  the  lowest  price  which 
that  foundry  was  permitted  by  the  rules  of  the  association  to 
bid  was  $24.25.  Tlie  same  thing  was  true  all  through  pay 
territory  to  a  greater  or  less  degree,  and  especially  at  "  re- 
served cities." 

Another  aspect  of  this  contract  of  association  brings  it 
within  tlie  term  used  in  the  statute,  *'a  conspiracy  in  re- 
straint of  trade."  A  conspiracy  is  a  combination  of  two  or 
more  persons  to  accomplish  an  unlawful  end  by  lawful 
means  or  a  lawful  end  by  unlawful  means.  In  the  answer 
of  the  defendants,  it  is  averred  that  the  chief  way  in  which 
cast-iron  pipe  is  sold  is  by  contracts  let  after  competitive 


UNITED   STATES   V.  ADDYSTON   PIPE   &   STEEL   CO.     803 

Opmion  of  the  Court 
bidding  invited  by  the  intending  purchaser.     It  would  have 
much  interfered  with  the  smooth  working  of  defendants' 
association  had  its  existence  and  purposes  become  known  to 
the  public.     A  part  of  the  plan  was  a  deliberate  attempt  to 
create  m  the  minds  of  the  members  of  the  public  inviting 
bids  the  belief  that  competition  existed  between  the  defend- 
ants.    Several  of  the  defendants  were  required  to  bid  at 
every  letting,  and  to  make  their  bids  at  such  prices  that  the 
one  already  selected  to  obtain  the  contract  should  liave  the 
lowest  bid.     It  is  well  settled  that  an  agreement  between  in- 
tending bidders  at  a  public  auction  or  a  public  letting  not  to 
bid  against  each  other,  and  thus  to  prevent  Competition,  is  a 
fraud  upon  the  intending  vendor  or  contractor,  and  the  en- 
suing sale  or  contract  will  be  set  aside.    Breslin  v.  Brown, 
24  Ohio  St  565;  Atcheson  v.  Motion,  43  N.  Y.  147;  Loyd  v 
Malone,  23  111.  41;   Wooton  v.  HinJde,  20  Mo.  290;  Phippen 
V.  Stickney,  3  Mete.    (Mass.)   384:  Kem-ney  v.   Taylor    15 
How.  494,  [294]  519;  WUhnr  v.  How,  8  Johns.  444;  Han- 
nah V.  Fife,  27  Mich.  172;    Gihhs  v.  Smith,  115  Mass.  592; 
Swan  V.  Chorpenning,  20  Cal.  182 ;    Gardiner  v.  Morse,  25 
Me.  140;    Ingram  v.  Ingram,  49  N.  C.  188;    BHshane  v. 
Adams,  3  N.  Y.  129;  Woodruff  v.  Be^-ry,  40  Ark.  251 ;  Wald, 
Pol.  Cont.  310,  note  by  Mr.  Wald,  and  cases  cited.    The  case 
of  Jones  V.  North,  L.  R.  19  Eq.  426,  to  the  contrary,  cannot 
be  supported.    The  largest  purchasers  of  pipe  are  municipal 
corporations,  and  they  are  by  law  required  to  solicit  bids  for 
the  sale  of  pipe  in  order  that  the  public  may  get  the  benefit 
of  competition.     One  of  the  means  adopted  by  the  defend- 
ants in  their  plan  of  combination  was  this  illegal  and  fraudu- 
lent  effort  to  evade  such  laws,  and  to  deceive  intending  pur- 
chasers.    No  matter  what  the  excuse  for  the  combination  by 
defendants  in  restraint  of  trade,  the  iUegaUty  of  the  means 
stamps  It  as  a  conspiracy,  and  so  brings  it  within  that  term 
of  the  federal  statute. 

The  second  question  is  whether  the  trade  restrained  by  the 
combination  of  the  defendants  was  interstate  trade.  The 
mills  of  the  defendants  were  situated,  two  in  Alabama,  two 
in  Tennessee,  one  in  Kentucky,  and  one  in  Ohio.  The  in- 
variable custom  in  sales  of  pipe  required  the  seller  to  deliver 
the  pipe  at  the  place  where  it  was  to  be  used  by  the  buyer, 


804 


86   FEDERAL   REPORTER,  294. 


Opinion  of  the  Court 

and  to  include  in  the  price  the  cost  of  delivery.  The  con- 
tracts, as  the  answer  of  the  defendants  avers,  were  invariably 
mad©  after  public  letting  at  the  home,  and  in  the  state,  of 
the  buyer.  The  pay  territory,  sales  in  which  it  was  the  pro- 
fessed object  of  the  defendants  to  regulate  by  their  contract  of 
association,  included  36  states.  The  cities  which  were  espe- 
cially reserved  for  the  benefit  of  the  defendants  were  Atlanta 
and  Anniston,  reserved  to  the  Anniston  mill,  in  Alabama; 
New  Orleans  and  Chattanooga,  reserved  to  the  Chattanooga 
mill,  in  Tennessee;  St.  Louis  and  Birmingham,  reserved  to 
the  Bessemer  mill,  in  Alabama;  Omaha,  reserved  to  the 
South  Pittsburg  mill,  in  Tennessee;  Louisville,  Xew  Albany, 
and  Jeffersonville,  reserved  to  Dennis  Long  &  Co.,  of  Louis- 
¥ill©;  and  Cincinnati,  Newport,  and  Covington,  reserved 
to  the  Addyston  mill,  in  Ohio.  Under  the  agreement, 
every  request  for  bids  from  any  place,  except  the  reserved 
cities,  sent  to  any  one  of  the  defendants,  was  submitted  to 
the  central  committee,  who  fixed  a  price,  and  the  contract 
was  awarded  to  that  member  who  would  agree  to  pay  for 
the  benefit  of  the  other  members  of  the  association  the 
largest  "bonus."  In  the  case  of  the  reserved  cities,  the 
successful  bidder  having  l>een  already  fixed,  the  association 
determined  the  price  and  bonus  to  be  paid.  The  contract  of 
association  restrained  every  defendant  except  the  one  se- 
lected to  receive  the  contract  from  soliciting  (in  good  faith) 
or  making  a  contract  for  pipe  with  the  intending  purchaser 
at  all,  and  restrained  the  defendant  so  selected  from  making 
the  contract  except  at  the  price  fixed  by  the  committee.  In 
cases  of  pipe  to  be  purchased  in  any  state  of  the  36  in  pay 
territory,  except  4,  each  one  of  the  defendants,  by  his  con- 
tract of  association,  restrained  his  freedom  of  trade  in  re- 
spect to  making  a  contract  in  that  state  for  the  sale  of  pipe 
to  be  delivered  across  state  lines;  five  of  them  agreeing  not 
to  make  such  a  contract  at  all,  and  the  sixth  agreeing  not  to 
make  the  contract  below  a  fixed  price.  With  respect  to  sales 
in  Ohio,  Kentucky,  [295]  Tennessee,  and  Alabama,  the  effect 
of  the  contract  of  association  was  to  bind  at  least  three, 
sometimes  four,  and  sometimes  five,  of  the  defendants  not 
to  make  a  contract  at  all  in  those  states  for  the  sale  and 


UNITED   STATES   V,  ADDYSTON   PIPE   &   STEEL   CO.     805 

Opinion  of  the  Court 

delivery  of  pipe  from  another  state;  and  if  the  job  were 
assigned,  as  it  might  be,  to  one  living  in  a  different  state  from 
the  place  of  the  contract  and  delivery,  its  effect  would  be  to 
bind  him  not  to  sell  and  deliver  pipe  across  state  lines  at  less 
than  a  certain  price.  It  thus  appears  that  no  sale  or  pro- 
posed sale  can  be  suggested  within  the  scope  of  the  contract 
of  association  with  respect  to  which  that  contract  did  not 
restrain  at  least  three,  often  four,  more  often  five,  and  usually 
all,  of  the  defendants  in  the  exercise  of  the  freedom,  which 
but  for  the  contract  would  have  been  theirs,  of  selling  in  one 
state  pipe  to  be  delivered  from  another  state  at  any  pric'3  they 
might  see  fit  to  fix.  Can  there  be  any  doubt  that  this  was  a 
restraint  of  interstate  trade  and  commerce?  Mr.  Justice 
Field,  in  Ooimty  of  Mobile  v.  Kimball,  102  U.  S.  691,  696, 
said: 

"Commerce  with  foreign  countries  and  among  tlie  states,  strictly 
considered,  consists  in  intercourse  and  traffic,  and  the  transiwrtatiou 
and  ti-ansit  of  persons  and  property,  as  well  as  the  purchase,  sale,  and 
exchange  of  commodities." 

In  Robbins  v.  Taking  Dist.,  120  U.  S.  489,  7  Sup.  Ct.  592, 
a  law  of  Tennessee,  which  imposed  a  tax  on  all  "  drunimei-s  " 
who  solicited  orders  on  samples,  was  held  unconstitutional 
in  so  far  as  it  applied  to  the  drummer  of  an  Ohio  firm,  who 
was  soliciting  orders  for  goods  to  be  sent  from  Ohio  to  pur- 
chasers in  Tennessee,  on  the  ground  that  it  was  a  tax  on  in- 
terstate commerce.  In  delivering  the  opinion  of  the  court  in 
that  case,  Mr.  Justice  Bradley  said  (page  497,  120  IT.  S. 
and  page  596,  7  Sup.  Ct.)  that  a  tax  on  the  sale  of  goods,  or 
the  offer  to  sell  them  before  they  are  brought  into  the  state, 
was  clearly  a  tax  on  interstate  commerce.     He  further  said : 

•*  The  negotiation  of  sales  of  goods  which  are  in  another  state,  for 
the  purpose  of  introducing  them  into  the  state  in  which  the  negotia 
tion  is  made,  is  interstate  commerce." 

The  principle  thus  announced  has  been  reaffirmed  by  the 
court  in  Corson  v.  Maryland,  120  U.  S.  502,  7  Sup.  Ct.  655 ;  in 
Asher  V.  Texas,  128  U.  S.  129,  9  Sup.  Ct.  1;  in  Stoutenhim/k 
V.  Hennick,  129  U.  S.  141,  9  Sup.  Ct.  256;  and  in  Brennmi  \, 
City  of  Titusville,  153  U.  S.  289,  14  Sup.  Ct.  829.  The  point 
of  these  cases  was  emphasized  by  the  distinction  taken  in 
Emert  v.  Missouri,  156  U.  S.  296,  15  Sup.  Ct.  367,  in  which 


806 


85  FEDERAL   REPORTER,  295. 


Opinion  of  the  C!ourt 

the.  validity  of  a  law  of  Missouri,  imposing  a  tax  on  peddlers, 
was  in  question.  The  plaintiff  in  error,  convicted  under  the 
law  of  failure  to  pay  the  tax,  was  the  selling  agent  of  a  New 
Jersey  sewing  machine  manufacturing  company,  who  carried 
the  machine  for  sale  with  him  in  his  wagon.  It  was  held 
that  in  such  a  case,  the  machine  having  become  part  of  the 
mass  of  property  in  the  state,  the  tax  on  the  i>eddler  was 
not  a  tax  on  interstate  conmierce. 

If,  then,  the  soliciting  of  orders  for,  and  the  sale  of,  goods 
in  one  state,  to  be  delivered  from  another  state,  is  interstate 
commerce  in  its  strictest  and  highest  sense,— such  that  the 
states  are  excluded  by  the  federal  constitution  from  a  right 
to  regulate  or  tax  the  same, — it  seems  clear  that  contracts  in 
restraint  of  such  solicita-  [296]  tions,  negotiations,  and 
sales  are  contracts  in  restraint  of  interstate  commerce.  The 
anti-trust  law  is  an  effort  by  congress  to  regulate  interstate 
commerce.  Such  commerce  as  the  states  are  excluded  from 
burdening  or  regulating  in  any  way  by  tax  or  otherwise, 
because*  of  the  power  of  congress  to  regulate  interstate  com- 
merce, must,  of  necessity,  l)e  the  commerce  which  congress 
may  regulate,  and  which,  by  the  terms  of  the  anti-trust  law, 
it  has  regulated.  We  can  see  no  escape  from  the  conclu- 
sion, therefore,  that  the  contract  of  the  defendants  was  in 
restraint  of  interstate  conunerce. 

The  learned  judge  who  dismissed  the  bill  at  the  circuit  was 
of  opinion  that  the  contract  of  association  only  indirectly 
affected  interstate  commerce,  and  relied  chiefly  for  this  con- 
clusion on  the  decision  of  the  supreme  court  in  the  case  of 
U.  S.  V.  E.  C.  Knight  Co,,  156  U.  S.  1,  15  Sup.  Ct.  249.  In 
that  case  the  bill  filed  under  the  anti-trust  law  sought  to 
enjoin  the  defendants  from  continuing  a  union  of  substan- 
tially all  the  sugar  refineries  of  the  country  for  the  refining  of 
raw  sugars  The  supreme  court  held  that  the  monopoly 
thus  effected  was  not  within  the  law,  because  the  contract  or 
agreement  of  union  related  only  to  the  manufacture  of  refined 
sugar,  and  not  to  its  sale  throughout  the  country ;  that  manu- 
facture preceded  commerce,  and  although  the  manufacture 
under  a  monopoly  might,  and  doubtless  would,  indirectly  af- 
fect both  internal  and  interstate  commerce,  it  was  not  wkhin 
the  power  of  congress  to  regulate  manufactures  within  a  state 


UNITED   STATES   V.  ADDYSTON   PIPE   &   STEEL   CO.     807 

Opinion  of  the  Court 

on  that  ground.  The  case  arose  on  a  bill  in  equity  filed  by 
the  United  States  under  the  anti-trust  act,  praying  for  relief 
in  resi^ect  of  certain  agreements  under  which  the  American 
Sugar-Refining  Company  had  purchased  the  stock  of  four 
Philadelphia  sugar-refining  companies  with  shares  of  its  own 
stock,  whereby  the  American  Company  acquired  nearly  com- 
plete control  of  the  manufacture  of  refined  sugar  in  this 
country.  The  relief  sought  was  the  cancellation  of  the 
agreements  of  purchase,  the  redelivery  of  the  stock  to  the 
parties  respectively,  and  an  injunction  against  the  further 
performance  of  the  agreements  and  further  violations  of 
the  act.  The  chief  justice,  in  delivering  the  judgment  of 
the  court,  said : 

"The  argument  is  that  the  power  to  control  the  manufacture  of 
refined  sugar  is  a  monopoly  over  a  necessity  of  life,  to  the  enjoyment 
of  which  by  a  large  part  of  the  population  of  the  United  States" inter- 
state commerce  is  indispensable,  and  that,  therefore,  the  general  gov- 
ernment, in  the  exercise  of  the  power  to  regulate  commerce,  may 
repress  such  monopoly  directly,  and  set  aside  the  instrmrents  whicli 
have  created  it.  *  ♦  ♦  Douijtless  the  power  to  control  the  manu- 
facture of  a  given  thing  involves  in  a  certain  sense  the  control  of  its 
disposition,  but  this  is  a  secondary,  and  not  the  primary,  sense;  and, 
although  the  exercise  of  that  power  may  result  in  bringing  the  opera- 
tion of  conunerce  into  play,  it  does  not  control  it,  and  it  affects  it  only 
incidentally  and  indirectly.  Commerce  succeeds  to  manufacture,  and 
is  not  a  part  of  it.  The  power  to  regulate  conunerce  is  the  power  to 
prescribe  the  rule  by  which  commerce  shall  be  governed,  and  is  a 
IK)wer  independent  of  the  power  to  suppress  monopoly.  But  it  may 
operate  in  repression  of  monopoly  whenever  that  corner  within  the 
rules  by  which  conmierce  is  governed,  or  whenever  the  transaction  is 
itself  a  monopoly  of  conunerce.  *  ♦  ♦  The  regulation  of  commerce 
applies  to  the  subjects  of  commerce,  and  not  to  matters  of  internal 
police.  Contracts  to  buy,  sell,  or  exchange  goods  to  l>e  transported 
among  the  several  states,  the  transportation  and  its  instrumentalities, 
and  articles  bought,  sold,  or  exchanged  for  the  purpose  of  such 
transit  among  the  states,  or  put  in  the  way  of  transit,  mav  be  regu- 
lated ;  but  this  is  because  they  form  part  of  interstate  trade  or  com- 
merce. The  fact  [297]  that  an  article  is  manufactured  for  export 
to  another  state  does  not  of  itself  make  it  an  article  of  interstate 
wnunerc-e,  and  the  intent  of  the  manufacturer  does  not  determine 
the  time  when  the  article  or  product  passes  from  the  control  of  the 
state,  and  belongs  to  commerce." 

The  chief  justice  then  refers  to  the  prior  case  of  Coe  v. 
Errol,  ms  IL  8.517,6  Sup.  Ct.  475,  in  which  it  was  held  that 
logs  Avere  not  made  subjects  of  interstate  commerce  by  the 
mere  intent  of  the  owner  to  ship  them  into  another  state,  so 
that  state  taxation  upon  them  could  be  regarded  as  a  burden 
upon  interstate  commerce,  until  that  intent  had  been  carried 
so  far  into  execution  that  "  they  had  commenced  their  final 


808 


85  FEDEBAL  REPOKTEB,  297. 


Opinion  of  the  Court 

movement  from  the  state  of  their  origin  to  that  of  their  desti- 
nation." Kidd  V.  Pearson,  128  U.  S.  1,  9  Sup.  Ct.  6,  is  also 
referred  to.  In  that  ease  it  was  held  that  a  law  of  Iowa, 
which  forbade  the  manufacture  of  spirituous  liquor  except 
for  certain  purposes,  was  not  in  conflict  with  the  commerce 
clause  of  the  federal  constitution,  although  it  appeared  by 
proof  that  the  liquor  was  to  be  manufactured  only  with  in- 
tent to  ship  the  same  out  of  the  state.  The  chief  justice  fur- 
ther said : 

**  It  was  in  the  light  of  well-settled  principles  that  the  act  of  July  2. 
189D,  was  framed.  CongreRs  did  not  attempt  thereby  to  assert  the 
power  to  deal  with  monopoly  directly  as  such ;  or  to  limit  and  restrict 
the  rights  of  corporations  created  by  the  states  or  the  citizens  of  the 
states  in  the  acquisition,  control,  or  disposition  of  proi)erty ;  or  to  reg- 
ulate or  prescribe  the  price  or  prices  at  which  such  proi)ertv  or  the 
prmlucts  tliereof  should  be  sold :  or  to  make  criminal  the  acts  of  per- 
sons in  the  acquisition  and  control  of  property  which  the  states  of 
their  residence  or  creation  sanctioned  or  permitted.  Aside  from  the 
provisions  applicable  where  congress  might  exercise  municipal  power, 
what  the  law  struck  at  was  combinations,  contracts,  and  conspiracies 
to  monopolize  trade  and  commerce  among  the  several  states  or  with 
foreign  nations ;  but  the  contracts  and  acts  of  the  defendants  related 
exclusively  to  the  acquisition  of  the  Philadelphia  refineries  and  the 
business  of  sugar  refining  in  Pennsylvania,  and  bore  no  direct  relation 
to  commerce  between  the  states  or  with  foreign  nations.  The  object 
was  manifestly  private  gain  in  the  manufacture  of  the  commodity,  but 
not  through  the  control  of  interstate  or  foreign  commerce.  *  *  *  * 
There  was  nothing  In  the  proofs  to  indicate  any  intention  to  put  a  re- 
straint upon  trade  or  commerce,  and  the  fact,  as  we  have  seen,  that 
trade  or  commerce  might  be  indirectly  affected,  was  not  enough  to 
^ititle  complaints  to  a  decree.*' 

^  We  have  thus  considered  and  quoted  from  the  decision  in 
tie  Knight  Case  at  length,  because  it  was  made  the  principal 
ground  for  the  action  of  the  court  below,  and  is  made  the 
chief  basis  of  the  argument  on  behalf  of  the  defendants  here. 
It  seems  to  us  clear  that,  from  the  beginning  to  the  end  of 
the  opinion,  the  chief  justice  draws  the  distinction  between 
a  restraint  upon  the  business  of  manufacturing  and  a  re- 
straint upon  the  trade  or  commerce  between  the  states  in  the 
articles  after  manufacture,  with  the  manifest  purpose  of 
showing  that  the  regulating  power  of  congre&s  under  the 
constitution  could  affect  only  the  latter,  while  the  former  was 
not  under  federal  control,  and  rested  wholly  with  the  states. 
Among  the  subjects  of  commercial  regulation  by  congress, 
he  expressly  mentions  **  contracts  to  buy,  sell,  or  exchange 
goods  to  be  transported  among  the  several  states,"  and  leaves 


UNITED   STATES   V.  ADDYSTON   PIPE   &   STEEL   CO.     809 

Opinion  of  the  Court 

it  to  be  plainly  inferred  that  the  statute  does  embrace  com- 
binations and  conspiracies  which  have  for  their  object  to  re- 
strain, and  which  necessarily  operate  in  restraint  of,  the 
freedom  of  such  contracts.  The  citation  of  the  case  of  Coe  v. 
[298]  Errol  was  apt  to  show  that  merchandise,  before  its 
shipment  across  state  lines,  was  not  within  the  regulating 
power  of  congress,  and,  a  fortiori,  that  its  manufacture  was 
not;  while  Kidd  v.  Pearson  clearly  made  the  distinction 
between  the  absence  of  power  in  congress  to  control  manufac- 
turing merely  because  the  manufacturer  intends  to  add  to 
interstate  conmierce  with  the  product,  and  the  power  which 
congress  has  to  prevent  obstructions  to  interstate  trans- 
portation in  the  product  when  made.  But  neither  of  these 
cases  controls  the  one  now  under  consideration.  The  subject- 
matter  of  the  restraint  here  was  not  articles  of  merchandise 
or  their  manufacture,  but  contracts  for  sale  of  such  articles 
to  be  delivered  across  state  lines,  and  the  negotiations  and 
bids  preliminary  to  the  making  of  such  contracts,  all  of 
which,  as  we  have  seen,  do  not  merely  affect  interstate  com- 
merce, but  are  interstate  commerce.  It  can  hardlv  be  said 
that  a  combination  in  restraint  of  what  is  interstate  com- 
merce does  not  directly  affect  and  burden  that  conmierce. 
The  error  into  which  the  circuit  court  fell,  it  seems  to  us,  Avas 
in  not  observing  the  difference  between  the  regulating  power 
of  congress  over  contracts  and  negotiations  for  sales  of 
goods  to  be  delivered  across  state  lines,  and  that  over  the 
merchandise,  the  subject  of  such  sales  and  negotiations. 
The  goods  are  not  within  the  control  of  congress  until  they 
are  in  actual  transit  from  one  state  to  another.  But  the 
negotiations  and  making  of  sales  which  necessarily  involve 
in  their  execution  the  delivery  of  merchandise  across  state 
lines  are  interstate  commerce,  and  so  within  the  regulating 
power  of  congress  even  before  the  transit  of  the  goods  in 
performance  of  the  contract  has  begun. 

The  language  of  the  chief  justice  in  the  last  passages  quoted 
above  from  his  opinion,  upon  which  so  much  reliance  was 
placed  by  the  circuit  court  and  the  defendants'  counsel  at 
the  bar,  is  to  be  interpreted  by  the  facts  of  the  case  before  the 
court.     The  statement  in  the  opinion  that  congress  did  not 


^1^*  85  FEDERAL   REPORTER,  298. 

Opinion  of  the  CJourt 

intend  l)y  the  ant i -trust  act  to  limit  and  restrict  the  rights  of 
persons  and  corporations  in  the  mere  acquisition,  control,  or 
disposition  of  property,  or  to  regulate  the  prices  at  which 
such  property  should  be  sold,  or  to  make  criminal  the  acts 
of  persons  or  corporations  in  the  acquisition  and  control  of 
property  which  tlie  states  of  their  residence  or  creation  sanc- 
tioned or  permitted,  does  not  imply  that  congress  did  not 
intend  to  strike  down  any  combination  -which  had  for  its 
object  the  restraint  and  attempted  monopoly  of  trade  and 
connnerceamojiga  given  number  of  states  in  specified  articles 
of  commerce,  and   the  resuhing  power  to  regulate   prices 
therein.       The  obstacle  in  the  way  of  granting  the  relief 
asked  in  ^  .  aS.  v.  E.  C.  Khi<jhf  Co.  was  (to  use  the  language 
of  the  chief  justice)  that  "  the  contracts  and  acts  of  the  de- 
fendant related  exclusively  to  the  acquisition  of  tlie  Phila- 
delphia refineries,  and   the  business  of  sugar  refining  in 
Peimsylvania,  and  bore  no  direct  relation  to  commerce  be- 
tween  th(^  states  or  with   foreign   nations."    The  sui>reme 
court  distinctly  adjudged  that  ''what  the  law  struck  at  was 
combinations,  contracts,  and  conspiracies  to  monopolize  trade 
and  commerce  among  the  several  states  or  with  foreign  na- 
tions.''   That  the  defendants  in  the  prasent  case  combined 
and  contracted  with  eacli  other  for  the  purpose  of  restraining 
trade  [290]  and  connnerce  among  the  states  covered  by  their 
agreement,   in   the  articles  manufactured   by   them,   is  too 
clear  to  admit  of  dispute.     In  the  E.  C.  Knight  Co.  Case 
there  was,  the  supreme  court  said,  "  notliing  in  the  proofs 
to  indicate  any  intention  to  i)nt  a  restraint  upon  trade  or 
commerce.''     In  the  present  case  the  proofs  shoAV  that  no 
one  of  the  companies  in  this  pipe-trust  combination  was  al- 
lowed t(»  send  its  goods  out  of  the  state  in  which  they  were 
manufactured  except  u[)on  the  terms  established  by  the  agree- 
ment.    Can  it  Im  doubted  that  this  was  a  direct  restraint 
upon  interstate  connnerce  in  those  goods?     To  give  the  lan- 
guage (»f  the  opinion  in  the  Knight  Case  the  construction 
contended  for  by  defendants  would  be  to  assume  that  the 
court,  after  having  in  the  clearest  way  distinguished  the 
case  it  was  deciding  from  a  case  like  the  one  at  bar,  for  the 
very  pur[)ose  of  not  deciding  any  case  but  the  one  before  it, 
then  priMt^eded  to  confuse  the  cases  by  using  language  which 


UNITED   STATES   V.  ADDYSTON   PIPE   &   STEEL   00.     811 

Opinion  of  the  Court. 

decided  both.    We  cannot  concur  in  such  an  interpretation  of 
the  opinion. 

Counsel  for  the  defendants  also  find  in  the  language  of 
Mr.  Justice  Peckham,  in  the  case  of  U.  S.  v.  Trans-Missouri 
F'reight  Ass'n,  166  U.  S.  290,  313,  326,  IT  Sup.  Ct.  540,  an 
argument  against  our  conclusion  in  this  case.  The  question 
in  that  case  was  whether  the  anti-trust  act  applied  to  rail- 
road companies  which  combined  in  establishing  traffic  rates 
for  the  transportation  of  persons  and  property.  It  was  vig- 
orously contended  on  behalf  of  the  railroad  companies  that 
the. act  was  never  intended  to  apply  to  them,  because  con- 
gress had  already  provided  for  their  regulation  by  the  inter- 
state commerce  law.  In  meeting  this  position,  Mr.  Justice 
Peckham  used  the  following  language  (page  313,  166  U.  S., 
and  page  548,  IT  Sup.  Ct.)  : 

"  We  have  held  that  the  trust  act  did  not  apply  to  a  eompanv  engaged 
m  one  state  in  the  refining  of  sugar  under  fircunistanees  detailed  in 
the  case  of  U.  ^.  v.  E,  C.  Knight  Co.,  156  U.  S.  1,  15  Sup.  Ct.  249, 
because  the  refining  of  sugar  under  those  circumstances  bore  no  dis- 
tinct relation  to  commerce  I)etween  the  states  or  with  foreign  nations 
To  exclude  agreements  as  to  rates  by  competing  railroads  for  the 
transportation  of  articles  of  connnerce  betAveen  the  states  would  leave 
little  for  the  act  to  take  effect  upon." 

Again,  upon  page  326,  1(U;  U.  8.,  and  page  553,  17  Sup. 
Ct.,  Justice  IVf'kham  repeats  the  same  idea: 

"  In  the  Knight  Co.  Case,  supra,  it  was  said  that  this  statute  ap- 
plied to  monopolies  in  restraint  of  interstate  or  international  trade  or 
commerce,  and  not  to  inonciwlies  in  the  manufacture  even  of  a  neces- 
sary of  life.  It  is  readily  seen  from  tliese  cases  that,  if  the  act  does 
not  apply  to  the  transportation  of  commodities  bv  railroads  from  one 
state  to  another  or  to  foreign  nations,  its  application  is  so  greatly 
limited  that  the  whole  act  might  .is  well  be  held  inoperative." 

This  is  not  a  declaration  that  cases  might  not  arise  within 

the  statute  which  were  not  combinations  of  common  carriers 

in  relation  to  interstate  transportation.     The  language  used 

means  nothing  more  than  that,  if  such  combinations  were 

excluded  from  the  effect  of  the  act,  the  great  and  manifest 

scope  for  the  operation  of  a  federal  statute  on  such  a  subject 

would  be  denied  to  it.     To  give  the  language  more  weight 

would  be  to  violate  the  first  canon  for  the  construction  of  a 

judicial  opinion  laid  down  by  Chief  Justice  Marshall  in 

Cohens  v.  Virginia,  6  ^Vlieat.  264,  340,  399 : 

[300]  "  It  is  a  maxim,  not  to  be  disregarded,  that  general  expressions 
in  every  opinion  are  to  be  taken  in  connection  with  the  case  in  which 


812 


85  FEDERAL   REPORTER,  300. 
Opinion  of  the  Court 


those  expi'essions  are  used.  If  they  go  beyond  the  case,  they  may  be 
respei'ted,  but  oiight  not  to  control  the  Judgment  in  a  subseciuent  suit 
when  the  very  point  is  presented  for  decision.  Tlie  reason  for  this 
maxim  is  obvious.  The  question  actually  before  the  court  is  investi- 
gated with  care,  and  considered  In  its  fuli  extent.  Other  principles 
which  may  ser%e  to  illustrate  it  are  considered  in  their  relation  to  the 
case  de(  ided,  but  their  possible  bearing  on  all  cases  is  seldom  com- 
pletely investigated." 

In  m  Greene,  52  Fed.  104,  cited  for  the  defendants,  is  to  be 
distinguished  from  the  case  at  bar  in  exactly  the  same  way  as 
the  Knight  Co.  Ca.se.  The  indictment  against  Greene,  drawn 
under  the  anti-trust  act,  charged  him  with  being  a  member 
of  a  combination  to  acquire  possession  and  control  of  75  per 
cent,  of  the  distilleries  of  the  country,  for  the  pnrjiose  of 
fixing  the  price  of  whisky,  and  controlling  the  trade  in  it 
between  the  states.  The  immediate  object  of  the  combination 
was  a  monopoly  in  manufacture.  The  effect  upon  interstate 
trade  in  whisky  was  as  indirect  as  was  the  monopoly  of  the 
refining  of  sugar  in  the  Knight  Co.  Case  upon  interstate 
trade  in  that  article. 

The  case  of  Dueher  Watch  €me  Mfg.  Co,  v.  E.  Howard 
Wateh  <&  Clock  Co,,Z^  U.  S.  App.  16, 14  C.  C.  A.  14.  and  66 
Fed.  637,  cannot  be  regarded  as  an  authority  upon  either  of 
the  questions  considered  in  this  case,  because  of  the  division  of 
opinion  among  the  judges.  It  was  a  suit  brought  by  a  watch 
manufacturing  company  against  20  other  companies  to  re- 
cover damages  for  a  boycott  of  tlie  plaintiff.  The  averment 
was  that  the  defendants  had  agi'eed  not  to  sell  any  goods 
manufactured  by  them  to  any  person  dealing  with  the  plain- 
tiff, and  had  caused  this  to  be  known  in  the  trade,  and  that 
they  fixed  an  arbitrary  price  for  the  sale  of  their  goods  to 
the  public,  and,  because  plaintiff's  competition  interfered 
with  their  maintaining  this  price,  they  were  using  the  boycott 
against  plaintiff,  to  stifle  competition.  The  pleadings  were 
not  drawn  with  care  to  bring  the  case  within  the  anti-trust 
law.  The  questions  arose  on  demurrer  to  the  bill.  Judge 
Laeombe  held  that  the  facts  stated  gave  rise  to  no  cause  of 
action;  Judge  Shipman  held  that  the  averments  were  not 
sufficient  to  show  that  the  trade  i-estrained  was  interstate; 
and  Judge  Wallace  dissented,  on  the  ground  that  a  cause  of 
action  was  sufficiently  stated,  and  that  the  restraint  was  upon 


UNITED  STATES  V,  ADDYSTON  PIPE  &  STEEL  CO.        813 
Opinion  of  the  CJourt- 

interstate  commerce.  These  varying  views  decided  the  case, 
but  they  certainly  furnish  no  precedent  or  authority. 

There  is  one  case  which  seems  to  be  quite  like  the  one  at 
bar.  It  is  the  case  of  ZJ.  S.  v.  Jellico  Mountain  Coal  dj  Coke 
Co,,  46  Fed.  432,  a  decision  by  Judge  Key  at  the  circuit.  The 
owners  of  coal  mines  in  Kentucky  entered  into  a  contract  of 
association  with  coal  dealers  in  Nashville,  by  Avhich  they 
agreed  that  the  mine  owners  bhould  only  sell  to  dealers  who 
w^ere  members,  and  the  members  should  only  buy  from  mine 
owners  who  were  members,  and  that  the  dealers  should  sell 
at  certain  fixed  prices,  of  which  the  mine  owners  should  re- 
ceive a  proportionate  part,  after  payment  of  freight,  and 
that  prices  might  be  raised  by  a  vote  of  the  association,  in 
which  case  the  addition  to  the  price  should  be  divided  between 
the  dealers  and  [301]  the  mine  owners.  The  contract  recited 
that  it  was  intended  to  establish  and  maintain  the  price  of 
coal  at  Nashville.  It  was  held  to  be  an  attempt  to  create  a 
monopoly  in  the  interstate  trade  in  coal  between  Kentucky 
and  Nashville,  Tenn.,  and  it  was  enjoined. 

It  is  pressed  upon  us  that  there  was  no  intention  on  the 
part  of  the  defendants  in  this  case  to  restrain  interstate  com- 
merce, and  in  several  affidavits  the  managing  officers  of  the 
defendants  make  oath  that  they  did  not  know  what  inter- 
state comnierce  was,  and,  therefore,  that  they  could  not  have 
combined  to  restrain  it.  Of  course,  the  defendants,  like 
other  persons  subject  to  the  law,  cannot  plead  ignorance  of 
it  as  an  excuse  for  its  violation.  They  knew  that  the  combi- 
nation they  were  making  contemplated  the  fixing  of  prices 
for  the  sale  of  pipe  in  36  different  states,  and  that  the  pipe 
sold  would  have  to  be  delivered  in  those  states  from  the  4 
states  in  which  defendants'  foundries  were  situate.  They 
knew  that  freight  rates  and  transportation  were  a  most  im- 
portant element  in  making  the  price  for  the  pipe  so  to  be 
delivered.  They  charged  the  successful  bidder  with  a  bonus 
to  be  paid  upon  the  shipment  of  the  pipe  from  his  state  to 
the  state  of  the  sale.  Under  their  first  agreement,  the  bonus 
to  be  paid  by  the  successful  bidder  was  varied  according  to 
the  state  in  which  the  sale  and  delivery  were  to  be  made.  It 
seems  to  us  clear  that  the  contract  of  association  was  on  its 
face  an  extensive  scheme  to  control  the  whole  commerce 


C^-JLjt 


85   FEDERAL   REPORTER,  301. 


Opinion  of  the  Court. 

among  3G  states  in  cast-iron  pipe,  and  that  the  defendants 
were  fully  aware  of  the  fact  whether  they  appreciated  the 
application  to  it  of  the  anti-trust  law  or  not. 

Much  has  been  said  in  argument  as  to  the  enlargement  of 
the  federal  governmental  functions  in  respect  of  all  trade 
and  industry  in  the  states  if  the  view  we  have  expressed  of 
the  application  of  the  anti-trust  law  in  this  case  is  to  prevail, 
and  as  to  the  interference  which  is  likely  to  follow  with  the 
control  which  the  states  have  hitherto  been  understoo«l  to  have 
over  contracts  of  the  character  of  that  before  us.  We  do  not 
announce  any  new  doctrine  in  holding  either  that  contracts 
and  negotiations  for  the  sale  of  merchandise  to  be  delivered 
across  state  lines  are  interstate  conunerce  (see  cases  above 
cited),  or  that  burdens  or  restraints  upon  such  commerce  con- 
gress may  pass  appro[)iiate  legislation  to  prevent,  and  courts 
of  the  United  States  may  in  proper  proceedings  enjoin.  In  re 
iJehs,  158  r.  S.  564.  i:.  Su]>.  Ct.  !KX>.  If  this  extends  federal 
jurisiliction  into  fields  not  befoie  occupied  by  the  general 
government,  it  is  not  because  such  jurisdiction  is  not  within 
the  limits  allowed  hy  tlie  constitution  of  the  United  States. 

The  prayer  of  the  petition  that  pipe  in  transportation  un- 
der the  contract  of  association  be  forfeited  in  a  proceeding 
in  equity  like  this  is,  of  course,  improper,  and  must  be  denied. 
The  sixth  section  of  the  anti -trust  act,  after  providing  that 
property  tnvned  and  in  transportation  from  one  state  to 
another  or  to  a  foreign  country  under  a  contract  inhibited 
by  the  act  "  shall  be  forfeited  to  the  United  States,"  contin- 
ues "  and  may  be  seized  and  condemned  by  like  proceedings 
as  those  provided  by  law  for  the  forfeiture,  seizure  and  con- 
denmation  of  property  imported  into  the  United  States  con- 
trary to  law."  This  rtMiuires  a  like  procedure  to  that  pre- 
scribed in  sections  |3021  a300-;3391,  Eev.  St.,  and  involves  a 
trial  by  jury.  The  only  remedy  which  can  be  afforded  in  this 
proiwding  is  a  decree  of  injunction. 

For  the  reasons  given,  the  decree  of  the  circuit  court  dis- 
missing the  bill  must  be  reversed,  with  instructions  to  enter 
a  decree  for  the  United  States  perpetually  enjoining  the 
defendants  from  maintaining  the  combination  in  cast-iron 
pipe  described  in  the  bill,  and  substantially  admitted  in  the 
tui-w  er.  and  from  doing  any  business  thereunder. 


[465J 


MOORE    V.  UNITED   STATES. 
Opiniou  of  the  Court. 

MOORE  V.  UNITED  STATES. 


815 


(Circuit  Court  of  Appeals,  Eiglith  Circuit.     February  14,  1898) 

[85  Fe<l.,  4(>5.] 

Jurisdiction  of  Federal  Courts—Admission  of  Territory  \s  State- 
Statute.— In  1895  the  plaintiff  in  error  was  indicted,  with  others 
in  a  district  court  of  the  territory  of  Utah,  under  section  3  of  the 
act  of  July  2,  1890   (20  Stat.  209),  which  declares  illegal  "every 
*     *     ♦    combination     *     *     *     in  restraint  of  trade  or  commerce  in 
any  territory."    In  January,  189G,  Utah  was  admitted  as  a  state 
and  thereafter  the  case  was  transferred  to  the  federal  court  for  the 
district  of  Utah,  where,  after  hearing  on  demurrer  to  the  indictment 
the  plaintifle  in  error  was  tried  and  convicted.    Held,  on  writ  of 
error,  that  neither  under  the  act  of  congress  authorizing  Utah  to 
form  a  state  government  (28  Stat.  Ill,  112),  nor  the  constitution  of 
Utah  (article  24,  §  7),  nor  by  other  legislation,  was  jurisdiction  con- 
ferred upon  the  federal  court  to  proceed  with  the  case.« 

Same.— ffeW,  further,  that  the  case  did  not  come  within  the  provisions 
of  Rev.  St.  §  13,  regulating  the  effect  of  the  rei)eal  of  statutes  for 
the  admission  of  Utah  as  a  state  did  not  operate  to  repeal  the  act  of 
July  2,  1890,  which  still  applies  to  the  territories  of  the  United 
States. 


In  Error  to  the  Circuit  Court  of  the  United  States  for  the 
District  of  Utah. 

B,  Harhness,  George  Sutherland,  and  WaUemar  Van  Gott 
for  plaintiff  in  error.  ' 

/.  TF.  Judd,  United  States  Attorney,  and  IF.  L.  Maginnis 
Assistant  United  States  Attorney.  ' 

Before  Brewer,  Circuit  Justice,  Sanborn,  Circuit  Judge, 
and  EiNER,  District  Judge. 

RiNER,  District  Judge. 

November  4,  1895,  the  plaintiff  in  error,  with  others,  was 
indicted  m  the  district  court  within  and  for  the  Third  judi- 
cial district  of  the  territory  of  Utah,  Salt  Lake  county,  for 
unlawfully  engaging  in  a  combination  in  restraint  of  trade 
and  commerce  in  that  territory.  The  indictment  charged 
that  the  defendants  therein  named,  "  on  the  22d  day  of  Octo- 

o  Syllabus  copyrighted,  1898,  by  West  Publishing  Co. 


816 


S5  TEDERAL  REPORTER,  465. 
Opinion  of  the  CJourt 


ber  in  the  year  of  our  Lord  1895,  in  the  district  and  territory 
aforesaid,  and  within  the  jurisdiction  of  this  court,  did  will- 
fully and  unlawfully  engage  in  a  combination  in  restraint  of 
trade  and  commerce  in  said  territory  in  this :  That  the  said 
defendant  B.  L.  Carpenter,  being  then  and  there  the  agent 
in  Salt  Lake  City,  Salt  Lake  county,  territory  of  Utah,  of 
the  Pleasant  Valley  Coal  Company,  a  corporation  engaged  in 
mining  coal,  and  selling  the  same  at  wholesale  to  dealers  in 
coal  in  said  Salt  Lake  City,  and  the  said  defendant  F.  H. 
Moore,  being  then  and  there  the  agent  of  the  Union  Pacific 
Coal  Company,  a  corporation  engaged  in  mining  coal  and  sell- 
ing the  same  at  wholesale  to  dealers  in  coal  in  said  Salt  Lake 
City,  and  each  and  all  of  the  said  defendants  other  than  said 
Carpenter  and  said  Mooi*e  being  then  and  there  engaged  in 
the  business  of  baying  coal  and  selling  the  same  at  retail  la 
said  Salt  I^ake  City,  and  each  and  all  of  said  defendants 
except  said  Carpenter  and  said  Moore  being  then  and  there 
members  of  an  association  designated  and  known  as  the  Salt 
Lake  [466]  Coal  Exchange,  said  Salt  Lake  Coal  Exchange 
being  a  voluntary  association  of  nearly  all  of  the  dealers  in 
coal  at  retail  in  said  Salt  Lake  City,  and  not  a  corporation; 
each  and  all  of  the  defendants  did  then  and  there  combine 
together  to  prevent  any  person  engaged  in  the  Inisiness  of 
buying  coal  and  selling  the  same  at  retaU  in  said  Salt  Lake 
City,  and  not  a  member  of  said  exchange,  and  any  person 
desiring  to  engage  in  such  business  in  said  citv,  and  not  a 
member  of  the  said  coal  exchange,  from  purchasing  coal 
from  said  Union  Pacific  Coal  Company  and  from  the  said 
Pleasant  Valley  Coal  Company  at  as  low  a  price  as  that  for 
which  the  same  kind  of  coal  was  being  sold  by  said  corpora- 
tions to  members  of  said  Salt  Lake  Coal  Exchange,  and  to 
make  the  price  of  coal  from  such  corporations  to  dealers  in 
coal  at  retail  in  said  city,  and  persons  desiring  to  engage  in 
dealing  in  coal  at  retail  in  said  city,  who  are  not  members  of 
said  exchange,  so  great  as  to  prohibit  and  prevent  them  pur- 
chasing  coal  of  said  corporations,  and  selling  the  same  at 
retail  in  said  city,  and  to  unlawfully  raise,  augment,  and  in- 
crease the  price  of  coal  at  retail  in  said  Salt  Lake  City,  and 
to  destroy  free  competition  in  the  sale  of  coal  in  said  city,  and 
to  compel  the  consumers  of  coal  in  said  city  to  pay  therefor 


MOORE   V,  UNITED   STATES. 


817 


Opinion  of  the  Court 
the  prices  fixed  by  the  said  coal  exchange ;  that  in  pursuance  of 
said  combination  said  F.H.  Moore,  as  agent  of  said  Union  Pa- 
cific Coal  Company,  did  on  the  23d  day  of  October,  1895,  re- 
fuse  to  sell  to  one  T.  P.  Lewis,  who  was  then  and  there  desir- 
ous  of  engaging  in  the  business  of  buying  coal  and  selling  the 
same  at  retail  in  said  Salt  Lake  City,  and  who  was  not  a 
member  of  said  coal  exchange,  a  carload  of  what  is  known  as 
Rock  Springs  coal,'  which  said  Moore,  as  said  agent,  was 
selling  to  the  members  of  the  said  coal  exchange  in  car-load 
lots  at  three  and  "/,,,  dollars  ($3.75)  a  ton,  except  at  the 
price  of  five  ($5)  dollars  per  ton,  which  was  then  the  retail 
price  of  said  coal  in  said  city,  and  refused  to  sell  said  coal 
at  all  except  to  the  members  of  said  exchange;  and  in  pur- 
suance of  said  combination  the  said  Carpenter,  as  agent  of 
said  Pleasant  Valley  Coal  Company,  in  said  countv,  on  the 
said  23d  day  of  October,  1895,  refused  to  sell  to  said  T.  P. 
Lewis,  who  was  then  and  there  desirous  of  engaging  in  the 
business  of  buying  coal  and  selling  the  same  at  retail  in  said 
Salt  Lake  City,  and  who  was  not  a  member  of  said  exchange, 
a  car  load  of  coal,  said  Carpenter  having  said  coal  for  s^le 
as  said  agent,  for  the  reason  that  said  Lewis  was  not  a  mem- 
ber of  said  exchange,— against  the  peace,  and  contrary  to  the 
form  of  the  statutes  of  the  United  States  in  such  case  made 
and  provided."    December  14,  1895,  the  defendants  were  ar- 
raigned in  the  territorial  court,  and  severally  pleaded  not 
guilty  to  this  indictment.    January  4,  1896,  Utah  was  ad- 
mitted into  the  Union  as  a  state  upon  an  equal  footing  with 
the  original  states.    President's  Proclamation,  29  Stat.  876 
Thereafter  this  case  was  transferred  to  the  circuit  court  of 
the  United  States  for  the  district  of  Utah.    November  U 
1896,  the  defendants  obtained  leave  of  court  (counsel  for  the 
United  States  consenting  thereto)  to  withdraw  their  pleas 
of  not  guilty  theretofore  entered  in  the  territorial  court,  and 
to  file  a  demurrer  to  the  indictment  upon  the  grounds  (1) 
that  the  indictment  charged  no  offense;  (2)  that  it  set  out 
no  means  by  which  the  alleged  combination  was  to  [467] 
be  effected;  (3)  for  the  reason  that  it  stated  no  act  or  fact 
to  show  that  the  alleged  combination  was  in  restraint  of 
trade;  (4)  that  the  acts  charged  as  overt  acts  were  not  shown 

11808— VOL  1— <K5  M 52 


olo 


85  FEDERAL  REPORTER,  467. 


Opinion  of  tlie  Court 

to  be  in  pursuance  of  any  means  to  be  employed ;  (5)  that  the 
prosecution  had  abated  by  the  admission  of  the  territory  of 
Utah  as  a  state.  The  demurrer  was,  as  the  record  shows, 
sustained  to  that  part  of  the  indictment  which  charges  a 
combination  to  raise  the  price  of  coal  in  Salt  Lake  City,  and 
was  overruled  as  to  the  remainder  of  the  indictment.  There- 
upon each  of  the  defendants  entered  a  plea  of  not  guilty,  and 
on  the  day  following — November  12,  1896 — the  case  was 
tried,  the  trial  resulting  in  a  verdict  of  guilty  as  to  all  of  the 
defendants.  The  bill  of  exceptions  shows  that  when  the 
testimony  was  concluded,  and  before  the  argument  to  the 
jury  began,  the  defendants  requested  the  court  to  instruct 
the  jury  to  return  a  verdict  of  not  guilty.  This  request  was 
overruled  by  the  court,  and  the  defendants  excepted.  Mo- 
tions in  arrest  of  judgment  and  for  a  new  trial  were  sever- 
ally made  and  overruled,  and  on  the  19th  of  November,  1896, 
the  plaintiff  in  error  was  sentenced,  by  the  court,  to  pay  to 
the  United  States  the  sum  of  $200  as  a  fine,  and  one-half  of 
the  costs  of  the  case,  taxed  at  $88.60.  He  thereupon  sued  out 
this  writ  of  error. 

No  questions  in  relation  to  combinations  or  conspiracies  in 
restraint  of  interstate  trade  or  commerce,  or  trade  or  com- 
merce between  one  territory  and  another  territory,  or  between 
a  territory  and  a  state,  or  between  a  state  or  a  territory  and 
a  foreign  nation,  arise  in  this  case.  The  indictment  seeks 
only  to  charge  the  defendants  with  unlawfully  entering  into 
a  combination  in  restraint  of  trade  and  commerce  in  the  ter- 
ritory of  Utah,  and  is  based  upon  the  following  provision  of 
an  act  of  congress,  entitled  "An  act  to  protect  trade  and  com- 
merce against  unlawful  restraints  and  monopolies,"  approved 
July  2, 1890 : 

**  Sec.  3.  Every  contract,  combination  in  foi*m  of  trust  or  otherwise, 
or  conspiracy,  in  restraint  of  trade  or  commerce  in  any  territory  of  the 
United  States  •  ♦  ♦  Is  hereby  declared  illegal.  ♦  ♦  ♦"  26  U.  S. 
Stat.  209. 

While  the  constitution  confers  upon  congress  the  power 
"  to  dispose  of  and  make  all  needful  rules  and  regulations  re- 
specting the  territory  or  other  property  of  the  United 
States,"  and  "  to  regulate  commerce  with  foreign  nations  and 
among  the  several  states  and  with  the  Indian  tribes,"  it  does 


MOORE   V.  UNITED   STATES. 
Opinion  of  the  Court. 


819 


not  confer  upon  it  the  power  to  regulate  trade  or  commerce 
within  a  state,  or  to  legislate  in  respect  thereto;  wherefore 
the  provision  of  the  statute  above  quoted  is  confined  to  con- 
tracts or  combinations  in  restraint  of  trade  in  a  territoiy. 
The  plaintiff  in  error  now  insists  that  the  provision  of  sec- 
tion 3  of  the  act  under  which  this  indictment  was  found  be- 
came inoperative  in  Utah  when  Utah  was  admitted  into  the 
Union  as  a  state,  and  that  the  circuit  court  for  that  district 
had  no  jurisdiction  to  proceed  in  the  case.     The  courts  of  the 
United   States  being  courts  of  limited  jurisdiction,  with 
power  to  take  cognizance  of  matters  civil  or  criminal  only  as 
the  power  so  to  do  is  conferred  upon  them  by  statute,  it  be- 
comes important  to  determine  at  the  outset  whether  the  cir- 
cuit court  had  jurisdiction  to  try  the  offense  with  which  the 
plaintiff  in  error  stands  charged  in  this  indictment.    When 
Utah  was  admitted  [468]  into  the  Union  as  a  state  on  an 
equal  footing  with  the  original  states,  the  territorial  govern- 
ment within  the  boundaries  of  the  ntw  state  was  at  an  end. 
Its  civil  ^nd  political  powers  were  transferred  to  other  offi- 
cers; those  of  peculiarly  internal  character  to  officers  of  the 
new  state;  those  which  bore  any  relation  to  the  national  sys- 
tem of  government,  of  which  the  state  formed  a  part,  to 
officers  holding  commissions  under  that  system,  and  possess- 
ing only  the  powers  derived  from  their  commissions.    As  one 
of  the  states  of  the  Union  and  in  virtue  of  that  character 
forming  one  of  the  districts  of  the  United  States,  the  district 
of  Utah,  and  the  circuit  court  sitting  in  that  district,  would 
possess  no  peculiar  jurisdiction  or  authority;  none  which  did 
not  appertain  to  other  districts  and  the  circuit  courts  having 
cognizance  of  matters  within  those  districts.    In  the  case  be- 
fore us  the  plaintiff  in  error  was  tried  and  convicted,  in  the 
circuit  court  of  the  United  States  for  the  District  of  Utah, 
upon  an  indictment  charging  him  with  the  violation  of  an  act 
of  congress  defining  an  offense  which  was  an  offense  only 
when  the  agreement  or  combination  complained  of  related  to 
trade  or  commerce  in  a  territory.    The  indictmenjt  was  re- 
turned by  a  territorial  grand  jury,  and  filed  in  a  territorial 
court  during  the  existence  of  a  territorial  form  of  govern- 
ment.   If,  therefore,  the  circuit  court  possessed  power  and 
authority  to  try  this  case,  it  was  because  of  the  existence  of 


820 


85   FEDERAL   REPORTER,  468. 


Opinion  of  tbe  CJourt 

legislation  continuing  the  provision  of  the  statute  defining 
thfoffense  set  out  in  the  indictment  in  force  after  the  admi^ 
sion  of  the  state,  and  specially  conferring  upon  the  circuit 
court  for  that  district  jurisdiction  in  such  cases.  That  there" 
can  be  no  valid  judgment  pronounced  upon  conviction  in  a 
criminal  case,  unless  the  law  creating  the  offense  be  at  the 
time  in  existence,  is  well  settled.  The  Irresistible^  7  Wheat. 
551;  U,  S,  V.  Tynen,  11  Wall.  95.  In  Yeaton  v.  U.  S.,  5 
Cranch,  281,  Chief  Justice  Marshall  said : 

**It  has  lx»en  long  settled  on  general  principles  that,  after  the  ex- 
piration or  repeal  of  a  law.  no  r>enalty  can  he  enforced  nor  punishment 
Inflicted  for  violations  of  the  law  committed  while  it  was  in  force, 
unless  some  special  provision  he  made  fc  r  that  purpose  by  statute." 

By  its  terms,  the  provision  of  the  statute  under  which  this 
indictment  was  found  applies  only  lo  the  territories  of  the 
United  States,  and,  while  it  may  yet  be  in  full  force  within 
the  territories,  it  is  clear  that  no  prosecution  could  be  main-' 
tained  under  it  for  entering  into  a  combination  or  conspiracy 
in  restraint  of  trade  in  Utah  after  the  date  of  her  admission 
as  a  state.  Permoli  v.  First  Municipality^  3  How.  589. 
When  Utah  became  one  of  the  states  of  the  Union,  this 
statute  ceased  to  be  in  force  within  its  boundaries,  unle&s, 
by  appropriate  legislation,  it  was  continued  in  force  for  the 
purpose  of  prosecuting  violations  thereof  committed  during 
L  existencTof  a  territorial  form  of  government. 

The  act  of  congress  authorizing  Utah  to  form  a  state  gov- 
ernment, after  providing  that  the  state  of  Utah  should  con- 
stitute one  judicial  district,  to  be  called  the  "  District  of 
Utah,"  and  providing  the  lime  and  place  for  holding  the 
circuit  a;id  district  courts  of  the  United  States  therein,  and 
conferring  upon  the  circuit  and  district  courts  for  that  dis- 
trict, and  the  judges  thereof,  the  same  powers  and  jurisdic- 
[409]  tion,  and  requiring  them  to  perform  the  same  duties, 
|)ossessed  and  required  to  be  performed  by  the  other  circuit 
and  district  courts  and  judges  of  the  United  States,  also  pro- 
vided : 

"That  the  convention  herein  provided  for  shall  have  the  power  to 
provide,  by  ordinance,  for  the  transfer  of  actions,  cases,  proceedings, 
and  matters  pending  in  the  supreme  or  district  courts  of  the  territory 
of  Utah  at  the  time  of  the  admission  of  said  state  into  the  Union,  to 
such  courts  as  shall  be  established  under  the  constitution  to  be  thus 
formed,  or  to  the  circuit  or  district  court  of  the  United  States  for  the 


MOORE   V,  UNITED   STATES. 
Opinion  of  the  CJourt 


821 


district  of  Utah ;  and  no  indictment,  action,  or  proceeding  shall  abate 
by  reason  of  any  change  in  the  courts,  but  shall  be  proceeded  with  in 
the  state  or  United  States  courts  according  to  the  laws  thereof 
respectively."  * 

"And  the  laws  of  the  United  States  shall  have  the  same  force  and 

OQ  St  r^i^l"  .*?«  ^^^  ®^^*®  "^  elsewhere  within  the  United  States." 
Zo  otat.  Ill,  112. 

Under  the  authority  conferred  upon  the  constitutional 
convention  by  the  enabling  act,  a  schedule  annexed  to  the 
constitution  of  the  state  provided  that: 

"All  actions,  causes,  proceedings  and  matters  which  shall  be  pend- 
ing in  the  district  courts  of  the  territory  of  Utah,  at  the  time  of  the 
admission  of  the  state  into  the  Union,  whereof  the  United  States 
circuit  and  district  courts  might  have  had  jurisdiction  had  there  been 
a  state  government  at  the  time  of  the  connuencement  thereof,  respec- 
tively, shall  be  transferred  to  the  proper  United  States  circuit  and 
district  courts,  respectively,  and  oil  files,  records,  indictments  and 
proceedings  relating  thereto,  shall  be  transferred  to  said  United 
States  courts."    Const.  Utah,  art.  24,  §  7. 

The  above  provisions  of  the  enabling  act  and  the  schedule 
comprise  the  legislation  relating  to  the  transfer  and  trial  of 
cases  pending  in  the  district  courts  of  the  territory  at  the 
time  Utah  was  admitted  as  a  state,  and  for  the  continuation 
of  the  laws  of  the  United  States  therein  after  her  admission. 
Clearly,  no  peculiar  jurisdiction  or  authority  is  conferred 
upon  the  circuit  court,  for  that  district,  by  this  legislation; 
on  the  contrary,  the  enabling  act  would  seem  to  inhibit  and 
exclude  the  exercise  of  any  extraordinary  or  peculiar  power 
either  by  the  circuit  or  district  courts  within  the  newly 
created  district.     That  act  provides: 

"That  the  circuit  and  district  courts  for  the  district  of  Utah,  and 
the  judges  thereof  respectively,  shall  possess  the  same  powers  and  juris- 
diction and  perform  the  same  duties  possessed  and  required  to  be  per- 
formed by  the  other  circuit  and  district  courts  and  judges  of  the  United 
States,  and  shall  be  governed  by  the  same  laws  and  regulations." 

There  is  no  provision  of  the  enabling  act,  nor  any  other 
general  or  special  act  of  congress,  continuing  the  provision 
of  the  act  of  July  2,  now  under  consideration,  in  force  in 
Utah  after  the  admission  of  the  state;  neither  is  there  any 
statute  which,  in  terms,  provides  for  the  transfer  to  and  the 
trial  of  cases  arising  under  that  act  in  the  circuit  court  for 
that  district.  This  case  was  transferred  to  and  tried  in  that 
'  court  for  the  reason,  doubtless,  that  it  was  considered  one  of 
the  cases  which  the  enabling  act  declares  shall  not  abate  by 
reason  of  any  change  in  the  courts,  but  shall  be  proceeded 


85  FEDERAL  REPORTEB,  470. 


Opinion  of  the  Ck)urt 

with  in  the  state  or  United  States  courts  according  to  the 
laws  thereof;  and,  as  the  indictment  charged  the  defendants 
with  violating  a  law  of  the  United  States,  that  the  case  came 
within  the  provisions  of  the  enabling  act,  and  also  within  the 
provision  of  the  schedule  annexed  to  the  consti-  [470]  tution 
authorizing  the  transfer  of  cases  whereof  the  circuit  court 
might  have  had  jurisdiction  had  there  been  a  state  govern- 
ment at  the  time  of  the  commencement  thereof.  We  do  not 
think  the  case  is  included  within  either  of  these  provisions. 
There  are  some  acts  which  congress  may  by  law  designate  as 
a  crime  against  the  general  government  or  against  the  opera- 
tions of  government  which  affect  every  citizen,  whether  of  a 
state  or  territory;  such  as  treason,  illegally  holding  office, 
violations  of  the  postal  laws,  counterfeiting,  false  impersona- 
tion in  procuring  naturalization,  presenting  false  claims 
against  the  government,  etc.  The  federal  laws  defining  these 
and  kindred  offenses  operate  upon  ail  citizens  of  the  United 
States,  and  that  they  reside  in  a  state  constitutes  no  exemp- 
tion from  a  prosecution  for  a  violation  thereof  in  the  courts 
of  the  United  States,  for  jurisdiction  is  expressly  conferred 
by  statute  upon  the  federal  courts.  As  applied  to  criminal 
laws,  it  is  these  laws  of  the  United  States  that  the  enabling 
act  declares  shall  have  the  same  force  and  effect  within  the 
state  of  Utah  as  elsewhere  within  the  United  States;  and  it 
is  prosecutions  for  violations  thereof  which,  under  the  pro- 
visions of  that  act,  are  not  to  abate  upon  the  admission  of  the 
state  by  reason  of  any  change  in  the  courts,  but  are  to  be 
transferred  from  the  territorial  district  court,  a  court  having 
jurisdiction  in  such  cases  during  the  existence  of  a  territorial 
form  of  government,  to  the  circuit  and  district  courts,  courts 
having  jurisdiction  in  such  cases  after  the  admission  of  the 
slate.  That  the  provisions  of  the  enabling  act  were  so  un- 
derstood and  construed  by  the  constitutional  convention  is 
evidenced  by  the  fact  that  in  the  schedule  (annexed  to  the 
constitution)  providing  for  the  transfer  of  causes  to  the  fed- 
eral courts  it  provides  only  for  those  cases  "  whereof  the 
United  States  circuit  and  district  courts  might  have  had 
jurisdiction  had  there  been  a  state  government  at  the  time  of 
the  commencement  thereof,"  and  this  is  iiot  such  a  case.  If 
there  had  been  a  state  government  at  the  date  of  this  indict- 


GULF^  C.  &  S.  JF.  BY.  CO.  V.  MIAMI   S.  S.  CO.  823 

Syllabus. 

ment,  no  indictment  could  have  been  returned,  for  the  reason 
that  there  would  have  been  no  law  in  force  in  the  state  of  Utah 
defining  such  an  offense. 

Neither  do  we  think  the  present  case  comes  within  the  pro- 
visions of  section  13  of  the  Revised  Statutes.  That  section 
reads  as  follows : 

"The  repeal  of  any  statute  shall  not  have  the  effect  to  release  or 
extinguish  any  penalty,  forfeiture,  or  liability  incurred  under  such 
statute,  unless  the  repealing  act  shall  so  expressly  provide,  and  such 
statute  shall  be  treated  as  still  remaining  in  force  for  the  puriK)se  of 
sustaining  any  proper  action  or  prosecution  for  the  enforcement  of 
such  penalty,  forfeiture  or  liability." 

It  is  clear  from  the  language  of  the  section  that  it  applies 
only  to  cases  where  the  statute  defining  an  offense  has  been 
repealed.  The  act  of  July  2d  was  not  repealed  by  the  en- 
abling act,  for  it  yet  applies  to  the  territories  of  the  United 
States.  It  ceased  to  be  in  force  in  Utah  only  because  it  was 
superseded  by  the  constitution  upon  the  admission  of  the 
state. 

Our  conclusion  is  that  no  power  existed  by  law  in  the  cir- 
cuit court  for  the  district  of  Utah  which  did  not  appertain 
to  the  circuit  courts  in  other  districts;  that  the  power  and 
jurisdiction  claimed  for  the  circuit  court  in  this  case  is  a  pe- 
culiar and  extraordinary  power,  and  [471]  does  not  belong  to 
it  regularly  by  its  constitution ;  that  no  such  power  has  been 
bestowed  upon  it  by  any  special  legislation,  and  could  not, 
therefore,  be  legally  and  properly  exercised  by  it.  In  the 
view  we  have  taken  of  this  case  it  becomes  unnecessary  to 
consider  the  other  assignments  of  error  set  out  in  the  record. 
The  judgment  of  the  circuit  court  must  be  reversed,  and  the 
case  remanded  to  that  court,  with  instructions  to  dismiss  the 
indictment. 


[407]  GTJI.F,  C.  &  S.  F.  RY.  CO.  ET  AL.  v.  MIAMI  S.  S. 

CO. 

(Circuit  Court  of  Appeals,  Fifth  Circuit.    March  29,  1898.) 

[86  Fed.,  407.] 

Carriebs— Connecting  Lines— Prepayment  of  Freight. — A  common 
carrier  engaged  in  interstate  commerce  may  at  common  law,  and 


824 


86  FEDERAL  BEPOETEB,  407. 


Opinion  of  the  Ck)urt 

under  the  interstate  commerce.  law,  demand  prepayment  of  freight 
charges,  when  delivered  to  it  by  one  connecting  carrier,  without 
exacting  su<!li  prepayment  when  delivered  by  another  connecting 
carrier,  and  may  advance  freight  charges  to  one  connecting  carrier 
without  advancing  such  charges  to  another  connecting  carrier.a 

Same— Through  Tbanspobtation— Joint  Rates  and  Billing.— Such 
canier  may  enter  into  a  contract  with  one  connecting  carrier  for 
through  transportation,  through  joint  traffic,  thi-ough  billing,  and 
for  the  division  of  through  rates,  without  being  obligated  to  enter 
Into  a  similar  contract  with  another  connecting  carrier. 

Same— Laws  of  Texas.— Rev.  St.  Tex.  1895,  arts.  453G,  4537,  4539,  do 
not  apply  to  interstate  commerce,  because  the  power  to  regulate 
such  commerce  is  vested  in  congi-ess,  and  has  been  fully  exercised 
by  the  enactment  of  the  intei-state  commerce  law. 

Same— Anti-Tbust  Law.— Under  the  act  of  July  2,  1890,  entitled  "An 
act  to  protect  trade  and  commerce  against  unlawful  restraints  and 
monopolies,'*  the  only  remedy  given  to  any  other  party  than  the 
government  of  the  United  States  is  a  suit  for  threefold  damages, 
costs,  and  attorney's  fees,  and  the  only  party  entitled  to  maintain  a 
bill  of  injunction  for  an  alleged  breach  of  the  act  Is  the  United 
States,  by  its  district  attorney,  on  the  authority  of  the  attorney 
general. 

Appeal  from  the  Circuit  Court  of  the  United  States  for 
the  Eastern  District  of  Texas. 

James  Hagerman,  T,  S.  Miller,  N.  A.  Stedman,  and  /.  W, 
Terry ^  for  appellants. 

M,  C,  McLemore,  John  Neetke,  and  F.  Chas,  Hume,  for 
appellee. 

Before   Pardee   and   McCormick,   Circuit   Judges,   and 
SwAYNE,  District  Judge. 


McCormick,  Circuit  Judge. 
The  bill  in  this  case  alleges  that: 

"The  Miami  Steamsliip  Company,  a  corporation  duly  incorporated 
under  and  by  virtue  of  the  laws  of  the  state  of  New  York,  complaining 
of  the  Gulf,  Colorado  &  Santa  F^  Railway  Compauv,  the  Interna- 
tional &  Great  Northern  Railroad  Company,  and  the'iMlssonri  Kan- 
sas &  Texas  Railway  Company  of  Texas,  In  this  behalf  says-  That 
the  Gulf,  Colorado  &  Santa  Fe  Railway  Company  is  a  corporation 
duly  inc<irporated  under  and  by  virtue  of  the  general  and  special 
laws  of  the  state  of  Texas,  having  Its  general  offices  at  Galveston 
Texas,  in  said  state,  and  of  which  L.  J.  Polk  is  general  manager- 


«  Syllabus  copyrighted,  1898,  by  West  Publishing  Co. 


GULF,  C.  &  S.  F.  RY.  CO.  V.  MIAMI   S.  S.  CO.  825 

Opinion  of  the  Court. 

that  it  is  a  component  part  of,  and  subsidiary  to,  the  Atchison.  Topeka 
&  Santa  Fe  Railroad  Company,  and  what  Is  commonly  known  as  the 
Santa  F6  System;    that  it  [408]  has  and  maintains  traffic  relations 
with  connecting  lines,  and  is  engaged  in  the  traffic  of  state  and  Inter- 
state commerce.    That  the  International  &  Great  Northern  Railroad 
Company  is  a  corporation  duly  incorporated  under  and  by  virtue  of 
general  and  special  laws  of  the  state  of  Texas,  and  has  *lts  general 
office  at  Palestine,  in  the  state  of  Texas,  and  of  which  Lerov  Trice 
is  general  superintendent;    that  It  is  a  component  part  of,  aiid  sub- 
sidiary to,  what  Is  known  commonly  as  the  Missouri  Pacific,  or  Gould 
System,  and  is  engaged  in  traffic  of  state  and  interstate  commerce' 
That  the  Missouri,  Kansas  &  Texas  Railway  Company  of  Texas  is  -i 
corporation  duly  incorporated  under  and  by  virtue  of  general  and 
special   laws  of  the  state  of  Texas,   and  has  Its  general  offices  at 
Dallas,  Texas,  and  of  which  A.  A.  Allen  is  general  manager;    that 
it  is  a  component  part  of,  and  subsidiary  to,  what  Is  commonly  known 
as  the  Missouri,  Kansas  &  Texas  Railway  System ;    that  it  has  and 
maintains  traffic  relations  with  connecting  lines,  and  is  engaged  in 
the  traffic  of  state  and  intei-state  commerce.    That  said  three  railway 
companies  are  the  only  trunk  lines  of  road  running  through  the  state 
of  Texas,  and  connected  by  close  traffic  relations  with  the  systems 
of  railway  reaching  points  beyond  the  state  of  Texas  and  in  states 
and  territories  north  and  west  of  Texas,  a  market  and  field  from 
which  and  to  which  large  quantities  of  freight  are  consigned  and 
shipped,   and  having  termini   at  Galveston,   Texas,  connecting  with 
the  Mallory  Line  and  your  orator.     That  your  orator  is  engaged  as 
a  common  carrier  for  hire  in  the  traffic  of  state  and  interstate  com- 
merce, owning  and  operating  a  line  of  steamships  between  the  ports 
of  New  York,  in  the  state  of  New  York,  and  Galveston,  in  the  state 
of  Texas ;   and  at  Galveston,  Texas,  it  connects  with  the  lines  of  the 
railway   cbmpanies    hereinbefore   named.     That   its   steamships   are 
commodious,  safe,  and  seaworthy,  and  amply  fitted  for  the  purpose 
of  transporting  freight  between  the  iwDints  named.     That  In  the  city 
of  New  York  It  connects  with  all  the  lines  of  railway  running  Into 
said  city,   and   has   in   the  said  port  and  at  the  port  of  Galveston 
wharves  and  sheds  sufficient  to  accommodate  and  protect  all  freights 
delivered  to  it,  and  has  In  every  respect  facilities  sufficient  to  serve 
the  public  with  dispatch,   comfort,   and  safety.     That   it   has   been 
operating  its  said  line  of  steamships  between  said  ports  since  the  15th 
day  of  .July,  1897,  and  has  done  a  large  business  in  every  respect 
satisfactory   to   its  patrons.     That  since  said  day   vour  orator  has 
recened  from  and  delivered  to  said  railroad  companies  large  quan- 
tities of  freight  on  Its  wharf  in  the  city  of  Galveston,  destined  to  or 
shipped  from  points  on  the  several  lines  of  said  railroads  and  their 
connecting  lines,  and  it  has  received  from  and  granted  to  said  rail- 
road companies  the  same  rights,  privileges,  conditions,  and  exactions 
as  to  or  by  any  other  line  of  steamships  In  similar  service  as  vour 
orator  granted  or   demanded    in   the   interchange   of   freight      That 
there   Is  one,   and  only   one,   other   line  of  steamships   which   plies 
betM-een  Galveston  and  New  York,  which  is  owned  and  operated  by 
the  New  Yorlc  &  Texas  Steamship  Company,  eoninionly  known  and 
called  the  Mallory  Line,  and  which  hereinafter  will  be  referred  to  as 
the  Mallory  Line.    That  said  line  of  steamshii>s  Is  engaged  in  exactly 
similar  service  as  those  of  your  orator,  and  said  line  has  at  New  York 
and  at  Galveston  wharves  and  sheds  which  connect  with  the  several 
lines  of  railway  running  into  said  cities.     Tliat  said  Mallorv  Line 
has  been  in  operation  between  said  ports  for  a  number  of  vears,  and 
for  several  years  prior  to  the  time  your  orator's  line  of  steamships 
was  put  in  operation  had  no  competitor  for  the  business  between  said 
ports.     That  the  accommodations  of  said  MalloiT  Line  and  of  j^our 


-'^  86   FEDERAL  REPOKTEB,  408. 

Opinion  of  the  Court. 

orator  for  tlie  reception  and  delivery  of  freight,  in  unloading  and 
loading  vessels.   In   receiving  and   delivering  freight,   are   in   every 
respect  similar  and  equal.    Their  resi)ective  wharves  connect  with  the 
several  lines  of  the  respondents  in  the  same  and  similar  manner,  and 
the  same  and  similar  accommodations  prevail  for  the  reception  and 
delivery  of  freight,  for  the  loading  and  unloading  of  cars.    That  the 
cost  of  loading  and  unloading  ears  at  the  resi)ective  wharves  is  the 
same,  Rn{^  the  respondents  have  contracts  for  loading  and  unloading 
cars  at  the  respective  wharves  for  the  same  price.    Tlmt  it  has  been, 
and  is  now.  the  estal)lished  custom  and  usage  bv  and  between  said 
railroad  companies  and  the  Mallory  Line  and  your  orator,  in  the 
interchange  of  freight,   for  the  line  over  which   freight   might   be 
routed  to  advance  to  the  line  over  which  tlie  freight  originated  the 
charges  attached  to  such  freight  up  to  the  time  of  delivery  to  the 
steamship  company  or  railroad  company  over  which  It  was  to  he 
forwarded  to  destination.     [409]  That  it  is.  and  has  been,  an  estab- 
lished custom  and  usage  between  tfie  respondents  and  the  Mallory 
line  and  your  orator  since  it  has  been  in  business,  with  reference 
to  freight  originating  at  New  Yorls  or  beyond,  and  destined  to  points 
In  Texas  on  the  lines  of  railway  operated  by  resiwndents,  for  the 
Mallory  Line  and  your  orator  to  bill  .such  freight  thron«.;li  from  its 
point  of  origin  to  the  iwint  of  destination  at  a  througlj  rate  previously 
agreed  ui>on,  but  on  equal,  exact,  and  similar  conditions  with  refer- 
ence to  both  steamship  lines,  and  for  said  railroads  to  i)ay  to  the 
steamship  company  delivering  the  freight  at  Galveston  the  freight 
charges  earned  Ijy  it  in  transporting  the  freight  from  point  of  origin 
to  Galveston  under  such  agreement,  and  to  receive  the  freiglit  ten- 
dUPed  by  such  steamship  company,  and  forward  sjime  to  its  destination 
under  such  agreement    And  it  is,  and  has  been,  an  established  custom 
and  usage  betiiieen  the  i-espondents  and  the  Mallory  Line  and  vour 
orator,  with  reference  to  freight  originating  at  points  on  the  lines 
of  the  several  railway  companies  in  Texas  destined  for  New  York 
or  to  points  beyond  on  lines  of  railway  connected  with  the  ALilIory 
Line  and  your  orator  at  that  point,  to  bill  freight  from  point  of  origin 
to  point  of  destination  at  a  through  rate  previoasiv  agreed  upon,  and 
at  the  same  and  similar  rates  and  ujuler  the  same  exact  and  similar 
conditions,  and  for  the  steamship  emnpany  receiving  such  freight  to 
pay  to  the  raiiroad  company  delivering  the  freight  at  Galveston  the 
charges  for  freights  earned  l>y  said  railroad  comi)anv  in  transmrting 
the  freight  from  point  of  origin  to  Galveston.  Texas,  under  said  agree- 
ment, and  to  receive  the  freight  tendered  by  the  railroad  companv, 
and  fonvard  the  same  to  New  Yoriv.  if  that  be  the  point  of  destina- 
tion,  or,  if  beyond,  to  deliver  same  to  connecting  lines  reaching  said 
point,  under  said  agreement    This  custom  and  usage  is  established 
In  all  cases,  except  in  the  case  of  peri8hja)Ie  goods,  when  the  custom 
aoes  not  apply. 

**TlKit  tlure  is  a  combination  of  railway  companies  and  steamship 
companies  known  and  dj'signated  by  t\\3  name  of  th-  Soutlnvestern 
Freight  BiUTaii.  conqiored  cf  and  by  llio  principal  railway  systems  in 
the  sonthwestern  portion  of  the  Unitefl  States,  of  which  \hi  resi^ond- 
ents  the  Southern  Pacific  Company,  the  M(»rgan  Steamship  Company, 
and  tha  Cromwell  Steamship  Coirpaiiy.  which  latter  stpamshi])  compa- 
nlee  operate  lines  ot  steamship  iHtween  the  i)orts  of  Nuw  Orleans,  in 
the  state  of  Lonisiana,  and  New  Yoriv.  and  the  Mallory  Line,  are 
memiiers.  organized  for  the  purjiose  cf  eoutrollir.g  freK'ht  of  interstate 
connuerce  in  that  iKirtion  of  the  Unittnl  States  reaciied  by  the  said 
railroads  and  tlieir  countvtions  by  rail  and  water.  That  hLM-etofore, 
to  wit,  on  or  atout  the  .Slst  day  of  January,  1808.  at  a  meeting  of 
said  freight  bnrean.  called  for  that  pun>'>8e  in  the  city  of  New  Yorlc, 
state  of  New  York,  at  which  representatives  of  the  lines  herein  com- 


GULF,  C.  &  S.  F.  RY.  CO.  r.  MIAMI   S.  S.  CO. 
Opinion  of  the  Court 


827 


plained  of,— the  MalloiT,  the  Morgan,  and  the  Cromwell  Steamship 
Lines,  thereunto  duly  authorized, — were  present  said  railroads  entered 
Into  a  conspiracy  with  said  steamship  companies  against  your  orator, 
wherein  and  whereby  it  was  and  is  attempted  to  prevent  your  orator 
from  carrying  on  its  business  as  a  <<ommon  carrier  in  interstate  com- 
merce.   That  said  railroad  companies  entered  into  an  agreement  with 
said  Mallory  Line,  the  Cromwell  Line,  and  the  Morgan  Line  II  sub- 
stance and  in  effect  as  follows:  'That  ail  through  rates  and  divisions 
via  Gulf  ports  be  discontinued  from  and  to  domestic  ports  with 
steamer  lines  not  members  of  this  association,  and  all  interchange  of 
traffic  with  such  lines  be  discontinued  as  far  as  possible.    That  in 
consideration  of  assistance  given  the  Mallory  Line  by  the  adoption 
of  this  agreement  the  Mallory  Line  is  to  cancel  all  existing  contracts 
or  si)3cial  arrangements  with  the  Kansas  City,  Pittsburg  &  Gulf  on 
Mlssotirl  river  business,  and  hereafter  al)ide  by  rates  and  regulations 
fixed  by  this  association.    That  all  rates  less  than  authorized  associa- 
tion basis  between  Texas  points  and  all  territories  be  withdrawn  FetH 
rnary  mfli.  and  that  prepayment  of  freight  be  demanded  from  the 
steamer  lines  not  members  of  this  association.'     That  your  orator  is 
the  only  steamer  line  running  between  New  York  and  any  of  the  Gnlf 
ports  not  a  member  of  the  said  association.    That  by  the  terms  of 
said  agreement  respondents  agreed  to  accept  from   and  deliver  to 
said  lines  members  of  said  association  freight  rpon  conditions  which 
they  would  not  grant  to  your  orator,  or  any  other  competitor  in  this 
field,  not  a  member  of  said  freight  bureau.     That  by  the  terms  of  said 
agreement  said  railroad  companies  bound  themselves  to  break  off  all 
relations  with  your  orator  except  those  coupled  with  such  discrim- 
inating conditions  as  to  amount  to  a  i)ractieal  refusal  to  transact  any 
business  [410]  with  yonr  orator.     That  pursuant  to  said  agreement, 
and   in   the  execution  thereof,  said  railroad  companies  have  served 
upon  your  orator  notices  in  substance  and  effect  that  on  and  after 
February  15,  1808.  they  will  not  accept  any  freiglit  from  your  orator 
destined  to  points  on  tlieir  respective  lines,  or  points  reached  by  their 
connections,  unless  the  freights  on  same  be  prepaid;  nor  will   they 
accept  any  freight  consigned  to  your  orator  except  upon  same  and 
similar  conditions;  that  th?y  will  no  longer  permit  your  orator  to 
bill  through  freight  as  is  and  has  been  heretofore  the  custom  between 
said  railroad  companies  and  the  only  two  lines  rr.nning  into  Gal- 
veston from  New  York,  but  will  require  and  demand  of  your  orator  on 
all  freight  shipped  by  its  line  full  local  rate  from  Galveston  to  point 
of  destination ;  nor  will  they  accept  any  freight  consigned  from  New 
York  or  to  points  on  the  connecting  line  at  that  place  routed  bv  vour 
orator's  line  except  that  full  locals  be  paid  to  Galveston,  and  freight 
rebilied  at  that  point  to  point  of  destination.     Your  orator  alleges 
that  these  conditions,  exactions,  and  demands  will  applv  only  to  your 
orator,  and  that  they  will  not  apply  to  the  Mallorv  Line,  or  to*  any 
other  line  running  from  New  York  to  Gulf  ports,  members  of  the  said 
freight  bureau.     But  on  the  contrary,  it  alleges  that  said  lines  will 
continue  to  act  in  conjunction  with  the  Mallory  Line  as  a  member  of 
said  association,  as  is  and  has  been  the  custom  heretofore,  and  as 
hereinbefore  alleged  and  set  forth.    That  by  so  doing  the  said  Inter- 
national &  Great  Northern  Railroad  Company,  the  Missouri,  Kausas 
&  Texas  of  Texas,  and  the  Gulf,  Colorado  &  Santa  F$  threaten  and 
Intend  to  unlawfully  and  willfully  violate  the  express  provisions  of 
the  laws  of  the  United  States;  and  in  carrying  into  effect  the  threats 
made  your  orator  will  be  prevented  from  engaging  and  continuing  iu 
the  traffic  of  interstate  commerce,  and  now  carried  on  bv  it     It  will 
be  required  to  accept  and  transport  freight  at  a  price  largely  below 
the    "ost  of  carriage  in  order  to  compete  in  the  same  field  with  the 
Mallory   Line  and  oti^^r  steamship   lines  having  connections  under 


828 


86  FEDERAL  REPORTER,  410. 


Opinion  of  tlie  CSourt 

similar  circumstances,  members  of  said  association.  That  siieli  steps 
on  the  part  of  said  railroad  companies  will  l)e,  in  effect,  granting  to 
the  Mai  lory  Line  and  other  steamer  lines  similarly  engaged,  members 
of  said  association,  nndue  and  uun^asonable  preference  over  your 
orator,  and  will  subject  It  to  un)lue  and  unreasonable  prejudice  and 
disadvantage. 

**  Your  orator  further  alleges  that  the  said  railroad  companies  and 
the  Mallory  Line  have  entered  into  an  agreement  and  compact  by 
which  said  railroad  companies  agree  to  accept  on  and  after  February 
15.  1898,  freight  from  the  Mallory  Line  originating  at  New  York,  and 
destined  to  points  on  their  line  in  the  state  of  Texas,  or  to  points  of 
connecting  roads,  on  a  through  rate  which  is  less  than  the  combination 
of  local  rates  which  will  be  demanded  of  your  orator  on  and  after 
said  date;  and  they  have  agreed  further  that,  in  the  event  freight 
originating  outside  of  New  Yorlc  City,  for  the  carriage  of  which  to 
New  York  the  Mailor>'  Line  or  consignors  of  said  freight  would  be  re- 
quired to  pay  not  more  than  thirty-five  cents  per  hundred  pounds: 
that  the  cost  of  such  transportation  to  New  York  so  required  shall 
be  absorbed,  and  all  lines  participating  in  the  carriage  of  such 
freigiit  from  New  York  shall  prorate  such  cost  of  carriage  to  New 
York  with  the  Mallory  Line,  and  the  Mallory  Line  will  be  called  upon 
to  pay  only  thirty-five  per  cent,  of  such  charge.  The  said  agreement 
affects  all  freights  originating  outside  of  New  York  City,  and  imposes 
upon  your  orator  in  its  competition  for  such  freight  the  amount,  at 
least,  rebated  to  the  Mallory  Line  as  its  pro  rata  of  the  arbitrary 
paid  out  in  getting  said  freight  to  New  York.  That  said  roads  have 
agreed  with  said  Mallory  Line  that  upon  all  freights  transported  by 
It  from  New  York  to  Galveston,  jind  from  Galveston  to  New  York, 
destined  to  points  on  the  lines  of  the  several  railways  outs'de  of 
Galveston,  shall  receive  thirty-five  per  ceot.  of  the  through  rate,  the 
balance  to  be  prorated  upon  an  agreed  basis  between  the  participating 
railroads.  That  said  railroads  will  not  grant,  but,  on  the  contrary, 
will  refuse  to  grant,  to  your  orator  equal  rights  and  privileges  with 
the  Mallory  Line  as  above  set  forth,  but  exact  and  demand  that  all 
freight  routed  via  your  orator's  line,  whether  it  originates  at  New 
York  or  beyond,  or  at  points  on  respondents'  lines  of  railwny, 
shall  be  required  to  pay  the  total  of  local  rates,  which  would  be 
largely  in  excess  of  the  amount  required  and  exacted  of  the  Mallory 
Line  or  other  meml)ers  of  such  association,  and  that  all  freights 
routed  over  your  orator's  line  will  have  to  pay  a  higher  rate  than  if 
the  same  were  routed  by  way  of  the  Mallory  Line.  That,  [411]  as 
hereinbefore  alleged,  the  service,  accommodation,  connections,  and 
ffieilities  of  the  Mallory  Line  and  tlioFe  of  your  orator  are  in  every 
sense  equal,  exact,  and  similar;  and  that  by  the  imjiosition  on  the  part 
of  the  railroads  herein  complained  of  your  orator  will  be  caused  to 
suffer  great  and  irreparable  injury,  its  business  prostrated,  and 
probaltly  prevented  from  continuing  in  its  line  of  business.  That  at 
law  there  exists  no  plain,  full,  complete,  and  adequate  remedy;  that 
your  orator  lielieves,  and  it  so  charges,  that  resi)ondents  intend  to  and 
will  enforce  said  threats  and  demands  on  and  after  February  15, 
18J>8,  and  thereby  divert  business  and  freight  from  it  to  the  Mallory 
Line,  and  prevent  it  from  cumix^ing  with  said  line  in  the  trajisuorta- 
tion  of  state  and  interstate  counnerce. 

"  Wherefore  your  orator  prays  that  your  honors  will  gviun  your 
most  gracious  writ  of  injunction  restraining  the  respondents,  and  each 
of  them,  tlieir  agents  and  servants,  from  in  any  way  interfering  with 
the  business  of  your  orator  as  it  has  been  heretofore  and  is  now  being 
carried  on  between  the  resiwndents  and  your  orator  in  tlie  manner 
and  by  the  means  hereinbefore  alleged,  and  restraining  them  from 
discriminating  against  your  orator  in  the  making  and  ^.-ranting  of 


GULF,  0.  A  S.  F.  RY.  CO.  V,  MIAMI  S.  S.  CO.  829 

Opinion  of  the  Court 

through  rates,  restraining  them,  and  each  of  them,  from  carrying  out 
the  agreement  between  them  and  others  in  so  far  as  it  affects  your 
orator,  and  commanding  them  to  afford  to  your  orator  the  same 
facilities,  and  to  accept  freight  under  the  same  conditions,  as  by  them 
extended  and  granted  to  the  other  connecting  steamship  lines  between 
Galveston  and  New  York,  and  commanding  them  to  make  the  same 
rate  of  freight  on  interstate  and  through  business,  and  to  allow  your 
orator  the  same  pro  rata  of  through  rates,  as  is  given  to  the  Mallory 
Line;  that  upon  the  final  hearing  had  said  injunction  be  made  per- 
manent ;  and  for  such  other  and  further  and  general  relief  as  to  your 
honors  may  seem  meet  and  proper." 

On  Februaiy  12,  1898,  this  bill  was  exhibited  to  one  of 
the  judges  of  the  circuit  court  for  the  Eastern  district  of 
Texas,  who  thereupon  ordered: 

"  Upon  consideration  of  the  within  petition,  the  same  is  set  down 
for  hearing  before  me  at  Galveston,  Texas,  on  February  21,  1898,  at 
10  o'clock  a.  m.  of  said  day,  at  the  United  Stjites  court  house,  and 
in  the  meantime  respondents  are  directed  to  maintain  with  com- 
plainant the  same  relations  with  respect  to  rates,  divisions, .  and 
freights  as  are  by  them  granted  to  the  Mallory  Line." 

At  the  time  and  place  appointed  the  defendants  appeared 
by  counsel.  The  Missouri,  Kansas  &  Texas  Railway  Com- 
pany of  Texas  submitted  an  answer,  which,  after  certain 
admissions  and  denials  not  necessary  to  note,  proceeded  thus : 

"This  defendant,  for  full  and  complete  answer  to  the  bill  of  com- 
plainant filed  herein,  shows:  It  is  engaged  in  the  operation  of  lines 
of  railway  lying  wholly  in  the  state  of  Texas,  with  a  mileage  of 
about  nine  hundred  and  seventy-six  miles,  extending  from  Galveston, 
Texas,  in  a  northwesterly  direction  to  the  north  line  of  the  state  of 
Texas  near  Denison,  in  Grayson  county,  Texas,  together  with  certain 
branches  in  the  state  of  Texas,  and  that  it  reaches  with  its  own  lines 
many  of  the  most  important  cities  in  Texas,  such  as  Houston,  Waco, 
Ft.  Worth,  Dallas,  Denison,  Sherman,  and  others,  and  connects  with 
all  the  principal  railroads  in  said  state,  and  that  its  business  con- 
sists of  the  transportation  of  passengers,  freight,  mail,  and  express, 
and  that  such  business  constitutes  inteniational,  interstate,  and  state 
commerce,  and  that  such  conunerce  in  the  natural  course  of  business 
moves  in  all  directions  over  this  defendant's  lines  of  railway  and  its 
connections.  It  is  to  the  best  interests  of  this  defendant,  as  well  as 
to  the  l)est  interests  of  its  connecting  lines  and  the  general  public 
which  they  serve,  as  the  defendant  believes  and  avers,  that  this  com- 
merce be  carried  at  reasonable,  open,  published,  and  stable  rates,  filed 
with  the  interstate  commerce  commission  where  the  commerce  is  in- 
terstate, and  with  the  railroad  commission  of  the  state  of  Texas 
where  the  commerce  is  state.  It  is  likewise  to  the  interest  of  this 
defendant,  its  connections,  and  the  public  generally,  that  it  should 
have  a  joint  through  tariff  from  points  on  its  lines  and  connections 
to  New  York  in  connection  with  some  steamship  line  from  Galveston ; 
and  this  defendant  shows  that  recently,  and  a  short  time  before  the 
filing  of  the  bill  [412]  herein,  it  effected  an  arrangement  with  the 
New  York  &  Texas  Steamship  Company,  hereinafter  and  in  the  bill 
referred  to  as  the  *  Mallory  Line,'  by  which  a  through  rate  has  been 
agreed  upon  between  New  York  and  what  is  known  as  'Atlantic  Sea- 
board Territory'  and  points  on  this  defendant's  lines  and  its  con- 


830 


86   FEDERAL   REPORTER,  412. 


Opioion  of  the  Court 

nections,  and  in  conformity  thereto  a  joint  through  tariff  has  been 
adopted  by  this  defendant  and  the  Mallory  Line  and  others,  and  filed 
with  the  interstate  comuieree  eomniission,  a  copy  whereof  is  hereto 
appended,  marked  '  Exhibit  A,'  for  convenient  reference,  and  made  a 
part  hereof;  and  that  the  rates  therein  agreed  upon,  published,  and 
established  are  reasonable  and  just,  and  under  the  provisions  of  the 
act  of  congress  to  regulate  interstate  conmierce  constitute  the  niaxl- 
muni  and  the  minimum  charges  which  can  be  made  by  this  defendant 
and  the  Mallory  Line  for  the  transportation  of  freight  between  the 
points  named.    This  defendant  shows  that  prior  to  July   15,   1897, 
when  the  complainant  first  entered  its  ships  in  the  service  between 
Galveston  and  New  York,  this  defendant,  in  connection  with  other 
railroads  of  the  Southwest,  had  in  force  certain  joint  tariffs  from 
New  York  to  points  on  its  line  and  those  on  its  connections,  by  the 
Gulf  liorts,  but  the  assent  of  the  steamship  companies  was  never 
given  to  such  joint  tariffs  by  filing  the  same  with  the  interstate  com- 
merce commission,  or  by  general  adoption  thereof,  and  tlie  steamship 
companies  were  bound  by  said  through  tariffs  only  when  they  ac- 
cepted shipments  of  freight  thereunder.     That  almost  immediately 
after  the  complainant  entered   into  the  New   York   and   Galveston 
trade  a  rate  war  broke  out  as  to  Texas  traffic  between  it  and  the 
Mallory  Line,  which  resulted  in  a  notice  being  given  by  this  defend- 
ant to  the  complainant  and  the  Mallory  Line  that  it  would  charge 
them  its  regular  established  rates  from  and  to  Galveston  on  Texas 
traffic;  and  since  such  natiee  was  given  this  defendant  has  charged 
on  all  freight  to  and  from  said  steamship  lines  its  regularly  estab- 
lished rates  to  and  from  Galveston;  and  the  Malloiy  Line  and  the 
complainant  have  at  all  times  allowed  such  rates  to  this  deiendant, 
and  at  the  time  of  the  filing  of  the  bill  of  complaint  herein  no  other 
or  different  arrangements  were  in  effect  between  this  defendant  and 
the  complainant,  or  between  this  defendant  and  the  Mallory  Line, 
save  and  except  that  this  defendant  had  made  a  contract  arrange- 
ment with  the  Mallory  Line  for  joint  through  rates  and  joint  billing 
such  as  hereinbefore  stated  and  liereinafter  set  out,   and  pursuant 
thereto  this  defendant  and  the  Mallory  Line  filed  with  the  interstate 
commerce  commission  such  joint  through  tariff  as  stated.    The  de- 
fendant further  avers  that  the  complainant  has  substantially  at  all 
times  since  it  has  been  engaged  in  the  trade  between  New  York  and 
Galveston  allowed  to  this  defendant  its  established  rail  rates  to  and 
from  Galveston  on  such  ti-aflic ;  and  further  avers  that  the  defendant 
has  not  and  does  not  intend  to  deny  the  right  to  the  complainant 
hereafter  of  having  its  commerce  carried  to  and  from  Galveston  at 
the  defendant's  regularly  established  Galveston  rates.    And  defend- 
ant further  alleges  that  its  regularly  established  rates  heretofore, 
now,  and  hereafter  to  be  in  effect  to  and  from  Galveston  have  been, 
are.  and  will  be  reasonable,  just,  and  lawful. 

"The  contract  agreement  between  this  defendant  and  the  Mallory 
Line  includes  a  through  joint  rate  between  the  points  established  by 
the  Joint  tariff  hereinabove  referred  to,  through  bills  of  lading,  and 
through  billing,  and,  for  the  present  a  division  of  the  through 
rate  on  the  basis  of  allowing  the  defendant  and  its  connecting  lines, 
as  their  proportion  of  the  through  rate,  the  established  tariff  rate 
from  Galveston  to  the  southwestern  inland  point  of  ortgin  or  destina- 
tion. The  defendant  however,  alleges  that  it  Is  and  will  be  entlrelj 
lawful  for  the  defendant  and  the  Mallory  Line  to  make  any  division 
of  the  through  rate  between  themselves,  as  from  time  to  time  they 
may  determine  to  be  just  and  equitable.  The  reasons  which  led  the 
defendant  to  enter  into  this  contract  arrangement  with  the  Mallory 
Line  are,  among  others:  (1)  The  Mallory  Line  has  been  long  running, 
and  is  now  running,  and  is  to  continue  to  run.  well-equipped  steam- 


GULF,  C.  &  S.  F.  RY.  CO.  V.  MIAMI   S.  S.  CO. 


8a  1 


Opinion  of  the  Court 

ships  between  New  York  and  Galveston,  carrying  a  large  commerce, 
and  has  a  well-established  business,  and  the  good  will  of  the  shippers 
of  the  country,  and  is  comijetent  and  reliable,  and  in  every  way 
capable,  trustworthy,  and  responsible.  (2)  That  the  arrangement  be- 
tween the  defendant  and  the  Mallory  Line,  whereby  they  carry  upon 
a  joint  through  rate,  published  and  known  to  the  world,  and  filed  with 
the  interstate  commerce  commission,  can  but  be  beneficial  to  the 
public  at  large,  and  redound  to  the  mutual  advantage  and  benefit 
[413]  of  both  parties  to  the  arrangement  (3)  The  steamships  of  the 
Mallory  Line  engaged  and  to  be  engaged  in  the  Galveston  and  New 
York  busniess  are  equal,  if  not  superior,  to  any  steamships  in  the 
United  States  engaged  in  what  is  known  as  the  'Atlantic  Coast 
Service.'  (4)  The  steamships  of  the  Mallory  Line  are  provided  with 
ample  facilities  for  the  carriage  of  both  freight  and  passengers.  (5) 
The  Mallory  Line  is  equipped  with  much  better  ships  than  any 
other  line  running  between  Galveston  and  New  York,  and  makes 
several  days'  better  time  between  the  t^vo  ports  than  anv  other  ships. 
(G)  The  steamships  of  the  Mallorj-  Line  plying  between  Galveston 
and  New  York  arrive  and  depart  at  regular  stated  times;  and  in 
the  arrangement  which  has  been  made  bet\veen  this  defendant  and 
the  Mallory  Line  hereinabove  referred  to  it  has  been  understood 
and  agreed  that  the  necessary  number  of  steamships  of  the  Malloi-y 
Line  should  arrive  and  depart  each  week,  arriving  and  leaving  upon 
certain  days  of  the  week  so  far  as  possible.  (7)  The  Malloi-v  Line 
afforded  the  best  opportunity  and  tlie  best  facilities  for  a  through 
business  connection  with  the  defendant. 

"The  defendant  further  shows  that  the  complainant  company  has 
not  such  a  service  between  Nev»'  York  and  Galveston  as  to  make  it 
specmlly  desirable  for  this  defendant  to  establish   a  joint  through 
tariff  with  it  with  through  bills  of  lading  and  through  billing.    The 
complainant's  steamships  are  not  equal   in   speed   or  appliances  to 
those  of  the  Mallory  Line.    They  require  eight  to  ten  days  to  make 
the  trip  between  Galveston  and  New  York,  while  the  steamships  of 
the  Mallory  Line  make  the  trip  in  about  six  days.    The  steamships 
of  the  complainant  are  not  combined  freight  and  passenger  ships,  but 
are  built  only  for  freight  though  they  may  be  able  to  cari-y  a  few 
passengers.     Since  the  complainant  entered  the  Galveston  and  New 
York  trade,  its  ships  have  not  arrived  or  departed  at  regular  and 
stated  periods.    At  first  they  ran  a  ship  about  once  a  week,  but  leav- 
ing upon  no  particular  day,  and  for  some  time  past  and  at  present  their 
ships  are  not  running  so  often,  and  arrive  and  depart  on  no  particu- 
lar day  or  regular  time.    This  defendant  further  distinctly  avers  that 
it  does  not  intend,  by  the  establishment  of  the  through  rate  and 
through  billing  and  through  business  connections  with  the  Mallory 
Line,  to  in  any  way  unduly  or  unreasonably  discriminate  against 
the    complainant's    line,    and    states   that    whatever    advantage    the 
Mallory  Line  may  secure  over  the  complainant's  line  is  the  result 
of  the  contract  arrangement  between  the  Mallory  Line  and  the  de- 
fendant and  that  such  contract  arrangement  is  reasonable,  justifiable 
and  lawful.    The  defendant  avers  that  it  is,  and  will  be  at  all  times 
ready  to  deliver  to  or  receive  from  the  complainant's  line  all  business 
which  shall  be  consigned  to  or  from  that  line,  and  destined  over  the 
line  of  the  defendant  or  its  connections.     But  the  defendant  avows 
the  purpose  of  requiring,  so  long  as  it  deems  proper,  the  prepayment 
of  freight  delivered  by  the  complainant  to  the  defendant,  and  says 
that  such  requirement  is  and  will  be  no  unjust  discrimination  against 
complainant  but  one  that  is  authorized  and  justified  by  law.     The 
defendant  states  that  it  is  not  ready  to  enter  into  an  arrangement 
with  the  complainant  for  a  through  joint  service  such  as  it  has  made 
with  the  Mallory  Line,  and  submits  that  it  ought  not  and  cannot  be 


832 


86   FEDERAL   REPORTER,  413. 


Opinlou  of  the  CJourt 

miiiired  to  enter  into  such  an  arrangement,  as  under  the  law  the 
defendant  Is  not  bound  to  carry  beyond  its  own  line.  The  defendant 
will  at  all  times  move  with  promptness  and  dispatch  to  and  from 
complainant  all  freight  which  may  be  tendered  at  the  established 
rates  from  Galveston,  and  accord  to  the  complainant  every  right 
which  it  accords  to  every  other  shipper  tendering  it  freight  at  Gal- 
veston. The  defendant  further  shows  that  the  complainant,  by  the 
bill,  seeks  to  avail  itself  of  the  benefits  of  a  contract  arrangement 
euteretl  into  between  this  defendant  and  the  Mallory  Line,  which 
ft  has  no  right  to  do.  The  defendant  shows  that  the  complainant 
is  not  subject  to  the  interstate  commerce  laws,  and  has  not  moved, 
and  does  not  move,  its  commerce  under  any  tariff  filed  with  the 
interstate  commerce  commisgiion ;  and,  not  being  subjected  to  the 
burdens  and  penalties  of  the  interstate  commerce  laws,  cannot  in 
this  proceeding,  avail  itself  of  the  benefits  thereof  by  securing  the 
advantage  of  a  joint  through  rate,  which,  under  the  interstate  com- 
merce laws,  can  only  be  made  by  the  joint  assent  of  the  parties. 
The  defendnat  further  shows  that  the  complainant  has  moved  the 
freight  whiili  it  carried  between  Galveston  and  New  York  at  rates 
not  published,  and  varying  from  time  to  time,  and  that  the  rates 
at  all  times  heretofore  charged  by  the  complainant  since  it  has  been 
in  the  business  of  carrying  between  Gal-  [414]  veston  and  New  York 
have  been  such  that,  when  added  to  the  establislied  railroad  rates 
from  Galveston  over  defendant's  line  and  connections,  would  be 
less  than  the  through  rates  established  by  the  arrangement  herein- 
before referred  to  which  has  been  made  between  the  defendant  and 
the  Mallory  Line  to  and  from  New  Jork  and  a  large  portion  of  sea- 
board territory.** 

The  other  defendants  each  separately  submitted  its  demur- 
rer, on  the  following  grounds,  and  in  identically  the  same 
words: 

"(1)  That  the  said  complainant  hath  not.  In  and  by  its  said  bill, 
stated  such  a  case  as  doth  or  ought  to  entitle  it  to  any  such  relief  as 
It  liereby  sought  and  prayed  for  fi-om  or  against  this  defendant 
*  •  ♦  (3)  That,  if  the  matters  stated  do  give  the  complainant  any 
cause  of  complaint  against  this  defendant,  the  same  is  triable  and 
determinable  at  law,  and  ought  not  to  be  inquired  of  by  this  court. 
(4)  That  it  appeai-s  from  the  bill  of  complaint  that  the  relief  is 
sought  for  under  and  by  virtue  of  an  act  of  congress  approved  July  2, 
1890,  entitled  *An  act  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies.*  That  under  the  said  act  the  only  remedy 
given  to  a  private  party,  or  any  party  other  than  the  government  of 
the  United  States,  is  that  of  a  suit  for  threefold  damages,  costs,  and 
reasonable  attorney's  fees ;  and  it  appears  from  the  said  act  that  the 
only  party  entitled  to  maintain  bill  for  injunction  for  any  alleged 
breach  thereof  is  the  government  of  the  United  States,  by  its  district 
attorney,  on  the  authority  of  the  attorney  general.  That  it  further 
appears  that,  independently  of  such  statute,  the  mattei-s  set  forth  in 
the  bill  of  complaint  do  not  show  any  cause  of  action,  at  law  or  in 
equity,  as  independently  of  such  statute  the  matters  set  forth  in  the 
said  bill  do  not  show  any  illegal  or  Avrongful  combination  or  con- 
spiracy. And  herein  this  defendant  says  that  it  has  the  legal  right 
to  decide  what  parties  it  will  credit  and  what  parties  it  will  not 
credit,  by  refusing  to  carry  freight  without  prepayment  of  charges, 
and  has  the  right  to  decide  what  parties  it  will  lend  money  to  by  ad- 
vancing charges  and  what  parties  it  will  refuse  to  so  lend  money  to. 
And  herein  this  defendant  further  says  that  it  is  under  no  legal  obll- 


GULF,  C.  &  S.  F.  RY.  CO.  V.  MIAMI   S.  S.  CO.  883 

Opinion  of  the  Court 

gation  to  transport  or  enter  into  any  extra  terminal  arrangement  con- 
cernmg  the  transportation  of  freight  except  on  its  own  terms  •  and 
when  It  does  of  its  own  volition,  enter  into  such  extra  terminal  ariinge- 
Sn""  L  ?''^- ^'^  through  carriage  of  freight,  through  billing,  through 
bills  of  ladmg,  e  c  it  is  entitled  to  select  the  connection  with  which 
it  desires  to  establish  such  arrangements,  and  that  it  has  the  perfect 
right  to  make  such  arrangements  with  one  connection  without  making 
the  same  or  similar  arrangements  with  others.  Defendant  further 
says  that  the  bill  fails  to  allege  any  facts  which  show  that  Ln  la  n 
ant  is  entitled  to  have  this  defendant  compelled  by  process  of  the 
court  to  enter  into  traffic  relations  with  it"  pi^tess  or  tue 

On  March  2,  1898,  the  judge  of  the  circuit  court  passed  his 
decree  as  follows : 

.mi'^m^^^^-f^-*'*''''"'^  ^"^  brought  on  to  be  heard  on  the  pleadings 
ad  amdavits  in  support  of  same,  and  solicitors  for  both  complai  laS 
and  respondents  having  been  heard,  and  due  deliberation  having  S 
had,  It  IS  ordered,  adjudged,  and  decreed  by  the  court  that  the  prelimi- 
nary injunction  prayed  for  in  complainant's  bill  be  granted?  and  The 
respondent  the  Gulf,  Colorado  &  Santa  Fe  Railway  Company  the 
Missouri,  Kansas  &  Texas  Railway  Company  of  Texas,  and  the  Inter 
national  &  Great  Northern  Railroad  Company,  and  each  of  them  theh- 
respective  agents  and  servants,  are  hereby  enjoined,  until  S  hea  ' 
Z  Mi.n  i%'.r'^'/'^?J  interfering  in  any  way  with  the  business  of 
the  Miami  Steamship  Company,  as  it  has  heretofore  and  is  now  bein- 
carried  on  between  said  railway  companies  and  the  Miami  Steamshin 
Company,  or  from  discriminating  against  said  Miam  S  e  sM 
Company  in  the  making  and  granting  of  through  rates  in  the  mannei- 
^l^l^^htimnrorr*  ?t  '^T?'  '^"^  eharges,^nd  in  Vl?e  mmmerTf 
through  billing  of  freight,  and  from  enforcing  and  carrving  into  effect 
the  agreeinent  between  them  and  others  operating  as  the  South 
western  Fiveight  Bureau,  in  so  far  as  the  same  affects  the  Smi 
Steamship  Company ;  and  you  and  each  of  you,  your  respect ie  agents 
and  servants,  are  hereby  commanded  to  afford  to  the  Miami  S, 
r^^.STF^I'^  ^^^  f?^  facilities  with  reference  to  the  interchange 
of  freight,  to  accept  from  and  deliver  to  it  freight  [4151  under  thP 
same  conditions  and  terms,  as  are  by  you  or  eifher  of  ^w  grant^ 

Yoi  nrfd  r«liV"-^  ^*^/'  steamship  line  operating  between  New 
Yoik  and  Galveston;  and  you  are  further  commanded  to  make  to 
Miaim  Steamship  Company  the  same  rate  of  freight  on  interstate 
and  through  business,  and  to  allow  to  said  Miami  Steamship  Companv 
the  same  pro  rata  or  division  of  such  through  rates  a^bv  ^"n  or 
either  of  you  gh-en  to  any  other  steamship  line  operating  between 
New  York  and  Galveston,  and  especially  to  the  New  S  &  S 
Steamship  Company."  AeJia^ 

The  defendants  jointly  and  severally  asked  to  be  allowed 
to  appeal,  and  have  jointly  and  severally  assigned  errors  as 
follows : 

ronsoil  fTo!  Tr  T'^'\ '''  ^^^^^^'.t'-ii^'ng  the  bill  for  injunction,  for  the 
leason  that  it  disclosed  no  equity  on  its  face.     (2)  Defendants  had 

raent  ot  freight  cliarges  when  delivered  to  them  or  either  of  them  bv  a 
connecting  carrier,  without  exacting  such  prepayment  when  delivered 
by  another  connecting  carrier.     (3)  The  defendants  had  and  ha\^ 
11808 — VOL  1 — 06  M 53 


834 


86   FEDERAL   REPOBTER,  415. 


Opinion  of  the  Court 

and  each  of  them  had  and  has,  the  right  to  advance  freij^lit  charges  to 
one  eonnectiujjT  carrier  from  wliich  they  or  either  of  them  may  re- 
ceive freight  for  further  transportation,  without  obligation  to  advanct* 
freight  charges  to  another  connecting  carrier.  (4)  The  defendants 
had  and  hav«\  and  each  of  them  had  and  has.  the  right  to  enter  into 
a  contract  with  cue  connecting  carrier  for  the  through  transpiu'tation 
of  freight,  for  through  joint  rates,  for  through  billing,  and  for  the 
division  of  through  rates,  without  being  obligated  t(»  make  the  same 
contract  with  another  connecting  carrier.  (5)  The  bill  fails  to  show 
any  such  discrimination  as  falls  within  the  purview  of  the  third  sec- 
tion of  the  act  to  rt-gulate  commerce.  [Specifications  C  to  15,  in(;Iu- 
sive,  omitted.]  (1(>)  The  act  to  regulate  commerce  (and  the  several 
amendments  thereof)  provides  its  own  ma.-hinery  and  its  own  reme- 
dies for  the  enforciMnent  thereof,  which  remedies  were  intended  to  be 
exclusive,  and  no  right  to  injumtitin  is  thereby  given  ui)  n  the  c«.m- 
plaint  of  any  private  suiter." 

The  appellants  contend  that  the  several  arrangements 
effected  between  the  Mallory  Line  and  the  defendant  railway 
companies  do  not  violate  the  common  law,  or  the  interstate 
commerce  law  of  the  United  States,  or  any  statute  of  the 
state  of  Texas.  They  contend  that  there  is  no  obligation 
imposed  upon  the  defendant  companies  to  make  any  arrange- 
ment for  through  joint  shipments,  with  a  joint  tariff,  through 
billing,  and  a  waiver  of  prepayment  of  freight,  with  the 
Lone  Star  Line  because  of  the  fact  that  they  have  such  ar- 
rangements with  the  Mallory  Line.  They  contend  that 
there  is  no  general  usage  or  custom  having  the  force  of  law 
or  local  custom  at  Galveston,  Tex.,  which  gives  to  one  con- 
necting carrier  the  right  to  have  the  same  arrangements  as 
to  through  shipments  on  joint  tariffs  which  other  carriers 
may  have  acquired  by  contract.  They  contend  that  the  ar- 
rangements existing  between  the  Mallory  Line  and  the  de- 
fendants are  several  contract  arrangements  between  it  and 
each  of  the  defendants,  and  that  the  same  are  in  no  way  af- 
fected by  the  fact,  if  it  is  a  fact,  that  there  was  an  under- 
standing in  advance  between  the  defendant  railway  com- 
panies that  they  would  each  make  a  .several  arrangement 
with  the  Mallory  Line.  Tlie  alleged  agreement  between  the 
steamer  lines  and  the  defendants,  so  far  as  it  provides  "  that 
the  Mallory  Line  is  to  cancel  all  existing  contracts  or  special 
arrangements  with  the  Kansas  City,  Pittsburg  &  Gulf  on 
Missouri  river  business,  and  hereafter  abide  by  rates  and 
regulations  fixed  by  this  association,"  does  not  appear,  on 
the  face  of  it,  or  in  the  allegations  of  the  bill,  to  give  any 
ground  of  grievance  to  the  complainant.    The  complainant 


GULF,  C.  &  S.  F.  RY.  CO.  V.  MIAMI   S.  S.  CO.  835 

Opinion  of  the  CJourt 

does  not  expect  to  receive  any   [416]    freight  from  these 
steamer  lines,  or  desire  to  furnish  any  freight  to  either  of 
them,  but,  so  far  as  it  is  related  to  either,  it  is  a  rival  of  each, 
competing  with  each,  more  or  less,  for  the  "  Missouri  River 
business."    This  part  of  the  agreement  looks  like  it  would 
work  in  the  interest  of  the  complainant  by  throwing  to  it 
all  of  the  business  of  the  Kansas  City,  Pittsburg  &  Gulf 
Railroad  and  any  other  carriers  in  the  territory  from  which 
the  complainant  solicits  traffic  who  are  not  members  of  the 
Southwestern    Freight   Bureau.     The   provision   "that   all 
rates  less  than  association  basis  between  Texas  points  and  all 
territories  be  withdrawn  February   15th"  would  likewise 
seem  to  affect  the  complainant  favorably,  whether  the  com- 
plainant's rates  are  lower  or  not  so  low  as  those  authorized 
by  the  association  basis.     If  the  complainant's  rates   are 
lower,  this  provision  would  seem  to  constitute  an  inducement 
to  traffic  to  patronize  the  complainant's  line.     If  its  rates 
are  higher,  the  provision  is  an  abatement  of  competition  to 
the  extent  that  the  association  rate  is  higher  than  the  rate 
that  the  other  steamship  lines  have  been  offering,  for  it  is 
only  "  rates  less  than  association  basis  "  that  are  to  be  with- 
drawn.    There  is  then  left  as  the  subject  of  complaint  by  the 
appellee  the  provision  "  that  all  through  rates  and  divisions 
by  Gulf  ports  be  discontinued  from  and  to  domestic  ports 
with  steamer  lines  not  members  of  this  association,  and  all 
interchange  of  traffic  with  such  lines  be  discontinued  as  far 
as  possible,  and  that  prepayment  of  freight  be  demanded 
from  the  steamer  lines  not  members  of  this  association." 

It  is  urged  that  at  common  law  a  common  carrier  is  not 
bound  to  carry  except  on  its  own  line,  and,  if  it  contracts 
to  go  beyond,  it  may,  in  the  absence  of  statutory  regulations, 
determine  for  itself  what  agencies  it  will  employ,  and  its 
contract  is  equivalent  to  an  extension  of  its  line  for  the  pur- 
pose of  the  contract.  And  if  it  holds  itself  out  as  a  carrier 
beyond  its  line,  so  that  it  may  be  required  to  carry  in  that 
way  for  all  alike,  it  may  nevertheless  confine  its  carrying 
to  the  particular  route  which  it  chooses  to  use.  It  puts  itself 
in  no  worse  position  by  extending  its  route  with  the  help  of 
others  than  it  would  occupy  if  the  means  of  transportation 
employed  were  all  its  own.     It  may  select  its  own  agencies 


836 


86   FEDERAL    Ui'-POKTER,  116. 


Opinion  of  the  Court 

and  its  own  associates  for  doing  its  own  work.  Atchison^ 
T.  €&  S.  F,  E,  Co,  V.  Denver  cC*  N.  O,  E.  Co,,  110  U.  S.  667, 
I  Sup.  Ct.  185.  We  listened  attentively  and  with  interest 
to  the  able  oral  argument  of  counsel  who  appeared  for  the 
appellee,  and  we  have  diligently  examined  the  printed  brief 
which  they  submitted,  and  the  numerous  authorities  cited 
thereon,  but  we  do  not  find  in  all  that  they  have  advanced, 
or  in  any  of  the  authorities  we  have  examined,  anything  to 
weaken  the  force  of  the  above  suggestions  and  the  authority 
on  which  the  suggestions  rest.  On  a  subject  so  prolific  of 
litigation  as  the  rights,  duties,  and  liabilities  of  railroad 
carriers,  and  the  rights  of  individual  consignors  and  con- 
signees and  of  connecting  carriers  doing  business  with  the 
railway  companies,  an  immense  mass  of  litigation  has  neces- 
sarily arisen,  and  a  large  number  of  adjudged  cases  from 
courts  of  high  respectability  are  reported.  Many  of  these 
cases  are  comprehensive  in  the  reach  of  their  authority,  and 
more  comprehensive  in  the  compass  of  their  [417]  dicta. 
They  distribute  themselves  more  or  less  through  all  the  ques- 
tions involved  in  the  case  now  before  us,  and  are  hardly 
susceptible  of  close  alignment  with  the  questions  here,  or 
satisfactory  review  in  connection  with  these  questions.  They 
are  instructive  in  their  analogies,  but  the  facts  are  different 
from  those  we  have  now  to  consider,  and  we  think  it  best  to 
let  our  application  of  their  analogies  appear  rather  in  the 
disposition  of  the  questions  on  which  we  are  called  to  pass 
than  in  any  attempted  formulation  of  their  doctrine  in  lan- 
guage which,  quoted  out  of  its  logical  connection,  and  con- 
strued from  the  standpoint  of  new  cases  hereafter  arising, 
might  tend  to  mislead. 

Counsel  for  the  appellee  cite  sections  2,  3,  and  7  of  the  act 
to  regulate  commerce  of  February  4,  1887:  also  section  2  of 
the  act  of  March  2,  1889  (amending  section  10),  to  amend 
the  act  to  regulate  commerce.  Section  2  of  the  act  of  1887 
clearly  defines  what  shall  constitute  the  unjust  discrimination 
which  it  prohibits,  and  cannot  be  made  to  apply  to  this  case 
without  assuming  that  the  contract  existing  between  each  of 
the  defendants  and  the  Mallory  Line  for  the  extension  of 
the  business  of  each  over  that  line  does  not  constitute  sub- 
stantially  dissimilar   circumstances   and   conditions   under 


GULF,  C.  &  S.  F.  RY.  CO.  V,  MIAMI   S.  S.  CO.  837 

Opinion  of  the  Court 

which  the  defendants  are  doing  business  with  the  Mallory 
Line  from  the  circumstances  and  conditions  under  which  the 
Lone  Star  Line  is  claiming  the  right  to  do  business  with  the 
defendants.     Such  an  assumption,  we  think,  is  rei^elled  by 
the  authorities  which  support  our  conclusion  as  to  the  de- 
fendants' contract  arrangements  being  valid  at  common  law. 
To  support  appellee's  claim  under  the  third  section  of  the 
act  to  regulate  commerce,  we  should  have  to  hold  that  the 
defendant  carriers  could  not  contract  with  the  Mallory  Line 
for  extending  their  business  over  that  line  without  at  the 
same  time  making  a  similar  contract  with  any  other  party 
who  is  shown  to  be  able  and  offering  to  do  the  same  carryiuff 
with  equal  safety,  dispatch,  and  responsibility,  and  that  to 
decline  to  let  such  stranger  carrier  into  their  contract,  or  to 
make  an  equivalent  contract  with  it,  is  to  give  an  undue  and 
unreasonable   preference   and   advantage   to   the   line   con- 
tracted with  and  to  subject  the  stranger  to  an  undue  and 
unreasonable  prejudice  or  disadvantage  in  respect  to  the 
traffic  it  desires  to  carry.     If  it  should  not  be  so  held,  the 
contract  arrangements  which  the  defendant  carriers  have 
with  the  Mallory  Line  do  not  constitute  the  facilities  for  the 
interchange  of  traffic,  or  that  discrimination  in  rates  and 
charges  between  connecting  lines  to  which  the  second  para- 
graph of  section  3  applies.    The  last  clause  of  the  second 
paragraph  of  section  3  provides  that  that  paragraph  shall 
not  be  construed  as  requiring  any  such  common  carrier  to 
give  the  use  of  its  tracks  or  terminal  facilities  to  another 
carrier  engaged  in  like  business.     It  is  provided  in  section  6 
that  every  common  carrier  subject  to  the  provisions  of  the 
act  shall  file  with  the  commission  copies  of  all  contracts, 
agreements,  or  arrangements  with  other  common  carriers  in 
relation  to  any  traffic  affected  by  the  provisions  of  the  act  to 
which  the  carrier  may  be  a  party.     And  in  cases  where  pas- 
sengers and   freight  pass  over  continuous  lines  or  routes 
operated  by  more  than  one  common  carrier,  and  the  carriers 
operating  such  lines  or  routes  establish  joint  tariffs  of  rates 
or  fares  or  charges  for  such  [418]  continuous  lines  or  routes, 
copies  of  such  joint  tariffs  shall  also  in  like  manner  be  filed 
Avith  the  commission.     These  provisions  do  not  expressly  au- 
thorize the  separate  carriers  to  contract  with  reference  to 


86  FEDERAL  REPORTER,  418. 


Opinion  of  the  Court 

through  routes  and  joint  tariffs  because  the  carriers  had  that 
authority.  But  these  provisions  do  necessarily  imply  the 
recognition  that  that  authority  did  exist,  and  that  it  could 
be  exercised  after  the  passage  of  the  act  in  like  manner  as  it 
was  known  to  have  been  exercised  for  long  periods  before 
the  passage  of  the  act,  and  to  be  in  general  use  at  the  time 
of  its  passage.  The  act  does  not  expressly  authorize  the 
separate  carriers  to  establish  rates,  fares,  and  charges  on 
their  respective  lines,  but  it  recognizes  that  such  carriers  have 
that  right,  in  like  manner  as  it  recognizes  that  two  or  more 
connecting  carriers  have  the  right  to  contract  for  through 
routing  and  a  joint  rate,  subject  in  each  case  to  the  leading 
limitations  embraced  in  the  first  four  sections  of  the  act. 
The  fact  that  these  parties  were  left  free  to  contract  in  refer- 
ence to  this  subject  necessarily  includes  a  freedom  to  decline 
to  contract  in  case  they  cannot  agree  upon  the  terms,  or  in 
case  they  consider  it  to  their  interest  not  to  contract  on  any 
terms.  This  legislation  was  had,  as  all  useful  legislation  is 
had,  in  reference  to  the  existing  conditions  and  the  manifest 
tendencies  of  the  subject  embraced.  It  was  at  that  time 
matter  of  common  knowledge,  and  minutely  within  the 
knowledge  of  the  committees  of  congress  which  had  this 
subject  in  charge,  that  freight  and  passengers  were  being 
carried  through  all  the  states  from  one  extremity  of  the 
Union  to  the  other,  over  continuous  lines  or  routes,  operated 
by  more  than  one  carrier,  on  tariffs  of  rates  and  fares  and 
charges  regulated  as  to  their  amount,  the  time  and  place  of 
their  receipt,  the  pro  rata  division  thereof  by  the  respective 
carriers,  the  accounting  for,  paying,  and  distribution  of  the 
same  by  and  to  the  respective  carriers  according  to  their  con- 
tract agreement  or  understanding,  express  or  implied.  The 
committees  of  congress,  especially  certain  members  who  were 
most  active  in  promoting  this  legislation,  had  knowledge  of 
the  English  acts  on  the  same  subject,  and  studied  profoundly 
the  different  clauses,  and  even  the  phraseology,  of  those  acts, 
and  their  practical  application  to  the  business  of  transporta- 
tion in  England,  and  the  decisions  of  the  commission  there 
established  and  of  the  courts  in  construing  those  acts.  And 
we  are  greatly  aided  in  construing  our  act  by  observing  what 
provisions  of  the  English  act  it  adopts,  what  provisions  it 


GULF,  C.  &  S.  F.  RY.  CO.  V.  MIAMI   S.  S.  CO.  839 

Opinion  of  the  Ck)urt 

modifies,  and  how  they  are  modified,  and  what  provisions  are 
omitted.     The  English  act  of  1873,  amendatory  of  the  act 
of  1854,  authorized  the  commission  by  it  established  to  estab- 
lish through  routes,  and  to  fix  through  rates  between  connect- 
ing lines,  and  provided  that  the  facilities  to  be  afforded  shall 
include  the  due  and  reasonable  forwarding  and  delivering  by 
any  railway  company  and  canal  company,  at  the  request  of 
any  other  such  company,  of  through  traffic  to  and  from  the 
railway  or  canal  or  any  other  such  company,  at  through 
rates,  tolls,  or  fares,  but  required  the  commissioners,  in  the 
apportionment  of  such  through  rates,  to  take  into  considera- 
tion all  the  circumstances  of  the  case,  including  any  special 
expense  incurred  in  respect  of  the  construction,  maintenance, 
or  making  of  the  route,  or  any  part  of  the  route,  as  well  as 
any  special  charges  which   1419]   any  company  may  have 
been  entitled  to  make  in  respect  thereof.     This  provision  is 
wholly  omitted  from  our  act.     The  intersta^te  commerce  com- 
mission was  early  impressed  Avith  the  view  that  there  were 
cases  in  this  country  Avhere  through   routes   and  reduced 
through  rates,  which  would  facilitate  the  movement  of  traffic, 
and  thereby  benefit  the  public,  are  prevented  from  being 
made  by  the  unreasonable  refusal  of  carriers  to  unite  in 
granting  such  facilities;  and,  being  impressed  with  the  view 
that  the  statute  was  apparently  designed  to  require  connect- 
ing carriers  to  join  in  the  formation  of  through  routes  at 
lower  aggregate  rates  than  a  combination  of  their  locals,  have 
repeatedly  called  the  attention  of  congress  to  the  fact  that  it 
had  failed  to  provide  the  machinery  necessary  to  accomplish 
that  purpose.     As  the  commission,  in  one  of  their  latest 
opinions,  say,  the  correction  of  this  defect  requires  the  exer- 
cise of  some  public  authority  which  can  investigate  the  cir- 
cumstances of  each  case,  allow  the  parties  to  a  proposed 
through  rate  an  opportunity  to  be  heard,  and  fairly  deter- 
-mine  the  matter— including,  if  need  be,  the  aggregate  rate 
and  divisions  thereof— with  due  regard  to  the  interest  of  the 
several  carriers  as  well  as  the  public.     Such  a  scheme  for 
establishing  compulsory  through  rates  should  be  surrounded 
by  proper  safeguards,  and  its  operation  lunited  by  proper 
restrictions.    Atchison,  T,  c&  S.  F.  R,  Co,  v.  Denver  <&  N,  O. 
B.  Co.,  supra;    Interstate  Commerce  Commission  v.  Balti- 


840 


86   FEDERAL  REPOBTER,  419. 


Opinion  of  the  Court 

mare  <£'  0.  IL  Co.,  145  U.  S.  26S,  12  Sup.  Ct.  844;  Gmmn- 
nati,  W,  O.  <£•  T.  P,  Ry,  Co.  v.  Interstate  Commerce  Commh- 
mmi,  162  U.  S.  184,  16  Sup.  Ct.  700;  Texm  d^  P.  Ry.  Co,  v. 
Interstvfr  Commrree  Comm'mimi,  162  U.  S.  197,  16  Sup.  Ct. 
666;  Interstate  Commerce  Commission  y,  Alabama  M.  R. 
Co.j  18  Sup.  Ct.  45;  Kenttfrl-y  cC*  /.  Bridyc  Co,  v.  Lomsville 
1^  iV.  R.  Co.,  37  Fed.  620  et  seq.;  Railroad  Co.  v.  Piatt  (de- 
cided by  the  Interstate  Conimerce  Gommissiuu  June  26, 1897). 
As  we  view  the  complainant's  bill  and  construe  sections  2 
and  3  of  the  act  to  re^ilate  commerce,  in  connection  with 
the  contract  or  arrangement  shown  to  exist  between  the  de- 
fendant carriers  and  the  Mallory  Line,  section  7  of  the  act 
and  section  10  as  amended  have  no  bearing  on  the  case  made. 
We  think  it  clear  from  our  construction  of  the  text  of  the  in- 
tei-state  commerce  act  and  its  amendments,  and  the  reasoning 
and  authority  of  the  few  eases  just  cited,  and  the  numerous 
other  cases  in  liij^  with  them,  more  or  less  pertinent  to  our 
inquiry,  that  the  case  attempted  to  be  made  in  the  appellee's 
bill  of  complaint  to  the  circuit  court  cannot  be  maintained 
under  the  interstate  commerce  act.  The  bill  shows  that  for 
many  years  prior  to  July  15,  1897,  there  had  been  no  compe- 
tition with  the  Mallory  Line  in  the  transportation  of  traffic 
by  steam  vessels  from  Galveston  to  New  Yorlc ;  that  the  com- 
plainant's own  line  began  business  on  the  15th  of  July,  1897, 
or  seven  months,  less  three  days,  before  the  exhibition  of  its 
bill.  The  custom  and  usage  that  obtained  with  reference  to 
this  interstate  and  foreign  traffic,  if  any  existed  and  was 
observed  by  the  defendant  carriers  before  July  15,  1807,  was 
necessarily  restricted  to  receiving  and  delivering  freight 
from  and  to  the  Mallory  Line  (as  they  are  continuing  to  do), 
and  not  of  delivering  or  receiving  to  or  from  other  lines,  or 
to  or  from  all  lines,  because  none  other  than  the  Mallory 
Line  theretofore  existed.  [420]  It  can  hardly  be  claimed 
that  the  usage  which  has  obtained  with  the  complainant's 
line  has  acquii-ed  the  force  of  local  custom.  Where  a  local 
custom  does  exist  in  reference  to  matters  about  which  parties 
contract,  and  they  refer  expressly  to  the  custom  of  the  port 
or  place,  or  make  no  express  reference  to  it,  such  custom 
will  be  considered  in  construing  such  contracts.  But  it 
is  beyond  the  power  of  a  local  custom  to  compel  parties  to 


GULF,  O.  &  S.  F.  RY.  CO.  V.  MIAMI   S.  S.  CO. 


841 


Opinion  of  the  Court 

contract,  or  to  impose  its  terms  on  their  dealings,  against 
their  expressed  wall,  or  against  the  duly-expressed  will  of 
either  of  them. 

Counsel  for  appellee  also  cite  articles  4536,  4537,  and  4539 
of  the  Revised  Statutes  of  Texas  of  1895.  It  is  shown  by 
the  bill  that  all  the  traffic  which  the  complainant  is  engaged 
in  handling  is  interstate  or  foreign  commerce.  Such  com- 
merce is  subject  to  exclusive  regulation  by  the  national  gov- 
ernment. This  power  to  regulate  such  commerce  is  vested  in 
congress,  and  is  not  a  dormant  power,  but  has  been  put  into 
full  exercise  by  the  act  of  February  4,  1887.  Hence  the  arti- 
cles of  the  Texas  statutes  cited  can  have  no  application  to 
such  commerce  as  that  which  the  complainant  is  engaged  in 
conducting.  There  is  nothing  in  the  language  of  the  Texas 
statute  that  indicates  a  purpose  upon  the  part  of  the  legis- 
lature that  the  articles  quoted  should  apply  to  interstate  or 
foreign  commerce. 

The  appellee  contends  that  the  defendant  railway  com- 
panies entered  into  such  a  combination,  conspiracy,  and 
agreement  as  is  prohibited  by  the  act  to  protect  trade  and 
commerce  against  unlawful  monopoly,  approved  July  2,  1890, 
for  the  purpose  and  with  the  intention  of  monopolizing  the 
traffic  of  interstate  commerce  betAveen  NeW  York  and  Galves- 
ton, in  restraint  of  such  commerce,  and  for  the  purpose  of 
preventing  complainant  from  carrying  on  its  business  of 
common  carrier  in  such  traffic.  Counsel  cite  sections  1,  2, 
4,  and  7  of  the  act  named.  Sections  1  and  2  are  strictly 
penal.  So  far  as  section  4  confers  any  new  jurisdiction  upon 
the  circuit  courts  of  the  United  States  to  prevent  and  restrain 
violations  of  this  act,  such  new  jurisdiction,  if  any  is  con- 
ferred, appears  to  be  limited  in  its  exercise  to  suits  on  behalf 
of  the  government  instituted  by  the  district  attorneys  of  the 
United  States  in  their  respective  districts,  and  under  the 
direction  of  the  attorney  general.  Blindell  v.  Hagan,  54 
Fed.  40 ;  Eagan  v.  Blindell,  13  U.  S.  App.  354,  6  C.  C.  A.  86, 
56  Fed.  696.  Section  7  provides  that  any  person  who  shall 
be  injured  in  his  business  or  property  by  any  other  person 
or  corporation  by  reason  of  anything  forbidden  or  declared 
to  be  unlawful  by  the  act  may  sue  therefor  in  any  circuit 
court  of  the  United  States  in  the  district  in  which  the 


842 


86  FEDERAL.  BEPORTER,  420. 


Opinion  of  the  Ck>urt 

defendant  resides  or  is  to  be  found,  without  respect  to  the 
amount  in  controversy,  and  shall  recover  threefold  the 
damages  by  him  sustained,  and  the  costs  of  suit,  including  a 
reasonable  attorney's  fee.  In  the  case  of  Blindell  v.  Tlagan^ 
mpra,  it  was  said  by  the  learned  judge  of  the  circuit  court 
that  this  act  makes  all  combinations  in  restraint  of  trade  or 
commerce  unlawful,  and  punishes  them  by  fine  or  imprison- 
ment, and  authorizes  suits  at  law  for  triple  damages  for  its 
violation.  But  it  gives  no  new  right  to  bring  a  suit  in  equity, 
and  a  careful  study  of  the  act  leads  to  the  conclusion  that 
suits  in  equity  or  injunction  [421]  suits  by  other  than  the 
government  of  the  United  States  are  not  authorized  by  it. 
However,  as  the  citizenship  of  the  parties  was  such  that  the 
United  States  court  had  jurisdiction,  the  learned  judge  re- 
tained the  case,  and  awarded  the  preliminary  injunction 
prayed  for,  because  the  nature  of  the  alleged  injury  was  such 
that  it  would  be  difficult  to  establish  in  a  suit  at  law  the  dam- 
age to  the  plaintiff,  and  because  to  entertain  it  would  prevent 
a  multiplicity  of  suits.  In  the  same  case  on  appeal  this 
court  said : 

"  We  concur  in  tlie  conciiision  readied  by  the  leanied  judge  who  de- 
cided the  case  below,  as  expressed  in  his  opinion,  and  which  is  made 
a  part  of  the  record,  that  the  jurisdiction  is  maintainable  on  general 
principles  of  equitable  jurisdiction,  and  a  careful  examination  of  the 
case  satisfies  ns  that  under  all  the  facts  before  it  there  was  no  error 
in  the  court  awarding  a  preliminary  injunction." 

In  U.  S.  V.  Dehs,  C^4:  Fed.  T24,  the  circuit  court,  to  sustain 
its  jurisdiction,  relied  mainly  on  the  act  of  July  2,  1890. 
When  the  case  came  in  review  before  the  supreme  court  in  Be 
Dehsj  158  U.  S.  564,  15  Sup.  Ct.  900,  that  court  entered  into 
no  examination  of  the  act  of  July  2,  1890,  preferring  to  rest 
its  judgment  on  the  broader  ground  of  the  general  juris- 
diction of  a  court  of  equity  to  prevent  injury  in  such  cases. 
The  supreme  court  was  careful  to  observe  that  it  must  not  be 
understood  from  its  putting  its  judgment  on  the  broader 
ground  that  it  dissented  from  the  conclusion  of  the  circuit 
court  in  reference  to  the  scope  of  the  act.  The  provisions  of 
the  act  in  question  apply  to  railroads,  and  render  illegal  all 
agreements  made  by  them  which  are  in  restraint  of  trade  or 
commerce.  U.  S.  v.  Association,  166  U.  S.  290,  17  Sup.  Ct. 
640.    We  do  not  doubt  the  general  jurisdiction  of  the  circuit 


GULF,  C.  &  S.  F.  RY.  CO.  V.  MIAMI   S.  S.  CO.  843 

Opinion  of  the  Court 

court  as  a  court  of  equity  to  afford  preventive  relief  in  a 
proper  case  against  threatened  injury  about  to  result  to  an 
individual  from  any  unlawful  agreement,  combination,  or 
conspiracy  in  restraint  of  trade.     Does  the  complainant  pre- 
sent a  proper  case  for  affording  such  preventive  relief?     It 
asks  for  a  preliminary  injunction  restraining  the  respondents 
from  interfering  with  its  business  as  it  has  been  heretofore 
and  is  now  being  carried  on  between  the  respondents  and  the 
complainant  in  manner  and  means  in  the  bill  alleged,  and 
restraining  them  from  discriminating  against  the  complain- 
ant in  making  and  granting  through  rates,  and  restraining 
them  from  carrying  out  the  agreement  between  them  and 
others  in  so  far  as  it  affects  the  complainant,  commanding 
them  to  afford  to  complainant  the  same  facilities,  and  accept 
freight  under  the  same  conditions,  as  by  them  extended  and 
granted    to    the    other    connecting    steamship    lines,    etc. 
Although  the  language  "  restraining  them  "  is  used  in  this 
prayer,  it  is  manifest  from  the  nature  of  the  case  and  all  the 
allegations  in  the  bill  that  the  preliminary  injunction  sought 
for  and  obtained  by  the  appellee  is  wholly  mandatory  in  its 
nature  and  effect.     The  bill  does  not  claim  that  the  com- 
plainant has  any  contract  arrangement  with  the  defendant 
railroad  carriers  which  those  carriers  are  about  to  breach. 
It  does  not  charge  that  the  carriers  are  obstructing  the  com- 
plainant's traffic  in  any  particular  by  violence  or  other  af- 
firmative action  so  as  in  any  way  to  hinder  the  prompt,  safe, 
and  [422]  convenient  interchange  of  traffic  between  its  line 
and  the  respondents'  lines,  or  to  hinder  the  prompt  dispatch 
thereof  to  its  respective  destination,  at  the  reasonable  rates 
therefor,  which  the  respondents  demand  and  receive  from 
all  persons  not  connected  with  them  by  their  contract  ar- 
rangement  for   through   routing,   billing,   and   rating.     It 
therefore  is  manifest  that  the  circuit  court  has  no  power  to 
grant  the  relief  asked,  unless  it  has  power  to  command  that 
the  respondents  shall  contract  with  the  complainant  for  such 
through  routing,  billing,  and  rating;  and,  not  only  so,  but 
shall  contract  with  the  complainant  therefor  on  the  same 
terms  that  they  have  contracted  with  the  Mallory  Line. 
All  the  reasons  which  have  prevailed  with  congress  to  with- 


844 


86   FEDERAL  REPORTER,  439. 


Syllabus. 

hold  this  power  from  the  interstate  commerce  commission, 
and  many  additional  reasons  with  strongest  force,  forbid 
that  the  numerous  circuit  courts  should,  in  advance  of  legis- 
lative action,  take  jurisdiction,  and  by  mandatory  injunc- 
tion compel  such  through  routing,  billing,  and  rating. 

We  conclude  that  the  several  arrangements  effected  be- 
tween the  Mallory  Line  and  the  defendant  railway  com- 
panies are  not  violative  of  the  common  law;  that  the  case 
attempted  to  be  made  in  the  appellee's  bill  of  complaint  in 
the  circuit  court  cannot  be  maintained  under  the  interstate 
commerce  act ;  that  the  statutes  of  Texas  relied  upon  do  not 
and  cannot  apply  to  interstate  commerce ;  and  that  the  bill 
does  not  present  such  a  case  as  the  circuit  court  has  jurisdic- 
tion to  relieve  by  mandatory  injunction,  either  under  the 
anti-trust  act  or  under  its  general  jurisdiction  as  a  court  of 
equity.  From  these  conclusions  it  results  that  the  decree  of 
the  circuit  court  must  be  reversed.  It  is  therefore  ordered 
that  the  order  of  the  circuit  court  granting  an  injunction 
pendente  lite  be,  and  the  same  is  hereby,  reversed,  and  the 
injunction  dissolved,  and  this  cause  is  remanded,  with  in- 
structions to  thereinafter  proceed  in  accordance  with  the 
views  expressed  in  this  opinion,  and  as  equity  may  require. 


I4m\    CAETEK-CRUME  CO.  v.  PEURRUNG. 

(Circuit  Court  wf  Appeals,  Sixth  Circuit    April  5,  1898.) 

[86  Fed.,  439.] 

IlEviEw  OS  Error— Sufficiency  of  EviDENCE.^If  there  is  any  sub- 
stantial evidence  upon  which  the  jury  could  reasonably  have  based 
their  verdict  it  will  not  be  disturbed  on  appeal,  though  there  may 
have  been  a  motion  for  a  verdict  or  a  motion  for  a  new  trial  which 
was  overruletl.o 

Same—Contract  m  Restraint  op  Trade— Waiver  of  Defense.— 
While  the  eouit  may  possibly  reverse  a  judgment  involving  the  en- 
forcement of  a  contract  contravening  public  policy  in  the  absence  of 
an  ol>jectiou  on  that  ground  in  the  trial  court  it  will  only  do  so  when 
puch  ilk^gality  appears  as  matter  of  law  upon  the  face  of  the  plead- 
ings, the  face  of  the  contract,  or  from  the  admitted  facts. 


o  Syllabus  copyrighted,  18S)8,  by  West  Publishing  Co. 


CABTER-CRUME   CO.  V.  PEURRUNG. 


845 


Opinion  of  the  Court 

Contracts  in  Uestkaint  of  Trade.— A  contract  with  an  independent 
manufacturer  for  the  entire  product  of  his  plant  is  not  in  itself  a 
contract  in  illegal  restraint  of  trade. 

Same. — If  an  independent  manufacturer  contracts  to  sell  his  entire 
product,  without  Icnowledge  of  similar  contracts  made  by  the  buyer 
with  otlier  manufacturers,  and  without  any  knowledge  of  the  fact 
tliat  such  contract  was  intended  by  the  buyer  as  one  step  in  n  gen- 
eral scheme  for  monopolizing  tlie  trade  in  that  article  and  controlling 
prices,  such  independent  manufacturer  cannot  be  held  to  have  con- 
spired against  the  freedom  of  commerce,  or  to  have  made  a  contract 
in  illegal  restraint  of  trade. 

Appeal  and  Error— Jurisdiction  of  Federal  Courts— Objection 
not  ItAisED  liELow.- The  ol>jection  that  the  suit  was  not  brought 
In  the  district  of  the  residence  of  either  party  does  not  affect  the  gen- 
eral jurisdiction  of  the  court,  and  cannot  be  raised  for  the  first  time 
on  appeal. 

In  Error  to  the  Circuit  Court  of  the  United  States  for  the 
Western  Division  of  the  Southern  District  of  Ohio. 


Oscar  M.  GottschUl^  for  plaintiff  in  error. 

Charles  W.  Baher^  for  defendant  in  error. 

Before  Litrton,  Circuit  Judge,  and  Severexs  and  Clark, 
District  Judges. 

LuRTON,  Circuit  Judge. 

This  is  an  action  at  law.  The  suit  was  brought  upon  a 
written  contract  made  August  14,  1894,  between  Peurrung 
Bros.  &  Co.,  a  firm  then  engaged  in  the  business  of  jobbing 
wooden  Avare  in  Cincinnati,  Ohio,  composed  of  Joseph  P.  and 
Charles  J.  Peurrung,  and  the  Carter-Crume  Company,  a  cor- 
poration of  West  Virginia.  By  this  contract,  for  considera- 
tion therein  recited,  which  will  be  hereafter  referred  to,  the 
Carter-Crume  Company  became  obliged  to  pay  to  Peurrung 
Bros.  &  Co.  $250  on  the  15th  of  each  month  for  the  next  en- 
suing 3  years,  6  months,  and  15  days,  unless  the  contract 
should  be  sooner  terminated  under  a  provision  contained 
therein.  The  installments  which  became  due  prior  to  Sep- 
tember 15,  1895,  were  duly  paid.  The  suit  was  for  install- 
ments thereafter  falling  due,  which  had  not  been  paid.  The 
petition  alleged  that  the  firm  of  Peurrung  Bros.  &  Co.  had 


846 


m  FEDERAL  REPORTER,  440. 


Opinion  of  the  CJonrt 

been  dissolved,  and  the  interest  of  Charles  J.  Peurrung  in 
th©  contract  had  [440]  been  assigned  to  the  plaintiif,  Joseph 
P.  Peurrung,  who  therefore  sued  in  his  own  name,  as  he 
might  under  the  law  of  Ohio.  There  was  a  judgment  in 
favor  of  the  plaintiff  for  the  amount  due  on  the  first  day 
of  the  trial  term.  The  errors  relied  upon  to  reverse  this 
judgment  as  presented  by  the  brief  and  argument  of  counsel 
will  be  considered  in  the  order  in  which  they  have  been 
argued. 

1.  It  is  said  that  the  evidence  did  not  show  that  the  plaintiff 
was  the  sole  owner  of  the  claim  in  suit;  that  for  this  reason 
the  court  erred  in  not  instructing  for  the  plaintiff  in  error  as 
requested  at  the  close  of  the  evidence  for  the  defendant  in 
error;  and  that  for  the  same  reason  it  was  error  to  refuse  a 
new  trial  at  the  close  of  all  the  evidence.  It  is  only  by  the 
strongest  stretch  of  liberality  that  ^e  can  discover  that  there 
was  a  request  for  a  direction  at  the  close  of  the  evidence  for 
the  plaintiff  below.  But  that  motion  was  waived  by  the  sub- 
sequent introduction  of  evidence,  and  was  not  renewed  at  the 
close  of  all  the  evidence.  Railway  Co,  v.  Lowry,  43  U.  S.  App. 
408,  20  C.  C.  A.  596,  and  74  Fed.  463.  There  was  evidence 
tending  to  show  that  Charles  J.  Peurrung,  in  a  settlement  of 
the  partnership  affairs  with  his  brother,  Joseph  P.  Peurrung, 
assigned  this  contract,  and  all  due  or  to  become  due  thereun- 
der, to  the  said  Joseph  P.  Peurrung.  The  witness  to  this  was 
Charles  J.  Peurrung  himself.  That  this  assignment  occurred 
before  this  suit  was  brought  is  also  fairly  made  out.  The  cir- 
cuit judge  instructed  the  jury  that  the  plaintiff  must  show,  in 
order  to  recover,  that  he  was  the  real  owner  of  this  claim ;  and 
that,  if  the  assignment  was  fictitious,  or  unproven,  the  case  of 
the  plaintiff  must  fail.  It  is  not  for  this  court  to  weigh  the 
evidence.  That  is  the  province  of  the  jury,  and,  where  there  is 
any  substantial  evidence  upon  which  a  jury  could  reasonably 
find,  this  court  will  not  disturb  the  verdict,  although  there 
may  have  been  a  motion  for  a  verdict,  or  a  motion  for  a  new 
trial,  which  was  overruled.  This  is  too  long  and  well  settled 
to  need  other  authoritv  than  Railway  Co.  v.  Lowry,  cited 
heretofore. 

2.  But  it  is  said  that  the  contract  in  question  is  one  in  re- 
straint of  trade,  and  therefore  void.    This  defense  is  here 


CARTER-CRUME   CO.  V.  PEURRUNG. 
Opiuion  of  the  Court. 


847 


made  for  the  first  time.  No  suggestion  as  to  its  illegality  is 
found  in  the  pleadings.  No  reference  thereto  occurs  in  the 
charge,  nor  was  any  exception  taken  to  any  instruction  given 
or  refused.  If  it  be  true  that  this  contract  is  one  which,  for 
reasons  of  public  policy,  is  void,  the  defense  in  the  court 
below  would  not  be  waived  by  failure  to  plead  properly.  It 
was  said  in  Coppell  v.  Hall^  reported  in  7  Wall.  542,  and  re- 
peated in  Oscanyan  v.  Arms  Co.,  103  U.  S.  i>61-268,  that: 

"  In  such  cases  there  can  1  e  no  waiver.  The  defense  is  allowed,  not 
for  the  sake  of  the  defendant,  but  of  the  law  itself.  The  principle  is 
indispensable  to  the  purity  of  its  administration.  It  will  not  enforce 
what  it  has  forbidden  and  denounced.  The  maxim,  '  Ex  dolo  malo  ncn 
oritur  actio,'  is  limited  by  no  such  qualification.  The  proposition  to  the 
contrary  strikes  us  as  hardly  worthy  of  serious  refutation.  Whenever 
the  illegality  appears,  whether  the  evidence  comes  from  one  side  or 
the  other,  the  disclosure  is  fatal  to  the  case.  Xo  consent  of  the  de- 
fendant can  neutralize  its  effect.  A  stipulation  in  the  most  solemn 
form  to  waive  the  objection  would  be  tainted  with  the  vice  of  the 
original  conti-act,  and  void  for  the  same  reasons.  Wherever  the  con- 
tamination reaches,  it  [441]  destroys,  -The  principle  to  be  extracted 
from  all  the  cases  is  that  the  law  will  not  lend  its  support  to  a  claim 
founded  upon  its  violation.'' 

But  the'  general  rule  is  that  a  defense  not  presented  to  the 
court  below  cannot  be  considered  on  writ  of  error  from  a 
superior  court.  Edwards  v.  Elliott,  21  Wall.  532:  Wilson 
v.  iVcNa7nee,  102  U.  S.  572 ;  Clark  v.  Eredencks,  105  U.  S. 
4 ;  Drexel  v.  True,  20  C.  C.  A.  265,  74  Fed.  12.  Objections 
going  to  the  jurisdiction  are  an  exception  to  this  rule,  l)e- 
cause  made  so  by  Act  March  3,  1875,  §  5. 

Possibly,  it  would  be  the  duty  of  this  court  to  reverse  and 
remand  for  dismissal  a  suit  brought  here  on  writ  of  error 
which  appeared  to  involve  the  enforcement  of  an  obligation 
contrary  to  good  morals  or  in  contravention  of  public  policy, 
although  no  such  objection  had  been  made  in  the  court  below. 
But  such  action  by  an  appellate  court,  as  a  tribunal  for  the 
review  of  the  action  of  trial  courts,  would  not  be  justifiable 
unless  such  illegality  should  appear  as  matter  of  kiw  from 
the  pleadings,  the  face  of  the  contract  in  suit,  or  from  the 
confessed  facts  of  the  case;  otherwise  the  right  to  introduce 
evidence  in  rebuttal  and  of  trial  by  jury,  if  the  suit  be  one 
at  law,  would  be  cut  off.  The  plaintiff  below  did  not  rely 
upon  any  contract  Avhich  was  in  itself  illegal  or  void  as  in 
contravention   of   public   policy.     Counsel   for  plaintiff  in 


848 


8G    FEDERAL   REPORTER,  441. 


Opinion  of  the  Ck)urt 

error  say  that  the  Carter-Cruine  Company  were  engaged  in 
an  illegal  effort  to  suppress  competition,  and  put  np  prices 
in  the  wooden  butter-dish  trade,  and  that  as  one  step  in 
this  scheme  they  bought  from  Penrrung  Bros.  &  Co.  their 
contract  with  Tower  &  Matthews.  Manifestly,  Perrung 
Bros.  &  Co.  liad  l^een  guilty  of  no  conspiracy  against  the 
public  in  contracting  for  the  entire  output  of  the  small 
factory  of  Tower  St  Matthews.  Neither  was  it  an  ilWal 
restraint  of  trade  for  the  Carter-Crume  Company-  to  con- 
tract for  the  same  product,  if  their  trade  demanded  it.  The 
prior  contract  with  Peurrung  Bros.  &  Co.  alone  stood  in  the 
way.  They  therefore  bargained  with  them  to  release  Tower 
&  ^lattliews,  and  to  supply  them  for  a  definite  time  with  the 
same  ware,  at  the  market  price,  less  a  fixed  trade  discount. 
At  the  same  time  they  contracted  with  Tower  &  Matthews 
for  the  entire  product  of  their  factory.  These  two  contracts 
were  concurrent  in  time,  and  were  sul>ject  to  be  determined 
on  same  notice.  There  were  some  features  about  this  last 
contract  which  indicate  an  intention  to  close  the  Tower  & 
Matthews  factory  after  the  delivery  of  a  certain  quantity 
of  ware  for  the  term  of  the  lease,  if  circumstances;  should 
make  it  desirable.  AVilliam  E.  Crume,  of  the  Carter-Crume 
Company,  in  the  effort  to  make  out  a  defense  of  misrepre- 
sentation as  to  the  extent  of  the  trade  of  Peurrung  Bros.  & 
Co.  in  such  goods  as  one  inducement  to  the  contract,  did  say 
that  his  company  were,  by  the  contracts  with  Peurrung  Bros. 
&  Co.  and  Tower  &  Matthews,  endeavoring  to  hold  up  the 
prices  of  such  goods,  and  that  Peurrung  Bros.  &  Co.  had 
been  selling  such  ware  at  a  less  price  than  the  Carter-Crume 
Company.  The  same  witness  also  said  that  they  at  that 
time  had  other  such  contracts, — whether  with  factories  or 
dealers  he  did  not  say.  There  is  no  evidence  that  Peurrung 
Bros.  [442]  &  Co.  were  aware  of  any  others  contracts,  or 
of  the  purpose  of  tlie  Carter-Crume  Company  to  control 
prices,  or  that  they  had  any  purpose  of  aiding  and  abetting 
that  company  in  any  such  scheme.  They  did  know  of  the 
contract  with  Tower  &  Matthews.  But  that  of  itself  was 
not  a  contract  in  general  restraint  of  trade.  If  one  con- 
tracts with  a  manufacturer  for  his  entire  product,  it  will, 
of  course,  restrain  the  producer  from  selling  to  others.    But 


CARTEB-CRUME   CO.  V,  PEURRUNG. 
Opinion  of  the  Court 


849 


such  a  contract,  taken  by  itself,  is  ordinarily  harmless.  The 
public  are  not  affected.  Another  question  might  arise  if  all 
or  a  large  proportion  of  all  the  producers  of  a  particular 
article  should  agree  to  sell  their  entire  product  to  one  buyer, 
who  would  thereby  be  enabled  to  monopolize  the  market. 
But,  if  each  independent  producer  contract  to  sell  his  prod- 
uct, or  to  sell  or  lease  his  plant,  without  concert  with  others, 
or  knowledge  of  or  purpose  to  participate  in  the  plans  of 
the  buyer,  he  cannot  be  said  to  have  conspired  against  free- 
dom of  commerce,  or  to  have  made  a  contract  in  illegal 
restraint  of  trade.  The  transaction  with  Peurrung  Bros.  & 
Co.  was,  on  its  face,  legitimate,  and  it  cannot  be  impeached 
simply  by  evidence  that  the  Carter-Crume  Company  under- 
stood and  intended  it  as  one  step  in  a  general  illegal  scheme 
for  monopolizing  the  trade  in  wooden  butter  dishes,  and 
controlling  prices.  The  principle,  if  we  admit  that  the 
purpose  of  the  Carter-Crume  Company  was  illegitimate, 
is  that  which  is  applied  to  so-called  wagering  contracts. 
The  proof  must  show  that  the  illegal  purpose  was  mutual. 
Roundtree  v.  Smitli,  108  U.  S.  269,  2  Sup.  Ct.  630;  Irwin 
V.  Williar,  110  U.  S.  499,  4  Sup.  Ct.  160;  Bihh  v.  Allen,  149 
U.  S.  481,  13  Sup.  Ct.  950.  This  defense,  not  being  one 
which  appears  either  upon  the  face  of  the  contract  in  suit 
or  from  the  admitted  purposes  of  both  parties,  cannot  be 
urged  as  an  objection  here,  the  objection  not  having  been 
made  in  the  court  below. 

3.  The  next  and  last  ground  urged  for  a  reversal  is  that 
this  suit  was  not  brought  in  the  district  of  the  residence  of 
either  the  plaintiff  or  the  defendant.  This  objection  was 
fatal  to  the  jurisdiction  if  it  had  been  taken  in  time.  The 
plaintiff  was  a  citizen  of  Indiana,  and  the  defendant  a  cor- 
poration of  West  Virginia.  Diversity  of  citizenship,  there- 
fore, existed,  and  the  case  was  one  of  which  the  court  could 
take  jurisdiction.  The  act  of  congress  which  prescribes 
the  particular  district  in  which  a  defendant  may  be  sued  is 
not  one  affecting  the  general  jurisdiction  of  the  court.  The 
exemption  from  being  sued  out  of  the  district  of  the  domicile 
of  either  of  the  parties  was  a  privilege  which  the  Carter- 
Crume  Company  could  and  did  waive  by  pleading  to  the 
11808— VOL  1—06  M ^54 


850 


86  FEDERAL   REPORTEB,  671. 
Statement  of  the  Case. 


merits.  Railway  Co.  v.  McBride,  141  U.  S.  127,  130,  132, 
11  Sup.  Ct.  982 ;  Railroad  Co.  v.  Cox^  145  U.  S.  593,  603,  12 
Sup.  Ct.  905;  Trmt  Co,  v.  McGeorge^  151  U.  S.  129. 14  Sup. 
a.  286.    The  judgment  is  accordingly  affirmed. 


[671]  THE  CHAKLES  E.  WISWALL. 

THE  CHARLES  E.  WISWALL  v.  SCOTT  ET  AL. 

CCircuIt  Court  of  Appeals,  Second  Circuit    March  2,  1898.) 

[86  Fed.,  671.] 

Monopolies — Interstate  Commerce. — A  combination  or  trust  be- 
tween the  owners  of  tugs  o|>erating  entirely  within  the  confines 
of  a  state  is  not  a  combination  in  restraint  of  trade  or  commerce 
among  the  several  states  or  with  foreign  nations,  so  as  to  come 
within  the  condemnation  of  the  statutes  of  the  United  States,  al- 
thoui;h  most  of  the  owners  held  coasting  licenseao 

Same — Towage  Charges. — One  who  requests  and  accepts  the  serv- 
ices of  a  tug  for  towage  puriwses  cannot  escaiie  paying  the  reason- 
able value  of  tlie  services  rendered,  on  the  ground  that  the  owners 
Oif  the  tugs  were  members  of  an  unlawful  combiiiatlon  to  raise 
prices.    74  Fed.  802,  affirmed.     [See  p.  608.] 

This  cause  comes  here  upon  appeal  from  a  decree  of  the 
district  court,  Northern  district  of  New  York,  in  favor  of 
the  libelants,  twelve  in  number,  who  were  severally  owners 
of  fourteen  propellers  or  steam  tugs  which  had  rendered 
towage  service  to  the  dredge  and  her  scows. 

The  suit  was  origiwally  l>egun  by  the  present  libelants,  and  by 
eight  others,  who  owned,  respectively,  nine  additional  steam  tugs 
or  propellers;  but,  it  appearing  that  no  services  had  been  reu- 
dered  by  these  last-mentioned  nine  vessels,  the  libel  was  amended 
accordingly,  at  final  hearing.  The  court  found  that  the  remaining 
libelants  were  entitled  to  recover  the  value  of  the  services  rendered 
by  their  respective  tugs,  and  referred  it  to  a  commissioner  to  ascertain, 
<tetemjine,  and  reiiort  the  values  of  the  services  of  the  respective 
vessels  over  and  aljove  all  payments  on  account  thereof  which  may  be 
established  by  the  evidence:  such  values  and  the  amounts  of  such 
payments  to  be  determined  ui>on  the  evidence  already  taken,  and 
such  additional  evidence  as  may  be  produced  and  given  by  the 
respective  parties  before  such  commissioner.  Abundant  oppor- 
liJlJ  tunity  was  given  to  all  jiarties  by  the  commissioner  to  take 
additional  evidence,  but  none  was  offered.  The  commissioner  there- 
after re|K>rted  the  value  of  the  senices  of  the  vessels  over  and  above 


oSyllabus  and  statement  copyrighted,  1898,  by  West  Publishing  Oa 


THE   CHARLES  E.  WISWALL. 
Opinion  of  the  Court. 


851 


all  payments,  separately  as  to  each  vessel.  He  did  not  separately 
state  the  value  of  the  services  of  each  tug,  and  the  amount  of  the  pay- 
ment thereon,  but,  inasnmch  as  it  appears  conclusively  that  $310 
was  paid,  it  would  .seem  that  he  found  the  total  value  of'the  services 
to  be  $1,2G9.16.  The  value  asserted  in  the  amended  libel  was  $1,300. 
Claimant  filed  exceptions  to  the  report,  and,  the  report  and  exceptions 
coming  on  to  be  heard,  the  decree  now  appealed  from  was  entered. 

Worthington  Frothingham^  for  appellant. 

Isaac  Lawson^  for  appellees. 

Before  Wallace,  Lacx}mbe,  and  Shipman,  Circuit  Judges. 

Lacombe,  Circuit  Judge  (after  stating  the  facts). 

The  record  is  long  and  somewhat  involved,  and  the  com- 
missioner's report  has  not  set  forth  his  findings  with  suf- 
ficient detail  to  be  of  much  assistance  to  the  court  in  de- 
termining just  what  he  did  find  and  upon  what  proof.  This 
appeal  may  be  best  disposed  of  by  taking  up  the  assignments 
of  error  seriatim. 

1.  It  is  assigned  as  error  that  the  libelants  in  the  original 
libel  and  in  the  amended  libel  were  a  combination  in  the 
form  a  trust  or  otherwise,  or  conspiracy  in  restraint  of 
trade  or  commerce  among  the  several  states  and  with  for- 
eign nations;  that  libelants  were  engaged  in  an  attempt  to 
monopolize  such  trade  or  commerce;  and  that  all  the  work 
alleged  to  have  been  done  by  them  collectively  or  individually 
was  under  a  contract  or  combination  in  such  form,  and  that 
such  contract  or  combifiation  was  void,  and  the  libelants 
cannot  maintain  this  suit  either  collectively  or  individually. 
We  do  not  find  any  satisfactory  evidence  that  these  boats 
were  "engaged  in  trade  or  commerce  among  the  several 
states  or  with  foreign  nations."  Most  of  them  held  coasting 
licenses,  but  there  is  not  a  scintilla  of  evidence  to  show  that 
they  ever  did  anything  except  to  tow  canal  boats,  barges,  and 
such  craft  on  the  waters  of  the  Hudson  Eiver  above  Pough- 
keepsie,  and  entirely  within  the  limits  of  the  state  of  New 
York.  And  it  seems  wholly  unnecessary  to  inquire  whether 
their  owners  had  entered  into  any  unlawful  combination  un- 
der the  laws  of  the  state.  Finding  that  the  rates  of  compensa- 
tion for  the  services  of  themselves,  their  crews  and  their  tuffs* 
were  becommg  so  low  as  to  be  unremunerative,  uncertain, 


852 


m   FEDKRAL   REFOK TEK,  <i72. 


OpiiiloE  of  the  Court. 

and  irregular,  they  agreed  with  each  other  to  charge  for  all 
services  rendered  by  each  vessel  such  sums  as  might  be  fixed 
by  a  tariff  which  they  adopted.  They  called  themselves  the 
"  Hudson  River  Tug-Boat  Association,"  had  a  so-called  su- 
perintendent to  allot  work  among  them,  adopted  a  system  of 
fines,  etc.,  but  they  never  became  a  legal  entity  either  as  a 
corporation,  a  joint-stock  association,  or  a  partnership. 
They  made  collectively  no  contract  with  the  claimant,  nor 
were  they  capable  of  making  such  contract.  Each  piece  of 
towage  service  rendered  was  a  transaction  between  the  boat 
towing  and  the  boat  towed,  with  which  the  other  boat  owners 
in  the  association  had  nothing  to  do.  Indeed,  the  libel  (orig- 
inal and  amended)  is  obnoxious  to  the  objection  of  an  im- 
proper joinder  of  libelants.  Each  should  have  brought  a 
separate  libel ;  [673]  but  since  this  objection  was  apparently 
not  taken  below,  and  the  only  result  would  be  to  increase  the 
costs  to  be  paid  by  the  defeated  party,  it  need  not  now  be  con- 
sidered. The  contracts  upon  which  recovery  was  had  were 
not  with  the  so-called  combination,  but  severally,  with  the 
several  tugs  rendering  the  service;  the  anionnt  of  compensa- 
tion asked  and  found  is  the  fair  and  reasonable  value  of  such 
service ;  and  the  existence  of  the  "  combination  "  is  no  bar  to 
its  recovery.  The  defendant's  proposition  is  that  a  person 
who  has  given  work,  labor,  and  services  to  another,  upon 
that  other's  employment,  may  not  recover  their  fair  and  rea- 
sonable value  if,  during  the  time  that  he  rendered  such  serv- 
ices, he  had  been  engaged  with  other  men  in  like  employment 
with  himself  in  a  combination  to  charge  for  such  services  as 
any  of  them  might  render  according  to  some  scale  agreed 
upon  by  them.  We  know  of  no  principle  of  law  which  calls 
for  the  adoption  of  such  a  rule,  and  are  referred  to  no  author- 
ities which  support  it.  The  cases  cited  on  appellant's  brief 
are  not  applicable.  The  only  contract  considered  in  U,  S. 
V.  Trans-Missouri  Freight  Ass\  166  U.  S.  290,  17  Sup.  Ct 
540,  was  the  contract  between  the  members  of  the  combina- 
tion. The  action  in  Bank  v.  Owensy  2  Pet.  538,  was  brought 
on  the  usurious  note  by  the  bank  that  exacted  the  usury ;  and 
the  same  is  true  of  Bank  v.  Larrib^  26  Barb.  596.  In  Leonard 
V.  Poole,  114  N.  Y.  377,  21  N.  E.  707,  the  court  refused  to 
take  an  accounting  between  two  parties  to  an  illegal  trans- 


THE   CHARLES  E.   WISWALL. 
Opinion  of  the  Court. 


853 


action.  In  Association  v.  Houck  (Tex.  Sup.)  30  S.  W.  869, 
it  appeared  that  defendants  Houck  and  Dieter  had  entered 
into  an  unlawful  combination  with  other  dealers  in  beer, 
which  secured  control  of  the  trade.  Plaintiff,  by  contract 
with  defendants,  bound  itself  to  sell  to  the  latter,  and  to  no 
other  dealer  in  the  city  of  El  Paso, — a  contract  which  gave 
the  combination  a  monopoly  of  the  sale  in  the  city  of  El  Paso 
of  the  product  of  plaintiff's  brewery,  and  materially  assisted 
the  parties  to  the  illegal  contract  in  carrying  out  their  object 
of  controlling  the  market  for  the  sale  of  beer  in  that  city. 
The  court  held  that  if  the  plaintiff,  when  it  made  its  contract 
with  Houck  and  Dieter,  knew  of  the  existence  of  the  combi- 
nation, it  was  not  an  innocent  seller,  and  could  not  recover, 
since  its  contract  "  is  calculated  materially  to  aid  the  pur- 
chasers in  effecting  their  unlawful  design."  In  Peck  v.  Burr, 
10  N.  Y.  294,  it  was  held  that,  where  a  contract  is  void  be- 
cause of  its  illegality,  there  can  be  no  recovery  for  services 
rendered  under  it  upon  a  quantum  meruit.  But  there  is 
nothing  illegal  about  the  several  contracts  sued  upon  here, 
which  are  to  render  towage  services- in  consideration  of  the 
payment  of  the  reasonable  value  of  such  services.  In  Amot 
V.  Coal  Co.,  68  N.  Y.  558,  it  was  held  that  "  the  agreement  of 
the  B.  C.  Co.  (of  which  plaintiff  was  an  assignee)  not  to 
sell  to  others,  it  knowing  that  the  object  of  defendant  was  to 
create  a  monopoly,  and  that  this  was  one  of  the  means  of 
averting  competition,  made  it  a  party  to  the  illegal  scheme  of 
defendant."  This  is  very  far  from  supporting  the  proposi- 
tion that  had  the  Pittston  &  Elmira  Coal  Company  sold 
1,000  tons  of  the  coal  thus  purchased  to  a  local  dealer  in  New 
York  City,  at  fair  market  rates,  it  could  not  recover.  [674] 
On  the  other  hand,  the  principle  is  well  recognized  by  the 
authorities  that  a  promise  remotely  connected  with  an  illegal 
act,  and  founded  on  a  new  consideration,  is  not  tainted  with 
the  illegality,  although  it  was  known  to  the  party  to  whom 
the  promise  was  made,  and  although  he  was  the  contriver  and 
conductor  of  the  illegal  act.  One  illustration  given  in  Arm- 
strong V.  Toler,  11  Wheat.  258,  is  this : 

"  The  man  who  imports  goods  for  another,  by  means  of  a  violation 
of  the  laws  of  his  country,  is  disqualified  from  founding  any  action 
upon  such  illegal  transaction  for  the  value  or  freight  of  the  goods. 
*     *     *     But,  after  the  act  is  accomplished,  no  new  contract  ought  to 


854 


m  FEDERAL   REPORTEB,  §74. 
Opfnlon  of  the  Court 


be  affected  by  it    It  ought  not  to  ¥ltiate  the  contract  of  the  retail 
merchant  who  buys  these  goods  from  the  importer." 

The  test,  whether  a  demand  connected  with  an  illegal 
transaction  is  capable  of  being  enforced  at  law,  is  whether 
the  plaintiff  requires  the  aid  of  the  illegal  transaction  to  es- 
tablish his  case.  If  he  cannot  open  his  case,  without  show- 
ing that  he  has  broken  the  law,  a  court  will  not  assist  him. 
But  if  he  does  not  claim  through  the  medium  of  the  illegal 
transaction,  but  upon  a  new  contract  bottomed  on  independ- 
ent consideration,  he  may  recover.  Swan  v.  Scott ^  11  Serg. 
&  R.  155;  Armstrong  v.  Toiler,  11  Wheat.  258;  McBlnir  v. 
GibheSj  17  How.  230.  In  the  case  at  bar  libelants  clearly  did 
not  require  the  aid  of  the  alleged  illegal  transaction  to  estab- 
lish their  case. 

2.  It  is  further  assigned  as  error  that  "  there  was  on  the 
trial  no  sufficient  proofs  of  the  value  of  the  services  alleged 
to  have  been  i>erformed  by  the  libelants  or  either  of  them, 
and  no  proof  excepting  of  such  value  as  was  made  and  estab- 
lished by  the  libelants  themselves  while  engaged  in  s;uch  com- 
bination," etc.  The  recoM  shows  that  as  to  each  item  of  charge 
there  was  evidence  that  the  service  rendered  was  worth  the 
price  charged,  and,  as  much  of  the  work  done  by  the  d liferent 
scows  was  similar  in  character  and  quantity,  many  of  the 
items  of  charge  are  supported  by  the  evidence  of  several  wit- 
nasses.  The  witnesses  stated  that,  in  testifying  to  the  value  of 
the  services,  they  did  not  give  consideration  to  the  schedule 
of  prices  adopted  by  the  association.  The  mere  fact  that  in 
some  instances  the  sum  testified  to  as  the  fair  and  reasonable 
value  of  a  particular  service  and  the  price  for  such  service 
named  in  tlie  schedule  were  identical  is  not  controlling.  It  is 
not  inconceivable  that  men  may  combine  together  to  ask  a 
perfectly  fair  price  for  their  work.  Co-operation  does  not 
necessarily  imply  extortion.  We  have  not  seen  nor  heard 
the  witnesses,  but  the  commissioner,  who  had  that  oppor- 
tunity, reached  the  conclusion  that  their  estimate*  of  value 
was  more  nearly  correct  than  that  of  the  single  witness  called 
by  claimant.  As  the  record  discloses  evidence  to  sup]>ort 
his  finding  upon  this  disputed  question  of  fact,  the  decree 
should  not  be  reversed  on  the  ground  assigned.  A])pellant's 
brief  refers  to  an  instance  where  the  tug  .Vndrews  charged 


DENNEHY   V.  M  NULTA. 


855 


Syllabus. 

five  dollars  for  towing  the  dredge  from  Troy  to  West  Troy, 
when  the  regular  charge  was  two  dollars,  the  additional  three 
dollars  being  charged  for  the  reason  that  Wiswall  (the  owner 
of  the  dredge)  had  previously  towed  with  a  boat  outside  of 
the  association.  There  [675]  is  no  persuasiveness,  however, 
to  any  such  evidence,  in  view  of  the  fact  that  the  owner  of 
the  Andrews  is  not  included  among  the  libelants;  that  no 
claim  on  behalf  of  that  tug  is  made;  and  that  whatever 
charges  are  made,  testified  to,  and  allowed  for  towing  from 
Troy  to  West  Troy  and  vice  versa  are  at  the  rate  of  two  dol- 
lars only. 

3.  It  is  further  assigned  as  error  that  judgment  was  ren- 
dered against  the  sureties  for  this  claimant  in  the  original  libel 
wherein  the  Hudson  River  Tug-Boat  Association  was  libel- 
ant, and  that  such  sureties  were  discharged  by  the  proceeding 
allowing  the  libel  to  be  amended  and  the  libelants  to  proceed 
therein  individually.  It  appears,  however,  that  the  Hudson 
River  Tug-Boat  Association  was  not  the  libelant  in  the  origi- 
nal libel.  Twenty  different  persons  were  individually  libel- 
ants, of  whom  eight  have  been  removed  by  amendment,  hav- 
ing no  claims.  In  other  words,  the  suit  began  with  twenty 
individual  libelants,  and  ended  with  twelve  of  them,  the  obli- 
gation of  the  sureties  being  to  answer  the  decree  of  the  court. 
The  assignment  of  error  is  unsound. 

4.  The  last  assignment  of  error  (the  sixth)  is  the  general 
one  that  judgment  should  have  been  given  for  claimants 
instead  of  for  libelants.  It  has  been  disposed  of  with  the 
other  assignments. 

The  decree  of  the  district  court  is  affirmed,  with  interest 
and  costs. 


[825] 


DENNEHY  ET  AL.  v.  McNULTA. 


(Circuit  Court  of  Appeals,  Seventh  Circuit.     May  2,  1898.) 

[86  Fed.,  825.] 

Contracts — Illegal  Condition  as  Consideration — Effect  of  Non- 
performance.— Rebate  vouchers  issued  by  a  distilling  company  to 
customers,  by  which  it  promised  to  refund  a  certain  sum  per  gallon 
on  their  purchases  at  the  end  of  six  months,  on  condition  of  their 
purchasing  exclusively  from  the  company  during  that  time,  cannot 


856 


86   FEDERAL   BEPORTEB,  825. 


Statement  of  the  Case. 

be  enforeed,  either  at  law  or  in  equity,  where  the  condition  has  not 
been  performed,  though  such  condition  be  Iliegal,  as  in  restraint  of 
trade ;  there  being  no  other  consideration  for  the  promise.  23  C  a 
A.  415,  77  Fed.  700,  affirmed.* 
Monopolies— Illegal  Combination  to  Contbol  Business— Leoalitt 
OF  Contracts.— One  purchasing  liquors  from  an  illegal  combination 
of  distillers,  which  controls  the  market  and  prices,  though  impelled 
thereto  by  business  needs  and  policy,  enters  into  the  contract  volun- 
tarily, and  cannot  retain  the  goods,  and  recover  the  price  paid,  or 
any  part  of  it,  either  on  the  grounnd  that  the  combination  was  ille- 
gal, or  the  price  excessive.    23  C.  C.  A.  415,  77  Fed.  700,  affirmed.* 

Appeal  from  the  Circuit  Court  of  the  United  States  for 
the  Northern  District  of  Illinois. 

I  Ti*®  appellants  filed  claims  for  allowance  against  the  funds  in  court 
In  the  consolidated  causes  against  the  Distilling  &  Cattle-Feeding  Com- 
pany, of  which  sufficient  description  api>ears  in  the  case  of  DistiUing 
Co.  V.  afc2Vii7J«  (decided  by  this  court  Jan.  4,  1897)  46  U.  S.  App.  578, 
23  C.  C.  A.  415,  and  77  Fed.  700. 

[Mfi]  (1)  The  claims  of  Dennehy  &  Co.  were  presented  by  petition 
to  their  name,  and  consisted  of  91  written  instruments,  called  rebate 
certificates  or  vouchers,  issued  by  the  Distilling  &  Cattle-Feeding 
Company  to  Charles  Dennehy  &  Co.,  aggregating  the  sum  of  ^5,238  23 
The  mstruments  are  of  various  dates,  numbers,  and  amounts,  and  in 
form  as  follows,  with  appropriate  insertions  in  the  blank  soaces 
respectively:  f^^^o. 

*'  Peoria,  111., ,  189-.    No. 

**  Subject  to  the  conditions  named  herein,  and  for  the  purpose  of 
securing  the  continuous  patronage  of  the  within-named  purchaser  the 
miccessors  and  assigns  of  the  same,  for  its  products,  the 'Dis- 
tilling &  Cattle-Feeding  Co.,  six  months  from  the  date  of  this  purchase 
voucher,  will  pay  to  Charles  Dennehy  &  Co.,  of  Chicago,  purchaser, 

dollars  (| ).  being  a  rebate  of  seven  cents  per  proof  gallon 

on proof  gallons  of  the  Distilling  and  Cattle-Feeding  Company's 

product  purchased  this  day.  This  voucher  will  be  valid  and  payable 
only  upon  condition  that  the  above-named  purchaser,  the  successors 
and  assigns  of  the  same,  from  the  date  of  this  voucher  to  the  time  of 
Its  paynunt  shall  have  bought  their  supply  of  such  kinds  of  goods  as 
are  produced  by  the  Distilling  and  Cattle-Feeding  Company  and  all 
compounds  thereof,  exclusively  of  one  or  more  of  the  dealers  named 
"**  ,?^  ^^^K  thereof,  until  further  notified,  and  shall  also  have  sub- 
scribed to  the  certificate  on  the  back  hereof. 

**Di8tUling  and  Cattle-Feeding  Co., 

"  By  J.  B.  Greenhut.  President 

*•  Not  transferable  nor  negotiable. 

"  When  due.  fonvard  to  the  (ierman-American  National  Bank  of 

H  '"*^%'        ^^  ^^^  ^^^^  voucher  is  payable  withjut  exchange  or  other 
cnarge. 


« Decision  In  77  Fed.,  900,  not  reprinted.    Nothing  in  it  relating  ta 
anti- trust  law,  restraint  of  trade,  or  illegal  combination. 
^  Syllabus  copyrighted,  1898,  by  West  Publishing  Co. 


DENNEHY   V,  M  NULTA. 


857 


Statement  of  the  Case. 

Printt^  upon  the  back  is  the  following  indorsement :  "  It  is  hereby 
certified  that  from  the  date  of  this  voucher  to  the  maturity  thereof 
the  within-named  purchaser,  and  the  successors  and  assigns  of  the 
same,  have  purchased  all  of  their  supply  of  such  kind  of  goods,  and 
their  compounds,  as  are  produced  by  the  Distilling  and  Cattle-Feeding 
Co.,  exclusively  from  one  or  more  of  the  dealers  named  hereon." 
Appended  thereto  is  a  list  of  61  dealers  or  distillers  referred  to,  vari- 
ously located  throughout  the  United  States. 

(2)  The  petition  of  Moses  Salomon  sets  up  that  he  is  the  assignee 
of  sundry  judgments  rendered  in  justices'  courts  against  the  Distilling 
&  Cattle-Feeding  Company,  and  also  the  holder  of  vouchers  on  which 
said  judgments  were  rendered :  but  it  appeared,  and  was  undisputed, 
that  appeals  from  the  judgments  were  perfected  and  pending,  whereby 
the  judgments  became  ineffective;  and  thereupon  the  petitioner 
Introduced  47  certificates  or  vouchers  issued  to  Stein  Bros.,  of  various 
dates,  numbers,  and  amounts,  aggregating  the  sum  of  $3,60i.64,  and 
similar  in  form  and  tenor  to  the  instrument  above  described,  except 
that  in  a  portion  thereof  the  rebate  was  named  at  "  five  cents  per 
proof  gallon,"  instead  of  seven  cents,  as  recited  in  the  sample  form, 
and  the  words,  "  Not  transferable  nor  negotiable,"  do  not  appear,  from 
the  record,  to  have  been  printed  or  stamped  thereon. 

It  is  not  claimed  that  the  payees  or  holders  in  either  case  complied 
in  any  respect  with  the  conditions  named  in  the  voucher.  On  the  con- 
trary, it  appears,  and  is  conceded,  that  there  was  neither  compliance 
not  attempt  to  i)erform  the  condition.  It  further  appears  that  no 
inerest  is  in  fact  asserted  by  either  of  the  payees  named  in  the 
vouchers:  but  that  (1)  the  Dennehy  &  Co.  vouchers  were  indorsed  in 
blank,  without  recourse,  by  that  corporation,  delivered  to  the  United 
States  Distilling  Company,  and  were  subsequently  delivered  to  one 
G.  E.  Jones,  for  whose  benefit,  as  finally  divulged,  the  claim  was  filed 
in  the  name  of  the  original  payees;  and  (2)  that  the  vouchers  issued 
to  Stein  Bros,  were  by  them  indorsed  payable  to  the  order  of  one 
Joseph  Wolf,  without  recourse,  and  by  the  latter  indorsed  in  blank, 
and  delivered  to  the  petitioner,  Salomon,  an  attorney  at  law,  under  an 
arrangement  that  Salomon  should  bear  all  expenses,  and  receive  one- 
half  of  any  amount  realized. 

The  hearing  upon  the  claims  was  before  a  special  master,  who 
reported  to  the  circuit  court  "the  testimony  and  evidence,  with  his 
conclusions  thereon."  Aside  from  the  matters  above  recited,  volum- 
inous testimony  was  introduced  on  behalf  of  the  claimants,  directed 
to  showing  that  the  Distilling  &  Cattle-Feeding  Company,  as  organized 
and  conducted,  was  a  combination  of  a  large  percentage  [8271  of  the 
distillers  of  the  coimtry,— asserted  to  be  85  per  cent,  thereof,— con- 
stituting an  illegal  trust,  monopolizing  and  controlling  the  product  of 
the  country  in  that  line  to  the  extent  of  nearly  90  per  cent ;  that  the 
system  of  rebate  vouchers  in  evidence  was  entered  into  and  designed 
to  carry  out  and  secure  the  purposes  of  the  monopoly;  that,  through 
this  control  of  the  major  share  of  distillery  products,  it  was  deemed  a 
business  necessity  on  the  part  of  Dennehy  &  Co.,  Stein  Bros.,  and 
other  dealers  throughout  the  country,  to  make  all  their  purchases  in 
that  line  from  the  distributors  of  the  combination ;  or,  as  stated  in  the 
argument  of  their  counsel,  it  became  "  impracticable  and  detrunental 
to  their  trade  to  buy  liquors  elsewhere,"  in  the  face  of  the  monopoly; 
but  it  also  appears  that  an  independent  and  accessible  supplv  existed 
in  fact.  The  conclusions  of  the  special  master  were  against  the  allow- 
ance of  the  claims  in  both  cases.  Exceptions  filed  by  each  claimant 
were  subsequently  heard  and  overruled  in  the  circuit  court  the  report 
of  the  special  master  in  each  case  was  confirmed,  and  final  decree 
entered  accordingly.  The  opinion  thereon,  by  Showalter,  Circuit 
Judge,  is  reported  in  77  Fed.  265. 


858  86  FEDERAL  BEPORTER,  827. 

Opinion  of  the  CJonrt 
Moses  Salomon^  for  appellants. 

Levy  MayeVy  for  appellees. 

Before  Woods  and  Jenkins,  Circuit  Judges,  and  Sea- 
man, District  Judge. 

Seaman,  District  Judge,  after  stating  the  case  as  above, 
delivered  the  opinion  of  the  court. 

Passing  technical  objections  to  consider  this  controversy 
upon  the  merits,  it  is  manifest  that  no  liability  is  chargeable 
against  the  Distilling  &,  Cattle- Feeding  Company,  except 
upon  one  or  the  other  of  the  following  propositions:  (1) 
That  the  conditions  contained  in  the  vouchers  may  either  be 
ignored  or  set  aside  for  illegality,  and  the  promise  thus  seg- 
regated may  be  enforced  without  performance  of  the  condi- 
tions; or  (2)  that  in  the  original  transactions  money  was 
paid  to  this  corporation  under  circumstances  from  which  the 
law  raises  an  implied  promise  of  repayment,  within  the  doc- 
trine of  money  had  and  received,  which,  ex  aequo  et  bono, 
belongs  to  the  party  by  whom  it  was  so  paid.  Under  either 
head,  the  mere  fact  that  the  corporation,  as  one  of  the  con- 
tracting parties,  may  constitute  an  unjust  monopoly,  and 
that  its  general  business  is  illegal, — a  status  apparently  held 
in  Distilling  <&  Cattle-Feeding  Co,  v.  People,  156  111.  448,  41 
N.  E.  188, — cannot  serve,  ipso  facto,  to  create  default  or 
liability  on  its  contracts  generally;  nor  can  such  fact  be 
invoked  collaterally  to  affect  in  any  manner  its  independent 
contract  obligations  or  rights.  Natio7ial  Distilling  Co.  v. 
Cream  City  Importing  Co..  86  Wis.  352,  355,  56  N.  W.  864. 

1.  Can  a  cause  of  action  be  predicated  upon  the  written 
agreement?  In  substance,  the  instrument  promises  that, 
"  subject  to  the  conditions  named,"  and  "  for  the  purpose  of 
securing  the  continuous  pati*onage"  of  the  purchaser  as 
payee  thereof,  the  Distilling  &  Cattle- Feeding  Company 
will,  in  six  months  after  date,  pay  to  the  purchaser  the 
amount  named,  "  being  a  rebate  of  seven  [or  five]  cents  per 
proof  gallon  "  on  a  purchase  that  day  made,  and  to  be  "  valid 
and  payable  only  on  condition  "  that  the  purchaser  named, 
his  successors  and  assigns,  from  date  of  the  voucher  to  the 
time  of  payment,  "shall  have  bought  their  supply  of  such 


DENNEHY   V.  M  NULTA. 


859 


opinion  of  the  Court. 

goods  as  are  produced  "  by  the  promisor  corporation  "  exclu- 
sively from  one  or  more  of  the  dealers  named  on  the  back," 
and  "shall  also  have  subscribed  to  the  certificate  on  the 
back."  The  terms  are  une-  [828]  qui  vocal  that  the  promise 
was  not  to  bind  the  corporation  unless  the  promisee  per- 
formed the  acts  stated.  In  other  words,  the  obligations  of 
the  contract  are  dependent  upon  a  condition  precedent;  and 
there  can  be  no  default  by  the  promisor  without  performance 
of  the  condition,  unless  waived  or  excused  by  acts  or  conduct 
on  the  part  of  the  promisor.  Under  the  contract  in  question, 
compliance  with  the  conditions  was  neither  obstructed  on  the 
one  side,  nor  attempted  on  the  other,  and  it  is  manifest  that 
no  right  of  action  at  law  has  accrued  in  favor  of  the  prom- 
isees. In  view  of  this  status,  the  appellants  contend  that  the 
claims  are  entitled  to  equitable  consideration,  because  (1) 
they  are  presented  in  the  course  of  a  proceeding  in  equity; 
and  (2)  this  condition  is  affixed  to  the  contract  as  a  means  by 
which  to  carry  out  the  illegal  purposes  of  a  monopoly  oper- 
ating in  restraint  of  trade,  and  for  that  reason  a  court  of 
equity  should  either  disregard  the  condition,  or  strike  it  out. 
But  assuming,  for  the  argimient,  that  both  premises  are  well 
taken,  no  relief  can  then  be  granted  for  enforcement  of  the 
contract,  as  no  consideration  is  left  to  support  the  promise. 
The  condition  is  the  sole  consideration  for  the  promise,  and, 
if  that  is  illegal,  the  promise  falls  with  it.  Even  if  the  con- 
sideration were  invalid  only  in  part,  the  same  result  would 
follow,  the  promise  being  indivisible.  Bish.  Cont.  §§  74, 
487 ;  3  Am.  &  Eng.  Enc.  Law,  886 ;  Greenh.  Pub.  Pol.  rule  24. 
No  element  of  the  contract  as  actually  made  between  the  par- 
ties remains  to  be  enforced.  A  court  of  equity  cannot  make 
a  new  contract  for  them,  nor  can  it  destroy  the  substance  of 
the  one  which  they  have  entered  into,  and  at  the  same  time 
preserve  the  contract  obligation.  Recovery  upon  the  vouch- 
ers  in  question,  with  the  conditions  unfulfilled,  would  have 
that  effect,  and  must  be  denied  in  equity  as  well  as  in  law. 
Klein  V.  In8ura7ice  Co.,  104  U.  S.  88,  91. 

2.  The  second  and  final  proposition  calls  for  the  applica- 
tion of  the  equitable  doctrine  on  which  assumpsit  may  be 
maintained  as  for  money  had  and  received,  and  the  right  to 
this  remedy  must  be  found  in  the  original  transactions  and 


860 


86   FBBERAX.   REPORTEB,  828. 


Opinion  of  the  Court 

circumstanoes  under  which  the  payments  were  made  to  the 
Distilling  &  Cattle-Feeding  Company.  These  were,  on  their 
face,  simple  contracts  of  bargain  and  sale,  and  the  only  pay- 
ments  referred  to  were  made  upon  distinct  purchases  of  su^ 
plies  at  stipulated  prices.  These  goods  were  legitimate  sub- 
jects of  trade,  and  there  was  no  illegality  in  the  nature  of  the 
contract  of  purchase.  There  is  no  pretense  that  the  pur- 
chaser was  either  deceived  or  mistaken.  On  the  contrary, 
Ms  purchase,  so  far  as  appears,  was  in  exact  compliance  both 
with  his  expectations  and  Ms  bargain.  It  is  not  asserted 
that  fraud  entered  directly  into  any  of  these  transactions; 
nor  is  there  impeachment  for  any  cause,  except  upon  the 
hypothesis  for  which  the  appellants  contend,  by  way  of  col- 
lateral attack  namely:  (1)  That  an  unlawful  combination 
enabled  the  seller  to  control  and  arbitrarily  fix  prices  upon 
nine-tenths  of  the  distillery  products  of  the  country;  (2) 
that  the  exigencies  of  business  on  the  part  of  the  purchasers 
constrained  them  to  deal  with  this  combination;  (3)  that  the 
amount  named  in  the  vouchers  as  rebate  was  bevond  the  fair 
price,  and  a  distinct  addition  to  the  price  which  was  imposed 
and  withheld  to  secure  continuance  of  the  trade.  And  upon 
the  line  of  testimony  introduced  as  tending  in  some  measure 
to  show  this  state  [829]  of  facts  the  appellants  rest  their 
right  to  recover  the  alleged  excess  in  the  prices  paid,  ai> 
money  paid  under  constraint  or  duress.  Without  consider- 
ing whether  the  testimony  referred  to  was  either  admissible 
under  the  issues,  or  of  the  effect  alleged,  and  conceding,  for 
the  purposes  of  the  case,  the  truth  of  each  of  the  above 
propositions  of  fact,  there  can  be  no  recovery  of  the  money 
so  paid,  for  the  reason  that  no  actual  duress  is  shown,  and  no 
element  exists  to  make  the  papnent  involuntary  or  compul- 
sory. Radich  v.  Hutchins^  95  U.  S.  210,  213;  Lonergan  v. 
Buford,  148  U.  S.  581, 590, 13  Sup.  Ct.  684 ;  6  Am.  &  Eng.  Enc. 
Law,  57,  tit.  "  Duress,"  and  cases  cited.  In  Radich  v.  Hutch- 
insj  supra^  it  is  said : 

"To  constitute  the  coercion  or  duress  which  will  be  regarded  as 
sufficient  to  make  a  payment  involuntary,  .  .  .  there  must  be  some 
actual  or  threatened  exercise  of  power  possessed,  or  believed  to  be 
possessed,  by  the  party  exacting  or  receiving  payment,  over  the  per- 
son or  property  of  another,  from  which  the  latter  has  no  other  means 
of  immediate  relief  than  by  making  the  payment.  As  stated  by  the 
court  of  appeals  of  Maryland,  the  doctrine  established  by  the  authori- 


DENNEHY   V.    M  NULTA. 


Opinion  of  the  Court. 


861 


ties  Is  that  '  a  payment  is  not  to  be  regarded  as  compulsory,  unless 
made  to  emancipate  the  person  or  property  from  an  actual  and  ex- 
isting duress  imposed  upon  it  by  the  party  to  whom  the  money  is 
^paid.'  Mayor,  etc.,  v.  Lefferman,  4  Gill,  425 ;  Brumagim  v.  Tillinghast, 
18  pal.  265 ;  Mays  v.  Cincinnati,  1  Ohio  St  268." 

In  the  case  at  bar  neither  the  persons  nor  the  property  of 
the  purchasers  were  within  the  physical  control  of  the  sellers 
when  the  contracts  of  purchase  were  entered  into,  or  when 
the  payments  were  made  thereupon,  and  in  the  eye  of  the  law 
the  transactions  were  voluntary.  At  the  utmost,  the  cir- 
cumstances here  assumed  show  an  urgent  need  for  the  goods 
to  keep  up  their  stock  and  continue  in  trade,  and  to  that  end 
a  business  necessity  to  make  their  purchases  from  the  illegal 
combination,  because  it  so  far  controlled  the  market  that  they 
had  reason  to  fear  disastrous  results  if  supplies  were  sought 
elsewhere.  However  urgent  this  need  may  have  seemed  for 
preservation  of  business  interests,  it  cannot  operate  to  change 
the  payment  made  upon  such  purchases  from  the  voluntary 
character  impressed  by  the  contract  into  the  involuntary 
payment  which  may  be  reclaimed.  Emery  v.  City  of  Lowell^ 
127  Mass.  138,  140;  Custin  v.  City  of  Viroqua,  67  Wis.  314, 
320,  30  N.  W.  515,  and  cases  cited;  6  Am.  &  Eng.  Enc.  Law, 
71.  As  the  purchaser  elected  to  take  the  goods  upon  the 
terms  fixed,  and  with  all  the  circumstances  in  mind,  his 
rights  must  be  measured  by  the  contract,  and  not  by  the 
motives  which  influenced  either  party  to  enter  into  it.  If 
the  seller  took  advantage  of  his  necessities,  and  made  the 
price  excessive,  it  would  be  subversive  of  the  well-established 
rules*  which  govern  contract  rights  to  receive  testimony  of 
such  circumstances,  to  so  modify  the  terms  agreed  upon,  and 
allow  recovery  of  the  excess  in  price.  In  the  case  of  an 
injurious  combination  of  the  nature  asserted  here,  the  remedy 
is  by  well-recognized  and  direct  proceedings;  but  one  who 
voluntarily  and  knowingly  deals  with  the  parties  so  com- 
bined cannot,  on  the  one  hand,  take  the  benefit  of  his  bargain, 
and,  on  the  other,  have  a  right  of  action  against  the  seller 
for  the  money  paid,  or  any  part  of  it,  either  upon  the  ground 
that  the  combination  was  illegal,  or  that  its  prices  were  un- 
reasonable. We  are  of  opinion  that  no  foundation  is  es- 
tablished for  either  set  of  claims,  and  the  decree  thereupon  is 
affirmed. 


862 


88  FEDERAL  REPORTER,  659. 


Opinion  of  the  Court. 

m^  SOUTHEKN  INDIANA  EXP.  CO.  v,  UNITED 

STATES  EXP.  CO.  ET  AL.« 

(Circuit  Court,  D.  Indiana.    August  4,  1898.) 
[88  Fed.,  659.] 

Cakbiebs  of  Goods — ^Duties  of  Connecting  Lines  Inter  Se. — ^The 
rules  of  tlie  common  law  do  not  require  a  carrier  to  receive  goods 
for  carriage,  either  from  a  consignor  or  a  connecting  carrier,  with- 
out prepayment  of  its  charges  if  demanded,  nor  to  advance  the 
charges  of  a  connecting  carrier  from  which  it  receives  goods  in  the 
course  of  transportation;  nor  can  it  be  required  to  extend  such 
credit  or  make  such  advances  to  one  connecting  carrier  because  It 
does  so  to  another.^ 

1060]  Same — Expbess  Companies — Intebstate  Commebce  Act. — ^The 
Interstate  commerce  act  does  hot  apply  to  independent  express  com- 
panies not  operating  railway  lines. 

Monopolies— Anti-Tbust  Law— Remedies.— The  anti-trust  law  of  July 
2,  1890,  does  not  authorize  a  court  of  equity  to  entertain  a  bill  by 
a  private  party  to  enforce  its  provisions,  his  remedy  being  by  an 
action  at  law  for  damages. 

Cabriers— Express   Companies — Indiana    Statute. — The   statute   of 
Indirtua  prescribing  the  duties  of  railroads  with  reference  to  inter- 
secting lines  (2  Bums'  Kev.  St.  1894,  §  5153;  Rev.  St  1881,  §  3903) 
has  no  application  to  express  companies. 

Same— Custom— Sufficiency  op  Allegation.— In  a  bill  against  three 
express  companies,  an  allegation  of  a  custom  between  defendants 
to  receive  goods  from  each  other  for  transportation  without  pre- 
payment of  chai-ges,  and  to  advance  back  charges  to  each  other,  is 
not  an  allegation  of  a  general  custom  of  the  business,  which  would 
bind  defendants  to  pursue  the  same  method  with  other  companies. 

This  was  a  bill  by  the  Southeni  Indiana  Express  Company 
against  the  United  States  Express  Company  and  others. 
Heard  on  demurrer  to  bill. 

Joseph  H.  Shea  and  Francis  M.  Trissall,  for  complainant. 
Baker  <&  Daniels^  for  defendants. 
Bakeb,  District  Judge. 

This  bill  is  filed  by  the  Southern  Indiana  Express  Com- 
pany, a  corporation  organized  and  existing  under  the  laws 

« Affirmed  by  Circuit  Court  of  Appeals,  Seventh  Circuit  (92  Fed., 
1022).    Memorandum  decision.    See  p.  093. 
»  Syllabus  copyrighted,  1898,  by  West  Publishing  Co. 


SOUTHEBN   IND.    EXP.    CO.    V,   U.   S.   EXP.   CO. 


863 


opinion  of  the  Court 

of  the  state  of  Indiana,  against  the  United  States  Express 
Company,  the  American  Express  Company,  the  Adams  Ex- 
press Company,  and  certain  individual  defendants,  alleged 
to  be  officers  and  stockholders  in  said  companies.  The  ex- 
press companies  are  allied  to  be  joint-stock  associations 
organized  under  the  law  of  the  state  of  New  York,  which 
is  as  follows : 

"Any  joint-stock  company  or  association  consisting  of  seven  or  more 
shareholders  or  persons  may  sue  and  be  sued  in  the  name  of  the  presi- 
dent or  treasurer  for  the  time  being  of  such  joint-stock  company  or 
association ;  and  all  suits  and  proceedings  so  prosecuted  by  or  against 
such  joint-stock  company  or  association,  and  the  service  of  all  process 
or  papers  in  such  suits  and  proceedings  on  the  president  or  treasurer, 
for  the  time  being,  of  such  joint-stock  company  or  association,  shall 
have  the  sauie  force  and  effect  as  regards  the  joint  rights,  proi)erty 
and  effects  of  such  joint-stock  company  or  association,  as  if  such 
suits  and  proceedings  were  prosecuted  in  the  names  of  all  the  share- 
holders and  associates  in  the  manner  now  provided  by  law." 

The  bill  alleges  that  the  defendant  companies  have  been  for 
many  years  engaged  in  the  express  business,  and  in  carrying 
articles  of  trade  and  commerce  over  railroads  under  contracts 
with  them,  and  have  been  declared  by  the  law  of  this  and 
other  states  to  be  common  carriers,  subject  to  all  the  lia- 
bilities, and  bound  to  perform  all  the  duties,  of  such  common 
carriers;  that  the  complainant  entered  into  a  contract  with 
the  Southern  Indiana  Railway  Company,  a  railway  located 
wholly  within  this  state,  to  carry  on  an  express  business  over 
said  railway  for  fiYQ  years  from  and  after  June  30, 1898 ;  that 
the  defendant  companies  carry  on  an  express  business  over 
railroads  which  connect  with  the  Southern  Indiana  Railway, 
and  that  the  express  business  originating  on  the  line  of 
railway  over  which  the  complainant  carries  on  its  business 
cannot  be  transported  to  its  destination  without  pass- 
[661  ]  ing  over  one  or  more  of  the  lines  of  railway  over  which 
some  one  of  the  defendant  companies  carries  on  its  business; 
that  the  usage,  long  established,  over  the  Southern  Indiana 
Railway  by  the  defendants,  as  well  as  long,  continuously, 
universally,  and  uninterruptedly  established  by  them  over 
the  lines  of  railway  on  which  they  carry  on  their  business, 
was  to  receive  and  deliver  to  each  other  packages  for  points 
beyond  their  own  routes,  so  that  a  package  for  a  distant 
point  is  transferred  from  one  express  company  to  another  as 
often  as  required  to  reach  its  destination,  and  is  taken  by  one 


864 


88  PEDEKAL   KEPOBTER,  661. 
Opinion  of  the  Court 


continuous  and  unbroken  carriage,  and,  to  facilitate  prompt- 
ness and  simplicity  in  transfers  from  one  company  to  another, 
the  receiving  company  pays  to  the  tendering  company  all 
charges  which  have  accrued  for  carriage  to  the  point  of  ten- 
der, known  as  "  accrued  charges  "  or  "  advance  charges,"  so 
that  the  company  having  advanced  all  the  accrued  charges 
receives  from  the  consignee  and  retains  the  whole  amount  of 
charges  to  the  point  of  destination;  that  another  of  such 
established  customs  and  usages  is  to  receive  and  forward 
packages  from  each  others'  lines  to  consignees  at  points  of 
destination  over  the  lines  of  the  others  without  requiring  the 
prepayment  of  charges  from  the  consignor  or  the  company 
to  which  the  package  is  delivered  to  be  forwarded;  that 
another  of  the  customs  and  usages  established  is  the  fixing  and 
publication  of  tariff  charges  for  carrying  packages  from  and 
to  all  points,  which  tariffs  are  divided  pro  rata  between  each 
of  the  companies  handling  the  package.    The  bill  then  pro- 
ceeds to  aver  that  these  usages  and  methods  of  doing  busi- 
ness were  safe,  reasonable,  and  essential  to  the  quick  and 
simple  transfer  of  packages,  and  to  the  transaction  of  the 
express  business,  and  that  any  company  denied  the  facilities 
thus  afforded  would  be  unable  to  compete  in  the  same  busi- 
ness with  another  company  which  could  avail  itself  of  such 
usages,  and  could  not  do  a  general  express  business  so  as 
adequately  to  accomodate  the  public.    The  bill  then  proceeds 
to  allege  that  the  defendant  companies  refuse,  when  articles 
of  trade  and  commerce  carried  by  the  complain  fan]  t  are  ten- 
dered to  the  defendants,  to  pay  the  accrued  charges,  or  to  re- 
ceive and  transport  to  their  destination  any  such  articles 
without  the  prepayment  of  the  charges  for  such  transfers. 
The  prayer  of  the  bill  is  that  the  defendants  may  be  enjoined 
and  restrained  from  refusing  to  receive  any  and  all  parcels 
offered  or  delivered  to  them  by  complainant  for  transporta- 
tion and  delivery  to  consignees,  and  from  demanding  prepay- 
ment of  their  charges  for  such  transportation,  and  from  re- 
taining and  withholding  from  the  complainant  all  sums  of 
money  known  as  accrued  charges  for  express  matter  delivered 
to  them  by  the  complainant,  and  from  refusing  to  or  retain- 
ing from  the  complainant  the  reasonable  pro  rata  part  of  the 


SOUTHERN    IND.    EXP.    CO.    V.   IT.   S.   EXP.   CO.  865 

Opinion  of  the  Court. 

charges  and  compensation  complainant  may  earn  ui)on  ex- 
press business  originating  off  its  line. 

The  grounds  upon  which  these  claims  for  injunctive  relief 
are  predicated  are:  (1)  That  such  is  the  duty  of  common 
carriers  at  common  law;  (2)  that  such  is  their  duty  under 
the  interstate  commerce  act;  (3)  that  such  is  the  require- 
ment of  the  anti-trust  law;  (4)  that  such  duty  is  imposed 
upon  them  by  the  custom  and  usage  set  up  in  the  bill. 

The  defendant  companies  have  demurred  to  the  bill  and 
the  amendment  thereto,  on  the  ground  that  the  court  is  with- 
out jurisdiction,  [662]  and  also  because  the  bill  and  the 
amendment  are  without  equity,  on  the  facts  stated. 

Waiving,  without  deciding,  the  question  of  jurisdiction, 
the  court  is  of  opinion  that  the  bill  cannot  be  maintained  on 
any  one  of  the  above-stated  grounds. 

1.  There  is  no  principle  of  the  common  law  requiring  a 
conmion  carrier  receiving  articles  of  trade  and  commerce 
from  a  connecting  line  to  advance  or  assume  the  payment  of 
the  charges  accrued  thereon  for  the  transportation  of  such 
articles  from  the  point  of  origin  to  the  connecting  line.     If 
it  does  thus  pay  or  assume  such  accrued  charges,  it  can  retain 
a  lien  upon  the  property  transported   for  their   payment 
as  well  as  for  the  payment  of  the  charges  due  to  itself  for 
such  transportation.     An  express  company,  like  any  other 
common  carrier,  has  a  right  to  demand  that  its  charges  for 
transportation  shall  be  paid  in  advance,  and  is  under  no 
obligation  to  receive  goods  for  transpctrtation  unless  such 
charges  are  paid  if  demanded.     Nor  is  such  express  company 
under  any  obligation  to  pay  to  the  tendering  company  the 
charges  due  to  it  for  its  services  in  transporting  such  articles 
of  trade  and  commerce  from  the  point  of  origin  to  iho^  point 
of  tender.     It  is  true  that  the  general  practice  is  to  collect 
the  charges  upon  delivery  of  the  goods  to  the  consignee,  and, 
when  goods  are  received  without  payment  in  advance  being 
demanded,  it  becomes  the  duty  of  the  carrier  to  transport 
them  to  their  destination,  or  to  deliver  them  to  the  next  re- 
ceiving  carrier.    Keceiving   the    goods   for   transportation 
without  any  demand  for  prepayment  of  charges  constitutes 
a  waiver  of  such  right.     The  carrier  holds  a  lien  upon  the 
11808— VOL  1—06  M 55 


866 


88  FEDERAL   KEPORTER,  662. 


Opinion  of  the  Court 

goods  for  payinent  of  charges,  and,  in  case  of  a  delivery  of 
them  to  the  consignee  before  payment,  it  can  hold  him  re- 
sponsible therefor.  The  same  rule  applies  whether  the  ar- 
ticles of  trade  and  commerce  are  received  from  the  original 
consignor  or  from  a  connecting  carrier.  An  express  com- 
pany, in  the  absence  of  contract,  is  under  no  obligation  to 
receive  and  transport  for  the  original  consignor,  or  to  con- 
tinue the  transportation  for  a  connecting  carrier,  without 
the  prepayment  of  its  charges  if  demanded.  The  furnishing 
of  equal  facilities,  without  discrimination,  does  not  require 
a  common  carrier  to  advance  monev  to  all  other  carriers  on 
the  same  terms,  nor  to  give  credit  for  the  carriage  of  articles 
of  trade  and  commerce  to  all  carriers  because  it  extends 
credit  for  such  services  to  others.  Oregon  Short-Line  cf? 
U,  N,  Ry.  Co,  V.  Northern  Pac,  R.  Co,,  6  C.  C.  A.  409,  61 
Fed.  158;  Id.,  51  Fed.  465;  Little  Roch  d'  M,  R.  Co,  v.  ;S'^. 
Louis  S.  TF.  Ry,  Co.,  11  C.  C.  A.  417,  63  Fed.  775;  Little 
Rock  &  M,  R,  Co,  V.  St.  Louis,  L  M,  d;  S,  Ry,  Co,,  41  Fed. 
559. 

2.  The  interstate  commerce  act  has,  so  far  as  express  com- 
panies not  operating  railway  lines  are  concerned,  wrought 
no  change  of  the  common  law  in  this  regard.  At  an  early 
day  the  question  was  raised  whether  express  companies  were 
subject  to  the  provisions  of  the  interstate  commerce  act,  and, 
after  full  argument  and  deliberate  consideration,  the  inter- 
state commerce  commission  unanimously  decided  that  the 
act  did  not  apply  to  express  companies  properly  so  termed; 
that  is  to  say,  to  independent  organizations  that  carried  on 
an  express  or  parcel  business  in  the  usual  manner,  and  which 
did  not  operate  railway  lines.  In  re  Express  Companies, 
1  Interst.  Commerce  Com.  E.  349.  [663]  This  case  was  de- 
cided on  December  28,  1887.  The  commission  shortly  there- 
after called  the  attention  of  congress  to  their  ruling,  and 
suggested  such  an  amendment  of  the  law  as  would  place  ex- 
press companies  within  their  jurisdiction;  but,  although 
more  than  10  years  have  elapsed,  congress  has  taken  no  action 
on  the  subject.  The  same  conclusion  was  reached  in  U.  S.  v. 
Morsman,  42  Fed.  448.  After  a  careful  consideration  of 
the  question,  I  see  no  reason  to  doubt  the  correctness  of  the 


/ 


SOUTHERN   IND.   EXP.    CO.    V.   U.   S.   EXP.    CO.  867 

Opinion  of  tlie  CJourt 

conclusions  reached  in  these  cases.  Under  the  averments 
of  the  bill,  it  is  manifest  that  neither  of  the  express  com- 
panies is  affected  by  the  interstate  commerce  act. 

3.  The  anti-trust  law  of  July  2,  1890,  has  wrought  no 
such  change  in  the  law  as  will  enable  the  court  to  enforce  its 
provisions  in  favor  of  a  private  party  by  a  bill  in  e^juity. 
Under  this  act,  the  only  remedy  given  to  any  other  part}^ 
than  the  government  of  the  United  States  is  an  action  at  law 
for  threefold  damages,  with  costs  and  attorney's  fees,  and 
the  only  party  entitled  to  maintain  a  bill  in  equity  for  in- 
junctive relief  for  an  alleged  violation  of  its  provisions  is 
the  United  States  by  its  district  attorney,  on  the  authoriza- 
tion of  the  attorney  general.  Gulf,  C,  c&  S.  F.  Ry.  Co.  v. 
Miami  S.  S.  Co.,  30  C.  C.  A.  142,  86  Fed.  407,  and  cases  there 
cited. 

Nor  does  section  5153,  2  Burns'  Rev.  St.  1894  (section 
3903,  Rev.  St.  1881),  aid  the  complainnt's  contention.  The 
sixth  paragraph  of  that  section  is  as  follows: 

"Every  siicli  corporation  shall  possess  the  generdl  powers  and  be 
subject  to  the  liabilities  and  restrictions  expressed  in  the  special 
powers  following:  ♦  ♦  *  To  cross,  intersect,  join  and  unite  it« 
railroad  with  any  other  railroad  before  constructed  at  any  other 
point  on  its  route  and  upon  the  grounds  of  such  other  railway  com- 
pany, with  the  necessaiy  turnouts,  sidiugs,  switches  and  other  con- 
veniences in  furtherance  of  the  objects  of  its  connections;  and 
every  company  whose  railroad  is  or  shall  be  hereafter  intersected 
by  any  new  railroad,  shall  unite  with  the  owners  of  such  new  rail- 
road in  forming  such  intersection  and  connections  and  grant  the 
facilities  aforesaid." 

This  paragraph  plainly  is  not  applicable  to  express  com- 
paines  which,  like  these  defendants,  do  not  own,  control,  or 
operate  a  railroad  line,  but  Avhich  simply  contract  for  space 
on  railroad  trains  for  iho^  transportation  of  articles  of  trade 
and  commerce  committed  to  their  care.  Besides,  the  con- 
nections and  facilities  referred  to  are  manifestly  the  physical 
connections  essential  to  constitute  the  two  railroads  connect- 
ing lines.  Such  is  the  view  of  ih^  supreme  court  of  this 
state.  Lake  Shore  <&  M.  S.  Ry.  Co.  v.  Cincinnati,  W,  <&  M. 
Ry.  Co.,  116  Ind.  578,  19  N.  E.  440;  Chicago,  St.  L,  d  P,  R. 
Co,  V.  Cincinnati,  W,  d  M,  Ry.  Co.,  126  Ind.  513,  26  N.  E. 
204.  The  same  view  of  a  very  similar  provision  of  the 
constitution  of  Colorado  Avas  taken  by  the  supreme  court  of 


868 


88   FEDERAL   REPORTER,  663. 


Opinion  of  the  Court. 

the  United  States  in  Atchison,  T.  <§  S.  F.  Ry.  Co,  v.  Denver 
dt  N,  O.  R.  Co.,  110  U.  S.  r>r,7,  4  Sup.  Ct.  185. 

4.  There  is  not  shown  bv  the  averments  of  the  bill  and  the 
aiiieudment  to  be  any  such  custom  or  usage  as  would  juscify 
the  court  in  granting  the  relief  prayed  for.  The  right  of 
the  complainant  to  such  relief  depends  upon  its  showing 
the  existence  of  a  custom  or  usage  having  the  force  of  law 
in  the  express  business  of  the  country.  It  is  not  enough  to 
ullege  and  pi-ove  a  custom  or  usage  among  one  ur  more 
express  companies  to  jwiy  accrued  charges  by  the  receiving 
company,  [664]  or  to  transport  without  prepayment  of 
charges  to  the  jxjint  of  destination.  Before  a  custom  or 
usage  can  acquire  the  forc^e  of  law,  it  must  appear  that  it  is 
general  and  luiiforni  in  the  business  to  be  affected  b\  it, 
and  that  such  custom  or  usage  has  lieen  i>eaceably  acquiescetl 
in  without  dispute  for  a  long  period  of  time.  The  custom 
or  usage  set  out  in  the  bill  is  not  shown  to  be  of  this  char- 
acter. It  is  certainly  beyond  the  power  of  the  defendants, 
by  any  custom  or  usage  established  between  themselves,  to 
comi^el  all  other  express  companies  in  this  country  to  sub- 
mit to  the  customs  and  usage's  which  they  have  adopted. 
Nor  because  the  defen<laiits  consent  to  pay  accrued  charges 
between  themselves,  and  to  continue  the  carriage  of  articles 
of  trade  and  commerce  to  their  destination  without  prepay- 
ment, can  they  be  required  to  do  the  same  for  all  others. 
While  the  method  of  doing  business  alleged  to  exist  between 
the  three  defendant  express  companies  is  certainly  highly 
advantageous  to  the  prompt  and  speedy  transportation  of 
parcels  and  packages,  the  law  cannot  compel  them  to  con- 
tinue this  method  of  doing  business,  even  between  them- 
selves, much  leas  as  between  themselves  and  others  with 
whom  heretofore  they  have  had  no  busines-^  i-elations. 
Whether  such  a  duty  can  be  imposed  by  legislative  enact- 
ment we  need  not  consider,  for  no  such  exercise  of  power 
has  as  yet  been  attempted. 

In  the  opinion  of  the  court,  the  demurrer  must  be  sus- 
tained, and,  as  no  amendment  can  make  a  better  case,  the 
bill  and  the  amendment  will  be  dismissed,  at  complainant's 
costs. 


UNITED   STATES   V.   JOINT   TRAFFIC   ASSOCIATION.     869 

Syllabus. 

11020]  UNITED  STATES  v,  JOINT  TRAFFIC  ASS'N. 

(Circuit  Court  of  Api^eals,  Second  Circuit.    March  19,  1897.)     No.  92. 

[89  Fed.,  1020.] 

Appeal  from  the  Circuit  Court  of  the  United  States  for  the 
Southern  District  of  New  York.  Wallace  Macfarlane,  U.  S. 
Atty.  Charles  Rowland  Eussell,  Allen  McCuUoh,  Ashbel 
Green,  Frank  Loomis,  and  Carter  &  Ledvard,  for  appellee. 
No  opinion.  Affirmed.  See  76  Fed.  895  Wp.  015),  also  171 
U.S.  505]. 

f  Copyri;,'lit,  imi  by  West  Publishing  Co.] 


[505J  UNITED  STATES  v.  JOINT  TRAFFIC  ASSO- 

CIATION.« 

APPEAL  FROM  THE  CIRCUIT  COl  RT  OF  APPEALS  FOR  THE  SECOND 

CIRCUIT. 

No.  84.     Argued  February  24,  25,  1898.— Decided  October  24,  1898. 

[171  U.  S.,  505.] 

Thirty-oue   railroad   companies,   engaged   in    transportation   between 
Chicago  and  the  Atlantic  coast,  formed  themselves  into  an  associa- 
tion knoM  n  as  the  Joint  Traffic  Association,  by  which  they  agreed 
that  the  association  should  have  jurisdiction  over  competitive  traffic, 
except  as  noted,  passing  through  the  western  termini  of  the  trunk 
lines  and  such  other  points  as  might  be  thereafter  designated,  and  to 
fix  the  rates,  fares  and  charges  therefor,  and  from  time  to  time 
change  the  same.    No  party  to  the  agi-eement  was  to  be  permitted 
to  deviate  from  or  change  those  rates,  fares  or  charges,  and  its  action 
in  that  respect  was  not  to  affect  rates  disapproved,  except  to  the  ex- 
tent of  its  interest  herein  over  is  own  road.    It  was  further  agreed 
that  the  powers  so  conferred  upon  the  managers  should  be  so  con- 
strued and  exercised  as  not  to  permit  violation  of  the  Interstate 
Commerce  Act,  and  that  the  managers  should  cooperate  with  the 
Interstate  Commerce  Commission  to  secure  stability  and  uniformity 
in  rates,  fares,  charges,  etc.    The  managei-s  were  given  power  to  de- 
cide and  enforce  the  course  which  should  be  pursued  with  connect- 
ing companies,  not  parties  to  the  agreement,  which  declined  or  failed 
to  observe  the  established  rates.    Assessments  were  authorized  in 
order  to  pay  expenses,  and  the  agreement  was  to  take  effect  January 


«  Bill  to  enjoin  the  execution  of  an  agreement  claimed  to  be  in  viola- 
tion of  the  interstate  commerce  act  dismissed  by  Circuit  Court  for  the 
Southei-n  District  of  New  York   (76  Fed.,  895),     See  p.  61.5.     Decree 
affirmed  by  Circuit  Court  of  Appeals,  Second  Circuit  (89  Fed    1020) 
memorandum  decision.    See  above. 


870 


171  UNITED  STATES  BEPOBTS^  505. 


Syllabus. 

1, 1896,  and  to  continue  in  existence  for  five  years.  The  bill,  filed  on 
behalf  of  the  United  States,  sought  a  judgment  declaring  that  agree- 
ment Tofd.    If  eld, 

(1)  That  upon  comparing  this  agreement  with  the  one  set  forth  In 

United  States  v,  Tnms-Missouri  Freight  Association,  166  U.  S. 
290,  the  similarity  between  them  suggests  that  a  similar  re- 
sult should  be  reached  in  the  two  cases,  as  the  point  now 
taken  was  urged  in  that  case,  and  was  then  intentionally  and 
necessarily  decided ; 

(2)  That  so  far  as  the  establishment  of  rates  and  fares  is  concerned 

there  is  no  substantial  difTerence  between  this  agreement  and 
the  one  set  forth  In  the  Tram-Missouri  case; 

(3)  That  Congress,  with  regard  to  the  interstate  commerce,  and  In 

the  course  of  regulating  it  in  the  case  of  railroad  corporations, 
has  the  power  to  say  that  no  contract  or  combination  shall  be 
legal,  which  shall  i-estrain  trade  and  commerce,  by  shutting 
out  the  operation  of  the  general  law  of  competition.a 

[43  L.  ed.,  259.]  6 

[The  right  of  a  railroad  company  in  a  jolnt-trafflc  association  to  devi- 
ate from  the  rates  prescribed,  provided  it  a*ts  on  a  resolution  of  its 
board  of  directors  and  senses  a  copy  thereof  on  the  managers  of  the 
association,  who,  upon  its  receipt,  are  re<|uired  to  "  act  pnwnptly  for 
the  protection  of  the  parties  hereto,  does  not  relieve  the  associa- 
tion from  condemnatinn  as  an  illepil  restraint  of  compptition,  as  the 
privilege  of  deviating  from  the  rates  would  be  exercised  upon  pain 
of  a  war  of  competition  against  it  by  the  whole  association.] 

[Congress  has  the  power  to  prohibit  as  in  restraint  of  interstate  com- 
merce, a  contract  or  combination  l)etween  compptinjx  railroad  com- 
panies to  establish  and  maintain  interstate  rates  and  fares  for  the 
transportation  of  fici^lit  aiul  passen^'crs  on  any  of  the  railroads 
parties  to  the  contract  or  c-onibinatiou.  men  though  the  rates  and 
fares  thus  established  are  reasonable.] 

[Congress  has  power  to  forbid  any  ayfi-ccment  or  combination  among 
or*  between  coinpi'tinji  railroad  companies  for  interstate  commerce, 
by  means  of  which  eomjietition  was  prevented.] 

[The  constitnti<mal  freedom  of  «'ontract  as  to  the  use  and  manage- 
ment of  property  does  not  include  the  riglit  of  railroad  companies  to 
combine  as  one  consolidated  and  powerful  assiwiation  for  tlie  pur- 
pose of  stifling  competition  among  tliemselves,  and  of  thus  keeping 
their  rates  and  charges  Iiigher  than  they  might  otherwise  be  under 
the  laws  of  competition,  even  if  their  rates  and  charjres  are 
reasonable.] 

a  The  foregoing  syllabus  and  the  abstracts  of  arguments  copyrighted, 
1898,  by  Banks  &  Bros. 

&  The  following  paragraphs  inclosed  in  iJrackets  comprise  the  sylla- 
bus to  this  case  in  the  U.  S.  Supreme  Court  Reports,  Book  43,  p.  259. 
Copyrighted,  1899,  by  The  Lawyers'  Co-Operative  Publishing  Co. 


UNITED    STATES    V,    JOINT    TRAFFIC    ASSOCIATION.      87l 

Statement  of  the  Case. 

[The  statute  under  review  is  a  legitimate  exercise  of  the  power  of 
Congress  over  interstate  commerce,  and  a  valid  regulation  thereof.] 

[An  agreement  of  railroad  companies  which  directly  and  effectually 
prevents  competition  is,  under  the  statute,  in  restraint  of  trade,  not- 
withstanding the  possibility  that  a  restraint  of  trade  might  also 
follow  unrestricted  competition,  which  might  destroy  weaker  roads 
and  give  the  survivor  power  to  raise  rates.] 


The  bill  was  filed  in  this  case  in  the  Circuit  Court  of  the 
United  States  for  the  Southern  District  of  New  York  for  the 
purpose  of  obtaining  an  adjudication  that  an  agreement 
[506]  entered  into  between  some  thirty-one  different  railroad 
companies  was  illegal,  and  enjoining  its  further  execution. 

These  railroad  companies  formed  most  (but  not  all)  of  the 
lines  engaged  in  the  business  of  railroad  transportation  be- 
tween Chicago  and  the  Atlantic  coast,  and  the  object  of  the 
agreement,  as  expressed  in  its  preamble,  was  to  form  an  asso- 
ciation of  railroad  companies  "  to  aid  in  fulfilling  the  purpose 
of  the  Interstate  Commerce  act,  to  cooperate  with  each  other 
and  adjacent  transportation  associations  to  establish  and 
maintain  reasonable  and  just  rates,  fares,  rules  and  regulations 
on  state  and  interstate  traffic,  to  prevent  unjust  discrimination 
and  to  secure  the  reduction  and  concentration  of  agencies  and 
the  introduction  of  economies  in  the  conduct  of  the  freight 
and  passenger  service."  To  accomplish  these  purposes  the 
railroad  companies  adopted  articles  of  association,  by  which 
they  agreed  that  the  affairs  of  the  association  should  be  ad- 
ministered by  several  different  boards,  and  that  it  should  have 
jurisdiction  over  all  competitive  traffic  (with  certain  excep- 
tions therein  noted)  which  passed  through  the  western  termini 
of  the  trunk  lines  (naming  them),  and  such  other  i:)oints  as 
might  be  thereafter  designated  by  the  managers.  The  duly 
published  schedules  of  rates,  fares  and  charges,  and  the  rules 
applicable  thereto,  which  were  in  force  at  the  time  of  the  exe- 
cution of  the  agreement  and  authorized  by  the  different  com- 
panies and  filed  with  the  Interstate  Commerce  Commission, 
were  reaffirmed  by  the  companies  composing  the  association. 
From  time  to  time  the  managers  were  to  recommend  such 
changes  in  the  rates,  fares,  charges  and  rules  as  might  be 
reasonable  and  just  and  necessary  for  governing  the  traffic 


171   UNITED   STATES   REPORTS,  506. 
Statement  of  the  Case. 


covered  by  the  agreement  and  for  protecting  the  interests  of 
the  parties  to  the  agreement,  and  a  faihire  to  observe  such 
recommendations  by  any  of  the  parties  to  the  agreement  was 
to  be  deemed  a  violation  of  the  agreement.  No  company 
which  was  a  party  to  it  was  permitted  in  any  way  to  deviate 
from  or  to  change  the  rates,  fares,  charges  or  rules  set  forth  in 
the  agreement  or  recommended  by  the  managers,  except  by  a 
resolution  of  the  board  of  directors  of  the  company,  and  its 
action  was  not  to  affect  the  rates,  etc.,  disapproved,  except  to 
the  ex-  [507  J  tent  of  its  interest  therein  over  its  own  road.  A 
copy  of  such  resolution  of  the  board  of  any  company  author- 
izing a  change  of  rates  or  fares,  etc.,  was  to  be  immediately 
forwarded  by  the  company  making  the  same  to  the  managers 
of  the  association,  and  the  change  was  not  to  become  effective 
until  thirty  days  after  the  receipt  of  such  resolution  by  the 
managers.  Upon  the  receipt  of  such  resolution  the  managers 
were  "  to  act  promptly  upon  the  same  for  the  protection  of 
the  parties  hereto."  It  was  further  stated  in  the  agi-eement 
that  "  the  powers  conferred  upon  the  managers  shall  be  so  con- 
strued and  exercised  as  not  to  permit  violation  of  the  Inter- 
state Commerce  act,  or  any  other  law  applicable  to  the 
premises  or  any  provision  of  the  charters  or  the  laws  appli- 
cable to  any  of  the  companies  parties  hereto,  and  the  mana- 
gers shall  cooperate  with  the  Interstate  Commerce  Commis- 
sion to  secure  stability  and  uniformity  in  the  rates,  fares, 
charges  and  rules  established  hereunder." 

One  provision  of  the  agreement  was  to  the  effect  that  the 
managers  were  charged  with  the  duty  of  securing  to  each 
company  which  was  a  party  to  the  agreement  equitable  pro- 
portions of  the  competitive  traffic  covered  by  the  agreement, 
so  far  as  it  could  be  legally  done.  The  managers  were  given 
power  to  decide  and  enforce  the  course  which  should  l)e  pur 
sued  with  connecting  companies,  not  parties  to  the  agreement, 
which  might  decline  or  fail  to  observe  the  rates,  etc.,  estab- 
lished  under  it,  and  the  interests  of  parties  injuriously  af- 
fected by  such  action  of  the  managers  were  to  be  accorded 
i*easonable  protection  in  so  far  as  the  managers  could  reason- 
ably do  so.  When  in  the  judgment  of  the  managers  it  was 
necessary  to  the  purposes  of  the  agreement,  they  might  deter- 


UNITED   STATES   V,   JOINT   TRAFFIC   ASSOCIATION.     873 

Statement  of  the  Case. 

mine  the  divisions  of  rates  and  fares  between  connecting  com- 
panies who  were  parties  to  the  agreement  and  connections  not 
parties  thereto,  keeping  in  view  uniformity  and  the  equities 
involved. 

Joint  freight  and  passenger  agencies  might  be  organized 
by  the  managers,  and,  if  established,  were  to  be  so  an-anged 
as  to  give  proper  representation  to  each  company  party  to  the 
agreement.  Soliciting  or  contracting  passenger  or  freight 
agencies  were  not  to  be  maintained  by  the  companies,  except 
[508]  with  the  approval  of  the  managers,  and  no  one  that  the 
managers  decided  to  be  objectionable  was  to  be  employed  or 
continued  in  an  agency.  The  officials  and  employes  of  any  of 
the  companies  could  be  examined,  and  an  investigation  made 
when,  in  the  judgment  of  the  managers,  their  information  or 
any  complaint  might  so  warrant.  Any  violation  of  the  agree- 
ment was  to  be  followed  by  a  forfeiture  of  the  offending  com- 
pany in  a  sum  to  be  determined  by  the  managers,  which 
should  not  exceed  five  thousand  dollars,  or  if  the  gross  re- 
ceipts of  the  transaction  which  violated  the  agreement  should 
exceed  five  thousand  dollars,  the  offending  party  should,  in 
the  discretion  of  the  managers,  forfeit  a  sum  not  exceeding 
such  gross  receipts.  The  sums  thus  collected  were  to  go  to 
the  payment  of  the  expenses  of  the  association,  except  that 
the  offending  company  should  not  participate  in  the  appli- 
cation of  its  own  forfeiture. 

The  agreement  also  provided  for  assessments  upon  the  com- 
panies in  order  to  pay  the  expenses  of  the  association,  and 
also  for  the  appointment  of  commissioners  and  arbitrators 
who  were  to  decide  matters  coming  before  them.  No  one 
retiring  from  the  agreement  before  the  time  fixed  for  its  final 
completion,  except  by  the  unanimous  consent  of  the  parties, 
should  be  entitled  to  any  refund  from  the  residue  of  the  de- 
posits remaining  at  the  close  of  the  agreement. 

It  was  to  take  effect  January  1, 1896,  and  to  continue  in  ex- 
istence five  years,  after  which  any  company  could  retire  upon 
giving  ninety  days'  written  notice  of  its  desire  to  do  so. 

The  bill  filed  by  the  Government  contained  allegations 
showing  that  all  the  defendant  railroad  companies  were  com- 
mon carriers  duly  incorporated  by  the  several  States  through 
which  they  passed,  and  that  they  were  engaged  as  such  car- 


874 


111   UHITED   STATES    REPORTS,  508. 


Statement  of  the  Case. 

riers  in  the  transportation  of  freight  and  passengers,  sepa- 
rately or  in  connection  with  each  other,  in  trade  and  commerce 
continuously  carried  on  among  the  several  States  of  the 
Union  and  between  the  several  States  and  the  Territories 
thereof.  The  bill  also  charged  that  the  defendants,  unlaw- 
fully intending  to  restrain  commerce  among  the  several  States 
and  to  prevent  competition  among  the  railroads  named,  in 
respect  to  all  their  [S09]  interstate  commerce,  entered  into  the 
agreement  referred  to  above,  and  it  charged  that  the  agree- 
ment was  an  unlawful  one,  and  a  combination  and  con- 
spiracy, and  that  it  was  entered  into  in  order  to  terminate  all 
comi^etition  among  the  parties  to  it  for  freight  and  passenger 
trafilc,  and  that  the  agi*eement  unlawfully  i-estrained  trade 
and  commerce  among  the  several  States  and  Teritories  of 
the  United  States,  and  unlaw^fully  attempted  to  monopolize 
a  part  of  such  interstate  trade  and  commerce.  The  bill  ended 
with  the  allegation  that  the  companies  were  preparing  to 
put  into  full  operation  all  the  provisions  of  the  agreement, 
and  the  relief  sought  was  a  judgment  declaring  the  agree- 
ment void  and  enjoining  the  parties  from  operating  their 
roads  under  the  same.  The  defendant,  the  Joint  Traffic 
Association,  filed  an  answer  (the  other  defendants  sub- 
stantially adopting  it),  which  admitted  the  making  of  the 
contract,  but  denied  its  invalidity  or  that  it  is  or  was  in- 
tended to  be  an  unlawful  contract,  combination  or  conspiracy 
to  restrain  trade  or  commerce,  or  that  it  was  an  attempt  to 
monopolize  the  same,  or  that  it  was  intended  to  restrain  or 
prevent  legitimate  com[x»tition  among  the  railroads  which 
were  parties  to  the  agreement.  The  answer,  in  brief,  denied 
all  allegations  of  unlawful  acts  or  of  an  unlawful  intent,  un- 
less the  making  of  the  agreement  itself  was  an  unlawful  act. 
The  answer  then  set  forth  in  quite  lengthy  terms  a  general 
history  of  the  condition  of  the  railroad  traffic  among  the  vari- 
ous railroads  which  were  parties  to  the  agreement  at  the 
time  it  was  entered  into,  and  alleged  the  necessity  of  some 
such  agreement  in  order  to  the  harmonious  operation  of  the 
different  roads,  and  that  it  was  necessary  as  well  to  the  public 
as  to  the  railroads  themselves. 

The  case  came  on  for  hearing  on  bill  and  answer,  and  the 
Circuit  Court,  after  a  hearing,  dismissed  the  bill,  and  upon 


UNITED   STATES   V.    JOINT   TRAFFIC   ASSOCIATION.      875 
Argument  for  Appellants. 

appeal  its  decree  was  affirmed  by  the  Circuit  Court  of  Ap- 
peals for  the  Second  Circuit,  and  the  Government  has  ap- 
pealed here. 

Mr.  Solicitor  General  for  appellants. 

The  agreement  violates  the  anti-trust  law,  because  it  creates 
an  association  of  competing  trunk  line  systems,  to  which  is 
[510]  given  jurisdiction  over  competitive  interstate  traffic, 
with  power,  through  a  central  authority,  aided  by  a  skilful 
scheme  of  restrictions,  regulations  and  penalties,  to  establish 
and  maintain  rates  and  fares  on  such  traffic  and  prevent  com- 
petition, thus  constituting  a  contract  in  restraint  of  trade  or 
commerce  among  the  several  States,  as  defined  by  this  court  in 
the  Trans-Missouri  case,  166  U.  S.  290. 

That  case  was  elaborately  argued  and  carefully  considered. 
A  petition  for  a  rehearing  was  presented  and  denied.  The 
decision  has  been  accepted  and  acted  upon  by  the  Depart- 
ments of  the  Government,  and  by  the  courts,  both  state  and 
Federal,  as  definitively  settling  the  meaning  and  scope  of  the 
anti-trust  law  when  applied  to  traffic  associations  among 
competing  interstate  railway  systems.  The  decision  was  not 
only  a  just,  but  an  eminently  salutary  one.  I  shall  not  con- 
cede that  the  principles  it  laid  down  remain  questionable. 
I  shall  not  admit  that  it  is  necessary  for  me,  by  argument,  to 
fortify  the  position  taken  by  this  court  in  that  case.  The 
anti-trust  law,  as  there  construed,  is  the  law  of  the  land. 

The  wisdom  of  Congress  in  prohibiting  all  agreements  in 
restraint  of  trade  among  interstate  railway  systems  is  even 
more  manifest  now  than  when  the  Timns-Missomi  case  was 
decided.  At  the  time  of  the  argument  of  the  Trans-Mis- 
souri case,  it  Avas  still  to  some  extent  a  mooted  question 
whether  the  Interstate  Commerce  Commission  Avas  empow- 
ered to  determine  what  are  fair  and  reasonable  rates,  and  to 
enforce  such  rates.  This  questipn  is  no  longer  open.  Inter- 
state Commerce  Commission  v.  N.  0,  cf?  Tex.  Pac.  Railway, 
167  U.  S.  479;  Interstate  Commerce  Commission  v.  Alabama 
Midland  Railway,  168  U.  S.  144. 

If  it  be  urged  that  any  illegality  in  the  agreement  is  cured 
by  section  3  of  article  7,  providing  that  ''  the  powers  con- 
ferred upon  the  managers  shall  be  so  construed  and  exercised 


876 


111  UNITED   STATES   BEPORTS,  511. 


Mr.  Carter's  argument  for  The  Joint  Traffic  Association, 
as  not  to  i>erinit  violation  of  the  Interstate  Connnerce  act,  or 
any  other  law  applicable  to  the  premises,  or  any  provision  of 
the  charters  or  the  laws  applicable  to  any  of  the  companies 
parties  hereto;  and  the  managers  shall  cooperate  with  the 
Interstate  Commerce  Commission  to  secure  stability  and  uni- 
[511]  formity  in  the  rates,  fares,  charges  and  rules  estab- 
lished hereunder." 

An  injunction  to  construe  and  exercise  powers  conferred  so 
as  to  permit  no  violation  of  law,  is  an  admission  that  the 
j>owers  may  l>e  so  construed  and  exercised  as  to  violate  law. 
If  the  anti-trust  law-  prohibited  only  those  contracts  in  un- 
reasonable restraint  of  trade  or  commerce  there  might  be 
saving  force  in  this  section.  But  the  anti-trust  law  prohibits 
all  contracts  in  restraint  of  trade  or  commerce.  Wliether 
the  rates  be  reasonable  or  unreasonable,  an  agreement  pro- 
viding for  their  establishment  and  maintenance  by  an  associa- 
tion of  interstate  railways,  is  prohibited.  The  managers  can 
exercise  none  of  the  essential  powers  conferred  by  the  agree- 
ment without  violating  the  law.  In  the  matter  of  the  essen- 
tial powers,  it  is  not  a  question  of  method  or  degree;  the 
powers  cannot  be  exercised,  because  they  are  in  themselves 
illegal.  The  association  itself  is  illegal.  It  is  formed  for  the 
purpose  of  controlling  certain  competitive  traffic.  The  cen- 
tral authority — the  managers — is  given  the  power  to  estab- 
lish and  maintain  rates  on  that  traffic.  Take  away  from  the 
association  the  power  to  establish  and  maintain  rates,  and 
it  immediately  falls  to  pieces.     It  ceases  to  have  a  raison 

The  authority  of  the  Government  to  mamtain  this  suit  is 
sustained  in  United  States  v.  Freight  Associc^tion,  166  U.  S. 
290,  343,  citing  in  re  Dehs,  158  U.  S.  564 ;  Cincinnati,  New 
Orleansj  d-c.  Railway  v.  Interstate  Commerce  Commission^ 
162  IT.  S.  184;  Texas  d  Pacific  Railway  v.  Interstate  Com- 
merce ComtHi'ssimi,  162  U.  S.  197. 

Mr.  James  C.  Carter  (with  whom  was  Mr,  Lewis  Cass 
Ledyard  on  the  brief),  for  the  Joint  Traffic  Association, 
appellee. 

There  are  certain  observations  in  relation  to  the  Anti- 
Trust  act  which  are  properly  to  be  made  before  proceeding 
to  the  argimient. 


UNITED    STATES    V.    JOINT   TRAFFIC    ASSOCIATION.      877 
Mr.  Carter's  argument  for  Tlie  Joint  Traffic  Asgoeiatiou. 

There  is  no  doubt  that  prior  to  and  at  the  time  of  the  pas- 
[512]  sage  of  this  law  there  were,  as  there  still  are,  certain 
tendencies  in  the  industrial  world  which  drew  widespread 
attention  and  excited,  in  some  minds,  much  alarm.  Many 
industries  were  seen,  or  supposed,  to  be  under  the  conti-ol  of 
great  aggregations  of  capital,  either  in  the  hands  of  individ- 
uals united  under  some  form  of  agreement,  partnership  or 
other,  or  contributed  as  the  capital  of  corporate  bodies. 
Some  of  the  most  conspicuous  were  called  by  the  vague  name 
of  "  trusts,"  and  this  term  came  to  be  employed,  in  a  general 
way,  to  designate  all  of  them.  For  obvious  reasons,  and 
quite  aside  from  the  question  whether  their  objects  and 
effects  are  mischievous  or  beneficial,  such  combinations  of 
capital  are  not  popular,  and  the  designation  '^  trust -'  came 
to  be  a  rather  reproachful  one. 

Undoubtedly  it  mav  be  possible  for  a  larsre  airirreffated 
capital  to  wield  a  greater  power  in  many  ways  than  would  be 
possible  for  the  same  amount  distributed  among  many  sep- 
arate owners  or  managers,  and  the  suspicion  was  entertained 
that  such  power  was  employed  in  controlling  markets,  and 
perhaps  in  controlling  legislation,  and  it  was  also  thought  to 
be  an  instrumentality  by  which  the  unequal  distribution  of 
wealth  was  fostered  and  increased.  The  disfavor  thus  ex- 
cited was,  as  was  natural,  turned  to  political  account.  Those 
opposed  to  a  protective  tariff  charged  upon  its  advocates 
that  they  were  favoring  and  stimulating  trusts,  and  the  lat- 
ter felt  the  need  of  repelling  the  charge  by  doing  something 
to  show  that  they  were  the  declared  enemies  of  trusts. 

Under  such  circumstances  it  was  quite  natural  that 
schemes  of  legislation  aimed  against  these  supposed  public 
enemies  should  be  started,  and  any  opposition  to  them  would 
naturally  draw  upon  the  authors  of  it  the  reproach  that 
they  were  the  friends  and,  perhaps,  the  paid  defenders,  of 
these  powerful  interests. 

^Vhile,  therefore,  all,  or  nearly  all,  professed  themselves 
in  favor  of  repressive  legislation,  the  question  what  legis- 
lation could  be  contrived  was  a  difficult  one  and  suggested, 
some  difficult  questions.  How  was  a  "  trust "  to  be  legally 
defined  so  that  a  prohibition  of  it  should  not  include  a  pro- 
hibition of  [513]  the  exercise  of  the  clearest  constitutional 


878 


171    CJNITED   STATES   REPORTS,  513. 


Mr.  Carter's  aq^nient  for  The  Joint  Traffic  Association. 

rights?  Congress,  surely,  could  not  prevent  the  creation 
of  corporations  under  state  laws,  or  limit  the  capacity  of 
forming  partnerships,  or  in  any  manner  interfere  with  the 
internal  business  of  States.  And  was  it  certain  that  these 
so  called  trusts  were,  in  every  instance,  necessarily  mischiev- 
ous? Indwd,  sensible  legislators  for  the  most  part  under- 
stood very  clearly  that  the  things  complained  of  were  but  the 
necessary  incidents  and  consequences  of  the  progress  of  in- 
dustrv  and  civilization  and  could  not  be  arrested  without 
checking  the  advance  of  the  nation  and  crippling  it  in  the 
fierce  competitions  with  other  nations,  and  that  any  useful 
effort  to  remedy  the  supposed  evils  must  be  directed  against 
the  abuses  of  the  power  of  aggregated  capital  and  not  at 
the  aggregations  themselves.  Under  these  circumstances 
Coiigress  proceeded  very  cautiously  and  enacted  the  only 
measure  which  seemed  possible  without  passing  the  plainest 
constitutional  limits.  It  did  not  attempt  to  define  ''  trusts," 
or  limit  aggregations  of  capital  in  any  form.  The  general 
charge  was  that  these  combinations  wei*e  in  some  form 
monopolies,  and  in  restraint  of  trade,  but  Congress  did  not 
in  the  remotest  degi-ee  attempt  to  define  what  a  monopoly  or 
restraint  of  trade  was.  It  was,  however,  perfectly  safe  to 
declare  that  if  these  combinations  did  in  any  case  create 
monopolies,  or  restraints  upon  trade,  they  should  be  prohib- 
ited from  so  doing  in  the  future;  and  this  is  what  Congress 
did  and  all  it  did,  by  passing  the  act  in  question.  It  prohib- 
ited contracts  and  combinations  to  create  monopolies  or  re- 
strain trade,  and  left  it  to  the  courts,  without  a  word  of 
direction  or  instruction,  to  determine  what  contracts  did 
create  monopolies  or  restrain  trade,'  and  what  did  not. 

It  cannot  be  said  that  Congress  has  done  an  unwise  or  im- 
prudent thing,  and  that  if  calamity  occurs  the  fault  lies  at 
its  door.  It  has  prohibited  nothing  but  contracts  and  com- 
binations to  create  restraints  of  trade  and  monopolies.  These, 
when  properly  defined,  are,  beyond  question,  public  mis- 
chiefs and  ought  to  be  prohibited.  If  any  useful  thing  be- 
comes stricken  down  by  the  law,  it  must  be  the  result  of  some 
eri'oneous  interpretation. 

[514]  The  first  question  we  design  to  consider  is  whether 
the  agreement  vloiates  any  of  the  provisions  of  the  act  re- 


UNITED    STATES    V.    JOINT   TRAFFIC   ASSOCIATION.      879 
Mr.  Carter's  argument  for  The  Joint  Traffic  Association. 

ferred  to.  To  this  end  it  is  of  much  importance  to  have  in 
mind  the  particular  nature  of  the  subject  with  which  this 
act  deals,  and  how  that  subject  has  heretofore  been  treated 
in  law  and  legislation. 

It  is  immediately  obvious  that  Congress  conceived  itself 
to  be  dealing  with  acts  supposed  to  be  productive  of  injury 
to  the  public,  and  of  injury  to  such  an  extent  as  to  justify 
repressive  legislation. 

We  next  observe  that  it  is  not  contracts  onlv  of  a  certain 
character  which  are  condemned,  but  that  they  are  coupled 
together  with  certain  other  acts,  presumably  of  a  similar 
nature  or  tendency,  namely,  combinations  or  conspiracies  in 
restraint  of  trade,  and  monopolies,  or  combinations  or  con- 
spiracies to  monopolize.  Contracts,  therefore,  are  dealt 
with,  not  so  much  as  contracts,  but  as  one  form  of  acts  re- 
lating to  trade  and  commerce  assumed  to  be  injurious  in 
their  tendencv  and  effect. 

That  contracts  of  a  certain  class  may  be  opposed  to  a 
'  sound  public  policy  has  been  recognized  in  the  law  from  a 
very  early  period.  The  grounds  or  reasons  of  pol^py  upon 
which  they  are  held  void  or  illegal  are  very  numerous  and 
varied,  but  a  class  embracing  numerous  instances  is  formed 
of  such  as  are  supposed  to  have  an  injurious  effect  upon 
trade  or  commerce;  between  these,  however,  there  is  quite  a 
marked  distinction  observable  in  the  way  in  which  they  are 
treated  in  the  law.  One  description  embraces  simply  or- 
dinary business  transactions,  where  parties  make  agreements 
with  each  other  for  supposed  mutual  profit  and  advantage, 
a  breach  of  which  would  result  in  pecuniary  loss  or  damage 
to  the  one  or  the  other,  and  a  demand  for  redress.  In  such 
cases  the  parties  expect  and  intend  to  enforce  the  contract, 
and  look  to  the  ordinary  legal  remedies  as  the  means  of  en- 
forcing it.  Contracts  whereby  a  business  is  sold  and  the 
seller  covenants  that  he  will  not  thereafter  carry  it  on,  or 
where  a  man  takes  an  apprentice  with  an  agreement  that  he 
will  not  set  himself  up  in  opposition  to  his  master  in  trade, 
supply  familiar  instances  of  this  character. 

[515]  Inasmuch  as  such  contracts  would  not  be  entered 
into  unless  it  was  believed  that  the  law  would  afford  redress 
in  case  of  a  breach  of  them,  the  repressive  purposes  of  the 


880 


171   UNITED  STATES   REPORTS,  515. 


Mr.  Carter's  iirnruuient  for  The  Joint  Traffic  A8«o<*iatioii. 

law,  where  they  are  supposed  to  be  opposed  to  public  policy, 
are,  in  general,  fully  satisfied  by  declaring  them  void  and 
denying  redress,  and  this  is  usually  the  extent  of  the  notice 
which  the  law  takes  of  them.  There  is  no  occasion  for  crim- 
inal legislation,  both  for  the  reason  that  there  is  not  present, 
ordinarily,  any  criminal  purpose,  and  if  there  were,  repression 
is  sufficiently  accomplished  without  a  resort  to  it.  The  doc- 
trine respecting  contracts  of  this  character  belongs  therefore 
to  the  law^  of  contracts,  and  the  treatises  on  that  law  usually 
embrace  a  chapter  devoted  to  it. 

But  there  is  another  and  much  snuiller  description  of  con- 
tracts supposed  to  be  injurious  to  trade  of  quite  a  different 
character.  They  are  not,  properly  speaking,  business  trans- 
actions. They  do  not  involve  the  sale,  leasing  or  exchange 
of  property,  or  the  hire  of  services;  nor  does  a  breach  of 
them  usually  result  in  distinct  and  ascertainable  pecuniary 
loss.  They  are  not,  indeed,  entered  into  by  parties  in  differ- 
ent interests,  as  in  the  case  of  buyer  and  seller,  one  of  which 
expects  to  gain  something  from  the  other,  but  })y  parties  in 
the  sai»e  interest  having  in  view  an  object  for  the  common 
good  of  all ;  nor  do  the  parties  to  them  generally  look  to,  or 
rely  upon,  any  legal  remedies  to  secure  obedience  to  theni. 
They  spring  out  of  circumstances  which  impress  the  parties 
to  them  with  the  belief  that  they  have  a  common  interest,  or 
that  it  is  expedient  to  create  a  common  interest  among  them, 
and  seek  to  control  or  regulate  the  conduct  of  each  other  in 
relation  to  business.  Instances  of  this  description  of  agree- 
ment ai-e  found  where  laborers,  or  employers,  unite,  in  the 
form  of  agreement,  to  regulate  hours  of  labor,  or  prices,  or 
where  merchants,  or  tradesmen,  combine  to  transact  their 
business  in  certain  prescribed  ways,  or  to  establish  uniform 
prices  for  their  goods,  or  to  j  uppress,  or  regulate,  competi- 
tion among  themselves;  or  where  a  class  of  producers  or 
dealers  combine  together  to  control  a  product,  or  a  business, 
with  a  view  of  imposing  upon  others  their  own  terms  as  to 
prices,  or  other  incidents  of  the  business. 

[516]  The  marked  distinction  between  these  cases  and  the 
ordinary  business  transactions  first  spoken  of  is,  that  in  the 
latter  there  is  a  difference  of  interest,  sometimes  regarded  as 


UNITED   STATES   V.   JOINT   TRAFFIC   ASSOCIATION.     881 
Mr.  Carter's  argumenf  for  The  Joint  Traffic  Association. 

a  hostility  of  interest  between  the  parties,  each  seeking  to 
gain  the  utmost  from  the  other;  whereas,  in  the  former,  the 
parties  are  in  the  same  interest,  each  seeking  the  same  end. 
The  term  *'  contract  "  does  not  well  express  this  sort  of  agree- 
ment. It  is  a  uniting  together  for  a  common  purpose^a 
combination— or,  when  thought  to  be  of  an  objectionable 
character,  a  conspiracy.  Such  unions  always  suppose  agree- 
ment, but  it  nepd  not  be  in  writing;  where  it  is  in  writing  it 
is  often  called  an  agreement,  or  contract;  but,  in  giving  it 
this  name  we  should  not  lose  sight  of  its  real  character.  In 
1-eality  it  is  simply  an  act,  and  innocent,  or  guiltj,  according 
as  the  law  may  be  inclined  to  regard  it. 

It  is  riianifest  that  where  the  law  does  regard  it  as  mis- 
chievous, and  to  such  a  degree  as  to  call  for  repression,  it  is 
not  enough  to  simply  declare  it  illegal.  The  practice  may, 
nevertheless,  be  persisted  in,  and  as  it  does  not  rely  for  its 
efficacy  upon  legal  remedies,  the  mere  withholding  of  such 
remedies  may  be  ineffectual.  The  action,  therefore,  which 
law  usually  takes  in  respect  to  such  so  called  contracts  is  in 
the  form  of  prohibition  and  penalty,  and  the  subject  belongs 
not  to  the  law  of  contracts,  but  to  the  criminal  law,  where  it 
is  usually  dealt  with  under  the  head  of  conspiracy. 

We  do  not  mean  by  the  above  observations  that  there  may 
not  be  instances  which  partake,  to  a  greater  or  less  degree,  of 
the  qualities  of  both  the  classes  above  mentioned ;  but  the 
distinction  between  them  is  so  constant  and  pervading  that  it 
will  be  at  once  recognized. 

As  a  conclusion  to  what  is  said  we  desire  to  point  out  that 
the  legal  doctrine  and  policy  to  which  this  Anti-Trust  act  be- 
longs, is  manifestly  the  one  last  described.  The  circumstance 
that  contracts  are  grouped  together  with  combinations  and 
conspiracies  and  made  the  subject  of  criminal  treatment, 
shows  this  very  plainly. 

The  ineptitude  of  some  of  the  language  of  this  legislation 
is  quite  apparent.  Undoubtedly  the  object  of  Congress  was 
to  [617]  reach  that  class  of  supposed  mischiefs  which  flow 
from  combinations.  But  the  great  bulk  of  the  cases,  proba- 
bly nine  tenths,  in  which  courts  have  felt  called  upon  to  say 
anything  about  contracts  in  restraint  of  trade,  has  been  the 
11808— VOL  1—06  M 56 


882 


171    UNITBB  STATES    RErORTS,  517. 


Mr.  Carter's  argument  for  The  Joint  Traffic  Association. 

business  transactions  first  alluded  to  in  which  an  agreement 
has  been  entered  into,  not  to  exercise  a  particular  calling,  as 
where  the  keeper  of  a  well-patronized  tavern  sells  out  his 
establishment  and  good  will,  and  covenants  not  to  further 
carry  on  the  business.  Such  agreements  at  the  conunon  law 
have  been  held  valid  or  void  according  to  the  supposed  rea- 
sonableness of  the  covenant;  but,  surely  even  when  void, 
there  was  nothing  about  them  calling  for  the  intervention 
of  the  criminal  law.  And  yet  this  statute  bunches  the  valid 
and  the  void  all  together,  and  makes  them  all  criminal,  when 
probably  there  was  not  the  i-emotest  intention  to  make  any 
of  them  criminal. 

These  observations,  of  course,  fully  admit  that  the  particu- 
lar agreement  or  combination  against  which  this  action  is 
aimed,  would  be,  assuming  that  the  act  covers  contracts  be- 
tween railroad  companies,  obnoxious  to  the  penalty  imposed 
by  the  act,  provided  it  were,  in  fact,  in  restraint  of  trade  or 
commerce  between  the  States.  That  it  is,  in  fact,  in  restraint 
of  trade  or  commerce  must  be  shown  before  this  action  can 
be  maintained,  and  this  is  the  proper  subject  for  discussion  in 
this  action.  This  question  is  broadly  open  and  unaffected  by 
any  decision  of  this  court,  and  we  expect  to  be  able  to  show 
that  the  agreement  is  not  only  not  in  restraint  of  trade  and 
commerce,  but  highly  beneficial  to  both;  that  Congress  has 
never  declared,  or  intended  to  declare,  it  criminal,  and  that  it 
is  deserving,  not  of  judicial  condemnation,  but  of  judicial  en- 
couragement and  approval. 

Unless  the  act  is  subject  to  the  interpretation  hereinafter 
maintained,  it  is  open  to  grave  objection  on  constitutional 
grounds,  which  will  be  dealt  with  by  other  counsel. 

Having  presented  this  preliminary  matter,  Mr,  Carter 
argued  the  following  points. 

I.  The  court  has  no  jurisdiction  to  entertain  this  suit,  un- 
less it  can  be  found  in  the  provisions  of  some  statute. 

The  bill  sets  forth  simply  the  commission  of  a  misde- 
meanor, [518]  and  an  intention  on  the  part  of  the  defendants 
to  repeat  the  offence.  No  principle  of  the  public  remedial 
law  of  America  or  England  is  more  fundamental  than  that 
the  ordinary  administration  of  criminal  justice  by  the  ordi- 
nary courts  of  common  law,  is  sufficient  for  the  repression  of 


UNITED   STATES    V,    JOINT   TRAFFIC    ASSOCIATION.      883 
.  Mr.  Carter's  argument  for  The  Joint  Traffic  Association. 

crime,  and  exclusive  adhesion  to  it  necessary  for  the  protec- 
tion of  the  citizen. 

II.  The  Anti-Trust  act  contained  provisions  purporting  to 
create  a  jurisdiction  in  equity  to  give  relief  by  way  oi'm- 
junction;  and,  perhaps,  the  decision  made  by  this  court  in 
the  suit  of  the  United  States  v.  The  Trans-Missouri  Freight 
Association,  should  be  regarded  as  a  determination  that  the 
Attorney  General  was  at  liberty  in  case  of  any  violation  of 
the  provisions  of  the  act  to  file  a  bill  for  an  injunction,  al- 
though it  would  seem  necessary,  upon  familiar  principles,  to 
make  out   a  case  for  equitable  interposition,  in  order  to 
justify  an  appeal  to  the  equitable  jurisdiction  thus  created. 
But  so  far  as  it  is  sought  to  maintain  the  present  action  on 
the  basis  of  an  alleged  violation  of  the  provisions  of  the  In- 
terstate Commerce  act,  no  support  can  be  derived  from  the 
decision  above  referred  to.     No  such  jurisdiction  in  equity 
is  given  by  that  act.    And  by  implication,  at  least,  it  is 
withheld;  for  in  certain  cases  specially  mentioned  in  sections 
6  and  13,  jurisdiction  is  expressly  given  to  courts  of  equity  to 
grant  injunctions.     If  it  is  not  given  in  other  cases  it  must 
be  taken  to  be  for  the  reason  that  it  was  not  intended. 
"  Expressio  nnius  est  exdnsio  alteriusP 

III.  A  clear  understanding  should  be  had  at  the  outset, 
of  the  meaning  of  the  terms  with  which  we  are  dealing.  The 
class  of  contracts  condemned  by  the  Anti-Trust  act  is  defined 
by  the  effect  they  have  upon  trade  or  commerce.  They  are 
such,  and  such  only,  as  have  the  effect  of  restraining  trade  or 
commerce.  The  actual  effect  which  the  contracts  have  upon 
trade  or  commerce  is  the  material  consideration  which  deter- 
mines whether  or  not  they  are  included  within  the  class. 

This  may  seem  self-evident,  and  indeed  is  so.  But  the 
possible  suggestion  might  be  made  that  there  is  a  class  of 
contracts,  called,  or  named,  "  contracts  in  restraint  of  trade," 
and  that  the  statute  relates  to  these  irrespective  of  their  real 
and  true  effect.  There  is  no  foundation  for  such  a  sugges- 
tion. There  [519]  is  no  class  of  contracts  known  to  the  law 
by  the  name  of  contracts  in  restraint  of  trade  irrespective  of 
their  actual  effect  upon  trade.  Whenever,  heretofore,  the 
point  has  been  made  in  the  case  of  a  particular  contract 
whether  it  was  in  restraint  of  trade,  it  has  been  determined 


m   UNITED  STAT18  BEPOBTS,  519. 


Mr.  Carter's  urgunient  for  Tlie  Joint  Traffic  Association. 

by  an  inquiry  as  to  its  actual  effect  upon  trade.  No  sugges- 
tion would  have  been  indulged  that  it  was  valid  or  void  ac- 
cording as  it  might,  or  might  not,  be  called  or  styled  a  con- 
tract in  restraint  of  trade. 

Moreover  we  are  dealing  with  the  criminal  law,  whicli 
never  dasses  acts  and  makes  them  punishable  under  arbitrary 
names,  without  regard  to  their  supposed  effects,  as  being 
actually  niischevious  or  otherwise.  This  would  be  putting 
innocence  on  a  par  with  guilt. 

IV.  There  seems  to  be  no  room  for  doubt  concerning  the 
meaning  of  the  term  **  in  restraint  of  trade  or  commerce." 
To  restrain  is  to  hold  back,  to  check,  to  prevent,  and  thus  to 
diminish.  It  is  injury  to  trade  or  commerce  which  the  act 
is  aimed  to  prevent.  IFnless,  therefore,  a  contract  injures  and 
thus  diitiinishes,  or  tends  to  diminish,  trade  or  commerce,  it 
cannot  be  deemed  as  in  restraint  of  trade  or  commerce. 

V.  The  agreement  under  which  The  Joint  Traffic  Associa- 
tion was  formed,  and  the  carrying  out  of  which  is  sought  to 
be  enjoined,  is  not  a  contract  in  restraint  of  trade  m  com- 
merce within  the  meaning  of  the  act  of  July  2, 1890. 

[Over  one  hundred  pages  of  appellant's  brief  are  taken  up 
with  the  discussion  of  this  point.  The  following  synopsis  of 
its  reasoning  was  filed  by  counsel.] 

The  bulk  of  the  whole  discussion,  so  far  as  respects  the 
Anti-Trust  act,  is  contained  under  this  Fifth  Point,  and  the 
line  of  argument  pursued  is  substantially  as  follows:  (1) 
That  no  restraint  is  directly,  or  in  terms,  imposed  upon  trade 
or  commerce;  that  all  the  members  of  the  association  will, 
as  the  agreement  assumes,  continue  in  business,  doing  the 
utmost  they  can,  and  in  competition  with  each  other;  that 
whatever  restraint  is  imposed  by  it  is  imposed  simply  upon 
11  single  feature  of  this  competition;  that,  competition  and 
trade  not  being  identical  with  each  other,  a  restraint  upon 
competition  is  not  necessarily  a  restraint  upon  trade.  It  is 
admitted,  how-  [5S0]  ever,  that  a  restraint  upon  competition 
may  be  a  restraint  upon  trade ;  but  it  is  asserted  that  whether 
it  is  so  or  not,  in  any  particular  case,  depends  upon  the  nature 
and  effect  of  the  restraint  imposed  in  such  case. 

(2)  The  argument  thus  reaches  one  of  the  main  subjects 
of  discussion,  namely,  what  the  effects  of  competition  in  trade 


UNITED   STATES    V.    JOINT   TRAFFIC    ASSOCIATION.      885 
Mr.  Carter's  argument  for  The  Joint  Traffic  Association. 

are;  when  they  are  good,  and  when,  if  ever,  they  are  bad; 
and  how  such  restraints  have  been  regarded  in  public 
economy,  law  and  legislation.  This  subject  is  treated  at 
first  generally,  without  reference  to  the  particular  effects  of 
competition  in  the  business  of  railroad  transportation. 

(3)  It  is  then  pointed  out  that  the  particular  field  of  dis- 
cussion in  the  case  has  been,  by  what  precedes,  fuiiy  dis- 
closed, namely,  the  effects  of  restraints  upon  competition  as 
restraining,  or  not  restraining,  trade  and  commerce,  and  a 
particular  proposition,  substantially  equivalent  to  the  main 
one,  is  stated  as  follows : 

"  The  agreement  in  question,  as  a  whole,  and,  particularly, 
so  much  of  it  as  affects  competition,  is  in  the  highest  degree 
promotive  of  trade  and  commerce."  The  discussion  on  this 
head  jnirsues  the  following  course : 

(a)  It  begins  with  a  statement  of  "  the  origin,  development 
and  present  condition  in  this  country  of  the  business  of  rail- 
way transportation,"  and  shows  that  by  the  delibsrate  policy 
of  all  our  governments,  state  and  National,  business  has 
been,  from  the  first,  subjected  to  the  severest  involuntary 
competition,  and  it  points  out  the  ruinous  results  to  which 
such  competition  leads  when  it  takes  place  on  rates,  and  aims 
to  show  that  such  results  can  be  arrested,  or  mitigated,  only 
by  allowing  the  competing  parties  to  displace  the  strife  by 
some  form  of  agreement,  (h)  This  discussion  is  proceeded 
with  by  pointing  out  what  the  main  requisites  of  a  good  rail- 
way service  are,  and  how  they  are  affected  by  railway  compe- 
tition in  rates.  It  aims  to  show  that  such  competition,  by 
making  uniformity  in  rates  impossible,  makes  it  impossible 
to  secure  any  of  these  essential  requisites,  and  that  they  can 
be  secured  only  by  some  form  of  concerted  agreement  be- 
tween the  parties. 

[521]  (4)  The  subject  of  agreements  between  railway  com- 
panies and  cooperative  traffic  associations  being  thus  reached, 
a  sketch  is  made  of  their  origin  and  development  down  to 
the  time  of  the  passage  of  the  Interstate  Commerce  law,  and 
it  is  shown  that  the  most  efficacious  form  of  agreement  down 
to  that  time  had  been  found  to  be  that  of  pooling. 

(5)  The  Interstate  Commerce  law  and  its  effects  are  then 
discussed,  and  it  is  shown  that  one  of  its  main  objects  was  to 


886 


171   UNITED   STATES   REPORTS,  521. 


Mr.  Carter's  argument  for  The  Joint  Traffic  Association. 

bring  about,  so  far  as  Federal  legislation  could  accomplish 
it,  uniformity  in  rates,  and  thus  put  an  end  to  the  practice 
of  discrimination,  and  attention  is  called  to  the  incidental 
feature  of  the  law.  which  prohibited  pooling  agreements.  It 
is  then  shown  that  the  effect  of  that  law  was  to  increase  and 
aggravate  the  very  evils  which  it  was  designed  to  remove. 
Pooling  being  prohibited,  the  most  effective  method  for  se- 
curing uniformity  in  rates  could  no  longer  be  employed,  and 
ruinous  competition,  with  every  form  of  discrimination,  fol- 
lowed, and  to  these  evils  was  added  the  unendurable  aggra- 
vation that  the  practices  which  the  law  could  not  prevent, 
were,  nevertheless,  converted  into  crimes. 

(6)  It  is  then  shown  that  the  necessity  was  universally  felt 
for  some  form  of  concerted  action  which  would  put  an  end  to 
these  deplorable  conditions  and  that  the  present  agreement 
was  the  result  of  an  earnest  effort  in  this  direction. 

(7)  An  analysis  of  the  agreement  is  then  made,  and  it  is 
pointed  out  that  it  is  not  aimed  against  competition  in 
general,  but  assumes  that  such  competition  will  still  continue 
actively  and  earnestly  on  every  point  except  that  of  rates. 

Its  precise  effect  upon  competition  in  rates  is  dealt  with, 
and  it  is  shown  that  while  its  object  is  to  secure  uniformity  in 
rates  by  inducing  competing  companies  to  consent  to  such 
uniformity,  it  does  not  purport  to  require  it  or  compel  it. 
That  it  does  not  really,  or  in  any  proper  sense,  seek  to  restrain 
competition  at  all,  but  aims  to  render  competition  open,  hon- 
est and  lawful,  so  that  the  business  of  railway  transportation 
may  be  conducted  in  conformity  with  the  requirements  of  the 
Interstate  Commerce  law,  and  without  the  daily  commission 
of  crime.  It  shows  that,  to  this  end,  it  is  necessary  that  each 
railroad  [522]  company  should  first  establish  its  rates  and 
should  adhere  to  them  for  a  reasonable  period,  which  is 
fixed  at  thirty  days,  in  order  if  it  intends  a  change  that  it 
may  give  reasonable  notice  of  its  intention  in  time  to  en- 
able the  competing  parties  to  meet  it,  and  to  shape  their  own 
conduct  accordingly;  that  this  is  absolutely  the  only  restraint 
upon  competition  effected  by  the  agreement,  and  being  only 
slight  and  temporary,  and  necessary  in  order  to  enable  compe- 
tition to  be  open  and  lawful,  cannot  be  regarded  as  a  re- 
straint upon  trade.    It  admits  that  one  of  its  main  objects 


UNITED   STATES   V.    JOINT   TRAFFIC    ASSOCIATION.     887 
Mr.  Carter's  argument  for  The  Joint  Traffic  Association. 

is  to  secure  what  the  Interstate  Commerce  law  sought  to 
secure,  uniformity  in  rates,  but  its  method  of  effecting  that 
result  is,  not  by  a  compulsory  agreement,  but  by  taking 
away  the  motives  to  ruinous,  secret  and  unlawful  competi- 
tion in  rates.  It  also  points  out  the  many  other  beneficial 
provisions  of  the  agreement  by  which  it  is  sought  to  make 
the  railroad  transportation  of  the  country  regular,  orderly, 
safe  and  effective. 

(8)  It  further  seeks  to  emphasize  the  beneficial  purposes 
of  the  agreement  by  showing  that  every  great  industry  in 
which  the  cooperation  of  many  different  proprietors  and 
agencies  is  required,  necessarily  calls  for  a  system  of  regu- 
lation which  must  be  supplied  either  by  the  action  of  gov- 
ernment, or,  in  the  absence  of  such  action,  by  the  volun- 
tary action  of  those  who  are  engaged  in  it,  and  it  pronounces 
the  association  as  "  an  institution  for  the  regulation  of  trans- 
portation business  in  those  respects  in  which  the  State,  either 
from  lack  of  jurisdiction,  or  because  it  deems  that  the  regu- 
lation could  be  best  devised  and  administered  bv  the  railroad 
systems  themselves,  has  choosen  not  to  regulate  it."     ' 

(9)  Throughout  this  part  of  the  argimient  the  central 
proposition  is  that  of  the  absolute  necessity  for  some  agency 
by  which  uniformity  in  rates  may  be  brought  about,  and  a 
uniformity  not  only  in  the  case  of  merchandise  shipped  from 
the  same  point  to  the  same  terminus,  but  also  in  the  case  of 
merchandise  shipped  from,  or  to,  any  points  in  any  way 
competing.  So  long  as  competition  in  rates  exists  differ- 
ent men  and  different  places  will  necessarily  be  put  up, 
or  pulled  down,  enriched  or  ruined,  as  one  railroad  company 
may  think  it  to  be  [523]  for  its  interest  to  make  lower  rates 
than  another,  and  without  regard  to  comparative  skill,  in- 
dustry or  other  natural  advantages  which  furnish  the  true 
and  only  field  for  useful  competition.  Railway  transporta- 
tion is  a  public  function,  and  absolute  neutralitv  in  relation 
to  the  multitudinous  competitions  of  life  is  an  essential  con- 
dition of  its  just  discharge.  This  neutrality  can  be  secured 
only  by  uniformity  in  rates.  If  this  is  not  secured  by  Gov- 
ernment it  must  be  brought  about  by  some  private  agency. 
It  cannot  be  secured  by  governmental  action,  because  the 
Government  has  committed  the  business  to  private  hands. 


888         VH   UNITED  STATES  REPOBTS,  523. 

lUr.  Carter's  argument  for  Tlie  Joint  Traffic  Association. 

The  Interstate  Commerce  law  had  this  uniformity  for  its 
prime  object ;  and  went  to  the  limit  of  Congressional  power 
in  the  effort  to  accomplish  it.  The  prime  object  of  the 
present  agreement  is  to  supplement  the  effort,  not  by  compul- 
sorily  restricting  competition,  but  by  taking  away  the  motives 
to  it.  It  is  asked  whether  it  is  possible  to  regard  an  organ- 
ization formed  to  effect  an  object  which  the  law  and  public 
policy  unite  in  viewing  as  essential,  but  which  Congress  can- 
not  by  law  reach,  as  a  restraint  upon  trade  ?  It  is  believed 
that  when  this  single  subject  is  considered  in  all  its  various 
relations,  it  is,  of  itself  alone,  decisive  of  the  whole 
controversy. 

(10)  The  important  matter  of  the  classification  of  freight 
is  taken  up  and  considered,  and  it  is  shown  that  tfie  great  end 
of  uniformity  in  rates  cannot  be  attained  without  a  system  of 
classification;  that  classification  is  only  a  part,  although  a 
necessary  part,  of  nite  making;  that  its  only  object  and  pur- 
pose is  to  maki^  iiniforniity  in  rates  possible ;  thai  it  has  never 
been  attempted,  except  as  part  of  an  effort  to  bring  about 
such  uniformity,  and  can  never  be  perfected,  or  even  pre- 
served, except  upon  the  condition  of  such  uniformity. 

(11)  The  general  usefulness  of  the  organization  formed  by 
the  association  is  dwelt  upon  by  calling  attention  to  the  mul- 
titude and  variety  of  subjects  upon  which  it  is  daily  engaged, 
and  especially  to  its  constant  occupation  with  the  question, 
how  any  particular  rates  which  may  happen  to  have  been 
established,  or  which  may  be  proposed  to  be  established,  affect 
different  places  and  different  merchants  or  manufacturers  en- 
[524]  gaged  in  the  same  business,  and  who  are  in  competi- 
tion with  each  other,  whether  they  may  be  a  few  miles  or 
hundreds  of  miles  apart.  It  is  asserted  that  the  association 
becomes  the  practical  arbitrator  in  cases  where  the  Interstate 
Commerce  law  cannot  operate  between  competing  merchants 
and  manufacturers,  and  between  comfjeting  places,  as  to  what 
rates  even-handed  justice  to  all  requires;  that  from  the  na- 
ture of  the  case  and  the  interest  of  the  railroads  themselves, 
no  rules  can  be  adoj)ted  for  decision  of  such  questions  except 
those  of  justice  and  equality,  and  that  it  is  practically  impos- 
sible that  it  should  be  made  a  medium  of  monopoly,  or  for  the 
exaction  of  anything  mor*?  than  reasonable  charges;  and  that 


UNITED   STATES   V,   JOINT   TKAFFIC   ASSOCIATION.     889 
Mr.  Carter's  argument  for  The  Joint  Traffic  Association. 

this  is  proved  by  a  reference  to  the  course  of  railroad  charges 
during  the  whole  period,  embracing  many  years,  in  which 
such  agreements  have  existed,  the  fact  being  that  they  have 
continually  declined  from  the  rate  of  about  three  cents  a  ton 
or  mile  to  less  than  one  cent  a  ton  or  mile,  a  rate  lower  than 
that  of  railway  transportation  in  any  other  quarter  of  the 
world. 

(12)  The  argument  then  refers  to  the  matters  of  fact 
which  were  involved  or  assumed  in  the  foregoing  discussion, 
and  justifies  whatever  assumptions  have  been  made  in  the  fol- 
lowing ways:  (a)  That,  by  the  very  nature  of  the  case,  they 
are  matters  which  must  necessarily  be  true,  because  they  are 
the  if^esults  of  the  operation  of  the  familiar  and  well-known 
laws  relating  to  industrial  pursuits,  (h)  Because  they  have 
that  notoriety  which  requires  a  court  to  take  judicial  notice 
of  them,  (c)  Because  they  are  fully  established  by  aver- 
ments in  the  answer  admitted  by  the  appellant  in  setting 
down  the  cause  for  hearing  upon  bill  and  answer,  (d)  By 
the  declarations,  repeated  in  multiplied  forms,  of  the  Inter- 
state Commerce  Commission,  the  great  public  agency  which 
has  such  supervision  and  control  over  the  business  of  railway 
transportation  as  Congress  can  assert.  Copious  extracts 
from  thchc  declarations  are  set  forth. 

(13)  These  extracts  and  other  proofs  thus  referred  to  are 
again  declared  to  stamp  this  association  as  one  instance,  of 
which  industrial  life  furnishes  a  multitude,  where  industrial 
[696]  interests  of  great  magnitude  are  subjected  to  private 
regulation,  and  for  the  reason  that  the  State  recognizes,  and 
always  has  recognized,  the  fact  that  such  regulation  is  far 
more  effective  over  a  large  range  of  subjects  than  any  which 
the  State  itself  could  devise  and  enforce.  This  statement  is 
confirmed  and  illustrated  by  reference  to  many  different  in- 
stances,   (a)  To  the  multitudinous  associations  ajuong  woi-k- 

»  men  and  employes  of  various  descriptions,  all  based  upon 
agreements  far  more  in  restraint  of  competition  than  any 
contained  in  this  instrument,  (b)  Similar  unions  among 
the  employers  of  labor,  (c)  To  the  numerous  Commercial, 
Stock  and  Produce  Exchanges  and  Boards  of  Trade,  all  of 
which  prescribe  rates  of  commission  and  for  compensation 
for  various  services,  and  forbid  any  departure  from  them, 


890 


171   UNITED   STATES   BEPOBTS,  525. 


Mr.  Carter's  argument  for  The  Joint  Traffic  Association. 

and  are  far  more  restrictive  of  competition  than  any  pro- 
vision in  the  agreement  in  question. 

(14)  The  question  is  submitted  whether  trade  is  in  any 
way  restrained  by  the  agreements  between  laborers  and  em- 
ployes, or  those  between  the  employers  of  labor,  and  it  is 
answered  by  saying  that  the  final  and  general  results,  not- 
withstanding occasional  abuses,  are  greatly  to  increase  the 
efficiency  of  labor  and  the  amount  of  work  done,  and  to  ele- 
vate the  character  of  the  laboring  classes.  The  same  ques- 
tion is  asked  in  respect  to  Commercial  Exchanges  and 
Boards  of  Trade,  whether  tKey  restrain  the  business  with 
which  they  are  conducted,  whether  there  is  less  buying  or 
selling  of  goods  in  consequence  of  commissions  or  other 
charges  being  fixed  at  particular  sums.  It  is  answered  by 
saying  that,  as  every  one  knows,  these  are  all  agencies  by 
which  the  number  and  magnitude  of  business  transactions 
is  enormously  increased.  . 

The  same  question  is  put  in  relation  to  the  operation  of 
the  present  agreement,  or  of  any  agreement  tending  to  se- 
cure uniformity  in  railroad  rates  and  the  stability,  certainty 
and  safety  of  railway  transportation;  and  it  is  asked 
whether,  in  consequence  of  such  agreements,  the  business  of 
railway  transportation  or  the  exchange  of  commodities  is  in 
any  particular  diminished,  and  whether  it  is  not,  on  the  con- 
trary, prodigiously  extended  and  enlarged. 

[526]  (15)  Under  general  subdivision  V  the  conclusion 
to  which  the  foregoing  line  of  argument  leads  is  drawn  in 
.these  words:  "That  the  agreement  which  this  action  seeks 
to  condemn  is  not  by  reason  of  any  restraint  effected  by  it 
upon  competition,  or  otherwise,  a  contract  in  restraint  of 
trade  or  commerce,  but  is  on  the  contrary  highly  needful  to, 
and  promotive  of,  both." 

Its  necessity  to  beneficial  purposes,  as  thus  established,  is 
then  separately  pointed  out  by  way  of  summing  up:  (a)  Its  , 
necessity  to  stability  in  rates,  (h)  Its  necessity  to  uniform- 
ity in  rates  and  to  prevent  unjust  discrimination,  (c)  Its 
necessity  to  secure  the  general  benefits  of  harmonious  coop- 
eration in  classification  and  interchange  of  traffic,  (d)  Its 
necessity  as  a  supplement  to  the  Interstate  Commerce  act, 
and  in  order  to  make  the  objects  of  that  act  attainable,     {e) 


UNITED  -SfATES   V.    JOINT   TRAFFIC   ASSOCIATION.      891 
Mr.  Phelps's  argument  for  the  New  York  Central  R.  R.  Co. 

Its  necessity  for  the  prevention  of  crime,  for  its  punishment 
when  committed,  and  for  the  prevention  of  perjury,  com- 
mitted in  order  to  conceal  crime. 

VI.  If  the  Anti-Trust  act  is  interpreted  as  forbidding 
agreements,  such  as  the  one  under  discussion,  one  of  three 
alternatives  must  necessarily  follow.  (1)  That  all  railroad 
transportation  be  abandoned;  or,  (2)  The  consolidation  of 
all  competing  railroads  under  a  single  ownership,  either 
governmental  or  private;  or,  (3)  That  all  competing  rail- 
road business  must  be  carried  on  in  constant  and  daily  vio- 
lation of  criminal  law.  Of  these  alternatives  neither  the 
first  or  the  second  can  be  contemplated  as  possible.  Rail- 
road transportation  cannot  be  abandoned,  and  no  govern- 
mental ownership  can,  under  present,  or  any  probably  near 
future  conditions,  be  brought  about.  We  have  no  sovereign 
government  possessing  the  requisite  powers.  It  is  the  third 
alternative  which  must  follow. 

VII.  These  positions  are  fully  supported  by  the  weight  of 
authority. 

VIII.  The  agreement  is  in  no  manner  in  violation  of  the 
provisions  of  the  second  section  of  the  act.  It  creates  no 
monopoly,  nor  is  it  an  attempt,  or  conspiracy  to  monopolize. 

IX.  In  the  attempt,  made  by  the  bill,  to  array  every  pos- 
sible objection  to  the  agreement,  there  is  an  evident  purpose 
to  [527]  suggest  that  its  eighth  article,  in  connection  with 
other  subsidiary  provisions,  constitutes  pooling,  and  there- 
fore is  a  violation  of  section  5  of  the  Interstate  Commerce 
act.  There  is  no  foundation  for  such  a  charge.  The  agree- 
ment in  no  manner  violates  any  provision  of  the  Interstate 
Commerce  law. 


3/r.  E.  /.  Phelfs  for  the  New  York  Central  and  Hudson 
Eiver  Railroad  Company,  appellee. 

I.  As  the  case  is  set  down  forliearing  on  bill  and  answers, 
no  fact  alleged  in  the  bill  can  be  taken  as  true  if  denied  in  the 
answers,  and  every  fact  alleged  in  the  answers  must  be  taken 
to  be  true  if  responsive  to  the  bill.  The  facts  on  which  the 
case  stands  are  therefore  to  be  found  exclusively  in  the 
answers,  either  in  the  admissions  or  in  the  responsive  aver- 
ments which  thev  contain. 


892  171   UNITED   STATES   REPORTS,  527. 

Mr.  Pbdps's  argument  for  the  New  York  Central  B.  R.  Go. 

II.  The  denials  in  the  answers  completely  negative  all  the 
charges  of  illegal  intent  on  the  part  of  the  defendants  which 
are  contained  in  the  bill,  unless  they  are  found  to  result 
necessarily  from  the  terms  of  the  agreement  itself. 

III.  Whether  the  agreement  by  its  terms  violates  the  Fedr 
eral  law,  depends  entirely  on  the  inquiry  whether  it  conflicts 
with  any  statute  of  the  United  States.  The  bill  is  not  based 
upop  any  statute,  but  proceeds  apparently  upon  common  law 
grounds.  No  statute  is  referred  to,  or  charged  to  have  been 
violated. 

IV.  The  only  statutes  of  the  United  States  that  are  claimed 
to  be  infringed  by  the  terms  of  the  agreement,  are  the  Inter- 
state Commerce  act,  of  February  4,  1887,  amended  by  acts  of 
March  2,  1889,  February  10,  1891,  and  February  8,  1895, 
and  the  Anti-Trust  act  of  July  2,  1890. 

V.  The  agreement  violates  no  provision  of  the  Interstate 
Commerce  act.  The  only  provision  in  that  act  that  is  claimed 
to  be  infringed,  is  contained  in  §  5,  which  prohibits  "  pool- 
ing." "  Pooling  "  means  a  division  of  the  money  earnings  of 
traflic,  which  this  article  does  not  contemplate. 

VI.  Even  assuming  that  tt||s  clause  in  the  agreement  can 
be  construed  into  a  violation  of  the  5th  section  of  the  Inter- 
state Commerce  act,  this  suit  would  not  be  maintainable,  be- 
[528]  cause  it  is  unauthorized  by  that  act,  and  precluded 
by  its  express  provisions.  This  court  has  no  power  to  grant 
an  injunction,  either  interlocutory  or  upon  final  decree,  at 
the  suit  of  the  United  States  (lovemment,  against  the  com- 
mission of  a  crime,  where  no  other  grounds  for  the  injunc- 
tion exist  except  that  the  act  sought  to  be  enjoined  is  an 
offence;  unless  such  power  is  specially  conferred  by  statute. 
No  such  power  is  granted. 

VII.  The  Anti-Tnist  act  of  July  2^  1890,  does  not  apply 
to  the  business  of  railway  transportation.  It  will  be  claimed 
that  the  decision  of  this  court  in  the  case  of  the  Trans-Mis- 
mmri  Assorkdion,  100  U.  S.  290,  is  decisiA^e  upon  this  point,  as 
well  as  upon  the  further  question  whether  the  agreement  here 
under  consideration  is  a  violation  of  the  provisions  of  the 
Anti-Trust  act  It  will  be  found  on  comparison  that  very 
material  differences  exist  between  the  agreement  shown  in 
that  case,  and  the  case  that  is  presented  here.    So  that  the 


UIJITED   STATES    V.    JOINT   TRAFFIC    ASSOCIATION.      893 
Air.  Phelps's  argument  for  the  New  York  Central  R.  R.  Co. 

decision  there  is  by  no  means  controlling  in  the  present  case. 
These  points  of  difference  are  clearly  pointed  out  in  the  brief 
of  Mr.  Edmunds,  and  need  not  be  restated.  But  we  conceive 
it  not  to  be  improper,  so  far  as  it  may  be  necessary,  re- 
spectfully to  ask  of  the  court  a  reconsideration  of  the  con- 
clusions reached  by  the  majority  of  the  judges  in  that  de- 
cision, which  overrules  the  judgment  of  six  United  States 
Circuit  and  District  Judges  who  sat  in  the  different  stages 
of  that  case  and  this. 

The  argument  in  opposition  to  it  has  been  so  fully,  so 
clearly  and  so  forcibly  presented  in  the  dissenting  opinion  of 
Mr.  Justice  WTiite,  that  it  is  hardly  possible  to  add  to  it,  nor 
is  it  necessary  to  repeat  it. 

VIII.  Assuming  for  the  purposes  of  the  argument,  that 
the  Anti-Trust  law  does  apply  to  railway  traffic  contracts, 
ho  provision  of  that  law  is  violated  by  the  agreement  now 
under  consideration. 

The  prohibitions  of  the  act  are  two :  1.  Against  contracts, 
combinations  or  conspiracies  in  restraint  of  trade  or  com- 
merce. 2.  The  monopoly  of,  or  the  attempt  or  combination 
to  monopolize  any  part  of  the  trade  or  commerce  of  the 
States,  or  with  foreign  nations. 

[529]  The  agreement  in  this  case  is  not  "  in  restraint  of 
trade  or  commerce."  The  theory  of  the  bill  appears  to  be 
that  the  agreement  comes  within  this  description,  because  it 
tends  to  restrict  competition,  and  because  any  agreement  that 
restrains  competition  is  "  in  restraint  of  trade."  Both  these 
assumptions  are  erroneous,  the  one  in  fact,  the  other  in  law. 
The  agreement  does  not  restrain  competition  to  any  such 
appreciable  extent  as  would  justify  an  injunction,  except  that 
competition  which  is  unlawful  because  it  is  secret. 

Assuming,  against  the  fact,  that  a  certain  restriction  of 
competition  is  the  necessary  result  of  this  agreement  if  it  is  al- 
lowed to  proceed,  it  plainly  appears  by  its  terms  to  be  only 
such  restriction  of  competition  as  is  necessary  to  secure  "  just 
and  reasonable  rates." 

By  the  Interstate  Commerce  act  all  rates  are  required  to  be 
"reasonable  and  just."  Every  unjust  and  unreasonable 
charge  is  made  unlawful.  Schedules  of  rates,  as  has  been 
pointed  out,  are  required  to  be  published  and  kept  open  to 


171   UNITED  STATES  KEPORTS,  529. 
Mr.  Phelps's  iirguineiit  for  the  New  York  Central  R.  R.  Co. 

public;  inspection,  and  to  be  filed  with  the  Commissioners; 
and  not  to  be  changed  without  due  notice  to  the  public  and 
the  Commissioners.  Ample  remedies,  criminal  and  civil,  are 
provided  for  the  violation  of  these  requirements,  the  enforce- 
ment of  which  is  made  the  duty  of  the  Commissioners,  and 
the  companies  are  also  made  subject  to  the  state  laws  regulat- 
Ing  rates. 

The  precise  question,  therefore,  under  this  clause  of  the 
Anti-Trust  act,  is  whether  a  contract  that  produces  a  result 
which  the  Interstate  Commerce  act  in  terms  authorizes  and 
provides  for,  and  helps  to  repress  a  practice  which  that  act 
forbids,  is  for  that  reason  a  contract  for  the  unlawful  re- 
straint of  trade.  Or,  in  other  words,  whether  it  can  be  made 
unlawful  by  a  forced  construction  of  the  general  provisions 
of  one  statute  (»f  the  United  States,  for  a  carrier  company  to 
provide  by  a  traffic  contract  for  the  maintenance  of  those 
"just  and  reasonable  rates"  which  another  statute  of  the 
United  States  not  only  authorizes,  but  creates  elaborate  means 
for  making  permanent,  and  for  preventing  the  secret  changes 
of  rates  which  the  Interstate  Commerce  act  prohibits. 

It  is  the  statutes  themselves  that  have  prescribed  a  defini- 
[530]  tion  of  this  clause  of  the  Anti-Trust  act,  so  far  as  it 
applies  to  railway  traffic  contracts,  if  it  is  held  to  apply  to 
them  at  all,  whatever  its  meaning  as  to  other  contracts 
maybe. 

That  the  just  and  reasonable  rates  of  transportation  which 
the  Interstate  Commerce  act  contemplates  and  provides  for, 
are  rates  that  are  just  and  reasonable  to  the  carriers  as  well 
as  to  the  carried,  cannot  be  open  to  doubt.  The  very  words 
"just  and  reasonable "  employed  in  that  act,  necessarily  im- 
ply that  meaning.  They  are  words  of  comparison  and  rela- 
tion, and  unless  the  rights  of  both  parties  to  a  contract  are 
considered,  there  can  be  no  comparison.  It  would  be  pre- 
posterous to  call  a  price  just  and  reasonable,  that  was  not  so 
to  one  side  as  well  as  to  the  other.  This  is  the  construction 
which  this  court  have  given  to  the  Interstate  Commerce  act 
in  this  very  particular. 

The  validity  of  the  agreement  here  in  question  must  be 
determined,  therefore,  not  merely  upon  the  language  of  the 
Anti -Trust  act  taken  by  itself,  but  by  that  language  consid- 


UNITED   STATES   V.    JOINT   TRAFFIC   ASSOCIATION.     895 

Mr.  Phelps's  argument  for  the  New  York  Central  R.  R.  Co. 

ered  in  connection  with  the  other  statute  of  the  United  States 
which  (if  this  applies)  is  in  pari  materia,  and  which  deals 
with  the  subject  so  much  more  exhaustively,  and  in  words  so 
plain  that  there  can  be  no  ambiguity  raised  in  respect  to  them. 
Granting  that  the  Anti-Trust  act  in  terms  makes  all  contracts 
unlawful  that  are  in  anywise  "  in  restriction  of  trade,"  how- 
ever reasonable  and  necessary  they  may  be,  is  that  to  be 
understood  to  invalidate  a  railway  contract  made  to  secure 
that,  and  only  that,  which  the  Interstate  Commerce  act  as 
construed  by  this  court  recognizes  as  the  right  of  railway 
companies  to  receive,  and  provides  means  to  secure  ?  It  will 
hardly  be  claimed  that  the  elaborate  provisions  of  the  Inter- 
state Commerce  act  on  the  subject  of  reasonable  rates  are 
repealed  by  the  Anti-Trust  act.  If  both  are  to  stand,  as 
applicable  to  this  case,  they  must  be  read  together,  the  same 
as  if  their  provisions  were  contained  (so  far  as  they  refer  to 
the  same  subject)  in  separate  sections  of  the  same  act. 

Quite  aside  from  the  provisions  of  the  Interstate  Commerce 
act,  giving  to  the  companies  the  right  to  just  and  reasonable 
rates,  and  to  use  proper  means  to  maintain  them,  the  same 
[531]  result  is  reached  under  the  principles  of  the  common 
law.  The  term  "  restraint  of  trade  "  employed  in  the  Anti- 
Trust  statute  has  a  common  law  definition.  And  as  the  act 
furnishes  no  other,  that,  upon  the  general  rules  of  construc- 
tion, must  be  taken  to  be  intended.  To  make  the  agreement 
an  infringement  of  this  statute,  it  must,  therefore,  be  one  that 
would  be  void  at  common  law.  It  is  respectfully  submitted 
on  this  point  that  in  the  construction  of  statutes  the  rule  is 
absolutely  without  exception,  that  where  a  word  or  phrase 
employed  has  a  well-settled  common  law  definition  distinct 
from  its  literal  meaning,  that  is  assumed  to  be  the  meaning 
mtended,  unless  a  different  definition  is  prescribed  in  the 
statute.  Even  the  Constitution  of  the  United  States,  a  polit- 
ical document  of  an  entirely  unique  character,  has  been  from 
the  outset  subjected  by  this  court  to  this  rule  of  construction. 

Even  if  it  should  be  held  that  the  language  of  the  Anti- 
Trust  act  forbids  any  contract  in  restraint  of  trade,  how 
ever  just,  reasonable  and  necessary,  the  agreement  here  in 
question  would  not  fall  within  the  prohibition,  bocaus-  it  does 


I 


896 


111   UNITED   STATES   REPORTS,  531. 


M*.  Phelps's  argament  for  tlie  New  York  Central  R.  R.  Co. 

not  tend  to  restrain  trade  or  commerce,  but  rather  to  pro- 
mote them. 

A  restraint  upon  excessive  and  unwholesome  competition  is 
not  a  restraint  upon  trade,  but  is  necessary  to  its  mainte- 
nance. 

This  view  is  so  fully  presented  and  discussed  in  the  nrief 
of  Messrs.  Carter  and  Ledyard,  that  further  argument  in 
support  of  it  is  not  requisite. 

There  is  no  ground  whatever  for  asserting  that  the  agree- 
ment infringes  the  provision  of  the  Anti-Trust  act  against 
monopolies. 

The  definition  of  the  word  "  monopoly,"  both  in  its  legal 
fiiid  its  ordinary  signification,  is  the  concentration  of  a  busi- 
ness or  employment  in  the  hands  of  one,  or  at  most,  of  a  few. 
That  is  the  plain  meaning  of  it  as  employed  in  the  act.  No 
feature  of  the  agreement,  in  any  view  that  can  be  taken  of  it, 
approaches  this  definition. 

So  far  from  tending  toward  the  concentration  ol  railroad 
transportation  in  fewer  hands,  it  does  not  in  any  possible 
event  withdraw  it  from  a  single  road  now  in  existence,  nor 
throw  the  least  obstacle  in  the  way  of  the  construction  of 
others. 

1532]  Its  effect  will  be,  if  it  is  successful,  not  to  diminish, 
but  to  increase  transportation  facilities,  by  preserving  roads 
that  might  otherwise  be  driven  from  the  field. 

IX.  If  the  construction  of  the  Anti-Trust  act  which  was 
adopted  by  the  court  in  the  Trans-Missouri  case  is  to  stand, 
it  is  respectfully  insisted  that  the  act,  so  far  as  thus  interpre- 
ted and  applied,  is  in  violation  of  the  provisions  of  the  Con- 
stitution of  the  United  States,  since  it  deprives  the  defend- 
ants in -error  of  their  liberty  and  their  property  without  due 
process  of  law,  and  deprives  them  likewise  of  the  equal  pro- 
tection of  the  laws. 

This  point  was  not  made  on  the  argument  of  the  Trans- 
M4mmui  ease,  because  no  such  construction  of  the  act  was 
anticipated  by  counsel.  Nor  was  it  considered  by  the  court, 
since  it  is  an  unvarying  rule  that  no  objection  to  the  constitu- 
tionality of  a  law  will  be  considered,  unless  raised  by  the 
party  affected. 


UNITED   STATES   V.   JOINT   TRAFFIC   ASSOCIATION.     897 
Mr.  Phelps's  argument  for  the  New  York  Central  R.  R.  Co. 

The  question  thus  presented  is  not  whether  the  act  in  gen- 
eral, or  in  its  application  to  the  many  other  cases  to  which  it 
is  obviously  addressed,  is  unconstitutional,  but  whether  the 
agreement  here  under  consideration  is  one  that  may  be  pro- 
hibited by  legislation,  without  infringing  the  freedom  of  con- 
tract and  the  right  of  property,  which  the  Constitution  de- 
clares and  protects. 

In  the  Trans-Missouri  case,  where  the  contract  under  con- 
sideration was  similar  to  the  one  here  in  controversy,  though 
far  more  open  to  the  objections  here  urged,  it  was  conceded, 
both  in  the  majority  and  the  minority  opinions  of  the  court, 
that  its  substantive  character  and  purpose  were  such  as  the 
answers  in  tlie  case  aver  and  set  forth.  It  was  for  this  rea- 
son believed  by  the  minority  of  the  judges  that  it  could  not 
have  been  the  intention  of  Congress  that  such  a  contract 
should  be  made  a  penal  offence.  But  it  was  held  by  the 
majority  that  the  language  of  the  act  admitted  of  no  other 
construction.  Though  it  was  conceded  in  the  opinion  of  the 
court  that  the  arguments  against  that  conclusion  "  bear  with 
much  force  upon  the  policy  of  an  act  which  should  prevent  a 
general  agreement  of  rates  among  competing  railroad  com- 
panies, to  the  extent  simply  [533]  of  maintaining  those  rates 
Avhich  were  reasonable  and  fair."  And  in  the  opinion  of  the 
minority  of  the  court  by  Mr.  Justice  ^Vliite,  he  remarks,  after 
stating  the  general  features  of  the  contract,  "  I  content  my- 
self with  giving  this  mere  outline  of  the  contract,  and  do  not 
stop  to  demonstrate  that  its  provisions  are  reasonable,  since 
the  opinion  of  the  court  rests  upon  that  hypothesis." 

The  accuracy  of  the  statement  we  have  made  above,  of  the 
legal  effect  upon  this  case  of  the  Anti-Trust  act,  as  so  con- 
strued, is  thus  both  established  and  conceded,  and  the  ques- 
tion distinctly  arises,  whether  legislation  having  such  a  re- 
sult is  within  the  power  of  Congress. 

That  the  operation  of  the  act  as  thus  interpreted  does  in 
fact,  by  prohibiting  the  contract  here  in  question,  deprive  the 
defendants  (whether  rightfully  or  not)  of  both  liberty  and 
property  to  a  very  grave  and  perhaps  ruinous  extent,  is  not 
open  to  question.  A  just  freedom  of  contract  in  lawful  busi- 
ness is  one  of  the  most  important  rights  reserved  to  the  citi- 
11808— VOL  1—06  M 57 


898 


111   UNITED   STATES   REPORTS,  533. 


Mr,  IHielps's  iirgiiiueiit  for  the  New  York  Ceiitral  R.  11.  Co. 

zeo  under  the  general  term  of  "  liberty,"  for  all  human  in- 
dustry depends  upon  such  freedom  for  its  fair  reward. 

The  use  of  property  is  an  essential  part  of  it,  and  when 
abridged  the  property  itself  is  taken.  Its  use  Is  abridged 
when  the  owner  is  precluded  from  anv  contract  that  is  neces- 
sary or  desirable  in  order  to  secure  to  him  a  just  compensa- 
tion  for  its  employment.  And  when  any  class  in  the  commu- 
nity is  so  precluded,  it  is  to  that  extent  **  deprived  of  the  equal 
protection  of  the  laws."  These  are  elementary  propositions 
in  constitutional  law,  and  have  been  often  asserted  by  this 
court. 

In  recapituhition  of  the  points  above  presented  upon  the 
question  of  the  const itutionalitv  of  the  Anti-Trust  act.  if  it 
is  held  applicable  to  the  agreement  in  this  case,  we  n^spect- 
fully  insist:  (1)  That  the  act  deprives  the  defendants  of 
both  liberty  and  property,  by  forbidding  a  contract  just  and 
reasonable  in  itself,  essential  to  the  use  of  their  property  and 
the  prosecution  of  their  business,  and  never  before  held  or 
claimed  to  \ye  unlawfid  or  wrong,  and  l)y  which  they  only 
agree'  to  do  what  they  have  a  right  to  do.  That  no  such 
contract  can  be  prohibited  by  law  without  a  violation  of  the 
[534]  constitutional  provision,  whatever  advantage  to  the 
public  in  keeping  down  rates  of  transportation  may  be  ex- 
pected to  result  from  it.  And  that  in  attempting  such  a 
prohibition,  the  case  contemplated  by  the  Constitution  is  dis- 
tinctly presented,  in  which  the  legislature  deems  that  a  public 
taiefit  is  to  Ix*  etiVcted  by  depriving  the  citizen  of  his  liberty 
or  proj)erty  without  due  process  of  law. 

(2)  That  even  if  such  a  deprivation  could  Ije  justified  in 
any  case,  the  public  good  in  this  case  does  not  in  any  sense 
require  it,  because  (a)  Those  intended  to  be  benefited  are  not 
the  public,  but  only  one  class  of  the  public  who  are  seeking  a 
business  advantage  over  another  and  much  larger  class, 
which  is  equally  entitled  to  protection,  (h)  Even  if  such 
class  is  held  to  constitute  the  public,  it  is  not  entitled  to  tht^ 
suppression  of  all  restriction  upon  competition.  Because 
such  a  suppression  would  be  a  plain  and  oppressive  violation 
of  the  equal  rights  of  the  other  class,  inasmuch  as  it  would 
compel  the  latter  to  serve  the  former  by  labor  and  property 
without  just  compensation,     (e)  The  legislation  in  question 


UNITED   STATES   V,   JOINT   TRAFFIC    ASSOCIATION.     S99 
^   Mr.  Edmunds's  argument  for  tbe  Pennsylvania  Railroad  Company, 
is  not  necessary,  even  if  it  is  admissible.    The  complete  sup 
pression  of  all  the  restriction  upon  competition  to  which  the 
public  has  a  right  to  object,  is  already  effectually  provided 
for  by  full  and  careful  Congressional  legislation,  in  which 
no  defect  or  msufficiency  can  be  pointed  out;  so  that  the  fur- 
ther suppression  now  proposed  only  extends  to  those  re- 
strictions, just  and  reasonable  in  themselves,  to  which  the 
pubhc  have  not  a  right  to  object.     And  even  without  that 
or  any  legislation,  it  would  be  utterly  impossible  under  exist- 
ing facts,  notorious  and  undisputed,  for  railwav  companies 
to  restrict  competition  to  a  degree  that  would  result  in  anv 
injury  to  the  public,     (d)  That  if  all  restrictions  upon  com"- 
petition  were  prohibited,  the  result,  instead  of  a  public  ad- 
vantage, would  be  a  public  calamity,  and  would  injure  rather 
than  benefit  the  very  class  in  whose  behalf  it  is  contended  for 
(3)  That  even  if  it  were  admitted  that  further  legislation 
against  restrictions  upon  competition  was  both  constitutional 
and  necessary,  the  provisions  of  this  act,  in  forbiddircr  all 
such  restrictions,  are  not  justly  adapted  to  the  onlv  endlhat 
IS  15J5]  admissible  on  public  policy.     If  this  one^is  of  that 
character  it  must  fail,  but  if  not,  it  cannot  be  made  unlawful 
because  it  is  unnecessary.     Few  special  contracts  would  be 
necessary  if  all  parties  concerned  in  the  transactions  to  which 
they  refer  would  always  do  right. 

Mr.  George  F.  Edmunds  for  the  Pennsylvania  Railroad 
Company,  appellee. 

Before  the  agreement  in  question  was  made,  the  rates  of 
each  road  had  been  independently  and  fairlv  established  by 
Itself,  and  duly  filed  with  the  Interstate  Commerce  Commis- 
sion;  and  these  rates  were  in  truth  just,  reasonable,  and  in 
conformity  with  law  in  every  respect,  and  were  in  full  opera- 
tion. ^ 

This  is  admitted  by  pleadings. 

This  being  true,  t^hese  rates  could  not  have  been  either 
raised  or  lowered,  under  then  existing  conditions,  without  in- 
justice to  patrons  or  else  injustice  to  those  interested  in  the 
roads,  including  the  people  along  their  lines,  as  well  as 
through  shippers. 

To  have  changed  any  of  them  would  have  been  against 


900  111   UNITED   STATES   REPORTS,  535. 

Mr.  Edmunds's  argument  for  the  Pennsylvania  Railroad  Company. 

justice  and  reason,  disobeying  the  first  commandment  of  the 
commerce  law. 

In  this  state  of  things  the  agreement  was  made.  The  pre- 
amble  contains  five  distinct  declarations,  as  follows: 

(1)  To  aid  in  fulfilling  the  purposes  of  the  Interstate 
Commerce  act ;  to  cooperate 

(2)  with  each  other  and  adjacent  transportation  associa- 
tions  to  establish  and  maintain 

(3)  reasonable  and  just  rates,  fares,  rules  and  regulations 
on  state  and  interstate  traffic ;  to 

(4)  prevent  unjust  discrimination,  and  to  secure  the  reduc- 
tion and  concentration  of  agencies 

(5)  and  the  introduction  of  economies  in  the  conduct  of 
the  freight  and  passenger  service. 

Every  one  of  these  declarations  is  admitted  to  have  been 
true  in  all  respects;  and  it  is  admitted  that  there  was  no 
other  [5S6]  purpose,  and  no  secret  or  covert  design  in  re- 
spect of  the  subject.  The  preamble  thus  became,  certainly 
as  between  the  parties  to  it,  the  constitutional  guide  in  the 
interpretation  of  the  body  of  the  contract. 

The  parties  next  declare  that  they  "make  this  agreement 
for  the  purpose  of  carrying  out  the  objects  above  named." 

The  first  six  articles  of  the  contract  provide  for  organiza- 
tion and  administration,  in  respect  of  which  no  criticism  has 
been  suggested,  except  as  to  section  5  of  Article  V  in  con- 
nection with  the  Solicitor  General's  contention  in  regard  to 
Article  VII. 

Article  VII  is  the  first  one  that  is  assailed  in  respect  of  its 
fundamental  character.  It  is  the  fundamental  one  in  regard 
to  rates.  If  it  violates  law,  it  is  bad,  and  must  not  be  put  in 
execution.  If  it  provides  for  the  fullest  obedience  to  law 
and  promotes  trade,  it  must  be  upheld. 

The  first  section  provides : 

"  Section  1.  The  duly  published  schedules  of  rates,  fares  and 
charges  and  the  rules  applicable  thereto  now  in  force  and  authorized 
by  the  companies  parties  hereto  upon  the  traffic  covered  by  this 
agreement  (and  filed  with  the  Interstate  Commerce  Commission  as  to 
such  of  said  traffic  as  is  interstate)  are  hereby  reaffirmed  by  the  com- 
panies composing  the  association,  and  the  companies  parties  hereto 
shall,  within  ten  days  after  this  agreement  becomes  effective,  file  with 
the  managers  copies  of  all  such  schedules  of  rates,  fares  and  charges, 
and  the  rules  applicable  thereto." 


UNITED   STATES   V.    JOINT   TRAFFIC   ASSOCIATION.      901 

Mr.  Edmunds's  argument  for  the  Pennsylvania  Railroad  Company. 

This  section  is  the  immediate  and  affirmative  act  of  the 
association.  Its  essence  is  that  all  parties  agree  to  abide  bv 
the  preexisting  just,  reasonable  and  lawful  rates  then  on 
file  with  the  Interstate  Commerce  Commission.  It  has  not 
been  contended  by  the  learned  Solicitor  General  that  this 
section  is  contrary  to  law.  It  is  submitted  with  confidence 
that  no  such  contention  can  be  made,  and  that  if  the  associa- 
tion agreement  had  stopped  there,  the  agreement  would  have 
been  simply  one  to  stand  by  just  and  reasonable  rates  inde- 
pendently fixed,  on  file  with  the  Interstate  Commerce  Com- 
mission,  which  would  be  agreeing  to  do  the  very  thing  that 
the  plain  [537]  words  of  the  statute  commanded  should  be 
done.  The  commerce  law  does  not  demand  competition ;  it 
only  demands  justice,  reason  and  equality.  Every  one  of 
its  clauses  is  devoted  directly  to  these  ends ;  anclHhe  com- 
petition that  produces  departure  from  the  reason  and  justice 
and  equality  that  the  act  requires  violates  the  essential 
principle  upon  which  it  is  founded. 

I  take  it  to  be  plain  that  if  these  thirty-one  defendants  had 
united  in  an  engagement  to  truly  and  faithfully  adhere  to 
and  carry  out  in  their  respective  conduct  all  the  requirements 
of  the  commerce  law,  and  had  agreed  to  the  imposition  of 
penalties  for  infraction,  it  would  be  manifest  that  they  had 
not  contracted  to  restrain  trade,  either  in  a  general  or  a  par- 
tial sense,  or  any  sense  whatever.  In  the  instance  of  this 
first  provision  of  the  agreement,  they  have  engaged  to  do 
that  very  thing  and  that  very  thing  only  in  the  form  of 
specific  language  referring  to  a  specific  and  existing  just, 
reasonable  and  lawful  state  of  things  which  they  were  then 
acting  upon. 

The  second  section  of  Article  VII  is  the  one  upon  which 
the  principal  assault  of  my  learned  brother  on  the  other  side 
is  made.  He  maintains  that  the  language  used  in  describing 
the  powers  and  duties  of  the  managers  is  intended  to  be 
evasive  and  to  conceal  its  real  purpose,  and  to  make  the 
managers  the  absolute  masters,  subject  to  an  appeal  to  the 
board  of  control  (being  the  presidents  of  all  the  roads),  of 
the  changing  and  fixing  of  future  rates.  The  first  answer 
to  this  is  that  the  pleadings  distinctly  admit  that  there  was 
no  evasive  intention,  or  other  unjust  purpose,  in  any  part 


902  171   UNITED   STATES  BEPOBTS,  537. 

Mr.  Ednmnds's  argoment  for  the  PeniiaylTania  Railroad  Company. 

of  the  arrangement.  It  is,  therefore,  not  just  to  maintain 
what  the  I'ecorcl  admits  to  be  untrue. 

But  whatever  construction  or  implication  may  exist  in 
i-espect  of  the  language  of  this  section,  it  is  sufficient  to 
say  that  the  very  next  section  of  the  same  article  declares 
that — 

"The  powers  wnfenred  upon  the  managers  shall  be  so  construed 
and  exercised  as  not  to  permit  violation  of  the  Interstate  Commerce 
act,  or  any  other  law  applicable  to  the  premises,  or  any  provision  of 
the  chartere  or  the  laws  applicable  to  any  of  the  companies  parties 
hereto,  and  the  managers  shall  co-  [538]  operate  with  the  Interstate 
Comiiierw  Commission  to  secure  stability  and  uniformity  in  the  rates, 
fares,  clmrjres  sind  rules  estal>lished  hereimder." 

Here  is,  in  words  as  clear  and  specific  as  the  English  lan- 
guage is  capable  of,  a  distinct  jurisdictional  liuiitation  upon 
the  powers  of  the  managers,  as  describiMl  in  the  prece<ling 
section,  and  in  terms  the  clause  provides  that  the  powers 
conferred  uj.on  the  numagers  shall  be  so  construed  and  exer- 
cised as  not  to  jjermit  the  violation  of  the  Interstate  Com- 
meree  act,  or  any  other  law,  and  so  forth ;  and  it  connnands 
the  managers  to  cooperate  to  these  ends  with  the  Interstate 
Commerce  Conunission. 

When  thenianagers  ccmie  to  act,  then,  inider  these  jwwers, 
how  do  thev  start?     Thev  start  with  a  svstom  of  rates  cslab- 

•  *  * 

lished,  not  by  the  agreement,  but  l)efore  it  was  made,  and 
confirmed  l»v  tlie  agreement,  which  wei-e  confessetllv  in  con- 
formity  with  and  in  promotion  of  the  Commerce  act,  and 
which  were  absolutely  just  and  reasonable.  The  managers 
are  to  have  authority  to  reconunend  such  changes  in  those 
rates  and  fares  as,  by  the  very  words  of  the  second  section, 
may  he  reasonable  and  just  and  neoessjiry  for  governing  the 
traffic  and  protecting  the  interests  of  the  parti?s.  Reason- 
ableness and  justice  is  the  first  and  fundamental  condition 
of  their  starting  to  act  at  all,  and  it  is  declared  that  they 
shall  not  act  otherwise  than  in  conformity  with  the  require- 
ments I  liave  alreadv  mentioned  containwl  in  the  Connnerce 
act.  Can  this  l»e  an  authority  to  restrain  trade  under  any 
definition  of  th  '  word  "restraint''?  The  onlv  restraint  is 
m  restraint  against  a  violation  of  law  by  the  managers  in 
agreeing  upon  unreasonable  and  unjust  rates  against  the  re- 
quirements of  the  Commerce  act.    If  we  assume  that  the 


UNITED   STATES    V.    JOINT   TRAFFIC    ASSOCIATION.      903 
Mr.  Edmunds's  argument  for  the  Pennsylvania  Railroad  Company. 

restraint  of  trade  mentioned  in  the  Trust  act  may  be  a 
restraint  of  innocent  and  just  proceeding,  can  any  one  main- 
tain that  it  makes  illegal  an  agreement  not  to  violate  law, 
but  to  obev  it  ? 

It  was  obvious  when  this  agreement  was  made  that  rates 
tlien  existing  and  being  in  all  particulars  reasonable  and 
eqiuil,  might,  in  the  course  of  changes  in  production,  trade, 
and  under  other  conditions  over  which  the  railways  could 
have  no  control,  [539]  become  unjust,  unreasonable  and  in- 
applicable to  the  new  conditions,  and  that  in  such  case  both 
public  and  private  interests  would  require  that  readjust- 
ments shoidd  be  made  in  order  to  bring  the  rates  into  con- 
formity with  what  reason,  justice  and  law  should  require 
under  such  conditions.  It  was  to  provide  for  this  that  sec- 
tions 2  and  3  of  the  seventh  article  were  inserted.  As  I 
have  said,  they  were  inserted  in  such  clear  language  that  it 
would  be  impossible  for  the  managers  to  agree  upon  any 
rates  in  lieu  of  the  just  one  then  existing,  that  were  not, 
in  the  same  sense  and  to  the  same  extent,  just,  reasonable 
and  for  the  public  interest,  as  those  then  existing.  The 
managers  must  act  in  that  way  and  to  that  end,  or  else  they 
were  forbidden  by  the  very  terms  of  the  agreement  to  act 
at  all. 

If  the  managers,  contrary  to  their  authority,  should  have 
agreed  upon  a  new  rate  which  any  one  of  the  independent 
roads  thought  to  be  wrong  in  itself  as  being  unreasonable  and 
not  in  conformity  with  the  requjrements  of  the  article  and  of 
law,  that  company,  or  any  number  of  companies  affected, 
could  lawfully  and  justly  (as  woidd  be  its  bounden  duty)  re- 
fuse to  conform  to  the  rate  of  the  managers.  But  it  is  asked, 
would  not  the  road  thus  refusing  be  subjected  to  the  fines  and 
forfeitures  provided  in  another  part  of  the  agi^eement,  and 
would  not  it  be  turned  out  of  the  association  ?  I  answer  em- 
phatically, no.  If  any  such  thing  were  attempted  under  the 
circumstances  named,  the  company  could  defend  itself  in  a 
court  of  justice  against  any  such  wrongful  exaction,  and  could 
compel  the  managers  and  its  associate  roads  to  obey  the  con- 
tract, and  to  give  it  its  just  equality  of  treatment  that  it  was 
before  entitled  to.  The  Commerce  act  itself  in  terms  requires 
the  same  reasonable  and  just  conduct  by  railways  towards 


904 


m  UNITED   STATES  KEPOKTS,  539. 


Mr.  Edmunds's  argument  for  the  Pennsylvania  Railroad  Company. 

each  other  as  it  does  in  their  treatment  of  their  customers  and 
the  public.  I  most  earnestly  maintain,  therefore,  that  the 
whole  and  every  part  of  Article  VII  is  perfectly  valid  under 
any  possible  construction  of  the  language  of  the  Trust  act,  as 
well  as  in  perfect  conformity  with  and  in  aid  of  the  Com- 
merce act. 

I  may  as  well  here  compare  the  provisions  of  Article  VII, 
which  contains  the  great  leading  feature  of  the  whole  agree- 
f540]  ment,  with  the  agreement  in  the  Trans- Missouri  case. 
The  difference  is  broad  and  fundamental.  In  this  case,  as  I 
have  shown,  the  rates  agreed  to  be  adhered  to  in  the  first  sec- 
tion of  Article  VII  had  already  been  indei)endently  estab- 
lished, were,  in  fact,  reasonable  and  just,  were  on  file  and 
inferentially  approved  by  the  Interstate  Commerce  Commis- 
sion, and  they  had  been  assailed  by  nobody,  and  the  Avhole 
trade  of  the  country  affected  was  proceeding  under  them  with 
advantage  to  the  shippers,  to  the  people  along  the  lines  of  the 
roads,  to  the  railways  themselves,  and  to  the  general  interests 
of  the  country.  It  was  an  engagement  to  stand  by  that  state 
of  things  and  for  the  express  purpose  of  continuing  that 
happy  state  of  things — exactly  those  that  the  law  requires — 
that  this  engagement  was  made.  Turn  now  to  the  Trans- 
Missouri  agreement  on  the  same  part  of  the  subject.  That 
agreement  did  not  propose  or  profess  to  stand  by  any  then 
existing  rates,  it  did  not  indicate  that  the  rates  then  existing 
were  just  or  reasonable,  but  it  proposed  to  put  into  the  hands 
of  its  managers  the  power  to  establish  de  novo  reasonable 
rates,  etc. ;  and,  in  the  very  words  of  the  agreement,  for  the 
purpose  of  mutual  protection,  and  for  nothing  else. 

The  Trans-Missouri  agreement  imposed  no  restriction  upon 
the  discretion  of  its  rate-making  board ;  it  did  not  impose  and 
did  not,  evidently,  intend  to  impose  the  distinct  barriers  of  the 
law  between  the  powers  of  its  rate  board  and  the  people  and 
any  one  of  the  roads  concerned.  It  did  not  profess  to  look  to 
any  other  interest  than  the  exclusive  interest  of  the  parties 
themselves;  and  it  will  be  seen,  on  a  careful  study  of  it,  that 
it  was  construed  and  constructed  for  the  sole  purpose  of  keep- 
ing up  and  increasing  rates,  instead  of  for  the  purpose  (as  in 
the  Joint  Traffic  agreement)  of  keeping  them  just  and  in  con- 


UNITED   STATES   V.   JOINT   TKAFFIC   .ASSOCIATION.     905 
Mr.  Edmunds's  argument  for  the  Pennsylvania  Railroad  Company. 

formity  with  law,  whether  by  reduction,  increase  or  other  re- 
adjustment. 

Other  essential  differences  are  stated  in  my  brief  which  I 
need  not  take  the  time  of  the  court  to  enlarge  upon. 

These  differences  are  illustrated  by  what  the  pleadings  in 
the  two  cases  show.    In  our  case,  the  practical  operation  of 
the  agreement  has  been  to  continue  the  same  competition  that 
[641]  existed  before.    This  is  admitted.    It  has  been  to  con- 
tmue  the  same  just  and  reasonable  rates  previously  estab- 
lished, and  to  give  a  cooperative  and  advantageous  service 
upon  equal  terms  to  everybody  and  of  equal  benefit  to  the 
whole  public.     The  bill  in  the  Trans-Missouri  case  alleged- 
there  being,  it  will  be  remembered,  no  previously  established 
rates  that  were  agreed  upon— that  the  parties  had  refused  to 
establish  and  give  their  customers  just  rates.     The  answer 
did  not  meet  the  charge,  but  evaded  it  in  the  manner  that  the 
court  will  see  stated  in  my  brief.    The  practical  construction 
by  parties  to  contracts  in  their  operations  under  them  has 
always  been  considered  an  important  element  in  determining 
the  true  character  and  meaning  of  the  contract.     Wliat  I 
have  now  stated  shows  the  operating  difference  between  the 
two  contracts. 

The  next  principal  contention  of  my  learned  brother  is  that 
Article  VIII  of  the  agreement  violates  the  Trust  act  by  re- 
straining trade. 

The  words  of  the  article  are  as  follows : 

"Article  VIII. 

"proportions  of  competitive  traffic. 

"  The  Managers  are  charged  with  the  duty  of  securins  to  each  pom 
pany  party   hereto  equitable  propartions  of  thrc»?tive  trX 
covered  by  this  agreement  so  far  as  can  be  legally  done.'' 

This  article  provides  that  the  managers  shall  endeavor  so 
far,  and  so  far  only,  as  obedience  to  law— that  is  to  say, 
conformity  with  the  Commerce  act  and  conformity  with  the 
Trust  act— would  permit,  to  secure  equitable  proportions  of 
the  competitive  traffic  to  each  one  of  the  companies.  It  is  a 
sufficient  answer  to  my  brother's  contention  to  say  that  the 
very  terms  of  the  article  do  not  require  or  invite  or  allow  the 
managers  to  act  under  it  at  all  otherwise  than  as  the  law  shall 


906 


171   UNITED   STATES   BEPORTS,  542. 


Mr.  Ediiiiiiuls's  argument  for  the  Peimsylvania  Railroad  Company. 

permit.  If,  therefore,  the  Trust  act  condemns  the  effort  re- 
ferred to,  then  not  to  make  the  effort.  If  the  Interstate  Com- 
merce act,  either  in  terms  or  spirit,  is  adverse  to  such  an  effort 
the  managers  are  not  authorized  to  take  a  step.  Does  it  vio- 
late the  hiw  to  merely  authorize  an  agent  to  do  something  in 
[542]  the  course  of  business  so  far,  and  so  far  only,  as  the  law 
will  permit  ? 

But  I  contend  that  it  was  in  conformity  with  law  that  each 
company  should  have  an  equitable  proportion  of  the  traffic. 
Wliat  does  equitable  mean?  It  means  that  which  right  and 
justice  and  the  public  interest  require.  What  did  justice  and 
public  policy  require?  And  what  does  it  still  require  in 
resjject  of  the  nine  great  lines  connecting  the  western  lakes 
and  the  valley  of  the  Mississippi  and  the  whole  continent 
beyond  with  the  Atlantic  seaboard?  Was  it  not  just  and 
necessary  to  public  interest  that  each  one  of  these  roads,  pass- 
ing through  great  extents  of  country,  and  having  along  them 
populations  and  interests  to  whose  \^  elf  are  the  existence  of 
each  one  of  these  roads  \\  as  necessary,  should  be  considered 
with  reference  to  the  through  traffic  which  should  come  from 
l)eyond?  The  question  answers  itself.  It  is  obvious,  then, 
that  just  so  far  as  each  road  should  be  enabled  to  carry  the 
through  traffic  tliat  naturally  belonged  to  it,  by  just  so  far 
the  people  along  the  whole  length  of  its  line  would  be  bene- 
fited by  increasing  the  hicome  of  the  line  and  thereby  con- 
tributing to  its  supi>ort  and  to  its  ability  to  make  lower 
rates  to  all  its  jjeople  from  one  end  of  the  line  to  the  other. 
This  provision  of  the  eighth  article  then,  I  submit,  was 
wholesome,  lawful  and  necessary,  and  it  was  the  very  thing 
that  one  of  the  clauses  in  the  Commerce  act  and  the  spirit  of 
all  its  provisions  required. 

I  may  be  allowed  to  say  a  word  in  respect  of  the  objection 
that  no  one  of  the  roads  could  change  its  rates  without  giving 
thirty  davs'  notice,  and  therefore  that  this  was  a  restraint  of 
trade,  in  one  sense  or  another.  It  will  be  seen  on  examining 
the  agreement  that  each  road  had  the  absolute  right,  under 
the  agreement  and  pursuant  to  its  provisions,  to  change  its 
own  rates,  and  still  continue  a  member  of  the  association. 
This  being  so,  it  seems  to  me  impossible  to  contend  that  any 
part  of  the  agreement  was  any  sort  of  restraint,  unless  it  can 


UNITED   STATES   V,   JOINT   TRAFFIC   ASSOCIATION.     907 
Mr.  Edmunds's  argument  for  the  Pennsylvania  Railroad  Company, 
be  established  that  the  thirty  days'  notice  was  too  long.     It 
is  a  matter  of  history  that  when  the  Conmierce  act  was  passed 
there  was  inserted  in  it  the  requirement  that  no  rate  should 
be  raised  except  on  ten  days'  notice,  and  none  should  [543]  be 
lowered  except  on  three  days^  notice,  publicly  displaved. 
What  was  the  principle  of  this  ?     It  was  that  justice  and  fair 
play  to  customers  and  to  the  public  and   to  all  persons 
directly  or  indirectly  interested  in  transportation  required 
that  sufficient  and  timely  knowledge  of  changes  in   rates 
which,  as  we  know,  affect  in  a  greater  or  less  degree  all  com- 
mercial and  productive  transactions,  should  be  had  by  every 
person  and  community  interested.     I  suppose  I  may  prop- 
erly state  it  as  a  public  fact,  now  known  to  everybody  engaged 
in  business,  that  the  time  fixed  in  the  Conmierce  act  for  notice 
was  much  too  short,  and  that  unjust  inequalities  have  arisen, 
again  and  again,  from  changes  in  rates  by  particular  roads 
on  such  short  notice  that   favored  custoiners  and   favored 
localities,  etc.,  would  get  advantages  over  others,  in  violation 
of  the  spirit  and  substance  of  the  Commerce  act.     It  was  for 
the  purpose,  then,  and  with  the  effect  of  producing  the  widest 
fair  play  and  equality  among  all  persons,  all  ro'^ds  and  all 
communities,  that  this  period  of  thirty  days  instead  of  ten 
was  agreed  upon.     It  was  obviously  right,  and  being  right,  it 
should  not  be  condemned,  unless  the  rigor  of  a  law^'that  can- 
not be  otherwise  construed  and  applied  compels  it. 

I  submit  with  sincere  confidence,  as  it  regards  the  provision 
I  have  just  spoken  of,  as  well  as  it  regards  all  the  other  pro- 
visions of  the  contract,  that,  instead  of  being  even  a  partial 
restraint  of  trade,  they  are- all  provisions  of  constraint  in  sup- 
port of  and  in  promotion  of  trade.     Trade  is  a  general  word, 
and  its  operations,  lilce  all  other  operations  that  require  co- 
operating and  associating  forces  and  arrangement,  are  ad- 
vanced by,  and  indeed,  cannot  be  carried  on  truly  and  hon- 
estly for  public  interests  without  checks  and  regulations,  some 
of  which  may  restrain  and  regulate  the  behavior  of  a  particu- 
lar element  in  the  whole  operation,  and  by  doing  so  do  not 
restrain  but  advance  and  promote  the  whole;  just  as,  to  take 
the  simplest  of  illustrations  that  occurs  to  me,  in  mechanics, 
the  safety  valve  of  a  locomotive,  with  its  counterweight,  regu- 
lates and  restrains,  or  gives  off.  the  accumulating  stean^in 


908 


111  UHITED  STATES  REPOKTS,  514. 


Mr.  Edmunds's  ai-gument  for  tbe  Fennsylvaniu  Railroad  Company. 

«„  b„il„,  in  ae  «,«  p,.«,  oo„.™ng  i,  n^r.ini.g  ie  fr.™ 
escape,  and  in  the  second  place,  enabling  it  to  escape.  But 
all  [M4]  this  does  not  restrain  the  operations  of  the  loco- 
motive; it  is  necessary  to  its  best  and  safest  performam^e  of 
duty.    A  hundred  illustrations  might  be  given. 

My  brother  on  the  other  side  suggests  that  the  clause  in  the 
agreement  providing  for  abolishing  soliciting  agencies  is  a 
restraint  of  the  trade.  I  have  stated  in  my  printed  points  my 
answer  to  this.  I  may  add,  however,  that  soliciting  trade  or 
ceasing  to  solicit  trade  is  not  trade  itself,  and  does  not  belong 
to  it,  even  as  an  incident.  Wherever  it  is  practised,  it  is  prac- 
tised apart  from  any  act  of  trade;  it  precedes  it,  and  some- 
times leads  up  to  it,  and  sometimes  repels  it.  It  was  per- 
fectly competent,  therefore,  and  certainly  wise,  for  these 
roads  to  agree  to  abolish  such  agencies,  and  to  join,  so  far  as 
it  might  l^  convenient  to  do  for  the  information  of  the  pub- 
lic, in  having  agencies  at  various  important  points  to  assist 
shippers  and  manufacturers  in  the  most  rapid  and  economical 
transmission  of  their  productions.  The  plan,  therefore,  sub- 
stituted  for  the  old  practice  is  one  far  more  advantageous  to 
the  public  who  wish  for  honest  and  equal  dealing  than  the 
old  practice.  But  I  submit  that  whatever  character  may  be 
imputed  to  soliciting  business,  it  does  not  fall  within  the  au- 
thority of  Congress  to  regulate  it  at  all.  While  it  is  going 
on  the  business  solicited  has  not  reached  the  point  of  being 
interstate  commerce,  and  cannot  reach  it  until  its  movement 
has  commenced,  or  is  about  to  commence,  definitely  from  one 
State  to  another. 

I  refrain  from  making  any  observations  on  the  constitu- 
tional question  arising  if  the  Trust  act  is  to  be  construed  as 
forbidding  innocent  contracts  promotive  of  public  policy, 
which  I  have  insisted  upon  in  my  printed  points,  for  the 
reason  that  in  the  division  of  our  subjects  of  discussion  this 
matter  is  left  entirely  to  my  brother  Mr.  Phelps. 

In  respect  of  the  meaning  of  the  words  of  the  Trust  act, 
I  beg  to  ask  your  Honors'  careful  attention  to  the  suggestions 
I  have  ventured  to  make  in  my  printed  points.  I  need  not 
enlarge  upon  them,  and  have  only  to  call  your  attention,  first, 
to  the  grammatical  construction  of  the  first  section,  and, 
second,  to  the  citations  I  have  made  from  law  writers,  show- 


UNITED   STATES   V.   JOINT   TRAFFIC   ASSOCIATION.     909 
Mr.  Solicitor  General's  argument  for  the  United  States. 

ing  a  distinct  and  separate  classification  of  the  two  phrases, 
[545]  "  restraint  of  trade  in  general  "  and  "partial  restraint 
of  trade."  If  these  writers  are  correct  (as  nobody  doubts, 
I  think,  they  are),  and  the  two  phrases  were  known  and 
treated  in  the  law  at  the  time  of  the  passage  of  the  act  as 
separate  things,  the  one  obnoxious  and  the  other  just  and 
wholesome,  then  I  respectfully  and  earnestly  insist  that  the 
universal  rule  of  construction  requires  that  the  words  in  the 
act  shall  be  assigned  to  the  first  class,  and  not  carried  over 
into  the  second. 

Mr.  Solicitor  General,  for  the  United  States,  in  conclusion. 

I.  It  is  claimed  that  because  nothing  has  been  done  under 
the  agreement,  no  irreparable  injury  has  been  or  can  be 
shown,  and  therefore  no  injunction  lies.  But  the  Anti- 
Trust  law  makes  the  agreement  illegal  and  vests  the  court 
with  jurisdiction  to  prevent  violations  of  the  act.  The  carry^ 
ing  out  of  an  illegal  contract  will  result  in  irreparable  injury 
to  the  public,  and  this  sufficiently  appears  from  the  provision 
of  the  law  declaring  the  illegality  and  authorizing  injunc- 
tion proceedings. 

II.  It  is  insisted  that  an  agreement  in  restraint  of  trade 
must  restrain  trade— that  is,  reduce  or  diminish  it;  that 
trade  must  be  injured. 

An  agreement  in  restraint  of  trade  may  or  mav  not  dimin- 
ish or  reduce  trade.     The  injury  sought  to  be  averted  bv  pro- 
hibiting such  agreements  is  the  injury  to  the  public.*^   The 
stifling  of  competition,  the  creation  of  a  monopoly,  may  in- 
crease the  trade  in  the  product  controlled,  but  nevertheless 
to  the  injury  of  the  public.     To  stifle  competition  is  to  create 
a  monopoly  and  place  the  public  at  the  mercv  of  the  monop- 
oly.    The  benefits  resulting  from  cheaper  products  through 
monopolies  have  never  been  held  by  courts  or  legislatures  as 
suihcient  to  overbalance  the  evils  to  the  Government   and 
people  from  the  creation  of  monopolies.     It  is  a  question  of 
method  rather  than  result.     Trusts  and  monopolies  are  for- 
bidden in  order  to  preserve  competition,  and  thereby,  as  far 
as  possible,  freedom  of  action  in  industrial  and  commereial 
life. 

III.  It  is  said  that  competition  is  not  trade,  but  a  mere 


910 


171  UNITED  STATES  KEPORTS,  546. 


1 


Mr.  Solicitor  Geiierarg  argiiiiient  for  the  United  States. 

incident  of  trade;  that  what  prevents  competition  does  not 
[540]  necessarily  injure  trade;  on  the  contrary,  to  restrict 
competition  may  benefit  trade,  that  the  whole  world  is  now 
^•oaning  nnder  competition;  that  the  hard  rule  of  the  sur- 
vival of  the  fittest  bears  heavily  upon  the  mass  of  the  people; 
that  tht^re  is  a  spirit  of  unrest,  of  dissatisfaction,  and  that  to 
avoid  the  effects  of  ruinous  competition  among  employers  and 
employes  combination  is  the  rule. 

It  may  be  conceded  that  the  law  of  the  survival  of  the  fit- 
test is  a  hard  one;  that  the  necessity  of  competition  under 
exist iu*r  conditions  presses  heavily  upon  the  weak.  But, 
after  all,  competition  is  not  oidy  the  life  of  trade,  but  the 
underlying  basis  of  our  social  and  industrial  life.  There 
may  k^  a  better  way,  bi\.t  we  have  not  yet  found  it.  Compe- 
tition goes  along  with  freedom,  with  independent  action. 
This  country  was  founded  on  the  principles  of  liberty  and 
equality.  It  sought  to  secure  to  every  citizen  an  equal  chance 
under  the  law.  That  is  all  the  i>eople  have  demanded  or  do 
demand — a  fair  show  in  the  race  of  life.  Undoubtedlv  there 
is  unrest,  dissatisfaction,  tendencies  to  anarchv  and  socialism. 
hut  tlu'se  result  not  from  ooinpetition.  hut  the  throttling  of 
conipetition  hy  trusts  and  coinhiiiation.s.  wliich  seek  to  control 
production  and  transportiition  and  dominate  hoth  working- 
men  and  consumers.  Against  these  the  individual  citizen 
protests.  He  does  not  demand  no  competition,  hut  fair  com- 
petition. Combinations  of  workingmen  acconipanv  aggre- 
gations of  capital.  Tims  the  masses  are  arrayed  against  the 
classes.  If  comhinations  of  capital  were  prevented,  if  com- 
petition among  employers  of  lalior  were  enforced,  the  inde- 
pendent demand  for  labor  from  competing  sources  would  tend 
to  fair  wages,  such  as  prices  might  warrant. 

IV.  It  is  insisted  that  this  agreement  among  railroads  to 
prevent  competition  is  not  only  innocent,  but  wise  and  salu- 
tary. l»eeause  in  the  case  of  railroads  competition  is  ruinons; 
that  if  competition  reduces  rates  below  the  point  of  profit  for 
any  line,  it  nuist  idtimately  l>e  bankrupted,  for  it  cannot  stop 
running  nor  can  the  capital  invested  in  it  be  withdrawn. 

But  this  argmnent  ajiplies  to  all  great  modem  industries, 
in  manufacture  as  well  as  transportation.  Capital  fixed  in  a 
[547 1  valuable  plant  cannot  be  withdrawn,  nor  can  labor 


UNITED   STATES   V.   JOINT  TRAFFIC   ASSOCIATION.     911 
Mr.  Solicitor  Geneiai's  argument  for  tlie  United  States, 
skilled  in  one  uidustry  be  readily  shifted  to  another.    Both 
manufacturers  and  workingmen  are  subject  to  the  contin- 
gencies of  competition.     The  estal)lishment  of  a  new  .)lant 
with  modern  improvements  may  destrov  s(.me  old  one    in 
which  both  have  virtually  risked  tjieir  all.    There  are  sec 
tions  where  a  number  of  years  ago  it  was  j.rofitable  to  make 
iron  out  of  local  ores.     Millions  of  dollars  were  invested  in 
furnaces.    Workingmen  skilled  in  iron-making  .settled  there 
and  with  their  earnings  bought  ],ropeity  aiu'l  built  home^.' 
Subsequently,  m  other  sections  more  accessible  to  the  markets 
with  cheaper  ores,  modern  furnaces  were  erected  and  cheaper 
iron  began  to  be  made.    The  ol,l  furnaw-s  could  not  meet 
the  competition  of  the  new.     They  had  to  be  abandoned. 
Was  It  possible  to  withdraw  the  capital  invested  in  them' 
Aot  at  all.     It  was  lost.     The  workingmen,  too,  suffered 
They  were  thrown  out  of  work,  ran  up  debts,  lost  their  homes. 
Why  are  not  men  who  put  their  capital  or  skill  into  a 
manufacturing  plant  just  as  much  entitled   to  protection 
against  ruirtous  comi3etition  as  thos,.  who  jiut  their  monev  or 
skill  in  a  transportation  plant?     Why  should  the  railroads 
be  singled  out  from  all  the  gi-eat  interests  of  this  countrv 
and  alone  be  authorized  to  combine  and  prevent  <ompetition 
and  keep  up  prices? 

Competition  drives  the  weak  to  the  wall,  the  fittest  survive 
but  the  gi-eatest  good  to  the  greatest  number  results  The 
opening  of  new  mines,  the  construction  of  new  plants,  the 
establishment  of  industries  with  improved  methods  of  pro- 
duction and  greater  natural  advantages,  lower  the  cost  of 
production  of  the  commodity  to  the  benefit  of  the  public  bfit 
the  person  or  corporation  or  region  which  cannot  lower  its 
cost  of  production  to  meet  the  new  competition  must  suffer 
Under  competition  the  most  improved  plant,  the  best  trained 
iabor,  the  most  economical  management,  the  wisest  business 
sagacity  and  foresight,  is  not  only  encouraged  hut  demanded 
for  success. 

The  best  railroad,  the  one  constructed  and  e<iuipi>ed  and 
managwl  in  the  best  way,  will  get  the  bulk  of  the  competitive 
1648]  business,  and  it  ought  to.  It  can  afford  to  carrv  the 
traffic  at  lower  rates  than  the  poorer  roads,  and  it  ought  "to  be 
allowed  to,  m  the  public  interest.    The  i>oorer  roads  can  get 


912 


111  UNITED   STATES  REPORTS,  548. 


Mr.  Solicitor  Genera I's  argiiiueot  for  the  United  States. 

the  business  by  putting  themselves  in  shape  to  do  tlie  business. 
Roads  equally  fitted  to  do  the  work  will  naturally  divide  the 
competitive  business  in  equitable  proportions.  Competition 
for  traffic  by  improved  service  and  lower  rates  will  result, 
naturally,  not  m  ruining  the  roads,  but  in  building  them  up. 
Under  eompi'tition,  the  best  road  fixes  the  rate;  under  com- 
bination, the  poorest  road.  Is  it  just  to  make  the  public  pay 
rates  from  Ciiicago  to  the  East  fixed  by  the  poorest  system 
protected  by  the  Joint  Traffic  agi'eenient? 

\^.  It  is  contended  there  is  no  re-traint  on  trade,  because 
the  railways  still  exist  with  all  their  facilities  for  transporta- 
tion, ready  and  willing  to  serve  the  public,  and  with  no  in- 
ducement for  service  weakened;  that  competition  in  every 
desirable  aspect  remains,  the  railroads  l>eing  permitted  to 
compete,  but  compelled  to  do  it  openly,  under  the  provision 
that  a  deviation  from  the  association  rate  cannot  l>e  made 
except  by  resolution  of  the  board  of  a  member  and  after 
thirty  days'  notice  to  the  managers. 

It  is  true  the  railways  exist  with  their  original  facilities, 
but  the  inducement  for  improvement  by  cheaper  methods  of 
transportation  is  weakened,  the  motive  for  competition  re- 
moved, the  means  of  competition  destroyed,  and  competition 
itself  absolutely  forbidden.  The  natural  result  of  preventing 
competition  is  to  keep  up  rates.  An  excess  in  rates  over  what 
would  obtain  under  competition  amounts  in  effect  to  a  tax  on 
the  things  tran*^ported.  This  operates  as  a  burden  upon  com- 
merce, and  a  restraint  of  trade. 

If  a  State  should  levy  a  tax  on  goods  transported  through 
it,  this  court  would  hold  such  an  act  unconstitutional,  because 
it  laid  a  burden  upon  interstate  commerce.  Moreover,  to  in- 
crease rates  and  maintain  them  at  a  i)oint  above  what  would 
obtain  under  competition  decre^ises  the  business  of  railroads 
but  enhances  the  cost  of  it,  and  thus  restrains  trade  or  com- 
merce. Lower  rates  mean  more  traffic,  both  freight  and 
passenger.  Higher  rates  means  less  traffic.  It  may  be  to  the 
[549]  interest  of  the  railroads  to  increase  the  rates  and  lessen 
the  traffic.  The  profits  may  be  as  much  or  more,  but  it  is 
done  at  tlie  expense  of  the  public  and  to  the  restraint  of  trade. 

VI.  It  is  insisted  that  rates  must  be  stable,  not  subject  to 
change;  that  a  manufacturer  cannot  safely  make  goods  nor  a 


UNITED  STATES  V,  JOINT  TRAFFIC  ASSOCIATION.  913 
Mr.  Solicitor  General's  argument  for  the  United  States. 
dealer  buy  them  unless  he  knows  the  rates  for  transporting 
them  to  market,  and  may  rely  upon  these  rates  continuing; 
therefore  agreements  for  maintaining  rates  at  a  fixed  point 
should  be  encouraged. 

It  is  obvious  that  the  manufacturer  or  dealer  must  not  only 
take  into  account  the  rates  he  will  have  to  pay  to  market,  but 
the  rates  his  competitors  from  every  quarter,  by  land  and 
water,  will  have  to  pay.  It  is  impracticable  to  attain  a  cast- 
iron  uniformity  of  this  land,  and  neither  the  Interstate  Com- 
merce law  nor  the  Joint  Traffic  agreement  attempts  it. 
Moreover,  the  agreement  does  not  assume  to  prevent  a  change 
of  rates.  It  virtually  takes  the  power  to  change  from  the 
companies,  but  gives  it  to  the  managers  of  the  association. 
For  natural  it  substitutes  arbitrary  change.  The  protest 
against  any  change  in  rates  is  a  protest  against  progress. 
The  history  of  railroads  shows  a  constant  tendency  towards 
cheaper  rates.  This  has  resulted  from  improvements  forced 
by  competition.  The  interest  of  the  public  lies  not  in  main- 
taining but  in  reducing  rates,  and  to  effect  such  reduction 
competition  is  essential. 

yil.  Uniformity  in  rates  is  declared  to  be  essential,  and 
it  is  urged  that  the  provisions  of  the  Interstate  Commerce  law 
favoring  uniformity  cannot  be  enforced  except  by  suppress- 
ing competition  through  this  agreement;  and,  to  illustrate 
the  need  of  uniformity,  it  is  said  that  without  it  an  industry 
in  Michigan  equidistant  from  market  with  a  similar  industry 
in  Indiana  might  be  wiped  out  of  existence  by  reduced  rates 
in  favor  of  the  Indiana  industry. 

But  neither  the  Interstate  Commerce  act  nor  this  agree- 
ment would  prevent  the  alleged  injustice  suggested.  The 
case  instanced  involves  a  reduction  in  rates  on  local  traffic, 
and  the  agreement  only  applies  to  competitive  traffic.  There 
is  nothing  in  the  agreement  to  prevent  any  member  of  the 
[560]  association  from  changing  the  rates  from  local  points; 
the  jurisdiction  of  the  association  is  restricted  to  competitive 
traffic. 

The  uniformity  demanded  by  the  Interstate  Commerce  act 
is  uniformity  in  the  treatment  by  each  railroad  of  its  own 
patrons.     The  second  section  prohibits  a  common   carrier 
11808-~voL  1—06  M 58 


171   UNITED   STATES   REPOBTS,  550. 


Mr.  Solicitor  General's  argument  for  the  United  States. 

from  charging  one  person  more  than  another  for  the  same 
service;  it  does  not  prohibit  a  carrier  from  charging  one  per- 
son more  or  less  than  another  railroad  charges  another  person 
for  an  equal  distance.  The  third  section  forbids  a  common 
carrier  to  give  any  undue  preference  or  advantage  to  any  per- 
son or  locality  over  any  other.  But  this  only  applies  to  the 
action  of  a  railroad  toward  the  people  or  the  places  served  by 
it.  And  so,  too,  with  reference  to  the  long  and  short  haul 
provisions  in  the  fourth  section. 

The  Interstate  Commerce  law  declares  that  all  charges 
must  be  reasonable  and  just.  It  provides  no  means  for  secur- 
ing this  desideratum  except  competition.  The  only  method 
of  stifling  competition  when  the  law  was  passed  was  the  pool- 
ing agreement,  and  this  was  forbidden.  Competition  be- 
tween railroads  was  preserved,  and  to  secure  the  benefits  of 
competition  to  all  patrons  of  each  road  it  was  provided  that 
the  competition  should  be  open  and  above  board,  so  that  the 
people  might  be  advised  of  the  existing  rates,  and  each  rail- 
road was  required  to  treat  its  patrons  with  uniformity,  with- 
out discrimination  and  without  preferences. 

The  object  of  the  law  was  to  secure  the  benefits  of  compe- 
tition to  all,  and  not  permit  a  road  to  charge  those  shippers 
for  whose  patronage  it  does  not  have  to  compete  excessive 
rates,  while  secretly  granting  lower  rates  to  those  shippers  for 
whose  patronage  it  has  to  compete.  The  competition  was  to 
be  restricted  to  where  it  belongs;  between  the  railroads  and 
not  between  the  shippers.  If  a  railroad  can  afford  to  carry 
the  freight  of  one  shipper  for  a  certain  rate,  it  can  afford  to 
carry  for  the  same  rate  like  freight  under  similar  conditions 
for  every  other  shipper. 

VIII.  It  is- contended  that  uniform  rates  should  be  main- 
tained on  the  trunk  lines  in  order  to  keep  the  weaker  roads  in 
[551]  operation  for  the  benefit  of  the  sections  through  which 

they  run. 

As  I  have  pointed  out,  the  agreement  does  not  apply  to 
local  traffic.  As  to  it,  each  road  has  a  monopoly,  with  power 
to  fix  its  own  rates.  The  agreement  applies  only  to  com- 
petitive traffic  between  great  centres.  The  argument,  then, 
Amounts  to  this,  that  the  rates  on  through  traffic  are  to  be 
icept  up  in  order  to  preserve  the  weak  roads  as  going  con- 


UNITED   STATES    V.   JOINT   TBAFFJC   ASSOCIATION.     915 
Mr.  Solicitor  General's  argument  for  tbe  United  States, 
cerns  for  the  benefit  of  the  sections  through  which  they  run 
What  is  this  but  to  tax  the  many   for  the  benefit  of  the  few? 
It  IS  not  the   function  of  Government  to  neutralize  the 
advantages  of  locality.     The  people  pay  for  these  and  are 
entitled  to  them.     If  I  settle  in  a  flourishing  region  on  a  good 
line,  I  pay  for  the  privilege  in  the  cost  of  the  land,  in  taxes, 
etc.     If  I  settle  m  an  undeveloped  region  on  a  poor  road,  I 
pay  httle  for  either  the  privilege  or  the  land,  and  must  ex- 
pect to  help  bear  the  cost  of  development. 

IX.  It  is  said  that  the  Interstate  Commerce  act  was  passed 
to  suppress  competition  and  secure  uniformity  in  rates. 
^    It  was  not  passed  to  suppress  competition,  but  to  preserve 
It  and  secure  its  benefits  to  all.     Competition  between  inde- 
pendent  lines  was  preserved  and  uniformity  enforced  to 
secure  the  benefit  of  this  competition  to  all.     Each  carrier 
was  required  to  treat  its  patrons  with  uniform  fairness,  with- 
out preference  and  without  discrimination.     The  only  effect- 
ive arrangement  used  at  that  time  by  the  trunli  lines  to 
stifle  competition  was  the  pooling  agreement,  and  this  was 
prohibited.     It  was  recognized  that  competition  would  keep 
the  rates  reasonable,  and  the  long  and  short  haul  provision 
was  intended  to  secure  to  all  points  on  each  road  the  benefit 
of  such  competition.    Unjust  discrimination  and  undue  pref- 
erences by  a  railroad  among  its  patrons  were  prohibited. 
Thus  the  benefits    of  open  competition  were  insured  to  aU. 
The  policy  was— among  the  patrons  of  each  road  uniformity^ 
but  between  the  roads  open  competition. 

X.  The  point  is  made  that  railways  are  public  highways, 
and  the  furnishing  of  railway  transportation  a  governmental 
function;  therefore  the  Government  should  eliminate  the  ad- 
[552]  vantage  of  locality  by  enforcing  absolute  uniformity 
m  rates,  or  permit  the  railroads  to  do  it  by  preventing  com- 
petition and  maintaining  arbitrary  rates. 

It  may  be  conceded  that  the  furnishing  of  railroad  trans- 
portation is  a  public  function,  and  therefore  the  Government 
may  regulate  it.  Government,  state  and  Federal,  has  done 
this,  by  forbidding  the  consolidation  of  competing  lines,  by 
prohibiting  pooling  contracts,  and  by  making  illegal'  ail 
agreements  in  restraint  of  trade. 
The  absolute  uniformity  demanded  is  neither  practicable 


916  171    UNITED   STATES    REPORTS,  552. 

Mr.  Solicitor  General's  argument  for  the  United  Stutes. 

nor  desirable.  Absolute  imiformity,  extending  to  every  rate, 
from  every  point,  on  every  railroad,  means  absolute  consoli- 
dation of  control  and  absolutely  arbitrary  rates,  and  this  is 
absolutely  inconsistent  with  competition.  It  admits  of  no 
competition.  The  desirable  uniformity  is  that  which  goes 
along  with  competition,  and  supplements  it,  and  secures  its 
benefits  to  all  shippers,  without  distinction.  Each  railroad 
should  be  required  to  treat  its  patrons—persons  and  places — 
with  fairness  and  equality,  without  preference  or  discrimina- 
tion. It  should  not  be  required,  however,  to  treat  its  ship- 
pers no  better  than  other  lines  treat  theirs.  On  tlie  contrary, 
it  should  be  induced  to  treat  its  shippers  the  very  best  it  can, 
and  thereby  make  it  incumbent  upon  competing  lines  to  treat 
their  shippers  as  well.  It  should  be  induced  to  do  this  not 
only  in  rates  but  in  service.  The  rigid,  cast-iron,  arbitrary 
rule  of  absolute  unifonnity  as  between  railroads,  contended 
for  by  Mr.  Carter,  would  logically  prevent  all  competition, 
whether  in  rates  or  st  r\  ice. 

If  the  railroads  are  not  to  be  permitted  to  conibint^  and 
prevent  ruinous  conipetitiun,  and  establish  anil  maintain  rea- 
sonable rates  by  arbitrary  methods,  then,  it  is  said,  they  nnist 
either  abandon  transportation,  or  consolidate,  or  persistently 

violate  the  law. 

There  is  a  virtual  consolidation  of  these  roads  now  under 
the  agreement.  The  public  is  not  interested  in  consolidation 
except  as  it  affects  competition.  Tlie  constitution  and  laws  of 
many  States  prohibit  the  consolidation  of  railroads,  but  only 
of  competing  railroads.  Lines  which  do  not  compete  may  con- 
[55ai  solidate,  and  the  public  thus  gains  the  benefit  of 
broader  and  more  economical  administration.  Railroads 
whicli  compete  may  not  consolidate,  because  it  prevents  com- 
petition and  keeps  up  rates. 

Public  policy  has  demanded  the  prohibition  of  the  consoli- 
dation of  competing  lines;  for  the  same  reason  Congress 
enacted  the  antipooling  section  of  the  Interstate  Commerce 
act  The  pooling  of  freights  and  the  division  of  earnings  is 
not  bad  in  itself.  It  is  bad,  because  used  to  stifle  competi- 
tion. Equally  bad  is  the  Joint  Traffic  agreement  before  the 
court,  which  operates  as  effectively  as  any  pooling  arrange- 
ment ever  devised.    The  people  have  not  stopped  to  inquire 


^ 


UNITED   STATES   V,   JOINT   TRAFFIC   ASSOCIATION.     917 
Mr.  Solicitor  General's  argument  for  the  ITnited  States. 

whether  consolidation  would  result  of  necessity  in  unreason- 
able rates;  neither  have  they  stopped  to  inquire  whether 
pooling  would  result  necessarily  in  unreasonable  rates.  It  is 
the  tendency,  not  the  absolute  result,  which  has  operated  to 
prohibit  consolidation,  to  prohibit  pooling,  to  prohibit  con- 
tracts in  restraint  of  trade. 

The  railroads  say  that  if  they  are  not  permitted  to  prevent 
competition  they  will  compete  and  in  doing  so  violate  the 
Interstate  Commerce  law;  that  they  should  be  permitted  to 
combine  for  the  purpose  of  preventing  violations  of  law,  even 
if  in  doing  so  competition  be  prevented. 

But  to  prevent  competition  is  in  itself  to  violate  the  law. 
Better  the  chance  to  violate  one  law  than  the  certainty  of 
violating  another.  Better  the  motive  to  violate  one  law  than 
the  mandate  to  violate  another.  If  the  ability  the  railroads 
employ  to  circumvent  the  law  were  used  to  observe  it,  neither 
this  agreement  nor  the  arguments  in  support  of  it  would  be 
before  the  court.  The  railroads  promise  to  obey  one  law  if 
the  court  will  permit  them  to  violate  another.  Would  they 
keep  the  compact,  if  made  ?  Respect  for  law  based  solely  on 
self-interest  is  delusive  and  evanescent. 

XI.  An  attempt  is  made  to  distinguish  this  case  from  the 
Trans-Missouri  case  by  saying  that  here  the  association  sim- 
ply adopted  the  admitted  fair  and  reasonable  rates  then  in 
force  and  filed  with  the  Interstate  Commerce  Commission  bv 
the  companies;  while  in  the  Trans-Missouri  case  the  associa- 
tion was  given  power  to  fix  rates.  But  in  the  Trans-Missouri 
[554]  agreement  the  association  was  only  given  power  to  fix 
reasonable  rates,  and  the  fact  that  the  rates  fixed  bv  the  asso- 
ciation  during  its  existence  were  fair  and  reasonable  was  ad- 
mitted. 

In  tl^  Trans-Missouri  case^  the  association  had  been  dis- 
solved. The  only  question  was  the  legal  effect  of  the  author- 
ity conferred  by  the  agreement.  If  there  were  no  power 
under  the  Joint  Traffic  agreement  to  change  rates,  neverthe- 
less the  power  to  maintain  rates  arbitrarily  would  involve 
authority  to  keep  them  up  after  progress  and  invention 
should  render  them  excessive  and  unreasonable.  But  in 
point  of  fact,  as  pointed  out,  the  Joint  Traffic  agreement  vests 
in  the  association,  through  the  managers,  with  appeal  to  the 


918 


m    UNITED   STATES    REPORTS,  554. 


Mr.  Solicitor  General's  argument  for  tbe  United  States. 

board  of  control,  the  authority  to  change  rates.  This  author- 
ity is  more  coercive  than  that  conferred  by  the  Trans-]^Iis- 
souri  agreement. 

Under  the  Trans-Missouri  agreement  five  days'  written 
notice  prior  to  each  monthly  meeting  was  required  to  be 
given  the  chairman  of  any  proposed  reduction  in  rates.  At 
each  monthly  meeting  the  association  voted  on  all  changes 
proposed.  All  parties  were  bound  by  the  decision  of  the 
association  "  unless  then  and  there  the  parties  shall  give  the 
association  definite  written  notice  that  in  ten  days  thereafter 
they  shall  make  such  modification,  notwithstanding  the  vote 
of  the  association.  .  .  .  Should  any  member  insist  upon  a 
reduction  of  rates  against  the  views  of  the  majority,  and  if 
in  the  judgment  of  said  majority  the  rates  so  made  affect  seri- 
ously the  rates  upon  through  traffic,  then  the  association  may, 
by  a  majority  vote  upon  such  other  traffic,  put  into  effect  cor- 
responding rates  to  take  effect  upon  the  same  day."  More- 
over, each  member  of  the  Trans-Missouri  association  might, 
at  its  peril,  make  a  rate  without  previous  notice  to  meet  the 
competition  of  outside  lines,  giving  the  chairman  notice  of 
its  action,  so  the  good  faith  of  the  transaction  might  be 
passed  upon  by  the  association  at  its  next  meeting. 

Thus,  under  the  Trans-Missouri  agreement  each  member 
might,  at  its  peril,  make  a  rate  to  meet  outside  competition, 
and  each  member  might,  upon  giving  ten  days'  notice,  make 
an  independent  rate,  notwithstanding  the  action  of  the  asso- 
ciation. But  under  the  Joint  Traffic  agreement  no  company 
can  [555]  deviate  from  the  rates  as  fixed  by  the  managers, 
except  by  a  resolution  of  its  board  of  directors,  and  thirty 
days  after  a  copy  of  such  resolution  is  filed  with  the  man- 
agers. This  absolutely  prevents  competition,  and  the  inten- 
tion to  prevent  competition  is  plain  from  the  provision  tliat 
"the  managers,  upon  receipt  of  such  notice,  ^all  act 
promptly  upon  the  same  for  the  protection  of  the  parties 
hereto." 

Mr.  Carter,  in  his  argument,  explained  the  operation  of 
this  clause.  Thirty  days'  notice  of  the  intention  of  any 
company,  by  resolution  of  its  board,  to  deviate  from  the 
rates  fixed  by"  the  association,  through  its  managers,  was 
required  in  order  that  the  association  might  have  time  to 


UNITED   STATES   V.   JOINT   TRAFFIC   ASSOCIATION.     919 
Mr.  Solicitor  General's  argument  for  the  United  States. 

determine  its  course  of  action.  If  it  could  meet  the  rate 
proposed  by  the  deviating  member,  it  would  do  so.  If  it 
could  not,  it  would  take  steps,  in  Mr.  Carter's  language,  "  to 
exterminate  "  the  recalcitrant  company.  In  no  other  way, 
according  to  Mr.  Carter,  could  ruinous  competition  be  pre- 
vented and  the  interests  of  all  members  of  the  association 
protected. 

XII.  It  may  be  conceded  that  the  public  along  each  line 
is  interested  in  the  line  getting  its  fair  share  of  the  through 
traffic  and  earnings;  and  this  it  will  get  under  competition. 
The  local  public  is  not  entitled,  however,  to  an  arbitrary 
share  of  the  through  traffic  and  earnings.  It  has  a  right  to 
no  more  than  the  advantages  of  the  line  attract.  To  give  it 
more  is  to  take  what  belongs  to  another  line  and  another 
section.  A  prosperous  section,  with  an  intelligent,  progres- 
sive population,  makes  a  good  railroad,  and  a  good  railroad 
attracts  through  traffic;  and  it  is  not  just  or  right  to  take 
this  traffic  away  and  give  it  to  a  poor  road  in  order  to  do  for 
it  what  the  public  along  its  line  ought  to  do. 

XIII.  The  provisions  of  the  Interstate  Commerce  law 
preventing  discrimination  and  undue  preferences  have  been 
discussed ;  they  can  be  enforced  without  suppressing  compe- 
tition. The  tenth  article  of  the  Joint  Traffic  agreement  pro- 
vides that  "  the  managers  shall  decide  and  enforce  the  course 
which  shall  be  pursued  with  connecting  companies  not  par- 
ties to  this  agreement  which  fail  or  decline  to  observe  the 
rates,  fares  and  rules  established  under  this  agreement." 
and  it  is  [546]  contended  that  this  provision  is  necessary  to 
prevent  discrimination  against  one  company  and  in  favor  of 
another  by  connecting  lines ;  but  a  reading  of  the  third  sec: 
tion  of  the  Interstate  Commerce  act  shows  that  the  mischief 
suggested  is  fully  provided  for  in  its  concluding  paragraph, 
which  provides  that  every  common  carrier  shall  afford  equal 
facilities  for  the  interchange  of  traffic  and  for  receiving  and 
forwarding  freight  or  passengers  from  connecting  lines, 
"and  shall  not  discriminate  in  their  rates  and  charges  be- 
tween such  connecting  lines." 

XIV.  It  is  insisted  that  if  Congress  had  intended  the  Anti- 
Trust  law  to  prohibit  every  contract  in  restraint  of  trade, 
whether  partial  or  general,  reasonable  or  unreasonable,  it 


920 


m   UNITED   STATES   REPORTS,  5.56. 


Mr.  Solicitor  General's  argument  for  the  United  States. 

would  have  used  the  language  "  every  contract  in  any  re- 
straint of  trade,"  etc.,  "  is  hereby  declared  to  be  illegal." 

It  seems  to  me,  and  I  submit  to  the  court,  that  the  expres- 
sion "  every  contract  in  restraint  of  trade  "  is  quite  as  com- 
prehensive as  "every  contract  in  any  restraint  of  trade," 
and  much  better  language.  With  due  respect  to  the  learned 
counsel,  it  might  be  suggested  that  if  his  criticism  of  the 
language  used  be  a  valid  one,  why  may  not  the  next  commen- 
tator on  this  section  forcefully  insist  that  Congress  should 
have  said  "every  contract  in  any  and  every  restraint  of 
trade  is  hereby  declared  to  be  illegal "  ? 

XV.  The  reply  to  Mr.  Phelps'  attack  upon  the  constitu- 
tionality of  the  Anti-Trust  law  as  construed  by  this  court  in 
the  Tram-Missouri  case^  is  to  be  found  in  the  argimient  of 
Mr.  Carter  that  railways  are  public  highways,  and  in  the 
furnishing  of  public  transportation  perform  in  a  sense  a 
governmental  function.  The  right  of  the  Government  to 
regulate  contracts  between  carriers  and  shippers  and  to 
place  proper  restrictions  upon  contracts  among  carriers  them- 
selves, in  order  to  protect  the  interests  of  the  public,  as 
affected  by  these  instrumentalities  of  commerce,  has  not 
heretofore  been  seriously  questioned.  The  States  regulate 
the  construction,  maintenance,  and  operation  of  railroads, 
prescribing  and  enforcing  maximum  rates,  preventing  the 
consolidation  of  competing  lines,  and  securing  to  the  public 
the  benefit  of  competition. 

The  doctrine  laid  down  in  the  case  of  Munn  v.  Illinois,  94 
[557]  U.  S.  113,  applies.  When  a  man  devotes Tiis  property 
to  a  public  use,  to  that  extent  he  grants  the  public  an  interest 
in  that  use.  The  same  policy  which  supports  the  prohibi- 
tion against  consolidation,  and  the  fifth  section  of  the  Inter- 
state Commerce  law  forbidding  the  pooling  of  freights  or 
the  division  of  earnings,  is  the  justification  for  the  declara- 
tion that  all  contracts  in  restraint  of  trade  shall  be  deemed 
illegal.  The  result  of  the  consolidation,  the  pooling  or  the 
combination  in  restraint  of  trade,  is  beside  the  question. 
Congress  is  entitled  to  pass  judgment  upon  the  tendency  of 
a  contract  in  restraint  of  trade.  If  it  deems  such  a  contract 
reprehensible,  injurious  in  its  tendencies,  it  may  prohibit 


UNITED   STATES   V.   JOINT  TRAFFIC   ASSOCIATION.     921 
Mr.  Solicitor  General's  argument  for  the  United  States. 

it,  whether  the  act  will  result  in  a  particular  case  in  the 
establishment  of  reasonable  or  unreasonable  rates. 

XVI.  As  to  the  remedy  in  the  case  of  an  unreasonably 
low  rate»  Judge  Cooley,  in  a  well-considered  opinion,  In  re 
Chicago^  St,  Paul  <&  Kansas  City  Railway^  2  Int.  Com.  Com. 
231,  approved  by  this  court  in  Interstate  Commerce  Commis- 
sion V.  Cincinnati^  N,  0,  c&  Texas  Pacific  Railway,  167  U.  S. 
479,  511,  held  that  under  the  Interstate  Commerce  law  the 
commission  has  no  power  to  determine  that  a  rate  is  un- 
reasonably low  and  to  order  the  carrier  to  refrain  from 
charging  such  rate  on  such  ground. 

XVII.  As  to  the  remedy  in  the  case  of  an  unreasonably 
high  7'ate. 

The  common  law  requires  that  rates  shall  be  reasonable 
and  fair.  So  does  the  Interstate  Commerce  law.  But  this  is 
a  mere  declaration,  and  there  is  no  adequate  remedy  to  en- 
force the  right.  The  commission  has  no  power  to  prescribe 
a  reasonable  rate  and  enforce  it,  or  to  declare  that  a  rate 
is  unreasonable  and  prohibit  it.  The  shipper  is  therefore 
left  to  recover  the  excess  in  rate  paid.  I  know  of  no  case 
where  the  excess  charged  over  a  reasonable  rate  on  interstate 
commerce  has  been  recovered  back.  The  amount  involved  in 
any  particular  transaction  would  be  small ;  it  would  require 
years  to  carry  the  case  through  the  courts,  and  no  individual 
shipper  would  invite  the  ill  will  of  a  powerful  railroad  by 
beginning  such  a  contest. 

[558]  Moreover,  the  man  who  actually  pays  the  freight  is 
not  the  man  who  suffers  from  the  unreasonable  charge.  Take 
the  case  of  grain.  The  farmer  sells  to  the  commission 
merchant.  If  the  rates  are  excessive,  he  gets  so  much  less  for 
his  grain  or  the  purchaser  from  the  commission  merchant 
pays  so  much  more  for  it.  The  commission  merchant  who 
pays  the  freight  has  no  real  interest  in  the  charge.  Of  course 
this  is  not  always  true,  but  it  does  apply  with  respect  to  the 
great  shipments  handled  by  middlemen. 

Finally,  it  is  questionable  under  the  Interstate  Commerce 
act  whether  a  suit  to  recover  back  an  excess  paid  above  a 
reasonable  rate  can  be  maintained,  if  the  rate  charged  was 
that  fixed  in  the  schedule  filed  with  the  commission  and  pub- 
lished under  the  Interstate  Commerce  law. 


M2  171   UNITED   STATES   REPOBTS,  558. 

Opinion  of  the  Court. 

Mr,  James  A,  Logan  and  J/r.  John  O.  Johnson  filed  a  brief 
on  behalf  of  the  Pennsylvania  Railroad  Company  and  eight 
other  railroad  companies,  appellees. 

Mr.  Eohert  If.  de  Forest  and  Mr.  Damd  Willcox  filed  a 
brief  on  behalf  of  the  Central  Kailroad  Company  of  New 
Jersey,  appellee. 

Mk.  Justice  Peckham,  after  stating  the  ease,  delivered  the 
opinion  of  the  court 

This  case  has  been  most  ably  argued  by  counsel  both  for 
the  Government  and  the  railroad  companies.  The  suit  is 
brought  to  obtain  a  decree  declaring  null  and  void  the  agree- 
ment mentioned  in  the  bill.  Upon  comparing  that  agreement 
with  the  one  set  forth  in  the  case  of  United  States  v.  Trans- 
Missouri  Freight  Association,  166  U.  S.  290,  the  great  simi- 
larity between  them  suggests  that  a  similar  result  should  be 
reached  in  the  two  cases.  The  respondents,  however,  object 
to  this,  and  give  several  reasons  why  this  case  should  not  be 
controlled  by  the  other.  It  is,  among  other  things,  said  that 
one  of  the  questions  sought  to  be  raised  in  this  case  might 
have  been  but  was  not  made  in  the  other;  that  the  point 
therein  decided,  after  holding  that  the  statute  applied  to  rail- 
[550]  road  companies  as  common  carriers,  was  simply  that 
all  contracts,  whether  in  reasonable  as  well  as  in  unreason- 
able restraint  of  trade,  were  included  in  the  terms  of  the  act, 
and  the  question  whether  the  contract  then  under  review  was 
in  fact  in  restraint  of  trade  in  any  degree  whatever  was 
neither  made  nor  decided,  while  it  is  plainly  raised  in  this. 

Again,  it  is  asserted  that  there  are  differences  between  the 
provisions  contained  in  the  two  agreements,  of  such  a  mate- 
rial and  fundamental  nature  that  the  decision  in  the  case 
referred  to  ought  to  form  no  precedent  for  the  decision  of  the 
case  now  before  the  court. 

It  is  also  objected  that  the  statute,  if  construed  as  it  has 
been  construed  in  the  Trans-Missouri  case,  is  unconstitu- 
tional, in  that  it  unduly  interferes  with  the  liberty  of  the  in- 
dividual and  takes  away  from  him  the  right  to  make  con- 
tracts regarding  his  own  affairs,  which  is  guaranteed  to  him 
by  the  Fifth  Amendment  to  the  Constitution,  which  provides 


UNITED   STATES   V,   JOINT   TRAFFIC   ASSOCIATION.     923 

Opinion  of  tlie  Court 

that  "  no  person  shall  be  .  .  .  deprived  of  life,  liberty 
or  property  without  due  process  of  law;  nor  shall  private 
property  be  taken  for  public  use  without  just  compensation." 
This  objection  was  not  advanced  in  the  arguments  in  the 
other  case. 

Finally,  a  reconsideration  of  the  questions  decided  in  the 
former  case  is  very  strongly  pressed  upon  our  attention,  be- 
cause, as  is  stated,  the  decision  in  that  case  is  quite  plainly 
erroneous,  and  the  consequences  of  such  error  are  far  reach- 
ing and  disastrous,  and  clearly  at  war  with  justice  and  sound 
policy,  and  the  construction  placed  upon  the  Anti-Trust 
statute  has  been  received  by  the  public  with  surprise  and 
alarm. 

We  will  refer  to  these  propositions  in  the  order  in  which 
they  have  been  named. 

As  to  the  first,  we  think  the  report  of  the  Trans-Missouri 
case  clearly  shows  not  only  that  the  point  now  taken  was 
there  urged  upon  the  attention  of  the  court,  but  it  was  then 
intentionally  and  necessarily  decided.  The  whole  foundation 
of  the  case  on  the  part  of  the  Government  was  the  allegation 
that  the  agreement  there  set  forth  was  a  contract  or  combina- 
tion in  restraint  of  trade,  and  unlawful  on  that  account.  If 
[560]  the  agreement  did  not  in  fact  restrain  trade,  the  Gov- 
ernment had  no  case. 

If  it  did  not  in  any  degree  restrain  trade,  it  was  immaterial 
whether  the  statute  embraced  all  contracts  in  restraint  of 
trade,  or  only  such  as  were  in  unreasonable  restraint  thereof. 
There  was  no  admission  or  concession  in  that  case  that  the 
agreement  did  in  fact  restrain  trade  to  a  reasonable  degree. 
Hence,  it  was  necessary  to  determine  the  fact  as  to  the  char- 
acter of  the  agreement  before  the  case  was  made  out  on  the 
part  of  the  Government. 

The  great  stress  of  the  argument  on  both  sides  was  un- 
doubtedly upon  the  question  as  to  the  proper  construction  of 
the  statute,  for  that  seemed  to  admit  of  the  most  doubt,  but 
the  other  question  was  before  the  court,  was  plainly  raised, 
and  was  necessarily  decided.  The  opinion  shows  this  to  be 
true.  At  page  341  of  the  report  the  opinion  contains  the  fol- 
lowing language : 

"  The  conclusion  which  we  have  drawn  from  the  examination  above 
made  into  the  owestion  before  us  is  that  the  Anti-Trust  act  applies  to 


171   UNITED   STATES    REPORTS,  560. 


Opinion  of  the  Court. 

railroads,  and  that  it  renders  illegal  all  agreements  which  are  in 
restraint  of  trade  or  commerce  as  we  have  above  defined  that  expres- 
sion, and  the  question  then  arises  whether  the  agreement  before  us  is 
of  that  nature. 


"Does  the  agreement  restrain  trade  or  conmierce  in  any  way  so  as 
to  be  a  violation  of  the  act?  We  have  no  doubt  that  it  does.  The 
agreement  on  its  face  recites  that  it  is  entered  into  for  the  purpose 
of  mutual  protection  by  establishing  and  maintaining  reasonable  rates, 
rules  and  regulations  on  all  freight  traffic,  both  through  and  local. 

"  To  that  end  the  association  is  formed  and  a  body  created  which  is 
to  adopt  rates  which,  when  agreed  to,  are  to  be  the  governing  rates 
for  all  the  companies,  and  a  violation  of  which  subjects  the  defaulting 
company  to  the  payment  of  a  penalty,  and  although  the  parties  have 
a  right  to  withdraw  from  the  agreement  on  giving  thirty  days'  notice 
of  a  desire  so  to  do,  yet  while  in  force  and  assuming  it  to  be  lived  up 
to,  there  can  be  no  doubt  that  its  direct,  immediate  and  necessaiy 
effect  is  [561] to  put  a  restraint  upon  trade  or  commerce  as  described 
in  the  act.  For  these  reasons  the  suit  of  the  Government  can  be 
maintahied  without  proof  of  the  allegation  that  the  agreement  was 
entered  into  for  the  purpose  of  restraining  trade  or  commerce  or  for 
maintaining  rates  above  what  was  reasonable.  The  necessary  effect 
of  the  agreement  is  to  restrain  trade  or  commerce,  nj  matter  what  the 
intent  was  on  the  part  of  those  who  signed  it." 

The  bill  of  the  complainants  in  that  case,  while  alleging 
an  illegal  and  unlawful  intent  on  the  part  of  the  railroad 
companies  in  entering  into  the  agreement,  also  alleged  that 
by  means  of  the  agreement  the  trade,  traffic  and  commerce 
in  the  region  of  country  affected  by  the  agreement  had  been 
and  were  monopolized  and  restrained,  hindered,  injured  and 
retarded.    These  allegations  were  denied  by  defendants. 

There  was  thus  a  clear  issue  made  by  the  pleadings  as  to  the 
character  of  the  agreement,  whether  it  was  or  was  not  one  in 
restraint  of  trade. 

The  extract  from  the  opinion  of  the  court  above  given 
shows  that  the  issue  so  made  was  not  ignored,  nor  was  it 
assumed  as  a  concession  that  the  agreement  did  restrain  trade 
to  a  reasonable  extent.  The  statement  in  the  opinion  is  quite 
plain,  and  it  inevitably  leads  to  the  conclusion  that  the  ques- 
tion of  fact  as  to  the  necessary  tendency  of  the  agreement 
was  distinctly  presented  to  the  mind  of  the  couR,  and  was 
consciously,  purposely  and  necessarily  decided.  It  cannot, 
therefore,  be  correctly  stated  that  the  opinion  only  dealt  with 
the  question  of  the  construction  of  the  act,  and  that  it  was 
assumed  that  the  agreement  did  to  some  reasonable  extent 
restrain  trade.  In  discussing  the  question  as  to  the  proper 
construction  of  the  act,  the  court  did  not  touch  upon  the  other 


UNITED    STATES    V.    JOINT    TRAFFIC    ASSOCIATION.      925 

Opinion  of  the  Court. 

aspect  of  the  case,  in  regard  to  the  nature  of  the  agreement 
itself,  but  when  the  question  of  construction  was  finished,  the 
opinion  shows  that  the  question  as  to  the  nature  of  the  agree- 
ment was  then  entered  upon  and  discussed  as  a  fact  necessary 
to  be  decided  in  the  case,  and  that  it  in  fact  was  decided.  An 
unlawful  intent  in  entering  into  the  agreement  was  held  im- 
[562]  material,  but  only  for  the  reason  that  the  agreement 
did  in  fact  and  by  its  terms  restrain  trade. 

Second.  We  have  assumed  that  the  agreements  in  the  two 
cases  were  substantially  alike.  This  the  respondents  by  no 
means  admit,  and  they  assert  that  there  are  such  material  and 
substantial  differences  in  the  provisions  of  the  two  instru- 
ments as  to  necessitate  a  different  result  in  this  case  from  that 
arrived  at  in  the  other. 

The  expressed  purpose  of  the  agreement  in  this  case  is, 
among  other  things,  "  to  establish  and  maintain  reasonable 
and  just  rates,  fares,  rules  and  regulations  on  state  and  inter- 
state traffic."  The  companies  agree  that  the  schedule  of  rates 
and  fares  already  duly  published  and  in  force  and  authorized 
by  the  companies,  parties  to  the  agreement,  and  filed,  as  to 
interstate  traffic,  with  the  Interstate  Commerce  Commission, 
shall  be  reaffirmed,  and  copies  of  all  such  schedules  are  to  be 
filed,  with  the  managers  constituted  under  the  agreement, 
within  ten  days  after  it  becomes  effective.  The  managers 
may  from  time  to  time  recommend  changes  in  the  rates,  etc., 
and  a  failure  to  observe  the  recommendations  is  deemed  a 
violation  of  the  agreement.  No  company  can  deviate  from 
these  rates  except  under  a  resolution  of  its  board  of  directors, 
and  such  resolution  can  only  take  effect  thirty  days  after 
service  of  a  copy  thereof  on  the  managers,  who,  upon  receipt 
thereof,  "  shall  act  promptly  for  the  protection  of  the  parties 
hereto."  For  a  violation  of  the  agreement  the  offending  com- 
pany forfeits  to  the  association  a  sum  to  be  determined  by 
the  managers  thereof,  not  exceeding  five  thousand  dollars,  or 
more  upon  the  contingency  named  in  the  rule. 

So  far  as  the  establishment  of  rates  and  fares  is  concerned, 
we  do  not  see  any  substantial  difference  between  this  agree- 
ment and  the  one  set  forth  in  the  Trans-Missouri  case.  In 
that  case  the  rates  were  established  by  the  agreement,  and 
any  company  violating  the  schedule  of  rates  as  established 


926 


111   UNITED   STATES  REPOBTS,  563. 


Opinion  of  tiie  Court 

wnder  the  agreement  was  liable  to  a  penalty.    A  company 
could  withdraw  from  the  association  on  giving  thirty  days' 
notice,  but  while  it  continued  a  member  it  was  bound  to 
charge  the  rates  fixed,  under  a  penalty  for  not  doing  so.    In 
[o63]  this  case  the  companies  are  bound  to  charge  the  rates 
fixed  upon  originally  in  the  agreement  or  subsequently  recom- 
mended by  the  board  of  managers,  and  the  failure  to  observe 
their  recommendations  is  deemed  a  violation  of  the  agree- 
ment.   The  only  alternative  is  the  adoption  of  a  resolution 
by  the  board  of  directors  of  any  company  providing  for  a 
change  of  rates  so  far  as  that  company  is  concerned,  and  the 
service  of  a  copy  thereof  upon  the  board  of  managers  as  al- 
ready stated.    This  provision  for  changing  rates  by  any  one 
company  is  absent  from  the  other  agreement.     It  is  this  pro- 
vision which  is  referred  to  by  counsel  as  most  material  and 
important,  and  one  which  constitutes  a  material  and  im- 
portant distinction  between  the  two  agreements.    It  is  said  to 
b©  designed  solely  to  prevent  secret  and  illegal  competition 
in  rates,  while  at  the  same  time  providing  for  and  permitting 
open  competition  therein,  and  that  unless  it  can  be  regarded 
m  restraining  competition  so  as  to  restrnin  trade,  there  is  not 
even  an  appearance  of  restraint  of  trade  in  the  agreement 
It  is  obvious,  however,  that  if  such  deviation  from  rates  by 
any  company  from  those  agreed  upon,  be  tolerated,  the 
principal  object  of  the  association  fails  of  accomplishment, 
because  the  purpose  of  its  formation  is  the  establishment  and 
maintenance  of  reasonable  and  just  rates  and  a  general  uni- 
formity therein.    If  one  company  is  allowed,  while  remaining 
a  member  of  the  association,  to  fix  its  own  rates  and  be  guided 
by  them,  it  is  plain  that  as  to  that  company  the  agreement 
might  as  well  be  rescinded.    This  result  was  never  contem- 
plated.   In  order,  therefore,  not  only  to  prevent  secret  compe- 
tition, but  also  to  prevent  any  competition  whatever  among 
the  companies  parties  to  the  agreement,  the  provision  is  there- 
in made  for  the  prompt  action  of  the  board  of  managers 
whenever  it  receives  a  copy  of  the  resolution  adopted  by  the 
board  of  directors  of  any  one  company  for  a  change  of  the 
rates  as  established  under  the  agreement.    By  reason  of  this 
provision  the  board  undoubtedly  has  authority  and  power  to 
enforce  the  uniformity  of  rates  as  against  the  offending  com- 


UNITED   STATES   V,   JOINT   TKAFFIC   ASSOCIATION.     927 

Opinion  of  tlie  Court 

pany  upon  pain  of  an  open,  rigorous  and  relentless  war  of 
competition  against  it  on  the  part  of  the  whole  association. 

[5G4]   A  company  desirous  of  deviating  from  the  rates 
agreed  upon,  and  which  its  associates  desire  to  maintain  is  at 
once  confronted  with  this  probability  of  a  war  between  itself 
on  the  one  side  and  the  whole  association  on  the  other,  in 
the  course  of  which  rates  would  probably  drop  lower  than 
the  company  was  proposing,  and  lower  than  it  would  desire 
or  could  afford,  and  such  a  prospect  would  be  generally  suffi- 
cient to  prevent  the  inauguration  of  the  change  of  rates  and 
the  consequent  competition.     Thus  the  power  to  commence 
such  a  war  on  the  part  of  the  managers  would  operate  to 
most  effectually  prevent  a  deviation  from  rates  by  any  one 
company  against  the  desire  of  the  other  parties  to  the  agree- 
ment    Competition  would  be  prevented  by  the  fear  of  the 
united  competition  of  the  association  against  the  particular 
member.    Counsel  for  the  association  themselves  state  that 
the  agreement  makes  it  the  duty  of  the  managers,  in  case 
the  defection  should  injuriously  affect  some  particular  mem- 
bers more  than  others,  to  endeavor  to  furnish  reasonable 
protection  to  such  members,  presumably  by  allowing  them 
to  change  rates  so  as  to  meet  such  competition,  or  by  recom- 
mending such  fierce  competition  as  to  persuade  the  recalci- 
trant to  fall  back  into  line.     By  this  course  the  competition 
is  open,  but  none  the  less  sufficient  on  that  account,  and  the 
desired   and  expected  result  is  to  be  the  yielding  of  the 
offending  company,  induced  by  the  war  which  might  other- 
wise be  waged  against  it  by  the  combined  force  of  all  the 
other  parties  to  the  agreement.    Under  these  circumstances 
the  agreement,  taken  as  a  whole,  prevents,  and  was  evidently 
intended  to  prevent,  not  only  secret  but  any  competition. 
The  abstract  right  of  a  single  company  to  deviate  from  the 
rates  becomes  immaterial,  and  its  exercise,  to  say  the  least, 
very  inexpedient,  in  the  face  of  this  power  of  the  managers 
to  enlist  the  whole  association  in  a  war  upon  it.    This  is  not 
all,  however,  for  the  agreement  further  provides  that  the 
managers  are  to  have  power  to  organize  such  joint  freight 
and  passenger  agencies  as  they  may  deem  desirable,  and  if 
established  they  are  to  be  so  arranged  as  to  give  proper  rep- 
resentation  to  each  company,  and  no  soliciting  or  contract- 


928 


171   UNITED  STATES   REPORTS,  ^565. 


Opinion  of  tlie  Court. 

mg  passenger  or  freight  agency  can  be  maintained  by  any  of 
the  [5651  companies,  except  with  the  approval  of  the  mana- 
gers. They  are  also  charged  with  the  duty  of  securing  to 
each  company,  party  to  the  agreement,  equitable  proportions 
of  the  competitive  traffic  covered  by  the  agreement,  so  far 
as  can  be  legally  done.  The  natural,  direct  and  necessary 
effect  of  all  these  various  provisions  of  the  agreement  is  to 
prevent  any  competition  whatever  between  the  parties  to  it 
for  the  whole  time  of  its  existence.  It  is  probably  as  effect- 
ive in  that  way  as  would  be  a  provision  in  the  agreement 
prohibiting  in  terms  any  competition  whatever. 

It  is  also  said  that  the  agreement  in  the  first  case  con- 
ferred upon  the  association  an  unlimited  power  to  fix  rates 
in  the  first  instance,  and  that  the  authority  was  not  confined 
to  reasonable  rates,  while  in  the  case  now  before  us  the 
agreement  starts  out  with  rates  fixed  by  each  company  for 
itself  and  filed  with  the  Interstate  Commerce  Commission, 
and  which  rates  are  alleged  to  be  reasonable.  The  distinc- 
tion is  unimportant.  It  was  considered  in  the  other  case 
that  the  rates  actually  fixed  upon  were  reasonable,  while  the 
rates  fixed  upon  in  this  case  are  also  admitted  to  be  reason- 
nble.  By  this  agreement  the  board  of  managers  is  in  sub- 
stance and  as  a  result  thereof  placed  in  control  of  the  busi- 
ness and  rates  of  transportation,  and  its  duty  is  to  see  to  it 
that  each  company  charges  the  rates  agreed  upon  and  re- 
ceives its  equitable  proportion  of  the  traffic. 

The  natural  and  direct  effect  of  the  two  agreements  is  the 
same,  viz.,  to  maintain  rates  at  a  higher  level  than  would 
otherwise  prevail,  and  the  differences  between  them  are  not 
sufficiently  important  or  material  to  call  for  different  judg- 
ments in  the  two  cases  on  any  such  ground.  Indeed,  coun- 
sel for  one  of  the  railroad  companies  on  this  argument,  in 
speaking  of  the  agreement  in  the  Trans-Missouri  case,  says 
of  it  that  its  terms,  while  substantially  similar  to  those  of 
the  agreement  here,  were  less  explicit  in  making  it  just  and 
reasonable. 

Eegarding  the  two  agreements  as  alike  in  their  main  and 
material  features,  we  are  brought  to  an  examination  of  the 
question  of  the  constitutionality  of  the  act,  construed  as  it 
has  [566]  been  in  the  Tram-Missouri  case.    It  is  worthy  of 


UNITED   STATES   V.    JOINT   TRAFFIC   ASSOCIATION.     929 

Opinion  of  the  Court, 
remark  that  this  question  was  never  raised  or  hinted  at  upon 
the  argument  of  that  case,  although,  if  the  respondents' 
present  contention  be  sound,  it  would  have  furnished  a  con- 
clusive objection  to  the  enforcement  of  the  act  as  construed. 
The  fact  that  not  one  of  the  many  astute  and  able  counsel 
for  the  transportation  companies  in  that  case  raised  an  ob- 
jection of  so  conclusive  a  character,  if  well  founded,  is 
strong  evidence  that  the  reasons  showing  the  invalidity  of 
the  act  as  construed  do  not  lie  on  the  surface  and  were  not 
then  apparent  to  those  counsel. 

The  point  not  being  raised  and  the  decision  of  that  case 
having  proceeded  upon  an  assumption  of  the  validity  of  the 
.  act  under  either  construction,  it  can,  of  course,  constitute  no 
authority  upon  this  question.     Upon  the  constitutionality 
of  the  act  It  IS  now  earnestly  contended  that  contracts  in  re- 
straint of  trade  are  not  necessarily  prejudicial  to  the  secur- 
ity or  welfare  of  society,  and  that  Congress  is  without  power 
to  prohibit  generally  all  contracts  in  restraint  of  trade,  and 
the  effort  to  do  this  invalidates  the  act  in  question.     It  is 
urged  that  it  is  for  the  court  to  decide  whether  the  mere  fact 
that  a  contract  or  arrangement,  whatever  its  purpose  or 
character,  may  restrain  trade  in  some  degree,  renders  it  in- 
jurious  or  prejudicial  to  the  welfare  or  security  of  society 
and  if  the  court  be  of  opinion  that  such  welfare  or  security 
IS  not  prejudiced  by  a  contract  of  that  kind,  then  Congress 
has  no  power  to  prohibit  it,  and  the  act  must  be  declared 
unconstitutional.      It  is  claimed  that  the  act  can  be  sup- 
ported only  as  an  exercise  of  the  police  power,  and  that  the 
constitutional  guarantees  furnished  bv  the  Fifth    Amend- 
ment secure  to  all  persons  freedom  in  the  pursuit  of  their  vo- 
cations and  the  use  of  their  property,  and  in  making  such 
contracts  or  arrangements  as  may  be  necessary  therefor.     In 
dwelling  upon  the  far-reaching  nature  of  the  language  used 
m  the  act  as  construed  in  the  case  mentioned,  counsel  con- 
tend that  the  extent  to  which  it  limits  the  freedom  and  de- 
stroys the  property  of  the  individual  can  scarcely  be  exag- 
gerated, and  that    ordinary  contracts    and    combinations, 
which  are  at  the  same  time  most  indispensable,  have  the 
effect  of  somewhat  [567]  restraining  trade  and  commerce 


11808~voL  1—06  M- 


-59 


930 


ni    UNITED   STATES   REPORTS,  567. 


Opinion  of  the  Court. 

although  to  a  very  slight  extent,  but  yet,  under  the  con- 
struction  adopted,  they  are  illegal. 

As  examples  of  the  kinds  of  contracts  which  are  rendered 
illegal  by  this  construction  of  the  act,  the  learned  counsel 
suggest  all  organizations  of  mechanics  engaged  in  the  same 
business  for  the  purpose  of  limiting  the  number  of  persons 
employed  in  the  business,  or  of  maintaining  wages;  the  for- 
mation of  a  corporation  to  carry  on  any  particular  line  of 
business  by  those  already  engaged  therein ;  a  contract  of  part- 
nership or  of  employment  between  two  persons  previously  en- 
gaged in  the  same  line  of  business ;  the  appointment  by  two 
producers  of  the  same  i>erson  to  sell  their  goods  on  commis- 
sion ;  the  purchase  by  one  wholesale  merchant  of  the  product 
of  two  producers;  the  lease  or  purchase  by  a  farmer,  manu- 
facturer or  merchant  of  an  additional  farm,  manufactory  or 
shop ;  the  withdrawal  from  business  of  any  farmer,  merchant 
or  manufacturer;  a  sale  of  the  good  will  of  a  business  with 
an  agreement  not  to  destroy  its  value  by  engaging  in  similar 
business;  and  a  covenant  in  a  deed  restricting  the  use  of  real 
estate.  It  is  added  that  the  effect  of  most  business  contracts 
or  combinations  is  to  restrain  trade  in  some  decree. 

This  makes  quite  a  formidable  list.  It  will  be  observed, 
however,  that  no  contract  of  the  nature  above  described  is 
now  before  the  court,  and  there  is  some  embarrassment  in 
assuming  to  decide  herein  just  how  far  the  act  goes  in  the 
direction  claimed.  Nevertheless,  we  might  say  that  the  for- 
mation of  corporations  for  business  or  manufacturing  pur- 
poses has  never,  to  our  knowledge,  been  regarded  in  the  nature 
of  a  contract  in  restraint  of  trade  or  commerce.  The  same 
may  be  said  of  the  contract  of  partnership.  It  might  also  be 
difficult  to  show  that  the  appointment  by  two  or  more  pro- 
ducers of  the  same  person  to  sell  their  goods  on  commission 
was  a  matter  in  any  degree  in  restraint  of  trade. 

We  are  not  aware  that  it  has  ever  been  claimed  that  a  lease 
or  purchase  by  a  farmer,  manufacturer  or  merchant  of  an 
additional  farm,  manufactory  or  shop,  or  the  withdrawal 
from  business  of  any  farmer,  merchant  or  manufacturer,  re- 
strained commerce  or  trade  within  any  legal  definition  of  that 
term;  [568]  and  the  sale  of  a  good  will  of  a  business  with 
an  accompanying  agreement  not  to  engage  in  a  similar  busi- 


UNITED   STATES   V.   JOINT   TRAFFIC   ASSOC^TATION.     931 

Opinion  of  the  Court. 

ness  was  instanced  in  the  Trans- Missouri  case  as  a  contract 
not  within  the  meaning  of  the  act;  and  it  was  said  that  such 
a  contract  was  collateral  to  the  main  contract  of  sale  and  was 
entered  into  for  the  purpose  of  enhancing  the  price  at  which 
the  vendor  sells  his  business.    The  instances  cited  by  counsel 
have  in  our  judgment  little  or  no  bearing  upon  the  question 
under  consideration.     In  Hopkins  v.  United  States,  decided 
at  this  term,  post,  578,  we  say  that  the  statute  applies  only  to 
those  contracts  whose  direct  and  immediate  effect  is  a  restraint 
upon  interstate  commerce,  and  that  to  treat  the  act  as  con- 
demning all  agi-eements  under  Avhich,  as  a  result,  the  cost  of 
conducting  an   interstate  commercial  business  may  be  in- 
creased, would  enlarge  the  application  of  the  act  far  beyond 
the  fair  meaning  of  the  language  used.     The  effect  upon  in- 
terstate commerce  must  not  be  indirect  or  incidental  only. 
An  agreement  entered  into  for  the  purpose  of  promoting  the 
legitimate  business  of  an  individual  or  corporation,  with  no 
purpose  to  thereby  affect  or  restrain  interstate  commerce,  and 
which  does  not  directly  restrain  such  commerce,  is  not,  as  we 
think,  covered  by  the  act,  although  the  agreement  may  indi- 
rectly and  remotely  affect  that  commerce.    We  also  repeat 
what  is  said  in  the  case  above  cited,  that  "  the  act  of  Congress 
must  have  a  reasonable  construction,  or  else  there  would 
scarcely  be  an  agreement  or  contract  among  business  men 
that  could  not  be  said  to  have,  directly  or  remotely,  some 
bearing  upon  interstate  commerce,  and  possibly  to  restrain 
It      To  suppose,  as  is  assumed  by  counsel,  that  the  effect  of 
the  decision  in  the  Trans-MissouH  case  is  to  render  illegal 
most  business  contracts  or  combinations,  however  indispensa- 
ble and  necessary  they  may  be,  because,  as  they  assert,  they 
all  restrain  trade  in  some  remote  and  indirect  degree,  is  to 
make  a  most  violent  assumption  and  one  not  called  for  or 
justified  by  the  decision  mentioned,  o»  by  any  other  decision 
of  this  court. 

The  question  really  before  us  is  whether  Congress,  in  the 
exercise  of  its  right  to  regulate  commerce  among  the  several 
States,  or  otherwise,  has  the  power  to  prohibit,  as  in  restraint 
[669]  of  interstate  commerce,  a  contract  or  combination  be- 
tween competing  railroad  corporations  entered  into  and 
formed  for  the  purpose  of  establishing  and  maintaining  inter- 


932 


111  UNITED   STATES  KEPORTS,  569. 


Opinion  of  the  Court 

state  rates  and  fares  for  the  transportation  of  freight  and 
passengers  on  any  of  the  railroads  parties  to  the  contract  or 
combination,  even  though  the  rates  and  fares  thus  established 
are  reasonable.  Such  an  agreement  directly  affects  and  of 
course  is  intended  to  affect  the  cost  of  transportation  of  com- 
modities, and  commerce  consists,  among  other  things,  of  the 
transportation  of  commodities,  and  if  such  transportation  be 
between  States  it  is  interstate  commerce.  The  agreement 
affects  interstate  commerce  by  destroying  competition  and  by 
maintaining  rates  above  what  competition  might  produce. 

If  it  did  not  do  that,  its  existence  would  be  useless,  and  it 
would  soon  be  rescinded  or  abandoned.  Its  acknowledged 
purpose  is  to  maintain  rates,  and  if  executed,  it  does  so.  It 
must  be  remembered,  however,  that  the  act  does  not  pro- 
hibit any  railroad  company  from  charging  reasonable  rates. 
If  in  the  absence  of  any  contract  or  combination  anions:  the 
railroad  coni})anies  the  rates  and  fares  would  be  Ic-s  ihau  they 
are  under  such  contract  or  coinbiuation,  that  is  not  by  rea- 
son of  any  provision  of  th«*  act  wliich  itself  lowers  rates,  but 
only  becaiTse  the  railroad  companies  would,  a  :  it  is  urged, 
voluntarily  and  at  once  inaugurate  a  war  of  coni]x»tition 
amonsr  themselves,  and  therebv  themselves  red  net*  their  rates 
and  feres. 

Has  not  Congress  with  regard  to  interstate  conunerce  and 
in  the  course  of  regulating  it,  in  the  case  of  railroad  corpora- 
tions, the  power  to  say  that  no  contract  or  combination  shall 
be  legal  which  shall  restrain  trade  and  coinmercc  by  shutting 
out  the  operation  of  the  general  law  of  competition?  We 
think  it  has. 

As  counsel  for  the  Traffic  Association  has  truly  said,  the 
ordinary  highways  on  land  have  generally  been  established 
and  maintained  by  the  public.  When  the  matter  of  the 
building  of  railroads  m  highways  arose,  a  question  was  pre- 
sented whether  the  State  should  itsflf  build  them  or  permit 
others  to  do  it.  The  State  did  not  build  them,  and  as  their 
building  required,  among  other  things,  the  appropriation  of 
[570]  land,  private  individuals  could  not  enforce  such  ap- 
propriation without  a  grant  from  the  State. 

The  building  and  operation  of  a  railroad  thus  required  a 
public  franchise.    The  State  would  have  had  no  power  to 


UNITED   STATES    V.   JOINT   TRAFFIC    ASSOCIATION.     93^ 

Opinion  of  the  Court. 

grant  the  right  of  appropriation  unless  the  use  to  which  the 
land  was  to  be  put  was  a  public  one.  Taking  land  for  rail- 
road purposes  is  a  taking  for  a  public  purpose,  and  the  fact 
that  it  is  taken  for  a  public  purpose  is  the  sole  justification 
for  taking  it  at  all.  The  business  of  a  railroad  carrier  is  of 
a  public  nature,  and  in  performing  it  the  carrier  is  also  per- 
forming to  a  certain  extent  a  function  of  government  which, 
as  counsel  observed,  requires  them  to  perform  the  service 
upon  equal  terms  to  all.  This  public  service,  that  of  trans- 
portation  of  passengers  and  freight,  is  a  part  of  trade  and 
commerce,  and  when  transported  between  States  such  com- 
merce becomes  what  is  described  as  interstate,  and  comes, 
to  a  certain  extent,  under  the  jurisdiction  of  Congress  by  vir- 
tue of  its  power  to  regulate  commerce  among  the  several 
States. 

Where  the  grantees  of  this  public  franchise  are  competing 
railroad  companies  for  interstate  commerce,  we  think  Con- 
gress is  competent  to  forbid  any  agreement  or  combination 
among  them  by  means  of  which  competition  is  to  be 
smothered. 

Although  the  franchise  when  granted  by  the  State  becomes 
by  the  grant  the  property  of  the  grantee,  yet  there  are  some 
regulations  respecting  the  exercise  of  such  grants  which  Con- 
gress may  make  under  its  power  to  regulate  commerce  among 
the  several  States.  This  will  be  conceded  by  all,  the  only 
question  being  as  to  the  extent  of  the  power. 

We  think  it  extends  at  least  to  the  prohibition  of  contracts 
relating  to  interstate  commerce,  which  Avould  extinguish  all 
competition  between  otherwise  competing  railroad  corpora- 
tions, and  which  would  in  that  way  restrain  interstate  trade 
or  commerce.     We  do  not  think,  when  the  grantees  of  this 
public  franchise  are  competing  railroads  seeking  the  busi- 
ness of  transportation  of  men  and  goods  from  one  State  to 
another,  that  ordinary  freedom  of  contract  in  the  use  and 
management  of  their  property  requires  the  right  to  combine  ' 
[571]  as  one  consolidated  and  poAverful  association  for  the 
purpose  of  stifling  competition  among  themselves,  and  of 
thus  keeping  their  rates  and  charges  higher  than  they  might 
otherwise  be  under  the  laws  of  competition.     And  this  is*^so. 
even  though  the  rates  provided  for  in  the  agreement  may  for 


934  111   UNITED   STATES   REPORTS,  571. 

Opinion  of  the  Court. 

the  time  l>e  not  more  than  are  reasonable.  They  may  easily 
and  at  any  time  be  increased.  It  is  the  combination  of  these 
large  and  powerful  corporations,  covering  vast  sections  of 
territory  and  influencing  trade  throughout  the  whole  extent 
thereof,  and  acting  as  one  body  in  all  the  matters  over  which 
the  combination  extends,  that  constitutes  the  alleged  evil, 
and  in  regard  to  which,  so  far  as  the  combination  operates 
upon  and  restrains  interstate  <wnmerce,  Congre^^s  has  poAvex 
to  legislate  and  to  prohibit. 

The  prohibition  of  such  contracts  may  in  the  judgment  of 
Congress  be  one  of  the  reasonable  necessities  for  (ho  proper 
regulation  of  conmierw,  and  Congress  is  the  judge  of  such 
necessity  and  propriety,  unless,  in  case  of  a  possil)le  gross 
perversion  of  the  principle,  the  courts  might  he  aj^plied  to 
for  relief. 

The  cases  cited  by  the  respondents'  counsel  in  regard  to  the 
general  constitutional  right  of  the  citizen  to  make  contracts 
relating  to  his  lawful  Ijusiiic-s  are  not  inconsi-itent  with  the 
existence  of  the  power  of  Congress  to  {U'ohibit  contracts  of 
the  nature  involved  in  this  case.  The  power  to  regnlnte  com- 
merce has  no  limitation  other  than  tho-e  ])i- '-crilKHl  in  the 
Constitution.  The  power,  however,  does  not  c.ury  with  it 
the  right  to  destroy  or  impair  tlios*  limitations  and  guar- 
antees which  are  also  placed  in  the  Constitution  or  in  any  of 
the  amendments  to  that  instrument.  Mononf/ahcla  Nariga- 
tion  Co,  V.  Umfed  States,  148  U.  S.  J112-33G;  Interstate  Com- 
merce Commisskni  v.  Bi'lmson,  154  U.  S.  447-479. 

Among  these  limitatitms  and  guarantees  counsel  refer  to 
those  wliicli  provide  that  no  person  shall  be  deprived  of  life, 
liberty  or  proj^erty  without  due  process  of  law,  and  that  pri- 
vate property  shall  not  be  taken  for  public  use  without  just 
compensation.  The  latter  limitation  is,  we  think,  plainly 
irrelevant. 

[572]  As  to  the  former,  it  is  claimed  that  the  citizen  is  de- 
prived of  his  liberty  without  due  process  of  law  when,  by  a 
general  statute,  he  is  arbitrarily  deprived  of  the  right  to  make 
a  contract  of  the  nature  herein  involved. 

The  case  of  Allgeyer  v.  Louisiana^  165  U.  S.  578,  is  cited  as 
authority  for  the  statement  concerning  the  right  to  contract. 
In  speaking  of  the  meaning  of  the  word  "  liberty,"  as  used  in 


UNITED   STATES   V,   JOINT   TRAFFIC   ASSOCIATION.     935 

Opinion  of  tlie  Court 

the  Fourteenth  Amendment  to  the  Constitution,  it  was  said 
in  that  case  to  include,  among  other  things,  the  liberty  of  the 
citizen  to  pursue  any  livelihood  or  vocation,  and  for  that 
purpose  to  enter  into  all  contracts  which  might  be  proper, 
necessary  and  essential  to  his  carrying  out  those  objects  to  a 
successful  conclusion. 

We  do  not  impugn  the  correctness  of  that  statement.  The 
citizen  may  have  the  right  to  make  a  proper  (that  is,  a  law- 
ful) contract,  one  which  is  also  essential  and  necessary  for 
carrying  out  his  lawful  purposes.  The  question  which  arises 
here  is,  whether  the  contract  is  a  proper  or  lawful  one,  and 
we  have  not  advanced  a  step  towards  its  solution  by  saying 
that  the  citizen  is  protected  by  the  Fifth,  or  any  other  amend- 
ment, in  his  right  to  make  proper  contracts  to  enable  him  to 
carry  out  his  lawful  purposes.  We  presume  it  will  not  be 
contended  that  the  court  meant,  in  stating  the  right  of  the 
citizen  "  to  pursue  any  livelihood  or  vocation,"  to  include 
every  means  of  obtaining  a  livelihood,  whether  it  was  lawful 
or  otherwise.  Precisely  how  far  a  legislature  can  go  in  de- 
claring a  certain  means  of  obtaining  a  livelihood  unlawful,  it 
is  unnecessary  here  to  speak  of.  It  will  be  conceded  it  has 
power  to  make  some  kinds  of  vocations  and  some  methods  of 
obtaining  a  livelihood  unlawful,  and  in  regard  to  those  the 
citizen  would  have  no  right  to  contract  to  carry  them  on. 

Congress  may.  restrain  individuals  from  making  contracts 
under  certain  circumstances  and  upon  certain  subjects.  Fris- 
hie  V.  United  States,  157  U.  S.  160. 

Notwithstanding  the  general  liberty  of  contract  which  is 
possessed  by  the  citizen  under  the  Constitution,  we  find  that 
there  are  many  kinds  of  contracts  which,  while  not  in  them- 
selves immoral  or  m^ala  in  se,  may  yet  be  prohibited  by  the 
[573]  legislation  of  the  States  or,  in  certain  cases,  by'Con- 
gress.  The  question  comes  back  whether  the  statute  under 
review  is  a  legitimate  exercise  of  the  power  of  Congress  over 
interstate  commerce  and  a  valid  regulation  thereof.  The 
question  is,  for  us,  one  of  power  only,  and  not  of  policy. 
We  think  the  power  exists  in  Congress,  and  that  the  statute 
is  therefore  valid. 

Finally,  we  are  asked  to  reconsider  the  question  decided  in 
the   Tram-Missouri  case,  and   to  retrace   the  steps   taken 


936 


171   UNITED   STATES   BEPORTS,  573. 


Opinion  of  tlie  Court 

therein,  because  of  the  plain  error  contained  in  that  decision 
and  the  widespread  alarm  with  which  it  was  received  and  the 
serious  consequences  w  hich  have  resulted,  or  may  soon  result, 
from  the  law  us  interpreted  in  that  case. 

It  is  proper  to  remark  that  an  application  for  a  reconsider- 
ation of  a  question  but  lately  decided  by  this  court  is  usually 
based  upon  a  statement  tluit  some  of  the  arguments  employed 
on  the  original  hearing  of  the  question  have  been  overlooked 
or  misunderstood,  or  that  some  controlling  authority  has  been 
either  misapplied  by  the  court  or  passed  over  without  discus- 
sion or  notice.  While  this  is  not  strictly  an  api)lication  for  a 
rehearing  in  the  same  case,  yet  in  sul»siance  it  is  the  same 
thing.  The  court  is  asked  to  reconsider  a  question  but  just 
decided  after  a  careful  investigation  of  tlie  matter  involved. 
There  have  heretofore  been  in  elfect  two  arguments  of  pre- 
cisely the  same  questions  now  before  the  court,  and  the  same 
arguments  were  addressed  to  us  on  both  those  occasions.  The 
report  of  tlie  Tram-M'fxsoun  earn  shows  a  dissenting  opinion 
delivertMl  in  that  case,  and  that  the  opinion  wa<  concurred  in 
by  three  other  members  of  the  court. 

That  opinion,  it  will  be  seen,  gives  with  great  force  and 
ability  the  arguments  against  the  decision  wliich  was  finally 
arrived  at  by  the  court.  It  was  after  a  full  discussion  of  the 
questions  involved  and  with  the  knowledge  of  ttie  views  en- 
tertained by  the  minority  as  expressed  in  the  di^^euting  opin- 
ion that  the  majority  of  the  court  came  to  the  conclusion  it 
did.  Soon  after  the  decision  a  petition  for  a  rehearing  of  the 
case  was  made,  supported  by  a  printed  argument  in  its  favor, 
and  pressed  with  an  earnestness  and  vigor  auil  at  length 
which  was  certainly  commensurate  with  the  importance  of 
the  case. 

[574]  This  court,  with  care  and  deliberation  and  also  with 
a  full  appreciation  of  their  impoitance,  again  considered  the 
questions  involved  in  its  former  decision. 

A  majority  of  the  court  once  more  arrived  at  the  conclu- 
sion it  had  first  announced,  and  accordingly  it  denied  the 
application.  And  now  for  the  third  time  the  same  argu- 
ments are  employed,  and  the  court  is  again  asked  to  recant 
its  former  opinion,  and  to  decide  the  same  question  in  direct 


UNITED   STATES   V,   JOINT   TRAFFIC   ASSOCIATION.     937 

Opinion  of  the  Court. 

opposition  to  the  conclusion  arrived  at  in  the  Trans- Missouri 
case. 

The  learned  counsel  while  making  the  application  frankly 
confess  that  the  argument  in  opposition  to  the  decision  in 
the  case  above  named  has  been  so  fully,  so  clearly  and  so 
forcibly  presented  in  the  dissenting  opinion  of  Mr.  Justice 
White,  that  it  is  hardly  possible  to  add  to  it  nor  is  it  neces- 
sary to  repeat  it. 

The  fact  that  there  was  so  close  a  division  of  opinion  in  this 
court  when  the  matter  was  first  und^-  advisement,  together 
with  the  different  views  taken  by  some  of  the  judges  of  the 
lower  courts,  led  us  to  the  most  careful  and  scrutinizing 
examination  of  the  arguments  advanced  by  both  sides,  and  it 
was  after  such  an  examination  that  the  majority  of  the  court 
came  to  the  conclusion  it  did. 

It  is  not  now  alle^^ed  that  the  court  on  the  former  occasion 
overlooked  any  argnnient  for  the  respondents  or  misapplied 
any  controlling  authority.  It  is  simply  insisted  that  the 
court,  notwithstanding  the  arguments  for  an  opposite  view, 
arrived  at  an  erroneous  result,  which,  for  reasons  already 
stated,  ought  to  be  reconsidered  and  reversed. 

As  we  have  twice  already  deliberately  and  earnestly  con- 
sidered the  same  arguments  which  are  now  for  a  third  time 
pressed  upon  our  attention,  it  could  hardly  be  exi)ected  that 
our  opinion  should  now  change  from  that  already  expressed. 

While  a;i  erroneous  decision  might  be  in  some  cases  prop- 
erly reconsidered  and  overruled,  yet  it  is  clear  that  the  first 
necessity  is  to  convince  the  court  that  the  decision  was  errone- 
ous. It  is  scarcely  to  be  assumed  that  such  a  result  could  be 
[575]  secured  by  the  presentation  for  a  third  time  of  the 
same  argnments  which  had  twice  before  been  unsuccessfully 
urged  upon  the  attention  of  the  court. 

We  have  listened  to  them  now  because  the  eminence  of  the 
counsel  engaged,  their  earnestness  and  zeal,  their  evident  be- 
lief in  the  correctness  of  their  position,  and,  most  important 
of  all,  the  very  grave  nature  of  the  questions  argued,  called 
upon  the  court  to  again  give  to  those  arguments  strict  and 
respectful  attention.  It  is  not  matter  for  surprise  that  we 
still  are  unable  to  see  the  error  alleged  to  exist  in  our  former 


938 


m   UNITED   STATES    HEPORTS,  57o. 


Opinion  of  the  Court. 

decision,  or  to  change  our  opinion  regarding  the  questions 
therein  involved. 

Upon  the  point  that  the  agreement  is  not  in  fact  one  in 
restraint  of  tr^de,  even  though  it  did  prevent  competition,  it 
must  be  admitted  that  the  former  argument  has  now  been 
much  enlarged  and  amplified,  and  a  general  and  most  mas- 
terly review  of  that  question  has  been  presented  by  counsel 
for  the  respondents.  That  this  agreement  does  in  fact  pre- 
vent competition,  and  that  it  must  have  been  so  intended,  we 
have  already  attempted  to  show.  Whether  stifling  competi- 
tion tends  directly  to  restrain  commerce  in  the  case  of  natu- 
rally competing  railroads,  is  a  question  upon  which  counsel 
have  argued  with  very  great  ability.  They  acknowledge 
that  this  agreement  purports  to  restrain  competition,  al- 
though, they  say,  in  a  very  slight  degree  and  on  a  single  j^oint. 
They  admit  that  if  competition  and  commerce  were  identical, 
being  but  different  names  for  the  same  thing,  then,  in  assum- 
ing to  restrain  competition  even  so  far,  it  would  be  assuming 
in  a  corresponding  degree  to  restrain  commerce.  Counsel 
then  add  (and  therein  we  entirely  agree  with  them)  that  no 
such  identity  can  be  pretended,  because  it  is  plain  that  com- 
merce can  and  does  take  place  on  a  large  scale  and  in  numer- 
ous forms  without  competition.  The  material  considerations 
therefore  turn  upon  the  effects  of  competition  upon  the 
business  of  railroads,  ivhether  they  are  favorable  to  the  com- 
merce in  which  the  roads  are  engaged,  or  unfavorjjble  and  in 
restraint  of  that  commerce.  Upon  that  question  it  is  con- 
tended that  agi'eements  between  railroad  companies  of  the 
[576]  nature  of  that  now  before  us  are  promotive  instead  of 
in  restraint  of  trade. 

This  conclusion  is  reached  by  counsel  after  an  examination 
of  the  peculiar  nature  of  railroad  property  and  the  alleged 
baneful  effects  of  competition  upon  it  and  also  upon  the  pub- 
lic. It  is  stated  that  the  only  resort  open  to  railroads  to  save 
themselves  from  the  effects  of  a  ruinous  competition  is  that 
of  agreements  among  themselves  to  check  and  control  it.  A 
rainous  competition  is,  as  they  say,  apt  to  be  carried  on  until 
the  weakest  of  the  combatants  goes  to  destruction.  After 
that  the  survivor,  being  relieved  from  competition,  proceed? 
to  raise  its  prices  as  high  as  the  business  will  bear.    Com- 


UNITED   STATES   V,   JOINT    TRAFFIC    ASSOCIATION.     939 

Opinion  of  tlie  Court.     ^ 

merce,  it  is  said,  thus  finally  becomes  restrained  by  the  effects 
of  competition,  while,  at  the  same  time,  otherwise  valuable 
railroad  property  is  thereby  destro3^ed  or  greatly  reduced  in 
value.  There  can  be  no  doubt  that  the  general  tendency  of 
competition  among  competing  railroads  is  towards  lower 
rates  for  transportation,  and  the  result  of  lower  rates  is  gen- 
erally a  greater  demand  for  the  articles  so  transported,  and 
this  greater  demand  can  only  be  gratified  by  a  larger  supply, 
the  furnishing  of  which  increases  commerce.  This  is  the 
first  and  direct  result  of  competition  among  railroad  carriers. 

In  the  absence  of  any  agreement  restraining  competition, 
this  result,  it  is  argued,  is  neutralized,  and  the  opposite  one 
finally  reached  by  reason  of  the  peculiar  nature  of  railroad 
property  which  must  be  operated  and  the  capital  invested  in 
which  cannot  be  withdrawn,  arid  the  railroad  managers  are 
therefore,  as  is  claimed,  compelled  to  not  only  compete  among 
themselves  for  business,  but  also  to  carry  on  the  war  of  com- 
petition until  it  sliall  terminate  in  the  utter  destruction  or  the 
buying  up  of  the  weaker  roads,  after  which  the  survivor  will 
raise  the  rates  as  high  as  is  possible.  Thus  the  indirect  but 
final  effect  of  competition  is  claimed  to  be  the  raising  of 
rates  and  the  consequent  restraint  of  trade,  and  it  is  urged 
that  this  result  is  only  to  be  prevented  by  such  an  agreement 
as  we  have  here.  In  that  way  alone  it  is  said  that  competi- 
tion is  overcome,  and  general  uniformity  and  reasonableness 
of  rates  securelv  established. 

[577]  The  natural,  direct  and  immediate  effect  of  compe- 
tition is,  however,  to  lower  rates,  and  to  thereby  increase  the 
demand  for  commodities,  the  supplying  of  which  increases 
commerce,  and  an  agreement,  whose  first  and  direct  effect  is 
to  prevent  this  play  of  competition,  restrains  instead  of  pro- 
moting trade  and  commerce.  AVliether,  in  the  absence  of  an 
agreement  as  to  rates,  the  consequences  described  by  counsel 
will  in  fact  follow  as  a  result  of  competition,  is  a  matter  of 
very  great  uncertainty,  depending  upon  many  contingencies 
and  in  large  degree  upon  the  voluntary  action  of  the  man- 
agers of  the  several  roads.  Railroad  companies  may  and 
often  do  continue  in  existence  and  engage  in  their  lawful 
traffic  at  some  profit,  although  they  are  competing  railroads 


171    rXITEB   STATES   KEFORTS,  577. 
,    Opinion  of  the  Conrt 

and  are  not  acting  under  any  agreement  or  combination  with 
their  competitors  upon  the  subject  of  rates.  It  appears  from 
the  brief  of  counsel  in  this  case  that  the  agreement  in  ques- 
tion does  not  embrace  all  of  the  lines  or  systems  engaged  in 
the  business  of  railroad  transportation  between  Chicago  and 
the  Atlantic  coast.  It  cannot  be  said  that  destructive  com- 
petition, or,  in  other  words,  war  to  the  death,  is  bound  to 
result  unless  an  agreement  or  combination  to  avoid  it  is 
entered  into  between  othci'iiv'ise  competing  roads. 

It  is  not  only  possible  but  probable  that  good  sense  and 
integrity  of  purpose  would  prevail  among  the  managers,  and 
while  making  no  agreement  and  entering  into  no  combination 
by  which  the  whole  railroad  interest  as  Iierein  represented 
should  act  as  one  combined  and  consolidated  bodv,  the 
managers  of  each  road  might  yet  make  such  reasonable 
charges  for  the  business  done  by  it  as  the  facts  might  justify. 
An  agreement  of  the  nature  of  this  one  wliich  directly  and 
effectually  stifles  competition,  must  be  regarded  under  the 
statute  as  one  in  restraint  of  trade,  notwithstanding  there  are 
possibilities  that  a  restraint  of  trade  may  also  follow  competi- 
tion that  may  be  indulged  in  until  the  weaker  roads  are  com- 
pletely destroyed  and  the  survivor  thereafter  raises  rates  and 
maintains  tliem. 

Coming  to  the  conclusion  we  do,  in  regard  to  the  various 
questions  herein  discussed,  we  think  it  unnecessary  to 
[578]  fiu'ther  allude  to  the  other  reasons  which  have  bften 
advanced  for  a  reconsideration  of  the  decision  in  the  Tram- 
Missouri  cam. 

The  jmfffmrnts  of  the  Circuit  Court  of  the  United  States 
for  the  Southern,  District  of  Ncv^  York  and  of  the  Cir- 
nuf  Court  of  Appeals  for  the  Second  Circuit  are  re- 
versed,  and  the  case  rermnded  to  the  Circuit  Court  with 
d'irrHio),s'  to  tuke  surh  further  proceedings  therein  as 
muf/  hi  hi  eon  form  it  f/  tvith  this  opinion, 

Mk.  Ji sire  Gray,  Mr.  Jitstjce  Smibas  and  Mr.  Justice 
White  dissented. 


Mr.  Justice  McKenna  took  no  part  in  the  decision  of  the 


[678] 


HOPKINS   V,   UNITED   STATES. 

Syllabus. 

HOPKINS  V,  UNITED  STATES.- 


941 


CERTIORARI  TO  THE  CIRCITT  COl  HT  OF  APPEALS  FOR  THE  EIGHTH 

CIRCUIT. 

No.  210.     Argued  February  28,  March  1,  1898. — Decided  October  24,  1898. 

[171   U.  S..  578.1 

The  Kansas  City  liive  Stook  PLxcliange  was  aii  uuiiicorporatod  voluu- 
teer  association  of  men,  doing  bnsiness  at  its  stock  yards,  situated 
partly  in  Kansas  City,  Missouri,  and  partly  across  the  line  sep- 
arating Kansas  City,  :Missouri,  from  Kansas  City,  Kansas.  The 
business  of  its  members  was  to  receive  individually  consignments  of 
cattle,  liogs,  and  other  live  stock   from  owners  of  the  same,  not 

•  only  in  the  States  of  Missouri  and  Kansas,  but  also  in  other  States 
and  Territories,  and  to  feed  such  stock,  and  to  prepare  it  for  the 
market,  to  disr)ose  of  the  same,  to  receive  the  proceeds  thereof 
from  the  purchasers,  and  to  pay  the  owners  their  proportion  of 
such  proceeds,  after  deducting  charges,  expenses  and  advances. 
The  members  were  individually  in  the  habit  of  soliciting  consign- 
ments from  the  owners  of  such  stock,  and  of  making  them  ad- 
vances thereon.  The  rules  of  the  association  forbade  members  from 
buying  live  stock  from  a  commisison  merchant  in  Kansas  City,  not 
a  member  of  the  exchange.  They  also  fixed  the  commission  for 
selling  such  live  stock,  prohibited  the  employment  of  agents  to 
solicit  consignments  except  upon  a  stipulated  salary,  and  forbade 
the  sending  of  prepaid  telegrams  or  telephone  messages,  with  in- 
formation as  to  the  condition  of  the  markets.  It  was  also  provided 
that  no  member  should  transact  business  with  any  person  vio- 
[579]  lating  the  rules  and  regulations,  or  with  an  expelled  or  sus- 
pended member  after  notice  of  such  violation.  Held,  that  the  situa- 
tion of  the  yards,  partly  in  Kansas  and  partly  in  Missouri,  was  a 
fact  without  any  weight;  that  such  business  or  occupation  of  the 
several  members  of  the  association  was  not  interstate  commerce, 
within  the  meaning  of  the  act  of  July  2,  1890,  c.  647,  "  to  protect 
trade  and  commerce  against  unlawful  restraints  and  monopolies;*' 
and  that  that  act  does  not  cover,  and  was  not  intended  to  cover, 
such  kind  of  agreements.^ 


o  This  suit  was  begun  in  the  Circuit  Court  of  the  United  States  for 
the  District  of  Kansas,  which  court  granted  the  prayers  in  the  bill  ask- 
ing for  the  dissolution  of  the  Kansas  City  Live  Stock  Exchange,  and 
for  an  injunction  restraining  defendant  from  enforcing  or  acting  pur- 
suant to  the  rules  and  by-laws  of  that  association  (82  Fed.,  529). 
See  p.  725.  Appeal  was  taken  to  the  Circuit  Court  of  Appeals, 
Eighth  Circuit,  and  removed  from  there  to  the  Supreme  Court  by 
writ  of  certiorari  (84  Fed.  1018).  See  p.  748.  Decree  reversed  by 
Supreme  Court,  with  directions  to  dismiss  the  bill  (171  U.  S.,  578). 

6  The  foregoing  syllabus  copyrighted,  1898,  by  Banks  &  Bros. 


942 


171    UNITED   STATES   REPORTS,  o79. 


Syllabiia 
[4a  li.  e<l.,  290.]« 

[The  business  of  buying  and  selling  Hve-stock  at  stock  yards  in  a  city 
by  members  of  a  stock  exchange  as  commission  merchants  is  not 
interstate  coniuierce,  although  most  of  the  purchases  and  sales  are 
of  live  Rt(»ck  sent  frani  other  states,  and  the  membi?rs  of  the  stock 
exchange  are  employed  to  sell  by  letter  from  the  o^vners  of  the  stock 
In  other  states,  and  send  agents  to  other  states  to  solicit  business, 
and  advance  money  to  the  cattle  owners,  and  pay  their  drafts,  and 
aid  tbem  in  making  the  cjittle  fit  for  market] 

[A  by-law  of  the  Kansas  City  Llve-Stock  Exchange,  which  regulates 
the  coniniissi(  us  to  be  chai-ged  by  nienil>ers  of  that  association  for 
selling  live  stuck  is  not  in  restraint  of  Interstate  commerce,  or  a 
violatitm  of  the  act  of  July  2.  18:»0,  to  protect  commerce  from  un- 
lawful restraints.] 

[A  commission  agent  wJiu  sells  cattle  at  their  place  of  destination, 
which  are  sent  from  an:»th  -r  state  to  b;»  sold,  is  nat  engaged  in  in- 
teretate  commerce;  nor  is  his  agreement  with  othei-s  in  the  same 
business,  as  tt»  the  c  anuiissions  ta  b^  charged  for  such  sales,  void  as 
a  contract  in  restraint  of  that  commerce.] 

|lE  order  to  come  within  the  provisions  of  the  statute,  the  direct 
effect  of  an  agreement  or  combinatiiin  must  be  in  restraint  of 
trade  or  commerce  among  tlu'  s«;veral  states  or  with  foreign 
nations.] 

[Restrictions  on  sending  prepaid  telegrams  or  telephone  messages, 
made  by  a  by-law  of  a  live-stock  exchange,  when  these  restrictions 
are  merely  for  the  regulation  of  the  business  of  the  members,  and 
do  not  affect  the  business  of  the  telegraph  company,  are  not  void 
as  regulations  of  interstate  commerce.] 

[The  business  of  agents  in  soliciting  causignments  of  cattle  to  com- 
mission merchants  in  another  state  for  sale,  is  not  interstate  com- 
merce ;  and  a  by-law  of  a  stock  exchange  restricting  the  number  of 
solicitors  to  three  does  not  restrain  that  commerce,  or  violate  the 
act  of  Congress,] 

[The  fact  thait  a  state  line  runs  through  stock  yards,  and  that  sales 
may  be  made  of  a  lot  of  stock  in  the  yards  which  may  be  partly  In 
one  state  and  partly  in  another,  has  no  effect  to  make  the  business 
of  selling  stock  interstate  commerce.] 

[A  combination  of  commission  merchants  at  stock  yards,  by  which 
they  refuse  to  do  business  with  those  who  are  not  members  of 
their  association,  even  if  it  is  illegal,  is  not  subject  to  the  act  of 
Congress  of  July  2.  18110,  to  protect  trade  and  commerce,  since  their 
business  is  not  interstate  commerce.] 

This  suit  was  commenced  by  the  United  States  attorney 
for  the  District  of  Kansas,  acting  under  the  direction  and  by 

«  The  following  paragraphs  inclosed  in  brackets  are  taken  from  the 
syllabus  to  this  case  in  the  U.  S.  Supreme  Court  Reports,  Book  4:^, 
p.  290.    Copyrighted,  1899,  by  The  Lawyers'  Co-Operative  Publishing  Co. 


HOPKINS    V.    UNITED   STATES. 
Statement  of  the  Case. 


94B 


the  authority  of  the  Attorney  General  of  the  United  States, 
against  Henry  Hopkins  and  the  other  defendants,  residents 
of  the  State  of  Kansas  and  members  of  a  vohintary  unin- 
corporated  association,  known  and  designated  as  the  Kansas 
City  Live  Stock  Exchange.  The  purpose  of  the  action  is  to 
obtain  the  dissohition  of  the  exchange,  and  to  perpetually 
enjoin  the  members  from  entering  into  or  from  continuing  in 
any  combination  of  a  like  character. 

As  a  foundation  for  the  relief  sought  it  was  alleged  in  the 
bill  that  the  members  of  this  association,  known  as  the  Kansas 
City  Live  Stock  Exchange,  have  adopted  articles  of  as- 
sociation, rules  and  by-laws  which  they  have  agreed  to  be 
bound  by ;  that  the  business  of  the  exchange  is  carried  on  and 
conducted  by  a  board  of  directors  at  the  Kansas  City  stock 
yards,  which  are  situated  partly  in  Kansas  City  in  the  State 
of  Missouri  and  partly  in  Kansas  City  in  the  State  of  Kansas, 
the  building  owned  by  the  stock  yards  company  being  located 
one  half  of  it  in  the  State  of  Missouri  and  the  other  half  in 
the  State  of  Kansas,  and  half  of  the  defendants  have  offices 
and  transact  business  in  these  stock  yards  and  in  that  part 
of  the  building  w^hich  is  within  the  State  of  Kansas,  and  the 
other  half  in  that  part  of  the  building  which  is  in  the  State 
of  Missouri;  that  the  Kansas  City  Stock  Yards  Company 
is  a  corporation  owning  the  stock  yards,  where  the  business 
is  done  by  the  members  of  the  exchange ;  that  substantially 
all  the  business  transacted  in  the  matter  of  receiving,  buy- 
ing, selling  and  handling  their  live  stock  at  Kansas  City  is 
carried  on  by  the  defendants  herein  and  by  the  other  members 
of  the  exchange  as  commission  merchants,  and  that  large 
numbers  of  the  live  stock,  consisting  [580]  of  cattle  and  hogs 
and  sheep  bought  and  sold  and  handled  at  the  stock  yards 
by  the  defendants  and  their  fellow  members  in  the  exchange, 
are  shipped  from  the  States  of  Nebraska,  Colorado,  Texas' 
Missouri,  Iowa,  and  Kansas,  and  the  Territories  of  Okla- 
homa, Arizona  and  New  Mexico;  that  when  this  stock  is 
received  at  the  stock  yards  it  is  sold  by  the  defendants, 
members  of  the  exchange,  to  the  various  packing  houses  situ- 
ated at  Kansas  City,  Missouri,  and  Kansas  City,  Kansas,  and 
it  is  also  sold  for  shipment  to  the  various  other  markets,  par- 
ticularly Chicago,  St.  Louis  and  New  York ;  that  vast  numbers 


171   UNITED   STATES   REPORTS,  580. 
Statement  of  the  Case. 


of  cattle,  hogs  and  other  live  stock  are  received  annually  at  the 
stock  yards  and  handled  bv  the  members  of  the  exchange. 

The  bill  also  alleges  that  large  numbers  of  the  live  stock 
sold  at  the  stock  yards  by  the  defendants  are  incumbered  by 
mortgages  thereon,  executed  by  their  owners  in  the  various 
States  and  Territories,  which  mortgages  have  been  given  to 
various  defendants  as  securitv  for  monev  advanced  bv  them 
to  the  different  owners  to  enable  them  to  feed  and  j.n^pare  the 
cattle  for  market,  and  that  w^hen  the  live  stock  so  mortgaged 
are  ready  for  shipment,  they  are  sent  to  the  defendants  who 
have  advanced  the  money  and  received  the  mortgages,  and  on 
the  sale  of  the  stock  the  amount  of  these  advances  and  in- 
terest is  deducted  from  the  proceeds  of  the  sale  of  the  cattle 
by  the  connnission  merchants  owning  the  mortgages;  that 
ninety  per  cent  of  the  members  of  the  exchange  make  such 
advances,  and  that  the  market  is  largely  sustainci]  b\  means 
of  the  money  thus  advanced  to  the  cattle  raisers  by  the  de- 
fendants, and  that  Kansas  City  is  the  only  place  for  many 
miles  about,  which  constitutes  an  available  market  for  the 
purchase  and  sale  of  live  stock  from  the  large  territory 
located  in  the  States  and  Territories  already  named ;  that  it  is 
the  custom  of  the  owners  of  the  cattle,  many  of  them  living 
in  different  states,  and  who  consign  their  stock  to  the  Kansas 
City  stock  yards  for  sale  to  draw  drafts  on  tlie  commission 
merchants  to  whom  the  live  stock  is  consigned,  which  the 
consignors  attach  to  the  bill  of  lading  issued  by  the  carrier, 
and  the  money  on  these  drafts  is  advanced  by  the  local  banks 
throughout  the  western  States  [581]  and  Territories.  These 
drafts  are  paid  by  the  consignees  and  the  proceeds  remitted 
to  the  various  owners  through  the  banks. 

The  business  thus  conducted  is  alleged  to  be  interstate  com- 
merce, and  it  is  further  alleged  that  if  the  i^erson  to  whom 
the  live  stock  is  consigned  at  Kansas  City  is  not  a  member  of 
the  exchange,  he  is  not  permitted  to  and  cannot  sell  or  dis- 
pose of  the  stock  at  the  Kansas  City  market,  for  the  reason 
that  the  defendants,  and  all  the  other  commission  merchants, 
members  of  the  exchange,  refuse  to  buy  live  stock  or  in  any 
manner  negotiate  or  deal  with  or  buy  from  a  person  or  com- 
mission merchant  who  is  not  a  member  of  the  exchange,  and 
thus  the  owner  of  live  stock  shipped  to  the  Kansas  City  mar- 


HOPKINS   V,   UNITED   STATES. 
Statement  of  the  Case. 


945 


ket  is  compelled  to  re-ship  the  same  to  other  markets,  and  by 
reason  of  the  unlawful  combination  existing  among  the 
defendants  and  the  other  members  of  the  exchange  the  owner 
is  prevented  from  delivering  this  stock  at  the  Kansas  City 
stock  yards,  and  the  sale  of  stock  is  thereby  hindered  and 
delayed,  entailing  extra  expense  and  loss  to  the  shipper,  and 
placing  an  obstruction  and  embargo  on  the  marketing  of  all 
live  stock  shipped  from  the  States  and  Territories  to  the 
Kansas  City  market  which  is  not  consigned  to  the  stock 
yards  company  or  to  the  defendants,  or  some  of  them,  mem- 
bers of  the  stock  exchange. 

It  is  alleged  that  the  defendants,  as  members  of  the  ex- 
change, have  adopted  certain  rules,  among  them  being  rules 
9  and  16,  which  are  particularly  alleged  to  be  in  restraint 
of  trade  and  commerce  between  the  States,  and  intended  to 
create  a  monopoly,  in  contravention  of  the  laws  of  the  United 
States  in  that  behalf. 

Kule  9  provides  as  follows  : 

"Section  1.  Commissions  charged  by  members  of  this  association 
for  selling  live  stock  shall  not  be  less  than  the  following  named 
rates." 

Sections  2,  3,  4,  5,  6  and  7  relate  to  the  amounts  of  such 
commissions,  and  it  is  alleged  that  in  some  instances  the  com- 
missions are  greater  than  had  theretofore  been  paid. 

Section  8  permits  the  members  to  handle  the  business  of 
f582]  non-resident  commission  firms  when  the  stock  is  con- 
signed directly  to  or  from  such  firm,  at  half  the  rates  fixed 
by  the  rule,  provided  the  non-resident  commission  firms  are 
established  at  the  markets  named  in  the  section. 

Section  10  prohibits  the  employment  of  any  agent,  solic- 
itor or  employe  except  upon  a  stipulated  salary  not  contin- 
gent upon  the  commissions  earned,  and  it  provides  that  not 
more  than  three  solicitors  shall  be  employed  at  one  time  by 
a  conmiission  firm  or  corporation,  resident  or  non-resident  of 
Kansas  Citv. 

Section  11  forbids  any  member  of  the  exchange  from  send- 
ing or  causing  to  be  sent  a  prepaid  telegram  or  telephone 
message  quoting  the  markets  or  giving  information  as  to  the 
condition  of  the  same,  under  the  penalty  of  a  fine  as  therein 
1180&— VOL  1— <w  M 60 


m   UNITED   STATES   REPOBTS,  582. 
Statement  of  the  Case. 


Stated.  The  rule,  however,  permits  prepaid  messages  to  be 
sent  to  shippers  quoting  actual  sales  of  their  stock  on  the  date 
made;  also  to  parties  desiring  to  make  purchases  on  the 
market 

Rule  16  provides,  in  section  1,  "  That  no  member  of  the  ex- 
change  shall  transact  business  with  any  persons  violating  any 
of  the  rules  or  regulations  of  the  exchange,  or  with  an  ex- 
pelled  or  suspended  member  after  notice  of  such  violation, 
suspension  or  expulsion  shall  have  bsen  issued  by  the  secre- 
tary or  board  of  directors  of  the  exchange." 

It  is  alleged  that  the  defendants  in  adopting  these  rules 
and  in  forming  the  exchange  and  carrying  out  the  same  have 
violated  and  are  violating  the  statute  of  the  United  States, 
approved  July  2,  1890,  c.  647,  26  Stat.  209,  entitled  "  An  act 
to  protect  trade  and  commerce  against  unlawful  restraints 
mud  monopolies,"  and  it  is  charged  that  it  was  the  purpose 
of  the  defendants,  in  organizing  the  exchange  and  in  adopt- 
ing the  rules  mentioned,  to  prevent  the  shipment  or  consign- 
ment of  any  live  stock  to-  the  Kansas  City  market  unless  it 
was  shipped  or  consigned  to  the  Kansas  City  stock  yards 
and  to  some  one  or  other  of  the  defendants,  members  of  the 
exchange,  and  to  compel  the  shippers  of  live  stock  from  other 
States  and  from  the  Territories  to  pay  to  the  defendants  the 
commissions  and  charges  provided  for  in  rule  9,  and  to  pre- 
prevent  such  shippers  [683]  from  placing  their  property  on 
sale  at  the  Kansas  City  market  unless  these  commissions 
were  paid. 

The  answer  of  the  defendants  admitted  their  forming  the 
exchange  and  becoming  members  thereof,  and  adopting, 
among  others,  the  rules  specially  mentioned  in  complainants' 
bill.  They  denied  that  the  exchange  itself  engaged  in  any 
business  whatever,  and  alleged  that  it  existed  simply  in 
order  to  prescribe  rules  and  provide  facilities  for  the  transac- 
tion of  business  by  the  members  thereof,  and  to  govern  them 
by  such  rules  and  regulations  as  have  been  evolved  and  sanc- 
tioned by  the  developments  of  commerce,  and  which  are 
universally  recognized  to  be  just  and  fair  to  all  concerned. 

It  was  further  set  up  in  the  answer  that  each  member  of 
the  organization  was  in  fact  left  free  to  compete  in  every 
manner,  and  by  all  means  recognized  to  be  fair  and  just,  for 


HOPKINS   V.  UNITED  STATES. 
Statement  of  the  Case. 


947 


his  share  of  the  business  which  comes  to  the  point  at  which 
the  members  of  the  organization  do  business ;  that  in  adopt- 
ing their  rules  they  followed  in  all  substantial  respects  the 
provisions  which  had  been  made  upon  the  same  subject  re- 
spectively by  the  exchanges  theretofore  established  at 
Chicago  and  East  St.  Louis,  Illinois,  and  which  have  been 
since  established  at  St.  Louis,  Omaha,  Indianapolis,  Buf- 
falo, Sioux  City  and  Fort  Worth ;  and  that  the  exchange  at 
no  time  refused  to  admit  as  a  member  any  reputable  person 
who  was  willing  to  comply  with  the  conditions  of  member- 
ship and  to  abide  by  the  rules  of  the  organization. 

Various  allegations  in  the  bill  as  to  the  effect  of  the  or- 
ganization in  precluding  any  sales  or  purchases  of  cattle 
other   than   by   its   members   are   denied. 

The  defendants  also  deny  that  the  exercise  of  their  occu- 
pation as  commission  merchants,  domg  business  as  members 
of  the  exchange,  constitutes  or  amounts  to  interstate  com- 
merce, within  the  meaning  of  the  Constitution  or  laws  of 
the  United  States.    They  allege  that  they  have  no  part  in  or 
control  over  the  disposition  of  the  live  stock  sold  by  them  to 
others,  nor  of  live  stock  purchased  by  them  as  commission 
merchants  acting  for  others.     They  allege  that  the  stock 
^ards  company  permits  any  person  whatsoever  to  transact 
business  at  its  yards  who   [584]   will  pay  the  established 
charges  of  that  company  for  its  services,  and  that  in  point 
of  fact  a  very  large  part  of  the  business  done  at  said  yards  is 
transacted  by  persons  who  are  not  members  of  the  exchange, 
and  without  the  interposition  of  such  members.    It  is  afso 
alleged  in  their  answer  that  they  are  under  no  obligations 
to  extend  the  privileges  of  the  exchange  to  a  person  who  is 
not  a  member  thereof,  who  has  violated  its  rules  and  been 
suspended  from  membership,  and  who  has  voluntarily  with- 
drawn therefrom,  and  announced  his  purpose  to  carry  on  his 
business  as  a  competitor  of  the  members  of  such  exchange, 
to  the  destruction  of  said  organization  and  its  rules  and  to 
the  injury  of  his  competitors. 

It  is  also  set  up  that  defendants  cannot  be  compelled  to 
deal  with  a  non-member  of  their  organization,  or  a  person 
violating  its  rules,  or  with  one  who  has  been  suspended  for 
such  violation,  or  who  has  withdrawn  therefrom,  or  who 


948 


111  UNITED  STATES  REPORTS,  584. 


Statement  of  tbe  Case. 

Iitts  announced  his  intention  to  destroy  said  organization  and 
to  compete  with  the  members  thereof,  and  the  defendants 
allege  that  they  cannot  be  compelled  to  deal  with  any  per- 
son whatsoever,  and  that  they  had  a  right  to  establish  said 
exchange,  and  now  have  the  right  to  maintain  the  same,  and 
to  require  the  observance  of  its  rules  and  regulations  on  the 
part  of  their  associates,  so  long  as  they  desire  to  retain  the 
privileges  of  membership  in  the  body.  They  allege  that  their 
rules  are  in  harmony  with  the  rules  and  regulations  of  com- 
mercial exchanges  which  have  existed  for  more  than  a  hun- 
dred years,  and  which  are  now  to  be  found  in  every  State 
almost  in  the  United  States,  and  throughout  the  world,  and 
that  such  rules  and  regulations  are  in  all  respects  legal  and 
binding.  They  deny  all  general  and  special  allegations  of 
illegal  agreements,  combinations  or  conspiracies  to  violate 
any  law  of  the  United  States,  or  of  the  State  of  Kansas. 

The  complainants,  in  addition  to  their  bill,  used  several 
affidavits,  the  tendency*  of  which  was  to  show  that  by  virtue 
of  the  adoption  of  rules  9  and  16,  the  members  of  the  ex- 
change refused  to  deal  with  one  who  had  violated  a  rule  and 
had  been  suspended  by  reason  thereof,  and  that  by  reason  of 
this  refusal  to  do  business,  the  member  thus  suspended  was 
[585]  substantially  incapacitated  from  carrying  on  his  busi- 
ness as  a  conunission  merchant,  and  that  by  this  combina- 
tMM  defendants,  in  forming  such  rule  and  in  adhering  to 
it,  have  greatly  injured  the  business  of  such  member. 

The  defendants  read  counter-affidavits  for  the  purpose  of 
sustaining  their  answer,  which  were  replied  to  by  the  com- 
plainants filing  affidavits  in  rebuttal,  and  upon  these  affidavits 
tnd  the  pleadings  above  described  an  application  for  an  in- 
junction was  made  to  the  Circuit  Court  of  the  United  States 
for  the  District  of  Kansas,  First  Division.  That  court,  after 
argument,  granted  an  injunction  restraining  the  defendants 
hma  combining  by  contract,  express  or  implied,  so  as  by  their 
jMCts,  conduct  or  words  to  interfere  with,  hinder  or  impede 
others  in  shipping,  trading,  selling  or  buying  live  stock  that 
is  received  from  the  States  and  Territories  at  the  stock  yards 
in  Kansas  City,  Missouri,  and  Kansas  City,  Kansas;  also 
enjoining  them  from  acting  under  the  rules  of  the  exchange 
known  as  rules  9  and  16,  and  frcHn  attempting  to  impose  any 


HOPKINS   V,   UNITED   STATES. 
Opinion  of  the  Court 


919 


fines  or  penalties  upon  members  for  trading  or  offering  to 
trade  with  any  person  respecting  the  purchase  and  sale  of 
any  live  stock ;  and  also  from  discriminating  in  favor  of  any 
member  of  the  exchange  because  of  such  membership,  and 
especially  from  discriminating  against  any  person  trading  at 
the  stock  yards,  and  from  refusing,  by  united  or  concerted 
action,  of  by  word,  persuasion,  threat  or  by  other  means,  to 
deal  or  trade  with  persons  with  respect  to  such  live  stock  who 
are  not  members  of  the  association,  because  they  are  not 
members  of  such  association,  or  in  any  manner  from  interfer- 
ing with  the  right  and  freedom  of  all  and  any  persons  trading 
or  desiring  to  trade  in  such  live  stock  at  the  stock  yards,  the 
same  as  if  the  exchange  did  not  exist.  The  defendants  were 
also  enjoined  from  agreeing  or  attempting  to  limit  the  right 
of  any  person  in  business  at  the  Kansas  City  stock  yards  to 
employ  labor  or  assistance  in  soliciting  shipments  of  live 
stock  from  other  States  or  Territories,  and  from  enforcing 
any  agreement  not  to  send  prepaid  telegrams  from  the  stock 
yards  to  any  other  State  or  Territory. 

The  District  Judge  delivered  an  opinion  upon  granting  the 
[586]  injunction,  which  will  be  found  reported  in  82  Fed. 
Rep.  529.  From  the  order  granting  it  an  appeal  was  taken 
by  the  defendants  to  the  United  States  Circuit  Court  of  Ap- 
peals for  the  Eighth  Circuit,  which  court  certified  to  this 
court  certain  questions  under  the  provisions  of  section  6  of 
the  act  of  March  3,  1891,  and  thereupon  a  writ  of  certiorari 
was  issued  from  this  court,  and  the  whole  case  brought  here 
for  decision. 

Mr.  L,  C,  Krauthof  for  Hopkins  and  others. 

Mr.  John  S.  Miller  filed  a  brief  for  same. 

Mr,  Gustavus  A.  Koemer  filed  a  brief  for  same. 

Mr.  Samuel  W.  Moore  for  the  United  States.  Mr.  Solicitor 
General  was  on  his  brief. 

Mr.  Justice  Peckham,  after  stating  the  case,  delivered  the 
opinion  of  the  court. 

The  relief  sought  in  this  case  is  based  exclusively  on  the  act 
of  Congress  approved  July  2,  1890,  c.  647,  entitled  "An  act 


9S0 


171  UNITED   STATES   REPOBTS,  586. 


Opinion  of  tlie  Ck>urt 

to  protect  trade  and  commerce  against  unlawful  restraints 
and  monopoHes,"  commonly  spokefof  as  the  Anti-Trust  act. 
26  Stat  209. 

The  act  has  reference  only  to  that  trade  or  commerce  which 
exists,  or  may  exist,  among  the  several  States  or  with  foreign 
nations,  and  has  no  application  whatever  to  any  other  trade 
or  commerce. 

The  question  meeting  us  at  the  threshold,  therefore,  in  this 
case  is,  what  is  the  nature  of  the  business  of  the  defendants, 
and  are  the  by-laws,  or  any  subdivision  of  them  above  re- 
ferred to,  in  their  direct  effect  in  restraint  of  trade  or  com- 
merce among  the  several  States  or  with  foreign  nations;  or 
does  the  case  made  by  the  bill  and  answer  show  that  any  one 
of  the  above  defendants  has  monopolized,  or  attempted  to 
monopolize,  or  combined  or  conspired  with  other  persons  to 
monopolize,  any  part  of  the  trade  or  commerce  among  the 
several  States  or  with  foreign  nations! 

[S871  That  part  of  the  bill  which  alleges  that  no  one  is 
permitted  to  do  business  at  the  cattle  market  at  Kansas  City 
unless  he  is  a  member  of  this  exchange,  does  not  mean  that 
there  is  any  regulation  at  the  stock  yards  by  which  one  who 
is  not  a  member  of  the  exchange  is  prevented  from  doing 
business,  although  ready  to  pay  the  established  charges  of 
the  stock  yards  company  for  its  services;  but  it  simply 
means  that  by  reason  of  the  members  of  the  exchange  re- 
fusing to  do  business  with  those  who  are  not  members  the 
non-member  cannot  obtain  the  facilities  of  a  market  for  his 
cattle  such  as  the  members  of  the  exchange  enjoy.  It  is  un- 
necessary at  present  to  discuss  the  question  whether  there  is 
any  illegality  in  a  combination  of  business  men  who  are 
members  of  an  exchange  not  to  do  business  with  those  who 
are  not  members  thereof,  even  if  the  business  done  were  in 
Wgard  to  interstate  commerce.  The  first  inquiry  to  be  mj»de 
is  as  to  the  character  of  the  business  in  which  defendants  are 
engaged,  and  if  it  be  not  interstate  commerce,  the  validity 
of  this  agreement  not  to  transact  their  business  with  non- 
members  does  not  come  before  us  for  decision. 

We  come,  therefore,  to  the  inquiry  as  to  the  nature  of  the 
business  or  occupation  that  the  defendants  are  engaged  in. 
Is  it  interstate  commerce  in  the  sense  of  that  word  as  it  has 


HOPKINS   V,   UNITED   STATES. 


951 


Opinion  of  the  Court 

been  used  and  understood  in  the  decisions  of  this  court?  Or 
is  it  a  business  which  is  an  aid  or  facility  to  commerce,  and 
which,  if  it  affect  interstate  commerce  at  all,  does  so  only 
in  an  indirect  and  incidental  manner. 

As  set  forth  in  the  record,  the  main  facts  are  that  the 
defendants  have  entered  into  a  voluntary  association  for  the 
purpose  of  thereby  the  better  conducting  their  business,  and 
that  after  they  had  entered  into  such  association  they  still 
continued  their  individual  business  in  full  competition  with 
each  other,  and  that  the  association  itself,  as  an  association, 
does  no  business  whatever,  but  is  simply  a  means  by  and 
through  which  the  individual  members  who  have  become 
thus  associated  are  the  better  enabled  to  transact  their  busi- 
ness; to  maintain  and  uphold  a  proper  way  of  doing  it; 
and  to  create  the  means  for  preserving  business  integrity 
in  the  transaction  [588]  of  the  business  itself.  The  business 
of  defendants  is  primarily  and  substantially  the  buying  and 
selling,  in  their  character  as  commission  merchants,  at  the 
stock  yards  in  Kansas  City,  live  stock  which  has  been  con- 
signed to  some  of  them  for  the  purpose  of  sale,  and  the  ren- 
dering of  an  account  of  the  proceeds  arising  therefrom.  Tlie 
sale  or  purchase  of  live  stock  as  commission  merchants  at 
Kansas  City  is  the  business  done,  and  its  character  is  not 
altered  because  the  larger  proportion  of  the  purchases  and 
sales  may  be  of  live  stock  sent  into  the  State  from  other 
States  or  from  the  Territories.  Where  the  stock  came  from 
or  where  it  may  ultimately  go  after  a  sale  or  purchase,  pro 
cured  through  the  services  of  one  of  the  defendants  at  the 
Kansas  City  stock  yards,  is  not  the  substantial  factor  in  the 
case.  The  character  of  the  business  of  defendants  must,  in 
this  case,  be  determined  by  the  facts  occurring  at  that  city. 

If  an  owner  of  cattle  in  Nebraska  accompanied  them  to 
Kansas  City  and  there  pel^sonally  employed  one  of  these 
defendants  to  sell  the  cattle  at  the  stock  yards  for  him  on 
commission,  could  it  be  properly  said  that  such  defendant 
in  conducting  the  sale  for  his  principal  was  engaged  in  inter- 
state conunerce?  Or  that  an  agreement  between  himself 
and  others  not  to  render 'such  services  for  less  than  a  certain 
sum  was  a  contract  in  restraint  of  interstate  trade  or  com- 
merce?    We  think  not.     On  the  contrary,  we  regard  the 


•tDZ 


171  UNITED  STATES   REPORTS,  588. 


Opinion  of  the  Ck^nrt 

services  as  collateral  to  such  commerce  and  in  the  nature  of 
a  local  aid  or  facility  provided  for  the  cattle  owner  towards 
the  accomplishment  of  his  purpose  to  sell  them;  and  an 
agreement  among  those  who  render  the  services  relating  to 
the  terms  upon  which  they  will  render  them  is  not  a  con- 
tract in  restraint  of  interstate  trade  or  commerce. 

Is  the  true  character  of  the  transaction  altered  when  the 
owner,  instead  of  coming  from  Nebraska  with  his  cattle, 
sends  them  by  a  common  carrier  consigned  to  one  of  the 
defendants  at  Kansas  City  with  directions  to  sell  the  c«n,tlle 
and  render  him  an  account  of  the  proceeds?  The  services 
rendered  are  the  same  in  both  instances,  only  in  one  case 
they  are  rendered  under  a  verbal  contract  made  at  Kai'i-as 
[589]  City  personally,  while  in  the  other  they  are  rendered 
under  written  instructions  from  the  owner  given  in  another 
State.  This  difference  in  the  manner  of  making  the  con- 
tract for  the  services  cannot  alter  the  nature  of  the  services 
themselves.  If  the  person,  under  the  circumstances  stated, 
who  makes  a  sale  of  the  cattle  for  the  owner  by  virtue  of  a 
personal  employment  at  Kansas  City,  is  not  engaged  in  inter- 
state commerce  when  he  makes  such  sale,  we  regard  it  as 
clear  that  he  is  not  so  engaged,  although  he  has  been  em- 
ployed by  means  of  a  written  communication  from  the  owner 
of  the  cattle  in  another  State. 

The  by-laws  of  the  exchange  relate  to  the  business  of  its 
members  who  are  commission  merchants  at  Kansas  City, 
and  some  of  these  by-laws,  it  is  claimed  by  the  Government, 
are  in  violation  of  the  act  of  Congress,  because  they  are  in 
restraint  of  that  business  which  is  in  truth  interstate  com- 
merce That  one  of  the  by-laws  which  relates  to  the  com- 
missions to  be  charged  for  selling  the  various  kinds  of  stock, 
is  particularly  cited  as  a  violation  of  the  act.  In  connection 
with  that  by-law  it  will  be  well  fo  examine  with  some  detail 
the  nature  of  the  defendants  business. 

It  is  urged  that  they  are  active  promoters  of  the  business 
of  selling  cattle  upon  consignment  from  their  owners  in  other 
States,  and  that  in  order  to  secure  the  business  the  defendants 
send  their  agents  into  other  States  to  the  owners  of  the  cattle 
to  solicit  the  business  from  them;  that  the  defendants  also 
lend  money  to  the  cattle  owners  and  take  back  mortgages 


HOPKINS   V,   UNITED  STATES. 
Opinion  of  the  Conrt 


953 


upon  the  cattle  as  security  for  the  loan;  that  they  make 
advances  of  a  portion  of  the  purchase  price  of  the  cattle  to  be 
sold,  by  means  of  the  payment  of  drafts  drawn  upon  them  by 
the  shippers  of  the  cattle  in  another  State  at  the  time  of  the 
shipment.  All  these  things,  it  is  said,  constitute  intercourse 
and  traffic  between  the  citizens  of  different  States,  and  hence 
the  by-law  in  question  operates  upon  and  affects  commerce 
between  the  States. 

The  facts  stated  do  not,  in  our  judgment,  in  any  degree 
alter  the  nature  of  the  services  performed  by  the  defendants, 
nor  do  they  render  that  particular  by-law  void  as  in  restraint 
[590]  of  interstate  trade  or  commerce  because  it  provides  for 
a  minimum  amount  of  commissions  for  the  sale  of  the  cattle. 

Objections  are  taken  to  other  parts  of  the  by-laws  which 
we  will  notice  hereafter. 

Notwithstanding  these  various  matters  undertaken  by  de- 
fendants, we  must  keep  our  attention  upon  the  real  busi- 
ness transacted  by  them,  and  in  regard  to  which  the  section 
of  the  by-law  complained  of  is  made.  The  section  amounts 
to  an  agreement,  and  it  relates  to  charges  made  for  services 
performed  in  selling  cattle  upon  commission  at  Kansas  City. 
The  charges  relate  to  that  business  alone.  In  order  to  obtain 
it  the  defendants  advance  money  to  the  cattle  owner;  they 
pay  his  drafts,  and  they  aid  him  to  keep  his  cattle  and  make 
them  fit  for  the  market.  All  this  is  done  as  a  means  towards 
an  end ;  as  an  inducement  to  the  cattle  owner  to  give  one  of 
the  defendants  the  business  of  selling  the  cattle  for  him  when 
the  owner  shall  finally  determine  to  sell  them.  That  busi- 
ness is  not  altered  in  character  because  of  the  various  things 
done  by  defendants  for  the  cattle  owner  in  order  to  secure  it. 
The  competition  among  the  defendants  and  others  who  may 
be  engaged  in  it,  to  obtain  the  business,  results  in  their  send- 
ing outside  the  city,  to  cattle  owners,  to  urge  them  by  dis- 
tinct and  various  inducements  to  send  their  cattle  to  one  of 
the  defendants  to  sell  for  them.  In  this  view  it  is  immaterial 
over  how  many  States  the  defendants  may  themselve  or  by 
their  agents  travel  in  order  to  thereby  secure  the  business. 
They  do  not  purchase  the  cattle  themselves;  they. do  not  trans- 
port them.  They  receive  them  at  Kansas  City,  and  the  com- 
plaint  made  is  in  regard  to  the  agreements  for  charges  for  the 


954 


m   UNITED   STATES   REPOBTS,  590. 


Opinion  of  the  Court 

services  at  that  point  in  selling  the  cattle  for  the  owner. 
Thus  everything  at  last  centres  at  the  market  at  Kansas  City, 
and  the  charges  are  for  services  there,  and  there  only,  per- 
formed. 

The  selling  of  an  article  at  its  destination,  which  has  been 
ient  from  another  State,  while  it  may  be  regarded  as  an 
interstate  sale  and  one  which  the  importer  was  entitled  to 
make,  yet  the  services  of  the  individual  employed  at  the  place 
where  the  article  is  sold  are  not  so  connected  with  the  subject 
sold  as  to  make  them  a  portion  of  interstate  commerce,  and  a 
[5911  combination  m  regard  to  the  amount  to  be  charged  for 
such  service  is  not,  therefore,  a  combination  in  restraint  of 
that  trade  or  commerce.  Granting  that  the  cattle  themselves, 
because  coming  frim  another  State,  are  articles  of  interstate 
commerce,  yet  it  does  not  therefore  follow  that  before  their 
sale  all  persons  performing  services  in  any  way  connected 
with  them  are  theiriselves  engaged  in  that  commerce,  or  that 
their  agreements  among  each  other  relative  to  the  compensa- 
tion to  be  charged  for  their  services  are  void  as  agreements 
made  in  restraint  of  interstate  trade.  The  commission  agent 
in  selling  the  cattle  for  their  owner  simply  aids  him  in  find- 
ing a  market ;  but  the  facilities  thus  afforded  the  owner  by 
the  agent  are  not  of  such  a  nature  as  to  thereby  make  that 
agent  an  individual  engaged  in  interstate  commerce,  nor  is 
his  agreement  with  others  engaged  in  the  same  business,  as 
to  the  terms  upon  which  they  would  provide  these  facilities, 
rendered  void  as  a  contract  in  restraint  of  that  commerce. 
Even  all  agreements  among  buyers  of  cattle  from  other 
States  are  not  necessarily  a  violation  of  the  act,  although 
such  agreements  may  undoubtedly  affect  that  commerce. 

The  charges  of  the  agent  on  account  of  his  service?  are 
nothing  more  than  charges  for  aids  or  facilities  furnished  the 
owner  whereby  his  object  may  be  the  more  easily  and  readily 
accomplished.  Charges  for  the  transportation  of  cattle  be- 
tween different  States  are  charges  for  doing  something  which 
is  one  of  the  forms  of  and  which  itself  constitutes  interstate 
trade  or  commerce,  while  charges  or  commissions  based  upon 
services  performed  for  the  owner  in  effecting  the  sale  of  the 
cattle  are  not  directly  connected  with,  as  forming  part  of,  in- 
terstate commerce,  although  the  cattle  may  have  come  from 


HOPKINS   V.   UNITED   STATES. 


955 


Opinion  of  the  Court. 

another  State.  Charges  for  services  of  this  nature  do  not 
immediately  touch  or  act  upon  nor  do  they  directly  affect  the 
subject  of  the  transportation.  Indirectly  and  as  an  incident, 
they  may  enhance  the  cost  to  the  owner  of  the  cattle  in  find- 
ing a  market,  or  they  may  add  to  the  price  paid  by  a  pur- 
chaser, but  they  are  not  charges  which  are  directly  laid  upon 
the  article  in  the  course  of  transportation,  and  which  are 
charges  upon  the  commerce  itself;  they  are  charges  for  the 
[592]  facilities  given  or  provided  the  owner  in  the  course  of 
the  movement  from  the  home  situs  of  the  article  to  the  place 
and  point  where  it  is  sold. 

The  contract  condemned  by  the  statute  is  one  whose  direct 
and  immediate  effect  is  a  restraint  upon  that  kind  of  trade  or 
commerce  which  is  interstate.  Charges  for  such  facilities  as 
we  have  already  mentioned  are  not  a  restraint  upon  that 
trade,  although  the  total  cost  of  marketing  a  subject  thereof 
may  be  thereby  increased.  Charges  for  facilities  furnished 
have  been  held  not  a  regulation  of  commerce,  even  when 
made  for  services  rendered  or  as  compensation  for  benefits 
conferred.  Sands  v.  Manistee  River  Improvement  Co,^  123 
U.  S.  288;  Monongahela  Navigation  Co.  v.  United  States, 
148  U.  S.  312,  329,  330;  Kentucky  c&  Indiana  Bridge  Com^ 
pany  v.  Louisville  d:c.  Railroad,  37  Fed.  Rep.  567. 

To  treat  as  condemned  by  the  act  all  agreements  under 
which,  as  a  result,  the  cost  of  conducting  an  interstate  com- 
mercial business  may  be  increased  would  enlarge  the  applica- 
tion of  the  act  far  beyond  the  fair  meaning  of  the  language 
used.  There  must  be  some  direct  and  immediate  effect  upon 
interstate  commerce  in  order  to  come  within  the  act.  The 
State  may  levy  a  tax  upon  the  earnings  of  a  commission  mer- 
chant which  were  realized  out  of  the  sales  of  property  be- 
longing to  non-residents,  and  such  a  tax  is  not  one  upon  in- 
terstate commerce  because  it  affects  it  only  incidently  and 
remotely  although  certainly.  Ficklen  v.  Shelby  County  Tax- 
ing District,  145  U.  S.  1.  Many  agreements  suggest  them- 
selves which  relate  only  to  facilities  furnished  commerce,  or 
else  touch  it  only  in  an  indirect  way,  while  possibly  enhanc- 
ing th^  cost  of  transacting  the  business,  and  which  at  the 
same  time  we  would  not  think  of  as  agreements  in  restraint  of 
interstate  trade  or  commerce.    They  are  agreements  which 


956 


Itl   UNITED   STATES  KEPORTS,  539. 


Opinion  of  tlie  Court 

in  their  effect  operate  in  furtherance  and  in  aid  of  conunerce 
by  providing  for  it  facilities,  conveniences,  privileges  or 
services,  but  which  do  hot  directly  relate  to  charges  for  ii% 
transportation,  nor  to  any  other  form  of  interstate  commerce. 
To  hold  all  such  agreements  void  would  in  our  judgment 
improperly  extend  the  act  to  matters  which  are  not  of  an 
Interstate  commercial  nature. 

[639  J  It  is  not  difficult  to  imagine  agreements  of  the  charac- 
ter above  indicated.  For  example,  cattle,  when  transported 
long  distances  by  rail,  require  rest,  food  and  water.  To  give 
them  these  accommodations  it  is  necessary  to  take  them  from 
the  car  and  put  them  in  pens  or  other  places  for  their  safe 
reception.  Would  an  agreement  among  the  landowners  along 
the  line  not  to  lease  their  lands  for  less  than  a  certain  sum  be 
a  contract  within  the  statute  as  being  in  restraint  of  inter- 
state trade  or  commerce  t  Would  it  be  such  a  contract  even  if 
the  lands,  or  some  of  them,  were  necessary  for  use  in  furnish- 
ing the  cattle  with  suitable  accommodations?  Would  an 
agreement  between  the  dealers  in  com  at  some  station  along 
the  line  of  the  road  not  to  sell  it  below  a  certain  price  be  cov- 
ered by  the  act,  because  the  cattle  must  have  corn  for  food  f 
Or  would  an  agreement  among  the  men  not  to  perform  the 
service  of  watering  the  cattle  for  less  than  a  certain  compen- 
sation come  within  the  restriction  of  the  statute?  Suppose 
the  railroad  company  which  transports  the  cattle  itself  fur- 
nishes the  facilities,  and  that  its  charges  for  transportation 
are  enhanced  because  of  an  agreement  among  the  landowners 
along  the  line  not  to  lease  their  lands  to  the  company  for  such 
purposes  for  less  than  a  named  sum,  could  it  be  successfully 
contended  that  the  agreement  of  the  landowners  among  them- 
selves would  be  a  violation  of  the  act  as  being  in  restraint  of 
interstate  trade  or  commerce?  Would  an  agreement  bstween 
builders  of  cattle  cars  not  to  build  them  under  a  certain  price 
be  void  because  the  effect  might  be  to  increase  the  price  of 
transportation  of  cattle  between  the  States  ?  Would  an  agree- 
ment among  dealers  in  horse  blankets  not  to  sell  them  for  less 
than  a  certain  price  be  open  to  the  charge  of  a  violation  of 
the  act  because  horse  blankets  are  necessary  to  put  on  horses 
to  be  sent  long  journeys  by  rail,  and  by  reason  of  the  agree- 
ment  the  expense  of  sending  the  horses  from  one  State  to  an- 


HOPKINS.t;.   UNITED  STATES. 
Opinion  of  the  Court 


957 


<ither  for  a  market  might  be  thereby  enhanced?  Would  an 
agreement  among  cattle  drivers  not  to  drive  the  cattle 
after  their  arrival  at  the  railroad  depot  at  their  place  of  desti- 
nation to  the  cattle  yards  where  sold,  for  less  than  a  minimum 
sum,  come  within  the  statute?  Would  an  agreement  among 
them-  [594]  selves  by  locomotive  engineers,  firemen  or  train- 
men engaged  in  the  service  of  an  interstate  railroad  not  to 
work  for  less  than  a  certain  named  compensation  be  illegal 
because  the  cost  of  transporting  interstate  freight  would  be 
thereby  enhanced?  Agreements  similar  to  these  might  be 
indefinitely  suggested. 

In  our  opinion  all  these  queries  should  be  answered  in  the 
negative.  The  indirect  effect  of  the  agreements  mentioned 
might  be  to  enhance  the  cost  of  marketing  the  cattle,  but  the 
agreements  themselves  would  not  necessarily  for  that  reason 
be  in  restraint  of  interstate  trade  or  commerce.  As  their 
effect  is  either  indirect  or  else  they  relate  to  charges  for  the 
use  of  facilities  furnished,  the  agreements  instanced  would  be 
valid  provided  the  charges  agreed  upon  were  reasonable.  The 
effect  upon  the  commerce  spoken  of  must  be  direct  and  proxi- 
mate. New  YorhyLake  E^ie  <&  Western  Railroad  v.  Penn- 
sylvania, 158  U.  S.  431,  439. 

An  agreement  may  in  a  variety  of  ways  affect  interstate 
commerce,  just  as  state  legislation  may,  and  yet,  like  it,  be 
entirely  valid,  because  the  interference  produced  by  the  agree- 
ment or  by  the  legislation  is  not  direct.  Sherlock  v.  Ailing^ 
93  U.  S.  99-103 ;  United  States  v.  E.  C,  Knight  Company,  156 
U.  S.  1,  16;  Pittsburg  <&  Southern  Coal  Co.  v.  Louisiana^ 
156  U.  S.  590,  597 ;  Transportation  Company  v.  Parkershurg, 
107  U.  S.  691 ;  Ficklen  v.  Shelby  County,  supra.  Reasonable 
charges  for  the  use  of  a  facility  for  the  transportation  of  in- 
terstate commerce  have  heretofore  been  regarded  as  valid  in 
this  court,  even  though  such  charges  might  necessarily  en- 
hance the  cost  of  doing  the  business.  Packet  Company  v. 
St  Louis,  100  U.  S.  423;  Packet  Company  v.  Catlettsburg^ 
105  U.  S.  559 ;  Transportation  Company  v.  Parkersburg,  107 
U.  S.  691;  Huse  v.  Glover,  119  U.  S.  543;  Ouachita  Packet 
Company  v.  Aiken,  121  U.  S.  444;  SL  Louis  v.  Western 
Union  Telegraph  Company,  148  U.  S.  92.  An  agreement 
among  the  owners  of  such  facilities,  to  cbar-^'*^.  not  less  than 


958 


111  UNITED  STATES  BEPOKTS,  695. 


Opinion  of  the  CJourt 

a  minimum  rate  for  their  use,  camiot  be  condemned  as  illegal 
under  the  act  of  Congress. 

The  fact  that  the  above  cited  cases  relate  to  tangible  prop- 
erty, the  use  of  which  was  charged  for,  does  not  alter  the 
1595]  reasoning  upon  which  the  decisions  were  placed.  The 
charges  were  held  valid  because  they  related  to  facilities  fur- 
nished in  aid  of  the  commerce  and  which  did  not  constitute  a 
regulation  thereof.  Facilities  may  consist  in  privileges  or 
conveniences  provided  and  made  use  of  or  in  services  ren- 
dered in  aid  of  commerce,  as  well  as  in  the  use  of  tangible 
property,  and  so  long  as  they  are  facilities  and  the  charges 
not  unreasonable  an  agreement  relating  to  their  amount  is 
not  invalid.  The  cattle  owner  has  no  constitutional  right 
to  the  services  of  the  commission  agent  to  aid  him  in  the  sale 
of  his  cattle  and  the  agent  has  the  right  to  say  upon  what 
tei-ms  he  will  render  them,  and  he  has  the  equal  right,  so  far 
as  the  act  of  Congress  is  concerned,  to  agree  with  others  in 
his  business  not  to  render  those  services  unless  for  a  certain 
charge.  The  services  are  no  part  of  the  commerce  in  the 
cattle. 

In  Brown  v.  Maryland^  12  Wheat.  419,  Chief  Justice  Mar- 
shall, while  maintaining  the  right  of  an  importer  to  sell  his 
article  in  the  original  package,  free  from  any  tax,  recognized 
the  distinction  between  the  importer  selling  the  article  him- 
self and  employing  an  auctioneer  to  do  it  for  him,  and  he 
said  that  in  the  latter  case  the  importer  could  not  object  to 
paying  for  such  services  as  for  any  other,  and  that  the  right 
to  sell  might  very  well  be  annexe4  to  importation  without 
annexing  to  it  also  the  privilege  of  using  auctioneers,  and 
thus  to  make  the  sale  in  a  peculiar  way.  In  such  case  a  tax 
upon  the  auctioneer's  license  would  be  valid. 

The  same  view  is  enforced  in  Emert  v.  Missouri^  156  U.  S. 
296. 

The  right  of  the  cattle  owners  themselves  to  sell  their  own 
cattle  is  not  affected  or  touched  by  the  agreement  in  question, 
while  the  privilege  of  having  their  cattle  sold  for  them  at 
the  market  place  frequented  by  defendants,  and  with  the 
aid  of  one  of  them,  is  a  privilege  which  they  are  charged 
for,  and  which  is  not  annexed  to  their  right  to  sell  their  own 
cattle. 


HOPKINS   V,   UNITED   STATES. 


969 


Opinion  of  tlie  Court 

It  is  possible  that  exorbitant  charges  for  the  use  of  these 
facilities  might  have  similar  effect  as  a  burden  on  commerce 
that  a  charge  upon  commerce  itself  might  have.  In  a  case 
[596]  like  that  the  remedy  would  probably  be  forthcoming. 
Transportation  Co.  v.  Parkersburg,  107  U.  S.  691.  As  was 
said  by  Mr.  Justice  Field  in  Sands  v.  Manistee  River  Im- 
provement Co.,  123  U.  S.  288,  294,  295,  "  should  there  be  any 
gross  injustice  in  the  rate  of  tolls  fixed,  it  would  not  in  our 
system  of  government,  remain  long  uncorrected." 

But  whether  the  charges  are  or  are  not  exorbitant  is  a  ques- 
tion primarily  of  local  law,  at  least  in  the  absence  of  any 
superior  or  paramount  law  providing  for  reasonable  charges. 
Transportation  Co,  v.  Parkershurg,  107  U.  S.  691.  This  case 
does  not  involve  that  question. 

If  charges  of  the  nature  described  do  not  amount  to  a  regu- 
lation of  interstate  trade  or  commerce  because  they  touch  it 
only  in  an  indirect  and  remote  way,  or  else  because  they  are 
in  the  nature  of  compensation  for  the  use  of  property  or 
privileges  as  a  mere  facility  for  that  commerce,  it  would  for 
a  like  reason  seem  clear  that  agreements  relating  to  the 
amounts  of  such  charges  among  those  who  furnish  the  privi- 
leges or  facilities  are  not  in  restraint  of  that  kind  of  trade. 
While  the  indirect  effect  of  the  agreements  may  be  to  en- 
hance the  expense  to  those  engaged  in  the  business,  yet  as  the 
agreements  are  in  regard  to  compensation  for  privileges 
accorded  for  services  rendered  as  a  facility  to  commerce  or 
trade,  they  are  not  illegal  as  a  restraint  thereon. 

The  facilities  or  privileges  offered  by  the  defendants  are 
apparent  and  valuable.  The  cattle  owner  has  the- use  of  a 
place  for  his  cattle  furnished  by  the  defendants  and  all  the 
facilities  arising  from  a  market  where  the  sales  and  purchases 
are  conducted  under  the  auspices  of  the  association  of  which 
the  defendants  are  members,  and  in  a  manner  the  least 
troublesome  to  the  owners  and  at  the  same  time  the  most 
expeditious  and  effective.  Each  of  these  defendants  has  the 
right  to  have  the  cattle  which  are  consigned  to  him  taken  to 
the  cattle  yards,  where,  by  virtue  of  the  arrangements  made 
by  defendants  with  the  owners  of  the  yards,  the  cattle  are 
placed  in  pens,  watered  and  fed,  if  necessary,  and  a  sale 
effected  at  the  earliest  moment.    It  is  these  facilities  and 


mf%M-f 


171    UNITED  STATES  REPORTS,  597. 
Opinion  of  tbe  Court 


services  which  are  paid  for  by  a  commission  on  the  sale 
effected  by  the  commission  men.  [597]  If,  as  is  claimed,  the 
commission  men  sometimes  own  the  cattle  they  sell,  then  the 
rales  do  not  apply,  for  they  relate  to  charges  made  for  sell- 
ing cattle  upon  commission  and  not  at  all  to  sales  of  cattle 
by  their  owners. 

Definitions  as  to  what  constitutes  interstate  commerce  are 
not  easily  given  so  that  they  shall  clearly  define  the  full 
meaning  of  the  term.  We  know  from  the  cases  decided  in 
this  court  that  it  is  a  term  of  very  large  significance.  It  com- 
prehends,  as  it  is  said,  intercouiS  forThe  ^rposes  of  trade  in 
any  and  all  its  forms,  including  transportation,  purchase,  sale 
and  exchange  of  commodities  between  the  citizens  of  different 
States,  and  the  power  to  regulate  it  embraces  all  the  instru- 
ments  by  which  such  commerce  may  be  conducted.  WeUon 
▼.  Missouri^  91  U.  S.  276;  Molile  County  v.  Kimball,  102 
U.  S.  691 ;  Gloucester  Ferry  Company  v.  Pennsylvania,  114 
U.  S.  196 ;  Hooper  v.  California,  155  U.  S.  648,  653 ;  United 
States  V.  E,  C.  Knight  Company,  156  U.  S.  1. 

But  in  all  the  cases  which  have  come  to  this  court  there  is 
not  one  which  has  denied  the  distinction  between  a  regulation 
which  directly  affects  and  embarrasses  interstate  trade  or 
commerce,  and  one  which  is  nothing  more  than  a  charge 
for  a  local  facility  provided  for  the  transaction  of  such 
commerce.  On  the  contrary,  the  cases  already  cited  show 
the  existence  of  the  distinction  and  the  validity  of  a  charge 
for  the  use  of  the  facility. 

The  services  of  members  of  the  different  stock  and  produce 
exchanges  throughout  the  country  in  effecting  sales  of  the 
articles  they  deal  in  are  of  a  similar  nature.  Members  of  the 
New  York  Stock  Exchange  buy  and  sell  shares  of  stock  of 
railroads  and  other  corporationsfand  the  property  represented 
by  such  shares  of  stock  is  situated  all  over  the  country.  Is  a 
broker  whose  principal  lives  outside  of  New  York  State,  and 
who  sends  him  the  shares  of  stock  or  the  bonds  of  a  corpora- 
tion created  and  doing  business  in  another  State,  for  sale, 
engaged  in  interstate  commerce?  If  he  is  employed  to  pur- 
chase stock  or  bonds  in  a  like  corporation  under  the  same 
circumstances,  is  he  then  engaged  in  the  business  of  interstate 
commerce?    It  may,  perhaps,  be  answered  that  stocks  or 


HOPKINS   V.   UNITED   STATES. 


961 


Opinion  of  the  Court 

[698]  bonds  are  not  commodities,  and  that  dealers  therein 
are  not  engaged  in  commerce.    Whether  it  is  an  answer  to 
the  question  need  not  be  considered,  for  we  wiU  take  the  case 
of  the  New  York  Produce  Exchange.     Is  a  member  of  that 
body  to  whom  a  cargo  of  grain  is  consigned  from  a  western 
State  to  be  sold  engaged  in  interstate  commerce  when  he  per- 
forms the  service  of  selling  the  article  upon  its  arrival  in  New 
York  and  transmitting  the  proceeds  of  the  sale  less  his  com- 
niissions?     Is  a  New  Orleans  cotton  broker  who  is  a  member 
of  the  Cotton  Exchange-  of  that  city,  and  who  receives  con- 
signments of  cotton  from  different  States  and  sells  them  on 
change  m  New  Orleans  and  accounts  to  his  consignors  for 
the  proceeds  of  such  sales  less  his  commission,  engaged  in 
interstate  commerce  ?     Is  the  character  of  the  business  altered 
in  either  case  by  the  fact  that  the  broker  has  advanced 
moneys  to  the  owner  of  the  article  and  taken  a  mortgage 
thereon  as  his  security?     We  understand  we  are  in  these 
queries  assuming  substantially  the  same  facts  as  those  which 
are  contained  in  the  case  before  us,  and  if  these  defendants 
are  engaged  in  interstate  commerce  because  of  their  services 
in  the  sale  of  cattle  which  may  come  from  other  States,  then 
the  same  must  be  said  -n  regard  to  the  members  of  the  other 
exchanges  above  referred  to.     We  think  it  would  be  an  en- 
en^rely  novel  view  of  the  situation  if  all  the  members  of  these 
different  exchanges  throughout  the  country  were  to  be  re- 
garded  as  engaged  in  interstate  commerce,  because  they  sell 
things  for  their  principals  which  come  from  States  different 
from  the  one  in  which  the  exchange  is  situated  and  the  sale 
made. 

The  theory  upon  which  we  think  the  by-law  or  agree- 
ment regarding  commissions  is  not  a  violation  of  the  statute 
operates  also  in  the  case  of  the  other  provisions  of  the  bv- 
laws.  The  answer  in  regard  to  all  objections  is,  the  defend- 
ants are  not  engaged  in  interstate  commerce. 

But  special  weight  is  attached  to  the  objection  raised  to 
section  11  of  rule  9  of  the  by-laws,  which  provides  against 
sending  prepaid  telegrams  as  set  forth  in  the  statement  of 
facts  herein  It  is  urged  that  the  purpose  of  this  section  is 
to  prevent  the  sending  of  prepaid  telegrams  by  the  defend- 

11808 — VOL  1 — 06  M 61 


962 


171  UNITED  STATES  BEPOKTS,  599. 


Opinion  of  tlie  C3ourt. 

ants  [5d9]  to  their  various  customers  in  the  different  States 
tributary  to  the  Kansas  City  market,  and  that  the  section  is 
a  part  of  the  contract  between  the  members  of  the  exchange, 
and  is  clearly  an  attempt  to  regulate  and  restrict  the  sending 
of  messages  by  telegraph  and  telephone  between  citizens  of 
various  States  and  Territories,  and  operates  upon  and  di- 
rectly affects  the  interstate  business  of  communicating  be- 
tween points  in  different  States  by  telegraph  or  telephone. 

An  agi-eement  among  the  defendants  to  abstain  from  tele- 
graphing in  certain  circumstances  and  for  certain  purposes 
is  so  clearly  not  an  attempt  to  regulate  or  restrain  the  gen- 
eral sending  of  telegrams  that  it  would  seem  unnecessary 
to  argue  the  question.  An  agreement  among  business  men 
not  to  send  telegrams  in  regard  to  their  busine-s  in  certain 
contingencies,  when  the  agreement  is  entered  into  only  for 
the  purpose  of  regulating  the  business  of  the  individuals,  is 
not  a  direct  attempt  to  atfect  the  business  of  the  telegraph 
company,  and  has  no  direct  effect  thereon.  Although  com- 
munication by  telegraph  may  be  commerce,  and  if  carried  on 
between  different  States  may  be  commerce  among  the  sev- 
eral States,  yet  an  agreement  or  by-law  of  the  nature  of 
the  one  under  consideration  is  not  a  burden  or  a  regulation  of 
or  a  duty  laid  upon  the  telegraph  company,  and  was  clearly 
not  entered  into  for  the  purpose  of  affecting  in  the  slightest 
degree  the  company  itself  or  its  transaction  of  interstate 
commerce. 

The  argument  of  counsel  in  behalf  of  the  United  States, 
that  becaiise  none  of  the  States  or  Territories  could  enact 
any  law  interfering  with  or  abridging  the  right  of  persons 
in  Kansas  or  ^lissouri  to  send  prepaid  telegrams  of  the  nat- 
ure in  question,  therefore  an  agreement  to  that  effect  entered 
into  between  business  men  as  a  means  towards  the  proper 
transaction  of  their  legitimate  business  would  be  void,  is,  as 
we  think,  entirely  unsound.  The  conclusion  does  not  follow 
from  the  factvS  stated.  The  statute  might  be  illegal  as  an 
improper  attempt  to  interfere  with  the  liberty  of  transacting 
legitimate  business  enjoyed  by  the  citizen,  while  the  agree- 
ment among  business  men  for  the  better  conduct  of  their  own 
[dOO]  business,  as  they  think,  to  refrain  from  using  the  tele- 
graph for  certain  purposes,  is  a  matter  purely  for  their  own 


HOPKINS  V.   UNITED  STATES. 


963 


Opinion  of  the  Ck)urt. 

consideration.  There  is  no  similarity  between  the  two  cases, 
and  the  principle  existing  in  the  one  is  wholly  absent  in  the' 
other.  The  private  agreement  does  not,  as  we  have  said, 
regulate  commerce  or  impose  any  impediment  upon  it  or  tax 
it.  Communication  by  telegraph  is  free  from  any  burden  so 
far  as  this  agi-eement  is  concerned,  and  no  restrictions  are 
placed  on  the  commerce  itself. 

The  act  of  Congi-ess  must  have  a  reasonable  construction  or 
else  there  would  scarcely  be  an  agieement  or  contract  among 
business  men  that  could  not  be  said  to  have,  indirectly  or  re- 
motely, some  bearing  upon  interstate  commerce,  and  possibly 
to  restrain  it.  We  have  no  idea  tliat  the  act  covers  or  was 
intended  to  cover  such  kinds  of  agreements. 

The  next  by-law  which  complainants  object  to  is  section  10 
of  the  same  rule  9,  which  prohibits  the  hiring  of  a  solicitor 
except  upon  a  stipulated  salary  not  contingent  upon  commis- 
sions earned,  and  which  provides  that  no  more  than  three 
solicitors  shall  be  employed  at  one  time  by  a  connnission  firm 
or  corporation. 

The  claim  is  that  these  solicitors  are  engaged  in  interstate 
commerce,  and  that  such  conmierce  must  be  free  from  any 
state  legislation  and  free  from  the  control  or  restraint  by  any 
person  or  combination  of  persons.  They  also  object  that  the 
rule  is  an  unlawful  inhibition  upon  the  privilege  possessed  by 
each  person  under  the  Constitution  to  make  lawful  contracts 
in  the  furtherance  of  his  business,  and  they  allege  that  in  this 
respect  these  members  have  surrendered  their  dominion  over 
their  own  business  and  permitted  the  exchange  to  establish  a 
species  of  regency,  and  that  the  by-law  in  regard  to  the  em- 
ployment of  solicitors  is  one  which  directly  affects  interstate 
commerce. 

McCall  V.  California,  136  U.  S.  104,  is  cited  for  the  propo- 
sition that  the  solicitors  employed  by  these  defendants  are 
engaged  in  interstate  commerce.  In  that  case  the  railroad 
company  was  itself  engaged  in  such  commerce,  and  its  agent 
in  California  was  taxed  by  reason  of  his  business  in  soliciting 
[601]  for  his  company  that  which  was  interstate  commerce. 
The  fact  that  he  did  not  sell  tickets  or  receive  or  pay  out 
money  on  account  of  it  was  not  regarded  as  material.  His 
principal  was  a  common  carrier,  engaged  in  interstate  com- 


964 


ni  UNITED  STATES  REPOBTS,  601. 


Opinion  of  the  Court 

merce,  and  he  was  engaged  in  that  commerce  because  he  was 
soliciting  for  the  transportation  of  passengers  by  that  com- 
pany through  the  different  States  in  Avhich  the  railroad  ran 
from  the  State  of  California.  In  the  case  before  us  the  de- 
fendants are  not  employed  in  inter-tate  commerce  but  are 
simply  engaged  in  the  performance  of  duties  or  services  relat- 
ing to  stock  upon  its  arrival  at  Kansas  City.  We  do  not 
think  it  can  be  properly  said  that  the  agents  of  the  defend- 
ants  whom  they  send  out  to  solicit  the  various  owners  of  stock 
to  consign  the  cattle  to  one  of  the  defendants  for  sale  are 
thereby  themselves  engaged  in  interstate  commerce.  They 
are  simply  soliciting  the  various  stock  owners  to  consign  the 
stock  owned  by  them  to  particular  defendants  at  Kansas 
City,  and  until  the  arrival  of  the  stock  at  that  point  and  the 
delivery  by  the  transportation  company  no  dutie-;  of  an  inter- 
state-commerce nature  arise  to  be  performed  by  the  defend- 
ants. As  the  business  they  do  is  not  interstate  connnerce,  the 
business  of  their  agents  in  soliciting  otliers  to  give  them  such 
business  is  not  itself  interstate  connnerce.  Not  being  en- 
gaged in  interstate  commerce,  the  agreement  of  the  defend- 
ants through  the  by-law  in  question,  restricting  ihe  number 
of  solicitors  to  three,  does  not  restrain  that  commerce,  and 
does  not  therefore  violate  the  act  of  Congress  under  dis- 
cussion. 

The  position  of  the  solicitors  is  entirely  different  from 
that  of  drummers  who  are  travelling  through  the  several 
States  for  the  purpose  of  getting  orders  for  the  purchase  of 
property.  It  was  said  in  Bobbins  v.  Shelby  County  Taxing 
District^  120  U.  S.  489,  that  the  negotiation  of  sales  of  goods 
which  are  in  another  State  for  the  purpose  of  introducing 
them  into  the  State  in  which  the  negotiation  is  made  is 
interstate  commerce. 

But  the  solicitors  for  these  defendants  have  no  property 
or  goods  for  sale,  and  their  only  duty  is  to  ask  or  induce 
those  who  own  the  property  to  agree  that  when  they  send  it 
to  IW2}  market  for  sale  they  will  consign  it  to  the  solici- 
tor's principal,  so  that  he  may  perform  such  services  as  may 
be  necessary  to  sell  the  stock  for  them  and  account  to  them 
for  the  proceeds  thereof.  Unlike  the  drummer  who  con- 
tracts  in  one  State  for  the  sale  of  goods  which  are  in  an- 


HOPKINS  V.  UNITED  STATES. 
Opinion  of  the  Court 


965 


other,  and  which  are  to  be  thereafter  delivered  in  the  State 
in  which  the  contract  is  made,  the  solicitor  in  this  case  has 
no  goods  or  samples  of  goods  and  negotiates  no  sales,  and 
merely  seeks  to  exact  a  promise  from  the  owner  of  property 
that  when  he  does  wish  to  sell  he  will  consign  to  and  sell 
the  property  through  the  solicitor's  principal.  There  is  no 
interstate  commerce  in  that  business. 

Hooper  v.  California,  155  U.  S.  648,  is  another  illustra- 
tion of  the  meaning  of  the  term  "  commerce,"  as  used  in  the 
Constitution  of  the  United  States.  In  that  case,  contracts 
of  marine  insurance  are  stated  not  to  appertain  to  interstate 
commerce,  and  cases  are  cited  upon  the  nature  of  the  con- 
tract of  insurance  generally  at  page  653  of  the  opinion. 

It  is  also  to  be  remarked  that  the  effect  of  the  agreement 
as  to  the  number  of  solicitors  to  be  employed  by  defendants 
can  only  be  remote  and  indirect  upon  interstate  commerce. 
The  number  of  solicitors  employed  has  no  direct  effect  upon 
the  number  of  cattle  transported  from  State  to  State.  The 
solicitors  do  not  solicit  transportation  of  the  cattle.  They  are 
not  in  the  interest  of  the  transportation  company,  and  the 
transportation  is  an  incident  only.  They  solicit  a  consign- 
ment of  cattle  to  their  principals,  so  that  the  latter  may  sell 
them  on  commission  and  thus  transact  their  local  business. 
The  transportation  would  take  place  any  way  and  the  cattle 
be  consigned  for  sale  by  some  one  of  the  defendants  or  by 
others  engaged  in  the  business.  It  is  not  a  matter  of  trans- 
portation but  one  of  agreement  as  to  who  shall  render  the 
services  of  selling  the  cattle  for  their  owner  at  the  place  of 
destination. 

We  say  nothing  against  the  constitutional  right  of  each 
one  of  the  defendants  and  each  person  doing  business  at  the 
Kansas  City  stock  yards  to  send  into  distant  States  and  Ter- 
ritories as  many  solicitors  as  the  business  of  each  will  war- 
rant. This  [603]  original  right  is  not  denied  or  questioned. 
But  cannot  the  citizen,  for  what  he  thinks  good  reason,  con- 
tract to  curtail  that  right?  To  say  that  a  State  would  not 
have  the  right  to  prohibit  a  defendant  from  employing  as 
many  solicitors  as  he  might  choose,  proves  nothing  in  regard 
to  the  right  of  individuals  to  agree  upon  that  subject  in  a 


966 


171   rXITED   STATES   REPORTS,  603. 


Opinion  of  tbe  Court. 

way  which  they  iiiav  think  the  most  conducive  to  their  own 
interests.  What  a  State  may  do  is  one  thing,  and  what 
parties  may  contract  voluntarily  to  do  among  themselves  is 
quite  another  thing. 

The  liberty  of  contract  as  referred  to  in  AUgeyer  v. 
Louisiana^  165  U.  S.  578,  is  the  liberty  of  the  individual  to 
be  free,  under  certain  circumstances,  from  the  restraint  of 
legislative  control  with  regard  to  all  his  contracts,  but  the 
case  has  no  reference  to  the  right  of  individuals  to  sometimes 
enter  into  those  voluntary  contracts  by  which  their  rights 
and  duties  may  properly  be  measured  and  defined  and  in 
many  cases  greatly  restrained  and  limited. 

We  agiee  with  the  court  below  in  thinking  there  is  not  the 
slightest  materiality  in  the  fact  that  the  state  line  runs 
through  the  stock  yards  in  question,  resulting  in  some  of  the 
pens  in  which  the  stock  may  be  confined  being  partly  in  the 
State  of  Kansas  and  partly  in  the  State  of  Missouri,  and  that 
sales  may  be  made  of  a  lot  of  stock  which  may  be  at  the 
time  partly  in  one  State  and  partly  in  the  other.  The  erec- 
tion of  the  building  and  the  putting  up  of  the  stock  pens 
upon  the  ground  through  which  the  state  line  ran  were  mat- 
ters of  no  moment  so  far  as  any  question  of  interstate  com- 
merce is  concerned.  The  character  of  the  business  done  is 
not  in  the  least  altered  by  these  immaterial  and  incidental 
facts. 

It  follows  from  what  has  been  said  that  the  complainants 
have  failed  to  show  the  defendants  guilty  of  any  violations 
of  the  act  of  Congress,  because  it  does  not  appear  that  the 
defendants  are  engaged  in  interstate  commerce,  or  that  any 
agreements  or  contracts  made  by  them  and  relating  to  the 
conduct  of  their  business  are  in  restraint  of  any  such  com- 
merce. 

Whether  they  refused  to  transact  business  which  is  not 
interstate  conunerce,  except  with  those  who  are  members  of 
the  exchange,  and  whether  such  refusal  is  justifiable  or  not, 
[0M]  are  questions  not  open  for  discussion  here.  As  de- 
fendants' actions  or  agreements  are  not  a  violation  of  the 
act  of  Congress,  the  complainants  have  failed  in  their  case^ 
and  the  order  for  the  injunction  must  be 


ANDERSON   V,   UNITED   STATES. 
Syllabus. 


967 


Reversed  and  the  case  remitted  to  the  Circuit  Court  of  the 
United  States  for  the  District  of  Kansas,  First  Division, 
with  directions  to  dismiss  the  bill  with  costs. 

Mr.  Justice  Harlan  dissented. 

Mr.  Justice  McKenna  took  no  part  in  the  decision  of 
this  case. 


[604]        ANDEESOX  v.  UNITED  STATES." 
certiorari  to  the  circuit  court  of  appeals  for  the  eighth 

CIRCUIT. 

No.  181.     Argued  February  25,  28,  1898. — Decided  October  24,  1898. 

[171  U.  S.,  604.] 

The  Traders'  Live  Stock  Exchange  was  an  unincorporated  association 
in  Kansas  City,  whose  members  bore  much  the  same  relation  to  it, 
and  through  it  carried  on  much  the  same  business  as  that  carried 
on  by  the  members  of  the  Kansas  City  Live  Stock  Exchange,  con- 
sidered and  passed  upon  in  Hopkins  v.  United  States,  just  decided. 
The  main  difference  was,  that  the  members  of  the  Traders'  Ex- 
change, defendants  in  the  present  proceedings,  were  themselves 
purchasers  of  cattle  on  the  market,  while  the  defendants  in  the 
former  case  were  commission  merchants  who  sold  cattle  upon 
commission  as  a  compensation  for  their  service.  The  articles  of 
association  of  the  Traders'  Exchange  contained  the  following  pre- 
amble: "We,  the  undersigned,  for  the  purpose  of  organizing  and 
maintaining  a  business  exchange,  not  for  pecuniai-y  profit  or  gain, 
but  to  promote  and  protect  all  interests  connected  with  the  buying 
fftid  selling  of  live  stock  at  the  Kansas  City  Stock  Yards,  and  to  cul- 
tivate courteous  and  manly  conduct  towards  each  other,  and  give 
dignity  and  responsibility  to  yard  traders,  have  associated  ourselves 
together  under  the  name  of  Traders'  Live  Stock  Exchange,  and  here- 
by agree,  each  with  the  other,  that  we  will  faithfully  observe  and  be 
bound  by  the  following  rules  and  by-laws  and  such  new  rules,  ad- 
ditions or  amendments  as  may  from  time  to  time  be  adopted  in 
conformity  with  the  provisions  thereof  from  the  date  of  organiza- 
tion." The  rules  objected  to  in  the  bill  in  this  case  were  the  fol- 
lowing :  "  Rule  10.  This  exchange  will  not  recognize  any  yard  trader 
unless  he  is  a  member  of  the  Traders'  Live  Stock  Exchange.  Rule 
11.  [605]  When  there  are  two  or  more  parties  trading  together 
as  partners,  they  shall  each  and  all  of  them  be  members  of  this 


o  Certified  to  the  Supreme  Court  by  the  Circuit  Court  of  Appeals, 
Eighth  Circuit  (82  Fed.,  998).  Memorandum  decision.  See  p.  742. 
Decision  in  the  Circuit  Court  not  reported. 


968 


171   UNITED   STATES  BEPOBTS^  605. 


J^ 


Syllabus. 

exchange.  Rule  12.  No  member  of  this  exchange  shall  employ 
any  person  to  buy  or  sell  cattle  unless  such  pei:son  hold  a  certificate 
of  membership  in  this  exchange.  Rule  13.  No  member  of  this  ex- 
change shall  be  allowed  to  pay  any  order  buyer  or  salesman  any 
sum  of  money  as  a  fee  for  buying  cattle  from  or  selling  cattle  to 
such  party."    UeU: 

(1)  That  this  court  is  not  called  upon  to  decide  whether  the  de- 

fendants are  or  are  not  engaged  in  interstate  commerce, 
because  If  it  be  conceded  they  are  so  engaged,  the  agreement 
as  evidenced  by  the  by-laws  is  not  one  in  restraint  of  that 
trade,  nor  is  there  any  combination  to  monopolize  or  attempt 
to  monopolize  such  trade  within  the  meaning  of  the  act ; 

(2)  That,  following  the  preceding  case,  in  order  to  come  within  the 

provisions  of  the  statute  the  direct  effect  of  an  agreement  or 
combination  must  be  in  restraint  of  that  trade  or  commerce 
which  is  among  the  several  States,  or  with  foreign  nations ; 

(3)  That   where  the   subject-matter   of   the   agreement   does   not 

directly  relate  to  and  act  upon  and  embrace  interstate  com- 
merce, and  where  the  undisputed  facts  clearly  show  that  the 
purpose  of  the  agreement  was  not  to  regulate,  obstruct  or 
restrain  that  commerce,  but  that  it  was  entered  into  with  the 
object  of  properly  and  fairly  regulating  the  transaction  of  the 
business  in  which  the  parties  to  the  agreement  were  engaged, 
such  agreement  will  be  upheld  as  not  within  the  statute, 
where  it  can  be  seen  that  the  character  and  terms  of  the 
agreement  are  well  calculated  to  attain  the  purpose  for  which 
it  was  formed,  and  where  the  effect  of  its  formation  and 
enforcement  upon  interstate  trade  or  commerce  is  in  any 
event  but  indirect  and  incidental,  and  not  its  purpose  or 
object ; 

(4)  That  the  rules  are  evidently  of  a  character  to  enforce  the 

purpose  and  object  of  the  exchange  as  set  forth  in  the  jji-e- 
amble,  and  that  for  such  purpose  they  are  reasonable  and 
fair,  and  that  they  can  possibly  affect  interstate  trade  or 
commerce  in  but  a  remote  way,  and  are  not  void  as  violations 
of  the  act  of  Congress.* 

[43  L.  ed.,  300.] » 

[An  agreement  among  persons  engaged  In  the  common  business,  as 
yard  trader,  of  buying  at  a  city  stock-yard  cattle  which  came  from 
different  states,  that  they  will  form  an  association  for  the  better 
conduct  of  their  busines.**,  and  that  they  will  not  transact  business 
with  other  yard  traders  who  are  not  members,  or  buy  cattle  from 


ANDEBSON   V.   UNITED  STATES. 
Statement  of  the  Case. 


969 


«The  foregoing  syllabus  copyrighted,  1898,  by  Banks  &  Bros. 

»  The  following  paragraphs  inclosed  in  brackets  comprise  the  sylla- 
bus to  this  case  in  the  U.  S.  Supreme  Court  Reports,  Book  43,  p. 
300.    Copyrighted,  1899,  by  The  Lawyers'  Co-Operative  Publishing  Co. 


those  who  also  sell  to  yard  traders  who  are  not  members  of  the 
association,  is  not  in  violation  of  the  act  of  July  2,  1890,  to  protect 
trade  and  commerce  against  unlawful  restraints  and  monopolies]. 

LA  rule  of  a  live-stock  exchange,  that  its  members  shall  not  recognize 
any  yard  trader  who  is  not  also  a  member  of  the  exchange,  is  not 
in  restraint  of,  or  an  attempt  to  monopolize,  trade,  where  the  ex- 
change does  not  Itself  do  any  business,  and  there  is  nothing  to  pre- 
vent all  yard  traders  from  being  members  of  the  exchange,  and  no 
one  is  hindered  from  having  access  to  the  yards  or  having  all  their 
facilities,  except  that  of  selling  to  members  of  the  exchange.] 

[Rules  to  enforce  the  purpose  and  object  of  such  exchange,  if  reason- 
able and  fair,  cannot,  except  remotely,  affect  interstate  trade  and 
commerce,  and  are  not  void  as  violations  of  the  act  of  July  2,  1890.] 

This  suit  is  somewhat  similar  to  the  Hopkins  suit^  just  de- 
cided, and  was  brought  by  the  United  States  against  the 
defendants  named,  who  were  citizens  and  residents  of  the 
Western  Division  of  the  Western  District  of  Missouri  and 
members  of  a  voluntary  unincorporated  association  known 
and  designated  as  the  Traders'  Live  Stock  Exchange,  the  suit 
being  brought  for  the  purpose  of  obtaining  a  decree  dissolv- 
ing the  exchange  and  enjoining  the  members  thereof  from 
entering  into  or  continuing  any  sort  of  combination  to  deprive 
any  people  engaged  in  shipping,  selling,  buying  and  handling 
[606]  live  stock  (received  from  other  States  and  from  the 
Territories,  intended  to  be  sold  at  the  Kansas  City  market), 
of  free  access  to  the  markets  at  Kansas  Citv,  and  to  the  same 
facilities  afforded  by  the  Kansas  City  stock  yards,  to  defend- 
ants and  their  associate  members  of  the  Traders'  Live  Stock 
Exchange. 

The  bill  was  filed  under  the  direction  of  the  Attorney 
General  of  the  United  States  by  the  United  States  District 
Attorney  for  the  Western  District  of  Missouri.  It  alleged  in 
substance  that  the  exchange  was  governed  by  a  board  of 
eight  directors,  who  carried  on  the  busings  thereof  with  the 
consent  and  approbation  of  the  defendants,  they  personally 
being  members  of  the  exchange.  It  then  made  the  same 
allegations  in  relation  to  the  stock  yards  being  partly  in 
Kansas  City,  Kansas,  and  partly  in  Kansas  City,  Missouri, 
that  are  contained  in  the  bill  in  the  Hopkins  case,  just  de- 
cided, and  also  as  to  the  sales  of  herds  or  droves  of  cattle 
which  were  at  the  time  of  the  sale  partly  in  one  State  and 


970 


171    UNITED   STATES   REPORTS,  606. 
StatemcBt  of  the  Case. 


partly  in  another.  It  is  further  alleged  that  the  Kansas  City 
stock  yards  are  a  public  market,  and,  next  to  the  market  at 
Chicago  in  the  State  of  Illinois,  the  largest  live  stock  market 
in  the  world,  and  vast  numbers  of  cattle,  hogs  and  other  live 
stock  are  received  annually  at  the  market,  shipped  from  vari- 
ous States  and  from  the  Territories,  and  are  sold  at  the  mar- 
ket to  buyers  who  reside  in  other  States  and  Territories,  and 
who  reship  the  stock;  that  the  stock  is  shipped  to  the  market 
under  contracts  by  which  the  shipper  is  permitted  to  unload 
the  stock  at  the  Kansas  City  stock  yards,  rest,  water  and  feed 
the  same,  and  i-»  accorded  the  privilege  of  selling  the  stock  on 
the  Kansas  City  market  if  the  prices  prevailing  at  the  time 
justify  the  sale,  and  many  head  of  such  stock  are  so  sold; 
that  prior  to  the  month  of  March,  1897,  as  alleged,  the  de- 
fendants herein  were  engaged  as  speculators  at  the  Kansas 
City  stock  yards,  and  were  buying  upon  the  market  and  re- 
selling upon  the  same  market  and  reshipping  to  other  markets 
in  other  States  the  cattle  so  received  at  the  Kansas  Citv  stock 
yards;  that  all  the  live  stock  shipped  to  and  received  at  these 
stock  yards  is  consigned  to  conunission  merchants,  who  take 
charge  of  the  stock  when  it  is  received,  and  who  sell  the  same 
[607]  to  packing  houses  located  at  Kansas  City,  Missouri, 
and  Kansas  City  in  the  State  of  Kansas,  and  they  sell  large 
numbers  of  cattle  to  the  defendants  herein. 

The  bill  then  alleges  that  the  defendants  "have  unlaw- 
fully entered  into  a  contract,  combination  and  conspiracy  in 
restraint  of  trade  and  conunerce  among  the  several  States 
and  with  foreign  nations,  in  this,  to  wit,  that  they  have  un- 
lawfully agreed,  contracted,  combined  and  conspired  to  pre- 
vent all  other  persons  than  members  of  the  Traders'  Live 
Stock  Exchange,  as  aforesaid,  from  buying  and  selling  cattle 
upon  the  Kansas  City  nuirket  at  the  Kansas  Citv  stock  vards 
as  aforesaid;  that  the  couimissitm,  firm,  i)erson,  partnership 
or  corporation  to  whom  said  cattle  are  consigned  at  Kansas 
City,  as  aforesaid,  is  not  i^ermitted  to  and  cannot  sell  or  dis- 
pose of  said  cattle  at  the  Kansas  City  market  as  aforesaid  to 
any  buyer  or  si>eculator  at  the  Kansas  City  stock  yards  unless 
said  buyer  or  speculator  is  a  member  of  the  Traders'  Live 
Stock  Exchange,  and  these  defendants  (and  each  of  them), 
unlawfully  and  oppressively  refuse  to  purchase  cattle,  or  in 


ANDERSON    V.    UNITED   STATES. 
Statement  of  tb^  Caso. 


971 


any  manner  negotiate  or  deal  with  or  buy  from  any  commis 
sion  merchant  who  shall  sell  or  purchase  cattle  from  any  specu- 
lator at  the  said  Kansas  City  stock  yards  who  is  not  a  member 
of  the  said  Traders'  Live  Stock  Exchange;  that  by  and 
through  the  unlawful  agreement,  combination  and  con 
spiracy  of  these  defendants  the  business  and  traffic  in  cattle 
at  the  said  Kansas  City  stock  yards  is  interfered  with, 
hindered  and  restrained,  thus  entailing  extra  expense  and 
loss  to  the  owner,  and  placing  an  obstruction  and  embargf)  on 
the  marketing  of  cattle  shipped  from  the  States  anc^  Terri- 
tories aforesaid  to  the  Kansas  City  stock  yards." 

It  is  further  alleged  that,  acting  in  pursuance  of  the  un- 
lawful combination  above  descril^ed,  the  board  of  directors  of 
the  exchange  have  imposed  fines  upon  certain  members  of  the 
exchange  "  who  had  traded  with  persons,  speculators  upon 
the  markets,  who  were  not  members  of  the  said  live  stock 
exchange,  and  within  three  months  last  past  have  imposed 
fines  upon  members  of  said  live  stock  exchange  who  have 
traded  with  commission  firms  at  said  Kansas  City  stock  yards 
[608]  which  said  commission  firms  had  bought  from,  and 
sold  cattle  to  speculators  upon  said  market  who  were  not 
members  of  the  said  live  stock  exchange." 

It  Avas  further  stated  in  the  bill  that  in  carrying  out  the 
purposes  and  aims  of  this  exchange  and  by  the  conduct  of  its 
members  engaged  in  this  alleged  combination,  conspiracy  and 
confederation,  they  were  acting  in  violation  of  the  laws  of 
the  United  States,  and  particularly  in  violation  of  section  1 
of  the  act  of  Congress,  approved  July  2,  1890,  c.  647,  entitled 
"An  act  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies,"  26  Stat.  209,  and  in  the  prosecu- 
tion of  this  unlawful  combination  they  had  agreed  to  hinder 
and  delay  the  business  of  buying  and  selling  cattle  at  the 
market  named  and  had  confederated  together  in  restraint  of 
trade  and  commerce  between  the  States,  and  that  tiie  object 
of  the  defendants  in  organizing  the  exchange  was  to  prevent 
the  sale  by  any  commission  merchant  at  the  Kansas  City 
stock  yards  of  any  cattle  to  any  person  who  might  be  a  bujer 
and  speculator  upon  the  market  who  is  not  a  member  of  the 
exchange. 

Accompanying  this  bill  were  several  affidavits  of  indi- 


972 


171   UNITED  STATES   KEPOETS,   608. 


Statement  of  the  Case. 

viduals  not  members  of  the  exchange,  but  who  were  tradeis  or 
speculators  at  the  stock  yards,  and  those  persons  said  that 
they  were  acquainted  with  the  association  in  question  and 
with  the  officers  and  members,  and  that  they  did  everything 
in  their  power  to  prevent  other  persons  who  were  not  members 
from  trading  at  the  stock  yards,  and  a  number  of  instances 
were  given  in  which  the  affiants  who  were  not  members  of 
the  exchange  were  endeavoring  to  do  business  with  commis- 
sion merchants  and  others  at  the  exchange  in  question,  when 
the  affi|nts  were  notified  that  they  could  not  continue  in  busi- 
ness unless  they  became  members  of  the  association,  and  where 
partnerships  were  engaged  in  business  where  one  partner  was 
a  member  of  the  association,  the  partner  who  was  a  member 
was  notified  that  he  could  not  continue  in  the  partnership 
business  with  the  other  unless  such  other  also  became  a  mem- 
ber; that  they  had  attempted  to  buy  cattle  from  a  great  many 
commission  firms  and  from  their  salesmen  at  these  stock  yards, 
f  609]  but  as  soon  as  they  went  into  the  yards  where  the  cat- 
tie  were  that  were  consigned  to  commission  firms  and  at- 
tempted to  purchase  them,  some  of  the  defendants  would 
appear,  call  the  salesman  aside,  and,  after  having  a  conversa- 
tion with  such  salasman,  the  latter  would  invariably  return 
to  affiant  and  say  that  he  could  not  price  cattle  to  the  affiant 
or  sell  the  same  to  him,  as  he  had  been  warned  by  members  of 
the  exchange  not  to  do  so ;  that  the  Traders'  Live  Stock  Ex- 
change would  not  permit  other  traders  and  speculators  upon 
the  market,  and  that  the  exchange  does  not  permit  commis- 
sion firms  at  the  stock  yards  to  sell  cattle  consigned  to  them  to 
any  trader  or  speculator  upon  the  market  who  is  not  a  mem- 
ber of  the  exchange,  and  that  commission  firms  had  been 
notified  by  the  officers  of  the  stock  exchange  not  to  sell  to 
speculators  on  the  market  who  were  not  members  of  the  Live 
Stock  Exchange,  and  where  commission  firms  sold  cattle  to 
traders  and  speculators  upon  the  market  who  were  not  mem- 
liers  of  the  exchange,  the  association  and  members  thereof 
would  boycott  the  commission  firm  making  such  sales,  and 
refuse  to  purchase  any  cattle  from  them,  and  refuse  to  go  into 
the  lots  and  look  at  cattle  which  had  been  consigned  to  them. 
Upon  the  bill  and  affidavits  application  was  made  to  the 
Circuit  Court  for  the  Western  Division  of  the  Western  Dis- 


ANDERSON    V.    UNITED   STATES. 
Statement  of  the  Case. 


973 


irict  of  Missouri  for  an  injunction  as  prayed  for  in  the  bill,  in 
opposition  to  which  application  various  affidavits  were  read 
on  the  part  of  the  defendants,  and  copies  of  the  articles  of 
association  and  by-laws  of  the  exchange  were  attached  to  the 
affidavit  of  the  president  of  the  exchange  and  read  on  the 
motion. 

Among  other  affidavits  was  that  of  the  general  superintend- 
ent of  the  stock  yards  company,  who  said  that  he  had  known 
the  organization,  the  Traders'  Live  Stock  Exchange,  since  its 
formation,  and  that  it  had  been  a  benefit  to  the  live  stock 
market  at  Kansas  City  by  furnishing  constant  buyers  for  cat- 
tle shipped  to  the  market,  no  matter  how  large  the  receipts  for 
any  one  day  or  series  of  days  might  be,  and  also  by  raising  the 
standard  of  business  integrity  among  its  members,  because  it 
required  every  member  to  comply  with  his  business  promises 
1 610]  and  verbal  agreements;  that  no  embargo  was  placed 
upon  any  one  purchasing  or  desiring  to  purchase  cattle  at  the 
yards,  but  a  free  and  open  market  was  oflPered  to  all  buyers 
and  sellers;  that  the  members  of  the  organization  were  en- 
gaged in  the  business  of  buying  and  selling  cattle  on  the  mar- 
ket, and  were  competitors  among  and  against  each  other; 
that  their  organization  did  not  restrain  or  interfere  with 
interstate  or  local  commerce,  and  the  members  did  not  monop- 
olize or  attempt  to  monopolize  the  business  of  buying  and 
selling  cattle  at  Kansas  City,  nor  did  the  organization  in  any 
manner  tend  to  limit  or  decrease  the  number  of  cattle  mar- 
keted at  Kansas  City,  but  that  it  had  the  contrary  effect;  that 
about  eighty-five  per  cent  of  the  total  receipts  for  the  years 
1895,  1896  and  1897  at  the  Kansas  City  market  of  cattle  had 
l:>een  billed  to  the  Kansas  City  market  alone  for  purposes  of 
sale  there. 

Other  affidavits  were  presented  to  the  same  effect.  Also 
the  affidavit  of  the  president  of  the  exchange.  The  president 
denied  all  allegations  in  relation  to  conspiracies  to  prevent 
other  persons  than  members  of  the  exchange  from  buying  and 
selling  cattle  upon  the  Kansas  City  market,  and  on  the  con- 
trary alleged  that  in  buying  cattle  the  defendants  were  in  com- 
petition with  each  other,  with  the  representative  buyers  of  all 
the  packing  houses,  with  the  representatives  of  the  various 
commission  merchants  who  buy  constantly  on  orders  from  a 


<I74 


ITL  UHITBD  STATES  BEPOBTS,  610. 
Statement  of  the  Case. 


distance,  and  with  others  who  buy  on  orders  on  their  own  ac- 
count, none  of  whom  are  members  of  the  exchange,  and  that 
with  these  various  classes  of  buyers  the  defendants  constantly 
deal,  and  that  in  selling  cattle  they  compete  with  each  other 
and  with  shippers  and  commission  merchants  offering  stock 
for  sale  on  the  market;  that  the  business  in  which  these 
defendants  are  engaged  is  that  of  buying  and  selling  cattle 
known  as  "  stockers  and  feeders:"  that  the  business  is  purely 
local  to  that  market;  that  the  defendants  do  not  deal  in 
quarantine  cattle  subject  to  government  inspection  or  cattle 
shipped  through  to  other  markets,  with  or  without  the  privi- 
lege of  the  Kansas  City  market,  nor  in  fat  cattle  sold  on  the 
local  market  shipped  to  other  States  or  to  foreign  countries; 
that  except  in  rare  instances  both  purchases  and  sales  made 
[011]  by  the  defendants  are  made  from  and  to  persons  not 
members  of  the  exchange,  and  that  in  the  judgment  of  the 
president  about  ninety-nine  per  cent  of  the  transactions  by 
the  defendants  are  with  persons  not  members  of  the  exchange. 
A  copy  of  the  articles  of  association  is  annexed  to  the  affi- 
davit, which  contains  the  following  preamble: 

'*We.  the  uiuli'isi^tHl,  for  rhe  piirpiis«.  ot  onmiuzlm:  and  maintain- 
ing a  business**  exehani^c.  n:)t  for  pwuniarj'  profit  or  gain,  but  to  pro- 
mote and  prottHt  all  inttMvsrs  ronuet-ted  with  the  buving  and  selling 
of  live  stock  at  the  Kaus.is  (  ity  Stwk  Yards,  and  to  cultivate  courte- 
ous and  raauly  londuet  tow.inls  each  t.tlier.  and  give  dignity  and  re- 
.siwnsibllity  to  yard  traders,  have  associattnl  oui-selves  together  under 
the  name  of  Traders'  Live  Stock  Exchange,  and  hcrebv  agree  each 
with  the  other,  that  we  will  faithfully  observe  and  be  bound  by  the  fol- 
lowiliir  rules  and  by-laws  and  snch  new  rules,  additions  or  amend- 
ments as  may  from  time  to  time  be  iidopttnl  in  conformity  with  the 
provisions  thereof  from  tlie  date  of  organization." 


Kules  10, 11, 12  and  IB  are  as  follows : 


"  Rule  10.  This  ex«'hauge  will  not  recognize  any  yard  trader  imless 
lie  is  a  member  of  the  Traders'  I,ive  Stork  Exchange. 

**Rule  11.  When  there  an*  tw<i  or  more  i)arties  trading  together  as 
IMirtners,  they  shall  each  and  all  of  tliem  be  members  of  this  exchange. 

•'Rule  12.  No  member  of  this  exchange  shall  employ  any  person  to 
buy  or  sell  cattle  unless  such  person  hold  a  certificate  of  membershiD 
in  this  exchange. 

"  Rule  13.  No  meml»er  t.f  this  exchange  shall  be  allowed  to  pay  any 
order  buyer  or  salesman  any  sum  of  money  as  a  fee  for  buying  cattle 
fmm  or  selling  cattle  to  such  party."  ' 

These  are  the  rules  which  are  specially  obnoxious  to  the 
complaints,  and  are  alleged  to  be  in  their  effect  in  violation 
of  the  Federal  statute  above  mentioned. 


ANDERSON    V.    UNITED   STATES.  975 

Opinion  of  the  Court 

Mr,  R.  E.  Ball  for  Anderson  and  others.    Mr,  I.  P.  Ryland 
and  Mr.  John  Z.  Peak  were  on  his  brief. 

Mr,  John  R.  Walker  for  the  United  States.     Mr.  Solicitor 
General  was  on  his  brief. 

[612]  Mr.  Justice  Peckham,  after  stating  the  case,  de- 
livered the  opinion  of  the  court. 

There  is  really  no  dispute  in  regard  to  the  facts  in  the  case. 
Although  the  bill  contains  various  allegations  in  regard  to 
conspiracies,  agreements  and  combinations  in  restraint  of 
trade  and  in  violation  of  the  Federal  statute,  yet  there  is 
no  evidence  of  any  act  on  the  part  of  the  defendants  pre- 
venting access  to  the  yards  or  preventing  purchases  and  sales 
of  cattle  by  any  one,  other  than  as  such  sales  may  be  pre- 
vented by  the  mere  refusal  on  the  part  of  the  defendants  as 
"  yard  traders  "  to  do  business  with  those  who  are  also  yard 
traders,  but  are  not  members  of  the  exchange,  or  with  commis- 
sion merchants  where  such  commission  merchants  themselves 
do  business  with  yard  traders  who  are  not  meinlx?rs  of  the  ex- 
change. In  other  words,  there  is  no  evidence  and  really  no 
charge  against  the  defendants  that  they  have  done  anything 
other  than  to  form  this  exchange  and  adopt  and  enforce  the 
rules  mentioned  above,  and  the  question  is  whether  by  their 
adoption  and  by  peacefully  carrying  them  out  without  threats 
and  without  violence,  but  by  the  mere  refusal  to  do  business 
with  those  who  will  not  respect  their  rules,  there  is  a  viola- 
tion of  the  Federal  statute. 

This  case  differs  from  that  of  llopkhw  v.  United  States, 
supra,  in  the  fact  that  these  defendants  are  themselves  pur- 
chasers of  cattle  on  the  market,  while  the  defendants  in  the 
Hopkins  case  were  only  commission  merchants  who  sold  the 
cattle  upon  commission  as  a  compensation  for  their  services. 

Counsel  for  the  Government  assert  that  any  agreement  or 
combination  among  buyers  of  cattle  coming  from  other 
States,  of  the  nature  of  the  by-laws  in  question,  is  an  agree- 
ment or  combination  in  restraint  of  interstate  trade  or  com- 
merce. 

The  facts  first  set  forth  in  the  complainants'  bill  upon 
which  to  base  the  claim  that  the  business  of  defendants  is  in- 


976 


171  UNITED   STATES  KEPOBTS,  613. 
Opinion  of  tlie  CJourt 


terstate  commerce,  we  have  already  decided  in  the  Hopkins 
ease  to  be  immaterial.  The  particular  situation  of  the  yards, 
partly  in  Kansas  and  partly  in  Missouri,  we  there  held  was  a 
fact  without  any  weight,  and  one  which  did  not  make  busi- 
ness inter-  [613]  state  commerce  which  otherwise  would  not 
partake  of  that  character. 

There  remain  in  the  bill  of  the  complainants  the  allega- 
tions that  the  cattle  come  from  various  States  and  are  placed 
on  sale  at  these  stock  yards  which  form  the  only  available 
market  for  many  miles  around,  and  that  they  are  sold  by  the 
commission  merchants  and  are  bought  in  large  numbers  by 
the  defendants  who  have  entered  into  what  the  complain- 
ants allege  to  be  a  contract,  combination  and  conspiracy  in 
restraint  of  trade  and  commerce  among  the  several  States, 
which  contract,  etc.,  it  is  alleged  is  carried  out  by  defendants 
unlawfully  and  oppressively  refusing  to  purchase  cattle  from 
a  commission  merchant  who  sells  or  purchases  cattle  from 
any  speculator  (yard  trader)  who  is  not  a  member  of  the 
exchange ;  and  it  is  further  alleged  that  by  these  means  the 
traffic  in  cattle  at  the  Kansas  City  stock  yards  is  interfered 
with,  hindered  and  restrained,  and  extra  expense  and  loss  to 
the  owner  incurred,  and  that  thereby  the  defendants  have 
placed  an  obstruction  and  embargo  on  the  marketing  of 
cattle  shipped  from  other  States.  All  these  results  are  al- 
leged to  flow  from  the  agreement  among  the  defendants  as 
contained  in  the  by-laws  of  their  association,  particularly 
those  numbered  ten,  eleven,  twelve  and  thirteen,  copies  of 
which  are  set  forth  in  the  statement  of  facts  herein. 

There  is  no  evidence  that  these  defendants  have  in  any 
manner  other  than  by  the  rules  above  mentioned  hindered  or 
impeded  others  in  shipping,  trading  or  selling  their  stock,  or 
that  they  have  in  any  way  interfered  with  the  freedom  of 
access  to  the  stock  yards  of  any  and  all  other  traders  and  pur- 
chasers, or  hindered  their  obtaining  the  same  facilities  which 
were  therein  afforded  by  the  stock  yards  company  to  the 
defendants  as  members  of  the  exchange,  and  we  think  the 
evidence  does  not  tend  to  show  that  the  above  results  have 
flowed  from  the  adoption  and  enforcement  of  the  rules  and 
regulations  referred  to. 

In  regard  to  rule  10,  the  question  is  whether,  without  a 


ANDERSON    V.   LTisriTED   STATES. 
Opinion  of  the  Court. 


977 


Violation  of  the  act  of  Congress,  persons  who  are  engaged  in 
the  common  business  as  yard  traders  of  buying  cattle  at  the 
[614]  Kansas  City  stock  yards,  which  come  from  different 
States,  may  agree  among  themselves  that  they  will  form  an 
association  for  the  better  conduct  of  their  business,  and  that 
they  will  not  transact  business  with  other  yard  traders  who 
are  not  members,  nor  will  they  buy  cattle  from  those  who  also 
sell  to  yard  traders  who  are  not  members  of  the  association. 
It  will  be  remembered  that  the  association  does  no  business 
Itself.     Those  who  are  members  thereof  compete  among  them- 
selves and  with  others  who  arc  not  members,  for  the  purchase 
of  the  cattle,  while  the  association  itself  has  nothing  whatever 
to  do  with  transportation  nor  with  fixing  the  prices  for  which 
the  cattle  may  be  purchased  or  thereafter  sold.     Any  yard 
trader  can  become  a  member  of  the  association  upon  comply- 
mg  with  its  conditions  of  membership,  and  mav  remain  such 
as  long  as  he  comports  himself  in  accordance  with  its  laws 
A  lessening  of  the  amount  of  the  trade  is  neither  the  neces- 
sary nor  direct  effect  of  its  formation,  and  in  truth  the 
amount  of  that  trade  has  greatly  increased  since  the  associa- 
tion was  formed,  and  there  is  not  the  slightest  evidence  that 
the  market  prices  of  cattle  have  been  lowered  by  reason  of  its 
existence.     There  is  no  feature  of  monopolv  in  the  whole 
transaction. 

^^  The  defendants  are  engaged  in  buying  what  are  called 
stockers  and  feeders;"  being  cattle  not  intended  for  any 
other  market,  and  the  demand  for  which  is  purely  local 
They  have  arrived  at  their  final  destination  when  offered  for 
sale,  and  there  is  free  and  full  competition  for  their  purchase 
between  all  the  members  of  the  exchange,  as  well  as  between 
them  and  all  buyers  not  members  thereof,  who  are  not  also 
yard  traders.  With  the  latter  the  defendants  will  not  com- 
pete, nor  will  they  buy  of  the  commission  men  if  the  latter 
continue  to  sell  cattle  to  such  yard  traders. 

Have  the  defendants  the  right  to  agree  to  conduct  their 
own  private  business  in  this  way? 

Whether  there  is  any  violation  of  the  act  of  Congress  by  the 
adoption  and  enforcement  of  the  other  rules  of  the  associa- 
tion, above  referred  to,  will  be  considered  hereafter. 
11808— VOL  1—06  M 62 


978 


ItL  UNITED   STATES  KEPORTS,  615. 


Opinion  of  tlie  Court 

It  is  first  contended  on  the  part  of  the  appellants  that  they 
[111 5]  are  not  engaged  in  interstate  commerce  or  trade,  and 
that  therefore  their  agreement  is  not  a  viohition  of  the  act. 
They  urge  that  the  cattle,  by  being  taken  from  the  cars  in 
which  they  were  transported  and  placed  in  the  various  pens 
hired  bv  commission  merchants  at  the  cattle  yards  of  Kansas 
City,  and  there  set  up  for  sale,  have  thereby  been  conmiingled 
with  the  general  mass  of  other  property  in  the  State,  and 
that  their  interstate  commercial  character  has  ceased  within 
the  decisions  of  this  court  in  Brown  v.  Hoiffiton^  114  U.  S. 
622,  and  Pittsht/rg  and  Soitthcrn  Coal  Co,  v.  Bates,  15C  U.  S. 

On  the  other  hand,  it  is  answered  that  the  cases  cited  in- 
Tolved  nothing  but  the  general  power  of  the  State  to  tax  all 
property  found  within  its  limits,  by  virtue  of  general  laws 
providing  for  such  taxation,  where  no  tax  is  levied  upon  the 
article  or  discrimination  made  against  it  by  reason  of  the 
fact  that  it  has  come  from  another  State,  and  it- is  main- 
tained that  the  agreement  in  question  acts  directly  upon  the 
subject  of  interstate  commerce  and  adds  a  restraint  to  it 
which  is  unlawful  under  the  provisions  of  the  statute. 

In  the  view  we  take  of  this  case  we  are  not  called  upon  to 
decide  whether  the  defendants  are  or  are  not  engaged  in  in- 
terstate commerce,  because  if  it  be  conceded  they  are  so  en- 
gaged, the  agreement  as  evidenced  by  the  by-laws  is  not  one 
in  restraint  of  that  trade,  nor  is  there  any  combination  to 
monopolize  or  attempt  to  monopolize  such  trade  within  the 
meaning  of  the  act. 

It  has  already  been  stated  in  the  Hopkins  case,  above  men- 
tioned, that  in  order  to  come  within  the  provisions  of  the 
statute  the  direct  effect  of  an  agreement  or  combination 
must  be  in  restraint  of  that  trade  or  commerce  which  is 
among  the  several  States,  or  with  foreign  nations.  Where 
the  subject-matter  of  the  agreement  does  not  directly  relate 
to  and  act  upon  and  embrace  interstate  commerce,  and 
where  the  undisputed  facts  clearly  show  that  the  purpose 
of  the  agreement  was  not  to  regulate,  obstruct  or  restrain 
that  commerce,  but  that  it  was  entered  into  with  the  object 
of  properly  and  fairly  regulating  the  transaction  of  the  busi- 
iiess  in  which  the  parties  to  the  agreement  were  engaged, 


ANDERSON   V.   UNITED   STATES. 


979 


Opinion  of  tlie  Court 
such  agreement  will  be  upheld  as  [616]  not  within  the  stat- 
ute, where  it  can  be  seen  that  the  character  and  terms  of  the 
agreement  are  well  calculated    to  attain    the    purpose  for 
which  it  was  formed,  and  where  the  effect  of  its  formation 
and  enforcement  upon  interstate  trade  or  commerce  is  in  any 
event  but  indirect  and  incidental,  and  not  its  purpose  or  ob- 
ject.   As  is  said  in  Smith  v.  Alabama,  124  U.  S.  465,  473; 
"  There  are  many  cases,  however,  where  the  acknowledged 
powers  of  a  State  may  be  exerted"  and  applied  in  such  a 
manner  as  to  affect  foreign  or  interstate  commerce  without 
being  intended  to  operate  as  commercial  regulations."    The 
same  is  true  as  to  certain  kinds  of  agreements  entered  into 
between  persons  engaged  in  the  same  business  for  the  direct 
and  bona  fide  purpose  of  properly  and  reasonably  regulat- 
ing the  conduct  of  their  business  among  themselves  and  with 
the  public.     If  an  agreement  of  that  nature,  while  apt  and 
proper  for  the  purpose    thus    intended,    should    possibly, 
though  only  indirectly  and  unintentionally,  affect  interstate 
trade  or  commerce,  in  that  event  we  think  the  agreement 
would  be  good.     Otherwise,  there  is  scarcely  any  agreement 
among  men  which  has  interstate  or  foreign  commerce  for 
its  subject  that  may  not  remotely  be  said  to,  in  some  ob- 
scure way,  affect  that  commerce  and  to  be  therefore  void 
We  think,  within  the  plain  and  obvious  construction  to  be 
placed  upon  the  act,  and  following  the  rules  in  this  regard 
already  laid  down  in  the  cases  heretofore  decided  in  this 
court,  we  must  hold  the  agreement  under  consideration  in 
tins  suit  to  be  valid. 

From  very  early  times  it  has  been  the  custom  for  men  en- 
gaged in  the  occupation  of  buying  and  selling  articles  of  a 
similar  nature  at  any  particular  place  to  associate  them- 
selves together.  The  object  of  the  association  has  in  manv 
cases  l^en  to  provide  for  the  ready  transaction  of  the  busi- 
ness of  the  associates  by  obtaining  a  general  headquarters 
for  Its  conduct,  and  thus  to  ensure  a  quick  and  certain  mar- 
ket for  the  sale  or  purchase  of  the  article  dealt  in.  Another 
purpose  has  been  to  provide  a  standard  of  business  inteffritv 
among  the  members  by  adopting  rules  for  just  and  faiV 
dealing  among  them  and  enforcing  the  same  by  penalties 
for  their  violation.    The  agreements  have  been  voluntary 


980 


171  UNITED   STATES  KEPORTS;  611. 


Opinion  of  the  Court. 

and  the  1^17]  penalties  have  betni  enforced  under  the  super- 
vision   and    by  members    of    the    association.      The  pre- 
amble adopted  by  the  association  in  this  case  shows  the 
ostensible  purpose  of  its  formation.     It  was  not  formed  for 
pecuniary  profits,  and  a  careful  perusal  of  the  whole  agree- 
ment fails,  as  we  think,  to  show  that  its  purpose  was  other 
than  as  stated  in  the  preamble.    In  other  words,  we  think 
that  the  rules  adopted  do  not  contradict  the  expressed  pur- 
pose of  the  preamble,  and  that  the  result  naturally  to  be  ex- 
pected from  an  enforcement  of  the  rules  would  not  directly, 
if  at  all,  aifect  interstate  trade  or  commerce.    The  agree- 
ment now  under  discussion  differs  radically  from  those  of 
United  S fates  v.  JelMeo  Moitntain  Coal  db  Coke  Co.,  46  Fed. 
Rep.  482;    United  States  v.  Coal  Dealers  Association  of 
California.  85  Fed.  Rep.  252,  and  United  States  v.  Addyston 
Pipe  di  Steel  Co.,  85  Fed.  Rep.  271.     The  agreement  in  all 
of  these  cases  provided  for  fixing  the  prices  of  the  articles 
dealt  in  by  the  different  companies,  being  in  one  case  iron 
pipe  for  gas,  water,  sewer  and  other  purposes,  and  coal  in 
the  other  two  cases.    If  it  were  conceded  that  these  cases 
were  well  decided,  thev  differ  so  materiallv  and  radicallv  in 
their  nature  and  purpose  from  the  case  under  consideration, 
that  thev  form  no  basis  for  its  decision.     This  association 
does  not  meddle  with  prices  and  itself  does  no  business.    In 
refusing  to  recognize  any  yard  trader  who  is  not  a  member 
of  the  exchange,  we  see  no  purpose  of  thereby  affecting  or 
in  any  manner  restraining  interstate  commerce,  which,  if 
affected  at  all,  can  only  be  in  a  very  indirect  and  remote 
manner.    The  rule  has  no  direct  tendency  to  diminish  or  in 
any  way  impede  or  restrain  interstate  commerce  in  the  cat- 
tle dealt  in  bv  defendants.    There  is  no  tendencv  as  a  result 
of  the  rule,  directly  or  indirectly,  to  restrict  the  competition 
among  defendants  for  the  class  of  cattle  dealt  in  by  them. 
Those  who  are  selling  the  cattle  have  the  market  composed 
of  defendants,  and  also  composed  of  the  representative  buy- 
ers of  all  the  packing  housas  at  Kansas  City,  and  also  of  the 
various  commission  merchants  who  are  constantly  buying  on 
orders  and  of  those  who  are  buying  on  their  own  account. 
This  makes  a  large  competition  wholly  outside  of  the  de- 
fendants.   The  owner  of  [618]  cattle  for  .sale  is,  therefore, 


ANDERSON    V.    UNITED   STATES. 


981 


Opinion  of  the  Court. 

furnished  with  a  market  at  which  the  competition  of  buyers 
has  a  broad  effect.  All  yard  traders  have  the  opportunity 
of  becoming  members  of  the  exchange,  and  to  thus  obtain  ail 
the  advantages  thereof. 

The  design  of  the  defendants  evidently  is  to  bring  all  the 
yard  traders  into  the  association  as  members,  so  that  they 
may  become  subject  to  its  jurisdiction  and  be  compelled  by 
its  rules  and  regulations  to  transact  business  in  the  honest 
and   straightforward  manner  provided   for  by  them.       If 
while  enforcing  the  rules  those  members  who  use  improi^er 
methods  or  who  fail  to  conduct  their  business  transactions 
fairly  and  honestly  are  disciplined  and  expelled,  and  there- 
by the  number  of  members  is  reduced,  and  to  that  extent 
the  number  of  competitors  limited,  yet  all  this  is  done,  not 
with  the  intent  or  purpose  of  affecting  in  the  slightest  de- 
gree interstate  trade  or  commerce,  and  such  trade  or  com- 
merce can  be  affected  thereby  only  most  remotely  and  indi- 
rectly, and  if,  for  the  purpose  of  compelling  this  membership, 
the  association  refuse  business  relations  with  those  commis- 
sion merchants  who  insist  upon  buying  from  or  selling  to 
yard  traders  who  are  not  members  of  the  association,  we  see 
nothing  that  can  be  said  to  affect  the  trade  or  commerce  in 
question  other  than  in  the  most  roundabout  and  indirect 
manner.     The  agreement  relates  to  the  action  of  the  asso- 
ciates themselves,  and  it  places  in  effect  no  tax  upon  any  in- 
strument or  subject  of  commerce;   it  exacts  no  license  from 
parties  engaged  in  the  commercial  pursuits,  and  prescribes 
no  condition  in  accordance  with  which  commerce  in  particu- 
lar articles  or  between  particular  places  is  required  to  be  con- 
ducted.   Sherlock  v.  Ailing,  93  U.  S.  99;  Smith  v.  Alabama, 
124  U.  S.  465,  473 ;  PiUslurg  and  Southern  Coal  Company 
V.  Louisiana,  156  U.  S.  590,  598. 

If  for  the  purpose  of  enlarging  the  membership  of  the  ex- 
change, and  of  thus  procuring  the  transaction  of  their  busi- 
ness upon  a  proper  and  fair  basis  by  all  who  are  engaged 
therein,  the  defendants  refuse  to  do  business  with  those  pom- 
mission  men  who  sell  to  or  purchase  from  yard  traders  who 
are  not  members  of  the  exchange,  the  possible  effect  of  such  a 
course  [619]  of  conduct  upon  interstate  commerce  is  quite 
remote,  not  intended  and  too  small  to  be  taken  into  account 


982 


m  UNITED  STATES  KEP0BTS,  619. 
Opinion  of  the  Court. 


The  agreement  lacks,  too,  every  ingredient  of  a  monopoly. 
Every  one  can  become  a  member  of  the  association,  and  the 
natural  desire  of  each  member  to  do  as  much  business  as  he 
could  would  not  be  in  the  least  diminished  bv  reason  of  mem- 
bership,  while  the  business  done  would  still  be  the  individual 
and  private  business  of  each  member,  and  each  would  be  in 
direct  and  immediate  competition  with  each  and  all  of  the 
other  members.  If  all  engaged  in  the  business  were  to  be- 
come members  of  the  association,  yet,  as  the  association  itself 
does  no  business,  it  can  and  does  monopolize  none.  The 
amount  and  value  of  interstate  trade  is  not  at  all  directly 
affected  by  such  membership;  the  competition  among  the 
members  and  with  others  who  are  seeking  purchasers  would 
be  as  large  as  it  would  otherwise  have  been,  and  the  only  re- 
sult of  the  agreement  would  be  that  no  yard  traders  would 
remain  who  were  not  members  of  the  association.  It  has  no 
tendency,  so  far  as  can  be  gathered  from  its  object  or  from 
the  language  of  its  rules  and  regulations,  to  limit  the  extent 
of  the  demand  for  cattle  or  to  limit  the  number  of  cattle 
marketed  or  to  limit  or  reduce  their  price  or  to  place  any  im- 
pediment or  obstacle  in  the  course  of  the  commercial  stream 
which  flows  into  the  Kansas  City  cattle  market.  While  in 
case  all  the  yard  traders  are  not  induced  to  become  members 
of  the  association,  and  those  who  are  such  members  refuse  to 
recognize  the  others  in  business,  we  can  see  no  such  direct, 
necessary  or  natural  connection  between  that  fact  and  the 
restraint  of  interstate  commerce  as  to  render  the  agreement 
not  to  recognize  them  void  for  that  reason.  A  claim  that 
such  refusal  may  therebv  lessen  the  number  of  actual  traders 
on  the  market,  and  thus  possibly  reduce  the  demand  for  and 
the  prices  of  the  cattle  there  set  up  for  sale,  and  so  affect 
interstate  trade,  is  entirely  too  remote  and  fanciful  to  be 
accepted  as  valid. 

This  case  is  unlike  that  of  Hopkins  v.  Oxley  Stave  Com- 
panyj  83  Fed.  Kep.  912,  to  which  our  attention  has  been 
called.  The  case  cited  was  decided  without  reference  to  the 
act  of  Con-  [630]  gress  upon  which  alone  the  case  at  bar  is 
prosecuted,  and  the  agreement  was  held  void  at  common  law 
as  a  conspiracy  to  wrongfully  deprive  the  plaintiff  of  its 
right  to  manage  its  business  according  to  the  dictates  of  its 


CRAVENS  V,    CARTER-CEUME   CO. 
Syllabus. 


983 


own  judgment.  It  was  also  said  that  the  fact  could  not  be 
overlooked  that  another  object  of  the  conspiracy  was  to 
deprive  the  public  at  large  of  the  benefits  to  be  derived  from  a 
labor-saving  machine  which  seemed  to  the  court  to  be  one  of 
great  utility.  No  question  as  to  interstate  commerce  arose 
and  none  was  decided. 

From  what  has  already  been  said  regarding  rule  10,  it 
would  seem  to  follow  that  the  other  rules  (11,  12  and  13)  are 
of  equal  validity  as  rule  10,  and  for  the  same  reasons.  The 
rules  are  evidently  of  a  character  to  enforce  the  purpose  and 
object  of  the  exchange  as  set  forth  in  the  preamble,  and  we 
think  that  for  such  purpose  they  are  reasonable  and  fair. 
They  can  possibly  affect  interstate  trade  or  commerce  in  but 
a  remote  way,  and  are  not  void  as  violations  of  the  act  of 
Congress. 

We  are  of  opinion  therefore  that  the  order  in  this  case 
should  he  reversed  and  the  case  remanded  to  the  Circuit 
Court  of  the  United  States  for  the  Western  Division  of 
the  Western  District  of  Missouri  with  directions  to  dis- 
miss the  complainants'*  hill  with  costs, 

Mr.  Justice  Harlan  dissented. 

Mr.  Justice  McKenna  took  no  part  in  the  decision  of  this 
case. 


1479]       CRAVENS  v,  CARTER-CRUME  CO. 

(Circuit  Court  of  Appeals,  Sixth  Circuit.    March  7,  1899.) 

[92  Fed.,  479.] 

Tbiai^Objections  to  Evidence— Sufficiency.— Error  cannot  be  as- 
signed upon  the  action  of  the  court  in  receiving  documents  in  evi- 
dence, where  no  ground  for  their  exclusion  is  stated  in  the  objection 
made.a 

Monopolies— Combination  to  Restrict  Production— Validity  of  Con- 
tracts.—At  a  convention  of  manufacturers  of  wooden  ware  in  whicli 
80  per  cent,  of  the  production  of  the  country  was  represented,  a  com- 
bination [480]  was  formed  for  the  purpose  of  restricting  the  produc- 
tion of  wooden  dishes  throughout  the  country,  and  keeping  up  the 


«  Syllabus  and  statement  copyrighted,  1899,  by  West  Publishing  C5o. 


92  FEDERAI-   BEPORTER,   480. 
Statement  of  the  Ca^. 


price  thereof.  To  this  end  it  was  expected  and  intended  that  all  the 
factories  would  be  brought  under  the  control  of  a  central  organisa- 
tion, which  was  to  regulate  the  prices.  The  articles  to  which  the 
combination  related  were  such  as  are  in  common  use.  Held,  that  a 
contract  made  in  pursuance  of  such  combination,  by  which  a  manu- 
facturer was  guarantied  a  certain  sum  as  dividends  on  his  stock  In 
the  central  company,  in  consideration  of  the  closing  of  his  factory 
for  a  year,  was  contrary  to  public  policy,  and  therefore  unlawful, 
and  would  not  be  enforced  by  the  courta 


Error  to  the  Circuit  Court  of  the  United  States  for  the 
Southern  District  of  Ohio. 

Charles  Cravens,  plaintiff  in  error,  a  citizen  of  Indiana,  doing  business 
at  Paducah,  Ky..  under  the  name  of  Charles  Cravens  &  Co.,  l>rought 
this  action  against  the  Carter-Crume  Company,  a  West  Virginia  cor- 
poration, the  National  Mercantile  Company,  an  Ohio  coriwration,  and 
the  Crume  &  Sefton  Manufacturing  Company,  another  West  Virginia 
corporation,  to  recover  the  sum  of  $9,000,  whifh  lie  claimed  bad  inured 
to  htm  under  the  guaranty  of  the  Carter-Crume  Company  that  the 
dividends  upon  certain  stock,  sold  to  him  by  contract  between  the 
National  Mercantile  Company  and -himself,  should  amount  to  the  sum 
of  19,000  for  the  year  then  next  eusuinp.  The  National  Mercantile 
Company  demurred  to  the  petition,  and,  the  demurrer  being  sustained, 
the  case  was  dismissed  as  to  that  company.  The  Crume  &  Sefton 
Manufacturing  Company  dropped  out  of  the  case  by  consent  of  pnrtiea 
The  Carter-Crume  Company  answerwl  the  petition,  and  the  plaintiflT 
relied.  As  no  question  arose  upon  the  pleadings,  and  none  of  the 
errors  assigned  has  relation  thereto,  it  is  unnecessary  to  give  any  de- 
tailed statement  thereof.  The  only  riuestlons  involved  are  such  as 
arose  upon  the  trial  of  the  case,  and  they  are  based  entirely  upon  the 
testimony.  The  facts  as  they  appeared  upon  the  trial  were  substan- 
tSiilly  these: 

The  plaintiff.  Cravens,  was,  and  for  some  time  had  beim,  engaged  in 
manufacturing  wootlen  dishes  and  dish  machines  at  Paducah,  Ky., 
at  the  time  of  the  making  of  the  wntract  of  gimrantj',  which  was 
on  the  28th  day  of  August,  1890.  At  that  time  tliere  were  also  a  num- 
ber of  parties  engaged  in  the  same  kind  of  business  at  various  other 
places  scattered  throughout  the  United  States,  principally  in  the  north- 
em  portion  thereof.  One  of  these  was  the  Carter-Cnnne  Company, 
wlilch,  by  its  charter,  was  required  to  establish  its  principal  office  at 
Niagara  Falls,  N.  Y.  The  president  and  secretary  kept  their  offices 
at  that  place,  but  the  vice-president  and  manager  had  offices  at  Day- 
ton, Ohio.  Another  of  such  manufacturers  was  tlie  Crume  &  Sefton 
Manufacturing  Company,  the  locality  of  whose  principal  office  is  not 
stated,  but  it  appears  to  have  been  doing  business  at  Dayton,  Ohio. 
The  National  Mercantile  Company  was  an  Ohio  corporation,  having 
its  principal  office  at  Dayton,  the  majority  of  the  stock  in  which  was 
owned  by  parties  largely  interested  in  the  other  two  companies  just 
mentioned.  William  E.  Crume,  of  the  Carter-Crume  Company,  and 
John  C.  Crmne,  of  the  Crume  &  Sefton  Company,  were  charter  mem- 
l)ers  thereof.  William  E.  Crume  was  the  secretary,  and  appears  to 
have  been  largely  influential  in  the  direction  of  the  management  of  the 
National  Mercantile  Company.  He  was  also  vice  president  of  the 
Carter-Crume  Company,  and  managed  its  affairs  at  Dayton,  Ohio. 
The  business  for  which  the  National  Mercantile  Company  was  incor- 


CRAVENS  V.   CARTEB-CRUME   CO. 
Statement  of  the  Case. 


1^85 


porated  is  thus  set  forth  in  the  third  article  of  incorporation :  "  Said 
corporation  is  formed  for  the  purpose  of  buying  and  selling  and  deal- 
ing in  wooden  ware  and  grocers'  novelties."    It  was  not  a  manufac- 
turer.   This  corporation  appears  to  have  been  formed  for  the  purpose 
of  creating  a  common  controlling  liead,  into  connection  with  which 
the  various  manufacturers  of  wooden  dishes  throughout  the  country 
should,  as  far  as  possible,  be  brought,  whereby  the  output  and  safe 
of  their  manufactures  should  he  controlled  in  respect  to  quantity  and 
price.    The  plaintiff,   Cravens,   after   some  preliminary   negotiations 
with  the  parties  representing  the  corporations  doing  business  at  Day- 
ton, as  above  stated,  went  there  on  the  date  above  mentioned,  August 
28,  1806,  for  the  purpose  of  meeting  and  conferring  with  those  parties 
and  others  [481]  interested  in  the  n;anufacture  of  wooden  dishes  and 
dish  machines.    A  considerable  number  of  such  persons  from  different 
places  in  the  country,  representing  about  80  per  cent,  of  the  entire 
output  of  wooden  dishes  in  the  country,  convened  there  that  day,  and 
a  meeting  was  held,  which  the  plaintiff  attended,  for  the  purpose  of 
effecting  a  combination  whereby  the  output  of  their  goods  should  be 
restricted  and  prices  maintained.     This  plan  involved  the  making  of 
contracts  by  the  manufacturers  with  the  National  Mercantile  Com- 
pany of  a  kind  similar  to  that  hereinafter  stated  between  the  plaintiff 
and  the  National  Mercantile  Company.     Having  taken  some  of  the 
stock,  the  plaintiff  was  made  a  director  of  that  company  on  that  day. 
The  following  is  an  extract  from  his  testimony,  as  found  in  the 
bill   of  exceptions:  ^' Q.  Mr.   Cravens,  you  were  contemplating  that 
deal  before  that?    A.  I  was  contemplating  a  deal  with  the  National 
Mercantile  Company.    Q.  You  went  down  to  Dayton  for  the  purpose 
of  getting  into  that  deal?    A.  I   didn't  know.     I   was  asked   to  go 
and  attend  a  meeting.     Q.  In  what  way?     A.  A  m?eting  of  the  dif- 
ferent manufacturers.     Q.  How  much  of  the  output  of  the  country 
was  represented  at  that  time?     A.  I  could  not  say.     Q.  Have  yoii 
no  idea?     A.   (No  response.)     Q.  What  was  the  cbject  of  tlie  meet- 
ing, as  stated  to  yon?     A.  Mr.  Crume  had  l)een  to  see  me;  wanted 
me  to  go  into  the  National  Mercantile  Ccmpauy.     He  wanted  me  to 
put  my  factory  in.    My  factory  would  represent  so  much  stock.     My 
dividend,  he  said,  would  amount  to  six  thousjind  dollars  or  move. 
I  refused  to  do  it.     I  told  him  that  I  would  if  Carter-Crume  Com- 
pany would  guaranty  me  nine  thousjiiul  dollars.     I  would  close  mv 
factory,  and  not  run  it  at  all.     Q.  You  were  made  director  of  the 
National  Mercantile  Company?    A.  Yes,  sir.    Q.  What  was  the  object 
of  that  company,  as  you  understood  as  a  director?     A.  W^ell,  I  saw- 
that  they  were  then  working  to  get  all  these  factories  in  line.     Q. 
For  what  purpo.se?     A.  They  wante<l  to  close  my  factory.     Q.  For 
What  purpose?    A.  To  get  the  factories  all  in  line.    Q.  As  "you  under- 
stand that,  as  a  director  of  the  company?    A.  They  were  to  maintain 
prices.     Q.  And  anything  else,  sir?    A.  What  they  wanted  to  do  was 
to  control  the  business  at  that  time.     Q.  And  that  was  the  object  of 
that  meeting,  was  it  not?    A.  That  was  the  object  of  that  meeting ;  yes, 
sir.     Q.  And  you  were  director  of  the  company?     A.  I  was  director 
of  the  company.     I  will  state,  though,  before  I  went  into  that  com- 
pany  1   had   the  guarantj— I   had   Mr.   Cnime's   word  that   Carter- 
Crume  Company  would  guarantj^  me  nine  thousand  dollars  a  year, 
if  I  did  this.     Q.  You  knew  what  you  were  going  into?     You  made 
the  proposition  that,  if  they  would  guaranty  this  nine  thousand  dol- 
lars, you  would  close  your  factory?    A.  I  was  leasing  them  my  ma- 
chineiy.     Q.  Didn't  you   know  what  the   Mercantile  Company  was 
buying  your  factory  for, — what  you  were  going  into  it  for?     A.  To 
get   rid  of  my  machinery;  to  get  this  nine  thousand  dollars.     Q. 
Didn't   Mr.   Cnnne  tell  you   what  he  wanted  to   do?     A.  That  he 
wanted  to  get  me  in  line.    Q.  What  for?    A.  To  maintain  prices." 


986 


92  FEDEBAL   REPORTER,   481. 


Statement  of  the  Case. 

On  the  occasion  of  that  meeting,  the  following  contracts  weFe 
entered   into   between   the   plaintiflf   and   the   other   parties   named 


It 


CONTRACT. 


This  agreement,  entered  into  by  and  between  the  National  Mer- 
cantile Company,  a  corporation  by  virtue  of  and  under  the  laws 
of  Ohm.  with  office  at  Dayton.  Ohio,  their  successors  or  assigns,  party 
of  the  first  part,  and  Charles  Cravens  &  Ccl,  a  -co-partnership,  of 

f/Tif*S,V  '^'"  P»^t»<^s  of  the  second  fmrt,  witnesseth  : 
__-/JLi."^^  P^^  ^  ^^  ^^^^  part  being  desirous  of  leasing  all  the 
-— w^'jIMi  machines  now  owned  or  controlled  bv  the  party  of  the 
second  part,  and  the  party  of  the  second  part  being  desirous  of  rent- 
ing said  machines  to  the  party  of  the  first  part,  it  is  hereby  a-reed 
that,  for  the  sum  of  one  dollar  ($1.00)  and  other  valuable  consid- 
erations, the  party  of  the  second  part  agrees  to  lease,  and  does  hereby 
lease,  to  the  party  of  the  first  part,  all  the  wood-dish  machines  now 
owned  or  controlled  by  it  and  all  the  wood-dish  machines  that  may 
during  the  continuance  of  this  contract,  come  into  the  possession 
or  control  of  the  party  of  tlie  second  part. 

"(2)  It  is  also  agreed  and  understood  that  the  said  machines  shall 
remain  [482]  in  the  possession  and  control  of  the  party  of  the  second 
part,  and  it  agrees  to  operate  and  keep  in  repair  the  said  machines 
and  proceed  to  make  wood  dishes  for  the  party  of  the  first  part,  on 
the  following  terms  and  conditions: 

"  (3)  The  wood  dishes  shall  be  made  of  giun  and  maple  wood,  all 
light  in  color,  all  first  quality,  and  satisfactoiy  to  the  general  trade 
and  they  shall  be  securely  packed  In  good,  substantial  crates,  con- 
taining 250  or  500  dishes,  as  may  be.  from  time  to  time,  specified  l)y 
first  party.  If  packed  in  crates,  the  crate  heads  shall  be  planed 
branded,  and  stenciled  as  instructed  by  the  party  of  the  first  part 

"  (4)  The  party  of  the  first  part  agrees  to  take  wood  dishes  per 
year  during  the  continuance  of  this  contract,  which  shall  be  dis- 
tributed as  near  as  may  be  to  dishes  daily. 

"  (5)  It  is  hereby  agreed  that  the  price  to  lie  paid  for  said  wood 
dishes  shall  be :  No.  1-2's,  65c. ;  No.  I's,  65c. ;  No.  2's,  75c. ;  No.  3'8, 
85e. ;  No.  5's,  $1.05,— per  thousand,  f.  o.  b.  care  at  factory  point,  and 
shipped  as  per  instructions  from  party  of  the  first  part :  shipping  bill 
together  with  invoice,  to  be  promptly  mailed  to  party  of  the  first  part 
Terms:  Cash  ten  days  after  date  of  bill  of  lading. 

"  (6)  In  consideration  of  tlie  large  quantity  of  wood  dishes  pur- 
chased by  the  party  of  the  fii-st  part,  the  party  of  the  second  part 
agrees  that  it  will  not  make  for  or  sell  wood  dishes,  directly  or  in- 
directly, to  any  other  person,  firm,  cr  corporation. 

"  (7)  The  dishes  purchased  l>y,  and  to  be  made  for.  the  party  of 
the  first  part  shall  not  become  the  property  of  the  party  of  the  first 
part  until  they  are  loaded  on  board  cars  oV  vessel,  and  receipted  for 
by  the  transportation  company. 

"  (8)  It  is  further  agreed  that  the  party  of  the  second  part  shall 
make  a  weekly  factory  report  to  the  party  of  the  first  part :  said  rei)ort 
to  be  made  out  on  the  Monday  following  the  close  of  each  week,  and 
mailed  to  the  ofiice  of  the  first  party.  This  report  to  contain  a  record 
of  the  quantity  of  each  size  dish  made  and  shipped  for  the  week,  and 
quantity  on  hand  at  the  end  of  each  week.  These  reports  to  be 
made  out  on  report  blanks  furnished  by  the  party  of  the  first  part. 

"  (9)  The  partj'  of  the  second  part  agrees  to  furnish  wood  dishes 
additionally  in  proportion  to  ai>ove-named  quantity,  at  the  same  prices, 
and  upon  the  conditions,  herein  named,  if  called  to  do  so  by  the  party 
of  the  first  part. 


CRAVENS   V.   CARTER-CRUME   CO. 
Statement  of  the  Case. 


987 


"(10)  Where   the   words   'wood   dishes'   are   used   herein,    it   is 
understood  that  wire-end  wood  dishes  are  meant. 
"August  28,  1895. 

"The  National  Mercantile  Company, 

"  By  W.  E.  Crume,  Scc'y. 
"  By  Charles  Cravens  &  (Do." 


SUPPLEMENTARY   AGREEMENT. 

"  Between  the  National  "Mercantile  Company  of  Dayton,  Ohio,  party 
of  the  first  part,  and  Charles  Cravens  &  Co.,  party  of  the  second  part 
to  be  attached  to  and  become  a  part  of  an  original  agreement  between 
the  above  parties,  dated  August  28,  1895: 

"  (1)  Party  of  the  second  part,  being  desirous  of  obtaining  forty- 
nine  shares  of  the  capital  stock  of  the  National  Mercantile  Company, 
hereby  agrees  to  pay  for  the  same  five  hundred  dollars  (.$500).  to  be 
paid  for  in  wood  dishes  shipped  to  the  order  of  the  party  of  the  first 
part,  all  to  be  of  first  quality,  and  at  the  prices  named  vk  the  original 
agreement  of  August  28,  1895. 

"  (2)  The  value  of  said  dishes  to  be  placed  to  the  credit  of  the 
second  party  on  the  books  of  the  company,  representing  its  shares  in 
the  capital  stoclv  of  the  company. 

"  (3)  Said  quantity  of  dishes  in  value  to  be  furnished  by  the  party 
of  the  second  part  before  the  party  of  the  first  part  shall  be  required 
to  pay  cash  for  dishes,  as  specified  in  section  5  of  the  original  agree- 
ment. 

"  (4)  It  is  agreed,  upon  the  expiration  of  this  agreement  or  any 
renewal  thereof,  that  the  share  of  assets  of  the  company,  as  represented 
by  the  shares  of  stock  held  by  the  party  of  the  second  part,  shall  be 
paid  over  to  the  party  of  the  second  part.. 

[483]  "(5)  This  agreement  to  remain  "in  force  and  effect  during 
the  continuance  of  the  contract  between  the  parties  hereto  of  even 
date  herewith. 

"The  National  Mercantile   Company. 

"  By  W.  E.  Crume,  Secretary. 
"  By  Charles  Cravens  &  Co. 

"  It  is  hereby  agreed,  by  tlie  parties  hereto,  that  the  Carter-Crume 
Company,  a  corporation  under  the  laws  of  West  Virginia,  agrees  to 
assume,  and  does  hereby  assume,  to  make  the  above  quantity  of  wood 
dishes  at  the  prices  and  upon  the  conditions  above  named. 
"  Dated  August  28,  1895. 

"The  Carter-Crume  Company, 
"By  W.  E.  Crume,  Vice  President. 
"ByCHARLBs  Cravens  &  Co." 

"  Memorandum  of  agreement  made  this  28th  day  of  August,  1895, 
by  and  bet\\een  the  Carter-Crume  Company,  a  corporation  organized 
under  the  laws  of  the  state  of  West  Virginia,  party  of  the  first  part, 
and  Charles  Cravens  &  Co.,  of  Paducah.  Kentucky,  parties  of  the 
second  part,  referring  to  a  contract  and  supplementary  agi-eement 
made  this  day  between  the  National  Mercantile  Company,  Dayton, 
Ohio,  and  Charles  Cravens  &  Co.,  of  Paducah,  Kentucky,  parties  of 
the  second  part:  Inasmuch  as,  under  the  agreement  above  referred 
to,  Charles  Cravens  &  Co.  have  become  owners  of  fifty  shares  of  stock 
In  the  National  Mercantile  Company,  parties  of  the  first  part  guar- 
anty to  parties  of  the  second  part  that  the  dividends  paid  by  the 
National  Mercantile  Company  to  Charles  Cravens  &  Co.,  on  said  fifty 
shares  of  stock,  shall   amount  to  seven  hundred  and  fifty  dollars 


dm 


02  VEDKBAIi  REFOBTEB,   ^M, 


Stateineiit  of  tlie  Case. 

(1750)  iM»r  iiioiitli,  or  a  total  of  nine  thousand  (|d,000)  dollars  for  the 
year,  ending  ou«-  year  from  to-day,  or,  In  the  event  of  such  dividends 
not  amountinur  to  »neh  amount,  then  parties  of  the  first  part  agree  to 
pay  to  parties  of  the  sei-ontl  part,  on  or  before  one  year  from  to-day, 
the  diffei-ence  in  money  between  the  total  amoimt  of  dividends  paid  on 
said  mty  shares  of  stock  and  the  sum  of  nine  thousand  (:?9,000)  ;  It 
also  being  a  <t>ndition  of  this  agreement  that  party  of  the  second  part 
Is  not  to  manufacture  the  dishes  for  the  National  Mercantile  Com- 
panj%  as  specified  in  their  contract  of  this  date,  referred  to  above,  but 
such  diilim  are  to  be  made  in  fulfillment  of  said  contract  bv  the  part}' 
of  the  first  jMirt.  Party  of  the  first  part  to  receive  all  raonev  paid  by 
tie  National  Mercantile  Company  for  such  dishes. 
•"  Signed  Auj;ust  28,  1805. 

**TlIK   CARTER-CRrME  COMPANY, 

**By  W.  E.  Crume,  Vice  President, 
••  By  Charles  Cravens  &  Co." 

TyiJewritten  iiiiuutes  of  tlie  proceeiliugs  at  a  meeting  of  the  direct- 
ors of  the  Nati<»ual  Mercantile  Coiiii>any  attended  by  the  plauitiflf  on 
that  day,  which  i\  witness  testifiinl  were  taken  at  the  time,  were 
offered  in  evidence  by  defendant,  and.  against  objection  on  behalf  of 
the  plaintiff,  re<eivetl.  which,  among  other  things,  stated  that  it  was 
r«iolvetl:  "That  it  is  the  iwlicy  of  tliis  wmpauy  to  hold  the  price  on 
niaehine-made  wire-end  w<mk1  butter  dishes  firm  at  $l.riO  basis,  and 
that  the  secretary  Imn  and  is  hereby,  instructed  to  use  his  best  en- 
deavor to  stop  all  attenir)ts  to  manufacture  dishes,  or  the  making  of 
machint?s  fi»r  the  manut'a<ture  of  w<hm1  dishes,  and  to  use  coercive 
measures,  if  niM-essiiry,  to  nij-tmiiilish  this  result."  These  minutes 
had  never  l>eeu  ♦•ritered  in  any  reconl  liook  of  the  company. 

The  plaintiff  ex«Hute<l  his  part  of  the  above  agreements!  aind  in  due 
time  deunuaUHl  the  $«.),( UM).  no  part  of  wlu<h  had  been,  or  was  at  any 
time,  paiil  to  him.  Numerous  other  contracts  between  manufac- 
turers of  wooden  dishes  and  the  National  Mercantile  Company  or  the 
Carter-Crunie  (Omiiany  of  a  similar  character,  made  about  the  same 
time,  were  offeretl  in  evidence*,  and  recelve<l.  against  the  objection  of 
counsel  for  pliuntiff.  who.  liowever.  assigntnl  no  reasons  or  grounds  for 
his  obje<-tlon.  Some  otiier  incidental  facts  were  shown,  but  the  fore- 
going is  the  substan<*e  of  the  «ase  as  It  appeared  upon  the  trial.  The 
trial  judge  held,  at  the  conclusimi  of  the  evidence,  that  the  contracts 
hetwwn  the  plaintiff,  the  National  Mercjintile  Company,  and  the 
Carter-c 'rume  C*omimuy,  were  not,  standing  by  themselves,  unlawful, 
but  that  wlien  taken  in  comiection  with  the  other  facts,  which  had 
been  sliown,  it  ajii^eared  that  they  forme<l  part  of  an  unlawful  com- 
bination in  restraint  of  trade;  [484]  that  they  were  therefore  con- 
trary to  public  policy,  and  could  not  be  enfon^i.  lie  tlierefore  dl' 
rected  a  verdict  for  the  defendant.  Coimsel  for  plaintiff  duly  ex- 
cepted thereto,  and,  the  verdict  ancl  judgment  having  passed  in  ac- 
cottlanc«»  with  tlie  instructions  of  tlie  court,  the  case  is  brought  here 
on  writ  of  error. 

Charles  W,  Baker,  for  plaintiff  in  error. 

Jmeph  W.  Wtlby,  for  defendant  in  error. 

Before  Liktox,  Circuit  Judge,  and  Severens  and  Ci^rk, 
District  Judges. 


CRAVENS   V.   CARTEB-CBUME  CO. 


989 


Opinion  of  the  Court. 

Severens,  District  Judge,  having  stated  the  case  as  above, 
delivered  the  opinion  of  the  court. 

The  first  of  the  assignments  of  error  relates  to  the  ad- 
mission in  evidence  of  the  contracts  between  other  parties 
and  the  National  Mercantile  Company  of  a  kind  similar  to 
that  of  the  plaintiff  with  the  latter  company.  But  no 
grounds  were  stated  for  the  objection  to  their  admission, 
and  for  that  reason,  according  to  the  settled  rule,  error  can- 
not be  assigned  upon  the  action  of  the  court  receiving  them. 
8  Enc.  PL  &  Prac.  1G3,  and  cases  cited.  It  may  not  be  im- 
proper, however,  to  say  that  no  valid  reason  occurs  to  us  on 
which  the  objection  could  have  bei»n  based,  seeing  that  those 
contracts  were  immediatelv  connected  with  the  contracts  in 
suit,  and,  all  taken  together,  constitute  the  entire  transaction 
in  which  the  parties  were  engaged.  The  same  observation  is 
applicable  to  contracts  between  Cravens  and  the  defendant, 
the  Carter-Crume  Company,  and  the  National  Mercantile 
Company,  which  are  copied  in  the  preceding  statement  of 
facts.     They  are  to  be  construed  as  one. 

The  second  assignment  relates  to  the  following  ruling  of 
the  court  at  the  conclusion  of  the  evidence  to  the  jury: 

"  Now  on  the  face  of  the  papers  themselves,  I  do  not  thinlv,  ami  I 
so  cliarge  you,  that  the  contracts — the  three  of  them — are  against 
public  policy.  But  there  is  evidence  tending  to  show  that  these  con- 
tracts were  a  part  of  a  combination  or  plan  entered  into  between  the 
manufacturers  to  the  extent  of  eighty  per  cent,  of  the  output  of  the 
counti*y  of  wooden  dishes,  by  which  they  each  made  a  contraet  with  a 
central  company,  who  was  to  be  the  selling  company,  agreeuig  to  sell 
all  their  output  to  that  company  at  cost,  taking  shares  in  that  com- 
pany, and  allowing  that  company  to  fix  the  marlvet  price  for  the  dis- 
position of  the  goods  after  they  had  l>een  transferred  to  them  for 
sale,  and  that  these  contracts  were  made  for  the  pui-pose  of  main- 
taining prices,  and  that  for  the  purpose  of  maintaining  prices  fur- 
ther they  made  contracts  to  limit  the  production  of  machines  for  the 
making  of  wooden  dishes." 

The  record  proceeds  to  state :  "  Whereupon  the  counsel  for 
plaintiff  excepted  to  that  part  of  the  charge  of  the  court 
touching  the  contracts  as  being  against  public  policy."  In 
explanation,  it  is  proper  to  say  that  the  above  ruling  was 
given  in  charge  to  the  jury  in  its  preliminary  instructions. 
The  jury  reported  a  disagreement.  Wliereupon  the  court 
gave  them  direct  instructions  to  find  for  the  defendant.     The 


K 


990 


92  FEDERAL  REPORTER,  484. 


Opinion  of  the  Court 

latter   instruction   superseded   the   former,  and   opens  the 
whole  case. 

The  third  assignment  is  based  upon  the  exception  to  the 
direction  of  the  verdict  in  favor  of  the  defendant.    We  can- 
not,  of  course,  assume,   and   the  court   below   could   not, 
that  any  fact  was  established  about  which  there  was  room 
for  controversy.    All  questions  of  fact  [485]  material  to 
the  issue,  about  which  different  opinions  could  fairly  have 
been  formed,  were  for  the  jury;  and  the  question  for  us  is 
whether  upon  the  facts,  which  were  substantially  uncontro- 
verted,  including  those  to  which  the  plaintiff  himself  testi- 
fied, the  verdict  which  the  court  directed  was  the  only  one 
which  the  court  would  have  allowed  finally  to  stand.    Rail- 
way Co.  V.  Loxmry,  20  C.  C.  x\.  59G,  74  Fed!  463,  and  43  U.  S. 
App.  408.    From  the  preceding  statement  of  the  case  as  ex- 
hibited  upon   the  trial,  the  material   and   uncontroverted 
facts  may  be  gathered  into  the  following  synopsis.    But 
first,  we  lay  out  of  consideration  the  typewritten  minutes  of 
the  proceedings  at  the  meeting  of  the   directors   of  the 
National  Mercantile  Company,  on  August  28,   1896.    We 
think  it  might  well  be  that  the  jury  would  have  been  justi- 
fied in  sharing  the  suspicion  of  counsel  for  the  plaintiff  in  re- 
gard to  their  genuineness  and  veracity.    It  must  be  ad- 
mitted that  it  is  most  remarkable  that  any  board  of  directors 
of  a  business  establishment  should  pass  such  a  resolution  as 
is  quoted  in  the  foregoing  pi-eliminary  statement,  however 
much  in  line  it  might  be  with  their  real  purposes. 

The  parties  who  were  engaged  in  these  transactions,  of 
whom  the  plaintiff  was  one,  representing  80  per  cent,  of  the 
total  product,  undertook  to,  and  did  in  fact,  form  a  combina- 
tion for  the  purpose  of  restricting  the  production  of  wooden 
dishes  throughout  the  country  and  keeping  up  the  prices 
thereof.  The  articles  to  which  this  combination  had  refer- 
ence were  articles  in  common  use.  The  plaintiff's  contracts 
were  part  of  the  means  employed  for  effecting  the  common 
object,  and  he  secured  the  means  of  sharing  in  the  profits  ex- 
pected to  be  gained  through  the  combination.  To  this  end 
all  the  factories  were  expected  to  be  brought  under  the  con- 
trol of  the  National  Mercantile  Company,  which  was  to  regu- 
late the  prices.    The  plaintiff  testified  that  it  was  the  purpose 


CRAVENS  V,   CARTER-CRUME  CO. 


m\ 


Opinion  of  the  Court. 

to  close  his  factory,  and  not  run  it  at  all.  He  further  testified 
that  it  was  the  purpose  "  to  get  all  the  factories  in  line,"  in 
order  "  to  maintain  prices."  He  was  guarantied  $9,000  for 
closing  his  factory  for  a  year,  and  the  contract  included  all 
the  dish  machines  that  might  come  into  his  possession  or  con- 
trol, thus  disabling  himself  from  manufacturing,  and  he  obli- 
gated himself  not  to  sell  any  wood  dishes  to  any  other  person, 
directly  or  indirectly,  during  the  continuance  of  the  contract. 
It  is  manifest  that  it  was  the  expectation,  and  that  the  parties 
intended,  to  get  a  sufficiently  large  number  of  manufacturers 
into  the  combination  to  practically  accomplish  their  purpose. 
We  cannot  doubt  that  such  a  combination,  for  such  purposes, 
was  opposed  to  public  policy,  and  therefore  unlawful.  It  is 
the  settled  doctrine  that  one  cannot  maintain  a  suit  in  a 
court  of  justice  upon  a  contract  entered  into  for  the  purpose 
of  promoting  such  objects.  The  doctrine  was  elaborately  dis- 
cussed, upon  the  principles  of  the  common  law,  by  Judge 
Taft  in  a  case  recently  decided  by  this  court.  TJ.  S.  v.  Addy- 
Hon  Pipe  (&  Steel  Co.,  29  C.  C.  A.  141,  85  Fed.  271.  In  that 
case  the  question  was  also  discussed  whether  the  anti-trust  law 
of  1890  was  applicable  to  the  contract  then  under  considera- 
tion. But  the  relation  of  that  act  to  the  common  law  was  in- 
volved in  the  discussion,  and  much  research  was  bestowed 
upon  the  established  principles  of  the  latter.  The  proposi- 
tion there  maintained  [486]  was  that  "no  conventional  re- 
straint of  trade  can  be  enforced  unless  the  covenant  embody- 
ing it  is  merely  ancillary  to  the  main  purpose  of  a  lawful  con- 
tract, and  necessary  to  protect  the  covenantee  in  the  enjoy- 
ment  of  the  legitimate  fruits  of  the  contract,  or  to  protect  him 
from  the  dangers  of  an  unjust  use  of  those  fruits  by  the 
other  party."  It  was  not  doubted,  nor,  indeed,  can  it  be,  that 
where  the  direct  purpose  of  the  contract  in  suit  is  to  establish, 
for  increasing  their  profits,  a  combination  among  manufac- 
tivrers  and  tradesmen  whose  function  is  to  prevent  competi- 
tion, and  thereby  prevent  the  public  from  obtaining  those  ar- 
ticles which  are  in  general  use,  at  the  prices  at  which  they 
could  be  obtained  as  the  result  of  fair  and  untrammeled.  com- 
petition, such  contract  is  unlawful,  and  cannot  be  enforced. 
We  have,  in  the  foregoing  statement  of  what  we  suppose  to  be 
the  conceded  rule,  restricted  it  to  the  case  of  "articles  in 


992 


€»2  FEDERAL  REPORTER,  1022. 
Statement  of  the  Case. 


general  use.'*  in  order  to  indicate  a  test  which  is  not  affected 
by  a  feature  put  forward  in  some  decisions  as  creating  a  dis- 
tinction. We  do  not  eonunit  ourselves  upon  the  question 
whether  such  distinction  exists  or  not.  The  result  of  the  ap- 
plication of  the  test  above  formulated  to  the  facts  of  this  case 
is,  manifestly,  that  the  contract  here  in  question  cannot  be  en- 
forced. It  is  argued  by  counsel  for  plaintiff  that  the  contract 
should  be  sustained,  within  the  principles  stated  and  ap- 
proved in  r.  JS.  V.  AMy^tmi  Pipe  <&  Steel  Co.,  upon  the 
theory  that  the  contract  upon  which  the  action  is  based  was 
collateral  merely,  and  did  not  require  the  aid  of  the  agree- 
ment for  combinatioii.  But  it  seems  clear  to  us  that  this 
proposition  cannot  Ije  maintained.  This  contract  was  one  of 
the  steps  in  the  forbidden  organization,  and  was  intended  to 
be  one  of  many  by  which  the  objects  of  the  combination  were 
to  be  accomplished.  Seeing  what  has  been  the  result  to  the 
plaintiff,  one  cannot, help  feeling  that  he  may  have  been 
duped  by  more  artfid  men.  But  he  was  a  business  man.  It 
is  not  claimed  for  him  that  he  was  mentally  incompetent  in 
any  such  sense  as  to  absolve  him  from  responsibility  for  the 
legal  consequences  of  his  acts,  and,  in  such  a  case  as  this,  the 
court  does  not  administer  equities  according  to  the  relative 
merit  of  the  parties. 

We  think  the  court  below  was  right  in  directing  a  verdict 
for  the  defendant.     The  judgment  is  affirmed,  with  costs. 


110^2]  SOrTHERN  INDIANA  EXP.  CO.  v,  UNITED 

STATES  EXP.  CO.  ET  AL. 

(Circuit  Court  of  Appeal!*,  Seventh  Circuit.    March  28,  1899.) 

[92  Fed..  1022.1 

Carriers  of  Omiiis — Duties  hf  I'o.n.necting  Lines  Inter  Se. 

Appeal  from  the  Circuit  Court  of  the  United  States  for 
the  District  of  Indiana. 

This  was  a  suit  in  equity  by  the  Southern  Indiana  Express 
Company  against  the  United  States  Express  Company  and 
others.    A  demurrer  to  the  bill  was  sustained  by  the  circuit 


BLOCK    V.   STANDARD   DISTILLING   CO.  993 

Syllabus. 

court,  and  the  bill  dismissed  (88  Fed.  659),  from  which  order 
complainant  appeals. 

F,  M,  Trissal^  for  appellant. 

Edward  Daniels^  for  appellee. 

Per  Curiam.  A  statement  and  sufficient  discussion  of  this 
case  will  be  found  in  the  opinion  of  the  circuit  court  as  re- 
ported in  Southern  Indiaiia  Exp.  Co.  v.  United  States  Exp, 
Co.^  88  Fed.  659.  The  decree  sustaining  the  demurrer  and 
dismissing  the  bill  is  affirmed. 

[Copyrighted,  1899,  by  West  Publishing  Co.] 
[For  88  Fed.,  t;59,  see  p.  862.] 


1978]    BLOCK  ET  AIj.  v.  STANDARD  DISTILLING  & 

DISTRIBUTING  CO. 

(Circuit  Court,  S.  D.  Ohio,  W.  D.    July  31,  1899.) 

[95  Fed.  978.] 

JUBISDICTION  OF  FeDEBAL  CoURT— CITIZENSHIP  OF  CORPORATION— SUF- 
FICIENCY OF  Allegation.— An  allegation  that  defendant  is  a  corpor- 
ation "organized  under  and  pursuant  to  the  laws  of  the  state  of 
New  Jersey  "  is  an  affirmative  statement  that  defendant  is  a  citizen 
of  New  Jerf^ey.o 

[979]  Equity    Pleading — Multifariousness — [Anti-Trust    Law]. 

A  bill  setting  up  a  claim  for  damages  under  the  anti-trust  law  of 
July  2,  1890,  and  also  asking  an  injunction  restraining  defendant 
from  using  complainant's  trade-mark  and  trade-name,  is  multifar- 
ious, as  joining  two  distinct  causes  of  action,  having  no  connection 
with  each  other,  and  one  of  which  is  triable  at  law. 

Unfair  Competition— Imitation  of  Trade-Name.— A  bill  which 
alleges  that  complainant  and  defendant  are  competitors  in  the  same 
line  of  business ;  that  defendant  has  assumed  a  trade-name  similar 
to,  and  in  imitation  of,  complainant's  trade-name,  and  the  public  has 
been  deceived  thereby,  and  great  confusion  and  injur>'  have  resulted 
to  complainant's  business  therefrom;  that  defendant's  incorpora- 
tors, before  it  was  organized,  knew  of  the  existence  and  character 
of  complainant's  business,  and  the  trade-name  under  which  it  had 
for  a  number  of  years  been  conducted ;  and  that  defendant  has  re- 


o  Syllabus  copyrighted,  1899,  by  West  Publishing  Co. 
11808— VOL  1—06  M «;? 


994 


95  FEDERAL  EEPOBTER,  979. 


Opinion  of  the  Court. 

fused,  on  complainant's  request,  to  desist  from  the  use  of  the 
name, — !>«tates  a  cause  of  action  against  defendant  for  unfair  com- 
petition. 
Same^ — Tbade-Name — Fbaud  Which  will  Debar  Relief. — The  mere 
fact  that  complainants,  as  partners,  conduct  their  business  under 
the  name  of  the  "  Standard  Distilling  Ck>mpany,"  is  not  sufficient  to 
show  that  they  represent  themselves  as  a  corporation  for  the  pur- 
pose of  deceiving  and  defrauding  the  public,  so  as  to  debar  them  of 
the  right  to  involve  the  protection  of  a  court  of  equity  in  the  use  of 
such  njinie. 

George  W.  Hardaere  and  Peck,,  Shaffer  db  Peckj  for  com- 
plainants. 

/.  Shroder  and  Levy  Mayer^  for  defendant. 

Thompson,  District  Judge. 

This  cause  is  submitted  to  the  court  upon  a  demurrer  to 
the  bill. 

The  fi.^  assignment  of  the  demurrer  denies  the  jurisdic- 

tion  of  the  court.  It  is  claimed  that  the  citizenship  of  the 
defendant  does  not  appear  affirmatively,  and  that  it  cannot 
be  inferred.  I  think  it  does  affirmatively  appear  that  the  de- 
fendant is  a  citizen  of  the  state  of  New  Jersev.  The  state- 
ment  that  it  was  "  organized  under  and  pursuant  to  the  laws 
of  the  state  of  New  Jersey  "  is  an  affirmative  statement  that 
it  is  a  citizen  of  New  Jersey.  In  Insurance  Co.  v.  Francis, 
11  Wall.  210,  216,  it  was  alleged  that  the  defendant  was  a 
corporation  created  by  the  laws  of  New  York,  located  and 
doing  business  in  Mississippi  imder  its  laws,  and  the  court 
said : 

"  This,  in  lejral  effect,  is  an  averment  that  the  defendant  was  a  citi- 
zen of  New  York,  because  a  corporation  can  have  no  legal  existence 
outside  of  the  sovereignty  by  which  it  was  created.  Its  place  of  resi- 
dence is  there,  and  can  be  nowhere  else.  Unlike  a  natural  person,  it 
cannot  change  its  domicile  at  will,  aiid,  although  it  may  be  permitted 
to  transact  business  where  its  charter  does  not  operate,  it  cannot  on 
that  account  acquire  a  residence  there." 

The  objection  to  the  jurisdiction  of  the  court  therefore  is 
not  well  taken. 

The  second  and  third  assignments  of  the  demurrer  allege 
that  the  bill  is  multifarious,  in  that  it  joins  two  distinct 
causes  of  action  not  necessarily  connected  or  blended,  and 
joins  an  action  at  law  with  a  suit  in  equity.  I  think  these 
objections  to  the  bill  are  well  taken.    The  claim  for  damages 


LOWRY     V,   TILE,    MANTEL  &  GRATE   ASSN. 


995 


Syllabus. 

under  the  anti-trust  law  of  July  2,  1890,  and  the  facts  set 
forth  upon  which  the  complainants  ask  that  the  defendant 
be  enjoined  from  using  complainants'  trade-mark  and  trade- 
name, constitute  distinct  causes  of  action,  having  no  connec- 
tion or  relation  to  each  other;  and,  besides,  one  is  a  cause  of 
action  triable  [980]  at  law,  while  the  other  is  of  equitable 
cognizance.  The  case  attempted  to  be  set  forth  under  the 
anti-trust  law  would  not  justify  the  allowance  of  an  injunc- 
tion. So  far  as  the  court  is  advised  by  the  statement  of  that 
part  of  the  case,  there  would  be  an  adequate  remedy  at  law. 
Gulf,  C.  di  S.  Ry.  Co,  v.  Miami  S.  S.  Co.,  30  C.  C.  A.  142,  86 
Fed.  407,  420;  Blindell  v.  Hagan,  54  Fed.  40;  Hagan  v. 
Blindell,  6  C.  C.  A.  86,  56  Fed.  696. 

The  fourth  assignment  of  the  demurrer  is  not  insisted 
upon. 

The  fifth  assignment  of  the  demurrer  is  upon  the  ground 
that  the  bill  does  not  state  facts  sufficient  to  constitute  a 
cause  of  action.<» 

4>  *  *  4t  4t 

[982]  The  demurrer  will  be  overruled  as  to  the  first  and 
fifth  assignments,  and  sustained  as  to  the  second  assignment 
thereof. 


[817]  LOWRY  ET  AL.  v.  TILE,  MANTEL  &  GRATE 
ASS'N  OF  CALIFORNIA  ET  AL.^> 

(Circuit  Court,  N.  D.  California.    November  13,  1899.) 

[98  Fed.,  817.] 

Misjoinder  of  Parties — Waiver  by  Appearaxce. — Defeiidaiits  by  a 
general  appearance  waive  the  objection  of  a  misjoinder  because 
otber  defendants  are  not  inhabitants  of  the  district.c 

General  Appearance. — There  is  a  general  appearance  by  a  demurrer 
which  does  not  alone  object  to  the  jurisdiction,  but  goes  to  the  mer- 
its of  the  ease. 


o  The  matter  omitted  has  no  l)earing  whatever  upon  the  anti-trust  law. 

6  See  also  charge  to  jury  (106  Fed.  38).  See  vol.  2,  p.  53.  Judg- 
ment affirmed  by  Circuit  Court  of  Appeals,  Ninth  Circuit  (115  Fed., 
27).  See  vol.  2,  p.  112.  Case  there  and  subsequently  entitled  Monta- 
gue &  Co.  V.  Lowry.  Affirmed  by  the  Supreme  Court  (193  U.  S.,  83). 
See  vol.  2,  p.  327. 

0  Syllabus  copyrighted,  1900,  by  West  Publishing  Co. 


996 


98  FEDEEAL  BEPOBTEB,   817. 
Opinion  of  tlia  Court 


Antitrust  Law— Unlawful  Combination.— A  complaint  alleging  that 
members  of  an  association  liave  conspired  and  combined  to  raise 
the  prices  of  tiles,  mantels,  and  grates,  to  control  the  output,  and 
to  regulate  the  prices  thereof,  with  the  intent  to  monopolize  the 
trade  and  commerce  between  the  other  states  aud  California  in 
regard  thereto,  as  well  as  to  arbitrarily  fix  their  prices  independ- 
ently of  their  natural  market  value,  brings  the  case  within  the 
antitrust  act  of  July  2,  1890  (26  Stat.  209). 

Action  at  Law  to  Recover  Damages  under  the  Provisions 
of  Act  July  2,  1890  (26  Stat.  209). 

Reddy^  OampheU  d;  Metson,  for  plaintiffs. 

Linforth  di  Whitaker,  for  certain  defendants. 

Morrow,  Circuit  Judge. 

This  is  an  action  at  law  brought  to  recover  damages  al- 
leged to  have  been  sustained  by  plaintiffs  by  reason  of  injury 
to  their  business  caused  by  the  forming  of  an  association  by 
defendants  claimed  to  be  within  the  prohibitoiy  provisions 
of  the  act  of  congress  of  July  2,  1890,  commonly  known  as 
the  "  Sherman  Antitrust  Act."  The  amended  complaint  al- 
leges: That  plaintiffs  are  co-partners  doing  business  under 
the  firm  name  of  Lowry  &  Daly,  citizens  of  the  state  of  Cali- 
fornia, and  residents  of  the  Northern  district  of  said  state. 
That  the  Tile,  Mantel  &  Grate  Association  of  California, 

and  the  officers  and  members  thereof,  have  since  the 

day  of  January,  1898,  and  do  now,  constitute  an  unincorpo- 
rated organization  composed  of  wholesale  dealers  in  tiles, 
mantels,  and  grates,  and  that  they  are  now,  and  ever  since 
that  day  have  been,  citizens  and  residents  of  the  city  and 
county  of  San  Francisco,  and  of  the  city  of  Sacramento,  and 
of  the  city  of  San  Jose,  in  the  state  of  California,  and  of  the 
states  set  forth  hereinafter,  and  that  all  said  defend-  [818 1 
ants  have  been  since  that  date,  and  now  are,  carrying  on  busi- 
ness in  the  state  of  California,  and  within  the  jurisdiction  of 
the  Northern  district  thereof.  That  the  defendants  herem- 
after  named  are  corporations  created  and  existing  under  the 
laws  of  the  respective  states  set  opposite  to  their  names :  Co- 
lumbia Encaustic  Tile  Company,  Indiana;  United  States 
Encaustic  Tile  Works,  Indiana;  Cambridge  Tile  Manufac- 
turing Company,  Kentucky;  Pittsburg  Tile  Company,  Penn- 


LOWRY     V.   TILE,    MANTEL   &  GRATE   ASSN. 
Opinion  of  the  Court. 


997 


sylvania ;  Trent  Tile  Works,  New  Jersey ;  W.  W.  Montague 
&  Co.,  California;  Bush  &  Mallett  Company,  California; 
Star  Encaustic  Tile  Company,  Limited,  Pennsylvania;  Man- 
grum  &  Otter,  California ;  American  Tile  Company,  Ohio ; 
Providential  Tile  Works,  New  Jersey;  the  John  Stock  Sons, 
California.    That  the  defendants  the  Columbia  Encaustic 
Tile  Company,  Cambridge  Tile  Manufacturing  Company, 
the  American  Tile  Company,  the  Pittsburg  Tile  Company, 
the  Providential  Tile  Works,  and  the  Star  Encaustic  Tile 
Company,  Limited,  are,  and  were  at  all  the  times  mentioned, 
manufacturers  of  tiles  in  the  states  set  forth,  and  that  the 
defendants  Heavener  Meir,  the  John  Stock  Sons,  W.  W. 
Montague  &  Co.,  Bush  &  Mallett,  Bennett  &  Schutte,  and 
Mangrum  &  Otter  are,  and  ever  since  January  1,   1898, 
have  been,  engaged  in  the  wholesale  and  retail  business  of 
buying  and  selling  tiles,  mantels,  and  grates  in  the  cities  of 
Sacramento,  San  Jose,  and  San  Francisco,  in  this  state. 
That  the  following  cities,  with  the  respective  populations 
placed  opposite  their  names,  are  each  situated  in  the  North- 
ern district  of  California:  San  Francisco,  290,000  and  up- 
wards; Oakland,  40,000  and  upwards;  Sacramento,  30,000 
and  upwards ;  San  Jose,  20,000  and  upwards.     That  in  said 
cities  there  are  a  great  number  of  dwelling  houses,  buildings 
used  for  business,  trade  purposes,  and  manufactories.    That 
new  buildings  are  being  constantly  erected,  and  in  their  con- 
struction large  quantities  of  tiles,  mantels,  and  grates  are 
necessarily  used  for  their  safe  construction  and  comfortable 
occupation.     That  none  of  the  tiles  used  about  buildings  or 
dwellings  are  made  in  the  state  of  California,  but  are  manu- 
factured in  Eastern  states,  and  imported  thence,  and  such 
importations  into  this  state  amount  to  the  annual  value  of 
$100,000  or  thereabouts.     That  for  many  years  past  plain- 
tiffs have  been  engaged  in  the  wholesale  business  of  dealing 
in  tiles,  mantels,  and  grates,  and  in  conducting  this  business 
have  purchased  these  articles  from  the  various  corporations 
defendant,  and  shipped  them  to  the  state  of  California, 
and  there  sold  them;  that  defendants  and  their  associates 
who  are  bound  by  contract  with  them  comprise  all  the  whole- 
sale dealers  who  handle  and  import  and  sell  tiles  in  the  cities 
aforesaid,  and,  when  cx)mbined  together,  can  and  do  abso- 


998 


m  FEDEBAL  BBPORTEB,   818. 


Opinion  of  the  CJonrt 

lutely  control  the  price  charged  for  tiles  in  said  cities,  by 
reason  of  the  distance  of  these  citias  from  any  manufacturers 
or  wholesale  dealei*s  other  than  defendants  and  those  com- 
bined with  them  in  other  states  or  foreign  countries,  who  do 
not  belong  to  the  said  Tile,  Mantel  &  Grate  Association  of 
California,  The  rates  of  transportation  are  prohibitory,  so 
that  no  tiles  hare  been  or  can  be  imported  from  places  other 
than  those  in  whicli  the  corporations  and  above-named  per- 
sons have  manufactories,  stock  on  hand,  or  warerooms,  and 
all  the  grates  and  tiles  made  and  manufactured  within  reach 
of  the  state  of  Cali-  [819]  fomia,  where  the  rate  of  freight 
is  such  that  an  imjiortation  can  be  made  to  San  Francisco 
and  said  other  cities  at  such  an  amount  as  to  admit  of  their 
importation  at  all,  are,  and  at  all  times  mentioned  have  been, 
controlled  by  the  said  defendants,  or  some  of  them,  or  those 
bound  by  contracts  to  them.  That  before  the  association, 
combination,  and  conspiracy  hereinafter  inferred  to,  defend- 
ants were  uncombined,  and  were  selling  grates,  mantels,  and 
tiles  on  their  respective  merits,  their  prices  being  determined 
by  the  law  of  su[)ply  and  demand.  That  in  the  j^ears 
1896  and  189T  there  wei-e  in  San  Francisco  and  the  other  said 
cities  numerous  persons  engaged  in  the  wholesale  and  retail 
business  of  selling  tiles,  and  in  the  placing  and  laying  of 
them.  That  defendants,  with  intent  to  form  a  contract, 
trust,  and  conspiracy  in  i^estraint  of  trade  and  commerce 
between  the  state  of  California  and  the  states  of  Indiana, 
Kentucky,  New  Jersey,  Pennsylvania,  and  Ohio,  for  the  pur- 
pose of  controlling  the  output  and  regulating  the  price  of 
these  commodities,  and  monopolizing  the  said  trade,  com- 
bined and  conspired  to  monopolize  the  grate,  tile,  and  mantel 
importations  and  trade  and  commerce  from  other  states  to 
and  with  the  state  of  California,  to  the  extent  of  the  tiles, 
grates,  and  mantels  that  could  be  used  in  the  state  of  Cali- 
fornia in  the  erection  and  construction  of  dwellings  and 
buildings,  and  so  conspii-ed  to  raise  the  price  of  these  com- 
modities in  the  California  market,  and  for  this  purpose  on 
or  about  the day  of  January,  1898,  formed  an  organi- 
zation and  adopted  a  constitution  and  by-laws,  which  consti- 
tution and  by-laws  are  now  in  effect.  That  the  said  consti- 
tution and  by-laws  provided  that  no  sales  and  deliveries,  or 


LOWBY     V,   TILE,    MANTEL   &   GBATE   ASSN. 


999 


Opinion  of  the  Court 

contracts  for  the  sale  or  delivery,  or  the  placing,  of  tiles, 
grates,  or  mantels,  will  be  made  by  the  manufacturer 
thereof  to  any  person  dealing  in  these  commodities,  unless 
such  person  belong  to  the  said  unincorporated  association, 

and  shall  pay  or  cause  to  be  paid  dollars  to  that 

organization,  and  bind  themselves  to  abide  by  its  constitu- 
tion and  by-laws ;  that  is  to  say,  that  no  one  who  is  a  member 
of  that  organization  shall  sell  to,  or  deal  with  or  deliver  to, 
any  person  engaged  in  the  business  of  buying,  selling,  or 
placing  tiles,  grates,  or  mantels  in  the  cities  of  San  Fran- 
cisco, Oakland,  Sacramento,  and  San  Jose,  and  other  cities 
in  this  state,  unless  such  person  shall  become  a  member  of 
the  said  unincorporated  organization,  and  shall  agree  that 
in  their  general  business  of  selling  such  commodities  to  the 
general  public  they  shall  sell  them  at  such  prices  as  may  be 
arbitrarily  fixed  by  the  said  unincorporated  association. 
That,  prior  to  the  formation  of  that  organization,  plaintiffs 
were  doing  a  large  business  in  selling  tiles,  mantels,  and 
grates,  and  were  making  an  annual  profit  of  about  $5,000. 
That  plaintiffs  are  unable  to  join  the  said  organization,  be- 
cause, according  to  its  constitution  and  by-laws,  a  unanimous 
vote  of  the  members  of  the  association  is  required  to  elect  a 
member  thereof,  and  certain  members  of  that  organization 
are  so  antagonistic  to  plaintiffs,  by  reason  of  business  differ- 
ences, that  they  would  not  allow  them  to  enter  the  organiza- 
tion; and  further,  the  rules  and  regulations  of  the  associa- 
tion require  that  members  must  keep  constantly  in  stock 
goods  to  the  value  of  $3,000,  and  there  are  times  when  plain- 
tiffs' stock  does  not  amount  to  that  value.  That,  if  [820] 
plaintiffs  join  said  association,  they  would  be  bound  to  sell 
their  wares  at  prices  arbitrarily  fixed  by  the  association,  and 
not  at  their  fair  market  value.  That  said  association  is 
illegal  and  void,  by  virtue  of  the  act  of  congress  approved 
July  2,  1890,  and  by  joining  it  plaintiffs  would  be  guilty  of 
a  crime  under  the  said  act.  That,  since  the  formation  of 
said  organization,  plaintiffs  have  been  unable  to  purchase 
tiles,  mantels,  or  grates  from  any  of  the  defendants,  although 
they  have  tendered  to  the  defendants  the  price  of  the  same. 
That  defendants  have  refused  to  deliver  any  tiles,  mantels, 
or  grates  to  them  since  the  organization  of  said  association. 


1000 


98  FEDEBAL  REPORTEB,  820. 


Opinion  of  the  Court. 

That,  about  the  time  of  the  formation  of  said  association, 
plaintiffs  had  placed  with  defendants  certain  orders  for  tiles; 
but  these  ordei-s  were  not  filled,  but  were  canceled,  by  the 
parties  with  whom  they  had  been  placed,  for  the  reason  that 
plaintiffs  did  not  belong  to,  and  would  not  join,  said  organi- 
zation. That,  about  the  time  of  the  formation  of  the  asso- 
ciation, plaintiffs  had  placed  orders  for  tiles  with  the  Colum- 
bia Encaustic  Tile  Company,  which  canceled  plaintiffs' 
orders  because  plaintiffs  did  not  belong  to  the  Tile,  Mantel 
&  Grate  Association.  That  said  organization  is  within  the 
statute  of  the  51st  congress,  passed  and  approved  July  2, 
1890,  known  as  '*  Chapter  647,  Supplement  to  the  Revised 
Statutes  at  Large  of  the  United  States."  That,  by  reason  of 
the  monopoly  of  such  association,  plaintiffs  are  damaged  in 
the  simi  of  $10,000.  Plaintiffs  pray  for  treble  the  sum  of 
$10,000,  in  accordance  with  the  provisions  of  the  above- 
named  act,  and  for  further  equitable  relief. 

To  this  amended  complaint  the  defendants  W.  W.  Mon- 
tague &  Co.,  a  corporation ;  the  Bush  &  Mallett  Company,  a 
corporation ;  Mrs.  Mary  Bennett  and  John  H.  Schutte,  part- 
ners trading  as  Bennett  &  Schutte:  the  John  Stock  Sons,  a 
corporation;  Heavener  Meir;  Mangrum  &  Otter,  a  corpora- 
tion; and  the  Tile,  Mantel  &  Grate  Association, — filed  a 
demurrer.  The  grounds  of  this  demurrer  are:  That  the 
amended  complaint  does  not  state  facts  sufficient  to  consti- 
tute a  cause  of  action  against  defendants,  or  any  of  them. 
That  there  is  a  misjoinder  of  parties  defendant,  in  that  the 
Columbia  Encaustic  Tile  Company,  the  United  States  En- 
caustic Tile  Works,  the  Cambridge  Tile  Manufacturing 
Company,  the  Pittsburg  Tile  Company,  the  Trent  Tile  Com- 
pany, and  the  Star  Encaustic  Tile  Company,  Limited,  are 
all  improperly  made  and  joined  as  defendants  in  this  action. 
That  the  amended  complaint  is  uncertain,  (1)  in  that  it  does 
not  appear  therefrom  whether  the  plaintiffs  were  at  any  of 
the  times  mentioned  in  the  amended  complaint  engaged  in 
interstate  commerce;  (2)  in  that  it  cannot  be  ascertained 
therefrom  whether  the  acts  of  defendants  complained  of  in- 
terfere with  interstate  commerce  directly,  immediately,  or 
at  all;  (3)  in  that  it  cannot  be  ascertained  therefrom  with 
sufficient  certainty  whether  plaintiffs  have  been  damaged  in 


LOWBY     V.    TILE,    MANTEL   &   GKATE   ASSN. 
Opinion  of  the  Court 


1001 


the  sum  of  $10,000  or  at  all.  It  does  not  appear  from  the 
record  that  the  foreign  corporations  joined  as  defendants 
have  been  served  with  process,  and  they  have  made  no  ap- 
pearance. 

This  action  is  brought  under  the  provisions  of  an  act  of 
congress  dated  July  2,  1890,  and  entitled  "An  act  to  protect 
trade  and  com-  [821]  merce  against  unlawful  restraints  and 
monopolies."    26  Stat.  209.    Section  7  of  this  act  provides: 

"Any  person  who  shall  be  injured  in  his  business  or  property  by 
any  other  person  or  corporation,  by  reason  of  anything  forbidden  or 
declared  to  be  unlawful  by  this  act,  may  sue  therefor  in  any  circuit 
court  of  the  United  States,  in  the  district  in  which  the  defendant  re- 
sides or  is  found,  without  respect  to  the  amount  in  controversy,  and 
shall  recover  three-fold  the  damages  by  him  sustained,  and  the  costs 
of  suit  including  a  reasonable  attorney's  fee." 

It  is  contended  by  the  counsel  for  defendants  that  there  is 
a  misjoinder  of  parties  defendant  in  the  amended  complaint, 
in  that  certain  corporations  organized  and  doing  business 
in  states  other  than  this  state  have  been  joined  as  defendants 
in  this  action;  such  corporations  being  residents  of  districts 
other  than  this,  and  not  found  within  this  district,  so  that 
no  service  of  process  can  be  made  upon  them,  and  themselves 
subjected  to  the  jurisdiction  of  the  court.  The  allegations 
of  the  amended  complaint  in  this  respect  are  as  follows : 

"All  of  said  defendants  have  been  since  that  date,  and  are  now, 
carrying  on  business  in  the  state  of  California,  and  within  the  juris- 
diction of  the  Northern  district  thereof." 

Defendants'  counsel  contend  that  these  allegations  are  not 
such  as  to  give  the  court  jurisdiction  over  such  defendants 
as  do  not  reside  in  this  district,  and  that,  as  the  defendant 
corporations  joined  with  them  reside  only  in  the  states  in 
which  they  have  been  respectively  organized,  they  can  only 
be  sued  in  their  own  districts.  It  is  contended  by  plaintiffs' 
counsel  that  the  defendants  who  have  demurred  are  estopped 
from  demurring  to  the  amended  complaint  upon  the  ground 
that  some  of  their  co-defendants  are  being  sued  in  the  wrong 
district,  since  they  have  made  a  general  appearance,  and  by 
so  doing  have  lost  the  right  to  raise  the  question  that  there 
is  a  misjoinder  of  parties  on  these  grounds.  In  the  case  of 
Improvement  Co.  v.  Gihney^  160  U.  S.  217,  16  Sup.  Ct.  272, 
40  L.  Ed.  401,  the  action  was  at  law,  and  the  court  discussed 


1002 


98  FEDERAL   REPORTEB,   821. 
Opinion  of  t!ie  Court. 


the  effect  of  a  general  appearance  by  a  defendant  upon  a 
demurrer  by  the  same  defendant  based  upon  jurisdictional 
grounds.  In  this  case  the  complaint  alleged  that  the  plain- 
tiff was  incorporated  under  the  laws  of  New  Jersey,  and  was 
a  citizen  of  that  state,  and  that  all  the  defendants  were  citi- 
zens and  residents  of  the  state  of  Indiana.    "  On  June  19, 

1890,  the  defendants  Gibney,  McElwaine,  and  Wheeler,  by 
their  attorney,  entered  a  general  appearance,  but  Gibney 
neither  pleaded  nor  answered,  and  the  defendant  Hartley 
never  appeared  or  made  any  defense.    On  September  19, 

1891,  McElwaine  and  Wheeler  pleaded  in  abatement  that 
at  the  time  of  the  bringing  of  this  action,  and  ever  since, 
Gibney  and  Bartley  were  citizens  of  the  state  of  Pennsyl- 
vania, and  not  citizens  or  residents  of  the  state  of  Indiana, 
and  that  therefore  the  court  had  no  jurisdiction  of  the  case. 
The  plaintiff  demurred  to  this  plea  as  not  containing  facts 
sufficient  to  constitute  a  cause  for  the  abatement  of  the  action. 
The  plaintiff  declining  to  plead  further,  but  electing  to  stand 
upon  its  demurrer  to  the  plea,  the  court  adjudged  that  the 
plaintiff  take  nothing  by  its  action,  and  that  the  defendant 
recover  costs."  The  case  was  [82«|  taken  to  the  supreme 
court  upon  a  writ  of  error.  Mr.  Justice  Gray  delivered  the 
opinion  of  the  court,  and  in  the  course  of  that  opinion  said, 
at  page  220,  IGO  U.  S.,  page  27a,  16  Sup.  Ct.,  and  page  402, 
40  L.  Ed. : 

yn  .Smith  V.  Lymi,  13.3  U.  S.  315.  10  Sup.  Ct.  303,  33  L.  Ed.  635. 
tins  court  li€»ld  tliat  the  provision  of  the  act  of  1888  as  to  the  district 
In  which  a  suit  lietwwn  citizens  of  different  states  should  be  brought, 
re«iuired  sucli  a  suit,  in  which  there  was  more  than  one  plaintiff  or 
more  than  «ine  defendant,  to  be  bnmght  in  the  district  in  which  all 
the  plaintiffs  or  all  tlie  defendants  were  inhabitants  When  there 
are  several  defendamts,  some  of  wiiom  are,  and  some  of  whom  are  not, 
inhabitants  of  the  district  in  which  the  suit  is  brought  the  que«<tion 
whether  those  defendants  wlio  are  inhabitants  of  the  district  may 
take  the  objection,  if  the  ncHircsident  defendants  have  not  appeared 
in  the  suit,  has  never  been  decided  by  this  court.  Strong  reasons 
might  be  given  for  Iiolding  that,  esi>ecially  where,  as  in  this  case  an 
action  is  brought  against  the  princijials  and  sureties  on  a  bond,  and 
one  of  the  principals  is  a  nonresident  and  does  not  appear,  the  defend- 
ants who  do  come  in  may  object  at  the  proper  stage  of  the  proceedings 
to  being  comi>elle<l  to  answer  the  suit.  But  in  the  present  case  it  is 
unnecessary  to  decide  that  (luesticm,  because  one  of  the  principals 
and  both  sureties,  l>eing  all  the  defendants  who  pleaded  to  the  juris- 
diction, had  entered  a  general  appearance  long  before  they  took  the 
objection  that  the  sureties  were  citizens  of  another  district  Defend- 
ants who  have  appeared  generally  in  the  action  cannot  even  object 
that  tliey  were  themselves  inhabitants  of  another  district  and  of 
eoui-se,  cannot  object  that  others  of  the  defendants  were  such  "     ' 


LOWRY     V.   TILE,    MANTEL   &  GRATE   ASSN. 
Opinion  of  the  Court. 


1003 


The  judgment  of  the  circuit  court  was  reversed,  and  the 
case  remanded,  with  directions  to  sustain  the  demurrer  to 
the  plea. 

A  general  appearance,  therefore,  on  the  part  of  these  de- 
fendants, must  be  deemed  a  waiver  of  the  objection  of  a 
misjoinder  because  the  other  defendants  are  not  inhabitants 
of  this  district.  Counsel  contend  that  they  have  not  made 
such  a  general  appearance,  but  have  demurred  specially  on 
the  ground  that  certain  defendants  are  improperly  joined 
with  them.  The  terms  of  the  demurrer  constitute  a  sufficient 
answer  to  this  contention. 

The  grounds  of  demurrer  are  not  confined  to  the  jurisdic- 
tion of  the  court,  but  the  merits  of  the  case  are  involved  in 
the  objection  that  the  complaint  does  not  state  facts  sufficient 
to  constitute  a  cause  of  action.  In  the  case  of  Sou  them  Pae. 
Co,  V.  Denton,  146  U.  S.  202,  13  Sup.  Ct.  44,  36  L.  Ed.  942, 
the  question  of  special  appearance  was  considered.  The 
action  was  at  law,  and  was  brought  in  the  circuit  court  of  the 
United  States  for  the  Western  district  of  Texas.  The  peti- 
tion alleged  that  the  defendant  was  a  corporation  duly  incor- 
porated under  the  laws  of  the  state  of  Kentuclvy,  a  citizen 
of  the  state  of  Kentuckv,  and  a  resident  of  El  Paso  countv, 
in  the  state  of  Texas ;  that  defendant  "  was  and  is  engaged 
in  the  business  of  running  and  propelling  cars  for  tlie  con- 
veyance of  freight  and  passengers  over  the  line  of  railway 
extending  eastwardly  from  the  city  of  El  Paso,  Texas,  into 
and  through  the  counties  of  El  Paso  and  Presidio,  and  the 
city  of  San  Antonio,  all  of  the  state  of  Texas;  that  the 
defendant  is  now  doing  business  as  aforesaid,  and  has  an 
agent  for  the  transaction  of  its  business  in  the  city  and 
county  of  El  Paso,  Texas,  to  wit,  W.  E.  Jessup."  The  plain- 
tiff resided  in  the  county  of  Red  River,  which  is  in  the 
Eastern  district  of  Texas.  Defendant,  by  leave  of  court, 
filed  a  document  desig-  [823]  nated  as  an  "  answer  or  de- 
murrer," ''  for  the  special  purpose,  and  no  other,  until  the 
question  herein  raised  is  decided,  of  objecting  to  the  juris- 
diction of  this  court,"  and  demurred  and  excepted  to  the 
petition  because,  upon  the  above  allegations,  "  it  appears 
that  the  suit  ought,  if  maintained  at  all  in  the  state  of  Texas, 
to  be  brought  in  the  district  of  the  residence  of  the  plain- 


1004 


98  FEDEKAL  BEPOBTEB,  823. 
Opinion  of  the  Court 


tiff,— that  is  to  say,  in  the  Eastern  district  of  Texas  ";  and 
tlie  defendant  prayed  judgment  whether  the  court  had  juris- 
diction. The  court  overruled  the  demurrer.  Defendant 
thereupon  answered  to  the  merits,  and,  judgment  being 
given  against  it,  sued  out  a  writ  of  error  in  the  United  States 
supreme  court  on  the  question  of  jurisdiction  only,  under 
the  act  of  February  25,  1889  (25  Stat.  693,  c.  236).  Mr. 
Justice  Gray  said,  at  page  206,  146  U.  S.,  page  45,  13  Sup. 
Ct.,  and  page  944,  36  L.  Ed. : 

"  It  may  be  assumed  that  the  exemption  from  being  sued  in  any 
other  district  might  be  waived  by  the  corporation  bv  appearing 
genera  ly  or  by  answering  to  the  merits  of  the  action  without  first 
objectiing  to  the  jurisdiction.    Railway  Co,  v.  McBride,  141  U.  S   127 

]l  i"P-  SI*  JSf'  ^^  ^'  ^^'  *^^'  Railway  Co.  v.  Cox,  145  U.  S.  593, 
iz  feup.  Lt.  905,  30  L.  Ed.  829.  But  In  the  present  case  there  was 
no  such  waiver.  The  want  of  jurisdiction,  being  apparent  on  the 
face  of  the  petition,  might  be  talcen  advantage  of  by  demurrer,  and 
S?  F®?J"  „5**^*^^^"^  ^'«s  necessarj'.  Coal  Co.  v.  Blatchfwd,  11 
Wall.  Ii2,  20  L.  Ed.  179.  The  defendant  did  file  a  demurrer  for 
the  special  and  single  purpose  of  objecting  to  the  jurisdiction;  and 
it  was  only  after  that  demurrer  had  been  overruled,  and  the  defend- 
ant bad  excepted  to  the  overruling  thereof,  that  an  answer  to  the 
merits  was  filed." 

The  case  of  Raihmy  Co,  v.  MeBride,  141  U.  S.  127.  130, 
11  Sup.  Ct,  982,  983,  35  L.  Ed.  659,  cited  in  Southern  Pae. 
€o.  V.  Denton^  mpra,  was  also  an  action  at  law ;  and  the  only 
question  involved  was  what  constituted  a  general  appear- 
ance, and  its  effect  upon  the  jurisdiction  of  that  court.  Mr. 
Justice  Brewer,  delivering  the  opinion  of  the  court,  said : 

"Assuming  that  service  of  process  was  made,  although  the  record 
contains  no  evidence  thereof,  and  that  the  defendant  did  not  volun- 
tarily api>eur,  its  first  appearance  was  not  to  raise  the  question  of 
jurisdiction  alone,  but  also  that  of  the  merits  of  the  case  Its  de- 
murrer, as  appears,  was  based  on  three  grounds;  two  referring 
to  the  question  of  jurisdiction,  and  the  third,  that  the  complaint  did 
not  state  facts  siimcient  to  constitute  a  cause  of  action..  There  was 
therefore  m  the  first  instance  a  general  appearance  to  the  merits. 
If  tlie  case  was  one  of  which  the  court  could  take  jurisdiction  such 
an  appearance  waives,  not  only  all  defects  in  the  service,  but  all 
special  privileges  of  the  defendant  in  respect  to  the  particular  court 
in  which  the  action  is  brought." 

In  the  case  at  bar  defendants  did  not  file  their  demurrer 
"for  the  special  and  single  purpose  of  objecting  to  the  juris- 
diction,-' but  for  the  further  purpose  of  attacking  the  merits 
of  the  case  upon  the  facts  as  stated  in  the  complaint ;  and 
this  last  issue  the  court  is  called  upon  to  decide  as  a  mate- 
rial question  in  controversy,  as  will  appear  hereafter.    The 


LOWRY     V.    TILE,   MANTEL   &  GRATE   ASSN. 


1005 


Opinion  of  the  Court. 

appearance  of  defendants  demurring  in  this  action  must,  in 
view  of  these  authorities,  be  regarded  as  a  general  appear- 
ance, and  they  are  therefore  prevented  from  objecting  that 
their  co-defendants  are  improperly  joined  with  them  on 
the  ground  that  they  are  being  sued  in  the  wrong  district. 

Considering  next,  the  ground  of  demurrer  that  the 
amended  com-  [824]  plaint  does  not  state  facts  sufficient  to 
constitute  a  cause  of  action:  The  statute  under  which  this 
action  is  brought  (26  Stat.  209)  provides: 

"Section  1.  Every  contract,  combination  in  the  form  of  trust  or 
otherwise,  or  conspiracy  in  restraint  of  trade  or  commerce  among  the 
several  states  or  with  foreign  nations,  is  hereby  declared  to  be 
illegal.     ♦     ♦     *  < 

"  Sec.  2.  Every  person  who  shall  monopolize  or  attempt  to  monopo- 
lize or  combine  or  consjiire  with  any  other  person  or  persons  to  mon- 
opolize any  part  of  the  trade  or  commerce  among  the  several  states  or 
withforeignnations,  shall  be  deemed  guilty  of  a  misdemeanor.    ♦      *      » 

"  See.  3.  Every  contract,  combination  in  form  of  trust  or  otherwise, 
or  conspiracy  in  restraint  of  trade  or  commerce  in  any  territory  of 
the  United  States,  or  the  District  of  Columbia,  or  in  restraint  of  trade 
or  commerce  between  any  such  territory  and  another,  or  between  any 
such  territory  or  territories  and  any  state  or  states  or  the  District  of 
Columbia,  or  with  foreign  nations,  or  between  the  District  of  Columbia 
and  any  state  or  states  or  foreign  nations,  is  hereby  declared  illegal." 

Defendants'  counsel  rely  upon  the  case  of  Anderson  v.  U. 
S.,  171  U.  S.  004, 19  Sup.  Ct.  50,  43  L.  Ed.  300,  as  supporting 
their  demurrer  upon  this  point.  The  bill  in  that  case  was 
filed,  under  the  direction  of  the  United  States  attorney  gen- 
eral, by  the  United  States  district  attorney  for  the  Western 
district  of  Missouri.  It  alleged,  among  other  things,  that 
defendants — 

"  Have  unlawfully  entered  into  a  contract,  combination,  and  conspiracy 
in  restraint  of  trade  and  commerce  among  the  several  states  and 
with  foreign  nations,  in  this,  to  wit :  That  they  have  unlawfully  agreed, 
contracted,  combined,  and  conspired  to  prevent  all  other  persons  than 
members  of  the  Traders'  Live  Stock  Exchange,  as  aforesaid,  from 
buying  and  celling  cattle  upon  the  Kansas  City  market,  at  the  Kansas 
City  Stock  Yards,  as  aforesaid;  that  the  commission,  firm,  person 
partnership,  or  corporation  to  whom  said  cattle  are  consigned  at 
Kansas  City,  as  aforesaid,  is  not  i^ermitted  to.  and  cannot  sell  or 
dispose  of  said  cattle  at  the  Kansas  City  market,  as  aforesaid  to 
any  buyer  or  speculator  at  the  Kansas  City  Stock  Yards,  unless  said 
buyer  or  speculator  is  a  member  of  the  Traders'  Live-Stock  Exchange 
and  these  defendants,  and  each  of  tliem,  unlawfnllv  and  oppressively 
refuse  to  purchase  cattle,  or  in  any  manner  negotiate  or  deal  with  or 
buy  from  any  commission  merchant  who  shall  sell  or  purchase  cattle 
from  any  speculator  of  the  said  Kansas  City  Stock  Yards  who  is  not 
a  member  of  the  said  Traders'  Live-Stock  Exchange;  that  by  and 
through    the    unlawful    agreement,    combination,    and    conspiracy    of 


1006 


98  FEDEKAL   BEPOBTER,   824. 


Opinion  of  the  Court. 

these  defendniits,  the  business  and  tralMc  in  cattle  at  the  said  Kan- 
sas City  Stoclv  Yards  is  interfered  with,  hindered,  and  restrained,  thus 
entailing  extra  expense  and  loss  to  the  owner,  and  placing  an  ob- 
struction and  embargo  on  the  marlvCting  of  cattle  shipped  from  the 
states  jind  territories  aforesaid  to  the  Kansas  City  Stocli  Yards." 

Mr.  Justice  Peckhani,  in  the  course  of  the  opinion  of  the 
court,  sa vs : 

"  The  agreement  now  under  discussion  differs  radically  from  those 
of  U.  8.  V.  Jcllicfi  Mountain  Coal  d  Coke  Co.  (C.  C.)  46  Fed.  432, 
12  L.  R.  A.  753;  U,  S.  v.  Coal  Dealers'  Ass'n  (C.  C.)  85  Fed.  2.52;  and 
r.  -S.  Y.  Addmtoti  Pipe  d  iiteel  Co.,  29  C.  C.  A.  141,  85  Fed.  271.  The 
agreement  in  all  of  these  cases  provided  for  fixing  the  prices  of  the 
articles  dealt  in  by  the  different  rompanies :  being  in  one  case  iron 
pipe  f(»r  gas.  water,  sewer,  and  other  puri>0!^es.  and  conl  in  the  other 
two  cases.  If  it  were  concetled  that  these  cases  were  well  decided, 
they  differ  so  materially  and  radically  in  their  nature  and  purix>se 
from  the  case  under  consideration  that  they  form  no  l)asis  for  its 
decision.  This  asscM-iation  does  not  meildle  with  prices,  and  itself 
does  no  business.  In  refusing  to  recognize  any  yard  trader  who  is 
not  a  member  of  the  exchange,  we  see  no  purpose  of  thereby  affecting, 
or  in  any  manner  restraining,  interstate  L-onnuerce,  which,  if  affected 
at  all,  can  only  be  in  a  very  [825]  indirect  and  remote  manner.  The 
rule  has  no  direct  tendency  to  diminish  or  in  any  way  impede  or  re- 
strain interstate  commerce  in  the  cattle  dealt  in  by  defendants. 
There  is  no  tendency,  as  a  result  of  the  iiiie.  directly  or  indirectly,  to 
restrict  the  competition  among  defendants  for  the  class  of  cattle 
dealt  in  by  them.  Those  who  are  selling  the  cattle  have  the  market 
«oniiM»se<i  of  dt^fendants.  and  also  composed  of  the  representative 
buyers  of  all  the  packing  houses  at  Kansas  City,  and  also  of  the 
various  commission  merchants  who  are  constantly  buying  on  orders, 
and  of  those  who  are  Iniying  on  their  own  account.  This  makes  a 
large  ciunpetition  wholly  outside  of  the  defendants.  The  owner  of 
cattle  for  sale  is  thei-efore  furnished  with  a  market  at  which  the  com- 
petition of  buj^ers  has  a  broad  effect  All  yard  traders  have  the  op 
I>ortunity  of  becoming  meml>ers  of  the  exchange,  and  to  thus  obtain 
all  the  advantages  thereof." 

The  allegations  of  the  amended  complaint  in  the  present 
case  are  that  the  members  of  the  Tile.  Mantel  &  Grate  Asso- 
ciation have  conspired  and  combined  to  raise  the  prices  of 
tiles,  mantels,  and  gi'ates.  to  control  the  output  and  to  regu- 
late the  prices  of  these  commodities,  with  the  intent  of 
monopolizing  the  trade  and  commerce  between  the  other 
states  and  California  in  regard  to  such  commodities,  as  well 
as  to  arbitrarily  fix  their  prices  independent  of  their  natural 
market  price.  It  wdll  be  seen,  therefore,  that  the  case  of  An- 
derson  v.  U.  S.  cannot  be  considered  as  applicable  to  the  case 
at  bar. 

The  case  of  U,  8.  v.  Jellieo  Mmmtain  Coal  <&  Coke  Co, 
{€.  G.)  46  Fed.  432, 12  L.  R.  A.  753,  is  more  in  point.    The 


LOWBY     V,   TILE,   MANTEL   &  GRATE   ASSN.  1037 

Opinion  of  the  Court. 

action  was  brought  under  the  antitrust  act  against  the  mem- 
bers of  the  Nashville  Coal  Exchange.  The  purpose  of  the 
agreement  in  that  case  was  to  establisli  the  price  of  coal  at 
Nashville,  and  to  change  the  same  from  time  to  time.  Mem- 
bers found  guilty  of  selling  coal  at  a  less  price  than  tlie  price 
fixed  by  the  exchange,  either  directly  or  indirectly,  were 
fined  2  cents  per  bushel  and  $10  for  tha  first  offense,  and  4 
cents  per  bushel  and  $20  for  the  second  offense.  Owners  or 
operators  of  mines  were  not  to  sell  or  ship  coal  to  any  per- 
sons, firms,  or  corporations  in  Nashville  who  were  not  mem- 
bers of  the  exchange,  and  dealers  were  not  to  buy  coal  from 
any  one  but  a  member  of  the  exchange.  The  court,  com- 
menting upon  the  agreement  of  this  association  of  coal  deal- 
ers, said : 

"This  clearly  indicates  the  purpose  of  the  asstn-iation  to  be  t<>  con- 
trol the  price  of  coal  in  the  Xashvillt^  niarlcet  used  in  manufacturing 
and  m  steamboats  whenever  it  conid;  that  the  mines  ot  coal  tributary 
to  Nashville  were  all  expected  to  btn-ome  members  of  the  exchan-e 
whereupon  the  prices  of  coal  could  be  fixed  absolutely ;  and  the  necSs- 
^2?i  'Jijerence  from  this  declaration  and  the  entire  organic  structure 
of  the  body  is  that  it  felt  strong  euinigh  already  to  regulate  and  estab- 
ish  the  prices  of  domestic  coal  in  that  market  to  a  large  extent  at 
least,  and  that  this  exchange  might  now  monopolize  the  busirfesssof 
dealing  in  domestic  coal  in  the  Nashville  market,  and  in  the  fnture 
monopolize  by  and  confine  to  its  membership  the  entire  trade  in  coal 
at  that  point.  It  seems  to  me  that  the  purposes  and  intention  of  the 
association  could  hardly  have  been  more  snccessfnlly  framed  to  fall 
within  the  provisions  of  the  act  of  July  2,  181J0,  had  the  obiect  been'to 
organize  a  combination,  the  business  of  which  should  subject  it  to  the 
pnalties  of  that  statute ;  and  there  is  no  need  of  authorities  to  sus- 
tain such  view  of  the  case." 

In  the  case  of  U.  8,  v.  Coal  Dealers'  Ass'n  (C.  C.)  85  Fed. 
252,  the  bill  alleged  that  defendants  comprised  all  the  whole- 
sale dealers  handling  coal  in  San  Francisco,  and  that  they, 
together  with  certain  retail  dealers,  had  conspired  with' 
intent  to  monopolize  the  coal  [826]  trade  and  commerce 
between  British  Columbia,  Washington,  and  Oregon,  to  the 
extent  of  the  coal  used  for  domestic  purposes  in  the  city  of 
San  Francisco.     It  was  said  by  this  court  in  that  case : 

"But  the  agreement  of  the  importers  and  wholesale  dealers,  which 
alone  gives  life  and  force  to  the  c<mibination,  is  directed  specifically  to 
the  maintenance  of  card  rates  for  certain  imported  coals,  by  name* 
and  it  IS  this  agreement,  and  what  may  l>e  ac<'omplished  under  it  by 
the  combination,  that  is  to  be  considered,  and  n<.t  <>liat  it  mav  be 
doing  at  any  particular  time." 


lOOo 


98  FEDERAL  REPORTER,  828. 


Opinion  of  the  Court 

In  U.  S.  V.  Addffsion  Fife  cfe  Steel  Co.^  54  U.  S.  App,  723, 
2^  C.  C.  A.  141,  and  85  Fed.  279,  the  United  States  began 
proceedings  in  equity  against  six  corponitions  engaged  in 
the  ma  nil  fact  11  re  of  cast-iron   pipe  in  localities   in   Ohio, 
Kentucky,  Ahibama,  and  Tennessee.    The  bill  of  complaint 
charged  the  defendants  with  a  combination  and  conspiracy 
in  unlawful  restraint  of  interstate  commerce.     It  appeared 
that  the  defendants,  who  were  manufacturers  and  vendors 
of  cast-ii-on  pipe,  entered  into  m  combination  to  raise  the 
price  of  pipe  for  all  the  states  west  and  south  of  New  York, 
Pennsylvania,  and  Virginia,  coni[)rising  some  36  states  in 
all;  and,  to  carry  out  this  combination,  the  associated  de- 
fendants entered  into  an  agreement  which  provided  certain 
methoils  of  procedure  in  dealing  with  the  public,  whereby 
competition  between  themselves  was  avoided  in  the  territory 
mentioned.    The  court,  in  an  able  opinion  reviewing  the 
whole  subject  of  the  law  relating  to  combinations  and  con- 
tracts in  restraint  of  trade,  arrived  at  the  conclusion  that  the 
association  of  the  defendants  was  a  contract,  combination, 
or  conspiracy  in  restraint  of  trade,  as  the  terms  are  to  be 
understood  under  the  act  of  July  2,  1890.     The  doctrine  of 
that  case  is  applicable  here.    The  allegations  charging  con- 
spiracy and   combination   to  raise  the  price  of  the  com- 
modities in  question,  and  of  an  agreement  by  the  members 
of  such  combination  to  sell  these  commodities  at  such  price-j 
as  shall  l)e  arbitrarily  fixed  by  the  combination  in  question, 
together  with  the  further  allegation  that  such  combination 
has  been  made  with  the  intent  of  monopolizing  trade  and 
commerce  between  California  and  other  states,  are  sufficient, 
under  these  authorities,  to  bring  the  case  within  the  opera- 
tion of  the  provisions  of  the  Sherman  act.    Defendants' 
demurrer  upon  the  ground  of  the  insufficiency  of  the  facts 
stated  to  constitute  a  cause  of  action  cannot,  therefore,  be 
sustained. 

Defendants  also  demur  on  the  gi^ound  of  uncertainty,  con- 
tending that  the  complaint  fails  to  show  that  defendants 
were  engaged  in  interstate  commerce,  or  that  their  acts 
directly  or  immediately  interfered  with  interstate  commerce, 
or  in  what  manner  plaintiffs  have  been  damaged,  or  at  all. 
Upon  consideration,  however,  this  ground  of  demurrer  does 


ADDYSTON  PIPE  &  STEEL  CO.  V.  UNITED  STATES.     1009 

Syllabus. 

not  appear  to  be  well  founded.  The  allegations  of  the 
complaint  are  obviously  free  from  uncertainty  in  these  par- 
ticulars, and  this  ground  of  demurrer  must  therefore  be 
denied.  The  demurrer  of  defendants  will  therefore  be  over- 
ruled. 


[2111  ADDYSTON  PIPE  AND  STEEL  COMPANY  v. 

UNITED  STATES.- 

APPEAL  FROM  THE  COURT  OF  APPEALS  FOR  THE  SIXTH  CIRCUIT. 

No.  51.     Argued  April  26,  27,  1899.— Decided  December  4,  1899. 

[175  U.  S.,  211.] 

Under  the  grant  of  power  to  Congress,  contained  in  Section  8  of  article 
I  of  tbe  Constitution,  "  to  regulate  commerce  with  Foreign  Nations 
and  among  the  several  States,  and  with  Indian  Tribes,"  that  Ijody 
may  enact  such  legislation  as  shall  declare  void  and  prohibit  the  per- 
formance of  any  contract  between  individuals  or  corporations  where 
the  natural  and  direct  effect  of  such  a  contract  shall  be,  when  car- 
ried out,  to  directly  and  not  as  a  mere  incident  to  other  and  inno- 
cent purposes,  regulate  to  any  extent  interstate  or  foreign  com- 
merce. 

The  provision  in  the  Constitution  regarding  the  liberty  of  the  citizen  is 
to  some  extent  limited  by  this  commerce  clause ;  and  the  power  of 
Congi'ess  to  regulate  interstate  commerce  comprises  the  right  to 
enact  a  law  prohibiting  the  citizen  from  entering  into  those  private 
contracts  which  directly  and  substantially,  and  not  merely  indirectly, 
remotely,  incidentally  and  collaterally,  regulate,  to  a  greater  or 
less  degree,  commerce  among  the  States. 

Interstate  commerce  consists  of  intercourse  and  traffic  between  the 
citizens  or  inhabitants  of  different  States,  and  includes  not  only  the 
transportation  of  persons  and  property  and  the  navigation  of  public 
waters  for  that  purpose,  but  also  the  purchase,  sale  and  exchange  of 
commodities. 

The  power  to  regulate  interstate  commerce,  and  to  prescribe  the  rules 

by  which  it  shall  be  governed,  is  vested  in  Congress,  and  when  that 

,     body  has  enacted  a  statute  such  as  the  act  of  July  2.  1890,  c.  G47, 

entitled  "an  act  to  protect  trade  and  commerce  against  unlawful 

restraints  and  monopolies,"  any  agreement  or  combination  which 


o  Bill  asking  for  a  preliminary  injunction  was  dismissed  by  the  Cir- 
cuit Court  for  the  Eastern  District  of  Tennessee  (78  Fed.,  712).  See 
p.  631.  Decree  rcAcrsed  and  defendants  perpetually  enjoined  by  the 
Circuit  Court  of  Appeals,  Sixth  Circuit  (85  Fed.,  271).  See  p.  772. 
This  latter  decree  was  modified  and  affirmed  by  the  Supreme  Court 
of  the  United  States  in  the  present  case  (175  U.  S.,  211). 
11808— VOL  1—06  M 64 


1010 


175  UNITED   STATES  BEPORTS,   211. 


Syllabus. 

directly  t)i>erates,  not  alone  upon  the  manufacture,  but  upon  the  sale, 
transportation  and  delivery  of  an  article  of  interstate  commerce,  by 
preventing  or  restricting  its  sale,  thereby  regulates  interstate  com- 
merce to  that  extent,  and  thus  trenches  upon  the  power  of  the  na- 
tional legislature,  and  violates  the  statute. 

The  contracts  considered  in  this  case,  set  forth  in  the  statement  of 
facts  and  in  the  opinion  of  the  court,  relate  to  the  sale  and  trans- 
portation to  other  States  of  specific  articles,  not  incidentally  or  col- 
laterally, but  as  a  direct  and  immediate  result  of  the  combination 
entered  into  by  the  defendants;  and  they  restrain  the  manufactur- 
ing, purchase,  sale  or  exchange  of  the  manufactured  articles  among 
the  several  States,  and  enhance  their  value,  and  thus  come  within 
the  provisions  of  the  "act  to  protect  trade  and  commerce  against 
unlawful  restraints  and  monoi>olies.** 

[812]  When  the  direct,  immediate  and  intended  effect  of  a  contract  or 
combinatitm  among  dealers  in  a  commodity  is  the  enhancement  of  Its 
price,  it  amounts  to  a  restraint  of  trade  in  the  commodity,  even 
though  contracts  to  buy  it  at  the  enhanced  price  are  being  made. 

The  judgment  of  the  court  below,  which  perpetually  enjoined  the  de- 
fendants in  the  court  below  from  maintaining  the  combination  in 
cast-iron  pipe  as  described  in  the  petition,  and  from  doing  any  busi- 
ness under  such  combination,  is  too  broad,  as  it  applies  equally  to 
commerce  which  is  wholly  within  a  State  as  well  as  to  that  which 
is  interstate  or  international  only. 

Although  the  jurisdiction  of  Congress  over  commerce  among  the  States 
Is  full  and  complete,  it  19  not  questioned  that  it  has  none  over  that 
which  is  wholly  within  a  State,  and  therefore  none  over  combina- 
tions or  agreements  so  far  as  they  relate  to  a  restraint  of  such  trade 
or  commerce :  nor  does  it  acquire  any  jurisdiction  over  that  part  of 
a  combination  or  agreement  which  relates  to  commerce  wholly  within 
a  State,  by  reason  of  the  fact  that  the  combination  also  covers  and 
regulates  commerce  which  is  interstate.* 


[44  L.  ed.,  13a]» 

[The  power  of  Congress  to  regulate  interstate  or  foreign  commerce 
includes  the  power  to  legislate  upon  the  subject  of  private  contracts 
in  respect  to  such  commerce.] 

[The  constitutional  guaranty  of  liberty  of  the  individual  to  enter 
into  private  contracts  does  not  limit  the  power  of  Congress  so  as 
to  prevent  It  from  legislating  upon  the  subject  of  contracts  in  re- 
straint of  interstate  or  foreign  commerce.] 

.1      » 

•  The  foregoing  syllabus  and  the  abstract  of  argument  copyrighted, 
1899,  1900,  by  The  Banks  Law  Publishing  Co. 

6  The  following  paragraphs  inclosed  in  brackets  comprise  the  syl- 
labus to  this  case  in  the  U.  S.  Supreme  Court  Reports,  Book  44, 
p.  13a  Copyrighted,  1900,  by  The  Lawyers'  Co-Operative  Publish- 
ing Co. 


ADDYSTON  PIPE  &  STEEL  CO.  V.  UNITED  STATES.      1011 

Statement  of  the  Case. 

[An  agi-eement  or  combination  between  corporations  engaged  in  the 
manufacture,  sale,  and  transportation  of  iron  pipe,  under  which 
they  enter  into  public  bidding  for  contracts,  not  in  truth  as  com- 
petitors, but  under  an  arrangement  which  eliminates  all  competition 
between  them  for  the  contract,  and  permits  one  of  their  number  to 
make  his  own  bid,  while  the  others  are  required  to  bid  over  him,  is 
in  violation  of  the  anti-trust  act  of  Congress  of  July  2,  1890,  so  far 
as  It  applies  to  sales  for  delivery  beyond  the  state  in  which  the  sale 
Is  made.] 

[A  combination  may  illegally  restrain  trade  by  preventing  competi- 
tion for  contracts  and  enhancing  prices,  although  it  does  not  pre- 
vent the  letting  of  any  particular  crmtract] 

[A  combination  to  restrain  competition  in  proposals  for  contracts  for 
the  sale  of  certain  articles  which  are  to  be  delivered  In  the  state  In 
which  some  of  the  parties  to  the  combination  reside  and  carry  on 
business  Is  not,  so  far  as  those  members  are  concerned,  in  violation 
of  the  antitrust  law  of  Congress,  although  the  contract  may  he 
awarded  to  some  party  outside  the  state  as  the  lowest  bidder.] 

This  proceeding  was  commenced  in  behalf  of  the  United 
States,  under  the  so-called  anti-trust  act  of  Congress,  of  July 
2,  1890,  c.  647,  2(>  Stat.  209.  It  was  undertaken  for  the  pur- 
pose of  obtaining  an  injunction  perpetually  enjoining  the  six 
corporations,  who  were  made  defendants,  and  who  were  en- 
gaged in  the  manufacture,  sale  and  transportation  of  iron 
pipe  at  their  respective  places  of  business  in  the  States  of 
their  residence,  from  further  acting  under  or  carrying  on  the 
combination  alleged  in  the  petition  to  have  been  entered  into 
between  them,  and  which  was  stated  to  be  an  illegal  and  un- 
lawful one,  under  the  act  above  mentioned,  because  it  was  in 
restraint  of  trade  and  commerce  among  the  States,  etc. 

The  trial  court  dismissed  the  petition,  78  Fed.  Rep.  712,  but 
upon  appeal  to  the  Circuit  Court  of  Appeals  the  judgment  of 
the  court  below  was  reversed  with  instructions  to  enter  a 
decree  for  the  United  States  perpetually  enjoining  defend^ 
ants  from  maintaining  the  combination  in  cast-iron  pipe  as 
described  in  the  i^etition,  and  from  doing  any  business  under 
such  combination.  54  U.  S.  App.  723.  The  six  defendants 
are  The  Addyston  Pipe  and  Steel  Company  of  Cincinnati, 
Ohio;  Dennis  Long  &  Company,  of  Louisville,  Kentucky; 
The  Howard-Harrison  Iron  Company,  of  Bessemer,  Ala- 
bama ;  The  Anniston  Pipe  and  Foundry  Company,  of  Annis- 
ton,  Ala-  [213]  bama:  The  South  Pittsburg  Pipe  Works,  of 
South  Pittsburg,  Tennessee,  and  The  Chattanooga  Foundry 


1012 


175  UNITED   STATES  BEPOBTS,  213. 


Statement  of  the  Case. 

and  Pipe  Works^  of  Chattanooga,  Tennessee;  one  company 
being  in  the  State  of  Ohio,  one  in  Kentucky,  two  in  Alabama 
and  two  in  Tennessee. 

The  following  are  in  substance  the  facts  upon  which  the 
judgment  of  the  Circuit  Court  of  Appeals  rested,  as  stated  in 
the  record : 

It  was  charged  in  the  petition  that  on  the  28th  of  Decem- 
ber, 1894,  the  defendants  entered  into  a  combination  and  con- 
spiracy among  themselves,  by  which  they  agreed  that  there 
should  be  no  competition  between  them  in  any  of  the  States 
or  Territories  mentioned  in  the  agreement,  (comprising  some 
thirty-six  in  all,)  in  regard  to  the  manufacture  and  sale  of 
cast-iron  pipe,  and  that  in  obedience  to  such  agreement  and 
combination,  and  to  carry  out  the  same,  the  defendants  had 
since  that  time  operated  their  shops  and  had  been  selling  and 
shipping  the  pipe  manufactured  by  them  into  other  States 
and  Territories,  under  contracts  for  the  manufacture  and  sale 
of  such  pipe  with  citizens  of  such  other  States  and  Territo- 
ries. There  was  to  be  a  "  bonus  "  charged  against  the  manu- 
facture of  the  pipe,  to  the  extent  set  forth  in  the  agreements 
and  to  be  paid  as  therein  stated.  The  whole  agreement  was 
charged  to  have  been  entered  into  in  order  to  enhance  the 
price  for  the  iron  pipe  dealt  in  by  the  defendants. 

The  petition  prayed  that  all  pipe  sold  and  transported 
from  one  State  to  another,  under  the  combination  and  con- 
spiracy described  therein,  be  forfeited  to  the  petitioner  and 
be  seized  and  confiscated  in  the  manner  provided  by  law,  and 
that  a  decree  be  entered  dissolving  the  unlawful  conspiracy 
of  defendants  and  perpetuaUy  enjoining  them  from  operating 
under  the  same  and  from  selling  said  cast-iron  pipe  in  ac- 
cordance  therewith  to  be  transported  from  one  State  into 
another. 

The  defendants  filed  a  joint  and  separate  demurrer  to  the 
petition  in  so  far  as  it  prayed  for  the  confiscation  of  goods  in 
.  transit,  on  the  ground  that  such  proceedings  under  the  anti- 
trust act  are  not  to  be  had  in  a  court  of  equity,  but  in  a  court 
of  law.  In  addition  to  the  demurrer,  the  defendants  filed  a 
joint  and  separate  answer,  in  which  they  admitted  the  exist- 
12141  ence  of  an  association  between  them  for  the  purpose  of 
avoiding  the  great  losses  they  would  otherwise  sustain,  due  to 


ADDYSTON  PIPE  &  STEEL  CO.  V,  UNITED  STATES.     1013 
Statement  of  the  Case. 

ruinous  competition  between  defendants,  but  denied  that 
their  association  was  in  restraint  of  trade,  state  or  interstate, 
or  that  it  was  organized  to  create  a  monopoly,  and  denied 
that  it  was  a  violation  of  the  anti- trust  act  of  Congress. 

Testimony  in  the  form  of  affidavits  was  submitted  by  peti- 
tioner and  defendants,  and  by  stipulation  it  was  agreed  that 
the  final  hearing  might  be  had  thereon. 

From  the  minutes  of  the  association,  a  copy  of  which  was 
put  in  evidence  by  the  petitioner,  it  appeared  that  prior  to 
December  28,  1894,  the  Anniston  Company,  the  Howardr 
Harrison  Company,  the  Chattanooga  Company  and  the  South 
Pittsburg  Company  had  been  associated  as  the  Southern 
Associated  Pipe  Works.  Upon  that  date  the  Addyston  Com- 
pany and  Dennis  Long  &  Co.  were  admitted  to  membership, 
and  the  following  plan  was  then  adopted : 

"  First.  The  bonuses  on  the  first  90,000  tons  of  pipe  secured  in  any 
territory,  IG"  and  smaller,  shall  be  divided  equally  among  six  shops. 

"  Second.  The  bonuses  on  the  next  75.000  tons,  30"  and  smaller, 
sizes  to  be  divided  among  five  shops.  South  Pittsburg  not  partici- 
pating. 

"  Third.  The  bonuses  of  the  next  40.000  tons,  3G"  and  smaller,  sizes 
to  be  divided  among  four  shops,  Anniston  and  South  Pittsburg  not 
participating. 

"  L^ourth.  The  bonus  on  the  next  15,000  tons,  consisting  of  all  sizes 
of  pipe,  shall  be  divided  among  three  shops,  Chattanooga,  South  Pitts- 
burg and  Anniston  not  participating. 

"  The  above  decision  is  based  on  the  following  tonnage  of  capacity : 

South  Pittsburg 15,000  tons. 

Anniston    30,000  tons. 

Chattanooga    ^ 40,000  tons. 

Bessemer   45,000  tons. 

Louisville    45,000  tons. 

Cincinnati    45,000  tons. 

[215]  "  When  the  220,000  tons- have  been  made  and  shipped  and  the 
bonuses  divided  as  hereafter  provided,  the  auditor  shall  set  aside  into 
2.»A^^r'^  ^""^  ^^^  bonuses  arising  from  the  excess  of  shipments  over 
220,000  tons,  and  shall  divide  the  same  at  the  end  of  the  year  among 
the  respective  companies  according  to  the  percentage  of  the  excels  of 
tonnage  they  may  have  shipped  (of  the  sizes  made  bv  them)  either 
in  pay  or  free  territoi-y.  It  is  also  the  intention  of  this  proposition 
that  the  bonuses  on  all  pipe  larger  than  30  inches  in  diameter  shall  be 
divided  equally  between  the  Addyston  Pipe  and  Steel  Company, 
Dennis  Long  &  Co.  and  the  Howard-Harrison  Company. 

"It  was  thereupon  resolved: 

"  First.  That  this  agreement  shall  last  for  two  years  from  the  date 
of  the  signing  of  same,  until  December  31,  189C. 

"  Second.  On  any  question  coming  before  the  association  requiring 
a  vote,  it  shall  take  five  affirmative  votes  thereon  to  carry  said  ques- 
tion, each  member  of  this  association  being  entitled  to  but  one  vote 

"Third.  The  Addyston  Pipe  and  Steel  Company  shall  handle  the 


1014 


175  UNITED   STATES  BEPORTS,   215. 
•  Statement  of  the  Case. 


business  of  the  gas  and  water  companies  of  Cincinnati,  Ohio,  Coving- 
ton and  Newport,  Ky.,  and  pay  the  bonus  hereafter  mentioned,  and 
the  balance  of  the  parties  to  this  agreement  shali  bid  on  such  work 
«uch  reasonable  prices  as  they  shall  dictate. 

"  Fourth.  Dennis  Long  &  Company,  of  Louisville,  Ky.,  shall  handle 
Louisville,  Ky.,  Jeflfersonville,  Ind.,  and  New  Albany,  Ind.,  furnishing 
all  the  pipe  for  gas  and  water  works  in  above-named  cities. 

"Fifth.  The  Anniston  Pipe  and  Foundry  Company  shall  handle 
Anniston,  Ala.,  and  Atlanta,  Ga.,  furnishing  all  pipe  for  gas  and 
water  companies  in  above-named  cities. 

"Sixth.  The  Chattanooga  Foundry  and  Pipe  Works  shall  handle 
Chattanooga,  Tenn.,  and  New  Orleans,  La.,  furnishing  all  gas  and 
water  pipe  in  above-named  cities. 

"Seventh.  The  Howard-Harrison  Iron  Company  shall  handle  Bes- 
semer and  Birmington,  Ala.,  and  St.  Louis,  Mo.,  furnishing  all  pipe 
for  gas  and  water  companies  in  the  [216]  above-named  cities ;  extra 
bonus  to  be  put  on  East  St.  Louis  and  Madison,  111.,  so  as  to  protect 
the  prices  named  for  St.  Louis,  Mo. 

"Eighth.  South  Pittsburg  Pipe  Works  shall  handle  Omaha,  Neb., 
on  all  sizes  required  by  that  city  during  the  year  of  1805,  conferring 
with  the  other  .companies  and  cooperating  with  them;  thereafter 
they  shall  handle  the  gas  and  water  companies  of  Omaha,  Neb.,  on 
such  sizes  as  they  make. 

"Note.— It  is  understood  that  all  the  shops  who  are  membei-s  of 
this  association  shall  handle  the  business  of  the  gas  and  water  com- 
panies of  the  cities  set  apart  for  them,  including  all  sizes  of  pipe 
made  by  them. 

"The  following  bonuses  were  adopted  for  the  diflPerent  States  as 
named  below:  All  railroad  or  culvert  pipe  or  pipe  for  any  drainage 
or  sewerage  purposes  on  12"  and  larger  sizes  shipjied  into  bonus  ter- 
ritory shall  pay  a  bonus  of  $l.tJO  per  ton.  On  all  sizes  below  12"  and 
shipped  into  'bonus  territory'  for  the  puri)oses  above  named,  there 
shall  be  a  bonus  of  $2.00  per  ton. 

List  of  Bonuses. 

Alabama $3  00        S.  D ....$2  00        Ky $2  00 

B'gham,  Ala...  2  00        Florida 100        I^ 3  00 

Anniston,  Ala..  2  00        Georgia 2  00        Miss 4  00 

IHobile,  Ala ... .  1  00  Atlanta,  Ga  ....  2  00        Mo 2  00 

Arizona Ter 3  00  Ga.  coast  p'ts  ..  1  00        Montana 3  00 

California 1  00        Idaho 2  00  Nebraska  ..          3  00 

Colorado 2  00       Nev 3  00        N.  Mex 3  00 

Ind.  Ter 3  00        Oklahoma 3  00        8.  C 100 

NorthC 1  00        Wis 2  00        Minn 2  00 

Tenn.,    east    ot 

C'land 2  00  Texas,  interior  .  3  00 

Tenn.,  middle 

and  west 3  00       Texas  coast 1  00 

niinois,  except  Madison  and  East  St.  Louis,  as  previously  provided    2  00 

Wyoming 4  00  Wash'ton  Ter . .  1  00  Utah..                 4  00 

Oregon 1  00  Mi  higan  .......  1  50        Indiana 2  00 

Ohio 1  50        West  Va 1  00        Iowa 2  00 

N.D 2  00       Kansas 2  00 

All  other  territory  free. 

"On  motion  of  Mr.  Llewellyn,  the  bonuses  on  all  city  work  as 
•peeially  reserved  shall  be  $2.00  per  ton." 

[217]  The  States  for  sale  in  which  bonuses  had  to  be  paid 
into  the  association  were  called  "  pay  "  territory  as  distin- 


ADDYSTON  PIPE  &  STEEL  CO,  V.  UNITED  STATES.     1015 
Statement  of  the  Case. 

guished  from  "  free  "  territory  in  which  defendants  were  at 
liberty  to  make  sales  without  restriction  and  without  paying 
any  bonus. 

The  by-laws  provided*  for  an  auditor  of  the  association, 
whose  duty  it  was  to  keep  account  of  the  business  done  by 
each  shop  both  in  pay  and  free  territory.  On  the  1st  and 
16th  of  each  month  he  was  required  to  send  to  each  shop  "  a 
statement  of  all  shipments  reported  in  the  previous  half 
month,  with  a  balance  sheet  showing  the  total  amount  of  the 
premiums  on  shipments,  the  division  of  the  same  and  debt 
credit  balance  of  each  company." 

The  system  of  bonuses  as  a  means  of  restricting  competi- 
tion and  maintaining  prices  was  not  successful.  A  change 
was  therefore  made  by  which  prices  were  to  be  fixed  for  each 
contract  by  the  association,  and  except  in  reserved  cities,  the 
bidder  was  determined  by  competitive  bidding  of  the  mem- 
bers, the  one  agreeing  to  give  the  highest  bonus  for  division 
among  the  others  getting  the  contract.  The  plan  was  em- 
bodied in  a  resolution  passed  May  27,  1895,  in  the  words 
following : 

"  Whereas,  the  system  now  in  operation  in  this  association  of  hav- 
ing a  fixed  bonus  on  the  several  States  has  not  in  its  operation  re- 
sulted m  the  adranremetit  in  the  prices  of  pipe  as  was  anticipated, 
except  in  reserved  cities,  and  some  further  action  is  imperatively  nec- 
essary in  order  to  accomplish  the  ends  for  which  this  association  was 
formed:  Therefore,  be  it  resolved,  that  from  and  after  the  first  day 
of  June,  that  all  competition  on  the  pipe  lettings  shall  take  place 
among  the  various  pipe  shops  prior  to  the  said  letting.  To  accomplish 
this  purpose  it  is  proposed  that  the  six  competitive  shops  have  a  rep- 
resentative board  located  at  some  central  city  to  whom  all  inquiries 
for  pipe  shall  be  referred,  and  said  board  shall  fix  the  price  at  which 
said  pipe  shall  be  sold,  and  bids  taken  fmm  the  respective  shops  for 
the  privilege  of  handling  the  order,  and  the  party  securing  the  order 
shall  have  the  protection  of  all  the  other  shops." 

In  pursuance  of  the  new  plan  it  was  further  agreed  "  that 
all  parties  to  this  association  having  quotations  out  shall 
f218]  notify  their  customers  that  the  same  will  be  with- 
drawn by  June  1,  1895,  if  not  previously  accepted,  and  upon 
all  business  accepted  on  and  after  June  1st  bonuses  shall 
be  fixed  by  the  committee.'- 

At  the  meeting  of  December  19,  1895,  it  was  moved  and 
carried  that  upon  all  inquiries  for  prices  from  "  reserved 
cities  "  for  pipe  required  during  the  year  of  1896,  prices  and 


1016 


115  UNITED  STATES  BEPOKTS,  218* 
Statement  of  the  Case. 


bonuses  should  be  fixed  at  a  regular  or  called  meeting  of  the 
principals. 

At  the  meeting  of  December  20, 1895,  the  plan  for  division 
of  bonuses  originally  adopted  was  modified  by  making  the 
basis  the  total  amounts  shipped  into  "  pay  "  territory  rather 
than  the  totals  shipped  into  "  pay  "  and  "  free  "  territory. 

To  illustrate  the  mode  of  doing  business  the  following 
excerpt  from  the  minutes  of  the  meetings  of  December  20, 
1895,  February  14,  18%,  and  March  13,  1896,  is  given: 

"  It  was  inored  to  sell  the  519  pieces  of  20"  pipe  from  Omaha,  Neb., 
for  ^23.40,  delivered.  Carried.  It  was  moved  that  Annistoii  partiii- 
pate  in  the  bonus  and  the  Job  be  sold  over  the  table.  Carried.  Pur- 
suant to  the  motion,  the  519  pieces  of  20"  pipe  for  Omaha  was  sold  to 
Bessemer  at  a  premium  of  $8. 

"  Moved  that  *  bonus  •  on  Anniston's  Atlanta  water  works  contract 
be  fixed  at  |7.10,  provided  freight  is  $1.00  a  ton.    Carried." 

An  illustration  of  the  manner  in  which  "  reserved  "  cities 
were  dealt  with  may  be  seen  in  the  case  of  a  public  letting  at 
St.  Louis.  On  February  4,  1896,  the  water  department  of 
that  city  let  bids  for  2800  tons  of  pipe.  St.  Louis  was  "  re- 
served" to  the  Howard-Harrison  Company  of  Bessemer,  Ala- 
bama. The  price  was  fixed  by  the  association  at  $24  a  ton, 
and  the  bonus  at  $0,50.  Before  the  letting  the  vice  president 
of  this  company  wrote  to  the  other  members  of  the  association 
under  date  of  January  24, 1896,  as  follows : 

**  I  write  to  say  that  in  view  of  the  fact  that  I  do  not  as  vet  know 
what  the  drayage  will  be  on  this  pi|ie,  I  prefer  that  if  any  of  you 
find  it  necessary  to  put  in  a  bid  without  going  to  St.  Lnufs,  please 
bid  not  less  than  $27  for  the  pipe,  and  2}  [219]  cents  per  pound  for 
the  specials.  I  would  also  like  to  know  as  to  which  of  you  would 
find  it  convenient  to  have  a  representative  at  the  letting.  It  will  be 
necessary  to  have  two  outside  bidders." 

The  contract  was  let  to  the  Howard-Harrison  Company  of 
Bessemer,  at  $24,  who  allowed  the  Shickle,  Harrison  and 
Howard  Company,  a  pipe  company  of  St.  Louis,  not  in  the 
association,  but  having  the  same  president  as  the  Howard- 
Harrison  Company  of  Bessemer,  to  fill  part  of  the  order. 
The  only  other  bidders  were  the  Addyston  Pipe  and  Steel 
Company,  and  Dennig  Long  &  Co.,  the  former  bidding  $24.37 
and  the  latter  $24.57.  The  evidence  shows  that  the  Chatta- 
nooga foundry  could  have  furnished  this  pipe,  delivered  in 
St  Louis,  at  from  $17  to  $18,  and  could  have  made  a  profit 
on  it  at  that  price.    The  record  is  full  of  instances  of  a  similar 


ADDYSTON  PIPE  &  STEEL  CO.  V,  UNITED  STATES.     1017 
Statement  of  the  Case. 

kind,  in  which,  after  the  successful  bidder  had  been  fixed  by 
the  "  auction  pool,"  or  had  been  fixed  by  the  arrangement  as 
to  "  reserve  "  cities,  the  other  defendants  put  in  bids  at  the 
public  letting  as  high  as  the  selected  bidder  requested,  in 
order  to  give  the  appearance  of  active  competition  between 
defendants. 

In  January,  1896,  after  the  auction  pool  had  been  in  opera- 
tion for  more  than  six  months,  the  Chattanooga  Company 
wrote  a  letter  to  its  representative  in  the  central  committee. 
The  letter  is  dated  January  2, 1896,  and  is  as  follows : 

"  Dear  Sir  :  Referring  to  our  policy  for  1896,  in  bidding  on  pipe, 
we  have  had  this  matter  under  consideration  for  some  time  past,  and 
from  the  information  obtained  from  Mr.  Thornton's  statement  as  to 
the  amount  of  business  done  last  year  in  pay  territory  and  from  esti- 
mates that  we  have  made  for  business,  that  will  come  into  that  ter- 
ritory for  1890,  we  have  been  able  to  determine  to  what  point  we  could 
bid  on  work  and  take  contracts,  and  if  bonus  is  forced  above  this 
point,  let  it  go  and  take  the  bonus.  We  note  from  your  letter  of  yes- 
terday that  you  have  sized  up  the  situation  in  its  essential  points,  and 
it  agrees  exactly  with  our  ideas  on  the  subject.  It  is  useless  to  argue 
that  Howard-Harrison  Iron  Co.,  [220]  Cincinnati,  and  other  shops, 
who  have  been  bidding  bonuFes  of  $6  or  $8  per  ton,  can  come  out  and 
make  any  money  if  they  continue  to  bid  such  b3nus.  In  the  case 
of  the  Howard-Harrison  Iron  Co.,  people  on  Jacksonville,  Fla  The 
truth  of  the  business  is  they  are  losing  monev  at  the  prices  they  bid 
for  this  work.  If  they  take  the  contract  at  $19  delivered,  it  will  only 
net  $16  at  the  shop  after  they  have  paid  pack  the  bonus  of  $4.75 ;  if 
they  should  continue  to  buy  all  the  pipe  that  goes  up  to  such  figures 
as  they  have  paid  for  Jacksonville  and  other  points,  they  would  wreck 
their  shop  in  a  few  months.  However,  they  of  course  calculate  this 
bonus  will  be  returned  to  them  on  work  taken  by  other  shops  We 
are  very  much  pleaded  with  the  bonus  that  has  been  paid  and  we 
only  hope  they  will  keep  it  up  as  it  is  only  money  in  our  pockets.  As 
long  as  there  is  no  money  to  us  let  them  make  the  pipe,  as  we  shall 
continue  to  do  so. 

"  For  the  iire^ent  you  will  adopt  the  following  basis  • 

"  On  16"  and  under  standard  weights,  $14.25  at  shop. 

"  On  18"  and  36"  standard  weights,  $13. 

••  On  16"  and  under  light  weights,  $14.50  to  $14.75  at  shop. 
That  is,  you  will  bid  all  over  $13,  $14.25  and  $14.50  on  work.     If 
we  get  work  at  these  prices  it  will  be  satisfactory.     If  the  others  run 
bonus  above  this  point  let  them  take  it,  as  it  will  be  more  money  to 
us  to  take  the  bonus. 

"We  note  Mr.  Thornton's  report  of  average  premiums  from  June 
1st  to  December,  that  the  average  was  $3.63.  The  average  bonuses 
that  are  prevailing  to-day  are  $7  to  $8.  We  cannot  expect  this  to 
continue,  and  we  think  your  estimate  of  $6  ton  average  bonus  is 
hish— as  we  do  not  believe  the  premiums  of  '96  will  average  that 
price,  unless  there  is  a  decided  change  for  the  better  in  business  We 
^Sl*^®*"®  ^®^*^  ^^^^^  ^^^  shipped  into  pay  territory  from  Jauuarv  1 
189o,  to  date,  including  the  40,000  tons  of  old  business  that  did  not  pay 
a  bonus,  about  188,000  tons,  and  we  think  a  very  conservative  esti- 
mate of  shipments  into  this  territory  will  amount  to  fully  200  000 
this  year:  more  than  that,  probably  overrun  240,000  tons,  from 'the 


1018 


175   UNITED   STATES  REPORTS,   221. 
Statement  of  the  Case. 


fact  that  the  city  of  Chicago  and  several  other  places  that  annually 
use  large  quantities  of  pipe  were  not  in  the  market  [221]  last  year, 
iwr  last  season,  from  the  fact  that  they  were  out  of  funds.  On  the 
basis  as  fiTen  you  above,  if  the  demand  should  reach  220,000  tons, 
which  would  give  us  our  entire  40,000  tons,  provided  we  did  no  busi- 
ness, then  the  association  would  pay  us  the  average  *  bonus,'  which 
might  be  from  $3.50  to  $5  on  our  40,000.  If  we  cannot  secure  busi- 
ness in  •  pay  territory  *  at  paying  prices,  we  think  we  will  be  able  to 
dispose  of  our  output  in  'free  territory,*  and  of  course  make  some 
profit  on  that 

"At  the  prices  that  Howard-Harrif?on  people  paid  for  Jacksonville, 
Des  riaines  and  one  or  two  other  points,  they  are  loshig  from  $2.50 
to  $3  per  ton,  that  is,  provided  *  bonuses '  would  not  be  returned  to 
them.  Therefore  when  business  goes  at  a  loss,  we  are  willing  that 
other  sbeps  make  It** 

Another  letter  was  written  by  the  same  company  pending 
a  trouble  over  a  letting  at  Atlanta.  The  Anniston  Company 
to  whom  Atlanta  had  been  "  reserved  "  made  its  bid  so  high 
($24)  that  a  Philadelphia  pipe  firm,  R.  D.  Wood  &  Co.,  had 
been  able  to  underbid  the  Anniston  Company  in  spite  of  dif- 
ference in  freights.  All  the  bids  had  been  rejected  as  too 
high,  and  upon  a  second  letting  Anniston's  bid  was  $1.25  a 
ton  less,  and  the  job  was  awarded  to  it.  The  charge  was 
then  made  by  Atlanta  persons  that  there  was  a  "  trust "  or 
"  combine."  This  was  vigorously  denied.  The  letter  of  the 
Chattanooga  Company  evoked  by  this  difficulty  was  dated 
February  25,  1896,  and  reads  as  follows : 

"  Gentlemen  :•  We  are  in  receipt  of  a  carbon  copy  of  your  favor  of 
the  24th  instant  to  F.  B.  Nichols,  V.  P.,  In  reference  to  Atlanta.  Ga. 
We  certainly  regret  that  the  matter  has  assume<l  its  present  shape, 
and  that  R.  D.  Wood  &  Company  should  make  a  lower  bid  i)y  one  dol- 
lar a  ton  than  the  southern  shops.  You  know  we  have  always  i)een 
opposeil  to  siiecial  customers  and  *  reserved  cities,'  we  do  not  think 
that  it  is  the  riglit  principle  and  we  believe  if  the  present  association 
continues,  that  all  special  customers  and  *  reserved  cities '  should  be 
wIihhI  out ;  there  is  no  good  reason  why  we  should  be  allowed  to 
handle  New  Orleans,  you  Atlanta,  Howard-Har-  [222]  risen  Iron  Co., 
St  Louis,  or  South  Pittsburg,  Omaha.  We  are  not  in  the  business  to 
award  special  privileges  to  any  foundry,  and  we  l>elieve  that  the  re- 
sult would  be  more  benefit  to  all  concerned  if  all  business  was  made 
competitive.  It  is  hardly  right,  and  we  believe  if  you  will  think  over 
the  matter  carefullv  you  will  conceile  it,  for  us  to  be  put  Into  a  posi- 
tion of  b9inar  unable  to  make  prices  or  furnish  pipe  for  the  city  of 
Atlanta,  when  we  have  always  heretofore  had  a  large  share  of  their 
trade.  We  cannot  explain  our  po.«ltlon  to  the  Atlanta  people  and  we 
consider  it  is  detrimental  to  our  business,  and  think  no  combination 
should  have  the  power  to  force  us  into  such  a  position.  The  same 
argument  will  apply  with  you  as  to  New  Orleans,  St  Louis  and  other 
places.  We  think  this  matter  should  l>e  considered  seriously  and  some 
action  taken  that  will  result  in  reestablishing  ourselves  (I  mean  the 
four  southern  shops)  in  the  confidence  of  the  Atlanta  people.  Wia- 
tar.  R.  D.  Wood  &  Company's  man,  has  no  doubt  told  them  all  about 


ADDYSTON  PIPE  &  STEEL  CO.  t%  UNITED  STATES.      1019 

Statement  of  the  Case. 

our  association,  or  as  much  as  he  could  guess,  and  has  worked  up  a 
very  bitter  feeling  against  us.  The  very  fact  that  you  have  been  pro- 
tected and  have  had  all  their  business  for  the  past  two  years  is  proof 
to  them  that  puch  a  *  combination '  exists,  and  they  state  that  if  they 
find  out  positively  that  we  are  working  together,  they  will  never  re- 
ceive a  bid  from  any  one  of  us  again.  We  cannot  aflPord  to  leave 
these  people  under  that  impression,  and  something  ought  to  be  done 
that  would  disprove  Mr.  Wistar's  statement  to  them.  We  believe 
that  all  business  ought  to  be  competitive.  The  fact  that  certain  shops 
have  certain  cities  '  reserved '  is  all  based  upon  mere  sentiment  and 
no  good  reason  exists  why  It  should  be  so.  We  believe  that  as  a 
general  thing;  we  have  had  our  prices  entirely  too  high,  and  espe- 
cially do  we  believe  this  has  been  the  case  as  to  prices  in  '  reserved 
cities.  The  prices  made  at  St  Louis  and  Atlanta  are  entirely  out  of  all 
reason,  and  the  result  has  been  and  always  will  be,  when  high  prices 
are  named,  to  create  a  bad  feeling  and  an  agitation  aginst  the  '  com- 
bination.' There  is  no  reason  why  Atlanta,  New  Orleans.  St  Louis  or 
Omaha  should  be  made  to  pay  higher  prices  for  their  pipe  than  other 
places  near  [223]  them,  who  do  not  use  anything  like  the  amount  of 
pipe  and  whose  trade  Is  not  as  desirable  for  many  other  reasons. 
There  is  no  sentiment  existing  with  us  in  reference  to  Atlanta,  as  we 
would  as  soon  sell  our  pipe  anywhere  else,  only  as  stated  above,  it  is 
wrong  In  principle  that  we  should  be  forced  to  give  up  Atlanta  or  any 
other  point  for  no  good  reason  that  we  know  of." 

It  appears  quite  clearly  from  the  prices  at  which  the  Chat- 
tanooga and  the  South  Pittsburg  Companies  offered  pipe  in 
"  free  "  territory  that  any  price  which  would  net  them  from 
$13  to  $15  a  ton  at  their  foundries  would  give  them  a  profit. 
Pipe  was  freely  offered  by  the  defendants  in  "  free  "  territory 
more  than  five  hundred  miles  from  their  foundries  at  less 
prices  than  their  representative  boards  fixed  prices  for  jobs 
let  in  cities  in  "  pay  "  territory  nearer  to  defendants'  foundries 
by  three  hundred  miles  or  more. 

The  defendants  adduced  many  affidavits  of  a  formal  type, 
chiefly  from  persons  who  had  been  buying  pipe  from  defend- 
ants and  other  companies,  who  testified  in  a  general  way  that 
the  prices  at  which  the  pipe  had  been  offered  by  defendants 
all  over  the  country-  had  been  reasonable,  but  in  not  one  of 
the  affidavits  was  any  attempt  made  to  give  figures  as  to  cost 
of  production  and  freight,  and  in  not  a  single  case  were  the 
specific  instances  shown  by  the  evidence  for  the  petiti^^ner 
disputed. 

There  was  some  evidence  as  to  the  capacity  of  the  defend- 
ants' mills.  The  division  of  bonuses  was  based  on  an  aggre- 
gate yearly  output  of  220,000  tons,  but  there  are  averments 
in  the  answer  that  indicate  that  this  was  not  a  statement  of 
the  actual  limit  of  capacity,  but  was  only  taken  as  a  standard 
of  restricted  output  upon  which  to  calculate  an  equitable 


1020 


175  UNITED  STATES  REPORTS,  223. 


Statement  of  the  Case. 

division  of  bonuses.  Nowhere  in  the  large  mass  of  affidavits 
is  there  any  statement  of  the  fer  diem  capacity  of  the  defend- 
ants' mills.  Taking  their  aggregate  capacity,  however,  as 
220,000  tons,  that  of  the  other  mills  in  the  "  pay  "  territory 
was  170,500  tons,  and  that  of  the  mills  in  the  "  free  "  terri- 
tory was  348,000  tons,  according  to  the  affidavit  of  the  chief 
officer  of  one  of  the  defendants.  Of  the  non-association  mills 
in  the  [224]  "  pay  "  territory  one  was  at  Pueblo,  Colorado, 
another  was  in  the  state  penitentiary  at  Waco,  Texas,  and  a 
third  in  Oregon.  Their  aggregate  annual  capacity  was 
45,500  tons.  Another  non-association  mill  was  the  Shickle, 
Howard-Harrison  mill  of  St.  Louis,  Missouri,  with  a  capacity 
of  12,000  tons.  John  W.  Harrison,  who  was  president  of 
this  company,  was  also  president  of  the  Howard-Harrison 
mill  at  Bessemer,  Alabama,  which  was  a  member  of  the  asso- 
ciation, and  it  appears  that  an  order  taken  by  the  Bessemer 
mill  at  St.  Louis  was  partly  filled  by  the  St.  Louis  mill. 
The  other  mills  in  the  "  pay  "  territory  were  one  at  Columbus, 
Ohio,  with  an  annual  capacity  of  30,000  tons,  one  at  Cleve- 
land, Ohio,  of  60,000  tons,  one  at  New  Comerstown,  in  north- 
eastern Ohio,  of  8000  tons,  and  one  at  Detroit,  Michigan,  of 
15,000  tons,  and  their  aggi*egate  annual  capacity  was  113,000 
tons.  In  the  "  free  "  territory  there  was  one  mill  in  eastern 
Virginia  with  an  annual  capacity  of  16,000  tons,  four  mills 
in  eastern  Pennsylvania  with  a  capacity  of  87,000  tons,  thi-ee 
mills  in  New  Jersey  with  a  capacity  of  210.000  tons,  and 
two  mills  at  New  York,  one  at  Utica  and  another  at  Buffalo, 
with  an  aggregate  capacity  of  35,000  tons. 

The  evidence  was  scanty  as  to  rates  of  freight  upon  iron 
pipes,  but  enough  appeared  to  show  that  the  advantage  in 
freight  rates  wliich  the  defendants  had  over  the  large  pipe 
foundries  in  New  York,  eastern  Pennsylvania  and  New  Jer- 
sey in  bidding  on  contracts  to  deliver  pipe  in  nearly  all  of  the 
"  pay  "  territory  varied  from  $2.00  to  $6.00  a  ton,  according 
to  the  location. 

The  defendants  filed  the  affidavits  of  their  managing  offi- 
cers, in  which  they  stated  generally  that  the  object  of  their  as- 
sociation was  not  to  raise  prices  beyond  what  was  reasonable, 
but  only  to  prevent  ruinous  competition  between  defendants 
which  would  have  carried  prices  far  below  a  reasonable  point; 


ADDYSTON  PIPE  &  STEEL  CO.  V.  UNITED  STATES.     1021 
Argument  for  Appellants. 

that  the  bonuses  charged  were  not  exorbitant  profits  and  addi- 
tions to  a  reasonable  price,  but  they  were  deductions  from  a 
reasonable  price  in  the  nature  of  a  penalty  or  burden  intended 
to  curb  the  natural  disposition  of  each  member  to  get  all  Ihe 
business  possible  and  more  than  his  due  proportion ;  that  the 
prices  fixed  by  the  association  were  always  reasonable  and 
[225]  were  always  fixed,  as  they  must  have  been,  with  refer- 
ence to  the  very  active  competition  of  other  pipe  manufactur- 
ers for  every  job;  that  the  reason  why  they  sold  pipe  at  so 
much  cheaper  rates  in  the  ''  free  "  territory  than  in  the  "  pay  " 
territory  was  because  they  were  willing  to  sell  at  a  loss  to 
keep  their  mills  going  rather  than  to  stop  them;  that  the 
prices  at  a  city  like  St.  Louis,  in  which  the  specifications 
were  detailed  and  precise,  were  higher  because  pipe  had  to  be 
made  especially  for  the  job  and  they  could  not  use  stock  on 
hand. 

Mr.  Frank  Spurlock  (with  whom  was  Mr,  Foster  V,  Brown 
on  his  brief)  and  Mr,  John  W,  Warrington  for  appellants, 
cited  in  their  briefs:   Printing  and  Numerical  Reg,  Co,  v. 
Sampson,  L.  R.  19  Eq.  462,  465 ;  Rousillon  v.  Rousillon,  14 
Ch.  Div.  351,  365 ;  National  Benefit  Co,  v.  Union  Hospital 
Co,,  45  Minnesota,  272;  Oregon  Steam  Navigation  Co,  v. 
Winsor,  20  Wall.  64,  68;  Oakdale  ManufactuHng  Co,  v. 
Garst,  18  E.  I.  484;  Tode  v.  Gross,  127  N.  Y.  480;  Shrainka 
V.  Scharringhausen,  8  Mo.  App.  522 ;  Beal  v.  Chase,  31  Michi- 
gan, 490;  Dolph  v.  Troy  Laundry  Machinery  Co,,  28  Fed. 
Rep.  553;  S,  C,  138  U.  S.,617;  Kellogg  v.  Larkin,  3  Pinney, 
(Wisconsin,)  123;   Dueler  Watch  Case  Manufacturing  Co. 
V.  E,  Howard  Watch  di  Clock  Co.,  35  U.  S.  App.  16 ;  Central 
Shade  Roller  Co,  v.  Cushman,  143  Mass.  353;    Diamond 
Match  Co,  V.  Roeher,  106  N.  Y.  473;  Leslie  v.  Lorillard, 
110  N.  Y.  519;  Gihhs  v.  Baltimore  Gas  Co,,  130  U.  S.  396; 
United  States  v.  Trans  Missouri  Freight  Ass\  166  TJ.  S. 
290 ;  Eastman  v.  Clark,  53  N.  H.  276 ;  Mayrant  v.  Marston, 
67  Alabama,  453;    Fay  v.  Davidson,  13  Minnesota,  523; 
Wickens  v.  Evans,  3  Younge  &  Jervis,  318 ;  Nat,  Benefit  Co. 
V.  Union  Hospital  Co,,  45  Minnesota,  272;  Huhhard  v.  Mil- 
ler, 27  Michigan,  15;  Robhins  v.  Shelby  County  Taxing  Dis- 
trict, 120  U.  S.  489 ;  Emert  v,  Missouri,  156  U.  S.  296 ;  Asher 


175   UNITED   STATES   BEPORTS,   225. 


Opinion  of  the  Court. 

¥.  Texas  J 128  U.  S.  129 ;  Stoutenhurgh  v.  Hennick,  129  U.  S. 
141;  Brennan  v.  TitusvUle^  153  U.  S.  289,  307;  Hopkim  v. 
United  States,  171  U.  S.  578;  Bohn  Marmfacturing  Co,  v. 
HolliSy  54  Minnesota,  223 ;  United  States  v.  E.  0,  Knight  Co,, 
156  U.  S.  1;  Brown  v.  Maryland.  12  Wheat.  419;  Stats 
ltt%\  Freight  Tax  case,  15  Wallace,  232 ;  Coe  v.  Errol,  116 
U.  S.  517 ;  Kidd  v.  Pearson,  128  U.  Si  1 ;  Welton  v.  Missouri, 
91  U.  S.  275 ;  In  re  Greene,  52  Fed.  Rep.  104 ;  Paul  v.  Vir- 
ginia, 8  Wall.  168;  Civil  Rights  cases,  109  U.  S.  3;  /n  iv 
Dehs,  158  U.  S.  564;  Scudder  v.  Union  NaVl  Bank,  91  U.  S. 
406;  United  States  v.  De  Witt,  9  Wall.  41;  License  Tax 
eases,  5  Wall,  462 ;  In  re  Rahrer,  140  U.  S.  545 ;  Patterson  v. 
Kentucky,  97  U.  S.  501;  Barron  v.  Baltimore,  7  Pet.  243; 
Monongahela  Naty.  Co,  v.  United  States,  148  U.  S,  312; 
#iitin  V.  Illinois,  94  U.  S.  113;  5w<^«?  v.  iV^c-w?  y<?r^,  143  IT.  S. 
517;  United  States  v.  Joint  Trafj^  Association,  171  U.  S 
505;  Anderson  v.  United  States,  171  U.  S.  604;  .V.  Y,,  Lake 
Erie  (&  Western  Railroad  v.  Pennsylvania,  158  U.  S.  431; 
Pittsburgh  S  Southern  Coal  Co,  v.  Bates,  156  U.  S.  577; 
Adams  Express  Co,  v.  Ohio,  165  U.  S.  194;  S,  C,  166  U.  S. 
185;  Brennan  v.  TitusviUe,  153  U.  S.  289;  Pettihone  v. 
United  States,  148  U.  S.  197;  Powell  v.  Pennsylvania,  127 
U.  S.  678 ;  Railroad  Co.  v.  Richmond,  19  Wall.  584 ;  il/«wri  v, 
/^?moM,  94  U.  S.  113;  Dmc  v.  Beidelman,  125  U.  S.  680; 
Budd  V.  iVew  r^^-,  143  U.  S.  617;  Packet  Co,  v.  Keokuk,  95 
U.  S.  80;  AUgeyer  v.  Louisiana,  165  U.  S.  578;  Butchers^ 
Union  Co,  v.  Crescent  City  Co,,  111  U.  S.  746;  Boyd  v. 
27n«Ye^  /S^a^e*,  116  U.  S.  616. 

Mr,  Solicitor  General  for  the  United  States. 


Mr.  Justice  Peckham,  after  stating  the  case,  delivered  the 
opinion  of  the  court 

The  foregoing  statement,  which  has  been  mainly  taken 
from  that  preceding  the  opinion  of  Circuit  Judge  Taft,  de- 
livered in  this  case  in  the  Circuit  Court  of  Appeals,  com- 
prises, as  we  think,  all  that  is  essential  to  the  discussion  of 
the  questions  arising  in  this  case,  and  we  believe  the  state- 
ment to  be  fully  borne  out  as  to  the  facts,  bv  the  evidence  set 
forth  in  the  record. 


ADDYSTON  PIPE  &  STEEL  CO.  V,  UNITED  STATES.     1023 

Opinion  of  tiie  Court 

Assuming,  for  the  purpose  of  the  argument,  that  the  con- 
tract in  question  herein  does  directly  and  substantially  op- 
erate as  a  restraint  upon  and  as  a  regulation  of  interstate 
commerce,  it  is  yet  insisted  by  the  appellants  at  the  threshold 
of  the  [227]  inquiry  that  by  the  true  construction  of  the 
Constitution,  the  power  of  Congress  to  regulate  interstate 
commerce  is  limited  to  its  protection  from  acts  of  interfer- 
ence by  state  legislation  or  by  means  of  regulations  made 
under  the  authority  of  the  State  by  some  political  subdivision 
thereof,  including  also  Congressional  power  over  common 
carriers,  elevator,  gas  and  water  companies,  for  reasons  stated 
to  be  peculiar  to  such  carriers  and  companies,  but  that  it  does 
not  include  the  general  power  to  interfere  with  or  prohibit 
private  contracts  between  citizens,  even  though  such  con- 
tracts have  interstate  commerce  for  their  object,  and  result 
in  a  direct  and  substantial  obstruction  to  or  regulation  of 
that  commerce. 

This  argument  is  founded  upon  the  assertion  that  the  reason 
for  vesting  in  Congress  the  power  to  regulate  commerce  was 
to  insure  uniformity  of  regulation  against  conflicting  and  dis- 
criminating state  legislation ;  and  the  further  assertion  that 
the  Constitution  guarantees  liberty  of  private  contract  to  the 
citizen  at  least  upon  commercial  subjects,  and  to  that  extent 
the  guaranty  operates  as  a  limitation  on  the  power  of  Congress 
to  regulate  commerce.    Some  remarks  are  quoted  from  the 
opinions  of  Chief  Justice  Marshall,  in  Gibbons  v.  Ogden,  9 
l^Mieat.  1,  and  Brown  v.  Maryland,  12  Wheat.  419,  and  from 
the  opinions  of  other  justices  of  this  court  in  the  cases  of  The 
State  Freight  Ta^,  15  Wall.  232,  275 ;  Railroad  Company  v. 
Richmond,  19  Wall.  584,  589 ;  Welton  v.  Missouri;  91  U.  S. 
276,  280;  Mobile  County  v.  Kimball,  102  U.  S.  691,  697,  and 
Kidd  V.  Pearson.  128  U.  S.  1,  21,  all  of  which  are  to  the  effect 
that  the  object  of  vesting  in  Congress  the  power  to  regulate 
interstate  commerce  was  to  insure  uniformity  of  regulation 
against  conflicting  and  discriminating  state  legislation.    The 
further  remark  is  quoted  from  Railroad  Company  v.  Rich- 
mond, supra,  that  the  power  of  Congress  to  regulate  com- 
merce was  never  intended  to  be  exercised  so  as  to  interfere 
with  private  contracts  not  designed  at  the  time  they  were 
made  to  create  impediments  to  such  commerce.     It  is  added 


1024 


175  UNITED  STATES  BEPOETS,  228. 


Opinion  of  the  Court 

that  the  proof  herein  shows  that  the  contract  in  this  case  was 
not  so  designed. 

It  is  undoubtedly  true  that  among  the  reasons,  if  not  the 
1228]  strongest  reason,  for  placing  the  power  in  Congress  to 
regulate  interstate  commerce,  was  that  which  is  stated  in  the 
extracts  from  the  opinions  of  the  court  in  the  cases  above 
cited. 

The  reagons  which  may  have  caused  the  framers  of  the 
Constitution  to  repose  the  power  to  regulate  interstate  com- 
merce in  Congress  do  not,  however,  affect  or  limit  the  extent 
of  the  power  itself. 

In  Gibbons  v.  Ogden^  (mipra^)  the  power  was  declared  to 
be  complete  in  itself,  and  to  aclmowledge  no  limitations  other 
than  are  prescribed  by  the  Constitution. 

Under  this  grant  of  power  to  Congi'ess,  that  body,  in  our 
judgment,  may  enact  such  legislation  as  shall  declare  void  and 
prohibit  the  performance  of  any  contract  between  individuals 
or  corporations  where  the  natural  and  direct  effect  of  such 
a  contract  will  be,  when  carried  out,  to  directly,  and  not  as  a 
mere  incident  to  other  and  innocent  purposes,  regulate  to  any 
substantial  extent  interstate  commerce.  (And  when  we  speak 
of  interstate  we  also  include  in  our  meaning  foreign  com- 
merce.) We  do  not  assent  to  the  correctness  of  the  propo- 
sition that  the  constitutional  guaranty  of  liberty  to  the 
individual  to  enter  into  private  contracts  limits  the  power 
of  Congress  and  prevents  it  from  legislating  upon  the  subject 
of  contracts  of  the  class  mentioned. 

The  power  to  regulate  interstate  commerce  is,  as  stated  by 
Chief  Justice  Marshall,  full  and  complete  in  Congress,  and 
there  is  no  limitation  in  the  grant  of  the  power  which  excludes 
private  contracts  of  the  nature  in  question  from  the  jurisdic- 
tion of  that  body.  Nor  is  any  such  limitation  contained  in 
that  other  clause  of  the  Constitution  which  provides  that  no 
person  shall  be  deprived  of  life,  liberty  or  property  without 
due  process  of  law.  It  has  been  held  that  the  word  "  liberty." 
as  used  in  the  Constitution,  was  not  to  be  confined  to  the 
more  liberty  of  person,  but  included,  among  others,  a  right 
to  enter  into  certain  classes  of  contracts  for  the  purpose  of 
enabling  the  citizen  to  carry  on  his  business.  AUgeyer  v. 
Louisiana^  165  U.  S.  578;  United  States  v.  Joint  Trafjlo 


ADDYSTON  PIPE  &  STEEL  CO.  V,  UNITED  STATES.      1025 

Opinion  of  the  Court 

Association,  171  U.  S.  505,  572.    But  it  has  never  been,  and 
in  our  opinion  ought  not  to  be,  held  that  the  word  included 
[229]  the  right  of  an  individual  to  enter  into  private  con- 
tracts  upon  all  subjects,  no  matter  what  their  nature  and 
wholly  irrespective  (among  other  things)   of  the  fact  that 
they  would,  if  performed,  result  in  the  regulation  of  inter- 
state commerce  and  in  the  violation  of  an  act  of  Congress 
upon  that  subject.     The  provision  in  the  Constitution  does 
not,  as  we  believe,  exclude  Congress  from  legislating  with  re- 
gard to  contracts  of  the  above  nature  while  in  the  exercise  of 
its  constitutional  right  to   regulate   commerce   among  the 
States.     On  the  contrary,  we  think  the  provision  regarding 
the  liberty  of  the  citizen  is,  to  some  extent,  limited  by  the  com- 
merce clause  of  the  Constitution,  and  that  the  power  of  Con- 
gress to  regulate  interstate  commerce  comprises  the  right  to 
enact  a  law  prohibiting  the  citizen  from  entering  into  those 
private  contracts  which  directly  and  substantially,  and  not 
merely   indirectly,   remotely,   incidentally   and   collaterally, 
regulate  to  a  greater  or  less  degree  commerce  among  the 
States. 

We  cannot  so  enlarge  the  scope  of  the  language  of  the 
Constitution  regarding  the  liberty  of  the  citizen  as  to  hold 
that  it  includes  or  that  it  was  intended  to  include  a  right  to 
make  a  contract  which  in  fact  restrained  and  regulated  inter- 
state commerce,  notwithstanding  Congress,  proceeding  under 
the  constitutional  provision  giving  to  it  the  power  to  reg- 
ulate that  commerce,  had  prohibited  such  contracts. 

While  unfriendly  or  discriminating  legislation  of  the  sev- 
eral States  may  have  been  the  chief  cause  for  granting  to 
Congress  the  sole  power  to  regulate  interstate  commerce,  yet 
we  fail  to  find  in  the  language  of  the  grant  any  such  limita- 
tion of  that  power  as  would  exclude  Congress  from  legislat- 
ing on  the  subject  and  prohibiting  those  private  contracts 
which  would  directly  and  substantially,  and  not  as  a  mere 
incident,  regulate  interstate  commerce. 

If  certain  kinds  of  private  contracts  do  directly,  as  already 
stated,  limit  or  restrain,  and  hence  regulate  interstate  com- 
merce, why  should  not  the  power  of  Congress  reach  those 
contracts  just  the  same  as  if  the  legislation  of  some  State  had 
11808— VOL  1—06  M 65 


1026 


175  UNITED  STATES  BEPOETS,  230. 


Opinion  of  tlie  Court 

enacted  the  provisions  contained  in  them  ?  Tlie  private  con- 
tracts may  in  truth  be  as  far  reaching  in  their  effect  upon 
[230]  interstate  commerce  as  would  the  legislation  of  a  single 
State  of  the  same  character. 

In  the  Debs  ease,  158  U.  S.  564,  it  was  said  by  Mr.  Justice 
Brewer,  speaking  for  the  court:  "It  is  curious  to  note  the 
fact  that  in  a  large  proportion  of  the  cases  in  respect  to  inter- 
state commerce  brought  to  this  court  the  question  presented 
was  of  the  validity  of  state  legislation  in  its  bearing  upon 
interstate  commerce,  and  the  uniform  course  of  decision  has 
been  to  declare  that  it  is  not  within  the  competency  of  a  State 
to  le^slate  in  such  a  manner  as  to  obstruct  interstate  com- 
merce. If  a  State,  with  its  recognized  power  of  sovereignty, 
is  impotent  to  obstruct  interstate  commerce,  can  it  l^e  that 
any  mere  voluntary  association  of  individuals  within  the 
limits  of  that  State  has  a  power  which  the  State  itself  does 
not  possess  ?  " 

Whsii  sound  reason  can  be  given  why  Congress  should  have 
the  i>ower  to  interfere  in  the  case  of  the  State,  and  yet  have 
none  in  the  case  of  the  individual  1  Commerce  is  the  impor- 
tant subject  of  consideration,  and  anything  which  directly 
obstructs  and  thus  regulates  that  commerce  which  is  carried 
or  among  the  States  whether  it  is  state  legislation  or  private 
contracts  between  individuals  or  corporations,  should  be  sub- 
ject to  the  power  of  Congress  in  the  regulation  of  that 
commerce. 

The  power  of  Congress  over  this  subject  seems  to  us  much 
more  important  and  necessary  than  the  liberty  of  the  citizen 
to  enter  into  contracts  of  the  nature  above  mentioned,  free 
from  the  control  of  Congress,  because  the  direct  results  of 
such  contracts  might  be  the  regulation  of  cominerce  among 
the  States,  possibly  quite  as  effectually  as  if  a  State  had 
passed  a  statute  of  like  tenor  as  the  contract. 

The  liberty  of  contract  in  such  case  would  be  nothing  more 
than  the  liberty  of  doing  that  which  would  result  in  the  regu- 
lation, to  some  extent,  of  a  subject  which  from  its  general  and 
great  importance  has  been  granted  to  Congress  as  the  proper 
representative  of  the  nation  at  large.  Regulation,  to  any  sub- 
stantial extent,  of  such  a  subject  by  any  other  power  than 
that  of  Congress,  after  Congress  has  itself  acted  thereon,  even 


ADDYSTON  PIPE  &  STEEL  CO.  V.  UNITED  STATES.     1027 
Opinion  of  the  Court 

[231]  though  such  regulation  is  effected  by  means  of  private 
contracts  between  individuals  or  corporations,  is  illegal,  and 
we  are  unaware  of  any  reason  why  it  is  not  as  objectionable 
when  attempted  by  individuals  as  by  the  State  itself.  In 
both  cases  it  is  an  attempt  to  regulate  a  subject  which,  for  the 
purpose  of  regulation,  has  been,  with  some  exceptions,  such 
as  are  stated  in  Mobile  County  v.  Kimball,  102  U.  S.  691,697; 
Morgan  v.  Louisiana,  118  U.  S.  455,  465;  Bowman  v.  Chicago 
<&  N.  W.  Railway,  125  U.  S.  465 ;  Western  Union  Telegraph 
Co,  V.  James,  162  U.  S.  650,  655,  exclusively  granted  to  Con- 
gress; and  it  is  essential  to  the  proper  execution  of  that  power 
that  Congress  should  have  jurisdiction  as  much  in  the  one 
case  as  in  the  other. 

It  is,  indeed,  urged  that  to  include  private  contracts  of  tJiis 
description  within  the  grant  of  this  power  to  Congress  is  to 
take  from  the  States  their  own  power  over  the  subject,  and 
to  interfere  with  the  liberty  of  the  individual  in  a  manner 
and  to  an  extent  never  contemplated  by  the  franiers  of  the 
Constitution,  and  not  fairly  justified  by  any  language  used  in 
that  instrument.  If  Congress  has  not  the  power  to  legislate 
upon  the  subject  of  contracts  of  the  kind  mentioned,  because 
the  constitutional  provision  as  to  the  liberty  of  tlie  citizen 
limits,  to  that  extent,  its  power  to  regulate  interstate  com- 
merce, then  it  would  seem  to  follow  that  the  several  States 
have  that  power,  although  such  contracts  relate  to  interstate 
commerce,  and,  more  or  less,  regulate  it.  If  neither  Congress 
nor  the  state  legislatures  have  such  power,  then  v/e  are 
brought  to  the  somewhat  extraordinary  position  that  there 
is  no  authority,  state  or  national,  which  can  legislate  upon 
the  subject  of  or  prohibit  such  contracts.  Thih-  cannot  l)e  the 
case. 

If  it  should  be  held  that  Congress  has  no  power  and  the 
state  legislatures  have  full  and  complete  authority  to  thus 
far  regulate  interstate  commerce  by  means  of  their  control 
over  private  contracts  between  individuals  or  corporations 
then  the  legislation  of  the  different  States  might  and  probably 
would  differ  in  regard  to  the  matter,  according  to  what  each 
State  might  regard  as  its  own  particular  interest.  One  State 
[332]  might  condemn  all  kinds  of  contracts  of  the  class  de- 
scribed, while  another  might  permit  the  making  of  all  of 


1028 


175  UNITED  STATES  BBPOBTS,  232. 


Opinion  of  tlie  Court 

them,  while  still  another  might  permit  some  and  prohibit 
others,  and  thus  great  confusion  would  ensue,  and  it  would  be 
difficult  in  many  cases  to  know  just  what  law  was  applicable 
to  any  particular  contract  regarding  and  regulating  interstate 
commercje.  At  the  same  time  contracts  might  be  made  between 
individuals  or  corporations  of  such  extent  and  magnitude  as 
to  seriously  affect  commerce  among  the  States.  These  con- 
sequences  would  seemingly  necessarily  follow  if  it  were  de- 
cided that  the  state  legiflatures  had  Ltrol  over  the  .ubject 
to  the  extent  mentioned. 

It  is  true,  so  far  as  we  are  informed,  that  no  state  legisla- 
ture has  heretofore  authorized  by  affirmative  legislation  the 
making  of  contracts  upon  the  matter  of  interstate  coiiimerce 
of  the  nature  now  under  discussion.  Nor  has  it,  in  terms, 
condemned  them.  The  reason  why  no  state  legislation  upon 
the  subject  has  been  enacted  has  probably  been  bebanse  it 
was  supposed  to  be  a  subject  over  wliich  state  legislatures 
had  no  jurisdiction.  If  it  should  be  decided  that  they  have, 
then  the  course  of  legislation  of  the  different  States  on  this 
subject  would  probably  be  as  varied  as  we  have  filreaJv 
indicated. 

On  the  other  hand,  if  it  be  true  that  in  no  event  foiild  a 
state  legislature  enact  a  law  affirmatively  authorizing;  -nch 
contracts,  (even  if  Congress  had  no  jurisdiction  over  the  sub- 
ject,) because  in  so  doing  it  would  to  a  greater  or  less  extent 
itself  thereby,  though  indirectly,  regulate  interstate  ('oni- 
merce,  then  the  question  whether  such  contracts  were  legal 
without  legislative  sanction  would  depend  upon  the  de(nsi()ns 
of  the  various  state  courts  having  jurisdiction  in  the  cases, 
and  in  that  event,  as  the  same  question  might  arise  in  dif- 
ferent States,  there  would  be  great  probability  of  inconsis- 
tent and  contradictory  decisions  among  the  courts  of  the  dif- 
ferent States,  and  that,  too,  upon  questions  of  contiaots 
amounting  to  the  regulation  of  interstate  commerce.  It  is 
true  that  under  our  system  of  government  there  are  numerous 
subjects  over  which  the  States  have  exclusive  jurisdiction, 
resulting  in  the  enact-  [233]  ment  of  different  laws  npoii  tin* 
same  subject  in  various  States,  and  also  in  varying  and  in 
consistent  judicial  judgments  in  the  different  States  upon 
the  same  subject.    That  condition  has  never  been  regarded 


ADDYSTON  PIPE  &  STEEL  CO.  V.  UNITED  STATES.     1029 
Opinion  of  the  Court 

as  an  end  in  itself  desirable.    It  undoubtedly  results  in  some 
confusion  as  to  the  law  applicable  to  the  particular  oase,  and 
in  many  instances  thereby  increases  the  cost  juid  renders 
doubtful  the  result  of  the  litigation  arising  under  such  cir- 
cumstances.   They  are  results  and  the  necessary  accompani- 
ment of  the  division  of  sovereignty  between  the  States  on  fhe 
one  hand  and  the  Federal  Government  on  the  other,  and  vet 
the  enormous  and  inestimable  benefits  arising  from  the  ex- 
istence of  separate,  independent  and  sovereign  States  have 
completely  submerged  the  comparatively  minor  evils  of  in- 
consistent judgments  and  different  laws  upon  many  of  the 
subjects  over  which  the  States  have  exclusive  jurisdiction. 
But  upon  the  matter  of  interstate  and  foreign  commerce  and 
the  proper  regulation  thereof,  the  subject  being  not  alone 
national  but  international  in  its  character,  the  great  impor- 
tance of  having  but  one  source  for  the  law  which  regulates 
that  commerce  throughout  the  length  and  breadth  of  the 
land  cannot  in  our  opinion  be  overestimated.     Each  State  in 
that  event  would  have  complete  jurisdiction  over  the  com- 
merce which  was  wholly  within  its  own  borders,  while  ihe 
jurisdiction  of  Congress,  under  the  provisions  of  the  Constitu- 
tion, over  interstate  commerce  would  be  paramount,  and 
would  include  therein  jurisdiction  over  contracts  of  the  na- 
ture we  have  been  discussing. 

The  remark  in  Railroad  Company  v.  Richmond,  {supra,) 
that  it  was  never  intended  that  the  power  of  Congress  should 
be  exercised  so  as  to  interfere  with  private  contracts  not 
designed  at  the  time  they  were  made  to  create  impediments 
to  interstate  commerce,  when  read  in  coimection  with  the 
facts  stated  in  the  report,  is  entirely  sound.  It  therein  ap- 
pears that  a  contract  had  been  made  between  the  parties,  as 
to  the  erection  of  an  elevator  and  the  business  to  be  done  by 
it,  which  contract  was  valid  when  made.  Subsequently  Con- 
gress passed  acts  relating  to  the  construction  of  bridges  over 
rivers  and  streams  and  authorizing  railroads  to  carry  ]^as- 
[234]  sengers  on  their  way  from  one  State  to  another.  The 
railroad  company  becoming  tired  of  its  contract  with  the 
elevator  company,  desired  to  take  advantage  of  this  legis- 
lation and  contended  that  under  it,  the  contract  which  it  had 
theretofore  made  with  the  elevator  company  became  void  as 


1030 


175  UNITED   STATES  REPORTS,  234. 


Opinion  of  the  CJourt. 

an  obstacle  to  or  a  regulatioE  of  commerce.  The  court  held 
that  contracts  which  were  valid  when  made  continue  valid 
and  capable  of  enforcement,  so  long,  at  least,  as  peace  lasts 
between  the  governments  of  the  contracting  parties,  notwith- 
standing a  change  in  the  condition  of  business  which  origi- 
nally led  to  their  creating.  It  was  then  added  that  it  never 
was  intended  that  the  power  of  Congress  should  be  exercised 
so  as  to  interfere  with  private  contracts  not  designed  at  the 
time  they  were  made  to  create  impediments  to  interstate 
commerce. 

There  is  no  intimation  in  this  remark  that  Congress  has  no 
power  to  legislate  regarding  those  contracts  which  do  directly 
regulate  and  restrain  interstate  commerce.  The  inference  is 
quite  the  reverse,  and  it  is  plain  that  the  case  assumes  if 
private  contracts  when  entered  into  do  directly  interfere  with 
and  regulate  interstate  commerce,  Congress  had  power  to  con- 
demn them.  If  the  necessary,  direct  and  immediate  effect  of 
the  contract  be  to  violate  an  act  of  Congress  and  also  to 
restrain  and  regulate  interstate  commerce,  it  is  manifestly 
immaterial  whether  the  design  to  so  regidate  was  or  was  not 
in  existence  when  the  contract  was  entered  into.  In  such 
case  the  design  does  not  constitute  the  material  thing.  The 
fact  of  a  direct  and  substantial  regulation  is  the  important 
part  of  the  contract,  and  that  regulation  existing,  it  is  unim- 
portant that  it  was  not  designed. 

Where  the  contract  affects  interstate  commerce  onlv  inci- 
dentally  and  not  directly,  the  fact  that  it  was  not  designed  or 
intended  to  affect  such  commerce  is  simply  an  additional 
reason  for  holding  the  contract  valid  and  not  touched  by  the 
act  of  Congress.  Otherwise  the  design  prompting  the  execu- 
tion of  a  contract  pertaining  to  and  directly  affecting,  and 
more  or  less  regulating,  interstate  commerce  is  of  no  impor- 
tance. We  conclude  that  the  plain  language  of  the  grant  to 
Congress  of  power  to  regulate  coimnerce  among  the  several 
[235]  States  includes  power  to  legislate  upon  the  subject  of 
those  contracts  in  respect  to  interstate  or  foreign  commerce 
which  directly  affect  and  regulate  that  commerce,  and  we  can 
find  no  reasonable  ground  for  asserting  that  the  constitu- 
tional provision  as  to  the  liberty  of  the  individual  limits  the 
extent  of  that  power  as  claimed  by  the  appellants.    We  there- 


ADDYSTON  PIPE  &  STEEL  CO.  V.  UNITED  STATES.     1031 

Opinion  of  the  Court 

fore  think  the  appellants  have  failed  in  their  contention 
upon  this  branch  of  subject. 

We  are  thus  brought  to  the  question  whether  the  contract 
or  combination  proved  in  this  case  is  one  which  is  either  a 
direct  retraint  or  a  regulation  of  commerce  among  the  sev- 
eral States  or  with  foreign  nations  contrary  to  the  act  of  Con- 
gress. It  is  objected  on  the  part  of  the  appellants  that  even 
if  it  affected  interstate  commerce  the  contract  or  combina- 
tion was  only  a  reasonable  restraint  upon  a  ruinous  compe- 
tition among  themselves,  and  was  formed  only  for  the  pur- 
pose of  protecting  the  parties  thereto  in  securing  prices  for 
their  product  that  were  fair  and  reasonable  to  themselves 
and  the  public.  It  is  further  objected  that  the  agreement 
does  not  come  within  the  act  because  it  is  not  one  which 
amounts  to  a  regulation  of  interstate  commerce,  as  it  has  no 
direct  bearing  upon  or  relation  to  that  commerce,  but  that 
on  the  contrary  the  case  herein  involves  the  same  principles 
which  were  under  consideration  in  United  States  v.  E,  C, 
Knight  Company,  156  U.  S.  1,  and,  in  accordance  with  that 
decision,  the  bill  should  be  dismissed. 

Keferring  to  the  first  of  these  objections  to  the  mainte- 
nance of  this  proceeding,  we  are  of  opinion  that  the  agreement 
or  combination  was  not  one  which  simply  secured  for  its 
members  fair  and  reasonable  prices  for  the  article  dealt  in 
by  them.  Even  if  the  objection  thus  set  up  would,  if  well 
founded  in  fact,  constitute  a  defence,  we  agree  with  the 
Circuit  Court  of  Appeals  in  its  statement  of  the  special  facts 
upon  this  branch  of  the  case  and  with  its  opinion  thereon  as 
set  forth  by  Circuit  Judge  Taft,  as  follows : 

"  The  defendants  being  manufacturers  and  vendors  of  cast-iron  pipe 
entered  into  a  combination  to  raise  the  prices  for  pipe  for  all  the 
States  west  and  south  of  New  York,  Pennsylvania  [236]  and  Virginia, 
constituting  considerably  more  than  three  quarters  of  the  territory 
of  the  United  States,  and  significantly  called  by  the  associates  *  pay ' 
territory.  Their  joint  annual  output  was  220.000  tons.  The  total 
capacity  of  all  the  other  cast-iron  pipe  manufacturers  in  the  *pay' 
territory  was  170,500  tons.  Of  this,  45,000  tons  was  the  capacity  of 
mills  in  Texas,  Colorado  and  Oregon,  so  far  removed  from  that  part 
of  the  *  pay '  territory  where  the  demand  was  considerable  that  neces- 
sary freight  rates  excluded  them  from  the  possibility  of  competing, 
and  12,000  tons  was  thfc  possible  annual  capacity  of  a  mill  at  St.  Louis, 
which  was  practically  under  the  same  management  as  that  of  one 
of  the  defendants'  mills.  Of  the  remainder  of  the  mills  in  *pay* 
territory  and  outside  of  the  combination,  one  was  at  Columbus,  Ohio, 
two  in  northern  Ohio,  and  one  in  Michigan.    Their  aggregate  possible 


1032 


176  UNITED   STATES  BEPORTS,  236. 


Opinion  of  the  Court 

annual  capacity  was  about  one  half  the  usiiai  annual  output  of  the 
ilefendants'  mllla  They  were,  it  will  be  observwl,  at  the  extreme 
northeni  end  of  the  'pay*  territory,  while  the  defendants'  mills  at 
Cincinnati,  Louisville,  Chattanooga  and  South  Pittsburg,  and  Annis- 
ton  and  Bessemer  were  grouped  much  nearer  to  the  centre  of  the 
'pay'  territory.  The  freight  upon  cast-iron  pipe  amounts  to  a  con- 
siderable i>erwntage  of  the  price  at  which  manufacturers  can  deliver 
it  at  any  great  distance  from  the  place  of  manufacture.  Within  the 
margin  of  the  freight  per  ton  which  Eastern  manufacturers  would 
have  to  pay  to  deliver  pipe  in  *pay'  territory,  the  defendants,  by 
controlling  two  thirds  of  the  output  in  'pay'  territory,  were  practi- 
cally able  to  fix  prices.  The  competition  of  the  Ohio  and  Michigan 
mills  of  course  stHuewhat  affected  their  power  in  this  resi)ect  in  the 
northern  part  of  the  '  pay '  territory,  but  the  further  south  the  place 
of  delivery  was  to  be,  the  more  complete  the  monopoly  over  the  trade 
which  the  defendants  were  able  to  exercise,  within  the  limits  already 
described.  Much  evidence  is  adduced  upon  affidavit  to  prove  that 
defendants  had  no  power  arbitrarily  to  fix  prices  and  that  they  were 
always  obligetl  to  meet  competition.  To  the  extent  that  they  could 
lot  impnse  prices  on  the  public  in  excess  of  the  cost  price  of  pipe 
r.ith  freight  from  Atlan-  [237]  tic  seaboard  added,  this  is  true,  but 
•vithin  that  limit  they  could  fix  prices  as  they  chose.  The  most  cogent 
evidence  that  they  had  this  power  is  the  fact  everywhere  apparent  in 
the  record  that  they  exercised  it.  The  details  of  the  way  in  which  it 
was  maintained  are  somewhat  obscured  by  the  manner  in  which  the 
proof  was  adduced  in  the  court  below  upon  aflldavits  solely,  and  with- 
out the  clarifying  effect  of  cross-exam Ination,  but  quite  enough  ap- 
pears to  leave  no  doubt  of  the  ultimate  fact. 

"The  defendants  were  by  their  combination  therefore  able  to  de- 
prive the  public  in  a  large  territory  of  the  advantages  otherwise 
accruhig  to  them  from  the  proximity  of  defendants'  pipe  factories  and, 
hy  keeipng  prices  Just  low  enough  to  prevent  competition  bv  Eastern 
manufacturers,  to  Cv>mpel  the  public  to  pay  an  increase  over  what  the 
price  would  have  been  if  fixed  by  competition  between  defendants, 
nearly  equal  to  the  advantage  in  freight  rates  enjoyed  by  defendants 
over  Eastem  competitors.  The  defendants  actiuired  this  power  by 
voluntarily  agi-eeing  to  sell  only  at  prices  fixed  by  their  committee 
and  by  allowing  th?  Iiii:h3st  bidder  at  the  secret  *  auction  pirol '  to 
become  the  lowest  bidder  of  them  at  the  public  letting.  Now,  the 
restraint  thus  imposetl  on  themselves  was  only  partial.  It  did  not 
cover  the  United  States.  There  was  not  a  complete  monopoly.  It 
was  tempered  by  the  fear  (;f  competitinu  and  it  affected  only  a  part 
of  the  price.  But  this  certainly  does  not  take  the  contract  of  associa- 
tion out  of  the  annulling  effect  of  the  rule  agamst  monopolies.  In 
United  States  v.  E.  C.  Knight  Company,  156  U.  S.  1,  10,  Chief  Justice 
Fuller,  in  speaking  for  the  court,  sjiid :  'Again  all  the  authorities  agree 
that  in  onier  to  vitiate  a  contract  or  combination,  it  Is  not  essential 
that  its  result  should  be  a  complete  monopoly;  it  is  sufficient  if  It 
really  tends  to  that  end  and  to  deprive  the  public  of  the  advantages 
which  flow  fntm  free  ciinitetitian.' 

"It  has  been  earnestly  pressed  upon  us  that  the  prices  at  which  the 
cast-iron  pipe  was  sold  in  'pay'  territory  were  reasonable.  A  great 
many  attidavits  (»f  purha;sers  of  pip^  in  '  pay '  territorv,  all  drawn 
by  the  same  hand  or  from  the  same  model,  are  produced.  In  which 
the  affiants  say  that  in  their  [238]  ophiion  the  prices  at  which  pipe 
has  been  sold  by  defendants  have  been  reasonable.  We  do  not  think 
the  issue  an  important  one.  because,  as  already  stated,  we  do  not 
think  that  at  common  law  there  is  any  question  of  reasonableness 
open  to  the  courts  with  reference  to  such  a  contract.     Its  tendency 


ADDYSTON   PIPE  AND  STEEL   CO.  V,  UNITED  STATES.      1033 

Opinion  of  the  Court 

was  certainly  to  give  defendants  the  power  to  charge  unreasonable 
prices,  had  they  chosen  to  do  so.  But  if  it  were  important  we  should 
unhesitatingly  find  that  the  prices  charged  In  the  instances  which 
were  in  evidence  were  unreasonable.  The  letters  from  the  manager 
of  the  Chattanooga  foundry  written  to  the  other  defendants  and  dis- 
cussing the  prices  fixed  by  the  association,  do  not  leave  the  slightest 
doubt  upon  this  point,  and  outweigh  the  perfunctory  affidavits  pro- 
duced by  the  defendants.  The  cost  of  producing  pipe  at  Chattanooga 
together  with  a  reasonable  profit,  did  not  exceed  $15  a  ton.  It  could 
have  been  delivered  at  Atlanta  at  $17  to  $18  a  ton,  and  yet  the  lowest 
price  which  that  foundry  was  permitted  by  the  rules  of  the  associa- 
tion to  bid  was  $24.25.  The  same  thing  was  true  all  through  *  pay ' 
territory  to  a  greater  or  less  degree,  and  especially  at  'reserved' 
cities. 

The  facts  thus  set  forth  show  conclusively  that  the  effect  of 
the  combination  was  to  enhance  prices  beyond  a  sum  which 
was  reasonable,  and  therefore  the  first  objection  above  set 
forth  need  not  be  further  noticed. 

We  are  also  of  opinion  that  the  direct  effect  of  the  agi-ee- 
ment  or  combination  is  to  regulate  interstate  commerce,  and 
the  case  is  therefore  not  covered  by  that  of  United  States  v. 
E.  C.  Knight  Company^  Sfrpra.  It  was  there  held  that 
although  the  American  Sugar  Refining  Company,  by  means 
of  the  combination  referred  to,  had  obtained  a  practical 
monopoly  of  the  business  of  manufacturing  sugar,  yet  the 
act  of  Congress  did  not  touch  the  case,  because  the  combina- 
tion only  related  to  manufacture  and  not  to  commerce  among 
the  States  or  with  foreign  nations.  The  plain  distinction 
between  manufacture  and  commerce  was  pointed  out,  and  it 
was  observed  that  a  contract  or  combination  which  directly 
related  to  manufacture  only  was  not  brought  within  the 
purview  of  the  act,  although  as  an  indirect  and  incidental 
result  of  such  combina-  [239]  tion  commerce  among  the 
States  might  be  thereafter  somewhat  affected.  Mr.  Chief 
Justice  Fuller,  in  delivering  the  opinion  of  the  court,  spoke 
of  the  distinction  between  the  two  subjects,  and  said : 


«t 


The  argument  is  that  the  power  to  control  the  manufacture  of  re- 
^,  t,^^^*'*^  ^^  ^  monopoly  over  a  necessity  of  life,  to  the  enjovment  of 
which  by  a  large  part  of  the  population  of  the  United  States  inter- 
state commerce  is  indispensable,  and  that,  therefore,  the  General  Gov- 
ernment, m  the  exercise  of  the  power  to  regulate  commerce,  mav  re- 
press such  monopoly  directly  and  set  aside  the  instruments  which 
have  created  it. 

"  Doubtless,  the  power  to  control  the  manufacture  of  a  given  thing 
Involves  in  a  certain  sense  the  control  of  its  disposition,  but  this  is  a 
secondary  and  not  the  primary  sense;  and  although  the  exercise  of 
that  power  may  result  in  bringing  the  operation  of  commerce  into 


XUtj4 


175  UNITED   STATES  BEPOBTS,   239. 


Opinion  of  the  Court 

play,  it  does*  not  control  it,  and  affects  it  only  incidentally  and  in- 
directly.   Commerce  succeeds  to  manufacture  and  is  not  a  part  of  it 

♦  ♦  ♦  ♦  ♦ 

**  It  will  be  ijerceived  bow  far  reaching  the  proposition  is  that  the 
power  of  dealing  with  a  monopoly  directly  may  be  exercised  by  the 
General  Government  whenever  interstate  or  international  commerce 
may  be  ultimately  affected.  The  regulation  of  commerce  applies  to 
the  subjects  of  commerce  and  not  to  matters  of  internal  police.  Con- 
tracts to  buy,  sell  or  exchange  goods  to  be  transported  among  the 
several  States,  the  transportation  and  its  instrumentalities,  and  arti- 
cles bought,  sold  or  exchanged  for  the  purposes  of  such  transit  among 
the  States,  or  put  in  the  way  of  transit,  may  be  regulated,  but  this 
is  because  they  form  part  of  interstate  trade  or  commerce.  The  fact 
that  an  article  is  manufactured  for  export  to  another  State  does  not 
of  itself  make  it  an  article  of  interstate  commerce,  and  the  intent  of 
the  manufactnrtT  dues  not  determine  the  time  when  the  article  or 

pnxluct  passt»s  from  the  control  of  the  State  and  belongs  to  commerce. 

♦  ♦  *  *  * 

"There  was  nothing  in  the  proofs  to  indicate  any  intention  to  put 
a  restraint  upon  trade  or  commerce,  and  the  fact,  as  we  [240]  have 
seen,  that  trade  or  commerce  might  be  indirectly  affected,  was  not 
enough  to  entitle  complainants  to  a  decree." 

The  direct  purpose  of  the  combination  in  the  Knight  case 
was  the  control  of  the  manufacture  of  sugar.  There  was  no 
combination  or  agreement,  in  terms,  regarding  the  future 
disposition  of  tlie  manufactured  article;  nothing  looking  to 
a  transaction  in  the  nature  of  interstate  commerce.  The 
probable  intention  on  the  part  of  the  manufacturer  of  the 
sngar  to  thereafter  dispose  of  it  by  sending  it  to  some  mar- 
ket in  another  State,  was  held  to  be  immaterial  and  not  to 
alter  the  character  of  the  combination.  The  various  cases 
which  had  been  decided  in  this  court  relating  to  the  subject 
of  interstate  connnerce,  and  to  the  difference  between  that 
and  the  manufacture  of  connnodities,  and  also  the  police 
power  of  the  States  as  affected  by  the  commerce  clause  of 
the  Constitution,  were  adverted  to,  and  the  case  wes  decided 
upon  the  principle  that  a  combination  simply  to  control 
manufacture  was  not  a  violation  of  the  act  of  Congress,  be- 
cause such  a  contract  (»r  coml)ination  did  not  directlv  con- 
trol  or  affect  interstate  connnercv,  but  that  contracts  for  the 
sale  and  transportation  to  other  States  of  specific  articles 
were  proper  subjects  for  regulation  because  they  did  form 
part  of  such  commerce. 

We  think  the  case  now  before  us  involves  contracts  of  the 
nature  last  above  mentioned,  not  incidentally  or  collaterally, 
but  as  a  direct  and  immediate  result  of  the  combination 
engaged  in  by  the  defendants. 


ADDYSTON   PIPE  AND  STEEL   CO.  V.  UNITED   STATES.      1035 

Opinion  of  the  Court. 

"While  no  particular  contract  regarding  the  furnishing  of 
pipe  and  the  price  for  which  it  should  be  furnished  was  in 
the  contemplation  of  the  parties  to  the  combination  at  the 
time  of  its  formation,  yet  it  was  their  intention,  as  it  was  the 
purpose  of  the  combination,  to  directly  and  by  means  of 
such  combination  increase  the  price  for  which  all  contracts 
for  the  delivery  of  pipe  within  the  territory  above  described 
should  be  made,  and  the  latter  result  was  to  be  achieved  by 
abolishing  all  competition  between  the  parties  to  the  combi- 
nation. The  direct  and  immediate  result  of  the  combina- 
tion was  therefore  necessarily  a  restraint  upon  interstate 
commerce  in  respect  of  arti-  [241]  cles  manufactured  by 
any  of  the  parties  to  it  to  be  transported  beyond  the  State 
in  which  they  were  made.  The  defendants  by  reason  of 
this  combination  and  agreement  could  only  send  their  goods 
out  of  the  State  in  which  they  were  manufactured  for  sale 
and  delivery  in  another  State,  upon  the  terms  and  pursuant 
to  the  provisions  of  such  combination.  As  pertinently 
asked  by  the  court  below,  was  not  this  a  direct  restraint 
upon  interstate  commerce  in  those  goods? 

If  dealers  in  any  commodity  agreed  among  themselves  that 
any  particular  territory  bounded  by  state  lines  should  be  fur- 
nished with  such  commodity  by  certain  members  only  of  the 
combination,  and  the  others  would  abstain  from  business  in 
that  territory,  would  not  such  agreement  be  reg^irded  as  one 
in  restraint  of  interstate  trade  ?  If  the  price  of  the  connnod- 
ity  were  thereby  enhanced,  (as  it  naturally  would  be,)  the 
character  of  the  agreement  would  be  still  more  clearly  one  in 
restraint  of  trade.  Is  there  any  substantial  difference  where, 
by  agreement  among  themselves,  the  parties  choose  one  of 
their  number  to  make  a  bid  for  the  supply  of  the  pipe  for 
delivery  in  another  State,  and  agree  that  all  the  other  bids 
shall  be  for  a  larger  sum,  thus  practically  restricting  all  but 
the  member  agreed  upon  from  any  attempt  to  supply  the 
demand  for  the  pipe  or  to  enter  into  competition  for  the  busi- 
ness? Does  not  an  agreement  or  combination  (^f  that  kind 
restrain  interstate  trade,  and  when  Congress  has  acted  by  the 
passage  of  a  statute  like  the  one  under  consideration,  does  not 
such  a  contract  clearly  violate  that  statute? 

As  has  frequently  been  said,  interstate  commerce  consists  of 


1036 


175  UNITED   STATES  REPORTS,   241. 


Opinion  of  tlie  Court 

intercourse  and  traffic  between  the  citizens  or  inhabitants  of 
different  States,  and  includes  not  only  the  transportation 
of  persons  and  property  and  the  navigation  of  public  waters 
for  that  purpose,  but  also  the  purchase,  sale  and  exchange  of 
commodities.  Gloucester  Fei^ry  Co,  v.  Pennsj/lvania^  114 
U.  S.  196-203;  Kidd  v.  Pearson,  128  U.  S.  1,  20.  If,  there- 
fore, an  agreement  or  combination  directly  restrains  not 
aione  the  manufacture,  but  the  purchase,  sale  or  exchange  of 
the  manufactured  commodity  among  the  several  States,  it  is 
brought  within  the  provisions  of  the  statute.  The  power  to 
regulate  [242]  such  commerce,  that  is,  the  power  to  pre- 
scribe the  rules  by  which  it  shall  be  governed  is  vested  in 
Congress,  and  when  Congress  has  enacted  a  statute  such  as 
the  one  in  question,  any  agreement  or  combination  which  di- 
rectly operates,  not  alone  upon  the  manufacture,  but  upon  the 
sale,  transportation  and  delivery  of  an  article  of  interstate 
commerce,  by  preventing  or  restricting  its  sale,  etc.,  thereby 
regulates  interstate  commerce  to  that  extent  and  to  the  same 
extent  trenches  upon  the  power  of  the  national  legislature 
and  violates  the  statute.  We  think  it  plain  that  this  contract 
or  combination  effects  that  result. 

The  defendants  allege,  and  it  is  true,  that  their  business  is 
not  like  a  factory  manufacturing  an  article  of  a  certain  kind 
for  which  there  is  at  all  times  a  demand,  and  which  is  manu- 
factured without  any  regard  to  a  particular  sale  or  for  a  par- 
ticular customer.  In  this  respect  as  in  many  others  the  busi- 
ness differs  radically  from  the  sugar  refiners.  The  business 
of  defendants  is  carried  on  by  obtaining  particular  contracts 
for  the  sale,  transportation  and  delivery  of  iron  pipe  of  a 
certain  description,  quality  and  strength,  differing  in  differ- 
ent contracts  as  the  intended  use  may  differ.  These  contracts 
are,  generall}  spetiking,  obtained  at  a  public  letting,  at  which 
there  are  many  competitors,  and  the  contract  bid  for  includes, 
in  its  terms,  the  sale  of  the  pipe  and  its  delivery  at  the  place 
desired,  the  cost  of  transportation  being  included  in  the  pur- 
chase price  of  the  pipe.  The  contract  is  one  for  the  sale  and 
delivery  of  a  certain  kind  of  pipe,  and  it  is  not  generally 
essential  to  its  performance  that  it  should  be  manufactured 
for  that  particular  contract,  although  sometimes  it  may  be. 

If  the  successful  bidder  had  on  hand  iron  pipe  of  the  kind 


ADDYSTON   PIPE   AND  STEEL   CO.  V,  UNITED  STATES.      1037 

Opinion  of  tlie  Court. 

specified,  or  if  he  could  procure  it  by  purchase,  he  could  in 
most  cases  deliver  such  pipe  in  fulfilment  of  his  contract  just 
the  same  as  if  he  manufactured  the  pipe  subsequently  to  the 
making  of  the  contract  and  for  the  specific  purpose  of  its 
performance.     It  is  the  sale  and  delivery,  of  a  certain  kind 
and  quality  of  pipe,  and  not  the  manufacture,  which  is  the 
material  portion  of  the  contract,  and  a  sale  for  delivery  be- 
yond the  State  makes  the  transaction  a  part  of  interstate 
commerce.     Municipal  corporations  and  gas,  railroad  and 
water  companies  [243]  are  among  the  chief  customers  for 
the  pipe,  and  when  they  desire  the  article  they  give  notice  of 
the  kind  and  quality,  size,  strength  and  purpose  for  which  the 
pipe  is  desired,  and  announce  that  they  Avill  receive  proposals 
for  furnishing  the  same  at  the  place  indicated  by  them.     Into 
this  contest  (and  irrespective  of  the  reserved  cities)  the  de- 
fendants enter,  not  in  truth  as  competitors,  but  under  an 
agreement  or  combination  among  themselves  which  elimi- 
nates all  competition  between  them  for  the  contract,  and 
permits  one  of  their  number  to  make  his  own  bid  and  requires 
the  others  to  bid  over  him.     In  certain  sections  of  the  coun- 
try the  defendants  would  have,  by  reason  of  their  situation, 
such  an  advantage  over  all  other  competitors  that  there  would 
practically  be  no  chance  for  any  other  than  one  of  their  num- 
ber to   obtain   the   contract,   unless   the   price   bid   was   so 
exorbitant  as  to  give  others  not  so  favorablv  situated  an 
opportunity  to  snatch  it  from  their  hands.     Under  these 
circumstances,  the  agreement  or  combination  of  the  defend- 
ants, entered  into  for  that  purpo  e  and  to  directly  obtain  that 
desired  result,  would  inevitably  and  necessarily  give  to  the 
defendant,  who  was  agreed  upon  among  themselves  to  make 
the  lowest  bid,  the  contract  desired  and  at  a  higher  price  than 
otherwise  would  have  been  obtained,  and  all  the  other  parties 
to  the  combination  would,  by  virtue  of  its  terms,  be  restricted 
from  an  attempt  to  obtain  the  contract. 

The  combination  thus  had  a  direct,  immediate  and  intended 
relation  to  and  effect  upon  the  subsequent  contract  to  sell  and 
deliver  the  pipe.  It  was  to  obtain  that  particular  and  specific 
result  that  the  combination  was  formed,  and  but  for  the 
restriction  the  resulting  high  prices  for  the  pipe  would  not 
have  been  obtained.    It  is  useless  for  the  defendants  to  say 


175  UNITED  STATES  BEPOBTS,  243. 


Opinion  of  the  Court. 

thej  did  not  intend  to  regulate  or  affect  interstite  commerce, 
They  intended  to  make  the  very  combination  and  agreement 
which  they  in  fact  did  make,  and  they  must  be  held  to  have 
intended  (if  in  such  case  intention  is  of  the  least  importance) 
the  necessary  and  direct  result  of  their  agreement. 

The  cases  of  HofMns  v.  United  States^  ITl  U.  S.  578,  and 
Anderson  v.  United  States^  171  IT.  S.  604,  are  not  relevant. 
In  the  Hopkins  ntse  it  was  held  that  the  business  of  the  mem- 
I2i4r]  bers  of  the  Kansas.  City  Live  Stock  Exchange  was  not 
iutei-state  conunerce.  and  hence  the  act  of  Congress  did  not 
affect  them;  while  in  the  Anderson  case  it  was  held  that 
whether  the  members  of  the  Traders'  Live  Stock  Exchange 
were  or  were  not  engaged  in  the  business  of  interstate  com- 
merce, was  inmiaterial,  as  the  agreement  proved  was  not  in 
restraint  of  trade,  and  did  not  regulate  such  commerce.  It 
was  said  that  when  it  is  seen  that  the  agreement  entered  into 
does  not  directly  relate  to  and  act  upon  and  embrace  inter- 
state commerce,  and  that  it  was  executed  for  another  and 
entirely  different  purpose,  and  that  it  was  calculated  to  attain 
it,  the  agreement  would  he  upheld,  if  its  effect  upon  that  com- 
jaerce  were  only  indirect  and  incidental.  The  agreement 
involved  in  that  case  was  held  to  be  of  such  a  character.  The 
case  we  have  here  is  of  an  entirely  different  nature,  and  is  not 
eovei'ed  or  affected  by  the  decisions  cited. 

It  is  also  urged  that  as  but  one  contract  would  be  aAvarded 
for  the  work  proposed  at  any  place,  and  therefore  only  one 
{person  would  secure  it  by  virtue  of  being  the  lowest  bidder, 
the  selection  bv  defendants  of  one  of  their  number  to  make 
the  lowest  bid  as  among  themselves  could  not  operate  as  any 
restraint  of  trade;  that  the  combination  or  agreement  oper- 
ated only  to  make  a  selection  of  that  one  who  should  have  the 
contract  by  being  the  lowest  bidder,  and  it  did  not  in  the  most 
remote  degree  itself  limit  the  number  or  extent  of  contracts, 
and  therefore  could  not  operate  to  restrain  interstate  trade. 
This  takes  no  heed  of  the  purpose  and  effect  of  the  combina- 
tion to  restrain  the  action  of  the  parties  to  it  so  that  there 
shall  be  no  competition  among  tliem  to  obtain  the  contract  for 
themselves. 

We  have  no  doubt  that  where  the  direct  and  immediate 
effect  of  a  contract  or  combination  among  particular  dealers 


ADDYSTON   PIPE   AND   STEEL   CO.  V.  UNITED   STATES.      1039 

Opinion  of  tlie  Court 

in  a  commodity  is  to  destroy  competition  between  them  and 
others,  so  that  the  parties  to  the  contract  or  combination  may 
obtain  increased  prices  for  themselves,  such  contract  or  com- 
bination amounts  to  a  restraint  of  trade  in  the  commodity, 
even  though  contracts  to  buy  such  commodity  at  the  enhanced 
price  are  continually  being  made.  Total  suppression  of  the 
[245]  trade  in  the  commodity  is  not  necessary  in  order  to  i-en- 
der  the  combination  one  in  restraint  of  trade.  It  is  the  effect 
of  the  combination  in  limiting  and  restricting  the  right  of 
each  of  the  members  to  transact  business  in  the  ordinary  way, 
as  Avell  as  its  effect  upon  the  volume  or  extent  of  the  dealing 
in  the  conunodity,  that  is  regarded.  All  the  facts  jind  circum- 
stances are,  however,  to  be  considered  in  order  to  determine 
the  fundamental  question— whether  the  necessary  effect  of  the 
combination  is  to  restrain  interstate  commerce. 

If  iron  pipe  cost  one  hundred  dollars  a  ton  instead  of  the 
prices  which  the  record  shows  Avere  paid  for  it,  no  one,  we 
think,  would  contend  that  the  trade,  in  it  would  amount  to  as 
much  as  if  the  lower  prices  prevailed.     The  higher  price 
would  operate  as  a  direct  restraint  upon  the  trade,  and  there- 
fore any  contract  or  combination  which  enhanced  the  price 
might  in  some  degree  restrain  the  trade  in  the  article.    It  is 
not  material  that  the  combination  did  not  prevent  the  letting 
of  any  particular  contract.    Such  was  not  its  purpose.    On 
the  contrary,  the  more  contracts  to  be  let  the  better  for  the 
combination.     It  was  formed  not  for  the  object  of  preventing 
the  letting  of  contracts,  but  to  restrain  the  parties  to  it  from 
competing  for  contracts,  and  thereby  to  enhance  the  prices  to 
be  obtained  for  the  pipe  dealt  in  by  those  parties.     And  when 
by  reason  of  the  combination  a  particular  contract  may  have 
been  obtained  for  one  of  the  parties  thereto,  but  at  a  higher 
price  than  would  otherwise  have  been  paid,  the  charge  that 
the  combination  was  one  in  restraint  of  trade  is  not  answered 
by  the  statement  that  the  particular  contract  was  in  truth 
obtained  and  not  prevented.     The  parties  to  such  a  combina- 
tion might  realize  more  profit  by  the  higher  prices  they  would 
secure  than  they  could  earn  by  doing  more  work  at  a  much 
less  price.    The  question  is  as  to  the  effect  of  such  combina- 
tion upon  the  trade  in  the  article,  and  if  tliat  effect  be  to 


1040 


175   UNITED  STATES   REPOBTS,  246. 
Opinion  of  the  Court 


destroy  competition  and  thus  advance  the  price,  the  combina- 
tion is  one  in  restraint  of  trade. 

Decisions  regarding  the  validity  of  taxation  by  or  under 
state  authority,  involving  sometimes  the  question  of  the  point 
of  time  that  an  article  intended  for  transportation  beyond  the 
[246]  State  ceases  to  be  governed  exclusively  by  the  domestic 
law  and  begins  to  be  governed  and  protected  by  the  national 
law  of  commercial  regulation,  are  not  of  very  close  applica- 
tion liere.  The  coomiodity  may  not  have  commenced  its 
journey  and  so  may  still  be  completely  within  the  jurisdiction 
of  the  State  for  purposes  of  state  taxation,  and  yet  at  that 
s^arne  time  the  commodity  may  have  been  sold  for  delivery  in 
another  State.  Any  combination  among  dealers  in  that  kind 
of  commodity,  which  in  its  direct  and  immediate  effect,  fore- 
closes all  competition  and  enhances  the  purchase  price  for 
which  such  commodity  would  otherwise  be  delivered  at  its 
destination  in  another  State,  would  in  our  opinion  be  one  in 
restraint  of  trade  or  commerce  among  the  States,  even  though 
the  article  to  be  transported  and  delivered  in  another  State 
were  still  taxable  at  its  place  of  manufacture. 

It  is  said  that  a  particular  business  must  be  distinguished 
from  its  mere  subjects,  and  from  the  instruments  by  which 
the  business  is  carried  on ;  that  in  most  cases  of  a  large  manu- 
facturing company  it  could  only  be  carried  on  by  shipping 
products  from  one  State  to  another,  and  that  the  business  of 
such  an  establishment  would  be  related  to  interstate  com- 
merce only  incidentally  and  indirectly.  This  proposition  we 
are  not  called  upon  to  deny.  It  is  not,  however,  relevant. 
Where  the  contract  is  for  the  sale  of  the  article  and  for  its 
delivery  in  another  State,  the  transaction  is  one  of  interstate 
commerce,  although  the  vendor  may  have  also  agreed  to 
manufacture  it  in  order  to  fulfil  his  contract  of  sale.  In  such 
case  a  combination  of  this  character  would  be  properly  called 
a  combination  in  restraint  of  interstate  commerce,  and  not 
one  relating  only  to  manufacture. 

It  is  almost  needless  to  add  that  we  do  not  hold  that  every 
private  enterprise  which  may  be  carried  on  chiefly  or  in  part 
by  means  of  interstate  shipments  is  therefore  to  be  regarded 
as  so  related  to  interstate  commerce  as  to  come  within  the 
regulating  power  of  Congress.    Such  enterprises  may  be  of 


ADDYSTOK   PIPE   AND   STEEL   CO.  V,  UNITED   STATES.      1041 

Opinion  of  the  Court 

the  same  nature  as  the  manufacturing  of  refined  sugar  in  the 
Kmght  case-thfit  is,  the  parties  may  be  engaged  as  manu- 
facturers  of  a  commodity  which  they  thereafter  intend  at 
1247]  some  time  to  sell,  and  possibly  to  sell  in  another  State; 
but  such  sale  we  have  already  held  is  an  incident  to  and  not 
the  direct  result  of  the  manufacture,  and  so  is  not  a  regula- 
tion of  or  an  illegal  interference  with  interstate  commerce. 
That  principle  is  not  affected  by  anything  herein  decided. 

The  views  above  expressed  lead  generally  to  an  affirmance 
of  the  judgment  of  the  Court  of  Appeals.    In  one  aspect, 
however,  that  judgment  is  too  broad  in  its  terms-the  in- 
junction IS  too  absolute  in  its  direction&-as  it  mav  be  con- 
strued  as  applymg  equally  U>  commerce  wholly  within  a 
State  as  well  as  to  that  which  is  interstate  or  international 
only.     This  was  probably  an  inadvertence  merely.     Although 
the  jurisdiction  of  Congress  over  commerce  among  the  States 
IS  full  and  complete,  it  is  nt)t  questioned  that  it  has  none  over 
that  which  is  wholly  within  a  State,  and  therefore  none  over 
combinations  or  agreements  so  far  as  they  relate  to  a  restraint 
of  such  trade  or  commerce.    It  does  not  acquire  any  jurisdic- 
tion over  that  part  of  a  combination  or  agreement  which 
relates  to  commerce  wholly  within  a  State,  by  reason  of  the 
fact  that  the  combination  also  covers  and  regulates  commerce 
which  IS  mterstate.    The  latter  it  can  regulate,  while  the  for- 
mer IS  subject  alone  U>  the  jurisdiction  of  the  Stat«.    The 
combination  herein  described  covers  both  commerce  which  is 
wholly  within  a  State  and  also  that  which  is  interstate. 

In  regard  to  such  of  these  defendants  as  might  reside  and 
carry  on  business  in  the  same  State  where  the  pipe  provided 
for  m  any  particular  contract  was  to  be  delivered,  the  sale 
transportation  and  delivery  of  the  pipe  by  them  under  that 
contract  would  be  a  transaction  wholly  within  the  State,  and 
the  statute  would  not  be  applicable  to  them  in  that  case. 
Ihey  might  make  any  combination  they  chose  with  reference 
to  the  proposed  contract,  although  it  should  happen  that  some 
non-resident  of  the  State  eventually  obtained  it. 

The  fact  that  the  proposal  called  for  the  delivery  of  pipe 
m  the  same  State  where  some  of  the  defendants  resided  and 
carried  on  their  business  woyld  be  sufficient,  so  far  as  the  act 

11808— VOL  1—06  M 66 


1042 


116  UNITED  STATES  BBPOBTS,  248. 
Opinion  of  tbe  Court 


of  Congress  is  concerned,  to  permit  those  defendants  to  com- 
bine as  they  might  choose,  in  regard  to  the  proposed  contract 
[248]  for  the  delivery  of  the  pipe,  and  that  right  would  not 
be  affected  by  the  fact  that  the  contract  might  be  subse- 
quently awarded  to  some  one  outside  the  State  as  the  lowest 
bidder.  In  brief,  their  right  to  combine  in  regard  to  a  pro- 
posal for  pipe  deliverable  in  their  own  State  could  not  be 
reached  by  the  Federal  power  derived  from  the  commerce 
dause  in  the  Constitution. 

To  the  extent  that  the  present  decree  includes  in  its  scope 
the  enjoining  of  defendants  thus  situated  from  combining  in 
regard  to  contracts  for  selling  pipe  in  their  own  State,  it  is 
modified,  and  limited  to  that  portion  of  the  combination  or 
agreement  which  is  interstate  in  its  character.  As  thus  modi- 
fied, the  decree  is 


INDEX— DIGEST, 

[Volumes  1  and  2.] 


ABATEMENT.      See  Statutes,  70. 

ACQUISITION  OF  PROPERTY,    fi^ee  Combinations,  etc.,  140-143. 
ACTIONS  AND  DEFENSES. 

I.  Actions. 
/.  By  private  parties. 
1.  Private  Individual  can  not  Sue  in  Equity  under  the  Statute- 
Remedy  at  Law.— The  act  "  to  protect  trade  and  commerce 
against  unlawful  restraints  and  monopolies"  (act  Cong. 
July  2,  1890)  confers  no  right  upon  a  private  individual  to 
sue  in  equity  for  the  restraint  of  the  acts  forbidden  by  such 
statute,  an  action  at  law  for  damages  being  the  only  remedy 
provided  for  private  persons,  and  the  right  to  bring  suits 
in  equity  being  vested  in  the  district  attorneys  of  the  United 

States.    Pidcock  v.  Harrington,  64  F.,  821.  i 377 

2.  Remedy,  Action  for  Damages— No  Recourse  in  Equity.— The 
Anti-Trust  Law  of  July  2,  1890,  does  not  authorize  a  court 
of  equity  to  entertain  a  bill  by  a  private  party  to  enforce  its 
provisions,  his  remedy  being  by  an  action  at  law  for  damages. 
Southern  Ind.  Exp.  Co.  v.  U.  S.  Exp.  Co.,  88  F.,  659.  1—862 
S.  A  municipal  corporation  engaged  in  operating  water,  light- 
ixig,  or  similar  plants,  from  which  a  revenue  is  derived,  is, 
in  relation  to  such  matters,  a  business  corporation  and  may 
maintain  an  action  under  section  7  of  the  Anti-Trust  Act  of 
July  2,  1890  (26  Stat,  210),  for  injury  to  its  "business"  by 
reason  of  a  combination  or  conspiracy  in  restraint  of  inter- 
state trade  or  commerce  made  unlawful  by  such  act.  City 
of  Atlanta  v.  Chattanooga  Foundry  d  Pipeworks,  127  F.,  23. 

-    ^  .     .       .  2—299 

4.  Bringing  m  Nonresidents.— The  authority  given  by  section  5  of 
the  act  of  July  2,  1890  (26  Stat,  209),  to  bring  in  nonresi- 
dents  of  the  district  can  not  be  availed  of  in  private  suits, 
and  the  court  can  acquire  no  jurisdiction  over  them     Qreer 
Mills  d  Co.  V.  Stoller,  77  F.,  1.  1—620 

1043 


1044 


INDEX — ^DIGEST. 


AOnOirS  AND  BEFENSES-Continued. 

2,  By  parties  to  the  combination, 

5.  Members  of  the  Kansas  City  live  Stock  Exchange  can  not  en- 
join the  board  of  directors  of  that  exchange,  under  the  Anti- 
Trust  Law  of  1890,  from  enforcing  against  them  certain  by- 
laws of  the  association  claimed  to  be  illegal  and  in  violation 
of  that  act.     Greer,  Mills  d  €o.  v.  Stoller,  77  F.,  1.      1—620 

8.  Where  a  member  of  a  voluntary  association  has  been  suspended 
by  the  directors  for  nonpayment  of  a  fine  for  violation  of  the 
by-laws,  his  action  to  be  restored  to  the  privileges  of  mem- 
bership is  founded  upon  the  contract  between  himself  and 
the  association,  which  he  must  either  accept  in  its  entirety 
or  repudiate.  He  does  not  occupy  the  position  of  a  stranger 
injured  by  the  acts  of  co-trespassers.  Ih, 

7.  May  Maintain  Action  to  Set  Aside  TTnlawful  Transfer  of  Prop- 
erty.— A  minority  stockholder  in  a  corporation  may  main- 
tain a  suit  in  equity  in  behalf  of  himself  and  all  other  stock- 
holders similarly  situated  to  set  aside  an  alleged  unlawful 
transfer  of  the  property  of  the  corporation  in  pursuance  of  a 
conspiracy  between  its  officers  and  the  transferee  in  restraint 
of  trade  and  commerce,  where  it  is  alleged  that  the  corpora- 
tion, on  demand,  has  refused  to  bring  such  suit.  Metcalf  v. 
Amer.  School-Furniture  Co.,  108  F.,  900.  2—75 

S.  Same— Multifariousness.— A  bill  for  such  relief  which  also  seeks 
the  recovery  of  treble  damages  under  the  Anti-Trust  Act  of 
July  2,  1890,  is  multifarious,  since  such  damages  are  only 
recoverable  in  an  action  at  law  by  the  plaintiff  as  an  indi- 
vidual, and  not  as  a  stockholder,  while  the  equitable  relief 
prayed  for  is  in  behalf  of  the  corporation,  and,  if  granted, 
would  inure  to  the  benefit  of  all  the  stockholders.  lb. 

t.  Ho  Bight  of  Action  Against  Trust  to  Recover  Damages. — Section 
7  of  the  Anti-Trust  Act  (26  Stat.  209),  giving  to  any  persoa 
Injured  by  any  other  person  or  corporation  by  reason  of  any- 
thing forbidden  in  the  act  the  right  to  recover  treble  dam- 
ages, does  not  authorize  an  action  against  an  alleged  trust 
corporation,  by  one  who  was  a  party  to  its  organization  and 
a  stockholder  therein,  to  recover  damages  resulting  from  the 
enforcement  by  defendant  of  rights  given  it  by  the  alleged 
unlawful  agreement.  Bishop  v.  Amer.  Preservers  Co.,  105  F., 
845.  »— 51 

10.  Member  of  a  Combination  in  Violation  of  Anti-Trust  Law  may 
Maintain  Suit  to  Enjoin  Infringement  of  Patent  Owned 
by  Complainant. — That  a  complainant  is  a  member  of  a  com- 
bination in  violation  of  the  Anti-Trust  Law  of  July  2,  1890 
(26  Stat,  209),  does  not  give  third  persons  the  right  to  in- 
fringe a  patent  of  which  complainant  is  owner,  nor  preclude 
complainant  from  maintaining  a  suit  in  equity  to  enjoin 
such  infringement     General  Electric  Co.  v.  Wise,  119  F.,  922. 

»— 205 


INDEX — ^DIGEST. 


1045 


ACTIONS  AND  DEFENSES— Continued. 

II.  Recovery  on  Collateral  Contract.— -The  act  of  July  2,  1890,  sec- 
tion 1  (26  Stat,  209),  known  as  the  "Sherman  Anti-Trust 
Act,"  does  not  invalidate,  or  prevent  a  recovery  for  the 
breach  of  a  collateral  contract  for  the  manufacture  and  sale 
of  goods  by  a  member  of  a  combination  formed  for  the  pur- 
pose of  restraining  interstate  trade  in  such  goods.  Hadley 
Dean  Plate  Glass  Co.  v.  Highland  Glass  Co.,  143  F.,  242. 

2—995 
See  also  Jayne  v.  Loder,  149  F.,  22. 

3.  By  illegal  combinations. 

12.  Can  not  Enforce  Illegal  Contract.— An  illegal  combination  or 

trust  can  not  resort  to  equity  to  enforce  a  contract  or  sale 
calculated  to  perpetuate  the  illegal  features  of  the  combi- 
nation.    Amer.  Biscuit  &  Mfg.  Co.  v.  Klotz,  44  F.,  721.     1—2 

13.  May  Recover  on  Collateral  Contracts  the  Price  of  Goods  Sold.— A 

violation  of  the  Sherman  Anti-Trust  Act  of  July  2,  1890  (26 
Stat,  209),  by  the  formation  of  a  combination  in  restraint 
of  trade,  by  which  a  penalty  is  incurred  under  the  statute, 
does  not  preclude  the  company  thus  illegally  formed  from 
recovering  on  collateral  contracts  for  the  purchase  price  of 
goods.     Connolly  v.   Vnion  Sewer  Pipe  Co.,  184  U.  S.,  540. 

14.  Same.— Nor  does  the  illegality,  at  common  law,  of  such  a  com- 

bination formed  by  corporations  and  persons  in  restraint  of 
trade,  preclude  it  from  recovering  the  purchase  price  of  goods 
sold  in  the  course  of  business.  /ft. 

-f.  By  the  United  States. 

15.  The  right  to  bring  suits  in  equity  for  violations  of  the  Anti- 

Trust  Act  of  July  2,  1890,  is  vested  in  the  district  attorneys 
of  the  United  States.    Pidcock  v.  Harrington,  64  F.,  821. 

18.  The  right  to  bring  suits  for  injunction  under  section  4  of  the 
act  of  July  2,  1890  (26  Stat,  209),  is  limited  to  suits  msti- 
tuted  on  behalf  of  the  Government.     Greer,  Mills  d  Co.  v 
Stoller,  77  F.,  1.  1—620 

17.  Same.— The  only  party  entitled  to  maintain  a  bill  of  injunction 

for  an  alleged  breach  of  the  Anti-Trust  Act  of  1890  is  the 
United  States,  by  its  district  attorney,  on  the  authority  of 
the  Attorney-General.     Gulf,  C.  d  S.  F.  Ry.  Co.  v.  Miami  S.  S 
Co.,  86  F.,  407.  1—823 

18.  The  intention  of  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat, 

209),  w^s  to  limit  direct  proceedings  in  equity  to  prevent 
and  restrain  such  violations  of  the  Anti-Trust  Act  as  cause 
injury  to  the  general  public,  or  to  all  alike,  merely  from  the 
suppression  of  competition  in  trade  and  commerce  among 


1046 


INDEX — ^DIGEST. 


ACTIONS  Aim  DEFENSES— Gontinued. 

the  several  States  and  with  foreign  nations,  to  tliOM  laitl- 
tuted  in  the  name  of  the  United  States,  under  section  4  of 
the  act,  by  district  attorneys  of  the  United  States,  acting 
under  the  direction  of  the  Attorney-General;  thus  securing 
the  enforcement  of  the  act,  so  far  as  such  direct  proceedings 
in  equity  are  concerned,  according  to  some  uniform  plan, 
operative  throughout  the  entire  country.  Minnesota  v. 
Northern  Securities  Co.,  IM  U.  S.,  48.  2—533 

5.  By  States. 

It.  A  State  can  not  maintain  an  action  in  equity  to  restrain  a 
corporation  from  violating  the  provisions  of  the  act  of  Jnly 
2,  1890|  on  the  ground  that  such  violations  by  decreasing 
competition  would  depreciate  the  value  of  its  public  lands 
and  enhance  the  cost  of  maintaining  its  public  institutions, 
the  damages  resulting  from  such  violations  being  remote  and 
indirect  and  not  such  direct  actual  injury  as  is  provided  for 
in  section  7  of  the  act  Minnesota  v.  Northern  Securities  Co., 
194  U.  S.,  48.  2—533 

20.  Municipal  Corporation  may  Maintain  Action  for  Damages 
under  Section  7,  Act  of  1890. — A  municipal  corporation  en- 
gaged in  operating  water,  lighting,  or  similar  plants,  from 
which  a  revenue  is  derived,  is,  in  relation  to  such  matters,  a 
business  corporation,  and  may  maintain  an  action  under 
section  7  of  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat, 
210),  for  injury  to  its  "business"  by  reason  of  a  combina- 
tion or  conspiracy  in  restraint  of  interstate  trade  or  com- 
merce made  unlawful  by  such  act  City  of  Atlanta  v.  Chat- 
tmiooffa  Fomidry  d  Pipeworks,  127  F.,  23.  2 — ^299 


6.  At  common  law — Damages. 

21.  Action  for  Damages  Must  Show  that  Plaintiff  is  Engaged  in 

Interstate  Commerce. — An  action  to  recover  damages  alleged 
to  have  been  en  used  by  acts  done  in  violation  of  the  Anti- 
Trust  Act  (26  Stat,  209)  can  not  be  maintained  when  the 
complaint  fails  to  show  that  plaintiff  is  engaged  in  interstate 
commerce,  and  no  such  showing  is  made  by  an  averment 
that  plaintiff  is  engaged  in  "  manufacturing  watch  cases 
throughout  all  the  States  of  the  United  States  and  in  foreign 
countries."  Dueber  Watch  Case  Mfg.  v.  Howard  Watch, 
etc.,  Co.,  55  F.,  851.  .  1—178 

Case  affirmed,  66  F.,  637  (1—121). 

22.  Same — ^Must  Show  Intention  to  Control  Market,  or  a  Large  Por- 

tion of  it. — An  agreement  by  a  number  of  manufacturers  and 
dealers  in  watch  cases  to  fix  an  arbitrary  price  on  their 
goods,  and  not  to  sell  the  same  to  any  persons  buying  watch 
cases  of  plaintiff,  is  not  in  violation  of  the  statute;  and  a 


INDEX — ^DIGEST. 


1047 


ACTIONS  AND  DEFENSES— Continued. 

complaint  which,  on  the  last  analysis,  avers  only  these  facts, 
without  averring  the  absorption  or  the  intention  to  absorb 
or  control  the  entire  marlcet,  or  a  large  part  thereof,  states 
no  cause  of  action.  /^^ 

23.  Action  Alleged  to  be  in  Violation  of  the  Statutes  of  a  State  and 

of  the  ITnited  States  Held  to  be  Founded  upon  Act  of  July  2, 
1890  (26  Stat,  290).— An  action  brought  in  the  United 
States  Circuit  Court  for  southern  New  York  by  a  manufac- 
turing company  against  competitors  in  various  States,  alleg- 
ing the  formation  of  a  combination  and  an  attempt  to  create 
a  monopoly,  "  in  violation  of  the  statutes  of  this  State  and 
the  United  States,"  whereby  plaintiff's  business  was  injured, 
and  alleging  the  formation  of  the  combination  on  and  prior 
to  November  16,  1887,  but  that,  after  the  passage  of  the  act 
of  Congress  of  July  2,  1890,  defendants  ratified,  renewed, 
and  confirmed  their  previous  contracts,  combinations,  etc, 
and  judgment  being  demanded  for  treble  damages  "under 
and  by  virtue  of  the  statute."  Held,  that  the  action  must 
be  deemed  to  be  founded  upon  the  said  act  of  July  2,  1890. 
Dueber  Watch  Case  Mfg.  Co.  v.  Hotcard  Watch,  etc.,  Co.,  66 
F.,  637.  I 421 

24.  Same — A  Cause   of  Action  not   Stated. — Where,   in  the   above 

action,  complaint  alleged  that  previous  to  November  16, 1887, 
it  sold  all  its  goods  to  a  great  number  of  dealers  "  throughout 
the  United  States  and  Canada ;  "  that  prior  to  that  date  de- 
fendants had  agreed  with  each  other  to  maintain  arbitrary 
and  fixed  prices  for  their  watch  cases ;  that  for  the  purpose 
of  compelling  plaintiff  to  join  with  them  therein,  defendants 
on  said  date  mutually  agreed  that  they  would  not  thereafter 
sell  any  goods  to  persons  who  bought  or  sold  goods  manu- 
factured by  plaintiff;  that  they  caused  notice  thereof  to  be 
served  upon  the  many  dealers  in  such  goods  throughout  the 
United  States  and  Canada,  who  had  formerly  dealt  in 
plaintiff's  goods,  whereupon  many  of  such  dealers  withdrew 
their  patronage  from  plaintiff ;  that  after  the  passage  of  the 
act  of  July  2,  1890,  defendants  ratified,  renewed,  and  con- 
firmed their  previous  agreements,  and  served  notice  of  such 
ratification  upon  all  said  dealers  in  plaintiff's  goods,  whereby 
said  dealers  were  compelled  to  refuse  to  purchase  plaintiff's 
watch  cases.  Held,  that  the  complaint  failed  to  state  a 
cause  of  action  under  the  statutes.  /j. 

26.  S&me— Held,  that  no  monopolizing  or  combination  to  monopo- 
lize interstate  commerce,  contrary  to  the  second  section  of 
the  act,  was  shown,  for  the  reason  that  the  allegations  did 
not  preclude  the  inference  that  each  defendant  may  have 
sold  his  entire  product  in  the  State  where  it  was  manufac- 
tured, ^j^ 


1048 


INDEX — DIGEST. 


AOnoirS  AND  DEFENSES— Continued. 

26.  Same— f/eM,  that  tlie  contracts  did  not  produce  an  unlawful 
restraint  of  trade,  under  the  first  section,  because  the  com- 
bination and  agreement  to  fix  arbitrary  prices  did  not  ap- 
pear to  include  all  manufacturers  of  watch  cases,  but  was 
only  a  partial  restraint  in  respect  to  an  article  not  of  prime 
necessity,  and  therefore  came  within  the  recognized  limits 
of  lawful  contracts.  /j,^ 

S7.  Mame—Held,  that  the  further  agreement  not  to  sell  to  customers 
of  plaintiff  was  a  lawful  means  of  enlarging  and  protecting 
the  business  of  the  defendants.  /j. 

Shipmtm,  Cir,  J.,  concurring,  on  the  ground — 

28.  That  the  acts  of  the  defendants,  whether  viewed  as  an  attempt 

to  create  a  monopoly  or  as  a  contract  in  restraint  of  trade, 
were  not  shown  to  concern  interstate  commerce,  because 
there  were  no   allegations  showing  the   residence   of  any 

,  dealers  who  withdrew  their  patronage  from  complainant, 

and  it  therefore  did  not  directly  appear  that  any  of  them 

.  resided  outside  of  the  State  where  plaintiff's  goods  were 

manufactured.  jj, 

Wallace,  Cir.,  dissenting,  on  the  ground — 

29.  That  the  allegations  were  sufficient  to  show  that  the  attempts 

to  monopolize  and  restrain  did  operate  upon  interstate  com- 
merce, jjf 

30.  That,  while  the  contracts  might  not  he  unlawful  in  themselves, 

yet  the  purpose  for  which  they  were  alleged  to  be  made, 
namely,  to  compel  plaintiff  to  Join  in  the  agreement  for  fix- 
ing arbitrary  prices,  and  to  injure  and  destroy  its  business 
if  it  refused  to  do  so,  was  oppressive  and  unjust,  and  ren- 
dered the  acts  of  defendants  unlawful  under  both  sections 
of  the  statute.  /^^ 

SI.  The  Only  Remedy  to  Party  other  than  the  TFnited  States  is  a 
Suit  for  Damages.— Under  the  act  of  July  2,  1890,  entitled 
**An  act  to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopolies,"  the  only  remedy  given  to  any 
other  party  than  the  Government  of  the  United  States,  is  a 
suit  for  threefold  damages,  costs,  and  attorney's  fees.  Gulf, 
€,  d  8.  F.  Ry,  Co.  v.  Miami  S.  8.  Co.,  86  F.,  407.  1^823 

32.  The  only  remedy  of  a  private  individual  to  restrain  acts  for- 
bidden by  the  Anti-Trust  Act  of  1890  is  an  action  at  law  for 
damages.    Pidcock  v.  Harrington,  64  F.,  821.  1—377 

88.  The  remedy  of  a  private  party  under  the  Anti-Trust  Act  of  1890 
is  an  action  at  law  for  damages.    8outhem  Ind.  Exp.  Co.  v. " 
U.  8.  Exp.  Co.,  88  F.,  659.  1^862 

84.  By  Direct  Action.— A  recovery  of  the  treble  damages  authorized 
by  the  Sherman  Anti-Trust  Act  of  July  2.  1890,  section  7  (26 
Stat.  L.,  209,  chap.  647),  in  case  of  injury  sustained  by  vio- 
lation of  the  act,  can  be  had  only  by  direct  action,  and  not 


INDEX — ^DIGEST. 


'    1049 


ACTIONS  AND  DEFENSES— Continued. 

by  way  of  set-off  in  an  action  brought  for  the  price  of  goods 
by  a  company  illegally  formed  in  violation  of  the  act— espe- 
cially when  the  State  practice  does  not  permit  the  set-off  of 
unliquidated  damages.  Connolly  v.  Union  Sewer  Pipe  Co., 
184  U.  S.,  540.  2—118 

35.  Municipal  Corporation  may  Maintin  Action  for  Damages 
under  Section  7,  Act  of  1890.— A  municipal  corporation  en- 
gaged in  oi)erating  water,  lighting,  or  similar  plants,  from 
which  a  revenue  is  derived,  is,  in  relation  to  such  matters,  a 
business  corporation,  and  may  maintain  an  action  under 
section  7  of  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat, 
210),  for  injury  to  its  "business"  by  reason  of  a  combina- 
tion or  conspiracy  in  restraint  of  interstate  trade  or  com- 
merce made  unlawful  by  such  act.  City  of  Atlanta  v.  Chat- 
ta/nooga  Foundry  d  Pipeicorks,  127  F.,  23.  2 — ^299 

86.  Statutory  Limitations  Governed  by  the  Laws  of  the  State  in 
which  Action  is  brought. — An  action  under  section  7  of 
the  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209),  providing 
that  "any  person  who  shall  be  injured  in  his  business  or 
property  by  any  other  person  or  corporation  by  reason  of 
anything  forbidden  or  declared  to  be  unlawful  by  this  act  may 
sue  therefor  in  any  circuit  court  of  the  United  States, 
*  *  *  and  shall  recover  threefold  the  damages  by  him 
sustained,"  is  not  an  action  for  a  penalty  or  forfeiture, 
within  section  1047,  Revised  Statutes,  prescribing  a  limita- 
tion of  five  years  for  a  "  suit  or  prosecution  for  any  penalty 
or  forfeiture,  pecuniary  or  otherwise,  accruing  under  the 
laws  of  the  United  States,"  but  one  for  the  enforcement  of  a 
civil  remedy  for  a  private  injury,  compensatory  in  its  pur- 
pose and  effect,  the  recovery  permitted  in  excess  of  damages 
actually  sustained  being  in  the  nature  of  exemplary  damages, 
which  does  not  change  the  nature  of  the  action,  and  such 
action  is  governed  as  to  limitation  by  the  statutes  of  the 
State  in  which  it  is  brought  City  of  Atlanta  v.  Chattanooga 
Foundry  and  Pipe  Co.,  101  F.,  900.  2—11 

Aflarmed  by  Circuit  Court  of  Appeals,  127  F.,  23   (2—299). 
The  judgment  of  the  circuit  court  was,  however,  reversed, 
but   upon   other  grounds— a   construction   of   section  4470, 
Tennessee  Code. 
Aflirmed  by  Supreme  Court  (203  U.  S.,  390). 

87.  Same— Every  Member  of  the  Combination  Liable  for  Damages. 

Every  member  of  an  illegal  combination  in  restraint  of  inter- 
state trade  or  commerce  in  violation  of  the  Anti'Trust  Act  is 
liable  for  the  damages  resulting  to  the  business  or  property 
of  a  plaintiff  by  reason  of  such  combination,  and  it  is  imma- 
terial that  there  were  no  direct  contract  relations  between 
plaintiff  and  defendant  City  of  Atlanta  v.  Chattanooga 
Foundry  and  Pipe  Works,  127  F.,  23.  2—299 


1050 


INDEX — ^DIGEST. 


ACnONS  AND  DEFEirSBS— Continued. 

38.  Same — ^Measure  ef  Recovery  for  Injury  to  Business.— If  the  ef- 
fect of  an  Illegal  combination  bet\Neen  manufacturers  to 
prevent  competition  in  tlie  sale  of  a  commodity  which  is  a 
subject  of  interstate  commerce  be  to  enhance  the  price  of 
such  commodity  to  a  purchaser,  he  is  entitled  to  recover  the 
difference  between  the  price  paid  and  the  reasonable  price 
under  natural  competitive  conditions,  as  an  injury  to  his 
business,  whether  tnch  business  ii  interstate  or  not,  provided 
the  transaction  by  which  the  purchase  was  made  was  in- 
terstate, fff^ 

Conspirinsr  to  Mure  Another  in  Business— HaiUng  Printed 
Circulars.— The  action  of  an  aasociation  of  manufacturers  in 
adopting  a  resolution  denouncing  a  dealer  in  the  product 
they  manufactured,  who  bought  and  shipped  such  product 
to  customers  in  other  States  and  foreign  countries,  and  in 
printing  such  resolution  in  circulars,  and  mailing  the  same  to 
other  manufacturers  and  customers  of  the  dealer,  whereby 
his  business  was  injured,  constituted  an  illegal  combination 
or  conspiracy  in  restraint  of  interstate  and  foreign  commerce, 
and  gives  the  person  injured  a  right  of  action  in  a  circuit 
court  of  the  United  States,  under  the  Anti-Trust  Law  of 
1890,  to  recover  the  damages  sustained.  Qihhs  v.  McNeeley, 
102  F.,  5M.  j^_25 

Verdict  for  defendant  directed,  107  F..  210  (2^71),  but 

Reversed  by  Circuit  Court  of  Appeals,  118  F.,  120  (2 — IM). 

Complaint  Fatally  B^ective  where  it  Faihi  to  Show  that  Plain- 
tiir  Suffered  Bamage.— A  complaint  in  a  civil  action,  based 
on  the  Anti-Trust  Law  of  1890,  alleging  an  illegal  combina- 
tion by  defendants  in  restraint  of  trade,  is  fatally  defective 
where  It  fails  to  show  that  plaintiff  has  suffered  damage  by 
reason  of  such  combination.  ih, 

41.  Treble  damages  are  recoverable  under  the  Auti-Trust  Act  of 
1890  only  in  an  action  at  law  by  the  plaintiff  as  an  indi- 
vidual and  not  as  a  stockholder  In  a  corporation  violating 
that  act.  Metcalf  v.  Amer,  School  Fimuture  Co.,  108  F., 
900.  a— 76 

Where  Manufacturer  Refused  to  Sell  because  Complainant 
was  not  a  Member  of  Trust  Association.— A  dealer  in  tiles, 
mantels,  and  grates  in  San  Francisco,  to  whom  a  manufac- 
turer in  another  State  refused  to  sell  tiles  on  the  sole 
ground  that  he  was  not  a  member  of  an  association  to 
which  he  belonged,  which  association  sought  to  control  the 
output  and  regulate  the  prices  thereof  in  California  and 
adjoining  States,  Held,  entitled  to  damages  under  section  7 
of  the  Anti-Trust  Act  of  1890.  Montague  v.  Lowry,  115  F., 
27.  »— 112 

Affirmed,  193  U.  S.,  38  (2—327). 

Bee  also  Bishop  v.  Amer.  Preservers  Co.,  105  F.,  845.       2-^1 


40. 


INDEX — ^DIGEST. 


1051 


ACTIONS  AMD  DEFENSES— Continued. 

7.  Equity— Injunctions,  etc 

43.  Private  Individuals  no  Remedy  in  Equity  under  the  Statute. — 

The  Anti-Trust  Act  of  July  2,  1890,  confers  no  right  upon 
private  individuals  to  sue  in  equity  for  the  restraint  of  acts 
forbidden  by  that  statute.  Pidcock  v.  Harrington,  64  F., 
821.  1—377 

44.  Private  Party  no  Remedy  in  Equity.— The  Anti-Trust  Act  of 

July  2,  1890,  does  not  authorize  a  court  of  equity  to  enter- 
tain a  bill  by  a  private  party  to  enforce  its  provisions. 
Southern  Ind.  Exp.  Co.  v.  V.  8.  Exp.  Co.,  88  F.,  659. 

1—862 

45.  The  right  to  bring  suits  for  injunction  under  section  4  of  the 

act  of  July  2, 1890  (26  Stat,  209),  is  limited  to  suits  instituted 
on  behalf  of  the  Government.  Oreer,  Mills  &  Co.  v.  Stoller, 
11  F.,  1.  1—620 

46.  The  only  party  entitled  to  maintain  a  bill  of  injunction  for  an 

alleged  breach  of  the  act  of  July  2,  1890  (26  Stat,  209),  is 
the  United  States,  by  its  district  attorney,  on  the  authority 
of  the  Attorney-General.  Qulf  C.  &  8.  F.  Ry.  Co.  v.  Miami 
8.  8.  Co.,  86  F.,  407.  1—824 

47.  Suit  Enjoining  Infringement  Maintainable  by  Owner  of  Patent 

though  Member  of  Illegal  Combination. — (Complainant 
though  a  member  of  a  combination  in  violation  of  the  Anti- 
Trust  Law  of  July  2,  1890,  can  maintain  a  suit  in  equity  to 
enjoin  an  infringement  of  a  patent  owned  by  him.  General 
Electric  Co.  v.  Wise,  119  F.,  922.  2—205 


8.  Purchases  from,  or  services  rendered  J)y,  illegal  corporations. 

48.  Can  not  Retain  Goods  and  Recover  Price  Paid. — One  purchas- 

ing liquors  from  an  illegal  combination  of  distillers,  which 
controls  the  market  and  prices,  though  impelled  thereto  by 
business  needs  and  policy,  enters  into  the  contract  voluntar- 
ily, and  can  not  retain  the  goods,  and  recover  the  price  paid, 
or  any  part  of  it,  either  on  the  ground  that  the  combination 
was  illegal,  or  the  price  excessive.  77  Fed.,  700,  affirmed. 
Dennehy  v.  McNulta,  86  F.,  825.  1—855 

49.  Rebate  vouchers  issued  by  a  distilling  company  to  customers,  by 

which  it  promised  to  refund  a  certain  sum  per  gallon  on 
their  purchases  at  the  end  of  six  months,  on  condition  of 
their  purchasing  exclusively  from  the  company  during  that 
time,  can  not  be  enforced,  either  at  law  or  in  equity,  where 
the  condition  has  not  been  performed,  though  such  condition 
be  illegal,  as  in  restraint  of  trade ;  there  being  no  other  con- 
sideration for  the  promise.    77  Fed.,  700,  affirmed.  /b. 


1052 


INDEX— DIGEST, 


ACTIONS  AND  BEFENSBS-Continued. 

fO.  Mmt  Pay  Beasonable  Yalue  of  Senrices — ^Towage.— One  who  re- 
quests and  accepts  the  services  of  a  tug  for  towage  purposes 
can  not  escape  paying  the  reasonable  value  of  the  services 
rendered  on  the  ground  that  the  tug  owners  are  members  of 
an  association  which  is  illegal  under  the  act  of  July  2,  1890, 
relating  to  trusts  and  monopolies.  The  Charles  E.  Wise- 
wall^  74  F.,  802.  1—608 
Affirmed,  86  F.,  671  (1—850). 

9.  Patents— Actions  for  infringement, 

91.  Third  Party  can  mot  Enjoin  Combination  from  Bringing  Suit 
for  Infringement  of  its  Patents.— The  fact  that  a  corporation 
owning  letters  patent  upon  a  particular  kind  of  machinery 
has  entered  into  a  combination  with  other  manufacturers 
thereof  to  secure  a  monopoly  in  its  manufacture  and  sale, 
and  to  that  end  has  acquired  all  the  rights  of  other  manu- 
facturers for  the  exclusive  sale  and  manufacture  of  such 
machines  under  patents,  will  not  entitle  a  stranger  to  the 
combination  to  enjoin  the  corporation  from  bringing  any 
suits  for  infringement  against  him  or  his  customers.  Strait 
V.  Wational  Harrow  Co.,  51  F.,  819.  1^52 

See  also  National  FoUimg  Box  d  Paper  Co.  v.  Robertson,  99  F., 
985  (8 — i)  ;  and  Otis  Elevator  Co.  v.  Geiger,  107  F.,  131 
(8—66). 
68.  Owner  of  Patent,  though  Member  of  Illegal  Combination,  can 
Maintain  Action  for  Infringement. — That  a  complainant  is  a 
member  of  a  combination  in  violation  of  the  Anti-Trust  Law 
of  July  2,  1880,  does  not  give  third  persons  the  right  to  in- 
fringe a  patent  of  which  he.  the  complainant,  is  owner,  nor 
preclude  complainant  from  maintaining  a  suit  in  equity  to 
enjoin  such  infringement.  General  Electric  Co.  v.  Wise, 
119  F.,  922.  ji— 205 

L  Combination  Organized  to  Receive  Assignments  of  Patents  can 

not  Maintain  Action  for  Infringement  against  Assignor. 

A  combination  among  manufacturers  of  spring-tooth  har- 
rows, whereby  a  corporation,  organized  for  the  purpose,  be- 
comes the  assignee  of  all  patents  owned  by  the  various  man- 
ufacturers, and  executes  licenses  to  them,  so  as  to  control 
the  entire  business  and  enhance  prices,  is  void  both  as  to  the 
assignments  and  licenses,  so  that  the  corporation  can  not 
maintain  a  suit  against  one  of  its  assignors  who  violates  the 
agreement,  for  infringement  National  Harrow  Co.  v. 
Bench.,  84  F.,  226.  1—7-10 

See  also  National  Harrow  Co.  v.  Quick,,  67  F.,  130  (1—443). 


INDEX — DIGEST. 


1053 


ACTIONS  ANB  DEFENSES— Continued. 

10.  Generally. 

54.  What  must  be  Shown. — To  vitiate  a  combination,  such  as  the 
Anti-Trust  Act  condemns,  it  need  not  be  shown  that  the  com- 
bination, in  fact,  results,  or  will  result,  in  a  total  suppres- 
sion of  trade  or  in  a  complete  monopoly,  but  it  is  only  essen- 
tial to  show  that  by  its  necessary  operation  it  tends  to  re- 
strain interstate  or  international  trade  or  commerce,  or  tends 
to  create  a  monopoly  in  such  trade  or  commerce,  and  to  de- 
prive the  public  of  the  advantages  that  flow  from  free  compe- 
tition. Northern  Securities  Co.  v.  United  States,  193  U.  S., 
197.     (Harlan,  Brown,  McKenna,  Day.)  8--340 

66.  Same. — In  order  to  maintain  this  suit  the  Government  is  not 
obliged  to  show  that  the  agreement  in  question  was  entered 
into  for  the  purpose  of  restraining  trade  or  commerce,  if 
such  restraint  is  its  necessary  effect.  U.  S.  v.  Trans-Mo.  Ft. 
Assn.,  166  U.  S.,  290.  1—649 

See  also  Pleading  and  Practice. 

56.  A  suit  brought  by  the  Attorney-General  of  the  United  States  to 

declare  the  Northern  Securities  Co.  combination  illegal  under 
the  act  of  July  2,  1890,  is  not  an  interference  with  the  con- 
trol of  the  States  under  which  the  railroad  companies  and 
the  holding  company  were,  respectively,  organized.  Northern 
Securities  Co.  v.  United  States,  193  U.  S.,  197  (Brewer, 
concurring).  8—342 

57.  No   Right  of  Action   Growing   out  of   Suits   against  Plaintiff 

which  have  not  been  Decided.— The  Anti-Trust  Act  of  July  2, 
1890  (26  Stat,  209),  which  gives  a  right  of  action  to  any 
person  injured  by  acts  in  violation  of  its  provisions,  does  not 
authorize  suit  where  the  only  cause  of  action  is  the  bringing 
of  two  suits  which  have  not  been  decided.    Bishop  v.  Amer. 

Preservers'  Co.,  51  F.,  272.  i 49 

See  also  Indictments. 


II.  Defenses. 

1.  Indeflniteness,  duplicity. 

58.  Indeflniteness.— In  an  action  by  a  corporation  for  the  infringe- 
ment of  elevator  patents,  an  answer  alleging  as  a  defense 
that  the  plaintiff  is  an  unlawful  combination  in  restraint  of 
trade  and  in  violation  of  the  Sherman  Anti-Trust  Law  (26 
Stat,  209),  but  which  fails  to  state  who  are  in  the  combina- 
tion in  the  agreement  characterized  as  unlawful,  and  does 
not  disclose  fully  and  in  detail  that  the  combination  was  en- 
tered into  after  the  act  took  effect,  and  all  the  facts  neces- 
sary to  show  its  illegality,  is  insufficient  for  indeflniteness. 
Otis -Elevator  Co.  v.  Geiger,  107  F.,  131.  2—66 


1054 


INDEX — ^DIGEST. 


ACTIONS  AND  DEFENSES -Continued. 

II.  DEFBNSEa— Continued. 

TO.  Duplicity. — ^A  declaration  in  an  action  brought  under  section  7 
of  tlie  Sherman  Anti-Trust  Act  (act  July  2,  1890,  c.  647,  26 
Stat,  210)  to  recover  damages  for  a  violation  of  section  1 
of  the  act,  which  alleges  in  a  single  connt  that  defendant  en- 
tered into  a  "contract,  combination,  and  conspiracy"  in  re- 
straint of  trade,  is  bad  for  duplicity.  Rice  v.  Stcmdard  Oil 
Co.,  1.34  F.,  464.  2— 6S3 

60.  Same.— The  Anti-Trust  Act  of  1890  makes  a  distinction  between 

a  contract  and  a  combination  or  conspiracy  in  restraint  of 
trade.  /5. 

Multifariousness.    See  Pleading  and  Practice. 

2,  Contract  in  violation  of  Anti-Trust  Act,  or  of  an  act  of  Congress. 

•1.  The  defense  that  a  contract  is  in  violation  of  the  act  of  Con- 
gress of  July  2,  1890  (26  Stat,  209),  to  protect  trade  and 
commerce  against  unlawful  restraints  and  monopolies,  which 
makes  illegal  every  contract  violative  of  its  provisions,  may 
be  set  up  by  a  private  individual  when  sued  thereon,  and,  if 
proved,  constitutes  a  good  defense  to  the  action.  Bement  v. 
National  Harrow  Co.,  186  U.  S.,  70,  2 — 170 

6S.  Same. — ^Anyone  sued  upon  a  contract  may  set  np  as  a  defense 
that  it  is  a  violation  of  an  act  of  Congress.  lb.  (169) 

3.  Illegal  co^mMnaiion — Purchases  from,  services, 

63.  Payment  for  Services  can  not  be  Avoided  because  Performed  by 
a  Trust — ^Towage. — One  who  requests  and  accepts  the  serv- 
ices of  a  tug  for  towage  purposes  can  not  escape  paying  the 
reasonable  value  of  the  services  rendered  on  the  groimd 
that  the  tug  owners  are  members  of  an  association  which  is 
illegal  under  the  act  of  July  2,  1890,  relating  to  trusts  and 
monopolies.  The  Charles  E.  Wisewall,  74  F.,  802.  1—608 
Affirmed,  86  F.,  671  (1—850). 

61.  Payment  of  Hote  for  Goods  Purchased  can  not  be  Avoided  be- 

cause Bought  from  a  Trust.— A  note  made  for  a  balance  due 
on  goods  bought  from  a  corporation  can  not  be  avoided 
merely  because  the  latter  is  a  trust  organized  to  create  and 
carry  out  restrictions  in  trade  contrary  to  the  Anti-Trust 
Act  of  July  2,  1890,  as  that  only  covers  contracts  which  are 
themselves  In  restraint  of  trade,  and  does  not  affect  those 
which  "merely  indirectly,  remotely,  incidentally,  or  collat- 
erally regulate,  to  a  greater  or  less  degree,  interstate  com- 
merce between  the  States."  Union  Sewer-Pipe  Co.  v.  Con- 
nelly,  99  F.,  354.  a_i 

Affirmed,  184  U.  S.,  540  (2—118). 

Bee  also  Dennehy  v.  McNulta,  86  F.,  825  (1— S85). 


INDEX — ^DIGEST. 


1055 


ACTIONS  AND  DEFENSES— Continued. 

II.  Defenses —Continued. 

65.  A  contract  for  the  sale  of  merchandise  is  not  rendered  illegal 

by  the  fact  that  the  selling  corporation  is  a  trust  or  mo- 
nopoly organized  in  violation  of  law,  either  Federal  or  State; 
the  contract  of  sale  being  collateral  and  having  no  direct 
/  relation  to  the  unlawful  scheme  or  combination.     Chicago 

Wall  Paper  Mills  v.  General  Paper  Co.,  147  F.,  491.      2 — 1027 
See  also  Continental  Wall  Paper  Co.  v.  Lewis  Voight  di  Sons 
Co.,  148  F.,  940. 

66.  Recovery  on  Collateral  Contract  by  Member  of  Combination  in 

Restraint  of  Interstate  Trade.— The  act  of  July  2,  1890,  sec- 
tion 1  (26  Stat,  209)  does  not  invalidate  or  prevent  a  recov- 
ery for  the  breach  of  a  collateral  contract  for  the  manufac- 
ture and  sale  of  goods  by  a  member  of  a  combination  formed 
for  the  purpose  of  restraining  interstate  trade  in  such  goods. 
Hadley  Dean  Plate  Glass  Co.  v.  Highland.  Glass  Co.,  143  F., 
242.  2—995 

-^  Patents — Illegal  combination. 

67.  Infringement   of   Patent — ^No   Defense   that   the   Owner   is   an 

Illegal  Corporation  under  Anti-Trust  Law. — The  fact  that 
the  owner  of  a  patent  is  a  corporation  alleged  to  have  been 
formed  in  violation  of  the  Anti-Trust  Law,  and  that  the 
patent  is  alleged  to  have  been  assigned  to  it  in  furtherance 
..  of  the  illegal  purpose  to  create  a  monopoly  and  control  the 
price  of  an  article  of  commerce,  is  not  available  to  an  in- 
fringer of  such  patent  to  defeat  a  suit  for  the  infringement 
Nation.al  Folding-Box  S  Paper  Co.  v.  Robertson,  99  F.,  985. 

2—4 

68.  Same. — In  an  action  by  a  corporation  for  the  infringement  of 
^         elevator  patents,  a  private  defendant  was  not  entitled  to 

urge  as  a  defense  that  plaintiflf  was  a  coiporation  organized 
merely  for  the  puipose  of  holding  the  legal  title  to  various 
elevator  patents  alleging  to  have  been  infringed,  for  the  pur- 
pose of  controlling  sales  and  enhancing  prices  of  elevators 
and  apparatus,  without  itself  engaging  in  the  manufacture 
and  sale  of  such  appliances,  in  violation  of  the  Sherman 
Anti-Trust  Law  (26  Stat,  209),  since  until  the  United  States 
has  acted  and  sought  to  prosecute  the  plaintiflf  for  violation 
of  such  act  an  infringer  of  the  plaintiff's  patent  will  not  be 
permitted  to  raise  such  issue  as  a  defense  thereto.  Otis 
Elevator  Co.  v.  Geiger,  107  F.,  131.  2 — 66 

69.  Infringement  Suit  can  not  be  Maintained  by  Combination  of 

Patent  Owners  against  Assignor. — A  combination  among 
manufacturers  of  spring-tooth  harrows,  whereby  a  corpora- 
tion, organized  for  the  purpose,  becomes  the  assignee  of  all 
patents  owned  by  the  various  manufacturers,  and  executes 
licenses  to  them,  so  as  to  control  the  entire  business  and  en- 


1056 


INDEX DIGEST, 


ACTIOlfS  AWD  BEFEMTSBS-Coiitmoed. 

II.  Defenses — Ck)iitinued. 

hance  prices,  is  void  both  as  to  the  assignments  and  licenses, 
so  that  the  corporation  can  not  maintain  a  suit  against  one 
of  its  assignors  who  violates  the  agreement,  for  infringe- 
ment. Natimal  Harrow  Co,  v.  Hetwh,  84  F.,  226.  1— 74« 
Bee  also  National  Harrow  Co.  v.  Quick,  67  F.,  130  (1— i43) ; 
and  Actions  and  Defenses  51-153. 

5.  Affreement  not  to  engage  in  business, 

70.  Suit  to  enforce. — In  a  suit  to  enjoin  a  defendant  from  violating 

a  contract  by  which  for  a  valuable  consideration  he  cove- 
nanted not  to  engage  in  business  for  himself  or  another  in 
competition  with  that  of  complainant  for  a  term  of  years, 
and  to  enjoin  a  codefendant  fi-om  employing  his  services  in 
a  competing  business,  it  is  no  defense  that  his  codefendant 
hired  him  in  ignorance  of  the  contract,  and  will  suffer  dam- 
age if  deprived  of  his  services.  A.  Booth  4  Co.  v.  Davis, 
127  F.,  875.  a— 319 

Affirmed,  131  F.,  31  (»-526). 

See  also  Robinson  v.  Suburban  Brick  Co.,  127  F.,  804  (»— 312), 

6.  Cfenerallff. 

71.  That  Combination  has  not  been  Injnrions  to  the  Public. — It  is 

no  defense  to  a  suit  to  dissolve  a  combination  as  ill^al, 
under  the  Anti-trust  Law,  that  it  has  not  been  productive  of 
Injury  to  the  public  or  even  that  it  has  been  beneficial,  by 
enabling  the  combination  to  compete  for  business  in  a  wider 
field.  U.  8.  V.  Chesapeake  &  O.  Fuel  Co.,  105  F.,  93.  2—34 
Affirmed,  115  F.,  610  (»— 151). 

78.  That  Combination  is  in  the  Form  of  a  Corporation  or  Holding 
Company.— The  fact  that  the  purpose  of  an  illegal  combina- 
between  stockholders  of  two  railroad  companies  operat- 
ing parallel  and  competing  interstate  lines,  to  secure  unity 
of  interest  and  control  of  such  companies,  and  to  prevent 
competition,  has  been  accomplished  by  the  formation  of  a 
corporation  which  has  acquired  the  ownership  of  a  majority 
of  the  stock  of  each  of  the  companies,  can  not  be  urged  to 
defeat  a  suit  by  the  United  States  to  restrain  the  exercise  of 
the  power  so  illegally  acquired  by  the  corporation  through 
such  combination,  as  imposing  a  restraint  upon  interstate 
commerce  in  violation  of  the  Anti-Trust  Law  (act  July  2, 
ISOT).  20  Stat.,  209).  17.  S.  v.  Northern  Securities  Co..  120  F., 
'*^'  2 215 

78.  Same— auestions  of  Benefit  to  the  Public— Public  Policy.— 
Where  the  effect  of  a  combination  is  to  directly  prevent  com- 
petition between  two  parallel  and  naturally  competing  lines 


INDEX— DIGEST.  1057 

ACTIONS  AND  DEFENSES— Continued. 

11.  Defenses — Continued. 

of  railroad  tnigaged  in  interstate  Imsiness,  it  is  in  restraint 
of  interstate  commerce,  and  a  violation  of  the  Anti-Trust 
Act  (act  .July  2,  189().  2«;  Stat.,  209),  and  the  court,  in  a  suit 
to  enjoin  it  as  sucli,  can  not  consider  the  question  whether 
the  conil»ination  may  not  l)e  of  greater  benefit  to  the  public 
tha'n  competition  would  be;  tliat  being  a  question  of  public 
I)olicy.  to  l»e  determined  l>y  Congress.  /ft. 

Affirmed.  19:?  TT.  S.,  197  (2—3.38). 
74.  The  pendency  of  a  suit  in  a  court  can  not  be  pleaded  in 
abatement  of  an  a(ti<m  in  a  circuit  court  of  the  United 
States  to  recover  treble  damages  under  section  7  of  the 
Anti-Trust  Act  of  .July  2.  181K)  (20  Stat.,  210),  since  the 
State  court  is  without  jurisdiction  to  enforce  the  remedy 
given  l>y  said  section,  and  therefore  tlie  same  case  can  not 
be  depending  in  l)otli  courts.     Locn-c  v.  Lauhtr,  130  ¥.,  0.33. 

2—563 

AGREEMENTS  NOT  TO  ENGAGE  IN  BUSINESS.     See  Actions 
AND  Defenses.  70;    Combinations,  etc.,  152-159. 

AGREEMENTS  NOT  TO  COMPETE  IN  BIDDING.     See  Combina- 
tions, ETC,  .39-52. 

ALLEGATIONS  AND  PROOF.    See  PLEAmNo  and  Practice.  12-15. 
ANTICIPATED  PROFITS.    See  Damages,  3. 
APPEAL.    Sec  Courts,  23,  30,  38,  40,  42,  43. 

APPORTIONMENT,  DIVISION,  OR  RESTRICTION  OF  TERRI- 
TORY.   Sec  Combinations,  etc,  39,  136,  137,  166. 

ATTACHMENT. 

Grounds  for  Dissolution— Prior  Attachment  in  State  Court.— 
Wliere  the  State  statute  provides  for  successive  attachments 
of  tlie  same  proi)erty,  a  prior  attachment  in  a  State  court 
affords  no  ground  for  the  discharge  of  an  attachment  in  a 
Federal  court.    Loire  v.  Lanlor,  130  F.,  633.  2-563 

ATTORNEY-GENERAL.     See  Actions  and  Defenses,  17,  18,  55; 
Parties,  7. 

ATTORNEY'S  FEES.    See  Costs. 

AVOIDANCE  OF  PAYMENT.    See  Actions  and  Defenses,  63,  64. 

BAILMENT.    See  Sale,  4. 

BIDDING,    AGREEMENTS    NOT    TO    COMPETE.    See    Combina- 
tions, etc,  39-52. 

11808— vol  1—06  M 67 


1058 


INDEX — ^DIGEST. 


INDEX — DIGEST. 


1059 


BILL.    See  Equity,  2, 4 ;  Pleading  and  Pbactice,  1, 2, 6-9, 15-17, 19, 20. 

BOOKSELLEBa    See  Combinations,  etc.,  28,  96. 

BOYCOTT.    See  Combinations,  etc.,  124,  213. 

BTTBDEir  OF  PBOOF.    See  Evidence.  3.  4. 

OABBIEBS. 

1.  Common  Carricra  Not  Included  Within  the  Statute.— It  was  not 
the  intention  of  Congress  to  include  common  carriers  sub- 
ject to  the  act  of  February  4,  1887,  within  the  provisions  of 
the  act  of  July  2,  1890,  which  is  a  special  statute,  relating 
to  combinations  in  the  form  of  trusts  and  conspiracies  in 
restraint  of  trade,  l^  8.  v.  Trans-Mo.  Ft.  Assn.,  53  F.,  440. 
Case  reversed,  166  U.  S.,  290  (1—048).  l— SO 

8.  May  Demand  Prepayment  of  Freight  from  One  Connecting  Car- 
rier and  Not  from  Another. — ^A  common  carrier  engaged  in 
interstate  commerce  may  at  common  law,  and  under  the  in- 
terstate commerce  law,  demand  prepayment  of  freight 
charges,  when  delivered  to  it  by  one  connecting  carrier,  with- 
out exacting  such  prepayment  when  delivered  by  another 
connecting  carrier,  and  may  advance  freight  charges  to  one 
connecting  carrier  without  advancing  such  charges  to  an- 
other connecting  carrier.  Qulf,  C.  &  S.  F.  By.  Co.  v.  Miami 
S.  S.  Co.,  86  F.,  407.  1—823 

8.  Same— Through  Transportation— Joint  Rates  and  Billing.— 
Such  carrier  may  enter  into  a  contract  with  one  connecting 
carrier  for  through  transi)ortation,  through  joint  traffic, 
through  billing,  and  for  the  division  of  through  rates,  with- 
out being  obligated  to  enter  into  a  similar  contract  with  an- 
other connecting  carrier.  /&, 

4.  Not  Required  to  Receive  Goods  Without  Prepayment  of 
Charges. — ^The  rules  of  the  common  law  do  not  require  a 
carrier  to  receive  goods  for  carriage,  either  from  a  consignor 
or  a  connecting  carrier,  without  prepayment  of  its  charges 
if  demanded,  nor  to  advance  the  charges  of  a  connecting  car- 
rier from  which  it  receives  goods  in  the  course  of  transpor- 
tation ;  nor  can  it  be  required  to  extend  such  credit  or  make 
such  advances  to  one  connecting  carrier  because  it  does  so  to 
another.  Southern  Ind.  Exp.  Co,  v.  O.  S.  Exp.  Co.,  88  F., 
659.  1—862 

0.  Same— Express  Companies. — The  interstate  commerce  act  does 
not  apply  to  independent  express  companies  not  operating 
railway  lines.  i&. 

See  also  Combinations,  etc.,  lOO-lll,  189-200, 

CBBTIOBABI.    See  Courts,  48. 

COAL.    See  Combinations,  etc,  25-27,  59. 


I 


COMBINATIONS,     CONSPIRACIES,     CONTRACTS,     ETC.,     IN 
RESTRAINT   OF   TRADE   AND   COMMERCE. 

I.  In  General. 

1.  Distinction. 

1.  Distinction   between   a   Contract   and  a   Combination  or   Con- 

spiracy in  Restraint  of  Trade.— Section  1  of  the  Anti-Trust 
Act  of  July  2,  1890  (26  Stat,  209),  which  declares  illegal 
"  every  contract,  combination  in  the  form  of  trust  or  other- 
wise, or  conspiracy  in  restraint  of  trade  or  commerce  among 
the  several  States  or  with  foreign  nations,"  makes  a  distinc- 
tion between  a  contract  and  a  combination  or  conspiracy  in 
restraint  of  trade.    Rice  v.  Standard  Oil  Co.,  134  F.,  464. 

2—633 

2.  Declaration  which  Made  no  such  Distinction  Bad  for  Duplicity. 

A  declaration  in  a  suit  based  on  section  7  (26  Stat,  210 j  to 
recover  damages  resulting  to  plaintiff  from  a  violation  of 
such  provision,  which  alleges  in  a  single  count  that  defend- 
ant entered  into  a  "  contract,  combination,  and  conspiracy  " 
in  restraint  of  trade,  is  bad  for  duplicity.  /ft. 

2.  Legality — How  determinahle — Test. 

8.  The  test  of  the  validity  of  contracts  or  combinations  in  re- 
straint of  trade  is  not  the  existence  of  restriction  upon  com- 
petition imposed  thereby,  but  the  reasonableness  of  that  re- 
striction under  the  facts  and  circumstances  of  each  par- 
ticular case.  Public  welfare  is  first  considered,  and,  if  the 
contract  or  combination  appears  to  have  been  made  for  a 
just  and  honest  purpose  and  the  restraint  upon  trade  is  not 
specially  injurious  to  the  public  and  is  not  greater  than  the 
protection  of  the  legitimate  interests  of  the  party  in  whose 
favor  the  restraint  is  imposed  reasonably  requires,  the  con- 
tract or  combination  is  not  illegal.  Shiras,  District  Judge, 
dissenting,  on  the  ground  that  this  rule  is  not  applicable  to 
coi-porations  charged  with  public  duties.  U.  S.  v.  Trans-Mo. 
Ft.  Assn.,  58  F.,  58.  1—186 

Case  reversed,  166  U.  S.,  290  (1—648). 

4.  Provisions  Apply  to  all  Contracts  in  Restraint— Not  Merely  to 

Unreasonable  Restraints.— The  prohibitory  provisions  of  the 
said  act  of  July  2,  1890,  apply  to  all  contracts  in  restraint 
of  interstate  or  foreign  trade  or  commerce  without  exception 
or  limitation,  and  are  not  confined  to  those  in  which  the 
restraint  is  unreasonable.  U.  S.  v.  Trans-Missouri  Freight 
Association,  166  U.  S.,  290.  1—649 

5.  Any  restraint  of  interstate  trade  or  commerce,  if  it  be  accom- 

plished by  a  conspiracy,  is  unlawful.     U.  S.  v.  Dehs,  64  F., 
724.  1—322 

6.  In  a  suit  to  restrain  alleged  violations  of  the  law  of  July  2, 

1890,  against  trusts  and  monopolies  affecting  interstate  com- 


1060 


INDEX — DICKST. 


COMBINATIONS,  CONSPIBACIES,  CONTRACTS,  ETC.— Cont'd. 

I.  Ix  General — Continued. 

uieiTe,  the*  twisttMice  of  an  niepil  comljination  anions'  the 
defendants  is  to  he  determined  not  alone  from  what  appears 
om  the  face  of  the  preamble,  rules,  and  by-laws  of  their  asso- 
ciation, bnt  from  the  entire  situation,  and  the  practical  work- 
ing and  results  of  their  metlnxls  of  dohig  husiness,  as  dis- 
closed hy  the  evidence.     l\  S.  v.  H(Ji)kin8,  82  F.,  529.    1—725 

7.  The  only  question  in  each  case  where  the  validity  of  a  contract 

or  wn  lb  illation  under  the  hiw  is  involved  is  whether  or  not 
its  necessary  effect  is  to  restrain  interstate  commerce. 
VJirsapruhe  d  O.  Fuel  Co.  v.  IJ.  8.,  115  F.,  010.  2—151 

8.  In  deteniiininj;  whether  or  not  a  coiiihination  is  in  violation  of 

tlie  Fwleral  Anti-Trust  Law.  as  in  rostra int  of  interstate 
commerce,  it  is  immaterial  that  such  is  not  its  ultimate  ob- 
ject, which  is  in  nn>st  eases  to  increase  the  trade  and  profits 
of  the  parties  to  such  comhinatlon :  n«u'  is  it  material  to 
ascertain  what  proportion  the  result inj;  restraint  of  inter- 
state commerce  beai-s  to  other  results.  The  true  inquiry  is 
whether  it  tends  directly  to  appreciably  restrain  interstate 
trade,  and,  if  it  does,  it  is  within  the  statute,  althouj,'h  such 
effect  may  not  l»e  so  considerable  as  its  other  effects.  Ellis 
V.  huiHtn,  I'ouhen  rf  Co.,  131  F..  1S2.  2—577 

9.  The  test  of  the  violation  of  the  Anti-Trust  Art  of  July  2,  1890 

(26  Stat,  209),  by  a  contract  or  combination  is  its  effect  upon 
competition  in  commerce  among  the  States.  If  its  necessary 
effect  is  to  stifle  or  to  directly  and  substantially  restrict  in- 
terstate commerce,  it  falls  under  the  ban  of  the  law.  but  if 
it  promotes  or  only  incidentally  or  indirectly  restricts  com- 
petition, while  its  main  punxise  an<l  chief  effect  are  to  pro- 
mote the  business  and  increase  the  trade  of  the  makers,  it 
Is  not  deuounctHl  or  avoided  by  that  law.  PhiU'nts  v.  lolu 
Portland  Cement  Co.,  125  F.,  593.  2—284 

10.  To  render  a  combination  unlawful  under  the  Anti-Trust  Act  of 

1890  it  need  not  be  one  which  by  its  terms  refers  to  inter- 
state commerce,  but  It  Is  sufficient  if  its  purpose  and  effect 
are  necessarily  to  restrain  interstate  trade.  Gihbs  v.  Mc- 
Neeleu,  118  F.,  120.  2—194 

11.  Act  Includes  every  Combination  which  Directly  and  Substan- 

tially Restricts  Interstate  Commerce. — The  generality  of  the 
language  used  in  the  Autl-Trust  Act  of  1890  (26  Stat.,  209), 
declaring  illegal  "  every  contract,  combination,  or  conspiracy 
in  restraint  of  trade  or  commerce  among  the  several  States 
or  with  foreign  nations,"  Indicates  the  purpose  of  Congress 
to  include  in  the  prohibition  every  combination  which 
directly  and  substantially  restricts  interstate  commerce, 
whatever  Its  form.  V,  S.  v.  Northern  {Securities  Co.,  120  F., 
721.  2—215 


INDEX — DIGEST. 


1061 


14. 


COMBINATIONS,  CONSPIRACIES,  CONTRACTS,  ETC.— Cont'd. 

I.  In  General— Continued. 

12.  Same — Applies  to  Interstate  Carriers.— The  Anti-Trust  Act  (act 

July  2.  181K),  26  Stat.,  209)  applies  to  interstate  carriers  of 
freight  and  i)assengei-s,  and  any  contract  or  combination 
which  directly  and  substantially  restricts  the  right  of  such 
a  carrier  to  fix  its  own  rates  indci)eiidently  of  its  natural 
comiietitors  places  a  direct  restraint  u\K)n  interstate  com- 
merce, in  that  it  tends  to  lu-event  coiiii)etition,  and  is  in 
violation  of  the  act,  whether  the  rates  actually  fixed  be 
reasonable  or  unrcasftnable.  /^ 

Decree  affirmed.  V.YA  V.  S.,  197  (2— 8;iS). 

13.  Same.— The  act  is  not  limited  to  restraints  of  interstate  and 

international  trade  or  commerce  that  are  unreasonable  in 
their  nature,  but  embraces  all  direct  restraints,  reasonable 
or  unreasonable,  imposed  l)y  any  coml)iiiation,  conspiracy,  or 
monopoly  upDii  such  trade  or  commerce.  T.  S.  v.  Northern 
ScciiriticM  Co.,  19:?  U.  S.,  197.  2—340 

When  the  direct,  immediate,  and  intended  effect  of  a  contract 
or  combination  among  dealers  in  a  commodity  is  the  en- 
hancement of  its  price,  it  amounts  to  a  restraint  of  trade  in 
the  comiiKMlity.  even  though  contracts  to  buy  it  at  the  en- 
hanced price  are  being  made.  Addji^ton  Pipe  <£-  f^teel  Co. 
V.  Vnited  States,  17.")  U.  S.,  211.  1—1010 

It  does  not  matter  that  a  combination  embraces  restraint  of 
trade  within  a  single  State  if  it  also  embraces  and  is 
directed  against  commerce  among  the  States.  .Sicift  <fe  Co. 
V.  United  .States,  190  l^  S.,  .Mr*.  2—641 

aSVt  also  r.  .V.  V.  MacAndrars  d-  Forbes  Co..  149  F.,  824. 
.7.  Contnirfs  not  rnforeeahle. 

16.  Contracts  that  were  in  unreasonable  restraint  of  trade  at  com- 
mon law  were  not  unlawful  in  the  sense  of  being  criminal,  or 
as  giving  rise  to  an  action  for  damages  to  one  prejudicially 
affectetl  thereby,  but  were  simply  void  and  not  enforceable. 
V,  S.  v.  Aihli/ston  Pi  lie  and  fUteel  Co.,  85  F.,  271.  1—772 

17.  A  contract  made  in  pursuance  of  a  combination  of  manufac- 
turers seeking  to  restrict  the  production  and  keep  up  the 
prices  of  wooden  dishes  throughout  the  country,  whereby  a 
manufacturer  was  guarantied  a  certain  sum  as  dividends  on 
his  stock  in  the  central  company,  in  consideration  of  the 
closing  of  his  factory  for  a  year,  held  to  be  contrary  to  pub- 
public  policy,  and  therefore  unlawful,  and  not  enforceable 
by  the  courts.     Crarcns  v.  Cartrr-Crnme  Co.,  92  F.,  479. 

__    ^  1—983 

18.  Can  not  Enforce  Sale  of  a  Business  Which  was  to  Constitute 
Part  of  an  Illegal  Combination  or  Trust.— Defendant  and  his 
partner  sold  tlieir  bakery  business  to  complainant  cori^ra- 
tion,  receiving  i)ayment  in  its  stock,  and  defendant  leased  to 
it  the  premises  where  the  business  was  c«niducted  and  con- 


15. 


1062 


INDEX — ^DIGEST. 


COMBINATIONS,  GONSFIBACIES,  CONTBACTS,  ETC.— Cont'd. 

I.  Ix  General — Continued, 
traeted  to  carry  it  oa  as  the  purchaser's  agent,  for  a  salary. 
After  operating  under  this  arrangement  for  a  time,  he  rc- 
fudiated  the  sale,  resumed  possession  under  the  old  flrm 
name,  and  refused  to  account  to  complainant.  The  bill  was 
bi-ouglit  to  enjoin  him  from  asfiertiug  a  hostile  claim,  for  an 
accounting,  sind  a  receiver.  Defendant,  and  his  partner  as 
interveuor.  filed  a  cross-bill  for  rescission  of  the  sale  for 
fraudulent  reiiresentations,  and  tendere<l  baclv  the  stock. 
Complainant  was  practically  a  "  trust,"  organized  to  mo- 
noi>olize  the  business,  and  had  already  secured  control  of  35 
leading  bakeries  in  12  different  States.  HeUU  that,  while  a 
case  was  made  for  a  receiver,  pending  litigation  between 
ordiuao'  parties,  the  prayer  would  be  denied,  as  equity 
would  not  encourage  a  combination  in  restraint  of  trade, 
and  probnlily  illegal,  under  act  of  Congress,  July  2,  1890,  "  to 
protect  trade  and  commerce  against  unlawful  restraints  and 
monopolies!.*'  and  act  of  Ix>ui8iana,  July  .">,  1890,  for  the  same 
purpose.    Amer.  Biscuit  d  Mfg.  €o.  v.  Klotz,  44  F..  721. 

1—2 

19.  A  railroad  company,  belonging  to  an  illegal  combination  in 

violation  of  the  Anti-Tmst  Law,  can  not  invoke  the  aid  of  a 
Federal  court  of  equity  for  the  protection  of  its  rights 
claimed  under  contracts  wiiich  were  the  dirert  result  and 
evidence  of  such  unlawful  combination.  Delaware,  L.  d  W, 
R,  Co.  V.  Frank,  110  F.,  689.  2—82 

20.  Illegal  Condition  as  Consideration — Effect  of  Konperf ormance. — 

Rebate  vouchers  issued  by  a  distilling  company  to  customers, 
by  which  it  promised  to  refund  a  certain  sum  per  gallon  on 
their  purchases  at  tlie  end  of  six  montlis,  on  condition  of 
their  purchasing  exclusively  from  the  company  during  that 
time,  can  not  be  enforced,  eitlicr  at  law  or  in  equity,  where 
the  condition  has  not  been  [performed,  though  such  condition 
be  illegal,  as  in  restraint  of  trade,  there  being  no  other  con- 
sideration for  the  i>romise.  77  Foil..  700,  affirmed.  Dennehy 
V.  MeXuitu,  86  F„  825.  1—855 

4  What  constitutes  monopolizing,  unlairfnl  eomhination,  etc. 

21.  To  constitute  the  offense  of  *' monopolizing,  or  attempting  to 

monopolize,*'  trade  or  commerce  among  the  States,  within 
the  meaning  of  section  2  of  the  Anti-Trust  Act  of  1890,  it  is 
necessary  to  acquire,  or  attempt  to  acquire,  an  exclusive 
right  in  such  commerce  by  means  which  will  prevent  others 
from  engagaing  therein.  In  re  Greene,  52  F.,  104.  1 — 55 
I.  Unlawful  Combination. — ^To  render  a  combination  unlawful 
under  the  Anti-Trust  Act  of  1890  it  need  not  l>e  one  which 
by  its  terms  refers  to  interstate  amimerce,  but  itxis  suffi- 
cient if  its  purpose  and  effect  are  necessarily  to  restrain  in- 
terstate trade.    Glhha  v.  McNeeley,  118  F.,  120.  2—194 


IKDEX — DIGEST. 


1063 


COMBINATIONS,  CONSPIRACIES,  CONTRACTS,  ETC.— Cont'd. 

I.  In  Geneeal— Continued. 

23.  Combination  of  Lawful  Elements  of  an  TTnlawful  Scheme. — 
Even  if  the  separate  elements  of  a  scheme  are  lawful, 
whefl  they  are  bound  together  by  a  common  intent  as  parts 
of  an  unlawful  scheme  to  monopolize  interstate  commerce 
the  plan  may  make  the  parts  unlawful,  f^wift  d  Co.  v. 
United  States,  196  U.  S.,  375.  2—641 

5.  Liabilitt/. 

24.  Liability  of  Members  of  Combination. — Every  member  of  an 

illegal  combination  in  restraint  of  interstate  trade  or  com- 
merce in  violation  of  the  Anti-Trust  Act  is  liable  for  the 
damages  resulting  to  the  business  or  property  of  a  plaintiff 
by  reason  of  such  combination,  and  it  is  immaterial  that 
there  were  no  direct  contract  relations  bet\^'een  plaintiff 
and  defendant.  City  of  Atlanta  v.  Chattanooga  Foundry  d 
Five  Works,  127  l!\,  23.  2—299 

Enforcement  of  Contracts  and  Collection  of  Debts.  See 
Actions  and  Defenses. 

Reco\'eby.    See  Actions  and  Defenses. 

Defenses.    See  Actions  and  Defenses,  II. 

II.  Prohibited. 

1.  Agreements,  contracts,  or  combinations  to  establish,  maintain,  raise, 

or  control  the  prices,  production,  or  output  of 

articles  or  commodities. 

25.  Coal— Agreement  Between  Mining  Companies  and  Coal  Dealers 

to  Control  the  Price  of  Coal. — An  agreement  between  coal- 
mining  companies  operating  chiefly  in  one  State  and  dealers 
in  coal  in  a  city  in  another  State,  creating  a  coal  exchange 
to  advance  the  interests  of  the  coal  business,  to  treat  all 
parties  to  the  business  in  a  fair  and  equitable  manner,  and 
to  establish  the  price  of  coal,  and  change  the  same  from 
time  to  time,  by  which  it  was  agreed  that  the  price  of  the 
coal  at  the  mines  should  be  4^  cents,  the  freight  being  4 
cents,  and  the  margin  of  the  dealer  should  be  4^  cents,  mak- 
ing the  price  to  the  consumer  13  cents,  and  that,  whenever 
the  price  of  the  coal  is  advanced  beyond  an  advance  in 
freights,  one-half  the  advance  shall  go  to  the  mine  owner 
and  the  otlier  half  to  the  dealer,  and  a  penalty  was  provided 
bj'  fine  of  any  member  selling  coal  at  a  less  price  than  the 
price  fixed  by  the  exchange,  and  by  which  it  was  forbidden 
for  owners  or  operators  of  mines  to  sell  coal  to  any  person 
other  than  members  of  the  organization,  and  for  dealers  to 
purchase  of  miners  who  were  not  members,  but  ctempting 
coal  used  for  manufacturing  and  steamboat  purposes  from 
the  prices  prescribed  until  all  the  mines  tributary  to  that 
market  should  come  into  the  exchange,  or  until  the  exchange 


10G4 


INDEX DIGEST. 


COMBINATIONS,  CONSPIBACIES,  CONIBACTS,  ElC.-Conrd. 

11.  PKoniHiTED-Continued. 
f-oulil  control  tlie  prices  of  van\  usvd  l>.v  lusimif.uturers,  is 
within  the  Ismj^infro  of  act  of  July  2,  1890,  (leclariug  "every 
coiitrart  or  t-oiiibination  in  tlie  form  of  a  trurg  or  otherwise, 
or  wiisi)irat'.v  in  restraint  <if  trade  or  <-oninierce  among  the 
several  Stat€»s,"  and  also  the  monojioli/Jng.  or  eomhination 
with  another  to  mono[K>li>:e,  trade  or  <nnnnerce  among  the 
several  States  a  misdemeanor.     L.  ,v.  v.  Jellh-o  Mtn.  Coal  d 

M.  A  combination  between  importers  of  coal  from  other  States 
and  foreipi  conntrii's  with  a  local  coal  dealers'  association, 
regulating  arldtrarily  the  retail  prices  of  coal  and  providing 
iigainst  free  n»mp«'titi«»ii.  Is  one  hi  restraint  of  Interstate 
i-onmserct*  within  the  m(«aning  of  the  aet  of  IHJM).  l.  S.  v. 
CfHif  Ihitfcrs'  Assn.  of  (Ud..  S.'»  F.,  LTil*.  1 — 74J) 

27.  Contract  Between  a  Fuel  Company  and  a  Combination  of  Coal 
Producers  who  Sought  to  Regulate  the  Production  and  Price 
of  Coal. — A  fontrait't  hy  whi«li  n  rorporation  agrees  to  take 
the  i^ntire  prcwhu't  of  a  nnmber  of  independent  |K?rsons.  firms, 
and  <-orjK>ratl<ins  engatrrd  in  mining  loal  and  making  coke 
in  a  <  Mitain  district,  wliich  is  intende<l  for  "  western  ship- 
ment "  over  a  leading  nmre  of  transiM>rtati<in.  to  sell  the 
sanie  at  not  less  than  a  minimnm  price,  to  l>e  fixed  hy  an 
exe<*ntive  coimnitt**'  a|)|K)inte(l  by  the  prodm^Ms.  jnid  to  ae- 
«mnt  for  and  jtav  over  to  sneh  pnidncers  the  entire  proeee<ls 
above  a  fixed  <\m\  per  ton  tc»  b<'  retained  as  ••(•OiiiiKMisation," 
the  stated  pnri>ase  being  to  't'ularge  the  western  market," 
and  nnder  whieh  the  shijnnents  nre  ma<le  into  other  States, 
is  illegal  nnder  the  Anti-Trnst  I.avv.  as  in  n-siraint  of  inter- 
state ('«mnmr«4'.  and  ;is  tentling  t4)  creiUe  a  nioiio|M»|y.  (  .  .S'. 
V.  Vlit  suiKi.Lr  a   Ohio  Furf  iU,.,  ItC,  F..  \y.\,  % — ;j4 


rmcHl,  11.%  v.,  r.io  (2 — 151  t. 
28.  Copyrighted  Books— Combination  of  Publishers  and  Book- 
sellers Throughout  the  United  States  for  the  Purpose  of 
Maintaining  Prices  on  Copyrighted  Books.— The  organization 
and  ronibinatlon  of  the  imblisliers  aind  booksellers  of  the 
llniteil  States  Into  two  nienii)ership  ;isso<-iations.  one  known 
as  the  "AnHM-ican  Pnblishers'  Asstuiation "  and  the  other 
as  the  •Ameriean  BM>k.sellers*  Assmiation."  whereby  they 
together  eontrollecl  the  pMhlleation  and  sale  of  at  least  90 
lier  cent  of  all  iH>pyright«Ml  Imoks.  the  object  being  to  eompel 
owners  ;hh1  dejilers  of  sueh  iMioks  to  inir<-hasi>  them  of  the 
mendw^rs  of  the  condonation  at  an  arbitrary  price  fixed  by  It, 
regardless  fjf  the  actnal  vahie  of  the  l)ooks  as  determine<l  by 
a  demand  in  an  oik'h  market,  or  the  condition  of  the  books, 
and  to  compel  all  publishers  and  dealers  of  such  books  to 
come  into  the  combination,  te  eonti-olle<l  by  it.  and  sell  books 
sit  prices  fixeil  liy  it,  regardless  of  the  value  of  the  books  or 


INDEX DIGEST. 


1065 


COMBINATIONS,  CONSPIBACIES,  CONTBACTS,  ETC.— Cont'd. 

II.  Prohikited — Continued. 
of  the  exigencies  of  the  trade  and  situation  of  the  seller,  or 
be  depriveil  of  the  i)rivilege  of  purchasing,  owning,  and  sell- 
ing such  books  through  a  system  of  blacklisting,  etc.,  the 
effect  of  which  would  be  to  cripple  the  business  of  any  pub- 
lisher or  lK)okseller  outside  of  the  combination — was  in 
violation  of  the  Anti-Trust  Law  of  .July  2,  1890  (20  Stat., 
2(HM.     BohhH-MenUl  Co.  v.  Straus.  139  F.,  Kut.  2—755 

29.  Drugs — Combination  of  Separate  Associations  of  the  Manufac- 

turers, Wholesalers,  and  Retailers  of  Drugs,  to  fix  Arbitrarily 
the  Prices  of  Such  Articles. — Where  three  voiunt.iry  associa- 
tions, conipd.'-ed  of  tlie  manufacturers,  wholesalers,  and  re- 
tailers. resi>ectively,  of  drugs,  proprietary  medicines,  etc., 
were  organized  to  arl)itrarily  fix  a  nuninunn  retail  pri<e  for 
such  articles,  which  were  of  universal  consumption  and 
were  of  ab^olute  and  daily  necessity,  and  then  restricted  the 
sale  of  such  .irti<-les  to  such  retailers  only  as  conducted 
their  retail  business  in  acctirdan<e  with  the  arbitrary  stand- 
ard of  pri«es,  such  (onil/mation  was  in  restraint  of  inter- 
state commerce  in  the  drug  trade  in  so  far  as  it  excluded 
"  aggressive  cutters  "  of  prices  and  those  who  <lealt  with 
then),  and  was  in  violation  of  act  of  July  2,  1890  (26  Stat.. 
209).  prohibiting  nionoiM>lies  in  restraint  of  interstate  trade 
and  c<»i!nnerce.  etc.  Lfnlrr  v.  Jat/ne,  142  F..  1010.  2 — 976 
Judgment  j-eversed  by  the  Circuit  Crmrt  of  Ai>penls  (149  F., 
21),  but  uix>n  other  grcunids  than  above. 

30.  Lumber— Combination    of    Local    Lumber    Dealers    Seeking    to 

Raise  and  Maintain  Price  of  Lumber  by  Refusing  to  Sell  to 
Consumers  who  Bought  from  Outside  Parties,  some  of  such 
Mills  being  Located  in  a  Neighboring  State. — A  complaint 
alleged  tliat  plaintiff  was  a  laiilder  doing  business  in  Port- 
land. Oreg. :  that  in  ^nch  business  he  imrchased  large  quan- 
tities of  rough  lumber  from  nulls  located  at  Vancouver, 
Wash.,  wliich  wjis  7  miles  fniui  Portland,  but  that  sueh 
mills  did  not  mtiiuifacture  finished  or  kiln-drieil  lumber; 
that  defendants,  wlu)  c<anprise<l  all  the  manufacturers  and 
ilealers  in  Portland,  (oml.ined  to  fix  exorbitant  prices  on  all 
lumber  sold  !»y  them,  and  to  comi>el  all  consumers  in  Port- 
land to  pay  such  prices  by  refusing  to  sell  any  finished  lum- 
l>er  at  any  ]>rice  to  such  consumers  jis  bought  lumber  of  any 
kind  from  other  dealers,  except  on  condition  that  such  con- 
smner  pays  to  defendants  the  difference  between  the  price  he 
pai<l  for  hnnber  sa  Ixuight  from  others  and  the  price  charged 
therefor  by  defendants  and  i)romises  to  buy  all  his  lumber 
thereafter  from  defendants;  that  the  puriKise  and  effect  of 
such  combination  w:is  to  prevent  i)laintiflf  and  other  consum- 
ers from  buying  hnnber  at  Washington  nulls,  and  to  obtain  a 
ni(MH)inily    vf   the    trade    in    Portland    at    unreasonable   and 


1066 


INDEX — ^DIGEST. 


COMBINATIONS,  CONSFIRACIBB»  CONTRACTS,  ETC.-Cont'd. 

II.  Prohibited— Continued. 

exorbitant  prices.  HeM,  that  the  combination  charged  con- 
stituted a  ▼iolation  of  the  Federal  Anti-Trust  Act,  its  effect 
being  to  directly  restrain  interstate  commerce,  and  that  the 
complaint  stated  a  cause  of  action  thereunder  for  the  re- 
covery of  damages  alleged  to  have  resulted  to  plaintiffs. 
BUis  V.  /tiwtofi,  Poulsm  cf  Co.,  131  F.,  182.     ^  »— 577 

Reversing,  124  F.,  956  (8—208). 

SI.  Same. — In  determining  whether  or  not  a  combination  is  in 
▼iolation  of  the  Federal  Anti-Trust  Law,  as  in  restraint  of 
Interstate  commerce,  it  is  immaterial  that  such  is  not  its 
ultimate  object,  which  is  in  most  cases  to  increase  the  trade 
and  profits  of  the  parties  to  such  combination;  nor  is  it 
materia]  to  apcertain  what  proportion  the  resulting  restraint 
of  interstate  commerce  bears  to  other  results.  The  true 
Inquiry  is  whether  it  tends  directly  to  appreciably  restrain 
interstate  trade,  and,  If  It  does,  it  is  within  the  statute, 
although  such  effect  may  not  be  so  considerable  as  its  other 
effects.  11), 

38.  Red  Cedar  ShingIes.~An  association  of  manufacturers  of  and 
dealers  in  red  cedar  shingles  in  the  State  of  Wa.shington 
formed  for  the  purpose  of  controlling  the  production  and  the 
price  of  such  shingles,  which  are  made  only  in  that  State, 
but  are  principally  sold  and  used  in  other  States,  and  which, 
by  its  acticn  in  closing  the  mills  of  its  members,  has  re- 
duced the  production,  and  has  also  arbitrarily  increased  the 
prices  at  which  the  product  is  sold,  is  a  combination  in  re- 
straint of  interstate  conmierce,  and  unlawful  under  the  Anti- 
Trust  Law  of  July  2,  1890.     Oihhfi  v.  McXecJey,  118  F.,  120. 

2—194 

88.  files— Combinations  to  Raise  Prices  of  Tiles,  etc.,  and  Control 
Output. — A  complaint  alleging  that  meml>ers  of  an  associa- 
tion have  conspired  and  combined  to  raise  the  prices  of  tiles, 
mantels,  and  grates,  to  control  the  output,  and  to  regulate 
the  prices  thereof,  with  the  intent  to  monoiiolize  the  trade 
and  commerce  between  the  other  States  and  California  In 
regard  thereto,  as  well  as  to  arbitrarily  fix  their  prices  in- 
deiiendently  of  their  natural  market  value,  brings  the  case 
within  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209). 
Loirry  v.  Tile,  Muni  el  c(  Orate  Asmi.  of  Cah,  98  F.,  817. 

1—995 

84.  Same— Combination  of  Tile  Manufacturers  in  California  and 
Adjoining  States  Agreeing  not  to  Sell  to  or  Purchase  from 
Dealers  not  Members.— The  Tile,  Mantel  and  Grate  Associa- 
tion of  California  was  organized  by  defendants,  who  were 
dealers  in  tiles  and  similar  articles,  for  the  declared  purpose 
of  uniting  "all  acceptable  dealers"  in  tiles,  fireplace  fix- 
tures, and  mantels  in  San  Francisco  and  vicinity   (within 


INDEX ^DIGEST. 


1067 


COMBINATIONS,  CONSPIRACIES,  CONTRACTS,  ETC.— Cont'd. 

II.  Prohibited — Continued. 

a  radius  of  200  miles),  and  all  American  manufacturers  of 
tiles  and  fireplace  fixtures.  The  articles  prescribed  that 
other  local  dealers  who  had  an  established  business  and  car- 
ried a  stock  of  a  stated  value,  and  who  were  "  acceptable," 
might,  on  motion  of  a  member,  be  permitted  to  join,  and  that 
all  manufacturers  of  tiles  in  the  United  States  might  become 
members  by  signing  the  constitution  and  paying  an  entrance 
fee.  The  local  members  were  bound  by  the  articles  not  to 
buy  goods  from  any  manufacturer  who  was  not  a  member 
nor  to  sell  goods  to  other  dealers  not  members  at  less  than 
list  price,  which  was  about  double  the  market  price,  and  the 
manufacturing  members  were  bound  not  to  sell  to  any  dealer 
within  the  prescribed  territory  who  was  not  a  member. 
Held,  That  such  association  was  a  combination  in  restraint 
of  trade  among  the  States,  illegal  under  section  1  of  the 
Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209),  and  also  an 
attempt  to  monopolize  a  part  of  the  trade  and  commerce 
among  the  States,  within  the  prohibition  of  section  2,  by 
shutting  out  from  such  trade  all  local  dealers  who  were  not 
members,  and  that  defendants  were  liable  in  damages,  under 
section  7  of  the  act,  to  such  a  dealer  to  whom  a  manufac- 
turer in  another  State  refused  to  sell  tiles,  as  it  had  pre- 
viously done,  on  the  sole  ground  that  such  dealer  was  not  a 
member  of  the  association.     MwUngue  v.  Lotvry,  115  F.,  27. 

2—112 
Aftirming  Louru  v.  Tile.  Mantel  and  Grate  Assn.  of  CaL,  106 
F.,  38  (2—53). 

35.  Same — An  Association  of  Dealers  in  Tiles  Agreeing  Not  to  Pur- 
chase from  Nonmembers  or  to  Sell  to  Them  Except  at  an 
Advance  of  50  per  cent  on  Price  to  Members. — An  association 
of  wliolesale  dealers  in  tiles,  mantels,  and  grates  in  Cali- 
fornia and  vicinity,  and  manufacturers  in  other  States,  of 
tiles  and  fireplace  fixtures,  in  which  the  dealers  agree  not 
to  purchase  from  manufacturers  not  members  of  the  associa- 
tion, and  not  to  sell  unset  tile  to  nonmembers  for  less  than 
list  prices,  which  are  more  tlian  50  per  cent  higher  than 
prices  to  members,  while  the  manufacturers  agree  not  to  sell 
their  products  or  wares  to  nonmembers  at  any  price,  under 
penalty  of  forfeiture  of  membership,  is  an  agreement  or 
combination  in  restraint  of  trade  within  the  meaning  of  the 
Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209).  Montague  & 
Co.  V.  Loitry,  193  U.  S.,  38.  2—327 

86.  Same— Where  the  Sales  were  Made  within  the  State.— Although 
the  sales  in  question  were  within  the  State  of  California 
and  although  such  sales  constituted  a  vei-y  small  portion  of 
the  trade  involved,  the  agreement  of  manufacturers  without 
the  State  not  to  sell  to  anyone  but  members  was  part  of 


1068 


INDEX — DIGEST, 


COMBINATIONS,  CONSPIRACIES,  CONTRACTS,  ETC.-ContM. 

II.  Proh I BiTKD— Continued, 
a   scheme   which   included   the   enhancement   of   the   price 

of  ii!j>;c»t  tilen  hy  tlu*  dealers  within  the  State,  and  the 
whole  thinj,'  was  s.>  hnund  to^'etlier  that  the  transactions 
witljin  tlie  State  were  iiisei>anible  and  heeanie  a  part  of  a 
}»unM)se  wlu<-li  wlu'ii  caniwl  out  aniount(Hl  to,  and  was,  a 
ionihiuation  in  restraint  nf  interstate  trade  and  commerce. 
AiMifiitwi  P'nw  it  strvJ  Co.  V.  (  iiitnl  States,  175  U.  S.,  211, 
folIowtHl;  H uphills  V.  f  iiitci  stftfcM,  171  U.  S.,  578;  Ander- 
mil  V.  I  nitrd  Sfatt's.  171  F.  S..  <;04,  distinguished.  lb. 

37.  Same.— The  parties  aggrieved,  l>eing  a  Hrm  of  dealers  in  tiles, 
mantels,  and  grates,  in  San  Franrisco.  whose  menihers  had 
nevin-  heon  asked  t«)  join  the  association  and  who  had  never 
applied  for  a<lniission  therein,  and  which  did  not  always 
carry  ^:\Mi\{\  worth  ot  stork,  as  rcMiuired  hy  the  rules  of  the 
asscriation  as  one  of  the  <on(litioiis  of  membership,  are  en- 
titled to  recovery  under  section  7  of  the  act  of  July  2,  1800. 

/ft. 
3S.  Wooden  Dishes. — A  contract  made  in  pursuance  of  a  combina- 
tion of  manufarturers,  seolving  to  restrict  the  production 
and  keep  up  the  prices  of  wmnlen  dishes  throughout  the 
country,  whereby  a  manufacturer  was  guaranteed  a  certain 
sum  as  dividends  on  his  stock  in  the  central  company  in 
consideration  of  the  closing  of  his  factory  for  a  year,  was 
contrary  to  public  policy  and  therefore  unlawful,  and  would 
not  be  enforced  by  the  courts.'  Cntrcns  v.  Cnrtcr-Cnimc  Co,, 
!»2  F..  47!).  .  i_08^ 


Wall    Paper.     See   Contixkntal   Wall    Papkk   (\>. 
VoHiiiT  &  Sons  Co.,  148  F..  UtVX 


r.    Lewis 


LICORKE    Pastf.     Sci'    v.    S.    r.    MacAxdrkws    ^^    Fokkes    Co., 
14!  ►  F..  ,S24. 

2.  CoiiihiitatifHis.  ,'ontnietft,  etc.,  (litniuathiff  ((mipetition  in  bidditiff. 
39.  Combination  of  Manufacturers— Dividing  Territory  and  Al- 
lotting Contracts  by  Pretended  Bids.— The  formation  of  a 
itmil»ination  hy  a  junnher  of  companies  manufacturing  iron 
I>i|)e  in  difTerent  States,  whereliy  the  territory  in  which  they 
operate  M-outprising  a  large  part  of  the  Fniteil  States)  is 
divided  into  "  reservinl  "  cities  and  "  i)ay  *'  territory,  the  re- 
serve<l  cities  l»eing  allotttnl  to  pai-ticular  members  of  the 
cohihiiKition,  free  of  competition  from  the  others,  though 
provisitm  is  made  for  in-eteiukHl  bids  by  the  latter  at  prices 
Iireviously  arranged,  and  when  all  offers  to  purchase  pipe 
ill  the  pay  territirry  are  snlanitted  to  a  conunittee,  which 
determines  llie  pri<e,  and  tlien  awards  the  contract  to  that 
member  of  tlie  combination  wbicli  agrees  to  pay  the  largest 
"  bonus."  to  be  divided  'v.uimg  the  others,  is  unlawful,  both 
at  common  law  and  under  the  act  of  1890,  against  trusts  and 


INDEX — ^DIGEST. 


1069 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont'd. 


II.  PRoiiinTTED — Continued. 
monoiKdies.     V.  S,  v.  Adilj/ston  I'iiK'  and  Steel  Co.,  85  F.. 

-'J-  1—772 

Revei>5ing,  78  Fed.,  712  (1— a-Ji). 

40.  Combinations  to  Enter  into  Public  Bidding  for  Contracts,  but 

Where  only  One  of  the  Combination  Really  Bids,  the  Others 
Being  Required  to  Bid  Above  Him.— An  agreement  or  com- 
bination between  cori)orations  engaged  in  the  manufacture, 
sale,  and  transportation  of  iron  pipe,  under  which  they  enter 
into  public  bidding  for  contracts,  not  in  truth  as  competitors, 
but  under  an  arrangement  which  eliminates  all  competition 
between  them  for  the  contract  and  i)ermits  one  of  their  num- 
ber to  make  his  own  bid,  while  the  others  are  required  to  bid 
over  him,  is  in  violation  of  the  Anti-Trust  Act  of  July  2, 
1890,  so  far  as  it  applies  to  salc^  for  delivery  beyond  the 
State  in  which  the  sale  is  made.     Adrliston  Pipe  nnd  Steel 

Co.  V.  V.  s.,  17.5  u.  s.,  i»n.  1— Kxm 

Amrming  85  F.,  271  (1—772). 

41.  Same.— A  combination  may  illegally  restrain  trade  by  prevent- 

ing competition  for  contracts  and  enhancing  prices,  although 
it  does  not  prevent  the  letting  of  any  particular  contract.   lb. 

42.  Same— Where  Goods  are  to  be  Delivered  in  the  State.— A  com- 

bination to  restrain  competition  in  proposals  for  c-ontracts 
for  the  sale  of  certain  articles  which  are  to  be  delivered  in 
the  State  in  which  some  of  the  parties  to  the  c*ombination 
reside  and  carry  on  business  is  not,  so  far  as  those  members 
are  concerned,  in  violation  of  the  Anti-Trust  Law,  although 
the  contract  may  be  awarded  to  some  party  outside  the 
State  as  the  lowest  bidder.  j^ 

43.  Same.— Any  agreement  or  combination  which  directly  operates] 

not  alone  upon  the  manufacture,  but  upon  the  sale,  trans- 
portation, and  delivery  of  an  article  of  interstate  commerce, 
by  preventing  or  restricting  its  sale,  thereby  regulates  inter- 
state connnerce  to  that  extent,  and  thus  trenches  upon  the 
power  of  the  national  legislature,  and  violates  the  statute. 

44.  Same.— When  the  direct,  immediate,  and  intended  effect  of  a 

contract  or  combination  among  dealers  in  a  commodity  is 
the  enhancement  of  its  price,  it  amounts  to  a  restraint  of 
trade  in  the  connnodity,  even  though  contracts  to  buy  it  at 
the  enhanced  price  are  being  made.  /& 

45.  Same.— The  contracts  considere<l  in  this  case,  set  forth  in  the 

statement  of  facts  and  in  the  opinion  of  the  court,  relate  to 
the  sale  and  transportation  to  other  States  of  specific  articles 
not  incidentally  or  collaterally,  but  as  a  direct  and  imme^ 
diate  result  of  the  combination  entered  into  by  the  defend- 
ants; and  they  restrain  the  manufacturing,  purchase,  sale 
or  exchange  of  the  manufactured  articles  among  the  several 


1070 


INDEX — DIGEST. 


COMBIlTATrOlf^    CONSPIEACIBS,   CONTKACTS,    ETC.— Cont'd. 

II.  PROfiiBrrsD — Continued. 

States,  and  enhance  tbeir  value,  and  thus  come  within  the 
provisions  of  the  "act  to  protect  trade  and  commerce 
against  unlawful  restraints  and  monopolies."  li» 

40.  Same.— The  judgment  of  the  court  below,  which  perpetually 
enjoined  the  defendants  In  the  court  below  from  maintain- 
ing the  combination  in  cast-iron  pipe  as  described  in  the 
petition,  and  from  doing  any  business  under  such  combina- 
tion, is  too  broad,  as  it  applies  equally  to  commerce  which  is 
wholly  within  a  State  as  well  as  to  that  which  is  interstate 
or  international  only.  lb, 

47.  Agreement  Between  live-Stock  Buyers  not  to  Bid  Against  Each 

Other,  etc. — An  agreement  between  corporations  and  indi- 
viduals, etc.,  engaged  in  buying  live  stocli  at  divers  points 
throughout  the  United  States,  to  refrain  from  bidding  against 
each  other  in  the  purchase  of  cattle  is  combination  in  re- 
straint of  trade;  so  also  their  agreement  to  bid  up  prices 
to  stimulate  shipments,  intending  to  coase  from  bidding 
when  the  shipments  have  arrived,  and  tlie  same  result  fol- 
lows from  the  combination  of  defendants  to  fix  prices  upon 
and  restrict  the  quantities  of  meat  shipped  to  tlieir  agents 
or  their  customers.  Being  restriction  ui)on  comi^etition,  such 
agreements  are  combination  in  restraint  of  trade.  V.  8.  v. 
8i€ift  d  Co.,  122  l\  529.  2—237 

48.  Same. — Restraint  of  trade  it  mot  dependent  upon  any  considera* 

tion  of  reasonableness  or  unreasonableness  in  the  combina- 
tion  averred,  nor  is  it  to  be  tested  by  the  prices  that  result 
from  the  combination.  The  statute  has  no  concern  with 
prices,  but  looks  solely  to  competition  and  to  the  giving  of 
competition  full  play  by  making  illegal  any  effort  at  re- 
striction upon  competition.  lb. 

49.  Same. — ^A  combination  of  a  dominant  proportion  of  the  dealen 

in  fresh  meat  throughout  the  United  States  not  to  bid 
against,  or  only  in  conjunction  with,  each  other  in  order  to 
regulate  prices  in  and  Induce  shipments  to  the  live-stock 
markets  in  other  States,  to  restrict  shipments,  establish  uni- 
form rules  of  credit,  make  uniform  and  improper  rules  of 
cartage,  and  to  get  less  than  lawful  rates  from  railroads 
to  the  exclusion  of  comi)etltors  with  intent  to  monopolize 
commerce  among  the  States,  is  an  illegal  combination  within 
the  meaning  and  prohibition  of  the  act  of  July  2,  1890  (26 
Stat,  209),  and  can  be  restrained  and  enjoined  in  an  action 
by  the  United  States.  8icift  d  Co,  v.  United  States,  196 
U.  S.,  375.  2— Ml 

00.  Same. — It  does  not  matter  that  a  combination  of  this  nature 
embraces  restraint  and  monopoly  of  trade  within  a  single 
.   State  if  it  ahio  embraces  and  is  directed  against  commerce 
among  the  States.  ib. 


INDEX — DIGEST. 


1071 


COMBINATIONS,    CONSPIBACIES,    CONTRACTS,    ETC.— Gonfd. 

II.  Prohibited — Continued. 
dl.  Same. — The  effect  of  such  a  combination  upon  interstate  com- 
merce is  direct  and  not  accidental,  secondary,  or  remote  as 
in  United  States  v.  E.  C.  Knight  Co.,  156  U.  S.,  1.  76. 

62.  Same. — Even  if  the  separate  elements  of  such  a  scheme  are  law- 

ful, when  they  are  bound  together  by  a  common  intent  as 
parts  of  an  unlawful  scheme  to  monopolize  intei-state  com- 
merce the  plan  may  make  the  parts  unlawful.  76. 

63.  Same. — When  cattle  are  sent  for  sale  from  a  place  in  one  State, 

with  the  expectation  they  will  end  their  transit,  after  pur- 
chase, in  another  State,  and  when  in  effect  they  do  so,  with 
only  the  interruption  necessary  to  find  a  purchaser  at  the 
stock  yards,  and  when  this  is  a  constantly  recurring  course, 
it  constitutes  intei-state  commerce,  and  the  purchase  of  the 
cattle  is  an  incident  of  such  commerce.  lb, 

S,  Contracts,  etc.,  in  restraint  of  interstate  trade  or  commerce. 

54.  Contracts,  Combinations,  etc.,  Against  Public  Policy  and  Void 

Under  the  Common  Law. — The  contracts,  combinations  in  the 
form  of  trust  or  otherwise,  and  conspiracies  in  restraint  of 
trade  declared  to  be  illegal  in  the  Anti-Trust  Act  of  July  2, 
1890  (26  Stat,  209),  are  the  contracts,  combinations,  and 
conspiracies  in  restraint  of  trade  that  had  been  declared  by 
the  courts  to  be  against  public  i3oliey  and  void  under  the 
common  law  before  the  passage  of  that  act  f'.  S.  v.  Trans- 
Mo.  Ft.  Assn.,  58  F.,  58.  1—186 
Case  reversed,  106  U.  S.,  290  (1—648). 

55.  Same.— The  test  of  the  validity  of  such  contracts  or  combina- 

tions is  not  the  existence  of  restriction  upon  competition 
imposed  thereby,  but  the  reasonableness  of  that  restriction 
under  the  facts  and  circumstances  of  each  particular  case. 
Public  welfare  is  first  considered,  and,  if  the  contract  or 
combination  appears  to  have  been  made  for  a  just  and  hon- 
est purpose,  and  the  restraint  upon  trade  is  not  specially  in- 
jurious to  the  public,  and  is  not  greater  than  the  protection 
of  the  legitimate  interests  of  the  party  in  whose  favor  the 
restraint  is  imposed  reasonably  requires,  the  contract  or 
combination  is  not  illegal.  Shiras,  district  judge,  dissent- 
ing on  the  ground  that  this  rule  is  not  applicable  to  corpora- 
tions charged  with  public  duties.    •  /j. 

56.  Agreements  Legal  when  Made  which  Violate  Act  of  1890. 

The  agreement  of  the  Trans-Missouri  Freight  Association, 
in  regard  to  establishing  and  maintaining  railroad  rates, 
though  legal  when  made,  became  illegal  on  the  passage  of 
the  act  of  July  2,  1890,  and  acts  done  under  it  after  that 
statute  became  operative  were  done  in  violation  of  it 
U.  S.  V.  Trans-Mo.  Ft.  Assn.,  166  U.  S.,  290.  1—648 

57.  Contracts  in  Eestraint  of  Trade — At  Common  Law. Contracts 

that  were  in  unreasonable  restraint  of  trade  at  common  law 


1072 


INDEX — DIGEST. 


COMBINATIONS,    CONSPIBACIBS,   CONTRACTS,   ETC.— Cont'd. 

11.  PKoiiiBirKD— Continued. 
were  mot  unlawful  in  the  sense  of  being  criminal,  or  as  j;iv- 
ing  rise  to  an  adion  for  damages  to  one  prejndk'ially  affected 
tliereliy,  lait  were  simply  void  and  not  enforceable.     U.  /?.  v. 
Afhliitttni    I*iitc  uixl  St((l  <Uk,  8.1  F..  271.  1—772 

ftS.  Same. — The  effect  of  the  Anti-Trust  Law  of  1890  is  to  render 
surh  contrnt'ts.  jis  a | (plied  t<»  interstate  connneree,  nnlawfnl 
in  an  affirmative  or  jMisitive  sense,  and  pnnislial>le  as  a  mi8- 
deiiK>niM>r,  :ind  also  to  cre.Mte  a  riglit  of  civil  .iction  for  dani- 
i»g('s  in  favor  <»f  ikm-sohs  injnred  tlu*reh.v,  and  a  remedy  hy 
iiijnnrtion  in  favor  hotli  of  private*  jH'rsoiis  and  tlie  pnldie 
.igainst  the  exerntion  <:f  sneli  tontracts  an<l  tlie  maintenance 
of  sncli  trade  r»»siraints.  /&. 

99.  Contracts  or  combinations  which  impose  any  restraints  what- 
ever upon  interstate  commerce  are  unlawful  under  the  Anti- 
Trnst  Law  t»f  July  2,  18iK);  and  it  is  immaterial  whether  or 
not  the  restraint  is  a  fair  and  reasonable  one,  or  whether  it 
has  actually  n»snlted  in  in<-reasing  the  price  of  the  <-onnnodity 
dealt  in.     /  .  *s'.  v.  Coal  liralcis'  Assn.  of  Cal..  ST*  F.,  2."»2. 

1—749 

60.  Contracts  which  operate  as  a  restraint  upon  the  soliciting  of 

orders  for.  and  tlie  sale  of.  goods  in  one  State,  to  be  deliv- 
ered from  another,  are  contracts  in  restraint  of  interstate 
wnnnerce,  witinn  the  meaning  of  the  act  of  July  2,  1890. 
r.  .V.  v.  E.  r.  Knlijht  fV>..  15  Snp.  Ct.,  249;  mo  U.  S.,  1,  dis- 
tingiiished.     I  .  S.  v.  Adiiitstoii  ripe  d  Steel  Co..  S5  F.,  271. 

1—772 

61.  To  render  a  combination  unlawful  inider  the  Anti-Trust  Act  of 

18JM>  it  need  not  Ite  one  which  by  its  terms  refers  to  inter- 
state conunerce,  but  it  is  sufficient  if  its  purpose  and  effect 
are  necessarily  to  restrain  interstate  trade.  Gibbs  v.  Mc- 
Weefetf,  118  F.,  120.  2-194 

62.  Every  Contract,  Combination,  or  Conspiracy,  in  Whatever  Form, 

of  Whatever  Nature,  and  Whoever  May  be  Parties  to  it, 
which  Directly  or  of  Necessity  Operates  in  Restraint  of  In- 
terstate Trade  or  Commerce. — Although  the  act  of  Congress 
known  as  the  Anti-Trust  Act  has  no  reference  to  the  mere 
nnmnfactnre  or  pi-oduction  of  articles  or  commodities  within 
the  limits  of  the  several  States,  it  embraces  and  declares  to 
be  illegail  every  c*ontract,  wmlanation.  or  conspiracy,  in 
whatever  form,  of  whatever  nature,  and  whoever  may  be 
parties  to  it.  which  directly  or  necessarily  oi^erates  in  re- 
straint of  trade  or  commerce  among  the  several  States  or 
with  foreign  nations.  Northern  Seeun'ties  Co.  v.  United 
States,  im  U.  S.,  197  (Harlan,  Brown,  McKenna,  Day). 

2—339 

68.  Same.— The  act  is  not  limited  to  restraints  of  interstate  and 

international  trade  or  commerce  that  are  unreasonable  in 


INDEX — DIGEST. 


1073 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont'd. 

II.  Prohibited — Continued. 

their  nature,  but  end)races  all  direct  restraints,  reasonable 
or  unreasonable,  imposed  by  any  combination,  conspiracy, 
or  nioiioiK)ly  upon  such  trade  or  commerce.  lb. 

64.  Railroad  carriers  engaged  in  interstate  or  international  trade 

or  coinnierce  are  embraced  by  the  act.  lb. 

65.  Combinations,   even   among  private   manufacturers   or  dealers, 

whereby  interstate  or  international  commerce  is  restraiuetl, 
or  coinniorce  are  embraced  l>y  the  act.  lb. 

66.  Every  combination  or  conspiracy  which  would  extinguish  com- 

petition between  otherwise  competing  railroads,  engaged  in 
interstate  trade  or  commerce,  and  which  would  in  that  way 
restrain  such  trade  or  commerce,  is  made  illegal  by  the  act. 

lb. 

67.  The  natural  effect  of  competition  is  to  increase  conunerce.  and 

an  agreement  whose  direct  effect  is  to  prevent  this  play  of 
competition  restrains  instead  of  i>roniotes  trade  and  com- 
merce. /5, 

68.  The   Northern   Securities   Company  comiiination   is   a   "  trust " 

within  the  meaning  of  the  act  of  Congress  of  July  2,  1890, 
known  as  the  Anti-Trust  Act;  but  if  not.  it  is  a  combination 
in  restraint  of  interstate  and  international  commerce,  and 
that  is  enough  to  bring  it  under  tlie  condemnation  of  the  act. 

lb. 

69.  Every  contract,  combination,  or  conspiracy,  the  necessary  effect 

of  which  is  to  stifle  or  to  directly  and  substantially  restrict 
competition  in  commerce  among  the  States,  is  in  restraint 
of  interstate  commerce  and  violates  section  1  of  the  act  of 
.July  2,  1890  (20  Stat,  209).  WhitireU  v.  Continental  To- 
baceo  Co.,  12.5  F.,  4.-54.  2—271 

70.  Same. — Every  attempt  to  monopolize  a  part  of  interstate  com- 

merce, the  necessary  effect  of  which  is  to  stifle  or  to  directly 
and  substantially  restrict  competition  in  conunerce  among 
the  States,  violates  section  2  of  the  act  of  July  2,  1890,  c.  647 
(20  Stat,  209).  /&. 

For  what  acts  and  comliinations  do  not  violate  the  act  i^ee 
same  case,  and  Comiu.nwtions.  i:tc..  III. 

71.  Monopolies  Prohibited  are  Those  Engaged  in  Interstate  Com- 

merce— Not  Merely  Because  the  Commodity  is  a  Necessity 
of  life.— The  monopoly  and  restraint  denounceil  by  the  act 
of  July  2,  1890  (20  Stat,  209)  "to  protect  trade  and  com- 
merce against  unlawful  restraints  and  monopolies,"  are  a 
monopoly  in  interstate  and  international  trade  or  commerce, 
and  not  a  monopoly  in  the  manufacture  of  a  necessary  of 
life.     U.  S.  v.  /:;.  C.  Knight,  156  U.  S.,  1.  1^79 

72.  Any   Restraint   of   Interstate    Trade    or   Commerce    if   Accom- 

plished by  Conspiracy.— The  act  of  July  2,   1890   (26  Stat, 
209),  section  1,  declaring  illegal  "every  contract,  combina- 
1180g— VOL  1—06  M 68 


1074 


INDEX — DIGEST. 


COMBINATIONS,    CONSPIBACIES,   CONTRACTS,    ETC.— Cont'd. 

II.  Pbohibited — Continued. 

tlon  in  the  form  of  trust,  or  otherwise,  or  consi)ir!iey  "  in 
restraint  of  trade  or  commerce  among  the  States,  or  with 
foreign  nations,  is  not  aimed  at  capital  merely  and  com- 
1»inatio]is  of  a  contractual  nature,  >>hich  by  force  of  the 
title,  "An  act  to  protect  trade  and  commerce  against  unlaw- 
ful restraints  and  monoiwlies,"  are  limited  to  such  as  tlie 
courts  have  declared  unlawful,  the  words  "  in  restraint  of 
tra«1e "  liaving,  in  connection  with  the  words  "  contract," 
and  "combination."  their  common-law  significance,  but  the 
term  **consi)iraey  "  is  used  in  its  well-settled  legal  meaning, 
so  that  any  restraint  of  trade  or  commerce,  if  to  be  accom- 
plished by  consipraej ,  is  unlawful.     (/.  S.  v.  Dehfs,  CA  F.,  724. 

1—322 

75.  Same — Construction. — The  construction  of  the  statute  is  not 

affected  by  the  use  of  the  phrase  "in  restraint  of  trade," 
rather  than  one  of  tlie  phrases  "to  injure  trade"  or  "to 
restrain  trade."  /6, 

74  Same. — ^The  word  "commerce,"  in  the  statute,  is  not  synony- 
mous with  "  trade,"  as  used  in  the  common-law  phrase  "  re- 
straint of  trade,"  but  has  the  meaning  of  the  word  in  that 
clause  of  the  Constitution  which  grants  to  Congress  power 
to  regulate  interstate  and  foreign  commerce.  Jh. 

71.  Supreme  Court  does  not  Bissent  from  Above  Conclusions. — The 
court  enters  into  no  examination  of  the  act  of  July  2,  lvS90 
26  Stat,  209).  on  which  the  Circuit  Court  mainly  relied  to 
sustain  its  jurisdiction ;  but  it  must  not  be  understood  that  it 
dissents  fmm  the  conclusions  of  that  court  in  reference  to 
the  scoi)e  of  tJiat  act,  but  simply  that  it  prefers  to  rest  its 
judgment  on  the  broader  ground  discussed  in  its  opinion,  be- 
lieving it  important  that  the  principles  underlying  it  should 
be  fully  stated  and  fully  affirmed.  In  re  Debs,  158  U.  S., 
904.  1—565 

76.  A  contract  by  which  a  corporation  agrees  to  take  the  entire 

product  of  a  number  of  persons,  firms,  and  corporations  en- 
gaged in  mining  coal  and  making  coke  in  a  certain  district, 
wMcli  Is  intended  for  "  western  shipment,"  to  sell  the  same 
at  not  less  than  a  minimum  price,  to  be  fixed  by  an  executive 
eommittee  appointed  by  the  producers,  and  to  account  for 
and  pay  over  to  such  producers  the  entire  proceeds  above  a 
fixed  sum  per  ton,  t?o  be  retained  as  "compensation" — the 
stated  purpose  being  "to  enlarge  the  westei-n  market"— 
and  under  which  the  shipments  are  made  into  other  States, 
is  one  aifecting  intezstate  commerce,  and  is  subject  to  the 
provision  of  the  Anti-Tnist  Law.  XJ.  8.  v.  Chesapeake  rf  O. 
FiieJ  Co.,  106  P.,  93.  2 — 34 

Afllrmed,  115  F.,  610  (8—151). 

77.  Iffect  of  Illegal   Proyisions — ^Divisibility.- Stipulations   in   a 


INDEX DIGEST, 


1075 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont'd. 

II.  Prohibited — Continued, 
contract  which  are  invalid  as  in  restraint  of  trade,  if  capa- 
ble of  being  constiued  divisibly.  do  not  affect  the  validity  of 
other  provisions.     U.  8.  Con  soli  da  icd  Seeded  Raisin  Co.  v. 
Orim  &  Skelley  Co.,  126  F.,  ,S<M.  2—288 

8ee  also  Contracts. 

4.  Live-stock  associations,  and  edchanges,  etc. 
78.  An  Association  of  Commission  Merchants. — An  association  of 
men  engaged  in  receiving,  buying,  selling,  and  handling,  as 
commission  merchants,  Jive  stock  received  at  the  Kansas 
City  stock  yards  from,  and  sold  for  shipment  to,  various 
States  and  Territories,  which  yards  furnished  the  only  avail- 
able public  market  for  tliat  purpose  for  an  exceedingly  large 
area,  and  which  by  its  rules  fixed  a  minimum  rate  of  com- 
missions to  be  charged  by  members  of  the  association,  and 
prohibited  the  employment  by  any  commission  firm  or  cor- 
poration of  more  than  three  persons  to  travel  and  solicit 
business,  and  prohibited  the  sending  of  prepaid  telegram  or 
telephone  messages  quoting  the  markets,  and  shut  out  all 
dealings  and  business  intercourse  between  members  and  non- 
members,  and  boycotted  ai\d  blacklisted  persons  attempting 
to  carry  on  business  without  joining  the  exchange,  thus 
effectually  preventing  them  from  securing  or  transacting 
business,  held  to  be  an  illegal  combination  to  restrict,  monop- 
olize, and  control  that  class  of  trade  and  commerce.  U.  8.  v. 
Hopkins,  82  F.,  529.  1—725 

Reversed,  171  U.  S.,  578  (1—941). 

79.  Same — Reasonableness  of  Restraints. — The  act  of  Congress  is 

aimed  against  all  restraints  of  interstate  commerce,  and  its 
purpose  is  to  permit  commerce  between  the  States  to  flow  in 
its  natural  channels,  unrestricted  by  any  combinations,  con- 
tracts, conspiracies,  or  monoiwlies  whatsoever.  The  reason- 
ableness of  the  restrictions  in  a  given  case  is  immaterial. 

Z&. 

80.  Agreement  Between  Live-Stock  Buyers  Not  to  Bid  Against  Each 

Other,  etc. — An  agreement  between  corporations  and  indi- 
viduals, etc.,  engaged  in  buying  live  stock  at  divers  points 
throughout  the  United  States,  to  refrain  from  bidding 
against  each  other  in  the  purchase  of  cattle  is  combination 
in  restraint  of  trade ;  so  also  their  agreement  to  bid  up  prices 
to  stimulate  shipments,  intending  to  cease  from  bidding 
when  the  shipments  have  arrived,  and  the  same  result  fol- 
lows from  the  combination  of  defendants  to  fix  prices  upon 
and  restrict  the  quantities  of  meat  shipped  to  their  agents  or 
their  customers.  Being  restriction  upon  competition,  such 
agreements  are  combination  in  restraint  of  trade.  U.  8.  v. 
8wift  &  Co.,  122  F.,  529.  2—237 

Aflarmed,  196  U.  S.,  375  (2—641). 


1076 


INDEX — DIGEST. 


COMBINATIONS,    CONSPIRACIBS,    CONTRACTS,    ETC.— Contd, 

1 1 .  Proiii BiTED— Continued. 

81.  Same. — Eestraint  of  trade  is  not  dependent  upon  any  cousiilera- 

tioii  of  reasonableness  or  unreasonableness  in  the  combina- 
tion averred,  nor  is  it  to  l»e  tested  by  the  i)rices  that  result 
from  tlie  eonibination.  Tlie  statute  has  no  concern  with 
prices,  but  looks  solely  to  coniijetitlon  antl  to  the  giving  of 
competition  full  play  by  making  illegal  ai»y  effort  at  re- 
striction u|K>n  competitioii,  lb. 

82.  A  combination  entered   into  by  independent   meat  dealers  to 

secure  less  than  lawful  freight  rates,  with  the  intent  to 
moiioiw)lizt'  (ininiierre  in  fresh  meat  among  the  several 
States,  is  forbidden  by  the  Anti-Trust  Act  of  .July  2,  1890 
(2ti  Stat,  2tl9).     .Sicift  *(•   Co.  v.   Initrd  l^tafrs,  10(3  U.  S., 

.7.  ('onsitinKj/  (')  injure  in  fmsinc.ss. 

83.  Printing  and  Mailing  Circulars. — The  action  of  an  association 

of  manufacturers  in  adopting  a  resolution  denouncing  a 
dealer  in  the  product  they  manufactured  (shingles),  who 
bought  and  shipi>e<l  such  product  to  customers  in  other 
States  and  foreign  countries,  and  in  printing  such  resolution 
in  circulars  and  mailing  the  same  to  other  manufacturers 
and  customei*s  of  the  dealer,  whereby  his  business  was  in- 
jured, constituted  an  illegal  conibin.ition  or  conspiracy  in 
restraint  of  interstate  and  foreign  conunerce,  and  gives  the 
iwrson  injured  a  right  of  action  in  a  cinnit  wurt  of  the 
United  States,  under  the  Anti -Trust  Law  of  1890,  to  re- 
co>er  the  damages  susinined.     flihhs  v.   J/r.Vrr/c//.   102  F., 

2—25 


El 


(i.  StfXJkholding  cmniHinies  or  corporations. 

84  Holding  Companies  to  Vote  Stock  in  the  Interests  of  a  Rail- 
road Combine. — Where  one  company  (The  Georgia  Company 
of  North  Carolina)  acquired  a  majority  of  the  stock  of 
the  Central  Railroad  Company  of  Georgia,  which  it  deposited 
with  a  trust  company  of  New  York,  and  transferred  to  the 
Tenninal  Company,  a  system  con|>oseil  of  several  competing 
lines  of  railroads,  which  latter  company  and  the  Georgia 
Company  relinquished  to  the  tnist  company  any  right  they 
might  have  to  vote  such  stock.  Held,  That  the  trust  com- 
pany was  a  mere  stakeholder  and  that  the  relinquishment 
did  not  entitle  it  to  a  vote.    Clarke  v.  Central  R.  R.  d  Bank- 


inff  Co.  of  Off.,  50  F.,  3.%. 


1—17 


85.  Same — ^Disqualifying  Interests. — The  fact  that  the  Terminal 
Company  has  no  appreciable  interest  in  the  stock  of  the 
Central  Railroad  Company,  because  of  a  mortgage  on  the 
railroad  executed  by  the  Terminal  Company,  does  not  re- 
move the  objection  to  its  noting  5»  person  or  by  representa- 
tive in  the  election  of  tlie  directors  of  that  railroad  com- 


INDEX — DIGEST. 


1077 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont'd. 

II.  Prohibited— Oontinued. 
pany.  in  view  of  the  fact  that  it  has  large  pecuniary  inter- 
ests in  two  directly  competing  lines  of  railroad.  lb. 

86.  Same — Anti-Trust    Law. — Transactions    of   this    character    are 

within  the  spirit,  if  not  within  the  letter,  of  the  "Sherman 
Anti-Trust  Law."  act  of  July  2,  1890  (2«  Stat,  209).  *lb. 

87.  Northern  Securities  Co. — Any  contract  or  comlVination  by  which 

a  majority  of  the  stock  of  two  railroad  companies  owning 
and  oper.Mting  parallel  and  competing  interstate  lines  of  road 
is  transferred  to  a  corporation  organized  for  the  purpose  of 
holding  and  voting  the  same  and  rec-ei\  ing  the  dividends 
thereon,  to  l)o  divided  pro  rata  among  the  stockholders  of 
the  two  companies  .so  transferring  their  stock,  directly  and 
substantially  restri<ts  interstate  trade  and  commerce,  and  is 
in  violation  of  the  Anti-Trust  Act  of  July  2.  1890  (26 
Stat.,  209).  since  it  destroys  any  motive  for  competition  be- 
tween the  two  roads;  and  it  is  immaterial  that  each  com- 
l>jiny  has  its  own  board  of  directors,  which  nominally  directs 
its  operations  and  tixes  its  rates,  r.  8.  v.  Northern  Secnri- 
tie.'i  Co.,  120  F.,  721.  2—215 

88.  Northern  Securities  Company— Corporation  Organized  to  Hold 

Majority  of  Stock  of  two  Competing  and  Parallel  Lines  of 
Railroad  for  the  Purpose  of  Preventing  Competition. — Stock- 
holders of  the  Gro.it  Northern  and  Northern  Pacific  Railway 
companies — corporations  having  competing  and  sul>stantially 
parallel  lines  from  the  Grent  Lakes  and  the*  Mississippi 
River  to  the  Pacific  Ocean  at  Puget  Sound — combined  and 
conceived  the  scheme  of  orgnnizing  a  cori)oration.  under  the 
laws  of  New  Jersey,  which  should  hold  the  shares  of  the 
stock  of  the  constituent  conii)anies.  such  shareliolders,  in 
lieu  of  their  sluire-^  in  those  companies,  to  receive,  upon  an 
agreed  Imsis  of  vahie.  shares  in  tlie  holding  corporation. 
Pursuant  lo  sucli  combination  tlie  Northern  Securities  Com- 
l)any  wns  organized  as  the  holding  corporation  through 
which  tliat  scheme  should  l)e  executed;  and  under  that 
scheme  such  holding  corixu-ation  became  the  holder — more 
proiterly  >jpeaking.  the  custodian— of  more  than  nine-tenths 
of  the  stock  of  the  Northern  Pacific,  and  more  than  three- 
f<un-ths  of  the  stock  of  the  Great  Northern,  the  stockholders 
of  the  conipiinies.  who  delivered  their  stock,  receiving,  uiK>n 
the  agreetl  basis,  sliares  of  stock  in  the  holding  cor|K)ration. 
Held,  That  the  arrangement  was  an  illegal  combination  in 
restraint  of  interstate  commerce  and  fell  within  the  prohi- 
bitions and  provisions  of  the  act  of  July  2,  1890,  and  it  was 
within  the  power  of  the  Circuit  Court,  in  an  .action,  brought 
by  the  Attorney-General  of  the  United  States  after  the  com- 
pletion of  the  transfer  of  such  stock  to  it,  to  enjoin  the 
holding  company  from  voting  such  stock  and  from  exercising 


1078 


INDEX — ^DIGEST, 


COMBINATIONS,    CONSPIRACIES,   CONTRACTS,   ETC.— Cont'd. 

II.  Prohibited— Continued, 
any  control  whatever  over  the  acts  and  doings  of  the  rail- 
road companies,  and  also  to  enjoin  the  railroad  companies 
from  paying  any  dividends  to  the  holding  corporation  on 
any  of  their  stocls:  held  by  it.  Northern  Securities  Co.  v. 
•  United  States,  193  U.  S.,  197.  2—338 

19.  Same.— Necessarily,  the  constituent  companies  ceased,  under 
this  arrangement,  to  be  in  active  competition  for  trade  and 
commerce  ahnig  tlielr  respective  lines,  and  l)ecame,  practi- 
cally, one  puwerfnl  consolldateil  corporation,  by  the  name  of 
ii  holding  cori>oration,  the  principal,  if  not  the  sole,  object 
for  the  formation  of  which  was  to  enrry  out  the  purpose  of 
the  original  ombiuatioii  under  which  comi>etition  between 
the  constituent  compniiies  would  cease.  /&. 

m.  Same.— A  combitiation  by  stockholders  in  two  competing  inter- 
state railway  companies  to  form  a  stoclvholding  corporation 
which  should  acquire,  in  exrhange  for  Its  own  capital  stock, 
a  controlHns?  interest  in  the  capital  stock  of  each  of  such 
railway  companies,  violates  the  Anti-Trust  Act  of  July  2, 
1890  (20  Stat..  2()0i.  which  declares  illegal  every  combina- 
tion or  conspiracy  in  restraint  of  interstate  commerce,  and 
f«>rbids  attempts  to  monoiwlize  such  commerce  or  any  part 
of  it     (48  L.  e*!..  <;70.)  2—342 

91.  Same. — Where  n«»  individual  investment  is  involved,  but  there 

is  a  combinatitrn  by  several  individuals  separately  owning 
stock  in  two  comi)eting  railroad  comi)anies  engaged  in  inter- 
state conunerr*'.  to  place  the  control  of  both  in  a  single  cor- 
l^>ration,  \vlii«li  is  organizeil  for  tliat  purpose  expressly  and 
as  a  mere  instrumentality  i)y  which  the  comi>eting  rail- 
roads can  lie  combined,  the  resulting  combination  is  a 
direct  restraint  of  trade  by  destroying  comiJetilion,  and  is 
illegal  within  the  meaning  of  the  act  of  July  2,  1890. 
(Brewer,  ccmcurrlng.)  2 — 341 

7.  Patent  ami  coitiirhjht   tiiimopolh-H  —lUvifal  coiublnatlons  and 

contracts. 

92.  A  corporation  organized  for  the  purpose  of  securing  assign- 

ments of  all  patents  relating  to  "  spring-tooth  harrows,"  to 
grant  licenses  to  the  assignors  to  use  the  patents  upon  pay- 
ment of  a  royalty,  to  fix  and  regulate  the  price  at  which 
.such  harnnvs  shall  be  sold,  and  to  take  charge  of  all  litiga- 
tion and  prosecute  all  infringements  of  such  i)atents,  is  an 
illegal  combination,  wliose  purposes  are  contrary  to  public 
policy,  and  which  a  court  of  equity  should  not  aid  by  en- 
tertaining infiini^ement  suits  brought  iu  pursuance  thereof. 
Natimtal  Hurroic  (Jo.  v.  QmicA;,  67  F.,  130.  1^443 

93.  Corporation   Organized  to  Receive  Assignments  of  Patents. — 

A  combination  among  manufacturers  of  si)ring-tooth  har- 
rows, by  wliich  each  manufacturer  assigns  to  a  corporation 


INDEX — ^DIGEST. 


1079 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont'd. 

II.  Prohibited — Continued, 
organized  for  the  purpose  the  patents  under  which  he  is 
operating,  and  takes  back  an  exclusive  license  to  make  and 
sell  the  same  style  of  harrows  previously  made  by  him,  and 
no  other,  all  the  parties  being  bound  to  sell  at  uniform  prices, 
held  to  be  an  unlawful  combination  for  the  enhancement  of 
prices  and  in  restraint  of  trade.  National  Harrow  Co.  v. 
Hench,  76  F.,  667.  1—610 

Affirmed,  83  F.,  36  (1—742). 

94.  Same. — Though  the  fact  that  several  patentees  are  exposed  to 

litigation  justifies  them  in  composing  their  differences,  they 
can  not  make  the  occasion  an  excuse  or  cloak  for  the  crea- 
tion of  monopolies  to  the  public  disadvantage.    Ih.      1 — 743 

95.  A  combination  among  manufacturers  of  spring-tooth  harrows, 

whereby  a  corporation  organized  for  the  purpose  becomes  the 
assignee  of  all  patents  owned  by  the  various  manufacturers, 
and  executes  licenses  to  them,  so  as  to  control  the  entire 
business  and  enhance  prices,  is  void  both  as  to  the  assign- 
ments and  licenses,  so  that  the  corporation  can  not  maintain 
a  suit  against  one  of  its  assignors,  who  violates  the  agree- 
ment, for  infringement.  National  Harrow  Co.  v.  Hench,  84 
F.,  226.  1—746 

96.  An   agreement   by   the   members   of   a   publishers'   association. 

controlling  90  per  cent  of  the  book  business  of  the  country, 
under  which  all  agreed  not  to  sell  to  anyone  who  would  cut 
prices  on  copyrighted  books,  nor  to  anyone  who  should  be 
known  to  have  sold  to  others  who  cut  prices,  etc.,  was  an 
agreement  relating  to  interstate  trade  or  commerce  within 
the  Anti-Trust  Act  of  July  2,  1890  (26  Stat.,  209.  Mines  v. 
Scrihner,  147  F.,  927.  2—1035 

97.  Same — Conspiracy — Restraint    of    Trade. — Defendants    became 

members  of  an  association  of  book  publishers  controlling  90 
per  cent  of  the  book  business  of  the  country,  which  associa- 
tion adopted  a  rule  that  they  would  not  sell  to  anyone  who 
cut  prices  on  copyrighted  books,  nor  to  anyone  who  should 
be  known  to  have  sold  to  others  at  cut  prices.  A  blact  list 
was  kept  containing  the  names  of  such  persons,  and  no  one 
on  the  Idack  list  could  not  Iniy  any  books  of  anybody  in  the 
scheme.  Held,  That  such  scheme  constituted  a  conspiracy 
iu  restraint  of  interstate  trade  or  commerce.  /&. 

98.  Same — Copyright — Effect — Extent    of    Rights    Acquired. — The 

rights  acquired  by  publishers  of  copyrighted  books  under  the 
copyright  law  did  not  justify  them  in  combining  and  agi*ee- 
ing  that  their  books  should  be  subject  to  the  rules  laid  down 
by  the  united  owners,  one  of  which  was  that  no  member  of 
the  as.soriation  should  sell  any  books  to  a  blacklisted  pur- 
chaser who  was  kftown  to  cut  prices.  lb. 

99.  License  Contracts   by  Patentee  in  District  where   Patent   De- 


IBDEX — DIGEST. 


COMBINATIONS,    CONSPIRACIES,   CONTRACTS,    ETC.— (Cont'd. 

1 1.  FnoHiBXTED — Contimie<I. 

dared  Illegal  and  in  Creating  a  Fnnd  to  Crush  Competi- 
tion.— Liwn^fo  (•♦intraets  eiilornl  into  by  tbe  owner  of  patent 
on  Ji  rnhber  tire,  vvhith  patent  Iiad  been  adjndged  invalid 
by  tlie  iMrcuit  Court  of  Appeals  for  tbe  Sixtb  Circuit,  with 
all  of  tbe  large  nuuiufaetiirers*  of  sucb  tires  in  tbe  United 
States,  all  of  wboni  were  engagwl  in  interstate  comnieree,  to 
niannfaeture  the  winie  on  a  royjilty  and  to  sell  at  prices 
alW>ve  tbe  tben  market  price,  and  providing  for  a  system  of 
rebates,  ;iiid  for  the  appointment  of  a  l)oard  to  receive  one 
half  of  the  royalties,  to  lie  used  in  iJun-basing  said  tires  and 
selling  them  at  prices  det'iiitHl  to  be  for  tbe  l>est  interest  of 
all.  Hi  hi.  that  such  contracts  went  beyond  the  rights  of  com- 
plainant under  its  patent  monopoly  in  raising  and  maintain- 
ing prices  in  the  Stntcs  c<.mp«>sing  tbe  sixth  Fetleral  cir- 
cuit, in  which  the  mcn«)iM»ly  had  no  practical  existence,  and 
in  creating  a  fund  to  be  used  to  crush  competition  by  outside 
manntactnnr^.  as  weU  in  t!ie  sixth  circuit  as  elsewhere,  and 
were  illegal  and  void  as  creating  a  combination  in  restraint 
of  intcrsTatc  trade  and  «-oiiimenc  in  violation  of  the  Anti- 
Tnist  Act  «>f  .July  2,  1S!M>  (2<;  Stat..  2<n»).  Uiibhcr  Tire 
Whirl  Co.  v.  MUininln  Ruhhi-r  Wark^  Co.,  142  F.,  531. 
tSt'V  tllm  ( 'OMBI NATIONS,   EFC.   IJ^i-lHS.  2 — 855 

8.  Riitlrintitfi—  Ktifcx,  etc. 

100.  Anti-Trust  Act  Applicable  to  Railroads.— Tbe  inovisions   re- 

S|)e<.*ting  contracts,  con»binati«»ns.  and  <'ous|.iracies  in  re- 
straint of  trade  or  connnerce  among  the  several  States  or 
with  ffireign  countries,  contained  in  tbe  act  of  July  2.  1890 
(26  Stilt,  2<1M.  "to  protect  tnide  and  connnerce  against  un- 
lawful restraints  and  monoi)oli«»s."  ai>ply  to  and  cover  com- 
nion  carriers  by  railroad.  ( \  s.  v.  Trnns-Mf,.  Ft.  Assn..  106 
U.  S.,  21M>.  1—648 

101.  Contracts  Between  Railroads  Affecting  Rates.— .V  contract  be- 

tween railroads  in  restraint  of  interstate  trade  or  connnerce 
is  prohibited,  even  thougli  the  contract  is  entereil  into  be- 
tween <x»ni|>eting  railroads,  only  for  the  purpose  of  thereby 
alteeting  traffic  rates  f(»r  the  tninspttrtation  of  r>orsons  and 
property.  /b. 

102.  Same— No   Authority   Therefor   Under   Act   to   Regulate   Com- 

merce.—The  act  of  Fclauary  4,  ISSI,  -  to  regulate  lonnuerce," 
is  not  inctinsistent  with  the  of  July  2,  IStMX  ;»s  it  does  not  con- 
fer uiMin  cinnpeting  railroad  ct»mi>anies  power  to  enter  into 
a  contract  in  restraint  of  trade  and  connnerce,  like  the  one 
which  forms  the  subject  of  this  suit.  lb. 

103.  Right  to  BcTiate  from  Rates  Prescribed.— I'he  right  of  a  rail- 

road company  in  .i  joint  t rathe  association  to  deviate  from 
the  rates  pres<ril>ed,  provided  it  acts  on  a  resolution  of  its 
Iwaitl  of  dirtHtors  and  serves  a  it)i)y  thereof  on  the  managers 


INDEX DIGEST. 


1081 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont'd. 

II.  Prohibited — Continued. 
of  the  association,  who,  upon  its  receipt,  are  required  to  **  act 
pmmplly  ftir  rhe  protection  of  the  i)arties  hereto,'  does  not 
relieve  the  association  from  condenniation  as  an  illegal  re- 
straint of  conjpetition,  as  the  privilege  of  deviating  from 
the  rates  would  be  exercised  upon  i)ain  of  a  war  of  competi- 
tion against  it  by  the  whole  association,  l.  ♦<?.  v.  Joint 
Traffic  Assn.,  171  U.  S.,  o(t.5.  1—869 

Reversing  7(J  F..  81»5  (1—615). 

104.  An  agreement  of  railroad  c<»mpanies  which  directly  and  effec- 

tually prevents  competition  is,  under  the  statute,  in  restraint 
of  trade,  n^itwithstanding  the  possibility  that  a  restraint  of 
trade  might  also  fellow  unrestricted  competition,  which 
might  destrciy  wesilier  rojKls  and  give  the  survivor  i)ower  to 
raise  rates.  75. 

105.  The  statute  applies  only  to  contracts  whose  direct  and  imme- 

diate effect  is  a  restraint  upon  interstate  connnerce,  and  not 
to  contracts  m.ule  to  promote  legitimate  business,  though 
they  may  indirectly  or  incidentally  affect  such  commerce. 

76. 

106.  Similar  to  Trans-Missouri  Case. — So  far  as  the  establishment  of 

rates  and  fares  is  concernetl  there  is  no  substantial  differ- 
ence between  the  agreemeut  in  this  case  and  the  one  set 
forth  in  tlie  Tians-Mis.sonri  <(isc.  /ft. 

107.  Congress,  with  regard  to  the  interstate  commerce,  and  in  tbe 

course  of  regulating  it  in  the  case  of  railroad  corporations, 
has  the  power  to  say  that  no  contract  or  combination  shall 
be  legal,  which  shall  restrain  trade  and  commerce,  by  shut- 
ting out  the  operation  of  tlie  general  law  of  competition. 

/6. 

108.  Any  contract  or  combination  between  interstate  carriers  which 

directly  and  substantially  restrict  the  right  of  such  a  car- 
rier to  fix  its  own  rates  independently  of  its  natural  com- 
lietitors  places  a  direct  restraint  upon  interstate  connnerce 
in  th.it  it  tends  to  prevent  competition  ;ind  is  in  violation  of 
the  act,  whether  the  rates  actually  fixed  be  reasonable  or 
UiU'e:isonal»le.     (  .  S.  v.  XortJurn  iSnunitirs  Co.,  120  F.,  721. 

2—215 

109.  Contract  or  Combination  Prescribing  Rates  to  be  Maintained. — 

Any  contract  or  arrangement  l)etween  railroad  companies 
for  the  pnrpoe  and  having  the  effect  of  preventing  com- 
petition hy  fixing  nites  to  be  maintained  by  the  parties  is 
in  violatl<»n  of  tlie  ja-ovisions  cf  the  Minnesota  anti-trust 
act  of  1800,  which  is  substantially  the  same  language  as 
the  Sherman  Anti-Trust  Act  of  181HJ.  Minnesota  v.  yorthern 
Si'ciiritii's  Co.,  V2:\  F.,  r»02.  2 246 

110.  Agreements   Between   Railroads   to   Raise   Rates   upon   Certain 

Class  of   Shipments. — When  a   numljer  of  railroads,   acting 


1082 


INDEX — DIGEST. 


COMBINATIONS,    CONSPIBACIES,    CONTRACTS,   ETC.— Cont'd. 

11.  PROHIBITKD— Continued, 
under  articles  of  organization.  l>y  concert  of  agreement  and 
action  advance  tlie  rates  upon  shipments  of  a  particular 
class  throughout  all  the  territory  to  which  their  organiza- 
tion and  influence  with  similar  organizations  extend,  and 
when  they  actually  advance  such  rates  and  exact  the  same  of 
shippers,  it  is  of  no  consequence  that  they  have  a  stipulation 
in  such  articles  that  each  and  all  members  can  at  will  and 
at  any  time  withdraw  from  the  agreement.  Such  a  com- 
bination is  in  restraint  of  trade.  Tift  v.  Southern  Railway 
Co.,  138  F.,  753.  2—734,  746 

See  also  Carkiebs.  • 

111.  Combinations  of  Bailroads  to  Prevent  Competition,  Pooling  Pas- 

senger   Receipts— No     Relief     in     Equity     Against     Ticket 
,  Brokers. — In  a  suit  by  a  railroad  company  to  enjoin  the  de- 

fendants, who  were  ticket  brokers,  from  dealing  in  special 
tickets  issued  by  complainant  on  account  of  the  Pan-Ameri- 
can Exposition,  which  were  by  their  terms  nontransferable, 
it  appeared  from  the  showing  made  on  a  motion  for  a  pre- 
liminary injunction  that  complainant  was  a  member  of  a 
combination  known  as  the  "  Tnmk  Line  Association."  formed 
by  a  number  of  railroads  operating  in  ditfereut  States  for 
the  purpose  of  preventing  competition;  that  the  passenger 
receipts  of  all  such  roads  were  iwoled  and  divided  on  an 
agreed  basis;  and  that  the  si>ecial  rates  made  on  account  of 
the  expisition  were  flxe<l,  and  the  terms  of  the  tickets  which 
were  the  l)asis  of  the  suit  were  i)rescribeil.  by  such  associa- 
tion through  its  passenger  connnittee.  Held,  That  such 
combination  was  illegal,  as  in  violation  of  the  Fe<leral  Aiiti- 
Trust  Law  (2(»  Stat.  209),  and  that  complainant  could  not 
invoke  the  aid  of  a  Federal  court  of  equity  for  the  protec- 
tion of  rights  claime<l  under  contracts  which  were  the  direct 
result  and  evidence  of  such  unlawful  comltination.  I)f  la- 
ir a  re,  L.  d  W.  M,  Co.  V.  Fruiik.  110  F.,  G8i).  2—82 

112.  A  combination  to  secure  less  than  lawful  freight  rates,  entered 

into  by  independent  meat  dealers  with  the  intent  to  monopo- 
lize commerce  in  fresh  meat  among  the  several  States,  is  for- 
bidden by  the  Anti-Tnist  Act  of  July  2,  1890  (20  Stat,  209). 
Sirift  tC-  Co.  V.  Vnitea  States,  196  U.  S.,  .^75.  2—643 

9,  Labor  eombinationM. 

113.  Anti-Tmst  Act  Applies  to  Combinations  of  Laborers.— The  act 

declaring  illegal  "  every  contract  or  combination  in  the  form 
of  trust,  or  otherwise  in  restraint  of  trade  or  connuerce 
among  the  several  States  or  with  foreign  nations,"  (26  Stat, 
209)  applies  to  combinations  of  lal^orers  as  well  as  of  capital- 
ists. !7.  8.  V.  Worhinpuicirti  AmaUj.  Couneil,  54  F.,  994. 
Case  affirmed,  57  F.,  85  (1—184).  *  1—110 


INDEX DIGEST. 


1083 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont'd. 

11.  Prohibited — Continued. 

114.  Same — Lawful  Combinations  Tamed  to  Unlawful  Purposes. — 
The  fact  that  a  combination  of  men  is  in  its  origin  and  gen- 
eral purix)ses  innocent  and  lawful  is  no  ground  of  defense 
when  the  combination  is  turned  to  the  unlawful  purpose  of 
restraining  interstate  and  foreign  commerce.  lb. 

116.  Same — Labor  Strikes. — A  combination  of  men  to  secure  or  com- 

pel the  employment  of  none  but  union  men  becomes  a  combi- 
nation in  restraint  of  interstate  commerce,  within  the  mean- 
ing of  the  statute,  when,  in  order  to  gain  its  ends,  it  seeks 
to  enforce,  and  does  enforce,  by  violence  and  intimidation, 
a  discontinuance  of  labor  in  all  departments  of  business,  in- 
cluding the  transportation  of  goods  from  State  to  State,  and 
to  and  from  foreign  nations.  lb. 

lie.  Same — Injunction — ^When  Granted. — Where  an  injunction  is 
asked  against  the  interference  with  interstate  commerce  by 
combinations  of  striking  workmen,  the  fact  that  the  strike 
is  ended  and  labor  resumed  since  the  filing  of  the  bill  is  no 
ground  for  refusing  the  injunction.  The  invasion  of  rights, 
e.specially  where  the  lawfulness  of  the  invasion  is  not  dis- 
claimed, authorizes  the  injunction.  lb. 

117.  Railroad   Employees — Agreements   not   to   Handle   Property  of 

Railroad  Against  which  Action  is  Taken. — Rule  12  of  an 
association  of  locomotive  engineers,  styled  the  "  Brother- 
hood of  Locomotive  Engineers,"  which  provides  "  that  here- 
after, when  an  issue  has  been  sustained  by  the  grand  chief, 
and  cnn'ied  into  effect  by  the  Brotherhood  of  Locomotive 
Engineers,  it  shall  be  recognized  as  a  violation  of  obligations 
if  a  member  of  the  Brotherhood  of  Locomotive  Engineers 
who  may  be  employed  on  a  railroad  run  in  connection  with 
or  adjacent  to  said  road,  to  handle  the  property  belonging 
to  said  railroad  or  system  in  any  way  that  may  benefit  said 
company  with  which  the  Brotherhood  of  Locomotive  Engi- 
neers arc  at  issue,  until  the  grievances  or  issues  or  differ- 
ences of  any  nature  or  kind  have  been  amicably  settled  " — 
is  plainly  a  rule  or  agreement  in  restraint  of  trade  or  com- 
merce, and  violative  of  section  1  of  the  act  of  Congress  of 
July  2,  1890..    Waterhouse  v.  Comer,  55  V:,  149.  1 — 119 

118.  Same— Conspiracy— Section     5440     R.     S. — Construing     several 

clauses  cf  the  interstate-commerce  law  recited  in  the  opin- 
ion \Aith  section  5140  of  the  Kovised  Statutes,  it  follows  that 
a  combination  of  persons,  without  regard  to  their  occupation, 
which  will  have  the  effect  to  defeat  the  provisions  of  the 
interstate-commerce  law,  inhibiting  discriminations  in  .the 
transiKU'tation  of  freight  and  passengers,  and  further  to 
restrain  the  trade  or  commerce  of  the  country,  will  be  ob- 
noxious to  the  penalties  therein  prescribed.  /ft. 


1084 


INDEX — ^DIGEST. 


COMBINATIONS,    CONSPIBACIES,    CONTRACTS,   ETC.— CJont'd. 

II.  PRomBiTEi)— Contiimtni. 

119.  Same— Ecccivew— Advice  of  Court.— In  this  case,  the  luovaiits 

Iiaviiig  jivowed  th*Mr  [niri>tise.  in  f»i>en  court,  to  submit  to  the 
construct imi  to  l.e  nunlc  by  tlic  court  relating  to  nile  12  of 
tlie  BnitliorliotKl.  the  receiver  is  ilirectcHl  to  enter  into  an 
jipprnpriate  «'«iiitr.Ht  with  tlieni.  subjec't  to  the  general  opera- 
tion «tf  this  derision  uitli  reference  to  said  nile.  /ft. 

120.  A  combination  of  lalNU'  organizations  whose  professed  object  is 

to  arrest  the  operation  of  the  railroads  whose  lines  extend 
fnnu  a  great  city  into  adjoining  States  until  such  roads  ac- 
cede to  certain  demands  made  ui>on  them,  whether  such  de- 
mands are  in  tlHMiist'lvrs  n\isonable  or  unreasonalde,  just  or 
unjust,  is  an  unlawful  conspiracy  in  restraint  of  trade  and 
connnene  among  the  States,  witliin  the  act  of  July  2,  1890, 
iiud  acts  threatem^l  in  pursuaiue  theretif  may  be  restrained 
by  injunction,  under  seetion  4  of  the  act.  f  .  »V.  v.  Elliolt, 
iVI  F..  801.  1—262 

DeniiU'rer  overruled,  (U  F..  27   (1-  J^ll). 

121.  Same — Interference  with  Mails  and  Interstate  Commerce. — A 

comliinatiou  by  railroad  empbiytvs  to  jirevent  all  the  rail- 
rojids  of  a  large  city  eiigaired  in  carrying  the  Unitetl  States 
mails  and  in  interstate  <-onnnerce  from  cari-jing  freight 
and  i>asscngers,  hauling  cars,  and  se<-uring  the  services  of 
perHins  orlier  than  strikers,  and  to  induce  persons  to  leave 
the  servict^  of  such  railroads,  is  within  section  1  of  the  act 
of  July  2,  1890,  and  is  illegal.     I  .  s.  v.  I':Hifttt,  CA  F..  27. 

1—311 

Its.  Combination  of  Railroad  Employees  Interfering  with  Operation 
of  mailroad  in  Hands  of  a  Keceiver— Instigating  Strike.— 
Maliciouifly  inciting  employees  of  a  receiver,  wluj  is  operat- 
ing a  rail  wad  under  tirder  of  the  court,  to  leave  his  employ, 
In  imrsnance  of  an  unlawful  c<anblnation  to  i)revont  the  op- 
♦  rati<»n  of  the  road.  tl»erel>y  intticting  injuries  on  its  business, 
for  wliicb  damages  wcnld  l>e  re<i»verabl*»  if  it  were  operated 
by  a  private  corjMiration,  is  a  contempt  of  the  court.  Thotnm 
\.  Vin.,  X.  O.  tt  7'.  P.  Rif.  Co..  r»L>  F..  80:J.  1—266 

123.  Same — Combination  to  Compel  Breach  of  Contract.— .V  co)nbina- 
tltm  to  intiict  i»ecu!iiiry  injury  on  the  owner  of  cars,  oper- 
ated by  railway  <«»n!panies  under  <t>ntracts  with  him,  by 
ci)niiM»lling  them  to  :,'lve  ui>  using  his  cars,  in  violation  of 
their  contracts,  ami,  on  their  refusal,  to  inflict  pecuniary 
injury  on  tliem  by  inciting  their  employc«>s  to  quit  their 
servi«e.  and  thus  i>aralyze  their  laislness.  the  existence  of 
the  contracts  l)cing  Ivuown  to  the  parties  so  con^bining,  is 
an  unlawful  cc»U8i»ira<'y.  /5, 

184.  Same — Boycott. — A  combination  by  enjidoyees  of  railway  com- 
IKinies  to  injure  in  his  laisiness  the  owner  of  cars  operated 
by   the  coni|>anies   by   compelling  them   to   ce.ise   using  his 


INDEX — ^DIGEST. 


1085 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,   ETC.— Cont'd. 

II.  Prohibited — Continued, 
cars  by  threats  of  (juitting  and  l>y  actually  quitting  their 
service,  thereby  inflicting  on  them  great  injurj,  where  the 
relation  l»etwceii  him  and  the  conq)anies  is  nmtually  profit- 
able, and  has  no  ett'tMt  whatever  on  the  character  or  reward 
of  the  services  of  tlie  employees  so  combining,  is  a  boycott 
and  an  unlawful  eonsi)iracy  at  conunon  law.  Jh. 

125.  Same — A  combination  to  incite  the  employees  of  all  the  rail- 

ways in  the  country  to  suddenly  quit  their  service,  without 
any  dissatisfaction  with  the  terms  of  their  employment, 
thus  i>aralyzing  utterly  all  railway  traffic,  in  order  to  starve 
the  railr(»ad  <N)nn>anies  and  the  public  into  conqielling  an 
owner  of  cars  used  in  «)i)erating  the  roads  to  pay  his  em- 
ployees more  wages,  they  h:i\  ing  no  lawful  right  so  to  compel 
him,  is  an  unlawful  conspiracy  by  rea.son  of  its  purpose, 
whether  such  purpose  is  effected  by  means  usually  lawful 
or  otherwise.  /j. 

126.  Same — Restraint   of   Interstate   Commerce. — Sudi   combination, 

its  purpose  l>eing  to  i»aralyze  the  interstate  commerce  of  the 
country,  is  an  unlawful  conspiracy,  within  the  act  of  July  2, 
•  181)0.  declaring  illegal  every  contract,  combination,  or  con- 
spiracy in  restraint  of  trade  or  commerce  among  the  several 
States,     r.  «S'.  V.  Patterson,  55  Fed.,  0(15.  disapproved.         Jb. 

127.  Same — Obstructing  Mails. — Such  combination,  where  the  mem- 

bers intend  to  st(ii>  all  mail  trains,  as  well  as  other  trains, 
and  do  delay  many,  in  violation  of  Revised  Statutes,  section 
3995,  punishing  any  one  willfully  and  knowingly  obstructing 
or  retarding  the  i)assage  of  the  mails,  is  an  unlawful  con- 
spiracy, although  the  obstruction  is  effected  by  merely  quit- 
ting employuK^nt.  /ft. 

128.  Combination  or  Conspiracy  to  Prevent  Passage  of  Trains Ob- 

struction of  Interstate  Commerce. — Any  c-ombination  or  con- 
spiracy on  the  part  of  any  class  of  men  who  by  violence  and 
intinndation  i)revent  tlie  passage  of  railroad  trains  engaged 
in  interstate  connnerce  is  in  violation  of  act  July  2,  1890,  de- 
claring illegal  every  contract  combination  in  the  form  of 
trust  or  otherwise,  or  conspiracy  in  resti-aint  of  trade  or 
commerce  among  the  States.     In  re  Grand  Jury,  62  F.,  840. 

1-^301 

129.  Mail— Obstructing  Passage  of  Mail  Trains.— It  is  a  violation  of 

section  995,  Revisetl  Statutes,  declaring  it  an  offense  to 
knowingly  and  willfully  obstruct  or  retard  the  passage  of 
the  mail,  for  one  to  prevent  the  running  of  a  mail  train  as 
made  up  ,though  he  is  willing  that  the  mail  car  shall  go  on, 
and  his  purix>se  is  other  than  to  retard  the  mails.  76. 

180.  Same.— The  railway  is  a  great  public  highway,  amhthe  duty  of 
the  railroad  company  as  a  common  carrier  is  first  to  the  pub- 
lic. The  road  must  be  kept  in  operation  for  the  acommoda- 
tion  of  the  public,  if  it  is  possible  to  do  so  with  the  force  and 


1086 


INDEX — DIGEST. 


COMBINATIONS,    CONSFIBACIES,    CONTRACTS,   ETC.— ContHi. 

II.  Prohibited — Continued. 

appliances  within  reach.  Any  negligence  in  this  resi>ect  is 
not  excused  by  teniiwrnry  difficulties  capable  of  being 
promptly  removed.  lb, 

131.  Same. — Where  the  transiwrtation  of  the  malls  and  interstate 
conmierce  has  long  l>een  interrupted  by  the  refusal  of  the 
employees  of  the  railway  company  to  move  trains  carrying 
Pullman  cars,  it  is  the  duty  of  the  railway  company  to  use 
every  effort  to  move  the  mails  and  interstate  commerce,  with- 
out regard  to  the  make-up  of  regular  trains;  and  any  willful 
failure  to  perform  this  duty  is  a  violation  of  the  statute.     Ih. 

188.  Railway  Employees — Strikes  for  the  Purpose  of  Injuring  a  Third 
Party. — It  is  unlawful  for  the  employees  of  railway  com- 
panies to  combine  and  quit  work  for  the  purpose  of  com- 
pelling their  employer  to  withdraw  from  his  relations  with 
a  third  party,  for  the  puriwse  of  injuring  that  third  party. 
They  have,  however,  a  right  to  organize  for  mutual  benefit 
and  protection,  and  for  the  purixise  of  securing  the  highest 
wages  and  the  best  conditions  they  can  command.  They 
may  appoint  officers,  who  shall  advise  them  as  to  the  course 
to  be  taken  in  their  relations  with  their  employer,  and  they 
may,  !f  they  choose,  repose  in  their  officers  authority  to 
order  them,  or  any  of  them,  on  pain  of  expulsion  from  their 
union,  peaceably  to  leave  the  employment  because  the  terms 
thereof  are  unsatisfactory.  Thomas  v.  Railnay  Co.,  62  F., 
817,  followed.     U.  8,  v.  Cmsidif,  C7  F.,  698.  1^52 

188.  Strike — Obstruction  of  Mails — Restraint  of  Interstate  Trade  or 
Commerce. — ^A  strike,  or  a  preconcerted  quitting  of  work,  by 
a  combination  of  railroad  employees  is,  in  itself,  unlawful 
if  the  concerted  action  is  knowingly  and  willfully  directed 
by  the  parties  to  it  for  the  purpose  of  obstructing  and 
retarding  the  passage  of  the  malls,  or  in  restraint  of  trade 
and  commerce  among  the  States.  Ih, 

III.  Not  Prohibited. 

J.  Agreements,  combinations,  etc.,  only  incidentally  affecting  interstate 

commerce, 

134.  Agreements  to  Raise  Prices  of  Lumber,  Not  Involving  an  Ab- 
sorption of  the  Entire  Traffic. — An  agreement  between  a 
number  of  lumber  dealers  in  different  States  to  raise  the 
price  of  lumber  50  cents  per  thousand  feet  in  advance  of  the 
market  price  can  not  operate  as  a  restraint  upon  trade 
within  the  meaning  of  the  act  of  Congress  "  to  protect  trade 
and  commerce  against  unlawful  restraint  and  monopolies" 
(26  Stat.,  209)  unless  such  agreement  involves  an  absorption 
of  the  entire  traffic  and  is  entered  into  for  the  purpose  of 
monopolizing  trade  in  that  commodity  with  the  object  of 
extortion.    U,  8,  v.  Nelson,  52  F.,  646.  1 — 77 

But  see  Combinations,  etc.,  8-15. 


INDEX — ^DIGEST. 


1087 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont'd. 

HI.  Not  PROHimTED— Continued. 
185.  A  combination  between  all  the  lumber  manufacturers  of  a  city 
to  raise  and  maintain  the  price  of  lumber  to  local  consumers, 
and  to  refuse  to  sell  lumber  to  consumers  who  purchase  any 
part  of  their  supply  from  outside  mills,  some  of  such  mills 
supplying  the  local  market  being  situated  in  another  State, 
is  not  in  violation  of  the  Sherman  Anti-Trust  Law,  as  in 
restraint  of  interstate  commerce,  its  effect  on  such  commerce 
being  indirect  and  incidental  only.  Ellis  v.  Innian,  Poulsen 
<&  Co.,  124  F.,  956.  '  2—268 

Reversed,  1.31  F.,  182  (2—577). 
136.  Apportionment  of  Territory— Agreements  Not  to  Compete— Iron 
Pipe.— The  combination  of  several  corporations  engaged  in 
the  manufacture  of  cast-iron  pipe  whereby  they  agree  not  to 
compete  with  each  other  in  regard  to  work  done  or  pipe 
furnished  in  certain  States  and  Territories,  and,  to  make 
effectual  the  objects  of  the  association,  agree  to  charge  a 
bonus  upon  all  work  done  and  pipe  furnished  within  those 
States  and  Territories,  which  bonus  was  to  be  added  to  the 
real  market  price  of  the  pipe  sold  by  those  companies,  was 
not  a  violation  of  the  Anti-Trust  Act,  as  it  affected  inter- 
state commerce  only  incidentally.  U.  8.  v.  Addyston  Pipe 
and  Steel  Co.,  78  F.,  712.  1—631 

Reversed,  85  F.,  271  (1—772)  ;  175  U.  S.,  211  (1—1009).    See 
Combinations,  etc,  39-46. 
137.  Same.— In    the    examination    of   such    a    contract,    fraud   and 
illegality  are  not  to  be  presumed,  but  must  be  proved,  as  in 
all  other  cases.  jj 

188.  Acts,  contracts,  and  combinations  which  promote,  or  only  inci- 
dentally or  indirectly  restrict  competition  in  commerce 
among  the  States,  while  their  main  purpose  and  chief  effect 
are  to  foster  the  trade  and  increase  the  business  of  those 
who  malie  and  operate  them,  are  not  in  restraint  of  inter- 
state commerce,  or  violative  of  section  1  of  the  act  of  July  2 
1890  (26  Stat.,  209).  Whitwell  v.  Continental  Tobacco  Co' 
125  F.,  454.  2—271 

139.  Same.— Attempts  to  monopolize  a  part  of  commerce  among  the 

States  which  promote,  or  only  incidentally  or  indirectly 
restrict,  competition  in  interstate  commerce,  while  their 
main  purpose  and  chief  effect  are  to  increase  the  trade  and 
foster  the  business  of  those  who  make  them,  were  not 
intended  to  be,  and  were  not,  made  illegal  or  punishable  by 
section  2  of  the  Anti-Trust  Act  of  July  2,  1890,  chapter  647 
(26  Stat,  209),  because  such  attempts  are  indispensable  to 
the  existence  of  any  competition  in  commerce  among  the 
States.  ,, 

140.  Combination  to  Monopolize  Refining  and  Selling  Sugar  by  Buy- 

ing up  all  Competitors  not  a  Violation  of  the  Statute.— A 
combination  whose  object  is  to  enable  a  single  company  to 


1088 


INDKX — DIGEST. 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont'd, 

III.  Not  Prohibited — Continued. 
iiioiiopolijse  fioci  control  the  Imsiiiess  of  ivtininjj  and  selling 
sugar,  by  buying  up  all  competing  concerns  in  the  Uniteil 
States,  is  not  in  vioiatiiin  of  Federal  Anti-Trust  Act  of  July 
2,  1890,  for  it  constitutes  no  restriction  upon,  or  monoiwly  of, 
commerce  between  the  States,  but,  at  most,  only  makes  it 
possible  for  the  promoters  of  the  combination  to  restrict  or 
monopolize  such  commerce,  should  they  so  desire.  V.  .V.  v. 
E,  V.  KnUiht  Co..  (iO  F.,  306.  1— 25(» 

141.  Same. — The  purchase  of  stock  of  sugar  refineries  foi  the  pur- 
pose of  acquiring  control  of  the  business  of  refining  and 
sellini^  !*ugar  in  the  Uuitetl  States  does  not  involve  monopoly, 
or  restraint  of  interstate  or  forei'^Mi  commerce,  within  the 
me.iuing  of  the  act  of  .Inly  2.  lHiM».  /  .  s.  v.  /;.  r.  Kniijht  Co., 
tiO  F..  im.  1—258 

148.  Purchase  of  Similar  Establishments  in  other  States  and  thus 
Securing  a  Monopoly  Bears  no  Birect  Relation  to  Interstate 
or  Foreign  Commerce. — Although  the  American  Sugar  Refin- 
tuff  VoiiiitaHif.  a  cori»  »ratinu  cxistinir  under  the  laws  of  the 
State  of  New  .Jersey,  obtained  through  tlie  purchase  of 
storix  in  four  l*liibideli>lna  refineries  such  disposition  over 
those  nuuuifactorii's  tbntujxliout  tin*  rniteil  States  as  gave 
it  a  pr:M  thai  na  luspoly  of  the  laisiness.  Ilchl.  that  the  ac- 
ciuisitiun  id'  thi.sc  refineries  by  tlu'  New  .lersey  cj»rporation, 
find  the  laisiness  of  sugar  relinin.:;  in  IViinsylvania,  l>ear  no 
direct  relation  to  rjinuucrcc  between  tlte  States  or  with  for- 
eign nations:  and  tliat  tlic  result  of  the  transaction  was  the 
creation  of  a  nionoin>ly  in  tli*'  manufacture  of  a  necessary  of 
life,  which  could  not  be  suppressetl  uiuUh-  the  Anti-Trust 
Act  of  July  2,  1890  (2<;  Stat..  2<«l>.  /  .  .S.  v.  /;,  C.  Knhjht 
Co.,  ].•♦>  l*.  S.,  1.  1— .379 

143.  Corporate  Rights  as  Regards  Acquisition  of  Property  to  an  Ex- 

tent which  Gives  Control  of  Traffic  Therein  Among  the  States 
Not  Prohibited. — Congress  Ims  no  authority,  under  the  com- 
merce clause  or  any  other  lu-ovislon  of  the  Constitution,  to 
limit  the  right  of  a  c«M'iM>ration  created  l)y  a  State  in  tlie 
a«iuisiti«in,  contnd,  and  disiw)sitioii  of  property  in  the  several 
States,  and  it  is  immaterl.il  tliat  such  proi)erty,  or  the  iirud- 
ucts  thereof,  may  become  the  subjects  of  interstate  com- 
merce. It  is  apparent  that  by  the  act  of  July  2.  1800,  in  rela- 
tii>n  to  monoiK)lies,  Congress  did  not  intend  to  de«Iare  that 
the  acquisition  by  a  State  corimration  of  so  large  a  i»art  of 
any  spe<'ies  tif  i»roi>erty  as  to  enal>le  the  owners  to  control  tlie 
traffic  therein  among  the  several  States,  constitute<l  a  crimi- 
nal offense,     hi  re  (trcviu,  52  F.,  104.  1 — 55 

144.  Contract  by  which  Stockholders  of  a  Corporation  Agree  Not  to 

Enter  Into  Competition  With  Purchaser  of  the  Business  of 
tlic  Company.— The  Anti-Trust  Act  of  July  2,  1800  (20  Stjit., 
200)  has  no  application  to  a  contract  by  which  the  stock- 


INDEX DIGEST. 


1089 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— CJont'd. 

III.  Not  Prohibited — Continued. 

holders  of  a  corporation  engaged  in  dealing  in  fish  at  differ- 
ent places,  in  consideration  of  the  purchase  of  the  business 
and  good  will  of  the  company  by  another,  agreed  not  to  enter 
into  competition  with  him  in  such  business  for  the  term  of 
ten  years.    A.  Booth  &  Co.  v.  Davis,  127  F.,  85.  2—318 

145.  Same. — Such  a  covenant  by  the  stockholdei*s  rests  upon  a  good 

consideration  and  is  lawful,  and  the  right  of  the  purchaser  to 
enforce  it  can  not  be  affected  by  the  question  whether  he 
has  conducted  the  business  lawfully  since  his  purchase,    /ft. 

146.  Same — Suit  to  Enforce — Defenses.— In  a  suit  to  enjoin  a  defend- 

ant from  violating  such  a  contract  and  to  enjoin  a  codefend- 
ant  from  employing  his  services  in  a  competing  business,  it 
is  no  defense  that  his  codefendant  hired  him  in  ignorance 
of  the  contract,  and  will  suffer  damage  if  deprived  of  his 
services.  /ft, 

147.  Same— Corporation  Selling  Out  Assets  and  Good  Will  and  There- 

by Incidentally  or  Remotely  Affecting  Interstate  Commerce. — 
•  Where  a  corporation  engaged  in  the  business  of  buying  and 
selling  fish  sold  out  its  assets  and  good  will  to  plaintiff's  as- 
signor, and  the  seller  no  longer  retained  any  interest  in  the 
property,  so  that  the  sale  was  not  a  mere  combination  of 
owners  and  properties  under  one  management,  the  sale  was 
not  in  violation  of  the  Federal  Anti-Trust  Act  of  July  2, 
1890  (26  Stat,  200),  though  the  contract  might  incidentally 
or  in  some  remote  degree  injuriously  affect  interstate  com- 
merce.    Davis  V.  A.  Booth  &  Co.,  131  F.,  31.  2—566 

148.  Same. — An  agreement  ancillary  to  such  sale  of  a  corporation's 

business,  by  which  the  stockholders,  who  received  the  pur- 
chase price,  agreed  that,  in  order  to  protect  the  good  will  of 
the  business  so  sold,  they  would  not  either  directly  or  indi- 
rectly engage  in  the  same  business  within  certain  distinct 
limits  for  a  perod  of  ten  years,  was  not  void,  as  an  unreason- 
able restraint  of  competition  in  trade,  at  common  law.        76. 

149.  Contract  for  Entire  Product. — A  contract  with  an  independent 

manufacturer  of  wooden  ware  for  the  entire  product  of  his 
plant  is  not  in  itself  a  contract  in  illegal  restraint  of  trade. 
Carter-Criime  Co.  v.  Perrung,  68  F.,  439,  1 — 845 

150.  Same. — If  an  independent  manufacturer  contracts  to  sell  his  en- 

tire product,  without  knowledge  of  similar  contracts  made  by 
the  buyer  with  other  manufacturers,  and  without  any  knowl- 
edge of  the  fact  that  such  contract  was  intended  by  the  buyer 
as  one  step  in  a  general  scheme  for  monopolizing  the  trade 
in  that  article  *  and  controlling  prices,  such  independent 
manufacturer  can  not  be  held  to  have  conspired  against  the 
freedom  of  commerce,  or  to  have  made  a  contract  in  illegal 
restraint  of  trade.  /&. 


11808— VOL  1—06  M- 


-69 


1090 


INDEX — DIGEST. 


GOMBIHATIOKS,    CONSPIRACIES,    CONTBACTS,   ETC.— Cont'd. 

III.  Not  Pbohibited— Contiiiuecl. 

151.  Where  tlie  subject-matter  of  the  agreement  does  not  directly 

relate  to  and  act  upon  and  embrace  interstate  commerce,  and 
where  the  undisinited  facts  clearly  show  that  the  purpose  of 
the  agreement  was  not  to  regulate,  obstruct,  or  restrain  that 
commerce,  but  that  it  was  entered  into  with  the  object  of 
properly  and  fairly  regulating  the  transaction  of  the  busi- 
ness in  which  the  parties  to  the  agreement  were  engaged, 
such  agreement  will  be  upheld  as  not  within  the  statute, 
where  it  can  lie  seen  that  the  character  and  terms  of  the 
agreement  are  well  calculated  to  attain  the  puri)ose  for  which 
It  was  formed,  and  where  the  effect  nf  Its  formation  and 
enforcement  upon  interstate  trade  or  commerce  is  in  any 
eyent  but  Indirect  and  incidental,  and  not  its  purpose  or 
object.  Aml€f»mi  v.  United  States,  171  U.  S.,  604.  1—967 
See  also  Combinations,  etc.,  0,  105,  174,  176,  and  Statutes, 
7,  8,  14,  44,  49. 

2,  Affreements  not  to  euimgc  in  business. 

152.  Agreements  Hot  to  Engage  in  Business  within  a  Radius  of  50 

Miles. — ^A  covenant  in  a  contract  by  which  the  owners  of 
brickmakiug  plants  conveyed  them  to  a  corporation  in  ex- 
change for  its  stock,  binding  the  sellers  not  to  engage  in 
competing  business  within  a  radius  of  50  miles  from  the 
place  of  business  of  the  coriX)ration  for  a  term  of  ten  years. 
Is,  valid,  and  may  be  enforced  in  a  court  of  equity  by  a  suit 
to  enjoin  Its  violation.  RoUnsmi  v.  SuhurMn  Brick  Co.,  127 
F.,  804.  a— 312 

153.  Same. — Such  a  covenant  is  personal,  and  is  not  brought  within 

the  statutes  of  a  State  other  than  that  in  which  the  contract 
was  made  by  the  fact  that  the  property  sold  was  situated  In 
such  State.  /&. 

154.  A  contract  for  sale  of  vessels,  even  If  they  are  engaged  in  inter- 

state commerce,  is  not  necessarily  void  because  the  vendors 
agree,  as  is  ordinary  In  case  of  sale  of  a  business  and  its 
good  will,  to  withdraw  from  business  for  a  specified  iDcriod. 
Cmeinnati,  etc.,  Packet  Co.  v.  Bay,  200  U.  S.,  179.        2—868 

155.  Contract  by  which  Stockholders  of  a  Corporation  Agree  Not  to 

Bnter  into  Competition  with  a  Purchaser  of  the  Business  of 
the  Company. — A  covenant  by  the  stockholders  of  a  corpora- 
tion which  sold  its  property,  business,  and  good  will,  that,  in 
consideration  of  such  sale  and  as  an  inducement  thereto, 
they  would  not  directly  or  indirectly  engage  in  the  same 
or  like  kind  of  business  as  that  carried  on  by  the  company 
in  the  same  territory  or  In  the  immediate  vicinity  of  such 
territory  for  ten  years  after  the  sale,  rests  upon  a  good 
consideration  and  is  lawful,  and  the  right  of  the  purchaser 
to  enforce  it  can  not  be  affected  by  the  question  whether  he 


INDEX — DIGEST. 


1091 


COMBINATIONS,    CONSPIRACIES,    CONTBACTS,    ETC.— Cont'd. 

III.  Not  Prohibited— Continued. 

has  conducted  the  business  lawfully  since  his  purchase. 
A.  Booth  d  Co.  V.  Davis,  127  F.,  875.  2—318 

156.  Same— Suit  to  Enforce— Defenses.— In  a  suit  to  enjoin  a  defend- 

ant from  violating  a  contract  by  which  for  a  valuable  con- 
sideration he  covenanted  not  to  engage  in  business  for 
himself  or  another  in  competition  with  that  of  complainant 
for  a  term  of  years,  and  to  enjoin  a  codefendant  from  em- 
l)loying  his  services  in  a  competing  business,  it  is  no  defense 
that  his  codefendant  hired  him  in  ignorance  of  the  contract,, 
and  will  suffer  damage  if  deprived  of  his  services.  lb, 

157.  An  agreement  by  which  the  stockholders  of  a  corporation,  on 

selling  its  assets  to  complainant's  assignor,  agreed  not  to 
again  engage  in  a  similar  business  in  specified  localities  for 
a  i>eriod  of  ten  years,  or  do  any  act  tending  to  impair  the 
good  will  of  the  business  sold,  was  not  contrary  to  public 
policy.     Davis  v.  .4.  Booth  tC-  Co.,  131  F.,  31.  2—566 

158.  Same — Construction. — Where  such  contract  ancillary  to  the  sale 

provided  that  the  stockholders  of  the  seller  would  not 
again  engage  in  a  similar  business  for  a  period  of  ten 
years  in  the  territory,  or  the  immediate  vicinity  of  the 
territory,  dealt  in  by  the  corix)ration,  or  operated  in  by  it 
or  its  agents,  or  the  immediate  vicinity  of  such  territory, 
the  localities  guarded  against  were  restricted  to  those  in 
which  the  selling  company  had  establishments  for  doin^ 
business,  and  the  immediate  vicinity  thereof,  and  did  not 
include  all  parts  or  every  one  of  the  United  States  in  which 
a  former  customer  reside<l,  or  into  which  the  c-orporation's 
corresi)ondence  had  extendetl,  or  through  which  an  agent  of 
the  company  had  traveled.  /ft. 

159.  Assignment  of  Patent — Agreements  to  Remain  out  of  Business. — 

A  contract  recited  that  plaintiff,  who  was  the  patentee  of  an 
invention  relating  to  brake  beams,  for  the  consideration  of 
$10,000  to  be  i^aid  him,  had  assigned  to  defendant,  which 
was  a   corporation  engaged   in   the  manufacture  of  brake 
beams,  a  certain  patent  and  a  pending  application  for  a  sec- 
ond and  provided  that  plaintiff  during  the  life  of  the  patent 
should  not  become  connected  with  any  company  manufactur- 
ing or  selling  brake  beams  in  the  United  States  either  as 
officer,  employee,  or  shareholder,  but  reserved  to  him  the 
right  to  terminate  such  part  of  the  contract  at  any  time  by 
refunding  the  consideration  paid  him  by  defendant.    Held^ 
That  such  agreement  to  remain  out  of  the  brake-beam  busi- 
ness did  not  render  the  contract  unlawful  as  one  in  restraint 
of  trade  and  competition  or  creating  a  monoijoly  and  that 
plaintiff  could  maintain  an  action  thereon  to  recover  the 
stipulated    consideration.    American    Brake    Beam    Co.    v. 
Fungs,  141  F.,  923.  2—826 


» 
>>j* 


1092 


INDEX — DIGEST. 


COMBINATIONS,    CONSPIRACIES,   CONTBACTS,   ETC.— Cont'd. 

III.  Not  Prohibited— Continued. 

J.  Manufacturer's  right  to  regulate  prices  and  restrict  sale  of  his  omi 

products, 

160.  Contracts  ICade  by  Manufacturer  with  Wholesale  Dealers  to  Sell 

Proprietary  Medicines  at  a  Certain  Price  Only.— A  system  of 
contracts  made  by  the  manufacturer  of  a  proprietary  med- 
icine between  him  and  wholesale  dealers,  to  whom  alone  he 
iold  his  medicine,  by  which  they  were  bound  to  sell  only  at 
a  certain  price  and  to  retail  dealers  designated  by  him,  and 
between  him  and  the  retail  dealers  by  which,  in  considera- 
tion of  being  so  designated,  they  agreed  to  sell  to  consumers 
only  at  a  certain  price,  is  not  unlawful  as  in  restraint  of 
trade,  but  is  a  reasonable  provision  for  the  protection  of  the 
manufacturer's  trade,  and  he  is  entitled  to  an  injunction  to 
restrain  a  defendant  from  inducing  other  parties  to  such  con- 
tracts to  violate  the  same.  Hartman  v.  John  D.  Parks  d 
Sons  Co.,  145  F.,  358.  »— 1000 

See  also  Dr.  Miles  Medical  Co.  v.  Japnes  Drug  Co.,  149  F.,  838. 

161.  Agreement  for  Bebate  if  Price  is  Maintained,  where  Purchaser 

was  not  Bound  in  any  way. — An  arrangement  whereby  a  dis- 
tillery company  promised  persons  who  purchased  from  its 
distributing  agents  that  if  for  the  ensuing  six  months  they 
would  purchase  their  distillery  products  exclusively  from 
Buch  agents  and  would  not  resell  the  same  at  prices  less  than 
those  fixed  by  the  company,  then,  on  being  furnished  with  a 
certificate  of  compliance  therewith,  it  would  pay  a  certain 
rebate  on  the  amount  of  such  purchases,  did  not  constitute  a 
contract  in  restraint  of  trade,  within  the  meaning  of  section 
1  of  said  act,  since  the  purchaser  was  not  in  any  way  bound 
to  the  performance  of  the  conditions  named;  nor  did  such 
arrangement  operate  to  "  monopolize,"  or  "  as  an  attempt  to 
monopolize,"  trade  and  commerce,  within  the  meaning  of 
section  2  of  said  act.    fn  re  Ore^me,  52  F.,  104.  1 — 56 

16JI.  Same — ^No  Offense  even  after  Compliance  with  the  Conditions. — 
Nor  was  there  any  offense  under  the  statute,  even  after  the 
purchaser  complied  with  the  conditions  of  the  promise,  and 
thereby  became  entitled  to  the  rebate,  for  such  compliance 
had  no  retroactive  effect  to  create  a  valid  contract  between 
the  parties  prior  thereto.  /ft. 

163.  Same. — Even  if  the  promise  could  be  considered  as  a  binding 

contract  between  the  parties,  the  restraint  thereby  imposed 
was  only  partial  and  reasonable  in  the  protection  of  de- 
fendant's business,  and  was  not  of  the  general  character 
necessary  to  constitute  an  unlawful  contract  In  restraint  of 
trade.  Mogul  8.  8.  Co.  v.  McGregor  [1892],  App.  Cas.,  pt.  1, 
p.  25,  approved.  76. 

164.  A  mannfacturer,  a  corporation,  and  its  employee  restricted  the 

tales  of  its  products  to  those  who  refrained  from  dealing  in 


INDEX — ^DIGEST. 


1093 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,   ETC.— Cont'd. 

III.  Not  Prohibited — Continued. 

the  commodities  of  its  competitors  by  fixing  the  prices  of  its 
goods  to  those  who  did  not  thus  refrain  so  high  that  their 
purchase  was  unprofitable,  while  it  reduced  the  prices  to 
those  who  declined  to  deal  in  the  wares  of  its  competitors  so 
that  the  purchase  of  the  goods  was  profitable  to  them.  The 
plaintifl!  applied  to  purchase,  but  refused  to  refrain  from 
handling  the  goods  of  the  corporation's  competitors,  and  sued 
it  for  damages  caused  by  the  refusal  of  the  defendants  to 
sell  their  commodities  to  him  at  prices  which  would  make  it 
profitable  for  him  to  buy  them  and  sell  them  again.  Held. 
The  restriction  of  their  own  trade  by  the  defendants  to 
those  purchasers  who  declined  to  deal  in  the  goods  of  their 
competitors  was  not  violative  of  the  Anti-Trnst  Act.  Whit- 
well  V.  Continental  Tobacco  Co.,  125  F.,  454.  2 — ^271 

165.  Sales.— The  owner  of  goods  may  dictate  the  prices  at  which  he 

will  sell  them,  and  the  damages  which  are  caused  to  au 
applicant  to  buy  by  the  refusal  of  the  owner  to  sell  to  him 
at  prices  which  will  enable  him  to  resell  them  at  a  profit 
constitute  no  legal  injury,  and  are  not  actionable,  because 
they  are  not  the  result  of  any  breach  of  duty  or  of  contract 
by  the  owner.  /[,. 

166.  Contracts  Restricting  Territory  within  Which  Purchasers  may 

Sell. — A  contract  of  sale  by  a  manufacturer  to  jobbers  of 
some  of  its  product,  to  be  shipped  across  State  lines  to  the 
latter,  whereby  the  parties  agree  that  the  purchasers  shall 
not  sell,  ship,  or  allow  any  of  the  product  thus  purchased  to 
be  shipped  outside  of  a  certain  State,  is  not  in  restraint  of 
trade  or  illegal  under  the  act  of  July  2,  1890.  Phillips  x. 
lola  Portland  Ceinent  Co.,  125  F.,  593.  Si— 284 

4.  Live-stock  associations  and  cmnmission  merchants. 

167.  A  combination  of  commission  merchants  at  stock  yards,  by 

which  they  refuse  to  do  business  with  those  who  are  not 
members  of  their  association,  even  if  it  is  illegal,  is  not  sub- 
ject to  the  act  of  Cougi-ess  of  July  2,  1890,  to  protect  trade 
and  commerce,  since  their  business  is  not  interstate  com- 
merce. Hopkins  v.  U.  S.,  171  U.  S.,  578.  1—941 
Reversing  82  F.,  529  (1—725). 

168.  Same. — In  order  to  come  within  the  provisions  of  the  statute, 

the  direct  effect  of  an  agreement  or  combination  must  be  in 
restraint  of  trade  or  commerce  among  the  several  States  or 
with  foreign  nations.  ,  /j,. 

169.  Same.— A   by-law   of   the   Kansas   City   Live- Stock    Exchange. 

which  regulates  the  commissions  to  be  charged  by  meml>ers 
of  that  association  for  selling  live  stock  is  not  in  restraint 
of  interstate  commerce  or  a  violation  of  the  act  of  July  2. 
1890,  to  protect  conunerce  from  unlawful  restraints.  /ft. 


1094 


INDEX — ^DIGEST, 


COMBINATIOirS,    COHSPIIIACIES,    CONTRACTS,   ETC.-ContU 

•III.,  Not  Prohibited— Continuetl. 

170.  Same.— A  commission  apent  who  sells  cattle  at  their  place  of 

defttlnation,  which  are  sent  from  another  State  to  be  sold.  Is 
not  engaged  in  interstate  commerce;  nor  is  bis  agreement 
with  others  in  the  same  bnsiness,  as  to  the  commissions  to 
be  charged  for  such  sales,  void  as  a  contract  in  restraint  of 
that  commerce.  1ft. 

171.  Same.— The  bnsiness  of  agents  in  soliciting  consignments  of 

eattle  to  commission  merchants  in  another  State  for  sale  Is 
not  interstate  commerce;  and  a  by-law  of  a  stock  exchange 
restricting  the  number  of  solicitors  to  three  does  not  re- 
strain that  commerce  or  violate  the  act  of  Congress.  76. 

178.  LlTe-Stock  Exchange— -Agreement  not  to  do  Bnsiness  with 
Other  Yard  Traders  who  are  not  Members  of  the  Exchange. — 
An  agreement  among  persons  engaged  in  the  common  busi- 
ness, as  yard  trader,  of  buying  at  a  city  stock  yard  cattle 
which  came  from  different  States,  that  they  will  form  an 
association  for  the  better  conduct  of  their  business,  and  that 
they  will  not  transact  business  with  other  yard  traders  who 
are  not  members,  or  buy  cattle  from  those  who  also  sell  to 
yard  traders  who  are  not  members  of  the  association,  is  not 
in  violation  of  the  act  of  July  2,  1890,  to  protect  trade  and 
commerce  against  unlawful  restraints  and  monopolies. 
Anderson  v.  U,  8.,  171  U.  S.,  604.  1—967 

178.  Same. — A  rule  of  a  live-stock  exchange  that  its  members  shall 
not  recognize  any  yard  trader  who  is  not  also  a  member  of 
the  exchange  is  not  in  restraint  of,  or  an  attempt  to  mo- 
nopolize, trade,  where  the  exchange  does  not  itself  do  any 
business,  and  there  is  nothing  to  prevent  all  yard  traders 
from  being  uieml)er8  of  the  exchange  and  no  one  is  hindered 
from  having  access  to  tlie  yards  or  having  all  their  facilities, 
except  that  of  selling  to  meuil>ers  of  the  exchange.  Ih, 

174.  Same. — Rules  to  enforce  the  purpose  and  object  of  such  ex- 

change, if  reasonable  and  fair,  can  not.  except  remotely, 
affect  interstate  trade  and  commerce,  and  are  not  void  as 
violations  of  the  act  of  July  2.  1890.  /ft. 

175.  Same. — ^In  order  to  come  within  the  provisions  of  the  statute 

the  direct  effect  of  an  agreement  or  combination  must  be  in 
restraint  of  that  trade  or  commerce  which  is  among  the 
several  States  or  with  foreign  nationa  /ft. 

176.  Same. — Where  the  subject-matter  of  the  agreement  does  not 

directly  relate  to  and  act  upon  and  embrace  interstate  com- 
merce, and  where  the  undisputetl  fact.^  clearly  show  that  the 
pnn^^se  of  the  agreement  was  not  to  regulate.  ol)struct,  or 
restrain  that  conniien^.  but  that  it  was  entered  into  with  the 
object  of  proiierly  and  fairly  regulating  the  transaction  of 
the  business  in  which  the  parties  to  the  agreement  were  en- 
gaged, such  agreement  will  be  upheld  as  not  within  the 


INDEX — ^DIGEST. 


1095 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont'd. 

III.  Not  Prohibited — Continued, 
statute,  where  it  can  be  seen  that  the  character  and  terms 
of  the  agreement  are  well  calculated  to  attain  the  purpose 
for  which  it  was  formed,  and  where  the  effect  of  its  forma- 
tion and  enforcement  uix)n  interstate  trade  or  commerce  is 
in  any  event  but  indirect  and  incidental,  and  not  its  purix)se 
or  object.  /ft. 

5.  Stock  exchanges — Cotifraet  for  distribution  of  quotations. 

177.  A  contract  between  a  board  of  trade,  having  a  property  right 

in  the  quotations  made  on  its  exchange,  and  a  telegraph  com- 
pany relating  to  the  transmission  and  distribution  of  such 
quotations  by  the  latter  is  not  in  violation  of  the  Anti-Trust 
Act  of  1890  (26  Stat,  209),  as  in  restraint  of  trade  and  com- 
merce, because  of  a  provision  that  the  quotations  shall  only 
be  furnished  to  persons  who  sign  an  agreement  to  the  effect 
that  they  shall  not  be  used  in  the  conduct  of  a  bucket  shop. 
Board  of  Trade  v.  Christie  Grain  &  Stock  Co.,  121  F.,  608. 

2—333 

178.  Contracts  under  which  the  Chicago  Board  of  Trade  furnishes 

telegraph  companies  with  its  quotations,  which  it  could  re- 
frain from  communicating  at  all,  on  condition  that  they  will 
only  be  distributed  to  persons  in  contractual  relations  with, 
and  approved  by,  the  board,  and  not  to  what  are  known  as 
bucket  shops,  are  not  void  and  against  public  i)olicy  as  being 
in  restraint  of  trade  either  at  common  law  or  under  the 
Anti-Trust  Act  of  July  2,  1890.  Board  of  Trade  v.  Christie 
Grain  and  Stock  Co.,  198  U.  S.,  236.  2—717 

179.  Same — Property  Right  in  Quotations — Entitled  to  Protection. — 

In  a  suit  brought  by  the  Chicago  Board  of  Trade  to  restrain 
parties  from  using  the  quotations  obtained  and  used  without 
authority  of  the  board,  defendants  contended  that  as  the 
board  of  trade  permitted,  and  the  quotations  related  to, 
transactions  for  the  pretended  buying  of  grain  without  any 
intention  of  actually  receiving,  delivering,  or  paying  for  the 
same,  that  the  board  violated  the  Illinois  bucket-shop  statute 
and  there  were  no  property  rights  in  the  quotations  which 
the  court  could  protect,  and  that  the  giving  out  of  the  quota- 
tions to  certain  persons  makes  them  free  to  all.  Held.  That 
even  if  .such  pretended  buying  and  selling  is  permitted  by 
the  board  of  trade  it  is  entitled  to  have  its  collection  of  quo- 
tations protected  by  the  law  and  to  keep  the  work  which  it 
lias  done  to  itself,  nor  does  it  lose  its  property  rights  in  the 
quotations  l»y  conniiunicating  them  to  certain  persons,  even 
tliough  many,  in  confidential  and  contractual  relations  to 
itself,  and  strangers  to  the  trust  may  be  restrained  from  ob- 
taining and  using  tlie  (juotations  by  inoludinsr  a  In-each  of 
tlie  trust.  /5, 


1096 


INDEX — DIGEST. 


COMBINATIONS,   CONSPIBACIES,   GONTBACTS,   ETC.— Confd. 

III.  Not  Prohibitei>— Continued. 

180.  Same— Entitled  ta  Protection  Though  it  Concerns  Illegal  Acts.— 
A  collection  of  information,  otherwise  entitled  to  protection, 
does  not  cease  to  be  so  because  it  concerns  illegal  acts,  and 
statistics  of  crime  are  property  to  the  same  extent  as  other 
statistics,  even  if  collected  by  a  criminal  who  furnishes  some 
of  the  data.  /^^ 

6.  Sloekholding  corporations — Minnesota. 

ISI.  Anti-Tmst  Law  of  Minnesota  Should  ReceiTe  Same  Construction 
at  Sherman  Anti-Trust  law. — ^The  anti-trust  law  of  Minne- 
sota (Laws  1899,  p.  487,  ch.  359),  making  unlawful  any  con- 
tract or  combination  in  restraint  of  trade  or  commerce  within 
the  State,  is  in  substantially  the  same  language  as  the  Anti- 
Trust  Act  of  July  2,  1890  (26  Stat.,  209),  and  must  receive 
a  similar  construction.  Minnesota  v.  Northern  Securities 
Co.,  123  F.,  692.  2—246 

Reversed,  194  U.  S.,  38.    Circuit  Court  had  no  jurisdiction 
(»— 533). 

188.  Same — Stockholding  Corporation. — A  bolding  corix)ration  or- 
ganized by  individual  stockholders  of  two  railroad  companies 
owning  and  operating  substantially  parallel  and  competing 
lines  of  railroad  within  the  State  of  Minnesota,  for  the  sole 
purpose  of  acquiring,  by  the  exchange  of  its  own  stock  there- 
for, stock  of  the  two  companies,  and  holding  and  voting  the 
same,  but  having  no  power  or  franchise  to  operate  a  rail- 
road, is  not  in  violation  of  the  Minnesota  anti-trust  law 
(Laws  1899,  p.  487,  ch.  359),  which  provides  that  "  any  con- 
tract, agreement,  arrangement,  or  conspiracy,  or  any  com- 
bination in  the  form  of  a  trust  or  otherwise  ♦  ♦  ♦  which 
Is  In  restraint  of  trade  or  commerce  within  this  State 
•  *  ♦  Is  hereby  prohibited  and  declared  to  be  unlawful," 
where  the  purpose  of  its  promoters  was  thereby  to  acqdire 
and  retain  in  the  same  hands  a  majority  of  the  stock  of  one 
or  both  companies,  to  insure  uniformity  of  policy  and  stabil- 
ity of  management,  although  it  in  fact  acquired  the  con- 
trolling interest  in  both,  in  the  absence  of  any  evidence  that 
It  ever  exercised  its  power  to  prevent  competition  between 
the  two  roads,  or  to  interfere  in  any  manner  with  the  fixing 
of  rates  by  either  company.  /j». 

7.  Patents — Combinations,  etc.,  to  keep  up  the  monopolies, 

18S.  Holding  Company.— Contracts  by  which  a  number  of  patents 
covering  similar  inventions  are  conveyed  by  the  several  own- 
ers to  one  of  the  parties,  which  grants  licenses  under  all  to 
the  others,  are  not  void  as  against  public  policy  or  as  In 


INDEX DIGEST. 


1097 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,   ETC.— Cont'd. 

III.  Not  Prohibited — Continued, 
violation  of  the  Sherman  Anti-Trust  Law,  because  of  pro- 
visions intended  to  protect  and  keep  up  the  patent  monop- 
oly by  requiring  the  licensor  to  prosecute  all  infringers, 
limiting  the  licenses  to  be  granted  to  such  licensees  as  shall 
be  agreed  on,  and  iuiix)sing  conditions  on  each  licensee  as  to 
the  use  and  ownership  of  the  patented  machines,  and  pro- 
hibiting him  from  using  any  others.  U.  S.  Consolidated 
.     Seeded  Raisin  Co.  v.  Oriffin  d  Skelley  Co.,  126  F.,  364.    2—288 

1S4.  Conditions  imposed  by  the  patentee  in  a  license  of  the  right  to 
manufacture  or  sell  the  patented  article,  which  keep  up  the 
monopoly  or  fix  prices,  do  not  violate  the  act  of  Congress  of 
July  2,  1890  (26  Stat.,  209),  to  protect  trade  and  commerce 
lagainst  unlawful  restraints  or  monopolies.  Bement  v. 
National  Harrotc  Co.,  186  U.  S.,  70.  2—170 

185..  Reasonable  and  legal  conditions  imposed  by  the  patentee  in  a 
license  of  the  right  to  manufacture  and  sell  the  patented 
article,  restricting  the  terms  upon  which  the  article  mauu- 
fact\ired  under  such  license  may  be  used  and  the  price  to  be 
demanded  therefor,  do  not  constitute  such  a  restraint  on 
commerce  as  is  forbidden  by  the  act  of  Congress  of  July  2, 
1890  (26  Stat,  209),  to  protect  trade  and  commerce  against 
unlawful  restraints  and  monopolies.  lb. 

186.  The  agreement  of  the  licensee  of  a  patent  for  improvements  re- 

lating to  float  spring-tooth  harrows  not  to  manufacture  or 
sell  any  other  such  harrows  than  those  which  it  had  made 
under  its  patents  before  assigning  them  to  the  licensor,  or 
which  it  was  licensed  to  manufacture  and  sell  under  the 
terms  of  the  license,  except  such  other  style  and  construction 
as  it  may  be  licensed  to  manufacture  and  sell  by  such 
licensor,  is  not  void  as  an  unlawful  restraint  on  trade  or 
commerce  forbidden  by  the  act  of  Congress  of  July  2,  1890 
(26  Stat,  209),  since  the  plain  purpose  of  this  provision  is 
to  prevent  the  licensee  from  infringing  on  the  rights  of 
others  under  other  patents,  and  not  to  stifie  competition  or 
prevent  the  licensee  from  attempting  to  make  any  improve- 
ment in  harrows.  .  /ft. 

187.  An  agreement  by  the  licensor  of  a  patent  for  impi-ovements  re- 

lating to  harrows  not  to  license  any  other  person  than  the 
licensee  to  manufacture  or  sell  any  harrow  of  the  peculiar 
style  and  construction  then  used  or  sold  by  such  licensee 
does  not  violate  the  act  of  Congress  of  July  2,  1890  (26 
Stat,  209),  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies.  /&. 

188.  The  very  object  of  these  laws  is  monopoly,  and  the  rule  is,  with 

few  exceptions,  that  any  conditions  which  are  not  in  their 
very  nature  illegal  with  regard  to  this  kind  of  property, 
imposed  by  the  patentee  and  agreed  to  by  the  licensee  for 


1098 


INDEX — DIGEST. 


COMBINATIONS,   CONSPIBACIES,   CONTRACTS,   ETC.— Confd. 

III.  Nw  PRCHiBiTEi*— rontinueil. 

the  right  to  manufacture  or  use  or  sell  the  article,  will  be 
upheld  by  the  courts.  The  fact  that  the  conditions  in  the 
contracts  keep  up  the  monopoly  or  fix  prices  does  not  render 
them  illegal.  Benient  v.  National  Harrow  Co.,  186  U.  S., 
70,  m.  2_189 

8ee  aim  Combinations,  etc.,  92-90. 

8,  Railroads — Rate» — Contracts,  etc.,  favoring  particular  roads  or 

individHals. 

189.  Combinations  to  Maintain  Bailroad  Bates,  but  not  Preventing 

or  Illegally  Limiting  Competition,  not  a  Violation  of  Section 
1  of  Statute. — ^An  agreement  between  several  comj)eting  rail- 
way companies  and  the  formation  of  an  association  there- 
under for  the  purpose  of  maintaining  just  and  reasonable 
rates,  preventing  unjust  discriminations  by  furnishing  ade- 
quate and  equal  facilities  for  the  interchange  of  traffic  be- 
tween the  several  lines,  without  preventing  or  illegally  limit- 
ing competition,  is  not  an  agreement,  combination,  or  con- 
spiracy in  restraint  of  trade  in  violation  of  the  act  of  July 
2,  1890.  section  1.  U.  S.  v.  Trms-Missouri  Freight  Asnn.,  5:3 
F.,  410.  1_^5;0 

Reversed,  166  U.  S.,  290  (1—648). 

190.  Same — Hot  a  Violation  of  Section  2  as  Tending  to  a  Monopoliza- 

tion, etc.^ — Nor  is  such  an  agreement  in  violation  of  section  2 
of  such  act  tending  to  the  monopolization  of  trade  and  com- 
merce. U>, 

191.  Same — Separate  Organizations,  etc. — ^Wherc  each  company,  i)y 

such  agreement  maintains  its  own  organization  as  before, 
elects  its  own  officers,  delegates  no  powers  to  the  association 
to  govern  in  any  respect  the  oi)erations  or  methods  of  trnns- 
acting  the  routine  business  of  the  several  comi>eting  lines, 
but  simply  requires  that  each  company  shall  charge  just  and 
reasonal>le  rates,  and  provides  for  certain  regulations  in  re- 
gard to  changes  in  such  rates,  such  contract  or  agreement 
is  not  forbidden  l)y  public  policy  as  amounting  to  a  transfer 
of  the  franchises  and  corporate  powers  of  such  companies. 

/6. 

192.  Same. — A    contract    Itetween    railroad    companies    f«>rmfng    a 

freight  association  that  they  will  establish  and  maintain 
such  rates,  rules,  and  regulations  on  freight  traffic  between 
competitive  points  as  a  committee  of  their  choosing  shall 
recommend  as  reasonable ;  that  these  rates,  rules,  and  regu- 
lations shall  be  public ;  that  there  shall  be  monthly  meetings 
of  the  association,  composed  of  one  rei)resentative  from  each 
railroad  company;  that  each  company  shall  give  five  days' 
notice  liefore  some  monthly  meeting  of  o\ery  reduction  of 


INDEX—DIGEST. 


1099 


COMBINATIONS,    CONSPIBACIES,    CONTRACTS,    ETC.— Cont'd. 

III.  Not  PROHiBiTED-U.'ontinued. 
rates  or  deviation  from  the  rules  it  proposes  to  make ;  that 
it  will  advise  with  the  representatives  of  the  other  members 
at  the  meeting  relative  to  the  proposed  modification,  will  sub- 
mit the  question  of  its  proposed  action  to  a  vote  at  that 
meeting,  and,  if  the  proposition  is  voted  down,  that  it  will 
then  give  ten  days'  notice  that  it  will  malie  the  modification 
notwithstanding  the  vote  before  it  puts  the  proposed  change 
into  effect;  that  no  member  will  falsely  bill  any  freight,  or 
bill  any  at  a  wrong  classification ;  and  that  any  meml)er  may 
withdraw  from  the  association  on  a  notice  of  thirty  days, 
appears  to  be  a  contract  tending  to  make  competition  fair 
and  open,  and  to  induce  steadiness  of  rates,  and  is  in  accord 
with  the  policy  of  the  Interstate  Commerce  Act.  Such  agree- 
ment can  not  be  adjudged  to  be  a  contract  or  conspiracy  in 
restraint  of  trade  under  the  Anti-Trust  Act  when  it  is  ad- 
mitted that  the  rates  maintained  under  the  same  have  been 
reasonable  and  that  the  tendency  has  been  to  diminish 
rather  than  to  enhance  rates,  and  there  is  no  other  evidence 
of  its  consequences  or  effect.  Shiras,  district  judge,  dissent- 
ing. 53  Fed.  Kep.,  440,  affirmed.  lj\  S.  v.  Trans-Mo.  Ft. 
Assn.,  58  F.,  58.  l — 186 

Reversed,  16G  U.  S.,  290  (1—648). 

193.  Same. — No  monoi>oly  of  trade  or  attempt  to  monopolize  trade 

within  the  meaning  of  the  Anti-Trust  Act  is  proved  by  such 
a  contract.  /ft. 

194.  Same. — ^The  railroad  companies  who  are  parties  to  such  a  con- 

tract do  not  thereby  substantially  disable  themselves  from 
the  discharge  of  their  public  duties.  rb. 

195.  A  contract  by  which  a  railroad  company  arranges  with  another, 

to  the  exclusion  of  still  others,  for  the  interchange  of  pas- 
sengers and  freight  by  through  tickets  and  bills  of  lading 
is  not  a  contract  in  unlawful  restraint  of  trade,  within  the 
meaning  of  the  act  of  July  2,  1890.  Prescott  &  A.  C.  R.  Co. 
Y.  Atchison,  T.  <t  8.  F.  R.  Co.,  73  F.,  438.  1—604 

196.  Contract  Between  Railroad  Company  and  Individual  Giving  to 

Latter  Exclusive  Control  of  Shipment  of  Milk  Over  its  Lines, 
Including  the  Fixing  of  Rates. — Defendant  railroad  company 
entered  into  a  contract  with  plaintiff  for  a  term  of  years  to 
build  up,  develop,  and  conduct  the  business  of  the  transpor- 
tation of  milk  on  its  lines  of  road.  Plaintiff  was  to  have 
full  charge  of  such  business  and  was  to  receive  as  compensa- 
tion a  percentage  of  tlie  freights  earned  therein.  It  was 
provided  that  he  should  charge  rates  not  in  excess  of  those 
charged  by  competitive  roads,  and  should  be  granted  the  ex- 
clusive privilege  of  transix)rting  milk  over  defendant's  lines 
"so  far  as  it  was  permitted  to  do  so  by  law."  In  the  exe- 
cution of  tlie  contract  all  rates  were  made  I>y  defendant,  and 


1100 


INDEX — ^BIOBST. 


COMBINATIONS,   CONSPIBACIES,   CONTRACTS,  ETC.— CJonfd. 

III.  Not  Prohibited— Continue<l. 
plaintiff  was  not  given  a  monopoly  of  the  milk  traffic.  fleW, 
That  such  contract  was  not  ultra  vires  nor  void  as  contrary 
to  public  policy,  especially  as  practically  construed  by  the 
parties  In  its  execution ;  nor  was  it  in  yiolation  of  the  Anti- 
Tmst  Act  of  July  2,  1890  (26  Stat,  209).  Delaware,  L.  d 
W.  R.  Co.  V.  Kutter,  147  F.,  51.  2—1022 

197.  Contracts  or  combinations  between  railroad  companies  which  do 

not  directly  and  necessarily  affect  transportation  or  rates 
therefor  are  not  in  restraint  of  trade  or  commerce,  nor  within 
the  Minnesota  anti-tnist  law  of  1899,  which  is  in  substan- 
tially the  same  language  as  the  Sherman  Anti-Trust  I^aw  of 
1890,  even  though  they  may  remotely  and  indirectly  appear 
to  have  some  probable  effect  in  that  direction.  Minnesota  v. 
Northern  Securities  Co.,  123  F.,  692.  2—246 

198.  Joint  Traffic  Associations — ^Proportionate  Bates  and  Division  of 

Traffic. — ^A  combination  of  railroad  companies  into  joint 
traffic  associations,  under  articles  of  agreement  by  which 
each  road  carries  the  freight  it  may  get  over  its  own  line,  at 
its  own  rates,  and  has  the  earnings  to  itself,  though  provid- 
ing proportional  rates  or  proportional  division  of  traffic,  is 
not  a  pooling  of  traffic  on  f i*eights  or  division  of  net  proceeds 
of  earnings,  within  the  prohibitions  of  the  Interstate  Com- 
merce Law,  nor  of  the  act  of  1890  (26  Stat,  209),  against 
unlawful  restraints  and  monopolies.  U.  fif.  v.  Joint  Traffic 
Assn.,  76  F.,  895.  1—615 

Reversed,  171  U.  S.,  505  (1—869). 

199.  Through  Transportation — ^Prepayment  of  Freight. — A  common 

carrier  engaged  in  Interstate  commerce  may  at  common  law 
and  under  the  Interstate  Commerce  Law  demand  prepayment 
of  freight  charges,  when  delivered  to  it  by  one  connecting 
carrier,  without  exacting  such  prepayment  when  delivered 
by  another  connecting  carrier,  and  may  advance  freight 
charges  to  one  connecting  carrier  without  advancing  such 
charges  to  another  connecting  carrier.  Oulf,  C.  d  8.  F.  Rp. 
Co.  V.  Miami  S.  8.  Co.,  86  F.,  407.  1—823 

800.  Same — Joint  Rates  and  Billing. — Such  carrier  may  enter  into  a 

contract  with  one  connecting  carrier  for  through  transporta- 
tion, through  joint  traffic,  through  billing,  and  for  the  divi- 
sion of  through  rates,  without  being  obligated  to  enter  Into 
a  similar  contract  with  another  connecting  carrier.  /&. 

801.  Same—Bemedy  not  by  Injunction,  but  by  Suit  for  Damages. — 

The  remedy  of  a  party  injured  by  such  an  agreement  Is 
not  by  bill  of  injunction,  but  by  a  suit  for  threefold  damages 
under  the  act  of  1890,  the  only  party  entitled  to  maintain  a 
bill  of  injunction  under  that  act  being  the  Government  of 
the  United  States.  |ft. 

See  also  Carbtebs. 


INDEX — DIGEST. 


1101 


COMBINATIONS,    CONSPIRACIES,   CONTRACTS,   ETC.— Cont'd. 

III.  Not  Prohibited— Continued. 
9.  Comhinatiofis,  etc.,  operating  within  a  State. 

908.  A  combination  or  trust  between  the  owners  of  tugs  operating 
entirely  within  the  confines  of  a  State  is  not  a  combination 
in  restraint  of  trade  or  commerce  among  the  several  States 
or  with  foreign  nations,  so  as  to  come  within  the  condemna- 
tion of  the  statutes  of  the  United  States,  although  most  of 
the  owners  held  coasting  licenses.  The  Charles  E.  Wiswall, 
86  F.,  671.  i_85o 

208.  A  contract  for  the  purchase  of  certain  river  craft  to  run  be- 
tween certain  points  in  the  same  State,  where  the  vessels 
necessarily  pass  over  the  soil  of  adjoining  States,  which 
provides  for  the  maintenance  of  existing  traffic  rates,  and  the 
vendors  agree  to  withdraw  from  competition  for  five  years, 
is  not  a  contract  in  restraint  of  interstate  trade  under  the 
Anti-Trust  Act  of  July  2,  1890  (26  Stat.,  209),  and  the  pur- 
chaser is  not  relieved  from  his  obligation  to  pay  the  pur- 
chase price.  Cincinnati,  etc.,  Packet  Co.  v.  Bay,  200  U.  S., 
179.  2—867 

104.  Same. — A  contract  is  not  to  be  assumed  to  contemplate  unlawful 
results  unless  a  fair  construction  requires  it.  /6. 

i05.  Same. — Even  if  there  is  some  interference  with  interstate  com- 
merce, a  contract  is  not  necessarily  void  under  the  Sherman 
Act  if  such  interference  is  insignificant  and  merely  inci- 
dental and  not  the  dominant  purpose;  the  contract  will  be 
construed  as  a  domestic  contract  and  its  validity  determiued 
by  the  local  law.  See  V.  S.  v.  Trans-Mo.  Ft.  Assn.,  166,  U.  S., 
290,  329;  U.  8.  v.  Joint  Traffic  Assn.,  171  U.  S.,  505,  568;  and 
Bemeni  v.  National  Harrow  Co.,  186  U.  S.,  70,  92.  /6. 

•W.  Same. — A  contract  for  sale  of  vessels,  even  if  they  are  engaged 

in  interstate  commerce,  is  not  necessarily  void  because  the 

vendors  agree,  as  is  ordinary  in  case  of  sale  of  a  business 

and  its  good  will,  to  withdraw  from  business  for  a  specified 

*     period.  /j, 

•07.  The  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209),  does  not 
apply  to  a  contract  or  combination  relating  to  the  business 
of  manufacturing  within  a  State.  Robinson  v.  Suburban 
Brick  Co.,  127  F.,  804.  2—312 

I.  Agreements  not  to  Engage  in  Business — Contracts  in  Partial  Re- 
straint of  Trade. — ^A  covenant  in  a  contract  by  which  the 
owners  of  brickmaking  plants  conveyed  them  to  a  corpora- 
tion in  exchange  for  its  stock,  binding  the  sellers  not  to  en- 
gage in  competing  business  within  a  radius  of  50  miles  from 
the  place  of  business  of  the  corporation  for  a  term  of  ten 
years,  is  valid,  and  may  be  enforced  in  a  court  of  equity  by 
a  suit  to  enjoin  its  violation.  7^. 

I.  A  combination  to  restrain  competition  in  proposals  for  con- 
tracts for  the  sale  of  certain  articles  which  are  to  be  de- 


1102 


jNDEX — DIGEST. 


COMBINATIONS,    CONSPIRACIES,   CONTRACTS,    ETC.— Cont'd. 

111.  Not  Prohibited — Continued. 
livered  in  the  State  in  wMch  some  of  the  parties  to  the  com- 
bination reside  and  carry  on  business  is  not,  so  far  as  those 
members  are  concerned,  in  violation  of  the  Anti-Trust  Law 
of  Congress,  althongh  the  contract  may  be  awarded  to  some 
party  outside  the  State  as  the  lowest  bidder.  Addyston  Pipe 
md  Steel  Co.  v.  U.  8.,  175  IT.  S.,  211.  1—1009 

210.  Same — Jurisdiction  of  Congress. — Although  the  jurisdiction  of 

Congress  over  commerce  among  the  States  is  full  and  com- 
plete, it  is  not  questioned  that  it  has  none  over  that  which  Is 
wholly  within  a  State,  and  therefore  none  over  combinations 
or  agreements  so  far  as  they  relate  to  a  resti*aint  of  such 
trade  or  commerce ;  nor  does  it  acquire  any  jurisdiction  over 
that  part  of  a  combinatitm  or  agreement  which  relates  to 
commerce  wholly  within  a  State  by  reason  of  the  fact  that 
the  combination  also  covers  and  regulates  commerce  which  is 
interstate.  /&• 

211.  An  association  of  manufacturers  of  shingles  within  a  particular 

State,  formed  for  the  puiTX)se  of  securing  concerted  action 
between  its  members  to  prevent  oveiproduction  and  establish 
uniform  prices  and  grading,  is  not  an  illegal  combination  in 
restraint  of  interstate  or  foreign  connnerce,  within  the  mean- 
ing of  the  Anti-Trust  Law  of  1800,  or  subject  to  Federal  con- 
trol ;  and  the  fact  that  through  the  action  of  the  association 
the  mills  of  its  members  were  closed  for  a  certain  time,  and 
the  price  of  shingles  was  raised,  but  not  to  an  extent  alleged 
to  he  unreasonable  or  exorbitant,  does  not  give  a  dealer  in 
shingles  for  export  a  right  of  action  against  it  or  its  members 
tinder  such  law.    CHhhs  v.  Mclfeeley,  102  F.,  504.  2—25 

212.  A  combination  controlling  not  only  the  manufacture  of  an  arti- 

cle in  the  State,  but  also  the  sale  of  the  manufactured  article, 
ts  not  one  in  restraint  of  interstate  commerce,  so  as  to  give 
a  right  of  action  against  it,  under  the  Anti-Trust  Law  of  July 
2,  1890,  to  one  injured  by  a  resolution  passed  and  circutated 
by  it  denouncing  him  for  cutting  prices-,  its  sales  being  within 
the  State,  and  any  transportation  and  sale  of  the  article  in 
other  States  being  by  other  agen<  ies.  Gibbs  v.  McNeelep, 
107  F.,  210.  2—71 

Reversed  by  Circuit  Court  of  Appeals.  118  F.,  120  (2—194). 

10.  Lahw  eainbinatioihs. 

213.  Combination  Between  Local  Labor  Union  and  Labor  Organiza- 

tion Covering  Hany  States — Boycott  on  Goods  Sent  to  Other 
States. — ^The  action  of  the  meml>er8  of  a  labor  union  in  at- 
tempting to  compel  a  hat  manufacturer  to  unionize  his  fac- 
tory by^  leaving  his  employment  and  preventing  others  from 
taking  employment  therein,  and  also,  with  the  assistance  of 
the  members  of  affiliated  organizations,  by  declaring  a  boy- 
cott upon  his  goods  in  other  States  into  which  such  goods 


INDEX Dr(3EST. 


1103 


COMBIMAMONS,  CONSPIRACIES,  CONTRACTS,  ETC. -Cont'd. 

III.  Not  Prohibited— Continued. 
have  been  shipi>ed  for  sale  at  retail,  does  not  have  such  rela- 
tion to  interstate  commerce  as  to  constitute  a  combination  or 
conspiracy  in  restraint  of  such  commerce  in  violation  of  the 
Sherman  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209). 
Loctvc  V.  Lawlor,  148  F.,  924.  (Decision  not  in  print  when 
body  of  this  book  went  to  press.) 
See  also  Combinations,  etc.,  112-133. 

II.  Municipal  contracts— State  monopolies. 

214.  Contract  Limiting  Character  of  Material  to  be  Used  to  that 

Controlled  by  a  Single  Corporation.— Where  the  contract  for 
the  paving  of  a  street  with  asphalt  limited  the  kind  of  as- 
phalt to  be  used  to  Trinidad  asphalt,  such  fact,  and  the  fur- 
ther fact  that  such  asphalt  was  controlled  by  a  single  cor- 
poration was  not  violative  of  the  commerce  clause  of  the 
Constitution  or  of  the  Federal  anti-trust  statutes,  and  did  not 
affect  the  validity  of  the  contract.  Field  v.  Barber  Asphalt 
Pav.  Co.,  117  F.,  925.  2—193 

215.  Same.— The  specification  in  an  ordinance  by  a  municipal  council 

that  Trinidad  Lake  asphalt  shall  be  used  for  street  improve- 
ment, does  not  violate  the  commerce  clause  of  the  Federal 
Constitution  or  the  Sherman  Anti-Trust  Act  of  July  2,  1890 
(2f>  Stat.,  209),  notwithstanding  this  particular  kind  of  asphalt 
is  the  product  of  a  foreign  country  and  competitive  bidding 
was  thereby  rendered  impossible.  FieU  v.  Barber  Asphalt 
Paviiig  Co.,  194  U.  S.,  618.  2—555 

216.  Same.— The  necessity  for  an  improvement  of  streets  is  a  matter 

of  which  the  proper  municipal  authorities  are  the  exclusive 
judges  and  their  judgment  is  not  to  be  interfered  with  except 
in  cases  of  fraud  or  gi-oss  abuse  of  power.  /ft. 

217.  State  Monopoly  of  Liquor  Traffic— The  act  of  July  2,  1890  (26 

Stat,  209)  is  not  applicable  to  the  case  of  a  State  which,  by 
its  laws,  assumes  an  entire  monoix)ly  of  the  traffic  in  intoxi- 
cating liquors  (act  S.  C,  Jan.  2,  1895).  A  State  is  neither  a 
"  person  "  nor  a  "  corporation,"  within  the  meaning  of  the 
act  of  Congress.    Loicenstein  v.  Evans,  69  F.,  908.        1—598 

COHMEBCE.    See  Interstate  Commerce. 

COMMON  CARRIERS.    See  Caeriebs. 

COMMON  LAW. 

1.  Common-Law  Oflfenses— Definitions.— There  are  no  common-law 
offenses  against  the  United  States,  and  the  offenses  cogniza- 
ble in  the  Federal  courts  are  only  such  as  the  Federal  stat- 
utes define,  provide  a  punishment  for,  and  confer  jurisdic- 
tion to  try ;  but  when  Congress  adopts  or  creates  a  common- 
law  offense  the  courts  may  i)ioperly  look  to  the  common  law 
for  the  true  meaning  and  definition  thereof,  in  the  absence 
of  a  clear  definition  in  the  act  creating  it.  In  re  Greene 
52  F.,  104.  j_5^ 


1104 


INDEX — ^DIGEST. 


OOMMOir  LAW-Coiitiniied. 

8.  Common-Law  Offente  Adopted  liy  Congress — Presumption— In- 
terpretation.— Where  Congress  adopts  or  creates  a  common- 
law  offense,  and  in  doing  so  uses  tenns  wbich  have  acquired 
a  well-understood  meaning  by  judicial  Interpretation,  the 
presumption  is  that  the  terms  were  used  in  that  sense,  and 
courts  may  properly  look  to  prior  decisions  interpreting  them 
for  the  meaning  of  the  terms  and  the  definition  of  the 
ofltense  where  there  is  no  other  diflnition  in  the  act.  U.  8.  v. 
Tram-Mo,  Ft  Assn,,  58  F..  58.  1—186 

Case  reversed,  ICS  V.  S.,  290  (1— (J48). 

8.  Common-Law  Bnle.— The  ground  on  which  certain  classes  of 
contracts  and  combinations  in  restraint  of  trade  were  held 
illegal  at  common  law  was  that  they  were  against  public 
policy.  I^' 

4.  Public  Policy— How  Determined.— The  public  policy  of  the  na- 
tion must  he  determined  from  its  Constitution,  laws,  and 
judicial  decisions.  /&• 

«.  Railroad  Companies— Arrangements  for  Through  Billing.— There 
is  no  principle  of  common  law  which  forbids  a  single  railroad 
corporation,  or  two  or  more  of  such  corporations,  from  select- 
ing, from  two  or  more  other  corporations,  one  which  they  will 
employ  as  the  agency  by  which  they  will  send  freight  beyond 
their  ow^n  lines,  on  through  bills  of  lading,  or  as  their  agent 
to  receive  freight,  and  transmit  it  on  through  bills  to  their 
own  lines,  and  without  breaking  bulk;  and  the  right  to 
make  sueh  selection  is  not  taken  away  by  the  Interstate 
Commerce  Law.  New  York  t§  N.  Ry.  Co,  v.  New  York  d  N.  E. 
R.  Co.,  50  F.,  867,  explained.  Preacott  d  A.  C,  R.  Co.  v. 
Atchism,  T.  d  8.  F.  R.  Co..  73  F.,  438.  1—604 

€.  Prepayment  of  Freight.- A  common  carrier  engaged  in  inter- 
state commerce  may  at  common  law,  and  under  the  Interstate 
Commerce  I^*iw,  demand  prepayment  of  freight  charges,when 
delivered  to  it  by  one  connecting  carrier,  without  exacting 
such  prepayment  when  delivered  by  another  connecting  car- 
rier, and  may  advance  freight  charges  to  one  connecting 
carrier  without  advancing  such  charges  to  another  connect- 
ing carrier.  Gulf,  C.  d  8.  F.  Rtf.  Co.  v.  Miami  8.  8.  Co., 
86  F.,  407.  1—823 

7.  Some.— The  rules  of  the  common  law  do  not  require  a  carrier 
to  receive  goods  for  carriage,  either  from  a  consignor  or  a 
connecting  carrier,  without  prepayment  of  its  charges  if 
demanded,  nor  to  advance  the  charges  of  a  connecting  car- 
rier from  which  it  receives  goods  in  the  course  of  transporta- 
tion; nor  can  it  be  required  to  extend  srch  credit  or  make 
such  advances  to  one  connecting  carrier  because  it  does  so 
to  another.  8outherfi  Ind.  Exp.  Co.  v.  V.  8.  Exp.  Co.,  8S  F.,. 
650.  1—862 


INDEX ^DIGEST. 


1105 


COMMON  LAW— Continued. 

8.  Contracts  in  Restraint  of  Trade — At  Common  Law. — Contracts 
that  were  in  unreasonable  restraint  of  trade  at  conmion  law 
were  not  unlawful  in  the  sense  of  being  criminal,  or  as 
giving  rise  to  an  action  for  damages  to  one  prejudicially 
affected  thereby,  but  were  simply  void,  and  not  enforceable. 
U.  8.  V.  Addyston  Pipe  and  Steel  Co.,  85  F.,  271.  1 — 772 

0.  Same. — No  contractual  restraint  of  trade  is  enforceable  at  com- 
mon law  unless  the  covenant  embodying  it  is  merely  ancil- 
lary to  some  lawful  contract  (involving  some  such  relations 
as  vendor  and  vendee,  partnership,  employer  and  employee), 
and  necessary  to  protect  the  covenantee  in  the  enjoyment  of 
the  legitimate  fniits  of  the  contract,  or  to  protect  him  from 
the  dangers  of  an  unjust  use  of  those  fruits  by  the  other 
party.  The  main  purpose  of  the  contract  suggests  the 
measure  of  protection  needed,  and  furnishes  a  sufficiently 
uniform  standard  for  determining  the  reasonableness  and 
validity  of  the  restraints.  But  where  the  sole  object  of  both 
parties  in  making  the  contract  is  merely  to  restrain  competi- 
tion, and  enhance  and  maintain  prices,  the  contract  is  void. 

/>. 

See  also  Continental  Wall  Paper  Co.  v.  Lewis  Voighi   & 
Sons  Co.,  148  F.,  939. 

10.  The  illegality,  at  common  law,   of  a  combination  formed  by 

corporations  and  persons  in  restraint  of  trade,  does  not  pre- 
clude it  from  recovering  the  purchase  price  of  goods  sold  in 
the  course  of  business.  Connolly  v.  Union  Sewer  Pipe  Co., 
184  U.  S.,  540.  2—118 

11.  Kote  to  Trust — Avoidance. — A  note  made  for  a  balance  due  on 

goods  bought  from  a  corporation  can  not  be  avoided  merely 
because  the  latter  is  a  trust  organized  to  create  and  carry 
out  restrictions  in  trade  contrary  to  the  common  law.  Union 
Sever  Pipe  Co.,  99  F.,  .354.  2—1 

Affirmed,  184  U.  S.,  540  (2—118). 

COMPETITION.    See  Statutes,  22,  23,  31. 

CONGRESS. 

1.  Debates  in  Congress  are  not  appropriate  sources  of  information, 
from  which  to  discover  the  meaning  of  the  language  of  a 
statute  passed  by  that  body.  17.  8.  v.  Trans  Mo.  Ft.  Assn., 
166  U.  S.,  290.  1—648 

a.  Power  to  Prohibit  Combinations  to  Establish  and  Maintain 
Bailroad  Rates. — Congress  has  the  power  to  prohibit,  as  in 
restraint  of  interstate  commerce,  a  contract  or  combination 
between  competing  railroad  companies  to  establish  and  main- 
tain interstate  rates  and  fares  for  the  transportation  of 
freight  and  passengers  on  any  of  the  railroads  parties  to  the 

11808— VOL  1—06  M 70 


1106 


INDEX — ^DIGEST. 


CONGBESS— Cuntinuei!. 

contract  or  combimitlou,  even  thougrh  the  rates  and  fares 
thn»  established  are  reasonable.  U.  S.  v.  Joint  Traffic  Assn., 
Ill  U.  S.,  505.  1—869 

5.  Same — Combinations  by  Means  of  Which  Competition  is  Pre- 

Tented. — Congress  has  the  iwwer  to  forbid  any  agreement  or 
combination  among  or  between  competing  railroad  companies 
for  interstate  commerce,  by  means  of  which  competition  was 
prevented.  lb, 

4.  The  Anti-Tmst  Law  is  a  legitimate  exercise  of  the  power  of 

Congress  over  interstate  commerce,  and  a  valid  regulation 
thereof.  /ft. 

i.  Power  to  Legislate  Upon  the  Subject  of  Private  Contracts  in 
Respect  to  Interstate  Commerce. — The  power  of  Congress  to 
regulate  intei*state  or  foreign  commerce  includes  the  power 
to  legislate  mwn  the  subject  of  private  contracts  in  respect 
to  such  commerce.  AiWuslon  Pipe  d  Steel  Co.  v.  United 
States,  175  U.  S.,  211.  1—1009 

6.  Same. — Congress  may  enact  such  legislation  as  shall  declare 

Yoid  and  prohibit  the  performance  of  any  contract  between 
individuals  or  corporations  where  the  natural  and  direct 
effect  of  such  a  contract  shall  be,  when  carried  out,  to 
directly  aud  not  as  a  mere  incident  to  other  and  innocent 
purposes,  regulate  to  any  substantial  extent  interstate  or 
foreign  commerce.  1ft. 

7.  Same. — The  power  of  Congress  to  regulate  interstate  commerce 

comprises  the  right  to  enact  a  law  prohibiting  the  citizen 
from  entering  Into  those  private  contracts  which  directly 
and  substantially,  and  not  merely  indirectly,  remotely,  In- 
cidentally, and  collaterally,  regulate,  to  a  greater  or  less 
degree,  connntn'ce  among  the  States.  /ft. 

5.  Same — ^No  Jurisdiction  Over  Commerce  Wholly  Within  a  State. — 

Although  the  jurisdiction  of  Congress  over  conuuerce  among 
the  States  is  full  and  ccjmplete,  it  is  not  questioned  that  It 
has  none  over  that  which  is  wholly  within  a  State,  and  there- 
fore none  over  combinations  or  agreements  so  far  as  they 
relate  to  a  restraint  of  such  trade  or  commerce;  nor  does  it 
acquire  any  jurisdiction  over  that  part  of  a  combination  or 
agreement  which  relates  to  commerce  wholly  within  a  State, 
by  reason  of  the  fact  that  the  combination  also  covers  and 
regulates  commerce  which  is  interstate.  /ft. 

9.  Congress  did  not  exceed  its  power  under  the  commerce  clause 
of  the  Federal  Constitution  in  enacting  the  Anti-Trust  Act 
of  July  2,  1890  (26  Stat,  209),  declaring  illegal  every  combi- 
nation or  conspiracy  in  restraint  of  interstate  commerce,  and 
forbidding  attempts  to  monopolize  such  commerce  or  any 
part  of  it,  although  such  statute  is  construed  to  embrace  a 
combination   of   stockholders   of   two    competing   interstate 


INDEX — DIGEST. 


1107 


CONGBESS— Continued. 

railway  companies  to  form  a  stock-holding  corporation  which 
should  acquire,  in  exchange  for  its  own  capital  stock,  a 
controlling  interest  in  the  capital  stock  of  each  of  such  rail- 
way companies.  Northern  Securities  Co.  v.  Umted  States, 
193  U.  S.,  197  (48  L.  ed.,  279).  2-^42 

10.  Had  Power  to  Enact  Anti-Trust  Law. — Under   its  powers  to 

regulate  commerce  among  the  several  States  and  with  for- 
eign nations  Congress  had  authority  to  enact  the  Anti-Trust 
Act  of  July  2,  1890.  Northern  Securities  Co.  v.  United  States, 
193  U.  S.,  197  (Harlan,  Brown,  McKenna,  Day).  2—340 

See  United  States  v.  E.  C.  Knight  Co.,  156  U.  S.,  1;  United 
States  y.  Trans-Missouri  Freight  Association,  166  U.  S.,  290; 
United  States  v.  Joint  Traffic  Assoeiatimi,  171  U.  S.,  505; 
Hopkins  v.  United  States,  171  U.  S.,  578;  Anderson  v.  United 
States,  171  U.  S.,  604;  Addyston  Pipe  <(•  Steet  Co.  v.  United 
States,  175  U.  S.,  211 ;  Montague  tl-  Co.  v.  Lowry,  193  U.  S., 
38. 

11.  The  constitutional  guarantee  of  liberty  of  contract  does  not 

prevent  Congress  from  prescribing  the  rule  of  free  competi- 
tion for  those  engaged  in  interstate  and  international  com- 
merce, jjf^ 

12.  Congress  may  protect  the  freedom  of  interstate  commerce  by 

any  means  that  are  appropriate  and  that  are  lawful  and  not 
prohibited  by  the  Constitution.  /ft. 

13.  If  in  the  judgment  of  Congress  the  public  convenience  or  the 

general  welfare  will  be  best  subserved  when  the  natural  laws 
of  competition  are  left  undisturbed  by  those  engaged  in 
interstate  commerce,  that  must  be,  for  all,  the  end  of  the 
matter,  if  this  is  to  remain  a  government  of  laws,  and  not 
of  men.  jj^ 

14.  When  Congress  declared  contracts,  combinations,  and  conspira- 

cies in  restraint  of  trade  or  commerce  to  be  illegal,  it  did 
nothing  more  than  apply  to  interstate  commerce  a  rule  that 
had  been  long  applied  by  the  several  States  when  dealing 
with  combinations  that  were  in  restraint  of  their  domestic 
conmierce.  jj 

15.  The  power  of  Congress  over  interstate  and  international  com- 

merce is  as  full  and  complete  as  is  the  power  of  any  State 
over  its  domestic  commerce,  subject,  of  course,  to  such 
restrictions  as  are  imposed  by  the  Constitution  upon  the 
exercise  of  all  power.  /j,^ 

16.  No  State  can,  by  merely  creating  a  corporation,  or  in  any  other 

mode,  project  its  authority  into  other  States,  so  as  to  prevent 
Congress  from  exerting  the  power  it  possesses  under  the 
Constitution  over  interstate  and  international  commerce,  or 
so  as  to  exempt  its  corporation  engaged  in  interstate  com- 
merce from  obedience  to  any  rule  lawfully  established  by 
Congress  for  such  commerce ;  nor  can  any  State  give  a  cor- 


1108 


INDEX — DIGEST. 


OON0BES8— Continued. 

poration  created  under  its  laws  authority  to  restrain  inter- 
state or  international  ccjmmerce  against  tlie  will  of  the 
nation  as  lawfully  expressed  by  Congi'ess.  Every  coriwra- 
tion  created  by  a  State  is  necessarily  subject  to  the  supreme 
law  of  the  land.  /&• 

17.  Whilst  every  instrumentality  of  domestic  commerce  is  subject 
,,  to  State  control,  every  Instrumentality  of  interstate  com- 
merce may  be  readied  and  controlled  by  national  authority, 
so  far  as  to  compel  It  to  resjject  the  rules  for  such  commerce 
lawfully  established  by  Congress.  1ft, 

18.  Congress  has  the  power  to  establish  rules  by  which  interstate 

and  international  commerce  shall  be  governed,  and  by  the 
ifiiti-Trust  Act  has  prescrilwHl  the  rule  of  free  comijetition 
among  those  engaged  in  such  cij!nmei<f.  lb. 

19.  Congress  may  Prohibit  Private  Contracts  which  Restrain  Inter- 

itate  Commerce. — Congress  maiy,  in  (he  exercise  of  the  power 
conferred  by  the  conunei-ee  clause  of  the  Constitution,  pro- 
hibit private  contracts  which  operate  to  directly  and  sub- 
stantially restrain  interstate  wmmerce.  V.  S.  v.  \orihern 
SecuritieH  Co.,  120  F.,  721.  2—210 

SO.  It  is  the  declared  policy  of  Congress,  which  accords  with  the 
principles  of  the  connnon  law,  to  promote  individual  competi- 
tion in  relation  to  interstate  commerce,  and  to  prevent  combi- 
nations which  restrain  such  comi>etition  l)etween  their  mem- 
iKsrs ;  and  it  is  no  defense  to  an  action  to  dissolve  sucli  a  com- 
bination as  illegal  under  the  Anti-Trust  Law  that  it  has  not 
in  fact  been  productive  of  injury  to  the  public,  or  even  that 
it  has  been  beneficial,  by  enabling  the  conil)ination  to  com- 
pete for  business  in  a  wider  field.  1 .  8.  v.  ('Iks  a  pea  he  d-  O. 
Fuel  Co.,  105  F.,  93.  2— iU 

Affirmed,  115  F..  610  (2—151). 

21.  Authority  over  State  Corporation. — Congress  has  no  authority, 
under  the  commerce  clause  or  any  other  provision  of  the 
Constitution,  to  limit  the  right  of  a  corporation  created  by 
a  State  in  the  acquisition,  control,  and  disposition  of  property 
in  the  several  States,  and  it  is  immaterial  that  such  property, 
«r  the  products  thereof,  may  become  the  subjects  of  inter- 
state commerce;  and  it  is  apparent  that  by  the  act  of  July 
2,  1890,  in  relation  to  monopolies,  Congress  did  not  intend  to 
declare  that  the  acquisition  by  a  State  corporation  of  so  large 
a  part  of  any  species  of  property  as  to  enable  the  owners  to 
control  the  traffic  therein  among  the  several  States  consti- 
tuted a  criminal  offense.    In  re  Greene,  52  F.,  104.        1 — 55 

2fl.  AVhile  Congress  may  not  have  general  visitatorial  power  over 
State  corporations,  its  powers  in  vindication  of  its  own  laws 
are  the  same  as  if  the  corporation  had  been  created  by  an 
act  of  Congress.    Hale  v.  Henkel,  201  U.  S..  43.  2—847 


INDEX — ^DIGEST. 


1109 


CONGRESS— Continued. 

23.  Franchises  of  a  corporation  chartered  by  a  State  are,  so  far  as 
they  involve  questions  of  interstate  commerce,  exercised  in 
subordination  to  the  power  of  Congress  to  regulate  such  com- 
merce, lb. 
See  also  Injunctions,  16. 

CONSENT  OF  PARTIES.     See  Courts,  14. 

CONSPIRACY. 

1.  A  conspiracy  consists  in  an  agreement  to  do  sonietliintr:  but  in 

the  sense  of  the  law,  and  therefore  in  the  sense  of  the  act 
ot  1890,  it  must  be  an  agreement  between  two  or  more  to  do, 
l)y  concerted  action,  something  criminal  or  milawful,  or,  it 
maj^  be,  to  do  something  lawful  by  criminal  or  unlawful 
means.  A  conspiracy,  tlierefore,  is  in  itself  unlawful,  and, 
in  so  far  as  this  statute  is  directed  against  conspiracies 
in  restraint  of  trade  among  the  several  States,  it  is  not 
necessary  to  loolv  for  tlie  illegality  of  the  offense  in  the  iiind 
of  restraint  proi>osed.  Any  proiK)sed  restraint  of  trade, 
.  tliongli  it  l)e  in  itself  innocent,  if  it  is  to  be  accomplished  by 
conspiracy,  is  unlawful.     I.  S.  v.  Debs,  04  F.,  724,  748. 

1— :^2 
See  also  I.  S.  v.  MiicAndrews  d-  Forbes  Co.,  149  F..  823,  831. 

2.  Conspiracy  to  Commit  Offenses  Against  the  United  States — Ee- 

vised  Statutes,  Section  5440. — The  statute  relating  to  conspir- 
acies to  commit  offenses  against  the  United  States  (Rev. 
Stat.,  sec.  .5440)  contains  tln-ee  elements,  which  are  neces- 
sary to  constitute  the  offense.  Tliese  are:  (1)  The  act  of 
two  Of  more  i)ei'sons  consiuring  together;  (2)  to  commit  any 
offense  against  the  United  States;  (3)  the  overt  act,  or  the 
element  of  one  or  more  of  such  parties  doing  any  act  to 
effect  the  oliject  of  the  conspiracy.  U.  S.  v.  C(if(sU1y,  67  F., 
098.  1—449 

3.  Same — Conspiracy  Defined. — A  conspiracy  is  a  combination  of 

two  or  more  persons  by  concerted  action  to  accomplish  a 
criminal  or  unlawful  puri)ose,  or  some  puri)ose  not  in  itself 
criminal,  by  criminal  or  unhnvful  means.  Peltibone  v. 
U.  S.,  148  U.  S.,  203,  cited.  lb. 

4.  Same — Manner  of  Conspiring. — The  common  design  is  the  es- 

sence <jf  the  charge ;  but  it  is  not  necessary  that  two  or  more 
persons  should  meet  together  and  enter  into  an  explicit  or 
fornuil  agreement  for  an  unlawful  scheme,  or  that  they 
should  directly,  by  words  or  in  writing,  state  what  the  un- 
lawful scheme  was  to  he,  and  the  details  of  the  plan  or  the 
means  by  which  the  unlawful  combination  was  to  ije  made 
effective.  It  is  sufficient  if  two  or  more  persons,  in  any  man- 
ner or  through  any  contrivance,  positively  or  tacitly,  come 
to  a  nnitual  understanding  to  accomplish  a  <-onnnon  and 
unlawful  design.  7^, 


INDEX—DIGEST, 


INDEX — DIGEST. 


1111 


CONSFIBACY-Coiitiiiued. 

i.  Same — Parties  to  Conspiracy. — Where  an  unlawful  end  is  sought 
to  he  effeiited,  and  two  or  wore  persons,  actuated  by  the  com- 
mon purpose  of  accomplishing  that  end,  work  together  in 
any  way  in  furtherance  of  the  unlawful  scheme,  every  one 
of  said  iiersons  becomes  a  member  of  the  conspiracy,  al- 
though the  part  any  one  was  to  take  therein  was  a  subordi- 
nate one,  or  was  to  be  executed  at  a  remote  distance  from 
the  other  conspirators.  lb. 

i.  Same.— Anyone  who,  after  a  conspiracy  is  formed,  and  who 
knows  of  its  existence,  joins  therein,  becomes  as  much  a 
party  thereto  from  that  time  as  if  he  had  originally  con- 
conspired.  U.  8,  y,  Bahcock,  Fed.  Cas.  No.  14487,  3  Dill., 
cited.  75, 

7.  Same — ^Evidence — Acts  of  One  Party. — Where  several  persons 

are  proved  to  have  combined  together  for  the  same  illegal 
puipose,  :iny  act  done  by  one  of  them,  in  pursuance  of  the 
original  concerted  plan,  and  with  reference  to  the  common 
object,  is,  in  the  centemplation  of  the  law,  the  act  of  the 
whole  party,  and  therefore  the  proof  of  such  act  will  be 
evidence  against  any  of  the  others  who  were  engaged  in 
the  conspiracy.  /ft. 

8.  Same — Declarations  by  Parties. — Any  declaration  made  by  one 

of  the  parties  during  the  pendency  of  the  illegal  enterprise, 
is  not  only  evidence  against  himself,  but  against  all  the  other 
wimpirators,  who,  when  the  combination  is  proved,  are  as 
much  responsible  for  such  declarations,  and  the  acts  to 
which  they  relate,  as  if  made  and  committed  by  themselves. 
This  rule  applies  to  the  declaration  of  a  co-conspirator, 
although  he  may  not  himself  lie  under  prosecution.  Ih, 

9.  Same — Conspiracy  as  Distinct  Olfense. — The  law  regards  the  act 

of  unlawful  combination  and  confederacy  as  dangerous  to 
the  i)ea<?e  of  society,  and  declares  that  such  combination  and 
confederacy  to  commit  crime  raiuires  an  additional  restraint 
to  those  provided  for  tlie  commission  of  the  crime  itself. 
It  therefore  makes  criminal  the  conspiracy  itself,  with  pen- 
alties and  punishments  distinct  from  those  it  attaches  to  the 
crime  which  may  l)e  the  oiiject  of  the  conspiracy.  Ih. 

10.  Same— Means  Contemplated— Allegations  and  Proofs.—It  is  not 

incumbent  nrM)n  the  prosecution  to  prove  that  all  the  means 
set  out  in  the  indictment  were  in  fact  agreed  uiion  to  carry 
out  the  consjjiracy,  or  that  any  of  them  were  actually  used 
or  put  in  operation.  It  is  sufficient  if  it  l>e  shown  that  one 
or  more  of  the  means  descriiied  in  tlie  indictment  were  to 
be  used  to  execute  that  purpose.  lb, 

11.  Same — Overt  Acts. — While  at  common  law  it  was  not  iie(  essary 

to  aver  or  prove  an  overt  act  in  furtherance  of  a  conspiracy, 
yet,  under  the  statute  relating  to  conspiracies  to  commit  an 
oflfense  against  the  United  States,  the  doing  of  some  act  in 


CONSPIRACtr— Continued. 

pursuance  of  the  conspiracy  is  made  an  ingredient  of  the 
crime,  and  must  be  established  as  a  necessary  element 
thereof,  although  the  act  may  not  be  in  itself  criminal. 
V.  S.  v.  Thompson,  31  F.,  331,  12  Sawy.,  155,  cited.  lb. 

12.  Same. — It  is  not  necessary,  however,  to  a  verdict  of  guilty,  that 
the  jury  should  find  that  each  and  every  one  of  the  overt 
acts  charged  in  the  indictment  was  in  fact  committed;  but  it 
is  sufficient  to  show  that  one  or  more  of  these  acts  was  com- 
mitted, and  that  it  was  done  in  furtherance  of  the  con- 
spiracy, lb. 

18.  A  combination  of  labor  organizations  whose  professed  object  is 
to  arrest  the  operation  of  the  railroads  whose  lines  extend 
from  a  gi-eat  city  into  adjoining  States  until  such  roads 
accede  to  certain  demands  made  upon  them,  whether  such 
demands  are  in  themselves  reasonable  or  unreasonable,  just 
or  unjust,  is  an  unlawful  conspiracy  in  restraint  of  trade  and 
commerce  among  the  States,  within  the  act  of  July  2,  1890, 
and  acts  threatened  in  pursuance  thereof  may  he  restrained 
by  injunction,  under  section  4  of  the  act.  U.  8.  v.  EllioU, 
62  F.,  801.  1—262 

14.  A  combination  to  incite  the  employees  of  all  the  railways  in 

the  country  to  suddenly  quit  their  service,  without  any 
dissatisfaction  with  the  terms  of  their  employment,  thus 
paralyzing  utterly  all  railway  traffic,  in  order  to  starve  the 
railroad  companies  and  the  public  into  compelling  an  owner 
of  cars  used  in  operating  the  roads  to  pay  his  employees 
more  wages,  they  having  no  lawful  right  so  to  compel  him, 
is  an  unlawful  conspiracy  by  reason  of  its  purx)0se,  whether 
such  purpose  is  effected  by  means  usually  lawful  or  other- 
wise.    Thomas  v.  Cith,  N.  O.  &  T.  P.  Ry.  Co.,  62  F.,  803. 

1—266 

15.  Same. — Such   combination,   its   purix)se  l)eing  to  paralyze  the 

interstate  commerce  of  the  country,  is  an  unlawful  con- 
spiracy, within  the  act  of  July  2,  1890,  declaring  illegal  every 
contract,  combination,  or  conspiracy  in  restraint  of  trade 
or  commerce  among  the  several  States.  V.  8.  v.  Patterson, 
55  F.,  605,  disapproved.  /ft. 

16.  Same — Obstructing  Mails. — Such  combination,  where  the  mem- 

bers intend  to  stop  all  mail  trains  as  well  as  other  trains, 
and  do  delay  many,  in  violation  of  Revised  Statutes,  section 
3995,  punishing  anyone  willfully  and  knowingly  obstructing 
or  retarding  the  passage  of  the  mails,  is  an  unlawful  con- 
spiracy, although  the  obstruction  is  effected  by  merely 
quitting  employment.  lb, 

17.  Any  combination  or  conspiracy  on  the  part  of  any  class  of  men 

who  by  violence  and  intimidation  prevent  the  passage  of 
railroad  trains  engaged  in  interstate  commerce  is  in  viola- 
tion of  act  of  July  2,  1890,  declaring  illegal  every  contract, 


1112 


INDEX — DIGEST. 


CONSPIRACY— Continued. 

combination  in  the  form  of  trust  or  otherwise,  or  conspiracy 
In  restraint  of  trade  or  eounnerce  among  the  States,  lu  re 
Grand  Jury,  62  F.,  840.  1—301 

18.  A  combination  of  persons,  without  regard  to  tlieir  ocxupation, 
whicli  will  haye  the  effect  to  defeat  the  proylsions  of  the 
interstate  commerce  law,  inliibiting  discriminations  in  the 
transportation  of  freight  and  passengers,  and  further  to 
restrain  the  trade  or  commerce  of  the  country,  will  be 
obnoxious  to  the  iienalties  prescribed  in  section  5440,  Revised 
Statutes,  relating  to  conspiracy.  Waterhonsc  v.  Comer,  55 
F..  149.  1—120 

1».  The  tenn  "  wnspinuy,"  in  section  1  of  tiie  act  of  ,Iuly  2.  1890 
(2r»  Stat.  209),  is  used  in  its  well-settled  legal  meaning,  and 
any  restraint  of  trade  or  commerce,  if  to  be  accomplished  by 
conspiracy,  is  unlawful.     U.  8.  v.  Dvbs,  G4  F.,  724.        1— »22 

80.  Conspiracy  to  Injure  in  Business.— The  action  of  an  association 
of  manutiuturers  in  adopting  a  resolution  denouncing  a 
dealer  in  the  product  they  manufacturetl.  who  bought  and 
shipped  such  i>roduct  to  customers  in  other  States  and  for- 
eign countries,  ami  in  printing  such  resolution  in  circulars, 
and  mailing  the  same  to  other  nmnufa<turers  and  customers 
of  the  dealer,  whereby  his  business  was  injured,  constituted 
an  illegal  combination  or  conspiracy  in  restraint  of  interstate 
and  foreign  conunerce,  and  gives  the  pei-son  injured  a  right 
of  action  in  a  circuit  court  of  tlie  United  States,  under  the 
Anti-Trust  Law  of  1890,  to  rec«jver  the  damages  sustained. 
mma  V.  McNeeley,  102  F.,  591.  2—25 

8ee  also  Statutes,  40, 

CON  STirUTION. 

1.  Constitutional  Guaranty  of  Sight  of  Assembly  and  Free 
Speech. — Inciting  the  emi>loye€s  of  a  rei-eiver,  wlio  is  op- 
erating a  railroad  under  the  onler  of  a  court,  to  leave  his 
emi)loy,  In  order  to  carry  out  an  unlawful  conspiracy,  is 
not  protwted  liy  constitutional  guaranties  of  the  right  of 
assemitly  and  frw  speech,  and  is  not  less  a  contempt  be^ 
cause  effected  by  words  only,  if  the  obstruction  to  the  oiiera- 
tion  of  the  wad  i>y  the  receiver  is  unlawful  and  malicious. 
Thouuts  V.  Cfn.,  Y.  O.  d  T.  F.  Ry.  Co.,  02  F.,  8a*i.       1—266 

1,  The  constitutional  freedom  of  contract  as  to  tlje  use  and  man- 
agement of  proi>erty  does  not  include  tbe  right  of  railroad 
companies  to  combine  as  one  consolidateil  and  powerful  asso- 
ciation for  the  purpose  of  stifling  competition  among  them- 
selves, and  of  Huis  keeping  their  rates  and  charges  higher 
than  they  might  otherwise  be  under  the  laws  of  comijetition, 
even  if  their  rates  and  charges  are  reasonaible.  U.  8.  v. 
Joint  Traffic  Asm.,  171  U.  S.,  505.  1—869 


INDEX DIGEST. 


1113 


CONSTITUTION— ("ontinued. 

3.  Legislation  which  renders  unlawful  contracts,  the  direct  effect 

of  which  is  to  shut  out  from  interstate  commerce  the  opera- 
tion of  the  general  law  of  competition,  is  not  an  interference 
with  the  general  liberty  of  contract  possessed  by  the  citizen 
under  the  fifth  amendment  to  the  Constitution.  lb. 

4.  The  constitutional  guaranty  of  liberty  of  the  individual  to  enter 

into  private  contracts  does  not  limit  the  power  of  Congress 
so  as  to  prevent  it  from  legislating  upon  the  subject  of  con- 
tracts in  restraint  of  interstate  or  foreign  commerce.  Ad- 
dyston  Pipe  and  Steel  Co.  v.  U.  8.,  175  U.  S.,  211.         1—1009 

5.  The  provision  in  the  Constitution  regarding  the  liberty  of  the 

citizen  is  to  some  extent  limited  by  the  commerce  clause  ;  and 
the  power  (>f  Congress  to  regulate  interstate  commerce  com- 
prises the  right  to  enact  a  law  prohibiting  the  citizen  from 
entering  into  those  private  contracts  which  directly  and  sub- 
stantially, and  m;t  merely  indirectly,  remotely,  incidentally, 
an<l  collaterally,  regulate,  to  a  greater  or  ie^s  degree,  com- 
merce among  the  States.  /ft. 

6.  Constitutional  Right  of  Private  Contract  Limited  by  Interstate 

Commerce  Clause. — The  constitutional  guaranty  of  liberty  to 
tlie  individual  to  enter  into  private  contracts  is  limited  to 
some  extent  by  the  conunerce  clause  of  the  Constitution,  and 
Congress  may,  in  the  exercise  of  the  iwwer  conferred  by 
such  clause,  prohibit  private  contracts  which  operate  to 
directly  and  substantially  restrain  interstate  commerce. 
r.  8.  v.  Xorthrrn  Securities  Co.,  120  F.,  721.  2 — 215 

7.  The  constitutional  guaranty  of  liberty  of  contract  does  not  pre- 

vent Congress  from  prescribing  the  rule  of  free  competition 
for  those  engjiged  in  interstate  and  international  conunerce. 
Northern  Securities  Co.  v.  Cnited  States,  193  U.  S.,  197. 
(Harlan,   Brown,   McKenna,   Day.)  2 — 340 

8.  Same. — The  constitutional   guaranty  of  liberty  of  contract  is 

not  infringed  by  a  Federal  court  decree  enjoining  the  North- 
ern Securities  Co.,  a  corporation  formeil  in  pursuance  of 
a  combination  of  stockholders  in  two  competing  interstate 
railway  conipsniies  for  the  puriK>se  of  acquiring  a  controlling 
interest  in  tlie  cai>ital  stock  of  such  companies,  from  exercis- 
ing the  powers  acquired  by  such  corijoration  by  virtue  of  its 
acquisition  of  such  stock.     iJ,8  L.  erf.,  679.)  2—342 

9.  Only  such  acts  as  directly  interfere  with  the  freedom  of  inter- 

state conunerce  are  prohibited  to  the  States  by  the  Constitu- 
tion. Field  V.  Barber  Asphalt  Co.,  194  U.  S.,  618.  2—555 
10.  Article  IV — Has  Nothing  to  do  with  the  Conduct  of  Individuals 
or  Corporations.— Article  IV  of  the  Constitution  of  the  United 
States  only  prescribes  a  rule  by  which  courts.  Federal  and 
State,  are  to  be  guided  when  a  question  arises  in  the  prog- 
ress of  a  pending  suit  as  to  the  faith  and  credit  to  be  given 
by  the  court  to  the  public  acts,  records,  and  judicial  proceed- 


1114 


INDEX — DIGEST. 


CONSTITimOir— (^ontiniied. 

iBffS  oC  m  State  other  than  that  In  which  the  court  is  sitting. 
It  has  nothing  to  do  with  the  conduct  of  individuals  or  cor- 
porations. JflmietoKi  ¥.  Northern  Securities  Co,,  194  U.  S„ 
48*  2—533 

11.  Vomrth  Amendment.  See  Immunity,  34,  15;  Witnesses,  8,  20; 
Seabch,  2-4 ;  Coepobations,  14,  25 ;  and  Courts,  22. 

IS.  Vifth  Amendment.  See  Immunity,  1,  X  7,  9,  16;  and  Wit- 
nesses, 1,  2,  4.  11-13,  15,  16,  20,  23. 

18,  Fourteenth  Amendment.— It  is  not  the  purpose  of  the  four- 
teenth amendment  to  prevent  the  States  from  classifying  the 
subjects  of  legislation  and  making  diflfereut  regulations  as 
to  the  property  of  different  individuals  diflferently  situated. 
The  provision  of  the  Federal  Constitution  is  satisfied  if  all 
persons  similarly  situated  are  treated  alike  in  privileges 
conferred  or  liabilities  imposed.  Field  v.  Barber  Asphalt 
Paving  Co.,  194  U.  S.,  618.  2—555 

14.  Same. — ^A  State  statute  which  provides  that  certain  improve- 

ments are  not  to  be  made  if  a  majority  of  resident  owners  of 
property  liable  to  taxation  protest,  Is  not  unconstitutional 
because  it  gives  the  privilege  of  protesting  to  them  and  not 
to  nonresident  owners.  /ft. 

15.  Same.— Discrimination  in  favor  of  agricultural  products.    See 

Connolly  v.  Union  Setoer  Pipe  Co.,  184  U.  S.,  540.        2—119 
CONTEMPT. 

1.  Interference  with  Beceiver — Impeding  Operation  of  Railroad.— 
Any  willful  attempt,  with  knowledge  that  a  railroad  is  in  the 
hands  of  the  court,  to  prevent  or  impede  the  receiver  thereof 
apijointed  by  the  court  from  complying  with  the  order  of  the 
court  in  running  the  road,  which  is  unlawful,  and  which,  as 
between  i»rivate  individuals,  would  give  a  right  of  action  for 
damages,  is  a  contempt  of  the  order  of  the  court.  Thomas  v. 
Chh,  Y.  O.  rf  T.  P.  R,  Co.,  02  F.,  803.  1— 26G 

S.  Same— Instigating  Strike— Unlawful  Combination.— Maliciously 
inciting  employees  of  a  receiver,  who  is  operating  a  railroad 
nnder  order  of  the  court,  to  leave  his  employ,  in  pursuance  of 
an  unlawful  combination  to  prevent  the  operation  of  the 
road,  thereby  inflicting  injuries  on  its  business,  for  which 
damages  would  be  recoverable  if  it  were  operated  by  a  pri- 
vate corporation,  is  a  contempt  of  the  court.  ih. 

8.  Same— Constitutional  Guaranty  of  Right  of  Assembly  and  Free 
Speech. — Such  inciting  to  carry  out  an  unlawful  conspiracy 
is  not  protected  by  constitutional  guaranties  of  the  right  of 
assembly  and  free  speech,  and  is  not  less  a  contempt  because 
effected  by  words  only,  if  the  obstruction  to  the  operation 
of  the  road  by  the  receiver  is  unlawful  and  malicious.        lb, 

4.  Contempt — Proceeding  in  Equity— Conclusiveness  of  Answer. — 
In  proceedings  for  contempt  in  equity,  ji  sworn  answer,  how- 
ever full  and  nnequivociil.  is  not  conciusive.  even  in  the  case 


INDEX — ^DIGEST. 


1115 


CONTEMPT— Continued . 

of  a  stranger  to  the  bill  for  the  injunction  which  has  been 
violated.     V.  8.  v.  Dehs,  64  F.,  724.  1—322 

5.  Same — Justification — ^Irregularities. — Where  a  court  had  juris- 

diction of  an  injunction  suit,  and  did  not  exceed  its  powers 
therein,  no  irregularity  or  error  in  the  procedure  or  in  the 
order  can  justify  disobedience  of  the  WTit.  76. 

6.  Same. — In  a  proceeding  for  contempt  in  disobeying  an  injunc- 

tion, the  sufficiency  of  the  petition  for  the  injunction,  in 
respect  to  matters  of  form  and  averment  merely  can  not  be 
questioned.  /ft. 

7.  Contempt— Trial  by  Court. — ^Though  the  same  act  constitute  a 

contempt  and  a  crime,  the  contempt  may  be  tried  and  pun- 
ished by  the  court.  /ft. 

8.  Contempt — ^Violation    of    Injunction — Conspiracy. — Where    de- 

fendants, directors,  and  general  officers  of  the  American 
Railway  Union,  in  combination  with  members  of  the  union, 
engaged  in  a  conspiracy  to  Iwycott  Pullman  cars,  in  use  on 
railroads,  and  for  that  purpose  entered  into  a  conspiracy 
to  restrain  and  hinder  interstate  commerce  in  general,  and, 
in  furtherance  of  their  design,  those  actively  engaged  in  the 
strike  used  threats,  violence,  and  other  unlawful  means  of 
interference  with  the  operations  of  the  roads,  and,  instead 
of  respecting  an  injunction  commanding  them  to  desist,  per- 
sisted in  their  purpose,  without  essential  change  of  conduct, 
they  were  guilty  of  contempt.  /ft. 

9.  Same — ^Interference  with  Receiver. — ^Any  improper  interference 

with  tlie  management  of  a  raih-oad  in  the  hands  of  receivers 
is  a  contempt  of  the  court's  authority  in  making  the  order 
appointing  the  receivers,  and  enjoining  interference  with 
tlieir  control.  /ft. 

10.  The  order  of  the  Circuit  Court  finding  the  petitioners  guilty  of 

contempt,  and  sentencing  them  to  imprisonment,  was  not  a 
final  judgment  or  decree.    Ir  re  Debs,  158  U.  S.,  564.     1—565 

11.  Violation  of  Injunction — Contempt. — An  injunction  having  been 

issued  and  served  upon  the  defendants,  the  Circuit  Court  had 
authority  to  inquire  whether  its  orders  had  been  disobeyed, 
and  when  it  found  that  they  had  been  disobeyed,  to  proceed 
under  Revised  Statutes,  section  725,  and  to  enter  the  order 
of  punishment  complained  of.  /ft. 

12.  Same— Habeas   Corpus.— The  Circuit  Court   having  full   juris- 

diction in  the  premises,  its  findings  as  to  the  act  of  disobe- 
dience are  not  open  to  review  on  habeas  corpus  in  this  or 
any  other  court.  /ft 

18.  Witness— Incriminating  Evidence.-~Where  a  witness  is  com- 
mitted for  contempt  in  refusing- to  answer  all  of  a  series  of 
questions,  for  tlie  reason  tliat  tlie  answers  would  tend  to 
criminate  him,  and  some  of  tlie  answers  would  have  that 
tendency,  he  should  not  be  denied  relief  on  habeas  corpus 


1116 


INDEX — DIGEST. 


CONTEMPT— Continued. 

becjiiise  mme  of  the  qiieKtit.ns   niigljt  l»e  safely   answered. 
Foot  V.  Buchafiau,  118  F.,  156.  2 — 104 

14.  Although  the  subpoena  duces  tecum  may  be  too  broad  in  its 
requisition,  where  the  witness  has  refused  to  answer  any 
question,  or  to  produce  any  books  or  papers,  this  objection 
would  not  go  to  the  validity  of  the  order  committing  him 
for  contempt.    Hule  v.  Hen  Id.  201  U.  S.,  43.  2—874 

CONTRACTS. 

1.  Contract  for  Entire  Product. — ^A  contract  with  an  independent 
manufacturer  for  tlie  entire  pi-oduct  (if  his  jjlant  is  not  in 
itself  a  contract  in  illegal  restraint  of  trade.  Carter-Crume 
Go.  V.  Pvrnnifi,  r,S  F..  4H0.  1—845 

8.  Same. — If  an  independent  manufacturer  contracts  to  sell  his 
entire  product,  without  knowledge  of  similar  contracts  made 
by  the  buyer  with  other  manufacturers,  and  without  any 
knowieilge  of  the  fact  tliat  such  contract  was  intended  by 
the  buyer  as  one  stei»  in  a  general  scheme  for  nionoix)lizing 
the  trade  in  that  article  and  c-ontrolling  prices,  such  inde- 
l^endent  niannufacturer  can  not  be  held  to  have  conspired 
against  the  freedom  of  commerce,  or  to  have  made  a  con- 
tract in  illegal  restraint  of  trade.  Jft. 

S.  Purchase  of  Business— Combination  in  Kestraint  of  Trade.— A 
contract  by  which  a  iierson  sells  his  proi^erty  and  business 
good  will  to  another  can  not  be  repudiated  on  the  ground  that 
the  purchaser  acfjuired  the  property  for  the  purpose  of  ob- 
taining a  monoiK>Iy  of  the  business  and  in  pursuance  of  an 
illegal  combination  in  restraint  of  interstate  trade  and  com- 
merce.    enmors-Mrr^tuurll  Vo,  v.  MvCotriiell  140  F.,  412. 

2—817 

4.  Same. — ^In  order  to  defeat  a  suit  to  enforce  such  a  contract  on 

tile  ground  that  its  enforcement  is  sought  to  aid  and  facili- 
tate the  carrying  out  of  an  illegal  combination  to  monoijolize 
interstate  trade  and  counuerce,  it  must  appear  that  the  con- 
tract is  directly  connected  with  such  unlawful  purpose,  and 
not  merely  collateral  thereto.  /&. 

5.  Same. — Although  the  combination  may  be  unlawful,  an  action 

fior  the  performance  of  the  contract  can  not  be  defeated  ui)on 
the  ground  that  plaintiff  is  carrying  on  its  business  in  an 
unlawful  manner  as  a  monojioly.  /&. 

6.  Same. — ^An  agreement,  as  in<-idental  to  the  sale  of  property  as  a 

business,  that  the  seller  will  not  enter  into  a  competing  busi- 
ness, is  valid  and  enforceable,  notwithstanding  it  is  in  partial 
restraint  of  trade.  /ft, 

7.  Same — Specific  Performance — Sale  of  Business — Enjoining  Vio- 

lation.— A  court  of  ecpiity  will  enjoin  a  defendant  from  vio- 
lating a  ctmtract,  clearly  shown,  by  which  he  deliberately 
obligated  himself  for  a  raluable  consideration  not  to  engage 
in  a  certain  business.  /ft. 


INDEX — ^DIGEST. 


1117 


CONTRACTS— Continued. 

8.  Purchaser  of  River  Craft  not  Relieved  from  Obligation  to  Pay 

Purchase  Price  Because  of  His  Agreement  to  Maintain  Pres- 
ent Traffic  Rates. — A  purchaser  of  river  craft  can  not  in- 
invoke  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209).  to 
relieve  him  from  his  obligation  to  pay  the  purchase  price,  be- 
cause of  his  covenant  to  maintain  the  present  traffic  rates, 
which  is  not  declared  by  the  contract  to  enter  into  the  con- 
sideration of  the  sale — especially  where  the  rates  referred  to 
primarily,  if  not  exclusively,  relate  to  domestic,  and  not  to 
interstate,  business.  Cmcmnati,  etc..  Packet  Co.  v.  Bay,  200 
U.  S.,  179.  2— S67 

9.  Same. — A  contract  is  not  to  be  assumed  to  contemplate  unlawful 

results  unless  a  fair  construction  requires  it.  /ft, 

10.  Same. — Where  a  contract  relates  to  commerce  between  points 

within  a  State,  both  on  a  boundary  river,  it  will  not  be  con- 
strued as  falling  within  the  prohibitions  of  the  Sherman 
act  because  the  vessels  affected  by  the  contract  sail  over  soil 
belonging  to  the  other  State  while  passing  between  the  intra- 
state points.  /ft. 

11.  Same. — Even  if  there  is  some  interference  with  interstate  com- 

merce, a  contract  is  not  necessarily  void  under  the  Sherman 
Act  if  such  interference  is  insignificant  and  merely  incidental 
and  not  the  dominant  purpose;  the  contract  will  \w  con- 
strued as  a  domestic  contract  and  its  validity  determined  by 
the  local  law.  /ft, 

12.  Same. — A  contract  for  sale  of  vessels,  even  if  they  are  engaged 

in  interstate  commerce,  is  not  necessarily  void  because  the 
vendors  agree,  as  is  ordinary  in  case  of  sale  of  a  business  and 
Its  good  will,  to  withdraw  from  business  for  a  specified 
period.  /ft, 

13.  Any  contract  or  combination  which  directly  and  substantially 

restricts  the  right  of  an  interstate  carrier  to  fix  its  own  rates, 
independently  of  its  natural  conii)etitors,  places  a  direct  re- 
straint upon  interstate  conmierce,  in  that  it  tends  to  prevent 
competition,  and  is  in  violation  of  the  act,  whether  the 
rates  actually  fixed  be  reasonable  or  unreasonable.  V.  8.  v. 
Northern  Senuritics  Co.,  120  F.,  721.  2 215 

14.  Contracts— Proprietary  Medicines.— A  system  of  contracts  made 

by  the  manufacturer  of  a  proprietary  medicine  between  him 
and  wholesale  dealers,  to  whom  alone  he  sold  his  medicine, 
by  which  they  were  bound  to  sell  only  at  a  certain  price  and 
to  retail  dealers  designated  by  him,  and  between  him  and 
the  retail  dealers  by  which,  in  consideration  of  being  so  desig- 
nated, they  agreed  to  sell  to  consumers  only  at  a  certain 
l)rice,  is  not  unlawful  as  in  restraint  of  trade,  but  is  a  rea- 
sonable provision  for  the  protection  of  the  manufacturer's 
trade,  and  he  is  entitled  to  an  injunction  to  restrain  a  defend- 


1118 


mDEX — ^DIGEST. 


GOlf  TRACTS— Conti  nmnl . 

ant  from  inducing  other  parties  to  such  contracts  to  violate 
the  same.    Hartmmt  v.  John  D.  Parks  d  Sons  Co.,  145  F.. 

wm.  »— 1000 

Bee  also  Br,  Miles  Medical  Co,  v.  James  Drug  Co,,  149  F., 

15.  A  contract  for  the  sale  of  merchandise  is  not  rendered  illegal  by 

the  fact  that  the  selling  corporation  is  a  tmst  or  monopoly 
organized  in  Tiolation  of  law.  either  Federal  or  State,  the 
contract  of  sale  being  collateral  and  having  no  direct  relation 
to  the  unlawful  scheme  or  combination.  Chicago  Wall  Paper 
Mills  V.  General  Paper  Co.,  147  F.,  491.  a— 1027 

16.  Contracts  limiting  Character  of  Material  to  be  Used  to  that 

Controlled  by  a  Single  Corporation. — Where  the  contract  for 
the  paving  of  a  street  with  asphalt  limited  the  kind  of 
asphalt  to  be  nit«e  to  Trinidad  asphalt,  »ueh  fact,  and  the 
further  fact  that  such  asphalt  was  controlletl  by  a  single 
corporation,  was  not  violative  of  the  commerce  clause  of  the 
Constitution  or  of  the  Federal  Anti-Ti*ust  Sbitutes,  and  did 
not  affect  tlie  validity  of  the  contract.  Field  v.  Barber 
Asphalt  Pav.  Co.,  117  F.,  925.  8—193 

Affirmed,  194  U.  S.,  618  (2—555). 

17.  Illegal. — Parties  to  a  transaction  adjudged  to  violate  the  Anti- 

Trust  Act  of  July  2,  1890  (20  Stat,  209),  ate  not  exempt 
from  the  doctrine  m  pari  delicto  on  the  theory  that  they 
acted  in  good  faith  and  without  intent  to  violate  the  law, 
where,  witli  knowledge  %>t  the  facts  and  of  the  statute,  they 
acted  under  the  mistaken  supposition  that  the  statute  would 
not  be  held  applicable  to  the  facts.  Uarriman  v.  Northern 
Securities  Co.,  197  U.  S.,  244.  2—669 

Affirming.  134  F.,  331  (2--618).      , 

Reversing,  132  F.,  464  (2—587). 

18.  Same. — ^Property  delivered  under  an  ezecuted  illegal  contract 

can  not  be  recovered  back  by  any  party  in  pari  delicto,  and 
the  courts  can  not  relax  the  rigor  of  this  rule  where  the 
record  discloses  no  siK?cial  consldenitions  of  equity,  justice, 
or  public  policy.  lb. 

19.  Same. — ^Where  a  vendor  after  transferring  shares  of  railway 

stock  to  a  corporation  in  exchange  for  its  shares  becomes  a 
director  of  the  purchasing  corporation  and  participates  In 
acts  consistent  only  with  absolute  ownership  by  it  of  the 
railway  sttx'ks.  and  does  so  after  an  action  has  been  brought 
to  declare  the  transaction  illegal,  his  right  to  rescind  the 
contract  and  compel  restitution  of  his  original  railway 
shares,  if  it  ever  existed,  is  lost  by  acquiescence  and  laches. 

lb. 


INDEX DIGEST. 


1119 


OONTRACTS— Continued. 

20.  Effect    of   Illegal    Provisions— Divisibility.— Stipulations    in    a 

contract  which  are  invalid  as  in  restraint  of  trade,  if 
capable  of  being  construed  divisibly,  do  not  affect  the 
validity  of  other  provisions.  U.  S.  Camolidated  Seeded 
Rusin  Co.  V.  Gri/fln  d  Skelley  Co.,  126  F.,  .364.  2— 288 

21.  Same — Validity — When  Question  for  Jury.— Conceding  that  a 

contract  legal  in  its  terms  and  in  its  consideration  may  be 
rendered  illegal  as  against  public  policy  by  reason  of  the 
intention  of  the  parties  to  so  use  it  as  to  commit  civil  injury 
to  third  persons,  where  the  evidence  as  to  such  intention  is 
conflicting,  tlie  contract  can  not  .be  declared  illegal  by  the 
court  as  matter  of  law.  /&. 

22.  Effect  of  Anti-Trust  Law  upon  Contracts  in  Restraint  of  Trade 

which  at  Common  Law  were  Not  TTnlawful. — The  effect  of 
the  Anti-Trust  Law  of  1890  is  to  render  contracts  in  i-e- 
straint  of  trade,  as  applied  to  interstate  commerce,  unlaw- 
ful in  an  affirmative  or  ix)sitive  sense,  and  punishable  as  a 
misdemeanor,  and  also  to  create  a  right  of  civil  action  for 
damages  in  favor  of  persons  injured  thereby,  and  a  remedy 
by  injunction  in  favor  both  of  private  r>ersons  and  the 
public  against  the  execution  of  such  contracts  and  the  main- 
tenance of  such  trade  restraints.  V.  8.  v.  Addystmi  Pipe  d 
Steel  Co.,  85  F.,  271.  1—772 

See  also  Continent ul  Wall  Paper  Co.  v.  Lewis  Voight  d  Sons 
Co.,  148  F.,  939.  , 

28.  The  statute  is  not  limited  to  contracts  or  combinations  which 
monopolize  interstate  commerce  in  any  given  commodity, 
but  seeks  to  reach  those  which  directly  restrain  or  impair 
the  freedom  of  interstate  trade.  The  law  reaches  contracts 
and  combinations  which  may  fall  short  of  complete  control 
of"  a  trade  or  business,  and  does  not  await  the  consolidation 
of  many  small  combinations  into  the  huge  ''trust"  which 
shall  control  the  production  and  sale  of  a  commodity.  Chesa- 
peake d  O.  Fuel  Co.  V.  United  States,  115  F.,  610,  624. 

2—168 
24.  Applies  to  Common  Carriers  by  Railroads— Contracts  Affecting 
Rates.— The  provisions  respecting  contracts,  combinations, 
and  conspiracies  in  restraint  of  trade  or  commerce  among 
the  several  States  or  with  foreign  countries,  contained  in 
the  act  of  July  2,  1890,  apply  to  and  cover  common  carriers 
by  railroad ;  and  a  contract  between  them  in  restraint  of 
such  trade  or  commerce  is  prohibited,  even  though  the  con- 
tract is  entered  into  between  competing  railroads,  only  for 
the  purpose  of  thereby  affecting  traffic  rates  for  the  trans- 
l)ortation  of  persons  and  property.  U.  8.  v.  Trans-Mo.  Ft. 
Assn.,  166  U.  S.,  290.  1—648 


1120 


INDEX — ^DIGEST. 


COHTBACTS— Continued. 

S8.  Act  Applies  to  All  Contracts  In  Restraint  of  Interstate  or  For- 
eign Commerce — Not  Confined  to  Unreasonable  Eestraints. — 
The  prohibitory  provisions  of  the  said  act  of  July  2,  1890. 
apply  to  all  contracts  in  restraint  of  interstate  or  foreign 
trade  or  eomnieree  without  exception  or  limitation;  and 
are  not  coutiued  to  those  in  whicli  the  restraint  is  unreason- 
able.    U.  8.  V.  Tranif-Mo.  Ft.  Asmi.,  ir>6  U.  S.,  290.         1—648 

26.  Test   of   Legality   of   a   Contract   or   Combination. — The   Anti- 

Tmst  Act  of  July  2,  1890  (20  Stat.,  2<J9),  does  not  leave 
to  the  ctmrts  the  consideration  of  the  question  whether  the 
restraint  is  or  is  not  unreasonable  and  such  as  would  have 
rendered  the  contract  invalid  at  common  law.  The  only 
question  in  each  case  where  the  validity  of  a  contract  or 
combination  under  the  law  is  involvetl  is  whether  or  not 
its  necessary  effect  is  to  restrain  interstate  commerce.  Ches- 
apeake dt  Ohio  Fuel  Co.  v.  U.  8.,  115  F.,  610.  2—151 

27.  Same. — The  test  of   the   violation   of   the   Anti-Trust   Act   of 

July  2,  1890  (26  Stat,  2!lK)),  by  a  contract  or  combination, 
is  its  effect  upon  competition  in  counnerce  among  the  States. 
If  its  necessaiy  effect  is  to  stifle  or  to  directly  and  sul)- 
stantially  restrict  intei-state  commerce,  it  falls  under  the 
ban  of  the  law,  but  if  It  promotes,  or  only  incidentally  or 
indirectly  restricts,  competition,  while  its  main  puriwse 
and  chief  effect  are  to  promote  the  business  and  increase 
the  trade  of  the  makers,  it  is  not  denounced  or  avoided  by 
that  law.    Phillips  v.  lola  Portland  Cement  Co.,  125  F..  593. 

2—284 

28.  The  Sherman  Act  of  July  2,   1890,  is  not  intended  to  affect 

contracts  which  have  only  a  remote  and  indirect  bearing 
on  commerce  between  the  States.    Field  v.  Barhcr  Asphalt 

2—555 


Paving  Co.,  194  U.  S..  618. 
L  The  Anti-Trust  Act  of  July  2,  1890  (26  Stat.,  209).  does  not 
apply  to  a  contract  or  combination  relating  to  the  business 
of  mannfactnring  within  a  State.  Robinson  v.  Suburban 
Brick  Co.,  127  F.,  804.  2—312 

30.  The  act  of  July  2,  1890,  commonly  known  as  the  "Anti-Trust 

Act,'*  does  not,  and  could  not  constitutionally,  affect  any 
monopoly  or  contract  in  restraint  of  trade,  unless  it  inter- 
feres directly  and  substantially  with  interstate  commerce, 
or  commerce  with  foreign  nations.  V.  8.  v.  Addyston  Pipe 
d  Steel  Co.,  78  F.,  712.  1—6:10 

31.  What  Contracts,  Combinations,   or  Conspiracies  Violate  Anti- 

Trust  Act. — Every  contract,  combination,  or  conspiracy  the 
necessary  effect  of  which  is  to  stifle  or  to  directly  and  sub- 
stantially restrict  competition  in  connuerce  among  the  States 
is  in  restraint  of  interstate  commerce,  and  violates  section 
1  of  the  act  of  July  2,  1890  (26  Stat.,  209).  Whituell  v.. 
Continental  Tobacco  Co.,  125  F.,  454.  2 — ^271 


INDEX DIGEST. 


1121 


CONTRACTS— Continued. 

32.  What  Acts,  Contracts,  and  Combinations  Do  Not  Violate  Anti- 

Trust  Act. — Acts,  contracts,  and  combinations  which  promote, 
or  only  incidentally  or  indirectly  restrict,  comi>etition  in 
commerce  among  the  States,  while  their  main  puriwse  and 
chief  effect  are  to  foster  the  trade  and  increase  the  business 
of  those  who  make  and  operate  them,  are  not  in  restraint  of 
interstate  commerce  or  violative  of  section  1  of  the  act  of 
July  2,  1890  (26  Stat,  209).  lb. 

33.  Section  1  of  the  Sherman  Anti-Trust  Act  of  July  2,  1890  (26 

Stat.,  209),  makes  a  distinction  between  a  contract  and  a 
combination  or  conspiracy  in  restraint  of  trade.  Rice  v. 
Standard  Oil  Co.,  1.34  F.,  464.  2—633 

34.  Contract  for  Sale  of  Goods  by  Member  of  Combination. — The 

act  of  July  2,  1890,  section  1  (26  Stat,  209),  known  as  the 
"  Sherman  Anti-Trust  Act"  does  not  invalidate  or  prevent 
a  recovery  for  the  breach  of  a  collateral  contract  for  the 
manufacture  and  sale  of  goods  by  a  member  of  a  combination 
formed  for  the  purpose  of  restraining  interstate  trade  in 
such  goods.  HadleyDcun  Plate  Glass  Co.  v.  Highland  Glass 
Co.,  143  F.,  242.  2—995 

In  Restraint  of  Trade.    8e€  Comisinations,  etc.,  54-77. 

Not  Enforceable.    See  Combinations,  etc.,  16-20. 

Freedo&c    of    Contract — Right    of    Private    Contract.     See 

Constitution,  2-8 ;  and  Congress,  5-7,  11,  19. 
Contracts  for  Entire  Product.    See  Combinations,  etc,  149, 

150. 

Agreements   not  to  P^ngage  in  Business  or  Compete.    See 

Combinations,  etc,  144-146,  148,  159,  208. 
Contracts   in   Violation   of  Anti-Trus^  Act.    See  Actions 

and  Defenses,  61,  62. 
Defenses.    See  Actions  and  Defenses. 

COPYBIGHT. 

The  rights  acquired  by  publishers  of  copyrighted  books  under 
the  copyright  law  did  not  justify  them  in  combining  and 
agreeing  that  their  books  should  be  subject  to  the  rules 
laid  down  by  the  united  owners,  one  of  which  was  that  no 
member  of  the  association  should  sell  any  books  to  a  black- 
listed purchaser  who  was  known  to  cut  prices.  Mines  v. 
Scribner,  147  F.,  927.  2—1035 

See  also  Combinations,  etc,  28,  96-98. 

COVENANTS.    See  Combinations,  etc,  152,  153,  155. 

COBPOBATIONS. 

1.  A  corporation,  while  by  fiction  of  law  recognized  for  some  pur- 
poses as  a  person  and  for  purpo.ses  of  jurisdiction  as  a  citi- 
zen, is  not  endowed  with  the  inalienable  rights  of  a  natural 

11808— VOL  1—06  M ^71 


M  i.  Zm 


INDEX — ^DIGEST. 


CORPOKATI0NS— ( '.  .iitimied. 

person,  but  it  is  an  artificial  i>ersoii,  created  and  existing  only 
for  the  convenient  transaction  of  business.  Northern  fifc- 
CHritie.$  Co.  v.  iHikd  States,  19:1  U.  S.,  107  (Brewer  con- 
curring). 2 — 341 

2.  Stockholding — Corporations    to    Acquire    Stock    of    Competing 

Kailroads — Legality. — The  real  control  of  a  corporation  is  in 
its  stockholders,  who  have  the  power  to  determine  all  im- 
portant eorix)rate  acts  and  policies,  and  any  contract  or 
conilti nation  by  which  a  majority  of  the  stock  of  two  rail- 
road cnni])anies  owninj?  and  oi^erating  parallel  and  competing 
inti'ist.itr  lines  of  i-oad  is  transferred  to  a  corporation  or- 
gsinized  for  the  inirpose  of  holding  and  voting  the  same, 
and  receiving  tbe  dividends  thereon,  to  be  divided  pro  rata 
among  the  stock liolders  of  the  two  eomi>anies  so  transfer- 
rin*? their  stock,  directly  and  siiibstantially,  restricts  inter- 
stale  trade  and  connnerce,  and  Is  In  violation  of  the  Anti- 
Trust  Act  of  July  2,  18fH)  (2(;  Stat.,  209).  since  it  destroys 
any  motive  for  comijetition  between  the  two  roads ;  and  it  ia 
immaterial  that  each  company  has  its  own  board  of  direct- 
ors, which  nominally  directs  its  operations  and  fixes  its 
rates,     r.  S.  v.  \.;///.'/a  Securities  Vo.,  120  F.,  721.    2—215 

3.  Same.^ — Tht  fact  that  the  imri^ose  of  an  illegal*  combination  be- 

tween stockholders  of  two  railroad  companies  operating  par- 
allel  and  comi>eting  interstate  lines,  to  secure  unity  of  inter- 
est and  control  of  such  companies,  and  to  prevent  competi- 
tion, has  been  accomplished  by  the  formation  of  a  corpora- 
tion which  has  aeciuired  the  ownership  of  a  majority  of  the 
stock  of  each  of  the  c«jmpauies,  can  not  be  urged  to  defeat 
a  suit  by  ^e  United  States  to  restrain  the  exercise  of  the 
power  so  megally  acquired  by  the  corporation  through  such 
combination,  as  imi)Osing  a  restraint  upon  interstate  com- 
merce in  violation  of  the  Anti-Trust  Law  (act  July  2,  1890, 
26  Stat,  209).  lb. 

Affinned.  193  U.  S.,  197  (2—338). 

4.  Powers  of  Corporations — New  Jersey  Statutes. — The  language  of 

the  New  Jersey  enabling  act  (Laws  1899,  p.  473),  author- 
izing the  organization  of  cori>orations  "  for  any  lawful  pur- 
pose," imiM>ses  a  limitation  upon  the  powers  of  any  corpo- 
ration organized  thereunder,  however  broad  may  be  the 
terms  of  its  articles  of  incorporation.  lb. 

5.  northern  Securities  Company — ^Distribution  of  Stock — Purchase 

and  Sale. — ^A  contract  by  which  defendant,  the  Northern  Se- 
curities Company,  acquired  from  complainants  certain  shares 
of  stock  of  the  Northern  Pacific  Railway  Ck)mpany  (193  U.  S. 
197),  Held,  under  the  evidence,  to  have  been  one  of  purchase 
and  sale,  by  which  defendant,  on  ijiayment  of  the  agreed 
price,  became  the  absolute  owner  of  the  shares,  free  from 


INDEX — ^DIGEST; 


1123 


CORPORATIONS^Continucd. 

any  trust  In  favor  of  the  complainants,  and  free  to  distribute 
the  same  pro  rata  among  all  its  stockholders  upon  the  entry 
of  a  decree  declaring  it  to  be  an  illegal  combination,  and 
prohibiting  it  from  voting  or  receiving  dividends  on  such 
stock.      Northern  Securities  Co.  v.  HaiTiman,  134  F.,  331. 

2—618 
Affirmed,  197  U.  S.,  244  (2—669). 

6.  Same — Should  not  be  Enjoined  from  Distributing  Stock. — ^De- 

fendant corporation  having  been  adjudged  an  illegal  combi- 
nation in  restraint  of  interstate  commerce,  and  enjoined 
from  voting  or  receiving  dividends  on  certain  railroad  stock 
which  it  owned,  but  permitted  to  transfer  the  same  to  its 
stockholders,  a  plan  adopted  by  its  directors  and  stockholders 
to  distribute  the  same  pro  rata  among  all  its  stockholders 
was  equitable,  and  its  execution  should  not  be  enjoined,      lb, 

7.  Same. — The  decree  of  the  Circuit  Court  in  the  Northern  Securi- 

ties case,  aflirmed  by  this  court  (193  U.  S.,  197),  did  not 
determine  the  quality  of  the  transfer  as  between  the  defend- 
ants, and  the  provisions  therein  as  to  return  of  shares  of 
stock  transferred  to  It  by  the  railway  stockholders  were 
^  permissive  only,  and  not  an  adjudication  that  any  of  the 
vendors  were  entitled  to  a  restitution  of  their  original  rail- 
way shares.  Harriman  v.  Northern  Securities  Co.,  197  U.  S.^ 
244.  2—669 

8.  Same. — The  judgment  of  the  Supreme  Court  in  the  Northern 

Securities  case  went  no  further  than  the  decree  of  the 
Circuit  Court  itself,  and  while  it  leaves  that  court  at  liberty 
to  proceed  in  the  execution  of  its  decree  as  circumstances 
may  require,  it  does  not  operate  to  change  the  decree  or 
import  a  power  to  do  so  not  otherwise  possessed.  lb, 

9.  Same. — The  judgment  or  opinion  of  the  Supreme  Court  in  this 

case  did  not  enlarge  the  scope  of  the  decree  of  the  Circuit 
Court  so  as  to  make  it  an  adjudication  that  any  of  the 
vendors  of  railway  stocks  were  entitled  to  judicial  restitu- 
tion of  the  stocks  transferred  by  them  to  the  Securities 
Company,  or  that  the  Securities  Company  could  not  dis- 
tribute the  shares  of  railway  stock  held  by  it  pro  rata 
between  its  own  shareholders.  jb. 

10.  Same. — The  transaction  between  complainants  and  the  Northern 

Securities  Company  was  one  of  purchase  and  sale  of  North- 
em  Pacific  Railway  Company  stock  for  shares  of  stock  of 
the  Securities  Company  and  cash  and  not  a  bailment  or 
trust.  jj 

11.  Same— Duty  of  Securities  Company  to  Distribute  Stock. — It  was 

the  duty  of  the  Securities  Company  under  the  decree  in  the 
Government  suit  to  end  a  situation  which  had  been  adjudged 
unlawful,  and  as  this  could  be  effected  by  sale  and  distribu- 
tion in  cash,  or  by  distribution  in  kind,  the  company  was 


1124 


INDEX — DIGEST. 


INDEX — ^DIGEST. 


1125 


00RF0RATI0N8—(«»n  tinned.  ,      i 

Justified  in  adopting  tlie  latter  nietliod  and  avoiding  the 
forced  sale  of  several  hundred  million  dollars  of  stock  which 
would  have  Involved  disastrous  results.  /b. 

18.  Unreasonable  Search  and  Seizure  of  Contracts  and  Correspond- 
ence— Immnnity — Grand  Jury. — A  corix)ratiou  charged  with  a 
violation  of  the  Anti-Trust  Act  of  July  2,  1800,  is  entitled  to 
immunity  under  the  fourth  amendment  of  the  Constitution 
from  such  an  unreasonalile  search  and  seizure  as  the  compul- 
sory production  before  a  grand  jury,  under  n  ftiihpwna  duces 
tecum,  of  all  understandings,  contracts,  or  correspondence 
between  such  corijoration  and  six  other  companies,  together 
with  all  reports  and  accounts  rendered  by  such  companies 
from  the  date  of  the  organization  of  the  cori)oratiou,  as  well 
as  all  letters  received  by  that  coiporatiou  since  its  organiza- 
tion, from  more  than  one  dozen  different  companies,  situateii 
in  seven  different  States.    Hale  v.  Henhel,  201  U.  S.,  43. 

2—874 
IS.  Same. — A  corporation  is  but  an  association  of  individuals  with 
a  distinct  name  and  legal  entity,  and  in  organizing  itself  as 
a  collective  body  it  waives  ni>  appropriate  constitutional  im- 
munities, and  although  it  can  not  refuse  to  produce  its  boolis 
and  papers  it  is  entitled  to  immunity  under  the  fourtli  amend- 
ment against  unreasonable  searches  and  seizures,  and  where 
an  examination  of  its  books  is  not  authorized  by  an  act  of 
Congress  a  subpoena  duces  tecum  requiring  the  production  of 
practically  all  of  its  books  and  papers  is  as  indefensible  as 
a  search  warrant  would  be  if  couched  in  similar  terms.      /B. 

14.  Same. — The  protection  against  unreasonable  searches  and  seiz- 

ures afforded  by  the  Fourth  Amendment  can  not  ordinarily 
be  invoked  to  justify  the  refusal  of  an  officer  of  a  corpora- 
tion to  produce  its  books  and  papers  in  obedience  to  a  sub- 
poetia  duces  tecum,  issued  in  aid  of  an  investigation  by  a 
grand  juiT  of  an  alleged  violation  of  the  Anti-Trust  Act  of 
July  2,  1890,  by  such  corporation.  16. 

15.  Same — Contempt. — ^Although  the  subpoena  duces  tecum  may  be 

too  broad  in  its  requisition,  where  the  witness  has  refused 
to  answer  any  question,  or  to  produce  any  booivs  or  papers, 
this  objection  would  not  go  to  the  validity  of  the  order  com- 
mitting him  for  contempt.  /&. 

16.  Same— Reserve   Eight  to   Investigate   Contracts   of   a   Corpo- 

ration.— ^A  corporation  is  a  creature  of  the  State,  and  there  is 
a  reserved  right  in  the  legislature  to  investigate  its  contracts 
and  find  out  whether  it  has  exceeded  its  powers.  /&. 

17.  Same.— There  is  a   clear  distinction   between   an   individual 

and  a  corporation,  and  the  latter,  being  a  creature  of  the 
State,  has  not  the  constitutional  right  to  refuse  to  submit  ita 
books  and  papers  for  an  examination  at  the  suit  of  the  State. 


CORPORATIONS— Continued. 

18.  Same. — An  officer  of  a  corporation  which  is  charged  with  crimi- 

nal violation  of  a  statute  can  not  plead  the  criminality  of  the 
corporation  as  a  refusal  to  produce  its  books.  /b. 

19.  Franchises  of  a  corporation  chartered  by  a  State  are,  so  far  as 

they  involve  questions  of  interstate  commerce,  exercised  in 
subordination  to  the  power  of  Congress  to  regulate  such  com- 
merce ;  and  while  Congress  may  not  have  general  visitatorial 
power  over  State  cori^orations,  its  powers  in  vindication  of  its 
own  laws  are  the  same  as  if  the  corporation  had  been  created 
by  an  act  of  Congress.  /&. 

20.  In  an  action  against  corporations  for  violations  of  the  Anti-Trust 

Law,  the  boolvs  of  the  various  defendants  both  before  and 
after  the  alleged  combination,  and  the  contracts  between 
them,  as  well  as  other  papers,  referred  to  in  the  opinion,  are 
all  matters  of  material  proof,  but  whether  material  or  not  the 
testimony  must  be  taken  and  exceptions  can  be  noted  by  the 
examiner  and  the  materiality  of  the  evidence  passed  on  by 
the  court.    'SeUon  v,  Vmied  States,  201  U.  S.,  92.        2—920 

21.  Corporate  Officers — Production  of  Documentary  Evidence. — The 

refusal  of  corporate  ofticers  to  obey  orders  of  a  Federal 
circuit  court  requiring  them  to  produce  certain  documentary 
evidence,  on  their  examination  before  a  special  examiner, 
can  not  be  justified  on  the  theory  that  such  evidence  was  not 
in  their  possession  or  under  their  control,  because  their  ix>s- 
session  was  not  personal,  but  was  that  of  the  corporations. 

76. 

22.  Same. — Documentary  evidence  in  the  shape  of  books  and  papers 

of  corporations  are  in  the  possession  of  the  officers  thereof. 

lb. 

23.  Same — Officers  and  Employees  Can  Not  Refuse  to  Testify  or  Pro- 

duce Books,  etc.— Hale  v.  Henkel  (vol.  2,  p.  874)  followed,  to 
the  effect  that  officers  and  employees  of  corporations  can 
not,  under  the  fourth  and  fifth  amendments,  refuse  to  testify 
or  produce  books  of  coii)orations  in  suits  against  the  corpo- 
rations for  violations  of  the  Anti-Trust  Law  of  July  2,  1890, 
in  view  of  tlie  imnmnity  given  by  the  act  of  February  25, 
190.^..  /?,. 

24.  Corporation  can  not  Claim  Immunity  Because  of  Testimony  or 

Evidence  Furnished  by  its  Officers. — A  corporation,  whether 
State  or  Federal,  can  not  claim  immunity  from  prosecution 
for  violation  of  the  interstate  commerce  or  anti-trust  laws  of 
the  United  States  because  of  testimony  given  or  evidence  pro- 
duced by  its  officers  or  agents  before  the  Interstate  Commerce 
Commission  or  the  Commissioner  of  Corporations,  or  in  any 
l)roceeding,  suit,  or  prosecution  under  such  laws ;  the  right  to 
immunity  on  account  of  evidence  so  given  in  the  several 
cases  granted  by  act  February  11,  1893  (27  Stat,  443),  and 
acts  February  14  and  February  25,  1903  (32  Stat,  827,  904), 


1126 


INDEX^ — DIGEST. 


COBPOBATIOKS— C  on  t  i  n  ium  I . 

being  limited  to  individuals  who  as  witnesses  give  testimony 
or  produce  evidence.  United  States  v.  Armour  d  Co.,  142  F., 
808.  2—951 

M,  Article  IV  of  the  Constitution  of  the  United  States  has  noth- 
ing to  do  with  the  conduct  of  individuals  or  corporations. 
It  only  iH-escribes  a  rale  by  which  courts,  Federal  and  State, 
are  to  be  guided  when  a  question  arises  in  the  progress  of  a 
pending  suit  as  to  the  faith  and  credit  to  be  given  by  the 
court  to  the  public  acts,  records,  and  judicial  proceedings  of 
a  State,  other  than  that  in  which  the  court  is  sitting. 
Mlimwaota  v.  Northern  fieenrities  Co.,  1M  V.  S.,  48.    2 — 533 

26.  Indictment — Criminal  Responsibility — Joinder  of  Defendants — 
Corporation  and  its  Officers.  See  l\  S.  v.  Mac  Andrews  d 
Forbes  Co.,  149  F.,  823,  836. 


COSTS. 


The  discretion  of  the  trial  court  under  section  7  of  the  Anti- 
Trust  Act  of  .July  2,  1890  (26  Stat,  209),  to  allow  a  reason- 
able attorney's  fee  to  the  successful  plaintiff  in  an  action 
brought  under  that  section  to  recover  damages  for  a  viola- 
tion of  the  provisions  of  that  act  against  combinations  in 
restraint  of  trade,  Is  not  abused  by  an  allowance  of  |760, 
although  the  verdict  was  but  for  ^500,  where  the  trial  took 
live  days,  and  from  the  proof  offered  it  appeared  that  from 
1750  to  ^1,000  would  he  a  reasonable  sum.  Montague  v. 
Loury,  193  U.  S.,  38.  2 — 329 


COXJBTS. 


I.  Feoebal  Coubts  in  Genekal- 

AND  Power. 


-Jurisdiction 


1.  Jurisdiction  over  Nonresident  Defendants  in  Private  Suits.— 
The  authority  given  by  section  5  of  the  act  of  July  2,  1890 
(26  Stat..  209),  to  bring  in  nonresidents  of  the  district  can 
not  be  availed  of  in  private  suits,  and  the  court  can  not 
acquire  jurisdiction  over  them.  Greer.  Mills  d  Co.  v.  Stoller, 
77  F..  1.  1—620 

8.  Jurisdiction  in  Private  Suits  Against  a  State  for  Violation  of 
Anti-Trust  law — Necessary  Parties. — Where  a  person  brings 
an  action  under  section  7  of  the  Anti-Trast  Law  of  July  2, 
1890,  against  the  officials  of  a  State,  to  recover  damages  for 
acts  done  under  authority  of  a  State  statute,  which  gives 
the  State  an  entire  monoiwly  of  the  traffic  in  intoxicating 
liquors  (act  S.  C,  Jan.  2,  1895),  the  State  itself  is  a  necessary 
party  thereto,  and  consequently  the  Federal  courts  would 
have  no  jurisdiction  of  the  action.  Loicenstein  v.  Evans, 
69  F.,  90S.  i_598 


INDEX — DIGEST. 


1127 


COURTS— Continued. 

I.  Federal  Courts  in  Gkxeral — Continued. 

3.  Court  of  Equity  can  not  Entertain  Bill  of  Private  Party  to 

Enforce  Anti-Trust  Law. — The  Anti -Trust  Law  of  July  2, 
1890,  does  not  authorize  a  court  of  equity  to  entertain  a  bill 
by  a  private  party  to  enforce  its  provisions,  his  remedy  be- 
ing by  an  action  at  law  for  damages.  Southern  hid.  Exp. 
Co.  V.  V.  S.  Exp.  Co.,  88  F.,  059.  1—862 

4.  The  United  States  can  not  maintain  a  bill  in  equity  to  restrain 

an  association  of  railroads  from  carrying  into  effect  an  agree- 
ment alleged  to  be  illegal  under  the  Interstate  Commerce 
Law,  when  it  appears  that  it  did  not  grant  the  charter  of, 
and  has  no  proprietary  interest  in,  any  of  the  roads.  Its 
liglit  is  to  prosecute  for  breaches  of  the  law,  not  to  provide 
remedies.     17.  S.  v.  Joint  Traffic  Assn.,  76  F.,  895.  1—615 

Case  reversed,  171  U.  S.,  505  (1—869). 

5.  Jurisdiction  After  Admission  of  Territory  as  State. — In  1895  the 

plaintiff  in  error  was  indicted,  with  others,  in  a  district 
court  of  the  Territory  of  Utah,  under  section  3  of  the  act  of 
July  2,  1890  (26  Stat,  209),  which  declares  illegal  "every 
*  *  ♦  combination  *  *  *  in  restraint  of  trade  or 
commerce  in  any  Territory."  In  January,  1896,  Utah  was 
admitted  as  a  State,  and  thereafter  the  case  was  transferred 
to  the  Federal  court  for  the  district  of  Utah,  where,  after 
hearing  on  demurrer  to  the  indictment,  the  plaintiff  in  error 
was  tried  and  convicted.  Held,  on  writ  of  error,  that 
neither  under  the  act  of  Congress  authorizing  Utah  to  form 
a  State  government  (28  Stat,  111,  112),  nor  the  constitution 
of  Utah  (art  24,  sec.  7),  nor  by  other  legislation,  was  juris- 
diction conferred  upon  the  Federal  court  to  proceed  with  the 
case.     Mome  v.  U.  S.,  85  F.,  465.  1—815 

6.  Same. — Held,  further,  that  the  case  did  not  come  within  the 

provisions  of  Revised  Statutes,  section  13,  regulating  the 
effect  of  the  repeal  of  statutes,  for  the  admission  of  Utah 
as  a  State  did  not  operate  to  repeal  the  act  of  July  2,  1890, 
which  still  applies  to  the  Territories  of  the  United  States.    lb. 

7.  Court  of  Equity — Adjustment  of  Difficulties  Between  Receiver  of 

Railroad  and  Employees. — Where  the  property  of  a  railway 
or  other  corporation  is  being  administered  by  a  receiver 
under  the  superintending  power  of  a  court  of  equity,  it  is 
competent  for  the  court  to  adjust  difficulties  between  the 
receiver  and  his  employees,  which,  in  the  absence  of  such 
adjustment,  would  tend  to  injure  the  property  and  to  defeat 
the  pui-pose  of  the  receivership.  Waterhouse  v.  Comer,  55  F., 
149.  1—119 

8.  Same. — It  follows,  then,  that  it  is  in  the  power  of  the  court,  in 

the  interest  of  public  order  and  for  the  protection  of  the 
proi^erty  under  its  control,  to  direct  a  suitable  arrangement 
with  its  employees  or  officers,  to  provide  compensation  and 


1128 


INDEX — DIGEST. 


COtJBTS— Contintieil . 

I.  Federal  Coukt??  in  GEXEKAL—Continuetl. 
conditions  of  their  employment,  and  to  avoid,  if  possible,  nil 
interruption  of  their  labor  and  duty,  which  will  be  disastrous 
to  the  trust  and  injurious  to  the  public.  lb. 

».  A  Conrt  of  Equity  Should  Not  Aid  by  Entertaining  Infringe- 
ment Suits  Brought  by  an  Illegal  Corporation.— A  corpora- 
tion organized  for  the  purpose  of  securing  assignments  of 
all  patents  relating  to  "spring-tooth  harrows,"  to  grant 
licenses  to  the  assignors  to  use  the  patents  upon  payment  of 
a  royalty,  to  fix  and  regulate  the  price  at  which  such  hai- 
rows  shall  be  sold,  and  to  take  charge  of  all  litigation,  and 
prosecute  all  infringements  of  such  patents  as  an  illegal 
couilM nation,  whose  purposes  are  contrary  to  public  policy, 
find  which  a  et>urt  of  equity  should  not  aid  by  entertaining 
infringement  suits  brought  in  pursuance  thereof.  National 
H arrow  Co.  v.  Quick,  67  F.,  130.  1 — 443 

10.  Jurisdiction  of  a  Court  of  Equity  can  not  be  Invoked  to  Enforce 

a  Contract  Arising  out  of  an  ITulawful  Combination  of  Rail- 
roads— Ticket  Brokers. — In  a  suit  by  a  railroad  company  to 
enjoin  the  defendants,  who  were  ticket  brokers,  from  deal- 
ing In  siiecial  tickets  issued  by  complainant  on  account  of 
the  Pan-American  Exposition,  which  were  by  their  terms 
nontransferable,  it  apiwared  from  the  showing  made  on  a 
motion  for  n  preliminary  Injunction  that  complninnnt  was  a 
member  of  a  combination  known  as  the  "  Trunk  Line  Associ- 
ation," formed  by  a  number  of  railroads  oi>erating  in  differ- 
ent States  for  the  purpose  of  preventing  eompctititm ;  that 
the  passenger  receipts  of  all  surh  roads  were  pooled  and 
dividefl  on  an  agreed  Imsis:  and  tliat  tlie  si>ecial  rates 
made  on  account  of  the  exposition  were  fixed,  and  tlie  terms 
of  the  tickets  which  were  the  basis  of  the  snit  were  pre- 
scribed l>y  such  association  through  its  passenger  com- 
mittee. IJehl  Tliat  such  combination  was  illegal,  as  in 
violation  of  the  Federal  Anti-Trust  Law  (2(J  Stat..  209), 
and  that  ecmiplainant  could  not  invoke  tlie  aid  of  :i  Federal 
court  of  equity  for  the  protection  of  rlglits  claimed  under 
contracts  which  were  the  direct  result  and  evidence  of  such 
unlawful  combination.  Delauare.  L.  tC  W.  11.  Go.  v.  Frank, 
110  F.,  (180.  2—82 

11.  A  railroad  company,  belonging  to  an  illegal  combination   in 

violation  of  the  Anti-Trust  Act  of  1890,  can  not  invoke  the 
aid  of  a  Federal  court  of  equity  for  the  protection  of  its 
rights  clainicil  under  contracts  which  were  tlie  direct  result 
and  evidence  of  such  unlawful  C(»mbination.  /ft.. 

12.  Will  Enjoin  a  Combination  Between  Two  Parallel  and  Competing 

Lines  of  Bailroad — Question  of  Public  Policy. — Where  the 
effect  of  a  combination  is  to  directly  prevent  competition 
between  two  parallel  and  naturally  comi>eting  lines  of  rail- 


INDEX — DIGEST. 


1129 


■COURTS— Continued. 

I.  Federal  Colkts  in  General— Continued, 
road  engaged  in  interstate  business,  it  is  in  restraint  of 
interstate  commerce  and  a  violation  of  the  Anti-Trust  Act 
of  July  2,  1890  (26  Stat,  209),  and  the  court,  in  a  suit  to 
enjoin  it  as  such,  can  not  consider  the  question  whether  the 
combination  may  not  be  of  greater  benefit  to  the  public 
than  competitiou  would  lie;  that  being  a  question  of  public 
l>olicy  to  be  determined  by  Congress.  U.  *Sf.  v.  Northern 
SecurUies  Co.,  120  F.,  721.  2—216 

18.  May  Restrain  Violations  of  Anti-Trust  Act  and  Frame  its 
Decree  to  Accomplish  Practical  Results. — Although  cases 
should  not  be  brought  within  a  statute  containing  criminal 
provisions  that  are  not  clearly  embraced  by  it,  the  court 
should  not  l3y  narrow,  technical,  or  forced  construction  of 
words  exclude  cases  from  it  that  are  obviously  within  its 
provisions,  and  while  the  act  of  July  2,  1890,  contains  crim- 
inal provisions,  the  Federal  court  has  power  under  section 
4  of  tlie  act  in  a  suit  in  equity  to  prevent  and  restrain 
violations  of  the  act,  and  may  mold  its  decree  so  as  to 
accomplish  i)ractical  results  such  as  law  and  justice  demand. 
Northern  Securities  Co.  v.  United  States,  193  U.  S.,  197. 

2— ;«9 

14.  Consent  of  Parties  can  Never  Confer  Jurisdiction  upon  a  Federal 

Court.  If  the  record  does  not  affirmatively  show  jurisdiction 
in  the  circuit  court,  this  court  must,  upon  its  own  motion, 
so  declare,  and  make  such  order  as  will  prevent  the  circuit 
court  from  exercising  an  authority  not  conferred  upon  it  by 
statute.     Minnesota  v.  Northern  Securities  Co..  194  U.  S.,  48. 

2—533 

15.  A  State  is  not  a  citizen  within  the  meaning  of  the  provisions  of 

the  Constitution  or  acts  of  Congress  regulating  the  jurisdic- 
tion of  the  Federal  courts.  n. 

16.  A  case  can  not,  under  existing  statutes  regulating  the  jurisdic- 

tion of  the  courts  of  the  United  States,  be  removed  from  a 
State  court,  as  one  arising  under  the  Constitution  or  laws  of 
the  United  States  unless  the  plaintiff's  complaint,  bill,  or 
declaration  shows  it  to  be  a  case  of  that  character.  76 

17.  While  an  allegation  in  a  complaint  filed  in  a  circuit  court  of 

the  United  States  may  confer  jurisdiction  to  determine 
whether  the  case  is  of  the  class  of  which  the  court  may  prop- 
erly take  cognizance  for  purposes  of  a  final  decree  on  the 
merits,  if  notwithstanding  such  allegation,  the  court  finds, 
at  any  time,  that  the  case  does  not  really  and  substantially 
involve  a  dispute  or  controversy  within  its  jurisdiction  then, 
by  the  express  command  of  the  act  of  1875,  its  duty  is  to 
proceed  no  further.  And  if  the  suit,  as  discussed  by  the 
complaint  could  not  have  been  brought  by  plaintiff  originally 
in   the   circuit   court,    then,    under   the    act   of    1887-88   it 


\ 


1130 


INDEX — ^DIGEST. 


INDEX — DIGEST. 


1131 


COUBTS— Continued. 

I.  Federal  CorRTs  ix  (iEXEKAL— Continued. 
should  not  have  been  removed  from  the  State  court  and 
should  be  remanded.  Ih. 

18.  A  State  can  not,  by  a  suit  in  its  own  name,  invoke  the  original 

jurisdiction  of  a  Federal  circuit  court  to  restrain  and  pre- 
vent  violations  by  competing  interstate  railway  companies, 
of  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209),  because, 
alone,  of  the  alleged  remote  and  indirect  injury  to  its  pro- 
prietary interests  arising  from  the  mere  absence  of  free  com- 
petition in  trade  and  conmierce  as  carried  on  by  such  car- 
riers within  its  limits.  lb. 

19.  Article  IV  of  the  Constitution  (»f  the  United  States  only  pre- 

scribes a  rule  by  which  courts,  Federal  and  State,  are  to  be 
guided  when  a  question  arises  in  the  progress  of  a  pending 
suit  as  to  the  faith  and  credit  to  be  given  by  tlie  court  to  the 
public  acts,  records,  and  judicial  proceedings  of  a  State, 
other  than  that  in  which  the  court  is  sitting.  It  has  nothing 
to  do  with  the  conduct  of  individuals  or  corporations.        Ih. 

20.  Allegation  of  Amount  in  Controversy. — It  is  not  essential  that  a 

bill  in  a  Federal  court  should  state  the  amount  or  value  in 
eontro\ersy.  if  it  appears  to  be  within  the  jurisdictional  limit, 
from  the  allegations  of  the  bill,  or  otherwise  from  the  record, 
or  from  evidence  taken  in  the  case  before  the  hearing  of 
objections  to  the  jurisdiction.  Rohinfton  v.  Suburhan  Brick 
Co,,  127  F.,  804.  2—312 

21.  Abatement — ^Pendency  of  Action  in  State  Court. — ^The  pendency 

of  a  suit  in  a  State  court  is  not  a  bar  to  one  on  the  same 
cause  of  action  in  a  Federal  court.  lb. 

22.  Production  of  Documents. — The  search  and  seizure  clause  of 

the  fourth  amendment  was  not  intended  to  interfere  with 
the  power  of  courts  to  compel  the  production  upon  a  trial  of 
documentary  evidence  through  a  subpwna  duces  tecum. 
Hale  v.  Henkel,  201  U.  S.,  43.  2—874 

Bee  also  Search,  and  Witnesses. 

23.  Orders  of  a  Federal  circuit  court  directing  witnesses  to  answer 

the  questions  put  to  them  and  produce  written  evidence  in 
their  ix>ssession  on  their  examination  before  a  sj^ecial  ex- 
aminer appointed  in  a  suit  brought  by  the  United  States  to 
enjoin  an  alleged  violation  of  the  Anti-Trust  Act  of  July  2, 
1890  (26  Stat,  209),  is  interlocutory  in  the  principal  suit, 
and  therefore  not  appealable  to  the  Supreme  Court.  An  ap- 
I)eal  does  lie,  however,  from  a  judgment  of  contempt,  at- 
tempting to  enforce  the  order.  Alexander  v.  Ufiited  States, 
201  U.  S.,  117.  2—945 

See  also  Nelson  v.  United  States,  201  U.  S.,  92  (2—920). 

24.  Admission  of  Evidence — Order  of  Proof. — In  an  action  to  recover 

damages  for  an  alleged  conspiracy  in  restraint  of  intei-state 
commerce,  it  was  within  the  discretion  of  the  trial  court  to 


COURTS— Continued. 


I.   Federal  Coikt-s  ix  Gexeral — Continut-d. 

admit  evidence  of  Jicts  and  declarations  of  various  of  the 
defendant  associations,  their  officers,  committees,  members, 
and  agents,  made  in  the  absence  of  many  of  the  other  de- 
fendants, before  a  prima  facie  case  of  conspiracy  had  been 
established,  and  before  privity  of  some  of  the  defendants  had 
been  proven,  on  condition  that  such  connecting  evidence 
should  be  thereafter  given.    Loder  v.  Jayne,  142  F.,  1010. 

2—977 
II.  Circuit  Courts. 

25.  Jurisdiction  to  Restrain  and  Punish  Violations  of  Anti-Trust 

Act. — The  circuit  court  have  jurisdiction  under  the  Anti- 
Trust  Act  of  July  2,  1890,  to  issue  injunctions  to  restrain 
and  punish  violations  of  that  act.     T.  S.  v.  Agler,  G2  F.,  824. 

1—294 

26.  Jurisdiction — ^Habeas  Corpus — Removal  of  Prisoner. — Where  a 

prisoner,  arrested  under  warrant  based  uik)u  an  indictment 
in  a  distant  State  and  district,  is  held  pending  an  applica- 
tion to  the  district  court  for  a  warrant  of  removal  for 
trial,  the  circuit  court  of  the  district  in  which  he  is  held 
has  authority  on  habeas  corpus  to  examine  such  indictment 
and  to  release  the  prisoner,  if  in  its  judgment  the  indictment 
should  be  quashed  on  demurrer.     In  re  Terrell,  51  F.,  213. 

1-^6 

27.  Habeas  Corpus — Removal  of  Prisoner — Examination  of  Indict- 

ment.— It  is  the  right  and  duty  of  the  circuit  court  on  an 
application  for  habeas  corpus  for  the  purpose  of  releasing 
a  person  held  under  a  warrant  of  a  United  States  commis- 
sioner to  await  an  order  of  the  district  judge  for  his  re- 
moval to  another  district  to  answer  an  indictment,  to  ex- 
amine the  indictment  to  ascertain  whether  it  charges  any 
offense  against  the  United  States,  or  whether  the  offense 
comes  within  the  jurisdiction  of  the  court  in  Avhich  the  in- 
dictment is  pending.     In  re  Greene,  52  F.,  104.  l — ^54 

28.  Jurisdiction— Obstruction  of  the  Mails. — The  circuit  court  had 

power  to  issne  its  process  of  injunction  upon  complaint  which 
clearly  showed  an  existing  obstruction  of  artificial  highways 
for  the  pjissage  of  interstate  commerce  and  the  transmission 
of  the  mails,  not  only  temporarily  existing,  but  threatening 
to  c-ontinue.     In  re  Debs,  158  U.  S.,  565.  1—565 

29.  Same— Violation  of  Injunction— Contempt. — Such  an  injunction 

having  been  issued  and  served  upon  the  defendants,  the  cir- 
cuit court  had  authority  to  inquire  whether  its  orders  had 
been  disobeyed,  and  when  it  found  that  they  had  been  dis- 
obeyed, to  proceed  under  Revised  Statutes,  section  725,  and 
to  enter  the  order  of  punishment  complained  of.  lb. 

80.  Same — Habeas  Corpus. — The  circuit  court  having  full  jurisdic- 
tion in  the  premises,  its  findings  as  to  the  act  of  disobedi- 


1132 


INDEX — DIGEST. 


COUBTS— Contimit'd. 

II.  CiRcriT  (.01  KTsi— Contiiuunl. 
eni-e  are  not  op<*n  to  review  011  habeas  eori^us  in  this  or  any 
other  court.  76. 

31.  The  eirenit  court  lias  power,  in  an  action  brought  by  the  At- 

torney-General, to  enjoin  the  Northern  Securities  Company, 
a  CMiriK nation  organized  to  hold  the  majority  of  tlie  stoclc  of 
l\v«i  coniiietiisg  and  parallel  lines  of  railroad  for  the  purpose 
_  of  |»reventing  eonipetition.  from  voting  such  stock,  and  from 
exerrisiiit:  any  control  whatever  over  the  acts  and  doings  of 
the  railroad  conipjinies  in  question,  and  also  to  enjoin  them 
from  paying  any  diviilends  to  the  holding  corporation  on  any 
of  the  stock  fo  lield  hy  it.  North  mi  Srcuritics  Co.  v. 
ruitcd  8i(itvs,  1IKI  IT.  S.,  11)7.  2—338 

32.  The  circuit  court  can  have  no  jurisdiction  of  a  suit  instituted 

by  a  State,  because  of  an  allegation  in  the  complaint  that  full 
faith  and  credit  will  not  be  given  to  its  public  acts  if  a  New 
Jersey  corporation  organized  for  the  puri)ose  of  acquiring 
the  control  of  two  competing  interstate  railway  companies 
engaged  in  business  within  its  limits  is  allowed  to  carry  out 
the  object  of  its  incorporation.  Minnesota  v.  Northern  Se- 
citritie.^  f'o.,  194  U.  S.,  48.  2—533 

18.  The  jurisdiction  of  the  circuit  court  to  entertain  a  suit  to  en- 
join a  combination  of  persons  from  interfering  with  and  pre- 
venting shipowners  from  shipping  a  crew  may  be  maintained 
on  tiie  ground  of  preventing  a  multiplicity  of  suits  at  law, 
and  for  the  reason  that  damages  sit  law  fur  interrupting  the 
business  and  iuten»ei>ting  the  jirofits  of  pending  enterprises 
and  vny.M.i^es  nnist.  in  their  nature,  be  conjectural  and  not 
susceptible  of  proof.  54  Fed.  Kep,,  40,  affirmed.  BUndell  v. 
Hoffau.  5(J  ¥.,  CiSXI.  1—182 

34.  The  jurisdiction  of  the  circuit  court  over  a  l»ill  in  equity  to 

enjoin  a  railroad  company  from  granting  rebates  to  favored 
shipitcrs  can  not  be  nuiintainod  wihmi  the  ground  that  such 
act  of  the  railroad  company  is  a  monopoly  within  the  mean- 
ing of  the  second  se«  tion  of  said  Anti-Tnisl  Art  (act  July 
2,  18JM),  20  Stat..  209).  United  States  v.  Ateltimn,  T.  d  8.  F, 
Hit.  Co.,  142  F.,  17<;.  2—831 

35.  The  pendency  of  a  suit  in  a  State  court  can  not  be  pleaded  in 

abatement  of  an  action  in  a  circuit  court  of  the  United 
States  to  recover  treble  damages  under  section  7  of  the  Anti- 
Tru*!t  Act  of  July  2,  1800  (2(J  Stat..  210),  since  the  State 
court  is  without  jurisdiction  to  enforce  the  remedy  given  by 
said  section,  and  therefore  the  same  case  can  not  be  depend- 
ing in  both  courts.  Loen:e  v.  Lnulor,  VM)  F.,  633.  2 — 563 
3«.  Appeal  to  Supreme  Court. — ^Where  there  are  allegations  of  di- 
verse citizenship  in  the  bill,  but  the  jurisdiction  of  the 
circuit  court  is  also  invoked  on  constitutional  grounds,  the 
case  is  appealable  directly  to  the  Supreme  Court  under  sec- 


INDEX DIGEST. 


1133 


COTJBTS— Continued. 

II.  CiKcrrr  Courts— Continued. 

tion  5  of  the  act  of  March  3,  1891,  as  one  involving  the  con- 
struction or  application  of  the  Constitution  of  the  United 
States,  and  where  both  parties  have  appealed  the  entire  case 
comes  to  this  court,  and  the  resi)ondent's  appeal  does  not 
have  to  go  to  the  Circuit  Court  of  Appeals.  Field  v.  Barber 
Asphalt  Paving  Co.,  194  U.  S.,  618.  2—555 

III.  Circuit  Court  of  Appeals. 

37.  The  Circuit  Court  of  Appeals  will  not  reverse  an  interlocutory 

order  granting  or  continuing  a  temporary  injunction  unless 
it  is  clearly  shown  that  the  same  was  improvidently  granted 
and  is  hurtful  to  the  nppellant.  Worlingmcn's  Amalg.  Coun- 
cil V.  U.  S.,  57  F.,  85.  1—184 

IV.  Supreme  Court. 

38.  Jurisdiction — ^Appeal — Dissolution  of  Illegal  Association. — The 

dissolution  of  the  freight  association  does  not  prevent  this 
court  from  taking  cognizance  of  the  appeal  and  deciding  the 
case  on  its  merits;  as,  where  parties  have  entered  into  an 
illegal  agreement  and  are  acting  under  it,  and  there  is  no 
adequate  remedy  at  law,  and  the  jurisdiction  of  the  court 
has  attached  by  the  filing  of  a  bill  to  restrain  such  or  like 
action  under  a  similar  agreement,  and  a  trial  has  been  had 
and  judgment  entered,  the  appellate  jurisdiction  of  this  court 
is  not  ousted  by  a  simple  dissolution  of  the  association 
effected  subsequently  to  the  entiy  of  judgment  in  the  suit. 
17.  8.  v.  Trans-Mo.  Ft.  Assn.,  166  U.  S.,  290.  1—648 

39.  Same. — While  the  statutory  amount  must  as  a  matter  of  fact  he 

in  controversy,  yet  the  fact  that  it  is  so  need  not  appear  in 
the  bill,  but  may  be  shown  to  the  satisfaction  of  the  court. 

lb. 

40.  Jurisdiction — Appeal — Refusal  of  Witness  to  Answer  Questions 

in  Anti-Trust  Investigation — Fifth  Amendment. — In  a  suit 
in  the  Circuit  Court  of  the  United  States  brought  by  the 
United  States  against  corporations  for  violations  of  the  Anti- 
Trust  Law  of  July  2,  1890,  a  witness  refused  to  answer  ques- 
tions or  submit  books  to  inspection  before  an  examiner  ap- 
pointed by  the  court  on  the  ground  of  immateriality,  also 
pleading  the  Fifth  Amendment ;  after  the  court  had  overruled 
the  objections  and  directed  him  to  answer  he  again  refused 
and  judgment  in  contempt  was  entered  against  him.  On  ap- 
peal to  the  Supreme  Court,  Held,  That  questions  under  the 
Constitution  of  the  United  States  were  involved  and  the 
court  has  jurisdiction  of  an  appeal  direct  from  the  circuit 
court.    Nelson  v.  United  States,  201  U.  S.,  92.  2 — ^920 

41.  Same. — In  such  an  action  the  books  of  the  various  defendants, 

both  before  and  after  the  alleged  combination,  and  the  con- 
tracts between  them,  as  well  as  other  papers  referred  to  in 
the  opinion,  are  all  matters  of  material  proof,  but  whether 


.JL'    ilk  V'     -M- 


INDEX — ^DIGEST. 


COUKTS— Ci  lilt  i  n  lie.  1 . 

IV,  SrPREME  Coi'RT— ContimuHl. 
material  or  not  the  testimony  must  be  taken  and  exceptions 
can  toe  noted  by  the  examiner  and  the  materiality  of  the 
evidence  passed  on  by  the  conrt.  lb. 

4t.  Jurisdiction — The  Order  of  a  Judgre  of  the  Circuit  Court  to  a 
Witness  to  Answer  or  be  Punished  for  Contempt  is  Interlocu- 
tory and  Not  Appealable  to  Supreme  Court. — In  a  suit  in  a 
circuit  court  of  the  United  States  brought  by  the  United 
States  against  corporations  for  violations  of  the  Anti-Trust 
Law  of  July  2,  1890,  a  witness  refused  to  answer  questions 
or  produce  books  before  the  examiner  on  the  ground  of  im- 
materially, also  pleading  the  privileges  of  the  Fifth  Amend- 
ment; the  court  overruled  the  objections  and  ordered  the 
witness  to  answer  the  questions  and  produce  the  books;  an 
appeal  was  taken  to  this  court.  Held,  That  while  such  an 
order  might  leave  the  witness  no  alternative  except  to  obey 
or  be  punished  for  contempt  it  is  interlocutory  in  the  prin- 
cipal suit  and  not  a  final  order,  nor  does  it  constitute  a  prac- 
tically indeiJendent  proceeding  amounting  to  a  final  judg- 
ment, and  an  appeal  will  not  lie  therefrom  to  this  court. 
Ahjander  v.  United  States,  201  U.  S.,  117.  2—946 

43.  Same — But  an  Appeal  from  a  Judgment  of  Contempt  is  Review- 

able.— If  the  witness  refuses  to  obey  and  the  court  goes  fur- 
ther and  punishes  him  for  contempt  there  is  a  right  of  re- 
view, and  this  is  adequate  for  his  protection  without  unduly 
imi>etling  the  process  of  the  case.  [See  also  Nelson  v.  United 
Stiihs,  2(11  U.  S.,  92  (2— 920).l  Ih. 

44.  The  jurisdiction  of  the  Supreme  Court  of  the  United  States  on 

writ  of  error  to  a  circuit  court,  under  the  Circuit  Court  of 
Appeals  act,  when  the  constitutionality  of  a  State  statute  is 
in  question,  extends  to  all  cases  in  which  such  a  question  is 
decided  against  the  claim  of  either  party,  and  therefore  in- 
cludes a  case  in  which  the  writ  of  error  is  taken  by  a  de- 
fendant who  set  up  In  defense  of  the  action  a  statute  which 
the  c-ourt  held  unconstitutional.  Connolly  v.  Union  Sewer 
Pipe  Co.,  184  U.  S.,  54'.  2—118 

45.  Same,— If  a  claim  is  made  in  the  circuit  court  that  a  State  en- 

actment is  invalid  under  the  Constitution  of  the  United 
States,  and  that  claim  is  sustained  or  rejected,  the  Supreme 
Court  may  review  the  judgment  at  the  instance  of  the  unsuc- 
cessful party.  /&• 

46.  Consent  of  Parties  can  Never  Confer  Jurisdiction  upon  a  Federal 

Court. — If  the  record  does  not  affirmatively  show  jurisdic- 
tion in  the  circuit  court,  the  Supreme  Court  must,  ui)on  its 
own  motion,  so  declare,  and  make  such  order  as  will  prevent 
the  circuit  court  from  exercising  an  authority  not  conferred 
upon  it  by  statute.  Minnesota  v.  Northern  Securities  Co., 
194  U.  S.,  48.  2—533 


INDEX — DIGEST. 


1185 


COURTS -Continued. 

II.  Supreme  Coc in— Continued. 

47.  The  findings  of  fact  made  in  a  State  court  in  a  suit  in  equity 

are  conclusive  upon  the  Supreme  Court  of  the  United  States 
on  writ  of  error  to  that  court  Dement  v.  National  Harrow 
Co.,  186  U.  S.,  70,  83.  2—169,  181 

48.  Certiorari. — Where  the  decree  of  the  Circuit  Court  of  Appeals 

in  an  action  in  equity  only  reverses  an  order  of  the  Circuit 
Court  granting  an  injunction,  but  the  court,  the  record  pre- 
senting the  whole  case,  practically  disposes  of  the  entire  con- 
troversy on  the  merits,  certiorari  may  issue  from  the  Su- 
preme Court  and  that  court  may  finally  disix)se  of  it  by  its 
direction  to  the  Circuit  Court.  Harriman  v.  Northern  Se- 
curities Co.,  197  U.  S.,  244.  2—669 

CREDIBILITY  OF  WITNESSES.     See  Jury,  2. 

DAMAGES. 

1.  Damages  Recoverable.— Only  actual  damages,  established  by  the 

proof  of  facts  fi'om  which  they  may  be  rationally  inferred 
with  reasonable  certainty,  are  recoverable  under  the  Sher- 
man Anti-Trust  Law  (26  Stat.,  209).  Speculative,  remote, 
or  contingent  daniages  can  not  form  the  basis  of  a  lawful 
judgment.     Cenirm  Coal  &  Coke  Co.  v.  Jfnrtman,  111  F.,  96. 

2—94 

2.  Same — Speculative   Damages — Evidence — Sufficiency. — The   esti- 

mates, speculations,  or  conjectures  of  witnesses  unfounded 
in  the  knowledge  of  actual  facts  from  which  the  amount  of 
the  dajnages  could  have  been  inferred  with  reasonable  cer- 
tainty will  no  more  sustain  a  judgment  than  the  conjectures 
of  a  jury.  /^^ 

3.  Same — Anticipated    Profits— When    Recoverable. — The    general 

rule  is  that  the  anticipated  protits  of  a  commercial  business 
are  too  remote,  speculative,  and  dependent  upon  changing 
circumstances  to  warrant  a  judgment  for  their  loss.  There 
is  an  exception  to  this  rule  that  the  loss  of  profits  from  the 
interruption  of  an  established  business  may  be  recovered 
where  the  plaintiff  makes  it  reasonably  certain  by  compe- 
tent proof  what  the  amount  of  his  actual  loss  was,  Jb. 

4.  Same — Profits  of  Established  Business — Evidence — Indispensable 

to  Recovery,— Proof  of  the  expenses  and  of  the  income  of  the 
business  for  a  reasonable  time  anterior  to  and  during  the 
interruption  charged,  or  of  facts  of  equivalent  import,  is 
indispensable  to  a  lawful  judgment  for  damages  for  the  loss 
of  the  anticipated  profits  of  an  established  business.        lb. 

5.  Same— Loss  of  Profits.- The  plaintiff  testified  that  the  acts  of 

the  defendants  had  greatly  diminished  his  business,  pre- 
vented him  from  making  contracts  for  future  delivery  of 
coal,  juid  diminished  his  sales  from  15  to  20  carloads  per' 
month,  on  which  he  would  have  made  a  profit  of  from  $12 
to  $20  ])er  car ;  that  he  could  not  tell  what  the  volume  of  his 


1136 


INDEX — ^DIGEST. 


DAMAGES— Conti  iiuwl. 

business*  was  before  or  after  the  acts  complained  of,  and  tliat 
lie  bad  no  books  or  papers  which  would  show  tliis  fact.  He 
produced  no  evidence  of  the  expenses  or  income  of  his  busi- 
ness before  or  after  the  acts  comphiined  of.  Held,  That  the 
evidence  was  insufficient  to  sustain  a  verdict  for  damages  for 
tlie  less  of  anticipated  profits.  lb. 

ft.  Burden  of  Proof. — In  an  action  for  damages  for  conspiracy  in 
restraint  of  interstate  conmierce  in  violation  of  act  of  Con- 
gress of  July  2,  1890  (26  Stat.,  209),  the  burden  was  on 
plaintiff  to  show  some  real  actual  damage  to  his  business 
by  reason  of  the  alleged  unlawful  combination.  Loder  v. 
Jupne,  142  F.,  1010.  2—977 

7.  Same — Compensation  for  Extra  Work — Evidence. — Where,  in  an 

action  for  damages  to  plaintiff's  business  because  of  an 
alleged  con^ipiracy  in  restraint  of  interstate  commerce,  plaiu- 
tiflf  clainietl  $5,(J00  comiiensation  to  himself  for  extra  work 
claimed  to  have  been  required  by  reason  of  such  unlawful 
combination,  but  failed  to  prove  how  much  additional  time 
he  was  required  to  spend  in  his  business  after  the  combina- 
tion went  into  effect,  he  was  not  entitled  to  recover  for  such 
alleged  extra  services.  Jb. 

8.  Same — ^Additional  Capital. — Wliere,  in  a  suit  for  damages  to 

plaintiff's  business  because  of  an  alleged  unlawful  combina- 
tion in  restraint  of  interstate  connnerce,  plaintiff  claimed 
that  because  of  such  combination  it  was  nec-essary  to  put 
110,000  extra  capital  into  his  business  from  rents  of  his 
building,  which  were  collected  from  time  to  time,  but  he 
testified  on  cross-examination  that  tlie  payments  of  interest 
and  taxes  on  the  building  were  in  excess  of  the  amount  paid 
Into  the  business,  he  was  not  entitleii  to  recover  interest  on 
such  alleged  additional  capital.  /&. 

9.  Same — ^Increased  Cost. — Where,  by  reason  of  an  unlawful  com- 

bination in  restraint  of  interstate  connnerce  in  violation  of 
the  Sherman  Act,  plaintiff  was  compelled  to  conduct  his 
business  at  a  greater  cost,  though  it  was  greater  in  volume, 
and  by  reason  of  the  injury  he  received  a  less  i)ercentage  of 
return,  he  was  entitled  to  recover  such  additional  cost, 
though  by  reason  of  his  increased  efforts  and  the  natural  in- 
crease of  his  business  he  was  enabled  to  withdraw  from  the 
business  for  his  personal  services  an  amount  equal  to,  or 
larger  than,  he  drew  from  the  business  before  the  conspiracy 
became  operative.  /ft. 

10.  The  owner  of  goods  may  dictate  the  prices  at  which  he  will 
sell  them,  and  the  damages  which  are  caused  to  an  appli- 
cant to  buy  by  the  refusal  of  the  owner  to  sell  to  him  at 
prices  which  will  enable  him  to  resell  them  at  a  profit  con- 
ttitnte  no  legal  injury,  and  are  not  actionable,  because  they 
are  not  the  result  of  any  breach  of  duty  or  of  contract  by 


INDEX — ^DIGEST. 


1137 


DAMAGES— Continued. 

the  owner.  Whitwell  v.  Continental  Tobacco  Co.,  125  P., 
454.  2—271 

Actions  fob  Recoveby.    See  Actions  and  Defenses,  21-42; 
Statutes  62-71. 

DECLABATIONS. 

1.  Averments.— A  declaration  in  an  action  for  damages  under  the 

Anti-Trust  Act  of  1890,  which  does  not  aver  that  the  goods 
manufactured  by  plaintiff,  and  in  respect  of  which  he  claims 
to  be  injured,  are  a  subject  of  interstate  commerce,  or  that 
the  acts  complained  of  have  anything  to  do  with  any  con- 
tract in  restraint  of  trade,  or  that  the  parties  are  citizens 
of  different  States,  is  demurrable.  Bishop  v.  American  Pre- 
servers Co.,  51  F.,  272.  1 ^9 

2.  Duplicity.- A  declaration  in  a  suit  based  on  section  7  of  the 

Anti-Trust  Act  of  July  2,  1890  (26  Stat,  210),  to  recover 
damages  resulting  to  plaintiff  from  a  violation  of  such  pro- 
vision, which  alleges  in  a  single  count  that  defendant  en- 
tered into  a  "  contract,  combination,  and  conspiracy  "  in  re- 
straint of  trade,  is  bad  for  duplicity.  Rice  v.  Standard  Oil 
Co.,   134   F.,   464.  2—633 

8ee  also  Pabties,  3. 

DEFENSES.     See  Actions  and  Defenses. 
DEFINITIONS.    See  Words  and  Phbases. 
DEMUBBEB. 

A  bill  in  equity,  and  the  demurrer  thereto,  are  neither  of  them 
to  be  read  and  construed  strictly  as  an  indictment,  but  are 
to  be  taken  to  mean  what  they  fairly  convey  to  a  dispas- 
sionate reader  by  a  fairly  exact  use  of  English  speech. 
Swift  d  Co.  V.  United  States,  196  U.  S.,  375.  2—642 

See  DECLABATIONS,  1 ;  Habeas  Cobpus,  1. 

DIBECT  AND  IMMEDIATE  EFFECT. 

Dibect.  See  Combinations,  etc.,  14,  19,  30,  43,  51,  63,  67,  91, 
168,  175;  Constitution,  9;  Intebstate  Commebce,  32,  37; 
Statutes,  11,  19,  23. 

Dibect  and  Immediate.    See  Combinations,  etc.,  14,  44   45 
105.  '      * 

DiBECTLY    AND    APPBECIABLY.       See    COMBINATIONS,    ETTC.,    8,    31; 

Statutes,  26. 

DiBECTLY  AND  EFFECTUALLY.      SCC  COMBINATIONS,  ETC.,  104. 
DiBECTLY   AND   NeCESSABILY.      SCC   COMBINATIONS,   ETC.,    9,    197; 

Statutes,  17. 

DiBECTLY  AND   SUBSTANTLALLY.      ScC  COMBINATIONS,  ETC.,  9,   11, 

12,  69,  70,  87,  108 ;  Congbess,  7 ;  Statutes,  10,  11,  14,  15',  16 
43,  48. 

DIVISION  OF  TEBBITOBY.     See  Combinations,  etc,  39,  136,  137. 

11808— VOL  1—06  M 72 


1188 


IHDEX — ^DIGEST. 


BOOVMEKTABT  BVIBBNCB.    See  Evidence,  8,  9 ;  and  PBODUonoN 
IMF  Documents. 

BBVGMS.    See  Combinations,  etc.,  29,  160. 

ENFOBCEMBNT.    See  Injunctions,  5,  8,  9,  13,  20,  21;  Combina- 
tions, ETC.,  16-20. 

1.  Equity  will  not  encourage  a  combination  in  restraint  of  trade 

and  probably  illegal  uuder  the  Federal  Anti-Trust  Act  of 
July  2,  1890.    Amer,  Biscuit  Mfg,  Co,  v.  Klotz,  44  F.,  721, 

X"'"  "O 

2.  Jurisdiction.— Equity  lias  jurisdiction  to  restrain  public  nui- 

lances  on  bill  or  infonimtion  filed  by  the  proper  officer  on 
behalf  of  the  people.    V,  S,  y,  Dehs,  64  F.,  724.  1—322 

8.  Same — Right  to  Jury. — ^The  power  given  by   act  of  July  2, 
1800,  to  circuit  courts  "  to  prevent  and  restrain  violations  " 
of  the  act  is  not  an  invasion  of  the  right  of  trial  by  jury, 
as  the  Jurisdiction  so  given  to  equity  will  be  deemed  to  be' 
limited  to  such  cases  only  as  are  of  equitable  cognizance. 

lb, 

4.  A  bill  in  equity  and  the  demurrer  thereto  are  neither  of  them 
to  be  read  and  construed  strictly  as  an  indictment,  but  are 
to  be  taken  to  mean  what  they  fairly  convey  to  a  dispas- 
sionate reader  by  a  fairly  exact  use  of  English  speech. 
Swift  d  Co.  V.  United  States,  196  U.  S.,  375.  2—642 

See  also  Parties  ;  Coubts  ;  Pleading  and  Pbactice. 

EVIDENCE. 

1.  Admissibility— Proclamations  of  Various  Government  Officers — 

newspaper  Reports. — In  order  to  sustain  the  allegations  of  a 
^  bill  praying  an  injunction  against  a  combination  in  restraint 

of  interstate  commerce,  the  complainant  may  offer  in  evi- 
dence, as  matter  of  history,  the  official  proclamation  of  the 
various  Government  officers  and  also  newspaper  reports  sup- 
ported by  affidavits  containing  manifestoes  and  declarations 
of  the  respondents.  U.  S,  v.  Workingmen's  Amalg.  Counoil, 
54  F.,  994.  1—110 

Case  affirmed,  57  F.,  85  (1—184). 

2.  Admission  of  Evidence — Order  of  Proof. — In  an  action  to  re- 

cover damages  for  an  alleged  conspiracy  in  restraint  of  inter- 
state commerce  it  was  within  the  discretion  of  the  trial 
court  to  admit  evidence  of  acts  and  declarations  of  various 
of  the  defendant  associations,  their  officers,  committees, 
members,  and  agents,  made  in  the  absence  of  many  of  the 
other  defendants,  before  a  prima  facie  case  of  conspiracy  had 
been  established,  and  before  privity  of  some  of  the  defend- 
ants had  been  proven,  on  condition  that  such  connecting  evi- 
dence should  be  thereafter  given.  Loder  v.  Javne,  142  F., 
1010.  2—977 

3.  Same— Burden  of  Proof.— The  burden  of  proving  a  combination 

and  conspiracy  between  manufacturers  and  wholesale  and 


INDEX — ^DIGEST. 


1139 


EVIDENCE— Continued. 

retail  dealers  of  proprietary  medicines  and  drugs  in  re- 
straint of  trade,  in  violation  of  act  of  Congress  of  July  2, 
1890  (26  Stat,  209),  injurious  to  plaintiff,  and  that  defend- 
ants were  engaged  and  took  part  in  such  conspiracy,  was  on 
the  plaintiff.  *  75, 

4.  Same — Damages — Burden  of  Proof. — In  an  action  for  damages 

for  conspiracy  in  restraint  of  interstate  commerce,  in  viola- 
tion of  act  of  Congress  of  July  2,  1890  (26  Stat,  209),  the 
burden  was  on  plaintiff  to  show  some  real  actual  damage  to 
his  business  by  reason  of  the  alleged  unlawful  combination. 

lb, 

5.  Same — Compensation  for  Extra  Work — Evidence. — ^Where,  in  an 

action  for  damages  to  plaintiff's  business  because  of  an  al- 
leged conspiracy  in  restraint  of  interstate  commerce,  plaintiff 
claimed  $5,000  compensation  to  himself  for  extra  work 
claimed  to  have  been  required  by  reason  of  such  unlawful 
combination,  but  failed  to  prove  how  much  additional  time 
he  was  required  to  spend  in  his  business  after  the  combina- 
tion went  into  effect,  he  was  not  entitled  to  recover  for  such 
alleged  extra  services.  75. 

6.  Sufficiency — Injunction  Pendente  Lite. — Evidence  that,  by  rea- 

son of  the  action  of  a  combination  of  persons,  the  crew  left 
complainants'  ship  as  she  was  about  to  sail,  and  that  another 
crew  could  not  be  procured  for  nine  days,  and  then  only  with 
the  assistance  of  the  police  authorities  and  the  protection  of 
a  restraining  order,  while  other  vessels  in  the  vicinity  had 
no  difficulty  in  getting  crews,  is  sufficient  to  authorize  the 
court  to  enjoin  interference  with  the  business  of  the  com- 
plainants by  such  combination  pendente  lite.  Blindell  v. 
Hagan,  56  F.,  696.  •  1—182 

Affirming  54  F.,  40  (1—106). 

7.  Acts  of  One  Party. — Where  several  persons  are  proved  to  have 

combined  together  for  the  same  illegal  purpose,  any  act  done 
by  one  of  them,  in  pursuance  of  the  original  concerted  plan, 
and  with  reference  to  the  common  object,  is,  in  the  con- 
templation of  the  law,  the  act  of  the  whole  party,  and  there- 
fore the  proof  of  such  act  will  be  evidence  against  any  of  the 
others  who  were  engaged  in  the  conspiracy.  U.  8.  v.  Cas- 
sidy,  67  F.,  698.  1     119 

8.  Documentary   or   Oral— Materiality.— Evidence,   whether  docu- 

mentary or  oral,  sought  to  be  elicited  from  witnesses  sum- 
moned in  an  action  brought  by  the  United  States  to  enjoin 
an  alleged  conspiracy  by  manufacturers  of  paper  to  suppress 
competition,  in  violation  of  the  act  of  July  2,  1890  (26  Stat, 
209),  by  creating  a  general  selling  and  distributing  agent,  is 
material,  where  it  would  tend  to  establish  the  manner  in 
which  such  agent  executed  its  functions.  Nelson  v.  United 
States,  201  U.  S.,  92.  2—920 


1140 


INDEX — ^DIGEST. 


EVEDBirCE— Continued. 

i.  Same. — ^Documentary  evidence  in  the  shape  of  books  and  papers 
of  corporations  are  in  the  possession  of  the  officers  thereof, 
who  can  not  refuse  to  produce  them  on  the  ground  that  they 
are  not  in  their  possession  or  under  their  control.  J6. 

10.  Same.— The  immateriality  of  the  evidence  sought  to  be  elicited 

can  not  justify  the  refusal  of  witnesses  to  obey  the  orders 
of  the  Federal  circuit  court,  requiring  them  to  answer  the 
questions  put  to  them  and  to  produce  written  evidence  in 
their  possession,  on  their  examination  before  a  special  ex- 
aminer. /J. 

11.  Same.— Objections  to  the  materiality  of  the  testimony  are  not 

open  to  consideration  on  a  writ  of  error  sued  out  by  wit- 
nesses to  review  a  judgment  for  contempt,  entered  against 
them  for  disobeying  an  order  to  testify.  /ft. 

OvEBT  Acts— CuMULATRE  Evidence.  See  U,  8.  v.  MacAndrewa 
d  Forbes  Co.,  149  F.,  836. 

See  also  Witnesses. 

EXPBESS  COMPANIES.    See  Statutes,  83. 

FAIB   AND    SEASONABLE    RESTRAINTS.    See    Combinations, 
etc.,  59,  174,  191. 

FISH.     See  Combinations,  144,  147. 

FIIRFEITT7RE  OF  OOOBS.    See  Seizure  ;  Statutes,  59. 

FRANCHISES.    See  Corporations,  19.  * 

GRANB  JURY. 

lowers— Witnesses— Refusal  to  Testify — Contempt.— Where, 
after  a  witness  had  refused  to  testify  before  a  grand  jury 
considering  supposed  infractions  of  the  Anti-Trust  Law,  the 
grand  jury  made  a  presentment  to  the  court  charging  the 
witness  with  contempt,  and  the  court,  after  hearing,  ordered 
the  witness  to  answer  the  questions  and  to  forthwith  pro- 
duce the  papers  required,  the  court*s  action  was  equivalent 
to  an  express  instruction  to  the  grand  jury  to  investigate 

.  the  matter  referred  to  in  the  presentment,  and  hence  the 
fact  that  the  grand  jury  had  been  previously  acting  beyond 
its  power  was  harmless.    In  re  Hale,  139  F.,  496.        2—804 

Order  affirmed.    Haie  v.  Henkel,  201  U.  S.,  43  (2—874). 

See  also  Immunity. 

HABEAS  CORPXra 

I.  Removal  of  Prisoner — Jurisdiction  of  Circuit  Courts. — Where  a 
prisoner,  arrested  under  warrant  based  upon  an  indictment 
in  a  distant  State  and  district,  is  held  pending  an  applica- 
tion to  the  district  court  for  a  warrant  of  removal  for  ti-ial, 
the  circuit  court  of  the  district  in  which  he  is  held  has 
authority  on  Jiaheas  corpus  to  examine  such  indictment  and 
to  release  the  prisoner,  if  in  its  judgment  the  indictment 


INDEX — ^DIGEST. 


1141 


HABEAS  CORPUS— Continued. 

should  be  quashed  on  demurrer.    In  re  Terrell,  51  F.,  213. 

-      •  .         1—16 

2.  Same.— On  haleas  corpus  to  release  a  person  held  under  a 

warrant  of  a  United  States  commissioner  to  await  an  order 
of  the  district  judge  for  his  removal  to  another  district  to 
answer  an  indictment,  it  is  the  right  and  duty  of  the  circuit 
court  to  examine  the  indictment  to  ascertain  whether  it 
charges  any  offense  against  the  United  States,  or  whether 
the  offense  comes  within  the  jurisdiction  of  the  court  in 
which  the  indictment  is  pending.    In  re  Greene,  52  F.,  104. 

1—54 

3.  Witness — Contempt— Incriminating    Evidence.— Where    a    wit- 

ness is  committed  for  contempt  in  refusing  to  answer  all  of 
a  series  of  questions,  for  the  reason  that  the  answers  would 
tend  to  criminate  him,  and  some  of  the  answers  would  have 
that  tendency,  he  should  not  be  denied  relief  on  haheas 
corpus  because  some  of  the  questions  might  be  safely  an- 
swered.   Foot  V.  Buchana/n,  113  F.,  156.  2 104 

4.  Witness  Committed  for  Contempt  by  One  Judge  Would  Not  be 

Discharged  by  Habeas  Corpus  by  Another  Judge  of  Same 
Court.— Where  a  suhpcena  duces  tecum  was  directed  to  be 
issued  by  a  circuit  judge,  and  the  witness  was  committed  * 
for  contempt  for  failure  to  obey  the  same,  he  would  not  be 
discharge  on  haheas  corpus  by  another  judge  of  the  same 
court,  though  the  latter  was  of  the  opinion  that  the  sub- 
poena authorized  an  unconstitutional  search  and  seizure  of 
private  papers.    In  re  Hale,  139  F.,  496.  2—804 

Order  affirmed  in  Hale  v.  Henkel,  201  U  .S.,  43  (2—874). 
6.  Jurisdiction  of  Circuit  Courts  in  Contempt  Proceedings.— Where 
the  circuit  court  has  full  jurisdiction,  its  findings  as  to  the 
act  of  disobedience  of  its  orders  are  not  open  to  review  on 
"     haheas  corpus  in  the  Supreme  Court  or  any  other  court.    In 
re  Dehs,  158  U.  S.,  564.  1—566 

HOLDING  COMPANIES. 

To  Vote  Stock.    See  Combinations,  etc.,  84-91,  181,  182. 
To  Receive  Assignments  of  Patents.    See  Combinations,  etc.. 
92-95,  183. 

IMMUNITY. 

1.  Of  Witnesses  Before  the  Grand  Jury.— Act  of  Congress,  Febru- 
ary 11,  1893  (27  Stat,  443),  providing  that  no  person  shall 
be  excused  from  testifying  in  a  proceeding  growing  out  of  an 
alleged  violation  of  an  act  to  regulate  interstate  commerce, 
approved  February  4,  1887,  on  the  ground  that  his  testimony 
will  tend  to  incriminate  him,  and  that  no  person  shall  be 
prosecuted,  etc.,  on  account  of  anything  concerning  which 
he  may  testify  in  such  proceeding,  applies  only  to  proceed- 
ings connected  with  the  act  of  February  4,  1887,  and  does 


1142 


INDEX — ^DIGEST. 


lOflTY— Continued. 

not  apply  to  a  prosecution  for  Violation  of  the  Anti-Trast  Act 
(26  Stat,  200),  bo  as  to  abrogate  in  relation  thereto  the 
Fifth  Amendment  to  the  Constitution,  providing  that  no  per- 
son shall  be  compelled  in  a  criminal  case  to  be  a  witness 
against  himself.    Foot  v.  Buchanan,  113  F.,  156.  8— 104 

%,  Same — dnestion  of  Incrimination  one  for  Jndge. — ^Where  a  wit- 
ness daims  that  the  answer  to  a  question  will  tend  to  in- 
criminate him,  it  is  not  for  the  witness,  but  for  the  judge, 
to  decide  whether,  under  all  the  circumstances,  such  might 
be  the  effect,  and  the  witness  entitled  to  the  privilege  of 
silence.  Ik 

8.  Same. — ^Where  a  person  has  already  been  indietei  for  an  offense 

abont  whioh  he  is  to  be  examined  as  a  witness,  and  the  ques- 
tions asked  him  tend  to  connect  him  with  such  offense,  the 
testimony  sought  is  within  the  inhibition  of  the  Fifth  Amend- 
ment to  the  Constitution  providing  that  no  person  shall  be 
comi)eIled  In  any  criminal  case  to  be  a  witness  against  him- 
self, lb. 
4.  Same — ^Witness  not  Compelled  to  act  Upon  an  Assurance  of 
Jndge. — Where  a  witness  before  a  grand  jury  declines  to 
answer  certain  questions,  and  is  talcen  before  the  judge,  who 
assures  him  that  he  can  safely  answer,  as  his  testimony  can 
not  be  used  against  him,  he  is  not  compelled  by  such  assur- 
ance to  relinquish  his  constitutional  privilege,  where  the 
answer  may  tend  to  criminate  him.  /6. 

9.  Same. — ^An  inquisition  before  a  grand  jury  to  determine  the  ex- 

istence of  supposed  violations  of  the  Anti-Trust  Act  was  a 
"proceeding"  within  the  act  of  February  19,  1903  (32  Stat, 
848),  providing  that  no  person  shall  be  prosecuted  or  sub- 
jected to  any  penalty  for  or  on  account  of  any  transaction, 
matter,  or  thing  concerning  which  he  may  testify  or  produce 
evidence  in  any  "proceeding"  under  several  statutes  men- 
tioned, including  such  Anti-Trust  Act  In  re  Hale,  139  F., 
486.  8—804 

8.  Same. — ^The  examination  of  witnesses  before  a  grand  jury  con- 
cerning an  alleged  violation  of  the  Anti-Trust  Act  of  July 
2,  1890  (26  Stat,  209),  is  a  "proceeding"  within  the  mean- 
ing of  the  proviso  to  the  act  of  February  25,  1903  (32  Stat, 
854r-903),  that  no  person  shall  be  prosecuted  or  be  subjected 
to  any  penalty  or  forfeiture  for,  or  on  account  of,  any  trans- 
action, matter,  or  thing  concerning  which  he  may  testify  or 
produce  evidence  in  any  proceeding,  suit,  or  prosecution 
under  certain  named  statutes,  of  which  the  Anti-Trust  Act 
Is  one.  The  word  "proceeding"  should  receive  as  wide  a 
construction  as  is  necessary  to  protect  the  witness  In  his 
disclosures.    Hale  v.  Hefikel,  201  U.  S.,  43.  8 — 874 

7.  Same.— The  interdiction  of  the  Fifth  Amendment  operates  only 
where  a  witness  is  asked  to  incriminate  himself,  and  does 
not  apply  if  the  criminality  is  taken  away.  /&. 


INDEX — ^DIGEST. 


1143 


IMMTJNITY— Continued. 

8.  Same. — ^A  witness  is  not  excused  from  testifying  before  a  grand 
jury  under  a  statute  which  provides  for  immunity,  because 
he  may  not  be  able,  if  subsequently  indicted,  to  procure  the 
evidence  necessary  to  maintain  his  plea.  The  law  takes  no 
account  of  the  practical  difficulty  which  a  party  may  have  in 
procuring  his  testimony.  /b. 

8.  Same. — The  difficulty,  if  any,  of  procuring  such  testimony  does 
not  render  the  immimity  from  prosecution  or  forfeiture, 
given  by  the  proviso  to  the  act  of  February  25,  1903,  In- 
sufficient to  satisfy  the  guaranty  of  the  Fifth  Amendment  to 
the  Constitution  against  self-incrimination.  /ft. 

10.  Same. — A  witness  can  not  refuse  to  testify  before  a  Federal 

grand  jury  in  face  of  a  Federal  statute  granting  immunity 
from  prosecution  as  to  matters  sworn  to,  because  the  immu- 
nity does  not  extend  to  prosecutions  in  a  State  court.  In 
granting  immunity  the  only  danger  to  be  guarded  against 
is  one  within  the  same  jurisdiction  and  under  the  same 
sovereignty.  75 

11.  Same.— The   privilege   against    self-incrimination    afforded   by 

the  United  States  Constitution,  Fifth  Amendment,  is  purely 
personal  to  the  witness,  and  he  can  not  claim  the  privilege 
of  another  person,  or  of  the  corporation  of  which  he  Is  an 
officer  or  employee.  [To  same  effect,  McAlister  v.  Henkel, 
201  U.  S.,  9(J  (2—919).]  /J,. 

18.  Same.— Under  the  practice  in  this  country  the  examination  of 
witnesses  by  a  Federal  grand  jury  need  not  be  preceded  by  a 
presentment  or  formal  indictment,  but  the  grand  jury  may 
proceed,  either  upon  their  own  knowledge  or  upon  examina- 
tion of  witnesses,  to  inquire  whether  a  crime  cognizable  by 
the  court  has  been  committed,  and  if  so,  they  may  Indict 
upon  such  evidence.  /j,, 

13.  Same. — In   summoning   witnesses   before   a   grand   jury   It   is 

sufficient  to  apprise  them  of  the  names  of  the  parties  with 
respect  to  whom  they  will  be  called  upon  to  testify,  without 
indicating  the  nature  of  the  charge  against  such  persons.    Ih. 

14.  Same.— A  corporation  charged  with  a  violation  of  the  Anti- 

Trust  Act  of  July  2,  1890,  is  entitled  to  immunity  under  the 
Fourth  Amendment  to  the  Constitution  from  such  an  un- 
reasonable search  and  seizure  as  the  compulsory  production 
before  a  grand  jury  under  a  suhposna  duces  tecum  of  all 
understandings,  contracts,  or  correspondence  between  such 
corporation  and  six  other  companies,  together  with  all  re- 
ports and  accounts  rendered  by  such  companies  from  the 
date  of  the  organization  of  the  corporation,  as  well  as  all 
letters  received  by  that  corporation  since  Its  organization, 
from  more  than  one  dozen  different  companies,  situated  In 
seven  different  States.  /^^ 


1144 


INDEX — ^DIGEST. 


nnftUNlTY— Continued. 

19.  Same. — The  protection  against  unreasonable  searches  and  seiz- 

ures afforded  by  United  States  Constitution,  Fourth  Amend- 
ment, can  not  ordinarily  be  invoked  to  justify  the  refusal  of 
an  officer  of  a  corporation  to  produce  its  books  and  papers 
in  obedience  to  a  suhpGena  duces  tecum,  issued  in  aid  of  an 
investigation  by  a  grand  jury  of  an  alleged  violation  of  the 
Anti-Trust  Act  of  July  2,  1890,  by  such  corporation.  lb. 

18.  Same.  Hale  v.  Henkel  (vol.  2,  p.  874)  followed  as  to  the  inquis- 
itorial powers  of  the  Federal  grand  jury  and  the  extent  of 
privilege  and  immunity  of  a  witness  under  the  Fifth  Amend- 
ment   McAUater  v.  Henkel,  201  U.  S.,  90.  2—919 

17.  Persons  who  furnished  evidence  in  the  "beef  trust"  investi- 

gation conducted  by  the  Commissioner  of  Corporations  pur- 
suant to  a  resolution  of  the  House  of  Representatives  of 
March  7,  1904,  although  they  did  so  without  being  sub- 
pcenaed  or  sworn,  can  not  be  prosecuted  for  violation  of  the 
Anti-Trust  Law  on  account  of  the  transactions,  matters,  or 
things  to  which  such  evidence  relates.  United  States  v. 
Armour  &  Co.,  142  F.,  808.  2—951 

18.  Same— Scope   of   Immunity   Provisions   of   Statutes.— The   im- 

munity provisions  of  the  various  statutes  applicable  to  the 
investigation,  to  be  valid,  must  be  as  broad  as  the  privilege 
given  by  the  Fifth  Amendment  to  the  Constitution.  lb. 

18.  Same.— Section  6  of  the  act  creating  the  Department  of  Com- 
merce and  Labor  (act  Feb.  14,  1903,  32  Stat,  827),  de- 
fining the  powers  and  duties  of  the  Commissioner  of  Cor- 
porations, requiring  him  to  make  investigation  into  the 
organization,  conduct,  and  management  of  the  business  of 
all  corporations  or  combinations  engaged  in  interstate  or 
foreign  commerce,  other  than  common  carriers,  and  giving 
him  the  same  powers  in  that  respect  as  is  conferred  on  the 
Interstate  Commerce  Commission  with  respect  to  carriers, 
including  the  power  to  subpoena  and  compel  the  attendance 
of  witnesses,  and  to  administer  oaths  and  require  the  pro- 
duction of  documentary  evidence,  contemplates  that  he  shall 
proceed  by  private  hearings.  Jb. 

20.  Same.— Section  6    (32  Stat,  827)   provides  that  "all  the  re- 

quirements, obligations,  liabilities,  and  immunities  imposed 
or  conferred  by  the  •  act  to  regulate  commerce '  and  by  '  an 
act  in  relation  to  testimony  before  the  Interstate  Commerce 
Commission '  shall  also  apply  to  all  persons  who  may  be  sub- 
pcenaed  to  testify  as  witnesses  or  to  produce  documentary 
evidence  in  pursuance  of  the  authority  conferred  by  this 
section.'*  /!>, 

21.  Same.— The  act  of  February  11,  1893  (27  Stat,  443),  which  is 

supplementary  to  the  Interstate  Commerce  Act,  provides  that 
"no  person  shall  be  prosecuted  or  subjected  to  any  penalty 
or  forfeiture  for  or  on  account  of  any  transaction,  matter, 


INDEX — ^DIGEST. 


1145 


IMMUNITY— Continued. 

or  thing  concerning  which  he  may  testify  or  produce  evi- 
dence, documentary  or  otherwise,  before  said  commission  or 
in  obedience  to  its  subpoena  *  *  *  or  in  any  such  case 
or  proceeding.  jb. 

22.  Same. — ^And  the  appropriation  act  of  February  25,   1908    (32 

Stat,  904),  making  provision  for  the  enforcement  of  the  in- 
terstate commerce  and  Anti-Trust  Laws,  contains  a  similar 
immunity  provision  relating  to  persons  giving  testimony  or 
producing  evidence  in  any  proceeding,  suit,  or  prosecution 
under  said  acts.  jb. 

23.  Corporations  can  not  Claim  Immunity*  because  of  Testimony 

Given  or  Evidence  Furnished  by  its  Ofllcers  or  Agents. — A 
corporation,  whether  State  or  Federal,  can  not  claim  im- 
munity from  prosecution  for  violation  of  the  interstate  com- 
merce or  Anti-Trust  Laws  of  the  United  States  because  of 
testimony  given  or  evidence  produced  by  its  officers  or  agents 
before  the  Interstate  Commerce  Commission  or  the  Commis- 
sioner of  Corporations,  or  in  any  proceeding,  suit,  or  prose- 
cution under  such  laws;  the  right  to  immunity  on  account 
of  evidence  so  given  in  the  several  cases  granted  by  act  of 
February  11,  1893  (27  Stat,  443),  and  acts  of  February  14 
and  25,  1903  (32  Stat,  827,  904),  being  limited  to  indi- 
viduals who  as  witnesses  give  testimony  or  produce  evi- 
dence.    United  States  v.  Armour  d  Co.,  142  F.,  808.    2 — 951 

IN  PABI  DELICTO.     See  Sale,  6,  7. 

INCIDENTALLY,  INDIBECTLY,  OR  REMOTELY.  See  Combi- 
nations, ETC.,  9,  105,  135,  136,  138,  139,  142,  151,  174,  176, 
205 ;  Congress,  7 ;   Statutes,  7,  8,  14,  44,  49. 

INCITING  STRIKES.     See  Combinations,  etc.,  119-125. 

INCRIMINATING  EVIDENCE.    See  Witnesses;  Immunity. 

INDICTMENTS. 

1.  Failure  to  Allege  that  Defendants  Monopolized  or  Conspired  to 
Monopolize  Trade  and  Commerce  Among  the  Several  States, 
etc. — An  indictment  under  section  2  of  the  Anti-Trust  Act 
of  July  2,  1890  (26  Stat,  209),  which  fails  to  allege  that  de- 
fendants monopolized,  or  conspired  to  monopolize,  trade  and 
commerce  among  the  several  States,  or  with  foreign  nations, 
fails  to  state  an  offense,  even  though  it  does  allege  that 
they  did  certain  acts  with  intent  to  monopolize  the  traffic 
in  distilled  spirits  among  the  several  States,  and  that  they 
have  destroyed  free  competition  in  such  traffic  in  one  of 
the  States  and  increased  the  price  of  distilled  spirits  therein. 
U.  S.  V.  Oreenhut,  50  F.,  469.  i 30 


1146 


INDEX — DIGEST. 


INBICTMBNTS— Continued. 

S.  failure  to  Charge  a  Crime.— An  Indictment  under  the  act  of 
July  2,  1890,  relating  to  monoiiolies,  averred  that  defend- 
ants, in  pursuance  of  a  combination  to  restain  trade  In  dis- 
tillery products  between  the  States  and  monoi)oliKe  the  traffic 
therein,  acquired  by  lease  or  purchase,  prior  to  the  passage 
of  the  act,  some  70  distilleries,  producing  three-quarters  of 
the  distillery  products  of  the  United  States,  and  that  they 
continued  to  operate  the  same  after  the  passage  of  the  law, 
and  by  certain  described  means  sold  the  product  at  increased 
prices.  Held,  That  no  crime  was  charged  in  respect  to  the 
purchase  or  continued  operation  of  the  distilleries,  since 
there  was  no  ayerment  that  defendants  obligated  the  vendors 
of  the  distilleries  not  to  build  others,  or  to  withhold  their 
capital  or  experience  from  the  business.  In  re  Coming,  51  F., 
33.  1—33 

S.  Same.— The  indictment  further  averred  that  defendants,  in  pur- 
suance of  the  combination,  shipped  certain  of  the  products  to 
Massachusetts,  and  sold  them  there  through  their  distribut- 
ing agents  to  dealers,  who  were  promised  a  rebate  of  5  cents 
per  gallon  on  their  purchases,  provided  such  dealers  pur- 
chased their  distillery  products  exclusively  from  the  distrib- 
uting agents,  and  sold  them  no  lower  than  the  prescribed  list 
prices,  said  rebate  to  be  paid  when  such  dealers  should  sign 
a  certificate  that  they  had  so  purchased  and  sold  for  six 
months;  and  that  by  this  means  defendants  had  controlled 
and  increased  the  price  of  distillery  products  in  Massachu- 
setts. Held,  That  no  crime  was  charged  with  respect  to  such 
sales,  since  there  was  no  averment  of  any  contract  whereby 
the  purchasers  bound  themselves  not  to  purchase  from  others, 
or  not  to  sell  at  less  than  list  prices.    /&.  1 — 34 

i.  Failure  to  Charge  a  Crime.— An  indictment  under  the  act  of  July 
2,  1890,  relating  to  monopolies,  averred  in  the  fourth  count 
that  defendants,  in  pursuance  of  a  combination  to  restrain 
trade  in  distillery  products  between  the  States,  shipped  cer- 
tain whisky  to  Massachusetts  and  sold  it  there  through  their 
distributing  agents  to  dealers  under  a  contract  whereby  said 
dealers  were  promised  a  rebate  of  5  cents  per  gallon  on  their 
purchases,  providing  such  dealers  purchased  their  dlstilleiy 
products  exclusively  from  the  distributing  agents  and  sold 
them  no  lower  than  the  prescribed  list  prices ;  said  rebate  to 
be  paid  when  such  dealers  should  sign  a  certificate  that  they 
had  so  purchased  and  sold  for  six  months ;  and  that  by  this 
means  defendants  had  controlled  and  increased  the  price  of 
distillery  products  In  Massachusetts.  Held,  That  no  crime 
was  charged  with  respect  to  such  sales,  since  there  was  no 
averment  of  any  contract  whereby  the  dealers  bound  them- 


INDEX — ^DIGEST. 


1147 


INDICTMENTS— Continued. 

selves  not  to  purchase  from  others,  or  not  to  sell  at  less  than 
list  prices.  In  re  CornUig,  51  F.,  205,  approved.  In  re 
Terrell,  51  F.,  213.  l_46 

5.  Failure  to  Allege  Contract  or  Means  of  Compulsion — ^Vagrue- 

ness. — In  an  indictment  under  section  1  of  the  act  of  July  2, 
1890,  to  protect  trade  and  commerce  against  monopolies,  one 
count  alleged,  in  substance,  that  on  a  specified  date  de- 
fendants, under  the  guise  of  the  Distilling  and  Cattle  Feed- 
ing Company,  sold  to  certain  persons  in  Boston  a  quantity  of 
alcohol,  then  in  Illinois,  and  that,  by  reason  of  the  fact  that 
said  company  controlled  the  manufacture  and  sale  of  75  per 
cent  of  all  distillery  products  in  the  United  States,  defend- 
ants fixed  the  price  at  which  the  purchasers  should  and  did 
sell  such  alcohol,  and  "  did  compel "  said  purchasers  "  to  sell 
said  alcohol  at  no  less  price  than  that  fixed  "  by  them,  but 
there  were  no  allegations  as  to  the  means  of  compulsion. 
Held,  That  it  could  not  be  assumed  from  these  allegations 
that  the  means  used  was  a  contract  with  the  purchasers,  and 
the  count  was  bad,  as  being  too  vague  to  charge  any  contract 
or  restraint  of  trade  between  the  States.  In  re  Cheene,  52 
F.,  104.  i_55' 

6.  Indictments  which  Simply  Follow  the  Language  of  the  Stat- 

ute—Tested by  Specific  Facts  Alleged.— Under  the  act  of 
July  2,  1890,  "  to  protect  trade  and  commerce  against  unlaw- 
ful restraints  and  monopolies,"  an  indictment  simply  follow- 
ing the  language  of  the  statute  would  be  wholly  insufficient, 
for  the  words  of  the  act  do  not  themselves  fully,  directly, 
and  clearly  set  forth  all  the  elements  necessary  to  constitute 
the  offense ;  and  the  indictment  must,  therefore,  be  tested  by 
the  specific  facts  alleged  to  have  been  done  or  committed.  76. 

7.  Indictment  of  Stockholders  for  Acts  of  Corporation — Omission 

to  State  Relation  Defendants  Bore  to  the  Corporation. — In 
indictments  of  individuals  under  the  said  statute,  where  all 
the  acts  alleged  to  constitute  the  ofljeuse  are  charged  to  have 
been  done  by  a  corporation,  an  omission  to  state  what  rela- 
tion defendants  bore  to  the  corporation,  other  than  that  of 
stockholders,  is  fatal,  since  mere  stockholders  can  not  be  held 
criminally  responsible  for  the  acts  of  the  corporation.      76. 

8.  Must  Contain  Description  of  the  Offense  and  a  Statement  of 

the  Facts  Constituting  Same— Words  of  Statute.— An  indict- 
ment under  the  act  of  Congress,  "to  protect  trade  and  com- 
merce against  unlawful  restraint  and  monopolies  "  (26  Stat, 
209),  must  contain  a  certain  description  of  the  offense,  and  a 
statement  of  facts  constituting  same,  and  it  is  not  sufficient 
simply  to  follow  the  language  of  the  statute.  U.  8.  v.  Nelson, 
52  F.,  646.  i__77 


1148 


INDEX — DIGEST. 


INDICTMENTS— Continued. 

».  An  Indictment  under  the  anti-trust  law  should  describe  some- 
thing that  amounts  to  a  conspiracy  under  that  act  conform- 
ably to  the  rules  of  pleading  at  common  law,  as  perhaps 
modified  by  general  Federal  statutes.  V.  8.  v.  MacAndrewa 
d  Forbes  Co.,  149  F.,  823,  831. 

10.  Must  Show  Means  Whereby  it  is  Sought  to  Monopolize.— In  an 

indictment  under  the  Anti-Trust  Act  of  1890  it  is  not  sufli- 
cient  to  declare  in  the  words  of  the  statute,  but  the  means 
whereby  it  is  sought  to  monopolize  the  market  must  be  set 
out,  so  as  to  enable  the  court  to  see  that  they  are  illegal. 
V.  8.  V.  Patterson,  55  F.,  605.  1—133 

Rehearing  on  general  demurrer,  59  F.,  280  (1—244). 

11.  Allegations  of  what  was  done  in  pursuance  of  an  alleged  con- 

spiracy are  Irrelevant  in  an  indictment  under  this  statute, 
and  are  of  no  avail  either  to  enlarge  or  to  take  the  place  of 
the  necessary  allegations  as  to  the  elements  of  the  offense. 

n.  Scope  of  the  Statute.— The  words  "  trade  "  and  "  commerce,"  as 
used  in  the  Anti-Trust  Act  of  1890,  are  synonymous.  The 
use  of  both  terms  in  the  first  section  does  not  enlarge  the 
meaning  of  the  statute  beyond  that  employed  in  the  common- 
law  expression,  "  contract  in  restraint  of  trade,"  as  they  are 
analogous  to  the  word  «  monopolize,"  used  in  the  second  sec- 
tion of  the  act  jj 

18.  The  word  "monopolize"  is  the  basis  and  limitatiou  of  the 
statute,  and  hence  an  indictment  must  show  a  conspiracy  in 
restraint  by  engrossing  or  monopolizing  or  grasping  the 
market.  It  is  not  sufficient  simply  to  allege  a  purpose  to 
drive  certain  competitors  out  of  the  field  by  violence,  annoy- 
ance, intimidation,  or  otherwise.  z^,. 

14.  Acts  of  Violence.— Where  counts  in  such  indictment  allege  a 

purpose  of  engrossing  or  monopolizing  the  entire  trade  in 
question,  acts  of  violence  and  intimidation  may  be  alleged  as 
the  means  to  accomplish  the  general  purpose.  /&. 

18.  Surplusage  in  an  indictment  can  not  be  reached  by  demurrer 
of  any  character;  but,  if  it  be  assumed  that  a  special  de- 
murrer will  lie,  it  must  point  out  the  specific  language  ob- 
jected to,  and  not  require  counsel  and  the  court  to  search 
through  the  indictment  for  what  is  claimed  as  demurrable. 
U,  8.  v.  Patterson,  59  F.,  280.  1—244 

15.  An  indictment  for  conspiracy  to  monopolize  interstate  com- 

merce in  cash  registers  need  not  negative  the  ownership  of 
patents  by  defendants,  or  aver  that  the  commerce  proposed 
to  be  carried  on  is  a  lawful  one.  /j,, 

17.  Averments.— It  is  unnecessary  to  set  out  in  detail  the  opera- 
tions supposed  to  constitute  interstate  commerce,  and  in  this 
respect  it  is  sufficient  to  use  the  language  of  the  statute,    lb. 


INDEX — ^DIGEST. 


1149 


INDICTMENTS— Continued. 

18.  It  is  unnecessary  to  allege  the  existence  of  a  commerce  which 

defendants  conspire  to  monopolize,  as  the  statute  does  not 
distinguish  between  strangling  a  commerce  which  has  been 
born  and  preventing  the  birth  of  a  commerce  which  does  not 

19.  The  indictment  need  not  show  that  the  purpose  of  the  con- 

spiracy was  to  grasp  the  commerce  into  the  hands  of  one  of 
the  defendants,  or  that  defendants  were  interested  in  behalf 
of  the  party  for  whose  benefit  they  conspired,  or  what  were 
their  relations  to  such  party.  /^^ 

20.  Grand  Jury— Finding— Indictment.— An  indictment  should  only 

be  found  where  the  grand  jury  believe  that  the  evidence  be- 
fore them  would  warrant  a  conviction.  In  re  Grand  Jury,  62 
F.,  840.  1—310 

8ee  also  XJ.  8.  v.  MacAndrews  &  Forbes  Co.,  149  F.,  823. 

INDIBECTLY.     See  Incidentally. 

INFRINGEMENT  OF  PATENTS.    8e€  Patents. 

INJUNCTIONS. 

1.  Must  be  Brought  by  the  Government.— The  act  of  July  2,  1890 

(26  Scat,  209),  does  not  authorize  the  bringing  of  injunc- 
tion suits  or  suits  in  equity  by  any  parties  except  the  Gov- 
ernment.    Blindell  v.  Hagan,  54  F.,  40.  1—106 
Case  affirmed,  56  F.,  696  (1—182). 

2.  Same.— The  intention  of  the  Anti-Trust  Act  of  July  2,  1890  (26 

Stat,  209),  was  to  limit  direct  proceedings  in  equity  to  pre- 
vent and  restrain  such  violations  of  the  Anti-Trust  Act  as 
cause  injury  to  the  general  public,  or  to  all  alike,  merely 
from  the  suppression  of  competition  in  trade  and  commerce 
among  the  several  States  and  with  foreign  nations,  to  those 
instituted  in  the  name  of  the  United  States,  under  section  4 
of  the  act,  by  district  attorneys  of  the  United  States,  acting 
under  the  direction  of  the  Attorney-General;  thus  securing 
the  enforcement  of  the  act,  so  far  as  such  direct  proceedings 
in  equity  are  concerned,  according  to  some  uniform  plan, 
operative  throughout  the  entire  country.  Minnesota  v. 
Northern  Securities  Co.,  194  U.  S.,  48.  2—533 

3.  The  right  to  bring  suits  for  injunction  under  section  4  of  the 

act  of  July  2,  1890  (26  Stat,  209),  is  limited  to  suits  insti- 
tuted on  behalf  of  the  Government.  Greer,  Mills  d  Co  v 
Stoller,  11  F.,  1.  1— 62() 

4.  The  fourth  section  of  the  Anti-Trust  Act  (26  Stat,  209)   in- 

vests the  Government  with  full  power  and  authority  to  bring 
a  suit  to  set  aside  an  agreement  between  competing  railroads 
for  the  regulation  of  rates  and  to  have  an  association 
founded  for  that  purpose  dissolved  and  its  members  en- 
joined from  carrying  out  the  terms  of  the  agreement  U.  8. 
v.  Trans-Missouri  Ft.  Assn.,  166  U.  S.,  290.  1—648 


1150 


INDEX — ^DIGEST. 


IN  JUNCTIONS— Continued. 

5.  Jurisdiction  of  Circuit  Courts. — ^The  circuit  courts  have  juris- 

diction under  tbe  Anti-Trust  Act  of  July  2,  1890,  to  issue 
injunctions  to  restrain  and  punish  violations  of  that  act. 
V.  8.  V.  Agler,  62  F.,  824.  1—294 

6.  Same— Technical  Defects  in  Bill.— That  a  bill  for  such  injunc- 

tion contains  no  prayer  for  process,  this  being  a  mere  tech- 
nical defect,  although  it  renders  the  bill  demurrable,  does 
not  affect  the  jurisdiction  of  the  court  or  render  the  injunc- 
tion issued  thereon  void.  /ft. 

7.  Same— Defendants  Hot  Named  in  Bill,  nor  Served  with  Sub- 

poena.— An  injunction  for  such  purpose  becomes  binding,  as 
against  one  not  named  in  the  bill,  and  not  served  with  sub- 
p(ena,  when  the  injunction  order  is  served  on  him  as  one  of 
the  unlcnown  defendants  referred  to'  in  the  bill.  lb. 

8.  Same — Proceedings   to   Punish   Violation. — An    information    to 

punish  violation  of  such  an  injunction  order  which  fails  to 
allege  that  the  order  was  a  lawful  one,  in  the  language  of 
the  statute,  or  that  the  person  charged,  not  named  in  the 
order,  was  one  of  the  unknown  parties  referred  to  therein, 
or  that,  either  by  Ins  words  or  his  acts,  he  was  engaged  in 
aiding  the  .^Kinimon  object  with  other  members  of  the  al- 
leged combination,  lacks  the  necessary  certainty.  lb, 

9.  Equity   Jurisdiction— Power  to  Enjoin— Right   to   Jury.— The 

ix)wer  given  by  section  4  of  the  act  July  2,  3890,  to  circuit 
courts  "to  prevent  and  restrain  violations"  of  the  act,  is 
not  an  invasion  of  the  right  of  trial  by  jury,  as  the  jurisdic- 
tion so  given  to  equity  will  be  deemed  to  be  limited  to  such 
cases  only  as  are  of  etiuitable  cognizance.  U.  8,  v.  Debs, 
m  F.,  724.  1—323 

See  also   V.  8.  v.  Elliott,  64  F.,  27   (1—311),  and  V.  8.  v. 
Agler,  ti2  F.,  824  (1—294). 

10.  Obstruction  of  Mails— Jurisdiction  of  Circuit  Court.— The  cir- 

cuit court  has  power  to  issue  its  process  of  injunction  upon  a 
couiplnint  which  clearly  shows  an  existing  obstruction  of 
artificial  highways  for  the  passage  of  interstate  commerce 
and  the  transmission  of  the  mails,  not  only  temporarily 
existing,  but  threatening  to  continue.  In  re  Debs,  158  U.  S., 
564.  1—565 

11.  Same — ^Violation  of  Injunction — Contempt. — Such  an  injunction 

having  been  issued  and  served  upon  the  defendants,  the 
circuit  court  had  authority  to  inquire  whether  its  orders 
had  hecn  disobeyed,  and  when  it  found  that  they  had  been 
disolteyed,  to  proceed  under  Revised  Statutes,  section  725, 
and  to  enter  the  order  of  punislAnent  complained  of.  lb. 

12.  Same — Habeas  Corpus. — ^The  circuit  court  having  full  jurisdic- 

tion in  the  premises,  its  findings  as  to  the  act  of  disobedience 
are  not  open  to  review  on  habeas  corpus  in  this  or  any  other 
court,  lb. 


INDEX — ^DIGEST. 


1151 


INJUNCTIONS— Continued. 

18.  Enforcement— Contempt.— The  proceeding  by  injunction  is  of  a 
civil  character,  and  may  be  enforced  by  proceedings  in  con- 
tempt, j^ 

14.  Such  proceedings  are  not  in  execution  of  the  criminal  laws  of 
the  land.  jj^ 

16.  Penalty  for   Contempt   no   Defense   in   Criminal   Action.— The 

penalty  for  a  violation  of  an  injunction  is  no  substitute  for, 
and  no  defense  to,  a  prosecution  for  any  criminal  offense 
committed  in  the  course  of  such  violation.  /ft. 

le.  Obstruction  of  Railroads.— An  injunction  will  lie  under  section 
4  of  the  Anti-Trust  Act  of  July  2,  1890,  to  restrain  a  com- 
bination whose  professed  object  is  to  arrest  the  operation 
of  the  railroads  whose  lines  extend  from  a  great  city  into 
adjoining  States  until  such  roads  accede  to  certain  demands 
made  upon  them,  whether  such  demands  are  in  themselves 
reasonable  or  unreasonable,  just  or  unjust.  Such  a  combina- 
tion is  an  unlawful  conspiracy  in  restraint  of  trade  and  com- 
merce among  the  States,  within  the  meaning  of  section  4  of 
that  act.     U.  8.  v.  Elliott,  62  F.,  801.  1—262 

Demurrer  overruled,  64  F.,  27  (1—311). 

17.  Same— Power  of  Congress  to  Authorize.— Act  of  July  2,  1890, 

section  4,  which  provides  that  the  circuit  courts  of  the 
United  States  have  jurisdiction  to  restrain  combinations  and 
conspiracies  to  obstruct  and  destroy  interstate  commerce, 
before  such  objects  are  accomplished,  is  not  void  for  want 
of  po^^  er  in  Congress  to  authorize  such  proceedings.  U.  8  v 
Elliott,  64  F.,  27.  1—311* 

18.  Injunction  Order— Persons  not  Named  in  Bill.— Under  act  of 

July  2,  1890,  section  5,  an  injunction  order  in  an  action  to 
enjoin  an  illegal  conspiracy  against  interstate  commerce  may 
provide  that  it  shall  be  in  force  on  defendants  not  named  in 
the  bill,  but  who  are  within  the  terms  of  the  order,  where  it 
also  provides  that  it  is  operative  on  all  persons  acting  in 
concert  with  the  designated  conspirators,  though  not  named 
in  the  writ,  after  the  commission  of  some  act  by  them  in 
furtherance  of  the  conspiracy,  and  service  of  the  writ  on 

them.  ,, 

_  lb. 

19.  Strike— Interference  with  Interstate  Commerce.— Where  an  in- 

junction is  asked  against  the  interference  with  interstate 
commerce  by  combinations  of  striking  workmen,  the  fact 
that  the  strike  is  ended  and  labor  resumed  since  the  filing 
of  the  bill  is  no  ground  for  refusing  the  injunction.  The 
invasion  of  rights,  especially  where  the  lawfulness  of  the 
invasion  is  not  disclaimed,  authorizes  the  injunction.  U.  8. 
V.  Workingmen's  Amalg.  Council,  54  F.,  994.  1—110 

Case  afl5rmed,  57  F.,  85  (1—184). 


1152 


INDEX — DIGEST. 


nrJOTfCnONS— ttontinued. 

to.  Injunction  in  Horthem  Securities  Case  no  Invasion  of  States' 
Rights  to  Create  Corporations. — The  enforcement  of  the  pro- 
visions of  the  Anti-Trust  Act  of  July  2.  1890  (26  Stat,  209), 
by  a  Federal  court  decree  enjoining  a  corporation  organized 
in  pursuance  of  a  combination  of  stockholders  in  two  com- 
peting interstate  railway  companies  for  the  purpose  of  ac- 
quiring a  controlling  interest  in  the  capital  stock  of  such 
companies,  from  exercising  the  power  acquired  by  such  cor- 
poration by  virtue  of  its  acquisition  of  such  stock,  does  not 
amount  to  an  invasion  by  the  Federal  Government  of  the 
reserved  rights  of  the  States  creating  the  several  corpora- 
tions, tiorthem  Securities  Co,  v.  United  States,  193  U.  S., 
197  (48  L.  ed.,  679).  2—342 

81.  Same. — A  Federal  court,  by  its  decree  in  a  suit  instituted  under 

the  authority  of  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat, 
209),  section  4,  to  prevent  and  restrain  violations  of  the  act, 
may  properly  enjoin  a  corporation  organized  in  pursuance  of 
a  combination  of  stockholder  of  two  competing  interstate 
railway  companies  for  the  purpose  of  acquiring  a  controlling 
interest  in  the  capital  stock  of  such  companies,  from  acquir- 
ing any  further  stock  therein,  from  voting  such  stock  as  it 
then  holds  or  may  subsequently  acquire,  and  from  exercis- 
ing any  control  over  the  railway  companies  by  virtue  of  its 
holdings,  and  may  restrain  the  railway  companies  from  per- 
mitting or  suffering  any  such  action  on  the  part  of  the  stock- 
holding corporation,  and  from  paying  any  dividends  on  ac- 
count of  the  stock  held  by  it.  Id. 

82.  Allowance — Comparative    Hardship   or   Inconvenience. — In    an 

application  for  a  preliminary  injunction  to  prevent  the 
Northern  Securities  Company  from  parting  with,  disposing 
of,  transferring,  assigning,  or  distributing  the  stock  of  the 
Northern  Pacific  Railway  Ck)mpany,  or  any  part  thereof,  by 
reason  of  the  decision  of  the  Supreme  Court  in  the  Northern 
Securities  Company  case  (193  U.  S.,  197),  during  the  pend- 
ency of  a  suit  to  determine  the  rights  of  the  Northern  Pa- 
cific Company  in  regard  to  such  return  or  distribution,  Held, 
That  the  preliminary  injunction  should  issue,  regard  being 
had  to  the  comparative  hardship  or  convenience  to  the 
respective  parties  resulting  from  the  awarding  or  denial  of 
the  Injunction.  Harriman  v.  Northern  Securities  Co.,  132  F., 
464.  2-— 587 

Reversed  by  Circuit  Court  of  Appeals,  134  F.,  331  (2—619). 

Action   of   Circuit   Court   of   Appeals   afiHrmed   by    Supreme 

Court,  197  U.  S.,  244  (8—669). 

23.  Same. — ^Where,  in  a  doubtful  case,  the  denial  of  a  preliminary 

injunction  would,  on  the  assumption  that  the  complainant 

ultimately  will  prevail,  result  in  greater  detriment  to  him 


INDEX — DIGEST. 


1153 


INJUNCTIONS-(^ontiniied. 

than  would,  on  tlie  contrary  assumption,  be  sustained  by  the 
defendant,  through  its  allowance,  the  injunction  usually 
should  be  granted.  /^^ 

84.  Same. — The  balance  of  convenience  or  hardship  ordinarily  is  a 
factor  of  controlling  importance  in  cases  of  substantial  doubt 
existing  at  tlie  time  of  granting  or  refusing  the  preliminary 
injunction.  j^ 

25.  Same.— Such  doubt  may  relate  either  to  the  facts  or  to  the  law 
of  the  case,  or  to  both.  It  may  equally  attach  to,  or  widely 
vary  in  degree  as  between,  the  showing  of  the  complainant 
and  of  the  defendant,  without  necessarily  being  determina- 
tive of  the  propriety  of  allowing  or  denying  the  injunction. 

lb. 

8e.  Same.— Preservation  of  Fund.— Where  the  sole  object  for  whicli 
an  injunction  is  sought  is  the  preservation  of  a  fund  in 
controversy,  or  the  maintenance  of  the  status  quo,  until  the 
question  of  right  between  the  parties  can  be  decided  on  final 
hearing  the  injunction  properly  may  be  allowed,  although 
there  may  be  serious  doubt  of  the  ultimate  success  of  the 
complainant      -  /j, 

27.  Same.— While  the  consideration  that  an  appeal   does  not   lie 

from  an  interlocutory  decree  denying  a  preliminary  injunc- 
tion is  entitled  to  no  weight  wliere,  on  the  application,  it 
clearly  appears  that  the  complainant  can  not  prevail  on  the 
final  hearing,  it  is  often  of  controlling  importance  where,  on 
such  application,  there  is  room  for  reasonable  doubt  as  to  the 
ultimate  result.  lb 

28.  Preliminary  Injunctions— Where  Material  Allegations  are  De- 

nied.—Where  the  material  allegations  of  a  bill  filed  by  the 
United  States  against  various  coal  companies,  under  act  of 
Congress,  July  2,  1890,  to  enjoin  their  combination  in  re- 
straint of  trade,  are  denied  by  defendants'  affidavits,  a 
preliminary  injunction  will  not  be  granted,  as  plaintiff  gives 
no  indemnifying  bond  in  case  the  injunction  sliould  be 
dissolved.     V.  8.  v.  Jeltico  Mtn.  Coke  &  Coal  Co,,  43  F.,  898. 

1—1 

29.  Injunction  Pendente  Lite— Evidence.— Evidence  that,  by  reason 

of  the  action  of  a  combination  of  persons,  the  crew  left  com- 
plainants' ship  as  she  was  about  to  sail,  and  that  another 
crew  could  not  be  procured  for  nine  days,  and  then  only  with 
•  the  assistance  of  the  police  authorities  and  the  protection  of 
a  restraining  order,  while  other  vessels  in  the  vicinity  had 
no  difficulty  in  getting  crews,  is  sufficient  to  authorize  the 
court  to  enjoin  interference  with  the  business  of  the  com- 
plainants by  such  combination  pendente  lite.  54  F.,  40, 
affirmed.    Blvndell  v.  Hagan,  56  F.,  696.  1—183 

21220— VOL  ^—06  M 73* 


1154 


INDEX — DIGEST. 


nrjUNCTIONS-Contimied. 

30.  Ecstraining  Orders— May  Issue  Without  Notice.— Under  section 

4  of  the  Anti-Trust  Law  of  July  2,  1890,  a  restraining  order 
may  be  issued  without  notice,  under  the  circumstances  sanc- 
tioned by  the  established  usages  of  equity  practice  in  other 
cases.     I/,  8.  v.  Coal  Dealers'  Asm.  of  Cal,  85  F.,  252. 

1—749 

31.  Preliminary   Injunctions— Review.— Where    the   opinion    of    a 

circuit  court  in  granting  a  preliminary  injunction  shows 
that  the  judge  regarded  as  of  controlling  importance  the 
fact  that  an  order  denying  the  injunction  would  not  be  re- 
viewable by  appeal,  the  rule  that  the  appellate  court  will  not 
interfere  with  the  exercise  of  the  discretionary  power  of  the 
court  of  first  Instance  unless  there  is  strong  reason  for  it 
does  not  apply,  and  the  (question  of  the  right  to  the  injunc- 
tion will  be  determined  on  the  merits.  NortJiern  Securities 
Co.  V.  Harriman,  134  F.,  331.  2—018 

Reversing  132  F.,  404  (2—587). 

32.  Same — Should  Not  be  Enjoined  from  Distributing  Assets. — De- 

fendant corporation  having  been  adjudged  an  illegal  com- 
bination in  restraint  of  interstate  commerce,  and  enjoined 
from  voting  or  receiving  dividends  on  certain  railroad  stock 
which  it  owned,  but  permitted  to  transfer  the  same  to  its 
stockholders,  a  plan  adopted  by  its  directors  and  stock- 
holders to  distribute  the  same  pro  rata  among  all  its  stock- 
holders was  equitable,  and  its  execution  should  not  be  en- 
joined. ^  ift. 

33.  Same — Bissent. — It  is  a  proper  exercise  of  discretion  for  a  court 

to  grant  a  preliminary  injunction  where  the  bill  and  evidence 
present  a  prima  facie  case  and  raise  important  and  doubtful 
questions  of  law  and  fact,  and,  unless  the  injunction  is 
gi-anted  to  preserve  the  status  quo  until  the  hearing,  the  suit 
would  be  ineflfective ;  and  an  order  for  an  injunction,  granted 
on  such  grounds  after  the  court  has  given  due  consideration 
to  the  balance  of  inconvenience  and  injury  which  may  result 
to  one  party  or  the  other,  should  not  be  reversed  by  an  ap- 
pellate court  before  the  case  has  been  finally  heard  and  de- 
termined by  the  court  below  on  full  proofs.  Per  Gray,  Cir- 
cuit Judge,  dissenting.  /ft, 

34.  Keview  of  Order  Granting  Temporary  Injunction.— The  Circuit 

Court  of  Appeals  will  not  reverse  an  interlocutory  order 
granting  or  continuing  a  temporary  injunction  unless  It  is 
clearly  shown  that  the  same  was  improvidently  granted  and 
Is  hurtful  to  the  appellant.  Workingmen's  Amalg.  Council 
V.  U.  8.,  57  F.,  85.  1—184 

See  also  Dr.  Miles  Medical  Co.  v.  Jaynes  Drug  Co.,  149  P.,  838. 


INDEX — DIGEST. 


1155 


INTERSTATE  COMMERCE. 

1.  Commerce   Defined. — The   word   "  commerce,"    as   used   in   the 

Anti-Trust  Act  of  July  2,  1890,  and  in  the  Constitution  of  the 
United  States,  has  a  broader  meaning  than  the  word 
*•  trade."  Commerce  among  the  States  consists  of  intercourse 
and  traffic  between  their  citizens,  and  includes  the  trans- 
portation of  persons  and  property,  as  well  as  the  purchase, 
sale,  and  exchange  of  commodities.  U.  8.  v.  Cassidy,  67  F., 
698.  i_^52 

2.  Scope   of  Anti-Trust   Act.— While  the  primary   object  of  the 

statute  was  doubtless  to  prevent  the  destruction  of  legiti- 
mate and  healthy  competition  in  interstate  commerce,  by  the 
engrossing  and  monopolizing  of  the  markets  for  commodi- 
ties, yet  its  provisions  are  broad  enough  to  reach  a  combina- 
tion or  conspiracy  that  will  interrupt  the  transportation  of 
such  commodities  and  persons  from  one  State  to  another. 
U.  8.  V.  Workingmen's  Amalgamated  Council,  54  F.,  995, 
cited.  jj^ 

8.  Pullman  cars  in  use  upon  railroads  are  instrumentalities  of 
"  commerce."     U.  8.  v.  Dehs,  04  F.,  763,  cited.  /ft. 

4.  Commerce — Definition. — Commerce  is  the  sale  or  exchange  of 
commodities,  but  that  which  the  law  looks  upon  as  the  body 
of  commerce  is  not  restricted  to  specific  acts  of  sale  or  ex- 
change. It  includes  the  intercourse— all  the  initiatory  and 
intervening  acts,  instrumentalities,  and  dealings — that  di- 
rectly bring  about  the  sale  or  exchange.  U.  8.  v.  Swift  & 
Co.,  122  F.,  529.  2—237 

6.  Interstate  Commerce  Includes  Purchase,  Sale,  and  Exchange  of 
Commodities. — Interstate  commerce  consists  of  intercourse 
and  traflic  between  the  citizens  or  inhabitants  of  different 
States,  and  includes  not  only  the  transportation  of  persons 
and  property  and  the  navigation  of  public  waters  for  that 
purpose,  but  also  the  purchase,  sale,  and  exchange  of  com- 
modities. Addyston  Pipe  and  Steel  Co.  v.  United  States,  175 
U.  S.,  211.  1—1009 

6.  Same— What  Constitutes  a  Violation  of  the  Statute.— Any  agree- 

ment or  combination  which  directly  operates,  not  alone  upon 
the  manufacture,  but  upon  the  sale,  transportation,  and  de- 
livery of  an  article  of  interstate  commerce,  by  preventing  or 
restricting  its  sale,  thereby  regulates  interstate  commerce 
to  that  extent,  and  thus  trenches  upon  the  power  of  the  na- 
tional legislature,  and  violates  the  Anti-Tnist  Act  of  1890  (*>6 
Stat,  209).  j^ 

7.  Commerce  Between  Two  Points  in  Same  State— Vessels  Passing 

Over  Soil  of  Adjoining  States.— Where  a  contract  relates  to 
commerce  between  points  within  a  State,  both  on  a  boundary 
river,  it  will  not  be  construed  as  falling  within  the  prohibi- 


1156 


INDEX — ^DIGEST. 


INTEBSTATE  COMMEBCE-1  Ontiniied. 

ttons  of  tlie  Sheriiiaii  Aft  because  the  vessels  affeeted  hy  the 
contract  sail  over  soil  lieloiigiiig  to  the  other  State  while 
Iiassing  between  the  interstate  points.  Chicinnuti,  eta. 
Packet  Go,  v.  Buy,  200  U.  S.,  179.  2—867 

8.  Same. — Even  if  there  is  some  interference  with  interstate  com-* 
merce,  a  contract  is  not  necessarily  void  under  tlie  Sherman 
Act  if  such  interference  is  insignilicunt  and  merely  inci- 
dental and  not  the  dominant  purpose;  the  contract  will  be 
construed  as  a  domestic  wntract  and  its  validity  determined 
by  the  local  law.  /&. 

t*  Same. — A  contract  for  sale  of  vessels,  even  if  they  are  engasecl 
in  interstate  commerce,  is  not  necessarily  void  because  the 
vendors  agrree,  as  is  ordinary'  in  case  of  sale  of  a  business 
and  its  good  will,  to  withdraw  from  business  for  a  specified 
period.  /&. 

10.  Policy  of  Congress. — It  is  the  declared  policy  of  Congress,  which 

accords  with  the  principles  of  the  common  law,  to  promote 
individnal  competition  in  relation  to  interstate  conmierce. 
and  to  prevent  combinations  which  restrain  such  competition 
between  their  luemliers,  or  between  such  nieml>ers  as  individ- 
uals and  outside  competitors.  L'.  8,  v.  Chexapcake  tC  O.  Fuel 
Co.,  105  F.,  93,  2 — :u 

Affirmed,  115  F.,  610  (2—151). 

11.  Policy  of  the  Nation  in  Regard  to.— It  has  been  the  public  policy 

of  this  nation,  from  tlie  date  of  the  passage  of  the  Interstate 
Conmierce  Act  of  1887,  to  regulate  that  part  of  interstate 
commerce  which  consists  of  transportation,  and  to  so  far  re- 
strict competition  in  freight  and  passenger  rates  l>etween 
railroad  companies  engaged  therein  as  sliall  be  necessary 
to  make  such  rates  open,  public,  reasonable,  uniform,  and 
steady,  aiul  to  prevent  discriminations  and  undue  preferences. 
I,  8.  V.  Trans-Mhsouh  Freight  .la»Vi.,  58  F.,  58.  1—186 

Decision  reversetl.  HUi  U.  S.,  290  (1—648). 

12.  The  Anti-Trust  Act  of  July  2,  1890.  embraces  and  declares  to  be 

illegal  every  contract,  combination,  or  conspiracy,  in  what- 
ever form,  of  whatever  nature,  and  whoever  may  l>e  p  irties 
to  it,  which  directly  or  necessarily  operates  in  restraint  of 
trade  or  connnerce  among  the  several  States  or  witli  foreign 
nations.  Nmthern  t>vrnritirH  Co.  v.  I  nitrd  Stateit,  193  U.  S.. 
197.     (Harlan,  Brown,  McKeuna,  Day.)  2 — :i39 

13.  Combinations,  even  among  private  manufacturers  or  dealers, 

whereby  interstate  or  international  <f>miner(e  is  restrained, 
are  equally  embraceil  by  the  act.  /ft. 

14.  Every  combination  or  conspiracy  which  would  extinguish  com-  . 

petition  between  otherwise  competing  railroads,  engaged  in 

interstate  trade  or  commerce,  and  which  would  in  tliat  way 

restrain  such  trade  or  commerce,  is  made   illegal   l>y   tlie 

1  aci.  Io% 


INDEX DIGEST. 


1157 


INTERSTATE  COMMERCE-Continued. 

16.  Congress  may,  in  the  exercise  of  the  power  conferred  upon  it 
by  the  connnerce  clause  of  the  Constitution,  prohibit  private 
contracts  which  operate  directly  and  substantially  to  restrain 
interstate  commerce.    U,  8.  v.  Northern  Securities  Co.,  120  F., 

16.  The  power  of  Congress  to  regulate  interstate  conmierceTfm^ 

prises  the  right  to  enact  a  law  prohibiting  the  citizen  from 
entering  into  those  private  contracts  which  directly  and  sub- 
stantially and  not  merely  indirectly,  remotely,  incidentally, 
and  collaterally,  regulate  to  a  greater  or  less  degree  com- 
merce among  the  States.  Ad<lyston  Pipe  ct  Steel  Co.  v 
Imted  State,,  175  U.  S.,  211.  229.  1-1009 

17.  A  State  can  not  invest  a  corporation  organized  under  its  laws 

with  the  power  to  do  acts  in  the  corporate  name  which  would 

operate  to  restrain  interstate  commerce.     V.  8.  v.  Northern 

Securities  Co..  120  F.,  721.  2— '>15 

as.  Powers  of  the  United  States-Transmission  of  the  Mails  -While 

the  United  States  is  a  Government  of  enumerated  powers 

It  has  full   attributes  of  sovereignty  within  the  limits  of 

those  powers,  an.ong  which  are  the  power  over  interstate 

commerce  and  tlie  power  over  the  transmission  of  the  mails 

In  re  Dehs,  1.58  U.  S.,  564.  ^__^ 

19.  Same.-The  powers  thus  conferred  are  not  dormant,  but  have 

been  assumed  and  put  into  practical  exercise  l»v  (N>ngres- 
sional  legislation.  '  ^  J" 

20.  Same-Removal    of    Obstructions.-In    the    exercise    of    those 

po.^rs  the  United  States  may  remove  everything  put  upon 
iHghways,  natural  or  artificial,  to  obsti-uct  the  passage  of 
interstate  connnerce,  or  the  carrying  of  the  mails.  /ft 

21.  Same-Executive  Power  May  Appeal  to  Civil  Courts.-While  it 

may  bo  competent  for  the  Governn.ent,  through  the  executive 
l>ran<.h  and  in  the  use  of  the  entire  executive  power  of  the 
na  ion,  to  forcibly  remove  all  such  obstructions,  it  is  equally 
within  Its  competency  to  appeal  to  the  civil  courts  Tor  an 
inquiry  and  detennination  as  to  the  existence  and  the  char- 

iZl  r  "'  """'  ^^"^  ''  ^^"^^  -^  '-^-^  to  exist  or 
threaten  to  occur,  to  invoke  the  powers  of  those  courts  to 

remove  or  i^strain  them,  the  jurisdiction  of  courts  to    ntel 

fere  in  such  matters  by  injunction  being  reco<^nized  from 

ancient  times  and  by  indubitable  authority.  T 

pltrnniTlnT  '''  ^7"  '^  '"^^  InJanction.-The  cm 
plaint  filed  m  this  case  clearly  shows  an  existing  obstruction 
o  art  ficial  highways  for  the  passage  of  intersta'tetm  J  :: 
.u  d  the  transmission  of  the  mails,  not  only  temporarily  e^ 
isting,  but  threatening  to  continue,  and  under  it  the  cfrc^t 
court  had  power  to  issue  its  process  of  inlunction  /^ 


1158 


I NDEX — ^DIGEST, 


IHTBBSTATE  COMMEBCE— Continued. 

28.  Carriers — Connecting^  Lines — ^Prepayment  of  Freight. — A  com- 
mon carrier  engaged  in  interstate  commerce  may  at  common 
law,  and  under  the  Interstate  Commerce  Law,  demand  pre- 
payment of  freight  charges,  when  delivered  to  it  by  one  con- 
necting carrier,  without  exacting  such  prepayment  when 
delivered  by  another  connecting  carrier,  and  may  advance 
freight  charges  to  one  connecting  carrier  without  advancing 
such  charges  to  another  connecting  carrier.  Gulf,  C.  <§  8,  F, 
Ry.  Co.  V.  Miami  S,  S.  Co.,  80  F.,  407.  1—823 

24.  Bailroad    Companies — Arrangements    for    Through    Billing. — 

There  is  no  principle  of  common  law  which  forbids  a  single 
railroad  corporation,  or  two  or  more  of  such  corporations, 
from  selecting,  from  two  or  more  other  corporations,  one  which 
they  will  employ  as  the  agency  by  which  they  will  send 
freight  beyond  their  own  lines,  on  through  bills  of  lading, 
or  as  their  agent  to  receive  freight,  and  transmit  it  on 
through  bills  to  their  own  lines,  and  without  breaking  bulk ; 
and  the  right  to  make  such  selection  is  not  taken  away  by 
the  Interstate  Commerce  Law.  {New  York  d  N.  Ry.  Co.  t. 
liew  York  d  N.  E.  R.  Co.,  50  Fed.,  867,  explained.)  Prescott 
d  A.  C.  R.  Co,  V.  Atchimti,  T.  d  8.  F.  R.  Co.,  73  F.,  438. 

1— fi04 

25.  Kansas   City   Live    Stock   Association — Engaged   in   Interstate 

Commerce.— Where  the  shipments  of  live  stock  from  growers, 
dealers,  and  traders  In  various  States  and  Territories  to 
the  defendants,  the  Kansas  City  Live  Stock  Association, 
was  solicited  by  the  latter  chiefly  through  personal  solicita- 
tion of  traveling  agents,  and  through  advertisements,  the 
course  of  business  involving  frequent  loans  to  shippers  in 
other  States,  secured  by  chattel  mortgages  on  herds,  and 
frequent  drafts  drawn  by  shippers  on  the  defendants,  and 
discounted  at  their  local  banks  in  other  States  on  the 
strength  of  bills  of  shipment  attached  thereto,  shipments 
being  made  to  Kansas  City,  and  the  loans  or  drafts  paid 
from  proceeds  of  sale,  and  the  balance  remitted  to  the 
shippers,  and  sales  at  Kansas  City  were  made  for  shipment 
to  markets  in  other  States,  as  well  as  for  slaughter  at  pack- 
ing houses  near  by,  the  traffic  being  of  Immense  proportions, 
and  defendants  active  promoters,  and  frequently  Interested 
parties,  gathered  In  for  sale  and  slaughter  millions  of  cattle, 
sheep,  and  hogs ;  and  their  rules  and  regulations  covered  the 
entire  business,  and  extended  over  the  whole  field  of  opera- 
tion, held,  that  defendants  were  engaged  in  commerce  be- 
tween the  States,  and  were  subject  to  the  provisions  of  the 
law  of  July  2,  1890,  against  trusts  and  monopolies.  U.  8.  v. 
Hopkins,  82  F.,  529.  1—725 

Reversed,  171  U.  S.,  578  (1—941). 


INDEX — ^DIGEST. 


1159 


INTERSTATE  COMMERCE— Continued. 

26.  Same. — Live  stock  shipped  from  various  States  to  the  yards  of 

a  stock-yards  association  in  another  State,  by  the  solicitation 
and  procurement  of  the  members  thereof,  to  be  there  sold 
or  to  be  reshipped  to  other  States,  if  the  market  should  be 
unsatisfactory,  does  not  cease  to  be  a  subject  of  interstate 
commerce  as  soon  as  it  reaches  such  yards  and  is  there  un- 
loaded, nor  until  it  has  been  further  acted  upon  so  as  to 
become  mingled  with  the  mass  of  property  in  the  State.    /&. 

27.  Same.— The  fact  that  the  place  of  business  of  an  association  is 

located  upon  both  sides  of  the  line  dividing  two  States  is 
in  itself  of  no  material  importance  in  determining  whether 
the  business  transacted  by  it  is  commerce  between  the 
States.  7^ 

28.  Same. — ^The  fact  that  a  State  line  runs  through  stock  yards, 

and  that  sales  may  be  made  of  a  lot  of  stock  in  the  yards 
which  may  be  partly  in  one  State  and  partly  in  another, 
has  no  effect  to  make  the  business  of  selling  stock  interstate 
commerce.    Hopkins  v.   United  Stales,  171  U.  S.,  578. 

1—941 

29.  Same. — The  business  of  buying  and  selling  live  stock  at  stock 

yards  in  a  city  by  members  of  a  stock  exchange  as  commission 
merchants  is  not  interstate  commerce,  although  most  of  the 
purchases  and  sales  are  of  live  stock  sent  from  other  States, 
and  the  members  of  the  stock  exchange  are  employed  to  sell 
l>y  letter  from  the  owners  of  the  stock  in  other  States,  and 
send  agents  to  other  States  to  solicit  business,  and  advance 
money  to  the  cattle  owners,  and  pay  their  drafts,  and  aid 
them  in  making  the  cattle  fit  for  market.  Hopkins  v. 
United  States,  171   U.  S.,  578.  1—941 

Reversing,   82   R,   578    (1—725). 

30.  Same.— A  by-law  of  the   Kansas   City   Live   Stock   Exchange, 

which  regulates  the  commissions  to  be  charged  by  members 
of  that  association  for  selling  live  stock  is  not  in  restraint 
of  interstate  commerce,  or  a  violation  of  the  act  of  July 
2,  1800,  to  protect  commerce  from  unlawful  restraints,     lb. 

31.  Same.— A  commission  agent  who  sells  cattle  at  their  place  of  des- 

tination, which  are  sent  from  another  State  to  be  sold,  is  not 
engaged  in  interstate  commerce;  nor  is  his  agreement  witli 
others  in  the  same  business,  as  to  tlie  commissions  to  he 
charged  for  such  sales,  void  as  a  contract  in  restraint  of  that 
conniierce.  ^^ 

32.  Same.— In  order  to  come  within  the  provisions  of  the  statute, 

the  direct  eflfect  of  an  agreement  or  combination  must  1)0  in 
restraint  of  trade  or  counnerce  among  the  several  States 
or  with  foreign   nations.  f^^ 

33.  Same.— Restrictions  on  sending  prepaid  telegrams  or  telephone 

messages,  made  by  a  by-law  of  a  live-stock  excliange,  when 


INDEX — DIGEST. 


INTERSTATE  COMMERCE- Continual. 

these  restrictions  are  merely  for  the  regulation  of  the  business 
of  the  members,  and  do  not  affect  the  business  of  the  tele- 
graph eomi»auy,  are  not  void  as  regulations  of  intei-state 
commerce.  ij), 

34.  Same.— The  business  of  agents  in  soliciting  consignments  of 

cattle  to  commisison  merchants  in  another  State  for  sale  is 
not  interstate  commerce,  and  a  by-law  of  a  stock  exchange  re- 
stricting the  number  of  solicitors  to  three  does  not  restrain 
that  connnerce  or  violate  the  act  of  Congress.  /ft. 

S5.  Same. — A  combination  of  commission  merchants  at  stock  yards, 
by  which  they  refnse  to  do  business  with  those  who  are  not 
members  of  their  association,  even  if  it  is  illegal,  is  not  sub- 
ject to  the  act  of  Congress  of  July  2,  1$90,  to  protect  trade 
ami  couHiierce,  since  their  business  is  not  interstate  com- 
merce. .  /ft. 

9i.  Beef  Trust — Combination  to  Monopolize  Interstate  Commerce  in 
Iresh  Meats. — Interstate  couuuerce  is  unlawfully  restrained, 
in  violation  of  the  act  of  July  2,  1890  (2G  Stat..  209),  by  a 
combination  of  indei)endent  meat  dealers,  in  aid  of  an  at- 
tempt to  monoiiolize  connnerce  in  fresh  meat  among  the 
States,  to  bid  up  prices  for  live  stock  for  a  few  days  at  a 
time,  in  order  to  induce  cattle  men  In  other  States  to  make 
large  shipments  to  the  stock  yards,  or  by  a  combination  for 
the  same  puriJO.«e  to  fix  the  selling  price  of  fresh  meat,  and 
to  that  end  to  restrict  shipments,  when  necessary,  to  estab- 
lish a  unlfonn  rule  of  credit  to  dealers,  and  to  keep  a  black 
list,  or  by  a  combination  in  aid  of  such  purpose  to  make 
uttifonn  and  improper  charges  for  cartage  for  the  delivery 
of  meat  sold  to  be  sliipped  to  dealers  and  consumers  in  the 
several  States.    Sicift  tC-  Co,  v.  UnHed  States,  196  U.  S.,  375. 

a— 043 

37.  The  effect  rpon  interstate  commerce  of  a  combination  of  a 
doniinnnt  portion  of  the  dealers  in  fresh  meat  throughout 
the  United  States  not  to  bid  against,  or  only  in  conjunction 
with,  each  other  in  order  to  regulate  prices  in  and  induce 
shipments  to  the  live-stock  markets  in  other  States,  to 
restrict  shipments,  etc.,  with  intent  to  monopolize  commerce 
among  the  States,  is  direct  and  not  accidental  or  secondary 
as  in  U.  S.  v.  E.  C.  Knight  Co,,  150  U.  S.,  1.  Swift  <£  Co,  v. 
United  States,  190  U.  S.,  375.  a— 041 

35.  When  cattle  are  sent  for  sale  from  a  place  in  one  State,  with 

the  expectation  they  will  end  their  transit,  after  purchase, 
in  another  State,  and  when  in  effect  they  do  so,  with  only 
the  interruption  necessary  to  find  a  purchaser  at  the  stock 
yards,  and  when  this  Is  a  constantly  recurring  conrse,  it 
constitutes  interstate  commerce  and  the  purchase  of  the 
cattle  is  an  incident  of  such  commerce.  /ft. 


INDEX — DIGEST. 


1161 


INTERSTATE  COMMERCE— Continued. 

39.  Although  the  jurisdiction  of  Congress  over  commerce  among 
the  States  is  full  and  complete,  it  is  not  questioned  that  it 
has  none  over  that  which  is  wholly  within  a  State,  and 
therefore  none  over  combinations  or  agreements  so  far  as 
they  relate  to  a  restraint  of  such  trade  or  commerce;  nor 
does  it  acquire  any  jurisdiction  over  that  part  of  a  combina- 
tion or  agreement  which  relates  to  commerce  wholly  within 
a  State  by  reason  of  the  fact  that  the  combination  also 
covers  and  regulates  commerce  which  is  interstate.  Addy- 
8ton  Pipe  and  Steel  Co.  v.  U.  S.,  175  U.  S.,  211.  1—1009 

Power  of  Congress  Over.    See  Congress. 

Prepayment  of  Freight.    See  Carriers. 

See  also  Corporations,  2,  3;  Actions  and  Defenses,  72,  73; 
and  Combinations,  etc.,  generally,  particularlv  paragraphs 
54-70,  134-151. 

IRON  PIPE.    See  Combinations  i-tc,  130. 

JOINT  RATES  AND  BILLING.     See  Carriers. 

JOINT    TRAFFIC    ASSOCIATIONS.    *Sfec    Combinations,    103-104. 
180-192. 

JUDGMENT. 

Oeneral  expressions  in  an  opinion  which  are  not  essential  to 
dispose  of  a  case  are  not  i>ermitted  to  control  the  judgment 
in  subsequent  suits.  Harriman  v.  Northern  Securities  Co,, 
197  U.  S.,  244.  2—669 

JURISDICTION. 

1.  In  a  suit  instituted  in  the  name  of  the  United  States,  under  the 

Anti-Trust  Law,  jurisdiction  depends  alone  upon  the  act,  and 
the  court  is  concerned  with  no  case  between  private  persons 
or  corporations,  where  jurisdiction  depends  on  other  condi- 
tions, and  in  which  proceeding  a  common-law  remedy  might 
become  available.    U.  S.  v.  Addyston  Pipe  d  Steel  Co.,  78  F., 

■^l--  1—631 

2.  Nonresidents.— The  authority  given  by  section  5  of  the  act  of 

July  2,  1800  (20  Stat.,  290),  to  bring  in  nonresidents  of  the 
district  can  not  be  availed  of  in  private  suits,  and  the  court 
can  acquire  no  jurisdiction  over  them.  Greer,  Mills  d-  Co.  v. 
Stoller,  V7  F.,  1.  1—620 

Sec  also  Courts;  States,  8,  10;  United  States. 
JURY. 

1.  Reasonable  Doubt.— A  reasonable  doubt  is  one  arising  out  of 
the  evidence ;  not  an  imaginary  doubt,  a  fanciful  conjecture, 
or  strained  inference,  but  such  a  doubt  as  a  reasonable  man 
would  act  upon  or  decline  to  act  upon  when  his  own  concerns 
are  involved— a  doubt  for  which  a  good  reason  can  be  given, 
which  reason  must  be  based  upon  the  evidence  or  want  of 
evidence.    U.  S,  v.  Cassidy,  07  F.,  098.  1-^52 


1162 


INDEX — ^DIGEST. 


J  UJftY— Conlimieii  " 

8.  Oredlliility  of  Wltiie»se«.— Tlie  Jury  are  the  exclusive  judges  of 
tbe  credibility  of  tiie  witnesses.  A  witness  is  presumed  to 
speak  tbe  trutb,  but  tbis  presumption  may  be  repelled  by  tbe 
manner  in  wblch  lie  testifies,  by  tbe  character  of  bis  testi- 
mony, or  by  tbe  evidence  affecting  bis  character  for  truth, 
honesty,  or  integrity,  or  bis  motives,  and  by  contrary  evi- 
dence. But  the  i)ower  of  the  Jury  to  Judge  of  tlie  effect  of 
evidence  is  not  arbitrary;  it  must  be  exercised  with  legal 
discretion,  and  in  subordination  to  the  rules  of  evidence.    lb. 

8.  Validity  of  Contract — ^Whcii  Question  for  Jury. — Ck)nceding  that 
a  contract  legal  in  its  terms  and  in  its  consideration  may  be 
rendered  illegal  as  against  public  policy  by  reason  of  the 
intention  of  the  parties  to  so  use  it  as  to  commit  civil  injury 
to  third  persons,  where  tbe  evidence  as  to  such  intention  is 
conflicting  the  contract  can  not  be  declared  illegal  by  the 
court  as  matter  of  law.  U,  8,  v.  Consolidated  Seeded  Raistn 
Co.,  126  F.,  364.  2—288 

See  also  Witnesses  ;  Gbano  Juby. 

IiABOB  OBQANIZATIOITS. 

1.  Ibe  employees  of  railway  companies  have  a  right  to  organize 

for  mutual  benefit  and  protection,  and  for  the  pui-pose  of 
securing  the  highest  wages  and  the  best  conditions  they  can 
command.  They  may  appoint  officers,  who  shall  advise 
them  as  to  the  course  to  be  taken  in  their  relations  with 
their  employer,  and  they  may,  if  they  choose,  repose  In  their 
officers  authority  to  order  them,  or  any  of  them,  on  pain 
of  expulsion  from  their  union,  i^eaceably  to  leave  the  employ- 
ment because  the  terms  thereof  are  unsatisfactory.  But  it  is 
unlawful  for  them  to  combine  and  quit  work  for  the  pur* 
pose  of  compelling  their  employer  to  withdraw  from  his  re- 
lations with  a  third  party,  for  the  purix>se  of  injuring  that 
third  party.  Thomas  v.  Itmlwan  Co.,  02  Fed.,  817,  followed. 
17.  8.  V.  Cassidy,  67  F.,  Gl)8.  1—452 

2.  Same. — ^A  strike,  or  a  preconcerted  quitting  of  work,  by  a  com- 

bination of  railroad  employees,  is,  in  itself,  unlawful,  if  the 
concerted  action  is  knowingly  and  willfully  directed  by  the 
parties  to  it  for  tbe  puriwse  of  obstructing  and  retarding 
the  passage  of  the  mails,  or  in  restraint  of  trade  and  com- 
merce among  the  States.  lb. 
See  aUo  Combinations,  etc.,  in  Restraint  of  Trade,  113-133, 
213 ;  Courts,  7,  8. 

LIABIUTY.     See  Statutes.  64. 

LICOmCE  PASTE  TRXTST.    See  U.  S.  v.  MacAndrews  &  Forbes  Co., 
149  F.,  823. 

MMITATION  OF  ACTION.    See  Actions  anii  Dki  exsks.  P.Ck 


INDEX DIGEST. 


11G3 


IiIQXrOR  TRAFFIC.    *S'ee  Combinations,  etc.,  217;  Courts.  2. 

LIVE-STOCK    ASSOCIATIONS    AND    EXCHANGES,    ETC.     See 
Combinations,  etc.,  78-«1,  167-176. 

LUMBER.     x<  V  Combinations,  etc.,  30-32,  134,  135,  211,  212. 

MAILS,  OBSTRUCTION  OF.     See  Combinations,  etc.,  127,  129,  133. 

MARKET  QUOTATIONS.    See  Combinations,  etc,  177-180. 

MANUFACTURERS. 

Right  to  Regulate  Prices  of  Their  Own    Products.    See 
Combinations,  etc.,  160-166. 

MINNESOTA. 

1.  Anti-trust  law  of  Minnesota   Should  Receive  the   Same   Con- 

struction as  the  Sherman  Anti-Trust  Law. — The  anti-trust 
law  of  Minnesota  (Laws  1899,  p.  487,  c.  359),  maldng  un- 
la\^ful  any  contract  or  combination  in  restraint  of  trade  or 
commerce  within  the  State,  is  in  substantially  the  same 
language  as  the  Sherman  Anti-Trust  Law  of  July  2,  1890 
(26  Stat.,  209),  and  must  receive  a  similar  construction. 
Minnesota  v.  Northern  Securities  Co.,  123  F.,  692.  2 — 246 
Case  reversed,  194  U.  S.,  48,  and  remanded  to  State  court. 
Circuit  court  without  jurisdiction  (2—533). 

2.  Following  the  decisions  of  the  United  States  Supreme  Court 

construing  the  latter  act,  the  Minnesota  law  applies  to  rail- 
roads, and  any  contract  or  arrangement  between  railroad 
companies  for  the  purpose  and  having  the  effect  of  prevent- 
ing competition  by  fixing  rates  to  be  maintained  by  the  par- 
ties is  in  violation  of  its  provisions;  but  contracts  or  com- 
binations which  do  not  directly  and  necessarily  affect  trans- 
portation, or  rates  therefor,  are  not  in  restraint  of  trade  or 
commerce,  nor  within  the  statute,  even  though  they  may 
remotely  and  indirectly  appear  to  have  some  probable  effect 
in  that  direction.  /j. 

3.  Same — Stockholding    Corporation. — ^A    holding   corporation   or- 

ganized by  individual  stockholders  of  two  railroad  compa- 
nies, owning  and  operating  substantially  parallel  and  com- 
peting lines  of  railroad  within  the  State  of  Minnesota,  for 
the  sole  purpose  of  acquiring,  by  the  exchange  of  its  own 
stock  therefor,  stock  of  the  two  companies,  and  holding  and 
voting  the  same,  but  having  no  power  or  franchise  to  operate 
a  railroad,  is  not  in  violation  of  the  Minnesota  anti-trust  law 
(Laws  1899,  p.  487,  c.  359),  which  provides  that  "any  con- 
tract, agreement,  arrangement,  or  conspiracy,  or  any  com- 
bination in  the  form  of  a  trust  or  otherwise  ♦  *  * 
which  is  in  restraint  of  trade  or  commerce  within  this 
State    *    *    *    is   hereby   prohibited   and   declared   to   be 


1164 


INDEX — DIGEST. 


MIlfNESOTA— Continuetl. 

luilawfiil."  where  the  imvitoMi  of  its  i»i*omoters  was  thereby 
to  acqiiiio  and  retain  in  the  same  hands  a  majority  of  the 
stoclt  of  one  or  both  coiiipauies,  to  insure  uniformity  of 
pjliey  and  stability  of  manaj?enient,  although  it  in  fact  ac- 
quired the  controiling:  interest  in  both,  in  the  absence  of 
any  evidence  that  it  ever  exercised  its  power  to  prevent 
competition  l>etween  the  two  roads,  or  to  interfere  in  any 
manner  with  tlie  fixing  of  rates  by  either  company.  lb. 

4.  Same — Enforcement   of  Statute— Jurisdiction   or  Equity. ^The 

anti-trust  law  of  Minnesota  (Laws  1809,  p.  487,  c.  359)  im- 
poses severe  i>enalties  for  its  violation,  but  contains  no  pro- 
vision for  restraining  or  enjoining  violations,  and  without 
such  statutory  authority  a  court  of  equity  has  no  jurisdic- 
tion to  enjoin  an  act  which  constitutes  a  criminal  offense. 

MONOPOLY. 

1.  Need  not  be  a  Complete  Monopoly.    In  order  to  vitiate  a  contract 

or  combination  it  is  not  (essential  tliat  its  result  should  be  a 
complete  monoiwly ;  it  is  sufficient  if  it  really  tends  to  that 
end  and  to  deprive  the  i)nl»rH-  of  the  advantages  which  flow 
from  free  ♦•omi»etitiou.  r.  .V.  v.  E,  V.  Kn'njht  Co.,  156  U.  S. 
1,   16.  *  1—392 

2.  Congress  did  not  attempt  by  the  act  of  July  2,  1890,  to  assert 

the  power  to  deal  with  mono|M»Iy  directly  as  such;  or  to 
limit  and  restrict  the  rights  of  corporations  created  by  the 
States  or  the  citizens  of  the  States  in  the  acquisition,  con- 
trol, or  disposition  of  property;  or  to  regulate  or  prescribe 
the  price  or  prices  at  which  such  property  or  the  products 
thereof  slmuld  be  sold ;  or  to  make  criminal  the  acts  of  per- 
sons in  the  anpiisition  and  conti'ol  of  proi)erty  which  the 
States  of  their  residence  or  creation  sanctioned  or  per- 
mitted. Aside  from  the  provisions  applicable  where  Con- 
gress might  exercise  nuinicipal  i)ower,  what  the  law  struck 
at  was  combinations,  contracts,  and  conspiracies  to  monopolize 
trade  and  commerce  among  the  several  States  or  with  for- 
eign nations.  j^^ 
8.  Bie  word  '*  monopolize  "  was  not  intended  to  be  used  with  ref- 
erence to  the  acquisition  of  exclusive  rights  under  Govern- 
ment concession,  but  the  word  was  used  to  mean  "  to  aggre- 
gate "  or  'concentrate"  in  the  hands  of  few,  practically, 
and,  as  a  matter  of  fact,  and  according  to  the  known  results 
of  human  action,  to  the  exclusion  of  others;  to  accomplish 
this  end  by  what,  in  popular  language,  is  expressed  in  the 
word  "  pooling,"  which  may  be  defined  to  l)e  an  aggregation 
of  property  or  capital  l»elonging  to  different  i>ersons,  with 
a  view  to  common  liabilities  and  profits.  ,4wier.  Biscuit  & 
Mfg.  Vo.  v.  Klotz,  44  F..  721,  724.                                    i— 7 


INDEX — ^DIGEST. 


1165 


MONOPOLY— Continued. 

4.  To  constitute  the  olTense  of  "monopolizing,  or  attempting  to 
monoi)olize,"  trade  or  connuerce  among  the  States,  within 
the  meaning  of  section  2  of  said  act,  it  is  necessary  to  ac- 
quire, or  attempt  to  acquire,  an  exclusive  right  in  such  com- 
merce by  means  which  will  prevent  others  from  engaging 

therein.     In  re  Greene,  52  F.,  104.  i 54 

6.  A  "  monopoly,"  in  the  prohibited  sense,  involves  the  element  of 
an  exclusive  privilege  or  grant  which  restrained  others  from 
the  exercise  of  a  right  or  liberty  which  they  had  before  the 
monopoly  was  secured.  In  commercial  law,  it  is  the  abuse 
of  free  connuerce,  by  which  one  or  more  individuals  have 
procured  the  advantage  of  selling  alone  or  exclusively  all  of 
a  particular  kind  of  merchandise  or  commodity  to  the  detri- 
ment of  the  public.     76.  \—ll 

6.  The  word  "  monopolize,"  used  in  section  2  of  the  act  of  1890,  is 

the  basis  and  limitation  of  the  statute,  and  hence  an  in- 
dictment must  show  a  conspiracy  in  restraint  by  engrossing 
or  monoiiolizing  or  grasping  the  market.  It  is  not  sufticient 
simply  to  allege  a  purpose  to  drive  certain  competitors  out 
of  the  field  by  violence,  annoyance,  intimidation,  or  other- 
wise,    v.  8.  V.  Patterson,  55  F.,  605.  1—138 

7.  The  statute  is  not  limited  to  contracts  or  combinations  which 

monopolize  interstate  commerce  in  any  given  commodity,  but 
seeks  to  reach  those  which  directly  restrain  or  impair  the 
freedom  of  interstate  trade.  The  law  reaches  combinations 
which  may  fall  short  of  complete  control  of  a  trade  or  busi- 
ness, and  does  not  await  the  cH)nsolidation  of  many  small 
combinations  into  the  huge  "trust"  which  shall  control 
the  production  and  sale  of  a  commodity.  Chesapeake  d  O 
Fuel  Co.  V.  United  States,  115  F.,  610,  624.  2—168 

8.  Monopoly   Not   Necessary— Tendency   Sufficient.— It  is   not   re- 

quired, in  order  to  violate  tliis  statute,  that  a  monopoly  lie 
created.  It  is  sufficient  if  that  be  the  necessary  tendency  of 
the  agreement.  '  *  ^^ 

9.  Every  attempt  to  monopolize  a  part  of  interstate. connncne  tlie 

necessary  effect  of  which  is  to  stifle  or  to  directly  and  sub- 
stantially restrict  competition  in  commerce  among  the  States, 
violates  section  2  of  the  act  of  July  2,  1890  (26  Stat.,  209). 
Whitwell  V.  Continental  Tobacco  Co..  125  F.,  454.  2—271 
10.  Attempts  to  monopolize  a  part  of  commerce  among  the  States 
which  promote,  or  only  incidentally  or  indirectly  restrict, 
competition  in  interstate  commerce,  while  their  main  imrpose 
and  chief  effect  are  to  increase  the  trade  and  foster  the  busi- 
ness of  those  who  make  them,  were  not  intended  to  be,  and 
were  not,  made  illegal  or  punishable  by  section  2  of  the  \nti- 
Trust  Act  of  July  2,  1890  (26  Stat.,  209),  because  such  at- 
tempts are  indispensable  to  the  existence  of  anv  competition 
in  counnerce  among  the  States.  '  jj, 


1166 


INDEX — DIGEST. 


MONOPOIiY— Cciiitimied . 

11.  Statute  Opeirates  Only  on  Monopolies  in  Intentaie  Commerce^ 
and  Hot  Beoanse  Commodity  it  a  Necessary  of  Life. — The 
moiiDIioIy  aud  restraint  denounced  by  the  act  of  July  2,  1890 
(26  Stat,  200),  "to  protect  trade  and  commerce  against  un- 
lawful restraints  and  monopolies,"  are  a  monopoly  in  inter- 
state and  international. trade  or  commerce,  and  not  a  monop- 
oly in  the  manufacture  of  a  necessary  of  life.  U.  8.  v. 
B,  C,  Knight  Co..  156  U.  S.,  1.  1—379 

11.  Bebate  to  EzclnsiTe  Purchasers. — An  arrangement  whereby  a 
distillery  company  promised  persons  who  purchased  from  its 
distributing  agents  that  if,  for  the  ensuing  six  months,  they 
would  purchase  their  distillery  pix)ducts  exclusively  from 
such  agents  and  would  not  resell  the  same  at  prices  less  than 
those  fixed  by  the  company,  then,  on  being  furnished  with  a 
certi^cate  of  compliance  therewith,  it  would  pay  a  certain 
rebate  on  the  amount  of  such  purchases,  did  not  operate  to 
•'monopolize,"  or  "as  an  attempt  to  monopolize,"  trade  and 
commerce,  within  the  meaning  of  section  2  of  said  act.  In  re 
&rmn0,  62  F..  104.  1—56 

13.  A  monopoly  of  trade  embraces  two  essential  elements:    (1) 

The  acciuisitioii  of  an  exclusive  right  to,  or  the  exclusive 
control  of,  that  trade;  and  (2)  the  exclusion  of  all  others 
from  that  right  and  control.  V,  8.  v.  Trans-Mo.  Ft.  Asm., 
m  P.,  58.  82.  1—218 

14.  State  Monopoly  of  liquor  Tral&c. — ^The  Anti-Trust  Act  is  not 

applicable  to  the  case  of  a  State  which  by  its  laws  assumes 
an  entire  monopoly  in  the  traffic  in  intoxicating  liquors  ( S.  C. 
act  of  Jan.  2, 1895).    Lowenstein  v.  Evans,  G9  F.,  908.    1— r»81> 

15.  Validity  of  Sale  of  Property  where  Object  is  Monopoly.— Tlie 

sale  and  transfer  by  a  corporation  of  its  property  and  go  d 
will  to  another  corporation,  where  such  sale  was  within  its 
powers,  oan  not  be  repadiated  on  the  ground  that  the  pur- 
chaser acquired  the  proi)erty  for  the  purpose  of  obtaining 
a  monopoly  of  the  business  and  in  pursuance  of  an  illegal 
combination  in  restraint  of  trade.  Metcalf  v.  Amer.  School 
Furniture  Co.,  122  F.,  115.  2—234 

See  also  Combinations,  etc.,  in  Resteaint  of  Tbade,  II  and 
III. 

MiriiTIFABIOUSlTESS.    See  Actions  and  Defenses,  8;  Pleading 
AND  Practice,  19.  20. 

MUNICIPAL  CONTBACTS.     See  Combinatioxs,  etc.,  214-216. 

MUNICIPAL  OBDINANCE. 

The  siieelfication  in  an  ordinance,  not  invalid  under  the  laws 
of  the  State,  that  a  particular  kind  of  asphalt  produced  only 
in  a  foreign  country*  shall  be  used  for  street  improvementa 


INDEX — ^DIGEST. 


1167 


MUNICIPAL  ORDINANCE— Continued. 

does  not  violate  the  Sherman  Anti-Trust  Law  or  any  Fed- 
eral right.  Field  v.  Barher  Asphalt  Paving  Co.,  194  U.  S., 
^1^-  2—555 

NEW  JERSEY.    See  Cobpobations,  4. 

NEW  TRIAL.    See  Jayne  v.  Lodeb,  149  F.,  21. 
NONRESIDENTS.    See  Statutes,  58. 
NOTE.    See  Actions  and  Defenses,  G4. 
NOTICE.    See  Statutes,  55. 
OBSTRUCTION  OF  MAILS. 

1.  Obstructing    the    Mails— Section    3995    Revised    Statutes.— Al- 

though the  law  (section  .3995  Revised  Statutes)  which  makes 
it  an  offense  to  obstruct  and  retard  the  passage  of  the 
United  States  mails  was  originally  passed  prior  to  the  in- 
troduction into  the  United  States  of  the  method  of  trans- 
porting mail  by  railroads,  and  the  phraseology  of  the  law 
conforms  to  conditions  prevailing  at  that  time  (March  3, 
1825),  yet  it  is  equally  applicable  to  the  modern  system  of 
conveyance  and  protects  alike  the  transportation  of  the  maU 
by  the  "limited  express"  and  by  the  old-fashioned  stage- 
coach.    U.  S.  V.  Cassidy,  G7  F.,  698.  1—451 

2.  Same.— The  statute  applies  to  all  persons  who  "  knowingly  and 

willfully  "  obstruct  and  retard  the  passage  of  the  mails  or 
the  carrier  carrying  the  same;  that  is,  to  those  who  know 
that  the  acts  performed,  however  innocent  they  may  other- 
wise be,  will  have  the  effect  of  obstructing  find  retarding 
the  mail,  and  who  perform  the  acts  with  the  intent  that 
such  shall  be  their  operation.  U.  S.  v.  Kirhy.  7  Wall.,  485, 
cited.  J  J 

3.  Same.— The  statute  also  applies  to  persons  who,  having  in  view 

the  accomplishment  of  other  purposes,  perform  unlawful  acts, 
which  have  the  effect  of  obstructing  and  retarding  the  pas- 
sage of  the  mails.  In  such  case,  an  intent  to  obstruct  and 
retard  the  mails  will  be  imputed  to  the  authors  of  the  un- 
lawful act,  although  the  attainment  of  other  ends  may  have 
been  their  primary  object.  V.  S.  v.  Kirhy,  7  Wall.,  485, 
cited.  *     J  J 

4.  Same— Mail  Trains.— A  mail  train  is  a  train  as  usually  and 

regularly  made  up,  including  not  merely  a  mail  car,  but 
such  other  cars  as  are  usually  drawn  in  the  train.  If  the 
train  usually  carries  a  Pullman  car,  then  such  train,  as  a 
mail  train,  would  include  the  Pullman  car  as  a  part  of  its 
regular  make-up.  Therefore,  if  such  a  train  is  obstructed 
or  retarded  because  it  draws  a  Pullman  car,  it  is  no  defense 


1168 


INDEX — DIGEST. 


OBSTRUCTION  OF  MAILS-(  ontiiuuil. 

that  the  imrties  so  delaying  it  were  willing  that  tlie  mail 
should  proceed  if  the  PuUmau  ear  were  left  behind,  t/.  S.  v. 
Clark,  Fed.  Cas.  No.  14805,  23  Int.  Rev.  Rec.,  30«.  followed. 

76. 

5.  Same.— Any  train  which  is  carrying  mail,  under  the  sanctioo 

of  the  postal  authorities,  is  a  mail  train,  in  the  eye  of  the 
hiw.  /&• 

6.  Same — Intent. — It  is  not  necessary  that  defendants  should  be 

shown  to  have  had  knowledge  that  the  mails  were  on  board 
of  a  train  which  they  have  detained  and  disabled.  On  the 
contrary,  they  are  chargeable  with  an  intent  to  do  what- 
ever is  the  reasonable  and  natural  consequence  of  their  acts; 
and  as  the  laws  make  all  railways  postal  routes  of  the 
Unite<l  States,  and  it  is  within  everyone's  knowledge  that 
a  large  portion  of  the  passenger  trains  carry  mail,  it  is  to 
be  presumed  that  any  person  obstructing  one  of  those  trains 
contemplates,  among  other  intents,  the  obstruction  of  the 
mail.     U.  8.  x.  Debs,  05  F.,  211,  followed.  lb. 

See  also  Combinations,  etc.,  121,  127,  129. 

FAKTIES. 

1.  Parties  to  Conspiracy.— Where  an  unlawful  end  is  sought  *o 
be  effected,  and  two  or  more  persons,  actuated  by  the  com- 
mon purpose  of  accomplishing  that  end,  work  together  In 
any  way  in  furtherance  of  the  unlawful  scheme,  every  one 
of  said  persons  becomes  a  member  of  the  conspiracy,  although 
the  part  any  one  was  to  take  therein  was  a  subordinate  one, 
or  was  to  be  executed  at  a  remote  distance  from  the  other 
conspirators.     [7.  8.  v.  Cansidy,  67  F.,  698.  l—45ii 

ft.  Same. — Any  one  who,  after  a  conspiracy  is  formed,  and  who 
knows  of  its  existence  joins  therein,  bec-omes  as  much  o 
party  thereto  from  that  time  as  if  he  had  originally  con- 
spired. U,  8.  V.  Bahcock,  Fed.  Cas.  No.  14487,  3  Dill.,  586, 
cited.  '^» 

S.  Same. — Any  declaration  made  by  one  of  the  parties,  during  the 
pendency  of  the  illegal  enterprise,  is  not  only  evidence 
against  himself,  but  against  all  the  other  conspirators,  wiio, 
when  the  combination  is  proved,  are  as  much  responsible  for 
such  declarations,  and  the  acts  to  which  they  relate,  as  if 
made  and  committed  by  themselves.  This  rule  applies  to 
the  declaration  of  a  coconspirator,  although  he  may  not 
himself  be  under  prosecution.  Ih. 

4.  Mecessary  Parties— Directors  of  TFnincorporatcd  Associations. — 
All  the  directors  of  an  unincorporated  association  are  neces- 
sary parties  to  a  suit  against  it  arising  out  of  contractual 
relations,  even  though  a  less  number  are  authorized  by  the 
association  to  transact  business.  Oreer,  Mills  &  Co.  v.  8tol- 
ler,  77  F.,  1.  1—620 


INDEX — DIGEST. 


1169 


PARTIES— Continued. 

5.  Parties  in  Equity — Unincorporated  Association. — In  a  suit  in 

equity  to  restrain  an  alleged  unlawful  combination  acting  as 
an  unincorporated  association,  it  is  sufficient  that  the  asso- 
ciation, together  with  a  large  number  of  its  members,  as 
individuals  and  officers  of  the  association,  are  made  parties 
defendant.     U.  8.  v.  Coal  Dealers'  Assn.  of  Cah,  a5  F.,  252. 

1—749 

6.  Indictment— Joinder  of  Defendants.— In  an  indictment  under 

the  Anti-Trust  I.aw,  the  offenses  thereunder  being  made 
misdemeanors,  all  who  aid  in  their  commission  may  be 
charged  as  principals,  and  a  corporation  and  its  offic-ers, 
who  i»ersonally  i)articipates  in  committing  the  same,  may  be 
joined  as  defendants,  although  their  acts  may  have  been 
separate.     6.  -8f.  v.  MacAn^reics  d-  Forbes  Co..  149  F.,  824. 

7.  Injunction — Government  Only  can  Bring  Suit  for. — The  Auti- 

Trust  Act  of  1890   (26  Stat.,  209)   does  not  authorize  the 
bringing  of  injunction  suits  or  suits  in  equity  by  any  parties 
except  the  Government    Blindell  v.  Hagan,  54  F.,  40.    1—106 
Case  affirmed,  56  F.,  696  (1—182). 

8.  Injunctive  Relief— United  States  Attorney. — The  only  party  en- 

titled to  maintain  a  bill  in  equity  for  injunctive  relief  for 
violating  the  provisions  of  the  Anti-Trust  Act  is  the  United 
States  attorney,  at  the  instance  of  the  Attorney-General. 
Metcalf  V.  Amer.  School  Furniture  Co.,  122  F.,  115.      2 235 

9.  The  State  is  a  necessary  party  to  an  action  under  section  7  of 

the  Anti-Trust  Act  of  .luly  2,  1890,  against  the  officials  of  a 
State  to  recover  damages  for  acts  done  under  the  authority 
of  a  State  statute,  which  gives  the  State  an  entire  monoiwly 
of  the  traffic  in  intoxicating  liquors  (act  of  S.  C.  of  Jan.  2. 
1895).     Lowenstein  v.  Evans,  69  F.,  908.  1—598 

10.  Consent  of  parties  can  never  confer  jurisdiction  ui)on  a  Federal 

court.    Minnesota  v.  Xorthern  Securities  Co.,  194  U.  S.,  48. 

2—533 

11.  Monopolies — Suit  by  Private  Individual. — The  act  "to  pi-otect 

trade  and  commerce  against  unlawful  restraints  and  monoix)- 
lies"  (act  Cong.  July  2,  1890)  confei-s  no  right  uiwn  a 
private  individual  to  sue  in  equity  for  the  restraint  of  the 
acts  forbidden  by  such  statute,  an  action  at  law  for  damages 
being  the  only  remedy  provided  for  private  i)ersons,  and  the 
right  to  bring  suits  in  equity  being  vested  in  the  district 
attorneys  of  the  United  States.  Pidcock  v.  Harrington,  ^ 
F.,  821.  1-^77 

8ee  also  Actions  and  Defenses,  1-20. 

PATENTS. 

1.  A  corporation  organized  for  the  purpose  of  securing  assign- 
ments of  all  patents  relating  to  "spring-tooth  harrows,"  to 
grant  licenses  to  the  assignors  to  use  the  patents  upon  pay- 
11808— VOL  1—06  M 74 


1170 


INDEX — ^DIGEST. 


PATENTS— Continued. 

ment  of  a  royalty,  to  fix  and  regulate  the  price  at  which  such 
harrows  shall  be  sold,  and  to  take  charge  of  all  litigation, 
and  prosecute  all  infringements  of  such  patents,  is  an  illegal 
combination,  whose  purposes  are  contrary  to  public  policy, 
and  which  a  court  of  equity  should  not  aid  by  entertaining 
Infringement  suits  brought  in  pursuance  thereof.  National 
Harrow  Co,  v.  Quick,  67  F..  130.  1^443 

2.  Corporation   Organized  to  Keceiye  Assignments   of  Patents. — 

A  combination  among  manufacturers  of  spring-tooth  har- 
rows, by  whirli  each  manufacturer  assigns  to  a  corporation 
<irganized  fur  the  puqiose  the  patents  under  which  he  is 
oi>erating,  and  takes  back  an  exclusive  license  to  make  and 
sell  the  same  style  of  harrows  previously  made  by  him,  and 
no  other,  nil  the  parties  being  bound  to  sell  at  uniform  prices, 
held  to  t>e  an  unlawful  combination  for  the  enhancement  of 
prices,  and  in  restraint  of  trade.  National  Harrow  Co,  v. 
Bench,  76  F.,  667.  1 610 

Affirmed,  83  F.,  36  (1—742). 

See  also  Indiana  Mfg.  Co.  v.  J,  I.  Case  ThrasUiiiu  Mnch.  Co., 
148  h .,  21. 

3.  Same. — Though  the  fact  that  several  patentees  are  exposed  to 

litigation  justifies  them  in  composing  their  differences,  they 
can  not  make  the  occasion  an  excuse  or  cloak  for  the  creation 
of  monopolies  to  the  public  disadvantage.  National  Harrow 
Co.  V.  Bench,  8:1  F.,  3G.  1—743 

4.  Same — ^Infringement  Suit. — A  combination  among  manufactur- 

ers of  spring-tooth  harrows,  whereby  a  corporation  organized 
for  the  purpose,  becomes  the  assignee  of  all  patents  owned 
by  the  various  manufacturers,  and  executes  licenses  to  them, 
f»  as  to  control  the  entire  business  and  enhance  prices,  is 
void  both  as  to  the  assignments  and  licenses,  so  that  the 
corporation  can  not  maintain  a  suit  against  one  of  its  as- 
signors who  violates  the  agreement,  for  infringement. 
National  Barrow  Co.  v.  Bench,  84  F.,  226.  1—746 

5.  Contracts   by   which   a   number   of   patents    covering   similar 

inventions  arc  conveyed  by  the  several  owners  to  one  of  the 
parties,  which  grants  licenses  under  all  to  the  others,  are 
not  void  as  against  public  policy,  or  as  in  violation  of  the 
Sherman  Anti-Tmst  law,  because  of  provisions  intended  to 
protect  and  keep  up  the  patent  monopoly  by  requiring  the 
licensor  to  prosecute  all  infringers,  limiting  the  licenses  to 
be  granted  to  such  licensees  as  shall  be  agreed  on,  and  impos- 
ing conditions  on  each  license  as  to  the  use  and  ownership  of 
the  patented  machines,  and  prohibiting  him  from  using  any 
others.  U.  8.  Consolidated  Seeded  Raisin  Co,  v.  Qriffin  & 
Skellev  Co.,  126  F.,  364.      .  S8— 288 


INDEX — ^DIGEST. 


1171 


PATENTS-Continued. 

6.  Same.— Eights  acquired  under  the  patent  laws  of  the  United 

States  can  not  be  affected  by  a  State  statute.  /j. 

7.  The  object  of  the  patent  laws  is  monopoly,  and  the  rule  is,  with 

few  exceptions,  that  any  conditions  which  are  not  in  their 
very  nature  illegal  with  regard  to  this  kind  of  property, 
imposed  by  the  patentee,  and  agi-eed  to  by  the  licensee  for 
the  right  to  manufacture  or  use  or  sell  the  article,  will  be 
upheld  by  the  courts ;  and  the  fact  that  the  conditions  in 
the  contracts  keep  up  the  monopoly  does  not  render  them 
illegal.  The  prohibition  was  a  reasonable  prohibition  for 
the  defendant,  who  would  thus  be  excluded  from  making 
such  harrows  as  were  made  by  others,  who  were  engaged  in 
manufacturing  and  selling  other  machines  under  other 
patents;  but  it  would  be  imreasonable  to  so  construe  the 
provision  as  to  prevent  the  defendant  from  using  any  letters 
patent  legally  obtained  by  it  and  not  infringing  patents 
owned  by  others.  Bemcnt  v.  National  Harrow  Co.,  186  U. 
^•'  '^^-  2 169 

8.  Conditions  imposed  by  the  patentee  in  a  license  of  the  right  to 

manufacture  or  sell  the  patented  article,  which  keep  up  the 
monopoly  or  fix  prices,  do  not  violate  the  act  of  Congress  of 
July  2,  1890  (26  Stat,  209),  to  protect  trade  and  commerce 
against  unlawful  restraints  or  monopolies.  /ft. 

9.  Eeasonable  and  legal  conditions  imposed  by  the  patentee  in  a 

license  of  the  right  to  manufacture  and  sell  the  patented 
article,  restricting  the  terms  upon  which  the  article  manu- 
factured under  such  license  may  be  used  and  the  price  to  be 
demanded  therefore,  do  not  constitute  such  a  restraint  on 
commerce  as  is  forbidden  by  the  act  of  Congress  of  July  2, 
1890  (26  Stat.,  209),  to  protect  trade  and  commerce  against 
unlawful  restraints  and  monopolies.  /ft. 

10.- The  agreement  of  the  licensee  of  a  patent  for  improvements  re^ 
lating  to  float  spring-tooth  harrows  not  to  manufacture  or 
sell  any  other  such  harrows  than  those  which  it  had  made 
under  its  patents  before  assigning  them  to  the  licensor,  or 
which  it  was  licensed  to  manufacture  and  sell  under  the 
terms  of  the  license,  except  such  other  style  and  construction 
as  it  may  be  licensed  to  manufacture  and  sell  by  such 
licensor,  is  not  void  as  an  unlawful  restraint  on  trade  or 
commerce  forbidden  by  the  act  of  Congress  of  July  2,  1890 
(26  Stat.,  209),  since  the  plain  purpose  of  this  provision  is 
to  prevent  the  licensee  from  infringing  on  the  rights  of 
others  under  other  patents,  and  not  to  stifle  competition  or 
prevent  the  licensee  from  attempting  to  make  any  improve- 
ment in  harrows.  ,- 

io. 


1172 


INDEX — DIGEST. 


PATENTS— Continued. 

11.  An  agreement  by  the  licensor  of  ii  [niteiit  for  iuiproveinents  i*e- 
lating^  to  harrows  not  to  license  any  other  person  than  the 
licensee  to  nianufaeture  or  sell  any  harrow  of  the  peculiar 
style  and  construction  then  usetl  or  sold  by  such  licensee 
does  not  violate  the  act  of  Conju'ress  of  July  '-,  1890  (26 
Btat.,  209),  to  i>rotect  trade  and  i-onnnerce  against  unlawful 
restraints  and  monopolies.  lb. 

19.  Licenses — Right  to  Attach  Conditions. — It  is  within  the  rights 
of  the  owner  of  a  patent  to  grant  licenses  conditioned  that 
the  licensees  shall  sell  the  patented  article  only  at  prices 
fixed  by  the  agreement  and  also  restricting  the  production 
of  a  licensee,  and  such  agreements,  if  made  in  good  faith 
and  for  the  purpose  of  protecting  the  patent  monopoly,  are 
not  illegal  as  in  restraint  of  trade  and  t-onnuerce,  and  such 
good  faith  is  not  inipeaciied  by  the  fact  that  the  patent  ha.H 
been  held  invalid  by  the  Federal  courts  in  some  circuits, 
where  it  has  l>een  sustained  in  others.  Rubber  Tire  Wheel 
€o.  V.  itilicaukee  Rubber  Works  Co.,  142  F.,  531.  2—855 

13.  Same. — Such  patent  monoijoly  does  not  include,  however,  the 

right  of  the  patentee  to  enter  into  a  combination  in  the 
form  of  license  contracts  with  manufacturers  throughout  the 
United  States,  not  only  to  raise  and  maintain  the  prices  of 
such  articles,  being  articles  of  interstate  connnerce,  above 
the  normal  market  price,  but  to  crash  out  competition  by 
outside  manufacturers.  lb. 

14.  Suit  for  Infringement — Befenses. — The  fact  that  the  owner  of 

a  patent  is  a  corporation  alleged  to  have  been  formed  in 
violation  of  the  Anti-Trust  Law.  and  that  the  patent  is 
alleged  to  have  been  assigned  to  it  in  furtherance  of  the 
illegal  purpose  to  create  a  monopoly  and  control  the  price  of 
an  article  of  commerce,  is  not  available  to  an  infringer  of 
such  patent  to  defeat  a  suit  for  the  infringement.  National 
Fold'mg-Box  &  Paper  Co.  v.  Robertson,  99  F.,  985.  2 — 1 

15.  In  an  action  by  a  coriwration  for  the  infringement  of  elevator 

patents,  a  private  defendant  was  not  entitled  to  urge  as  a 
defense  that  plaintiff  was  a  corporation  organized  merely 
for  the  purpose  of  holding  the  legal  title  to  various  elevator 
patents  alleging  to  have  been  infringed,  for  the  purpose  of 
controlling  sales  and  enhancing  prices  of  elevatoi-s  and 
apparatus,  without  itself  engagaing  in  the  manufacture  and 
sale  of  such  appliances,  in  violation  of  the  Sherman  Anti- 
Trnst  law  (26  Stat.,  209),  since  until  the  United  States 
has  acted  and  sought  to  prosecute  the  plaintiff  for  violation 
of  such  act  an  infringer  of  the  plaintiff's  patent  will  not  be 
permitted  to  raise  such  issue  as  a  defense  thereto.  Otis 
Elevator  Vo.  v.  Geiger,  107  F.,  131.  8 — 66 


INDEX — DIGEST. 


1178 


PATENTS— Continued. 

16.  Infringement  of  Patent  Belonging  to  Memher  of  a  Corporation 
in  Violation  of  Anti-Trust  Law.— That  a  complainant  is  a 
member  of  a  combination  in  violation  of  the  Anti-Trust  Law 
of  July  2,  1890  (20  Stat.,  209),  does  not  give  third  persons 
the  right  to  infringe  a  patent  of  which  complainant  is 
owner,  nor  preclude  complainant  from  maintaining  a  suit 
in  equity  to  enjoin  such  infringement.  General  Eleetric  Co. 
V.  Wise,  119  F.,  922.  2—205 

PATENT  MEDICINES.    See  Combinations,  etc,  29,  ICO. 

PAYMENT.    See  Actions  and  Defenses,  63,  64. 

PLEADING  AND  PBACTICE. 

1.  Bill  and  Answer— Waiver  of  Oath.— Where  the  bill  for  injunc- 

tion A>'aives  the  oath  of  the  respondents,  an  answer,  under 
oath,  denying  all  the  equities  of  the  bill,  can,  under  the 
amendment  to  equity  rule  41,  be  used  at  the  hetiring  with 
probative  force  of  an  affidavit  alone.  Whether  the  injunc- 
tion should  issue  must  be  determined  by  the  whole  evi- 
dence submitted.  U.  S.  v.  Workingmen's  Amalg.  Council, 
54  F.,  994.  i_iio 

Case  attlrmed,  57  F.,  85  (1 — 184). 

2.  Hearing  on  Bill  and  Answer— Evidence. — When  a  suit  is  heard 

on  bill  and  answer,  the  allegations  of  fact  in  the  bill  that 
are  denied  in  the  answer  are  to  be  tal^eu  as  disproved,  and 
the  averments  of  fact  in  the  answer  stand  admitted.  U.  8. 
V.  Trans-Mo.  Ft.  Assn.,  58  F.,  58.  1—186 

3.  Same. — ^Where   the   contract   is   admitted,  but   the   allegations 

tending  to  show  its  sinister  purpose,  tendency,  and  effect  con- 
tained in  the  bill  are  denied  by  the  answer,  and  averments 
tending  to  show  a  just  and  honest  purpose,  tendency,  and 
effect  are  made,  the  latter  averments  contained  in  the  an- 
swer stand  admitted,  and  the  contract  will  be  presumed  to 
have  been  made  for  an  honest  and  legitimate  purpose,  unless 
the  provisions  of  the  agreement  clearly  show  the  contrary. 
lu  the  examination  of  such  a  contract,  fraud  and  illegality 
are  not  to  be  presumed.  jy^ 

4.  Notice— Eestraining  Order.— Under  section  4  of  the  Anti-Trust 

Law  of  July  2,  1890,  a  restraining  order  may  be  issued  with- 
out notice,  under  the  circumstances  sanctioned  by  the  es- 
tablished usages  of  equity  practice  in  other  cases.  U.  8.  v. 
Coal  Dealers'  Assn.  of  Cal.,  85  F.,  252.  1—749 

5.  Allegations.— A  complaint  alleging  that  members  of  an  asso- 

ciation have  conspired  and  combined  to  raise  the  prices  of 
tiles,  mantels,  and  grates,  to  control  the  output,  and  to  reg- 
ulate the  prices  thereof,  with  the  intent  to  monopolize 
trade  and  commerce  between  the  other  States  and  California 


1174 


INDEX^ — DIGEST. 


FI-EADING  AND  PRACTICE— Continued. 

in  regard  thereto,  as  well  as  to  arbitrarily  fix  their  prices 
independently  of  their  natural  marl^et  value,  brings  the  case 
withia  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat.,  209). 
Lowry  V.  Tile,  3Iantel  &  arate  Asm.  of  Cal„  98  F.,  817. 

1—995 

6.  Averments.— A  bill  charges  a  violation  of  the  Anti-Tmst  Act  of 

July  2,  1890  (26  Stat,  209),  as  against  the  objections  of  want 
of  equity,  multifariousness,  and  failure  to  set  forth  sufficient 
definite  or  specific  facts,  where  it  avers  the  existence  of  a 
combination  of  a  dominant  proportion  of  the  dealers  in  fresh 
meat  throughout  the  United  States,  not  to  bid  against  each 
other  in  the  live-stoclc  markets  of  the  different  States,  to  bid 
up  prices  for  a  few  days,  in  order  to  induce  shipments  to  the 
stock  yards,  to  fix  selling  prices,  and  to  that  end  to  restrict 
shipments  of  meat  when  necessary,  to  establish  a  uniform 
rule  of  credit  to  dealers,  and  to  keep  a  black  list,  to  make 
uniform  and  improper  charges  for  cartage,  and  to  secure  less 
than  lawful  freiglit  rates,  to  the  exclusion  of  competitors. 
Bwift  d  Co.  V.  United  States,  196  U.  S.,  375.  2—643 

7.  Same. — Trade  in  fresh  meat  is  sufficiently  shown  to  ue  commerce 

among  the  States,  protected  from  restraint  by  the  act  of  July 
2,  1890  (26  Stat,  209),  by  allegations  in  a  bill  charging  meat 
dealers  with  violations  of  that  act,  which,  even  if  they  import 
a  technical  passage  of  title  at  the  slaughtering  places  in  cases 
of  sales,  also  import  that  the  srtles  are  to  persons  in  other 
States,  and  that  the  shipments  to  other  States  are  pursuant 
to  such  sales,  and  by  allegations  charging  sales  of  such 
meat  by  their  agents  in  other  States,  which  indicate  that 
some,  at  least,  of  the  sales  were  in  the  original  packages    /ft. 

8.  Same. — ^A  general  allegation  of  intent  may  color  and  apply  to 

all  the  specific  charges  of  a  bill  which  seeks  relief  against 
alleged  violations  of  the  Anti-Trust  Act  of  July  2,  1890  (26 
Stat,  209).  /ft. 

9.  Same. — ^Vagueness  can  not  be  asserted  of  a  charge  in  a  bill  seek- 

ing relief  against  an  attempt  to  monopolize  commerce  in 
fresh  meat  among  the  States,  in  violation  of  the  Anti-Trust 
Act  of  July  2,  1890  (26  Stat,  209).  that  a  combination  exists 
among  independent  meat  dealers  to  restrain  tlieir  respective 
agents  from  bidding  against  each  other  when  purchasing  live 
stock  for  them  in  the  stock  yards,  /ft. 

10.  Sufficiency  of  Complaint — Action  Under  Anti-Trust  Act.— The 
complaint,  in  an  action  to  recover  damages  under  section  7 
of  the  Auti  Trust  Act  (act  July  2,  1890,  c.  617,  26  Stat,  210), 
which  sets  forth,  among  other  things,  that  defendants  are 
members  of  a  local  labor  union,  which  is  a  branch  of  a  larger 
organization  covering  several  States,  which  in  its  turn  is 
subordinate  to  the  American  Federation  of  Labor,   which 


INDEX — ^DIGEST. 


1175 


PLEADING  AND  PBACTICE— Continued. 

covers  still  other  States ;  that  defendants,  by  reason  of  such 
membership,  were  able  to  compel,  and  undertook  to  compel, 
and  did  compel,  plaintiffs,  against  their  will,  to  unionize  their 
factory,  by  withdrawing  from  plaintiffs'  employment,  by  pre- 
venting others  from  working  for  them,  and  by  boycotting, 
with  the  aid  of  their  associates,  plaintiffs'  goods  in  the  hands 
of  plaintiffs'  customers  in  other  States.  Held  sufficient  on 
motion  for  correction  of  same.  Loewe  d  Co.  v.  Lawlor  et 
al.y  130  F.,  633.  2—854 

Sufficiency — 'Injunction.    See    Dr.    Miles    J^Iedical    Co.    v. 
Jaynes  Drug  Co.,  149  F.,  838. 

11.  What  Must  be  Shown. — In  order  to  maintain  a  suit  under  the 

Anti-Trust  Act  the  Government  is  not  obliged  to  show  that 
the  agreement  in  question  was  entered  into  for  the  purpose 
of  restraining  trade  or  commerce,  if  such  restraint  is  its 
necessary  effect.    L\  S.  v.  Trmis-Mo.  Ft.  Assn.,  166  U.  S.,  290. 

1—649 

12.  Allegations   and   Proofs — ^Means   Contemplated. — It  is   not   in- 

cumbent upon  the  prosecution  to  prove  that  all  the  means 
set  out  ill  the  indictment  were  in  fact  agreed  upon  to  carry 
out  the  conspiracy,  cr  that  any  of  them  were  actually  used 
or  put  in  operation.  It  is  sufficient  if  it  be  shown  that  one 
or  more  of  the  means  described  in  the  indictment  were  to 
be  used  to  execute  that  purpose.  U.  S.  v.  Cassidy,  67  F., 
698.  i_450 

13.  Same — Overt  Acts. — While  at  common  law  it  was  not  necessary 

to  aver  or  prove  an  overt  act  in  furtherance  of  a  conspiracy, 
yet,  under  the  statute  relating  to  conspiracies  to  commit  an 
offense  against  the  United  States,  the  doing  of  some  act 
in  pursuance  of  the  conspiracy  is  made  an  ingredient  of  the 
crime,  and  must  be  established  as  a  necessary  element 
thereof,  although  the  act  may  not  be  in  itself  criminal. 
U.  8.  V.  Thompson.  31  Fed.,  .331,  12  Sawy.,  155,  cited.        76. 

14.  Same. — It  is  not  necessary,  however,  to  a  verdict  of  guilty, 

that  the  jury  should  find  that  each  and  every  one  of  the 
overt  acts  charged  in  the  indictment  was  in  fact  committed; 
but  it  is  sufficient  to  show  that  one  or  more  of  these  acts 
was  committed,  and  that  it  was  done  in  furtherance  of  the 
conspiracy.  75, 

15.  Allegation  of  Amount  in  Controversy. — It  is  not  essential  that 

a  bill  in  a  Federal  court  should  state  the  amount  or  value 
in  controversy,  if  it  appears  to  be  within  the  jurisdictional 
limit,  from  the  allegations  of  the  bill,  or  otherwise  from  the 
record,  or  from  evidence  taken  in  the  case  liefore  the  hearing 
of  objections  to  the  jurisdiction.  Robinson  v.  Suburban 
Brick  Co.,  127  F.,  804.  2—312 


1176 


INDEX — DIGEST. 


PLEADING  ANB  PBACTICE— Continued. 

1€.  Technical  Defects  in  Bill.— That  a  hill  for  injunction  contains 
no  prayer  for  process,  this  being  a  mere  technical  defect, 
although  it  renders  the  bill  demurrable,  does  not  affect  the 
jurisdiction  of  the  court  or  render  the  injunction  issued 
thereon  ▼old.    U.  8,  v.  Affler,  62  F.,  824.  1—294 

17.  Same—Defendants  not  Named  in  Bill,  nor  Served  with  Snb- 

pcena. — An  injunction  for  such  purpose  becomes  binding,  as 
against  one  not  named  in  the  bill,  and  not  served  with  sub- 
poena, when  the  injunction  order  is  served  on  him  as  one  of 
the  unknown  defendants  referreil  to  in  the  bill.  76. 

18.  Same — ^Proceedings   to   Punish   Yiolation. — An    information   to 

punish  violation  of  such  an  injunction  order  which  fails 
to  allege  that  the  order  was  a  lawful  one,  in  the  language 
of  the  statute,  or  that  the  person  charged,  not  named  in  the 
order,  was  one  of  the  unknown  parties  referred  to  therein, 
or  that,  either  by  his  words  or  his  acts,  he  was  engaged  in 
aiding  the  common  ol»jeit  with  other  members  of  the  alleged 
combination.   l:icks   the  net^essarj'  certaintj*.  lb. 

19.  Multifariousness.— A  hill  setting  up  a  claim  for  damages  under 

the  Anti-Trust  I^w  of  July  2,  1890,  and  also  asking  an  in- 
junction restraining  defendant  from  using  complainant's 
trade-mark  and  trade  name,  is  multifarious,  as  joining  two 
distinct  causes  of  acticiu,  having  no  connection  with  each 
tither,  and  one  of  which  is  triable  at  law.  Block  v.  f^tand- 
urd  DistUlbig  d  Distributing  Co.,  O.'i  F..  978.  1-^993 

20.  Multifariousness  of  Bill. — A  bill  for  relief  by  a  minority  stock- 

holder, on  behalf  of  himself  and  all  other  stockholders  simi- 
larly situated,  to  set  aside  an  alleged  unlawful  transfer  of 
the  property  of  the  corporation  In  pursuance  of  a  conspiracy 
between  its  officers  and  the  transferee  in  restraint  of  trade 
and  ccMnmerce;  and  which  also  seeks  the  recovery  of  treble 
damages  under  the  Anti-Trust  Act  of  July  2,  1890,  is  multifa- 
rious, since  such  damages  are  only  recoverable  in  an  action  at 
law  by  the  plaintifT  as  an  individual,  and  not  as  a  stock- 
holder, while  the  equitable  relief  prayed  for  is  in  behalf  of  the 
t^rporation,  and,  if  granted,  would  inure  to  the  l)enefit  of 
all  the  stockholdei's.  Metcalf  v.  Amer.  School  Furniture 
Co.,   108  F..  IHiO.  2—75 

SI.  Indefiniteness. — In  an  action  by  a  coi-poration  for  tlie  infringe- 
ment of  elevator  patents,  nn  answer  alleging  as  a  defense 
that  the  plaintiff  is  an  unlawful  combination  in  restraint  of 
trade  and  in  violation  of  the  Sherman  Anti-Trust  I^w  (26 
Stat,  2(»9),  but  which  fails  to  state  who  are  in  the  com- 
bination in  the  agi-eement  characterized  as  unlawful,  and 
does  not  disclose  fully  and  in  detail  that  the  combination 
was  entered  into  after  the  act  took  effect,  and  all  the  facts 
necessary  to  show  its  illegality,  is  insufficient  for  indefinite- 
ness.   Oii»  EJerntor  Co.  v.  Geiger,  107  F.,  131.  2—66 


INDEX — ^DIGEST. 


1177 


PLEADING  AND  PBACTICE— Continued. 

22.  Duplicity. — A  declaration  in  an  action  brought  under  section 
7  of  the  Sherman  Anti-Trust  Act  of  July  2,  1890  (26  Stat., 
210),  to  recover  damages  for  a  violation  of  section  1  of  the 
act,  which  alleges  in  a  single  count  that  defendant  entered 
into  a  "  contract,  combination,  and  conspiracy  "  in  restraint 
of  trade,  is  bad  for  duplicity.  Rice  v.  Standard  Oil  Co., 
134  F.,  464.  2—633 

88.  Same.— The  Anti-Trust  Act  of  1890  makes  a  distinction  be- 
tween a  contract  and  a  combination  or  conspiracy  in  re- 
straint of  trade.  lb. 
See  also  I.  S.  v.  MacAudrcas  d  Forbes  Co.,  149  F.,  824. 

24.  Under  the  practice  in  tliis  country  the  examination  of  wit- 

nesses by  a  Federal  grand  jury  need  not  be  preceded  by  a 
presentment  or  formal  indictment,  but  the  grand  jury  may 
proceed,  either  upon  their  own  knowledge  or  ui>on  examina- 
tion of  witnesses,  to  inquire  whether  a  crime  cognizable  by 
the  court  has  beei\  committeed,  and  if  so,  they  may  indict 
upon  such  evidence.    Hale  v.  Henkel,  201  U.  S.,  43.      2 — 874 

25.  In  summoning  witnesses  it  is  sufficient  to  apprise  them  of  the 

names   of  the  parties  with   resjMxt  to  whom  they  will  be 
called  to  testify  without  indicating  the  nature  of  the  charge 
against  them,  or  laying  a  basis  by  a  formal  indictment.    lb. 
See  also  Witnesses;  and  Grand  Jury. 

26.  In  an  action  against  (oiporations  for  violations  of  the  Anti- 

Trust  Law  the  books  of  the  various  defendants  both  before 
and  after  the  alleged  combination,  and  the  contracts  be- 
tween them,  as  well  as  other  papers  referred  to  in  the 
opinion,  are  all  matters  of  material  proof,  but  whether  ma- 
terial or  not  the  testimony  must  be  taken  and  exceptions 
can  be  noted  by  the  examiner  and  the  materiality  of  the 
evidence  passed  on  by  the  court.  Nelsmi  v.  T'nited  States. 
201  U.  S.,  92.  2—921 

PBELIMINABY  INJUNCTIONS:     See  Injunctions,  28,  31,  34. 

PBEPAYMENT  OF  FBEIGHT.     See  Carriers. 

PBOCEDUBE.     See  Pleading  and  1»kactice. 

PBODUCTION  OF  DOCUMENTS.     See  Corporations,  12-15,  17,  18, 
20-23 ;  Witnesses.  8,  16,  20,  23 ;  Search,  2-4. 

PBOFIT  AND  LOSS.     See  Damages,  3,  5. 

PUBLIC  POLICY. 

1.  Pnblic  Policy— How  Determined.— The  public  policy  of  the  na- 
tion must  be  determined  from  its  constitution,  laws,  and 
judicial  decisions.     U.  S.  v.  Trans-Mo.  Ft.  Assn.,  58  F.,  58. 

1—186 
Case  reversed,  166  U.  S.,  290  (1—648). 


llio 


INDEX — DIGEST. 


FITBIilC  POIilCY— Continued. 

8.  Same— Interstate  Commerce.— The  act  of  February  4,  1887,  en- 
titled "An  act  to  regulate  commerce,"  demonstrates  the  fact 
that  from  the  date  of  the  passage  of  that  act  it  has  been 
the  public  policy  of  this  nation  to  regulate  that  part  of 
interstate  commerce  which  consists  of  transportation,  and 
to  so  far  restrict  competition  in  freight  and  passenger  rates 
between  railroad  companies  engaged  therein  as  shall  be 
necessary  to  make  such  rates  open,  public,  reasonable,  uni- 
form, and  steady,  and  to  prevent  discriminations  and  undue 
preferences.  /6. 

3.  Contracts — ^Fublic  Policy. — ^Freedom  of  contract  is  as  essential 
to  unrestricted  commerce  as  freedom  of  competition,  and 
one  wlMi  asks  the  court  to  put  restrictions  upon  the  right  to 
contract  ought  to  make  it  clearly  appear  that  the  contract 
assailed  is  against  public  policy.  /&. 

Bee  Actions  and  Defenses,  73 ;   Combinations,  92,  157. 

PUBLISHEBS.     iSfee  Comhinations,  etc,  28,  9i». 

PTJBCHASE  AND  SALE.     See  Sale,  4. 

FBOFItlETABY  PATENT  MEDICINES.  .Sfcf  Com ni nations,  etc., 
29,  160. 

BAILBOADS     See  Combinations,  otc,  100-111,  180-201. 

BAILBOAD  EMPLOYEES.     See  Combinations,  etc.  117-133. 

BATES.     See  Railroads. 

BEASONABLE  DOUBT.     Sec  Jury,  1. 

BEASONABLENESS  OB  UNBEASONABLENESS.  -See  Combina- 
tions, ETC,  3,  4,  13,  48,  55,  59.  G3,  79,  81,  163.  174;  Statutes, 
5,  6,  13,  16,  19,  31. 

BEBATES.  /?ee  Actions,  49, ;  Combinations,  etc,  161,  162;  Indict- 
ments, 3,  4. 

BECEIVEBS.  See  Courts,  7;  Contempt,  1,  2;  Combinations,  etc., 
119,  122. 

BECOVEBY.    See  Actions  and  Defenses,  11.  13,  14,  38,  39,  41,  66. 

BEMEDIES. 

I.  Suit  by  Private  Individual  Must  Be  at  Law. — ^The  act  "  to  pro- 
te<t  trade  and  coniiuerce  against  unlawful   restraints  and 

s 

mono[>olies  "  (net  Cong.  July  2,  1890)  confers  no  right  upon 
a  private  individual  to  sue  in  equity  for  the  restraint  of 
the  acts  forbidden  by  such  statute,  an  action  at  law  for 
damages  being  the  only  remedy  provided  for  private  persons, 
and  the  right  to  bring  suits  in  equity  being  vested  in  the  dis- 
trict attorneys  of  the  United  States.  Pidcock  v.  Harrington, 
64  F.,  821.  *  1-^77 


INDEX ^DIGEST. 


1179 


BEMEDIES— Continued. 

2.  Voluntary  Associations — Stispension  of  Members. — Where  a 
member  of  a  voluntary  association  has  been  suspended  by 
the  directors  for  nonpayment  of  a  fine  for  violation  of  the 
by-laws,  his  action  to  be  restored  to  the  privileges  of  mem- 
bership is  founded  upon  the  contract  between  himself  and 
the  association,  which  he  must  either  accept  in  its  entirety 
or  repudiate.  He  does  not  occupy  tlie  position  of  a  stranger 
injured  by  the  acts  of  cotrespassers.  Greer,  Mills  tC-  Co.  v. 
Stoller,  77  F.,  1.  1—620 

See  also  Actions  and  Defenses. 

BEMOTELY.    See  Incidentally,  Indirectly,  and  Remotely. 

BEMOVAL  FBOM  STATE  COITBT.     ^S-ee  Courts,  16. 

BEMOVAL  OF  PBISONEBS. 

1.  From  One  State  to  Another  for  Trial. — On  an  application  to  a 

Federal  court  for  the  removal  of  a  resident  of  the  district 
to  a  distant  State  and  district  for  trial,  it  is  the  duty  of 
the  court  to  scrutinize  the  indictment,  disregarding  tech- 
nical defects,  but  to  refuse  the  warrant  if  the  crime  alleged 
is  not  triable  in  the  district  to  which  a  removal  is  sought, 
or  if  the  indictment  fails  to  charge  any  offense  under  the 
law.    In  re  Corning,  51  F.,  203.  1—33 

2.  Habeas  Corpus — Jurisdiction  of  Circuit  Courts. — Where  a  pris- 

oner, arrested  under  warrant  based  upon  an  indictment  in  a 
distant  State  and  district,  is  held  pending  an  application 
to  the  district  court  for  a  warrant  of  removal  for  ti-ial,  the 
circuit  court  of  the  district  in  which  he  is  held  has  authority 
on  habeas  corpus  to  examine  such  indictment,  and  to  re- 
lease the  prisoner,  if,  in  his  judgment,  the  indictment  should 
be  quashed  on  demurrer.    In  re  Terrell,  51  F.,  213.        1 — 46 

3.  Same. — On  habeas  corpus  to  release  a  person  held  under  a  war- 

rant of  a  United  States  commissioner  to  await  an  order  of 
the  district  judge  for  his  removal  to  another  district  to 
answer  an  indictment,  it  is  the  right  and  duty  of  the  cir- 
cuit court  to  examine  the  indictment  to  ascertain  whether 
it  charges  any  offense  against  the  United  States  or  whether 
the  offense  comes  within  the  jurisdiction  of  the  court  in 
which  the  indictment  is  pending.     In  re  Greene,  52  F.,  104. 

1—54 

BESTBAINING  OBDEBS.    See  Injunctions,  30. 

BESTBAINT  OF  TBADE. 

^ee  Combinations,  etc,  in  Restraint  of  Trade,  particularly 
paragi-aphs  1,  3-5,  7-16,  18,  20,  22,  23.  43,  48,  54-77,  79,  81, 
91,  107,  108,  133-150,  etc. ;  mid  Statutes,  5-7,  10,  11,  13,  17, 
19,  21-24.  26,  28,  31,  35.  36,  43,  44,  48,  49. 


1180 


INDEX — ^DIGEST. 


BIOHT  OF  ACTIOM.    See  Actions  and  Defenses,  9,  57. 
BUBBER  TIBES.    ^ee  Combinations,  etc.,  99. 

BX]XES  OF  LABOB  UNIONa    See  Combinations,  etc..  117. 

1.  Yalidity  of  Sale. — ^The  sale  and  transfer  by  a  corporation  of  Its 
property  and  good  will  to  another  corporation,  where  such 
sale  was  within  its  powers,  can  not  be  repudiated  on  the 
ground  that  the  purchaser  acquired  the  property  for  tht 
purpose  of  obtaining  a  monopoly  of  the  business  and  in 
imrsuamt*  of  an  illegrni  combination  in  restraint  of  trade 
Metcalf  V.  Amen  School  Furniture  Co.,  122  F.,  115.      2 — 234 

t.  A  contract  for  sale  of  vessels,  even  if  they  are  engaged  in  inter- 
state commerce,  is  not  necessarily  void  because  the  vendors 
agree,  as  is  ordinary  In  ease  of  sale  of  a  business  and  its 
good  will,  to  withdraw  from  business  for  a  specffied  period. 
VimhimtL  t(-r.,  Packet  Co.  v.  Bay,  200  U.  S.,  170.        8— fiST 

3.  Contract  for  Sale  of  Goods  by  Member  of  Combination.— The 

act  of  July  2,  1890,  section  1  (26  Stat,  209).  known  as  the 
**8heiinan  Anti-Trust  Act,"  does  not  invalidate  or  prevent 
a  recovery  for  the  breach  of  a  collateral  contract  for  the 
manufacture  and  sale  of  goods  by  a  member  of  a  combination 
fonued  for  the  purpose  of  restraining  interstate  trade  in 
such  goods.  Hadleif  Dean  Plate  Glass  Co.  v.  Highland  Glass 
Co.,  143  F.,  242.  »— 995 

4.  The  transaction  between  the  complainants  and  the  Northern 

Securities  Company  by  which  the  former  parted  with  and 
delivered  to  the  latter,  as  a  holding  corporation,  certain 
shares  of  the  stock  of  the  Northern  Pacific  Railway  Com- 
pany and  received  in  exchange  certain  other  shares  of  the 
Securities  Company  st<xk,  held  to  be  one  of  purchase  aM 
sale  of  the  Northern  Pacific  stock,  and  not  a  bailment  or 
trust.  Uairman  v.  Aor/Aerri  Securities  Co,,  197  U.  S.,  244. 
Affirming  134  F.,  331  (^-618).  3^—6611 

5.  Same. — When  a  vendor  testifies  that  the  transaction  was  an 

unconditional  sale  and  that  he  attached  to  his  negotiations 
no  other  conditions  than  that  of  price,  he  is  estopped  from 
aftenaanls  denying  that  this  is  a  statement  of  fact  and 
claiming  that  he  only  swore  to  a  conclusion  of  law.         lb. 

S.  Same.— Property  delivered  under  an  executed  illegal  contract 
can  not  be  recovered  back  by  any  partj-  in  pari  delicto,  and 
the  courts  can  not  relax  the  rigor  of  this  rule  where  the 
record  discloses  no  sjjecial  considerations  of  equity,  justice^ 
or  public  policy.  f^. 

7.  Same.— The  fact  that  the  complainants  in  this  case  acted  in 
good  faith  and  without  intention  to  violate  the  law  does 
not  exempt  them  from  the  doctrine  of  in  pari  delirto.    All 


INDEX — DIGEST. 


1181 


SALE— Continued. 

the  parties  having  supi»osed  the  statute  would  not  be  held 
applicable  to  the  transaition  neither  can  plead  isrnorauce 
of  the  law  as  against  the  other  and  the  defendant  secured 
no  unfair  advantage  in  retaining  the  consideration  volun- 
tarily delivered  for  the  price  agreed.  /fc. 

8.  Same. — Where  a  vendor  after  transferring  shares  of  railway 

stock  to  a  coriioration  in  exchange  for  its  shares  becomes  a 
director  of  the  purchasing  corporation  and  participates  in 
acts  consistent  only  with  absolute  ownership  Ijy  it  of  the 
railway  stocks,  and  does  so  after  an  action  has  been  brought 
to  declare  the  transaction  illegal,  his  right  to  rescind  the 
contract  and  compel  restitution  of  his  original  railway 
shares,  if  it  ever  existed,  is  lost  by  acquiescence  and  laches. 

9.  Restriction  of  Sales  of  Goods.— A  manufacturer,  a  corp;.ration. 

.  and  its  employee  restricted  the  sales  of  its  products  to  those 
who  refrained  from  dealing  in  the  commodities  of  its  com- 
l>etitors  by  fixing  the  prices  of  its  goods  to  those  who  did 
•  not  thus  refrain  so  high  that  their  purchase  was  unprofit- 
able, while  it  reduced  the  prices  to  those  who  declineti  to 
deal  in  the  wares  of  its  competitors  so  that  the  purchase 
of  the  goods  was  profitable  to  them.  The  plaintiff  ai)plied 
to  purchase,  but  refused  to  refrain  from  handling  the  goods 
of  the  cori)oration's  competitors,  and  sued  it  for  damages 
caused  by  the  refusal  of  the  defendants  to  sell  their  couunod- 
ities  to  liim  at  prices  which  would  make  it  profital>le  for 
him  to  buy  them  and  sell  them  again.  Held,  the  restriction 
of  their  own  trade  by  the  defendants  to  those  purchasers 
who  declined  to  deal  in  the  goods  of  their  competitors  was 
not  violative  of  the  Anti-Trust  Act.  Whitwell  v.  Continental 
Tobacco  Co.,  125  F.,  454.  2—271 

10.  Same.— The  owner  of  goods  may  dictate  the  prices  at  which 
he  will  sell  them,  and  the  damages  which  are  caused  tn 
an  applicant  to  buy  by  the  refusal  of  the  owner  to  sell  to 
him  at  prices  which  will  enable  him  to  resell  them  at  a 
profit  constitute  no  legal  injury,  and  are  not  actionable, 
because  they  are  not  the  result  of  any  breach  of  duty  or  of 
contract  by  the  owner.  *       j^ 

See  also  Combinations,  etc.,  18. 

8EABCH  AND  SEIZUBE. 

1.  Unreasonable  Searches— Subpoena  Duces  Tecum— Eights  of  an 
Agent. — A  suhpwna  duces  tecum  commanding  the  secretary 
and  treasurer  of  a  corporation  supposed  to  have  violated  the 
Anti-Trust  Act  to  testify  and  give  evidence  before  the  grand 
.jury,  and  to  bring  with  him  and  produce  numerous  agi-ee- 
ments,   letters,   telegrams,  reports,   and  other  writings,   de- 


1182 


INDEX — DIGEST. 


SEARCH  ANB  SEIZVBE— Continued. 

scribecl  generieally,  in  effect  including  all  the  correspondence 
and  documents  of  his  corporation  originating  since  the  date 
of  its  organization,  to  which  nineteen  other  named  corpora- 
tions or  i>ersons  were  iiarties,  for  the  purpose  of  enabling  the 
district  attorney  to  establish  a  violation  of  such  act  on  the 
part  of  the  witness'  principal,  constituted  an  unreasonable 
search  and  seizure  of  papers,  prohibited  by  Fourth  Amend- 
ment to  the  Constitution.  In  re  Hale,  139  F.,  49C.  2—804 
2.  Same. — A  corporation  charged  with  a  violation  of  the  Anti-Trust 
Act  of  July  2,  1890,  is  entitled  to  immunity  under  the  Fourth 
Amendment  to  the  Constitution  from  such  an  unreasonable 
search  and  seizure  as  the  compulsory  production  before  a 
grand  jury,  under  a  subpoena  duces  tecum,  of  all  under- 
standings, contracts,  or  correspondence  between  such  cor- 
poration and  six  other  comiianies,  together  with  all  reports 
and  accounts  rendered  by  such  companies  from  the  date  of 
the  organization  of  the  corporation,  as  well  as  all  letters 
received  by  that  corporation  since  its  organization,  from 
more  than  one  dozen  different  companies,  situated  In  seven 
different  States.    Hale  v.  Henkel,  201  U.  S.,  43.  2—874 

3.  The  search  and  seizure  clause  of  the  Fourth  Amendment  was  not 

intended  to  interfere  with  the  power  of  courts  to  compel  the 
production  upon  a  trial  of  documentary  evidence  through  a 
suhpmia  duces  tecum.  J&. 

4.  The  protection  against  unreasonable  searches  and  seizures  af- 

fonled  by  the  Fourth  Amendment  tothe  Constitution  can  not 
ordinarily  be  invoked  tt>  justify  the  refusal  of  an  officer  of 
a  corporation  to  produce  its  books  and  papers  in  obedience 
to  a  stihitffiia  (hicen  fpcimi,  issued  in  aid  of  an  investigation 
by  a  gi-aud  juiy  of  aa  alleged  violation  of  the  Anti-Trust  Act 
of  July  2.  189(^  by  such  corporation.  /&. 

5.  In  a  suit  in  equity  brought  by  the  United  States  to  enjoin  the 

carrying  out  of  a  contract  or  combination  in  restraint  of 
interstate  commerce,  under  the  act  of  1890,  there  can  be 
no  seizure  of  goods  in  course  of  transportation  pursuant  to 
the  unlawful  contract.  Such  seizure  can  only  be  made  under 
the  sixth  section  of  the  act,  which  authorizes  seizures  and 
condemnation  by  like  proceedings  to  those  provided  in  cases 
of  property  imported  into  the  United  States  contrary  to  law. 
U.  S.  X.  Adfhfston  Pipe  ct  Steel  Co.,  85  F.,  271.  1—773 

SHINGLES.    See  Combinations,  etc.,  32,  211,  212. 

SOUTH    CABOLINA   DISPENSABY   LAWS.    See   Lowemtein   v. 
Evans,  69  F.,  908  <  1—598). 

SPECIFIC  PEBFOBMANCE.       ^ee  Contracts,  7. 


INDEX — DIGEST. 


1183 


SPECULATIVE  DAMAGES.     See  Damages,  2. 

STATES. 

1.  Bight  to  Create  Corporations — Interstate  Commerce. — ^A  State 

can  not  invest  a  corporation  organized  under  its  laws  with 
the  power  to  do  acts  in  the  corporate  name  which  would 
operate  to  restrain  interstate  commerce.  C7.  S.  v.  Northern 
Securities  Co.,  120  F.,  721.  2—216 

2.  Same. — No  State  can,  by  merely  creating  a  corporation,  or  in 
^     any  other  mode,  project  its  authority  into  other  States,  so 

as  to  prevent  Congress  from  exerting  the  power  it  possesses 
under  the  Constitution  over  interstate  and  international 
commerce,  or  so  as  to  exempt  its  corporation  engaged  in 
interstate  conmierce  from  obedience  to  any  rule  lawfully 
established  by  Congress  for  such  commerce;  nor  can  any 
State  give  a  corporation  created  under  its  laws  authority 
to  restrain  interstate  or  international  commerce  against 
the  will  of  the  nation  as  lawfully  expressed  by  Congress. 
Every  corporation  created  by  a  State  is  necessarily  subject 
to  the  supreme  law  of  the  land.  Northern  Securities  Co.  v. 
United  States,  193  U.  S.,  197  (Harlan,  Brown,  McKenna, 
Day).  2—341 

8.  Bight  to  Create  Corporations — Injunction  in  Northern  Securi- 
ties Case  no  Invasion. — The  enforcement  of  the  provisions 
of  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat.,  209),  by  a 
Federal  court  decree  enjoining  a  corporation  organized  m 
pursuance  of  a  combination  of  stockholders  in  two  com- 
peting interstate  railway  companies  for  the  purpose  of  ac- 
quiring a  controlling  interest  in  the  capital  stock  of  such 
companies,  *  from  exercising  the  power  acquired  by  such 
corporation  by  virtue  of  its  acquisition  of  such  stock,  does 
not  amount  to  an  invasion  by  the  Federal  Government  of 
the  reserved  rights  of  the  States  creating  the  several  cor- 
porations. Northern  Securities  Co.  v.  United  States,  193 
U.  S.,  197  (48  L.  ed.,  679).  2—342 

4.  Jurisdiction  of  Federal  Courts. — A  State  is  not  a  citizen  within 

the  meaning  of  the  provisions  of  the  Constitution  or  acts 
of  Congress  regulating  the  jurisdiction  of  the  Federal  courts. 
Minnesota  v.  Northern  Securities  Co.,  194  U.  S.,  48.      2 — 533 

5.  Same. — A  State  can  not  maintain  an  action  in  equity  to  re- 

strain a  corporation  from  violating  the  provisions  of  the 
act  of  July  2,  1890,  on  the  ground  that  such  violations  by 
decreasing  competition  would  depreciate  the  value  of  its 
public  lands  and  enhance  the  cost  of  maintaining  its  public 
institutions,  the  damages  resulting  from  such  violations 
being  remote  and  indirect  and  not  such  direct  actual  injuiy 
as  is  provided  for  in  section  7  of  the  act.  /&. 


1 184 


INDEX — DIGEST. 


STATES— Continued. 

6.  State  Corporations — Power  of  Congress. — C'ougreHs  has  no  au- 

thority, under  the  fonuuew'©  clause  or  any  other  provision 
of  the  Constitution,  to  limit  the  right  of  a  corporation  cre- 
ated liy  a  State  in  the  acquisition,  control,  and  disposition 
of  property  in  the  several  States,  and  it  is  immaterial  that 
such  pi*oi>erty,  or  the  products  thereof,  may  become  the  sub- 
jects of  interstate  ccjuunerce;  and  it  is  apparent  that  by 
the  act  of  July  2,  1890,  in  relation  to  monopolies,  Congress 
did  not  intend  to  declare  tliat  the  acquisition  by  a  State 
conioration  of  so  large  a  part  of  any  species  of  proi^erty 
as  to  enable  the  owners  to  w>ntrol  the  traffic  therein  among 
the  several  States  constituted  a  criminal  offense.  In  re 
Greene.  52  F.,  104.  1 — 55 

7.  State  Corporations— Interstate  Commerce— Power  of  Congreu.— 

Franchises  of  a  corfmratlon  chartered  by  a  State  are.  so  far 
as  they  involve  rpu^stlons  of  interstate  commerce,  exercised 
in  subordination  to  the  power  of  Congress  to  regulate  such 
commerce.  While  Congress  may  not  have  general  visita- 
torial power  over  State  coriM>ration8,  its  powers  in  vindica- 
tion of  its  own  laws  are  the  same  as  if  the  corporation  had 
been  created  by  an  act  of  Congress.  Hale  v.  Henhel,  201 
U.  8.,  4X  a-»74 

i.  state  courts  are  without  jurisdiction  of  a  suit  to  recover  dam- 
ages under  section  7  of  the  Federal  Anti-Trust  Act  of  1890. 
Locttc  V.  Laiclor,  \m  F.,  «».  8—563 

fl;  A  State  is  neither  a  "  [person  "  nor  a  **  coiiwration,"  within  the 
meaning  of  the  Anti-Trust  Act  of  1890,  and  the  provisions 
of  that  act  are  not  applicable  to  the  case  where  the  State 
by  its  laws  assumes  a  monopoly  of  the  traffic  in  intoxicating 
liquors.     LoireiiHtein  v.  Evaim,  69  F.,  008.  1 — 598 

10.  Where  an  action  is  brought  against  the  officials  of  a  State 

under  s«iction  7  of  the  Anti-Trust  Law  of  July  2.  1800,  to 
recover  damages  for  acts  done  under  authority  of  a  State 
statute  which  gives  the  State  an  entire  monoiKily  of  the 
traffic  in  intoxicating  liquors  (act  S.  C,  Jan.  2,  1895).  the 
State  itself  is  a  necessary  party  thereto,  and  conse<iuently 
the  Federal  (irnrts  would  have  no  jurisdiction  of  tlie  .ution. 

lb. 

11.  Xanufactures  within  a  State.~^The  Anti-Trust  Act  of  1890  has 

no  reference  to  the  mere  manufacture  or  production  of  ar- 
ticles or  commodities  within  the  limits  of  the  several  States. 
Norihem  Securiticn  Co.  v.  UnUed  States,  193  U.  S.,  197. 

a— 339 

STATE  MONOPOLIES.    See  States,  9. 


INDEX—DIGEST. 


1185 


STATUTES. 


I.  Anti-Trust  Act  of  July  2,  1890. 


1.  Construction  and  operation — In  general. 

1.  Act  Operates  on  Monopolies  in  Interstate  Commerce,  and  Not 
Because  Commodity  is  a  Necessary  of  Life. — The'  monopoly 
and  restraint  denounced  by  the  act  of  July  2,  1890  (c.  647, 
26  Stat,  209),  "to  protect  trade  and  commerce  against  un- 
lawful restraints  and  monopolies,"  are  a  monopoly  In  inter- 
state and  international  trade  or  commerce,  and  not  a  monop- 
oly In  the  manufacture  of  a  necessary  of  life.  V.  S.  v. 
E.  C.  Knight  Co.,  156  U.  S.,  1.  1— .379 

8.  The  statute  is  not  limited  to  contracts  or  combinations  which 
monopolize  interstate  commerce  in  any  given  commodity, 
but  seeks  to  reach  those  which  directly  restrain  or  Impair 
the  freedom  of  interstate  trade.  The  law  reaches  combina- 
tions which  may  fall  short  of  complete  control  of  a  trade  or 
business,  and  does  not  await  the  consolidation  of  many  small 
combinations  Into  the  huge  "  trust "  which  shall  control  the 
production  and  sale  of  a  commodity.  Chesapeake  d  O.  Fuel 
Co.  V.  United  States,  115  F.,  610,  624.  2—168 

3.  Common  Carriers  Not  Included  Within  the  Statute. — It  was  not 

the  Intention  of  Congress  to  Include  common  carriers  sub- 
ject to  the  act  of  February  4,  1887,  within  the  provisions  of 
the  act  of  July  2,  1890,  which  is  a  special  statute,  relating 
to  combinations  In  the  form  of  trusts  and  conspiracies  in 
restraint  of  trade.  U.  8.  v.  Trans-Mo.  Ft.  Asm.,  53  F.,  440. 
Case  reversed,  166  U.  S.,  290  (1—648).  1—80 

4.  Applies  to  Common  Carriers  by  Railroads — Contracts  Affecting 

Rates. — The  provisions  respecting  contracts,  combinations, 
and  conspiracies  In  restraint  of  trade  or  commerce  among 
the  several  States  or  with  foreign  countries,  contained  in 
the  act  of  July  2,  1890,  "to  protect  trade  and  commerce 
against  unlawful  restraints  and  monopolies,"  apply  to  and 
cover  common  carriers  by  railroad ;  and  a  contract  between 
them  in  restraint  of  such  trade  or  commerce  is  prohibited, 
even  though  the  contract  Is  entered  Into  between  competing 
railroads,  only  for  the  purpose  of  thereby  aflFecting  traffic 
rates  for  the  transportation  of  i>ersons  and  property.  V.  8. 
V.  Trans-Mo.  Ft.  Assn.,  166  U.  S.,  290.  1—648 

5.  Act  Applies  to  All  Contracts  in  Restraint  of  Interstate  or  For- 

eign Commerce — Not  Confined  to  Unreasonable  Restraints. 

The  prohibitory  provisions  of  the  said  act  of  July  2,  1890, 
apply  to  all  contracts  in  restraint  of  Interstate  or  foreign  ' 
trade  or   commerce  without  exception   or   limitation;   and 
are  not  confined  to  those  in  which  the  restraint  is  unreason- 
able.  j^ 

11808— VOL  1—06  M ^76 


1186 


INDEX^ — DIGEST. 


STATUTES— Coiitiime<l. 

I.  Act  or  1890— Continued. 

6.  Act  Aimed  at  all  &ettrai]iti->&easonableness  of  Restraints  Im- 

material.—The  act  of  Congress  Is  aimed  against  all  restraints 
of»  interstate  commerce,  and  its  purijose  is  to  permit  com- 
merce between  tlie  States  to  flow  in  its  natural  channels, 
unrestricted  by  any  combinations,  contracts,  conspiracies,  or 
monopolies  whatsoever.  The  reasonableness  of  the  restric- 
tions in  a  given  case  is  immaterial.  V.  8.  v.  Hopkins,  82  F., 
529.  1_725 

Reversed,  171  U.  S.,  579  (1—941). 

7.  Test  of  Validity  of  Contract  or  Combination  under  Anti-Trust 

Act.— The  test  of  the  violation  of  the  Anti-Trust  Act  of 
July  2,  1890  (26  Stat.  209,  c.  647).  by  a  contract  or  combina- 
tion, is  its  effect  upon  competition  in  commerce  among 
the  States.  If  its  necessary  effect  is  to  stifle  or  to  directly 
and  substantially  restrict  interstate  commerce,  it  falls  under 
the  ban  of  the  law,  but  if  it  promotes,  or  only  incidentally 
or  indirectly  restricts,  competition,  while  its  main  purpose 
and  chief  effect  are  to  promote  the  business  and  increase 
the  trade  of  the  makei-s,  it  is  not  denounced  or  avoided  by 
that  law.    PhiUips  v.  lola  Portland  Cement  Co.,  125  F.,  59y. 

»— 284 

8.  The  Sherman  Act  of  July  2,  1890,  is  not  intended  to  affect 

contracts  which  have  only  a  remote  and  indirect  bearing 
on  conmieree  between  the  States.  Field  v.  Barber  Asphalt 
Paving  Co.,  194  U.  S.,  618.  2—665 

i.  The  Anti-Tnist  Act  of  July  2.  1800  (20  Stnt,  209),  does  not 
apply  to  a  contract  or  combination  relating  to  the  business 
of  manufacturing  within  a  State.  Robimton  v.  Suburban 
Brick  Co.,  127  F.,  804.  2—312 

10.  The  act  of  July  2,  1890,  commonly  known  as  the  "Anti-Trust 

Act"  does  not,  and  could  not  constitutionally,  affect  any 
monopoly  or  contract  in  restraint  of  trade,  unless  it  inter- 
feres directly  and  substantially  with  interstate  commerce, 
or  commerce  with  foreign  nations.  I.  S.  v.  Addystmi  Pipe 
4  Steel  Co.,  78  F.,  712.  1—6.30 

11.  Any  agreement   or  combination  which  directly  operates,   not 

alone  upon  the  manufacture,  but  upon  the  sale,  transporta- 
tion, and  delivery  of  an  article  of  interstate  commerce  by 
preventing  or  restricting  its  sale  thereby  regulates  interstate 
commerce  to  that  extent,  and  thus  trenches  upon  the  power 
of  the  national  legislature  and  violates  the  statute.  Addys- 
ton  Pipe  d  Steel  Co.  v.  U.  S.,  175  U.  S.,  211.  1—1009 

12.  Effect  of  Anti-Trust  Law  upon  Contracts  in  Restraint  of  Trade 

which  at  Common  Law  were  Not  Unlawful.— The  effect  of 
the  Anti-Trust  Law  of  1890  is  to  render  contracts  in  re- 
straint of  trade,  as  applied  to  interstate  commerce,  unlaw- 
ful in  an  affirmative  or  positive  sense,  and  punishable  as  a 


INDEX — DIGEST. 


1187 


STATUTES— Continued. 

I.  Act  of  1890-Continued. 
misdemeanor,  and  also  to  create  a  right  of  civil  action  for 
damages  in  favor  of  persons  injured  thereby,  and  a  remedy 
by  injunction  in  favor  both  of  private  persons  and  the 
public  against  the  execution  of  such  contracts  and  the  main- 
tenance of  such  trade  restraints.  U.  S.  v.  Addystmi  Pipe  c6 
Steel  Co.,  85  F.,  271.  ^_^^.^ 

18.  Test  of  Legality.— The  Anti-Trust  Act  of  July  2,  1890  (26  Stat 
209),  declaring  all  contracts  and  combinations  illegal  if  in 
restraint  of  trade  or  commerce  among  the  States,  does  not 
leave  to  the  courts  the  consideration  of  the  question  whether 
the  restraint  is  or  is  not  unreasonable  and  such  as  would 
have  rendered  the  contract  invalid  at  common  law.  The 
only  question  in  each  case  where  the  validitv  of  a  contract 
or  combination  under  the  law  is  involved  is  whether  or  not 
its  necessary  effect  is  to  restrain  interstate  commerce.  Ches- 
apeake d-  Ohio  Fuel  Co.  v.  U.  S.,  115  F.,  610.  2—151 

14.  Same.— The  test  of  the  violation  of  the  Anti-Trust  Act  of  July 

2,  1890  (20  Stat,  209),  by  a  contract  or  combination  is  its 
effect  upon  competition  in  commerce  among  the  States  If 
its  necessary  effect  is  to  stifle  or  to  directly  and  substan- 
tially restrict  interstate  commerce,  it  falls  under  the  ban 
of  the  law,  but  if  it  promotes,  or  only  incidentally  or  in- 
directly restricts,  competition,  while  its  main  purpose  and 
chief  effect  are  to  promote  the  business  and  increase  the 
trade  of  the  makers,  it  is  not  denounced  or  avoided  by  that 
law.  Phillips  V.  lola  Portland  Ceme^it  Co.,  125  F.,  593. 
(See  also  Combinations,  etc.,  9-15.)  2— '>84 

15.  Construction— Act  Includes  Every  Combination  which  Directly 

and  Substantially  Restricts  Interstate  Commerce.— The  gen- 
erality of  the  language  used  in  the  Anti-Trust  Act  of  r890 
(act  July  2,  1890,  26  Stat,  209),  declaring  illegal  "every 
contract,  combination,  or  conspiracy  in  restraint  of  trade 
or  commerce  among  the  several  States  or  with  foreiga 
nations,"  indicates  tlie  purpose  of  Congress  to  include  in  the 
prohibition  every  combination  which  directly  and  substan- 
tially restricts  interstate  commerce,  whatever  its  form  U 
S.  V.  Northern  Securities  Co.,  120  F.,  721  2— *>15 

16.  Same.-The  Anti-Trust  Act  (act  July  2,  1890,  26  Stat,  209)  Ip- 

plies  to  interstate  carriers  of  freight  and  passengers,  and 
any  contract  or  combination  which  directly  and  substantially 
restricts  the  right  of  such  a  carrier  to  fix  its  own  rates  in- 
dependently of  its  natural  competitors,  places  a  direct  re- 
straint upon  interstate  commerce,  in  that  it  tends  to  prevent 
competition,  and  is  in  violation  of  the  act,  whether  the 
rates  actually  fixed  be  reasonable  or  unreasonable.  lb 

17.  Saftie.-The  Anti-Trust  Act  of  July  2,  1890,  embraces  and  de^ 

Clares   to   b-   illegal   every   contract,    combination,    or   con- 


1188 


INDEX — DIGEST. 


STATUTBS— Continued. 


I.  Act  of  1890 — Continued. 


18 


19. 


20. 
81. 

3E3f> 


84. 


85. 


spiracy,  in  whatever  form,  of  whatever  nature,  and  whoever 
may  be  parties  to  it,  which  directly  or  necessarily  o^ierates 
in  restraint  of  trade  or  commerce  among  the  several  States 
or  with  foreign  nations.  Northern  Securities  Co.  v.  United 
States,  193  U.  S.,  197.     (Harlan.  Brown,  McKenna,  Day.) 

2—339 

That  act  has  no  reference  to  the  mere  manufacture  or  pro- 
duction of  articles  or  commodities  within  the  limits  of  the 
several  States.  /&. 

The  act  is  not  limited  to  restraints  of  interstate  and  inter- 
national  trade  or  commerce  that  are  unreasonable  in  their 
nature,  hut  embraces  all  direct  restraints,  reasonable  or 
unreasonable,  imposed  by  any  combination,  conspiracy,  or 
monopoly  upon  such  trade  or  commerce.  /&, 

Bailroad  carriers  engaged  in  interstate  or  international  trade 
or  commerce  arc  embraced  by  the  act.  Jh, 

Combinations,  even  among  private  manufacturers  or  dealers, 
whereby  interstate  or  international  commerce  is  restrained, 
are  equally  embraced  by  the  act.  /ft 

Every  combination  or  conspiracy  which  would  extinguish  com- 
petition between  otherwise  competing  railroads,  engaged  in 
interstate  trade  or  commerce,  and  which  would  in  that  way 
restrain  such  trade  or  commerce,  is  made  illegal  by  tho 
act.  76. 

The  natural  effect  of  competition  is  to  Increase  commerce,  and 
an  agreement  whose  direct  effect  is  to  prevent  this  play  of 
competition  restrains  Instead  of  promotes  trade  and  com- 
merce. /&. 

The  act  of  July  2,  1890,  was  leveled,  as  appears  by  its  title,  at 
only  unlawful  restraints  and  monopolies.  Congress  did 
not  intend  to  reach  and  destroy  those  minor  contracts  in 
partial  restraint  of  trade  which  the  long  course  of  decisions 
at  common  law  had  affirmed  were  reasonable  and  ought  to 
be  upheld.  Northern  SecuHties  Co.  v.  United  States,  193 
U.  S.,  197.     (Brewer,  concurring.)  2 — 341 

The  general  language  of  the  act  is  limited  by  the  power  which 
each  individual  has  to  manage  his  own  property  and  deter- 
mine the  place  and  manner  of  its  investment.  Freedom 
of  action  in  these  respects  is  among  the  inalienable  rights 
of  every  citizen.  /^ 

In  determining  whether  or  not  a  combination  is  in  violation 
of  the  Federal  Anti-Trust  Law,  as  in  restraint  of  interstate 
commerce,  it  is  immaterial  that  such  is  not  its  ultimate  ob- 
ject, which  is  in  most  cases  to  increase  the  trade  and  profits 
of  the  parties  to  such  combination ;  nor  is  it  material  to  as- 
certain  what  proportion  the  resulting  restraint  of  inter- 


INDEX — ^DIGEST. 


1189 


STATUTES— Continued. 

I.  Act  of  1890-Continued. 

state  commerce  bears  to  other  results.  The  true  inquiry  it 
whether  it  tends  directly  to  appreciably  restrain  interstate 
trade,  and,  if  it  does,  it  is  within  the  statute,  although  such 
effect  may  not  be  so  considerable  as  its  other  effects.  Ellis 
V.  Inman,  Poulsen  &  Co.,  131  F.,  182.  2—577 

27.  The  statute  under  review  (act  of  July  2,  1890)  is  a  legitimate 
exercise  of  the  power  of  Congress  over  interstate  commerce, 
and  a  valid  regulation  thereof.  U.  8.  v.  Joint  Traffic  Assn., 
171  U.  S.,  505.  1— «69 

88.  Section  1  of  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209), 

makes  a  distinction  between  a  contract  and  a  combination  or 
conspiracy  in  restraint  of  trade.  Rice  v.  Standard  Oil  Co., 
134  F.,  464.  2_633 

89.  The  Interstate  Commerce  Act  and  the  act  known  as  the  "  Sher- 

man Anti-Trust  law"  are  separate  and  independent  acts, 
not  germane  in  character  and  purpose ;  and  therefore  juris- 
diction in  the  circuit  court  of  the  United  States  over  a  bill 
in  equity  to  enjoin  a  railroad  company  from  granting  re- 
bates to  favored  shippers  can  not  be  maintained  upon  the 
ground  that  such  act  of  the  railroad  company  is  a  monopoly 
within  the  meaning  of  the  second  section  of  said  Anti-Trust 
Act  (act  July  2,  1890,  26  Stat,  209).  United  States  v. 
Atchison,  T.  d  S.  F.  Ry.  Co.,  142  F.,  176.  2—831 

30.  Acts  done  under  an  agreement  legal  when  made,  but  which  be- 
came illegal  on  the  passage  of  the  act  of  July  2,  1890,  are 
done  in  violation  of  that  act.  U.  S.  v.  Tra/ns-Mo.  Ft.  Assn., 
166  U.  S.,  290.  1—669 

81.  The  statute  has  no  concern  with  prices,  but  looks  solely  to 
competition  and  to  the  giving  of  competition  full  play  by 
making  illegal  any  effort  at  restriction  upon  competition. 
Restraint  of  trade  is  not  dependent  upon  any  consideration 
of  reasonableness  or  unreasonableness  in  the  combination 
averred,  nor  is  it  to  be  tested  by  the  prices  that  result  from 
the  combination.     U.  S.  v.  Swift  &  Co.,  122  F.,  529.        2—237 

32.  The  Anti-Trust  Act  should  have  a  reasonable  construction- 
one  which  tends  to  advance  the  remedy  it  provides  and  to 
abate  the  mischief  at  which  it  was  leveled.  Whitwell  v. 
Continental  Tobacco  Co.,  125  F.,  454.  2—271 

83.  Scope  of  the  Statute.— The  words  "  trade  "  and  "  commerce,"  as 

used  in  the  Anti-Trust  Act  of  1890,  are  synonymous.  The 
use  of  both  terms  in  the  first  section  does  not  enjarge  the 
meaning  of  the  statute  beyond  that  employed  in  the  con- 
mon-law  expression  "  contract  in  restraint  of  trade,"  as  they 
are  analogous  to  the  word  "  monopolize,"  used  in  the  second 
section  of  the  act     U.  S.  v.  Patterson,  55  F.,  605.         1—133 

84.  Same.— The  word  "monopolize"  is  the  basis  and  limitation  of 

the  statute,  aud  hence  an  indictment  must  show  a  conspiracy 


1M»0 


STATUTES— Continueti 


INDEX — DIGEST. 


I.  AtT  OF  1890— Continued. 

in  restraint  by  engrossing  or  monopolizing  or  grasping  the 
market.  It  is  not  sufficient  simply  to  allege  a  purpose  to 
drive  certain  competitors  out  of  the  field  by  violence,  annoy- 
ance, intimidation,  or  otherwise.  Ih, 

85.  Scope  of  the  Statute— Conspiracy.— The  act  of  July  2.  1890  (2« 

Stat,  209),  section  1,  declaring  illegal  "every  contract,  com- 
bination in  the  form  of  trust  or  otherwise,  or  conspiracy  "  iu 
restraint  of  trade  or  comniert*e  among  the  States  or  with 
foreign  nations,  is  not  aimed  at  capital* merely  and  combina- 
tions of  a  contractual  nature,  which  l>y  force  of  the  title, 
"An  act  to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopolies,"  are  limited  to  such  as  the  courts 
have  declared  unlawful,  the  words  "  in  restraint  of  trade  " 
having,  in  connection  with  the  words  "  contract "  and  "  com- 
bination," their  c^mnion-latw  significance,  but  the  term 
*'  conspiracy  "  is  used  iu  its  well-settled  legal  meaning,  so 
that  any  restraint  of  trade  or  commerce,  if  to  be  accom- 
plished by  conspiracy,  is  unlawful.  IJ.  ii.  v.  Debs,  *J4  F.. 
724.  1 — 322 

86.  Same — Construction. — The  construction  of  the  statute   is   not 

affected  by  the  use  of  the  phrase  "in  restraint  of  trade," 
rather  than  one  of  the  phrases  "  to  injure  trade  '  or  "  to 
restrain  trade."  /ft. 

87.  Same. — The  word  ''commerce,"  in  the  statute,  is  not  synony- 

mous with  "  trade,"  as  used  in  the  common-law  phrase  "  re- 
straint of  trade,"  but  has  the  meaning  of  the  word  in  that 
clause  of  the  Constitution  which  grants  to  Congress  power 
to  regulate  interstate  and  foreign  commerce.  /ft. 

88.  Supreme  Court  Does  Not  Bissent  from  Conclusions  in  V.  S.  ▼. 

Debs.— The  court  enters  into  no  examination  of  the  act 
of  July  2,  1890  (21 J  Stat..  209),  on  which  the  circuit 
wurt  mainly  relied  to  sustain  its  jurisdiction;  but  it  must 
not  be  understood  that  it  dissents  from  the  conclusions  of 
that  court  in  reference  to  the  scope  of  that  act,  but  simply 
that  it  prefers  to  rest  its  judgment  on  the  broader  ground 
discussed  in  Its  opinion,  l)elieving  it  important  that  the 
principles  underlying  it  should  be  fully  stated  and  fully 
aflirmed.    in  re  Debs,  158  U.  S.,  564.  1—565 

89.  While  the  primary  object  of  the  Anti-Trust  Act  of  1890  was 

doubtless  to  prevent  the  destruction  of  legitimate  and 
healthy  competition  in  interstate  commerce  by  the  engross- 
ing and  monopolizing  of  the  markets  for  commodities,  yet 
its  provisions  are  broad  enough  to  reach  a  combination  or 
conspiracy  that  will  interrupt  the  transportation  of  such 
commodities  and  persons  from  one  State  to  another.  U.  8. 
V.  WorJcinffmen*a  Amalgamated  Council,  54  F.,  995,  cited. 
U.  8.  V.  Cassidp,  67  F.,  698.  1—452 


INDEX — ^DIGEST. 


1191 


STATUTES— Continue*!. 

I.  Act  of  1890 — Contiiuie«l. 
Section  1. 

40.  Conspiracy  in  Eestraint  of  Interstate  Commerce. — A  combina- 

tion by  railroad  employees  to  prevent  all  the  railroads  of 
a  large  city  engaged  in  carrying  the  United  States  mails 
and  in  interstate  commerce  from  carrying  freight  and  pas- 
sengers, hauling  cars,  and  securing  the  services  of  persons 
other  than  strikers,  and  to  induce  persons  to  leave  the 
service  of  such  railroads,  is  within  act  of  July  2,  1890,  sec- 
,  tion  1,  which  provides  that  every  contract,  combination  in 
the  form  of  trust  or  otherwise.  "  or  conspiracy  in  restraint 
of  trade  or  commerce  "  among  the  States  is  illegal.  U.  8.  v. 
Elliott,  64  F.,  27.  1—311 

41.  Same.— Act  of  July  2,  1890   (26  Stat.,  209),  section  1,  is  not 

aimed  at  capital  merely  and  combinations  of  a  contractual 
nature,  which  by  force  of  the  title,  "An  act  to  protect  trade 
and  connnerce  against  unlawful  restraints  and  monopolies," 
are  limited  to  such  as  the  courts  have  declared  unlawful. 
U.  8.  V.  Dels,  m  F.,  724.  1—322 

42.  Same. — The  term    "  conspiracy "    in   section   1   of   the   act  of 

July  2,  1890  (26  Stat,  209),  is  used  in  its  well-settled  legal 
meaning,  so  that  any  restraint  of  interstate  trade  or  com- 
merce, if  accomplished  by  conspiracy,  is  unlawful.  /ft. 

43.  What   Contracts,  Combinations,  or  Conspiracies  Violate   Anti- 

Trust  Act. — Every  contract,  combination  or  conspiracy  the 
necessary  effect  of  which  is  to  stifle  or  to  directly  and  sub- 
stantially restrict  comi>etition  in  connnerce  among  the  States 
is  in  restraint  of  interstate  commerce,  and  violates  section 
1  of  the  act  of  July  2,  1890  (26  Stat,  209).  Whitm'll  v. 
Continental  Tobacco  Co.,  125  F.,  454.  2—271 

44.  What  Acts,  Contracts,  and  Combinations  Do  Not  Violate  Anti- 

Trust  Act. — Acts,  contracts,  and  combinations  which  promote, 
or  only  incidentally  or  indirectly  restrict,  competition  in 
commerce  among  the  States,  while  their  main  purpose  and 
chief  effect  are  to  foster  the  trade  and  increase  the  business 
of  those  who  make  and  operate  them,  are  not  in  restraint  of 
interstate  commerce  or  violative  of  section  1  of  the  act  of 
July  2,  1890  (26  Stat.,  209).  /ft. 

46.  Section  1  of  the  Sherman  Anti-Trust  Act  of  July  2,  1890  (26 
Stat,  209),  makes  a  distinction  between  a  contract  and  a 
combination  or  conspiracy  in  restraint  of  trade.  Rice  v. 
Standard  Oil  Co.,  134  F.,  464.  2—mS 

46.  Contract  for  Sale  of  Goods  by  Member  of  Combination. — ^The 
act  of  July  2,  1890,  section  1  (26  Stat,  209),  known  as  the 
"  Sherman  Anti-Trust  Act,"  does  not  invalidate  or  prevent 
a  recovery  for  the  breach  of  a  collateral  contract  for  the 
manufacture  and  sale  of  goods  by  a  member  of  a  combination 


1192 


INDEX — ^DIGEST. 


STATUTES— Continued. 

I.  Act  of  ISW— Continued, 
formed  for  the  purpose  of  restraining  interstate  trade  In 
such  goods.    Hadley  Dean  Plate  Glass  Oo.  v.  Highland  Glass 
Co.,  143  F.,  242.  a— 995 

See  also  Inijictmemts,  5* 

Section  2. 

47.  Monopolies. — ^To  oonstitute  the  offense  of  "  monopolizing,  or 
attempting  to  monopolize,"  trade  or  commerce  among  the 
States,  within  the  meaning  of  section  2  of  the  Anti-Trust 
Act  of  1890,  it  is  necessary  to  acquire,  or  attempt  to  acquire, 
an  exclusiTe  right  in  such  commerce  by  means  which  will 
prevent  others  from  engaging  therein.  /»  re  Greene,  52  F., 
104.  1_55 

4S.  Every  attempt  to  monopolize  a  part  of  interstate  commerce,  the 
necessary  effect  of  which  is  to  stifle  or  to  directly  and  sub- 
stantially restrict  competition  in  commerce  among  the  States, 
violates  section  2  of  the  act  of  July  2,  1890  (26  Stat.,  209). 
WhUwefl  V.  Continental  Tobacco  Co.,  125  F.,  454.         2—271 

49.  Same. — ^Attempts  to  monopolize  a  part  of  commerce  among  the 

States  which  promote,  or  only  incidentally  or  indirectly  re- 
jitrict,  competition  in  interstate  commerce,  while  their  main 
purpose  and  chief  effect  are  to  increase  the  trade  and  foster 
the  business  of  those  who  raalie  them,  were  not  intended  to 
be,  and  were  not,  made  illegal  or  punishable  by  section  2 
of  the  Anti-Tnist  Act  of  July  2,  1890  (c.  647,  26  Stat,  209), 
because  such  attempts  are  indispensable  to  the  existence  of 
any  competition  in  commerce  among  the  States.  /&. 

Sec  also  iNDicx^rEXTs,  1;  Monopoly. 

•  Section  |* 

50.  Power  of  Congress  to  Authorize  Injunction.— Act  of  July  2, 

1890,  section  4,  which  provides  that  the  circuit  courts  of  the 
United  States  have  jurisdiction  to  restrain  combinations 
and  conspiracies  to  obstruct  and  destroy  interstate  com- 
merce, before  such  objects  are  accomplished,  is  not  void  for 
want  of  power  in  Congress  to  nuthorize  such  proceedings. 
U.  S,  V,  Elliott,  64  F.,  27.  1—311 

51.  Oovernment  Has  Power  to  Bring  Suit.— The  fourth  section  of 

the  act  of  1890  invests  the  Government  with  full  power  and 
authority  to  bring  suit  against  the  Trans-Missouri  Freight 
Association :  and,  if  the  facts  alleged  are  proved,  an  injunc- 
tion sliould  imie.  l.  is.  v.  Tra>i>i-Mo,  Ft.  Assn.,  166  U.  S., 
290.  1_P^9 

52.  Who  May  Sue  to  Restrain.— The  intention  of  the  Anti-Trust 

Act  of  July  2,  1890  (26  Stat..  209),  was  to  limit  direct  pro- 
ceedings in  wiuitj'  to  prevent  and  restrain  such  violations 
of  the  Aiiti-Tnist  Art  :is  ( anse  injury  to  the  general  public, 


INDEX — ^DIGEST. 


1193 


STATUTES— Continued. 

I.  Act  of  1890— Continued. 

or  to  all  alike,  merely  from  the  suppression  of  competition 
in  trade  and  commerce  among  the  several  States  and  with 
foreign  nations,  to  those  instituted  in  the  name  of  the 
United  States,  under  section  4  of  the  act,  by  district  attor- 
neys of  the  United  States,  acting  under  the  direction  of 
the  Attorney-General;  thus  securing  the  enforcement  of  the 
act,  so  far  as  such  direct  proceedings  in  equity  are  con- 
cerned, according  to  some  uniform  plan,  operative  through- 
out the  entire  country.  Minnesota  v.  Northern  Securities 
Co.,  194  U.  S.,  48.  2—533 

53.  The  right  to  bring  suits  for  injunction  under  section  4  of  the 

act  of  July  2,  1890  (26  Stat,  290),  is  limited  to  suits  insti- 
tuted on  behalf  of  the  Government.  Greer,  Mills  d  Co.  v. 
Stoller,  77  F.,  1.  1—620 

54.  Although  the  act  of  July  2,  1890,  contains  criminal  provisions, 

tlie  Federal  court  has  power  under  section  4  of  the  act  in  a 
suit  in  equity  to  prevent  and  restrain  violations  of  the  act, 
and  may  mold  its  decree  so  as  to  accomplish  practical  re- 
sults such  as  law  and  justice  demand.  Northern  Securities 
Co.  V.  United  States,  193  U.  S.,  197.  2—339 

56.  Eestraining  Order— Notice.— Under  section  4  of  the  Anti-Trust 
Law  of  July  2,  1890,  a  restraining  order  may  be  issued 
without  notice,  under  the  circumstances  sanctioned  by  the 
established  usages  of  equity  practice  In  other  cases.  U.  S. 
V.  Coal  Dealers*  Assn.  of  Cal,  85  F.,  252.  1 — 749 

56.  Injunction. — A  combination  whose  professed  object  Is  to  ar- 
rest the  operation  of  the  railroads  whose  lines  extend  from 
a  gi'eat  city  Into  adjoining  States  until  such  roads  accede 
to  certain  demands  made  upon  them,  whether  such  demands 
are  In  themselves  reasonabe  or  unreasonabe,  just  or  unjust, 
is  an  unlawful  conspiracy  In  restraint  of  trade  and  com- 
merce among  the  States,  within  the  act  of  July  2,  1890, 
and  acts  threatened  In  pui-suauce  thereof  may  be  restrained 
by  injunction  under  section  4  of  the  act.  V.  8.  v.  Elliott, 
62  F.,  801.  1— 2f2 

See  also  Injunctions,  9,  16,  17,  21. 

Section  5. 

67.  Injunction  Order— Persons  Not  Named  in  Bill. — Under  act  of 
July  2,  1890,  section  5,  an  Injunction  order  In  an  action  to 
enjoin  an  illegal  conspiracy  against  Interstate  commerce 
may  provide  that  it  shall  be  in  force  on  defendants  not 
named  in  the  bill,  but  who  are  within  the  terms  of  the  order, 
where  it  also  provides  that  it  Is  operative  on  all  persons 
acting  in  concert  with  the  designated  conspirators,  though 
not  named  In  the  writ,  after  the  commission  of  some  act  by 


1194 


IHDEX — DIGEST. 


STATUTES— Continued. 

I.  Act  of  1890 — Continued. 

tliem  In  furtherance  of  tlie  conspiracy,  and  service  of  the 
writ  on  them.     U.  S,  v.  EUwtt.  (H  F..  27.  1—311 

18.  llie  authority  given  by  section  5  of  the  act  of  July  2,  1890 
(26  Stat.,  290),  to  hrlng  in  nonresidents  of  the  district  can 
not  be  availeil  of  in  private  suits,  and  the  court  can  acquire 
no  jurisdiction  over  them.  Greer,  Mills  it  Co.  v.  Poller, 
"7  F.,  1.  1—620 

See  aim  Injunctions,  18. 

Section  6, 

59.  Forfeiture  of  Property.— The  provision  of  act  of  July  2,  1800, 
section  6,  for  forfeiture  of  "  any  proi3erty  owned  under  any 
contract  or  by  any  combination,  or  pursuant  to  any  con- 
spiracy (and  l>eing  the  subject  thereof)  mentioned  in  this 
act,  and  being  in  the  course  of  transportation  fi-om  one 
State  to  another  or  to  a  foreign  country,"  does  not  imply 
that  only  cases  in  which  property  shall  be  found  subject  to 
forfeiture  shall  be  deemed  within  the  scope  of  the  act. 
U,  S.  V.  Debs,  64  F.,  724.  1—322 

00.  Seizure  of  goods  in  course  of  transportation  pursuant  to  the 
unlawful  contract  can  only  he  made  under  the  sixth  section 
of  the  act  of  1890,  which  authorizes  seizures  and  condemna- 
tion by  like  proceedings  to  those  provided  in  cases  of  prop- 
erty imported  into  the  United  States  contrary  to  law. 
V.  S,  v.  Addyston  Pipe  iC  Steel  Co.,  85  F..  271.  1—773 

81.  There  can  be  no  such  seizure  in  a  suit  in  equity  Itn.ught  by  the 
United  States  under  the  act  of  1890  to  enjoin  the  carrying 
out  of  a  contract  or  combination  in  restraint  of  interstate 
commerce.  /b. 

Section  7. 

88.  Necessary  Parties— Jurisdiction  of  Federal  Courts.— Where  a 
person  brings  an  action  under  section  7  of  the  Anti-Trust 
Law  of  July  2,  1890,  against  the  officials  of  a  State  to  re- 
cover damages  for  acts  done  under  authority  of  a  State 
statute  which  gives  the  State  an  entire  monoiwly  of  the 
traffic  in  intoxicating  liquors  (act  S.  C,  Jan.  2,  1895),  the 
State  itself  is  a  necessary  party  thereto,  and  consequently 
the  Federal  courts  would  have  no  jurisdiction  of  the  action. 
Lmcemstein  v.  rJians,  m  F.,  908.  1—598 

83.  A  municipal  corporation  engaged  in  operating  water,  lighting, 
or  similar  plants,  from  which  a  revenue  is  derived,  is,  in  re- 
lation to  such  matters,  a  business  coriK>ration,  and  may 
maintain  an  action  under  section  7  of  the  Anti-Trust  Act  of 
July  2,  1890  (20  Stat.,  210),  for  injury  to  its  business"  by 
reason  of  a  combination  or  conspinicy  in  restraint  of  inter- 
state trade  or  commerce  made  unlawful  by  suoli  act.  Ciiy 
of  Atlanta  v.  Vhnttanooga  Foiindri/  d-  PiiKirorlfi.  127  F.,  23. 
Affirmed,  203  U.  S..  390.  2—299 


INDEX — DIGEST. 


1195 


STATUTES— Continueii. 

* 

1.  Act  of  1890— Continued. 

64.  Same — ^Who  Liable. — Every  member  of  such  an  illegal  combina- 

tion is  liable  for  the  injury  resulting  to  the  business  or 
property  of  a  plaintiff  l)y  reason  of  such  combination,  re- 
gardless of  any  contract  relation  between  the  plaintiff  and 
defendant.  ,  ih. 

65.  Does  Not  Authorize  an  Action  for  Damages  by  Party  to  the 

Trust.— Section  7  of  the  Anti-Trust  Act  (26  Stat,  209),  giv- 
ing to  any  person  injuretl  by  any  other  i)erson  or  corpora- 
tion by  reason  of  anything  forbidden  in  the  act  the  right  to 
recover  treble  damages,  does  not  authorize  an  action  against 
i\n  alleged  trust  corrx)ration  by  one  who  was  a  party  to  its 
organization  and  a  stockholder  therein  to  recover  damages 
resulting  from  the  enforcement  by  defendant  of  rights  given 
it  by  the  alleged  unlawful  agreement.  Bishop  v.  American  " 
Preservers  Co.,  105  F.,  845.  2 — 51 

Affirming  51  F.,  272   (1—49). 

66.  For  an  action  for  recovery  under  this  section  brought  under 

this  section  against  an  association  of  manufacturers  of  and 
dealers  in  tiles,  mantels,  and  grates,  where  the  party  suing 
was  not  a  member  of  the  association,  and  the  sales  were 
made  within  the  State,  see  Montague  v.  Loivry,  193  U.  S., 
38.  2-327 

67.  Attorneys'  Fees. — The  discretion  of  the  trial  court  under  the 

Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209),  section  7,  to 
allow  a  reasonable  attorney's  fee  to  the  successful  plaintiff 
in  an  action  brought  under  that  section  to  recover  damages 
for  a  violation  of  the  provisions  of  that  act  against  combina- 
tions in  restraint  of  trade,  is  not  abused  by  an  allowanc-e  of 
$750,  although  the  verdict  was  for  but  $500,  where  the  trial 
took  five  days,  and  from  the  proof  offered  it  appeared  that 
from  $750  to  $1,000  would  be  a  reasonable  sum.  lb. 

68.  A  recovery  of  the  treble  damages  authorized  by  the  Sherman 

Anti-Trust  Act  of  July  2,  1890,  section  7  (26  Stat.,  209),  in 
case  of  injury  sustained  by  violation  of  the  act,  can  be  had 
only  by  direct  action,  and  not  by  way  of  set-off  in  an  action 
brought  for  the  price  of  goods  by  a  company  illegally  formed 
in  violation  of  the  act,  especially  when  the  State  practice 
does  not  permit  the  set-off  of  unliquidated  damages.  Con- 
nolly V.  Union  Sewer  Pipe  Co.,  184  U.  S.,  540.  2 — 118 

88.  A  declaration  in  a  suit  based  on  section  7  of  the  Anti-Trust 
.\ct  of  1890  (26  Stat,  210),  to  recover  damages  resulting 
to  plaintiff  from  a  violation  of  such  provision,  which  alleges 
in  a  single  count  that  defendant  entered  into  a  "  contract, 
combination,  and  conspiracy  "  in  restraint  of  trade,  is  bad 
for  duplicity.     Rice  v.  Standard  Oil  Co.,  134  F.,  464.    2—633 

70.  The  pendency  of  a  suit  in  a  State  court  can  not  be  pleaded  in 
abatement  of  an  action   in   a  circuit  ctnn-t  of  the  United 


1196 


INDEX^ — ^DIGEST. 


STATUTBS— Con  ti  u  iied. 

I.  Act  or  1890— Continued. 

States  to  recover  treble  damages  under  section  7  of  tlie 
Anti-Trust  Act  of  July  2,  1890  (26  Stat,  210),  since  tbe 
State  court  is  without  Jurisdiction  to  enforce  the  remedy 
given  by  said  section,  and  therefore  the  same  case  can  not 
be  depending  in  both  courts.    Loewe  v.  Lawlor,  130  F.,  633. 

2—563 
71.  Limitation. — ^An  action  under  section  7  of  the  Anti-Trust  Act 
of  July  2,  1890  (26  Stat,  209),  providing  that  "any  person 
who  shall  be  injured  in  his  business  or  property  by  any  other 
person  or  corporation  by  reason  of  anything  forbidden  or 
declared  to  be  unlawful  by  this  act  may  sue  therefor  in 
any  circuit  court  of  the  United  States,  •  ♦  ♦  and  shall 
recover  threefold  the  damages  by  him  sustained,"  is  not 
an  action  for  a  penalty  or  forfeiture  within  Revised  Statutes, 
seetion  1047,  prescribing  a  limitation  of  five  years  for  a 
"  suit  or  prosecution  for  any  penalty  or  forfeiture,  i)ecuuiary 
or  otherwise,  accruing  under  the  laws  of  the  United  States," 
but  one  for  the  enforcement  of  a  civil  remedy  for  a  private 
injury,  compensatoiy  in  its  purpose  and  effect,  the  recovery 
permitted  in  excess  of  damages  actually  sustained  being 
in  the  nature  of  exemplary  damages,  which  does  not  change 
the  nature  of  the  action,  and  such  action  is  governed  as  to 
limitation  by  the  statutes  of  the  State  in  which  it  is  brought. 
dtp  of  Atlanta  v.  Chattanooga  Foundry  tC-  Pipe  Co.,  101  F., 
900.  8_lt 

Affirmed,  127  F.,  23  (2—299). 

Affirmed,  203  U.  S.,  390. 

ITOB  Combinations,  etc.,  pbohibited,  see  Combinations,  Con- 
spiBAciEs,  Contracts,  etc.,  in  Restraint  of  Trade,  II. 

Fob  Combinations,  etc.,  not  within  the  Statute,  see  Com- 
binations, Conspiracies,  Contracts,  etc.,  in  Restraint  of 
Trade,  III. 

Fob  Actions,  Defenses,  or  Parties,  see  Actions  and  De- 
fenses; AND  Parties. 

For  Jurisdiction  of  Federal  Courts,  see  Courts. 

Fob  Damages,  see  Actions  and  Defenses,  21-42;  and  Dam- 
ages. 

II.  Immunity  Statutes. 
Act  of  February  11,  1893, 

72.  Immunity  of  Witnesses.— Act  of  February  11,  1893  (27  Stat, 
443),  providing  that  no  person  shall  be  excused  from  testi- 
fying In  a  proceeding  growing  out  of  an  alleged  violation 
of  an  act  to  regulate  interstate  commerce,  approved  Feb- 
ruary 4,  1887,  on  the  ground  that  his  testimony  will  tend 
to  incriminate  him,  and  that  no  person  shall  be  prosecuted, 
etc.,  on  account  of  anything  concerning  which  lie  may  tes 


INDEX — ^DIGEST. 


1197 


STATUTES— Continued. 

U.  Immunity  Statltes — Continued, 
tify  in  such  proceeding,  applies  only  to  proceedings  con- 
nected with  the  act  of  February  4,  1887,  and  does  not  apply 
to  a  prosecution  for  violation  of  the  act  of  July  2,  1890  (26 
Stat.,  209),  so  as  to  abrogate  in  relation  thereto  the  Fifth 
Amendment  to  the  Constitution,  providing  that  no  pei*son 
shall  be  compelled  in  a  criminal  case  to  be  a  witness  against 
himself.    Foot  v.  Buchanan,  113  F.,  156.  2 — 104 

73.  The  act  of  February  11,  1893  (27  Stat,  443),  which  is  supple- 

mentary to  the  Interstate  Commerce  Act,  provides  that  "  no 
person  shall  be  prosecuted  or  subjected  to  any  penalty  or 
forfeiture  for  or  on  account  of  any  transaction,  matter,  or 
thing  concerning  which  he  may  testify  or  produce  evidence, 
documentary  or  otherwise,  before  said  Commission  or  in 
obedience  to  its  subpoena  *  *  *  or  in  any  such  case  or 
proceeding."     V.  S.  v.  Armour  &  Co.,  142  F.,  808.        2—951 

Act  of  February  19,  1903. 

74.  Immunity  of  Witnesses— Anti-Trust  Act— Inquisitions.— An  in- 

quisition before  a  grand  jury  to  determine  the  existence  of 
supposed  violations  of  the  Anti-Trust  Act  was  a  "proceed- 
ing" within  act  of  Congress,  February  19,  1903  (ch.  708, 
32  Stat.,  848),  providing  that  no  person  shall  be  prosecuted 
or  subjected  to  any  penalty  for  or  on  account  of  any 
transaction,  matter,  or  thing  concerning  which  he  may  tes- 
tify or  produce  evidence  in  any  "  proceeding  "  under  several 
statutes  mentioned,  including  such  Anti-Trust  Act.  In  re 
Hale,  139  F.,  496.  2—804 

Act  of  February  25,  1903. 

75.  The  examination  of  witnesses  before  a  grand  jury  concerning 

an  alleged  violation  of  the  Anti-Trust  Act  of  Jnly  2,  1890 
(26  Stat,  209),  is  a  "  proceeding  "  within  the  meaning  of  the 
proviso  to  the  act  of  February  25,  1903  (32  Stat,  854-903), 
that  no  person  shall  be  prosecuted  or  be  subjected  to  any 
penalty  or  forfeiture  for  or  on  account  of  any  transaction, 
matter,  or  thing  concerning  which  he  may  testify  or  produce 
evidence  in  any  proceeding,  suit,  or  prosecution  under  cer- 
tain named  statutes,  of  which  the  Anti-Trust  Act  is  one. 
Hale  V.  Henkel,  201  U.  S.,  43.  2—874 

76.  The  right  of  a  witness  to  claim  his  privilege  against  self-in- 

crimination, afforded  by  the  Fifth  Amendment  to  the  Con- 
stitution, when  examined  concerning  an  alleged  violation  of 
the  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209),  is  taken 
away  by  the  proviso  to  the  act  of  Febmary  25,  1903  (32 
Stat,  904),  that  no  person  shall  be  prosecuted  or  be  sub- 
jected to  any  penalty  or  forfeiture  for  or  on  account  of  any 
transaction,  matter,  or  thing  concerning  which  he  may  tes- 


1198 


STATUTTES— Contimied. 


INDEX — DIGEST. 


II.  Immunity  SxATrTES— Continued. 

tify  or  produce  evidence  in  any  proceeding,  suit,  or  prosecu- 
tion under  certain  named  statutes,  of  whicli  tlie  Anti-Trust 
Act  is  one,  which  funiislies  a  sufficient  immunity  from 
.  prosecution  to  satisfy  the  constitutional  guaranty,  although 
it  may  not  afford  immunity  from  prosecution  in  the  State 
courts  for  the  offense  disclosed.  [See  also  Nelson  v.  United 
States,  201  U.  S.,  92  (2—920).]  lb, 

77.  Imnmiiity  Provision. — The  appropriation  act  of  B'ebruary  25, 

1903  (32  Stat,  904),  making  provision  for  the  enforcement 
of  the  Interstate  Commerce  and  Anti-Trnst  Laws,  contains  an 
immunity  provision  relating  to  persons  giving  testimony  or 
producing  evidence  in  any  proceeding,  suit,  or  prosecution 
under  said  laws.     U.  S.  v.  Amiour  d  Co.,  142  F.,  808.    2—952 

III.  Commerce  and  Labor  Act. 

Act  of  Februaru  i^,  J903. 

78.  The  primary  purpose  of  Commerce  and  Labor  Act  of  February 

14,  1903  (32  Stat,  825),  was  legislative,  to  enable  Congress, 
by  information  secured  through  the  work  of  officers  charged 
with  the  execution  of  that  law  to  pass  such  remed'al  legis 
lation  as  might  be  found  necessary,  and  the  act  must  be 
construed  in  view  of  such  purpose.  United  States  v.  Ar- 
mour  d  Co.,  142  F.,  808.  2—951 

79.  Commissioner  of  Corporations — ^Investigation  of  Corporations  or 

Combinations.— Section  8  of  that  act  (32  Stat.,  827),  defining 
the  powers  and  duties  of  the  Commissioner  of  Corporations, 
requiring  him  to  make  investigation  into  the  organization, 
conduct,  and  management  of  the  business  of  all  corporations 
or  combinations  engaged  in  interstate  or  foreign  commerce 
other  than  common  carriers,  and  giving  him  the  same  powers 
In  that  respect  as  is  conferred  on  the  Interstate  Commerce 
Commission  with  respect  to  carriers,  including  the  power  to 
subiwena  and  compel  the  attendance  of  witnesses,  and  to 
administer  oaths  and  require  the  protluctlon  of  documentary 
evidence,  contemplates  that  he  shall  proceed  by  private 
hearings;  and,  having  such  fiowers.  a  person  who  appears 
before  him  on  his  demand  or  by  his  request,  and  gives  testi- 
mony or  produces  documents,  although  not  sworn,  is  entitled 
to  the  same  privileges  and  immunities  as  though  his  attend- 
ance was  compelled  by  subpoena  and  his  testimony  given 
under  oath.  /b^ 

80.  Same— Immunity.— Section  6  (32  Stat.,  827)  requires  the  Com- 

missioner of  Corporations  to  investigate  all  corporations 
and  combinations  engaged  in  interstate  or  foreign  conunerce, 
exceiit  common  carriers,  and  provides  that  "  all  the  require- 
ments,  obligatu»ns,   liabilities,  and  immunities   imiK>sed   or 


INDEX — ^DIGEST.  1199 

STATUTES— Continued. 

III.  Commerce  and  Labor  Act — Continued. 

conferred  by  said  'Act  to  regulate  commerce '  and  by  *An  act 
in  relation  to  testimony  before  the  Interstate  Commerce 
Commission '  *  *  *  shall  also  apply  to  all  persons  who 
may  be  subpoenaed  to  testify  as  witnesses  or  to  produce 
documentary  evidence  in  pursuance  of  the  authority  con- 
ferred by  this  section."  y^ 

* 

IV.  Interstate  Commerce  Act. 
Act  of  February  4,  1881. 

81.  Public  Policy.— The  act  of  February  4,  1887,  entitled  "An  act 

to  regulate  commerce,"  demonstrates  the  fact  that  from 
the  date  of  the  passage  of  that  act  it  has  been  the  public 
policy  of  this  nation  to  regulate  that  part  of  interstate 
commerce  which  consists  of  transportation,  and  to  so  far 
restrict  competition  in  freight  and  passenger  rates  between 
railroad  c-ompanies  engaged  therein  as  shall  be  necessary 
*  to  make  such  rates  oi>en,  public,  reasonable  uniform,  and 
steady  and  to  prevent  discriininations  and  undue  prefer- 
ences. V.  S.  V.  Trans-Mo.  Ft.  Assn.,  58  F.,  58.  1—186 
Case  reversed,  im  U-  S.,  290  (1—648). 

82,  Not  Inconsistent  with  Anti-Trust  Act.— The  act  of  February  4, 

1887  (24  Stat.,  379),  "to  regulate  commerce,"  is  not  incon- 
sistent with  the  act  of  July  2,  3890,  as'  it  does  not  confer 
upon  competing  railroad  cumpanies  i>ower  to  enter  into  a 
contract  in  restraint  of  trade  and  coumierce,  like  the  one 
which  forms  the  subject  of  this  suit.  U.  S.  v.  Trans-Mo. 
Ft.  Assn.,  166  U.  S.,  290.  1—648 

88.  Express  Companies.— The  Interstate  Commerce  Act  does  not 
apply  to  independent  express  companies  not  operating  rail- 
way lines.  Southern  Ind.  Ewp.  Co.  v.  U.  S.  Exp.  Co.,  88  F., 
^^-       .  1—862 

V.  Revised  Statutes. 

84.  Section  725.— Where  an  injunction  had  been  issued  and  served 

upon  the  defendants,  the  circuit  court  had  authority  to  in- 
quire whether  its  orders  had  been  disobeyed,  and  when  it 
found  that  they  had  been  disobeyed,  to  proceed  under  Re- 
vised Statutes,  section  725,  and  to  enter  the  order  of  pun- 
ishment complained  of.     In  re  Debs,  158  U.  S.,  564.       1—566 

85.  Section  1047.— An  action  under  section  7  of  the  Anti-Trust  Act 

of  July  2,  1900  (26  Stat,  209),  to  recover  threefold  the  dam- 
ages, is  not  an  action  for  a  penalty  or  forfeiture,  within  Re- 
vised Statutes,  section  1047,  prescribing  a  limitation  of  five 
years  for  a  "suit  or  prosecution  for  any  penalty  or  for- 
feiture, pecuniary  or  otherwise,  accruing  under  the  laws  of 
the  United  States,"  but  one  for  the  enforcement  of  a  civil 


1200 


INDEX — DIGEST. 


STATUTES— Coiiti  nueti. 

V.  Revised  Statutes — Continued. 

remedy  for  a  private  injury,  eompemsatory  in  its  purpose  and 
eifeot,  tbe  recovery  permitted  in  excess  of  damages  actually 
sustained  being  in  tlie  nature  of  exemplary  damages,  whlcli 
does  not  change  tbe  .nature  of  tbe  action,  and  sucb  action 
is  governed  as  to  limitation  by  tbe  statutes  of  tbe  State  in 
wbicb  it  is  brought.  Atlanta  v.  Chai^moga  Foundry  S 
Pipe  Cfi.,  101  F.,  900.  t— 11 

Affirmed,  127  P.,  23  («— 290). 

Affirmed,  203  U.  S.,  390. 

86.  Section  8899. — Obstnieting  the  Maili. — ^Although  tbe  law,  which 

now  appears  in  Revised  Statutes,  section  3905,  and  wbicb 
malies  it  an  offense  to  obstruct  and  retard  tbe  passage  of  tbe 
United  States  mails,  was  originally  passed  prior  to  tbe  in- 
troduction into  the  United  States  of  tbe  method  of  trans- 
porting mail  by  railroads,  and  tbe  phraseology  of  tbe  law 
conforms  to  conditions  prevailing  at  that  time  (Mar.  3. 
1825),  yet  it  is  equally  applicable  to  the  modern  system  of 
conveyance  and  protects  alike  tbe  transportation  of  the  mail 
by  the  "  limitel  express "  and  by  the  old-fashioned  stage- 
coach.    U.  S.  V.  Cassidy,  67  F.,  098.  1—449 

87.  Same. — Tbe  statute  applies  to  all  persons  who  "  knowingly  and 

willfully"  obstruct  and  retard  the  passage  of  the  mails  or 
the  carrier  carrying  tbe  same;  that  is,  to  those  who  Icnow 
that  tbe  acts  performed,  however  innocent  they  may  other- 
wise be,  will  have  tbe  effect  of  obstructing  and  retarding  the 
mail,  and  who  perform  the  acts  with  the  intent  that  such 
shall  be  their  operation.     D'.  8.  v.  KirJty^  7  Wall.,  485,  cited. 

/». 

88.  Same. — ^The  statute  also  applies  to  persons  who,  having  in  view 

the  accomplishment  of  other  purposes,  perform  unlawful 
aett,  which  have  the  effect  of  obstructing  and  retarding  the 
passage  of  tbe  mails.  In  such  case,  an  intent  to  obstruct  and 
retard  the  mails  will  be  imputed  to  the  authors  of  the  un- 
lawful act,  although  tbe  attainment  of  other  ends  may  have 
been  their  primary  object.  U.  8.  v.  Kirby,  7  Wall.,  485, 
cited.  It>. 

L  Section  5440 — Conspiracy. — Onstruing  several  clauses  of  the 
interstate  commerce  law  recited  in  the  opinion  with  sec- 
tion 5440  of  the  Revised  Statutes,  it  follows  that  a  combina- 
tion of  persons,  without  regard  to  their  occupation,  which 
will  have  the  effect  to  defeat  the  provisions  of  the  interstate 
commerce  law,  inhibiting  discriminations  in  the  transporta- 
tion of  freight  and  passengers,  and  further  to  restrain  the 
trade  or  commerce  of  tbe  country,  will  he  obnoxious  to  the 
penalties  therein  prescribed.  Waterhouse  v.  Comer,  55  F., 
149.  1—119 


INDEX — DIGEST. 


1201 


STATUTES— Continued. 

V.  Revised  Statuteh— Continued. 

90.  Same. — The  statute  relating  to  conspiracies  to  commit  offenses 

against  the  United  States  (Rev.  Stat,  sec.  5440)  contains 
three  elements  wbicb  are  necessary  to  constitute  the  offense. 
These  are:  (1)  The  act  of  two  or  more  persons  conspiring 
together;  (2)  to  commit  any  offense  against  the  United 
States;  (3)  the  overt  act,  or  the  element  of  one  or  more  of 
such  parties  doing  any  act  to  effect  the  object  of  the  con- 
spiracy.    U.  S.  V.  Cassidy,  67  F.,  698.  1 449 

VI.  State  Laics. 

91.  The  anti-trust  law  of  Minnesota   (Laws  1899,  p.  487,  c.  359), 

mailing  unlawful  any  contract  or  combination  in  restraint 
of  trade  or  commerce  within  the  State,  is  in  substantially 
the  same  language  as  the  Sherman  Anti-Trust  Law  of  July 
2,  1890  (26  Stat,  209),  and  must  receive  a  similar  construc- 
tion.   Minnesota  v.  Northern  Securities  Co.,  123  U.  S.,  692. 

a— 246 
Decision  reversed,  194  U.  S.,  38.    (Circuit  court  had  no  juris- 
diction  (2—533). 

STATUTORY  CONSTRUCTION. 

1.  When  Congress  adopts  or  creates  a  common-law  offense,  the 
courts  may  properly  look  to  the  common  law  for  the  true 
meaning  and  definition  thereof,  in  the  absence  of  a  clear 
definition  in  the  act  creating  it    In  re  Greene,  52  F.,  104. 

1—55 
8.  Where  Congress  adopts  or  creates  a  common-law  offense,  and  in 
doing  so  uses  terms  which  have  acquired  a  well-understood 
meaning  by  judicial  interpretation,  the  presumption  is  that 
the  terms  were  used  in  that  sense,  and  courts  may  properly 
look  to  prior  decisions  interpreting  them  for  the  meaning  of 
the  terms  and  the  definition  of  the  offense  where  there  is  no 
other  definition  in  the  act  V.  8.  v.  Trans-Mo.  Ft.  Assn.,  58 
F.,  58.  i_i86 

3.  Every  statute  must  be  read  in  the  light  of  the  general  laws 

upon  the  same  subject  in  force  at  the  time  of  its  enactment 
V.  S.  V.  Trans-Mo.  Ft.  Assn.,  58  F.,  58.  1—186 

4.  The  Anti-Trust  Act  should  have  a  reasonable  construction — one 

which  tends  to  advance  the  remedy  it  provides,  and  to  abate 
the  mischief  at  which  it  was  leveled.  Whitwell  v.  Conti- 
nental  Tobacco  Co.,  125  F.,  454.  2—271 

6.  Debates  in  Congress  are  not  appropriate  sources  of  information 
from  which  to  discover  the  meaning  of  the  language  of  a 
statute  passed  by  that  body.  V.  8.  v.  Trans-Mo.  Ft.  Assn., 
166  U.  S.,  290.  1—648 

STOCK    AND    STOCKHOLDERS.    See    Corpobations,    2-11;    Com- 

BINATIONS,   177-182. 

11808— VOL  1—06  M ^76 


1202 


INDEX — DIGEST. 


STOCK  QITOTATIONS.    See  Combinations,  177-180. 

STBIKES.    See  Combinations,  etc.,  115,  116,  121-127, 132,  133,  213. 

SUBPCEIIA  DUCES  TECUM.    See  Cobpobations,  12-15 ;  Coubts,  22. 

SU6AB.    See  B.  C.  Knight  Co,  case.  Vol.  I,  pages  250,  258,  379. 

SUIT.    See  Actions  and  Defenses. 

TELEOBAMS   AND   TELEPHOITE   MESSAGES.    See   Intebstate 

COMMEBCE,  33. 

TESTIMONY.    See  Witnesses. 
THBOUGH  TBANSPOBTATION.    See  Cabbiebs. 
TICKET  BBOKEBS.     See  Combinations,  etc.,  111. 
TILES.    See  Combinations,  33-37. 

TOBACCO  TBUST  CASES. 

Whitwell  V.  Continental  Tobacco  Co.,  125  F.,  454  (2—271). 
In  re  Hale,  139  F.,  496  (2—804). 
Hale  V.  Henkel  201  U.  S.,  43  (2—874). 
McAlisier  v.  Henkeh  201  U.  S.,  61  (S^— 918). 

TBANSPOBTATION.    See  Cabbiebs;  and  Statutes,  81. 

TBEBLE  DAMAGES.    See  Actions  and  Defenses  21-42 ;  Statutes, 
62-71. 

TBINIDAD  ASPHALT.    See  Combinations,  etc.,  214-2HJ. 

TBUSTS.    See  Wobdb  and  Phbases. 

UNITED  STATES. 

Tlie  Government  of  the  United  States  has  jurisdiction  over 
every  foot  of  soil  within  Its  territory,  and  acts  directly 
upon  each  citizen.    In  re  Debs,  158  U.  S.,  564.  1 — 565 

See  aUo  Actions  and  Defenses,  15-18. 

UNSEASONABLE  SEABCHES.     See  Seabch  and  Seizube. 

WAGES,  ETC.,  OF  EMPLOYEES.    See  Coubts,  8. 

WALL  PAPEB  TBUST.    See  Continental  Waix  Papeb  Co.  v.  Lewis 
VoiOHT  &  Sons  Co.,  148  F.,  939. 

WITNESSES. 

I.  Incriminating  Evidence — ^Protection— Constitution— Statute.— A 
witness  before  the  grand  Jury  can  not  be  required,  under 
the  Fifth  Amendment  to  the  Constitution,  to  answer  as  to  his 
participation  in  and  knowledge  of  a  combination  to  regulate 
and  control  the  price  of  cotton  seed  and  the  product  and 
price  of  oil  throughout  certain  States,  in  violation  of  the 
act  to  protect  trade  and  commerce  against  unlawful  re- 
straints  and   monopolies    (26   Stat,  209),  notwithstanding 


INDEX — DIGEST. 


1203 


WITNESSES— Continued. 

section  860,  Revised  Statutes,  providing  that  no  evidence 
obtained  from  a  witness  by  means  of  a  judicial  proceeding 
shall  be  given  in  evidence  or  in  any  manner  used  against 
him  in  any  court  in  any  criminal  proceeding,  since  such  sec- 
tion does  not  exempt  the  witness  from  prosecution  for  the 
offense  which  may  he  disclosed  by  his  testimony.  Foot  v. 
Buchanan,  113  F.,  156.  2 — 103 

2.  Same — Immunity  of  Witnesses. — Act  of  February  11,  1893  (27 

Stat.,  443),  providing  that  no  person  shall  be  excused  from 
testifying  in  a  proceeding  growing  out  of  an  alleged  violation 
of  an  act  to  regulate  interstate  commerce,  approved  Febru- 
ary 4,  1887,  on  the  ground  that  his  testimony  will  tend  to 
incriminate  him,  and  that  no  person  shall  be  prosecuted,  etc., 
on  account  of  anything  concerning  which  he  may  testify  in 
such  proceeding,  applies  only  to  proceedings  connected  with 
•  the  act  of  February  4,  1887,  and  does  not  apply  to  a  prosecu- 
tion for  violation  of  the  act  of  July  2,  1890  (26  Stat,  209), 
so  as  to  abrogate  in  relation  thereto  the  Fifth  Amendment  to 
the  Constitution,  providing  that  no  person  shall  be  compelled 
in  a  criminal  ca^  to  be  a  witness  against  himself.  lb. 

3.  Same — Question  of  Incrimination  for  Judge  to  Decide. — Where 

a  witness  claims  that  the  answer  to  a  question  will  tend  to 
incriminate  him,  it  is  not  for  the  witness,  but  for  the  judge, 
to  decide  whether,  under  all  the  circumstances,  such  might 
be  the  effect,  and  the  witness  entitled  to  the  privilege  of 
silence.  /f,. 

4.  Same. — Where  a  person  has  already  been  indicted  for  an  offense 

about  which  he  is  to  be  examined  as  a  witness,  and  the 
questions  asked  him  tend  to  connect  him  with  such  offense, 
the  testimony  sought  is  within  the  inhibition  of  the  Fifth 
Amendment  to  the  Constitution,  providing  that  no  person 
shall  be  compelled  in  any  criminal  case  to  be  a  witness 
against  hiuiFelf. 

6.  Same — Assurance  of  Safety — Relinquishment  of  Privilege — Can 
Not  Be  Compelled. — Where  a  witness  before  a  grand  jury 
declines  to  answer  certain  questions,  and  is  taken  before 
the  judge,  who  assures  him  that  he  can  safely  answer,  as 
his  testimony  can  not  be  used  against  him,  he  is  not  com- 
pelled by  such  assurance  to  relinquish  his  constitutional 
privilege  where  the  answer  may  tend  to  criminate  him.    lb. 

8.  Same  —  Contempt  —  Commitment  —  Habeas    Corpus  —  Relief. 

Where  a  witness  is  committed  for  contempt  in  refusing  to 
answer  all  of  a  series  of  questions,  for  the  reason  that  the 
answers  would  tend  to  criminate  him,  and  some  of  the 
answers  would  have  that  tendency,  he  should  not  be  denied 
relief  on  habeas  corpus  because  some  of  the  questions  might 
be  safely  answered.  /^^ 


1204 


INDEX — DIGEST. 


WITNESSES— Coutiiiuwi 

7.  Ijnmiiiiity  of  Witnessei — ^Anti-Tmtt  Aet— laqniiitions. — An  In- 
quisition before  a  grand  Jury  to  determine  the  existence  of 
supposed  TiolatlouB  of  ttie  Anti-Trust  Act  was  a  "  proceed- 
ing "  witliln  act  of  Congress  of  February  19,  1903  (32  Stat., 
848),  providing  that  no  person  shall  be  prosecuted  or  sub- 
jected to  any  penalty  for  or  on  account  of  any  transaction, 
matter,  or  thing  concerning  which  he  may  testify  or  produce 
evidence  in  any  "  proceeding "  under  several  statutes  men- 
tioned, including  such  Anti-Trust  Act    In  re  Bale,  139  F., 

4®^  j^— 804 

f.  fkmt — ^Unreasonable  Starches — Rights  of  an  Agent — Subpoena 
Bnces  Teonm. — ^A  subpoena  duces  tecum  commanding  the 
secretary  and  treasurer  of  a  corporation  supposed-  to  have 
violated  the  Anti-Trust  Act  to  testify  and  give  evidence  be- 
fore the  grand  Jury,  and  to  bring  with  him  and  produce 
numerous  agreements,  letters,  telegrams,  reports,  and  other 
writings,  described  generically,  in  effect  including  ail  the 
correspondence  and  documents  of  his  corporation  originating 
since  the  date  of  its  organization,  to  which  nineteen  other 
named  corporations  or  persons  were  parties,  for  the  purpose 
of  enabling  the  district  attorney  to  establish  a  violation  of 
such  act  on  the  part  of  the  witness*  principal,  constituted  an 
unreasonable  search  and  seizure  of  pai)er8,  prohibited  by 
the  Fourth  Amendment  to  the  Constitution.  ib. 

9.  Same — ^Habeas  Corpus. — Where  a  subpcena  duces  tecum  was 
directed  to  be  issued  by  a  circuit  judge,  and  the  witness 
was  committed  for  contempt  for  failure  to  obey  the  same,  he 
would  not  be  discharged  on  liabeas  corpus  by  another  Judge 
of  the  same  qpnrt,  though  the  latter  was  of  the  opinion  that 
the  subpoena  authorized  an  unconstitutional  search  and 
seizure  of  private  papers.  /j. 

10.  Protection  of  Witness— Act  of  February  25,   1903    (32  Stat, 

905). —The  examination  of  witnesses  before  a  grand  jury 
conceming  an  alleged  violation  of  the  Anti-Trust  Act  of  July 
2,  1890  (26  Stat,  209),  is  a  "proceeding"  within  the  mean- 
ing of  the  proviso  to  the  act  of  February  25,  1903  (32  Stat, 
903),  that  no  person  shall  be  prosecuted  or  be  subjected  to 
any  penalty  or  forfeiture  for,  or  on  account  of,  any  trans- 
action, matter,  or  thing  concerning  which  he  may  testify 
or  produce  evidence  in  any  proceeding,  suit,  or  prosecution 
under  certain  named  statutes,  of  which  the  Anti-Trust  Act 
is  one.  The  word  "proceeding"  ihonld  receive  as  wide  a 
eonstraction  as  it  necessary  to  protect  the  witness  in  his  dis- 
closures.    Hale  V.  Henkel,  201   U.    S.,  43.  2-^4 

11.  The  constitutional  right  of  a  witness  to  claim  his  privilege 

against  self-incrimination,  afforded  by  the  Fifth  Amendment, 


INDEX — ^DIGEST. 


1205 


WITNESSES-( 'ontiiinea. 

when  examined  concerning  an  alleged  violation  of  the  Anti- 
Trust  Act  of  July  2,  1890  (2G  Stat,  209),  is  taken  away  by 
the  proviso  to  the  act  of  February  25,  1903  (32  Stat,  904), 
that  no  person  sliall  be  prosecuted  or  be  subjected  to  any 
penalty  or  forfeiture  for,  or  on  account  of,  any  transaction, 
matter,  or  thing  concerning  which  he  may  testify  or  produce 
evidence  in  any  proceeding,  suit,  or  prosecution  under  certain 
named  statutes,  of  which  the  Anti-Trust  Act  is  one,  which 
furnishes  a  sufficient  immunity  from  prosecution  to  satisfy 
the  constitutional  guaranty,  although  it  may  not  afford  im- 
munity from  prosecution  in  the  State  courts  for  the  offense 
disclosed.  •  [See  also  Nelson  v.  United  States,  201  U  S  92 
(2—920).]  '      "j^ 

12.  The  interdiction  of  the  Fifth  Amendment  operates  only  where  a 

witness  is  asked  to  incriminate  himself,  and  does  not  apply 
if  the  criminality  is  taken  away.  A  witness  is  not  excused 
from  testifying  before  a  grand  jury  under  a  statute  which 
provides  for  immunity,  because  he  may  not  be  able,  if  sub- 
sequently indicted,  to  procure  the  evidence  necessary  to 
maintain  his  plea.  The  law  takes  no  account  of  the  practi- 
cal difficulty  which  a  party  may  have  in  procuring  his 
testimony.  ,, 

13.  The  difficulty,  if  any,  of  procuring  the  testimony  which  a  person 

has  given  on  his  examination  before  a  grand  jury  concern- 
ing an  alleged  violation  of  the  Anti-Trust  Act  of  July  2,  1890, 
does  not  render  the  immunity  from  prosecution,  or  forfeiture, 
given  by  the  proviso  to  the  act  of  February  25,  1903,' 
insufficient  to  satisfy  the  guaranty  of  the  Fifth  Amendment 
against  self-incrimination.  jj^ 

14.  A  witness  can  not  refuse  to  testify  before  a  Federal  grand  jury 

in  face  of  a  Federal  statute  granting  immunity  from  prosecu- 
tion as  to  matters  sworn  to,  because  the  immunity  does  not 
extend  to  prosecutions  in  a  State  court.  In  granting  immu- 
nity, the  only  danger  to  be  guarded  against  is  one  within  the 
same  jurisdiction  and  under  the  same  sovereignty.  /ft. 

15.  The  privilege  against  self-incrimination  afforded  by  the  Fifth 

Amendment  is  purely  personal  to  the  witness,  and  he  can  not 
claim  the  privilege  of  another  person,  or  of  the  corporation 
of  which  he  is  an  officer  or  employee.  [To  same  effect 
McAUster  v.  Henkel,  201  U.  S.,  90  (2—919).]  /&. 

16.  A  witness  who  can  not  avail  himself  of  the  Fifth  Amendment  as 

to  oral  testimony,  because  of  a  statute  granting  him  immu- 
nity from  prosecution,  can  not  set  it  cp  as  against  the 
production  of  books  and  papers,  as  the  same  statute  would 
equally  jjrant  him  immunity  in  respect  to  matters  proved 
thereby.  ., 


* 


1206 


INDEX — ^DIGEST. 


INDEX — DIGEST. 


1207 


WimESSES— Con  t  ill  iieil . 

17.  Corporations  Can  Not  Befuse  to  Answer  Unless  Protected  by 

Immunity  Statute. — While  an  individual  may  lawfully  re- 
fuse to  answer  incriminating  questions  unless  protected  by 
an  immunity  statute,  a  corporation  is  a  creature  of  tbe  State, 
and  tliere  is  a  reserved  right  in  the  legislature  to  investigate 
its  contracts  and  find  out  whether  it  has  exceeded  its  powers. 

16. 

18.  Under  the  practice  in  this  country  the  examination  of  witnesses 

hy  a  Federal  grand  jury  need  not  be  preceded  by  a  present- 
ment or  formal  indictment,  but  the  grand  jury  may  proceed, 
either  upon  their  own  knowledge  or  upon  examination  of 
witnesses,  to  inquire  whether  a  crime  cognizable  by  the 
court  has  been  committed,  and,  if  so,  they  may  indict  upon 
such  evidence.  /&. 

19.  In  summoning  witnesses  before  a  grand  jury  it  is  sufficient  to 
^         apprise  them  of  the  names  of  the  parties  with  respect  to 

whom  they  will  be  called  to  testify  without  indicating  the 
nature  of  the  charge  against  tlioni,  in-  laying  a  basis  by  a 
formal  Indictment  lb. 

80.  Hale  v.  Henkel  (vol.  2,  page  874)  followed  to  the  effect  that 
officers  and  employees  of  corporations  can  not,  under  the 
Fourth  and  Fifth  Amendments,  refuse  to  testify  or  produce 
books  of  corporations  in  suits  against  the  coriwrations  for 
violations  of  the  Anti-Trust  Law  of  July  2,  1890,  in  view 
of  the  immunity  given  by  the  act  of  February  25,  1903. 
Nelson  v.  Umted  States,  201  U.  S.,  92.  2—920 

SI.  Witnesses  can  not  by  objections  to  materiality  of  evidence  be 
relieved  from  testifying.  The  tendency  or  effect  of  the  testi- 
mony on  the  issues  l>etween  the  parties  is  no  concern  of 
theirs.  .  lb. 

22.  Objections  to  the  materiality  of  the  testimony  are  not  open  to 

consideration  on  a  writ  of  error  sued  out  by  witnesses  to 
review  a  judgment  for  contempt  entered  against  them  for 
disobeying  an  order  to  testify.  76. 

23.  Eefusal  to  Answer  or  Produce  Books — Order  of  Circuit  Court 

to  Answer  or  be  Held  in  Contempt  Not  Reviewable  by 
Supreme  Court.— In  a  suit  in  a  circuit  court  of  the  United 
States  brought  by  the  United  States  against  corporations 
for  violations  of  the  Anti-Trust  Law  of  July  2,  1890,  a  wit- 
ness refused  to  answer  questions  or  produce  books  before 
the  examiner  on  the  ground  of  immateriality,  also  pleading 
the  privileges  of  the  Fifth  Amendment ;  the  court  overruled 
the  objections  and  ordered  the  witness  to  answer  the  ques- 
tions and  produce  the  books;  an  appeal  was  taken  to  this 
court  Held,  that  while  such  an  order  might  leave  the  wit- 
ness no  alternative  except  to  obey  or  be  punished  for  con- 
tempt it  is  interlocutory  in  the  principal  suit  and  not  a 


' 


WITNESSES— Continued. 

final  order,  nor  does  it  constitute  a  practically  independent 
proceeding  amounting  to  a  final  judgment,  and  an  appeal 
will  not  lie  therefrom  to  this  court.  Alea^ander  v.  United 
States,  201  U.  S.,  117.  2—945 

24.  Same — But  an  Appeal  from  a  Judgment  of  Contempt  is  Review- 
able.— If  the  witness  refuses  to  obey  and  the  court  goes 
further  and  punishes  him  for  contempt  there  is  a  right  of 
review,  and  this  is  adequate  for  his  protection  without  un- 
duly impeding  the  process  of  the  case.  I -See  also  Nelson 
v.  United  States,  201  U.  S.,  92  (2—920).]  /6. 

Cbedibility.    See  Juby,  2. 
Immunity.    See  Immunity. 

WOODEN  WARE.    ,8^ee  Combinations,  etc.,  38,  149. 

WORDS  AND  PHRASES. 

1.  "  Boycott." — A  combination  by  employees  of  railway  companies 
,         to  injure  in  his  business  the  owner  of  cars  operated  by  the 

companies,  by  compelling  them  to  cease  using  his  cars  by 
threats  of  quitting  and  by  actually  quitting  their  service, 
thereby  inflicting  on  them  great  injury,  where  the  relation 
between  him  and  the  companies  is  mutually  profitable,  and 
has  no  effect  whatever  on  the  character  or  reward  of  the 
services  of  the  employees  so  combining,  is  a  boycott,  and  an 
unlawful  conspiracy  at  common  law.  Thomas  v.  Cm.,  N.  O. 
d  T.  P.  Ry.  Co.,  62  F.,  803.  1—267 

2.  "Commerce." — The  word  "commerce,"  in  the  statute,  is  not 

synonymous  with  "  trade,"  as  used  in  the  common-law  phrase 
"restraint  of  trade,"  but  has  the  meaning  of  the  word  in 
that  clause  of  the  Constitution  which  grants  to  Congress 
power  to  regulate  interstate  and  foreign  commerce.  U.  S. 
V.  Dehs,  64  F.,  724.  1—322 

3.  Same. — ^The  word   "commerce,"  as  used  in   the  act  of  July 

2,  1890,  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies,  and  in  the  Constitution  of  the 
United  States,  has  a  broader  meaning  than  the  word  "  trade." 
Commerce  among  the  States  consists  of  intercourse  and 
traflic  between  their  citizens,  and  includes  the  transportation 
of  persons  and  property,  as  well  as  the  purchase,  sale,  and 
exchange  of  commodities.     U.  S.  v.  Cassidy,  67  F.,  698. 

1—452 

4.  Same. — Commerce    is    the    sale   or   exchange   of   commodities, 

but  that  which  the  law  looks  upon  as  the  bodj^  of  com- 
merce is  not  restricted  to  specific  arts  of  sale  or  exchange. 
It  includes  the  intercourse — all  the  .initiatory  and  inter- 
vening acts,  instrumentalities,  and  dealings — that  directly 
bring  about  the  sale  or  exchange.  U.  S.  v.  Swift  d  Co., 
122  F.,  529.  2—237 


1208 


INDEX — ^DIGEST. 


WOBBS  AHB  PHBABBS-C^iitiiuiwl. 

«.  "  Conspiracy."— The  term  "  conspiracy,"  In  section  1  of  the  act 
of  July  2,  1890  (26  Stat,  209),  Is  used  in  its  well-settled 
legal  meaning,  and  any  restraint  of  interstate  trade  or  com- 
merce, if  accomplished  by  conspiracy,  is  unlawful.  V.  8.  v. 
Debs,  64  F.,  724.  1—822 

«.  i«»e.--A  conspiracy  consists  In  an  agreement  to  do  something ; 
tout  In  the  sense  of  the  law,  and  therefore  in  the  sense 
of  this  statute.  It  must  be  an  agreement  between  two 
or  more  to  do,  by  concerted  action,  something  criminal  or 
unlawful,  or,  It  may  be,  to  do  something  lawful  by  criminal 
or  unlawful  means.  A  conspiracy,  therefore,  is  in  itself 
unlawful,  and,  in  so  far  as  this  statute  is  directed  against 
conspiracies  in  restraint  of  trade  among  the  several  States, 
it  is  not  necessary  to  look  for  the  illegality  of  the  offense 
In  the  kind  of  restraint  proposed.  Any  pi-oiK)sed  restraint 
of  trade,  though  It  be  In  itself  innocent,  if  it  is  to  be  ac- 
complished by  conspiracy,  is  unlawful.  lb.  (1—352) 
7.  Same. — A  conspiracy  is  a  combination  of  two  or  more  per- 
sons by  concerted  action  to  accomplish  a  criminal  or  un- 
lawful purpose,  or  some  purpose  not  in  itself  criminal,  by 
criminal  or  unlawful  means.  Pettibone  y.  U.  8.,  13  Sup.  Ct. 
542 ;  148  U.  S.,  203,  cited.    U,  8,  v.  CaaHdtf,  67  F.,  698. 

1—449 
a  Same.— Unlike  "combination,"  "conspiracy"  is  a  term  of  art. 
In  the  Anti-Trust  Law  It  is  to  be  interpreted  independently 
of  the  preceding  words,  and  an  indictment  thereunder  should 
therefore  describe  something  that  amounts  to  a  conspiracy 
under  the  act  conformably  to  the  rules  of  pleading  at  com- 
mon law,  as  perhaps  modified  by  general  federal  statutes. 
U.  8,  V.  Mac  Andrews  4  Forbes  Co.,  149  F.,  831. 
».  "  In  Eettraint  of  Trade."— The  words  *•  in  restraint  of  trade," 
In  section  1  of  the  act  of  July  2,  1890  (26  Stat,  209),  have, 
in  connection  with  the  words  "contract,"  and  "combina- 
tion," their  common-law  significance,  but  the  term  "con- 
spiracy" is  used  in  its  wellsettled  legal  meaning,  so  that 
any  restraint  of  trade  or  commerce.  If  to  be  accomplished 
by  conspiracy,  is  unlawful.    U.  8.  v.  Debs,  64  F.,  724.    1—322 

1©.  Same.— The  construction  of  the  statute  Is  not  affected  by  the 
use  of  the  phrase  "  in  restraint  of  trade,"  rather  than  one  of 
the  phrases  "  to  injure  trade  "  or  "  to  restrain  trade."        /&. 

11.  "MaU  Traint."— A  mail  train  is  a  train  as  usually  and  regu- 
larly made  up,  including  not  merely  a  mail  car,  but  Such 
other  cars  as  are  usually  drawn  in  the  train.  If  the  train 
usually  carries  a  Pullman  car,  then  such  train,  as  a  mall 
train,  would  include  the  Pullman  car  as  a  part  of  its  regular 
make-up.  Therefore,  if  such  a  train  Is  obstructed  or  r©. 
tardeil  because  it  draws  a  Pullman  car.  it  is  no  defense  that 


INDEX^ — ^DIGEST. 


1209 


WOBBS  AND  PHBASES-Continued. 

the  parties  so  delaying  it  were  willing  that  the  mail  should 
proceed  if  the  Pullman  car  were  left  behind.     U.  8.  v.  Olark 
Fed.  Gas.  No.  14805,  23  Int  Rev.  Rec.,  306,  followed.    V  8 
V.  Cassidy,  67  F.,  698.  1—449 

12.  Same.— Any  train  which  is  carrying  mail  under  the  sanction 
of  the  postal  authorities  is  a  mail  train  in  the  eye  of  the 
law.  -.- 

18.  « Monopolize."— The  word  "monopolize"  can  not  be  Intended  to 
be  used  with  reference  to  the  acquisition  of  exclusive  rights 
under  Government  concession,  but  that  the  lawmaker  has 
used  the  word  to  mean  "  to  aggregate  "  or  "  concentrate  "  in 
the  hands  of  few,  practically,  and,  as  a  matter  of  fact,  and 
according  to  the  known  results  or  human  action,  to  the  ex- 
clusion of  others ;  to  accomplish  this  end  by  what  in  popular 
language,  is  expressed  in  the  word  "  pooling,"  which  may  be 
defined  to  be  an  aggregation  of  property  or  capital  belonging 
to  different  persons,  with  a  view  to  common  liabilities  and 
profits.     Amer.  Biscuit  d  Mfg.  Co.  v.  Klotz,  44  F.,  724.     1—7 

14.  "MonopoUzing,  or  Attempting  to  Monopolize."— To  constitute 

the  offense  of  "  monopolizing,  or  attempting  to  monopolize." 
trade  or  commerce  among  the  States,  within  the  meaning  of 
section  2  of  said  act,  it  is  necessary  to  acquire,  or  attempt 
to  acquire,  as  exclusive  right  in  such  commerce  by  means 
which  will  prevent  others  from  engaging  therein.  In  re 
Green,  52  F.,  104.  ^__^ 

15.  Monopoly  of  trade  embraces  two  essential  elements:  (1)   The 

acquisition  of  an  exclusive  right  to,  or  the  exclusive  control 
of,  that  trade;  and  (2)  the  exclusion  of  all  others  from  that 
right  and  control.  U.  8.  v.  Trans-Mo,  Ft.  Assn.,  58  F.,  58, 
°**  1 218 

le.  "  Municipal  Corporation."— A  municipal  corporation  engaged 
operating  water,  lighting,  or  similar  plants,  from  which  a 
revenue  is  derived,  is,  in  relation  to  such  matters,  a  business 
corporation,  and  may  maintain  an  action  under  section  7  of 
the  Anti-Trust  Act  of  July  2,  1890  (26  Stat.  210),  for  injury 
to  its  "  business  "  by  reason  of  a  combination  or  conspira^ 
in  restraint  of  interstate  trade  or  commerce  made  unlawful 
by  such  act.  City  of  Atlanta  v.  Chattanooga  Foundry  c€ 
PtpeworJts,  127  F,  23.  2—299 

17.  "More  or  Le8s."-Where,  In  a  contract  for  the  manufacture  and 
delivery  of  goods,  the  statement  of  quantity  is  qualified  by 
the  words  "  more  or  less,"  these,  unless  supplemented  by 
language  giving  them  a  broader  scope,  apply  only  to  such 
accidental  or  immaterial  variations  in  quantity  as  would 
naturally  occur  in  connection  with  such  a  transaction.  Ha^ 
ley  Dean  Plate  Glass  Co.  v.  Highland  Glass  Co.,  143  F.,  242. 

2—994 


1210 


Il^DEX — DIGEST. 


WOBBS  AWD  PHBASES— Continuwl. 

It.  ** Trust"— What  1»  commonly  termed  a  "trust"  is  a  species 
of  combiniitioii  organized  by  individuals  or  corporations  for 
tlie  purpose  of  monopolizing  the  manufacture  of  or  traffic  In 
various  articles  and  commodities,  which  were  well  known  and 
fully  understood  when  the  Anti-Trust  Act  was  approved. 
U,  S.  V.  Northern  Securities  Co.,  120  F.,  721,  t24.         S— 220 


o 


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FEDERAL 


ANTI-TRUST  DECISIONS 


CASES  DECIDED  IN  UNITED  STATES  COURTS 


AMSme  tJNDER.  INVOLVING.  OR  GROWING 
OUT  OP  THE  ENFORCEMENT  OP 


ii 

.1 


THE  ANTI-TRUST  ACT  OF  JULY  2,  1890 

(26  Stat.,  209) 
INCLUDING  .4.  FEW,  SQMSjypAt  SIMILAR  DECISIONS 

NOT?.  9isEi)  .bi-tK :?  iii*.VcT 

•   ••«•••--      *'.••    :    •• 

•  •••••         ••         ••  "v'  •••  •  •• 

•  »••••      •"      ••  •••       »•       •  • 

•••      ••       •       ••••••••       •         • 

1,900-1906... 


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•  •  •  * 
« •*  •  • 


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•  •  •    *  • 
»     •   •   • 


PREPARED  AND  EDITED  BY 

JAMES  A.  FINCH 

BY  DIRECTION  OP  THE  ATTORNEY-GENERAL 


VOL.2 


;\ 


WASHINGTON 
GOVERNMENT  PRINTING  OFFICE 

1907 


r< 


.AJ>  -VJ  S  \  V"\ a.-'Sa  Sk 


CASES  REPORTED. 


VOLS.  1  ANB  a. 


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•  •  •  ..•    :••  -•♦•  •       I 


A.  Booth  &  Co.  V.  Davis,  127  F.,  875 2—318. 

131  F.,  31 2—566. 

Addyston  Pipe  &  Steel  Co.,  U.  8.  v.,  78  F.,  712 1—631. 

85  F.,  271.. 1-772. 

175  U.  S.,  211... 1—1009. 

Agler,  U.  S.  v.,  62  F.,  824 1—294. 

Alexanderv.  United  States,  201  U.  8.,  117 2—945. 

American  Biscuit  &  Manfg.  Co.  v.  Klotz,  44  F.,  721 1 — 2. 

American  Brake  Beam  Co.  v.  Pungs,  141  F. ,  923 2 — 826. 

American  Preservers'  Co. ,  Bishop  t;. ,  51  F, ,  272 1 — 49. 

105  F.,  845 2-51. 

American  School-Fumiture  Co. ,  Metcalf  v. ,  108  F. ,  909 2—75. 

113  F.,  1020 2—111. 

122  F.,  115 2—234. 

Anderson  V.  United  States.,  82  F.,  998 1—742. 

171  U.  S.,604 : 1—967. 

Armour  &  Co.,  U.  S.  v.,  142  F.,  808 2—861. 

Atchison,  T.  &  S.  F.  Ry.  Co.,  Prescott  &  A.  C.  Ry.  Co.  y., 

73F.,438 1—604. 

84  F.,  213.. (note)  1—604. 

Atchison,  T.  &  S.  F.  Ry.  Co.,  U.  S.  v.,  142  F.,  176 2—831. 

Barber  Asphalt  Paving  Co.,  Field  r.,  117  F.,  925 .' 2—192. 

194U.  S.,  618 2-555. 

Bay  (Cincinnati,  Portsmouth,  Big  Sandy  and  Pomeroy  Packet 

Co.  v.),  200  U.  S.,  179 '. 2—867. 

Beef  Trust  cases.    See  U.  S.  v.  Swift,  and  U.  S.  r.  Armour  &  Co. 

Bement  v.  National  Harrow  Co.,  186  U.  S.,  70 2—169. 

Bishop  V.  American  Preservers'  Co. ,  51  F. ,  272 1 — 49. 

105  F.,  845 2—51. 

Blindell  v.  Hagan,  54  F.,  40 1—106. 

56  F.,  696 1—182. 

Block  V.  Standard  Distilling  &  Distributing  Co.,  95  F.,  978 1—993. . 

Board  of  Trade  v.  Christie  Grain  &  S.  Co.,  116  F.,  944 (note)  2—233. 

121  F., 608 2—233. 

125  F. ,  161 (note)  2—233. 

198  U.  S.,  236 2—717. 

Ill 


410232 


W  CASES   REPORTED. 

Bobbs-Merrill  Ca  t.  Straas,  139  F.,  156 2—755 

Booth  &  Co.  r.  Dftvis,127F.,  875 ...........'..  2—318. 

131  F.,  31 1.......  i— 666. 

Biicliaiiaii,  Foot  v.,  113  F.,  156 ...IIV^I...  2—103, 

Oamors-McConnell  Co.  v,  McConnell,  140  F. ,  412  . :  2—817. 

140  F.,  987 "'''  2-825.* 

Carter-Crume  Co.,  Cravens  v.,  92  F.,  479 1—983. 

Carter-Crume  Co.  v,  Peummg,  86  F.,  439 lllll        1—844 

ClMiridy,  U.  8.  t.,  67  F.,  698 llll.ll.ll...  1-449. 

Central  Coal  &  Cok©  Co.  v.  Hartman,  111  F.,  96.... *'*".".[..  2—94. 
Central  Railroad  and  Banking  Co.  of  Ga.,  Clarke  r.,  50  F.,  838.!  1—17. 

Charles  £.  Wiaewall.  the,  74  F.,  802 1—608. 

86  F.,  671 .,!!."!!].  1— 85o! 

Chattanooga  Foundry  &  Pipe  Works,  City  of  Atlanta  »., 

101  F.,  900 2—11. 

127  F.,  23 2—299. 

203  U.  a,  —  (note)  2-299. 

Chesapeake  &  O.  Fuel  Co.,  U.  8.  ».,  105  F.,  93 2—34. 

115  F.,  610 2—151. 

Chicago  Wall  Paper  Mills  v.  General  Paper  Co.,  147  F.,  491 2—1027. 

Christie  Grain  &  Stock  Co.,  Bd.  of  Trade  v.,  116  F., 944 (note)  2—233. 

121  F.,  608 2—233. 

125F.,  161. ...(note)  2—233. 

_     .  198U.  8.,  236 2-717. 

Cincinnati,  N.  O.  A  T.  P.  Ry.  Co.,  Thomas  f.,  62  F.,  803 1-262. 

Cincinnati,  Portsmouth,  Big  Sandy  and  Pomeroy  Packet  Co.  i;. 

Bay,  200U.  8.,  179 2—867. 

City  of  Atlanta  r.  Chattanooga  Foundry  A  Pipeworks, 

101  F.,  909 2—11. 

127  F.,  23 2-299. 

^    ^       ^  203  U.  S.  - . .  ( note)  2-299. 

Clarke  v.  Central  Railroad  &  Banking  Co.  of  Ga.,  50  F.,  338  ....  1-17. 

Coal  Dealers*  Association  of  Cal.,  U.  8.  r.,  85  F.,  252 1—749. 

Comer,  Waterhouse  r.,  55  F.,  149 .]     1—119 

Connolly,  Union  Sewer-Pipe  Co.  w.,  99  F.,  354 ..!.!"".  1 "... !  2—1. 

184  U.  8.,  540 2—118. 

Continental  Tobacco  Co.,  Whitwell  t?.,  125  F,,  454 2—271 

Coming,  In  re,  51  F.,  205 ...III...  1—33. 

Cravens  v.  Carter-Oume  Co.,  92  F.,  479 HH  l— ggg 

Davis  etal.,  A.  Booth  &  Co.  w.,  127  F.,  875. 2—318 

131  F.,  31 .!.!]]]".!!!  2-566 

Debs,  U.  S.,  r.,  64  F.,  724 1—322.' 

Debs,  In  re.,  158  U.  8.,  564 lllll.l  1—566 

Delaware,  L,  A  W.  R.  Co.  ».  Frank,  110  F.,  689 2—81 

Delaware,  L.  &  W.  R.  Co.  r.  Kutter,  147  F.,  51 IJ.lll.l.l  2—1021. 

D.  E.  Loewe  &  Co.  17.  Lawlor,  130  F.,  633 " 2—563 

142  F.,  216 IVZlll^  2-854.' 


CASES    REPORTED.  V 

Dennehy  V.  McNulta,  86  F.,  825 1—855. 

77  F.,  900 (note)  1—856. 

Dneber  Watch  Case  Mfg.  Co.  v.  Howard  Watch  and  Clock  Co., 

55  F.,  851 1—178. 

66  F.,  637 1—421. 

E.  C.  Knight  Co.,  U.  8.  t?.,  60  F.,  306 1—250. 

60  F.,  934 1—258. 

156  U.  8.,  1 1—379. 

E.  Howard  Watch  &  Clock  Co.,  Dueber  Watch  Case  Mfg.  Co.  r., 

55F.,851 1—178. 

66  F.,  637 1—421. 

Elliott,  U.  8.  t'.,  62F.,  801 1—262. 

64F.,  27 1-311. 

Ellis  V.  Inman,  Poulsen  &  Co.,  124  F.,  956 2—268. 

131  F.,  182 2—577. 

Evans  y.  Lowenstein,  69  F.,  908 1—598. 

Farmers'  Loan  &  Trust  Co.  v.  Northern  Pac.  R.  Co.,  60  F.,  803 1—257. 

Field  V.  Barber  Asphalt  Paving  C!o.,  117  F. ,  925 2—192. 

194U.  8.,  618 2—555. 

Foot  v.  Buchanan,  113  F.,  166 2—103. 

Frank  (Delaware,  L.  &  W.  R.  Co.  v.),  110  F.,  689 2—81. 

Geiger  (Otis  Elevator  Co.  ».),  107  F.,  131 2—66. 

General  Electric  Co.  v.  Wise,  119  F.,  922 2—205. 

General  Paper  Co.   v.  Chicago  Wall  Paper  Mills,  147  F.,  491 2—1027. 

Gibbs  V,  McNeeley  ( Shingle  Trust) ,  102  F. ,  594 2—25. 

107  F.,  210 2—71. 

118  F.,  120 2-194. 

Grand  Jury,  In  re,  62  F.,  840 1—301. 

Greene,  In  re.,  52  F.,  104.. 1—54. 

Greenhut,  U.  S.  r.,50  F.,  469 1—30. 

Greer,  Mills  &  Co.  v.  StoUer,  77  F.,  1 1—620. 

Griffin  &  Shelley  Co.,  U.  8.  Consolidated  8.  R.  Co.  v.,  126  F.,  364. .  2—288. 
Gulf,  G.  &  8.  F.  Ry.  Co.  v.  Miami  8.  8.  Co.,  86  F.,  407 1—823. 

Hadley  Dean  Plate  Glass  Co.  v.  Highland  Glass  Co.,  143  F.,  242.  2—994. 

Hagan,  Blindell  r.,  54  F.,  40 1 loe. 

56  F.,  696 ;  1-182! 

Hale,  In  re.,  139  F.,  496 2—804. 

Hale  v.Henkel,  201  U.  8.,  43 2—874! 

Harriman  v.  Northern  Securities  Co. ,  132  F. ,  464 2—578. 

134  F.,  331 2—618. 

197  U.  8.,  244 2-669. 

Harrington,  Pidcock  t.,  64  F.,  821 1—733. 

Hartman,  Central  Coal  &  Coke  Co.  v. ,  111  F. ,  96 2—94. 


VI  CASES   REPORTED. 

Hartman  v.  John  D.  Parks  &  Sons  Co.,  146  F.,  358 2—999. 

Hench,  National  Harrow  Co.  v.,  76  F.,  667 1—610. 

83F.,  38 1—742. 

84  F.,  226 .' 1—746. 

Henkel,  Hale  v.,  20111.  S.,  43 2—874. 

In  re  Hale,  139  F.,  496 2—804. 

Henkel,  McAlister  v.,  201  U.S.,  90 2—919. 

Highland  Glass  Co.,  Hadley  Dean  Plate  Glass  Co.  r.,143  F.,  242 .  2—994. 

Hopkins,  U.  8.  v.,  82  F.,  529 1—725. 

84F.,  1018 1—748. 

171  U.S., 578 1—941. 

Howaivi  Watch  &  Clock  Co.,  Dueber  Watch  Case  Mf' g  Co.  t>., 

55  F.,  851 1—178. 

66  F.,  637 1—421. 

In  re  Coming,  51  F.,  2a5 1—33. 

In  re  Debs,  petitioner,  158  U.  S.,  564 1—565. 

U.  S.  V.  Debs,  64  F.,  724 1—322. 

In  re  Grand  Jury,  62  F.,  840 1—301. 

In  re  Greene,  52  F.,  104 1—54. 

In  re  Hale,  139  F.,  496 2—804. 

Hale  I'.  Henkel,  201  U.  S.,  43 2—874. 

In  re  Terrell,  51  F.,  213 1—46. 

Inman,  Poulsen&Co.,  Ellis  v.,  124  F.,  956 2—268. 

131  F.,  182 2—577. 

lola  Portland  Cement  Co. ,  Phillips «;. ,  125  F. ,  593 2—284. 

Jayne,  Loder  r.,  142  F.,  1010 2—976. 

Jellico  Mountain  Coke  <&  Coal  Co.,  U.  S.  i.,  43  F.,  898 1—1. 

46  F.,  432 1—9. 

John  D.  Parks  &  Sons  Co.,  Hartman  t.,  145  F.,  358 2—999. 

Joint  Traffic  Association,  U.  S.  r. ,  76  F.,  895. 1—615. 

89  F.,  1020 1—869. 

171U.  S.,  505 1—869. 

KinseyCo.  r.  Board  of  Trade,  198  U.  8.,  236 2—717. 

Klotz,  American  Biscuit  &  ManfgCo.  r.,  44  F.,  721 1—2. 

Knight  Co.,  U.  S.t;.,  60  F.,  306 1—250. 

60  F.,  934 1—258. 

156  U.  S.,  1 1-379. 

Kutter,  Delaware,  L.  &  W.  R,  Co.  i.,  147  F.,  51 2—1021. 

Lawlor,  Loewet?.,  130  F.,  633 2—563. 

142  F.,  216 2—854! 

Licorice  Paste  Trust.    See  U.  S.  v.  MacAndrews  &  Forbes  Co. 

Loderv.  Jayne,  142  F.,  1010 2—976. 


CASES   REPORTED.  VII 

Loewe&Co.  v.  Lawlor,  130  F.,  633 2—563. 

Loewe  et  al.  V.  Lawlor,  142  F.,  216 2—854. 

Lowenstein  v.  Evans,  69  F.,  908 1—598. 

Lowry  v.  Tile,  Mantel  &  Grate  Ass'n,  98  F.,  817 1—995. 

106  F.,  38 2—53. 

Lowry,  W.  W.,  Montague  &  Co.  v.,  115  F.,  27 2—112. 

193U.  S.,  38 2—327. 

McAlisterv.  Henkel,  201  U.  S.,  90 2—918. 

McConnell,  Camors-McConnell  Co.  v. ,  140  F. ,  412 2—817. 

140  F.,  987 2—825. 

McNeeley,  Gibbsv.,  102  F.,  594 2—25. 

107  F.,  210 2—71. 

118  F.,  120 2—194. 

McNulta,  Dennehyt;.,86F.,825 1—855. 

Metcalf  V.  American  School  Furniture  Co.,  108  F.,  909 2—75. 

113  F.,  1020 2—111. 

122  F.,  115 2—234. 

Miami  S.  S.  Co.,  Gulf,  C.  &  S.  F.  Ry.  Co.  v.,  86  F.,  407 1—823. 

Milwaukee  Rubber  Works  Co.,   Rubber  Tire  Wheel   Co.  v., 

142F.,531 2—855. 

Mines  v.  Scribner,  147  F.,  927 2—1035. 

Minnesota  v.  Northern  Securities  Co. ,  123  F. ,  692 2—246. 

194U.  S.,  48 2—533. 

Montague  &  Co.  V.  Lowry,  115  F.,  27 2    112. 

193U.  S.,  38 2—327. 

Moore  v.  U.  S.,  86  F.,  465 1—815. 

National  Folding-Box  &  Paper  Co.  v.  Robertson,  99  F.,  985 2—4. 

National  Harrow  Co.  v,  Hench,  76  F.,  667 1—610. 

83  F.,  36.... 1—742. 

84F.,226 1—746. 

National  Harrow  Co.  v.  Quick,  67  F.,  130 1 — 143. 

74F.,  443 1—608. 

National  Harrow  Co. ,  Bement  v. ,  186  U.  S. ,  70 2—169. 

National  Harrow  Co.,  Strait  v.,  51  F.,  819 1—52. 

Nelson,  United  States  v.,  52  F.,  646 2—77. 

Nelson  V.  United  States,  201  U.  S.,  92 2-920. 

Northern  Securities  Co.,  Harriman  r.,  132  F.,  464 2—587. 

134  F.,  331 2— 6ia 

107  U.  S.,  244 2—669. 

Northern  Securities  Co.,  U.  S.  v.,  120  F.,  721 2—215. 

193U.  S.,  197 2—338. 

Northern  Securities  Co.,  Minnesota  r.,  123  F.,  692 2—246. 

194U.  S.,  48 2--533. 

Otis  Elevator  Co.  V.  Geiger,  107  F.,  131 2—66. 


'*^lft,„ 


Vni  CA8E8   BEPOBTED. 

Parks,  John  D.  &  Sons  Co.,  Hartman  v.,  146  P.,  358 2—999. 

Patterson,  U.  8.  t?.,55F.,  605 1— 133. 

59  F.,  280 :.....'..  1—244. 

Pteuming,  Carter-CromeCo.f.,  86  F.,  439 ...[..]]  1—844] 

Phillips  V,  Portland  Cement  Co.,  125  F.,  593 2—284] 

Pidcockr.  Harrington,  64  F.,  821 [[[[  1— 37?] 

Preacott  &  A,  C.  R.  Co.  v,  Atchison,  T.  &  8.  F.  Co., 

73F.,438 1—604. 

84  F.,  213. (note)  1—604. 
PungB,  American  Brake  Beam  Co.  ».,  141  F.,  923 2—826. 

Quick,  National  Harrow  Co.  v.,  67F.,  130 1—130. 

74  F.,  236 1.*  I-6O9] 

Bice  r.  Standard  Oil  Co.,  134  F.,  464 2—633. 

Robertson,     National  Folding-Box  &  P&per  Co.  r.,  99  F.,  985  ..  2—4. 

Robinson  v.  Suburban  Brick  Co.,  127  F.,  804 2—312. 

Rubber  Tire  Wheel  Co.  w.  Milwaukee  Rubber   Works  Co., 
142  F.,  531 2-855. 

Scribner,  Mines  v.,  147  F.,  927 2—1035. 

Shingle  Trust.    *Sec  Gibbs  v.  McNulty. 

Southern  Ind.  Exp.  Co.  v.  United  States  Exp.  Co.,  88  F.,  659...  1—862. 

92  F.,  1022..  1—993. 

Southern  Railway  Co.,  Tift ».,  138  F.,  753 2—733. 

Standard  Distilling  &  Distributing  Co.,  Block  v.,  95  F.,  978 1—993. 

Standard  Oil  Co.,  Rice  t'.,  134  F.,  464 : 2—633. 

State  of  Minnesota  v.  Northern  Securities  Co.,  123  F.,  692 2—246. 

194U.  a,  48 2—533, 

Stoller,  (Greer,  Mills  &  Co.  v.),  77  F.,1 1—620. 

Strait  r.  National  Harrow  Co.,  51  F.,  819 1—52. 

Straus,  Bobbs-Merrill  Co.  v.,  139  F.,  155 2—755. 

Suburban  Brick  Co.,  Robinson  t?.,  127  F.,  804.. 2—312] 

Swift  &  Co.,  U.  8.  v.,  122  F.,  529 2—237] 

196U.  8.,  375 l..'..'.ll."..  2— 64l] 

Terrell,  In  re,  51  F.,  213 i    |q 

Thomas  v.  On.,  N.  O.  &  T.  P.  Ry.  Co.,  62  F.,  803.. .^l^l]]]*]]]  1—266. 

Tift  V.  Southern  Railway  Co.,  138  F.,  753 2—733. 

Hie,  Mantel  &  Grate  Ass'n,  Lowry  r.,  98  F.,  817 .]]]  1— 995] 

106F.,38 2—53. 

Tobacco  Trust  Cases.    See  Hale  v.  Henkel  and  McAliater  t>.  Henkel. 
Trans-Missouri  Freight  Ass^n,  U.  S.  p.,  53  F.,  440 1—80. 

68F.,58 ....;.']  1-186. 

166U.  8.,  290 1—648. 


CASES    REPORTED.  IX 

Union  Sewer-Pipe  Co.  v.  Connolly,  99  F.,  354 2—1. 

184  U.  S.,  540 2—118. 

U.S.  v.  Addyston  Pipe  &  Steel  Co.,  78  F.,  712 1—631. 

85  F.,  271 1—772. 

175U.  S.,  211 1—1009. 

U.  S.  r.  Agler,  62  F.,  824 1—294. 

U.  S.  V.  Armour  &  Co.,  142  F.,  808 2—951. 

U.  S.  V.  Atchison,  T.  &  S.  F.  Ry.  Co.,  142  F.,  176 2—831. 

U.  S.  r.  Cassidy,  67  F.,  698.. 1—449. 

U.  S.  V.  Chesapeake  &  Ohio  Fuel  Co.,  105  F.,  93 2—34. 

115  F.,  610 2—151. 

U.  8.  V.  Coal  Dealers'  Association  of  Cal.,  85  F.,  252 1—749. 

U.  S.  V.  Debs,  64F.,  724 1—322. 

In  re  Debs,  158  U.  8.,  564 1—565. 

U.  8.  V.  E.  C.  Knight  Co.,  60  F.,  306 1—250. 

60  F.,  934 1—258. 

156  U.  8.,  1 1—379. 

U.  8.  1'.  Elliott,  62  F.,  801 1—262. 

64F.,  27 1—311. 

U.  8.  V.  Freight  Association.    See  V.  8.  v.  Trans-Missouri  Freight 

Association. 
U.  8.  V.  General  Paper  Co.    See  Nelson  v.  U.  8.,  and  Alexander 
V.  U.  8. 

U.  8.  V.  Greenhut,  50  F.,  469 1—30. 

U.  8.  V.  Hopkins,  82  F.,  529 1—725. 

84F.,  1018 :....  1—748. 

171  U.  8.,  578 1—941. 

U.  S.  V.  Jellico  Mountain  Coke  &  Coal  Co.,  43  F.,  898 1—1. 

46  F.,  432 1—9. 

U.  8.  V.  Joint  Traffic  Association,  76  F.,  895 1—615. 

89  F.,  1020 1—869. 

171  U.S.,  505 1—869. 

U.  8.  V.  MacAndrews  &  Forbes  Co.  (Licorice  Paste  Trust).  De- 
murrer overruled  by  Cir.  Ct.  for  Sn.  D.  of  N.  Y.,  Dec.  4, 1906. 
Opinion  not  yet  published. 

U.  8.  V.  Nelson,  52  F.,  646 1—77. 

U.  8.,  Nelson  r.,  201  U.  8.,  92 2—920. 

U.  8.  V.  Northern  Securities  Co.,  120  F.,  721 2—215. 

193  U.  8.,  197 2—238. 

U.  8.  V.Patterson,  55  F.,  605 1—133. 

59  F.,  280 1—244. 

U.  8.  V.  Swift  &  Co.,  122  F.,  529 2—237. 

196  U.  8.,  376 2—641. 

U.  8.  V.  Trans-Missouri  Freight  Association,  53  F.,  440 1 — 80. 

58  F.,  58 1—186. 

166U.  8.,  290 1—648. 

U.  8.  V.  Workingmen's  Amalgamated  Council,  54  F. ,  994 1 — 110. 

57  F.,  85 1—184. 

U.  S,,  Alexander!;., 201  U.  S.,117 2—945. 


^  0A8E8  EEPOBTED. 

TJ.  8.,  Anderson  t?.,  82  F.,  998... *     t— 742. 

171  n.  S.,  604 '*........,*  1—967. 

U.  8.,  Moore  v.,  85  F.,  465 '     1—815 

V.  S.  Consolidated  8.  R.  Co.  v.  Griffin  &  Shelley  Co.,  126  F.,  364  .  2—288, 

U.  8.  Exp.  Co.,  Southern  Ind.  Exp.  Co.  ».,  88  F.,  659 *  1—862. 

92  F.,  1022.....,.".".'  1-992." 

Waterhouse  i».  Comer,  55  F.,  149 1—119. 

Whitwell  V.  Continental  Tobacco  Co. ,  125  F. ,  464 .1......    2—271. 

Wise,  General  Electric  Co.  v.,  119  F.,  922 ..."."]". 2—205 

Wisewall,  The  Charles  E.,  74  F.,  802 1—802 

86  F.,  671 .]".]]1^^]*]]!'.  1— 85o! 

Workingmen's  Amalgamated  Council,  V.  8. ».,  54  F.,  994 1—110. 

57F.,  86 1-184. 


CASES  CITED. 


TOLS.  1  AND  2. 


A.  F.  Booth  &  Co.  V.  Davis,  127  F.,  875... 2—820. 

Ackennant;.  Shelp,  8  N.J.  Law  125 2—641. 

Adamsv.  Burke,  17  Wall.,  453 2—863. 

Adams  V.  Palmer,  6  Gray,  338 2-307. 

Adams  «.  New  York,  192  U.  S.,  685 2—903. 

Adamsv.  Woods,  2Cranch,  337 1—353. 

Adderley  v.  Dixon,  1  Sim.  <fe  S.,  607,  611 1—109. 

Addyston  Pipe  &  Steel  Co.  v.  U.  8.,  176  U.  S.,  211. 2—2,12,51,162,189, 

198,221,226,243, 
258,276,278,337, 
459,460,471,561, 
666,820,822. 

228,229 2—227. 

234 2—167. 

237 2—317. 

238 2—115,190. 

239 2—72. 

240 2—512. 

243 2-303. 

245 2—166,276,286,304. 

246 2—63,998. 

248 2—31. 

229-233 2—998. 

237,241,246 2—168. 

239,240,243,246 2—226. 

(See  also  U.  S.  v.  Addyston  Pipe 
and  Steel  Co.). 

Adeev.  J.  L.  Mott  Iron  Works,  46  F.,  89 2—943. 

Alkensv.  Wisconsin,  196  U.S.,  194,  206 2—662. 

Alcock  r.  Giberton.  5  Duer.,  76 2—1008. 

Aldridge  V.  Williams,  3  How.,  9,  24 1—673. 

Algerv.  Thacher,  19  Pick.,  61,54 1—783. 

Allen  v.  Pullman  Co.,  191  U.  8.,  171, 179, 180 2—663. 

Allgeyer  v.  Louisiana,  166  U.  S.,  578, 589 1—934,   966,    1024; 

2—276,279. 

AUison  v.  Corson,  88  F.,  581 2—607. 

Alsbrookv.  Hathaway,  3  Sneed,  454 2— SIO. 

American  Biscuit  &  Mfg.  Co.  v.  Klotz.    See  Manufacturing  Co.  v.  Klotz. 
American  Live  Stock  Com.  Co.  v.  Chicago  Live  Stock  Exchg.,  143  111., 

210 1—630. 

American  Steel  and  Wire  Co.  v.  Speed,  192  U.S.,  500 2—665. 

American  Strawboard  Co.  v.  Haldeman  Paper  Co.,  88  F.,  619 1—786;  2—1011. 

American  Sugar  Refg.  Co.  v.  Louisiana,  179  U.  S. ,  89 2—140, 141. 146, 147. 


JTIT 


CASES   CITED. 


Amejv.  Long,  dEasI,  473 2-904 

Amherst  Academy  w.  Cowes,  6  Pick.,  427,  433.*..........*"'" 2-^17 

Ammunition  Co.  V.  Nordenfelt.    {See  Maxim-NoMenfelt  "Guns  "ind 
Ammunition  Co.  v.  Nordenfelt,  [1893]  1  Ch.,  680). 

Anderson  t?.  Dunn.  6  Wheat.,  2CM ] l—m4 

Anderson  ff.  Jett.  89  Ky.,  376 1    oo  <>rv>  - 

Anderson  ».  U.  8..  171  U  8    604 1—92,202,792,796. 

'^•o.,niv.o.,tsm 1—1005,  1038;   2— 

117,226,226,258, 

318,337,469,460, 

•  631, 664, 

612... 2_5ii. 

^l 2-581,1032. 

Anfiei».Kaiiwftyco.,i5iu.s..'i"";.;"".*;;;;; *  IzZt'.^!:^' 

Appleton  V.  Ecaubert,  46 F., 281 *.*'." ^-MS 

Arkansasv.  Kansas  &  Tex.  Coal  Co.,  183  U.S.  185.  r.] 2-648 

Armstrong  t?.  Toler,  11  Wheat.,  268 1—864 

Amot..coaico..68N.Y.,658 ;.*:.":::;;::;::;:;;::::  i-4*2;766,799.85»; 

2—276. 

w5. .  • . « i__403*  g     160 

Arnot  V.  Pittston  &  Elmim  Coal  Co.   {See  Amot  v.  Coal  Co.,  68  N.Y.* 
668).  ' 

Arthur  ».  Oakes,  68  F.,  310 *    ,,,  „„ 

324 1-317,372. 

«** 1—689 

Aabestoa  FeltingCo.  v.  United  States*  P.  Salamander  Feltineii "is 
Blatch.,463 l    "ii 

Asherv.  Texas,  128  U.S.,  129.. ".r.!r."r.r.".';;r.*.;; i-7W8nR.  9^jui 

Ashley  t'.  Ryan,  153  U.S.,  436.  440, 446 2-5w'6S' 

Aiiuociation  r.  Houck,  30  8.  W.,  869  (88  Tex.,  184)....        i-gss'      " 

Aasociationi.  Kock,  14La.  Ann.,  168... 1-90  798 

Association  I?.  Niezerowski,  95  Wis.,  129... i_-^     ' 

Association  «%  Walsh,  2Daly,  1 [[ I— 2O6 

Atcheson  ».  Mallon,  43  N.  Y.,  147 ."......"..............'.'." i_^3' 

Atchison,  T.ife  S.  F.  Ry.  Co..  v.  Denver*  N.  0.  R.  Co.,  110  U.  8    667      1-836  «»  iliw 
Atchison.  Topeka  &  8.  Fe.  R.  R.  ..  Matthews.  174  U.  8.,  %    ..  !'  gl^'      '*"• 

Atlanta  v.  Chattanooga  F.  &  P.  Works,  127  F.,  23 2—324 

Attorney-General  r.  Birmingham,  4  Kay  &  J..  528 .. .      i_^2. 

Attorney-General  v.  Brown.  24  N.  J.  Eq.  (9  C.  E.  Green),  89,'9i.';r.""  1-690 
Attorney-General  v.  Cambridge  Consumers'  Gas  Co.,  L.  R.  6  Eq.,  282  I-344" 
Attorney-General  r.  City  of  Eau  Claire.  37  Wis.,  400  .  * "  1-344' 

Attorney-General  r.  Forbes,  2  Mylne  &  Co..  128 .'*."*".'"""  l-^i  "342  ai4  W 

Attorney-General  t;.  Heishon.  3C.  E.  Green  (18  N.  J.  Eq.).  410 :.  jl^' ^^' *"' ^^• 

Attorney-General  r.  Hunter,  1  Dev.  Eq.,  12 1— 342' 

Attorney-General  v.  Jamaica  Pond  Aqueduct  Corporation,  m  Mass.! 

361 '_ 

1 5gfi  fig7 

Attorney-General  V.  Johnson,  2  Wils.  Ch.,  87 i_^2'      * 

Attorney-General  v.  N.J.  R.  R.,  2  C.  E.  Green  (17  N.  J.EqiJ.lM.'".*.       1-690* 

Attorney-General  r.  Nichol,  16  Ves.,  888 **  1I344* 

Attorney-General  v.  Railroad  Companies,  36  Wis.,  624,  527."!!  1-844  619 

Attorney-General  v.  Richards,  2  Anstr..  608 1 1-687 

Attorney-General  ».  Terry.  L.  R.  9  Ch.,  423 1-342  688 

Attorney-General  v.  Tudor  Ice  Co..  104  Mass.,  239,  244 i-sge' 

Attorney-General  v.  Woods,  108  Mass.,  836 1-686 

Austin  v.  Tennessee,  179  U.  8..  849 2^^ 

Ayerst  V.  Jenkins,  L.  R.  16 Eq.,  275,  284 !.!!!.!!!.!!!!!!!...!..*.".  2—714 

Ball  V.  Rutland.  93  F..  616 *  g_«^ 

Bank  V.  Lamb.  26  Barb.,  696 tl^' 

Bunk  V.  Owens,  2  Pet..  588 .'*.'".'.' t^^' 

Bank  v.Schennerhom,  9 Paige,  872.  878. '.'.*..*. i_889 


CASES    CITED. 


XTII 


Bank  of  Australasia  v.  Breillat,  6  Moore,  P.  C. ,  152,  201 2—874. 

Bannon  V.  U.  S.,  15  Sup.  Ct.,  467  (156  U.  S.,  464) 1—469. 

Barber  Asphalt  Paving  Co.  v.  Hunt,  100  Mo.,  22 2—560. 

Barbierv.  Connolly,  113  U.  S.,  27,  31 2—138. 

Barthet  V.  City  of  New  Orleans,  24  F.,  663 1—760. 

Beal  V.  Chase,  31  Mich.,  490 1—75,94,205,786. 

518 1—702. 

521 1-96. 

Beck  t*.  Real  Estate  Co.,  65  F.,  30 2—92. 

Bell's  Gap  R.  R.  v.  Penn.,  134  U.  S.,  232 .* 2—141,148. 

Belton  V.  Hatch,  109  N.  Y.,  593 1—630. 

Bement  v.  National  Harrow  Co.,  186  U.  8.,  70 2—293,732,863,866. 

70,88,89 2—208. 

70,88-91 2—209. 

70,88.92,93 2—785,786. 

70,92 2—873. 

70,92,93 2—998. 

70,94 2—803,804. 

Bensley  v.  Texas  &  Pac.  Ry.  Co.,  191  U.  S.,  492 2—573. 

Bessette  v.  ConkeyCo.,194  U.S., 324 2—838. 

Bibbv.  Allen,  149  U.S.,  481 1—849. 

Birch  r.Somerville,  2Ir.  Law  R.,N.S.,  243 2-^973. 

Bishop  V.  Preservers'  Co.,  157  III.,  284 1—797. 

Bishop  V.  Preservers'  Co.,  51  F.,  272 2—21. 

Black  River  Lumber  Co.  r.  Warner.  93  Mo.,  374,388 2—997. 

Blaney  v.  Maryland,  74  Md.,  153 2—809,894. 

Blease  v.  Garlington,  92  U.  S.,  1 2—942. 

Bleistein  v.  Donaldson  Lithographing  Co.,  188  U.  S.,  239,  249,  250 2—731. 

Blindell  v.  Hagan,  54  F.,  40;  56  F.,  696 1—379,623,841.842, 

995-  2—79 

Block  V.  Distributing  Co.,  95  F.,  978 2—79. 

Board  of  Trade  v.  Christie  Grain  and  Stock  Co.,  198  U.  S.,  236 2—863, 1007. 

Board  of  Trade  v.  C.  B.  Thompson  Commission  Co.,  103  F.,  902 2— 73L 

Board  of  Trader.  Hadden-KruU  Co.,  109  F.,  705 2—731. 

Boatmen's  Bankf.  Fritzlen,  135  F.,  650 2—850. 

Bobbs-Merrill  Co.  v.  Snellenburg,  131  F.,  630 2—804. 

Bonsack  Mach.  Co.  v.  Smith,  70  F.,386 2—824,1007. 

Booth,  A.,  &Co.,  V.  Davis,  127  F.,  875 2—820. 

Bowen  v.  Matheson,  14  Allen,  499 1—202. 

Bowman  v.  Chicago  &  N.  W.  Railway  Co.,  125  U.  S.,  465 1—388, 1027. 

465,497 1—738,739. 

Boyd  V.Gill,  19  F.,  145 1—627. 

Boyd  r.  State,  19  Neb.,  128 1—363. 

Boyd  V.  U.  S.,  116  U.  S.,  616 2-813,902,912,973. 

616-634 1—869. 

616,635 1-693:  2—917. 

Bradyt;.  D^ly,  175U.  S.,  148 2—13,307,308. 

154 2—17. 

Bram  t>.  U.  S.,  168  U.  8.,  632 2—972. 

Brawley  V.  U.  S.,  96  U.  S.,  168,172 2—997. 

Brennan  v.  City  of  Titusville,  163  U.  8.,  289 1—737,  806;  2—60, 

241. 

Brennan  v.  People,  16111.,  611 1—874. 

Breslin  v.  Brown,  24  O.  St.,  666 1—803. 

Brewer  r.  Blougher,  14  Pet.,  178,198 1—676. 

Bridge  Co.  v.  Hatch,  125  U.  S.,1 1—345. 

Brinckerhoff  v.  Brown,  7  Johns.  Ch.,  217 1—212. 

Brisbane  r.  Adam8,3N.  Y..  129 1—808. 

Brown  V.  Houston,  114  U.  8.,  622 1—68,978. 

623 1-741. 

Brown  V.  Jacobs  Pharmacy  Co.,  41 8.  E. ,  653  (116  Ga.,  429) 2—276. 


'  J^JI  V 


CA8E8   ClTJfiD. 


Brown*.  Maryland,  12 Wheat.  419 1-741,968.1028: 

a-466. 
♦*» 1—314. 

**6 9—481. 

44S i_3]^ 

Brown  V.  Rounwvell,  78111.,  589 1—76,206  277  27f. 

Brownv.  United  States,  118  U.S.,  668,571 1—720 

Brownie.  Walker,  161  U.S.,  591 2-108.109,812.898. 

899.900,968. 
Brown  v.Woister,  113  F.,  20 f— 943. 

Brace  V.  Baxter,  7  Lea,  477 .'"".]]...!......."...  a-310. 

BQehanv.  Broadwcll,  88  Mo.,  31 , '.'.'.'.'.    2—569 

Buck  V.  Bock,  60  111.,  106,106 .....-......*......."......  1—339 

Bndd  p.  New  York,  148  U.  8., 617 .[.[...[.....  1— 433] 738, 740. 

Bull  V.  Loveland,  10  Pick.,  9 ' *""*  g-^goc 

Bullard  V.  Bell,  1  Mason, 213 ........".  2-311. 

Bunnell's  Appeal,  69  Pa.  St,  69 1— 344^ 

Buskirkt;.  King,  72  F.,  22 ........"......  2—607! 

Butchers'  &  Drovers'  Stock- Yards  Co.  v.  Louisville  &  N.  K.  Co.,  67F.,  85.  1—794. 

ButcheW  Union  Co.v.  Crescent  tMy,  etc.,  Co.,  Ill  U.  8.,  746,755 2-277. 


0. 

Cadyv.Morton,  14Pick..  236 2—973. 

California  Steam  Navigation  Co.  v.  Wright,  6  Cal.,  258 2—276. 

Callanv.  Wilson,  127  U.S.,  540,656 2—165. 

Callawayv.  McMillian,  llHeisk.,667 .,....!]..*!!!  2—308. 

Campbell  t .  City  of  Haverhill,  155  U.  S.,  610 2-13, 16, 18,308. 

614 2-307. 

Cammeyex  v.  Lutheran  Churches,  2  Sandf .  Ch.,  208-229 1-626. 

Carbon  Co.  r.  McMillin,  119  N.  Y.,  46 I-745, 766, 7», 

Carew  «.  Rntherford,  106  Mass.,  1,14 1— 202!29o! 

Carletonw.Rugg,  149  Mass.,  550-657 ,,,,,]  1— 359! 

Caroll  V.  Caroll's  Lessees,  16  How.,  275 [  2_7io. 

Carrw  Fife,  156  U.  S.,  494 11....!]]!]]!]!  2—316. 

Carrol  v.  Green,  92  U.  S.,  509 2—22,311. 

Cartwrlght's  Case,  114  Mass.,  230, 288 1—694. 

case  of  the  Earl  of  Shaftesbury,  2  St.  Trials  615;  S.  C.  1  Mod.,  144  ... .  1-693. 

Case  of  Greene,  52F.,104 1—262. 

Case  of  Phelan,  62  F..  803 '.'.*  i_36l! 

Case  of  the  State  Freight  Tax,  15  Wall.,  282,  275 !..'...',!..!!].".!  1—178,364,856. 

C^se  of  Yates,  4  Johns.,  314,  369 I— 593'. 

Casey  V.  Typographical  Union,  45  F.,  136. 144 1—108,290. 

Castner  V.  Coffman,  178  U.  8.,  168,183 2-707! 

CeUuloid  Manufacturing  Co.  v.  Goodyear  Dental  Vulcanite  Co.,  18 

Blatchf.,384 1_53 

Central  Ohio  Salt  Co.  v.  Guthrie,  35  Ohio  St.,  666,6?2 1—403;  2— 47a 

Central  R.  R.  t>.  Macon,  110  F.,  871 2—754! 

Central  Stock  and  Grain  Exch.  v.  Bd.  of  Trade,  196  El. ,  396 !  2—733! 

Central  Stock  Yards  Co.  v.  Louisville  At  N.  R.  Co.,  112  F.,  828,  827,  828.  2-^7. 
Central  Transportation  Co.  v.  Pullman  Palace  Car  Co.,  189  U.  S.,  24-43.  2—1006, 1008. 

Champion  t>.  Ames,  188  U.  S.,  321 2—224. 

Chandler  V.  Hanna,  73  Ala.,  390 !  1—622! 

Chapin  v.  Brown,  83  la.,  156 1—7%! 

Chapman  w.  Kirby,  49  ni.,  211,  219 .'*  2—98. 

Chapman  v.  Kansas  City,  etc.,  Ry.  Co.,  146  Mo.,  481,  608 !....!!  2—997. 

Chappellv.  Walerworth,  156  U.  8.,  102, 107 2— W7. 

Charge  to  the  Grand  Jury,  2  Sawy.,  667 .....!  2—894! 

Charles  E.  Wisewall  (The),  74  F.,  802 .!.!..!  2— 13o! 

Charlotte,  etc.,  R.  R.  v.  Gibbes,  142  U.  8.,  386 .!!!.!!  2— 914! 

Chemical  Works  v.  Hecker,  11  Blatchf .,  668. 1-^. 


OASES    CITED. 


XV 


Cherokee  Nation  v.  Southern  Kansas  Ry.  Co.,  136  U.  8.,  641,  657 1—354,357,687; 

2— 48L 

Chesapeake  &  Ohio  Fuel  Co.  v.  U.  8.,  115  F.,  610 2—203,278. 

619 2—276. 

Chicago.  Burlington  &  Q.  R.  Co.  v.  Chicago,  166  U.  S.,  226 2—914. 

Chicago  Gaslight,  etc.,  Co.  v.  People's  Gaslight,  etc.,  Co.,  121  111., 530..  1—206,222,688,724. 

Chicago,  etc.,  R.  Co.  r.  Pullman  Sn.  Car  Co.,  139  U.  S.,  79 1—75,  200,  207,  724, 

793. 

79, 90 2—481. 

Chicago.  M.  &  St.  P.  Ry.  v,  Tompkins,  176  U.  S.,  173 2—754. 

Chicago  <fe  N.  W.  R.  R.  Co.  v.  Osborne,  52  F.,  914 2—748. 

Chicago,  St.  L.  &  P.  R.  Co.  v.  Cin.  W.  &  M.  Ry.  Co.,  126  Ind.,  516 1—867. 

Chicago,  etc.,  Ry.  v.  Minnesota.  134  U.  S.,  418 2—742, 743, 754. 

Chittenden  V.  Brewster.  2  Wall.,  191, 196 2—558. 

Church  V.  Railroad,  78  F.,  526 2—79. 

Chinese  Exclusion  Case,  130  U.S.,  581 1—678. 

Church  of  the  Holy  Trinity  v.  U.  S..  143  U.  S..  457 1—707. 

Cincinnati,  N.  0.,etc.,Ry.  Co.  v.  Interstate  Commerce  Com.,  162  U.  8., 

184 1—6%,  723, 840. 

Cincinnati     Siemens-Lungren    Gas    Illuminating   Co.    v.   Western 

Siemens-Lungren  Co.,  152  U.  8.,  200.  205 .^ 2—97. 

City  of  Georgetown  r.  Alexandria  Canal  Co.,  12  Pet.,  91,  98 1—686. 

City  of  Newton  v.  Levis,  79  F.,  715 2—605. 

City  of  8t.  Louis  v.  Laughlin,  49  Mo.,  559 2—850. 

City  of  Tltusville  v.  Brennan,  143  Pa.  St..  642 2— 6L 

Clark  V.  Frederick.s,  106  U.  8.,  4 1—847. 

Clarkr.  Kansas  City,  176  U.  S.,  114 2—146. 

Clause  t?.  Bullock  Ptg.  P.  Co.,  118111.,  612,  617 2— 13L 

Clemens  t'.  Estes,  22  F.,  899 2—791. 

Cleveland  City  Ry.  i\  Cleveland,  94  F.,  409 2—764. 

Clews  I'.  Jamieson,  182  U.  S.,  461 2—728. 

Cloth  Co.  t».  Lorsont,  L.  R.  9  Eq.,  345 .' 1—94,199,786,788. 

345,354 1—205. 

Coal  &  Coke  Co.  v.  Hartman,  111  F.,  % 2—989. 

Coal  Co.  V.  Bates,  156  U.  8.,  677 1—739,741. 

Coal  Co.  V.  People,  214111.,  421 2—1034. 

Cockrill  V.  Butler,  78  F.,  679...... 2—14,22,23. 

Coddington  v.  Webb,  4  Sandf.,  639 1—363. 

Coer.  Errol,  116  U.  S.,  617 1—257,429,807; 

2—198. 

517-520 1-68. 

617,529 ,. 1—416. 

Cohens  V.  Virginia,  6  Wheat.,  264,  340,  399 1—811. 

385,414 2-463. 

399 2—710. 

413 1—396,578,466. 

Collins  w.  Locke,  4  App.  Cas.,  674 1—789,797. 

Columbia  Wire  Co.  v.  Freeman  Wire  Co.,  71  F.,  302 2—209, 867. 

3% 2—9,2%. 

Commission  v.  Louisville  &  Nashville  R.  R.  Co.,  118  F.,  626 2—743. 

Commonwealth  v.  Carlisle,  Brightly,  N.  P.,  36 1—89. 

39 1—202. 

40 1—402. 

41 1-410. 

Commonwealth  v.  Green,  126  Pa.  St.,  531 1 2— «%. 

Commonwealth  i'.  Grinstead  (Ky.),  63  S.  W.,  427  (111  Ky.  203) 2—277,279. 

Commonwealth  t'.  Hunt,  4  Mete.  (Mass.),  Ill,  123 1—265,442. 

Commonwealth  V.  Martin,  17  Mass.,  359,  362 2—486. 

Commonwealths.  Peaslee,  177  Mass.,  267,272 2—531,663,668. 

Commonwealth  v.  Shaw,  4  Cush,,  594 2—920. 

Commonwealth  7;.  Smyth,  11  Cush.,  478 2—894. 


XVI 


CASES  CITED. 


Conk  V.  RailTOad  Co.,  1  Tenn.  Cas.,  409 2—23,24. 

Connolly. v.  Union  Sewer  Pipe  Co. ,  184  U.  8.,  640 2—237, 306, 575. 

545,550 2—999. 

Conaolidated  Rubber  Tire  Wheel  Co.  t».  Finlay  Rubber  Tire  Co.,  116  F., 

^^ 2—869. 

Continental  National  Bank  v.  Buford,  191  U.  S.,  119 2—546 

Cooley  V.  Board.  12 How.,  298 ..*"*'  i_74o. 

Coosaw  Mining  Co.  v.  South  Carolina,  144  U.  8.,  560 1—687  619  706 

Coppell  V.  Hall,  7  Wall.,  642 '"  1-^7'      ' 

Corson  tJ.  Maryland,  120  U.  8.,  542 1—805*  2—60 

Cortelyou  and  Another  and  Neotttyle  Co.  v.  Charles  Eneu  Johnson  & 

Co.,  138  F.,  110 2—786 

Cotting  V.  Kanhas  City  Stock  Y.  Co.,  183  U.  S.,  79..!!!!]"].".'.']!.*;]".'*.'.'  2-14o!l49. 

Counselman  v.  Hitchcock,  142  U.  8.,  547 2—108  109  810  968 

647-582 ]]]]]]]]]]]  1-359!      ' 

547,586 2—898  899 

County  of  Lane  r.  Oregon,  7  Wall.,  76 2—477 

County  of  Mobile  i'.  Kimball,  102  U.  8.,  691 ]]]]]]]]]]]]]]  1— 354!  356, 737; 

2—466,495,604. 

«96 1-^05. 

697 2—224. 

702 1—67,302,397,  489, 

^     .  459,  767. 

Covington,  Ac,  Bridge  Co.  0.  Kentucky,  15417.  8.,  204.. 1—738,  739 

Craft  t'.  McConoughy,  79 111.,  346 !!!!]  1—91/202  766  796 

349,350 ]]]]]]]  1— 4(M. 

350 2 470 

Craigr.  People,  47  III.,  487 ].]]]]]]]  1— »44 

Crandall  v.  Nevada,  6  Wall.,  36 ]]]]]]]]]]]]]]      1—173 

Cranford  v.  Tyrrell,  128  N.  Y.,  341,444 ]]].]]]]]]]]]]]]]]  1— 592] 

Cravens tr.  Carter-Cmme Co.,  92  F.,  479... ]]]]]]  2—198 

Crescent  Mfg.  Co.  v.  Nelson  Mfg.  Co.,  100  Mo.,  325.  336 ] ] ] ]  ]    2—997 

Crook  V.  People,  16  111.,  534,  537 ,         ]'  i—sgg 

Crossr.North  Carolina,  132  U.S., 131 ..]]]]]].]]]]]]    1— 173 

Cratcher  v.  Kentucky,  141  D.  8.,  47 .]]]]]]]]]]]]]]]]]]]  ]  ]  1— 737  738 

59... 2—663 

CMtin  r.  City  of  Viroqua,  67  Wis.,  314,  320 , I-861] 

'    B. 

Daniel  Ball,  The,  10  Wall..  567 l^SM. 

Davis  r.  Dale,  1  M.  &  M.,  614 ].].......'..]  2—973 

Davis  V.  Mason,  5TermR.,  120 ]]]]]]]]]]]].]]]]]  1—98. 

Davis  V.  Mayor,  etc.,  14  N.  Y.,  526 ]]]]]]]]]]]]]]]]] ]  1— 342 

Defiance  Water  Co.  v.  Defiance,  191  U,  8.,  184, 191....]]]]]]]]]]]]]]]]]    2—546 

De  Forest  r,  Thompson,  40  F.,  375 ].]]]]]]]  2—90. 

Delaware  &  Atlantic,  Ac,  Co.  v.  Delaware,  ex  rel.,  etc.,  3  U.  8.,  App.  30.  2—188. 

De  Mattos  17.  Gibson,    De  Gex  &  Jones,  276 .- 2—1020 

De  Neufville  V.  Railroad  Co.,  81  F.,  10 ]]]]]]]  2—78  80 

Dennehy  t*.  McNnlta,  86  F..  825 2— «21  1032 

^  ,  827,829 ]]]]]]]]]]]]]]]]]]]]  2-12?: 

Denver&R.  G.  R.  Co.  r.  U.  8.,  124F.,156,161 2_^07  617 

Denver  &  N.  O.  Ry.  Co.  v.  Atchison,  T.,  &  8.  F.  R.  Co.,  15  F.,  660 . ! ! !      I-202' 

De  Witt  Wire-Cloth  Co.  v.  N.  J.  Wire-Cloth  Co.,  14  N.  Y.,  8upp.,  277...  1-201  202  795 

Diamond  Match  Co.  V.  Roeber,  106  N.  Y.,  473 i_702'.  2J^20* 

Dier's  Case.  6  Year  B<x)k  6, 2  Hen.  V ]]  i—ggg' 

Dillon  t'.  Barnard,  21  Wall.,  430,437 ]]]]]]]]]]]]]]]  1-212 

Distilling  &  Cattle  Feeding  Co.  v.  People,  156  111.,  448 ]]]]]]]  1—745]  756, 799,  su; 

2 127. 

Dodge,  F.  W.  Co.,  v.  Construction  Information  Co..  183  Mass.,  62 . .         2—731 
Dowerv.  Richards,  161  U.S.,  668,666 2— 181] 


CASES    CITED. 


XVII 


Drexel  r.  True,  74  F.,  12 1—847. 

Dr.  Miles  Medical  Co.  r.  Goldthwaite,  133  F.,  794 2—863, 1019. 

Dr.  Miles  Medical  Co.  r.  Piatt,  142  F.,  606 2—1020. 

Dubowskir.  Goldstein.  [1896]  1  Q.  B.,  478 1—786. 

Dueber  Watch  Case  Mfg.  Co.  v.  E.  Howard  Watch,  etc.,  Co.,  55  F.,  851 ... .  1—257, 357;  2—21. 

66  F.,  637....  1—60.1.812. 

Duncan  ?•.  Missouri,  1.V2  U.  S.,  377,  382 2—139. 

Dunlopr.  Gregory.  ION.  Y.,  241 1—786;  2—1011. 

Dushane  /•.  Benedict,  120  U.  S.,  630,648 2— 13l] 

E. 

East  Tennessee,  V.  &  G.  R.  Co.  r.  Interstate  Com.  Com..  99  F.,  64 2—743. 

181  U.S.,  1,27..  2-*l7. 

Eastman  r.  Sherry.  37  F.,  844,845...  2—972. 

Ea.ston  and  Amboy  Railroad  Co.  v.  Greenwich,  25  N.J.  Eq.,565  .......  1—586. 

Edison  Electric  Light  Co. r. Sawyer- Man  Electric  Co., 53  F.,598 2—69.823. 

Edison  Elec.  Lt.  Co.  v.  U.  S.  Elec.  Ltg.  Co., 45  F., 55, 59 2— 9i3. 

Edison  Phonograph  Co.  r.  Pike,  116  F.,863 2—787. 

Edwards  r.  Elliott,  21  WhU. , 532 ] ] ] ]  1—847] 

Egan  V.  Hart,  165  U.  S.,  188 ] ]]]]  2_i8i! 

Eilenbecker  /.Plymouth  Co., 134  U.S., 31, 36 1— 359!.594. 

Ellerman  r. Chicago  Junction  R.vs.,etc.,Co.,49  N.  J.Eq.,215,217 I— 702! 

Elliraan  r.Carrington,  [1901]  2Ch.,275 2— 732]l015. 

Elliott  r.  Osborne,  1  Cal.,396 1— 363] 

Elliott  r.Peirsol.l  Pet., 328,340 1— 34o]s38. 

Ely  V.  Supervisors,  36  N.  Y., 297 .] .  i_,54/ 

Emack  r.  Kane, 34  F.,47 1—108. 

Embrey  r.Jemison,131  U.S., 336,348 2— 127]729. 

Emert  v.  Mi.ssouri,  1.%  U.  S., 296 1— 739]8a=>]958. 

Emery  v.  Candle  Co.,  47  O.  St.,  320 i_446!  796] 

Emery  »•.  City  of  Lowell,  127  Mas.s.,  138, 140 1—861. 

Evans  r.  Hu^e.v,  76  111.,  115.  120 2— 13l] 

Ewing  r.  Johnson,  34  How.  Pr.,  202 1— SOs] 

Ex  parte  Bain,  121  U.  8.,  1 1— 247] 

Ex  parte  Brown,  72  Mo.,  83 2—894  90s 

Ex  parte  Buskirk,  72  F..  14 ],  g—^isg] 

ExparteCrowDog.  109U.  S..556.  570 ]]]]]]  l— 710] 

Ex  parte  FLsk.  113  U.  S..  713 ^ ]].]."  »— lOe]  8:19. 

718,119 * ]]]]]]]  S[_34o] 

Ex  parte  Irvine,  74  F.,954 2—110. 

Ex  parte  Mirzan.  119  U.  S..  .584-686 ]..]]]]]]  1^59. 

Ex  parte  Neet,  157  Mo.,  527 ]]]]]]]]  2—850. 

Ex  parte  Robinson,  19  Wall.,  505 ]]]]]]]]  1— 594] 

ExparteReynolds,  15CoxC.  C.,108, 119 ]]  2— 92o] 

Ex  parte  Rowland,  104  U.  8.,  604 2—839] 

ExparteSiebold.  lOOU.S.,  371,  395 ]]]]]]]]]  1—3^  356  578 

Ex  parte  Terry,  128  U.  S.,  289 l-34o!.=i94:' 2-«39 

289,305 1-598. 

Ex  parte  Watkins,  3  Pet.,  193 1—340.  598. 

Ex  parte  Yarbrough.  110  U.  S.,  651 ]]  l— 598! 

Exchange  Tel.  Co.  v.  Gregory  &  Co.,  [1896]  1  Q.  B.  D.,  147 2-73l] 

Express  Cases,  117  V.  8.,  1 1—794. 

F. 

Factor  Co.  v.  Adler,  90Cal.,  110 1—799. 

Farmer  r.  Storer,  11  Pick.  (Ma.ss.),  241 2—972] 

Farmers'  L.  &  T.  Co.  v.  Lake  St.  El.  R.  R.  Co.,  173  111.,  439 2—13?] 

Farmers'  L.  &  T.  Co.  v.  N.  Y.  &  Northern  Ry.  Co.,  160  N.  Y..  410,425...  2—222. 
Farmers'  L.  &  T.  Co.  v.  Northern  Pacific  R.  R.  Co.,  83  F.,  249,267 2—846] 

21220— VOL  2—07  m 11 


:X¥iii 


CA8E8   CITED. 


Fanners'  &  Merchants'  Ins.  Co.  r.  Dobney,  18l>  U.  S..  901 f-871. 

Farreri*.  Close,  L.  R.  4Q,  B.,  602, 61 2 ". 1—781. 

Fan  V.  Manite]Ier,2  Cram-h,  10 , 1—853. 

Fayerweather  t?.  Ritch,  89  F.,  529 i— 943. 

Ficklen  v.  Shelby  Co.  Taxing  Di.«it.,  146  U.  8.,  1 1—955, 957. 

Finney  v.  Ackerman,  21  Wis.,  271 2—845. 

Fitzgerald  v.  Champenyti.  30  L.  J.,  N.  &  Eq,,  782;  2  Johns.  &  Hem.,  81-^.  1—710. 

Wong  Yiie  Ting  r.  United  States,  119  L'.  S.,  698 1—578. 

Ford  V.  Association,  156111.,  166 1—797. 

Fosditk  I'.  Scfhall,  99  IT.  8.,  236 1—9. 

Fowle  ti.  Park.  131  U.  a,  88 '.■.'■  1-75,197,785,788: 

4—732. 1008. 

88,97 1—205. 

Flight  Association  Case.    Sec  U.  S.  ir.  Tnum-Missouri  Freight  A.««n, 

Freight  Tax  Case,  15  Wall..  232 ! , 1—739. 

Frisbiep.  United  States,  167  IJ.  S.,  160 1—935;  *— 808,895. 

Fnchs  V.  St.  Louis,  167  Mo..  620 2—850. 

F.  W.  Dodge  Co.  u.  Construction  Information  Co.,  183  Mass..  62 «— 731. 

Qaiuewell.  etc.,  Co.  IT.  Crane.  160  Mam..  60 «-808. 

QaMinerr.  Morse,  26  Me.,  140 1—803. 

Oust  V.  Hall  dc  Lyon  Co.,  179  MaM ,  688 2-794.1020. 

Garatir.  Harris,  177  Mass..  ?2 2—1016,1016. 

Gelpcke  t'.  City  of  Dwbuque,  1  Wall..  220 1—353. 

General  Electric  Co.  v.  Anchor  Electric  Co.,  106  F.,  J? 03 f— 209, 211. 

OenexalElectricCo.  p.  Wliie,  119  F.,  922-924 2—799. 

Georgia  v.  Brailsford,  2  Dall.,  402 2— 608, 824. 

Gibbons  r.  Ogden,  9  Wheat.,  1. 1—1028, 1024. 

187 1—395. 

189 1— 388,4n. 

1«0 1— 4h. 

1^ 1-768. 

'■ 195 1—364.896. 

196 1-396, 4(;6. 

IW--. 1-351,688;  2-224, 

465.471. 

210 1-645,388;  2—188, 

476. 

222 1-421. 

281 1-396. 

Gibbsiv  Bammore  Gas.  Co.,  130  U.  8.,  396 i— 92,  202,  2ft5,  222 

226, 227. 799. 

406 1—724. 

408 l-«88,723. 

-MW 1-197.203,206,702. 

Qlbbs  «.  Mc.N'eelcy.  107  F.,  211 2-317 

118F.,120... 2-276.278. 

Glbbs  ir.  Smith.  116  Mass.,  .692 1—803. 

Olbaoii ».  Shufeldt,  122  U.  8.,  27.... i—^e?! 

Gilwoii  V.  Smith,  2  Atk.,  l62 *'  i— ,'S87! 

Gilbert  v.  Mickel,  4  Sandf.  Ch.,  381  (marg.  p.  367) ]  i— 108 

Gilmanf.  Philadelphia. 8  Wall.,  713 1-318,364. 

724 i-m. 

V-iS 1-689. 

Glaseottv.  Laxig,8MfL  &C.,  461,  466 2—606. 

Gloucester  Ferry  Co.  v.  Penn.,  114  U.  S.,  196 l— 737, 740, 767. 960; 

2—616. 
208 1—67,302,  398.  489, 

45ia036;  2-115. 


CASES    CITED. 


XIX 


Glouce.'«tcr  Isinglass  A  Glue  Co.  v.  Russia  Cement  Co.,  164  Mass.,  92 1—94, 793. 

94....  1—206. 

Goebel  i\  Hough,  26  Minn..  252,  256,  258  2—98. 

Goldsmith  v.  State.  32  Tex.  Cr.  R.,  112 2—973. 

Goodt'.  Daland.  121  N.  Y.,  1 2—1007.' 

Goodpaiiter  v  Voris.  8  Iowa,  334 2—972. 

Goodridge  r.  Rogers.  22  Pick,,  495 2—307. 

Goodyear  r.  Beverley  Rubber  Co.,  CliflF.  34»-354 2—795. 

Goodyear  Tire  «fe  Rubber  Co.  v.  Rubber  Tire  Wheel  Co.,  116  F.,  363. . . .  2—859. 

■  Gordon  r.  Gil  foil,  99  U.S.,  168 2-318,564. 

Gorton  V.  Brown,  27111.,  489 1—61. 

Grant  v.  Raymond,  6  Pet.,  218,  241 2—187,208. 

Grasselli  v.  Lowden,  11  Ohio  St.,  349 2—316. 

Great  Southern  Fire  Proof  Hotel  Co.  v.  Jones,  177  U.  S.,  449,  453 2—546. 

Great  Western  R.  Co.  v.  Birmingham,  etc.,  R.  Co.,  2  Phil.  Ch.,  597  ....  2—606. 

Gulf,  Colo.  &  Santa  Fe  R.  Co.  v.  Ellis,  166  U.  S.,  160, 154 2—659,  906,  914. 

Green  r.  Williams,  45  111.,  206 2—98. 

Greene's  case.  52  F..  104 1—867. 

Griffin  f.  Colver,  16  N,  Y.,  489,491 2—97. 

Grove  »'.  Grove.  93  F.,  865 '. 2—89 

Gulf,  C.  &  S.  F.  R.  Co.  V.  Miami  S.  S.  Co.,  86  F.,  407 1—867;  2—79. 

420 1—996. 

Gulf,  Colo.  &  S.  Fe  Ry.  v.  Ellis.  165  U.  8.,  160, 166, 159, 160, 165 2—140, 145. 

Gundling  v.  Chicago.  177  U.  S.,  183 2—146. 

Guy  r.  Baltimore,  100  U.  S.,  434 1—739. 

Hadden  v.  Dooley,  74  F.,  429,431 2—006. 

Hagan  v.  Blindell.    See  Blindell  v.  Hagan. 

Hair  r.  Barnes  26  III.  App..  580 2—98. 

Haler.  Henkel,  201  U.S.,43 , 2-944,962,968. 

Hall  V.  DeCuir,96U.  S.,  486 1—740. 

Hammersteln  v.  Parsons,  38  Mo.  App.,  336, 337 1—630. 

Hanchett  v.  Humphrey,  93  F.,  895-897 2—972. 

Hanley  v.  Kansas  City  Southern  Ry.,  187  U.  8.,  617 2—872. 

Hanna  r.  People,  86111.,  24:^ 1—374. 

Hannah  v.  Fife,  27  Mich.,  172 1—803. 

Hard  r.  Seeley,  48  Barb.,  428 2—1008. 

Harriman  v.  Northern  Secur.  Co.,  197  U.  S.,  244 2—819. 

Harrison  r.  Glucose  Refining  Co.,  116  F,,  304 2—831, 1007, 1032. 

307 2—820. 

-310 2-825. 

Harrison  v.  Maynard,  Merrill  &  Co.,  61  F..  689 2—785, 793. 

Harrow  Co.  r.  Hench,  83  F.,  36 1—766, 799;  2— 8, 69, 

198. 

76  F.,  667 2—8,69. 

Harrow  Co.  r.  Quick,  67  F.,  130 1—614,746;  2—8,9, 

69,209. 

Hathaway  r.  Rojich.  2  Woodb.  &  M.,  63,73 2—972. 

Hawes  v.  City  of  Oakland,  lOl' U.  8.,  450 2—78. 

Hawks  r.  Lands,  2  Gilm.,  227,  232 2—131. 

Hayes  v.  Missouri,  120  U.  8.,  68,  71 2—139,  559. 

Hay-Press  Co,  v.  Devol,  72  F.,  717 1—626. 

721,722 1-624. 

Hazlehurst  r.  Railroad  Co.,  43  Ga.,  13 1—202,799. 

Heath  r.  Wallace,  138  U.  8.,  573,  584 1— 715! 

Heaton-Peniusular  Co.  v.  Eureka  Specialty  Co.,  47  U.  8.  App.,  146, 160.  2—187. 

77  F.,  288 2—784. 

Hedrick  v.  Atchison,  T.  &  8.  Fe  R.  R.  Co.,  167  U.  8.,  673,  677 2—181. 

Heckerr.  Mayor,  etc.,  28  How.,  Pr.,  212 2—86. 


XX 


CASES   dlTKD. 


Henderson  r.  Mayor . .f  New  York,  92  U.  8.,  259 1—707, 73»,  739; 

2—466. 

Henderson  Bridge  Co.  r.  Ky..  IWU.  8.,  150 1—738, 740. 

Hendrick  >'.  Lind.*«iy.  93  V.  S.,  Uh '. 2—324,325. 

Henry  Bill  I'uhlishiJiK  Co.  r.  .^niythe.  27  F.,  914-925 2—703. 

Herreshoff  r.  Boutinean.  17  R.  I.,  3 1-786. 

Hill  t'.  Mining  Co..  119  Mo.,  9-24 1—626. 

Hilton  r.  E«'ker.-<k'y.  6E1.  &BI.,  47 1—781^798. 

^ 1-781:  2-1002. 

71.  75 2-1002. 

Hiteli€0<*k  r.  Anthony.  83  F..  779 1—786-2-317  1011 

Hitchcock  r.  Coker,  6  Adol.  &  E..  454 ..[.["."..,'"."  1-786!  788. 

Hinckley  r.  Iltt^burg  Steel  Co.,  121  U.  S.,  2frl 2—997. 

Hodge  r.  Sloan.  107  N.  Y.,  244 1-75. 2ft').  786, 1011. 

Hoer.  Knap,  17  F.,  204 2—187. 

Hoffman  v.  Brooks,  11  Wkly.  Law  Bnl.,  258 1—796. 

Hogan  r.  State,  30  VVi.s.,  428 2—898! 

Holder  r.  Aultman.  169  I'.S.,  81.88.. 2—558! 

Hooker  r.  Vanilewater.  4  Denio,  349 1—90,  202.  799. 

351.352 1—403. 

353 1-201. 

HtH»i»t'r  i:  Califomiii.  155  IT.  8.,  648 1—739.  9<S. 

e-TS 1—960. 

Hopkin!«i'.OxIeySttiveCo.,  83F..912 i_982 

Hopkinsr.  r.s..  mr.s., 57H... '/.  i.ggi',   ^r,^   97^ 

1038:  2—117,225, 
226,257,337,459, 
460, 531,. 561. 664. 
820. 

Sm 2—511. 

-W !  2_..42! 

^^ 2-276.     277,     286. 

1031. 

600 2—277.282. 

Horn  i:  Ltwkhart.  17  Wall..  570 2—89. 

Hornby  r.  Close,  L.  R.2Q.B.,  153 1—781. 

Horner  r.  Ashford,  3  Bing.,  322 1—94.  97.  78ti. 

Horner  r.  Graves,  7  Bing..  735 l—^^^'J)^.  ili6.5; 

743 1-205.400. 

Horner /•.  U.  S.,  143  U.  8.,  207 1—47.58. 

214 i_59. 

570 i_59. 

Howard  r.  Ma nii fact u ring  Co.,  139  U.  8.,  199,  206 2-97. 

Hubbaril  v.  Miller,  27  Mich.,  15 i_94^  7^5^ 

19 1—202. 

Hubbard  /.Rogers,  64  111., 434,  437 2—131. 

Hul.se  V.  Bonsack  Machine  Co.,  66  F..869 2—1003,1013. 

Humesr.  City  of  Ft.  Smith.  93  F.,862 2—89. 

Huntington  v.  Attrill,  146r.  S.,  657 2— 14!  308. 

Huntington  r.  Attrill,  [1898]  App.  Cas. .150 ! !  2—14! 

Hunton  r.  H.  tt  H.  Co.,  76  N.  W.,  IMl  (118  Mich.,  475) 2—972. 

Hiuet'.  Glover.  119  V.  8..  543 1—740,  967. 

Hntchins  v.  Hutchins,  7  Hill.  104 , 1— 435! 

Hyde  v.  Woo<K  2  Sawy..  ft55-659 1— 63o! 


z. 

Illinois  Commission  Co.  v.  Cleveland  Tel.  Co.,  119  F.,  301 2—731. 

Improvement  Co.  r.  Gibney,  160  U.  S.,  217,  220 ..!  1— iooi.1002. 

In  Mutter  of  Morse.  18  N.  Y.  Crim.  Rep.,  312 2—896. 

InreAyers.  123r.  y.,44:i [  2—839! 


CASES    CITED. 


XXI 


InreBuell,  3  Dill..  116., 1— £5,47.57. 

In  reCary.  10  F.,  t22  (note) 2—^89. 

In  re  Corning,  51  F.,  205 1—48,58,182. 

213 ,  1—257. 

In  re  Connselraan.  44  F..  20* 2— 107. 

In  re  Coy,  127  U.  S.,  731 1—173.340. 

In  re  Debs,  168  U.  S..  564 1— til9,6£6.708,814, 

842. 1026:  2—466, 
476. 

In  reDoig.  4  F.,  193 1-47,58. 

In  re  Doolittle,  23  F.,  544 1—283. 

In  re  Express  Companies,  1  Interst.  O »m .  Cora.  R.,  349 1—866. 

In  reGreen,  134  U.  S.,  377 1—173. 

In  re  Greene.  52  F.,  104 1—182,257,430,812. 

Ill 1—198. 

112 2— 5D8. 

113 1—7.37,738. 

116 1—218:  2—276,279. 

116, 117 2—276. 

118 1— '2*5. 

119 1— (VI2. 

In  re  Grot  nc,  22  F. ,  194 2— 8«  6. 

In  reGiice.  79  F,,  627,644 2— 276,27y. 

In  re  Higgins,  27  F.,  443,444 1—125,283. 

In  re  Kea.sby  &  Mattison  Co.,  10  Snp.  Ct.,  273-275  (160  U.  S.,  221) 1—623. 

Inrel^ne.  135  U.  S.,  446 1—59. 

In  re  Lanca.ster.  1.37  U.  S.,  193 l—oS. 

In  re  Lester.  77  Ga..  143 2—809,87.5. 

In  re  Minor,  G9  F.,  233 1—739. 

InreNeagle,  135  U.  S.,  1 1—578. 

In  reNevitt.  117  F..  448,  458 2—838. 

In  re  Pallisser,  136  T.  S.,  257 1—47. 

In  re  Quarles  149  T.  S.,  532 1—578. 

In  re  Raliror,  140  U.  S.,  545 2—465,739. 

5.55 1—388. 

n  re  Sawyer,  124  U.S..  200 2—838. 

220-2-22 1—340. 

In  re  Swan,  150  C,  s.,637 1—598. 

In  re  Terrell  (U.  S.  r.  Greenhut),  51  F..  213 1—58.182. 

215 1-644. 

Inre  Watts  etal.,  190  U.S.,  32 2— «38. 

India  Bagging  Assn.  a  Kock,  14  La.  Ann.,  168 1—201,405;  2 — 470. 

Indianapolis  Gas  Co.  {.Indianapolis,  82  F.,  245 2—608. 

"Industry,"  schooner,  1  Gall..  114, 117 2—486. 

Ingram  v.  Ingram.  49N.C.,  188 1—803. 

Ingram  v.  Lawson.  6  Bing.  N.  C,  212 2—98. 

Insurance  Co.  v.  Clunie.  88  F.  167.  170 2—90, 92. 

Insurance  Co.  r.  Francis,  11  Wall.,  210,216 1—994. 

Interstate  Com.  Com.  r.  Alabama  Mid.  R.  R.  Co.,  74  F.,  715 2—1025. 

168  U.S., 144 1—840. 

Interstate  Com.  Com.  r.  Baird,  194  U.  S.,  25 2—815, 903, 949. 

Interstate  Com.  Com.  v.  B.  &  O.  R.  Co.,  145  U.  S.,  263, 282 1— «39, 1025. 

Interstate  Com.  Com.  v.  Brimson,  154  U.  S.,  447 2—903,949. 

475 2—481. 

479 1—934 

488 1—594. 

Interstate  Com.  Com.  r.  Clyde  S.  S.  Co..  181  U.  S.,  29-33 2—847. 

Interstate  Com.  Com.  v.  Lake  Shore  &  M.  S.  Ry.  et.  al.,  134  F.,  942, 946. .  2—846. 

Interstate  Com.  Com.  v.  Louisville  &  N.  R.  R.  Co.,  73  F.,  409 2—840. 

Interstate  Com.  Com.  v.  Western  N.  Y.  »fc  P.  R.  R.  Co..  82  F.,  192, 196 2—846. 

Interstate  Land  Co.  r.  Maxwell  I^nd  Grant  Co.,  139  U.  S.,  5()9,  577  ....  1—212. 


XXII 


CASES   CITED. 


Iron  Mtn.  R.R.r.  Memphis,  96  F.,  122 2—754. 

Irresistible  (The),  7  Wheat,  551 1!.!'"""!!!!]]!  1— «20 

Irwin  t».  Williar.  110  U.S.,  499 !]!..!  l-«49. 

Israel  r.  Arthur,  152  U.  8.,  355 ...7...........  2— 18l! 

Jackr.  KansaK,  199  r.  8.,  372 f— 900 

Janisi'.  Knapp,  121  F..  34 .*".-...............  2— looi  1005 

Jarvis  f.  Peek,  10  Puige,  125 ,...!!....!.  2—1008. 

Jerome  v.  Ross,  7  Johns.  Ch.,  333 ][]  1—108. 

Jersey  City  v.  City  of  Hndson,  2  Beasley  (18  N.  J.  Eq.),  420,  426*!.."  ^1]  1-^. 

Jewettt'.  Bowman,  27  N.  J.  Eq.,  171 1—363. 

John  D.  Park  *  Si.ns  Co.  v.  Wholesale  Druggists'  Assn.,  176  N.  Y.,  1 ...  2—804, 1018. 

Johnston  r.  Smith's  Admr.,  70  Ala..  108 2— «2I. 

Johnson  Steel  Street  Rail  Co.  v.  North  Branch  Steel  Co.,  48  F..  196  ....  2—943. 
Joint  Traffic  Association  Case  {me  U.  S.  v.  Joint  Traffic  Assn.,  171  V  S 
506).  *    " 

Jones  t».  Clifford's  Exr.,  5  Fla.,  510,  515 i_205. 

Jones  r.  North,  L.  R.  19  Eq.,  426 ............  1—803 

Jones  t'.  Pope,  1  Saunders,  38 2—311 

Juddv.  Harrington,  139 X.Y.,  105.... ..........".............  I— 795] 

Kearney  tr.  Taylor,  15  How.,  4»i,  519 1—808. 

Keeler  v.  Standard  Folding  Bed  Co..  167  U.  8..  659. 2—794  mn 

Keeler  v.  Taylor,  58  Pa.  St.,  467 ..1........  1—786. 

Kelleyt.  Manufacturing  Co.,  44  F.,  19... '*"]]1!1.]]  I-54 

Kellogg r.Larkin. 8  Pin..  123 .''  i_7S9  791 

160 ]'....*..;..r.;   1-205! 

Kelly  V.  Jackstm,  6  Pet.,  631 2—741 

Kenny  r.  Collier,  79Ga..743 !...!!!!.!!!!       2-98 

Kentucky  &  Ind.  Bridge  Co.  v.  Louisville  &  N.  R.  Co..  37  F..  567. ... ..  f-739.  956. 

626 1—840. 

Kentucky  Railroad  Tax  Cases,  115  U.S..  321 2-.S.i9 

Kerfootr.  People,  51  111.  App.,  409 [[  1— »I0. 

Kerr  t'.  New  Orleans,  126  F.,  920 2— 82tl. 

Klddr.  Pearson.  128  U.  S..  1 I— 68  267,  409  411 

680.  681,  808j 
2—198. 

** 1-390.398,439,641. 

14H,  1036. 

'^^ 1-390,  1023. 

22 1—390. 

'^ 2—56  .(W8. 

^^ 2—668. 

26 2—31. 

Kiflf  I*.  Yonman;*,  m  N.  Y.,  329 I— 6.3-  2—126. 

Kirkman  r.  Philips'  Heirs,  7  Heisk.,222,  225 ........".........  2-308  310 

King  t.  Inbahitants  of  Hodnett,  1  T.  R.,  69, 101 i—iSTy 

Kingif,TheV«uj<han.  2D«»iig.,616 '.'..'.'.'.'.'.'.'.  l-^m 

King  Bridge  Co.  1 .  Ot.n?  County,  120  U.  8.,  225 2-M6 

King  of  the  Two  Sicilies  v.  Willcox.  7  St.  Tr.  (N.S.),  1019, 1068 2-900 

Kingman  f.  Wo*ttem  Mfg.  Co..  92  F.,  486.. 2—997 

Kippr.  Deniston,  4  Johns*..  24 1—363 

Klein  r.  Insurance  Co.,  104  IT.  8..  88,  91 l"".'."'.'.'.'.'.'.'.'.]'.['.  i—nS9 

Knapp  I'.  S.  Jarvis  Adams  Co.,  185  F.,  1008 '..'.'.".'.'.['  2-«4 

Kramerr.  Old,  25  8.  E.,  813  (119  N.C.I).. '..'.'.'.'.['.  2—317 


CASES    CITED. 


XXIII 


I-. 

Lafond  t'.  Deems,  81  N.  Y.,  607-514 1—630. 

Lake  FrontCa.se,  146  U.  S.,  387 1—347. 

Lake  Shore,  &e.,  Ry.  Co.,  v.  Ohio,  173  U.  S.,  285,301 2—481. 

Lake  Shore  &  M.  S.  R.  Co.  v.  Cin.  W.  &  M.  Ry.  Co.,  116  Ind.,  578 1—867. 

Lambr.  People,  96  111.,  74 1—374. 

Lamson  r.  Boyden,  160111.,  613,  620,  621 2—969. 

Land  Co.  V.  Peck,  112  111.,  408,  439 2—972. 

Lane  Co.  r.  Oregon,  7  Wall.,  71,  76 1—395,578. 

Lange  t'.  Werk.  2  Ohio  St.,  519,  520 1—786;  2—316. 

Lau  Ow  Bew  r.  U.  S.,  144  U.  S.,  47,  59 1—706. 

Leckier.  Scott,  10  La.,  412 : 2—972. 

Leev.  Angas,  L.  R.  2  Eq.  59 2—908. 

Leete  r.  State  Bank  of  St.  Loui-s,  115  Mo.,  184 2—845. 

Legal  Tender  Cases,  12  Wall.,  457,  555 1—578. 

Lehman  v.  Graham ,  135  F. ,  39 2—826. 

Leisy  V.  Hardin,  135  U.  S.,  100 1—388,739,768; 

2—61,  998. 

107 1—736. 

108 1—741. 

Leloupr.  Port  of  Mobile.  127  U.  S.,  640,  647 1—737;  2—663. 

Leonard  t'.  Poole,  114  N.  Y.,  371,  377 1—79.5,852. 

Leslie  V.  Lorillard,  110  N.  Y.,519.... 1—789,791. 

533 1—702.  I 

Lewis  V.  Board  of  Commissioners,  74  N.  C,  194 2—895. 

Lewis  r.  Wilson,  121  N.  Y.,  284-287 1—630. 

License  Cases,  5  How.,  504 1—739. 

599 1—388. 

Light  Co.  f.  Electric  Co.,  53  F..  598 2—10. 

Lilienthal's  Tobacco  r.  U.  S.,  97  U.  S.,  268 2—741. 

Little  Rock  &  M.  R.  Co.  v.  St.  Louis  S.  W.  Ry.  Co.,  63  F..  775 1—605,866. 

Little  Rock  &  M.  R.  Co.  r.  St.  Louis,  I.  M.  &S.  Ry.  Co.,  41  F.,  659 1—866. 

Littleton  v.  Fritz,  65  la.,  488 1—359. 

Livingston  r.  Livingston,  6  Johns.  Ch.,  500,  501 1—108. 

Liverpool*  L.  &  G.  Ins.  Co.  v.  Clunie,  88  F.,  160 2—824. 

Lloyd  V.  Pennie,  60  F.,  4 2—943. 

Loeb  r.  Columbia  Township  Trustees,  179  U.  S.,  4?2,  477 2—124. 

Logan  v.Penn.  R.  R.  Co.,  132  Pa.  St.,  403,  410 2—951. 

Logan  f.  U.  S..  144  U.  S.,  263 1-173,578. 

Lonergan  r.  Ruford,  148  U.  S.,  581,  590 1—860. 

Lord  Eldon's  Opinion,  7  Yes.,  257-259 1—363. 

Lottery  Case,  188  U.  S.,  321,  365 2—465. 

348 2—466. 

Louisville  Gas  Co.  1.  Citizens'  Gas  Co.,  116  U.  S.,  683 1—688. 

Louisville,  etc.,  v.  McChord,  103  F.,  220 2—754. 

Louisville  &  Nashville  R.  Co.  r.  Behliner,  175  U.  S.,  675 2—743. 

677 2—262,477.507,530. 

701 2—607,530. 

702 2—477,607. 

Lowry  r. Tile.  Mantel  &  G.  Assn.,  98  F.,  817 2—21,278. 

826 2—278. 

106  F.,  40 2—278. 

46 2—276. 

^46 2—989. 

Loydr.  Malone,  23  111.,  41 1—803. 

Lumber  Co.  v.  Hayes,  76  Cal.,  387 1—201,766,799. 


XXIV 


€A8E8  CITED. 


MeAlister  p.  Heiikel.  201  r.  S..  9t> «_-^ 

MeBlttir  , .  Gibbes.  17  How..  296 ;;'.*.". ,_^' 

McCallr.  California,  136  U.S..  101.  i_-^  ofis 

McCool  r.  Smith.  1  Black,  4i>9. 469 .'.*.'.'.*.".'.'.'.' .*'' '  t-m 

McCredkr.  Senior,  4  Paige.  37S.S81. 382 |    ^39" 

Mcculloch  I'.  Maryland.  4  Wheat. ,  316. 405 iZ^q^  5;^.  ^_^^ 

— ^J5,*28 :;.'i*  ,_4,6; '  • " 

*^^ I--11.5. 

424 |_=-o 

McCullouKrhr.  Brown,  418. C.iM "' i-^jo-'* 

McCullough  r.  Commonwealth.  67  P«.  St..  30 "-^ee 

McDonald  r.  Hovey,  110  U.  8..  619,628. l—igg 

Mt»Ore«ry  r.  Chandler,  .W  Me.,  638 .'  *.' ,_^24 

McKeer.  United  States,  164  U.S..  287 ,.,,[ I~(i75 

McKinley  r.  Wheeler.  130  U.  8..  680 2—915 

McMullen  r.  Hoffman.  174  V.  S.,  689.6M .............7  a-l'>8  819 

K9F..  515 2— S-M 

Mae  William  r.  COnn.  Web  Co..  1 19  F..  509 '  ] *~94!} 

MachineCo.  /■".  Smith.  70  F..  383 J_g  " 

Machinery  Co.  r.  Dolph.  m  U.  S..  617:  28  F..  siis'.V.'.V. ."..".".  .".'.'.*.".*".*.'.'.  'i_78t;. 

Madiwn  Ave.  Baptist  Chnrcli  r.  Oliver  i^it.  Baptist  Church  73  N   Y    96    *— "9 

Magennis  v.  Parkhurst.  4  N.  J.  Eq.,  433.  434  . ..  t_^ 

MagtMH.  ,-.  Illinois  Tn,st  &  Saving.  B*mk,  170  U.  8..  2^. '■.'.".'.'.■.';;;;;;;.  i-uo.  U6,m, 

Mail  Company /.  Flanders.  12  Wall,,  130 .»_55g 

Maillard  r.  Lawrence,  16  How.,  251 1—3^8 

Mallan  r.  May.  11  Mee.s,&  VV.,652 ".."......"..7^."..".        1—784 

^^7 1— 20i>. 

667 I y^  1^ 

Manchester,  etc..  R.  R.  r.  Concord  R.  R..  20  Atl.,  383  (66  N.  H.','ioO).'.*;  l-m5  507 
Manufacturing  Co.  r.  Hollis,  55  N.  W.,  1119. 1121  {64  Minn..  223)  I-^iso'       ' 

Manufacturing  ('<..  r.  Klotz,  44  F..  721 i_.,.- ' -oq.  a    107 

Mansfield  C.  &  L.  M.  Ry.  Co.  r.  Swan.  Ill  l.  .^..  379  38-> »    !,«  '"" 

Market  Co.  r.  Hoffman,  101  U.  S..  115 1— 353' 

Marsh  r.  Rnssell.  66  N.  Y..  288 ] 1—213 

Mason  1:  Dullagham,  82  F..689 !...."....... »_^9  * 

Massier.  Buck,  128  F., 31 '.......     ^—{V^  826 

Ma.st,  Foos  &  Vo.  ".  Stover  Mfg.  Co..  177  U.  8.,  4a=i,  495! ."  " -_707"       * 

Match  Co.  r.  Roeber.  106  N.  Y.,  473 •       ' "  i_94.  201  785  788 

Matthews  v.  Awiwx'iated  Press  of  New  York.  136  N.  Y.,  333,  840 . .  1—701  786 

Mattiiigly  r.  Northwestern  Va.  R.  R..  l.-iS  U.  S.,  53,  57 .......... " . . ...,  2— ;>4ti  ' 

Ma.xim  Nordenfelt  Guns  and  Ammunition  Co.  r.  Nordenfelt,  [1893]  1  ' 

Ch.,  680.    (^Sfca/w>Nordenfelt  r.  Maxim  Nordenfelt  Co.)  «— KXXS  100« 

Maxim  Nordenfelt  Gnns  &  Am.  Co.,  Ltd..  r.  Colt'.M  Patent  Firearmi 

Mfg.  Co..  103  F.,  39 _  j_y^^ 

Mayor  of  Georgetown  v.  Alexandria  Canal  Co..  12  Pet..  91.  98 1—844 

Mayor,  etc.,  of  Knoxville  r.  Africa.  77  F..  501 •»— 707 

Merz  Capsule  Co.  r.  U.  8.  Capsule  Co..  67  F.,  414  ....'..  .'.'.'.'.*.'.".'  .*.".'.'.".'.'.'  I'-^jiS;"  2_574. 

71  F., 787 2— 57V     ~~^ 

Metcalf  *'.  Am.  Scho(»l  Furniture  Co.,  122  F.,  116 •»— 82o" 

Metcalf  r.  Watertown,  128  U.  S..  586 ..........."!..."!.  S— .>17 

Mexican  Nat.  Railroad  r.  Davidson,  1.57  U.  S.,  201, '208 1 !.!!."]!!. 2^7 

Miller  r.Ammon,  145  U.S.,  421,  427 T    v,.  ^    ,.,« 

Miller  r.  Davi.s  88  .Me.,  454 "..'.'.'.'.".V.r. ^I^'g" 

Milwaukee,  etc.,  Co.  r  Milwaukee.  87  F.,  .577 2-754 

Minneapolis  &  St.  L.  Ry.  Co.  r.  Beckwith,  129  U.  8.,  26  .....*...'.'..'"*"  o_^u 

Minnesota  r.  Btirber,  136  U.  S..  313 *     "  i_737 

Minnuei  r.  Phila.  &  Reading  R.  Co.,  18  N.  J.  Law.  «"".."." 2—641 

Missouri  ex  rel.,  etc.,  r.  Bell  Tel.  Co.,  23  F.,  539 •»— 188 


CASES   CITED, 


XXV 


Missouri  c.  Lewis.  101  U.  S..  22,  31 2—138. 

Mi8.souri,  K.  &  T.  Ry.  r.  Haber,  169  U.  8..  613,  626 2—138, 466. 

613.626,627 2—476. 

Missouri  Pac.  Ry.  Co.  t',  Mackey.  127  U.  8.,  2a5 2—914. 

MissonriPac.  Ry.  Co.  r.  U.  S.,  189  U.  S..  274 2—843,844,847. 

Mitchel  I'.  Reynolds.  1  P.  Wms.,  181 1—203, 700, 785, 788. 

190 1—782. 

Mitchell  V.  Great  Works  Milling  and  Man'f'g.  Co.,  2  Story,  648, 653 ... .  1—673. 

Mitchell  V.  Hawley,  16  Wall..  544,  546,  547 2—795. 

Mobile  r.  Kimball,  102  U.  S.,  691 1—388.960,1023. 

697 1—1027. 

Mobile  r.  Louisville  &  Nashville  R.  R,  84  Ala..  115,  126 1—592. 

Mogul  Steamship  Co.  v.  McGregor,  Gow  &.  Co.,  21  Q.  B.  Div.,  554 1—75,  204,  207,  62», 

689. 

23  Q.  B.  Div.,  598 1—75,  '204, 630. 689. 

[1892]  App.  Cas.,  25....   1-7.5,204,  689,  781. 

792. 

Monongahela  Mav.  Co.  r.  U.  S..  148  U.  8.,  312 1—740;  2—914. 

329,330 -.  1—855. 

336 1—934. 

Montague  &  Co.  v.  Lowry,  193  U.  8.,  38 2—459. 4«iO,  513, 527, 

583,663,804,998. 

Moore  v.  State.  96  Ten n.,  209 2—973, 

Mwres  v.  Bricklayers'  Union,  23  Wkly.  Cin.  Law  Bull.,  48 1—287. 

More  J'.  Bennett,  140  111.,  69 1—796. 

Morey  r.  Light  Co..  :i8  N.  Y.  Super.  Ct.,  185 2—98. 

Morgan  v.  Louisiana,  118  U.  S..  455,  465 1—1027. 

Morrill  r.  Railroad  Co..  55  N.  H.,  531 1—202. 

Morris  &  Essex  Railroad  r.  Prudden,  5  C.  E.  Green  (20N.  .1.  Eq.),  530. 

532 ' 1—590. 

Mom's  Run  Coal  Co.  v.  Barclay  Coal  Co.,  6.s  Pa.  St.,  173 1—91 ,  201, 440, 613. 

745.     766,     795; 
2—276. 

184,1S6.1S7 1—401;  2—469. 

Morse,  etc..  Co.  r.  Morse,  103  Mass..  73 2—831,1007. 

Mosher  v.  Railway  Co.,  127  U.  S..  390 2—88. 

Mount  Adams  *Si  E.  P.  Inclined  Ry.  Co.  r.  Lowery  (see  Railway  Co.  r. 
Lowery). 

Mugler  r.  Kansas.  123  U.  8..  623.  672 1—594. 

Mulcahy  i\  Reg..  L.  R.  3  H.  L..  306.  329 1—247. 

Munn  V.  Illinois.  94  U.S.,  113 1—4.33,738,740. 

Murphy  /'.  Christian  Press,  etc.,  Co.,  38  App.  Div.  426;  56  N.  Y.  Supp.,  .597.  2—1020. 

N. 

Nathan  r.  Louisiana,  8  How.,  73 1—637, 738, 739, 

National  Benefit  Co.  /'.  Union  Hospital  Co.,  45  Minn.,  272 1—702, 785. 

National  Distilling  Co.  v.  Cream  City  Importing  Co.,  86  Wis..  3.52.355  ..  1—8.58;  2—126. 

National  Enameling  &  Stamping  Co.  r.  Haberman,  120  F.,  415 2—820. 

National  Harrow  Co.  v.  Hench,  83  F.,  36 2—803. 

National  Harrow  Co,  /'.Quick,  67  F.,  130 2—803. 

National  Phonograph  Co.  t'.  Schlegel,  128  F.,  733 2—865. 

National  Tel.  News  Co.  r.  Western  Un.  Tel.  Co.,  119  F.,  294 2—731. 

Navigation  Co.  r.  Winsor,20  Wall,, 64 1—94,  204,  207,  786. 

66 1^43L 

68 1—75, 

Nesterv.  Brewing  Co.,  161  Pa.  St.,  473 1—613,74.5,766,795, 

Newburyport  Water  Co.  v.  Newburyport,  193  U.  8.,  561 2—549. 

New  Memphis  Gas  &  Light  Co.  r.  Memphis,  72  F.,592 2—607. 

New  Orleans  r.  U.S.,  10  Pet., 662 1—341. 

New  Orleans  Gas  Co.  V.  Louisiana  Light  Co.,  115  U.S., 650 1—688. 


^^VI  CASES   CITED. 

New  York  Bank  Note  Co.  v.  Hamilton,  etc.,  Co.,  28  App.  Div.  411. 50  N.  Y. 

Slipp.,1093 2—1020 

New  York  &  Chi. Grain  &  SUx-k  Exchg.  v.  Bd. of  Trade,  127  111.,  153  .,..  2-732 

New  York  &  N.  Ry.  Co.  v.  New  York  &  N.  E.  R.  Co., 50  P., 867 l-mi 

New  York,L.E.&  W.R.Co....Penn.,1.58  r.8.,431,439 1-740957 

New  York  Life  Ins.  Co.  r.  People,  195  111. ,430 2—920 

Nordenfelt  r.  Maxim  Nordenfelt  Co.,  [IBU]  App.  Cas., 535  ...... '....'.'  i _70C, 785, 788. 

567 1—786. 

[18831  1  CJi.,  680 2—1003  1008 

Norfolk  &  W.  R.  Co.  r.  Peiin.,  1361".  8., 114 i_737 

Norfolk  &  Western  Ry.  i>.  Sims,  191  U.  S.,  441 •—665 

Norrington  r.  Wright,  115  (T.  s.,  188.  2(M.. "] «_997' 

Northern  Securities  Co.  v.  V.  8..  19S  U.  S.,  197. .*'.".'.'."  2-086,     634,    666, 

746,  804. 

198 2—820. 

356.... 2—627.628. 

404 2—1002. 

O. 

Gates  V.  National  Bank.  100  T.  S.,  239 1—707 

Oil  Co.  r.  Adoue,  83Tex.,650 1—797. 

Olivera  v.  Insurance  Co.,  3  Wheat.,  193 .!!.".]....  1— 315! 

Ontario  Salt  Co.  r.  Merchants'  Salt  Co..  18  Grant,  Ch.,  m..............  1-205  789  790 

Oregon  Short  Line  v.  Skottowe.  162  U.  S. ,  490,  494 2— &47I      ' 

Oregon  Short  Line  &  U.  N.  Ry,  Co.  1;.  Northern  Pac.  R.  Co.,  61  F.,  1.58; 

51  P.,  465 ^ I jj^y. 

Oregon  Steam  Navigation  Co.  v.  WInsor,  20  WalL^M ......"....,......*  l_702;  2-324,874, 

1011. 

66 1-400. 

69 2-317. 

^— —  70 2—296 

Odginal  Package  Ciwe;  Leisy  r.  Hardin,  135  U.  8.,  100 •.  l -739 

Osbom  r.  Bank,  6  Wheat.. 815 *'*  i_iog' 

Osborne  r.  Detroit,  32  F.,  3ii.. ...........*...* 2—973 

OBcanyan  v.  ArnwCo.,103  U.S.. 261-268 .l].!!..!... ].......'!        1-847 

Ouachita  Packet  Co.  i».  Aiken.    See  Packet  Co.  r.  Aiken. 

Oxley  Stave  Co.  r.  Coopers'  International  Union  of  N.  Amer.,?2F.695.  2-8». 

F. 

Packet  Co.  r,  Aiken.  121  U.  S.,  444 |_74o  95- 

Packet  Co.  n  Catlettsburg.  105 U.  8.,  559 i_74o'967' 

Packet  Co.  t.  Keokuk,  95  IT.  S..  80 ""  1—739' 

Packet  Co.  r.  St.  Louis,  100  U.  8.,  423 1— 740^957 

Parisian  Com b Co.  r.  Exchange,  92  F. .  721 2—943. 

Birk  &  SonsCo.  r.  National  Wholesale  Druggists'  Assn.,  175  N.  Y.,  1. . . . .  i-mi  1015 

Parker  r.  Ormsby,  141  l.  8.,  81 2—546* 

Parkersburg  &  o.  R.  Transp.  Co.  v.  City  of  Parkersbui*,  107  U.  8.,  691.  l-»44  740 

Passenger  Cases,  7  How.,  283 1-739' 

Patterson  Case,  55  P..  605.  62»-632 1—3.58 

Patterson  t\  Kentucky,  97  U.  8.,  501 2—188 

Paul  «•.  Virginia,  8  Wall..  168, 183 l."*..."...]!"."]l!....  i-498  503 

Flaxton  v.  Dongla.H,  16  Ves..  240,  243 " ""  f—no 

Fmv.  Waggoner.  5  Hay w.,  19 »— 312 

Pearsallr.  Great  Northern  Ry.  Co.,  161  U.  8.,  646,671  ..."".......'**.*.''  8-222,263,452,459, 

_  461,488,506. 

Fttiiwnr.  Yewdall.  9511.  8.,  294... I— 359 

Peck  If.  Burr.  10  N.  Y..  2»4 .."!...]..!!.!..."       1—853 

Peels  w.  Saal field.  [1892]  2 Ch.,  149 1—786 

Pembina  Mining  Co.  r.  Penn..  125  U.  8.,  181 *™. "*...".., ]]!.!!.  2—914 

Pennsylvania  r.  Wheeling,  etc..  Bridge  Co.,  13  How.,  518 ...'..[  t-ui 


CASES    CITED. 


XXVII 


Pennsylvania  K.  Co.  v.  Commonwealth,  7  Atl.,  368,371 2—222. 

Pennsylvania  R.  R.  Co.  v.  Hughes,  191  U.  S.,  477 2—560. 

Pennsylvania  R.  R.  Co.,  r.  Knight,  192  U.  S.,  21 2—667. 

Pensacola  Tel.  Co.  r.  Western  Un.  Tel.  Co.,  96  U.  8.,  1 1—68, 3.54,3.55,737; 

2—515. 

Pentleton  r.  Rickey.  32  Pa.  St.,  58,63 1—5. 

People  t\  American  Sugar  Refining  Co.,  7  Rey.  «&  Corp.  (Cal.),  83 1—257. 

People  V.  Batchelor,  22N.  Y.,  134 1—624. 

People  V.  Barstow,  6Cowen,  290 2—186. 

People  r.  Butler  Street  Foundry  Co.,  201  111..  236 2—1033. 

248 2—969. 

People  V.  Caldwell,  71  N.  Y.  Supp..  6.54 2—87. 

People  c.  Chicago  Gas  Trust  Co.,  130  111.,  268,  292,  297 1—404,470,799: 

2—222. 

People  V.  Ferry  Co.,  68  N.  Y.,  71 1—342. 

People  '.  Fisher,  14  Wend.,  1 1—443. 

9 1—89,201.202. 

18 1—118. 

People  r.  Gillson,  109  N.  Y..  389,  398 2—276. 

People  V.  Mather,  4  Wend. ,  230,  254 2—110. 

People  *•.  Milk  Exchange,  145  N.  Y.,  267 1—799:  2—197. 

People  r.  Miner,2  Lans,,396 1—342. 

People  V.  North  River  Sugar  Refining  Co.,  54  Hun. ,354 1—202, 257. 

366 1—799. 

People  V.  Sharp,  107  N.  Y.,  427 2—969. 

People  r.  Sheldon,  139  N.  Y.,  251,264 1—795. 

People*.  Vanderbilt,  26  N.  Y.,  287. 1—342. 

28N.  Y.,  396 1—341,342,586. 

People  ex  rel  Tyroler  r.  Warden,  1.57  N.  Y.,  116 2—87.  88. 

Perkins  r.  Lyman,  9  Mass.,  522 1—204. 

Perkins  v.  Nichols,  11  Allen,  542 1—212. 

Permoli  r.  First  Municipality,  3  How.,  589 1—820. 

Petri  r.  Commercial  Bank  of  Chicago,  142  U.  S.,  644,  650 1—67.5. 

Perry  r.  Gibson,  1  Ad.  «k  Ell.,  48;  3  Nev.  &  M.,  462 2—973. 

Petit  V.  Minnesota.  177  U.  S.,  164 2—146. 

Pettibone  r.  U.  S.,  148  U.  S.,  197 1—265.286. 

203 1-455. 

Philadelphia  r.  13lh  »fc  15th  Street  Passenger  Railway  Co.,  8  Phil.,  648.  1—586. 

Philadelphia,  et<'.,  Co.  v.  Howard,  13  How.,  307,  344 2—997. 

Phippen  r.  Stickney.  3  Mete,  384,  389 1—213,  803. 

Phipps  V.  J<mes,  59  Am.  Dec.  711  (20  Pa.  St.,  260) 1— €23. 

Pickard  r.  Car  Co..  117  U.  S.,  34 1—737. 

Pidcock  (.  Harrington.  64  F.,  821 1—623:  2—17.79,80, 

237. 

Pierre  c.  Fuller,  8  Mass.,  222 1—785, 

Pigot'sCase,  11  Co,  Rep.,  26b,  27b 2—874. 

Pine  River  Logging  Co.  v.  V.  S.,  186  U.  S.,  279;  89  P.,  907 2—997. 

Httsbtjrg  Carbon  Co.  r.  McMillin,  119  N.  Y..  46 1—613. 

Pittsburg  &  Sn,  Coal  (^o.  r.  Bates,  156  U.  S.,  577 , 1—978. 

Pittsburg  &  Sn.  Coal  Co.  r.  La.,  166  U.  S.,  590 1—739. 

597. 1—957. 

598 1—981. 

Pleasjuits  V.  Fant.  89,  U.  S.,  116 2—993. 

Plumley  r.  Mass.,  155  U.  S..  461 1—739. 

Porter  r.  Sabin,  149  U.  S.,  478    2—78. 

Post  V.  V.  S.,  161  l'.S.,583 2—813. 

Postal  Tel.  Cable  Co.  v.  Alabama,  165  U.  S.,  482.487 2—546,547. 

Powers  r.  Hurmert.  .51  Mo,  136-13K ". 2—845. 

Pratt  V.  Paris  Gaslight  &  Coke  Co.,  168  U.  S.,  255,  258 2—548. 

Prescoit  it  A.  C.  R.  Co.  r.  Atchison,  T.  &  S,  F.  R.  Co.,  73  P..  438 1—609. 

Printing,  itc.  Registering  Co,  v.  Sampson,  L.  R.  19  Eq..  462 1—688,  70s. 


jL.Jk A  III 


CA8E8   CITED. 


l*romy  r.  Drtiper.  2  story.  19».., t— 972 

ProvUleiue  Bunk  *•.  Billings.  4  Pet..  614,  5iH........*.!L"!"..'"'".'.  «— 9!.i 

I'nllmHn  Car  Co.  r.  Miawiiri  Pac.  Co..  116  U.  8..  m,  m ---w 

Piiterbanith  v.  Smith,  m  111..  19» 1— asy! 

Queen  c.  Brye5,  1  B.  vte  S.,  311 ^_y^ 

Queen  r.  Hertford  College,  :JQ.  B.  D.,  6i*8.  707 ..............!  I-«7:/ 


R<iee  r.  Ettston  .v  .\ rnboy  R.  Co.,  62  X.  J.  Law,  .W a_«4i 

Radieh  i\  Hutihins,  95  r.  S.,  210,  218 *  |_Kfio 

Rttilrortd  C'nmm.  r.  RnNeiibttiim,  180  F..  110 i—H'26 

RailnoHd  (•(».  r.  Collins.  JO(iii..  582 |"_.jo'>  799 

lailroadCo.  r.  FiiUtT.  17  WhI1.,o60.. '"".'^" ".'.'.'. i-nl'^ 

Railroad  Co.  r.  Hazen,  Hini..  3ti 1—;^, 

Railroad  Co.  r.  Hiiscn.  9.1 1*.  s. .  46ft,  472 ........  2— 4f)<; 

469 , ^  «»— 99s 

RailrwdCo.  »•.  MH'onnell.  82  F,.  65 ....".'. t-m  >*x  90 

Railrnad  Co.  r.  Maryland.  21  Wall.,  45t!,  473 '..."".  "-"'"!*^.^!  2-478  -soa  oW 

Railroad  Co.  /.  Richmond,  lit  \Vall..»l [.._  [-^is!  1029. 

5W I— 102:i 

Ealhvny Co.  /•.  Becker.  32  F..  849 ,_73y 

Railway  (\..  r.  chirk,  7.'i  F..  76:  74  F..  362 [,["[  s_.>2 

Railway  Co.  «.  Good  ridge,  149  U.  8.,  680 '  i—^\ 

Railway  €0.  r.  Humej*.  ll.i  U.  S..  M2 f—is 

Railway  Co.  r.  Lowery.  74  F..  463 ^ .  I— Mti  y'«) 

Railway  Co.   r.  .McBride.  141  U.  8..  127, 130  . . . .  ^ ! !  ]  1  ] .  T.  T. ". '  ]  ]  1 T.  1 i  -loilj 

Railway  Co.  r.  .Methven,  21  Ohio  St..  !m .»_iy 

Ramsey  r.Tempk.  3  Lea,  2.W.. ^_3,o 

Raniiier.  Ir\iue.  7  Man.  &  G..  960,  «B 1—703 

Raymond  r,  Leiivitt.   6  Mieh..  447 .'.'.'.'.'.''.'.'.['.'.'.'.'.■  1—407 

Reagan  r.  Fanners'  I^oan  &  Trast  Co.7 irvl  F.  S..  362 *..... 1-742 

Reeiorr,  Lli»«»onib,  141  U.  8.,  567 ■»— 3ie; 

Red  r.  CityCouneil.2jGa.,  8%.. '.".'.' J.'.'.'.'^.'.'.'^.'.  i-9S 

Ri-d  River  Cattle  Co.  i\  Ntn^lham.  137  F.  S..  632 '.'.I'. I— 66.V  *— 316 

Reed  r.  Smith.  40  F.  .H>2 .!....l 1—448   " 

Reg.  r.  MtCulky.  2  .MiHMly.  Cr.  Cas..  M ....'' 1—175  353 

Registering  Co.  r.  .Sampson,  L.  R..  19  Eq..  4»'2 |->13 

Reiche  t\  Smythe.  13  Wall..  164 /  '   |_ioi 

Rex  r.  Eeeles,  3  Doug..  3;{7 1—440 

Rex  r.  .«haftsb»ir.v.  8  Howell'sSt.  Tr..  759 *.".*. ••— ,s9-» 

Rex  r.  Turner.  13  East..  228.  231 ......................I  [  iZmi 

Riee  r  Railnmd  Co..  1  Black.  379 ....."......[^."      1— 353 

Riehanis  >\  Am.  De)*k  &e.  Co.,  87  Wis.,  otti '..'."'.'.'.'. '.]'.""  1—702 

RiuhardM  c.  Hugh,  .>1  L.  J.  Q.  B..  361 '.".'.'.'.'.'.'.'.'.  f- 973 

Riehards  r.  Seating  Co..  87  \Vi.s...i03 " 1— 7a5 

Rirliartmm  r.  Buhl.  77  Mich., 632 ...".*..."..*.  i —446  799-  fi— 197 

470. 

635,tJ57,660.. i_4or, 

Richanlson  >\  Melli.><h.  2  Biiig.,  252 '    i_i9j,' 

Riddick  «.  Governor.  1  Mo.,  147 ...!!!.^]...l  1—622 

Rio  Grand.-  Railroad  Co.  r.  Brownsville.  45  Tex.,  8« ..!.....[!....  I-0H6 

Robhins  r.  Taxing  Dist..  I'iOF.  S.,4«9 ....'.'.'.'. [['.]['.'.  I— 737,7n9,9♦14■ 
i— .'>9,«i0. 

490 I— 73»;. 

J—  4M S— 497. 

^^ 1-397. 

"*^ : 1— 68.«).->:  f— 198 


CASES   CITED. 


JL  a1  A 


Robertson  r.  Cea.^e.  97  C.  S.,  M6 2—546. 

Roljertstm  /•.  Parks,  76  Md.,  lis,  135 2—304. 

Robinson  r.  Hibbs.  4S  111..  408.409,410 2—131. 

Roehm  v.  Horst.  178  l".  S..  1,21 2—997. 

Roller  Co.  v.  Cushman.  143  Mass..  35;i 1—93. 792. 

Rorke  r.  Board.  *^  Pac.  881-X83  (99  Cal..  19t>) 1—630. 

Roundtreer.  Smith.  108  V.  S..  '269 1— M9. 

Rousillon  I'.  Kousilhtn,  14  Ch.  Div.,  351 1 — 785.  7sh 

363 1— -205. 

365 1—213. 

Rowand  v.  Commonwealth.  82  Pa.  St..  4a5 2— 89«;. 

Rowe  r.  The  Granite  Bridge  Corf»t)ration,  21  Pick.,  340.  347 1—590. 

Rowena  Clarke  v.  Central  R,  K.  and  Banking  Cf».  of  Ga..  50  F.,  338 2—747. 

Royer  v.  c:ou|X' .  2 J  F. .  3>s 2—21 1 . 

Rubber  Tire  Wheel  «'o.  /'.  C<»lumbia  Pneumatic  Wagon  Co.,  91  F.,  978.  2—859. 

Rubber  Tire  Wheel  Co.  r.  Victor  Rubl>er  Tire  Co..  1*23  F.,  85 2—859. 

Rupp,  Wittgenfeld  Co.  r.  Elliott.  131  F.,  730 i—m^. 

Russell  r.  Farley.  ia5  V.  S..  4:«.  43« 2— 4505. 

Rutherford  r.  .Metcalf,  5  Hayw.  (Tenn.).  5x.  61.  62 1—339. 

Ryder  r.  Holt.  12.s  C.  S..  525 1—439. 

s. 

Saddle  Co.  v.  Tro.xel.  9s  F  ,  62t) 2— 4>9. 

St.  Louis  V.  St.  Louis  JJas  Light  Co..  70  Mo..  69 1— (-88. 

St.  Louis  »'.  W.  r.  Tel.  Co..  148  U.  S..  92 1—740,957. 

8t,  Louis,  etc.,  R.  R.  Co.  r.  Wear.  135  Mo.,  230,  265 2—839. 

St.  Loui-s.  V.  ifc  T.  R.  R.  Co.  r.  Terre  Haute  &  1.  K.  Co..  145  V.  S..  393..  2—714. 

St.  Matthews  Bank  v.  Fidelity  Co.,  105  F..  161 2—972. 

St.  Joseph  r.  Porter,  29  Mo.  App. .  <'»U5 2 — 850. 

Salt  Co.  V.  Guthrie,  35  O.  St.,  tUMi 1—92, 202,  766. ' 

Sandford  r.  Nichols.  Vim  Mass..  iS*; 2—816. 

Sands  r.  Manistee  R.  Imp.  Co.,  123  U.  S.,  288,  294.  295 1—710, 955. 959. 

Sanitary  Reduction  Works  r.  California  Reduction  Co.,  94  F.,  693 2—607,824. 

Santa  Clara  Co.  v.  Southern  Pac.  R.  R.,  118  U.  S.,  394.  39(» 2—914. 

Santa  Clare  Mill  tt  Lumber  Co.  r.  Hayes,  76  Cal.,  387,  390 1— 4a5:  2—470. 

Saratoga  Bank  r.  King.  44  N.  Y..  87 1—403. 

Saville  v.  Roberts,  1  Ld.  Raym.,  378 1 — 135. 

Sawyer  r.  Hoag.  17  Wall.,  6'20 1—321. 

Schooner  Exchange  v.  McFaddon.  7  Cr.,  116,  136 1—578. 

Schooner  Indu-^try,  1  Gall..  114, 117 2 — 186. 

Schollenberger  r.  Penn..  171  U.  S.,  1 2-998. 

Schwalm  v.  Holmes,  49  Cal.,  6(»5 2—276. 

Scott  r.  Donald,  165  U.  S.,  58 1—739. 

Scott  r.  Neely,  140  U.  S..  106 1—359. 

Sea  right  r.  Stoke.s.  3  How.,  151.  169 1—346,582. 

Secor  V.  Railrotid  Co.,  7  Bis.s.,  513  1—283. 

Shafer  r.  Wilson,  44  Md..  268,278 2—98. 

Shaftsburj-  r.  Arrowsmith,  4  Ve.s.,  66 2—908. 

Seldonetal.  v.  Wabash  Ry.  Co.,  105  F.,  785 2—846. 

Shepard  v.  Milwaukee  Gas  Co.,  6  Wis.,  539 1— 6s.s. 

Sherlm-k  r.  Ailing,  93  V.  S.,99 1—981. 

99,103 1—408,957. 

100 l-€39. 

Sherry  r.  Perkins,  147  Mass..  212 1— 108,2S4. 

Shields  r.  Barrow,  17  How,,  130 1—626. 

Shfewsbury  &  Chester  R.  Co.  i'.  Shrewsburj-  R.  Co.,  1  Sim.  N.  S.,  ♦410. 

♦426,  *427,  *432 2—607. 

Simmer  v.  City  of  St.  Paul,  23  Minn.,  408,  410 2—97. 

Simmons  Medicine  Co.  v.  Simmons,  8]  F.,  163 2— 100«. 

Singer  r.  Walm.sley,  Fed.  Cas.  No.  12900;  1  Fish.  Pat.  Cas.,  558 2—862,865. 


%. 


^^^  CASES   CITED. 

Sinnot  r.  Davenport.  22  How.,  223,238.... ^^^gg 

227,243 a 1Q«  j7»; 

mmhelmerr.  Gannent  Worker..  77  Hun..21.r  2.  N.  Y.'supp:."32i':;::  i-92 

8.  Jarvm  Adams  Co.  v.  Knapp.  121  R,  34 !_Jt 

Skinkerr.  Heman.  148  Mo.,  349 ']] l^^; 

Skrainka  /•.  .Scharritighansen,  8  Mo.  .\pp..  .V22  rll^ *"   .JT'.v^ 

eiauter  r.  Whitelock,  12  Iml,  338 l~^' 

Smalley  r.  Greene,  52  la.,  241  ""l!:' 

Smith r.Aiaimma.  124 U.S.. 465.473 ::::;:::::::::::: tiSoo«,  *  .^7 

Smith  r.  Biven.s.  56  F..  3^32 !~ori         

Smith  J'.  Oil  Co..  86  F.,  359 l_y' 

Smyth  f.  AmeM69 U.  S..  466 ."" :    !?'.,.    ,,, 

r,j S— 90,  74«.  75-1. 

Smyth*  r.  Fiske,  23  Wall..  374,  3S0 jZtT.  -„« 

Snow  r.  Wheeler,  113  Mas*.,  179. 185 i_-^'      ' 

Soda  Fountain  Co.  r.  Green,  69  F.,  333 .' a_iVfiQ  .«o 

South  Carolina  v.  Seym.mi,  153  U.  S.,  3.=i3,  357  1-4(m 

Southern  Indiana  Exp.  Co.  v.  U.  S.  Exp.  Co.,  88  F..  659.'." .".'.' .";;.".'".".'.".■  2-80.287. 

^     .^        ,,  92F.,1022 2—80 

Southern  Pac.  Co.  v.  Denton,  146  U.  S.,  202.  2(« ilTfun  in«M 

Southern  Pac.  Co.  v.  Earl,  82  F.. 690 i-gftT' 

SoulhernPac.Co.  F.Hamilton.  54  F.,  468..  l_^^' 

Speer  J'.  Skinner.  35  111..  282 J    -T 

Spring  Co.  V.  Knowlton.  103  U.  S.,  49 -..".','.**.* ^ZS'.  s,u 

Springfield  r.  Connecticut  River  Railroad,  4  Cash.,  63. .' ! I-.w.'      ' 

Stafford*.  Ingersol,  3  Hill.,  38... \Z^ 

Stamford  v.  8tamf<.rd  Horse  Railroad  Co.,  .56  Conn.^  381 i    vji  \ai 

Standard  Fire  I»roofing  Co.  v.  St.  Louis  Co. ,  177  Mo.  559      *    innii 

Stanton  r.  Allen.  5  Denio.,  434 t^l^  .n..  -«« 

Stanton  r.Embry,  93  U.S.,  548 [[ lzf{^ 

Star  Brewery  Co.  v.  United  Breweries,  121  F.,  713 --inao 

Starr  v.  Mayer,  60  Ga.,  546 l_qZ 

State  i\  Adams,  70  Tenn.,  647 »— 896 

State  V.  Anderson,  5  Kan.,  90,  114 '  T    ^' 

State  r.  Ancker,  2  Rich.  Law,  245 \Z^' 

State  t'.  Bryant.  90  Mo., 534 !..."...."' iZn,^' 

State  r.  Dayton  &  Southea.stern  Railroad,  36  Ohio  Stl,  4sV l-,586 

State  e.x  rel.,  etc.,  v.  Delaware,  etc..  Co..  47  F.,  688      ••—isk 

State  f.  Glidden.  55  Conn.,  46 7    .^\,, 

^g 1—290.441. 

Stater.  Goodnight.  70  Tex.,  682..!.....*.''.*'.' J^^' 

State  V.  Goo«l will,  lO  S.  E..  285.  286  (33  W.  Va.,  179) »_^fi 

State  t'.  Grant,  79  Mo..  113 •—84- 

Slate  ».  Harpers  Ferry  Boat  Co.,  16  W.  Va.,  sij*.  873 i_.«q 

State  t».  Hope.  100  Mo.,  347 2-97^ 

States.  M<rahill,30.\.  W.,  .'V>3(72Ia.,  Ill) ,_Zl' 

State  t'.  M^g^ath.  44  N.  J.  L..  227 atZ' 

States.  March,  lJonc.M(X.c.).  526 IZq 

State  r.  Neirraska  Distilling  Co..  29  Neb.,  700 " i_44«  Voa 

State  r.  Quarles.  13  Ark..  307 iZqla 

State  r.  Schuchmann,  133  Mo..  Ill [ l_7^' 

State  v.  Smith,  100  -V.  W..  40.  42  ( 124  la..  834)  . .      I_q^' 

State  «».  Smith,  .Meigs,  99.. 2— sqr" 

State  V.  Standard  Oil  Co..  49  O.  St.,  187.  .".'.*.".' *."' ,_-!!:  ,,    ,„- 
8tate  r.  Stewart,  69  Vt.,  273 :  !Z'L7 

2S6  '90,441. 

State  V.  Terry.  80  Mo..  368 -...l."]*!!!.]]      fiZsw 

State  *;.  Thoma.s  98  N.  C,  599 ] ftZono 

State  ».  Wolcott.  21  Conn.,  272.  280 2— «94 

State  I?.  Weutworth.  65  Maine,  234,  241 ......!.... 2—920 


CASES   CITED. 


XXXI 


State  of  Pennsylvania  r.  Wheeling  Bridge  Co.,  13  How.,  518,  564 1—586,  587. 

State  Freight  Tax  Case,  15  Wall.,  232,  275 l—ms,  1023. 

272 1—637. 

Steamship  Co.  v.  McKenna,  30  F.,  48 1-290. 

Steamship  Co.  r.  McGregor.    {See  Mogul  Steamship  Co.  r.  McGregor, 

Gow  &  Co.) 
Stearns  Co.  v.  St.  Cloud,  Mankato  and  Au.stin  Railroad,  36  Minn.,  425..  1— .586. 
Stephens  &  Condit  Transp.  Co.  v.  Central  R.  R.  Co.,  34  N.  J.  Law,  280. .  2—641. 

Stevens  t'.  Pratt,  101111.,  206 2—137. 

Stewart  i'.  Transportation  Co.,  17  Minn.,  372,391 1—201,213. 

Stilwell  r.  Wilken.s,  .Jac,  280 1—5. 

Stockard  v.  Morgan,  185  U.S.,  27 2—998. 

Stockton  V.  Railroad  Co.,  .50  N.  J.  Eq.,  52 1—799. 

Stockwell  r.  U.  S.,  13  Wall.,  351 2—304. 

Stock  Yards  Co.  r.  Keith,  139  U.  S.,  128 1—794. 

Stoutenburg  ?•.  Hennick,  129U.  S.,  141 1—805;  2—60. 

Straus  V.  Amer.  Publishers'  Assn..  177  N.  Y.,  473 2—772. 

Strait  r.  Harrow  Co.,  18  N.  Y.  .Supp.,  224,233 1-446,745. 

Strait  r.  Harrow  Co.,  51  F.,  819 2—9,69,  125,  800, 

823. 

Summers  r.  Moseley,  2  Cromp.  &  Mee-s.,  477 2—904,973. 

Supreme  Lodge  v.  Wilson,  66  F.,  788 1—630, 

Swan  r.  Chorpenning,  20  Cal.,  182 1— 103. 

Swan  i\  Scott,  11  Serg.  &  R.,  155 1—854. 

Swann  r.  Swann,  21  F.,  299 1—200. 

Swift  &  Co.  t'.  U.  S.,  196  U.  S.,  375,  396 2-^22,851. 

T. 

Taddy  &  Co.  v.  Stevens  &  Co.,  20  T.  L.  R.  [?]  102,  Eng.  Ch.  D 2—1020. 

Tainter  r.  Clark,  5  Allen,  66 1—212. 

Tallis  «'.  Tallis,  1  El.  &  Bl.,  391 1—203,213,786. 

Taylor  t'.  Blanchard,  13  Allen,  370 1—786. 

Telegraph  Co.  v. Crane,  160  Mass..  60 1—793. 

Telegraph  Co.  v.  Texa.s,  105  U.  S.,  460,464 1—668,737. 

Temperton  y.  Rus.sell,  [1893J  1  Q.  B.,  715 1—289. 

Temple  v.  Com.,  75  Va.,  892 2—110. 

Tenneasee  v.  Davis,  100  U.  S.,257 1—578. 

Tennessee  v.  Union  &  Planters'  Bank,  152  U.  S. ,  454, 461 2—547. 

Texas  r.  White,  7  Wall.,  700,725 ." 2—476.  , 

Tenn.  Coal  Co.  v.  Waller,  37  F.,  M5,647 2—969. 

Texas  &  Pacific  Ry.  Co.  r.  Cody,  166  U.S.,  606,608 2—548. 

Texas  &  Pac.  Ry.  Co.  v.  Interstate  Commerce  Com.,  162  U.  S.,  197 1—696,840. 

219, -220-  2—1025. 

Texas  &  P.  Ry.  Co.  v.  Southern  Pac.  Ry.  Co.,  41  La.  Ann.,  970 1—92. 

Texas  Standard  Oil  Co.  v.  Adoue,  83  Tex.,  650 1—407. 

Thermometer  Co.  v.  Pool,  51  Hun,  157,163 1—94,200,206. 

Third  St.  &  Suburban  Ry.  v.  Lewis,  173  U.  S.,  457,460 2—348. 

Thomas  v.  Miles'  Adm'r.,  3  Ohio  St.,  274 2—317. 

Thomas  I'.  Railway  Co.,  62  F.,  803 1—537.      • 

817 1—467. 

8'22 1—4.58. 

lOlU.  S.,  71 1—98. 

Thomas  I',  Richmond,  12  Wall.,  349,355 2—714. 

Thompson-Houston  Elec.  Co.  v.  Jeffrey  Mfg.  Co.,  83  F.,  614 2—943. 

Thornley  V.  U.  S.,  113  U.  S.,  313 1—353. 

Thorpe  V.  Adams,  L.  R.  6  C.  P.,  135 1—710. 

Tisdalev.  Munroe,  3  Yerg.,  320 2—512. 

Todev.  Gross,  127  N.  Y.,  480 1—785;  2—1008. 

Toledo,  A.  A.  &  N.  M.  Ry.  Co,  v.  Pennsylvania  Co.,  54  F.,  730, 738 1—290, 

Trade-Mark  Cases,  lOOU.  S.,  22 1—439. 


XXXII 


CA8E8   CITED. 


Tmniportiitlon  Co.  r.  Parkfrsburg.  lOT  U.  8..  «S»1 1-957  95U 

Trust  €0.  i.  Clark, 92  F., 293, 29ti, 298 '*'  2_97  '      ' 

Tulk  r.  Molmy,  2  Ph..  774 * i—im 

Tuttle  r.  Matthews.  28  F..  9» ...............]...        I— fti 

Tyroler,  P«?ople  ex  rel.  i-.  Warden.  Ift7  N.  Y..  116.*. "17.. ""[..l]]].].*.  1-^7,88. 

Union  P«e.  Ry.  Co.  r.  Wyler.  158  U.  S..  286 f^^-j 

U.  8.  r.  Addyxtoii  Pipe  &  Steel  Co..  78  F..  712,  71« *  1—739'  760. 

®^*'"271 1—980,991,992: 

f-61,    62.    278. 
817. 576, 1004. 

279.... 1—1008:  2—161. 

281 S— 323,820. 

282.... 2_|7, 

^®* «— 27«. 

{See  itim  Addystoii  Pipe  and  Steel 

Co.  ir,  IT.  8.) 

0.8.  r.  Amedy.  11  When t..  392,  412 t-^MS. 

U.  8.  r.  American  Bell  Tel.  Co..  159  U.  8..  (i48,  558 """"**.]'!..    «-4i7 

0. 8.  r.  Bell  Telephone  Co..  128  U.  8..  315,867 i—ag^'gig 

U.8.t».  Anon.  21  F.,  761,  768 1— 3.W 

0.8.  p.  AnuHtrong,  2  Curt.,  446.  248 |_g4  jjjg 

U.S.  1".  Babemk.SDUI..  586... i—^w 

U. 8.  V.  Bell. 81  F.,  830 , IZlZll]]]'.'.'.'.'.'.'.'."'.'  S— 972 

U. 8.  w,  Beviins.  3  Wheat.,  886 '.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.  i— k6o 

U.  S.  If,  Brawner,  7  F.,  86 | |-  L 

U.  8.  P. Britton,  107  U.  a. 8B5.  670 '. .'.'.'.'.'.lll'.'.'.'Z'.'.'. l-(i5'l75 

U.  8.  r.  Britton,  108  U.  8..  199-206 i_^ 

U.  8.  If.  Cadwallader.  60  F..  677 «_«.« 

0.  8.it.  Caril.  10SU.8.,  611 i_^^ 

U.  8.  V.  Clark,  Fed.  Ca«.  No.  14805 1— 3tM  ,536 

U.  8.  «.  Coal  BealeW  Abhi.,  85  F..  252 ....^.."^Z"..  I-9H0.1007;  £-62, 

276  **7H 

U.  8.  V.  Coolidge,  I  Wheat.,  41§ |_^  '*    * 

IJ.  8. ».  Coombs,  12  Pet,,  72 i— a'ia 

U.  8.  w. Coppersmith,  4  F.,  19H ..].'."'.". |_64  19^ 

0.  8.  f.  CruikDhank,  92  IJ.  8.,  642.  568 1..........................  I— ^i 

~~-~— ~  008'  ••••-••••••..•.........,,..,,.,,.,.,,,.   1__7R 

U.  8.  f.  Dcbn  («ee  «l«  In  re  Debs)  64  F.,  763 1. '!"!*'  1—459. 

761 1—562, 

?i4 1— 84i. 

65F.,211 '   1—562 

U.S.  i».  K.  C.  Knight  Co.,  60  F.,  306,931 1—357. 

156  i:.  8.,  1 1—429,434,642,644, 

668,680,681,735, 
738.806,810,960, 
1031,  1033; 
Jf— 52,  72,  168,  189, 
199.225,256,817, 
322,337,469,460, 
497,531.573,668, 
770,820. 

** 2-505. 

" 2-30,505. 

^^ 1—737:  2—668. 

^® 1—802,957;  2—116, 

585. 
" 1-601;  2—524,526. 


CASES    CITED.  XXXIH 

U.  8.  v.  Elliott,    62F.,801 i_^^ 

64F.,27 ZZZZ;;i-S6L 

U.  8.  V.  Fowkes,  49  F..  50 | 17  53 

U.  8.  V.  Freight  Association,  166  U.  S.,  290.    (Sec  U.  8.  v.  Trans^Mo. 
Freight  Assn.) 

U.  8.  V.  Greenhut,  60  F.,  469 1—257 

U.S.v.Hess,  124  U.S.,  483 !..!.]].!!!!!....!!!!  1—173 

U.S. V.Hill,  1  Brock.,  156 2—892. 

U.S. V.Hopkins,  82  F.,  629 1—771 

U.S. V.Howell,  11  Wall.,  436,437 !!!!!!!.!!....  1— 175 

U. 8. V. Hudson,  7Cr.,  32 .!!!!!...!..!  1—64  594. 

U.8.r.JellicoMtn.Coal&CokeCo.,46  F.,432. 1—201,257,770  818 

980, 1006;  2—276, 
278 
U.8.v.JointTraffic  A.ss'n,  171U.S,505 2—61,92,  189,  221 

225,267.278,469. 
460,510,527,746, 
746. 

5^ 2—244,585. 

567..... 2-165. 

^68 2—162,166,276,277, 

282,286,582,783, 
840,866. 

569.571 2-468. 

572 1—1025. 

„  ^   ^  576,577 2-276. 

U.  8.  V.  Kane,  23  F.,  748 1—283 

U.  S.  v.  Kilpatrick,  16  F.,  765 ...!.. !!!!.!!!.."! 2—810 

U.  S.  V.  Kimball,  117  F.,  156,161 .-!.-!!'.". T.!. 2-«96 

U.  S.  r.  Kirby,  7  Wall.,  482 1—305  707. 

486 I |5g 

U.  S.  r.  Lee,  106  U.  S.,  196, 220 2—479 

U.8.V.  Mooney,  116  U.  S.,  104,  107 .."!!!!]]!!!!.  1—707 

U.  S.  V.  Morris,  14  Pet.,  464,475.... !.!..]]!!...."     2—486 

U.  8.  V.  Morsman,  42  F.,  448 '][[ 1—866 

U.  8.  V.  Nelson,  62  F.,  646 !... "!]]..!!!!!!.!     1—182  434 

U.  8.  r.  Northern  Secur.  Co.,  120  F.,  721 2— 260,278  627. 

726 2—276,286. 

193U.  8.,  197.. 2-686,034,666,746, 

804. 

198 2-«2o! 

356 2—627,628. 

■ 404 2 1002 

U.  8.  V.  Northwestern  Exp.  Co.,  164  U.  S.,  686 2— 915^ 

U.S.,.   Palmer.  3  Wheat.,  610 : '.'.'.'.'.".".".'  1-430,' 705. 

630 1—706. 

631 I 7^5 

U.  8.1.  Patterson,. 5.5  F., 606 ■..:";":;;:;  1-291; 302, 469. 

U.  8.  V.  Pridgeon,153  U.S.,  48 1—698 

U.  S.  r.  Reed,  2Blatch.,435,449 2—895 

U.  S.  V,  Rogers,  23  F., 658 ';.."!."!.]!!!!!!!.!]!!  1—47  58 

U.  8.  V.  Saline  Bank,l  Pe't.,100 2—900 

U.S.  V.San  Jacinto  Tin  Co.,  125  U.S.,  273, 286 ]!!.!!!...!!...!         1—583  619 

U.S.  V.  Sanborn,  28  F.,  299, 301, 302 '"'  2—972 

U.  8.  V.  Sanges,144  U.S., 310 ....I........  l—ig 

U.  S.  V.  Simmond8,96U.S.,360 1— €6  17^^ 

U.  8.  V.  Speed,  8  Wall, 77,84 .'..'.".''*.'.'.*'.'.*.'.**.*.'." 2-997 

U.S.  V.  Swift  «fe  Co.,  122  F.,  534 2—m 

U.  S.V.Terry,  39  F.,  355 l"-'.l"!".'."!.*!."!"  2-896! 

21220— VOL  2—07  m in 


XXXIV 


OASES   CITED. 


V.  8.  v..  Tmiis^-Misroari  F»eif ht  Awn..  fi8  F..  440 i_i82, 300, 618. 

S8F.,ii8 1-360,430,605,618, 

647. 

166  U.S.,  290 1-7A781,842,8.'>2, 

923, 925, 928,  eSl, 
936:  «  — 51,  91, 
162,189,221,225, 
244,256.278,322, 
469,460,009,527. 

*  «11 «— 316. 

312 1-740. 

813,826 1-^11. 

323 2-167. 

327 1—762. 

328 2-585. 

329 2-873. 

381 2-638. 

382 2—481,638. 

389,840,342 2-276,286. 

341 2 167,746. 

U.  8.  V.  Tbonifts,  S6  P.,  881 '  i— aos 

U.  8.  r.  Thompson,  12 Sawy.,  155.  31  P..  331 .'...7... ....!....  1-460 

U.  S.  V.  Trumbull,  46,  F.,  755 1—65. 

U.  8.  V.  Tynen,  11  Wall.,  96 ."*"["*!"!![]]  1-820 

U.  8.  V.  Union  Pacific  Railroad  Co.,  91  U.  8.,  72,  79................  ....  1-177  678  705 

U.  8.  V.  Waddell,  112  U.  8.,  76 1-173174 

U.  8.  V.  Walsh,  5  Dill.,  58 [['[[  i_4^' 

U.  8.  V.  W.  U.  Tel.  Co.,  50  P.,  28,  42 ^. ....... .......  l-«47. 

U.  8-  r.  Williams,  1  Cranch  C.  C.  178 2—972 

U.  S.  V.  Wlltberger.  5  Wheat.,  76.  96 "!.............!!'.  2-485. 

U.  8.  V.  Worlcingmen's  Amalg.  Council,  54  P.,  994 1—202, 266, 291, 360. 

W5 1-302,459. 

1000 1-202.459. 

57F.,86 1—266,308,360. 

U.  8.  Chemical  Co.  v.  Provident  Chemical  Co.,  64  P.,  946 2—276. 

U.  8.  Consol.  Seeded  Raisin  Co.  v.  Griffin  &  Slcelly  Co.,  126  P.,  364.. .1!  2—863,867 

366 8-865. 

U.  S.  Exp,  Co.  r.  Henderson,  69  la.,  40 i-Wi 

Urmston  v.  Whitelegg,  63  L,  T.  (N.  S.),  466 7.1.......[.!!  1—798. 

Underwood's  Case.  2  Humph.,  48,  49 ...'■'*.".*.  1— 399] 

Union  Pac.  Ry.  Co.  v.  Chicago.  R.  I.  &  P.  Ry.  Co.,  51  P.,  siw,  317^1!!.  l-'llS. 


Van  Horn  r.  Van  Horn.  52  N.  J.  Law,  286 2-304. 

Veazie  i.  Moor.  14  How.,  568,  574 1—257  392. 

Verdin  r.  St.  Louis.  131  Mo.,  26 .."..'.!"..!""]*.]  2— 56o! 

Vicksburg  f.  Tobln.  100  U.  S.,  430 ......!..!!.. IT...!  1—740. 

Victor  Talking  Machine  r.  The  Pair,  128  P.,  424 2— 786i863 

Vicker>-i'.  Welch,  19  Pick.,  528 []]  2—1008. 

Vidal  r.  Girard's  Exrs.,  2  How.,  127, 197 1— 200 

Village  of  Pine  City  v.  Munch,  42  Minn.,  342 1—586. 

Vulean  Powder  Co.  r.  Hercules  Powder  Co.,  96  Cal.,  310 1—797;  2—808,1006. 

w. 

Wabash  R.  R.  Co.  t'.  Defiance,  167  U.  S.,  88 ..,, 2—562. 

WalMKh,  etc.,  Ry.  Co.  v.  Illinois,  118  U.  8.  557 .....I.........  1—U7. 

^ 1-354,356. 

,  574 8-504. 


CASES   CITED. 


XXXV 


Waffle  V.  Vanderhej'den.  8  Paige,  46 1—363. 

Walker  V.  Collins.  167  U.  S.,  57,  59 2—548. 

Walker  t>.  Cronin,  107  Mass..  555 1—284. 

Wall  v.  Thomas,  41  P.,  620 1—624. 

Wallace  v.  Lincoln  Savings  Bank.  89  Tenn.,631 2—310. 

Walling  r.  Michigan.  116  U.S.,  446 1—737,739. 

454 1—736. 

Walsh  V.  Dwight.  68  N.  Y.Supp.,  91 2—1015,1017. 

93 2—277,279. 

Ward  I'.  Byrne,  5Mee8.  &  W.,647 1—786. 

— 549 1—75. 

Ward  v.  State,  2  Mo.,  120 2—894. 

Warev.  Curry.  67  Ala..  274 2—821. 

Warren  V.  Exchange,  52  Mo.  App.,  157-167 1—630. 

Warren  r.  Paving  Co.,  115  Mo..  572,  680 2—660,562. 

Waterhouse  V.  Comer,  55  P.,  149 1—361. 

Watson  V.  Puller,  9  How.  Pr..  425 1—368. 

Watson  V.  Jones,  13  Wall..  679 2—565. 

Watson  V.  Williams,  36  Miss.,  331,  341 1—594. 

Weare  Commission  Co.  v.  People,  209111.,  528 2—729. 

Wedding?'.  Meyler,  192  U.  S.,  573 2—872. 

Weeks  v.  Smith,  3  Abb.  Prac,  211-214 2—839. 

Weir  v.  Gas  Co..  91  P.,  940 ^i--...  2—78. 

Weiss  t).  Herlihy,  23  App.  Div.,  608;  49  N.  Y.  Supp.,  81 2—92. 

Welch  V.  People,  30  111.  App.,  399.  409 1—339. 

Welch  V.  Phelps  &  Bigelow  Windmill  Co.,  36  8.  W.,  71  (89  Tex.,  653) ..  2—277. 

Welton  i'.  Missouri,  91  U.  S.,  276 1—739,960;  2—515. 

280 1—1023. 

West  Virginia  Transp.  Co.  v.  Ohio  R.  Pipe  L.  Co.,  22  W.  Va.,  600 1—222, 688, 724» 799. 

625 1—206. 

Western  Union  Tel.  Co.  v.  Ann  Arbor  R.  R.  Co.,  178  U.  S.,  239 2—548. 

243 2—565. 

Western  Un.  Tel.  Co.  v.  Amer.  Un.  Tel.  Co.,  65Ga.,  160 1—202,206,688,724. 

Western  Un.  Tel.  Co.  v.  James,  162  U.  S.,  650,655 1—1027. 

Western  Un.  Tel.  Co.  v.  Penn.  R.  R.  Co.,  195  U.  8..  540,  647 2—707. 

120P.,981 2—707. 

123P.,33,36  2—620,707. 

Weston  r.  Ives,  97  N.  Y.,  222-228 1-S30. 

Wetmore  v.  Mellinger,  64  Iowa i— 51 . 

Whipple  V.  Cumberland  Cotton  Mfg.  Co.,  3  Story,  84 2—972. 

White  V.  Brownell,  2  Daly,  329,  337,  342,  350;  3  App.  Prac.  (N.  8.),  318..  1—630. 

Whiter.  Parkin,  12  East.  578 -. 2—311. 

Whitehead  &  Hoag  Co.  v.  O'Callahan.  139  P.,  243 2—943. 

Whiteside  V.  Haselton.  110  U.  8.,  296 1—665;  2—316. 

Whitney  v.  Fairbanks,  54  P.,  985 2—79. 

Whitney  t>.  Slayton,  40  Me.,  224 1—785. 

Whittaker  r.  Howe,  3  Beav..  383 1—75,199,205,785. 

788. 

Whitwell  V.  Continental  Tobacco  Co. ,  125  P.,  454 2—286, 1015, 1019. 

Wickensv.  Evans,  3  Younge&  J.,  318 1—206,789. 

Wiggins  Ferry  Co.  v.  Chicago  &  A.  R.  Co.,  73  Mo.,  389 1—205, 208. 

Wight  V.  U.  8.,  167  U.  S..  516 2—1025. 

Wilbur  V.  How. ,  8  Johns.  ,444 1—803. 

Williams  V.  Fears,  179  U.  S.,  270 •. : 2—146, 

Wilson  t'.  Blair,  119  U.S.,  387 2—316. 

Wilson  V.  McNamee,  102  U.  8.,  572 1—847. 

Wilson  V.  Rousseau,  4  How.,  645,  674 2—186. 

646 2—796. 

Windsors.  McVeigh,  93  U.S.,  274.  282,283 1—340. 

Wisconsin  r.  Pelican  Ins.  Co.,  127  U.  S.,  265 2—14. 


XXXVI  CASES    CITED. 

Woodruff  V.  Berry.  40  Ark.,  261, 252 1—202,808. 

Woodward©.  Alston,  12  Helsk.,  681 2— W. 

Wooton  V.  Hinkle,  20  Mo.,  290 ]  [  1—803. 

Wordenv.  Searls,  121U.  S.,  26 !]]"!]..]1!!!!!!!!]!  2—839! 

Y. 

Yarborough's  Admr.  r.  Avant,  66  Ala.,  526 2— «21. 

Yates'  Case,  4  Johns,  317,373 ......[....  1—339. 

Yatesv.  The  Queen,  14  Q.  B.  D..  648 7^....,....  2-898! 

Yeatonv.  U.  S.,  5  Cr.,  281 1—820. 

Yiek  Wo  V.  Hopkins,  118  U.  S.,  856,  369 2—139! 


FEDERAL 
ANTI-TRUST  DECISIONS 


VOL.  2 

11)00-10()(). 


[354]  UNION  SEWER-PIPE  CO.  v,  CONNELLY.' 

(Circuit  Court,  N.  D.  Illinois,  N.  D.    January  29,  1900.) 

'  [99  Fed.,  354.] 

Note  to  Trust— Avoidance.— A  note  made  for  a  balance  due  on  goods 
bought  from  a  corporation  cannot  be  avoided  merely  because  the 
latter  is  a  trust  organized  to  create  and  carry  out  restrictions  in 
trade  contrary  to  the  common  law.* 

Same. — A  note  made  for  a  balance  due  on  goods  bought  from  a  corpor- 
ation cannot  be  avoided  merely  because  the  latter  is  a  trust  organ- 
ized to  create  and  carry  out  restrictions  in  trade  contrary  to  the 
"  Sherman  Act"  (Act  Cong.  July  2,  1890),  as  that  only  covers  con- 
tracts which  are  themselves  in  restraint  of  trade,  and  does  not 
aflfect  those  which  "merely  indirectly,  remotely,  incidentally,  or 
collaterally  regulate,  to  a  greater  or  less  degree,  interstate  com- 
merce between  the  states." 

Illinois  Trust  Law— Constitutionaijty.— Act  111.  July  1,  1893,  de- 
fining trusts  and  conspiracies  against  trade,  declaring  contracts  in 
violation  of  its  provisions  void,  etc.,  provides  (section  9)  that  it  shall 
not  apply  to  agricultural  products  or  live  stock  while  in  the  hands 
of  producers.  Held,  that  such  section  rendered  the  entire  act  void, 
as  a  violation  of  section  1  of  the  fourteenth  amendment  of  the  fed- 
eral constitution,  and  the  provision  of  Const.  111.  art.  4,  §  22,  that, 
in  cases  wfiere  a  general  law  can  be  made  applicable,  no  special  law 
shall  be  passed. 


o  Affirmed  by  Supreme  Court  (184  U.  S.,  540).    See  p.  118. 
6  Syllabus  copyrighted,  1000,  by  West  Publishing  Co. 

21220— VOL  2—07  m 1  j 


^  ^  FEDERAL  KEPORTEB,  354. 

Opinion  of  the  Court. 
Herbert  II'.  Hamlin  aiid  Edwin  Walker,  for  plaintiff. 
O^DmneU  S  Coghlan  and  John  R,  MeFee,  for  defendant. 
KoHLSAAT,  District  Judge. 

Plaintiff  in  this  case  brinijp^  snit  to  recover  on  certain 
promissary  notes  given  by  defendant  for  balance  due  on  pur- 
cliases  and  deliveries  of  sewer  pipe.  IX^fendant  pleads  the 
general  issue,  and  gives  notices  thereunder  of  thi-ee  spe- 
cial defenses,  all  of  which  are  based  unon  the  theory  that 
plaintiff  was  a  trust  or  combination  organized  for  the  ex- 
press purpose  of  creating  and  carrying  out  restrictions  in 
trade,  contrary  (1)  to  tlie  common  law  in  force  both  in  Ohio 
and  Illinois;  (2)  to  the  act  of  congress  of  Julv  1.  1800,  com- 
monly called  the  ^*  Sherman  A(t";  and  (3) 'to  the  statute 
of  the  state  of  Illinois  taking  effect  on  July  1,  I8im. 

As  to  the  matters  set  out  in  the  first  notice  of  special  de- 
fense, it  is  undoubtedly  true  that  by  the  common  law  con- 
tracts which  are  themselves  directly  in  restraint  of  trade 
may,  in  a  proceeding  based  thereon,  1h>  declared  void  and  un- 
enforceable by  the  courts;  but  there  is  no  case  brought  to 
the  attention  of  the  court  in  which  it  has  been  held  tliat  at 
common  law  a  contract  not  in  itself  in  restraint  of  trade  is 
void  because  one  of  the  parties  thereto  is  a  party  to  a  con- 
tract which  is  in  restraint  of  trade,  and  the  one  contract  is 
indirectly  based  upon  the  other.  The  fact  that  one  party  to 
a  contract  is  engagt^d  in  illegal  acts  will  not,  at  common  law, 
avail  the  other  party  as  a  defense  to  the  enforcement  of  a 
contract  in  itself  legal.  The  first  notice  of  special  defense 
will  therefore  be  stricken  out. 

It  will  be  seen  by  an  inspection  of  the  so-called  "  Sherman 
Act,''  and  of  the  opinion  of  Mr.  Justice  Peckham  in  the 
Addyston  Pipe  cC-  Steel  Co,  Cam  (decided  by  the  United 
States  supreme  court,  Dec.  [355]  4,  1899)  20  Sup.  Ct.  9G, 
Adv.  S.  U.  S.  96, 44  L.  Ed. ,  that  the  act  only  covers  con- 
tracts which  are  themselves  directly  in  restraint  of  trade, 
and  does  not  affect  those  which  "  merely  indirectly,  remotelv,' 
incidentally,  or  collaterally  regulate,  to  a  greater  or  less 


UNION   SEWER-PIPE   CO.  V,  CONNELLY. 


Opinion  of  tlie  Court. 

degree,  interstate  connnerce  among  the  states."  It  therefore 
follows  that  the  second  matter  of  special  defense  set  up  must 
be  stricken  out. 

Now,  coming  to  the  ground  of  special  defense  set  up  in 
the  third  notice,  to  wit,  the  Illinois  statute  which  went  into 
effect  on  July  1,  1893 :  This  statute,  in  terms,  provides  that 
the  defense  herein  set  up  may  be  maintained  as  a  bar;  and, 
if  the  statute  is  valid,  then  plaintiff  cannot  recover  in  this 
case,  if  it  be,  as  averred  by  defendant,  a  corporation 
organized  in  restraint  of  trade,  and  a  trust,  under  the  defi- 
nition contained  in  said  statute.  Plaintiff  contends  that  the 
said  statute  is  unconstitutional  (1)  because  it  is  obnoxious 
to  section  1  of  the  fourteentli»  amendment  of  the  federal 
constitution,  which  reads,  in  part,  as  follows:  "No  state 
shall  nuike  or  enforce  any  law  which  shall  abridge  the  privi- 
leges or  immunities  of  citizens  of  the  United  States,  nor 
shall  any  state  deprive  any  person  of  life,  liberty  or  prop- 
erty without  due  process  of  law,  nor  denj^  to  any  person 
within  its  jurisdiction  the  equal  jDrotection  of  the  laws;" 
and  also  (2)  because  it  is  in  contravention  of  section  22  of 
article  4  of  the  constitution  of  the  state  of  Illinois,  which 
reads,  in  part,  as  follows :  •'  In  all  other  cases  where  a  gen- 
eral law  can  be  made  applicable,  no  special  law  shall  be 
enacted."  The  said  statute  of  July  1,  1893,  after  defining 
a  trust,  and  setting  out  the  various  penalties  provided  for 
violation  of  the  act,  provides,  in  section  9,  that  "  the  pro- 
visions of  this  act  shall  not  apply  to  agricultural  products 
or  live  stock  while  in  the  hands  of  the  producer  or  raiser." 
Can  it  be  claimed  that,  under  this  clause  9,  every  person 
>vithin  the  jurisdiction  of  the  state  of  Illinois  has  equal  pro- 
tection of  the  law^s?  Is  not  this  class  legislation?  Is  it  in 
accordance  wath  section  1  of  the  fourteenth  amendment  to 
the  federal  constitution  that  those  who  produce  or  raise 
agricultural  products  or  live  stock  shall  be  exempted  from 
the  provisions  of  a  statute  which,  by  its  terms,  are  binding 
on  every  other  citizen  or  person  within  the  state  ?  I  think 
clearly  not.  I  am  of  the  opinion  that  this  statute  contains 
both  class  and  special  legislation,  and  is  in  contravention  of 
both  the  federal  and  state  constitutions,  and  therefore  void. 


4  99  FEDERAL  REPOBTEB,  985. 

Statement  of  the  Case. 

It  is  urged  that,  granting  the  unconstitutionality  of  said 
ninth  clause,  yet  it  may  be  declared  void  without  affecting 
the  validity  of  the  remaining  clauses  of  said  act.  If  this 
were  so,  then,  by  declaring  said  clause  void,  the  courts  would 
make  the  act  binding  upon  those  classes  pi  persons  within 
the  state  which  the  legislature  had  specially  exempted 
from  its  provisions.  This  would  be  judicial  legislation  of 
the  most  flagrant  character.  In  my  opinion,  the  said  clause 
9  taints  the  whole  act,  and  renders  it  all  void.  Therefore 
the  special  defense  set  up  in  the  third  notice  must  be  stricken 
out.  It  follows  upon  the  record,  as  it  is  with  the  said  three 
matters  of  special  defense  stricken  out,  that  a  verdict  must 
be  given  for  the  plaintiff  fqr  the  face  of  the  notes  in  suit, 
and  interest  thereon  from  maturity  at  5  per  cent.,  and  the 
jury  will  be  so  instructed. 


[985]     NATIONAL  FOLDING-BOX  &  PAPER  CO.  r, 

ROBEKTSON,  ET   AL. 

(Circuit  Court,  D.  Counecticut.    February  0,  1900.) 

[99  Fed.,  985.] 

Patents^  Infringement— Folding  Paper  Boxes.— Tlio  ^^'ilsun  pat- 
ent, No.  286300,  for  an  improvement  in  folding  paper  l>axes.  held 
not  anticipated,  and  valid,  on  motion  for  a  preliminary  injuuctio?^ 

Same— Suit  fob  Infringement— Defenses.— The  fact  tliat  the  owner 
of  a  patent  is  a  corporation  alleged  to  have  been  formed  hi  vio- 
lation of  the  anti-trust  law,  and  that  the  patent  is  alleged  to  have 
been  assigned  to  it  in  furUierance  of  the  illegal  purpose  to  create 
a  monopoly  and  control  the  price  of  an  article  of  commerce,  is  not 
available  to  an  infringer  of  such  patent  to  defeat  a  suit  for  the 
infringement.o 

This  is  a  suit  in  equity  for  the  infringement  of  a  patent. 
On  motion  for  a  preliminary  injunction. 

Walter  D,  Edmonds^  for  complainant. 

Charles  W.  Comstoch  and  W,  E.  Simonda,  for  defendants. 

«  Syllabus  copyrighted,  1900.  by  West  Publishing  Co. 


NATIONAL   FOLDING-BOX  &  P.  CO.  V,  BOBERTSON.  5 

Opinion  of  the  Court 
Town  SEND,  District  Judge. 

On  motion  for  a  preliminary  injunction  against  infringe- 
ment of  the  first  claim  of  patent  No.  286360,  granted  Octo- 
ber 9,  1883,  to  Arthur  Wilson,  for  improvement  in  folding 
paper  boxes.  This  claim  has  been  sustained  by  Judge 
Thomas,  after  exhaustive  consideration  of  the  issues  of  an- 
ticipation and  noninfringement,  in  two  opinions  in  the  suit 
of  this  complainant  against  Robert  Gair  (C.  C;  91  Fed. 
905,  and  97  Fed.  813).  The  new  evidence  introduced  related 
only  to  patents  set  up  in  the  answer,  but  not  discussed,  in 
said  Gair  Case.  The  defendants  relied  chiefly  on  one  only 
of  said  patents,  namely.  No.  269682,  to  Linnett,  which  they 
claim  exactly  corresponds  with  the  boxes  of  the  patent  in 
suit,  except  in  the  use  of  what  are  known  as  the  tongues 
and  slits  for  securing  the  same,  and  that  this  construction 
was  suggested  by  Linnett  when  he  said,  "  the  parts  at  the 
ends  being  attached  together  to  secure  them,  as  by  pasting 
or  otherwise  [986]  securing  the  parts,"  and  they  contend 
that  the  use  of  such  slits  and  tongues  was  well  laiown  in  the 
art.  As  pointed  out  by  J\idge  Thomas  in  his  carefully  con- 
sidered opinion,  the  merit  of  the  invention  in  suit  is  that 
the  end  piece,  with  its  tongues,  when  caught  into  said  aper- 
tures and  loosely  held  therein,  closes  and  holds  together  the 
end  of  the  box  by  means  of  its  lever  function.  This  con- 
struction dispensed  with  the  exterior  perforations  of  the 
boxes  of  the  prior  art,  and  reinforced  the  sides  of  the  box 
against  strain. 

Counsel  for  complainant  says  the  Linnett  patent  was  not 
presented  for  Judge  Thomas'  consideration,  because  the  pat- 
ent to  Arthur,  May  15,  1877,  No.  190803,  which  was  dis- 
cussed and  considered,  covered  everything  embraced  in  the 
Linnett  construction.  The  construction  of  Arthur  is  nearer 
to  the  patented  construction  than  that  of  Linnett.  It  is 
apparent  that  neither  Arthur  nor  Linnett  had  any  idea  of 
the  clutch  invention  which  Wilson  devised.  All  the  other 
questions  herein  were  before  Judge  Thomas,  and  were  dis- 
posed of  by  him. 

The  defendants  have  also  filed  a  plea  in  abatement  alleg- 
ing that  certain  partnerships  and  corporations  which  were 


O  m  FEDERAL  BEPORTER,  986. 

Opinion  of  tlie  Court 

rivals  in  business,  situated  in  various  states,  engaged  in  the 
manufacture  of  these  boxes,  being  articles  of  commerce  and 
in  gi-eat  demand  throughout  the  United  States,  for  the  pur- 
pose of  stifling  competition,  and  controlling  and  limiting 
the  output  of  each  of  said  manufacturing  concerns,  or  lessen- 
ing the  amount  of  production  of  said  goods  and  articles  of 
commerce,  entered  into  a  conspiracy,  for  the  purpose  of  stip- 
ulating and  providing  for  uniform  minimum  prices  of  said 
articles  of  commerce  sold  throughout  the  states,  and  enhanc- 
ing the  price  thereof,  and  limiting  the  production  of  the 
same,  and  that,  in  pursuance  of  said  conspiracy,  each  of  the 
parties  entered  into  a  contract  to  sell  its  plant  to  a  new 
corporation,  to  be  organized  under  the  laws  of  the  state  of 
New  Jersey.    Said  contract  was  set  forth  in  full.    It  com- 
prised an  agi*eement  between  certain  firms,  persons,  and 
corporations  to  take  stock  in  said  corporation,  and  provisions 
for  the  appraisal  of  the  property  of  each  of  the  constituent 
members,  and  for  the  allotment  to  each  of  them  of  stock 
in  the  new  corporation  in  proportion  to  such  appraisal.    The 
plea  in  abatement  further  alleged  that  said  parties  further 
agreed  that  neither  of  the  persons  or  companies  mentioned 
in  said  agreement  should  engage  in  the  manufacture  or 
sale  of  said  articles  of  commerce,  or  directly  or  indirectly 
continue  in,  carry  on,  or  engage  in  said  business  of  which 
said  articles  might  form  a  part,  indej>endently  of  the  said 
National  Folding-Box  &  Paper  Company,  to  be  organized 
as  aforesaid,  for  the  period  of  49  years,  and  that  durmg 
said  period  the  parties  should  refrain  from  entering  into 
competition  as  rivals  of  said  company;  and  that  in  pursu- 
ance of  said  conspiracy  the  parties  abandoned  the  manu- 
facture of  such  articles,  and  that  said  National  Folding- 
Box  &  Paper  Company  has  carried  out  all  the  designs  of 
said  parties;  and  that,  in  pui*suance  of  said  agreement  and 
conspiracy,  all  the  patents  have  been  transferred  to  said  cor- 
poration ;  and  that  "  it  was  further  agreed  between  the  par- 
ties   ♦    *    *    that  each  of  the  parties  to  said  agreement 
could  and  did  [987]  manufacture  said  articles  of  commerce 
under  patents  owned  by  them  prior  to  the  formation  of  said 
company,"  and  that  such  articles  "  were  sold  by  said  parties 
♦    ♦    *    at  uniform  prices,  and  upon  the  same  terms, 


NATIONAL   FOLDING-BOX   &  P.  CO.  V,  ROBERTSON.  T 

Opinion  of  the  Court 

without  respect  to  the  cost  of  production  or  the  merits  of 
the  respective  articles  '';  and  that  the  patent  in  suit  was  con- 
veyed to  the  complainant  corporation  in  pursuance  of  said 
conspiracy  to  restrain  the  trade  in  the  states  where  said 
plants  wei'e  located.    The  plea  further  alleges  as  follows: 

"  Tlie  direct  tendency  and  tlie  direct  result  of  said  conspiracy  and 
agreement  between  said  parties,  as  aforesaid,  was  and  did,  as  intended 
by  the  parties  thereto,  create  a  scarcity  of  said  articles  of  commerce, 
and  enliance  the  price  thereof,  in  the  states  where  said  plants  were 
located,  and  throughout  the  several  states  where  said  articles  were  in 
use  by  the  public  to  a  great  extent ;  and  the  said  conspiracy,  and  the 
natural  results  of  the  same,  as  intended  and  designed  by  the  parties  to 
said  agreement,  and  the  acts  of  the  parties  thereto  under  the  same,  are 
all  and  each  in  violation  of  law,  in  restraint  of  trade  ami  commerce 
between  the  several  states,  and  are  directly  prohibited  by  the  common 
law  and  the  laws  of  the  United  States,  and,  as  said  illegal  and  unlaw- 
ful combination  of  the  parties  to  said  agreement,  the  said  National 
Folding-Box  &  Paper  Company,  have  no  right,  power,  or  authority  to 
sue  or  plead  in  the  courts  of  the  United  States,  in  any  civil  action 
wherein  it  invokes  the  aid  of  the  courts  of  the  United  States,  to  pro- 
tect the  plaintiff  to  further  engage  in  or  carry  on  the  business  for 
which  it  was  illegally  organized,  and  especially  to  protect  it  as  de- 
manded in  this  suit,  and  said  combination  is  illegal  and  void,  and  your 
res{>ondents,  therefore,  pray  that  the  proceeding  in  the  cause  may  be 
abated  and  dismissed." 

This  plea  was  argued  under  an  oral  stipulation  to  the  effect 
that,  for  the  purposes  of  the  motion  for  a  temporary  injunc- 
tion, the  facts  alleged  in  said  plea  should  be  taken  as  true,  so 
far  as  thev  referred  to  the  contents  and  execution  of  the 
agr(>euients  therein  alleged,  but  that  this  admission  should 
not  l)e  construed  to  extend  to  anv  innuendoes  contained  in 
the  plea  respecting  the  purposes  of  said  agreements,  except 
so  far  as  they  appeared  on  the  face  thereof,  nor  respecting 
the  intent  or  animus  of  the  parties  thereto. 

The  conclusioiis  reached  dispense  with  the  necessity  of 
resting  the  decision  on  the  legality  of  the  agreement  alleged 
in  the  plea  in  abatement.  It  does  not  appear  that  the  orig- 
inal ccmtract  was  illegal.  There  are  no  provisions  therein 
which,  directl}^  or  indirectly,  refer  to  any  restriction  of  trade 
or  regulation  of  output  or  of  prices.  The  parties  thereto 
bound  themselves  not  to  engage  in  like  business  for  49  years. 
This  was  essential  to  effectuate  the  transfer  of  the  good  will, 
and  is  not  unusual  in  such  cases.  The  allegation  that  it  was 
further  agreed  that  the  parties  "  could  and  did  manufac- 
ture/' etc.,  is  in  direct  •  conflict  with  the  previous  allegation 
of  the  plea.    To  sustain  this  plea,  it  would  be  necessarj^  to 


8 


m  FEDERAL  REPOBTEE,   987. 


Opinion  of  the  Court. 

hold,  as  claimed  by  defendants,  that  a  corporation  formed  in 
restraint  of  trade  in  one  state  could  not,  in  another  state, 
maintain  a  suit  to  restrain  the  infringement  of  its  patent. 

The  federal  cases  chiefly  relied  on  by  defendants  are  Har- 
row Co,  V.  Bench  (C.  C.)  76  Fed.  667,  affirmed  in  27  C.  C.  A. 
349, 83  Fed.  36, 39  L.  E.  A.  299 ;  Harrow  Co.  v.  Quick  (C.  C.) 
67  Fed.  130.  ^         \         / 

Harrow  Go.  v.  Hench,  supra,  was  a  suit  to  enjoin  licensees 
from  violating  a  license  contract  by  selling  below  the  price 
agreed  on  therein,  and  for  a  decree  for  the  specific  perform- 
ance  thereof,  which  [988]  contract  was  made  with  a  combi- 
nation controlling  90  per  cent,  of  the  manufacturers  of  cer- 
tain harrows  in  the  United  States.    Said  contracts  prevented 
licensees  from  selling  their  products  at  a  price  less  than  was 
set  forth  in  a  schedule  annexed  to  the  license,  so  that,  as  the 
court  said,  the  corporation  is  simply  clothed  with  the  legal 
title  to  the  assigned  patents,  while  "  the  several  assignors  are 
mvested  with  the  exclusive  right  to  manufacture  and  sell 
their  old-style  harrows  under  their  own  patents;   but  all  of 
them  must  sell  at  uniform  prices,  and  upon  the  same  terms, 
without  respect  to  cost  or  the  merits  of  their  respective  styles 
of  harrows,  and  all  the  members  of  the  combination  are 
strictly  forbidden  to  manufacture  or  sell  any  other  kind  or 
style  of  float  spring-tooth  harrow  than  they  are  thus  licensed 
to  make  and  sell."    Judge  Achason  refused  the  injunction, 
and  the  court  of  appeals  affirmed  his  decision,  taking  the 
ground  that  the  prior  owners  were  the  beneficial  owners,  with 
right  to  continue  their  business,  subject  only  to  the  restric- 
tion in  its  management  imposed  by  the  contract,  and  that 
"  the  result  would  be  the  same,  in  legal  contemplation,  if  the 
corporation  and  licenses  had  been  dispensed  with,  and  the 
contract  had  provided  simply,  as  it  does,  for  combination  and 
restraint  of  competition."    This  was  not  an  infringement 
suit,  but  a  suit  to  compel  the  performance  of  an  unlawful 
contract.    The  decision  rests  upon  the  fact  that  the  corpora- 
tion was  organized  solely  for  the  purpose  of  making  a  com- 
bination to  restrain  competition  and  trade  and  to  enhance 
prices. 

In  the  same  line,  Judge  Coxe,  in  the  suit  of  the  same  com- 
plainant against  the  same  defendant*  (C.  C;  84  Fed.  226), 


NATIONAL  FOLDING-BOX   &  P.  CO.  V.  ROBERTSON. 


9 


Opinion  of  the  Court. 

to  restrain  infringement  of  a  patent  which  had  been  assigned 
in  accordance  with  said  contract,  held  that,  as  the  contract 
was  illegal  and  void,  the  assignment  also  was  void,  and  solely 
on  that  ground  dismissed  the  complaint. 

The  only  opinion  in  the  federal  courts  cited  by  defendant 
which  would  seem  to  support  the  doctrine  that  an  infringer 
might  defend  his  illegal  acts,  even  in  a  case  where  the  com- 
plainant was  a  combination  formed  for  the  purpose  of  re- 
straining trade  and  competition,  is  Harrow  Co.  v.  Quick, 
supra,  in  which  the  learned  judge  disposed  of  the  question  of. 
infringement  on  the  merits,  but,  in  passing  on  the  defense 
that  this  same  harrow  company  was  an  illegal  combination, 
said: 

"  It  seems  to  me  that  the  court  cannot  sustain  the  present  bill  with- 
out giving  aid  to  the  unlawful  combination  or  trust  represented  by  the 
complainant.  The  question  is  not  free  from  doubt,  but  in  a  case  of 
doubt  I  feel  it  my  duty  to  resolve  it  in  such  a  way  as  will  not  lend  the 
countenance  of  the  court  to  the  creation  of  combinations,  trusts,  or 
monopolies." 

The  court  of  appeals,  however,  said  on  this  point : 

"  While  not  prepared,  in  view  of  the  authorities,  to  sanction  the  prop- 
osition that  the  infringer  of  a  patent  may  escape  liability  by  showing 
that  the  legal  owner  is  engaged  in  a  supposed  unlawful  combination  or 
trust,  we  do  not  consider  the  point"     20  C.  C.  A.  413,  74  Fed.  239. 

And  in  Columbia  Wire  Co.  v.  Freeman  Wire  Co.  (C.  C.) 
71  Fed.  306,  Judge  Adams  said : 

"  I  would  quite  agree  with  the  learned  judge  who  wrote  that  opinion, 
that  the  correctness  of  his  conclusion,  even  in  that  case,  was  not  free 
from  doubt." 

[989]  And  he  refused  to  apply  said  doctrine  in  a  case  of 
infringement. 

The  question  here  presented  was  discussed  by  Judge  Wal- 
lace in  Strait  v.  Harrow  Co.  (C.  C.)  51  Fed.  819.  Judge 
Wallace  says : 

"The  proposition  that  the  plaintiff",  while  infringini:  the  rights 
vested  in  the  defendant  under  the  letters  patent  of  the  United  States, 
is  entitled  to  stop  the  defendant  from  bringing  or  prosecuting  any  suit 
therefor  because  the  defendant  is  nn  obnoxious  corporation,  and  is 
seeking  to  i3erpetuate  the  monopoly  which  is  conferred  upon  it  by 
its  title  to  letters  patent,  is  a  novel  one,  and  entirely  unwarranted."  ' 

The  opinion  in  Machine  Co.  v.  Smith  (C.  C.)  70  Fed.  383, 

is  to  the  same  effect.    Judge  Simonton  says: 

"The  issues  are  these:  Do  the  complainants  hold  letters  patent 
of  the  United  States  giving  them  the  exclusive  right  to  make,  vend, 


10 


m  FEDEBAL  EBPORTEB,  989. 
Opiiiron  of  the  Court 


and  n»»  certain  patt'iitahlo  dt'vKos?  Have  tin*  aotVndants  infringed 
the  rights  thus  grantetl?  If  in  pmeiiring  these  exelnslve  rights,  or 
if.  in  their  exereiae,  the  eoinplaiiiants  have  lu^en  gniltv  of  fraudulent 
or  iiuproiier  conduct  towards  these  defendants,  the  fuii<himental  prin- 
ciples relied  <m  would  debar  theiii  of  auy  relief  in  this  court.  But 
if,  in  the  absence  of  these,  it  is  souglil  to  deprive  them  of  their  remedy 
for  the  infringement  of  their  rights  because  of  their  m  jtives  in  nss(M-t- 
ing  tlieiii.  such  motives  are  not  the  sul)je(t  of  judicial  inquirv.  strait 
V.  Natwitaf  Harrvw  Co..  51  Fed.  810.  The  rule  that  one  coming 
into  equity  must  <'onie  with  clean  hands  is  confiiuMl  to  the  condu<t 
of  the  party  in  the  matter  Iw'fore  the  «-ourt,  and  n«»t  to  matters 
aliunde.  Courts  of  equity,  as  well  as  courts  of  law.  will  not  refus** 
reilress  to  the  suitor  becaus*-  his  con<luct  in  other  matters  not  then 
before  the  court  may  not  be  blameless.  It  Is  eufiugh  If  the  suitor 
shows  that  he  has  acted  justly,  fairly,  and  legallv  In  tlie  sub|tH-t- 
matter  of  the  suit*    Beach,  Mod.  Eq.  Fur.  §  IG.  and  cast's  cited." 

The  distinction  between  the  cases  where  such  a  defense 
might  and  might  not  be  interposed  is  stated  as  follows  by 
Jndge  Wallace  in  Strait  v.  FI arrow  Co.,  mtpra: 

"If  the  defendant  had  brought  suit  against  the  plaint ifts  tor  mnw 
breaeh  of  contract  or  violation  of  its  allegtMl  rights,  fonndcil  upan 
tlie  combination  agreement,  then  it  might  Iwome  pertinent  to  inquin* 
Into  the  character  of  the  comblnati<in.  and  ascert.iin  whether  the 
court  would  enforce  auy  rights  growing  out  of  it.  But.  In  a  suit 
brought  for  the  hifringement  of  a  imtent  by  the  owner,  anv  such 
Inquiry,  at  the  l>ehe8t  of  the  infringer.  w<iuld  be  as  impertinent  as 
one  in  respect  to  the  moral  character  or  antecedents  of  the  plaintiff 
in  an  ordinary  suit  for  trespass  uiwin  his  proju  it  .  Even  a  gambler, 
or  the  keeiKT  of  a  bmthel.  cannot  lie  deprive<l  «»f  his  proin-rtv  l»e- 
eaiise  he  is  an  obnoxious  jH'rson  or  n  criminal." 

The  court  of  appeals  in  this  circuit  said  in  Liffht  €o.  v. 
Electrie  Co,.  3  C.  C.  A.  605,  ."i-l  Fed.  5J>8 : 

"They  fthe  owners  of  the  imtent  in  suit!  do  not  los*.  that  right 
merely  b«H:nise  th€»y  may  have  joined  in  a  combinati<m  with  otliers. 
holding  other  patents  se<*uring  similar  moiuipi.lies,  which  <-ombination 
may.  when  Judicially  examined  in  a  projH'r  f«»nun.  b<»  held  to  be 
unlawful.  We  do  not  feel  justitied  In  assuming,  uimui  the  facts 
before  us  In  the  present  suit  that  tlie  use  whi<h  the  complainants 
propose  to  make  of  the  injunction— an  injunction  which  seems  neces- 
sary t:»  sec'ure  their  monopoly  and  make  their  patent  fruitful— will  * 
be  such  as  to  pnanote  any  other  nu.nopoly.  When  it  shall  be  made 
to  appear  that  some  one,  to  whom  in  fainiess  and  good  cons  •ien<*e  these 
complainants  should  sell  their  lampa  has  l>een  arbitrarily  refused 
them,  save  up<m  opi>ressive  and  unreasonable  terms,  it  will  lx»  time 
to  ctjusider  whether  the  complainants  shouhl  be  allowe<l  to  ctmtinue 
in  iiossession  of  the  injunction." 

In  Soda-Fonntain  €o,  v,  G-retm  (C.  C.)  69  Fed.  33S,  Judge 
Dallas  sii.stained  exceptions  to  such  a  i)lea.  and  oi-dered  it 
stricken  out  as  irrelevant,  immaterial,  and  impertinent.  The 
moticn  for  a  prcliniinarj'  injunction  is  granted. 


CITY  OF  ATLANTA  V.   CHATTANOOGA  F.  &   P.  CO. 


11 


Statement  of  the  Case. 

[900]  CITY  OF  ATLANTA  v,  CHATTANOOGA  FOUN- 
DRY &  PIPE  CO." 

MANION  ET  AL.  v,  SAME. 

(Circuit  Court,  E.  D.  Tennessee,  S.  D.     May  5.  1900.) 

[101  Fed.,  900.] 

Monopolies — Action  for  Damages  under  Anti-Trust  Act — Limita- 
tion.—An  action  under  Anti-Tmst  Act  (Act  July  2,  1890;  26  Stat. 
209)  §  7,  providing  that  "auy  person  wlio  shall  be  injured  in  his 
business  or  pi*oi)erty  by  any  other  person  or  corporation  by  reason 
of  anything  forbidden  or  declared  to  be  unlawful  by  this  act  may 
sue  therefor  in  any  circuit  court  of  the  United  States,  *  *  ♦ 
and  shall  recover  three  fold  the  damages  by  him  sustained,"  is  not 
an  action  for  a  penalty  or  forfeiture,  within  Rev.  St.  §  1047,  pre- 
scribing a  limitation  of  five  years  for  a  "  suit  or  prosecution  for 
any  penalty  or  forfeiture,  pecuniary  or  otherwise,  accruing  under 
the  laws  of  the  United  States,"  but  one  for  the  enforcement  of  a 
civil  remedy  for  a  private  injury,  compensatory  in  its  purpose  and 
effect,  the  recovery  permitted  in  excess  of  damages  actually  sus- 
tained being  in  the  nature  of  exemplary  damages,  which  does  not 
change  the  nature  of  the  action,  and  such  action  is  governed  as  to 
limitation  by  the  statutes  of  the  state  in  which  it  is  brought.^ 

Same — Tennessee  Statute. — An  action  brought  under  such  section, 
in  which  the  right  of  recovery  is  based  on  an  alleged  exorbitant 
charge  made  by  defendant  to  plaintiffs  for  manufactured  articles 
purchased,  by  reason  of  a  combination  or  trust  entered  into  by  de- 
fendant with  others  for  the  purpose  of  monopolizing  ti'ade  in  viola- 
tion of  the  act,  is  for  an  injury  to  personal  property,  and  comes 
within  Shannon's  Code  Tenn.  §  4470,  which  prescribes  a  limitation 
of  three  years  for  "  actions  for  injuries  to  personal  or  real  property/' 
being,  in  effect,  the  same  as  an  action  on  the  case  for  the  recovery 
of  the  money  which  plaintiffs  were  illegally  compelled  to  pay  in 
excess  of  the  fair  market  value  of  the  articles  purchased. 

On  Demurrers  to  Pleas  Interposing  the  Defense  of  the 
Statute  of  Limitations  of  Tennessee. 

Pritchard  dc  Sizer,  for  Manion  &  Co. 

O,  P.  Gore.  L.  A.  Dean,  Westmoreland  Bros.,  and  /.  L, 
Faust,  for  city  of  Atlanta,  Ga. 

«  Judgment  reversed  by  the  Circuit  Court  of  Appeals,  Sixth  Circuit, 
with  directions  to  grant  a  new  trial    (127  Fed.,  23).     See  p.  299. 

Affirmed  by  Supreme  Court  Dec.  3,  1906  (203  U.  S.  ).    Not  yet 

officially  reported. 

6  Syllabus  copyrighted,  1900,  by  West  Publishing  Co. 


101  FEDSBAL  BEPOBTKB,  901. 


Opinion  of  the  Court 
Brown  ds  Spurlock^  for  Oiattanoc^  Foundry  &  Pipe  Co. 

[901]  Clabk,  District  Judge. 

These  suits  are  brought  to  recover  damages  under  section 
7  of  the  so-called  "  Anti-Trust  Act "  of  congress  of  July  2, 
1890,  which  reads  as  follows: 

"Any  person  who  shall  be  Injured  In  his  business  or  property  by 
any  other  person  or  corporation  by  reason  of  anything  forbidden  or 
declared  to  be  unlawful  by  this  act,  may  sue  therefor  In  any  circuit 
court  of  the  United  States  in  the  district  in  which  the  defendant  re- 
sides or  is  found,  without  respect  to  the  amount  in  controversy,  and 
shall  recover  three  fold  the  damages  by  him  sustained,  and  the  costs 
of  suit,  including  a  reasonable  attorney's  fee." 

The  first-named  case  is  a  suit  on  behalf  of  the  city  of  At- 
lanta, Ga.,  a  municipal  corporation,  and  the  second  on  behalf 
of  plaintiffs,  who  aver  that  they  are  contractors  engaged  in 
the  business  of  furnishing  and  laying  gas,  water,  and  sewer 
pipes  in  the  city  of  New  Orleans,  La.  The  defendant  here- 
tofore has  been,  and  now  is,  engaged  in  the  business  of  manu- 
facturing and  selling  cast-iron  pipe  and  fittings,  used  for  the 
purposes  of  public  drainage  and  sewerage,  and  by  gas  and 
water  companies  in  the  business  of  operating  gas  and  water 
plants.  The  declarations  in  the  two  c^ses  vary  slightly  in 
the  form  of  statement  of  the  case.  Both  suits  are  actions  on 
the  case,  and,  in  substance,  proceed  upon  the  ground  that  the 
defendant  entered  into  an  unlawful  trust  or  combination 
with  others  for  the  purpose  of  monopolizing  trade  in  viola- 
tion of  the  anti-trust  act.  The  trade  combination  or  trust 
complained  of  here  was  involved  in  Addyston  Pipe  d;  Steel 
Co.  V.  U.  S.,  175  U.  S.  211,  20  Sup.  Ct.  96,  Adv.  S.  U.  S.  96, 

44  L.  Ed. ,  and  is  there  fully  described.    The  plaintiffs 

in  each  case  became  purchasers  of  the  manufactured  product 
of  the  defendant  in  large  quantities,  and  at  prices  set  out  in 
the  declarations.  It  is  charged  with  sufficient  detail  that  by 
reason  of  the  unlawful  combination  and  trust  contract  en- 
tered into,  the  defendants  were  enabled  to  advance,  and  did 
advance,  the  price  on  their  manufactured  goods,  and  that  the 
plaintiffs  were,  in  consequence,  compelled  to  pay  an  exor- 
bitant and  unfair  price,  which  is  called  a  "  bonus,"  on  the 
goods  purchased.  The  estimated  difference  between  the  just 
and  fair  market  price  of  the  goods  and  the  price  actually 


CITY  OP  ATLANTA  V,   OHATTANOOGA  F.  &   P.  CO.     18 

Opinion  of  the  Court. 

paid  is  stated  in  figures,  and  the  specific  damages  claimed  are 
laid  at  this  difference  between  the  fair  price  of  the  goods  and 
the  trust  price  paid,  the  declarations  concluding  with  an 
averment  of  the  right  to  increase  the  actual  damages  sus- 
tained threefold,  as  authorized  by  the  act.  Besides  other 
pleas,  the  defendant  interposes  as  a  defense  the  state  statute 
of  limitations  of  one  and  three  years,  as  found  in  the  Code 
of  Tennessee  (Shannon's  Revisal),  §§  4409,  4470,— the  for- 
mer section  prescribing  a  limitation  to  actions  for  statute 
penalties,  injuries  to  the  person,  and  other  civil  wrongs,  not 
necessary  to  be  noticed;  and  the  latter  prescribing  a  limita- 
tion period  of  three  years  for  injuries  to  property,  real  and 
personal.  To  these  pleas  the  plaintiffs  demur  upon  the 
ground  that  section  1047  of  the  Revised  Statutes  applies  to 
the  actions,  and  that  the  state  statute  is  inapplicable. 

The  case,  in  respect  of  the  issues  thus  presented,  turns  in 
pai-t  on  the  distinction  between  a  penalty,  as  such,  imposed 
by  statute  for  a  breach  of  its  provisions,  by  way  of  punish- 
ment for  the  act,  [902]  and  in  the  public  interest  on  the  one 
hand,  and  a  private  remedy  conferred  on  a  person  specially 
injured  by  the  unlawful  act,  and  by  way  of  compensation  for 
the  injury  sustained,  on  the  other.  If  the  action  authorized 
by  section  7  is  a  penalty  in  the  sense  indicated,  it  might  be 
conceded  for  the  moment,  or  for  the  purposes  of  the  ques- 
tion now  to  be  decided,  that  section  1047  of  ih^  Revised 
Statutes  would  be  applicable,  and  under  that  view  the  de- 
murrer would  be  well  taken.  On  the  other  hand,  if  the  suit 
is  not  in  its  nature  and  substance  a  penal  action,  but  a  civil 
remedy  for  a  private  injury,  compensatory  in  its  purpose 
and  effect,  the  action  is  subject  to  the  state  statute  of  limi- 
tations applicable  to  cases  of  this  class,  if  there  be  such  a 
statute.  Camphell  v.  City  of  Haverhill,  155  U.  S.  610,  15 
Sup.  Ct.  217,  39  L.  Ed.  240;  Brady  v.  Daly,  175  U.  S.  148  20 

Sup.  Ct.  62,  Adv.  S.  U.  S.  62,  44  L.  Ed. .    In  the  last 

case  cited  Mr.  Justice  Peckham,  giving  the  opinion  of  the 
court,  said  : 

"  The  court  belmy  was,  as  is  stated  in  the  opiuiou,  somewhat  in- 
fluenced m  Its  decision  of  this  question  by  the  belief  that,  if  this  were 
K?  \  ^^?^  ^*?*"^.^'  *^^^^  was  no  federal  statute  of  limitations  applica- 
ble to  it,  and  said  that  it  could  hardly  be  supposed  that  it  was  the 


101    FEDEKAIj   REPORTEK,   {K)2. 


Opinion  of  tlie  Court. 

intent  ot"  congress  to  jM'ruiit  siicli  a  statutoiy  rate  of  damages  to  run 
without  federal  statutory  limitation.  If  there  were  no  such  feilerti 
statute,  then  the  state  statute  would  apply.  Although  not  an  a-tloji 
to  recover  a  statutory  penalty  or  forfeiture,  still,  in  the  absence  of  Muy 
federal  statute  of  limitations,  it  would  l>e  liniit-d  by  the  limitation 
existing  for  the  <la8S  of  actions  to  which  it  In^longs  in  tlie  state  wheie 
the  action  was  bmught.  (\unpheU  v.  Cltii  of  lUivcrhiU.  l.^r»  r.  S.  ^JIO, 
G14.  15  Sup.  Ct.  217,  :5!)  I..  Ed.  270.* 

See,  also,  Voeknll  v.  Bntler  (C.  C.)  78  Fed.  079. 
Section  1047  of  the  Kevised  Statutes  prescrilies  limitations 
as  follows: 

•'  Xo  suit  or  prosecution  for  any  pL'ualty  or  forfeiture,  piH-uniary  or 
otiierwise,  accruing  under  the  laws  of  the  United  States,  shall  be 
maintaintHl,  except  in  cases  where  it  is  otherwise  specially  provided, 
unless  the  same  is  connnenced  within  tive  years  from  the  time  when 
the  penalty  or  forfeiture  accrue<l:  provided,  that  the  person  of  the 
offender,  or  the  property  liable  for  such  penaltj'  or  forfeiture,  shalU 
within  the  same  period,  be  found  within  the  United  States;  so  that 
the  proiier  process  therefor  may  be  instituted  and  si*rved  against 
such  person  or  prcperty." 

It  is  necessary,  therefore,  to  determine  the  question 
whether  the  suits  are  essentially  penal  or  civil  actions  in  their 
object  and  result.  This  question  whether  the  action  author- 
ized is  intended  as  a  punishment  or  as  compensation  obvi- 
ously involves  the  distinction  between  a  civil  remedy  an<l  a 
penal  action  in  its  primary  or  international  meaning,  this 
being  the  sense  which  was  under  consideration  in  the  leading 
case  of  Hyntington  v.  Attnll,  146  IT.  S.  657, 13  Sup.  Ct.  224, 
36  L.  Ed.  1123,  in  which  Mr.  Justice  Gray,  for  the  court, 

'*  In  the  municipal  law  of  England  and  America,  the  words  '  penal* 
and  'penalty'  have  l>t»en  ustHl  in  various  senses.  Strictly  and  pri- 
marily, they  denote  punishmint.  whether  <'orp>iaI  or  ptMMuiiary,  iuj- 
IHiseil  and  enforced  by  the  stale  for  a  crime  or  offense  aiiainst  its 
laws." 

In  the  previous  case  of  Wiscomin  v.  Pelican  Ins.  Co,,  127 
U.  S.  265,  8  Sup.  Ct.  1370,  32  L.  Ed.  239,  Mr.  Justice  Gray, 
for  the  court,  had  said : 

**  The  rule  that  the  courts  of  no  country  execute  the  penal  laws  of 
another  applies  not  only  to  prosecutions  and  sentences  for  crimes  and 
iiiisdemeanors,  [903]  but  to  all  suits  in  favor  of  the  state  for  the  re- 
covery of  i)ec!uiiary  penalties  for  an.v  violation  of  statutes  for  the 
protection  of-  its  revenue,  or  other  municipal  laws,  and  to  all  judg- 
ments for  such  penalties." 

In  HnnUngton  v.  Attrill  [1893]  App.  Cas.  150,  before  the 
privy  council  of  England,  precisely  the  same  question  was  in 


CITY  OF  ATLANTA  V,   CHATTANOOGA  F.  &   P.  CO. 

Opinion  of  the  Court. 


15 


judgment  as  that  involved  and  decided  in  Hvntingtmi  v. 
Attrill,,  mimi.  the  suit  being  between  the  same  parties. 
Lord  Watson,  delivering  the  judgment  of  their  lordships, 
quoted  the  above  passtige  from  Wiscomin  v.  Pelican  Ins,  Co., 
rendering  in  italics  the  words  "  but  to  all  suits  in  favor  of 
the  state,-'  and  then  went  on  to  say  : 

"  Their  lordships  do  not  hesitate  to  accept  that  exposition  of  the  law 
which,  in  their  opinion,  discloses  the  proper  test  for  ascertaining 
whether  an  action  is  penal  within  the  meaning  of  the  rule.  A  pro- 
ceeding, in  order  to  come  within  the  scoi)e  of  the  rule,  must  be  in  the 
nature  of  a  suit  in  favor  of  the  state  whose  law  has  been  infringed. 
All  the  provisions  of  numicipal  statutes  for  the  regulation  of  trade 
and  trading  companies  are  presumably  enacted  in  the  interest  and 
for  the  benefit  of  the  community  at  large;  and  persons  who  violate 
these  provisions  are,  in  a  certain  sense,  offenders  against  the  state 
law,  as  well  as  against  individuals  who  may  be  injured  by  their  con- 
duct. But  foreign  tribunals  do  not  regard  these  violations  of  statute 
law  as  offenses  against  the  state,  unless  their  vindication  rests  with 
the  state  itself,  or  with  the  community  which  it  represents.  Penalties 
may  be  attached  to  them,  but  that  circumstance  will  not  bring  them 
within  the  iiile,  except  in  cases  where  these  penalties  are  recoverable 
at  the  instance  of  the  state,  or  of  an  official  duly  authorized  to  prose- 
cute on  its  behalf,  or  of  a  member  of  the  public  in  the  character  of 
a  common  informer.  An  action  by  the  latter  is  regarded  as  an  actio 
I)opularis  i)ursued,  not  in  his  individual  interest,  but  in  the  interest 
of  the  whole  community." 

In  Dicey,  Confl.  Laws,  p.  220,  the  general  proposition  is 
laid  down  (as  rule  40)  that  the  high  court  of  justice  in  Eng- 
land cannot  entertain  an  action  for  the  recovery  of  a  penalty 
due  under  the  laws  of  a  foreign  country,  or  an  action  on  a 
foreign  judgment  for  such  penalty.  Upon  the  authority  of 
leading  cases  cited,  the  rule  is  then  commented  on  as  follows : 

"What  is  a  penal  law?  The  application  of  rule  40  raises  the  diffi- 
cult question,  when  is  a  law  to  be  considered  a  penal  law?  Or,  what 
is  really  the  same  inquiry  under  another  form,  when  is  an  action  to 
be  considered  a  penal  action?  These  inquiries  are  to  be  answered  as 
follows :  A  '  penal  law '  is  strictly  and  proi^erly  a  law  which  imposes 
punishment  for  an  offense  against  the  state;  and  a  *  penal  action'  is 
a  proceeding  for  the  recovery,  in  favor  of  the  state,  of  a' penalty  due 
under  a  iienal  law.  A  law,  on  the  other  hand,  is  not  a  penal  law 
merely  because  it  imposes  an  extraordinary  liability  on  a  wrongdoer, 
in  favor  of  the  person  wronged,  which  is  not  limited  to  the  damages 
suffered  by  him;  and  an  action  for  enforcing  such  liability  by  the 
recovery  of  the  penalty  due  to  the  person  wronged  is  not  a  penal 
action.  The  essential  characteristic,  in  short,  of  a  penal  action  is 
that  it  should  be  an  action  on  behalf  of  the  government  or  the  com- 
munity, and  not  an  action  for  remedying  a  wrong  done  to  an  indi- 
vidual. A  proceeding,  then,  in  order  to  c-ome  within  rule  40,  must 
be  in  the  nature  of  a  suit  in  favor  of  the  state  whose  law  has  been 
infringed." 

This  question  of  distinction  between  penal  actions  brought 


16 


101   FEDERAL  BEPOKTER,  903. 
Opinion  of  the  CJourt 


by  a  common  informer,  or  on  behalf  of  the  state,  to  redi-ess 
a  public  wrong,  and  remedial  actions  brought  by  the  party 
injured  to  redress  a  private  wrong,  has  been  under  consid- 
eration in  many  adjudged  cases.  13  Am.  &  Eng.  Enc.  Law 
(2d  Ed.)  52;  16  Enc.  PL  &  Prac.  229,  where  the  subject  wiU 
be  found  fully  treated,  and  the  cases  cited. 

[904]  It  is  quite  obvious  that  no  sound  i-eason  could  be 
suggested  why  eongi-ess  would  have  been  concerned  in  i)re- 
scribing  a  limitation  to  actions  for  penalties  or  forfeitures 
other  than  such  as  are  prescribed  in  favor  of  the  United  States 
for  breaches  of  public  law,  punishable  by  i>ecuniary  mulct, 
or  otherwise,  at  the  instance  of  the  United  States.  In 
Cmn.pb€U  v.  City  of  Haverhill j  the  court  said :  - 

'*  Is  it  not  more  reasonable  to  pre»iiiiie  that  eongreas,  in  authoriz- 
ing an  action  for  infrinj,'eineiit.  intended  to  subject  such  action  to 
the  general  laws  of  the  state  applicable  to  actions  of  a  similar  nature? 
In  creating  a  new  right  and  providing  a  court  for  the  enforcement  of 
such  right,  must  we  not  presume  that  congress  intended  that  the 
reme«ly  should  be  enfon^ed  In  the  manner  common  to  lilce  actions 
within  the  same  jurisdiction/' 

Til  is  languagfi  is  equally  api)licable  to  the  remedy  pro- 
vided by  section  7  of  the  act  in  question. 

In  examining  the  question  of  what  "  suit  or  prosecution 
for  any  penalty  or  forfeiture,  pecuniary  or  otherwise,  ac- 
cruing under  the  laws  of  the  United  States,"  is  within  the 
purpose  and  meaning  of  section  1047,  it  would  seem  that 
reference  may,  with  propriety,  be  made  to  section  919  as 
possibly  tlirowing  light  on  the  inquiry,  in  which  it  is  pro- 
vided that: 

"All  suits  for  the  i-ecovery  of  any  duties,  imposts,  or  taxes,  or  for 
the  enforcement  of  any  penalty  or  forfeiture  provided  by  any  act 
resp<?cting  imports  or  tonnasjce.  or  the  registering  and  recording  or 
enrolling  and  licensing  of  vessels,  or  the  internal  revenue,  or  direct 
taxes,  and  all  suits  arising  under  the  postal  laws,  shall  be  brought  in 
the  name  of  the  United  States," 

The  action  provided  for  in  section  7  of  the  act  could 
neitlier  be  brought  in  the  name  of  the  United  States,  nor 
prosecuted  as  a  popular  or  qui  tam  action,  the  remedy  being 
expressly  restricted  to  the  party  "injured  in  his  business 
or  property."  The  phraseology  of  the  proviso  in  section 
1047  must  be  regarded  as  somewhat  significant  as  to  the 
character  of  the  prosecution  within  the  legislative  purpose. 


CITY   OF  ATLANTA   V,  CHATTANOOGA   F.  &  P.  CO. 


17 


Opinion  of  the  Court 

In  view  of  these  and  other  provisions  of  the  Revised  Stat- 
utes, and  of  the  doctrine  of  more  recent  cases,  it  seems  per- 
missible to  entertain  serious  doubt  whether  section  1047  ap- 
plies, or  was  intended  to  apply,  to  suits  other  than  those 
prosecuted  in  behalf  of  the  United  States.  But,  be  this  as 
it  may,  I  conclude  that  this  is  not  a  penal  action,  and  the 
recovery  sought  is  not  a  penalty  within  the  sense  here  in- 
volved, which  is  substantially  the  same  as  the  international 
sense. 

In  Brady  v.  Daly  the  case  was  considered  with  reference 
to  jurisdiction,  as  well  as  the  statute  of  limitations,  and  the 
case  at  bar,  in  principle,  is  undistinguishable  from  that 
case,  and  is  governed  by  it.  Mr.  Justice  Peckham,  giving 
the  opinion  of  the  court  (page  154,  175  U.  S.,  page  64,  20 

Sup.  Ct.,  page  64,  Adv.  S.  U.  S.,  and  page ,  44  L.  Ed.), 

said: 

"  The  statutes,  it  will  be  perceived,  all  use  the  Avord  '  damages ' 
when  referring  to  the  wrongful  production  of  a  dramatic  composi- 
tion. No  word  of  forfeiture  or  penalty  is  to  be  found  in  them  on 
that  subject.  It  is  evident  that  in  many  cases  it  would  be  quite 
difficult  to  prove  the  exact  amount  of  damages  which  the  proprietor 
of  a  copyrighted  dramatic  composition  suffered  by  reason  of  its  un- 
lawful production  by  another,  and  yet  it  is  also  evident  that  the 
statute  seelvs  to  provide  a  remedy  for  such  a  wrong,  and  to  grant  to 
the  proprietor  [905]  the  right  to  recover  the  damages  which  he  has 
sustained  tlierefrom.  The  idea  of  the  pimishment  of  the  wrong- 
doer is  not  so  much  suggested  by  the  language  used  in  the  statute  as 
is  a  desire  to  provide  for  the  recovery  by  the  proprietor  of  full  com- 
pensation from  tlie  wrongdoer  for  the  damages  such  proprietor  has 
sustained  from  the  wrongful  act  of  the  latter." 

The  reasoning  thus  adopted  is  forcibly  applicable  to  the 
cases  at  bar. 

In  Pidcock  v.  Harrington  (C.  C.)  64  Fed.  821,  the  main 
question  was  whether  the  anti-trust  act  conferred  on  a  pri- 
vate person  a  right  to  sue  in  equity  to  restrain  the  act  for- 
bidden by  the  statute.  It  was  determined  that  an  action  at 
law  for  damages  was  the  only  remedy  of  a  private  person. 
In  analyzing  the  statute,  Judge  Coxe  said : 

"The  first  three  sections  are  penal  statutes.  They  give  no  civil 
remedy.  Section  4  vests  the  right  to  institute  proceedings  in  equity 
in  the  district  attorneys  of  the  United  States,  and,  together  with  sec- 
tion 5,  prescribes  the  procedure  in  such  suits.  Section  6  provides  for 
the  seizure  and  forfeiture  to  the  United  States  of  property  illegally 
owned  under  the  provisions  of  the  act.     So  far,  then,  the  act  is  a 

21220— VOL  2—07  M 2 


lo 


101   FEDEKAL   REPORTER,   905. 
Opinion  of  the  Court 


public  act  providing  no  private  remedy.  If  it  ended  witb  section  6, 
there  would  probably  be  no  pretense  that  it  sanctioned  a  suit  lilvc  the 
one  at  bar.  What  follows,  however,  in  no  way  strengthens  the 
complainant's  position.  The  only  section  which  gives  a  private  rem- 
edy is  the  seventh,  which  is  as  follows."  Then,  setting  out  section  7 
in  the  veiy  language  of  the  statute,  the  court  proceeded  to  sav :  "  But 
for  this  section,  no  private  person  would  have  any  standing'  in  court 
and,  as  the  only  right  conferred  by  it  is  the  right  to  sue  for  damages 
.in  a  court  of  law,  it  follows  that  the  point  presented  bv  the  demurrer 
is  well  foundetl.  The  precise  question  was  decided  in  favor  of  the 
views  here  expressed  in  BUndell  v.  Ilagan  (C.  C.)  54  Fed.  40.  af- 
flnned  in  56  Feci.  (J!)0.  6  C.  C.  A.  86." 

See,  also,  14  Enc.  PL  &  Prac.  55. 

It  is  insisted  by  plaintiffs'  counsel  that,  in  so  far  as  the 
statute  authorizes  the  recoyery  of  damages  above  those  actu- 
ally sustained,  the  actions  must  be  regarded  as  penal.  As, 
undoubtedly,  the  chief  object  of  this  section  of  the  statute 
is  remedial  and  protective,  the  fact  that  damages  above  ac- 
tual compensation  are  allowed  would  not  change  the  real 
character  of  the  action.  In  many  civil  actions  for  the  re- 
dress of  private  wrongs,  exemplary  or  punitive  damages 
may  be  allowed  by  the  court  or  jury,  but  this  does  not  make 
the  action  penal.  As  was  said  by  the  supreme  court  of  the 
United  States  in  Railway  Co.  v.  Humes,  115  U.  S.  512,  6  Sup. 
Ct.  110,  29  L.  Ed.  463 : 

"The  injury  actually  received  is  often  so  small  that  in  manv  cases 
no  effort  would  be  made  by  the  sufferer  to  obtain  redress  if  tlie  pri- 
vate interest  were  not  supporteil  by  the  imposition  of  punitive 
damages." 

In  suits  for  the  infringement  of  patents  in  the  event  a 
verdict  is  rendered  for  the  plaintiff,  the  court  is  expressly 
authorized  to  enter  judgment  for  any  sum  above  the  amount 
found  by  the  verdict  as  actual  damages,  not  exceeding  three 
times  the  amount  of  the  verdict,  together  with  the  costs 
(Rev.  St.  §  4919) ;  and  under  section  4921,  a  court  of  equity, 
when  exercising  jurisdiction,  is  empowered  in  like  manner 
to  increase  the  damages  found;  the  statute  providing: 

"  And  the  court  shall  have  the  same  power  to  increase  such  damages, 
in  its  discretion,  as  is  given  to  increase  the  damages  found  bv  ver- 
dicts in  actions  in  the  nature  of  actions  of  trespass  upon  the  case." 

[S061  Kevei-tlioless,  Camphell  v.  City  of  Haverhill  was  an 
action  on  the  case  for  infringement  of  letters  patent,  in  which 
it  was  fidjudged  that  the  statute  of  limitations  of  the  several 
states  applied  to  such  actions,  and  the  suggestion  that  the 


CITY  OF  ATLANTA  V.   CHATTANOOGA  F.  &  P.  CO. 


19 


Opinion  of  the  Court. 

action  was  penal  evidently  did  not  occur  to  counsel  or  the 
court. 

Another  view  affecting  the  proper  interpretation  of  the 
statute  should  be  mentioned  in  closing  the  discussion  of  this 
point  in  the  ca^.  Section  3  of  the  statute  declares  unlawful 
and  prohibits  every  trade  combination  or  trust  contract,  and 
inflicts  punishment  for  a  violation  of  the  statute  by  enacting 
that: 

"  Every  person  who  shall  make  any  such  contract  or  engage  in  any 
such  combination  or  conspiracy,  shall  be  deemed  guilty  of  a  misde- 
meanor, and,  on  conviction  thereof,  shall  be  punished  by  fine  not  ex- 
ceeding five  thousand  dollars,  or  by  imprisonment  not  exceeding  one 
year,  or  by  both  said  punishments,  in  the  discretion  of  the  court." 

It  Avould  be  unusual  to  discover  that  a  statute  inflicted 
punishment  for  infringement  of  its  provisions  by  fine  and 
imprisonment,  or  either,  and  again  in  the  form  of  pecuniary 
penalty  for  tlie  same  act.  A  sound  rule  of  interpretation 
would  be  that  when  a  statute  inflicts  punishment  by  way  of 
fine  and  imprisonment  at  the  suit  of  the  state  for  a  public 
wrong  affecting  the  whole  community,  and  also  confers  a 
remedy  on  a  party  for  prixate  injuries  resulting  from 
breaches  of  the  statute,  the  latter  will  not  be  regarded  as  a 
penalty  unless  the  statute  so  declares.  It  was  accordingly  so 
decided  by  the  supreme  court  of  Ohio  in  Railway  Co.  v. 
Methven^  21  (3hio  St.  586.  A  statute  providing  for  a  fine 
or  penalty  usually  either  fixes  the  amount,  or  prescribes 
maximum  and  minimum  limits  within  which  the  amount 
must  be  fixed  by  the  court  or  jury,  as  the  punishment,  and 
the  amount  bears  no  direct  relation  to  damages  sustained  by 
private  injury.  The  amount  of  damages  which  may  be  re- 
covered in  the  remedial  action  afforded  by  section  7  of  the 
act  in  question  is  determined  by  the  injury  sustained,  and 
the  actual  compensation  therefor  increased  to  treble  that 
amount.  The  damages  actually  claimed  here  in  the  first  case 
are  laid  at  the  sum  of  $50,000,  and  in  the  second  $20,000. 
The  great  disproportion  between  these  sums  and  the  maxi- 
mum limit  of  the  fine  imposed  by  section  3  is  a  circumstance 
admitting  of  no  rational  explanation,  if  the  damages  re- 
covered under  section  7  must  be  regarded  as  a  penalty  in- 
flicted as  punishment,  like  the  fine  imposed  under  section  3. 
These  and  otlier  characteristic  points  of  difference  between 


20 


IM  FEDERAL  REPORTER,  906. 


Opinion  of  the  Court. 

penal  and  remedial  actions  support  the  conclusion  arrived 
at  that  these  actions  are  remedial  and  Compensatory  only. 
.  The  question  now  remains  whether  the  statute  of  limita- 
tions of  the  state  relied  on  is  applicable  to  these  actions,  or 
actions  of  the  chiss  to  which  they  belong.  Tfe  statute  (Shan- 
non's Code,  §  44G6)  expressly  declares  the  legislative  pur- 
pose and  intent  to  prescribe  a  bar  to  "  all  civil  actions  other 
than  those  f6r  causes  embraced  in  the  foregoing  article,"  the 
limitation  of  real  actions  having  been  provided  in  the  pre- 
ceding article.  Sections  then  follow  prescribing  a  period  of 
limitation  to  various  suits,  such  as  actions  for  injuries  to  the 
per-  f907]  son,  and  statute  penalties,  among  which  is  sec- 
tion 4470,  which  reads  as  follows : 

"Actions  for  injuries  to  persimal  or  real  property ;  actions  for  tlie 
detention  or  conversion  of  personal  property,  witiiin  three  years  from 
the  accruing  of  the  cause  of  action." 

The  words  "  personal  and  real  property  "  arc  by  the  Code 
itself  (section  63)  thus  defined: 

"The  word  *  property'  includes  both  personal  and  real  nronert\" 

the  words  'personal  property'  Include  money,  goods,  chattels   thingi 

n  action  and  evidences  of  debt ;  *  real  estate,'  '  real  property  "  land!/ 

include  lands,  tenements  an<l  hereditaments,  and  all  rlghte  thereto 

and  interests  therein,  e<iuitable  as  well  as  legal."  luerero 

A  definition  of  "  personal  property,"  as  given  by  a  critical 
writer,  and  fully  sustained  by  authority,  is  in  these  words : 

♦1,17^'*^''?^  property  Includes  every  kind  of  chose  in  action,  using 
that  term  in  its  very  widest  sense.  It  Includes,  that  is  to  sav  everv 
ZSS«'?7?]''^  ^^''S?*  ^.touched,  or  intangible  movable.    This  it  iS- 

fwL^*'^*'*'  ^?/?®  S?t*  ^^^  ""^  *»»«  *«"»'  a^d  also  everything 
(not  an  immovable)  which  can  be  made  the  object  of  a  legal  claim  • 

Sii*!''llwT  P^kV^"^'"'"  ^^""^  ^  ^  partnership  property  "    Dicey! 

See,  also,  1  Schouler,  Pers.  Prop.  (3d  Ed.)  2-17. 

It  will  be  observed  that  by  the  very  terms  of  the  act  of 
congress,  the  remedy  of  a  suit  to  recover  damages  is  only 
conferred  on  "  any  person  who  shall  be  injured  in  his  busi- 
ness  or  property."  The  suits  in  these  cases  must,  therefore, 
necessarily  be  construed  as  actions  to  recover  damages  for  an 
injury  to  "  business  or  property." 

The  plaintiff  in  the  first-named  case  is  engaged  in  no 
business  whatever,  and  the  plaintiffs  in  the  second  case  are 
engaged  in  the  business  of  taking  contracts  to  furnish  and 


CITY  OF  ATLANTA  V.   CHATTANOOGA  F.  &   P.  CO. 


21 


Opinion  of  the  Court 

place  in  position  pipes  and  fittings.  They  do  not  deal  in  or 
handle  pipes  and  fittings  as  merchants  or  dealers  would  do. 
It  will  admit  of  question  whether,  in  an  action  under  the 
statute  for  an  injury  to  business  alone,  it  would  not  be  neces- 
sary for  a  plaintiff  to  allege  that  he  was  engaged  in  inter- 
state trade  or  commerce,  in  order  to  come  within  the  protec- 
tion of  the  act .  Dueber  Watch-Case  Mfg,  Co,  v.  E,  Howard 
Watch  (Si  Clock  Co,  (C.  C.)  55  Fed.  851;  Bishop  v.  Pre- 
servers' Co,  (C.  C.)  51  Fed.  272.  In  Lowry  v.  Association 
(C.  C.)  98  Fed.  817,  facts  are  disclosed  which,  in  respect  of 
both  the  character  of  business  and  method  of  injury  to  such 
business,  bring  the  case  within  the  anti-trust  act.  However, 
the  injuries  alleged  in  the  declarations  as  grounds  for  re- 
covery are  not  injuries  to  any  business  in  which  the  plaintiffs 
were  engaged.  The  suits  are  clearly  for  the  recovery  of  the 
difference  between  the  fair  market  value  of  the  goods  pur- 
chased and  the  unlawful  prices  arbitrarily  fixed  by  the 
trust  combination;  or,  stated  in  another  form,  the  suits  are 
to  recover  back,  as  damages,  the  sums  of  money  unlawfully 
demanded  and  paid,  increased  threefold  by  the  express  direc- 
tion of  the  act.  Now,  money  has  been  declared  to  be  per- 
sonal property,  not  only  by  state  statute,  but  again  and 
again  by  text  writers  and  in  judicial  statement.  Confess- 
edly, the  declarations  present  no  case  of  an  injury  to  prop- 
erty at  all  unless  it  is  personal  property.  I  am  unable  to 
perceive  that  the  actions  are  for  injuries  other  than  to  per- 
sonal property. 

[908]  The  contention,  finally,  is  that  section  4470  of  Shan- 
non's Code  of  Tennessee  is  applicable  only  when  the  injury 
is  direct.  Such  an  interpretation  would  disregard  all  prog- 
ress, and  carry  us  back  to  the  old  action  of  trespass.  Before 
the  reformed  code  systems  of  pleading  adopted  in  most  of 
the  states,  the  action  on  the  case  had,  by  wide  application, 
become  the  remedy  of  every  wrong  or  injury  to  personal 
property  to  which  trespass  would  not  apply.  Trespass  upon 
the  case  would  lie  for  every  civil  wrong  to  chattels  personal, 
whether  corporeal  or  incorporeal,  and  whether  the  injury 
was  direct  and  immediate  or  indirect  and  consequential. 
And.  Steph.  PI.  §  52;  Bish.  Noncont.  Law,  §  45;  Cooley, 
I'orts  (2  Ed.)  510;  Poll.  Torts  (5th  Eng.  Ed.)  pp.  13,  22, 


mjtmm 


101  FEDERAL  REPORTER,   908. 


Opinion  of  the  Court. 

495.  See,  also,  Carrol  v.  Green,  92  U.  S.  509,  23  L.  Ed.  738 ; 
Railway  Co.  v.  CUrh,  38  U.  S.  App.  573,  20  C.  C.  A.  447,  73 
Fed.  76,  74  Fed.  362;  CockHll  v.  Butler  (C.  C.)  78  Fed.  679. 
No  valid  reason  could  be  suggested  for  a  construction  of  the 
statute  which  would  restrict  its  application  within  such  nar- 
row limits  in  view  of  the  wide  and  various  applications  of 
actions  on  the  case.  The  words  of  the  statute,  "  actions  for 
injuries  to  personal  or  real  property,"  are  general,  and  in  no 
wise  restricted  by  the  specific  mention  of  actions  for  deten- 
tion or  conversion.  If,  indeed,  money  unlawfully  obtained 
as  alleged  in  these  declarations  is  not  a  direct  injury,  the 
civil  wrong  belongs  to  a  class  for  the  redress  of  which  tres- 
pass on  the  case  had  been  a  long-used  remedy  at  the  time  of 
the  adoption  of  the  Code.  In  1  Add.  Torts  (6th  Ed.)  §  27,  it 
is  said: 

**  If  one  man  has  obtained  money  from  another  through  the  medium 
of  oppression,  imposition,  extortion,  or  deceit,  or  by  the  commission  of 
a  trespass,  such  money  is,  in  contemplation  of  lavv,  not  the  money  of 
the  wrongdoer,  but  of  the  injured  person,  whose  title  to  it  cannot  be 
destroyed  and  annulled  by  the  fraudulent  and  unjust  dispossession." 

The  author  then,  declaring  that  an  action  will  lie  to 
recover  back  money  paid  under  such  conditions,  continues: 

"  Such  an  action  also  lies  against  all  persons  who  extort  money  for 
doing  what  they  are  by  law  bound  to  do  without  payment  or  reward, 
or  who  receive,  and  have  in  their  possession,  and  wrongfully  detain, 
the  money  of  another ;  '  for,'  as  it  has  been  observed,  '  no  man  will 
venture  to  take,  if  he  knows  he  is  liable  to  refund.'  " 

The  doctrine  is  supported  by  reference  to  cases  in  which  it 
was  decided  that  money  may  be  recovered  back  when  wrong- 
fully paid  under  different  circumstances.  Thus,  excessive 
charges  demanded  by  a  carrier  of  goods  for  transportation, 
and  paid  by  the  consignee  in  order  to  get  possession,  would 
support  an  action  to  recover  back  the  excess.  So,  of  money 
paid  under  the  coercion  of  threatened  litigation,  or  money 
unlawfully  demanded  and  received  by  a  revenue  officer  for 
the  release  of  goods  seized,  or  other  like  payments  wrong- 
fully demanded  and  taken.  In  2  Greenl.  Ev.  (16th  Ed.)  § 
224,  the  distinction  between  an  action  of  trespass  and  an 
action  on  the  case  is  stated  clearly,  and  in  the  fewest  words 
possible,  thus : 

"  By  the  former,  redress  is  sought  for  an  injury  accompanied  with 
actual  force ;  by  the  latter,  it  is  sought  for  a  wrong  without  force." 


CITY  OF  ATLANTA  V.   CHATTANOOGA  F.  &  P.  CO. 


23 


Opinion  of  the  Court. 

[909]  And  in  reference  to  the  character  of  the  injury 
which  would  support  an  action  on  the  case  it  is  further 
observed : 

"  So,  though  the  property  was  forcibly  taken,  the  force  may  be 
waived,  and  trover,  which  is  an  action  on  the  case,  may  be  sustained, 
for  the  value  of  the  goods."    Id.  §  226. 

The  extended  use  of  the  action  of  trespass  on  the  case  is 
well  indicated  by  the  following  definition,  which  has  been 
generally  accepted  as  accurate: 

*'  The'  writ  of  trespass  upon  the  case  lies  where  a  party  sues  for 
damages  for  any  wrong  or  cause  of  complaint  to  which  covenant  or 
trespass  will  not  apply."     And.  Steph.  PI.  §  52. 

See,  also,  upon  this  subject,  Cockrill  v.  Butler  (C.  C.)  78 
Fed.  679,  and  authorities  there  cited. 

The  circumstance  that  an  exorbitant  price  for  a  commodity 
arbitrarilv  fixed  bv  a  trust  combination  is  demanded  and  re- 
ceived  through  the  medium  of  a  contract  of  purchase  in  no 
wise  affects  or  changes  the  real  nature  of  the  injuiy  as  an 
unlawful  taking  and  detention.  "'  The  conmiission  of  an  act 
specifically  forbidden  by  law,  or  the  omission  or  failure  to 
perform  any  duty  specifically  imposed  by  law,  is  generally 
equivalent  to  an  act  done  with  intent  to  cause  wrongful  in- 
jury. Where  the  harm  that  ensues  from  the  unlawful  act 
or  omission  is  the  very  kind  of  harm  which  it  was  the  aim  of 
the  law  to  prevent  (and  this  is  the  commonest  case),  the  jus- 
tice and  necessity  of  this  rule  are  manifest  without  further 
comment."    Poll.  Torts  (5th  Ed.)  p.  23. 

In  Conk  V.  Railroad  Co.,  1  Tenn.  Cas.  409,  possession  of  the 
goods  was  obtained  through  a  contract  for  transportation, 
and  the  action  was  for  the  value  of  the  goods.  "  The  action,' 
said  the  supreme  court,  "  is  for  the  detention  or  conversion 
of  the  plaintiff's  property.  It  is  true,  the  contract  for  carry- 
ing the  goods  is  averred,  and  that  the  defendant  failed  to 
comply  with  it.  Yet  the  gist  of  the  action  is  the  detention  or 
conversion  of  the  property,  by  which  it  was  lost  to  the  plain-, 
tiff."    It  was  held  that  three  vears  was  the  limitation. 

« 

In  the  light  of  this  exposition  of  the  law  in  respect  of  the 
form  and  proper  application  of  the  older  and  well-defined 
remedies,  the  inquiry  into  the  legislative  purpose  disclosed  in 
the  section  of  the  Code  with  which  I  am  dealing  ought  not  to 


24 


101  FEDEKAL   BEPORTER,  909. 


Opiuion  of  the  Court 

*  involve  a  question  of  interpretation  which  will  not  admit  of 
satisfactory  answer.    The  Code  of  1858  is  a  systematic  com- 
pilation enacted  as  such,  every  part  of  which  must  be  read  in 
view  of  this  circumstance,  and  not  as  an  independent  enact- 
ment.   Forms  of  actions  were  abolished  by  the  Code,  and 
the  statute  of  limitations  does  not  depend  on  the  form,  but 
on  the  cause,  of  action.     Ccmk  v.  Railroad  Co.,  1  Tenn.  Cas. 
409.    In  construing  the  words  "  actions  for  injuries  to  per- 
sonal or  real  property,"  as  found  in  section  4470,  it  seems 
allowable  to  refer  to  sections  4437  and  4438  in  the  preceding 
chapter,  under  the  same  title,  both  chapters  belonging  to  part 
3  of  Shannon's  Code,  which  treats  "  Of  the  Redress  of  Civil 
Injuries."    In  the  sections  last  referred  to  the  Code  under- 
takes to  deal  with  all  actions  in  the  well-recognized  classes  of 
actions  ex  contractu  and  ex  delicto,  and  to  completely  abol- 
[010]  ish  forms  of  action.    Section  4437  declares  that  "  all 
contracts  may  be  sued  on  in  the  same  form  of  action,"  and 
section  4438,  dealing  with  the  general  subject  of  torts,  pro- 
vides that  *'  all  wrongs  and  injuries  to  the  property,  in  which 
money  only  is  demanded  as  damages,  may  be  redressed  by  an 
action  on  the  facts  of  the  case."    No  valid  reason  could  be 
offered  to  support  an  interpretation  which  would  give  to  tlie 
words  "  actions  for  injuries  to  personal  or  real  property,"  in 
section  4470,  a  meaning  more  restricted  than  the  sense  in 
which  the  words  "  all  wrongs  and  injuries  to  tlie  property  " 
are  used  in  section  4438.    It  is  hardly  to  be  doubted  on  any 
substantial  ground  that  the  legislative  purpose  in  both  sec- 
tions was  to  include  and  provide  for  every  species  of  injury 
to  personal  property  included  in  the  more  general  or  collective 
name  of  torts  or  civil^wrongs.    The  new  remedy  provided 
by  congress  must  be  enforced  just  as  like  actions^within  the 
same  jurisdiction  (Camphell  v.  City  of  Haverhill;  Cochrill 
V.  Entler),  in  accord  with  Eev.  St.  §  914.    The  actions  are, 
therefore,  prosecuted  according  to  Shannon's  Code  Tenn. 
§  4438,  as  actions  "  on  the  facts  of  the  case  ";  and,  agi^eably 
to  Eev.  St.  §  721,  as  expounded  in  the  cases  last  cited  (also, 
Emdy  v.  Daly),  the  state  statute  of  limitations  furnishes  the 
rule  of  decision. 

Having  regard  to  the  real  nature  and  purpose  of  the  ac- 
tions, I  conclude  that  they  are  suits  for  an  injury  to  personal 


GIBBS   V,  M  KEELEY. 


25 


Syllabus. 

property,  and  within  section  4470  of  the  state  statute  of  limi- 
tations prescribing  a  period  of  three  years  as  a  bar  to  such 
suits.  It  follows,  of  course,  that  section  4469  is  inapplicable. 
Accordingly,  the  demurrer  as  to  the  second  plea  is  sustained, 
and  as  to  the  third  plea  overruled. 


[594]  GIBBS  V.  McNEELEY  ET  AL.° 

(Circuit  Court,  D.  Washington,  W.  D.    June  8,  1900.) 

[102  Fed.,  594.] 

Monopolies — Action  undeb  Anti-Trust  Law — Pleading. — A  com- 
plaint in  a  civil  action,  based  on  the  anti-trust  law  of  1890,  alleging 
an  illegal  combination  by  defendants  in  restraint  of  trade,  is  fatally 
defective,  where  it  fails  to  show  that  plaintiff  has  suffered  damage 
by  reason  of  such  combination.^ 

Same — Illegal  Combinations  within  the  Statute — Right  of  Ac- 
tion FOR  Damages. — An  association  of  manufacturers  of  shingles 
within  a  particular  state,  formed  for  the  purpose  of  securing  con- 
certed action  between  its  members  to  prevent  overproduction  and 
establish  uniform  prices  and  grading,  is  not  an  illegal  combination 
in  restraint  of  interstate  or  foreign  commerce,  within  the  meaning 
of  the  anti-tnist  law  of  1890,  or  subject  to  federal  control ;  and  the 
fact  that  through  the  action  of  the  association  the  mills  of  its  mem- 
bers were  closed  for  a  certain  time,  and  the  price  of  shingles  was 
raised,  but  not  to  an  extent  alleged  to  be  unreasonable  or  exorbi- 
tant, does  not  give  a  dealer  in  shingles  for  export  a  right  of  action 
against  it  or  its  members  under  such  law. 

Same. — The  action  of  an  association  of  manufacturers  in  adopting  a 
resolution  denouncing  a  dealer  in  the  product  they  manufactured, 
who  bought  and  shipped  such  product  to  customers  in  other  states 
and  foreign  countries,  and  in  printing  such  resolution  in  circulars, 
and  mailing  the  same  to  other  manufacturers  and  customei*s  of  the 
dealer,  whereby  his  business  was  injured,  constituted  an  illegal 
combination  or  conspiracy  in  restraint  of  interstate  and  foreign 
commerce,  and  gives  the  person  injured  a  right  of  action  in  a 
circuit  court  of  the  United  States,  under  the  anti-trust  law  of  1890, 
to  recover  the  damages  sustained. 

o  Verdict  for  defendants  directed  by  Circuit  Court  (107  Fed.,  210). 
See  p.  71.  Reversed  by  Circuit  Court  of  Appeals,  Ninth  Circuit  (118 
Fed.,  120).    See  p.  1^. 

6  Syllabus  copyrighted,  1900,  by  West  Publishing  Co. 


26 


102  FEDEBAL  KEPORTER,  591. 
Opinion  of  the  Court 


Action  to  recover  damages  claimed  on  account  of  an  un- 
lawful combination  to  restrain  interstate  and  foreign  com- 
merce, and  a  conspiracy  on  the  part  of  the  defendants  to 
establish  and  control  prices  of  the  product  of  the  mills  em- 
ployed in  manufacturing  red-cedar  shingles,  in  the  state  of 
Washington,  and  to  limit  the  production  of  red-cedar  shin- 
gles so  as  to  prevent  demoralization  of  the  market  by  over- 
production, and  also  to  recover  damages  alleged  to  have  been 
caused  by  the  defendants  and  others,  forming  an  unincor- 
porated association  of  shingle  manufacturers  under  the  name 
and  style  of  the  Washington  Eed-Cedar  Shingle  Manufac- 
turers' Association,  by  the  circulation  through  the  mails  and 
publication  of  false  and  defamatory  statements  concerning 
the  plaintiff,  and  intended  to  injure  him  in  his  business  as 
a  buyer  and  exporter  of  red-cedar  shingles.  Denuirrer  to 
complaint  overruled. 

T,  O,  Ahhottj  for  plaintiff. 

Bates  cC'  Murray^  for  defendants. 

Han  FORD,  District  Judge. 

The  plaintiff's  amended  complaint  sets  forth  four  separate 
causes  of  action.    The  material  allegations  to  be  considered 
may  be  condensed  into  a  few  sentences.    The  plaintiff  shows 
that  for  several  years  he  was  engaged  in  business  at  Tacoma, 
in  the  state  of  Washington,  as  a  buyer  and  exporter  of  red- 
cedar  shingles;   that  red-cedar  shingles  are  a  staple  article 
of  manufacture  in  the  state  of  Washington,  the  market  for 
which  is  mostly  in  other  states  and  in  Canada;    that  the 
defendants,  and  other  persons,  firms,  [595]  and  corporations 
named  in  the  complaint,  are  manufacturers  of  red-cedar 
shingles,  owning  and  operating  mills  in  several  different 
places  in  this  state,  and  that  they  have  formed  and  constitute 
an  unincorporated  association  having  for  its  object  the  pre- 
vention of  injurious  competition,  and  that  the  organization 
and  maintenance  of  said  association  is  in  violation  of  the 
act  of  congress  entitled  "  An  act  to  protect  trade  and  com- 
merce  against   unlawful   restraints   and   monopolies,"   ap- 
proved July  2,  1890  (1  Sup.  Rev.  St.  [2d  Ed.]  762).    For  a 
second  cause  of  action  the  complaint  alleges,  in  addition  to 


GIBBS   V,  M  NEELEY. 


Opinion  of  the  Court. 


27. 


the  matters  already  recited,  that  the  association  has  estab- 
lished prices  for  red-cedar  shingles  below  which  members 
are  not  allowed  to  sell,  said  prices  being  a  little  higher  than 
the  market  prices  prior  to  the  formation  of  the  association ; 
that  the  plaintiff's  customers  refused  to  buy  at  the  prices 
fixed  by  the  association,  causing  him  damage  in  the  loss  of 
trade  to  the  amount  of  $1,200.    For  a  third  cause  of  action 
the  complaint  alleges,  as  additional  matter,  that  the  associa- 
tion caused  all  the  shingle  mills  owned  and  operated  by  its 
members  to  shut  down  for  a  period  of  60  days  for  the  pur- 
pose of  preventing  an  oversupply,  and  that  by  restricting 
the  production  of  red-cedar  shingles  the  plaintiff  sustained 
further  damages  by  loss  of  trade  to  the  amount  of  $1,000. 
For  a  fourth  cause  of  action  the  plaintiff  charges  that  the 
defendants  and  other  members  of  the  association,  with  intent 
to  injure  the  plaintiff  and  to  destroy  his  business,  at  a  meet- 
ing of  the  central  committee  of  the  association,  adopted  cer- 
tain resolutions  containing  false  and  defamatory  statements 
concerning  the   plaintiff,   charging  that   the  plaintiff  was 
endeavoring  to  injure  the  market  for  Washington  red-cedar 
shingles;   that  plaintiff  had  no  money  invested  in  his  busi- 
ness as  a  dealer  in  shingles;  that  he  was  without  credit,  and 
was  irresponsible,  and  was  not  an  honorable  and  legitimate 
dealer  in  shingles ;  that  the  officers  of  the  association  caused 
said  resolutions  containing  said  false  and  defamatory  mat- 
ters to  be  written  and  made  a  part  of  the  records  of  the 
association,  and  caused  the  same  to  be  printed  as  a  circular, 
and  to  be  distributed  through  the  United  States  mails,  ad- 
dressed to  each  manufacturer  of  shingles  in  the  state  of 
Washington,  and  to  various  wholesale  and  retail  dealers, 
including  customers  of  the  plaintiff  in  the  United  States  and 
Canada,  and  to  a  number  of  newspapers  and  trade  journals 
having  circulation  among  the  plaintiff's  customers;   that  as 
the  result  of  said  combination  and  conspiracy  among  the 
defendants  and  other  members  of  said  association,  and  of 
the  acts  and  things  complained  of,  odium  and  discredit  were 
cast  upon  the  plaintiff,  and  his  customers  thereafter  refused 
to  buy  shingles  of  him,  and  the  manufacturers  of  shingles 
who  theretofore  had  transacted  business  with  him  refused 


28 


102   FEDEKAL  REPOETEB,   595. 


Opinion  of  the  Court 
to  sell  shingles  to  him,  and  by  that  means  his  business  was 
totallydestroyed.  to  his  damage  in  the  sum  of  $15,000. 

1.  The  complaint  in  it«  statement  of  the  first  cause  of  ac- 
tion IS  radically  defective,  in  this:  that  it  does  not  allege 
that  any  damage  has  resulted  to  the  plaintiff  from  the  acts 
complained  of,  and  for  that  rea.son  the  demurrer  will  be  sus- 

dllI16CI« 

2.  The  gist  of  the  second  cause  of  action  is  that  the  plain- 
tiif  has  l>een  damaged  by  diminution  of  trade  in  conse- 
quence of  the  action  of  the  association  in  raising  the  price  of 
shmg  es:  and  the  third  cause  of  [596]  action  is  similar,  the 
complamt  bemg  that  a  shrinkage  of  the  plaintiff's  business 
was  caused  hy  the  action  of  the  association  in  suspending 
the  operation  of  mills  controlled  by  it,  so  as. to  prevent  an 
overstocking  of  the  market.    Both  of  these  causes  of  action 
appear  to  be  predicated  upon  a  notion  that  because  the  plain- 
tiff was  a  buyer  and  exporter  of  shingles  he  had  a  vested 
right  to  the  benefit  of  uni-estrained  competition  for  trade 
among  manufacturers,  and  that  the  plaintiff  has  a  vested 
right  at  all  times  to  have  a  surplus  of  shingles  on  the  market 
so  that  he  may  enjoy  that  advantage  in  buying  to  supply 
the  demands  of  his  customers,  and  that  bv  deprivinor  him  of 
these  benefits  and  advantages  the  association  has  committed 
a  lega  wrong,  and  deprived  him  of  valuable  property  rights 
for  which  he  is  entitled  to  recover  damages.    There  is  no 
allegation  m  the  complaint  that  the  price  of  shingles  fixed 
by  the  association  is  higher  than  the  reasonable  price,  con- 
sidering  the   necessary  cost   of  production,   and   allowing 
something  for  the  value  of  the  tiniber  to  the  owners  of  the 
land  upon  which  it  grows,  and  a  reasonable  profit  to  the 
manufacturers,  nor  that  the  wants  of  consumers  have  not 
been  promptly  supplied.    On  the  contrary,  the  pleader  has 
boldly  advanced  the  selfish  theoiy  that,  unless  conditions  are 
maintained  so  that  a  middleman  or  speculator  may  operate 
with  profit  to  himself,  he  has  a  right  to  comj^ensation  in 
damages  from  the  ownei-s  of  mills  who  refuse  to  operate  for 
his  benefit,  or  t<.  sell  the  product  at  prices  satisfactoiy  to  him 
regardless  of  losses  which  may  result  to  them  from  such  oper- 
ation.   It  is  a  well-known  and  lamentable  fact  that  for  half  a 
century  loggei-s  have  been  permitted  to  cull  the  magnificent 


GIBBS  V,  mVeELEY. 


29 


Opinion  of  the  Court, 
forests  of  this  state,  wasting  the  greatest  of  her  natural  en- 
dowments, by  cutting  fir  and  cedar  trees  recklesslv,  sending 
only  the  best  logs  to  the  mills  to  be  manufactured  into  lumber 
for  shipment  to  market  in  distant  states  and  countries,  leav- 
ing the  residue  to  decay  upon  the  ground,  or  give  additional 
energy  to  the  destructive  force  of  forest  fires  in  the  summer 
months.     They  have  paid  but  little  for  stumpage,  and  fre- 
quently their  hired  laborers  have  been  defrauded  of  their 
wages.     Unrestrained  competition  has  been  the  means  by 
which  this  state  has  been  stripped  of  its  wealth.     Cedar  trees 
standing  and  growing  in  our  forests  are  a  blessing  to  the 
state,  and  they  ought  to  be  preserved,  at  least  until  their 
value  is  appreciated,  so  that  the  crop  which  has  required 
many  centuries  of  time  for  its  perfection  will  be  worth  to 
owners  of  the  land  something  more  than  the  price  which  a 
farmer  may  reasonably  expect  for  his  annual  production. 
It  seems  ridiculous  that  while  land  producing  wheat,  hay, 
vegetables,  or  fruit  in  this  state  usually  brings  annual  re- 
turns over  and  above  expenses  of  cultivating  and  harvesting 
of  from  $10  to  $50  per  acre,  the  average  market  price  for  a 
fee-simple  title  to  timber  land  in  western  Washington  has 
never  yet  been  above  $10  per  acre.     An  association  which 
will  check  the  wanton  destruction  of  cedar  trees  in  this  state, 
by  reckless  lumbermen,  for  the  benefit  of  speculators,  instead 
of  being  condemned,  deserves  the  gratitude  of  the  common- 
wealth.    No  principle  of  natural  justice  is  appealed  to  by 
that  part  of  the  complaint  now  under  consideration,  and  I  do 
not  think  that  the  act  of  congress  commonly  designated  as 
the  "Anti-Trust  Law  of  1890,"  to  which  the  complaint  refers, 
can  be  fairly  construed  so  as  [597]  to  make  the  Washington 
Red-Cedar  Shingle  Manufacturers'  Association  a  criminal 
organization,  so  long  as  its  operations  are  properly  con- 
ducted, and  kept  within  the  scope  of  the  object  for  which 
the  association  was  formed,  as  set  forth  in  its  constitution, 
the  first  article  of  which  reads  as  follows: 

Qi  •"''^^.^i*^®  ^*  *^^^  organization  shall  be  the  Washington  Red-Cedar 
fehiugle  Manufacturers'  Association,  and  its  object  shall  be  to  secure  a 
full  understanding  of  the  conditions  surrounding  the  red-cedar  shingle 
market  throughout  the  United  States;  the  establishing  of  uniform 
rules  for  grading  and  manufacturing;  the  establishing  of  uniform  rates 
and  prices;  and  for  purpose  of  carrying  out  such  other  measures  as 


30 


102  FEDERAL  RBPOBTER,  597. 
Opinion  of  the  Court 


may  Iw  deemed  for  the  welfare  and  in  the  Interest  of  the  manu- 
faetnrew  of  red-cedar  shingles." 

There  is  in  this  declaration  no  hint  of  a  purpose  to  create 
a  monopoly,  or  to  place  any  burden  upon  interstate  or  foreign 
commerce.  The  association,  judged  by  the  instrument  which 
defines  its  object  and  circumscribes  its  powers,  is  iimocent  of 
any  wrong  intent,  because  its  object  is  to  influence  tlie  con- 
duct of  its  members,  and  not  to  assail  the  rights  of  others. 
Concert  of  action  for  mutual  protection  among  farmers  or 
craftsmen  or  miners  whose  operations  are  entirely  within  the 
state  may  indirectly  affect  the  prices  or  the  abundance  of 
commodities  brought  for  sale  within  the  state  by  importers, 
as  well  as  commodities  produced  within  the  state  for  sale 
elsewhere;  but  associations  of  persons  not  themselves  en- 
gaged in  interstate  commerce,  having  no  object  other  than 
to  protect  their  own  rights  and  serve  their  own  interests  in 
business  operations  wholly  confined  within  the  state,  cannot 
be  held  to  be  amenable  as  violators  of  the  anti-trust  law, 
which  is  necessarily  so  limited  as  to  reach  only  combinations 
intended  to  prevent  competition  in  interstate  or  foreign 
commerce. 

The  distinction  between  the  business  of  manufacturing 
staple-commodities  for  sale  to  whomsoever  will  buy,  whether 
for  home  consumption  or  transportation  to  distant  markets, 
and  interstate  commerce,  is  very  clearly  brought  into  view, 
and  the  principle  upon  which  I  intend  to  rest  in  making  this 
decision  is  explained,  in  the  opinion  by  Chief  Justice  Fuller 
in  the  case  of  U.  S,  v.  E.  C,  Knight  Co.,  156  U.  S.  1-11,  15 
Sup.  Ct.  253,  89  L.  Ed.  329.  The  sense  of  that  decision  is 
epitomized  in  the  following  excerpts : 

"The  relief  of  the  citizens  in  eadi  state  from  the  burden  of  mo- 
nopoly and  the  evils  resulting  from  the  restraint  of  trade  amone 
such  citizens  was  left  with  the  states  to  deal  with,  and  this  otmrt  has 
recognizeii  their  possession  of  that  power,  even  to  the  extent  of  holding 
that  an  employment  or  business  carried  on  by  private  individuals 
when  it  became  a  matter  of  such  public  interest  and  imi)ortanco  as  to 
create  a  common  cliarge  or  burdeu  upon  the  citizen,— in  other  words 
when  it  becomes  a  practical  monopoly,  to  which  the  citizen  is  com- 
Iielled  to  resort,  and  by  the  means  of  which  a  tril)ute  can  be  exacted 
from  the  connunnity.— is  snbject  to  regulation  !)v  state  legislative 
power.  On  the  other  hand,  the  power  of  ft>ngres.s  to  regulate  com- 
merce among  the  several  states  is  also  exclusive.  The  constitution 
does  not  provide  that  interstate  commerce  shall  be  free  but  bv  the 
Erant  of  this  legislative  power  to  regulate  it,  it  was  left  free  except  as 


GIBBS   V.  M  NEELEY. 


31 


Opinion  of  the  Court. 

congress  might  impose  restraints.     ♦     *     *     '  Counuerce  und^iubtedly 
is  traffic/  said  Chief  Justice  Marshall ;  '  but  it  is  something  more ;  it 
is  intercourse.     *     *     *     That  which  belongs  to  commerce  is  within 
the  jurisdiction  of  the  United  States,  but  that  which  does  not  belong 
to  conunerce  is  witliin  tlie  jurisdiction  of  the  police  power  of  the 
state.'     Gibbons  v.  Ogdcn,  9  Wheat.  189-210,  6  L.  Ed.  23;  Bronn  v. 
Mariflaml,  12  Wheat.  410-448,  6  L.  Ed.  678;  License  Cases^  5  How. 
505-599,  12  L.  Ed.  256;  [598]  Mobile  Co.  v.  Kimball,  102  U.  S.  691,  26 
L.  Ed.  238;  Bowman  v.  Railicav  Co.,  125  U.  S.  465,  8  Sup.  Ct.  689, 
1062.  31  L.  Ed.  700;  Leisy  v.  Hardin,  135  U.  S.  100,  10  Sup.  Ct.  681,  34 
U  Ed.  128;  In  re  Rahrer,  140  U.  S.  545-555,  11  Sup.  Ct.  865,  35  L.  Ed. 
572.     *     *     *     Doubtless  the  ijower  to  control  the  manufacture  of  a 
given  thing  involves,  in  a  certain  sense,  the  control  of  its  disiwsition, 
but  this  is  a  secondary,  and  not  a  primary,  sense;  and.  although  the 
exercise  of  that  power  uiay  result  in  bringing  the  operation  of  com- 
mene  into  play,  it  dees  not  ct)ntrol  it,  and  affects  it  only  incidentally 
and  indirectly.    Commerce  succeeds  to  manufacture,  and  is  not  a  part 
of  it.     *     *     ♦     The  regulation  of  commerce  applies  to  the  subjects 
of  connnerce,  and  not  to  matters  of  internal  police.    Contracts  to  "buv, 
sell,  or  exchange  goods  to  be  transported  among  the  several  states, 
the  transportation  and  its  instrumentalities,  and  articles  bought,  sold, 
or  exchanged  for  the  purpose  of  such  transit  among  the  states,  or 
put  in  the  way  of  transit,  uiay  be  regulated,  but  this  is  because  they 
lorm  r>art  of  interstate  trade  or  conmierce.    The  fact  that  an  article 
is  manufactured  for  exi)ort  to  another  state  does  not  of  itself  make 
it  an  article  of  interstate  commerce,  and  the  intent  of  the  manu- 
facturer does  not  determine  the  time  when  the  article  or  product 
passes  from  the  control  of  the  state,  and  belongs  to  commerce.     *     *     * 
Contracts,   combinations,   or  conspiracies   to  control   domestic  enter- 
prise in  manufacture,  agriculture,  mining,  production  in  all  its  forms, 
or  to  raipe  or  lower  prices  or  wages,  might  unquestionablv  tend  to 
restrain  external  as  well  as  domestic  trade;  but  the  restraint  would 
be  an  indirect  result,  however  inevitable  and  whatever  its  extent,  and 
such  result  would  not  necessarily  determine  the  object  of  the  contract, 
combination,   or  conspiracy.     *     *     *     It   was   in   the   light  of   well- 
settled  principles  that  the  act  of  July  2,   1890,   was   framed.     Con- 
gress did  not  attempt  thereby  to  assert  the  power  to  deal  with  mo- 
nopoly directly  as  such,  or  to  limit  and  restrain  the  right  of  corpora- 
tions created  by  the  states  or  citizens  of  the  states  in  the  aquisition, 
control,  or  disposition  of  property,  or  to  regulate  or  prescribe  the  price 
or  i>rices  at  which  such  property  or  the  product  thereof  should  be  sold, 
or  to  make  criminal  the  acts  of  persons  in  the  acquisition  and  control 
of  projierty  which  the  states  of  their  residence  or  creation  sanctioned 
or  permitted." 

See,  also,  Kidd  v.  Pearsoiu  128  U.  S.  1-26.  9  Sup.  Ct.  6. 
32  L.  Ed.  346. 

The  more  recent  decision  of  the  supreme  court  in  the  case 
of  Addyston  Pipe  di  Steel  Co.  v.  TJ .  S.,  175  U.  S.  211-248, 

20  Sup.  Ct.  96,  Adv.  S.  U.  S.  96,  44  L.  Ed.  ,  does  not 

conflict  with  the  decisions  above  cited.  That  case  is  to  be 
distinguished  from  the  one  luider  consideration  by  the  fact 
that  it  involved  an  agreement  between  manufacturing  firms 
and  corporations  located  m  several  states,  binding  them- 
selves to  refrain  from  all  competition  with  each  other  for 


tJA 


102  FEDEKAL  REPORTER,  598. 


Opinion  of  the  Court 

the  sale  of  iron  pipe  in  the  36  states  and  territories  named  in 
the  agreement. 

The  history  of  the  hop  industry  in  this  state  may  be  re- 
ferred to  as  an  illustration.  There  was  a  time  when  the 
production  of  hops  was  a  favorite  industry  in  this  state,  but 
during  several  years  past  it  has  grown  more  and  more  into 
disfavor  because  it  has  been  unprofitable,  and  interstate 
commerce  in  this  commodity  has  been  diminished  by  reason 
of  the  convei-sion  of  many  hop  fields  into  meadows  and  vege- 
table gardens.  It  may  be  true  that  the  hop  farmers,  acting 
individually  and  without  advice  from  any  one,  have,  one 
after  another,  converted  their  hop  fields;  but  if  they  had 
joined  an  association  of  farmers  who  for  general  welfare 
had  adopted  efficient  measures  to  obtain  true  information 
with  regard  to  the  supply  and  demand  for  hops  and  other 
products  of  the  state,  and  had  conformed  to  an  intelligent 
resolution  of  the  association  to  meet  an  increasing  demand 
for  onions,  potatoes,  and  hay,  instead  of  continuing  to  lose 
the  value  of  their  labor  and  the  use  of  their  farms,  year 
after  year,  by  producing  [599]  hops  in  excess  of  the  require- 
ments of  the  market,  it  would  certainly  be  tyrannical  for  the 
courts  to  ]>unisli  them  for  resulting  losses  of  profit  by 
dealers  and  speculators  in  hops.  In  my  opinion,  it  would 
be  equally  absurb  to  apply  coercive  measures  to  compel 
shingle  manufacturers  to  operate  their  mills  without  profit 
to  themselves,  or  to  forbid  them  to  have  the  benefit  of  co- 
operation for  their  own  advantage.  The  demurrer  to  the 
second  and  third  affirmative  defenses  will  be  sustained  on 
the  ground  that  the  object  of  the  association  is  not  unlaw- 
ful. The  anti-trust  law  was  not  intended  to  oppress  any 
class,  and  it  cannot  be  so  construed  as  to  prohibit  the  right 
of  manufacturers,  whether  acting  individually  or  in  concert, 
to  be  prudent,  and  use  common  sense  in  maintaining  reason- 
able prices,  and  avoiding  losses  by  overproduction. 

3.  According  to  the  statement  of  the  fourth  cause  of  ac- 
tion, the  association  appears  to  have  been  used  for  a  purpose 
not  suggested  by  its  constitution,  and  highly  prejudical  to 
the  plaintiff.  In  my  opinion  the  complaint  states  ii  good 
cause  of  action  to  recover  damages  for  libel,  and  the  onlv 


GIBBS   V.    m'nEELEY. 


33 


Opinion  of  tlie  Court 

question  as  to  the  right  of  the  plaintiff  to  maintain  the  action 
in  this  court  is  whether  the  facts  alleged  make  a  case  of 
which  jurisdiction  is  given  to  this  court  by  the  terms  of  the 
anti-trust  law.  The  first  and  second  sections  of  the  act 
declare  contracts,  combinations,  and  conspiracies  in  restraint 
of  trade  or  commerce  among  the  several  states  or  with 
foreign  countries,  and  all  attempts  of  persons  to  monopolize 
intersate  and  foreign  commerce,  to  be  illegal,  and  the  seventh 
section  reads  as  follows :        ^ 

"Any  person  wlio  sliall  be  injured  in  his  business  or  property  by 
any  other  person  or  corporation  by  reason  of  anything  forbidden  or 
declared  to  be  unlawful'  by  this  act,  may  sue  therefor  in  any  circuit 
court  of  the  United  States  in  the  district  m  which  the  defendant 
resides  or  is  found,  without  respect  to  the  amount  in  controversy,  and 
shall  recover  threefold  the  damages  by  him  sustained  and  the  costs 
of  suit,  including  a  reasonable  attorney's  fees." 

It  is  essential  to  a  right  of  action  pursuant  to  this  law  to 
show  that  the  defendants  have  entered  into  a  combination 
or  conspiracy  to  restrain  or  monopolize  interstate  or  foreign 
conimerce,  and  that  the  plaintiff  has  been  injured  in  his 
business  or  property  by  an  act  of  the  defendants  pursuant 
to  their  agreement  with  each  other,  and  intended  to  affect 
interstate  commerce,  and  the  injury  must  be  of  a  pecuniary 
nature,  involving  a  loss  of  business  or  damage  to  property. 
I  find  that  all  the  requirements  of  the  statute  are  met  in  the 
plaintiff's  statement  of  his  fourth  cause  of  action.     He  does 
directly  and  positively  charge  that  the  defendants  have  en- 
tered into  a  combination  to  restrain  interstate  and  foreign 
commerce,  and  constitute  an  organization;  that  at  a  meet- 
ing of  the  central  committee,  controlling  the  affairs  of  the 
association,    a    resolution    denouncing    the    plaintiff    was 
adopted,  and  recorded,  so  as  to  be  preserved  in  the  records 
of  the  association;  that  said  resolution  was  printed   and 
widely  distributed  as  a  circular,  and  especially  directed  to 
persons,  firms,  and  corporations  in  the  state  of  Washingon, 
and  in  other  states,  and  in  Canada,  with  whom  the  plaintiff 
had  theretofore  transacted  business  as  a  buyer  and  exporter 
of  shingles.     The  resolution  was  obviously  intended  to  create 
a  prejudice  against  the  plaintiff,  and  to  have  the  effect  to 
impair  his  credit,  [600]  and  to  destroy  his  business,  by  in- 
21220— VOL  2—07  m ^3 


81 


105  FEDERAL  BEPORTEB,  93. 


Syllabus. 

ducing  his  customers  to  forsake  him;  and  the  claimant 
alleges  that  the  plaintiff  has  been  injured  in  his  business  by 
reason  of  what  the  defendants  have  done  in  pursuance  of 
their  unlawful  combination  against  his  business.  The  reso- 
lution is  not  a  regulation  of  tlie  conduct  of  the  association  or 
it  members,  and  they  were  not  minding  their  own  business 
when  they  adopted  it,  but  is  an  agreement  on  their  part  to 
assail  the  character  of  a  man  engaged  in  interstate  commerce, 
for  the  purpose  of  crippling  him  as  a  competitor  for  trade. 
By  annihilating  a  man  of  experience  and  skill  in  a  par- 
ticular branch  of  commerce,  the  restraint  upon  commerce  is 
quite  as  effectual  as  would  be  any  contract  binding  him  to 
abstain  from  competition. 

Demurrer  to  fourth  cause  of  action  overruled. 


[03]  UNITED  STATES  EX  REL.  GEIGGS,  ATTY. 
GEN.,  ET  AL.  ik  CHESAPEAKE  &  O.  FUEL  CO. 
ET  AL.« 


(Circuit  Court,  S.  D.  Ohio,  W.  D.    August  31,  1900.) 

[105  Fed.,  oaj 

Monopolies — Contracts  Affecting  Interstate  Commerce. — A  con- 
tract by  which  a  corporation  agrees  to  take  the  entire  product  of 
a  number  of  persons,  firms,  and  corporations  engaged  in  mining 
coal  and  malsing  coke  in  a  certain  district,  which  is  intended  for 
"  Western  shipment,"  to  sell  the  same  at  not  less  than  a  minimum 
price,  to  be  fixed  by  an  executive  committee  appointed  by  the  pro- 
ducers, and  to  account  for  and  pay  over  to  such  producers  the  entire 
proceeds  above  a  fixed  sum  per  ton,  to  be  retained  as  "  compensa- 
tion,"— the  stated  purpose  being  "  to  enlarge  the  Western  market," — 
and  under  which  the  shipments  are  made  Into  other  states,  is  one 
affecting  interstate  commerce,  and  Is  subject  to  the  provision  of  the 
anti-trast  law.* 

Same— Anti-Trust  Law.— It  is  the  declared  policy  of  congress  to  pro- 
mote individual  competition  in  relation  to  interstate  commerce,  and 
In  prevent  combinations  which  restrain  such  competition  between 
their  members ;  and  it  is  no  defense  to  an  action  to  dissolve  such  a 


•  Afllrmed  by  Circuit  Court  of  Appeals,  Sixth  Circuit  (115  Fed., 
010).    See  p.  151. 
»  Syllabus  copyrighted,  1901,  by  West  Publishing  Co. 


UKITED  STATES  V,  CHESAPEAKE  &  0.  FUEL  CO. 

Opinion  of  the  Court. 


35 


combination  as  illegal  under  the  anti-trust  law  that  it  has  not  in 
fact  been  productive  of  injury  to  the  public,  or  even  that  it  has  been 
beneficial,  by  enabling  the  combination  to  compete  for  business  in 
a  wider  field. 
Same — Combination  in  Restraint  of  Trade. — By  a  contract  bet\veeu 
a  fuel  company  and  an  association  composed  of  14  persons,  firms, 
and  coriwrations,  engaged  in  producing  coal  and  coke  in  a  certain 
district,  the  company  was  to  handle  for  a  term  of  years  the  entire 
output  of  the  mines  intended  for  the  Western  market,  aud  bound 
itself  not  to  sell  the  product  of  any  competing  mines.  A  minimum 
price  at  which  the  coal  should  be  sold  was  to  be  fixed  by  the  execu- 
tive committee  of  the  association  from  time  to  time,  and  the  com- 
pany agreed  to  pay  such  price,  to  obtain  as  large  a  profit  as  possible, 
and  to  account  to  the  association  for  all  of  the  sauie,  above  a  fixed 
sum  per  ton,  which  it  was  to  retain  as  compensation.  The  amount 
to  be  furnished  by  each  member  of  the  association  was  also  to  be 
fixed  by  the  executive  committee,  and  each  was  to  receive  payment 
at  the  same  rate,  to  be  based  on  the  average  price  realized  for  the 
particular  grade  furnished  during  the  current  month.  Held,  that 
such  provisions  were  in  restraint  of  trade,  and  rendered  the  contract 
illegal,  under  the  anti-trust  act  of  July  2,  1890  (26  Stat.  209),  in 
so  far  as  it  related  to  interstate  commerce. 


In  Equity.  Suit  to  annul  a  contract  and  to  dissolve  a  com- 
bination as  illegal  under  the  anti-trust  law. 

Wm.  E.  Biindy,  United  States  Attorney,  and  Sherman  T. 
McPherson  and  Edward  P.  Moulinier^  Assistant  United 
States  Attorneys. 

Pawton  df  Warrington,  Brown,  Jackson  &  Knight,  St. 
Clair,  Walker  (&  Summerfield,  and  Richard  P.  Ernst,  for 
defendants. 

Thompson,  District  Judge. 

This  suit  was  brought  by  the  United  States  district  attor- 
ney for  this  district,  by  direction  of  the  attorney  general  of 
the  United  States.  The  bill  alleges  that  the  defendants, 
other  than  the  Chesapeake  &  Ohio  Fuel  Company,  14  in  num- 
ber, are  producers  and  shippers  of  coal,  and  that  some  of 
these  are  makers  and  shippers  of  coke  in  the  counties  of 
Fayette  and  Kanawha,  in  the  state  of  West  Virginia,  in  what 
is  known  as  the  "  Kanawha  District,"  and  that  they  produce 
nearly  if  not  all  of  the  coal,  and  make  nearly  if  not  all 


36 


%I\K     VWWVWnAT      "1>W1>/V1>»1*WP       tkA 


Opinion  of  tlie  Conrt. 

of  the  coke,  shipped  from  said  district;  that  a  [M]  great 
portion  of  the  coal  and  coke  so  produced  and  made  is 
shipped  for  sale  and  consumption  into  the  states  of 
Ohio,  Kentucky,  Indiana,  Illinois,  Michigan,  Minnesota, 
Montana,  and  the  Dakotas;  that  prior  to  the  15th  of  Decem- 
ber, 1897,  each  of  the  defendants,  other  than  the  Fuel  Com- 
panyy  sold  their  product  in  the  several  states  mentioned 
without  any  restriction  other  than  the  natural  and  necessary 
competition  between  themselves  and  others,  but  that  on  that 
day  they  entered  into  a  contract  and  combination  in  the  form 
of  a  trust  and  conspiracy  in  restraint  of  trade  and  commerce 
among  the  several  states  mentioned,  in  regard  to  the  sale  and 
production  of  coal  and  coke,  of  which  the  following  is  a  copy : 


ft  I 


Tills  agreement,  made  this  15th  day  of  December,  1897,  between 
the  C.  &  O.  Fuel  Company,  a  corporation  created,  organized,  and 
existing  under  and  pursuant  to  the  laws  of  the  state  of  West  Virginia, 
and  hereinafter  caller  the  '  Fuel  Company,'  of  the  first  part,  and  the 
St  Clair  Company,  a  cori>oration  of  West  Virginia ;  John  Carver  and 
Enoch  Carver,  partners  in  business  under  the  firm  name  and  stjle  of 
Carver  Brothers;  W.  R.  Johnson,  M.  T.  Davis,  doing  business  as 
M.  T.  Davis  &  Co. ;  John  Carver  and  Enoch  Carver,  partners  in  busi- 
ness under  the  firm  name  and  style  of  the  Mecca  Coal  and  Coke  Com- 
pany ;  S.  H.  Montgomery,  doing  business  under  the  name  of  the 
Montgomery  Coal  Company;  the  Chesapeake  Mining  Company,  a 
corporation  of  West  Virginia;  the  Belmont  Coal  Company,  a  corpo- 
ration of  West  Virginia;  the  Kanawha  Splint-Coal  Company,  a  cor- 
poration of  West  Virginia ;  the  Robinson  Coal  Company,  a  corporation 
of  West  Virginia;  Harry  B.  Smith,  special  receiver  of  the  I^ns 
Creek  Coal  and  Coke  Company;  Joseph  Renshaw,  special  receiver  of 
the  Big  Black  Band  Coal  Company ;  the  Charlmore  Coal  Company,  a 
corporation  of  West  Virginia;  and  Robert  Brabbin,  Jr.,  and  L.  N. 
Perry,  partners  in  business  under  the  firm  name  and  style  of  the 
Brabbin  Coal  Company;  Jasper  McCallister,  Samuel  Moore,  and 
James  Kelsoe,  doing  business  as  McCallister  &  Co., — and  together 
constituting  the  C.  &  O.  Coal  Association,  and  hereinafter  collectively 
mentioned  as  the  'Coal  Association,'  of  the  second  part:  Whereas, 
the  members  of  the  said  Coal  Association  are  all  miners  and  ship- 
pers of  coal,  and  part  of  them  makers  and  shippers  of  coke,  on  the 
line  of  the  Chesapeake  &  Ohio  Railway,  in  Fayette  or  Kanawha 
counties.  West  Virginia,  and  have  formed  and  organized  said  asso- 
ciation for  the  promotion  of  their  common  business  interests  in  the 
mining  of  Kanawha  coals  and  cokes;  and  whereas,  the  said  Fuel 
Company  has  been  incorporated  and  organized  for  the  purpose  of 
placing  said  Kanawha  coals  and  cokes  upon  the  Western  market,  Its 
prime  object  to  promote  the  sale  of,  and  enlarge  the  Western  market 
for.  said  coals  and  cokes:  Now,  therefore,  this  agreement  witnesseth: 
"  (1)  That  the  parties  of  the  second  part  agree,  in  consideration  of  the 
covenants  and  agreements  on  the  part  of  the  party  of  the  first  part 
herein  contained,  each  firm,  individual,  or  corporation  severally,  for 
themselves,  himself,  or  itself,  and  not  for  any  other,  and  each  of  them 
doth  hereby  agree,  to  sell  to  the  said  Fuel  Company  exclusively  the 
entire  coal  and  coke  output  of  the  mine  or  mines  operated  by  each  of 


UNITED  STATES  V,  CHESAPEAKE  &  O.  FUEL  CO.  37 

Opinion  of  the  Court. 

them  respectively  on  said  C.  &  O.  Ry.,  or  branches  thereof,  for  West- 
ern shipment,  for  a  period  of  not  less  than  five  years  from  and  after 
the  date  of  January,  1898,  subject  to  all  the  provisions,  terms,  and 
conditions  hereinafter  contained,  except  as  to  such  coal  as  may  be 
sold  by  any  member  of  said  Coal  Association  to  the  Chesapeake  & 
Ohio  Railway  Company  for  the  consumption  of  said  railway  com- 
pany, which  said  coal  such  member  shall  have  the  right  to  sell  to 
said  railway  company  direct,  it  being  understood  that  this  contract 
applies  only  to  the  coal  and  coke  to  be  sold  west  of  the  respective 
mmes  of  the  members  of  said  Coal  Association,  and  shall  not  in  any 
way  apply  to  or  interfere  with  the  Eastern  trade  of  the  members  of 
said  association. 

"(2)  The  minimum  price  f.  o.  b.  mines  of  all  the  various  grades  of 
coal  and  coke  sold  and  to  be  shipped  West  by  the  members  of  said  as- 
sociation, and  embraced  in  this  contract,  shall  be  fixed  by  the  executive 
committee  of  said  Coal  Association  from  time  to  time,  as  it  shall  see 
proper,  after  consultation  with  the  executive  committee  of  the  Fuel 
Company.  The  said  Fuel  Company  [95]  covenants,  agrees,  and  binds 
itself  that  it  will  make  no  contract  for  the  sale  of  any  coal  or  coke  of 
any  members  of  said  association  at  a  price  lower  than  such  minimum 
prices  to  be  fixed  by  such  committee,  and,  further,  that  it  will  at  all 
times  endeavor  to  obtain  the  maximum  price  for  such  coal  and  coke. 
It  is  understood  and  agreed  that  the  minimum  prices  hereinbefore 
mentioned  are  net  prices  f.  o.  b.  mines,  and  not  including  any  profit  to 
the  said  Fuel  Company,  which  is  to  get  its  profit  over  and  above 
said  prices. 

"  (3)  That  the  said  Fuel  Company  shall  make  its  sales  direct,  and 
shall  not  make  any  contract  for  the  sale  of  coal  and  coke  to  a  third 
party  in  the  name  of  any  member  of  the  said  Coal  Association,  and 
shall  have  no  right  by  any  contract  to  bind  any  member  of  said  asso- 
ciation to  any  third  party,  except  for  river  business,  as  hereinafter 
provided  for. 

"  (4)  The  executive  committee  of  said  Fuel  Company,  who  shall 
administer  and  have  charge  of  its  affairs,  shall  be  composed  of  three 
(3)  persons,  one  of  whom  shall  at  all  times  be  a  member  of  or  officer 
of  a  member  of  said  Coal  Association,  and  shall  from  time  to  time, 
according  to  the  by-laws  or  articles  of  association  of  said  association' 
be  designated  as  a  member  of  such  executive  committee,  and  shall 
thereupon  be  appointed  such  member  of  such  executive  committee 
by  said  Fuel  Company  in  tlie  place  and  stead  of  the  member  of  or 
officer  of  a  member  of  said  Coal  Association  previouslv  occupying 
such  office.  The  executive  committee  of  said  Coal  Association  shall 
consist  of  three  members  of  or  officers  of  members  of  said  Coal  Asso- 
ciation, to  be  selected  as  such  from  time  to  time  by  the  members  of 
said  Coal  Association  according  to  their  by-laws  or  articles  of  asso- 
ciation. 

"  (5)  The  said  Fuel  Company  covenants,  agrees,  and  binds  itself 
to  sell  for  shipment  by  rail  via  the  said  Chesapeake  &  Ohio  Railway, 
and  pay  for  to  the  members  of  said  Coal  Association  as  hereinafter 
agreed,  not  less  than  600,000  tons  per  annum  of  coal  and  75,000  tons 
per  annum  of  coke;  such  sales  and  shipments  to  be  disposed  of  in 
as  nearly  equal  monthly  quantities  as  possible.  But  in  case  said 
Fuel  Company  is  unable  for  any  time  to  make  sales  of  coal  or  coke 
by  reason  of  the  failure  or  inability  of  the  members  of  said  asso- 
ciation to  make  prices  sufficiently  low  to  enable  said  Fuel  Company 
to  meet  the  prices  in  the  market  where  said  coal  or  coke  is  sought  to 
be  sold,  and  to  compete  with  other  sellers  of  coal  or  coke  in  such 
markets,  then  there  shall  be  an  abatement  of  the  minimum  amount 
of  coal  or  coke  hereinbefore  agreed  to  be  taken  annually  by  said  Fuel 


MO 


105   FEDEBAL   KEPOBTER,  95. 


Opinion  of  the  Court. 

CoiupaiHy,  bearing  the  same  proportion  to  such  minimum  amount  of 
coal  or  folve  as  such  time  during  which  such  Inability  to  meet  such 
market  prices  shall  continue  does  to  one  year.  The  executive  com- 
mittee of  said  Coal  Association  shall,  not  later  than  the  20th  day  of 
each  month,  designate  the  percentage  of  the  total  product  of  each 
class  and  grade  of  coal  and  coke  which  they  deem  best  to  be  shipped 
by  each  member  of  said  association  by  rail  as  aforesaid  during  the 
succeeding  month,  which  apiwrtionment  so  made  shall  be  furnished 
the  general  manager  of  said  Fuel  Company  not  later  than  the  20th  day 
of  said  first-mentioned  month,  and  all  orders  received  to  be  shipped 
by  rail  as  aforesaid  during  such  succeeding  month  shall  be  distributed 
between  the  members  of  said  Coal  Association  by  said  general  manager 
according  to  sueli  apportionments :  provided  that,  if  any  nieml)er  of 
said  Coal  Association  shall  be  unable  or  shall  not  desire  to  ship  West 
the  full  amount  of  any  kind  or  gi'ade  of  coal  or  coke  apiwrtioned  to 
such  member  for  any  month,  the  said  Fuel  Company  shall  distribute 
the  order  for  the  deficiency  so  caused  among  the  other  members  of 
said  association  who  are  shippers  of  such  grade  of  coal  or  coke,  in 
the  projwrtion  as  tetween  such  other  members  fixed  I)y  said  com- 
mittee for  such  month:  provided,  further,  that  only  actual  inability 
shall  excuf^e  a  member  of  said  association  from  shipping  so  nuich  of 
the  apportionment  for  any  month  [as  (?)]  shall  be  required  i>y  the 
said  Fuel  Company  for  contribution  to  contracts  previously  taken  by 
said  Fuel  Company. 

"  (*>^  The  said  Fuel  Company  shall  make  and  render  to  the  mem- 
bers of  the  Coal  Association  accurate  and  complete  reports  of  all  coke 
and  coal  shipped  by  rail  as  aforesaid,  as  follows:  (a)  A  daily  report 
of  all  sales,  showing  the  net  prices  of  such  sales,  (b)  A  monthly 
report  showing  the  toiuiage  of  the  various  kinds  and  grades  of  coal 
and  coke  shipped  by  members  of  said  Coal  Association  and  wdghed 
during  tlie  month,  or  weiglied  during  such  month  though  shipped 
during  a  preceding  month,  together  with  the.  average  price  [96]  for 
each  grade  or  kind  of  coal  or  coke  so  shipped  and  weighed,  which 
average  price  shall  be  computed  ui>on  the  basis  of  the  actual  price, 
less  gross  profits,  if  any.  received  for  all  coal  or  coke  sold,  and  the 
minimuui  i>rice,  fixed  as  hereinafter  provided,  for  such  month  for 
coal  or  coke  not  sold  in  such  month;  said  roiwrt  to  be  made  not  later 
than  the  10th  day  of  each  month  for  all  coal  and  coke  weighed,  or 
weighed  dnring  the  pi*evious  calendar  month.  The  coal  and  coke 
shipped  and  weighed  or  weighed  during  such  month  sliall  be  paid 
for  by  said  Fuel  Company  to  the  members  of  said  Coal  Association 
according  to  the  average  prices,  detennined  as  aforesaid,  and  upon 
the  sale  after  the  end  of  each  month  of  any  coal  or  coke  shipped  and 
weighed,  or  welghe<l  but  not  sold  during  such  month,  the  surplus,  if 
any,  arising  after  deducting  from  the  actual  price  i-eceived  the  minl- 
lunm  price  for  such  kind  and  grade  of  coal  or  coke  for  such  month 
and  profit  shall  be  paid  forthwith  to  the  shippers  of  such  grade  of 
eoal  or  coke  for  such  month  according  to  their  tonnage  of  such  kind 
or  grade  of  coal  or  coke  for  sucii  month.  And  the  said  Fuel  Com- 
pany agrees  and  binds  itself  to  pay  as  aforesaid,  in  cash,  on  or  before 
the  20th  day  of  each  month,  for  all  coal  and  coke  during  the  previous 
calendar  month.  • 

"(7)  The  said  Fuel  Company  further  covenants,  agrees,  and  binds 
itself  to  handle  only  such  coal  and  coke  as  are  produced  by  the  above- 
mentioned  members  of  said  Coal  Association,  and  not  to  handle,  buy, 
or  sell,  for  itself  or  on  commission,  any  coal  or  coke  produced  by 
any  other  operator  along  said  Chesapeake  &  Ohio  Railway  or  branchefl 
thereof,  or  any  coal  or  coke  wherever  produced,  of  the  same  grade 
as»  or  competing  with,  coal  or  coke  produced  by  any  of  the  members 


UNITED  STATES   V,  CHESAPEAKE   &   O,  FUEL   CO. 


Sd 


Opinion  of  the  Court. 

of  said  association,  the  prime  object  of  this  contract  being  to  enlarge 
the  sale  of,  and  extend  the  Western  market  for,  Kanawha  coal  and 
coke ;  and  this  shall  not  prevent  the  said  Fuel  Company  from  dealing 
in  anthracite  coal  or  New  River  coal  or  coke:  provided,  that  New 
River  coal  or  coke  shall  not  be  dealt  in  to  the  prejudice  of,  or  sold  as 
a  substitute  for,  Kanawha  coals  and  cokes:  and  provided,  further, 
that  in  an  emergency,  and  when  absolutely  necessary,  other  coals 
and  cokes  may  be  handled  by  said  Fuel  Company  to  meet  such  emer- 
gency. But  no  dealing  in  such  anthracite.  New  River,  or  other  coal 
or  coke  shall  be  done  by  said  Fuel  Company  to  an  extent  or  in  a 
manner  incompatible  with  the  prime  object  of  this  agreement,  as 
hereinbefore  recited. 

"(8)  That  at  any  time,  by  a  vote  of  two-thirds  (f )  of  the  members 
of  said  Coal  Association,  said  Fuel  Company  may  be  allowed  to  han- 
dle any  other  coal  or  cokes  for  such  time  and  upon  such  terms  and 
conditions  as  may  be  prescribed  by  such  vote. 

"(9)  The  said  Fuel  Company  is  to  receive  a  gross  profit  on  all  rail 
coal  and  coke  sold,  which  shall  not  exceed  ten  (10)  cents  per  ton  of 
two  (2,000)  thousand  pounds  on  any  sale,  which  compensation  shall 
be  retained  by  said  Fuel  Company  out  of  the  monthly  settlements  of 
coal  and  coke  sold :  the  true  intent  and  meaning  of  this  clause  being 
that  the  Fuel  Company  shall  get  its  profit  over  and  above  the  net 
minimum  price  of  said  coal  and  coke  f.  o.  b.  mines  as  hereinbefore 
fixed,  and,  if  the  price  at  which  said  coal  and  cokes  is  sold  by  said 
Fuel  Co.  shall  be  suflicient  to  yield  a  sum  exceeding  said  minimum 
price  and  gross  profit  of  ten  (10)  cents  per  ton  as  aforesaid,  then 
the  difference  shall  be  paid  over  to  the  members  of  said  association 
in  the  manner  and  at  the  time  hereinbefore  mentioned,  as  they  may 
be  entitled  under  this  agreement,  as  part  of  the  purchase  price  to  be 
paid  for  coal  and  coke  by  said  Fuel  Co. 

"(10)  The  members  of  said  association  shall  not  be  required  to 
mine  and  ship  coal  when  hindered  or  prevented  by  causes  bej^ond 
their  own  control,  such  as  sti-ikes,  accidents,  refusal  or  inabili^  of 
the  carrier  to  provide  transportation,  &c. 

"(11)  The  said  Coal  Association  shall  have  the  right  once  per 
month,  through  a  conunittee  not  exceeding  three  in  number,  or  a 
person  designated  by  said  committee,  to  examine  the  order,  sales, 
and  tonnage  books  of  said  Fuel  Company. 

,  "(12)  The  coal  or  coke  of  members  of  said  Coal  Association  shipped 
in  barges  by  rive*-  shall  be  handled  by  the  said  Fuel  Company,  as  an 
agent,  on  the  same  terms  and  under  the  same  conditions  as  are  now 
established  or  may  be  hereafter  established  and  prevail  in  Cincinnati 
market  for  the  sale  of  river  [97]  coal,  but  the  said  Fuel  Company 
shall  not  make  time  sales  or  extend  credit  without  the  consent  of  the 
shii>pers  of  such  coal. 

"(13)  All  settlements  for  coal  or  coke  shipped  by  rail  as  aforesaid 
shall  be  made  upon  the  scale  weights  of  the  Chesapeake  &  Ohio 
Railway  Company,  as  ascertained  at  its  weighing  stations  now  estab- 
lished or  that  may  hereafter  be  established. 

"(14)  It  is  distinctly  understood  that  nothing  herein  contained 
shall  be  construed  to  render  the  said  members  of  said  association 
liable  as  partnoi-s,  in  any  way,  manner,  or  form,  either  as  between 
themselves  or  with  the  said  P^iel  Company ;  each  of  said  firms,  corpo- 
rations, and  individuals  contracting  herein  for  themselves,  itself, 
or  himself,  and  not  ore  for  the  other. 

"(15)  The  said  Fuel  Company  further  covenants,  agrees,  and  bindo 
Itself  that  neither  it  nor  any  of  its  officers,  employes,  or  servants 
will,  with  its  knowledge,  directly  or  indirectly,  in  aUy  way,  manner, 
or  form,  engage  or  become  interested   in   the  buying  or  selling  of 


40 


105  FEDEBAL  KEPOBTEB,  97. 
Opinion  of  the  €kmrt 


Mtnminoiis  coal  or  coke  In  competition  with  the  coal  or  coke  o' 

any  of  the  members  of  said  Coal  Association,  except  under  the  terms 

and  conditions  of  this  agreement  ® 

"(1*5)  The  members  of  said  Coal  Association  above  named    each 

fnd^^,^',^';i'f  fl  *"'  t^r^^T'  "^"^^  "***  *>"«  ^«r  the  other?  ^^enant 
and  agree  that  the  said  members  of  said  association  will  not  sell 

miosis'' e^!^n7,2w'**;r''f  ^'"°*^  ^i*  P°^"*-^  '''^^^  «^  th^'r  respectfve 
mines,  except  under  the  terms  and   conditions  of  this   agieement 

during  the  period  covered  by  this  agreement,  and  that  th?re  shall 
be  no  pretended  sale  or  lease  of  the  property  of  the  members  of  the 
said  association  made  to  evade  this  contract;  but  It  Is  further  under- 
stood and  mutally  agreed  that  this  contract  shall  not  be  construed 
to  prevent  ;.ny  bona  flde  sale,  assignment  or  lease  of  the  resnective 
proi>ertie^  operated  by  the  members  of  said  association,  respectivelv 
or  the  interest  therein  of  any  member  of  said  association.  And  In 
case  of  such  sale,  assignment,  or  lease,  the  memi>ers  of  said  association 
are  not  to  be  held  responsible  under  this  contract  for  the  sale  and 
delivery  of  any  coal  from  Rich  properties  after  sueli  sale,  assignment 
or  lease  takes  place.  But  in  case  the  vendee,  assignee,  or  lessee  of 
«ny  coal  or  coke  property  of  any  memiier  of  the  Coal  Association 
toires,  he  shall  have  the  right  to  take  the  place  of  such  member  in 
this  agreement.  "^cmuci  iu 

"(17)  And  whereas,  some  of  the  members  of  said  association  have 
contracts  for  the  sale  of  coal  or  ct»ke,  which  cannot  be  completed 
until  after  this  agreement  goes  into  operation;  and  whereas,  it  is 
to  the  advantage  both  of  such  membera  and  of  said  Fuel  Company 
that  sue  1  contracts  be  filial  through  said  Fuel  Companv,  it  is  further 
agreed  tliat  the  members  of  said  association  having  existing  contracts 
to  be  completecl  during  the  period  of  this  agreement  sliall  on  or  before 
*  ?,^i^'\^^f7  ""^  December,  1807,  file  with  tiie  general  manager  of 
said  Buel  Company  a  memorandum  of  each  of  said  contracts  and 
;«5  "^^  «^}^  contracts  as  are  uncompleted  on  the  first  dav  of  January. 
1898,  shall  i)e  completed  througli  said  Fuel  Companv;  the  Fuel  Com- 
pany to  make  no  charge  for  Its  services  in  connection  with  such 
contract  and  collecting  the  proceeds  of  the  same ;  said  Fuel  Companv 
not  to  guaranty  tiie  colle<»tion  of  such  prmeeils,  or  be  responsible 
for  same  unless  collected  l>y  It  guch  coal  or  coke  so  shipped  on  ex- 
isting contracts  shall  not  be  taken  into  account  in  any  way  as  a  part 
of  the  traHic  hereinbefore  i.rovided  for  in  this  contract,  nor  its  prices 
taken  into  account  in  comimtlng  the  average  price  for  anv  month 
but  such  as  shall  be  shipped  by  rail  shall  be  considered  part  of  the 
minimum  tonnage  mentioned  in  the  fifth  clause  of  this  agreement 
for  the  year  in  which  it  is  sliipi^ed.  afereemeni 

"(18)  The  said  Fuel  Company  shall  keep  at  its  own  expense  one 
or  more  inspectors  to  examine  and  Inspect  from  time  to  time  as 
often  as  may  be  ntH'e^sary,  the  coal  and  coke  produced,  with  a  view 
of  keeping  up  a  proi>er  standard  of  exwllence.  Should  said  inspector 
find  coal  or  coke  badly  or  improperly  prepared,  he  shall  Immediately 
report  all  the  facts  In  writing  to  tlie  Fuel  Companv  and  to  the  opera- 
tor preparing  such  coal  or  coke,  and  shipments  fi-om  mine  or  mines 
producing  such  alleged  improi>erly  prepared  coal  or  coke  may  be 
suspended  after  five  (5)  days'  notice  in  writing  to  such  operator,  at 
the  discretion  of  tlie  executive  committee  of  the  Fuel  Company,  until 
Buch  time  as  such  operator  may  prepare  such  coal  or  coke  properlv 
In  any  case  such  [98]  operator  shall  have  the  right  to  refer  the  Ques- 
tion whether  such  coal  or  coke  is  Iniproperlv  prepared  or  not  or  if 
not  so  prepared,  whether  the  same  be  so  prepared  at  reasonable  cost  to 
arbitration,  as  herein  provided,  which  decision  as,  to  the  preparation 
of  such  coal  shall  be  final  and  binding  on  both  parties;  and  in  case 


UNITED  STATES   V,  CHESAPEAKE   &  O.  FUEL  CO. 

Opinion  of  the  Court 


41 


said  arbitration  shall  find  such  coal  or  coke  improperly  prepared,  and 
shall  further  find  that  it  is  impossible  or  impracticable  for  such  opera- 
tor to  remedy  such  faults  at  reasonable  cost  he  shall  have  the  right 
to  withdraw  from,  and  have  this  agreement  annulled  as  to  him.  If 
said  Fuel  Company  shall  make  default  in  payment  for  any  coal  or 
coke  shipped  under  this  agreement  according  to  the  terms  hereof,  and 
said  default  shall  continue  for  the  space  of  fifteen  (15)  days,  unless 
payment  shall  be  withheld  by  reason  of  attachment,  suggestion, 
garnishment,  or  other  legal  process  against  the  member  of  said  Coal 
Association  on  wliose  claim  default  is  so  made,  such  default  shall, 
at  the  option  of  such  member  on  whose  claim  such  default  it  is  so 
made,  work  an  annulment  of  this  contract  as  to  such  member:  pro- 
vided such  member  shall  within  ten  (10)  days  after  the  expiration 
of  said  fifteen  (15)  days  give  notice  in  writing  to  said  Fuel  Company 
of  the  election  of  such  member  to  exercise  such  right  of  annulment; 
and  a  failure  to  exercise  this  right  for  any  such  default  shall  not 
prevent  the  exercise  of  the  same  for  any  subsequent  default  And  a 
violation  or  failure  to  keep,  observe,  and  perform  any  covenant  or 
covenants  herein  contained  by  any  party  to  this  agreement  shall, 
at  the  option  of  the  party  or  parties  thereby  aggrieved,  work  an 
annulment  of  this  agreement  as  to  such  party  or  parties  on  thirty  (30) 
days'  notice  in  writing.  And  no  waiver  of  this  right  in  case  of 
any  violation  or  failure  to  keep,  observe,  and  perform  anv  covenant 
hereot  shall  prevent  the  exercise  of  the  same  for  any  subsequent 
violation  ot  or  failure  to  keep,  observe,  and  perform,  the  same,  or 
any  other  covenant  hereof;  provided,  that  upon  any  notice  for  the 
annulment  cf  this  agreement  as  hereinbefore  provided  b^ing  given 
by  any  parties  or  party,  tlie  party  or  parties  to  whom  it  is  so  given,  if 
desiring  to  contest  the  rights  of  the  parties  or  party  giving  said  notice 
to  annul  this  agreement  shall  have  the  right  to  submit  the  question  to 
arbitration,  as  herein  provided,  and  the  decision  of  such  arbitrator 
shall  be  final  and  binding  on  all  parties  to  such  arbitration.  Rut  any 
withdrawal  or  annuhrent  as  tn  any  member  or  members  under  this, 
or  clause  No.  18  hereit  shall  not  affect  this  contract  as  to  the  parties 
remaining,  between  themselves. 

"  (19)  Anv  person,  firm,  or  corporation  now  or  hereafter  producing 
coal  to  be  shipped  on  the  Chesapeake  &  Ohio  Railway  may  become  a 
party  to  this  contract  by  signing  the  same,  or  an  exact  copy  liereof. 
with  the  Fuel  Company,  or  by  an  indorsement  attached  hereto  may  ac- 
cept the  provisions  hereof:  and,  upon  becoming  such  party  hereto, 
such  person,  firm,  or  corporation  shall  be  entitled  to  all  the  rights  and 
privileges,  and  be  subject  to  all  the  duties  and  liabilities,  hereunder, 
the  san  e  as  if  he,  it  or  they  had  been  named  in  said  contract  as  one  of 
the  parties  of  the  second  part,  and  had  duly  signed  and  executed  it 
with  the  others  named  therein :  provided,  that  said  association  shall 
agree  to  such  person,  firm,  or  corporation  becoming  a  partv  hereto 
by  a  majority  vote  of  a  quorum  of  its  members. 

"  (20)  It  is  understood  and  hereby  agreed  that  in  any  matter  or 
thing  connected  with  this  agreement,  where  any  party  hereto  shall 
assert,  maintain,  or  set  up  any  claim,  right  privilege,  liability,  or 
penalty  in  his,  its  or  their  favor,  or  against  any  other  party  or 
parties  hereto,  and  thereby  a  controvei-sy  shall  arise  hereunder,  then 
and  in  that  event  either  party  or  parties  to  such  controversy  shall 
have  the  right  to  submit  the  said  controversy  to  arbitration*  in  the 
manner  hereinafter  set  forth.  There  is  hereby  constituted  and  ap- 
pointed an  arbitration  committee,  which  shall  be  conqwsed  of  two  per- 
sons and  such  third  person  as  shall  be  by  such  two  selected  from 
time  to  time  as  any  controversy  may  arise.  Such  two  persons  shall 
be  selected  as  follows:   Each  and  every  year  during  the  continuance 


4a 


105  FEDERAL   REPORTER,  98. 
Opinion  of  tlie  Court. 


to  wll^ZnoJ-,**'\-?*^..^"^'  Company  shall  appoint  some  person 
l^;TUi^?  ^^'^  arbitration  committee,  and  the  parties  of  tlie  second 

annointmi.?  fLT^^'^l'n  ''"^  **"  ^^^]'^  "^'^^  '^^^^^  committee,  of  which 
appointment  the  Fuel  Company  and  the  association  shall  have  notice, 
and  the  two  persons  so  ai>pointed  shall  continue  to  serve  until  their 
successors  shall  be  appointed  in  the  same  manner.  Whenever  a  con- 
troversy shall  arise  hereunder,  the  party  desiring  to  submit  such 
controversy  shall  notify  the  other  party  or  parties  to  sue     coiitm 

t'hrfil  atT.r.;^"/''!  ^T't'"^'  -'"^  ^'"^  d^i^n'nte'in  suchToUc" 
the  time  and  place  when  said  two  arbitrators  shall  meet  to  heir  the 
matter  in  controversy,  and  he  or  they  shall  also  notify  ti^saW 
arbitrators  to  meet  at  said  time  and  place.  And  at  the  time  and 
place  so  desigiinted  said  two  arbitrators  shall  meet,  and  thev  shall 
select  a  third  arbitrator,  who,  with  the  other  tNvo  shall  coifsti  ute 
the  full  arbitration  committee  to  hear  and  determine  the  said  cSn 

fiZTnn;l?l?nl7^'^•''T•'^^  ^°  *'*"  "^**"«'*«  ^^  ^^^^'  '^"d  fact  shall  be 
taal,  and  shall  be  binding  upon  each  and  nil  of  the  parties  to  that 

eontrovei-sy     Such  notice  may  be  served  as  a  legal  notice  is  served 

offic^  ^dI.ifJ"'v^^?  ***  *'•"  JI='^*^'^^'  '"^  ^^  ««^'^^  «^  ^^'«  ^»-  their  post 
office  address.     And  any  notice  to  any  one  or  more  of  the  parties 

of  the  second  part  may  be  served  upon  or  sent  by  mail  to  the  orest 

dent  and  secretary  of  said  association.    If  at  t'iie       „e  and  plaJL 

said  tvvo  arbitrators  are  required  to  meet,  either  one  or  both  of  them 

should  fail  or  refuse  to  attend  or  serve,  then  the  Fuel  Coi  panv    In- 

its  agent  or  attorney,  on  the  one  side,  may  fill  the  v'lrVincv  c^^^^ 

SL  bv  ?;fl?L'^'"^^  ;*^"*^^^l.«^'  '^'^^  '-  serve,  and  th7asS 
Ji1\k  ^^/'^F'  "-*^'**  ^^  attorney,  may  fill  the  vacancv  caused  bv 

the  absence  of  its  arbitrator  or  his  refusing  to  serve-  and  the  arbl- 

afoiesaid  shall  select  the  third,  which  three  shall,  for  that  contro- 

versy.  constitute  the  arbHration  committee,  and  shall  Imve  tliP  sime 

powers    and  their  award  shall  be  as  final,  as  if  the  two  ai^  trXrs 

erein  first  prmided  for  had  attended  and  selected  a  third     If  „Z^ 

either  party  shall  fail  or  refuse  to  attend,  or  shall  fail  or  refuse  to 
select  an  arbitrator  when  required  hereunder  so  to  do.    he  said  associa 
^J""-   '  f  I>resident,  other  officer  or  attorney,  mav  selec    an  nrbl 

snail  fail  or  refuse  to  make  such  appointment,  in  that  event  the  FhpI 

sew?  ft lilr      n^^^^  ''^^'^'\  ^V^^''''''}^^  in  ^^ny  of  said  modes  shall 

f^tll:  ;  i  i'  :  "^^  "^^  *'V*^  '''''^"  institute  the  arbitration  coniMiittee 
!,^'^f/"^,^.^/^^™\«e  said  controversy,  whose  award  shall  be  final     A 
notice  to  arbitrate  hereunder  shall  not  fix  a  time  longer  tt^infifieen 
(15)  days  nor  less  than  five- (5)  days  from  the  time  of  giving  ^a id  no 
tice  unless  by  loutnal  consent.    The  place  of  such  meeting  of  the  ai^M 
trators  shall  be  at  Cincinnati.  Ohio,  or  Charleston,  T  Va     unless 
by  mutua    consent.     Said  arbitrators  shall  have  the  right  to  ad""  ,rn 
their  sessiori  from  time  to  time  or  to  such  place  or  places  as  t  ev 
may  determine.    And  they  shall  make  their  award    n  not  less  than 
three  days  from  the  time  the  evidence  is   finallv  taken  befm-pir 
subinitted  to  them;  such  award  to  be  valid  if  s  gned  bv  two  of  the 
arbitrators.    Every  award  shall  be  executed  in  dupliSite   and  a  conv 
thereof  fnrnisbwl  to  each  of  the  executive  commitee^  herein  nZ 
tioned     The  failure  of  a  regular  arbitrator  to  attend  at  a  time Tnd 
place  designated  in  any  notice  to  him.  and  the  apjS  „ent  of  ano^ier 
in  his  stead  for  any  contr.>versy,  shall  not  for  that  reason  vacate  bis 
general  api>oinfcment  as  an  arbitrator  until  his  successor's  apS»  nt^ 
If  the  two  arbitrators  appointed  as  above  provided  shall  at  aS?  time 


UNITED  STATES   V.  CHESAPEAKE   &   0.  FUEL  CO. 

Opinion  of  the  Court. 


4B 


fail  or  refuse  for  two  days  to  appoint  the  third  arbitrator,  the  latter 
shall  be  appointed  by  the  judge  of  the  circuit  court  of  Kanawha 
county.  West  Virginia. 

"  Witness  the  following  signatures : 

"  The  C.  &  O.  Fuel  Co.,  Donald  Macdonald,  Pt. 

"  Robinson  Coal  Co.,  by  Neil  Robinson. 

"W.  R.  Johnson. 

"  The  Kanawha  Splint-Coal  Company,  by  F.  E.  Lair. 

"  Carver  Bros. 

"Enoch  Carver. 

"  Jos.  Renshaw,  Special  Receiver  Big  Black  Band  Coal  Co. 

"  Charlmore  Coal  Co.,  Herndon  &  Renshaw,  Mgrs. 

"  McCallister  &  Co.,  per  James  Kelsoe. 

"  IVIecca  Coal  &  Coke  Co.,  by  John  Carver. 

*  Chesapeake  Mining  Co.,  by  J.  B.  Lewis. 

"  Coalburg  Colliery  Co.,  l)y  J.  B.  Lewis. 

"  Montgomery  Coal  Co.,  by  S.  H.  Montgomery. 

*'  Belmont  Coal  Co.,  by  T.  E.  Embleton,  Pt. 

"  Harris  B.  Smith,  Spl.  Receiver  Lens  Creek  Coal  &  Coke  Co." 

[100]  That  this  contract  went  into  effect  on  the  1st  day  of 
January,  1898,  and  that  the  defendants,  acting  thereunder, 
monopolized  and  controlled  the  amount  of  coal  and  coke 
produced  in  the  Kanawha  district,  and  only  permitted  such 
amount  of  coal  to  be  mined  and  coke  to  be  made  as  could  be 
sold  by  the  Fuel  Company  in  accordance  with  the  provisions 
of  the  contract,  the  producers  being  permitted  to  ship  only 
such  amounts  as  should  be  apf)ortioned  among  them  by  an 
executive  committee  of  three  selected  by  members  of  the 
association ;  that  the  defendants,  acting  under  said  contract, 
not  only  controlled  the  amount  of  coal  and  coke  shipped  into 
the  states  mentioned  from  the  Kanawha  district,  but  wholly 
destroyed  competition  in  the  sale  of  the  same.  And  it  is 
alleged  generally  that  the  said  contract,  and  the  operations 
thereunder,  constitute  an  unlawful  combination,  in  the  form 
of  a  trust,  in  restraint  of  trade  and  commerce  among  the 
said  several  states,  and  that  said  defendants  have  combined 
and  conspired  with  one  another  to  monopolize,  and  have  at- 
tempted to  monopolize,  by  reason  of  said  contract,  and  their 
acts  and  operations  thereunder,  a  part  of  the  trade  and  com- 
merce in  coal  and  coke  among  the  said  several  states,  all  in 
violation  of  the  act  of  congress  of  July  2,  1890.  And  the 
prayer  of  the  bill  is  that  the  defendants  be  restrained  from 
selling  or  shipping  any  coal  or  coke  into  any  state,  other  than 
the  state  in  which  they  reside,  under  said  contract,  and  that 
they  be  restrained  from  continuing  in  any  like  combination 
or  agreement,  and  from  further  agreeing  and  combining  and 


,Ajfl^ 


105  FEDERAL  EEPOBTER,  100. 


Opinion  of  tlie  Court. 

actiBg  in  any  manner  as  set  out  in  said  contract,  and  that 
the  contract  be  declared  void  and  illegal,  and  that  said  trust 
and  combination  be  dissolved  by  decree  of ^  the  court. 

At  the  hearing  no  evidence  was  introduced  by  the  com- 
plainant,  but  the  case  was  submitted  upon  the  bill  and 
answer,  and  the  evidence  introduced  by  the  defendants.    The 
circumstances  under  which  the  contract  was  made,  and  the 
facts  in  relation  to  the  operations  of  the  defendants  there- 
under, as  shown  by  the  allegations  of  the  answer  and  the  evi- 
dence, are,  in  substance,  as  follows:   The  defendants  other 
than  the  Fuel  Company  are  owners  of  coal  mines  and  pro- 
ducers and  shipi>ers  of  coal,  and  some  of  them  are  makers  and 
shippers  of  coke.    Their  mines  and  coke  plants  are  situated 
along  the  line  of  the  Chesapeake  &  Ohio  Railway,  in  the 
counties  of  Fayette  and  Kanawha,  in  the  state  of  West 
Virginia,  and  in  the  territory  known  as  the  "  Kanawha  Dis- 
trict."    The  counties   of   Fayette   and   Kanawha   embrace 
nearly  all  of  the  district.    A  part  of  Putnam  county  is 
within  this  district.    Besides  the  mines  of  the  defendants, 
there  are  in  the  same  district,  on  the  Chesapeake  &  Ohio  Rail- 
way, or  south  side  of  the  Kanawha  river,  the  mines  of  the 
following  companies,  viz.:    The  Great  Kanawha  CoUiery 
Company,  the  Mt.  Carbon  Company,  Limited,  the  Diamond 
Mine,  the  Forest  Hill  Coal  Company,  the  East  Bank  Coal 
&  Coke  Company,  the  Polsue  Coal  Company,  the  Coalburg 
Colliery  Company,  the  Stevens  Coal  Company,  the  Acme 
Mines,  the  Coal  Yalley  Mining  Company,  and  the  AVinifrede 
Coal  Company,— and  on  the  Kanawha  &  Michigan  Railway, 
or  north  side  of  the  river,  the  Boomer  Mine,  the  Long- Acre 
1101]  Mine,  the  Harwood  Mine,  the  Cannelton  Coal  Com- 
pany, the  Kelly's  Creek  Coal  Company,  the  Riverside  Coal 
Company,   the   Peal   Splint-Coal   Company,   the   Marmet- 
Smith  Company,  the  Plymouth  Mines,  and  the  Big  Mountain 
Operating  Company.    The  capacity  of  the  mines  of  the  de- 
fendants is  about  4,800  tons  of  coal  a  day,  and  of  the  other 
mines  on  the  same  side  of  the  river  about  4,300  to  4,500 
tons  a  day.    The  defendant  coke  producers  make  about  440 
tons  a  day,  and  the  other  coke  producers  of  the  district 
about  300  tons  a  day.    Some  of  the  defendants  operate  mines 
on  both  sides  of  the  Kanawha  river,  but  none  of  the  mines  on 


UNITED   STATES   V.  CHESAPEAKE   &   O.  FUEL   CO. 


Opinion  of  the  Court. 


45 


the  north  side  are  covered  by  the  contract  in  question.  Mac- 
donald,  the  president  of  the  Fuel  Company,  prior  to  the 
organization  of  that  company  and  the  making  of  the  con- 
tract had  been  engaged  in  selling  coal  and  coke  in  Cincinnati 
and  its  vicinity  from  mines  along  the  Chesapeake  &  Ohio 
Railway;  but  the  Fuel  Company,  under  the  contract,  has 
been  selling  coal  and  coke  in  West  Virginia,  Kentucky,  Ohio, 
Indiana,  Illinois,  Michigan,  -Wisconsin,  Missouri,  Iowa, 
Nebraska,  North  Dakota,  South  Dakota,  Arizona,  and  Missis- 
sippi. The  extent  and  the  places  of  the  Western  shipment 
by  the  defendants,  other  than  the  Fuel  Company,  prior  to 
the  making  of  the  contract,  are  not  shown;  but  the  answer 
alleges  that  they  "  had  no  trade  whatever  in  most  of  said 
states,  and  had  very  little  in  the  others,  except  in  Cincinnati, 
Ohio."  The  other  districts  and  localities  competing  with 
the  defendants  in  the  Western  market  are:  The  New  River 
fields,  of  West  Virginia,  with  the  capacity  of  about  2,000 
tons  of  coke  a  day ;  the  Flat  Top  fields,  of  West  Virginia,  on 
the  Norfolk  &  Western  Railway;  the  fields  along  the  Balti- 
more &  Ohio  Railway,  the  West  Virginia  &  Pittsburg  Rail- 
road, and  the  Ohio,  West  Virginia  &  Pittsburg  Railroad,  in 
West  Virginia;  the  coal  fields  of  Western  Pennsylvania; 
the  Hocking,  Wellston,  and  Nelson ville  coal  fields,  of  Ohio; 
and  the  coal  fields  of  Kentucky,  Tennessee,  Illinois,  Iowa, 
and  Missouri.  The  aggregate  production  of  all  these  fields 
is  said  to  be  115,000,000  tons  of  coal  annually.  The  defend- 
ants' shipment  West  in  1897  was  about  450,000  tons.  In 
1898  it  was  about  550,000  tons  of  coal  and  from  60,000  to 
65,000  tons  of  coke.  The  twelfth  clause  of  the  contract,  in 
relation  to  coke  and  coal  shipped  by  river,  was  rescinded  in 
June,  1898.  Prior  to  the  making  of  the  contract  there  was 
a  lack  of  uniformity  in  the  preparation  of  coal  and  coke. 
Under  the  contract  this  has  been  remedied,  and  the  quality 
of  the  product  has  been  improved.  The  minimums  of  coal 
and  coke  which  the  Fuel  Company  was  required  to  take  and 
pay  for,  as  provided  in  the  fifth  clause  of  the  contract,  was 
in  excess  of  the  production  of  the  defendants'  mines  during 
the  year  preceding  the  making  of  the  contract;  the  excess 
of  coal  being  about  60,000  tons,  and  of  coke  about  30,000 
tons.    A  man  employed  by  the  producers,  the  defendants 


46 


105   FEDERAL  REPORTER,  101. 


Opinion  of  tlie  Court 

other  than  the  Fuel  Company,  and  known  as  the  "  equalizer,'' 
makes  the  distribution  of  orders  and  cars  to  the  shippers. 
About  3,000,000  tons  of  coal  is  shipped  East  over  the  Chesa- 
peake &  Ohio  Railway  from  the  New  River  and  Kanawha 
districts  annually.  What  portion  is  shipped  from  the  Ka- 
nawha district  does  not  appear.  The  facilities  for  placing 
coal  and  coke  on  the  Western  [102]  market  have  been  in- 
creased by  the  operation  of  the  contract,  and  the  monthly 
payments  by  the  Fuel  Company  have  relieved  the  operators 
from  losses  by  bad  debts,  and  have  furnished  the  means  for 
promptly  paying  the  men  in  their  employ.  River  ship- 
ments from  the  whole  Kanawha  district  are  double  the  ship- 
ments of  defendants  by  rail.  Prior  to  making  the  contract, 
single  operators  were  sometimes  not  able  to  take  and  fill 
large  contracts.  It  does  not  appear  that  under  the  contract 
prices  have  been  materially  increased  or  diminished,  but  have 
been  maintained. 

Two  questions  have  been  presented:  (1)  Does  the  con- 
tract in  question  relate  to  interstate  commerce?  (2)  And, 
if  so,  will  its  performance  restrain  interstate  commerce,  with- 
in the  meaning  of  the  act  of  congress  known  as  the  "Anti- 
Trust  Law  ? " 

1.  If  it  be  assumed  that  the  Fuel  Company  was  to  become 
the  purchaser  of  the  coal  produced  by  the  other  defendants, 
and  not  their  agent  for  its  sale  to  others,  with  an  interest  in 
the  profits,  yet  by  the  terms  of  the  contract  the  coal  and  coke 
are  to  be  delivered  to  the  Fuel  Company  for  "  Western  ship- 
ment,"—to  markets  in  states  other  than  West  Virginia,— 
there  to  be  sold  for  not  less  than  a  minimum  price  to  be  fixed 
by  the  executive  committee  of  the  association;  and  the  Fuel 
Company  is  required  to  account  and  pay  over  to  the  mem- 
bers of  the  association  all  profits  made  over  and  above  10 
cents  per  ton,  which  it  is  to  retain  as  "  compensation  "  for  the 
use  of  its  capital  and  for  its  services.  The  contract,  read  in 
the  light  of  the  circumstances  under  which  it  was  made, 
shows  that  it  contemplates  and  provides  for  the  sale  of  coal 
and  coke  in  states  other  than  West  Virginia;  and  the  evi- 
dence shows  that,  in  the  performance  of  the  contract,  coal 
and  coke  have  been  sold  in  the  states  mentioned  in  the  bill. 
Indeed,  the  prime  ohjeH  of  the  contract,  as  repeatedly  ex- 


XJNITED  STATES   V.  CHESAPEAKE  &  0.  FUEL  CO.  47 

Opinion  of  the  CJourt 

pressed  therein,  is  "  to  enlarge  the  sale  of,  and  extend  the 
Western  market  for,  Kanawha  coal  and  coke."  The  con- 
tract, therefore,  and  the  combination  thereunder  formed  by 
the  defendants,  have  direct  relation  to  interstate  trade  and 
commerce,  and  in  carrying  out  its  purpose  interstate  com- 
merce has  been  directly  affected. 

2.  This  being  so,  the  question  is  whether  the  provisions 
of  the  contract  which  give  exclusive  control  of  the  output 
of  the  mines  to  the  Fuel  Company;  which  prohibit  compe- 
tition between  the  members  of  the  association;  which  pro- 
hibit the  Fuel  Company  from  handling  competing  coals 
and  cokes;  which  authorize  the  executive  committee  of  the 
association  to  apportion  to  its  members  the  class,  grade,  and 
quantity  of  coal  and  coke  to  be  shipped  each  month;  which 
fix  a  mimimum  price  below  w^hich  the  Fuel  Company  is 
prohibited  from  selling  coals  and  cokes  in  the  Western  mar- 
ket; and  which  fix  the  settlement  price  between  the  Fuel 
Company  and  the  association  by  a  method  of  monthly  aver- 
ages,— are  lawful  regulations  for  the  conduct  of  the  business 
of  the  defendants,  or  whether  they  are  regulations  in  re- 
straint of  interstate  cotnmerce,  as  charged  in  the  bill.  It 
is  claimed  by  the  defendants  "that  restriction  of  competi- 
tion among  only  a  small  proportion  of  the  coal  and  coke' 
operators  or  other  producers  of  a  particular  state,  which 
is  ancillary  to  a  main,  lawful  purpose,  and  which  in  fact 
results  in  [103]  keener  and  larger  competition  and  greater 
freedom  and  volume  in  interstate  trade  and  commerce,  vio- 
lates no  provision  of  the  federal "  anti-trust  act."  The 
"main,  lawful  purpose"  to  which  the  noncompetitive  fea- 
tures of  the  contract  are  ancillary,  as  claimed  by  the  defend- 
ants, is  "to  enlarge  the  sale  of,  and  extend  the  Western 
market  for,  Kanawha  coal  and  coke."  But,  as  is  well  said 
in  the  Addyston  Case,  "  no  conventional  restraint  of  trade 
can  be  enforced  unless  the  covenant  embodying  it  is  merely 
ancillary  to  the  main  purpose  of  a  lawful  contract,  and  nec- 
essary to  protect  the  covenantee  in  the  enjoyment  of  the 
legitimate  fruits  of  the  contract,  or  to  protect  him  from  the 
dangers  of  an  unjust  use  of  those  fruits  by  the  other  party." 
U.  S,  V.  Addyston  Pipe  c§  Steel  Co.^  29  C.  C.  A.  151,  85 
Fed.  282,  46  L.  R.  A.  131.    Here  no  relationship  between 


'IX'Cl 


105  FEDERAL  REPOBTER,  103. 


Opinion  of  the  Court 

the  parties  to  the  contract  exists  which  calls  for  the  protec- 
tion of  the  Fuel  Company  against  the  association,  by  the 
enforcement  of  the  noncompetitive  clauses  of  the  contract. 
The  alleged  main  purpose  of  the  contract  is  a  provision 
mainly  for  the  benefit  of  the  association,  and  incidentally 
for  the  benefit  of  the  Fuel  Company,  by  enabling  it  to  earn 
a  commission  on  sales ;  and  the  enforcement  of  the  noncom- 
petitive clauses  of  the  contract  would  benefit  the  parties 
accordingly,  but  would  afford  no  counterbalancing  benefits 
to  the  public.    It  is  said,  however,  that  the  increase  in  the 
volume  of  trade,  the  competition  in  a  larger  field  of  opera- 
tions, the  better  condition  of  the  product,  and  the  main- 
tenance of  reasonable  prices,  resulting  from  the  performance 
of  the  contract,  benefit  the  public,  and  justify  the  partial 
restraint  of  trade.    But  the  policy  of  the  law  looks  to  com- 
petition,  as  the  best  and  safest  method  of  securing  these 
benefits,  and  not  to  combinations  which  restrain  trade.    It 
is  opposed  to  the  methods  of  combination,  and  will  not 
suffer  competition  to  be  destroyed  under  the  pretense  that 
the  public  will  be  better  served  by  combination.    In  the 
exercise  of  the  power  of  regulation  conferred  upon  it  by 
the  constitution,  congress  has  chosen  competition,  in  prefer- 
ence  to  combination,  as  the  best  factor  for  the  maintenance 
of  the  life  and  the  promotion  of  the  ends  of  interstate  com- 
merce, and  has  prohibited  "  every  contract,  combination  in 
the  form  of  trust  or  otherwise,  or  conspiracy  in  restraint  of 
trade  or  commerce  among  the  several  states' or  with  foreign 
nations,"  and  has  declared  that  "  every  persons  who  shall 
monopolize  or  attempt  to  monopolize  or  combine  or  conspire 
with  any  other  person  or  persons  to  monopolize  any  part  of  the 
trade  or  commerce  among  the  several  states  or  with  foreign 
nations,  shall  be  deemed  guilty  of  a  misdemeanor."    Now,  it 
is  provided  in  the  contract  in  question  that  the  Fuel  Company 
shall  have  exclusive  control  of  "the  entire  coal  and  coke 
output  of  the  mine  or  mines  operated  by  each  of  them 
[members  of  the  association],  respectively,  on  said  C.  &  O. 
Eailway,  or  branches  thereof,  for  Western  shipment,  for 
a  period  of  not  less  than  five  years,    ♦    ♦    ♦    except  as  to 
such  coal  as  may  be  sold  by  any  member  of  said  coal  asso- 
ciation to  the  Chesapeake  &  Ohio  Eailway  Company  for  the 


UNITED  STATES   V.  CHESAPEAKE   &   O.  FUEL  CO. 


Opinion  of  the  Court. 


49 


consumption  of  said  railway  company;  "  and  it  is  provided 
further  "  that  the  said  members  of  said  association  will  not 
sell  or  consign  any  coal  or  coke  bound  to  points  [104] 
west  of  their  respective  mines,  except  under  the  terms  and 
conditions  of  this  agreement,  during  the  period  covered  by 
this  agreement,"  and  that  the  Fuel  Company,  "  nor  any  of 
its  officers,  employes,  or  servants,  will,  with  its  knowledge, 
directly  or  indirectly,  in  any  way,  manner,  or  form,  engage 
or  become  interested  in  the  buying  or  selling  of  bituminous 
coal  or  coke  in  competition  with  the  coal  or  coke  of  any 
of  the  members  of  said  Coal  Association,  except  under  the 
terms  and  conditions  of  this  agreement."  And  it  is  fur- 
ther provided  that  the  minimum  price  shall  be  fixed  by 
the  executive  committee  of  the  association  for  "  all  the  vari- 
ous grades  of  coal  and  coke  sold  and  to  be  shipped  West  by 
the  members  of  said  association,"  and  that  the  Fuel  Com- 
pany "  will  make  no  contract  for  the  sale  of  any  coal  or 
coke  of  any  members  of  said  association  at  a  price  lower  than 
such  minimum  price  to  be  fixed  by  such  committee."  And 
it  is  further  provided  "  that  the  Fuel  Company  shall  make  a 
monthly  report  showing  the  tonnage  of  the  various  kinds 
and  grades  of  coal  and  coke  shipped  by  members  of  said 
Coal  Asociation  and  weighed  during  the  month,  or  weighed 
during  such  month  though  shipped  during  a  pi-eceding 
month,  together  with  an  average  price  for  each  grade  or 
kind  of  coal  or  coke  so  shipped  and  weighed,  which  aver- 
age price  shall  be  computed  upon  the  basis  of  the  actual 
price,  less  gross  profits,  if  any,  received  for  all  coal  or  coke 
sold,  and  the  minimum  price,  fixed  as  hereinafter  provided, 
for  such  month,  for  coal  or  coke  not  sold  in  such  month; 
said  report  to  be  made  not  later  than  the  10th  day  of  each 
month  for  all  coal  and  coke  weighed,  or  weighed  during 
the  previous  calendar  month.  The  coal  and  coke  shipped 
and  weighed  or  weighed  during  such  month  shall  be  paid 
for  by  said  Fuel  Company  to  the  members  of  said  Coal 
Association  according  to  the  average  prices  determined  as 
aforesaid."  And  it  is  further  provided  that  the  executive 
committee  of  the  Coal  Association  "  shall,  not  later  than  the 
twentieth  day  of  each  month,  designate  the  percentage  of 
21220— VOL  2—07  m 1 


105  FEDERAL   REPORTEK,   104. 


Opinion  of  the  Court, 
the  total  prodmt  of  each  class  and  grade  of  coal  and  coke 
which  they  deem  best  to  be  shipped  bj  each  iiieiiiber  of  said 
association    by    rail    as   afoi-esaid    during   the    succeeding 
month."     Under  thesi?  provisions  the  extent  of  the  produc- 
tion of  the  mines,  the  shipment  and  sale  of  the  prochut,  and 
the  making  and  regulation  of  the  prices  thereof,  are  subject 
to  the  control  of  tlie  executive  ctimmittee  of  the  association. 
All  competition  among  the  memlnn-s  of  the  as.sociation  in 
the  pi-oduction,  shipment,  and  sale  of  their  i)r()du(t  is  elim- 
inated, and  the  coml)ination  enters  the   Western   markets 
clothed  with  powers  which  enal)h»  it  to  exeicise  a  huge  in- 
fluence in  tliose  markets  in  regulating  the  sup])Iv  and  the 
prices  of  coal  and  coke.     These  provisions  niv  in  i-estraint 
of  trade,  and  tend  to  monopoly,  within  the  meaning  of  the 
act  of  congress,  and  render  the  contract  illegal,  in  so  far  as 
it  relates  to  interstate  commerce.     The  important  (piestion 
is  not  wliether  the  perforim:nce  of  the  contract  so  far  has 
resulted  in  actual  injury  to  trade,  but  whether  the  contract 
confers  i>ower  to  regidate  and  restrain  trade,  upon  those 
charged  with  its  performance.    The  attempt  to  confer  power 
to  regulate  and  restrain  interstate  commerce  by  contract  is 
II  usurpation  of  the  functions  of  congress,  and  [105]  can- 
not he  sustained  upon  the  gi-ound  that  trade  has  not  in  fact 
been  injured.     It  is  for  congress  to  determine  what  regula- 
tions of  trade  will  best  promote  the  public  good.     It  is  the 
policy  of  congiess  to  encourage   and   promote  individual 
effort.     It  looks  to  individual  competition,  rather  than  to 
combinations,  for  the  benefits  which  are  to  follow  and  flow 
from  commerce  between  the  states,  and,  in  the  exercise  of 
its  constitutional   power,  has  prohibited   all   combinations 
wliich    restrain    trade.     It    is    for    congress    to    determine 
whether  the  i>olicy  it  has  adopted  shall  \ye  maintained  as 
the  one  which  will  best  promote  the  interests  of  the  counti-y, 
or  whether  it  shall  abandon  that  policy  and  place  the  inter- 
state commerce  of  the  country  in  the  hands  of  combinations. 
But  until  congress  takes  that  course,  as  long  as  this  act  re- 
mains upon  the  statute  books,  it  is  the  duty  of  the  courts 
to  condemn  every  contract  which   necessarilv   in   its  i)er- 
formance  involves  a  restraint  of  trade,  although  it  may  no( 
extend  to  the  point  of  a  monopoly  of  all  that  trade.  ^  The 


BISHOP    V,   AMERICAN    PRESERVERS    CO. 


51 


Syllabus. 

recent  discussion  of  these  questions  in  the  cases  of  U.  S.  v. 
Trans-Missouri  Freight  Ass'n,  166  U.  S.  290,  17  Sup.  Ct. 
540,  41  L.  Ed.  1007;  U.  S.  v.  Joint-Traffic  Ass'n,  171  U.  S. 
505,  19  Sup.  Ct.  25,  43  L.  Ed.  259;  U.  S.  v.  Addyston  Pipe 
(&  Steel  Co,,  29  C.  C.  A.  141,  85  Fed.  271,  46  L.  R.  A.  122; 
Id.,  175  U.  S.  211,  20  Sup.  Ct.  96,  44  L.  Ed.  136,  render  their 
further  discussion  here  unnecessary.  The  contract  in  ques- 
tion here,  and  the  combination  of  the  defendants  thereunder, 
are  in  restraint  of  trade  and  commerce  among  the  several 
states,  and  such  trade  has  in  fact  been  restrained  in  the  per- 
formance of  the  contract;  and  the  defendants,  and  each 
of  them,  therefore,  will  be  enjoined  from  selling  or  shipping 
under  this  contract  coal  or  coke  into  any  state  other  than 
the  state  in  which  they  reside,  and  the  contract,  in  so  far 
as  it  affects  interstate  trade  and  commerce,  is  declared  to  be 
void  and  illegal,  and  the  combination  of  the  defendants 
thereunder  will  he  dissolved. 


1845]  BISHOP  r.  AMERICAN  PRESERVERS  CO.  ET 

AL.« 

(Circuit  Conrt,  N.  D.  Illinois,  N.  D.     Octol»er  19,  1900.) 

[105  Fed.,  845.]  - 

Monopolies — Anti-Trust  Law — Action  for  Damages. — Section  7  of 
the  Jinti-trust  act  (2G  Stat.  209),  giving  to  any  person  injured  by  any 
otJier  person  or  oori)oration  by  reason  of  anything  forbidden  in  the 
act  the  riglit  to  recover  treble  damages,  does  not  authorize  an  action 
against  an  alleged  trust  corix)ration.  by  one  who  was  a  party  to  its 
organization  and  a  stoclvholder  therein,  to  rcK'Over  damages  result- 
ing from  the  enforcement  by  defendant  of  rights  given  it  by  the 
alleged  unlawful  agreement* 


On  Demurrer  to  Amended  Declaration. 

Lynden  Evans  and  Frederick  Amd,  for  plaintiff. 

Moran,  Mayer  d-  Meyer,  for  defendants. 

0  See  also  vol.  1,  page  49  (51  Fed.,  272). 

ft  Syllabus  copyrighted,  1901.  by  West  Publishing  Co. 


52 


105   FEDERAL  REPORTER,   845. 


Opinion  of  the  Court. 

KoHLSAAT,  District  Judge. 

This  matter  comes  on  to  be  heard  upon  demurrer  to  the 
declaration  herein  as  amended.  A  demurrer  was  sustained 
to  the  original  declaration  in  1892  by  Judge  Blodgett  (51 
Fed.  272),  and  the  suit  seems  to  have  remained  dormant  since 
that  year,  llie  suit  is  for  the  purpose  of  recovering  treble 
damages  under  section  7  of  the  Sherman  act,  the  facts  set 
forth  in  the  declaration  on  which  plaintiff  seeks  such  re- 
covery being  substantially  as  follows:  That  phiintiff  was 
prior  to  the  year  1888  engaged  in  the  business  of  manufac- 
turing preserves,  etc.;  that  in  said  year  he  entered  into  an 
agreement  with  certain  of  the  defendants  and  others  to  form 
a  trust  or  combination,  which  combination  was  subsequently 
formed,  and  to  which  he  conveyed  his  said  business;  that 
defendant  American  Preservers  Company  was  subsequently 
organized  under  the  laws  of  the  state  of  West  Virginia  for 
the  purpose  of  acquiring  title  to  the  property  controlled  by 
said  trust,  and  for  the  purpose  of  forming  a  channel  through 
which  said  trust  could  purchase  and  control  the  business  of 
plaintiff,  and  purchase  and  control  the  entire  manufacture 
of  preserves,  etc.,  in  the  United  States;  that  plaintiff  was 
forced  to  execute  a  bill  of  sale  of  his  said  manufacturing 
plant  and  business  to  said  American  Preservers  Company, 
but  continued  to  conduct  said  business  under  the  name  and 
style  of  A.  D.  Bishop  &  Co.;  that  subsequently  differences 
arose  between  him  and  the  managers  of  said  trust,  and  there- 
upon the  said  American  Preservers  Company  brought  a  suit 
in  replevin  against  plaintiff,  and  by  means  thereof  obtained 
possession  of  plaintiff's  entire  plant,  stock  in  trade,  and  busi- 
ness, and  still  retains  the  same.  In  the  amended  declaration 
it  is  averred  that  the  products  so  controlled  by  said  trust  are 
products  used  in  trade  and  commerce  among  the  several 
states  of  the  United  States  and  with  foreign  nations,  and 
that  such  products  constitute  articles  of  interstate  commerce. 
It  would  seem  that  this  case  would  come  within  the  rules  of 
law  established  by  the  Supreme  Court  in  United  States  v. 
E.  C.  Knight  Co.,  156  U.  S.  1, 15  Sup.  a.  249,  39  L.  Ed.  325, 
although  it  might  be  a  debatable  question  as  to  whether  or 
not  the  question  could  be  determined  on  demurrer.  How- 
ever, I  am  of  the  opinion  that  the  demurrer  should  [846]  be 


LOWRY   V.  TILE,  MANTEL   &   GRATE   ASSN. 

Syllabus. 


53 


sustained  on  the  ground  that  the  damage  which  plaintiff 
claims  to  have  suffered  is  not  of  the  nature  contemplated 
in  section  7  of  the  Sherman  act,  when  considered  in  con- 
nection with  the  remaining  sections  thereof.  Whatever 
damages  plaintiff  may  have  sustained  in  the  premises 
are  the  result,  not  of  the  alleged  unlawful  combination,  but 
of  the  exercise  of  the  right,  which  every  citizen  possesses,  to 
bring  a  lawsuit.  There  is  another  ground  which  might  well 
be  considered  as  placing  plaintiff  without  the  provision  of 
said  act,  to  wit,  the  fact  that  plaintiff  was  himself  a  party 
to  the  unlawful  combination,  and  was  injured  by  reason  of 
his  illegal  connection  therewith.  The  demurrer  is  sustained 
on  the  ground  that  the  declaration  as  amended  states  no 
cause  of  action. 


[38]  LOWKY  ET  AL.  v,  TILE,  MANTEL  &  GEATE 
ASS'N  OF  CALIFORNIA  ET  AL.« 

(Circuit  .Court,  N.  D.  California.    December  26,  1900.) 

[106  Fed.,  38.] 

Monopolies — ^Anti-Tbust  Act — Combination  in  Restbaint  of  Inter- 
state Commerce. — ^The  Tile,  Mantel  &  Grate  Association  of  Cali- 
fornia was  organized  for  the  purpose,  as  declared  in  its  constitu- 
tion and  the  preamble  thereto,  of  uniting  "  all  acceptable  dealers  " 
in  tiles,  fireplace  fixtures,  and  mantels  in  San  Francisco  and  vi- 
cinity (within  a  radius  of  200  miles),  and  all  American  manufac- 
turers of  tiles  and  fireplace  fixtures.  Its  constitution  and  by- 
[39]  laws  provided  that  its  active  members  should  consist  of  dealers 
in  such  articles  in  San  Francisco  and  vicinity,  carrying  a  stock  of  a 
stated  value,  who  should  be  elected  to  membership,  each  of  whom 
should  pay  an  entrance  fee  and  annual  dues,  and  the  nonresident 
members  should  embrace  all  manufacturers  throughout  the  United 
States  who  signed  the  constitution  and  paid  the  entrance  fee. 
They  provided  that  no  dealer  and  active  member  should  purchase 
from  any  manufacturer  or  his  agent  who  was  not  a  member  of  the 
association,  nor  sell  any  unset  tiles  to  any  person  not  a  member  for 
less  than  the  list  price,  and  that  no  manufacturer  who  was  a  mem- 

o  Demurrer  of  defendants  overruled  (98  Fed.,  817).  See  vol.  1,  p. 
995.  Charge  to  the  jury  (106  Fed.,  38).  Judgment  aflirmed  by  Cir- 
cuit Court  of  Appeals,  Ninth  Circuit.  Case  there  and  subsequently 
entitled  Montague  &  Co.  v.  Lowry  (115  Fed.,  27).  See  p.  112. 
Aflirmed  by  the  Supreme  Court  (193  U.  S.,  38).    See  p.  327. 


106  FEDERAL  REPORTER,  39. 


Chfti^  to  the  Jury. 

tier  should  sell  his  products  to  any  dealer  who  was  not  a  member. 
Held,  that  such  association  was  Illegal  and  in  violation  of  sections 
1  and  2  of  the  antitrust  act  of  July  2,  1890,  being  a  combination  hi 
restraint  of  trade  and  commerce  among  the  states,  by  Imposing  a 
tax  on  such  commerce  between  its  members,  to  the  extent  of  the 
membership  fees  and  dues,  and  an  attempt  to  monopolize  a  part  of 
the  trade  in  the  articles  named  between  the  manufacturers  in  other 
states  and  the  dealers  In  San  Francisco,  which,  in  operation,  did 
effect  such  monopoly,  and  that  under  section  7  of  such  act  such 
association  and  its  members  were  liable  in  treble  damages  to  a 
ii?aler,  not  a  member  of  the  combination,  whose  business  was  In- 
jured thereby.o 

Action  at  Law  to  Kecover  Treble  Damages  under  the 
Anti-Trust  Act, 

Campbell  d*  Metsmh,  for  plaintiffs. 

Walter  H,  Liitfotth  and  P.  F,  Diiiim^  for  defendants. 

Morrow,  Circuit  Judge  (charging  jury). 

This  is  an  action  at  law  brought  to  recover  damages  al- 
leged to  have  been  sustained  by  the  plaintiffs  by  i-eason  of 
injury  to  their  business  as  dealers  in  tiles  and  fireplace  fix- 
tures, caused  by  the  fonning  of  an  association  by  the  defend- 
ants as  dealers  in  such  articles,  and  which  association,  the 
plaintiffs  claim,  is  within  the  prohibitoiy  provisions  of  the 
act  of  congi-ess  of  July  2,  1890,  commonly  known  as  the 
"Sherman  xinti-Trust  Act."  That  act  provides,  among 
other  things,  as  follows : 

**  Section  1.  Every  t^  ntnirt,  comlnnaticTii  fn  the  f«»rni  of  trust  or 
othen*is«\  or  cimspinuy.  In  restraint  of  trade  or  tomnipree  among  tlie 
several  states  or  with  foreign  nations,  Is  hereby  dc<IarcHl  to  be 
illegal.     ♦     ♦     ♦ 

"  Sec.  2.  Eveiy  i)ei-8,>n  who  shall  monopolize  or  attemi>t  to  nionopo- 
Ilae  or  combine  or  iM.nsi»Ji-e  with  any  otlier  |»erson  or  iums<uis  to 
monopolize  any  pait  of  the  trade  or  commerce  among  tlie  several 
states  or  foreign  nations,  shall  be  deemed  guilty  of  a  misde- 
meanor.    ♦     ♦     •     "  e        J  iioutr- 

"  Sec.  7.  Any  i>ersun  wlio  shall  lie  injured  in  his  business  or  property 
by  any  other  iiem»n  or  corporation  by  reason  of  anything  forbidden  or 
declared  to  bi»  unlawful  by  this  act,  may  sue  therefor  in  any  circuit 
court  of  the  I'liited  States  in  the  district  in  which  the  defendant  re- 
sides or  is  found,  without  respect  t(»  the  amount  in  controversy  and 
shall  recover  thiw-fold  the  damages  by  him  sustained,  and  the  costs 
of  suit  inc-Iuding  a  reasonable  attorney's  fee." 


«  Syllabus  copyrighted,  1901,  by  West  Publishing  Co. 


LOWRY    r.  TILE,  MANTEL   &    GRATE   ASSN. 


55 


Charge  to  the  Jury. 

Tou  will  observe  that  the  things  forbidden  and  declared 
to  be  unlawful  by  the  act  are :  First,  every  contract,  combina- 
tion in  the  form  of  trust  or  otherwise,  or  conspiracy  in  re- 
straint of  trade  or  commerce  among  the  several  states;  and, 
second,  the  act  of  monopolizing,  or  attempting  to  monopo- 
lize, or  combining  or  conspiring  to  monopolize,  any  part  of 
the  trade  or  connnerce  among  the  several  states.  The  charge 
against  the  defendants,  under  these  prohibitions,  is  the  or- 
ganization of  an  association  called  the  Tile,  Mantel  &  Grate 
Association  of  California,  under  an  agreement  and  combina- 
tion in  restraint  of  trade  and  commerce.  The  printed  docu- 
ment [40]  introduced  in  evidence,  and  entitled,  *' The  Con- 
stitution and  By-Laws  of  the  Tile,  Mantel  &  Grate  Associa- 
tion of  California,"  shows  that  this  association  was  organ- 
ized on  July  7,  1898,  and  that  the  constitution  and  by-laws 
were  adopted  on  July  14,  1898.  Under  the  title  of  "  Pre- 
amble and  Resolutions  "  the  objects  of  the  association  are 
declared  to  be  "  to  unite  all  acceptable  dealers  in  tiles,  fire- 
place fixtures,  and  mantels  in  San  Francisco  and  vicinity 
(within  a  radius  of  two  hundred  miles),  and  all  American 
manufacturers  of  tiles,  and,  by  frequent  interchange  of 
ideas,  advance  the  interests  and  promote  the  mutual  welfare 
of  its  members."  Article  1  of  the  constitution  provides  as 
follows  concerning  membership  in  the  association: 

"Section  1.  Any  individual,  crupdration.  or  firm  engaged  or  contem- 
plating eiignging  in  the  tile,  mantel,  and  grate  Imsiness  in  San  Fran- 
cisco, or  within  a  radius  of  two  hundred  miles  thereof  (not  manu- 
fncturers).  having  an  establislied  Ijusiness.  and  currying  not  less  than 
^.'J.iMK)  worth  of  stock,  and  having  been  i)roposed  l)y  a  memlier  in  good 
standing,  and  elected,  shall,  after  having  signeil  the  constitution  and 
by-laws  governing  sriid  association,  and  uiion  tlie  payment  of  an  en- 
trance feo  as  hereinafter  provided,  enjoy  all  the  priviieges  of  member- 
ship. 

"  Sec.  2.  All  associated  and  individual  manufacturers  of  tiles  and 
fireplace  fixtures  through  the  ITnited  States  may  become  nonresident 
meml>ers  of  this  association  upon  the  payment  of  an  entrance  fee  as 
hereinafter  provided,  and  after  having  signed  the  constitution  and  by- 
laws governing  said  associatitm," 

Article  2  provides  as  follows  concerning  fees  and  dues : 

"  Section  1.  The  initiation  fee  of  this  association  shall  be.  for  active 
members  twenty-five  dollars,  and  for  non-resident  members  ten  dollars, 
which  amounts  nuist  accompany  each  application  for  membership. 

"  Sec.  2.  Each  active  member  of  the  association  shall  pay  ten  dollars 
I^er  year  as  dues.  payal>le  in  advance  on  the  third  Monday  in  August  of 
each  year.     No  dues  shall  be  charged  against  nonresident  members." 


56 


106  FEDEBAL  BEPORTEB,   40. 


Charge  to  the  Jurj. 

Article  6  makes  provision  for  amendments  to  the  constitu- 
tion, as  follows : 

"All  proposed  alterations  or  amendments  to  this  constitution  shal! 
be  submitted  in  writing  at  a  regular  meeting,  and  no  action  thereon 
shall  be  taken  until  the  next  succeeding  regular  meeting.  Due  notice 
of  such  alterations  or  amendments  shall  be  mailed  to  each  member  at 
least  one  week  prior  to  the  meeting  at  which  action  is  to  be  taken 
thereon,  and  such  alterations  or  amendments  nmst  receive  the  c"r,proval 
of  two-thirds  of  the  active  members  of  the  association." 

The  document  introduced  in  evidence  as  the  constitution 
and  by-laws  of  the  association  contains  the  provisions  which 
have  been  quoted,  and  there  is  no  evidence  in  the  document 
itself  of  any  amendment  thereof.  But  there  is  testimony  to 
the  effect  that  that  part  of  article  1  of  the  constitution  limit- 
ing the  qualification  of  membership  to  those  persons  engaged 
in  the  tile,  mantel,  and  grate  business  in  San  Francisco,  hav- 
ing an  established  business,  and  carrying  not  less  than  $3,000 
worth  of  stock,  has  not  been  enforced,  as  to  the  requirement 
that  the  member  shall  have  a  stock  of  goods  of  the  value  of 
$3,000.  There  is  also  testimony  to  the  effect  that  the  provi- 
sion of  article  2  relating  to  the  fees  and  dues,  and  fixing  the 
initiation  fee  for  active  members  at  $25,  has  been  changed  to 
provide  that  the  initiation  fee  for  such  membership  shall 
be  $10. 

The  real  purpose  and  object  of  the  association  appears  to  be 
declared  in  sections  7  and  8  of  the  by-laws.  Section  7  pro- 
vides that: 

[41]  "No  dealer  and  active  member  of  this  association  shall  pur- 
chase directly  or  indirectly  any  tile  or  fireplace  fixtiu-es  from  anv 
manufacturer,  or  resident  or  traveling  agent  of  anv  manufacturer, 
not  a  member  of  this  association,  neither  shall  they  sell  or  dispose  of. 
directly  or  indirectly,  any  uufet  tile  for  less  than  list  prices  to  anv 
person  or  persons  not  a  member  of  this  association,  uiultr  ]>enalty  of 
expulsion  from  the  asscciatitn." 

Section  8  provides  as  follows : 

"Manufacturers  of  tile  <r  fircT>l'ice  fixtures,  or  rcsidenr  or  fviwoh 
Ing  agents  of  manufacturers,  spelling  or  disposing,  directly  or  iiidi- 
rectly,  their  products  or  wju-es  to  any  person  or  persons  not  niombei's 
of  the  Tile,  Mantel  &  Grate  Association  of  California,  shall  forfeit 
their  membership  in  the  association." 

The  uncontroverted  evidence  in  this  case  shows  that  the 
active  members  of  the  association  consist  of  a  number  of 
dealers  in  tiles,  mantels,  and  grates  in  San  Francisco,  and 
that  they  are  not  manufacturers  of  any  of  these  articles;  that 


LOWRY    V.  TILE,  MANTEL   &   GRATE   ASSN. 


57 


Charge  to  the  Jury. 

the  nonresident  members  of  the  association  consist  of  a  num- 
ber of  manufacturers  of  tiles  and  fireplace  fixtures  situated 
in  different  parts  of  the  United  States  outside  of  California. 
The  plaintiffs  were  not  members  of  the  association,  and  have 
not  been  at  any  time  during  its  existence.  Is  it  the  apparent 
purpose  and  the  natural  and  direct  consequence  of  this  pro- 
vision of  the  constitution  and  by-laws  of  the  Tile,  Mantel  & 
Grate  Association  to  restain  trade  and  commerce  between 
the  dealers  in  tiles,  mantels,  and  grates  in  San  Francisco  and 
the  manufacturers  of  such  articles  in  the  Eastern  States? 
Or  do  these  provisions  operate  in  such  a  way  that  the  mem- 
bers of  the  association  have  monopolized  or  have  attempted 
to  monopolize  any  part  of  the  trade  or  commerce  in  these 
commodities  between  tjie  manufacturers  in  the  East  and  the 
dealers  in  San  Francisco?  The  purpose  of  the  organiza- 
tion, as  declared  in  the  preamble  and  in  section  2  of  article 
1  of  the  constitution,  was  to  embrace  "  all  American  manu- 
facturers "  of  tiles  and  fireplace  fixtures,  as  nonresident 
members,  and  the  ''  acceptable  dealers "  in  tiles,  fireplace 
fixtures,  and  mantels  in  San  Francisco  and  vicinity  (within 
a  radius  of  200  miles)  as  the  active  resident  members.  It 
does  not  appear  that  the  declared  purpose  of  the  association 
has  actually  been  accomplished,  in  the  completeness  of  its 
membership.  Not  all  American  manufacturers  of  tiles  and 
fireplace  fixtures  have  become  nonresident  members. 
AVhether  all  "  acceptable  dealers  "  in  San  Francisco  have  be- 
come members  is  not  entirely  clear,  nor  is  it  certain  what 
constitutes  an  "  acceptable  member.''  But  the  natural  effect 
and  necessary  consequence  of  the  agreement  and  combination, 
so  far  as  completed  and  actually  enforced,  is  to  limit  the  San 
Francisco  dealer  who  is  a  member  of  the  association  in  his 
purchase  of  tiles  and  fireplace  fixtures  to  those  manufactur- 
ers in  the  United  States  who  are  nonresident  members  of 
the  association.  The  San  Francisco  dealer  who  has  become 
a  member  of  this  association  cannot  purchase  tiles  and  fire- 
place fixtures  from  any  outside  manufacturer  except  under 
penalty  of  forfeiting  his  membership  in  the  association,  and 
the  manufacturer  belonging  to  the  association  as  a  nonresi- 
dent member  cannot  sell  to  anv  dealer  in  San  Francisco  Avho 
is  not  a  member  of  the  association,  except  under  the  same 


58 


106   FEDERAL  REPORTER,   42. 


Charge  to  the  Jury. 

penalty  of  forfeiting  of  meml>ership.    If  all  the  manufac- 
turers of  tiles  and  fireplace  fixtures  in  the  United  States 
should    f 42]   l>ec()ine  menil>ers  of  the  association,  then  no 
dealer  in  tiles  or  fireplace  fixtures  not  a  member  of  the  as- 
soeiatiim  could  carry  on  his  business  in  San  Francisco,  Ix*- 
cause  there  would  he  no  manufacturer  of  those  articles  from 
whom  he  could  purchase  the  goods;  and  as  he  could  not 
purchase  from  another  denier  in  San  Francisco  wlu),  as  a 
meml>er  of  the  association,  is  entitled  to  buy  from  the  Eastern 
manufacturer,  except  at  list  prict^s  for  unseat  tiles,  he  could 
not  compete  with  other  dealers,  these  list  prices  l^eing  so  hi^h. 
He  would  thus  be  practically  debarred  from  continuing  hi^ 
business.    On   the  other  hand,  if  all   the   dealers  in   San 
Francisco  should  prove  to  be  "  acceptable  members ''  of  the 
association,  and  not  all  the  manufacturers  of  tiles  and  fire- 
place fixtures  in  the  United  States  should  become  nonresident 
members,  such  manufacturers  remaining  out  of  the  organiza- 
tion would  be  deprived  of  all  customers  in  San  Francisco, 
l:»ecaiise  no  dealer  in  San  Francisco  could  purchase  tiles  from 
siich  a  manufacturer  except  under  penalty  of  forfeiture  of 
his  membership  in  the  association.    In  other  words,  the  East- 
em  manufacturer  who  becomes  a  member  of  this  association 
is  restricted  in  his  selling  market  to  members  of  the  associ- 
ation  in  San  Francisco,  and  the  San  Francisco  dealer  who  is 
a  member  of  the  association  is  restricted  in  his  purchasing 
market  to  manufacturers  who  are  members  of  the  association. 
But  this  is  not  all.    The  Eastern  manufacturer  who  is  not 
a  meml)er  of  the  a&sociation  is  also  restricted  in  his  selling 
market  to  the  dealers  in  San  Francisco  who  are  not  mem- 
bers of  the  a&sociation,  and  the  dealers  in  San  Francisco 
who  are  not  members  of  the  association  are  also  restricted 
in  their  purchasing  market  to  those  manufacturers  who  are 
not  memWrs  of  the  a&sociation.    It  will  be  said,  however, 
that  all  manufacturers  of  tiles  and  fireplace  fixtures  in  the 
United  States  mif>'  become  members  of  the  association.    But 
upon  what  terms?    The  manufacturer  must  apply  for  and 
obtain  membership  in  the  association,  and  pay  a  fee  of  $10 
and,  in  order  that  the  San  Francisco  dealer  may  have  the 
privil^je  of  purchasing  tiles  and  fireplace  fixtures  from  the 
manufacturers  who  are  members  of  the  association,  he  must 


LOWRY   'V.  TILE,  MANTEL  &   GRATE   ASSN. 


59 


Charge  to  the  Jury, 

first  prove  himself  to  be  an  ''  acceptable  member "  to  the 
other  members  of  the  association ;  and,  if  he  finds  himself  to 
be  an  ''  acceptable  member,"  he  must  pay  a  fee  of  $10,  and 
thereafter  must  continue  to  pav  annual  dues  in  the  sum  of 
$10. 

It  has  been  held  that  an  ordinance  of  a  municipal  corpo- 
ration requiring  i3ersons  or  firms  soliciting  orders  on  behalf 
of  manufacturers  of  goods  to  take  out  a  license  and  pay  a  tax 
is  an  exercise  of  the  taxing  power,  and,  when  enforced 
against  a  person  or  firm  soliciting  orders  for  a  manufac- 
turer of  goods  in  another  state,  it  imposes  a  tax  upon  and  is 
a  regulation  of  interstate  commerce,  in  violation  of  the  pro- 
visions of  the  constitution  of  tlie  United  States. 

In  Rohhins  v.  Taxing  DisL,  120  U.  S.  489,  7  Sup.  Ct.  51)2, 
30  L.  Ed.  694,  a  statute  of  Tennessee  declared  that  all  drum- 
mers and  all  persons  not  having  a  regularly  licensed  house 
of  business  in  the  taxing  district,  offering  for  sale  or  selling 
goods  therein  by  sample,  should  be  required  to  pay  to  the 
county  trustee  the  sum  of  $10  per  week,  or  $25  per  month, 
for  such  privilege.  Bobbins  was  engaged  in  soliciting  in  the 
city  of  Memphis,  Tenn.,  the  sale  of  goods  for  a  Cincinnati 
[43]  firm,  exhibiting  samples  for  the  purpose  of  securing 
orders  for  the  goods.  He  had  no  license,  and  was  prose- 
cuted and  convicted  for  a  violation  of  the  statute.  The  stat- 
ute made  no  discrimination  between  those  who  represented 
business  houses  out  of  the  state  and  those  who  represented 
like  houses  within  the  state.  There  was,  therefore,  no  ele- 
ment of  discrimination  in  the  case.  But,  notwithstanding 
this  equality  of  the  tax  upon  all  dealers,  the  conviction  was 
set  aside  by  the  supreme  court  of  the  United  States  on  the 
groimd  that,  whatever  the  state  might  see  fit  to  enact  with 
reference  to  a  license  tax  upon  those  who  acted  as  drummers 
for  houses  within  the  state,  it  could  not  impose  upon  those  who 
acted  as  drummers  for  houses  outside  of  the  state  any  bur- 
den by  way  of  a  license  tax,  for  the  reason  that  such  persons 
were  engaged  in  interstate  commerce,  which  must  be  left 
free  from  any  restrictions  or  impositions  whatever.  Nego- 
tiations in  the  conduct  of  interstate  commerce  could  not  be 
taxed  by  the  state,  or  by  a  municipal  corporation  under  its 
authority. 


60 


106   FEDERAL  REPORTER,   43. 


Chai-ge  to  the  Jury, 

In  Corsm^  v.  Manjiand,  120  U.  S.  502,  7  Sup.  Ct.  655,  30 
L.  Ed.  699,  tlie  same  question  arose  with  respect  to  a  provi- 
sion of  the  Code  of  Maryland,  and  the  same  doctrine  de- 
clared as  in  the  preceding  case. 

In  Asker  v.  Texas,  128  U.  S.  129, 9  Sup.  Ct.  1, 32  L.  Ed.  368, 
a  statute  of  the  state  of  Texas  required  any  commercial  trav- 
eler, drummer,  salesman,  or  solicitor  of  trade,  by  sample  or 
otherwise,  to  pay  an  annual  occupation  tax  of  $35.  This 
statute  was  declared  to  be  unconstitutional,  and  the  case  of 
Robhins  v.  Taxing  Dist.  was  expressly  affirmed,  to  meet  the 
vigorous  assault  made  by  the  court  of  appeals  of  Texas  upon 
the  doctrine  of  that  case. 

In  Stoutenhiirgh  v.  Hennick,  129  U.  S.  141,  9  Sup.  Ct. 
256,  32  L.  Ed.  637,  an  agent  of  a  firm  doing  business  in  the 
city  of  Baltimore  solicited  orders  in  the  District  of  Colum- 
bia without  having  taken  out  a  license  there  as  required  by 
an  act  of  the  legislative  assembly  of  that  District.  The 
supreme  court  held  that  this  law  was  invalid,  as  construed  to 
include  the  business  of  an  agent  soliciting  orders  for  a  busi- 
ness house  located  outside  the  District. 

In  Brennan  v.  City  of  Titus vUle,  153  U.  S.  289,  14  Sup. 
Ct.  829,  38  L.  Ed.  719,  an  order  of  the  city  of  Titusville  pro- 
vided "  that  all  persons  canvassing  or  soliciting  within  said 
city  orders  for  goods,  books,  paintings,  wares  or  merchan- 
dise of  any  kind,  or  persons  delivering  such  articles  under 
orders  so  obtained  or  solicited,  shall  be  required  to  procure 
from  the  mayor  a  license  to  transact  said  business,  and  shall 
pay  to  the  said  treasurer  therefor  the  following  sums,  ac- 
cording to  the  time  for  which  said  license  shall  be  granted," 
etc.  The  facts  of  the  case  were  these :  One  Shephard  was  a 
manufacturer  of  picture  frames  and  maker  of  portraits,  re- 
siding in  Chicago,  in  the  state  of  Illinois,  in  which  city  he 
had  his  manufactory  and  place  of  business.  The  defendant, 
Brennan.  was  an  agent  of  Shephard,  employed  by  him  to 
travel  and  solicit  orders  for  said  pictures  and  frames.  Upon 
receiving  orders  for  such  goods,  Brennan  forwarded  the  same 
to  Shephard,  at  Chicago,  where  the  goods  were  made,  and 
from  there  shipped  to  the  purchasers,  in  Titusville,  in  the 
[44]  state  of  Pennsylvania,  by  railroad,  freight  and  ex- 


LOWRY  V.  TILE,  MANTEL  &  GRATE   ASSN. 


61 


Charge  to  the  Jury. 

press;  and  the  price  of  the  goods  was  collected  and  for- 
warded to  Shephard.  sometimes  by  the  express  company, 
and  at  other  times  by  the  agent  of  Shephard.  Brennan  was 
engaged  in  conducting  the  business  in  the  manner  stated  at 
the  time  of  his  arrest,  without  having  obtained  a  license  as 
required  by  the  municipal  ordinance.  He  was  convicted, 
and  sentenced  to  pay  a  fine  of  $25  and  costs.  From  that 
judgment  he  api)ealed  to  the  supreme  court  of  the  state, 
where  the  judgment  was  affirmed;  the  court  holding  that  the 
ordinance  was  enacted  in  the  exercise  of  the  police  power  of 
the  state.  City  of  Titusville  v.  Brennan,  143  Pa.  St.  642,  22 
Atl.  893,  14  L.  R.  A.  100.  Brennan  thereupon  sued  out  a 
writ  of  error  to  the  supreme  court  of  the  United  States. 
The  whole  question  Avas  again  reviewed  by  that  court,  and 
all  the  previous  cases  in  that  court  relating  to  the  subject 
carefully  considered.  The  court  declared  that  commerce 
between  the  citizens  of  the  several  states  must  be  absolutely 
free  from  restraint.     The  court  said: 

"  It  must  be  considered,  in  view  of  a  long  line  of  decisions,  that  it  Is 
settled  that  nothing  which  is  a  direct  burden  upon  interstate  com- 
merce can  be  imposed  by  the  state  without  the  assent  of  congress, 
and  that  the  silence  of  congress  in  respect  to  any  matter  of  interstate 
commerce  is  equivalent  to  a  declaration  on  its  part  that  it  should 

be  absolutely  free." 

• 

In  Leisy  v.  TIardiii,  135  U.  S.  100,  10  Sup.  Ct.  081,  34  L. 
Ed.  128,  the  supreme  court  held  that  a  state  statute  pro- 
hibiting the  sale  of  intoxicating  liquors,  except  for  certain 
purposes  and  under  license  from  a  county  court,  was  uncon- 
stitutional and  void  when  applied  to  a  sale  by  an  importer 
of  liquors  brought  from  another  state  in  the  original 
packages,  because  the  operation  of  the  law  was  repugnant  to 
the  power  of  congress  to  regulate  commerce  among  the  sev- 
eral states.    The  court,  in  passing  upon  the  question,  said : 

"  The  power  vested  in  congress  '  to  regulate  commerce  with  foreign 
nations  and  among  the  several  states  and  with  the  Indian  tribes '  is 
the  power  to  prescribe  the  rule  by  which  that  commerce  is  to  be 
governed,  and  is  a  power  complete  in  itself,  acknowledging  no  limita- 
tions other  than  those  prescribed  in  the  constitution.  It  is  co- 
extensive with  the  subject  on  which  it  acts,  and  cannot  be  stopped  at 
the  external  boundary  of  a  state,  but  must  enter  its  interior,  and  must 
be  capable  of  authorizing  the  disposition  of  those  articles  which  it 
introduces,  so  that  they  may  become  mingled  with  the  common  mass 
of  property  within  the  territory  entered." 


62 


106   FEDERAL  REPORTER,   44. 


Charge  to  the  Jury. 

And  fiii-ther,  to  make  this  limitation  on  state  authority 
over  interstate  connnerce  more  clear,  the  court  said: 

"It  is  only  after  the  iiuportntiou  is  completetl.  suid  the  i)roi>erty 
imported  has  miugled  with  and  become  a  part  of  the  general  proi)erty 
of  the  state,  that  Its  regulations  can  act  ui)on  it,  except  so  far  as 
may  l>e  ntn-essary  to  insure  safety  in  the  disi)osition  of  the  imiwrt 
until  thus  mingleil." 

In  the  case  of  I'lt'ded  Strifes  v.  Coffl  Dealers'  Am'n,  (C.  C.) 
85  Fed.  *i52,  this  court,  referring  to  the  case  jujt  quoted 
from,  said  : 

**  If  a  law  of  a  state  regulating  the  sale  of  intoxicating  liquors,  so 
:is  to  prohibit  their  sale  exi*ept  for  certain  i»uriM)ses  and  under  license 
from  a  county  court,  is  uuconstitutional  and  void  when  applied  to 
ii  sale  by  an  importer  of  liquors  brought  from  another  state  in  the 
original  packages,  bei-ause  the  law  in  that  relation  is  in  restraint  of 
trade  and  commerce  '  among  the  several  states,'  what  shall  be  said 
of  the  constitution  and  by-laws  of  the  Coal  Dealers'  Asso-  [45]  elation, 
and  the  agi-eement  of  that  ass(xiation  with  the  wholesale  dealers 
resiiecting  the  sale  of  iuqwrted  coal  in  San  Francisco  under  the  anti- 
trust actV     If  one  is  in  restraint  of  commerce,  is  not  the  other?  " 

In  Uiiifed  SMes  v.  Addyston  Pipe  c§  Steel  Co..  29  C.  C.  A. 
141,  85  Fed.  271,  54  U.  8.  App.  723,  707,  4C  L.  R.  A.  122, 
Judge  Taft  considered  the  effect  of  such  state  statutes  in  the 
same  relation,  and  said : 

*'  If.  then,  the  soliciting  of  orders  for.  and  the  sale  of,  goods  in  one 
state,  to  be  delivereil  from  another  state,  is  interstate  commerce  in  its 
strictest  and  highest  sense. — such  that  the  states  are  excluded  by  the 
federal  constitution  from  a  right  to  regulate  or  tax  the  same.— it  seems 
clear  that  contracts  in  restraint  of  such  solicitations,  negotiations,  and 
sales  are  contracts  in  restraint  of  interstate  conmierce." 

Thest*  observations  appear  to  the  court  to  Ix*  applicable 
to  the  effect  of  the  constitution  and  by-laws  of  the  Tile,  Man- 
tel &  Cirate  Association  of  California  involved  in  this  ca.se. 
If  an  ordinance  of  San  Francisco  imposing  a  tax  of  $10 
upon  a  solicitor  who  should  seek  orders  for  tiles  and  fireplace 
fixtures  for  an  Eastern  manufacturer  would  be  contrary  to 
law,  because  a  restriction  upon  interstate  connnerce,  then  a 
like  fee  and  the  conditions  of  membership  imposed  by  this 
organization  upon  Eastern  manufacturers  for  the  privilege  of 
selling  to  San  Francisco  dealers  who  are  members  of  the  asso- 
ciation is  also  a  restriction  upon  interstate  commerce,  and 
would  for  the  same  renson  be  cx)ntrarv  to  law. 

This  brings  us  to  the  question  as  to  llie  effect  this  organi- 
zation had  upon  the  price  of  tiles  in  this  market.    Mr.  W.  B. 


LOWRY    V.  TILE,  MANTEL   &   GRATE   ASSN. 


63 


Charge  to  the  .lury. 

Webster,  the  secretary  and  treasurer  of  the  Tile,  Mantel  & 
Grate  Association  of  California,  testified  as  follows,  on  cross- 
examination  : 


the 
did 


Q.  After  the  formation  of  the  cori)oration,  and  the  adoption  of 
list  price  of  the  American  Tile  Company  by  your  association,  that  um 
1  ai^e  the  price  of  tile  in  this  market,  did  it  iiotV     You  can  answer  that 
easy.     A.  .\es,  sir;    it  raised  the  price.     The  Eastern  factories  raised 

w.?.v^'''rv'''''  "?"  ".^-  ^'  '^^^^  ^^*^^^^"»  factories  raised  the  price  on 
.^ou  A.  \es,  sir:  the  price  was  raised  twice  since  that  time  on  us: 
t  lat  IS,  not  the  list,  but  the  discount  for  orders.  Thev  are  less  to-dav 
than  they  >yere  at  that  time.  Q.  That  is,  the  factories*  from  whom  vou 
..  iV^  ^'''  *""■'  '"^'^  *'^^^^^'  factories  that  notified  us  of  the  raise. 
^11       .  *^'""  ^^'*^*'  ^**  •^'""*'  ^"""^t?!  that  the  lu'ice  had  l>een  practi- 

cauy  the  same  for  the  same  character  of  goods  bv  all  the  factories'' 
A.  h  roin  the  time  of  the  society  up  to  the  present  time.  Q.  Before  the 
formation  of  the  society  up  to  the  present  time?  A.  Xo,  sir.  O  You 
did  not  so  state?  A.  I  did  not  understand  the  question  if  I  (lid  l)e- 
cause  It  is  a  known  fact  that  the  prices  have  l)een  raised  three  or  four 
times.     Q.  The  prices,  then,  since  this  formation,  have  been  raiseil? 

As  was  said  by  the  supreme  court  of  the  United  States  in 
Addyston  Pipe  d'  Steel  Co,  v.  United  States.  175  U.  8   '^46 
20  Sup.  Ct.  96,  44  L.  Ed.  149 : 

"Any  combination  among  dealers  in  that  kind  of  commodities,  which 
in  Its  direct  and  iuimediate  effect  forecloses  all  comi>etition,  and  en- 
hances the  purchase  price  for  which  snch  conmioditv  would  otherwise 
be  dehvered  at  its  destination  In  another  state,  would  be  one  in  re- 
straint of  trade  or  commerce  among  the  states." 

Under  these  conditions,  the  dealing  in  tiles  and  fireplace 
fixtures  between  the  manufacturing  members  of  the  associa- 
tion in  the  East  and  the  dealers  in  San  Francisco,  also  mem- 
bers of  the  association,  [46|  is  in  etfect  a  monopoly  of  at 
least  a  part  of  ihe  trade  and  commerce  between  California 
and  the  Eastern  states  in  those  articles;  and  this  monopoly, 
excluding  as  it  does  the  outside  manufacturer  and  the  outside 
dealer,  except  upon  conditions,  is  also  in  restraint  of  trade 
and  commerce  between  the  several  states.  The  uncontro- 
verted  testimony  fully  supports  this  practical  operation  of  the 
agreement  and  combination,  as  disclosed  by  the  constitution 
and  by-laws  of  the  association,  in  whatever  light  it  may  be 
considered.  It  follows,  therefore,  that  the  court  is  called 
upon  to  instruct  you  that,  under  the  law,  the  members  of  this 
organization  have,  in  violation  of  law,  entered  into  a  contract 
and  combination  in  restraint  of  trade  and  commerce,  and  that 
tliey  have  attempted  to  monopolize  and  have  monopolized  a 
part  of  the  trade  and  commerce  between  the  manufacturers 


u 


106   FEDERAL  REPORTER,  46. 


CMrge  to  the  Jury. 
in  the  East  and  the  dealers  in  San  Francisco  in  the  article  of 

Under  these  instructions,  there  is  left  for  your  considera- 
tion the  single  question  of  damages;  and,  under  tlie  pro- 
visions of  the  statute,  if  you  find  that  the  plaintiffs  have 
been  injured  in  their  business  by  reason  of  this  unlawful 
conibination  and  association  of  the  defendants,  you  will 
find  for  the  plaintiffs  in  such  a  sum  as  shall  be  equivalent  to 
and  represi*nt  the  actual  damages  sustained  by  the  plain- 
tiffs. It  is  for  the  court,  in  executing  the  provisions  of  the 
statute  in  entering  judgment  upon  the  verdict  (if  you  shall 
find  for  the  plaintiffs),  to  treble  the  amount  of  the  damages; 
that  is  to  say,  any  verdict  rendered  by  you,  and  upon  which 
a  judgment  will  l)e  entered  by  tlie  court,  will  be  multiplied  by 
three,  and  a  judgment  entered  for  such  treble  damages. 
Your  verdict  will,  however,  be  limited  to  the  actual  damages 
which  the  evidence  shows  the  plaintiffs  have  sustained  by 
reason  of  the  acts  of  the  defendants  in  violation  of  the  act 
of  congress.  The  sole  question,  then,  as  to  damages,  in 
this  case,  relates  to  any  injury  which  the  plaintiffs  mav  have 
sustained  in  their  business  by  reason  of  the  association  in 
question.  It  is  not  enough,  in  an  action  of  this  kind,  which 
is  one  at  law,  for  the  plaintiffs  to  establish  the  existence  of 
an  association  which  comes  within  the  inhibition  of  the  act  of 
congress.  Plaintiffs  must  go  still  further,  and  the  burden 
of  proof  is  upon  them  to  show  some  real  and  actual  damage 
to  their  business  bv  reason  of  such  an  association.  There 
is  no  duty  imposed  by  the  law  upon  the  association,  even  if 
within  the  statute,  to  show  that  its  acts  have  not  worked  in- 
jur}' to  the  business  of  plaintiffs.  On  the  contrary,  the  duty 
and  burden  of  proving  damage  to  their  business  is  imposed 
by  law  upon  the  plaintiffs,  and,  unless  they  prove  this  dam- 
age to  their  business  by  a  preponderance  of  evidence,  the 
verdict  must  be  for  the  defendants.  Mere  speculation  as  to 
the  possible  profits  of  a  mercantile  business,  in  the  absence 
of  evidence  directed  to  such  conditions,  cannot  be  indulged 
in  by  the  jury  for  purposes  of  finding  a  verdict  in  damages. 
The  damages  which  the  law  contemplates,  and  which  the  act 
of  congress  provides  for,  must  be  reasonable  damages  ascer- 
tainable ui3on  the  evidence  presented  in  the  case.    There  must 


LOWRY    V.    TILE,    MANTEL   &   GRATE  ASSN. 
Charge  to  the  Jury. 


65 


be  facts,  transactions,  actual  evidence  of  some  material  and 
pertinent  character,  relating  to  a  business  from  which  the 
jury  can  ascertain  with  reasonable  certainty  that  damage  has 
actually  been  worked  to  such  business,  before  any  [47]  ver- 
dict in  damages  can  be  returned,  other  than  nominal  damages. 
It  is  the  duty  of  a  party,  under  the  law  applicable  in  this  case, 
to  use  all  reasonable  efforts  to  make  any  damage  to  his  busi- 
ness as  small  as  possible.  The  plaintiffs  in  an  action  of  this 
kind  are  not  permitted  to  claim  damage  to  their  business  by 
reason  of  an  association  contrary  to  the  statute,  where  it 
was  within  their  own  power,  in  the  exercise  of  reasonable 
diligence,  to  avert  any  such  damage,  and  to  avoid  any  con- 
sequences of  injury  to  their  business;  that  is  to  say,  a  party 
claiming  damages  is  bound,  in  the  exercise  of  reasonable 
diligence,  to  safeguard  himself  against  any  aviodable  con- 
sequence of  the  act  of  another  as  to  which  he  claims  a  right 
to  recover  damages.  It  is  not  material  in  this  case,  so  far 
as  damages  are  concerned,  that  the  Columbia  Encaustic  Tile 
Company,  or  some  other  nonresident  member  of  the  associa- 
tion, refused  at  any  point  of  time  to  sell  tiling  to  the  plain- 
tiffs, if,  as  a  matter  of  fact,  the  plaintiffs,  by  applying  to 
other  manufacturers  of  tile  in  the  same  market,  whether 
members  of  the  association  or  not,  could  have  procured  such 
tiles  as  may  have  been  necessary  in  the  transaction  of  their 
business  at  the  same  price.  And,  if  there  was  a  difference  in 
price,  the  amount  of  the  damages  would  be  limited  to  such 
difference  in  price.  If,  therefore,  you  find  from  the  evidence 
4hat  at  any  point  of  time  when  tiles  were  refused  the  plain- 
tiffs by  the  Columbia  Encaustic  Tile  Company,  or  any  other 
member  of  the  association,  there  were  in  the  market  other 
manufacturers  from  whom  at  the  same  price  and  charges  the 
plaintiffs  could  have  procured  such  tiles  as  they  needed,  you 
must  consider  that  it  was  their  duty  to  apply  to  such  manu- 
facturers for  tiles;  and  if  they  failed  to  use  reasonable  dili- 
gence in  making  such  application,  and  thereby  failed  to  pro- 
vide themselves  with  the  necessary  tiles,  they  are  not  entitled 
to  any  damages  by  reason  of  the  refusal  of  such  tiles  on  the 
part  of  any  member  of  the  association.  If  the  evidence  in 
the  case  in  the  matter  of  damage  to  the  business  of  the  plain- 

21220— VOL  2—07  m 5  * 


66 


107  FEDEKAL  BEPOBTEB,   131. 
Syllabus. 


tiffs  has  not  shown  any  real  and  substantial  damage  to  their 
business  by  reason  of  the  association,  apart  from  conjecture 
or  mere  speculation,  then  they  are  not  entitled  to  any  sub- 
stantial compensation,  and  no  verdict  in  damages  should  be 
rendered  in  their  favor,  except  a  verdict  for  nominal  dam- 
ages; that  is  to  say,  a  verdict  in  the  sum  of  one  dollar,  or 
other  trifling  amount.     If  you  believe  from  the  evidence  in 
this  case  that  in  the  month  of  August,  1898,  the  plaintiffs 
ordered   from  the  Cohimbia   Encaustic  Tile   Company   of 
Anderson,  Ind.,  a  certain  lot  of  tiles,  and  said  Columbia  En- 
caustic Tile  Company  agreed  to  ship  the  same  to  them  in 
accordance  with  the  terms  of  prior  agreements,  and  if  you 
further  believe  from  the  evidence  that,  by  reason  of  the  said 
Columbia  Encaustic  Tile  Company  joining  the  Tile,  Mantel 
&  Grate  Association  of  California,  they  failed  and  refused 
to  ship  said  tiles  to  the  plaintiffs,  and  broke  their  contract 
with  them,  you  are  instructed  that  the  plaintiffs  are  entitled 
to  recover,  by  reason  of  said  breach  of  contract,  the  difference 
between  what  the  tiles  would  cost  them  laid  down  in  this  mar- 
ket and  the  market  value  of  the  tiles  in  this  market.     And, 
if  you  find  as  above,  you  should  find  for  the  plaintiffs  in 
whatever  amount  you  find  to  be  the  difference  between  the 
cost  of  said  [48]  tiles  here  in  San  Francisco  and  the  market 
value  of  the  tiles  in  San  Francisco. 

The  jury  returned  a  verdict  in  favor  of  the  plaintiffs,  fixing  their 
damages  in  the  sum  of  $500.  ^ 


[1311  OTIS  ELEVATOR  CO.  v.  GEIGER  ET,  AL. 

(Circuit  Court.  D.  Kentucky.    March  30,  1901.) 
[107  Fed..  131.] 

Patents— Infringement— Defense— Anti-Tbust  Law.— In  an  action 
for  the  infringement  of  elevator  patents,  a  private  defendant  was  not 
entitled  to  urge  as  a  defense  that  plaintiff  was  a  corporation  organ- 
iaed  merely  for  the  purpose  of  holding  the  legal  title  to  various  elc- 
vntor  paitenta  alleged  to  have  been  infringed,  for  the  puri)ose  of  con- 
trolling sales  and  enhancing  prices  of  elevators  and  apparatus, 
without  itself  engaging  in  the  manufacture  and  sale  of  such  appli- 
ances, in  violation  of  the  Sherman  antitrust  law  (26  Stat  209). 


OTIS  ELEVATOB  CO.  V.  GEIGEB. 


67 


Opinion  of  the  Court. 

since,  until  the  United  States  has  acted  and  sought  to  prosecute  the 
plaintiff  for  violation  of  such  act,  an  infringer  of  the  plaintiff's  pat- 
ent will  not  be  permitted  to  raise  such  issue  as  a  defense  thereto.o 
.  Same — Pleading — Indefiniteness. — In  an  action  by  a  corporation  for 
the  infringement  of  elevator  patents,  an  answer  alleging  as  a 
defense  that  the  plaintiff  is  an  unlawful  combination  in  restraint  of 
trade  and  in  violation  of  the  Sherman  anti-trust  law  (26  Stat.  209), 
but  which  falls  to  state  who  are  in  the  combination  in  the  agree- 
ment characterized  as  unlawful,  and  does  not  disclose  fully  and  in 
detail  that  the  combination  was  entered  into  after  the  act  took 
effect,  and  all  the  facts  necessary  to  show  its  illegal itj',  is  insuf- 
ficient for  indefiniteness. 


Bill  for  infringement  of  patents.     On  exceptions  to  an- 
swer.   Exceptions  sustained. 

Brown  c&  Darby ^  for  complainant. 

A,  E,  Willson  and  E,  H,  Hunter,  for  defendants. 

Evans,  District  Judge. 

The  complainant,  a  corporation  organized  under  the  laws 
of  New  Jersey,  in  its  bill  charges  that  it  is  the  owner,  by 
mesne  conveyances  duly  recorded,  of  certain  letters  patent, 
[132]  which  the  defendants  have  infringed  and  will  con- 
tinue to  infringe ;  and  the  usual  prayer  for  an  injunction  and 
accounting  of  profits  is  contained  in  the  bill.  The  defendant 
has  filed  an  answer,  the  third  paragraph  of  which  is  in  this 
.  language : 

"These  defendants  have  no  knowledge  of  the  assignments  alleged 
to  have  been  made  of  the  said  letters  patent,  and  therefore  deny  the 
same,  and  deny  that  any  right  or  interest  in  the  said  letters  patent 
has  been  acquired  or  is  now  possessed  by  the  complainant ;  but,  upon 
information  and  belief,  these  defendants  aver  that  the  complainant, 
the  Otis  Elevator  Company,  is  a  corporation  or  association  created  by 
the  owners  of  several  distinct  patents  relating  to  the  construction  and 
operation  of  elevators,  for  the  sole  purpose  of  restraining  manufac- 
ture, controlling  sales,  and  enhancing  prices  of  elevators  and  appara- 
tus used  in  connection  therewith, — the  Otis  Elevator  Company  not 
Itself  engaging  in  the  manufacture  and  sale  of  such  appliances,  but 
being  merely  provided  to  hold  the  legal  title  to  the  said  distinct  and 
various  letters  patent  while  the  original  owners  thereof  are  licensed 
thereunder, — and  that  by  reason  thereof  no  title  enforceable  in  a 
court  of  equity  has  been  or  is  now  vested  in  the  complainant." 


«  Syllabus  copyrighted,  1901,  by  West  Publishing  Co. 


68 


101  VEDWLMj  BIPOBTEB,  132. 


Opinion  of  the  Court. 

The  complainant  has  filed  exceptions  to  this  paragraph, 
and  the  interesting  question  thereby  raised  is  to  be  deter- 
mined. 

Possibly  the  act  of  congress  approved  July  2,  1890  (26 
Stat.  209),  and  commonly  known  as  the  ^\Shermim  Anti- 
Trust  Law,"  is  the  only  statute  upon  ivhich  the  courts  of  the 
United  States,  ordinarily  speaking,  could  adjudge  such  an 
agiecment  as  the  third  paragraph  of  the  answer  describes  to 
be  void.  Certainly  I  do  not  recall  any  other  which  would 
authorize  the  courts  of  the  United  States  to  declare  a  state 
corporation  to  be  unlawful  ab  initio,  as  a  prohibited  combi- 
nation. We  may  probably  assume  that  prior  to  July  2,  1890, 
there  was  no  law  of  the  United  States  which  provided  that 
such  combinations  should  be  invalid.  But  the  act  of  that 
date,  by  its  terms,  is  made  to  operate  only  through  the  penal- 
ties which  are  therein  prescribed,  or  through  the  direct  pro- 
ceedings which  it  authorizes  the  United  States  to  institute  to 
declares  certain  prohibited  arrangements  void,  or  by  giving 
any  person  who  is  injured  in  his  business  the  right  to  recover 
multiplied  damages,  though,  in  addition,  while  these  statu- 
tory remedies,  being  the  ways  expressly  prescribed  for  en- 
forcing the  act,  are  otherwise  exclusive,  it  may  be  quite  true 
that  the  policy  of  the  United  States,  as  manifested  by  this 
legislation,  would  authorize  the  courts. of  the  United  States, 
upon  more  general  principles,  to  refuse  to  enforce,  as  be- 
tii^een  the  parties  thereto,  such  combinations  as  are  de- 
nounced by  this  legislation.  But,  as  matter  of  pleading,  it 
seems  to  the  court  that  until  the  United  States  has  acted  it 
does  not  lie  in  the  mouth  of  a  mere  infringer  to  urge  any  of 
these  objections  as  matter  of  defense  to  a  suit  for  infrinse- 
ment,  and  thus  divert  attention  from  his  own  wrongful  acts 
by  raising  an  independent  and  altogether  collateral  issue  as 
to  the  manner  in  which  the  complainant  acquired  title  to  the 
patent  alleged  to  have  been  infringed.  If  the  paragraph 
showed  that  the  United  States,  by  a  direct  proceeding  in  its 
courts,  had  already  caused  the  alleged  agreement  to  be 
adjudged  void,  though  the  complainant  possibly  in  that 
event  could  not  recover  for  the  infringement  complained  of, 
the  real  owner  of  the  patent,  whose  assignment  to  the  com- 


OTIS   ELEVATOR  CO.  V.  GEIGER. 


69 


Opinion  of  tlie  Court. 

plainant  might  thus  be  shown  to  have  been  void,  could  do  so. 
A  judgment  in  this  case  in  favor  of  this  complainant  [133] 
before  such  proceedings  as  have  been  referred  to  had  taken 
place  would,  through  the  recorded  deed  of  assignment,  pro- 
tect the  defendant  against  another  suit  by  the  assignor  for 
the  same  cause  of  action,  and  it  therefore  seems  to  the  court 
that  the  only  legitimate  issues  pertinent  to  the  charge  of 
infringement  are  very  different  from  the  one  sought  to  be 
raised  in  paragraph  3  of  the  ansAver.    It  might,  indeed,  be 
quite  possible  for  the  general  objects  of  the  alleged  combina- 
tion to  be  unlawful,  and  such  as  could  be  enjoined  at  the  suit 
of  the  United  States,  without  necessarily  affecting  other  spe- 
cial acts,  such  as  a  conveyance  to  the  complainant  of  the  pat- 
ent.   And,  as  there  is  no  doubt  that  the  conveyance  of  this 
patent  w^as  in  fact  made  and  recorded,  it  seems  to  the  court 
that  the  defendant,  under  those  circumstances,  and  in  an  ac- 
tion of  this  character,  cannot  be  allow^ed  to  question  the  title 
of  the  complainant  to  the  patent  upon  this  ground,  and  the 
weight  of  the  authorities  supports  this  view.    The  apparent 
conflict  in  the  decisions  may  be  somewhat  reconciled  by 
ascertaining  Avhether  the  suits  in  which  they  were  rendered 
grew  out  of  contracts  or  out  of  torts,  as  in  the  former  case 
they  may  approach  nearer  the  line  where  the  act  of  congress 
miglit  operate  upon  them  than  in  the  latter.    Chief  upon  one 
side  of  the  question  are  the  decisions  in  the  cases  of  St?mt  v, 
Harrow  Co.  (C.  C.)  51  Fed.  819;  Edison  Electric  Light  Co. 
V.  Sawyer-Man  Electnc  Co.,  3  C.  C.  A.  605,  53  Fed.  598; 
Soda-Fountain  Co.  v.  Green  (C.  C.)  69  Fed.  334;  Saddle  Co. 
V.  Troxel  (C.  C.)  98  Fed.  620.    And  upon  the  other  side  are 
the  cases  of  Harrow  Co,  v.  Hench,  27  C.  C.  A.  349,  83  Fed. 
36,  39  L.  E.  A.  299;  Id.  (C.  C.)  76  Fed.  667;  Harrow  Co.  v. 
Quick  (C.  C.)  67  Fed.  130.    The  first  of  the  last  three  cases 
named,  it  will  be  observed,  w^as  one  in  wj^ch  a  portion  of  the 
contract  was  sought  to  be  enforced  by  certain  of  the  parties 
to  the  illegal  combination,  and  the  court  doubtless  thought 
(though  it  does  not  very  clearly  appear  from  the  opinion 
precisely  what  relief  had  been  invoked)  that,  as  their  con- 
tract was  vicious,  it  would  leave  the  parties  as  it  found  them, 
and  decline  to  enforce  the  agreement.     But  it  is  conceived 


70 


107  FEDEBAL  BEPOKTER,  133. 
Opittion  of  the  Court 


that  very  different  principles  would  apply  to  parties  who 
sought  to  enforce  portions  of  the  vicious  contract  from  those 
which  would  apply  to  a  case  like  the  one  before  us. 

But,  whether  these  views  of  the  court  are  correct  or  not, 
there  are  certain  rules  of  pleading  which  apply  to  paragraph 
3  of  the  answer  which  must  control  the  action  of  the  court 
upon  the  exceptions,  because  its  allegations  are  too  vague 
and  inexplicit,  even  if  another  view  should  be  taken  of  the 
main  question  argued  upon  the  exceptions.  The  paragraph 
in  no  way  states  who  are  in  the  combination  with  the  com- 
plainant in  the  agreement  characterized  as  unlawful.  Such 
a  defense,  if  maintainable,  should  very  explicitly  and  exactly 
show  how  the  complainant  is  an  unlawful  association,  giving 
all  the  necessary  particulars,  in  order  that  the  complainant 
can  know  precisely  what  it  is  to  meet,  and  so  that  the  court 
can  determine  whether  all  the  rights  of  the  complainant  to 
protect  its  claim  to  a  patent  have  been  forfeited,  ipso  facto, 
the  entering  into  such  an  association;  and  the  averments  of 
the  answer  should  be  made  in  such  clear  terms  as  to  show 
that  the  defendants,  under  the  kw  and  upon  the  facts  they 
state,  can  thereby  defeat  an  action  against  them  which  might 
otherwise  be  [IM]  meritorious.  The  court  should  take 
nothing  for  gi-anted  in  such  a  case,  and  the  pleading  should 
disclose  fully  and  in  detail  not  only  that  the  combination 
was  made  after  July  2,  1890,  but  all  the  facts  necessary  to 
show  the  illegality  of  the  association.  And  the  fact  that  the 
complainant  is  a  corporation  organized  under  the  laws  of  a 
state  may  make  these  requirements  all  the  more  exacting  and 
emphatic. 

The  initial  statements  in  the  paragi*aph,  being  mere  deni- 
als, are  sufficient ;  but  from  either  point  of  view  the  court  is 
of  opinion  that  the  exceptions  to  the  third  paragraph  of  the 
answer  should  be  allowed  so  far  as  they  apply  to  those  parts 
of  the  paragraph  IRginning  with  the  words,  "But,  upon 
information  and  belief,  these  defendants  aver  that  the  com- 
plainant, the  Otis  Elevator  Company,  is  a  corporation  or 
association  created  by  the  owners  of  several  distinct  patents 
relating,"  etc.,  and  continuing  to  the  close  of  the  paragraph. 
All  order  can  be  prepared  accordingly. 


GIBBS   v.  m'nEELEY.  71 

Opinion  of  the  Court 
[210]    GIBBS  ET  AL.  v.  McNEELEY  ET  AL.« 

(Circuit  Court,  D.  Washington,  W.  D.    March  15,  1901.) 

[107  Fed.,  210.] 

Anti-Teust  Law— RestRxUNt  of  Interstate  Commerce.— A  combina- 
tion controlling  not  only  the  manufacture  of  an  article  in  the  state, 
but  also  the  sale  of  the  manufactured  article,  is  not  one  in  restraint 
of  interstate  commerce,  so  as  to  give  a  right  of  action  against  it 
under  the  anti-trust  law  of  July  2,  1890,  to  one  injured  by  a  resolu- 
tion passed  and  circulated  by  it  denouncing  him  for  cutting  prices, 
its  sales  being  within  the  state,  and  any  transportation  and  sale  of 
the  article  in  other  states  being  by  other  agencies.^ 

T.  0.  Ahhott,  for  plaintiffs. 

C,  0.  Bates^  Chas  A,  Murray^  and  /.  F.  McDaniels^  for 
defendants. 

Bellinger,  District  Judge. 

This  case  is  being  tried  on  what  is  known  as  the  "  fourth 
cause  of  action."  In  this  cause  of  action  it  is  alleged,  in 
effect,  as  follows:  That  the  defendants,  with  the  intent  to 
injure  and  destroy  the  plaintiff's  business,  and  to  bring  plain- 
tiff into  public  odium  and  discredit,  and  to  provoke  him  to 
wrath,  and  to  induce  his  patrons  in  the  various  states  to 
withdraw  their  patronage  from  him,  and  to  destrov  his  credit 
and  business,  did  maliciously  compose  and  declare  a  certain 
communication  of  and  concerning  plaintiff  and  his  business, 
as  follows:  Said  committee  did  adopt,  and  enter  upon  the 
records  of  the  association,  and  did  distribute  and  publish, 
certain  resolutions,  whereby  it  was  falsely  and  maliciously 
alleged  that  plaintiff  was  endeavoring  to  injure  the  market 
for  Washington  red  cedar  shingles,  and  whereby  it  was  fur- 
ther falsely  and  maliciously  stated  that  plaintiff  had  no 
money  invested  in  said  business,  and  that  he  was  without 
credit,  and  irresponsible,  and  was  not  an  honorable  and 
legitimate  dealer  in  said  shingles.    That,  thereafter  the  said 

o  Demurrer  overruled  as  to  fourth  cause  of  action  (102  Fed.,  594). 
See  p.  25.  Verdict  for  defendants  in  error  directed  (107  Fed.,  210). 
Reversed  by  Circuit  Court  of  Appeals,  Ninth  Circuit  (118  Fed.,  120). 
See  p.  194. 

6  Syllabus  copyrighted,  1901.  by  West  Publishing  Co. 


n 


lot  FEDERAL  BEPOBTEB,  211. 


Opinion  of  tlie  Conrt 

committee,  by  its  officers,  etc.,  with  intent  to  induce  all  whole- 
sale and  retail  dealers  in  the  states  and  foreign  countries 
named  to  refuse  to  buy  shingles  of  plaintiff  and  do  business 
with  him,  and  to  induce  the  manufacturers  to  refuse  to  sell 
shingles  to  plaintiff,  did  publish  said  resolutions  by  print- 
[211]  ing  the  same  in  circular  form,  and  addressed  the  same 
to  various  wholesale  and  retail  dealers  throughout  the  state 
of  Washington  and  other  states,  and  to  a  large  number  of 
newspapers  and  trade  journals  in  Washington  and  other 
states,  etc.  That  by  virtue  of  said  conspiracy  and  of  the 
advertising  so  done  the  defendants  did  bring  the  plaintiff 
into  odium  and  discredit  with  said  manufacturers,  so  that 
they  refused  to  sell  him  Washington  red  cedar  shingles,  and 
did  also  bring  him  into  odium  and  discredit  with  a  large 
number  of  his  patrons  and  clients,  so  that  they  refused  t^) 
buy  shingles  of  him,  and  did  totally  destroy  plaintiff's 
business. 

In  the  case  of  17.  S.  v.  E.  C,  KnHjht  6V).,  l^G  IT.  S.  1,  15 
Sup.  Ct.  240,  e^9  L.  Ed.  325,  the  supreme  court  held  that, 
althoiigli  the  American  Sugar-Kefining  Compjun'.  had  ob- 
tained a  practical  monopoly  of  the  business  of  iiiaiiiifactur- 
ing  sugar,  yet  the  act  of  congress  did  not  touch  the  case, 
because  the  combination  only  related  to  manufacture,  and  not 
to  commerce  among  the  states  or  foreign  countries;  that  a 
combination  which  directly  related  to  manufacture  oiilv  was 
not  brought  within  the  purview  of  the  act,  althouirli.  Ms  an 
indirect  and  incidental  result  of  such  combinatioii,  couuiierce 
among  the  states  mijrht  \m  thereafter  simiewhat  affected. 
The  court  in  that  ca»e  savs: 


II  m 


Tlie  fact  that  an  artWe  is  iiifmiifnctun'd  for  cxiKirt  to  another 
state  does  not  of  itself  iiialce  it  an  article  of  interstate  commerce,  and 
the  intent  of  tlie  manufacturer  does  not  determine  the  time  when 
the  article  or  product  passes  from  tlie  control  of  the  state  and  helonjfs 
to  commerce." 


In  the  more  reciMit  case  of  Addystmi  Pipe  <f'  Steel  Co.  \\ 
U.  S,,  175  IT.  S.  2S0,  20  Sup.  Ct.  96,  44  L,  Ed.  130,  the  prin- 
ciple wa«!  recognized  that  a  combination  to  control  manu- 
facture is  not  a  violation  of  the  act  of  congivss,  since  such 
1  combination  does  not  directly  control  or  affect  interstate 
commerce.    The  court  distinguishes  such  a  combination  from 


GIBBS  V,  m'neELEY. 


73 


Opinion  of  the  Court. 

one  having  for  its  object  the  sale  and  transportation  to  other 
states  of  specific  articles.  Combinations  of  the  latter  class 
are  held  to  be  proper  subjects  for  regulation,  because  they 
enter  into  such  commerce.  To  which  class  does  the  case 
on  trial  belong?  Plaintiff  contends  that,  inasmuch  as  the 
combination  under  consideration  controls  not  only  the  manu- 
facture, but  the  sale,  of  the  maufactured  product,  this  case 
belongs  in  the  latter  class;  that  defendants'  combination 
affects  interstate  commerce,  and  is  therefore  made  unlawful 
by  the  act  of  congress.  The  reason  why  the  manufacture 
within  a  state  of  an  article  of  commerce  is  not  within  the 
purview  of  the  act,  although  the  manufacturing  combination 
constitutes  a  monopoly,  being  that  it  involves  nothing  in 
the  way  of  interstate  commerce,  does  it  alter  the  case  that 
the  combination  includes  the  sale  of  its  product  among  its 
objects?  I  am  of  the  opinion  that  it  does  not;  that'^the 
lawfulness  of  what  is  done  depends  upon  the  place  directly 
affected,  and  not  upon  the  character  in  other  respects  of  what 
is  done.  It  makes  no  difference  that  the  manufacturer  in- 
tends his  product  for  sale  in  other  states  and  foreign  coun- 
tries. Such  an  intention  does  not  alter  the  character  of 
the  combination  to  manufacture,  and  upon  this  piinciple  it 
makes  no  difference  thnt  the  contract  or  combination  is  for 
the  manufacture  and  sale  of  [212]  specific  articles.  It  must 
go  further,  and  provide  for  the  sale  and  transportation  to 
other  states  of  the  specific  nrticles:  otherwise,  what  is  pro- 
posed cannot  be  said  to  look  to  interstate  conunerce.  Mere 
state  commerce  is  a  matter  of  state  control.  In  this  case  the 
action  of  the  defendants  in  jn-ox  iding  for  the  sale  of  their 
product  is  without  reference  to  interstate  commerce.  The 
defendants  manufacture  and  sell  within  the  state,  with  the 
intention  that  the  product  sold  shall  all  be  used  within  the 
state,  or  transported  and  sold  out  of  it,  as  the  purchastn- 
shall  decide.  The  sale  and  the  manufacture  cannot  be  dis- 
tinguished, so  far  as  the  question  of  state  control  is  con- 
cerned; both  take  place  within  the  state;  both  are  equally 
withm  its  police  power;  both  affect  interstate  conunerce  in 
the  secondary  sense  merely;  neither  affects  it  in  the  primary 
sense.  If  the  shingles  manufactured  are  transported  and 
sold  in  other  states,  it  is  done  by  other  agencies  and  com- 


74 


107  FEDERAIi  BIPOBTEB,  212. 


Opinion  of  the  Court 

binations  not  responsible  to  the  Washington  Ked  Cedar 
Shingle  Manufacturers'  Association,  and  not  provided  for 
by  their  contract  of  association.  If  the  plaintiff  has  suffered 
injury  by  reason  of  the  alleged  combination,  it  is  within  the 
province  of  his  ijtate  to  provide  him  a  remedy.  This  court 
is  without  jurisdiction  in  the  premises. 

The  learned  judge  of  this  district,  in  passing  upon  the 
demurrer  filed  in  this  case   (102  Fed.  594),  expresses  the 
opinion  that  the  plaintiff  is  entitled  to  recover  upon  the 
fourth  cause  of  action  set  out  in  the  complaint.    The  proof 
submitted,  however,  does  not  sustain  this  cause  of  action. 
The  only  charge  affecting  the  plaintiff  made  out  by  the  evi- 
dence is  that  he  is  a  rate  cutter.    All  else  contained  in  the 
circular  complained  of  is  merely  inference,  more  or  less 
doubtful,  drawn  from  the  alleged  fact  that  plaintiff  was 
engaged  in  cutting  rates.    It  is  stated  in  the  circular  that 
the  plaintiff  was  endeavoring  to  injure  the  market  for  Wash- 
ington red  cedar  shingles,  but  it  is  plainly  enough  stated  that 
he  is  endeavoring  to  do  this  by  cutting  rates.    It  is  stated 
that  he  has  no  money  invested  in  the  business,  and  his  own 
testimony  is  to  that  effect.    But,  whether  true  or  false,  it 
does  not  affect  his  business  integrity  or  capacity.    The  cir- 
cular announces  the  purpose  of  those  issuing  it  to  deal  with 
responsible,  honorable,  and  legitimate  dealers;   and,  having 
announced  a  purpose  not  to  deal  with  the  plaintiff,  this  state- 
ment is  construed  to  mean  that  the  plaintiff  is  an  irresponsi- 
ble and  dishonorable  dealer,  whose  methods  are  not  legiti- 
mate.   But  the  only  inference  admissible  as  to  this  is  the  in- 
ference that  the  authors  of  the  circular  intend  to  have  noth- 
ing to  do  with  rate  cutters,  because  they  regard  the  practice 
of  rate  cutting  as  an  illegitimate  and  dishonest  practice; 
an  opinion  based  upon  a  fact  stated,  and  not  injurious  unless 
the  fact  to  which  it  is  related  is  of  that  character.     The 
plaintiff,  with  many  years'  experience  in  the  shingle  business, 
is  presumed  to  know  whether  the  charge  of  rate  cutting  in- 
volves the  integrity  of  those  against  whom  it  is  made,  and  it 
appears  that  some  years  ago  he  advertised  himself  to  his  cus- 
tomers in  a  circular  issued  in  behalf  of  a  firm  to  which  he 
belonged  as  a  rate  cutter,  and  sought  to  attract  business  by 
the  announcement.    I  am  of  the  opinion  that  a  verdict  based 


METCALF   V.   AMERICAN   SCHOOL-FURNITURE   CO.        75 

Statement  of  the  Case. 

upon  such  testimony  ought  not  to  stand,  [313]  and,  if  so,  a 
verdict  for  the  defendants  should  be  directed.  But  with 
the  utmost  respect  for  the  opinion  of  the  learned  judge  just 
referred  to,  I  am  convinced  that  the  allegations  in  the  fourth 
cause  of  action  are  not  sufficient.  The  allegations  are  of  a 
libel,  and  the  damages  alleged  do  not  result  from  any  com- 
bination, or  conspiracy,  or  monopoly  denounced  by  the  act 
of  July  2,  1890.  No  such  combination  or  conspiracy  or 
monopoly  is  shown.  And,  if  the  parties  to  the  circular  in 
question  can  be  said  to  have  conspired  to  libel  the  plaintiff 
and  injure  his  business,  their  conduct  was  not  in  restraint 
of  trade,  and  within  the  mischief  intended  to  be  prevented 
by  the  act  of  congress. 


[909]      METCALF  v,  AMERICAN  SCHOOL-FURNI- 

TURE  CO.  ET  AL.« 

(Circuit  Court,  W.  D.  New  York.    May  13,  1901.) 

[108  Fed.,  909.] 

COBPORATIONS — SUIT    BY    STOCKHOLDER— MULTIFARIOUSNESS    OF    BiLL. — 

A  minority  stocliholder  in  a  coriwration  may  maintain  a  suit  in 
equity  in  behalf  of  himself  and  all  other  stockholders  similarly  sit- 
uated to  set  aside  an  alleged  unlawful  transfer  of  the  property  of  the 
corporation  in  pursuance  of  a  conspiracy  between  its  officers  and  the 
transferee  in  restraint  of  trade  and  commerce,  where  it  is  alleged 
that  the  coriwration,  on  demand,  has  refused  to  bring  such  suit; 
but  a  bill  for  such  relief  which  also  seeks  the  recovery  of  treble 
damages  under  the  anti-trust  act  of  July  2,  1890,  is  multifarious, 
since  such  damages  are  only  recoverable  in  an  action  at  law  by  the 
plaintiff  as  an  individual,  and  not  as  a  stockholder,  while  the  equita- 
ble relief  prayed  for  is  in  behalf  of  the  corporation,  and,  if  granted, 
would  inure  to  the  benefit  of  all  the  stockholdei-s.& 


In  Equity.    On  motion  for  temporary  injunction  and  de- 
murrers to  bill. 


o  Affirmed  by  Circuit  Court  of  Appeals,  Second  Circuit  (113  Fed., 
1020),  and  plaintiff  allowed  thirty  days  in  which  to  amend.  Memo- 
randum decision.  See  p.  111.  Amended  bill  dismissed  (122  Fed., 
115.    See  p.  234. 

»  Syllabus  copyrighted,  1901,  by  West  Publishing  Co. 


76  108   FEDEBAL  BEPORTER,   909. 

Opinion  of  the  Court. 
Seymour^  Seymour  cfe  Harmon^  for  orator. 

Davies,  Stone  ds  Auerhach  {Joseph  Amrbach  and  Brain- 
ard  Tollesy  of  counsel),  for  defendants  American  School- 
Furniture  Co.  and  Oakman  and  TtimhuU,  trustees. 

Mauhhy  Kimball,  for  defendants  Buffalo  School-Furniture 
Co.  and  others. 

Hazel,  District  Judge. 

The  orator,  Caroline  Metcalf,  holder  of  5(59  shares  of  stock 
in  the  Buffalo  School-Furniture  Company,  is  a  citizen  of 
Connecticut.  She  brings  this  bill  in  equity  in  behalf  of  her- 
self and  all  other  stockholders  having  like  interests  with  her, 
not  citizens  of  New  York,  against  the  Buffalo  School-Fur- 
niture Company,  incorporated  in  the  state  of  AYest  Virginia, 
but  transacting  its  business  and  having  its  property  in  the 
state  of  New  York ;  Oliver  S.  Garretson,  Henry  R.  Hoffeld, 
Frederick  C.  Garretson,  Edward  C.  Shafer,  Robert  L.  Cox, 
and  Albert  D.  Garretson,  directors  of  that  corporation,  own- 
ing 80  per  cent,  of  the  capital  stock,  all  of  whom  are  resi- 
dents of  the  state  of  New  York;  the  American  School- 
Furniture  Company,  a  corporation  of  the  state  of  New  Jer- 
sey; and  AValter  G.  Oakman  and  George  R.  Turnbull,  resi- 
dents of  the  state  of  New  York,  who  claim  to  have  an  interest 
in  the  proiierty  described  in  the  complaint,  as  trustees  for  the 
holders  of  bonds  of  the  defendant  American  School-Furni- 
ture  Company.  She  alleges  that  the  directors  of  the  de- 
fendant Buffalo  School-Furniture  Company,  without  her 
consent,  [910]  and  the  defendant  American  School-Furni- 
ture Company,  on  the  2d  day  of  March,  1899,  entered  into  an 
unlawful  combination  and  conspiracy  whereby  it  was  agreed 
that  there  should  be  no  competition  in  the  United  States  in 
the  purchase  and  sale  of  school  furniture  and  similar  articles, 
and  that  the  defendants  contracted,  combined,  and  conspired 
to  restrict,  restrain,  monopolize,  and  control  trade  and  com-  ' 
merce  among  the  several  states  in  school  furniture ;  that  this 
was  done  to  increase  and  control  the  price  in  contracts  for  the 
delivery  of  school  furniture  and  the  like  among  the  several 
states  and  with  foreign  nations,  and  within  the  several  states. 
The  bill,  at  great  length,  alleges  conspiracy,  and  after  stating 


METCALl-^    i\  AMERICAN    SCHOOL-FURNITURE    CO. 


77 


Opinion  of  tbe  Court. 

that  the  nominal  capital  of  the  defendant  American  School- 
Furniture  Company  is  $10,000,000,  all  of  which,  after  the  for- 
mation of  that  corporation,  was  issued  for  property,  or  for 
options  for  property,  held  by  promoters  of  the  company,  not 
exceeding  $3,000,000  in  value ;  that  the  defendant  American 
School-Furniture  Company  borrowed  $1,000,000,  which  still 
constitutes  a  liability,  and  which  loan  the  promoters  were  able 
to  obtain  on  the  property  acquired ;  that  a  large  secret  profit 
was  made  out  of  the  transaction ;  that  the  consideration  for 
the  transfer  of  the  property  of  the  Buffalo  School- Furniture 
Company  to  the  American  School -Furniture  Company  was 
the  sum  of  $137,461  in  cash,  $15,000  in  notes,  1,300  shares  of 
the  common  stock,  and  1,300  shares  of  the  preferred  stock,  of 
the   American    School-Furniture    Company, — it    is    further 
alleged  that  no  business  whatever  has  been  actually  carried  on 
by  the  defendant  Buffalo  School- Furniture  Company  since 
the  transfer;  that  its  board  of  directors,  acting  beyond  their 
power,  intend  to  wind  up  and  dissolve  the  company  and  dis- 
tribute all  of  its  assets,  including  the  stock  of  the  American 
School-Furniture  Company,  among  its  stockholders,  pro  rata, 
although  the  American  School- Furniture  Company  and  the 
aforesaid  directors  know  said  stock  to  have  no  value.     It  is 
further  alleged  that  the  total  capital  stock  of  the  Buffalo 
School-Furniture  Company  is  $350,000,  divided  into  3,500 
shares,  of  the  par  value  of  $100  each ;   that  the  complainant 
requested  the  Buffalo  School-Furniture  Company  to  bring  an 
action  in  equity  to  undo  the  transactions  herein  complained 
of,  and  recover  its  real  estate  and  other  assets  from  the  de- 
fendant American  School-Furniture  Company ;  that  she  has 
exhausted  all  the  means  within  her  reach  to  obtain  within  the 
corporation  itself  the  redress  of  her  grievances;    that  the 
property  and  earning  capacity  of  the  Buffalo  School-Furni- 
ture Company  will  be  destroyed;    and  that  she  brings  this 
bill  for  the  benefit  of  herself  and  all  the  stockholders  of  the 
Buffalo  School-Furniture  Company  who  may  be  similarly  sit- 
uated who  are  not  residents  of  the  state  of  New  York.     It  is 
further  alleged  that  this  fraudulent  combination  and  scheme 
were  fully  consummated  by  the  defendant  directors  and  the 
American  School-Furniture  Company,  and  that  complainant 
has  never  consented  thereto;  that  she,  being  without  remedy 


78 


108   FKDEHAL  EEPORTER,   910, 


Opinion  of  tlie  Court. 

by  the  strict;  rules  of  the  common  law,  prays  that  the  Ameri- 
can School-Furniture  Company  and  the  defendants  the 
directors  of  the  Buffalo  School -Furniture  Company  may  be 
decreed  to  be  personally  liable  to  her  in  the  premises  for 
treble  [911]  the  damages  which  she  has  sustained,  and  that 
the  transfer  of  the  real  estate  and  all  of  the  property  and 
assets  of  the  Buffalo  School-Furniture  Company  may  be  set 
aside;  that  it  be  restored,  reconveyed,  and  again  vested  in 
the  Buffalo  School-Furniture  Company,  and  that  her  dam- 
ages may  be  ascertained  and  trebled ;  that  a  receiver  be  ap- 
pointed; that  the  treble  damages  that  may  be  adjudged  and 
awarded  to  her  may  be  charged  as  a  lien  upon  said  real  estate 
formerly  of  the  Buffalo  School-Furniture  Company;  that 
the  lien  may  in  this  proceeding  be  foreclosed ;  and  that  she 
be  paid  the  damages  and  treble  damages  awarded  and  ad- 
judged to  her  out  of  the  proceeds  of  such  sale. 

The  defendants  have  all  demurred  to  the  bill  on  grounds 
of  multifariousness  and  want  of  equity.  This  suit  is  prop- 
erly brought  by  the  plaintiff  as  a  shareholder  in  the  Buffalo 
corporation,  suing,  as  she  alleges,  for  herself  and  for  and  on 
behalf  of  all  other  stockholders  not  residents  of  the  state  of 
New  York.  The  Buffalo  School-Furniture  Company  is 
under  control  of  the  guilty  parties,  and  they  have  refused  to 
sue  when  requested  by  the  complainant  so  to  do.  Hawea  ▼. 
Oihj  of  Oakland,  104  U.  S.  450,  26  L,  Ed.  827;  2  Cook,  Corpw 
§  701 ;  De  NeufmUe  v.  Railroad  Co.,  26  C.  C.  A.  e306,  81  Fed. 
10;  Porter  v.  Sahm.  149  U.  S.  478,  13  Sup.  Ct.  1008,  37  L. 
Ed.  815;  Weir  v.  Gas  Co.  (C.  C.)  91  Fed.  940. 

The  primary  question  immediately  arises  whether  this  in- 
dividual demand  for  damages  is  not  inconsistent  and  antago- 
nistic to  the  equitable  relief  sought  in  the  bill,  and  whether 
these  are  not  demands  for  equitable  and  legal  relief  upon 
distinct  and  independent  grounds.  Innumerable  acts  are 
alleged  to  have  been  committed  in  pursuance  of  the  conspir- 
acy. It  is  also  claimed  that  the  conspiracy  formed  and 
carried  out  by  the  directors  was  and  is  in  violation  of  the 
act  of  congress  of  July  2,  1890.  Her  grievance  for  which 
she  demands  relief  is  that  of  a  minority  stockholder  suing 
for  herself  and  several  other  stockholders.  The  damages 
alluded  to  in  the  bill,  which  she  demands  for  her  sole  and  in- 


METCALF   V.   AMERICAN    SCHOOL-FURNITURE   CO.        79 

Opinion  of  the  Court. 

dividual  benefit,  appear  to  be  the  treble  damages  awarded 
to  a  person  who  is  injured  in  his  business  or  property  by 
the  acts  of  any  other  person  or  corporation  forbidden  or  de- 
clared to  be  unlawful  by  the  federal  anti-trust  law.     It  is 
strenuously  insisted  that  the  subject-matter  of  this  case,  be- 
cause of  the  diverse  citizenship  of  the  parties,  is  properly 
before  the  court,  irrespective  of  the  act  of  1890,  and  that,  as 
the  bill  states  a  cause  of  action  in  favor  of  the  dissenting 
stockholder  without  reference  to  that  statute,  a  court  of 
equity,  having  thus  obtained  jurisdiction  of  the  subject-mat- 
ter, may  administer  all  the  relief  which  justice  demands; 
that  the  damages  sought  are  incidental  to  the  demand  for 
equitable  relief,  and  the  court  has  power  to  completely  ad- 
just all  the  rights  of  the  parties.    Madison  Ave.  Baptist 
Church  V.  Oliver  St.  Baptist  Church,  73  N.  Y.  96.     It  is  a 
general  rule  that  a  court  of  equity,  having  acquired  juris- 
diction of  the  subject-matter,  may  mold  its  decrees  according 
to  the  circumstances  of  each  case.     The  damages,  however, 
sought  to  be  recovered  in  this  suit,  in  the  light  of  the  demand 
set  out  in  the  complaint,  at  paragraphs  24,  26,  28,  and  31,  can- 
not be  re-  [  912 1  garded  as  supplemental  to  the  revesting  of  the 
property  or  incidental  to  the  relief  sought  by  the  bill.    The 
relief  sought,  other  than  the  individual  demand  for  treble 
damages,  is  in  equity.    Section  7  of  the  federal  act  of  1890 
is  declaratory  of  a  common-law  right  which  existed  in  favor 
of  parties  injured  by  wrongs  enumerated  in  other  sections 
of  that  act,  and  confers  jurisdiction  to  seek  a  remedy,  and 
with  treble  damages,  in  a  federal  tribunal.    The  character  of 
the  right  of  action  is  in  no  way  changed,  and  still  remains 
one  in  tort.    Blindell  v.  Hagen  (C.  C.)  54  Fed.  40;  Pidcock 
V.  Uamngton  (C.  C.)  64  Fed.  821 ;  Gulf,  C.  d;  S.  F.  R.  Co.  v. 
Miami  S.  S.  Co.,  30  C.  C.  A.  142,  86  Fed.  407 ;  Block  v.  Dis- 
tributing Co.  (C.  C.)  95  Fed.  978.     It  inures  in  the  case  at 
bar  to  the  complainant  individually,  and  not  to  her  as  a  stock- 
holder, as  an  additional  asset  of  the  corporation.     All  other 
relief  sought,  if  granted,  must  in  the  end  belong  and  come 
into  the  hands  of  the  corporation,  to  the  advantage  of  the 
stockholders  thereof.     Cook,  Corp.  §  701,  and  cases  cited; 
Church  V.  Railroad  Co.   (C.  C.)   78  Fed.  526;   Whitney  v. 
Fairbanks  (C.  C.)  54  Fed.  985.    This  case  is  clearly  distin- 


80 


108   FEDERAL  BEPORTEB,  912. 
Opinion  of  the  Court. 


guishable  fi-om  De  Neufville  v.  Railroad  Co.,  26  C.  C.  A,  306, 
81  Fed.  10,  cited  by  counsel  for  complainant.  In  that  case 
the  relief  was  demanded  in  form  in  favor  of  the  complainant 
individually,  but  in  law  belonged  to  the  corporation  of  which 
the  complainant  was  a  stockholder,  while  in  this  case  the 
treble  damages  sought  by  virtue  of  the  anti- trust  act  would 
belong  to  the  individual  complainant,  and  not  to  the  cor- 
poration of  which  she  is  a  stockholder.  In  the  case  of  Pid- 
cock  V,  Harrington,  supra,  Judge  Coxe  said,  in  relation  to 
the  anti-trust  act: 

•*It  Is  clear  that  the  right  to  maintain  In  snch  a  suit  [in  equity]  is 
not  expressly  conferred  by  the  act.  Indeed,  such  right  is  by  implica- 
tion denied:  ♦  ♦  *  First,  because  a  private  person  is  given  (sec- 
tion 7)  the  right  to  maintain  an  action  at  law;  and,  second,  the 
district  attorneys  of  the  United  States,  under  the  direction  of  the 
attorney  general  (section  4),  are  charged  with  the  duty  of  c<»mmencing 
suits  in  equity.  If  it  were  the  intention  of  the  lawmakers  to  vest 
In  every  irresponsible  individual  who  may  deem  himself  aggrieved 
the  right  to  invoke  the  drastic  and  far-reaching  remedies  conferred 
by  the  act.  is  it  not  reasonable  to  suppose- they  would  have  said  so 
in  unambiguous  terms?  " 

To  the  same  effect  is  the  decision  of  Judge  Baker  in 
S&ttthem  Indiana  Exp.  Go,  v.  United  States  Exp.  Co.  (C.  C.) 
88  Fed.  659,  affirmed  by  the  circuit  court  of  appeals  in  35  0. 
C.  A.  172,  92  Fed.  1022*!    The  learned  district  judge  said : 

"  The  anti-trust  law  of  July  2,  1890,  has  wrought  no  such  change  in 
the  law  as  will  enable  the  court  to  enforce  its  provisions  in  favor  of 
a  private  party  by  a  bill  in  equity.  Under  this  act.  the  only  remedy 
given  to  any  other  party  than  the  government  of  the  United  States 
Is  an  action  at  law  for  threefold  damages,  with  costs  and  attorney's 
fees;  and  the  only  party  entitled  to  maintain  a  bill  in  equity  for 
injunctive  relief  for  an  alleged  violation  of  its  provisions  is  the 
United  States,  by  Its  district  attorney,  on  the  authorization  of  the 
attorney  general." 

Without  deeming  it  necessary  to  specifically  set  out  all  of 
the  grounds  of  demurrer  of  the  various  defendants  inter- 
posed herein,  it  may  be  said  that  the  chief  grounds  argued 
by  counsel  were  the  multifariousness  of  the  bill,  and  want  of 
equity  in  favor  of  the  orator  gen-  [913]  erally.  The  bill, 
at  great  length,  alleges  conspiracy  in  restraint  of  trade  and 
commerce,  negligence,  and  ultra  vires  acts  of  the  directors 
of  the  Buffalo  School-Furniture  Company,  resulting  in  th^ 
depreciation  of  the  value  of  its  stock  and  property.  I  think 
that  the  bill,  with  its  inferences,  sufficiently  avers  a  con- 
spiracy in  restraint  of  trade  and  commerce  to  enable  the 


DELAVSrAKE,  L.  &   W.  K.  CO.  V.  FRANK. 

Syllabus. 


81 


complainant  to  give  proof  of  the  charge  in  support  of  her 
allegation.  If  these  alleged  unlawful  acts  are  proven,  in- 
jury has  been  sustained  by  the  corporation,  and  therefore 
equity  will  afford  relief.  This  would  entitle  the  plaintiff, 
as  a  stockholder,  to  equitable  relief. 

The  objection  that  the  bill  is  demurrable  because  it  lacks 
equity  fails.  The  defendants  Oakman  and  Turnbull  have 
filed  a  plea  in  addition  to  their  demurrer.  It  is  not  strictly 
necessary  for  the  court  to  pass  upon  the  sufficiency  of  this 
plea,  having  come  to  the  conclusion  that  the  demurrer  filed 
by  these  same  defendants  must  be  sustained.  The  court  is 
of  the  opinion,  however,  that  the  benefit  of  the  ploa  should 
be  saved  to  the  hearing,  in  accordance  with  the  rule  laid 
down  in  Story,  Eq.  PL  §§  697,  698.  The  motion  for  a  tem- 
porary injunction  is  denied.  Demurrers  sustained,  with 
costs  to  the  various  defendants;  complainant  having  leave 
to  amend  within  30  days. 


[689]  DELAWAKE,  L.  &  W.  R.  CO.  v.  FRANK  ET  AL. 

(Circuit  Court,  W.  D.  New  York.    August  26,  1901.) 

[110  Fed.,  689.] 

Cabbiebs  of  Passengebs — Special  Tickets — Contbact  Pbohibiting 
Tbansfeb. — A  common  carrier  has  a  right  to  issue  and  sell  Special 
tickets  at  a  recced  rate  of  fare  in  consideration  of  the  purchaser's 
agreement  to  certain  conditions  and  limitations  contained  therein, 
among  which  it  may  be  stipulated  that  the  ticket  shall  not  be 
transferred,  and  the  use  of  such  a  ticket  by  another  to  whom  it 
has  been  transferred  in  violation  of  the  contract  is  an  actionable 
wrong.o 

Same — Contbact  Made  by  Ticket — Intebfebence  with  Pebfobm- 
ANCE  BY  Thibd  Pabties. — A  railroad  ticket  broker  who  induces  the 
purchaser  of  a  special  ticket,  in  which  he  has  agreed,  for  a  valuable 
consideration,  not  to  transfer  the  same,  to  violate  such  agreement 
by  selling  the  return  portion  of  the  ticket  for  the  purpose  of  havmg 
it  used  by  another,  is  guilty  of  an  actionable  interference  with 
the  performance  of  the  contract. 

Fedebal  Coubts — Pabties  to  Suit  in  Equity — ^Dismissal  as  to 
Cebtain   Defendants. — A   federal   court   may   dismiss   a   suit  as 

a  Syllabus  copyrighted,  1901,  by  West  Publishing  Co. 
21220- VOL  2—07  m 6 


82 


110   FEDERAL  REPORTER,   680. 
Syllabus. 


against  ik'lViKlaiits  lietween  ivlioiii  ami  the  TOiiij.lainaut  tlu«  ro- 
qiiisite  diversity  f»f  citizenship  does  not  exist,  and  retnin  it  as  U* 
remaining  defentlants  over  whom  it  has  jnris<lietioii,  where  the  de- 
fendants dismissed  are  not  indlsiiensiible  pfirties,  ami  their  dis- 
missiil  will  not  prejudice  the  rights  of  the  others. 

•INJITNCTION— Parties— Join WER  of  Defexdaxts. -In  a  suit  l.y  a  rail- 
road company  for  an  injnnrtion  to  restrain  tlK*  ijureljase  froni  pas- 
sengers of  partly-used  tickets,  nontransferable  l>y  their  terms,  and 
their  n»siile  for  use  in  violaticm  of  the  contract  eoutaine<l  therein, 
where  difterent  brokers  are  engaged  in  dealing  in  thi'  s;ime  class 
of  tickets,  all  or  any  number  of  them  may  Ik'  joinetl  as  defendants. 

JuRismcTiox  OK  Feoekai.  CoiRTs — Amount  in  Controversy — Suit 
FOR  Injunction.— In  a  suit  for  an  iiijuncticm  the  amount  lnv«)Ived 
for  the  rmritose  of  determining  the  jurisilicticm  of  a  federal  c(unt  is 
the  value  of  the  right  to  Ih^  protect^!,  or  the  extent  of  the  injury 
to  be  prevented,  by  the  injnnction.« 

Injunction— Grounds— Inadequacy  of  Legal  Kemedy.— A  i-ourt  of 
equity  has  juristliction  of  a  suit  to  enjoin  wnjngful  acts  by  de- 
fendants where  the  complainant's  legal  remedy  invclves  numerous 
actions  against  irresponsible  defendants,  to  recover  small  sums. 
in  which  the  danniges  would  not  l>e  clearly  susceptible  of  proof, 
and  which,  if  successful,  would  not  result  in  any  practical  bpneflt 
to  complainant. 

Equity— Right  to  Invoke  Jurisdiction— I»rotection  of  Conracts 
Arisinc  Out  of  Unlawful  Combination.— In  a  suit  by  a  railroad 
company  to  enjoin  the  defendants,  who  were  ticket  brokers,  from 
dealing  in  s|)ecial  tickets  issuwl  by  complainant  on  ac\x>unt  of  the 
Pan-Aineriean  Exi)osition,  which  were  by  their  terms  nontrans- 
ferable, It  appeared  from  the  showing  made  on  a  motion  for  a  pre- 
liminary injunction  that  complainant,  was  a  niembtM-  of  a  combina- 
tion known  as  the  " Trunk  Line  AsstKlatlon,'  formeil  by  a  number 
f>f  raironds  ojierating  In  different  states  for  the  purpose  of  pre- 
venting romiietitlon ;  that  the  passenger  receipts  of  all  such  roads 
were  iMMJied  and  divided  on  an  agiwd  basis;  and  that  the  special 
rates  nuide  on  account  of  the  Exposition  were  fixed,  and  the  terms 
of  the  tickets  which  were  the  basis  of  the  suit  prescrilH^l.  by  such 
fflsscK'latlon  through  its  passenger  committee.  Ueld,  that  such  com- 
bination was  illegal,  as  in  violation  [690]  of  the  fetleral  anti-trust 
law  (2«1  Stat.  20il),  and  that  complainant  could  not  invoke  the  aid 
of  a  f«leral  court  of  e<piity  for  the  protection  of  rights  claimed 
under  contracts  which  were  the  direct  result  and  evidence  of  such 
unlawful  conibination. 

In  Equity.    On  motion  for  preliminary  injunction. 
Roffen^^  Lovhe  d-  Mtllmm^  for  complainant. 

*»  Jnrisiliction  as  affei'ted  by  amount  In  controversy,  see  notes~to 
Aner  v.  Lombard,  19  C.  C.  A.  75 ;  Shoe  Co.  v.  Roper,  36  C.  C.  A.  459. 


DELAWARE,  L.  &   W.  R.  CO.  V.  FRANK.  83 

Opinion  of  the  Court. 

Roberts,  Becker,  Messer  d:  Groat,  Laughlin  d  Ewell,  Louts 
L.  Ullman,  and  George  F.  Schnltz  {Tracy  C,  Becher  and 
Louis  Marshal,  of  counsel),  for  defendants. 

Hazel,  District  Judge. 

The  injunctive  relief  of  this  court  is  invoked  by  the  com- 
plainant on  the  ground  of  diverse  citizenship,  and  on  the 
further  ground  that,  by  the  wrongful  and  fraudulent  action 
and  threatened  continuance  of  the  wrongful  and  fraudulent 
sale  of  special  coach  excursion  tickets,  account  Pan-American 
Exposition,  by  the  defendants,  the  complainant  is  damaged 
far  in  excess  of  the  sum  of  $2,000.     The  complainant  is  a 
citizen  of  Pennsylvania.     The  bill  alleges  that  the  complain- 
ant believes  the  defendants  are  citizens  of  Xew  York.     A 
restraining  order  was  heretofore  allowed  on  the  bill  and 
accompanying  affidavits,  with  an  order  to  show  cause  why 
an  injunction  pendente  lite  should  not  be  granted.     Sixty- 
one  defendants  are  proceeded  against,  many  of  them  under 
the  name  of  John  Doe.     By  the  bill  it  is  claimed  that  the 
complainant  railroad   corporation  is  greatly  wronged  and 
damaged  by  the  fraudulent  and  unlawful  actJs  of  the  defend- 
ants, who  are  raihoad  ticket  brokers  engaged  in  business  at 
Buffalo,  N.  Y.     After  reciting  that  the  complainant  operates 
a  railroad  for  the  carriage  of  passengers  and  freight  for  hire 
between  Hoboken,  N.  J.,  and  Buffalo,  N.  Y.,  and  branch 
lines  connecting  with  its  main  line  and  various  other  railroad 
lines  with  which  it  interchanges  freight  and  traffic,  the  bill 
alleges  that  there  is  now  l^eing  held  in  the  city  of  Buffalo, 
within  the  jurisdiction  of  this  court,  the  Pan-American  Ex- 
lM)sition ;  that,  shortly  before  the  opening  of  the  Exposition, 
application  was  made  by  the  officers  thereof  to  the  complain 
ant  and  other  railway  companies  connecting  with  it,  to  reduce 
their  usual  and  ordinary  rate  of  fai-e  charged  for  passenger 
transportation  from  points  along  their  lines  to  Buffalo  and 
return  to  the  initial  point.     To  this  request,  it  is  alleged, 
complainant  consented,  and  thereafter  caused  to  be  sold  at 
its  various  stations  tickets  for  special  round  trips  and  excur- 
sions to  Buffalo  at  greatly  reduced  rates.     The  bill  further 
alleges  that,  in  consideration  of  such  reduced  rates,  such 
tickets  provide  that  the  same  shall  not  be  transferable  nor 


iJfTK 


110  FEDERAL  REPORTER,  690. 


Opinion  of  the  C!oart. 

be  valid  or  accepted  for  transportation  in  the  hands  of  any 
person  other  than  the  original  purchaser;  that  the  same  shall 
be  good  for  only  a  specified  number  of  days  from  the  date 
of  sale  stamped  thereon,  and  before  being  presented  for  re- 
turn passage  shall  be  stamped  by  a  validating  agent  at  Buf- 
falo not  later  than  the  day  canceled  thereon,— that  being  the 
day  on  which  said  ticket  shall  be  used  for  return  to  the  ini- 
tial point,  and  then  to  be  used  by  continuous  passage  on  the 
same  train.  The  ticket  has  printed  on  its  face  the  words, 
"  Special  Excui^ion  Ticket,  Account  Pan-American  Exposi- 
tion." The  conditions  as  above  set  [691]  forth  are  printed 
thereon,  and  the  purchaser  is  required  to  subscribe  to  the  fol- 
lowing contract : 

**  In  consideration  of  the  reduced  fare  at  which  this  ticket  is  sold,  I, 
the  purchaser,  hereby  accept  and  agree  to  be  governed  by  all  the  con- 
ditions as  stated  in  the  above  contract" 

It  is  further  alleged  that  the  New  York  Central  &  Hudson 
Kiver  Kailroad  Company  and  the  West  Shore  Railroad  Com- 
pany, connecting  roads,  have  issued  like  tickets,  which  are 
good  in  part  over  complainant's  road.  The  bill  then  alleges 
broadly  that  defendants  are  engaged  as  ticket  brokers  or 
ticket  scalpers  at  Buffalo,  and  in  the  conduct  of  their  busi- 
ness procure  from  the  original  purchasers,  and  other  persons 
in  many  instances,  the  return  portions  of  such  tickets  pur- 
chased by  them  from  Buffalo  to  the  initial  point,  and  that, 
when  the  same  are  procured,  such  tickets  are  sold  to  other 
persons,  who,  by  falsely  impersonating  the  original  purchaser 
before  the  validating  agent  of  complainant,  and  signing  the 
original  purchaser's  name  to  such  ticket,  are  enabled  to  use 
such  tickets  for  transportation  over  complainant's  railroad. 
It  is  further  alleged  that  defendants,  by  billboards  and  pla- 
cards placed  over  and  in  front  of  their  various  offices,  give 
notice  that  they  buy  and  sell  such  tickets  at  cut  rates;  that 
they  employ  solicitors  to  intercept  persons  originally  pur- 
chasing such  Pan-American  special-rate  tickets,  on  their  ar-  ► 
rival  at  Buffalo,  for  the  purpose  of  purchasing  the  return 
portions  of  such  tickets,  and  that  such  tickets  are  disposed 
of  to  the  traveling  public;  Jiat  the  purchaser  is  instructed 
how  to  impersonate  the  original  purchaser  so  as  to  escape 
detection.    It  is  also  charged  that  forgeries  and  other  fraudu- 


DELAWARB,  L.  &  W.  R.  CO.  V,  FRANK* 
Opinion  of  the  Court. 


85 


lent  and  wrongful  acts  are  committed  by  the  defendants,  the 
original  purchaser  of  the  ticket,  and  the  purchaser  from  the 
defendants,  for  the  purpose  of  hindering  and  impeding  the 
complainant  in  its  business,  and  to  deprive  it  of  the  sale  of 
tickets  at  the  regular  and  ordinary  rate  from  Buffalo  to  other 
points  along  its  line,  and  to  defraud  it  out  of  the  amount  of 
the  fare  which  the  person  fraudulently  using  such  ticket 
would  otherwise  pay  for  such  transportation.  It  is  also  al- 
leged that  the  defendants  are  pecuniarily  irresponsible,  that 
it  is  impossible  for  complainant  to  establish  from  which  of 
the  defendants  fraudulent  tickets  are  purchased,  and  that 
no  practicable  means  exist  by  which  the  frauds  of  the  defend- 
ants can  be  detected  or  prevented.  The  bill  also  alleges  that 
the  defendants,  or  many  of  them,  are  united  in  an  association 
and  band  and  conspire  together  to  carry  on  the  business  of 
purchasing  and  disposing  of  said  tickets,  and  that  complain- 
ant's business  is  thereby  greatly  injured,  and  its  earnings  and 
profits  lessened.  At  the  time  of  the  hearing  on  the  motion 
to  continue  the  injunction,  36  defendants  appeared,  by  coun- 
sel, specially,  to  object  to  the  jurisdiction  of  the  court.  Other 
defendants  appeared  in  person.  The  ground  of  objection 
is  that  a  diversity  of  citizenship  does  not  exist  between  com- 
plainant and  many  of  the  defendants.  Affidavits  of  two  de- 
fendants were  read  and  filed,  showing  that  they  are  citizens 
of  the  same  state  as  the  complainant.  Affidavits  of  other  de- 
fendants A\  ere  also  read  and  filed,  from  which  it  satisfactorily 
appears  that  such  defendants  are  not  citizens  of  New  [692] 
York.  The  affidavits  denying  diversity  of  citizenship  are, 
upon  this  application,  treated  as  a  plea  to  the  jurisdiction  of 
the  court  to  grant  the  provisional  relief  sought. 

Defendants  contend  (1)  that  the  bill  cannot  be  dismissed 
as  to  any  defendant  not  within  the  jurisdiction  of  the  court 
without  a  dismissal  of  the  bill  as  to  all  defendants;  (2)  that 
the  bill  does  not  state  a  cause  of  action,  either  in  law  or 
equity,  against  any  of  the  defendants;  (3)  that  complainant 
is  engaged  in  an  open  violation  of  the  anti-trust  law  of  con- 
gress in  maintaining  in  combination  with  other  railroads  a 
rate  of  fare  to  the  Exposition  and  return  to  the  initial  point; 
(4)  that  the  bill  ought  to  be  dismissed  on  the  further  ground 
that  its  essential  allegations  and  those  of  the  accompanying 


^^  110  FEDERAL  REPORTER,   692. 

Opinion  of  the  Court. 

affidavits  are  made  on  information  and  belief,  or  by  a  person 
who  has  no  actual  knowledge  of  the  facts  alleged. 

This  application  is  based  mainly  upon  the  bill  of  com- 
plaint.    The  bill,  however,  is  positive  in  many  of  its  allega- 
tions, and  being  verified,  may  therefore  be  considered  an 
affiflavit  as  a  basis  for  provisional  remedy.    Hecl^er  v.  Mmjot, 
etc.,  28  How.  Prac.  212,  and  cases  cited.    The  defendants' 
counsel  contend  that  the  allegations  of  complainant^s  papei-s 
are  not  made  in  such  a  direct  and  positive  manner  that  the 
writ  of  injunction  may  issue.    An  examination  of  the  aver- 
ments  of  the  bill  and  the  affidavits  submitted  convinces  me, 
however,  that  this  objection  is  untenable.    I  deem  it  quite 
uniformly  settled  by  the  courts  of  the  United  States  and  by 
the  state  courts,  where  the  question  has  been  considered,  that 
t  common  carrier  has  a  right  to  issue  and  sell  tickets  along 
and  over  its  line  or  road  at  reduced  rate  of  fare  in  considera- 
tion of  the  purchaser's  agreement  tc.  on  his  part  conform  to 
conditions  and  stipulations  expressed  by  the  ticket  and  fur- 
nisJHMl  to  the  purchaser.     The  conditions  to  whicli  the  pur- 
chaser of  complainant's  ticket  assented  were,  substantially, 
that  the  ticket  should  not  l)e  transferred  to  another  for  use; 
that  the  purchaser  would  present  the  return  portion  of  the 
ticket  for  use?  within  a  specified  time:  that  he  would  affix  his 
signature  in  the  presence  of  the  joint  agent  on  tiie  reverse 
side  of  the  return  i,ortion  on  or  before  the  day  limited  for 
return  use.      It   was  held   in  the  case  of  Rutlvond  Co.  v. 
Mi-rmnwll  (C.  C.)  82  Fed.  65,  that  the  right  to  make  and 
issue  a  s|)ecial  form  of  ticket,  furnishing  a  reduced  rate  of 
fare,  and  thereby  aiding  in  a  great  public  i)uri)()se,  is  fully 
recogniml  both  at  common  law  and  by  legislation,  and  that 
the  use  of  one  of  thes«3  tickets  in  violation  of  tlie  contract 
by  a  person  other  than  the  original  purchaser  is  a  fraud 
upon  the  common  carrier.     It  follows  that  the  right  to  im- 
pose conditions  uiM»n  its  passengers  in  consideration  of  the 
acceptance  of  a  ticket  at  rediiced  fare  carries  with  it  a  right 
to  limit  the  ticket  as  to  time,  the  train  on  which  it  is  to^'be 
used,  and  to  prohibit  a  sale  and  transfer  thereof  to  another 
person.     Defendants  admit  a  right  of  limitation  as  to  time, 
restrictions  as  to  train  to  be  used,  and  that  a  railroad  com- 
pany may  require  the  ticket  issued  by  it  to  be  stam|>ed. 


DELAWARE,  L.  &   W.  R.  CO.  V.  FRANK. 
Opinion  of  tlie  Court. 


87 


They  insist,  howe\'er,  that,  as  the  ticket  is  property,  a  prohi- 
bition of  its  sale  is  equivalent  to  depriving  its  owner  of  ac- 
quired property;  that  he  obtains  by  the  purchase  thereof 
an  assignable  right,  and  also  the  right  to  authorize  another 
to  indorse  his  name  [693]  on  the  ticket  whenever  it  is  re- 
quired by  the  contract  of  purchase.  I  cannot  accept  this 
view.  No  substantial  reason  presents  itself  why  a  purchaser 
of  transportation  from  a  common  carrier  in  consideration 
of  the  reduction  of  fare  from  the  ordinarv  rate  should  not 
abide  faithfullv  bv  reasonable  restrictions  and  limitations 
contained  in  the  contract  of  purchase.  ^Miile  a  person  may 
obtain  an  assignable  right  in  a  railroad  ticket,  yet,  when  the 
right  obtained  is  curtailed  or  limited,  the  purchasing  party, 
assenting  to  the  limitation  for  a  valuable  consideration,  must 
hold  his  obligation  as  inviolate  as  he  has  a  right  to  hold  that 
of  the  railroad  company.  In  consideration  of  the  price 
paid  for  the  ticket  the  purchaser  obtains  the  right  of  passage, 
and  as  well  obligates  the  connnon  carrier  to  other  responsi- 
bilities. Where  a  right  of  passage  is  obtained  by  special 
contract  and  at  a  reduced  rate  of  fare,  carrying  with  it  re- 
strictions and  limitations,  the  purchaser  receives  a  considera- 
tion which  makes  it  obligatory  on  him  to  in  good  faith  carry 
out  his  agreement.  A  violation  of  the  contract  of  transpor- 
tation by  the  common  carrier  lays  it  oj)en  to  legal  liabilities 
and  consecjuent  remedies.  The  contract  is  binding  on  both. 
If  the  time  in  which  a  return  j)art  of  the  ticket  may  be  used 
has  lapsed,  the  purchaser  of  the  ticket  has  failed  to  accept 
a  right  guarantied  him  by  the  contract.  Failure  to  use  the 
return  portion  of  the  ticket  by  him  must  be  deemed  his  own 
voluntary  act  or  neglect.  The  common  carrier  is  required  to 
transport  the  purchaser  on  his  return  without  additional 
compensation.  It  may  be  recpiired  to  provide  for  his  use 
such  comfort  and  conveniences  as  are  usuallv  allotted  to 
the  traveling  j)ublic.  This  question  was  only  recentl\^  before 
the  Fourth  department,  appellate  division  of  the  supreme 
court  of  New  York.  People  v.  Caldwell^  71  X.  Y.  Supp. 
054.     Justice  McLennan,  speaking  for  the  court,  said  : 

"  We  tliinlv  tlie  decision  in  tlie  case  of  People  ex  rel.  Tj/roler  v. 
Warden,  157  N.  Y.  IIG,  51  N.  E.  1000,  43  L.  R.  A.  2G4,  68  Am.  St  Rep. 
703.  nmst  be  regarded  as  decisive  of  tlie  proposition  that  it  is  not 
oonipetent   for  the  legislature  to  jiroliibit  the  purchase  and  sale  of 


110  FEDERAL  BEPORTER,   693. 
Opinion  of  tlie  Court. 


?k!^l!!./nf  ^'**  ''''^'"  traiisiK>rtaition  lines  when  racb  sale  is  not  in 

n^nZli?/«,fTlf2^T**^.^***^  **^«  transportation  companies 
upon  tlie  sale  of  such  tickets  by  them." 

This  was  a  case  brought  before  the  court  on  appeal  from 
a  final  order  in  habeas  corpus  proceedings  discharging  the 
relator  from  arrest.    The  relator  was  arrested  for  violating 
an  act  of  the  legislature  passed  in  1901,  which  by  its  terms 
provided,  in  substance,  that  no  person  shall  sell  a  passage 
ticket  giving  any  right  to  a  passage  or  conveyance  upon  any 
railroad  train,  unless  it  be  an  authorized  ag^nt  of  the  com- 
pany running  such  train,  or  unless  he  has  received  a  certifi- 
cate of  authority  therefor,  in  writing,  from  such  company. 
The  court  followed  a  decision  of  the  court  of  appeals  {Ty^ 
roler  v.  Warden,  supra)  holding  such  a  penal  statute  uncon- 
stitutional.   It  will  be  seen  that  the  appelate  division  limited 
its  decision,  and  interpreted  the  decision  of  the  court  of 
appeals,  to  tickets    issued  over    railroad  lines    whenever 
such  sale  is  not  in  violation  of  contractual  obligations.    It 
is  clear  that  a  limitation  upon  the  use  of  a  ticket  as  to  time 
and  its  use  by  another  than  the  original  purchaser  may  be 
restricted  and  limited  to  the  fair  and  true  intendment  of  the 
contract.    When,  therefore,  a  subsequent  purchaser  of  a 
ticket  from  a  broker,  who  pur-  [6M]  chased  the  ticket  from 
the  original  purchaser,  uses  the  same,  he  becomes  liable  to 
the  railroad  company  wronged,  in  an  action  at  law,  for  any 
damage  sustained.    No  obligation  exists  on  the  railroad 
company  to  transport  a  passenger  holding  such  a  ticket. 
Mosher  v.  BaUway  Co,,  127  U.  S.  390,  8  Sup.  Ct.  1324,  32 
L.  Ed.  249.    It  is  equally  clear  that  the  interference  of  the 
ticket  broker  in  inducing  a  person  holding  the  return  part 
of  a  ticket  purchased  by  him  from  the  railroad  under  special 
contract  arrangements  not  to  transfer  or  permit  the  use  of 
such  ticket  by  another  person,  in  consideration  of  the  sale  of 
such  ticket  at  a  reduced  rate  of  fare,  in  order  to  break  the 
contract,  is  actionable.    An(/le  v.  Railway  Co.,  151  U  S  1  14 
Sup.  Ct.  240,  38  L.  Ed.  55 ;  Bailroad  Co,  v.  McConnell,  supra 
An  examination  of  the  authorities  convinces  me  that  it  is 
quite  well  settled  that  jurisdiction  may  be  retained  over 
defendants  as  to  whom  a  diversity  of  citizenship  exists,  and 
a  dismissal  of  the  complaint  may,  and  in  a  proper  case  will, 
be  permitted  against  defendants  who  are  not  found  to  be 


DELAWARE,  L.  &   W,  R.  CO.  V,  FRANK. 
Opinion  of  tlie  Court. 


89 


within  the  jurisdiction  of  the  court,  unless  such  defendants 
are  indispensable  to  the  entry  of  a  decree  against  the  remam- 
ing  defendants,  and  when  it  may  be  done  without  prejudice. 
Horn  V.  Lochhart,  17  Wall.  570,  21  L.  Ed.  657 ;  Oxley  Btame 
Go,  V.  Coopers'"  International  Union  of  North  America  (C. 
C.)  72  Fed.  695;  Mason  v.  Dullagham,  27  C.  C.  A.  296,  82 
Fed.  689;  Grove  v.  Grove  (C.  C.)'93  Fed.  865;  Smith  v.  Oil 
Co,,  30  C.  C.  A.  103;  86  Fed.  359. 

The  contention  of  counsel  for  defendants  that  the  bill 
imperfectly  and  defectively  charges  fraudulent  and  wrong- 
ful acts  by  61  defendants,  rendering  it  impossible  to  separate 
any  one  of  them  or  dismiss  the  bill  as  to  any  of  them  with- 
out injury  and  prejudice  to  the  remaining  defendants,  is 
untenable.  The  defendants  who  are  not  diverse  citizens 
from  the  complainant  are  not  indispensable. 

The  question  now  arises,  can  this  proceeding  be  main- 
tained against  the  remaining  defendants,  and  by  a  single 
bill?  These  objections  are  removed  by  the  language  of 
Judge  Clark  in  the  McConnell  Case,  where  the  facts  are  simi- 
lar to  the  case  at  bar,  at  page  75,  where  he  says : 

"  I  thinlc  tlie  defendants  may  properly  be  joined  in  one  suit.  Plain- 
tiffs' business  is  the  subject-matter  in  each  bill,  and  the  right  claimed 
is  exactly  the  same  against  all  the  defendants.  The  injury  com- 
plained of  is  the  same,  and  is  being  inflicted  by  defendants  in  the 
same  method  and  at  tlie  same  time." 

The  objection  that  the  suit  fails  of  jurisdiction  because 
it  is  not  shown  that  the  defendants  against  whom  the  action 
may  be  continued  have  damaged  complainant  in  a  sum 
in  excess  of  $2,000  is  overruled.  It  has  been  frequently 
held  that  in  a  suit  in  equity,  where  an  injunction  is  sought, 
the  amount  in  dispute  is  not  the  amount  in  controversy , 
but  the  value  of  the  object  to  be  gained  by  the  bill.  In  the 
case  of  Humes  v.  City  of  Ft.  Smith  (C.^  C.)  93  Fed.  862, 
where  an  objection  was  made  to  the  jurisdiction  of  the  court 
because  the  amount  in  controversy  did  not  exceed  the  sum  of 
$2,000,  the  court  said : 

"Jurisdiction  is  not  determined  in  that  way.  Jurisdiction  is  de- 
teruimed  by  the  value  of  the  right  to  be  protected,  or  the  extent  of 
the  injury  to  be  prevented,  by  the  injunction." 

[695]  A  court  of  equity  will  not  require  a  pursuit  of  a 
legal  remedy  which  foreshadows  annoyance,  accompanied 


90 


110   FEDEEAI.  REPOBTER,   095. 


Opinion  of  the  Court. 

by  uncertain  results  and  multiplicity  of  suits,  to  recover 
small  sums  from  irresijonsible  defendants,  where,  as  in  this 
case,  the  damages  caused  by  the  alleged  wrongful  acts  are 
not  clearly  susceptible  of  proof,  and  where  the  legal  remedy 
that  is  afforded  falls  short  of  being  complete  and  efficient. 
Ra'dnHuJ  Co,  V.  MeConnell,  mpm;  /n,sttnuir€  Co.  v.  Chfuie 
(C.  C.)  88  Fed.  U>7:  SmJf^  v.  Birem  (C.  C.)  50  Fed.  852 : 
aS////////  v.  Amen,  169  U.  S.  400,  18  Sup.  Ct.  418,  42  L.  P:d.  810; 
De  Forest  v.  Thompson  (C.  C.)  40  Fed.  375.  The  complain- 
ant's irdpers,  standing  alone,  disclose  a  proper  case  for  the 
exercise  of  equitable  relief. 

I  now  come  to  consider  a  groimd  of  objection  to  a  prelim- 
inaiT  injunction,  not  free  from  difficulty.  I  have  given  the 
subject  most  serious  consideration,  and  am  conscious  of  the 
great  importance  and  far-reaching  effect  that  its  decision 
involves.  Defendants  contend  that  the  complainant,  in 
determining  on  the  reduced  rate  of  fare  for  a  round-trip 
ticket  on  its  road  during  the  continuance  of  the  Pan-Amer- 
ican Exposition  at  Buffalo,  ending  with  October  31,  1901, 
in  conjunction  with  other  railroad  lines  having  facilities  for 
transportation  of  passengers  over  its  road  to  Buffalo,  vio- 
lated the  provision  of  the  act  of  congress  of  July  2,  1890,  by 
which  it  is  provided : 

"  Ever.v  wntnict,  eoinl)iiiation  in  the  form  of  trust  or  otherwise  or 
conspiracy  in  restraint  of  trade  or  commerce  among  tlie  several  states 
or  with  foreign  nations,  is  hereby  declared  to  be  illegal."    26  Stat' 
20!). 

It  appears  from  the  affidavit  of  Mr.  Lansing:  That  the 
complainant  is  a  party  to  a  combination  which  is  engaged  in 
pooling  railroad  rates  and  in  fixing  fares  for  railroad  trans- 
portation in  order  to  avoid  competition  between  the  several 
lines  constituting  the  association  known  and  distinguished  as 
the  "  Trunk  Line  Association.''  This  association  has  among 
its  membership  a  constituted  committee  Imown  as  the 
"  Trunk  Line  Committee."  It  is  claimed  that  its  member- 
ship consists  of  the  complainant  and  eight  other  railroad 
corporations,  citizens  of  different  states,  operating  in  the 
Middle  states.  The  Trunk  Line  Association  acts  through  a 
trunk  line  passenger  committee,  which  is  composed  of  the 
general  passenger  agents  of  the  principal  railroads  operating 
in  the  territory  reached  by  the  several  railroads  which  they 


DELAWAKE,  L.  &   W.  R.  CO.  V,  FRANK. 


91 


Opinion  of  the  Court. 

represent.     That  the  special  Pan-American  tickets  referred 
to  in  the  bill  of  complaint  have  been  issued  pursuant  to  such 
combination  and  conspiracy.     That  the  rates  and  conditions 
of  the  tickets  were  previously  arranged,  and  are  a  product 
of  this  combination  organized  to  stifle  competition  in  rail- 
road rates.     It  further  appears  that  the  complainant  and 
other  railroads  in  combination  are  pooling  the  first  and  sec- 
ond class  passenger  business  of  their  res])ective  roads  upon 
an  agreed  division  of  the  receipts.     The  representative  of 
the  joint  agency  testified  before  the  police  court  of  the  city 
of  Buffalo  in  a  proceeding  brought  against 'a  ticket  broker. 
It  appears  from  his  testimony,  which  is  produced  by  the  de- 
fendants, that  the  rates  are  fixed  by  the  association,  and  that 
the  complainant  is  a  member  thereof;  that  he  is  employed 
by  this  association  in  conjunction  with  the  Central  Passen- 
ger  Association.     The   defendants'   affidavits   and   exhibits 
have  not  been  questioned  or  controverted  on  [696]  the  part 
of  complainant.     They  stand  admitted,  therefore,  upon  this 
application  for  a  continuance  of  the  injunction.     Defendants 
charge  that  the  very  ticket  which  is  the  ground  of  this  appli- 
cation is  the  result  and  the  evidence  of  an  unlawful  agree- 
ment between  the  different  railroads  composing  the  Trunk 
Line  Association.     This  is  not  denied.     The  court  cannot  at 
this  time  pass  upon  the  existence  of  this  unlaw^f ul  agreement, 
other  than  as  it  appears  in  the  papers  submitted.     Were 
this  at  final  hearing,  when  all  the  facts  known  to  the  com- 
plainant w^ere  divulged,  the  court  might  not  be  bound  to 
seemingly  protect  the  defendants  in  the  pursuit  of  their  nefa- 
rious practices,  for  such  they  admittedly  are.     The  defend- 
ants do  not  deny  the  charges  of  wrongdoing.     A  court  of 
equity  would  therefore  be  bound  to  raise  its  arm  in  defense 
of  a  complainant  suffering  wrongs  which  could  be  properly 
righted  by  the  exercise  of  its  power.     But  can  the  aid  of  a 
federal  tribunal  be  invoked  to  protect  the  complainant  in 
the  issuance  of  a  ticket  over  its  railroad,  Avhich,  as  far  as  it 
appears  to  the  court,  is  the  culmination  as  w^ell  as  the  evi- 
dence of  an  agreement  between  railroad  corporations  speci- 
fically forbidden  by  an  act  of  congress  which  has  been  sus- 
tained by  the  supreme  court  of  the  United  States  ?     U,  S.  v. 
Trm$-Missouri  Freight  Ass'n,  166  U.  S.  290, 17  Sup.  Ct.  540, 


92 


110   FEDERAL  REPORTER,   698. 
Opinion  of  tlie  C3oiirt. 


41  L.  Ed.  1007;  U.  S.  v.  Joint  Traffic  Ass'n,  ITl  U.  S.  505, 
19  Sup.  Ct.  25,  43  L.  Ed.  259.  The  complainant  contends 
that  this  charge  made  by  the  defendants  does  not  avail,  as 
the  wrongdoing,  if  any  exists,  does  not  relate  to  the  subject- 
matter.  I  am  not  convinced  as  to  the  soundness  of  this  con- 
tention. C«in  the  railroad  complainant  conspire  unlawfully 
to  G^K  rates,  and  then  come  into  a  court  of  equity  and  invoke 
its  aid  to  protect  those  rates  which  are  represented  by  the 
ticket  pi-esented  to  the  court,  and  which  is  wrongfully  used 
by  the  defendants?  The  evil  practice  which  stands  admitted 
by  the  papers  is  the  very  practice  in  which  the  court's  protec- 
tion is  invoked.  As  was  well  said  in  Insurance  Co,  v.  €lunie 
(C.  C.)  88  Fed.  170: 

••  The  maxim  tliat  lie  wlio  comes  into  equity  must  come  witli  clean 
Iinnds  lias  its  limitationa  It  does  not  apply  to  every  miconscieu- 
tious  act  or  inequitable  conduct  on  the  part  of  the  complainants.  The 
inequity  which  deprives  a  suitor  of  a  right  to  justice  in  a  court  of 
equity  is  not  general  iniquitous  conduct,  unconnected  with  the  act  of 
the  defendant  which  the  complaining  party  states  as  his  ground  or 
cause  of  action,  but  it  must  be  evil  practice  or  wrong  conduct  in  the 
particular  matter  or  transaction  in  resjject  to  which  judicial  protec- 
tion or  redress  is  sought." 

See,  also,  Beach,  Mod.  Eq.  Jur.  14-16;  Pom.  Eq.  Jur.  397, 
398 ;  Beck  v.  Real  Estate  Co,,  12  C.  C.  A.  497,  65  Fed.  30 ; 
Weiss  V.  Herlihy,  23  App.  Div.  608,  49  N.  Y.  Supp.  81; 
Sinsheimer  v.  fratment  Workers,  77  Hun,  215,  28  N.  Y. 
Supp.  321. 

In  the  Sinsheimer  Case  an  injunction  was  sought  by 
plaintiffs,  who  were  a  combination  of  clothing  manufac- 
turers formed  for  mutual  protection  from  the  demands  for 
higher  wages  of  their  employes,  who  were  also  organized 
for  protection  and  for  advancing  their  wages.  The  court 
said : 

"  Under  the  circumstances  disclosetl  by  the  papers  in  this  case,  if 
the  defendants  were  guilty  of  any  violation  of  law,  the  plaintiffs  were 
certainly  equally  implicated,  and  under  this  condition  of  affairs  it  is 
difficult  to  see  [6»7]  how  they  would  have  a  right  to  the  intervention 
of  a  court  of  equity.  In  dealing  with  questions  of  this  nature  the 
court  should  be  studious  to  see  that  the  rights  of  all  parties  are  pro- 
tected, and  that  the  forms  of  law  should  not  be  permitted  to  be  used 
on  behalf  of  one  party  against  another,  when  the  party  seeking  the 
Intervention  of  the  court  has  been  endeavoring  to  secure  his  ends  by 
means  similar  to  thnse  which  he  seeks  to  enjoin  on  the  part  of  his 
antascnist." 

The  wrongdoing  of  complainant,  admitted  by  the  papers. 


DELAWABB,  L.  &  W.  R.  CO.  V,  FRANK. 
Opinion  of  the  Court. 


9d 


is  not  remote.  It  has  given  birth  to  the  combination  whose 
tickets  have  been  wrongfully  diverted  by  the  defendants. 
This  court  has  no  sympathy  with,  nor  would  it  lend  its  aid 
willingly  to,  those  indulging  in  practices  admitted  by  the 
defendants.  But,  sitting  as  a  court  of  equity,  it  is  bound  by 
those  rules  which  are  the  very  foundation  of  that  branch  of 
our  jurisprudence.  The  complainant  does  not  come  before 
the  court  with  clean  hands  in  the  transaction  comi^lained  of. 
The  court  can,  therefore,  not  grant  it  equitable  relief  upon 
the  state  of  facts  before  it  at  tliis  time.  The  complainant 
must  therefore  be  relegated  to  its  remedies  at  law,  and  the 
injunction  vacated.    Let  an  order  be  entered  accordingly. 


ON   REHEARING. 


(October  14,  1901.) 


Motion  for  reargument  on  notice  to  defendants  was 
heard  by  me  September  30,  1901.  Affidavits  were  read  m 
behalf  of  complainant,  denying  the  charge  of  violation  of 
the  anti-trust  act,  the  alleged  pooling  of  business,  and  the 
apportionment  or  division  of  money  received  by  various 
railroads  for  sale  by  them  of  reduced-rate  Pan-American 
tickets.  Defendants,  in  reply,  read  additional  affidavits, 
corroborative  of  their  charge  of  iniquitous  conduct  by  the 
complainant  with  respect  to  the  tickets  in  question.  An- 
swers in  behalf  of  38  defendants  were  served  and  filed, 
denying  the  commission  of  the  wrongful  acts  charged  in  the 
complaint. 

Important  and  difficult  questions  of  law  are  involved  in 
the  determination  of  this  motion.  A  disposition  of  it  on 
the  affidavits  presented  may  fail  of  having  the  facts  care- 
fully examined  and  deliberately  heard.  The  original  mo- 
tion for  injunction  was  denied,  for  the  reasons  stated  in  the 
opinion  of  the  court  filed  August  26,  1901.  The  Pan-Amer- 
ican Exposition,  on  account  of  which  the  reduced-rate  ticket 
was  issued  by  the  complainant  and  other  roads  associated 
with  it,  will  close  its  gates  on  October  31st, — within  17  days. 
It  is  doubtful  whether  the  necessity  for  immediate  protec- 
tion from  alleged  wrongful  acts  now  exists.  Inasmuch  as 
the  defendants  have  read  additional  affidavits  and  filed  an 


Ill    FEDERAL  REPORTER,   98. 
Syllabus. 

answer  corroborative  of  the  charge  of  the  existence  of  a 
combination  in  viohition  of  hiw,  the  issues  now  raised  ought 
not  at  this  time  to  be  disposed  of  summarily. 

Motion  for  reargument  denied  as  to  defendants  who  have 
appeared  and  answered.  Defendants  who  have  not  an- 
swered, of  course,  may  l)e  proceeded  against  in  accordance 
with  the  ordinary  rules  of  equity  procedure. 


[%1  CENTRAL  COAL  &  COKE  CO.  ET  AL.  r.  HART> 

(Cirtiiit  Couit  of  Appeals,  Eighth  Circuit.    September  .'50.  1901.) 

1111  Fed.,  96.] 

Monopolies— Combinations  in  Restraint  of  Trade— Da  mages.— 
Ooly  actual  damages,  established  l)y  the  proof  of  facts  from  which 
they  may  l>e  ratiomUly  inferred  with  reasonable  certaintj-.  are 
recoverable  [under  the  Sherman  anti-trust  law  (2G  Stat.  209)]. 
Speculative,  remote,  or  contingent  damages  cannot  form  the  basis 
of  a  lawful  judgment 

Same— Spec  ulative  Damages — Evidence— Slj-ficienc  v. The  esti- 
mates, si)eculations,  or  conjectures  of  witnesses  unfounded  in  the 
knowledge  of  actual  facts  from  which  the  amount  of  the  damages 
could  have  been  inferred  witli  reasonable  certainty  will  no  more 
sustain  a  judgment  than  the  conjectures  of  a  jury. 

Same— Anticipated  I'rofits— When  Recoverable.— The  general  rule 
is  that  the  anticipated  profits  of  a  commercial  business  are  too 
remote,  speculative,  and  dependent  upon  changing  circumstances  to 
warrant  a  judgment  for  their  loss.  There  is  an  exception  to 
[97]  this  rule  that  the  loss  of  profits  from  the  interruption  of  an 
established  business  may  be  recoveretl  where  the  plaintiff  makes  It 
reasonably  certain  by  competent  proof  what  tlie  anumnt  of  his 
actual  loss  was. 

Same— I»ROFiTS  of  Established  Business— Evidence— Indispensable 
TO  Recovery.— Proof  of  the  expenses  and  of  the  inci)me  of  the  busi- 
ness for  a  reasonable  time  anterior  to  and  during  the  interruption 
ehargetl.  or  of  facts  of  equivalent  imi>ort,  is  indispensable  to  a 
lawful  judgment  for  damages  for  the  loss  of  the  anticipated  profits 
of  an  establisheil  business. 

Same— Loss  of  I»rofits.— The  plaintiff  testified  that  the  acts  of  the 
defendants  had  greatly  diminished  his  business,  prevented  him 
from  making  contracts  for  future  delivery  of  coal,  and  diminished 
his  sales  from  1.**  to  20  carloads  per  month,  on  whicli  he  would  liave 
made  a  profit  of  from  |12  to  |20  per  car ;   that  he  could  not  tell 


CENTRAL   COAL   &   COKE    CO.    V.   HARTMAX. 
Opinion  of  the  Court. 


95 


what  the  volume  of  his  business  was  before  or  after  the  acts  com- 
plained of,  and  that  he  had  no  books  or  papers  which  would  sliow 
this  fact.  He  produced  no  evidence  of  the  expenses  or  income  of 
his  business  before  or  after  the  acts  complained  of.  llchl,  that  the 
evidence  was  insufiicient  to  sustain  a  verdict  for  damages  for  the 
loss  of  anticipatetl  profits. 

( Syllabus  by  the  Court. ) 

In  Error  to  the  Circuit  Court  of  the  United  States  for  the 
Western  District  of  Missouri. 

IF.  C.  Perry   {Daniel  B.  Holmes^  Adiel  Sherwood,  and 
John  O^ Grady ^  on  the  brief),  for  plaintiffs  in  error. 

Charles  H,  Nearing  (J,  S.  Went  and  -/.  B.  Campbell  on 
the  brief),  for  defendant  in  error. 

Before  Sanborn,  Circuit  Judge,  and  Adams  and  I^)rHREN, 
District  Judges. 


Sanborn,  Circuit  Jutl-ofe. 

This  was  an  action  brouirht  ])v  Samuel  Hartnian  against 
the  Central  Coal  &  Coke  Conij^any  and  several  other  corpora- 
tions for  three  times  the  damages  which  he  claimed  that  the 
defendants  had  inflicted  u])on  his  business  by  their  violation 
of  the  inhibitions  of  the  act  to  protect  trade  against  unlaw- 
ful combinations  and  monopolies,  commonly  called  the 
"Sherman  Anti-Trust  Law"  (26  Stat.  209,  *c.  647).  His 
complamt  was  that  he  had  been  engaged  in  the  sale  of  coal 
in  Kansas  City,  in  the  state  of  Kansas,  since  1803;  that  in 
September,  181)6,  he  and  the  defendants  had  formed  a  coal 
club  to  establish  and  control  the  prices  at  which  coal  should 
be  sold  in  Kansas  City,  Kan.,  and  Kansas  City,  :Mo.,  and 
to  restrain  commerce  among  the  states:  that  they  had  ac- 
complished their  purpose;  that  he  withdrew  from  the  club 
in  1897;  that  thereafter  the  defendants  and  their  associates 
would  not  sell  him  Salt  Fork  coal  or  Cherokee  coal  at  any 
other  i)rices  than  those  which  they  had  established  for  the 
sale  of  coal  at  retail  to  consumers;  that  this  action  of  the 
defendants  caused  him  a  loss  of  all  his  trade  in  Salt  Fork 
coal,  of  a  large  portion  of  his  business  in  Cherokee  coal,  and 
made  it  impossible  for  him  to  make  contracts  for  the  future 


m 


111   FEDEBAL  KEFOBTER,  98. 


Opinion  of  the  Court. 

delivery  of  coal,  because  he  was  uncertain  whether  or  not 
he  could  obtain  it;  so  that  he  suffered  damages  in  the  sum 
of  $2,500.  The  defendants  denied  these  averments,  and  at 
the  close  of  the  trial  the  jury  found  that  the  plaintiff's 
<lamages  were  $130,  and  judgment  was  thereupon  rendered 
[08]  against  the  defendants  for  three  times  this  amount, 
$500  attorney's  fees,  and  the  costs  of  the  action. 

The  assignment  of  errors  challenges  rulings  of  the  court 
uiKjn  the  construction  of  the  act  of  congress  upon  the  nature 
and  extent  of  interstate  commerce,  and  upon  the  sufficiency 
of  the  evidence  of  damages  to  warrant  a  verdict  against  the 
defendants.    If  no  real  legal  injury  was  proved  in  this  case, 
if  there  was  actually  no  subject  of  this  controversy,  if  this 
is  really  nothing  but  a  moot  case,  any  opinion  we  might 
render  upon  the  grave  questions  relating  to  the  construction 
of  the  act  of  congress  and  the  character  and  extent  of  com- 
merce among  the  states  would  be  mere  obiter  dicta,  and  any 
discussion  or  decision  of  these  questions  in  this  action  would 
be  useless.    For  this  reason  the  sufficiency  of  the  evidence 
of  damages  to  sustain  the  verdict  will  first  be  considered. 
The  only  damages  claimed  in  the  petition,  and  the  only  losses 
which  the  plaintiff  sought  to  prove  at  the  trial,  were  the 
loss  of  some  of  the  expected  profits  of  his  business  of  buy- 
ing and  selling  coal  between  January  1,  1897,  and  January 
25,  1899.    Compensation  for  the  legal  injury  is  the  measure 
of   recoverable   damages.    Actual   damages    only    may   be 
secured.    Those  that  are  speculative,  remote,  uncertain,  may 
not  form  the  basis  of  a  lawful  judgment.    The  actual  dama- 
ges which  will  sustain  a  judgment  must  be  established,  not 
by  conjectures  or  unwarranted  estimates  of  witnesses,  but  by 
facts  from  which  their  existence  is  logically  and  legally  in- 
ferable.   The  speculations,  guesses,  estimates  of  witnesses, 
form  no  bt^tter  basis  of  recovery  than  the  speculations  of  the 
jury  themselves.    Facts  must  be  proved,  data  must  be  given 
which  form  a  rational  basis  for  a  reasonably  correct  estimate 
of  the  nature  of  the  legal  injury  and  of  the  amount  of  the 
damages  which  resulted  from  it,  before  a  judgment  of  re- 
covery can  be  lawfully  rendered.    These  are  fundamental 
principles  of  the  law  of  damages.    Now,  the  anticipated 
profits  of  a  business  are  generally  so  dependent  upon  numer- 


CENTRAL   COAL  &   COKE   CO.  V.  HARTMAN. 


97 


Opinion  of  ttie  Court. 

ous  and  uncertain  contingencies  that  their  amount  is  not 
susceptible  of  proof  with  any  reasonable  degree  of  certainty ; 
hence  the  general  rule  that  the  expected  profits  of  a  com- 
mercial business  are  too  remote,  speculative,  and  uncertain 
to  warrant  a  judgment  for  their  loss.  Howard  v.  Manu- 
facturing Co,,  139  U.  S.  199,  206,  11  Sup.  Ct.  500,  35  L.  Ed. 
147;  Cincinnati  Siemens-Limgren  Gas  Illuminating  Co.  v. 
Western  Siemens-Lungren  Co,,  152  U.  S.  200,  205,  14  Sup. 
Ct.  523,  38  L.  Ed.  411 ;  Trust  Co.  v.  CUrk,  92  Fed.  293,  296, 
298,  34  C.  C.  A.  354,  357,  359 ;  Simmer  v.  City  of  St.  Paul 
23  Minn.  408,  410;  Griifin  v.  Colver,  16  N.  Y.  489,  491,  69 
Am.  Dec.  718.  There  is  a  notable  exception  to  this  general 
rule.  It  is  that  the  loss  of  profits  from  the  destruction  or 
interruption  of  an  established  business  may  be  recovered 
where  the  plaintiff  makes  it  reasonably  certain  by  competent 
proof  what  the  amount  of  his  loss  actually  was.  The  reason 
for  this  exception  is  that  the  owner  of  a  long-established 
business  generally  has  it  in  his  power  to  prove  the  amount 
of  capital  he  has  invested,  the  market  rate  of  interest  thereon, 
the  amount  of  the  monthly  and  yearly  expenses  of  operating 
his  business,  and  the  monthly  and  yearly  income  he  derives 
from  it  for  a  long  time  before,  and  for  the  time  during 
the  interruption  of-  which  he  complains.  The  interest 
[99]  upon  his  capital  and  the  expenses  of  his  business  de- 
ducted from  its  income  for  a  few  months  or  years  prior  to 
the  interruption  produce  the  customary  monthly  or  yearly 
net  profits  of  the  business  during  that  time,  and  form  a 
rational  basis  fi-om  which  the  jury  may  lawfully  infer  what 
these  profits  would  have  been  during  the  interruption  if  it 
had  not  been  inflicted.  The  interest  on  the  capital  and  the 
expenses  deducted  from  the  income  during  the  interruption 
show  what  the  income  actually  was  during  this  time;  and  this 
actual  net  income,  compared  with  that  which  the  jury  infers 
from  the  data  to  which  reference  has  been  made  the  net  in- 
come would  have  been  if  there  had  been  no  interruption, 
forms  a  basis  for  a  reasonably  certain  estimate  of  the  amount 
of  the  profits  which  the  plaintiff  has  lost.  One,  however, 
who  would  avail  himself  of  this  exception  to  the  general 
rule,  must  bring  his  proof  within  the  reason  which  warrants 
21220— VOL  2—07  M 7 


98 


111   FEDERAL  REPORTER,   99. 


Opinion  of  the  Court. 

the  exception.  He  who  is  prevented  from  embarking  in  a 
new  business  can  recover  no  profits,  because  there  are  no 
provable  data  of  past  business  from  which  the  fact  that 
anticipated  profits  would  have  been  realized  can  be  legally 
deduced.  1  Sedg.  Dam.  §  183 ;  Red  v.  City  Council^  25  Ga. 
386;  Kenny  v.  Collier.  79  Ga.  743,  8  S.  E.  58;  Greene  v. 
Williams,  45  111.  206;  Hair  v.  Barnes,  26  111.  App.  580; 
Morey  v.  Light  Co.,  38  N.  Y.  Super.  Ct.  185.  And  one  who 
seeks  to  recover  for  the  loss  of  the  anticipated  profits  of  an 
established  business  without  proof  of  the  expenses  and  in- 
come of  the  business  for  a  reasonable  length  of  time  before 
as  well  as  during  the  interruption  is  in  no  better  situation. 
In  the  absence  of  such  proof,  the  profits  he  claims  remain 
speculative,  remote,  uncertain,  and  incapable  of  recovery. 
In  Goebel  v.  Hough,  26  Iklinn.  252,  258,  2  N.  W.  847,  849, 
the  supreme  court  of  Minnesota  said : 

"  When  a  regular  and  established  business,  the  value  of  which  may 
be  ascertained,  has  been  wrongfully  interrupted,  the  true  general  rule 
for  compensating  the  party  injured  is  to  ascertain  how  nnich  less 
valuable  the  business  was  by  reason  of  the  interruption,  and  allow 
that  as  damages.  This  gives  him  only  what  the  wrongful  act  de- 
prived him  of.  The  value  of  such  a  business  depends  mainly  on  the 
ordinaiy  profits  derived  from  it.  Such  value  cannot  be  ascertained 
without  showing  what  the  usual  profits  are." 

The  truth  is  that  proof  of  the  expenses  and  of  the  income 
of  the  business  for  a  reasonable  time  anterior  to  and  during 
the  interruption  charged,  or  of  facts  of  equivalent  import, 
is  indispensable  to  a  lawful  judgment  for  damages  for  the 
loss  of  the  anticipated  profits  of  an  established  business. 
Gobel  V.  Hongh,  26  Minn.  252,  256,  2  N.  W.  847 ;  Chapman  v. 
Kirhy,  49  111.  211,  219;  1  Sedg.  Dam.  §  182;  Ingram  v. 
Lawson,  6  Bing.  N.  C.  212 ;  Shafer  v.  Wilson,  44  Md.  268, 278. 

Did  the  plaintiff  make  any  proof  of  this  character  at  the 
trial  below?  The  only  evidence  he  offered  relating  to  the 
damages  which  he  claimed  was  his  own  testimony,  and  he 
directed  this  to  four  elements  of  injury  which  he  evidently 
thought  tended  to  show  loss  of  profits,  viz.  loss  of  customers, 
diminution  of  supply  of  coal,  decrease  of  volume  of  business, 
and  the  amount  of  his  anticipated  profits  on  sales  that  he  did 
not  make.  According  to  his  testimony,  he  had  been  in  the 
business  of  buying  and  selling  coal  at  Kansas  City  since  1893. 
He  became  one  of  the  board  of  control  of  the  coal  club  in  1896. 


CENTBAL  COAL  <&  COKE   CO.  V.  HABTMAN. 


99 


Opinion  of  the  Court 

and  [100]  withdrew  from  it  in  1897.  After  his  withdrawal 
he  could  not  procure  two  kinds  of  bituminous  coal  known 
as  "  Salt  Fork  coal  "  and  "  Cherokee  coal  "  unless  he  paid  for 
it  a  price  only  50  cents  a  ton  less  than  the  price  to  the  con- 
sumers, notwithstanding  the  fact  that  the  retail  dealers  who 
were  members  of  the  club  could  buy  this  coal  at  a  price  about 
$1.25  per  ton  less  than  the  price  to  the  consumers.  The 
reason  why  he  could  not  buy  this  coal  at  the  same  rate  as  the 
members  of  the  club  was  that  they  controlled  the  coal  and  its 
price,  and  they  would  not  sell  it  to  him  at  that  price.  His 
only  testimony  as  to  his  loss  of  customers  was  that  before  he 
left  the  club  he  could  and  did  make  contracts  for  the  future 
delivery  of  this  coal ;  that  after  he  withdrew  he  did  not  dare 
to  do  so,  because  he  did  not  know  that  he  could  secure  it; 
that  there  was  some  trade  that  would  come  to  him  for  certain 
grades  of  coal;  that  he  could  not  give  these  grades  to  those 
who  came;  that  they  did  not  want  to  come  back,  because 
they  did  not  know  whether  they  could  get  the  coal  or  not; 
that  his  contract  business  on  car-load  lots  before  he  with- 
drew from  the  club  was  one  or  two  car  loads  a  month,  and 
that  he  did  not  know  what  it  was  on  wagon  loads.  He 
produced  no  contracts  he  had  ever  made.  He  named  no 
customer  with  whom  he  had  ever  had  a  contract,  no  customer 
whom  he  had  lost.  He  did  not  testify  how  many  customers 
had  left  him,  nor  the  amount  of  coal  which  any  or  all  of  them 
had  been  accustomed  to  buy  during  the  years  from  1893  to 
1897,  when  he  had  been  receiving  all  this  coal  which  he 
wished  to  procure.  Here  are  no  facts — no  data — from  which 
the  number  of  customers  or  the  amount  of  custom  which  he 
had  lost  can  be  lawfully  inferred,  none  which  make  the 
amount  of  the  contracts  for  future  delivery  which  he  did 
not  make  either  reasonably  or  unreasonably  certain,  no  basis 
for  even  a  fair  conjecture.  He  testified  that  he  did  not  know 
himself  what  his  customary  contract  business  was  and  he 
produced  no  evidence  from  which  the  jury  could  learn.  As 
to  his  transactions  in  Salt  Fork  and  Cherokee  coal,  he  testified 
that  before  he  left  the  association  he  was  selling  from  two  to 
three  car  loads  of  Salt  Fork  coal  per  week  during  the  winter 
time,  and  that  this  was  the  biggest  part  of  his  business, — 
nearly  half  of  it.     But,  when  the  account  books  of  the  cor- 


100 


111   FEDERAL  BEPOKTEB,   100. 
Opinion  of  the  Court 


poration  from  which  he  bought  this  coal  were  produced,  they 
disclosed  the  fact  that  he  purchased  only  four  car  loads  dur- 
ing November  and  December,  1896,  and  only  four  car  loads 
between  December,  1896,  and  August,  1897,  and  he  admitted 
that  this  might  be  a  true  statement  of  the  amount  of  this  coal 
which  he  handled  during  that  winter,  and  he  produced  no 
books  of  account,  no  bills,  no  checks,  no  other  evidence  to 
explain  the  wildness  of  his  conjecture  that  his  business  in 
this  coal  the  winter  before  its  interruption  was  from  26  to  39 
car  loads,  when  in  fact  it  did  not  exceed  8.    He  testified  that 
after  he  left  the  club  he  had  a  hard  time  to  get  Cherokee  coal, 
but  that  he  got  some  through  other  dealers,  and  that  his 
business  in  this  coal  was  two  or  three  cars  a  week  in  the 
winter  before  he  withdrew.    But  he  produced  no  evidence  to 
verify  this  statement,  and  no  proof  of  the  amount  of  the  de- 
crease of  this  business,  if  any,  caused  by  the  action  of  the 
club.    There  is  no  evidence  in  the  record  that  the  coal  club 
in    any    way    diminished    his    trade    in    any    other    coals 
[101]  than  the  Salt  Fork  and  the  Cherokee.    The  plaintitf 
testified  that  their  action  did  not  disturb  his  trade  in  the 
anthracite  and  semianthracite  coals,  and  that  his  business  in 
these  increased  after  the  interruption  of  his  trade  in  the  Salt 
Fork  and  Cherokee.    As  to  the  volume  of  his  general  busi- 
ness and  its  decrease  he  testified  that  the  better  grades  of 
coal  he  handled  were  in  the  association,  and  his  failure  to  get 
them  caused  his  business  to  run  down  so  that  he  had  hardly 
any ;  that  he  had  only  one  grade  of  coal  one  winter ;  and  that 
he  could  not  do  business  after  he  left  the  club  as  he  could  the 
winter  before.    But  he  produced  no  evidence  of  the  volume 
of  his  business,  of  its  income,  or  of  its  expenses  before  or 
after  the  interruption.    The  only  evidence  he  produced  as 
to  his  expected  profits  was  his  own  testimony  that  his  or- 
dinary profit  on  a  car  load  of  coal  was  from  $12  to  $20,  and 
that  he  had  his  own  place  of  business  and  his  own  teams. 
But  the  evidence  disclosed  the  fact  that  this  $12  to  $20  was 
the  difl'erence  between  the  amount  he  paid  for  a  car  load  of 
coal  and  the  amount  which  he  retailed  it  for,  and  that  it 
would  be  necessary  to  deduct  from  this  alleged  profit  the 
proper  proportion  of  the  expenses  of  hiring  the  teamsters, 
maintaining  the  teams  and  the  office,  handling  the  coal,  and 


CENTKAL   COAIi  &  COKE   CO.  V.  HABTMAN. 
Opinion  of  the  Court 


101 


operating  the  business,  before  the  actual  profit  could  be  ascer- 
tained ;  and  there  was  no  evidence  of  the  amount  of  these  ex- 
penses. The  plaintiff  testified  that  he  kept  a  ledger,  in  which 
he  entered  the  charges  of  coal  sold  on  credit,  and  that  he  had 
a  bank  account  and  a  bank  book,  but  he  said  that  he  had  no 
books  that  would  show  how  much  coal  he  handled  before  or 
after  the  interruption,  and  he  did  not  produce  either  his 
ledger  or  his  bank  book.  Here  are  a  few  extracts  from  his 
testimony  on  cross-examination  : 

nAl^wn^""!:  ^""^  S^'''*  ^""^  "^  ^°y  ^^**'^"«  as  to  the  amount  your  busi- 
?hnt  rwn^Ar^^^'  "^^^  ^'*"-  ^'  ^^«'  I  ^^'""^  I  ^^^  "lake  an  estimate 
wnniH  L  "^  Z  ^"""J  ''^^^  a  "^^^  ^«ss  d^ri^g  the  season.    Q.  That 

wou  d  be  your  estmiate?    A.  Yes,  sir.     Q.  But  you  can't  ten  these 

hnnJfi"^? •?'''''  '""""^  '^^''^  y^"  ^a^^^^d  l^«s  after  that  than  you  did 
handle  while  you  were  a  member  of  the  association,  or  before  you  were 

I  month^''*  ^  ^^"^'^^^"^^  ^""  ^^t^^^°  ^^^»^e  and  fifteeS  ^aS 
a  month.  *  *  *  Q.  And  you  can't  tell  the  jury  the  number  of 
cars  of  coal  that  you  handled  in  1898?    A.  No,  sir^  Q    All  that  vou 

?SJJrf  ^''v^^^^  ^^"  k^^^Jf  ."  ^«  ^  ""^^  ^^^«  tl^a^  it  was  in  the  year 
eft.  ♦  *  *  '.^®^'^  ^'  ^"*  ^^w  ^^^^  less  you  can't  tell?  A.  No. 
sir.  •    Q.  You  haven't  got  any  actcount,  or  any  paper,  or  anv 

book  or  anything  on  earth  to  show  how  much  you  took  m?  or  how 
much  your  expenses  were,  or  how  much  you  had  to  pay  for  your  coal? 
A.  I  haven't  got  it  here,  but  I  expect  I  could  come  pretty  near  telling 
you  what  it  was  Q.  You  haven't  even  got  your  cLh  book,  to  show 
how  much  you  took  in  In  any  given  time,  have  you?  A.  No,  sir. 
g.  Or  your  journal  to  show  how  much  you  paid  out?  A.  No,  sir. 
g.  You  haven  t  got  any  record  to  show  how  much  coal  you  bought  or 
who  you  got  it  from,  or  when  it  was  received?    A.  Nof  sir     ♦     ♦    I 

«Vnml!.?  Jr^?'*'"'^,  ^'""^  ""^y  information  from  your  books  as  to  the 
amount   of   Cherokee   coal   you    handled?    A.  No,    sir.    Q.  And   the 

O  So  'wp  wiif '•  ^'l  1,"  ""^^l^^  f^^^  y^"  ^^'^^^  handled?  A.  Yes.  sir. 
Q.  So  we   will   just   have  to  take  your  word   for   it?    A.  Yes    sir 

A*  ?t^^«^^*  ^""^  ^^*  a  bank  book?  A.  Yes,  sir.  Q.  Where  is  ihat? 
A.  It  IS  over  m  my  office.  Q.  Haven't  you  got  the  Fweiffh  billsl  for 
your  coal?  A.  I  had  them,  but  I  destroyed  them  Q  Siven't  /ou 
got  those  in  1898,  when  you  thought  about  commencing  this  suit? 
t  iu"^^.**^''^'  ^"^^  ^  ^i<l"'t  look  after  that  part  of  the  business 
Q  Then  the  result  of  it  all  is  that,  so  far  as  the  extent  of  your  S 
ness  18  concerned  at  any  time,  we  can't  get  any  light  as  to  that  from 

ar L^°1  S  .e%theS^=  "°*  ^^'"  ^™-  --  ^'^^  ^'^-"" 

[102]  These  excerpts  from  the  testimony  demonstrate  the 
fact  that  the  basis  of  this  judgment  is  nothing  but  the  mere 
guess  of  an  interested  witness.  Litigants  cannot  be  per- 
mitted to  estimate  the  money  out  of  the  coffers  of  their 
opponents  in  this  reckless  way.  This  plaintiff  first  estimated 
that  he  had  lost  the  sale  of  from  9  to  13  cars  of  Salt  Fork 
coal  per  month  during  the  winter  season  after  he  withdrew 
from  the  club,  and  the  same  number  of  cars  of  Cherokee  coal, 


102 


lU   FEDERAL  BEPOBTEB,  102. 


Opinion  of  the  Court 

or  in  the  aggregate  from  18  to  26  cars  per  month.  On  cross- 
examination  he  guessed  again,  and  estimated  that  his  loss 
was  only  from  12  to  15  cars  a  month.  When  the  books  of 
the  Salt  Fork  Coal  Company  were  produced,  and  showed 
that  his  purchases  of  that  coal  in  the  winter  of  1896  had 
averaged  less  than  2  cars  per  month,  he  conceded  that  this 
might  be  correct,  and  that  he  might  have  overestimated  his 
trade  in  this  coal  before  he  withdrew  from  the  association  at 
least  300  per  cent.;  that  he  had  guessed  9  to  13  cars  per 
month,  when  it  was  only  2.  Testimony  of  this  character  is 
nothing  but  conjecture,  and  it  presents  no  substantial  evi- 
dence to  make  certain  the  profits  that  were  lost,  if  any.  Ex- 
pected profits  are,  in  their  nature,  contingent  upon  many 
changing  circumstances,  uncertain  and  remote  at  best.  They 
can  be  recovered  only  when  they  are  made  reasonably  certain 
by  the  proof  of  actual  facts  which  present  data  for  a  rational 
estimate  of  their  amount.  The  speculations  and  conjectures 
of  witnesses  who  know  no  facts  from  which  a  reasonably  ac- 
curate estimate  can  be  made  form  no  better  basis  for  a 
judgment  than  the  conjectures  of  the  jury  without  facts. 
The  plaintiff  in  this  case  had  his  bank  account  at  his  com- 
mand, which  would  certainly  have  given  him  some  indica- 
tion of  the  volume  of  his  business  before  and  after  the  inter- 
ruption of  which  he  complained.  He  had  his  ledger,  in 
which  he  testified  that  he  had  entered  the  charges  of  the  coal 
which  he  had  sold  on  credit.  The  bank  account  and  the 
ledger  account  together,  if  properly  kept,  would  have  given 
at  least  an  approximate  statement  of  the  value  of  the  coal 
which  he  handled,  because  one  would  have  shown  his  cash 
receipts,  the  other  his  charges  for  coal  sold  on  credit,  and 
the  payments  he  received  for  that  coal,  and  a  careful  com- 
parison of  the  two  would  have  enabled  any  intelligent  book- 
keeper to  at  least  approximate  the  value  of  his  business. 
These  books  were  not  produced.  The  indispensable  facts 
to  warrant  a  recovery  of  the  expected  profits  of  an  estab- 
lished business  were  not  established.  There  was  no  evidence 
of  the  amount  of  capital  in  the  business,  of  its  expenses  or 
of  its  income,  either  before  or  after  its  interruption.  There 
were  no  data  for  a  rational  estimate  of  the  profit?  at  any 
time  during  the  continuance  of  the  business;  nothing  from 


FOOT   V,   BUCHANAN. 


103 


Syllabus. 

which  the  jury  could  reasonably  infer  that  the  business  was 
profitable  before,  less  profitable  or  profitless  after,  the  plain- 
tiff's withdrawal  from  the  club.  Much  less  were  there  any 
facts  established  which  made  the  amount  of  the  expected 
profits  lost  reasonably  certain.  The  interested  witness  who 
alone  estimated  this  loss  himself  testified  that  he  knew  no 
facts  from  which  a  rational  finding  could  be  made,  and  his 
testimony  shows  that  his  estimates  were  nothing  but  the 
wildest  conjecture.  The  result  is  that  the  verdict  is  a  specu- 
lation of  the  jury,  based  on  the  conjectures  of  an  interested 
witness,  unsupported  by  the  proof,  or  the  [103]  knowledge 
of  any  facts  from  which  the  plaintiff's  loss,  or  its  amount, 
could  lawfully  or  rationally  be  inferred,  and  it  cannot  be 
sustained. 

The  conclusion  which  has  already  been  reached  upon  the 
sufficiency  of  the  evidence  of  damages  to  sustain  the  verdict 
renders  it  both  unnecessary  and  unwise  to  consider  or  discuss 
the  other  questions  in  this  case.  The  nature  of  the  evidence 
of  damages  introduced  and  withheld  by  the  plaintiff  renders 
it  improbable  that  it  will  ever  be  necessary  to  consider  the 
other  issues  of  law  which  counsel  have  discussed. 

The  judgment  below  is  reversed,  and  the  case  is  remanded 
to  the  court  below,  with  instructions  to  grant  a  new  trial. 


[156]  FOOT  V.  BUCHANAN,  UNITED  STATES  MAE- 

SHAL. 


(Circuit  Court,  N.  D.  Mississippi,  W.  D.    January  14,  1902.) 

1113  Fed,  156.] 

Witnesses — Evidence — Incriminating — Protection — Constitution — 
Statute. — Under  the  fifth  amendment  of  the  constitution  of  the 
United  States,  providing  that  no  person  shall  be  compelled  in  any 
criminal  case  to  be  a  witness  against  himself,  a  witness  before  the 
grand  jury  cannot  be  required  to  answer  as  to  his  participation  in, 
and  knowledge  of,  a  combination  to  regulate  and  control  the  price 
of  cotton  seed  and  the  product  and  price  of  oil  throughout  certain 
states,  in  violation  of  the  act  to  protect  trade  and  commerce  against 
unlawful  restraints  and  monopolies  (26  Stat.  209),  notwithstand- 
ing Rev.  St  §  860,  providing  that  no  evidence  obtained  from  a  wit- 
ness by  means  of  a  judicial  proceeding  shall  be  given  in  evidence  or 


104 


113   FEDERAL  BEPORTER,   156. 
Statement  of  the  Case. 


In  any  manner  used  against  him  in  any  court  In  any  criminal  pro- 
ceeding, since  such  section  does  not  exempt  the  witness  from 
prosecution  for  the  offense  which  may  be  disclosed  by  his  testimony. 
Same—Interstate  Commerce  Act— Violation— Witness— Exemption 
ITBOM  Prosecution— Unlawful  Monopolies— Prohibition— Appli- 
cability of  Exemption.— Act  Cong.  Feb.  11,  1893  (27  Stat  443), 
providing  that  no  person  shall  be  excused  from  testifying  in  a  pro^ 
ceeding  growing  out  of  an  alleged  violation  of  an  act  to  regulate 
Interstate  commerce,  approved  February  4,  1887.  on  the  ground 
that  his  testimony  will  tend  to  incriminate  him,  and  that  no  person 
shall  be  prosecuted,  etc.,  on  account  of  anything  concerning  which 
he  may  testify  in  such  proceeding,  applies  only  to  proceedings  con- 
nected with  the  act  of  February  4,  1887,  and  does  not  apply  to  a 
prosecution  for  violation  of  the  act  to  protect  trade  and  commerce 
against  unlawful  restraints  and  monopolies  (26  Stat.  209),  so  as 
to  abrogate  in  relation  thereto  Const  U.  S.  Amend.  5,  providing  that 
no  person  shall  be  compelled  in  a  criminal  case  to  be  a  witness 
against  himself. 

Same— Question  for  Judgk.— Where  a  witness  claims  that  the  answer 
to  a  question  will  tend  to  Incriminate  him,  It  Is  not  for  the  witness, 
but  for  the  Judge,  to  decide  whether,  under  all  the  circumstances', 
such  might  be  the  effect,  and  the  witness  entitled  to  the  privilege  of 
silence. 

Same— Nature  of  Testimony.— Where  a  person  has  already  been  In- 
dicted for  an  offense  about  which  he  Is  to  be  examined  as  a  witness 
and  the  questions  asked  him  tend  [157]  to  connect  him  with  such 
offense,  the  testimony  sought  is  within  the  inhibition  of  Const 
U.  S.  Amend.  5,  providing  that  no  person  shall  be  compelled  in 
any  criminal  case  to  be  a  witness  against  himself. 

Same— Assurance  of  Safety— Relinquishment  of  Privilege.— 
Where  a  witness  before  a  grand  jury  declines  to  answer  certain 
questions,  and  is  taken  before  the  Judge,  who  assures  him  that  he 
can  safely  answer,  as  his  testimony  cannot  be  used  against  hhn 
he  Is  not  compelled  by  such  assurance  to  relinquish  his  constitu- 
tional privilege,  where  the  answer  may  tend  to  criminate  him. 

Same— Contempt— Commitment— Habeas  Corpus— Reijef.— Where  a 
witness  Is  committed  for  contempt  in  refusing  to  answer  all  of  a 
series  of  questions,  for  the  reason  that  the  answers  would  tend  to 
criminate  him,  and  some  of  the  answers  would  have  that  tendency, 
he  should  not  be  denied  relief  on  habeas  corpus  because  some  of 
the  questions  might  be  safely  answered.* 

Habeas  Corpus. 

iMwrmce  Foot  was  subpoenaed  as  a  witness  before  the  grand  lurv 
52^  t^^  district  court  of  the  United  States  for  the  Western  division  of 
the  Northern  district  of  Mississippi.    He  was  sworn  and  examined 


»  Syllabus  copyrighted,  1902,  by  West  Publishing  Co7 


FOOT   V.   BUCHANAN. 


105 


Statement  of  the  Case. 

in  relation  to  violations  of  an  act  of  congress  approved  July  2,  1890, 
entitled  "An  act  to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopolies"  (26  Stat.  209).  This  act  is  intended  to 
suppress  conspiracies  or  trusts  in  restraint  of  trade,  and  it  provides 
that  every  person  who  shall  violate  its  provisions  shall,  on  convic- 
tion, be  punished  by  fine  not  exceeding  $5,(X)0,  or  by  imprisonment 
not  exceeding  one  year,  or  both,  in  the  discretion  of  the  court.  The 
assistant  United  States  attorney  propounded  to  the  witness  a  num- 
ber of  questions,  among  which  were  the  following: 

"  State  whether  or  not  you  attended  any  meeting,  called  either  at 
Memphis  or  New  Orleans  or  Meridian  or  elsewhere,  in  the  early  part 
of  this  fall,  or  at  any  time  within  the  past  eighteen  months,  to  dis- 
cuss fixing  a  price  upon  cotton  seed,  or  the  products  of  cotton  seed? 

"  Has  your  mill,  or  any  other,  to  your  knowledge,  contributed 
anything  to  the  selection  of  a  committee  whose  duty  it  is  to  see  that 
the  various  mills  in  the  states  of  Mississippi,  Louisiana,  and  Ten- 
nessee keep  up  a  uniform  rate  on  cotton  seed  and  its  products? 

"  If  your  mill  should  immediately  advance  the  price  of  cotton 
seed,  or  lower  the  price  of  products,  would  you  be  subject  to  any 
sort  of  forfeiture,  censure,  or  supervision  from  any  source  whatever? 

*'  Is  there  any  sort  of  understanding  existing  between  the  mills  in 
Mississippi,  Tennessee,  or  Louisiana,  either  written  or  verbal,  by 
which  the  various  mills  are  to  be  allowed  to  press  a  certain  amount 
of  seed ;  and,  in  the  event  any  greater  amount  is  pressed  by  any  mill, 
is  there  any  obligation  on  the  part  of  such  mill  to  account  for  the 
same  to  any  committee  whose  duty  it  is  to  look  after  such  matters? 

"  Is  it  not  a  fact  that  within  the  past  six  months  one  oil  mill  will 
not  invade  what  is  known  as  the  'territory'  of  another  oil  mill  to 
purchase  seed;  and  is  it  not  a  fact  that  all  the  mills  in  a  certain 
territory  have  an  agreement  whereby  each  day,  or  every  few  days, 
they  communicate  with  each  other  over  the  telephone,  by  letter,  or 
otherwise,  and  inform  each  other  what  they  are  paying  for  seed,  or 
what  they  intend  to  pay  next  day  or  next  week,  and  by  virtue  of  such 
communications  or  agreements  do  not  all  the  mills  pay  the  same 
price  for  seed  and  sell  all  products  within  such  territory  at  the  same 
price,  and  has  this  not  been  the  practice  this  fall? 

"During  the  past  six  months  has  there  existed  an  agreement  be- 
tween the  oil  mills  of  Memphis,  or  those  of  Mississippi,  Tennessee, 
and  Louisiana,  that  you  will  all  be  governed,  in  purchasing  cotton  seed 
and  selling  the  products  thereof,  by  the  Memphis  or  New  Orleans 
market,  and  do  you  strictly  adhere  to  said  agreement?  " 

The  witness  refused  to  answer  these  questions,  and  gave  as  the 
reason  for  his  refusal  that  "  in  answering  the  questions  he  would 
criminate  himself,  and  put  the  government  in  possession  of  informa- 
tion as  to  the  details  of  [158]  said  alleged  combine  and  agreement, 
*  and  the  names  of  parties  and  witnesses,  which  might  supply  the 
means  of  convicting  him  of  the  same  offense."  For  this  refusal  to 
answer,  on  report  of  the  grand  jury,  the  witness  was  carried  before 
the  district  court,  where  he  repeated  his  reasons  for  declining  to 
answer.  The  court  required  the  witness  to  return  to  the  grand  jury 
and  answer  the  questions,  and,  on  his  refusal  to  obey  the  order  of 
the  court  and  answer  the  questions,  he  was  committed  to  jail,  "  there 
to  remain  from  day  to  day  and  term  to  term  of  this  court  until  he 
shall  answer  said  interrogatories,  or  be  otherwise  discharged  by  due 
course  of  law."  Being  in  the  custody  of  the  United  States  marshal 
for  the  Northern  district  of  Mississippi  under  this  order  of  the  court, 
he  filed  a  petition  for  the  writ  of  habeas  corpus.  The  petition  alleges 
the  facts  which  have  been  stated,  and  also,  on  information  and 
belief,  that  the  petitioner  "at  the  time  of  his  refusal  to  answer  the 
questions  propounded  to  him  by  the  grand  jury  aforesaid,  and  at 


106 


113  FEDEEAL  REPORTER,   158. 
Opinion  of  the  Court 


^e  present  time,  stands  indicted  in  the  district  court  of  the  United 
States  at  Jaclison.  Mississippi,  for  the  same  identical  offense  which 
the  grand  jury  was  seeking  to  investigate  in  propounding  the  ques- 
tions aforesaid  to  your  relator."  The  writ  was  issued,  and  the  re- 
turn of  the  marshal  shows  that  the  petitioner  was  held  under  the 
said  order  of  the  court  The  United  States  attorney,  who,  by  order 
?l  ^5®,/""^  granting  the  writ  was  notified  of  the  proceedings,  filed 
the  following  addition  to  the  marshal's  return :  '*  We  admit  that  the 
questions  in  the  petition  were  asljed.  but  deny  that  the  defendant  is 
entitled  to  the  relief  sought  and  state  the  facts  to  be  that  the  de- 
fendant was  assured  by  the  court  that  no  information  given  by  him 
In  answer  to  the  questions  would  or  could  be  used  against  him  in 
any  prosecution  in  any  United  States  court  in  this  state.  And  we 
deny  that  the  defendant  knew  of  any  hidictment  against  him  at  the 
time  the  questions  were  asked,  etc.,  but  admit  that  he  was  under 
inaictment ' 

A.  K.  Foot  and  James  8tom  (/.  C.  Wtkm^  on  the  brief), 
for  petitioner. 

M.   A.   Montgomery^   United   States   Attorney,   for   re- 
spondent. 

Shelby,  Circuit  Judge  (after  stating  the  case  as  above). 

1.  It  is  a  rule  of  the  common  law  that  a  witness  will  not 
be  compelled  to  answer  any  question,  the  reply  to  which 
would  supply  evidence  by  which  he  could  be  convicted  of  a 
criminal  offense.    This  doctrine  was  firmly  implanted  in 
the  common  law  of  Great  Britain  and  of  the  colonies  long 
before  the  adoption  of  the  constitution  of  the  United  States. 
The  principle  is  held  so  sacred  in  this  country  that  it  is  em- 
bodied in  the  respective  constitutions  of  all  the  states,  as 
well  as  in  the  federal  constitution.    The  principle,  as  ap- 
plied to  this  case,  is  found  in  the  fifth  amendment  to  the 
constitution :  "  No  person  shall  be  compelled  in  any  criminal 
case  to  be  a  witness  against  himself."    The  question  here  is, 
does  this  provision  protect  the  petitioner  in  declining  to 
answer   the  questions   propounded   to  him?    The  general 
power  of  the  court  to  punish  a  witness  for  contempt  who 
refuses  to  answer  is  unquestioned.    But  that  power  is  lim- 
ited  by  the  language  quoted  from  the  constitution.    Any 
exercise  of  jurisdiction  or  power  violative  of  this  provision 
is  void,  and  the  witness  imprisoned  by  an  order  made  in 
.excess  of  the  court's  authority  is  entitled  to  be  discharged 
on  the  writ  of  habeas  corpus.    Ex  parte  Fiak,  113  U.  S.  713, 5 


FOOT   V,   BUCHANAN. 


Opinion  of  the  CJourt 


107 


Sup.  Ct.  724,  28  L.  Ed.  1117;  Eev.  St.  §  762.  Was  the  order 
of  the  district  court  requiring  the  petitioner  to  answer  these 
questions,  and  committing  him  for  his  refusal  to  answer,  in 
excess  of  the  court's  authority? 

In  1890  Charles  Counselman  was  subpoenaed  before  the 
United  [159]  States  grand  jury  for  the  Northern  district 
of  Illinois  which  was  engaged  in  investigating  alleged  viola- 
tions of  an  act  to  regulate  commerce,  approved  February  4, 
1887  (24  Stat.  379).  Questions  were  propounded  to  him, 
the  answers  to  which  would  tend  to  criminate  him.  He 
declined  to  answer,  and  was  carried  before  the  court.  The 
court  held  (Judge  Gresham  presiding)  that  section  860  of 
the  Revised  Statutes  of  the  United  States  provided  that  no 
evidence  obtained  from  a  witness  by  means  of  a  judicial 
proceeding  shall  be  given  in  evidence,  or  in  any  maimer  used 
against  him,  in  any  court  of  the  United  States,  in  any  crimi- 
nal proceeding,  and  that  he  was  fully  protected  by  this 
statute;  that  therefore  he  should  be  required  to  answer.  It 
was  held,  in  view  of  this  statute  (Rev.  St.  §  860),  that  the 
witness  could  not  claim  the  privilege  of  silence  under  the 
fifth  amendment  of  the  constitution.  Counselman's  peti- 
tion seeking  to  be  discharged  on  habeas  corpus  was  dis- 
missed, and  he  was  remanded  to  the  custody  of  the  marshal. 
In  re  Counselman  (C.  C.)  44  Fed.  268.  Counselman  took 
an  appeal  to  the  supreme  court.  The  decision  of  the  lower 
court  was  reversed.  The  supreme  court  held  that  the  wit- 
ness could  not  be  required  to  answer.  Referring  to  section 
860,  the  supreme  court  said: 

"  It  could  not  and  would  not  prevent  the  use  of  his  testimony  to 
search  out  other  testimony  to  be  used  in  evidence  against  him  or 
his  property  in  a  criminal  proceeding  in  such  court.  It  could  not 
prevent  the  obtaining  and  the  use  of  witnesses  and  evidence  which 
would  be  attributable  directly  to  the  testimony  he  might  give  under 
compulsion,  and  on  which  he  might  be  convicted,  when  otherwise, 
and  if  he  had  refused  to  answer,  he  could  not  possibly  have  l>een  con- 
victed." And  again:  "  We  are  clearly  of  opinion  that  no  statute  which 
leaves  the  party  or  witness  subject  to  prosecution  after  he  answers 
the  criminating  question  put  to  him  can  have  the  effect  of  supplanting 
the  privilege  conferred  by  the  constitution  of  the  United  States.  Sec- 
tion 860  of  the  Revised  Statutes  does  not  supply  a  complete  protection 
from  all  the  perils  against  which  the  constitutional  prohibition  was 
designed  to  guard,  and  is  not  a  full  substitute  for  that  prohibition. 
In  view  of  the  constitutional  provision,  a  statutory  enactment,  to  be 
valid,  must  afford  absolute  immunity  against  future  prosecutions  for 


108 


113  FEDERAL  KEPORTER,   159. 
Opinion  of  the  Court 


"Fro'^TUVr^lL^  T^e  c«urt  concluclod: 

and  of  an  the  anSeL*r^^^^^^^^^^  P^^^^^^on, 

the  appellant  was  ent  t  ed  toVJf^sen^LTA^''''^^  ""^  ^J^"'^"  *^^* 
L.  Ed.  lliq,  1114-11^  IJ.  fe.  54^  5G4r-o85,  12  Sup.  Ct.  195,  198-207,  35 

MDoflkt'  p^"^^^""^  J"^^^^t  ^f  the  supreme  court  the 
appellant,  Counselman,  was  discharged  from  custody. 

That  case  seems  conclusive  of  the  case  at  bar.    But  the 

Walker,  161  U.  S  591, 16  Sup.  Ct.  644,  40  L.  Ed.  819,  is  vi  J- 
tually  a  repeal  of  the  case  of  Counselman  v.  Hitclicoch:^  Is 
that  contention  true?    After  the  opinion  in  Counselman  v. 

itr    T^      '     f '       f^^  ^«^"nity  to  witnesses  in  certain 
^ses.    It  provides,  m  brief,  that  no  person  shall  be  excused 
from  testifying  m  interstate  commerce  actions,  or  from  pro- 
ducing books,  papers,  contracts,  etc.,  before  the  interstate 
commerce  commission,  or  in  any  cause  or  proceeding,  crimi- 
nal  or  otherwise,  based  upon  or  growing  out  of  any  alleged 
violation  of  the  act  of  congress  entitled  "An  act  to  re-ulate 
commerce,"  ap-    [160]    proved  February  4,   1887    on   the 
ground  or  for  the  reason  that  the  testimony  or  evidence  re- 
quired of  him  would  tend  to  criminate  him  or  subject  him  to 
a  penalty  or  forfeiture,  and  that  no  person  shall  be  prose- 
cuted or  subjected  to  any  penalty  or  forfeiture  on  account 
of  any  transaction,  matter,  or  thing  concerning  which  he 
may  testify  or  produce  evidence  before  said  commission,  or  in 
SlT!  \2  ^^!.f  ^^P«^^^'  «r  i^  a«y  such  case  or  proceeding, 
f  L    /lu    ;,      ^  supreme  court  having  decided  that  section 
860  of  the  Eevised  Statutes  did  not  confer  complete  indem- 
mty  on  witnesses,  this  act  was  evidently  passed  to  confer  such 
indemnity  m  the  cases  to  which  it  refers.    The  act  has  no 
application  to  the  case  at  bar.    It  is  confined  by  its  terms 
to  proceedings  connected  with  "An  act  to  regulate  commerce  » 
approved  February  4,  1887,  and  amendments  thereto.    The 
petitioner  in  the  case  at  bar  was  examined  before  the  grand 
jury  m  reference  to  offenses  under  "An  act  to  protect  trade 
and  commerce  against  unlawful  restraints  and  monopolies  " 
approved  July  2,  1890  (26  Stat.  209;  1  Supp.  Eev.  St.  p. 
762).    In  the  case  of  Brown  v.  Walker,  161  U.  S   591    16 
Sup.  a.  644,.  40  L.  Ed.  819,  cited  by  the  district  attorney, 


FOOT  v.   BUCHANAN. 


109 


Opinion  of  the  Court 
the  court  construed  the  act  of  February  11,  1893  (27  Stat. 
443).  The  court  held  (four  of  the  justices  dissenting)  that 
the  act  affords  absolute  immunity  to  the  witness  in  the  cases 
to  which  the  act  relates  against  prosecution,  state  or  federal, 
for  the  offense  about  which  the  witness  is  examined,  and 
deprives  the  witness  of  his  constitutional  right  to  refuse  to 
answer.  This  act,  as  we  have  said,  by  its  terms  is  confined 
to  a  certain  class  of  cases,  and  has  no  application  to  the  case 
at  bar.  There  is  no  statute  applicable  to  the  case  at  bar 
which  tends  to  protect  the  witness,  except  section  860  of 
the  Revised  Statutes,  and  that  has  been  held  by  the  supreme 
court  not  to  afford  the  protection  furnished  by  the  constitu- 
tion. The  principle  established  by  the  decision  in  Counsel- 
man  V.  Hitchcock,  so  far  as  it  is  applicable  to  the  case  at  bar, 
is  unaffected  by  the  opinion  of  the  court  in  Brown  v.  Walker, 
The  result  of  the  two  cases  is  (1)  that  since  the  statute  of 
February  11,  1893  (27  Stat.  443),  parties  or  witnesses  in 
cases  or  proceedings  under  the  act  of  February  4,  1887  (24 
Stat.  379),  to  regulate  commerce,  and  amendments  thereto, 
may  be  required  to  answer  questions  that  tend  to  criminate 
the  witness  or  party;  but  (2)  witnesses  or  parties  in  other 
cases  may  not  be  required  to  answer  criminating  questions, 
because  section  860  of  the  Revised  Statutes  does  not  afford 
complete  indemnity  to  the  witness  or  party.  The  first  result 
is  established  by  a  bare  majority  in  Brown  v.  Walker,  The 
second  proposition  is  established  without  dissent  in  Counsel- 
man  V.  Hitchcock. 

2.  It  is  true  that  the  witness  cannot  avoid  answering 
questions  upon  his  mere  statement  that  his  answers  to  them 
Avill  tend  to  criminate  him.  It  is  for  the  judge  to  decide 
whether  his  answer  will  reasonably  have  such  tendency, 
or  whether  it  will  furnish  an  element  or  link  in  the  chain  of 
evidence  necessary  to  convict  him.  In  determining  whether 
or  not  the  witness  is  entitled  to  the  privilege  of  silence,  the 
court  may  look  at  all  of  the  circumstances  of  the  case,  and 
determine  whether  or  not  there  is  reasonable  ground  to  appre- 
fI61|  hend  danger  to  the  witness  from  his  being  compelled 
to  testify.  If  the  fact  that  the  witness  is  in  danger  appears, 
great  latitude  should  then  be  allowed  to  him  in  judging  for 
himself  of  the  effect  of  any  particular  question.     A  question 


110 


113   FEDERAL  REPOBTER,   161. 


Opinion  of  the  Court 

ipMch  might  appear  at  first  a  very  slight  and  innocent  one 
might,  by  establishing  a  link  in  a  chain  of  evidence,  become 
the  means  of  convicting  the  witness.  Ex  parte  Irvine  (C. 
C.)  74  Fed.  954.  In  the  case  at  hmt  it  appears  that  the  de- 
fendant was  already  indicted  for  the  offense  about  which  he 
was  examined,  and  the  questions  tended  to  connect  him  with 
the  offense  for  which  he  is  indicted-  There  can  be  no 
doubt  that  under  such  circumstances,  when  the  questions 
are  such  as  seek  to  connect  him  with  the  crime  under  investi- 
gation, the  court  will  not  require  him  to  answer  them. 

S.  It  is  set  up  in  the  answer  filed  by  the  district  attorney 
that  the  petitioner,  when  carried  before  the  court  upon  his 
failure  to  answer  questions  before  the  grand  jury,  was  as- 
sured by  the  court  that  no  information  given  by  him  in  his 
answers  to  the  questions  would  or  could  be  used  against  him 
in  any  prosecution  in  any  court  of  the  United  States.  The 
petitioner  could  not  be  required  to  waive  his  constitutional 
privilege  upon  such  an  assurance  by  the  court.  He  has  a  ^ 
right  to  stand  upon  his  constitutional  privilege,  notwith- 
standing such  assurance,  and  to  remain  silent  whenever  any 
question  is  asked,  the  answer  to  which  may  tend  to  criminate 
him.    Temple  v.  Com,^  75  Va.  892. 

4,  It  is  argued  by  the  district  attorney  that  some  of  the 
questions  asked  (we  have  not  stated  them  all)  could  have 
been  answered  without  endangering  petitioner,  and  that,  if 
any  one  of  them  did  not  call  for  a  criminating  answer,  he 
is  not  entitled  to  relief.  We  can  not  accept  that  view.  He 
was  carried  before  the  court,  and  the  court  required  him  to 
answer  all  of  the  questions.  He  is  under  commitment  for 
refusal  to  answer  all.  It  was  one  examination,  relating  to 
one  subject,  and  the  questions  culminated  in  an  effort  to 
show  the  witness'  connection  with  the  misdemeanor  charged. 
Where  there  is  a  series  of  questions,  the  examiner  cannot 
"  pick  out  one,  and  say,  if  that  be  put,  the  answer  will  not 
criminate  him."  If  it  is  one  step  having  a  tendency  to 
criminate  him,  he  is  not  compelled  to  answer.  People  v. 
Mather^  4  Wend.  230,  254;  Paxton  v.  Douglas^  16  Ves.  240, 
243. 

The  act  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies  is  the  law  of  the  land,  and  should 


METC^VLF    V,   AMERICAN    SCHOOL   FURNITURE   CO.      Ill 

Statement  of  tbe  Case.  • 

be  enforced.  We  would  make  no  order  that  would  tend  to 
obstruct  its  proper  enforcement.  It  confers  jurisdiction  on 
the  United  States  courts,  and  provides  a  remedy  in  a  civil 
action  "  by  way  of  petition  setting  forth  the  case,  and  pray- 
ing that  such  violation  shall  be  enjoined  or  otherwise  pro- 
hibited." 26  Stat.  209,  §4.  This  provision  does  not  pre- 
vent the  criminal  prosecution  of  those  guilty  of  its  viola- 
tion. But  the  procedure  against  violators  of  the  act  must 
conform  to  law.  The  penalties  of  fine  and  imprisonment 
provided  by  the  act  may  be  imposed  by  the  same  procedure 
sustained  by  the  same  kind  of  evidence,  either  direct  or  cir- 
cumstantial, that  is  admissible  in  prosecutions  for  other 
misdemeanors,  and  it  ought  not  to  be  necessary,  and  cer- 
tainly is  [162]  not  permissible,  to  resort  to  methods  in  con- 
flict with  the  constitutional  rights  of  the  citizen. 

It  is  ordered  that  the  petitioner,  Lawrence  Foot,  be  dis- 
charged from  custody.     Petitioner  discharged. 

Pardee  and  McCormick,  Circuit  Judges,  who  were  pres- 
ent at  the  hearing  of  this  case,  concur  in  this  opinion. 


[1030 J  METCALF   v.  AMERICAN  SCHOOL  FURNI- 

TURE  CO.  ET  AL.« 

(Circuit  Court  of  Appeals,  Second  Circuit.    February  4,  1902.) 

[113  Fed.,  1020.] 

Appeal  from  the  Circuit  Court  of  the  United  States  for 
the- Western  District  of  New  York 

Frederick  Seymour  for  appellant. 

Before  Wallace,  Lacombe,  and  Shipman,  Circuit  Judges. 

Per  curiam.  Decree  affirmed  in  open  court,  with  instruc- 
tions to  allow  plaintiff  30  days  to  amend,  on  payment  of  costs. 
For  opinion  below,  see  108  Fed.  909.^ 

«  Demurrers  to  bill  as  originally  filed  sustained  by  the  Circuit  Court 
(108  Fed.,  909).  See  p.  75.  Decree  affirmed  by  the  Circuit  Court  of 
Appeals,  Second  Circuit  (113  Fed.,  1020).  Amended  bill  dismissed 
(122  Fed.,  115).    See  p.  234. 

»  Copyrighted,  1902,  by  West  Publishing  Co. 


112 


115   FEDEKAL  BEPOBTEK,  27. 


Statement  of  the  Case. 

[271  W.  W.  MONTAGUE  &  CO.  ET  AL.  u.  LOWRY 

ET  AL.« 

(Circuit  Court  of  Appeals,  Nintli  Circuit    February  17,  1902.) 

[115  Fed.,  27.) 
Monopolies — ^Anti-Trust  Act — Combination  in  Restraint  of  Inter- 
STATE  Commerce.— Tlie  Tile,  Mantel  &  Grate  Association  of  Cali- 
fomia  was  organized  by  defendants,  who  were  dealers  in  tiles  and 
similar  articles,  for  the  declared  purpose  of  uniting  "  all  acceptable 
dealers"  in  tiles,  fireplace  fixtures,  and  mantels  in  San  Francisco 
and  vicinity  (within  a  radius  of  200  miles),  and  all  American 
manufacturers  of  tiles  and  fireplace  fixtures.  The  articles  prescribed 
that  other  local  dealers  who  had  an  established  business  and 
carried  a  stock  of  a  stated  value,  and  who  were  "acceptable," 
might,  on  motion  of  a  member,  be  permitted  to  join,  and  that  all 
manpfacturers  of  tilCs  in  the  United  States  might  become  members 
by  signing  the  constitution  and  paying  an  entrance  fee.  The  local 
members  were  bound  by  the  articles  not  to  buy  goods  from  any 
manufacturer  who  was  not  a  member,  nor  to  sell  goods  to  other 
dealers  not  members,  at  less  than  list  price,  which  was  about 
double  the  market  price,  and  the  manufacturing  members  were 
bound  not  to  sell  to  any  dealer  within  the  prescribed  territory  who 
was  not  a  member.  Held,  that  such  association  was  a  combina- 
tion in  restraint  of  trade  among  the  states,  illegal  under  sec- 
tion 1  of  the  anti-trust  act  of  July  2,  1890  (26  Stat.  209),  and  also 
an  attempt  to  monopolize  a  part  of  the  trade  and  commerce  among 
the  states,  within  the  prohibition  of  section  2,  by  shutting  out  from 
such  trade  all  local  dealers  who  were  not  members,  and  that 
defendants  were  liable  in  damages,  under  section  7  of  the  act,  to 
such  a  dealer  to  whom  a  manufacturer  in  another  state  refused 
to  sell  tiles,  as  it  had  previously  done,  on  the  sole  ground  that 
such  dealer  was  not  a  member  of  the  association.^ 

In  Error  to  the  Circuit  Court  of  the  United  States  for  the 
Northern  District  of  C«ilif  ornia. 
See  106  Fed.  38. 

The  writ  of  error  in  this  case  is  brought  to  review  the  judgment 
of  the  circuit  court  rendered  in  an  action  which  the  defendants  in 
error  brought  against  the  plaintiffs  in  error  under  the  act  of  con- 
gress of  July  2,  1890  (26  Stat.  209),  commonly  known  as  the  "  Sher- 

o  Begun  hi  the  Circuit  Court  for  the  Northern  District  of  California, 
and  there  entitled  Lowry  v.  Tile,  Mantel  d  Grate  Ass'n.  of  Cal.  De- 
murrer overruled  (98  Fed..  817).  See  vol.  1,  p.  995.  Charge  to  jury 
(106  Fed.,  38).  See  p.  53.  Judgment  affirmed  by  the  Circuit  Court 
of  Appeals,  Ninth  Circuit  (115  Fed.,  27),  where  the  title  of  the  case 
was  changed  to  Montague  d  Co.  v.  Lowry.  Affirmed  by  Supremo 
Court  (193  U.  S.,  38).    See  p.  327. 

»  Syllabus  copyrighted,  1902,  by  West  Publishing  Co. 


W.   W.    MONTAGUE   &   CO.   V,  LOWRY. 
Statement  of  the  Case. 


113 


man  Anti-Trust  Act."  The  complaint  alleged  that  the  plaintiffs 
therein  had  been  injured  in  their  business  by  reason  of  the  illegal 
combination  between  the  defendants  therein  made  under  the  name 
of  the  Tile,  Mantel  &  Grate  Association  of  California.  The  sub- 
stantial facts  alleged  in  the  complaint  and  proved  on  the  trial  were 
that  for  a  number  of  years  prior  to  the  year  1898  the  defendants  in 
error  had  been  engaged  in  the  business  of  buying  and  selling  and 
setting  tiles,  mantels,  [28]  and  grates  in  the  city  of  San  Francisco, 
and  that  the  tile  which  they  used  in  their  business  was  purchased 
from  some  of  th3  various  tile  manufacturers  in  the  states  of  Ohio, 
Indiana,  Kentucky,  New  Jersey,  and  Pennsylvania,  who  subsequently 
entered  into  the  association,  there  being  no  manufactures  of  tiles 
in  the  state  of  California;  that  by  industry  and  attention  thereto  the 
defendants  in  error  had  established  a  profitable  business;  that  in 
the  year,  1898  the  plaintiffs  in  error  formed  the  association,  the  object 
of  which,  as  declared  in  its  articles,  was  "to  unite  all  acceptable 
dealers  in  tiles,  fireplace  fixtures,  and  mantels  in  San  FrancisL-o  and 
vicinity  (withm  a  radius  of  two  hundred  miles),  and  all  American 
manufacturers  of  tiles,  and  by  frequent  interchange  of  ideas  advance 
and  promote  the  mutual  welfare  of  its  members."  As  to  membership, 
it  provided  that  any  individual,  corporation,  or  firm  engaged  in  the 
tile,  mantel,  and  grate  business  in  San  Francisco,  or  within  a  radius 
of  200  miles  therefrom,  having  an  established  business,  and  carrying 
not  less  than  $3,000  worth  of  stock,  and  having  been  proposed  by 
a  member  in  good  standing  and  elected,  and  having  signed  the  con- 
stitution and  by-laws,  and  paid  an  entrance  fee  of  $10,  might  become 
a  member.  It  was  also  provided  that  all  manufacturers  of  tiles 
and  fireplace  fixtures  throughout  the  United  States  might  become 
nonresident  members  upon  the  payment  of  an  entrance  fee  and  sign- 
ing the  constitution  and  by-laws.  Section  7  of  the  by-laws  forbade 
members  of  the  association  to  purchase  goods  from  any  manufac- 
turer unless  the  latter  were  a  member  of  the  association,  and  forbade 
them  to  "  sell  or  dispose  of,  directly  or  indirectly,  any  unset  tile  for 
less  than  list  prices  to  any  person  or  persons  not  a  member  of 
this  association,  under  penalty  of  expulsion  from  the  association." 
It  provided,  further,  that  any  manufacturer  selling  goods  to  others 
than  members  of  the  association  should  forfeit  membership.  It  was 
shown  that  the  list  price  referred  to  in  section  7  was  a  nominal 
catalogue  price  of  goods  fixed  by  the  manufacturers  for  convenience 
but  that  in  selling  to  members  of  the  association,  and,  prior  to  form- 
ing the  association,  in  selling  to  the  trade  generally,  the  manufac- 
turers had  allowed  large  discounts  from  the  list  prices  amoimting 
to  something  more  than  50  per  cent,  thereof.  The  defendants  in 
error  alleged  in  their  complaint  that  it  required  the  imanimous  con- 
sent of  the  association  to  become  a  member  thereof,  and  that  by 
reason  of  certain  business  difficulties  there  were  members  of  the 
association  who  were  antagonistic  to  them,  and  who  would  not  have 
permitted  them  to  join  if  they  had  applied,  and  that  they  were  not 
eligible  to  join  the  association  for  the  further  reason  that  they  did 
not  carry  at  all  times  stock  of  the  value  of  $3,000.  They  also  alleged 
that  the  association  constituted  a  trust  and  conspiracy  in  restraint 
of  interstate  trade  and  commerce,  and  a  monopoly  of  the  grate,  tile 
and  mantel  trade  between  the  parties  engaged  therein.  The'  jury 
found  damages  for  the  defendants  in  error  in  the  sum  of  $500  and 
for  that  amount  judgment  was  rendered  in  their  favor,  and  for  the 
further  sum  of  $750  for  an  attorney's  fee,  which  was  allowed  bv 
the  court. 

21220— VOL  2—07  M 8 


114  115  FEDERAL.  BEPORTER,   28. 

Opinion  of  the  Court 

P.  F.  Dunn  and  Linforth'(&  Whitaker,  for  plaintiffs  in 
error, 

/.  C.  Campbell,  W.  H.  Mefson,  and  E.  W,  Campbell,  for 
defendants  in  error. 

Before  Gilbert  and  Koss,  Circuit  Judges,  and  Hawley, 
District  Judge. 

Gilbert,  Circuit  Judge,  after  stating  the  case  as  above, 
delivered  the  opinion  of  the  court. 

Two  questions  are  presented  upon  the  writ  of  error— First, 
did  the  association  constitute  a  combination  which  was 
within  the  prohibition  of  the  act  of  July  2,  1890?  And, 
second,  was  the  amount  of  the  attorney's  fee  allowed  by  the 
court  excessive?  In  answering  the  first  question,  we  must 
first  take  into  the  account  the  declared  purpose  of  the  asso- 
ciatfon.  It  was  formed  to  unite  all  acceptable  dealers  en- 
gaged in  the  tile,  grate,  and  mantel  business  in  San  Fran- 
[29]  Cisco,  and  within  a  radius  of  200  miles  therefrom,  and 
all  American  manufacturers  of  tiles.  In  its  scope  it  in- 
cluded upon  the  one  hand  every  manufacturer  of  tiles  wher- 
ever situate  in  the  United  States,  and  upon  the  other  the  six 
firms  of  local  dealers  who  joined  the  association  at  its  forma- 
tion, together  with  those  who  might  be  permitted  thereafter 
to  become  members.  The  defendants  in  error  were  not  in- 
vited to  enter  into  the  combination.  The  rules  prescribed 
that  others  in  the  same  line  of  business,  who  had  an  estab- 
lished business  and  carried  stock  of  the  value  of  $3,000,  and 
who  were  "  acceptable,"  might  upon  the  proposition  of  one 
who  was  already  a  member,  and  upon  the  vote  of  the  asso- 
ciation, be  permitted  to  join  the  combination.  The  evidence 
shows  that  the  defendants  in  error  after  the  formation  of 
the  association  made  efforts  to  purchase  tile  from  manufac- 
turers in  Indiana  with  whom  they  had  before  been  doing 
business,  and  that  their  orders  were  declined,  and  they  were 
notified  that  they  could  not  purchase  goods  from  the  manu- 
facturers unless  they  became  members  of  the  association. 
They  could  not  obtain  tile  from  the  local  dealers  in  San 
Francisco  unless  they  paid  the  "  list "  price,  which  was  more 


W.   W.    MONTAGUE   &   CO.    V.   LOWRY. 


115 


Opinion  of  the  Court. 

than  double  the  price  which  members  of  the  association  were 
required  to  pay. 

We  think  that,  in  the  light  of  these  facts,  the  association 
clearly  comes  within  the  prohibition  of  the  act  of  congress. 
It  has  a  direct  tendency  to  restrain  trade  between  the  differ- 
ent states  and  to  create  a  monopoly.  In  principle  it  would 
be  the  same  if  it  were  an  association  between  all  the  manu- 
facturers of  the  United  States  in  that  line  of  goods  and  a 
single  dealer  in  California,  whereby  all  other  resident  deal- 
ers were  shut  out  and  all  competition  between  local  dealers 
extinguished.  Section  1  of  the  act  of  July  2, 1890.  provides 
as  follows :  "  Every  contract,  combination  in  the  form  of 
trust  or  otherwise,  or  conspiracy  in  restraint  of  trade  or 
commerce  among  the  several  states  or  with  foreign  nations 
is  hereby  declared  to  be  illegal ;  "  and  it  proceeds  to  denounce 
a  penalty  against  any  one  who  shall  make  any  such  contract 
or  engage  in  any  such  combination  or  conspiracy.  Interstate 
commerce  "  includes  the  purchase,  sale  and  exchange  of 
commodities"  {Gloucester  Ferry  Co.  v.  Pemisylvania,  114 
U.  S.  203,  5  Sup.  Ct.  828,  29  L.  Ed.  158) ;  and  every  agree- 
ment which  has  the  tendency  to  restrain  the  purchase,  sale, 
and  exchange  of  commodities  is  brought  within  the  prohibi- 
tion of  the  statute  {Addyston  Pipe  c5  Steel  Co.  v.  TJ.  S.,  175 
U.  S.  238,  20  Sup.  Ct.  96,  44  L.  Ed.  136) .  The  combination 
in  the  case  before  the  court  evidently  tended  to  restrain 
trade.  The  defendants  in  error  who  had  been  regular  pur- 
chasers of  goods  from  the  manufacturers  were  shut  out  from 
dealing  with  them  from  the  time  when  the  association  was 
formed.  Their  orders  to  the  manufacturers  for  goods  were 
rejected  for  the  express  reason  and  for  no  other  reason  than 
that  they  were  not  members  of  the  association. 

The  tendency  of  the  combination  was  also  to  create  a 
monopoly  in  the  hands  of  the  local  members  thereof.  Sec- 
tion 2  of  the  act  includes  within  its  prohibition  "  every  per- 
son who  shall  monopolize  or  attempt  to  monopolize  or  con- 
spire with  any. other  person  or  persons  to  monopolize  any 
part  of  trade  or  conmierce  among  the  several  states  or  with 
foreign  nations."  The  combination  in  the  case  before  the 
court  [30]  was  not  one  such  as  might  lawfully  have  been 
made  between  the  residents  of  a  single  state  for  the  purpose 


116 


115  FEDEBAL  BEPOBTEB,  30. 


Opinion  of  the  Court 

of  regulating  the  me&ods  of  conducting  their  business  or  fix- 
ing the  prices  of  goods  or  for  other  legitimate  purposes,  such 
m  was  sustained  by  the  court  in  U.  S,  v.  E.  C,  Knight  Co,, 
156  U.  S.  1,  15  Sup.  Ct  249,  39  L.  Ed.  325,  where  it  wus 
held  that  an  agreement  between  manufacturers  in  a  state 
bore  no  distinct  relation  to  commerce  between  the  states  or 
with  foreign  nations,  but  it  is  one  that  brings  within  its 
scope  not  only  local  dealers,  but  all  the  wholesale  dealers 
in  the  same  kind  of  goods  in  all  the  states.    Said  the  court 
in  II,  S.  V.  E,  a.  Knight  Co,,  156  U.  S.  16,  15  Sup.  Ct.  255, 
S9  L.  Ed.  325 :   "  It  is  not  essential  that  the  result  of  the  com- 
bination be  a  complete  monopoly.    It  is  sufficient  if  it  merely 
tends  to  that  end  and  to  deprive  the  public  of  the  advantages 
which  flow  from  competition."    The  local  members  were 
bound  by  the  articles  of  the  association  not  to  sell  goods  to 
nonmembers  except  at  prices  which  were  more  than  double 
the  prices  which  the  members  paid  and  which  all  dealers 
had  paid  before  the  association  was  formed,  and  the  manu- 
facturers were  bound  not  to  sell  to  nonmembers  at  any  price 
or  under  any  conditions.    The  testimony  indicated  that  the 
defendants  in  error  had  been  in  constant  competition  with 
the  San  Francisco  firms  which  entered  Into  the  association, 
and  had  bid  against  them  on  contracts  for  work.    The  for- 
mation of  the  association  shut  off  all  such  competition.    The 
defendants  in  error  were  powerless  to  compete  with  local 
firms  which  possessed  such  advantages  over  them.    The 
necessary  effect  of  the  combination  was  to  crowd  out  of 
business  every  local  dealer  who  was  not  a  member,  and 
thereby  to  create  a  monopoly  in  the  hands  of  those  who 
were.    It  is  argued  that  the  defendants  in  error  might  have 
joined  the  association  had  they  chosen  to  do  so,  and  that 
thereby  they  might  have  availed  themselves  of  the  privileges 
of  membership.    To  this  it  is  sufficient  to  say  that  it  does  not 
appear  that  they  would  have  been  admitted  to  membership 
if  they  had  applied.    Under  the  by-laws  they  were  not  eligi- 
ble, for  the  reason  that  they  did  not  at  all  times  carry  the 
requisite  amount  of  stock,  and  if  they  had  possessed  the 
necessary  amount  of  stock  they  had  no  assurance  that  they 
were  "  acceptable  "  to  the  members.    On  the  contrary,  the 
fact  that  they  were  not  invited  to  enter  the  combination  when 


W.   W.   MONTAGUE  &   CO.   V.  LOWRY. 


117 


Opinion  of  the  Court. 

it  was  formed  was  a  distinct  intimation  to  them  that  they 
were  not  acceptable.  But  it  is  immaterial  whether  they 
would  or  would  not  have  been  admitted  into  the  combination. 
To  protect  their  business  and  secure  their  legal  rights  they 
were  not  obliged  to  submit  an  application  for  membership 
in  such  a  combination  with  the  possibility  of  its  rejection, 
or  to  submit  themselves  to  the  rules  and  exactions  of  the 
association.  It  is  clear,  also,  that  the  tendency  of  the  com- 
bination was  to  prevent  others  from  engaging  in  the  business. 
No  one  could  become  a  member  who  had  not  "  an  established 
business,"  and  it  is  too  evident  to  admit  of  denial  that  no 
one  could  establish  a  business  in  competition  with  the  mem- 
bers of  the  association  who  possessed  such  advantage  in 
dealing  with  the  manufacturers. 

It  is  earnestly  contended  that  the  case  in  its  principle 
comes  within  the  doctrine  of  Hopkins  v.  U,  jS.,  171  U.  S.  578, 
19  Sup.  Ct.  40,  43  L.  Ed.  290,  and  Anderson  v.  Same,  171  U. 
S.  604,  19  Sup.  Ct.  50,  [31]  43  L.  Ed.  300;  but  we  think 
it  is  clearly  distinguishable  from  those  cases.  In  the  Hop- 
kins Case  the  association,  which  was  claimed  to  have  been 
formed  in  violation  of  the  act,  was  a  local  voluntary  associa- 
tion of  men  whose  business  it  was  to  receive  at  Kansas  City 
consignments  of  cattle  shipped  from  owners  in  various 
statas,  and  to  feed,  prepare  for  market,  and  sell  (he  same, 
and  pay  the  owners  their  portion  of  the  proceeds  after  de- 
ducting charges  and  expenses.  The  rules  of  the  association 
forbade  members  to  buy  stock  from  one  who  was  not  a 
member  or  to  transact  business  with  any  person  who  violated* 
its  rules  and  regulations.  The  court  h^ld  that  the  business 
of  the  members  of  the  association  was  not  interstate  com- 
merce, and  that  the  agreements  or  contracts  relating  to 
their  business  were  not  in  restraint  of  interstate  trade,  for 
the  reason  that  trade  between  the  states  was  not  affected 
by  the  combination,  which  was  a  purely  local  one,  comprising 
only  members  of  the  state  in  which  it  was  formed.  The 
Anderson  Case  was  similar  to  the  Hopkins  Case,  with  the 
exception  that  the  members  of  the  association  were  pur- 
chasers of  certain  classes  of  live  stock  instead  of  agents  for 
the  sale  thereof.  There  was  no  association  or  combination 
between  such  purchasers  and  the  vendors  of  the  stock,  and 


118 


184  UNITED   STATES   REPORTS,  540. 
Syllabus. 


no  monopoly  was  created  or  was  intended  to  be  thereby 
created.  The  association  itself  transacted  no  business.  The 
court  said: 

"Those  who  are  members  thereof  compete  among  themselves  and 
with  others  who  are  not  members  for  the  purchase  of  the  cattle,  while 
the  association  itself  has  nothing  whatever  to  do  with  transportation 
nor  with  fixing  the  prices  for  which  the  cattle  may  be  purchased  or 
thereafter  sold.  ♦  *  *  A  lessening  of  the  amount  of  the  trade  is 
neither  the  necessary  nor  direct  effect  of  its  formation,  and  in 
truth  the  amount  of  that  trade  has  greatly  increased  since  the  asso- 
ciation was  formed,  and  there  is  not  the  slightest  evidence  that  the 
market  prices  of  cattle  have  been  lowered  by  reason  of  its  existence. 
There  is  no  feature  of  monopoly  in  the  whole  transaction." 

The  difference  between  those  eases  and  the  case  at  bar  is 
apparent.  The  resident  members  of  the  Tile,  Mantel  &  Grate 
Association,  while  they  may  compete  with  themselves,  have 
no  competition  with  those  who  are  not  members,  for  the 
latter  are  practically  excluded  from  doing  business  within 
the  portion  of  the  state  of  California  which  is  included  in 
the  prescribed  area;  and  instead  of  being  a  combination  be- 
tween purchaj-ers  only,  as  was  the  fact  in  the  Anderson  Case, 
it  is  a  combination  between  manufacturers  and  buyers  of 
different  states,  which  brings  together  on  the  one  hand  all 
the  wholesale  dealers  in  the  United  States  in  that  line  of 
goods,  and  on  the  other  hand  the  chosen  few  who  are  per- 
mitted to  obtain  goods  and  supply  the  local  demand. 

We  find  no  ground  for  disturbing  the  finding  of  the  circuit 
court  concerning  the  amount  of  the  attorney's  fee  to  be 
allowed  to  the  defendants  in  error. 

The  judgment  is  affirmed. 


[540]  CONNOLLY  v.  UNION  SEWER  PIPE  COM- 

ERROR  TO  THE  CIRCUIT  COURT  FOR  THE   NORTHERN  DISTRICT  OF 

ILLINOIS. 

No.  46.     Argued  April  22,  23,  1901.— Decided  March  10,  1902. 

[184   U.   S.,  540.] 

If  a  claim  is  made  in  the  Circuit  Ck)urt  that  a  state  enactment  is 
Inralid  under  the  Constitution  of  the  United  States,  and  that  claim 


•  Decision  In  the  Circuit  Court  (99  Fed.,  354).    See  p.  1. 


CONNOLLY    V.   UNION   SEWER   PIPE   CO. 


119 


Syllabus. 

is  sustained  or  rejected,  this  court  may  review  the  judgment,  at 
the  instance  of  the  unsuccessful  party. 

If  the  alleged  combination  in  this  case  was  illegal,  it  would  not  follow 
that  they  could,  at  common  law,  refuse  to  pay  for  pipes  bought 
for  them  under  special  contracts. 

The  contracts  between  the  plaintiflf  and  the  respective  defendants 
were  collateral  to  the  agreement  between  the  plaintiff  and  other 
corporations,  etc.,  whereby  an  illegal  combination  was  formed  for  the 
sale  of  sewer  pipe.  ^ 

The  first  special  defence  in  this  case,  based  alone  upon  the  principles 
of  the  common  law,  was  properly  overruled. 

The  special  defence,  based  upon  the  act  of  Congress  of  July  2,  1890, 
26  Stat  209,  was  also  properly  rejected.  That  act  does  not  declare 
illegal  or  void  any  sale  made  by  such  combination  or  its  agents  of 
property  acquired  for  the  purpose  of  being  sold,  such  property  not 
being  at  the  time  in  the  course  of  transportation  from  one  State  to 
another,  or  to  a  foreign  country ;  and  the  buyer  could  not  refuse 
to  comply  with  his  contract  of  purchase  upon  the  gi'ound  that  tite 
seller  was  an  illegal  combination,  which  might  be  resti*ained  or 
suppressed  in  tlie  mode  prescribed  by  the  act  of  Congress.^ 


[46  L.  ed.,  679.]  & 

[The  illegality,  at  common  law,  of  a  combination  formed  by  corpora- 
tions and  persons  in  restraint  of  trade,  does  not  preclude  it  from 
recovering  the  purchase  price  of  goods  sold  in  the  course  of  busi- 
ness.] 

[A  violation  of  the  Sherman  Anti-Trust  Act  of  July  2,  1890  (26  Stat. 
L.,  209,  chap.  041),  by  the  formation  of  a  combination  in  restraint 
of  trade,  by  which  a  penalty  is  incurred  under  the  statute,  does 
not  preclude  the  company  thus  illegally  formed  from  recovering  on 
collateral  contracts  for  the  purchase  price  of  goods.] 

[A  recovery  of  the  treble  damages  authorized  by  the  Sherman  Anti- 
Trust  Act  of  July  2,  1890,  §  7  (26  Stat.  L.,  209,  chap.  G47),  in  case 
of  injury  sustained  by  violation  of  the  act,  can  be  had  only  by 
direct  action,  and  not  by  way  of  set-off  in  an  action  brought  for  the 
price  of  goods  by  a  company  illegally  formed  in  violation  of  the 
act — especially  when  the  State  practice  does  not  permit  the  set-off 
of  unliquidated  damages.] 

[A  discrimination  in  favor  of  agricultural  products  or  live  stock  in 
the  hands  of  the  producer  or  raiser  made  by  the  Illinois  trust  act 


oThe  foregoing  syllabus  copyrighted,  1902,  by  the  Banks  Law  Pub- 
lishing Co. 

&  The  following  paragraphs  inclosed  in  brackets  are  taken  from  the 
syllabus  to  this  case  in  the  United  States  Supreme  Court  Reports, 
Book  46,  p.  679.  Copyrighted,  1902,  by  The  Lawyers'  Co-Operative 
Publishing  Co. 


120 


184  UNITED  STATES  REPORTS,   540. 


OplDlon  of  the  Court. 

of  June  20,  1893.  exempting  tbem  from  the  provisions  which  pro- 
hibit a  recovery  of  the  price  of  articles  sold  by  any  trust  or  com- 
Wnation  formed  In  restraint  of  trade  or  competition  in  violation 
^  that  act  renders  the  act  repugnant  to  the  provisions  of  the 
V.  S.  Const,  14th  Amend.,  in  respect  to  equal  protection  of  the 
laws.] 

[An  elimination  of  the  unconstitutional  portion  of  the  Illinois  trust 
act  of  June  20.  1803,  which  exempts  agriculturists  and  live-stock 
dealers  from  the  provisions  wWch  prohibit  combinations  in  re- 
straint of  trade,  can  not  be  made  without  bringing  these  classes 
of  persons  within  the  prohibitions  of  the  statute,  in  contravention 
of  the  legislative  intent,  and  therefore  the  entire  act  must  be  held 
Invalid.] 

The  case  is  stated  in  the  opinion  of  the  court. 

Mr.  Henry  D.  Coghlan  for  plaintiffs  in  error.  Mr.  Joseph 
A.  O^DonneU  was  on  his  brief, 

[Ml]  Mr.  fferhert  Hamlin  and  Mr.  Edwin  Walker  for 
defendant  in  error. 

Mr.  Justice  Harlan  delivered  the  opinion  of  the  court. 

The  Union  Sewer  Pipe  Company— a  corporation  organ- 
ized under  the  laws  of  Ohio  and  doing  business  in  Illinois- 
brought  its  action  against  Thomas  Connolly,  a  citizen  of  Il- 
linois, in  the  Circuit  Court  of  the  United  States  for  the 
Northern  District  of  Illinois,  on  two  negotiable  promissory 
notes  both  executed  at  Chicago  by  the  defendant;  one,  dated 
December  15,  1894,  the  other  dated  January  15,  1805,  and 
each  payable  to  the  order  of  the  plaintiff  corporation  ninety 
days  after  date  at  the  First  National  Bank  of  Chicago. 

These  notes  were  given  on  account  of  the  purchase  by  the 
defendant  from  the  plaintiff  of  sewer  pipe  commonly  known 
as  standard  Akron  pipe,  at  prices  agreed  upon  between  the 
parties. 

The  Pipe  Company  also  brought  an  action  in  the  same 
court  against  William  E.  Dee,  a  citizen  of  Illinois,  upon  an 
open  account  for  $2389.26,  the  value  at  agreed  prices  of  cer- 
tain pipe  purchased  by  him  from  the  plaintiff  in  June,  1896. 
The  plaintiff  supplied  the  pipe  under  a  written  contract  ex- 
ecuted between  it  and  the  defendant  in  Illinois  under  date  of 
August,  1895. 


CONNOLLY   V.   UNION   SEWEB  PIPE   CO. 


Opinion  of  the  Court 


121 


Each  of  the  defendants  filed  a  plea  of  the  general  issue, 
with  notice  of  special  defences  and  of  set-off. 

The  special  defences  in  each  case  were  substantially  the 
same.  The  notice  in  the  Connolly  case  was  that  the  defend- 
ant on  the  trial  of  the  action  would  rely  on  these  special 
matters : 

"  First.  That  the  plaintiff  is,  and  at  all  times  since  about 
the  first  day  of  January,  1893,  has  been  a  trust  or  combina- 
tion of  the  capital,  skill  and  acts  of  divers  persons  and  cor- 
porations carrying  on  a  commercial  business  in  the  States 
of  Ohio  and  Illinois  and  between  said  States  and  elsewhere 
in  the  United  States  of  America,  and  organized  for  the  ex- 
press purpose  of  unlawfully  and  contrary  to  the  common  law 
creating  and  carrying  out  restrictions  in  trade,  to  wit,  in  the 
trade  of  buying,  selling  and  otherwise  dealing  in  certain  ar- 
ticles of  merchandise,  to  wit,  sewer  and  drainage  pipes,  and 
also  for  the  express  purpose  of  [543]  unlawfully  and  con- 
trary to  the  common  law  limiting  the  production  of  said 
articles  of  merchandise  and  increasing  the  market  price  there- 
of;  and  also  for  the  express  purpose  of  unlawfully  and  con- 
trary to  the  common  law  preventing  competition  in  tlie  man- 
ufacture, making,  transportation,  sale  or  purchase  of  said 
articles  of  commerce ;  also  for  the  express  purpose  of  unlawful- 
ly and  contrary  to  the  common  law  fixing  standards  or  figures 
whepeby  the  prices  of  said  articles  of  merchandise  intended 
for  sale,  use  and  consumption  in  this  State  should  be  con- 
trolled and  established ;  and  also  for  the  express  purpose  of 
unlawfully  and  contrary  to  the  common  law  being  a  pre- 
tended agency  whereby  the  sale  of  said  articles  of  commerce 
should  and  might  be  covered  up  and  made  to  appear  to  be 
for  the  original  vendors  thereof,  and  so  as  to  enable  the  orig- 
inal vendors  or  manufacturers  thereof  to  control  the  whole- 
sale and  retail  price  of  such  articles  of  commerce  after  the 
title  thereto  had  passed  from  such  vendors  or  manufacturers ; 
and  for  the  further  express  purpose  of  unlawfully  and  con- 
trary to  the  common  law  making  and  entering  into  and  carry- 
ing out  a  certain  contract  or  certain  contracts  by  which  the 
several  persons  or  corporations  forming  the  plaintiff,  or 
being  the  pretended  stockholders  thereof,  to  wit,  have  bound 


122 


184   UNITED  8TAT1B  BEPORTS,   542. 


Opinion  of  the  Court. 

themselves  not  to  sell,  dispose  of  or  transport  said  article  of 
commerce  below  certain  common  standard  figures  or  card  or 
list  prices  in  excess  of  the  true  market  values  thereof,  and 
by  which  they  have  agreed  to  keep  the  prices  of  said  articles 
of  commerce  at  certain  fixed  or  graduated  figures,  and  by 
which  they  have  established  certain  settled  prices  of  said 
articles  of  commerce  between  themselves  and  others,  so  as 
to  preclude  a  free  and  unrestricted  competition  among  them- 
selves and  others  in  the  sale  and  transportation  of  said  ar- 
tides  of  commerce,  and  by  which  they  have  agreed  to  pool, 
combine  and  unite  any  interests  they  may  have  in  connec- 
tion with  the  sale  and  transportation  of  said  articles  of  com- 
merce so  that  the  prices  thereof  may  effect  advantageously 
to  themselves;  that  all  of  the  claims* of  the  plaintiff  against 
the  defendant  in  this  action  arise  wholly  out  of  and  are  in 
respect  of  sales  of  said  articles  of  merchandise  made  be- 
tween the  1st  day  of  January,  A.  D.  1893,  and  the  1st  day  of 
March,  1896,  to  this  defendant  by  [543]  the  plaintiff  in  the 
ordinary  course  of  its  business  as  such  a  trust  or  combina- 
tion acting  as  aforesaid,  and  that  this  action  is  brought  to 
recover  the  alleged  price  thereof  and  for  no  other  purpose. 

"  Secondly.  That  the  plaintiff  is  and  at  all  times  since  the 
1st  day  of  January,  1893,  was  a  combination  in  the  form  of  a 
trust,  in  restraint  of  trade  and  commerce  among  the  several 
States,  and  doing  business  as  such  throughout  the  United 
States  and  l^etween  the  States  of  Ohio  and  Illinois,  contrary 
to  the  provisions  of  an  act  of  Congress  of  date  of  July  2, 1890, 
and  entitled  ^Vn  act  to  protect  trade  and  commerce  against 
unlawful  restraints  and  monopolies,'  and  that  this  action  is 
brought  solely  to  recover  the  price  of  articles  of  merchandise, 
to  wit,  sewer  and  drainage  pipes,  sold  to  the  defendant  by  the 
plaintiff,  then  and  there  acting  and  doing  business  as  such  a 
combination,  as  aforesaid,  in  violation  of  the  provisions  of 
said  act. 

"  Thirdly.  That  the  plaintiff  is  and  at  all  times  since  the 
1st  of  January,  1893,  was  a  trust  doing  business  as  such  in  the 
State  of  Illinois  and  elsewhere,  contrary  to  the  provisions  of 
an  act  of  the  legislature  of  the  State  of  Illinois  entitled  'An 
act  to  define  trusts  and  conspiracies  against  trade,  declaring 


CONNOLLY   V,   UNION   SEWER   PIPE   CO. 


123 


Opinion  of  tlie  Court. 

contracts  in  violation  of  this  provision  void,  and  making  cer- 
tain acts  and  violations  thereof  misdemeanors,  and  prescrib- 
ing pmiishment  thereof  and  matters  connected  therewith, 
approved  June  20,  1893,  in  force  July  1,  1893;'  that  this 
action  is  brought  solely  to  recover  the  price  of  articles  of  mer- 
chandise, to  wit,  sewer  and  drainage  pipes,  sold  to  the  defend- 
ant by  the  plaintiff,  then  and  there  acting  and  doing  business 
in  violation  of  the  provisions  of  said  act,  and  that  the  defend- 
ant hereby  pleads  said  act  in  defence  to  this  action  and  the 
whole  thereof." 

The  set-offs  claimed  by  Connolly  were :  Treble  the  amount 
of  the  actual  damages  sustained  and  allowed  by  the  act  of 
Congress  of  July  2,  1890,  c.  G47,  known  as  the  Sherman  anti- 
trust act,  $56,970.44;  actual  damages  sustained  by  reason  of 
the  violation  by  the  plaintiff  of  the  provisions  of  the  Illinois 
statute  of  July  1,  1893,  $17,323.48 ;  and  for  money  had  and 
received  by  plaintiff  of  defendant  contrary  to  law,  $17,323.48. 

The  set-offs  claimed  bv  Dee  were  of  like  character  but  of 
larger  amounts. 

[544]  Both  cases  wel-e,  by  agreement,  submitted  to  the  same 
jury  and  were  treated  as  one  consolidated  case.  At  the  trial 
the  defendants  respectively  asked  leave  to  amend  their  notices 
of  special  defences,  but  leave  was  denied. 
.  The  Circuit  Court  disallowed  lx)th  the  first  and  second  of 
the  above  special  defences,  and  in  respect  of  the  third  its  de- 
cision was  that  the  Illinois  Trust  statute  of  1893  was  in  viola- 
tion of  the  Constitution  of  the  United  States.  It  consequently 
directed  the  jury  to  find  a  verdict  for  the  plaintiff  in  each 
case;  in  the  Connolly  case,  for  the  amount  of  the  two  notes 
sued  on;  in  the  Dee  case,  for  the  amount  of  the  plaintiff's 
open  account  against  him.  Verdicts  having  been  returned  as 
directed,  and  a  motion  for  new  trial  in  one  case  and  motions 
for  new  trial  and  in  arrest  of  judgment  in  the  other,  having 
been  overruled,  judgments  were  rendered  on  the  verdicts. 

1.  The  defendant  in  error  insists  that  these  cases  should 
have  gone  to  the  Circuit  Court  of  Appeals,  and  has  moved  on 
that  ground  that  the  writ  of  error  be  dismissed.  The  defence 
in  each  case  was  based  in  part  on  the  Illinois  statute  of  1893. 
The  plaintiff  insisted  at  the  trial  that  that  statnte  was  in  vio- 


184  UNITED   STATES   REPORTS,   54. 


Opinion  of  tlie  Court 

lation  of  the  Constitution  of  the  United  States,  and  its  posi- 
tion  was  sustained  by  the  Circuit  Court.    There  have  been 
suits  m  which  the  Circuit  Court  upon  the  claim  of  the  defend- 
ant has  applied  the  Constitution  of  the  United  States  to  the 
case  before  it  and  put  the  plaintiff  out  of  court.    Here,  the 
lilaintiff  claimed  that  the  state  enactment  upon  which  defend- 
ants relied  was  unconstitutional,  and  its  position  upon  that 
point  was  sustained.    In  Loeh  v.  Colombia  Township  Tnis- 
t€€B,  179  U.  S.  472,  477,  this  court  said:  "The  Circuit  Court 
of  Appeals  Act  does  not  declare  that  the  final  judgment  of  a 
Circuit  Court  in  a  case  in  which  there  was  a  claim  of  the  re- 
pugnancy of  a  state  statute  to  the  Constitution  of  the  United 
States  may  be  reviewed  here  only  upon  writ  of  error  sued  out 
by  the  party  making  the  claim.    In  other  words,  if  a  claim  is 
made. in  the  Circuit  Court,  no  matter  by  which  party,  that  a 
state  enactment  is  invalid  under  the  Constitution  of  the 
United  States,  and  that  claim  is  sustained  or  rejected,  then  it 
is  consistent  with  the  words  of  the  act,  and,  we  think,  in  har- 
mony with  its  object,  that  this  court  [545]  review  the  judg- 
ment at  the  instance  of  the  unsuccessful  party,  whether  plain- 
tiff or  defendant.    It  was  the  purpose  of  Congress  to  give 
opportunity  to  an  unsuccessful  litigant  to  come  to  this  court 
directly  from  the  Circtiit  Court  in  every  case  in  which  a  claim 
is  made  that  a  state  statute  is  in  contravention  of  the  Consti- 
tution of  the  United  States."    Upon  the  authority  of  that 
case,  the  motion  to  dismiss  is  denied. 

2.  The  defendant  Connolly  purchased  Akron  sewer  pipe 
from  the  plaintiff  and  for  the  agreed  price  thereof  gave  the 
two  promissory  notes  upon  which  he  was  sued.    The  defend- 
ant Dee  also  purchased  Akron  sewer  pipe  at  an  agreed  price 
as  shown  by  the  account  upon  which  he  was  sued.    Each 
defendant  disputed  his  liability  to  the  plaintiff  upon  the 
ground  that  prior  to  the  making  of  the  contracts  with  the 
defendants  respectively  for  pipe,  the  plaintiff  corporation 
entered  into  a  combination  with  certain  firms,  corporations 
and  companies  engaged  in  Ohio  in  the  manufacture  of  Akron 
pipe ;  which  combination,  it  is  alleged,  was  in  illegal  restraint 
of  trade  and  therefore  forbidden  by  the  principles  of  the  com- 
mon law  as  recognized  and  enforced  both  in  Ohio  and 
Illmois. 


CONNOLLY  V,   UNION   SEWER  PIPE  CO. 


125 


Opinion  of  the  Court. 

■  The  defence  cannot  be  maintained.  Assuming,  as  defend- 
ants contend,  that  the  alleged  combination  was  illegal  if 
tested  by  the  principles  of  the  common  law,  still  it  would  not 
follow  that  they  could,  at  common  law,  refuse  to  pay  for  pipe 
bought  by  them  under  special  contracts  with  the  plaintiff. 
The  illegality  of  such  combination  did  not  prevent  the  plain- 
tiff corporation  from  selling  pipe  that  it  obtained  from  its 
constituent  companies  or  either  of  them.  It  could  pass  a  title 
by  a  sale  to  any  one  desiring  to  buy,  and  the  buyer  could  not 
justify  a  refusal  to  pay  for  what  he  bought  and  received  by 
proving  that  the  seller  had  previously,  in  the  prosecution  of 
its  business,  entered  into  an  illegal  combination  with  others  in 
reference  generally  to  the  sale  of  Akron  pipe. 

In  Strait  v.  National  Harrow  Co,^  51  Fed.  Rep.  819,  a  suit  in 
which  the  plaintiffs  sought  a  permanent  injunction  restrain- 
ing the  defendant  from  instituting  or  prosecuting  any  action 
against  the  plaintiffs  for  the  infringement  of  letters  patent 
owned  by  the  defendant  covering  certain  improvements  in 
spring- tooth  har-  [546]  rows,  or  from  instituting  or  prose- 
cuting any  such  suits  against  any  person  using  the  spring- 
tooth  harrows  manufactured  by  the  plaintiffs,  the  court  said : 
"  In  substance,  the  complaint  shows  that  the  defendant  has 
entered  into  a  combination  with  various  other  manufacturers 
of  spring-tooth  harrows  for  the  purpose  of  acquiring  a 
monopoly  in  this  country  in  the  manufacture  and  sale  of  the 
same,  and,  as  an  incident  thereto,  has  acquired  all  the  rights 
of  the  other  manufacturers  for  the  exclusive  sale  and  manu- 
facture of  such  harrows  under  patents,  or  interests  in  patents, 
owned  by  them  respectively.  Such  a  combination  may  be  an 
odious  and  a  wicked  one,  but  the  proposition  that  the  plain- 
tiffs, while  infringing  the  rights  vested  in  the  defendant 
under  letters  patent  of  the  United  States,  is  entitled  to  stop 
the  defendant  from  bringing  or  prosecuting  any  suit  therefor 
because  the  defendant  is  an  obnoxious  corporation,  and  is 
seeking  to  perpetuate  the  monopoly  which  is  conferred  upon 
it  by  its  title  to  the  letters  patent,  is  a  novel  one,  and  entirely 
unwarranted.  The  party  having  such  a  patent  has  a  right  to 
bring  suit  on  it,  not  only  against  a  manufacturer  who  in- 
fringes, but  against  dealers  and  users  of  the  patented  article,' 
if  he  believes  the  patent  is  being  infringed ;  and  the  motive 


126 


1S4   UNITED  STATES  REPORTS,   540. 


Opinion  of  the  C^nrt. 

which  prompts  him  to  sue  is  not  open  to  judicial  inquiry, 
because,  having  a  legal  right  to  sue,  it  is  immaterial  whether 
his  motives  are  good  or  bad,  and  he  is  not  required  to  give  his 
reasons  for  the  attempt  to  assert  his  legal  rights.  '  The  exer- 
cise of  the  legal  right  cannot  be  affected  by  the  motive  which 
controls  it.'    Kif  v.  Youmam,  86  N.  Y.  329." 

In  Xutional  l^i'^tiUmg  Co.  v.  Cream  City  Importing  Co,^  86 
Wisconsin,  352.  :i")5,  which  was  an  action  to  recover  the  price 
of  goods  sold  and  delivei-ed,  one  .of  the  defences  was  that  the 
plaintiff  was  a  member  of  an  illegal  trust  or  combination  to 
interfere  with  the  freedom  of  trade  and  commerce.    The  Su- 
preme Court  of  Wisconsin  said :  "  The  fii-st  defence  does  not 
deny  any  allegation  of  the  complaint,  but  the  substance  of  it. 
is  that  the  sale  and  delivery-  of  the  goods  in  question  to  the  de- 
fendant was  void  as  against  public  policy,  because  the  vendor 
was  at  the  time  a  member  of  an  unlawful  trust  or  combi- 
nation, formed  to  unlawfully  interfere  with  the  freedom  of 
trade  and  com-  [5471  meree  and  in  restraint  thereof  and  to 
accomplish  the  ends  therein  set  forth.    .    ,    .    Conceding,  for 
the  purposes  of  this  case,  that  the  tnist  or  combination  in 
question  may  be  illegal  and  its  members  may  be  restrained 
from  carrying  out  the  purposes  for  which  it  Avas  created  by  a 
court  of  equity  in  a  suit  on  behalf  of  the  public,  or  may  be 
subject  to  indictment  and  punishment,  there  is,  nevertheless, 
no  allegation  showing  or  tending  to  show  that  the  contract  of 
sale  between  the  plaintiff  and  defendant  was  tainted  with  any 
illegality,  or  was  contrary  to  public  policy.    The  argument, 
if  any  the  case  admits  of.  is  that,  as  the  plaintiff  was  a  mem- 
ber of  the  so-called  '  trust,'  or  '  combination,'  the  defendant 
might  voluntarily  purchase  the  goods  in  question  of  it  at  any 
agreed  price,  and  convert  them  to  its  own  use,  and  be  justified 
in  a  court  of  justice  in  its  refusal  to  pay  the  plaintiff  for 
them,  because  of  the  connection  of  the  vendor  with  such  trust 
or  combination.    The  plaintiff's  cause  of  action  is  in  no  legal 
sense  dependent  upon,  or  affected  by  the  alleged  illegality  of 
the  trust  or  combination,  because  the  illegality,  if  any,  is 
entirely  collateral  to  the  transaction  in  question,  and  the 
court  is  not  called  upon  in  this  action  to  enforce  any  contract 
tainted  with  illegality,  or  contrary  to  public  policy.    The 
mere  fact  that  the  plaintiff  is  a  member  of  a  trust  or  combina- 


CONNOLLY   V,   UNION    SEWER   PIPE   CO. 


127 


Opinion  of  the  Court. 

tion,  created  with  the  intent  and  purposes  set  forth  in  the 
answer,  will  not  disable  or  prevent  it  in  law  from  selling 
goods  within  or  affected  by  the  provisions  of  such  trust  or 
combination,  and  recovering  their  price  or  value.  It  does  not 
appear  that  it  had  stipulated  to  refrain  from  such  transac- 
tions. A  contrary  doctrine  would  lead  to  most  startling  and 
•  dangerous  consequences." 

That  case  was  cited  with  approval  by  the  Circuit  Court 
of  Appeals  for  the  Seventh  Circuit  in  Dennehy  v.  McNvlta^ 
86  Fed.  Rep.  825,  827,  829.  In  that  case  the  court  said: 
"  The  mere  fact  that  the  corporation,  as  one  of  the  contract- 
ing parties,  may  constitute  an  unjust  monopoly,  and  that  its 
general  business  is  illegal — a  status  apparently  held  in  Dis- 
tilling di  Cattle  Feeding  Co.  v.  People^  150  Illinois,  448 — 
cannot  serve,  ipso  facto^  to  create  default  or  liability  on  its 
contracts  generally ;  nor  can  such  fact  be  invoked  collaterally 
to  affect  in  any  [548]  manner  its  independent  contract  obli- 
gations." Again:  "  In  the  case  of  an  injurious  combination 
of  the  nature  asserted  here,  the  remedy  is  by  well  recognized 
and  direct  proceedings:  but  one  who  voluntarily  and  know- 
ingly deals  with  the  parties  so  combined  cannot,  on  the  one 
hand,  take  the  benefit  of  his  bargain,  and,  on  the  other,  have 
a  right  of  action  against  the  seller  for  the  money  paid,  or 
any  part  of  it,  either  upon  the  ground  that  the  combination 
is  illegal,  or  that  its  prices  were  unreasonable." 

It  is  undoubtedly  the  general  rule  that  a  contract  made  in 
violation  of  a  statute  is  void,  and  no  recovery  can  be  had  upon 
it;  as  in  Embrey  v.  Jemison,  131  U.  S.  336,  348.  That  was 
an  action  upon  a  promissory  note  given  in  execution  of  a  con- 
tract for  the  purchase  of  "  future  delivery  "  cotton,  neither 
the  purchase  or  delivery  of  actual  cotton  being  contemplated 
by  the  parties,  but  the  settlement  in  respect  to  which  was  to 
be  on  the  basis  of  the  "  difference  "  between  the  contract  price 
and  the  market  price  of  cotton  futures,  according  to  the  fluc- 
tuations in  the  market.  The  contract  was  held  to  be  a  wager- 
ing contract,  and  therefore  illegal  and  void.  As  there  could 
be  no  recovery  upon  the  original  agreement  without  disclos- 
ing the  fact  that  it  was  illegal  and  one  that  could  not,  for  that 
reason,  be  enforced  or  made  the  basis  of  a  judgment,  it  was 
held,  that  attention  could  not  be  withdraAvn  from  the  ille- 


128 


184  UNITED   STATES  BEPOBTS^   548. 


Opinion  of  the  Court. 

gality  of  the  contract  by  the  device  of  taking  notes  for  the 
amount  claimed  under  that  contract.  So,  in  Miller  v.  Simmon. 
145  F.  S.  421,  427.  That  was  an  action  to  recover  the  value 
of  1125  gallons  of  wines  sold  in  Chicago  by  one  who  had  not 
obtained  a  license  to  sell  liquors  at  all— an  ordinance  of  that 
city  expressly  declaring  that  no  person,  firm,  or  corporation 
should  sell  or  offer  for  sale  "  any  spirituous  or  vinous  liquors 
in  quantities  of  one  gallon  or  more  at  a  time,  within  the  city, 
without  having  first  obtained  a  license  therefor,"  under  a 
penalty  of  not  less  than  $50  or  more  than  $200  for  each 
offence.  It  was  held  that  the  action  could  not  be  maintained, 
because  "  an  act  done  in  disobedience  to  the  law  creates  no 
right  of  action  which  a  court  of  justice  will  enforce."  In 
that  case  the  sale  from  which  it  was  attempted  to  imply  the 
promise  of  the  buyer  to  pay  for  what  [549]  he  received,  was 
itself  expressly  forbidden  by  law  under  a  penalty.  The 
action  there  was  upon  the  sale,  and  there  was  a  direct  connec- 
tion between  it  and  the  purchase  of  the  wines.  So,  again,  in 
McMiillen  v.  Eofman,  174  U.  S.  639,  654,  after  an  extended 
review  of  the  cases,  American  and  English,  the  court  said : 
"  The  authorities  from  the  earliest  time  to  the  present  unani- 
mously held  that  no  court  will  lend  its  assistance  in  any  way 
toward  carrying  out  the  terms  ^f  an  illegal  contract." 

In  the  present  case  other  considerations  must  control.  This 
is  not  an  action  to  enforce  or  which  involves  the  enforcement 
of  the  alleged  arrangement  or  combination  between  the  plain- 
tiff corporation  and  other  corporations,  firms  and  companies 
in  relation  to  the  sale  of  Akron  pipe.  As  already  suggested, 
the  plaintiff,  even  if  part  of  a  combination  illegal  at  common 
law,  was  not  for  that  reason  forbidden  to  sell  property  it  ac- 
quired or  held  for  sale.  The  purchases  by  the  defendants 
had  no  necessary  or  direct  connection  with  the  alleged  illegal 
combination ;  for  the  contracts  between  the  defendants  and 
the  plaintiff  could  have  been  proven  without  any  reference  to 
the  arrangement  whereby  the  latter  became  an  illegal  com- 
bination.  If,  according  to  the  principles  of  the  common  law, 
the  Union  Sewer  Pipe  Company  could  not  have  sold  or  passed 
title  to  any  pipe  it  received  and  held  for  sale,  because  of  an 
illegal  arrangement  previously  made  with  other  corporations, 
firms  or  companies,  a  different  question  would  be  presented! 


CONNOLLY   V.    UNION   SEWER   PIPE   CO. 


129 


Opinion  of  the  Court. 

But  we  are  aware  of  no  decision  to  the  effect  that  a  sale  sim- 
ilar to  that  made  by  the  present  plaintiff  to  the  defendants 
respectively  would  in  itself  be  illegal  or  void  under  the  prin- 
ciples of  the  common  law.  The  contracts  between  the  plain- 
tiff and  the  respective  defendants  were,  in  every  sense,  collat- 
eral to  the  alleged  agreement  between  the  plaintiff  and  other 
corporations,  firms  or  associations  whereby  an  illegal  combi- 
nation was  formed  for  the  sale  of  sewer  pipe. 

We  are  of  opinion  that  the  first  special  defence,  based  alone 
upon  the  principles  of  the  common  law,  was  properly  over- 
ruled. 

3.  The  special  defence  based  upon  the  act  of  Congress  of 
July  2, 1890,  c.  647,  26  Stat.  209,  was  also  properly  rejected. 

[550]  That  act  declares  illegal  "every  contract,  combination 
in  form  of  trust  or  otherwise,  or  conspiracy  in  restraint  of 
trade  or  commerce  among  the  several  States,  or  with  foreign 
nations  " — every  person  making  any  such  contract  or  engag- 
ing in  any  such  conspiracy  being  subject  to  a  fine  not  exceeding 
$5000,  or  to  imprisonment  not  exceeding  one  year,  or  to  both 
punishments  in  the  discretion  of  the  court.  §  1 .  So,  every  per- 
son monopolizing  or  attempting  to  monopolize,  or  combining 
or  conspiring  with  any  other  person  or  persons  to  monopolize, 
any  part  of  the  trade  or  commerce  among  the  several  States 
or  with  foreign  nations,  is  liable  by  that  act  to  the  like  penal- 
ties in  the  discretion  of  the  court.  §  2.  The  several  Circuit 
Courts  of  the  United  States  are  invested  with  jurisdiction  to 
prevent  and  restrain  violations  of  its  provisions.  §  4.  Any 
property  owned  under  any  contract  or  by  any  combination  or 
pursuant  to  any  conspiracy  (and  being  the  subject  thereof), 
and  being  in  the  course  of  transportation  from  one  State  to 
another,  or  to  a  foreign  country,  is  subject  to  be  forfeited, 
seized  and  condemned.  §  6.  By  another  section  it  is  declared : 
"Any  person  who  shall  be  injured  in  his  business  or  property 
by  any  other  person  or  corporation  by  reason  of  anything  for- 
bidden or  declared  to  be  unlawful  by  this  act,  may  sue  there- 
for in  any  Circuit  Court  of  the  United  States  in  the  district 
in  which  the  defendant  resides  or  is  found,  without  respect  to 
the  amount  in  controversy,  and  shall  recover  threefold  the 


21220— VOL  2—07  m- 


-9 


130 


ISI   UNITED   STATES   REPORTS,   550. 


Opinion  of  the  Conrt. 

damages  by  him  sustained,  and  the  cost  of  .suit,  including 
a  reasonable  attorney's  fee."    §  7. 

Much  of  what  has  just  been  said  in  reference  to  the  first 
special  defence,  based  on  the  common  law,  is  applicable  to  this 
part  of  the  case.    If  the  contract  between  the  plaintiff  cor- 
poration and  the  other  named  corporations,  persons  and  com- 
panies, or  the  combination  thereby  formed,  was  illegal  under 
the  act  of  Congress,  then  all  those,  whether  persons,  corpora- 
tions or  associations,  directly  connected  therewith,  became 
subject  to  the  penalties  prescribed  by  Congress.    But  the  act 
does  not  declare  illegal  or  void  any  sale  made  by  such  combi- 
nation, or  by  its  agents,  of  property  it  acquired  or  which  came 
into  its  possession  for  the  purpose  of  being  sold— such  prop- 
erty not  being  at  the  [551]  time  in  the  course  of  transporta- 
tion from  one  State  to  another  or  to  a  foreign  country.    The 
buyer  could  not  refuse  to  comply  with  his  contract  of  pur- 
chase upon  the  ground  that  the  seller  was  an  illegal  combina- 
tion which  might  be  restrained  or  suppressed  in  the  mode 
prescribed  by  the  act  of  Congress ;   for  Congress  did  not  de- 
clare that  a  combination  illegally  formed  under  the  act  of 
1890  should  not,  in  the  conduct  of  its  business,  become  the 
owner  of  property  which  it  might  sell  to  whomsoever  wished 
to  buy  it    So  that  there  is  no  necessary  legal  connection  here 
between  the  sale  of  pipe  to  the  defendants  by  the  plaintiff 
corporation  and  the  alleged  arrangement  made  by  it  with 
other  corporations,  companies  and  firms.    The  contracts  un- 
der which  the  pipe  in  question  was  sold  were,  as  already  said, 
collateral  to  the  arrangement  for  the  combination  referred 
to,  and  this  is  not  an  action  to  enforce  the  terms  of  such  ar- 
rangement   That  combination  may  have  been  illegal,  and 
yet  the  sale  to  the  defendants  was  valid. 

In  the  case  of  The  Charles  E,  Wisewall,  74  Fed.  Rep.  802, 
which  was  a  libel  in  rem  by  certain  tug  owners  against  a 
steam  dredge  to  recover  the  value  of  certain  services  rendered 
by  the  tug  in  towing  the  dredges,  it  was  sought  to  avoid  pay- 
ment for  the  services  thus  rendered  upon  the  ground  that  the 
tug  owners  were  members  of  an  association  which  was  illegal 
and  void  under  the  Sherman  act.  The  court,  assuming  that 
the  agreement  by  which  the  tugs  acted  in  unison  was  prohib- 
ited by  that  act,  said :  "  He  [the  claimant]  should  not  be  per- 


CONNOLLY   v.   UXIOK   SEWER   PIPE   CO. 


131 


Opinion  of  the  Court. 

mitted  to  i-epudiate  his  just  debts  to  the  individual  tugs  be- 
cause their  association  was  illegal.  Having  asked  for  their 
services  and  having  accepted  the  benefit  thereof,  he  should 
pay.  .  .  .  An  agreement  by  the  tug  Mayflower  to  tow  the 
dredge  Wisewall,  for  a  reasonable  sum,  from  Albany  to  Troy, 
is  not  void  because  the  Mayflower  is  associated  Avith  other 
tugs  to  regulate  the  price  of  towing  at  Albany.  Should  the 
claimant  purchase  a  pair  of  trousers  at  an  Albany  clothing 
shop,  he  would  find  it  difficult  to  avoid  paying  their  actual 
market  j^rice  because  the  vendor  and  other  tailors  of  that  city 
had  combined  to  keep  up  prices." 

Nor  can  the  defendants  refuse  to  pay  for  what  they  bought 
upon  the  ground  that  the  seventh  section  of  the  Sherman  act 
[552]  gives  the  right  to  any  person  "  injured  in  his  business 
or  property  by  any  other  person  or  corporation  by  reason  of 
anything  forbidden  or  declared  to  be  unlawful "  by  the  act, 
to  sue  and  recover  treble  the  damages  sustained  by  him.  We 
shall  not  now  attempt  to  declare  the  full  scope  and  meaning 
of  that  section  of  the  act  of  Congress.  It  is  sufficient  to  say 
that  the  action  which  it  authorizes  must  be  a  direct  one,  and 
the  damages  claimed  cannot  be  set  off  in  these  actions  based 
upon  special  contracts  for  the  sale  of  pipe  that  have  no  direct 
connection  with  the  alleged  arrangement  or  combination  be- 
tween the  plaintiff  and  other  corporations,  firms  or  com- 
panies. Such  damages  cannot  be  said,  as  matter  of  law, 
to  have  directly  grown  out  of  that  arrangement  or  combina- 
tion, and  are,  besides,  unliquidated.  Besides,  it  is  well  set- 
tled in  Illinois  that  "  unliquidated  damages  arising  out  of 
covenants,  contracts  or  torts  disconnected  with  plaintiff's 
claim  cannot  be  set  off  under  the  statute."  Robinson  v.  Hibhs. 
48  111.  408, 409, 410 ;  Hawks  V.  Lands,  3  Gilm.  227,  232 ;  Hub- 
hard  V.  Rogers,  04  111.  434, 437;  Evans  v.  Hughey,  76  111.  115. 
120;  Clause  v.  Bullock  Printing  Press  Co,,  118  111.  612,  617; 
Dushane  v.  Benedict,  120  U.  S.  630,  648.  If  the  act  of  Con- 
gress expressly  authorized  one  who  purchased  property  from 
a  combination  organized  in  violation  of  its  provisions  to 
plead,  in  defence  of  a  suit  for  the  price,  the  illegal  character 
of  the  combination,  that  would  present  an  entirely  different 
question.    But  the  act  contains  no  such  provision. 


132 


184   UNITED   STATES   REPORTS,   552. 


Opinion  of  the  Court 

4.  We  come  now  to  the  consideration  of  the  defence  based 
upon  the  Trust  statute  of  Illinois  of  1893. 

As  that  statute  is  alleged  to  be  repugnant  to  the  Constitu- 
tion of  the  United  States,  and  that  its  full  scope  may  be  seen, 
it  is  here  given  in  full : 

"  §  1.  That  a  trust  is  a  combination  of  capital,  skill  or  acts 
by  two  or  more  persons,  firms,  corporations  or  associations  of 
l>ersons,  or  of  two  or  more  of  them  for  either,  any  or  all  of  the 
following  purposes:  First— to  create  or  carry  out  restrictions 
in  trade.    Second— to  limit  or  reduce  the  production,  or  in- 
crease or  reduce  the  price  of  merchandise  or  commodities. 
Third— to    prevent    competition    in    manufacture,    making, 
transportation,  sale  or  purchase  of  merchandise,  produce  or 
commodities.     [553]  Fourth— to  fix  at  any  standard  or  fig- 
ure whereby  its  price  to  the  public  shall  be  in  any  manner 
controlled  or  established  upon  any  article  or  commodity  of 
merchandise,  produce  or  manufacture  intended  for  sale,  use 
or  consmnption  in  tliis  Stcite;  or  to  establish  any  pretended 
agency  whereby  the  «^ale  of  any  such  article  or  commodity 
shall  be  c^)vered  up  and  made  to  Mppt'pr  to  b?  for  the  original 
vendor,  for  a  like  purpose  or  purposes,  and  to  enable  such 
original  vendor  or  manufacturer  to  control  the  Avholesale  or 
retail  price  of  any  such  article  or  commodity  after  the  title  to 
such  article  or  commodity  shall  have  passed  from  such  vendor 
or  manufacturer.    Fifth— to  nu^ke  or  enter  into,  or  examine 
or  carry  out  any  contract,  obligation  or  agreement  of  any 
kind  or  description  by  which  they  shall  bind  or  have  bound 
themselves  not  to  sell,  dispose  of  or  transport  any  article  or 
commodity,  or  article  of  trade,  use,  merchandise,  commerce 
or  consumption  below  a  common  standard  figure,  or  card  or 
list  price,  or  by  which  they  shall  agree  in  any  manner  to  keep 
the  price  of  such  article,  commodity  or  transportation  at  a 
fixed  or  graduated  figure,  or  by  which  they  shall  in  any  man- 
ner establish  or  settle  the  price  of  any  article  or  commodity 
or  transportation  between  them  or  themselves  and  others  to 
preclude  a  free  and  unrestricted  competition  among  them- 
selves or  others  in  the  sale  or  transportation  of  any  such  arti- 
cle or  commodity,  or  by  which  they  shall  agree  to  pool,  com- 
bine or  unite  any  interest  they  may  have  in  connection  with 


CONNOLLY   V.   UNION   SEWER  PIPE   CO. 


133 


Opinion  of  the  Court. 

the  sale  or  transportation  of  any  such  article  or  commodity 
that  its  price  might  in  any  manner  be  affected. 

"  §  2.  That  any  corporation  holding  a  charter  under  the 
laws  of  this  State  which  shall  violate  any  of  the  provisions 
of  this  act  shall  thereby  forfeit  its  charter  and  franchise,  and 
its  corporate  existence  shall  cease  and  determine. 

"  §  3.  For  a  violation  of  any  of  the  provisions  of  this  act  by 
any  corporation  mentioned  herein  it  shall  be  the  duty  of  the 
Attorney  General  or  prosecuting  attorney,  upon  his  own  mo- 
tion, to  institute  suit  or  quo  warranto  proceedings,  at  any 
county  in  this  State  in  which  such  corporation  exists,  does 
business  or  may  have  a  domicile,  for  the  forfeiture  of  its 
charter  rights  and  franchise,  and  the  dissolution  of  its  cor- 
porate existence. 

[554]  "  §  4.  Every  foreign  corporation  violating  any  of 
the  provisions  of  this  act  is  hereby  denied  the  right  and  pro- 
hibited from  doing  any  business  within  this  State,  and  it 
shall  be  the  duty  of  the  Attorney  General  to  enforce  this 
provision  by  injunction  or  other  proper  proceedings,  in  any 
county  in  which  such  foreign  corporation  does  business,  in 
the  name  of  the  State  on  his  relation. 

"  §  5.  Any  violation  of  either  or  all  of  the  provisions  of  sec- 
tion 1  of  this  act  shall  be  and  is  hereby  declared  to  be  a  con- 
spiracy against  trade,  and  a  misdemeanor;  and  any  person 
who  may  be  or  may  become  engaged  in  any  such  conspiracy 
or  take  part  therein  or  aid  or  advise  in  its  commission,  or  who 
shall,  as  principal,  manager,  director,  agent,  servant  or  em- 
ploye, or  in  any  other  capacity,  knowingly  carry  out  any  of 
the  stipulations,  purposes,  prices,  rates,  orders  thereunder, 
or  in  pursuance  thereof,  shall  be  punished  by  fine  not  less 
than  two  thousand  dollars  nor  more  than  five  thousand 
dollars. 

"  §  6.  In  any  indictment  or  information  for  any  offence 
named  in  this  act,  it  is  sufficient  to  state  the  purposes  and 
effects  of  the  trust  or  combination,  and  that  the  accused  was 
a  member  of,  acted  with  or  in  pursuance  of  it,  without  giving 
its  name  or  description  or  how  or  where  it  was  created. 

"  §  7.  In  prosecutions  under  this  act  it  shall  be  sufficient  to 
prove  that  a  trust  or  combination  as  defined  herein  exists, 
and  that  the  defendant  belonged  to  it  or  acted  for  or  in  con- 


xtjri: 


184   UNITED   STATES  KEPORTS,    554. 


Opiulon  of  the  Court. 

nection  with  it,  without  proving  all  the  members  belonging 
to  it,  or  proving  or  producing  any  article  of  agreement  or 
any  written  instrument  on  which  it  may  have  been  based,  or 
that  it  was  evidenced  by  any  written  instrument  at  all. 

"  §  8.  That  any  contract  or  agreement  in  violation  of  the 
provisions  of  this  act  shall  be  absolutely  void  and  not  en- 
forcible  either  in  law  or  equity. 

"  §  9.  The  provisions  of  this  act  shall  not  apply  to  agri- 
mltural  products  or  live  stock  while  in.  the  hands  of  the  pro- 
ducer  or  raiser. 

"  §  10.  Any  purchaser  of  any  article  or  commodity,  from 
imy  person,  firm,  corporation  or  association  of  persons,  or  of 
two  or  more  of  them,  transacting  business  contrary  to  any 
provision  of  the  preceding  sections  of  this  act,  shall  not  be 
liable  for  the  [5551  price  or  payment  of  such  article  or 
commodity  and  may  plead  this  act  as  a  defence  to  any  suit 
for  such  price  or  payment."  Laws,  HI.  1893,  p.  182,  act  of 
June  20,  1893;  Hurd's  Kev.  Stat.  HI.  (1899),  p.  618,  tide 
**  Criminal  Code." 

Some  reference  was  made  to  the  act  of  the  legislature  of 
Illinois  approved  June  10,  1897,  amending  an  act  approved 
June  11,  1891,  in  force  July  1,  1891,  relating  to  the  punish- 
ment of  persons,  partnerships  or  corporations  forming  pools, 
trusts  and  combines,  and  prescribing  the  mode  of  procedure 
and  rules  of  evidence  in  such  eases.  The  act  of  1897  amended 
section  one  of  the  act  of  1891  so  as  to  read  :  "  If  any  cor])ora- 
tion  organized  under  the  laws  of  this  or  any  other  State  or 
country  for  transacting  or  conducting  any  kind  of  business  in 
this  State,  or  any  partnership  or  individual  or  other  associa- 
tion of  persons  whosoever,  sliall  create,  enter  into,  become  a 
naember  of  or  a  party  to  any  pool,  trust,  agi-eement,  combina- 
tion, confederation  or  understanding  with  any  other  cor- 
poration, partnership,  individual  or  any  other  person  or  asso- 
ciation of  persons,  to  regulate  or  fix  the  price  of  any  article 
of  merchandise  or  commodity,  or  shall  enter  into,  become  a 
naember  of,  or  party  to  any  pcx)!,  agreement,  contract,  com- 
bination, or  confederation  to  fix  or  limit  the  amount  or 
quantity  of  any  article,  commodity  or  merchandise  to  be 
manufactured,  mined,  produced  or  sold  in  this  State,  such 
corporation,  partnership  or  individual  or  other  association  of 


CONNOLLY    V,   UNION    SEWEfi   PIPE   CO. 


136 


Opinion  of  the  Court. 

persons  shall  be  deemed  and  adjudicated  guilt}-  of  a  con- 
spiracy to  defraud,  and  be  subject  to  indictment  and  punish- 
ment as  provided  in  this  act :  provided,  however,  that  in  the 
mining,  manufacture  or  production  of  articles  of  merchan- 
dise, the  cost  of  which  is  mainly  made  up  of  wages,  it  shall 
not  be  unlawful  for  persons,  firms  or  corporations  doing 
business  in  this  State  to  enter  into  joint  arrangements  of  any 
sort,  the  principal  object  or  effect  of  which  is  to  maintain  or 
increase  wages."  As  this  act  of  1897  was  passed  after  the 
date  of  the  transactions  here  involved,  it  has  nothing  to  do 
with  the  present  case.  Besides,  the  special  defence  was  based 
on  the  act  of  1893.  The  act  of  1897  is  referred  to  onlv  as 
showing  the  exemption  of  another  class  from  the  operation 
of  the  general  law  relating  to  pools,  trusts,  combinations  and 
confederations  organ-  [556]  ized  to  regulate  prices  of  arti- 
cles, commodities  and  merchandise.  Laws,  111.  1897,  c.  38, 
p.  153;  Kurd's  Revised  Statutes  of  Illinois,  pp.  615,  639. 

That  the  arrangement  or  combination  made  between  the 
Union  Sewer  Pipe  Company  and  other  companies,  corpora- 
tions and  firms,  created  such  a  trust  as  the  Illinois  statute 
forbids  is  manifest  from  the  evidence  in  the  record.  It  is 
equally  clear  that  if  the  plaintiff  was  an  Illinois  corporation, 
its  charter  could  be  forfeited  and  an  end  put  to  its  corporate 
existence  by  proceedings  instituted  by  the  Attorney  General 
of  the  State.  §§  1,  2  and  3.  It  is  also  clear  that,  if  the  stat- 
ute is  not  altogether  invalid  the  defendants  could  plead  non- 
liability for  the  pipe  purchased  by  them  upon  the  ground 
that  the  plaintiff  was,  under  the  statute  of  Illinois,  an  illegal 
combination  and  the  contracts  which  it  made  with  the  de- 
fendants were  void.  §§  8,  10.  The  statute  expressly  au- 
thorizes such  a  defence.  In  that  particular,  the  defence  based 
upon  the  statute  of  Illinois  differs  from  the  other  special 
defences. 

The  vital  question,  however,  is  whether  the  statute  of 
Illinois  of  1893  is  not  inconsistent  with  the  Constitution  of 
the  United  States,  by  reason  of  the  fact  that  by  the  ninth 
section  it  declares  that  "  the  provisions  of  this  act  shall  not 
apply  to  agricultural  products  or  live  stock  while  in  the 
iiands  of  producer  or  raiser."  The  Circuit  Court  held  this 
section  to  be  repugnant  to  the  Fourteenth  Amendment  of  the 


184  UNITED   STATES   REPOftTS,  556. 
Opinion  of  the  Court. 

Constitution  of  the  United  States,  and  to  be  so  connected  and 
interwoven  with  other  sections  that  its  invalidity  affected  the 
entire  act. 

Looking  specially  at  its  provisions,  it  wiU  be  seen  that,  so 
far  as  the  statute  is  concerned,  two  or  more  agriculturalists  or 
two  or  more  live  stock  raisers  may,  in  respect  of  their  prod- 
ucts or  live  stock  in  hand,  combine  their  capital,  skill  or  acts 
for  the  purpose  of  creating  or  carrying  out  restrictions  in 
the  sale  of  such  products  or  live  stock;  or  limiting,  increasing 
or  reducing  their  price;    or  preventing  competition  in  their 
sale  or  purchase ;  or  fixing  a  standard  or  figure  whereby  the 
price  thereof  to  the  public  may  be  controlled;  or  making 
contracts  whereby  they  would  become  boimd  not  to  sell  or  dis- 
pose of  such  agricultural  products  or  live  stock  below  a  com- 
mon standard  figure  [5571  or  card  or  list  price;  or  estab- 
Hshing  the  price  of  such  products  or  stock  in  hand,  so  as  to 
preclude  free  and  unrestricted  competition  among  themselves 
or  others ;  or  by  agreeing  to  pool,  combine  or  unite  any  in- 
terest they  may  have  in  connection  with  the  sale  or  transpor- 
tation of  their  products  or  live  stock  that  the  price  might  be 
affected.    All  this,  so  far  as  the  statute  is  concerned,  may  be 
done  by  agriculturalists  or  live  stock  raisers  in  Illinois  with- 
out subjecting  them  to  the  fine  imposed  by  the  statute.    But 
exactly  the  same  things,  if  done  by  two  or  more  persons, 
firms,  corporations  or  associations   of  persons,   who   shall 
have  combined  their  capital,  skill  or  acts,  in  respect  of  their 
property,  merchandise  or  commodities  held  for  sale  or  ex- 
change, is  made  by  the  statute  a  public  offence,  and  every 
principal,  manager,  director,  agent,  servant  or  employe  know- 
ingly carrying  out  the  purposes,  stipulations  and  orders  of 
such  combination  is  punishable  by  a  fine  of  not  less  than  two 
thousand  nor  more  than  five  thousand  dollars.     Is  not  this 
such  discrimination  against  those  engaged  in  business  (other 
than  the  sale  of  agricultural  products  and  live  stock  in  the 
bands  of  producers  and  raisers)  as  is  forbidden  by  that  clause 
of  the  Fourteenth  Amendment  which  declares  that  "  no  State 
shall    .    .    .    deny  to  any  person  within  its  jurisdiction  the 
equal  protection  of  the  laws!" 

^  By  section  26  of  a  statute  of  Illinois  it  is  provided :  "  For- 
eign corporations,  and  the  officers  and  agents  thereof,  doing 


CONNOLLY   V.    UNION   SEWEB  PIPE   CO. 


137 


Opinion  of  the  Court. 

business  in  this  State  shall  be  subjected  to  all  the  liabilities, 
restrictions  and  duties  that  are  or  may  be  imposed  upon  asso- 
ciations of  like  character  organized  under  the  general  laws 
of  this  State,  and  shall  have  no  other  or  greater  powers." 
1  Starr  &  Curtis,  619.  The  contracts  upon  which  these  suits 
are  based  were  made  in  Illinois.  The  purpose  of  the  above 
statute  was  "  to  produce  uniformity  in  the  powers,  liabili- 
ties, duties  and  restrictions  of  foreign  and  domestic  corpora- 
tions of  like  character  and  bring  them  all  under  the  influence 
of  the  same  law."  Stevens  v.  Pratt^  101  111.  206;  Farmers*' 
Loan  and  Trust  Co.  v.  Lake  St.  Elevated  R.  R.  Co.^  173  111. 
439.  These  matters  are  called  to  our  attention  as  showing — 
as  undoubtedly  they  do — ^that  the  Union  Sewer  Pipe  Com- 
pany, while  doing  business  in  Illinois,  was  subject  to 
[558]  the  statute  of  Illinois  concerning  trusts  or  combina- 
tions, and  which,  in  terms,  applies  to  both  domestic  and  for- 
eign corporations.  But  the  question  remains  to  be  decided 
whether  the  statute  is  repugnant  to  the  Constitution  of  the 
United  States.  If  it  be,  then  it  is  not  law  and  cannot  be 
applied  for  the  purpose  of  defeating  the  plaintiff's  claims  in 
these  actions. 

The  question  of  constitutional  law  to  which  we  have  re- 
fered  cannot  be  disposed  of  by  saying  that  the  statute  in 
question  may  be  referred  to  what  are  called  the  police  powers 
of  the  State,  which,  as  often  stated  by  this  court,  were  not 
included  in  the  grants  of  power  to  the  General  Government, 
and  therefore  were  reserved  to  the  States  when  the  Constitu- 
tion was  ordained.  But  as  the  Constitution  of  iho:  United 
States  is  the  supreme  law  of  the  land,  anything  in  the  Consti- 
tution or  statutes  of  the  States  to  the  contrary  notwith- 
standing, a  statute  of  a  State,  even  when  avowedly  enacted  in 
the  exercise  of  its  police  powers,  must  yield  to  that  law.  No 
right  granted  or  secured  by  the  Constitution  of  the  United 
States  can  be  impaired  or  destroyed  by  a  state  enactment, 
whatever,  may  be  the  source  from  which  the  power  to  pass 
such  enactment  may  have  been  derived.  "  The  nullity  of  any 
act  inconsistent  with  the  Constitution  is  produced  by  the 
declaration  that  the  Constitution  is  the  supreme  law."  The 
State  has  undoubtedly  the  power,  by  appropriate  legislation, 
to  protect  the  public  morals,  the  public  health  and  the  public 


X'jo 


184  UNITED   STATES   REPORTS,   558. 


Opinion  of  the  Court. 

safety,  but  if,  by  their  necessary  operation,  its  regulations 
looking  to  either  of  those  ends  amount  to  a  denial  to  persons 
within  its  jurisdiction  of  the  equal  protection  of  the  laws, 
they  must  be  deemed  unconstitutional  and  void.  Gibhom  v. 
Ogden,  9  Wlieat.  1,  210;  Sinnot  v.  Davenport,  22  How.  227, 
243;  Missouri,  Kansas  df  Texas  Railway  v.  Baber^  169  U.  S. 
613,  626. 

WTiat  may  be  regarded  as  a  denial  of  the  equal  protection 
of  the  laws  is  a  question  not  always  easily  determined,  as  the 
decisions  of  this  court  and  of  the  highest  courts  of  the  States 
will  show.    It  is  sometimes  difficult  to  show  that  a  state 
enactment,  having  its  source  in  a  power  not  controverted, 
infringes  rights  protected  by  the  National  Constitution.    No 
rule  can  be  formulated  that  will  cover  every  case.    But  upon 
this  general  ques-  [559]  tion  we  have  said  that  the  guarantee 
of  the  equal  protection  of  the  laws  means  "  that  im  person  or 
class  of  persons  shall  be  denied  the  same  protection  of  the 
laws  which  is  enjoyed  by  other  pei-sons  or  other  chisses  in  the 
same  place  and  in  like  circumstances."    Missouri  v.  Lewis, 
101  U.  S.  22,  31.    We  have  also  said :  "  The  Fourteenth 
Amendment,  in  declaring  that  no  State  '  bhall  deprive  any 
jjerson  of  life,  liberty  or  proi>erty,  without  due  process  of 
law,  nor  deny  to  any  person  within  its  jurisdiction  the  equal 
protection  of  the  laws,'  undoubtedly  intended  not  only  that 
there  should  be  no  arbitrary  deprivation  of  life  or  liberty, 
or  arbitrary  spoliation  of  property,  but  that  equal  protection 
and  security  should  be  given  to  all  under  like  circumstances  in 
the  ^enjoyment  of  their  personal  and  civil  rights:  that  all  per- 
sons should  be  equally  entitled  to  pursue  their  happiness  and 
acquire  and  enjoy  property ;  that  they  should  have  like  access 
to  the  courts  of  the  country  for  the  protection  of  their  persons 
and  pro|)erty,  the  prevention  and  redress  of  wrongs,  and  the 
enforcement  of  contracts;  that  no  impediment   should  be 
interposed  to  the  pursuits  of  any  one  except  as  applied  to  the 
same  pursuits  by  others  under  like  circumstances ;  that  no 
greater  burdens  should  be  laid  upon  one  than  are  laid  upon 
others  in  the  same  calling  and  condition,  and  that  in  the  ad- 
ministration of  criminal  justice  no  different  or  higher  punish- 
ment should  be  imposed  upon  one  than  such  as  is  prescribed 
to  all  for  like  offences."    Barhier  v.  Connolly,  113  IJ.  S.  27, 


CONNOLLY   V,   UNION    SEWER   PIPE   CO. 


139 


opinion  of  tlie  Court. 

31.  This  language  was  cited  with  appro  v^al  in  Tick  Wo  v. 
Hopkins,  118  U.  S.  356,  369,  in  which  it  was  also  said  that 
"  the  equal  protection  of  the  laws  is  a  pledge  of  the  protection 
of  equal  laws."  In  Hayes  v.  Missouri,  120  U.  S.  68,  71,  we 
said  that  the  Fourteenth  Amendment  required  that  all  per- 
sons subject  to  legislation  limited  as  to  the  objects  to  which 
it  is  directed,  or  by  the  territory  within  which  it  is  to  operate, 
"  shall  be  treated  alike,  under  like  circumstances  and  consid- 
erations, both  in  the  privileges  conferred,  and  in  the  limita- 
tions imposed."  "  Duo  process  of  law  and  the  equal  pro- 
tection of  the  laws,"  this  court  has  said,  "  are  secured,  if  the 
laws  operate  on  all  alike,  and  do  not  subject  the  individual 
to  an  arbitrary  exercise  of  the  [560]  powers  of  government." 
Duncan  v.  Missouri,  152  U.  S.  377,  382.  Many  other  cases  in 
this  court  are  to  the  like  effect. 

These  principles,  applied  to  the  case  before  us,  condemn 
the  statute  of  Illinois.  We  have  seen  that  under  that  statute 
all  except  producers  of  agricultural  commodities  and  raisers 
of  live  stock,  who  combine  their  capital,  skill  or  acts  for  any 
of  the  purposes  named  in  the  act,  may  be  punished  as  crimi- 
nals, while  agriculturalists  and  live  stock  raisers,  in  respect 
of  their  products  or  live  stock  in  hand,  are  exempted  from  the 
operation  of  the  statute,  and  may  combine  and  do  that 
which,  if  done  by  others,  would  be  a  crime  against  the  State. 
The  statute  so  provides  notwithstanding  persons  engaged 
in  trade  or  in  the  sale  of  merchandise  and  commodities, 
within  the  limits  of  a  State,  and  agriculturalists  and  raisers 
of  live  stock,  are  all  in  the  same  general  class,  that  is,  they 
are  all  alike  engaged  in  domestic  trade,  which  is,  of  right, 
open  to  all,  subject  to  such  regulations,  applicable  alike  to 
all  in  like  conditions,  as  the  State  m^j  legally  prescribe. 

The  difficulty  is  not  met  by  saying  that,  generally  speak- 
ing, the  State  when  enacting  laws  may,  in  its  discretion, 
make  a  classification  of  persons,  firms,  corporations  and 
associations,  in  order  to  subserve  public  objects.  For  this 
court  has  held  that  classification  "must  always  rest  upon 
some  difference  which  bears  a  reasonable  and  just  relation  to 
the  act  in  respect  to  which  the  classification  is  proposed,  and 
can  never  be  made  arbitrarily  and  without  any  such  basis. 
♦    *    *    But   arbitrary    selection    can    never   be    justified 


140 


184  UNITED  SI  AXES  REPOBTS,  560. 


Opinion  of  tbe  Court 

by  calling  it  classification.  The  equal  protection  demanded 
by  tbe  Fourteenth  Amendment  forbids  this.  ♦  ♦  •  No 
doty  rests  more  imperatively  upon  the  courts  than  the  en- 
forcement of  those  constitutional  provisions  intended  to  se- 
cure that  equality  of  rights  which  is  the  foundation  of  free 
government.  *  ^  *  Ji  jg  apparent  that  the  mere  fact  of 
classification  is  not  sufficient  to  relieve  a  statute  from  the 
reach  of  the  equality  clause  of  the  Fourteenth  Amendment, 
and  that  in  all  cases  it  must  appear  not  only  that  a  classifica- 
tion has  been  made,  but  also  that  it  is  one  based  upon  some 
reasonable  ground — some  difference  which  bears  a  just  and 
proper  relation  to  the  attempted  classification — and  is  not  a 
mere  ar-  [561]  bitrary  selection."  Gulf,  Colorado  and 
Emia  Fe  Railway  v.  Ellh,  165  U.  S.  150, 155, 159,  160,  165. 
These  principles  were  recognized  and  applied  in  Cotting  v. 
Kansas  City  Stock  Yards  Co.,  183  U.  S.  79,  in  which  it  was 
unanimously  agreed  that  a  statute  of  Kansas  regulating  the 
charges  of  a  particular  stock  yards  company  in  the  State, 
but  which  exempted  certain  stock  yards  from  its  operation, 
was  repugnant  to  the  Fourteenth  Amendment  in  that  it 
denied  to  that  company  the  equal  protection  of  the  laws. 

Attention  has  been  called  to  the  cases  of  Magotin  v.  Illinois 
Trust  and  Savings  Bank,  170  U.  S.  283,  and  American  Sugar 
Refining  Co.  v,  Louisiana,  179  IJ.  S.  89 ;  and  it  is  supposed 
that  the  grounds  upon  which  the  decision  of  the  present  case 
is  placed  are  inconsistent  with  the  principles  announced  in 
those  cases.    We  do  not  think  so. 

In  Magonn  v.  Illinois  Trust  and  Savings  Bank  we  held 
that  the  progressive  inheritance  tax  law  of  Illinois  of  June 
15,  1895,  was  not  in  conflict  with  the  Constitution  of  the 
United  States  by  reason  of  the  fact  that  the  amount  of  the 
tax  was  determinable  by  valuation  so  that  every  person  and 
corporation  should  pay  in  proportion  to  the  value  of  his,  her 
or  its  property  inherited.  The  classification  made  by  the 
statute  was  held'not  to  be  arbitrary  by  reason  of  the  fact  that 
inheritances  were  classified  according  to  amount,  and  each 
class  taxed  at  a  different  rate ;  for  it  was  based  upon  princi- 
ples of  equality  between  the  members  of  each  distinct  class. 
Such  classification  was  held  not  to  be  inconsistent  with  the 
Fourteenth  Amendment. 


CONNOLLY   V,   UNTON    SEWER   PIPE   CO. 


Opinion  of  the  Ck)urt. 


141 


In  American  Sugar  Refining  Co,  v.  Louisiana,  we  held 
that  a  statute  of  Louisiana  exempting  from  its  operation 
planters  and  farmers  grinding  and  refining  their  own  sugar 
and  molasses,  but  which  imposed  a  license  tax  upon  persons 
and  corporations  carrying  on  the  business  of  refining  sugar 
and  molasses,  did  not  deny  the  equal  protection  of  the  laws 
to  such  persons  and  corporations  as  were  thus  taxed.     It  was 
as  if  tlie  statute  had  imposed  a  tax  upon  the  business  of  re- 
fining sugar  and  molasses,  and  had  declared,  as  reasonably 
it  might  have  done,  that  those  who  only  refined  their  own 
sugar  and  molasses  should  not  be  regarded  as  belonging  to 
that  class.     We  said  in  that  case :   [562]  "  The  power  of  tax- 
ation under  this  provision  was  fully  considered  in  HelVs 
Gap  Railroad  Co,  v.  Pennsylvania,  134  U.  S.  232,  in  which 
it  was  said  not  to  have  been  intended  to  prevent  a  State  from 
changing  its  system  of  taxation  in  all  proper  and  reasonable 
ways.     It  maj'^,  if  it  chooses,  exempt  certain  classes  of  prop- 
erty altogether;    may  impose  different  specific  taxes  upon 
different  trades  or  professions;  may  vary  the  rates  of  excise 
upon  various  products;   may  tax  real  and  personal  estate  in 
a  different  manner;   may  tax  visible  property  only  and  not 
securities;  may  allow  or  not  allow  deductions  for  indebted- 
ness.    'All  such  regulations,  and  those  of  like  character,  so 
long  as  they  proceed  within  reasonable  limits  and  general 
usage,  are  within  the  discretion  of  the  state  legislature  or 
the  people  of  the  State  in   framing  their  constitution.'" 
Again :  "  The  discrimination  is  obviously  intended  as  an  en- 
couragement to  agriculture,  and  does  not  deny  to  persons 
and  corporations  engaged  in  a  general  refining  business  the 
equal  protection  of  the  laws." 

The  decision  now  rendered  is  not  all  in  conflict  with  the 
views  expressed  in  the  two  cases  just  cited.  It  is  sufficient 
to  say  that  those  cases  had  reference  to  the  taxing  power  of 
the  State,  and  involved  considerations  that  could  not,  in  the 
nature  of  things,  apply  to  a  state  enactment  like  the  one  in- 
volved in  the  present  case.  The  power  to  tax  persons  and 
property  is  an  incident  of  sovereignty,  and  the  extent  to 
which  it  may  be  exerted  has  been  indicated  in  numerous 
cases.  Taxing  laws,  it  has  been  well  said,  furnish  the  meas- 
ure of  every  man's  duty  in  support  of  the  public  burdens 


142 


184   UJ^'ITED   STATES   KEPORTS,   562. 


Opinion  of  the  Court 

and  the  means  of  enforcing  it.     A  tax  may  be  imposed  only 
upon  certain  callings  and  trades,  for  when  the  State  exerts  its 
power  to  tax,  it  is  not  boimd  to  tax  all  pursuits  or  all  property 
that  may  be  legitimately  taxed  for  governmental  purposes. 
It  would  be  an  intolerable  burden  if  a  State  could  not  tax 
any  property  or  calling  unless,  at  the  same  time,  it  taxed 
all  property  of  all  callings.     Its  discretion  in  such  matters 
is  very  great  and  should  be  exercised  solely  with  reference 
to  the  general  welfare  as  involved  in  the  necessity  of  taxation 
for  the  support  of  the  State.    A  State  may  in  its  wisdom 
classify  property  for  purposes  of  taxation,  and  the  exercise 
of  its  discretion  is  not  to  be  questioned  in  a  court  of  the 
[563]  United  States,  so  long  as  the  classification  does  not  in- 
vade rights  secured  by  the  Constitution  of  the  United  States. 
But  different  considerations  control  when  the  State,  by  legis- 
lation, seeks  to  regulate  the  enjoyment  of  rights  and  the  pur- 
suit of  callings  connected  with  domestic  trade.     In  prescrib- 
ing regulations  for  the  conduct  of  trade,  it  cannot  divide 
those  engaged  in  trade  into  classes  and  make  criminals  of 
one  class  if  they  do  certain  forbidden  things,  while  allowing 
another  and  favored  class  engaged  in  the  same  domestic 
trade  to  do  the  same  things  with  impunity.    It  is  one  thing 
to  exert  the  power  of  taxation  so  as  to  meet  the  expenses  of 
government,  and  at  the  same  time,  indirectly,  to  build  up  or 
protect  particular  interests  or  industries.     It  is  quite  a  dif- 
ferent thing  for  the  State,  under  its  general  police  power,  to 
enter  the  domain  of  trade  or  commerce,  and  discriminate 
against  some  by  declaring  that  particular  classes  within  its 
jurisdiction  shall  be  exempt  from  the  operation  of  a  general 
statute  making  it  criminal  to  do  certain  things  connected 
ivith  domestic  trade  or  commerce.    Such  a  statute  is  not  a 
legitimate  exertion  of  the  power  of  classification,  rests  upon 
no  reasonable  basis,  is  purely  arbitrary,  and  plainly  denies 
the  equal  protection  of  the  laws  to  those  against  whom  it 
discriminates. 

We  must  not  be  understood  by  what  has  been  said  as  con- 
ceding that  the  question  of  a  denial  of  the  equal  protection 
of  the  laws  can  never  arise  under  the  taxing  statutes  of  a 
State.  On  the  contrary,  the  power  to  tax  is  so  far  limited 
that  it  cannot  be  used  to  impair  or  destroy  rights  that  are 


CONNOLLY   V.   UNION   SEWEB  PIPE   CO. 
Opinion  of  the  Court 


143 


given  or  secured  by  the  supreme  law^  of  the  land.  We  only 
need  to  say  in  this  connection  that  the  constitutional  validity 
of  the  statute  of  Illinois  now  befoie  us  is  not  necessarily  to 
be  determined  by  the  same  principles  that  apply  to  taxing 
laws. 

Other  cases  have  been  cited,  but  they  are  equally  inappli- 
cable in  the  present  discussion,  and  only  serve  to  show  the 
extent  to  which  the  police  powers  of  the  States  may  be 
exerted  without  infringing  the  Federal  Constitution. 

Returning  to  the  particular  case  before  us,  and  repeating 
or  summarizing  some  thoughts  already  expressed,  it  may  be 
observed  that  if  combinations  of  capital,  skill  or  acts,  in 
respect  [564]  of  the  sale  or  purchase  of  goods,  merchandise 
or  commodities,  whereby  such  combinations  may,  for  their 
benefit  exclusively,  control  or  establish  prices,  are  hurtful  to 
the  public  interests  and  should  be  suppressed,  it  is  impossible 
to  perceive  why  like  combinations  in  respect  of  agricultural 
products  and  live  stock  are  not  also  hurtful.  Two  or  more 
engaged  in  selling  dry  goods,  or  groceries,  or  meats,  or  fuel, 
or  clothing,  or  medicines,  are,  under  the  statute,  criminals, 
and  subject  to  a  fine,  if  the}^  combine  their  capital,  skill  or 
acts  for  the  purpose  of  establishing,  controlling,  increasing 
or  reducing  prices,  or  of  preventing  free  and  unrestrained 
competition  amongst  themselves  or  others  in  the  sale  of  their 
goods  or  merchandise;  but  their  neighbors,  who  happen  to 
be  agriculturalists  and  live  stock  raisers,  may  make  combina- 
tions of  that  character  in  reference  to  their  grain  or  live 
stock  without  incurring  the  prescribed  penalty.  Under  what 
rule  of  permissible  classification  can  such  legislation  be 
sustained  as  consistent  with  the  equal  protection  of  the  laws? 
It  cannot  be  said  that  the.  exemption  made  by  the  ninth  sec- 
tion of  the  statute  was  of  slight  consequence,  as  affecting  the 
general  public  interested  in  domestic  trade  and  entitled  to 
be  protected  against  combinations  formed  to  control  prices 
for  their  own  benefit;  for  it  cannot  be  disputed  that  agri- 
cultural products  and  live  stock  in  Illinois  constitute  a  very 
large  part  of  the  wealth  and  property  of  that  State. 

We  conclude  this  part  of  the  discussion  by  saying  that  to 
declare  that  some  of  the  class  engaged  in  domestic  trade  or 
commerce  shall  be  deemed  criminals  if  they  violate  the  regu- 


1A  A 


184   UNITED   STATES   REPORTS,   564. 
Opinion  of  tlie  Court. 


lations  prescribed  by  the  State  for  the  purpose  of  protecting 
the  public  against  illegal  combinations  formed  to  destroy 
competition  and  to  control  prices,  and  that  others  of  the  same 
class  shall  not  be  bound  to  regard  those  regulations,  but  may 
combine  their  capital,  skill  or  acts  to  destroy  competition  and 
to  control  prices  for  their  special  benefit,  is  so  manifestly  a 
denial  of  the  equal  protection  of  the  laws  that  further  or 
extended  arginiient  to  establish  that  position  would  seem  to 
be  iinnecessarv. 

We  therefore  hold  that  tlie  act  of  1893  is  repugnant  to  the 
Constitution  of  the  United  State-;,  unless  its  ninth  section  can 
be  eliminated,  leaving  the  rest  of  the  act  in  ©[deration. 

1565]  The  principles  applicable  to  such  a  question  are  well 
settled  by  the  adjudications  of  this  court.  The  different  sec- 
tion >  of  II  statute  are  independent  of  each  other,  that  which  is 
unconstitntional  may  be  disregarded,  and  valid  sections  may 
stand  and  be  enforced.  But  if  an  obnoxious  section  is  of  such 
import  tliat  the  other  sections  without  it  would  cause  results 
not  contemplated  or  desired  by  the  legislature,  then  the  entire 
statute  nuist  be  held  inoperative.  The  first  section  of  the  act 
here  in  question  embraces  by  its  terms  all  persons,  firms,  cor- 
porations or  associations  of  persons  who  combine  their  cap- 
ital, skill  or  acts  for  any  of  the  purposes  specified,  while  the 
ninth  section  declares  that  the  statute  shall  not  apply  to  agri- 
culturalists or  live  stock  dealers  in  respect  of  their  products 
or  stock  in  hand.  If  the  latter  section  be  eliminated  as  un- 
constitutional, then  the  act,  if  it  stands,  will  apply  to  agricul- 
turalists and  live  stock  dealers.  Those  classes  would  in  that 
way  be  reached  and  fined,  when,  evidently,  the  legislature 
intended  that  they  should  not  be  regarded  as  offending 
against  the  law  even  if  they  did  combine  their  capital,  skill 
or  acts  in  respect  of  their  products  or  stock  in  hand.  Look- 
ing then  at  all  the  sections  together,  we  must  hold  that  the 
legislature  would  not  have  entered  upon  or  continued  the 
policy  indicated  by  the  statute  unless  agriculturalists  and 
live  stock  dealers  were  excluded  from  its  operation  and 
thereby  protected  from  prosecution.  The  result  is  that  the 
statute  must  be  regarded  as  an  entirety,  and  in  that  view  it 
must  be  adjudged  to  be  unconstitutional  as  denying  the  equal 


CONNOLLY   V,   UNION   SEWER  PIPE   CO. 


145 


Mr.  Justice  McKenna,  dissenting. 

protection  of  the  laws  to  those  within  its  jurisdiction  who  are 
not  embraced  by  the  ninth  section. 

Whether  it  is  also  within  the  prohibition  against  the  depri- 
vation of  property  without  due  process  of  law,  is  a  question 
which  it  is  unnecessary  to  consider  at  this  time. 

Perceiving  no  error  in  the  record,  the  judgment  in  each 
case  must  be  affirmed. 

A^i'mcd  and  it  is  so  ordered, 
Mr.  Justice  McKena,  dissenting. 

The  trust  statute  of  Illinois  of  1893  is  directed  against  com- 
[566]  binations  in  trade  made  to  affect  prices  of  commodi- 
ties. The  court  holds  that  the  statute  is  repugnant  to  the 
Constitution  of  the  United  States  because  of  the  ninth  sec- 
tion, which  excludes  from  the  operation  of  the  statute  "  agri- 
cultural products  or  live  stock  while  in  the  hands  of  the 
producer  or  raiser."  In  other  words,  and  to  present  the  dis- 
criminations of  the  statute  in  its  application  to  persons,  it 
punishes  as  a  criminal  conspiracy  the  acts  enumerated  in  sec- 
tion one,  except  when  they  are  done  by  producers  and  raisers 
of  agricultural  products  and  live  stock  in  respect  thereto. 
The  statute  also  takes  away  a  right  of  action  for  the  price  of 
the  commodities  sold.  One  of  the  defences  of  the  plaintiffs 
in  error  was  based  on  that  provision. 

The  view  of  the  court  is  that  the  legislation  is  purely  dis- 
criminative and  is  not  justified  by  any  legal  principle  of 
classification.  To  su^ain  the  view  the  rule  expressed  in 
Gulf,  Colorado  <&  Santa  Fe  Railway  v.  Ellis,  165  U.  S.  150,  is 
quoted.  It  was  there  said :  "  It  is  apparent  that  the  mere 
fact  of  classification  is  not  sufficient  to  relieve  a  statute  from 
the  reach  of  the  equality  clause  of  the  Fourteenth  Amend- 
ment, and  that  in  all  cases  it  must  appear,  not  only  that  a 
classification  has  been  made,  but  also  that  it  is  one  based  upon 
some  reasonable  ground — some  difference  which  bears  a  just 
and  proper  relation  to  the  attempted  classification — and  is 
not  a  mere  arbitrary  selection."  Undoubtedly.  Without  the 
observance  of  that  principle,  there  can  be  no  classification  at 
all  in  any  proper  sense.    There  will  be  arbitrary  grouping 


21220— VOL  2—07  m- 


-10 


146 


181  UNITED  STATES  BEPORTS,  566. 


Mr.  Justice  McKenna,  dissenting. 

not  association  of  persons  or  things  on  account  of  common 
properties  or  characters  or  relations.  But  dilferences  are 
recognized  in  classification  as  well  as  resemblances,  and  this 
court  has  found  it  necessary  to  so  state.  In  Atchison,  Topeka 
€&  Santa  Fe  Railroad  v.  Matthews,  174  U.  S.  96,  we  said: 
"  Indeed,  the  very  idea  of  classification  is  that  of  inequality, 
so  that  it  goes  without  saying  that  the  fact  of  inequality  in  no 
manner  determines  the  matter  of  constitutionality." 

It  seems  like  a  contradiction  to  say  that  a  law  having  in- 
equality of  operation  may  yet  give  equality  of  protection. 
Viewed  rightly,  however,  the  contradiction  disappears;  in- 
deed, need  not  even  be  expressed.  There  are  very  few  exer- 
tions of  [567]  government  which  can  be  made  applicable  to 
all  persons  as  such.  Government  is  not  a  simple  thing.  It 
encounters  and  must  deal  with  the  problems  which  come  from 
persons  in  an  infinite  variety  of  relations.  Classification  is 
the  recognition  of  those  relations,  and  in  making  it  a  legisla- 
ture must  h^  allowed  a  wide  latitude  of  discretion  and  judg- 
ment. This  has  been  decided  many  times  against  contentions 
based  on  a  variety  of  facts.  I  will  content  myself  by  citing 
the  later  cases  and  commenting  upon  them  very  briefly.  The 
cases  are  Magoun  v.  Illinois  T'mst  (&c.  Bank,  170  U.  S.  283; 
Clark  V.  Kansas  City,  176  U.  S.  114;  Gundling  v.  Chicago^ 
177  U.  S.  183 ;  Petit  v.  Minnesota,  177  U.  S.  164 ;  Williams 
V.  Fears,  170  TJ.  S.  270;  American  Sugar  Refining  Company 
V.  Louisiana,  179  U.  S.  89. 

In  these  cases  and  the  cases  cited  in  them  classifications 
were  sustained  which  depended  upon  differences  in  the 
amounts  of  legacies ;  on  differences  between  corporations ;  on 
differences  between  land  dependent  on  its  use  for  agriculture 
and  other  purposes  in  regard  to  the  power  of  a  city  to  annex 
it;  on  differences  between  fire  insurance  and  other  insur- 
ance; on  the  right  of  a  legislature  to  declare  as  a  matter  of 
law  that  the  work  of  a  barber  was  not  a  work  of  necessity, 
while  as  to  all  other  kinds  of  labor  the  fact  was  to  be  deter- 
mined by  a  jury;  on  the  difference  between  hiring  persons 
to  labor  in  the  State  and  hiring  persons  to  labor  out  of  the 
State;  on  differences  between  sugar  refiners  based  entirely 
and  only  on  the  fact  of  the  production  or  purchase  of  the 
sugar  refined. 


CONNOLLY  V,   UNION   SEWER  PIPE   CO. 


147 


Mr.  Justice  McKenna,  dissenting. 

In  American  Sugar  Refining  Co.  v.  Louisiana,  a  license  tax 
was  imposed  on  those  engaged  in  carrying  on  the  business  of 
refining  sugar  and  molasses.  It  was  provided,  however,  that 
the  law  should  not  apply  to  "  planters  and  farmers  grinding 
and  refining  their  own  sugar." 

Wherein  did  the  Louisiana  statute,  which  was  held  consti- 
tutional, differ  from  the  Illinois  statute,  which  is  held  to  be 
unconstitutional?  In  the  former  case  the  distinction  (in  the 
opinion  in  the  case  it  is  called  "  discrimination  ")  was  be- 
tween manufacturers  of  sugar  and  growers  of  it.  In  the 
case  at  bar  the  distinction  is  between  traders  in  products  and 
growers  of  them.  Is  not  a  parallel  obvious?  Can  the  cases 
be  distinguished  because  [568]  in  one  a  tax  was  imposed  and 
in  the  other  conduct  is  regulated  or  penalized?  Indeed,  is 
not  the  distinction  verbal,  each  being  means  to  an  end?  Be- 
sides, what  justification  for  the  distinction  is  there  under  the 
Constitution?  None,  I  submit,  can  be  found  in  the  words 
of  that  instrument.  Any  state  legislation  which  denies  the 
equal  protection  of  the  laws  is  prohibited.  The  prohibition 
is  independent  of  form  or  means.  It  would  be  strange,  in- 
deed, if  the  power  of  a  State  is  limited  and  confined  by  the 
Constitution  of  the  United  States,  when  the  State  attempts 
by  law  to  regulate  conduct,  and  is  unbounded  in  its  discretion 
when  it  imposes  taxes ;  that  in  one  case  it  may  see  a  difference 
between  manufacturers  and  planters,  and  in  the  other  case 
may  not  see  a  difference  between  traders  in  commodities  ac- 
quired for  the  purposes  of  sale  and  such  property  when  held 
by  farmers  by  whose  labor  they  were  produced. 

The  reasoning  of  the  cases  is  as  strong  and  demonstrative 
as  their  instances.  We  have  declared  that  we  could  not  in- 
vestigate or  condemn  the  impolicy  of  a  state  law,  and  that 
this  court  is  not  a  refuge  from  the  mere  injustice  and  oppres- 
sion of  state  legislation.  Many  of  the  exercises  of  govern- 
ment, it  has  been  pointed  out,  were  addressed  to  persons,  not 
absolutely  or  abstractly,  but  according  to  their  relations,  and 
that  classification,  based  on  those  relations,  need  not  be  con- 
stituted by  an  exact  or  scientific  exclusion  or  inclusion  of 
persons  or  things.  Therefore,  it  has  been  repeatedly  declared 
that  classification  is  justified,  if  it  is  not  palpably  arbitrary. 

The  cases  afford  not  only  aflBrmative  examples  but  also  by 


148 


184  UNITED   STATES   REPORTS,   563. 
Mr.  Justice  McKenna,  disseiitiD£. 


a  negative  deduction  illustrate  what  is  legal  classification. 
Mr.  Justice  Bradley  said  in  BeWs  Gap  Railroad  v.  Pennsyl- 
vania^ 134  U.  S.  232:  "Clear  and  hostile  demonstrations 
against  particular  persons  and  classes,  especially  such  as  are 
of  unusual  character,  unknown  to  the  practice  of  our  govern- 
ment, might  be  obnoxious  to  the  constitutional  prohibition." 
That  is,  the  prohibition  upon  the  States  to  deny  to  any  citi- 
zen the  equal  protection  of  the  laws.  The  thought  of  Mx. 
Justice  Bradley  was  developed  and  illustrated  by  Mr.  Jus- 
tice Brown,  speaking  for  this  court  ip  American  Sugar  Re- 
-fining  Co.  v.  Louisiana,  and  tests  of  the  unconstitutionality 
of  the  discriminations  of  a  state  law  [569]  were  expressed, 
which  were  as  ready  as  they  were  significant.  Speaking  of 
the  Ijouisana  act,  which  discriminated  between  refiners  of 
sugar,  Mr.  Justice  Brown  said :  "  The  act  in  question  does 
undoubtedly  discriminate  in  favor  of  a  certain  class  of  re- 
finers, but  discrimination,  if  founded  upon  a  reasonable  dis- 
tinction in  principle,  is  valid.  Of  course,  if  such  discrimina- 
tion were  purely  arbitrary^  oppressive  or  capricious  (the 
italics  are  mine),  and  made  to  depend  upon  differences  of 
color,  race,  nativity,  religious  opinions,  political  affiliations,  or 
other  considerations  having  no  possible  connection  with  the 
duties  of  citizens  as  taxpayers,  such  exemption  would  be  pure 
favoritism,  and  a  denial  of  the  equal  protection  of  the  laws 
to  the  less  favored  classes." 

Of  course,  the  enumeration  of  some  tests  does  not  exclude 
others,  but  why  the  enumeration  of  the  special  kind?  Did 
not  the  case  require  it  ?  What  ingenuity  can  find  a  difference 
in  the  act  and  process  of  sugar  refining  when  done  by  a  pur- 
chaser of  raw  sugar  and  a  raiser  (planter)  of  it;  what  dif- 
ference in  the  product  after  it  shall  be  refined,  or  in  any 
element,  thing  or  circumstance,  which  can  affect  its  use  or 
sale.  The  whole  and  6nly  distinction  in  the  classes  which 
the  statute  made  was  between  the  grower  of  sugar  and  the 
buyer  of  it— the  exact  and  only  distinction  of  the  Illinois 
law  now  held  to  be  void,  and  yet  the  Louisiana  law  was  sus- 
tained as  constitutional. 

I  have  already  adverted  to  the  distinction  which  may  be 
claimed  to  exist  between  taxing  laws  and  regulating  laws,  but 
a  few  words  more  may  be  justified.    The  opinion  of  the  court 


CONNOLLY   V,   UNION   SEWER  PIPE   CO. 


Mr.  Justice  McKenna,  dissenting. 


149 


makes  a  great  deal  of  the  penal  provisions  of  the  trust  law, 
and  its  discriminations  are  displayed  and  intensified  more 
by  the  recitation  and  effect  of  those  provisions  than  by  the 
provision  upon  which  the  defence  of  plaintiffs  in  error  was 
based,  that  is,  the  provision  (sec.  10)  which  precludes  recov- 
ery of  the  price  of  "  any  article  or  commodity  sold  "  by  an 
offender  against  the  statute. 

The  penal  provisions  of  the  statute  are  not  before  us  for 
judgment.  If  they  were,  and  the  unconstitutionality  of  the 
statute  could  be  attributed  to  them,  they  might  be  construed 
as  separable  and  be  discarded.  But,  not  insisting  on  that, 
and  consider-  [570]  ing  the  comments  on  those  provisions  to 
be  more  than  incidental  illustration  of  the  character  of  the 
statute,  it  is  very  clear  to  me  that  they  do  not  in  any  way 
affect  the  power  of  the  State.  In  other  words,  the  power  of 
the  State  cannot  be  impugned  or  affected  by  the  sanctions 
which  the  State  may  impose  to  secure  obedience  to  its  com- 
mands or  prohibitions.  It  may  be  through  a  tax  or  it  may 
be  through  penalties,  and  the  question  will  always  be,  is 
the  thing  which  is  directed  or  forbidden  within  the  power  of 
the  State?  And  when  a  statute  is  assailed  as  denying  the 
equal  protection  of  the  laws  its  equal  operation  is  only  in- 
volved. 

The  principle  of  classification,  therefore,  is  not  different  in 
tax  laws  than  in  other  laws.  That  principle,  as  I  have  said, 
necessarily  implies  discrimination  between  the  persons  com- 
posing the  class  and  other  persons.  The  equality  prescribed 
by  the  Constitution  is  fulfilled  if  equality  be  observed  be- 
tween the  members  of  the  class.  It  is  violated  if  such  equality 
be  not  observed,  and  the  latter  was  the  case  in  Catting  v. 
Kansas  City  Stock  Yards  Co,,  183  U.  S.  79.  That  case,  there- 
fore, does  not  sustain  the  ruling  now  made. 

Any  further  remarks  may  be  only  repetition,  but  the  appli- 
cation of  the  cases  to  the  statute  now  before  us  should  be 
pointed  out. 

The  equality  of  operation  which  the  Constitution  requires 
in  state  legislation  cannot  be  construed,  as  we  have  seen,  as 
demanding  an  absolute  universality  of  operation,  having  no 
regard  to  the  different  capabilities,  conditions  and  relations 
of  men.     Classification,  therefore,  is  necessary,  but  what  are 


150 


184  UNITED  STATES  BEPORTS,  570. 


Mr.  Justice  McKenna,  dissenting. 

its  limits  t  They  are  not  easily  defined,  but  the  purview  of 
the  legislation  should  be  regarded.  A  line  must  not  be  drawn 
which  includes  arbitrarily  some  persons  who  do  and  some 
persons  who  do  not  stand  in  the  same  relation  to  the  purpose 
of  the  legislation.  But  a  wide  latitude  of  selection  must  be 
left  to  the  legislature.  It  is  only  a  palpable  abuse  of  the 
power  of  selection  which  can  be  judicially  reviewed,  and  the 
right  of  review  is  so  delicate  that  even  in  its  best  exercises 
it  may  lead  to  challenge.  At  times,  indeed,  it  must  be  exer- 
cised, but  should  always  be  exercised  in  view  of  the  fimction 
and  necessarily  large  powers  of  a  legislature. 

[571]  What  was  the  purpose  of  the  Illinois  statute,  and 
what  were  the  relations  of  its  classes  to  that  purpose?    The 
statute  was  the  expression  of  the  purpose  of  the  State  to 
suppress  combinations  to  control  the  prices  of  commodities, 
not,  however,  in  the  hands  of  the  producers,  but  in  the  hands 
of  traders,  persons  or  corporations.    Shall  we  say  that  such 
suppression  must  be  universal  or  not  at  all  ?    How  can  we  ? 
What  knowledge  have  we  of  the  condition  in  Illinois  which 
invoked  the  legislation,  or  in  what  form  and  extent  the  evil 
of  combinations  to  control  prices  appeared  in  that  State? 
Indeed,  whether  such  combinations  are  evils  or  blessings,  or 
to  what  extent  either,  is  not  a  judicial  inquiry.     If  we  can 
assume  them  to  be  evil  because  the  statute  does  so,  can  we 
go  beyond  the  statute  and  determine  for  ourselves  the  local 
conditions  and  condemn  the  legislation  dependent  thereon? 
But  are  there  not,  between  the  classes  which  the  statute 
makes,  distinctions  which  the  legislature  had  a  right  to  con- 
sider ?     Of  whom  are  the  classes  composed  ?    The  excluded 
class  is  composed  of  farmers  and  stock  raisers  while  hold- 
ing the  products  or  live  stock  produced  or  raised  by  them. 
The  included  class  is  composed  of  merchants,  traders,  manu- 
facturers, all  engaged  in  commercial  transactions.    That  is, 
one  class  is  composed  of  persons  who  are  scattered  on  farms; 
the  other  class  is  composed  of  persons  congregated  in  cities 
and  towns,  not  only  of  natural  persons  but  of  corporate  or- 
ganizations.   In  the  difference  of  these  situations,  and  in 
other  differences  which  will  occur  to  any  reflection,  might 
not  the  legislature  see  difference  in  opportunities  and  powers 
between  the  classes  in  regard  to  the  prohibited  acts?    That 


1 


CHESAPEAKE   &   O.   FUEL  CO.   V.   UNITED   STATES.      151 

Syllabus. 

differences  exist  cannot  be  denied.  To  describe  and  con- 
trast them  might  be  invidious.  To  consider  their  effect 
would  take  us  from  legal  problems  to  economic  ones,  and 
this  demonstrates  to  my  mind  how  essentially  any  judgment 
or  action,  based  upon  those  differences,  is  legislative  and 
cannot  be  reviewed  by  the  judiciary. 

I  am,  therefore,  constrained  to  dissent  from  the  judgment 
of  the  court. 

Mr.  Justice  Gray  took  no  part  in  the  decision  of  this  case. 


[610]    CHESAPEAKE  &  O.  FUEL  CO.  v,  UNITED 

STATES." 

(Circuit  Court  of  Appeals,  Sixth  Circuit    April  8,  1902.) 

[115  Fed.,  610.] 

Monopolies — Anti-Tbust  Act — Contracts  in  Restraint  of  Inter- 
state Commerce. — By  the  anti- trust  act  of  July  2,  1890  (26  Stat. 
209),  congress  has,  in  the  exercise  of  the  power  delegated  to  it  by 
the  constitution,  declared  all  contracts  and  combinations  illegal,  if 
in  restraint  of  trade  or  commerce  among  the  states;  and  such 
act  does  not  leave  to  the  courts  the  consideration  of  the  question 
whether  the  restraint  is  or  is  not  unreasonable,  and  such  as  would 
have  rendered  the  contract  invalid  at  common  law.  The  only 
question  in  each  case  where  the  validity  of  a  contract  or  combina- 
tion under  the  law  is  involved  is  whether  or  not  its  necessary 
effect  is  to  restrain  interstate  commerce.^ 

Same — Contracts  Affecting  Interstate  Commerce. — A  contract  by 
which  a  corporation  agrees  to  tal^e  the  entire  product  of  a  num- 
ber of  inder^endent  persons,  firms,  and  corporations  engaged  in 
mining  coal  and  malving  colie  in  a  certain  district,  which  is  intended 
for  "  Western  shipment "  over  a  leading  route  of  transportation, 
to  sell  the  same  at  not  less  than  a  minimum  price,  to  be  fixed 
by  an  executive  committee  appointed  by  the  producers,  and  to  ac- 
count for  and  pay  over  to  such  producers  the  entire  proceeds, 
above  a  fixed  sum  per  ton  to  be  retained  as  "  compensation," — 
the  stated  purpose  being  to  "  enlarge  the  Westerft  marliet," — and 
under  which  the  shipments  are  made  into  other  states,  is  one 
affecting  interstate  commerce,  and  is  subject  to  the  provisions  of 
the  anti- trust  law. 

o  Combination  dissolved  by  the  Circuit  Court  (105  Fed.,  93).    See 
p.  34. 

6  Syllabus  copyrighted,  1902,  by  West  Publishing  Co. 


152 


115  FEDERAL  REPORTER,   611. 


Statement  of  the  Case. 

[611]  Same— Combinations  in  Restraint  of  Trade.— By  a  contract 
between  a  fuel  company  and  an  association  composed  of  14  per- 
sons, firms,  and  corporations  independently  engaged  in  producing 
coal  and  coke  in  a  certain  district  on  a  line  of  a  railroad,  the 
company  was  to  handle  for  a  term  of  years  the  entire  output  of 
the  members  of  the  association  intended  for  the  Western  marlset, 
and  shipped  oyer  such  line  of  railroad,  and  bound  itself  not  to  sell 
the  product  of  any  competing  mines.    A  minimum  price  at  which 
the  coal  and  coke  should  be  sold  was  to  be  fixed  by  the  executive 
committee  of  the  association  from  time  to  time,  and  the  company 
agreed  to  pay  such  price,  to  obtain  as  large  a  profit  as  possible, 
and  to  account  to  the  association  for  all  of  the  same,  above  a 
fixed  sum  per  ton,  which  it  was  to  retain  as  compensation.    The 
amoimt  to  be  furnished  by  each  member  of  tha  association  was 
also  to  be  fixed  by  the  executive  committee,  and  each  was  to  re- 
ceive payment  at  the  same  rate,  to  be  based  on  the  average  price 
realized   for   the   particular   grade   furnished   during   the   current 
month.    It   was  also  provided   that  any  other  producer  of  coal 
to  be  shipped  on  such  line  of  railroad  might  become  a  party  to  the 
contract  by  a  majority  vote  of  the  members  of  the  association. 
Held,  that  such  contract  was  illegal,  under  the  antitrust  law,  as  in 
restraint   of    interstate   commerce,    and   as   tending    to   create   a 
monopoly. 

Same— Requisites  of  Illegal  Combination— Preventing  Individual 
Competition.— It  is  the  declared  policy  of  congress,  which  accords 
with  the  principles  of  the  common  law,  to  promote  individual  com- 
petition in  relation  to  hiterstate  commerce,  and  to  prevent  combi- 
nations which  restrain  such  competition  bet^veen  their  members, 
or  between  such  members  as  individuals  and  outside  competitors ' 
and  it  is  no  defense  to  a  suit  to  dissolve  such  a  combination  as 
illegal,  under  the  anti-trust  law.  that  it  has  not  been  productive 
of  injuiy  to  the  public,  or  even  that  it  has  been  beneficial,  by  en- 
abling the  combmation  to  compete  for  business  in  a  wider  field. 

Appeal  from  the  Circuit  Court  of  the  United  States  for 
the  Southern  District  of  Ohio. 

*Jh\'^^T  "1!^^  ^"^"^  ^^"^  ^""^^  «^  *^  ^»J  ^  the  circuit  court  by 
*5**.^Kf*'K'^  attorney  of  the  United  States  for  the  Southern  d  strict 
of  Ohio,  by  direction  of  the  attorney  general,  against  the  defendants 
to  enjoin  th«n  from  selling  or  shipping  coal  or  coke  into  a^  state 
other  than  the  one  in  which  they  reside,  under  or  by  virtue  of  a 
f  wS"  f  greement  set  forth  and  attached  to  the  bill.  The  complainants 
ask  that  the  defendants  be  resti-ained  from  further  consSg  agr^ 
ing,  combmmg  and  acting  together  in  the  manner  set  out  in  t^ 
agreement  which  it  is  prayed  be  declared  null  and  void  and  the 
unlawful  trust  and  combination  thereunder  be  dLoh^  by  decrel 

SonTsl  flirow'sr"^^*  "'^^'  ''  ^  ^"^^^^  evidences  The'Li^S 

♦h"T?^i"?r^^®?*'^™^^^  *^*s  l^t^  ^ay  of  December,  1807,  between 
the  C.  &  O.  Fuel  Company,  a  corporation  created,  or^nized!^ 


CHESAPEAKE   &   O.   FUEL  CO.   V,   UNITED   STATES.     153 


Statement  of  the  Case. 

existing  under  and  pursuant  to  the  laws  of  the  state  of  West  Vir- 
ginia, and  hereinafter  called  the  'Fuel  Company,'  of  the  first  part, 
and  the  St.  Clair  Company,  a  corporation  of  West  Virginia;  John 
Carver  and  Enoch  Carver,  partners  in  business  under  the  firm  name 
and  style  of  Carver  Brothers;  W.  R.  Johnson,  M.  T.  Davis,  doing 
business  as  M.  T.  Davis  &  Co.;  John  Carver  and  Enoch  Carver, 
partners  in  business  under  the  firm  name  and  style  of  the  Mecca 
Coal  and  Coke  Company;  S.  H.  Montgomery,  doing  business  imder 
the  name  of  the  Montgomery  Coal  Company;  the  Chesapeake  Min- 
ing Company,  a  corporation  of  West  Virginia;  the  Belmont  Coal 
Company,  a  corporation  of  West  Virginia;  the  Kanawha  Splint  Coal 
Company,  a  corporation  of  West  Virginia;  the  Robinson  Coal  Com- 
pany, a  corporation  of  West  Virginia;  Harry  B.  Smith,  special  re- 
ceiver of  the  Lens  Creek  Coal  and  Coak  Company;  Joseph  Ren- 
shaw,  special  receiver  of  the  Big  Black  Band  Coal  [612]  Company; 
the  Charlmore  Coal  Company,  a  corporation  of  West  Virginia; 
and  Robert  Brabbin,  Jr.,  and  L.  N.  Perry,  partners  in  business  under 
the  firm  naiue  and  style  of  the  Brabbin  Coal  Company;  Jasper 
McCallister,  Samuel  Moore,  and  James  Kelsoe,  doing  business  as 
McCallister  &  Co.,— and  together  constituting  the  C.  &  O.  Coal  As- 
sociation, and  hereinafter  collectively  mentioned  as  the  'Coal  Asso- 
ciation,' of  tlie  second  part.  Whereas,  the  members  of  the  said  coal 
association  are  all  miners  and  shippers  of  coal,  and  part  of  them 
makers  and  shippers  of  coke,  on  the  line  of  the  Chesapeake  &  Ohio 
Railway,  in  Fayette  or  Kanawha  counties.  West  Virginia,  and  have 
formed  and  organized  said  association  for  the  promotion  of  their 
common  business  interests  in  the  mining  of  Kanawha  coals  and 
cokes;  and  whereas,  the  said  fuel  company  has  been  im-orporated 
and  organized  for  the  purpose  of  placing  said  Kanawha  coals  and 
cokes  upon  the  Western  market,— its  prime  object  to  promote  the 
sale  of,  and  enlarge  the  Western  market  for,  said  coals  and  cokes: 
Now,  therefore,  this  agreement  wituesseth: 

"(1)  That  the  parties  of  the  second  part  agree,  in  consi<leration  of 
the  covenants  and  agreements  on  the  part  of  the  party  of  the  first 
part  herein  contained,  each  firm,  individual,  or  corporation,  severally, 
for  themselves,  hhnself,  or  itself,  and  not  for  any  other,  and  each  of 
them  doth  hereby  agree  to  sell  to  the  said  fuel  company  exclusively 
the  entire  coal  and  coke  output  of  the  mine  or  mines  operated  by  each 
of  them,  respectively,  on  said  C.  &  O.  Ry.,  or  branches  thereof,  for 
Western  shipment,  for  a  period  of  not  less  than  five  years  from  and 
after  the  date  of  January,  1898,  subject  to  all  the  provisions,  terms, 
and  conditions  hereinafter  contained,  except  as  to  such  coal  as  may 
be  sold  by  any  member  of  said  coal  association  to  the  Chesapeake  & 
Ohio  Railway  Company  for  the  consmnption  of  said  railway  company, 
which  said  coal  such  member  shall  have  the  right  to  sell  to  said  rail- 
way company  direct;  it  being  understood  that  this  contract  applies 
only  to  the  coal  and  coke  to  be  sold  west  of  the  respective  mines  of 
the  members  of  said  coal  association,  and  shall  not  in  any  way  ap- 
ply to,  or  interfere  with,  the  Eastern  trade  of  the  members  of  said 
association. 

"(2)  The  minimum  price  f.  o.  b.  mines  of  all  tlie  various  grades  of 
coal  and  coke  sold  and  to  be  shipped  West  by  the  members  of  said 
association,  and  embraced  in  this  contract,  shall  be  fixed  by  the 
executive  committee  of  said  coal  association  from  time  to  time,'  as  it 
shall  see  proper,  after  consultation  with  the  executive  couunittee  of 
the  fuel  company.  The  said  fuel  company  covenants,  agrees,  and 
binds  itself  that  it  will  make  no  contract  for  the  sale  of  any  coal  or 
coke  of  any  members  of  said  association  at  a  price  lower  than  such 
minimum  prices  to  be  fixed  by  such  committee,  and  further  that  it 
will  at  all  times  endeavor  to  obtain  the  maximum  price  for  such  coal 


J-tJ^ 


115  FEDERAL  REPOBTEB,  612. 


Statement  of  tlie  Case. 

and  coke.  It  is  understood  and  agreed  tliat  the  minimum  prices  here- 
inbefore mentioned  are  net  prices  f.  o.  b.  mines,  and  not  including  any 
profit  to  the  said  fuel  company,  which  is  to  get  its  profit  over  and 
above  said  prices. 

••(3)  That  the  said  fuel  company  shall  make  Its  sales  direct,  and 
shall  not  make  any  contract  for  the  sale  of  coal  and  coke  to  a  third 
^^^^  J'*  ^^  "*™®  ^^  *°^  member  of  the  said  coal  association,  and 
shall  have  no  right  by  any  contract  to  bind  any  member  of  said  asso- 
ciation to  any  third  party,  except  for  river  business,  as  hereinafter 
provided  for. 

"(4)  The  executive  committee  of  said  fuel  company,  who  shall  ad- 
minister and  have  charge  of  Its  affairs,  shall  be  composed  of  three  (3) 
persons,  one  of  whom  shall  at  all  times  be  a  member  of,  or  officer  of  a 
member  of,  said  coal  association,  and  shall  from  time  to  time,  accord- 
tog  to  the  by-laws  or  articles  of  association  of  said  association,  be 
designated  as  a  member  of  such  executive  committee,  and  shall  there- 
upon be  appointwl  such  membc^r  of  such  executive  committee  bv  said 
fttel  company  in  the  place  and  stead  of  the  meml^er  of,  or  ofticer  of 
a  member  of,  said  coal  association  previously  occupvini?  such  office. 
The  executive  committee  of  said  coal  association  'shall   consist  of 
three  members  of.  or  officers  of  members  of,  said  coal  association,  to 
be  selectetl  as  such  from  time  to  time  by  the  members  of  said  coal 
association  according  t€*  their  by-laws  or  articles  of  association. 
•*  %1  "^  "  ^^^  "^^  ^^^  '"^^  company  covenants,  agrees,  and  binds 
Itself  to  sell  for  shipment  by  rail  via  the  said  Chesapeake  &  Ohio  Rail- 
way, and  pay  for,  to  the  members  of  said  coal  association  as  herein- 
after agreed,  not   less  than   000.000  tons  per   annum   of  coal,   and 
<5,000  tons  per  annum  of  coke;  such  sales  and  shipments  to  be  dis- 
p»ed  of  in  as  nearly  equal  monthly  quantities  as  possible.    But  In 
case  said  fuel  company  is  unable  for  any  time  to  make  sales  of  coal 
or  coke  by  reason  of  the  failure  or  inability  of  the  members  of  said 
association  to  make  prices  sufficiently  low  to  enable  said  fuel  com- 
pany to  meet  the  prices  in  the  market  where  said  coal  or  coke  is 
sought  to  be  sold,  and  to  compete  with  other  sellers  of  coal  or  coke  in 
such  markets,  then  there  shall  be  an  abatement  of  the  minimum 
amount  of  coal  or  coke  hereinbefore  agreed  to  be  taken  annually 
by  said  fuel  company,  bearing  the  same  proportion  to  such  minimum 
amount  of  coal  or  coke  as  such  time  during  which  such  inability  to 
meet  such  market  prices  shall  continue  does  to  one  year.    The  execu- 
tive committee  of  said  coal  association  shall,  not  later  than  the  20th 
day  of  each  month,  designate  the  i^ercentage  of  the  total  product  of 
each  class  and  grade  of  coal  and  coke  which  they  deem  best  to  be 
shipped  by  ejich  member  of  said  association  by  rail  as  aforesaid  dur- 
ing the  succeeding  month,  which  apportionment  so  made  shall  be 
furnished  the  general  manager  of  said  tnel  company  not  later  than 
the  20th  day  of  said  first-mentioned  month,  and  all  orders  received 
to  be  shipped  by  rail  as  aforesaid  during  such  succeeding  month  shall 
be  distributed  between  the  membere  of  said  coal  association  by  said 
general  manager   according  to  such   apportionments:  provided   that. 
If  any  member  of  said  coal  association  shall  be  unable  or  shall  not 
desire  to  ship  West  the  full  amount  of  any  kind  or  grade  of  coal  or 
coke  apportioned  to  such  member  for  any  month,  the  said  fuel  com- 
pany shall  distribute  the  order  for  the  deficiency  so  caused  among  the 
other  members  of  said  association  who  are  shippers  of  such  grade  of 
coal  or  coke  in  the  proportion  as  between  such  other  members  fixed 
by   said   committee  for   such   month:  provided,   further,   that   only 
fictual  inability  shall  excuse  a  member  of  said  association  from  ship- 
ping so  much  of  the  apportionment  for  any  month  as  shall  be  re- 
Quired  by  the  said  fuel  company  for  contribution  to  contracts  previ- 
ously taken  by  said  fuel  company. 


CHESAPEAKE   &   O.   FUEL  CO.   V,   UNITED   STATES.      155 


Statement  of  the  Case.* 

"(6)  The  said  fuel  company  shall  make  and  render  to  the  mem- 
bers of  the  coal  association  accurate  and  complete  reports  of  all  coke 
and  coal  shipped  by  rail  as  aforesaid,  as  follows:  (a)  A  daily  report 
of  all  sales,  showing  the  net  prices  of  such  sales,  (b)  A  monthly  re- 
port showing  the  tonnage  of  the  various  kinds  of  grades  of  coal  and 
coke  shipped  by  members  of  said  coal  association  and  weighed  dur- 
ing the  month,  or  weighed  during  such  month  though  shipped  during 
a  preceding  month,  together  with  the  average  price  for  each  grade 
or  kind  of  coal  or  coke  so  shipped  and  weighed,  which  average  price 
shall  be  computed  upon  the  basis  of  the  actual  price,  less  gross  profits, 
if  any,  received  for  all  coal  or  coke  sold,  and  the  minimum  price, 
fixed  as  hereinafter  provided,  for  such  month  for  coal  or  coke  not  sold 
in  such  month ;  said  report  to  be  made  not  later  than  the  10th  day  of 
each  month  for  all  coal  and  coke  weighed,  or  weighed  during  the  pre- 
vious calendar  month.  The  coal  and  coke  shipped  and  weighed  or 
weighed  during  such  month  shall  be  paid  for  by  said  fuel  company 
to  the  members  of  said  coal  association  according  to  the  average 
prices,  determi«ed  aforesaid,  and  upon  the  sale  after  the  end  of  each 
month  of  any  coal  or  coke  shipped  and  weighed,  or  weighed  but  not 
sold  diu'ing  such  month,  the' surplus,  if  any,  arising  after  deducting  from 
the  actual  price  received  the  minimum  price  for  such  kind  and  grade 
of  coal  or  coke  for  such  month,  and  profit,  shall  l)e  paid  forthwith 
to  the  shippers  of  such  grade  of  coal  or  coke  for  such  month  according 
to  their  tonnage  of  such  kind  or  grade  of  coal  or  coke  for  such  month. 
And  the  said  fuel  company  agrees  and  binds  itself  to  pay  as  aforesaid, 
in  cash,  on  or  before  the  20th  day  of  each  month,  for  all  coal  and  coke 
during  the  previous  calendar  month. 

"(7)  The  said  fuel  company  further  covenants,  agrees,  and  binds 
itself  to  handle  only  such  coal  and  coke  as  are  produced  by  the  al)ove- 
mentioned  members  of  said  coal  association,  and  not  to  handle,  buy, 
or  sell,  for  it.«elf  or  on  commission,  any  coal  or  coke  produced  by  any 
other  operator  [614]  along  said  Chesapeake  &  Ohio  Railway,  or 
branches  thereof,  or  any  coal  or  coke,  wherever  produced,  of  the  same 
grade  as,  or  competing  with,  coal  or  coke  produced  by  any  of  the 
members  of  said  association,  the  prime  object  of  this  contract  being 
to  enlarge  the  sale  of,  and  extend  the  Western  market  for,  Kanawha 
coal  and  colxe ;  and  this  shall  not  prevent  the  said  fuel  company  from 
dealing  in  anthracite  coal  or  New  River  coal  or  coke:  provided,  that 
New  River  coal  or  coke  shall  not  be  dealt  in  to  the  prejudice  of,  or 
sold  as  a  substitute  for,  Kanawha  coals  and  cokes;  and,  provided, 
further,  that  in  an  emergency,  and  when  absolutely  necessary,  other 
coals  and  cokes  may  be  handled  by  said  fuel  company  to  meet  such 
emergency.  But  no  dealing  in  such  anthracite.  New  River,  or  other 
coal  or  coke  shall  be  done  by  said  fuel  company  to  an  extent  or  in  a 
manlier  incompatible  with  the  prime  object  of  this  agreement,  as  here- 
inbefore recited. 

"(8)  That  at  any  time,  by  a  vote  of  two-thirds  (§)  of  the  members 
of  said  coal  association,  said  fuel  company  may  be  allowed  to  handle 
any  other  coal  or  coke  for  such  time  and  upon  such  terms  and  condi- 
tions as  may  be  prescribed  by  such  vote. 

"(9)  The  said  fuel  company  is  to  receive  a  gross  profit  on  all  rail 
coal  and  coke  sold,  which  shall  not  exceed  ten  (10)  cents  per  ton  of 
two  (2,000)  thousand  pounds  on  any  sale,  which  compensation  shall 
be  retained  by  said  fuel  company  out  of  the  monthly  settlements  of 
coal  and  coke  sold ;  the  true  intent  and  meaning  of  this  clause  being 
that  the  fuel  company  shall  get  its  profit  over  and  above  the  net 
minimum  price  of  said  coal  and  coke  f.  o.  b.  mines  as  hereinbefore 
fixed,  and,  if  the  price  at  which  said  coal  and  coke  is  sold  by  said 
fuel  company  shall  be  sufficient  to  yield  a  sum  exceeding  said  mini- 
mum price  and  gross  profit  of  ten. (10)  cents  per  ton  as  aforesaid. 


156 


115  FEDERAL  REPORTER,   614. 
-Statement  of  the  Case. 


then  the  difference  shall  be  paid  over  to  the  members  of  said  associa- 
tion in  the  manner  and  at  the  time  hereinbefore  mentioned,  as  they 
may  be  entitled  under  this  agreement,  as  part  of  the  purchase  price 
to  be  paid  for  coal  and  coke  by  said  fuel  company. 

"(10)  The  members  of  said  association  shall  not  be  required  to 
mme  and  ship  coal  when  hindered  or  prevented  bv  causes  beyond 
their  own  control,  such  as  strikes,  accidents,  refusal  or  inability  of 
the  carrier  to  provide  transportation,  &c 

"(11)  The  said  coal  association  shall  have  the  right,  once  per 
month,  through  a  committee  not  exceeding  three  in  number,  or  a  per- 
son designated  by  said  committee,  to  examine  the  order,  sales,  and 
tonnage  l)ooks  of  said  fuel  company. 

"(12)  The  coal  or  coke  of  members  of  said  coal  association  shipped 
in  barges  by  river  shall  be  handled  by  the  said  fuel  company,  as  an 
agent,  on  the  same  terms  and  under  the  same  conditions  as  are  now 
established  or  may  be  hereafter  established  and  prevail  in  Cincinnati 
market  for  the  sale  of  river  coal,  but  the  said  fuel  company  shall  not 
make  time  sales  or  extend  credit  without  the  consent  at  the  shipDers 
of  such  coal.  ^ 

"(13)  All  settlements  for  coal  or  coke  shipped  by  rail  as  aforesaid 
shall  be  made  upon  the  scale  of  weights  of  the  Chesapeake  &  Ohio 
Railway  Company,  as  ascertained  at  its  weighing  stations  now  estab- 
lished, or  that  may  hereafter  be  established. 

"(14)  It  is  distinctly  understood  that  nothing  herein  contained 
shall  be  construed  to  render  the  said  members  of  said  association 
liable  as  partners,  in  any  way.  manner,  or  form,  either  as  between 
themselves  or  with  the  said  fuel  company ;  each  of  said  firms,  corpo- 
rations, and  individuals  contracting  herein  for  themselves,  itself,  or 
himself,  and  not  one  for  the  other. 

"(15)  The  said  fuel  company  further  covenants,  agrees,  and  binds 
itself  that  neither  it,  nor  any  of  its  officers,  employes,  or  servants 
will.  With  its  knowledge,  directly  or  indirectly,  in  anv  way,  manner 
or  foi-m,  engage  or  become  interested  in  the  buving  or  selling  of 
bituminous  coal  or  coke  in  competition  with  the  coal  or  coke  of  any 
of  the  members  of  said  coal  association,  except  under  the  terms  and 
conditions  of  this  agreement. 

"(16)  The  members  of  said  coal  association  above  named,  each  for 
himself,  itself,  or  themselves,  and  not  one  for  the  other,  covenant  and 
agree  [615]  that  the  said  members  of  said  association  will  not  sell 
or  consign  any  coal  or  coke  bound  to  points  west  of  their  respective 
mines,  except  under  the  terms  and  conditions  of  this  agreement 
during  the  period  covered  by  this  agreement,  and  that  there  shall  be 
no  pretended  sale  or  lease  of  the  property  of  the  members  of  the  said 
association  made  to  evade  this  contract :  but  it  is  further  understood 
and  mutually  agreed  that  this  contract  shall  not  be  construed  to  pre- 
^®S*  *"y  ^^^  ^^®  s*^^^'  assigimient.  or  lease  of  the  respective  proo- 
erties  operated  by  the  membei-s  of  said  association,  respectively  or 
the  interest  therein  of  any  member  of  said  association.  And  in  case  of 
such  sale,  assignment,  or  lease,  the  members  of  said  association  are  not 
to  be  held  responsible  under  this  contract  for  the  sale  and  delivery  of 
any  coal  from  sucOi  properties  after  such  sale,  assignment,  or  lease 
takes  place.  But  in  case  the  vendee,  assignee,  or  lessee  of  any  coal  or 
coke  property  of  any  member  of  the  coal  association  desires,  he  shall 
nave  the  right  to  take  the  place  of  such  member  in  this  agreement 

(17)  And  whereas,  some  of  the  members  of  said  association  have 
contracts  for  the  sale  of  coal  or  coke,  which  cannot  be  completed 
until  after  this  agreement  goes  into  operation;  and  whereas  it  is 
to  the  advantage  both  of  such  members  and  of  said  fuel  comnanv 
that  such  contracts  be  filled  through  said  fuel  company  It  is 
further  agreed  that  the  members  of  said  association  having  exist- 
ing contracts  to  be  completed  during  the  period  of  this  agreement 


CHESAPEAKE   &  O.   FUEL  CO.   V.   UNITED   STATES.      157 


Statement  of  the  Case. 

shall  on  or  before  the  24th  day  of  December,  1897,  file  with  the 
general  manager  of  said  fuel  company  a  memorandum  of  each  of 
said  contracts,  and  such  of  said  contracts  as  are  uncompleted  on 
the  first  day  of  January,  1898,  shall  be  completed  through  said 
fuel  company;  the  fuel  company  to  make  no  charge  for  its  serv- 
ices in  connection  with  such  contract,  and  collecting  the  proceeds  of 
the  same;  said  fuel  company  not  to  guaranty  the  collection  of  such 
proceeds,  or  be  responsible  for  same  xmless  collected  by  it.  Such 
coal  or  coke  so  shipped  on  existing  contracts  shall  not  be  taken  into 
account  in  any  way  as  a  part  of  the  traffic  hereinbefore  provided 
for  in  this  contract,  nor  its  prices  taken  into  account  in  computing 
the  average  price  for  any  month,  but  such  as  shall  be  shipped  by 
rail  shall  be  considered  part  of  the  minimum  tonnage  mentioned  in 
the  fifth  clause  of  this  agreement  for  the  year  in  which  it  is  shipped. 
"(18)  The  said  fuel  company  shall  keep  at  its  own  expense  one  or 
more  inspectors  to  examine  and  inspect  from  time  to  time,  as  often 
as  may  be  necessary,  the  coal  and  coke  produced,  with  a  view  of 
keeping  up  a  proper  standard  of  excellence.  Should  said  inspector 
find  coal  or  coke  badly  or  improperly  prepared,  he  shall  immediately 
report  all  the  facts  in  writing  to  the  fuel  company  and  to  the  oper- 
ator preparing  such  coal  or  coke,  and  shipments  from  mine  or  mines 
producing  such  alleged  improperly  prepared  coal  or  coke  may  be  sus- 
pended after  five  (5)  days'  notice  in  v/riting  .to  such  operator,  at  the 
discretion  of  the  executive  committee  of  the  fuel  company,  until  such 
time  as  such  operator  may  prepare  such  coal  or  coke  properly.  In 
any  case  such  operator  shall  have  the  right  to  refer  the  question 
whether  such  coal  or  coke  is  improperly  prepared  or  not,  or,  if  not  so 
prepared,  whether  the  same  be  so  prepared  at  reasonable  cost,  to 
arbitration,  as  herein  provided,  which  decision  as  to  the  prepara- 
tion of  such  coal  shall  be  final  and  binding  on  both  parties;  and  in 
case  said  arbitration  shall  find  such  coal  or  coke  improperly  pre- 
pared, and  shall  further  find  that  it  is  impassible  or  impracticable  for 
such  operator  to  remedy  such  faults  at  reasonable  cost,  he  shall  have 
the  right  to  withdraw  from,  and  have  this  agreement  annulled  as  to 
him.  If  said  fuel  company  shall  make  default  in  payment  for  any 
coal  or  coke  shipped  under  this  agreement  according  to  the  terms 
hereof,  and  said  default  shall  continue  for  the  space  of  fifteen  (15) 
days,  unless  payment  shall  be  withheld  by  reason  of  attachment,  sug- 
gestion, garnishment,  or  other  legal  process  against  the  member  of 
said  coal  association  on  whose  claim  default  is  so  made,  such  de- 
fault shall,  at  the  option  of  such  member  on  whose  claim  such  default 
is  so  made,  work  an  annulment  of  this  contract  as  to  such  member: 
provided,  such  member  shall  within  ten  (10)  days  after  the  expira- 
tion of  said  fifteen  (15)  days  give  notice  in  writing  to  said  fuel  com- 
pany of  the  election  of  such  member  to  exercise  such  right  of 
annulment;  and  a  failure  to  exercise  this  right  [616]  for  any  such 
default  shall  not  prevent  the  exercise  of  the  same  for  any  subse- 
quent default.  And  a  violation  or  failure  to  keep,  observe,  and  per- 
form any  covenant  or  covenants  herein  contained  by  any  party  to 
this  agreement  shall,  at  the  option  of  the  party  or  parties  thereby 
aggrieved,  work  an  annulment  of  this  agreement  as  to  such  party  or 
parties  on  thirty  (30)  days'  notice  in  writing.  And  no  waiver  of 
this  right,  in  case  of  any  violaticm  or  failure  to  keep,  observe,  and 
perform  any  covenant  hereof,  shall  prevent  the  exercise  of  the  same 
for  any  subsequent  violation  of,  or  failure  to  keep,  observe,  and  per- 
form, the  same,  or  any  other  covenant  hereof:  provided  that,  upon 
any  notice  for  the  annulment  of  this  agreement  as  hereinbefore  pro- 
vided l)eing  given  by  any  parties  or  party,  the  party  or  parties  to 
whom  it  is  so  given,  if  desiring  to  contest  the  rights  of  thfi  parties 
or  party  giving  said  notice  to  annul  this  agreement,  shall  have  the 


Xoo 


116  FEDEBAL  REPOKTER,  616. 


Statement  of  the  Case. 

• 

right  to  submit  the  question  to  arbitration,  as  herein  provided,  and 
the  decision  of  such  arbitrator  shail  be  final  and  binding  on  ail  par- 
ties to  such  arbitration.  Bat  any  withdrawal  or  annulment  as  to  any 
naember  or  members  under  this,  or  clause  No.  18  hereof,  shall  not 
affect  this  contract  as  to  the  parties  remaining,  between  themselves. 

*  (19)  Any  person,  firm,  or  corporation  now  or  hereafter  producing 
coal  to  be  shipped  on  the  Chesiipeake  &  Ohio  Railway  may  become  a 
party  to  this  contract  by  signing  the  same,  or  an  exact  copy  hereof 
with  the  fuel  company,  or  by  an  indorsement  attached  hereto  may 
accept  the  provisions  hereof;  and,  upon  becoming  such  party  hereto 
such  permu,  firm,  cir  corporation  shall  be  entitled  to  all  the  rfghts  and 
privileges,  and  be  subject  to  all  the  duties  and  liabilities,  hereunder 
the  same  i\s  if  he,  it,  or  they  had  been  named  in  said  contract  as  one 
of  the  parties  of  the  second  part,  and  had  duly  signed  and  executed 
it  with  the  others  named  therein  :  provided,  that  said  association  shall 
agree  to  such  pers«jn,  firm,  or  corporation  becoming  a  party  hereto  by 
a  majority  vote  of  a  quorum  of  its  members. 

"(20)  It  is  understood  and  hereby  agreed  that  in  any  matter  or 
thing  conneited  with  this  agreement  where  any  partv  hereto  shall 
•leert,  maintain,  or  set  up  any  claim,  right,  privilege,  liability,  or  pen- 
alty in  his>  its,  or  their  favor,  «)r  against  any  other  party  or  parties 
hereto,  and  thereby  a  c<JUtroversy  shall  arisy  hereunder,  then  and  in 
tliat  event  either  party  or  parties  to  such  controversy  shall  have  the 
right  to  submit  the  said  controversy  to  arbitration  in  the  manner  here- 
inafter set  forth.    There  is  hereby  constituted  and  appointed  an  arbi- 
totion  committee,  which  shall  be  composed  of  two  persons  and  such 
tliird  person  as  shall  be  by  such  two  selected  from  time  to  time  as  any 
controversy  may  arise.     Such  two  persons  shall  be  selected  as  fol- 
lows:  Each  and  every  year  during  the  continuance  of  this  contract 
tm  said  fuel  company  shall  apiM>int  some  iwrson  to  serve  upon  said 
arbitration  committee,  and  the  parties  of  the  second  part  simll  also 
appoint  one  to  serve  upon  said  committee,  of  which  appointment  the 
fuel  company  and  the  association  shall  liave  notice,  and  the  two  per- 
sons so  appointed  shall  continue  to  serve  imtil  their  successors  shall 
be  appointed  in  the  same  manner.    Whenever  a  controversy  shall 
arise  hereunder,  the  party  desiring  to  submit  such  controversy  shall 
notify  the  other  party  or  parties  to  such  controversy  of  the  same   to 
writing,  and  shall  designate  in  such  notice  the  time  and  place  when 
said  two  arbitrators  shail  meet  to  hear  the  matter  in  controversy 
wid  he  or  they  shall  also  notify  the  said  arbitrators  to  meet  at  said 
time  and  place.    And  at  the  time  and  place  so  designated  said  two 
ai^ltrators  shall  meet,  and  they  shall  select  a  third  arbitrator,  who, 
with  the  other  two,  shall  constitute  the  full  arbitration  committee  to 
hear  and  determine  the  said  controversy,  and  whose  award  in  all 
matters  of  law  and  fact  shall  be  final,  and  shall  be  binding  upon  each 
and  ail  of  the  parties  to  that  controversy.    Such  notice  may  lie  served 
as  a  legal  notice  is  served,  or  it  may  be  mailed  to  the  party,  to  be 
served  at  his  or  their  post-ofltce  address.    And  any  notice  to  any  one 
or  more  of  the  parties  of  the  second  part  may  be  served  upon,  or  sent 
by  mall  to,  the  president  and  secretary  of  said  association.    If  at  the 
time  and  place  said  two  arbitrators  are  required  to  meet,  either  one 
or  both  of  them  should  fail  or  refuse  to  attend  or  serve,  then  the  fuel 
company,  by  its  agent  or  attorney,  on  the  one  side,  may  fill  the  va- 
cancy caused  by  its  arbitrator  being  absent  or   [617]'  refusing  to 
serve,  and  the  association,  by  its  officer,  agent,  or  attorney   may  fill 
the  vacancy  caused  by  the  absence  of  its  arbitrator,  or  his  refushig  to 
serve;  and  the  arbitrator  or  arbitrators  so  selected  by  either  or  both 
of  said  parties  as  aforesaid  shall  select  the  third,  which  three  shall 
for  that  controversy,  constitute  the  arbitration  committee,  and  shall 
have  the  same  powers,  and  their  award  shall  be  as  final,  as  if  the  two 


CHESAPEAKE   &  O.   FUEL  CO.   V.   UNITED   STATES.      159 


Statement  of  the  Case. 

arbitrators  herein  first  provided  for  had  attended  and  selected  a 
third.  If,  upon  having  notice  to  attend  at  a  time  and  place  to  settle 
a  controversy,  either  party  shall  fail  or  refuse  to  attend,  or  shall  fail 
or  refuse  to  select  an  arbitrator  when  reijuired  hereunder  so  to  do, 
the  said  association,  by  its  president,  other  oflicer,  or  attorney,  may 
select  an  arbitrator  in  the  place  or  stead  of  the  absent  one;  and,  if 
such  association  shall  fail  or  refuse  to  mal^e  sUch  appointment,  in 
that  event  the  fuel  compan3%  by  its  agent  or  attorney,  may  make  such 
appointment  or  appointments,  and  the  two,  when  so  appointed  in  any 
of  said  modes,  shall  select  a  third,  and  the  tliree  shall  constitute  the 
arbitration  committee  to  hear  and  determine  said  controversy,  whose 
award  shall  be  final.  A  notice  to  arbitrate  hereunder  shall  not  fix 
a  time  longer  than  fifteen  (15)  days,  nor  less  than  five  (5)  days,  from 
the  time  of  giving  said  notice,  unless  by  mutual  consent.  The  place 
of  such  meeting  of  the  arbitrators  siiali  be  at  Cincinnati,  Ohio,  or 
Charleston,  W.  Va.,  unless  by  mutual  consent.  Said  arbitrators 
shall  have  the  right  to  adjourn  their  session  from  time  to  time,  or 
to  such  place  or  places  as  they  may  determine.  And  they  shall  make 
their  award  in  not  less  than  three  days  from  the  time  the  evidence  is 
finally  taken  before  or  submitted  to  them ;  such  award  to  be  valid  if 
signed  by  two  of  the  arbitrators.  Every  award  shall  be  executed  in 
duplicate,  and  a  copy  thereof  furnished  to  each  of  tlie  executive  com- 
mittees herein  mentioned.  The  failure  of  a  regular  arbitrator  to 
attend  at  a  time  and  place  designated  in  any  notice  to  him,  and  the 
appointment  of  another  in  his  stead  for  any  controversy,  shall  not 
for  that  reason  vacate  his  general  appointment  as  an  arbitrator  until 
his  successor  is  appointed.  If  the  two  arbitrators  appointed  as  above 
provided  shall  at  any  time  fail  or  refuse  for  two  days  to  appoint  the 
third  arbitrator,  the  latter  shall  be  appointed  by  the  judge  of  the  cir- 
cuit court  of  Kanawha  coimty,  West  Virginia. 
"  Witness  the  following  signatures : 

"  The  C.  &  O.  Fuel  Co., 

"Donald  McDonald,  Pt. 
"Robinson  Coal  Co., 

"  By  Neil  Robinson. 
"W.  R.  Johnson. 
"The  Kanawha  Splint  Coal  Company, 

"  By  F.  E.  Laib. 
"  Cabver  Bbos. 
"  Enoch  Cabver. 
"  Jos  Renshaw, 

^'Special    Receiver   Big   Black   Band 
Coal  Co, 
"  Chablmobe  Coal  Co., 

"  Hebndon  &  Renshaw,  Mgrs. 
"McCallisteb  &  Co., 

"  Per  James  Kelsoe. 
"Mecca  Coal  &  Coke  Co., 

"  By  John  Cabver. 
"Chesapeake  Mining  Co., 

"By  J.  B.  Lewis. 
"  Coai^urg  Courier y  Co., 

"  By  J.  B.  Lewis. 
"Montgomery  Coal  Co., 

"  By  S.  H.  Montgomery. 
"  Belmont  Coal  Co., 

"  By  T.  E.  Embleton,  Pt. 
"Habbis  B.  Smith, 

**  8pl.   Receiver  Lens  Creek   Coal  d 
»  Coke  Co:* 


160 


115  FBDEKAL  KEPOBTEE,  618. 
Statement  of  tlie  Case. 


|§18]  The  (lefeudaiits  answered,  admitting  the  making  of  the  con- 
tract, and  takinjc;  issue  upon  the  other  allegations  of  the  bill,  and  seek- 
ing to  justify  the  making  of  the  agreement  for  lawful  purposes,  for 
reascms  set  f«»rtli  in  the  answer,  which  are  noticed  in  the  opinion. 
The  complainant  offeree!  no  .testimony,  but  certain  evidence  was  intro- 
duced by  the  defendants  for  the  pui-pose  of  showing  the  legality  of  * 
the  transaction,  and  did  tend  to  establish  certain  facts.— among 
otliers,  the  folhiwing:  The  14  parties  to  the  agreement  are  carrying 
on  trade  and  business  in  what  is  known  as  the  "  Kanawha  district," 
in  West  Virginia.  These  parties  are  miners  and  shippers  of  coal  and 
manufacturers  of  coke  in  that  distrfct,  and  the  mines  covered  by  the 
contract  are  on  the  snuth  side  of  the  Kanawha  river.  They  do  not 
own  all  of  the  mines  on  that  side  of  the  river.  One  Donald  McDonald 
hacl  been  the  agent  of  the  various  coal  companies  in  the  sale  of  coal 
ami  roke  at  Cincinnati,  Ohio,  prior  to  the  formation  of  the  Chesapeake 
&  Ohio  Fuel  Company,  which  company  is  one  of  the  parties  to  the 
agreement  in  controversy,  and  of  which  he  became  the  president.  His 
business,  before  the  formation  of  the  fuel  company,  was  largely  con- 
fined to  local  points  west  of  the  Chesapeake  &  Ohio  Railroad,  and  to 
Cincinnati  and  vicinity.  After  the  making  of  the  contract,  coal  and 
coke  were  sold  theremider  in  West  Virginia.  Kentucky,  Ohio,  Indiana, 
Illinois,  Michigan.  Wisconsin,  Missuuri,  Iowa.  Nebraska,  North  Da- 
kota. South  Dakota,  Arizona,  and  small  quantities  in  Mississippi.  Of 
the  parties  to  the  agreement,  which  relates  only  to  rail  shipments  west 
on  the  Chesapeake  &  Ohio  Railroad,  seven  in  number  have  river  tipples 
for  shipping  eoal  by  the  Great  Kanawha  river.  Other  miners,  not  par- 
ties to  this  agreement,  also  have  tipples  for  shipping  coal  on  this  river. 
The  mines  embraced  in  the  agreement  have  a  capacity  of  about  5,000  tons 
a  day,  and  the  mines  of  the  Kanawha  district  not  parties  to  the  agi-ee- 
ment  have  a  capacity  of  about  11,000  tons  a  day.  The  coke  ovens  in 
this  district  represented  by  parties  in  this  agreement  are  about  226 
in  number,  with  a  daily  capacity  of  about  450  tons,  to  abDut  347  in 
number,  with  a  daily  capacity  of  525  tons  owned  by  others  than  the 
parties  to  the  agreement.  Competition  hi  the  Western  market  is  keen 
with  the  coal  mines  shipped  along  the  line  of  the  Chesapeake  &  Ohio 
Railroad,  in  the  Kanawha  district.  This  competition  comes  from  the 
Flat  Top  coal  fields  on  the  line  of  the  Norfolk  &  Western  Railroad, 
from  the  coal  fields  all  along  the  line  of  the  Baltimore  &  Ohio  Rail- 
road. W^st  Virginia  &  Pittsburg  Railroad,  and  West  Virginia  Central 
Railroad;  also  competition  by  rail  and  water  from  all  of  the  great 
coal  fields  of  western  Pennsylvania,  the  Hocking,  Welston,  and  Nelson 
fields  of  Ohio,  the  coal  fields  of  Kentucky  and  Tennessee,  northern 
and  southern  Illinois,  and  the  fields  of  Iowa,  and  some  competition 
from  .>lissouri.  The  aggregate  of  all  these  fields  is  about  115,000,000 
tons  annually.  The  competition  in  the  Western  market  is  severe,  with 
the  coke  pro<luced  in  the  Kanawha  district.  The  twelfth  clause  of  the 
agreement,  which  provides  that  the  Chesapeake  &  Ohio  Fuel  Company 
shall  handle  the  coal  shipped  in  barges,  was  rescinded  by  all  the 
parties  to  the  agreement  in  June,  1898.  The  business  of  the  operators 
had  not  been  satisfactory,  and  it  was  agreed  with  McDonald,  the 
former  sales  agent,  that  a  company  should  be  formed  for  the  sale  of 
the  coal,  which  should  use  every  practicable  means  to  push  the  sale 
of  the  coal,  and  to  enlarge  its  market  There  were  large  contracts, 
which  no  single  operator  could  take.  The  minimmn  of  600,000  tons 
of  coal  and  75,000  tons  of  coke  per  annum,  which  it  is  provided  shall 
be  taken  under,  the  contract,  was  considerably  m  excess  of  the  pre- 
vious year's  shipments.  In  making  the  contract,  the  coal  was  placed 
at  about  00,000  tons  in  excess  of  the  previous  year's  production,  and 
the  coke  at  ^,000  tons.  It  Is  testified  that  larger  contracts  had  been 
obtained  for  the  sale  of  coal  than  theretofore,  an(f  larger  than  any  of 


CHESAPEAKE   &   0.   FUEL   CO.   V.   UNITED   STATES.      161 

Opinion  of  the  Court. 

the  operators  could  fill.  And  better  preparation  of  the  coal  for  the 
market  had  been  secured,  together  with  a  more  equitable  distribution 
of  the  cars  for  the  shipment  of  the  coal.  Since  the  fall  of  1898  an 
agent,  termed  the  "equalizer,"  has  been  employed  to  attend  to  the 
distribution  of  the  orders  sent  in  by  the  fuel  company.  The  price  to 
consumers  has  been  reduced,  and  there  has  been  no  intention  to  con- 
trol the  market  or  enhance  prices.  The  circuit  court  made  a  decree  m 
favor  of  the  complainant  (105  Fed.  93),  and  the  defendants  appealed. 

[619]  Malcolm  Johnson  and  A,  0.  Cassatt,  for  appellants. 

Wm.  E.  Bundy  and  Sherman  T.  McPherson,  for  the 
United  States. 

Before  Lurton,  Day,  and  Severens,  Circuit  Judges. 

Day,  Circuit  Judge  (after  stating  the  facts  as  above). 

This  action  involves  the  construction  and  application  of 
Act  Cong.  July  2,  1890  (26  Stat.  209).  This  statute  makes 
illegal  "every  contract,  combination,  in  the  form  of  trust 
or  otherwise,  or  conspiracy  in  restraint  of  trade  or  commerce 
among  the  several  states  or  with  foreign  nations."  The 
act  further  makes  it  a  misdemeanor  to  monopolize  or 
attempt  to  monopolize,  or  combine  or  conspire  with  others 
to  monopolize,  any  part  of  the  trade  or  commerce  among 
the  several  states.  This  suit  was  brought  under  cover  of 
the  fourth  section,  giving  to  the  circuit  court  jurisdiction 
of  proceedings  in  equity  brought  by  the  United  States  dis- 
trict attorney,  under  the  direction  of  the  attorney  general, 
to  restrain  violations  of  the  law. 

Is  the  contract  in  restraint  of  trade,  within  the  meaning  of 
the  law?  As  we  understand  the  decisions  of  the  supreme 
court  of  the  United  States,  the  construction  of  the  statute 
is  no  longer  an  open  question.  At  the  common  law,  contracts 
were  invalid  when  in  unreasonable  restraint  of  trade,  and 
were  not  enforced  by  the  courts.  See  opinion  of  this  court, 
per  Taft,  Circuit  Judge,  in  U.  S.  v.  Addyston  Pipe  <&  Steel 
Co,,  29  C.  C.  A.  141,  85  Fed.  271-279,  46  L.  K.  A.  122.  By 
the  constitution  of  the  United  States,  congress  is  given 
plenary  power  to  regulate  commerce  between  the  states  and 
with  foreign  nations.  In  the  exercise  of  this  power,  con- 
gress may  prevent  interference  by  the  states  with  the  free- 
21220— VOL  2—07  m 11 


162 


115   FEDERAL   REPORTER,  619. 


OpinioB  of  the  Ck>iirt 

dom  of  interstate  commerce,  and  may  likewise  prohibit 
individuals,  by  contract  or  otherwise,  from  impeding  the 
free  and  untrammeled  flow  of  such  trade.  In  the  exercise 
of  this  right,  congress  has  seen  fit  to  prohibit  all  contracts 
in  restraint  of  trade.  It  has  not  left  to  the  courts  the  con- 
sideration of  the  question  whether  such  restraint  is  reason- 
able or  unreasonable,  or  whether  the  contract  would  have 
been  illegal  at  the  common  law  or  not.  The  act  leaves  for 
consideration  by  judicial  authority  no  question  of  this  char- 
acter, but  all  contracts  and  combinations  are  declared  illegal 
if  in  restraint  of  trade  or  commerce  among  the  states.  U,  S, 
V.  Trans-Missouri  Freight  Ass'n,  166  U.  S.  290,  17  Sup.  Ct. 
540,  41  L.  Ed.  1007;  U,  8,  v.  Joint  Traffic  Ass^  171  U.  S. 
505,  10  Sup.  Ct.  25,  43  L.  Ed.  259;  Addyston  Pipe  <&  Steel 
€o,  V.  U.  S,,  175  U.  S.  211,  20  Sup.  Ct.  96,  44  L.  Ed.  136. 

While  this  is  the  general  rule  to  be  deduced  from  the 
authorities  cited,  it  is  to  be  remembered  that  the  supreme 
court  has  also  declared : 

"All  agreement  entered  into  for  the  purpose  of  promoting  the  legit- 
imate business  of  an  individual  or  corporation,  with  no  purpose  to 
thereby  aft'ect  or  restrain  interstate  commerce,  is  not,  as  we  think, 
covered  by  the  act,  although  the  agreement  may  indirectly  and 
remotely  affect  commerce."  U.  8.  v.  Joint  Trafflc  Ass'n,  171  U.  S. 
505,  568,  19  Sup.  Ct  25,  43  L.  Ed.  259. 

The  question  is,  in  each  case,  does  the  contract  or  com- 
bination have  the  necessary  effect  to  restrain  interstate  com- 
merce? A  contract  or  combination  which  interferes  with 
the  freedom  of  interstate  commerce,  [620]  and  hinders  or 
prevents  its  free  enjoyment,  to  the  extent  that  it  does  so, 
restrains  that  commerce,  and  is  illegal.  It  was  the  policy 
of  the  common  law  to  discourage  monopolies,  and  to  refuse 
to  enforce  contracts  which  had  the  effect  to  suppress  com- 
petition. It  was  believed  and  declared  by  those  who  built 
up  that  system  of  jurisprudence  that  the  public  interests 
were  best  subserved  when  commerce  and  trade  were  left 
unfettered  by  combinations  and  agreements  which  had  the 
effect  to  destroy  competition  in  whole  or  in  part.  It  was 
in  the  same  spirit,  and  with  the  same  end  in  view,  that  con- 
gress passed  the  act  under  consideration,  which  is  aimed  to 
maintain  interstate  commerce  upon  the  basis  of  free  com- 
petition, and  contracts  which  have  the  necessary  t-endency 


CHESAPEAKE    &   O.    FUEL    CO,    17.    UNITE!'    STATES.      163 

Opinion  of  the  Court- 
to  restrain  that  freedom  are  within  the  condemnation  of 
the  law.  The  courts  are  not  concerned  with  the  ix)licy  of 
such  a  law.  It  is  not  for  them  to  inquire  whether  it  be  true, 
as  is  often  alleged,  that  this  is  a  mistaken  public  policy,  and 
combinations,  in  the  reduction  of  the  cost  of  production, 
cheapened  transportation,  and  lowered  cost  to  the  consumer, 
have  been  productive  of  more  good  than  evil  to  the  public. 
The  constitution  has  delegated  to  congress  the  right  to  con- 
trol and  regulate  commerce  between  the  states.  In  the  exer- 
cise of  this  right,  it  has  declared  for  that  policy  which  shall 
keep  competition  free,  and  leave  interstate  commerce  open 
to  all,  without  the  right  to  any  to  fetter  it  by  contracts  or 
combinations  which  shall  put  it  under  restraint. 

Looking,  then,  to  the  contract  in  question,  we  find  14  of  th^ 
coal  producers  of  this  district,  whose  aggregate  production 
is  .5,000  tons  a  day,  entering  into  an  agreement  which,  without 
making  a  partnership,  undertakes  to  control  the  entire  out- 
put of  the  several  mines  for  shipment  west  by  a  leading  route. 
Examining  its  provisions,  we  find  that  these  14  independent 
operators,  who  theretofore  were  competing  in  the  open  market 
for  the  trade  which  is  the  subject  of  this  contract,  are  now 
prevented  from  any  independent  action  in  fixing  prices,  but 
are  obliged  to  sell  at  a  price  fixed  by  the  executive  committee, 
or  not  to  sell  at  all.  One  of  the  witnesses  introduced  by  the 
defendants  said  in  the  coui-se  of  his  testimonv : 

•*  I  suppose  before  this  contract  went  into  effect  the  operators  were 
not  generally  informed  as  to  what  each  other  were  receiving,  and  that 
each  received  his  own  price." 

Undoubtedly  the  market  price  was  generally  controlling, 
but  the  price  was  not  fixed  by  arbitrary  agreement,  and  was 
left  to  the  operation  of  the  natural  laws  of  open  competi- 
tion. Under  this  agreement  no  member  of  the  association 
is  permitted  to  sell  coal  or  coke  bound  to  points  west  on  the 
railroad  except  under  the  terms  and  conditions  of  the  con- 
tract, and  the  fuel  company  cannot  directly  or  indirectly 
become  interested  in  the  buying  or  selling  of  bituminous  coal 
or  coke  of  any  members  of  the  association,  or  coal  or  coke 
in  competition  with  coal  or  coke  of  members  of  the  associa- 
tion, except  under  the  terms  of  the  agreement.  Monthly  re- 
ports are  to  be  made,  showing  the  tonnage  of  the  various 


hJ^IJ^-Iii!! 


115  FEDBKAL  REPORTER,   621. 


Opinion  of  tlie  Court. 

kinds  of  coal  and  coke  sMpped  by  the  various  members  of 
the  association,  and  weighed  during  the  month,  together  with 
an  average  price  of  each  grade  of  coal  or  coke  so  shipped  and 
weighed,  which  average  price  is  to  be  computed  upon  the 
basis  of  the  actual  1621]  price,  less  gross  profits,  if  any, 
received  for  all  coal  and  coke  sold,  and  the  minimum  price 
as  fixed  by  the  contract  for  coal  and  coke  not  sold  in  such 
month,  and  settlement  to  be  made  with  the  members  of  the 
association  according  to  the  prices  fixed.  The  fuel  company 
is  to  receive  a  gross  profit  of  not  to  exceed  10  cents  a  ton,  and 
the  amount  realized  each  month  in  excess  of  said  profit,  over 
and  above  the  minimum  price,  is  to  be  paid  to  the  members  of 
the  coal  association.  The  executive  committee  of  the  coal 
association  is  required,  not  later  than  the  20th  day  of  each 
month,  to  designate  the  percentage  of  the  total  product  of 
each  class  and  grade  of  coal  and  coke  which  they  deem  best 
to  be  shipped  by  each  member  of  the  association  under  the 
terms  of  the  contract. 

A  consideration  of  these  provisions,  assuming  that  the 
contract  relates  to  interstate  commerce,  would  seem  to  make 
plain  the  violation  of  the  statute  of  1890.  Here  are  14 
dealers  who  have  neither  formed  a  corporation  nor  a  partner- 
ship, but  have  limited  to  the  terms  of  this  agreement  their 
rights  for  five  years  in  the  mining  and  shipping  of  coal  upon 
one  of  their  main  outlets  to  the  market.  They  have  re- 
stricted their  right  to  produce  coal  for  such  shipment  to  fciie 
amount  designated  by  the  committee.  They  have  restricted 
sales  to  this  purchaser  to  a  price  to  be  fixed  by  the  com- 
mittee. They  have  eliminated  competition  in  the  market 
among  themselves.  They  have  restricted  the  purchaser  so 
that  he  may  not  buy  from  others  in  competition  with  them- 
selves. If  we  correctly  interpret  the  decisions  of  the  supreme 
court,  these  provisions  clearly  restrain  the  freedom  of  inter- 
state commerce,  which  it  is  the  purpose  of  this  statute  to 
maintain  unfettered  by  such  contracts  ahd  combinations. 
While  it  is  admitted  that  some  restraint  may  result  upon 
commerce  by  these  provisions,  it  is  strenuously  argued  by 
the  learned  counsel  for  the  defendants  that  such  restrictions 
among  a  portion  of  the  coal  dealers  of  a  district  are  only 
ancillary  to  a  main  lawful  purpose,  resulting  in  larger  com- 


CHESAPEAKE    &   O.   FUEL   CO.   t;.    UNITED   STATES.      165 

Opinion  of  the  Court 

petition,  and  greater  freedom  and  volume  of  interstate  trade, 
and  do  not  violate  the  act.  In  support  of  this  contention, 
Judge  Taft's  opinion  in  the  Addyston  Pipe  Co.  Case,  supra, 
is  cited,  in  which,  after  summarizing  the  five  instances  in 
which  the  common  law  upheld  covenants  in  partial  restraint 
of  trade,  the  learned  judge  said: 

"  It  would  be  stating  it  too  strongly  to  say  tliat  these  five  classes  of 
covenants  m  restraint  of  trade  include  all  of  those  upheld  as  valid  at 
the  common  law ;  but  it  would  certainly  seem  to  follow  from  the 
tests  laid  down  for  determining  the  validity  of  such  an  agreement 
that  no  conventional  restraint  of  trade  cnn  be  enforced  unless  the 
covenant  embodying  it  is  merely  ancillary  to  the  main  puriwse  of  a 
lawful  contract,  and  necessary  to  protect  the  covenantee  in  the  en- 
joyment of  the  legitimate  fiiiits  of  the  contract,  or  to  protect  him 
from  the  dangers  of  an  unjust  use  of  those  fruits  by  the  other  party." 

And  the  judge  quotes  from  Chief  Justice  Tindal  in  Homer 
v.  Graves,  7  Bing.  735,  to  the  effect  that  in  such  cases  it  is  to 
be  considered  whether  the  restraint  imposed  by  the  contract 
is  only  fair  protection  to  the  interests  of  the  party  in  whose 
favor  it  is  given,  and  not  so  large  as  to  interfere  with  the 
interests  of  the  public.  If  the  unreasonable  restraint,  as  at 
the  common  law,  was  the  test  of  the  validity  of  such  contracts, 
we  might  inquire  whether  this  agreement  [62S]  did  not 
contain  certain  restrictions  entirely  unnecessary  to  the  pro- 
tection of  the  fuel  company  in  acquiring  the  coal  from  the 
association,  which  restrictions  are  inimical  to  the  public  in- 
terest. But  it  is  to  be  remembered  that  the  test  of  the  com- 
mon law  as  to  the  reasonableness  of  the  restraint  of  com- 
merce is  not  the  test  of  the  validity  of  such  agreements, 
within  the  provision  of  the  statute.  This  proposition  was 
decided  by  the  supreme  court  in  the  Trans-Missouri  Case, 
supra,  and  affirmed  in  later  cases.  Not  that  every  case  of 
incidental  restraint  makes  a  contract  void,  but  the  question 
is,  is  it  the  effect  of  the  contract  to  directly  restrain  interstate 
commerce?  Upon  this  question  the  supreme  court  has  said 
(Joint  Traffic  Ass'n  Case,  171  U.  S.  567,  568,  19  Sup.  Ct.  31, 
43  L.  Ed.  287)  : 

"  Nevertheless,  we  Difght  say  that  the  formation  of  corporations  for 
business  or   manufacturing  purposes   has   never,   to   our   knowledge 
been  regarded  in  the  nature  of  a  contract  in  restraint  of  trade  or 
commerce.    The  same  may  be  said  of  the  contract  of  partnership 
It  might  also  be  difficult  to  show  that  the  appointment,  of  two  or 
more  producers,  of  the  same  person  to  sell  their  goods  on  commission 
was  a  matter  in  any  degree  in  restraint  of  trade. 


im 


115  FEDERAL  REPORTER,  622. 
Opinion  of  the  Court 


"An  agreement  entered  into  for  the  pui-pose  of  promoting  the  legit- 
imate business  of  an  individual  or  corporation,  with  no  purpose  to 
thereby  affect  or  restrain  interstate  commerce,  and  which  does  not 
directly  restrain  such  commerce,  is  not,  as  we  think,  covered  by  the 
act,  although  the  agreement  may  indirectly  and  remotely  affect  that 
commerce.  We  also  repeat  what  is  said  in  the  case  above  cited, 
that  'the  act  of  congress  must  have  a  reasonable  construction,  or 
else  there  would  scarcely  be  an  agreement  or  contract  among  business 
men  that  could  not  be  said  to  have,  indirectly  or  remotely,  some 
bearing  upon  interstate  commerce,  and  possibly  to  restrain  it.' " 

And  in  the  Addyston  Case^  175  U.  S.  245,  20  Sup.  Ct.  109, 
44  L.  Ed.  149,  the  court  says: 

"All  the  facts  and  circumstances  are,  however,  to  be  considered  in 
order  to  determine  the  fundamental  question,  whether  the  necessary 
effect  of  the  combination  is  to  restrain  interstate  commerce." 

And  it  is  argued  that  the  main  purpose  of  this  agreement 
being  to  increase  the  trade  of  the  parties,  to  enhance  compe- 
tition in  a  larger  field,  and  improve  the  character  of  the 
product,  these  objects  are  beneficial  to  the  public,  as  well  as 
to  the  private  parties,  lawful  in  their  scope  and  purpose, 
and  justifying  the  indirect  and  partial  restraint  of  trade 
involved  in  the  execution  of  the  agreement.  The  argument 
here  advanced  would  be  available  to  nearly  every  combina- 
tion of  this  kind.  Wider  markets  and  more  trade  may  be  the 
inducements  to  such  agreements,  but  they  are  purposes  which 
the  act  of  congress  does  not  permit  to  interfere  with  the  free- 
dom of  interstate  traffic.  It  would,  however,  be  closing  our 
eyes  to  the  situation  and  the  terms  of  the  contract  not  to 
perceive  that  the  limiting  of  competition  was  a  moving  pur- 
pose in  entering  into  this  agreement.  Not  only  are  the  14 
operators  who  signed  the  agreement  limited  in  prices  and 
trade  and  production  to  the  governing  action  of  the  execu- 
tive committee,  but  in  the  nineteenth  paragraph  of  the  con- 
tract it  is  provided  that  any  person,  firm,  or  corporation 
now  or  hereafter  producing  coal  to  be  shipped  on  the  Chesa- 
peake &  Ohio  Eailroad  may  become  a  party  to  the  contract 
by  signing  the  same;  such  parties  to  be  ad-  [623]  mitted, 
by  a  majority  vote  of  the  members,  to  full  participation  in 
the  benefits  and  obligations  of  the  contract.  The  parties 
mav  well  be  concluded  to  have  intended,  in  what  thev  did,  to 
put  an  end  to  competition  in  the  district  in  shipments  to  the 
Western  market  U>  be  reached  by  the  Chesapeake  &  Ohio 


CHESAPEAKE   &    O.    FUEL   CO,   V,   UNITED   STATES.      167 

Opinion  of  the  Court. 

Railroad,  by  getting  all  the  operators  into  an  agreement  to 
sell  for  a  single  price,  to  be  fixed  by  a  committee  of  their 
number,  and  to  limit  competition  among  themselves  in 
markets  near  and  remote,  within  the  scope  of  the  agreement. 
It  is  to  be  remembered  in  this  connection  that  it  is  the  effect 
of  the  contract  upon  interstate  commerce,  not  the  intention 
of  the  parties  in  entering  into  it,  which  determines  whether 
it  falls  within  the  prohibition  of  the  statute.  The  Trans- 
Missouri  Case,  166  U.  S.  341,  IT  Sup.  Ct.  540,  41  L.  Ed. 
1007;  the  Addyston  Case,  175  U.  S.  234,  20  Sup.  Ct.  96,  44 
L.  Ed.  136.  It  is,  moreover,  contended  that  the  effect  of 
this  agreement  has  been  the  reduction  of  prices  to  the  con- 
sumer. In  determining  whether  a  combination  restrains 
interstate  commerce,  it  is  not  only  the  effect  upon  consumers 
which  is  to  be  considered,  but,  as  well,  the  effect  upon  others 
in  the  business,  who,  from  choice  or  necessity,  are  left  outside 
of  the  organization.  As  is  said  in  the  Trans-Missouri  Case, 
166  U.  S.  323, 17  Sup.  Ct.  552,  41  L.  Ed.  1021 : 

"  In  business  or  trading  combinations,  they  may  even  temporarily, 
or  perhaps  permanently,  reduce  the  price  of  the  article  traded  in  or 
manufactured,  by  reducing  the  expense  inseparable  from  the  running 
of  many  different  companies  for  the  same  purpose.  Trade  or  com- 
merce under  those  circumstances  may  nevertheless  be  badly  and  un- 
fortunately restrained  by  driving  out  of  business  the  small  dealers 
and  worthy  men  whose  lives  have  been  spent  therein,  and  who  might 
be  unable  to  readjust  themselves  to  their  altered  surroundings.  Mere 
reduction  in  the  price  of  the  commodity  dealt  in  might  be  dearly 
paid  for  by  the  ruin  of  such  a  class,  and  the  absorption  of  control 
over  one  commodity  by  an  all-powerful  combination  of  capital." 

In  the  present  case,  if  the  scheme  of  this  combination  shall 
prevail,  until  nearly  all  of  the  operators  in  this  district  have 
availed  themselves  of  the  opportunity  contained  in  the  con- 
tract and  become  parties  to  it,  the  effect  upon  dealers  who 
have  not  its  large  facilities,  and  may  be  unable  to  compete 
for  the  contracts  and  meet  the  prices  fixed  by  the  committee, 
cannot  be  otherwise  than  disastrous.  And  when  the  small 
dealer  has  been  driven  out,  the  combination  is  one  step 
nearer  to  the  power  to  control  the  market. 

It  is  further  contended  that  the  competition  is  such  in 
the  market  for  which  this  coal  is  intended,  and  the  coal 
produced  by  the  operators,  parties  to  this  agreement,  is  such 
a  small  fraction  of  the  quantity  sold,  that  it  cannot  affect 


168 


nS  FEDERAl,  BEPORTER,  623. 
Opinion  of  tlie  Court 


prices  materially.  It  is  not  required,  in  order  to  violate  this 
statute,  that  a  monopoly  be  created.  It  is  sufficient  if  that 
be  the  necessary  tendency  of  the  agreement.  In  V.  S.  v.  E, 
C.  Knight  Co,,  156  U.  S.  1,  15  Sup.  Ct.  249,  39  L.  Ed.  325, 
Chief  Justice  Fuller  said : 

"  Again,  all  the  authorities  agree  that,  in  order  to  vitiate  a  contract 
or  combination,  it  is  not  essential  that  Its  result  be  a  complete  monop- 
oly. It  is  sufficient  if  it  really  tends  to  that  end,  and  to  deprive  the 
public  of  the  advantages  which  flow  from  a  free  competition."    Quoted 

f*^."?5£^^^^  *^  *^®  ^ddyston  Case,  175  U.  S.  237,  20  Sup.  Ct  96,  44 
L.  Ed.  136. 

[624]  The  statute  is  not  limited  to  contracts  or  combina- 
tions which  monopolize  interstate  commerce  in  any  given 
'commodity,  but  seeks  to  reach  those  which  directly  restrain 
or  impair  the  freedom  of  interstate  trade.  The  law  reaches 
combinations  which  may  fall  short  of  complete  control  of  a 
trade  or  business,  and  does  not  await  the  consolidation  of 
many  small  combinations  into  the  huge  "  trust "  which  shall 
control  the  production  and  sale  of  a  commodity. 

Again,  it  is  argued  that  the  features  of  the  contract  which 
fix  the  minimum  to  be  taken  by  the  fuel  company  in  excess 
of  the  former  production  of  the  mines,  and  i>ermit  a  propor- 
tionate reduction  of  the  minimum  quantity  to  be  taken  when 
the  price  is  fixed  so  high  that  the  fuel  company  cannot  meet 
the  market,  are  evidences  that  this  is  no  more  than  an  agree- 
ment to  make  the  fuel  company  the  common  agent  of  the 
parties  for  the  sale  of  the  product  of  the  mines  at  the  market 
price.  The  answers  to  this  position  are  obvidus.  In  the  con- 
stitution of  such  an  agency  the  restrictive  features  of  this 
contract  are  unnecessary.  Should  the*  fuel  company  be  un- 
able in  all  cases  to  meet  the  price  fixed,  the  parties  are 
nevertheless  prohibited,  during  the  life  of  the  contract,  from 
dealing  with  others,  or  selling  at  a  less  price  than  the  com- 
mittee has  fixed,  and  the  purchaser  is  not  at  liberty  to  deal 
with  competitors  for  a  supply  of  coal  for  this  market. 
"  It  is  the  effect  of  the  combination  in  limiting  and  restrict- 
ing the  right  of  each  of  the  members  to  transact  business  in 
the  ordinary  way,  as  well  as  its  effect  upon  the  volume  or 
extent  of  the  dealing  in  the  commodity  that  is  regarded." 
The  Addystan  Case,  175  U.  S.  245,  20  Sup.  Ct.  109,  44  L. 
Ed.  149. 


BEMENT   V.    NATIONAL   HARROW   CO. 


169 


Syllabus. 

We  think  this  contract,  within  the  meaning  of  the  statute, 
is  in  restraint  of  interstate  commerce,  and  tends  to  create 
monopoly. 

That  the  contract  under  consideration  has  relation  to  inter- 
state commerce,  within  the  meaning  of  the  act,  we  think  not 
doubtful.  The  coal  was  contracted  for  to  be  sold  in  the 
Western  market.  It  is  declared  to  be  a  main  purpose  of  the 
contract  to  extend  that  market.  The  coal  was  in  fact  shipped 
to  a  number  of  Western  states.  The  payments  were  to  be 
made  for  the  coal  upon  the  basis  of  a  10  per  cent,  profit  to 
the  fuel  company,  and  the  excess  to  go  to  the  members  of  the 
coal  association.  These  sales  were  made,  as  it  was  intended 
and  stipulated  that  they  should  be,  in  the  Western  states. 
Upon  this  subject,  speaking  for  the  court  in  the  Addyston 
Case,  175  U.  S.  241,  20  Sup.  Ct.  107,  44  L.  Ed.  147,  Mr.  Jus- 
tice Peckham  said: 

"  If,  therefore,  an  agreement  or  combination  directly  restrains  not 
alone  the  manufacture,  but  the  purchase,  sale,  or  exchange  of  the 
aiauufactured  commodity  among  the  several  states,  it  is  brought 
within  the  provisions  of  the  statute.  The  power  to  regulate  such  com- 
merce— that  is,  the  power  to  prescribe  the  rules  by  which  it  shall  be 
governed — is  vested  in  congi*ess;  and,  when  congress  has  enacted  a 
statute  such  as  the  one  in  question,  any  agreement  or  combination 
which  directly  operates,  not  alone  upon  the  manufacture,  but  upon  the 
sale,  transportation,  and  delivery  of  an  article  of  interstate  commerce, 
by  preventing  or  restricting  its  sale,  etc.,  thereby  regulates  interstate 
commerce  to  that  extent,  and  to  the  same  extent  intrenches  upon  the 
power  of  tlio  national  legislature  and  violates  the  statute." 

Within  this  principle,  we  think  the  contract  and  combina- 
tion under  consideration  have  relation  to  interstate  commerce. 
The  judgment  of  the  circuit  court  is  affirmed. 


[70]  BEMENT  v.  NATIONAL  HARKOW  COMPANY. 

ERROR  TO  THE  SUPREME  COURT  OF  THE  STATE  OF  NEW  YORK. 


No.  215.     Argued  April  9,  10,  1902.     Decided  May  19,  1902. 

[186  U.  S.,  70.] 

Any  one  sued  upon  a  contract  may  set  up,  as  a  defence,  that  it  is  a 
violation  of  an  act  of  Congress. 

The  object  of  the  patent  laws  is  monopoly,  and  the  rule  is  with  few 
exceptions,  that  any  conditions  which  are  not  in  their  very  nature 
illegal  with  regard  to  this  kind  of  property,  imposed  by  the  patentee, 


170 


186  UNITED  STATES  KEPORTS,  70. 


Syllabus. 

and  agreed  to  by  the  licensee  for  the  right  to  manufacture  or  use  or 
sell  the  article,  will  be  upheld  by  the  courts ;  and  the  fact  that  the 
conditions  in  the  contracts  keep  up  the  monopoly,  does  not  render  them 
illegal.  The  prohibition  was  a  reasonable  prohibition  for  the  defend- 
ant, who  would  thus  be  excluded  from  making  such  harrows  as 
were  made  by  others,  who  were  engaged  in  manufacturing  and  sell- 
ing other  machines  under  other  patents;  but  it  would  be  unreason- 
able to  so  construe  the  provision,  as  to  prevent  the  defendant  from 
using  any  letters  patent  legally  obtained  by  It  and  not  infringing 
patents  owned  by  others. 
Upon  the  facts  found,  there  was  no  error  in  the  judgment  of  the  Court 
of  Appeals,  and  it  is  affirmed.* 

[46  L.  ed.,  1058.] » 

IThe  defense  that  a  contract  is  in  violation  of  the  act  of  Congress 
of  July  2,  1890  (26  Stat.  L.,  209,  chap.  647),  to  protect  trade  and 
commerce  against  unlawful  restraints  and  monopolies,  which  makes 
Illegal  every  contract  violative  of  its  provisions,  may  be  set  up  by 
a  private  individual  when  sued  theron,  and,  if  proved,  constitutes 
a  good  defense  to  the  action.] 
fConditions  imposed  by  the  patentee  in  a  license  of  the  riglit  to  manu^ 
facture  or  sell  the  patented  article,  which  keep  up  the  monopoly 
or  fix  prices,  do  not  violate  the  act  of  Congress  of  July  2,  1890  (26 
Stat  L.,  209.  chap.  647),  to  protect  trade  and  commerce  against 
unlawful  restraints  or  monopolies.] 
IReasonable  and  legal  conditions  imposed  by  the  patentee  in  a  license 
of  the  right  to  manufacture  and  sell  the  patented  article,  restrict- 
ing the  terms  upon  which  the  article  manufactured  under  such 
license  may  he  used,  and  the  price  to  be  demanded  therefor,  do  not 
constitute  such  a  restraint  on  commerce  as  is  forbidden  by  the  act 
of  Congress  of  July  2,  1890  (26  Stat.  L.,  209,  chap.  647),  to  protect 
trade  and  commerce  against  unlawful  restraints  and  monopolies.] 
IThe  agreement  of  the  licensee  of  a  patent  for  improvements  relating' 
to  float  spring  tooth  hari-ows,  not  to  manufacture  or  sell  any  other 
such  harrows  than  those  which  it  had  made  under  its  patents  be- 
fore assigning  them  to  the  licensor,  or  which  it  was  licensed  to 
manufacture  and  sell  under  the  terms  of  the  license,  except  such 
other  style  and  construction  as  it  may  be  licensed  to  manufacture 
and  sell  by  such  licensor,  is  not  void  as  an  unlawful  restraint  on 
trade  or  commerce  forbidden  by  the  act  of  Congress  of  July  2, 
1890  (20  Stat  L.,  209,  chap.  647),  since  the  plain  purpose  of  this 
provision  is  to  prevent  the  licensee  from  infringing  on  the  rights 


«The  foregoing  syllabus  copyrighted,  1902,  by  The  Banks  Law  Pub 
nshing  O. 

»The  following  paragraphs  Inclosed  In  brackets  are  taken  from  the 
^Uabus  to  this  case  in  the  United  States  Supreme  Court  Reports, 
Book  46,  p.  1058.    Copyrighted,  1902,  by  The  Lawyers'  Co-Operativo 
Publishing  Co. 


BEMENT    V.    NATIONAL   HARROW   CO. 
Statement  of  the  Case. 


171 


of  others  under  other  patents,  and  not  to  stifle  competition  or  pre- 
vent the  licensee  from  attempting  to  make  any  improvement  in 
harrows.] 
[An  agreement  by  the  licensor  of  a  patent  for  improvements  relating 
to  harrows,  not  to  license  any  other  person  than  the  licensee  to 
manufacture  or  sell  any  harrow  of  the  peculiar  style  and  construc- 
tion then  used  or  sold  by  such  licensee,  does  not  violate  the  act  of 
Congress  of  July  2,  1890  (26  Stat  L.,  209,  chap.  647),  to  protect 
trade  and  commerce  against  unlawful  restraints  and  monopolies.] 

This  was  a  writ  of  error  to  the  Supreme  Court  of  the  State 
of  New  York,  to  which  court  the  record  had  been  remitted 
after  a  decision  of  the  case  by  the  Court  of  Appeals.  The 
action  was  brought  by  the  plaintiff  below,  the  defendant  in 
error  here,  [71]  a  corporation,  to  recover  the  amount  of  liqui- 
dated damages  arising  out  of  an  alleged  violation  by  the 
defendant  below,  the  plaintiff  in  error  here,  also  a  corpora- 
tion, of  certain  contracts  execuu^d  between  the  parties,  in  re- 
lation to  the  manufacture  and  sale  of  what  are  termed  in  the 
contracts  "  float  spring  tooth  harrows,"  their  frames  and  at- 
tachments applicable  thereto,  under  letters  patent  owned  by 
the  plaintiff.  The  action  was  also  brought  to  restrain  the 
future  violation  of  such  contracts,  and  to  compel  their  specific 
performance  by  tlie  defendant.  The  case  was  tried  before  a 
referee  pursuant  to  the  statute  of  New  York  providing  there- 
for, and  he  ordered  judgment  in  favor  of  the  plaintiff  for 
over  twenty  thousand  dollars,  besides  enjoining  the  defend- 
ant from  violating  its  contract  w^ith  the  plaintiff,  and  direct- 
ing their  specific  performance  as  continuing  contracts.  Tliis 
judgment  was  reversed  by  the  appellate  division  of  the  Su- 
preme Court  and  an  order  made  granting  a  new  trial,  but  on 
appeal  from  such  order  the  Court  of  Appeals  reversed  it  and 
affirmed  the  original  judgment.  The  defendant  brings  the 
case  here  by  writ  of  error. 

The  particular  charact>er  of  the  action  appears  from  the 
pleadings.  The  complaint,  after  alleging  the  incorporation 
of  both  parties  to  the  action,  the  plaintiff  in  New  Jersey  and 
the  defendant  in  Michigan,  averred  that  about  April  1,  1891, 
the  plaintiff's  assignor,  a  New  York  corporation,  entered  with 
the  defendant  into  certain  license  contracts,  called  therein 
Exhibits  A  and  B.    The  substance  of  contract  A  is  as  follows: 


'1  fJQ 


186  UNITED   STATES  KEPOBTS,   71. 


Statement  of  tlie  Case. 
It  stated  that  the  plaintiff  was  the  owner  of  certain  letters 
patent  of  the  United  States,  which  had  been  issued  to  other 
parties  and  were  then  owned  by  the  plaintiff,  for  improve- 
ments relating  to  float  spring  tooth  harrows,  harrow  frames 
and  attachments  applicable  thereto,  eighty-five  of  which  pat- 
ents were  enumerated,  and  that  the  defendant  desired  to 
acquire  the  right  to  use  in  its  business  of  manufacturino^  at 
Lansing,  (in  the  State  of  Michigan,)  and  to  sell  throughout 
the  United  States,  under  such  patents  or  some  one  or  more  of 
them,  and  under  all  other  patented  rights  owned  or  thereafter 
acquired  by  the  plaintiff,  which  applied  to  and  embraced  the 
peculiar  construction  employed  by  the  defendant,  during  the 
term  of  such  patents  or  either  or  any  [72]  thereof,  applicable 
to  and  embracing  such  construction.    The  plaintiff  then,  in 
and  by  such  contract,  gave  and  granted  to  the  defendant  the 
license  and  privilege  of  using  the  rights  under  those  patents 
in  Its  business  of  manufacturing,  marketing  and  vending  to 
others  to  be  used,  float  spring  tooth  harrows,  float  spring 
tooth  harrow  frames  without  teeth  and  attachments  applica- 
ble thereto;  a  sample  of  the  harrow  frames  and  attachments 
the  defendant  was  licensed  to  manufacture  and  sell,  being  (as 
stated)  in  the  possession  of  the  treasurer  of  the  plaintiff,  and 
marked  and  numbered  as  set  forth  in  schedule  A,  which  was 
made  a  part  of  the  license.    The  license  was  granted  upon 
the  terms  therein  set  forth,  which  were  as  follows : 

(1)  The  defendant  was  to  pay  a  royalty  of  one  dollar  for 
tieach  float  spring  tooth  harrow  or  frame  sold  bv  it  pursuant 

to  the  license,  to  be  paid  to  the  plaintiff  at  its  office  in  the  city 
of  Utica  in  the  State  of  New  York. 

(2)  The  defendant  was  to  make  verified  reports  of  its  busi- 
ness each  month  and  mail  them  to  the  plaintiff,  and  the  de- 
fendant agreed  that  it  would  not  ship  these  harrows  to  any 
person,  firm  or  corporation  to  be  sold  on  commission,  or  allow 
any  rebate  or  reduction  from  the  price  or  prices  fixed-  in  the 
license,  except  to  settle  with  an  insolvent  debtor  for  harrows 
previously  sold  and  delivered. 

(3)  The  defendant  agreed  that  it  would  not  during  the 
continuance  of  the  license  sell  its  products  manufactured 
under  the  license  at  a  less  price  or  on  more  favorable  terms  of 
payment  and  delivery  to  the  purchasers  than  was  set  forth  in 


BEMENT    V.    NATIONAL   HARROW   CO. 
Statement  of  the  Case. 


173 


schedule  B,  which  was  made  a  part  of  the  license,  except  as 
thereinafter  provided. 

(4)  The  plaintiff  reserved  the  right  to  decrease  the  selling 
price  and  to  make  the  terms  of  payment  and  delivery  more 
favorable  to  the  purchasers,  and  it  might  reduce  the  royalty 
on  the  harrows  manufactured  under  the  license. 

(5)  The  plaintiff  agreed  to  furnish  license  labels  to  the 
defendant,  which  were  to  be  affixed  to  each  article  sold,  and 
the  amount  of  ten  cents  paid  for  each  of  such  labels  was  to  be 
credited  and  allowed  on  the  royalty  paid  by  the  defendant  at 
the  time  of  such  payment. 

[73]  (6)  The  defendant  agreed  that  it  would  not,  during 
the  continuance  of  the  license,  be  directly  or  indirectly  en- 
gaged in  the  manufacture  or  sale  of  any  other  float  spring 
tooth  harrows,  etc.,  than  those  which  it  was  licensed  to  man- 
ufacture and  make  under  the  terms  of  the  license,  except  such 
as  it  might  manufacture  and  furnish  another  licensee  of  the 
National  Harrow  Company,  and  then  only  such  construc- 
tions thereof  as  such  other  licensee  should  be  licensed  by  the 
plaintiff  to  manufacture  and  sell,  except  such  other  style  and 
construction  as  it  might  be  licensed  to  manufacture  and  sell 
by  the  plaintiff. 

(7)  The  defendant  agreed  to  pay  to  the  plaintiff  for  each 
and  every  of  the  articles  sold  contrary  to  the  strict  terms  and 
provisions  of  the  license,  the  sum  of  five  dollars,  which  sum 
was  thereby  agreed  upon  and  fixed  as  liquidated  damages. 

(8)  The  defendant  agreed  not  to  directly  or  indirectly, 
in  any  way,  contest  the  validity  of  any  patent  applicable  to 
and  embracing  the  construction  which  the  defendant  was 
licensed  to  manufacture,  or  which  it  might  manufacture,  for 
another  licensee,  which  such  other  licensee  was  itself  licensed 
to  manufacture  or  sell,  or  the  reissues  thereof,  and  no  act  of 
either  party  should  invalidate  this  admission.  The  defend- 
ant also  agreed  not  to  alter  or  change  the  construction  of  the 
float  spring  tooth  harrows,  float  spring  tooth  harrow  frames, 
without  teeth  or  attachments  applicable  thereto,  which  it 
was  authorized  to  manufacture  and  sell  under  the  license, 
in  any  part  or  portions  thereof  which  embody  any  of  the 
inventions  covered  by  the  letters  patent,  or  any  of  them,  or 
any  reissues  thereof. 


174 


186   UNITED   STATES   REPORTS,   73. 
Statemeiit  of  the  Cane. 


(9)  The  plaintiff  agreed  that  after  the  license  was  de- 
livered it  would  not  grant  licenses  or  let  to  any  other  person 
the  right  to  manufacture  the  articles  named  of  the  peculiar 
style  and  construction  or  embodying  the  peculiar  features 
thereof  used  by  the  defendant,  as  illustrated  and  embodied 
in  the  sample  harrow  then  placed  in  the  possession  of  the 
treasurer  of  the  plaintiff  and  referred  to  in  schedule  A  of 
the  license. 

(10)  Nothing  contained  in  the  license  was  to  authorize 
the  defendant  to  manufacture  or  vend,  directly  or  indirectly, 
any  other  or  different  style  of  harrow  than  duplicates  of  such 
sam-  [74]  pies  as  had  been  deposited  by  it  with  the  plaintiff, 
and  such  as  were  embraced  in  the  license. 

(11)  xVny  departure  from  the  terms  of  the  license  might 
at  the  option  of  the  plaintiff  be  treated  as  a  breach  of  the 
license,  and  the  licensee  might  be  treated  as  an  infringer,  or 
the  plaintiff  might  restrain  the  breach  thereof  in  a  suit 
brought  for  that  purpose  and  obtain  an  injunction,  the  li- 
censee waiving  any  right  of  trial  by  jury;  such  remedy  was 
to  be  in  addition  to  the  liquidated  damages  already  provided 
for. 

(12)  The  termination  of  the  license  by  the  plaintiff  was 
not  to  release  the  defendant  from  its  obligation  to  pay  for 
articles  sold  up  to  the  termination  of  the  license. 

(13)  The  plaintiff  agreed  to  defend  the  defendant  in  any 
suit  brought  for  an  alleged  infringement. 

(14)  No  royalties  were  to  be  paid  for  articles  exported  for 
use  in  a  foreign  country. 

(15)  The  license  was  personal  to  the  licensee  and  not 
assignable,  except  to  the  successors  of  the  defendant  in  the 
same  place  and  business,  without  the  written  consent  of  the 
plaintiff,  nor  were  the  royalties  or  other  sums  specified  to 
cease  to  be  paid  under  any  circumstances,  except  under  the 
conditions  named  in  the  license  during  the  continuance 
thereof. 

(16)  The  parties  agreed  that  the  license  should  continue 
during  the  term  of  the  patent  or  patents  applicable  to  the 
license  and  during  the  term  of  any  reissues  thereof. 

(17)  The  place  of  the  performance  of  the  agreement  was 
the  city  of  Utica,  New  York,  and  the  agreement  was  to  be 


BEJVtENT   V.   NATIONAL   HARROW   CO. 
Statement  of  the  Case. 


175 


construed  and  the  rights  of  the  parties  thereunder  deter- 
mined according  to  the  laws  of  New  York. 

(18)  The  consideration  of  the  contract  or  license  was  one 
dollar,  paid  by  each  of  the  parties  to  the  other,  and  the  cov- 
enants contained  therein  to  be  performed  by  the  other,  and 
it  applied  to  and  bound  the  parties  thereto,  their  successors, 
heirs  and  assigns. 

Schedule  A  which  followed  contained  a  description  of  the 
particular  kinds  of  harrow  which  the  defendant  was  author- 
ized to  make  and  sell  under  the  license.  Schedule  B  con- 
tained a  statement  of  the  prices  and  terms  of  sale  under  the 
license,  and  it  was  [75]  therein  stated  that  "A  maximum  dis- 
count of  forty-two  per  cent  may  be  allowed  on  sales  of  har- 
rows, frames  and  teeth  in  the  following  territory :  All  of  the 
New  England  States,  also  States  of  New  York,  Pennsylvania, 
New  Jersey,  Delaware,  Maryland,  Virginia  and  West  Vir- 
ginia. A  maximum  discount  of  forty-five  per  cent  may  be 
allowed  on  all  sales  in  the  territory  throughout  the  United 
States  not  mentioned  above." 

This  contract  or  license  was  signed  by  the  president  of  the 
National  Harrow  Company  for  the  plaintiff,  and  A.  O. 
Bement,  president  of  the  defendant  corporation,  for  the 
defendant. 

The  other  license,  called  Exhibit  B,  was  in  substance  the 
same  as  Exhibit  A,  excepting  that  the  privilege  of  sale  ior 
the  articles  manufactured  was  that  portion  of  the  territory 
embraced  within  the  United  States  lying  south,  and  west  of 
Virginia,  West  Virginia  and  Pennsylvania,  and  there  was 
some  difference  in  the  machines  which  the  defendant  was  au- 
thorized to  manufacture  and  sell  under  this  license,  and  in 
regard  to  the  prices  to  be  charged  for  those  machines  not  cov- 
ered by  the  former  contract  or  license. 

These  two  agreements  were,  as  stated,  made  parts  of  the 
plaintiff's  complaint,  and  the  plaintiff  then  set  forth  various 
alleged  violations  of  the  two  agreements  on  the  part  of  the  de- 
fendant, and  claimed  a  recovery  of  a  large  amount  of  dam- 
ages under  the  provisions  of  the  contracts,  and  prayed  for  an 
injunction  restraining  future  violations  and  for  a  specific 
performance  of  the  contracts. 

The  plaintiff  also  alleged  that  the  plaintiff's  assignor,  the 


176 


180  UNITED   STATES  REPORTS,   75. 
Statement  of  the  Case. 


New  York  corporation,  duly  assigned  to  the  plaintiff  all  its 
rights  and  interests  in  regard  to  the  subject-matter  of  the  two 
contracts,  and  that  the  plaintiff,  at  the  time  of  the  commence- 
ment of  the  action,  was  the  lawful  owner  of  all  such  interests 
and  rights,  and  was  entitled  to  bring  the  action  in  its  own 
name. 

To  this  complaint  the  defendant  made  answer,  denying 
many  of  its  allegations  and  setting  up  certain  other  agree- 
ments which  it  alleged  had  been  made  by  the  plaintiff  and 
other  parties,  including  defendant,  and  which,  as  averred, 
amounted  to  a  combination  of  all  the  manufacturers  and 
dealers  in  patent  harrows,  to  regulate  their  manufacture  and 
to  provide  for  their  sale  and  [76]  the  prices  thereof  through- 
out the  United  States.  It  was  also  in  the  answer  averred  that 
such  contracts  had  been  pronounced  to  be  void  by  the  Su- 
preme Court  of  New  York,  and  the  contracts  now  before  the 
court  were,  as  contended  by  defendant,  but  a  continuation 
and  a  part  of  the  other  contracts  already  declared  void,  and 
that  these  contracts  between  the  parties  to  this  action  were 
also  void.  It  also  alleged  that  all  of  the  various  contracts 
were  in  violation  of  the  act  of  Congress,  approved  July  2, 
1890,  being  chapter  647  of  the  first  session  of  the  Fifty-first 
Congress,  (26  Stat.  209,)  entitled  "An  act  to  protect  trade 
and  commerce  against  unlawful  restraints  and  monopolies." 
The  case  was  referred  to  a  referee  to  hear  and  decide,  who, 
after  hearing  the  testimony,  reported  in  favor  of  the  plaintiff.  * 
The  material  portions  of  his  report  are  as  follows : 

"That  for  some  time  prior  to  the  month  of  September,  1890,  the 
spring  tooth  harrow  business  was  conducted  by  the  following-named 
parti^: p.  C.  &  H.  C.  Reed  &  Company,  of  Kalamazoo,  Mich.;  G.  B. 
Olin  &  Company,  Perry  and  Canandaigua,  N.  Y. ;  Chase,  Taylor  & 
Company,  W.  S.  Lawrence,  doing  business  under  the  name  of  Law- 
mice  &  Chapin,  both  of  Kalamazoo,  Mich. ;  J.  M.  Childs  &  Company, 
of  Utica,  N.  Y. ;  and  A.  W.  Stevens  &  Son,  of  Auburn,  N.  Y.,  who  began 
the  harrow  business  in  substantially  the  order  named  above. 

The  first  tvvo  above-named  firms  conducted  their  business  in  sep- 
arate portions  or  territory  of  the  United  States,  under  the  same  United 
States  letters  patent,  and  the  other  fli^ns  began  their  business  in  hostil- 
ity to  the  same  letters  patent.  The  first  two  firms  began  a  number  of 
patent  lawsuits  against  the  other  firms  and  their  customers  for  infringe- 
ment of  patents.  These  suits  were  vgiorously  prosecuted  and  the 
court  finally  decided  the  patents  valid,  and  ordered  an  accounting  of 
profits  against  the  firm  of  Chase,  Taylor  &  Company,  and  W.  S.  Law- 
rence. 

IF^J^l  ^?  September,  1890,  the  last  four  of  the  above-named  firms 
settled  their  disputes  over  patents  with  the  first  two  firms,  and  took 


BEMENT   V.    NATIONAL   HAKROW   CO. 
Statement  of  the  Case. 


177 


licenses  under  their  letters  patent.  Considerable  sums  of  money  were 
paid  in  settlement  of  these  disputes  and  rights ;  and  prior  to  said  date, 
September,  1890,  there  was  no  other  relation  between  the  first  two 
firms  named,  and  the  other  parties  [77]  than  that  of  licensor  and 
licensee  under  United  States  letters  patent. 

"  In  the  year  1890,  and  just  prior  thereto,  other  persons,  firms  and 
corporations  began  the  spring  tooth  harrow  business  and  other  patent 
lawsuits  followed :  Suits  were  begun  against  the  defendants  herein, 
and  against  their  customei-s  purchasing  their  spring  tooth  harrows- 
and  one  ease  had  gone  to  final  decree,  in  which  the  defendant  was 
ordered  to  account  for  profits  and  damages;  and  an  injunction  had 
been  granted  in  other  suits.  Proceedings  were  pending  upon  an  appli- 
cation for  rehearing  in  these  cases. 

"  In  September,  1890,  the  six  firms  first  above  named  decided  to 
organize  a  corporation  known  as  the  National  Harrow  Company  of 
New  York,  with  a  view  to  transferring  various  United  States  letters 
patent  owned  by  the  six  firms  respectively  to  said  coi-poration.  and  for 
the  purpose  of  conducting  the  manufacture  of  some  part  or  portion  of 
the  material  which  entered  into  their  spring  tooth  harrow  business. 

"  In  the  conduct  of  the  spring  tooth  harrow  business,  the  harrows 
came  to  be  known  in  the  market  as  '  fioat  spring  tooth  harrows ; '  that 
name  having  been  adopted  to  diflTerentiate  the  harrows  from  those 
known  in  the  market  as  '  wheel  harrows,'  which  had  frame  bars  and 
curved  spring  teeth  supported  from  an  axle  above,  which  axle  had 
wheels  at  either  end  of  the  diameter  above  thirty  inches.  The  two 
classes  of  harrows  were  differentiated,  one  being  called  a  '  float '  and 
the  otlier  a  '  wheel '  spring  tooth  harrow.  The  litigations  had  been 
wholly  over  the  '  float '  spring  tooth  harrows. 

"  The  members  comi>osing  the  first  six  firms,  above  named,  in  the 
harrow  business  in  September,  1890,  organized  under  the  laws  of  the 
State  of  New  York  the  '  National  Harrow  Company.'  That  corpora- 
tion was  duly  legally  incoi-porated,  and  after  its'  incorporation  it 
received  from  the  said  six  firms  the  transfer  of  their  separate  United 
States  letters  patent,  license  contracts  and  privileges  under  patents 
The  defendant's  president,  Arthur  O.  Bement,  became  and  continued 
a  director  of  this  coiporation  until  its  dissolution,  which  followed  in  a 
little  over  a  year. 

[78]  "  This  corporation  entered  into  some  contracts  with  spring 
tooth  harrow  manufacturers,  which  were  decided  by  the  Supreme 
Court  of  the  State  of  New  York  to  be  illegal  as  against  public  policy, 
on  account  of  restraints  contained  in  the  contracts,  which  extended 
beyond  the  lifetime  of  the  patents.  That  case  is  reported  in  the  New 
York  Supplement,  vol.  18,  page  224.  Strait  et  ah  v.  National  Harrow 
Company  et  al. 

"  Immediately  following  this  decision,  all  of  the  contracts  then  in 
existence  which  were  affected  thereby  were  immediately  cancelled  by 
the  parties  to  such  contra,cts. 

"  The  defendant,  E.  Bement  &  Sons,  in  the  fall  of  1890,  entered  into 
a  contract  with  the  National  Harrow  Company,  looking  to  the  selling 
of  its  patents  and  rights  under  patents  relating  to  the  spring  tooth 
harrow  business;  but  this  contract  was  abandoned,  the  conditions 
upon  which  it  was  executed  not  having  been  complied  with,  the  con- 
tract became  and  was  wholly  void. 

"The  defendant  had  no  contract  with  the  National  Han*ow  Com- 
pany until  about  June  16  or  17,  1891,  at  which  time  several  contracts 
were  entered  into  between  the  defendant  and  the  National  Harrow 
Company  of  New  York.  Among  other  contracts  the  defendant  exe- 
cuted and  delivered  assignments  in  writing  of  several  United  States 

21220— VOL  2—07  M ^12 


178 


180  UNITED   STATES   REPOKTS,   78. 
Statement  of  the  Case. 


letters  patent  and  license  rights  and  privileges  under  United  States 
letters  patent,  all  of  which  related  to  the  defendant's  float  spring  tooth 
harrow  business.  Such  contracts  constituted  an  absolute  sale  of  the 
property  and  privileges  thereby  transferred,  and  the  defendant  agreed 
to  accept  in  i»aynient  thereof  the  paid-up  capital  stock  of  the  National 
Harrow  Company  of  New  York,  and  the  value  of  the  rights  transferred 
were  by  agi-eenient  between  the  parties  fixed  and  determined  by  arbi- 
tration, under  which  arbitration  the  defendant  was  awarded  and  the 
value  was  fixed  at  upwards  of  $29,000.  The  defendant  was  dissatis- 
ied  with  the  amount  of  the  award,  and  sucli  dissatisfaction  and  dif- 
ference was  afterwards  adjusted  by  an  agreement  to  issue  to  the 
defendant  and  the  defendant  to  accept  an  additional  amount  of 
116,000  of  said  capital  stock.  That  by  agreement,  in  the  place  of  the 
said  capital  stock  of  the  New  York  company,  the  defendant  accepted 
[7»]  and  agreed  to  take  the  stock  of  the  plaintiff  in  this  action,  and 
there  has  been  issued  to  the  defendant  and  the  defendant  has  received 
the  capital  stock  of  this  plaintiff  in  an  amount  upwards  of  $45,000  in 
payment  for  the  property  and  rights  sold  and  transferred  l)y  the  de- 
fendant to  the  National  Harrow  Company  of  New  York.  That  said 
upwards  of  145,000  of  stock  was  issued  to  the  president  of  the  defend- 
ant for  defendant's  benefit,  and  on  said  stock  defendant  has  received 
several  cash  dividends. 

"The  transaction  between  the  National  Harrow  Company  of  New 
York  and  this  defendant  bad,  in  June,  1891.  was  intended  by  the  par- 
ties to  be  an  absolute  sale  by  the  defendant  to  the  National  Harrow 
Company  of  New  York  of  the  United  States  letters  patent  and  licenses 
under  United  States  letters  patent  relating  to  the  float  spring  tooth 
harrow  business  conducted  by  the  defendant,  and  it  was  found  on 
a  good,  valuable  and  adequate  consideration  moving  between  the 
parties. 

"  That,  as  a  part  of  such  transaction,  the  National  Harrow  Company 
of  New  York  granted,  issued  and  delivered  to  the  defendant  the 
license  contracts  A  and  B,  which  are  attached  to  the  complaint  in  this 
action  and  made  a  part  thereof.  Upon  the  consunmiation  of  the 
transaction  in  June.  1891,  the  controversy  over  patents  and  infringe- 
ments existing  between  the  first  six  firms  named  above,  and  the 
defendant  and  its  customers,  was  settled.  The  pai;)ers  which  were 
executed  in  June,  1891.  were  all  dated  as  of  April  1,  1891,  and  were  to 
take  effect  as  of  that  date.  At  the  date  of  the  execution  and  delivery 
of  the  license  contracts  A  and  B,  the  National  Harrow  Company  of 
New  York  was  the  owner  by  assignment  and  purchase  of  a  large  num- 
ber of  United  States  letters  patent,  which  it  is  claimed  fully  monopo- 
lized and  covered  the  defendant's  float  spring  tooth  harrow  business. 

"  The  sale  by  the  defendant  of  its  letters  patent,  and  license  rights 
and  privileges  to  the  National  Harrow  Company  of  New  York,  and  the 
signing  and  delivering  of  license  contracts  A  and  B,  were  intended  to 
and  did.  settle  existing  controversies  with  reference  to  the  rights  of 
the  National  Harrow  Company  of  New  York  and  the  defendant 

[80]  "  I  decide  that  the  contract  entered  into  in  June,  1891,  including 
the  contracts  A  and  B  between  the  National  Harrow  Company  of 
New  York  and  this  defendant  were  and  are  good  and  valid  contracts, 
founded  on  adequate  considerations  and  were  reasonable  in  their 
provisions;  contracts  A  and  B  imposing  no  restraints  upon  the  de- 
fendant beyond  those  which  the  parties  had  a  right,  from  the  nature 
of  the  transaction,  to  impose  and  accept. 

**  In  July,  1891,  a  corporation  was  organized  under  the  laws  of  the 
State  of  New  Jersey,  known  and  designated  as  the  National  Harrow 
Company,  which  corporation  is  the  plaintiff  in  this  action.  None  of 
the  parties  organizing  this  corporation  were  in  the  spring  tooth  har- 
row business.    The  New  Jersey  corporation  was  duly  and  legally  or- 


BEMENT   V.   NATIONAL  HAKROW  CO. 


179 


statement  of  the  Case. 

ganlzed  in  conformity  with  the  laws  of  that  State,  and  was  by  those 
laws  and  its  charter  authorized  to  purchase  United  States  letters 
patent  and  to  grant  licenses  under  United  States  letters  patent  and  to 
conduct  the  manufacturing  business,  and  had  a  variey  of  other  rights 
and  privileges  under  its  charter  and  said  statutes.  That  this  corpora- 
tion, the  plaintiff,  still  is  a  legal  and  valid  corporation,  entitled  to  hold 
and  enjoy  such  of  its  property  as  it  now  or  may  hereafter  own  or 
acquire,  and  that  it  was  not  organized  in  hostility  to  any  rule  of  pub- 
lic policy. 

"  That  the  National  Harrow  Company  of  New  Jersey,  this  plaintiff, 
through  its  duly  constituted  oflicers  purchased  from  the  National  Har- 
row Company  of  New  York  all  of  its  various  United  States  letters 
patent,  and  all  contracts,  licenses  and  privileges  which  the  National 
Harrow  Company  of  New  York  then  owned  and  possessed,  and  also 
purchased  a  part  of  its  other  property,  rights  and  privileges. 

"  That  on  the  9th  of  September,  1891,  a  formal  transfer  in  writing 
was  made  from  the  National  Harrow  Company  of  New  York  to  the 
National  Harrow  Company  of  New  Jersey  of  the  property  and  rights 
sold  as  aforesaid  by  the  former  company  to  the  latter,  which  transfer 
was  founded  on  a  good,  valuable  and  edequate  consideration  moving 
between  the  parties,  and  which  transfer  was  sanctioned  by  the  di- 
rectors and  stockholders  of  the  New  York  corporation,  and  by  the 
officers  and  [81]  directors  of  the  National  Harrow  Company  of  New 
Jersey,  this  plaintiff,  and  separate  assignments  in  writing  were  made 
of  the  various  United  States  letters  patent  from  the  New  York  corpo- 
ration to  the  New  Jersey  corporation. 

"  I  decide  that  this  transfer  was  in  all  respects  legal  and  valid,  being 
founded  on  a  good  and  valual)le  consideration,  and  that  it  vested  in  the 
plaintiff  in  this  action  all  the  rights,  privileges  and  benefits  accruing  to 
the  New  York  corporation  under  its  contracts  with  the  defendant, 
including  contracts  A  and  B,  which  contracts  have  been  slightly  modi- 
fled  by  the  parties  as  to  price  and  terms  of  sale. 

"  The  defendant's  president,  Arthur  O.  Bement,  became  a  director 
and  an  active  manager  of  the  plaintiff,  and  continued  as  such  down  to 
September.  1893. 

"  The  defendant  made  monthly  verifled  reports  to  this  plaintiff  down 
to  and  including  the  8th  of  September,  1893,  of  the  harrows  embraced 
in  contracts  A  and  B.  by  such  reports  stating  the  total  harrows  sold  to 
be  13,900,  on  which  defendant  paid  to  the  plaintiff  a  royalty  of  $13,900. 

"The  National  Harrow  Company  of  New  York  and  this  plaintiff 
have  performed  all  of  the  stipulations  and  provisions  in  the  contracts 
entered  into  between  the  National  Harrow  Company  of  New  York  and 
this  defendant,  including  all  the  provisions  of  contracts  A  and  B,  and 
the  plaintiff  is  now  ready,  willing  and  able  to  perform  all  of  the  stipu- 
lations and  agreements  to  be  performed  on  its  part,  as  assignee  of  the 
National  Harrow  Company  of  New  York. 

"  That  the  defendant,  after  having  received  and  retained  large  pecu- 
niary benefits  under  the  contracts,  has  failed,  neglected  and  refused, 
and  still  fails,  neglects  and  refuses  to  keep  and  perform  its  contracts 
entered  into,  including  the  stipulations  and  provisions  contained  in 
contracts  A  and  B,  and  since  September,  1893,  it  has  wholly  repudiated 
contracts  A  and  B,  and  refused  to  perform  any  of  the  stipulations  con- 
tained therein  which  it  agreed  to  do  and  perform,  and  it  has  broken 
and  violated  all  of  the  stipulations  and  agreements  contained  in  con- 
tracts A  and  B  which  it  agreed  to  do  and  perform." 

The  referee  then  states  with  some  detail  the  various  viola - 
[82]  tions  of  the  license  agreements  by  the  defendant,  and 
finds  the  defendant  indebted  to  the  plaintiff  in  the  sum  of 


180  186   UNITED   STATES  BEPORTS,   82. 

Statement  of  tlie  Case. 

over  twenty  thousand  dollars.    He  then  continues  as  fol- 
lows: 

"1  deeide  that  tbe  plaintiff  is  a  legal  and  valid  coiiwration  author- 
ized to  enforce  its  rights  in  courts  having  jurisdiction,  and  that  all  of 
the  contracts  in  evidence  were  and  are  legal,  valid  and  binding  con- 
tracts, such  ais  niiglit  reasonably  be  made  under  the  circumstances, 
foundtHl  upon  an  adequate  consideration,  and  that  they  embodied  no 
illegal  restraints,  and  aie  not  repugnant  to  anv  rule  of  public  policy 
T,."*  ffffraint  of  trade,  or  tending  to  create  a  monopoly,  trust  or  any 
other  Illegal  comlnnation  :  and  that  the  contracts  entered  into  between 
the  defendant  and  the  National  Harrow  ('omi)any  of  New  York,  includ- 
hig  contracts  A  and  B,  are  and  were  iutendetlto  be  continuing  con- 
tracts, and  sh-iild  be  enforced  according  to  their  true  intent  and  mean- 
ing as  hereby  interpreted." 

The  referee  then  held  the  plaintiff  entitled  to  a  judgment 
against  the  defendant,  declaring  the  validity  of  the  plaintiff 
corporation  and  its  title  to  the  contracts  and  their  validity, 
and  decreeing  specific  performance  thereof  and  restraining 
fiiture  violations  of  the  contracts  by  the  defendant.  Judg- 
ment in  accordance  with  the  report  was  entered,  from  Avhich 
the  defendant  appealed  to  the  appellate  division  of  the 
Supreme  Court. 

Some  difficulties  regarding  the  form  in  which  the  case  was 
presented  to  that  court  arose  upon  the  argiunent,  and  it  was 
therefore  suspended  and  the  case  sent  back  to  the  referee  for 
a  resettlement,  which  was  subsequently  agreed  upon  by  coun- 
sel for  the  respective  parties,  who  entered  into  a  stipulation  in 
regard  to  w^hat  was  to  be  reviewed  by  the  courts  above,  and, 
among  other  things,  it  was  agreed  between  counsel :  "  That 
the  foregoing  record,  as  amended  and  corrected  in  this  stipu- 
lation, contains  all  of  the  evidence  given  and  proceedings  had 
before  the  referee  material  to  the  questions  to  be  raised  on  this 
appeal  by  the  appellant,  which  questions  to  be  raised  by  the 
appellant  on  this  appeal  are  to  be  only  as  follows."  Those 
questions  are  eight  in  number,  the  fourth  of  which  is: 
"  Whether  or  not  the  contracts  A  and  B  are  valid  under  the 
act  of  Congress  approved  July  2, 1890,  chapter  647  of  the  first 
[83]  session  of  the  Fi%-first  Congress."  This  is  the  only 
Federal  question  raised  and  appearing  in  the  record 

The  case  .was  thereupon  argued  before  the  appellate  divi- 
sion, which  reversed  the  judgment,  and  ordered  a  new  trial, 
but  it  did  not  state  in  its  order  of  reversal  that  the  judgment 
was  reversed  on  questions  of  fact  as  well  as  of  law.    The 


BEMENT    V.    NATIONAL   HARROAV   CO. 


181 


Opinion  of  the  Court. 

plaintiff  then  appealed  to  the  Court  of  Appeals  from  the 
order  granting  a  new  trial,  and  after  argument  it  was  held 
by  that  court  that  it  had  no  jurisdiction  to  review  the  facts, 
and  that  upon  the  findings  of  the  referee  there  had  been  no 
error  of  law  committed,  and  consequently  the  Supreme  Court 
was  wrong  in  reversing  the  judgment.  The  court  therefore 
reversed  the  judgment  of  the  Supreme  Court,  and  affirmed 
the  judgment  entered  upon  the  report  of  the  referee. 

Mr.  Clark  C.  Wood,  Mr,  Edward  Cahill  and  Mr.  Henry  /. 
Cookingham  for  plaintiff  in  error. 

Mr.  Edioin  H^Risley  for  defendant  in  error. 

Mr.  Justice  Peckham,  after  making  the  foregoing  state- 
ment of  facts,  delivered  the  opinion  of  the  court. 

In  this  court  we  are  concluded  by  the  findings  of  fact  made 
in  a  state  court  in  a  suit  in  equity,  as  well  as  in  an  action  at 
law.  Dower  v.  Richards,  151  U.  S.  658,  666;  Israel  v.  Ar- 
thur, 152  U.  S.  355;  Egan  v.  Hart,  165  U.  S.  188;  Hedriek  v. 
Atchison,  Topeka  (&  Santa  Fe  Railroad  Company,  167  U.  S. 
673,  677. 

The  only  Federal  question  raised  in  the  record  is  as  to  the 
validity  of  contracts  A  and  B,  with  regard  to  the  act  of  Con- 
gress on  the  subject  of  trusts.  Act  of  July  2,  1890,  c.  647,  26 
Stat.  209.  That  is  a  question  of  law,  plainly  raised  in  the 
record,  and  we  are  not  precluded  from  its  consideration  by 
any  action  of  the  state  courts.  If,  however,  facts  not  found 
by  the  referee  are  necessary  for  the  purpose  of  connecting 
those  contracts  with  others  not  found  in  such  report,  we 
cannot  supply  the  omission  to  find  those  facts.  The  conten- 
tion of  the  defendant  is  that  [84]  the  two  contracts  A  and 
B  are  in  truth  a  part  and  continuation  of  the  agreements 
set  forth  in  the  defendant's  answer,  and  that  taken  together 
they  prove  a  purpose  and  combination  on  the  part  of  all 
the  dealers  in  patented  harrows  to  control  their  manufacture, 
sale  and  price  in  all  portions  of  the  United  States,  and 
defendant  avers  that  such  a  contract  or  combination  was 
and  is  void,  not  only  as  against  public  policy,  but  also 
because  it  is  a  violation  of  the  Federal  statute  upon  the  sub- 
ject of  trusts  and  illegal  combinations.     Those  former  al- 


im  UNITED  STATES  REPORTS,   84. 
Opinion  of  the  Court 


leged  contracts  are  not  mentioned  in  the  report  of  the  referee 
excepting,  as  he  stated,  they  had  been  declared  void  as 
against  public  policy,  and  as  being  in  restraint  of  trade 
because  they  extended  beyond  the  life  of  the  patents  therein 
mentioned,  and  the  referee  found  that  following  this  decision 
all  of  the  contracts  then  in  existence,  which  were  affected 
thereby,  were  inmiediately  cancelled  by  the  parties  thereto. 

The  referee  made  no  finding  of  any  fact  connecting  the 
contracts  A  and  B  with  prior  contracts  of  a  like  nature 
including  other  parties,  as  alleged  in  the  answer  of  the  de- 
fendant. The  referee  did  find,  however,  that  the  defendant 
had  no  contract  with  the  National  Harrow  Company  until 
June  16  or  17,  1891,  at  which  time  several  contracts  were 
entered  into  between  the  plaintiff  and  the  National  Harrow 
Company  of  New  York,  and  among  other  contracts  the 
plaintiff  executed  and  delivered  assignments  in  writing  of 
several  United  States  letters  patent  and  license  rights  and 
privileges  under  United  States  letters  patent,  all  of  which 
relate  to  the  defendant's  float  spring  tooth  harrow  business. 
He  also  found  that  such  contracts  constituted  an  absolute 
sale  of  the  property  and  privileges  thereby  transferred,  and 
that  the  defendant  agreed  to  and  did  accept  in  payment 
thereof  paid  up  capital  stock  of  the  plaintiff.  He  further 
found  that  the  transaction  between  the  assignor  of  the 
plaintiff  and  the  defendant  in  June,  1891,  was  intended  by 
the  parties  to  be  an  absolute  sale  by  »the  defendant  to  such 
assignor  of  the  United  States  letters  patent  and  licenses 
under  such  patents  relating  to  the  float  spring  tooth  harrow 
business  conducted  by  the  defendant,  and  that  it  was  founded 
upon  a  good,  valuable  and  adequate  consideration  between 
the  parties;  that  as  a  part  of  such  consider-  [85]  ation  the 
assignor  of  the  plaintiff  granted  and  delivered  to  the  de- 
fendant the  license  contracts  A  and  B,  heretofore  spoken  of. 
and  that  upon  the  consummation  of  the  transaction  the  con- 
troversy over  patents  and  infringements  existing  between 
the  first  six  firms  named  in  the  referee's  report  and  the  de- 
fendant and  its  customers  w^as  settled.  The  report  also 
decided  "  that  the  contract  entered  into  in  June,  1891,  includ- 
ing the  contracts  A  and  B  between  the  National  Harrow 
Company  of  New  York  and  this  defendant  were  and  are 


BBMENT   V.   KATIONAIi   HARROW  CO. 


Opinion  of  the  Court 


isa 


good  and  valid  contracts,  founded  on  adequate  considera- 
tions and  were  reasonable  in  their  provisions;  contracts  A 
and  B  imposing  no  restraints  upon  the  defendant  beyond 
those  which  the  parties  had  a  right,  from  the  nature  of  the 
transaction,  to  impose  and  accept." 

The  omission  of  the  referee  to  find  from  the  evidence  that 
the  contracts  A  and  B  were  a  continuation  of  former  con- 
tracts held  to  have  been  void,  and  that  there  were  in  fact 
other  manufacturers  of  harrows  who  had  entered  into  the 
same  kind  of  contracts  with  plaintiff  as  those  denominated 
A  and  B,  and  that  there  was  a  general  combination  among 
the  dealers  in  patented  harrows  to  regulate  the  sale  and 
prices  of  such  harrows,  furnishes  no  ground  for  this  court 
to  assume  such  facts.  The  contracts  A  and  B  are  to  be 
judged  by  their  own  contents  alone  and  construed  accord- 
ingly. 

The  referee  also  decided  that  the  plaintiff  was  a  legal  and 
valid  corporation,  authorized  to  enforce  its  rights  in  courts 
having  jurisdiction,  and  that  all  the  contracts  in  evidence 
might  reasonably  be  made  under  the  circumstances,  and 
were  founded  upon  a  good,  valuable  and  adequate  considera- 
tion, and  were  reasonable  in  their  provisions,  and  that  they 
were  and  are  legal,  valid  and  binding  contracts,  and  such  as 
embodied  no  illegal  restraints,  and  were  not  repugnant  to 
any  rule  of  public  policy  as  in  restraint  of  trade,  and  were 
not  intended  to  create  a  monopoly,  trust  or  illegal  combina- 
tion, and  that  the  contracts  entered  into  between  the  defend- 
ant and  the  National  Harrow  Company  of  New  York,  in- 
cluding the  contracts  A  and  B,  are,  and  were,  intended  to 
be  continuing  contracts,  and  should  be  enforced  according 
to  their  true  intent  and  meaning  as  hereby  interpreted. 

When  he  speaks  of  all  the  contracts  in  evidence,  the  referee 
[86]  plainly  means  all  the  contracts  in  evidence  between  the 
parties  to  this  action,  for  it  was  of  such  contracts  only  that 
he  had  been  speaking.  There  were,  in  fact,  other  contracts 
than  those  designated  A  and  B  between  these  parties,  and 
such  other  contracts  had  been  put  in  evidence,  and  previ- 
ously referred  to  by  the  referee.  He,  therefore,  must  have 
included  what  is  termed  the  escrow  agreement  in  his  finding, 


186  UNITED   STATES  REPOBTS,  87. 

Opinion  of  the  Court. 

that  all  the  agreements  made  by  defendant  with  the  plain- 

*  rU7^^/*"''-  '^^"^  agreement  is  set  forth  in  the  margin.' 
[87 1  There  is  no  finding  by  the  referee  that  this  agreement 
was  ever  signed  by  any  one  other  than  the  parties  to  this  ac- 
tion, or  that  any  other  person  received  the  licenses  from  and 
made  contracts  with  the  plaintiflF  similar  to  the  ones  entered 
into  between  these  parties.  All  that  the  referee  finds  is,  that 
all  the  contracts  in  evidence  were  legal,  by  which  was  meant, 
as  already  stated,  all  the  contracts  in  evidence  between  the 
parties  to  the  action,  which  wei«  in  existence  and  uncan- 
celled In  the  absence  of  any  finding  as  to  the  escrow  agree- 
ment having  been  signed  by  others,  it  must  be  regarded  as 
unimportant,  and  we  are  brought    back    to  the    question 

«  "  Escrow  Aprrement. 

"This  memorancln  of  iigreement,  made  and  entered  Into  this  1st 
day  of  April.  A.  D.  1891.  by  ami  between  the  National  Harrow  Com- 
pany a  c-or,>oration  of  Utka,  in  the  State  of  New  York,  and  Edward 
Norris  of  the  same  pla.-e;  and  E.  Bement  &  Sons  of  Lansing,  in  the 
State  of  Michigan. 

**Wliereas,  the  eait!  National  Harrow  Company  is  the  owner  of  a 
large  number  of  latters  patent  relating  to  float  spring  tooth  harrows, 
and  is  desirous  of  gi-anting  licenses  thereunder  to  tlie  following- 
named  porsons.  firms  and  corporations,  to  wit:  Chas.  H.  Childs  & 
Company,  D.  B.  Smith  &  Company,  A.  W.  Stevens  &  Son.  Childs  & 
Jones,  S,T.Knse  Chilled  Plow  Co.npany.  Geo.  W.  Sweet  &  Company. 
Walker  Manntnctnring  Coinpany.  Taylor  &  Henry,  the  Herndeen 
Manufacturing  Company.  I).  C.  &  h.  C.  Reed  &  Company,  L.  C.  Lull 
&  Ccmipany  Williams  Manufacturing  Company,  W.  S.  Lawrence, 
McSherry   Manufacturing   Company.   D.    O.    Everst   &   Company    E 

^ZL^r"',;  "r^'  *  '''"'"'^"'^''  ''^""^^^'  ^^^^"^^  Manufactu'ring 
Company,  Eureka  Mower  Company. 

"And  wherens.  the  said  National  Harrow  Company  has  placed  in 
the  hands  of  said  E.  Xorris  in  escrow,  duly  executtnl  by  it  in  dupli- 
cate, a  certain  contract  and  license  for  each  of  said  persons,  firms 
and  corporations  hereintefore  named,  to  be  by  the  said  E  Norris 
Immediately  presented  to  each  of  the  above  and  foregoing  named 
respective  i>ersons.  firms  and  corimrations,  to  l>e  signed  and  executed 
Uy  said  resiiective  persons,  firms  and  corporations— 

"Now,  therefore,  it  is  hereby  understood  and  agreed  by  and  be 
tween  the  parties  hereto,  that  as  the  said  licenses  and  contracts  are 
signed  and  executed  by  the  said  respective  persons,  firms  and  corpor- 
ations, they  shall  be  held  by  said  Norris.  in  escrow,  for  both  parties 
until  such  time  as  all  of  said  above-named  persons,  firms  and  cor- 


BEMENT   V,    NATIONAL   HARROW   CO. 


Opinion  of  the  Court 


185 


whether  these  contracts  or  licenses,  A  and  B,  irrespective  of 
any  contracts  not  found  by  the  referee  as  in  any  way  con- 
nected with,  or  forming  a  part  thereof,  are  void  as  a  viola- 
tion of  the  act  of  Congress. 

The  plaintiff  contends  in  the  first  place  that  only  the  At- 
torney General  of  the  United  States  can  bring  an  action 
under  the  statute,  excepting  that  by  section  7  of  the  act  any 
person  injured  in  his  business  or  property,  as  provided  for 
therein,  may  himself  sue  in  any  Circuit  Court  of  the  United 
States,  in  the  district  in  [88]  which  the  defendant  resides 
or  is  found.  Assuming  that  the  plaintiff  is  right  so  far  as 
regards  any  suit  brought  under  that  act,  we  are  nevertheless 
of  opinion  that  any  one  sued  upon  a  contract  may  set  up  as 


porations  shall  have  signed,  executed  and  delivered  the  same  to  said 
Norris,  whereuix)n  they  shall  become  operative,  and  immediately 
thereafter  the  said  Norris  shall  deliver  one  of  the  duplicates  of  each 
of  said  contracts  and  licenses  to  the  said  National  Harrow  Company 
and  the  other  duplicate  thereof  to  the  respective  licensees  who  have 
signed  the  same,  in  person  or  by  mail. 

"  But  in  case  any  of  the  above-named  persons,  firms  and  corjjora- 
tions  shall  neglect  or  refuse  to  sign,  execute  and  deliver  said  respec- 
tive contracts  and  licenses  on  or  before  the  1st  day  of  June  next, 
then  and  in  such  case  said  E.  NoiTis  shall,  provided  he  shall  l>e  so 
directed,  by  a  resolution  duly  adopted  by  the  board  of  trustees  of 
said  National  Harrow  Company,  make  delivery  of  such  of  said  con- 
tracts and  licenses  as  have  been  signed  and  executed  as  above  pro- 
vided, at  which  time  said  contracts  and  licenses  shall  become  opera- 
tive, and  in  case  the  said  National  Harrow  Company  shall  conclude 
not  to  accept  any  less  number  than  the  whole  of  such  respective  con- 
tracts and  licenses,  then  and  in  such  case  the  said  Norris  shall  cancel 
each  of  said  contracts  and  licenses,  and  they  shall  be  null  and  void. 

"  Witness  the  signatures  of  the  parties. 

"The   National   Harrow   Co., 
By  Chas.  H.  Childs,  Pres't. 
"  Edward  Norris. 
"E.  Bement  &  Sons, 
By  A.   O.   Bement,  Pres't. 
"Received  of  E.  Bement  &  Sons  a  license  and  contract  executed 
between  the  National  Harrow  Company  and  said  E.  Bement  &  Sons, 
which  I  agree  to  hold  and  deliver  in  accordance  with  an  agreement 
between  the  said  National  Harrow  Company  and  said  E.  Bement  & 
Sons  and  myself,  and  hereto  attached. 
"  Dated  this  1st  day  of  April,  1891.  Edward  Norris." 


186 


186  UNITED  STATES  REPOBTS,  88. 


Opinion  of  the  Court 

a  defence  that  it  is  a  violation  of  the  act  of  Congress,  and  if 
found  to  be  so,  that  fact  will  constitute  a  good  defence  to 
the  action. 

The  first  section  of  the  act  provides  that  "  every  contract, 
combination  in  the  form  of  trust,  or  otherwise,  or  conspir- 
acy, in  restraint  of  trade  or  commerce  among  the  several 
States,  or  with  foreign  nations,  is  hereby  declared  to  be 
illegaL"  Every  person  making  such  a  contract  is  deemed 
guilty  of  a  misdemeanor,  and  on  conviction  is  to  be  punished 
by  fine  or  by  hnprisonment,  or  both.  As  the  statute  makes  the 
contract  in  itself  illegal,  no  recovery  can  be  had  upon  it 
when  the  defence  of  illegality  is  shown  to  the  court.  The 
act  provides  for  the  prevention  of  violations  thereof,  and 
makes  it  the  duty  of  the  several  district  attorneys,  under  the 
direction  of  the  Attorney  General,  to  institute  proceedings 
in  equity  to  prevent  and  restrain  such  violations,  and  it 
gives  to  any  person  injured  in  his  business  or  property  the 
right  to  sue,  but  that  does  not  prevent  a  private  individual 
when  sued  upon  a  contract  which  is  void  as  in  violation  of 
the  act  from  setting  it  up  as  a  defence,  and  we  think  when 
proved  it  is  a  valid  defence  to  any  claim  made  under  a  con- 
tract thus  denounced  as  illegaL 

This  brings  us  to  a  consideration  of  the  terms  of  the 
license  contracts  for  the  purpose  of  determining  whether 
they  violate  the  act  of  Congress.  The  first  important  and 
most  material  fact  in  considering  this  question  is  that  the 
agreements  concern  articles  protected  by  letters  patent  of 
the  Government  of  the  United  States.  The  plaintiff,  ac- 
cording to  the  finding  of  the  referee,  was  at  the  time  when 
these  licenses  were  executed  the  absolute  owner  of  the  letters 
patent  relating  to  the  float  spring  tooth  harrow  business. 
It  was,  therefore,  the  owner  of  a  monopoly  recognized  by 
the  Constitution  and  by  the  statutes  of  Congress.  An 
owner  of  a  patent  has  the  right  to  sell  it  or  to  keep  it;  to 
manufacture  the  article  himself  or  to  license  others  to 
manufacture  it;  to  sell  such  article  himself  or  to  authorize 
f  89]  others  to  sell  it.  As  stated  by  Mr.  Justice  Nelson,  in  Wil- 
son V.  Boi/sseau,  4  How.  646,  674,  in  speaking  of  a  patent: 

"  The  law  has  thus  impressed  upon  it  all  the  qualities  and  charac- 
teristics of  property  for  the  specified  period ;  and  has  enabled  him  to 


BEMENT   V.   NATIONAL   HARROW  CO. 


187 


Opinion  of  the  Court 

hold  and  deal  with  it  the  same  as  in  the  case  of  any  other  description 
of  property  belonging  to  him,  and  on  his  death  it  passes,  with  his  per- 
sonal estate,  to  his  legal  representatives,  and  becomes  part  of  the 
assets." 

Again,  as  stated  by  Mr.  Chief  Justice  Marshall,  in  Grant  v. 

Raymond,  6  Pet.  218,  241 : 

"  To  promote  the  progress  of  useful  arts,  is  the  interest  and  policy 
of  every  enlightened  government.  It  entered  into  the  views  of  the 
framers  of  our  Constitution,  and  the  power  '  to  promote  the  progress 
of  science  and  useful  arts,  by  securing  for  limited  times  to  authors  and 
inventors,  the  exclusive  right  to  their  respective  writings  and  discover- 
ies,' is  among  those  expressly  given  to  Congress.  This  subject  was 
among  the  first  which  followed  the  organization  of  our  Government. 
It  was  taken  up  by  the  first  Congress  at  its  second  session,  and  an  act 
was  passed  authorizing  a  patent  to  be  issued  to  the  inventor  of  any 
useful  art,  etc.,  on  his  petition,  '  granting  to  such  petitioner,  his  heirs, 
administrators  or  assigns,  for  any  term  not  exceeding  fourteen  years, 
the  sole  and  exclusive  right  and  liberty  of  making,  using  and  vending 
to  others  to  be  used,  the  said  invention  or  discovery.'  The  law  further 
declares  that  the  patent '  shall  be  good  and  available  to  the  grantee  or 
grantees  by  force  of  this  act,  to  all  and  every  intent  and  purpose  herein 
contained.'  The  amendatory  act  of  1793  contains  the  same  language, 
and  it  cannot  be  doubted  that  the  settled  purpose  of  the  United  States 
has  ever  been,  and  continues  to  be,  to  confer  on  the  authors  of  useful 
inventions  an  exclusive  right  to  their  inventions  for  the  time  mentioned 
in  their  patent.  It  is  the  reward  stipulated  for  the  advantages  derived 
by  the  public  for  the  exertions  of  the  individual,  and  is  intended  as  a 
stimulus  to  those  exertions.  The  laws  which  are  passed  to  give  effect 
to  this  purpose  ought,  we  think,  to  be  construed  in  the  spirit  in  which 
they  have  been  made;  and  to  execute  the  contract  fairly  on  the  part 
of  the  United  States,  where  the  full  benefit  has  been  actually  received : 
[90]  if  this  can  be  done  without  transcending  the  intention  of  the 
statute,  or  countenancing  acts  which  are  fraudulent  or  may  prove  mis- 
chievous. The  public  yields  nothing  which  it  has  not  agreed  to  yield : 
it  receives  all  which  it  has  contracted  to  receive.  The  full  benefit  of 
the  discovery,  after  its  enjoyment  by  the  discoverer  for  fourteen  years, 
is  preserved ;  and  for  his  exclusive  enjoyment  of  it  during  that  time 
the  public  faith  is  pledged." 

In  Heaton- Peninsular  Company  v.  Enreka  Specialty  Cortv- 
pany,  47  U.  S.  App.  146,  160,  it  is  stated  regarding  a  paten- 
tee: 

"  If  he  sees  fit,  he  may  reserve  to  himself  the  exclusive  use  of  his 
invention  or  discovery.  If  he  will  neither  use  his  device  nor  permit 
others  to  use  it,  he  has  but  suppressed  his  own.  That  the  grant  is 
made  upon  the  reasonable  expectation  that  he  will  either  put  his  inven- 
tion to  practical  use  or  permit  others  to  avail  themselves  of  it  upon 
reasonable  terms,  is  doubtless  true.  This  expectation  is  based  alone 
upon  the  supposition  that  the  patentee's  interest  will  induce  him  to 
use,  or  let  others  use,  his  invention.  The  public  has  retained  no  other 
security  to  enforce  such  expectations.  A  suppression  can  endure  but 
for  the  life  of  the  patent,  and  the  disclosure  he  has  made  will  enable 
all  to  enjoy  the  fruit  of  his  genius.  His  title  Is  exclusive,  and  so 
clearly  within  the  constitutional  provisions  in  respect  of  private  prop- 
erty that  he  is  neither  bound  to  use  his  discovery  himself  nor  permit 
others  to  use  it.  The  dictum  found  in  Hoe  v.  Knap,  17  Fed.  Rep.  204, 
is  not  supported  by  reason  or  authority." 


J.OO 


186  UNITED  STATES  EEPOBTS,   90. 


Opinion  of  the  Court. 

Il  is  true  that  in  certain  circumstances  the  sale  of  articles 
manufactured  under  letters  patent  may  be  prevented  wh«-u 
the  use  of  such  article  may  be  subject,  within  the  several 
States,  to  the  control  which  they  may  respectively  impose  in 
the  legitimate  exercise  of  their  powers  over  their  purely 
domestic  affairs,  whether  of  internal  commerce  or  of  police 
regulation.  Thus  an  improvement  for  burning  oil,  pro- 
tected by  letters  patent  of  the  United  States,  was  condemned 
by  the  state  inspector  of  Kentucky  as  unsafe  for  illuminat 
ing  purposes  under  the  statute  requiring  an  inspection  and 
imposing  a  penalty  for  [»1]  the  violation  of  the  statute,  and 
it  was  held  that  the  enforcement  of  the  statute  was  within 
the  proper  police  powers  of  the  State,  and  that  it  interfered 
with  no  right  conferred  by  the  letters  patent.  Patterson  v. 
Kentucky,  97  U.  S.  501. 

There  are  decisions  also  in  regard  to  telephone  companies 
operating  under  licenses  from  patentees  giving  them  the  right 
to  use  their  patents  for  the  purpose  of  operating  public  tele- 
phone lines,  but  prohibiting  companies  from  serving  within 
such  district  any  telephone  company,  and  it  has  been  held  in 
the  lower  Federal  courts  that  such  a  prohibition  was  of  no 
force;  that  it  was  inconsistent  with  tlie  grant,  because  a  tele- 
phone company,  being  in  the  nature  of  a  common  carrier,  was 
bound  to  render  an  equal  stnviee  to  all  who  applied  and  ten- 
dered the  compensation  fixed  by  law  for  the  service;  that 
while  the  patentees  were  under  no  obligation  to  license  the 
use  of  their  inventions  by  any  public  telephone  company,  yet, 
having  done  so,  they  were  not  at  liberty  to  place  restraints 
upon  such  a  public  corporation  which  would  disable  it  to  dis- 
charge all  the  duties  imposed  upon  companies  (Migaged  in  the 
discharge  of  duties  subject  to  regulation  by  law.     It  could 
not  be  a  public  telephone  company  and  could  not  exercise  the 
franchise  of  a  common  carrier  of  messages  with  such  excep- 
tions to  the  grant.    See  Missouri  ex  rel  Sc,  v.  Bell  Telephone 
Cmnpamf.  23  Fed.  Rep.  539:  State  ex  rel.  rfv.  v.  Delaware 
dic.  Comimny,  47  Fed.  Rep.  683;  and  Delaware  <&  Atlantic 
cfw.  Company  v.  Delaware  ex  rel,  i%c,  3  IT.  S.  App.  30. 

These  ea.^^s  are  cited  in  the  opinion  of  the  court  in  the  case 
of  Ileaton-Peninsalar  Company  v.  Eureka  Speeialfy  Com- 
pany, supra.    Notwithstanding  these  exceptions,  the  general 


BEMENT   V,   NATIONAL   HARKOW   CO. 


189 


Opinion  of  the  Court 

rule  is  absolute  freedom  in  the  use  or  sale  of  rights  under  the 
patent  laws  of  the  United  States.  The  very  object  of  these 
laws  is  monopoly,  and  the  rule  is,  with  few  exceptions,  that 
anv  conditions  which  are  not  in  their  verv  nature  illegal  with 
regard  to  this  kind  of  property,  imposed  by  the  patentee  and 
agreed  to  by  the  lici?nsee  for  the  right  to  manufacture  or  use 
or  sell  the  article,  will  be  upheld  by  the  courts.  The  fact  that 
the  conditions  in  the  contracts  keep  up  the  monopoly  or  ^x 
prices  does  not  render  them  illegal. 

[92]  The  contention  that  they  do  not  affect  interstate  com- 
merce, is  not  correct.  We  think  the  licenses  do  bv  their  terms 
and  by  their  plain  meaning  refer  to,  include  and  provide  for 
interstate  as  well  as  other  commerce.  The  contract  called  Ex- 
hibit B  provides  for  the  manufacture  at  Lansing,  Michigan, 
and  for  the  sale  of  the  articles  there  made  in  territory  Iviner 
south  and  west  of  Virginia  and  West  Virginia  and  Pennsyl- 
vania, and  the  referee  finds  that  a  number  of  harrows  have 
been  sold  under  that  contract.  The  contracts  plainly  look  to 
the  sale,  and  they  also  determine  the  price  of  the  article  sold, 
throughout  the  United  States,  as  well  as  to  the  manufacture  in 
the  State  of  Michigan.  As  these  contract^  do,  therefore,  in- 
clude interstate  commerce  within  their  provisions,  we  are 
brought  back  to  the  question  whether  the  agreement  between 
these  parties  with  relation  to  these  patented  articles  is  valid 
within  the  act  of  Congress.  It  is  true  that  it  has  been  held  by 
this  court  that  the  act  included  any  restraint  of  commerce, 
whether  reasonable  or  unreasonable.  United  States  v.  Tram- 
Missouri  Freight  Association,  166  U.  S.  290:  United  States 
V.  Joint  Traffic  Association,  171  U.  S.  505;  Addy stone  Pipe 
(&c.  Company  v.  Ufiited  States,  175  U.  S.  211.  But  that 
statute  clearly  does  not  refer  to  that  kind  of  a  restraint  of 
interstate  commerce  which  may  arise  from  reasonable  and 
legal  conditions  imposed  upon  the  assignee  or  licensee  of  a 
patent  by  the  owner  thereof,  restricting  the  terms  upon  which 
the  article  may  be  used  and  the  price  to  be  demanded  therefor. 
Such  a  construction  of  the  act  we  have  no  doubt  was  never 
contemplated  by  its  framers. 

Uiiited  States  v.  E.  C.  Knight  Company,  156  U.  S.  1,  does 
not  bear  upon  the  facts  herein.  That  case  related  to  a  pur- 
chase of  stock  in  manufacturing  companies,  by  reason  of 


190 


186  UNITED   STATES  BEPORTS,   92. 
Opinion  of  the  Court. 


which  the  purchaser  secured  control  of  a  large  majority  of 
the  manufactories  of  refined  sugar  in  the  United  States.  It 
was  held  by  this  court  that  the  Federal  act  relating  to  trusts 
and  combinations  affecting  interstate  commerce  could  not 
reach  and  suppress  the  creation  of  a  monopoly  in  regard  to 
the  refining  of  sugar,  and  that  the  manufacturhig  of  a  com- 
modity bore  no  direct  relation  to  commence  between  the  States 
or  with  foreign  nations.  It  was  saiti  by  Mr.  Chief  Justice 
Fuller,  for  the  court,  while  |93]  speaking  of  such  manufac- 
ture: "Nevertheless  it  does  not  follow  that  an  attempt  to 
monopolize,  or  the  actual  monopoly  of,  the  manufacture  was 
an  attempt,  whether  executory  or  consummated,  to  monopo- 
lize commerce,  even  though,  in  order  to  dispose  of  the  prod- 
uct, the  instrumentality  of  commerce  was  necessarily  in- 
voked." 

In  these  contracts  provision  is  expressly  made,  not  alone 
for  manufacture,  but  for  the  sale  of  the  manufactured 
product  throughout  the  United  States,  and  at  prices  which 
are  particularly  stated,  and  which  the  seller  is  not  at  liberty 
to  decrease  without  the  assent  of  the  licensor.  Addystone 
Pipe  cC-  Steel  Company  v.  United  States^  175  U.  S.  211,  238. 
These  contracts  directly  affected,  not  as  a  mere  incident  of 
manufacture,  the  sale  of  the  implements  all  over  the  country, 
and  the  question  arising  is  whether  the  contracts  which  thus 
affect  such  sales  are  void  under  the  act  of  Congress. 

On  looking  through  these  licenses  we  have  been  unable  to 
find  any  conditions  contained  therein  rendering  the  agree- 
ment void  because  of  a  violation  of  that  act.  There  had  been. 
as  the  referee  finds,  a  large  amount  of  litigation  between  the 
many  parties  claiming  to  own  various  patents  covering  these 
implements.  Suits  for  infringements  and  for  injunction 
had  been  frequent,  and  it  was  desirable  to  prevent  them  in 
the  future.  This  execution  of  these  contracts  did  in  fact 
settle  a  large  amount  of  litigation  regarding  the  validity  of 
many  patents  as  found  by  the  referee.  This  was  a  legitimate 
and  desirable  result  in  itself.  The  provision  in  regard  to  the 
price  at  which  the  licensee  would  sell  the  article  manufac- 
tured under  the  license  was  also  an  appropriate  and  reason- 
able condition.  It  tended  to  keep  up  the  price  of  the  im- 
plements manufactured  and  sold,  but  that  was  only  recog- 


BEMENT   V.    NATIONAL   HARROW  CO. 


Opinion  of  the  Court. 


191 


nizing  the  nature  of  the  property  dealt  in,  and  providing 
for  its  value  so  far  as  possible.  This  the  parties  were  legally 
entitled  to  do.  The  owner  of  a  patented  article  can,  of 
course,  charge  such  price  as  he  may  choose,  and  the  owner 
of  a  patent  may  assign  it  or  sell  the  right  to  manufacture 
and  sell  the  article  patented  upon  the  condition  that  the 
assignee  shall  charge  a  certain  amount  for  such  article. 

It  is  also  objected  that  the  agreement  of  the  defendant  not 
[04]  to  manufacture  or  sell  any  other  float  spring  tooth 
harrow,  etc.,  than  those  which  it  had  made  under  its  patents 
before  assigning  them  to  the  plaintiff,  or  which  it  was  licensed 
to  manufacture  and  make,  under  the  terms  of  the  license, 
except  such  other  style  and  construction  as  it  may  be  licensed 
to  manufacture  and  sell  by  the  plaintiff,  is  void  under  the  act 
of  Congress. 

The  plain  purpose  of  the  provision  was  to  prevent  the  de- 
fendant from  infringing  upon  the  rights  of  others  under 
other  patents,  and  it  had  no  purpose  to  stifle  competition  in 
the  harrow  business  more  than  the  patent  provided  for,  nor 
was  its  purpose  to  prevent  the  licensee  from  attempting  to 
make  any  improvement  in  harrows.  It  was  a  reasonable  pro- 
hibition for  the  defendant,  who  would  thus  be  excluded  from 
making  such  harrows  as  were  made  by  others  who  were  en- 
gaged in  manufacturing  and  selling  other  machines  under 
other  patents.  It  would  be  unreasonable  to  so  construe  the 
provision  as  to  prevent  defendant  from  using  any  letters 
patent  legally  obtained  by  it  and  not  infringing  patents 
owned  by  others.  This  was  neither  its  purpose  nor  its 
meaning. 

There  is  nothing  which  violates  the  act  in  the  agreement 
that  plaintiff  would  not  license  any  other  person  than  the 
defendant  to  manufacture  or  sell  any  harrow  of  the  peculiar 
style  and  construction  then  used  or  sold  by  the  defendant. 
It  is  a  proper  provision  for  the  protection  of  the  individual 
who  is  the  licensee,  and  is  nothing  more  in  effect  than  an 
assignment  or  sale  of  the  exclusive  right  to  manufacture  and 
vend  the  article.  In  brief,  after  a  careful  examination  of 
these  contracts,  we  are  unable  to  find  any  provision  in  them, 
either  taken  separately  or  in  connection  with  all  the  others 


192 


m  FEDERAL  BEPORTER,  925. 


Byllabus. 

therein  contained,  which  would  render  the  contracts  between 
these  parties  void  as  in  violation  of  the  act  of  Congress. 

It  mnst,  however,  be  conceded  that  the  escrow  agreement 
above  set  fortli  looks  to  the  signing,  by  the  parties  mentioned 
therein,  of  contracts  similar  to  those  between  the  parties  to 
this  suit,  designated  A  and  B,  and  containing  like  conditions 
relating  to  the  patents  respectively,  owned  by  such  parties. 
But  there  is  no  finding  by  the  referee  that  such  contracts  were 
in  fact  entei-ed  into  by  those  other  parties  nor  that  they  con- 
105]  stituted  a  combination  of  most,  if  not  all,  of  the  persons 
or  corj)orations  engaged  in  the  business  concerning  which  the 
agreements  between  the  parties  to  this  suit  were  made.     If 
such  simihir  agreements  had  been  made,  and  if,  when  exe- 
cuted, they  would  have  formed  an  illegal  combination  within 
the  act  of  Congress,  we  cannot  presume  for  the  purpose  of 
reversing  this  judgment,  in  the  absence  of  any  finding  to 
that  effect,  that  they  were  made  and  l>ecame  effective  as  an 
illegal  coml)ination.    As  between  these  parties,  we  hold  that 
the  agreements  A  and  B  actually  entered  into  were  not  a 
violation  of  the  act.    We  are  not  called  upon  to  express  an 
opinion  upon  a  state  of  facts  not  found.    Upon  the  facts 
found  there  is  no  error  in  the  judgment  of  the  Court  of 
Appeals,  and  it  must,  therefore,  be 

Mr.  Justice  IIari.an,  Mr.  Jusncis  Gray  and  Mr.  Justice 
White  did  not  hear  the  argument  and  took  no  part  in  the 
decision  of  this  case. 


[0«5]    FIELD  V.  BARBER  ASPHALT  PAV.  C0.-» 

(Circuit  Court,  W.  D.  Missouri.    July  15,  1902.) 

[117  Fed.,  925.] 

Cloud  on  Titm— Removal— Action  in  Equity— Possession  of  Plain- 
tiff.—A  suit  in  equity  may  be  maintained  for  the  removal  of  a 
cloud  on  title  under  the  Missouri  statutes,  though  plaintiff  is  not  In 
possession.* 


«  See  194  U.  S.  618  (p.  555). 

»  Syllabus  copyrighted,  1902,  by  West  Publishing  Co. 


FIELD   t'.    BAEBER  ASPHALT  PAV.   CO. 

Syllabus. 


193 


United    States   Courts — ^Jubisdiction — Amount    in    Contboveesy. 

Where  complainant  sued  to  set  aside  special  tax  bills  assessed 
against  certain  lots  in  a  city,  of  which  he  owned  the  fee,  and  he 
was  the  equitable  owner  of  other  lots  assessed,  and  the  tax  bills  on 
all  the  lots  amounted  to  over  $2,000,  the  federal  court  had  juris- 
diction. 

Municipal  Corporations— Special  Taxes— Tax  Bills— Registration 
BY  City  Clerk.— The  failure  of  a  city  clerk  of  a  city  to  register 
tax  bills  for  special  assessments,  as  required  by  the  Missouri  stat- 
utes, is  not  a  sufficient  defense  against  the  bills,  the  statute  being 
directory  merely. 
[926]  Same — Street  Grading — Assessment. — Where  the  evidence,  in 
the  action  to  restrain  a  special  city  assessment,  showed  that  the 
grading,  for  which  the  city  was  not  entitled  to  charge  the  abutting 
property,  was  not  included,  at  least  to  any  great  extent,  m  the  cost 
of  paving,  and  no  extra  charge  or  expense  for  the  grading  was 
made,  the  fact  that  some  grading  was  done  was  immaterial. 
Same — City    Improvements — Protest — Statutes — Constitutional- 
ity— Review. — Where  a  nonresident  property  owner  did  not  appear 
after  notice  and  attempt  to  protest  against  a  city  street  improve- 
ment, he  cannot,  in  an  action  to  restrain  enforcement  of  tax  bills 
agahist  his  property,  obtain  a  review  of  the  constitutionality  of 
Laws  Mo.  1895.  §95,  limiting  the  right  to  protest  to  resident  owners. 
Contract  for  Improvement — Acts  of  Aldermen— Review. — The  board 
of  aldermen  of  a  city,   in  procuring  the   improvement  of  streets 
and  letting  the  contract  therefor,  do  not  act  in  a  legislative  ca- 
pacity, but  act  in  an  administrative  or  business  capacity,  and  hence 
their  acts  are  reviewable  on  the  ground  of  fraud  or  corruption. 
Validity   of   Contract— Limitation   as   to   Material— [Anti-Trust 
Laws].— Where  the  contract  for  the  paving  of  a  street  with  asphalt 
limited  the  Icind  of  asphalt  to  be  used  to  Trinidad  asphalt,  such 
fact,  and  the  further  fact  that  such  asphalt  was  controlled  by  a 
single  corporation,  [was  not  violative  of  the  commerce  clause  of  the 
constitution  or  of  the  Federal  anti-trust  statutes,  and]  did  not  affect 
the  validity  of  the  contract.     [See  p.  194.] 
Same — Evidence. — Evidence  in  an  action  to  vacate  special  tax  bills 
for  municipal  improvements  reviewed,  and  held  not  sufficient  to  show 
corruption  on  the  part  of  the  city  council. 
Same — Necessity    of    Improvement — Review. — Where    one    of    the 
streets  of  a  city,  located  in  an  extreme  and  thinly  populated  por- 
tion, had  been  well  paved  with  macadam  in  1892,  and  at  the  time 
the  street  was  ordered  paved  with  aphalt  by  the  city  council,  in 
1897,  the  macadam  was  not  badly  worn,  and  the  street  was  in 
good  condition,  the  subsequent  improvement  was  unnecessary,  and 
special  assessments  therefor  void. 


21220— VOL  2—07  m -13 


194 


118   FEDERAL   EEPORTER,  120. 


Syllabus. 

[The  only  part  of  the  opinion  which  has  any  bearing 
whatever  upon  the  federal  anti-trust  law  is  as  follows:] 

[929 1  "  The  evidence  shows  that  the  contracts  called  for 
*Lake  Trinidad  asphalt.'  There  is  evidence  tending  to 
sliow  that  good  asphalt,  and  quite  as  good  as  Trinidad,  can 
be  obtained  from  Bermuda,  Mexico,  and  from  places  in  the 
United  States.  On  such  facts  it  is  contended  that  the  city 
had  no  right  to  limit  the  contract  to  Trinidad,  and  that  in 
so  doing  the  commerce  clause  of  the  constitution  was  vio- 
lated, and  that  the  federal  anti-trust  statutes  were  likewise 
violated.  And  this  argument  is  emphasized  by  complainant's 
counsel,  because,  as  he  contends,  the  defendant  has  a  monoply 
of  Trinidad  asphalt.  The  evidence  does  not  show  this  to  be 
so.  But,  if  it  does  have  the  monoply,  I  do  not  believe  the 
point  is  well  taken.  An  individual  certainly  has  the  right, 
in  the  erection  of  an  improvement,  to  get  that  which  he 
believes  the  best,  and  that  which  he  prefers,  regardless  of 
the  reason;  and  he  should  not  defeat  a  recovery  by  show- 
ing that  in  fact  something  else  was  as  good  or  better,  or 
that  the  vendor  had  a  monoply."  • 


nm 


GIBBS  V,  McNEELEY  ET  AL.« 


(Circuit  Court  of  Appeals,  Nintli  Circuit.    October  13,  1902.) 

[318  Fed.,  120.] 

Awti-Tbust  Law— Combinations  in  Restraint  of  Interstate  Com- 
aiERCE.— To  render  a  combination  unlawful  under  the  anti-trust  act 
of  1890  [U.  S.  Comp.  St.  1901,  p.  3200],  it  need  not  be  one  which  by 
its  terms  refers  to  Intei-state  commerce,  but  it  is  sufficient  if  its 
purpose  and  effect  are  necessarily  to  restrain  interstate  trade.6 

Same. — ^An  association  of  manufacturers  of  and  dealers  in  red  cedar 
shingles  hi  the  state  of  Washington,  formed  for  the  purpose  of  con- 
trolling the  production  and  the  price  of  such  shingles,  which  are 
made  only  in  that  state,  but  are  principally  sold  and  used  in  other 
states,  and  which,  by  its  action  in  closing  the  mills  of  its  members, 


0  Demurrer  overruled  by  Circuit  Court  as  to  fourth  cause  of  action 
(102  Fed.,  594).  See  p.  25.  Verdict  for  defendants  m  error  directed 
(107  Fed.,  210).  See  p.  71.  Reversed  by  Circuit  Court  of  Appeals 
(118  Fed.,  120). 

»  Syllabus  and  statement  copyrighted,  1908,  by  West  Publishing  Co. 


GIBBS   V.   M  NEELEY. 


195 


statement  of  the  Case. 

has  reduced  the  production,  and  has  also  arbitrarily  increased  the 
prices  at  which  tlie  product  is  sold,  is  a  combination  in  restraint  of 
interstate  commerce,  and  unlawful  under  the  anti-trust  law  of 
July  2  1890  [U.  S.  Comp.  St.  1901,  p.  3200] .« 


In  Error  to  the  Circuit  Court  of  the  United  States  for  the 
Western  Division  of  the  District  of  Washington. 

The  plaintiff  in  error  brought  an  action  to  recover  damages  against 
the  defendants  in  error  under  the  act  of  congress  known  as  the 
"  Sherman  Anti-Trust  Act,"  of  July  2,  1890  [U.  S.  Comp.  St.  1901,  p. 
3200],  and  alleged  in  his  complaint,  as  his  first  cause  of  action:  That 
for  more  than  10  years  he  had  [121]  been  a  dealer  in  Washington  red- 
cedar  shingles  at  the  city  of  Tacoma  in  the  state  of  Washington,  con- 
ducting a  general  business  in  such  shingles,  purchasing  them  of  the 
various  manufacturers  thereof  within  the  state  of  Washington,  and 
selling  them  to  purchasers  in  other  states  of  the  United  States  and  in 
certain  foreign  countries:  That  his  business  was  valuable;  and  that 
he  was  solely  dependent  upon  it  for  his  livelihood,  and  that  he  had 
acquired  a  wide  clientage,  and  had  transacted  a  business  amounting 
to  $100,000  a  year,  and  had  derived  an  annual  profit  therefrom  of 
$8,000;  that  the  said  Washington  red-cedar  shingle  is  solely  manu- 
factured in  the  state  of  Washington,  and  has  become  an  article  of 
prime  necessity  and  indispensable  use  to  the  i)eople  in  the  various 
states  and  countries  named;  and  alleged  that,  during  the  first  10 
months  of  the  year  1899,  4,000,000,000  shingles  were  manufactured, 
of  which  3,300,500,000  were  manufactured  for  the  puriK)se  of  selling 
and  delivermg  to  purchasers  outside  the  state  of  Washington,  and 
were  so  sold  and  delivered.  That  the  defendant  the  Washington  Red- 
Cedar  Shingle  Manufacturers'  Association  was  a  voluntary  associa- 
tion of  the  various  manufacturers  and  dealers  in  said  shingles  in  the 
state  of  Washington,  comprising  a  total  of  108;  that  the  association 
has  a  constitution  and  by-laws:  that  membership  is  secured  by  pay- 
ing a  certain  initiation  fee  graded  according  to  the  number  and 
character  of  shingle  machines  in  use  by  the  applicant  for  membership ; 
that  its  officers  are  president,  vice  president,  secretary,  treasurer,  and 
a  central  committee;  that  the  defendants  specifically  named  in  the 
complaint  are  respectively  such  officers;  that  the  powers  of  the  com- 
mittee were  to  hold  meetings  "  and  issue,  from  time  to  time,  a  mini- 
mum price  below  which  all  members  agree  not  to  sell  shingles  to 
dealers  or  wholesalers,"  "to  establish  a  system  of  prices  at  which 
shingles  must  be  sold  to  retail  dealers,"  etc.,  "to  order  the  closing 
down  of  all  mills,  and  to  take  other  necessary  steps  to  curtail  the 
output  of  Washington  red-cedar  shingles,  when  in  their  judgment  the 
supply  should  exceed  the  demand."  For  a  second  cause  of  action, 
the  plaintiff  in  error  alleged,  in  addition  to  the  facts  above  set  forth, 
that  on  or  about  August  15,  1899,  the  central  committee  adopted  a 
schedule  of  prices  for  shingles,  whereby  the  members  of  said  associa- 
tion were  required-  to  and  bound  themselves  to  sell  at  the  price  so 
fixed,  to  wit:  Extra  A,  $1..35  per  1,000,  Clears,  $1.50  per  1,000, 
which  price  the  plaintiff  alleged  was  above  the  market  price ;  the  mar- 
ket price  then  being  Extra  A,  $1.20  per  1,000,  and  Clears,  $1.35  per 
1,(XK).  That  by  reason  of  the  said  increase  in  prices  the  plaintiff 
was  unable  to  carry  on  his  business  and  supply  the  natural  and  ordinary 
demand  for  such  shingles,  or  to  purchase  shingles  at  any  other  than 
the  price  so  fixed,  and  he  was  injured  thereby  in  his  business  in  the 


a  See  Monopolies,  vol.  35,  Cent.  Dig.  §§  11,  13. 


196 


118  FEDEBAL  BEPOKTER,   121. 
Opinion  of  the  Court. 


mm  of  $1,200.  For  a  third  cause  of  action,  tlie  plaintiff,  in  addition 
to  the  facts  above  alleged,  set  forth  that  on  November  11,  1899,  for  the 
pnri>08e  of  further  increasing  the  price  of  said  shingles,  the  associa- 
tion ordered  its  mills  to  close  down  for  the  period  of  60  days,  which 
order  was  obeyed,  whereby  the  trade  in  shingles  was  interrupted,  and 
he  was  unable  to  purchase  shingles  with  which  to  fill  his  orders,  to 
his  damage  in  the  sum  of  $1,000.  For  a  fourth  cause  of  action,  in 
addition  to  the  facts  already  set  forth,  the  plaintiff  alleged  that  the 
president,  vice  president,  treasurer,  and  secretary,  together  witli  the 
central  conuiiittee,  for  the  purjiose  of  destroying  the  plaintiff's  busi- 
ness, published  resolutions  adopted  at  a  meeting  of  the  central  com- 
mittee, chai-ging  the  plaintiff  with  endeavoring  to  injure  the  market 
for  Washington  red-cedar  shingles,  and  with  having  no  money  in- 
Tested  in  his  business,  and  as  being  without  credit  and  irresponsible, 
and  not  an  honorable  and  legitimate  dealer  in  such  shingles,  and  that 
for  the  purpose  of  inducing  all  wholesale  and  retail  dealers  in  shingles  in 
the  states  and  foieign  countries  afores;iid  to  refuse  to  buy  shingles  of 
the  plaintiff,  and  to  induce  the  manufacturers  of  shingles  to  refuse  to 
sell  him  shingles,  they  printed  and  circulatoil  through  the  mails  the  said 
resolutions,  and  published  them  in  newspapers.  And  the  plaintiff  in 
error  set  forth  in  the  complaint  the  names  of  253  persons  to  whom 
such  circulars  were  sent.  He  alleged  that  the  result  of  the  conspiracy 
was  to  destroy  his  business,  to  his  damage  in  the  sum  of  $15,000.  On 
February  2,  1900,  the  defendants  in  the  action,  by  their  atternevs, 
filed  a  general  appt^arance  with  the  clerk  on  behalf  of  all  the  de- 
fendants nametl  in  the  complaint.  The  defendants  McNeeley  and 
Beckraan  subsequently  appeared  separately,  and  [122]  demurred  to 
each  cause  of  action  in  the  complaint  for  want  of  jurisdiction  of  the 
persons  of  the  defendants,  want  of  jurisdiction  of  the  subje<t-matter, 
defect  of  parties  defendant,  and  tlie  insufficiency  of  the  facts  pleaded 
to  constitute  causes  of  action.  Upon  the  last  of  these  gromids  of 
.denmrrer.  the  cause  was  presented  in  the  circuit  court  before  Han- 
ford,  District  Judge,  and  the  demurrer  was  sustained  as  to  all  except 
the  fourth  cause  of  action.  102  Fed.  5M.  Upon  that  cause  the  case 
afterward  went  to  trial  befoi-e  Bellinger,  District  Judge,  who  directed 
the  Jury  to  return  a  verdict  for  the  defendants  in  error  upon  the 
ground  that  the  proofs  did  not  sustain  the  cau.ses  of  action,  and  that 
the  combination  described  in  the  complaint  is  not  one  in  restraint  of 
interstate  commerce,  so  as  to  give  a  right  of  action,  under  the  pro- 
visions of  the  act  of  July  2,  1800  [U.  S.  Comp.  St.  1901,  p.  3200],  to 
one  who  has  been  injured  by  a  resolution,  passed  and  circulated,  de- 
nouncing him  for  cutting  prices,  and  also  upon  the  ground  that  in  the 
opinion  of  the  court  the  allegations  in  the  fourth  cause  of  action  were 
insufficient  to  constitute  a  cause  of  action.    107  Fed.  210. 

T.  0.  Ahhott  and  T,  Z.  StUes,  for  plaintiff  in  error. 

Charles  O,  Bates,  Charles  A,  Murrayy  and  John,  A.  Me- 
DanieUy  for  defendants  in  error. 

Before  Gilbert  and  Eoss,  Circuit  Judges,  and  Hawley, 
District  Judge. 

Gilbert,  Circuit  Judge,  after  stating  the  case  as  above, 
delivered  the  opinion  of  the  court. 

The  case  having  gone  to  trial  before  a  jury  on  the  fourth 
cause  of  action,  and  having  been  determined  adversely  to  the 


GIBBS   V.    M  NEFXEY. 


197 


Opinion  of  the  Court. 

plaintiff  in  error  on  the  facts,  and  it  being  conceded  that  the 
demurrer  to  the  first  cause  of  action  was  properly  sustained, 
the  question  which  is  here  presented  is  whether  the  facts 
alleged  in  either  the  second  or  the  third  cause  of  action  in 
the  complaint  constitute  a  cause  of  action  under  the  act  of 
July  2,  1890,  commonly  known  as  the  "  Sherman  Anti-Trust 
Act"  [U.  S.  Comp.  St.  1901,  p.  3200].  The  combination 
which  is  described  in  the  complaint  consists  of  a  combination 
of  manufacturers  and  wholesale  dealers  in  Washington  red- 
cedar  shingles,  who  reside  and  carry  on  their  business  within 
the  state  of  Washington,  and  sell  and  deliver  goods  to  resi- 
dents of  other  states.  It  is  not  charged  that  the  defendants 
in  error,  or  anv  of  them,  have  entered  into  anv  combination 
or  contract  with  residents  of  other  states.  The  alleged  right 
of  the  plaintiff  in  error  to  recover  is  based  substantially  upon 
the  fact  that  the  combination  comprises  all  the  manufacturers 
and  wholesale  dealers  within  the  state  of  Washington,  and 
that  they  have  combined  and  conspired  together  to  fix  an 
arbitrary  price  to  wholesale  and  retail  dealers  for  an  article 
of  merchandise  used  in  interstate  commerce,  below  which  no 
one  is  permitted  to  buy  or  to  sell,  and  that  the  price  so  fixed 
marks  a  distinct  increase  of  the  market  price  as  it  had  stood 
theretofore,  and  that  the  association  has  assumed  and  exer- 
cised, and  will  continue  to  exercise,  the  power  to  shut  down 
all  mills  within  the  state  at  will,  and  for  so  long  a  time  as  it 
may  deem  necessary.  Is  this  a  combination  in  restraint  of 
interstate  commerce,  such  as  is  denounced  by  the  statute? 
There  can  be  no  doubt  that  at  common  law  it  is  an  unlawful 
combination  in  restraint  of  trade.  It  has  the  effect  to  di- 
minish production,  abolish  competition,  and  enhance  prices. 
Its  illegality  is  not  relieved  by  the  fact  that  [123]  it  was 
induced  by  the  keen  competition  and  the  unprofitable  condi- 
tion of  the  shingle  manufacturing  business  which  existed 
befor.}  it  was  entered  Into,  or  by  the  fact  that  the  prices 
fixed  by  the  combination  may  have  been  reasonable.  Manu- 
facturing Co.  V.  Klotz  (C.  C.)  44  Fed.  721;  Richardson  v. 
Buhl,  77  Mich.  632,  43  N.  W.  1102,  6  L.  E.  A.  457;  State  v. 
Standard  Oil  Co.,  49  Ohio  St.  137,  30  N.  E.  279,  15  L.  R.  A. 
145,  34  Am.  St.  Rep.  541;  People  v.  Milk  Exchange,  145 
N.  Y.  267,  39  N.  E.  1062,  27  L.  R.  A.  437,  45  Am.  St.  Rep. 


198 


118  FEDERAL  REPORTEB,  123. 


Opinion  of  tlie  Court 

600 ;  Hamrow  Co,  v.  Hmch,  27  C.  C.  A.  349,  83  Fed.  36,  39 
L.  Ed.  299:  Crcn^em  v.  Oarter-Orume  Co,,  34  C.  C.  A.  479, 
92  Fed.  479. 

The  anti-tnist  act  goes  as  far,  if  not  farther,  than  the  com- 
mon law,  and  declares  unlawful  all  combinations  in  restraint 
of  interstate  trade.  In  order,  therefore,  to  bring  the  com- 
bination which  is  under  consideration  within  the  interdiction 
of  the  act,  it  must  appear  that  it  is  more  than  a  mere  com- 
bination in  restraint  of  trade;  it  must  involve  the  restraint 
of  interstate  or  international  commerce.  It  is  urged  by  the 
defendants  in  error  that  merchandise  is  not  subject  to  the 
power  of  congress  to  regulate  commerce  until  it  is  in  actual 
transit  from  one  state  to  another,  and  that  matters  occurring 
prior  to  the  commencement  of  this  final  niovenuMit  are  not 
matters  of  interstate  commerce,  but  are  within  the  authority 
of  the  state,  and  are  wholly  unaffected  by  other  authority. 
Coe  V.  Town  of  Errol,  116  U.  S.  517,  6  Sup.  Ct.  4T5, 29  L.  Ed. 
715;  Kidd  V.  Peamon,  128  IJ.  S.  1,  9  Sup.  Ct.  6,  32  L.  Ed. 
346 ;  and  other  cases  are  cited  in  support  of  that  view.  But 
in  Rohhins  v.  Taxing  Dist,  120  U.  S.  489,  497,  7  Sup.  Ct.  592, 
30  L.  Ed.  694,  it  was  said :  "  The  negotiation  of  sales  of 
goods  which  are  in  another  state,  for  the  purpose  of  introduc- 
ing them  into  the  state  in  which  the  negotiation  is  made,  is 
interstate  commerce;"  and  the  case  of  Addyston  Pipe  (& 
Steel  Co.  V.  U,  S,,  175  U.  S.  211,  20  Sup.  Ct.  96,  44  L.  Ed. 
136,  is  authority  for  the  proposition  that  the  power  of  con- 
gress to  regulate  conmierce  is  not  confined  to  goods  that  have 
begun  their  movement  out  of  the  state  in  which  they  are 
manufactured,  but  that  it  extends  to  negotiations  and  con- 
tracts made  preliminary  to  the  manufacture,  sale,  and  ship- 
ment of  goods  in  interstate  commerce.  The  court  in  that 
case  had  under  consideration  a  combination  between  manu- 
facturers located  in  different  states.  The  combination  com- 
prised six  corporations,  and  it  was  entered  into  for  the  pur- 
pose of  raising  prices  of  steel  pipe  in  certain  designated 
states.  Their  method  of  business  required  the  delivery  of 
pipe  by  the  seller  at  the  place  where  it  was  to  be  used  by  the 
buyer,  and  included  in  the  price  the  cost  of  delivery.  By  the 
terms  of  the  combination,  contracts  were  to  be  made,  after 
public  letting,  at  the  home  and  in  the  state  of  the  buyer. 


GIBBS   V,   M  NEELEY. 


Opinion  of  the  Court. 


199 


Requests  for  bids  were  to  be  submitted  to  a  central  commit- 
tee, which  was  to  fix  a  price,  and  the  contract  was  to  be 
awarded  to  that  member  of  the  combination  who  would  agree 
to  pay,  for  the  benefit  of  the  other  members,  the  largest 
bonus.  This  was  the  method  of  business  except  in  certain 
designated  reserved  states,  in  which  the  successful  bidder 
was  to  be  designated,  and  the  price  and  bonus  were  to  be 
fixed  by  the  association.  The  agreement  of  the  association 
restrained  eveiy  defendant,  except  the  one  selected  to  re- 
ceive the  contract,  from  making  a  contract  for  pipe  with  the 
intended  purchaser.  [124]  With  respect  to  the  sales  in  the 
states  in  which  the  mills  of  the  defendant  were  situated,  the 
effect  of  the  agreement  was  to  bind  at  least  three,  if  not  more, 
of  the  defendants  to  make  no  contract  at  all  in  those  states 
for  the  sale  and  delivery  of  pipe  in  another  state.  In  short, 
the  agreement  had  the  effect  to  restrain  at  least  three,  some- 
times four,  sometimes  five,  and  sometimes  all,  of  the  defend- 
ants in  interstate  trade,  which  otherwise  thev  would  have 
been  permitted  to  engage  in,  in  selling  in  one  state  pipe  to 
be  delivered  from  another  state  at  prices  to  be  determined 
upon  from  competition  and  at  market  rates.  There  were 
other  restrictions  in  the  combination,  not  necessarv  here  to 
be  further  specified.  The  court  held  that  the  association  was 
a  contract,  combination,  or  conspiracy  in  restraint  of  trade, 
as  the  terms  are  understood  in  the  act,  and  that  the  subject- 
matter  of  the  restraint  was  not  articles  of  merchandise  or 
their  manufacture,  but  contracts  for  the  sale  of  such  articles, 
to  be  delivered  across  state  lines,  and  the  negotiations  and 
bids  preliminary  to  the  making  of  such  contracts;  all  of 
which  are  interstate  commerce.     The  court  said : 

"  If,  therefore,  an  agreement  or  combination  directly  restrains  not 
alone  the  manufacture,  but  the  purchase,  sale,  or  exchange  of  the 
manufactured  commodity  among  the  several  states,  it  is  brought 
within  the  provisions  of  the  statute." 

The  defendants  in  error  rely  upon  the  case  of  U,  S.  v. 
E.  C,  Knight  Co.,  156  U.  S.  1, 15  Sup.  Ct.  249,  39  L.  Ed.  325. 
That  case  arose  upon  a  bill  in  equity  filed  by  the  United 
States  under  the  anti-trust  act  to  enjoin  the  defendants  from 
continuing  a  combination  which  comprised  substantially  all 
the  sugar  refineries  of  the  country  for  refining  raw  sugar. 
The  bill  alleged  that  the  American  Sugar-Refining  Company 


AiUil 


118   FEDERAL  BEPOBTER,   124. 
Opinion  of  the  Court 


had  purchased  the  stock  of  four  other  sugar-refining  com- 
panies with  shares  of  its  own,  and  that  thereby  it  acquired 
almost  the  complete  control  of  the  manufacture  of  refined 
sugar  in  the  United  States.  It  was  the  object  of  the  suit 
to  cancel  the  agreements  of  purchase,  to  cause  the  redelivery 
of  the  stock  to  the  fonner  owners  thereof,  and  to  enjoin  the 
further  performance  of  the  agreement.  The  court  denied 
the  relief  which  was  prayed  for,  and  held  that  the  combina- 
tion was  not  within  the  prohibition  of  the  statute  for  the 
reason  that  the  agreement  related  only  to  the  manufacture 
of  refined  sugar,  and  not  to  its  sale.  The  chief  justice,  in  de- 
livering the  opinion  of  the  court,  said : 

*•  Commerce  succeeds  to  manufacture,  and  is  not  a  part  of  it  The 
power  to  regulate  commerce  is  the  power  to  prescribe  the  rule  bv 
which  couuuerce  shall  be  governed,  and  is  a  power  independent  of  the 
power  to  suppress  monopoly.  But  it  may  operate  in  repression  of 
moniipoly  wherever  that  comes  within  the  rules  by  which  commerce  Is 
governed,  or  whenever  the  transaction  is  itself  a  monopoly  of  com- 
merce. ♦  *  *  The  fact  that  an  article  is  manufactured  for  export 
to  another  state  does  not  of  itself  malie  it  an  article  of  interstate  com- 
merce, and  the  intent  of  the  manufacturer  does  not  determine  the  time 
when  the  article  or  product  passes  from  the  control  of  the  state,  and 
belongs  to  wmmerce;'  ' 

The  chief  justice  proceeded  to  say,  further: 

;'Wbat  the  law  struck  at  was  combinations,  contracts,  and  con- 
spiracies to  monopolize  trade  and  coumierce  among  the  several  states 
or  with  foreign  nations,  but  the  contracts  and  acts  of  the  defendants 
related  exclusively  to  the  acquisition  of  the  Philadelphia  refineries 
and  the  business  of  sugar  refln-  [125]  ing  in  Pennsvlvania,  and  bore 
no  direct  relation  to  commerce  between  the  states*  or  with  foreign 
nations.  The  object  was  manifestly  private  gain  in  the  manufacture 
of  the  commodity,  but  not  through  the  control  of  interstate  or  for- 
eign commerce.  ♦  •  ♦  There  was  nothing  in  the  proofs  to  indicate 
any  intention  to  put  a  restraint  upon  trade  or  commerce,  and  the  fact 
as  we  have  seen,  that  trade  or  commerce  might  be  indirectly  affected* 
was  not  enough  to  entitle  complainants  to  a  decree." 

The  purport  of  this  language  of  the  court  is  to  mark  a 
distinction  between  a  restraint  upon  manufacturing  and  a 
restraint  upon  interstate  commerce  in  a  manufactured  article, 
and  to  hold  that  the  power  of  congress  to  regulate  commerce 
extends  only  to  the  latter.  If  the  defendants  in  that  case 
had  combined  for  the  purpose  of  not  only  regulating  the 
manufacture  of  refined  sugar,  but  the  price  at  which  it  should 
be  furnished  to  purchasers  in  other  states,  a  different  case 
might  have  been  presented.  There  was  nothing  in  the  case 
as  it  was  presented  to  show  that  the  combination  contem- 


GIBBS   V.   M  NEELEY. 


201 


Opinion  of  the  Court. 

plated  a  regidation  of  prices  of  merchandise  which  was  to 
enter  into  interstate  commerce,  or  a  restraint  of  the  trade  in 
merchandise  in  such  commerce.  There  was  before  the  court 
only  a  combination  to  manufacture,  which  might  or  might 
not  result  in  an  increase  of  prices,  and  the  court  held,  there- 
fore, that  commerce  was  only  indirectly  affected.  Mr.  Justice 
Peckham,  in  delivering  the  opinion  of  the  court  in  the  Addy- 
ston  Pipe  &  Steel  Co.  Case,  said : 

"  It  is  the  sale  and  delivery  of  a  certain  kind  and  quality  of  pipe, 
and  not  the  manufacture,  which  is  the  material  portion  of  the  contract, 
and  a  sale  for  delivery  beyond  the  &tate  makes  the  transaction  a  part 
of  interstate  commerce," 

— And,  distinguishing  that  case  from  the  E.  C.  Knight  Co. 
Case,  said,  of  the  combination  in  the  latter  case,  that  its  direct 
purpose  was  the  control  of  the  manufacture  of  sugar;  and 
added : 

"There  was  no  combination  or  agreement  in  terms  regarding  the 
future  disposition  of  the  manufactured  article,  nothing  looking  to  a 
transaction  in  the  nature  of  interstate  commerce." 

In  these  words  the  court  marked  the  limit  of  the  doctrine 
of  the  E.  C.  Kiiight  Co.  Case.  The  plain  intimation  from 
the  language  of  the  court  is  that,  if  there  had  been  in  that 
case  a  combination  or  agreement  in  terms  regarding  the  fu- 
ture disposition  of  the  manufactured  article  across  state  lines, 
there  would  have  been  added  the  essential  element  to  make  it 
a  combination  affecting  interstate  commerce. 

The  ground  upon  which  the  court  held  that  the  combina- 
tion of  manufacturers  in  the  Addyston  Pipe  &  Steel  Co. 
Case  restrained  interstate  commerce  was  the  fact  that  it  was 
made  in  contemplation  of  the  transaction  of  future  business 
between  citizens  of  different  states  and  the  negotiation  of 
sales,  to  be  made  in  one  state,  of  goods  to  be  delivered  therein 
from  another.  While  there  was  in  that  case  no  particular 
contract  for  furnishing  pipe  or  fixing  its  price  in  the  con- 
templation of  the  parties  to  the  combination  at  the  time  when 
it  was  made,  the  court  referred  to  the  fact  that  it  was  the 
purpose  of  the  combination  to  abolish  all  competition,  and 
said : 

"  The  direct  and  immediate  result  of  the  combination  was,  there- 
fore, necessarily  a  restraint  upon  interstate  commerce  in  respect  of 
articles  manufac-  [126]  tured  by  any  of  the  parties  to  it,  to  be  trans- 
l>orted  beyond  the  state  in  which  they  were  made." 


&}m 


118  FEDEBAL  KBPOBTEE,  126. 


Opinion  of  the  Coupt. 

The  present  case  differs  in  important  aspects  from  both 
the  E.  C.  Knight  Co.  Case  and  the  Addyston  Pipe  &  Steel 
Co.  Case.    It  occupies  a  ground  intermediate  between.    The 
combination  which  it  presents  is  more  than  a  mere  combi- 
nation to  manufacture,  such  as  was  before  the  court  in  the 
E.  C.  Knight  Co.  Case,  and  it  lacks  some  of  the  featui-es  of 
the  Addyston  Pipe  &  Steel  Co.  Case,  in  that  it  contains  no 
express  provision  for  the  transaction  of  business  across  state 
lines;  it  does  not  by  its  terms  refer  to  the  sale  or  delivery 
of  shingles  elsewhere  than  in  the  state  of  Washington.     But 
can  it  be  said  that  such  sales  and  delivery  were  not  within 
its  contemplation,  and  are  not  directly  affected  by  it?    The 
defendants  in  enw  were  engaged  in  manufacturing  a  prod- 
uct of  which,  as  they  well  knew,  more  than  80  |)er  cent,  was 
to  be  sold,  delivered,  and  used  in  states  other  than  that  of 
its  manufacture.     They  were  in  the  business  of  selling  and 
delivering  shingles  to  purchasers  in  other  states.    In  fixing 
a  list  of  prices  they  fixed  it  not  alone  for  domest ic  trade,  but 
for  external  commerce  as  well.    The  inevitable  result  of  the 
combination  is  to  enhance  tlie  price  and  restrain  the  trade 
of  shingles  in  all  the  states.    In  the  E.  C.  Knight  Co.  Case 
it  was  held  that  a  monopoly  to  manufacture  did  not  neces- 
sarily affect  interstate  commerce.    The  reason  for  so  hold- 
ing is  apparent.     From  the  creation   of  a  monopoly  to 
manufacture,  it  does  not  necessarily  follow  that  interstate 
commerce  in  the  monopolized  article  will  in  any  degree  be 
interfered  with.    The  total  production  of  the  manufactured 
article  and  its  price  may,  notwithstanding  the  monopoly,  re- 
main unaffected.     In  that  case  it  was  said,  "There  was 
nothing  in  the  proofs  to  indicate  any  intention  to  put  a  re- 
straint upon  trade  or  commerce."    But  this  cannot  be  said 
of  a  combination  of  manufacturers  in  one  state  who  agree 
to  arbitrarily  increase  the  price  and  diminish  the  total  out- 
put of  a  manufactured  product  which  is  made  only  in  that 
state,  but  which  is  principally  bought  and  used  in  other 
states.   ITie  intention  to  put  a  restraint  upon  interstate  com- 
merce in  such  a  case  is  evident,  and  the  restraint  is  not  indi- 
rect, but  direct,  and  it  is  the  neceasary  and  inevitable  result 
of  the  combination. 


GIBBS   V,   M  NEELEY. 


203 


Opinion  of  the  Court 

We  do  not  think  that  the  act  contemplates  that  the  com- 
bination therein  made  unlawful  must  be  one  which  shall  by 
its  terms  refer  to  interstate  commerce.  It  is  enough  if 
its  purpose  and  effect  are  necessarily  to  restrain  interstate 
trade.  If  it  were  otherwise,  all  combinations  in  restraint  of 
interstate  trade  might  be  so  expressed  in  words  as  to  avoid 
the  statute.  The  true  test  would  seem  to  be,  not  what  the 
agreement  professes,  but  what  it  accomplishes.  This  com- 
bination must  be  dealt  with  in  view  of  the  known  facts 
which  surrounded  it  when  it  was  formed,  and  which  still 
attend  it.  It  is  impossible  that  the  parties  to  it  had  in  view 
only  domestic  trade.  They  must  have  had  in  contemplation 
the  market  which  they  had  theretofore  had,  and  which  they 
would  continue  to  have,  and  which,  as  they  well  knew,  was 
principally  without  the  limits  of  their  own  state.  It  is  im- 
material that  all  the  parties  to  the  agreement  were  resi- 
dents of  the  same  state.  It  is  not  the  place  where  the  parties 
reside  that  dis-  [127]  tinguishes  the  combination,  and  lends 
to  it  the  features  of  a  combination  in  restraint  of  interstate 
trade.  A  case  in  point  is  Chesapeake  c£'  O.  Fuel  Co.  v. 
U.  S.^  115  Fed.  610,  recently  decided  by  the  circuit  court  of 
appeals  for  the  Sixth  circuit,  in  which  the  court  held  illegal 
under  the  anti-trust  law,  both  as  in  restraint  of  interstate 
commerce  and  as  tending  to  create  a  monopoly,  a  combina- 
tion between  a  fuel  company,  a  corporation  of  the  state  of 
West  Virginia,  and  14  corporations,  persons,  and  firms  of 
that  state,  who  were  independently  engaged  in  producing 
coal  and  coke  in  a  district  on  the  line  of  a  railroad.  The 
combination  stipulated  that  the  company  was  to  handle  for 
a  term  of  years  the  entire  output  of  the  members  of  the 
association,  which  was  to  be  shipped  to  the  western  market 
over  said  road,  and  that  it  should  sell  the  product  of  no 
competing  mines,  and  it  provided  that  a  minimum  price 
for  the  sale  of  the  coal  and  coke  should  be  fixed  from  time 
to  time  by  a  committee  of  the  association,  which  price  the 
fuel  company  agreed  to  pay,  and  in  addition  thereto  agreed 
to  obtain  as  large  a  profit  as  possible,  and  to  account  to  the 
association  for  all  thereof  above  a  fixed  sum  per  ton,  which 
it  was  to  retain  as  its  compensation.     We  have^  not  over- 


U8  FEDERAL  KEPORTER,   127. 


Opinion  of  the  Court 

looked  certain  expressions  of  the  court  in  the  E.  C.  Knight 
Co.  Case,  where  it  was  said  that  congress  did  not  attempt, 
by  the  act  of  July  2,  1890,  "  to  limit  and  restrict  the  rights 
of  corporations  created  by  the  states,  or  the  citizens  of  the 
states,  in  the  acquisition,  control,  or  disposition  of  prop- 
erty, or  to  regulate  or  prescribe  the  price  or  prices  at  which 
such  property  or  the  products  thereof  should  be  sold "  ; 
and  where  it  was  further  said  that  contracts  "  to  raise  or 
lower  prices  or  wages  might  unquestionably  tend  to  restrain 
external  as  well  as  domestic  trade,  but  the  restraint  would 
be  an  indirect  result,  however  inevitable  and  whatever  its 
extent,  and  such  result  would  not  necessarily  determine  the 
object  of  the  contract,  combination,  or  conspiracy."     We 
think  the  court,  in  using  this  language,  had  in  view  combi- 
nations to  raise  prices  which  might  be  made  without  special 
reference  to  interstate  trade,  and  which  would  only  indi- 
rectly affect  it.    The  combination  in  the  case  before  the 
court  is  more  than  a  combination  to  regulate  prices;  it  is 
a  combination  to  control  the  production  of  a  manufactured 
article  more  than  four-fifths  of  which  is  made  for  interstate 
trade,  and  to  diminish  competition  in  its  production,  as  well 
as  to  advance  its  price.    These  features,  we  think,  deter- 
mine its  object,  and  brmg  it  under  the  condemnation  of  the 
law.    The  plaintiff  in  error  is  in  the  business  of  buying  the 
manufactured  article  in  the  state  where  it  is  manufactured, 
and   sellmg  it   to  purchasers   in   other  states.     The   acts 
charged  against  the  defendants  in  error  interfere  with  his 
"  contracts  to  buy,  sell,  or  exchange  goods  to  be  transported 
among  the  several  states,"— contracts  which  are  made  and 
negotiated  between  the  plaintiff  in  error  and  his  customers 
in  various  states,— and  the  acts  of  the  defendants  are  in 
restraint  of  the  interstate  commerce  in  which  he  is  engaged. 
We  think  the  complaint  states  a  cause  of  action.    We  find 
no  erfor  in  the  ruling  of  the  circuit  court  in  denying  the 
motion  of  the  plaintiff  in  error  for  an  order  granting  the 
default  of  all  the  defendants  in  error  except  E.  J.  McNeeley 
and  Victor  H.  Beckman,  [128]  and  granting  Bates  &  Mur- 
ray  leave  to  withdraw  their  general  appearance  entered  on 
behalf  of  all  of  the  defendants  in  error,  and  to  so  amend 


GENERAL   ELECTRIC   CO.    V,   WISE. 


Statement  of  tlie  Case. 


205 


the  same  as  to  make  said  appearance  for  and  on  behalf  of 
McNeeley  and  Beckman  only. 

The  judgment  of  the  circuit  court  is  reversed,  and  the 
cause  remanded  for  further  proceedings  not  inconsistent 
with  the  foregoing  views. 


[922]      GENEKAL  ELECTKIC  CO.  v.  WISE. 

(Circuit  Court,  N.  D.  New  Yorlj.    January  17,  1903.) 

[119  Fed.,  922.] 

Patents — Injunction  against  Infringement — ^Defenses. — ^That  a 
defendant  is  able  to  respond  in  damages  is  no  defense  to  an  appli- 
cation for  an  injunction  against  infringement  of  a  patent.  If  the 
patent  is  valid,  the  owner  has  the  absolute  right  to  be  protected 
in  the  exclusive  use  of  the  invention  which  the  law  secures  to  him 
during  the  term  of  the  patent.^  & 

Same — Violation  of  Anti-Trust  Law. — ^That  a  complainant  is  a 
member  of  a  combination  in  violation  of  the  anti-trust  law  of  July 
2,  1890  [U.  S.  Comp.  St.  1901,  p.  3200],  does  not  give  third  persons 
the  right  to  infringe  a  patent  of  which  complainant  is  owner,  nor 
preclude  complainant  from  maintaining  a  suit  in  equity  to  enjoin 
such  infringement. 

Same — Anticipation — Prior  Unsuccessful  Devices. — A  patent  for 
an  invention  which  successfully  accomplishes  a  useful  result  is  not 
void,  for  anticipation  or  prior  use,  because  of  a  prior  device,  how- 
ever similar  in  combination  or  close  in  resemblance  to  that  of  the 
patent,  where  such  prior  device  was  not  operative,  and  failed  to 
produce  the  result  sought,  and  which  is  produced  by  the  device  of 
the  patent. 

Same — Infringement — Incandescent  Lamp  Socket. — ^The  device  of 
the  Tournier  patent.  No.  559232,  for  an  incandescent  lamp  socket, 
was  not  anticipated  by  either  the  Weston  socket  or  the  Westing- 
house  push  button  socket,  both  of  which  failed  to  accomplish  the 
result  sought,  and  attained  by  the  device  of  the  patent  Claims  1, 
2,  3,  and  4  construed,  and  held  valid  and  infringed,  on  a  motion  for 
a  preliminary  injunction. 

In  Equity.  This  is  a  motion  in  the  above-entitled  cause 
for  a  preliminary  injunction  restraining  the  defendant,  his 
agents  and  servants,  from  manufacturing  and  selling  certain 

a  See  Patents,  vol.  38,  Cent.  Dig.  §  495. 

6  Syllabus  copyrighted,  1903.  by  West  Publishing  Co. 


206 


11»  FEDERAL  REPORTER,   922. 


Opinion  of  the  Court. 

electrical  apparatus  (sockets  for  incandescent  lamps)  al- 
leged to  be  an  infringement  of  the  Tournier  patent  (letters 
patent  No.  559232),  particularly  claims  1,  2,  3,  and  4  there- 
of,--a  structure  or  invention  alleged  to  be  indispensable  in 
the  art  of  electric  lighting. 

Eamuel  Owen  EdmondSj  ioT  complainant 

Alfred  Wilkinson  (William  Keman^  of  counsel),  for  de- 
fendant. 

Eay,  District  Judge. 

The  complainant's  claim  is:  That  prior  to  April  28,  1896, 
Julius  C.  Tournier,  a  citizen  of  the  state  of  New  York,  re- 
siding at  Schenectady,  was  the  original,  first,  and  sole  in- 
ventor of  certain  new  and  useful  improvements  in  sockets 
for  incandescent  lamps,  fully  described  in  the  letters  patent, 
No.  559232,  and  which  had  not  been  used  by  others  in  this 
country  before  his  invention  or  discovery  thereof,  and  which 
had  not  been  abandoned  or  patented  or  described  in  any 
printed  publication  in  this  or  any  foreign  country  before  his 
invention  or  discovery  thereof,  or  more  than  two  years  prior 
to  his  application  for  said  letters  patent,  and  which  were  not, 
prior  to  his  said  application,  in  public  use  or  on  sale  in  this 
or  any  other  country  for  more  than  two  years.  That  all 
lawful  conditions  having  been  complied  with,  on  the  28th  day 
of  April,  1896,  letters  patent,  in  due  form,  were  duly  issued 
therefor  to  the  said  Tournier ;  [928]  complainant.  General 
Electric  Company,  being  the  a&signee  of  said  Tournier. 
That  by  virtue  of  such  patent  and  assignment  the  complain- 
ant became  and  is  vested  with  and  possessed  of  the  full  and 
entire  right,  title,  and  interest  in  and  to  said  letters  patent, 
and  all  rights  thereunder,  and  was  in  the  full  possession 
and  enjoyment  of  same  up  to  February,  1899.  That  the  com- 
plainant is  a  large  manufacturing  company,  engaged  in 
manufacturing  and  putting  sockets  for  incandescent  lamps, 
employing  and  containing  such  invention,  on  the  market 
and  in  the  trade,  and  that  same  are  being  generally  used, 
and  that  such  sockets  so  made,  sold,  and  delivered  have  been 
duly  marked  "  Patented,"  and  that  complainant  has  invested 
large  capital  in  the  business,  and  been  to  great  expense  and 


GENERAL   ELECTRIC   CO.    D.    WISE. 
Opinion  of  the  Court. 


207 


trouble  in  establishing  the  business,  and  that  such  sockets 
are  in  great  demand,  and  complainant  will  reap  great  bene- 
fits if  the  alleged  infringement  by  the  defendant  is  enjoined, 
and  suffer  great  loss  if  an  injunction  is  not  granted.  That 
in  the  spring  of  1899,  the  Anchor  Electric  Company  under- 
took to  and  did  infringe  said  letters  patent.  That  this 
complainant  brought  suit  against  said  company  for  said  in- 
fringement in  the  United  States  circuit  court  for  the  South- 
ern district  of  New  York,  and  that  an  answer  was  filed  al- 
leging the  invalidity  of  said  patent  by  reason  of  anticipa- 
tion in  the  i)rior  art,  and  that  the  production  of  such 
structure  did  not  involve  the  exercise  of  invention,  and  also 
denying  that  the  sockets  made  and  sold  by  said  Anchor  Elec- 
tric Company  constituted  an  infringement.  That  proofs 
were  taken,  the  action  tried  and  duly  submitted,  and  a  decree 
duly  made  and  entered  fully  establishing  the  validity  of 
such  patent.  The  final  decree  was  made  Januar}^  24,  1902. 
Another  suit  and  decree  of  similar  or  the  same  import  against 
New  England  Electric  Company  are  also  alleged.  It  is  then 
alleged  that  the  defendant,  well  knowing  all  such  facts,  with- 
out license  or  allowance  and  against  the  will  of  the  com- 
plainant, has  made  and  sold,  and  is  making  and  selling,  or 
causing  to  be  made,  used,  and  sold,  sockets  for  incandes- 
cent lamps,  employing  and  containing  the  said  invention, 
and  particularly  those  set  forth  in  claims  1,  2,  3,  and  4  of 
said  letters  patent,  and  is  threatening  to  continue  such  in- 
fringement; that  said  defendant  has  been  notified  of  such 
infringement;  and  that  his  continuance  of  such  acts  en- 
courage others  to  infringe  likewise. 

The  defendant  claims  that  this  invention  was  old, — prior 
invention, — and  relies  on  the  Weston  socket  and  the  West- 
inghouse  push  button  socket,  and  says  he  has  not  infringed, 
and  that  his  block  differs  more  from  Tournier's  than  Tour- 
nier's  does  from  Weston's.  The  defendant  then  alleges  that 
the  complainant  does  not  come  into  court  with  "  clean 
hands  " ;  that  it  and  all  other  important  socket  manufactur- 
ers in  the  country  organized  an  illegal  association  three  or 
more  years  ago,  by  the  terms  of  which  they  bound  themselves 
to  raise  the  price  of  sockets,  and  not  to  sell  at  a  lower  price 
than  agreed,  in  direct  opposition  to  the  anti-trust  law  of  July 


208 


119  FEDERAL  REPORTER,   923. 


Opinion  of  the  Court 

2,  1890  (26  Stat.  209  [U.  S.  Comp.  St.  1901,  p.  3200]).  By 
implication,  rather  than  directly,  it  charges  collusion  be- 
tween the  complainant  and  Anchor  Electric  Company  in  the 
action  referred  to,  and  finaUy  says  no  injunction  should  be 
granted,  because  the  defendant  is  a  leading  manufacturer  of 
Watertown,  N.  Y.,  amply  able  to  respond  in  damages,  and 
that  the  com-  [924]  plainant  should  resort  to  that  remedy 
even  if  this  court  finds  an  infringement. 

No  time  will  be  used  in  answering  this  suggestion,  except 
to  say  that,  if  the  complainant's  letters  patent  are  valid,  it  is 
entitled  to  protection  by  injunction  against  all  the  world. 
No  other  person  or  company  can  use  its  property  of  this 
description  without  its  consent,  and  relegate  it  to  an  action 
for  damages.    If  this  patent  is  valid,  the  complainant  has 
the  absolute  right,  under  the  laws  of  our  country,  to  the  use 
of  the  patent,  and  to  designate  the  parties  upon  whom  it 
will  confer  the  right  to  use  it.    Again,  in  such  a  case,  an 
action  for  damages  does  not  afford  an  ample  or  a  full  and 
complete  remedy.    Such  a  remedy  is  inadequate.    In  a  sense, 
the  granting  of  a  patent  confers  a  monopoly  on  the  inventor 
or  owner  of  such  patent,  but  such  a  monopoly  is  granted  in 
the  interest  of  the  public  as  well  as  of  the  grantee  of  the  pat- 
ent,  and  is  an  encouragement  to  the  development  of  invent- 
ive skill  and  genius.    The  patent  laws  of  the  United  States, 
while  sometimes  abused  or  perverted,  have  had  much  to  do 
with  the  growth  and  prosperity  of  our  country,  and  have 
added  much  to  our  material  and  intellectual  development. 
Ultimately,  these  inventions  are  surrendered  to  the  public, 
and  it  is  only  just  that  for  a  time  the  inventor  reap  the 
inwards  of  study  and  industry.    Grant  v.  Raymond,  6  Pet. 
218,  241,  8  L.  Ed.  376 ;  Bement  v.  Harroio  Co,,  186  U.  S.  88, 
89,  22  Sup.  Ct.  747,  46  L.  Ed.  1058.    The  cry  of  monopoly' 
therefore,  has  no  place  in  the  discussion  of  the  question  of 
infringement  or  priority  of  invention.     It  is  difficult  to 
understand  how  or  why  a  violation  of  the  Sherman  anti- 
trust law  by  this  complainant,  if  there  has  been  such  a  viola- 
tion, confers  any  right  on  the  defendant  to  infringe  this  pat- 
ent.   That  act  points  out  the  penalties  for  its  violation,  and 
it  is  not  understood  that  such  law  denies  the  grantees  of  pat- 
ents the  protection  of  the  law  because  they  may  be  violating 


GENERAL   ELECTRIC   CO.    V,   WISE. 


209 


Opinion  of  the  Court. 

some  statute.  However  that  may  be  the  evidence  falls  far 
short  of  establishing  such  a  violation  by  this  complainant. 
The  testimony  on  that  subject  is  squarely  contradicted.  An 
individual  cannot  confiscate  the  property  or  property  right 
of  a  corporation  on  the  ground  it  has  violated  that  act. 
Soda  Fountain  Co,  v.  Green  (C.  C.)  69  Fed.  333;  Columbia 
Wire  Co.  v.  Freeman  Wire  Co.  (C.  C.)  71  Fed.  302;  Bement 
V.  Harrow  Co,,  186  U.  S.  70,  88-91,  22  Sup.  Ct.  747,  46  L.  Ed. 
1058.  Harrow  Co.  v.  Qnkk  (C.  C.)  67  Fed.  131,  cannot  be 
accepted  as  authority  on  this  question. 

We  come  then  to  the  consideration  of  the  questions 
whether  this  Tournier  patent,  No.  559,232,  issued  April  28, 
1896,  is  a  new  and  valid  invention,  and  whether  the  defend- 
ant has  infringed  and  is  infringing  same. 

Claims  1,  2,  3,  and  4  of  the  said  patent,  now  particularly  in 
question,  are  as  follows: 

"(1)  In  an  incandescent  lamp  socket,  an  insnlating  block,  circuit 
terminals,  and  a  circuit-ccmtrolling  key,  with  a  metallic  tip  and  oi)er- 
ating  spring  mounted  thereon,  in  combination  with  a  metallic  socket 
mounted  on  the  insulating  block;  the  metallic  tip  of  the  controlling 
key  being  adapted  to  make  contact  with  the  shell  and  close  the  circuit 

"(2)  In  an  incandescent  lamp  socket,  as  a  new  article  of  manufac- 
ture, an  insulating  block,  formed  with  passages  in  its  eilges  for  the 
circuit  wires,  a  [925]  transverse  passageway  for  the  insertion  of  a 
controlling  circuit  key  shaft,  its  bearings,  and  a  controlling  spring,  a 
cavity  at  one  end  for  the  location  of  a  rotary  metallic  tip  of  the  key 
shaft,  and  a  cavity  at  the  other  end  for  the  location  of  one  of  the 
binding  screws  and  brackets,  a  cavitj'  at  one  side  of  the  block  for  the 
location  of  the  other  binding  screw  and  bracket,  ind  a  contact  arm  as 
herein  set  forth. 

"(3)  In  an  incandescent  lamp  socket,  an  insulating  block,  formed 
with  a  transverse  cavity,  a  rotary  circuit-controlling  key,  and  a 
spring  and  contact  tip  located  in  this  cavity,  binding  screws  located 
in  cavities  in  the  insulating  block,  one  connected  with  the  key  shaft 
and  the  other  with  a  metallic  contact  arm  projecting  over  the  top 
of  the  block,  and  a  shell  or  socket  mounted  on  the  top  of  a  block, 
and  adapted  to  complete  the  circuit  with  a  lamp  by  contact  of  the 
contact  tip  therewith. 

"(4)  In  a  socket  for  incandescent  lamps,  the  combination  with  the 
insulating  base  thereof  and  a  key  having  a  contact  tip  of  a  lamp- 
socket  cylindrical  shell  mounted  on  one  end  of  said  base,  and  so 
arranged  in  relation  to  the  key  tip  that  the  latter  contacts  with  the 
lamp-socket  cylindrical  shell  to  close  the  c.  'cuit,  as  set  forth." 

In  General  Electric  Co.  v.  Anchor  Electric  Co.  (and 
Henry  G.  Issertel  as  agent  and  manager  of  said  company), 
reported  (C.  C.)  106  Fed.  503,  the  validity  of  this  patent,— 
particularly  of  claims  1,  2,  3,  and  4,  above  quoted,  and  also 


21220— VOL  2—07  m- 


-14 


210 


119  FEDEBAL  BEPORTER,   925. 
Opinion  of  the  Court 


claim  9,  was  directly  in  issue;  and  it  was  held  by  Shipman, 
Circuit  Judge,  after  full  and  careful  consideration: 

"The  Toiirnier  patent  No.  559232,  for  a  socljet  for  incandescent 
lamps,  the  base  of  which  consists  of  a  substantial  block  of  porcelain 
or  other  insulating  material,  in  which  the  contact  key  and  circuit 
terminals  are  incased,  covers  a  device  which,  as  a  complete  struc- 
ture, was  not  anticipated,  and,  in  view  of  its  immediate  general 
adoption  and  commercial  success,  cannot  be  denied  patentable  inven- 
tion. Claims  1,  2,  3,  and  4  construed,  and  held  infringed.  Claim 
9,  which  is  limited  to  an  insulating  ring,  used  between  the  outer  shell 
and  the  socket  held  void  for  lack  of  invention,  in  view  of  the  prior 
art" 

In  that  decision,  as  far  as  it  covers  the  precise  questions 
now  presented,  this  court  fully  concurs.  It  is  not  necessary 
to  travel  over  the  same  ground,  and  present  the  same  facts 
and  reasoning  in  different  language.  But  the  respondent 
here,  James  B.  Wise,  as  he  alleges,  raises  new  questions,  and 
presents  new  evidence,  upon  which  this  court  is  asked  to 
find  and  hold  that  this  invention,  covered  by  the  claims 
quoted,  was  anticipated  and  not  patentable,  and,  failing 
here,  claims  the  defendant's  socket  is  as  much  or  more  a  new 
invention  as  the  complainant's,  and  that  same  is  so  widely 
different  as  not  to  constitute  an  infringement.  The  defend- 
ant says : 

"  We  oppose  this  motion  on  new  evidence  of  the  highest  importance, 
and  offer  entirely  new  defenses:  First.  On  the  Weston  socket  hav- 
ing a  cylindrical  block  of  insulation,  identical  in  every  essential  with 
Toumier's,  for  it  has  the  transverse  passageway,  the  outside  cavities, 
and  the  wire  grooves  or  passages  in  its  edges.  Second.  On  the  West- 
inghouse  push  button  socket  in  public  use  and  on  sale  in  1893  and 
before,  which  shows  a  porcelain  block  of  similar  construction,  hav- 
ing a  transverse  passageway  to  receive  and  to  protect  the  switch 
mechanism." 

It  is  not  discovered  from  the  record  that  Judge  Shipman 
had  these  two  sockets,  or  a  description  of  them,  before  him 
when  he  passed  on  the  question  of  anticipation  or  prior  in- 
vention and  use.  This  alleged  new  evidence  will  be  consid- 
ered on  the  theory  that  it  was  not  presented  to  the  court  on 
the  trial  of  the  Anchor  Electric  Co.  Case,  and  might  have 
changed  the  result  there,  and  may  change  the  result  here 
from  [f)26]  what  it  necessarily  would  be,  should  this  court 
follow  the  decision  of  Judge  Shipman. 

Two  or  more  persons  may  use  the  same  material,  existing 
in  precisely  or  substantially  the  same  form,  experimenting: 
and  making  combinations,  and  having  in  mi^d  the  constru^ 


GENEBAL  ELECTEIC   CO.    V,   WISE. 
Opinion  of  the  Court 


211 


tion  of  a  new  and  a  useful  invention  that  will  produce  a 
given  result.  The  one  or  ones  who  fail  invent  nothing,  but 
the  one  who  succeeds  may  have  invented  a  patentable  thing; 
and,  if  a  patent  is  granted,  he  is  entitled  to  its  protection  and 
benefits.  Those  who  failed,  or  others,  cannot,  by  taking  the 
same  materials  and  making  substantially  the  same  combina- 
tions, varying  the  form  or  arrangement,  or  both,  in  nones- 
sentials, but  aiming  at  and  producing  the  same  results,  claim 
either  priority  of  invention,  prior  use,  or  new  invention. 
Such  facts  will  not  defend  the  charge  of  infringement.  And 
even  if  in  such  experimentation  certain  imperfect  results 
were  obtained,  that  fact  does  not  establish  priority  of  inven- 
tion. "  If  the  patented  invention  is  not  operative,  it  cannot 
be  infringed  by  one  that  is."  Royer  v.  Coupe  (C.  C.)  29 
Fed.  358,  39  O.  G.  239.  It  would  seem  to  follow  that  how- 
ever close  the  resemblance  between  some  prior  alleged  inven- 
tion, even  when  put  in  actual  use,  and  the  patented  invention, 
if  such  alleged  prior  invention  was  not  operative,  and  failed 
to  produce  the  beneficial  results  sought  and  produced  by  the 
patent,  it  could  not  constitute  prior  invention.  In  such  case 
the  patented  invention  cannot  be  regarded  as  old. 

In  General  Electric  Co,  v.  Anchor  Electric  Co.^  supra. 
Judge  Shipman  says: 

"  The  insulating  block  of  the  patent  as  constructed  and  arranged  to 
become  the  receptacle  of  the  various  metallic  parts,  was  a  novelty, 
and  in  its  peculiar  characteristics  it  had  no  predecessor." 

It  is  now  insisted  that  the  Weston  socket  and  the  Westing- 
house  push  button  socket  are  each  substantially  identical 
with  the  Tournier  socket,  and  that  therefore  the  Tournier 
insulating  block  had  not  one,  but  two,  predecessors.  A  care- 
ful examination  of  both,  and  a  comparison  of  the  Tournier 
block  with  the  Weston  block,  not  only  fail  to  disclose  iden- 
tity, but  even  similarity,  when  we  consider  the  purposes  for 
which  devised,  and  the  ends  to  be  accomplished.  Both  are, 
in  general  form.  Cylindrical.  Each  has  a  transverse  passage- 
way, but  these  are  neither  identical,  nor,  mechanically  speak- 
ing, similar.  The  differences  in  the  two  are  marked  and  well 
defined,  and  absolutely  essential  differences.  They  are  so 
marked  that  it  does  not  occur  to  the  observer  that  the  de- 
signer of  the  Tournier  block  had  the  Weston  block  before 


212 


119   FEDERAL  BEFOBTEE,   926. 
Opinion  of  the  Court. 


him,  or  in  mind,  when  planning  his.  In  the  Tournier  block 
the  transverse  passageway  givas  neither  ingress  on  the  one 
side,  nor  egress  on  the  other,  to  its  full  depth.  At  one  side 
this  passageway  is  so  widened  as  to  form  a  chamber  oil 
either  side  of  tlie  main  passagew^^',  while  at  the  other  side  a 
part  of  the  block  is  entirely  cut  away  for  about  one-third  the 
diameter  of  the  block,  and  to  a  depth  within  one-eighth  or 
one- fourth  of  an  inch  from  the  bottom  of  the  transverse. 
passageway.  Upon  one  side  a  recess  is  cut,  which  reaches  to 
within  about  one-eighth  of  an  inch  of  the  passage  referred 
to.  There  are  other  peculiarities,  not  necessary  to  describe, 
but  all  these  peculiarities  have  their  necessary  uses  in  the 
assembled  socket.  In  the  Weston  |927]  block,  which  was 
of  wood,  the  transverse  passageway  extends  from  circum- 
ference to  circumference  unbroken,  is  much  wider,  is  of  uni- 
form width  from  circumference  to  circumference  and  of 
uniform  depth,  giving  ingress  and  egress  to  its  full  depth, 
and  on  one  side  is  cut  through  to  the  bottom.  Upon  the  out- 
side of  the  cylinder  we  find  no  less  than  eight  grooves  and 
recesses  vertical  and  diagonal  for  the  arrangement  and  ap- 
plication of  the  electrical  appliances,  none  of  which  are 
found  in  the  Tournier  block.  AYhen  we  come  to  consider 
the  mode  of  using  these  blocks,  the  ideas  of  means  of  appli- 
cation and  use,  and  the  results,  we  find  that  the  functions  are 
not  the  same,  the  modes  of  operation  are  radically  unlike, 
the  results  not  the  same,  and  the  ideas  of  means  for  the  ac- 
complishment of  satisfactory  results  are  radically  different, 
or  at  least  radically  defective,  in  the  assembled  Weston 
socket.  The  Weston  socket  was  not  satisfactory  or  even  safe. 
The  Tournier  device  was  carefully  and  skillfully  wrought 
out  by  a  change  in  the  character  of  the  insulating  base,  as 
well  as  by  the  modes  of  working  the  same,  and  also  in  many 
minor  details  and  appliances,  all  brought  into  harmony  and 
harmonious  action,  and  producing  satisfactory  results,  at 
which  many  had  aimed,  but  which  all  had  failed  to  accomp- 
lish. It  is  impossible  to  find  that  the  Weston  socket  was,  in 
a  legal  sense,  as  applied  in  these  cases,  the  predecessor  of  the 
Tournier  socket. 

Coming  to  the  consideration  of  the  Westinghouse  push 


GENERAL   ELECTRIC   CO.    V.    WISE. 


213 


Opinion  of  the  Court. 

button  socket,  we  find  far  less  resemblance  and  similarity. 
It  is  not  necessary  to  go  into  detail.  In  both  the  Star  and 
Weston  sockets,  the  metallic  switeh  mechanism,  which  is  in 
the  circuit  where  the  current  of  electricity  is  being  fed  to 
the  lamp,  is  arranged  in  a  cavity  or  a  passageway  on  the 
underside  of  the  block,  and  consequently  there  is  no  solid 
insulation  between  these  electrified  parts  and  the  metallic 
supporting  cap  of  the  socket.  The  result  of  this,  or  one 
result,  is  the  tendency  to  short-circuiting  and  burning  out, 
and  the  resulting  fire  hazard.  In  the  Tournier  socket,  the 
metallic  switch  mechanism  is  arranged  in  a  passageway  on 
the  upper  side  of  the  block,  and  we  have  a  solid  wall  of  in- 
sulation interposed  between  these  electrified  parts  and  the 
supporting  cap  of  the  socket.  Short-circuits  and  burning 
out  are  thus  precluded  between  such  parts  and  the  cap.  In 
the  Tournier  socket,  we  find  the  contact  key  and  circuit  ter- 
minals encased  within  the  base,  and  accidental  contact  with 
the  exterior  metallic  shell  is  thus  prevented.  In  the  AVeston 
socket,  one  of  the  terminals — one  of  the  parallel  contact  strips 
on  the  block  (and  this  corresponds  to  the  screw  shell  ele- 
ment)— is  always  in  the  circuit  and  electrified,  whether  the 
lamp  is  in  place  and  the  current  turned  on  or  not.  Here  is 
found,  again,  the  evil  of  short-circuiting,  with  outside  metal- 
lic bodies,  and  also  a  liability  to  accidental  shock  when 
handling  the  socket  and  when  replacing  or  removing  the 
lamp.  With  the  Tournier  socket,  all  this  is  remedied,  as 
the  situation  is  the  reverse.  Again,  in  the  Tournier  struc- 
ture we  find  the  threaded  shell  disconnected  from  the  circuit 
except  when  the  lamp  is  in  place  or  the  key  closed.  To  bring 
about  these  results,  necessary  to  the  success  of  the  art,  re- 
quired inventive  skill.  The  Tournier  structure  accomplished 
what  all  others  had  failed  to  bring  about,  by  new  ideas  of 
means,  by  the  use  of  new  means,  or,  to  some  [928]  extent,  old 
appliances  improved,  applied,  and  combined  in  a  new  and  an 
effective  and  beneficial  way. 

We  come,  then,  to  consider  the  alleged  infringement.  Each 
and  every  essential  element  of  the  Tournier  patent,  as  de- 
scribed or  mentioned  in  the  claims  quoted,  or  its  exact  equiva- 
lent, is  used  by  the  defendant  in  what  we  will  term  the  "  Wise 


214 


119  FEDEKAL  BEPOBTER,  928. 


OpiBion  of  the  Court 

Socket."    Placing  the  various  appliances,  making  up  the 
assembled  sockets,  side  by  side,  and  then  taking  the  assem- 
bled sockets  as  a  whole,  we  find  that  there  is  no  substantial 
difference,  except  in  the  mere  form  of  two  or  three  of  the 
parts.     In  short,  the  Wise  socket  is  a  copy  of  the  Tournier. 
The  compared  sockets  perform  the  same  functions  by  the 
same  modes  of  operation.    The  effects  are  the  same;  the 
modes  of  operation  are  the  same,  substantially ;  and  the  same 
is  true  of  the  means  employed.    In  some  respects  we  find 
variations  in  size,  shape,  and  arrangement,  but  these  are  evi- 
dently studied,  not  for  the  sake  of  improvement,  but  to  avoid 
the   charge  of  infringement.    The  socket  of  the  Anchor 
Electric  Co.  held  to  be  an  infringement,  and  therefore  en- 
joined  (106  Fe(^.  503),  differs  but  slightly  from  the  Wise 
socket,  here  in  question.    The  defendant  here,  in  some  re- 
spects,  has   varied    from   the   Anchor   Electric   and   New 
England  infringements,  but  in  so  doing  has  made  the  simi- 
larity of  his  socket  to  the  Tournier  patent  the  more  appar- 
ent.   In  some  respects  he  has  varied  the  form  of  the  insu- 
lating block  by  changing  the  location,  size,  and  shape  of 
certain  cavities  and  grooves ;  but  all  these  changes  are  imma- 
terial, as  they  do  not  change  the  principles  of  operation,  the 
means,  or  the  results,  and  the  claims  of  the  Tournier  patent 
(referred  to  and  here  in  question)  do  not  confine  the  com- 
plainant to  any  precise  form  or  size.    The  combinations  in 
the  assembled  socket  do  not  present  any  substantially  differ- 
ent combination.    As  stated,  the  combinations  are  substan- 
tially identical.    So  far  as  there  has  been  a  substitution  of 
elements,  they  were  well-known  equivalents.    The  defendant 
has  produced  this  Wise  socket  extensively  and  secretly.    He 
claims  the  right  to  continue  its  manufacture  and  sale.    Un- 
less enjoined,  he  will  do  this,  and  most  seriously  injure  the 
complainant.    This  injury  cannot  he  measured  satisfactorily 
by  any  judgment  for  damages,  even  if  the  defendant  shail 
be  found  responsible  at  the  end  of  the  protracted  litigations 
sure  to  foUow  a  denial  of  this  application. 

The  conclusion  is  that,  until  the  trial  and  determination  of 
this  action,  the  defendant  should  be  enjoined  as  prayed.  It 
is  so  ordered. 


UNITED   STATES   V,    NORTHERN   SECURITIES   CO.         215 

Syllabus. 

[721]    UNITED   STATES   v,   NORTHERN   SECURI- 
TIES CO.  ET  AL.« 

(Circuit  Court,  D.  Minnesota,  Third  Division.    April  9,  1903.) 

[120  Fed.,  721.] 

Monopolies — Combination  in  Restraint  of  Intebstate  Commerce — 
Construction  of  Anti-Tbust  Law. — The  generality  of  the  language 
used  in  the  anti-trust  act  of  1890  (Act  July  2,  1890,  26  Stat  209, 
c.  647  [U.  S.  Comp.  St.  1901,  p.  3200]),  declaring  illegal  "every 
contract,  combination  or  conspiracy  in  restraint  of  trade  or  com- 
merce among  the  several  states  or  with  foreign  nations,"  indicates 
the  purpose  of  Congress  to  include  in  the  prohibition  every  com- 
bination which  directly  and  substantially  restricts  interstate  com- 
merce, whatever  its  form.6 

Same — Application  of  Act  to  Interstate  Carriers. — The  anti-trust 
act  (Act  July  2,  1890,  26  Stat.  209,  c.  647  [U.  S.  Comp.  St.  1901,  p. 
3200])  applies  to  interstate  carriers  of  freight  and  passengers,  and 
any  contract  or  combination  which  directly  and  substantially  re- 
stricts the  right  of  such  a  carrier  to  fix  its  own  rates,  independently 
of  its  natural  competitors,  places  a  direct  restraint  upon  interstate 
commerce,  in  that  it  tends  to  prevent  competition,  and  is  in  viola- 
tion of  the  act,  whether  the  rates  actually  fixed  be  reasonable  or 
unreasonable. 

Same — Corporation  to  Acquire  Stock  of  Competing  Railroads — 
Legality. — The  real  control  of  a  corporation  is  in  its  stockholders, 
who  have  the  power  to  determine  all  important  corporate  acts  and 
policies,  and  any  contract  or  combination  by  which  a  majority  of 
the  stock  of  two  railroad  companies  owning  and  operating  parallel 
and  competing  interstate  lines  of  road  is  transferred  to  a  corpora- 
tion organized  for  the  purpose  of  holding  and  voting  the  same,  and 
receiving  the  dividends  thereon,  to  be  divided  pro  rata  among  the 
stockholders  of  the  two  companies  so  transferring  their  stock,  di- 
rectly and  substantially  restricts  interstate  trade  and  commerce, 
and  is  in  violation  of  the  anti-trust  act  (Act  July  2,  1890,  26  Stat 
209,  c.  647  [U.  S.  Comp.  St  1901,  p.  3200]),  since  it  destroys  any 
motive  for  competition  between  the  two  roads ;  and  it  is  immaterial 
that  each  company  has  its  own  board  of  directors,  which  nominally 
directs  its  operations  and  fixes  its  rates. 

Corporations — Powers — New  Jersey  Statutes. — ^The  language  of 
the  New  Jersey  enabling  act  (Laws  1899,  p.  473),  authorizing  the 
organization  of  corporations  "for  any  lawful  purpose,"  imposes  a 
limitation  upon  the  powers  of  any  corporation  organized  there- 
under, however  broad  may  be  the  terms  of  its  articles  of  incorpora- 
tion. 


o  Affirmed  by  Supreme  Court  (193  U.  S.,  197).     See  p.  338. 
» Syllabus  copyrighted,  1903,  by  West  Publishing  Co. 


216 


120  FEDERAL  HEPORTEB,   721. 
Statement  of  tlie  Case. 


Same— Interstate  Commebce.— A  state  cannot  Invest  a  corporation 
organized  under  its  laws  with  the  power  to  do  acts  In  the  corporate 
name  which  wonld  operate  to  restrain  interstate  commerce. 

COlfSTlTUTIONAL    I^W—RlOHT   OF    PRIVATE    CONTRACT— LIMITATION    BY 

Interstate  Commerce  Clause.— The  ccmstltutional  guaranty  of  lib- 
erty to  the  Individual  to  enter  into  private  cou tracts  is  limited  to 
some  extent  by  the  commerce  clause  of  the  Constitution,  and  Con- 
gress may.  in  the  exercise  of  the  power  conferred  by  such  clause, 
prohibit  private  contracts  which  operate  to  directly  and  substan- 
tially restrain  Interstate  commerce*. 

Monopolies— Combination  in  Restraint  of  Interstate  Commerce- 
Suit  TO  EN.IOIN.— The  fact  that  the  purpose  of  an  Illegal  combina- 
tion between  stockholders  of  two  railroad  companies  operating 
parallel  and  competing  interstate  lines,  to  secure  unity  of  interest 
and  control  of  such  companies,  and  to  prevent  competition,  has 
been  accomplished  by  the  formation  of  a  corporation  which  has 
acquired  the  ownership  of  a  majority  of  the  stock  of  each  of  the 
companies,  cannot  be  urged  to  defeat  a  suit  by  the  United  States 
to  restrain  the  exercise  of  the  power  so  illegally  acquired  [722]  by 
the  corporation  through  such  combination,  as  imposing  a  restraint 
upon  interstate  commerce  in  violation  of  the  anti-trust  law  (Act 
July  2,  imo,  26  Stat.  200,  c.  647  [U.  S.  Comp.  St.  1901,  p.  3200]). 

Same— Defenses— QiTESTioNs  of  Public  Policy.— Where  the  effect 
of  a  combination  is  to  directly  prevent  competition  between  two 
parallel  and  naturally  competing  lines  of  railroad  engaged  in  inter- 
state business,  it  is  in  restraint  of  Interstate  commerce,  and  a  vio- 
lation of  the  anti-tniKt  act  (Act  July  2,  18JM),  26  Stat  209,  see  647 
[U.  S,  Comp.  St.  1901,  p.  3200]).  and  the  court,  in  a  suit  to  enjoin 
It  as  such,  cannot  consider  tlie  question  whether  the  combination 
may  not  be  of  greater  benefit  to  the  public  than  competition  would 
be;  that  being  a  question  of  public  policy,  to  he  determined  by  Con- 


Ib  Equity. 

Phlhmder  C.  Knox,  Attorney  General,  D.  T.  Watson^ 
Special  Counsel,  James  M.  Beck  and  TF.  A.  Day.  Assistant 
Attorneys  General,  and  John  M.  Freemanj  for  the  Fnited 

States. 

George  B.  Yomtg  and  John  If.  Griggs^  for  the  Northern 
Securities  Coei})any. 

George  B.  Young,  for  James  J.  Hill,  William  P.  Cloiigh, 
D.  Willis  James,  John  S.  Kennedy,  and  George  F.  Baker. 

M.  D.  Groeer,  for  the  Great  Northern  Railway  Company, 


UNITED   STATES   V,    NORTHERN    SECURITIES   CO.         217 


^ 


Opinion  of  the  Court 
C.  ^y.  Bunn,  for  the  Northern  Pacific  Railway  Company. 

Francis  Lynde  Stetson  and  David  Willcox,  for  defendants 
Morgan,  Bacon,  and  Lamont. 

Before  Caldwell,  Sanborn,  Thayer,  and  Vandevanter, 
Circuit  Judges. 

Thayer,  Circuit  Judge. 

This  is  a  bill,  exhibited  by  the  United  States,  to  restrain 
the  violation  of  an  act  of  Congress  approved  July  2,  1890, 
26  Stat.  209,  c.  647  [U.  S.  Comp.  St.  1901,  p.  3200],  entitled 
"An  act  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies,"  which  is  commonly  termed  the 
"Sherman  Anti-Trust  Act."  The  case  was  heard  before 
a  Circuit  Court  composed  of  the  four  Circuit  Judges  of  the 
Eighth  Circuit,  pursuant  to  the  provisions  of  a  recent  act 
of  Congress,  approved  February  11,  1903,  which  requires 
such  cases  to  be  heard  "  before  not  less  than  three  of  the 
Circuit  Judges"  of  the  Circuit  where  the  suit  is  brought, 
when  the  Attorney  General  files  with  the  clerk  of  the  court 
wherein  the  case  is  pending,  a  certificate  that  it  is  one  of 
"  general  public  importance."  Such  a  certificate  has  been 
filed,  and  in  accordance  with  the  mandate  of  the  statute  the 
case  "has  been  given  precedence  over  others  and  in  every 
way  expedited." 

From  admissions  made  by  the  pleadings,  as  well  as  from 
much  oral  testimony,  we  reach  the  following  conclusions  as 
respects  matters  of  fact : 

Two  of  the  defendants,  namely,  the  Northern  Pacific  Rail- 
way Company  and  the  Great  Northern  Railway  Company, 
are  the  owners,  respectiveh^,  of  lines  of  railroad  which  extend 
from  the  cities  of  Duluth,  St.  Paul,  and  Minneapolis,  in  the 
state  of  Minnesota;  thence  across  the  continent  to  Puget 
Sound.  These  roads  are,  and  in  public  estimation  have  ever 
been  regarded  as,  parallel  and  competing  lines.  For  some 
years,  at  least,  after  they  were  built,  they  competed  with  each 
other  actively  for  transcontinental  and  interstate  traffic. 

[723]  In  the  spring  of  the  year  1901  they  united  in  pur- 
chasing about  98  per  cent,  of  the  entire  capital  stock  of  the 
Chicago,  Burlington  &  Quincy  Railway  Company,  and  be- 


218 


120  FEDEBAL  BEPOBTBB,  723. 
Opinion  of  the  Court 


came  joint  sureties  for  the  payment  of  bonds  of  the  last- 
named  company,  whereby  the  purchase  was  accomplished, 
which  were  to  run  20  years,  and  bear  4  per  cent,  interest  per 
annum.  The  amount  of  stock  so  acquired  was  of  the  par 
value  of  about  $107,000,000,  and,  as  it  was  purchased  at  the 
rate  of  $200  per  share,  the  bonded  indebtedness  of  the  two 
companies  was  thus  increased  to  the  extent  of  $200,000,000. 

Subsequent  to  the  acquisition  of  the  stock  of  the  Burling- 
ton Company,  and  in  the  summer  of  the  year  1901,  certain 
large  and  influential  stockholders  of  the  Northern  Pacific 
and  Great  Northern  Companies,  who  had  practical  control 
of  the  two  roads,  and  who  have  been  made  parties  defendant 
to  the  present  bill,  acting  in  concert  with  each  other,  con- 
ceived the  design  of  placing  a  very  large  majority  of  the 
stock  of  both  of  the  last-named  companies  in  the  hands  of  a 
single  owner.    To  this  end  these  stockholders  arranged  and 
agreed  with  each  other  to  procure  and  cause  the  formation 
of  a  corporation  under  the  laws  of  the  state  of  New  Jersey, 
which  latter  company,  when  organized,  should  buy  all  or  at 
least  the  greater  part  of  the  stock  of  the  Northern  Pacific 
and  Great  Northern  Companies.    The  individuals  who  con- 
ceived and  promoted  this  plan  agreed  with  each  other  to 
exchange  their  respective  holdings  of  stock  in  the  last-named 
railroad  companies  for  the  stock  of  the  New  Jersey  company, 
when  the  same  should  be  fully  organized,  and  to  use  their 
influence  to  induce  other  stockholders  in  their  respective 
companies  to  do  likewise,  to  the  end  that  the  New  Jersey 
company  might  become  the  sole  owner  of  the  whole,  or  at 
least  a  major  portion,  of  the  stock  of  both  railroad  compa- 
nies. 

In  accordance  with  this  plan  the  defendant  the  Northern 
Securities  Company  (hereafter  termed  the  "  Securities  Com- 
pany ")  was  organized  under  the  laws  of  the  state  of  New 
Jersey  on  November  13,  1901,  with  a  capital  stock  of  $400,- 
000,000,  that  sum  being  the  exact  amount  required  to  pur- 
chase the  total  stock  of  the  two  railroad  companies  at  the 
price  agreed  to  be  paid  therefor.  When  the  Securities  Com- 
pany was  organized,  it  assented  to  and  became  a  party  to  the 
scheme  that  had  been  devised  by  its  promoters  before  it  be- 
came a  legal  entity. 


UNITED   STATES   V.    NORTHERN   SECURITIES   CO. 


219 


7 


J 


Opinion  of  the  Court 

Very  shortly  after  its  organization  the  Securities  Com- 
pany acquired  a  large  majority  of  all  the  stock  of  the  North- 
ern Pacific  Company  at  the  rate  of  $115  per  share,  paying 
therefor  in  its  own  stock  at  par.  At  the  same  time  it  ac- 
quired about  300,000  shares  of  the  stock  of  the  Great  North- 
em  Company  from  those  stockholders  of  that  company  who 
had  been  instrumental  in  organizing  the  Securities  Com- 
pany, paying  therefor  at  the  rate  of  $180  per  share,  and 
using  its  own  stock  at  par  to  make  the  purchase. 

The  Securities  Company  subsequently  made  further  pur- 
-  chases  of  stock  of  the  Great  Northern  Company  at  the  same 
rate,  and  in  about  three  months  had  acquired  stock  of  the 
latter  company,  amounting  at  par  to  about  $95,000,000,  using 
for  that  purpose  its  own  stock  to  the  amount  of  about  $171,- 
000,000.  The  Securities  Company  was  enabled  to  make  the 
subsequent  purchase  of  stock  from  stocldiolders  [724]  of- the 
Great  Northern  Company  not  immediately  concerned  in  the 
organization  of  the  Securities  Company  by  the  advice,  pro- 
curement, and  persuasion  of  those  stocldiolders  of  the  Great 
Northern  Compan}^  who  had  been  instrumental  in  organ- 
izing the  Securities  Company,  and  had  exchanged  their  own 
stock  for  stock  in  that  company  shortly  after  its  organiza- 
tion. At  the  present  time  the  Securities  Company  is  the 
owner  of  about  96  per  cent,  of  all  the  stock  of  the  Northern 
Pacific  Company,  and  the  owner  of  about  76  per  cent,  of  all 
the  stock  of  the  Great  Northern  Company. 

The  scheme  which  was  thus  devised  and  consummated  led 
inevitably  to  the  following  results :  First,  it  placed  the  con- 
trol of  the  two  roads  in  the  hands  of  a  single  person,  to  wit, 
the  Securities  Company,  by  virtue  of  its  ownership  of  a 
large  majority  of  the  stock  of  both  companies;  second,  it 
destroyed  every  motive  for  competition  between  two  roads 
engaged  in  interstate  trafiic,  which  were  natural  competitors 
for  business,  by  pooling  the  earnings  of  the  two  roads  for  the 
common  benefit  of  the  stockholders  of  both  cx)mpanies ;  and, 
according  to  the  familiar  rule  that  every  one  is  presumed  to 
intend  what  is  the  necessary  consequence  of  his  own  acts 
when  done  willfully  and  deliberately,  we  must  conclude  that 
those  who  conceived  and  executed  the  plan  aforesaid  in- 
tended, among  other  things,  to  accomplish  these  objects. 


y 
/ 


i 


120  FEDEBAL  BEPORTER,   724. 
Opinion  of  tlie  Court. 

Tlie  general  question  of  law  arising  upon  this  state  of 
facts  is  whether  such  a  combination  of  interests  as  that  above 
described  falls  within  the  inhibition  of  the  anti-trust  act  or 
is  beyond  its  reach.  The  act  brands  as  illegal  "  every  con- 
tract, combination  in  the  form  of  trust  or  otherwise,  or  con- 
spiracy in  restraint  of  trade  or  commerce  among  the  several 
states  or  with  foreign  nations."  Learned  counsel  on  both 
sides  have  commented  on  the  general  language  of  the  act, 
doing  so,  of  course,  for  a  different  purpose,  and  the  general- 
ity of  the  language  employed  is,  in  our  judgment,  of  gi^eat 
significance.  It  indicates,  we  think,  that  Congress,  being 
unable  to  foresee  and  describe  all  the  i^lans  that  might  l)e 
formed  and  all  the  expedients  that  might  be  resorted  to  to 
place  restraints  on  interstate  trade  or  commerce,  deliberately 
employed  words  of  such  general  import  as,  in  its  opinion, 
would  comprehend  every  scheme  that  might  be  devised  t(» 
accomplish  that  end. 

^Vliat  is  commonly  termed  a  "  trust "  was  a  species  of  com- 
bination  organized  by  individuals  or  corporations  for  the 
purpose  of  monopolizing  the  manufacture  of  or  traffic  in 
various  articles  and  commodities,  which  was  well  known  and 
fully  understood  when  the  anti-trust  act  was  approved. 
Combinations  in  that  form  were  accordingly  prohibited ;  but 
Congress,  evidently  anticipating  that  a  combination  might 
be  otherwise  fonned,  was  careful  to  declare  that  a  combina- 
tion in  any  other  form,  if  in  restraint  of  intei^state  trade  or 
commerce— that  is,  if  it  directly  occasioned  or  effected  such 
restraint— should  likewise  be  deemed  illegal, 

:Moreover,  in  cases  arising  under  the  act,  it  has  been  held 
by  the  highest  judicial  authority  in  the  nation,  and  its 
opinion  has  been  reiterated  in  no  uncertain  tone,  that  the 
act  applies  to  interstate  carriers  of  freiglit  and  passengers 
as  well  as  to  all  other  ix*rsons,  natural  or  artificial;  that 
the  words  "in  restraint  of  trade  or  conmierce"  do  not 
1725]  mean  in  unreasonable  or  partial  restraint  of  trade  or 
commerce,  but  any  direct  restraint  thereof;  that  an  agree- 
ment between  competing  railroads,  which  requires  them  to  act 
in  concert  in  fixing  the  rate  for  the  carriage  of  passengers  or 
freight  over  their  respective  lines  from  one  state  to  another, 
and  which,  by  that  means,  restricts  temporarily  the  right  of 


UNITED   STATES    V.    NORTHERN    SECURITIES   CO. 


221 


J 


Opinion  of  the  Court. 

any  one  of  such  carriers  to  name  such  rates  for  the  carriage 
of  such  freight  or  passengers  over  its  road  as  it  pleases,  is  a 
contract  in  direct  restraint  of  commerce  within  the  meaning 
of  the  act,  in  that  it  tends  to  prevent  competition;  that  it 
matters  not  whether,  while  acting  under  such  a  contract,  the 
rate  fixed  is  reasonable  or  unreasonable,  the  vice  of  such  a 
contract  or  combination  being  that  it  confers  the  power  to 
establish  unreasonable  rates,  and  directly  restrains  commerce 
by  placing  obstacles  in  the  way  of  free  and  unrestricted  com- 
petition between  carriers  who  are  natural  rivals  for  patron- 
age; and,  finally,  that  Congress  has  the  power,  under  the 
grant  of  authority  contained  in  the  federal  Constitution,  to 
regidate  commerce,  to  say  that  no  contract  or  combination 
shall  be  legal  which  shall  restrain  interstate  trade  or  com- 
merce by  shutting  off  the  operation  of  the  general  law  of 
competition.  United  States  v.  Trans-Missouri  Freight  Ass''n^ 
ir>G  U.  S.  290. 17  Sup.  Ct.  540.  41  L.  Ed.  1007 :  United  States 
V.  Joint  Trafjie  Ass'n.  171  IT.  S.  505,  19  Sup.  Ct.  25,  43  L. 
Ed.  259;  Addyston  Pipe  di  Steel  Co.  v.  Umted  States.  175 
U.  S.  211,  20  Sup.  Ct.  96,  44  L.  Ed.  im. 

Taking  the  foregoing  propositions  for  granted,  because 
they  have  been  decided  by  a  court  whose  autliority  is  con- 
trolling, it  is  almost  too  plain  for  argument  that  the  defend- 
ants would  have  violated  the  anti-trust  act  if  they  had  done, 
through  the  agency  of  natural  persons,  what  they  have  ac- 
complished through  an  artificial  person  of  their  own  creation. 
That  is  to  say,  if  the  same  individuals  who  promoted  the 
Securities  Company,  in  ])ursuance  of  a  previous  understand- 
ing or  agreement  so  to  do,  had  transferred  their  stock  in 
the  two  railroad  companies  to  a  third  party  or  parties,  and 
had  agreed  to  induce  other  shareholders  to  do  likewise,  until 
a  majority  of  the  stock  of  both  companies  had  been  vested 
in  a  single  individual  or  association  of  individuals,  and  had 
empowered  the  holder  or  holders  to  vote  the  stock  as  their 
own,  receive  all  the  dividends  thereon,  and  prorate  or  divide 
them  among  all  the  shareholders  of  the  two  companies  who 
had  transferred  their  stock — the  result  would  have  been  a 
combination  in  direct  restraint  of  interstate  commerce,  be- 
cause it  would  have  placed  in  the  hands  of  a  small  coterie  of 
men  the  power  to  suppress  competition  between  two  com- 


/ 


J 


222  120  FEDERAL  BEPORTEB,   725. 

Opinion  of  the  Court. 

peting  interstate  carriers,  whose  lines  are  practically  par- 
allel. 

It  will  not  do  to  say  that,  so  long  as  each  railroad  company 
has  its  own  board  of  directors,  they  operate  independently, 
and  are  not  controlled  by  the  owner  of  the  majority  of  their 
stock.  It  is  the  common  experience  of  mankind  that  the 
acts  of  corporations  are  dictated  and  that  their  policy  is  con- 
trolled by  those  who  own  the  majority  of  their  stock.  In- 
deed, one  of  the  favorite  methods  in  these  days,  and  about 
the  only  method,  of  obtaining  control  of  a  corporation,  is  to 
purchase  the  greater  part  of  its  stock.  It  was  the  method. 
pursued  by  the  Northern  Pacific  and  Great  Northern  Com- 
panies to  obtain  control  of  the  Chicago,  Burlington  &  Quincy 
Kailroad;  and,  so  [726]  long  as  directors  are  chosen  by 
stockholders,  the  latter  will  necessarily  dominate  the  former, 
and  in  a  real  sense  determine  all  important  corporate  acts. 

The  fact  that  the  ownership  of  a  majority  of  the  capital 
stock  of  a  corporation  gives  one  the  masttery  and  control 
of  the  corporation  was  distinctly  recognized  and  declared  in 
Pearmll  v.  Great  Northern  Railway,  161  U.  S.  646,  671,  16 
Sup.  Ct.  705,  710,  40  L.  Ed.  838.    The  same  fact  has  been 
recognized  and  declared  by  other  courts.    Pennsylvania  R, 
Co.  V.  Commonwealth  (Pa.)  7  Atl.  368,  371;  Farmers^  Loan 
di  Trust  Co,  V.  New  York  <&  Northern  Railway  Co,,  150 
K  Y.  410,  425,  44  N.  E.  1043,  34  L.  E.  A.  76;  People  ex  rel, 
V.  Chicago  Gas  Trust  Co.,  130  111.  268,  22  N.  E.  798,  802,  8 
L.  R.  A.  497,  17  Am.  St.  Eep.  319.    In  opposition  to  this 
view  counsel  cite  Pullman  Car  Co,  v.  Missouri  Pacific  Co., 
115  U.  S.  587,  596,  6  Sup.  Ct.  194,  29  L.  Ed.  499,  but  in  that 
case  the  meaning  of  the  word  "  controlled,"  as  used  in  a 
private  contract,  was  the  point  under  consideration,  and 
what  was  said  on  the  subject  cannot  be  held  applicable  to 
cases  arising  under  the  anti-trust  act,  when  the  point  in- 
volved is  whether  the  ownership  of  all  of  the  stock  of  two 
competing  and  parallel  railroads  vests  the  owner  thereof 
with  the  power  to  suppress  competition  between  such  roads. 
We  entertain  no  doubt  that  it  does.    Indeed,  we  regard  the 
suppression  of  competition,  and  to  that  extent  a  restraint  of 
commerce,  as  the  natural  and  inevitable  result  of  such  own- 
ership. 


UNITED   STATES   V.   NORTHERN   SECURITIES   CO.         223 

Opinion  of  the  Court 

What  has  been  done  through  the  organization  of  the  Se- 
curities Company  accomplishes  the  object  which  Congress 
has  denounced  as  illegal  more  effectually,  perhaps,  than  such 
a  combination  as  is  last  supposed.  That  is  to  say,  by  what 
has  been  done  the  power  has  been  acquired  (and  provision 
made  for  maintaining  it)  to  suppress  competition  between 
two  interstate  carriers  who  own  and  operate  competing  and 
parallel  lines  of  railroad.  Competition,  we  think,  would  not 
be  more  effectually  restrained  than  it  now  is  under  and  by 
force  of  the  existing  arrangement  if  the  two  railroad  compa- 
nies were  consolidated  under  a  single  charter. 
/  It  is  manifest,  therefore,  that  the  New  Jersey  charter  is 
about  the  only  shield  which  the  defendants  can  interpose 
between  themselves  and  the  law.  The  reasoning  which  led 
to  the  acquisition  of  that  charter  would  seem  to  have  been 
that  while,  as  individuals,  the  promoters  could  not,  by  agree- 
ment between  themselves,  place  the  majority  of  the  stock 
of  the  two  competing  and  parallel  railroads  in  the  hands 
of  a  single  person  or  a  few  persons,  giving  him  or  them  the 
power  to  operate  the  roads  in  harmony,  and  stifle  compe- 
tition, yet  that  the  same  persons  might  create  a  purely 
fictitious  person  termed  a  corporation,  which  could  neither 
think  nor  act  except  as  they  directed,  and,  by  placing  the 
same  stock  in  the  name  of  such  artificial  being,  accomplish 
the  same  purpose.  The  manifest  unreasonableness  of  such 
a  proposition,  and  the  grave  consequences  sure  to  follow 
from  its  approval,  compel  us  to  assume  that  it  must  be 
unsound,  especially  when  we  reflect  that  the  law,  as  admin- 
istered by  courts  of  equity,  looks  always  at  the  substance  of 
things — at  the  object  accomplished,  whether  it  be  lawful  or 
unlawful — rather  than  upon  the  particular  devices  or  means 
by  which  it  has  been  accomplished. 

[727]  So  far  as  the  New  Jersey  charter  is  concerned,  the 
question,  broadly  stated,  which  the  court  has  to  determine, 
is  whether  a  charter  granted  by  a  state  can  be  used  to  de- 
feat the  will  of  the  national  legislature  as  expressed  in  a 
law  relating  to  interstate  trade  and  commerce  over  which 
Congress  has  absolute  control.  Presumptively,  at  least,  no 
charter  granted  by  a  state  is  intended  by  the  state  to  have 
that  effect  or  to  be  used  for  such  a  purpose;  and  in  the  pres- 


224 


120  FEDERAL  REPOKTER,  727. 


/ 


Opinion  of  the  Court. 

ent  instance  it  is  clear  that  the  state  of  New  Jersey  did  not 
intend  to  grant  a  charter  under  cover  of  which  an  object 
denounced  by  Congress  as  unlawful,  namdy,  a  combination 
conferring  the  power  to  restrain  interstate  commerce  might 
be  formed  and  maintained  because  the  enabling  act  under 
which  the  Securities  Company  was  organized  expressly  de- 
clares that  three  or  more  persons  may  avail  themselves  of 
the  provisions  of  the  act  and  *'  become  a  corporation  for  any 
lawful  purpose."  Laws  N.  J.  1899,  p.  473.  This  language 
is  not  merely  perfunctory.  It  means,  obviously,  that,  what- 
ever powers  the  incorporators  saw  fit  to  assume,  they  must 
hold  and  exercise  for  the  accomplishment  of  lawful  objects. 
The  words  in  question  operate,  therefore,  as  a  limitation 
upon  all  the  powers  enumerated  in  the  articles  of  associa- 
tion which  were  filed  by  the  promoters  of  the  Securities 
Company,  so  that,  however  extensive  and  comprehensive 
th('s('  powers  may  seem  to  be,  the  state  of  New  Jersey  has 
said,  ''  You  shall  not  exercise  them  so  as  to  set  at  defiance 
any  statute  lawfully  enacted  by  the  Congress  of  the  United 
States,  or  anv  statute  lawfullv  enacted  bv  anv  state  wherein 
you  see  fit  to  exercise  your  powers." 

But  aside  from  this  view  of  the  subject,  if  the  state  of 
New  Jersey  had  imdertaken  to  invest  the  incorporators  of 
the  Securities  Company  with  the  power  to  do  acts  in  the 
corporate  name  which  would  operate  to  restrain  interstate 
csommerce,  and  for  that  reason  could  not  be  done  by  them 
acting  as  an  association  of  individuals,  then  we  have  no 
doubt  that  such  a  grant  would  have  been  void  under  the 
provisions  of  the  anti-trust  act,  or  at  least  that  the  charter 
could  not  be  permitted  to  stand  in  the  way  of  the  enforce- 
ment of  that  act. 

The  power  of  Congress  over  interstate  commerce  is  su- 
preme, far-reaching,  and  acknowledges  no  limitations  other 
than  such  as  are  prescribed  in  the  Constitution  itself.  Gth- 
hons  V.  Ogden,  9  Wheat.  1,  197,  6  L.  Ed.  23;  Comity  of 
Mobile  V.  EimhaU,  102  U.  S.  691,  696,  697,  26  L.  Ed.  238; 
Champion  v.  Ames   (decided  Feb.  23,  1903)   23  Sup.  Ct. 

321,  47  L.  Bd.  .    No  legislation  on  the  part  of  a  state 

can  curtail  or  interfere  with  its  exercise;  and,  in  view  of 
repeated  decisions,  no  one  can  deny  that  it  is  a  legitimate 


UNIIED   STATES   V,    NORTHERN   SECURITIES   CO.         225 
.  Opinion  of  the  Court 

/  exercise  of  the  power  in  question  for  Congress  to  say  that 
neither  natural  nor  artificial  persons  shall  combine  or  con- 

.  spire  in  any  form  whatever  to  place  restraints  on  inter- 
state trade  or  commerce.  United  States  v.  Trans-Missouri 
Freight  Association,  166  U.  S.  290,  17  Sup.  Ct.  540, 41  L.  Ed. 
1007;  United  States  v.  Joint  Traffic  Association,  171  U.  S. 
505,  19  Sup.  Ct.  25,  43  L.  Ed.  259;  Addyston  Pipe  c&  Steel 
Co,  V.  United  States,  175  U.  S.  211,  20  Sup.  Ct.  96,  44  L.  Ed. 
136. 

It  is  urged,  however,  that  such  a  combination  of  adverse 
interests  as  was  formed,  and  has  been  heretofore  described, 
was  lawful,  and  not  prohibited  by  the  anti-trust  act,  be- 
cause such  restraint  upon  interstate  trade  or  commerce,  if 
any,  as  it  imposes,  is  indirect,  collateral,  [728]  and  remote, 
and  hence  that  the  combination  is  not  one  of  that  character 
which  ih^  Congi-ess  of  the  United  States  can  lawfully  for- 
bid.    The  following  cases  are  relied  upon  to  sustain  the 
contention :  United  States  v.  E,  C,  Knight  Co.,  156  U.  S.  1, 
15  Sup.  Ct.  249,  39  L.  Ed.  325;  Hopkins  v.  United  States, 
171  U.  S.  578,  19  Sup.  Ct.  40,  43  L.  Ed.  290;  Anderson  v. 
United  States,  171  U.  S.  604,  19  Sup.  Ct.  50,  43  L.  Ed.  300. 
/  It  is  pertinent,  therefore,  to  inquire  in  what  way  the  exist- 
ing combination  that  has  been  formed  does  affect  interstate 
commerce.     It  affects  it,  we  think,  by  giving  to  a  single  cor- 
porate entity,  or,  more  accurately,  to  a  few  men  acting  in 
concert  and  in  its  name  and  under  cover  of  its  charter,  the 
power  to  control  all  the  means  of  transportation  that  are 
owned  by  two  competing  and  parallel  railroads  engaged 
J  in  interstate  commerce ;  in  other  words,  iho^  power  to  dictate 
every  important  act  which  the  two  companies  may  do,  to 
compel  them  to  act  in  harmony  in  establishing  interstate 
rates  for  the  carriage  of  freight  and  passengers,  and  gener- 
ally to  prescribe  the  policy  which  they  shall  pursue.     It 
matters  not,  we  think,  through  how  many  hands  the  orders 
come  by  which  these  aims  are  accomplished,  or  through 
what  channels.     The  power  was  not  only  acquired  by  the 
combination,  but  it  is  effectually  exercised,  and  it  operates 
directly  on  interstate  commerce,  notwithstanding  the  man- 

21220— VOL  2—07  M 15 


Ir^ 


226 


120  FEDEBAL   REPORTEK,   728. 


Opinion  of  the  Court 

ner  of  its  exercise,  by  controlling  the  means  of  transporta- 
tion, to  wit,  the  cars,  engines,  and  railroads  by  which  per- 
sons and  commodities  are  carried,  as  well  as  by  fixing  the 
price  to  be  charged  for  such  carriage.   . 

The  cases  cited  above,  and  on  which  reliance  is  placed  to 
sustain  the  view  that  the  restraint  imposed  is  merely  indirect, 
remote,  incidental,  or  collateral,  are  not  relevant,  for,  as  was 
fully  explained  in  Addyston  Pipe  S  Steel  Co.  v.  United 
States,  175  U.  S.  211,  238,  240,  243,  20  Sup.  Ct.  96,  44  L.  Ed. 
136,  one  of  these  cases  (United  States  v.  E\  €.  Knight  Com- 
pany)  dealt  only  with  a  combination  within  a  state  to  obtain 
.  a  practical  monopoly  of  the  manufacture  of  sugar,  and  it  was 
J  held  that  the  combination  only  related  to  manufacture,  and 
not  to  commerce  among  the  states  or  with  foreign  nations; 
that  the  fact  that  an  article  was  manufactured  for  export  to 
another  state  did  not  make  it  an  article  of  interstate  com- 
merce before  transportation  had  been  begim,  or  necessarily 
subject  it  to  federal  control ;  and  that  the  effect  of  the  com- 
bination then  under  consideration  on  interstate  commerce  was 
at  most  only  incidental  and  collateral.  But  while  comment- 
ing on  its  previous  decision  in  United  States  v.  E.  C.  Knight 
Oo,j  the  court  took  occasion  to  say,  in  Addyston  Pipe  <&  Steel 
€o.  V.  United  States,  175  U.  S.  246,  20  Sup.  Ct.  96, 44  L.  Ed. 
136,  that,  when  a  contract  is  made  for  the  sale  and  delivery 
of  an  article  in  another  state,  the  transaction  is  one  of  inter- 
state commerce,  although  the  vendor  has  also  agreed  to 
manufacture  the  article  so  sold,  and  that  combinations  to 
control  and  monopolize  such  transactions  would  be  in  re- 
straint of  interstate  commerce. 

In  the  other  cases  (Hopkins  v.  United  States  and  Ander- 
son v.  United  States)  it  was  held  that  the  business  of  the 
members  of  the  Kansas  City  Live  Stock  Exchange,  which 
was  undeF  oonsideratioii  by  the  court,  was  not  interstate 
commerce  and  that  tlie  act  did  not  affect  them,  and  that,  even 
if  they  were  so  affected,  the  particular  agree-  [729]  ment 
which  w^as  involved  did  not  operate  as  a  restraint  of  inter- 
state commerce. 
We  fail  to  find  in  either  of  these  cases  any  suggestion  that 


UNITED   STATES   V.    NORTHERN    SECURITIES   CO.         227 


/ 


Opinion  of  the  Court. 

a  combination  such  as  the  one  in  hand,  the  object  and  neces- 
sary effect  of  which  is  .to  give  to  a  single  person  or  to  a  coterie 
of  persons  full  control  of  all  the  means  of  transportation 
owned  by  two  competing  and  parallel  lines  of  road  engaged 
in  interstate  commerce,  as  well  as  the  power  to  ^x  the  rate 
for  the  transportation  of  persons  and  property,  does  not 
directly  and  immediately  affect  interstate  commerce.  No 
combination,  as  it  would  seem,  could  more  immediately 
affect  it. 

Again,  it  is  urged  tentatively  that,  if  the  existing  combina- 
tion which  the  government  seeks  to  have  dissolved  is  held  to 
be  one  in  violation  of  the  anti-trust  act  and  unlawful,  then 
the  act  unduly  restricts  the  right  of  the  individual  to  make 
contracts,  buy  and  sell  property,  and  is  invalid  for  that 
reason.  With  reference  to  this  contention  it  might  be  sug 
gested  (as  it  has  been  by  the  government)  that,  as  the  situs 
of  the  stock  which  the  Securities  Company  has  bought  is  in 
the  states  of  AVisconsin  and  Minnesota,  which  respectively 
chartered  the  Northern  Pacific  and  Great  Northern  Com- 
panies, and  as  the  stock  owes  its  being  to  the  laws  of  those 
states,  and  as  each  state  has  forbidden  the  consolidation  of 
competing  and  parallel  lines  of  railroad  therein,  and  has 
likewise  prohibited  any  consolidation  of  the  "stock  and 
franchises  "  of  such  roads,  the  contention  last  mentioned  is 
entitled  to  little  consideration  in  the  case  at  bar. 

But  waiving  and  ignoring  this  suggestion,  the  argument 
advanced  in  behalf  of  the. defendants  is  met  and  answered, 
so  far  as  this  court  is  concerned,  by  the  decision  in  Addyston 
Pipe  <&  Steel  Co.  v.  United  States,  175  U.  S.  228,  229,  20 
Sup.  Ct.  96,  102,  44  L.  Ed.  136,  where  it  is  said,  inter  alia : 


If 


Under  this  grant  of  power  to  Congress  (the  power  to  regulate 
commerce  between  the  several  states  and  with  foreign  nations), 
that  body,  in  our  judgment,  may  enact  such  legislation  as  shall  de- 
clare void  and  prohibit  the  performance  of  any  contract  between  in- 
dividuals or  corporations  where  the  natural  and  direct  effect  of  such 
a  contract  will  be,  when  carried  out,  to  directly,  and  not  as  a  mere 
incident  to  other  and  innocent  purposes,  regulate,  to  any  substan- 
tial extent,  interstate  commerce.  ♦  *  *  We  do  not  assent  to  the 
correctness  of  the  proposition  that  the  constitutional  guaranty  of  liberty 
to  the  individual  to  enter  into  private  contracts,  liuiits  the  power  of 
Congress  and  prevents  it  from  legislating  on  the  subject  of  contracts 
of  the  class  mentioned.  *  *  *  It  has  been  held  that  the  word 
*  liberty,'  as  used  in  the  Constitution,  was  not  to  be  confined  to  the 


AZo 


120  FEDERAL  REPORTER,   729. 
Opinion  of  the  C!ourt 


UNITED   STATES    V.    NORTHERN    SECURITIES   CO. 


229 


mere  libeity  of  |»ersons.  but  included,  among  others,  a  right  to  pntei 
Into  certain  classes  of  contracts  for  the  purpose  of  enabling  the 
citizen  to  carry  on  his  business.  ♦  ♦  *  ^ut  it  has  never  been,  and 
In  our  opinion  ought  not  to  be  held,  that  the  word  included  the  right 
of  an  individual  to  enter  into  private  (tjntracts  upon  all  subjects,  no 
matter  what  their  nature,  and  wholly  irrespective,  among  other 
things,  of  the  fact  that  they  would,  if  i)erformed,  result  in  the  regu- 
lation of  interstate  commerce,  and  in  violation  of  an  act  of  Congress 
upon  that  subject.  The  provision  of  the  Constitution  does  not  as 
we  believe,  exclude  Congress  from  legislating  with  regard  to  contracts 
of  the  above  nature  while  in  the  exercise  of  its  constitutional  right 
to  regulate  coumierce  among  the  states.  On  the  contrarv  we  think 
the  provision  regarding  the  libertj^  of  the  citizen  is  to  some  extent 
limited  by  the  commerce  clause  of  the  Constitution,  and  that  the 
power  of  Congress  to  regulate  interstate  commerce  comi)rises  the 
righ  to  enact  a  law  prohiliiting  the  citizen  iVom  entering  into  those 
private  contracts  which  directly  and  substautiallv,  and  not  merely 
indirectly,  remotely,  incidentally,  and  collaterallv,*  regulate  [7301  to 
a  greater  or  less  degree  conunerce  among  the  states.  We  cannot 
so  enlarge  the  scoije  of  the  language  of  the  Constitution  regarding 
the  liberty  of  the  citizen  as  to  hold  that  it  includes,  or  that  it  was 
intended  to  include,  a  right  to  make  n  iHiitract  which  in  fact  restr-iined 
and  regulated  interstate  commerce,  notwithstanding  Congress  *  nro- 
ceedmg  under  the  constitutional  provision  giving  to  it  the  i>ower 
to  regulate  that  commerce,  had  luohibited  such  contracts." 

These  observations,  as  a  matter  of  course,  preclude  further 
controversy  over  the  power  of  Congress  to  limit  to  some  ex- 
tent the  right  to  make  contracts  when  enacting  laws  for  the 
regulation  of  commerce  between  the  states. 
,  Learned  counsel  for  the  defendants  further  contend  as 
^  follows:  That  the  anti-trust  act  was  not  intended  to  include 
or  prohibit  combinations  looking  to  the  virtual  consolidation 
of  parallel  and  competing  lines  of  railroad,  although  such  a 
combination  operates  to  stifle  competition;  that  no  relief 
can  be  granted  to  the  government  in  this  instance,  because 
the  combination  or  conspiracy  of  which  it  complains  has 
accomplished  its  purpose,  to  wit,  the  organization  of  the 
Securities  Company  and  the  lodgment  of  the  majority  of  the 
stock  of  the  two  railroads  in  its  hands  before  the  bill  was 
filed;  and,  finally,  that  the  combination  proven  was  one 
*'  formed  in  aid  of  commerce  and  not  to  restrain  it;"  in  other 
words,  that  it  was  one  formed  to  enlarge  the  volume  of  inter- 
state traffic  and  thus  benefit  the  public. 

The  court  cannot  assent  to  either  of  these  propositions. 

The  first,  we  think,  is  clearly  untenable  for  the  reasons 
already  stated  and  fuUy  disclosed  in  the  decisions  heretofore 
cited. 


Opinion  of  the  Court 

V  Concerning  the  second  contention,  we  observe  that  it  would 
be  a  novel,  not  to  say  absurd,  interpretation  of  the  anti-trust 
act  to  hold  that  after  an  unlawful  combination  is  formed 
and  has  acquired  the  power  which  it  had  no  right  to  acquire, 
namely,  to  restrain  commerce  by  suppressing  competition, 
and  is  proceeding  to  use  it  and  execute  the  purpose  for  which 
the  combination  was  formed,  it  must  be  left  in  possession 
of  the  power  that  it  has  acquired,  with  full  freedom  to 
exercise  it.  Obviously  the  act,  when  fairly  interpreted,  will 
bear  no  such  construction.  Congress  aimed  to  destroy  the 
power  to  place  any  direct  restraint  on  interstate  trade  or  com- 
merce, when  by  any  combination  or  conspiracy,  formed  by 
either  natural  or  artificial  persons,  such  a  power  had  been 
acquired;  and  the  government  may  intervene  and  demand 
relief  as  well  after  the  combination  is  fully  organized  as 
while  it  is  in  process  of  formation.  In  this  instance,  as  we 
have  already  said,  the  Securities  Company  made  itself  a 
party  to  a  combination  in  restraint  of  interstate  commerce, 
that  antedated  its  organization,  as  soon  as  it  came  into  ex- 
istence, doing  so,  of  course,  under  the  direction  of  the  very 
individuals  who  promoted  it. 

Relative  to  the  third  contention,  which  has  been  pressed 
with  great  zeal  and  ability,  this  may  be  said:  It  may  be 
that  such  a  virtual  consolidation  of  parallel  and  competing 
lines  of  railroad  as  has  been  effected,  taking  a  broad  view 
of  the  situation,  is  beneficial  to  the  public  rather  than  harm- 
ful. It  may  be  that  the  motives  which  inspired  the  combina- 
tion by  which  this  end  was  accomplished  were  wholly  laud- 
able and  unselfish ;  that  the  combination  was  formed  by  the 
individual  defendants  to  protect  great  interests  which  had 
been  committed  to  their  charge;  or  it  may  be  that  the  com- 
bination was  the  initial  [731]  and  a  necessary  step  in  the 
accomplishment  of  great  designs,  which,  if  carried  out  as 
they  were  conceived,  would  prove  to  be  of  inestimable  value 
to  the  communities  which  these  roads  serve  and  to  the  country 
at  large. 

We  shall  neither  affirm  nor  deny  either  of  these  proposi- 
tions, because  they  present  issues  which  we  are  not  called 
upon  to  determine,  and  some  of  them  are  issues  which  no 


230 


120  FEDERAL  REPORTER,  731. 


^ 


Opinion  of  the  Court 

court  is  empowered  to  hear  or  decide,  involving,  as  they  do, 
questions  of  public  policy  which  Congress  must  determine 
/  It  is  our  duty  to  ascertain  whether  the  proof  discloses  a 
combination  in  direct  restraint  of  interstate  commerce ;  that 
is  to  say,  a  combination  whereby  the  power  has  been  acquired 
to  suppress  competition  between  two  or  more  competing 
and  parallel  lines  of  railroad  engaged  in  interstate  com- 
nierce.    If  it  does  disclose  such  a  combination— and  we  have 
little  hesitation  in  answering  this  question  in  the  affirma- 
tive—then the  anti-trust  act,  as  it  has  been  heretofore  inter- 
preted by  the  court  of  last  resort,  has  been  violated,  and 
the  government  is  entitled  to  a  decree. 
/    A  decree  in  favor  of  the  United  States  will  accordingly  be 
entered  to  the  following  effect :  Adjudging  that  the  stock  of 
the  Northern  Pacific  and  Great  Northern  Companies,  now 
held  by  the  Securities  Company,  was  acquired  in  virtue  of  a 
combination  among  the  defendants  in  restraint  of  trade  and 
commerce  among  the  several  states,  such  as  the  anti-trust 
act  denounces  as  illegal ;  enjoining   the  Securities  Company 
from  acquiring  or  attempting  to  acquire  further  stock  of 
either  of  said  companies ;  also  enjoining  it  from  voting  such 
stock  at  any  meeting  of  the  stockholders  of  either  of  said 
railroad  companies,  or  exercising  or  attempting  to  exercise 
any  control,  direction,  supei-vision,  or  influence  over  the 
acts  of  said  companies  or  either  of  them  by  virtue  of  its 
holding  such  stock;    enjoining  the  Northern  Pacific  and 
Great  Noi-thern  Companies,  respectively,  their  officers,  direct- 
ors, and  agents,  from  permitting  such  stock  to  be  voted  by 
the  Northern  Securities  Company,  or  any  of  its  agents  or 
attorneys  on  its  behalf,  at  any  corporate  election  for  directors 
or  officers  of  either  of  said  companies ;  and  likewise  enjoining 
them  from  paying  any  dividends  to  the  Securities  Company 
on  account  of  said  stock,  or  permitting  or  suffering  the 
Securities  Company  to  exercise  any  control  whatsoever  over 
the  corporate  acts  of  said  companies,  or  to  direct  the  policy 
of  either;   and,  finally,  permitting  the  Securities  Company 
to  return  and  transfer  to  the  stockholders  of  the  Northeni 
Pacific  and  Great  Northern  Companies  any  and  all  shares 
of  stock  of  those  companies  which  it  may  have  received  from 


J 


UNITED   STATES   V.    NORTHERN   SECURITIES   CO.         231 

Opinion  of  tlie  Court 

such  stockholders  in  exchange  for  its  own  stock,  or  to  make 
such  transfer  and  assignment  to  such  person  or  persons  as 
are  now  the  holders  and  owners  of  its  own  stock  originally 
issued  in  exchange  for  the  stock  of  said  companies. 

THE  DECREE. 

It  was  ordered,  adjudged,  and  decreed  as  follows,  to  wit: 
That  the  defendants  above  named  have  heretofore  entered 
into  a  combination  or  conspiracy  in  restraint  of  trade  and 
commerce  among  the  several  states,  such  as  an  act  of  Con- 
gress, approved  July  2,  1890,  26  Stat.  209,  c.  647  [U.  S. 
Comp.  St.  1901,  p.  3200],  entitled  "An  act  to  protect  trade 
and  commerce  against  unlawful  restraints  and  monop- 
1733]  olies,"  denounces  as  illegal;  that  all  of  the  stock  of 
the  Northern  Pacific  Kailway  Company  and  all  the  stock  of 
the  Great  Northern  Railway  Company  now  claimed  to  be 
held  and  owned  by  the  defendant  the  Northern  Securities 
Company  was  acquired  and  is  now  held  by  it  in  virtue  of 
such  combination  or  conspiracy  in  restraint  of  trade  and 
commerce  among  the  several  states;  that  the  Northern  Se- 
curities Company,  its  officers,  agents,  servants,  and  employes, 
be,  and  they  are  hereby,  enjoined  from  acquiring  or  attempt- 
ing to  acquire  further  stock  of  either  of  the  aforesaid  rail- 
way companies;  that  the  Northern  Securities  Company  be 
enjoined  from  voting  the  aforesaid  stock  which  it  now  holds 
or  may  acquire,  and  from  attempting  to  vote  it,  at  any  meet- 
ing of  the  stockholders  of  either  of  the  aforesaid  railway 
companies,  and  from  exercising  or  attempting  to  exercise 
any  control,  direction,  supervision,  or  influence  whatsoever 
over  the  acts  and  doings  of  said  railway  companies,  or  either 
of  them,  by  virtue  of  its  holding  such  stock  therein ;  that  the 
Northern  Pacific  Eailway  Company  and  the  Great  Northern 
Railway  Company,  their  officers,  directors,  servants,  and 
agents,  be,  and  they  are  hereby,  respectively  and  collectively 
enjoined  from  permitting  the  stock  aforesaid  to  be  voted 
by  the  Northern  Securities  Company,  or  in  its  behalf,  by  its 
attorneys  or  agents,  at  any  corporate  election  for  directors 
or  officers  of  either  of  the  aforesaid  railway  companies,  and  • 
that  they,  together  with  their  officers,  directors,  servants,  and 


232 


120  FEDERAL  REPOBTER,  132. 
Opinion  of  the  Court 


agents,  be  likewise  enjoined  and  respectively  restrained  from 
paying  any  dividends  to  the  Northern  Securities  Company 
on  account  of  stock  in  either  of  the  aforesaid  railway  com- 
panies which  it  now  claims  to  own  and  hold ;  and  that  the 
aforesaid  railway  companies,  their  officers,  directors,  serv- 
ants, and  agents,  be  enjoined  from  permitting  or  suffering 
the  Northern  Securities  Company,  or  any  of  its  officers  or 
agents,  as  such  officers  or  agents,  to  exercise  any  control 
whatsoever  over  the  corporate  acts  of  either  of  the  aforesaid 
railway  companies. 

But  nothing  herein  contained  shall  be  construed  as  pro- 
hibiting the  Northern  Securities  Company  from  returning 
and  transferring  to  the  stockholders  of  the  Northern  Pacific 
Railway  Company  and  the  Great  Northern  Railway  Com- 
pany, respectively,  any  and  all  shares  of  stock  in  either  of 
said  railway  companies  which  said  the  Northern  Securities 
Company  may  have  heretofore  received  from  such  stock- 
holders in  exchange  for  its  own  stock;  and  nothing  herein 
contained  shall  be  construed  as  prohibiting  the  Northern  Se- 
curities Company  from  making  such  transfer  and  assign- 
ments of  the  stock  aforesaid  to  such  person  or  persons  as 
may  now  be  the  holders  and  owners  of  its  own  stock  origi- 
nally issued  in  exchange  or  in  payment  for  the  stock  claimed 
to  have  been  acquired  by  it  in  the  aforesaid  railway  com- 
panies. 

It  is  further  ordered  and  adjudged  that  the  United  States 
recover  of  and  from  the  defendants  its  costs  herein  ex- 
pended, the  same  to  be  taxed  by  the  clerk  of  this  court,  and 
have  execution  therefor, 

Henry  C.  Caldwell, 

Presiding  Judge, 
Walter  H.  Sanborn, 
Amos  M.  Thayer, 

Circuit  Judges, 


BOARD  OF  TRADE  V,    CHRISTIE  GRAIN  &  STOCK  CO. 


233 


Opinion  of  the  Court 

[608]     BOAED  OF  TRADE  OF  CITY  OF  CHICAGO  v, 
CHRISTIE  GRAIN  &  STOCK  CO.  ET  AL.« 

(Circuit  Court,  W.  D.  Missouri.    Marcli  19,  1903.) 

[121  Fed.,  608.] 

Exchanges — Contract  for  Distribution  of  Quotations — Legality 
OF  Restrictions. — ^A  contract  betAveen  a  board  of  trade,  having  a 
property  right  in  the  quotations  made  on  its  exchange,  and  a  tele- 
graph company,  relating  to  the  transmission  and  distribution  of  such 
quotations  by  the  latter,  is  not  in  violation  of  the  anti-trust  act  of 
1890  (Act  July  2,  1890,  26  Stat.  209  [U.  S.  Comp.  St  1901,  p.  3200]), 
as  in  restraint  of  trade  and  commerce,  because  of  a  provision  that 
the  quotations  shall  only  be  furnished  to  persons  who  sign  an  agree- 
ment to  the  effect  that  they  shall  not  be  used  in  the  conduct  of  a 
bucket  shop.  6 

In  Equity.    On  final  hearing. 

For  former  opinion,  see  116  Fed.  944. 

Hook,  District  Judge. 

The  only  question  of  consequence  presented  at  the  final 
hearing  which  was  not  fully  argued  at  the  preliminary  hear- 
ing is  whether  the  arrangement  between  the  board  of  trade  and 
the  telegraph  companies  is  violative  of  the  provisions  of  the 
Sherman  act  (Act  July  2, 1890, 26  Stat.  209  [U.  S.  Comp.  St. 
1901,  p.  3200]).  This  proposition  may  be  roughly  stated  as 
follows:  The  board  of  trade,  having  a  property  right  in  its 
quotations,  contracted  with  the  telegraph  companies  for 
their  transmission  and  distribution  by  the  latter;  such  trans- 
mission and  distribution  to  be  confined  to  persons  who  would 
sign  an  application  embodying  an  agreement  to  the  effect  that 
the  quotations  should  not  be  used  in  the  conduct  of  an  unlaw- 
ful business,  to  wit,  a  bucket  shop.     Is  such  an  arrangement 

oAn  injunction  was  granted  by  the  Circuit  Court  July  5,  1902  (116 
Fed.,  944),  but  it  was  not  based  in  any  way  upon  the  anti-trust  law, 
and  therefore  the  decision  is  not  reprinted.  On  final  hearing,  March 
19,  1903,  the  court  considered  the  matter  from  the  standpoint  of  the 
anti-trust  law  and  adhered  to  its  original  conclusions  (121  Fed.,  608). 
See  above.  The  decree  was  reversed  by  the  Circuit  Court  of  Appeals, 
Eighth  Circuit  (125  Fed.,  161),  but  not  upon  any  ground  related  to  the 
anti-trust  law.  Decision  not  reprinted.  The  action  of  the  Circuit 
Court  of  Appeals  was  reversed  by  the  Supreme  Court,  and  the  in- 
junction allowed  (198  U.  S.,  236).    See  p.  717. 

6  Syllabus  copyrighted,  1903,  by  West  Publishing  Co. 


234 


122  FEDERAL  REPORTER,  U5. 


Syllabus. 

an  unlawful  combination  in  restraint  of  trade  and  commerce, 
within  the  meaning  of  the  act  of  July  2,  1890,  popularly 
known  as  the  '*  Sherman  Anti-Trust  Act "  ?  I  am  of  the 
opinion  that  it  is  not. 

Let  a  final  decree  be  prepared  in  conformity  with  the 
above,  and  the  conclusions  heretofore  announced  in  this  case. 


[115]  METCALF   v,   AMERICAN   SCHOOL   FURNI- 
TURE CO.  ET  AL.« 

(Circuit  Court,  W.  D.  New  York.    March  7,  1903.) 

ri22  Fed..  115.] 
Equity— Plea— SETTiifG  Down  fob  Hearing.— Where  a  plea  has  been 
set  down  for  argument  by  complainant,  the  facts  stated  therein 
must  be  tal^en  as  true.6 

CoRPOBATioNs— Action  by  Stock holdeb.— Where  the  action  of  a  cor- 
poration in  maljing  a  transfer  of  all  of  its  property  was  illegal,  and  it 
is  under  the  control  of  the  directors  who  made  such  transfer,  a 
stockholder  may  maintain  a  suit  on  behalf  of  the  corporation  to 
set  aside  the  transfer. 

Same—Powers— Sale  of  All  Its  Property.- A  corporation  organ- 
ized under  the  laws  of  West  Virginia  has  power,  under  Code  W.  Va. 
1899,  c.  53,  §  56,  to  sell  and  transfer  all  of  its  property  and  discon- 
tinue its  business  by  the  action  of  the  holders  of  a  majority  of  the 
stock,  taken  at  a  general  stockholders'  meeting. 

Same— Ratification  of  Unauthobized  Sale.— Where  a  corporation 
has  power  to  transfer  all  of  its  property  by  a  vote  of  a  majority  of 
its  stock,  such  a  transfer,  made  by  its  directors  without  actual  fraud, 
may  be  validated  by  a  subsequent  ratification  by  the  stockholders. 

Same— Rights  of  Minobity  Stock holdebs -Effect  of  Statute.— 
Where  the  charter  and  by-laws  of  a  corporation  and  the  statutes  of 
the  state  under  which  It  is  organized,  vest  in  a  majority  of  the 
stockholders  the  right  to  sell  the  property  of  the  corporation  and 
to  discontinue  its  corporate  existence,  every  stockholder  takes  his 
stock  subject  to  such  right;  and  a  minority  stockholder  must  sub 
mit  to  the  action  of  the  majority  in  exercising  such  power,  in  the 
absence  of  fraud. 

Same — Validity  of  Sale — Combination  in  Restbaint  of  Tbade. 

The  sale  and  transfer  by  a  corpomtion  of  its  property  and  good  will 


« Demurrer  to  bill  as  originally  filed  sustained  by  Circuit  Court 
(108  Fed.,  909).  See  p.  75.  Decree  affirmed  by  Circuit  Court  of  Ap- 
peals, Second  Circuit  (113  Fed.,  1020),  memorandum  decision  (see  p. 
Ill),  and  plaintiff  allowed  30  days  in  which  to  amend.  Amended  bill 
dismissed  (122  Fed.,  115). 

»  Syllabus  copyrighted,  1903,  by  West  Publishing  Co. 


METCALF   V,   AMERICAN    SCHOOL   FURNITURE   CO.         235 

Opinion  of  the  Court. 

to  another  corporation,  where  such  sale  was  within  its  powers, 
cannot  be  repudiated  on  the  ground  that  the  purchaser  acquired 
the  property  for  the  purpose  of  obtaining  a  monopoly  of  the  business, 
and  in  pursuance  of  an  illegal  combination  in  restraint  of  trade.» 

[116]  Same — Secbet  Pbofit  Obtained  by  Dibectoes. — The  fact  that 
directors  of  a  corporation,  on  making  a  sale  of  its  property  by  a  secret 
agreement  with  tlie  purchaser,  obtained  for  themselves  a  portion  of 
the  consideration  paid  for  the  property,  does  not  afford  ground  for  a 
rescission  of  the  sale  at  suit  of  the  corporation  or  a  stockholder; 
the  remedy  being  by  suit  against  the  directors  for  an  accounting. 

Same — Rescission — Executed  Contbact. — A  contract  by  a  corpora- 
tion for  the  sale  of.  its  property  cannot  be  rescinded  by  the  corpora- 
tion, or  at  suit  of  a  stockholder  suing  in  its  right,  on  the  ground 
that  it  was  ultra  vires,  where  it  has  been  fully  executed  by  a  trans- 
fer of  the  property  and  the  receipt  of  the  price. 

Same — Payment  fob  Pbopebty  Sold — Acceptance  of  Stock  in  An- 
otheb  Cobpoeation. — Where  a  corporation  is  given  by  its  charter 
the  right  to  dispose  of  its  property  and  to  discontinue  its  corporate 
existence,  it  has  the  power  to  accept  stock  in  another  corporation  in 
payment  of  the  purchase  price  of  its  property,  provided  the  trans- 
action is  bona  fide. 

Same — Constbuction  of  Statute. — The  provisions  of  Code  W.  Va. 
1899,  c.  52,  §§  3,  4,  which  prohibit  the  purchase  of  stocks,  bonds,  or 
securities  by  a  corporation,  except  when  taken  in  payment  of  a 
debt,  or  as  security  therefor,  apply  only  while  the  corporation  is  a 
going  concern,  engaged  in  carrying  on  the  business  for  which  it  was 
created. 

I  Same — Injunctive  Relief — Anti-Tbust  Law. — ^The  only  party  en- 
titled to  maintain  a  bill  in  equity  for  injunctive  relief  for  violating 
the  provisions  of  the  anti-trust  act  is  the  United  States  attorney,  at 
the  instance  of  the  Attorney-General.] 

In  Equity.     On  demurrers  and  pleas. 

Seymour,  Seymour  <&  Harmon,  for  complainant. 

Davies,  Stone  <&  Auerhach  (Br^ainard  Tolles,  of  counsel), 
for  defendants  American  School  Furniture  Co.,  Oakman,  and 
Turnbull. 

Cox,  Keman  d;  Kimball  {Maulshy  Kimball,  of  counsel), 
for  defendants  Buffalo  School  Furniture  Co.  et  al. 

Hazel,  District  Judge. 

This  cause  was  heretofore  considered  by  this  court  (108 
Fed.  909),  and  the  demurrers  then  interposed  were  sustained 

« Validity  of  monopolistic  contracts  as  affected  by  public  iwlicy, 
see  note  to  Cravens  v.  Carter-Crtime  Co.,  34  C.  C.  A.  486. 


Zoo 


122  FEDEBAL  BEFOBTEB,  116. 


Opinion  of  tbe  Court 

on  the  ground  of  multifariousness.  In  the  former  bill  of 
complaint,  relief  was  sought  in  equity  by  complainant  as  a 
minority  stockholder,  suing  for  herself  and  in  behalf  of  other 
stockholders  of  defendant  Buffalo  School  Furniture  Com- 
pany, and  to  recover  treble  damages,  under  the  anti-trust 
act  of  July  2,  1890  (26  Stat.  209  [U.  S.  Comp.  St.  1901,  p. 
3200]).  It  was  held  that  such  damages  were  only  recover- 
able in  an  action  at  law  by  the  complainant,  and  inured  to 
her  sole  benefit,  while  the  equitable  relief  sought  by  the  bill 
was  for  the  benefit  of  the  corporation  in  whose  behalf  the 
suit  was  brought,  and  therefore  inconsistent  remedies  were 
averred  in  the  bill.  The  order  sustaining  the  demurrers  to 
the  original  bill  recites  that  they  are  sustained  solely  and 
only  upon  the  ground  of  multifariousness,  although  the  pre- 
cise questions  here  involved  were  also  then  considered.  The 
opinion  of  the  court,  however,  merely  indicated  an  impression 
that  the  bill,  with  the  inferences  deduced  therefrom,  suffi- 
ciently averred  a  conspiracy  in  restraint  of  trade  and  com- 
merce to  enable  the  complainant  to  give  evidence  upon  the 
trial  in  support  of  the  charge.  Subsequently  the  parties  ap- 
peared before  the  court  in  settlement  of  the  terms  of  the 
order,  with  the  result  that  the  restrictive  order  sustaining 
the  demurrer  because  of  multifariousness,  only,  was  entered. 
On  appeal  the  Circuit  Court  of  Appeals  affirmed  the  de- 
f  117]  cree  of  the  Circuit  Court,  with  leave  to  amend  the  bill. 
113  Fed.  1020.  The  precise  questions  now  considered  not 
having  been  determined  on  the  former  hearing,  as  appears 
by  the  order  sustaining  the  demurrer  because  of  multifari- 
ousness, the  contention  of  the  complainant  that  the  defend- 
ants' demurrers  were  overruled  upon  every  other  ground 
therein  stated  cannot  be  maintained.  The  amended  bill 
which  is  now  before  me  has  eliminated  the  demand  for  treble 
damages,  but  in  all  other  respects  the  relief  demanded  is  prac- 
tically similar  to  that  of  the  original  bill.  All  the  defend- 
ants, except  Oakman  and  Turnbull,  have  demurred  to  part, 
answered  to  part,  and  all  the  defendants  have  filed  pleas  in 
bar  to  part  of  the  bOl  now  considered. 

The  grounds  of  demurrers  may  be  subdivided  and  briefly 
summarized  into  four  general  grounds,  as  follows:  (1)  Want 
of  equity ;  (2)  complainant  has  no  legal  capacity  to  sue ;  (3) 


UNITED   STATES   V,   SWIFT   &   CO. 


237 


Syllabus. 

that  the  cause  assigned  for  equitable  relief  does  not  entitle 
complainant  to  the  character  of  the  relief  prayed  for;  (4) 
defect  of  parties  plaintiff  or  defendant,  in  that  there  are  in- 
terested stockholders,  without  whose  presence  relief  ought 
not  to  be  granted.** 

«  *  #  «  * 

[126]  I*  do  not  understand  that  it  is  claimed  by  com- 
plainant that  this  court  has  the  power  to  take  cognizance  of 
the  alleged  illegal  combination  because  of  the  provisions  of 
the  anti-trust  act  of  1890  (26  Stat.  209  [U.  S.  Comp.  St.  1901, 
p.  3200]).  It  has  been  many  times  decided,  and  no  longer 
admits  of  any  question  or  doubt,  that  the  only  party  entitled 
to  maintain  a  bill  in  equity  for  injunctive  relief  for  vio- 
lating the  provisions  of  the  anti-trust  act  is  the  United  States* 
attorney,  at  the  instance  of  the  Attorney  General.  Pidcock 
v,  Harrington  (C.  C.)  64  Fed.  821;  Southe?^  Indiana  Ex- 
press Co,  V.  U.  S,  Co.  (C.  C.)  88  Fed.  659;  Connolly  v.  Union 
Seiver  Pipe  Co,^  supra^ 

*  ♦  «  He  « 

It  follows  from  the  foregoing  that  the  bill  must  be  dis- 
missed, with  costs,  and  the  pleas  of  the  various  defendants 
allowed.  The  complainant,  however,  is  entitled  to  take  issue, 
if  she  shall  see  fit,  upon  the  facts  stated  in  the  plea,  by  filing 
replication  within  thirty  days  from  the  entry  of  an  order  in 
accordance  with  this  opinion. 


[529]    UNITED  STATES  v.  SWIFT  &  CO.  ET  AL,» 

(Circuit  Court,  N.  D.  Illinois,  N.  D.    April  18,  1903.) 

[122  Fed.,  529.] 

Intekstate  Commebce  Act — Commerce. — Commerce  is  the  sale  or 
exchange  of  commodities,  but  that  which  the  law  looks  upon  as  the 
body  of  commerce  is  not  restricted  to  specific  acts  of  sale  or 
exchange.    It  includes  the  intercourse — all  the  initiatory  and  inter- 


0  It  is  not  deemed  advisable  .to  reprint  the  entire  opinion,  as  very 
little  of  it  relates  to  the  anti-trust  law.  This  may  be  seen  by  consult- 
ing the  syllabus,  which  is  printed  in  full. 

6  Decree  modified  and  affirmed  by  Supreme  Court  (196  U.  S.,  375). 
See  p.  641. 


238 


122  FEDERAL  REPOBTEB,  629. 
Statement  of  the  Case. 


vening  acts,  instrumentalities,  and  dealings— that  directly  bring 
about  the  sale  or  exchange. 
Same— Restbaixt  of  Trade.— Restraint  of  trade  is  not  dependent 
upon  any  consideration  of  reasonableness  or  unreasonableness  in 
the  combination  averred,  nor  is  it  to  be  tested  by  the  prices  that 
result  from  the  combination.  The  statute  has  no  concern  with 
prices,  but  looks  solely  to  competition  and  to  the  giving  of  com- 
petition full  play  by  making  illegal  any  effort  at  restriction  upon 
competition. 

Same.— The  agreement  of  the  defendants  to  refrain  from  bidding 
against  each  other  in  the  purchase  of  cattle  is  combination  in 
restraint  of  trade;  so  also  their  agreement  to  bid  up  prices  to 
stimulate  shipments,  intending  to  crease  from  biddmg  when  the  ship- 
ments have  arrived,  and  the  same  result  follows  from  the  combina- 
tion of  defendants  to  fix  prices  upon  and  restrict  the  quantities 
of  meat  shipped  to  their  agents  or  their  customers.  Bemg  restric- 
tion upon  competition,  such  agreements  are  combination  in  restraint 
of  trade.a 

The  defendants  are  seven  corporations,  one  copartnership, 
and  twenty-three  other  persons,  and  the  petition  is  fairly 

summarized  as  follows : 

* 

Ist.  "That  at  the  time  of  its  filing  they  had  been  and  then  were 
engaged  m  the  business  of  buying  live  stock  at  divers  points  through- 
out the  United  States  where  sttx-kyards  existed,  and  slaughtering 
the  same  at  such  places  in  different  states  and  converting  the  same 
into  fresh  meats  for  human  consumption. 

2nd.  "  That  they  bad  been  and  then  were  engaged  In  the  business  of 
selling  such  fresh  meats  at  the  places  where  prepared,  to  dealers  and 
consumers  in  divers  other  states  and  territories  of  the  United  States 
and  in  foreign  countries,  and  shipping  the  same  when  so  sold  from 
said  places  of  preparation  to  such  dealers  and  consumers,  pursuant 
to  such  sales,  and  were  thus  engaged  in  trade  and  commerce  among 
the  several  states  and  territories  and  with  foreign  nations. 

3rd.  "That  they  had  been  and  then  were  engaged  in  the  business 
of  shipping  such  fresh  meats  from  said  points  where  so  prepared 
by  common  carriers  to  the  respective  agents  of  the  defendants  located 
at  and  near  the  principal  markets  of  such  meats  in  other  states 
and  territories  and  in  foreign  countries  for  sale  by  those  agents  in 
those  markets  to  dealers  and  consumers,  which  they  there  sold 
through  their  agents  and  were  thus  engaged  in  trade  and  conmierce 
among  the  several  states  and  territories  and  with  foreign  nations 

4th.  *•  That  of  the  total  volume  of  trade  and  commer^  among  the 
said  states  and  territories  in  fresh  meats  the  said  defendants  to- 
gether controlled  about  sixty  per  cent. 

5th.  "That  as  to  such  trade  and  commerce  among  the  several 
states  and  -territories  and  foreign  nations  in  fresh  meats,  the  said 
defendants  should,  and  but  for  the  acts  herehiafter  complained  of 
would  be  and  remain  in  competition  with  each  other. 

«th.  "That  said  defendants,  in  violation  of  the  act  of  congress  of 
July  2,  1890,  c.  647,  2G  Stat.  209  [U.  S.  Comp.  St.  1901,  p.  3200]'  and 


«  Syllabus  copyrighted,  1903,  by  West  Publishing  Co. 


UNITED   STATES   V.   SWIFT   &   CO. 
Statement  of  the  Case. 


239 


in  order  to  restrain  competition  among  themselves  as  to  the  pur- 
chase of  livestock  necessary  to  the  production  of  the  meats  produced 
by  them,  have  engaged  in,  [530]  and  intended  to  eontmue  an  unlaw- 
ful combmatiun  and  conspiracy  between  themselves  for  directing  and 
requiring  their  respective  purchasing  agents  at  the  said  several  stock- 
yards and  markets  where  they  customarily  purchase  such  livestock, 
which  livestock  is  produced  and  owned  principallv  in  other  states 
and  territories  of  the  United  States,  and  shipped  by  the  owners 
thereof  to  such  stockyards  for  competitive  sale,  to  refrain  from 
biddmg  against  each  other  when  making  purchases  of  sufh  livestock 
and  by  these  niivms  inducing  and  compelling  the  o\>-ners  of  such 
Iivestoclv  to  sell  the  same  at  less  prices  than  they  would  receive  if 
such  biddmg  were  competitive;  which  combination  and  conspiracy 
IS  m  restraint  of  trade  and  commerce  among  the  several  states  etc 

7th.  "That  said  defendants,  in  further  violation  of  said  act,  and 
in  order  to  further  restrain  competition  among  themselves,  which 
would  otherwise  exist,  as  to  the  purchase  of  livestock  necessary 
to  the  production  of  the  meats  produced  by  them,  have  engaged  in 
and  intend  to  continue  an  unlawful  combination  and  conspiracy 
among  themselves  for  bidding  up  through  their  agents  the  prices  of 
livestock  for  a  few  days  at  said  stockyards,  thereby  inducing  ship- 
pers from  other  states  and  territories  to  make  large  shipments  of 
such  ivestock  to  such  stockyards,  and  then  refrain  from  bidding  no 
such  livestock,  and  thereby  obtaining  such  livestock  at  prices  much 
less  than  it  would  bring  in  the  regular  way  of  trade. 

8th.  "That  said  defendants,  in  further  violation  of  said  act,  and 
in  order  to  restrain  and  destroy  competition  among  themselves  as 
to  such  trade  and  commerce  and  to  monopolize  the  same,  have  en- 
gaged in  and  intend  to  continue  an  unlawful  combination  and  con- 
spiracy to  arbitrarily,  from  time  to  time,  lower  and  fix  prices,  and 
maintain  uniform  prices  at  which  they  will  sell,  directlv  or  through 
their  respective  agents,  such  fresh  meats  to  dealers  and  consumers 
throughout  said  states  and  territories  and  foreign  countries.  That 
the  arbitrary  raising,  lowering,  fixing,  and  maintaining  of  sfiid 
prices  is  effected  through  the  action  of  divers  of  their  agents  in 
secretly  holding  periodical  meetings,  and  there  agreeing  upon  the 
prices  to  be  adopted  by  said  defendants  respectivelv  in  such  trade 
and  commerce,  which  said  prices  are  notified  by  letters  and  telegrams 
and  are  adhered  to  in  their  sales,  which  are  made  directlv,  and 
among  other  ways ;  and  by  collusively  restricting  and  curtailing  the 
quantities  of  such  meats  shipped  by  them  in  pursuance  of  such  com- 
bination, and  imposing  against  each  other  divers  penalties  for  anv 
deviations  from  such  prices,  and  establishing  a  uniform  rule  for  the 
giving  of  credit  to  dealers  throughout  the  said  states  and  territories 
and  foreign  countries,  and  for  the  conduct  of  the  business  of  such 
^r.r^'^'TJ*^  penalties  for  violations  thereof,  by  notifying  each  other 
of  the  delinquencies  of  said  dealers,  and  keeping  what  is  commonly 
knov.'u  as  a  'black  list'  of  such  delinquents,  and  refusing  to  ^11 
meats  to  any  of  such  delinquent  dealers. 

f>.^^^*  'A^\  ^u®  ^^^^  defendants,  in  violation  of  the  provisions  of 
^mhh!?f ^  '  ^""^^  engaged  in  and  intend  to  continue  an  unlawful 
^ot?t«  nl  ^°'^  conspiracy,  to  direct  and  require  their  respective 
agents  at  and  near  many  of  the  markets  for  such  fresh  meats 
throughout   the   United   States   and   territories   to   arbitrarily   make 

?n.h  ^rf  .  "^^^T*  ''^^\^^^  ^'*'*  ^^'"^^^^  ^^^  deliveiT,  upon  making 
such  sales  to  dealers  and  cunsumers  in  those  markets  of  the  meats 

ffjr/^  ^  ^^S^-  through  said  agents  by  the  said  defendants  respec- 
fi^ll  ™  }^^^'^  ^y^vtil  points  of  preparation,  thereby  increas^g 
the  charges  for  such  meats  to  said  dealers  and  consumers 


240 


122  FEDEKAL  BEPOKTEB,   530. 
Statement  of  tlie  Case. 


lOtli.  "  That  notwithstanding  the  common  carriers  by  railroad  sub- 
ject to  the  provisions  of  the  laws  of  the  United  States  for  the  regu- 
lation of  commerce,  have  established  and  publislied  their  schedule 
of  rates,  fares  and  charges  for  the  transportation  of  livestock,  and 
for  the  transiwrtation  of  meats,  which  are  the  onlv  lawful  rates 
for  such  transportation,  the  sjiid  defendants,  intending  therebv  to 
monopolize  the  commerce  aforesaid,  and  prevent  competition  therein, 
have  made  and  are  making  agreements  and  arrangements  with 
divers  officers  and  agents  of  such  common  carriers  whereby  the  said 
defendants  were  to  receive,  and  will  continue  to  receive,  by  means  of 
rebates  and  other  devices,  unlawful  rates  for  such  transportation  less 
than  the  lawful  rates,  which  rebates  they  divide,  among  themselves 
[iSl]  and  will  continue  to  do  so  unless  restrained  by  the  injunction 
of  this  court,  which  is  a  scheme  to  monopolize,  and  also  a  combina- 
tion and  conspiracy  in  restraint  of  trade  and  commerce  among  the 
several  states  and  territories  and  with  foreign  nations. 

11th.  "  That  the  said  defendants  now  are,  and  for  vears  past  have 
been  in  combination  and  conspiracy  with  each  other  and  with  the 
railroad  companies  and  others  to  complainant  unknown,  to  obtain  a 
monoiioly  of  the  supply  and  distribution  of  fresh  meats  throughout 
the  United  States  and  its  territories  and  foreign  countries,  to  that 
end  the  defendants  do  and  will  artificially  restrain  such  commerce 
and  put  in  force  abnonnal,  unreasonable  and  arbitrary  regulations 
for  the  conduct  of  their  own  and  each  other's  business,  effecting  the 
same  from  the  shipment  of  the  livestock  from  the  plains  to  the  final 
distribution  of  the  meats  to  the  consumer.  All  to  the  injury  of  the 
people  and  in  defiance  of  law." 

To  this  petition  five  of  the  defendant  corporations  have 
filed  joint  and  several  demurrers,  the  grounds  of  which  are 
as  follows : 

"  The  bill  of  complaint  does  not  allege  any  contract,  combination 
or  conspiracy  in  restraint  of  interstate  or  foreign  trade  or  commerce 
within  the  meaning  of  said  act  of  congress  of  July  2,  1890,  c.  647.  26 
Stat.  209  [U.  S.  Comp.  St.  1901,  p.  3200].  ,    .  ^i.  ^o 

"The  bill  of  complaint  does  not  allege  any  acts  of  defendants 
monopolizing,  or  attempting  to  monopolize,  or  combining  or  con- 
spiring to  monopolize  any  part  of  such  trade  or  commerce  within  the 
meaning  of  said  act. 

"  If  the  act  of  congress  in  question  should  be  given  a  constniction 
which  would  sustain  this  bill  of  complaint,  such  act  would  violate 
the  provisions  of  the  Constitution  of  the  United  States 

"  Said  bill  is  multifarious. 

"There  is  a  misjoinder  of  causes  of  action  and  of  persons  in  said 
bill,  as  alleged  in  said  demurrers. 

"  The  said  bill  of  complaint  and  the  allegations  and  charges  therein 
are  not  sufficiently  definite  or  specific,  but  are  too  general  and  in- 
definite." 

The  hearing  is  on  these  demurrers  and  on  motion  for  an 
injunction. 

John  K,  Richards^  S.  H,  Bethea,  and  W.  A.  Day,  for  the 
United  States. 

John  S.  Miller,  and  MerriU  Starr,  for  defendants. 


UNITED   STATES   V.   SWIFT   &   CO. 


241 


Opinion  of  the  Court 

After  the  foregoing  statement  of  facts,  Grosscup,  Circuit 
Judge,  delivered  the  opinion : 

Commerce,  briefly  stated,  is  the  sale  or  exchange  of  com- 
modities. But  that  which  the  law  looks  upon  as  the  body  of 
commerce  is  not  restricted  to  specific  acts  of  sale  or  exchange. 
It  includes  the  intercourse— all  the  initiatory  and  interven- 
ing acts,  instrumentalities  and  dealings— that  directly  bring 
about  the  sale  or  exchange.  Thus,  though  sale  or  exchange 
is  a  commercial  act,  so  also  is  the  solicitation  of  the  drummer, 
whose  occupation  it  is  to  bring  about  the  sale  or  exchange. 
Brennan  v.  Titusville,  153  U.  S.  289,  14  Sup.  Ct.  829,  38  L. 
Ed.  719.  The  whole  transaction  from  initiation  to  culmina- 
tion is  commerce. 

When  commerce,  thus  broadly  defined,  is  between  parties 
dealing  from  different  states— to  be  effected  so  far  as  the 
immediate  act  of  exchange  goes  by  transportation  from  state 
to  stat^— it  is  commerce  between  the  states,"  within  the 
meaning  of  the  constitution,  and  the  statute  known  as  the 
Sherman  Act.  But  it  is  not  the  transportation  that  consti- 
tutes the  transaction  interstate  commerce.  That  is  an  ad- 
junct only,  essential  to  commerce,  but  not  the  sole  test. 
[632]  The  underlying  test  is  that  the  transaction,  as  an  en- 
tirety, including  each  part  calculated  to  bring  about  the 
result,  reaches  into  two  or  more  states;  and  that  the  parties 
dealing  with  reference  thereto  deal  from  different  states. 

An  interstate  commercial  transaction  is,  in  this  sense,  an 
affair  rising  from  different  states,  and  centering  in  the  act  of 
exchange,  each  essential  part  of  the  affair  being  as  much 
commerce  as  is  the  center.  With  this  definition  in  mind,  let 
us  see  what  the  transaction  made  out  in  the  petition  is. 

For  the  purpose  of  clear  exposition,  the  facts  set  forth  in 
the  petition  should  be  separated  into  two  groups— those  that 
are  intended  to  bring  the  transaction  within  ih^  body  of 
interstate  commerce;  and  those  that  are  intended  to  fix  upon 
such  transaction  the  character  of  unlawful  combination  and 
conspiracy.  Shorn  of  verbiage,  and  of  immaterial  accesso- 
ries, the  first  group  may  be  stated  as  follows :  The  defend- 
ants controlling  sixty  per  cent,  of  the  trade  and  commerce 
in  fresh  meats  in  the  United  States,  buy,  in  the  course  of 

21220— VOL  2—07  M 16 


242 


122  FEDEBAL  KEPORTEB,  532. 


Opinion  of  tlie  Court. 

their  business,  livestock  shipped  from  points  throughout  the 
United  States;  which,  having  been  converted  into  fresh 
meats,  is  sold  again  by  them  at  the  places  where  prepared,  to 
dealers  and  consumers  in  other  states;  or  is  sold  through 
their  agents,  located  in  other  states,  to  dealers  and  con- 
sumer in  the  states  where  the  agents  are  located.  The  ship- 
ment in  the  first  class  of  sales  is  made  directly  from  the 
places  where  the  meat  is  prepared  to  the  dealers  and  consum- 
ers in  other  states,  and  in  the  latter  class  to  the  agents  in  the 
other  states  who,  upon  sale,  deliver  directly  to  the  dealer 
and  consumer. 

What  may  be  called  the  body  of  these  transactions  is  two- 
fold. It  reaches  backward  to  the  purchase  of  cattle  that  come 
to  defendants  from  states  other  than  those  in  which  defend- 
ants manufacture;  and  it  reaches  forward  to  the  sale  of  the 
m6ats,  after  conversion,  to  parties  dealing  with  respect  there- 
to from  states  other  than  the  state  of  the  defendants;  fol- 
lowed by  shipments  into  the  other  states.  Each  of  these 
transactions  constitute,  in  my  judgment,  interstate  com- 
merce. The  purchase  of  cattle  shipped  habitually  from 
other  states  to  the  markets  where  defendants  purchase,  in 
the  expectation  that  the  purchase  will  be  made  by  the 
slaughter  companies,  is  an  act  of  interstate  commerce. 
Hopkins'  Case,  171  U.  S.  590,  19  Sup.  Ct.  40,  43  L.  Ed.  290. 

It  is  none  the  less  interstate  commerce  merely  because  the 
local  incidents  or  facilities  for  such  purchase  are  to  be  re- 
garded as  outside  the  interstate  character  of  the  transaction. 
Thus  the  local  commission  broker,  or  the  men  who  drive  the 
cattle  from  the  pens  to  the  slaughter  house,  need  not,  in  any 
survey  of  the  transaction,  be  held  to  be  within  the  interstate 
status  of  the  transaction.  With  them,  it  is  essentially  the 
same  whether  the  cattle  come  from  the  state  in  which  the 
purchase  is  made,  or  from  other  states.  They  are  aids  or 
facilities  only,  and  as  such  are  merely  local  incidents.  But 
the  purchase  of  livestock  thus  brought  habitually  from  other 
states,  relates,  in  its  larger  bearings,  to  a  transaction  that  had 
its  beginning  in  other  states.  The  original  shipments  are  in- 
fluenced, and  to  a  large  extent  brought  about,  by  the  char- 
acter of  the  purchase. 


UNITED   STATES   V.   SWIFT   &   CO. 


Opinion  of  the  Court. 


243 


[533]  The  purchase,  the  shipments,  and  the  transporta- 
tion, are  commercially  interdependent;  and  in  any  survey 
of  the  transaction,  as  an  entirety,  none  could  be  omitted. 
They  each  go  to  make  the  transaction,  and  covering  diflPerent 
states,  they  stamp  the  transaction — ^not  all  its  incidents,  but 
its  essential  body — as  a  transaction  in  interstate  commerce. 

Coming,  now,  to  the  other  branch  of  the  transaction — 
the  sales  by  the  defendants — a  like  result  follows.  Unques- 
tionably it  is  interstate  conmierce  when  purchasers  from 
other  states  buy  directly  from  the  defendants,  and  have  the 
meats  shipped  to  them  by  the  vendors.  The  situs  of  such  a 
transaction,  both  as  to  initiatory  intercourse,  and  as  to  trans- 
portation in  furtherance  of  the  exchange,  includes  a  state 
other  than  the  one  from  which  defendants  deal. 

I  think  the  same  is  true  of  meat  sent  to  agents,  and  sold 
from  their  stores.  The  transaction  in  such  case,  in  reality, 
is  between  the  purchaser  and  the  agents'  principal.  The 
agents  represent  the  j^rincipal  at  the  place  where  the  ex- 
change takes  place;  but  the  transaction,  as  a  commercial  en- 
tity, includes  the  principal,  and  includes  him  as  dealing 
from  his  place  of  business.  Indeed  such  privity  exists  be- 
tween the  principal  and  the  transaction,  that  he  could,  at  the 
instant,  as  a  citizen  of  another  state,  sue  upon  the  transaction 
in  the  federal  courts ;  nor  have  I  any  question  that  if  the  condi- 
tions of  this  case  were  reversed,  so  that  defendants  were  in- 
voking the  shelter,  instead  of  seeking  to  escape,  the  obliga- 
tions of  the  commerce  clause,  federal  law  would  be  found 
equal  to  the  protection  asked. 

I  need  not  dwell  on  the  contention  of  defendants  that  the 
fresh  meats  in  the  hands  of  the  agents  are  subject  to  ordi- 
nary state  taxation,  or  upon  the  cases  cited  in  this  connec- 
tion. It  is  enough  to  say  that  because  a  thing  can  be  taxed 
by  the  state,  it  does  not  follow  that  it  lies  outside  the  body 
of  interstate  commerce ;  for  commerce,  interstate  as  well  as 
domestic,  is  subject  to  the  police  and  taxing  power  of  the 
state,  so  long  as  the  exercise  of  such  power  does  not  interfere 
with  the  national  government's  exclusive  right  of  regulation. 
Addyston  Pipe  &  Steel  Company  v.  United  States,  175  U.  S. 
211,  20  Sup.  Ct.  96,  44  L.  Ed.  136 ;  Austin  v.  Tennessee,  179 
U.  S.  349,  21  Sup.  Ct.  132,  45  L.  Ed.  224;  Prentice  and  Egan 


122   FEDERAIi  REPORTER,   533. 


Opinion  of  the  Court 

on  the  Commerce  Clause  of  the  Constitution,  p.  27.  Nor 
shall  I  differentiate  the  Knight  Case,  155  U.  S.  685,  15 
Sup.  Ct.  248,  39  L.  Ed.  310 ;  the  Hopkins  Case,  and  other 
cases  urged  upon  me  as  applicable  to  the  case  under  consid- 
eration. A  study  of  these  cases  will  show  that  they  are  not 
in  conflict  with  the  views  already  expressed. 

The  next  inquiiy  is  this:  Do  the  facts  set  forth  in  the  sec- 
ond grouping,  fix  upon  the  transaction,  even  though  the 
transactions  be  within  the  body  of  interstate  commerce,  the 
character  of  unlawful  combination.  The  averments  of  the 
petition  in  this  respect  may  be  summarized  as  follows :  That 
the  defendants  are  engaged  in  an  unlawful  combination  and 
conspiracy  under  the  Sherman  act  in  (a)  directing  and  re- 
quiring their  purchasing  agents  at  tlie  markets  wliere  the 
livestock  was  customarily  purchased,  to  refrain  from  bid- 
ding against  each  other  when  making  such  purchases;  (b) 
in  bidding  up  through  their  agents,  tlie  prices  of  livestock 
for  a  few  days  at  a  time,  to  induce  |ofi4]  large  sliipments, 
and  then  ceasing  from  bids,  to  obtain  livestock  thus  shipped 
at  prices  much  less  than  it  would  bring  in  the  regular  way; 
(c)  in  agreeing  at  meetings  between  them  ui>on  prices  to  be 
adopted  by  all,  and  restriction  upon  the  quantities  of  meat 
shipped;  (d)  in  directing  and  requiring  their  agents 
throughout  the  United  States  to  impose  uniform  eliarges  for 
cartage  for  delivery,  thereby  increasing  to  dealers  and  con- 
sumers the  charges  for  such  meats;  and  (e)  in  making 
agreements  with  the  transportation  companies  for  rebates 
and  other  discriminative  rates. 

Ko  one  can  doubt  that  these  averments  state  a  case  of  com- 
bination. Whether  the  combination  be  imlawful  or  not,  de- 
pends on  whether  it  is  in  restraint  of  trade.  The  general 
meaning  of  that  term  is  no  longer  open  to  inquiry.  It  has 
been  passed  upon  carefully  by  the  Supreme  Court  in  the 
Freight  Association  Case,  166  13.  S.  290,  17  Sup.  Ct.  540,  41 
L.  Ed.  1007,  and  in  the  Traffic  Case,  171  U.  S.  558,  19  Sup. 
Ct.  25, 43  L.  Ed.  259,  where  the  whole  subject  was  a  year  later 
elaborately  re-argued.  I  will  not  extend  into  this  opinion 
oven  a  summary  of  these  cases.  It  is  clear  from  them  that 
restraint  of  trade  is  not  dependent  upon  any  consideration  of 


UNITED   STATES   V,   SWIFT   &   CO. 
Opinion  of  the  Court. 


245 


reasonableness  or  unreasonableness  in  the  combination 
averred ;  nor  is  it  to  be  tested  by  the  prices  that  result  from 
the  combination.  Indeed,  combination  that  leads  directly 
to  lower  prices  to  the  consumer  may,  within  the  doctrine  of 
these  cases,  even  as  against  the  consumer,  be  restraint  of 
trade;  and  combination  that  leads  directly  to  higher  prices, 
may,  as  against  the  producer  be  restraint  of  trade.  The 
statute,  thus  interpreted,  has  no  concern  with  prices,  but 
looks  solely  to  competition,  and  to  the  giving  of  competition 
full  play,  by  making  illegal  any  effort  at  restriction  upon 
competition.  Whatever  combination  has  the  direct  and  nec- 
essary effect  of  restricting  competition,  is,  within  the  meaning 
of  the  Sherman  act  as  now  interpreted,  restraint  of  trade. 

Thus  defined,  there  can  be  no  doubt  that  the  agreement  of 
the  defendants  to  refrain  from  bidding  against  each  other 
in  the  purchase  of  cattle,  is  combination  in  restraint  of  trade ; 
so  also  their  agreement  to  bid  up  prices  to  stimulate  ship- 
ments, intending  to  cease  from  bidding  when  the  shipments 
have  arrived.  The  same  result  follows  when  we  turn  to  the 
combination  of  defendants  to  fix  prices  upon,  and  restrict 
the  quantities  of  meat  shipped  to  their  agents  or  their  cus- 
tomers. Such  agreements  can  be  nothing  less  than  restric- 
tion upon  competition,  and,  therefore,  combination  in  re- 
straint of  trade;  and  thus  viewed,  the  petition,  as  an  entirety, 
makes  out  a  case  under  the  Sherman  act. 

The  demurrer  challenges  the  petition  for  multifariousness 
and  misjoinder  of  parties;  and  challenges  each  paragraph 
of  the  petition,  standing  separately,  as  insufficient  to  con- 
stitute a  case  under  the  Sherman  act.  But  the  paragraphs 
can  not  properly  be  looked  upon  as  separate  causes  of  action. 
They  relate  clearly  to  each  other,  thus  constituting  a  whole 
that  is  the  sum  of  the  parts;  and  thus  regarded,  are  free 
from  the  objections  indicated. 

It  may  be  true  that  the  way  of  enforcing  any  decree  under 
this  petition  is  beset  with  difficulties,  and  that  a  literal  en- 
forcement may  result  in  vexatious  interference  with  defend- 
ant's affairs.  But  in  the  inquiry  [535]  before  me,  I  am 
not  at  liberty  to  stop  before  such  considerations.  The  Sher- 
man act,  as  interpreted  by  the  Supreme  Court,  is  the  law  of 


246  123  FEDERAL  BEPORTER,  692. 

Syllabus. 

tb©  land,  and  to  the  law  as  it  stands  both  court  and  people 
must  yield  obedience. 

The  demurrer  is  overruled,  and  the  motion  for  preliminary 
injunction  granted. 


[602]  STATE  OF  MINNESOTA  v,  NORTHERN  SE- 
CURITIES CO.  ET  AL.« 

(Circiiti  Court,  D.  Minnesota,  Third  Division.    August  1,  1903.) 

[123  Fed.,  692.] 

Monopolies — Combinations  in  Restraint  of  Trade  and  Commerce — 
Minnesota  Statute. — The  anti-trust  law  of  Minnesota  (Laws  1899, 
p.  487,  c.  350),  making  unlaw^ful  any  contract  or  combination  in 
restraint  of  trade  or  commerce  within  the  state,  is  in  substantially 
the  same  language  as  the  Sherman  anti-trust  law  (Act  July  2,  1890, 
c.  647, 26  Stat.  209  [U.  S.  Comp.  St.  1<)01,  p.  3200] ),  and  must  receive  a 
similar  construction.  Following  the  decisions  of  the  United  States 
Supreme  Court  construing  the  latter  act,  the  Minnesota  law  applies 
to  railroads,  and  any  contract  or  arrangement  between  railroad 
companies  for  the  purpose  and  having  the  effect  of  preventing  com- 
petition by  fixing  rates  to  be  maintained  by  the  parties  is  in  viola- 
tion of  its  provisions;  but  contracts  or  combinations  which  do  not 
directly  and  necessarily  affect  transportation,  or  rates  therefor,  are 
not  in  restraint  of  trade  or  commerce,  nor  within  the  statute,  even 
though  they  may  remotely  and  indirectly  appear  to  liavo  some  prob- 
able effect  in  that  direction.^ 

Same — Railroads — Stock-Holding  Corporation. — ^A  holding  corpora- 
tion organized  by  individual  stockholders  of  two  railroad  companies, 
owning  and  operating  substantially  parallel  and  competing  lines  of 
railroad  within  the  state  of  Minnesota,  for  the  sole  purpose  of 
acquiring,  by  the  exchange  of  its  own  stock  therefor,  stock  of  the 
two  companies,  and  holding  and  voting  the  same,  but  having  no 
power  or  franchise  to  operate  a  railroad,  is  not  in  violation  of  the 
Minnesota  anti-trust  law  (Laws  1899,  p.  487,  c.  359),  which  provides 
that  "any  contract,  agreement,  arrangement,  or  conspiracy,  or  any 
combination  in  the  form  of  a  trust  or  otherwise  ♦  *  *  which  is 
in  restraint  of  trade  or  commerce  within  this  state,  *  ♦  ♦  is 
hereby  prohibited  and  declared  to  be  unlawful,"  where  the  purpose 
of  its  promoters  was  thereby  to  acquire  and  retain  in  the  same 
hands  a  majority  of  the  stock  of  one  or  both  companies,  to  insure 


« Reversed  by  Supreme  Court,  with  direction  that  the  case  be  re- 
manded to  the  State  court  (194  U.  S.,  48).    See  p.  533. 
»  Syllabus  copyrighted,  1903,  by  West  Publishing  Co. 


MINNESOTA   V,    NORTHERN   SECURITIES   CO. 


Opinion  of  the  Court 


247 


uniformity  of  policy  and  stability  of  management,  although  it  in 
fact  acquired  the  controlling  interest  in  both,  in  the  absence  of  any 
evidence  that  it  ever  exercised  its  power  to  prevent  competition 
between  the  two  roads,  or  to  interfere  in  any  manner  with  the  fixing 
of  rates  by  either  company. 

Same — Enforcement  of  Stati:te — Jurisdiction  of  Equity. — ^The 
anti-trust  law,  of  Minnesota  (Laws  1899,  p.  487,  e.  359)  imposes 
severe  penalties  for  its  violation,  but  contains  no  provision  for 
restraining  or  enjoining  violations,  and  without  such  statutory 
authority  a  court  of  equity  has  no  jurisdiction  to  enjoin  an  act 
which  constitutes  a  criminal  offense. 

Railroads — Minnesota  Statute  against  Consolidation — Stock- 
Holding  Corporation. — The  Minnesota  statute  prohibiting  the  con- 
solidation of  parallel  and  competing  lines  of  railroad  (Laws  1874,  p. 
154,  c.  29,  and  subsequent  enactments  of  the  same  tenor),  which 
provides  that  "  no  railroad  corporation  or  the  lessees,  purchasers  or 
managers  of  any  railroad  corporation  shall  consolidate  the  stock, 
property  or  franchise  of  such  corporation  [693]  with,  or  lease  or 
purchase  the  works  or  franchise  of,  or  in  any  way  control  any  other 
railroad  corporation  owning  or  having  under  its  control  a  parallel 
or  competing  line,"  does  not  apply  to  a  corporation  organized  by 
Individual  stockholders  of  two  companies,  owning  parallel  and  com- 
peting lines  of  railroad,  for  the  sole  purpose  of  acquiring,  holding, 
and  voting  stock  of  the  two  companies,  in  the  formation  of  which 
neither  company  had  any  part,  and  which  has  no  powers  or  fran- 
chise as  a  railroad  company.  Such  a  corporation  is  merely  an 
investing  stockholder,  and  not  a  railroad  corporation,  nor  a  lessee, 
purchaser,  or  manager  of  a  railroad  corporation,  within  the  terms 
of  the  statute ;  and,  although  it  may  acquire  and  own  a  majority  of 
the  stock  of  both  companies,  it  does  not  thereby  effect  a  consolida- 
tion, where  the  companies  still  maintain  their  separate  organiza- 
tions, with  separate  boards  of  directors  and  managing  officers. 


In  Equity.    On  final  hearing. 

W,  B,  Douglas^  M.  D,  Mimn,  and  Geo.  P,  Wilson,  for  com- 
plainant. 

Young  <&  Lightner,  for  Northern  Securities  Co.  and  J.  J. 
Hill. 

C.  W.  Bunn,  for  Northern  Pacific  Ry.  Co. 

M.  D.  Grover,  for  Great  Northern  Ry.  Co. 

LocHREN,  District  Judge. 

This  cause  came  on  for  final  hearing  at  St.  Paul  June  5, 
1903,  upon  the  bill,  answers,  and  testimony  taken  and  on  file. 


248 


123  FEDERAL  REPORTEB,  693. 


Opinion  of  the  Court 

That  the  cause  is  one  of  equitable  cognizance,  and  that  this 
court  has  rightful  jurisdiction  of  the  same,  was  conceded  by 
counsel  The  cause  was  fully  argued,  and  upon  full  consid- 
eration the  following  facts  appear  and  are  established : 

First.  The  defendant  the  Great  Northern  Eailway  Com- 
pany is  a  Minnesota  corporation,  which  has,  as  stated  in  the 
bill,  acquired  the  property  rights  and  franchises,  and  the 
management  and  control,  of  various  specified  railway  cor- 
porations.   The  defendant  the  Northern  Pacific  Kailway 
Company  is  a  Wisconsin  corporation,  which  filed  its  articles 
of  incorporation  in  Minnesota,  and  in  1896  purchased  and 
acquired  all  the  railroad  properties,  railway  lines,  right  of 
way,  rolling  stock,  and  franchises  of  the  earlier  Northern 
Pacific  Kailroad  Company,  and  has  also,  as  stated  in  the  bill, 
acquired  the  property  rights  and  franchises  and  the  manage- 
ment and  control  of  other  specified  railway  corporations. 
The  said  Great  Northern  and  Northern  Pacific  Companies 
now,  and  for  many  years,  severally  own,  operate,  and  main- 
tain a  main  line  of  railway  extending  from  the  cities  of 
Duluth,  St.  Paul,  and  Minneapolis  westward,  across  the 
states  of  Minnesota,  North  Dakota,  Montana,  Idaho,  and 
Washington,  to  Puget  Sound,  with  many  branches  along  the 
route  of  each,  and  that  said  two  systems  of  railroad  are,  as 
to  each  other,  parallel  and  competing  lines  of  railway,  at 
least  between  cities  and  towns  reached  or  traversed  by  the 
lines  of  both  of  said  two  railways,  among  which  are  Duluth, 
St.  Paul,  Minneapolis,  Anoka,  St.  Cloud,  Moorehead,  East 
Grand  Forks,  and  several  other  towns  in  the  state  of  Minne- 
sota, and  that  a  reasonable  degree  of  competition  for  the 
traffic  between  places  so  situated  on  both  said  lines  of  railway 
has  existed  in  the  past  yeai*s. 

Second.  The  state  of  Minnesota  has  heretofore  made  large 
grants  of  its  swamp  lands  in  aid  of  the  construction  of  por- 
tions of  the  railways  of  each  of  said  companies,  and,  in  the 
support  of  its  various  state  institutions-educational,  elee- 
mosynary, and  otherwise—transports  an-  [694]  nually  large 
quantities  of  goods,  stores,  and  supplies  upon  said  two  rail- 
roads; and  large  quantities  of  wheat  and  other  products 
owned  and  produced  by  citizens  and  inhabitants  of  Minne- 
sota are  annually  carried  over  said  railroads  from  competi- 


MINNESOTA   V.    NORTHERN   SECURITIES   CO. 
Opinion  of  the  Court. 


249 


tive  places  in  the  western  part  of  the  state  to  Duluth,  St. 
Paul,  and  Minneapolis. 

Third.  In  1874  the  Legislature  of  the  state  of  Minnesota 
enacted  a  statute  known  as  chapter  29,  p.  154,  of  the  General 
Laws  of  1874,  as  follows : 

"Section  1.  No  railroad  corporation,  or  the  lessees,  purchaser  or 
manager  of  any  railroad  corporation,  shall  consolidate  the  stock, 
property  or  franchise  of  such  corporation  with,  or  lease  or  purchase 
the  works  or  franchise  of,  or  in  any  way  contol  any  other  railroad 
corporation  owning  or  having  under  its  control  a  parallel  or  compet- 
ing line;  nor  shall  any  officer  of  such  railroad  corporation  act  as  an 
officer  of  any  other  railroad  corporation  owning  or  having  the  control 
of  a  parallel  or  competing  line,  and  the  question  whether  railroads 
are  parallel  or  competing  lines  shall,  when  demanded  by  the  party 
complainant,  be  decided  by  a  jury  as  in  other  civil  cases." 

In  1881  the  Legislature  of  Minnesota  enacted  a  statute 
(Laws  1881,  p.  109,  c.  94)  authorizing  and  empowering  any 
railroad  corporation,  domestic  or  foreign,  to  consolidate  its 
stock  and  franchises  with,  or  lease  or  purchase  or  in  any 
way  become  owner  of  or  control  the  stock  of  any  other  rail- 
road corporation  when  their  respective  railroads  can  be 
connected  and  operated  together  so  as  to  constitute  a  contimi- 
ous  main  line,  with  or  without  branches.  But  the  same 
statute  reiterated  the  prohibition  against  the  consolidation  of 
railroads  having  parallel  and  competing  lines,  and  by  a  sub- 
sequent amendment  of  this  statute  (Laws  1899,  p.  253,  c. 
229)  the  same  prohibition  was  again  enacted  almost  in  the 
language  of  the  act  of  1874,  above  quoted.  In  1899  the 
liCgislature  of  Minnesota  also  enacted  a  statute  known  as  the 
"Anti-trust  law  "  (Laws  1899,  p.  487,  c.  359) ,  which  provided : 

"  Section  1.  Any  contract,  agreement,  arrangement,  or  conspiracy, 
or  any  combination  in  the  form  of  a  trust  or  otherwise,  hereafter 
entered  into  which  is  in  restraint  of  trade  or  commerce  within  this 
state,  or  in  restraint  of  trade  or  commerce  between  any  of  the 
people  of  this  state  and  any  of  the  people  of  any  other  state  or 
country,    *    ♦    *    is  hereby  prohibited  and  declared  to  be  unlawful." 

Severe  penalties  are  denounced  against  all  who  shall  vio- 
late the  act,  including  the  forfeiture  of  the  charter  of  any 
offending  corporation.  And  it  is  made  the  duty  of  the  At- 
torney General  to  institute,  in  the  name  of  the  state,  proceed- 
ings in  any  court  of  competent  jurisdiction  to  recover  the 
penalties  imposed,  and  also,  in  the  case  of  offending  corpo- 
rations, to  enforce  the  forfeiture  of  their  charters. 

Fourth.  The  railroads  both  of  the  Great  Northern  and 


250 


123  FEDERAL  REPOBTER,   694. 


C^lnion  of  tlie  CJonrt 

northern  Pacific  Companies  between  the  Missouri  river  and 
l^uget  Sound  pass  through  long  stretches  of  mountainous 
and  unsettled  or  sparcely  settled  country,  which  supplies 
comparatively  little  traffic  or  business  to  these  railroads. 
But  the  forests  near  Puget  Sound  produce  a  great  supply 
of  lumber,  readily  marketable  east  of  the  Missouri  river,  and 
in  Iowa,  Illinois,  Nebraska,  and  Missouri.    To  transport  it 
over  these  railroads  (which  in  the  direction  of  the  principal 
markets  for  the  lumber  ended  at  St.  Paul)  at  rates  which 
would  make  the  business  practicable,  it  was  necessary  that 
west-bound  freight  should  be  se-  [605]  cured  for  the  cars 
which    would    bring    the    lumber    eastward.     The    Great 
Northern  Company  and  Northern  Pacific  Company  were 
alike  interested  in  this  business,  and,  acting  in  harmony,  in 
the  spring  of  1<>01,  purchased  substantially  all  the  shares  of 
the  Chicago,  Burlington  &  Quincy  Railway  Company  (each 
company  buying  and  owning  one-half),  at  $200  per  share, 
amounting  to  $108,000,000,  par  value,  the  cost  being  about 
$216,000,000;  paying  for  the  same  in  the  joint  4  per  cent 
Imnds  of  the  two  purchasing  companies.    As  the  Burlington 
system  so  purchased  has  a  railway  extending  from  Minne- 
apolis and  St.  Paul  to  Chicago,  and  railways  covering  large 
portions    of    the    states   of    Illinois,    Towa,    Missouri,    and 
Nebraska,  and  connecting  again  with  the  Northern  Pacific  at 
Billings,  in  Montana,  it,  though  still  managed  by  its  own 
directors  and  officers,  affords  to  the  two  purchasing  railroads 
the  needed  mutual  extension  to  transport  their  trains  of  lum- 
l>er  to  desirable  markets,  and  to  bring  return  traffic,  in  coal, 
iron,  steel,  cotton,  and  other  commodities,  needed  on  the  route 
of  these  two  railroads  and  on  the  Pacific  Coast,  and  in  the 
trade  growing  up  Iietween  Pugot  Sound  and  Alaska,  China, 
and  Japan. 

The  IFnion  Pacific  Railway  extends  from  Omaha  to  Ogden, 
and,  by  its  connection  with  the  Central  or  Southern  Pacific, 
to  San  Francisco,  with  the  branches  and  connections  which 
reach  points  on  the  Great  Northern  and  Northern  Pacific 
in  Montana  and  Washington.  As  the  Burlington  system 
connects  with  the  Union  Pacific  at  Omaha  and  elsewhere 
in  Nebraska,  and  extends  east,  north,  and  south  from  Omaha, 
much  of  the  freight  gathered  by  it,  bound  for  the  Pacific 


MINNESOTA   V.    NORTHERN    SECURITIES   CO. 


251 


Opinion  of  the  Court. 

Coast,  passed  over  the  Union  Pacific.  Hence  the  purchase 
of  the  Burlington  system  by  the  Great  Northern  and  North- 
em  Pacific,  which  was  completed  about  April  1,  1901,  led 
the  managers  of  the  Union  Pacific  Company  to  fear  a  diver- 
sion of  this  traffic  from  the  railwav  of  the  Union  Pacific  to 
the  railways  of  the  two  purchasing  companies ;  and  Edward 
H.  Harriman,  representing  the  Union  Pacific  Company,  ap- 
plied to  James  J.  Hill  and  J.  Pierpont  Morgan,  who  respec- 
tively represented  the  Great  Northern  and  Northern  Pacific 
Companies  in  such  purchase,  to  permit  the  Union  Pacific  Com- 
pany to  join  and  share  with  them  in  the  purchase  of  the  Bur- 
lington system,  but  his  application  was  declined.  There- 
upon the  said  Harriman  and  others  acting  in  the  interest  of 
the  Union  Pacific  Company  began  rapidly  and  quietly  to 
purchase  the  stock  of  the  Northern  Pacific  Company,  intend- 
ing thus  to  acquire  a  majority  of  that  stock,  and  the  control 
of  that  company,  with  its  half  interest  in  the  Burlington 
system.  The  common  stock  of  the  Northern  Pacific  Com- 
pany was  $80,000,000,  and  it  had  issued  and  had  outstanding 
preferred  stock  to  the  amount  of  $75,000,000,  which  had  the 
same  voting  power  as  the  common  stock,  but  which  the  com- 
pany, by  the  action  of  its  directors,  might  pay  off  at  par, 
and  thus  retire,  on  the  1st  dav  of  January.  190*2,  or  on  the 
1st  day  of  any  succeeding  year.  During  the  month  of  April 
and  first  week  in  May.  1901,  the  said  Harriman  and  others 
acting  with  him  in  the  interest  of  the  Union  Pacific  Com- 
pany purchased  and  held  a  little  more  than  $37,000,000  of 
the  common  stock,  and  a  little  more  than  $41,000,000  of  the 
preferred  stock,  of  the  Northern  Pacific  Company;  being 
more  than  $78,000,000  in  all,  and  more  than  a  majority  of 
the  aggregate  [696]  of  the  common  and  preferred  stock  of 
that  company.  But  in  the  first  week  of  May,  1901,  J.  P. 
Morgan  &  Co.,  becoming  apprehensive,  purchased  $15,000,000 
of  the  coftimoa  stock  of  the  Northern  Pacific  Company, 
which,  with  their  previous  holding  of  that  stock,  and  those 
of  Mr.  Hill  and  other  stockholders  of  the  Northern  Pacific 
Company,  who  in  this  matter  acted  with  Mr.  Morgan,  gave 
the  latter  the  control  of  more  than  $41,000,000  of  such  com- 
mon stock;  being  more  than  a  majority  of  that  stock.  As 
it  was  known  that  Mr.  Morgan  and  his  associates  would 


252 


123  FEDEBAL   REPORTER,  696, 


Opinion  of  the  Court. 

insist  upon  the  payment  and  retirement  of  the  preferred 
stock  on  January  1,  1902,  and  that  the  board  of  directors 
of  the  Northern  Pacific  Company  would  take  action  to  that 
end,  Mr.  Harriman  and  his  associates  abandoned  their  at- 
tempt to  obtain  the  control  of  that  company. 

For  many  years,  including  the  period  of  the  construction 
of  the  Great  Northern  Company's  railroad  from  the  state  of 
Minnesota  to  Puget  Sound,  and  its  branches  and  extensions 
in  other  directions,  Mr.  Hill,  with  the  acquiescence  of  all  the 
stockholders,  had  been  the  president  and  active  manager  of 
that  company.  The  stock  of  that  company  aggregated 
$125,000,000,  and  he,  with  a  small  number  of  other  holders 
of  large  amounts  of  that  stock,  had  for  some  time  considered 
the  project  of  uniting  their  holdings  of  stock  by  transferring 
the  same  to  some  corporation  to  whom  any  others  of  the 
holders  of  such  stock  might  transfer  their  holdings,  and  thus 
apsure  permanency  to  the  management  and  policy  of  the 
company. 

The  attempt  in  the  interest  of  the  Union  Pacific  Company 
to  purchase  a  majority  of  the  stock  of  the  Northern  Pacific 
Company,  and  obtain  the  control  of  that  company,  and 
through  it  of  the  Burlington  system,  alarmed  the  managers 
and  stockholders  of  the  Northern  Pacific  Company,  and  led 
them  to  consider  the  feasibility  of  forming  a  holding  com- 
pany which  should  purchase  or  secure  in  exchange  for  its 
own  stock  more  than  a  majority  of  the  stock  of  the  Northern 
Pacific  Company,  and  hold  the  same  secure  against  any  raid 
in  the  future  in  the  interest  of  a  rival  or  hostile  railroad. 
Mr.  Hill  and  the  stockholders  referred  to  of  the  Great  North- 
em  Company  were  likewise  alarmed  by  such  attempt  in  the 
interest  of  the  Union  Pacific  Company  to  obtain  control  of 
the  Northern  Pacific,  and  through  it  of  the  Burlington  sys- 
tem—a result  which  they  apprehended  would  injuriously 
affect  the  property  of  the  Great  Northern  Railroad,  and  the 
country  traversed  by  it  and  by  the  Northern  Pacific  Rail- 
road ;  and,  in  the  project  of  establishing  a  holding  company 
to  purchase  and  hold  a  majority  of  the  stock  of  the  Northern 
Pacific  Company,  they  joined  for  the  purpose  of  selling  to 
such  holding  company,  and  placing  therein  their  own  stock 
in  the  Great  Northern  Company,  and  permitting  all  other 


MINNESOTA   V.    NORTHERN    SECURITIES   CO. 


Opinion  of  the  Court. 


253 


stockholders  of  the  same  company  who  might  so  choose  to 
do  likewise,  and  thus  accomplish  their  purpose  above  stated 
of  giving  permanency  to  the  management  and  policy  of  the 
Great  Northern  Company. 

The  incorporation  of  the  Northern  Securities  Company 
under  the  general  laws  of  New  Jersey",  and  with  a  capital 
of  $400,000,000,  was  completed  November  13,  1901.  Neither 
the  Great  Northern  Company  nor  the  Northern  Pacific  Com- 
pany, by  any  act  of  its  directors,  or  any  [697]  corporate  act, 
had  anything  to  do  with  the  formation  or  subsequent  action 
of  the  Northern  Securities  Company;  but  Mr.  Morgan, 
Mr.  Hill,  and  other  stockholders  of  the  Northern  Pacific 
Company  and  Great  Northern  Company  were  individually 
the  promoters  who  caused  and  procured  the  incorporation 
of  the  Northern  Securities  Company  for  the  purposes  above 
stated.  The  Northern  Securities  Company,  when  formed, 
offered  and  agreed  to  purchase  and  to  pay  for  in  its  own 
stock  at  par  ($100  per  share)  any  stock  of  the  Northern 
Pacific  Company  at  the  price  of  $115  per  share,  and  any 
stock  of  the  Great  Northern  Company  at  the  price  of  $180 
per  share;  and  large  amounts  of  the  stock  of  said  two  rail- 
roads were,  at  such  rates,  and  so  paid  for,  purchased  from 
said  promoters  and  other  stockholders  of  said  two  railroad 
companies  by  said  Northern  Securities  Company.  About  the 
same  time  Mr.  Harriman  and  his  associates  sold  to  J.  P. 
Morgan  &  Co.  all  the  Northern  Pacific  Company  stock  which 
they  had  purchased  as  aforesaid — ^both  common  and  pre- 
ferred— amounting  to  more  than  $78,000,000,  and  said  J.  P. 
Morgan  &  Co.  at  the  same  time  sold  all  the  same  stock  to 
the  Northern  Securities  Company,  who  paid  the  considera- 
tion therefor  directly  to  Mr.  Harriman  and  his  associates; 
a  part  of  such  consideration  being  something  more  than 
$82,000,000  of  the  stock  of  said  Northern  Securities  Company. 
That  purchase  was  completed  on  November  18,  1901.  On 
January  1,  1902,  the  Northern  Pacific  Company  paid  off  and 
retired  its  preferred  stock,  having  raised  the  money  for  that 
purpose  by  an  issue  of  bonds,  which  were  made  convertible 
and  were  converted  into  common  stock  of  that  company. 
Other  stockholders  of  each  of  said  two  railroad  companies  sold 
their  stock  to  the  Northern  Securities  Company,  receiving 


9^ 


123   FEDER.4L  BEPORTER,   697. 
Opinion  of  the  Court 


in  payment  or  exchange  therefor,  at  the  rates  aforesaid, 
stock  of  the  last-named  company,  so  that  by  December  1, 
1901,  said  Northern  Securities  Company  had  become  the 
owner  of  considerable  more  than  a  majority  of  the  stock  of 
the  Northern  Pacific  Company,  and  a  large  amount,  but 
less  than  a  majority,  of  the  stock  of  the  Great  Northern 
Company.  Similar  purchases  from  stockholders  continued, 
and  at  the  time  of  the  commencement  of  this  suit  the  North- 
em  Securities  Company  had  become,  and  still  is,  the  owner 
of  about  %  per  cent,  of  all  the  stock  of  the  Northern  Pacific 
Company,  and  of  about  76  per  cent,  of  all  the  stock  of  the 
Great  Northern  Company. 

CONCLUSIONS  OF  JJkW, 

1.  It  is  obvious  from  the  foregoing  facts  that  the  Northern 
Securities  Company  was  incorporated  with  the  purpose  and 
intent  on  the  part  of  its  promoters  that  it  should  acquire  by 
purchase,  by  exchange  for  its  stock,  and  should  own  and 
control,  a  considerable  majority  of  all  the  stock  of  the  North- 
ern Pacific  Company,  and  thus  secure  that  company  against 
the  danger  of  any  future  raid  upon  its  stock  which  might 
place  its  management  and  the  resulting  control  of  the  Bur- 
lington system  in  the  power  of  any  rival  railroad  corpora- 
tion, whose  interests  might  be  hostile  to  the  development 
and  property  of  the  Northern  Pacific  and  Great  Northern 
Companies,  and  their  seaboard  terminals,  and  of  the  region 
of  country  traversed  by  their  railroad  systems.  This  was 
the  avowed  purpose  of  Mr.  Morgan  and  his  associates  who 
[008]  acted  with  him  in  this  matter,  including  Mr.  Hill  and 
other  large  stockholders  of  the  Great  Northern  Company, 
who  also  held  large  amounts  of  stock  in  the  Northern  Pacific 
Company,  and  were  apprehensive  that  any  hostile  control  of 
the  Northern  Pacific  Company  which  might  sacrifice  its  in- 
terests to  a  rival  would  be  disastrous  to  the  development 
and  prosperity  of  the  Great  Northern  Company.  And  at 
the  very  time  when  the  Northern  Securities  Company  was 
formed  and  incorporated,  by  means  of  the  large  holdings  of 
Northern  Pacific  Company  stock  by  himself  and  his  associ- 
ates acting  with  him,  and  by  the  then  purchase  by  J.  P. 
Morgan  &  Co.  of  the  Harriman  holding  of  such  stock,  said 


MINNESOTA   V,    NORTHERN    SECURITIES   CO. 


255 


Opinion  of  the  Court. 

J.  P.  Morgan  was  able  at  once  to  transfer  and  have  trans- 
ferred to  the  Northern  Securities  Company  a  large  and  con- 
trolling majority  of  the  stock  of  the  Northern  Pacific  Com- 
pany, as  was  done;  thereby  accomplishing,  as  was  believed, 
the  purpose  of  securing  that  stock  against  hostile  raids  in 
the  future. 

With  respect  to  the  stock  of  the  Great  Northern  Company, 
the  evidence  shows  that,  when  the  Northern  Securities  Com- 
pany was  incorporated,  it  was  the  purpose  and  intent  of  Mr. 
Hill  and  other  large  stockholders  of  the  Great  Northern 
Company  who  acted  with  him  to  sell  and  dispose  of  to  the 
Northern  Securities  Company,  for  its  stock,  their  several 
holdings  of  stock  in  the  Great  Northern  Company,  aggre- 
gating then  about  $35,000,000,  to  the  end  that  such  large 
amounts  of  Great  Northern  Company's  stock  should  be  kept 
together,  and,  as  it  was  hoped,  aid  in  giving  permanency  to 
the  management  and  policy  which  had  controlled  and  was 
controlling  the  railway  and  development  of  that  company. 
And  it  was  their  purpose  that  all  other  stockholders  of  the 
Great  Northern  Company  who  might  choose  to  do  so  should 
be  permitted  to  sell  or  exchange  their  stock  of  that  company 
for  stock  of  the  Northern  Securities  Company  on  the  same 
terms,  and  it  was  hoped  and  expected  that  many  would  do 
so.  But  the  said  Hill  and  his  associates  had  no  power  or 
control  which  could  enable  them  to  transfer  or  cause  to  be 
transferred  to  the  Northern  Securities  Company  so  much  as 
one-third  of  the  stock  of  the  Great  Northern  Company.  The 
evidence  therefore  fails  to  show  that  the  Northern  Securities 
Company  was  formed  for  the  purpose  of  acquiring  and  hold- 
ing a  majority  of  the  stock  of  the  Great  Northern  Company, 
as  well  as  that  of  the  Northern  Pacific  Company,  although 
that  result  followed  soon  after,  and  may  have  been  desired 
and  anticipated. 

2.  One  question  in  this  cause  is  w^hether  the  acquisition  by 
the  Northern  Securities  Company,  in  the  manner  above 
stated,  of  a  majority  of  the  capital  stock  of  both  the  Great 
Northern  and  Northern  Pacific  Companies,  which  own  and 
operate  parallel  and  competing  railroads  across  the  state  of 
Minnesota,  and  its  ownership  of  such  stock,  is  a  violation  of 
the  Minnesota  anti-trust  law  (Laws  Minn.  1889,  p.  487,  c. 


256 


123  FEDERAL  REPORTER,   698. 


MINNESOTA   V.    NORTHERN   SECURITIES   CO. 


257 


Opinion  of  the  Court 

359),  which  provides,  as  above  stated,  that  "any  contract, 
agreement,  arrangement,  or  conspiracy,  or  any  combination 
in  the  form  of  a  trust  or  otherwise  hereafter  entered  into 
which  is  in  restraint  of  trade  or  commerce  within  this  state 
*  *  •  is  hereby  prohibited  and  declared  to  be  unlawful." 
Language  in  the  act  extending  these  provisions  to  interstate 
commerce  is  here  omitted  and  disregarded,  and  the  act  con- 
sidered valid  as  to  trade  and  commerce  within  the  state- 
|fe.M|  that  being  a  proper  subject  for  state  legislation, 
though  carried  on  by  the  same  instrumentalities  used  in 
interstate  commerce.  The  language  just  quoted  is  evidently 
taken  from  the  act  of  Congress  of  July  2,  1890,  c.  647,  26 
Stat.  209  [U.  S.  Comp.  St.  1901,  p.  3200],  known  as  the 
Sherman  anti-trust  act,  which  has  received  consideration  by 
the  Supreme  Court  of  the  United  States  in  several  cases. 

In  United  States  v.  E.  C.  Knight  Company,  156  U.  S.  1, 
15  Sup.  Ct.  249,  39  L.  Ed.  325,  a  New  Jersey  corporation^ 
already  in  control  of  most  of  the  manufactories  of  refined 
sugar  in  the  United  States,  purchased  with  shares  of  its 
owii  stock  the  stock  of  four  Philadelphia  refineries,  and  ac- 
quired nearly  complete  control  of  that  business  in  the  coun- 
try.   It  was  charged  that  the  contracts  under  which  these 
purchases  were  made  constituted  combinations  in  restraint 
of  trade,  and  that  by  entering  into  them  the  defendants  com- 
bined and  conspired  to  restrain  the  trade  and  commerce 
m  refined  sugar  among  the  several  states  and  with  foreign 
nations.    Held,  that  though  the  contracts  of  purchase  of 
these  refineries  would  result  in  a  monopoly  in  the  manufac- 
ture of  refined  sugar,  an  article  certain  to  enter  into  com- 
merce, yet  the  manufacture  of  the  article  was  no  part  of 
commerce,  and  therefore  the  contract  had  no  direct  relation 
to  commerce,  even  though  to  dispose  of  the  product  the  in- 
strumentality of  commerce  would  be  necessarily  invoked. 
The  product  would  not  enter  into  commerce  till  transporta- 
tion began,  and  the  contracts  had  no  reference  to  transpor- 
tation. 

In  United  States  v.  Trans-Missouri  Freight  Association 
166  U.  S.  290,  17  Sup.  Ct.  540,  41  L.  Ed.  1007,  it  was  held 
that  the  Sherman  anti-trust  act  applies  to  railroads,  and 
prohibits  all  contracts  in  restraint  of  trade,  whether  reason- 


Opinion  of  the  Court. 

able  or  unreasonable,  and  also  that  articles  of  agreement  by 
which  some  17  railroad  companies  formed  that  association, 
in  which  each  railroad  company  had  a  representative,  em- 
powering the  association  to  fix  reasonable  rates  for  the 
transportation  of  freight  on  said  railroads  (many  of  whom 
were  competitive),  and  change  such  rates  on  proper  occasion, 
and  binding  the  railroad  companies,  under  penalties,  to  con- 
form their  charges  for  transportation  to  the  rates  so  to  be 
established,  was  a  contract  in  violation  of  that  anti-trust  act. 
Plainly,  the  direct  and  only  object  of  this  agreement  was  its 
provision  for  the  fixing,  controlling,  and  maintaining  rates 
for  the  transportation  of  freight  over  these  railroads. 

United  States  v.  Joint  Traffic  Association,  171  U.  S.  505, 
19  Sup.  Ct.  25,  43  L.  Ed.  259,  was  like  the  case  last  cited. 
The  association  was  formed  between  31  railroad  companies, 
engaged  in  transportation  between  Chicago  and  the  Atlantic 
Coast.  The  association  formed  of  representatives  of  the 
companies  was  given  control  over  competitive  transportation 
of  freight  and  passengers,  with  power  to  fix  rates,  fares, 
and  charges,  and  change  the  same  from  time  to  time;  and 
to  these  rates  the  railroad  companies  bound  themselves  to 
conform.  The  principal  difterence  between  this  case  and  the 
one  last  mentioned  was  that  by  the  terms  of  this  agreement 
the  association  was  to  cooperate  with  the  interstate  com- 
merce commission,  to  secure  stability  and  uniformity  in  the 
rates,  fares,  and  charges  established.  It  was  held  that  this 
agreement  also  violated  the  an ti- trust  act. 

[7001  In  Hopkins  v.  United  States,  171  U.  S.  578,  19  Sup. 
Ct.  40,  43  L.  Ed.  290,  the  'members  of  the  Kansas  City  Live 
Stock  Exchange  did  business  at  the  Kansas  City  Stockyards 
located  partly  in  Kansas  City,  Kan.,  and  partly  in  Kansas 
City,  Mo.,  dealing  on  their  own  account,  or  as  commission 
merchants  in  live  stock  shipped  from  surrounding  states  and 
territories,  to  the  owners  of  which  they  often  made  advances 
before  shipment.  They  were  bound  by  articles  of  associa- 
tion and  by-laws,  which,  among  other  things,  fixed  the  mini- 
mum rates  for  commissions,  forbade  the  giving  of  informa- 
tion of  the  condition  of  the  market,  except  under  specified 
circumstances,  and  forbade  all  dealing  with  any  person  who 
21220— VOL  2—07  m 17 


/ 


258 


123   FEDERAL   REPORTER,   700. 


Opinion  of  the  Coui-t. 

violated  the  rules  of  the  exchange,  or  with  an  expelled 
or  suspended  member.  Held,  that  the  business  so  trans- 
acted was  not  commerce,  although  it  furnished  aids  and 
facilities  to  interstate  commerce.     The  court  said : 

"The  coiitniet  condemned  by  the  statute  is  one  whose  direct  and 
immetliate  effect  is  a  restraint  upon  tlmt  kind  of  trade  or  commerce 
which  is  interstate.  Chnr^'es  for  such  facilities  as  we  have  already 
mentioned  are  not  a  restraint  upon  that  trade,  although  the  total 
cost  of  marketing  a  subject  thereof  may  be  thereby  increased.  Charges 
for  facilities  furnished  have  been  held  not  a  regulation  of  commerce, 
even  when  made  for  services  rendered  or  as  c»mi)ensation  for  bene- 
lits  conferred.  Sands  v.  Manistee  River  Improvement  Company,  123 
U.  S.  288  [8  Sup.  Ct  118,  31  L.  Ed.  149] ;  Monongahela  Navigation 
Co,  V.  IJfiited  States,  148  U.  S.  312,  329,  330  [13  Sup.  Ct.  G22/37  L. 
M.  4ti3] ;  Kentucky  d  Intfiana  Bridge  Co.  v.  Lomsville,  etc..  Rail- 
rm4  (C.  C.)  37  Fed.  5U7  12  L.  R.  A.  289]." 

In  Andermn  v.  United  States,  ITl  IJ.  S.  604,  19  Sup.  Ct. 
50,  43  L,  Ed.  300,  the  facts  were  similar  to  tliose  in  the  Hop- 
kins Case,  last  cited.  The  holding  of  the  court  is  expressed 
in  the  syllabus  as  follows: 

"  That  where  tlie  subje<'t-matter  of  the  agreeminit  does  not  directly 
relate  to  and  act  uiKin  and  embrace  interstate  commerce,  and  where 
the  undisimte<l  facts  clearly  show  that  the  purpose  of  the  agreement 
was  not  to  regulate,  obstruct,  or  restrain  that  connuerce.  I)ut  was 
entereil  into  with  the  object  of  proiierly  and  fairly  regulating  the 
transaction  of  tlie  business  in  which  the  parties  to  the  jigreement 
were  engaged,  such  agi-eement  will  be  upheld,  as  not  within  the 
statute,  where  it  can  be  seen  that  the  character  and  terms  of  the 
agieement  are  well  calculated  to  attain  the  purpose  for  which  it  was 
formed,  and  where  the  effect  of  its  formation  and  enforcement  upon 
interstate  trade  or  commerce  is  in  any  event  but  indirect  and  acci- 
dental, and  not  ite  purpose  and  ol>ject" 

In  Addystm  Pipe  c£'  Steel  Company  v.  United  States,  175 
U.  S.  211,  20  Sup.  Ct.  %,  44  L.  Ed.  136,  six  corporations  en- 
gaged in  the  manufacture,  sale,  and  transportation  of  iron 
pipe,  and  being  located  in  the  states  of  Ohio,  Kentucky, 
Tennessee,  and  Alabama,  entered  into  a  detailed  agreement, 
parceling  among  themselves  the  business  of  a  large  number 
of  cities  in  Western  and  Southern  states,  with  the  purpose 
and  intent  of  largely  increasing  the  price  at  which  iron 
pipe  should  lie  furnished  to  such  cities.  When  any  such 
city  sought  competitive  bids  for  iron  pipe,  the  corporation 
entitled  under  this  secret  agreement  to  furnish  such  pipe 
would  make  its  bid  much  above  a  fair  market  price,  and  the 
other  companies  would  present  still  higher  bids,  to  give  the 
appearance  of  competition.     The  company  intended  would 


MINNESOTA    V.    NORTHERN    SECURITIES   CO. 
Opinion  of  the  Court. 


259 


thus  get  the  contract,  but,  under  the  same  agreement,  would 
have  to  pay  a  large  bonus,  to  be  divided  among  the  other 
companies.  Although  these  corporations  were  manufacturers 
of  iron  pipe,  thij  par-  [701]  ticular  agreement  had  reference 
to  the  sale  and  delivery  of  such  pipe  to  municipal  customers, 
its  intended  and  direct  eifect  being  to  exclude  competition 
and  raise  the  price  of  the  conmiodity.     The  court  said  : 

"  Where  the  contract  is  for  the  sale  of  the  article  and  for  its 
deliveiy  in  another  state  the  transaction  is  one  of  interstate  commerce, 
although  the  vendor  may  also  have  agreed  to  manufacture  it  in  order 
to  fulfill  his  contract  of  sale.  In  such  case  a  combination  of  this 
character  would  be  properly  called  a  combination  in  restraint  of 
interstate  commerce,  and  not  one  relating  only  to  manufacture." 

The  proper  construction  of  the  Sherman  anti-trust  act,  so 
far  as  it  relates  to  railroad  transportation,  as  deduced  from 
these  decisions  of  the  Supreme  Court  appears  to  be  this: 
(a)  The  act  «pplies  to  railroads.  And  all  contracts  made 
between  railroad  companies  for  the  purpose  and  having  the 
effect  of  preventing  competition  by  fixing  rates,  or  empower- 
ing persons  to  fix  them,  and  agreeing  to  conform  to  them  when 
fixed,  are  in  restraint  of  trade,  and  within  the  provisions 
of  the  statute,  whether  the  rates  so  fixed  are  reasonable  or 
unreasonable,  (b)  That  contracts  between  divers  manu- 
facturers of  a  commodity,  respecting  their  sales  of  that  com- 
modity, to  be  delivered  by  them  outside  the  state,  having 
the  direct  effect  of  stifling  competition  and  raising  the  cost 
of  the  article  to  the  purchaser,  are  also  in  restraint  of  trade, 
and  within  the  statute,  (c)  That  contracts  which  do  not 
directly  and  necessarily  affect  transportation,  or  rates  there- 
for, are  not  in  restraint  of  trade,  or  within  the  statute,  even 
though  they  may  remotely  and  indirectly  appear  to  have 
some  probable  effect  in  that  direction. 

The  state  anti-trust  act  must  have  the  same  construction 
in  respect  to  traffic  on  railroads  within  the  state. 

Neither  the  Great  Northern  Company  nor  thy  Northern 
Pacific  Company  were  parties  to,  or  in  their  corporate  capac- 
ity had  anything  to  do  with,  the  formation  of  the  Northern 
Securities  Company,  nor  of  any  of  the  contracts  or  proceed- 
ings complained  of  in  the  bill.  The  Northern  Securities 
Company  is  merely  an  invester  in  and  owner  of  a  majority 
of  the  stock  of  each  of  these  two  railroad  campanies.     It 


260 


123   FEDERAL  REPORTEB,   70i. 


Opinion  of  the  Court 

is  not  a  railroad  company,  and  has  no  franchise  or  power  to 
manage  or  operate  or  direct  the  management  or  operation  of 
either  railroad  in  respect  to  rates  or  charges  for  transporta- 
tion, or  otherwise;  and  there  is  no  scintilla  of  evidence  that  it 
has  sought  to  control  or  interfere  in  respect  to  any  of  these 
matters.  It  has  therefore  done  no  act  and  made  no  contract 
in  restraint  of  trade  or  commerce.  Owning  now  a  majority 
of  the  stock  of  each  of  these  railroad  companies,  it  has  the 
power,  by  voting  its  stock,  to  elect  the  board  of  directors— 
the  governing  body— of  each  of  these  railroad  companies. 
But  the  board  of  directors  of  each  is  a  different  body  from 
the  board  of  directors  of  the  other,  as  no  director  of  the 
Great  Northern  Company  can  be  a  director  of  the  Northern 
Pacific  Company.  The  directors  of  each  railroad  company 
will  appoint  its  managing  and  other  officers,  and  control 
its  business  and  policy.  Presumably,  they  will  seek,  in 
lawful  ways  only,  to  increase  the  business  and  prosperity 
of  the  railroad  which  they,  as  directors,  represent. 

The  action  of  the  defendant  Hill  in  promoting  the  forma- 
tion of  the  Northern  Securities  Company,  under  the  circum- 
stances and  for  the  [702]  purposes  which  the  evidence 
discloses,  and  investing  in  its  stock  by  the  sale  to  it  of  his 
stock  in  the  two  railroad  companies,  involved  no  act  or 
-contract  in  restraint  of  trade  or  commerce,  or  affecting  trans- 
portation or  rates,  more  than  any  ordinary  transfer  of  rail- 
road stock  from  one  person  to  another. 

That  my  judgment,  after  most  careful  consideration  of  the 
facts  and  the  law  applicable  thereto,  as  construed  by  the 
highest  court,  leads  me  to  the  conclusion  that  none  of  the 
defendants  have  violated  the  Minnesota  anti-trust  act— a 
conclusion  apparently  contrary  to  that  reached  by  the  emi- 
nent judges  who,  in  this  court,  recently  decided  the  case  of 
United  States  v.  Northern  Securities  Company^  120  Fed.  721 
:and  who  will  doubtless  in  another  court  review  this  cause 
upon  appeal— has  necessarily  caused  hesitation  and  careful 
examination.  But  the  rights  of  litigants  and  my  own  sense 
of  duty  alike  require  that  my  own  deliberate  judgment, 
guided  by  my  understanding  of  authoritative  expositions  of 
the  law,  be  given  in  all  causes  tried  before  me. 
The  decision  of  the  case  last  cited,  as  I  read  it  and  under- 


MINNESOTA   V.    NORTHERN    SECURITIES   CO. 
Opinion  of  the  Court. 


2f^l 


\ 


stand  it,  docs  not  specif}^  or  point  out  any  contract,  agi-ee- 
ment,  or  act  on  the  part  of  the  defendants,  or  any  of  them, 
which  is  directly  in  restraint  of  trade  or  commerce,  or  which 
has  any  direct  reference  to  trade,  commerce,  transportation, 
or  rates,  nor  even  any  threat  or  avowed  purpose  on  the  part 
of  any  defendant  to  do  any  such  act,  or  enter  into  any  such 
contract  or  agreement.  But  it  is  argued  that,  because  the 
Northern  Securities  Company  has  become  the  owner  of  a 
large  majority  of  the  stock  of  each  of  the  two  railroad  cor- 
porations, it  will  be  for  its  interest  to  suppress  competition 
between  them,  by  causing  the  two  boards  of  directors  of  these 
railroad  corporations,  Avhich  it  can  fill  by  election,  to  enter 
into  arrangements  or  agreements  in  restraint  of  trade,  which 
will  suppress  competition;  and  as  a  corollary  to  this  reason- 
ing (or  conjecture)  the  decision  holds  that  the  formation  of 
the  Northern  Securities  Company,  and  purchase  by  it  of  a 
majority  of  the  stock  of  each  of  these  railroad  companies, 
are  acts  or  contracts  in  restraint  of  trade,  though  of  them- 
selves, and  without  further  action  (not  yet  taken,  and  per- 
haps never  to  be  taken)  by  the  directors  of  the  two  railroad 
companies,  the  formation  of  the  Northern  Securities  Com- 
pany and  its  holdings  of  stock  has  and  can  have  nothing  to 
do,  directly  or  indirectly,  with  trade,  commerce,  transpor- 
tation, or  rates. 

To  epitomize  this  decision:  It  is  held  that  it  will  be  for 
the  interest  of  the  Northern  Securities  Company  to  restrain 
trade  b}^  supj)ressing  competition  between  these  two  railroad 
companies,  and  that  by  coercing  or  persuading  the  two  boards 
of  directors,  whom  it  has  the  power  to  elect,  it  will  certainly 
cause  them  to  commit  highly  penal  offenses,  by  entering  into 
combinations,  contracts,  and  arrangements  in  restraint  of 
trade,  in  violation  of  the  anti-trust  act,  and  hence  the  North- 
ern Securities  Company  is  already  guilty  of  these  offenses 
that  have  never  been  committed  or  thought  of  by  its  officers 
or  promoters,  so  far  as  appears,  and  it  must  be  suppressed 
and  destroyed.  I  am  compelled  to  reject  the  doctrine  that 
any  person  can  be  held  to  have  committed,  or  to  be  purposing 
and  about  to  commit,  a  highly  penal  offense,  merely  because 
it  can  be  shown  that  his  pecuniary  interests  will  be  thereby 
advanced,  and  that  he  has  the  power,  either  directlv  bv  him- 


Zb:J 


123  FEDERAL  REPOBTER,   703. 


Opinion  of  the  Court 

[70aj  self,  or  indirectly  through  persuasion  or  coercion  of 
his  a£rents,  to  coniiiass  the  commission  of  the  offense. 

Altliough  the  bill  avers  that  the  acts  of  the  defendants 
complained  of  are  in  viohition  of  the  act  of  Congi^ess  of  July 
2,  1890,  c.  G47,  2iy  Stat.  209  [IT.  S.  Comp.  St.  1901,  p.  3200]-^ 
the  Sherman  anti-trust  act—the  state  of  Minnesota  has  no 
authority  to  enforce  that  act  by  bill  for  injunction.    Such  a 
suit  can  only  be  instituted  on  behalf  of  the  federal  govern- 
ment by  its  attorney  general,  under  the  special  provisions 
giving  the  United  States  Circuit  Courts  jurisdiction  to  pre- 
vent and  restrain  by  injunction  violations  of  that  act.     The 
state  anti-trust  act  contains  no  provisions  for  restraining  or 
enjoining  violations  of  its  provisions.    As  before  stated,1t  is 
a  highly  penal  statute;  and  without  special  statutory  au- 
thority a  court  of  equity  has  no  jurisdistion  to  restrain  the 
commission  of  criminal  offenses  which  involve  no  threatened 
destruction  of  property  or  property  rights. 

3.  The  charge  in  the  bill  that  the  acts  of  the  defendants 
contravene  the  statutes  of  Minnesota  prohibiting  tlie  con- 
solidation of  parallel  and  competing  lines  of  raHroad  pre- 
sents a  different  question.  Chapter  29,  p.  154,  Gen.  Laws 
Minn.  1874,  pmvides,  as  stated  : 

"No  railroad  wrporation  or  the  lessors,  purchasers  or  niana-ers  of 
any   railroad   eori>nratiou,   shall   consolidate   the   stock    mi  f^^^^^^^ 
f^nnlZ  «'^/"'*"/-»'P«'-ation  with,  or  lease  or  purchase  tZZovL  or 
franciiise  of.  or  In  any  way  control  any  other  railroad  corporation 
ownnig  or  having  under  its  control  a  parallel  or  competing  line/^ 

This  is  the  only  statute  on  that  subject  of  consolidating 
parallel  and  competing  railroads  that  need  be  considered,  as 
it  covei-s  whatever  is  contained  in  any  other.  This  statute  is 
a  valid  exercise  of  the  police  iv-r^r  of  the  state.  Louisrille 
et€.,RaUrmid  v.  Kenfuclq/,  161  U.  S.  677,  16  Sup.  Ct.  714,  40 
li.  Ed.  849. 

The  prohibition  against  consolidating  applies:  (1)  To 
railroad  corporations.  The  Northern  Securities  Company 
is  not  a  railroad  corporation,  and  neither  the  Great  Northern 
Company  nor  the  Northern  Pacific  Companv,  in  its  corporate 
capacity,  did  any  of  the  acts  charged.  (2)  Lessees  of  rail- 
road corporations.  There  were  none.  (3)  Purchasers  of 
railroad  corporations.    Construing  this  term  as  applying  to 


MINNESOTA   V.    NORTHERN   SECURITIES   CO. 


263 


Opinion  of  the  Court. 

those  who  acquire  by  deed  or  decree,  having  capacity  to  hold 
and  enjoy  the  franchises  and  operate  the  railroad,  there  were 
none  in  this  case.  (4)  Managers  of  railroad  corporations. 
A  railroad  manager  is  the  person  having  the  administration, 
charge,  and  oversight  of  the  operation  and  business  of  the 
railroad.  Among  the  parties  concerned,  Mr.  Hill  alone  was 
a  railroad  manager.  He  did  not  effect  any  consolidation. 
He  promoted  the  formation  of  the  i>orthern  Securities  Com- 
pany, and  sold  to  it  stock  of  both  railroad  companies. 

But  the  complainant  contends  that  when  the  Northern 
Securities  Company  had,  about  December  1,  1901,  purchased 
and  become  the  owner  of  a  large  and  controlling  majority  of 
the  stock  of  the  Northern  Pacific  Company,  it  became  the 
purchaser  of  that  railroad  corporation,  within  the  meaning 
of  that  word  as  used  in  the  act  of  1874,  and  became  thereby 
disabled  from  acquiring,  as  it  afterwards  did,  a  controlling 
majority  of  the  stock  of  the  Great  Northern  Company.  And 
upon  the  subject  of  purchasing  a  railroad  by  buying  all  the 
stock,  I  am  cited  [704]  to  chapter  94,  Gen.  Laws  Minn.  1881, 
which  provides  that  any  railroad  corporation  ma}^  lease  or 
purchase  or  become  the  owner  or  control  or  hold  stock  of  any 
other  railroad,  when  their  respective  railroads  can  be  con- 
nected together  and  form  a  continuous  line,  with  or  without 
branches.  But  in  that  case  the  purchase  of  the  stock  would 
be  by  a  railroad  corporation  having  capacity  to  operate  the 
railroad,  even  aside  from  the  authoritv  to  do  so  either  ex- 
pressly  or  impliedly  granted  by  this  statute;  and  such  pur- 
chaser could  therefore  rightfully  assume  the  control,  man- 
agement, and  operation  of  the  railroad,  the  stock  of  which  it 
had  so  acquired. 

I  am  also  cited  to  the  case  of  Pearsall  v.  Great  Northern 
Railway,  161  U.  S.  646,  16  Sup.  Ct.  705,  40  L.  Ed.  838. 
Pearsall  was  the  owner  of  500  shares  of  the  stock  of  the 
Great  Northern  Company,  and  filed  the  bill,  in  behalf  of 
himself  and  other  stockholders,  to  enjoin  the  Great  North- 
ern Company  from  entering  into  and  carrying  out  an  agree- 
ment with  bondholders  under  mortgages  of  the  Northern 
Pacific  Company,  who  were  about  to  foreclose  the  mort- 
gages and  reorganize  the  company,  issuing  new  bonds  to  the 


264 


123  FEDERAL  BEPORTER,   704. 


Opinion  of  the  Court, 
amoimt  of  $100,000,000,  to  be  guarantied  by   the   Great 
JSorthem  Company,  also  stock  to  a  like  amount,  one-half 
of  which  was  to  be  transferred  to  the  stockholders  of  the 
(jreat  Northern  Company  in  consideration  of  such  guaranty 
imd  thereafter  at  all  intersecting  points  traffic  was  to  be  ex- 
changed between  the  two  companies,  and  the  common  earn- 
mgs  therefrom  divided  on  a  mileage  basis.     The  bill  averred 
that  the  threatened  contract,  if  carried  out,  would  amount 
to  a  consolidation  of  the  two  railroaas,  in  violation  of  the 
said  Minnesota  statute  of  1874,  and  endanger  the  value  of 
complainant's  Great  Northern  stock.    The  court  held  that 
ttie  transfer  of  one-half  of  the  capital  stock  of  the  Northern 
raciiic  Company  to  the  shareholders  of  the  Great  Northern 
Company,  as  a  body,  for  a  consideration  coming  from  the 
toeat  Northern  Company  as  a  corporation,  was  virtually  a 
transfer  of  the  stock  to  the  Great  Northern  Company,  who 
having  thus  acquired  one-half  of  the  stock  of  the  Northern 
Pacific  Company,  would  easily  and   certainly  obtain  the 
little^  more  necessary  to  assure  it  the  mastership  of  the 
Northern  Pacific  Company,  and  result  in  the  probable  amal- 
^mation  of  the  two  companies  in  violation  of  the  statute  • 
thus  endangering  the  value  of  the  complainant's  shares! 
Ihe  relief  sought  by  the  complainant  was  therefore  granted 
to  protect  his  property  interests  against  probable  threatened 
danger.     But  there,  again,  the  purport  of  the  holding  was 
that,  if  one  railroad  corporation  acquired  a  controlling  ma- 
jority of  the  stock  of  another  railroad  corporation,  it  could 
operate  it,  or  control  its  operation,  under  its  own  ample 
franchises  and  powers  to  operate  railroads.    The  case  is  far 
from  sustaining  the  idea  that  if  a  single  investor  in  rail 
road  stocks,  whether  a  natural  person  or  a  corporation  with- 
out railroad  franchises,  should  acquire  by  purchase  a  major 
ity  or  the  whole  of  the  stock  of  both  the  Northern  Pacific 
Company  and  the  Great  Northern  Company,  that  would 
work  any  consolidation  of  those  two  companies    or  that 
such  purchaser  would  have  any  power  to  manage  or  operate 
the  railroads  of  both  or  either  of  said  railroad  companies 
In  the  case  under  consideration  the  court  is  careful  to  note 
the  difference  in  effect  between  the  purchase  of  a  controllino- 
majority  of  the  stock  of  a  rail-   [705]   road  corporation 


MINNESOTA   V,    NORTHERN    SECURITIES   CO. 


Opinion  of  the  Court. 


265 


by  a  rival  railroad  corporation,  which  might  control,  man- 
age and  operate  it,  and  a  purchase  of  the  same  stock  by  an 
individual  or  individuals,  though  holding  whatever  amount 
of  stock  in  the  same  rival  railroad  company.  The  court 
says: 

"Doubtless  these  stocliholders  [of  the  Great  Northern  Company] 
could  lawfully  acquire  by  individual  purchases  a  majority  or  even 
the  whole  of  the  stock  of  the  reorganized  [Northern  Pacific]  com- 
pany, and  thus  possibly  obtain  its  ultuuate  control ;  but  the  com- 
panies would  still  remain  separate  corporations,  with  no  interests,  as 
such,  in  common." 

I  am  not  able  to  agree  with  the  suggestion  that  this  ex- 
pression may  be  regarded  as  one  not  necessary  to  the  deci- 
sion, and  therefore  perhaps  not  carefully  considered.  On 
the  contrary,  it  seems  to  me  to  be  a  carefully  considered 
and  necessary  limitation  or  explanation  of  general  language 
elsewhere  made  use  of  in  that  decision. 

It  follows  that  as  the  Northern  Securities  Company  is 
merely  an  invester  in  the  stocks  of  these  railroad  corpora- 
tions, not  being  itself  a  railroad  corporation,  and  being 
without  franchise,  power,  or  authority  to  manage,  control, 
or  operate  any  railroad,  its  ownership  of  a  majoritj^  of  the 
stocks  of  these  two  railroad  companies  does  not  come  within 
the  prohibitive  language  of  the  statute  of  1874.  The  two 
companies  still  remain  separate  corporations,  with  no  inter- 
ests, as  such,  in  common.  The  case  would  not  be  different 
if  one  natural  person  with  abundant  capital  should  invest 
in  the  majority  of  the  stocks  of  one  of  these  companies, 
and  another  like  person  should  invest  in  the  majority  of 
the  stocks  of  the  other  company.  The  interest  of  the  two, 
if  they  chose  to  act  in  harmony,  would  be  the  same  as  the 
interest  of  one  person  OAvning  the  whole. 

But  it  is  urged  that  the  ownership  by  the  Northern  Se- 
curities Company  of  such  a  large  majority  of  the  stock  of 
these  two  parallel  railroads  creates  a  monopoly,  having  a 
tendency  to  prevent  competition  between  these  railroads,  and 
presents  a  case  within  the  mischief  intended  to  be  remedied 
by  the  statute  of  1874,  and  should  be  held,  even  if  outside 
of  the  language  of  that  statute,  to  be  within  the  intention  of 
the  Legislature  which  enacted  that  statute;  also  that  it  is 
contrary  to  the  public  policy  of  the  state,  which  seeks  to 
promote  competition  between  railroads  as  well  as  other  com- 


£i\rx 


123  FEDERAL  REPORTER,   704. 


Opinion  of  the  Court 

amount  of  $100,000,000,  to  be  guarantied  by  the  Great 
Northern  Company,  also  stock  to  a  like  amount,  one-half 
of  which  was  to  be  transferred  to  the  stockholders  of  the 
Great  Northern  Company  in  consideration  of  such  guaranty, 
and  thereafter  at  all  intersecting  points  traffic  was  to  be  ex- 
changed between  the  two  companies,  and  the  common  earn- 
ings therefrom  divided  on  a  mileage  basis.    The  bill  averred 
that  the  threatened  contract,  if  carried  out,  would  amount 
to  a  consolidation  of  the  two  railroads,  in  violation  of  the 
said  Minnesota  statute  of  18T4,  and  endanger  the  value  of 
complainant's  Great  Northern  stock.    The  court  held  that 
the  transfer  of  one-half  of  the  capital  stock  of  the  Northern 
Pacific  Company  to  the  shareholders  of  the  Great  Northern 
Company,  as  a  body,  for  a  consideration  coming  from  the 
Great  Northern  Company  as  a  corporation,  was  virtually  a 
transfer  of  the  stock  to  the  Great  Northern  Company,  who, 
having  thus  acquired  one-half  of  the  stock  of  the  Northern 
Pacific  Company,  would  easily  and  certainly  obtain  the 
little  more  necessary  to  assure  it  the  mastership  of  the 
Northern  Pacific  Company,  and  result  in  the  probable  amal- 
gamation of  the  two  companies  in  violation  of  the  statute; 
thus  endangering  the  value  of  the  complainant's  shares. 
The  relief  sought  by  the  complainant  was  therefore  granted 
to  protect  his  property  interests  against  probable  threatened 
danger.    But  there,  again,  the  purport  of  the  holding  was 
that,  if  one  railroad  corporation  acquired  a  controlling  ma- 
jority of  the  stock  of  another  railroad  corporation,  it  could 
operate  it,  or  control  its  operation,  under  its  own  ample 
franchises  and  powers  to  operate  railroads.    The  case  is  far 
from  sustaining  the  idea  that  if  a  single  investor  in  rail- 
road stocks,  whether  a  natural  person  or  a  corporation  with- 
out railroad  franchises,  should  acquire  by  purchase  a  major- 
ity or  the  whole  of  the  stock  of  both  the  Northern  Pacific 
Company  and  the  Great  Northern  Company,  that  would 
work  any  consolidation  of  those  two  companies,  or  that 
such  purchaser  would  have  any  power  to  manage  or  operate 
the  railroads  of  both  or  either  of  said  railroad  companies. 
In  the  case  under  consideration  the  court  is  careful  to  note 
the  difference  in  effect  between  the  purchase  of  a  controllino- 
majority  of  the  stock  of  a  rail-   [705]   road  corporation 


MINNESOTA   V.   NORTHERN    SECURITIES   CO. 


265 


Opinion  of  the  Court. 

by  a  rival  railroad  corporation,  which  might  control,  man- 
age and  operate  it,  and  a  purchase  of  the  same  stock  by  an 
individual  or  individuals,  though  holding  whatever  amount 
of  stock  in  the  same  rival  railroad  company.  The  court 
says: 

"Doubtless  these  stoclcholders  [of  the  Great  Northern  Company] 
could  lawfully  acquire  by  individual  purchases  a  majority  or  even 
the  whole  of  the  stock  of  the  reorganized  [Northern  Pacific]  com- 
pany, and  thus  possibly  obtain  its  ultimate  control;  but  the  com- 
panies would  still  remain  separate  corporations,  with  no  interests,  as 
such,  in  common." 

I  am  not  able  to  agree  with  the  suggestion  that  this  ex- 
pression may  be  regarded  as  one  not  necessary  to  the  deci- 
sion, and  therefore  perhaps  not  carefully  considered.  On 
the  contrary,  it  seems  to  me  to  be  a  carefully  considered 
and  necessary  limitation  or  explanation  of  general  language 
elsewhere  made  use  of  in  that  decision. 

It  follows  that  as  the  Northern  Securities  Company  is 
merely  an  invester  in  the  stocks  of  these  railroad  corpora- 
tions, not  being  itself  a  railroad  corporation,  and  being 
without  franchise,  power,  or  authority  to  manage,  control, 
or  operate  any  railroad,  its  ownership  of  a  majority  of  the 
stocks  of  these  two  railroad  companies  does  not  come  within 
the  prohibitive  language  of  the  statute  of  1874.  The  two 
companies  still  remain  separate  corporations,  with  no  inter- 
ests, as  such,  in  common.  The  case  would  not  be  different 
if  one  natural  person  with  abundant  capital  should  invest 
in  the  majority  of  the  stocks  of  one  of  these  companies, 
and  another  like  person  should  invest  in  the  majority  of 
the  stocks  of  the  other  company.  The  interest  of  the  two, 
if  they  chose  to  act  in  harmony,  would  be  the  same  as  the 
interest  of  one  person  owning  the  whole. 

But  it  is  urged  that  the  ownership  by  the  Northern  Se- 
curities Company  of  such  a  large  majority  of  the  stock  of 
these  two  parallel  railroads  creates  a  monopoly,  having  a 
tendency  to  prevent  competition  between  these  railroads,  and 
presents  a  case  within  the  mischief  intended  to  be  remedied 
bv  the  statute  of  1874,  and  should  be  held,  even  if  outside 
of  the  language  of  that  statute,  to  be  within  the  intention  of 
the  Legislature  which  enacted  that  statute;  also  that  it  is 
contrary  to  the  public  policy  of  the  state,  which  seeks  to 
promote  competition  between  railroads  as  well  as  other  com- 


266 


123  FEDERAfc   REPORTER,   105. 


Opinion  of  tlie  Court, 
mon  carriers.    The  terms  "  monopolies  and  trusts  "  are  per- 
haps, m  cases  like  this,  too  often  employed  at  the  bar  to  all 
business  enterprises  requiring  and  employing  great  aggrega- 
tions of  wealth,  and  in  the  vague  sense  in  which,  at  L 
hustings    they  are  use  to  arouse  envy  and  jealousy,  for- 
getting the  manifast  necessity  of  such  aggregations  of  Vealth 
to  produce  the  commodities,  and  their  transportation,  which 
our  civilization  and  comfort  retpiire.    Every  railroad  corpo- 
ration  is  in  one  siMise  a  monopoly.    It  has  franchises  giving 
rights  and  powers  not  common  to  all  citizens.    It  alone  can 
operatejts  own  raihmd,  though  subject  to  reasonable  regu- 
lation by  the  state.    All  monopolies,  in  a  strict  sense,  Li 
upon  some  grant  by  the  sovereign  power  of  an  exclusive 
franchise  or  privilege.    And  with  modem  facilities  for  trans- 
portation and  communication,  all  the  statutes  and  learning 
respecting  "forestalling,"  "regrating,"  and  "encrrossinc" 
have  become  archaic,  and  even  the  meaning  of  those  terms 
th      'rift4'*''''.i^  recogiiized.    [706]  When,  a  statute  like 
k  t^iS  V"       ^"^^^'^'-^^  ^^esignates  parties  whom 
It  prohibi  s  from  doing  specified  acts,  not  otherwise  unlaw- 
fill,  to  ask  a  court  to  extend  that  statute  to  parties  not 
named,  or  to  acts  not  so  specified,  on  tlie  ground  that  such 
extension  may  be  conjectured  to  be  within  the  intention  of 
the  Legislature,  is  an  invitation  to  enter  the  domain  of  jii- 
dicial  legislation.     The  policy  of  the  state  appeal^  in  its 

S^S  r;      r  r^  T^^'^  ^^^  ^^^  interpretation  of  any 
aoiii3tlul  statute.    It  is  clear  from  several  statutes  that  the 
policy  of  thastate  of  Mbnesota  is  opposed  to  the  consolida- 
tion of  parallel  railroads,  and  to  the  control  by  any  railroad 
company  of  the  operation  and  management  of  another  com- 
pany s  parallel  and  competing  railroad.    It  is  deemed  ad- 
vantageous to  the  public  that  at  least  reasonable  competition 
between  such  lines  of  railroad  shall  continue.    Wliile  acts 
of  railroad  corporations,  leasees,  purchasers,  and  managers 
contrary  to  this  policy  are  prohibited,  there  is  no  statute  dis- 
closing any  policy  as  to  what  parties  (other  than  competinff 
railroad  corporations)  shall  own  the  stock  of  any  railroad 
corporation,  or  of  any  number  of  such   corporations    or 
respecting  the  amount  of  such  stock  which  any  one  party 


MINNESOTA   V.    NORTHERN    SECURITIES   CO. 


Opinion  of  the  Court 


267 


may  own.  The  bill  truthfully  states,  in  substance  (para- 
graph 7),  that  it  has  been  the  settled  policy  of  Minnesota, 
since  its  organization  as  a  territory,  to  develop  its  resources 
by  the  encouragement  of  railroad  building  therein,  and  re- 
fers to  the  many  grants  of  land  in  aid  of  railroad  construc- 
tion. As  showing  the  same  policy,  reference  also  might  be 
made  to  very  many  donations  for  the  like  purpose  by  coun- 
ties, cities,  and  towns,  under  legislative  authority.  The 
policy  of  the  stiite  in  respect  to  the  operation  and  manage- 
ment of  railroads  is  disclosed  by  its  statutes;  especially  by 
sections  879  to  403,  vol.  i.  General  Statutes  of  Minnesota  of 
1894,  under  the  heading  of  "  Railroad  and  AYarehouse  Com- 
mission," which  closely  follows  the  provisions  of  congres- 
sional legislation  respecting  interstate  commerce,  and,  under 
clearly  specified  regulations,  places  the  supervision,  over- 
sight, and  control  of  those  matters — particular!}^  the  rates 
for  transportation — in  the  hands  of  the  designated  state 
officials.  It  is  plain  from  these  statutes,  as  construed  by  the 
Supreme  Court  of  the  state,  that  it  is  the  policy  of  the  state 
that  the  railroads,  with  their  rolling  stock  and  appliances, 
shall  be  kept  in  a  high  state  of  safety  and  efficiency,  and 
that  rates  of  transi)ortation,  while  kept  ample  to  secure  such 
result,  shall  always  be  fair,  reasonable,  stable,  and  uniform. 
Schedules  of  rates  are  to  be  kept  publicly  posted  at  every 
station,  and  no  change  or  deviation  from  such  jDublished 
rates  is  permitted,  nor  any  rebates  allowed  or  advantage  to 
one  shipper  over  another,  and  no  change  in  such  rates  is 
permitted  until  after  10  days'  previous  published  notice  has 
been  given.  Under  this  system  shippers  can  count  accurately 
the  cost  of  transjjortation  as  an  expense  in  their  business, 
with  the  assurance  that  others  engaged  in  like  business 
must  incur  exactly  the  like  expense ;  and  untrammeled  com- 
petition between  rival  railroads,  resulting  in  rate  wars, 
sporadic  struggles  for  particular  contracts  or  consignments. 
as  well  as  all  rebates,  open  or  secret,  all  alike  unfair  oi 
ruinous  to  carriers  and  shippers,  are  prohibited,  under  pen- 
alties, and  intended  to  be  entirely  eliminated  and  [707]  done 
away  with,  leaving  as  the  only  bases  of  competition  between 
rival  carriers  the  furnishing  of  the  better  accommodations, 
and  the  greater  safety  and  celerity  of  carriage.     All  com- 


Do 


124  FEDEBAL  BEPORTEB,  956. 


Syllaba& 

plaints  that  published  rates  are  unreasonable  are  heard  and 
determined  by  these  state  officials,  who  may  fix  rates  binding 
on  the  railroads;  thus  necessarily  making  rates  uniform  as 
between  rival  railroads.    As  a  result  of  this  policy,  and  the 
absolute  power  of  the  state  officials  to  fix  rates,  and  keep 
them  at  the  lowest  reasonable  figures,  competition  between 
rival  railroads  no  longer  reduces  rates,  as  it  did  when  rail- 
road companies  alone  controlled  them.     On  the  contrary, 
where  two  or  more  railroads  divide  the  transportation  be- 
tween two  places,  the  necessity  of  considering  greater  fixed 
charges  and  greater  cost  of  administration  and  operation 
may  make  the  reasonable  rate  for  transportation  greater 
than  if  the  whole  business  could  be  done,  and  was  in  fact 
done,  by  one  railroad.    However  that  may  be,  the  Northern 
Securities  Company  is  but  an  investing  stockholder  in  these 
two  railroad  companies,  without  power  to  consolidate  them 
or  to  interfere  with  the  management  or  control  of  either. 
Because  of  its  large  holdings  of  these  stocks,  it  may  elect 
the  board  of  directors  of  each,  who  must  be  composed  of 
entirely  different  persons.     Each  board  will  appoint  the 
officers  and  control  the  business  and  affairs  of  its  own  corpo- 
ration, and  will  naturally  seek  to  increase  its  business  and 
property.    Neither  has  any  power  to  control  the  other  nor 
to  contract  with  the  other  in  restraint  of  trade.    There  is  no 
presumption  that  either  will  disobey  the  law,  or  be  guilty 
of  the  commission  of  penal  offenses.    Should  they  do  these 
things,  then  the  anti-trust  act  of  Minnesota  will  be  for  the 
first  time  violated,  and  the  railroad  corporations  and  their 
offending  officials  will  be  amenable  to  punishment,  and  to 
appropriate  legal  or  equitable  proceedings. 
Decree  will  be  entered  dismissing  the  bill. 


1056]  ELLIS  V.  INMAN,  POULSEN  &  CO.  ET.  AL.« 

(Circuit  Court,  D.  Oregon.    July  30,  1903.) 
[124  Fed.,  956.] 

Monopolies— Anti-Tbust  Law— Combination  in  Restraint  of  Inter- 
state Commerce.— A  combination  between  all  the  lumber  manufac- 


«  Judgment  reversed  by  Circuit  Court  of  Appeals,  Ninth  Circuit  (131 
Fed.,  182).    See  p.  577. 


ELLIS    V,   INMAN,   POULSEN   &   CO. 
Opinion  of  the  Court. 


269 


turors  of  a  city  to  raise  and  maintain  the  price  of  lumber  to  local 
i'onsumei's,  and  to  refuse  to  sell  lumber  to  consumers  who  purchase 
any  part  of  their  supply  from  outside  mills,  some  of  such  mills  sup- 
plying the  local  market  being  situated  in  another  state,  is  not  io 
violation  of  the  Sherman  anti-trust  law,  as  in  restraint  of  interstate 
commerce,  its  effect  on  such  commerce  being  indirect  and  inci- 
dental only.o 

At  Law.    On  demurrer  to  complaint. 

[957]  Veasie  c%  Freeman^  for  plaintiff. 

Cake  (&  Cake,  for  defendant  Inman,  Poulsen  &  Co. 

Wm.  D,  Fenton,  for  other  defendants. 

Bellinger,  District  Judge. 

The  defendants,  comprising  all  the  lumber  manufacturers 
of  Portland,  have  entered  into  a  combination  to  monopolize 
the  local  lumber  market,  and  to  advance  the  price  of  lumber 
sold  for  use  within  the  city.  There  are  a  number  of  outside 
mills,  including  two  mills  at  Vancouver,  in  the  state  of 
Washington,  convenient  to  the  Portland  market,  and  capable 
of  supplying  that  market  with  rough  lumber,  but  without 
adequate  facilities  for  supplying  finished  and  kiln-dried 
lumber.  In  consequence  of  the  high  prices  charged  by  the 
combination,  the  plaintiff,  who  is  a  contractor  and  builder 
in  Portland,  and  others  similarly  situated,  purchased  rough 
lumber  at  the  Vancouver  mills,  and,  being  under  the  neces- 
sity of  having  finished  and  dried  lumber,  applied  to  the 
defendants  therefor.  The  defendants  refuse  to  sell  plaintiff 
lumber  of  this  character  unless  he  will  agree  to  buy  hereafter 
all  the  lumber  required  by  him  for  use  in  the  city  of  Portland 
of  them,  and  will  pay,  in  addition  to  their  usual  prices,  the 
difference  between  the  prices  at  which  plaintiff  purchased 
rough  lumber  at  Vancouver  and  the  prices  charged  for  that 
kind  of  lumber  by  the  defendants.  The  combination  in  this 
case  is  to  advance  the  price  of  lumber  to  Portland  consumers. 
It  has  no  reference  to  the  trade  in  lumber  with  Vancouver. 
If  this  is  a  wrong,  it  is  a  wrong  done  to  such  consumers,  who 
are  compelled  to  pay  extortionate  prices  to  the  monopoly. 

a  Syllabus  copyrighted,  1903,  by  West  Publishing  Co. 


124   FEDERAL   REPORTER,   957. 
Opinion  of  the  Court 
It  is  not  contended  that  the  advance  of  price  in  the  local 
market^the  thing  for  which  the  combination  was  formed- 
operates  m  restraint  of  the  trade  in  lumber  with  Vancouver, 
buch  advance  has  a  contrary  tendency  so  far  as  rough  lum- 
her  IS  concerned.    And  it  is  not  apparent  why  the  defend- 
ante,  having  a  particular  kind  of  lumber  not  obtainable  else- 
where, may  not  refuse  to  sell  such  lumber  to  those  who 
patronize  outside  mills  in  the  purchase  of  a  part  of  their 
supplies,  or  why  the  defendants  may  not  di^riminate  in 
prices  in   favor  of  those  who  purchase  exclusively   from 
them.    The  tendency  of  this  discrimination  is  to  keep  those 
who  are  compelled  to  have  finished  and  dried  lumber  from 
purchasing  rough  lumber  at  outside  mills.    Assuming  that 
this  operates  in  restraint  of  the  trade  in  rough  Inmter  be- 
tween Vancouver  and  Portland,  it  is  not  such  a  result  as 
Mlows  direcUy  or  immediately  from  the  acts  complained  of. 
1  he  discrimination  is  against  all  outside  mills.    A  relatively 
^all  number  of  these  happen  to  be  located  at  Vancouver. 
Ihe  remainder  are  in  Oregon,  and  convenient  to  the  Port- 
land market.    Among  the  Portland  purchasers  of  ,ou<* 
lumber  at  these  outside  mills  there  ar«  some  who  are  con- 
sumers of  finished  and  dried  lumber.    Some  of  those  pur- 
chase.^ of  rough  lumber  resort  to  the  mills  at  Vancouver, 
«nd  of  these  some  require  finished  and  dried  lumber;  and  it 
so  happeiis  (but  as  to  this  the  allegations  of  the  complaint 
are  not  definite)  that  the  outside  mills,  includin..  thL  at 
Vancouver,  cannot  or  do  not  furnish  an  adequate'supplV  of 
8uch  lumber;    and  so  we  at  length  i«,ch  a  point  where, 

ttrfo^r/h"**'''!:-'""  f  .^P^'*'  ""^^  ^^'^P^'-'-^  -edi- 
tions, 1958]  the  working  of  the  combination  tends  indirectly 

fi^- k!^       i  ,"•"**, ""  ^^^  ^"^^  ^"y  '^"ds  to  cmite  a  trade  in 
hnished  and  dried  lumber  between  these  points,  since  there 
js  no  reason  why  the  outside  mills  cannot,  in  a  short  time 
be  prepared  to  supply  the  demand  for  finished  and  dried  as 
well  as  rough  lumber;    and  yet  the  combination  cannot  be 

^h^n^oT  "'v.*"'  t-dency   wuh  being  organized  in 
furtherance   of  such   a   trada    If  the   defendants   should 
greaUy  reduce  the  pnce  of  aU  kinds  of  lumber  to  all  pufchas 
ers,  It  would  have  a  tendency  to  lessen,  if  it  did  not  destroy 


WHITWELL    V,    CONTINENTAL   TOBACCO   CO. 


271 


Syllabus. 

the  trade  in  lumber  now  carried  on  between  Vancouver  and 
Portland,  yet  they  would  not  be  accused  in  so  doing  of  acting 
in  restraint  of  that  trade.  No  more  can  they  be  said  to  be  so 
acting  within  the  meaning  of  the  act  of  congress  when  they 
raise  the  price  of  lumber  to  their  Portland  consumers,  or 
discriminate  in  the  sale  of  special  kinds  of  lumber  in  favor 
of  customers  who  buy  exclusively  from  them. 
The  demurrer  is  sustained. 


[464]     WHITWELL  v.  CONTINENTAL  TOBACCO  CO. 

ETAL. 

(Circuit  Court  of  Appeals,  Eighth  Circuit.    November  12,  1903.) 

[125  Fed.,  454.] 

A.NTI-TRUST  Act — What  Contracts,  Combinations,  or  Conspiracies 
Violate. — Every  contract,  conil)iuatioii,  or  conspiracy,  the  necessary 
effect  of  which  is  to  stifle  or  to  directly  and  substantially  restrict 
competition  in  commerce  among  the  states,  is  in  restraint  of  inter- 
state conmierce,  and  violates  section  1  of  the  act  of  July  2,  1890, 
c.  047,  26  Stat.  209  [U.  S.  Comp.  St.  1901,  p.  3200]. 

Same — What  Acts,  Contracts,  and  Combinations  do  not  Violate. — 
Acts,  contracts,  and  combinations  which  promote,  or  only  incident- 
ally or  indirectly  restrict,  competition  in  commerce  among  the  states, 
while  their  main  puipose  and  chief  effect  are  to  foster  the  trade 
and  increase  the  business  of  those  who  malvo  and  operate  them,  are 
not  in  restraint  of  interstate  commerce,  or  violative  of  section  1  of 
the  act  of  July  2,  1890,  c.  G47,  26  Stat.  209  [U.  S.  Comp.  St.  1901, 
p.  3200] . 

[465]  Same— Construction.— The  anti-trust  act  should  have  a  rea- 
sonable consti-uction— one  which  tends  to  advance  the  remedy  it 
provides,  and  to  abate  the  mischief  at  which  it  was  leveled. 

Same — Attempts  to  Monopolize  a  Part  of  Interstate  Commerce. — 
Every  attempt  to  monoiwlize  a  part  of  interstate  commerce,  the 
necessary  effect  of  which  is  to  stitle  or  to  directly  and  substantially 
restrict  competition  in  conunerce  among  the  states,  violates  section 
2  of  the  act  of  July  2,  1890,  c.  647,  26  Stat.  209  [U.  S.  Comp.  St. 
1901,  p.  3200]. 

Same. — Attempts  to  monoiwlize  a  part  of  commerce  among  the  states 
which  promote,  or  only  incidentally  or  indirectly  restrict,  compe- 
tition in  interstate  commerce,  while  their  main  purpose  and  chief 
effect  are  to  increase  the  trade  and  foster  the  business  of  those  who 
make  them,  were  not  intended  to  be,  and  were  not,  made  illegal  or 


272 


125  FEDEBAL  REPOKTBB,  454. 


Opinion  of  the  Court 

puDishable  by  section  2  of  the  antitrust  act  of  July  2,  1890,  c.  647, 
20  Stat.  209  [U.  S.  Comp.  St.  1901,  p.  3200],  because  such  attempts 
are  indispensable  to  the  existence  of  any  competition  in  commerce 
among  the  states. 

Same— Restriction  of  Sales  of  Goods.— A  manufacturer,  a  corjiora- 
tlon,  and  its  employ<i  restricted  the  sales  of  its  products  to  those 
who  refrained  from  dealing  in  the  commodities  of  its  competitors 
by  fixing  the  prices  of  its  goods  to  those  who  did  not  thus  refrain 
so  high  that  their  purchase  was  unprofitable,  while  it  reduced  the 
prices  to  those  who  declined  to  deal  in  the  wares  of  its  competitors 
so  that  the  purchase  of  the  goods  was  profitable  to  them.  The  plain- 
tiff applied  to  purchase,  but  refused  to  refrain  from  handling  the 
goods  of  the  corporation's  competitors,  and  sued  it  for  damages 
caused  by  the  refusal  of  the  defendants  to  sell  their  commodities 
to  him  at  prices  which  would  make  it  profitable  for  him  to  buy  them 
and  sell  them  again.  Held,  the  restriction  of  their  own  trade  by  the 
defendants  to  those  purchasers  who  declined  to  deal  in  the  goods  of 
their  competitors  was  not  violative  of  the  anti-ti-ust  act. 

Sales-Restriction— Damages.— The  owner  of  goods  may  dictate  the 
prices  at  which  he  will  sell  them,  and  the  damages  which  are  caused 
to  an  applicant  to  buy  by  the  refusal  of  the  owner  to  sell  to  him  at 
prices  which  will  enable  him  to  resell  them  at  a  profit  constitute  no 
legal  injury,  and  are  not  actionable,  because  they  are  not  the  result 
of  any  breach  of  duty  or  of  contract  by  the  owner. 

(Syllabus  by  the  Court) 


111  Error  to  the  Circuit  Court  of  the  United  States  for  the 
District  of  Minnesota. 

Dan  W,  Lawler  (Frank  Arnold,  on  brief) ,  for  plaintiff  in 
error. 

O.  A,  Severance  and  Junius  Parker  (W.  W.  Fuller,  F.  B. 
Kellogg,  and  B.  E,  Olds,  on  the  brief),  for  defendants  in 
error. 

Before  Sanborn,  Thayer,  and  Van  Devanter,  Circuit 
Judges. 

Sanborn,  Circuit  Judge. 

This  is  an  action  by  the  plaintiff,  Joseph  P.  Whitwell,  to 
recover  treble  damages  from  the  Continental  Tobacco  Com- 
pany, a  corporation,  and  from  one  of  its  employes,  George  E. 
McHie,  under  the  anti-trust  act  of  July  2,  1890,  c.  647,  26 
Stat.  209  [U.  S.  Comp.  St.  1901,  p.  3200],  on  the  sole  ground 
that  the  defendants  refused  to  sell  the  manufactured  products 


WHITWELL   V,    continental   TOBACCO   CO. 
Opinion  of  the  Court 


273 


of  the  tobacco  company  to  him  at  prices  which  would  enable 
him  to  resell  them  to  others  at  a  profit,  unless  he  refrained 
from  buying,  selling,  or  han-  [456  J  dling  plug  chewing  to- 
bacco made  by  independent  manufacturers  who  were  com- 
peting with  the  tobacco  company  for  the  trade  of  the  country. 
All  the  parties  to  the  suit  were  engaged  in  interstate  com- 
merce, and  the  products  in  question  were  the  subjects  thereof. 
The  main  question  which  the  case  presents  is,  may  one  en- 
gaged in  commerce  among  the  states  lawfully  select  his  cus- 
tomers, and  sell  only  to  those  who  do  not  buy  or  sell  the 
wares  of  his  competitors,  or  is  such  a  restriction  of  his  own 
trade  by  a  manufacturer  or  merchant  and  his  employes  a 
"  contract,  combination  or  conspiracy  in  restraint  of  trade  " 
or  an  "  attempt  to  monopolize  any  part  of  trade,"  within  the 
meaning  of  the  act  of  July  2,  1890,  26  Stat.  209  [U.  S.  Comp. 
St.  1901,  p.  3200]  ? 

An  analysis  of  the  averments  of  the  complaint  to  which 
the  court  below  sustained  a  general  demurrer  will  demon- 
strate the  fact  that  the  crucial  question  in  this  case  has  been 
correctly  stated.  The  material  facts  which  those  averments 
disclose  are  these:  The  plaintiff  is  a  jobber  of  tobacco,  and 
of  the  products  of  tobacco,  at  St.  Paul,  Minn.  The  tobacco 
company  is  a  manufacturer  and  merchant,  and  McHie  is  its 
agent  and  emploj^e.  The  tobacco  company  owns  and  con- 
trols most  of  the  valuable  and  leading  brands  of  plug  and 
chewing  tobacco  in  the  United  States,  and  fixes  the  market 
prices  thereof.  The  company  and  its  agent,  McHie,  had 
long  been,  and  on  May  1,  1902,  still  were,  in  the  practice  of 
selling  its  goods  to  jobbers  in  this  way:  They  allotted  to  an 
intending  purchaser  an  amount  of  its  goods  which  he  was 
required  to  buy  during  each  succeeding  period  of  four  months. 
This  allotment  w^as  much  in  excess  of  the  amount  which  he 
would  be  able  to  sell  during  that  time.  They  fixed  the  pricc»s 
of  the  goods  comprising  the  allotment  so  high  that,  if  the 
purchaser  paid  the  prices  thus  fixed,  he  could  not  make  any 
profit  by  buying  and  selling  the  commodities.  They  re- 
quired each  purchaser  to  refrain  from  dealing  in  plug  chew- 
ing tobaccos  made  by  independent  and  competing  manufac- 

21220— VOL  2—07  m 18 


125  FEDERAL  REPORTER,   456. 
Opinion  of  tJie  Court, 
tiirers.    If  the  purchaser  complied  with  this  requirement, 
they  invariably  reduced  his  allotment  to  the  amount  he  was 
able  to  sell,  and  paid  back  to  him  such  a  percentage  of  ihe 
aggregate  price  of  the  goods  he  bought  that  the  handling  of 
these  commodities  was  by  reason  of  this  repayment  alone 
made  profitable  to  him.    If  the  purchaser  refused  to  comply 
with  this  requirement,  they  refused  to  reduce  the  amount  of 
his  allotment  or  the  prices  of  his  goods,  so  that  the  business 
was  unprofitable  to  him.    The  plaintiff  had  long  participated 
in  this  method  of  transacting  business,  had  been  handling  the 
products  of  the  tobacco  company  in  accordance  with  it,  and 
had  an  established  business  in  the  purchase  of  tobacco  and 
its  products,  and  in  the  sale  of  them  throughout  the  states  of 
Minnesota,  North  Dakota,  and  South  Dakota,  when  on  May 
1,  1902,  the  defendants  made  an  allotment  to  him  for  the 
succeeding  four  months,  and  offered  to  furnish  their  com- 
modities to  him  in  accordance  with  their  established  practice. 
He,  however,  refused  to  refrain  from  handling  the  goods  of 
independent  manufacturers  who  w^ere  competing  with  the 
defendants.    Thereupon   the  latter  refused   to  reduce   the 
allotment  which  they  had  made  to  him,  or  the  prices  thereof, 
so  that  the  handling  of  the  goods  of  the  tobacco  company 
would  be  profitable  to  the  plaintiff,  and  he  did  [457]  not 
purchase,  or  agree  to  purchase,  their  gcKxIs.    He  was  unable 
to  procure  them  elsewhere,  and  sustained  damages  in  the 
sum  of  $280. 

Ho  other  facts  are  stated  in  the  complaint.  There  are, 
however,  allegations  that  the  defendants  combined  and  con- 
spired to  regulate  and  to  raise  the  prices  of  their  goods,  and 
to  control  the  output  thereof,  with  the  intent  to  monopolize 
trade  and  commerce  among  the  states  of  Minnesota  and 
North  Dakota  and  South  Dakota;  that  they  combined  to 
arbitrarily  &k  the  prices  of  their  goods,  independently  of 
their  natural  market  value,  and  to  refuse  to  sell  them  on 
©qiial  terms  to  aU  intending  purchasers ;  and  that  they  did 
all  these  things  in  restraint  of  trade  and  commerce  among 
the  states.  But  the  only  way  in  which  the  plaintiff  avers 
that  these  defendants  restrained  or  attempted  to  monopolize 
interstate  trade,  or  disclosed  their  intent  to  do  so,  was  by 
restricting  the  sale  of  their  own  goods  to  customers  who 


WHITWELL    V,    CONTINENTAL   TOBACCO   CO. 
Opinion  of  the  Court. 


275 


refrained  from  handling  the  wares  of  their  competitors  by 
making  their  sales  on  the  terms  which  have  been  stated. 
The  general  averments  of  the  intent,  purpose,  and  effect  of 
the  acts  of  the  defendants  may  therefore  be  laid  aside  here. 
They  serve  no  purpose  save  to  foreshadow  the  argument  of 
counsel  relative  to  the  legal  effect  of  the  facts  which  the  com- 
plaint sets  forth.  They  neither  state,  nor  aid  in  the  statement 
of,  any  cause  of  action,  because  they  disclose  no  fact,  and 
the  only  question  here  is  whether  the  facts  stated  in  the  com- 
plaint constitute  a  cause  of  action.  The  only  facts  thus 
stated  are  that  the  tobacco  company  and  its  employe  refused 
to  make  sales  of  its  products  to  the  plaintiff,  or  to  others 
who  desired  to  purchase,  on  terms  that  would  be  profitable 
to  them,  unless  they  refrained  from  dealing  in  the  goods  of 
its  competitors.  Was  this  act,  or  the  course  of  dealing  which 
it  illustrates,  a  violation  of  the  anti-trust  law  of  1890? 
That  law  provides : 

"  Section  1.  Every  contract,  combination  in  the  form  of  trust  or 
otherwise,  or  conspiracy,  in  restraint  of  commerce  among  the  several 
states,  or  with  foreign  nations,  is  hereby  declared  to  be  illegal.    *    *    » 

"  Sec.  2.  Every  person  who  shall  monopolize,  or  attempt  to  monopo- 
lize, or  combine  or  conspire  with  any  other  person  or  persons,  to 
monopolize  any  part  of  the  trade  or  commerce  among  the  several 
states,    ♦    *    *    shall  be  deemed  guilty  of  a  misdemeanor.    *    ♦    *    »» 

Under  this  act,  every  contract,  combination,  and  conspiracy 
in  restraint  of  trade  among  the  states  is  illegal.  Every 
person  who  engages  in  any  such  combination  violates  this 
law,  and  a  corporation  is  a  person.  Act  July  2,  1890,  c. 
647,  §§  1,  8,  26  Stat.  209,  210  [U.  S.  Comp.  St.  1901,  pp. 
3200,  3202].  Hence  the  real  question  in  every  case  which 
arises  under  this  law  is  whether  or  not  the  contract,  com- 
bination, or  conspiracy  challenged  is  in  restraint  of  trade 
among  the  states.  It  has  now  been  settled  by  repeated 
decisions  of  the  Supreme  Court  that  this  question  must  be 
tried,  not  by  the  intent  with  which  the  combination  was 
made,  nor  by  its  effect  upon  traders,  producers,  or  consumers, 
but  by  the  necessary  effect  which  it  has  in  defeating  the  pur- 
pose of  the  law.  That  purpose  was  to  prevent  the  stifling 
or  substantial  restriction  of  competition,  and  the  test  of  the 
legality  of  a  combination  imder  the  act  which  was  inspired 
by  this  purpose  is  its  direct  and  necessary  effect  upon  com- 
petition in  conmierce  among  [458]  the  states.    If  its  neces- 


276 


125  FEDERAL  BEPOBTEB,  458. 


Opinion  of  the  Court 

sary  effect  is  to  stifle  or  to  directly  and  substantially  restrict 
free  competition,  it  is  a  contract,  combination,  or  conspiracy 
in  restraint  of  trade,  and  it  falls  under  the  ban  of  the  law. 
U,  S,  V.  Tram-Missouri  Freight  Assaciation,  166  U.  S.  290, 
339,  340,  342,  17  Sup.  Ct.  540,  41  L.  Ed.  1007;  Addyston 
Pipe  (&  Steel  Co.  v.  U.  J8.,  175  U.  S.  211,  20  Sup.  Ct.  96, 
44  L.  Ed.  136 ;  U.  S.  v.  Joint  Traffic  As8\  171  U.  S.  505, 
576,  577,  19  Sup.  Ct.  25,  43  L.  Ed.  259;  U.  S,  v.  Northern 
Securities  Co.  (C.  C.)  120  Fed.  721,  725;  V.  S.  v.  Jellico 
Mountain  Coal  d:  Coke  Co.  (C.  C.)  46  Fed.  432, 12  L.  E.  A. 
753;  Lowry  v.  Tile,  Mantel  cfe  Crate  Ass'n  (C.  C.)  98  Fed. 
817,  826;  Id.  (C.  C.)  106  Fed.  40,  45;  U.  S.  v.  Addyston 
Pipe  €&  Steel  Co.,  85  Fed.  271,  294,  29  C.  C.  A.  141,  163,  46 
li.  R.  A.  122;  U.  S.  v.  Coal  Dealers  Ass^n  (C.  C.)  85  Fed. 
252;  Chesapeake  ds  O.  Fuel  Co.  v,  V.  S.,  115  Fed.  610,  619, 
53  C.  C.  A.  256,  265;  Gihhs  v.  McNeeley,  118  Fed.  120,  55 
C.  C.  A.  70,  60  L.  E.  A.  152;  Brown  v.  Jacobs  Pharmacy  Co. 
(Ga.)  41  S.  E.  553,  57  L.  E.  A.  547;  Amot  v.  Coal  Co.,  68 
N.  Y.  558,  23  Am.  Eep.  190 ;  Morris  Run  Coal  Co.  v.  Barclay 
Coal  Co.,  68  Pa.  173,  8  Am.  Eep.  159. 

If,  on  the  other  hand,  it  promotes  or  but  incidentally  or 
indirectly  restricts  competition,  while  its  main  purpose 'and 
chief  effect  are  to  foster  the  trade  and  to  increase  the  busi- 
ness of  those  who  make  and  operate  it,  then  it  is  not  a  con- 
tract, combination,  or  conspiracy  in  restraint  of  trade,  within 
the  true  interpretation  of  this  act,  and  it  is  not  subject  to 
its  denunciation.  Hopkins  v.  U.  S.,  171  U.  S.  578,  592,  19 
Sup.  Ct  40,  43  L.  Ed.  290;  Anderson  v.  U.  S.,  171  U.  S. 
604,  616, 19  Sup.  Ct  50,  43  L.  Ed.  300;  U.  S.  v.  Joint  Traffic 
Ass\  171  U.  S.  505,  568,  19  Sup.  Ct.  25,  43  L.  Ed.  269 : 
Addyston  Pipe  d  Steel  Co.  v.  U.  S.,  176  U.  S.  211,  245,  20 
Sup.  Ct  96,  44  L.  Ed.  136;  U.  S.  Chemical  Co.  v.  Provident 
Chemical  Co.  (C.  C.)  64  Fed.  946;  California  Steam  Navi- 
gation Co.  V.  Wright,  6  Cal.  258,  65  Am.  Dec.  511 ;  Smalley 
V.  Greene,  52  Iowa,  241,  3  N.  W.  78,  35  Am.  Eep.  267; 
Schwalm  V.  Holmes,  49  Cal.  665;  In  re  Greene  (C.  C )  52 
Fed.  104, 115, 116, 117;  In  re  Grice  (C.  C.)  79  Fed.  627,  644^ 
AUgeyer  v.  Louisiana,  166  U.  S.  578,  589,  7  Sup.  Ct.  427,  41 
L.  Ed.  832;  State  v.  Goodwill  (W.  Va.)  10  S.  E.  285,  286,  0 
L.  E.  A.  621,  25  Am.  St  Eep.  863;  People  v.  GUlson,  109  N. 


WHITWELL  V.    CO:SrTINENTAL   TOBACCO   CO. 
Opinibn  of  the  Court 


277 


Y.  389,  398,  17  N.  E.  343,  4  Am.  St.  Eep.  465;  Butchers' 
Union  Co.  v.  Crescent  City,  etc.,  Co.,  Ill  U.  S.  746,  755,  4 
Sup.  Ct.  652,  28  L.  Ed.  585;  Welch  v.  Phelps  <&  Bigelow 
Windmill  Co.  (Tex.  Sup.)  36  S.  W.  71;  Commonwealth  v. 
Grinstead  (Ky.)  63  S.  W.  427;  Walsh  v.  D wight  (Sup.) 
58  N.  Y.  Supp.  91,  93;  Brown  v.  Rounsavell,  78  111.  689; 
Noyes  on  Intercorporate  Eelations,  §  388,  p.  563. 

In  Hopkins  v.  TJ.  S.,  171  U.  S.  592,  19  Sup.  Ct.  45,  43  L. 
Ed.  290,  the  Supreme  Court  said : 

"The  contract  condemned  by  the  statute  is  one  whose  direct  and 
immediate  effect  is  a  restraint  upon  that  liind  of  trade  or  commerce 
which  is  interstate.  *  *  *  To  treat  as  condemned  by  the  act  all 
agreements  under  whicli.  as  a  result,  the  cost  of  conducting  an  inter- 
state commercial  business  may  be  increased,  would  enlariare  the  ap- 
plication of  the  act  far  beyond  the  fair  meaning  of  the  language 
used.  There  must  be  some  direct  and  immediate  effect  uix)n  inter- 
state commerce  in  order  to  come  within  the  act." 

[459]  And  at  page  600,  171  U.  S.,  page  48,  19  Sup.  Ct.,  43 
L.  Ed.  290,  it  said : 

"  The  act  of  Congress  must  have  a  reasonable  construction,  or  else 
there  would  scarcely  be  an  agreement  or  contract  among  business 
men  that  could  not  be  said  to  have,  indirectly  or  remotely,  some 
bearing  \\\)0\\  interstate  commerce,  and  possibly  to  restrain  it  We 
have  no  idea  that  the  act  covers  or  was  intended  to  cover  such  kinds 
of  agreements." 

In  Anderson  v.  TJ.  S.,  I7l  U.  S.  616,  19  Sup.  Ct.  54,  43  L. 
Ed.  300,  the  court  quoted  this  sentence  from  the  opinion  in 
Smith  V.  Alabama,  124  U.  S.  465,  473,  8  Sup.  Ct  564,  566,  31 
L.  Ed.  508,  "  There  are  many  cases,  however,  where  the  ac- 
knowledged powers  of  a  state  may  be  exerted  and  applied 
in  such  a  manner  as  to  affect  foreign  or  interstate  commerce 
without  being  intended  to  operate  as  commercial  regula- 
tions," and  then  said : 

"The  same  is  true  as  to  certain  kinds  of  agreements  entered  into 
between  persons  engaged  in  the  same  business  for  the  direct  and  bona 
fide  purpose  of  properly  and  reasonably  regulating  the  conduct  of 
their  business  among  themselves  and  with  the  public.  If  an  agree- 
ment of  that  nature,  while  apt  and  proper  for  the  purpose  thus  in- 
tended, should  possibly,  though  only  indirectly  and  unintentionally,  af- 
fect interstate  trade  or  commerce,  in  that  event  we  think  the  agree- 
ment would  be  good.  Otherwise  there  is  scarcely  an  agreement 
among  men  which  has  interstate  or  foreign  commerce  for  its  subject 
that  may  not  remotely  be  said  to  in  some  obscure  way  affect  that 
commerce,  and  to  be*  therefore  void." 

In  U.  S.  V.  Joint  Traffic  Ass'n,  171  U.  S.  568, 19  Sup.  Ct.  31, 
43  L.  Ed.  259,  the  Supreme  Court,  after  reviewing  and  af- 


278 


125   FEDERAL  REPOBTER,   459. 


Opinion  of  the  CJourt 

firming  the  case  of  Hopkins  v.  U.  S,  and  the  rule  which  has 
been  quoted  from  that  case,  declared : 

"An  agreement  entered  into  for  the  purpose  of  promoting  the  legiti- 
mate business  of  an  indlvidnal  or  eoriwration,  with  no  purpose  to 
thereby  affect  or  restrain  interstate  commerce,  and  which  does  not 
directly  restrain  such  commerce,  is  not,  as  we  thiulc,  covered  by  the 
act,  altliough  the  agreement  may  indirectly  and  remotely  affect  that 
commerce.  *  *  ♦  To  suppose,  as  is  assumed  by  counsel,  that  the 
effect  of  the  decision  in  the  Trans-Missouri  Case  is  to  render  illegal 
most  business  contracts  or  combinations,  however  indispensable  and 
necessary  they  may  be,  because,  as  they  assert,  they  all  restrain  trade 
in  some  remote  and  indirect  degree,  is  to  make  a  most  violent  as- 
sumption, and  one  not  called  for  or  justified  by  the  decision  men- 
tioned, or  by  any  other  decision  of  this  court." 

The  right  of  each  competitor  to  hx  the  prices  of  the  com- 
modities which  he  offers  for  sale,  and  to  dictate  the  terms 
upon  which  he  will  dispose  of  them,  is  indispensable  to  the 
very  existence   of  competition.     Strike  down  or  stipulate 
away  that  right,  and  competition  is  not  only  restricted,  but 
destroyed.     Hence  agreements  of  comjjeting  railroad  com- 
panies to  intrust  their  power  to  fix  rates  of  transportation 
to  the  same  man  or  body  of  men  (U,  S,  v.  Tram-Missouri 
Freight  Ass'n,  166  IJ.  S.  200, 17  Sup.  Ct.  540,  41  L.  Ed.  1007; 
U.  S,  V.  Joint  Traific  Ass'n,  l7l  U.  S.  505,  19  Sup.  Ct.  25,  43 
L.  Ed.  259;  U.  S.  v.  Northern  Semirities  Co.  fC.  C]   120 
Fed.  721),  and  contracts  of  competitors  in  the  production  or 
sale  of  merchantable  commodities  to  deprive  each  competitor 
of  the  right  to  fix  the  j)rices  of  his  own  goods,  the  terms  of 
the  sale,  or  the  customers  to  whom  he  shall  dispose  of  them, 
and  either  to  fix  these  prices,  terms,  and  customers  by  the 
agreement  of  [460]  the  competitors,  or  to  intrust  the  power 
to  dictate  them  to  the  same  man  or  body  of  men  {U,  8.  v. 
JeJlico  Mountain  Coal  <&  Coke  Co.  [C.  C]  46  Fed.  432,  12 
L.  R.  A.  753:  U.  8.  v.  Coal  Dealers'  Ass'n  [C.  C]  85  Fed.  252; 
Addyston  Pipe  cf-  8teel  Co.  v.  U.  8.,  175  U.  S.  211,  20  Sup! 
a.  96,  44  L.  Ed.  136;  U.  8.  v.  Addyston  Pipe  d;  8teel  Co., 
85  Fed.  271,  29  C.  C.  A.  141,  46  L.  R.  A.  122;  Chesapeake  cC* 
O.  Fuel  Co.  V.  U.  8.,  115  Fed.  610,  53  C.  C.  A.  250;  Gibhs  v. 
McNeeley,  118  Fed.  120,  55  C.  C.  A.  70,  60  L.  R.  A.  152; 
Lowry  v.  Tih,  Mantel  &  Grate  Ass'n  [C.  C]  98  Fed.  817; 
Id.  [C.  C]  106  Fed.  40),  necessarily  have  the  effect  either  to 
stifle  competition  entirely,  or  to  directly  and  substantially  re- 
strict it,  because  such  contracts  deprive  the  rivals  in  trade  of 


WHIT  WELL   V.    CONTINENTAL   TOBACCO   CO. 


279 


Opinion  of  the  Court 

their  best  means  of  instituting  and  maintaining  competition 
between  themselves. 

In  the  contract,  combination,  or  conspiracy  which  is 
charged  against  the  defendants  in  this  case  there  is  nothing 
of  this  character.  The  tobacco  company  is  a  manufacturer 
and  trader,  and  McHie  is  its  employe.  Conceding,  for  the 
purpose  of  the  argiunent  only,  but  not  deciding,  that  there 
may  be  a  contract,  combination,  or  conspiracy  in  restraint  of 
trade  between  an  employer  and  his  employe,  no  such  contract, 
combination,  or  conspiracy  between  them  can  be  a  violation 
of  this  law  unless  it  is  in  restraint  of  interstate  commerce; 
and  the  only  combination  charged  against  the  defendants  is 
their  combination  to  make  sales  of  the  commodities  of  the 
tobacco  company  profitable  to  purchasers  to  those  persons 
only  who  refrain  from  dealing  in  the  wares  of  their  com- 
petitors. The  two  defendants  in  this  case  have  never  been 
and  never  intended  to  be  competitors.  There  has  never  been 
any  competition,  actual  or  possible,  between  them,  and  hence 
no  competition  between  them  is  or  can  l>e  restrained  by  their 
combination  to  conduct  the  trade  of  the  tobacco  company. 
The  contract,  combination,  or  conspirac)^  charged  against 
them  did  not  restrict  comj^etition  between  them  and  the  in- 
dependent manufacturers  or  dealers  who,  according  to  the 
complaint,  were  their  competitors,  because  it  left  the  latter 
free  to  select  their  purchasers  and  to  fix  the  prices  of  their 
goods  and  the  terms  at  which  they  would  dispose  of  them  to 
all  intending  purchasers. 

The  tobacco  company  and  its  competitors  were  not  dealing 
in  articles  of  prime  necessity,  like  corn  and  coal,  nor  were 
they  rendering  public  or  quasi  public  service,  like  railroad 
and  gas  corporations.  Each  of  them,  therefore,  had  the 
right  to  refuse  to  sell  its  commodities  at  any  price.  Each 
had  the  right  to*  fix  the  prices  at  which  it  Avould  dispose  of 
them,  and  the  terms  upon  which  it  would  contract  to  sell 
them.  Each  of  them  had  the  right  to  determine  with  what 
persons  it  would  make  its  contracts  of  sale.  In  re  Greene  (C. 
C.)  52  Fed.  104,  115;  In  re  GHce  (C.  C.)  79  Fed.  627,  644; 
l^Valsh  V.  D wight  (Sup.)  58  N.  Y.  Supp.  91,  93;  Broicn  v. 
Iiounsavell,  78  111.  589;  Coinmomvealth  v.  GHnstead  (Ky.) 
(33  S.  W.  427;  Allgeyer  v.  Louisiana^  165  U.  S.  578,  589,  17 


280 


125  FEDERAL  BEPORTER,   160. 


Opinion  of  the  Court. 
Sup.  a,  427,  41  L.  Ed.  832.  There  is  nothing  in  the  act  of 
July  2,  1890,  c.  647,  26  Stat.  209  [U.  S.  Comp.  St.  1901,  p. 
3^00],  which  deprived  any  of  these  competitors  of  these 
rights.  If  there  had  been,  the  law  itself  would  have 
destroyed  competition  more  effectually  than  any  contracts  or 
combi-  [461]  nations  of  persons  or  of  corporations  couM 
possibly  have  stifled  it  The  exercise  of  these  undoubted 
rights  is  essential  to  the  very  existence  of  free  competition, 
and  so  long  as  their  exercise  by  any  person  or  corporation  in 
no  way  deprives  competitors  of  the  same  rights,  or  restricts 
them  in  the  use  of  these  rights,  it  is  difficult  to  perceive  how 
their  exercise  can  constitute  any  restriction  upon  competition 
or  any  restraint  upon  interstate  trade. 

The  acts  of  the  defendant  which  are  alleged  by  the  com- 
plaint in  this  action  to  constitute  an  unlawful  restraint  upon 
interstate  commerce  are  nothing  more  than  the  lawful  ex- 
ercise of  these  unquestioned  rights  which  are  indispensable 
to  the  existence  of  competition  or  to  the  conduct  of  trade. 
The  tobacco  company  and  its  employe  fixed  the  prices  of  its 
commodities  so  high  that  the  plaintiff  could  not  profitably 
buy  them.  This  was  no  restriction  upon  free  competition, 
because  it  left  the  rivals  of  the  company  free  to  sell  their 
competing  commodities  at  any  price  which  they  elected  to 
charge  for  them.  It  would  have  been  no  violation  of  the  law 
under  consideration  if  the  tobacco  company  and  its  employe 
had  combined  to  refuse  to  sell  any  of  its  commodities  at  any 
price,  and  to  retire  from  the  business  in  which  they  were 
engaged  entirely.  Much  less  could  it  be  a  violation  of  this 
act  for  them  to  fix  their  prices  too  high  for  profitable  invest- 
ment by  the  plaintiff. 

The  tobacco  company  and  its  employe  sold  its  prod- 
ucts to  customers  who  refrained  from  dealing  in  the 
goods  of  its  competitors  at  prices  which  rendered  their 
purchases  profitable.  But  there  was  no  restriction  upon 
competition  here,  because  this  act  left  the  rivals  of  the 
tobacco  company  free  to  sell  their  competing  commodities 
to  all  other  purchasers  than  those  who  bought  of  the  defend- 
ants, and  free  to  compete  for  sales  to  the  customers  of  the 
tobacco  company  by  offering  to  them  goods  at  lower  prices 
or  on  better  terms  than  they  secured  from  that  company. 


WHIT  WELL   V,    CONTINENTAL   TOBACCO   CO. 
Opinion  of  the  Court 


281 


The  tobacco  company  and  its  employe  were  not  required, 
like  competitors  engaged  in  public  or  quasi  public  service, 
to  sell  to  all  applicants  who  sought  to  buy,  or  to  sell  to  all 
intending  purchasers  at  the  same  prices.  They  had  the  right 
to  select  their  customers,  to  sell  and  to  refuse  to  sell  to  whom- 
soever they  chose,  and  to  fix  different  prices  for  sales  of  the 
same  commodities  to  different  persons.  In  the  exercise  of 
this  right  they  selected  those  persons  who  would  refrain 
from  handling  the  goods  of  their  competitors  as  their  cus- 
tomers, by  selling  their  products  to  them  at  lower  prices 
than  they  offered  them  to  others.  There  was  nothing  in 
this  selection,  or  in  the  means  employed  to  effect  it,  that  was 
either  illegal  or  immoral.  It  had  no  necessary  effect  to  di- 
rectly and  substantially  restrict  free  competition  in  any  of 
the  products  of  tobacco,  and  it  did  not  unlawfully  restrain 
interstate  commerce,  because  it  in  no  way  restricted  the  exer- 
cise of  the  rights  of  the  competitors  of  the  tobacco  company 
to  fix  the  prices  of  their  goods  and  the  terms  of  their  sales 
of  similar  products  according  to  the  dictates  of  their  respec- 
tive wills. 

It  is  contended,  however,  that  this  selection  by  the  de- 
fendants of  customers  who  refrained  from  selling  the  goods 
of  their  competitors  violated  section  2  of  the  anti-trust  act, 
because  it  was  an  [462]  "  attempt  to  monopolize  *  *  * 
part  of  the  trade  or  commerce  among  the  several  states." 
It  is  admitted  that  the  practice  of  the  defendants  was  not 
only  an  attempt,  but  a  successful  attempt,  to  monopolize  a 
part  of  this  commerce.  But  is  every  attempt  to  monopolize 
any  part  of  interstate  commerce  made  unlawful  and  punish- 
able by  section  2  of  the  act  of  July  2,  1890,  c.  647,  26  Stat. 
209  [U.  S.  Comp.  St.  1901,  p.  3200]  ?  If  so,  no  interstate 
commerce  has  ever  been  lawfully  conducted  since  that  act 
became  a  law,  because  every  sale  and  every  trans^^ortation 
of  an  article  which  is  the  subject  of  interstate  commerce  is 
a  successful  attempt  to  monopolize  that  part  of  this  com- 
merce which  concerns  that  sale  or  transportation.  An  at- 
tempt by  each  competitor  to  monopolize  a  part  of  interstate 
commerce  is  the  very  root  of  all  competition  therein.  Eradi- 
cate it,  and  competition  necessarily  ceases — dies.  Every 
person  engaged  in  interstate  commerce  necessarily  attempts 


f}Q€% 

tjOm 


125  fEDEBAL  BEPOBIEB,  461. 


Opinion  of  the  CJourt 

to  draw  to  himself,  and  to  exclude  others  from,  a  part  of 
that  trade;  and,  if  he  may  not  do  this,  he  may  not  compete 
with  his  rivals,  all  other  persons  and  corporations  must 
cease  to  secure  for  themselves  any  part  of  the  commerce 
among  the  states,  and  some  single  corporation  or  person 
must  be  permitted  to  receive  and  control  it  all  in  one  huge 
monopoly.    The  purpose  of  the  act  of  July  2,  1890,  was, 
however,  to  prevent  the  stifling  of  competition,  not  to  de- 
stroy it  or  to  foster  monopoly,  and  any  construction  of  any 
of  its  provisions  which  would  give  it  such  an  effect  is  un- 
reasonable and  inconsistent  with  the  object  and  spirit  of 
the  law.    It  is  an  interpretation  which  fastei-s  the  mischief 
it  was  passed  to  remedy,  and  destroys  the  remedy  provided 
to  abate  the  evil,  while  a  sound  construction  would  tend  to 
abate  the  mischief  and  to  promote  the  remedy.    It  cannot, 
therefore,  lie  the  true  meaning  of  the  second  section  of  this 
law  that  every  attempt  to  monopolize  any  part  of  inter- 
state commerce  is  illegal.    The  act  must,  as  the  Supreme 
Court  has  twice  declared  {Tlopldm  v.  U,  S,.  171  U.  S.  578, 
600,  19  Sup.  Ct.  40,  43  L.  Ed.  290;  L\  S.  v.  Joint  Tmiftc 
Ass'n,  171  U.  S.  505,  568,  19  Sup.  Ct.  25,  43  L.  Ed.  259), 
liave  a  reasonable  construction.     The  purpose  of  the  second 
section  is  the  same  as  that  of  the  first— to  prevent  the  re- 
striction  of  competition— and   the  two  sections  ought  to 
receive  similar  interpretations.    The  Supreme  Court  has  de- 
clared that  the  true  construction  of  the  first  section  is  that 
no  contract,  combination,  or  conspiracy  is  denounced  by  it 
unless  its  necessary  effect  is  to  directly  and  substantially 
restrict  comi)etition  in  commerce  among  the  states.    By  a 
parity  of  reasoning,  the  correct  interpretation  of  the  second 
section  must  l^  that  no  attempt  to  monopolize  a  part  of 
commerce  among  the  states  is  made  illegal  or  punishable  by 
the  provisions  of  that  section  imless  the  necessary  effect  of 
that  attempt  is  to  directly  and  substantially  restrict  com- 
merce among  the  states.     The  acts  of  the  defendants  had 
no  such  effect.     They  evidenced  nothing  but  the  legitimate 
efforts  of  traders  to  secure  for  themselves  as  large  a  part  of 
interetate  trade  as  possible,  while  .they  left  their  competitors 
free  to  do  the  same.    It  was  not— it  could  not  have  been— 
the  purpose  or  the  effect  of  the  second  section  of  this  law 


WHITWELL   V.    CONTINENTAIi  TOBACCO   CO. 


Opinion  of  the  CJourt. 


283 


to  prohibit  or  to  punish  the  customary  and  universal  at- 
tempts of  all  manufacturers,  merchants.  [463]  and  traders 
engaged  in  interstate  commerce  to  monopolize  a  fair  share 
of  it  in  the  necessary  conduct  and  desired  enlargement  of 
their  trade,  while  their  attempts  leave  their  competitors  free 
to  make  successful  endeavors  of  the  same  kind.  The  acts 
of  the  defendants  were  of  this  nature,  and  they  did  not 
violate  the  second  section  of  the  law.  An  attempt  to  mo- 
nopolize a  part  of  interstate  conmieree,  the  necessary  effect 
of  which  is  to  stifle  or  to  directly  and  substantially  restrict 
competition  in  commerce  among  the  states,  violates  the  sec- 
ond section  of  this  act.  But  an  attempt  to  monopolize  a 
part  of  interstate  commerce  which  promotes,  or  but  indi- 
rectly or  incidentally  restricts,  competition  therein,  while  its 
main  purpose  and  chief  effect  are  to  increase  the  trade  and 
foster  the  business  of  those  who  make  it,  was  not  intended 
to  be  made,  and  was  not  made,  illegal  hy  the  second  section 
of  the  act  under  consideration,  because  such  attempts  are 
indispensable  to  the  existence  of  any  competition  in  com- 
merce among  the  states. 

There  is  another  reason  why  the  complaint  in  this  action 
fails  to  state  facts  sufficient  to  constitute  a  cause  of  action: 
The  sole  cause  of  the  damages  claimed  in  it  is  shown  to  be 
the  refusal  of  the  defendants  to  sell  their  goods  to  the 
l>laintiff  at  prices  which  would  enable  him  to  resell  them 
with  a  profit.  Now,  no  act  or  omission  of  a  party  is  action- 
able, no  act  or  omission  of  a  pei'son  causes  legal  injury  to 
another,  unless  it  is  either  a  breach  of  a  contract  with,  or 
of  a  duty  to,  him.  The  damages  from  other  acts  or  omis- 
sions form  a  part  of  that  damnum  absque  injuria  for  which 
no  action  can  be  maintained  or  recovery  had  in  the  courts. 
The  defendants  had  not  agreed  to  sell  their  goods  to  the 
plaintiff  at  prices  which  would  make  their  purchase  profit- 
able to  him,  so  that  the  damages  he  suffered  did  not  result 
from  any  breach  of  any  contract  with  him.  They  were  not 
caused  by  the  breach  of  any  legal  duty  to  the  plaintiff,  for 
the  defendants  owed  him  no  duty  to  sell  their  products  to 
him  at  any  price — much  less,  at  prices  so  low  that  he  could 
realize  a  profit  by  selling  them  again  to  others.    The  com- 


284 


125  FEDERAL  BEPORTER,   593. 


Opinion  of  the  Court, 
plaint  therefore  fails  to  show  that  any  legal  injury  or  ac- 
tionable damages  were  inflicted  upon  the  plaintiff  by  the 
acts  of  the  defendants  and  the  judgment  below  is  affirmed. 


[593]  PHILLIPS  V.  lOLA  PORTLAND  CEMENT  CO. 

(Circuit  Court  of  Appeals,  Eighth  Circuit.    November  12,  1903.) 

[125  Fed.,  593.] 

Anti-Tbust  Aciv-Test  of  Validity  of  Contract  or  CoMBiNAiroif 
UNDER.— The  test  of  the  violation  of  the  anti-trust  act  of  July  2 
1890  (26  Stat.  209,  c.  647  [U.  S.  Comp.  St.  1901,  p.  8200]),  by  a 
contract  or  combination,  is  its  effect  upon  competition  in  commerce 
among  the  states.  If  its  necessary  effect  is  to  stifle  or  to  directly 
and  substantially  restrict  interstate  commerce,  It  falls  under  the 
ban  of  the  law,  but  if  it  promotes,  or  only  incidentally  or  indirectly 
restricts,  competition,  while  its  main  purpose  and  chief  effect  are 
to  promote  the  business  and  increase  the  trade  of  the  maimers,  it  ia 
not  denounced  or  avoided  by  that  law. 

Same— Contract  Restkicting  Territory  within  Which  Purchasers 
MAT  Sell.— A  contract  of  sale  by  a  manufacturer  to  jobbers  of 
some  of  its  product,  to  be  shipped  across  state  lines  to  the  latter, 
whereby  the  parties  agree  that  the  purchasers  shall  not  sell,  ship* 
or  allow  any  of  the  product  thus  purchased  to  be  shipped,  outside 
of  a  certain  state,  is  not  in  restraint  of  trade  or  illegal  under  the 
act  of  July  2,  1890. 

(Syllabus  by  the  Court.) 

[5M]  In  Error  to  the  Circuit  Court  of  the  United  States 
for  the  Western  District  of  Missouri. 

John  Charles  Harrm  (Edward  F,  Harris^  on  the  brief), 
for  plaintiff  in  error. 

Jarnes  C.  Williams,  for  defendant  in  error. 

Before  Sanborn,  Thayer,  and  Van  Devanter,  Circuit 
Judges. 

Sanborn,  Circuit  Judge. 

This  is  a  writ  of  error  to  review  a  judgment  for  the  plain- 
tiff below,  the  lola  Portland  Cement  Company,  a  corpora- 
tion, against  Thomas  H.  Phillips,  in  an  action  for  damages 


PHILLIPS   V.   IOLA  PORTLAND  CEMENT   CO. 


285 


Opinion  of  the  Court 

for  the  breach  of  a  contract  of  sale  of  cement.  The  com- 
pany was  a  manufacturer  of  cement  in  the  state  of  Kansas. 
The  defendant  below,  Phillips,  was  a  member  of  the  copart- 
nership of  William  Parr  &  Co.,  who  were  merchants  engaged 
in  business  at  Galveston,  in  the  state  of  Texas.  On  January 
24,  1901,  Parr  &  Co.  made  a  contract  with  the  cement  com- 
pany whereby  they  agreed  to  purchase  of  it,  during  the  year 
1901,  50,000  barrels  of  lola  portland  cement  to  be  delivered 
free  on  board  the  cars  at  lola,  in  the  state  of  Kansas,  and  to 
pay  therefor  $1.20  per  barrel.  They  further  agreed  "  not 
to  sell  said  cement,  ship  same,  or  allow  same  to  be  shipped," 
outside  of  the  state  of  Texas.  Under  this  contract  they  ac- 
cepted and  paid  for  24,580  barrels  of  the  cement,  and  refased 
to  accept  25,420  barrels  thereof.  The  cement  company 
brought  an  action  against  them  to  recover  the  damages  which 
it  sustained  by  the  failure  of  the  purchasers  to  accept  and 
pay  for  these  25,420  barrels,  and  Phillips,  the  only  defendant 
served  with  process,  answered  that  the  contract  was  illegal 
and  void  under  Act  Cong.  July  2,  1890,  c.  647,  26  Stat.  209 
[U.  S.  Comp.  St.  1901,  p.  3200],  because  it  provided  that 
Parr  &  Co.  should  not  sell  the  cement,  ship  it,  or  allow  it  to 
be  shipped,  without  the  state  of  Texas. 

It  is  now  settled  by  repeated  decisions  of  the  Supreme 
Court  that  the  test  of  the  validity  of  a  contract,  combination, 
or  conspiracy  challenged  under  the  anti-trust  law  is  the  direct 
effect  of  such  a  contract  or  combination  upon  competition  in 
commerce  among  the  states.  If  its  necessary  effect  is  to  stifle 
competition,  or  to  directly  and  substantially  restrict  it,  it  is 
void.  But  if  it  promotes,  or  only  incidentally  or  indirectly 
restricts,  competition  in  commerce  among  the  states,  while  its 
main  purpose  and  chief  effect  are  to  foster  the  trade  and  en- 
hance the  business  of  those  who  make  it,  it  does  not  constitute 
a  restraint  of  interstate  commerce  within  the  meaning  of  that 
law,  and  is  not  obnoxious  to  its  provisions.  This  act  of 
Congress  must  have  a  reasonable  construction.  It  was  not 
its  purpose  to  prohibit  or  to  render  illegal  the  ordinary  con- 
tracts or  combinations  of  manufacturers,  merchants,  and 
traders,  or  the  usual  devices  to  which  they  resort  to  promote 
the  success  of  their  business,  to  enhance  their  trade,  and  to 
make  their  occupations  gainful,  so  long  as  those  combina- 


Zob 


125  FEDERAL  BEPORTER,  595. 


Opinion  of  tlie  Court 

tioiis  and  devices  do  not  necessarily  have  a  dii-ect  and  sub- 
stantial effect  to  restrict  competition  in  commerce  among  the 
states.    HopMm  v.  U.  ^,,  171  U.  S.  578,  592,  19  Sup.  Ct.  40, 

43  L.  Ed.  290;  Andei'son  v.  [505]  U.  S.,  171  U.  S.  604,  616, 
19  Slip.  Ct.  50,  43  L.  Ed.  300;  U,  S.  v.  Joint  Traffic  As8\ 
171  U.  S.  505,  568,  10  Sup.  Ct.  25,  43  L.  Ed.  259;  Addyston 
Pipe  i&  Steel  Co,  v.  l\  S.,  175  U.  S.  211,  245,  20  Sup.  Ct.  96, 

44  L.  Ed.  136;  U.  S,  v.  Tmns-Mismun  Freight  Ass\  166 
U.  8.  290,  339,  340.  342,  17  Sup.  Ct.  540,  41  L.  Ed.  1007; 
r.  S.  V.  Xorthem  SecHtifies  Co.  (C.  C.)  120  Fed.  721,  725. 
The  application  of  this  rule  to  the  facts  of  the  case  in  hand 
leaves  no  doubt  that  there  was  nothing  in  the  contract  before 
us  obnoxious  to  the  provisions  of  the  anti-trust  law  of  1890. 
The  lola  Cement  Company  had  no  monopoly  of  the  manu- 
facture or  sale  of  cement  in  the  United  States.  It  was  sur- 
rounded by  competing  manufacturers,  and  the  contract 
which  it  made  with  Parr  &  Co.,  of  Galveston,  had  no  direct  or 
substantial  effect  upon  competition  in  trade  among  the  states. 
It  left  the  manufacturers  who  were  comi^eting  with  the 
plaintiff  for  the  trade  of  the  country  free  to  select  their  cus- 
tomei-s,  to  fix  their  priee<,  and  to  dictate  their  terms  for  the 
sales  of  the  commodities  they  offered,  so  that  in  this  regard 
no  restraint  whatever  was  imposed.  If  it  had  the  effect  to 
restrain  Parr  &  Co.  from  using  the  product  which  they  pur- 
chased to  cofnpete  with  other  jobl>ers  or  manufacturers  in 
the  country  beyond  the  limits  of  the  state  of  Texas,  this 
restriction  was  not  the  chief  purpose  or  the  main  effect  of 
the  contract  of  sale,  but  a  mere  indirect  and  immaterial  inci- 
dent of  it.  The  agreement  of  sale  imposed  no  direct  restric- 
tion upon  competition  in  commerce  among  the  states,  did  not 
constitute  a  i-estraint  of  that  commerce,  and  was  not  obnox- 
ious to  the  provisions  of  the  act  of  July  2,  1890. 

For  a  more  extended  consideration  of  the  principles  upon 
which  this  decision  is  based,  for  a  citation,  review,  and  anal- 
ysis of  the  authorities  which  sustain  them  and  which  compel 
the  ultimate  conclusion  which  w-e  have  reached  in  this  case, 
reference  is  made  to  the  opinion  of  this  court  in  WhitweU 
V.  Continental  Tohaceo  Co,  (which  is  filed  herewith)  125 
Fed.  454.  A  repetition  of  the  citation  and  review  of  au- 
thorities, and  of  the  more  exhaustive  discussion  of  princi- 


PHILLIPS   V.   lOLA  PORTLAND  CEMENT   CO. 
Opinion  of  the  Conrt. 


287 


pies  there  indulged  in,  would  be  useless  here,  and  it  is 
omitted. 

The  evidence  disclosed  the  fact  that  shortly  after  the  ex- 
piration of  the  year  within  which  the  defendants  had  agreed 
to  receive  and  pay  for  the  cement  the  plaintiff  sold  the 
25,420  barrels,  which  the  defendants  refused  to  take,  for  $1.10 
per  barrel.  The  president  of  the  plaintiff  testified  that  the 
cost  of  selling  this  cement  was  about  10  cents  per  barrel, 
that  it  did  not  cost  any  more  to  sell  the  cement  which  had 
been  previously  sold  to  Parr  &  Co.  than  it  did  to  sell  any 
other  cement,  but  that  the  cost  of  selling  any  cement  was 
about  10  cents  per  barrel.  The  court  below  instructed  the 
jury  that,  if  they  believed  that  the  cost  of  selling  this  cement 
was  10  cents  per  barrel,  they  might  allow  that  amount  as 
a  part  of  the  damages  which  the  plaintiff  was  entitled  to 
recover.  This  instruction  is  assigned  as  error.  But  it  was 
manifestly  right.  The  plaintiff  had  once  incurred  and  paid 
the  cost  of  selling  the  cement  in  question  to  Parr  &  Co.,  and 
had  obtained  a  valid  contract  for  its  purchase  price.  Their 
failure  to  comply  with  this  agreement  imposed  upon  the 
plaintiff  the  necessary  expense  of  making  a  second  sale 
of  that  portion  of  the  cement  already  sold  which  the  defend- 
ants refused  to  accept. 

[596]  It  is  assigned  as  error  that  the  court  below  refused 
to  admit  in  evidence  a  telegram  from  the  president  of  the 
lola  company  to  Parr  &  Co.,  dated  January  24,  1901,  the 
day  of  the  date  of  the  contract,  to  the  effect  that  the  plain- 
tiff would  guaranty  a  rate  of  freight  of  fi\Q  cents  per  him- 
dred  less  than  Kansas  City  rates  to  all  Texas  points.  But 
there  was  no  error  in  this  ruling.  The  telegram  was  not 
admissible  to  establish  any  agreement  to  guaranty  this 
rate  of  freight,  and  a  breach  of  that  agreement  as  a  defense 
to  the  action,  because  no  such  defense  was  pleaded.  It  was 
not  admissible  to  modify  or  change  the  written  contract  of 
January  24, 1901,  because  if  it  was  sent  before  or  at  the  time 
that  the  contract  was  executed  it  was  merged  in  that  con- 
tract and  became  ineffective,  and  if  it  was  sent  after  that 
contract  was  made  it  was  not  pleaded  and  had  no  place  in 
the  trial  of  this  case. 

Another  alleged  error  specified  is  that  the  court  below 


Zoo 


126  FEDEBAL  BEPOBTER,  364. 


Syllabua. 

refused  to  admit  in  evidence  a  letter  from  thiB  plaintiff  to 
the  defendants,  dated  February  10,  1902,  in  which  they 
wrote  that  they  had  not  done  an  agency  business  and  re- 
quested a  proposition.  It  is  contended  that  this  letter  was 
competent  to  establish  the  fact  that  the  relation  between  the 
plaintiff  and  the  defendants  under  the  contract  in  suit  was 
that  of  vendor  and  vendee,  and  not  that  of  principal  and 
agent.  Conceding  that  this  letter  had  a  tendency  to  estab- 
lish that  fact,  its  rejection  did  not  prejudice,  and  could  not 
have  prejudiced,  the  defendants,  because  the  relation  of 
vendor  and  vendee  was  proved  by  the  contract,  because  the 
case  was  tried,  and  the  court  charged  the  jury,  and  this 
court  has  determined  the  case,  upon  that  theory,  and  error 
without  prejudice  is  no  ground  for  reversal. 
The  judgment  below  is  affirmed. 


l^U]  UNITED  STATES  CONSOLIDATED  SEEDED 
RAISIN  CO.  V,  GRIFFIN  &  SKELLEY  CO. 

(Circuit  Court  of  Appeals,  Ninth  Circuit.    November  9,  1903.) 

[126  Fed..  364.] 

MoifOPOLiEs— Legality  op  Contracts— Licenses  undeb  Patents.— 
Contracts  by  which  a  number  of  patents  covering  similar  inventions 
are  conveyed  by  the  several  owners  to  one  of  the  parties,  which 
grants  licenses  under  all  to  the  others,  are  not  void  as  against 
public  policy,  or  as  in  violation  of  the  Sherman  anti-trust  law. 
because  of  provisions  intended  to  protect  and  keep  up  the  patent 
monopoly  by  requiring  the  licensor  to  prosecute  all  infringers,  limit- 
ing the  licenses  to  be  granted  to  such  licensees  as  shall  be  agreed  on, 
and  imposing  conditions  on  each  licensee  as  to  the  use  and  owner- 
ship of  the  patented  machines,  and  prohibiting  him  from  using  any 
others.*  6 

Patents — ^Rights  of  Patentee— Eoect  of  State  LAws.^Rlghts  ac- 
quired under  the  patent  laws  of  the  United  States  cannot  be  af- 
fected by  a  state  statute.     , 

Contracts— Efject  of  Illegal  Provisions— Divisibility.— Stipula- 
tions in  a  contract  which  are  invalid  as  in  restraint  of  trade,  if 

o  Validity  of  monopolistic  contracts  as  affected  by  public  policy,  see 
note  to  Cravens  v.  Carter-Orume  Co,,  34  C.  0.  A.  486. 
6  Syllabus  copyrighted,  1904,  by  West  Publishing  Co. 


U.    S.    CONSOL.    S.    R.    CO.    V.   GRIFFIN    &   SKELLEY   CO.         289 

Statement  of  the  Case. 

capable  of  being  construed  divisibly,  do  not  affect  the  validity  of 
other  provisions. 
Same — Validity — When  Question  fob  Jury. — Conceding  that  a  con- 
tract legal  in  its  terms  and  in  its  consideration  may  he  rendered 
illegal  as  against  public  policy  by  reason  of  the  intention  of  the  par- 
ties to  so  use  it  as  to  commit  civil  injury  to  third  persons,  where  the 
evidence  as  to  such  intention  is  conflicting  the  contract  cannot  l>e 
declared  illegal  by  tbe  court  as  matter  of  law. 


In  Error  to  the  Circuit  Court  of  the  United  States  for  the 
Northern  District  of  California. 

The  plaintiff  in  error  is  a  corporation  created  under  the  laws  of 
New  York.  I»rior  to  .Tune  2<;,  19(i0,  it  was  the  owner  of  two  certain 
patents  for  machines  for  seeding  and  i)ro(essing  raisins.  Other  j>er- 
sons  ami  corporations  at  Fresno,  Cal.,  engaged  in  the  raisin-seeding 
business,  owned  certain  other  patents.  Litigation  had  arisen  between 
the  owners  of  these  patents.  To  end  this  litigation,  and  to  avoid  it 
in  the  future,  an  agreement  was  made  on  June  20,  IfHX),  between  the 
plaintiff"  in  error,  as  the  party  of  the  first  part,  and  the  Forsvth  Raisin 
Process  Company,  the  Forsyth  Seeded  Kaisin  Company,  the  Griffin  & 
Skelley  Company,  the  California  Seeding  Machine  Companv,  William 
M.  Griffin,  Thomas  E.  Langley,  Cary  S.  Cox,  and  Lee  L.  Gray,  as 
parties  of  the  second  pait.  The  agreement  recites  that  tlie  party  of 
the  first  part  is  the  owner  of  patents  numbered  r>4.38.*i3  and  .^43834, 
and  that  the  parties  of  the  second  part  own  patents  numbered  011782 
<>411).H8.  041039,  014178,  502131,  002008,  010008,  and  07022.?,  ami  that  it 
is  deemed  expedient  and  for  the  interest  of  all  parties  that  all  of 
said  letters  patent  be  combined  f(n-  mutual  protection  and  assistance. 
It  thereupon  provides,  in  sul>stance,  that  the  jiarties  of  tbe  second 
part  shall  assign  tlieir  various  patents  to  the  party  of  the  first  part, 
and  that  the  latter  shall  use  every  reasonable  effort  to  defend  and 
l>rotect  tbe  several  inventions  and  letters  patent  in  the  interest  of  all, 
and  that  it  shall  grant  licenses  under  said  patents,  institute  and  de- 
feud  suits  to  protect  said  inventions  and  letters  patent.  Tbe  agree- 
ment provides  further  that  the  royalties  which  shall  be  i-eceived  on 
license  contracts  shall,  after  the  deduction  of  exi^enses  and  other 
charges,  as  provided  for  in  the  agreement,  be  paid  40  i)er  cent,  to  the 
plaintiff  in  error  on  [365]  account  of  its  patents,  .30  i)er  cent,  to  the 
Forsyth  Kaisin  Process  Company  on  account  of  its  patent,  20  per  cent, 
to  the  present  owners  of  letters  patent  010008,  0  per  cent,  to  Thomas  e! 
Langley  and  C.  S.  Cox,  and  4  per  cent,  to  the  California  Seeding  Ma- 
chine Company.  The  agreement  provides  for  an  appointment  of  an 
advisory  committee  of  four  memliers,  two  to  be  elesignated  by  the 
I)artj'  of  the  first  part,  and  two  by  the  parties  of  the  second  part*;  said 
committee  to  have  authority  to  determine  to  whom  licenses  shall  be 
granted  under  the  letters  i>atent,  the  terms  and  conditions  thereof; 
and  it  gives  the  committee  power  to  employ  a  financial  agent,  whose 
duty  it  shall  be  to  collect  and  distribute  the  royalties  under  such 
licenses.  The  agreement  makes  further  provision  for  the  payment 
of  salaries  of  officers,  taxes,  and  other  expenses,  makes  reference  to 
a  suit  then  pending  in  the  United  States  Circuit  Court  for  the  North- 
ern District  of  California  by  the  Forsyth  Raisin  Process  Company 
against  A.  L.  Hobbs  &  Co.  on  letters  patent  011782,  and  provides  that 
the  same  shall  be  prosecuted  without  delay  at  the  expense  of  the 


21220— VOL  2—07  m- 


-19 


Atji) 


126  FEDEBAL  REPORTEB,  366. 


Statement  of  the  Case. 

plaintiff  tlierein.  The  agreement  proceeds  to  provide  that,  in  case 
any  of  the  said  mentioned  letters  patent  shall  be  judicially  determined 
to  be  invalid  by  a  court  of  last  resort,  then  the  share  of  royalties 
In  the  agreement  apportioned  to  and  on  account  of  such  letters  patent 
shall  thereafter  not  be  paid. 

The  licenses  issued  under  this  agreement  were  all  In  the  one  form. 
They  recited  that  the  plaintiff  in  error,  the  licensor,  is  the  sole  owner 
of  the  letters  patent  referred  to  in  the  agreement;  and,  first,  that  it 
grants  to  the  licensee  the  right  to  use  machines  and  processes  embodied 
in  and  covered  by  said  letters  patent  throughout  the  United  States  for 
the  life  of  said  patents;  second,  that  the  party  of  the  second  part  shall 
pay  therefor  as  license  fee  one-eighth  of  one  cent  for  each  pound  of 
raisins  seedetl  or  processed  under  said  letters  patent  during  the  years 
1900  and  11)01,  and  thereafter  Due-fourtli  of  a  cent  per  pound;  third, 
that  the  llwnsor  shall  from  time  to  time  lease  to  tlie  licensee  raishi- 
see«ling  macliines,  processes,  appliances,  fittings,  etc.,  as  the  same  may 
be  reiuired,  ui>im  payment  of  the  actual  cost  of  the  same,  title  to  such 
machines,  h<nvever,  to  remain  in  the  licensor;  fourth,  that  the  licensee 
** shall  use  every  reasonable  endeavor  to  stnure  and  pr<»mote  the  busi- 
ness of  raisin-seeding  under  this  contract,  shall  neither  sublet  any  of 
said  machines,  nor  allow  any  parties,  except  its  own  euiployes,  to 
have  possession  or  control  of  or  to  use  said  machines;  shall  not 
use  any  other  raisln-stHHlIng  machines  during  the  life  of  this  con- 
tract than  those  furnished  by  the  first  party,  or  with  their  con- 
sent; and  shall  not  buy.  sell,  nor  deal  in  raisins  seeded  or  treated 
by  any  other  machines  or  processes  than  those  of  tlie  first  party." 
The  fifth  provision  requires  the  liceusw  to  lieep  suitable  boolis  of 
account,  oixm  to  the  inspectiim  of  the  licensor.  The  sixth  prohibits 
the  licensor  from  licensing  any  other  party  under  said  letters  patent 
for  less  royalty  or  compensation  than  one-half  a  <»eut  per  pound  for 
raisins  scetled  under  or  priK-cssed  under  the  said  patents,  except  with 
the  consent  of  four  of  certain  named  of  the  licensees.  The  license 
contract  contains  the  provision  that  the  licensor  shall  vigorously 
pro»e<?ute  infringers  of  said  letters  patent,  so  as  to  prevent  as  far  as 
possible,  all  unlawful  interference  with  the  bustoess  and  rights  of  the 
licensee  under  ami  l)y  virtue  of  the  contract. 

The  plafntilf  In  error  brought  an  action  at  law  against  the  defend- 
iiEt  in  error,  alleging  that  (m  .Tune  27,  IJXK),  one  of  the  above- 
nientione<l  contracts  of  liccnst*  was  entered  into  and  executed  by  the 
said  parties;  that  thereafter,  during  the  years  1J)00  and  1001,  the 
defendant  in  error  prowssed  about  12.000.000  pounds  of  raisins,  the 
licimse  fees  and  rentals  for  the  same,  as  provided  for  In  said  contract 
being  the  sum  of  $15,000;  that  no  part  of  said  sum  has  been  paid 
except  |3,T5!).42,  and  that  the  remainder,  $11,240.58,  is  due  and 
unpaid.  The  plaintiff  in  I'rror,  as  a  second  cause  of  action,  alleged 
that  after  3Iarch  15,  Ifm,  the  defendant  in  error  willfully  and  mali- 
ciously, and  for  the  puriKise  and  intent  of  damaging  and  injuring 
the  plaintiff  in  error,  failed,  refused,  and  neglected  to  use  every  or 
any  reasonable  endeavor  to  secure  or  pnmiote  the  business  of  raisin- 
seeding  under  said  contract  and  did  sublet  and  transfer  certain  and 
sundry  raisin-seeding  and  procsenslng  machines  which  it  owned  and 
was  operating  prior  to  the  execution  of  the  contract  of  June  27.  1900, 
to  other  parties,  who  were  not  Its  own  employes,  and  did  authorize, 
permit  and  allow  such  other  parties  to  use  the  same,  and  did  [866] 
buy,  sell,  and  deal  in  raisins  seeded  and  treated  bv  other  machines 
and  processes  than  those  of  the  plaintiff  in  error,  to  its  injury  in  the 
sum  of  $10,000.  The  defendant  in  error  made  its  answer  to  this  com- 
plaint by  denying  that  it  was  indebted  to  the  plaintiff  in  error  for 
license  fees  or  rentals  or  for  damages,  and  alleged  as  matters  of 
defense,  in  substance,  that  on  February  25,  1901,  the  defendant  In 


U.    S.    CONSOL.    S.    R.    CO.    V,    GRIFFIN    &   SKELLEY   CO.         291 


Statement  of  the  Case. 

error  rescinded  its  license  contract  with  the  plaintiff  In  error,  and 
gave  to  It  written  notice  thereof;  and  as  reasons  for  such  rescission 
alleged  that  prior  to  the  execution  of  said  contract  it  was  understood 
and  agreed  between  the  defendant  in  error  and  the  plaintiff  in  error 
that  a  similar  contract  should  be  entered  into  by  the  plaintiff  in  error 
with  the  Griffin  &  Skelley  Company,  Forsyth  Seeded  Raisin  Company, 
Fresno  Home  Pacliing  Company,  Porter  Bros.  Company,  Fruit  Clean- 
ing Company,  Goldeu  West  Packing  Company,  and  the  Co-operative 
Packers'    Association;    that    by    reason    of    said    representation    the 
defendant  in  error  was  Induced  to  sign  said  contract  and  otherwise 
would  not  have  signed  the  same,  but  that  the  plaintiff  in  error  has 
wholly  failed  to  obtain  a  contract  with  the  Co-operative  Packers'  Asso- 
ciation.   The  defendant  in  error,  in  its  answer,  further  alleged  that  at 
the  time  of  the  execution  of  the  contract  of  June  20,  1900,  the  plaintiff 
in  error  represented  that  it  was  the  owner  of  patents  numbered  631938 
and  G31039;  that  the  defendant  in  error  relied  on  such  representation, 
but  that  thereafter  it  learned  that  the  plaintiff  in  error  did  not  own 
the  said  letters  patent  or  either  of  them,  and  on  February  25,  1901,  it 
learned  that  said  representitions  were  false,  and  that  the  plaintiff  in 
error  had  not  and  would  not  acquire  title  to  the  said  letters  patent  or 
either  of  them.    The  answer  further  alleged,  as  ground  for  rescinding 
the  contract  of  license,  that  the  plaintiff  in  error  willfully  and  negli- 
gently failed  and  refused  vigorously  to  prosecute  infringers  of  the 
letters  patent  enumerated  in  the  contract  of  June  26,  1900,  and  that 
it  did  not  prevent  as  far  as  possible  all  or  any  imlawful  interference 
with  the  business  and  rights  of  the  defendant  in  error  under  said 
agreement;  that  by  reason  of  such  failure  the  general  public  disre- 
garded said  letters  patent,  and  without  the  consent  of  the  plaintiff  in 
error,  in  opposition  to  its  rights  and  to  the  rights  of  the  defendant  in 
error,  openly,  continuously,  and  generally  used  the  devices  and  proc- 
esses covered  bv  said  letters  patent  without  paying  license  fees  or 
royalty  to  the  plaintiff  in  error;  that  a  material  and  chief  considera- 
tion moving  to  said  defendant  in  error  should  protect  the  defendant 
In  error  in  its  business  and  rights  under  said  contract  and  prevent 
unlawful    interference    with    such    business    and    rights    by    persons 
engaged  in  such  business  in  competition  with  the  defendant  in  error; 
that  such  consideration  has  utterly  failed;  that  the  plaintiff  in  error 
has  failed  to  protect  the  business  and  rights  of  the  defendant  in  error, 
and  has  permitted  general,  continuous,  and  open  use  of  the  patented 
devices  and  processes  referred  to  in  said  contract    Upon  these  issues 
the  cause  was  tried  before  the  court  and  a  jury.    At  the  conclusion  of 
the  evidence  and  the  arguments  of  counsel,  the  court  submitted  to  the 
jury  the  decision  of  the  various  questions  raised  upon  the  issues  so' 
presented.    After  the  jury  had  retired  to  consider  of  their  verdict  the 
court  recalled  them,  and  gave  them  a  peremptoi*y  instruction  to  find 
for  the  defendant  in  error.     In  so  instructing  them  the  court  said: 
"There  are  three  propositions  only  in  the  case,  and  I  think  upoii 
either  one  of  them  you  should  find  for  the  defendant.    I  think  the  con- 
tract is  void,  first,  because  it  is  contrary  to  a  provision  of  your  stat- 
ute, section  1673,  as  explained  to  you.    I  think  it  is  void  because  it  is 
in  contravention  of  public  policy,  because,  if  carried  out  to  the  full 
extent  that  it  was  Intended  to  be,  it  would  have  amounted  to  a  monop- 
oly of  the  business.     In  the  next  place,  I  think  it  is  void  because  it 
provided  for  certain  litigation,  and  I  am  inclined  to  think  the  testi- 
mony justifies  the  belief  that  that  litigation  must  be  pressed,  regard- 
less of  the  rights  of  other  parties,  and  with  a  view  of  oppressing  them 
and  driving  them  out  of  business.    Courts  cannot  sustain  any  such 
contracts." 

The  evidence  on  which  the  court  held  that  the  combination  con- 
templated oppressive  litigation  was  the  testimony  of  William  Forsyth 


9Q0 


im  FEDERAL  REPORTER,  367. 


Stateiiieiit  of  the  Case. 

and  A.  Gartenlaiib.  Forxytli.  wlio  warn  president  of  three  of  the  eor- 
iwratioiis  who  were  part  it's  of  the  «efM)nd  part  to  the  <(>ntract,  and 
attorney  in  faet  for  the  remainder  of  the  parties  of  the  second  part 
in  signing  the  contract  of  Jnne  20,  1900,  testified  [367]  that  in  the 
negotiations  leadiiiir  np  to  tlie  couh-act   tlie  plaintiff   in   error  was 
^     represente<l  by  its  secretary,  James  Williamson,  and  its  treasurer.  C. 
F.  Allen.    The  conrt  drew  from  the  witness  the  following  testimony : 
'*The  Conrt:  I  do  not  know  whether  I  got  a  wrong  imnression  or 
not.  hut  I  want  to  know  what  the  fact  was.     What  was  the  under- 
standing as  to  the  in-osecution  of  the  holders  of  other  pat.'uts?    Was 
it  the  design  of  the  organization,  or  the  understanding  among  von.  that 
these  pi"dse<*iitions  sImmiUI  I>e  urgeil  for  tlie  purpose  of  wearing  them 
ont.  or  because  they  were  infringers?     A.  Other  patents,  vou  mean; 
lieople   using   the   same    machines?     Q.  Xo.    sir:  I    mean    those   that 
were  engaged  in  the  business :  these  outside  i»arties  that  you  expe<-ted 
to  close  out,    A.  Both  for  the  [jurpose  of  wearing  tliem  out  and  to  stop 
them  using  the  machint^s.     Q.  I  inferred  tliat.  and  I  w.-mtcd  to  know 
whether  that  was  a  |>art  of  the  combination.     Tliat  was  a  i>art  of  this 
crombination?     A.  Yes,  sir."     The  witness  proceeded  to  refer  to  litiga- 
tion i>ending  at  that  time  for  infringements  of  i>atents  held  l»v  the 
plaintift    in    error,    after   which    he   gave    the    following    testin'ionv: 
•*Q.  What  was  said,  if  anything,  in  regard  to  closing  up  anv  other 
wnceru,  and  how  did  they  propose  to  clost*  them  up?     A.  By  liringing 
wilts  against  them.     Q.  Suits  for   what?     A.  For   infringing  of  pat- 
ents."   A.   Gartenlanb,   who   was   in    the   schhIciI    raisin    iuisiness   at 
Fresno,  and  who  refuses!  to  take  a  license  from  the  plaintiff  in  error, 
testified  to  a  conversation  wliich  he  had  witli  .Iam«'s  Williamson,  as 
follows:  *' Q.  'V^Tien  l»e  said  b*'  was  g  )ing  to  sue  pe)i>lc  wno  <lid  not 
take  ont  a  li<-ense,  did  he  give  ytm  to  umlerstand  that  he  was  ir!»ing 
to  sue  for  an  infringement  of  stmje  of  thesv  i»atcnts?     A.  He  said  he 
was  going  to  close  them  up:  be  would  worry  tlieni  ont   o'  l»usiness. 
Q.  Did  you  not  ask  him  how  be  was  going  to  close  tbr'in  up?     A.  I 
did  not.     He  told  me  how.     He  explained  to  me.     i}.  Did  be  wA  say 
lie   was   going   to   bring   suits   on    these   imtents    for    infrinjjements? 
A.  lie  said  he  owned  all  the  patents,  and.  the  patent  litiirition  l>eing 
so  cxi>ensive  that  you  could  not  defend  .a  suit  for  less  tli  tn  %:^.m{\  or 
110.000.  that,  if  he  kept  on  filing  five  or  six  suits,  lie  wou'd  worr\   ft 
man  out  so  that  he  would  eitbei-  close  up  or  take  out  a  license.     (}.  The 
suits  were  for  infringement  of  the  patents?    A.  ITi-  did   i)<»t  expl:»in 
to  me  how  he  was  going  to  file  his  suits."     As  opposed  to  tins  testi- 
mony were  the  der>ositions  of  Williamson  and  Allen,  taken   in   New 
York  before  the  trial;  taken,  it  is  true,  on  the  issues  raided  on  the 
finsvver.  yet  referring  in  general  terms  to  the  nejrotiations  which  led 
up  to  the  contract.     Williamson,  being  asked  whether  anything  was 
said   as   to   the   purpose   or   objects   of   the   combination,    j.nswered: 
"Nothing  further  than  that  the  United  States  Consolidated   Seeded 
Halsin  Company  was  to  become  the  owner  of  the  patents,  and.  as  the 
owner  of  the  patents,  license  certain  people."    Charles  F.  Allen  was 
asked  the  following  questions:  "  Q.  State  whether  or  not  all  the  rep- 
resentations made  by  the  plaintiflf  to  the  defendant— that  is  to  say, 
such  representations  as  were  made  to  induce  them  to  sign  the  con- 
tract—are contained  in  the  license  contract  itself  which  was  issued 
to  them.     A.  Yes,  sir.     *     *     ♦    Q.  Was  it  not  one  of  the  purposes 
of  the  combination  that  you  should  get  a  sufficient  number  of  patents 
to  control    the   raisin-seeding   art?    A.  No,    sir.    Q.  What    was   the 
object   in    getting   together    this   considerable    number   of   patents? 
A.  Because  those  who  gave  their  iratents  did  it  to  stop  litigation  that 
we  had  brought  against  them."    Alfred  Nichols,  the  president  of  the 
plaintiff  in  error,  also  deposed  "  that  no  representations  or  statements 
were  made  by  the  plaintiff  to  induce  defendant  to  enter  into  this 


U.   S.    CONSOL.    S.   R.    CO.    V,   GRIFFIN   &   SKELLEY   CO.         293 

Opinion  of  the  Court. 

license  contract  other  than  such  statements  and  representations  and 
promises  and  agreements  as  were  contained  in  the  written  document 
itself."  As  tending  to  contradict  the  testimony  of  Forsyth  and  Gar- 
tenlaub,  other  witnesses  testified  as  to  the  representations  made  by 
the  plaintiff  in  error  to  induce  them  to  join  the  combination.  T.  E. 
Langley  testified  that  Williamson  said  that  they  would  prevent  others 
who  did  not  take  out  licenses  from  operating  by  bringing  suits  against 
them.  "  Q.  What  were  they  to  sue  them  for?  What  was  to  be  the 
basis  of  the  suits?  A.  Infringement  of  the  patents."  A.  L.  Hobbs, 
who  was  asked  to  join  the  combination,  testified  that  in  the  represen- 
tations made  to  him  it  was  not  said  that  the  plaintiff  in  error  would 
bring  suits  for  anything  except  what  they  claimed  was  an  infringe- 
ment. .John  Bonner,  who  declined  to  join  the  combination,  gave  sim- 
ilar testimony. 

[368]  John  II.  Miller^  for  plaintiff  in  error. 

Piatt  d'  Bayne  and  //.  //.  Welsh,,  for  defendants  in  error. 

Before  Gilbert  and  Ross,  Circuit  Judges,  and  Hawlev, 
District  Judge. 

Gilbert,  Circuit  Judge,  after  stating  the  case  as  above, 
delivered  the  opinion  of  the  court. 

The  Circuit  Court  instructed  the  jury  to  return  a  verdict 
for  the  defendant  in  error,  holding  the  contract  void  on 
three  grounds :  First,  that  it  was  contrary  to  public  policy, 
in  that  it  tends  to  create  a  monopoly;  second,  that  it  is  pro- 
hibited by  the  provisions  of  .section  1673  of  ih^  Civil  Code 
of  the  State  of  California ;  and,  third,  that  it  was  contrary 
to  public  policy,  for  the  reason  that  it  provided  for  oppres- 
sive litigation.  That  such  a  contract  is  not  void  as  against 
public  policy,  in  that  it  tends  to  create  a  monopoly,  has 
been  decided  by  the  Supreme  Court  in  the  case  of  Bement  v. 
National  Harvoic  Co.,  186  U.  S.  70,  22  Sup.  Ct.  747,  46  L. 
Ed.  1058.  In  that  case  a  contract  had  been  entered  into 
between  the  National  Harrow  Company  and  various  other 
corporations  and  firms  engaged  in  manufacturing  float 
spring  tooth  harrows,  their  frames  and  attachments,  under 
various  patents,  85  in  number,  which  were  assigned  to  the 
National  Harrow  Company.  That  corporation  then  entered 
into  contracts  with  the  other  parties  to  the  agreement,  and 
gave  to  each  a  license  very  similar  to  the  license  in  question  in 
the  present  suit.     The  license  provided  that  the   licensee 


aIt'x 


im  FEDERAL  REPORTER,   368. 


Opinion  of  the  Court. 

should  pay  a  fixed  royalty,  should  make  verified  reports  of 
its  business,  and  that  it  should  not  sell  its  products  manu- 
factured under  the  license  at  a  lower  price  or  on  more  favor- 
able terms  of  payment  than  was  set  forth  in  a  schedule 
which  was  made  a  part  of  the  license,  except  that  the  licensor 
reserved  the  right  to  reduce  the  selling  price  and  to  reduce 
the  royalty.  The  licensee  agreed  that  it  would  not,  during 
the  continuance  of  the  license,  directly  or  indirectly  engage 
in  the  manufacture  or  sale  of  any  other  float  spring  tooth 
harrows,  etc.,  than  those  which  it  was  licensed  to  manufac- 
ture and  make  under  the  terms  of  the  license,  except  such  as 
it  might  manufacture  and  furnish  another  licensee  of  the 
National  Harrow  Company,  and  then  only  such  constructions 
thereof  as  such  other  licensee  should  be  licensed  by  the  Na- 
tional Harrow  Company  to  manufacture  and  sell,  except 
such  other  style  and  construction  as  it  might  be  licensed  to 
manufacture  and  sell  by  the  National  Harrow  Company. 
Provision  was  made  for  the  payment  of  fixed  liquidated 
damages  for  breach  of  certain  of  the  terms  of  the  license, 
and  the  licensee  agreed  not  to,  directly  or  indirectly,  in  any 
way  contest  the  validity  of  any  patent  under  which  it  was 
licensed  to  manufacture,  or  which  it  might  manufacture  for 
another  licensee;  and  it  agreed  also  not  to  alter  or  change 
the  construction  of  the  float  spring  tooth  harrow,  the  frames, 
etc.,  which  it  was  authorized  to  manufacture  under  the 
license  and  under  the  patents.  The  licensor  covenanted  not 
to  grant  licenses  to  any  other  person  or  any  right  to  manu- 
facture articles  of  the  peculiar  style  and  construction,  or 
embodying  the  peculiar  features  thereof,  used  by  the  licensee. 
It  was  agreed  that  the  license  should  continue  during  [369] 
the  life  of  the  patent  or  patents  applicable  thereto,  and  dur- 
ing the  term  of  any  reissue  thereof.  There  were  other  pro- 
visions of  the  contract  not  necessary  here  to  be  considered. 
The  licensee  having  violated  the  contract,  suit  was  brought 
to  recover  damages  and  to  restrain  further  breaches.  The 
licensee,  in  defense  thereof,  answered  that  the  license  grew 
out  of  a  combination  of  the  National  Harrow  Company  and 
other  manufacturei-s  and  dealers,  which  amounted  to  a  com- 
bination to  regulate  the  manufacture  and  provide  for  the 


tJ.    S.    CONSOL.    S.   R.    CO.    V.   GRIFFIN    &   SKELLBY   CO.         295 

Opinion  of  tlie  Court 

sale  of  float  spring  tooth  harrows  at  fixed  prices  throughout 
the  United  States,  and  that  said  combination  was  void,  as 
in  restraint  of  trade,  and  a  monopoly  prohibited  by  the 
Sherman  act.  In  the  opinion  of  the  court  Mr.  Justice 
Peckham  said  of  the  patent  laws  of  the  United  States : 

"The  very  object  of  these  laws  is  monopoly,  and  the  rule  is,  witli 
few  exceptions,  that  any  conditions  which  are  not  in  their  very 
nature  illegal  with  regard  to  this  kind  of  property,  imwsed  by  the 
patentee  and  agreed  to  by  the  licensee  for  the  right  to  manufacture 
or  use  or  sell  the  article,  will  be  upheld  by  the  courts.  The  fact 
that  the  conditions  in  the  contracts  keep  up  the  monopoly  or  fix  prices 
does  not  render  them  illegal." 

Concerning  the  application  of  the  Shein.an  act  to  the  con- 
tract in  question,  the  court  said : 

"  But  that  statute  clearly  does  not  refer  to  that  kind  of  a  restraint 
of  interstate  commerce  whicli  may  arise  from  reasonable  and  legal 
conditions  imposed  upon  the  assignee  or  licensee  of  a  i^ateut  l^y  the 
owner  thereof,  restricting  the  terms  upon  which  the  article  may  be 
used  and  the  price  to  be  demanded  therefor.  *  *  *  The  owner  of 
a  patented  article  can,  of  course,  charge  such  price  ns  he  may  choose, 
and  the  owner  of  a  patent  may  assign  it  or  sell  the  right  to  manu- 
facture and  sell  the  article  patented  upon  the  condition  that  the 
assignee  shall  charge  a  certain  amount  for  sucli  article.  It  is  also 
objected  that  the  agreement  of  the  defendant  not  to  manufacture  or 
sell  any  other  float  spring  tooth  harrow,  etc.,  than  those  wliich  it  had 
made  under  its  patents  before  assigning  them  to  the  i»laintiff,  or 
which  it  was  licenced  to  manufacture  and  make  under  the  t'^-rms  of 
the  license,  except  such  other  style  and  construction  as  it  may  be 
licensed  to  manufacture  and  sell  by  the  plaintiff,  is  void  under  the 
act  of  Congress.  The  plain  purpose  of  the  provision  Avas  to  prevent 
the  defendant  from  infringing  uiwn  tlie  rights  of  others  under  other 
patents,  and  it  had  no  purpose  to  stifle  competition  in  the  harrow 
business  more  than  the  patent  provided  for,  nor  was  its  punwse  to 
prevent  the  licensee  from  attempting  to  make  any  improvement  in 
harrows.  It  was  a  reasonable  prohibition  for  the  defendant,  who 
v.ould  thufc  be  excluded  frorn  making  such  h-.tr-ows  as  were  made 
by  others  who  were  engaged  in  manufacturing  :uid  selling  other 
iijMChlnes  under  other  patents.  It  would  be  uniojisonnblc  to  so  con- 
strue the  provision  as  to  prevent  defendant  from  using  any  letters 
patent  legally  obtained  by  it  and  not  infringing  patents  owned  by 
others.    This  was  neither  Its  i impose  nor  its  meiming." 

We  think  the  principles  announced  in  that  case  must  cim- 
trol  our  decision  of  the  question  which  is  here  presented,  and 
under  its  authority  we  hold  that  the  contract  in  question 
in  the  present  case  is  not  void  as  against  public  policy,  as 
tending  to  create  a  monopoh^,  or  as  obnoxious  to  the  pro- 
visions of  the  Sherman  anti-trust  act. 

The  principles  announced  in  the  case  just  cited  are  appli- 
cable also  to  the  question  whether  the  contract  was  prohibited 


296 


126  FEDERAL  BEPORTER,  370. 


Opinion  of  the  Court. 

by  section  ]f>73  [370]  of  the  Code  of  Civil  Procedure  of 
California.    That  section  reads  as  follows : 

"  Every  c-ontnut  by  which  one  is  restrained  from  exercising  a  law- 
I !  profession,  trade,  or  business  of  any  Icind  otherwise  than  as  pro- 
vided by  the  next  two  sections,  is  to  that  extent  void." 

The  next  two  sections  refen-ed  to  have  no  relevancy  to 
the  questions  involved  in  the  present  case,  and  need  not  be 
quoted.  That  the  provisions  of  a  state  law  cannot  affect 
rights  acquired  under  a  patent  of  the  United  States,  is  too 
plain  to  require  discussion.  In  Colnmhia  Wire  Co.  v.  Free- 
mmn  Wire  (Jo,  (C.  C.)  71  Fed.  302,  306,  the  court  said : 

"The  entire  theorj-  and  purpose  of  our  i>atent  laws  is  to  create  a 
limited  monopoly.  In  consideration  tliat  a  patentee  will  give  his  in- 
vention to  the  imblie.  with  full  drawings  and  specifications,  so  as  to 
enable  the  public  to  freely  use  it  at  the  expiration  of  17  years  a 
grant  is  made  to  htoi  of  an  exclusive  right  to  the  monopoly  of  the 
patented  device  during  that  time.  The  rights  so  awiuired  by  the 
patentee  under  a  grant  from  the  United  States  are  entirely  inconsistent 
with  the  patentee's  being  made  subject  to  the  provisions  of  the  anti- 
trust laws  of  the  several  states.' 

But,  whatever  may  be  the  effect  of  the  section  of  the  Cali- 
fornia statute  quoted  as  regards  the  contract  in  question,  we 
hold  that  it  can  have  no  relevancy  to  any  portion  thereof 
except  that  covenant  of  the  licensee  embodied  in  the  fourth 
provision  of  the  license  contract  that  it  shall  "  neither  sub- 
let any  of  said  machines,  nor  allow  any  parties,  except  its 
own  employes,  to  have  possession  or  control  of,  or  to  use 
said  machines;  shall  not  use  any  other  raisin-seeding  ma- 
chines during  the  life  of  this  contract  than  those  furnished 
by  the  first  party,  or  with  their  consent;  and  shall  not  buy, 
sell,  nor  deal  in  raisins  seeded  or  treated  by  any  other  ma- 
chines or  processes  than  those  of  the  firet  party."    If  that 
provision  of  the  contract  is,  indeed,  rendered  void  by  the 
local  statute,  none  of  the  questions  presented  in  this  case  is 
thereby  affected,  as  that  provision  is  not  involved  in  the  liti- 
gation.   The  plaintiff  in  error  sued  on  two  covenants  only 
of  the  license  contract— the  covenant  to  pay  a  royalty,  and 
the  covenant  not  to  sublet  the  machines.    These  are  valid 
and  subsisting  covenants,  and  are  not  affected  by  section 
1673,  which  provides  that  the  contract  which  contravenes 
that  section  is  only  "  to  that  extent  void."    In  Oregon  Rail- 
way dt  Navigation  Co.  v.  Wimor,  20  Wall.  64,  70,  22  L.  Ed. 


U.    S.    CONSOL.    S.   R.    CO.    V.   GRIFFIN   &   SKELLEY   CO. 


297 


Opinion  of  the  Court. 

315,  the  court  affirmed  the  doctrine  "  that  agreements  in  re- 
straint of  trade,  whether  under  seal  or  not,  are  divisible;  and 
accordingly  it  has  been  held  that,  when  such  an  agreement 
contains  a  stipulation  which  is  capable  of  being  construed 
divisibly,  and  one  part  thereof  is  void  as  being  in  restraint 
of  trade,  whilst  the  other  is  not,  the  court  will  give  effect 
to  the  latter,  and  will  not  hold  the  agreement  to  be  void 
altogether." 

It  remains  to  be  considered  whether  the  original  contract 
of  June  26,  1900,  is  void,  or  so  tainted  with  inequity  that  a 
court  will  not  enforce  its  provisions,  for  the  reason  that  it 
provides  for  oppressive  litigation  against  third  persons. 
The-  contract  itself  contains  in  its  terms  no  provision  for 
oppressive  litigation.  It  contains  a  covenant  on  the  part 
of  the  plaintiff  in  error  to  "  institute  and  defend  suits  based 
[371]  ui)on  or  concerning  the  inventions  and  letters  patent 
above  specified,  and  such  others  as  may  hereafter  be  acquired 
by  it  under  and  by  virtue  of  this  agreement."  The  license 
contract  contained  a  provision  requiring  the  plaintiff  in 
error  to  "  vigorously  prosecute  infringers  of  said  letters  pat- 
ent, so  as  to  prevent  as  far  as  possible  all  unlawful  interfer- 
ence with  the  business  and  rights  of  said  party  of  the  second 
part  under  and  by  virtue  of  the  contract."  These  are  proper 
provisions,  and  they  are  not  open  to  criticism.  The  ruling 
of  the  trial  court  was  based  upon  certain  oral  testimony  ad- 
duced upon  the  trial.  There  was  no  issue  raised  by  the 
pleadings  to  which  such  testimony  was  applicable.  The  de- 
fendant in  error  had,  it  is  true,  alleged  in  its  answer  ''  that 
the  object  of  the  said  combination  was  not  only  the  purpose 
aforesaid,  but  also  for  the  purpose  of  forcing  out  of  the 
seeded  raisin  business  the  individuals,  companies,  and  corpo- 
rations who  did  not  unite  Avith  the  said  plaintiff  and  join 
with  it  in  its  scheme  and  plan."  That  purpose,  as  pleaded 
in  the  answer,  was  not  necessarily  an  illegal  one.  The 
answer  did  not  aver  that  the  said  alleged  purpose  was  ex- 
pressed in  the  terms  of  the  contract  of  June  26,  1900,  or  that 
the  contract  itself  ]>rovided  in  any  way  for  unjust  or  op- 
pressive litigation.  So  far  from  making  that  allegation,  the 
defendant  in  error  set  up  in  its  answer  as  one  of  its  groiuids 
of  defense,  and  as  a  reason  for  rescinding  the  contract,  that 


IM  IfEDEBAL  REPORTER,   371. 
Opinion  of  the  C5oiirt. 

the  plaintiff  in  error,  having  promised  vigorous  prosecution 
of  infringers  of  said  letters  patent,  failed  to  perform  the 
promised  service.    The  averment  of  the  answer  that  one  of 
the  unexpressed  purposes  of  the  combination  was  to  force 
out  of  the  seeded  raisin  business  those  who  did  not  take 
licenses  thereunder  is  presumably  true,  when  it  is  considered 
that  the  whole  of  the  new  art  of  seeding  raisins  by  ma- 
chineiy  was  covered  by  the  patents  which  were  pooled  in  the 
combination.    The  natural   result   of  such   a   combination 
would  be  to  force  out  of  business  all  who  did  not  obtain 
licenses  from  the  plaintiff  in  error,  for  they  would  neces- 
sarily be  infringei-s.    The  oral  evidence  which  prompted  the 
action  of  the  trial  court  in  withdrawing  the  case  from*  the 
jury  was  the  testimony  of  the  president  of  the  defendant  in 
error,  who  had  l)een  an  active  agent  in  effecting  the  combi- 
nation, that  it  was  the  ''  design  of  the  organization  or  the  un- 
derstanding," that  litigation  was  to  be  instituted  against 
those  who  refused  to  take  licenses,  "  both  for  the  purpose  of 
wearing  them  out  and  because  they  wei-e  infringers."    The 
same  witness  testified  later,  however,  that  it  was  the  purpose 
to  close  up  such  third  parties  by  bringing  suit  against  them 
"  for  infringing  of  patents."    There  was  the  testimony,  also, 
of  another,  who  said  that  Williamson,  the  secretary  of  the 
plaintiff  in  error,  stated  to  the  witness  that  he  was  going  to 
close  up  and  wear  out  of  business  all  who  did  not  take  out  a 
license.    Admitting  that  a  contract  legal  in  its  terms  and  in 
its  consideration  may  be  rendered  illegal,  as  against  public 
policy,  by  reason  of  the  intention  of  the  parties  thereto  at  the 
time  of  entering  into  it  to  so  use  it  as  thereby  to  comuiit  civil 
injury  to  third  persons,   it  may  nevertheless  be  doubted 
whether  the  mere  existence  in  the  minds  of  some  of  the  con- 
tracting parties  of  such  a  purpose— a  purpose  different  from 
the  main  purpose,  and  never  in  fact  carried  into  execution- 
is,  after  the  contract  has  been  acted  upon  and  acquiesced  in 
inter  partes  [372J  for  eight  months,  ground  sufficient  to 
justify  the  denial  of  any  remedy  thereon.     But,  however 
that  may  be,  we  are  clearly  of  the  opinion  that  if,  in  view  of 
the  pleadings  and  the  law  applicable  thereto,  the  question  of 
the  existence  of  such  an  illegal  purpose  was  properly  before 
the  court  as  affecting  the  legality  of  the  contract,  it  was, 


CITY   OF   ATLANTA   V.    CHATTANOOGA  F.   &  P.   WORKS.       299 

Syllabus. 

under  the  evidence,  a  question  of  fact  which  should  have 
been  submitted  to  the  jury  for  its  decision.  There  was  evi- 
dence before  the  court  and  jury  tending  to  contradict  the 
evidence  that  such  a  purpose  existed.  There  was  the  testi- 
mony of  three  of  the  officers  of  the  plaintiff  in  error  taken 
upon  depositions  in  New  York  upon  the  general  issues  raised 
by  the  answer,  in  which  they  deposed  in  substance  that  the 
contract  itself  embodied  all  of  the  representations  made  to 
induce  its  execution,  and  that  its  objects  were  fully  ex- 
pressed in  its  terms.  There  was  the  testimony,  also,  of 
others  who  were  asked  to  take  out  licenses  under  the  con- 
tract, who  stated  that  the  officers  of  the  plaintiff  in  error 
made  no  representation  to  them  that  suits  would  be  brought 
against  others,  except  on  account  of  infringement  of  the 
patents. 

The  judgment  of  the  lower  court  is  reversed,  and  the 
cause  remanded  for  a  new  trial. 


123]  CITY  OF  ATLANTA  v.  CHATTANOOGA  FOUN- 
DRY  &  PIPEWORKS  ET  AL.« 

(Circuit  Court  of  Appeals,  Sixtli  Circuit.    December  8,  1903.) 

[127  Fed.,  23.] 

Monopolies — Anti-Trust  Act — Action  by  City  for  Injury  to  Busi- 
ness.— A  municipal  corp{>ration  engaged  in  operating  water,  light- 
ing, or  similar  plants,  from  which  a  revenue  is  derived,  is,  in  relation 
to  such  matters,  a  business  corporation,  and  may  mamtain  an 
action  under  section  7  of  the  anti-trust  act  of  July  2,  1890,  c.  647, 
26  Stat.  210  [U.  S.  Comp.  St.  1901,  p.  3202],  for  injury  to  its  "busi- 
ness "  by  reason  of  a  combination  or  conspiracy  in  restraint  of  inter- 
state trade  or  commerce  made  unlawful  by  such  act* 

Same — Liability  of  Members  of  Combination. — Every  member  of  an 
illegal  combination  in  restraint  of  interstate  trade  or  commerce  in 
violation  of  the  anti-trust  act  is  liable  for  the  damages  resulting  to 

o  Suit  originally  brought  In  the  Circuit  Court  of  the  United  States 
for  the  Eastern  District  of  Tennessee,  where  it  was  entitled  "  City  of 
Atlanta  v.  Chattanooga  Foundry  &  Pipe  Co."  (101  Fed.,  900).  See 
p.  11.  Judgment  reversed  by  Circuit  Court  of  Appeals,  Sixth  Circuit 
(127  Fed.,  23).  See  above.  Affirmed  by  Supreme  Court  December  3, 
1906  (203  U.  S., ).    Not  yet  officially  reported. 

6  Syllabus  and  statement  copyrighted,  1904,  by  West  Publishing  Co. 


300 


127   FEDERAL   REPORTER,   23. 
Statement  of  the  Case. 


the  business  or  propeitj*  of  a  plaintiff  by  reason  of  such  combina- 
tion, and  it  is  Immaterial  that  there  were  no  direct  contract  rela- 
tions between  plaintiff  and  defendant. 
Same— INJUBY  to  Business.— If  the  effect  of  an  lll^al  combination 
between  maniifactnrers  to  prevent  competition  in  the  sale  of  n  com- 
modity which  Is  a  subject  of  interstate  commerce  be  to  enhance  the 
price  of  such  commodity  to  a  purchaser,  he  is  entitled  to  recover 
the  difference  between  the  price  paid  and  the  reasonable  price  under 
natural  competitive  conditions,  as  an  injury  to  his  business,  whether 
such  business  Is  interstate  or  not,  provided  the  transaction  by  which 
the  purchase  was  made  was  interstate. 
Same— Action  fob  Damaoes— Limitation.— An  action  under  section  7 
of  the  anti-trust  law  (Act  July  2,  1890,  c.  647.  2©  Stat.  210  [U    S 
Comp.  St.  1901,  p.  3202]),  providing  that  "any  person  who  shall  be 
Injured  in  his  business  or  property  by  any  other  person  or  corpora- 
tion by  reason  of  anything  forbidden  or  declared  to  be  mihuvful  by 
this  act  may  sue  therefor  in  any  Circuit  Court  of  the  Unittni  States 
♦    •    ♦    aud  shall   re*»ver  three-fold  the  damages  by  him  sus- 
tained," is  not  an  action  for  a  penalty  or  forfeiture,  withhi  Rev  St 
S  1047  [U.  S.  Comp.  St.  11*01,  p.  727],  prescribing  a  limitation  of 
ive  years  for  a  "  suit  or  prosecution  for  any  penalty  or  forfeiture 
pecuniary  or  otherwise,  accnitog  under  the  laws  of  the  United 
States,"  but  one  for  the  enforcement  of  a  civil  remedy  given  by 
statute  for  a  private  injury,  compensatory  in  its  purpose  and  effect* 
the  recover^'  permitted  in  excess  of  actual  damages  being  in  the 
nature  of  exemplary  damages,  which  does  not  change  the  nature  of 
the  action,  and  such  action  is  governed  as  to  limitation  by  the  stat- 
utes of  the  state  in  which  it  is  brought. 
[24]  Same-Ten  XESSEE  Statute.— An  action  under  said  section  based 
on  an  allegwl  excessive  price  plaintiff  was  comiielled  to  pay  for  a 
manufactured  article  by  reason  of  a  mmbination  between  defend- 
ants and  others  to  prevent  competition  and  enhance  the  price  of 
such  article  in  violation  of  the  act  Is  not  one  for  an  Injury  to  per- 
sonal property,  within  Shannon's  Code  Tenn.  §  4470,  which  pre- 
scribes a  limitation  of  three  years  for  "actions  for  injuries  to 
personal  or  real  pi-operty,"  but  is  one  to  enforce  a  statute  liability 
and  within  stntion  447a  which  prescribes  a  limitation  of  ten  years 
for  c-ertain  actions,  and  in  "all  other  cases  not  expressly  provided 
for. 

In  Error  to  the  Circuit  Court  of  the  United  States  for 
the  Eastern  District  of  Tennessee. 
See  101  Fed.  900. 
This  was  an  action  to  recover  damages  under  the  seventh  section 

cUtst  l^l^nT^m**^  •'"'^'  ^  l^^'  '''  ^*'  26  Stat.  210  [US 
comp.  St.  1901  p  .1202].  Imown  as  the  "Anti-Trust  Act."  The  olain- 
tiflf  is  a  municipal  corporation  of  the  state  of  Georgia.  The  defend- 
ants  are  two  manufacturing  cori>orations  of  the  state  of  TennesTcS 


CITY   OF   ATLANTA   V.    CHATTANOOGA   F.   &   P.   WORKS.       301 


Statement  of  the  Case. 

engaged  in  the  business  of  nialcing  nnd  selling  cast-iron  pii>e  and 
fittings. 

The  declaration  averred  that  on  or  about  the  28th  of  December, 
1894,  the  said  two  companies  entered  Into  an  unlawful  combination 
for  the  purpose  of  restraining  interstate  trade  and  commerce  with 
four  other  corporations  engaged  in  the  same  line  of  manufacture,  to 
wit,  tile  Anniston  Pipe  &  Foundry  Company,  and  the  lloward-IIar- 
rison  Iron  ('ompany,  both  corporations  of  tlie  state  of  Alabama,  and 
conducting  business  in  tiuit  state;  tlie  I>ennis,  Long  &  Co.,  a  ct)rpora- 
tion  of  tlic  state  of  Kentuclvy,  und  carrying  on  its  business  in  said 
state;  aud  the  Addyston  Pipe  &  Steel  Company,  a  corporation  of  the 
state  of  Ohio,  engaged  iu  business  at  Cincinnati,  in  tliat  state.  The 
illegal  trust  agreement  <-omi»lained  of  is  the  ideuti<al  trust  which 
was  dissolved  by  decree  of  ibis  coiu't  in  tlie  case  reporte<l  as  The 
I  uitcd  NtatCff  v.  The  AtliliMoii  Piitv  t(-  ^tvtl  Co.,  85  Fed.  271,  29 
C.  C.  A.  141,  4U  L.  U.  A.  122,  aud  atiirmed  by  the  Supreme  Court  in 
Addliatun  Pipe  d  Steel  Co.  v.  United  t^tatei<,  175  U.  S.  211.  20  Sup.  Ct. 
liO,  44  L.  Kd.  Via.  Reference  may  be  made  to  the  opinions  in  those 
cases  for  the  nature  and  metliods  of  the  trust  out  of  which  has  ari¥«»n 
the  present  acticm. 

The  declaration,  in  substance,  charges  that  the  plaiutift*  was  en- 
gagetl  in  conducting  a  system  of  waterwoiivs,  and  that  it  derived  a 
large  revenue  from  the  sale  of  water  to  private  consumers,  the  in- 
come going  into  the  city  treasury ;  that,  for  the  purposes  and  uses  of 
its  said  waterworlvs  business,  it  bought  during  tlie  operations  of  said 
unlawful  trust  a  large  supply  of  ircm  water  pipe,  and  that  the  con- 
tract f<»r  its  supply  of  such  pipe  was  given  to  the  Anniston  Piiie  & 
Foundry  Company  as  the  lowest  bidder.  It  is  then  averred  that,  by 
reasdii  of  the  sai<l  unlawful  agreement  lK»tweeii  the  said  producers 
of  said  pipe,  all  competition  was  suppressed,  and  that  the  said  Annis- 
ton Company  obtained  the  contract  through  an  arrangement  by 
which  it  was  to  l)e  allowed  to  obtain  same  at  a  price  agreed  upon 
between  said  conspirators,  without  any  competition,  aud  that  for  this 
privilege  it  agreed  to  pay  and  did  pay  to  the  said  association  a 
large  sum,  called  a  "bonus,"  which  was  to  be  divided  between  the 
parties  to  said  arrangement  in  agreed  proportions.  It  is,  in  effect, 
charged  tliat  the  "  bimiis  "  constituted  the  difference  bet^veen  the  fair 
and  reasonable  value  of  the  pipe  so  bought  by  plaintiff,  and  tlie 
l)rice  whicli  it  was  compelled  to  pay,  and  that  this  large  and  unrea- 
sonable price  was  extorted  from  plaintiff  through  the  unlawful  sup- 
pression of  comi>etitioii,  and  by  the  instrumentality  of  fictitious  bids 
put  in  by  tlie  otlier  i)arties  to  said  association,  s<.>  arranged  as  to 
create  the  semblance  of  competition,  and  yet  secure  the  contract  for 
the  Anniston  Company  at  the  price  set  by  the  combination  as  the 
ostensil»le  lowest  bidder.  The  plaintiff  avers  that,  by  reason  of  the 
formation  of  said  illegal  combination,  interstate  commerce  in  cast- 
in»n  pipe  was  restrained,  and  plaintiff  compelled  to  deal  only  with  the 
said  Anniston  Comi»any,  and  to  pay  a  price  agreed  upon  by  the  mem- 
bers of  tlie  combination,  which  was  unreasonable;  that  the  bonus  so 
paid  out  of  the  price  [25]  paid  by  plaintiff  was  paid  into  a  common 
pocivet,  aild  divided  among  the  conspirators  in  an  agreed  way ;  and 
that  the  two  Tennessee-  corporations  here  sued  received  their  due 
proportion  of  said  bonus  according  to  the  terms  and  plans  of  the 
scheme.  By  ail  of  which  the  plaintiff  avers  that  it  was  compelled  to 
pay  for  the  cast-iron  pii3e  so  bought  and  used  in  its  said  waterworks 
^15,000  more  than  would  have  been  paid  but  for  the  said  unlawful 
trust  between  the  producers  of  such  pipe,  and  it  lays  the  damage  to 
its  business  and  property  at  triple  the  said  excess  price  so  paid  and 
reasonable  attorneys'  fees. 


302 


127   FEDERAL  BEPORTEB,  25. 
Opinion  of  the  Court. 


The  defendants  plead  the  general  issue  of  not  guilty,  and  the  Ten- 
nessee statutes  of  limitations  of  one  and  three  years. 

Upon  the  conclusion  of  all  of  the  evidence,  the  court  instructed  the 
Jury  to  find  for  the  defendants.  This  has  been  assigned  as  error,  and 
this  writ  sued  out  by  the  plaintiff  below. 

George  Westmoreland  and  6'.  F.  Goree,  for  plaintiff  in 
error. 

Fmnh  Spurlock,  for  defendant  in  error. 

Before  Lurton,  Severens,  and  Eichards,  Circuit  Judges. 

LuRTON,  Circuit  Judge,  after  making  the  foregoing  state- 
ment of  the  case,  delirered  the  opinion  of  the  court. 

The  plaintiffs  action  is  to  recover  damages  incurred  in  its 
'*  business  or  property  "  by  reason  of  a  combination  forbidden 
by  the  act  of  July  2,  1890,  c.  647,  26  Stat.  209  [U.  S.  Comp. 
St.  1901,  p.  3200],  known  as  the  "Anti-Trust  Act,"  and  its 
right  to  a  recovery  depends  wholly  upon  the  seventh  section 
of  that  law. 

It  is  true  that  plaintiff  is  a  municipal  corporation.     Never- 
theless it  w^as  maintaining  a  system  of  waterworks,  and  fur- 
nished water  to  consumers,  charging  for  same  precisely  as 
would  a  private  corporation  engaged  in  a  like  business.    That 
a  municipal  corporation  may  be  empowered  to  engage  in  the 
business  of  furnishing  water  or  gas,  or  in  the  operation  of 
street  railways,  as  well  as  many  other  quasi  public  occupa- 
tions, must  be  conceded.    That  the  profit  resulting  inures  to 
the  public  does  not  alter  the  fact  that  when  thus  engaged  it 
is  pro  hac  vice  a  business  corporation.    If  its  "  business  "  as 
a  corporation  engaged  in  the  occupation  of  supplying  water 
for  a  consideration  has  been  injured  by  the  unlaw^ful  combi- 
nation complained  of,  it  is  just  as  mnch  entitled  to  maintain 
this  suit  as  a  private  corporation  engaged  in  a  like  occupa- 
tion.   That  it  was  not  engaged  in  an  interstate  water  busi- 
ness is  true.    But  if  it  has  no  standing  to  recover  damages  for 
an  injury  to  its  "  buisness,"  it  is  not  easy  to  see  how  it  has  any 
better  standing  to  recover  for  an  injury  to  its  "  property." 
That  there  was  evidence  tending  to  show  that  the  plaintiff 
had  been  compelled  to  pay  an  unreasonable  price  for  the  pipe 
which  it  bought  during  the  continuance  of  the  unlawful  com- 
bination complained  of  is  not  to  be  disputed.    That  its  pur- 
chases were  made  exclusively  from  the  Anniston  Pipe  Com- 


CITY    OF   ATLANTA    V.    CHAa:TANOOGA   F.   &   P.    WORKS.       803 

Opinion  of  the  Court. 

pany,  a  corporation  doing  business  in  Alabama,  and  that  it 
is  not  suing  that  corporation,  is  of  no  vital  significance.  The 
Alabama  company  and  the  two  Tennessee  companies  which 
are  sued  were  members  of  an  association  which  included 
practically  every  pipe  manufacturing  concern  in  a  situation 
to  compete  for  the  business  of  the  plaintiff.  The  evidence 
also  tended  to  show  that  the  object  of  the  combination  was  to 
prevent  any  other  producer  of  such  pipe  from  competing 
with  the  Anniston  Company  for  plaintiff's  business,  and  that 
practices  were  adopted  intended  to  compel  [26]  it  to  deal 
exclusively  with  the  Alabama  member  of  the  association,  and 
to  pay  a  price  settled  by  the  combination  in  advance  of  any 
bidding.  For  this  privilege  the  Alabama  corporation  agreed 
to  pa}^  a  large  sum  into  the  pool  treasury,  called  a  "  bonus," 
w^hich  was  to  be  divided  among  the  confederates  in  agreed 
proportions.  An  appearance  of  competition  was  to  be  main- 
tained by  bids  put  in  by  the  other  associates,  every  such  bid 
being  higher  than  the  bid  to  be  made  b}'^  the  company  to 
w^hom  the  contract  had  been  assigned.  There  was  to  be  no 
chance  for  any  other  person  to  secure  a  contract  with  the 
plaintiff  than  that  membf^r  of  the  combine  selected  in  advance 
of  the  open  biddings. 

Mr.  Justice  Peckham,  in  Addyston  Pijye  Co,  v.  United 
States,  175  U.  S.  211,  243,  20  Sup.  Ct.  96,  108,  44  L.  Ed.  136, 
where  this  very  combination  was  under  consideration,  speak- 
ing for  the  court  of  the  results  of  the  agreement  between  the 
corporations  who  were  members  of  this  trust,  said : 

"The  combination  thus  had  a  direct,  immediate,  and  intended  re- 
lation to,  and  effect  upon,  the  subsequent  contract  to  sell  and  deliver 
the  pipe.  It  was  to  obtain  that  particular  and  specific  result  that  the 
combination  was  formed,  and  but  for  the  restriction  the  resulting  high 
prices  for  the  pipe  would  not  have  been  obtained.  It  is  useless  for  the 
defendants  to  say  that  they  did  not  intend  to  regulate  or  affect  inter- 
state commerce.  They  intended  to  make  the  very  combination  and 
agreement  which  they  in  fact  did  malje,  and  they  must  be  held  to 
have  intended  (if  in  such  case  intention  is  of  the  least  importance) 
the  necessary  and  direct  result  of  their  agreement." 

Undoubtedly  it  was  not  competent  for  the  Congress  to  reg- 
ulate by  legislation  commerce  which  is  purely  intrastate,  and 
this  limitation  was  recognized  in  Addyston  Pipe  Co,  v.  United 
States,  where  the  court  said : 

"  In  regard  to  such  of  these  defendants  as  might  reside  and  carry  on 
business  in  the  same  state  where  the  pipe  provided  for  in  any  particu- 


304 


m  FEDERAIi  BEtORTER,   26. 
Opinion  of  tl»e  Court 


lar  contract  was  to  lie  deliverer!,  the  sale,  transportation,  and  deliverv 
of  the  pipe  l)y  them  under  that  contract  would  lie  a  transaction  wliolly 
within  the  state,  and  the  statute  would  not  be  applicable  to  them  in 
that  case.  They  might  malce  any  combination  they  chose  with  refer- 
ence to  the  proposed  contract,  although  it  should  happen  that  some 
nonresident  of  the  state  eventually  obtained  it." 

Tlie  (lim-t  intention  and  effect  of  the  combination  was  to 
limit  and  ixistriet  the  right  of  each  of  the  several  companies 
to  eonii>ete  for  Inisiness  with  Athinta,  as  well  as  to  enhance 
the  price  of  the  commodity  wliich  was  the  snhject  of  the 
agreement. 

We  have,  then,  a  direct  acticm  by  this  plaintiff  against  two 
of  the  meml)ers  of  this  imlawfiil  combine.  That  there  was 
no  i)iirchase  made  direct  from  cither  of  them  is  of  no  im- 
portance. Their  guilt  is  as  great  as  that  of  the  Alabama 
corporation  from  whom  the  plaintiff  did  bny  its  pipe.  If  the 
agivement  Ix-tween  the  defendjints  and  their  associates  was 
tmlawfnl  and  tortious,  each  is  responsible  for  the  torts  com- 
mitted in  the  course  of  the  illegal  combination.  These  de- 
fendants have  themselves  jiarticipated  in  the  benefits  result- 
ing from  the  lionus  paid  by  the  Alabama  memljer  of  the 
association,  and  have  no  ground  to  complain  that  they  have 
Ijeen  alone  sued.  Sforkfrdi  v.  F,  .S.,  1']  Wall  351,  20  L.  Ed. 
401;  Vcm  Horn  v.  Vmi  Horn,  ;>2  N.  J.  Law,  280,  20  Atl.  485, 
10  L.  K.  A.  184:  Iioherfso,)   r.  Parl'H.  70  Md.  118,  135,  24 

r271  Replying  to  the  argument  that  if  the  combination  did 
not  i)revent  any  particidar  contract  that  it  had  not  restrained 
trade.  Justice  Peckham,  in  AihhjHfon   Pipe  Co.  v.   United 

Sfatr,%  175  IT.  8.  245,  20  Sup.  Ct,  109,  44  L.  Ed.  136,  said : 

*•  It  is  not  material  that  the  combination  did  not  prevent  the  letting 
of  any  particular  contract.  Such  was  not  its  pun»ose.  On  the  con- 
trarj%  tlie  more  cimtracts  to  l)e  let.  the  l>etter  for  tlie  i-ombination  It 
was  formed,  not  for  tlie  object  of  preventing  the  letting  of  contracts, 
but  to  restrain  the  parties  to  it  from  comiK^ting  for  contracts    and 

t  L3  Ll?ir*'T*/**r  ^"^  ^"^  ***^  obtaine^l  for  the  pipe  dealt  in  by 
those  parties.  ♦  •  •  The  question  is  as  to  the  effect  of  such  voni 
bination  upon  the  trade  in  the  article;  and  if  that  effect  be  to  destroy 
«.mpetltion,  and  thus  advance  the  price,  the  combination  is  one  in  re- 
straint of  trade.*'  "^ 

If,  then,  the  price  of  a  commodity  which  is  the  subject  of 
an  interstate  contract  be  unlawfully  enhanced  by  a  combina- 
tion for  the  purpose  of  suppressing  competition,  shall  the 
vendee  thus  compelled  to  pay  this  unlawfully  enhanced  price 


CITY   OF  ATLANTA   V.    CHATTANOOGA   P.   &  P.   WORKS.       305 

Opinion  of  the  Court. 

be  without  remedy  against  the  combination  because  he  may 
happen  not  to  be  engaged  in  the  conduct  of  an  interstate 
business  ?  If  the  effect  of  a  combination  to  enhance  the  price 
of  a  commodity  which  is  the  subject  of  interstate  commerce 
be  to  restrain  such  commerce,  within  the  meaning  of  the  law 
of  Congress,  by  reason  of  its  tendency  to  affect  the  volume 
of  such  trade,  then  the  effect  upon  the  business  of  one  who 
has  paid  the  enhanced  price,  in  an  interstate  transaction, 
nmst  be  to  correspondingly  affect  the  volume  or  profit  of 
that  business.  Thedifference  between  what  he  was  thus  com- 
pelled to  pay  and  the  reasonable  price  of  the  commodity 
under  natural  competitive  conditions  would  be  an  injury 
to  that  business  directly  resulting  from  such  unlawful 
combination.  The  injury  to  his  business,  whether  it  be  in  its 
volume  or  profit,  is  the  same  whether  that  business  be  inter 
or  intra  state — whether  he  buy  to  extend  his  plant,  or  to 
sell  again  in  an  interstate  business.  This  excessive  price  is 
the  expected  and  intended  result  of  the  unlawful  combination 
to  restrain  interstate  trade  in  that  commodity.  That  such 
a  plaintiff  is  entitled  to  recover  the  damages  thus  sustained 
in  his  business,  whatever  its  character,  would  seem  to  be  the 
plain  purpose  of  the  seventh  section  of  the  law  of  Congress, 
under  the  logic  of  the  decision  in  Addyston  Pipe  Co.  v.  United 
States.  It  is  possible  to  so  construe  this  seventh  section  as 
to  devitalize  this  section  by  confining  compensatory  relief 
to  such  persons  as  shall  sustain  an  injury  in  some  interstate 
business  whose  volume  or  profit  has  been  diminished.  But 
this  construction  does  not  seem  consistent  with  the  wide 
economic  purposes  of  Congress,  as  manifested  by  the  whole 
tenor  of  the  act.  Congress  evidently  foresaw  the  wholesome 
effect  of  pecuniary  responsibility  for  injuries  resulting  from 
such  forbidden  combinations  and  the  courts  should  not  de- 
vitalize the  remedy  by  strained  interpretations  calculated 
to  encourage  disregard  of  the  law.  The  act  gives  the  remedy 
to  "  any  person  "  "  injured  in  his  business  or  property  by 
any  other  person  or  corporation  by  reason  of-  anything  for- 
bidden or  declared  to  be  unlawful  by  this  act."  If  Con- 
gress had  the  power  to  declare  imlawful  a  combination 
which  was  intended  to  restrain  interstate  commerce  by  en- 
21220— VOL  2—07  m — -20 


127   FEDEKAL  BEPORTER,  28. 
Opinion  of  the  Court 

hancing  the  value  of  a  commodity  when  the  subject  of  inter- 
state commerce,  it  had  the  power  to  give  a  [28]  compensa- 
tory remedy  to  any  person  directly  affected  by  the  unlawful 
agreement. 

We  see  no  application  of  the  case  of  Connolly  v.  Union 
Sewer  Pipe  Co,,  184  U.  S.  540,  22  Sup.  Ct.  431, 46  L.  Ed.  679, 
to  the  case  at  bar.  Undoubtedly  the  contract  of  purchase 
and  sale  of  pipe  was  a  contract  wholly  collateral  to  the  un- 
lawful trust  agreement  between  the  makers  of  such  pipe,  and 
the  vendor  could  make  out  a  case  for  the  purchase  price 
without  reliance  upon  the  unlawful  agreement  between  such 
makers.  The  contract  of  bargain  and  sale  between  the 
Anniston  Pipe  Company  and  the  plaintiff  was  therefore  a 
valid  and  enforceable  agreement,  and  the  plaintiff  could  not 
defend  a  suit  for  the  price  by  showing  that  the  seller  was  a 
partner  in  an  illegal  association.  The  court  in  that  case  did 
decide  that  the  damages  recoverable  under  the  seventh  sec- 
tion were  recoverable  only  in  a  direct  action,  and  could  not 
be  set  off  in  a  suit  under  a  contract  for  the  price.  But  this 
was  based,  not  upon  any  construction  of  that  section,  but 
upon  the  general  principle  of  law  which  forbids  the  setting 
off  of  unliquidated  damages  not  directly  growing  out  of  the 
principal  transaction.  The  present  suit  is  a  direct  action, 
and  is  therefore  unaffected  by  anything  decided  in  that  case. 

This  brings  us  to  the  question  of  the  limitation  applicable 
to  the  suit.  Under  the  evidence,  it  was  very  plain  that  plain- 
tiff's right  of  action  accrued  more  than  three  and  less  than 
five  years  before  action  commenced.  The  anti-trust  act  pro- 
vides no  limitation,  and,  if  any  has  been  prescribed  by  fed- 
eral law,  it  is  that  found  in  section  1047,  Rev.  St.  [U.  S. 
Comp.  St.  1901,  p.  727],  which  provides  that  "no  suit  or 
prosecution  for  any  penalty  or  forfeiture,  pecuniary  or 
otherwise,  accruing  under  the  laws  of  the  United  States," 
shall  be  maintained  unless  commenced  within  five  years  from 
accrual  of  penalty  or  forfeiture.  If  this  is  an  action  to  re- 
cover a  penalty,  within  tlie  meaning  of  this  statute,  the  suit 
was  in  time.  The  shorter  statute  of  the  state,  limiting  the 
time  for  the  commencement  of  suits  for  statutory  penalties 
to  one  year,  would  have  no  application  to  a  suit  for  a  pen- 
alty under  an  act  of  Congress.    It  is  only  when  there  is  no 


CITY   OF  ATLANTA   t\    CHATTANOOGA   F.   &   P.    WORKS.       307 

Opinion  of  the  Court. 

federal  statute  that  the  limitation  prescribed  by  the  law  of 
the  state  is  applicable.  Campbell  v.  Haverhill,  155  U.  S. 
610,  614,  15  Sup.  Ct.  217,  39  L.  Ed.  280 ;  Brady  v.  Daly,  175 
U.  S.  148,  20  Sup.  Ct.  62,  44  L.  Ed.  109. 

We  find  ourselves  in  agreement  with  the  court  below  in 
holding  that  an  action  under  the  seventh  section  of  the  act 
of  July  2,  1890,  c.  647,  26  Stat.  210  [U.  S.  Comp.  St.  1901, 
p.  3202],  is  not  a  penal  action.     The  three  first  sections  of  the 
act  are  undoubtedly  penal.    They  forbid  certain  contracts 
and  combinations,  and  provide  that  persons  doing  any  of 
the  forbidden  things  shall  be  guilty  of  a  misdemeanor,  and 
subject  to  punishment  by  both  fine  and  imprisonment.     The 
fourth  and  fifth  sections  give  jurisdiction  to  the  Circuit 
Courts  to  prevent  and  restrain  violations  of  the  act,  and 
deal    with    procedure    under    the    restraining    power    thus 
granted.     The  sixth  section  provides  for  the  forfeiture  to 
the  United  States  of  property  in  course  of  transportation 
owned  by  any  such  unlawful  combination,  etc.    The  sev- 
enth section  alone  gives  any  remedy  to  one  injured  by  sucli  a 
[29]  forbidden  combination  or  contract,  and  that  measures 
the  relief  by  the  "  damages  by  him  sustained,"  costs  of  suit, 
and  his  reasonable  attorney's  fees.    The  remedy  is  not  given 
to  the  public,  for  no  one  may  bring  the  action  save  the  per- 
son "  who  shall  be  injured,"  etc.,  and  the  recovery  is  for  the 
sole  benefit  of  the  person  so  injured  and  suing.    It  is  not 
reasonable  to  construe  the  remedy  so  conferred  as  a  penal 
action,  for  that  would  be  to  add  to  the  punishment  by  fine 
or  imprisonment  imposed  by  the  other  sections  of  the  act  an 
additional  punishment  by  way  of  pecuniary  penalty.    The 
plain  intent  is  to  compensate  the  person  injured.    True,  the 
compensation  is  to  be  three  times  the  damage  sustained.    But 
this  enlargement  of  compensation  is  not  enough  to  constitute 
the  action  a  penal  action,  within  the  meaning  of  section 
1047,  Eev.  St.  [U.  S.  Comp.  St.  1901,  p.  727].    Thus  in 
Goodridge  v.  Rogers,  22  Pick.  495,  and  Adams  v.  Palmer, 
6  Gray,  338,  the  action  was  for  a  tort  for  entering  upon  land 
and  committing  trespass,  and  was  brought  under  a  statute 
which  gave  to  the  plaintiff  threefold  damages.    It  was  never- 
theless held  not  to  be  an  action  for  a  statute  penalty,  so  as  to 


308 


127   FEDERAL  REPORTER,   29. 
Opinion  of  the  Conrt 


bring  it  under  a  statute  which  barred  all  actions  and  suits 
for  penalties  and  forfeitures  within  one  year.  In  suits  for 
the  infringement  of  patents,  judgment  for  threefold  the 
actual  damages  may  be  rendered,  but  suits  under  the  statute 
have  never  been  regarded  as  penal  actions.  Campbell  v. 
ffmerhill,  155  U.  S.  610, 15  Sup.  Ct.  217,  39  L.  Ed.  280.  In 
Woodward  v.  Alston,  12  Heisk.  581,  an  action  against  a 
clerk  for  fees  illegally  collected  was  held  not  to  be  a  penal 
action,  although  called  a  "  penalty  "  in  the  statute  giving 
the  particular  remedy.  In  Brady  v.  Daly,  175  U.  S.  148,  20 
Sup.  Ct.  62,  44  L.  Ed.  109,  the  suit  was  under  section  4966, 
Eev.  St.  [U.  S.  Comp.  St.  1901,  p.  3415],  providing  that  one 
publicly  presenting  a  copyrighted  dramatic  performance, 
without  the  owner's  consent,  shall  be  liable  for  all  damages, 
"  to  be  assessed  at  such  sum,  not  less  than  one  hundred  and 
fifty  dollars  for  the  first,  and  fifty  dollars  for  every  subse- 
quent performance  as  to  the  court  may  seem  just."  The 
suit  was  held  not  to  be  a  suit  for  the  recovery  of  a  penalty 
or  forfeiture. 

The  whole  subject  of  penal  and  compensatory  actions  has 
been  so  thoroughly  considered  in  Huntington  v.  Attrill,  146 
U.  S.  657, 13  Sup.  Ct.  224,  36  L.  Ed.  1123,  and  Brady  v.  Daly, 
175  U.  S.  148,  20  Sup.  Ct.  62,  44  L.  Ed.  109,  as  well  as  by 
the  very  full  and  able  opinion  of  Judge  Qark  in  the  court- 
below  in  disposing  of  a  demurrer  to  a  plea,  that  we  feel  we 
can  add  nothing  to  the  subject 

The  limitation  applied  by  the  court  below  was  that  pre- 
scribed by  section  4470,  Shannon's  Revision,  Tenn.  Code. 
Prior  to  the  Tennessee  Code  of  1858  the  statute  of  limitations 
operated  upon  the  remedy,  and  applied  to  the  form  of  action. 
By  the  Code  then  adopted,  and  its  amendments,  the  limita- 
tion now  applies  to  the  cause  of  action.  Kirkman  v.  PhUips' 
Heirs,  7  Heisk.  222;  Callaway  v.  McMUlian,  11  Heisk.  557. 
The  limitations  of  actions  other  than  real  are  found  in  sec- 
tions 4466  to  4483  inclusive.  Shannon's  Code.  Section  4466 
provides  that: 

"  All  civil  actions,  other  than  those  far  causes  embraced  in  the  fore- 
going  article,   shan   be  commenced   after  the   cause  of  action   has 
accrued,  within  the  periods  prescribed  in  this  chapter,  unless  other 
wise  expressly  provided."  uui«!.»  oiner 


CITY   OF  ATLANTA   V.    CHATTANOOGA  P.   &  P.   WORKS.       309 

Opinion  of  the  Court. 

[30]  Section  4469,  among  other  things,  prescribes  that 
actions  for  "  statute  penalties  "  shall  be  brought  within  one 
year. 

Sections  4470,  4472,  and  4473  must  come  under  considera- 
tion, and  are  here  below  set  out  in  full : 

"  Sec.  4470.  Actions  for  injuries  to  personal  or  real  property ;  actions 
for  the  detention  or  conversion  of  personal  property  within  three 
years  from  the  accruing  of  the  cause  of  action." 

"  Sec.  4472.  Actions  for  the  use  and  occupation  of  land  and  for 
rent;  actions  against  the  sureties  of  guardians,  executors  and  admin- 
istrators, sheriffs,  clerics  and  other  public  oflScers,  for  nonfeasance, 
misfeasance  and  malfeasance  in  office ;  actions  on  contracts  not  other- 
wise expressly  provided  for,  within  six  years  after  the  cause  of  action 
accrued. 

"  Sec.  4473.  Actions  against  guardians,  executors,  administrators, 
sheriffs,  clerlis,  and  other  public  officers  on  their  bonds,  actions  on 
judgments  and  decress  of  courts  of  record  of  this  or  any  other  state 
or  government,  and  all  other  cases  not  expressly  provided  for,  within 
ten  years  after  the  cause  of  action  accrued." 

The  learned  trial  judge  held  this  action  to  be  one  for  an 
injury  to  property,  within  the  meaning  of  section  4470,  and 
therefore  barred  in  three  years.  To  this  we  cannot  assent 
That  section  plainly  applies  only  to  causes  of  action  arising 
out  of  some  injury  to  property,  as  distinguished  from  its 
detention  or  conversion.  Property,  either  personal  or  real, 
may  be  injured  or  damaged  without  its  being  either  detained 
or  converted.  But  whether  the  cause  of  action  be  an  injury 
or  damage  to  the  property,  or  for  its  taking  or  detention, 
the  suit  must  be  brought  within  the  same  period.  This  dis- 
tinction between  the  two  kinds  of  injury  to  tangible  personal 
property  is  of  very  ancient  origin.  Sir  William  Blackstone 
(volume  3,  145,  153),  in  his  chapter  entitled  "Of  Injuries 
to  Personal  Property,"  says; 

"The  rights  of  personal  property  in  possession  are  liable  to  two 
species  of  injuries — the  amotion  or  deprivation  of  that  possession, 
and  the  abuse  or  damage  of  the  chattels,  while  the  possession  con- 
tinues in  the  legal  owner.  The  former,  or  deprivation  of  possession, 
is  also  divisible  into  two  branches — the  unjust  and  unlawful  taking 
them  away,  and  the  unjust  detaining  them,  though  the  original  taliing 
might  be  lawful." 

Touching  injuries  to  property,  as  distinguished  from  its 

taking  or  detention,  the  same  author  says: 

"  As  to  the  damage  that  may  be  offered  to  things  personal  while 
in  the  possession  of  the  owner,  as  hunting  a  man's  deer,  shooting  his 
dogs,  poisoning  his  cattle,  or  in  any  wise  talking  from  the  value  of 
any  of  his  chattels,  or  malting  them  in  a  worse  condition  than  l)efore, 
these   are   injuries  too   obvious  to   need  explanation.    I   have  only, 


310 


127   FEDERAL   EEPORTER,    30. 

Opinion  of  the  Court 


therefore,  to  mention  tlie  remedies  given  by  tbe  law  to  redress  them, 
which  are  in  two  shapes :  By  action  of  trespass  vl  et  armis,  where 
the  act  is  in  itself  immediately  injurious  to  another's  property,  and 
therefore  necessarily  accompanied  with  some  degree  of  force:  and 
by  special  action  on  the  case,  wliere  the  act  Is  in  itself  indifferent, 
and  the  injury  only  consequential,  and  therefore  arising  without  any 
breach  of  the  peace  In  both  of  which  suits  the  plaintiff  shall 
recover  damages  in  proportion  to  the  injury  which  he  proves  that 
his  property  has  sustained.  And  it  is  not  material  whether  the 
damage  l>e  done  by  the  defendant  himself,  or  his  servants  by  his 
direction,  for  the  action  will  lie  against  the  master  as  well  as  the 
servant  And  if  a  man  keeps  a  dog  or  other  brute  animal  used  to 
do  mischief,  as  by  worrying  sheep  or  the  like,  the  owner  must 
answer  for  the  consecjuences,  if  he  knows  of  such  evil  habit" 

We  find  in  the  very  carefully  selected  verbiage  of  section 
4470  a  recognition  of  the  two  kinds  of  injury  to  which  tangi- 
ble  property  is  [31]  susceptible— one  by  a  damage  which 
does  not  affect  the  possession,  and  the  other  by  a  taking  or 
detention  which  does. 

While  the  precise  question  has  not  been  decided  by  the 
Supreme  Court  of  Tennessee,  we  do  find  an  indisposition  to 
give  to  the  section  any  such  broad  and  indeterminate  mean- 
ing as  would  inchide  a  suit  which  does  not  involve  any  actual 
injury  to  property.  Thus  this  section  was  held  not  to  apply 
to  a  suit  against  an  attorney  for  the  negligent  loss  of  a  debt 
intrusted  to  him  for  collection.  Bruce  v.  Baxter,  7  Lea,  477  • 
ErnmeyY.  Temple,  3  Lea,  253.  Nor  to  the  suit  of  a  stock- 
holder, in  behalf  of  the  corporation,  against  bank  directors, 
for  the  negligent  discharge  of  their  duties,  by  which  the 
corporation  had  sustained  losses.  Wallace  v.  Lincoln  Sav- 
ings Bank,  89  Tenn.  631, 15  S.  W.  448,  24  Am.  St.  Rep.  625. 

In  Kirhman  v.  Philips^  Heirs,  7  Heisk.  222,  225,  the  court 
said :  "  The  statute  of  limitations  applicable  depends  upon 
the  nature  and  character  of  the  action,  and  not  upon  its 
form."  In  the  same  case  it  was  held  that,  although  the  forms 
of  action  have  been  abolished  by  the  Code,  an  owner  of  per- 
sonal property,  whose  right  to  sue  for  damages  for  its  con- 
version was  barred  by  the  statute  of  three  years,  might 
waive  the  tort,  and  sue  for  the  value  upon  the  implied  as- 
sumpsit, in  which  case  his  suit  would  not  be  barred  in  six 
years ;  that  being  the  time  within  which  a  suit  upon  a  con- 
tract might  be  brought.  See,  also,  Ahhrook  v.  Hathaway, 
3  Sneed,  454.  Actions  on  statute  liabilities,  not  being  a 
statute  penalty,  and  not  dependent  upon  any  contract,  ex- 


CITY   OF  ATLANTA   V,    CHATTANOOGA  F.   &  P.   WORKS.       311 

Opinion  of  the  Court 

press  or  implied,  are  actions  not  otherwise  "  expressly  pro- 
vided for  by  any  of  the  other  sections  of  the  chapter  upon 
the  limitations  of  actions  other  than  real."  Such  an  action 
is  at  the  common  law — one  in  the  nature  of  an  action  upon 
a  specialty — and  is  of  a  similar  kind  to  those  enumerated 
in  section  4473,  Shannon's  Code.  Under  the  statute  of  21 
James  I,  c.  16,  all  actions  "  upon  the  case,"  with  certain  ex- 
ceptions, and  "  all  actions  of  debt  grounded  upon  any  lend- 
ing or  contract  without  specialty,"  were  barred  unless  com- 
menced within  the  time  named  in  the  statute.  But  an  action 
of  debt  which  was  grounded  upon  a  specialty  was  not  within 
the  statute.  Specialties  were  not  within  the  evil  intended. 
Angell  on  Limitations,  §  80 ;  Jones  v.  Pope,  1  Saunders,  38 ; 
White  V.  Parkin,  12  East,  578 ;  Browne  on  Actions  at  Law, 
345 ;  Bullard  v.  Bell,  1  Mason,  243,  Fed.  Cas.  No.  2121 ;  4 
Bacon,  Abridgment,  471.  But  the  statute  of  James  operated 
upon  the  form  of  action.  Thus  all  actions  "  upon  the  case," 
whatever  the  cause  of  action,  were  within  the  bar  of  the 
statute,  and  so  were  "  all  actions  of  debt  grounded  upon  any 
lending  or  contract  without  specialty." 

In  Carrol  v.  Chreen,  92  U.  S.  509,  23  L.  Ed.  738,  it  was  held 
that  a  suit  by  creditors  of  a  corporation  to  enforce  their 
claims  against  stockholders  under  a  clause  of  the  charter 
rendering  them  individually  liable  was  barred  by  the  South 
Carolina  statute;  being,  in  substance,  the  act  of  21  James  I, 
c.  16.  The  reason  given  for  this  result  was  that  the  charter 
was  a  mere  offer  or  proposal  by  the  state,  which  the  stock- 
holders could  accept  or  reject,  and  that  by  taking  stock  they 
assented  to  the  liability  imposed,  and  that  the  assent  thus 
given  and  promise  implied  was  the  ground  of  liability,  and 
that  the  action  of  case  would  lie  upon  such  an  implied 
promise,  which  action  was  within  [32]  the  bar  of  the  statute. 
The  court,  however,  went  further,  and  held  that  the  action 
or  suit  was  not  on  the  statute,  and  was  therefore  not  an  action 
on  a  specialty.  "The  statute,"  said  the  court,  "was  only 
inducement.  The  implied  promise  of  the  stockholders  to 
fulfill  its  requirements  was  the  agreement  on  their  part, 
and  it  was  without  specialty."  The  distinctions  made  in 
the  case  are  quite  refined,  and  turn  upon  common-law  forms 
of  action.    So  far  as  the  case  goes  upon  the  ground  that 


312 


121  FEDEBAL  BEPOBTER,  804. 


Syllabus. 

the  charter  involved  a  mere  proposal,  and  that  the  liability 
of  the  shareholder  was  grounded  upon  his  implied  agree- 
ment, it  is  in  accord  with  the  great  current  of  authority. 

The  statute  of  James,  as  amended  by  Act  N.  C.  1715,  c.  21, 
was  in  force  in  Tennessee  until  adoption  of  the  Tennessee' 
Code  of  1858.  Act  N.  C.  1715,  c.  31,  Scott's  Revisal,  vol.  1; 
Pea  V.  Waggoner,  5  Hayw.  19;  TisdcOe  v.  Munroe,  3  Yerg. 
820.  By  the  Code,  the  statutes  no  longer  operate  upon  the 
form,  but  upon  the  cause,  of  action;  and,  by  section  4473, 
every  cause  of  action  not  otherwise  expressly  provided  for  is 
barred,  without  regard  to  whether  it  be  upon  a  specialty 
or  not. 

It  is  impossible,  having  any  regard  to  the  verity  of  things, 
to  conceive  how  any  action  would  lie,  under  the  seventh  sec- 
tion of  the  anti-trust  act,  upon  any  implied  agreement  of  the 
defendants  to  compensate  the  plaintiff  for  the  injury  to  its 
business  and  property.  But  if  we  could  torture  an  implied 
agreement  out  of  the  transaction,  the  defendants  would  not 
be  in  better  plight,  for,  if  the  cause  of  action  be  a  contract, 
express  or  implied,  the  action  would  not  be  barred  for  six 
years.  Shannon's  Code,  §  4472.  We  are,  however,  of  opin- 
ion that  this  is  an  action  on  a  statute  liability,  and  that  the 
cause  of  action  does  not  arise  out  of  any  agreement,  and  that 
such  an  action  is  not  barred  for  ten  years. 

The  third  and  fourth  pleas  were  bad,  and  the  demurrer  to 
them  should  have  been  sustained.  The  direction  to  find  a 
verdict  for  the  defendants  was  also  error. 

The  judgment  will  be  reversed,  with  directions  to  grant  a 
new  trial. 


[804]    EOBmSON  v.  SUBURBAN  BRICK  CO. 

(Circnlt  Court  of  Appeals,  Fourth  Circuit.    February  2,  1904.) 

[127  Fed.,  8013 

Federal  Coubts— Jurisdiction  a— Aixbgation  of  Amount  in  Con- 
troversy.—It  is  not  essential  that  a  bill  In  a  federal  court  should 
state  the  amount  or  value  In  controversy,  if  it  appears  to  be  within 


«  Jurisdiction  of  Circuit  Courts  as  determined  by  amount  in  contro- 
versy, see  notes  to  Auer  v.  Lombard,  19  C.  0.  A.  75;  TennenUSmhUna 
Shoe  Co.  V.  Roper,  36  C.  C.  A.  459. 


ROBINSON   V.   SUBURBAN   BRICK   CO. 


313 


Opinion  of  the  Court 

the  jurisdictional  limit,  from  the  allegations  of  the  bill,  or  other- 
wise from  the  record,  or  from  evidence  taken  in  the  case  before 
the  hearing  of  objections  to  the  jurisdiction. 

Contracts  in  Partial  Restraint  of  Trade — Validity  a — Sale  of 
Good  Will. — ^A  covenant  in  a  contract  by  which  the  owners  of 
brickmaking  plants  conveyed  them  to  a  corporation  in  exchange 
for  its  stock,  binding  the  sellers  not  to  engage  in  competing  business 
within  a  radius  of  50  miles  from  the  place  of  business  of  the  cor- 
poration for  a  term  of  10  years,  is  valid,  and  may  be  enforced  in  a 
court  of  equity  by  a  suit  to  enjoin  its  violation. 

Same — Law  Governing. — Such  a  covenant  is  personal,  and  is  not 
brought  within  the  statutes  of  a  state  other  than  that  in  which 
the  contract  was  made  by  the  fact  that  the  property  sold  was  situ- 
ated in  such  state. 

Monopolies — Anti-Trust  Act — Manofacturing  Combination. — ^The 
anti-trust  act  (Act  July  2,  1890,  c.  647,  26  Stat.  209  [U.  S.  Comp. 
St.  1901,  p.  3200] ) ,  does  not  apply  to  a  contract  or  combination  re- 
lating to  the  business  of  manufacturing  within  a  state. 

Abatement  & — Pendency  of  Action  in  State  Court. — The  pendency 
of  a  suit  in  a  state  court  is  not  a  bar  to  one  on  the  same  cause  of 
action  in  a  federal  court.© 

Appeal  from  the  Circuit  Court  of  the  United  States  for 
the  Northern  District  of  West  Virginia,  at  Wheeling. 

Henry  M,  Russell  and  J,  B.  Driggs,  for  appellant. 

Nelson  G.  Huhhard  {MuVbard  <&  Euhhard,  on  briefs),  for 
appellee. 

Before  Goff  and  Simon  ton,  Circuit  Judges,  and  Mc- 
Dowell, District  Judge. 

Simon  ton,  Circuit  Judge. 

This  case  comes  up  on  appeal  from  the  Circuit  Court  of 
the  United  States  for  the  Northern  District  of  West  Vir- 
ginia. It  has  been  twice  argued  in  this  court.  In  the  year 
1898  George  O.  Robinson,  the  appellant  here,  was  engaged 
in  the  business  of  manufacturing  brick  in  the  town  of  Bel- 
laire,  in  the  state  of  Ohio.  At  the  same  time  George  K. 
Wheat  was  engaged  in  the  same  business  in  or  near  the  city 

o  Validity  of  monopolistic  contracts,  as  affected  by  public  policy,  see 
notes  to  Chicago,  M.  &  8t.  P.  Ry.  Co.  v.  Wahash,  St.  L.  &  P.  Ry.  Co., 
9  C.  C.  A.  666 ;  Cravens  v.  Carter-Crume  Co.,  34  C.  C.  A.  486. 

*  See  Abatement  and  Revival,  vol.  1,  Cent.  Dig.  §  87. 

0  Syllabus  copyrighted,  1904,  by  West  Publishing  Co. 


314 


127  FEDERAL  BEPORTEB,  805. 


Opinion  of  the  Court 

of  Wheeling,  W.  Va.  The  Belmont  Brick  &  Tile  Company 
had  a  manufactory  at  Martin's  Ferry,  in  the  state  of  Ohio. 
B.  F.  Hodgman  was  conducting  the  manufacture  of  brick  at 
[805]  Moundsville,  W.  Va.  The  owners  of  these  factories 
entered  into  an  agreement  on  24th  December,  1898,  whereby 
they  all  agreed  to  sell  and  convey  their  several  plants  to  a 
corporation  to  be  organized  under  the  laws  of  West  Vir- 
ginia, which  would  have  its  principal  place  of  business  at 
Wheeling.  They  were  each  to  receive,  in  payment  for  the 
plant,  specified  amounts  of  stock  in  the  new  company.  The 
agreement  contained  the  following  stipulation: 

"It  is  mutually  agreed  bet>veen  tiie  parties  liereto,  and  each  for 
Miuself  specifically  promises  and  agrees,  not  to  liereafter  engage  in 
ttie  bnckmakmg  business,  or  in  any  lines  tliat  may  be  manufactured 
Hereafter  at  any  of  the  several  plants  to  be  operated  by  the  corpo- 
ration whose  creation  is  here  contemplated,  or  to  furnish  means  aid 
or  adv  ce  to  cithers  seeking  to  do  so  in  such  a  way  as  to  come  in 
competition  with  the  said  corporation  within  a  territory  which  may 
be  described  as  within  a  radius  of  50  miles  from  the  citv  of  Wheeling 

L?g;erm'nt""  '""^"^  ^'  *^"  ^^^^^  '''"^  ^^  ^'^^  '^'  «^^-^  '' 

The  agreement  was  carried  out,  and  the  property  ex- 
changed for  the  stock  in  the  new  company  called  the  Sub- 
urban Brick  Company.  George  O.  Robinson  took  an  active 
part  in  the  management  and  control  of  the  new  company 
for  some  time.  He  afterwards  sold  out  all  his  interest,  and 
then  ceased  to  have  anything  to  do  in  the  business  of  the 
company.  Very  soon  thereafter  he  became  a  stockholder 
in  the  Standard  Brick  &  Stone  Company,  a  corporation 
organised  under  the  laws  of  Ohio,  and  engaged  in  manu- 
facturing brick  substantially  the  same  as  that  of  the  Sub- 
urban Brick  Company,  at  Bellalre,  Ohio,  within  10  miles 
of  Wheelmg. 

The  bill  in  this  case  is  filed  by  the  Suburban  Brick  Com- 
pany against  George  O.  Robinson  in  order  to  compel  the 
specific  performance  of  his  contract  as  above  set  forth.  It 
states  the  facts  above  set  out,  and  prays  that  the  defendant, 
George  O.  Robinson,  be  enjoined  from  prosecuting  the  busi- 
ness of  brickmaking  as  manager  or  adviser  of  the  Standard 
Brick  &  Stone  Company,  or  of  any  others  who  may  seek 
to  engage  in  business  within  the  said  territory. 

The  answer  did  not  deny  the  execution  of  the  agreement 
set  out  in  the  bill,  nor  the  violation  of  it  by  the  defendant. 


ROBINSON   V.    SUBURBAN   BRICK   CO. 


315 


Opinion  of  the  Court 

It  justifies  the  breach  of  the  agreement;  insisting  that  it 
was  unlawful  and  invalid  under  the  laws  of  the  state  of 
Ohio,  under  the  trust  laws  of  the  United  States,  at  common 
law,  and  against  the  principles  of  equity.  The  answer  also 
set  up  the  pendency  of  a  suit  between  the  same  parties  in  a 
court  of  Ohio,  involving  the  same  question  as  is  involved 
in  this  case. 
With  this  answer  the  defendant  also  filed  a  demurrer : 

**  (1)  The  said  bill  is  defective,  in  that  it  does  not  allege  facts 
showing  that  this  court  has  jurisdiction  of  this  cause,  nor  are  such 
facts  otherwise  shown  by  the  record.  (2)  The  agreement  set  forth 
in  the  said  bill  is  void,  by  reason  of  the  laws  of  the  state  of  Ohio, 
and  also  by  reason  of  the  acts  of  Congress  of  the  United  States; 
and,  except  by  virtue  of  the  said  agreement,  the  plaintiff  shows  no 
right  to  relief.  (3)  The  facts  stated  in  the  bill  do  not  present  a  case 
in  which  a  court  of  equity  has  jurisdiction,  even  if  the  agreement 
were  valid,  to  award  an  injunction  or  to  grant  the  relief  prayed  for. 
(4)  The  said  bill  is  in  other  respects  uncertain,  informal,  and 
erroneous." 

At  tlie  hearing,  all  the  evidence  having  been  taken  and 
submitted,  the  court  below  overruled  the  demurrer.  The 
second,  third,  and  fourth  grounds  of  demurrer  are  clearly 
superseded  by  the  answer.  The  first  [806]  ground  of  demur- 
rer, based  ui^on  the  failure  of  complainant  to  state  in  so 
many  words  that  the  matter  in  controversy  exceeded  $2,000, 
besides  interest  and  costs,  was  overruled;  the  court  holding 
that  it  may  be  determined  from  the  evidence  herein  that  the 
amount  in  controversy  exceeds  the  required  jurisdictional 
amount.  The  decree,  on  bill,  answer,  and  evidence,  granted 
complainant  the  relief  asked,  and  ordered  the  injunction  to 
issue,  to  remain  in  force  until  24th  December,  1908,  the  dat« 
fixed  by  the  agreement  in  the  record. 

Leave  to  appeal  was  granted  the  defendant,  and  the  case 

is  here  on  assignments  of  error  as  follows : 

"  (1)  The  said  decree  is  erroneous  in  overruling  and  refusing  to 
sustain  the  defendant's  demurrer  to  the  bill  in  the  said  suit.  (2) 
The  said  decree  is  erroneous  in  awarding  the  injunction  against  the 
said  defendant  which  is  thereby  awarded  and  decreed.  (3)  The 
said  decree  is  erroneous  in  granting  the  plaintiff  the  relief  prayed  for 
instead  of  refusing  such  relief  and  dismissing  the  plaintiff's  bill." 

As  to  the  demurrer:  It  is  not  essentially  necessary  that 
the  bill  should  state  the  amount  of  the  matter  in  controversy, 
if  this  fact  is  either  manifest  from  the  allegations  of  the 
bill,  or  it  be  made  to  appear  in  any  part  of  the  record.    The 


316 


127   FEDEBAL  KEPOBTEB,   806. 


Opinion  of  the  Court 
courts  go  farther  than  this,  and  permit  this  jurisdictional 
fact  to  be  established  by  affidavits,  if  it  appears  in  no  part 
of  the  record.    Carr  v.  Fife,  156  U.  S.  494,  15  Sup.  Ct.  427, 
89  L.  Ed.  508;  United  States  v.  Trans-Missouri  Freight 
Associatiofi,  166  U.  S.  311,  17  Sup.  Ct.  540,  41  L.  Ed.  1007; 
Whiteside  V.  Easelton,  110  U.  S.  296,  4  Sup.  Ct.  1,  28  L.  Ed' 
152;  WUson  v.  Blair,  119  U.  S.  387,  7  Sup.  Ct.  230,  30  L.  Ed. 
441 ;  Bed  River  Cattle  Co,  v.  Needham,  137  U.  S   632   11 
Sup.  a.  208,  34  L.  Ed.  799.    And  in  Rect(yr  v.  Lipscomb, 
141  U.  S.  557,  12  Sup.  Ct.  83,  35  L.  Ed.  857,  the  court,  not- 
withstanding allegations  in  the  record,  went  into  the  tes- 
timony, and,  under  all  the  showing  presented,  held  that  the 
matter  in  controversy  was  not  within  the  jurisdictional  limit. 
In  the  case  at  bar  the  testimony  showed  that  the  threatened 
damage  from  the  act  of  the  defendant  amounted  to  many 
thousands  of  dollars. 

As  to  the  merits:  It  is  charged  that  this  contract  sought 
to  be  enforced  is  in  restramt  of  trade  and  void.  Contracts 
of  this  character,  whereby  a  party  binds  himself  not  to  carry 
on  a  particular  business  within  a  limited  territory  and  for 
a  limited  time,  have  always  been  sustained  by  courts,  espe- 
cially if  the  contract  accompanies,  as  a  part  of  the  consid- 
eration thereof,  a  sale  by  a  vendor  to  a  vendee.  The  rule 
IS  clearly  stated  by  Mr.  Pomeroy  in  his  Equity  Jurispru- 
dence (volume  2,  443,  444) : 

"Contracts  in  partial  restraint  of  trade  are  valid.    To  this  end 
tltey  must  be  partial  with  respect  to  the  territory  included-  rea^n 

Ji^jL'^o^r^ltfK*'^"/™?^'  r  *^^^^^-^'  th^ciV^cums'tan^^^^ 
rights  of  the  party  burdened,  and  the  one  benefited  by  the  restric- 
tto^  and  the  number  and  interests  of  the  public  who^  freedom  of 
trade  is  circumscribed;  and  made  upon  a  valuable  Ind  suffiSpnt 
consideration.     The  Jurisdiction  of  eQudty  is  generally  exerc^^^ 
respect  to  these  contracts,  for  the  Purpose  of Tndirectirco^^^^^^ 
^eir  specific  performance,  by  means  of  ^  injunction  preveS  theif 
violation.    Such  contracts  are  frequently  made  in  connertion  with  o 

not  ^rX^'a^'^r  ^^^  n  ^^"'  *^^  vendTSipulXTtha?  he  will 
not  <^rry  on  the  same  business  within  a  specified  distance  from  thi 
old  place,  or  for  a  specified  time,  or  will  not  solidt  the  o^^custSners 
for  their  trade,  and  the  like.  These  khid  of  stipXions  rsOTl  I? 
reasonable  as  to  territory  and  time,  will  be  S4d  against  the 
vendor,  often  by  an  injunction."  «"iurcea  agamst  the 

This  seems  to  be  the  law  of  Ohio.    «  Kestraint  of  trade, 
founded  on  good  consideration,  reasonable,  and  not  oppress- 
ive, is  valid."    Lan§e  v.  Werk,  2  Ohio  St.  519;  Grasselli  v 
Lowden,  11  Ohio  St.  349.    "A  restriction  as  to  one  city  for 


ROBINSON   V,   SUBURBAN  BRICK   CO. 


817 


Opinion  of  the  Court. 

five  years  is  valid."  Thomas  v.  Miles''  Adm'r,  3  Ohio  St. 
274.  So  in  North  Carolina.  Kramer  v.  Old,  25  S.  E.  813, 
34  L.  R.  A.  389,  56  Am.  St.  Rep.  650 :  "  Good  will  is  prop- 
erty which  the  owner  has  the  right  to  sell  to  the  full  extent 
of  the  field  from  which  he  derives  his  profit,  and  for  a  rea- 
sonable time.  Its  market  value  is  lessened  if  he  cannot  bind 
himself  not  to  compete.  The  space  limit  may  be  enough  to 
secure  to  the  buyer  the  full  benefit  of  the  business  he  has 
bought."  In  the  Federal  courts  the  same  principle  prevails. 
Oregon  S.  Nav.  Co,  v.  Winsor,  20  Wall.  69,  22  L.  Ed.  315 : 
"  Restraint  is  invalid  at  common  law,  except  when  it  is 
ancillary  to  a  lawful  contract,  involving  relations  of  vendor 
and  vendee,  and  necessary  to  protect  the  covenantee  in  the 
lawful  fruits  of  his  contract."  U.  S,  v.  Addyston  Pipe  Line 
Co.,  85  Fed.  271,  29  C.  C.  A.  141,  46  L.  R.  A.  122;  Hitchcock 
V.  Anthony,  83  Fed.  779,  28  C  C.  A.  80. 

It  is  suggested  that  this  contract  is  invalid  under  the  laws 
of  Ohio,  especially  as  it  involves  the  purchase  of  land  in 
Ohio.  But  the  question  we  are  considering  is  not  the  validity 
or  invalidity  of  the  purchase  of  defendant's  land.  He  no- 
where seeks  a  recission  of  that  sale.  Nor  has  he  offered  to 
return  the  consideration  received  by  him  on  its  purchase. 
On  the  contrary,  he  retains  it.  The  question  before  us  is  a 
personal  covenant  b}^  defendant  with  complainant,  made  in 
West  Virginia,  to  be  construed  and  enforced  according  to 
the  law  of  West  Virginia.  There  is  no  question  of  its  validity 
under  the  law  of  West  Virginia. 

It  is  also  urged  that  this  transaction  is  void  under  the  "  act 
to  protect  trade  and  commerce  against  unlawful  restraints 
and  monopolies."  Act  July  2,  1890,  c.  647,  26  Stat.  p.  209 
[U.  S.  Comp.  St.  1901,  p.  3200].  But  this  statute  is  in- 
tended to  protect  interstate  trade  and  commerce,  and  does 
not  relate  to  manufactories  within  a  state.  U.  S,  v.  E.  C, 
Knight  Co.,  156  U.  S.  1,  15  Sup.  Ct.  249,  39  L.  Ed.  325; 
illustrated  in  Addyston  Pipe  dc  Steel  Co.  v.  TJ.  S.,  175  U.  S. 
237,  20  Sup.  Ct.  96,  44  L.  Ed.  136.  The  doctrine  is  well 
stated  in  Gibbs  v.  McNeeley,  107  Fed.  211 : 

"Manufacture  within  a  state  of  an  article  of  commerce  is  not 
within  the  purview  of  the  act,  although  the  manufacturing  combina- 
tion constitutes  a  monopoly.  ♦  ♦  *  It  makes  no  difference  that  the 
manufacturer  intends  his  product  for  sale  in  other  states  and  foreign 


318 


127  FEDEBAL  BEPOBTER,  875. 
Sytlabufi. 


countries.  •  *  ♦  It  must  go  further,  and  provide  for  the  sale  and 
transportation  to  other  states ;  otherwise  what  is  proposed  cannot  be 
said  to  lool£  to  interstate  commerce." 

The  pendency  of  the  suit  in  the  court  of  Ohio  cannot 
affect  the  suit  in  the  Circuit  Court  of  the  United  States. 
Gwdon  Y.  Gil  foil,  99  U.  S.  168,  25  L.  Ed.  383;  Stanton  v. 
Embri/,  93  U.  S.  548,  23  L.  Ed.  983.  See,  also,  Anderson  v. 
U.  S.,  171  I  J.  S.  C04,  19  Sup.  Ct.  50,  43  L.  Ed.  300. 

From  a  consideration  of  the  whole  case,  we  are  satisfied 
with  the  conchision  reached  by  the  court  below.  The  decree 
is  affirmed. 


[875]       A.  BOOTH  &  CO.  v,  DAVIS  ET  AL.« 

(Circuit  Court,  B.  D.  Michigan.  S.  D.    January  19,  1904.) 

[127  Fed.,  875.] 

Monopolies— Anti-Teust  Act— Scope.— The  Anti-Trust  Act  (Act  July 
2,  1890,  e.  647,  26  Stat.  209  [U.  S.  Comp.  St.  1901.  p.  3200] )  has  no 
application  to  a  contract  hy  which  the  stocliholders  of  a  corporation 
engaged  in  dealing  in  fish  at  different  places,  in  consideration  of 
the  purchase  of  the  business  and  good  will  of  the  company  by  an- 
other, agreed  not  to  enter  into  competition  with  him  in  such  business 
for  the  term  of  10  years.^ 

Same— Michigan  Statute.— The  Michigan  act  of  June  23,  1899  (Ses& 
Laws,  1899,  p.  409,  No.  255),  to 'prevent  trusts  and  monopolies,  is 
prospective  only  in  its  operation,  and  does  not  affect  a  contract 
made  prior  to  Its  passage  which  was  valid  when  made. 

COHTBACT  IN  PaBTIAL  ReSTBAINT  OF  TbADE  C— VAUDITY— SALE  OF  BUSI- 
NESS AND  Good  Wm — ^A  covenant  by  the  stockholders  of  a  corpora- 
tion which  sold  its  property,  business,  and  good  will,  that,  in 
consideration  of  such  sale  and  as  an  inducement  thereto,  they  would 
not  directly  or  indirectly  engage  in  the  same  or  like  kind  of  business 
as  that  carried  on  by  the  company  in  the  same  territory  or  in  the 
immediate  vicinity  of  such  territory  for  10  years  after  the  sale, 
rests  upon  a  good  consideration  and  is  lawful,  and  the  right  of  the 


» Affirmed  by  Circuit  Court  of  Appeals,  Sixth  Circuit  (131  Fed.,  31). 
See  p.  56a  Petition  for  writ  of  certiorari  denied  by  the  Supreme 
Court  (195  U.  S.,  mQ).    Memorandum  decision.    Not  reprinted. 

»  Syllabus  copyrighted,  1904,  by  West  Publishing  Co. 

»  Validity  of  monopolistic  contracts  as  affected  by  public  policy,  see 
notes  to  Chicago,  Jf.  4  8t,  P.  Rv.  Oo.  ▼.  Waftash,  St  L,  d  P.  Ry,  Co,,  9 
C.  C.  A.  666;  Oravem  v.  Oarter-Crume  Co.,  34  C.  C.  A.  48a 

See  CJontracts.  vol.  11,  Cent  Dig.  §  655. 


A.   BOOTH   &   CO.    V.   DAVIS. 


Opinion  of  the  Court. 


ai9 


purchaser  to  enforce  it  cannot  be  affected  by  the  question  whether 
he  has  conducted  the  business  lawfully  since  his  purchase. 
Same — Suit  to  Enforce — Defenses. — In  a  suit  to  enjoin  a  defendant 
from  violating  a  contract  by  which  for  a  valuable  consideration  he 
covenanted  not  to  engage  In  business  for  himself  or  another  in  com- 
petition with  that  of  complainant  for  a  term  of  years,  and  to 
enjoin  a  codefendant  from  employing  his  services  in  a  competing 
business,  it  is  no  defense  that  his  codefendant  hired  him  in  igno- 
rance of  the  contract,  and  will  suffer  damage  if  deprived  of  his 
services. 


In  Equity.     On  motion  for  preliminary  inj  miction. 

Chas.  jS.  Thornton  and  Henry  M.  Du-ffield,  for  complainant, 

Fred  A,  Baker  and  E,  E,  Kane,  for  defendants. 

Swan,  District  Judge. 

In  this  cause  the  motion  to  vacate  the  restraining  order 
issued  herein  and  the  motion  for  a  preliminary  order  was 
continued  until  the  further  order  of  the  court.  The  main 
defense  to  the  bill  presented,  it  was  then  thought,  a  question 
to  be  determined  upon  plenary  proofs  rather  than  upon  affi- 
davits. In  the  expectation  that  the  taking  of  proofs,  then 
in  progress,  would  obviate  the  labor  of  [876]  digesting  the 
many  voluminous  affidavits  submitted  upon  the  hearing  of 
the  motion  for  injunction,  and  reviewing  upon  the  proofs  and 
facts  in  issue,  the  formal  disposition  of  that  motion  was 
postponed  with  that  end  in  view.  The  taking  of  the  testi- 
mony, however,  has  been  extended  by  stipulations  of  the 
parties,  and  is  not  completed.  The  defendants  now  urge 
that  their  interests  will  suffer  injury  by  deferring  decision 
until  the  completion  of  the  proofs.  To  avert  that  result, 
and  to  facilitate  the  review  of  this  matter,  the  conclusions 
here  reached  are  founded  upon  the  affidavits  filed,  notwith- 
standing the  unsatisfactory  nature  of  such  data  compared 
with  plenary  proofs. 

The  bill  is  filed  to  restrain  the  defendant  Davis  from  a 
breach  of  his  contract  hereinafter  set  forth,  which  contract, 
it  is  claimed  by  complainant,  was  and  is  a  part  of  the  con- 
sideration for  the  purchase  by  complainant  of  the  property 
and  good  will  of  the  Davis  Fresh  &  Salt  Fish  Company,  a 


320 


127   FEDERAL  REPORTER,  876. 


Opinion  of  the  Court. 

corporation  orgmnized  under  and  by  virtue  of  the  laws  of 
the  state  of  Michigan,  and  transacting  a  general  fish  busi- 
ness, and  also  engaged  in  buying,  catching,  producing,  and 
selling  salt  and  fresh  fish.  The  company  had  its  principal 
office  in  the  city  of  Detroit,  in  said  state.  It  also  carried  on 
business  at  Cleveland,  Columbus,  and  Dayton,  Ohio;  Louis- 
ville, Ky.;  Nashville,  Tenn.;  St.  Louis  and  Kansas  City, 
Mo. ;  Buffalo  and  New  York  City,  in  the  state  of  New  York; 
Grand  Eapids,  Jackson,  East  Saginaw,  Lansing,  Port  Hu- 
ron, and  Detroit,  Mich.  The  bill  also  seeks  to  have  the 
Wolverine  Fish  Company,  Limited,  restrained  from  aiding 
Davis  "to  violate  his  contract  with  complainant  by  employ- 
ing said  Davis  in  its  business. 

On  August  14,  1898,  in  consideration  of  the  sum  of  $17,- 
473.14,  the  Davis  Fresh  &  Salt  Fish  Company  sold  to  Wil- 
liam Vernon  Booth,  of  Chicago,  with  the  consent  of  all  of 
its  officers  and  stockholders,  all  of  the  goods,  chattels,  and 
property  of  every  kind,  nature,  and  description  to  it  belong- 
ing, or  in  which  it  had  any  interest  at  that  time,  and,  as  part 
thereof,  the  good  will  of  the  business  conducted  by  it  at 
Detroit,  and  gave  said  Booth  a  bill  of  sale,  with  warranty  of 
title,  signed  by  defendant  Davis,  its  president,  and  James  T. 
Donaldson,  its  secretary,  appended  to  which  was  the  follow- 
ing, signed  by  said  Davis: 

**  For  and  in  consideration  of  one  dollar  and  other  valuable  consid- 
eration, which  I  acknowledge,  I  hereby  agree  to  perform  the  cove- 
nants and  agreements  above  made  and  to  be  performed  by  the  Davis 
Fresh  &  Salt  Fish  Company. 

"Witness  my  hand  and  seal  this  14th  day  of  September,  A.  D. 
1898." 

Said  Davis  was  a  stockholder  and  the  principal  officer  and 
manager  of  the  vendor  corporation,  and  apparently  very  de- 
sirous that  the  contract  of  sale  should  be  completed,  and  he 
and  other  stockholders  of  the  Davis  Fresh  &  Salt  Fish  Com- 
pany executed  the  following  agreement: 

"This  instrmnent  witnesseth.  That  William  Vernon  Booth  has  pur- 
chased the  plant,  business  and  good  will  of  the  business  of  the  Davis 
Fresh  &  Salt  Fish  CJompany,  and  has  paid  therefor  the  sum  of  $17,- 
473.14;  that  in  making  said  transfer,  and  as  an  inducement  to  said 
William  Vernon  Booth  to  purchase  said  plant,  business  and  good  will 
and  pay  the  sum  aforesaid  for  the  same,  we  have  each  agreed  that  we 
would  not,  and  we  now  do  agree,  each  for  himself.  Jointly  and  severally 
with  him,  the  said  William  Vernon  Booth,  his  heirs  and  assigns,  forever, 


A.    BOOTH   &   00.   V,   DAVIS. 


821 


Opinion  of  the  Court. 

that  we  will  not,  during  the  next  ten  years,  in  the  territory  or  the 
immediate  vicinity  of  the  territory  dealt  in  by  our  company,  or  oper- 
ated in  by  ourselves  or  the  agents  or  employes  of  the  company,  en- 
gage or  in  any  [877]  manner  be  interested  in,  either  directly  or 
indirectly,  for  ourselves  or  for  others,  the  same  or  like  kind  or  char- 
acter of  business  as  that  lieretofore  conducted  and  now  being  carried 
on  by  said  company,  and  that  we  will  not,  during  the  said  period  of 
ten  (10)  years,  either  directly  or  indirectly,  be  guiltj-  of  any  act  inter- 
fering with  the  business,  its  good  will,  its  trade  or  its  customers,  or 
come  in  competition  with  the  same ;  and  we  will  not,  jointly  or  sever- 
ally, either  in  firms  or  cori^oratious,  or  as  individuals,  or  in  any  other 
way,  directly  or  indirectly  interfere  with  the  said  trade  or  business  or 
do  any  act  prejudicial  to  the  same  or  any  part  thereof,  or  interfere 
with  the  persons  employed  therein ;  the  meaning  hereof  being  that  the 
said  William  Vernon  Booth  is  buying  and  paying  for  the  good  will  of 
the  business  in  the  largest  and  fullest  scope  of  the  term ;  and  that  we 
will  not,  and  each  agrees  that  he  will  not,  do  anything  to  interfere 
with  or  injure  the  said  business,  but  will  during  said  period,  lend  his 
aid  and  best  influence  to  the  promotion  and  advancement  of  the  same. 
*•  In  witness  wliereof  we  liave  hereunto  subscribed  our  names  and 
affixed  our  seals,  jointly  and  severally,  this  first  day  of  August,  A.  D. 
1898. 

"  Edgar  A.  Davis. 

"  Jamks  T.  Donaldson. 

"  Belle  R.  Harper. 

"Ed.  E.  Kane. 

"  Belle  B.  Davis." 

The  consideration  named  in  the  instrument  quoted  above 
was  paid  on  or  about  the  14th  of  Septeml)er,  1898,  to  the 
Davis  Fresh  &  Salt  Fish  Company,  and  by  it  distributed 
among  its  stockholders,  defendant  Davis  receiving  his  full 
share  thereof.  The  purchase  and  agreement  recited  above 
were  made  by  said  Booth,  as  agent  for  complainant,  and  a 
formal  transfer  was  made  by  Booth  to  his  principal  of  all  the 
property,  rights,  and  contracts  involved  in  the  transaction. 
The  propei-ty  was  duly  delivered.  The  complainant  has  en- 
tered into  the  possession  thereof,  and,  the  bill  claims,  is  con- 
tinuing such  business  in  Detroit  and  the  other  places  where 
the  Davis  Fresh  &  Salt  Fish  Company  conducted  its  business 
before  said  sale.  The  bill  seeks  an  injunction  against  Davis 
from  violating  his  said  agreement,  and  against  the  Wolverine 
Fish  Company,  Limited,  and  other  defendants  (except  Ed- 
son,  who  was  not  served),  from  aiding  and  assisting  Davis 
in  the  violation  of  his  contract.  The  answer  of  the  defend- 
ants, and  the  separate  answer  of  defendant  Davis,  do  not  dis- 
pute the  purchase  of  the  property  and  good  will  of  the  Davis 
Frash  &  Salt  Fish  Company.  The  defense  is,  first,  that  the 
21220— VOL  2-^7  M 21 


322 


127    FEDERAL   REPORTER,   877. 


Opinion  of  tlie  Court. 

contract  is  against  public  policy  and  in  restraint  of  trade; 
that  it  is  void  under  the  provisions  of  the  "  Sherman  Act," 
so-called  (Act  July  2, 1890,  c.  647,  26  Stat.  209  [U.  S.  Comp. 
St.  1901,  p.  3200]),  and  an  act  of  the  Legislature  of  the  state 
of  Michigan,  entitled  "  An  act  to  prevent  trusts,  monopolies 
and  combinations  of  capital,  skill  and  arts,  and  carrying  out 
i-estraints  in  trade  and  commerce,"  etc.,  approved  June  23, 
1899  (Sess.  Laws  1899,  p.  409,  No.  255). 

The  Sherman  act  has  no  bearing  upon  this  controversy.    Its 
purpose  and  scope  is  to  avoid  all  contracts  and  combinations 
in  the  form  of  trusts  or  otherwise,  or  conspiracy  in  restraint 
of  trade  and  commerce  among  the  several  states  and  with 
foreign  nations.     United  States  v.  E,  C.  Knight  Co.,  156  U. 
S.  1, 15  Sup.  Ct.  249,  39  L.  Ed.  325 ;  United  States  v.  Freight 
Assy,  166  U.  S.  290,  17  Sup.  Ct.  540,  41  L.  Ed.  1007.    The 
business  of  the  complainant  is  lawfully  conducted  by  the 
sale  of  its  commodities  at  the  different  points  where  the  busi- 
ness acquired  from  the  Davis  Fresh  &  Salt  Fish  Company 
was  carried  on.    It  had  noth-  {878]  ing  to  do  with  the  inter- 
state or  foreign  trade  or  commerce  subject  to  congi-essional 
legislation.    It  produced  and  sold  its  goods  at  the  several 
places  where  it  did  business,  just  as  its  vendor  had  and  as 
any  individual  or  corporation  might  do,  and  it  had  the  same 
right  to  engage  in  such  business  on  complying  with  the  laws 
in  the  states  in  which  it  was  carried  on.    The  statute  of 
Michigan  which  defendants  have  invoked  as  invalidating 
the  contracts  and  business  of  the  complainant  acquired  from 
the  Davis  Fresh  &  Salt  Fisli  Company  was  not  passed  until 
a  year  after  the  purchase  by  complainant  of  that  company's 
property  and  good  will.    It  is  in  terms  prospective,  and  can- 
not be  invoked  to  defeat  a  contract  lawful  when  made.    Its 
first  section  defines  a  trust  as — 

"  A  combination  of  capital,  skill  or  arts  by  two  or  more  persons  firms, 
partnerships,  coriwrations  or  associations  of  persons,  or  of  any  two 
or  more  of  tliem,  for  either,  any  or  all  of  the  following  purposes  • 

^  (1)  To  create  and  carry  out  restrictions  in  trade  or  commerce 

'  (2)  To  limit  or  reduce  the  production,  or  increase  or  reduce  the 
price  of  merchandise  or  any  commodity. 

"  (3)  To  prevent  competition  in  manufacturing,  making,  transpor- 
tation, sale  or  purchase  of  merchandise,  produce  or  anv  commodity 

**  (4)  To  fix  at  any  standard  or  figure  wliereby  its  price  to  the' pub- 
lic or  consumer  shall  be  in  any  manner  controlled  or  established  any 


A.   BOOTH   &  CO.    V.   DAVIS. 
Opinion  of  the  Court 


323 


article  or  commodity  of  merchandise,  produce  or  commerce  Intended 
for  siile,  barter,  use  or  consumption  in  this  state." 

Examination  of  Ihe  provisions  of  this  act  is  convincing 
that  it  is  directed  only  against  combinations  of  persons, 
firms,  partnerships,  corporations,  or  associations  of  persons 
conspiring  to  co-operate  in  violation  of  its  provisions,  and 
that  it  contains  nothing  prohibitive  of  the  acquisition  by  a 
person,  persons,  corporation,  or  association  of  the  business 
or  property  of  any  person  or  association,  natural  or  artificial. 
All  such  persons  or  associations  may  acquire  property  and 
carry  on  business  at  as  many  different  places  as  their  capital 
will  warrant,  and  fix  their  own  prices  for  their  commodities, 
providing  they  do  not,  for  that  purpose  and  in  its  accom- 
plishment, combine  with  other  persons,  firms,  or  organiza- 
tions to  effect  any  of  the  ends  denounced  by  the  statute.  The 
prior  Michigan  statute  of  1889,  in  existence  at  the  time  of 
the  execution  of  the  contracts  under  which  complainant 
claims,  was  repealed  by  an  act  of  1899.  There  is  grave  ques- 
tion as  to  its  validity,  and  that  doubt  probably  prompted  the 
act  of  1899.  The  transaction  by  which  the  complainant  ac- 
quired the  title  and  interest  for  which  it  seeks  protection  in 
this  cause  was  an  out  and  out  purchase  of  the  vendor  cor- 
poration's property  and  good  will,  and  of  the  ancillary 
agreement  of  its  stocldiolders,  the  breach  of  which  agreement 
is  the  gravamen  of  the  complainant's  case.  That  such  a 
transaction  is  lawful  seems  clear.  In  United  States  v.  Ad- 
dyston  Pipe  (&  Steel  Co.,  85  Fed.  271-281  et  seq.,  29  C.  C.  A. 
141,  46  L.  R.  A.  122,  Judge  Taft  considers  the  question  here 
involved,  and  in  a  forcible  opinion  demonstrates  that  agree- 
ments by  the  seller  of  property  or  business  not  to  compete 
with  the  buyer  in  such  a  way  as  to  impair  the  business  sold 
are  perfectly  valid.  The  opinion  has  so  carefully  and  fully 
reviewed  the  authorities  in  support  of  this  proposition  as  to 
exhaust  the  subject.  The  judgment  of  the  Court  of  Appeals 
(except  in  a  minor  part  having  [879]  no  concern  with  the 
main  question)  was  affirmed  by  the  Supreme  Court  of  the 
United  States.  175  U.  S.  211,  20  Sup.  Ct.  96,  44  L.  Ed.  136. 
It  is  therefore  a  matter  of  no  concern  whether  or  not  the 
complainant  is  conducting  its  business  in  such  a  way  as  to 
reduce  the  cost  of  its  commodity,  and  to  increase  its  profits  in 


m  FEDEKAI^  BEPORTBK,  819. 
Opinion  of  the  CJourt 

that  way,  or  by  raising  the  price  otherwise.  The  contract  of 
purchase  which  it  made  with  the  Davis  Fresh  &  Salt  Fish 
Company,  and  its  agi-eement  with  the  defendant  Davis  and. 
the  other  stockholders,  by  which  they  engage  not  to  conijjete, 
individually  or  otherwise,  directlv  or  indirectlv,  witli  the 
complainant,  w^as  a  contract  wholly  collateral  to  the  scheme 
and  method  of  its  business  and  its  rights  and  equities  tinder 
the  contract  of  sale;  and  the  agi-eement  witli  Davis  and  the 
other  stockholders  can  \m  enforced  with  as  much  propriety 
as  any  other  hiwful  contract  or  agreement  into  which  it 
might  enter.  Athntta  v.  ChatfatuHHja  F.  d-  P,  }YorkH  (C.  C. 
A.,  Sixth  Circuit,  decided  Dec.  8,  1903)  127  Fed.  !>3.  It  is 
well  settled  that  an  agreement  which  o[)erates  merely  iis  a 
partial  restraint  of  trade  is  gcx)d.  provided  it  be  not  unrea- 
sonable and  there  be  a  consideration  to  support  it.  In  Ore- 
gon  Steamship  Jarigation  Co.  v.  Whiyor,  '20  AVall.  f»7,  22 
L.  Ed,  315,  Mr.  Justice  Bradley  says: 

*'In  order  that  It  may  not  l>e  iiuivasouable,  tlip  restraint  iini)08ecl 
must  not  be  larger  than  is  requlreil  for  tlio  protect i<iii  of  the  jiarty 
with  whom  the  contract  is  iiunle:  *  *  *  but  a  contract  not  to 
nse  a  trade  at  a  particular  place,  if  it  be  founde<l  n|..m  a  j,'oo(l  con- 
sideration and  be  made  for  a  gmul  purpose,  is  valid.  Of  course,  a 
contract  not  to  exercise  a  trade  generally  would  Ik»  oliii.xious  to  the 
rule,  and  would  be  void." 

Examining  this  agreement  between  complainant  and 
Davis,  it  will  be  found  that  it  has  no  feature  which  the 
law  condemns.  It  is  limited,  as  to  time,  for  the  10  years 
ensuing  its  date;  "and  to  the  territory  or  immediate  vicinity 
of  the  territory  dealt  in  by  the  company,  or  oi>erated  in  by 
ourselves  or  the  agents  or  employes  of  the  company.-'  Its 
validity  is  fully  sanctioned  by  the  case  of  the  Oregon  Steam- 
ship  Namgation  Company  v.  Winaor^  20  Wall.  67,  22  L.  Ed. 
315.  The  execution  of  the  contract  is  admitted  by  the  de- 
fendants. It  is  no  answer  to  its  enforcement  against  Davis 
that  he  did  not  get  the  consideration  he  expected  from  the 
sale,  because,  as  he  alleges,  complainant  did  not  carry  out 
an  understanding  subsequently  made  with  him.  The  de- 
fense that  the  Davis  Fresh  &  Salt  Fish  Company  had  no 
business  and  no  good  will,  but  its  business  at  the  time  of 
the  contract  was  carried  on  by  Davis  as  trustee  for  the  com- 
pany,  is  unconscionable  and  without  merit.    The  objection 


A.    BOOTH    &   CO.    V.   DAVIS. 
Opinion  of  the  Court 


325 


that  the  complainant  is  a  trust  and  a  monopoly  is  answered 
by  the  view  taken  of  the  statute  of  Michigan  of  1899,  and 
it  is  shown  by  the  affidavits  that  the  complainant's  business 
in  this  line  is  but  a  small  fraction  of  that  done  by  other 
dealers  in  the  same  commodities  in  the  territory  covered  by 
its  operations,  and  that  it  is  but  one  of  several  hundred 
dealers  in  that  territory. 

It  is  further  claimed  that  the  bill  does  not  aver  that  the 
complainant  has  complied  with  the  statute  with  regard  to 
foreign  corporations.  The  affidavits  submitted  by  complain- 
ant completely  negative  this  objection. 

It  is  urged  that  the  agreement  with  Davis  and  the  other 
stockholders  is  not  supported  by  any  consideration.  There 
is  no  force  in  this  position.  [880]  It  recites  that  the 
signers  do  agi*ee,  "  as  an  inducement  to  said  William  Ver- 
non Booth  to  purchase  said  plant,  business  and  good  will 
and  pay  the  sum  aforesaid  ($17,473  14)  for  the  same,  we 
each  have  agreed  that  we  would  not,  and  we  now  do  agree, 
each  for  himself,  jointly  and  severally  *  *  *  that  we 
will  not  during  the  next  ten  (10)  years,  in  the  territory 
or  the  immediate  vicinity  of  the  territory  dealt  in  by  our 
company,  or  operated  in  by  ourselves  or  the  agents  or  em- 
ployes of  the  company,  engage  or  in  any  manner  be  inter- 
ested in,  either  directly  or  indirectly,  for  ourselves  or  for 
others,  the  same  or  like  kind  or  character  of  business  as 
that  heretofore  conducted  and  now  being  carried  on  by  said 
company,  its  officers,  agents,  employes  or  assigns,"  etc.  The 
signers  of  this  instrument  are  estopped  from  denying  want 
of  consideration  for  its  provisions.  Their  express  acknowl- 
edgment in  the  instrument  is  that  an  inducement  to  the 
purchase  at  the  time  was  their  several  contracts  not  to  com- 
pete, directly  or  indirectly,  as  individuals  or  otherwise,  with 
their  vendee  during  the  time  and  in  the  territory  desig- 
nated. The  effect  of  such  competition,  it  is  obvious,  would 
be  to  impair  the  value  of  the  property  and  good  will  pur- 
chased, and,  as  has  been  said,  a  contract  which  would  in- 
sure against  this  is  not  in  restraint  of  trade,  but  valid.  In 
Hendrick  v.  Lindsay,  93  U.  S.  148,  23  L.  Ed.  855,  it  is  said  : 

"Damage  to  the  promisee  constitutes  as  good  a  consideration  as 
benefit  to  the  promisor.  In  PiUan  v.  Van  Mierop,  3  Burr.  1663,  the 
court  say :  'Any  damage  or  suspension  of  a  right,  or  possibilit\'  of  a 


326 


127   FEDERAL  REPORTER,   880. 
Opinion  of  the  CJourt 


loss,  occasioned  to  the  plaiutiflf  by  the  promise  of  another,  is  a  suffi- 
cient consideration  for  such  promise,  and  will  make  it  binding, 
although  no  actual  benefit  accrued  to  the  party  promishig.'  This  rule 
Is  sustained  by  a  long  list  of  adjudged  cases." 

The  restraint  upon  the  defendants  secured  by  this  con- 
tract, it  is  clear  beyond  question  from  the  terms  of  the 
contract  itself,  was  regarded  by  both  parties  thereto  as  con- 
sideration. It  does  not  lie  in  the  mouth  of  Davis,  when  he 
has  deliberately  and  for  the  purpose  of  inducing  the  com- 
plainant to  pay  the  large  sum  of  $17,473.14:  for  the  business, 
which  he  now  states  was  worthless,  to  deny  that  there  was 
any  consideration  for  his  ag^eeme^t.  In  fact,  the  denial  of 
want  of  consideration,  and  Davis'  objections  to  the  contract 
that  the  Davis  Fresh  &  Salt  Fish  Company  had  no  business 
or  good  will  at  the  time  of  the  sale,  are  inconsistent  in  them- 
selves, and  compel  the  conclusion  that,  if  the  vendor  cor- 
poration had  no  business,  the  sale  of  its  property  and  the 
inventory  upon  which  it  was  made  was  a  fraud  upon  the 
purchaser,  which  discredits  the  claim  of  Davis  that  the 
agreement  of  himself  and  fellow  stockholders  was  an  inde- 
pendent transaction. 

In  behalf  of  the  Wolverine  Fish  Company,  Limited,  it  is 
urged  that  it  had  no  knowledge  of  the  agreement  entered 
into  by  Davis  to  refrain,  directly  or  indirectly,  from  engag- 
ing in  the  fish  business  for  himself  or  others,  and  that  to 
deprive  it  of  his  services  and  experience  is  a  hardship.  The 
equities  of  the  case  in  favor  of  the  complainant,  in  view  of 
the  facts,  are  nuich  stronger  than  the  consideration  urged 
by  the  Wolverine  Company  against  being  enjoined  from  the 
employment  of  Davis  in  violation  of  his  contract  with  com- 
plainant. Whatever  injury  results  to  the  Wolverine  Fish 
Company,  Limited,  from  the  enforcement  of  Davis'  con- 
tract with  complainant,  is  chargeable,  not  to  the  latter,  but 
to  Davis  himself.  If  that  company  is  injured,  it  is  because 
[881]  of  Davis'  willful  breach  of  his  contract  with  the  com- 
plainant, and  not  by  reason  of  any  act  or  omission  of  the 
complainant.  It  is  no  answer  to  the  enforcement  of  com- 
plainant's contract  that  Davis  has  broken  it  and  entered 
into  relations  with  others  whereby  the  benefit  of  his  experi- 
ence and  services  will  operate  inevitably  to  the  detriment 
of  the  complainant,  although  Davis'  employer  did  not  know 


MONTAGUE   &   CO.   V.   LOWRY. 


Syllabus. 


327 


of  his  self-imposed  disability.  To  hold  otherwise  would 
sanction  the  doctrine  that  one  entering  into  a  like  contract 
to  that  executed  by  Davis  to  the  complainant  might  be  ab- 
solved from  his  obligations  under  the  contract  by  hiring  his 
services  to  one  ignorant  of  his  disability.  Such  a  construc- 
tion of  the  letter  and  spirit  of  like  engagements  would  make 
them  entirely  nugatory,  and  would  be  grossly  unjust  to  the 
party  who  had  paid  in  good  faith  a  valuable  consideration 
for  the  property  and  good  will  of  a  business  which  his 
vendors  collectively  and  individually  have  covenanted  not  to 
impair  or  invade. 

It  results  from  these  views  that  the  complainant  is  en- 
titled to  the  injunction  restraining  Davis  from  a  breach  of 
his  contract  with  the  complainant,  and  restraining  the  Wol- 
verine Fish  Company,  Limited,  from  benefiting  in  any  way 
by  his  services  and  experience  in  the  fish  business,  as  defined 
in  the  contract  between  complainant  and  Davis,  and  an  in- 
junction will  be  issued,  according  to  the  prayer  of  the  bill, 
against  Davis  and  the  AVolverine  Fish  Company,  Limited. 


[38]      MONTAGUE  &  COMPANY  v.  LOWRY.« 


ERROR    IX)  THE     CIRCUIT    COURT    OF    APPEALS    FOR  THE     NINTH 

CIRCUIT. 

No.  46.     Submitted  October  27,  1903.— Decided  February  23,  1904. 

[193  U.  S.  38.] 

An  association  was  formed  in  California  by  manufacturers  of,  and 
dealers  in,  tiles,  mantels  and  grates ;  the  dealers  agreed  not  to  pur- 
chase materials  from  manufacturers  who  were  not  members  and 
not  to  sell  unset  tiles  to  any  one  other  than  members  for  less  than 
list  prices  which  were  fifty  per  cent  higher  than  the  prices  to  mem- 
bers ;  the  manufacturers,  who  were  residents  of  States  other  than 
California  agreed  not  to  sell  to  any  one  other  than  members ;  viola- 

o  Begun  in  the  Circuit  Court  for  the  Northern  District  of  California, 
and  there  entitled  Lowry  v.  Tile,  Mantel  and  Grate  Ass'n.  of  Gal, 
Demurrer  overruled  (98  Fed.,  817).  See  vol.  1,  p.  995.  Charge  to 
jury  (106  Fed.,  38).  See  p.  53.  Judgment  affirmed  by  Circuit  Court 
of  Appeals,  Ninth  Circuit.  (115  iTed.,  27).  See  p.  112.  Case  then 
and  subsequently  entitled  Montague  &  Co.  v.  Lowry,  Affirmed  by 
Supreme  Court  (193  U.  S.  38.) 


tjJo 


IWa    UNITED  STATES  EEPOBTS^   38. 


Syllabus. 

tlons  of  tlie  agreemeot  rendered  the  member  subject  to  forfeiture  of 
membersbip.  Membership  in  the  association  was  prescribed  by 
rules  and  dependent  on  conditions,  one  of  which  was  the  carrying 
of  at  feast  |3,000  worth  of  stock,  and  whether  applicants  were  ad- 
mitted was  a  matter  for  the  arbitrary  decision  of  the  association. 
In  an  action  by  a  firm  of  dealers  in  tiles,  mantels  and  grates,  In 
San  Francisco,  whose  members  had  never  been  aslsed  to  join  the 
association  and  who  had  never  applied  for  admission  therein,  and 
which  did  not  always  carry  $3,000  worth  of  stoclc,  to  recover  damages 
under  §  7  of  the  Anti-Trust  Act  of  July  2,  1890— 

Held  that  although  the  sales  of  unset  tiles  were  within  the  State  of 
California  and  although  such  sales  constituted  a  very  small  portion 
of  the  trade  Involved,  agreement  of  manufacturers  without  the  State 
not  to  sell  to  any  one  but  members  was  part  of  a  scheme  which  in- 
cluded the  enhancement  of  the  price  of  unset  tiles  by  the  dealers 
within  the  State  and  that  the  whole  thing  was  so  bound  together 
that  the  transactions  within  the  State  were  inseparable  and  became 
a  part  of  a  purpose  .which  when  carried  out  amounted  to,  and  was, 
a  combination  in  restraint  of  interstate  trade  and  [39]  commerce. 
AMtfston  Pipe  d  Steel  Co.  v.  United  States,  175  U.  S.  211,  followed; 
Hopkins  V.  United  States,  171  U.  S.  578 ;  Anderson  v.  United  States, 
171  U.  S.  604,  distinguished. 

Held  that  the  association  constituted  and  amounted  to  an  agreement 
or  combination  in  restraint  of  trade  within  the  meaning  of  the  act  of 
July  2,  1890,  and  that  the  parties  aggrieved  were  entitled  to  recover 
threefold  the  damages  found  by  the  jury. 

Held  that  the  amount  of  attorney's  fees  allowed  as  costs  under  the  act 
Is  within  the  discretion  of  the  trial  court  and  as  such  discretion  Is 
reasonably  exercised  thin  court  will  not  disturb  the  amount  awai-ded." 

[48  h.  ed.,  608.]  » 

[An  association  of  wholesale  dealers  in  tiles,  mantels,  and  grates  in 
San  Francisco  and  vicinity,  and  nonresident  manufacturers  of  tiles 
and  fireplace  fixtures,  In  which  the  dealers  agree  not  to  purchase 
from  manufacturere  not  members  of  the  association,  and  not  to 
s»l]  unset  tiles  to  nonmembers  for  less  than  list  prices,  which  are 
more  than  fifty  per  cent  higher  than  prices  to  members,  while  the 
manufat^urei-s  agree  not  to  sell  their  products  or  wares  to  non- 
members  at  any  price,  under  penalty  of  forfeiture  of  membership, 
is  an  agreement  or  combination  in  restraint  of  trade  within  the 
meaning  of  the  Anti-Trust  Act  of  July  2, 1890  (26  Stat.  L.  209,  chap. 
647,  U.  S.  C!omp.  Stat.  1901,  p.  3202).] 


oThe  foregoing  syllabus  and  the  abstract  of  argument  copvrighted 
1904,  by  The  Banks  Law  Publishing  Ck>. 

» The  following  paragraphs  inclosed  in  brackets  comprise  the  sylla- 
bus to  this  case  in  the  U.  S.  Supreme  Court  Reports,  Book  48,  p.  608. 
Copyrighted.  1908,  1904,  by  the  liawyers*  Co-Operatlve  Publishing  Co. 


MONTAGUE   &   CO.    V.   LOWBY. 


329 


statement  of  the  Case. 

[Tlie  discretion  of  the  trial  court  under  the  Anti-Trust  Act  of  July  2, 
1890  (26  Stat.  L.  209,  chap.  647,  U.  S.  Comp.  Stat.  1901,  p.  3202). 
§  7,  to  allow  a  reasonable  attorney's  fee  to  the  successful  plaintiff 
in  an  action  brought  under  that  section  to  recover  damages  for  a 
violation  of  the  provisions  of  that  act  against  combinations  in 
restraint  of  trade,  is  not  abused  by  an  allowance  of  $750,  although 
the  verdict  was  for  but  $500,  where  the  trial  took  five  days,  and 
from  the  proof  offered  it  appeared  that  from  $750  to  $1,000  would 
be  a  reasonable  sum.] 

This  action  was  brought  under  section  7  of  the  act  of  July 

2,  1890,  26  Stat.  209;  3  Comp.  Stat.  3202,  commonly  called 

the  Anti-Trust  Act.    The  section  reads  as  follows : 

"  Sec.  7.  Any  person  who  shall  be  injured  in  his  business  or  property 
by  any  other  person  or  corporation  by  reason  of  anything  forbidden  or 
declared  to  be  unlawful  by  this  act,  may  sue  therefor  in  any  Circuit 
Court  of  the  United  States  in  the  district  in  which  the  defendant 
resides  or  is  found,  without  respect  to  the  amount  in  controversy, 
and  shall  recover  threefold  the  damages  by  him  sustained,  and  the  costs 
of  suit,,  including  a  reasonable  attorney's  fee." 

Plaintiffs  in  error  (defendants  below)  seek  to  review^  the 
judgment  of  the  Circuit  Court  of  Appeals  for  the  Ninth  Cir- 
cuit, 115  Fed.  Rep.  27,  affirming  a  judgment  for  plaintiffs, 
entered  in  the  Circuit  Court  for  the  Northern  District  of 
California,  upon  a  verdict  of  a  jury.     106  Fed.  Eep.  38. 

It  appeared  in  evidence  on  the  trial  in  the  United  States 
Circuit  Court  that  the  plaintiff's  for  many  years  prior  to  the 
commencement  of  this  action  had  been  copartners,  doing 
business  as  such  in  the  citv  of  San  Francisco  in  the  State  of 
California,  and  dealing  in  tiles,  mantels  and  grates,  and  that 
The  Tile,  Mantel  and  Grate  Association  of  California,  and 
the  officers  and  members  thereof,  had  since,  on  or  about  the  — 
dav  of  Januarv,  1898,  constituted  under  that  name  an  unin- 
corporated  organization  composed  of  Avholesale  dealers  in 
tiiles,  mantels  and  grates,  who  were  citizens  and  i-esidents 
of  the  city  and  county  of  San  Francisco,  or  the  city  of  Sacra- 
mento, or  the  city  of  San  Jose  in  the  State  of  California, 
and  such  organization  was  also  composed  of  the  manufac- 
turers of  tiles,  mantels  [40]  and  grates,  who  were  residents  of 
other  States,  and  engaged  in  the  sale  of  their  manufactured 
articles  (among  others)  to  the  various  other  defendants  in 
the  State  of  California.  There  were  no  manufacturers  of 
tiles  within  the  State  of  California,  and  all  the  defendants 


ooU 


183  UNITED  STATES  BEPORTS,   m. 
Statement  of  the  Case. 


Who  were  residents  of  tliat  State  and  who  were  also  dealers 
m  tiles,  m  the  prosecution  of  their  business,  procured  the  tiles 
from  outside  the  State  of  California  and  from  among  those 
manufacturers  who  were  made  defendants  herein.    The  man- 
Bfacturei^  and  dealers  were  thus  engaged  in  the  prosecution 
of  a  business  which,  with  reference  to  the  sales  of  tiles, 
amounted  to  commerce  between  the  States.    Under  these  cir 
cumstances  the  dealers  in  tiles,  living  in  San  Francisco,  or 
withm  a  radius  of  200  miles  thereof,  and  being  some  of  the 
defendants  m  this  action,  together  with  the  Eastern  manufac- 
turers of  tiles,  who  are  named  as  defendants  heroin,  formed 
an  association  called  The  Tile,  Mantel  and  Grate  Association 
of  California.    The  objects  of  the  association,  as  stated  in 
the  ^constitution  thereof,  were  to  unite  all  acceptable  dealers 
m  tiles,  fireplace  fixtures  and  mantels  in  San  Francisco  and 
vicmity,  (withm  a  radius  of  200  miles,)  and  all  American 
manufacturers  of  tiles,  and  by  frequent  interchange  of  ideas 
advance  the  interests  and  promote  the  mutual  welfare  of  its 
members. 

By  its  constitution,  article  I,  section  1,  it  was  provided  that 
any  individual,  corporation  or  firm  engaged  in  or  contem- 
plating  engaging  in  the  tile,  mantel  or  grate  business  in  San 
Francisco,  or  within  a  radius  of  200  miles  thereof,  (not  man- 
ufacturers,) having  an  established  business  and  carryincr  not 
less  than  $3,000  worth  of  stock,  and  having  been  proposed  bv 
a  member  m  good  standing  and  elected,  should,  after  having 
signed  the  constitution  and  by-laws  governing  the  associa 
tion,  and  upon  the  payment  of  an  entrance  fee  as  provided 
enjoy  all  the  privileges  of  membership.    It  was  provided  in 
the  second  section  of  the  same  article  that  all  associated  and 
individual    manufacturers   of   tiles   and   fireplace   fixtures 
throughout  the  United  States  might  become  non-resident 
members  of  the  association  upon  the  payment  of  an  entrance 
fee  as  provided,  and  after  having  signed  the  constitution  and 
by-laws  govern-  [41 J  ing  the  association.    The  initiation  fee 
was,  for  active  members,  $25,  and  for  non-resident  members 
HO,  and  each  active  member  of  the  association  was  to  pay  $10 

SdeX  *"'  "^"^'^  ^"*  ''''  "^""^  """"^  ^"^""'^"^  against  non- 
An  executive  committee  was  to  be  appointed,  whose  duty 


MONTAGUE   &  CO.   V,  LOWRY. 


331 


Statement  of  the  Case. 

it  was  to  examine  all  applications  for  membership  in  the 
association  and  report  on  the  same  to  the  association.  It  does 
not  appear  what  vote  was  necessary  to  elect  a  member,  but  it 
is  alleged  in  the  complaint  that  it  required  the  unanimous 
consent  of  the  association  to  become  a  member  thereof,  and  it 
was  further  alleged  that  by  reason  of  certain  business  diffi- 
culties there  were  members  of  the  association  who  were 
antagonistic  to  plaintiffs,  and  who  would  not  have  permitted 
them  to  join,  if  they  had  applied,  and  that  plaintiffs  were  not 
eligible  to  join  the  association  for  the  further  reason  that 
they  did  not  carry  at  all  times  stock  of  the  value  of  $3,000. 

The  by-laws,  after  providing  for  the  settlement  of  disputes 
between  the  members  and  their  customers,  by  reason  of  liens, 
foreclosure  proceedings,  etc.,  enacted  as  follows,  in  article 
III : 

"  Sec.  7.  No  dealer  and  active  member  of  tbis  association  shaU  pur- 
chase, directly  w  indirectly,  any  tile  or  fireplace  fixtures  from  any 
manufacturer  or  resident  or  traveling  agent  of  any  manufacturer  not 
a  member  nf  this  association,  neither  shall  they  sell  or  dispose  of, 
directly  or  indirectly,  any  unset  tile  for  less  than  list  prices  to  any 
person  or  i)ersons  not  a  member  of  this  association,  under  penalty  of 
expulsion  from  the  association. 

"  Sec.  8.  Manufacturers  of  tile  or  fireplace  fixtures  or  resident  or 
traveling  agents  or  manufacturei-s  selling  or  disposing,  directly  or 
indirectly,  their  products  or  wares  to  any  person  or  persons  not  mem- 
bers of  the  Tile,  Mantel  and  Grate  Association  of  California,  shall  for- 
feit their  membership  in  the  association." 

The  term  "  list  prices,"  referred  to  in  the  seventh  section, 
was  a  list  of  prices  adopted  by  the  association,  and  when 
what  are  called  "  unset "  tiles  were  sold  by  a  member  to  Buy 
one  not  a  member,  they  were  sold  at  the  list  prices  so  adopted, 
which  [42]  were  more  than  fifty  pe.r  cent  higher  than  when 
sold  to  a  member  of  the  association. 

The  plaintiffs  had  established  a  profitable  business  and 
were  competing  with  all  the  defendants,  who  were  dealers 
and  engaged  in  the  business  of  purchasing  and  selling  tiles, 
grates  and  mantels  in  San  Francisco  prior  to  the  formation 
of  this  association.  The  plaintiffs  had  also  before  that  time 
been  accustomed  to  purchase  all  their  tiles  from  tile  manu- 
facturers in  Eastern  States,  (who  were  also  named  as  parties 
defendants  in  this  action,)  and  all  of  those  manufacturers 
subsequently  joined  the  association.  The  plaintiffs  -were  not 
members  of  the  association  and  had  never  been,  and  had 


aa2 


tm   UNITED   STATES  REPORTS,   42. 
Argument  for  Plaintiflfs  in  Error. 


never  applied  for  membership  therein  and  had  never  been 
invited  to  join  the  same. 

The  proof  shows  that  by  reason  of  the  formation  of  this 
association  the  plaintiffs  have  been  injured  in  their  business 
because  they  were  unable  to  procure  tiles  from  the  manufac-' 
tiirere  at  any  price,  or  from  the  dealers  in  San  Francisco,  at 
less  than  the  price  set  forth  in  the  price  list  mentioned  in  the 
seventh  section  of  the  by-laws,  supra,  which  was  more  than 
fifty  per  cent  over  the  price  at  which  members  of  the  associa- 
tion could  purchase  the  same.  Before  the  fonnation  of  the 
association  the  plaintiffs  could  and  did  procure  their  tiles 
from  the  manufacturers  at  much  less  cost  than  it  was  pos- 
sible for  them  to  do  from  the  dealers  in  San  Francisco  after 
its  formation. 

There  was  proof  on  the  part  of  the  defendants  below  that 
the  condition  of  carrying  $3,000  worth  of  stock,  as  mentioned 
in  the  constitution,  had  not  always  been  enforced,  but  there 
was  no  averment  or  proof  that  the  article  of  the  constitution 
on  that  subject  had  ever  been  altered  or  repealed. 

The  jury  rendered  a  verdict  for  $500  for  the  plaintiffs,  and 
pursuant  to  the  provisions  of  the  seventh  section  of  the  act 
judgment  for  treble  that  sum,  together  with  what  the  trial 
TOurt  decided  to  be  a  reasonable  attoniey's  fee,  was  entered 
for  the  plaintiffs. 

Mr.  Wmiam  M.  Piersm  for  plaintiffs  in  error: 

The  association  is  not  obnoxious  to  the  provisions  of  the 
Sherman  Anti-Trust  Act. 

[43]  This  case  can  be  distinguished  from  the  Trans-Mis- 
souri ease,  160  II.  S.  290,  and  the  Joint  Traffic  Case,  171  U.  S. 
505.    So  far  as  the  transactions  between  the  dealers  and  the 
manufacturers  are  concerned,  the  association  fixes  no  tariff 
or  pnces  whatever;  and  it  must  be  observed  generaUy  that 
the  association  itself  does  no  business.    It  is  lawful  for  a 
man  to  decline  to  work  for  another  man  or  class  of  men  or 
to  do  business  with  another  man  or  class  of  men,  as  he  ^ 
fit;  and  what  is  lawful  for  one  man  to  do  in  this  regard  sev- 
eral men  may  agree  to  act  jointly  in  doing,  and  may  make 
express  and  simultaneous  declaration  of  their  purpose.    The 
lawfulness  of  a  provision  as  between  dealers  and  manufac- 


MONTAGUE   &  CO.   V,  LOWRY. 


333 


Argument  for  Plaintiflfs  in  Error. 

turers,  such  as  is  contained  in  the  constitution  and  by-laws 
of  the  plaintiff's  in  error,  is  impliedly  recognized  in  the  Hop- 
kins Case,  171  U.  S.  578,  and  is  aptly  recognized  and  ap- 
proved in  the  Anderson  Case,  171  U.  S.  604.  See  also  U.  S, 
V.  Greenhft,  51  Fed.  'Rep.  205;  In  re  Greene,  52  Fed.  Rep. 
104;  U,  S.  V.  Nelson,  52  Fed.  Rep.  646;  Dueber  Mfg.  Co,  v. 
Howard  Co,,  55  Fed.  Rep.  851;  S.  C,  14  C.  C.  A.  14;  Gihhs 
V.  McNealy,  102  Fed.  Rep.  594;  Steamship  Co.  v.  McGregor^ 
L.  R.  23  Q.  P,.  598:  Mohn  v.  Hollis,  54  Minnesota,  223. 

Witliin  these  authorities  and  on  a  view  of  the  constitution 
and  by-laws  of  the  association  in  question,  it  will  appear  that 
the  provisions  touching  transactions  between  dealers  and 
manufacturers  are  not  obnoxious  to  the  act  of  Congress,  and 
it  will  appear  further  that  the  association  in  question  has 
none  of  the  elements  of  a  monopoly.  Indeed,  the  object  of 
the  association  is  said  to  be  to  unite  all  acceptable  dealers 
and  all  American  manufacturers. 

An  association  cannot  be  in  restraint  of  trade  when  its 
doors  are  o]>en  to  all  in  the  trade,  and  it  fixes  no  price  what- 
ever. The  only  limitation  was  to  haA^e  established  homes 
with  $3,000  worth  of  stock. 

The  transactions  in  unset  tiles  at  list  prices  are  local  trans- 
actions, intra-state  transactions,  in  no  respect  taking  on  the 
quality  of  interstate  commerce  and  being  purely  local,  are 
not  within  the  jiurview  of  the  act.  Addyston  Pipe  rf?  Steel 
Co.  V.  U.  S.,  175  U.  8.  211.  Assuming,  however,  for  argu- 
[44]  ment,  the  transactions  in  unset  tiles  to  be  along  the  line 
of  interstate  commerce, — they  are  so  trifling,  incidental  and 
remote  in  their  bearing  upon  interstate  trade  and  commerce 
as  to  be  what  mathematicians  call  negligible  quantities 
which  may  be  left  out  of  consideration  without  impairing 
the  general  result.  Trans-Missonri  case,  the  Joint  Traffic 
case,  and  Hopkins  case,  supra. 

The  attorney  fee  allowed  was  excessive.  Plaintiffs  below 
asked  for  $10,000  damages  and  were  only  allowed  $500  and 
the  fee  is  out  of  proportion. 

Mr,  J.  C.  Campbell  for  defendant  in  error: 

The  Tile,  Mantel  and  Grate  Association  of  California  is  a 
combination  declared  to  be  illegal  by  the  act  of  July  2,  1890, 


m    UNITED  STATES  REPOBTS,   44. 


Opinion  of  the  Court. 

for  it  is  in  restraint  of  trade  or  commerce  among  the  several 
States,  and  was  formed  to  and  does  monopolize  such  trade  or 
commerce.  Um'ted  States  v.  Freight  Association,  166  U.  S. 
290,  323 ;  Addyston  Pipe  d:  Steel  Co,  v.  United  States,  176 
IT.  S.  211,  241,  244 ;  United  States  v.  E.  0.  Knight  Co,,  156 
U.  S.  1,  16;  United  States  v.  Coal  Dealers  Association,  85 
Fed.  Eep.  252 ;  Hopkins  v.  United  States,  171  U.  S.  578,  and 
see  p,  597;  Anderson  v.  United  States,  171  U.  S.  604,  distin- 
.  guished. 

The  counsel  fee  was  fair  and  reasonable. 

Ml.  Justice  I'eckham,  after  making  the  foregoing  state- 
ment, delivered  the  opinion  of  the  court. 

The  question  raised  by  the  plaintiffs  in  error  in  this  case 
is,  whether  this  association,  described  in  the  foregoing  state- 
ment of  facts,  constituted  or  amounted  to  an  agreement  or 
combination  in  restraint  of  trade  within  the  meaning  of  the 
so-called  Anti-Trust  Act  of  July  2,  1890? 

The  result  of  the  agreement  when  carried  out  was  to  pre- 
vent the  dealer  in  tiles  in  San  Francisco,  who  was  not  a 
member  of  the  association,  from  purchasing  or  procuring 
the  same  upon  any  terms  from  any  of  the  manufacturers 
who  were  such  members,  and  all  of  those  manufacturers  who 
had  been  accustomed  to  sell  to  the  plaintiffs  were  members. 
The  non-  [45]  member  dealer  was  also  prevented  by  the 
agreement  from  buying  tiles  of  a  dealer  in  San  Francisco 
who  was  a  member,  excepting  at  a  greatly  enhanced  price 
over  what  he  would  have  paid  to  the  manufacturers  or  to  any 
San  Francisco  dealer  who  was  a  member,  if  he,  the  purchaser, 
were  also  a  member  of  the  association.  The  agreement^ 
therefore,  restrained  trade,  for  it  narrowed  the  market  for 
the  sale  of  tiles  in  California  from  the  manufacturers  and 
dealers  therein  in  other  States,  so  that  they  could  only  be  sold 
to  the  members  of  the  association,  and  it  enhanced  prices  to 
the  non-member  as  already  stated. 

The  plaintiffs  endeavored  in  vain  to  procure  tiles  for  the 
purposes  of  their  business  from  these  tile  manufacturers,  but 
the  latter  refused  to  deal  with  them  because  plaintiffs  were 
not  members  of  the  association.  It  is  not  the  simple  case  of 
manufacturers  of  an  article  of  commerce  between  the  several 


MONTAGUE   &  CO.   V.  LOWBY. 
Opinion  of  the  Court. 


385 


States  refusing  to  sell  to  certain  other  persons.  The  agree- 
ment is  between  manufacturers  and  dealers  belonging  to  an 
association  in  which  tlie  dealers  agree  not  to  purchase  from 
manufacturers  not  members  of  the  association,  and  not  to 
sell  unset  tiles  to  any  one  not  a  member  of  the  association 
for  less  than  list  prices,  which  are  more  than  fifty  per  cent 
higher  than  the  prices  would  be  to  those  who  were  members, 
while  the  manufacturers  who  became  members  agreed  not 
to  sell  to  any  one  not  a  member,  and  in  case  of  a  violation  of 
the  agreement  they  were  subject  to  forfeiting  their  member- 
ship. B}^  reason  of  this  agreement,  therefore,  the  market 
for  tiles  is,  as  we  have  said,  not  only  narrowed  but  the  prices 
charged  by  the  San  Francisco  dealers  for  the  unset  tiles  to 
those  not  members  of  the  association  are  more  than  doubled. 
It  is  urged  that  the  sale  of  unset  tiles,  provided  for  in  the 
seventh  section  of  the  by-law  s,  is  a  transaction  wholly  within 
the  State  of  California  and  is  not  in  any  event  a  violation 
of  the  act  of  Congress  which  applies  only  to  commerce  be- 
tween the  States.  The  provision  as  to  this  sale  is  but  a  part 
of  the  agreement,  and  it  is  so  united  with  the  rest  as  to  be 
incapable  of  separation  without  at  the  same  time  altering 
the  general  purpose  of  the  agreement.  The  whole  agreement 
is  to  be  construed  as  [46]  one  piece,  in  which  the  manufac- 
turers are  parties  as  well  as  the  San  Francisco  dealers,  and 
the  refusal  to  sell  on  the  part  of  the  manufacturers  is  con- 
nected with  and  a  part  of  the  scheme  which  includes  the 
enhancement  of  the  price  of  the  unset  tiles  by  the  San  Fran- 
cisco dealers.  The  whole  thing  is  so  bound  together  that 
when  looked  at  as  a  whole  the  sale  of  unset  tiles  ceases  to 
be  a  mere  transaction  in  the  State  of  California,  and  becomes 
part  of  a  purpose  which,  when  carried  out,  amounts  to  and 
is  a  contract  or  combination  in  restraint  of  interstate  trade 
or  commerce. 

Again,  it  is  contended  the  sale  of  unset  tiles  is  so  small  in 
San  Francisco  as  to  be  a  negligible  quantity;  that  it  does 
not  amount  to  one  per  cent  of  the  business  of  the  dealers  in 
tiles  in  that  city.  The  amount  of  trade  in  the  commodity  is 
not  very  material,  but  even  though  such  dealing  heretofore 
has  been  small,  it  would  probably  largely  increase  when  those 
who  formerly  purchased  tiles  from  the  manufacturers  are 


336 


1S»3    UNITEB  STATES  REPOKTS,   4t}. 


Opinion  of  the  Court 

shut  out  by  rmmn  of  the  association  and  their  non-member- 
ship therein  from  purchasing  their  tiles  from  those  manu- 
facturers, and  are  compelled  to  purclia,se  them  from  the  San 
Francisco  dealers.  Either  the  extent  of  the  trade  in  unset  tiles 
would  increase  between  the  members  of  the  association  and 
outsiders,  or  else  the  latter  would  have  to  go  out  of  business, 
because  unable  to  longer  compete  with  their  rivals  who  were 
members.  In  either  event,  the  combination,  if  carried  out, 
directly  effects  a  restraint  of  interstate  conuuerce. 

It  is  also  contended  that,  as  the  expressed  object  of  the  as- 
sociation was  to  unite  therein  all  the  dealers  in  San  Francisco 
and  vicinity,  the  plaintiffs  had  nothing  more  to  do  than 
j5in  the  association,  pay  their  fees  and  dues  and  become  like 
one  of  the  other  members.  It  was  not,  however,  a  matter  of 
course  to  permit  any  dealer  to  join.  The  constitution  only 
provided  for  "all  acceptable  dealers''  joining  the  associa- 
tion. As  plaintiffs  were  not  invited  to  be  among  its  found- 
ers, it  would  look  as  if  they  were  not  regarded  as  acceptable. 
However  that  may  be,  they  never  subsequently  to  its  forma- 
tion applied  for  admission.  It  is  plain  that  the  question  of 
their  admission,  if  they  had  so  applied,  was  one  to  be  arbi- 
[47 J  trarily  determined  by  the  aasociation.  The  constitu- 
tion provided  for  the  appointment  of  an  executive  commit- 
tee, whose  duty  it  was  to  examine  all  applications  for  mem- 
bership in  and  to  report  on  the  same  to  the  association,  after 
which  it  was  to  decide  whether  the  applicants  should  be  ad- 
mitted or  not.  If  they  were  not  acceptable  the  applicants 
would  not  be  admitted,  and  whether  they  were  or  not,  was  a 
matter  for  the  arbitrary  decision  of  the  association.  Its 
decision  that  they  were  not  acceptable  was  sufficient  to  bar 
their  entrance. 

Again,  it  appears  that  plaintiffs  were  not  eligible  under 
the  constitution,  because  they  did  not  always  carry  stock 
worth  $3,000,  which  by  section  1  of  article  I,  was  made  a 
condition  of  eligibility  to  membership.  True,  it  was  stated 
in  evidence  that  this  provision  had  not  been  enforced,  but 
there  was  no  averment  or  proof  that  it  had  been  repealed, 
and  there  was  nothing  to  prevent  its  enforcement  at  any 
time  that  an  application  was  made  by  any  one  who  would 
not  come  up  to  the  condition.    The  case  stands,  therefore, 


MONTAGUE  &  CO.   V,  LOWBY. 


337 


Opinion  of  the  CJourt 

that  the  plaintiffs  had  not  been  asked  to  join  the  association 
at  its  formation;  that  they  did  not  fill  the  condition  pro- 
vided for  in  its  constitution  as  to  eligibility,  and  that  if  they 
had  applied  their  application  was  subject  to  arbitrary  re- 
jection. 

The  plaintiffs,  however,  could  not,  by  virtue  of  any  agree- 
ment contained  in  such  association,  be  legally  put  under  ob- 
ligation to  become  members  in  order  to  enable  them  to 
transact  their  business  as  they  had  theretofore  done,  and  to 
purchase  tiles  as  they  had  been  accustomed  to  do  before  the 
association  was  formed. 

The  consequences  of  non-membership  were  grave,  if  not 
disastrous,  to  the  plaintiffs.  It  has  already  been  shown  how 
the  prices  of  tiles  were  enhanced  so  far  as  plaintiffs  were 
concerned,  and  how  by  means  of  this  combination  interstate 
commerce  was  affected. 

The  purchase  and  sale  of  tiles  between  the  manufacturers 
in  one  State  and  dealers  therein  in  California  was  interstate 
commerce  within  the  Add^ston  Pipe  case,  175  U.  S.  211.  It 
was  not  a  combination  or  monopoly  among  manufacturers 
simply,  but  one  between  them  and  dealers  in  the  manufac- 
tured article,  [48]  which  was  an  article  of  commerce  be- 
tween the  States.  United  States  v.  E,  O,  Knight  Company^ 
166  U.  S.  1,  did  not  therefore  cover  it.  It  is  not  brought 
within  either  Hopkins  v.  United  States,  171  U.  S.  578,  or 
Anderson  v.  United  States,  171  U.  S.  604.  In  the  first  case 
it  was  held  that  the  occupation  of  the  members  of  the  asso- 
ciation was  not  interstate  commerce,  and  in  the  other  that 
the  subject  matter  of  the  agreement  did  not  directly  relate 
to,  embrace  or  act  upon  interstate  commerce,  for  the  reasons 
which  are  therein  stated  at  length.  Upon  examination  we 
think  it  is  entirely  clear  that  the  facts  in  the  case  at  bar  bear 
no  resemblance  to  the  facts  set  forth  in  either  of  the  above 
cases  and  are  not  within  the  reasoning  of  either.  The  agree- 
ment directly  affected  and  restrained  interstate  commerce. 

The  case  we  regard  as  a  plain  one  and  it  is  unnecessary  to 
further  enlarge  upon  it. 

There  is  one  other  question  which,  although  of  secondary 
importance,  is  raised  by  the  plaintiffs  in  error.  After  the 
21220— VOL  2—07  M ^22 


338 


193  UNITED  STATES  REPORTS,   197. 
Syllabus. 


rendition  of  the  verdict  the  plaintiffs  below  claimed  a  rea- 
sonable attorney's  fee  under  the  seventh  section  of  the  act, 
and  made  proof  of  what  would  be  a  reasonable  sum  therefor, 
from  which  it  appeared  that  it  would  be  from  $750  to  $1,000. 
The  trial  court  awarded  to  the  plaintiffs  $750.  The  verdict 
being  only  for  $500,  the  plaintiffs  in  error  claimed  that  the 
allowance  was  an  improper  and  unreasonable  one.  The 
trial  took  some  five  days.  The  judgment  in  effect  pro- 
nounced the  association  illegal.  The  amount  of  the  attor- 
ney's fee  was  within  the  discretion  of  the  trial  court,  rea- 
sonably exercised,  and  we  do  not  think  that  in  this  case  such 
discretion  was  abused. 
The  judgment  is 

Aiftrmed, 


1197]       NORTHERN  SECURITIES  COMPANY  v, 

UNITED  STATES." 


APPEAL   FROM   THE   CIRCUIT   COURT  OF  THE  UNITED  STATES   FOR 

THE   DISTRICT  OF   MINNESOTA. 

1193  U.  S.  197.] 

No.  277.    Argued  December  14,  15,  1»03. — ^Declded  March  14,  1904. 

Stockholders  of  the  Great  Northern  and  Northern  Pacific  Railway 
companies— corporations  having  competing  and  substantially  parallel 
lines  from  the  Great  Lakes  and  the  Mississippi  River  to  the  Pacific 
Ocean  at  Puget  Sound — combined  and  conceived  the  scheme  of  or- 
ganizing a  corporation,  under  the  laws  of  New  Jersey,  which  should 
hold  the  shares  of  the  stock  of  the  constituent  companies,  such  share- 
holders, in  lieu  of  their  shares  in  those  companies,  to  receive,  upon 
an  agreed  basis  of  value,  shares  in*  the  holding  corporation.  Pur- 
suant to  such  combination  the  Northern  Securities  Company  was 
organized  as  the  holding  corporation  through  which  that  scheme 
should  be  executed ;  and  under  that  scheme  such  holding  corporation 
became  the  holder— more  properly  speaking,  the  custodian — of  more 
than  nine-tenths  of  the  stock  of  the  Northern  Pacific,  and  more  than 
three-fourths  of  the  stock  of  the  Great  Northern,  the  sockholders  of 
the  companies,  who  delivered  their  stock,  receiving,  upon  the  agreed 
basis,  shares  of  stock  in  the  holding  corporation.^ 


«  Decree  of  the  Circuit  Court  (120  Fed.,  721,  731).    See  pp.  215,  231. 
»  Syllabus  and  extracts  of  briefs,  arguments,  etc,  copyrighted,  1904, 
by  The  Banks  Law  Publishing  Co. 


NORTHERN   SECURITIES   CO.   V.   UNITED   STATES.       339 

Syllabus. 

Veld,  that,  necessarily,  the  constituent  companies  ceased,  under  this 
arrangement,  to  be  in  active  competition  for  trade  and  commerce 
along  their  respective  lines,  and  became,  practically,  one  powerful 
consolidated  corporation,  by  the  name  of  a  holding  corporation,  the 
principal,  if  not  the  sole,  object  for  the  formation  of  which  was  to 
carry  out  the  purpose  of  the  original  combination  under  which 
competition  between  the  constituent  companies  would  cease. 

Held,  that  the  arrangement  was  an  illegal  combination  in  restraint 
of  interstate  commerce  and  fell  within  the  prohibitions  and  pro- 
visions of  the  act  of  July  2,  1890,  and  it  was  within  the  power  of 
the  Circuit  Court,  in  an  action,  brought  by  the  Attorney  General 
of  the  United  States  after  the  completion  of  the  transfer  of  such 
stock  to  it,  to  enjoin  the  holding  company,  from  voting  Such  stock 
and  from  exercising  any  control  whatever  over  the  acts  and  doings 
of  the  railroad  companies,  and  also  to  enjoin  the  railroad  companies 
from  paying  any  dividends  to  the  holding  corporation  on  any  of 
their  stock  held  by  it. 

Held,  that  although  cases  should  not  be  brought  within  a  statute  con- 
taining criminal  provisions  that  are  not  clearly  embraced  by  it, 
the  court  should  not  by  narrow,  technical  or  forced  construction  of 
words  exclude  cases  from  it  that  are  obviously  within  its  provisions 
and  while  tlie  act  of  July  2,  1890,  contains  criminal  provisions,  the 
Federal  court  has  power  under  §  4  of  the  act  in  a  suit  in  equity  to 
prevent  and  restrain  violations  [198]  of  the  act,  and  may  mould  its 
decree  so  as  to  accomplish  practical  results  such  as  law  and  justice 
demand. 

Harlan,  Brown,  McKenna  and  Day,  JJ.o  * 

The  combination  is,  within  the  meaning  of  the  act  of  Congress  of 
July  2, 1890,  known  as  the  Anti-Trust  Act,  a  "  trust " ;  but  if  not,  it  is 
a  combination  in  restraint  of  interstate  and  International  commerce, 
and  that  is  enough  to  bring  it  under  the  condemnation  of  the  act 

From  prior  cases  in  this  court,  the  following  propositions  are  dedu- 
cible  and  embrace  this  case  : 

Although  the  act  of  Congress  known  as  the  Anti-Trust  Act  has  no  refer- 
ence to  the  mere  manufacture  or  production  of  articles  or  commodi- 
ties within  the  limits  of  the  several  States,  it  embraces  and  declares 
to  be  illegal  every  contract,  combination  or  conspiracy,  in  whatever 
form,  of  whatever  nature,  and  whoever  may  be  parties  to  it,  which 


o  Mr.  Justice  Harlan  announced  the  affirmance  of  the  decree  of  the 
Circuit  Court  and  delivered  an  opinion  in  which  Brown,  McKenna 
and  Day,  JJ.,  concurred.  Mr.  Justice  Brewer  delivered  a  separate 
opinion  in  which  he  concurred  in  affirming  the  decree  of  the  Circuit 
Court. 

Mr.  Justice  White  delivered  a  dissenting  opinion  in  which  the  Chief 
Justice  and  Peckham  and  Holmes,  JJ.,  concurred;  Mr.  Justice 
Holmes  delivered  a  dissenting  opinion  in  which  the  Chief  Justice  and 
White  and  Peckham,  JJ.,  concurred. 


340 


193   UNITED  STATES  REPORTS,    198. 


Syllabus. 

directly  or  necessarily  operates  in  restraint  of  trade  or  commerce 
among  the  several  States  or  with  foreign  nations. 

The  act  is  not  limited  to  restraints  of  interstate  and  international 
trade  or  commerce  that  are  unreasonable  in  their  nature,  but  em- 
braces all  direct  restraints,  reasonable  or  unreasonable,  imposed  by  any 
combination,  conspiracy,  or  monopoly  upon  such  trade  or  commerce. 

Railroad  carriers  engaged  in  Interstate  or  international  trade  or  com- 
merce are  embraced  by  the  act. 

Combinations,  even  among  private  manufacturers  or  dealers,  where- 
by interstate  or  international  commerce  is  restrained,  are  equally 
embraced  by  the  act 

Congress  has  the  power  to  establish  niles  by  which  interstate  and  inter- 
national commerce  shall  be  governed,  and  by  the  Anti-Trust  Act  has 
prescribed  the  rule  of  free  couii>etition  among  those  engaged  in  such 
commerce. 

Erery  combination  or  conspiracy  which  would  extinguish  competition 
between  otherwise  competing  railroads,  engaged  in  interstate  trade 
or  commerce,  and  which  would  in  that  way  restrain  such  trade  or 
commerce,  is  made  illegal  by  the  act. 

The  natural  effect  of  competition  is  to  increase  eonmierce,  and  an 
agreement  whose  direct  effect  is  to  prevent  this  play  of  competition 
restrains  instead  of  promotes  trade  and  commerce. 

To  vitiate  a  combination,  such  as  the  act  of  Congress  condemns,  it 
need  not  [199]  be  shown  that  such  combination,  in  fact,  results,  or 
will  result,  in  a  total  suppression  of  trade  or  in  a  complete  monopoly, 
but  it  is  only  essential  to  show  that  by  its  necessary  operation  it 
tends  to  restrain  interstate  or  international  trade  or  commerce,  or 
tends  to  create  a  monopoly  in  such  trade  or  eonmierce,  and  to  de- 
prive the  public  of  the  advantages  that  flow  from  free  competition. 

The  constitutional  guarantee  of  liberty  of  contract  does  not  prevent 
Congress  from  prescribing  the  rule  of  free  competition  for  those 
engaged  in  interstate  and  international  commerce. 

Under  its  powers  to  regulate  commerce  among  the  several  States  and 
with  foreign  nations,  Congress  had  authority  to  enact  the  statute  in 
question.  United  Btateg  v.  E.  0.  Knight  Co.,  156  U.  S.  1 ;  United 
States  V,  Trans-Missouri  Freight  Association,  166  U.  S.  290 ;  United 
States  V.  Joint  Traffic  Association,  171  U.  S.  505;  Hopkins  v.  United 
States,  171  U.  S.  578;  Anderson  v.  United  States,  171  U.  S.  604; 
Addyston  Pipe  d  Steel  Co,  v.  United  States,  175  U.  S.  211;  Mon- 
tague d  Co.  V.  Lowry,  193  U.  S.  38. 

Congress  may  protect  the  freedom  of  interstate  commerce  by  any 
means  that  are  appropriate  and  that  are  lawful  and  not  prohibited 
by  the  Constitution. 

If  in  the  judgment  of  Congress  the  public  convenience  or  the  general 
welfare  will  be  best  subserved  when  the  natural  laws  of  competition 
are  left  undisturbed  by  those  engaged  in  interstate  commerce,  that 
must  be,  for  all,  the  end  of  the  matter,  If  this  is  to  remain  a  gov- 
ernment of  laws,  and  not  of  men. 


NORTHERN   SECURITIES   CO.   V,    UNITED   STATES.       341 

Syllabus. 

When  Congress  declared  contracts,  combinations  and  conspiracies  In 
.  restraint  of  trade  or  commerce  to  be  illegal,  it  did  nothing  more 
than  apply  to  interstate  commerce  a  rule  that  had  been  long  ap- 
plied by  the  several  States  when  dealing  with  combinations  that 
were  in  restraint  of  their  domestic  commerce. 

Subject  to  such  restrictions  as  are  imposed  by  the  Constitution  upon 
the  exercise  of  all  power,  the  power  of  Congress  over  interstate 
and  international  commerce  is  as  full  and  complete  as  is  the  power 
of  any  State  over  its  domestic  commerce. 

No  State  can,  by  merely  creating  a  corporation,  or  in  any  other  mode, 
project  its  authority  into  other  States,  so  as  to  prevent  Congress 
from  exerting  the  power  it  possesses  under  the  Constitution  over 
interstate  and  international  commerce,  or  so  as  to  exempt  its  cor- 
poration engaged  in  interstate  commerce  from  obedience  to  any  rule 
lawfully  established  by  Cogress  for  such  commerce;  nor  can  any 
State  give  a  corporation  created  under  its  laws  authority  to  restrain 
interstate  or  international  commerce  against  the  will  of  the  nation 
as  lawfully  expressed  by  Congress.  Every  corporation  created  by  a 
State  is  necessarily  subject  to  the  supreme  law  of  the  land. 

Whilst  every  instrumentality  of  domestic  commerce  is  subject  to  state 
control,  every  instrumentality  of  interstate  commerce  may  be 
reached  and  controlled  by  national  authority,  so  far  as  to  compel  it 
to  respect  the  rules  for  such  commerce  lawfully  established  by 
Congress. 


[200] 


By  Mb.  Justice  Bbewer. 


The  act  of  July  2,  1890,  was  leveled,  as  appears  by  its  title,  at  only 
unlawful  restraints  and  monopolies.  Congress  did  not  intend  to 
reach  and  destroy  those  minor  contracts  in  partial  restraint  of 
trade  which  the  long  course  of  decisions  at  common  law  had  affirmed 
were  reasonable  and  ought  to  be  upheld. 

The  general  language  of  the  act  is  limited  by  the  power  which  each 
individual  has  to  manage  his  own  property  and  determine  the  place 
and  manner  of  its  investment.  Freedom  of  action  in  these  respects 
is  among  the  inalienable  rights  of  every  citizen. 

A  corporation,  while  by  fiction  of  law  recognized  for  some  purposes  as 
a  person  and  for  purposes  of  jurisdiction  as  a  citizen,  is  not  endowed 
with  the  inalienable  rights  of  a  natural  person,  but  it  is  an  artificial 
person,  created  and  existing  only  for  the  convenient  transaction  of 
business. 

Where,  however,  no  individual  investment  is  involved,  but  there  is  a 
combination  by  several  individuals  separately  owning  stock  in  two 
competing  railroad  companies  engaged  in  interstate  commerce,  to 
place  the  control  of  both  in  a  single  corporation,  which  is  organized 
for  that  purpose  expressly  and  as  a  mere  instrumentality  by  which 
the  competing  railroads  can  be  combined,  the  resulting  combination 
is  a  direct  restraint  of  trade  by  destroying  competition,  and  is  illegal 
within  the  meaning  of  the  act  of  July  2,  1890. 


342 


193  UNITED  STATES  REPORTS,  200. 


Syllabus. 

A  suit  brought  by  the  Attorney  General  of  the  United  States  to 
declare  this  combination  Illegal  under  the  act  of  July  2,  1890,  Is  not 
an  interference  with  the  control  of  the  States  under  which  the  rail- 
road companies  and  the  holding  company  were,  respectively,  or- 
ganlzed.a 

[48  L.  ed.,  079.T  » 

[A  combination  by  stockholders  in  two  competing  interstate  railway 
companies  to  fonn  a  stock-holding  corporation  which  should  ac- 
quire, In  exchange  for  its  own  capital  stock,  a  controlling  interest 
In  the  capital  stook  of  each  of  such  railway  companies,  violates  the 
Anti-Trast  Act  of  July  2, 1890  (26  Stat.  L.  209,  chap.  647,  U.  S.  Comp. 
Stat.  1901,  p.  3200),  which  declares  illegal  every  combination  or 
conspiracy  in  resti-alnt  of  interstate  commerce,  and  forbids  attempts 
to  monopolize  sueli  commerce  or  any  part  of  it.] 

[Congress  did  not  exceed  its  power  under  the  commerce  clause  of  the 
Federal  Constitution  in  enacting  the  Anti-Trust  Act  of  July  2,  1890 
(26  Stat.  L.  209,  chap.  647,  U.  S.  Comp.  Stat.  1901,  p.  3200),  declar- 
ing illegal  every  combination  or  conspiracy  in  restraint  of  interstate 
commerce,  and  forbidding  attempts  to  monopclize  such  commerce 
or  any  part  of  it,  although  such  statute  is  construed  to  embrace  a 
combination  of  stockholders  of  two  competing  interstate  railway 
companies  to  form  a  stock-holding  corporation  wliich  should  acquire. 
In  exchange  for  its  own  capital  stock,  a  controlling  interest  !n  the 
capital  stock  of  each  of  such  railway  companies.] 

[The  enforcement  of  the  provisions  of  the  Antl-Tnist  Act  of  July  2, 1890 
(26  Stat.  L.  200,  chap.  647,  U.  S.  Comp.  Stat.  1901,  p.  3200),  by  a 
Federal  court  decree  enjoining  a  corporation  organized  in  pursuance 
of  a  combination  of  stockholders  in  two  competing  interstate  rail- 
way companies  for  the  purpose  of  acquiring  a  txmtrolling  interest 
in  the  capital  stock  of  such  companies,  from  exercising  the  iwwer 
acquired  by  such  corporation  by  virtue  of  its  acquisition  of  such 
stock,  does  not  amount  to  an  invasion  by  the  Federal  Government 
of  the  reserved  rights  of  the  States  creating  the  several  corporations.} 

[The  constitutional  guaranty  of  liberty  of  contract  is  not  infringed  by 
the  enforcement  of  the  provisions  of  the  Anti-Trust  Act  of  July  2. 1890 
(26  Stat.  L.  20l>,  chap.  647.  U.  S.  Comp.  Stat.  1901,  p.  3200),  by  a 
Federal  court  decree  enjoining  a  corporation  formed  in  pursuance 
of  a  combination  of  stockholders  In  two  competing  interstate  railway 
companies  for  the  purpose  of  acquiring  a  controlling  interest  in  the 
capital  stock  of  such  companies,  from  exercising  the  powers  ac- 
quired by  such  corporation  by  virtue  of  its  acquisition  of  such  stock.] 

[A  Federal  court,  by  its  decree  in  a  suit  instituted  under  the  authority 

•  The  foregoing  syllabus  and  the  abstracts  of  briefs  and  arguments, 
etc.,  copyrighted,  1904.  by  The  Banks  Law  Publishing  Co. 

» The  following  paragraphs  Inclosed  in  brackets  comprise  the  sylla- 
bus to  this  case  in  the  U.  S.  Supreme  Court  Reports,  Book  48,  p.  679. 
Copyrighted,  1903, 1904,  by  the  Lawyers'  Co-Operative  Publishing  Co. 


NORTHERN    SECURITIES   CO.   V.   UNITED   STATES.       348 

Bill  in  Equity. 

of  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat.  L.  209,  chap.  647, 
U.  S.  Comp.  Stat.  1901,  p.  3200),  §  4,  to  prevent  and  restrain  viola- 
tions of  the  act.  may  properly  enjoin  a  corporation  organized  in 
pursuance  of  a  combination  of  stockholders  of  two  competing  inter- 
state railway  companies  for  the  purpose  of  acquiring  a  controlling 
interest  in  the  capital  stock  of  such  companies,  from  acquiring  any 
further  stock  therein,  from  voting  such  stock  as  it  then  holds  or  may 
subsequently  acquire,  and  from  exercising  any  control  over  the  rail- 
way companies  by  virtue  of  its  holdings,  and  may  restrain  the  rail- 
way companies  from  permitting  or  suffering  any  such  action  on  the 
part  of  the  stock-holding  corporation,  and  from  paying  any  divi- 
dends on  account  of  the  stock  held  by  it] 

The  pleadings  in  this  action  and  the  decree  of  the  Circuit 
Court  are  as  follows : 

PETITION.* 

To  the  judges  of  the  Circuit  Court  of  the  United  States  for 

the  District  of  Minnesota: 

Now  comes  the  United  States  of  America,  by  Milton  D. 
[201]  Purdy,  the  United  States  attorney  for  the  District  of 
Minnesota,  acting  under  direction  of  the  Attorney-General  of 

o  Bill  in  equity  of  United  States,  this  page,  supra. 

Exhibit:  Certificate  of  Incorporation  of  Northern  Securities  Com- 
pany, page  216,  post. 

Answer  of  Northern  Securities  Company,  page  221,  post. 

Answer  of  Hill  and  other  defendants,  page  241,  post. 

Answer  of  Great  Northern  Railway  Company,  page  241,  post. 

Answer  of  Northern  Pacific  Railway  Company,  page  242,  post. 

Answer  of  Morgan  and  other  defendants,  page  247,  post. 

Answer  of  Lament,  defendant,  page  255,  post. 

Decree  of  the  Circuit  Court,  page  255,  post. 

Summary  of  facts  from  argument  and  brief  of  Mr.  George  B.  Young 
for  appellants,  page  257,  post. 

Abstract  of  argument  of  Mr.  John  G.  Johnson  for  appellant  Northern 
Securities  Company,  page  268,  post. 

Abstract  of  argument  of  Mr.  Charles  W.  Bunn  for  appellant  North- 
em  Pacific  Railway  Company,  page  273,  post. 

Abstract  of  brief  submitted  by  Mr.  John  W.  Griggs  for  appellant 
Northern  Securities  Company,  page  276,  post. 

Abstract  of  brief  submitted  by  Mr.  M.  D.  Grover  for  appellant  Great 
Northern  Railway  Company,  page  280,  post. 

Abstract  of  brief  submitted  by  Mr.  Francis  Lynde  Stetson  and  Mr. 
David  Willcox  for  appellants  Morgan,  Bacon  and  Lament,  page  290, 
post. 

Abstract  of  argument  and  brief  of  Mr.  Attorney  General  Knox  and 


344 


193  UNITEB  STATES  BEPOBTS,  201. 
Bill  in  Equity. 


the  United  States,  and  brings  this  its  proceeding  by  way  of 
petition  against  the  Northern  Securities  Company,  a  corpo- 
ration  organized  and  existing  under  the  laws  of  the  State  of 
New  Jersey ;  the  Great  Northern  Kailway  Company,  a  cor- 
poration organized  and  existing  under  the  laws  of  the  State 
of  Minnesota;  the  Northern  Pacific  Kailway  Company,  a 
corporation  organized  and  existing  under  the  laws  of  the 
Stat«  of  Wisconsin ;  James  J.  Hill,  a  citizen  of  the  State  of 
Minnesota  and  a  resident  of  St.  Paul,  and  William  P. 
Clough,  D.  Willis  James,  John  S.  Kennedy,  J.  Pierpont 
Morgan,  Robert  Bacon,  George  F.  Baker,  and  Daniel  La- 
mont,  citizens  of  the  State  of  New  York  and  residents  of 
New  York  City,  and,  on  information  and  belief,  complains 
and  says  : 

I.  The  defendants,  the  Northern  Pacific  Railway  Company 
and  the  Great  Northern  Railway  Company,  were,  at  the  times 
hereinafter  mentioned,  and  now  are,  common  carriers,  em- 
ployed in  the  transportation  of  freight  and  passengers  among 
the  several  States  of  the  United  States  and  between  such 
States  [202]  and  foreign  nations,  and,  as  such  carriers  so  em- 
ployed,  were  and  are  engaged  in  trade  and  commerce  among 
the  several  States  and  with  foreign  nations. 

II.  On  and  prior  to  the  13th  day  of  November,  1901,  the 
defendants,  James  J.  Hill,  William  P.  Clough,  D.  WilUs 
James,  and  John  S.  Kennedy,  and  certain  other  persons 
whose  names  are  unknown  to  the  complainant,  but  whom  it 
prays  to  have  made  parties  to  this  action  when  ascertained 
(hereinafter  referred  to  as  James  J.  Hill  and  his  associate 
st9ckholders) ,  owned  or  controlled  a  majority  of  the  capital 
stock  of  the  defendant,  the  Great  Northern  Railway  Com- 
pany, and  the  defendants,  J.  Pierpont  Morgan  and  Robert 
Bacon  (members  of  and  representing  the  banking  firm  of 
J.  P.  Morgan  &  Co.,  of  New  York  City),  George  F.  Baker 
and  Daniel  S.  Lamont,  and  certain  other  persons  whose  names 
are  unknown  to  the  complainant,  but  whom  it  prays  to  have 

Hr.  William  A.  Day,  assistant  to  Attorney  General,  for  the  United 
States,  appellee,  page  297,  post. 

Opinion  of  Mb.  Justice  Hablan,  page  317,  post. 

Opinion  of  Mb.  Justice  Bbeweb,  page  360,  post. 

Opinion  of  Mb.  Justice  White,  page  364,  post. 

Opinion  of  Mb.  Justice  Holmes,  page  400,  post. 


NORTHEKN  .  SECURITIES   CO.   V.   UNITED   STATES.       345 

Bill  in  Equity. 

made  parties  to  this  action  when  ascertained  (hereinafter  re- 
ferred to  as  J.  Pierpont  Morgan  and  his  associate  stockhold- 
ers), owned  or  controlled  a  majority  of  the  capital  stock  of 
the  defendant,  the  Northern  Pacific  Railway  Company. 

Til.  The  Northern  Pacific  Railway  Company  and  the 
Great  Northern  Railway  Company,  at  and  prior  to  the  doing 
of  the  acts  hereinafter  complained  of,  owned  or  controlled 
and  operated  two  separate,  independent,  parallel,  and  compet- 
ing lines  of  railway  running  east  and  west  into  or  across  the 
States  of  Wisconsin,  Mimiesota,  North  Dakota,  Montana, 
Idaho,  Washington,  and  Oregon,  the  Northern  Pacific  system, 
extending  from  Ashland,  in  the  State  of  Wisconsin,  and  from 
Duluth  and  St.  Paul,  in  the  State  of  Minnesota,  through 
Helena,  in  the  State  of  Montana,  and  Spokane,  in  the  State 
of  Washington,  to  Seattle  and  Tacoma,  in  the  State  of  Wash- 
ington, and  Portland,  in  the  State  of  Oregon,  and  the  Great 
Northern  system,  extending  from  Superior,  in  the  State  of 
Wisconsin,  and  from  Duluth  and  St.  Paul,  in  the  State  of 
Minnesota,  through  Spokane,  in  the  State  of  Washington,  to 
Everett  and  Seattle,  in  the  State  of  Washington,  and  to  Port- 
land, in  the  State  of  Oregon,  with  a  branch  line  to  Helena,  in 
the  State  of  Montana,  thus  furnishing  [203]  to  the  public 
two  parallel  and  competing  transcontinental  lines  connecting 
the  Great  Lakes  and  the  Mississippi  River  with  Puget  Sound 
and  the  Pacific  Ocean.  At  the  times  mentioned,  these  two 
railway  systems,  which  will  hereafter  be  referred  to  respec- 
tively as  the  Northern  Pacific  system  and  the  Great  Northern 
system,  each  of  which,  with  its  leased  and  controlled  lines, 
main  and  branch,  aggregates  over  5,500  miles  in  length,  were 
the  only  transcontinental  lines  of  railway  extending  across 
the  northern  tier  of  States  west  of  the  Great  Lakes,  from  the 
Great  Lakes  and  the  Mississippi  River  to  the  Pacific  Ocean, 
and  were  then  engaged  in  active  competition  with  one  another 
for  freight  and  passenger  traffic  among  the  several  States  of 
the  United  States  and  between  such  States  and  foreign  coun- 
tries, each  system  connecting  at  its  eastern  terminals,  not  only 
with  lines  of  railway,  but  with  lake  and  river  steamers  to 
other  States  and  to  foreign  countries,  and  at  its  western  ter- 
minals with  sea-going  vessels  to  other  States,  Territories, 
and  possessions  of  the  United  States  and  to  foreign  countries. 


346 


193   UNITED  STATES  EEPOBTS,   203. 
Bill  in  Equity. 


IV.  Prior  to  the  year  1893  the  Northern  Pacific  system  was 
owned  or  controlled  and  operated  by  the  Northern  Pacific 
Eailroad  Company,  a  corporation  organized  and  existing 
under  certain  acts  and  resolutions  of  Congress.    During  that 
year  the  company  became  insolvent,  and  the  line  was  placed 
in  the  hands  of  receivers  by  the  proper  courts  of  the  United 
States.    While  in  this  condition,  awaiting  foreclosure  and 
sale,  an  arrangement  was  entered  into  between  a  majority  of 
the  bondholders  of  the  Northern  Pacific  Eailroad  Company 
and  the  defendant,  the  Great  Northern  Kailway  Company, 
for  a  virtual  consolidation  of  the  Northern  Pacific  and  Great 
Northern  systems  and  the  placing  of  the  practical  control 
of  the  Northern  Pacific  system  in  the  hands  of  the  defendant, 
the  Great  Northern  Eailway  Company.    This  arrangement 
contemplated  the  sale,  under  foreclosure,  of  the  property  and 
franchises  of  the  Northern  Pacific  Eailroad  Company  to  a 
committee  of  the  bondholders,  who  should  organize  a  new 
corporation,  to  be  known  as  the  Northern  Pacific  Eailway 
Company,  which  was  to  become  the  [204]  successor  of  the 
Northern  Pacific  Eailroad  Company;  one-half  of  the  capital 
stock  of  the  new  company  was  to  be  turned  over  to  the  share- 
holders of  the  defendant,  the  Great  Northern  Eailway  Com- 
pany, which  in  turn  was  to  guarantee  the  payment  of  the 
bonds   of   the    Northern    Pacific    Eailway    Company.     An 
agreement  was  to  be  entered  into  for  the  exchange  of  traffic  at 
intersecting  and  connecting  points  and  for  the  division  of 
earnings  therefrom.    The  carrying  out  of  this  arrangement 
was  defeated  by  the  decision  of  the  Supreme  Court  of  the 
United  States  in  the  case  of  Pearsall  v.  The  Great  Northern 
Eailway  Company  (which  was  decided  March  30,  1896,  and 
is  reported  in  the  one  hundred  and  sixty-first  volume  of  the 
reports  of  said  court,  beginning  on  page  646,  to  which  ref- 
erence is  made),  in  which  it  was  held  that  the  practical  effect 
would  be  the  consolidation  of  two  parallel  and  competing 
lines  of  railway,  and  the  giving  to  the  defendant,  the  Great 
Northern  Eailway  Company,  a  monopoly  of  all  traffic  in  the 
northern  half  of  the  State  of  Minnesota,  as  well  as  of  all 
transcontinental  traffic  north  of  the  line  of  the  Union  Pacific, 
to  the  detriment  of  the  public  and  in  violation  of  the  laws  of 
the  State  of  Minnesota. 


NORTHEKN   SECURITIES   CO.    V.   UNITED   STATES. 


Bill  in  Equity. 


347 


V.  Early  in  the  year  1901  the  defendants,  the  Great 
Northern  and  Northern  Pacific  Eailway  companies,  acting 
for  the  purpose  of  promoting  their  joint  interests,  and  in 
contemplation  of  the  ultimate  placing  of  the  Great  Northern 
and  Northern  Pacific  systems  under  a  common  source  of 
contml,  united  in  the  purchase  of  the  total  capital  stock  of 
the  Chicago,  Burlington  and  Quincy  Eailway  Company,  of 
Illinois,  giving  the  joint  bonds  of  the  Great  Northern  and 
Northern  Pacific  Eailway  companies,  payable  in  twenty 
years  from  date,  with  interest  at  4  per  cent  per  annum,  for 
such  stock,  at  the  rate  of  $200  in  bonds  in  exchange  for  each 
$100  in  stock,  and  in  this  manner  purchased  and  acquired 
about  $107,000,000  of  the  $112,000,000  total  capital  stock  of 
the  Chicago,  Burlington  and  Quincy  Eailway  Company,  or 
about  98  per  cent  thereof.  In  this  manner,  at  the  time  stated, 
the  defendants,  the  Great  Northern  and  Northern  Pacific 
Eailway  companies,  secured  control  of  the  vast  system  of  rail- 
[205 1  \\a.y  lines  known  as  the  Burlington  system,  about 
8,000  miles  in  length,  extending  from  St.  Paul,  in  the  State 
of  Minnesota,  where  it  connects  with  the  Great  Northern 
and  Northern  Pacific  Eailway  systems,  through  the  States 
of  Minnesota,  Wisconsin,  and  Illinois,  to  Chicago,  in  the 
State  of  Illinois,  and  from  these  two  cities  through  said 
States  and  through  the  States  of  Iowa,  Missouri,  Nebraska, 
Colorado,  South  Dakota,  Wyoming,  and  Montana,  to  Quincy, 
in  the  State  of  Illinois;  to  Burlington  and  Des  Moines,  in 
the  State  of  Iowa ;  to  St.  Louis,  Kansas  City,  and  St.  Joseph, 
in  the  State  of  Missouri ;  to  Omaha  and  Lincoln,  in  the  State 
of  Nebraska ;  to  Denver,  in  the  State  of  Colorado ;  to  Chey- 
enne, in  the  State  of  Wyoming,  and  to  Billings,  in  the  State 
of  Montana,  where  it  again  connects  with  the  Northern 
Pacific  Eailway  system,  these  States  lying  west  of  Chicago 
and  south  of  the  States  crossed  by  the  Great  Northern  and 
Northern  Pacific  systems,  and  constituting  the  territory  oc- 
cupied in  part  by  what  is  known  as  the  Union  Pacific  Eail- 
way system,  which  has  been  and  is  a  parallel  and  competing 
system  within  said  territory  with  the  said  Burlington  system. 

VI.  The  attempt  to  turn  over  a  controlling  interest  in  the 
stock  of  the  Northern  Pacific  Eailway  Company  to  the  Great 
Northern  Eailway  Company  and  thus  effect  a  virtual  con- 


348 


193   UNITED   STATES  BEPOBTS,   205. 
Bill  in  Equity. 


solidation  of  the  two  railway  systems,  having  thus,  in  the 
year  1896,  been  defeated  by  a  decision  of  the  Supreme  Coui  t 
of  the  United  States,  the  defendants  James  J.  Hill  and  his 
associate  stockholders  of  the  defendant,  the  Great  Northern 
Eailway  Company,  owning  or  controlling  a  majority  of  the 
stock  of  that  corporation,  and  the  defendants  J.  Pierpont 
Morgan  and  his  associate  stockholders  of  the  defendanl,  tho 
Northern  Pacific  Eailway  Company,  owning  or  controlling 
a  majority  of  the  stock  of  that  corporation,  acting  for  them- 
selves as  such  stockholders  and  on  behalf  of  the  said  railway 
companies  in  which  they  owned  or  held  a  controlling  in- 
terest, on  and  prior  to  the  13th  day  of  November,  1901,  con- 
triving and  intending  unlawfully  to  restrain  the  trade  or 
commerce  among  the  several  States  [206]  and  between  said 
States  and  foreign  countries  carried  on  by  the  Northern  Pa- 
cific and  Great  Northern  systems,  and  contriving  and  In- 
tending unlawfully  to  monopolize  or  attempt  to  monopolize 
such  trade  or  commerce,  and  contriving  and  intending  un- 
lawfully to  restrain  and  prevent  competition  among  said 
railway  systems  in  respect  to  such  interstate  and  foreign 
trade  or  commerce,  and  contriving  and  intending  unlawfully 
to  deprive  the  public  of  the  facilities  and  advantages  in  the 
carrying  on  of  such  interstate  and  foreign  trade  or  commerce 
theretofore  enjoyed  through  the  independent  competition  of 
said  railway  systems,  entered  into  an  unlawful  combination 
or  conspiracy  to  effect  a  virtual  consolidation  of  the  North- 
em  Pacific  and  Great  Northern  systems,  and  to  place  re- 
straint upon  all  competitive  interstate  and  foreign  trade  or 
commerce  carried  on  by  them,  and  to  monopolize  or  attempt 
to  monopolize  the  same,  and  to  suppress  the  competition 
theretofore  existing  between  said  railway  systems  in  said 
interstate  and  foreign  trade  or  commerce,  through  the  in- 
strumentality and  by  the  means  following,  to  wit :  A  holding 
corporation,  to  be  called  the  Northern  Securities  Company, 
was  to  be  formed  under  the  laws  of  New  Jersey,  with 
a  capital  stock  of  $400,000,000,  to  which,  in  exchange  for  its 
own  capital  stock  upon  a  certain  basis  and  at  a  certain  rate, 
was  to  be  turned  over  and  transferred  the  capital  stock,  or  a 
controlling  interest  in  the  capital  stock,  of  each  of  the  de- 
fendant railway  companies,  with  power  in  the  holding  cor- 


NOBTHEBN   SECUBITIES   CO.   V.   UNITED   STATES.       349 

Bill  in  Equity. 

poration  to  vote  such  stock  and  in  all  respects  to  act  as  the 
owner  thereof,  and  to  do  whatever  it  might  deem  necessary 
to  aid  in  any  manner  such  railway  companies  or  enhance 
the  value  of  their  stocks.  In  this  manner,  the  individual 
stockholders  of  these  two  independent  and  competing  railway 
companies  were  to  be  eliminated  and  a  single  common  stock- 
holder, the  Northern  Securities  Company,  was  to  be  sub- 
stituted; the  interest  of  the  individual  stockholders  in  the 
property  and  franchises  of  the  two  railway  companies  was 
to  terminate,  being  thus  converted  into  an  interest  in  the 
property  and  franchises  of  the  Northern  Securities  company. 
The  individual  stockholders  of  the  [207]  Northern  Pacific 
Railway  Company  were  no  longer  to  hold  an  interest  in  the 
property  or  draw  their  dividends  from  the  earnings  of  the 
Northern  Pacific  system,  and  the  individual  stockholders  of 
the  Great  Northern  Railway  Company  were  no  longer  to 
hold  an  interest  in  the  property  or  draw  their  dividends 
from  the  earnings  of  the  Great  Northern  system,  but  having 
ceased  to  be  stockholders  in  the  railway  companies  and 
having  become  stockholders  in  the  holding  corporation,  both 
were  to  draw  their  dividends  from  the  earnings  of  both 
systems,  collected  and  distributed  by  the  holding  corporation. 
In  this  manner,  by  making  the  stockholders  of  each  system 
jointly  interested  in  both  systems,  and  by  practically  pooling 
the  earnings  of  both  systems  for  the  benefit  of  the  former 
stockholders  of  each,  and  by  vesting  the  selection  of  the  di- 
rectors and  officers  of  each  system  in  a  common  body,  to  wit, 
the  holding  corporation,  with  not  only  the  power  but  the 
duty  to  pursue  a  policy  which  would  promote  the  interests, 
not  of  one  system  at  the  expense  of  the  other,  but  of  both  at 
the  expense  of  the  public,  all  inducement  for  competition  be- 
tween the  two  systems  was  to  be  removed,  a  virtual  consoli- 
dation effected,  and  a  monopoly  of  the  interstate  and  foreign 
commerce  formerly  carried  on  by  the  two  systems  as  inde- 
pendent competitors  established. 

VII.  In  pursuance  of  the  unlawful  combination  or  con- 
spiracy aforesaid,  and  solely  as  an  instrumentality  through 
which  to  effect  the  purposes  thereof,  on  the  13th  day  of  No- 
vember, 1901,  the  defendant,  the  Northern  Securities  Com- 
pany, was  organized  under  the  general  laws  of  the  State  of 


350 


193   UNITED   STATES  REPORTS,   207. 


Bill  in  Equity. 

New  Jersey ,  with  its  principal  office  in  Hoboken,  in  said  State, 
and  with  an  authorized  capital  stock  of  $400,000,000.  A  copy 
of  the  articles  of  incorporation  of  such  company  is  at- 
tached to  and  made  a  part  of  this  petition.  Among  the  pur- 
poses and  powers  designedly  inserted  in  said  articles  is  the 
purpose  and  power,  not  only  to  "purchase"  and  "hold" 
"  shares  of  the  capital  stock  of  any  other  corporation  or  cor- 
porations," under  which  said  company  wrongfully  claims 
and  is  exercising  the  power  to  acquire  by  exchange  [208]  and 
hold  the  stock  of  the  Northern  Pacific  and  the  Great  North- 
em  railway  companies,  but  the  purpose  and  power,  while 
owner  thereof,  "  to  exercise  all  the  rights,  powers,  and  privi- 
leges of  ownership ;"  that  is,  to  vote  such  stock,  collect  the 
dividends  thereon,  and  in  all  respects  act  as  a  stockholder  of 
such  railway  companies;  and  the  purpose  and  power  "  to  aid 
in  any  manner  any  corporation  *  *  *  of  which  any  bonds 
*  ♦  *  or  stock  are  held,  *  ♦  ♦  and  to  do  any  acts  or 
things  designed  to  protect,  preserve,  improve,  or  enhance  the 
value  of  any  such  bonds  *  *  *  or  stock,"  meaning  thereby 
to  do  whatever  it  may  deem  necessary  to  aid  in  any  manner 
the  Northern  Pacific  and  the  Great  Northern  Railway  com- 
panies, or  to  preserve  or  enhance  the  value  of  their  stocks  or 
bonds. 

VIII.  In  further  pursuance  of  the  unlawful  combination  or 
conspiracy  aforesaid,  and  solely  as  an  instrumentality  through 
which  to  effect  the  purposes  thereof,  on  or  about  the  14th  day 
of  November,  1901,  the  defendant  the  Northern  Securities 
Company  was  organized  by  the  election  of  a  board  of  directors 
and  the  selection  of  a  president  and  other  officers,  the  defend- 
ant James  J.  Hill,  the  president  and  controlling  power  in  the 
management  of  the  defendant  the  Great  Northern  Railway 
Company,  being  chosen  a  director  and  president  thereof;  and 
thereupon,  in  further  pursuance  of  the  unlawful  combination 
or  conspiracy  aforesaid,  the  defendants  James  J.  Hill  and  his 
associate  stockholders  of  the  defendant  the  Great  Northern 
Railway  Company  assigned  and  transferred  to  the  defendant 
the  Northern  Securities  Company,  a  large  amount  of  the  capi- 
tal stock  of  the  Great  Northern  Railway  Company,  the  exact 
amount  being  unknown  to  complainant,  but  constituting  a 
controlling  interest  therein,  and  complainant  believes  a  ma- 


NORTHERN   SECURITIES  CO.   17.   UNITED   STATES.       351 

Bill  in  Equity. 

jority  thereof,  upon  the  agreed  basis  of  exchange  of  $180,  par 
value,  of  the  capital  stock  of  the  said  Northern  Securities 
Company  for  each  share  of  the  capital  stock  of  the  Great 
Northern  Railway  Company ;  and  the  defendants  J.  Pierpont 
Morgan  and  his  associate  stockholders  of  the  Northern  Pacific 
Railway  Company  assigned  and  transferred  to  the  defendant 
the  Northern  Securities  Company  a  [209]  large  majority  of 
the  capital  stock  of  the  defendant  the  Northern  Pacific  Rail- 
way Company,  the  exact  amount  being  unknown  to  complain- 
ant, upon  the  agreed  basis  of  exchange  of  $115,  par  value,  of 
the  capital  stock  of  the  said  Northern  Securities  Company 
for  each  share  of  the  capital  stock  of  the  Northern  Pacific 
Railway  Company;  and  thereafter,  in  further  pursuance  of 
the  unlawful  combination  or  conspiracy  aforesaid,  the  defend- 
ant, the  Northern  Securities  Company,  oft'ered  to  the  stock- 
holders of  the  defendant  railway  companies  to  issue  and  ex- 
change its  capital  stock  for  the  capital  stock  of  such  railway 
companies,  upon  the  basis  of  exchange  aforesaid,  no  other 
consideration  being  required.  In  further  pursuance  of  the 
imlawful  combination  or  conspiracy  aforesaid  the  defendant 
the  Northern  Securities  Company  has  acquired  an  additional 
amount  of  the  stock  of  the  defendant  railway  companies,  issu- 
ing in  lieu  thereof  its  own  stock  upon  the  basis  of  exchange 
aforesaid,  and  is  now  holding,  as  owner  and  proprietor,  sub- 
stantially all  of  the  capital  stock  of  the  Northern  Pacific  Rail- 
way Company  and,  as  claimant  believes  and  charges,  a  major- 
ity of  the  capital  stock  of  the  Great  Northern  Railway  Com- 
pany, but  if  not  a  majority,  at  least  a  controlling  interest 
therein,  and  is  voting  the  same  and  is  collecting  the  dividends 
thereon,  and  in  all  respects  is  acting  as  the  owner  thereof  in 
the  organization,  management,  and  operation  of  said  railway 
companies,  and  in  the  receipt  and  control  of  their  earnings, 
and  will  continue  to  do  so,  unless  restrained  bv  the  order  of 
this  court.  By  reason  whereof  a  virtual  consolidation  under 
one  ownership  and  source  of  control  of  the  Great  Northern 
and  Northern  Pacific  Railway  systems  has  been  affected,  a 
combination  or  conspiracy  in  restraint  of  the  trade  or  com- 
merce among  the  several  States  and  with  foreign  nations  for- 
merly carried  on  by  the  defendant  railway  companies  inde- 
pendently and  in  free  competition  one  with  the  other  has  been 


352 


193  UNITED  STATES  BBPOBTS,   210. 


Bill  in  Equity. 

formed  and  is  in  operation,  and  the  defendants  are  thereby 
attempting  to  monopolize,  and  have  monopolized,  such  inter- 
state and  foreign  trade  or  commerce,  to  the  great  and  irrep- 
arable damage  of  the  people  of  the  United  [210]  States,  in 
derogation  of  their  common  rights,  and  in  violation  of  the  act 
of  Congress  of  July  2, 1890,  entitled  "An  act  to  protect  trade 
and  commerce  against  unlawful  restraints  and  monopolies." 
IX.  If  the  defendant  the  Northern  Securities  Company  has 
not  acquired  a  large  majority  of  the  capital  stock  of  the  de- 
fendant the  Great  Northern  Railway  Company,  it  is  because 
the  individual  defendants  named,  and  their  associates  in  the 
combination  or  conspiracy  charged  in  this  petition,  or  some  of 
them,  since  it  became  apparent  that  the  legality  of  their  cor- 
porate device  for  the  merger  of  the  stock  of  competing  rail- 
way companies,  through  the  instrumentality  of  a  central  or 
holding  corporation,  would  be  assailed  in  the  courts,  have  pur- 
posely withheld,  or  caused  to  be  withheld,  a  large  amount  of 
the  capital  stock  of  said  railway  company  from  transfer  for 
the  stock  of  the  Northern  Securities  Company,  and  have  pur- 
posely discouraged  and  prevented  the  transfer  and  exchange 
of  such  stock  for  the  stock  of  the  Northern  Securities  Com- 
pany, all  for  the  purpose  of  concealing  the  real  scope  and  ob- 
ject of  the  unlawful  combination  or  conspiracy  aforesaid,  and 
of  deceiving  and  misleading  the  state  and  Federal  authori- 
ties, and  of  furnishing  a  ground  for  the  defence  that  the 
Northern  Securities  Company  does  not  hold  a  clear  majority 
of  the  stock  of  the  Great  Northern  Railway  Company.    The 
complainant  avers  that  such  stock,  so  withheld  or  not  trans- 
ferred to  the  Northern  Securities  Company,  is  now  in  the 
hands  of  some  person  or  persons  (unknown  to  the  complain- 
ant) friendly  to  and  under  the  influence  of  the  individual 
defendants  named  and  their  associates  aforesaid,  or  some  of 
them,  and  will  either  not  be  voted,  or  be  voted  in  harmony  with 
the  Great  Northern  stock  held  by  the  Northern  Securities 
Company,  until  the  question  of  the  legality  of  this  corporate 
d«vice  for  merging  competing  raOway  lines  shall  be  finally  and 
judicially  determined,  when  such  stock  will  either  be  turned 
over  to  the  Northern  Securities  Company  or  continue  to  be 
held  and  voted  outside  said  company  but  in  harmony  with  the 


KOBTHEBN   SECURITIES   CO.   V.   UNITED   STATES.       358 

Bill  in  Equity. 

Great  Northern  [211]  stock  held  and  voted  by  it,  as  may  at 
the  time  ^em  advisable. 

X.  In  further  pursuance  of  the  unlawful  combination  or 
conspiracy  aforesaid,  the  Northern  Securities  Company  (sub- 
ject, it  may  be,  to  the  condition  stated  in  the  next  preceding 
paragraph)  is  about  to  and  will,  unless  restrained  by  the  order 
of  this  court,  receive  and  acquire,  and  hereafter  hold  and 
control  as  owner  and  proprietor,  substantially  all  of  the  cap- 
ital stock  of  the  defendant  railway  companies,  issuing  in  lieu 
thereof  its  own  capital  stock  to  the  full  extent  of  the  author- 
ized issue,  of  which,  upon  the  basis  of  exchange  aforesaid,  the 
former  stockholders  of  the  Great  Northern  Railway  Com- 
pany have  received  or  will  receive  and  hold  about  55  per  cent 
thereof,  the  balance  going  to  the  former  stockholders  of  the 
Northern  Pacific  Railway  Company. 

XI.  No  consideration  whatever  has  existed,  or  will  exist, 
for  the  transfer  as  aforesaid  of  the  stock  of  the  defendant 
railway  companies  from  their  stockholders  to  the  Northern 
Securities  Company,  other  than  the  issue  of  the  stock  of  the 
Northern  Securities  Company  to  them  in  exchange  therefor, 
for  the  purpose,  after  the  manner,  and  upon  the  basis 
aforesaid. 

The  defendant,  the  Northern  Securities  Company,  was  not 
organized  in  good  faith  to  purchase  and  pay  for  the  stocks 
of  the  Great  Northern  and  the  Northern  Pacific  Railway 
companies.  It  was  organized  solely  to  incorporate  the  pool- 
ing of  the  stocks  of  said  companies  and  to  carry  into  efl'ect  the 
unlawful  combination  or  conspiracy  aforesaid.  The  North- 
ern Securities  Company  is  a  mere  depositary,  custodian, 
holder,  and  trustee  of  the  stocks  of  the  Great  Northern  and 
the  Northern  Pacific  Railway  companies,  and  its  shares  of 
stock  are  but  beneficial  certificates  issued  against  said  rail- 
road stocks  to  designate  the  interest  of  the  holders  in  the  pool. 
The  Northern  Securities  Company  does  not  have  and  never 
had  any  capital  sufficient  to  warrant  such  a  stupendous  oper- 
ation. Its  subscribed  capital  was  but  $30,000,  and  its  author- 
ized capital  stock  of  $400,000,000  is  just  sufficient,  when  all 
issued,  to  [212]  represent  and  cover  the  exchange  value  of 


21220— VOL  2—07  m- 


-23 


S54 


IttS   UNITED  STATES  HEPORTS,    212. 


Bill  in  Equity. 

substantially  the  entire  stock  of  the  Great  Northern  and 
Northern  Pacific  Eailway  companies,  upon  the  basis  and  at 
the  rate  agreed  upon,  which  is  about  $122,000,000  in  excess  of 
the  combined  capital  stock  of  the  two  railway  companies 
takmi  at  par. 

XII.  If  the  Government  fails  to  prevent  the  carrying  out 
of  the  combination  or  conspiracy  aforesaid,  and  the  defend- 
ant, the  Northern  Securities  Company,  is  permitted  to  receive 
and  hold  and  act  as  owner  of  the  stock  of  the  Northern 
Pacific  and  Great  Northern  Railway  companies  as  aforesaid, 
not  only  will  a  virtual  consolidation  of  two  competing  trans- 
continental lines,  with  the  practical  pooling  of  their  earnings, 
be  effected,  and  a  monopoly  of  the  interstate  and  foreign  com- 
merce formerly  carried  on  by  them  as  competitors  be  created, 
and  all  effective  competition  between  such  lines  in  the  carry- 
ing of  interstate  and  foreign  traffic  be  destroyed,  but  there- 
after, to  all  desiring  to  use  it,  an  available  method  will  be 
presented,  whereby,  through  the  corporate  scheme  or  device 
aforesaid,  the  act  of  Congress  of  July  2,  1890,  entitled  "An 
act  to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopolies,''  may  be  circumvented  and  set  at 
naught,  and  all  transcontinental  lines,  indeed  the  entire  rail- 
way systems  of  the  country,  may  be  absorbed,  merged,  and 
consolidated,  thus  placing  the  public  at  the  absolute  mercy 
of  the  holding  corporation. 

XIII.  In  furtherance  of  the  purpose  and  object  of  the 
unlawful  combination  or  conspiracy  aforesaid  to  monopolize 
or  attempt  to  monopolize  the  trade  or  commerce  among  the 
several  States,  and  between  such  States  and  foreign  countries, 
formerly  carried  on  in  free  competition  by  the  defendants, 
the  Northern  Pacific  and  Great  Northern  Railway  com- 
panies, and  to  place  a  restraint  thereon,  the  individual  de- 
fendants  named  and  their  associate  stockholders  of  the 
defendant  railway  companies,  have  combined  or  conspired 
with  one  another  and  with  other  persons  (whose  names  are 
unknown  to  the  complainant,  but  whom  it  prays  to  have 
made  parties  to  this  action  when  ascertained)  to  use  and  em- 
ploy, in  addition  to  the  corporate  scheme  [213]  or  device 
aforesaid,  and  in  aid  thereof,  various  other  schemes,  devices, 
and  instrumentalities,  the  precise  details  of  which  are  at 


NORTHERN    SECURITIES   CO.    V.    UNITED   STATES.       355 

Bill  in  Equity. 

present  unknown  to  the  complainant  but  will  be  laid  before 
the  court  when  ascertained,  by  means  of  which,  unless  pre- 
vented by  the  order  of  this  court,  the  object  and  purpose  of 
the  unlawful  combination  or  conspiracy  aforesaid  may  and 
will  be  accomplished. 

■ 

PRAYER. 

In  consideration  whereof,  and  inasmuch  as  adequate  relief 
in  the  premises  can  only  be  obtained  in  this  court,  the  United 
States  of  America  prays  your  honors  to  order,  adjudge,  and 
decree  that  the  combination  or  conspiracy  hereinbefore  de- 
scribed is  unlawful,  and  that  all  acts  done  or  to  be  done  in 
carrying  it  out  are  in  derogation  of  the  common  rights  of  all 
the  people  of  the  United  States  and  in  violation  of  the  act  of 
Congress  of  July  2, 1890,  entitled  "An  act  to  protect  trade  and 
commerce  against  unlawful  restraints  and  monopolies,"  and 
that  the  defendants  and  each  and  every  one  of  them,  and  their 
officers,  directors,  stockholders,  agents,  and  servants,  and  each 
and  every  one  of  them,  be  perpetually  enjoined  from  doing 
any  act  in  pursuance  of  or  for  the  purpose  of  carrying  out 
the  same,  and,  in  addition,  that  the  several  defendants  be 
respectively  enjoined  as  follows : 

First.  That  the  defendant,  the  Northern  Securities  Com- 
pany, its  stockholders,  officers,  directors,  executive  committee, 
and  its  agents  and  servants,  and  each  and  every  one  of  them, 
be  perpetually  enjoined  from  purchasing,  acquiring,  receiv- 
ing, holding,  voting  (whether  by  proxy  or  otherwise),  or  in 
any  manner  acting  as  the  owner  of  any  of  the  shares  of  the 
capital  stock  of  either  the  Northern  Pacific  Railway  Com- 
pany or  the  Great  Northern  Railway  Company;  and  that  a 
mandatory  injunction  may  issue  requiring  the  Northern  Se- 
curities Company  to  recall  and  cancel  any  certificates  of  stock 
issued  by  it  in  purchase  of  or  in  exchange  for  any  of  the 
shares  of  the  capital  stock  of  [214]  either  of  said  railway 
companies,  surrendering  in  return  therefor  to  the  holders 
thereof  the  certificates  of  stock  in  the  respective  railway  com- 
panies in  lieu  of  which  they  were  issued. 

Second.  That  the  defendant,  the  Northern  Pacific  Rail- 
way Company,  its  stockholders,  officers,  directors,  agents, 
and  servants,  and  each  and  every  one  of  them,  be  perpetually 


35li 


li*;i    UNITED   STATES  REPORTS,   214. 


Bill  in  Equity. 

enjoined  from  in  any  manner  recognizing  or  accepting  the 
Northern  Securities  Company  as  the  owner  or  holder  of  any 
shares  of  its  capital  stock,  and  from  permitting  such  com- 
pany to  vote  such  stock,  whether  by  proxy  or  otherwise,  and 
from  paying  any  dividends  upon  such  stock  to  said  company 
or  its  assigns,  miless  authorized  by  this  court,  and  from  recog- 
nizing as  valid  any  transfer,  mortgage,  pledge,  or  assignment 
by  such  company  of  such  stock,  unless  authorized  by  this 
court. 

Third.  That  the  defendant,  the  Great  Northern  Railway 
Company,  its  stockholders,  officers,  directors,  agents,  and 
servants,  and  each  and  every  one  of  them,  be  perpetually  en- 
joined from  in  any  manner  recognizing  or  accepting  the 
Northern  Securities  Company  as  the  owner  or  holder  of  any 
shares  of  its  capital  stock,  and  from  permitting  such  company 
to  vote  such  stock,  whether  by  proxy  or  otherwise,  and 
from  paying  any  dividends  upon  such  stock  to  said  com- 
pany or  its  assigns,  unless  authorized  by  this  court,  and  from 
recognizing  as  valid  any  transfer,  mortgage,  i)ledgo,  or 
assignment  by  such  company  of  such  stock  udIcms  authorized 
by  this  court. 

Fourth.  That  the  individual  defendants  iianieJ.  and  their 
associate  stockholders,  and  each  and  every  stockholder  of 
either  of  said  railway  companies  who  has  exchanged  his  stock 
therein  for  the  stock  of  the  Northern  Securities  Company,  be 
each,  respectively,  perpetually  enjoined  from  in  any  manner 
holding,  voting,  or  acting  as  the  owner  of  any  of  the  stock 
of  the  Northern  Securities  Company,  issued  in  exchange  for 
the  stock  of  either  of  the  said  railway  companies,  unless  au- 
thorized by  this  court;  and  that  a  mandatory  injunction 
may  issue  requiring  each  of  the  said  defendants  to  surrender 
any  stock  of  the  Northern  Securities  Company  so  acquired 
and  held  by  him,  and  accept  [216]  therefor  the  stock  of 
the  defendant  railway  company  in  exchange  for  which  the 
same  was  issued. 

Fifth.  That  the  individual  defendants  named,  and  their 
associate  stockholders,  and  each  and  every  person  combin- 
ing or  conspiring  with  them,  as  charged  in  Paragraph 
XIII  hereof,  and  their  trustees,  agents,  and  assigns,  pres- 
ent or  future,  and  each  and  every  one  of  them,  be  perpetu- 


NORTHERN    SECURITIES   CO.    V,   UNITED   STATES.       357 

Bill  in  equity. 

ally  enjoined  from  doing  any  and  every  act  or  thing  men- 
tioned in  said  paragraph,  or  in  furtherance  of  the  combi- 
nation or  conspiracy  described  therein,  or  intended  or  tend- 
ing to  place  the  capital  stock  of  the  defendant  railway 
companies,  or  the  competing  railway  systems  operated  by 
them,  or  the  competitive  interstate  or  foreign  trade  or  com- 
merce carried  on  by  them,  under  the  control,  legal  or  prac- 
tical, of  the  defendant,  the  Northern  Securities  Company, 
or  of  any  person  or  persons,  or  association  or  corporation, 
acting  for  or  in  lieu  of  said  company,  in  the  carrying  out 
of  the  unlawful  combination  or  conspiracy  described  in  said 
paragraph. 

The  United  States  prays  for  such  other  and  further  relief 
as  the  nature  of  the  case  may  require  and  the  court  may 
deem  proper  in  the  premises. 

To  the  end,  therefore,  that  the  United  States  of  America 
may  obtain  the  relief  to  which  it  is  justly  entitled  in  the 
premises,  may  it  please  your  honors  to  grant  unto  it  writs 
of  subpoena  directed  to  the  said  defendants,  the  Northern 
Securities  Company,  the  Northern  Pacific  Railway  Com- 
pany, the  Great  Northern  Railway  Company,  James  J.  Hill, 
William  P.  Clough,  D.  Willis  James,  and  John  S.  Kennedy, 
and  their  associate  stockholders  of  the  Great  Northern  Rail- 
way Company,  as  their  names  may  become  known  to  com- 
plainant and  the  court  be  advised  thereof,  J.  Pierpont  Mor- 
gan, Robert  Bacon,  George  F.  Baker,  and  Daniel  S.  Lamont, 
and  their  associate  stockholders  of  the  Northern  Pacific 
Railway  Company,  as  their  names  may  become  known  to 
complainant  and  the  court  be  advised  thereof,  and  the  per- 
sons referred  to  in  Paragraph  XIII  hereof,  as  their  names 
may  become  known  to  complainant  and  the  court  be  advised 
thereof,  and  to  each  of  them,  commanding  them,  and  [216] 
each  of  them,  to  appear  herein  and  answer  (but  not  under 
oath)  the  allegations  contained  in  the  foregoing  petition, 
and  abide  by  and  perform  such  order  or  decree  as  the  court 
may  make  in  the  premises;  and  that,  pending  the  final 
hearing  of  this  case,  a  temporary  restraining  order  may 
issue  enjoining  the  defendants  and  their  associates,  and 
each  of  them,  and  their  stockholders,  directors,  officers, 
agents,  and  servants  as  hereinbefore  prayed. 


358  1B3  UNITED  STATES  EEPORTS,   2l(i. 

Bill  In  Equity;  exhibit 

The  petition  was  signed  and  verified  by  Milton  D.  Purdy, 
Attorney  of  the  United  States  for  the  District  of  Minne- 
sota, and  also  signed  by  Philander  C.  Knox,  Attorney- 
General  of  the  United  States,  and  John  K.  Richards, 
Solicitor-General  of  the  United  States. 


Annexed  to  the  petition  as  an  exhibit  was  the  charter  of 
the  Northern  Securities  Company,  as  follows: 

GEHflFICAlK  <IF   iMOKPtmATlON  OF  NOBTIIERX    SK(  I  HITIKS  COMPANY. 

State  of  Nkw  .Tehsky,  «#: 

We,  the  uiMlersiciM'd.  in  order  to  form  a  c*ori»orat!«m  for  tlie  purposes 
hereinafter  stated,  under  and  porpuant  to  tlie  iirovislons  of  the  act  of 
the  legislature  of  the  State  of  New  Jersey  entitletl  "An  act  eonoeruing 
corporatiniis  "  h•e^i^<ion  of  1890),  and  tlie  aet8  amendatory  thereof  and 
supplemental  thereto,  do  herei>y  certify  as  follows: 

First  The  name  of  the  corporation  is  Ncrtliern  Seiinities  Company. 

Second.  Tlie  location  of  its  principal  tittice  in  the  State  of  New  Jer- 
my  is  at  No.  51  Newarlv  street,  in  the  eitj-  of  Hoboken,  (-ountv  of 
Hudson.  The  name  of  tlie  agent  tlierein,  and  in  charge  thereof,  upon 
whom  pi-oee^s  against  the  corpoiation  may  he  served,  is  Hudson  Trust 
Company.     Such  office  is  to  be  the  registered  cHice  of  the  coriK>ration. 

Third.  The  objects  for  which  the  coriwratlon  is  formed  are : 

(1)  To  acquire  by  purchase,  subscription,  or  otherwise,  and  to  hold 
as  inYCStment.  any  licnds  or  other  securities  or  evidemes  of  [217]  In- 
debtedness, (iv  any  shares  of  capital  st(Kk  crejued  or  issued  by  any 
other  cortHtration  or  corporations,  assticiation  or  assiu  iations.  of  the 
State  of  New  Jersey,  or  of  any  other  State,  Territory,  or  country. 

(2)  To  purchase,  hold,  sell,  assign,  transfer,  mortgage,  pledge,  or 
otherwise  dispose  of  any  bonds  or  other  securities  or  evidences  of 
Indebtedness  created  or  issued  by  any  other  ct)rporation  or  corpora- 
tions, association  or  associations,  of  the  State  of  New  Jersey,  or  of 
any  other  State,  Territory,  or  country,  and  while  owner  thereof  to 
exercise  all  the  rights,  powei-s.  and  privileges  of  ownership. 

(3)  To  purchase,  hold,  sell,  assign,  transfer,  mortgage,  pledge,  or 
otherwise  dispose  of  shares  of  the  capital  stock  of  any  other  corpora- 
tion or  corporations,  nsscciation  or  ;;ssociations,  of  the  State  of  New 
Jersey,  or  of  any  other  State,  Terr  itory.  or  country,  and  while  owner  of 
such  stock  to  exercise  all  the  rights,  powers,  and  privileges  of  owners 
ship,  including  the  right  to  vote  thereon. 

(4)  To  aid  in  any  manner  any  coriwration  or  association  of  which 
any  bonds  or  other  securities  or  evidences  of  indebtedness  or  stock  are 
held  by  the  corporation,  and  to  do  any  acts  or  things  designed  to  pro- 
tect, preserve,  improve,  or  enhance  the  ralue  of  any  such  bonds  or 
other  securities  or  OTldences  of  indebtedness  or  stock. 

(5)  To  acquire,  own,  and  hold  such  real  and  personal  property  as 
may  be  necessary  or  convenient  for  the  transaction  of  its  business. 

The  business  or  puipose  of  the  coiporation  is  from  time  to  time  to 
do  any  one  or  more  of  the  acts  and  things  herein  set  forth. 

The  corporation  shall  have  power  to  conduct  its  business  in  other 
States  and  in  foreign  countries,  and  to  have  one  or  more  offices  out  of 
this  State,  and  to  hold,  purchase,  mortgage,  and  convey  real  and  per- 
sonal property  out  of  this  State. 

Fourth,  The  total  authorized  capital  stock  of  the  corporation  Is  four 


NORTHERN   SECURITIES   CO.   V.   UNITED   STATES.       359 

Bill  in  Equity ;  exhibit. 

hundred  million  dollars  ($400,000,000),  divided  into  [218]  four  mil- 
lion (4,000,000)  shares  of  the  par  value  of  one  hundred  dollars  ($100> 
each.  The  amount  of  the  capital  stock  with  which  the  corporation  will 
commence  business  is  thirty  thousand  dollars. 

P^ifth.  The  names  and  post-office  addresses  of  the  incorporators,  and 
the  number  of  shares  of  stock  subscribed  for  by  each  (the  aggregate  of 
such  subscriptions  being  the  amount  of  capital  stock  with  which  this 
company  will  commence  business),  are  as  follows: 


Name  and  post-office  address. 


Number  of 
shares. 


ileorge  F.  Baker,  jr.,  258  Madison  avenue,  New  York,  N.  Y. 

Abram  M.  Hyatt,  21^  Allen  avenue,  Allenluirst,  N.  J 

Richard  Trimble,  53  East  Twenty-fifth  street,  New  York,  N.  Y. 


100 

100 
100 


Sixth.  The  duration  of  the  corporation  shall  be  perpetual. 

Seventh.  The  number  of  directors  of  the  corporation  shall  be  fixed 
from  time  to  time  by  the  by-laws;  but  the  number,  if  fixed  at  more 
than  three,  shall  be  some  multiple  of  three.  The  directors  shall  be 
classified  with  respect  to  the  time  for  which  they  shall  severally  hold 
office  by  dividing  them  into  three  classes,  each  consisting  of  one-third 
of  the  whole  number  of  the  board  of  directors.  The  directors  of  the 
first  class  shall  be  elected  for  a  term  of  one  year,  the  directors  of  the 
second  class  for  a  term  of  two  years,  and  the  directors  of  the  third 
class  for  a  term  of  three  years ;  and  at  each  annual  election  the  suc- 
cessors to  the  class  of  directors  whose  term  shall  expire  in  that  year 
shall  be  elected  to  hold  office  for  the  term  of  three  years,  so  that  the 
term  of  office  of  one  class  of  directors  shall  expire  in  each  year. 

In  case  of  any  increase  of  the  number  of  the  directors  the  additional 
directors  shall  be  elected  as  nmy  be  provided  in  the  by-laws,  by  th',* 
directors  or  by  the  stockholdei*s  at  an  annual  or  special  meeting,  and 
one-third  of  their  number  shall  be  elected  for  the  then  unexpired  por- 
tion of  the  term  of  the  directors  of  the  first  class,  one-third  of  their 
number  for  the  unexpired  portion  [219]  of  the  term  of  the  directors 
of  the  second  class,  and  one-third  of  their  number  for  the  unexpired 
portion  of  the  term  of  the  directors  of  the  third  class,  so  that  each 
class  of  directors  shall  be  increased  equally. 

In  case  of  any  vacancy  in  any  class  of  directors  through  death,  resig- 
nation, disqualification,  or  other  cause,  the  remaining  directors,  by 
affirmative  vote  of  a  majority  of  the  board  of  directors,  may  elect  a 
successor  to  hold  office  for  the  unexpired  portion  of  the  term  of  the 
director  whose  place  shall  be  vacant,  and  until  the  election  of  a  suc- 
cessor. 

The  l)oard  of  directors  shall  have  power  to  hold  their  meetings  out- 
side the  State  of  New  Jersey  at  such  places  as  from  time  to  time  may 
be  designated  by  the  by-laws,  or  by  resolution  of  the  board.  The  by- 
laws may  prescribe  the  number  of  directors  necessary  to  constitute 
a  quorum  of  the  board  of  directors,  which  number  may  be  less  than  a 
majority  of  the  whole  number  of  the  directors. 

As  authorized  by  the  act  of  the  legislature  of  the  State  of  New" 
Jersey  passed  March  22,  1901.  amending  the  seventeenth  section  of  the 
act  concerning  corporations  (revision  of  1896),  any  action  which  there- 
tofore required  the  consent  of  the  holders  of  two-thirds  of  the  stock 
at  any  meeting  after  notice  to  them  given,  or  required  their  consent 


193   UNITED  STATES  BEPORTS,   219. 
Answer  of  Northern  SecuriUes  Company. 

to  jriting  to  be  filed  may  be  taken  upon  the  consent  of,  and  the  con- 
sent  given  and  filed  by,  the  holders  of  two-thirds  of  the  stock  of  each 
class  represented  at  such  meeting  in  person  or  by  proxy. 
r^mnvJ^f  elected  or  appointed  by  the  board  of  directors  may  be 
hTrd^f  dir^nr^  A^  the  affirmative  vote  of  a  majority  of  the  whole 
Hoard  of  directors.  Any  other  officer  or  employ^  of  the  corDoration 
may  be  removed  at  any  time  by  vote  of  the  £>ard  of  director  or  b? 
any  committee  or  superior  officer  upon  whom  such  ^wer  of  removal 
may  be  conferred  by  the  by-laws  or  by  vote  of  the  boa^d  of  diritTs 

The  board  of  directors,  by  the  affirmative  vote  of  a  majority  of  the 
whole  board,  may  appoint  from  the  directors  an  execuUve  committ^ 
of  which  a  majority  shall  constitute  a  quorum,  [22^  and  to  S  ex- 
tent as  shall  be  provided  in  the  by-laws  such  committL  shall  have  and 
may  exercise  all  or  any  of  the  powers  of  board  of  directors  including 
SJaTmay  r»l  "^'  "'  '''"  ^corporation  to  be  affix^^'^aH  Ta^"rf 

The  board  of  directors  may  appoint  one  or  more  vice-presidents  one 
«L^Th''''^'?^!  treasurers,  and  one  or  more  assistant  s«^^ta^^^^^^ 

respectively,  shall  have  and  may  exercise  all  the  powers  of  the  presl- 
*^*St  *"!  "'^  treasurer,  and  of  the  secretary,  respectively 

The  board  of  directors  shall  have  power  from  time  to  time  to  fix 
and  determine  aiid  to  vary  the  amount  of  the  working  capital  of  the 
corporation;  to  determine  whether  any.  and  if  any.  what  part  of  any 
accumu  ated  profits  shall  be  declared  in  dividends  and  paid  to  the 
stockholders ;  to  determine  the  time  or  times  for  the  declaration  nnri 
payment  of  dividends,  and  to  direct  and  to  determine  the  use  and  X 

S^i*  ?«."*'  "ify,  «".yl"f  «»-  °ft  profits  over  and  above  the  capital  stork 
paid  In;  and  in  its  discretion  the  board  of  directors  may  use  and 
apply  any  such  surplus  or  accumulated  profits  in  purchasing  or  ac 
quiring  its  bonds  or  other  obligations,  or  shares  of  the  capital  stcxi 
of  the  coi-i>oration  to  such  extent  and  in  such  manner  and  upon  such 
terms  as  the  board  of  directors  shall  deem  expedient  but  C res  of 
such  capital  stock  so  purchased  or  acquired  ^y  be  rSold  inless 
such  shares  shall  have  been  retired  for  the  purpose  of  d^reasing  thi 
capital  stock  of  the  corporation  to  the  extent  authorized  bv  law  ^ 
««^  f  ?5*!  **'  directors,  from  time  to  time  shall  determine  whether 
and  to  what  extent,  and  at  what  times  and  places  and  unde^  what 
conditions  and  regulations,  the  accounts  and  bJoks  of  the  corporaTion 
or  any  of  them  shall  be  open  to  the  inspection  of  the  sSolders' 
and  no  stockholders  shall  have  any  right  to  inspect  anyVccount  or 
S1;r<5flr'TM  *'^  l^""  «on>oration  except  as  conferred  bvTtatute 
of  the  State  of  New  Jersey,  or  authorized  by  the  board  of  directors 
or  by  a  resolution  of  the  stockholders.  uireciors 

«i?il'^^?**^^^^  of  directors  may  make  by-laws,  and  from  time  to 
time  may  alter  amend,  or  repeal  any  by-laws;  but  any  by-laws  made 
by  the  board  of  direc  tors  may  be  altered  or  repealed  by  the  stockhoWers 
at  any  anminl  meeting  or  at  any  special  meeting,  provided  notice  of 
m^tinr^^^"^  alteration  or  repeal  be  included  in  the  notice  of  the 

im^li^rk'Sr,  m^^^^^^  ''^^^"*"  '''  '""^  ^^"^«  ^"^  ««^»«  *^- 
eyifrfndTictrrTrlm^^^^^^^  '^  ^"^-  ^*  ^^''''^  '^'^  ^^^«-  ^' 

The  answer  of  the  Northern  Securities  Company  to  the  pe- 
tition of  the  United  States  of  America,  was  as  follows : 
I.  This  defendant  admits  and  avers  that  the  defendant 


NORTHERN   SECURITIES   CO.    V,   UNITED   STATES.       361 
Answer  of  Northern  Securities  Company. 

railway  companies  were,  at  the  time  mentioned  in  the  peti- 
tion, and  are  now  common  carriers  employed  in  transporta- 
tion of  freight  and  passengers  within  and  among  those  States 
of  the  United  States  in  which  the  railways  operated  by  them 
are  situated,  and  not  further  or  otherwise,  but  were  and  are 
engaged  in  commerce  among  the  several  States  and  with  for- 
eign nations. 

II.  This  defendant  admits  that,  on  and  prior  to  November 
13, 1901,  the  capital  stock  of  the  defendant  railway  companies 
was  owned  and  controlled  by  their  respective  shareholders, 
and  it  avers,  on  information  and  belief,  that  the  outstanding 
capital  stock  of  the  Great  Northern  Railway  Company  was 
owned  by  more  than  eighteen  hundred  (1,800)  separate  own- 
ers, and  the  outstanding  capital  stock  of  the  Northern  Pacific 
Railway  Company  was  owned  by  more  than  thirty-five  hun- 
dred (3,500)  separate  owners;  and  that  among  the  sharehold- 
ers of  the  Great  Northern  Railway  Company^  (hereinafter 
caUed  the  Great  Northern  Company)  were  the  defendants 
Hill,  Clough,  James,  Morgan,  and  Kennedy ;  and  that  among 
the  shareholders  of  the  Northern  Pacific  Railway  Company 
(hereinafter  called  the  Northern  Pacific  Company)  were  the 
defendants  Morgan,  Bacon,  Baker,  Hill,  Kennedy,  James, 
and  Lamont.  It  avers  that  the  persons  named  and  meant 
to  be  designated  in  the  peti-  [222]  tion  as  owning,  control- 
ling, or  as  being  associated  in  the  ownership  and  control  of 
a  majority  of  the  stock  of  the  Great  Northern  Company,  did 
not  at  any  time,  nor  in  any  manner,  own  or  control  a  major- 
ity of  said  stock,  nor  as  much  as  one-third  (^)  part  thereof. 
Their  holdings  in  said  stock  were  at  all  times  separate  and 
individual,  and  not  in  association  with  each  other,  or  with 
any  other  person  or  persons,  and  neither  of  them  was  under 
any  obligation  or  promise  to  any  of  the  others,  or  to  any  other 
person,  to  hold,  use,  or  vote  his  stock  otherwise  than  as  he 
should,  from  time  to  time,  determine  to  be  best  for  his  own 
individual  interest.  The  persons  named  and  meant  to  be  des- 
ignated in  the  petition  as  owning,  controlling,  or  as  being 
associated  in  the  ownership  and  control  of  a  majority  of  the 
stock  of  the  Northern  Pacific  Company,  did  not,  at  the  date 
named,  nor  at  any  time,  or  in  any  manner,  own  or  control  a 
majority  of  such  stock,  nor  as  much  as  one-third  (i)  part 


mt 


tm  UNITED  STATES  REPORTS,   222. 


Answer  of  Northern  Securities  Company. 

thereof.  Their  holdings  in  said  stock  were  at  all  times  sepa- 
rate and  individual,  and  neither  of  them  had  any  control  of 
the  holdings  of  the  other,  or  of  any  other  person  or  persons, 
and  neither  of  them  was  under  any  promise  of  obligation  to 
the  other,  or  to  any  person,  to  hold,  use  or  vote  his  stock 
otherwise  than  as  he  should,  from  time  to  time,  determine  to 
be  best  for  his  own  individual  interest. 

Except  as  herein  admitted  and  averred,  this  defendant  de- 
nies each  and  every  allegation  of  subdivision  II  of  the 
petition. 

III.  This  defendant  admits  that  the  Northern  Pacific 
Company  owned  and  operated  a  railway  from  Ashland,  in 
Wisconsin,  via  Duhith,  and  from  St.  Paul,  across  Minnesota, 
North  Dakota,  Montana,  Idaho,  and  Washington,  and  into 
Oregon,  passing  through  Helena,  in  the  State  of  Montana, 
and  Spokane,  in  the  State  of  Washington,  and  extending  to 
Tacoma  and  Seattle  in  Washington,  and  to  Portland  in  Ore- 
gon; and  that  the  Great  Northern  Company  operated  lines 
of  railway  extending  from  St.  Paul,  in  the  State  of  Minne- 
sota, across  said  State  and  North  Dakota,  Montana,  Idaho, 
and  Washington  to  Everett  and  Seattle  in  Washington,  pass- 
ing through  Spokane  in  that  State. 

[223]  It  admits  that  the  said  lines,  so  operated  by  said 
companies  connected  with  other  railway  lines,  and  that, 
either  directly  or  by  means  of  such  other  railway  lines,  they 
connected  with  lines  of  steamships  on  the  Great  Lakes  and 
the  ocean ;  and  that  the  mileage  operated  by  said  companies 
aggregated  about  fifty-five  hundred  (5,500)  miles  for  the 
Northern  Pacific  Company  and  about  forty-one  hundred  and 
twenty-eight  (4,128)  miles  for  the  Great  Northern  Company. 

It  denies  that  the  lines  operated  by  said  companies  are  par- 
allel or  competing,  except  for  the  short  distances  and  to  the 
limited  extent  hereinafter  mentioned,  and  denies  that  said 
companies  were  engaged  in  active  competition  with  each 
other,  except  in  the  manner  and  to  the  extent  hereinafter 
SLaxeci  • 

Except  as  hereinabove  and  hereinafter  stated,  it  denies 
each  and  every  allegation  in  subdivision  III  of  said  petition, 

IV.  This  defendant  admits  and  avers  that  prior  to  1893 
those  portions,  and  those  portions  only,  of  the  lines  of  the 


NORTHERN   SECURITIES   CO.   V.   UNITED   STATES.       863 


Answer  of  Northern  Securities  Company. 

Northern  Pacific  Company  which  had  been  built  and  were 
operated  by  virtue  of  the  act  of  Congress  incorporating  the 
Northern  Pacific  Eailroad  Company,  approved  July  2,  1864, 
were  owned  and  operated  by  the  last-named  company,  and 
that  in  the  year  1893  that  company  became  insolvent  and 
its  lines  passed  into  the  hands  of  receivers  appointed  by 
various  Federal  courts. 

It  admits  that  while  in  this  condition  a  contract  was  made, 
as  set  forth  in  the  report  of  the  Pearsall  case,  referred  to  in 
the  petition.  It  avers  that  said  contract  was  made  under  and 
in  conformity  with  the  provisions  of  the  act  of  incorporation 
of  the  Great  Northern  Company,  and  that  the  only  objection 
made  to  the  validity  of  the  contract  was  that  the  provisions 
in  said  charter  under  which  it  was  made  had  been  repealed 
by  subsequent  general  laws  of  the  State.  It  denies  that  the 
case,  or  that  the  decision  therein,  is  correctly  stated  in  the 
petition.  And  it  avers  that  neither  the  said  contract  nor 
the  issues  raised  and  decided  in  the  said  case  have  anv  rele- 
vancv  to  the  matters  in  controversv  in  this  case. 

V.  This  defendant  admits  and  avers  that  in  the  winter  and 
[224]  spring  of  1901  the  defendant  railway  companies,  for 
the  purpose  of  promoting  their  several  interests  and  the  in- 
terests of  the  country  traversed  bv  their  lines  and  bv  those  of 
the  Chicago,  Burlington  and  Quincy  Railroad  Company, 
purchased  in  equal  parts  the  stock  of  the  last-named  com- 
pany to  the  amount  and  at  the  price  and  upon  the  terms  of 
payment  stated  in  the  petition.  It  admits  that  the  lines 
operated  by  the  Chicago,  Burlington  and  Quincy  Railroad 
Company  and  its  connections  are  substantially  as  stated  in 
the  petition.  It  denies  that  what  is  called  in  the  petition  the 
Burlington  system  was  or  is  parallel  to  or  competing  with 
what  is  therein  called  the  Union  Pacific  system,  but  admits 
that  some  of  the  lines  of  each  system  compete  with  some 
lines  of  the  other. 

It  denies  that  said  purchase  of  stock  was  made  in  contem- 
plation of  the  ultimate  placing  of  the  Great  Northern  and 
Northern  Pacific  systems  under  a  common  source  of  control, 
or  that  it  was  made  for  any  other  motive  or  with  any  other 
purpose  than  as  hereinafter  stated. 


364 


l«J  UNITED  STATES  BEPOBTS,  224. 


Answer  of  Northern  Securities  Ck>mpany. 

Except  as  herein  admitted,  it  denies  each  and  every  allega> 
tion  in  subdivision  V  of  the  petition. 

VI.  This  defendant  denies  that  prior  to  its  organization  the 
defendants  James  J.  Hill  or  J.  Pierpont  Morgan,  or  said 
Hill  and  Morgan,  or  any  persons  associated  with  them,  or 
either  of  them,  owned  or  controlled  a  majority  of,  or  held  a 
controlling  interest  in,  the  stock  of  either  of  said  railway 
companies. 

It  denies  that  said  persons,  or  that  any  of  the  persons  con- 
cerned in  its  organization,  contrived  or  intended  any  of  the 
things  alleged  in  subdivision  VI  of  the  petition  or  entered 
into  any  agreement  or  conspiracy  to  do  any  of  the  things 
charged  in  said  subdivision. 

It  admits  and  avers  that  said  James  J.  Hill  and  other 
holders  (not  exceeding  ten  in  number)  of  the  stock  of  the 
Great  Northern  Company,  but  not  including  the  defendants 
Morgan,  Bacon,  or  Lamont,  did  plan  its  organization  with 
an  authorized  capital  of  four  hundred  million  dollars  ($400,- 
000,000)  for  the  purposes,  and  those  only,  set  forth  in  its 
certificate  of  incorporation.  [225]  It  denies  that  James  J. 
Hill  and  J.  P.  Morgan  agreed  between  themselves,  or  with 
other  stockholders  of  either  of  the  defendant  railway  com- 
panies, or  with  either  of  said  railway  companies,  or  with  any- 
one whomsoever,  that  a  controlling  interest  of  the  stock  of 
either  of  said  railway  companies  should  be  turned  over  or 
transferred  to  this  defendant,  whether  in  exchange  for  its 
stock  or  otherwise. 

It  denies  that  any  of  the  matters  stated  in  said  subdivision 
VI  of  the  petition  were  contemplated  or  intended,  or  have 
resulted,  or  will  result,  from  its  formation  and  operation. 
And  it  denies  the  allegation  that  it  is  the  duty  of  the  directors 
of  said  railway  companies  to  pursue  a  policy  which  will  pro- 
mote the  interest  of  both  systems  at  the  expense  of  the  public. 

It  alleges  that  the  motives  and  intentions  of  the  persons  so 
forming  this  defendant  were  and  are  such,  and  such  only,  as 
are  in  this  answer  stated,  and  it  denies  each  and  every  alle- 
gation in  subdivision  VI  of  the  petition  not  herein  expressly 
admitted  or  specifically  denied. 

VII.  This  defendant  admits  its  formation  under  the  laws 
of  New  Jersey,  with  the  articles,  a  copy  of  which  is  attached 


NOBTHEBN   SECUBITIES  CO.   V,   UNITED   STATES.       365 
Answer  of  Northern  Securities  (Company. 

to  the  petition,  and  that  the  provisions  of  said  articles  were 
designedly  inserted  therein  and  were  fully  authorized  by  the 
general  corporation  laws  of  that  State.  And  it  says  that  the 
exercise  of  the  powers  of  a  stockholder  provided  for  in  said 
articles  was  not,  as  wrongly  stated  in  the  petition,  confined  to 
the  stock  of  the  defendant  railwa}^  companies  which  this  de- 
fendant might  hold.  It  avers  that  the  clause  in  said  articles, 
partially  quoted  in  paragraph  VII  of  the  petition,' was  not 
intended  to,  and  does  not,  enlarge  its  powers,  as  the  same  are 
set  forth  in  the  preceding  clauses  of  said  articles,  but  makes 
clear  its  power  to  do  such  acts  as  making  or  procuring  ad- 
vances of  money  to  any  corporation  whose  securities  are  held 
by  it,  the  indorsement  or  guaranty  by  it  of  the  obligations  of 
such  corporation,  becoming  surety  therefor,  or  in  any  lawful 
manner  using  its  name  or  resources  in  aid  of  such  corporation. 

VIII.  This  defendant  admits  and  avers  that  on  or  about 
the  [22^]  14th  day  of  November,  1901,  its  directors  and  offi- 
cers were  elected,  and  among  them  the  defendant  James  J. 
Hill  as  a  director  and  president,  but  denies  that  he  was  or  is 
the  controlling  power  in  the  management  of  the  Great 
Northern  Company. 

It  admits  and  avers  that  thereafter  the  defendant  James  J. 
Hill  and  other  stockholders  of  the  Great  Northern  Company, 
severally  and  each  acting  for  himself  alone,  and  without  any 
agreement  to  that  effect  with  any  other  stockholder,  sold  to 
this  defendant  a  large  amount  of  Great  Northern  stock  at  one 
hundred  and  eighty  dollars  ($180)  per  share  in  exchange  for 
stock  of  this  defendant  at  par,  but  it  avers  that  the  stock  so 
sold  was  not  within  twenty-six  million  dollars  ($26,000,000) 
of  a  majority  of  the  stock  of  the  Great  Northern  Company. 

It  admits  and  avers  that  thereafter  and  about  November 
22,  1901,  it  offered  like  terms  of  purchase  to  the  other  share- 
holders of  the  Great  Northern  Company,  the  offer  to  hold 
good  for  sixty  days  from  its  date,  and  that  many  of  the  share- 
holders of  that  company,  each  acting  for  himself  alone, 
accepted  such  offer  and  made  such  sale. 

It  admits  and  avers  that  the  defendant  J.  P.  Morgan  and 
other  shareholders  of  the  Northern  Pacific  Company  sold  to 
the  defendant  a  majority  of  the  stock  of  the  Northern  Pacific 
Company;  and  that  this  defendant  has  received  such  divi- 


s%^ 


im   UNITED   STATES  REPORTS,   226. 


Answer  of  Northern  Securities  Company. 

deiids  as  liave  been  paid  on  the  shares  held  by  it,  in  the  same 
maimer  and  at  the  same  rate  as  other  shareholders;  but  it 
denies  that  it  has  acted,  whether  as  owner  of  stock  or  other- 
wise, in  the  management  or  direction  of  either  of  said  railway 
companies  or  in  receipt  or  control  of  the  earnings  of  either  of 
them,  and  it  avers  that  no  change  whatever  has  taken  place 
in  the  management  of  the  said  railway  companies,  or  either 
of  them,  and  that  each  of  them  is  managed  by  the  same  board 
of  directors  and  officers  as  existed  before  the  organization  of 
this  defendant. 

It  denies  that  any  of  the  things  done  by  the  defendants 
James  J.  Hill  and  J.  Pierpont  Morgan,  or  by  either  of  them, 
or  by  this  defendant  or  its  promoters,  directors,  officers,  or 
stockholders,  or  any  of  them,  were  done  in  pursuance  of  the 
pre-  f227]  tended  combinatioaor  conspiracy  alleged  in  sub- 
division VIII  of  the  petition,  or  as  an  instrumentality  to 
effect  the  purposes  thereof,  and  it  denies  that  by  reason  of  the 
matters  or  any  of  them  in  the  petition  alleged  a  virtual  or 
any  coiiwlidation  of  said  defendant  railway  companies  or 
their  business  has  been  effected  or  intended;  and  it  denies 
any  conspiracy  or  combination  in  restraint  of  trade  or  com- 
merce among  the  States,  or  with  foreign  nations,  or  that  the 
defendants  or  imy  of  them  are  attempting  or  intending  to 
monopolize  or  restrain  any  such  trade  or  commerce. 

IX.  It  denies  each  and  ©very  allegation  in  subdivision  IX 
of  the  petition. 

X.  This  defendant  says  that  it  does  not  know  and  cannot 
set  forth  how  much  additional  stock  of  either  defendant 
railway  company  it  is  likely  to  acquire,  since  each  acquisi- 
tion of  shares  by  it  depends,  among  other  contingencies,  on 
the  willingness  of  the  holders  of  the  said  stock  to  sell  it  upon 
terms  which  this  defendant  may  be  willing  to  accept. 

XI.  This  defendant  says  it  has  bought  and  paid  for  and 
has  caused  to  be  transferred  to  it  upon  the  records  of  the 
Great  Northern  Company,  in  accordance  with  the  by-laws  of 
that  company,  about  five-twelfths  {^  )  of  the  shares  of  that 
company's  stock;  and  has  also  negotiated  for,  but  has  not 
yet  caused  to  be  presented  to  the  Great  Northern  Company 
for  transfer  upon  its  records,  other  shares  of  the  stock  of  that 
company  aggregating  about  four-twelfths  (f%)  of  the  total 


NORTHERN   SECURITIES   CO.    V,    UNITED   STATES.       367 

Answer  of  Northern  Securities  Company. 

amount  of  its  stock,  but  has  not  acquired  a  right  to  vote 
as  stockholder  of  the  Great  Northern  Company  on  stock 
not  so  transferred.  This  defendant,  in  acquiring  shares  of 
the  Great  Northern  Company  and  of  the  Northern  Pacific 
Company,  dealt  solely  with  the  sej^arate  owners  of  the  said 
shares  in  their  respective  individual  capacities.  It  has  no 
knowledge  of  any  agreement,  promise,  or  understanding 
between  any  of  the  holders  of  said  stock  concerning  the  sale 
thereof  to  it,  and  it  denies  that  any  such  agreement,  promise, 
or  understanding  was  ever  made.  All  the  sales  and 
transfers  of  the  said  stock  to  this  defendant  [228]  were 
absolute  and  without  any  reservation  of  any  right  or  interest 
in  any  share  thereof  to  the  seller  or  to  any  other  person. 

This  defendant  has  not  paid  for  all  the  stock  of  the  Great 
Northern  Company  and  of  the  Northern  Pacific  Company 
acquired  by  it  in  shares  of  its  own  stock,  but,  on  the  contrary, 
has  expended  upward  of  forty  million  dollars  ($40,000,000) 
cash  in  the  making  of  such  purchases.  Every  share  of  the 
Great  Northern  Company  and  the  Northern  Pacific  Com- 
pany acquired  by  this  defendant  has  been,  and  so  long  as  it 
remains  the  property  of  this  defendant  will  continue  to  be, 
held  and  owned  by  it  in  its  own  right,  and  not  under  any 
agreement,  promise,  or  understanding  on  its  part,  or  on  the 
part  of  its  stockholders  or  officers,  that  the  same  shall  be 
held,  owned,  or  kept  by  it  for  any  period  of  time  whatever, 
or  under  any  agreement  that  in  any  manner  restricts  its 
right  and  power  immediately  to  sell  or  otherwise  dispose 
of  the  same,  or  that  restricts  or  controls  to  any  extent 
any  use  of  the  same,  which  might  lawfully  be  exercised 
by  any  other  owner  of  said  stocks.  There  has  been  and 
is  no  agreement,  promise,  or  understanding  between  any 
of  the  holders  of  said  stock  so  acquired  by  this  defendant, 
or  between  any  of  them  and  any  other  person  or  corporation, 
that  any  of  said  shares  should  at  any  tune  be  held,  used,  or 
voted  by  this  defendant  for  the  purpose  of  combining  or 
consolidating  or  placing  under  one  common  management 
or  control  the  railways  of  the  Great  Northern  Company 
and  of  the  Northern  Pacific  Company,  or  the  business 
thereof,  or  for  the  purpose  of  monopolizing  or  restraining 
traffic   or   competition   between   the   said   railways.    Many 


OOO 


193  imiTED  STATES  BEPOBTS,  228. 


Answer  of  Northern  Seoirities  Ck)mpany. 

stockholders  of  the  said  companies  have  not  sold,  and  may 
never  sell,  their  shares  to  this  defendant;  and  the  said  rail- 
way companies  have  not  nor  have  any  of  the  directors  of 
either  of  them,  by  any  act,  formal  or  informal,  or  by  sug- 
gestion, ever  solicited  any  of  their  respective  shareholders 
to  sell  their  shares  to  this  defendant.  This  defendant  was 
organized  in  good  faith,  and  it  denies  all  the  allegations  in 
subdivision  XI  of  the  petition. 

[229]  XIL  This  defendant  denies  each  and  every  allega- 
tion in  subdivision  XTI  of  the  petition. 

XTII.  This  defendant  denies  each  and  every  allegation  in 
subdivision  XIII  of  the  petition. 

Second. 

Further  answering  the  petition,  this  defendant,  upon  infor- 
mation and  belief,  says  that  the  facts  as  to  the  purchase  of  the 
shares  of  the  Chicago,  Burlington  and  Quincv  Railroad  Com- 
pany (hereinafter  called  the  Burlington  Company)  and  the 
planning  and  forming  of  this  defendant  and  the  motives, 
intentions,  and  purposes  of  the  persons  and  corporations  con- 
cerned in  these  enterprises,  or  either  of  them,  were  not  as 
erroneously  stated  in  the  petition,  but  were  and  are  as 
follows : 

I.  When  projecting  the  line  of  the  Great  Northern  Com- 
pany to  the  Pacific  coast,  that  company  and  its  directors  con- 
templated the  necessity  of  creating  for  the  line  not  merely 
State  and  interstate,  but  an  international  commerce.  Nearly 
all  the  country  traversed  or  reached  by  the  line  was  then  but 
sparsely  settled  or  not  settled  at  all.  It  was  principally  agri- 
cultural, grazing,  or  timber  land,  with  mineral  deposits  in  the 
mountain  ranges  believed  to  be  large  and  valuable,  but  not 
developed  or  explored.  Whatever  commodities  the  region 
might  furnish  for  carriage  would  be  raw  material,  of  great 
weight  and  bulk  in  proportion  to  its  value,  which  would  not 
bear  transportation  to  market  except  at  a  low  mileage  rate, 
such  as  could  be  made  possible  only  by  every  practical  reduc- 
tion in  the  cost  of  transportation.  The  available  market  for 
all  such  products  was  far  from  the  places  of  production. 

In  Washington  and  Oregon  are  the  largest  and  finest  bodies 
of  standing  timber  in  the  United  States,  the  best  market  for 


NORTHEBN   SECUBITIES  CO.   V,   UNITED   STATES.       369 
Answer  of  Northern  Securities  Company. 

which  is  in  the  prairie  States  of  the  Mississippi  Valley  east  of 
the  Rocky  Mountains ;  but  the  lumber  and  shingles  from  the 
Pacific  coast  would  not  bear  the  cost  of  transportation  to 
those  States  if  the  cars  carrying  them  had  to  be  hauled  back 
empty,  or  nearly  so,  for  a  distance  of  from  1,500  to  2,000 
miles.  And  [230]  the  same  is  true  of  the  other  products. 
On  the  other  hand,  the  unoccupied  or  sparsely  populated 
country  along  the  line,  or  reached  by  it,  could  not  furnish  a 
market  for  commodities  enough  to  load  the  returning  cars; 
the  result  being  that  unless  the  company  could  secure  traffic 
for  carriage  beyond  the  Pacific  coast  no  great  traffic  either 
way  could  exist  or  be  created. 

To  meet  these  conditions  the  Great  Northern  Company  not 
only  went  to  great  additional  expense  in  the  construction  of 
its  line  to  obtain  gradients  loAver  than  those  of  any  other  line 
to  the  Pacific  coast,  but  also  made  great  efforts  to  create  and 
increase  in  the  countries  of  eastern  Asia  a  demand  for  the 
products  of  this  country ;  and  soon  after  the  completion  of  its 
railway  in  1893  it  induced  a  Japanese  company  to  run  a  line 
of  steamships,  connecting  with  its  railway,  on  the  route  be- 
tween Seattle  and  ports  of  Japan,  China,  and  Russian  Siberia, 
and  succeeded  in  creating  and  has  since  been  actively  engaged 
in  building  up  a  commerce  in  which  the  flour  manufactured 
along  its  line,  cotton  (both  raw  and  manufactured),  iron  and 
steel  (especially  steel  rails  and  plates),  machinery,  and  such 
other  manufactures  of  this  country  as  a  market  could  be 
found  or  made  for  in  eastern  Asia,  have  been  carried  to  orien- 
tal ports,  and  return  cargoes  of  such  oriental  products  as  are 
consumed  in  this  country  have  been  brought  back.  A  large 
west-bound,  as  well  as  an  increased  east-bound,  traffic  has 
thus  been  secured  by  the  company,  enabling  it  to  make  such 
rates  on  lumber  and  other  products  of  the  country  served  by 
it  as  permit  them  to  be  shipped  to  Eastern  mhrkets  with  a 
profit  to  the  shippers. 

One  year  before  the  Burlington  purchase,  this  oriental 
traffic  had  reached  such  proportions  that  the  Great  Northern 
Company  caused  to  be  begun  the  construction  of  steamships 
to  run  from  Seattle  to  ports  in  Japan,  China,  and  the  Philip- 
pines, which,  from  their  great  carrying  capacity  (being  the 
21220~voL  2—07  M- — ^24 


370 


193   UNITED  STATES   REPOBTS,  231. 


Answer  of  Northern  Securities  Company, 
largest  in  tlie  world),  will  be  able  to  carry  at  very  low  rates 
(if  full  cargoes  can  be  secured),  and  thus  enable  the  company 
to  move  the  largest  volume  of  west-bound  traffic  (and  also 
of  east-bound  traffic)  at  the  lowest  cost. 

[S31]  In  the  interstate  and  international  commerce  which 
the  Great  Northern  Company  has  thus  built  up,  it  competes 
both  in  this  country  and  on  the  ocean  with  the  other  transcon- 
tinental lines  (including  the  Canadian  Pacific),  and  at  tlie 
oriental  ports  it  competes  for  commerce  of  the  world.  Its 
rates  are  and  must  be  made  in  competition  with  the  rates  of 
ocean  carriers  and  by  way  of  the  Suez  Canal. 

The  policy  thus  followed  by  the  Great  Northern  Company 
in  building  up  an  international,  and  thereby  interstate,  com- 
merce has  been  followed  by  the  Northern  Pacific  Company 
since  its  reorganization  in  1896. 

In  creating  and  maintaining  this  competitive  interstate 
and  international  commerce  both  the  Great  Northern  Com- 
pany and  the  Northern  Pacific  Company  were  hampered 
and  placed  at  a  disadvantage  with  the  other  transcontinental 
railways,  as  well  as  with  European  competitors,  by  the  want 
of  sufficient  direct  connection  with  the  territory  offering  the 
best  markets  for  the  products  of  the  country  along  their 
lines,  and  with  the  places  of  production  and  great  centers  of 
distribution  from  which  their  traffic  must  be  supplied.  For 
many  months  before  the  purchase  of  the  Burlington  shares 
they  had  considered  the  best  means  of  getting  closer  to  such 
markets  and  sources  of  supply.  The  lines  of  the  Burling- 
ton, better  than  those  of  any  other  company,  fulfilled  the  re- 
quirements of  both  the  Great  Northern  Company  and  the 
Northern  Pacific  Company  in  respect  of  markets  for  east- 
bound  and  freight  for  west-bound  traffic.  The  Burlington* 
lines  traverse  the  treeless  States  of  Illinois,  Iowa,  Missouri, 
Nebraska,  Wyoming,  Kansas,  and  Colorado,  which  afford 
the  best  markets  for  the  lumber  of  the  Pacific  coast.  They 
reach  Denver,  Kansas  City,  Omaha,  and  Aurora,  where  are 
located  the  principal  smelters  of  silver-lead  ores,  such  as  are 
mined  near  the  lines  of  the  defendant  railway  companies. 

They  reach  Omaha,  Kansas  City,  and  Chicago,  where  are 
the  great  packing  houses  and  the  great  markets  for  the  cattle 


NORTHERN   SECURITIES   CO.    V,   UNITED   STATES.       371 
Answer  of  Northern  Securities  Company. 

and  sheep  of  the  ranges  of  North  Dakota,  Montana,  Wyo- 
ming, Idaho,  Oregon,  and  Washington. 

[233]  They  reach  St.  Louis  and  Kansas  City,  connecting 
there  with  lines  traversing  the  cotton  States,  from  which 
come  raw  and  manufactured  cotton  required  for  shipment  to 
China  and  Japan. 

At  Chicago  and  St.  Louis  they  connect  w^ith  the  lines 
Avhich  reach  the  points  of  supply  of  manufactured  iron,  steel, 
machinery,  and  other  manufactured  articles  that  find  a  mar- 
ket in  Japan  and  China. 

The  Burlington  line  southward  from  Minneapolis  and  St. 
Paul  along  the  Mississippi  River  reaches  the  great  coal  de- 
posits of  southern  Illinois,  the  largest  west  of  Pennsylvania 
and  West  Virginia;  and  its  light  gradients  and  consequent 
low  cost  of  transportation  make  it  possible  to  supply  such 
coal  to  points  on  the  lines  of  each  defendant  railway  com- 
pany east  of  the  Mississippi  River,  relieving  the  people  and 
the  railways  of  that  territory  from  entire  dependence  upon 
the  Pennsylvania  and  West  Virginia  mines,  the  supply  from 
which  is  yearly  becoming  more  costly  and  less  certain. 

The  price  paid  for  said  Burlington  stock  was  lower  per 
mile  of  main  track  covered  by  the  stock  than  that  for  which 
the  stock  of  any  other  large  and  well  established  system  in 
the  same  general  territory  could  have  been  bought. 

The  purchase  of  the  Burlington  stock  by  the  Northern  Pa- 
cific and  Great  Northern  companies  in  equal  parts  served 
each  company  as  well  as  if  it  were  the  sole  owner  of  such 
stock,  while  such  purchase  might  have  been  beyond  the  finan- 
cial means  of  either  company  by  itself. 

The  Great  Northern  and  Northern  Pacific  companies  there- 
fore each  purchased  an  equal  number  of  shares  of  the  Bur- 
lington stock  as  the  best  means  and  for  the  sole  purpose  of 
reaching  the  best  markets  for  the  products  of  the  territory 
along  their  lines,  and  of  securing  connections  which  would 
furnish  the  largest  amount  of  traffic  for  their  respective 
roads,  increase  the  trade  and  interchange  of  commodities 
between  the  regions  traversed  by  the  Burlington  lines  and 
their  connections  and  the  regions  traversed  or  reached  by  the 
Great  Northern  and  Northern  Pacific  lines,  and  by  their  con- 
necting lines  of  shipping  on  [233]  the  Pacific  coast.    These 


872 


193  UNITEB  STATES  BEPORTS,  233. 


Answer  of  Northern  Securities  Company. 

connections  and  such  interchange  of  traffic  were  deemed  to  be 
and  are  indispensable  to  the  maintenance  of  their  business, 
local  as  well  as  interstate,  and  to  the  development  of  the 
country  served  by  their  respective  lines,  and  of  like  advan- 
tage  to  the  Burlington  lines  and  the  country  served  by  them, 
and  strengthen  each  company  in  the  comi)etition  with  the 
more  southerly  lines  to  the  Pacific  coast,  with  the  Canadian 
Pacific  Railway,  and  with  European  carriers,  for  the  trade 
and  commerce  of  the  Orient. 

In  such  purchase  there  was  no  purpose  to  lessen  any 
competition  of  the  Burlington  lines  with  those  of  either  of 
the  purchasers,  for  they  are  not  competitive,  or  to  lessen 
any  competition  between  the  purchasers.  Such  purchase 
was  not  intended  to  have,  and  it  cannot  have,  any  such  effect. 
The  purchase  of  the  Burlington  stock  was  not  made  in 
view  of  the  fonnation  of  this  defendant,  but  solelv  from 
the  motives  and  with  the  purposes  already  stated. 

11.  The  project  of  forming  a  holding  company  of  any 
kind  was  not  the  result,  in  any  way,  of  the  failure  of  the 
plan  which  was  defeated  by  the  decision  of  the  Supreme 
Court  in  the  PearsrtU  case.  There  was  no  connection  what- 
ever between  the  two. 

The  project  of  a    holding    company  which  finally   de- 
veloped into  the  formation  of  this  defendant  had  its  in- 
ception years  before  that  date,  among  several  gentlemen, 
not  exceeding  ten  in  number,  who  had  been  large  shai-e- 
holders  in  the  Great  Northern  Company  and  its  predecessor, 
the  St.  Paul,  Minneapolis  and  Manitoba  Railway  Company; 
some  of  them  from  the  original  organization  of  the  latter 
•company  in  1879,  and  others  from  dates  not  long  after  that 
time.    They  have  never  held  a  majority  of  the  stock  of  the 
Great  Northern  Company,  but  have  taken  an  active  interest 
in  its  policy  and  administration ;  have  aided  it  when  neces- 
rsary  in  financing  its  operations;    have  acted  together  in 
l)romoting  its  interests;  have,  with  some  exceptions,  served 
from  time  to  time  as  directors  and  officers  (Mr.  Hill  having 
been  president  of  the  successive  companies  since  1882) ;  and 
by  reason  of  their  active  interest  in  the  company  and  serv- 
[SS4]  ices  to  it  have  influenced  to  a  large  degree  its  policy 
and  management    As  far  back  as  1893,  most  of  these  gen- 


NORTHERN    SECURITIES   CO.    V,   UNITED   STATES.       373 
Answer  of  Northern  Securities  Company. 

tlemen  being  well  advanced  and  some  far  advanced  in  years, 
they  began  to  discuss  together  what  would  be  the  effect 
upon  the  policy  which  under  their  influence  the  company 
had  pursued  with  great  benefit  to  its  shareholders  and  the 
public,  should  their  holdings  by  death  or  otherwise  be- 
come scattered,  and  by  what  means  their  holdings  could  be 
kept  together,  so  as  to  secure  the  continuance  of  such  policy 
in  the  management  of  the  company.  It  was  considered 
that  if  a  company  should  be  formed  to  which  they  might 
transfer  their  individual  holdings,  their  shares  were  likely 
to  be  held  together,  so  long  as  the  majority  in  the  holding 
company  should  so  wish,  and  this  would  tend  to  give  sta- 
bility to  the  policy  of  the  Great  Northern  Company,  be  of 
aid  to  it  in  financial  operations,  and  maintain  the  value 
of  their  investments.  These  conclusions  were  the  result  of 
various  consultations  among  the  persons  mentioned,  or  some 
of  them,  but  no  definite  agreement  was  made  for  forming 
such  a  company  or  binding  anyone  to  transfer  his  shares  to 
it  if  formed. 

From  time  to  time,  beginning  with  the  reorganization  of 
the  Northern  Pacific  Company  in  1896,  Mr.  Hill  and  said 
other  Great  Northern  shareholders  who  had  discussed  with 
him  the  plan  of  forming  a  holding  company,  had  made 
large  purchases  of  Northern  Pacific  shares,  individually, 
each  for  himself,  without  any  concerted  action,  and  solely 
as  investments.  About  May  1,  1901,  their  aggregate  hold- 
ings of  the  common  stock  of  the  Northern  Pacific  Company 
amounted  to  nearly  twenty  million  dollars  ($20,000,000)  of 
the  eighty  million  dollars  ($80,000,000)  common  stock  of 
the  company,  which  also  had  a  preferred  stock,  amounting 
to  seventy-five  million  dollars  ($75,000,000),  with  the  same 
voting  power  as  the  common  stock.  At  this  time  the  firm 
of  J.  P.  Morgan  &  Co.  held  about  six  million  dollars 
($6,000,000)  of  the  common  stock.  In  the  fall  of  1900  Mr. 
Hill  and  said  Great  Northern  shareholders  discussed  the 
question  of  putting  their  holdings  of  Northern  [335] 
Pacific  stock  into  the  proposed  holding  company,  as  well  as 
the  suggestion  that  all  the  other  stockholders  of  the  Great 
Northern  Company  should  be  given  the  opportunity  of  sell- 
ing and  transferring  their  shares  to  the  holding  company, 


374 


193   UNITED  STATES  BEPORTS,   235. 


Answer  of  Northern  Securities  Company, 
and  that  its  capital  stock  should  be  made  large  enough  to 
enable  it  to  buy  such  holdings,  though  it  was  not  known  that 
the  holders  of  any  considerable  amount  of  Great  Northern 
stock,  other  than  those  above  named,  would  desire  to  make 
such  transfer. 

At  the  time  of  the  purchase  of  the  Burlington  shares  it 
was  not  contemplated  by  either  purchasing  company  or  its 
shareholders  that  any  alliance  between  the  purchasing  com- 
panies, or  among  their  shareholders,  was  needed  to  preserve 
to  each  company  its  fair  share  of  the  advantages  secured  by 
the  purchase.    It  was  thought  that  the  manifest  interest  of 
each  company  rendered  any  further  guaranty  or  security 
needless.    But  pending  or  just, after  the  conclusion  of  the 
negotiations  for  the  Burlington  stock,  parties  acting  in  the 
interest  of  the  Union  Pacific  Railway  system  did  purchase 
Northern  Pacific  shares,  both  conmion  and  preferred,  to  the 
amount  of  about  seventy-eight  million  dollars  ($78,000,000), 
being  a  clear  majority  of  the  entire  capital  stock  of  that 
company.    The  apparent  intent  of  such  purchase  was  to  de- 
feat and,  if  successful,  it  would  have  defeated,  the  carrying 
out  of  the  purposes  for  which  the  Burlington  shares  had  been 
bought  by  the  Great  Northern  and  Northern  Pacific  com- 
panies, and  the  development  of  the  interstate  and  interna- 
tional commerce  of  each  of  them,  and  would  have  subordi- 
nated the  policy  of  each  to  an  interest  adverse  to  both  the 
Great  Northern  and  Northern  Pacific  companies,  and  to  the 
public  served  by  their  lines. 

To  protect  the  interests  of  the  shareholders  of  the  North- 
em  Pacific  Company,  J.  P.  Morgan  &  Co.  made  additional 
purchases  of  Northern  Pacific  common  stock,  which,  with 
the  holdings  in  said  stock  of  Mr.  Hill  and  other  Great 
Northern  shareholders  who  had  discussed  with  him  the  plan 
of  forming  a  holding  company,  constituted  about  forty-two 
million  dollars  ($42,000,000) ,  being  a  majority  of  the  common 
stock.  In  [236]  view  of  the  injury  apprehended  to  both 
companies,  and  to  their  shareholders,  and  the  better  to  pro- 
tect their  interests  in  the  future,  the  Great  Northern  share- 
holders holding  Northern  Pacific  shares,  deemed  it  advisable 
that  the  projected  holding  company  should  have  power 
to  purchase  not  only  their  own  Great  Northern  and  Northern 


NORTHERN   SECURITIES   CO.   V.   UNITED   STATES.       375 
Answer  of  Northern  Securities  Company. 

Pacific  shares,  but  also  the  shares  of  such  other  Great  North- 
ern and  Northern  Pacific  shareholders  as  might  wish  to  sell 
their  stock  to  said  holding  company,  and  the  shares  of  com- 
panies already  formed,  and  others  that  might  be  formed,  for 
the  purpose  of  aiding  the  traffic  or  operations  of  the  Great 
Northern  and  Northern  Pacific  companies,  respectively.  At 
this  time  it  was  not  expected  by  any  of  the  persons  concerned 
that  any  Northern  Pacific  shares  except  the  said  forty-two 
million  dollars  ($42,000,000)  would  be  acquired  by  the  pro- 
posed holding  company.  The  organization  of  such  company 
was  not  dependent  on  any  agreement  that  it  should  acquire  a 
majority  of  the  shares  of  either  defendant  railway  company. 
It  would  have  been  organized  if  the  Burlington  purchase  had 
not  been  made,  and  if  its  promoters  had  had  no  other 
shares  to  transfer  to  it  than  the  thirty-four  million  dollars 
($34,000,000)  Great  Northern  stock  and  the  twenty  million 
dollaj^s  ($20,000,000)  Northern  Pacific  stock  held  by  them  on 
May  1,  1901.  It  was  not  known  that  all  or  how  many  of  the 
shareholders  of  either  of  the  railway  companies  would  be 
likely  to  transfer  their  shares  to  this  defendant  when  formed. 
After  its  organization  this  defendant  bought  and  still  holds 
about  one  hundred  and  fifty  million  dollars  ($150,000,000) 
of  the  stock  of  the  Northern  Pacific  Company;  and  it  has 
also  purchased  and  negotiated  for  the  purchase  of  the  stock  of 
the  Great  Northern  Company,  as  hereinbefore  stated.  Neither 
the  said  persons  who  were  concerned  in  the  formation  of  this 
defendant,  nor  the  said  persons  from  whom  it  has  acquired 
the  stocks  of  said  railway  companies,  nor  this  defendant 
itself  since  its  formation,  nor  its  stockholders,  directors,  or 
officers,  have  planned  or  intended  that  the  stock  of  said  rail- 
way companies  acquired  by  this  defendant,  or  any  part 
thereof,  should  be  held,  used,  or  voted  by  [237]  it,  or  by  its 
officers,  agents  or  proxies,  for  the  purpose  of  combining,  con- 
solidating or  placing  under  one  common  management  or 
control  the  railways  of  the  Great  Northern  and  Northern 
Pacific  companies,  or  the  business  thereof;  or  for  the  pur- 
pose of  monopolizing  or  restraining  competition  between  the 
said  railway  companies;  or  for  any  other  purpose  than  the 
election  by  each  of  said  railway  companies  of  a  competent 
and  distinct  board  of  directors,  able  and  intending  to  manage 


876 


lai   UNITED  STATES  BEPORTS,   237. 


Answer  of  Northern  Securities  Company. 

each  of  them  independently  of  the  other,  and  for  tlie  benefit 
of  their  shareholders  and  of  the  public.  By  the  acts  of  the 
legislature  of  the  Stete  of  Minnesota  incorporating  the  Great 
Northern  Eailway  Company,  and  by  the  acts  of  the  legisla- 
hire  of  the  State  of  Wisconsin  incorporating  the  Northern 
Pacific  Eailway  Company,  it  is,  in  substance,  provided  that 
the  business  and  affairs  of  each  railway  company  shall  bp 
managed  by  a  board  of  directors  to  be  elected  by  the  stock- 
holders, and  that  all  the  powers  of  each  corporation  relating 
to  said  matters  shall  be  Vested  in  such  board.  • 

Every  share  of  stock  issued  by  this  defendant  has  been 
issued  to  the  persons  and  corporations  receiving  the  same 
m  good  faith,  for  full  value  paid  to  it,  either  in  cash  or  its 
equivalent,  and  in  accordance  with  the  provisions  of  its 
articles  of  incorporation  and  with  the  laws  of  the  State  of 
New  Jersey.    No  agreement,  promise,  or  understanding  has 
been  made  between  this  defendant  and  any  of  its  stock- 
holders, or  between  its  stockholders  themselves  or  any  of 
them,  or  between  said  stockholders  or  any  other  persons  or 
corporations,  that  the  stock  of  this  defendant  should  be 
held,  used,  or  voted  other  than  by  each  stockholder,  sepa- 
rately and  individually,  and  in  such  way  as  he  should  see  fit; 
and  there  has  been  no  agi-eement,  promise,  or  understaiidinir 
between  said  stockholders  themselves,  or  any  of  them,  or 
between  said  stockholders  and  any  other  person  or  corpora- 
tion, that  they  or  any  of  them  should  use,  hold,  or  vote  their 
stock  in  this  defendant  in  association  or  for  any  common 
purpose  or  object.    The  owners  and  holders  of  stock  of  this 
defendant  are  more  than  thirteen  hundred  (1,300)  in  num- 
ber, and  the  owner-  [238]  ship  of  the  stock  is  being  changed 
from  day  to  day  by  sales  and  transfei-s  in  the  usual  course 
of  dealing.    The  said  persons  who  formed  or  were  otherwise 
concerned  in  the  formation  of  this  defendant  have  never, 
all  together,  held,  owned  or  otherwise  controlled  an  amount 
of  stock  of  the  said  company  equal  to  so  much  as  one-third 
of  the  whole  amount  thereof  now  outstanding.    This  de- 
fendant has  no  contract  or  obligation  to  purchase  or  acquire 
any  shares  whatever  in  either  railway  company,  in  addition 
to  those  which  it  has  purchased  or  negotiated  to  purchase, 
as  above  stated.     Its  authorized  capital  was  fixed  by  per' 


NOBTHERN    SECURITIES   CO.    V.    UNITED   STATES.       377 
Answer  of  Northern  Securities  Company. 

sons  who  planned  its  organization  to  enable  it  to  give  to 
each  stockholder  in  each  of  the  defendant  railway  com- 
panies an  opportunity  to  sell  his  stock  to  it,  should  he  see  fit 
to  do  so,  and  should  this  defendant  desire  to  acquire  it. 
The  sum  fixed  was  deemed  ample  by  those  who  planned  the 
formation  of  this  defendant  to  furnish  the  means  to  pay 
for  all  such  shares  as  would  likely  be  acquired  by  it,  and  to 
leave  remaining  a  large  amount  to  be  used  for  the  purchase 
of  stock  in  other  corporations,  not  common  carriers,  which 
this  defendant  might  consider  beneficial  to  acquire.  This 
defendant  was  not  formed  as  a  scheme  or  a  device  to  evade 
the  act  of  Congress  known  as  the  "Anti-Trust  Act,"  or  any 
other  law  whatever,  but  solely  for  the  purposes  hereinbefore 
stated. 

III.  This  defendant  was  not  formed,  nor  did  any  of  those 
concerned  in  its  formation,  nor  any  of  those  who  sold  their 
shares  of  stock  to  it,  have  any  purpose  or  intention,  to  re- 
strain trade  or  commerce,  or  to  lessen  competition  between 
said  railway  companies,  or  to  monopolize  traffic  in  any  man- 
ner whatever;  nor  can  any  such  results  follow  from  the 
formation  or  operation  of  this  defendant.  In  point  of  fact, 
since  the  organization  of  this  defendant  rates  on  the  de- 
fendant railway  companies'  lines,  including  rates  to  and 
from  points  common  to  both,  have  voluntarily  been  so  re- 
duced as  to  decrease  their  earnings  by  upwards  of  a  million 
of  dollars  annually.  For  all  interstate  commerce  on  the 
lines  of  either  the  defendant  railway  companies,  except  traffic 
beginning  and  ending  on  their  own  lines  [239]  respectively, 
the  rates  are  fixed  by  joint  tariffs  with  connecting  lines.  In 
respect  to  all  such  traffic  neither  of  the  defendant  companies 
has  ever  had,  or  can  have,  any  independent  rate-making 
power  or  control  of  traffic  or  rates.  All  joint  tariffs  with 
other  companies  to  or  from  points  common  to  the  lines  of 
the  defendant  railway  companies  have  always  been,  and 
necessarily  must  be,  the  same,  whether  the  traffic  is  carried 
by  one  or  the  other  of  said  companies.  The  total  amount 
of  all  other  interstate  traffic,  that  is,  traffic  between  common 
points  on  the  two  roads,  which  is  not  competitive  both  as  to 
rates  and  quality  of  service  with  other  carriers  having  equal 


S78 


193   UNITED  STATES  BEPORTS,  239. 


Answer  of  Northern  Securities  Company. 

rate-making  power  with  them,  is  less  than  2  per  cent  of  the 
total  interstate  traffic  of  the  two  companies. 

IV.  The  sale  and  transfer  of  property,  whether  in  the  form 
of  shares  of  corporate  stock  or  otherwise,  has  never  been 
adjudged  to  be,  and  is  not,  in  violation  of  the  act  of  Confess 
of  July  2,  1890,  known  as  the  "Anti-Trust  Act." 

This  defendant  is  not  a  railroad  company,  and  it  has  no 
power  to  operate  or  manage  railways  or  make  or  control  rates 
of  transportation,  nor  to  monopolize  or  restrain  traffic  of  any 
kind.  So  far  from  intending  to  violate  any  provision  of  said 
act  of  Congress,  the  j^ersons  who  were  concerned  in  organiz- 
ing this  defendant  and  those  who  have  sold  their  shares  to  it 
had  GYery  reason  to  believe  and  did  believe  that  such  sales 
were  not  in  any  way  in  contravention  of  that  act.  In  com- 
mon with  the  general  public,  they  were  aware  that  during  the 
eleven  years  since  the  passage  of  that  act  in  many  instances 
the  stock  of  a  competing  railway  company  has  been  acquired 
by  its  competitor  or  the  shareholders  thereof,  such  acquisi- 
tion including  many  of  the  principal  railways  doing  business 
throughout  the  country.  This  has  been  done  without  objec- 
tion from  any  branch  of  the  Government  of  the  United  States, 
and  has  invariably  proven  beneficial  to  the  railway  com- 
panies concerned  and  to  the  public,  and  those  making  sales 
of  stocks  to  this  defendant  had  no  reason  to  believe  that  such 
sales  were  open  to  any  legal  objection  or  question  whatever. 

[240]  V.  This  defendant  was  not  organized  for  the  pur- 
pose of  acquiring  a  majority  of  the  stock  of  either  the  Great 
Northern  or  the  Northern  Pacific  Company,  but  merely  to 
purchase  the  stock  of  those  who  wished  to  sell,  as  above 
stated,  and  was  not  organized  for  the  purpose  of  controlling 
railway  rates  in  the  slightest  degree,  and  has  not  had  and 
cannot  have  any  such  effect.    The  transactions  referred  to  in 
the  petition  have  consisted  in  the  organization  of  a  lawful 
corporation  and  the  purchase  of  property  by  it.    All  acts 
done  in  relation  to  the  organization  of  this  defendant  and  in 
the  conduct  of  its  business  have  been  expressly  authorized  by 
law,  and  have  had  no  effect  whatever  to  restrain  trade  or 
commerce  among  the  several  States  or  with  foreign  nations. 
If  these  lawful  transactions  should  hereafter  have  any  effect 
to  restrain  trade  or  commerce  among  the  several  States  or 


NORTHERN   SECURITIES   CO.    V.   UNITED   STATES.       379 
Answer  of  Northern  Securities  Company. 

with  foreign  nations  (which  is  hereby  denied),  that  effect 
would  be  merely  indirect,  remote,  incidental,  and  collateral, 
and  not  intended,  and  as  nothing  compared  with  the  great 
expansion  of  the  volume  of  interstate  and  international  com- 
merce which  was  intended,  and  which  this  defendant  believes 
is  destined  to  result  from  the  enterprise  of  the  two  railway 
companies,  that  culminated  in  the  purchase  of  the  Burlington 
stock. 
And  this  defendant  says: 

1.  The  "Anti-Trust  Act "  was  not  intended  to  prevent  or 
defeat  an  enterprise  in  aid  of  a  great  competitive  interstate 
and  international  commerce  merely  because  such  enterprise 
may  carry  with  it  the  possibility  of  incidental  restraint 
upon  some  commerce,  trifling  both  as  respects  territory  and 
volume. 

2.  Nor  w  as  the  act  intended  to  limit  the  power  of  the  sev- 
eral States  to  create  corporations,  define  their  purposes,  fix 
the  amount  of  their  capital,  and  determine  who  may  buy, 
own,  and  sell  their  stock. 

3.  Otherwise  construed,  the  act  would  be  unconstitutional, 
because : 

The  power  to  regulate  commerce  with  foreign  nations  and 
[241]  among  the  States  does  not  give  Congress  the  power  to 
regulate  any  of  the  matters  above  mentioned  in  respect  to 
corporations  created  by  the  States ;  and  because 

Persons  may  not  be  deprived  of  their  property  without  due 
process  of  law,  by  taking  from  them  the  right  to  sell  it  as 
their  interest  may  suggest. 

VI.  There  is  a  defect  of  necessary  parties  defendant,  be- 
cause, as  already  set  forth,  the  persons  who  made  sales  of 
stock  of  the  said  railway  companies  to  this  defendant  were 
numerous,  exceeding  more  than  1,300  in  number,  and  few  of 
them  had  any  connection  whatever  in  the  planning  or  form- 
ing of  this  defendant,  and  in  their  absence  from  this  litiga- 
tion no  decree  can  be  made  affecting  their  rights  in  the 
premises. 

VII.  And  this  defendant  denies  all  and  all  manner  of 
unlawful  combination  and  confederacy  wherewith  it  is  by 
the  said  petition  charged,  without  this,  that  if  there  is  any 
other  matter,  cause,  or  thing  in  the  petition  contained  mate- 


380 


IW   UNITED   STATES  REPOBTS,   241. 


Answer  of  Nortbern  Pacific  Railway  Company. 
Fial  or  necessary  for  this  defendant  to  make  answer  unto,  and 
not  herein  or  hereby  well  and  sufficiently  answered,  con- 
fessed, traversed,  and  avoided  or  denied,  the  same  is  not  true 
to  the  knowledge  or  belief  of  this  defendant;  all  of  which 
matters  and  things  this  defendant  is  ready  and  willing  to 
aver,  maintain,  and  prove  as  this  honorable  court  shall  direct, 
and  humbly  prays  to  be  hence  dismissed,  with  its  reasonable 
costs  and  charges  in  this  behalf  most  wrongfully  sustained. 

Signed  (no  verification)  for  the  Northern  Securities  Com- 
pany,  by  John  W.  Griggs  and  Geo.  B.  Young,  solicitors  and 
counsel. 

A  separate  answer  was  filed  by  the  defendants  James  J. 
Hill,  William  P.  Clough,  D.  Willis  James,  John  S.  Kennedy, 
and  George  F.  Baker,  which  was  substantially  the  same  as 
the  answer  of  the  defendant  Northern  Securities  Company. 

The  answer  of  the  Great  Northern  Railway  Company  was 
substantially  the  same  as  that  of  the  Northern  Securities 
Com-  [242]  pany  with  the  omission  of  Paragraph  II  of  the 
second  statement  of  defence. 

The  answer  of  the  defendant  the  Northern  Pacific  Railway 
Company  was  as  follows  : 

I.  This  defendant  admits  the  allegations  of  Paragraph  I 
of  the  petition  that  this  defendant  and  the  Great  Northern 
Railway  Company  were  at  the  times  mentioned  in  said  peti- 
tion and  now  are  common  carriers  employed  in  the  transpor- 
tation of  freight  and  passengers  among  the  several  States  of 
the  United  States  within  which  the  railways  operated  by 
them  are  situated. 

This  defendant  denies  each  and  every  other  allegation  of 
paragraph  I  of  the  petition. 

II.  This  defendant  admits  the  allegations  of  Paragraph  II 
of  the  petition  that  prior  to  November  13,  1901,  the  stock  of 
this  defendant  was  owned  and  controlled  by  its  shareholders, 
and  that  among  them  were  the  parties  in  that  behalf  alleged! 

This  defendant  denies  any  knowledge  or  information  suffi! 
cient  to  fonn  a  belief  of  each  and  every  other  allegation  of 
Paragraph  II  of  the  petition. 

III.  This  defendant  admits  the  allegations  of  Paragraph 
III  of  the  petition  that  this  defendant  at  the  times  men- 


NORTHERN   SECURITIES   CO.   V.   UNITED   STATES.       881 
Answer  of  Northern  Pacific  Railway  Company. 

•tioned  owned  and  operated  a  railway  extending  from  Ash- 
land in  Wisconsin  via  Duluth,  Minnesota,  and  from  St. 
Paul,  Minnesota,  across  Minnesota,  North  Dakota,  Montana, 
Idaho,  and  Washington,  passing  through  Helena,  in  the 
State  of  Montana,  and  Spokane,  in  the  State  of  Washington, 
and  extending  to  Tacoma  and  Seattle,  in  Washington,  and  to 
Portland,  in  Oregon;  that  the  Great  Northern  Company 
operated  lines  of  railway  extending  from  St.  Paul  aforesaid 
across  Minnesota,  North  Dakota,  Montana,  Idaho,  and  Wash- 
ington, passing  through  Spokane  and  extending  to  Everett 
and  Seattle,  in  the  State  last  aforesaid;  that  the  said  lines 
connected  with  other  railway  lines,  and  either  directly  or  by 
means  of  such  other  railway  lines  connected  with  lines  of 
steamships  on  the  Great  Lakes  and  the  ocean,  and  that  the 
mileage  operated  by  said  companies  aggregated  about  five 
thousand  five  hundred  miles  for  this  defendant  [243]  and 
about  four  thousand  one  hundred  and  twenty-eight  miles  for 
the  Great  Northern  Company. 

This  defendant  denies  each  and  every  other  allegation  i>f 
Paragraph  III  of  the  petition. 

IV.  This  defendant  admits  the  allegations  of  Paragraph 
IV  of  the  petition  that,  prior  to  the  year  1893,  a  corporation 
known  as  the  Northern  Pacific  Railroad  Company,  organized 
and  existing  under  certain  acts  and  resolutions  of  Congress, 
and  which  then  operated  some  parts  of  the  lines  of  this  de- 
fendant, became  insolvent  and  was  placed  in  the  hands  of 
receivers  appointed  by  various  courts  of  the  United  States; 
that,  while  in  this  condition,  a  plan  of  reoriranization  was 
entered  into  by  the  bondholders  of  said  company,  an(J  that  an 
arrangement  was  proposed  between  the  said  bondholders  and 
the  Great  Northern  Company  which  was  never  carried  out. 
This  defendant  admits  that  a  case  entitled  Pearsall  agaiiist 
the  Great  Northern  Railway  Company  was  decided  by  the 
Supreme  Court  of  the  United  States  on  March  30,  1896,  and 
is  reported  in  volume  161  of  the  reports  of  said  court,  begin- 
ning on  page  696. 

This  defendant  denies  any  knowledge  or  information  suffi- 
cient to  form  a  belief  of  each  and  every  other  allegation  of 
Paragraph  IV  of  the  petition.    It  is  informed  and  believed 


X 


382 


ISO   UNITED  STATES  KBPOBTS,  241. 


Answer  of  Northern  Pacific  Railway  Company. 

that  said  paragraph  is  wholly  irrelevant  to  the  cause  of  ac- 
tion, if  any,  stated  in  the  petition. 

V.  This  defendant  admits  the  allegations  in  Paragraph  V 
of  the  petition  that  early  in  the  year  1901  this  defemiani  and 
the  Great  Northern  Conipany,  acting  for  the  purpose  of  pro- 
moting their  several  interests,  each  purchased  shares  of  stock 
of  the  Chicago,  Burlington  and  Quincy  Railroad  Comi)any 
of  Illinois,  paying  therefor  with  the  joint  bonds  of  the  Great 
Northern  Company  and  the  Northern  Pacific  Company,  pay- 
able in  twenty  years  from  date,  with  interest  at  4  per  cent 
per  annum,  at  the  rate  of  $200  in  bonds  for  each  $100  in 
stock,  and  in  this  manner  the  said  companies  severally  pur- 
chased and  acquired  each  about  49  per  cent  of  said  stock; 
that  the  lines  operated  by  said  [244]  Burlington  Company 
and  its  connections  were  geographically  as  stated  in  the  peti- 
tion, and  that  some  of  said  lines  compete  with  some  linos  of 
what  is  called  in  the  petition  the  Union  Pacific  system. 

This  purchase  was  made  by  these  defendants  primarily  in 
order  to  secure  a  terminus  in  Chicago  and  permanent  connec- 
tion with  the  eastern  and  southeastern  niarlv(ts,  which  are 
especially  valuable  to  the  agricultural  and  mineral  products 
of  the  northwest,  and  also  because  the  Burlington  system 
serves  a  large  and  growing  territory,  and  the  purchase  was 
deemed  desirable  and  profitable  in  itself.  It  had  no  connec- 
tion with  the  future  formation  of  any  company  whatsoever 
and  was  not  made  with  intent  to  violate  the  statute  or  com- 
mon law  of  any  State  or  of  the  United  States,  and  was  not  in 
violation  of  any  such  law. 

This  defendant  denies  each  and  every  other  allegation  of 
Paragraph  V  of  the  petition.  It  is  informed  and^  believes 
that  said  paragraph  is  wholly  irrelevant  to  the  cause  of  ac- 
tion, if"  any,  stated  in  the  petition. 

VI.  This  defendant  denies  any  knowledge  or  information 
sufficient  to  form  a  belief  of  each  and  every  allegation  of 
Paragraph  VI  of  the  petition. 

VII.  This  defendant  admits  the  allegation  of  Paragraph 
VII  of  the  petition,  that  the  defendant  Northern  Securities 
Company  was  heretofore  organized,  as  it  is  informed  and 
believes,  under  the  general  laws  of  the  State  of  New  Jersey. 

This  defendant  denies  any  knowledge  or  information  suffi- 


NORTHERN   SECDTtlTIES   CO.    V,   UNITED   STATES.       383 
Answer  of  Northern  Pacific  Railway  Company. 

cient  to  form  a  belief  of  each  and  every  other  allegation  of 
Paragraph  VII  of  the  petition. 

VIII.  This  defendant  admits  the  allegations  of  Paragraph 
VIII  of  the  petition  that  the  defendant,  Northern  Securities 
Company,  has  purchased  and  now  holds  and  owns  a  large 
majority  of  the  capital  stock  of  this  defendant,  and  that  the 
Securities  Company  has  received  such  dividends  as  have  been 
paid  on  any  shares  held  by  it. 

This  defendant  denies  any  knowledge  or  information  suffi- 
[245]  cient  to  form  a  belief  of  each  and  every  other  allega- 
tion of  Paragraph  VIII  of  the  petition. 

IX.  This  defendant  denies  anv  knowledge  or  information 
sufficient  to  form  a  belief  of  each  and  e\tM\  alloization  of 
Paragraph  IX  of  the  petition. 

X.  This  defendant  denies  any  knowledge  or  information 
sufficient  to  foym  a  belief  of  each  and  every  allegation  of 
Paragraph  X  of  the  petition. 

XI.  This  defendant  denies  each  and  every  allegation  of 
Paragraph  XI  of  the  petition. 

XII.  This  defendant  denies  each  and  every  allegation  of 
Paragraph  XII  of  the  petition.  It  is  informed  and  believes 
that  said  paragi'aph  consists  merely  of  expressions  of  opinion, 
and  is,  therefore,  without  Aveight  in  support  of  any  cause  of 
action. 

XIII.  This  defendant  denies  any  knowledge  or  informa- 
tion sufficient  to  form  a  belief  of  each  and  every  allegation  of 
Paragraph  XIII  of  the  petition. 

XIV.  As  this  defendant  is  informed  and  believes,  the  pur- 
chase by  the  Northern  Securities  Company  of  shares  of  stock 
of  this  defendant  and  the  sale  thereof  by  the  owners  have 
been  expressly  authorized  by  law.  They  have  had  no  effect 
whatever,  in  law  or  in  fact,  in  restraint  or  monopoly  of  trade 
or  commerce  among  the  several  States  or  with  foreign  nations. 
The  petition  does  not  allege  that  at  any  place  within  the  juris- 
diction of  this  court  or  elsewhere  any  such  restraint  or  mo- 
nopoly has  been  effected. 

If  these  lawful  transactions,  consisting  merely  of  the  pur- 
chase and  sale  of  property,  should  hereafter  have  any  effect  in 
restraint  or  monopoly  of  trade  or  commerce  among  the  sev- 
eral States  or  with  foreign  nations,  that  would  not  be  their 


384 


193   UNITED  STATES  REPOBTS,  245. 


Answer  of  Northern  Pacific  Railway  Company. 

direct  effect,  but  would  be  merely  indirect,  remote,  incidental, 
and  collateral,  and  would,  therefore,  not  bring  said  transac- 
tions within  said  act  of  Congress  above  mentioned.  Any 
other  construction  would  render  the  statute  unconstitutional, 
as  beyond  the  power  of  Congress,  and  as  depriving  the  sellers 
of  the  stock  thus  sold  and  also  the  stockholders  of  this  defend- 
ant who  have  not  sold  [246]  their  shares  to  the  Securities 
Company,  of  liberty  and  property  without  due  |)n)cess  of  law, 
because,  thus  construed,  it  would  be  an  inhibition  upon  their 
right  to  sell  their  property.  If  complainant's  contention  be 
sustained,  the  right  of  the  owner  of  property  to  sell  the  same 
will  be  dependent  upon  what  the  courts  at  any  future  tune 
may  hold  to  have  been  the  intention  of  the  purchaser  in  buy- 
ing such  property.  This  result  would  seriously  impair  the 
liberty  of  the  owner  and  the  value  of  his  property,  and  is  con- 
trary to  the  constitutional  guaranties  thereof. 

These  transactions  are,  therefore,  not  within  the  act  of  Con- 
gress above  mentioned ;  nor  has  Congress  any  constitutional 
power  to  annul  or  prohibit  action  thus  expressly  authorized 
by  state  statutes  under  which  the  same  has  been  or  may  here- 
after be  taken. 

Xy.  There  is  a  defect  of  necessary  parties  defendant 
herein,  because  in  this  suit  it  is  sought  to  annul  all  sales  of 
shares  made  by  shareholders  of  this  defendant  to  the  North- 
ern Securities  Company  and  to  cancel  all  certificates  of  stock 
of  the  latter  company  issued  in  purchase  of  the  same.  The 
parties  making  such  sales  are  numerous,  and  many  of  them 
>ad  no  connection  with  the  matter  save  to  sell  their  shares  to 
the  Securities  Company  after  its  organization.  It  is  obvious 
that  in  their  absence  no  adjudication  can  be  made  annulling 
such  sales  to  the  Securities  Company.  A  decree  to  such  effect 
as  prayed  for  by  the  petition  necessarily  would  deprive  such 
original  sellers  of  their  property  without  due  process  of  law. 
AH  persons  who  sold  shares  in  this  defendant  to  the  Securi- 
ties Company  are,  therefore,  necessary  parties,  and  the  peti- 
tion is  bad  by  reason  of  their  absence. 

XVI.  And  this  defendant  denies  all  and  all  manner  of  un- 
lawful combination  and  confederacy  wherewith  it  is  by  the 
said  petition  charged,  without  this,  that  if  there  is  any  other 
matter,  cause,  or  thing  in  the  petition  contained  material  or 


NOBTHEBN   SECURITIES  CO.   V,   UNITED   STATES.       385 
Answer  of  Morgan  and  other  defendants. 

necessary  for  this  defendant  to  make  answer  unto,  and  not 
herein  or  hereby  well  and  sufficiently  answered,  confessed, 
traversed,  and  [247]  avoided  or  denied,  the  same  is  not  true 
to  the  knowledge  or  belief  of  this  defendant;  all  of  which 
matters  and  things  this  defendant  is  ready  and  willing  to 
aver,  maintain,  and  prove  as  this  honorable  court  shall  direct, 
and  humbly  prays  to  be  hence  dismissed  with  its  reasonable 
costs  and  charges  in  this  behalf  most  wrongfully  sustained. 

The  first  five  paragraphs  of  the  answer  of  the  defendants, 
J.  Pierpont  Morgan  and  Robert  Bacon,  were  substantially 
the  same  as  the  same  paragraphs  of  the  answer  of  the 
Northern  Pacific  Railway  and  the  remainder  of  the  answer 
of  such  defendants  was  as  follows: 

VI.  These  defendants  admit  that  the  defendant  James  J. 
Hill  and  certain  other  persons  decided  upon  the  formation 
of  a  securities  company  for  the  purposes  set  forth  in  the 
certificate  of  incorporation  of  the  Northern  Securities  Com- 
pany attached  to  the  petition  and  in  all  respects  as  therein 
stated. 

These  defendants  deny  each  and  every  other  allegation  of 
Paragraph  VI  of  the  petition. 

VII.  These  defendants  admit  the  allegations  of  Paragraph 
VII  of  the  petition  that  on  November  13, 1901,  the  defendant 
Northern  Securities  Company  was  organized  under  the  gen- 
eral laws  of  the  State  of  New  Jersey,  with  its  principal  office 
in  Hoboken,  in  said  State,  and  with  an  authorized  capital 
stock  of  $400,000,000,  and  that  a  copy  of  the  articles  of  in- 
corporation of  said  company  correctly  stating  its  powers  is 
attached  to  the  petition. 

These  defendants  deny  each  and  every  other  allegation  of 
Paragraph  VII  of  the  petition. 

VIII.  These  defendants  admit  the  allegations  of  Para- 
graph VIII  of  the  petition  that  on  or  about  November  14, 
1901,  the  defendant  Northern  Securities  Company  was  or- 
ganized by  the  election  of  directors  and  officers;  that  the 
defendant  James  J.  Hill  was  chosen  a  director  and  president 
thereof;  that  thereupon  the  said  James  J.  Hill  and  other 
stockholders  of  the  Great  Northern  Company,  each  individu- 

21220— VOL  2—07  m 26 


dob 


l«l   UNITED  STATES  REPORTS,   2-»8. 
Answer  of  Morgan  and  other  defendants. 


ally  and  separately  [248]  from  tlie  others,  sold  to  the  Se- 
curitias  Company  a  large  amount  of  the  capital  stock  of 
the  Great  Northern  Company  for  the  price  of  $180  par  value 
of  the  capital  stock  of  the  Securities  Company  for  each 
share  of  the  capital  stock  of  the  Great  Northern  Company; 
that  these  defendants  and  other  stockholders  of  the  Northem 
Pacific  Company,  each  individually  and  separately  from  the 
others,  sold  to  the  Securities  Company  a  large  amount  of 
the  capital  stock  of  the  Northern  Pacific  Company;  that  the 
Securities  Company  also  offered,  for  a  limited  period,  like 
terms  of  purchase  to  the  other  shareholders  of  the  (Jreat 
Northern  Company;  that  the  Securities  Comi^any  now  holds 
and  owns  a  large  majority  of  the  capital  stock  of  the  North- 
ern Pacific  Eailway  Company,  and  a  large  amount,  though 
less  than  a  controlling  interest,  of  the  stock  of  the  Great 
Northern  Company,  and  has  negotiated  for  the  purchase  of 
additional  shares  of  that  company,  and  that  the  Securities 
Company  has  received  such  dividends  as  have  been  paid 
on  any  shares  held  by  it. 

These  defendants  deny  each  and  every  other  allegation  of 
Paragraph  VIII  of  the  petition. 

IX.  These  defendants  deny  each  and  every  allegation  of 
Paragraph  IX  of  the  petition. 

X.  These  defendants  deny  any  knowledge  or  information 
sufficient  to  form  a  belief  of  each  and  every  allegation  of 
Paragraph  X  of  the  petition. 

XI.  These  defendants  deny  each  and  every  allegation  of 
Paragraph  XI  of  tl\e  petition. 

XII.  These  defendants  deny  each  and  every  allegation  of 
Paragraph  XII  of  the  petition.  They  are  informed  and  be- 
lieve that  said  paragraph  consists  merely  of  expressions  of 
opinion,  and  is,  therefore,  without  weight  in  support  of  any 
cause  of  action. 

XIII.  Ther?e  defendants  deny  each  and  every  allegation  of 
Paragraph  XIII  of  the  petition. 

XIV.  In  July,  18%,  the  capital  stock  of  the  Northern  Pa- 
cific Railway  Company  was  fixed  at  $155,000,000,  of  which 
\2i9]  $75,000,000  were  preferred  and  $80,000,000  common 
stock.  The  prefeiTed  stock  of  the  company  was  issued  in 
exchange  for  various  obligations  of  the  former  Northern 


NORTHERN    SECURITIES   CO.    V.    UNITED    STATES.       387 
Answer  of  Morgan  and  other  defendants. 

Pacific  Railroad  Company  because  the  holders  thereof  would 
not  accept  new  common  stock  therefor.  At  the  same  time 
it  was  contemplated  that  the  time  would  arrive  when  said 
preferred  stock  should  properly  be  retired,  and  it  was,  ac- 
cordingly, then  provided  that  the  preferred  stock  might  be 
retired  in  whole  or  in  part  at  par  on  any  first  day  of  January, 
up  to  and  including  January  1,  1917.  Both  classes  of  stock 
wore  made  subject  to  a  voting  trust  in  this  defendant  Morgan 
and  others,  continuing  until  November  1,  1901.  but  termi- 
nable by  the  trustees  in  their  discretion  at  an  earlier  date. 

The  Northern  Pacific  Company  shared  in  the  recent  pros- 
l)erity  of  the  country,  and  its  common  stock  appreciated  in 
value  until  it  was  deemed  practicable  to  carry  out  the  original 
intention  of  retiring  the  preferred  stock  and  also  to  terminate 
the  voting  trust.  Accordingly  said  trust  was  terminated  by 
the  trustees  upon  January  1, 1901,  and  the  preferred  stock  was 
retired.  Although  the  latter  action  was  in  contemplation 
and  was  practically  decided  upon  some  time  before  the  termi- 
nation of  the  voting  trust,  it  was  not  made  the  subject  of 
formal  action  by  the  board  of  directors  until  November  13, 
1901,  and  was  completed  upon  January  1,  1902. 

XV.  As  hereinbefore  stated,  early  in  1901,  the  Northern 
Pacific  Company,  and  the  Great  Northern  Company,  each 
purchased  about  49  per  cent  of  the  capital  stock  of  the  Chi- 
cago, Burlington  and  Quincy  Railroad  Company.  This 
l)urchase  was  made  by  the  Northern  Pacific  Company  pri- 
marily in  order  to  secure  a  terminus  at  Chicago  and  perma- 
nent connection  with  the  eastern  and  southeastern  markets, 
Mhich  are  especially  valuable  for  the  agricultural  and 
mineral  products  of  the  northwest,  but  also  because  the  Bur- 
lington system  serves  a  large  and  growing  territory,  and  the 
purchase  was  deemed  desirable  and  j^rofitable  in  itself. 

These  purchases  Avere  not  made,  as  the  petition  alleges,  "  in 
[250 1  contemplation  of  the  ultimate  placing  of  the  Great 
Northern  and  Northern  Pacific  system  under  a  common 
source  of  control."  They  had  no  connection  whatever  with 
the  future  formation  of  the  Northern  Securities  Company,  or 
any  other  company  whatsoever,  and  had  no  conne<;tion  with 
the  fact  alleged  in  the  petition  that  the  Union  Pacific  Kail- 


doo 


193   UNITED  STATES  REPORTS,   250. 
Answer  of  Morgan  and  other  defendants. 


way  system  is  to  some  extent  a  competing  system  Avith  the 
Burlington  system. 

The  said  purchases  were  not  made  with  intent  to  violate  the 
statute  or  common  law  of  any  State  or  of  the  United  States ; 
were  not  in  violation  of  any  such  law,  and  are  not  charged  in 
the  petition  to  have  been  in  any  respect  unlawful. 

XVI.  During  the  reorganization  of  the  Northern  Pacific 
system  the  firm  of  J.  P.  Morgan  &  Co.,  of  which  these  defend- 
ants are  members,  acted  as  reorganization  managers,  and  ever 
since  the  reorganization  of  the  Northern  Pacific  Company  has 
been  its  fiscal  agent.  Said  firm  has  accordingly  at  all  times 
desired  to  further  the  best  interests  of  the  company  and  all  its 
stockholders,  and  especially  to  aid  in  steadily  developing  the 
business  of  the  company  and  the  prosperity  of  the  country 
which  it  serves.  Said  firm  considered  that  these  results  were 
accomplished,  so  far  as  possible,  by  the  policy  of  the  company 
during  the  existence  of  the  voting  trust,  as  above  stated.  Not 
long  after  the  termination  of  the  voting  trust,  however,  and 
very  early  in  May,  1901,  said  firm  became  aware  that  unusu- 
ally large  purchases  of  both  classes  of  stock  were  in  progress 
in  the  stock  market,  apparently  in  a  single  interest.  Said 
firm  was  apprehensive  that  these  purchases  were  for  the  pur- 
pose of  securing  control  of  the  direction  of  the  Northern 
Pacific  Company  and  thus  managing  it,  not  for  what  said 
firm  conceived  to  be  the  best  interest  of  the  company,  but  for 
some  ulterior  purpose  of  which  said  firm  was  not  informed. 

Accordingly  said  firm,  prior  to  May  T,  1901,  purchased 
common  stock  of  the  Northern  Pacific  Company  in  consid- 
able  amounts,  and  their  holdings  upon  that  day  amounted  to 
about  two  hundred  thousand  shares.  In  making  these  pur- 
chases said  [261]  firm  acted  on  its  own  account  and  in  behalf 
of  no  other  person  whomsoever,  and  was  actuated  by  no 
motive  save  those  above  stated. 

The  said  purchases  were  not  made  with  intent  to  violate 
the  statute  or  common  law  of  any  State  or  of  the  United 
States,  and  were  not  in  violation  of  any  such  law. 

XVU.  For  some  years  the  defendant  Hill  and  others  who 
were  interested  in  the  Great  Northern  Company,  but  not  in- 
cluding these  defendants,  had  in  contemplation  the  formation 
of  a  corporation  for  the  purpose  of  purchasing  their  separate 


NORTHERN   SECURITIES   CO.   V,   UNITED   STATES.       389 
Answer  of  Morgan  and  other  defendants. 

interests  in  that  company,  with  the  general  object  that  said 
interests  should  be  held  together  and  the  policy  and  course  of 
business  of  the  Great  Northern  Company  should  be  continu- 
ous in  developing  the  company's  system  and  the  territory 
served  by  it,  and  not  subject  to  radical  change  and  possible 
inconsistency  from  time  to  time.  In  or  about  August,  1901, 
as  this  plan  was  approaching  maturity,  said  parties  for  simi- 
lar reasons  determined  that  they  would  also  sell  to  the  new 
company,  when  formed,  their  interests  in  the  Northern  Pa- 
cific Company,  which  were  considerable  in  amount,  and  that 
the  capital  of  the  new  company  should  be  made  sufficiently 
large  to  enable  it  to  purchase  all  shares  of  the  Great 
Northern  and  Northern  Pacific  companies  which  the  holders 
might  desire  to  sell  and  anj^  other  shares  which  the  new  com- 
pany might  deem  it  advisable  to  acquire. 

By  this  time  it  had  become  known  that  the  purchases  in  the 
market  of  shares  of  the  Northern  Pacific  Company,  to  which 
reference  is  made  above,  had  been  made  in  behalf  of  a  corpo- 
ration known  as  the  Oregon  Short  Line  Railroad  Company, 
controlled  by  the  Union  Pacific  Railroad  Company;  that 
there  were  held  in  that  interest  shares  of  the  Northern  Pacific 
Company  to  about  the  amount  of  $41,000,000  of  preferred 
stock,  which,  however,  was  to  be  retired  on  January  1,  1902, 
and  $37,000,000  of  common  stock,  together  making  780,000 
shares  and  constituting  an  absolute  majority  of  the  total  capi- 
tal stock  of  the  Northern  Pacific  Company.  Thereupon  and 
therefore,  [252]  with  the  view  and  for  the  purpose  of  pro- 
tecting the  Northern  Pacific  Company  and  the  holders  of  its 
common  stock  against  the  possible  control  of  the  direction  of 
said  company  in  an  adverse  interest,  these  defendants  deter- 
mined and  also  advised  their  fi'iends  to  sell  their  Northern 
Pacific  stock  to  the  new  company. 

As  set  forth  in  the  petition,  the  Northern  Securities  Com- 
pany was  duly  organized  pursuant  to  the  laws  of  New  Jersey 
upon  November  13, 1901 .  It  was  organized  according  to  law, 
and  possesses  all  the  powers  set  forth  in  its  certificate  of  in- 
corporation, and  has  full  power  to  do  every  act  which  it  has 
in  fact  done,  and  the  petition  does  not  allege  the  contrary. 

It  having  become  known  that  the  Oregon  Short  Line  Com- 
pany was  not  disinclined  upon  satisfactory  terms  to  sell  its 


nm 


193   UNITED  STATES  KEPORTS,   252. 


Answer  of  Morgan  and  other  defendants, 
holdings  of  the  major  part  of  the  Northern  Pacific  stock,  the 
firm  of  J.  P.  Morgan  &  Company,  deeming  such  action  for  the 
best  interest  of  the  Northern  Pacific  Company,  purchased 
from  said  Oregon  Short  Line  Company  all  its  holdings  of  the 
capital  stock  of  the  Northern  Pacific  Company. 

After  its  organization  the  Northern  Securities  Company 
duly  purchased  all  the  shares  of  the  Northern  Pacific  Com- 
pany and  of  the  Great  Northern  Company  hereinbefore  men- 
tioned, including  those  purchased  by  the  firm  of  J.  P.  Morgan 
&  Company  from  the  Oregon  Short  Line  Company,  for 
which  It  paid  partly  in  cash  and  partly  in  its  own  shares.  It 
also  was  willing  to  purchase  the  shares  of  any  other  share- 
holders of  the  Great  Northern  Company,  who  desired  to  sell 
the  same,  for  the  price  of  one  hundred  and  eighty  dollars  for 
each  share  of  the  Great  Northern  Company,  payable  in  its  own 
shares,  and  did  actually  purchase  and  pay  for  considerable 
amounts  of  said  stock  at  such  price. 

None  of  ther^  purchases  by  the  Northern  Securities  Com- 
pany were  made  with  intent  to  violate  the  statute  or  common 
law  of  any  State  or  of  the  United  States,  or  were  in  violation 
of  any  such  law. 

XVIIL  The  foregoing  is  a  correct  statement  of  all  the 
mat-  [253]  ters  mentioned  in  the  petition,  omitting  its  many 
irrelevant  adjectives,  adverbs,  and  conclusions,  and  of  some 
other  facts  in  addition  thereto.    The  transactions  prior  to  the 
formation  of  the  Northern  Securities  Company  had  no  con- 
nection whatever  with  the  formation  thereof,  save  as  abov  ^ 
stated.     That  company  was  organized,  not  for  the  purpose  of 
acquiring  a  majority  of  the  stock  of  either  the  Great  North- 
ern or  the  Northern  Pacific  Company,  but  as  above  set  forth 
It  was  not  organized  for  the  purpose  of  affecting  railway 
rates  or  competition  in  the  slightest  degree,  and  has  not  had 
any  such  effect.    In  the  transactions  above  stated  these  de- 
fendants and,  so  far  as  they  are  aware,  the  other  parties  who 
have  been  engaged  therein  have  never  sought  or  intended  to 
violate  the  act  of  Congress  of  July  2,  1890,  entitled  "An  act 
to  protect  trade  and  commerce  against  unlawful  restraints 
and  monopolies  "  (26  Stat.  209,  c.  647),  or  to  enter  into  any 
contract,  combination  in  the  foim  of  trust  or  otherwise,  or 
conspiracy  in  restraint  of  trade  or  commerce  among  the  ^v- 


NORTHERN    SECURITIES   CO.    V,   UNITED    STATES.       391 
Answer  of  Morgan  and  other  defendants. 

eral  States  or  with  foreign  nations,  or  to  monopolize  or  at- 
tempt to  monopolize,  or  combine  or  conspire  with  any  other 
person  or  persons  to  monopolize,  any  part  of  the  trade  or 
commerce  among  the  several  States  or  with  foreign  nations. 

The  transactions  have  consisted  merel}^  in  the  organization 
of  a  lawful  corporation  of  New  Jersey  and  the  sale  to  and 
purchase  by  it  of  property  lawfully  salable.  All  acts  done 
in  relation  to  the  organization  of  the  Securities  Company  and 
the  purchase  by  it  of  shares  of  stock  of  the  railway  companies 
and  the  sale  thereof  hy  the  owners  have  been  expressly 
authorized  by  law.  They  have  had  no  effect  whatever,  in 
law  or  in  fact,  in  restraint  or  monopoly  of  trade  or  commerce 
among  the  several  States  or  with  foreign  nations.  The  pe- 
tition does  not  allege  that  at  any  place  within  the  jurisdiction 
of  this  court  or  elsewhere  any  such  restraint  or  monopoly 
has  been  effected. 

If  these  lawful  transactions,  consisting  merely  of  the  pur 
chase  and  sale  of  property,  should  hereafter  have  any  effect 
in  restraint  or  monopoly  of  trade  or  commerce  among  the 
several  States  or  with  foreign  nations,  such  effect  would  not 
be  their  [254]  direct  effect,  but  would  be  merely  indirect, 
remote,  incidental,  and  collateral,  and  aside  from  any  in- 
tention of  the  parties,  and  therefore  would  not  bring  said 
transactions  within  said  act  of  Congress.  Any  other  con- 
struction would  render  the  statute  unconstitutional  as  be- 
yond the  power  of  Congress,  and  as  depriving  these  defend- 
ants and  the  sellers  generally  of  the  stock  thus  sold,  of  liberty 
and  property  without  due  process  of  law,  because,  thus  con- 
strued, it  would  be  an  inhibition  upon  their  right  to  sell  their 
propert}^  If  complainant's  contention  be  sustained,  the 
right  of  the  owner  of  property  to  sell  the  same  will  be  de- 
pendent upon  what  the  courts  at  any  future  time  may  hold 
to  have  been  the  intention  of  the  purchaser  in  buying  su(;h 
property.  Such  a  result  Avould  seriously  impair  the  liberty 
of  the  owner  and  the  value  of  his  property,  and  is  contrary 
to  the  constitutional  guaranties  thereof. 

These  transactions  are,  therefore,  not  within  the  act  of  Con- 
gress above  mentioned ;  nor  has  Congress  any  constitutional 
power  to  annul  or  prohibit  action  thus  expressly  authorized 
by  state  statutes  under  which  the  same  has  been  taken. 


im  UNITED  STATES  BEPOBTS,  254. 


Decree  of  the  Circuit  CJourt. 

XIX  There  is  a  defect  of  necessary  parties  defendant 
herein  because  in  this  suit  it  is  sought  to  annul  all  sales  of 
shares  made  by  shareholders  of  the  Great  Northern  Company 
and  the  Northern  Pacific  Company  to  the  Northern  Securities 
Company,  and  to  cancel  all  certificates  of  stock  of  the  latter 
company  issued  in  purchase  of  the  same.    As  already  set 
forth,  the  parties  making  such  sales  are  numerous,  and  many 
of  them  had  no  connection  with  the  matter  save  to  sell  their 
shares  in  the  railway  companies  to  the  Securities  Company 
after  its  organization.    It  is  obvious  that  in  their  absence  no 
adjudication  can  be  made  annulling  such  sales  to  the  Securi- 
ties Company.    A  decree  to  such  effect  as  prayed  for  by 
the  petition  necessarily  would  deprive  such  original  seller? 
of  their. property  without  due  process  of  law.    All  personj-j 
who  sold  shares  in  the  railway  companies  to  the  Securities 
Company  are,  therefore,  necessary  parties,  and  the  petition 
is  bad  by  reason  of  their  absence. 

AA.  And  these  defendants  deny  all  and  all  manner  of 
[255]  unlawful  combination  and  confederacy  wherewith 
they  are  by  the  said  petition  charged,  without  this,  that  if 
there  is  any  other  matter,  cause,  or  thing  in  the  petition  con- 
tamed  material  or  necessary  for  these  defendants  to  make 
answer  unto,  and  not  herein  or  hereby  well  and  sufficiently 
answered,  confessed,  traversed,  and  avoided  or  denied,  the 
same  is  not  true  to  the  knowledge  or  belief  of  these  defend- 
ants; all  of  which  matters  and  things  these  defendants  are 
ready  and  willing  to  aver,  maintain,  and  prove  as  this 
honorable  court  shall  direct,  and  humbly  pray  to  be  hence 
dismissed  with  their  reasonable  costs  and  charges  in  this 
behalf  most  wrongfully  sustained. 

The  answer  of  the  defendant  Daniel  S.  Lamont  was  sub- 
stantially the  same  as  that  of  defendants  Morgan  and  Bacon 
except  that  certain  allegations  as  to  the  actions  of  J.  P.  Mor- 
gan &  Co.  in  Paragraphs  XVI  and  XVII  were  omitted^ 

On  April  9, 1903,  after  the  case  had  been  tried  before  a  Cir- 
cuit Court  consisting  of  Circuit  Judges  Caldwell,  Sanborn, 
Thayer  and  Vandevanter  (for  opinion  of  Judge  Thayer,  see 
120  Fed.  Kep.  T20),  the  following  decree  was  entered: 

"Sr^®^^'  ^<^^»<^^^  and  decreed  as  follows,  to  wit- 
^rJ!'^\,^^^  defendants  above  named  have  heretofore  entered  into  a 
combination  or  conspiracy  in  restraint  of  trade  and  commerce  among 


NORTHEBN   SECURITIES  CO.    V.   UNITED   STATES.       893 


Argument  of  Mr.  Young  for  appellants. 

the  several  States,  such  as  an  act  of  Congress,  approved  July  2,  1890, 
entitled  'An  act  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies '  denounces  as  illegal. 

"  That  all  the  stocks  of  the  Northern  Pacific  Railway  Company  and 
all  the  stock  of  the  Great  Northern  Railway  Company,  now  claimed 
to  be  owned  and  held  by  the  defendant,  the  Northern  Securities  Com- 
pany, was  acquired  and  is  now  held  by  it  in  virtue  of  such  combina- 
tion or  conspiracy  in  restraint  of  trade  and  commerce  among  the 
several  States. 

"That  the  Northern  Securities  Company,  its  officers,  agents,  serv- 
ants and  employes  be  and  they  are  hereby  enjoined  from  [256]  ac- 
quiring, or  attempting  to  acquire  further  stock  of  either  the  aforesaid 
railway  companies. 

"That  the  Northern  Securities  Company  be  enjoined  from  voting 
the  aforesaid  stoclc  which  it  now  holds  or  may  acquire  and  from 
attempting  to  vote  it,  at  any  meeting  of  the  stockholders  of  either  of 
the  aforesaid  railway  companies  and  from  exercising  or  attempting 
to  exercise  any  control,  direction,  supervision  or  influence  whatsoever 
over  the  acts  and  doings  of  said  railway  companies  or  either  of  them 
by  virtue  of  its  holding  such  stock  therein. 

"  That  the  Northern  Pacific  Railway  Company  and  the  Great  North- 
ern Railway  Company,  their  officers,  directors,  servants  and  agents 
be  and  they  are  hereby  respectively  and  collectively  enjoined  from 
permitting  the  stock  aforesaid  to  be  voted  by  the  Northern  Securities 
Company,  or  in  its  behalf,  by  its  attorneys  or  agents  at  any  corporate 
election  for  directors  or  officers  of  either  of  the  aforesaid  railway 
companies. 

"And  that  they,  together  with  their  officers,  directors,  servants  and 
agents,  be  likewise  enjoined  and  respectively  restrained  from  paying 
any  dividends  to  the  Northern  Securities  Company  on  account  of 
stock  in  either  of  the  aforesaid  railway  companies  which  it  now 
claims  to  own  and  hold : 

"And  that  the  aforesaid  railway  companies,  their  officers,  directors, 
servants  and  agents,  be  enjoined  from  permitting  or  suffering  the 
Northern  Securities  Company  or  any  of  its  officers  or  agents,  as  such 
officers  or  agents,  to  exercise  any  control  whatsoever  over  the  cor- 
porate acts  of  either  of  the  aforesaid  railway  companies. 

"  But  nothing  herein  contained  shall  be  construed  as  prohibiting 
the  Northern  Securities  Company  from  returning  and  transferring 
to  the  Northern  Pacific  Railway  Company  and  the  Great  Northern 
Railway  Company,  respectively,  any  and  all  shares  of  stock  in  either 
of  said  railway  companies  which  said.  The  Northern  Securities  Com- 
pany, may  have  heretofore  received  from  such  stockholders  in  ex- 
change for  its  own  stock ;  and  nothing  herein  contained  shall  be  con- 
strued as  prohibiting  [257]  the  Northern  Securities  Company  from 
making  such  transfer  and  assignments  of  the  stock  aforesaid  to  such 
person  or  persons  as  may  now  be  the  holders  and  owners  of  its  own 
stock  originally  issued  in  exchange  or  in  payment  for  the  stock 
claimed  to  have  been  acquired  by  it  in  the  aforesaid  railway  com- 
panies. 

"  It  is  further  ordered  and  adjudged  that  the  United  States  recover 
from  the  defendants  its  costs  herein  expended,  the  same  to  be  taxed 
by  the  clerk  of  this  court,  and  have  execution  therefor." 

# 

3fr.  George  B.  Young  for  appellants  argued  and  pre- 
sented in  a  brief  the  following  summary  of  the  facts : 

1.  For  some  years  prior  to  1901  the  two  railway  com- 


nu 


193  UNITED  STATES  REPORTS,  257. 


Argiiiiieiit  of  Mr.  Young  for  appellants. 

panies  had  been  engaged  in  an  enterprise  of  building  up 
a  great  interstate  and  Oriental  commerce. 

2.  In  April,  1901,  they  purchased  nearly  all  the  Burling- 
ton shares  at  a  cost  of  over  $200,000,000,  paying  for  them 
with  their  joint  bonds,  and  not  with  the  bonds  of  the  Bur- 
lington as  stated  in  the  decision  of  the  lower  court.  They 
made  the  purchase  not  with  any  view  of  placing  the  two 
eomi^anies,  their  shares  or  their  commerce,  under  a  sin<^le 
control.  ^ 

3.  Immediately  after  this  purchase,  persons  interested  in 
the  Union  Pacific  attemi)ted  to  obtain  the  stock  control  of 
the  Northern  Pacific,  their  object  being  to  prevent  the  car- 
rying out  of  the  enterprise  of  the  defendant  railway  com- 
panies, and  especially  to  prevent  the  use  of  the  Burlington 
road  in  carrying  out  that  enterprise. 

4.  This  "  raid  "  (as  it  is  called)  on  the  Northern  Pacific 
stock  failed,  the  failure  being  largely  due  to  an  error  of  the 
raidei-s  in  buying  common  instead  of  preferred  stock.  But 
there  was  imminent  danger  that  another  like  attempt  might 
be  made  and  be  successful. 

5.  Such  a  raid,  if  successful,  would  destroy  the  commerce 
the  railway  companies  were  building  up,  "^and  in  aid  of 
which  they  had  bought  the  Burlington  shares. 

[258]  6.  For  .some  years  prior  to  1901,  Mr.  Hill  and  ten 
other  shareholders  in  the  Great  Northern  Co.,  holding  less 
than  30  per  cent  of  its  stock  had  contemplated  the  forma- 
tion of  a  company  to  which  they  should  make  absolute 
transfers  of  their  shares  in  consideration  of  the  shares  of 
such  new  company.  Their  purpose  was  that  the  shares 
should  be  voted  alike  in  the  future  as  they  had  been  in  the 

pasi,  and  that  they  should  fare  alike  in  any  sale  of  them 
that  might  be  made. 

T.  In  June,  1901,  after  the  defeat  of  the  raid,  it  was 
first  suggested  that  the  proposed  company  should  be  en 
larged  so  as  to  include  the  Northern  Pacific  common  stock 
(about  $21,000,000)  held  by  the  same  persons,  and  later 
the  plan  was  still  further  widened  so  as  to  include  the 
Northern  Pacific  common  stock  (about  $20,000,000)  held 
by  J.  P.  Morgan  &  Co.  should  they  desire  to  make  such  dis- 
position of  the  stock  held  by  them. 


i 


NORTHERN   SECURITIES  CO.   V,   UNITED   STATES.       395 


Argument  of  Mr.  Young  for  appellants. 

8.  It  had  all  along  been  the  purpose  of  Mr.  Hill  and  his 
ten  associates  that  every  shareholder  in  the  Great  Northern 
Co.  should  be  given  an  opportunity  to  join  the  company  as 
originally  planned, — this  not  because  they  needed  or  de- 
sired the  accession  of  such  other  shareholders,  but  to  avoid 
any  complaint  of  unfair  treatment  on  their  part. 

9.  This  purpose  was  carried  into  the  enlarged  project, 
and  at  the  instance  of  Mr.  Morgan,  the  same  opportunity 
was  to  be  given  to  holders  of  Northern  Pacific  stock.  And 
like  the  company  originally  projected,  the  enlarged  com- 
pany was  to  be  authorized  and  was  expected  to  acquire 
shares  in  coal  mines  and  in  industrial  enterprises  of  utility 
to  the  railways,  but  whose  stock  the  railway  companies 
could  not  hold,  and  also  to  be  a  financial  as  well  as  an 
investment  company,  with  power  in  that  capacity  to  aid 
the  operations  of  the  railway  companies,  or  of  any  other 
companies  whose  shares  or  securities  it  might  hold. 

10.  The  amount  of  Great  Northern  stock  held  by  Mr.  Hill 
and  his  ten  associates  was  from  33  to  35  millions  out  of  a 
total  capital  of  $125,000,000.  In  1896,  they  had  severally 
[259]  acquired  $29,000,000  of  Northern  Pacific  common 
stock,  which  amount  had,  on  May  1,  1901,  been  reduced  by 
sales  to  $20,000,000. 

.  11.  In  forming  the  Northern  Securities  Co.  it  was  the 
intention  of  its  promoters  that  it  should  acquire,  if  it  could, 
a  majority  of  Northern  Pacific  stock,  thereby  protecting  such 
stock  from  future  raids,  and  protecting  the  conmiarce  of  the 
railways  from  the  ruin  that  would  result  from  a  successful 
raid. 

They  did  not  desire  or  expect  that  the  Securities  Co.  should 
acquire  a  majority  of  Great  Northern  shares.  Such  acquisi- 
tion was  not  deemed  necessary  for  the  protection  of  the  stock 
of  that  .company  or  of  the  commerce  of  the  roads. 

12.  \A^ile  the  capitalization  of  the  Securities  Co.  is  nearly, 
it  is  not  (as  stated  in  the  opinion)  the  exact  amount  required 
to  pay  for  all  the  shares  of  the  two  railway  companies  at  the 
prices  ($180  for  Great  Northern  and  $115  for  Northern  Pa- 
cific) fixed  for  such  exchanges. 

13.  Mr.  Hill  and  his  ten  associates  who  promoted  the 
Securities  Co.  did  not  agree  or  bind  themselves  even  to  trans- 


396 


193  UNITEB  STATES  BEPOETS^  259. 


Argument  of  Mr.  Young  for  appellants. 

fer  their  dwn  shares  to  the  Securities  Co.  Each  of  them  was 
left  to  decide  for  himself.  Mr.  Hill  retained  between  two 
and  three  millions  of  his  shares. 

And  neither  they,  nor  any  one  concerned  in  promoting  the 
Securities  Co.,  nor  J.  P.  Morgan  &  Co.  ever  agreed  in  any 
manner  that  upon  the  organization  of  the  Securities  Co. 
they  would  *'  use  their  influence  to  induce  other  stockholders 
ha  their  respective  companies  to  do  likewise,"  as  erroneously 
stated  in  the  decision  of  the  lower  court. 

14.  The  Securities  Co.  is  not  a  railway  company  and  has 
no  power  to  build  or  operate  railways.  Its  powers  are 
limited  to  buying,  selling  and  holding  stocks,  bonds  and  other 
securities,  with  power  to  aid  in  any  manner  any  company 
whose  stock  or  bonds  it  may  hold,  and  to  do  all  acts  designed 
to  aid  any  company  whose  shares  or  securities  it  may  hold, 
and  protect  or  enhance  the  value  of  its  investment;  also  to 
hold  any  real  or  personal  property  recjuired  for  the  transac- 
tion of  its  business.  [260]  In  short,  it  is  at  once  an  invest- 
ment and  a  financial  company. 

15.  Soon  after  its  organization,  and  on  November  18,  1901, 
the  Securities  Co.  purchased  the  Northern  Pacific  shares  that 
had  been  acquired  by  those  concerned  in  the  raid,  known  as 
the  Harriman  shares.  Those  had  been  purchased  from  them 
by  J.  P.  Morgan  &  Co.  The  purchase  comprised  $^7,023,000 
of  common  stock  and  $41,085,000  of  preferred  stock,  at  a 
lump  price  of  $1)1,401,500,  payable  (and  paid)  $8,915,029  in 
cash,  and  $82,491,871  in  shares  of  the  Securities  Co.  at  par. 
About  the  same  time  it  received  from  its  promoters  and  J.  P. 
Morgan  &  Co.,  the  Northern  Pacific  common  stock  (about 
$42,000,000)  held  by  them.  It  availed  itself  of  its  right  as  a 
common  stockholder  of  the  Northern  Pacific  to  purchase  at 
par  for  cash,  the  new  common  stock  (issued  to  replace  the 
$75,000,000  preferred  stock  retired)  to  the  amount  of  75-80 
of  the  amount  of  common  stock  held  by  it  As  a  result  of 
these  purchases,  the  Securities  Co.,  at  the  beginning  of  the 
year  1902,  and  before  this  suit  was  begun  (in  March,  1902) 
held  about  $152,000,000  of  the  total  $155,000,000  stock  of  the 
Northern  Pacific. 

16.  Soon  after  its  organization,  Mr.  Hill  and  the  other 
promoters  of  the  Securities  Co.  transferred  to  it  about  30 


NORTHERN   SECURITIES   CO.   V.   UNITED   STATES.       397 
Argument  of  Mr.  Young  for  appellants. 

millions  of  Great  Northern  shares  at  $180  in  exchange  for 
Securities  shares  at  par,  and  within  three  months  from  its 
organization,  (and  before  the  commencement  of  this  suit,) 
the  Securities  Co.  had  acquired,  on  the  same  terms  and  from 
other  holders,  about  65  millions  of  Great  Northern  shares, 
making  its  total  holdings  95  millions  of  the  total  capital  of 
125  millions. 

17.  It  is  not  the  fact,  as  stated  in  the  decision  that  the 
Securities  Co.  was  enabled  to  make  the  purchase  of  65  mil- 
lions of  stock  bought  from  non-promoters,  or  of  any  of  it, 
by  the  advice,  procurement  or  persuasion  of  the  Great  North 
ern  shareholders  who  had  been  instrumental  in  organizing 
the  Securities  Co.  There  is  not  any  evidence  in  support  of 
this  finding,  and  the  evidence  is  conclusive  against  it. 

The  facts  proved  beyond  question  are  that  each  purchase 
[261]  was  an  independent  transaction  between  the  seller  of 
stock,  and  the  Securities  Co.,  without  solicitation,  persua- 
sion or  other  influence  by  the  Securities  Co.,  or  any  one  else. 

18.  At  the  time  of  the  formation  of  the  Securities  Co.,  the 
Great  Northern  shareholders  were  1,800  in  number.  Of  them 
about  1,200  transferred  their  shares  to  the  Securities  Co. 

When  this  suit  was  begun,  in  April,  1902,  the  shareholders 
of  the  Securities  Co.  were  more  than  1,300;  in  October, 
1902,  they  were  about  1,800. 

19.  The  Securities  Co.  is  the  absolute  owner  of  the  shares 
acquired  by  it  and  of  the  dividends  thereon.  The  shares  are 
not  pooled  or  consolidated,  nor  are  the  earnings  of  the  two 
roads  pooled.     It  is  in  no  sense  a  "  trust."' 

20.  The  promoters  of  the  Securities  Co. — Mr.  Hill  and  his 
ten  associates — do  not,  all  of  them  together  hold,  nor  have 
they  ever  held  more  than  one-third  of  the  $360,000,000  stock 
of  the  Securities  Co.  that  has  been  issued  and  is  outstanding, 
and  these  gentlemen  and  J.  P.  Morgan  &  Co.  have  never  held 
more  than  $140,000,000. 

21.  By  the  charter  of  each  railway  company,  its  commerce 
is  controlled  and  directed  wholly  by  a  board  of  directors,  the 
members  of  which  are  chosen  for  prescribed  terms  and  cannot 
be  removed  during  their  terms.  And  by  the  laws  of  Minne- 
sota and  Wisconsin  no  person  who  is  a  director  in  one  com- 
pany can  be  a  director  in  the  other. 


398 


193   UNITED  STATES  BEPORTS,   261. 


Arguiiieut  of  Mr.  Young  for  appellants. 

22.  The  Securities  Co.  has  not  attempted  to  control  or  med- 
dle with  the  commerce  or  the  management  of  either  railway, 
nor  is  there  ant  evidence  that  it  purposes  doing  cither.  Ever 
since  its  formation  such  commerce  has  been  conducted  by  the 
two  boards  of  directors  in  complete  independence  of  each 
other. 

23.  There  has  been  no  agreement  to  suppress  and  no  sup- 
pression of  competition  between  the  two  railway  companies, 
which  is  as  active  as  it  was  before  the  Securities  Co.  was 
formed. 

24.  The  entire  interstate  commerce  of  the  two  railways,  the 
rates  on  which  can  be  controlled  by  those  companies  without 
other  competition  or  consent  of  connecting  lines,  falls  short 
[262]  of  three  per  cent  of  their  total  interstate  commerce: 
and  any  restraint  that  could  be  in  any  event  imposed  by  the 
Securities  Co.  on  their  interstate  commerce  could  only  affect 
this  three  per  cent. 

All  the  interstate  commerce  of  each  railroad  (including  the 
competitive  three  per  cent)  has  been  largely  increased  since 
the  organization  of  the  Securities  Co.,  owing  to  the  great  ad- 
vantages of  the  Burlington  connection,  and  to  the  protection 
afforded  to  all  the  commerce  of  the  roads  by  placing  a  major- 
ity of  Northern  Pacific  shares  beyond  the  reach  of  raids,  in 
the  ownership  of  the  Securities  Co.  And  during  such  period 
rates  have  l^een  reduced  to  such  an  extent  as  to  reduce  net 
earnings  by  upwards  of  $1,000,000. 

25.  There  has  been  no  increase  of  capitalization  of  either 
railway  company,  nor  any  watering  of  that  of  the  railway 
companies  or  of  the  Northern  Securities  Co.  The  capital  of 
each  railway  remains  unchanged.  If  the  Securities  Co.  had 
issued  its  shares  at  par  for  cash,  and  used  the  money  to  buy 
the  railway  shares  for  cash  in  the  market  at  their  market 
value,  its  outstanding  shares  would  be  more  than  at  present. 
It  would  have  had  to  issue  and  sell  at  least  190  of  its  shares, 
to  be  able  to  buy  for  cash  each  100  shares  of  Great  Northern 
which  it  has  obtained  by  exchange  of  only  180  of  its  own 
shares.  And  it  would  have  had  to  pay  more  than  $115  for 
Northern  Pacific.  The  course  pursued,  instead  of  watering 
in  any  way  tlie  Securities  Co.'s  stock,  has  furnished  that  com- 
pany with  properties  of  a  market  and  intrinsic  value  consid- 


NORTHEKN    SECURITIES   CO.    V.   UNITED   STATES.       899 
Argunient  of  Mr.  Young  for  appellants. 

erably  in  excess  of  the  par  value  of  the  shares  issued  by  it  in 
payment  for  them. 

Appellants  contend  as  to  the  Anti-Trust  Act  and  its 
meaning : 

1.  The  act  is  wholly  a  criminal  law,  directed  to  the  pun- 
ishment and  prevention  of  crime.  The  remedy  by  injunction, 
etc.,  given  by  the  fou.rth  section  is  not  to  protect  property  in- 
terests, but  solely  to  prevent  ''  violations  of  this  Act ''  (i.  e. 
crime-,  for  every  vii)lation  of  the  act  is  a  crime,  and,  without 
this  section,  would  not  be  within  the  comjietence  of  a  court  of 
equity  to  restrain  by  injunction). 

[263]  2.  Being  a  criminal  statute,  the  act  is  not  to  be  en- 
larged by  construction.  The  first  section  cannot  be  stretched 
so  as  to  make  criminal  (and  whatever  the  section  declares 
unlaAvful,  it  makes  criminal,  and  makes  nothing  criminal  it 
has  not  declared  unlawful)  every  agreement,  combination  or 
conspiracy  that  merely  tends  to  re.strain  commerce  among 
the  States,  or  that  confers  on  the  parties  to  it  or  anv  one  else 
the  power  to  restrain  trade. 

3.  The  act  makes  unlawful  and  criminal  every  contract, 
combination  or  conspiracy  in  direct  restraint  of  interstate 
trade  or  commerce. 

The  gist  of  the  crime  is  the  contract,  combination  or  con- 
spiracy, and  the  offense  is  complete  on  the  making  of  such 
contract,  or  the  formation  of  such  combination  or  conspiracy, 
though  nothing  be  done  to  carry  it  out,  and  though  trade  be 
not  in  fact  restrained. 

But  to  constitute  a  combination  or  conspiracy  in  restraint 
of  interstate  trade  or  commerce,  the  parties  must  combine  or 
conspire  to  do  acts,  which,  if  performed,  will  of  themselves 
restrain  such  trade  or  commerce,  and  will  directly  restrain 
it — that  is,  acts  which  operate  directly  on  such  commerce. 

If  the  acts  which  the  parties  combine  or  conspire  to  do  fall 
short  of  this,  if  they  are  not  such  as  operate  directly  on  the 
connnerce,  and  by  such  operation  directly  restrain  it,  then  the 
combination  or  conspiracy  is  not  within  the  act. 

4.  The  act  makes  criminal  those  contracts,  combinations 
and  conspiracies  only  which  directly  and  immediately  re- 
strain interstate  trade  or  commerce — that  is  by  acting  directly 


400 


193   UNITED  STATES  REPORTS,  263. 


Argument  of  Mr.  Young  for  appellants. 

and  immediately  upon  such  trade  or  commerce.    171  U.  S. 
668,  592 ;  175  U.  S,  2M,  245. 

5.  As  the  crime  consists  in  contracting,  combining  or  con- 
spiring to  do  acts  which  by  their  own  operation  will  directly 
and  immediately  restrain  interstate  commerce,  it  necessarily 
follows  that  if  the  acts  which  the  parties  contract  or  combine 
to  do  are  of  that  description,  they  violate  the  law,  though 
they  had  no  conscious  purpose  or  "  specific  intent "  to  restrain 
interstate  [264]  commerce  by  the  means  of  such  acts  or  at  all. 
156  U.  S.  341. 

On  the  other  hand,  if  the  acts  to  be  done  are  not  such  as  by 
their  own  operation  on  interstate  commerce  directly  restrain 
it,  the  contract,  combination  or  conspiracy  to  do  those  acts  is 
not  a  crime  under  the  Anti-Trust  Act.    175  U.  S.  234. 

6.  The  act  makes  criminal  every  contract,  etc.,  in  direct 
restraint  of  commerce,  without  respect  of  persons. 

A  contract  or  combination  or  conspiracy  that  would  be 
criminal  as  in  restraint  of  interstate  commerce  or  trade  if 
made  between  two  or  more  railway  companies,  is  equally  a 
crime  if  made  between  two  or  more  interstate  carriers  by 
wagon  or  stagecoach  or  ferry,  or  between  two  or  more  inter- 
state traders  wholesale  or  retail.    166  U.  S.  312. 

7.  Any  restraint  of  interstate  conmierce,  or  power  to  re- 
strain it,  directly  consequent  upon  the  acquisition  of  property 
and  incident  to  its  ownership,  is  not,  nor  is  the  agreement  for 
such  acquisition  made  criminal  by,  this  act.    156  U.  S.  16. 

Hence,  where  competitors  in  interstate  trade  or  commerce 
agree  to  and  do  form  a  partnership  or  a  corporation,  or  where 
one  of  them  buys  out  the  other,  or  a  third  person  or  associa- 
tion of  persons  buys  out  both,  whatever  suppression  of  com- 
petition or  power  to  suppress  competition  may  follow  is  not, 
nor  is  the  agreement  to  form  such  corporation,  partnership 
or  association  for  such  purchase,  made  criminal  by  the  act. 
171  U.  S.  505,  567. 

8.  So  where  a  combination  is  formed  to  acquire,  and  which 
does  acquire,  nearly  all  of  an  article  in  common  use  through- 
out the  country  and  shipper  in  large  quantities  among  the 
States,  such  ownership,  though  it  gives  the  power  to  control 
the  interstate  trade  and  commerce  in  such  article,  and  to  sup- 
press such  trade  and  commerce  altogether,  is  not,  nor  is  such 


NORTHERN   SECURITIES   CO.    V.    UNITED   STATES.       401 
Argument  of  Mr.  Young  for  appellants. 

combination,  a  restraint  of  commerce  prohibited  by  the  Anti- 
Trust  Act,  the  power  being  an  incident  of  ownership.  156 
U.  S.  1-,  16. 

9.  By  this  act  Congress  regulates  commerce  by  punishing 
[265]  the  making  of  certain  contracts  by  fine  and  imprison- 
ment. The  regulation  is  and  must  be  uniform  throughout 
the  United  States,  for  an  act  made  criminal  when  done  in 
Minnesota  cannot  be  innocent  when  done  in  Massachusetts. 
The  matters  embraced  in  the  act,  thus  requiring  a  uniform 
regulation  throughout  the  country,  are  matters  within  the 
exclusive  ]\XT\^diici\on  of  Congress,  and  no  matters  that  are 
not  within  such  exclusive  jurisdiction  are  within  the  act. 
If  it  appears  that  the  States  have  jurisdiction  of  any  mat- 
ter (e.  g.,  the  ownership  of  stock  in  or  the  consolidation  of 
railway  companies  doing  an  interstate  business)  claimed  to 
be  within  this  act,  the  existence  of  jurisdiction  in  the  States 
in  conclusive  that  such  matter  is  not  within  the  act. 

The  appellants,  therefore,  maintain  the  following  proposi- 
tions : 

1.  The  Government  is  not  entitled  to  maintain  this  pro- 
ceeding under  sections  1  and  4  of  the  Anti-Trust  Act,  nor 
had  the  Circuit  Court  jurisdiction  of  it  imder  those  sections, 
for  the  conspiracy  or  combination  charged  in  the  petition 
and  found  by  the  Circuit  Court,  if  it  ever  existed,  had  done 
all  it  was  formed  to  do,  and  had  come  to  an  end,  before  the 
proceeding  was  instituted. 

2.  The  only  combination  of  which  there  is  any  evidence  is 
a  combination  formed  in  aid  of  commerce,  to  liberate,  pro- 
tect and  enlarge  and  not  to  restrain  it,  and  which  has  liber- 
ated, protected,  aided  and  enlarged  it,  and  has  not  restrained 
and  does  not  threaten  to  restrain  it. 

3.  There  is  no  evidence  of  the  combination  or  conspiracy 
charged  in  the  petition,  or  of  the  combination  or  conspiracy 
found  by  the  Circuit  Court. 

4.  The  conspiracy  or  combination  in  question  whether  as 
alleged  in  the  petition  or  as  found  by  the  Circuit  Court,  was 
not  a  combination  or  conspiracy  in  restraint  of  interstate 
conmierce,  for  the  only  things  which  the  parties  thereto  com- 
bined or  conspired  to  do  or  procure  to  be  done  were  (1)  the 

21220— VOL  2—07  M ^26 


402 


im   UNITED  STATES  REPORTS,   265. 


Argument  of  Mr.  Young  for  appellants, 
organization  of  the  Securities  Co.,  and  (2)  the  acquisition 
by  the  Se-  [266]  curities  Co.,  with  their  help,  of  a  large  ma- 
jority of  the  shares  of  each  of  the  defendant  railway  com- 
panies in  exchange  for  its  own  shares. 

The  things  so  to  be  done  or  procured  to  be  done  (whether 
taken  separately  or  together)  are  such  as  do  not  and  cannot 
m  any  wise  restrain  interstate  commerce,  and  hence  a  combi- 
nation or  conspiracy  to  do  them  or  procure  them  to  be  done 
is  not  in  restraint  of  interstate  commerce. 

The  Circuit  Court  erred  in  holding  (1)  that  the  Securities 
Co.,  having  acquired  such  majority  of  shares,  has  power  to 
suppress  competition  between  the  railway  companies.  In 
fact,  the  Securities  Co.  is  without  power  to  suppress  com- 
petition. It  is  a  mere  shareholder  and  not  a  director.  The 
office  of  director  is  created  by  the  State  and  not  by  the  share- 
holder. As  to  power  of  directors  being  distinct  from  those 
of  shareholders,  see  Hoyt  v.  Thompson,  19  N.  Y.  207,  216; 
BurriU  v.  Nahant  Bank,  2  Mete.  163 ;  Pullman  Car  Co.  v! 
Missovri  Pac,  Ry,  Co,,  115  U.  S.  587.  The  charter  of  each 
railway  company  gives  to  the  board  of  directors  all  the  pow- 
ers attributed  to  it  in  the  foregoing  decisions.  Rev.  Stat. 
Wisconsin,  1878,  c.  87,  §  1804;  Gen.  Stat.  Minnesota,  1894, 
§  2717;  (2)  that  it  obtained  and  holds  such  power  by  means 
of  and  as  a  party  to  the  combination  or  conspiracy  and  not  as 
an  incident  of  its  ownership  of  the  shares;  (3)  that  the  pos- 
session of  such  power  to  suppress  competition  is  of  itself 
and  irrespective  of  its  exercise,  a  restraint  of  interstate  com-' 
merce;  and  therefore  (4)  the  combination  or  conspiracy  in 
question  was  in  restraint  of  such  commerce. 

6.  The  petition  does  not  allege  nor  do  the  proofs  disclose 
any  facts  showing  a  monopoly  or  a  conspiracy  or  attempt  to 
monopolize  any  interstate  or  foreign  commerce.  For  defi- 
nition of  monopoly,  see  Texas  Pacific  v.  Interstate  Com. 
Com.,  162  U.  S.  197,  210;  United  States  v.  Freight  Associa- 
tion, 166  U.  S.  290;  Pearsall  v.  Cheat  Northern,  161  U.  S 
646,  676;  United  States  v.  E.  C.  Knight  Co.,  156  U.  S.  1, 10; 
In  re  Coming,  51  Fed.  Rep.  205,  211. 

[267]  6.  The  case  is  not  within  the  Anti-Trust  Act,  for 
in  any  view  of  the  matters  complained  of,  their  effect  upon 
commerce—whether  much  or  little,  for  good  or  for  ill-r-is 


NORTHERN   SECURITIES  CO.    V.   UNITED   STATES.       403 
Argument  of  Mr.  Young  for  appellants. 

indirect  and  remote.  The  Anti-Trust  Act  and  the  regulative 
power  of  Congress  under  the  commerce  clause  of  the  Consti- 
tution, are  alike  strictly  limited  to  matters  which  directly  and 
immediately  affect  interstate  or  foreign  commerce. 

In  determining  what  is  a  combination  in  direct  restraint  of 
commerce  the  distinction  between  direct  and  indirect  regula- 
tions of  commerce  becomes  important,  see  Fargo  v.  Michigan, 
121  U.  S.  230 ;  Phila.  S.  S.  Co.  v.  Pennsylvania,  122  U.  S.  326, 
328;  N.  Y.,  L.  Erie  <&c.  R.  Co.  v.  Pennsylvania,  158  U.  S. 
431;  Maine  v.  Grand  Trunk  Railway  Co.,  142  U.  S.  217; 
PicJcard  v.  Pullman  Co.,  117  U.  S.  34 ;  Pullman  Co.  v. 
Pennsylvania,  141  U.  S.  18,  25.  In  the  declarations  of  the 
limitations  of  the  act  and  of  the  power  of  Congress,  the 
court  has  merely  repeated  its  settled  doctrine.  Hooper  v. 
California,  155  U.  S.  648,  655;  Williams  v.  Fears,  179  U.  S. 
270,  278. 

Where  subjects  for  commercial  regulation  are  of  a  nature 
to  require  or  admit  of  one  uniform  system  or  plan  of  regula- 
tion, the  power  to  regulate  them  is  exclusively  in  Congress, 
and  any  attempted  regulation  by  a  State  whether  to  enlarge 
or  restrain,  is  j-imply  idtra  vires,  for  it  is  a  usurpation  of  a 
power  vested  exclusively  in  Congress.  Wabash  Raikcay  Co. 
V.  Illinois,  118  U.  S.  557,  574;  Rohhins  v.  Shelby  Taxing 
DistHct,  120  U.  S.  489,  492 ;  Philadelphia  S.  S.  Co.  v.  Penn- 
sylvania, 122  U.  S.  326,  336 ;  Bowman  v.  Chicago,  etc.,  R.  R, 
Co.,  125  U.  S.  465,  480.  Anything,  therefore,  not  exclu- 
sively within  the  jurisdiction  of  Congress  is  not  within  the 
act. 

7.  The  very  general  language  of  the  Anti-Trust  Act  was 
not  intended  to  include  combinations  to  purchase  railways  or 
railway  shares,  competing  or  non-competing,  nor  consolida- 
tions actual  or  "  virtual "  of  railways  or  railway  companies. 
Congress,  when  passing  the  act  did  so  with  full  knowledge 
of  the  situation.  Ches.  <&  O.  Tel.  Co.  v.  Manning,  186  U.  S. 
238,  245.  It  knew  that  the  railway  systems  of  the  country 
[268]  rested  on  such  combinations  authorized  by  state  laws, 
some  of  them  having  existed  many  years. 

These  are  matters  of  public  history  and  within  the  knowl- 
edge of  the  court.  Ohio  L.  &  T.  Co.  v.  Debold,  16  How.  416, 
435;  R.  R.  Co.  v.  Maryland,  21  Wall.  456,  469;  Brown  v. 


41^% 


193  UNITED  STATES  BEPOBTS,  268. 


Argument  of  Mr.  Johnson  for  Northern  Securities  Company. 

Piper,  91  U.  S.  37, 42 ;  Phillips  v.  Detroit,  111  U.  S.  604,  606 ; 
Lehigh  Valley  v.  Pennsylvania,  145  U.  S.  192,  201 ;  Louisville 
€&  Nashville  v.  Kentucky,  161  U.  S.  677,  699;  Preston  v. 
Browder,  1  Wheat.  115,  121 ;  United  States  v.  Union  Pacific, 
91  U.  S.  72,  79;  Piatt  v.  Union  Pacific,  99  U.  S.  48,  55. 

If  Congress  had  meant  to  declare  such  consolidations  and 
stock  purchases  of  competing  companies  to  be  illegal,  the  se- 
curities issued  by  them  void  and  state  legislation  unconstitu- 
tional, it  would  have  said  so  in  plain,  specific  and  apt 
language. 

The  construction  put  on  the  act  by  all  branches  of  the  gov- 
ernment and  by  everybody  down  to  the  commencement  of 
this  proceeding,  has  been  in  full  accord  with  our  position 
that  the  act  has  nothing  to  do  with  combinations  to  own  rail- 
ways or  railway  shares.  The  following  consolidations  of 
competing  railroad  lines  existed  at  the  time  of  the  passage  of 
the  act  or  have  been  effected  since  that  time:  Boston  .^  Maine 
Hailroad  Company  and  competing  lines;  New  York,  New 
Haven  &  Hartford  Eailroad  Co.,  and  New  P:ngland  Railroad 
Co.  and  other  roads;  New  York  Central  Railroad  and  the 
West  Shore  and  Rome,  Watertown  and  Ogdensburg  and 
other  railroad  companies;  Pennsylvania  Railroad  Company 
and  Baltimore  and  Ohio  and  other  companies;  the  Reading 
Company. 

8.  Even  though  the  Government  were  entitled  to  any  in- 
junction, the  decree  goes  far  beyond  what  the  Government 
was  entitled  to  receive,  or  the  Circuit  Court  authorized  to 
grant. 

Mr,  John  G.  Johnson,  for  appellant,  Northern  Securities 
Company,  argued: 

The  facts  found  by  the  court  below  cannot  be  deduced 
from  the  testimony  and  the  substratum  of  the  bill  filed,  of 
the  ar-  [269]  guments  below  in  its  support,  and  of  the  deci- 
sion of  the  lower  court  was  the  assertion  of  a  conspiracy 
which  never  existed.  It  is  conceded  that  the  Securities  Cora- 
pany  did  acquire  a  majority  of  stock  of  both  railroad  com- 
panies  and  such  acquisition  was  t)ecause  of  its  intent  to 
acquire.  The  company  is  chargeable  with  all  the  legal  con- 
sequences of  an  intentional  acquisition  of  such  shares.    It  is 


NORTHERN   SECURITIES  CO.   V.   UNITED  STATES.       405 
Argument  of  Mr.  Johnson  for  Northern  Securities  Company. 

denied,  however,  that  any  individuals  or  corporations  con- 
spired to  do  anything  except  to  form  a  corporation  and 
acquire  shares  of  the  Northern  Pacific  Railway  Company 
belonging  to  them,  and  about  twenty-seven  per  cent  of  the 
stock  of  the  Great  Northern  Railway  Company.  The  sub- 
sequent acquisition  of  an  additional  fifty  per  cent  of  the 
Great  Northern  stock  was  for  third  persons  over  whom  the 
defendants  had  no  control  but  who  simply  accepted  an  invi- 
tation to  sell  their  stock  issued  by  the  Securities  Company 
after  its  formation.  The  authorized  capital  of  that  com- 
pany was  made  sufficiently  large  to  enable  it  to  acquire  all 
the  stock  of  both  roads  but  this  was  not  in  pursuance  of  any 
combination,  conspiracy  or  contract  but  of  the  policy  of  the 
appellants  to  let  every  co-shareholder  of  the  railroad  com- 
panies have  the  benefit  of  every  advantage  obtained  for 
themselves. 

Everything  of  which  the  Government  complains  was  done 
with  the  intention  of  working  out  with  permanent  results  the 
problem  of  interstate  and  international  commerce.  In  order 
to  effect  permanent  arrangements  and  to  promote  a  great 
public  end  through  a  greatly  increased  commerce,  at  low 
rates,  the  two  railway  companies  purchased  the  shares  of  the 
Burlington  road  for  over  $200,000,000,  paid  by  their  joint 
and  several  bonds,  thus  being  able  to  give  assurances  of  per- 
manency of  low  rates  and  do  such  other  things  as  were  nec- 
essary in  building  up  and  enlarging  this  great  commerce. 
This  resulted  in  demands  by  the  Union  Pacific  for  a  part  of 
the  traffic  and  on  their  being  refused  the  Oregon  Short  Line 
acting  for  the  Union  Pacific  acquired  a  large  amount,  almost 
a  controlling  interest,  in  the  stock  of  the  Northern  Pacific. 
The  situation  was  critical  and  the  organization  of  the  Securi- 
ties Com-  [270]  pany  and  all  that  followed  was  for  the  pur- 
pose of  preventing  a  raid  on  the  stock  similar  to  that  which 
had  so  nearly  succeeded  and  was  done  solely  with  the  attempt 
to  secure  the  maintenance  of  the  benefit  to  commerce,  which 
had  resulted,  and  which,  still  more  in  the  future,  would  result 
from  the  acquisition  of  the  Burlington  shares. 

Such  alliances  as  that  of  the  Burlington  with  the  Northern 
Pacific  and  Great  Northern  are  valuable  because  they  give  an 
opportunity  of  securing  a  large  number  of  markets  in  a  great 


^!VD 


193   UNITED   STATES  REPORTS,   270. 


Argmnent  of  Mr.  JoliDson  tor  Northern  Securities  Oompany. 

and  rich  territory  under  a  fairly  permanent  transportation 
policy.  They  are  of  enormous  value  to  the  people  along  the 
lines  of  the  railroads,  to  the  country  generally  and  to  the 
world.  To  transact  business,  large  investments  must  be  made 
and  the  condition  prerequisite  thereto  is  reasonable  assurance 
of  continuance.  When  the  Government  seeks  to  condemn  an 
arrangement  which  promotes  the  interest  of  the  whole  nation 
by  pretending  that;  it  was  intended  to  restrain  trade,  it  must 
establish  convincingly  the  existence  of  the  illegal  intent 
aUeged. 

The  sole,  question  of  law  to  be  determined  is  whether  or  not 
the  acquisition  by  a  corporation  of  a  controlling  interest  in 
the  shares  of  two  competitive  railway  companies,  violates 
the  Sherman  Act.  It  is  not  illegal  for  an  existing  corpora- 
tion to  acquire  such  controlling  interest;  it  is  not  illegal  for 
persons  holding  a  sufficient  number  of  shares  to  enter  into  an 
agreement  that  will  form  a  company  to  acquire  such  control. 
An  agreement  to  do  what  is  legal  cannot  be  an  illegal  con- 
spiracy, combination  or  contract. 

The  Sherman  Act  is  a  penal  one,  defining  a  criminal  of- 
fense, for  which  it  provides  a  punishment.  It  is  an  indis- 
pensable prerequisite  to  a  conviction  for  a  criminal  misde- 
meanor, especially  if  thei-e  be  no  criminal  intent,  and  such 
does  not  exist  in  the  present  case,  that  the  offense  condemned 
shall  be  clearly  defined,  and  it  is  well  settled  that  penal  laws 
are  to  be  strictly  construed.  United  States  v.  WUlherger,  5 
Wheat.  76 ;  United  States  v.  Whittier,  5  Dillon,  35,  citing 
United  States  v.  J/orm,  14:  Pet.  464;  United  States  v.  Shel- 
don, 2  Wheat.  119;  United  fS71]  States  v.  CUyton,  2  Dillon, 
219;  Bishop  on  Statutory  Crimes,  sec.  41;  Andrews  v. 
United  States,  2  Story,  213;  United  States  v.  Hartwell,  6 
Wall.  385,  396;  Swearingen  v.  United  States,  161  U.  S.  446, 
451;  France  v.  United  States,  164  U.  S.  676,  682;  Schooner 
Paulina's  Cargo  v.  United  States,  7  Cr.  52,  61 ;  United  States 
V.  Reese,  92  U.  S.  214,  219;  United  States  v.  Comerford, 
25  Fed.  Kep.  902;  United  States  v.  Chase,  135  U.  S.  255, 
261;  United  States  v.  Goldenberg,  168  U.  S.  95,  102;  Sarlls 
V.  United  States,  152  U.  S.  570,  575. 

This  court  will  not  legislate  but  will  merely  discharge  its 


NORTHERN   SECURITIES   CO.    V,   UNITED   STATES.       407 
Argument  of  Mr.  Johnson  for  Northern  Securities  Company. 

duty  of  construction.  If  the  legislation  is  incomplete  a 
crime  cannot  be  fastened  upon  one  who  has  done  innocently 
something  not  defined  as  criminal.  An  act  not  made  criminal 
caimot  be  condemned  because  it  may  seem  equally,  or  even 
more,  evil  than  the  one  made  criminal.  That  Congress  had 
no  clearly  defined  understanding  of  the  nature  of  the  mis- 
demeanor at  which  it  struck,  is  evidenced  by  the  final  debates 
in  the  House  of  Representatives. 

The  purchase  by  a  person  or  corjDoration,  of  a  majority  of 
the  shares  of  two  competing  railway  companies,  is  not  "  a 
contract,  combination  in  the  form  of  a  trust  or  otherwise,  or 
conspiracy,  in  restraint  of  trade  or  commerce  among  the 
several  States."  The  Sherman  Act  prohibits,  not  a  contract 
tending  to  restrain  trade,  but  one  actually  in  restraint  thereof. 
The  meaning  of  "  restraint  of  trade  "  was  well  understood 
when  the  Sherman  Act  was  passed.  United  States  v.  Freight 
Association,  166  U.  S.  290,  328.  In  the  Addyston  Case,  175 
U.  S.  211,  the  contract  was  actually  in  restraint  of  trade. 

The  holding  by  a  person  or  corporation  as  owner  of  a  ma- 
jority of  the  shares  of  two  competing  railway  companies,  is 
not  "  a  contract  or  combination  or  conspiracy  in  restraint  of 
trade  "  within  the  meaning  of  the  act. 

A  corporation,  though  incorporated  for  the  purpose  of 
holding,  and  actually  holding,  a  majority  of  the  shares  of 
two  competing  railway  companies  is  not  such  a  combination 
or  conspiracy.  See  the  Pearsall  Case,  161  U.  S.  646 ;  United 
States  [272]  v.  Joint  TrafjiG  Association,  171  U.  S.  505,  567. 
A  person  or  corporation,  by  purchasing  a  majority  of  jthe 
shares  of  two  competing  railway  companies  does  not  mo- 
nopolize, or  attempt  to  monopolize,  "  any  part  of  the  trade  or 
commerce  among  the  several  States."  As  to  what  a  monopoly 
is,  see  In  re  Green,  52  Fed.  Rep.  104;  dissenting  opinion  of 
Story,  J.,  in  Charles  River  Bridge  v.  Warden  Bridge,  11 
Pet.  420,  606;  20  Am.  &  Eng.  Ency.  of  Law,  846;  2  Rawle's 
Bouvier's  Dictionary,  435,  and  cases  cited;  Blackstone,  Bk. 
IV,  159;  Century  Dictionary. 

The  purchase  by  one  person,  of  the  property  of  his  rival, 
with  the  intention  thereby  to  destroy  his  competition,  is  not 
illegal,  although  by  the  purchase  he  will  acquire  the  power  to 


408  193  UNITED   STATES  BEPORTS,   272. 

Argument  of  Mr.  Johnson  for  Northern  Securities  Company, 
prevent  the  same.  Oregon  Coal  Co.  v.  Winsor,  20  Wall.  64. 
A  person  or  corporation,  by  holding,  as  owner,  the  majority 
of  the  shares  of  two  competing  railway  companies,  does  not 
monopolize,  or  attempt  to  monopolize  "  any  part  of  the  trade 
or  commerce  among  the  several  States." 

The  power  of  Congress  to  regulate  commerce  does  not  con- 
fer upon  it  a  right  to  prescribe  the  persons  who  may  engage 
therein,  or  to  regulate,  or  to  control,  the  ownership  of  shares 
of  stock  of  corporations  engaging  therein.  United  States  v. 
Kmght,  156  U.  S.  1 ;  Louisville  <&  NashvUU  v.  Kentucky,  161 
U.  S.  677,  693.  * 

The  States  create  railroad  corporations  and  may  prescribe 
the  manner  of  issuance  of  their  shares,  and  the  method  of 
transfer  of  title  thereto.  In  the  use  and  operation  of  rail- 
roads engaged  in  interstate  commerce,  the  corporations  own- 
ing  the  same  must  submit  to  Federal  jurisdiction  but  this  does 
not  involve  any  right  on  the  part  of  the  United  States  to  con- 
trol the  transfer  of  shares  by  the  shareholders,  even  though 
as  a  result  of  said  transfers  the  controlling  interest  may  be 
transferred.  It  is  not  within  the  power  of  the  Federal 
government  to  destroy  the  title  to  property  created  by  the 
State. 

Congress  has  unrestricted  power  to  prevent  restraint  or 
monopolization  of  interstate  commerce,  as  the  authorities 
de-  [2731  fine  those  words,  but  not  as  the  United  States  now 
daims.  Properly  interpreted,  the  Sherman  Act  is  constitu- 
tional  but  the  United  States  is  now  endeavoring  to  have  its 
provisions  interpreted  so  as  to  be  violative  of  States'  rights. 
Such  a  construction  should  not  be  adopted,  if  there  is  one 
which  harmonizes  with  the  Constitution.  Grenada  County 
V,  Brogden,  112  U.  S.  261 ;  Hawaii  v.  ManJcickL  190  U.  S. 
197. 

The  mere  ownership  of  property  cannot  be  an  illegal  re- 
straint of  trade.  As  to  the  power  of  the  State  over  railroad 
corporations,  see  Railroad  Co,  v.  Maryland,  21  Wall.  456; 
Ashley  V.  Ryan,  153  U.  S.  436. 

The  relief  decreed  by  the  lower  court  was  improper  under 
any  aspect  of  the  case.  United  States  v.  Knight,  156  U.  S. 
1,17. 


NORTHEBN   SECURITIES   CO.   V.   UNITED   STATES.       409 
Argument  of  Mr.  Bunn  for  Northern  Pacific  Railway. 

Mr,  Charles  W,  Bunn  for  appellant,  Northern  Pacific  Rail- 
way Company,  argued : 

The  Sherman  Act  only  declares  those  contracts  illegal 
which  are  in  restraint  of  trade.  The  government  cannot 
rest  on  proof  of  combination  and  conspiracy  but  must  estab- 
lish restraint  of  commerce  and  to  do  this  must  prove  that  the 
ownership  by  one  person  of  the  stocks  of  two  competing  roads 
is  per  se  such  restraint. 

The  statute  must  be  interpreted  so  as  to  fall  within  the  con- 
stitutional powers  of  Congress  which  do  not  extend  to  de- 
termine the  ownership  of  stock  in  corporations  or  to  the 
regulation  of  consolidations  of  railroad  companies  chartered 
by  the  States. 

This  power  belongs  to  the  States;  Congress  only  has  the 
power  to  regulate  the  use  of  such  property  in  commerce  be- 
tween the  States.  See  definition  of  commerce  in  Gihhons  v. 
Ogden,  9  Wheat.  1, 189, 196,  as  repeated  by  this  court  in  Pas- 
senger Cases,  7  How.  283,  394,  462 ;  Henderson  v.  Mayor,  92 
U.  S.  259,  270;  Lottery  Case,  188  U.  S.  321,  346.  Congress 
has  power  only  under  §  8,  Art.  I,  of  the  Constitution,  and  by 
Amendment  X  all  power  not  thus  granted  is  reserved  to  the 
States.  Under  the  guise  of  regulating  commerce  Congress 
[274]  cannot  prescribe  general  rules  as  to  transfer  of  real  or 
personal  property  or  prohibit  the  purchase  of  stock  and  bonds 
because  when  bought  they  may  be  used  in  a  business  carried 
on  with  intent  to  monopolize  or  restrict  interstate  commerce. 
In  re  Greene,  52  Fed.  Rep.  104,  113,  citing  County  of  Mobile 
V.  Kimhall,  102  U.  S.  691,  702;  Gloucester  Ferry  Co,  v. 
Pennsylvania,  114  U.  S.  196,  203;  United  States  v.  E,  C, 
Knight  Co,,  156  U.  S.  1.  The  power  of  Congress  extends 
only  to  those  things  that  directly  and  immediately  pertain 
to  commerce ;  the  powers  of  the  States  include  many  things 
which  operate  indirectly  though  importantly  on  commerce. 
Gihhons  v.  Ogden,  9  Wlieat.  1,  203.  For  cases  involving  this 
demarkation  between  national  and  state  powers,  see  United 
States  v.  Joint  Traffic  Association,  171  U.  S.  505 ;  Addyston 
Pipe  Co,  V.  United  States,  175  U.  S.  211,  228;  Hopkins  v. 
United  States,  171  U.  S.  578,  592 ;  Anderson  v.  UniUd  States, 
171  U.  S.  604,  615;  Sherlock  v.  Ailing,  93  U.  S.  99;  Louis- 
vUle  (&  Nashville  v.  Kentucky,  161  U.  S.  677,  701.    In  the 


410 


193  UNITED  STATES  KEPOBTS,  274. 


Arguinent  of  Mr.  Bunn  for  NoiHieni  Puctfic  Eailway. 

last  case  this  court  cites  decisioos  in  which  state  statutes  pro- 
hibiting or  pennitting  consolidation  were  enforced.  This 
would  have  been  erroneous  if  the  things  complained  of  fell 
within  the  power  of  Congress,  for  that  power  if  it  exists  is 
exclusive  of  all  state  action,  and  must  be  so  in  order  that  it 
be  uniform.  As  to  matters  in  regard  to  which  the  States 
may  act  until  Congress  acts,  see  CooUy  v.  Board  of  Port 
Wardens^  12  How.  299;  The  James  Gray  v.  The  John  Fraser, 
21  How.  184;  Pound  v.  Turek,  95  U.  S.  450;  Rohhim  v. 
Shelby  Taxing  District^  120  U.  S.  489,  402 ;  and  cases  cited 
mpra.  No  rule  of  law  is  introduced  by  the  Sherman  xVct; 
what  was  restraint  of  commerce  is  the  same  now ;  the  only 
feature  of  the  act  is  making  the  preliminary  conspiracy  a 
crime.  The  Constitution  itself  forbade  restraint  of  inter- 
state commei-ce.  In  re  Dehs,  158  U.  S.  564.  A  combination 
that  is  restraint  of  trade  now  was  restraint  of  trade  before 
the  act  of  leasing,  buying  and  consolidation  of  competing 
railroads  has  gone  on  for  fifty  years  both  before  and  since 
the  act  of  1890. 

[275]  If  a  thing  restrains  interstate  commerce  it  is  im- 
material how  innocent  the  intent  may  be,  and  if  it  does  not 
restrain  it,  it  is  immaterial  how  evil  the  intent  may  be.  The 
question  is  does  the  agreement  restrain  trade  or  commerce. 
United  States  v.  Freight  Association,  166  U.  S.  290,  341; 
Addyston  Case,  supra.  If  an  action  be  lawful  its  purpose 
is  immaterial.  This  is  elementary.  Phelps  v.  Nowlen,  72 
N.  Y.  39.  45 ;  Kiif  v.  Youmans,  86  N.  Y.  324,  329 ;  Wood  v. 
Amory,  105  N.  Y.  278,  281 ;  Lough  v.  Onterhridge,  143  N.  Y. 
271,  282;  Adler  v.  Fenton,  24  How.  407,  410;  Vmted  States 
V.  Greenhnt,  51  Fed.  Rep.  205,  211;  In  re  Greene,  52  Fed. 
Rep.  104,  111;  Randall  v.  Eazleton,  12  Allen,  412,  418; 
Braekett  v.  Griswold,  112  N.  Y.  454;  United  States  v.  Isham, 
17  Wall.  496;  Dkkerman  v.  Northern  Trust  Co,,  176  U.  S. 
181 ;  Fahm£y  v.  Kelly,  102  Fed  Rep.  403 ;  Mogul  S,  S.  Co. 
V.  McGregor,  App.  Cas.  (1802)  25,  41;  AUen  v.  Flood,  L.  R. 
App.  Cas.  (1808)  1;  Bohn  Mfg.  Co.  v.  HoUis,  54  Minnesota, 
223,  234.  The  opinion  of  the  court  below  proceeds  upon  the 
proposition  that  a  combination  of  two  competitors  is  a  re- 
straint of  trade  because  it  lessens  competition.  This  is  error. 
The  Trans-Missouri,  Joint  Traffic  and  Addyston  cases  prove 


NORTHERN   SECURITIES   CO.    V.   UNITED   STATES.       411 


Brief  of  Mr.  Griggs  for  Nortliern  Securities  Company. 

only  that  a  contract  restraining  rival  companies  from  com- 
peting is  a  restraint  of  trade.  No  such  agreement  exists  in 
this  case.  The  law  does  not  require  competition.  The  busi- 
ness of  a  rival  may  be  purchased  for  the  purpose  of  being 
rid  of  his  competition.  Gamble  v.  Queens  County  Water 
Co.,  123  N.  Y.  91,  104;  Diamond  Match  Co.  v.  Roeher,  lOG 
N.  Y.  473 ;  Rafferty  v.  Buffalo  City  Gas  Co.,  37  N.  Y.  App. 
Div.  618,  621;  Trenton  Potteries  Co.  v.  Olyphant,  56  N.  J. 
Eq.  680 ;  Oakdale  Co.  v.  Garst,  18  R.  I.  484. 

The  Securities  Company  is  neither  alleged  nor  proved  to 
have  done  or  omitted  anything  which  can  be  construed  as  a 
violation  of  the  Anti-Trust  Act.  If  it  has  the  power  to  sup- 
press or  diminish  competition  it  has  not  used  it  and  if  the 
act  has  been  violated  at  all  it  must  be  due  to  the  mere  exist- 
ence of  the  Securities  Company,  to  its  powers  as  applicable 
to  railway  com-  [276]  panics  or  to  something  illegal  in  its 
origin.  The  illegality  can  not  be  sustained  under  the  deci- 
sions of  this  court. 

Mr.  John  W.  Griggs  for  appellant,  Northern  Securities 
Company,  submitted  a  brief : 

The  acts  of  the  defendants  do  not  constitute  a  contract, 
combination,  or  conspiracy  in  restraint  of  interstate  trade  or 
commerce  within  the  meaning  and  prohibition  of  the  Sher- 
1  man  Act.  The  United  ^States  rests  its  case  upon  two  alle- 
gations : 

First.  That  the  Northern  Securities  Company  has  been 
formed  and  has  taken  over  a  majority  of  the  shares  of  the 
two  railroad  companies  in  the  manner  indicated  by  the  plead- 
ings and  proofs. 

Second.  That  the  intended  and  the  necessary  effect  of  those 
acts  is  to  destroy  competition  between  the  two  railroad  com- 
panies. 

The  answer  of  the  defendants  is : 


/ 


First.  That  the  formation  of  the  Northern  Securities  Com- 
pany and  the  acquirement  by  it  of  stock  of  the  two  railroad 
companies  was  a  lawful  transaction,  governed  solely  by  local 
state  laws,  and  not  in  contravention  of  any  pro^asion  of  the 
J^ederal  Constitution  or  statutes. 

Second.  That  the  acts  of  the  defendants  were  all  done  in 


412 


193  UNITED   STATES   REPORTS,   276. 


Brief  of  Mr.  Griggs  for  Northern  Securities  Company. 

good  faith,  without  any  purpose  to  destroy  competition  or  re- 

/  strain  trade. 
To  put  it  more  concisely:  The  defendants  contend  that 
what  they  have  done  is  lawful,  has  no  direct  effect  in  restraint 
of  competition,  and  was  not  intended  to  restrain  competition. 
The  creation  of  railway  corporations;  the  form  of  their 
corporate  organization ;  the  character  and  qualities  of  their 
corporate  stock;  the  routes  which  their  roads  shall  take, 
whether  they  may  connect  with  other  roads  running  in  the 
same  general  direction,  whether  they  may  or  may  not  con- 
solidate with  parallel  lines,  or  operate  parallel  lines  through 
different  portions  of  a  State— all  these  matters  are,  and 
always  have  been,  subjects  of  state  jurisdiction.  Louisville 
<§  Nashville  R,  Co.  v.  [277]  Kentucky,  161  U.  S.  677,  702; 
PearsaU  v.  Great  Northern,  161  U.  S.  646;  Lake  Shore  d 
Mich.  Southern  v.  Ohio,  173  U.  S.  285 ;  Missouri,  Kansas  c5 
Texas  v.  Haber,  169  U.  S.  613 ;  Cleveland  c&c.  Railway  v. 
Illinois,  177  U.  S.  514. 

The  lower  court  did  not  find  as  matter  of  fact  that  the 

defendants  had  in  any  way  restrained  trade  or  commerce;  or 

I  that  they  had  attempted  so  to  do;    or  that  they  had  con- 

4  tracted  or  combined  so  to  do.    What  the  court  did  find  and 

decide  was,  that  the  defendants  had  done  certain  things 

whereby  they  had  obtained  the  power  to  suppress  competition 

between  two  interstate  carriers  who  own  and  operate  com- 

,  peting  and  parallel  lines  of  railroad.    This  idea  is  repeated 

J   agam  and  again  throughout  the  opinion.    It  speaks  of    "  a 

direct  restraint  of  interstate  conmierce  because  it  would  have 

placed  in  the  hands  of  a  small  coterie  of  men  the  power  to 

suppress    competition    between    two    competing    interstate 

carriers." 

To  say  that  one  person,  or  several  persons,  cannot  acquire 
or  own  a  majority  of  the  stock  of  two  competing  railroad 
corporations  because  they  are  thereby  occupying  a  vantage 
ground  from  which  they  can,  if  they  choose,  effect  an  agree- 
I  ment  or  understanding  between  the  two  companies  in  re- 
^  straint  of  competition,  is  to  say  that  the  power  to  commit  a 
crime  is  equivalent  to  its  actual  commission.  ^ 

The  acts  of  the  defendants  being  prima  facie  lawful,  the 
burden  of  proof  is  upon  the  Government  to  show  that  they 


NORTHERN   SECURITIES   CO.    V.   UNITED   STATES.       413 
Brief  of  Mr.  Griggs  for  Nortliern  Securities  Company. 

,  were,  as  the  Attorney  General  charges,  not  bona  fide,  but  a 
mere  formal  device  intended  to  defeat  the  provisions  of  the 
Sherman  Act.  Joint  Traffic,  Trans-Missouri,  Addyston  Pipe 
Cases;  United  States  v.  Hopkins,  171  U.  S.  578;  United 
States  V.  Workingmen^s  Amalgamated  Council,  54  Fed.  Rep. 
994;  State  v.  Shippers  Compress  c&  Warehouse  Co.,  67  S.  W. 
Rep.  (Texas)  1049;  S.  C,  affirmed,  69  S.  W.  Rep.  58. 
/  Any  restraint  of  trade  or  commerce  which  may  result  from 
the  acts  done  by  the  defendants  is  indirect  and  incidental 
only,  and  not  covered  by  the  act.  In  every  instance  where 
this  court  has  had  occasion  to  pass  upon  the  meaning  of  the 
act  [278]  it  has  carefully  distinguished  between  acts  which 
directly  restrain  commerce,  and  acts  which  only  indirectly  or 
incidentally  have  that  effect.  United  States  v.  E.  C.  Knight 
Co.,  156  U.  S.  1,  12,  16;  Joint  Traffic  Case,  171  U.  S.  505, 
566 ;  United  States  v.  Ches.  <&  Ohio  Fuel  Co.,  105  Fed.  Rep. 
93 ;  .S'.  C,  affirmed,  115  Fed.  Rep.  610. 

If  the  Sherman  Act  can  be  so  construed  as  to  forbid  the 
V  sale  of  stock  in  two  competing  railroad  corporations  to  one 
purchaser,  then  that  act  is  an  attempted  interference  on  the 
part  of  Congress  with  transactions  which  are  wholly  within 
the  control  of  the  States  of  the  Union,  and  in  that  respect  the 
act  is  unconstitutional. 

As  to  the  extent  of  state  legislative  power  over  the  instru- 
mentalities of  interstate  commerce,  see  Louisville  (&  Nashville 
Case,  161  U.  S.  677,  702;  C.  <&  C.  Bridge  Co.  v.  Kentucky,  154 
U.  S.  204.  Regulation  of  commerce,  to  be  constitutional, 
must  be  confined  to  commerce  itself,  and  cannot  reach  out  to 
those  things  which  not  being  designed  as  agencies  of  such 
commerce,  or  not  being  actually  enjoined  therein,  may  yet 
have  an  indirect  or  ultimate  relation  thereto. 

Such  a  construction  of  the  Constitution  would  vest  in  Con- 
gress the  regulation  of  all  branches  of  productive  business 
from  their  first  beginnings.    License  Tax  Cases,  5  Wall.  462. 

The  fact  that  an  article  was  manufactured  for  export  to 
another  State  does  not  make  it  an  article  of  interstate  com- 
merce. Coe  V.  Errolj  116  U.  S.  517;  Kidd  v.  Pearson. 
128  U.  S.  1. 

The  creation  of  state  corporations  and  the  regulation  of 
the  sales  of  corporation  shares  belong  to  the  class  of  business 


-.,:j 


414  193   UNITED   STATES  REPORTS,  278. 

Brief  of  Mr.  Griggs  for  Nortliern  Securities  Company. 

afairs  over  which  the  States  have  exclusive  jurisdictian. 
United  States  v.  Boyer,  82  Fed.  Eep.  425 ;  Clark  v.  Central 
E,  R.  <&  Banking  Co.  of  Georgia^  Jackson,  J.,  June  30,  1893, 
U.  S.  Circuit  Court,  Savannah;  In  re  Greene^  52  Fed.  Rep. 
104,  112;  Pearsall  v.  Great  Northern,  161  U.  S.  646,  671; 
Rogers  v.  NashviUe  d;c,  Ry,  Co,,  92  Fed.  Rep.  312. 

But  assuming  that  Congress  may,  under  the  commerce 
clause  of  the  Constitution  and  as  a  regulation  of  commerce, 

/  restrain  [279]  the  States  in  the  exercise  of  their  prerogatives 
from  permitting  two  or  more  corporations  to  which  the 
States  have  given  life  from  merging,  yet  such  a  purpose  on 
the  part  of  the  Government  ought  to  be  clearly  and  distinctly 
expressed,  and  not  be  found  in  the  judicial  interpretation 
of  doubtful  language  contained  in  a  penal  statute. 

J  So  that,  if  it  be  argued  that  Congress  may  forbid  the  sale 
of  one  railroad  to  another,  it  is  enough  to  reply  that  it  has 
never  done  so;  that  the  Sherman  Act  does  not  expressly,  or 
by  any  just  interpretation,  do  so. 

The  Sherman  Act  is  a  penal  statute ;  every  act  which  may 
be  prevented  by  injunctive  order  would,  if  committed  and 
proven,  subject  the  parties  to  criminal  prosecution.  The  rule 
of  strict  construction  must  be  therefore  applied.  United 
States  V.  Whittier,  5  Dillon,  35;  United  States  v.  Sheldon, 
2  Wlieat  119 ;  United  States  v.  Harttoell,  6  Wall.  385 ;  United 
States  V.  Shack  ford,  5  Mason,  445 ;  United  States  v.  Clayton, 
2  Dillon,  219;  United  States  v.  Garretson,  42  Fed.  Rep.  22; 
Dwarris'  Stat.  641 ;  Euhhard  v.  Johnstone,  3. Taunt.  177. 

y  Acquiescence  by  the  Government  for  more  than  eleven 
years  in  the  actual  merger  and  consolidation  of  many  im- 
portant parallel  and  competing  lines  of  railroads  and  steam- 
ships engaged  in  interstate  and  international  commerce,  has 
given  a  practical  construction  to  the  act  of  July  2, 1890,  to  the 
effect  that  it  was  not  intended  to  forbid,  and  does  not  forbid, 
the  natural  processes  of  unification  which  are  brought  about 
under  modem  methods  of  lease,  consolidation,  merger,  com- 
munity of  interest,  or  ownership  of  stock.  As  held  in  1803, 
in  Stuart  v.  Laird,  1  Cranch,  299,  where  the  right  of  a  justice 
of  the  Supreme  Court  to  sit  as  a  Circuit  Judge  was  chal- 
lenged, upon  the  ground  that,  not  having  been  appointed  as 
such,  and  not  having  been  distinctly  commissioned  as  such, 


NORTHERN   SECURITIES   CO.    V.   UNITED   STATES.       415 
Brief  of  Mr.  Grover  for  Great  Nortliern  Railway. 

the  act  of  Congress  of  1789,  under  which  the  Circuit  Court 
was  originally  instituted,  was  unconstitutional. 

"  Practice  and  acquiescence  for  a  period  of  several  years, 
commencing  with  the  organization  of  the  judicial  system, 
[280]  affords  an  irresistible  answer,  and  has  indeed  fixed  the 
construction.  It  is  a  contemporary  interpretation  of  the  most 
forcible  nature.  This  practical  exposition  is  too  strong  and 
obstinate  to  be  shaken  or  controlled.  Of  course,  the  question 
is  at  rest,  and  ought  not  to  be  disturbed." 

This  is  a  just  principle  of  jurisprudence,  founded  upon  the 
very  highest  considerations  of  public  equity. 

It  has  frequently  been  invoked  and  enforced  in  order  to 
prevent  the  disturbance  and  uns(»ttlement  of  important  affairs 
which  have  been  transacted  in  reliance  upon  a  general  public 
;ind  private  belief  that  the  law  did  not  include  them  in  its 
terms  of  condemnation. 
^  But  we  venture  the  assertion  that  no  case  has  ever  arisen 
in  which  a  disregard  of  that  salutary  rule  of  construction 
would  result  in  such  widespread  and  irremediable  injury  to 
vested  interests  as  this.  Not  that  any  decree  which  this  court 
could  make  against  these  defendants  would  particularly  or 
radically  affect  their  property  interests,  but  because  the  de- 
cision once  made  that  the  Sherman  Act  applies  to  such  trans- 
actions as  the  purchase,  lease,  merger  or  consolidation  of 
parallel  lines  of  transportation,  would  render  every  such 
transaction  for  the  last  thirteen  years  unlawful,  and  require 
the  Attomev  General,  in  the  due  discharo:e  of  his  dutv,  to 
i  bring  suit  for  dissolution  and  injunction.  Unnumbered  mil- 
^  lions  of  dollars  of  capital  stock  and  bonds  issued  upon  rail- 
road mergers  and  consolidations  would  be  tainted  with  ille- 
gality, or  affected  in  value  by  the  withdrawal  of  the  property 
against  which  they  were  issued.  Purchases  of  stock  in 
underlying  roads  long  ago  made  and  paid  for  would  be  un- 
settled, and  financial  chaos  would  result. 

Mr,  M.  D,  Grover  for  appellant,  Great  Northern  Railway 
Company,  submitted  a  brief : 

The  findings  of  fact  upon  which  the  decree  rests  are  con- 
trary to  the  evidence.  This  is  made  clear  by  separating 
the  findings  and  considering  the  evidence  bearing  on  eadi 


v/ 


416 


193  UNITED   STATES  BEPOBTS^  281. 


Brief  of  ^rr.  Grover  for  Great  Northern  Railway. 

[281 1  separately.  There  was  no  desire  or  intent  to  evade 
the  Anti-Trust  Act,  to  restrain  competition,  to  monopolize 
trade,  to  inflate  securities,  water  stock,  or  create  fictitious 
capital. 

J  I.  It  is  not  denied  that  the  Northern  Securities  Company 
is  a  corporation  lawfully  organized  under  the  laws  of  the 
State  of  New  Jersey,  with  charter  power  to  purchase  and 
sell  securities  of  all  kinds,  and  to  purchase,  hold,  vote  and 
sell  all  the  shares  of  stock  of  any  single  corporation  or  of 
Ifion-competing  corporations.  Its  right  to  purchase,  hold, 
vote  and  sell  all  the  stock  of  the  Great  Northern  Railway 
Company  alone,  or  the  Northern  Pacific  Railway  Company 
alone,  is  not  denied. 

II.  The  organization  of  the  Company  was  the  result  of  a 
plan  to  form  an  investment  or  holding  company,  which  had 
its  inception  years  before  its  articles  were  filed,  among  not 
exceeding  ten  large  holders  of  Great  Northern  stock,  who 
had  taken  an  active  interest  in  the  policy  of  the  company  and 
its  administration,  but  who  never  had  held  in  the  aggregate 

f  to  exceed  one-fourth  of  its  outstanding  stock.  It  was  thought 
'  that  if  a  company  were  formed  to  which  they  might  sell 
their  individual  holdings,  their  shares  would  be  likely  to  be 
held  together,  so  long  as  a  majority  of  the  holding  company 
should  wish,  and  that  this  would  tend  to  give  stability  to  the 
policy  of  the  company,  be  of  aid  to  it  in  its  financial  opera- 
tions, and  maintain  the  value  of  its  investments. 

III.  The  Burlington  purchase  was  made  to  enlarge  trade, 
not  to  restrain  it;  to  increase  competition,  not  to  suppress 
it.  At  the  time  of  the  purchase  it  was  not  contemplated  by 
either  purchasing  company  or  its  shareholders  that  any  alli- 
ance between  the  purchasing  company  or  its  shareholders  was 
needed  to  preserve  to  each  company  its  fair  share  of  the  ad- 
vantages secured  by  the  purchase. 

J  IV.  At  the  time  of  the  organization  of  the  Securities  Com- 
pany the  Great  Northern  shareholders  referred  to  owned 
about  $30,000,000  of  Great  Northern  stock,  and  $35,000,000 
[282]  of  Northern  Pacific  common  stock,  having  increased 
their  holdings  of  the  latter  by  purchases  from  J.  P.  Morgan 
&  Oo.  They  did  not  control  a  majority  of  the  shares  of 
^_  either  of  the  defendant  railway  companies.    In  view  of  the 


fMp. 


NOBTHEBN    SECUBITIES   CO.    V.   UNITED   STATES.       417 

Brief  of  Mr.  Grover  for  Great  Northern  Railway. 

injury  apprehended  to  both  companies,  and  their  sharehold- 
ers, and  the  better  to  protect  their  interests  in  the  future, 
against  raids  of  adverse  interests,  the  Great  Northern  share- 
holders referred  to  deemed  it  advisable  that  the  holding 
company  which  they  had  considered  should  be  organized, 
should  have  power  to  purchase,  not  only  their  own  Great 
Northern  and  Northern  Pacific  shares,  but  also  the  shares 
of  such  other  Great  Northern  and  Northern  Pacific  share- 
'  holders  as  might  wish  to  sell  their  stock  to  it,  and  also  the 
shares  of  compaines  already  formed,  and  others  that  might 
be  formed,  for  the  purpose  of  aiding  the  traific  operations 
of  the  Great  Northern  and  Northern  Pacific  companies. 

V.  At  this  time  it  was  not  expected  by  any  of  the  persons 
concerned,  that  any  Northern  Pacific  shares,  except  the 
$42,000,000  owned  by  them  and  by  J.  P.  Morgan  &  Co. 
would  be  acquired  by  the  proposed  holding  company.  The 
organization  of  the  company  was  not  dependent  on  any 
agreement  that  it  should  acquire,  nor  upon  the  question  of, 
a  majority  of  the  shares  of  either  of  the  defendant  railway 
companies.  There  was  no  agreement  or  understanding  be- 
tween the  Great  Northern  shareholders  referred  to,  that  they 
or  either  of  them  would  undertake  to  influence  any  one  of 
the  other  1,800  Great  Northern  shareholders,  or  of  the  other 
3,600  Northern  Pacific  shareholders,  to  sell  their  shares  to 
the  company. 

VI.  The  Great  Northern  shareholders  referred  to,  upon 
the  organization  of  the  Northern  Securities  Company  and 
the  sale  of  their  shares  to  it,  parted  with  such  stock  control 
as  they  had  in  the  Great  Northern  and  Northern  Pacific 
companies.  They  do  not  own  to  exceed  one-third  of  the  out- 
standing capital  stock  of  the  Securities  Company.  At  the 
time  of  the  trial  the  stock  of  the  Securities  Company  was 
held  by  1,800  [283]  separate  owners.  The  stock  control  of 
the  Securities  Company  is,  therefore,  not  in  the  eight  or  ten 
Great  Northern  shareholders  referred  to,  but  in  the  1,790 
other  shareholders  of  the  Securities  Company,  owning  at 
least  two-thirds  of  its  outstanding  shares. 

VII.  Nothing  has  been  done  except  the  purchase  by  the 

21220— VOL  2--07  M ^27 


TcJ.O 


193   UNITED   STATES  REPORTS,   283. 


Brief  Of  Mr.  Grover  f6r  Great  Northern  Railway. 

Securities  Company  of  a  majority  of  the  stock  of  the  Great 
Northern  and  Northern  Pacific  companies. 

VIII.  The  Securities  Company  as  owner  of  the  stock  so 
purchased  may  sell  it  or  pledge  it.  It  has  made  no  agree- 
ment as  to  what  it  will  do  with  it,  or  how  it  will  vote  it,  or 
how  it  will  dispose  of  the  dividends  received  upon  it.  It  is 
not  a  trustee  of  those  from  whom  it  received  such  shares,  and 
owes  them  no  duty  or  obligation  respecting  the  shares,  since 
they  have  no  further  interest  in  them. 

IX.  It  is  not  claimed  or  pretended  that  the  defendant  rail- 
way companies  have  entered  into  any  contract  or  combina- 
tion in  restraint  of  trade,  or  that  either  of  them  has  done  any- 
thing to  restrain  trade  or  in  violation  of  law.  It  is  not 
claimed  that  the  Securities  Company  can  restrain  trade,  ex- 
cept through  the  exercise  of  its  right,  as  owner  of  the  shares 
It  purchased,  to  vote  them  at  stockholders'  meetings,  in  the 
election  of  a  separate  board  of  directors  for  each  of  the  de- 
fendant railway  companies;  for  the  boards  must  be  separate 
under  the  laws  of  the  States  of  Minnesota  and  Wisconsin. 

/  X.  This  suit  was  not  brought  to  prevent  or  restrain  the 
execution  of  a  contract,  or  the  forming  of  a  combination,  in 
restraint  of  trade,  but  to  restrain  the  Securities  Company 
from  voting  the  stock  it  owns  at  stockholders'  meetings,  and 
from  receiving  dividends,  thereon,  thereby  preventing  'pay- 
ment of  dividends  upon  its  own  shares  issued  in  payment  for 
the  shares  it  purchased,  upon  the  ground  that  mere  posses- 
sion of  the  votmg  power  of  the  shares,  is  an  unlawful  re- 
stramt  and  regulation  of  the  interstate  commerce  of  the 
defendant  railway  companies. 

ra?/i  ^^®  C^overnment  has  no  financial  interest  in  this  suit. 
12m]  The  only  way  in  which  the  Securities  Company  could 
restrain  the  commerce  of  the  two  railway  companies,  is 
through  the  voting  power  of  the  shares  it  owns.  If  it  had 
purchased  the  shares  of  only  one  of  the  companies,  its  right 
to  vote  such  shares  would  not  be  questioned.  Trade  could 
not,  within  the  contention  of  the  Government,  or  the  ruling 
of  the  court,  be  restrained  by  the  Securities  Company,  should 
its  voting  powers  be  limited  to  the  shares  of  one  of  the  com- 
panies. The  decree  enjoins  it  from  voting  the  shares  of 
either  company  and  from  receiving  dividends  from  either. 


'.. 


NORTHERN    SECURITIES   CO.    V.    UNITED   STATES.       419 
Brief  of  Mr.  Groyer  for  Great  Northern  Railwaj. 

JThe  effect  of  the  decree  is  to  deprive  it  of  the  means  to  pay 

{dividends  upon  its  own  stock  whether  issued  in  payment  for 

/the  stock  it  purchased,  or  issued  for  cash.     Thus  the  decree 

/destroys  the  earning  power  of  the  stock  of  the  Securities 

Company,  a  large  majority  of  which  is  now  held  by  over 

eighteen  hundred  bona  fide  holders  in  the  usual  course  of 

business  not  parties  to  the  suit. 

r  The  important  questions  are :  1.  Does  the  commerce  clause 

/of  the  Constitution  of  the  United  States  confer  upon  Con- 

/gress  jurisdiction  to  regulate  the  issue,  sale  and  ownership  of 

/  the  capital  stock  of  corporations  organized  under  the  laws 

/  of  any  one  of  the  several  States,  or  to  inquire  into  the  motives 

(^  of  incorporators,  or  of  the  buyers  or  sellers  of  their  shares? 

2.  Has  Congress,  under  the  commerce  clause  of  the  Con- 
stitution of  the  United  States,  power  to  forbid  or  regulate 

.  the  purchase  or  lease,  by  one  railway  company  engaged  in 
interstate  commerce,  of  the  railway  of  its  competitor,  or  the 
purchase  or  lease  by  the  owner  of  one  ferryboat,  stage  coach 
or  river  steamboat,  engaged  in  interstate  trade,  of  the  ferry- 
boat, stage  coach  or  river  steamboat,  of  a  competitor,  on  the 
ground  Ihat  through  such  purchase  or  lease  competition  may 
be  restrained,  and  commerce  regulated  ? 

3.  Is  the  unity  of  ownerehip  through  purchase,  partner- 
ship, consolidation  or  lease,  of  a  majority  of  the  shares  of 
competing  corporations,  engaged  in  interstate  trade,  a  con- 
tract or  combination  in  the  form  of  trust  or  otherwise,  for- 
bidden by  the  Anti-Trust  Act,  as  in  restraint  of  trade? 

/  [285]  4.  Is  there  anything  in  connection  with  the  organ- 
ization of  the  Northern  Securities  Company,  or  its  purchasers 
of  stock,  that  in  any  way  distinguishes  its  right  to  vote  and 
receive  dividends  upon  such  stock  from  the  right  of  any  sin- 
gle interest,  individual  or  corporate,  to  vote  and  receive  divi- 
dends upon  shares  of  competing  corporations  engaged  in 
interstate  trade,  purchased  in  the  ordinary  course  of  business, 
or  acquired  by  gift  or  inheritance  ?   . 

5.  This  suit  was  brought  under  section  4  of  the  Anti-Trust 
Act,  which  gives  the  court  jurisdiction  to  prevent  and 
restrain  violations  of  the  act.  Every  violation  of  the  act  is 
criminal.  The  court  is,  therefore,  given  jurisdiction  to  pre- 
vent and  restrain  the  commission  of  a  crime.     Months  before 


\ 


i 


420 


193  UNITBB  8TATB8  KEPOBTS,  285. 


Brief  of  Mr.  Orover  for  Great  Northern  Railway. 

J  the  suit  was  l^egim,  the  Securities  Company  had  acquired  a 
large  majority  of  the  shares  of  the  defendant  railway  com- 
panies, from  time  to  time,  from  hundreds  of  individual 
shareholders,  who  sold  their  holdings  in  good  faith,  and  much 
of  the  stock  so  taken  in  payment  therefor  has  since  been  sold 
and  exchanged,  and  pa&sed  through  many  hands,  in  the  usual 
course  of  business.  Does  the  Anti-Trust  Act  give  the  court 
jurisdiction  to  annul  the  purchases  made  by  the  Northern  Se- 
curities Company,  and  compel  a  return  of  the  shares  it  pur- 
chased! Payment  for  the  shares  it  bought  was  made  in^ts 
own  stock  in  part  only.  It  paid  cash  to  the  amount  of  over 
$40,000,000.    The  owners  of  such  shares  are  changing  from 

yday  to  day ;  they  are  not  before  the  court.  The  decree  does 
not  restrain  a  contract  or  combination  in  restraint  of  trade. 
It  destroys  or  impairs  the  value  of  millions  of  dollars  worth 
of  property,  owned  by  many  hundreds  of  people  who  ac- 
quired their  title  in  good  faith  and  who  are  not  parties  to  this 
suit.  First.  The  commerce  clause  of  the  Constitution  of  the 
United  States  does  not  take  away  from  the  severjil  States  the 
right  to  authorize  the  formation  of  corporations,  define  their 
business,  fix  the  amount  of  their  capital  or  purchasing  power, 
and  regulate  the  issue,  sale  and  ownership  of  their  capital 
stock. 

As  respects  the  purchase  by  one  corporation  of  the  shares 
[286]  of  another,  the  matter  rests  with  the  States  which 
have  created  the  corporations.  Should  unification  of  owner- 
ship of  property  in  corporations  proceed  to  such  an  extent  as 
to  be  thought  against  public  policy,  it  may  be  prevented  by 
the  several  States,  through  limiting  the  power  of  corpora- 
tions, and  restraining  their  right  to  engage  in  business. 

It  has  beeli  the  practice,  since  the  infancy  of  railroads  in 
this  country,  for  one  railroad  company  to  purchase  or  lease 
the  railroad  of  a  competing  company,  or  to  acquire  a  majority 
of  the  shares  of  a  competing  company,  or  of  two  companies 
competing  with  each  other,  or  to  effect  the  consolidation  of 
competing  companies.  This  has  been  done  without  objection 
from  anv  branch  of  the  Federal  Government,  and  has  invari- 
ably  proven  beneficial  to  the  railway  companies  concerned,  to 
their  shareholders,  and  to  the  public.  The  extent  to  which 
this  has  been  done  appears  in  the  record,  and  is  shown  by 


NOBTHERN   SECURITIES   CO.   V.   UNITED   STATES.       421 


Brief  of  Mr.  Grover  for  Great  Northern  Railway. 

extracts  from  Poor's  Manual  and  from  the  annual  reports 
made  by  the  Interstate  Commerce  Commission  to  Congress, 
from  1889  to  1900.  And  see  the  brief  of  Judge  Young  where 
this  subject  is  discussed  at  length  with  proper  reference  to  the 
record. 

Second.  Unity  of  ownership  of  shares  of  competing  cor- 
porations, engaged  in  interstate  trade,  does  not  restrain  such 
trade,  and  is  not  forbidden  by  the  Anti-Trust  Act,  nor  is 
such  unity  of  ownership  a  regulation  of  interstate  commerce, 
and  thus  subject  to  exclusive  Federal  jurisdiction  under  the 
commerce  clause  of  the  Constitution.  Joint  Traffic,  Trans- 
Missouri  and  Addyston  Pipe  Co.  cases. 

There  is  a  distinct  difference  between  an  agreement  be- 
tween the  owners  of  competing  concerns,  to  divide  territory, 
to  restrain  output,  or  to  maintain  prices,  and  the  uncondi- 
tional sale  of  the  property  or  business  of  one  of  them  to  the 
other,  or  of  the  property  of  business  of  both  to  another  per- 
son. In  the  former  case,  the  agreement  in  terms  restrains 
competition  in  trade  operations,  between  separate  owners  or 
establishments,  or  instrumentalities  engaged  in  such  opera- 
tions. The  agree-  [287]  ment  relates  to  the  manner  in 
which  competitors  shall  conduct  their  business.  If  one  com- 
peting concern  buys  the  plant  or  business  of  its  competitor, 
competition  is  not  thereby  directly  restrained.  The  restraint 
in  such  case,  if  any,  is  merely  an  incident  to  the  ownership  of 
property,  and  the  fact  that  there  may  be  such  a  restraint  does 
not  forbid  the  acquiring  of  such  ownership.  By  unity  of 
interest  output  is  not  necessarily  limited,  prices  are  not 
necessarily  increased.  On  the  contrary,  the  public  may  be 
benefited,  prices  may  be  less  by  reason  of  greatly  increased 
volume  of  business  and  less  cost  per  unit  of  production. 

Third.  The  Anti-Trust  Act  is  a  penal  statute  and,  as  con- 
strued by  the  court  below,  it  makes  unity  of  ownership  of  a 
majority  of  the  shares  of  competing  corporations  engaged  in 
interstate  trade,  no  matter  how  such  ownership  is  acquired, 
criminal,  because  such  ownership  gives  power  to  commit 
crime. 

It  is  conceded  that  such  ownership,  so  far  as  it  may  control 
the  policy  of  the  corporations,  can  be  exercised  for  a  lawful 


422 


193   UNITED   STATES  REPOBTS,   287. 
Brief  of  Mr.  Greyer  for  Great  Northern  Railway. 


purpose,  for  building  up  trade,  increasing  competition  and  re- 
ducing prices. 

It  is  not  claimed  or  pretended  that  in  the  case  under  review 
trade  has  been  restrained,  yet  the  court  below  held  that  unity 
of  ownership  of  a  majority  of  the  stock  of  the  defendant  rail- 
way companies  was  unlawful,  and,  therefore,  criminal,  be- 
cause such  ownership  has  necessarily  caused  the  doing  of 
something  that  has  not  been  done ;  has  necessarily  restrained 
trade,  though  trade  has  not  been  restrained. 

Stated  in  another  way,  the  court  below  decided  that  owner- 
ship by  the  Securities  Company  of  a  majority  of  stock  of  the 
defendant  railway  companies  regulates  the  commerce  of  the 
companies,  and  though  such  commerce  has  in  fact  been  so  reg- 
ulated as  to  build  up  trade,  increase  competition  and  reduce 
prices,  in  law  it  has  necessarily  been  so  regulated  as  to  re- 
strain trade,  suppress  competition  and  increase  prices  because 
through  unity  of  ownerhip  motive  to  compete  has  been  de- 
stroyed. Tozer  v.  Vnited  States,  4  I,  C.  C.  Rep.  24G ;  R.  R, 
Co,  V.  Dey,  [288]  2  I.  C.  C.  Rep.  325;  Schooner  Paulina's 
Cargo  v.  Vnited  States,  7  Cranch,  52,  61 ;  United  States  v. 
Reese,  92  U.  S.  214. 

Fourth.  Trade  has  not  been  restrained  through  the  exercise 
of  the  voting  power  of  these  stocks.  The  ruling  that  trade 
has  been  restrained,  is  contrary  to  the  facts,  and  charges  the 
individuals  engaged  in  this  transaction  with  a  crime,  that  has 
not  been  committed  nor  intended. 

When  this  suit  was  begim,  the  shares  of  the  Northern  Se- 
curities Company  were  held  by  over  eighteen  hundred  sepa- 
rate owners  who  had  purchased  them  in  good  faith,  in  the 
usual  course  of  business.  The  shareholders  of  the  defendant 
railway  companies,  who  were  instrumental  in  organizing  the 
Securities  Company,  have  never  owned  to  exceed  one-third  of 
its  stock.  The  control  of  the  Securities  Company,  so  far  as 
stock  ownership  can  control  it  through  the  election  of  a  board 
of  directors,  is  not  in  the  eight  Great  Northern  shareholders 
who  were  concerned  in  the  organization  of  the  company,  but 
in  the  seventeen  hundred  and  ninety  shareholders  owners  of 
more  than  two-thirds  of  its  stock.  The  combination  of  which 
the  court  convicted  the  eight  individual  defendants,  was  not 
one  by  which  they  were  to  acquire  control  over  the  two  rail- 


NOKTHEBN  SECURITIES  CO.  V,  UNITED  STATES.  423 
Brief  of  Mr.  Grover  for  Great  Northern  Railway, 
way  companies,  for  themselves,  but  one  through  which  such 
control  would  necessarily  be  conferred  upon  the  seventeen 
hundred  and  ninety  other  stockholders  of  the  Securities 
Company. 

The  ruling  of  the  court  that  the  possession  of  the  voting 
power  of  a  majority  of  the  shares  of  the  defendant  railway 
companies  by  the  Securities  Company,  necessarily  restrains 
trade  through  suppressing  competition,  finds  no  support  in 
facts.  The  boards  of  directors  of  both  railway  companies 
may  be  elected  by  the  Securities  Company.  The  executive 
officers  of  the  two  companies  will  be  elected  by  these  boards, 
and  the  ruling  of  the  courts  rests  upon  the  proposition,  that 
such  boards  and  officers  will  be  influenced,  persuaded  or 
coerced  in  such  way,  that  they  will  lack  their  former  incen- 
tive to  compete  for  traffic,  to  obtain  it  from  each  other,  and  to 
underbid  each  other  for  the  purpose  of  getting  it;  that  they 
will  enter  [289]  into  contracts  or  in  some  way  through  con- 
cert of  action,  maintain  higher  rates  than  ought  to  be  main- 
tained; in  other  words,  that  they  will  charge  unreasonable 
rates,  will  not  provide  adequate  facilities,  nor  extend  con- 
struction of  lines. 

The  Northern  Securities  Company  has  no  power  or  motive 
to  restrain  trade  which  any  single  owner  of  a  majority  of  the 
shares  of  defendant  railway  companies  would  not  have,  and 
which  the  individual  owners  of  the  shares  did  not  have,  by 
lawful  conference  and  concert  of  action,  before  they  trans- 
ferred their  shares  to  it. 

The  defendant  railway  companies  were  hampered  and 
placed  at  disadvantage  with  other  transcontinental  railways, 
as  well  as  with  ocean  competitors  by  the  want  of  sufficient 
direct  connection  with  traffic  centers  offering  the  best  markets 
for  the  products  of  the  country  along  their  lines,  and  with 
places  of  production  and  distribution  from  which  their 
traffic  must  be  supplied.  Through  the  Burlington  purchase 
they  acquired  permanent  access  to  markets  and  sources  of 
supply?  instead  of  a  temporary  one  resting  upon  joint  rates 
subject  to  change  at  any  time  without  regard  to  their  interest. 
Having  made  the  purchase  and  assumed  the  resulting  joint 
and  several  obligations,  it  became  a  matter  of  the  highest 
importance  to  each  company  that  the  burdens  should  be 


4 


424 


193  UNITED  STATES  REPORTS,  280. 


Brief  of  Mr.  Stetson  and  Mr.  Willcox  for  Morgan  and  others, 
equally  bome  and  the  advantages  equally  shared.  Through 
placing  the  ownership  of  a  majority  of  the  shares  of  both 
companies  in  the  hands  of  a  single  owner,  the  benefits  of  the 
Burlington  purchase  became  better  assured  than  would  be 
the  case  if  the  shares  were  held  in  many  hands,  and  liable  at 
any  time  to  be  sold  to  an  intersst  adverse  to  the  building  up 
of  the  business  of  the  defendant  railway  companies  and  the 
country  which  their  lines  traverse. 

It  has  not  been  shown  that  the  power  of  the  defendant 
railway  companies  to  restrain  competition  can  affect  more 
than  three  or  four  per  cent  of  their  intestate  traffic,  or  that  it 
has  affected  or  can  affect  constructioii  or  extension  of  their 
I  lines,  or  the  amount  or  quality  of  their  equipment.  Through 
their  [2901  ownership  of  Burlington  shares,  and  by  reason 
of  the  obligation  assumed  in  paying  for  the  shares,  they  have 
a  common  interest  in  building  up  the  traffic  of  eacli  in  connec- 
tion with  the  Burlington  Company.  This  connection  became 
necessary  to  their  prosperity,  to  the  welfare  of  their  patrons, 
and  to  the  successful  meeting  of  a  worid-wide  competition. 
What  has  been  done  was  done,  not  to  restrain  competition, 
but  to  enlarge  it. 

The  unity  of  ownership  of  their  shares  has  not  restrained 
the  commerce  of  either,  and  the  extent  to  which  such  unity 
can  restrain  it,  is  as  nothing  compared  with  the  great  in- 
crease in  volume  of  interstate  and  international  commerce 
which  was  intended,  and  which  will  result  from  the  carrying 
out  of  the  enterprise  of  the  two  companies  in  the  purchase 
of  the  Buriington  stock,  and  the  preservation  of  the  pur- 
chase, and  its  benefits,  by  placing  the  stock  of  the  railroad 
companies  where  it  is  less  likely  to  become  scattered  and  to 
pass  under  control  of  adverse  interests,  than  it  would  be  if 
held  by  many  owners. 

Mr.  Frands  Lynde  Stetson  and  Mr.  David  Willcox  for  ap- 
pellants, Morgan,  Bacon  and  Lamont,  submitted  a  brief : 

The  transactions  alleged  are  entirely  lawful  in  their  char- 
acter. They  consisted  merely  in  the  organization  of  a  lawful 
corporation  of  Xew  Jersey,  and  in  the  sale  to,  and  purchase  by, 
it  of  property  lawfully  salable.  All  the  acts  were  expressly 
authorized  by  law.  The  legal  effect  of  the  transaction  has 
been  that  the  owner  of  stock  in  one  of  the  railway  companies 


i 


NORTHERN    SECURITIES   CO.    V.   UNITED   STATES.       425 
Brief  of  Mr.  Stetson  and  Mr.  Willcox  for  Morgan  and  others. 

has  sold  the  same  to  the  Securities  Company,  and  has  re- 
ceived therefor  stock  of  the  Securities  Company,  which  com- 
pany owns  the  stock  not  merely  of  one  of  the  railway  com- 
panies, but  the  stock  of  both.  So  that  each  individual  who 
has  transferred  his  property  to  the  Securities  Company  has 
obtained  therefor  something  entirely  different — ^namely,  an 
interest  in  a  company  holding  stock  of  the  other  railway 
company  as  well.  It  is  manifest  that  in  the  fullest  possible 
sense  this  constituted  a  sale  of  the  property.  Berger  v.  U.  S, 
Steel  [291]  Corp.,  53  Atl.  Rep.  (N.  J.)  68.  The  title  passed 
for  valuable  consideration  to  a  purchaser  authorized  to  hold 
the  property.  Aside  from  the  corporate  form  of  the  trans- 
action, the  effect,  too,  was  that  each  stockholder  in  one  of  the 
railway  companies  transferred  an  interest  in  his  holdings  to 
every  other  such  stockholder. 

These  transactions  being  lawful  are  not  affected  by  allega- 
tions as  to  the  motive  which  actuated  them.  As  the  means 
employed  were  lawful,  the  only  question  must  be  whether  the 
result  accomplished  was  unlawful.  Pettihone  v.  United 
States,  148  U.  S.  197,  203 ;  United  States  v.  I  sham,  17  Wall. 
496;  Adler  v.  Fenton,  24  How.  407,  410;  Kiif  v.  Youmans,  86 
N.  Y.  324,  329;  cited  with  approval  in  Connolly  v.  Union 
Seiver  Pipe  Co,,  184  U.  S.  540,  546;  Randall  v.  Hazleton,  12 
Allen,  412,  418 ;  Dickerman  v.  Northern  Trust  Co,,  176  U.  S. 
181,  190;  Strait  v.  National  Harrow  Co.,  51  Fed.  Rep.  819; 
Phelps  V.  Nowlen,  72  N.  Y.  39,  45 ;  Wood  v.  Amory,  105  K  y! 
278,  281 ;  Loiigh  v.  Outerhridge,  143  N.  Y.  271,  282 ;  National 
Assn.  V.  Cnmming,  170  X.  Y.  315,  326,  340;  Mogid  Steamship 
Co.  V.  McGregor,  App.  Cas.  1892,  pp.  25,  41,  42;  Allen  v. 
Flood,  L.  R.  App.  Cas.  1898,  p.  1;  Pender  v.  Lushinqton, 
L.  R.  6  Ch.  Div.  70,  75. 

An  intent  to  violate  the  Anti-Trust  Act,  and  therefore  to 
commit  a  crime,  could  not  in  any  case  be  inferred,  but  must 
be  actually  proved. 

No  indirect  or  remote  effect  of  these  lawful  transactions 
upon  competition  between  the  railway  companies  could  bring 
them  within  the  Federal  Anti-Trust  Act. 

The  mere  fact  that  a  contract  has  the  effect  of  restraining 
trade  or  suppressing  competition  in  some  degree  does  not 
render  it  injurious  to  the  public  welfare  and  thus  bring  it 


I 


426 


193   UNITED   STATES   REPORTS,   291. 


Brief  of  Mr.  Stetson  and  Mr.  Willcox  for  Morgan  and  others. 

within  the  police  power.  Oregon  Co.  v.  Wimor^  20  Wall.  64; 
Gihhs  V.  Gas  Co,^  130  U.  S.  396 ;  Hyer  v.  Richmond  Co,,  168 
U.  S.  471,  477,  affirming,  80  Fed.  Rep.  839;  Contimntal  Ins. 
Co.  V.  BoQTd,  67  Fed.  Rep.  310;  Diamond  Match  Co.  v.  Roe- 
ler,  106  N.  Y.  473;  Hodge  v.  Sloan,  107  N.  Y.  241;  Leslie  v. 
LoriUard,  110  N.  Y.  519;  Tode  v.  Gross,  127  N.  Y.  480;  Mat- 
thews V.  Associated  Press,  136  [292]  N.  Y.  333;  Lough  v. 
Ovterhridge,  143  N.  Y.  271,  145  N.  Y.  601 ;  Oakes  v.  Catta- 
raugus Co.,  143  N.  Y.  430;  Curran  v.  (7a^w,  152  N.  Y.  33, 36; 
Watertown  Co.  v.  Pool,  51  Hun,  157,  affirmed  127  N.  Y.  485 ; 
Central  Shade  Roller  Co.  v.  Cushman,  143  Massachusetts, 
353. 

In  United  States  v.  E.  C.  Knight  Co.,  156  U.  S.  1 ;  Hopkins 
V.  United  States,  171  U.  S.  578 ;  Anderson  v.  United  States, 
171  U.  S.  604,  and  Addyston  Pipe  S  Steel  Co.  v.  United 
States,  175  U.  S.  211,  246,  the  Anti-Trust  Act  concerns  only 
those  agreements  of  which  the  direct  and  immediate  effect  is 
to  restrain  commerce.  The  transaction  now  under  review 
was  lawful,  and,  however  considered,  was  not  prohibited  by 
the  Anti-Trust  Act,  because  such  restraint  upon  interstate 
trade  or  commerce,  if  any,  as  it  might  impose,  would  be 
indirect,  collateral  and  remote. 

This  act  is  a  criminal  statute  pure  and  simple  and  its  mean- 
ing and  effect  as  now  determined  must  also  be  its  meaning  and 
effect  wlien  made  the  basis  of  a  criminal  proceeding.  Con- 
versely, the  act  should  not  receive  such  construction  only  as  it 
would  receive  upon  the  trial  of  those  indicted  for  violating 
its  j)rovision.  Criminal  intent  is  essential  to  constitute  a 
crime,  and  the  testimony  bearing  thereon  is  always  a  question 
for  the  jury.  People  v.  Wiman,  148  X.  Y.  29,  3?,:  People  v. 
Flack,  125  ^.Y.^M,ZU. 

Regardless  of  all  other  considerations  presented  on  this 
argument,  the  judgment  under  review  must  be  reversed 
unless  it  is  to  be  established  as  matter  of  law  that  the  mere 
possession  of  the  power  to  control  all  the  means  of  transpor- 
tation of  two  competing  interstate  commerce  carriers  oper- 
ates as  the  effectual  exercise  of  such  power  and  directly 
affects  interstate  commerce,  notwithstanding  the  fact  that 
such  power  has  never  been  exercised  by  its  possessors,  and  the 
further  fact  that  it  is  perfectly  practicable  for  them  to  exer- 


KOBTHEBN  SECUBITIES  00.  V.  UNITED  STATES.      427 


Brief  of  Mr.  Stetson  and  Mr.  Willcox  for  Morgan  and  others. 

cise  it  in  a  perfectly  proper  way.  Support  for  the  proposi- 
tion now  under  review  was  sought  below  in  the  Pearsall  case, 
161  U.  S.  646,  674,  the  Joint  Trafjlc  case,  the  Trans-Missouri 
case  and  the  Addyston  [293]  Pipe  case.  The  proposition, 
however,  can  be  deduced  from  these  cases  only  by  what  to  us 
seems  violent  distortion.  As  to  the  case  first  cited,  see  Minne- 
sota V.  Northern  Securities  Co.,  123  Fed.  Kep.  692,  705. 

In  the  other  cases  and  also  in  cases  decided  by  the  Circuit 
Court  and  Court  of  Appeals,  the  combinations  had  been 
formed  by  corporations  or  individuals  engaged  in  business 
independently  of  one  another  and  they  had  agreed  to  regulate 
their  prices  or  mode  of  carrying  on  their  business  by  the 
rules  of  the  combination.  United  States  v.  Jellico  Coal  Co., 
46  Fed.  Rep.  432 ;  United  States  v.  California.  Coal  Dealers 
Association^  85  Fed.  Rep.  252;  Chesapeake  Fuel  Co.  v. 
United  States,  115  Fed.  Rep.  610;  Gihhs  v.  McNeeler,  118 
Fed.  Rep.  120. 

It  has  been  held  repeatedly  that  such  restraints  as  result 
from  the  sale  or  the  purchase  of  property  are  not  within  the 
provisions  of  anti-trust  statutes.  Indeed,  it  is  the  settled 
law  that  the  transfer  of  a  business  is  not  illegal  because  it 
restrains  trade,  even  by  an  express  covenant.  Oregon  Co. 
v.  Winson,  20  Wall.  64;    Union  Co.  v.  Connolly.  99  Fed. 

Rep.  354,  aff'd  184  U.  S.  540;  Fisheries  Co.  v.  Lennen,  116 
Fed.  Rep.  217;  Harrison  v.  Glucose  Co.,  116  Fed.  Rep. 
304;  Hodge  v.  Sloan,  107  N.  Y.  244;  Leslie  v.  Loril- 
lard,  110  N.  Y.  519;  Tode  v.  Gross,  127  N.  Y.  480; 
Oakes  v.  Cattaraugus  Co.,  143  N.  Y.  430;  Watertown  Co. 
V.  Pool,  51  Hun,  157,  approved  127  N.  Y.  485;  Wood  v. 
Whitehead  Co.,  165  N.  Y.  545 ;  Walsh  v.  Dwight,  40  App. 
Div.  (N.  Y.)  513;  Park  (&  Sons  Co.  v.  Druggists^  Asso- 
ciation, 54  App.  Div.  (N.  Y)  223;  S.  C,  175  N.  Y.  1; 
Diamond  Match  Co.  v.  Roeher,  106  N.  Y.  473. 

So,  too,  it  has  been  ruled  precisely  that  the  formation  of 
associations  or  corporations  is  not  illegal,  because  the  result 
will  be  to  restrain  competition.  Hopkins  v.  United  States, 
171  U.  S.  578;  Anderson  v.  United  States,  171  U.  S.  604 
United  States  Vinegar  Co.  v.  Foehrenhach,  148  N.  Y.  58 
Rafferty  v.  Buffalo  City  Gas  Co.,  37  App.  Div.  (N.  Y.)  618 
Gamble  v.  Queens  County  Water  Co.,  123  N.  Y.  91,  104;  In 


428 


193   UNITED   STATES  REPOBTS,   293. 


Brief  of  Mr.  Stetson  and  Mr.  Willcox  for  Morgan  and  others.       ' 

re  Greme^  52  Fed.  Kep.  104;  United  States  v.  Greenhut^ 
51  Fed.  Eep.  205;  In  re  Terrell,  51  Fed.  [294]  Rep.  213; 
Trenton  Potteries  Co.  v.  Olyphant,  58  N.  J.  Eq.  507 ;  Mogul 
S,  S.  Co,  V.  McGregor,  App.  Cas.  (1892)  25;  Lough  v. 
Outerhndge,  143  N.  Y.  283;  State  v.  Continental  Tobacco 
Co,,  75  S.  W.  Rep.  (Mo.)  737. 

It  is  YQYj  doubtful  whether  in  any  case  the  second  section 
of  the  act  applies  to  railroads.  Prof.  Langdell,  16  Harvard 
Law  Review,  545,  June,  1903;  Mr.  Thorndike,  Pamphlet, 
1903,  The  Merger  Case,  p.  32. 

In  the  Joint  Traifie  cases  the  court  did  not  specifically 
define  "  monopoly,"  but  said  that  it  had  the  meaning  given 
to  it  in  the  body  of  the  Anti-Trust  Act,  which  was  not  in- 
volved in  the  Pearsall  case,  and  the  decision  there  cannot 
now  be  urged  upon  this  court  as  a  limitation  upon  its  free- 
dom of  construction  of  the  statute.  See  Laredo  v.  Inter- 
national Bridge  Co.,  66  Fed.  Rep.  246. 

Obviously,  a  consolidation  of  two  railroads  authorized  by 
the  laws  of  every  State  which  they  enter  would  not  be 
condemned  as  constituting  a  monopoly;  nor  would  a  pur- 
chase of  all  the  stock  of  one  road  by  a  competing  road 
similarly  authorized  be  so  condemned;  nor  would  a  com- 
bination to  induce  the  legislatures  of  the  several  States  to 
authorise  such  a  consolidation  or  such  a  purchase.  It  cannot 
be  that,  in  prohibiting  monopolies,  the  Congress  intended  to 
forbid  these  familiar  processes  of  railroad  amalgamation, 
and  if,  when  authorized  by  state  law,  the  consummated  act 
is  not  a  monopoly,  it  would  not  be  such  merely  because  it  has 
not  been  so  authorized. 

The  construction  claimed  would  make  the  statute  uncon- 
stitutional because  it  would  deprive  the  Securities  Company 
of  its  property  without  due  proceas  of  law.  Corporations 
are  entitled  to  the  same  constitutional  protection  of  their 
property  rights  as  natural  persons.  Minneapolis  Railway 
Go.  V.  Beckwith,  129  U.  S.  26;  Carrington  Turnpike  Co. 
Y.  Sanford  164  U.  S.  578,  592;  Gulf  Co.  v.  Ellis,  165  U.  S. 
150,  154;  Lake  Shore  Co.  v.  Smith,  173  U.  S.  684,  690; 
County  of  Santa  Clara  v.  Southern  Pacific  R.  R.  Co.,  18 
Fed.  Rap.  385,  404;  County  [295]  of  San  Mateo  v.  South- 
ern Pacific  R.  R.  Co.,  13  Fed.  Rep.  722,  745,  760. 


NOKTHERN    SECURITIES   CO.    V.   UNITED   STATES.       429 
Brief  of  Mr.  Stetson  and  Mr.  Willcox  for  Morgan  and  others. 

This  constitutional  provision  protects  the  right  to  acquire 
property — equally  with  the  right — to  hold  the  same  after  it 
has  been  acquired.  Holden  v.  Hardy,  169  U.  S.  366,  391: 
State  V.  Goodwill,  33  W.  Va.  179 ;  State  v.  Juloic,  129  Mis- 
souri, 163,  173;  Knight  Case,  156  U.  S.  1. 

The  Pearsall  Case,  161  U.  S.  646,  distinctly  recognizes  that 
a  natural  person  would  be  entirely  at  liberty  to  buy  all  the 
shares  which  his  means  permitted  of  the  stock  of  the  North- 
ern Pacific  Railway  Company  and  the  Great  Northern  Rail- 
way Company.  The  State  creating  a  corporation  might 
limit  its  power  in  this  respect,  but  Congress  had  no  such  gen- 
eral authority  to  cut  down  the  powers  granted  by  the  States 
to  their  corporations,  merely  because  they  are  artificial  in- 
stead of  natural  persons.  Therefore,  it  is  obvious  that  a  cor- 
poration having  authority  by  its  charter  to  make  such  pur- 
chases cannot,  merely  because  it  is  a  corporation,  be  pre- 
vented from  so  doing  without  depriving  it  of  that  right 
without  due  process  of  law. 

As  construed  and  applied  by  the  Circuit  Court  the  Anti- 
Trust  Act  is  unconstitutional,  in  that  it  discriminates  be- 
tween persons  in  the  matter  of  property  rights  and  privileges 
on  grounds  that  are  purely  arbitrary  and  are  without  justi- 
fication in  reason. 

The  power  to  suppress  competition  between  two  competing 
interstate  railroad  companies  being  always  existent  and 
under  the  theory  of  the  Circuit  Court  always  attaching  to  a 
majority  of  the  shares  of  both,  whether  owned  by  one  person 
or  by  several,  the  Anti-Trust  Act,  if  understood  as  intended 
to  do  away  with  such  power,  should  be  enforced  so  as  to  pre- 
vent any  one  person,  as  much  as  any  two  or  more  persons, 
from  acquiring  stock  in  both  of  such  competing  companies. 

If  as  construed  by  the  court  below,  the  Anti-Trust  Act 
arbitrarily  and  without  reason  discriminates  between  persons 
in  the  matter  of  their  property,  rights  and  privileges,  the  act 
[296]  is  beyond  the  power  of  Congress  as  clearly  as  it  would 
be  beyond  the  power  of  any  state  legislature. 

"  Liberty,"  as  used  in  the  Fifth  Amendment  to  the  Consti- 
tution means  not  merely  bodily  liberty— freedom  from  phys- 
ical duress,  but  in  effect  comprehends  substantially  all  those 
personal  and  civil  rights  of  the  citizen  which  it  is  meant  to 


*k^J 


im  UNITED  STATES  REPOBTS,   296. 


Brief  of  Mr.  Stetson  and  Mr.  WIllcox  for  Morgiin  and  others. 

place  beyond  the  power  of  the  general  government  to  destroy 
or  impair.  Slmightei'  Emise  Oases,  16  Wall.  36,  122,  127 ; 
Mmin  V.  lUinmSj  94  U.  S.  113,  142;  People  v.  Walsh,  117  N. 
y.  60;  Butchers'  Union  Co,  v.  Crescent  Co.  Ill  U.  S.  746; 
AUgeyer  v.  Louisiana,  165  U.  8.  578 ;  United  States  v.  Joint 
Traffic  Association,  171  U.  S.  505,  572;  Addyston  Pipe  d' 
Steel  Co,  V.  United  States,  175  U.  S.  211,  228;  Bertholf  v. 
O'ReUly,  74  N.  Y.  im ;  In  re  Jacobs,  98  N.  Y.  98 ;  People  v, 
GUlson,  109  N.  Y.  389;  People  v.  King,  110  N.  Y.  418;  God- 
vharles  v.  Wigeman,  113  Pa.  St.  431.  And  see  Eegina  v. 
Druitt,  10  Cox  C.  C.  592,  600. 

It  follows  that,  as  used  in  the  Fifth  Constitutional  Amend- 
ment, *'  liberty  "  includes  equality  of  rights  under  the  law  and 
secures  citizens  similarly  situated  against  discriminations 
between  them  which  are  arbitrary  and  without  foundation  in 
reason.  United  States  v.  Criiikshank,  92  U.  S.  542,  554 ;  Yick 
Wo  V.  Hopkins,  118  U.  S.  356,  369;  Gnlf,  Colorado  <&  Santa 
Fe  Ry.  Co,  v.  EUis,  165  U.  S.  150, 160. 

Hence,  the  principles  affirmed  and  acted  upon  by  this  court 
in  applying  the  Fourteenth  Amendment  to  state  legislation, 
are  equally  applicable  to  legislation  by  Congress,  and,  as  con- 
strued by  the  court  below,  the  Anti-Trust  Act  is  invalid  as 
trespassing  upon  the  "  liberty  "  of  citizens,  by  denying  them 
equality  of  rights  and  discriminating  between  them  in  the 
matter  of  their  property  rights,  arbitrarily  and  without  rea- 
son. Cotting  v.  Kansas  City  Stock  Yards,  183  U.  S.  106; 
Connolly  v.  Union  Sewer  Co.,  184  U.  S.  540;  Earlier  v.  Con- 
nolly, 113  U.  S.  27,  31. 

As  construed  and  applied  by  the  Circuit  Court,  the  statute 
is  unconstitutional  because  without  due  process  of  law,  it 
[207]  would  deprive  these  defendants  and  all  others  who 
sold  to  the  Securities  Company  of  their  property.  If  there 
were  any  prohibitions  on  the  companies  it  would  not  apply 
to  their  stockholders.  A  corporation  and  its  stockholders  are 
different  entities.  Pnllman  Co,  v.  Missouri  Pacific,  115  U.  S. 
587;  Watson  v.  Bonfils,  116  Fed.  Kep.  157;  American  Pre- 
serves  Co,  v.  Morris,  43  Fed.  Rep.  711;  Electric  Co,  v. 
Jamaica  Co,  61  Fed.  Rep.  655,  678. 

Any  effort  to  limit  the  right  to  sell  necessarily  would  de- 
prive these  defendants  of  their  property  without  due  process 


NORTHEBN   SECURITIES   CO.    V,   UNITED   STATES.       481 
Argument  of  Attorney-General  for  United  States. 

of  law.  Cleveland  Co.  v.  Backus,  154  U.  S.  439,  445;  People 
ex  rel,  Manhattan  Co.  v.  Barker,  146  N.  Y.  304,  312 ;  People 
ex  rel.  Manhattan  Institution  v.  Otis,  90  N.  Y.  48,  52;  H olden 
V.  Hardy,  169  U.  S.  366,  391 ;  People  v.  Marx,  99  N.  Y.  377, 
386 ;  People  v.  Gillson,  109  N.  Y.  389 ;  Forster  v.  Scott,  136 
N.  Y.  577;  Ingersoll  v.  Nassau  Co.,  157  N.  Y.  453,  463;  Purdy 
V.  Erie  R.  R.  Co.,  162  N.  Y.  42, 49 ;  City  v.  Collins  Baking  Co.. 
39  Ajjp.  Div.  (N.  Y.)  432;  Rochester  Turnpike  Co.  v.  Joel, 
41  App.  Div.  (N.  Y.)  43;  People  v.  Meyer,  44  App.  Div. 
(N.  Y.)  1;  Ingraham  v.  National  Salt  Co.,  72  App.  Div. 
(N.  Y.)  582;  Janesville  v.  Carpenter,  77  Wisconsin,  288,  301. 

If  complainant's  contention  should  be  sustained,  the  right 
of  an  owner  of  property  to  sell  the  same  would  be  dependent 
upon  what  the  courts  at  any  future  time  might  hold  to  be  the 
intention  of  the  purchaser  in  buying  the  property.  Such  a 
result  would  seriouslj^  impair  the  liberty  of  the  owner,  and 
the  value  of  his  property. 

Wliatever  view  be  taken  of  the  character  of  the  transaction 
the  decree  of  the  Circuit  Court  transcended  the  authority  of 
the  court  under  the  statute,  which  was  the  sole  ground  and 
source  of  its  jurisdiction. 

Mr.  Attorney  General  Knox,  with  whom  Mr.  William  A, 
Day,  Assistant  to  the  Attorney  General,  was  on  the  brief,  for 
the  United  States,  appellee: 

The  bill  was  filed  by  the  United  States  to  restrain  a  viola- 
tion [298]  of  the  Anti-Trust  Act  of  July  2,  1890,  26  Stat. 
209;  the  defendant.  Northern  Securities  Company,  is  a  cor- 
poration organized  under  the  general  laws  of  New  Jersey: 
the  two  raihvay  companies  are  common  carriers  engaged  in 
freight  and  passenger  traffic  among  the  several  States  and 
with  foreign  nations;  the  Great  Northern  was  chartered  by 
the  State  of  Minnesota  and  the  Northern  Pacific  Railway 
Company  operates  under  a  Federal  franchise  originally 
granted  to  the  Northern  Pacific  Railroad  Company,  and  in 
taking  over  that  franchise  it  not  only  became  invested  with 
the  rights  and  privileges  incident  thereto,  but  also  became 
charged  with  the  duties,  obligations  and  conditions  which 
Congress  attached  to  the  granting  thereof.  The  Northern 
Pacific  Railroad  Company  was  the  constant  concern  of  Con- 


432 


193  UNITED   STATES  REPORTS,   298. 


Argument  of  Attorney-General  for  United  States, 
gress.  See  Act  of  July  2,  1864,  Res.  May  T,  1866,  extending 
time  for  completion ;  Act  of  June  25,  1868,  relative  to  filing 
reports ;  Joint  Resolution,  July  1,  1868,  extending  time  for 
completion;  Joint  resolution  of  March  1,  1869,  allowing  issue 
of  bonds;  Joint  Resolution,  April  10,  1869,  granting  right  of 
way;  Resolution  of  May  31, 1870,  authorizing  issue  of  bonds; 
act  of  September  29,  1890,  forfeiting  certain  granted  lands; 
act  of  February  26,  1895,  providing  for  classification  of 
mineral  lands;  act  of  July  1,  1898,  granting  lands  in  lieu  of 
those  taken  by  settlers. 

The  individual  defendants  were,  prior  to  November  13, 
1901,  large  and  influential  holders  of  the  stock,  some  of  one 
raihvay  company  and  some  of  both  companies.  The  two  rail- 
roads are  practically  parallel  for  their  entire  length;  each 
system  runs  east  and  west  through  Minnesota,  North  Dakota, 
Montana,  Idaho  and  Washington ;  each  connects  with  steam- 
ers on  Lake  Superior  running  to  Bulfalo  and  other  eastern 
points  and  at  Seattle  with  lines  of  the  steamships  engaged  in 
trade  with  the  Orient.  The  lower  court  found  that  the  roads 
"  are,  and  in  public  estimation  have  ever  been  regarded  as, 
parallel  and  competing."  The  testimony  in  this  case  estab- 
lishes that  fact  which  is  also  res  judicata,  Pearsall  v.  Great 
Nortliem  Railway  Co,,  161  U.  S.  646,  and  even  if  the  roads 
only  competed  for  [29d]  three  per  cent  of  their  interstate 
business  they  w^ould  be  competing  lines. 

It  has  been  the  ever  present  aim  of  those  dominating  the 
policy  of  the  Great  Northern  and  the  Northern  Pacific, 
during  the  past  few  years,  to  bring  about  a  community  of 
interest  or  some  closer  form  of  union  to  the  end  that  the 
motive  from  which  competition  springs  might  be  extin- 
guished. On  at  least  three  prior  occasions  Mr.  Hill  and 
Mr.  Morgan  and  their  associates  acted  in  concert  in  trans- 
actions affecting  both  roads:  the  attempted  transfer  of 
half  the  stock  of  the  Northern  Pacific  to  the  Great  North- 
ern in  exchange  for  a  guarantee  of  the  bonds  of  the  North- 
ern Pacific  which  was  held  to  be  violative  of  the  laws  of 
Minnesota,  Pearsall  v.  Great  Northern  Ry.  Co,,  161  U.  S. 
646;  the  joint  purchase  of  the  Burlington  in  1901;  in  the 
events  leading  up  to  the  panic  of  May,  1901.  After  the 
refusal  to  admit  the  Union  Pacific  to  an  interest  in  the 


NORTHERN   SECURITIES    CO.    V.   UNITED   STATES.       433 
Argument  of  Attorney-General  for  United  States. 

Burlington  purchase,  those  in  control  of  the  Union  Pacific 
attempted  to  acquire  control  of  the  Northern  Pacific  and 
as  soon  as  Mr.  Hill  and  Mr.  Morgan  heard  of  this  attempt 
they  reached  an  understanding  to  oppose  it  in  concert,  and 
this  resulted  in  the  threat  to  retire  the  preferred  stock 
of  the  Northern  Pacific,  and  the  subsequent  conference  at 
which  the  plan  announced  in  the  statement  of  June  1,  in 
the  Wall  Street  Summary,  was  arranged.  The  testimony 
of  defendants  shows  that  the  incorporation  of  the  Securities 
Company,  and  its  acquisition  of  a  large  majority  of  the 
stock  of  both  railway  companies  were  the  designed  results 
of  a  plan  or  understanding  between  the  defendants  Hill 
and  Morgan  and  their  associates,  which  was  carried  out 
to  the  letter  by  the  parties  thereto.  The  facts,  as  the  Gov- 
ernment asserts  them,  are  recapitulated  in  the  opinion  of 
the  Circuit  Court. 

On  the  facts  as  proved  the  Government  maintains  that 
a    combination    has  l)een  accomplished    by  means    of    the 
Securities  Company  which  is  in  violation  of  §   1  of  the 
act  of  July  2,  1890;   that  the  defendants  have  monopolized 
or  attempted  to  monopolize  a  part  of  the  interstate  or  for- 
eign conmierce  of  the  United  [300]  States  and  that  if  either 
result  has  been  accomplished,  the  relief  granted  by  the  Cir- 
cuit Court  was  authorized  by  law.     The  contention  as  to 
whether  the  Anti-Trust  Act  is  or  is  not  a  crimainl  statute 
is  not  material.     Nor  was  it  in  the  Joint  Traffic  Case,  171 
U.  S.  505.     The  primary  aim  of  Congress  in  passing  the 
act  was  not  to  create  new  offenses  but  to  pronounce  and 
declare  a  rule  of  public  policy  to  cover  a  field  wherein  t\\Q 
Federal   government  has  supreme  and   exchisive  jurisdic- 
tion.    As  the  United  States  has  no  common  law,  contracts 
in  restraint  of  trade  would  not  be  repugnant  to  any  law 
or  rule  of  policy  of  the  United  States  in  the  absence  of  a 
statute,  and  the  controlling  purpose  of  the  act  was  to  de- 
clare that  the  public  policy  of  the  nation  forbade  contracts, 
combinations,  conspiracies,  and  monopolies  in  restraint  of 
interstate  and  international  trade  and  commerce,  and  the 
jurisdiction  conferred  upon  courts  of    equity  to    restrain 
violations  of  the  act  was  intended  as  a  means  to  uphold 

21220— VOL  2—07  M 2& 


434 


193   UNITED   STATES  KEPORTS,    mO, 


Argument  of  Attorney-General  for  United  States. 

and  enforce'  the  principle  of  public  policy  therein  asserted, 
not  as  a  means  to  prevent  the  commission  of  crimes.  United 
States  V.  Tram-Mo.  Freight  Assn.,  166  U.  S.  290,  342. 
If  the  Anti-Trust  Act  is  a  criminal  statute,  it  is  also  in 
.  the  highest  degree  a  remedial  statute;  as  such  it  is  invoked 
in  the  case  at  bar,  and  as  such  it  ought  to  be  construed 
liberally  and  given  the  widest  effect  consistent  with  the 
language  employed.  It  ought  not  to  be  frittered  away 
by  the  refinements  of  criticism.  Broom's  Legal  Maxims, 
5th  Am.  ed.,  3d  London  ed.,  80;  Potter's  Dwarris  on  Stat.' 
and  Const.  231,  234;  Pierce  and  Hopper,  Str.  253.  It 
makes  no  difference  in  the  application  of  these  rules  that 
the  statutes  have  a  penal  as  well  as  a  remedial  side.  Ch. 
Prac.  215. 

A  statute  may  be  penal  in  one  part  and  remedial  in  an- 
other part.  But  in  the  same  act  a  strict  construction  may 
be  put  on  a  penal  clause  and  a  libsral  construction  on  a 
remedial  clause.  Sedgwick  on  Construction  of  Statutory 
and  Constitutional  Law,  (2d  ed.)  309,  310;  Dwarris  on 
Statutes,  653,  655 ;  H7/de  v.  Oogan,  2  Doug.  702. 

[301]  The  Anti-Trust  Act  was  purposely  framed  in  broad 
and  general  language  in  order  to  defeat  subterfuges  de- 
signed to  evade  it.  It  is  framed  in  sweeping  and  compre- 
hensive language  which  includes  every  combination,  regard- 
less of  its  form  or  structure,  in  restraint  of  trade  or  commerce 
among  the  several  States  or  with  foreign  nations,  and  every 
person,  natural  or  artificial,  monopolizing,  attempting  to 
monopolize,  or  combining  with  any  other  person  to  monopo- 
lize any  part  of  such  trade  or  commerce. 

The  form  or  framework  is  immaterial.  Congress,  no 
doubt,  anticipated  that  attempts  would  be  made  to  defeat 
its  will  through  the  "  contrivances  of  powerful  and  ingenious 
minds,"  and  to  meet  these  it  used  the  broad  and  all-embracing 
language  found  in  the  act;  and  it  is  in  this  light  that  that 
language  is  to  be  construed.  And  the  device  of  a  holding 
corporation  for  the  purpose  of  circumventing  the  law  can 
be  no  more  effectual  than  any  other  means.  Noyes  on  Inter- 
corporate Eelations,  §  393. 

This  court  has  decided  that  this  act  applies  to  common 
carriers  by  railroad,  as  well  as  all  other  persons,  natural  or 


NORTHERN   SECURITIES   CO.   V.   UNITED   STATES.       485 
Argument  of  Attorney-General  for  United  States. 

ailificial.  Trans-Missouri  Case^  166  U.  S.  290.  The  words 
in  restraint  of  trade  as  used  in  the  act  extend  to  any  and  all 
restraints  whether  reasonable  or  unreasonable,  partial  or 
total,  and  there  are  peculiar  reasons  why  this  applies  to  rail- 
road corporations. 

In  exercising  its  powers  over  commerce  Congi-ess  may  to 
some  extent  limit  the  right  of  private  contract,  the  right  to 
buy  and  sell  property,  without  violating  the  Fifth  Amend- 
ment. It  may  declare  that  no  contract,  combination,  or 
monopoly  which  restrains  trade  or  commerce  by  shutting 
out  the  operation  of  the  general  law  of  competition  shall  be 
legal.  Trans-Missoim  Case,  supra:  Joint  Traffic  Case,  su- 
pra; Addyston  Pipe  Co.  Case,  175  U.  S.  211. 

When  its  natural  effect  is  to  stifle,  smother,  destroy,  pre- 
vent, or  shut  out  competition,  the  agreement  or  combination 
is  in  restraint  of  trade  or  conmierce  and  illegal  under  sec- 
tion 1  of  [302]  the  act  if  in  interstate  or  international  trade 
or  commerce.     Trans-Missouri  Case,  supra. 

"To  prevent  or  suppress  competition"  and  "to  restrain 
trade"  are,  in  fact,  often  used  by  judges  as  convertible  terms 
to  express  one  and  the  same  thought. 

Mogul  S.  S.  Co.  V.  McGregor,  L.  K.  App.  Cas.  (1892),  25, 
was  decided  upon  common  law  principles,  there  being  no 
statute,  such  as  the  Federal  Anti-Trust  Act,  making  it  un- 
lawful and  criminal  to  enter  into  agreements  or  combina- 
tions in  restraint  of  trade. 

Both  the  Court  of  Appeal  and  House  of  Lords  held  that 
the  action  could  not  be  maintained  because,  even  if  it  were 
in  restraint  of  trade,  an  agreement  in  restraint  of  trade  was 
not  unlawful  at  common  law  in  the  sense  that  it  furnished 
cause  for  a  civil  action  by  one  damaged  by  it,  but  only  in 
the  sense  that  it  was  void  and  unenforceable  if  sued  on. 

The  Government  does  not  claim  that  ordinary  corporations 
and  partnerships  formed  in  good  faith  in  ordinary  course 
of  business  come  within  the  prohibitions  of  the  act  because 
incidentally  they  may  to  some  extent  restrict  competition, 
but  those  where  the  corporation  or  partnership  is  formed  for 
the  purpose  of  combining  competing  businesses.  The  act 
embraces  not  only  monopolies  but  attempts  to  monopolize. 
The  term  monopoly  as  used  by  modern  legislators  and  judo-es 


mi   UNITED   STATES  BEPORTS,   302. 
Argument  of  Attorney-General  for  United  States. 

signifies  the  combining  or  bringing  together  in  the  hands  of 
one  person  or  set  of  persons  the  control,  or  the  power  of  con- 
trol, over  a  particular  business  or  employment,  so  that  com- 
petition therein  may  be  suppressed.  People  v.  Chicago  Gas 
Trust  Company,  130  Illinois,  294;  People  v.  North  River 
Sugar  Refving  Co..  54  Hun  (N.  Y.),  377;  United  States  v. 
E,  C.  Knight  Co.,  156  U.  S.  1.  And  as  to  railroads,  see  Pear- 
sail  V.  Great  Northern  Railway,  161  U.  S.  646,  677 ;  Louis- 
vtlle  S  Nash  ville  R.  R.  Co.  v.  Kentucky,  161  U.  S.  677. 

A  combination  or  monopoly  exists  within  the  meaning  of 
the  act  even  if  the  immediate  effect  of  the  acts  complained  of 
is  not  to  suppress  competition  or  to  create  a  complete  monop- 
oly. [303]  It  is  sufficient  to  show  that  they  tend  to  bring 
about  those  results.  Cases  cited  supra,  and  Salt  Co.  v.  Guth- 
rie, 35  Ohio  St.  672. 

It  is  not  essential  to  show  that  the  person  or  persons 
charged  with  monopolizing  or  combining  have  actually 
raised  prices  or  suppressed  competition,  or  restrained  or 
monopolized  trade  or  commerce  in  order  to  bring  them  within 
the  condemnation  of  the  act.  It  is  enough  that  the  necessary 
effect  of  the  combination  or  monopoly  is  to  give  them  the 
power  to  do  those  things.  The  decisive  question  is  whether 
the  power  exists,  not  whether  it  has  been  exercised.  In  the 
Trau.^-Mis.^Of'n\  Joint  Trafjie.  Pearsall  and  Addystoa  Cases, 
supra,  this  court  held  that  it  was  immaterial  that  trade  or 
commerce  had  not  actually  been  restrained— that  it  made  no 
difference,  even,  that  rates  and  prices  had  been  lowered,  it 
being  enough  to  bring  the  combination  within  the  condemna- 
tion of  the  act  that  it  had  the  power  to  restrain  trade  or  com- 
merce. The  very  existence  of  the  power,  under  these  rulings, 
constitutes  a  restraint. 

It  is  not  necessary  in  order  to  bring  a  combination  or  con- 
spiracy within  the  operation  of  the  act  that  the  members  hind 
themselves  each  with  the  other  to  do  the  acts  alleged  to  be  in 
restraint  of  trade.  It  is  enough  that  they  act  together  in 
pursuance  of  a  common  object,  and  while,  of  course,  this  pre- 
supposes agreement  between  them  in  a  broad  sense,  an  agree- 
ment or  contract  in  the  technical  sense  is  not  at  all  essential. 
Reg.  v.  Mnrphy,  8  C.  &  P.  397. 

A  combination  or  a  monopoly,  the  necessary  effect  of  which 


NORTHEEN   SECURITIES    CO.    /;.    UNITED   STATES.       437 
Argument  of  Attorney-General  for  United  States. 

is  to  restrain  trade  or  commerce,  is  a  violation  of  the  act,  and 
the  aim,  motive,  intention,  or  design  with  which  the  combina- 
tion is  entered  into  or  the  monopoly  created  is  wholly  imma- 
terial and  outside  the  question.  It  may  have  been  to  aid  and 
further  commerce  rather  than  to  restrain  it ;  but  if  in  point 
of  law  the  effect  or  the  tendency  of  the  combination  is  to  re- 
strain trade  or  commerce  the  combination  is  unlawful,  and 
the  motive  behind  it,  however  beneficent,  does  not  alter  that 
fact  in  the  [304]  slightest  degree.  Trans-Missoun  Case, 
166  U.  S.  290,  341;  C.  di  O.  Fuel  Co.  v.  Umt<d  States,  115 
Fed.  Rep.  623. 

A  combination  or  monopoly  of  competing  lines  of  inter- 
state railway— of  competing  instrumentalities  of  interstate 
commerce— is  a  combination  or  monopoly  in  restraint  of  in- 
terstate commerce  within  the  prohibition  of  the  act.  The 
transportation  of  persons  and  things  is  commerce  and  if  a 
conibination  or  monopoly  of  such  transportation  is  a  combi- 
nation or  monopoly  in  restraint  of  commerce  within  the  act, 
and  hence  illegal,  it  follows  as  a  corollary  that  a  combination 
or  monopoly  of  the  means  or  instrumentalities  of  transporta- 
tion is  likewise  a  combination  or  monopoly  in  restraint  of 
commerce,  because  a  monopoly  of  the  means  of  transporta- 
tion leads  directly  and  inevitably  to  a  monopoly  of  transpor- 
tation itself. 

Again,  a  monopoly  of  the  mea?is  of  transportation  puts  it  hi 
the  power  of  the  monopolist  to  stifle  competition  in  the  him- 
ness  of  transportation,  and  a  combination  or  monopoly  which 
had  the  power  to  stifle  competition  in  the  hvshuss  of  trans- 
portation among  the  States  is  in  restraint  of  interstate  com- 
merce and  therefore  illegal. 

From  still  another  standpoint,  Congress  may  prohibit,  and 
has  prohibited,  combinations  and  monopolies  in  the  husiness 
of  interstate  and  international  transportation.  But  what 
does  this  power  amount  to  if  Congress  may  not  also  prohibit 
monopolies  of  the  means  and  instrumentalities  of  such 
transportation— of  the  roads  themselves?  Virtually  noth 
ing;  for  he  who  has  a  monopoly  of  the  means  of  transpor- 
tation has  a  monopoly  of  transportation  itself.  See  the 
Trans-MissouH  Case,  Joint  Traific  Case  and  Pearsall  Case, 
supra. 


1 


438 


193  UNITED  STATES  KEPOBTS,   3M. 


\ 


Argument  of  Attorney-General  for  United  States. 

The  Anti-Trust  Act  prohibiting  combinations  and  monopo- 
lies in  restraint  of  intestate  and  foreign  commerce  is  an  exer- 
cise of  the  power  granted  to  Congress  to  regulate  commerce, 
Champhm  v.  Ames.  188  U.  S.  321,  and  the  term  ''  commerce  " 
as  used  in  that  grant  embraces  the  instrumentalities  by  which 
connnerce  is  or  may  be  carried  on.  Railroad  Co.  v.  Fuller^ 
[305]  17  Wall.  560,  568;  Welton  v.  Missouri,  91  U.  S.  275, 
280;  Pemaeola  2Vi.  Co.  v.  West  Un.  Tel  Co.,  96  U.  S.  1; 
Cloueester  Femj  Co.  v.  Pennsylvania,  114  U.  S.  196,  203. 

But  put  the  proposition  as  it  is  put  by  appellants:  Can 
Congress  regulate  the  ownership  of  interstate  railroads  under 
its  power  to  regulate  commerce  among  the  States,  and  has  it 
done  so  by  this  act  of  1890?  Most  certainly,  yes.  Congress 
can  regulate  anything  and  everything  in  the  sense  that  it 
can  prohibit  and  prevent  its  use  in  a  way  that  will  defeat  a 
law  that  Congress  may  constitutionally  enact.  For  this  pur- 
pose, the  supreme  power  operates  upon  everything,  upon 
everv  one. 

Mo  device  of  State  or  individual  creation  can  be  interposed 
as  a  shield  between  the  Federal  authoritv  and  those  who  at- 
tempt  to  subvert  it.  No  rules  of  law  which  govern  the  rela- 
tions which  individuals  have  created  inter  sese,  or  which  have 
been  assumed  between  themselves  and  a  State,  are  to  be  con- 
sidered in  an  issue  between  them  and  the  United  States  to  de- 
feat the  ends  of  a  constitutional  law.  The  Federal  power 
would  not  be  supreme  if  the  operation  of  its  laws  could  be  de- 
feated, embarrassed,  or  impeded  by  any  means  whatsoever. 

It  is  no  violation  of  the  reserved  rights  of  the  States,  but, 
on  the  contrary,  is  clearly  within  the  Federal  power  for  Con- 
gress to  enact  that  no  pelfeons,  natural  or  artificial,  shall  form 
a  combination  of  the  instrumentalities  of  any  part  of  inter- 
state commerce  the  effect  or  tendencv  of  which  would  be  to 
restrain  interstate  trade  or  commerce,  and  that  no  person  of 
persons,  natural  or  artificial,  shall  acquire  a  monopoly  of 
such  instrumentalities.  This  is  a  natural  and  logical  deduc- 
tion from  the  supreme,  plenary,  and  exclusive  nature  of  the 
power  of  the  Federal  Government  over  foreign  and  interstate 
commerce,  in  the  exercise  of  which  Congress  may  descend  to 
the  most  minute  directions. 
The  "  penetrating  and  all-embracing  "  nature  of  this  power 


NORTHERN   SECURITIES   CO.   V.   UNITED   STATES.       439 
Argument  of  Attorney-General  for  United  States. 

has  often  been  stated,  explained,  and  emphasized  by  this 
court.  Gihhons  v.  Ogden,  9  Wheat.  1,  197,  and  see  concur- 
ring opinion  of  Johnson,  J.,  also.  The  principles  announced 
in  [306]  this  case  have  never  been  departed  from,  but  have 
been  reaffirmed  time  and  again  by  this  court,  notably  in 
Brown  v.  Maryland,  12  Wheat.  419 ;  Passenger  Cases,  7  How. 
283;  In  re  Dehs,  158  U.  S.  564;  Champion  v.  Ames,  188 
U.  S.  321 ;  Stockton  v.  Baltimore  <&  N.  T.  R.  Co.,  32  Fed. 
Rep.  11,  16. 

The  fact  that  in  recent  years  interstate  commerce  has  come 
to  be  carried  on  by  railroads  and  over  artificial  highways  has 
in  no  manner  narrowed  the  scope  of  the  constitutional  pro- 
vision or  abridged  the  power  of  Congress  over  such  com- 
merce. On  the  contrary,  the  same  fullness  of  control  exists 
in  the  one  case  as  in  the  other,  and  the  same  power  to  remove 
obstructions  from  the  one  as  from  the  other. 

Of  course,  it  makes  no  difference  whether  the  obstruction 
be  physical  or  economic — whether  it  be  a  sand  bar,  a  mob,  or 
a  monopoly — ^whether  it  result  from  the  sinking  of  a  vessel  or 
the  stifling  of  competition — the  power  of  Congress  to  remove 
it  is  the  same  in  each  case.  Oilman  v.  Philadelphia,  3  WalL 
713,  724. 

On  these  subjects  the  state  legislatures  have  no  jurisdiction. 
Addyston  Pipe  Co.  Case,  175  U.  S.  211,  232;  Boardman  v. 
Lake  Shore  c&c.  Ry.  Co.,  84  N.  Y.  157,  185. 

Congress  has  the  power  to  legislate  upon  the  subject  of  con- 
solidations of  railroad  corporations  when  the  consolidations 
form  interstate  lines;  in  the  absence  of  legislation  by  Con- 
gress, the  power  exists  in  the  States  to  legislate  upon  the 
subject,  but  in  the  presence  of  legislation  by  Congress  the 
power  of  the  States  over  the  subject  is  excluded.  Noyes  on 
Intercorporate  Relations,  §  19,  citing  Louisville  di  Nashville 
V.  Kentucky,  supra. 

This  exclusive  jurisdiction  of  the  Federal  Government 
over  commerce  with  foreign  nations  and  among  the  States, 
and  over  the  instrumentalities  of  such  commerce,  includes  the 
power  of  police,  or,  that  which  is  its  equivalent,  over  those 
subjects  in  all  its  undefined  breadth  and  fullness  and  which 
is  just  as  full,  complete,  and  far-reaching  as  is  the  police 
power  of  the  state  legislatures  with  reference  to  subjects 


■"xxU 


193  UNITED  STATES  BEFOBTS,  307. 


Argument  ot  Attorney-General  for  United  Statee. 

within  the  [307]  exclusive  jurisdiction  of  the  States.  In 
either  case  there  are  no  limitations  to  its  exercise,  except  the 
constitutional  guaranties  in  favor  of  life,  liberty,  and  prop- 
erty. Thayer's  Cases  on  Const.  Law,  742,  note;  Cooley's 
Const.  Lim.  723;  Noyes  on  Intercorp.  Eel.  §  409. 

Anti-trust  statutes  are  enacted  in  the  exercise  of  the  police, 
or  an  analogous,  power.  State  v.  Firemen'8  Fund  Ins.  Co,, 
1 62  Missouri,  46 ;  State  v.  Sehlit^  Brewing  Co,,  104  Tennessee, 
715;  Waters-Pierce  Co.  v.  JState,  19  Tex.  Civ.  App.  1. 

Congress  having  the  police  power,  or  its  equivalent,  over 
foreign  and  interstate  commerce  and  the  instrumentalities 
thereof,  may  in  exercising  it,  strike  down  restraints  upon  such 
commerce,  whether  they  result  from  combinations  and  mo- 
nopolies  of  the  agencies  of  transportation  or  otherwise,  just 
as  a  State  could  prohibit  similar  restraints  upon  interstate 
commerce.  To  contend  otherwise  is  to  contend  that  the 
Federal  power  over  interstate  and  foreign  commerce  is  not 
supreme,  but  is  in  some  respects  subordinate  to  state  author- 
ity; that  the  police  powers  or  the  reserved  powers  of  the 
States  are,  for  some  purposes,  paramount  to  the  powers  of 
Congress  in  fields  wherein  the  Federal  Government  has  been 
invested  by  the  Constitution  with  complete  and  supreme 
authority.  This,  of  course,  is  not  so.  New  Orleans  Gas  Co. 
V.  Louisiana  Light  Co.,  115  U.  S.  650,  661. 

The  Lomsmlle  (&  Nashville  Case,  supra,  does  not  hold  that 
Congress  has  no  power  to  prohibit  the  consolidation  of  com- 
peting intei-state  railroads.  Congress  has  created  "  the  in- 
struments of  such  commerce,"  and  it  has  passed  regulations 
concerning  them,  and  the  power  to  do  these  things  is  now 
unquestioned.  California  v.  Pariiic  Railway  Co.,  127  U.  S.  1. 
What  the  court  meant  in  the  Louis  mile  Case  was  that  in  re- 
spect of  matters  of  a  local  nature,  which  did  not  admit  or 
i-equire  uniform  regulation,  the  States  may  "regulate  the 
instruments  of  such  commerce  *'  until  Congress  legislates  on 
the  same  subjects,  while  in  respect  of  matters  of  national 
importance,  or  which  admit  of  uniform  regulation,  the  power 
ISm]  of  the  States  is  wholly  excluded.  The  distinction  was 
stated  in  Welton  v.  Missouri,  91  U.  S.  275. 

Ownership  of  a  majority  of  its  stock  constitutes  the  con- 
trol of  a  corporation  when  the  inquiry  is  whether  a  combina- 


/ 


NORTHERN  SECURITIES   00.  V.  UNITED   STATES.       441 
Argument  of  Attorney-General  for  United  States. 

tion  or  monopoly  has  been  formed  to  stifle  competition 
between  two  or  more  rival  and  competing  railroads.  Noves 
on  Intercorp.  Rel.  §  294 ;  Farmers'  L.  <&  T.  Co.  v.  N.  Y.  dsc. 
B.  R.  Co,  150  N.  Y.  410,424;  People  v.  Chicago  <&  Gas  Trust 
Co.,  130  Illinois,  268,  291 ;  Greenhood  on  Public  Policv,  5 ; 
Richardson  v.  Crandall,  48  N.  Y.  343;  Salt  Co.  v.  Guihne, 
35  Ohio  St.  666;  Milhank  v.  N.  Y.,  L.  E.  db  ^Y.,  64  How. 
(N.  Y.)  29;  Pearsall  v.  Great  Northo-n  Railway,  161  U.  S. 
646,  671 ;  Pullman  Co.  v.  Mo.  Pac.  R.  Co.,  115  U.  S.  587;  Pa. 
R.  Co.  V.  Commonwealth,  7  Atl.  Rep.  368,  371. 

The  Great  Northern  and  Northern  Pacific  Railway  com- 
panies, competing  interstate  carriers,  have  been  combined  in 
violation  of  section  1  of  the  Anti-Trust  Act,  that  is  to  say,  a 
majority  of  the  stock  of  each  road  has  been  transferred  to  a 
common  trustee,  the  Securities  Company,  which  is  thus  vested 
with  the  power  to  control  and  direct  both  roads  for  the  com- 
mon benefit  of  the  stockholders  of  each. 

The  Anti-Trust  Act  condemns  in  express  terms  every 
"  combination  in  the  form  of  trust,"  and  if  those  companies 
have  been  combined  "  in  the  form  of  trust,"  a  violation  of  the 
very  letter  of  the  statute  has  been  proved. 

There  is  no  great  difficulty  in  getting  at  wJiat  Congress 
meant  by  a  "trust."    The  meaning  of  the  term  was  well 
understood  in  the  economic  and  industrial  world  at  the  time 
of  the  passage  of  the  Anti-Trust  Act,  and  is  now.      The  word 
was  first  used  to  describe  an  arrangement  whereby  the  busi- 
ness of  several  competing  corporations  is  centralized  and  com- 
bined by  causing  at  least  a  majority  of  the  stock  of  the  con- 
stituent corporations  to  be  transferred  to  a  trustee,  who,  in 
return,  issues  to  the  stockholders  "  trust  certificates."    The 
trustee  holds  the  legal  title  to  the  shares  and  has  the  right  to 
vote  them,  and  in  this  way  exercises  complete  control  over  the 
1 309]  business  of  the  combination.     The  trustee  also  receives 
the  dividends  on  the  shares,  and  out  of  these  pays  the  former 
stockholders  of  the  constituent  corporations  dividends  on  the 
"  trust  certificates."    See  Century  Dictionary ;  Am.  &  Eng. 
Ency.  Law,  2d  ed.,  title  Monopolies  &  Trusts ;  State  v.  Stand- 
ard Oil  Co.,  49  Ohio  St.  137 ;  Eddy  on  Combinations,  §  582 ; 
Noyes  on  Intercorp.  Rel.  §  304;  Dodd's  Pamphlet  on' Com- 
binations :  Their  Uses  and  Abuses.    The  facts  show  that  the 


442 


193   UlsriTED   STATES  REPORTS,   309. 


Argument  of  Attorn^-General  for  United  States. 

Northern  Securities  Company  constitutes  a  trust— it  has  all 
the  essential  elements  of  one.  It  is  a  trustee,  and  as  such 
'  holds  the  stock  of  two  competing  companies ;  it  has  the  legal 
title,  its  stockholders  have  the  equitable  title,  to  the  property. 
Morawetz,  §  237,  and  cases  cited.  There  is  a  trust  agreement, 
the  terms  whereof  are  in  the  charter;  it  is  sufficient  to  show 
an  agreement  if  the  stockholders  acted  in  pursuance  of  any 
understanding  plan  or  scheme,  verbal  or  otherwise.  Harding 
V.  Am.  Glucose  Co.,  182  Illinois,  551.  The  certificates  of  stock 
of  the  company  represent  and  fill  ihe^  same  office  as  trust 
certificates;  the  company  has  the  power  to  vote  the  stock  of 
both  railways  and  thus  elect  the  directors  of  both.  As  trustee, 
it  collects  the  dividends  on  the  stock  of  both  companies 
and  thereout  pays  dividends  on  its  own  stock  exactly  as  a 
trustee  of  a  trust  collects  and  pays  on  the  trust  certificates. 

It  constitutes  a  trust  in  another  light  also.  As  the  courts 
througlioiit  the  country  held  with  practical  unanimity  that 
the  class  of  '*  trusts  "  just  described  is  illegal,  a  second  class 
was  invented  of  corporations  that  have  acquired  control  of 
other  corporations  by  purchasing  their  stock.  This  organiza- 
tion is  of  the  same  general  character  as  the  preceding,  but 
the  form  is  changed  in  order  to  escape  the  force  of  the  deci- 
sions of  the  courts  rdating  to  corporate  partnerships.  Beach 
on  Monopolies  and  Industrial  Trusts,  §  150.  The  Securities 
Company  clearly  comes  within  this  second  classification  of 
"  trusts."  Koyes  on  Intercorp.  Kel.  §§  310,  285.  393;  People 
v.  Chicago  Oas  Trust  Co.,  130  Illinois,  268,  202,  302,  citing 
Chicago  Gas  [310]  Light  Co.  v.  People's  Gas  Light  Co.,  121 
Illinois,  530;  Am.  Glmose  Case,  supra. 

It  is  not  essential,  however,  to  show  that  the  Great  North- 
ern and  Northern  Pacific  Railway  companies  have  been  com- 
bined in  the  technical  form  of  "  trust,"  or  "  corporate  com- 
bination," as  some  writers  call  it  when  the  trustee  is  a  hold- 
ing corporation.  Section  1  of  the  Anti-Trust  Act  covers 
any  and  every  form  of  combination.  A  violation  of  that  sec- 
tion will  have  been  established,  therefore,  if  it  is  shown 

Mr.  Hill,  Mr.  Morgan,  and  the  other  individual  defendants, 
acting  in  concert  or  in  pursuance  of  a  previous  understand- 
ing, have  caused  the  title  to  a  majority  of  the  shares  of  the 


NORTHERN   SECURITIES    CO.    V.   UNITED   STATES.       443     ^ 
Argument  of  Attorney-General  for  United  States. 

Great  Northern  and  Northern  Pacific  companies  to  be  vested 
in  a  single  person— the  Securities  Compan}^— thereby  center- 
ing the  control  of  the  two  roads  in  a  single  head  and  in  that 
way  effecting  a  conMnation  of  them,  the  effect  or  tendency 
of  which  is  to  suppress  coiiii)etition  between  them. 

When  analyzed  the  disguise  by  which  the  defendants 
sought  to  hide  the  fact  of  the  combination,  and  their  connec- 
tion therewith,  ap]3ears  so  thin  and  transparent  that  it  is  a 
cause  of  wonder  that  they  should  ever  have  adopted  such  a 
flimsy  device. 

It  may  succeed  for  a  time  in  balHing  jierHons  who  may 
have  an  interest  in  preventing  its  being  done  and  has  suc- 
ceeded, but  it  was  a  mere  crafty  contrivance  to  evade  the 
requisition  of  the  law.  Attoimey-General  v.  The  Great 
Northern  Railway  Company,  6  Jur.  (N.  S.)  1006;  S.  C,  1 
Drew.  &  Smale,  159. 

The  defendants  seem  to  have  thought  that  they  could  pro- 
cure the  organization  of  a  corporation  and  have  it  do  what 
they  could  not  lawfully  do  themselves  or  through  the  agency 
of  natural  persons,  as  if  that  which  would  have  been  illegal 
if  done  through  the  agency  of  a  natural  person  would  lose  the 
stamp  of  illegality  if  done  through  the  agency  of  a  corporate 
organization;  but  see  Attoimey  General  v.  Central  R.  Co., 
50  N.  eT.  Eq.  52;  Ford  v.  Chicago  Milk  Shippers'  Assn.,  155 
Illi-  [311]  nois,  166,  178, 180,  citing  Morawetz,  §  227;  1  Kyd 
on  Corp.  13;  State  ex  rel.  v.  Standard  Oil  Co.,  49  Ohio  St. 
137 ;  Distilling  and  Cattle  Feeding  Co.  v.  People,  156  Illinois. 
448,  490. 

Defendants  insist  that  it  is  immaterial  that  a  combination 
can  be  discovered  by  going  behind  the  fiction  that  the  Securi- 
ties Company  is  a  private  perr-on  vith  an  existence  separate 
and  apart  from  its  members,  because,  as  they  say,  the  law 
will  not  allow  that  fiction  to  be  disregarded  or  contradicted — 
will  not  allow  the  acts  of  the  corporate  entity  to  be  treated  as 
the  acts  of  the  natural  persons  who  compose  it.  The  defend- 
ants thus  seek  to  defeat  the  ends  of  the  law  by  a  fiction  in- 
vented to  promote  them.  This  proposition  cannot  be  sus- 
tained. People  V.  North  River  Sugar  Rfg.  Co.,  121  N.  Y. 
582,  615. 

It  can  never  be  a  question  as  to  whether  parties  to  a  com- 


193   UNITED  STATES  REPORTS,   311. 


Argument  of  Attornej-General  for  United  Stiites. 
bination  in  restraint  of  trade  are  individuals  or  corporations; 
It  IS  always  a  question  as  to  the  nature,  effect,  and  operation 
of  the  combination. 

Of  coui-se  a  State  has  certain  powers  over  the  instrumen- 
talities of  commerce  which  it  creates,  as  it  has  over  the  indi- 
viduals bv  whom  commerce  is  conducted.  But  a  State  has 
no  power  over  either  instrumentalities  or  individuals  that 
can  be  interposed  between  them  and  the  obligations  imposed 
by^a  Federal  statute  regulating  interstate  commerce. 

Where  the  subject  is  national  in  its  character  the  Federal 

Congreas  has  power  to  regulate  commerce  among  the 
States,  and  when  in  the  exercise  of  that  power  it  becomes 
necessary  to  legislate  respecting  the  instrumentalities  of  com- 
merce,  it  may  do  so,  irrespective  of  the  question  as  to  how  or 
by  what  authority  those  instrumentalities  were  created. 

And  if  regulation  of  the  control  of  these  instrumentalities 
is  essential  to  prevent  the  subversion  of  a  policy  of  Congress 
It  may  regulate  that  control. 

[312]  The  power  to  regulate  commerce  among  the  several 
States  includes  the  i>ower  to  prevent  restraint  upon  such 
commerce. 

To  restrain  commerce  is  to  regulate  it. 

Therefore  any  law  of  any  State  which  restrains  interstate 
commerce  is  invalid;  and  any  contract  between  individuals 
or  corporations,  or  any  combination  in  any  form  which  re- 
strains sucli  commerce  is  invalid. 

The  supreme  power  extends  to  the  whole  subject.  Under 
^his  plenarA^  power  Congress  has  supervised  interstate  com- 
merce from  the  granting  of  franchises  to  engage  therein,  to 
the  most  minute  directions  as  to  its  operation.  For  this 
purpose  it  possesses  all  powers  which  existed  in  the  States 
before  the  adoption  of  the  National  Constitution,  and  which 
have  always  existed  in  the  Parliament  of  England  In  re 
Behs,  158  U.  S.  586;  GiMan  v.  PhUadelphia,  3  Wall.  725 

If  the  arrangement  accomplishes  that  which  the  law  pro- 
hibits, through  the  means  which  the  law  prohibits  it  is  cer- 
tainly within  the  prohibition  of  the  law,  and  if  this  were  a 
consolidation  under  state  authority  instead  of  being  a  com- 


NOBTHERN   SECURITIES   CO.   V.   UNITED   STATES.       445 
Argument  of  Attorney-General  for  United  States. 

bination  which  effects  that  which  defies  the  law  of  every  foot 
of  land  which  these  railroads  occupy,  there  should  be  no  hesi- 
tation in  saying  that  it  violated  the  Federal  statute,  if  it 
accomplished  a  restraint  upon  interstate  commerce.  To  hold 
otherwise  would  be  to  read  into  the  law  a  proviso  to  the  effect 
that  the  act  should  not  apply  when  the  combination  took  the 
form  of  a  railroad  consolidation  under  authority  of  state 
legislation. 

Fictions  of  law,  invented  to  promote  justice,  can  never  be 
invoked  to  accomplish  its  defeat.  "  In  fctione  juris  semper 
cpquitas  exist  it  ^  Most  mi  v.  Fahriges^  Cowper,  177;  Morris 
V.  Pugh,  3  Burr.  1243;  Morawetz,  §g  1,  227;  Taylor  on  Cor- 
porations, §  50;  Clark  and  Marshall  on  Private  Corpora- 
tions, 17,  22;  State  v.  Standard  Oil  Co.,  41). Ohio  St.  137; 
Ford  V.  Milk  Shippers^  sujrra^  and  other  cases  cited  supra. 

Th<i  Northern  Securities  Compaii}',  in  violation  of  section  2 
of  the  Anti-Trust  Act,  has  monopolized  a  part  of  interstate 
commerce  by  acquiring  a  large  majority  of  the  shares  of  the 
[313]  capital  stock  of  the  Great  Northern  and  Northern 
Pacific  Railway  companies — two  parallel  and  competing 
lines  engaged  in  interstate  commerce;  and  the  Northern 
Securities  Company  and  the  individual  defendants,  or  two  or 
more  of  them,  have  combined,  each  with  the  other,  so  to 
monopolize  a  part  of  interstate  commerce. 

From  the  facts  and  the  argument  already  made  it  ap- 
pears that  by  acquiring  a  majority  of  the  shares  of  the 
Great  Northern  and  Northern  Pacific  the  Securities  Com- 
pany has  obtained  the  control  of,  and,  therefore,  the  power  to 
suppress  competition  between,  two  rival  and  competing  lines 
of  railway  engaged  in  interstate  commerce,  and  in  that  way 
has  monopolized  a  part  of  interstate  commerce.  This  con- 
clusion is  sustained  by  the  judgment  of  this  court  in  the  case 
of  Pearsall  v.  Great  Northern  Railway^  supra.,  which  is  con- 
clusive of  the  case  at  bar,  since  it  establishes  the  principle 
that  to  vest,  designedly,  in  one  person  or  set  of  persons,  a 
majority  of  stock  of  two  competing  lines  of  interstate  rail- 
way is  to  monopolize  a  part  of  interstate  railroad  traffic. 

Even  if  a  natural  person  could  lawfully  have  done  what 
the  Securities  Company  has  done,  that  would  be  no  argu- 
ment to  prove  that  the  Securities  Company,  in  so  doing,  has 


193   UNITED   STATES   REPORTS,   313. 


Argument  of  Attorney-General  for  United  States. 

not  violated  the  law  against  monopolies.    People  v.  North 
River  Sugar  Refining  Company,  supra,  p.  625. 

It  is  not  denied  that  the  very  spirited  contention  that  the 
construction  the  Government  puts  upon  the  law  in  question 
interferes  with  the  power  of  people  to  do  what  they  will 
with  their  property. 

That  was  the  very  object  of  the  law,  and  it  was  certainly 
contemplated  that  the  rights  of  purchase,  sale,  and  contract 
would  be  controlled,  so  far  as  necessary,  to  prevent  those 
rights  from  being  exercised  to  defeat  the  law. 

A  combination  cannot  be  imagined  coming  into  existence 
without  more  or  less  redistribution  of  property  between  indi- 
viduals through  purchases,  sales,  or  contracts.  Combina- 
tions are  never  bestowed  upon  us  ready  made. 

[314]  It  must  be  remembered  that  the  monopoly  com- 
plained of  is  a  monopoly  of  railway  traffic  resulting  from 
centering  in  a  single  body  controlling  stock  interests  in  two 
competing  railways,  and  whatever  may  be  the  power  of 
Congress  or  state  legislatures  over  monopolies  in  general, 
they  may  unquestionably,  in  the  exercise  of  their  broad  reg- 
ulative powers  over  quasi-pnhlic  corporations,  prohibit  any 
monopoly  of  railway  transportation  within  their  respective 
spheres  of  action. 

As  to  the  contention  that  the  transaction  is  simply  a  sale 
of  stock  to  an  investor  and  to  stamp  it  as  illegal  would  be  an 
unwarranted  infringement  upon  the  right  of  contract,  and 
that  the  Securities  Company  never  intended  to  take  any  active 
part  in  the  controlling  of  the  two  companies,  the  argument  is 
not  sincere  and  it  is  demonstrated  by  the  testimony  of  thfe 
individual  defendants  that  the  Securities  Company \vas  the 
designed  instrument  for  directing  and  controlling  the  policies 
of  the  competing  lines. 

As  to  the  circular  of  Mr.  Hill  to  the  stockholders,  it  is  well 
settled  that  because  a  person  has  the  right  to  purchase  stock 
it  does  not  follow  that  stockholders  of  two  or  more  compet- 
ing corporations  can  combine  among  themselves  and  with 
such  person  to  sell  him  their  stock  and  induce  others  to  do  the 
same,  so  as  to  center  the  controlling  stock  interests  of  the  sev- 
eral corporations  in  a  single  head,  in  violation  of  statutes 
against  combinations,  consolidations,  and  monopolies.    Noyes 


NORTHERN   SECURITIES   CO.   V.   UNITED   STATES.       447 
Argument  of  Attorney-General  for  United  States. 

on  Intercorp.  Kel.  §  36;  Penna,  R,  Co.  v<  Com.,  7  Atl.  Rep. 
373. 

This  distinction  between  an  actual  J)072a  fide  sale,  and  one 
which  is  merely  nominal  and  really  a  cloak  under  which  to 
accomplish  a  combination  sometimes  leads  to  confusion  of 
language  or  thought.  See  Trenton  Potteries  Co.  v.  Olyphant^ 
58  N.  J.  Eq.  507;  Noyes  on  Intercorp.  Rel.  §  354. 

As  to  the  argument  of  the  appellants  that  the  "  acquiescence 
by  the  Government  for  more  than  eleven  years  in  the  merger 
and  consolidation  of  many  important  parallel  and  competing 
[316]  lines  of  railroad  and  steamships  engaged  in  interstate 
commerce  and  foreign  conunerce  has  given  a  practical  con- 
struction to  the  Anti-Trust  Act  of  July  2,  1890,  to  the  effect 
that  it  was  not  intended  to  forbid  and  does  not  forbid  the 
natural  processes  of  unification  which  are  brought  about 
under  modern  methods  of  lease,  consolidation,  merger,  com- 
munity of  interest,  or  ownership  of  stock,"  there  is  no 
force  whatever  to  the  contention  which  the  court  below  evi- 
dently deemed  too  flimsy  even  to  refer  to.  But  the  answer 
to  it  is  threefold — ^the  case  of  a  company  formed  for  the  pur- 
pose of  holding  stocks  of  two  competing  lines  of  interstate 
railways  is  a  new  one  and  arose  for  the  first  time  in  this 
case;  the  constitutionality  of  the  act  and  its  application  to 
railroads  was  not  settled  until  1898  by  the  decision  of  Traiis- 
Missovri  and  Joint  Traffic  Cases,  supra;  even  if  there  had 
been  acquiescence  as  to  certain  combinations  it  would  not 
amount  to  an  estoppel  against  the  Government  for  prose- 
cuting this  action.  Louisville  &  Nashville  v.  Kentucky,  161 
U.  S.  677, 689. 

The  combination  and  monopoly  charged  by  the  United 
States  o^Dcrate  directly  on  interstate  commerce,  and  do  not 
affect  it  only  indirectly,  incidentally,  or  remotely.  Noyes  on 
Intercorp.  Rel.  §  392,  und  authorities  there  cited. 

The  question  in  this  case  is  not  whether  the  means  by  which 
the  power  of  the  combination  is  brought  into  play  are  direct 
or  indirect,  but  whether  the  combination  itself,  whenever  its 
power  has  been  brought  into  play — it  matters  not  how  indi- 
rect may  have  been  the  means  employed  in  bringing  it  into 
play — operates  directly  on  interstate  or  international  com- 
merce.   The  failure  of  the  defendants'  counsel  to  bear  this  in 


448  X«3  XTKXTBD  8TAXB8  BEPO^TS,  315. 

Argument  of  Attorney-GeDeral  for  United  States. 
miiKl  has  led  them  to  make  very  elaborate  arguments  to  show 
that  the  combination  charged  by  the  Government  affects  in- 
terstate commerce  only  indirectly  and  remotelv.  In  reply  to 
the  contention  on  this  point,  see  opinion  of  the  court  below 
after  citing  United  States  v.  E,  C.  Knight  Company,  156  U. 
S,  1;  Hopkhis  V.  United  States,  111  U.  S.  5T8;  Anderson  v. 
United  States,  171  U.  S.  6(M,  on  which  counsel  for  defendants 
rely,  [316]  properly  held  that  no  combination  could  more 
immediately  affect  such  commerce. 

The  relief  granted  by  the  Circuit  Court  was  authorized  by 
section  4  of  the  Anti-Trust  Act. 

The  gist  of  the  Government's  charge  being  that  a  combina- 
tion of  the  two  railway  companies  has  been  formed  by  center- 
ing the  title  to  a  majority  of  their  respective  sliares  in  the 
Securities  Company,  which  by  obtaining  such  majority  of 
both  stocks  has  acquired  a  monopoly— all  in  violation  of  the 
Anti-Trust  Act  and  as  unlawful  combination  and  monopoly 
exists  solely  by  virtue  of  the  Securities  Company's  ownership 
of  such  majorities  the  logical  and  most  direct  way  to  destroy 
the  combination  and  monopoly  and  prevent  the  continued  vio- 
lation of  the  statute  is  to  strip  such  ownership,  which  was 
acquired  in  pursuance  of  an  illegal  object,  of  its  powers  and 
incidents— to  disarm  it  of  its  power  to  violate  the  law.  And 
this  is  what  the  Circuit  Court  did.  Clearly  this  decree  vio- 
lates no  rights  of  property  which  the  Securities  Company  or 
any  of  the  other  defendants  is  entitled  to  claim. 

It  is  proper  to  grant  this  relief  even  though  the  purpose  of 
the  company  had  already  been  accomplished.  The  combina- 
tion charged  by  the  Government  is  a  combination  of  the  two 
railways,  formed  by  concentrating  in  the  Securities  Company 
the  power  to  control  both  roads.  This  combination  did  not 
"  come  to  an  end,"  did  not ''  accomplish  its  purpose,"  with  the 
organization  of  the  Securities  Company,  and  therefore  the 
vjolation  of  the  Anti-Trust  Act  did  not  "  come  to  an  end  " 
there,  but  continued  on  without  interruption,  and  under  the 
act  the  Circuit  Courts  can  prevent,  restrain,  enjoin  or  other- 
wise prohibit  violations  thereof,  and  are  left  free  to  frame 
their  remedial  process  to  meet  the  exigencies  of  the  case,  and 
Its  courts  of  equity  they  enjoy  the  same  wide  latitude  in  form- 
ulating relief  in  cases  of  this  class  that  they  enjoy  in  any 


NORTHERN    SECURITIES    CO.    V.    UNITED   STATES.       449 
Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

other  class  of  cases  within  the  jurisdiction  of  equity.  Taylor 
V.  Simo7i,  4  Mylne  &  Craig,  141 ;  Chicago,  R.  I.  di  P,  Ry,  Co, 
V.  Union  Pacific  Ry.  Co..  47  Fed.  Rep.  15,  20. 

[317]  There  is  no  defect  of  parties;  all  interests  materi- 
ally affected  by  the  decree  of  the  Circuit  Court  are  repre- 
sented by  the  parties  before  the  court. 

There  were  1,300  persons  who  exchanged  stock  of  the  rail- 
way companies  for  stock  of  the  Securities  Company,  and  in  a 
court  of  equity  the  interests  of  absent  parties  are  represented 
when  there  are  parties  having  similar  interests  before  the 
court.    Sfnith  v.  Suwrnstedt,  16  How.  288,  302. 

Any  question  as  to  a  defect  of  parties  which  might  have 
existed  has  been  removed  from  the  case  by  the  form  of  the 
decree  entered  by  the  Circuit  Court,  which  simply  adjudges 
that  the  parties  defendant  have  entered  into  an  unlawful 
combination  and  conspiracy  in  restraint  of  interstate  com- 
merce, and  then  proceeds  to  enjoin  the  defendants,  the  Securi- 
ties Company,  and  the  railway  companies  from  doing  the 
things  which  alone  give  life  and  force  to  the  combination. 
The  decree  thus  operates  only  on  the  parties  to  the  bill  and 
materially  affects  only  their  interests.  The  defendant  cor- 
porations stand  for  the  interests  of  their  respective  stock- 
holders. ^  Sanger  v.  Upton,  91  U.  S.  59 ;  Hawkins  v.  GUnn, 
131  U.  S.  329;  Minnesota  v.  Northern  Securities  Co.,  184 
U.  S.  199. 

Mr.  Justice  Harlan  announced  the  affirmance  of  the 
decree  of  the  Circuit  Court,  and  delivered  the  following 
opinion:  • 

This  suit  was  brought  by  the  United  States  against  the 
Northern  Securities  Company,  a  corporation  of  Xew  Jersey; 
the  Great  Northern  Eailway  Company,  a  corporation  of  Min- 
nesota ;  the  Northern  Pacific  Railway  Company,  a  corpora- 
tion of  Wisconsin;  James  J.  Hill,  a  citizen  of  Minnesota;  . 
and  William  P.  Clough,  D.  Willis  James,  John  S.  Kennedy, 
J.  Pierpont  Morgan,  Robert  Bacon,  George  F.  Baker  and 
Daniel  S.  Lamont,  citizens  &i  New  York. 

Its  general  object  was  to  enforce,  as  against  the  defendants, 
the  provisions  of  the  statute  of  July  2,  1890,  commonly 
21220— VOL  2—07  m ^29 


450  193  UNITED   STATES  BEPORTS,   317. 

Opinion  of  tlie  Court,  by  Harlan,  J.,  affirming  decree. 

known  as  the  Anti-Trust  Act,  and  entitled  "An  act  to  protect 
trade  [318]  and  commerce  against  unlawful  restraints  and 
monopolies."  26  Stat.  209.  By  the  decree  below  the  United 
States  was  given  substantially  the  relief  asked  by  it  in  the 
bill. 

As  the  act  is  not  very  long,  and  as  the  determination  of  the 
particular  questions  arising  in  this  case  may  require  a  consid- 
eration of  the  scope  and  meaning  of  most  of  its  provisions,  it 
is  here  given  in  full : 

"  Sec.  1.  Every  contract,  combination  in  the  form  of  trust  or  other- 
wise, or  conspiracy,  in  restraint  of  trade  or  counnerce  among  the  sev- 
eral States,  or  with  foreign  nations,  is  hereby  declared  to  be  illegal. 
Every  person  who  shall  make  any  snch  contract  or  engage  in  any  such 
combination  or  conspiracy,  shall  be  deemed  guilty  of  a  misdemeanor, 
and,  on  conviction  thereof,  shall  be  punished  by  fine  not  exceeding  five 
thousand  dollars,  or  by  imprisonment  not  exceeding  one  year,  or  by 
both  said  punishments,  in  the  discretion  of  the  court. 

"  Seo.  2.  Every  person  who  shall  monopolize,  or  attempt  to  monopo- 
lize, or  combine  or  conspire  with  any  other  person  or  persons,  to  monop- 
olize any  part  of  the  trade  or  commerce  among  the  several  States,  or 
with  foreign  nations,  shall  be  deemed  guilty  of  a  misdemeanor,  and, 
on  conviction  thereof,  shall  be  punished  by  fine  not  exceeding  fiva 
thousand  dollars,  or  by  imprisonment  not  exceeding  one  year,  or  by 
both  said  punishments,  in  the  discretion  of  the  court. 

"  Sec.  3.  Every  contract,  combination  in  form  of  trust  or  otherwise, 
or  conspiracy,  in  restraint  of  trade  or  commerce  in  any  Territory  of 
the  United  States  or  of  the  District  of  Columbia,  or  in  restraint  of 
trade  or  commerce  between  any  such  Territory  and  another,  or  between 
any  such  Territorj-  or  Territories  and  any  State  or  States  or  the  Dis- 
trict of  Columbia,  or  with  foreign  nations,  or  between  the  District  of 
Columbia  and  any  State  or  States  or  foreign  nations,  is  hereby 
declared  illegal.  Every  person  who  shall  make  any  such  contract  or 
engage  in  any  such  combination  or  conspiracy,  shall  be  deemed  guilty 
of  a  misdemeanor,  and,  on  conviction  thereof,  shall  be  punished  by 
fine  not  exceeding  five  thousand  dollars,  [319]  or  by  imprisonment  not 
exceeding  one  year,  or  by  both  said  punishments,  in  the  discretion  of 
the  court.  • 

"  Sec.  4.  The  several  Circuit  Courts  of  the  United  States  are  hereby 
invested  with  jurisdiction  to  prevent  and  restrain  violations  of  this 
act ;  and  it  shall  be  the  duty  of  the  several  district  attorneys  of  the 
United  States,  in  their  respective  districts,  under  the  direction  of  the 
Attorney-General,  to  institute  proceedings  in  equity  to  prevent  and  re- 
strain snch  violations.  Such  proceedings  may  be  by  way  of  petition 
setting  forth  the  case  and  praying  that  such  violation  shall  be  enjoined 
or  otherwise  prohibited.  When  the  parties  complained  of  shall  have 
been  duly  notified  of  such  petition  the  court  shall  proceed,  as  soon  as 
may  be,  to  the  hearing  and  determination  of  the  case;  and,  pending 
snch  petition  and  before  final  decree,  the  court  may  at  any  time  make 
such  temporary  restraining  order  or  prohibition  as  shall  be  deemed 
just  in  the  premises. 

"Sec.  5.  Whenever  it  shall  appear  to  the  court  before  which  any 
proceeding  under  section  four  of  this  act  may  be  pending,  that  the  ends 
of  justice  require  that  other  parties  should  be  brought  before  the  court, 
the  court  may  cause  them  to  be  summoned,  whether  they  reside  in  the 


NORTHERN   SECURITIES   CO.   V,   UNITED   STATES.       451 
Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

district  in  which  the  court  is  held  or  not ;  and  subpoenas  to  that  end 
may  be  served  in  any  district  by  the  marshal  thereof. 

"  Sec  6.  Any  property  owned  under  any  contract  or  by  any  com- 
bination, or  pursuant  to  any  conspiracy  (and  being  the  subject  thereof) 
mentioned  m  section  one  of  this  act,  and  being  in  the  course  of  trans- 
portation from  one  State  to  another,  or  to  a  foreign  countrv,  shall  be 
forfeited  to  the  United  States,  and  may  be  seized  and  condemned  by 
like  proceedings  as  those  provided  by  law  for  the  forfeiture,  seizure, 
and  condemnation  of  property  imported  into  the  United  States  con- 
trary to  law. 

"  Sec.  7.  Any  person  who  shall  be  injured  in  his  business  or  property 
by  any  other  person  or  corporation  by  reason  of  anything  forbidden 
or  declared  to  be  unlawful  by  this  act,  may  sue  therefor  in  any  Circuit 
Court  of  the  United  States  in  the  dis-  [320]  trict  in  which  the  defend- 
ant resides  or  is  found,  without  respect  to  the  amount  in  controversv 
and  shall  recover  threefold  the  damages  by  him  sustained,  and  the 
costs  of  suit,  including  a  reasonable  attorney's  fee. 

r  ^u^;,\  ^'5^^  ^^^  ^^^^*^  '  person,'  or  '  persons,'  wherever  used  in  this 
act  shall  be  deemed  to  include  corporations  and\associations  existing 
under  or  authorized  by  the  laws  of  either  the  United  States,  the  laws 
of  any  of  the  Territories,  the  laws  of  any  State,  or  the  laws  of  any 
foreign  country."  ^^ 

Is  the  case  as  presented  by  the  pleadings  and  the  evidence 
one  of  a  combination  or  a  conspiracy  in  restraint  of  trade  or 
commerce  among  the  States,  or  with  foreign  states?  Is  it 
one  in  which  the  defendants  are  properly  chargeable  with 
monopolizing  or  attempting  to  monopolize  any  part  of  such 
trade  or  commerce  ?  Let  us  see  what  are  the  facts  disclosed 
by  the  record. 

The  Great  Northern  Railway  Company  and  the  Northern 
Pacific  Railway  Company  owned,  controlled  and  operated 
separate  lines  of  railway— the  former  road  extending  from 
Superior,  and  from  Duluth  and  St.  Paul,  to  Everett,  Seattle, 
and  Portland,  with  a  branch  line  to  Helena ;  the  latter,  ex- 
tending from  Ashland,  and  from  Duluth  and  St.  Paul,  to 
Helena,  Spokane,  Seattle,  Tacoma  and  Portland.  The  two 
lines,  main  and  branches,  about  9,000  miles  in  length,  were 
and  are  parallel  and  competing  lines  across  the  continent 
through  the  northern  tier  of  States  between  the  Great  Lakes 
and  the  Pacific,  and  the  two  companies  were  engaged  in  active 
competition  for  freight  and  passenger  traffic,  each  road  con- 
nectmg  at  its  respective  terminals  with  lines  of  railway,  or 
with  lake  and  river  steamers,  or  with  seagoing  vessels 

Prior  to  1893  the  Northern  Pacific  system  was  owned  or 
controlled  and  operated  by  the  Northern  Pacific  Railroad 
Company,  a  corporation  organized  under  certain  acts  and  res- 
olutions  of  Congress.    That  company  becoming  insolvent,  its 


4:t)iu 


193   T'NITRD   STATES   REPORTS,   320. 


Opinion  of  tJie  Court,  by  Harlan,  J.,  nffinning  deeree. 

road  iiiid  i)roiK'ity  passed  into  the  hands  of  receivers  ap- 
pointed bv  courts  of  the  United  States.  In  advance  of  fore- 
closure  and  [flSl]  sale  a  majority  of  its  bondholders  made  an 
arrangement  with  the  Great  Northern  Railway  Company 
for  a  virtual  consolidation  of  the  two  systems,  and  for  giving 
the  practical  control  of  the  Nortliern  Pacific  to  the  Great 
Northern.  That  was  the  arrangement  declared  in  Petn-sdU  v. 
Great  Xorf/ferti  Raihvay  Company^  161  U.  S.  C>4(),  to  be  ille- 
gal under  the  statutes  of  Minnesota  which  forbade  any  rail- 
road  corporation  or  the  purchasers  or  managers  of  any  cor- 
poration, to  consolidate  the  stock,  property  or  franchises  of 
such  corjioration,  or  to  lease  or  purchase  the  works  or  fran- 
chises of,  or  in  any  way  control,  other  railroad  corporations 
owning  or  having  under  their  control  parallel  or  competing 
lines.    Gen.  Laws,  Minn.  1874,  c.  2J>;  ch.  1881. 

Early  in  1901  the  Great  Nortliern  and  Northern  Pacific 
Railway  companies,  having  in  view  the  ultimate  placing  of 
their  two  systems  under  a  common  control,  united  in  the  pur- 
chase  of  the  capital  stock  of  the  Chicago,  Burlington  and 
Quincy  Railway  Company,  giving  in  payment,  upon  an 
agreed  basis  of  ^xchan^,  the  joint  Lds  of  the  Great  North- 
em  and  Northern  Pacific  Railway  companies,  payable  in 
twenty  years  from  date,  with  interest  at  4  per  ^ent  ix,r 
annum.  In  this  manner  the  two  purchasing  companies  be- 
came the  owners  of  $107,000,000  of  the  $112,000,000  total 
capital  stock  of  the  Chicago,  Burlington  and  Quincy  Rail- 
way  Company,  whose  lines  aggregated  about  8,000  miles,  and 
extended  from  St.  Paul  to  Chicago  and  from  St.  Paul  and 
Chicago  to  Quincy,  Burlington,  Des  Moines,  St.  Ix)uis,  Kan- 
sas City,  St.  Joseph,  Omaha,  Lincoln,  Denver,  Cheyenne  and 
Billings,  where  it  connected  with  the  Northern  Pacific  rail- 
road. By  this  purchase  of  stock  the  Great  Northern  and 
Northern  Pacific  acquired  full  control  of  the  Chicago,  Bur- 
lington and  Quincy  main  line  and  branches. 

Prior  to  November  13,  1901,  defendant  Hill  and  associate 
stockholders  of  the  Great  Northern  Railway  Company,  and 
defendant  Morgan  and  associate  stockholders  of  the  North- 
em  Pacific  Railway  Company,  entered  into  a  combination  to 
form,  [322]  under  the  laws  of  New  Jersey,  a  holding  cor- 
poration, to  be  called  the  Northern  Securities  Company,  with 


NORTHERN    SECURITIES    CO.    V.    UNITED   STATES.       453 
Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

a  capital  3k>ck  of  $400,000,000,  and  to  which  company,  in 
exchange  for  its  own  capital  stock  upon  a  certain  basis  and 
at  a  certain  rate,  was  to  be  turned  over  the  capital  stock,  or  a 
controlling  interest  in  the  capital  stock,  of  each  of  the  constit- 
uent railway  companies,  with  power  in  the  holding  corpora- 
tion to  vote  such  stock  and  in  all  respects  to  act  as  the  owner 
thereof,  and  to  do  whatever  it  might  deem  necessary  in  aid  of 
such  railway  companies  to  enhance  the  value  of  their  stocks. 
In  this  manner  the  interests  of  individual  stockholders  in  the 
property  and  franchises  of  the  two  independent  and  compet- 
ing railway  companies  were  to  be  converted  into  an  interest 
in  the  property  and  franchises  of  the  holding  corporation. 
Thus,  as  stated  in  Article  VI  of  the  bill,  "by  making  the 
stockholders  of  each  system  jointly  interested  in  both  sys- 
tems, and  by  practically  pooling  the  earnings  of  both  for  the 
benefit  of  the  former  stockholders  of  each,  and  by  vesting  the 
selection  of  the  directors  and  officers  of  each  system  in  a  com- 
mon  body,  to  wit,  the  holding  corporation,  with  not  only  the 
power  but  the  duty  to  pursue  a  policy  which  would  promote 
the  interests,  not  of  one  system  at  the  expense  of  the  other, 
but  of  both  at  the  expense  of  the  public,  all  inducement  for 
competition  between  the  two  systems  was  to  be  removed,  a 
virtual  consolidation  effected,  and  a  monopoly  of  the  inter- 
state and  foreign  commerce  formerly  carried  on  hj  the  two 
systems  as  independent  competitors  established." 

In  pursuance  of  this  combination  and  to  effect  its  objects, 
the  defendant,  the  Northern  Securities  Company,  was  organ- 
ized November  13,  1901,  under  the  laws  of  New  Jersey. 

Its  certificate  of  incorporation  stated  that  the  objects  for 
which  the  company  was  formed  were :  "  1.  To  acquire  by 
purchase,  subscription  or  otherwise,  and  to  hold  as  invest- 
ment, any  bonds  or  other  securities  or  evidences  of  indebted- 
ness, or  any  shares  of  capital  stock  created  or  issued  by  any 
other  corporation  or  corporations,  association  or  associations, 
of  the  [323]  State  of  New  Jersey,  or  of  any  other  State,  Ter- 
•  ritory  or  country.  2.  To  purchase,  hold,  sell,  assign,  trans- 
fer, mortgage,  pledge  or  otherwise  dispose  of  any  bonds  or 
other  securities  or  evidences  of  indebtedness  created  or  issued 
by  any  other  corporation  or  corporations,  association  or  asso- 
ciations, of  the  State  of  New  Jersey,  or  of  any  other  State, 


4.^ 


IM  UNirED  STATES  BEPOBTS,   323. 


Opinion  of  the  Court,  by  Harlan,  X,  affirming  decree. 

Territory  or  country,  and  while  owner  thereof  to^exercise  all 
the  rights,  powers  and  privileges  of  ownership.  B.  To  pur- 
chase, hold,  sell,  assign,  transfer,  mortgage,  pledge  or  other- 
wise dispose  of  shares  of  the  capital  stock  of  any  other  cor- 
poration or  corporations,  association  or  associations,  of  the 
State  of  New  Jersey,  or  of  any  other  State,  Territory  or  coun- 
try, and  while  owner  of  such  stock  to  exercise  all  the  rights, 
powers  and  privileges  of  ownership,  including  the  right  to 
vote  thereon.  4.  To  aid  in  any  manner  any  corporation  or 
association  of  which  any  bonds  or  other  securities  or  evi- 
dences of  indebtedness  or  stock  are  held  by  the  corporation, 
and  to  do  any  acts  or  things  designed  to  protect,  preserve, 
improve  or  enhance  the  value  of  any  such  bonds  or  other 
securities  or  evidences  of  indebtedness  or  stock.  5.  To  ac- 
quire, own  and  hold  such  real  and  personal  property  as 
may  be  necessary  or  convenient  for  the  transaction  of  its 
business. 

It  was  declared  in  the  certificate  that  the  business  or  pur- 
pose of  the  corporation  was  from  time  to  time  to  do  any  one 
or  more  of  such  acts  and  things,  and  that  the  corporation 
should  have  power  to  conduct  its  business  in  other  States 
and  in  foreign  countries,  and  to  have  one  or  more  offices,  and 
hold,  purchase,  mortgage  and  convey  real  and  personal  prop- 
erty, out  of  New  Jersey. 

The  total  authorized  capital  stock  of  the  corporation  was 
fixed  at  $400,000,000,  divided  into  4,000,000  shares  of  the 
par  value  of  $100  each.  The  amount  of  the  capital  stock 
with  which  the  corporation  should  commence  business  was 
fixed  at  $30,000.  The  duration  of  the  corporation  was  to 
be  perpetuaL 

This  charter  having  been  obtained,  Hill  and  his  associate 
stockholders  of  the  Great  Northern  Kailway  Company,  and 
[324]  Morgan  and  associate  stockholders  of  the  Northern 
Pacific  Eailway  Company,  assigned  to  the  Securities  Com- 
pany a  controlling  amount  of  the  capital  stock  of  the  re- 
spective constituent  companies  upon  an  agreed  basis  of  ex- 
change of  the  capital  stock  of  the  Securities  Company  for 
each  share  of  the  capital  stock  of  the  other  companies. 

In  further  pursuance  of  the  combination,  the  Securities 
Company  acquired  additional  stoclc  of  the  defendant  rail- 


' 


NOBTHEBN   SECUBITIES   CO.   V,   UNITED   STATES.       455 
Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

way  companies,  issuing  in  lieu  thereof  its  own  stock  upon 
the  above  basis,  and,  at  the  time  of  the  bringing  of  this  suit, 
held,  as  owner  and  proprietor,  substantially  all  the  capital 
stock  of  the  Northern  Pacific  Eailway  Company,  and,  it 
is  alleged,  a  controlling  interest  in  the  stock  of  the  Great 
Northern  Railway  Company,  "  and  is  voting  the  same  and  is 
collecting  the  dividends  thereon,  and  in  all  respects  is  acting 
as  the  owner  thereof,  in  the  organization,  management  and 
operation  of  said  railway  companies  and  in  the  receipt  and 
control  of  their  earnings." 

No  consideration  whatever,  the  bill  alleges,  has  existed  or 
will  exist,  for  the  transfer  of  the  stock  of  the  defendant  rail- 
way companies  to  the  Northern  Securities  Company,  other 
than  the  issue  of  the  stock  of  the  latter  company  for  the 
purpose,  after  the  manner,  and  upon  the  basis  stated. 

The  Securities  Company,  the  bill  also  alleges,  was  not 
organized  in  good  faith  to  purchase  and  pay  for  the  stocks 
of  the  Great  Northern  and  Northern  Pacific  Railway  com- 
panies, but  solely  "  to  incorporate  the  pooling  of  the^  stocks 
of  said  companies,"  and  carry  into  effect  the  above  combina- 
tion; that  it  is  a  mere  depositary,  custodian,  holder  or  trus- 
tee of  the  stocks  of  the  Great  Northern  and  Northern  Pacific 
Railway  companies;    that  its  shares  of  stock  are  but  bene- 
ficial certificates  against  said  railroad  stocks  to  designate  the 
interest  of  the  holders  in  the  pool ;  that  it  does  not  have  and 
never  had  any  capital  to  warrant  such  an  operation;   that 
its  subscribed  capital  was  but  $30,000,  and  its  authorized 
capital  stock  of  $400,000,000  was  just  sufficient,  when  all 
issued,  to  represent  [325]  and  cover  the  exchange  value  of 
substantially  the  entire  stock  of  the  Great  Northern  and 
Northern  Pacific  Railway  companies,  upon  the  basis  and  at 
the  rate  agreed  upon,  which  was  about  $122,000,000  in  excess 
of  the  combined  capital  stock  of  the  two  railway  companies 
taken  at  par;  and  that,  unless  prevented,  the  Securities  Com- 
pany would  acquire  as  owner  and  proprietor  substantially 
all  the  capital  stock  of  the  Great  Northern  and  Northern 
Pacific  Railway  companies,  issuing  in  lieu  thereof  its  own 
capital  stock  to  the  full  extent  of  its  authorized  issue,  of 
which,  upon  the  agreed  basis  of  exchange,  the  former  stock- 
holders of  the  Great  Northern  Railway  Company  have  re- 


456  193   UNITED   STATES   REPORTS,   325. 

Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

ceived  or  would  receive  and  hold  about  fifty-five  per  cent, 
the  balance  going  to  the  former  stockholders  of  the  Northern 
Pacific  Railway  Company. 

The  Government  charges  that  if  the  combination  was  held 
not  to  be  in  violation  of  the  act  of  Congress,  then  all  efforts 
of  the  National  Government  to  preserve  to  the  people  the 
benefits  of  free  competition  among  carriers  engaged  in  inter- 
state commerce  will  be  wholly  unavailing,  and  all  transcon- 
tinental lines,  indeed  the  entire  railway  systems  of  the  coun- 
try, may  be  absorbed,  merged  and  consolidated,  thus  placing 
the  public  at  the  absolute  mercy  of  the  holding  corporation. 

The  several  defendants  denied  all  the  allegations  of  the  bill 
imputing  to  them  a  purpose  to  evade  the  provisions  of  the  act 
of  Congress,  or  to  form  a  combination  or  conspiracy  having 
for  its  object  either  to  restrain  or  to  monopolize  commerce  or 
trade  among  the  States  or  with  foreign  nations.  They  de- 
nied that  any  combination  or  conspiracy  was  formed  in  vio- 
lation of  the  act. 

In  our  judgment,  the  evidence  fully  sustains  the  material 
allegations  of  the  bill,  and  shows  a  violation  of  the  act  of 
Congress,  in  so  far  as  it  declares  illegal  every  combination  or 
conspiracy  in  restraint  of  commerce  among  the  several  States 
and  with  foreign  nations,  and  forbids  attempts  to  monopo- 
lize such  commerce  or  any  part  of  it. 

Summarizing  the  principal  facts,  it  is  indisputable  upon 
this  [326]  record  that  under  the  leadership  of  the  defendants 
Hill  and  Morgan  the  stockholders  of  the  Great  Northern  and 
Northern  Pacific  Railway  corporations,  having  com])otii\g 
and  substantially  parallel  lines  from  the  Great  Lakes  and  the 
Mississippi  River  to  the  Pacific  Ocean  at  Puget  Sound  com- 
bined and  conceived  the  scheme  of  organizing  a  corporation 
under  the  laws  of  New  Jersey,  which  should  hold  the  shares 
of  the  stock  of  the  constituent  companies,  such  shareholders, 
in  lieu  of  their  shares  in 'those  companies,  to  receive,  Tipon  an 
•greed  basis  of  value,  shares  in  the  holding  corporation ;  that 
pursuant  to  such  combination  the  Northern  Securities  Com- 
pany was  organized  as  the  holding  corporation  through 
which  the  scheme  should  be  executed;  and  under  that  scheme 
such  holding  corporation  has  become  the  holder-  more  prop- 
tjrly  speaking,  the  custodian — of  more  than  nine-tenths  of 


NORTHERN  SECURITIES    CO.   V.    UNITED   STATES.       457 
Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

the  stock  of  the  Northern  Pacific,  and  more  than  three-fourths 
of  the  stock  of  the  Great  Northern,  the  stockholders  of  the 
companies  who  delivered  their  stock  receiving  upon  the 
agreed  basis  shares  of  stock  in  the  holding  corporation.  The 
stockholders  of  these  two  competing  companies  disappeared, 
as  such,  for  the  moment,  but  immediately  reappeared  as 
stockholders  of  the  holding  company  which  was  thereafter 
to  guard  the  interests  of  both  sets  of  stockholders  as  a  unit, 
and  to  manage,  or  cause  to  be  managed,  both  lines  of  railroad 
as  if  held  in  one  ownership.  Necessarily  by  this  combination 
or  arrangement  the  holding  company  in  the  fullest  sense 
dominates  the  situation  in  the  interest  of  those  who  were 
stockholders  of  the  constituent  companies;  as  much  so,  for 
every  practical  purpose,  as  if  it  had  been  itself  a  railroad 
corporation  which  had  built,  owned,  and  operated  both  lines 
for  the  exclusive  benefit  of  its  stockholders.  Necessarily, 
also,  the  constituent  companies  ceased,  undci  such  a  combi- 
nation, to  be  in  active  competition  for  trade  and  commerce 
along  their  respective  lines,  and  have  become,  practically,  one 
powerful  consolidated  corporation,  by  the  name  of  a  holding 
corporation  the  principal,  if  not  the  sole,  object  for  the  for- 
mation of  which  was  to  carry  out  the  purpose  of  the  original 
[327]  combination  under  which  competition  between  the 
constituent  companies  would  cease.  Those  who  were  stock- 
holders of  the  Great  Northern  and  Northern  Pacific  and  be- 
came stockholders  in  the  holding  company  are  now  inter- 
ested in  preventing  all  competition  between  the  two  lines, 
and  as  owners  of  stock  or  of  certificates  of  stock  in  the  hold- 
ing company,  they  will  see  to  it  that  no  competition  is  tol- 
erated. They  will  take  care  that  no  persons  are  chosen  direct- 
ors of  the  holding  company  who  will  permit  competition 
between  the  constituent  companies.  The  result  of  the  com- 
bination is  that  all  the  earnings  of  the  constituent  companies 
make  a  common  fund  in  the  hands  of  the  Northern  Securities 
Company  to  be  distributed,  not  upon  the  basis  of  the  earn- 
ings of  the  respective  constituent  companies,  each  acting  ex- 
clusively in  its  own  interest,  but  upon  the  basis  of  the  cer- 
tificates of  stock  issued  by  the  holding  company.  No  scheme 
or  device  could  more  certainly  come  within  the  words  of  the 
act — "combination   in   the   form   of  a   trust  or   otherwise 


458 


193  UNITED  STATES  BEPOBTS,  327. 


Opinion  of  tlie  Cdurt,  by  Harlan,  X,  affirming  decree. 

•  •  *  in  restraint  of  commerce  among  the  several  States 
or  with  foreign  nations,"— or  could  more  effectively  and  cer- 
tainly suppress  free  competition  between  the  constituent  com- 
1>&nies.  This  combination  is,  within  the  meaning  of  the  act, 
a  "  trust;  "  but  if  not,  it  is  a  combination  in  restraint  of  in- 
terstate and  intematianal  commerce;  and  that  is' enough  to 
bring  it  under  the  condemnation  of  the  act  The  mere  exist- 
ence of  such  a  combination  and  the  power  acquired  by  the 
holding  company  as  its  trustee,  constitute  a  menace  to,  and  m 
restraint  upon,  that  freedom  of  commerce  which  Congress 
intended  to  recognize  and  protect,  and  which  the  public  is 
entitled  to  have  protected.  If  such  combination  be  not  de- 
stroyed, all  the  advantages  that  would  naturally  come  to  the 
public  under  the  operation  of  the  general  laws  of  competi- 
tion, as  between  the  Great  Northern  and  Northern  Pacific 
Eailway  companies,  will  be  lost,  and  the  entire  commerce  of 
the  immense  territory  in  the  northern  part  of  the  United 
States  between  the  Great  Lakes  and  the  Pacific  at  Puget 
Sound  will  be  at  the  mercy  of  a  single  holding  cor-  [328] 
poration,  organized  in  a  State  distant  from  the  people  of 
that  territory. 

The  Circuit  Court  was  undoubtedly  right  when  it  said- 
all  the  Judges  of  that  court  concurring— that  the  combina- 
tion referred  to  "led  inevitably  to  the  following  results: 
First,  it  placed  the  control  of  the  two  roads  in  the  hands 
of  a  single  person,  to  wit,  the  Securities  Company,  by 
virtue  of  its  ownership  of  a  large  majority  of  the  stock  of 
both  companies;  second,  it  destroyed  every  motive  for  com- 
petition between  two  roads  engaged  in  interstate  traffic, 
which  were  natural  competitors  for  business,  by  pooling 
the  earnings  of  the  two  roads  for  the  common  benefit  of 
the  stockholders  of  both  companies."  120  Fed.  Ren.  721. 
724.  ^         ' 

Such  being  the  case  made  by  the  record,  what  are  the 
principles  that  must  control  the  decision  of  the  present 
case!  Do  former  adjudications  determine  the  controlling 
questions  raised  by  the  pleadings  and  proofs? 

The  contention  of  the  Government  is  that,  if  regard  be 
had  to  former  adjudications,  the  present  case  must  be  de- 
termined in  its  favor.      That  view  is  contested  and  the 


2SI0BTHEEN   SECUBITIES    CO.   V,   UNITED   STATES.       459 
Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

defendants  iasist  that  a  decision  in  their  favor  will  not 
be  inconsistent  with  anything  heretofore  decided  and  would 
be  in  harmony  with  the  act  of  Congress. 

Is  the  act  to  be  construed  as  forbidding  every  combina- 
tion or  conspiracy  in  restraint  of  trade  or  commerce  among 
the  States  or  with  foreign  nations  ?  Or,  does  it  embrace 
only  such  restraints  as  are  unreasonable  in  their  nature? 
Is  the  motive  with  which  a  forbidden  combination  or  con- 
spiracy was  formed  at  all  material  when  it  appears  that 
the  necessary  tendency  of  the  particular  combination  or 
conspiracy  in  question  is  to  restrict  or  suppress  free  com- 
petition between  competing  railroads  engaged  in  commerce 
among  the  States?  Does  the  act  of  Congress  prescribe,  as 
a  rule  for  interstate  or  international  commerce,  that  the 
operation  of  the  natural  laws  of  competition  between  those 
engaged  in  such  commerce  shall  not  be  restricted  or  inter- 
fered with  by  any  contract,  combination  or  [329]  conspir- 
acy? How  far  may  Congress  go  in  regulating  the  af- 
fairs or  conduct  of  state  corporations  engaged  as  carriers 
in  commerce  among  the  States  or  of  state  corporations 
which,  although  not  directly  engaged  themselves  in  such 
conunerce,  yet  have  control  of  the  business  of  interstate 
carriers?  If  state  corporations,  or  their  stockholders,  are 
foimd  to  be  parties  to  a  combination,  in  the  form  of  a 
trust  or  otherwise,  which  restrains  interstate  or  interna- 
tional commerce,  may  they  not  be  compelled  to  respect  any 
rule  for  such  commerce  that  may  be  lawfully  prescribed  by 
Congress  ? 

These  questions  were  earnestly  discussed  at  the  bar  by 
able  counsel,  and  have  received  the  full  consideration  which 
their  importance  demands. 

The  first  case  in  this  court  arising  under  the  Anti-Trust 
Act  was  United  States  v.  E,  C,  Knight  Co.,  150  IJ.  S.  1. 
The  next  case  was  that  of  United  States  v.  Trans-MissouH 
Freight  Association,  166  U.  S.  290.  That  was  followed  by 
United  States  v.  Joint  Trafftc  Association,  171  U.  S.  505, 
HopJcins  V.  United  States,  171  U.  S.  578,  Anderson  v.  United 
States,  171  U.  S.  604,  Addyston  Pipe  (&  Steel  Co.  v.  United 
States,  175  U.  S.  211,  and  Montague  (&  Co.  v.  Lowry,  193 
U.S.  38.    To  these  may  be  added  Pearsall  v.  Great  korth- 


460 


193   UNITED   STATES   REPORTS,   329. 


Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

em  Railway,  161  U.  S.  646,  wMch,  although  not  arising 
under  the  Anti-Trust  Act,  involved  an  agreement  under 
which  the  Great  Northern  and  Northern  Pacific  Railway 
companies  should  be  consolidated  and  by  ivhich  competi- 
tion between  those  companies  was  to  cease.  In  United 
States  V.  E.  C.  Knight  Co.,  it  was  held  that  the  agreement 
or  arrangement  tliere  involved  had  reference  onlv  to  the 
manufacture  or  production  of  sugar  by  those  engaged  in 
the  alleged  combination,  but  if  it  had  directly  embraced 
interstate  or  international  commerce,  it  would  then  liave 
been  covered  by  the  Anti-Trust  Act  and  would  have  been 
illegal;  in  United  States  v.  Trans-Missouri  Freight  Asso- 
ciation, that  an  agi'eement  between  certain  railroad  com- 
panies providing  for  establishing  and  maintaining,  for 
their  mutual  protection,  reasonable  rates,  rules  and  regu- 
lations in  respect  [330]  of  freight  traffic,  through  and  local, 
and  by  which  free  competition  aniong  those  companies  was 
restricted,  was,  by  reason  of  such  restriction,  illegal  under 
the  Anti-Trust  Act;  in  United  States  v.  Joint  Traffic  Asso- 
ciation, that  an  arrangement  between  certain  railroad  com- 
panies in  reference  to  railroad  traffic  among  the^  States,  by 
which  the  railroads  involved  were  not  subject  to  competition 
among  themselves,  was  also  forbidden  by  the  act ;  in  Hop- 
kins V.  United  States  and  Anderson  v.  United  States,  that 
the  act  embraced  only  agreements  that  had  direct  connec- 
tion with  interstate  commerce,  and  that  such  commerce 
comprehended  intercourse  for  all  the  purposes  of  trade,  in 
any  and  all  its  forms,  including  the  transportation,  pur- 
chase, sale  and  exchange  of  commodities  between  citizens 
of  different  States,  and  the  power  to  regulate  it  embraced 
all  the  instrumentalities  by  which  such  commerce  is  con- 
ducted; in  Addyston  Pipe  S  Steel  Co.  v.  United  States, 
all  the  members  of  the  court  concurring,  that  the  act  of 
Congress  made  illegal  an  agreement  between  certain  pri- 
vate companies  or  corporations  engaged  in  different  States 
in  the  manufacture,  sale  and  transportation  of  iron  pipe, 
whereby  competition  among  them  was  avoided,  was  cov- 
ered by  the  Anti-Trust  Act;  and  in  Montague  v.  Lowry^ 
all  the  members  of  the  court  again  concurring,  that  a  com- 
bination created  by  an  agreement  between  certain  private 


NORTHERN   SECURITIES   CO.    V.   UNITED   STATES.       461 
Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

manufacturers  and  dealers  in  tiles,  grates  and  mantels,  in 
different  States,  whereby  they  controlled  or  sought  to  con- 
trol the  price  of  such  articles  in  those  States,  was  con- 
demned by  the  act  of  Congress.  In  Pear  sail  v.  Great 
Northern  Railway,  which,  as  already  stated,  involved  the 
consolidation  of  the  Great  Northern  and  Northern  Pacific 
Kailway  companies,  the  court  said :  "  The  cons^olidation 
of  these  two  great  cor]:)orations  will  unavoidably  result  in 
giving  to  the  defendant  [the  Great  Northern]  a  monopoly 
of  all  traffic  in  the  northern  half  of  the  State  of  Minnesota, 
as  well  as  of  all  transcontinental  traffic  north  of  the  line 
of  the  Union  Pacific,  against  which  public  regulations 
will  be  but  a  feeble  protection.  The  acts  of  the  Minnesota 
Legislature  of  1874  and  1881  undoubtedly  [331]  reflected 
the  general  sentunent  of  the  public,  that  their  best  security 
is  in  competition." 

We  will  not  incumber  this  opinion  by  extended  extracts 
from  the  former  opinions  of  this  court.  It  is  sufficient  to  say 
that  from  the  decisions  in  the  above  cases  certain  proposi- 
tions are  plainly  deducible  and  embrace  the  present  case. 
Those  propositions  are : 

That  although  the  act  of  Congress  known  as  the  Anti-Trust 
Act  has  no  reference  to  the  mere  manufacture  or  production 
of  articles  or  commodities  within  the  limits  of  the  several 
States,  it  does  embrace  and  declare  to  be  illegal  every  con- 
tract, combination  or  conspiracy,  in  whatever  form,  of  what- 
ever nature,  and  whoever  may  be  parties  to  it,  which 
directly  or  necessarily  operates  in  restraint  of  trade  or  com- 
merce among  the  several  States  or  with  foreign  nations; 

That  the  act  is  not  limited  to  restraints  of  interstate  ^nd 
international  trade  or  commerce  that  are  unreasonable  in 
their  nature,  but  embraces  all  direct  restraints  imposed  by 
any  combination,  conspiracy  or  monopoly  upon  such  trade  or 
commerce ; 

That  railroad  carriers  engaged  in  interstate  or  interna- 
tional trade  or  commerce  are  embraced  bv  the  act: 

That  combinations  even  among  private  manufacturers  oi 
dealers  whereby  interstate  or  international  commerce  is  re- 
strained are  equally  embraced  by  the  act; 

That  Congress  has  the  power  to  establish  rules  by  which 


462 


193   UNITED   STATES  BEPOBTS,   331. 


Opinion  of  the  Court,  by  Barlan,  J.,  affirming  decree. 
interntate  and  international  commerce  shall  be  governed,  and, 
by  the  Anti-Trust  Act,  has  prescribed  the  rule  of  free  compe- 
tition among  those  engaged  in  such  commerce ; 

That  every  combination  or  conspiracy  which  would  extin- 
guish competition  between  otherwise  competing  railroads  en- 
gaged in  interstate  trade  or  commerce,  and  which  would  m 
l^#  way  restrain  such  trade  or  commerce,  is  made  illegal  by 
the  act; 

That  the  natural  effect  of  competition  is  to  increase  com- 
merce, and  an  agreement  whose  direct  effect  is  to  prevent  this 
play  of  competition  restrains  instead  of  promotes  trade  and 
commerce ; 

[332]  That  to  vitiate  a  combination,  such  as  the  act  of 
Congress  condemns,  it  need  not  be  shown  that  the  combina- 
tion, in  fact,  results  or  will  result  in  a  total  suppression  of 
trade  or  in  a  complete  monopoly,  but  it  is  only  essential  to 
show  that  by  its  necessary  operation  it  tends  to  restrain  inter- 
state or  international  trade  or  commerce  or  tends  to  create  a 
monopoly  in  such  trade  or  commerce  and  to  deprive  the  pub- 
He  of  the  advantages  that  flow  from  free  competition; 

That  the  constitutional  guarantee  of  liberty  of  contract 
does  not  prevent  Congress  from  prescribing  the  rule  of  free 
competition  for  those  engaged  in  interstate  and  international 
commerce;  and, 

That  under  its  power  to  regulate  commerce  among  the 
several  States  and  with  foreign  nations.  Congress  had  author- 
ity to  enact  the  statute  in  question. 

No  one,  we  assume,  will  deny  that  these  propositions  were 
distmctly  announced  in  the  former  decisions  of  this  court. 
They  cannot  be  ignored  or  their  effect  avoided  by  the  intima^ 
tion  that  the  court  indulged  in  obiter  dicta.  What  was  said 
in  those  cases  was  within  the  limits  of  the  issues  made  by  the 
parties.  In  our  opinion,  the  recognition  of  the  principles  an- 
nounced  in  former  cases  must,  under  the  conceded  facts,  lead 
to  an  affirmance  of  the  decree  below,  unless  the  special  objec- 
tions, or  some  of  them,  which  have  been  made  to  the  applica- 
tion of  the  act  of  Congress  to  the  present  case  are  of  a  sub- 
stantial character.    We  will  now  consider  those  objections. 

Underlying  the  argument  in  behalf  of  the  dc.f eudants  is  the 
idea  that  as  the  Northern  Securities  Companv  is  a  state  cor- 


NOBTHEBN   SECUBITIES   CO.   V.   UNITED   STATES.       463 
.Opinion  of  tbe  Court,  by  Harlan,  J.,  affirming  decree. 

poration,  and  as  its  acquisition  of  the  stock  of  the  Great 
Northern  and  Northern  Pacific  Railway  companies  is  not  in- 
consistent with  the  powers  conferred  by  its  charter,  the  en- 
forcement of  the  act  of  Congress,  as  against  those  corpora- 
tions, will  be  an  unauthorized  interference  by  the  national 
government  with  the  internal  commerce  of  the  States  creat- 
ing those  corporations.  This  suggestion  does  not  at  all  im- 
press us.  There  is  no  reason  to  suppose  that  Congress  had 
any  purpose  [333]  to  interfere  with  the  internal  affairs  of 
the  States,  nor,  in  our  opinion,  is  there  any  ground  whatever 
for  the  contention  that  the  Anti-Trust  Act  regulates  their 
domestic  commerce.  By  its  very  terms  the  act  regulates  only 
commerce  among  the  States  and  with  foreign  states.  Viewed 
in  that  light,  the  act,  if  within  the  powers  of  Congress,  must 
be  respected ;  for,  by  the  explicit  words  of  the  Constitution, 
that  instrument  and  the  laws  enacted  by  Congress  in  pur- 
suance of  its  provisions,  are  the  supreme  law  of  the  land, 
"  anything  in  the  constitution  or  laws  of  any  State  to  the  con- 
trary notwithstanding  "—supreme  over  the  States,  over  the 
courts,  and  even  over  the  people  of  the  United  States,  the 
source  of  all  power  under  our  governmental  system  in  respect 
of  the  objects  for  which  the  National  Government  was  or- 
dained. An  act  of  Congress  constitutionally  passed  under 
its  power  to  regulate  commerce  among  the  States  and  with 
foreign  nations  is  binding  upon  all ;  as  much  so  as  if  it  were 
embodied,  in  terms,  in  the  Constitution  itself.  Every  judi- 
cial officer,  whether  of  a  national  or  a  state  court,  is  under 
the  obligation  of  an  oath  so  to  regard  a  lawful  enactment  of 
Congress.  Not  even  a  State,  still  less  one  of  its  artificial 
creatures,  can  stand  in  the  way  of  its  enforcement.  If  it 
were  otherwise,  the  Government  and  its  laws  might  be  pros- 
trated at  the  feet  of  local  authority.  Cohens  v.  Virginia,  6 
Wheat.  264,  385,  414.  These  views  have  been  often  expressed 
by  this  court. 

It  is  said  that  whatever  may  be  the  power  of  a  State  over 
such  subjects  Congress  cannot  forbid  single  individuals  from 
disposing  of  their  stock  in  a  state  corporation,  even  if  such 
corporation  be  engaged  in  interstate  and  international  com- 
merce ;  that  the  holding  or  purchase  by  a  state  corporation, 
or  the  purchase  by  individuals,  of  the  stock  of  another  corpo- 


im  UNITED  STATES   REPORTS,   333. 


Opinion  of  the  Court  by  Harlan.  J.,  affirming  decree. 

ration,  for  whatever  purpose,  are  matters  in  respect  of  which 
Congress  has  no  authority  under  the  Constitution ;  that,  so 
far  as  the  power  of  Congress  is  concerned,  citizens  or  state 
corporations  may  dispose  of  their  property  and  invest  their 
mone^r  in  any  way  they  choose;  and  that  in  regard  to  all 
|SM|  such  matters,  citizens  and  state  corporations  are  sub- 
ject, if  to  any  authority,  only  to  the  lawful  authority  of  the 
State  in  which  such  citizens  reside,  or  under  whose  laws  such 
corporations  are  organized.     It  is  unnecessary  in  this  case 
to  consider  such  abstract,  general  questions.     The  court  need 
not  now  concern  itself  with  them.     They  are  not  here  to  be 
examined  and  determined,  and  may  well  be  left  for  considera- 
tion in  some  case  necessarily  involving  their  determination. 
In  this  connection,  it  is  suggested  that  the  contention  of  the 
Government  is  that  the  acquisition  and  ownership  of  stock 
in  a  state  railroad  corporation  is  itself  interstate  commerce, 
if  that  corporation  l>e  engaged  in  interstate  commerce.    This 
suggestion  is  made  in  different  ways,  sometimes  in  express 
words,  at  other  times  by  implication.    For  instance,  it  is 
said  that  the  question  here  is  whether  the  power  of  Congress 
over  interstate  commerce  extends  to  the  regulation  of  the 
ownership  of  the  stock  in  state  railroad  companies,  by  rea- 
son of  their  being  engaged  in  such  commerce.     Again,  it  is 
said  that  the  only  issue  in  this  case  is  whether  the  Northern 
Securities  Company  can  acquire  and  hold  stock  in  other  state 
corporations.     Still  further,  it  is  asked,  generally,  whether 
the  organization  or  ownership  of  railroads  is  not  under  the 
control  of  the  States  under  whose  laws  they  came  into  ex- 
istence?    Such  statements  as  to  the  issues  in  this  case  are, 
w^e  think,  wholly  unwarranted  and  are  very  w^ide  of  the  mark ; 
it  is  the  setting  up  of  mere  men  of  straw  to  be  easily  stricken 
down.    We  do  not  understand  that  the  Government  makes 
any  such  contentions  or  takes  any  such  positions  as  those 
statements  imply.    It  does  not  contend  that  Congress  may 
control  the  mere  acquisition  or  the  mere  ownership  of  stock 
in  a  state  corporation  engaged  in  interstate  commerce.    Nor 
does  it  contend  that  Congress  can  control  the  organization 
of  state  corporations  authorized  by  their  charters  to  engage 
in  interstate  and  international  commerce.    But  it  does  con- 
tend that  Congress  may  protect  the  freedom  of  interstate 


NORTHERN    SECURITIES   CO.    V.   UNITED   STATES.       465 
Opinion  of  tbe  Court,  by  Harlan,  J.,  affirming  decree. 

commerce  by  any  means  that  are  appropriate  and  that  are 
lawful  and  not  prohibited  [335]  by  the  Constitution.  It 
does  contend  that  no  state  corporation  can  stand  in  the  way 
of  the  enforcement  of  the  national  will,  legally  expressed. 
Wliat  the  Government  particularly  complains  of,  indeed, 
all  that  it  complains  of  here,  is  the  existence  of  a  combination 
among  the  stockholders  of  competing  railroad  comi)anies 
which  in  violation  of  the  act  of  Congress  restrains  interstate 
and  international  connnerce  through  the  agency  of  a  common 
corporate  trustee  designated  to  act  for  both  companies  in 
repressing  free  competition  between  them.  Independently 
of  any  question  of  the  mere  ownership  of  stock  or  of  the 
organization  of  a  state  corporation,  can  it  in  reason  be  said 
that  such  a  combination  is  not  embraced  bv  the  verv  terms 
of  the  Anti-Trust  Act?  May  not  Congress  declare  that 
combinafion  to  be  illegal  ?  If  Congress  legislates  for  the  pro- 
tection of  the  public,  may  it  not  proceed  on  the  ground  that 
wrongs  when  effected  by  a  powerful  combination  are  more 
dangerous  and  require  more  stringent  supervision  than  when 
they  are  to  be  effected  by  a  single  person  ?  Callan  v.  Wnson, 
127  U.  S.  540,  556.  How  far  may  the  courts  go  in  order  to 
give  effect  to  the  act  of  Congress,  and  remedy  the  evils  it  was 
designed  by  that  act  to  suppress?  These  are  confessedly 
questions  of  great  moment,  and  they  will  now  be  considered. 
By  the  express  words  of  the  Constitution,  Congress  has 
power  to  "  regulate  commerce  with  foreign  nations  and 
among  the  several  States,  and  with  the  Indian  tribes."  In 
view  of  the  numerous  decisions  of  this  court  there  ought  not, 
at  this  day,  to  be  any  doubt  as  to  the  general  scope  of  such 
power.  In  some  circumstances  regidation  may  properly  take 
the  form  and  have  the  effect  of  prohibition.  In  re  Rahrer^ 
140  U.  S.  545;  Lottery  Case  188  U.  S.  321,  355,  and  authori- 
ties there  cited.  Again  and  again  this  court  has  reaffirmed 
the  doctrine  announced  in  the  great  judgment  'rendered  by 
Chief  Justice  Marshall  for  the  court  in  Gibbons  v.  Ogden^  b 
Wheat.  1,  196,  197,  that  the  power  of  Congress  to  regulate 
commerce  among  the  States  and  with  foreign  nations  is  the 
power  "  to  prescribe  the  imle  by  which  commerce  is  to  be 
governed;  "  that  such  power  "  is  complete  [336]  in  itself, 
21220— VOL  2—07  m 30 


466  193   UNITED  STATES  BEPORTS,  336. 

Opinion  of  tlie  Court,  by  Harlan,  J.,  affirming  decree. 

may  be  exercised  to  its  utmost  extent,  and  acknowledges  no 
limitations  other  than  are  prescribed  in  the  Constitution;" 
that  "  if,  as  has  always  been  understood,  the  sovereignty  of 
Congress,  though  limited  to  specified  objects,  is  plenary  as 
to  those  objects,  the  power  over  commerce  with  foreign  na- 
tions and  among  the  several  States,  is  vested  in  Congress  as 
absolutely  as  it  would  he  in  a  single  government  having  in  its 
constitution  the  same  restrictions  on  the  exercise  of  the  poioer 
as  are  found  in  the  Constitution  of  the  United  States;  "  that 
a  sound  construction  of  the  Constitution  allows  to  Congress  a 
large  discretion,  "  with  respect  to  the  means  by  which  the 
powers  it  confers  are  to  be  carried  into  execution,  which  en- 
able that  body  to  perform  the  high  duties  assigned  to  it,  in 
the  manner  most  beneficial  to  the  people; "  and  that  if  the 
end  to  be  accomplished  is  within  the  scope  of  the  Constitu- 
tion, "  all  means  which  are  appropriate,  which  are  plainly 
adapted  to  that  end  and  which  are  not  prohibited,  are  con- 
stitutional." Brown  v.  Maryland,  12  Wheat.  419 ;  Sinnot  v. 
Davenport,  22  How.  227,  238 ;  Henderson  v.  The  Mayor,  92 
U.  S.  259 ;  Railroad  Company  v.  Eusen,  95  U.  S.  465,  472 ; 
County  of  MohUe  v.  Kimball,  102  U.  S.  G91 ;  M.,  K.  di  Texas 
Ry.  Co,  V.  Haher,  169  U.  S.  613,  626;  The  Lottery  Case,  188 
U.  S.  321,  348.    In  Cohere  v.  Virginia,  6  Wheat  264,  413, 
this  court  said  that  the  United  States  were  for  many  im- 
portant purposes  "  a  single  nation,"  and  that  "  in  all  commer- 
cial regulations  we -are  one  and  the  same  people;"   and  it 
has  since  frequently  declared  that  commerce  among  the 
several  States  was  a  imit,  and  subject  to  national  control. 
Previously,  in  McCtdloch  v.  Maryland,  4  Wheat.  316,  405, 
the  court  had  said  that  the  Government  ordained  and  estab- 
lished by  the  Constitution  was,  within  the  limits  of  the 
powers  granted  to  it,  "  the  Government  of  all ;   its  powers 
are  delegated  by  all ;  it  represents  all,  and  acts  for  all,"  and 
was  "  supreme  within  its  sphere  of  action."    As  late  as  the 
case  of  In  re  Debs,  158  U.  S.  564,  582,  this  court,  every  mem- 
ber of  it  csoncurring,  said:  "The  entire  strength  of  the 
Nation  may  be  used  to  enforce  in  any  part  of  the  land  the 
[337]  full  and  free  exercise  of  all  National  powers  and  the 
security  of  all  rights  entrusted  by  the  Constitution  to  its 
cam    The  strong  arm  of  the  National  Government  may  be 


NORTHERN   SECURITIES    CO.    V.   UNITED   STATES.        467 
Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

put  forth  to  brush  away  all  obstructions  to  the  freedom  of 
interstate  commerce  or  the  transportation  of  the  mails.  If 
the  emergency  arises,  the  army  of  the  Nation,  and  all  its 
militia,  are  at  the  service  of  the  Nation  to  compel  obedience 
to  its  laws." 

The  means  employed  in  respect  of  the  combinations  for- 
bidden by  the  Anti-Trust  Act,  and  which  Congress  deemed 
germane  to  the  end  to  be  accomplished,  was  to  prescribe  as 
a  rule  for  interstate  and  international  commerce,  (not  for 
domestic  commerce,)   that  it  should  not  be  vexed  by  com- 
binations, conspiracies  or  monopolies  which  restrain  com- 
merce by  destroying  or  restricting  competition.     We  say 
that  Congress  has  prescribed  such  a  rule,  because  in  all  the 
prior  cases  in  this  court  the  Anti-Trust  Act  has  been  con- 
strued as  forbidding  any  combination  which  by  its  neces- 
sary operation  destroys  or  restricts  free  competition  among 
those  engaged  in  interstate  commerce;  in  other  words,  that 
to  destroy  or  restrict  free  competition  in  interstate  commerce 
was  to  restrain  such  commerce.     Now,  can  this  court  say 
that  such  a  rule  is  prohibited  by  the  Constitution  or  is  not 
one  that  Congress  could  appropriately  prescribe  when  ex- 
erting its  power  under  the  commerce  clause  of  the  Con- 
stitution?    Whether  the  free  operation  of  the  normal  laws 
of  competition  is  a  wise  and  wholesome  rule  for  trade  and 
commerce  is  an  economic  question  which  this  court  need  not 
consider  or  determine.    Undoubtedly,  there  are  those  who 
think  that  the  general  business  interests  and  prosperity  of 
the  country  will  be  best  promoted  if  the  rule  of  competition 
is  not  applied.     But  there  are  others  who  believe  that  such 
a  rule  is  more  necessary  in  these  days  of  enormous  wealth 
than  it  ever  was  in  any  former  period  of  our  history.    Be 
all  this  as  it  may.  Congress  has,  in  effect,  recognized  the 
rule  of  free  competition  by  declaring  illegal  every  combi- 
nation or  conspiracy  in  restraint  of  interstate  and  interna- 
tional commerce.       As  in  the  judgment  of  Congress  the 
public  convenience  and  the  general  welfare  [338]  will  be 
best  subserved  when  the    natural  laws  of  competition    are 
left  undisturbed  by  those  engaged  in  interstate  commerce, 
and  as  Congress  has  embodied  that  rule  in  a  statute,  that 


468 


193  UNITED   STATES   KEPORTS,  338. 


Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

must  be,  for  all,  tlie  end  of  the  matter,  if  this  is  to  remain  a 
government  of  laws,  and  not  of  men. 

It  is  said  that  railroad  corporations  created  under  the 
laws  of  a  State  can  only  be  consolidated  with  the  authority 
of  the  State.  Why  that  suggestion  is  made  in  this  case  we 
cannot  understand,  for  there  is  no  pretense  that  the  com- 
bination here  in  question  was  under  the  authority  of  the 
States  under  whose  laws  these  railroad  cori)orations  were 
created.  But  eyen  if  the  State  allowed  consolidation  it 
would  not  follow  that  the  stockholders  of  two  or  more  state 
railroad  corporations,  having  emnpeting  lines  and  engaged 
in  hderstiife  aymtnerfe^  could  lawfully  combine  and  form  a 
distinct  corporation  to  hold  the  stock  of  the  constituent  cor- 
porations, and,  by  destroying  competition  between  them,  in 
violation  of  the  act  of  Congress,  restrain  conniiorce  among 
the  States  and  with  foreign  nations. 

The  rule  of  competition,  prescribed  by  Congress,  was  not 
at  all  new  in  trade  and  commerce.  And  we  camiot  l^e  in 
any  donbt  as  to  the  reason  that  moved  Congress  to  the  in- 
corporation of  that  rule  into  a  statute.  That  reason  was 
thns  stated  in  United  States  v.  Joint  Trafpe  Association: 
•^  Has  not  Congress  with  regard  to  interstate  commerce  and 
in  the  course  of  regulating  it,  in  the  case  of  railroad  cor- 
porations, the  i)ower  to  say  that  no  contract  or  combination 
shall  be  legal  which  shall  restrain  trade  and  commerce  by 
shutting  out  the  operation  of  the  general  law  of  competi- 
tion? We  think  it  has.  .  .  .  It  is  the  combination  of 
these  large  and  powerful  corporations,  covering  vast  sections 
of  territory  and  influencing  trade  throughout  the  whole 
extent  thereof,  and  acting  m  one  body  in  all  the  matters  over 
which  the  combination  extends,  that  constitutes  the  alleged 
evil,  and  in  regard  to  which,  so  far  as  the  combination 
epenttes  upon  and  restrmns  interstate  commerce^  Congress 
has  power  to  legislate  and  to  prohibit."  (pp.  569,  571.) 
That  such  a  rule  was  applied  to  interstate  commerce 
[339]  should  not  have  surprised  any  one.  Indeed,  when 
Congress  declared  contracts,  combinations  and  conspiracies 
in  restraint  of  trade  or  commerce  to  be  illegal,  it  did  nothing 
more  than  apply  to  interstate  commerce  a  rule  that  had 
been  long  applied  by  the  several  States  when  dealing  with 


NORTHERN   SECURITIES    CO.    V,   UNITED   STATES.        469 

Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree, 
combinations  that  were  in  restraint  of  their  domestic  com- 
merce. The  decisions  in  state  courts  upon  this  general 
subject  are  not  only  numerous  and  instructive  but  they 
show  the  circumstances  under  which  the  Anti-Trust  Act 
was  passed.  It  may  well  be  assumed  that  Congress,  when 
enacting  that  statute,  shared  the  general  apprehension  that 
a  few  povverful  corporations  or  combinations  sought  to 
obtain,  and,  unless  restrained,  Avould  obtain  such  absolute 
control  of  the  entire  trade  and  commerce  of  the  country  as 
would  be  detrimental  to  the  general  welfare. 

In  Morris  Run  Coal  Co,  v.  Barclay  Coal  Co.,  68  Pa.  St.  173, 
180,  the  Supreme  Court  of  Pennsylvania  dealt  with  a  com- 
bination of  coal  companies  seeking  the  control  within  a  large 
territory  of  the  entire  market  for  bituminous  coal.  The  court, 
observing  that  the  combination  was  wide  in  its  scope,  general 
in  its  influence,  and  injurious  in  its  effects,  said: 

"  Wlien  competition  is  left  froe,  individual  error  or  folly  will  gen- 
erjilly  find  a  correction  in  the  conduct  of  others.  But  here  is  a  com- 
bination of  all  the  companies  operating  in  the  Blosshurg  and  Barclay 
mining  regions,  and  controlling  their  entire  productions.  They  have 
combined  together  to  govern  the  supply  and  the  price  of  coal  in  all 
the  markets  from  the  Hudson  to  the  Mississippi  rivers,  and  from  Penn- 
sylvania to  the  Lakes.  This  combination  has  a  power  in  its  confed- 
erated form  which  no  individual  action  can  confer.  The  pul)lic  inter- 
est nnist  succumb  to  it.  for  it  has  left  no  competition  free  to  correct 
its  baleful  influence.  When  the  supply  of  coal  is  susjiended  the  de- 
mand for  it  l)ecomes  importunate,  and  jn-ices  nnist  rise.  Or  if  the 
s"PI>lv  goes  forward,  the  in-ices  fixed  by  the  confederates  nnist  accom- 
pany it.  The  domestic  hearth,  the  furnaces  of  the  iron  master  and 
the  fires  of  the  manufacturer  all  feel  the  restraint,  while  many 
dependent  hands  are  [340]  i)aralyzed  and  hungry  mouths  are  stinted. 
The  infiuence  of  a  lack  of  supply  or  a  rise  in  the  price  of  an  article 
of  such  prime  necessity  cannot  be  measured.  It  permeates  the  entire 
mass  of  the  connnunity.  and  leaves  few  of  its  members  untouched  by 
its  withering  l)light.  Such  a  combination  is  more  than  a  contract;  it 
is  an  offense.  ♦  *  *  jn  all  such  combinations  where  the  purpose 
is  injurious  or  unlawful,  the  gist  of  the  offense  is  the  conspiracy. 
Men  can  often  do  by  the  comhinution  of  many  what  severally  no  one 
could  accomplish,  and  even  what  when  done  by  one  would  l)e  inno- 
cent. *  ♦  *  There  is  a  pofencff  in  innnhrrs  irhoi  comhincd,  which 
the  law  cannot  overlook,  where  injury  is  the  consequence." 

The  same  principles  were  applied  in  Arnot  v.  Pittston  d' 
Elmira  Coal  Co.,  68  N.  Y.  558,  505,  which  was  the  case  of  a 
combination  of  two  coal  companies,  in  order  to  give  one  of 
them  a  monopoly  of  coal  in  a  particular  region,  the  Court  of 
Appeals  of  New  York  holding  that  "A  combination  to  effect 
such  a  purpose  is  inimical  to  the  interests  of  the  public,  and 
that  all  contracts  designed  to  effect  such  an  end  are  contrary 
to  public  policy,  and  therefore  illegal." 


^§4 


470 


193  UNITED   STATES  REPORTS,   340. 


Opinion  of  the  Court,  by  Harlan,  J.,  affinning  decree. 

They  were  also  applied  by  the  Supreme  Court  in  Ohio  in 
Cmtral  Ohio  Salt  Co.  v.  Guthrie,  35  Ohio  St.  666,  672,  which 
was  the  case  of  a  combination  among  manufacturers  of  salt 
in  a  large  salt-producing  territory,  the  court  saying : 

**  It  is  no  ans^i^er  to  say  that  competition  in  the  salt  trade  was  not 
In  fact  destroyed,  or  that  the  price  of  the  commodity  was  not  unreason- 
ably advanced.  Courts  will  not  atop  to  enquire  as  to  the  degree  of 
injury  inflicted  upon  the  public;  it  is  enough  to  know  that  the  inevita- 
ble tendency  of  ««"/<  contracts  is  injurious  to  the  public.'' 

So,  in  Craft  v.  McConoughy,  79  Illinois,  346,  350,  which 
was  the  case  of  a  combination  among  grain  dealers  by  which 
competition  was  stifled,  the  court  saying: 

"  So  long  as  competition  was  free,  the  interest  of  the  public  was  safe. 
The  laws  of  trade,  in  connection  with  the  rigor  of  competition,  was  all 
the  guaranty  the  public  required,  but  the  secret  combination  created 
by  the  contract  destroyed  all  competition  and  created  a  monopoly 
£341]  against  which  the  public  interest  had  no  protection." 

Again,  in  People  v.  Chicago  Gas  Trust  Co.^  180  Illinois, 
268,  297,  which  involved  the  validity  of  the  organization  of  a 
gas  corporation  which  obtained  a  monopoly  in  the  business 
of  furnishing  illuminating  gas  in  the  city  of  Chicago  by  buy- 
ing the  stock  of  four  other  gas  companies,  it  was  said : 

"Of  what  ayail  is  it  that  any  number  of  gas  companies  may  be 
formed  under  the  general  incorporation  law,  if  a  giant  trust  company 
can  be  clothed  with  the  power  of  buying  up  and  holding  the  stock  and 
property  of  such  companies,  and,  through  the  control  thereby  attained, 
can  direct  all  their  oiierations  and  weld  them  into  one  huge  com- 
bination?" 

To  the  same  effect  are  cases  almost  too  numerous  to  be 
cited.  But  among  them  we  refer  to  Richardson  v.  Buhl,  77 
Michigan,  632,  which  was  the  case  of  the  organization  of  a 
corporation  in  Connecticut  to  unite  in  one  corporation  all  the 
match  manufacturers  in  the  United  States,  and  thus  to  obtain 
control  of  the  business  of  manufacturing  matches;  Santa 
Clara  Mill  c§  Lumber  Co.  v.  Hayes,  76  California,  387,  390, 
which  was  the  case  of  a  combination  among  manufacturers  of 
lumber,  by  which  it  could  control  the  business  in  certain  local- 
ities; and  India  Bagging  Association  v.  Kock,  14  La.  Ann. 
168,  which  was  the  case  of  a  combination  among  various  com- 
mercial firms  to  control  the  prices  of  bagging  used  by  cotton 
planters. 

The  cases,  just  cited,  it  is  true,  relate  to  the  domestic  com- 
merce of  the  States.    But  they  serve  to  show  the  authority 


NORTHERK  SECURITIES   CO.   V,  UNITED   STATES.       471 
Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

which  the  States  possess  to  guard  the  public  against  combi- 
nations that  repress  individual  enterprise  and  interfere  with 
the  operation  of  the  natural  laws  of  competition  among  those 
engaged  in  trade  within  their  limits.  They  serve  also  to  give 
point  to  the  declaration  of  this  court  in  Gibbons  v.  Ogden,  9 
Wheat.  1,  197 — a  principle  never  modified  by  any  subsequent 
decision — that,  subject  to  the  limitations  imposed  by  the  Con- 
stitution upon  the  exercise  of  the  powers  granted  by  that  in- 
strument," the  power  over  commerce  with  foreign  nations  and 
among  the  several  States  is  vested  in  Congress  as  absolutely 
[342 1  as  it  would  be  in  a  single  government  having  in  its 
constitution  the  same  restrictions  on  the  exercise  of  power  as 
are  found  in  the  Constitution  of  the  United  States."  Is 
there,  then,  any  escape  from  the  conclusion  that,  subject 
only  to  such  restrictions,  the  power  of  Congress  over  inter- 
state and  international  commerce  is  as  full  and  complete  as 
is  the  power  of  any  State  over  its  domestic  commerce?  If 
a  State  may  strike  down  combinations  that  restrain  its 
domestic  commerce  by  destroying  free  competition  among 
those  engaged  in  such  commerce,  what  power,  except  that  of 
Congress,  is  competent  to  protect  the  freedom  of  interstate 
and  international  commerce  when  assailed  by  a  combination 
that  restrains  such  commerce  by  stifling  competition  among 
those  engaged  in  it  ? 

Now,  the  court  is  asked  to  adjudge  that,  if  held  to  em- 
brace the  case  before  us,  the  Anti-Trust  Act  is  repugnant  to 
the  Constitution  of  the  United  States.  In  this  view  we  are 
unable  to  concur.  The  contention  of  the  defendants  could 
not  be  sustained  without,  in  effect,  overruling  the  prior  de- 
cisions of  this  court  as  to  the  scope  and  validity  of  the  Anti- 
Trust  Act.  If,  as  the  court  has  held.  Congress  can  strike 
down  a  combination  between  private  persons  or  private  cor- 
porations that  restrains  trade  among  the  States  in  iron  pipe 
(as  in  Addyston  Pipe  &  Steel  Co.  v.  United  States),  or  in 
tiles,  grates  and  mantels  (as  in  Montagus  v.  Lowry),  surely 
it  ought  not  to  be  doubted  that  Congress  has  power  to  declare 
illegal  a  combination  that  restrains  commerce  among  the 
States,  and  with  foreign  nations,  as  carried  on  over  the  lines 
of  competing  railroad  companies  exercising  public  franchises, 
and  engaged  in  such  commerce.     We  cannot  agree  that  Con- 


193  UHITED   STATES  BEPORTS,  342. 
Opinion  of  the  Cowrt,  by  Harlan,  X,  affirming  decree. 

gress  may  strike  down  combinations  among  manufacturers 
and  dealers  in  iron  pipe,  tiles,  grates  and  mantles  that  re- 
strain commerce  among  the  States  in  such  articles,  but  may 
not  strike  down  combinations  among  stockholders  of  com- 
peting railroad  carriers,  which  restrain  commerce  as  in- 
volveil  in  the  trans{)ortation  of  passengers  and  property 
among  tlie  several  States.  If  private  parties  may  not,  by 
conihination  among  themselves,  restrain  interstate  [3431  «"cl 
international  commerce  in  violation  of  an  act  of  Congress, 
much  less  can  such  restraint  be  tolerated  when  imposed  or 
attempted  to  be  imposed  ujwn  conunerce  as  carried  on  over 
public  hitrhways.  Indeed,  if  the  contentions  of  the  defend- 
ants are  sound  why  may  not  (til  the  railway  companies  in 
the  United  States,  that  are  engaged,  under  state  charters, 
in  interstate  and  international  commeive,  enter  into  a  combi- 
nation such  as  the  one  hen*  in  <|uestion,  and  l>y  the  device  of 
a  holding  corporation  obtain  the  alisolute  c(mtrol  throughout 
the  entire  countiy  of  rates  for  passengers  and  freight,  l)eyond 
the  power  of  Congi'ess  to  iirotect  the  public  against  their  ex- 
actions? Tlie  argument  in  liehalf  of  the  defendants  neces- 
sarily leads  to  such  results,  and  places  Congress,  although 
invested  by  the  people  of  the  United  States  with  full 
authority  to  regulate  interstate  and  international  conunerce, 
in  a  condition  of  utter  helplessness,  so  far  as  the  protection 
of  the  j)ublic  against  such  coml)inations  is  concerned 

Will  it  1m*  said  that  Congress  can  m€»et  such  emergencies 
by  prescril>ing  the  rates  by  which  uiterstate  carriers  shall  be 
governed  in  the  transjMirtation  (»f  freight  and  passengers? 
If  Congress  luis  the  [)ower  to  fix  such  rates — and  upon  that 
qnestioii  we  exiii-ess  no  opinion — it  dews  not  choose  to  exer- 
cise its  power  in  that  way  or  to  that  extent.  It  has,  all  will 
agree,  a  large  discretion  as  to  the  means  to  l)e  employed  in 
the  exercise  of  any  [jower  granted  to  it.  For  the  present, 
it  has  determined  to  go  no  farther  than  to  protect  the  free- 
dom of  commerce  among  the  States  and  with  foreign  states 
by  declaring  illegal  all  contracts,  combinations,  conspiracies 
or  monoi)olies  in  i-estraint  of  such  commerce,  and  make  it  a 
public  offence  to  violate  the  rule  thus  prescribed.  How 
much  further  it  may  go,  we  do  not  now  say.    We  need  only 


NORTHERN    SECURITIES    CO.    V,   UNITED   STATES.       473 
Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

at  this  time  consider  whether  it  has  exceeded  its  powers  in 
enacting  the  statute  here  in  question. 

Assuming,  without  further  discussion,  that  the  case  before 
us  is  within  the  terms  of  the  act,  and  that  the  act  is  not  in 
excess  of  the  powers  of  Congress,  we  recur  to  the  question, 
how  far  may  the  courts  go  in  reaching  and  suppressing  the 
combination  [344]  described  in  the  bill?     All  will  agree  that 
if  the  Anti-Trust  Act  be  constitutional,  and  if  the  combina- 
tion in  question  he  in  violation  of  its  provisions,  the  courts 
may  enforce  the  provisions  of  the  statute  by  such  orders  and 
decrees  as  are  necessary  or  appropriate  to  that  end  and  as  may 
be  consistent  with  the  fundamental  rules  of  legal  procedure. 
And  all,  we  take  it,  will  agree,  as  established  firmly  by  the 
decisions  of  this  court,  that  the  power  of  Congress  over  com- 
merce extends  to  all  the  instrumentalities  of  such  commerce, 
and  to  every  device  that  may  be  employed  to  interfere  with 
the  freedom  of  conmierce  among  the  States  and  with  foreign 
nations.     Equally,  we  assume,  all  will  agree  that  the  Consti- 
tution and  the  legal  enactments  of  Congress  are,  by  express 
words  of  the  Constitution,  the  supreme  law  of  the  land,  any- 
thing  in   the   constitution   and   laws   of   any   State   to   the 
contrary    notwithstanding.     Nevertheless,    the    defendants, 
strangely  enough,  invoke  in  their  behalf  the  Tenth  Amend- 
ment of  the  Constitution  which  declares  that  ''the  powers 
not  delegated  to  the  United  States  by  the  Constitution,  nor 
prohibited  by  it  to  the- States,  are  reserved  to  the  States 
respectively  or  to  the  People; ''  and  we  are  confronted  with 
the  suggestion  that  any  order  or  decree  of  the  Federal  court 
which  will  prevent  the  Northern  Securities  Company  from 
exercising  the  ])ower  it  acquired  in  becoming  the  holder  of 
the  stocks  of  the  (Ireat  Northern  and  Northern  Pacific  Rail- 
way companies  will  be  an  invasion  of  the  rights  of  the  State 
under  which  the  Securities  Company  was  chartered,  as  well 
as  of  the  rights  of  the  States  creating  the  other  companies. 
In  other  words,  if  the  State  of  New  Jersey  gives  a  charter 
to  a  corjioration,  and  even  if  the  obtaining  of  such  charter 
is  in  fact  pursuant  to  a  combination  under  which  it  becomes 
the  holder  of  the  stocks  of  shareholders  in  two  competing, 
parallel  railroad  companies  engaged  in  interstate  commerce 
in  other  States,  whereby  competition  between  the  respective 


474 


193  UNITED  STATES  BEPOHTS,  344. 


Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree, 
roads  of  those  companies  is  to  be  destroyed  and  the  enormous 
commerce  carried  on  over  them  restrained  by  suppressing 
competition,  Congress  must  stay  its  hands  and  allow  [345] 
such  restraint  to  continue  to  the  detriment  of  the  pubHc 
because,  forsooth,  the  corporations  concerned  or  some  of  them 
are  state  corporations.    We  cannot  conceive  how  it  is  possible 
for  any  one  to  seriously  contend  for  such  a  proposition.    It 
means  nothing  less  than  that  Congress,  in  regulating  inter- 
state commerce,  must  act  in  subordination  to  the  will  of  the 
States  when  exerting  their  power  to  create  corporations, 
^o  such  view  can  be  entertained  for  a  moment. 

It  is  proper  to  say  in  passing  that  nothing  in  the  record 
tends  to  show  that  the  State  of  New  Jersey  had  anv  reason  to 
suspect  that  those  who  took  advantage  of  its  liberal  incor- 
poration laws  had  in  view,  when  organizing  the  Securities 
Company,  to  destroy  competition  between  two  great  railway 
carriers  engaged  in  interstate  commerce  in  distant  Stales  of 
the  Union.    The  purpose  of  the  combination  was  concealed 
under  very  general  words  that  gave  no  clue  whatever  to  the 
real  purposes  of  those  who  brought  about  the  organization  of 
the  Securities  Company.    If  the  certificate  of  the  incorpora- 
tion of  that  company  had  expressly  stated  that  the  object  of 
the  company  was  to  destroy  competition  between  competing, 
parallel  lines  of  interstate  carriers,  all  would  have  seen,  at 
the  outset,  that  the  scheme  was  in  hostility  to  the  national 
authority,  and  that  there  was  a  purpose  to  violate  or  evade 
the  act  of  Congress. 

We  reject  any  such  view  of  the  relations  of  the  National 
Government  and  tlie  States  c6mposing  the  Union,  as  that  for 
which  the  defendants  contend.    Such  a  view  cannot  be  main- 
tained without  destroying  the  just  authority  of  the  United 
States.     It  IS  inconsistent  with  all  the  decisions  of  this  court 
as  to  the  powers  of  the  National  Government  over  matters 
committed  to  it.    No  State  can,  by  merely  creating  a  corpo- 
ration, or  in  any  other  mode,  project  its  authority  into  other 
States,  and  across  the  continent,  so  as  to  prevent  Congress 
from  exerting  the  power  it  possesses  under  the  Constitution 
over  interstate  and  international  commerce,  or  so  as  to  ex- 
empt its  corporation  engaged  in  interstate  commerce  from 
obedience  to  any  rule  lawfully  established  by  Congress  for 


NORTHERN   SECURITIES   CO.   V,   UNITED   STATES.       475 
Opinion  of  the  Ck)urt,  by  Harlan,  J.,  affirming  decree. 

such  com-  [346]  merce.  It  cannot  be  said  that  any  State 
may  give  a  corporation,  created  under  its  laws,  authority  to 
restrain  interstate  or  international  commerce  against  the  will 
of  the  nation  as  lawfully  expressed  by  Congress.  Every  cor- 
poration created  by  a  State  is  necessarily  subject  to  the  su- 
preme law  of  the  land.  And  yet  the  suggestion  is  made  that 
to  restrain  a  state  corporation  from  interfering  with  the  free 
course  of  trade  and  commerce  among  the  States,  in  violation 
of  an  act  of  Congress,  is  hostile  to  the  reserved  rights  of  the 
States.  The  Federal  court  may  not  have  power  to  forfeit 
the  charter  of  the  Securities  Company;  it  may  not  declare 
how  its  shares  of  stock  mav  be  transferred  on  its  books,  nor 
prohibit  it  from  acquiring  real  estate,  nor  diminish  or  in- 
crease its  capital  stock.  All  these  and  like  matters  are  to  be 
regulated  by  the  State  which  created  the  company.  But  to 
the  end  that  effect  be  given  to  the  national  will,  lawfully  ex- 
pressed. Congress  may  prevent  that  company,  in  its  capacity 
as  a  holding  corporation  and  trustee,  from  carrying  out  the 
purposes  of  a  combination  formed  in  restraint  of  interstate 
commerce.  The  Securities  Company  is  itself  a  part  of  the 
present  combination;  its  head  and  front;  its  trustee.  It 
would  be  extraordinary  if  the  court,  in  executing  the  act  of 
Congress  could  not  la}^  hands  upon  that  company  and  pre- 
vent it  from  doing  that  which,  if  done,  will  defeat  the  act  of 
Congress.  UjDon  like  grounds  the  court  can,  by  appropriate 
orders,  prevent  the  two  competing  railroad  companies  here 
involved  from  cooperating  with  the  Securities  Company  in 
restraining  commerce  among  the  States.  In  short,  the  court 
may  make  any  order  necessary  to  bring  about  the  dissolution 
or  suppression  of  an  illegal  combination  that  restrains  inter- 
state commerce.  All  this  can  be  done  without  infringing  in 
any  degree  upon  the  just  authority  of  the  States.  The 
affirmance  of  the  judgment  below  will  only  mean  that  no 
combination,  however  powerful,  is  stronger  than  the  law 
or  will  be  permitted  to  avail  itself  of  the  pretext  that  to  pre- 
vent it  doing  that  which,  if  done,  would  defeat  a  legal  enact- 
ment of  Congress,  is  to  attack  the  reserved  rights  of  the 
States.  It  [34:7]  would  mean  that  the  Government  which 
represents  all,  can,  when  acting  within  the  limits  of  its 
powers,  compel  obedience  to. its  authority.     It  would  mean 


476 


193   UNITED   STATES   REPORTS,   347. 


Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

that  no  device  in  evasion  of  its  provisions,  however  skillfully 
such  device  may  have  been  contrived,  and  no  combination,  by 
whomsoever  formed,  is  beyond  the  reach  of  the  supreme  law 
of  the  land,  if  such  device  or  combination  by  its  operation 
dii-ectly  restrains  connnerce  among  the  States  or  with  foreign 
nations  in  violation  of  the  act  of  Congress. 

The  defendants  rely,  with  some  confidence,  upon  the  case 
of  Railroad  Company  v.  Maryland,  21  Wall.  45G,  473.     But 
nothing  we  have  said  is  inconsistent  with  any  principle  an- 
nounced in  that  case.    The  court  there  recognized  the  prin- 
ciple that  a  State  has  plenary  powers  "  over  its  own  territory, 
its  highways,  its  franchises,  and  its  corporations,-'  and  ob- 
served that  *'we  are  bound  to  sustain  the  constitutional 
powers  and  prerogatives  of  the  States,  as  well  as  those  of  the 
United  States,  whenever  they  are  brought  l>efore  us  for  adju- 
dication, no  matter  what  may  lie  the  consequences."    Of 
course,  every  State  has,  in  a  general  sense,  plenary  power  over 
its  corporations.    But  is  it  conceivable  that  a  State,  when 
exerting  power  over  a  corporation  of  its  creation,  may  pre- 
vent or  embarrass  the  exercise  by  Congress  of  any  power 
with  which  it  is  invested  by  the  Constitution  ?     In  the  case 
just  referred  to  tlie  court  does  not  say,  and  it  is  not  to  be  sup 
posed  that  it  will  ever  say,  tliat  any  power  exists  in  a  State 
to  prevent  the  enforcement  of  a  lawful  enactment  of  Con- 
gress, or  to  invest  any  of  its  corporations,  in  whatever  busi- 
ness engaged,  with  authority  to  disregard  such  enactment  or 
defeat  its  legitimate  operation.    On  the  contrary,  the  court 
has  steadily  held  to  the  doctrine,  vital  to  the  United  States 
as  well  as  to  the  States,  that  a  state  enactmeut,  even  if  passed 
in  the  exercise  of  its  acknowledged  powers,  must  yield,  in 
case  of  conflic?t,  to  the  supremacy  of  the  Constitution  of  the 
Unitecl  States  and  the  acts  of  Congress  enacted  in  pursuance 
of  its  provisions.    This  residts,  the  court  has  said,  as  well 
from  the  nature  of  the  Gov-  [348]  ernment  as  from  the  words 
of  the  Constitution.     Gibbons  v.  Ogden,  9  Wheat.  1,  210  • 
Shwot  V.  Daren/m%  22  How.  227,  24S;  In  re  Dehs,  158  U.  s! 
564;  Missmitij  Kansas  <&  Texas  Railway  v.  Ilaher,  169  U.  S. 
6ia,  626,  627.    In  Texas  v.  White,  7  Wall.  700,  725,  the  court 
remarked  **  that  '  the  people  of  each  State  compose  a  State, 
having  its  own  government,  and  endowed  with  all  the  fimc- 


NORTHEItN    SECURITIES    CO.    V.    UNITED   STATES.       477 
Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

tions  essential  to  separate  and  independent  existence,'  and 
that  'without  the  States  in  union,  there  could  be  no  such 
political  body  as  the  United  States.'  County  of  Lane  v. 
Oregon^  7  Wall.  76.  Not  only,  therefore,  can  there  be  no  loss 
of  separate  and  independent  autonomy  to  tlie  States,  through 
their  union  under  the  Constitution,  but  it  may  be  not  unrea- 
sonably said  that  the  preservation  of  the  States,  and  the  main- 
tenance of  their  governuients,  are  as  much  within  the  design 
and  care  of  the  Constitution  as  the  preservation  of  the  Union 
and  the  maintenance  of  the  National  Government."  These 
doctrines  are  at  the  basis  of  our  Constitutional  Government, 
and  cannot  be  disregarded  w4th  safety. 

The  defendants  also  rely  on  Louisville  &  Nashville  Rail- 
road V.  Kentucky,  161  U.  S.  677,  702.  In  that  case  it  Avas 
contended  by  the  railroad  company  that  the  assumption  of 
the  State  to  forbid  the  consolidation  of  parallel  and  com- 
peting lines  was  an  interference  with  the  power  of  Congress 
over  interstate  commerce.  The  court  observed  that  but  little 
need  be  said  in  answer  to  such  a  proposition,  for  "  it  has 
never  been  supposed  that  the  dominant  power  of  Congress 
over  interstate  commerce  took  from  the  States  the  power  of 
legislation  with  respect  to  the  instruments  of  such  commerce, 
so  far  as  the  legislation  was  within  its  ordinary  police 
powers."  But  that  case  distinctly  recognized  that  there 
was  a  division  of  power  between  Congress  and  the  States  in 
respect  to  interstate  railways,  and  that  Congress  had  the 
superior  right  to  control  that  commerce  and  forbid  inter- 
ference therewith,  while  to  the  States  remained  the  power 
to  create  and  to  regulate  the  instruments  of  such  commerce, 
so  far  as  necessary  to  the  conservation  of  the  public  interests. 
If  there  is  anything  in  that  case  which  [349]  even  intimates 
that  a  State  or  a  state  corporation  may  in  any  way  directly 
restrain  interstate  commerce,  over  which  Congress  has,  by 
the  Constitution,  complete  control,  we  have  been  unable  to 
find  it. 

The  question  of  the  relations  of  the  General  Government 
with  the  States  is  again  presented  by  the  specific  contention 
of  each  defendant  that  Congress  did  not  intend  "  to  limit  the 
power  of  the  several  States  to  create  corporations,  define 
their  purposes,  fix  the  amount  of  their  capital,  and  determme 


478 


193   UNITED  STATES  KEP0HT8,   349. 


Opinion  of  the  Court,  by  Harian,  J.,  affirming  decree. 

who  may  buy,  own  and  sell  their  stock."    All  that  is  true, 
generally  speaking,  but  the  contention  falls  far  short  of 
meeting  the  controlling  questions  in  this  case.    To  meet  this 
contention  we  must  repeat  some  things  already  said  in  this 
opinion.    But  if  what  we  have  said  be  sound,  repetition  will 
do  no  harm.    So  far  as  the  Constitution  of  the  United  States 
is  concerned,  a  State  may,  indeed,  create  a  corporation,  de- 
fine its  powers,  prescribe  the  amount  of  its  stock  and  the 
mode  in  which  it  may  be  transferred    It  may  even  authorize 
one  of  its  corporations  to  engage  in  commerce  of  every  kind: 
domestic,  interstate  and  international.     The  regulation  or 
control  of  purely  domestic  commerce  of  a  State  is,  of  course, 
with  the  State,  and  Congress  has  no  direct  power  over  it 
so  long  as  what  is  done  by  the  State  does  not  interfere  with 
the  operations  of  the  General  Government,  or  any  legal  en- 
actment of  Congress.    A  State,  if  it  chooses  so  to  do,  may 
even  submit  to  the  existence  of  combinations  within  its  limits 
that  restrain  its  internal  trade.    But  neither  a  state  corpora- 
tion nor  its  stockholders  can,  by  reason  of  the  non-action 
of  the  State  or  by  means  of  any  combination  among  such 
stockholders,  interfere  with  the  complete  enforcement  of 
any  rule  lawfully  devised  by  Congress  for  the  conduct  of 
commerce  among  the  States  or  with  foreign  nations ;  for,  as 
we  have  seen,  interstate  and  international  commerce  is  by 
the  Constitution  under  the  control  of  Congress,  and  it  be- 
longs to  the  legislative  department  of  the  Government  to 
prescribe  rules  for  the  conduct  of  that  commerce.    If  it  were 
otherwise,  the  declaration  in  the  Constitu-  [350]  tion  of  its 
supremacy,  and  of  the  supremacy  as  well  of  the  laws  made 
in  pursuance  of  its  provisions,  was  a  waste  of  words.    Whilst 
every  instrumentality  of  domestic  commerce  is  subject  to 
state  control,  every  instrumentality  of  interstate  commerce 
may  be  reached  and  controlled  by  national  authority,  so  far 
as  to  compel  it  to  respect  the  rules  for  such  commerce  law- 
fully established  by  Congress.    No  corporate  person  can  ex- 
cuse a  departure  from  or  violation  of  that  rule  under  the  plea 
that  that  which  it  has  done  or  omitted  to  do  is  permitted  or 
not  forbidden  by  the  State  under  whose  authority  it  came 
into  existence.    We  repeat  that  no  State  can  endow  anv  of 
its  corporations,  or  any  combination  of  its  citizens,  with 


NORTHERN   SECURITIES    CO.    V.   UNITED   STATES.        479 
Opinion  of  the  Court,  by  Haiian,  J.,  affirming  decree. 

authority  to  restrain  interstate  or  international  commerce, 
or  to  disobey  the  national  will  as  manifested  in  legal  enact- 
ments of  Congress.    So  long  as  Congress  keeps  within  the 
limits  of  its  authority  as  defined  by  the  Constitution,  infring- 
ing no  rights  recognized  or  secured  by  that  instrument,  its 
regulations  of  interstate  and  international  commerce,  whether 
founded  in  wisdom  or  not,  must  be  submitted  to  by  all.    Harm 
and  only  harm  can  come  from  the  failure  of  the  courts  to 
recognize  this  fundamental  principle  of  constitutional  con- 
struction.   To  depart  from  it  because  of  the  circumstances 
of  special  cases,  or  because  the  rule,  in  its  operation,  may 
possibly  affect  the  interests  of  business,  is  to  endanger  the 
safety  and  integrity  of  our  institutions  and  make  the  Consti- 
tution mean  not  what  it  says  but  what  interested  parties 
wish  it  to  mean  at  a  particular  time  and  under  particular 
circumstances.    The  supremacy  of  the  law  is  the  foundation 
rock  upon  which  our  institutions  rest.     The  law,  this  court 
said  in  United  States  v.  Lee,  106  U.  S.  196,  220,  is  the  only 
supreme  power  in  our  system  of  government.    And  no  higher 
duty  rests  upon  this  court  than  to  enforce,  by  its  decrees,  the 
will  of  the  legislative  department  of  the  Government,  as 
expressed  in  a  statute,  unless  such  statute  be  plainly  and 
unmistakably  in  violation  of  the  Constitution.    If  the  statute 
is  beyond  the  constitutional  power  of  Congress,  the  court 
would    fail   in   the   performance   of   a   solenm   duty   if   it 
(351]  did  not  so  declare.     But  if  nothing  more  can  be  said 
than  that  Congress  has  erred — and  the  court  must  not  be 
understood  as  saying  that  it  has  or  has  not  erred — the  remedy 
for  the  error  and  the  attendant  mischief  is  the  selection  of 
new  Senators  and  Representatives,  who,  by  legislation,  will 
make  such  changes  in  existing  statutes,  or  adopt  such  new 
statutes,  as  may  be  demanded  by  their  constituents  and  be 
consistent  with  law. 

Many  suggestions  were  made  in  argument  based  upon  the 
thought  that  the  Anti-Trust  Act  would  in  the  end  prove  to  be 
mischievous  in  its  consequences.  Disaster  to  business  and 
wide-spread  financial  ruin,  it  has  been  intimated,  will  follow 
the  execution  of  its  provisions.  Such  predictions  were  made 
in  all  the  cases  heretofore  arising  under  that  act.  But  they 
have  not  been  verified.    It  is  the  history  of  monopolies  in  this 


480 


193  UNITED   STATES  REPORTS,   351. 


Opiuiou  of  the  Court,  by  Harlan,  J.,  afflrmiug  decree. 

country  and  in  England  that  predictions  of  ruin  are  habitu- 
ally made  by  them  when  it  is  attempted,  by  legislation,  to  re- 
strain their  operations  and  to  protect  the  public  against  their 
exactions.  In  this,  as  in  former  cases,  they  seek  shelter  be- 
hind the  reserved  rights  of  the  States  and  even  behind  the 
constitutional  guarantee  of  liberty  of  contract.  But  this 
court  has  heretofore  adjudged  that  the  act  of  Congress  did 
not  touch  the  rights  of  the  States,  and  that  liberty  of  con- 
tract did  not  involve  a  right  to  deprive  the  public  of  the  ad- 
vantages of  free  comi>etition  in  trade  and  commerce.  Lib- 
erty of  contract  does  not  imply  liberty  in  a  corporation  or 
individuals  to  defy  the  national  will,  when  legally  expressed. 
Nor  does  the  enforcement  of  a  legal  enactment  of  Congress 
infringe,  in  any  proper  sense,  the  general  inherent  right  of 
every  one  to  acquire  and  hold  property.  That  right,  like  all 
other  rights,  must  be  exercised  in  subordination  to  the  law. 

But  even  if  the  court  shared  the  gloomy  forebodings  in 
which  the  defendants  indulge,  it  could  not  refuse  to  respect 
the  action  of  the  legislative  branch  of  the  Government  if  what 
it  has  done  is  within  the  limits  of  its  constitutional  power. 
The  suggestions  of  disaster  to  business  have,  we  apprehend, 
their  origin  [352]  in  the  zeal  of  parties  who  are  opposed 
to  the  policy  underlying  the  act  of  Congre&s  or  are  interested 
in  the  result  of  this  particular  case ;  at  any  rate,  the  sugges- 
tions imply  that  the  court  may  and  ought  to  refuse  the  en- 
forcement of  the  provisions  of  the  act  if,  in  its  judgment, 
Congress  was  not  w^ise  in  prescribing  as  a  rule  by  which  the 
conduct  of  interstate  and  international  commerce  is  to  be  gov- 
erned, that  every  combination,  Avhatever  its  form,  in  restraint 
of  such  commerce  and  the  monopolizing  or  attempting  to 
monopolize  such  commerce  shall  be  illegal.  These,  plainly, 
are  questions  as  to  the  policy  of  legislation  which  belong  to  an- 
other department,  and  this  court  has  no  function  to  supervise 
such  legislation  from  the  standpoint  of  wisdom  or  policy. 
We  need  only  say  that  Congress  has  authority  to  declare,  and 
by  the  language  of  its  act,  as  interpreted  in  prior  cases,  has, 
in  effect  declared,  that  the  freedom  of  interstate  and  inter- 
national commerce  shall  not  be  obstructed  or  disturbed  by 
any  combination,  conspiracy  or  monopoly  that  will  restrain 
such  commerce,  by  preventing  the  free  operation  of  competi- 


NORTHERN   SECURITIES   CO.   V,   UNITED   STATES.       481 
Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

tion  among  interstate  carriers  engaged  in  the  transportation 
of  passengers  and  freight.  This  court  cannot  disregard  that 
declaration  unless  Congress,  in  passing  the  statute  in  ques- 
tion, be  held  to  have  transgressed  the  limits  prescribed  for  its 
action  by  the  Constitution.  But,  as  already  indicated,  it  can- 
not be  so  held  consistently  with  the  provisions  of  that  instru- 
ment. 

The  combination  here  in  question  may  have  been  for  the 
pecuniary  benefit  of  those  who  formed  or  caused  it  to  be 
formed.  But  the  interests  of  private  persons  and  corpora- 
tions cannot  be  made  paramount  to  the  interests  of  the  gen- 
eral public.  Under  the  Articles  of  Confederation  commerce 
among  the  original  States  was  subject  to  vexatious  and  local 
regulations  that  took  no  account  of  the  general  welfare.  But 
it  was  for  the  protection  of  the  general  interests,  as  involved 
in  interstate  and  international  commerce,  that  Congress,  rep- 
resenting the  whole  country,  was  given  by  the  Constitution 
full  power  to  regulate  commerce  among  the  States  and  with 
foreign  [353]  nations.  In  Brown  v.  Maryland^  12  Wheat. 
"4:19,  446,  it  was  said : 

"  Those  v:lio  felt  tlie  injury  arising  from  this  state  of  things,  and 
those  who  were  caiiable  of  estimating  the  influence  of  commerce  on 
the  prosperity  of  nations,  perceived  the  necessity  of  giving  the  control 
over  this  important  subject  to  a  single  government.  It  may  be  doubted 
whether  any  of  the  evils  proceeding  from  the  feebleness  of  the  Federal 
Government  contributed  more  to  that  great  revolution  which  intro- 
duced the  present  system  than  the  deep  and  general  conviction  thai 
connnerce  ought  to  be  regulated  by  Congress." 

Railroad  companies,  we  said  in  the  Traiu-Missouri  Freight 
Associatio7i  case,  "  are  instruments  of  commerce,  and  their 
business  is  commerce  itself."  And  such  companies,  it  must 
be  remembered,  operate  "  public  highways,  established  pri- 
marily for  the  convenience  of  the  people,  and  therefore  are 
subject  to  governmental  control  and  regulation.''  Cherokee 
Nation  v.  Kansas  Railway  Co.^  135  U.  S.  641,  657;  Chicago 
(&c.  R.  R.  Co,  V.  Pulhnan  Car  Co.^  139  U.  S.  79,  90 :  Interstate 
Commeree  Commission  v.  Brimson,  154  U.  S.  447,.  475 ; 
United  States  v.  Trans-Missouri  Freight  Association^  166 
U.  S.  290,  332;  Smyth  v.  Ames,  169  U.  S.  466,  544;  Lake 
Shore  dec.  Ry,  Co,  v.  Ohio,  173  U.  S.  285,  301.     When  such 

21220— VOL  2—07  m 31 


iSklLJmm 


m  VmiTED  STATES   REPOBTS,  353. 


Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

carriers,  in  the  exercise  of  public  franchises,  engage  in  the 
transportation  of  passengers  and  freight  among  the  States 
they  become— even  if  they  be  state  corporations— subject  to 
such  rules  as  Congress  may  lawfully  establisli  for  the  conduct 
of  interstate  commerce. 

It  was  said  in  argument  that  the  circumstances  under 
which  the  Northern  Securities  Company  obtained  the  stock 
of  the  constituent  companies  imported  simply  an  investment 
in  the  stock  of  other  corporations,  a  purchase*  of  that  stock; 
which  investment  or  purchase,  it  is  contended,  was  not  for- 
bidden by  the  charter  of  the  company  and  could  not  bo  made 
illegal  by  any  act  of  Congress.    This  view  is  ^liolly  falla- 
cious, and  doe^  not  comport  with  the  actual  transaction. 
There  was  no  actual  investment,  in  any  substantial  sense,  by 
the  Northern  Securities  Company  in  the  stock  of  (he  two  con- 
stituent com-  (•KMl  panies.    If  it  was,  in  form,  such  a  trans- 
action, it  was  not,  in  fact,  one  of  that  kind.    However  that 
company  may  have  acquired  for  itself  any  stock  in  the  Great 
Northern  and  Northern  Pacific  Railway  companies,  no  matter 
how  it  obtained  the  means  to  do  so,  all  the  stock  it  held  or 
tc»quired  in  the  constituent  companies  was  acquired  and  held 
to  be  used  in  suppressing  com|>etition  between  those  com- 
panies.   It  came  into  existence  only  for  that  purpose.    If  any 
one  had  full  knowledge  of  what  was  designed  to  \ye  accom- 
plished, and  as  to  what  was  actually  accomplished,  by  the 
combination  in  question,  it  was  the  defendant  Morgan.    In  his 
testimony  he  was  asked,  "  Why  put  the  stocks  of  both  these 
[constituent  companies]  into  one  holding  company?"    He 
frankly  answered :  «  In  the  first  place,  this  holding  company 
was  simply  a  question  of  mstodian,  because  it  had  no  other 
alliances."    That  disclosed  the  actual  nature  of  the  transac- 
tion, which  was  only  to  organize  the  Northern  Securities 
Company  as  a  holding  company,  in  whose  hands,  not  as  a  real 
purchaser  or  absolute  owner,  but  simply  as  custodian,  were  to 
he  placed  the  stocks  of  the  constituent  companies— such  custo- 
dian to  represent  the  combination  formed  between  the  share- 
holders of  the  constituent  companies,  the  direct  and  neces- 
sary effect  of  such  combination  being,  as  already  indicated, 
to  restrain  and  monopolize  interstate  commerce  by  suppress- 
ing or  (to  use  the  words  of  this  court  in  United  States  v. 


NORTHERN    SECURITIES    CO.    V.   UNITED   STATES.       483 
Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

Joint  Trafilc  Association)"  smothering  '*  competition  between 
the  lines  of  two  railway  carriers. 

We  will  now  inquire  as  to  the  nature  and  extent  of  the 
relief  granted  to  the  Government  by  the  decree  below. 

By  the  decree  in  the  Circuit  Court  it  was  found  and  ad- 
judged that  the  defendants  had  entered  into  a  combination  or 
^conspiracy  in  restraint  of  trade  or  commerce  among  the  sev- 
eral States,  such  as  the  act  of  Congress  denounced  as  illegal  ; 
and  that  all  of  the  stocks  of  the  Northern  Pacific  Eailway 
Company  and  all  the  stock  of  the  Great  Northern  Railway 
Company,  claimed  to  be  owned  and  held  by  the  Northern 
Securities  Company,  was  acquired,  and  is  by  it  held,  in  virtue 
of  such  com-  [355]  bination  or  conspiracy,  in  restraint  of 
trade  and  commerce  among  the  several  States.  It  was  thet'e- 
fore  decreed  as  follows: 

"  That  ihe  Northern  Securities  Company,  its  officers,  agents,  servants 
and  employes,  he  and  they  are  hereby  enjoined  from  acquiring,  or 
atten)i)tino'  to  acquire,  further  stoclv  of  either  of  the  aforesaid  railway 
companies;  that  the  Northern  Securities  Company  be  enjoined  from 
voting  the  aforesaid  stock  which  it  now  holds  or  may  acquire,  and 
from  attempting  to  vote  it,  at  any  meeting  of  the  stockholders  of  either 
of  the  aforesaid  railway  companies  and  from  exercising  or  attempting 
to  exercise  any  control,  direction,  supervision  or  influence  whatsoever 
over  the  acts  and  doings  of  said  railway  companies,  or  either  of  them, 
by  virtue  of  its  holding  such  stock  therein ;  that  the  Northern  Pacific 
Railway  Company  and  the  Great  Northern  Railway  Company,  their 
officers,  directors,  servants  and  agents,  be  and  they  are  hereby  respect- 
ively and  collectively  enjoined  from  permitting  the  stock  aforesaid  to 
be  voted  by  the  Northern  Securities  Company,  or  in  its  behalf,  by  its 
attorneys  or  agents,  at  any  corporate  election  for  directors  or  officers 
of  either  of  the  aforesaid  railway  companies ;  that  they,  together  with 
their  officers,  directors,  servants  and  agents,  be  likewise  enjoined  and 
respectively  restrained  from  paying  any  dividends  to  the  Northern 
Securities  Company  on  account  of  stock  in  either  of  the  aforesaid  rail- 
way companies,  which  it  now  claims  to  own  and  hold;  and  that  the 
aforesaid  railway   companies,   their  officers,   directors,   servants   and 
agents,  be  enjoined  from  permitting  or  suffering  the  Northern  Securities 
Company  or  any  of  its  officers  or  agents,  as  such  officers  or  agents  to 
exercise  any  control  whatsoever  over  the  corporate  acts  of  either  of  the 
aforesaid  railway  companies.     But  nothing  herein  contained  shall  be 
construed  as  prohibiting  the  Northern  Securities  Companv  from  return- 
ing and  transferring  to  the  Northern  Pacific  Railway  Company  and 
the  Great  Northern  Railway  Company,  respectively,  any  and  all  shares 
of  stock  in  either  of  said  railway  companies  which  said.  The  Northern 
Securities  Company,  may  have  heretofore  received  from  such  stock 
[356]  holders  in  exchange  for  Its  own  stock :  and  nothing  herein  con- 
tained shall  be  construed  as  prohibiting  the  Northern  Securities  Com- 
pany from  making  such  transfer  and  assignments  of  the  stock  afore- 
said to  such  person  or  persons  as  may  now  be  the  holders  and  owner*? 
of  Its  own  stock  originally  issued  in  exchange  or  in  payment  for  the 
stock  claimed  to  have  been  acquired  by  it  in  the  aforesaid  railwav 
companies."  ^ 


484 


193  UXITED   states'  REPORTS,  356. 


Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

Subsequently,  and  before  the  appeal  to  this  court  was  per- 
fected, an  order  was  made  in  the  Circuit  Court  to  this  effect : 

**  Tliat  upon  tlie  giving  of  an  approved  bond  to  the  United  States  by 
or  on  behalf  of  the  defendants  in  the  sum  of  fifty  thousand  dollars 
conditioned  to  prosecute  their  appeal  with  effect  and  to  pay  all  dam- 
ages which  may  result  to  the  United  States  from  this  order,  that  por- 
tion of  the  injunction  contained  in  the  final  decree  herein  which  forbids 
the  Northern  Pacific  Railway  Company  and  the  Great  Northern  Rail- 
way Company,  their  oflicers,  directors,  servants  and  agents,  from 
paying  dividends  to  the  Northern  Securities  Company  on  account  of 
stock  in  either  of  the  railway  companies  which  the  Securities  Companv* 
claims  to  own  and  hold,  is  suspended  during  the  pendency  of  the  appeal 
allowed  herein  this  day.  All  other  portions  of  the  decree  and  of  the 
injunction  it  contains  remain  in  force  and  are  unaffected  by  this 
order." 

^o  valid  objection  can  be  made  to  the  decree  below,  in  form 
'©r  in  substance.  If  there  was  a  combination  or  conspiracy  in 
violation  of  the  act  of  Congress,  between  the  stockholders  of 
the  Great  Northern  and  the  Northern  Pacific  Railway  com- 
panies, whereby  the  Northern  Securities  Company  was  formed 
as  a  holding  corporation,  and  whereby  interstate  commerce 
over  the  lines  of  the  constituent  companies  was  restrained,  ir 
must  follow  that  the  court,  in  execution  of  that  act,  and  to 
defeat  the  efforts  to  evade  it,  could  prohibit  the  parties  to  the 
combination  from  doing  the  specific  things  which  being  done 
would  affect  the  result  denounced  by  the  act.  To  say  that  the 
Kjourt  could  not  go  so  far  is  to  say  that  it  is  powerless  to  en- 
force the  act  or  to  suppress  the  illegal  combination,  and  pow- 
erless [357]  to  protect  the  rights  of  the  public  as  against  that 
combination. 

It  is  here  suggested  that  the  alleged  combination  had  ac- 
complished its  object  before  the  commencement  of  this  suit, 
in  that  the  Securities  Company  had  then  organized,  and  had 
actually  received  a  majority  of  the  stock  of  the  two  constitu- 
ent companies;  therefore^  it  is  argued,  no  effective  relief  can 
now  be  granted  to  the  Government.  This  same  view  was 
pressed  upon  the  Circuit  Court,  and  was  rejected.  It  was 
4;ompleteIy  answered  by  that  court  when  it  said : 

"Concerning  the  second  contention,  we  observe  that  it  would  be  a 
novel,  not  to  say  absurd,  interpretation  of  the  Anti-Trust  Act  to  hold 
that  after  an  unlawful  combination  is  formed  and  has  acquired  th? 
power  which  it  had  no  right  to  acquire,  namely,  to  restrain  commerce 
by  suppressing  competition,  and  is  proceeding  to  use  it  and  executt* 
the  purpose  for  which  the  combination  was  formed,  it  must  be  left  iu 
possession  of  the  power  that  it  has  acquired,  with  full  freedom  to 
exercise  it.    Obviously  the  act,  when  fairly  interpreted,  will  bear  no 


NORTHEEN   SECURITIES   CO.   V.   UNITED   STATES.       485 

Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 

such  construction.  Congress  aimed  to  destroy  the  power  to  place  any 
direct  restraint  on  interstate  trade  or  commerce,  when  by  any  com- 
bination or  conspiracy,  formed  by  either  natural  or  artificial  persons, 
such  a  power  had  been  acquired ;  and  the  Government  may  intervene 
and  demand  relief  as  well  after  the  combination  is  fully  organized  as 
while  it  is  in  process  of  formation.  In  this  instance,  as  we  have 
already  said,  the  Securities  Company  made  itself  a  party  to  a  combina- 
tion in  restraint  of  interstate  commerce  that  antedated  its  organiza- 
tion, as  soon  as  it  came  into  existence,  doing  so,  of  course,  under  the 
direction  of  the  very  individuals  who  promoted  it." 

The  Circuit  Court  has  done  only  what  the  actual  situation 
demanded.  Its  decree  has  done  nothing  more  than  to  meet 
the  requirements  of  the  statute.  It  could  not  have  done  les^ 
without  declaring  its  impotency  in  dealing  with  those  who 
have  violated  the  law.  The  decree,  if  executed,  will  destroy, 
not  the  property  interests  of  the  original  stockholders  of  the 
constituent  companies,  but  [358]  the  power  of  the  holding 
corporation  as  the  instrument  of  an  illegal  combination  of 
which  it  was  the  master  spirit,  to  do  that  which,  if  done, 
would  restrain  interstate  and  international  commerce.  The 
exercise  of  that  power  being  restrained,  the  object  of  Con- 
gress will  be  accomplished ;  left  undisturbed,  the  act  in  ques- 
tion will  be  valueless  for  any  practical  purpose. 

It  is  said  that  this  statute  contains  criminal  provisions  and 
must  therefore  be  strictly  construed.  The  rule  upon  that  sub- 
ject is  a  very  ancient  and  salutary  one.  It  means  only  that 
we  must  not  bring  cases  within  the  provisions  of  such  a 
statute  that  are  not  clearly  embraced  by  it,  nor  by  narrow, 
technical  or  forced  construction  of  words,  exclude  cases  from 
it  that  are  obviously  within  its  provisions.  What  must  be 
sought  for  always  is  the  intention  of  the  legislature,  and  the 
duty  of  the  court  is  to  give  effect  to  that  intention  as  dis- 
closed bv  the  words  used. 

As  early  as  the  case  of  King  v.  Inhahitants  of  Hodnett^  1 
T.  E.  96, 101,  Mr.  Justice  Buller  said : 

"  It  is  not  true  that  the  courts  in  the  exposition  of  penal  statutes  are 
to  narrow  the  construction." 

In  United  States  v.  Wiltherger,  5  A^Tieat.  76,  95,  Chief  Jus- 
tice Marshall,  delivering  the  judgment  of  this  court  and  re- 
ferring to  the  rule  that  penal  statutes  are  to  be  construed 
strictly,  said:  * 

"  It  is  a  modification  of  the  ancient  maxim,  and  amounts  to  this,  that 
though  penal  laws  are  to  be  construed  strictly,  they  are  not  to  be 


486 


im  ITNTTED  STATES  BEPORTS,  358. 
Opinion  of  the  Court,  by  Harlan,  J.,  affirming  decree. 


construi^  8o  itrfetly  as  to  defent  the  obvious  inteirtion  of  tlie  legisla- 

tSe  ;t  J,?t.  rf/'"  *'  r-  ^^^  ^  ^  «PP"^  ««  *«  »«»-ro^  the  words  of 
S^^^f  rrl^nfi^iin''  ^''^•-  "«]?»,*>f  «»8es  which  those  words,  in  their  ordi- 
naij  JK captation,  or  in  that  sense  in  which  the  legislature  has  obvi- 

?8  to  rf^  imVT!^  <^«mprehe„d  The  intentio^of  tL  leglslatr; 
1®  I?  .,  wllected  trom  the  words  they  employ.  Where  there  is  no 
ambiguity  in  the  words,  there  is  no  room  for  construction  " 

In  Uniied  States  v.  Morris,  14  Pet.  464,  475,  this  court 
speaking  by  Chief  Justice  Taney,  said  : 

lt*b^yond7SL^i*"tU.^-"'  ^***^^*  ^  ^^"'^  certainly  will  not  extend 

So,  in  The  Schoorwr  Industry,  1  Gall.  114, 117,  Mr.  Justice 
otory  said: 

...ui^LT  ^'i<^*»"*>t€<*»y  i««nd  to  constnie  penal  statutes  strictly 

Lr  la  tit!"  n.?iifl  Z"''**^  *]^"i*'  i''^  "^^  *^"»*^  to  intei-pret  them  accord- 
Z  wi«  fn  ihl  ^  T'^"''''\  *"!  ***®  '''*^''*^**'  ^'^^^  to  hold  all  cases  which 
«re  uithin  the  words  and  the  mischiefs  to  be  within  the  remX-.l 
influence  of  the  statute.*  »>iiiini  lue  remeai.a 

In  another  case  the  same  eminent  jurist  said : 

JLli^^}^  *****  ^^^  *"  *t8  true  and  sober  sense;  and  that  is  that 

c^ses  tT'ZZlT' }l^  ^^'^"^  ""'  Impllcatiin  or  extended  to 
rS  f  t j^bviously  within  their  words  and  punK>rt.  ♦  •  ♦  in 
short,  it  apiiears  to  me  that  the  proper  wurse  in  all  the«e  ca^es  is  to 
search  out  and  follow  the  true  intent  of  the  legislature  .fnd  to  ado^t 
that  sense  of  the  words  which  harmonizes  the  best  \wth  the  «)nteTt 
Tl**?Tt^  *"  the  fullest  manner  the  nm"arent  WiUy  and  ohiStl' 
of  the  legislature/'    lni,e4  mutes  v.  Wimjl  t^n^%  21?,  2?i 

In  People  v.  Bariow,  6  Cowen,  290,  the  highest  court  of 
Mew  York  said : 

nJ^t**T^^  *  ^1!^  **^*^^"^^  ^'^  ♦*>  ^  construed  strictly,  the  court  are 

Sinl  li'ir^ln  «"^f,J:'l".*'"*^"^  ''^  '^"^  legislature^    Anumg  otSer 

Z  miidl   ouZ  l^f  1^^^^^^  *«  ™^^^  ^o^  thelood  oJ 

sSTuS."  "Jthough  it  be  penal,  to  receive  an  equitable  con- 

^^f'lJ''.  ^^^w^/**r.>^.^fA  V.  Martin,  17  Massachusetts,  350, 
4U2,  the  highest  court  of  Massachusetts  said : 

'•If  a  statute,  creating  or  increasing  a  penam-.  be  canahle  of  two 
constructions,  undoubtedly  that  construction  wS?eho,>e^^^^^^^^^^^ 

moiL  tSIn"  n'^fn*"  \^**^  "*^**^^'^'^'  »*"^  *^  *«  »«t  justlfiK  hi  this  an^ 
wi?  f*®"  1"  *'?/  ^^^^**  *^««^'  to  imagine  ambiguities,  merely  that  n 
knient  constnict  on  may  be  adopted.    If  such  were  tLprhi lege  o^  « 

sZuie^lmuTe^^.  "T^^^^^^^  '"f  ^"'•"^  wlllS^n 'almcLTever? 

»mrate  enatted ,  for  it  rarely  happens  tliat  one  is  so  nrenisA  nnd  ova^f 

^JS  *''i;:^';?f  '"  '""J  preelndV tho  exmise  of  J^gSty  iu  raising 
doubts  about  Its  eonstmctlon."  "seimiiy  lu  raising 


NORTHERN   SECURITIES    CO.    V,    UNITED   STATES.       487 
Mr.  Justice  Brewer,  concurring. 

Tiieie  are  cases  almost  without  number  in  this  country  and 
in  England  to  the  same  effect. 

Guided  by  these  long-established  rules  of  construction,  it 
is  manifest  that  if  the  Anti-Trust  Act  is  held  not  to  embrace 
a  case  such  as  is  now  before  us,  the  plain  intention  of  the  leg- 
islative branch  of  the  Government  will  be  defeated.  If  Con- 
gress has  not,  by  the  words  used  in  the  act,  described  this  and 
like  cases,  it  would,  we  apprehend,  be  impossible  to  find  words 
that  would  describe  them.  This,  it  must  be  remembered,  is  a 
suit  in  equity,  instituted  by  authority  of  Congress  "  to  pre- 
vent and  restrain  violations  of  the  act,"  §  4;  and  the  court, 
in  virtue  of  a  well  settled  rule  governing  proceedings  in 
equity,  may  mould  its  decree  so  as  to  accomplish  practical 
results — such  results  as  law  and  justice  demand.  The  de- 
fendants have  no  just  cause  to  complain  of  the  decree,  in 
matter  of  law,  and  it  should  be  affirmed. 

The  judgment  of  the  court  is  that  the  decree  below  be  and 
hereby  is  affirmed,  with  liberty  to  the  Circuit  Court  to  pro- 
ceed in  the  execution  of  its  decree  as  the  circumstances  may 
require. 

Mr.  Justice  Brewer,  concurring. 

I  cannot  assent  to  all  that  is  said  in  the  opinion  just  an- 
nounced, and  believe  that  the  importance  of  the  case  and  the 
questions  involved  justify  a  brief  statement  of  my  views. 

Fir.st,  let  me  say  that  while  I  was  with  the  majority  of  the 
court  in  the  decision  in  United  States  v.  Freight  Association^ 
166  U.  S.  290,  followed  by  the  cases  of  United  States  v.  Joint 
Traffic  Association,  171  U.  S.  505,  Addyston  Pipe  di  Steel 
Company  v.  United  States,  175  U.  S.  211,  and  Montague  <& 
Co,  V.  Lowin/,  193  U.  S.  38,  decided  at  the  present  term,  and 
while  a  further  examination  (which  has  been  induced  by  the 
able  and  exhaustive  arguments  of  counsel  in  the  present  case) 
has  not  disturbed  the  conviction  that  those  cases  were  rightly 
decided,  [361]  I  think  that  in  some  respects  the  reasons  given 
for  the  judgments  cannot  be  sustained.  Instead  of  holding 
that  the  Anti-Trust  Act  included  all  contracts,  reasonable  or 
unreasonable,  in  restraint  of  interstate  trade,  the  ruling 
should  have  been  that  the  contracts  there  presented  were  un- 


r 


488 


193  UNITED   STATES  REPORTS,  361. 


Mr.  Justice  Brewer,  concurring. 

reasonable  restraints  of  interstate  trade,  and  as  such  within 
the  scope  of  the  act.  That  act,  as  appears  from  its  title,  was 
leveled  at  only  "  unlawful  restraints  and  monopolies."  Con- 
gress did  not  intend  to  reach  and  destroy  those  minor  con- 
tracts in  partial  restraint  of  trade  which  the  long  course  of 
decisions  at  conunon  law  had  affirmed  were  reasonable  and 
ought  to  be  upheld.  The  purpose  rather  was  to  place  a 
statutory  prohibition  with  prescribed  penalties  and  remedies 
upon  those  contracts  which  were  in  direct  restraint  of  trade 
unreasonable  and  against  public  policy.  Whenever  a  de- 
parture from  common  law  rules  and  definitions  is  claimed, 
the  purpose  to  make  the  departure  should  be  clearly  shown. 
Such  a  purpose  does  not  appear  and  such  a  departure  was 
not  intended. 

Further,  the  general  language  of  the  act  is  also  limited  by 
the  power  which  each  individual  has  to  manage  his  own 
property  and  determine  the  place  and  manner  of  its  invest- 
ment    Freedom  of  action  in  these  respects  is  among  the 
inalienable  rights  of  every  citizen.    If,  applying  this  thought 
to  the  present  case,  it  appeared  that  Mr.  Hill  was  the  owner  of 
a  majority  of  the  stock  in  the  Great  Northern  Railway  Com- 
pany he  could  not  by  any  act  of  Congress  be  deprived  of  the 
nght  of  investing  his  surplus  means  in  the  purchase  of  stock 
of  the  Northern  Pacific  Eailway  Company,  although  such 
purchase  might  tend  to  vest  in  him  through  that  ownership 
a  control  over  both  companies.    In  other  words,  the  right, 
which  all  other  citizens  had,  of  purchasing  Northern  Pacific 
stock  could  not  be  denied  to  him  by  Congress  because  of  his 
ownership  of  stock  in  the  Great  Northern  Company.    Such 
was  the  ruling  in  Pearsall  v.  Great  Northern  Railway,  161 
U.  S.  646,  m  which  this  court  said  (p.  671),  in  reference  to 
the  nght  of  the  stockholders  of  the  Great  Northern  Company 
to  purchase  the  stock  of  the  [362]  Northern  Pacific  Railway 
Company  : 

"Doubtless  these  stockholders  could  lawfully  acquire  bv  individini 
purchases  a  majority,  or  even  the  whole  of  the  stock  of  the  reorSn 
^  company,  and  thus  possibly  obtain  its  ultimate  controf:  bul  the 
companies  would  still  remain  separate  corporations  with  no   nterests 
as  such,  m  common."  luieithis, 

But  no  such  investment  by  a  single  individual  of  his  means 
IS  here  presented.    There  was  a  combination  by  several  indi- 


// 


r 


t 


NORTHERN  SECURITIES   CO.   V.   UNITED   STATES.       489 
Mr.  Justice  Brewer,  concurring. 

viduals  separately  owning  stock  in  two  competing  railroad 
companies  to  place  the  control  of  both  in  a  single  corporation. 
The  purpose  to  combine  and  by  combination  destroy  com- 
petition existed  before  the  organization  of  the  corporation, 
the  Securities  Company.  That  corporation,  though  nomi- 
nally having  a  capital  stock  of  $400,000,000,  had  no  means  of 
its  own ;  $30,000  in  cash  was  put  into  its  treasury,  but  simply 
for  the  expenses  of  organization.  The  organizers  might  just 
as  well  have  made  the  nominal  stock  a  thousand  millions  as 
four  hundred,  and  the  corporation  would  have  been  no  richer 
or  poorer.  A  corporation,  while  by  fiction  of  law  recognized 
for  some  purposes  as  a  person  and  for  purposes  of  jurisdic- 
tion as  a  citizen,  is  not  endowed  with  the  inalienable  rights 
of  a  natural  person.  It  is  an  artificial  person,  created  and 
existing  only  for  the  convenient  transaction  of  business.  In 
this  case  it  was  a  mere  instrumentality  by  which  separate 
railroad  properties  were  combined  under  one  control.  That 
combination  is  as  direct  a  restraint  of  trade  by  destroying 
competition  as  the  appointment  of  a  committee  to  regulate 
rates.  The  prohibition  of  such  a  combination  is  not  at  all 
inconsistent  with  the  right  of  an  individual  to  purchase 
stock.  The  transfer  of  stock  to  the  Securities  Company  was 
a  mere  incident,  the  manner  in  which  the  combination  to 
destroy  competition  and  thus  unlawfully  restrain  trade  was 
carried  out. 

If  the  parties  interested  in  these  two  railroad  companies 
can,  through  the  instrumentality  of  a  holding  corporation, 
place  both  under  one  control,  then  in  like  manner,  as  was  con- 
ceded on  the  argument  by  one  of  the  counsel  for  the  appel- 
lants, could  [363]  the  control  of  all  the  railroad  companies 
in  the  country  be  placed  in  a  single  corporation.  Nor  need 
this  arrangement  for  control  stop  with  what  has  already  been 
done.  The  holders  of  $201,000,000  of  stock  in  the  Northern 
Securities  Company  might  organize  another  corporation  to 
hold  their  stock  in  that  company,  and  the  new  corporation 
holding  the  majority  of  the  stock  in  the  Northern  Securities 
Company  and  acting  in  obedience  to  the  wishes  of  a  majority 
of  its  stockholders  would  control  the  action  of  the  Securities 
Comjjany  and  through  it  the  action  of  the  two  railroad  com- 
panies, and  this  process  might  be  extended  until  a  single  cor- 


490 


193  UNITED   STATES   REPORTS,  363. 


White,  J.,  The  Chief  Justice,  Pei-Iihaiii,  Holmes,  JJ.,  dissenting. 

poration  whose  stock  was  owned  by  three  or  four  parties 
would  be  in  practical  control  of  both  roads,  or,  having  before 
us  the  possibilities  of  combination,  the  control  of  the  whole 
transportation  system  of  the  country.  I  cannot  believe  that 
to  be  a  reasonable  or  lawful  restraint  of  trade. 

Again,  there  is  by  this  suit  no  interference  with  state 
control.  It  is  a  recognition  rather  than  a  disregard  of  its 
action.  This  merging  of  control  and  destruction  of  com- 
petition was  not  authorized,  but  specifically  prohibited  by 
Ihe  State  which  created  one  of  the  railroad  companies,  and 
within  whose  boundaries  the  lines  of  both  were  largely 
located  and  much  of  their  business  transacted.  The  purpose 
and  policy  of  the  State  are  therefore  enforced  by  the  decree. 
So  far  as  the  work  of  the  two  railroad  companies  was  inter- 
state conmierce,  it  was  subject  to  the  control  of  Congress,  and 
its  purpose  and  policy  were  expressed  in  the  act  under  which 
this  suit  was  brought. 

It  must  also  be  remembered  that  under  present  condi- 
tions a  single  railroad  is,  if  not  a  legal,  largely  a  practical, 
monopoly,  and  the  arrangement  by  which  the  control  of 
these  two  comi>eting  roads  was  merged  in  a  single  corpora- 
tion broadens  and  extends  such  monopoly.  I  cannot  look 
upon  it  as  other  than  an  unreasonable  combination  in  re- 
straint of  interstate  commerce — one  in  conflict  with  state 
law  and  within  the  letter  and  spirit  of  the  statute  and  the 
power  of  Congress.  Therefore  I  concur  in  the  judgment  of 
affirmance. 

[364]  I  have  felt  constrained  to  make  these  observations 
for  fear  that  the  broad  and  sweeping  language  of  the  opin- 
ion of  the  court  might  tend  to  unsettle  legitimate  business 
enterprises,  stifle  or  retard  wholesome  business  activities, 
encourage  improper  disregard  of  reasonable  contracts  and 
invite  unnecessary  litigation. 

Mr.  JiTSTi€E  White,  with  whom  concurred  Mr.  Chief 
Justice  Fuller,  Mr.  Justice  Peckham,  and  Mr.  Justice 
HoL M  E8,  dissenting. 

The  Northern  Securities  Company  is  a  New  Jersey  cor- 
poration; the  Great  Northern  Railway  Company,  a  Min- 
nesota  one:  and  the  Northern  Pacific  Railway  Company, 


northern  securities  CO.  V,  united  states.     491 

White,  J.,  Tlie  Chief  Justice,  Peclvham,  Holmes,  JJ.,  dissenting. 

a  AVisconsin  corporation.  Whilst  in  the  argument  at  bar 
the  Government  referred  to  the  subject,  nevertheless  it 
expressly  disclaimed  predicating  any  claim  .for  relief  upon 
the  fact  that  the  predecessor  in  title  of  the  Northern  Pacific 
Railway  Company  was  a  corporation  created  by  act  of 
Congress.    That  fact,  therefore,  may  be  eliminated. 

The  facts  essential  to  be  borne  in  mind  to  understand 
my  point  of  view,  without  going  into  details,  are  as  follows : 
The  lines  of  the  Northern  Pacific  and  the  Great  Northern 
Railway  companies  are  both  transcontinental,  that  is,  trunk 
lines  to  the  Pacific  Ocean,  and  in  some  aspects  are  conceded 
to  be  competing.     Mr.  Morgan  and  Mr.  Hill  and  a  few 
persons   immediately   associated   with   them   separately   ac- 
quired and  owned  capital  stock  of  the  Northern  Pacific  Rail- 
way Company,  aggregating  a  majority  thereof.     Mr.  Hill 
and  others  associated  with  him  owned,  in  the  same  manner, 
about  one-third  of  the  capital  stock  of  the  Great  Northern 
Railway  Company,  the  balance  of  the  stock  being  distrib- 
uted among  about  eighteen  hundred  stockholders.    Although 
Mr.  Hill  and  his  immediate  associates  owned  only  one-third 
of  the  stock,  the  confidence  reposed  in  Mr.  Hill  was  such 
that,  through   proxies,  his  influence  was  dominant  in  the 
affairs  of  that  company.     [3651  Under  these  circumstances 
Mr.   Morgan   and   Mr.   Hill   organized   under  the   laws   of 
New  Jersey  the  Northern  Securities  Company.     The  pur- 
pose was  that  the  company  should  become  the  holder  of 
the  stock  ot  the  two  railroads.     This  was  to  be  effected  by 
having  the  Northern  Securities  Company  give  its  stock  iii 
exchange  for  that  of  the  two  railroad  companies.     Whilst 
the  purpose  of  the  promoters  was  mainly  to  exchange  the 
stock  held  by  them  in  the  two  railroads  for  the  Northern 
Securities  Company  stock,  nevertheless  the  right  of  stock- 
holders generally  in  the  two  railroads  to  make  a  similar 
exchange  or  to  sell  their  stock  to  the  Securities  Company 
was  provided  for.     Under  the  arrangement  the  Northern 
Securities  Company  came  to  be  the  registered  holder  of  a 
majority  of  the  stock  of  both  the  railroads.    It  is  not  denied 
that  the  charter,  and  the  acts  done  under  it,  of  the  Northern 
Securities  Company,  were  authorized  by  the  laws  of  New 
Jersey,  and,  therefore,  in  so  far  as  those  laws  were  com- 


492 


mi  UNITED   STATES  BEPORTS,  365, 


White,  J.,  Tlie  CMef  Justice,  Peckliam,  Holmes,  JJ.,  dissenting. 

petent  to  sanction  the  transaction,  the  corporation  held  the 
stock  in  the  two  railroads  secured  by  the  law  of  the  State 
of  its  domicil. 

The  government  by  its  bill  challenges  the  right  of  the 
Northern  Securities  Company  to  hold  and  own  the  stock 
in  the  two  railroads.  The  grounds  upon  which  the  relief 
sought  was  based  were,  generally  speaking,  as  follows: 
That  as  the  two  railroads  were  competing  lines  engaged  in 
part  in  interstate  commerce,  the  creation  of  the  Northern 
Securities  Company  and  the  acquisition  by  it  of  a  majority 
of  the  stock  of  both  roads  was  contrary  to  the  act  of  Con- 
gress iaiown  as  the  Anti-Trust  Act.  26  Stat.  209.  The 
clauses  of  the  act  which  it  was  charged  were  violated  were 
the  first  section,  declaring  illegal  "every  contract,  com- 
bination in  the  form  of  trust  or  otherwise,  or  conspiracy, 
in  restraint  of  trade  or  commerce  among  the  several  States, 
or  with  foreign  nations;"  and  the  provisions  of  the  second 
section  making  it  a  misdemeanor  for  any  person  to  "  mo- 
nopolize, or  attempt  to  monopolize,  or  combine  or  conspire 
with  any  other  person  or  persons,  to  monopolize  any  part  of 
the  trade  or  commerce  among  the  several  [366]  States  or 
with  foreign  nations."  The  court  below  sustained  the  con- 
tentions of  the  government.  It,  therefore,  enjoined  the  two 
railroad  companies  from  allowing  the  Northern  Securities 
Company  to  vote  the  stock  standing  in  its  name  or  to  pay  to 
that  company  any  dividends  upon  the  stock  by  it  held.  On 
the  giving,  however,  of  a  bond  fixed  by  the  court  below  the 
•decree  relating  to  the  payment  of  dividends  was  suspended 
pending  the  appeal  to  this  court. 

The  court  recognized,  however,  the  right  of  the  Northern 
Se(!urities  Company  to  retransfer  the  stock  in  both  railroads 
to  the  persons  from  whom  it  had  been  acquired.  The  cor- 
rectness of  the  decree  below  is  the  question  presented  for 
decision. 

Two  questions  arise.  Does  the  Anti-Trust  Act,  when 
rightly  interpreted,  apply  to  the  acquisition  and  owner- 
ship by  the  Northern  Securities  Company  of  the  stock  in 
the  two  railroads,  and,  second,  if  it  does,  had  Congress  the 
power  to  regulate  or  control  such  acquisition  and  owner- 
ship ?    As  the  question  of  power  lies  at  the  root  of  the  case, 


NORTHERN   SECURITIES    CO.   V.   UNITED   STATES.       493 
White,  X,  The  Chief  Justice,  Peckhain,  Holmes,  JJ.,  dissenting. 

I  come  at  once  to  consider  that  subject.  Before  doing  so, 
liowever,  in  order  to  avoid  being  misled  by  false  or  irrele- 
vant issues,  it  is  essential  to  briefly  consider  two  questions 
of  fact.  It  is  said,  first,  that  the  mere  exchange  by  the 
Northern  Securities  Company  of  its  stock  for  stock  in  the  rail- 
roads did  not  make  the  Northern  Securities  Company  the  real 
owner  of  the  stock  in  the  railroads,  since  the  effect  of  the 
transaction  was  to  cause  the  Securities  Company  to  become 
merely  the  custodian  or  trustee  of  the  stock  in  the  railroads ; 
second,  that  as  the  two  railroads  were  both  over-capitalized, 
stock  in  them  furnished  no  sufficient  consideration  for  the 
issue  of  the  stock  of  the  Northern  Securities  Company.  It 
would  suffice  to  point  out,  «,  that  the  proof  shows  that 
nearly  nine  million  dollars  were  paid  by  the  Securities 
Company  for  a  portion  of  the  stock  acquired  by  it,  and  that, 
moreover,  nearly  thirty-five  million  dollars  were  expended 
by  the  Securities  Company  in  the  purchase  of  bonds  of  the 
Northern  Pacific  Company,  which  have  been  converted  by 
the  Securities  Company  into  the  stock  of  that  railroad, 
[367]  which  the  Securities  Company  noAv  holds;  and,  b,  that 
the  market  value  of  the  railroad  stocks  is,  moreover, -indis- 
putably shown  by  the  proof  to  have  been  equal  to  the  value 
fixed  on  them  for  the  purpose  of  the  exchange  or  purchase  of 
such  stock  by  the  Northern  Securities  Company.  Be  this  as 
it  may,  it  is  manifest  that  these  considerations  can  have  no 
possible  influence  on  the  question  of  the  power  of  Congress  in 
the  premises ;  and  therefore  the  suggestions  can  serve  only  to 
obscure  the  controversy.  If  the  power  was  in  Congress  to 
legislate  on  the  subject  it  becomes  wholly  inmaaterial  what 
was  the  nature  of  the  consideration  paid  by  the  company  for 
the  stock  by  it  acquired  and  held  if  such  acquisition  and 
ownership,  even  if  real,  violated  the  act  of  Congress.  If  on 
the  contrary  the  authority  of  Congress  could  not  embrace  the 
right  of  the  Northern  Securities  Company  to  acquire  and  own 
the  stock,  the  question  of  what  consideration  the  Northern 
Securities  Company  paid  for  the  stock  or  the  method  by 
which  it  was  transferred  must  necessarily  be  beyond  the  scope 
of  the  act  of  Congress. 

In  testing  the  power  of  Congress  I  shall  proceed  upon  the 
assumption  that  the  act  of  Congress  forbids  the  acquisition  of 


\ 


193  UNTTED   STATES  KEPOBTS,  367. 


White,  J.,  The  Chief  Justice,  Peckham,  Holmes.  JJ.,  disseutiug. 

a  majority  of  the  stock  of  two  competing  railroads  engaged  in 
part  in  interstate  commerce  by  a  corporation  or  any  combina- 
tion of  persons. 

The  authority  of  Congress,  it  is  conceded  by  all,  must  rest 
upon  the  power  delegated  by  the  eighth  section  of  the  first 
article  of  the  Constitution,  "  to  regulate  Commerce  with  for- 
eign Nations,  and  among  the  several  States  and  with  the 
Indian  tribes."  The  proposition  upon  which  the  case  for 
the  government  depends  then  is  that  the  ownership  of  stock 
in  railroad  corporations  created  by  a  State  is  interstate 
commerce,  wherever  the  railroads  engage  in  interstate  com- 
merce. 

At  the  outset,  the  absolute  correctness  is  admitted  of  the 
declaration  of  Mr.  Chief  Justice  Marshall  in  Gibbons  v.  Og- 
den,  that  the  power  of  Congress  to  regulate  commerce  among 
the  [368]  States  and  with  foreign  nations  "  is  complete  in 
itself  and  may  bt*  exercised  to  its  utmost  extent,  and  ac- 
knowledges no  limitations  other  than  are  prescrib?d  in 
the  Constitution ; "  and  that  if  the  end  to  be  accomplished 
is  within  the  scope  of  the  Constitution,  "  all  means  which  are 
appropriate,  which  are  plainly  adapted  to  that  end  and  which 
are  not  prohibited,  are  constitutional." 

The  plenary  authority  of  Congres  over  interstate  com- 
merce, its  right  to  regulate  it  to  the  fullest  extent,  to  fix  the 
rates  to  be  charged  for  the  movement  of  interstate  com- 
merce, to  legislate  concerning  the  ways  and  vehicles  actually 
engaged  in  such  traffic,  and  to  exert  any  and  every  other 
power  over  such  commerce  which  flows  from  the  authority 
conferred  by  the  Constitution,  is  thus  conceded.  But  the 
concessions  thus  made  do  not  concern  the  question  in  this 
case,  which  is  not  the  scope  of  the  power  of  Congress  to  reg- 
ulate (»oinmerce.  but  whether  the  i>ower  extends  to  regulate 
the  ownership  of  stock  in  railroads,  which  is  not  commerce 
at  all.  The  confusion  which  results  from  failing  to  observe 
this  distinction  will  appear  from  an  accurate  analysis  of 
Gibbons  v.  Ogtlen^  for  in  tliat  case  the  great  Chief  Justice 
was  careful  to  define  the  commerce,  the  power  to  regulate 
which  was  conferred  upon  Congress,  and  in  the  pas«a<yes 
which  I  have  previously  quoted,  simply  pointed  out  the  rule 
by  which  it  was  to  be  determined  in  any  case  whether  Con- 


NORTHERN   SECURITIES    CO.    V,   UNITED   STATES.       495 
Wliite,  J.,  The  Chief  Justice,  Peckham,  Holmes,  JJ.,  disseuting. 
gress,  in  acting  upon  the  subject,  had  gone  beyond  the  limits 
of  the  power  to  regulate  commerce  as  it  was  defined  in  the 
opinion.     Accepting  the  test  announced  in  Gibbons  v.  Ogden 
for  determining  whether  a  given  exercise  of  the  power  to 
regulate  commerce  has  in  effect  transcended  the  limits  of 
regulation,  it  is  essential  to  accept  also  the  luminous  defini- 
tion of  commerce  announced  in  that  case  and  approved  so 
many  times  since,  and  hence  to  test  the  question  for  decision 
by  that  definition.     The  definition  is  this:  "  Commerce  un- 
doubtedly is  traffic,  but  it  is  something  more,  it  is  intercourse. 
It  describes  the  commercial  intercourse  between  nations  and 
parts  of  nations  in  all  its  branches,  and  is  regulated  [369]  by 
prescHbing  rules  for  carrying  on  that  intercourse:'     (Italics 
mine.) 

Does  the  delegation  of  authority  to  Congress  to  regulate 
commerce  among  the  States  embrace  the  power  to  regulate 
the  ownership  of  stock  in  state  corporations,  because  such 
corporations  may  be  in  part  engaged  in  interstate  commerce? 
Certainly  not,  if  such  question  is  to  be  governed  by  the  defini- 
tion of  commerce  just  quoted  from  Gibbons  v.  Ogde7i.    Let  me 
analyze  the  definition.     -  Commerce  undoubtedlv  is  traffic, 
but  It  IS  something  more,  it  is  intercourse;  "  that  is,  traffic 
between  the  States  and  intercourse  bi'tween  the  States.     I 
think  the  ownership  of  stock  in  a  state  corporation  cannot  be 
said  to  be  in  any  sense  traffic  between  the  States  or  intercourse 
between  them.     The  definition  continues :  "  It  describes  the 
commercial  intercourse  b?tween  nations  and  parts  of  nations." 
Can  the  ownership  of  stock  in  a  state  corporation,  bv  the  most 
latitudinarian  construction,  be  embraced  by  the  words  "  com- 
mercial intercourse  between  natiojis  and  parts  of  nations?  " 
And  to  remove  all  doubt,  the  definition  points  out  the  mean- 
ing of  the  delegation  of  power  to  regulate,  since  it  savs  that 
it  IS  to  be  "  regulated  by  prescribing  rules  for  carrving  on 
that  intercourse."     Can  it  in  reason  be  maintained  \hat  to 
prescribe  rules  governing  the  ownership  of  stock  within  a 
State  in  a  corporation  created  by  it  is  within  the  power  to 
prescribe  rules  for  the  regulation  of  intercourse  between  citi- 
zens of  different  States? 

But  if  the  question  be  looked  at  with  reference  to  the  pow- 
ers of  the  Federal  and  state  governments,  the  general  nature 


496 


193  UNITED  STATES  REPORTS,  369. 


Wliite,  J.,  The  Chief  Justice,  Peckham,  Holmes,  JJ.,  dissenting. 

of  the  one  and  the  local  character  of  the  other,  which  it  was 
the  purpose  of  the  Constitution  to  create  and  perpetuate,  it 
seems  to  me  evident  that  the  contention  that  the  authority  of 
the  National  Government  under  the  commerce  clause  gives 
the  right  to  Congress  to  regulate  the  ownership  of  stock  in 
railroads  chartered  by  state  authority,  is  absolutely  destruc- 
tive of  the  Tenth  Amendment  to  the  Constitution,  which  pro- 
vides  that  "  the  powers  not  delegated  to  the  United  States  by 
the  Consti-  [370]  tution,  nor  prohibited  by  it  to  the  States, 
are  reserved  to  the  States  respectively  or  to  the  people."  This 
must  follow,  since  the  authority  of  Congress  to  regulate  on 
the  subject  can  in  reason  alone  rest  upon  the  proposition  that 
its  power  over  commerce  embraces  the  right  to  control  the 
ownership  of  railroads  doing  in  part  an  interstate  commerce 
business-  But  power  to  control  the  ownership  of  all  such 
railroads  would  necessarily  embrace  their  organization. 
Hence  it  would  result  that  iLould  be  in  the  po/er  of  Con- 
gress  to  abrogate  every  such  railroad  charter  granted  by  the 
States  from  the  beginning  if  Congress  deemed  that  the  rights 
conferred  bv  such  state  charters  tended  to  restrain  commerce 
between  th^  States  or  to  create  a  monopoly  concernit>g  the 
same. 

Besides,  if  the  principle  be  acceded  to,  it  must  in  reason  b,- 
held  to  embrace  every  consolidation  of  state  railroads  which 
may  do  in  part  an  interstate  commerce  business,  even  al- 
though sucli  consolidation  mav  have  been  expresslv  author- 
imd  by  the  laws  of  the  States  creating  the  corporations. 

It  would  likewise  overthrow  every  state  law  forbidding 
such  consolidations,  for  if  the  ownership  of  stock  in  state  cor 
porations  be  within  the  regulating  power  of  Congress  under 
the  commerce  clause  and  can  be  prohibited  by  Congress,  it 
would  be  within  the  power  of  that  body  to  permit  that  which 
it  had  the  right  to  prohibit. 

But  the  principle  that  the  ownership  of  property  is  em- 
braced within  the  power  of  Congress  to  regulate  commerce, 
whenever  that  body  deems  that  a  particular  character  of 
ownership,  if  allowed  to  continue,  may  restrain  commerce 
between  the  States  or  create  a  monopoly  thereof,  is  in  my 
opinion  in  conflict  with  the  most  elementary  conceptions  of 
rights  of  property.    For  it  would  follow  if  Congress  deemed 


NORTHERN   SECURITIES   CO.   V.   UNITED   STATES.       497 

White,  J.,  The  Chief  Justice,  Peclvham,  Holmes,  JJ.,  dissenting. 

that  the  acquii-^ition  by  one  or  more  individuals  engaged  in 
interstate  commerce  of  more  than  a  certain  amount  of  prop- 
erty would  be  prejudicial  to  interstate  commerce,  the  amount 
of  property  held  or  the  amount  which  could  be  employed  in 
interstate  commerce  could  be  regulated. 

[371]  In  the  argument  at  bar  many  of  the  consequences 
above  indicated  as  necessarily  resulting  from  the  contention 
made  were  frankly  admitted,  since  it  was  conceded  that, 
even  although  the  holding  of  the  stock  in  the  two  railroads 
by  the  Northern  Securities  Company  which  is  here  assailed, 
was  expressly  authorized  by  the  laws  of  both  the  States  by 
which  the  railroad  corporations  were  created,  as  it  was  by 
the  law  of  the  State  of  New  Jersey,  nevertheless  as  such  au- 
thority, if  exerted  by  the  States,  would  be  a  regulation  of 
interstate  commerce,  it  would  be  repugnant  to  the  Constitu- 
tion as  an  attempt  on  the  part  of  the  States  to  interfere  with 
the  paramount  authority  of  Congress  on  that  subject.  True, 
this  assertion,  made  in  the  oral  argument,  in  the  printed  ar- 
gument is  qualified  by  an  intimation  that  the  rule  would  not 
apply  to  state  action  taken  before  the  adoption  of  the  Anti- 
Trust  Act,  since  up  to  that  time,  in  consequence  of  the  in- 
action of  Congress  on  the  subject,  the  States  were  free  to 
legislate  as  they  pleased  regarding  the  matter.  But  this 
suggestion  is  without  foundation  to  rest  on.  It  has  long 
since  been  determined  by  this  court  that  where  a  particular 
subject  matter  is  national  in  its  character  and  requires  uni- 
form regulation,  the  absence  of  legislation  by  Congress  on 
the  subject  indicates  the  will  of  Congress  that  the  subject 
should  be  free  from  state  control.  County  of  Mobile  v.  Kim- 
ball, 102  U.  S.  691 ;  Bobbins  v.  Shelby  Taxing  DistHct,  120 
U.  S.  489,  493 ;  United  States  v.  E.  €,  Kniqht  Company,  156 
•U.S.I. 

It  is  said,  moreover,  that  the  decision  of  this  case  does  not 
involve  the  consequences  above  pointed  out,  since  the  only 
issue  in  this  case  is  the  right  of  the  Northern  Securities  Com- 
pany to  acquire  and  own  the  stock.  The  right  of  that  com- 
pany to  do  so,  it  is  argued,  is  one  thing;  the  power  of  indi- 
viduals or  corporations,  when  not  merely  organized  to  hold 
stock,  an  entirely  different  thing.  My  mind  fails  to  seize 
21220--VOL  2—07  M 32 


498 


193  UNITED   STATES   REPORTS,  371. 


White,  J.,  The  Chief  Justice,  Peckham,  Holmes,  JJ.,  dissenting. 

the  distinction.  The  only  premise  by  which  the  power  of 
Congress  can  be  extended  to  the  subject  matter  of  the  right 
of  the  Securities  Company  to  own  the  stock  must  be  the 
proposition  that  such  [372]  ownership  is  within  the  legis- 
lative power  of  Congress,  and  if  that  proposition  be  admitted 
it  is  not  perceived  by  what  process  of  reasoning  the  power  of 
Congress  over  the  subject  matter  of  ownership  is  to  be  lim- 
ited to  ownership  by  particular  classes  of  corporations  or  per- 
sons. If  the  power  embraces  ownership,  then  the  authority  of 
Congress  over  all  ownership  which  in  its  judgment  may  affect 
interstate  commerce  necessarily  exists.  In  other  words  the 
logical  result  of  the  asserted  distinction  amounts  to  one  of  two 
things.  Either  that  nothing  is  decided  or  that  a  decree  is 
to  be  entered  having  no  foundation  upon  which  to  rest. 
This  is  said  because  if  the  control  of  the  ownership  of  stock 
in  competing  roads  by  one  and  the  same  corporation  is  within 
the  power  of  Congress,  and  creates  a  restraint  of  trade  or 
monopoly  forbidden  by  Congress,  it  is  not  conceivable  to 
me  how  exactly  similar  ownership  by  one  or  more  individu- 
als would  not  create  the  same  restraint  or  monopoly,  and  be 
equally  within  the  prohibition  which  it  is  decided  Congress 
has  imposed.  Besides  the  incongruity  of  the  conclusion  re- 
sulting from  the  alleged  distinction,  to  admit  it  would  do 
violence  to  both  the  letter  and  spirit  of  the  Constitution, 
since  it  would  in  effect  hold  that,  although  a  particular  act 
was  a  burden  upon  interstate  commerce  or  a  monopoly 
thereof,  individuals  could  lawfully  do  the  act,  provided  only 
they  did  not  use  the  instrumentality  of  a  corporation.  But 
this  court  long  since  declared  that  the  power  to  regulate  com- 
merce, conferred  upon  Congress,  was  "  general  and  includes 
alike  commerce  by  individuals,  partnerships,  associations 
and  corporations."    Paul  v.  Virginia^  8  Wall.  168,  183. 

Indeed,  the  natural  reluctance  of  the  mind  to  follow  an 
erroneous  principle  to  its  necessary  conclusion,  and  thus  to 
give  effect  to  a  grievous  wrong  arising  from  the  erroneous 
principle,  is  an  admonition  that  the  principle  itself  is  wrong. 
That  admonition,  I  submit,  is  conclusivelv  afforded  by  the 
decree  which  is  now  affirmed.  Without  stopping  to  point 
out  what  seems  to  me  to  be  the  conclusion,  contradiction  and 
denial  of  rights  of  property  which  the  decree  exemplifies, 


NORTHERN  SECURITIES   CO.   V,   UNITED   STATES.       499 
White,  J.,  The  Chief  Justice,  Peckham,  Holmes,  JJ.,  dissenting. 

let  me  see  [373]  if  in  effect  it  is  not  at  war  with  itself  and  in 
conflict  with  the  principle  upon  which  it  is  assumed  to  be 
based. 

Fundamentally  considered,  the  evil  sought  to  be  remedied 
is  the  restraint  of  interstate  commerce  and  the  monopoly 
thereof,  alleged  to  have  been  brought  about,  through  the 
acquisition  by  Mr.  Morgan  and  Mr.  Hill  and  their  friends 
and  associates,  of  a  controlling  interest  in  the  stock  of  both 
the  roads.  And  yet  the  decree,  whilst  forbidding  the  use  of 
the  stock  by  the  Northern  Securities  Company,  authorizes 
its  return  to  the  alleged  conspirators,  and  does  not  restrain 
them  from  exercising  the  control  resulting  from  the  owner- 
ship. If  the  conspiracy  and  combination  existed  and  was 
illegal,  my  mind  fails  to  perceive  why  it  should  be  left  to 
produce  its  full  force  and  effect  in  the  hands  of  the  indi- 
viduals by  whom  it  was  charged  the  conspiracy  was  entered 
into. 

It  may,  however,  be  said  that  even  if  the  results  which  I 
have  indicated  be  held  necessarily  to  arise  from  the  principles 
contended  for  by  the  government,  it  does  not  follow  that  such 
power  would  ever  be  exerted  by  Congress,  or,  if  exerted, 
would  be  enforced  to  the  detriment  of  charters  granted  by 
the  States  to  railroads  or  consolidations  thereof,  effected 
under  state  authority,  or  the  ownership  of  stock  in  such  rail- 
roads by  individuals,  or  the  rights  of  individuals  to  acquire 
property  by  purchase,  lease  or  otherwise,  and  to  make  any 
and  all  contracts  concerning  property  which  may  thereafter 
become  the  subject  matter  of  interstate  commerce.  The  first 
suggestion  is  at  once  met  by  the  consideration  that  it  has 
been  decided  by  this  court  that,  as  the  Anti-Trust  Act  for- 
bids any  restraint,  it  therefore  embraces  even  reasonable 
contracts  or  agreements.  If,  then,  the  ownership  of  the  stock 
of  the  two  railroads  by  the  Northern  Securities  Company  is 
repugnant  to  the  act  it  follows  that  ownership,  whether  by 
the  individual  or  another  corporation,  would  be  equally 
within  the  prohibitions  of  the  act.  As  to  the  second,  true 
it  is  that  by  the  terms  of  the  Anti-Trust  Act  the  power  to 
put  its  provisions  in  motion  is,  as  to  many  particulars,  con- 
fided to  the  highest  law  officer  of  the  govern-  [374]  ment, 
and  if  that  officer  did  not  invoke  the  aid  of  the  courts  to 


500 


im  UNITED   STATES  BEPOBTS,  374. 


Wliite,  J.,  The  Chief  Justice,  Peckham,  Holmes,  JJ.,  dissenting. 

restrain  the  rights  of  the  railroads  previously  chartered  by 
the  States  to  enjoy  the  benefits  conferred  upon  them  by  state 
legislation,  or  to  prevent  individuals  from  exercising  their 
right  of  ownership  and  contract,  the  law  in  these  respects 
would  remain  a  dead  letter.    But  to  indulge  in  this  assump 
tion  would  be  but  to  say  that  the  law  would  not  be  enforced 
by  the  highest  law  officer  of  the  government,  a  conchision 
which,  of  coui-se,  could  not  be  indulged  in  for  a  moment. 
In  any  view,  such  suggestion  but  involves  the  proposition  that 
vast  rights  of  property,  instead  of  resting  upon  constitu- 
tional and  legal  sanction,  must  alone  depend  upon  whether 
an  executive  officer  might  elect  to  enforce  the  law — a  con- 
clusion repugnant  to  every  principle  of  liberty  and  justice. 
Having  thus  by  the  light  of  reason  sought  to  show  the  un- 
soundness of  the  proposition  that  the  power  of  Congress  to 
regulate  commerce  extends  to  controlling  the  acquisition  and 
ownership  of  stock  in  state  corporations,  railroad  or  other- 
wise, because  they  may  be  doing  an  interstate  commerce  busi- 
ness, or  to  the  consolidation  of  such  companies  under  the 
sanction  of  state  legislation,  or  to  the  right  of  the  citizen  to 
enjoy  his  freedom  of  contract  and  ownership,  let  me  now  en- 
deavor to  show,  by  a  review  of  the  practices  of  the  govern- 
ments, both  state  and  national,  from  the  beginning  and  the 
adjudications  of  this  court,  how  wanting  in  merit  is  the 
proposition  contended  for.    It  may  not  be  doubted  that  from 
the  foundation  of  the  government,  at  all  events  to  the  time 
of  the  adoption  of  the  xinti-Trust  Act  of  1890,  there  was  an 
entire  absence  of  any  legislation  by  Congress  even  suggest- 
ing that  it  was  deemed  by  any  one  that  power  was  possessed 
by  Congress  to  control  the  ownership  of  stock  in  railroad  or 
other  corporations,  because  such  corporations  engaged  in 
interstate  commerce.    On  the  contrary,  when  Congress  came 
to  exert  its  authority  to  regulate  interstate  commerce  as 
carried  on  by  railroads,  manifested  by  tlie  adoption  of  the 
interstate  conmierce  act,  24  Stat.  S79,  it  sedulously  confined 
the  provisions  of  that  act  to  the  [375]  carrying  on  of  inter- 
state commerce  itself,  including  the  reasonableness  of  the 
ratas  to  be  charged  for  carrying  on  such  commerce  and  other 
matters  undeniably  concerning  the  fact  of  interstate  com- 
merce.   The  same  conception  was  manifested  subsequently 


NORTHERN  SECURITIES   CO.   V.   UNITED   STATES.       501 
White,  J.,  The  Chief  Justice,  Peckham,  Holmes,  JJ.,  dissenting. 

in  legislation  concerning  safety  appliances  to  be  used  by 
railroads,  since  the  provisions  of  the  act  were  confined  to 
such  appliances  when  actually  employed  in  the  business  of 
interstate  commerce.  27  Stat.  531.  It  also  mav  not  be 
doubted  that  fron)  the  beginning  the  various  States  of  the 
Union  have  treated  the  incorporation  and  organization  of 
railroad  companies  and  the  ownership  of  stock  therein  as 
matters  within  their  exclusive  authority.  Under  this  con- 
ception of  power  in  the  States,  universally  prevailing  and 
always  acted  upon,  the  entire  railroad  system  of  the  United 
States  has  been  built  up.  Charters,  leases  and  consolidations 
under  the  sanction  of  state  laws  lie  at  the  basis  of  that  enor- 
mous sum  of  property  and  those  vast  interests  represented 
by  the  railroads  of  the  United  States.  Extracts  from  the 
reports  of  the  Interstate  Commerce  Commission  and  from  a 
standard  authority  on  the  subject,  which  were  received  in 
evidence,  demonstrate  that  in  effect  nearly  every  great  rail- 
road system  in  the  United  States  is  the  result  of  the  consoli- 
dation and  unification  of  various  roads,  often  competitive, 
such  consolidation  or  unification  of  management  having  been 
brought  about  in  every  conceivable  form,  sometimes  by  lease 
under  state  authority,  sometimes  by  such  leases  made  where 
there  was  no  prohibition  against  them,  and  by  stock  aqui- 
sitions  made  by  persons  or  corporations  in  order  to  acquire 
a  controlling  interest  in  both  roads.  Without  stopping  to 
recite  details  on  the  subject,  I  content  myself  with  merely 
mentioning  a  few  of  the  instances  where  great  systems  of 
railroad  have  been  formed  by  the  unification  of  the  manage- 
ment of  competitive  roads,  by  consolidation  or  otherwise, 
often  by  statutory  authority.  These  instances  embrace  the 
Boston  and  Maine  system,  the  Kew  York,  New  Haven  and 
Hartford,  the  New  York  Central,  the  Reading,  and  the 
Pennsylvania  systems.  [376]  One  of  the  illustrations— as  to 
the  New  York  Central  system— is  the  case  of  the  Hudson 
River  Railroad  on  one  side  of  the  Hudson  River  and  the 
West  Shore  Railroad  on  the  other,  both  parallel  roads  and 
directly  competitive,  and  both  united  in  one  management 
by  authority  of  a  legislative  act.  It  is  indeed  remarkable, 
if  the  whole  subject  was  within  the  paramount  power  of 
Congress  and  not  within  the  authority  of  the  States,  that 


'tMi^ 


193  UNITED   STATES  KEPORTS,  376. 


White,  J.,  The  Chief  Justice.  Pecltham,  Holmes,  JJ.,  dissenting. 

there  should  have  been  a  universal  understanding  to  the  con- 
trary from  the  beginning.    When  it  is  bome  in  mind  that 
such  universal  action  related  to  interests  of  the  most  vital 
character,  involving  property  of  enormous  amount  concern- 
ing the  welfare  of  the  whole  people,  it  is  impossible  in  rea- 
son to  deny  the  soundness  of  the  assumption  that  it  was  the 
universal  conviction  that  the  States,  and  not  Congress,  had 
control  of  the  subject  matter  of  the  organization  and  owner- 
ship of  railroads  created  by  the  States.    And  the  same  in- 
ference is  applicable  to  the  condition  of  things  which  has 
existed  since  the  adoption  of  the  Anti-Trust  Act  in  1890. 
Who  can  deny  that  from  that  date  to  this  consolidations  and 
unilication  of  management,  by  means  of  leases,  stock  owner- 
ship by  individuals  or  corporations,  have  been  carried  on, 
when  not  prohibited  by  state  laws,  to  a  vast  extent,  and  that 
during  all  this  time,  despite  the  energy  of  the  government 
in  invoking  the  Anti-Trust  Law,  that  no  assertion  of  power 
in  Congress  under  that  act  to  control  the  ownership  of  stock 
was  ever  knowingly  made  until  first  asserted  in  this  cause. 
Quite  recently  Congress  has  amended  the  interstate  commerce 
act  by  provisions  deemed  essential  to  make  its  prohibitions 
more  practically  operative,  and  jet  no  one  of  such  provisions 
lends  itself  even  to  the  inference  that  it  was  deemed  by  any 
one  that  the  power  of  Congress  extended  to  the  control  of 
stock  ownership.    Certainly  the  States  have  not  so  con- 
sidered it.    As  a  matter  of  public  history  it  is  to  be  observed 
that  not  long  since,  by  authority  of  the  legislature  of  the 
State  of  Massachusetts,  a  controlling  interest  by  lease  of  the 
Boston  and  Albany  road  passed  to  the  New  York  Central 
system. 

[377]  The  decisions  of  this  court  to  my  mind  leave  no  room 
for  doubt  on  the  subject.  As  I  have  already  shown,  the  very 
definition  of  the  power  to  regulate  commerce,  as  announced 
in  Gibhom  v.  Ogden^  excludes  the  conception  that  it  extends 
to  stock  ownership.  I  shall  not  stop  to  review  a  multitude 
of  decisions  of  this  court  concerning  interstate  commerce, 
which,  whilst  upholding  the  paramount  authority  of  Congress 
over  that  subject,  at  the  same  time  treated  it  as  elementary, 
that  the  effect  of  the  power  over  commerce  between  the  States 
was  not  to  deprive  the  States  of  their  right  to  legislate  con- 


NORTHEBTsT   SECURITIES    CO.   V.    UNITED   STATES.       503 

White,  J.,  The  Chief  Justice,  Peclfham,  Holmes,  JJ.,  dissenting. 

cerning  the  ownership  of  property  of  every  character  or  to 
create  railroad  corporations  and  to  endow  them  with  such 
powers  as  were  deemed  appropriate,  or  to  deprive  the  indi- 
vidual of  his  freedom  to  acquire,  own  and  enjoy  property  by 
descent,  contract  or  otherwise,  because  railroads  or  other 
property  might  become  the  subject  of  interstate  commerce. 

In  Paul  V.  Virginia^  8  Wall.  168,  the  question  was  as  to  the 
power  of  the  State  of  Virginia  to  license  a  foreign  insurance 
company,  and  one  of  the  contentions  considered  was  whether 
the  contract  of  insurance,  since  it  was  related  to  commerce, 
was  within  the  regulating  power  of  Congress  and  not  of  the 
State  of  Virginia.  The  proposition  was  disposed  of  in  the 
following  language  (p.  183) : 

"Issuing  a  policy  of  insurance  is  not  a  transaction  of  commerce. 
The  policies  are  simply  contracts  of  indemnity  against  loss  by  fire, 
entered  into  between  the  corporations  and  the  assured,  for  a  consider- 
ation paid  by  the  latter.  These  contracts  are  not  articles  of  commerce 
in  any  proi^er  meaning  of  the  word.  They  are  not  subjects  of  trade 
and  barter  offered  in  the  market  as  something  having  an  existence 
and  value  independent  of  the  parties  to  them.  They  are  not  commodi 
ties  to  be  shipped  or  forwarded  from  one  State  to  another,  and  then 
put  up  for  sale.  They  are  like  other  personal  contracts  between  par- 
ties which  are  completed  by  their .  signature  and  the  transfer  of 
the  consideration.  Such  contracts  are  not  interstate  transactions, 
though  the  parties  may  be  domiciled  [378]  in  different  States.  The 
policies  do  not  take  effect — are  not  executed  contracts — until  delivered 
by  the  agent  in  Virginia.  They  are,  then,  local  transactions,  and  are 
governed  by  the  local  law.  They  do  not  constitute  a  part  of  the  com- 
merce between  the  States  any  more  than  a  contract  for  the  purchase 
and  sale  of  goods  in  Virginia  by  a  citizen  of  New  York  whilst  in 
Virginia  would  constitute  a  portion  of  such  commerce." 

In  other  words,  the  court  plainly  pointed  out  the  distinc- 
tion between  interstate  commerce  as  such  and  the  contracts 
concerning,  or  the  ownership  of  property  which  might  become 
the  subjects  of  interstate  commerce.  And  the  authority  of 
Paul  V.  Virginia  has  been  repeatedly  approved  in  subsequent 
cases,  which  are  so  familiar  as  not  to  require  citation. 

In  Railroad  Go,  v.  Maryland^  21  Wall.  456,  the  question  was 
this:  The  State  of  Maryland  had  chartered  the  Baltimore 
and  Ohio  Railroad  Company,  and  in  the  charter  had  imposed 
upon  it  the  duty  of  paying  to  the  State  a  certain  proportion 
of  all  its  receipts  from  freight,  which  applied  as  well  to- inter- 
state as  domestic  freight.  The  argument  was  that  these  pro- 
visions were  repugnant  to  the  commerce  clause,  because  they 
necessarily  increased  the  sum  which  the  railroad  would  have 


504 


193  UNITED   STATES   REPORTS,  378. 


White,  J.,  Tlie  Chief  Justice,  Pecliham.  Holmes,  JX,  dissenting. 
to  charge,  and  thereby  constituted  a  regulation  of  commerce. 
The  court  held  the  law  not  to  be  repugnant  to  the  Constitu- 
tion, and  in  the  course  of  the  opinion  said  (p.  473) : 

alwiv^  t!^,;  ^irr^r^  f  *l!^  '^^''^  ^'^^J''''^  P*^'^^'^  ^^»<^b  a  state  has 
always  been  conceded  to  have  over  its  own  territory,  its  highways 

ts  franchises  and  its  corporations,  we  cannot  regard  the  stipulation 

m  question  as  amounting  to  either  of  these  unconstitutional  acts." 

True  it  is  that  some  of  the  expressions  used  in  the  opinion 
io  the  case  just  cited,  giving  rise  to  the  inference  that  there 
was  power  in  the  State  to  regulate  the  rates  of  freight  on 
interstate  conmierce,  may  be  considered  as  having  been  over- 
ruled by  Wabash  Railroad  Company  v.  Illinois,  118  U.  S.  557. 
But  that  case  also  in  the  fullest  manner  pointed  out  the  fact 
that  the  power  to  regulate  commerce,  conferred  on  Congress 
by  the  [370]  Constitution,  related  not  to  the  mere  ownership 
of  property  or  to  contracts  concerning  property,  because  such 
property  might  subsequently  be  used  in  interstate  commerce 
or  become  the  subject  of  it.  For  instance,  the  definition  given 
of  interstate  conmierce  in  Gibbons  v.  Ogdm,  previously  re- 
ferred to,  was  reiterated  and  in  addition  the  definition  ex- 
pounded in  County  of  Mobile  v.  Kimball,  102  U.  S.  091,  was 
approvingly  quoted.    That  definition  was  as  follows  (p.  574) : 

r.onJt^?TZ!i'T**^  ^?f^  eoontries  and  among  the  States,  strictly 
construed,  consists  in  intercourse  and  traffic,  including  in  these  terms 
navigation  and  the  transportation  and  transit  of  persons  and  pronerSr 
as  well  as  the  purchase,  sale  and  exchange  of  commodities     For  the 

S?^leratnrXft^^^^^  ^^«L^^  '^'^^  '--  b-  onfroi/system 
01  rules,  applicable  alike  to  the  whole  country;    and  the  authority 

which  can  act  for  the  whole  country  can  alone  adopt  such  a  systeS 

Action  upon  It  by  sei^arate  States  is  not.  therefore,  permissible     Lan 

guage  afhrming  the  exclusiveness  of  the  grant  of  power  over  commence 

m    h  us  defined  may  not  be  inaccurate,  when  it  would  be  so  if  annUed 

to  legwluUm  upm  mbfccts  which  are  merely  auxiliary  to  commerce:  " 

In  Ashley  v.  Byan,  153  U.  S.  436,  this  was  the  question : 
The  property  of  various  railroad  corporations  operating  in 
the  States  of  Ohio,  Michigan,  Indiana,  Illinois  and  Missouri 
had  been  sold  under  decrees  of  foreclosure.  The  purchasers 
of  the  respective  lines  availed  themselves  of  the  Ohio  statutes, 
and  consolidated  all  the  corporations  into  one  so  as  to  form  a 
single  system,  the  Wabash.  On  presenting  the  articles  of 
consolidation  to  the  Secretary  of  State  of  Ohio,  that  officer 
demanded  a  fee  imposed  by  the  Ohio  statutes,  predicated 
epon  the  sum  total  of  the  capital  stock  of  the  consolidated 


NORTHERN   SECURITIES   CO.   V.   UNITED   STATES.     '505 
White,  J.,  The  Chief  Justice,  Peckham,  Hohnes,  JJ.,  dissenting. 

company.  This  was  refused  on  the  ground  that  the  State  of 
Ohio  had  no  right  to  make  the  charge,  and  that  its  doing  so 
was  repugnant  to  the  commerce  clause  of  the  Constitution  of 
the  United  States  and  to  the  Fourteenth  Amendment.  This 
court  decided  against  this  contention.  It  held  that,  as  the 
right  to  consolidate  could  [380]  alone  arise  frOm  the  Ohio 
law,  the  corporation  could  not  avail  of  that  law  and  avoid  the 
condition  which  the  law  imposed.  Speaking  of  the  consoli- 
dation, the  court  said  (p.  440) : 

"  The  rights  thus  sought  could  only  be  acquired  by  the  grant  of  the 
State  of  Ohio,  and  depended  for  their  existence  upon  the  provisions 
of  its  laws.  Without  that  State's  consent  they  could  not  have  been 
procured." 

And,  after  a  copious  review  of  the  authorities  concerning 

the  power  of  the  State  over  the  consolidation,  the  case  was 

suDMned  up  by  the  court  in  the  following  passage  (p.  446) : 

"  Considering,  as  we  do,  that  the  payment  of  the  charge  was  a  condi- 
tion imposed  by  the  State  of  Ohio  upon  the  taking  of  corporate  being 
or  the  exercise  of  corporate  franchises,  the  rignt  to  which  depended 
solely  on  the  tvlll  of  that  State,"  (italics  mine,)  "and  hence  that 
liability  for  the  charge  was  entirely  optional,  we  conclude  that  the 
exaction  constituted  no  tax  upon  interstate  commerce,  or  the  right  to 
carry  on  the  same,  or  the  instruments  thereof,  and  that  its  enforcement 
involved  no  attempt  on  the  part  of  the  State  to  extend  its  taxing 
power  beyond  its  territorial  limits." 

How  a  right  which  was  thus  decided  to  depend  solely  upon 
the  authority  of  the  States  can  now  be  said  to  depend  solely 
upon  the  will  of  Congress,  I  do  not  perceive. 

In  United  States  v.  E,  C.  Knight  Co.,  156  U.  S.  1,  the  facts 

and  the  relief  based  on  them  were  thus  stated  by  Mr.  Chief 

Justice  Fuller,  delivering  the  opinion  of  the  court  (p.  9) : 

"  By  the  purchase  of  the  stock  of  the  four  Philadelphia  refineries, 
with  shares  of  its  own  stock,  the  American  Sugar  Refining  Company 
acquired  nearly  complete  control  of  the  manufacture  of  refined  sugar 
within  the  United  States.  The  bill  charged  that  the  contracts  under 
which  these  purchases  were  made  constituted  combinations  in  re- 
straint of  trade,  and  that  in  entering  into  them  the  defendants  com- 
bined and  conspired  to  restrain  the  trade  and  commerce  in  refined 
sugar  among  the  several  States  and  with  foreign  nations,  contrary  to 
the  act  of  Congress  of  July  2,  1890." 

[381]  After  referring,  in  a  general  way,  to  what  consti- 
tuted a  monopoly  or  restraint  of  trade  at  common  law,  the 
question  for  decision  was  thus  stated  (p.  11) : 

"  The  fundamental  question  is,  whether  conceding  that  the  existence 
of  a  monopoly  in  manufacture  is  established  by  the  evidence,  that 
monopoly  can  be  directly  suppressed  under  the  act  of  Congress  in  the 
mode  attempted  by  this  bill." 


506 


im  UNITED  STATES   REPORTS,  381. 


WMte,  J.,  The  Chief  Justice,  Peckham,  Holmes,  JJ.,  dissenting. 

Examinmg  this  question  as  to  the  power  of  Congress,  it 
was  observed  (p.  11)  : 

"It  cannot  be  denied  that  the  power  of  a  State  to  protect  the  lives, 
health  and  projierty  of  its  citizens,  and  to  preserve  good  order  and  the 
pjWIc  morals,  '  the  power  to  govern  men  and  things  within  the  limits 
of  its  dominion,'  is  a  power  originally  and  always  belonging  to  the 
States,  not  surrendered  by  them  to  the  general  government,  nor 
directly  rMtnlmd  hy  the  Oonstitntion  of  the  United  States,  and  essen- 
tially  exclusive." 

Next,  pointing  out  that  the  power  of  Congress  over  inter- 
state commerce  and  the  fact  that  its  failure  to  legislate  over 
subjects  requiring  uniform  legislation  expressed  the  will  of 
Congress  that  the  State  should  be  without  power  to  act  on 
that  subject,  the  court  came  to  consider  whether  the  power  of 
Congress  to  regulate  commerce  embraced  the  authority  to 
regulate  and  control  the  ownership  of  stock  in  the  state  sugar 
refining  companies,  because  the  products  of  such  companies 
when  manufactured  might  become  the  subject  of  interstate 
commerce.  Elaborately  passing  upon  that  question  and  re- 
affirming the  definition  of  Chief  Justice  Marshall  of  com- 
merce, in  the  constitutional  sense,  it  was  held  that,  whilst 
the  power  of  Congress  extended  to  commerce  as  thus  defined, 
it  did  not  embrace  the  ownership  of  stock  in  state  corpora- 
tions, because  the  products  of  such  manufacture  might  subse- 
quently become  the  subject  of  interstate  commerce. 

The  parallel  between  the  two  cases  is  complete.  The  one 
corporation  acquired  the  stock  of  other  and  competing 
cori^orations  by  exchange  for  its  own.  It  was  conceded,  for 
the  [382]  purposes  of  the  case,  that  in  doing  so  monopoly 
had  been  brought  about  in  the  refining  of  sugar,  that  the  • 
sugar  to  be  produced  was  likely  to  become  the  subject  of  inter- 
state commerce,  and  indeed  that  part  of  it  would  certainly 
become  so.  But  the  power  of  Congress  was  decided  not  to 
extend  to  the  subject,  because  the  ownership  of  the  stock  in 
the  corporations  was  not  itself  commerce. 

In  Pearsall  v.  The  Great  Northern  Railway  Company ^  161 
U.  S.  646,  the  question  was  whether  the  acquisition  by  the 
Great  Northern  road  of  a  controlling  interest  in  the  stock  of 
the  Northern  Pacific  Railway  Company  was  a  violation  of  a 
Minnesota  statute  prohibiting  the  consolidation  of  competing 
lines.    It  is  at  once  evident  that  if  the  subject  of  consolidation 


NORTHEBN   SECURITIES   CO.   V,   UNITED   STATES.       507 
White,  J.,  The  Chief  Jnstiee,  Peckham,  Holmes,  JJ.,  dissenting. 

was  within  the  authorit}^  of  Congress,  as  Congress  had  not 
expressed  its  will  upon  the  subject,  the  act  of  the  legislature 
of  Minnesota  was  void  because  repugnant  to  the  Constitution 
of  the  United  States.  But  the  possibility  of  such  a  contention 
was  not  thought  of  by  either  party  to  the  cause  or  by  the  court 
itself.  Treating  the  power  of  the  State  as  undoubted,  the 
court,  speaking  through  Mr.  Justice  Brown,  decided  that  the 
Minnesota  law  should  be  enforced.  It  was  pointed  out  in  the 
opinion  that,  as  the  charter  was  one  granted  by  the  State,  the 
railroad  company  and  the  ownership  of  stock  therein  was  sub- 
ject to  the  state  law,  and  this  was  made  the  basis  of  the  de- 
cision. Whilst,  however,  resting  its  conclusion  upon  the 
power  of  the  State  over  the  corporation  by  it  created,  the 
court  was  careful  to  recognize  that  the  authority  in  the  State 
was  so  complete,  as  the  company  was  a  state  corporation,  that 
the  State  had  the  right,  if  it  chose  to  do  so,  to  authorise  the 
consolidation^  even  although  the  lines  were  competing. 

In  Louisville  <&  Nashville  Railroad  v.  Kentucky,  161  U.  S. 
677,  the  power  of  the  State  to  pass  a  law  forbidding  the  con- 
solidation of  competing  state  railroad  corporations  doing  in 
part  an  interstate  commerce  business  was  again  considered, 
and  a  state  statute  in  which  the  power  was  exercised  was  up- 
held. Here,  again,  it  is  to  be  observed  that  if  the  consolida- 
tion of  [383]  state  railroad  corporations,  because  they  did  in 
part  an  interstate  commerce  business,  was  within  the  para- 
mount authority  of  Congress,  that  authority  was  exclusive 
and  the  state  regulation  which  the  court  upheld  was  void. 
And  this  question,  vital  to  the  consideration  of  the  case,  and 
without  passing  upon  which  it  could  not  have  been  decided 
did  not  escape  observation,  since  it  was  explicitly  pressed 
upon  the  court  and  was  directly  determined.  The  court, 
speaking  through  Mr.  Justice  Brown,  said  (pp.  701,  702) : 

"But  little  need  be  said  in  answer  to  the  final  contention  of  the 
plaintiff  in  error,  that  the  assumption  of  a  right  to  forbid  the  consoli- 
dation of  parallel  and  competing  lines  is  an  interference  with  the 
power  of  Congress  over  interstate  commerce.  The  same  remarlc  may 
be  made  with  respect  to  all  police  regulations  of  interstate  railways. 
*  *  ♦  *  * 

"  It  has  never  been  supposed  that  the  dominant  power  of  Congress 
over  interstate  commerce  took  from  the  States  the  power  of  legisla- 
tion with  respect  to  the  instruments  of  such  commerce,  so  far  as 
the  legislation  was  within  its  ordinary  police  powers.  Nearly  all  the 
railways  in  the  country  have  been  constructed  under  state  authority, 


508 


193  UNITED   STATES   REPOBTS,  383. 


White,  J..  The  Chief  Justice,  Pecl^ham,  Holmes,  JJ.,  dissenting, 
ovl'lhrf""^  *"*"  suDiwsed  that  they  intended  to  abandon  their  power 

their  oneratfon  ^fr  '''/^^  ^T?  ^^  '"^^"^'^  ^"^'^  rej,nilations  upon 
^m  Jifrln  ?it  1  ■  ^T^  ?^*"*'^  ^**'*  "*^  interests  of  the  public  may 
seen  to  render  desirable.  In  the  division  of  authority  with  vem^nf 
to  iiiterstate  railways  Congress  reserves  to  itself  thrsupoHor  rillif  to 
control  their  cwunerce  and  forbid  interference  thereAvUhTwhU^^ 
the  States  remains  the  power  to  create  and  to  regulate  the  instruments 

?4e?^teT"^'''''  ''  '''  "'  ^'^^^"'•^  *?  *^^  cons^rvalioSVfTe"^ 

How  one  case  could  be  more  completely  decisive  of  another 
than  the  ruling  in  the  case  just  quoted  is  of  this,  I  am  unable 
to  perceive. 

[384]   The  subject  was  considered  at  circuit  in  In  re 
Greene,  52  Fed.  Kep.  104.    The  case  was  this :  A  person  was 
indicated  m  one  State  for  creating  a  monopoly  in  violation  of 
the  Anti-Trust  Act  of  Congress  and  was  held  in  another 
State  for  extradition.    The  writ  of  hahem  corpus  was  in- 
voked, upon  the  contention  that  the  face  of  the  indictment 
did  not  state  an  offense  against  the  United  States,  since  the 
matters  charged  did  not  involve  intei-state  commerce     The 
case  is  referred  to,  although  it  arose  at  circuit  and  was  de- 
termined before  the  decisions  of  this  court  in  the  Pearsall  and 
LmisviUe  and  NashvUIe  cases,  because  it  was  decided  by  Mr. 
Justice  Jackson,  then  a  Circuit  Judge,  who  subsequentlV  be- 
came a  member  of  this  court.    The  opinion  manifests  that 
the  case  was  considered  by  Judge  Jackson  with  that  care 
which  was  his  conceded  characteristic  and  was  stated  by  him 
With  that  lucidity  which  was  his  wont.     In  disdiari^ing  the 
accused  on  the  grounds  stated  in  the  application  for  the  writ 
Judge  Jackson  said  (p.  112) :     * 

"  Congress  may  place  restrictions  and  limitations  upon  the  ri'ht  of 
rurdfwe  orBrteHv  ^Tr^^^  T*'^^  '''  authorirto  acQuVr'^^  u^' 
Smit  ^f^fn,^,.^ilT-!?-  ^}  "^^^  *^^^**  '°'P«^«  s"<^»>  restrictions  and 
il^  li  #  "^'.^  ^^^  ^i^^""^"  ^^  tmvect  to  the  exercise  of  a  public  privi 
l!!^!'*^""'*^^!?  conferred  by  the  United  States.  But  Congress  clr- 
tamly  has  not  the  power  or  authority  under  the  commVrce  clause  or 
any  other  provision  of  (he  Constitution,  to  JiniifaXTirict  the  riehl 

?L'nrf  1^"'  ''^f  "^  ^^  '^^  ^^^^^^  «^  *be  citizens  of  tlfstate^^ 
the  acquis  tion,  control  and  disposition  of  property.  Neither  can  Con 
gress  regulate  or  prescribe  the  price  or  prices  at  which  such  p?one^^^^^ 
m  products  thoreof.  shall  be  sold  by  the  owner  or  ovvners  whetbe; 
jorporat ions  or  individuals.  It  is  e<  ually  clear  that  Coa^ress  has  no 
jurisdiefon  over,  and  cannot  make  criminal,  the  aims  pmT^^ses  anS 
intentions  of  i»ersons  in  the  ae^iuisition  and  (control  of  prii^rtv  which 
the  States  of  their  residence  or  creation  sanction  and  pSt'  It  la 
Dot  material  that  such  property,  or  the  products  thereof  nTybeime 
the  [385]  subject  of  trade  or  commerce  among  the  several  Stat^  or 


l^ORTHERN   SECURITIES    CO.    V.    UNITED   STATES.       509 

White,  J.,  The  Chief  Justice,  Peckham,  Holmes,  JJ.,  dissenting. 

with  foreign  nations.  Commerce  among  the  States,  within  the  exclu- 
sive regulating  i)3wer  of  Congress,  'consists  of  intercourse  and  traffic 
between  their  citizens,  and  includes  the  transportation  of  persons  and 
property,  as  well  as  the  purchase,  sale  and  exchange  of  commodities.* 
Count }f  of  Mobile  v.  Kimhalh,  102  U.  S.  691,  702 ;  Qlonccster  Ferry  Co.  v. 
Pennsylvania,  114  U.  S.  203.  In  the  application  of  this  comprehensive 
definition,  it  is  settled  by  the  decision  of  the  Supreme  Court  that  such 
commerce  includes,  not  only  the  actual  transportation  of  commodities 
and  persons  between  the  States,  but  also  the  instrumentalities  and 
processes  of  such  transportation. 

*****♦*♦ 
"That  neither  the  production  or  manufacture  of  articles  or  com- 
modities which  constitute  subjects  of  commerce,  and  which  are  intended 
for  trade  and  traffic  with  citizens  of  other  States,  nor  the  preparation 
for  their  transportation  from  the  State  where  produced  or  manufac- 
tured, prior  to  the  commencement  of  the  actual  transfer,  or  transmis- 
sion thereof  to  another  State,  constitutes  that  interstate  conmierce 
which  comes  witliin  the  regulating  power  of  Congress;  and,  further, 
that  after  the  termination  of  the  transportation  of  commodities  or  arti- 
cles of  traffic  from  one  State  to  another,  and  the  mingling  or  merging 
thereof  in  the  general  mass  of  property  in  the  State  of  destination,  the 
sale,  distribution  and  consumption  thereof  in  the  latter  State  forms  no 
part  of  interstate  commerce." 

If  this  opinion  had  been  written  in  the  case  now  considered 
it  could  not  more  completely  than  its  reasoning  does  have  dis- 
posed of  the  contention  that  the  ownership  of  stock  by  a  cor- 
poration in  competing  railroads  was  commerce. 

United  States  v.  Freight  Association^  166  U.  S.  290,  was 
this :  A  large  number  of  railway  companies,  who  were  made 
defendants  in  the  cause,  had  formed  themselves  into  an  asso- 
ciation, known  as  the  Trans-Missouri  Freight  Association, 
and  the  companies  had  bound  themselves  by  the  provisions 
contained  in  the  articles  of  agreement.  Many  stipulations 
relating  to  [3^6]  the  carrying  on  of  interstate  commerce  over 
the  roads  which  were  parties  to  the  agreement  were  contained 
in  it,  and  section  3  provided  as  follows : 

"  A  committee  shall  be  appointetl  to  establish  rates,  rules  and  regula- 
tions on  the  traffic  subject  to  this  association,  and  to  consider  changes 
therein,  and  make  rules  for  meeting  the  competition  of  outside  lines. 
Their  conclusions,  when  unanimous,  shall  be  made  effective  when  they 
so  order,  but  if  they  differ  the  question  at  issue  shall  r»e  referrefl  to  the 
managers  of  the  lines  parlies  hereto ;  and  if  they  disagree  it  shall  be 
arbitrated  in  the  manner  provided  in  article  VII." 

The  government  sought  to  dissolve  the  association  on  the 
ground  that  the  agreement  restrained  commerce  between  the 
States,  and  therefore  was  in  violation  of  the  Anti-Trust  Act. 
On  the  hearing  in  this  court,  as  the  agreement  directly  related 
in  many  particulars  to  interstate  transportation  and  the 
charge,  to  be  made  therefor,  it  was  conceded  on  all  hands  that 


510 


193  UNITED  STATUS  BIPOBTS,  386. 


WWte,  J.,  The  Chief  Justice.  Peckhmn,  Holmes,  JX,  diiweiiting. 

it  embraced  subjects  which  came  within  the  power  of  Con- 
gress  to  regulate  commerce.    The  contentions  on  behalf  of 
the  association  were  these :  First.  That  the  movement  of  in- 
terstate commerce  bj  railroads  was  not  within  the  Anti-Trust 
Act,  since  Congress  had  regulated  that  subject  by  the  inter- 
state commerce  act.  and  did  not  intend  to  amplify  its  provi- 
sions in  any  respect  by  the  subsequent  enactment  of  the  Anti- 
Trust  Law.    Second.  That  even  if  this  were  not  the  case, 
and  the  movement  of  interstate  commerce  by  railroads  was 
affected  by  the  Anti-Trust  Statute,  the  particular  agreement 
in  question  did  not  violate  the  act,  because  the  agreement  di<l 
not  unreasonably  restrain  interstate  commerce.    Both  these 
contentions  were  decided  against  the  association,  the  court 
ht)lding  that  the  Anti-Trust  Act  did  embrace  interstate  car- 
riage  by  railroad  corporations,  and  as  that  act  prohibited 
any  contract  in  restraint  of  interstate  commerce,  it  hence  em- 
braced all  contracts  of  that  character,  whether  they  were  rea- 
sonable or  unreasonable. 

The  same  subject  was  considered  in  a  subsequent  case, 
18871  United  States  v.  Joint  Traiflc  Association,  171  U.  8. 
505.  In  that  case  also  there  was  no  question  that  the  agree- 
ment between  the  railroads  related  to  the  movement  of  inter- 
state commerce,  but  it  was  insisted  that  the  particular  agree- 
ment there  involved  did  not  seek  to  fix  rates,  but  only  to 
secure  the  continuation  of  just  rates  which  had  already  been 
^x^j  and  hence  was  not  within  the  Anti-Trust  Law.  If  this 
were  held  not  to  be  true,  a  reconsideration  of  the  questions 
decided  in  the  Freight  Association  case  was  invoked.  The 
court  reviewed  and  reiterated  the  rulings  made  in  the  Freight 
Association  case  and  held  that  the  particular  agreement  in 
question  came  within  them. 

I  mention  these  two  last  cases  not  because  they  are  apposite 
to  the  case  in  hand,  for  they  are  not,  since  the  contracts  which 
were  involved  in  them  confessedly  concerned  interstate  com- 
merce, whilst  in  this  case  the  sole  question  is  whether  the 
ownership  of  stock  in  competing  railroads  does  involve  inter- 
state  commerce.  The  cases  are  referred  to  in  connection  with 
the  decisions  previously  cited,  because,  taken  together,  they 
illiistrate  tlie  distinction  which  this  court  has  always  main- 
tained between  the  power  of  Congress  over  interstate  com- 


NOBTHEBN  SEOUEITIES   CO.   V.   UNITED   STATES.       511 

White,  J.,  The  Chief  Justice,  PeclJiham,  Holmes,  JJ.,  dissenting. 

merce  and  its  want  of  authority  to  regulate  subjects  not 
embraced  within  that  grant.  The  same  distinction  is  aptly 
shown  in  subsequent  cases. 

Hopkins  v.  United  States,  171  U.  S.  578,  involved  whether 
a  particular  agreement  entered  into  between  persons  carrying 
on  the  business  of  selling  cattle  on  commission,  exclusively  at 
the  Kansas  City  stock  yards  was  valid.  At  those  yards  cattle 
were  received  in  vast  numbers  through  the  channels  of  inter- 
state commerce,  and  from  thence  were  distributed  through 
such  channels.  For  these  reasons  the  business  of  those  en- 
gaged exclusively  in  the  sale  of  cattle  on  the  stock  yards  was 
asserted  to  be  interstate  commerce  and  within  the  power  of 
Congress  to  regulate.  In  the  opinion  of  the  court,  delivered 
by  Mr.  Justice  Peckham,  it  was  at  the  outset  said  (p.  586) : 

"The  relief  sought  in  this  case  is  based  exclusively  on  the  [388] 
act  of  Congress  approved  July  2,  1890,  c.  647,  entitled  'An  act  to  pro- 
tect trade  and  commerce  against  unlawful  restraints  and  monopolies,* 
commonly  spoken  of  as  the  Anti-Trust  Act.    26  Stat.  209. 

"  The  act  has  reference  only  to  that  trade  or  commerce  which  exists, 
or  may  exist,  among  the  several  States  or  with  foreign  nations,  and 
has  no  application  whatever  to  any  other  trade  or  commerce. 

"  The  question  meeting  us  at  the  threshold,  therefore,  in  this  case  is, 
what  is  the  nature  of  the  business  of  the  defendants,  and  are  the  by- 
laws, or  any  subdivision  of  them  above  referred  to,  in  their  direct 
effect  in  restraint  of  trade  or  commerce  among  the  several  States  or 
with  foreign  nations;  or  does  the  case  made  by  the  bill  and  answer 
show  that  any  one  of  the  above  defendants  has  monopolized,  or  at- 
tempted to  monopolize,  or  combined  or  conspired  with  other  persons 
to  monopolize,  any  part  of  the  trade  or  commerce  among  the  several 
States  or  with  foreign  nations?" 

Proceeding,  then,  to  consider  the  agreement,  it  was  pointed 
out  that  the  contention  that  the  sale  of  cattle  on  the  stock 
yards  constituted  interstate  commerce  was  without  merit 
The  distinction  between  interstate  commerce  as  such  and  the 
power  to  make  contracts  and  to  buy  and  sell  property  was 
clearly  stated,  and  because  of  that  distinction  the  agreement 
was  held  not  to  be  within  the  act  of  Congress,  because  that 
act  could  and  did  only  relate  to  interstate  commerce. 

And  on  the  day  the  decision  just  referred  to  was  announced 
another  case  under  the  Anti-Trust  Act  was  decided.  Ander- 
son V.  United  States,  171  U.  S.  604.  The  difference  between 
that  case  and  the  Hopkins  case  was  thus  stated  by  Mr.  Justice 
Peckham,  in  delivering  the  opinion  of  the  court  (p.  612) : 

"This  case  differs  from  that  of  Hopkins  v.  United  States,  supra, 
in  the  fact  that  these  defendants  are  themselves  purchasers  of  cattle 


m  VKITED  STATES   REPORTS,  388. 


While,  J.,  TJie  Chief  Justice,  Peckham,  Holmes,  JJ.,  dissenting, 
on  the  iiiarket,  while  the  defendants  in  the  Hopkins  case  were  oulv 

^r^^rZ:t\:^L^^I^^^^^^^  or  combination  in 

The  court,  however,  said  it  did  not  deem  it  necessary  to 
decide  whether  the  fact  that  the  merchants  who  entered  into 
the  agreement  bought  cattle  in  other  States  and  shipped  them 
to  other  States,  caused  their  business  to  be  interstate  com- 
merce, because  in  any  event  the  court  was  of  opinion  that 
the  agreement  which  was  assailed,  even  if  it  involved  inter- 
state commerce,  was  not  in  violation  of  any  of  the  provisions 
of  the  Anti-Trust  Act. 

The  Andersoji  case  was  followed  by  Addyston  Pipe  <&  Steel 
Co.  V.  United  States,  175  U.  S.  211.    The  case  involved  de- 
cidmg  whether  a  particluar  combination  of  pipe  manufac- 
turers, looking  to  the  control  of  the  sale  and  transportation 
of  such  pipe  over  a  large  territory,  embracing  many  States 
and  a  division  of  the  territory  between  the  members  of  the 
combination,  was  within  the  prohibitions  of  the  Anti-Trust 
Act.    Coming  to  consider  the  subject,  the  court,  through 
Mr.  Justice  Peckham,  analyzed  the  contract  and  pointed  out 
Its  monopolistic  features.    In  answer  to  the  argument  that 
the  matter  complained  of  was  not  commerce,  because  it  re- 
lated only  to  a  sale  of  pipe,  and  therefore  was  within  the 
rule  announced  in  the  Knight  and  Hopkins  cases,  the  Knight 
case  was  approvingly  reviewed,  and  its  doctrine  in  effect  was 
reaffirmed,  the  court  observing  (p.  240) : 

el?^t  ni ""fi?*  ^"""^f  of  the  combination  in  the  Knight  case  was  the 
control  of  tlie  manufacture  of  sugar.     There  was  no  coiiihin.if.vl  !.^ 

State  commer^"'"^  '"""°^  *°  "   transaction   in  the  nature  of 
„•  •  * 

We  think  the  case  now  l)efore  us  involves  eontrart<i  nf  tim  ..ofr.-.,, 
last  before  mentioned,  not  incidentally  or  ^ilate^alfy  [SW]  but  -S  a 
direct  and  immediate  result  of  the  combination  engaged  in  bydefend- 

agreement  could  only  send  their  goods  out  of  the  State  in  irhirh  HiPt, 
were  manufactured  for  sale  and  delivery  in  another  State   m^^^^^^ 

ZZlTLZ'Z^'il  '"  ^\\T^^'^*-^«^  of  such  eomUnaZi  As  per 
tlnently  asked  by  the  court  below,  was  not  this  a  direct  restraint  unon 
interstate  commerce  in  those  goods?  "     (Italics  mine!)       ^^"^^'^  ^^^ 

Having  thus  found  that  the  agreement  concerned  inter- 
state commerce,  because  it  directly  purported  to  control  the 


JfORTHERN   SECURITIES   CO.    V.    UNITED   STATES.       513 
White,  J.,  The  Chief  Justice,  Peckham,  Holmes,  JJ.,  dissenting. 

movement  of  goods  from  one  State  to  the  other,  and  besides 
sought  to  prohibit  that  movement  or  restrict  the  same  to 
particular  individuals,  it  was  held  that  the  contract  was, 
for  these  reasons,  within  the  prohibitions  of  the  Act  of  Con- 
gress, and  was  therefore  void.  I  do  not  pause  to  consider 
the  case  of  Montague  <&  Co,  v.  Lowry,  193  U.  S.  38,  decided 
at  this  term,  since  on  the  face  of  the  opinion  it  is  patent 
that  the  contract  directly  concerned  the  shipment  of  goods 
from  one  State  to  another,  and  this  was  the  sole  and  exclu- 
sive basis  of  the  decision. 

Now,  it  is  submitted,  that  the  decided  cases  just  reviewed 
demonstrate  that  the  acquisition  and  ownership  of  stock  in 
competing  railroads,  organized  under  state  law,  by  several 
persons  or  by  corporations,  is  not  interstate  commerce,  and, 
therefore,  not  subject  to  the  control  of  Congress.  It  is, 
indeed,  suggested  that  the  cases  establish  a  contrary  doctrine. 
This  is  sought  to  be  demonstrated  by  quoting  passages  from 
the  opinions  separated  from  their  context  apart  from  the 
questions  which  the  cases  involved.  But  as  the  issues  which 
were  decided  in  the  Knight,  in  the  Pearsall,  in  the  Louisville 
and  Nashville  case  and  in  the  Hopkins  case  directly  exclude 
the  significance  attributed  to  the  passages  from  the  opinions 
in  those  cases  relied  upon,  it  must  follow  that  if  such  pas- 
sages could,  when  separated  from  their  context,  have  the 
meaning  attributed  to  them  the  expressions  would  be  mere 
obiter.  And  this  consideration  renders  it  unnecessary  for 
me  to  analyze  the  passages  to  show  that  when  they  are  read 
in  connection  with  their  con-  [391]  text  they  have  not  the 
meaning  now  sought  to  be  attached  to  them.  But  other 
considerations  equally  render  it  unnecessary  to  particularly 
review  the  sentences  relied  upon.  There  can  be  no  doubt 
that  it  was  expressly  decided  in  the  Knight  case  that  the 
acquisition  of  stock  by  one  corporation  in  other  corporations 
so  as  to  control  them  all  was  not  interstate  commerce, 
although  the  goods  of  the  manufacturing  companies  whose 
stock  was  acquired  might  become  the  subject  of  interstate 
commerce.  If  then  the  passage  from  the  Knight  case  could 
be  given  the  meaning  sought  to  be  affixed  to  it,  the  result 
would  be  but  to  say  that  that  case  overruled  itself.  And 
21220— VOL  2—07  M 33 


614 


193  UNITED   STATES   KEPOBTS,  391. 


White,  J.,  The  Chief  Justic-e,  Peckham.  Holmes,  JJ.,  dissenting. 
tMs  would  be  the  result  in  the  Pearsall  case,  since  in  that 
case  it  was  decided  that  the  States  had  the  power  to  forbid 
the  consolidation  of  competing  railroads,  even  by  means  of 
the  acquisition  of  stock.    Besides,  as  in  the  Louhville  and 
Nashville  case,  immediately  following  the  Pearsall,  it  was 
expressly  decided  that  the  interstate  ccMnmerce  power  of 
Congress  did  not  embrace  such  consolidation,  and  Congress 
therefore,  could  not  restrain  a  State  from  either  forbidding 
or  permitting  it  to  take  place,  it  would  follow  that  if  the  sen- 
tences  in  the  Pearsall  case  had  the  import  now  applied  to 
them,  that  that  case  not  only  overruled  itself,  but  was  be- 
sides overruled  by  the  Louisville  and  Nashville  case,  and 
this  although  the  two  cases  were  decided  on  the  same  day, 
the  opinions  in  both  cases  having  been  delivered  by  the  same 
Justice. 

The  same  confusion  and  contradiction  arises  from  sepa- 
rating from  their  context  and  citing  as  appJicable  to  this 
case  passages  from  the  opinions  in  the  Freirjht  Association 
and  Joint  Traffic  cases.    Those  cases,  as  I  have  previously 
stated,  related  exclusively  to  a  contract  admittedly  involv- 
ing interstate  commerce,  and  it  was  decided  that  any  re- 
straint  of  such  conunerce  was  forbidden  by  the  Anti-Trust 
Act.    Now  in  the  Hopkins  case,  decided  subsequent  to  the 
Freight  Association  and  Joint  Traffic  cases,  the  contract  con- 
sidered unquestionably  involved  a  restraint,  but,  as  such  re- 
straint did  not  concern  interstate  commerce,  it  was  held  not 
to  come  within  the  power  of  Congress.     [392]     It  would 
follow  then,  if  the  sentence  quoted  from  the  opinions  in  the 
Freight  Association  and  Joint  Traffic  cases,  which  cases  con- 
cerned only  that  which  was  completely  interstate  commerce, 
applied  to  that  which  was  not  such  commerce,  that  the  Hop^ 
Mm  case  overruled  both  these  cases,  although  the  opinions 
in  all  of  the  cases  were  delivered  by  the  same  Justice,  and  no 
intimation  was  suggested  of  such  overruling.    It  would  also 
result  that,  after  having  overruled  those  cases  in  the  Hopkins 
case,  the  court,  in  expressing  its  opinion  through  the  same 
Justice,  proceeded  in  the  Addyston  Pipe  case,  which  related 
only  to  interstate  commerce,  to  overrule  the  Hopkins  case 
and  reaffirm  the  prior  cases. 
Of  course,  in  my  4)pinion,  there  is  no  ground  for  holding 


KORTHERN  SECURITIES   CO.   ^;.   UNITED   STATES.       515 
White,  J.,  The  Chief  Justice,  Peckham,  Holmes,  J  J.,  dissenting. 

that  the  decided  cases  embody  such  extreme  contradictions 
or  produce  such  utter  confusion.  The  cases  are  all  consistent, 
if  only  the  elementary  distinction  upon  which  they  proceeded 
be  not  obscured,  that  is,  the  difference  which  arises  from  the 
power  of  Congress  to  regulate  interstate  commerce  on  the 
one  hand,  and  its  want  of  authority  on  the  other,  to  regulate 
that  which  is  not  interstate  commerce.  Indeed,  the  confound- 
ing and  treating  as  one,  things  which  are  wholly  different, 
is  the  error  permeating  all  the  contentions  for  the  Govern- 
ment. 

What  has  been  previously  said  suffices  to  show  the  reasons 
which  control  my  judgment,  and  I  might  well  say  nothing 
more.  There  were,  however,  three  propositions  so  earnestly 
pressed  by  the  Government  at  bar  upon  the  theory  that  they 
demonstrate  that  common  ownership  of  a  majority  of  the 
stock  of  competing  railroads  is  subject  to  the  regulating 
power  of  Congress  that  I  propose  to  briefly  give  the  reasons 
which  cause  me  to  conclude  that  the  contentions  relied  upon 
are  without  merit. 

1.  This  court,  it  is  urged,  has  frequently  declared  that  the 
power  of  Congress  over  interstate  commerce  includes  the 
authority  to  regulate  the  instrumentalities  of  such  commerce, 
and  the  following  cases  are  cited :  Railroad  Co.  v.  Fuller,  17 
Wall.  560 ;  Welton  v.  Missow^,  91  U.  S.  275 ;  Pensacola  Tele- 
[393  J  graph  Co.  v.  Western  Union  TeUgraph  Co.,  96  U.  S. 
1 ;  Gloucester  Ferry  Co.  v.  Pennsylvania,  114  U.  S.  196.     To 
these  cases  might  be  added  many  others,  including  some  of 
those  which  have  been  previously  referred  to  by  me.    The 
argument  now  made  is,  as  the  power  extends  to  instru- 
mentalities,    and     railroads     are     such     instrumentalities, 
therefore  the  acquisition  and  ownership  of  railroads,  by 
persons  or  corporations,  is  commerce  and  subject  to  the  power 
of  Congress  to  regulate.    But  this  involves  a  non  sequitur, 
and  a  confusion  of  thought  arising  from  again  confounding 
as  one,  things  which  are  wholly  different.    True,  the  instru- 
mentalities of  interstate  commerce  are  subject  to  the  power 
to  regulate  commerce,  and  therefore  such  instrumentalities 
when  employed  in  interstate  commerce  may  be  regulated  by 
Congress  as  to  their  use  in  such  commerce.    But  this  is  en- 
tirely distinct  from  the  power  to  regulate  the  acquisition  and 


516 


193  UNITED  STATES  BEPORTS,  393. 


White.  J..  The  Chief  Justice,  Peclsham,  Holmes,  JJ.,  dissenting. 

ownership  of  such  instrumentalities,  and  the  many  forms  of 
contracts  from  which  such  ownership  may  arise.  The  same 
distinction  exists  between  the  two  which  obtains  between 
the  power  of  Congress  to  regulate  the  movement  of  property 
in  the  channels  of  interstate  commerce  and  its  want  of  au- 
thority to  regulate  the  acquisition  and  ownership  of  the  same 
property.  This  difference  was  pointed  out  in  the  cases  which 
have  been  referred  to,  and  the  distinction  between  the  two 
has  been  from  the  beginning  the  dividing  line,  demarking  the 
power  of  the  national  government  on  the  one  hand  and  of 
the  States  on  the  other.  All  the  rights  of  ownership  in 
railroads  belonging  to  corporations  organized  under  state 
law,  the  power  to  acquire  the  same,  to  mortgage,  to  fore- 
close mortgages,  to  lease,  and  the  contract  relations  concern- 
ing them,  have  from  the  foundation  had  their  sanction  in  the 
legislation  of  the  several  States.  One  may  search  in  vain 
in  the  acts  of  Congress  for  any  legislation  even  suggesting 
that  the  power  over  these  subjects  was  deemed  to  be  in  Con- 
gress. On  the  contrai'y,  the  legislation  of  Congress  concern- 
ing the  instnimentaUties  of  railroads  under  the  interstate 
commerce  power  clearly  refutes  the  contention,  since  that 
legislation  relates  only  to  such  instrumentalities  [394]  during 
their  actual  use  in  interstate  commerce  and  not  otherwise. 
How,  consistently  with  the  proposition,  can  the  great  num- 
ber of  cases  be  explained  which  in  both  the  Federal  and 
state  courts  have  dealt  with  the  ownership  of  railroads 
and  their  instrumentalities  by  foreclosure  and  otherwise, 
under  the  assumption  that  the  rights  of  the  parties  were  con- 
trolled by  state  laws  governing  the  subject  ?  And  here  again 
it  would  follow,  if  the  proposition  was  adopted,  that  all  the 
vast  body  of  state  legislation  on  the  subject  would  be  void 
from  the  beginning  and  the  enormous  simi  of  property  rights 
depending  upon  such  legislation  would  be  impaired  and  lost, 
since  if  the  subject  were  within  the  power  of  Congress  it  was 
one  requiring  a  uniform  regulation,  and  therefore  the  in- 
action of  Congress  would  signify  an  entire  want  of  power  in 
the  States  orer  the  subjects. 

2.  The  court,  it  is  urged,  has  in  a  number  of  cases  declared 
that  the  several  States  were  without  power  to  directly  burden 
interstate  commerce.    The  acquiring  and  ownership  by  one 


NORTHERN   SECURITIES   CO.   V.   UNITED   STATES.       517 
White,  J.,  The  Chief  Justice,  Pecliham,  Holmes,  JJ.,  dissenting. 

person  or  corporation  of  a  majority  of  the  stock  in  competing 
railroads  engaged  in  interstate  commerce,  it  is  argued,  being 
a  direct  burden,  therefore  power  to  regulate  the  subject  is  in 
Congress  and  not  in  the  States.  Undoubtedly  not  only  in  the 
decisions  referred  to  but  in  many  others,  including  most  of 
those  which  have  been  by  me  quoted,  the  absolute  want  of 
power  in  the  States  to  legislate  concerning  interstate  com- 
merce or  to  burden  it  directly  has  been  declared,  and  the  doc- 
trine in  its  fullest  scope  is  too  elementary  to  require  citation 
of  authority.  But  to  decide  this  case  upon  the  assumption 
that  the  acquisition  and  ownership  of  stock  in  competing 
railroads  engaged  in  interstate  commerce  is  a  regulation  of 
commerce,  or,  what  is  the  same  thing,  a  direct  burden  on  it, 
would  be  but  to  assume  the  question  arising  for  decision. 

Where  an  authority  is  exerted  by  a  State  which  is  within 
its  power,  and  that  authority  as  exercised  does  not  touch 
interstate  commerce  or  its  instriAnentalities,  and  can  only 
have  an  effect  upon  such  commerce  by  reason  of  the  reflex 
and  remote  results  [395]  of  the  exertion  of  the  lawful  power, 
it  cannot  be  said,  without  a  contradiction  in  terms,  that  the 
power  exercised  is  a  regulation,  because  a  direct  burden  upon 
commerce.  To  say  to  the  contrary  would  he  to  declare  that 
no  power  on  any  subject^  however  local  in  its  character^ 
could  he  exercised  hy  the  States  if  it  was  deemed  hy  Con- 
gress or  the  courts  that  there  would  he  produced  some  effect 
upon  interstate  commerce.  The  question  whether  a  burden 
is  direct  and  therefore  constitutes  a  regulation  of  interstate 
conunerce  is  to  be  determined  by  ascertaining  whether  the 
power  exerted  is  lawful,  generally  speaking,  and  then  by 
finding  whether  its  exercise  in  the  particular  case  was  such  as 
to  cause  it  to  be  illegal,  because  directly  burdening  inter- 
state commerce.  If  in  a  given  case  the  power  be  lawful  and 
the  mode  in  which  it  is  exercised  be  not  such  as  to  directly 
burden,  there  is  no  regulation  of  commerce,  although  as  an 
indirect  result  of  the  exertion  of  the  lawful  power  some  effect 
may  be  produced  upon  commerce.  In  other  words,  where 
the  power  is  lawful  but  it  is  asserted  that  it  has  been  so 
exerted  as  to  amount  to  a  direct  burden,  there  must  he^  so  to 
speak^  a  privity  hetween  the  manifestation  of  the  power  and 
the  resulting  hurden.    The   distinction  is  well  illustrated 


518 


193  UNITED  STATES  BEPOBTS^  395. 


Wiate,  J.,  The  Chief  Justice,  Pecliham,  Holmes,  JJ.,  dissenting. 

by  the  cases  which  have  been  referred  to,  and  was  very 
lucidly  pointed  out  by  Judge  Jackson  in  the  Greene  case. 
Take  the  Knight  case.    There  as  the  contract  merely  con- 
cerned the  purchase  of  stock  in  the  refineries,  and  contained 
no  condition  relating  to  the  movement  in  interstate  commerce 
of  the  goods  to  be  manufactured  by  the  refining  companies, 
the  court  held  as  the  right  to  acquire  was  not  within  the 
commerce  clause,  the  fact  that  the  owners  of  the  manufactureci 
product  might  thereafter  so  act  concerning  the  product  as 
to  burden  commerce,  there  was  no  direct  burden  resulting 
from  the  mere  acquisition  and  ownership.    On  the  contrary, 
in  the  Addyston  Pipe  case,  after  stating  in  the  fullest  way 
the  paramount  authority  of  Congress  concerning  commerce, 
the  court  approached  the  tenns  of  the  contract  in  order  to 
determine  whetlier  it  related  to  interstate  commerce,  and  if 
it  did,  whether  it  created  a  direct  burden.    In  doing  so,  as  it 
[396]  found  that  the  contract  both  related  to  interstate  com- 
merce and  directly  burdened  the  same,  the  contract  was  held 
to  be  void.    This  case  comes  within  the  Knight  case.    It 
concerns  the  acquisition  and  ownership  of  stock.    No  con- 
tract is  in  question  made  by  the  owners  of  the  stock  con- 
trolling the  railroads  in  the  perfonnance  of  their  duties  as 
carriers  of  interstate  connnerce.     The  sole  contention  is  that 
as  the  result  of  the  ownership  of  the  stock  there  may  arise, 
in  the  operation  of  the  roads,  a  l)urden  on  interstate  com- 
merce.      That  is,  tluit  such  burden  may  indirectly  result 
from  the  acquisition  and  ownership.     To  maintain  the  con- 
tention, therefore,  it  must  be  decided  that  because  owner- 
ship of  proi>erty  if  acquired  may  he  so  used  as  to  burden 
commerce,  therefore  to  acquire  and  own  is  to  burden.     This, 
however,  would  be  but  to  declare  that  that  which  was  in  its 
very  nature  and  essence  indirect  is  direct. 

S.  But,  it  is  said,  it  may  not  be  denied  that  the  common 
.ownership  of  stock  in  competing  railroads  endows  the  holdei's 
of  the  majority  of  the  stock  with  a  common  interest  in  both 
railroads  and  with  the  authority,  if  they  choose  to  exert  it,  to 
so  unify  the  management  of  the  roads  as  to  suppress  competi- 
tion between  them.  This  power,  it  is  insisted,  is  within  the 
regulating  authority  of  Congress  over  interstate  commerce. 
In  other  words,  the  contention  broadly  is  that  Congress  has 


NOBTHEBN   SECUBITIES   CO.   V,   UNITED   STATES.       519 
White,  J,,  The  Chief  Justice,  Pecltham,  Holmes,  JJ.,  dissenting. 

not  only  the  authority  to  regulate  the  exercise  of  interstate 
commerce,  but  under  that  power  has  the  right  to  regulate  the 
ownership  and  possession  of  property,  if  the  enjoyment  of 
such  rights  would  enable  those  who  possessed  them  if  they 
engaged  in  interstate  commerce  to  exert  a  power  over  the 
same.  But  this  proposition  only  asserts  in  another  form 
that  the  right  to  acquire  the  stock  was  interstate  commerce, 
and  therefore  was  within  the  authority  of  Congress,  and  is 
refuted  by  the  reasons  and  authorities  already  advanced. 
That  the  proposition,  if  adopted,  would  extend  the  power  of 
Congress  to  all  subjects  essentially  local,  as  already  stated  in 
considering  the  previous  proposition,  is  to  my  mind  manifest. 
So  clearly  is  this  the  result  of  the  particular  proposition  now 
being  considered,  that,  [397]  at  the  risk  of  repetition,  I  again 
illustrate  the  subject.  Under  this  doctrine  the  sum  of  prop- 
erty to  be  acquired  by  individuals  or  by  corporations,  the 
contracts  which  they  may  make,  would  be  within  the  regulat- 
ing power  of  Congress.  If  it  were  judged  by  Congress  that 
the  farmer  in  sowing  his  crops  should  be  limited  to  a  certain 
production  because  overproduction  would  give  power  to 
affect  commerce,  Congress  could  regulate  that  subject.  If 
the  acquisition  of  a  large  amount  of  property  by  an  individ- 
ual was  deemed  by  Congress  to  confer  upon  him  the  power  to 
affect  interstate  commerce  if  he  engaged  in  it.  Congress  could 
regulate  that  subject.  If  the  wage-earner  organized  to  better 
his  condition  and  Congress  believed  that  the  existence  of 
such  organization  would  give  power,  if  it  were  exerted, 
to  affect  interstate  commerce,  Congress  could  forbid  the 
organization  of  all  labor  associations.  Indeed,  the  doctrine 
must  in  reason  lead  to  a  concession  of  the  right  in  Congress  to 
regulate  concerning  the  aptitude,  the  character  and  capacity 
of  persons.  If  individuals  were  deemed  by  Congress  to  be 
possessed  of  such  ability  that  participation  in  the  manage- 
ment of  two  great  competing  railroad  enterprises  would  endow 
them  with  the  power  to  injuriously  affect  interstate  commerce, 
Congress  could  forbid  such  participation.  If  the  principle 
were  adopted,  and  the  power  which  would  arise  from  so 
doing  were  exercised,  the  result  would  be  not  only  to  destroy 
the  state  and  Federal  governments,  but  by  the  implication 
of  authority,  from  which  the  destruction  would  be  brought 


520 


193  UNITED  STATES  REPOBTS,  397. 


White,  J.,  The  Chief  Justice.  Peckhani,  Holmes.  JX.  dissenting, 
about,  there  would  be  ei^ted  upon  the  ruins  of  both  a  gov- 
ernment endowed  with  the  arbitrary  power  to  disregard  the 
great  guaranty  of  life,  liberty  and  property  and  every  other 
safeguard  upon  which  organized  civil  society  depends.    I 
say  the  guaranty,  because  in  my  opinion  the  three  are  indis- 
solubly  united,  and  one  cannot  be  destroyed  without  the  other. 
Of  course,  to  push  propositions  to  the  extreme  to  which  they 
naturally  lead  is  often  an  unsafe  guide.    But  at  the  same 
time  the  conviction  cannot  be  escaped  by  me  that  principles 
and  conduct  bear  a  relation  one  to  the  other,  especially  in 
matters  of  public  concern.    The  fathers  [398]  founded  our 
government  upon  an  enduring  basis  of  right,  principle  and 
of  limitation  of  power.    Destroy  the  principles  and  the  limi- 
tations which  they  impose,  and  I  am  unable  to  say  that  con- 
duct  may  not,  when  unrestrained,  give  rise  to  action  doing 
violence  to  the  great  truths  which  the  destroyed  principles 
embodied. 

The  fallacy  of  all  the  contentions  of  the  Government  is,  to 
mj  mind,  illustrated  by  the  summing  up  of  the  case  for  the 
Government  made  in  the  argument  at  bar.    The  right  to  ac- 
quire and  own  the  stock  of  competing  railroads  involves,  says 
that  summing  up,  the  power  of  an  individual  "  to  do  "  (italics 
mine)  absolutely  as  he  pleases  with  his  own,  whilst  the  claim 
of  the  Government  is  that  the  right  of  the  owner  of  prop- 
erty "  to  do  "  (italics  mine)  as  he  pleases  with  his  own  may 
be  controlled  in  the  public  interest  by  legitimate  legislation. 
But  the  case  mvolves  the  right  to  acfidre  and  own,  not  the 
light  "  to  do  "  (italics  mine).    Confusing  the  two  givas  rise 
to  the  errors  which  it  has  been  my  endeavor  to  point  out 
Undoubtedly  the  States  possess  power  over  corporations, 
created  by  them,  to  permit  or  forbid  consolidation,  whether 
accomplished  by  stock  ownership  or  otherwise,  to  forbid  on© 
corporation  from  holding  stock  in  another,  and  to  impose  on 
this  or  other  subjects  such  regulations  as  may  be  deemed  best. 
Generally  speaking,  however,  the  right  to  do  these  things 
springs  alone  from  the  fact  that  the  corporation  is  created  by 
the  States,  and  holds  its  rights  subject  to  the  conditions  at- 
tached to  the  grant,  or  to  such  regulations  as  the  creator,  the 
State,  may  lawfully  impose  upon  its  creature,  the  corporation. 
Moreover,  irrespective  of  the  relation  of  creator  and  crea- 


NOBTHERN   SECURITIES   CO.   V.   UNITED   STATES.       521 


ii'. 


% 


White,  J.,  The  Chief  Justice,  Peckham,  Holmes,  JJ.,  dissenting. 

ture,  it  is,  of  course,  true  in  a  general  sense  that  government 
possesses  the  authority  to  regulate,  within  certain  just  limits, 
what  an  owner  may  do  with  his  property.  But  the  first 
power  which  arises  from  the  authority  of  a  grantor  to  exact 
conditions  in  making  a  grant  or  to  regulate  the  conduct  of 
the  grantee  gives  no  sanction  to  the  proposition  that  a  gov- 
ernment, irrespective  of  its  power  to  grant,  has  the  general 
authority  to  [399]  limit  the  character  and  quantity  of  prop- 
erty which  may  be  acquired  and  owned.  And  the  second 
power,  the  general  governmental  one,  to  reasonably  control 
the  use  of  property,  affords  no  foundation  for  the  proposi- 
tion that  there  exists  in  government  a  power  to  limit  the 
quantity  and  character  of  property  which  may  be  acquired 
and  owned.  The  difference  between  the  two  is  that  which 
exists  between  a  free  and  constitutional  government  re- 
strained by  law  and  an  absolute  government  unrestrained  by 
any  of  the  principles  which  are  necessary  for  the  perpetu- 
ation of  society  and  the  protection  of  life,  liberty  and 
property. 

It  cannot  be  denied  that  the  sum  of  all  just  governmental 
power  was  enjoyed  by  the  States  and  the  people  before  the 
Constitution  of  the  United  States  was  formed.  None  of  that 
power  was  abridged  by  that  instrument  except  as  restrained 
by  constitutional  safeguards,  and  hence  none  was  lost  by  the 
adoption  of  the  Constitution.  The  Constitution,  whilst  dis- 
tributing the  preexisting  authority,  preserved  it  all.  With 
the  full  power  of  the  States  over  corporations  created  by 
them  and  with  their  authority  in  respect  to  local  legislation, 
and  with  power  in  Congress  over  interstate  conmierce  carried 
to  its  fullest  degree,  I  cannot  conceive  that  if  these  powers, 
admittedly  possessed  by  both,  be  fully  exerted  a  remedy  can- 
not be  provided  fully  adequate  to  suppress  evils  which  may 
arise  from  combinations  deemed  to  be  injurious.  This  must 
be  true  unless  it  be  concluded  that  by  the  effect  of  the  mere 
distribution  of  power  made  by  the  Constitution  partial  im- 
potency  of  governmental  authority  has  resulted.  But  if  this 
be  conceded,  arguendo,  the  Constitution  itself  has  pointed 
out  the  method  by  which,  if  changes  are  needed,  they  may  be 
brought  about.  No  remedy,  in  my  opinion,  for  any  supposed 
or  real  infirmity  can  be  afforded  by  disregarding  the  Con- 


522 


193  UNITED  STATES  BEPOKTS,  399. 


White.  J..  Tlie  Chief  Justice,  Peckham,  Holmes,  JJ.,  dissenting, 
stitution,  by  destroying  the  lines  which  separate  state  and 
Federal  anthority,  and  by  implying  the  existence  of  a  power 
which  is  repugnant  to  all  those  fundamental  rights  of  life, 
.  liberty  and  property,  upon  which  just  government  must 
rest. 

[400]  If,  however,  the  question  of  the  power  of  Congress 
be  conceded,  and  the  assumption  as  to  the  meaning  of  the 
Anti-Trust  Act  which  has  been  indulged  in  for  the  purpose 
of  considering  that  power  be  put  out  of  view,  it  would  yet 
remain  to  be  determined  whether  the  Anti-Trust  Act  em- 
braced the  acquisition  and  ownership  of  the  stock  in  ques- 
tion by  the  Northern  Securities  Company.     It  is  unnecessary 
for  me,  however,  to  state  the  reasons  which  have  led  me  to 
the  conclusion  that  the  act,  when  properly  interpreted,  does 
not  embrace  the  acquisition  and  ownership  of  such  stock, 
since  that  subject  is  considered  in  an  opinion  of  Mr.  Justice 
Holmes,  which  explains  the  true  interpretation  of  the  statute, 
as  it  IS  understood  by  me,  more  clearly  that  I  would  be  able 
to  do.  ^ 

Being  of  the  opinion,  for  the  reasons  heretofore  given,  that 
Congress  was  without  power  to  regulate  the  acquisition  and 
ownership  of  the  stock  in  question  by  the  Northern  Securities 
Comijany,  and  because  I  think  even  if  there  were  such  power 
in  Congress,  it  has  not  been  exercised  bv  the  .Inti-Trust  Act 
as  is  shown  in  the  opinion  of  Mr.  Justice  Holmes,  I  dissent! 

I  am  authorized  to  say  that  the  Chief  Justice,  Mr.  Jus- 
tice Peckham  and  Mr.  Justice  Holmes,  concur  in  this 
dissent. 

Mr.  Justice  Holmes,  with  whom  concurred  the  Chiei' 
Justice,  Mr.  Justice  White,  and  Mr.  Justice  Peckham, 
dissenting.  ' 

I  am  unable  to  agree  with  the  judgment  of  the  majority 
of  the  court,  and  although  I  think  it  useless  and  undesirable, 
as  a  rule,  to  express  dissent,  I  feel  bound  to  do  so  in  this  case 
and  to  give  my  reasons  for  it. 

Great  cases  like  hard  cases  make  bad  law.  For  great  cases 
are  called  great,  not  by  reason  of  their  real  importance  in 
shaping  the  law  of  the  future,  but  because  of  some  accident  of 
immediate  overwhelming  interest  which  appeals  to  the  feel- 


NOBTHEBN   SECURITIES   CO.   V.   UNITED   STATES.       523 
White,  J.,  The  Chief  Justice,  Peckham,  Holmes,  JJ.,  dissenting. 

ings  and  distorts  the  judgment.  These  immediate  interests 
[401]  exercise  a  kind  of  hydraulic  pressure  which  makes 
what  previously  was  clear  seem  doubtful,  and  before  which 
even  well  settled  principles  of  law  will  bend.  What  we  have 
to  do  in  this  case  is  to  find  the  meaning  of  some  not  very 
difficult  words.  We  must  try,  I  have  tried,  to  do  it  with  the 
same  freedom  of  natural  and  spontaneous  interpretation  that 
one  would  be  sure  of  if  the  same  question  arose  upon  an 
indictment  for  a  similar  act  which  excited  no  public  atten- 
tion, and  was  of  importance  only  to  a  prisoner  before  the 
court.  Furthermore,  while  at  times  judges  need  for  their 
work  the  training  of  economists  or  statesmen,  and  must  act 
in  view  of  their  foresight  of  consequences,  yet  when  their 
task  is  to  interpret  and  apply  the  words  of  a  statute,  their 
function  is  merely  academic  to  begin  with — to  read  English 
intelligently — and  a  consideration  of  consequences  comes  into 
play,  if  at  all,  only  when  the  meaning  of  the  words  used  is 
open  to  reasonable  doubt. 

The  question  to  be  decided  is  whether,  under  the  act  of 
July  2,  1890,  c.  047,  26  Stat.  209,  it  is  unlawful,  at  any  stage 
of  the  process,  if  several  men  unite  to  form  a  corporation 
for  the  purpose  of  buying  more  than  half  the  stock  of  each 
of  two  competing  interstate  railroad  companies,  if  they  form 
the  corporation,  and  the  corporation  buys  the  stock.  I  will 
suppose  further  that  every  step  is  taken,  from  the  beginning, 
with  the  single  intent  of  ending  competition  between  the 
companies.  I  make  this  addition  not  because  it  may  not  be 
and  is  not  disputed  but  be<;ause,  as  I  shall  try  to  show,  it  is 
totally  unimportant  under  any  part  of  the  statute  with  which 
we  have  to  deal 

The  statute  of  which  we  have  to  find  the  meaning  is  a 
criminal  statute.  The  two  sections  on  which  the  Govern- 
ment relies  both  make  certain  acts  crimes.  That  is  their 
immediate  purpose  and  that  is  what  they  say.  It  is  vain 
to  insist  that  this  is  not  a  criminal  proceeding.  The  words 
cannot  be  read  one  way  in  a  suit  which  is  to  end  in  fine  and 
imprisonment  and  another  way  in  one  which  seeks  an  in- 
junction. The  construction  which  is  adopted  in  this  case 
must  be  adopted  in  one  [402]  of  the  other  sort.  I  am  no 
friend  of  artificial  interpretations  because  a  statute  is  of  one 


524 


193  UNITED  STATES  BEPORTS,  402. 


Wbite,  J.,  The  Chief  Justice.  Peckham,  Hohnes,  JJ..  dissenting, 
kind  rather  than  another,  but  all  agree  that  before  a  statute 
IS  to  be  taken  to  punish  that  which  always  has  been  lawful 
it  must  express  its  intent  in  clear  words.  So  I  say  we  must 
read  the  words  before  us  as  if  the  question  were  whether 
two  small  exporting  grocers  should  go  to  jail. 

Again  the  statute  is  of  a  very  sweeping  and  general  char- 
acter. It  hits  "  every  "  contract  or  combination  of  the  pro- 
hibited sort,  great  or  small,  and  "  every  "  person  who  shall 
monopolize  or  attempt  to  monopolize,  in  the  sense  of  the  act, 
**any  part"  of  the  trade  or  commerce  among  the  several 
States.  There  is  a  natural  inclination  to  assume  that  it  was 
directed  against  certain  great  combinations  and  to  read  it  in 
that  light.  It  does  not  say  so.  On  the  contrary,  it  says 
*'  every,"  and  "  any  part."  Still  less  was  it  directed  speciaUy 
agamst  railroads.  There  even  was  a  reasonable  doubt 
whether  it  included  railroads  until  the  point  was  decided  by 
this  court. 

Finally,  the  statute  must  be  construed  in  such  a  way  as 
not  merely  to  save  its  constitutionality  but,  so  far  as  is  con- 
sistent with  a  fair  interpretation,  not  to  raise  grave  doubts 
on  that  score.    I  assume,  for  the  purposes  of  discussion, 
although  it  would  be  a  great  and  serious  step  to  take,  that  in 
some  case  that  seemed  to  it  to  need  heroic  measures,  Congreas 
might  regulate  not  only  commerce,  but  instruments  of  com- 
merce or  contracts  the  bearing  of  which  upon  commerce 
would  be  only  indirect.    But  it  is  clear  that  the  mere  fact  of 
an  indirect  effect  upon  commerce  not  shown  to  be  certain  and 
wry  gi-eat,  would  not  justify  such  a  law.    The  point  decided 
in  United  States  v.  E.  C,  Knight  Co,,  156  U.  S.  1,  17,  was 
that  "  the  fact  that  trade  or  commerce  might  be  indirectly 
affected  was  not  enough  to  entitle  complainants  to  a  decree." 
Commerce  depends  upon  population,  but  Congress  could  not, 
on  that  ground,  undertake  to  regulate  marriage  and  divorce. 
If  the  act  before  us  is  to  be  carried  out  according  to  what 
seems  to  me  the  logic  of  the  argument  for  the  Government, 
which  I  do  [403]  not  believe  that  it  will  be,  I  can  see  no 
part  of  the  conduct  of  life  with  which  on  shnilar  principles 
Congress  might  not  interfere. 

This  act  is  construed  by  the  Government  to  affect  the  pur- 
chasers of  shares  in  two  railroad  companies  because  of  the 


NORTHERN   SECURITIES   CO.    V.   UNITED   STATES.       525 
White,  J.,  The  Chief  Justice,  Peckham,  Holmes,  JJ.,  dissenting. 

effect  it  may  have,  or,  if  you  like,  is  certain  to  have,  upon  the 
competition  of  these  roads.  If  such  a  remote  result  of  the 
exercise  of  an  ordinary  incident  of  property  and  personal 
freedom  is  enough  to  make  that  exercise  unlawful,  there  is 
hardly  any  transaction  concerning  commerce  between  the 
States  that  may  not  be  made  a  crime  by  the  finding  of  a  jury 
or  a  court.  The  personal  ascendency  of  one  man  may  be 
such  that  it  would  give  to  his  advice  the  effect  of  a  command, 
if  he  owned  but  a  single  share  in  each  road.  The  tendency 
of  his  presence  in  the  stockholdersV  meetings  might  t>e  certain 
to  prevent  competition,  and  thus  his  advice,  if  not  his  mere 
existence,  become  a  crime. 

I  state  these  general  considerations  as  matters  which  I 
should  have  to  take  into  account  before  I  could  agree  to 
affirm  the  decree  appealed  from,  but  I  do  not  need  them  for 
my  own  opinion,  because  when  I  read  the  act  I  cannot  feel 
sufficient  doubt  as  to  the  meaning  of  the  words  to  need  to  for- 
tify jny  conclusion  by  any  generalities.  Their  meaning 
seems  to  me  plain  on  their  face. 

The  first  section  makes  "  Every  contract,  combination  in 
the  form  of  trust  or  otherwise,  or  conspiracy  in  restraint  of 
trade  or  commerce  among  the  several  States,  or  with  foreign 
nations"  a  misdemeanor,  punishable  by  fine,  imprisonment 
or  both.  Much  trouble  is  made  by  substituting  other  phrases 
assumed  to  be  equivalent,  which  then  are  reasoned  from  as 
if  they  were  in.  the  act.  The  court  below  argued  as  if  main- 
taining competition  were  the  expressed  object  of  the  act. 
The  act  says  nothing  about  competition.  I  stick  to  the 
exact  words  used.  The  words  hit  two  classes  of  cases,  and 
only  two— Contracts  in  restraint  of  trade  and  combinations 
or  conspiracies  in  restraint  of  trade,  and  we  have  to  consider 
what  [404]  these  respectively  are.  Contracts  in  restraint 
of  trade  are  dealt  with  and  defined  by  the  common  law. 
They  are  contracts  with  a  stranger  to  the  contractor's  busi- 
ness, (although  in  some  cases  carrying  on  a  similar  one,) 
which  wholly  or  partially  restrict  the  freedom  of  the  con- 
tractor in  carrying  on  that  business  as  otherwise  he  would. 
The  objection  of  the  common  law  to  them  was  primarily  on 
the  contractor's  own  account.    The  notion  of  monopoly  did 


526 


193  UKITED  STATES  BEPOKTS,  401. 


White,  J.,  The  Chief  Justice.  Pedtham,  Holmes,  JJ.,  dissenting. 

not  come  in  unless  the  contract  covered  the  whole  of  Eng- 
land. Mitchel  V.  Reynolds,  1  P.  Wms.  181.  Of  course  this 
objection  did  not  apply  to  partnerships  or  other  forms,  if 
there  were  any,  of  substituting  a  community  of  interest 
where  there  had  been  competition.  There  was  no  objection 
to  such  combinations  merely  as  in  restraint  of  trade,  or 
otherwise  unless  they  amounted  to  a  monopoly.  Contracts 
in  restraint  of  trade,  I  repeat,  were  contracts  with  strangers 
to  the  contractor's  business,  and  the  trade  restrained  was 
the  contractor's  own. 

Combinations  or  conspiracies  in  restraint  of  trade,  on  the 
other  hand,  were  combinations  to  keep  strangers  to  the  agree- 
ment out  of  the  business.  The  objection  to  them  was  not  an 
objection  to  their  effect  upon  the  parties  making  the  con- 
tract, the  members  of  the  combination  or  firm,  but  an  objec- 
tion to  their  intended  effect  upon  strangers  to  the  firm  and 
their  supposed  consequent  effect  upon  the  public  at  large. 
In  other  words,  they  were  regarded  as  contrary  to  public 
policy  because  they  monopolized  or  attempted  to  monopolize 
some  portion  of  the  trade  or  commerce  of  the  realm.  See 
United  States  v.  E,  C.  Knight  Co,,  156  U.  S.  1.  All  that  is 
added  to  the  first  section  by  §  2  is  that  like  penalties  are  im- 
posed upon  every  single  person  who,  without  combination, 
monopolizes  or  attempts  to  monopolize  commerce  among  the 
States;  and  that  the  liability  is  extended  to  attempting  to 
monopolize  any  part  of  such  trade  or  commerce.  It  is 
more  important  as  an  aid  to  the  construction  of  §  1  than  it 
is  on  its  owm  account.  It  shows  that  whatever  is  criminal 
when  done  by  Way  of  combination  is  equally  criminal  if 
done  by  a  single  man.  That  I  am  right  in  my  interpreta- 
tion [405]  of  the  words  of  §  1  is  shown  by  the  words  "  in 
the  form  of  trust  or  otherwise."  The  prohibition  was  sug- 
gested by  the  trusts,  the  objection  to  which,  as  every  one 
knows,  was  not  the  union  of  former  competitors,  but  the 
sinister  power  exercised  or  supposed  to  be  exercised  by  the 
combination  in  keeping  rivals  out  of  the  business  and  ruin- 
ing those  who  already  were  in.  It  was  the  ferocious  extreme 
of  competition  with  others,  not  the  cessation  of  competition 
among  the  partners,  that  was  the  evil  feared.    Further  proof 


NOBTHEBN  SECUBITIES   CO.   V,   UNITED   STATES.       527 
White,  J.,  The  Chief  Justice,  Peclvham,  Holmes,  JJ.,  dissenting. 

is  to  be  found  in  §  7,  giving  an  action  to  any  person  injured 
in  his  business  or  property  by  the  forbidden  conduct.  This 
cannot  refer  to  the  parties  to  the  agreement  and  plainly 
means  that  outsiders  who  are  injured  in  their  attempt  to 
compete  with  a  trust  or  other  similar  combination  may  re- 
cover for  it.  Montague  &  Co,  v.  Low^y,  193  U.  S.  38.  How 
effective  the  section  may  be  or  how  far  it  goes,  is  not  material 
to  my  point.  My  general  summary  of  the  two  classes  of 
cases  which  the  act  affects  is  confirmed  by  the  title,  which  is 
"  An  Act  to  protect  Trade  and  Commerce  against  unlawful 
Restraints  and  Monopolies." 

What  I  now  ask  is  under  which  of  the  foregoing  classes 
this  case  is  supposed  to  come,  and  that  question  must  be 
answered  as  definitely  and  precisely  as  if  we  were  dealing 
with  the  indictments  which  logically  ought  to  follow  this 
decision.    The  provision  of  the  statute  against  contracts  in 
restraint  of  trade  has  been  held  to  apply  to  contracts  be- 
tween railroads,  otherwise  remaining  independent,  by  which 
they  restricted  their  respective  freedom  as  to  rates.    This 
restriction  by  contract  with  a  stranger  to  the  contractor's 
business  is  the  ground  of  the  decision  in  United  States  v. 
Joint  Trafjic  Association,  171  U.  S.  505,  following  and  affirm- 
ing United  States  v.  Trans-Missouri  Freight  Association,  166 
U.  S.  290.     I  accept  those  decisions  absolutely,  not  only  as 
binding  upon  me,  but  as  decisions  which  I  have  no  desire  to 
criticise  or  abridge.     But  the  provision  has  not  been  de- 
cided, and,  it  seems  to  me,  could  not  be  decided  without  per- 
version of  plain  language,  to  apply  to  an  arrangement  by 
which  competition  is  ended  through  com-  [406]  munity  of 
interest— an  arrangement  which  leaves  the  parties  without 
external  restriction.    That  provision,  taken  alone,  does  not 
require  that  all  existing  competitions  shall  be  maintained. 
It  does  not  look  primarily,  if  at  all,  to  competition.    It 
simply  requires  that  a  party's  freedom  in  trade  between  the 
States  shall  not  be  cut  down  by  contract  with  a  stranger. 
So  far  as  that  phrase  goes,  it  is  lawful  to  abolish  competition 
by  any  form  of  union.    It  would  seem  to  me  impossible  to 
say  that  the  words  "  every  contract  in  restraint  of  trade  is 
a  crime  punishable  with  imprisonment,"  would  send  the  mem- 


528 


193  UNITED   STATES   REPORTS,  406. 


White,  J.,  The  Chief  Justice,  Peckham,  Holmes,  JJ.,  dissenting. 

bers  of  a  partnership  between,  or  a  consolidation  of,  two 
trading  corporations  to  prison— still  more  impossible  to  say 
that  it  forbade  one  man  or  corporation  to  purchase  as  much 
stock  as  he  liked  in  both.  Yet  those  words  would  have  that 
effect  if  this  clause  of  §  1  applies  to  the  defendants  here. 
For  it  cannot  be  too  carefully  remembered  that  that  clause 
applies  to  "  every  "  contract  of  the  forbidden  kind — a  con- 
sideration which  was  the  turning  point  of  the  Trans-Missouri 
Freight  Association's  case. 

If  the  statute  applies  to  this  case  it  must  be  because  the 
parties,  or  some  of  them,  have  formed,  or  because  the  North- 
ern Securities  Company  is,  a  combination  in  restraint  of 
trade  among  the  States,  or,  what  comes  to  the  same  thing  in 
my  opinion,  because  the  defendants,  or  some  or  one  of  them, 
ire  monopolizing  or  attempting  to  monopolize  some  part 
of  the  commerce  between  the  States.  But  the  mere  reading 
of  those  words  shows  that  they  are  used  in  a  limited  and 
accurate  sense.  According  to  popular  speech,  every  concern 
monopolizes  whatever  business  it  does,  and  if  that  business 
is  trade  between  two  States  it  monopolizes  a  part  of  the  trade 
among  the  States.  Of  course  the  statute  does  not  forbid  that. 
It  does  not  mean  that  all  business  must  cease.  A  single  rail- 
road down  a  narrow  valley  or  through  a  mountain  gorge  mo- 
nopolizes all  the  railroad  transportation  through  that  valley 
or  gorge.  Indeed  every  railroad  monopolizes,  in  a  popular 
sense,  the  trade  of  some  area.  Yet  I  suppose  no  one  would 
say  that  [407]  the  statute  forbids  a  combination  of  men 
into  a  corporation  to  build  and  run  such  a  railroad  between 
the  States. 

I  assume  that  the  Minnesota  charter  of  the  Great  Northern 
and  the  Wisconsin  charter  of  the  Northern  Pacific  both  are 
valid.  Suppose  that,  before  either  road  was  built,  Minnesota, 
as  part  of  a  system  of  transportation  between  the  States,  had 
created  a  railroad  company  authorized  singly  to  build  all  the 
lines  in  the  States  now  actually  built,  owned  or  controlled  by 
either  of  the  two  existing  companie&  I  take  it  that  that 
charter  would  have  been  just  as  good  as  the  present  one,  even 
if  the  statutes  which  we  are  considering  had  been  in  force. 
In  whatever  sense  it  would  hive  areated  a  monopoly  the  pres- 


NORTHERN   Sl!.CURITIES    CO.   V.   UNITED   STATES.       529 
White,  J.,  The  Chief  Justice,  Peclcham,  Holmes,  JJ.,  dissenting. 

ent  charter  does.  It  would  have  been  a  large  one,  but  the  act 
of  Congress  makes  no  discrimination  according  to  size.  Size 
has  nothing  to  do  with  the  matter.  A  monopoly  of  "  any 
part "  of  commerce  among  the  States  is  unlawful.  The  sup- 
posed company  would  have  owned  lines  that  might  have  been 
competing— probably  the  present  one  does.  But  the  act  of 
Congress  will  not  be  construed  to  mean  the  universal  disinte- 
gration of  society  into  single  men,  each  at  war  with  all  the 
rest,  or  even  the  prevention  of  all  further  combinations  for  a 
common  end. 

There  is  a  natural  feeling  that  somehow  or  other  the  statute 
meant  to  strike  at  combinations  great  enough  to  cause  just 
anxiety  on  the  part  of  those  who  love  their  country  more  than 
money,  while  it  viewed  such  little  ones  as  I  have  supposed 
with  just  indifference.    This  notion,  it  may  be  said,  somehow 
breathes  from  the  pores  of  the  act,  although  it  seems  to  be 
contradicted  in  every  way  by  the  words  in  detail.    And  it  has 
occurred  to  me  that  it  might  be  that  when  a  combination 
reached  a  certain  size  it  might  have  attributed  to  it  more  of 
the  character  of  a  monopoly  merely  by  virtue  of  its  size  than 
would  be  attributed  to  a  smaller  one.    I  am  quite  clear  that 
it  is  only  in  connection  with  monopolies  that  size  could  play 
any  part.    But  my  answer  has  been  indicated  already.    In 
the  first  place  size  in  the  case  of  railroads  is  an  inevitable 
incident  and  if  it  were  an  [408]  objection  under  the  act,  the 
Great  Northern  and  the  Northern  Pacific  already  were  too 
great  and  encountered  the  law.    In  the  next  place  in  the  case 
of  railroads  it  is  evident  that  the  size  of  the  combination  is 
reached  for  other  ends  than  those  which  would  make  them 
monopolies.     The  combinations  are  not  formed  for  the  pur- 
pose of  excluding  others  from  the  field.    Finally,  even  a 
small  railroad  will  have  the  same  tendency  to  exclude  others 
from  its  narrow  area  that  great  ones  have  to  exclude  others 
from  a  greater  one,  and  the  statute  attacks  the  small  monopo- 
lies as  well  as  the  great.    The  very  words  of  the  act  make 
such  a  distinction  impossible  in  this  case  and  it  has  not  been 
attempted  in  express  terms. 
If  the  charter  which  I  have  imagined  above  would  have 

21220— VOL  2—07  M 34 


530 


11)3   UNITED   STATES   REPORTS,  408. 


White,  J.,  The  Chief  Justice,  Peckham,  HolmeB,  JJ.,  dissentlug. 

been  good  notwithstanding  the  monopoly, in  a  popular  sense, 
which  it  created,  one  next  is  led  to  ask  whether  and  why  a 
combination  or  consolidation  of  existing  roads,  although  in 
actual  competition,  into  one  company  of  exactly  the  same 
powers  and  extent,  would  be  any  more  obnoxious  to  the  law. 
Although  it  was  decided  in  LouumlU  c§  Nashville  Railroad 
Co.  V.  Kentucky^  161  U.  S.  677,  701,  that  since  the  statute,  as 
before,  the  States  have  the  power  to  regulate  the  matter,  it 
was  said,  in  the  argimient,  that  such  a  consolidation  would  be 
unlawful,  and  it  seems  to  me  that  the  Attorney  Genenil  was 
compelled  to  say  so  in  order  to  maintain  his  case.    But  I 
think  that  logic  would  not  let  him  stop  there,  or  short  of  de- 
nying the  power  of  a  State  at  the  present  time  to  authorize 
one  company  to  construct  and  own  two  parallel  lines  that 
might  compete.    The  monopoly  would  be  the  same  as  if  the 
roads  were  consolidated  after  they  had  begun  to  compete — 
and  it  is  on  the  footing  of  monopoly  that  I  now  am  supposing 
the  objection  made.    But  to  meet  the  objection  to  the  preven- 
tion of  competition  at  the  same  time,  I  will  suppose  that  three 
parties  apply  to  a  State  for  charters ;  one  for  each  of  two  new 
and  possibly  competing  lines  respectively,  and  one  for  both 
of  these  lines,  and  that  the  charter  is  granted  to  the  last.    I 
think  that  charter  would  be  good,  and  I  think  the  whole 
argument  to  the  contrary  rests  [409]  on  a  popular  instead  of 
an  accurate  and  legal  conception  of  what  the  word  "  monopo- 
lize" in  the  statute  means.    I  repeat,  that  in  my  opinion 
there  is  no  attempt  to  monopolize,  and  what,  as  I  have  said, 
in  my  judgment  amounts  to  the  same  thing,  that  there  is  no 
combination  in  restraint  of  trade,  until  something  is  done 
with  the  intent  to  exclude  strangers  to  the  combination  from 
competing  with  it  in  some  part  of  the  business  which  it  car- 
ries on. 

Unless  I  am  entirely  wrong  in  my  understanding  of  what 
a  "  combination  in  restraint  of  trade  "  means,  then  the  same 
monopoly  may  be  attempted  and  effected  by  an  individual, 
and  is  made  equally  illegal  in  that  case  by  §  2.  But  I  do  not 
expect  to  hear  it  maintained  that  Mr.  Morgan  could  be  sent 
to  prison  for  buying  as  many  shares  as  he  liked  of  the  Great 
Northern  and  the  Northern  Pacific,  even  if  he  bought  them 


NORTHERN   SECURITIES    CO.    V.    UNITED   STATES.       531 
White,  J.,  The  Chief  Justice,  Peckham,  Holmes,  JJ.,  dissenting. 

both  at  the  same  time  and  got  more  than  half  the  stock  of 
each  road. 

There  is  much  that  was  mentioned  in  argument  which  I 
pass  by.     But  in  view  of  the  great  importance  attached  by 
both  sides  to  the  supposed  attempt  to  suppress  competition,  I 
must  say  a  word  more  about  that.    I  said  at  ih^  outset  that  T 
should  assume,  and  I  do  assume,  that  one  purpose  of  the  pur- 
chase was  to  suppress  competition  between  the  two  roads.     I 
appreciate  the  force  of  the  argument  that  there  are  independ- 
ent stockholders  in  each ;  that  it  cannot  be  presumed  that  the 
respective  boards  of  directors  will  propose  any  illegal  act; 
that  if  they  should  they  could  be  restrained,  and  that  all  that 
has  been  done  as  yet  is  too  remote  from  the  illegal  result  to 
be  classed  even  as  an  attempt.     Not  every  act  done  in  further- 
ance of  an  unlawful  end  is  an  attempt  or  contrary  to  the  law. 
There  must  be  a  certain  nearness  to  the  result.     It  is  a  ques- 
tion of  proximity  and  degree.     Commonwealth  v,  Peaslee, 
177  Massachusetts,  267,  272.     So,  as  I  have  said,  is  the  amena- 
bility of  acts  in  furtherance  of  interference  with  commerce 
among  the  States  to  legislation  by  Congress.     So,  according 
to  the  intimation  of  this  court,  is  the  question  of  liability 
under  the  present  stat-  [410]  ute.    Hopkins  v.  United  States, 
171  U.  S.  578;   Anderson  v.  United  States^  171,  U.  S.  604. 
But  I  assume  further,  for  the  purposes  of  discussion,  that 
what  has  been  done  is  near  enough  to  the  result  to  fall  under 
the  law,  if  the  law  prohibits  that  result,  although  that  as- 
sumption very  nearly  if  not  quite  contradicts  the  decision  in 
United  States  v.  E\  C,  Knight  Co.,  156  U,  S.  1.     But  I  say 
that  the  law  does  not  prohibit  the  result.     If  it  does  it  must 
be  because  there  is  some  further  mining  than  I  have  yet  dis- 
covered in  the  words  "  combinations  in  restraint  of  trade." 
I  think  that  I  have  exhausted  the  meaning  of  those  words  in 
what  I  already  have  said.     But  they  certainly  do  not  re- 
quire all  existing  competitions  to  be\ept  on  foot,  and,  on 
the  principle  of  the  Trans-Missouri  Freight  Association's 
case,  invalidate  the  continuance  of  old  contracts  by  which 
former  competitors  united  in  the  past. 

A  partnership  is  not  a  contract  or  combination  in  restraint 
of  trade  between  the  partners  unless  the  well  known  words 


tioZ 


193  UNITED   STATES   REPOETS,  410. 


Wliite,  J.,  The  Chief  Justic-e,  Peckham,  Holmes,  JJ.,  disseuting. 

are  to  be  given  a  new  meaning  invented  for  the  purposes  of 
this  act.  It  is  true  that  the  suppression  of  competition  was 
referred  to  in  United  States  v.  Trans- Missouri  Freight  As- 
sociatioit,  166  U.  S.  290,  but,  as  I  have  said,  that  was  in  con- 
nection with  a  contract  with  a  stranger  to  the  defendant's 
business — a  true  contract  in  restraint  of  trade.  To  suppress 
competition  in  that  way  is  one  thing,  to  suppress  it  by  fusion 
is  another.  The  law,  I  repeat,  says  nothing  about  competi- 
tion, and  only  prevents  its  suppression  by  contracts  or  combi- 
nations in  restraint  of  trade,  and  such  contracts  or  combina- 
tions derive  their  character  as  restraining  trade  from  other 
features  than  the  suppression  of  competition  alone.  To  see 
whether  I  am  wrong,  the  illustrations  put  in  the  argument 
are  of  use.  If  I  am,  then  a  partnership  between  two  stage 
drivers  who  had  been  competitors  in  driving  across  a  state 
line,  or  two  merchants  once  engaged  in  rival  commerce  among 
the  States  whether  made  after  or  before  the  act,  if  now  con- 
tinued, is  a  crime.  For,  again  I  repeat,  if  the  restraint  on  the 
freedom  of  the  members  of  a  combination  caused  bv  their 
entering  into  partnership  is  a  restraint  of  [411]  trade,  every 
such  combination,  as  well  the  small  as  the  great,  is  within 
the  act. 

In  view  of  my  interpretation  of  the  statute  I  do  not  go  fur- 
ther into  the  question  of  the  power  of  Congress.  That  has 
been  dealt  with  by  my  brother  White  and  I  concur  in  the 
main  with  his  views.  I  am  happy  to  know  that  only  a 
minority  of  my  brethren  adopt  an  interpretation  of  the  law 
which  in  my  opinion  would  make  eternal  the  helium  omnium 
emdra  omnes  and  disintegrate  society  so  far  as  it  could 
into  individual  atoms.  If  that  were  its  intent  I  should 
regard  calling  such  a  llfw  a  regulation  of  commerce  as  a 
mere  pretense.  It  would  be  an  attempt  to  reconstruct  society. 
I  am  not  concerned  with  the  wisdom  of  such  an  attempt,  but 
I  believe  that  Congress  w^as  not  entrusted  by  the  Constitution 
with  the  power  to  make  it  and  I  am  deeply  persuaded  that  it 
has  not  tried. 

I  am  authorized  to  sav  that  the  Chief  Justice,  Mr.  Jus- 
tice White  and  Mr.  Justice  Peckham  concur  in  this 
dissent. 


MINNESOTA   V.   NORTHERN   SECURITIES   CO.  533 

Syllabus. 

[48]    MINNESOTA  v,  NOKTHERN  SECURITIES 

COMPANY." 

appeal  from  the  circuit  court  of  the  united  states  for 

THE  district  OF   MINNESOTA. 
No.  433.     Argued  January  7,  8,  1904. — Decided  April  11,  1904. 

[194  U.  S.,  48.] 

Consent  of  parties  can  never  confer  jurisdiction  upon  a  Federal  court. 
If  the  record  does  not  affirmatively  show  jurisdiction  in  the  Cir- 
cuit Court,  this  court  niust,  upon  its  own  motion,  so  declare,  and 
make  such  order  as  will  prevent  the  Circuit  Court  from  exercising 
an  authority  not  conferred  upon  it  by  statute.* 

A  State  is  not  a  citizen  within  the  meaning  of  the  provisions  of  the 
Constitution  or  acts  of  Congress  regulating  the  jurisdiction  of 
the  Federal  courts. 

Under  existing  statutes  regulating  the  jurisdiction  of  the  courts  of 
the  United  States,  a  case  cannot  be  removed  from  a  state  court,  as 
one  arising  under  the  Constitution  or  laws  of  the  United  States 
unless  the  plaintiff's  complaint,  bill  or  declaration  shows  it  to  be  a 
case  of  that  character. 

While  an  allegation  in  a  complaint  filed  in  a  Circuit  Court  of  the 
United  States  may  confer  jurisdiction  to  determine  whether  the 
case  is  of  the  class  of  which  the  court  may  properly  take  cogni- 
zance for  purposes  of  a  final  decree  on  the  merits,  if,  notwithstand- 
ing such  allegation,  the  court  finds,  at  any  time,  that  the  case  does 
not  really  and  substantially  involve  a  dispute  or  controversy  within 
its  jurisdiction  then,  by  the  express  command  of  the  act  of  1875, 
its  duty  is  to  proceed  no  further.  And  if  the  suit,  as  disclosed  by 
the  complaint  could  not  have  been  brought  by  plaintiff  originally 
in  the  Circuit  Court,  then,  under  the  act  of  1887-1888  it  should  not 
have  been  removed  from  the  state  court  and  should  be  remanded. 

The  intention  of  the  Anti-Trust  Act  of  July  2,  1890,  26  Stat.  209,  was 
to  limit  direct  proceedings  in  equity  to  prevent  and  restrain  such 
violations  of  the  Anti-Trust  Act  as  cause  injury  to  the  general  pub- 
lie,  or  to  all  alike,  merely  from  the  suppression  of  competition  in 
trade  and  commerce  among  the  several  States  and  with  foreign  na- 
tions, to  those  instituted  in  the  name  of  the  United  States,  under  §  4 
of  the  act,  by  District  Attorneys  of  the  United  States,  acting  un- 
der the  direction  of  the  Attorney  General ;  thus  securing  the  enforce- 
ment of  the  act,  so  far  as  such  direct  proceedings  in  equity  are  con- 
cerned, according  to  some  uniform  plan,  operative  throughout  the 
entire  country. 

o  Decree  in  the  Circuit  Court  (123  Fed.,  692).     See  p.  246. 
6  Syllabus  and  abstracts  of  arguments  copyrighted,  1904,  by  The 
Banks  Law  Publishing  Co. 


534 


l»l  UNITED   STATES  BEPORTS,  48. 


Arpuneot  for  appellant 

A  State  eaiiiiot  maintain  an  action  in  equity  to  restrain  a  corporation 
from  violating  the  provisions  of  the  act  of  July  2,  1890.  on  tlie 
ground  that  such  violations  hy  decreasing  competition  would  depre- 
ciate the  value  of  its  public  lands  and  enhance  the  cost  of  maintain- 
ing its  public  Institutions,  the  damages  resulting  from  such  vio- 
lations being  remote  and  indirect  and  not  such  direct  actual  injury 
as  is  provided  for  In  |  7  of  the  act. 

[iJI]  Article  IV  of  the  Constitution  of  the  United  States  only  pre- 
scribes a  rule  by  which  courts,  Federal  and  state,  are  to  be 
guided  when  a  question  arises  in  the  progress  of  a  pending  suit  as 
to  the  faith  and  credit  to  be  given  by  the  court  to  the  public  acts, 
records,  and  judicial  proceedings  of  a  State,  other  than  that  in 
which  the  court  is  sitting.  It  has  nothing  to  do  with  the  conduct  of 
individuals  or  corporations^ 

The  facts  are  stated  in  the  opinion  of  the  court 

Mr,  Tf .  B.  Douglas^  Attorney  General  of  the  State  of  Min- 
nesota, and  Mr,  M,  D,  Munn,  with  whom  Mr,  (reorge  P,  WU- 
son  was  on  the  brief,  for  appellant : 

As  to  removal  to  and  jurisdiction  of  the  Circuit  Court: 

The  action  was  removed  on  the  joint  petition  of  all  the  de- 
fendants, on  the  ground  that  it  arose  under  the  Constitution 
and  laws  of  the  United  States,  and  that  the  right  upon  which 
it  was  based  and  on  which  a  recovery  by  plaintiff  depended, 
would  be  defeated  by  one  construction  of  the  Constitution  or 
said  laws,  and  sustained  by  an  opposite  construction.  Di- 
verse citizenship  did  not  form  a  basis  for  such  removal,  Pas- 
M  Telegraph  Cable  Go,  v.  Alabama,  155  U.  S.  482,  and  could 
not  rightfully  be  presented  as  a  ground  therefor. 

As  to  the  doing  of  business  by  the  Northern  Securities 
Company  within  Minnesota  and  attempt  to  vacate  service  of 
summons,  see  Goldey  v.  Morning  News  Co,,  156  U.  S.  518; 
Wabash  Wesiem  Railway  v.  Brow,  164  U.  S.  271. 

The  Circuit  Court  has  jurisdiction  of  all  civil  actions  in 
part  arising  under  or  depending  upon  the  construction  of 
the  Constitution,  laws  or  treaties  of  the  United  States.  24 
Stat.  552;  25  Stat.  433;  Postal  Tel,  Cable  Co,  v.  Alabama. 
165  U.  S-  482;  Ames  v.  Kansas,  111  U.  S.  462;  GoUAVash- 
ing  and  Water  Co,  v.  Keyes,  96  U.  S.  203 ;  Shoshone  Mining 
Co,  V.  Rtitter,  177  U.  S.  507;  Cummings  v.  Chicago,  188  U.  S. 
410. 


MINNESOTA   V.   NORTHERN*  SECURITIES   CO. 
Argument  for  appellant. 


535 


Read  in  the  light  of  section  5  of  the  Court  of  Appeals 
Act — chap.  517  of  the  laws  of  1891 — it  is  equally  clear  that 
jurisdiction  is  assumed  to  exist  in  the  Circuit  Courts  and  an 
appeal  authorized  "  in  any  case  that  involves  the  construction 
or  application  of  the  Constitution  of  the  United  States." 

[50]  The  Supreme  Court  of  the  United  States  is  without 
original  jurisdiction  of  this  controversy.  Minnesota  v. 
Northern.  Securities  Co.,  184  U.  S.  199. 

Assuming  the  facts  to  be  as  stated  in  the  affidavit  of  the 
president  of  the  Securities  Company,  above  referred  to,  to 
the  effect  that  the  Securities  Companj^  is  not  the  owner  of 
any  property  situated  in  Minnesota  and  never  transacted  any 
business  therein,  the  courts  of  Minnesota  cannot  acquire  juris- 
diction to  hear  and  determine  the  issues  involved  herein,  a 
jurisdiction  over  the  person  of  the  Securities  Company  can- 
not be  obtained.  Pennoyer  v.  Neff,  95  U.  S.  714;  St,  Clair 
V.  Cox,  106  U.  S.  350;  Goldey  v.  Morning  News  Co.,  156 
U.  S.  518;  Barrow  Steamship  Co.  v.  Kane,  170  U.  S.  100; 
Cahanne  v.  Graf,  87  Minnesota,  510;  Conley  v.  Matlieson 
Alkely  Works,  190  U.  S.  406. 

The  Northern  Pacific  and  Great  Northern  Railway  com- 
panies are  necessary  parties  with  the  Securities  Company, 
and  being  residents  of  different  States  and  not  engaged  in 
doing  business  in  any  single  State,  jurisdiction  of  the  person 
of  all  the  defendants  cannot  be  obtained  elsewhere  than  in 
this  court,  in  which  the  Securities  Company  has  voluntarily 
appeared.  Minnesota  v.  Northern  Securities  Company, 
supra. 

Under  California  v.  Southeim  Pacific  Ry.  Co.,  157  U.  S. 
270,  and  Minnesota  v.  Northern  Securities  Co.,  unless  a  Fed- 
eral question  is  deemed  to  exist  in  this  record  which  gives 
to  the  Circuit  Court,  jurisdiction  over  the  subject  matter  of 
the  action,  under  our  dual  form  of  government,  a  State  will 
be  deprived  of  the  right  to  invoke  the  jurisdiction  of  any 
court  in  the  land  for  the  purpose  of  enforcing  its  laws  or 
protecting  its  proprietary  interests  from  unlawful  acts  done 
in  violation  of  the  laws  of  the  State  or  Nation. 

Two  Federal  questions  are  clearly  set  forth  in  appellant's 
bill  of  complaint.  Whether  the  State  to  protect  its  pro- 
prietary interests  had  a  cause  of  action  against  the  defend- 


536 


194  uniteA  states  reports,  50. 

Argument  for  appellant. 


ants  arising  in  part  under  the  Federal  Anti-Trust  Act; 
and  whether  the  state  Anti-Consolidation  and  Anti-Trust 
acts  (rightly  con-  [51]  strued)  had  been  violated.  This  pre- 
sents a  controversy  between  the  appellant  and  the  defendants, 
the  correct  determination  of  which  involves  or  depends  upon 
the  construction  and  the  application  of  the  commerce  clause 
as  well  as  Article  IV  of  the  Constitution  of  the  United  States. 

An  issue  was  tendered  in  which  the  appellant  alleged  the 
commission  of  certain  acts  by  the  defendants  which  were 
specifically  asserted  to  be  not  only  seriously  injurious  to  its 
proprietary  interest,  but  in  violation  of  the  Federal  Anti- 
Trust  Act,  and  the  learned  trial  court  in  its  decision  actually 
construed  the  act  adversely  to  one  contention  of  appellant 
and  this  construction  rendered  it  unnecessary  for  the  court 
to  construe  the  act  with  reference  to  the  other  questions  sub- 
mitted. In  this  portion  of  the  decree  the  court  construed  the 
act  as  excluding  the  appellant  from  invoking  equity  juris- 
diction for  its  enforcement.  Again,  upon  the  argument  in 
this  court  appellant's  contentions  upon  both  propositions  were 
strenuously  opposed  by  counsel  for  appellees. 

It  is  therefore  submitted  that  the  pending  controversy  is 
one  in  part "  arising  under  and  depending  upon  the  construc- 
tion of  the  laws  of  the  United  States."  Cases  cited  supra, 
and  Cummings  v.  Chicago,  188  U.  S.  410;  Defance  Water  Co. 
V.  Defiance,  191  U.  S.  184;  N.  P.  Railway  Co.  v.  Towmend, 
190  U.S.  270. 

The  test  as  to  jurisdiction  of  the  Circuit  Court  is  clearly 
stated  in  the  opinion  of  the  court  in  Gold-Washing  <&  Water 
Co,  y.  Keyes,  supra,  and  affirmed  in  the  case  of  Shoshone 
Mining  Co.  v.  Rntter,  supra,  see  p.  507 ;  Railroad  Compamj  v. 
Mississippi,  102  U.  S.  141 ;  Chapman  v.  Goodnow,  123  U.  S. 
540;  Kankatma  Co.  v.  Green  Bay  i&  Canal  Co.,  142  U.  S.  254, 
and  cases  cited ;  O'Neil  v.  Vermont,  144  U.  S.  323. 

If  this  construction  of  the  act  of  Congress  obtains  in  the 
application  of  the  rule  invoked,  it  is  clear  from  the  record 
that  the  State  has  suffered,  and  will  continue  from  year  to 
year  to  suffer,  damages  to  its  proprietary  interests  which  will 
be  difficult,  if  not  impossible,  to  measure,  running  into  mil- 
[521  lions  of  dollars.    Parker  v.  W.  L.  C.  (&  W.  Co.,  2  Black, 


MINNESOTA   V.   NORTHERN    SECURITIES   CO. 


537 


Argument  for  appellant. 

551,  and  cases  cited;  Clark  y.  Smith,  13  How.  194;  Pennsyl- 
vania V.  Wheeling  Bridge  Co.,  13  How.  518. 

Upon  the  proposition  that  a  State  may  sue  to  redress  in- 
juries which  are  strictly  analogous  to  those  suffered  by  pri- 
vate individuals,  see  United  States  v.  San  Jacinto  Tin  Co.^ 
125  U.  S.  273 ;  United  States  v.  Am.  Bell  Tel.  Co.,  128  U.  S. 
315,  317 ;  Missouri  v.  Illinois,  180  U.  S.  240 ;  Kansas  v.  Colo- 
rado, 185  U.  S.  125. 

The  violation  of  the  Minnesota  Anti-Consolidation  and 
Anti-Trust  Act,  rightfully  construed,  involves,  as  applied  to 
this  controversy,  the  construction  and  the  application,  of 
Article  IV  of  the.  Federal  Constitution,  as  well  as  the  com^ 
merce  clause.  For  history  of  the  clause,  see  Elliott's  De- 
bates, vol.  4,  123,  vol.  5,  487,  504. 

The  gravamen  of  the  charge  in  appellant's  complaint  is 
that  the  defendants  created  a  corporate  device  in  New  Jersey 
and  used  it  for  the  purpose  and  with  the  result  that  property 
rights  in  Minnesota  were  affected,  in  violation  of  its  laws. 
Our  contention  is  that  Article  IV  must  be  so  construed  as  to 
make  the  constitutional  enactments  of  Minnesota  effective 
throughout  the  United  States,  so  far  as  they  apply  to  and 
affect  property  rights  within  the  State.  Otherwise  the  pol- 
icy and  laws  of  any  State  may  be  easily  evaded. 

The  test  of  jurisdiction  must  necessarily  be  determined  by 
a  correct  answer  to  the  question:  What  issues  were  fairly 
tendered  for  determination  by  the  bill  of  complaint?  If  this 
be  not  the  test,  the  trial  court,  by  misconstruing  a  statute, 
has  the  power  to  eliminate  from  the  record  a  jurisdictional 
question  and  deprive  a  party  of  the  right  of  appeal. 

The  question  of  whether  or  not  the  case  was  properly  re- 
moved from  the  state  to  the  Federal  court,  is  in  itself  a  Fed- 
eral question.  Railroad  Company  v.  Koontz,  104  U.  S.  15. 
The  determination  of  this  question  in  itself  gives  the  right  of 
appeal  to  this  court  direct. 

The  case  having  been  appealed  to  this  court,  and  this 
court,  [63]  on  its  own  motion,  having  questioned  the  cor- 
rectness of  the  removal  from  the  state  to  the  Federal  court, 
that  establishes  the  jurisdiction  of  this  court  on  appeal 
over  the  entire  case  should  this  court  determine  that  the 


OtJO 


194  UNITED   STATES   REPORTS,  53. 


Argument  for  appellees. 
case  was  properly  removed  from  the  state  to  the  Federal 
court.    Oahley  v.  Goodnow,  118  U.  S.  44 ;  Scott  v.  Goodnow, 
165  U.  S.  58 ;  Garter  v.  Texas,  177  F.  S.  442. 

Mr.  John  G.  Johnson,  and  Mr,  George  B,  Young,  with 
whom  Mr.  M.  D.  Grover  and  Mr.  C.  W.  Bunn  were  on  the 
brief,  for  appellees; 

On  the  question  of  removal  to  and  jurisdiction  of  the  Cir- 
cuit Court: 

The  cause  was  properly  removed  to  the  Circuit  Court,  and 
upon  such  removal  that  court  acquired  jurisdiction  of  it  as  a 
"  suit  arising  under  the  Constitution  a^  laws  of  the  United 
States.^ 

As  to  the  test  of  such  a  suit  as  determined  by  Chief  Justice 
Marshall,  see  Oshom  v.  Bank,  9  Wheat  738,  822,  in  which  it 
was  held  that  a  cause  may  depend  upon  several  questions  of 
fact  and  law.    Some  of  these  may  depend  on  the  construction 
of  a  law  of  the  United  States,  others  on  principles  uncon- 
nected with  that  law.    If  it  be  a  sufficient  foundation  for 
jurisdiction  that  the  title  or  right  set  up  by  the  party  may  lie 
defeated  by  one  construction  of  the  Constitution  or  laws  of 
the  United  States  and  sustained  by  the  opposite  construction 
provided  the  facts  necessary  to  support  the  action  be  made 
out,  ihm  all  the  other  questions  must  be  decided  as  incidental 
to  this  which  gives  that  jurisdiction.    Under  this  construc- 
tion, the  judicial  power  of  the  United  States  extends  effect- 
ively and  beneficially  to  that  most  important  class  of  cases 
which  depends  on  the  character  of  the  cause.    See  also  Cohens 
V.  Virginia,  6  IrAlieat.  264,  379. 

The  following  cases  were  decided  under  the  act  of  1875 : 
G(M-W ashing  Co.  v.  Keyes,  96  U.  S.  199,  201;  Tennessee  v. 
Davis,  100  U.  S.  257,  264;  Railroad  Co.  v.  Mississippi,  102 
U.  S.  135, 140;  Ames  v.  Kansas,  111  U.  S.  449,  462;  Kansas 
[M]  Pacific  V.  Atchison  R.  R.,  112  U.  S.  414;  Pacific  Rail- 
road Removal  Cases,  115  U.  S.  1;  Starin  v.  New  York,  115 
U.  S.  248,  257;  Southern  Pacific  R.  Co.  v.  Calif ornhi,  118 
U.  S.  109, 112;  Metcalf  v.  Watertown,  128  U.  S.  5SQ;Shreve- 
port  V.  CoU,  129  U.  S.  36,  41 ;  Beck  v.  Perkins,  139  U.  S.  628. 
In  the  act  of  1887-8,  Congress  used  the  same  terms  as  in  the 


MINNESOTA   V.   NORTHERN    SECURITIES   €0. 


539 


Argument  for  appellees. 

act  of  1875,  in  the  same  sense  and  reenacted  them  as  thus 
construed. 

And  this  court  has  never  intimated  that  the  criterion  de- 
clared by  Chief  Justice  Marshall  and  adopted  and  applied  by 
itself  in  so  manv  cases  was  erroneous  in  itself  or  had  been 
rendered  inapplicable  to  any  class  of  cases  by  the  amending 
act  of  1887-8.  The  following  cases  originated  after  the  latter 
act:  Cooke  v.  Avery,  147  U.  S.  375,  384;  Colorado  Central 
Mining  Co.  v.  Turck,  150  U.  S.  138,  143 ;  Blackhiirn  v.  Port- 
land, Gold  Mining  Co.,  175  U.  S.  571,  580;  Patton  v.  Brady, 
184  U.  S.  G08,  611 ;  Sicaiford  v.  Templeton,  185  U.  8.  487, 
494 ;  Northern  Pacific  Ry.  Co.  v.  Soderherg,  188  U.  S.  526. 

As  it  is  the  proper  function  of  the  plaintiff's  pleading  to 
state  his  own  case  and  not  that  of  the  defendant,  to  give  juris- 
diction the  Federal  question  must  appear  in  plaintiff's  state- 
ment of  his  own  case,  or  of  his  own  claim,  and  that  is  all  that 
is  required. 

In  a  few  cases  there  are  expressions^-inadvertent,  no 
doubt — to  the  effect  that  the  plaintiff's  declaration  must  show 
that  he  asserts  a  right  under  the  Constitution  or  some  law  of 
the  United  States, — as  if  only  such  suits  were  suits  arising 
under  the  United  States  Constitution  or  laws.  But  this  is 
directly  opposed  to  the  cases  already  cited  and  others  that 
will  be  cited. 

If  such  a  requirement  were  essential  to  jurisdiction,  one 
whose  property  was  wrongfully  seized  by  a  United  States 
marshal  or  revenue  collector,  or  whose  property  was  taken 
or  his  person  or  property  injured  by  a  Federal  r«nilway  cor- 
poration, could  have  no  redress  in  the  Federal  courts.  His 
right  of  property  or  of  personal  security  is  not  derived  from 
the  United  States  Constitution  or  laws,  and  when  he  asserts 
either  [55]  in  a  declaration  he  is  not  asserting  a  right  under 
the  United  States  Constitution  or  laws. 

For  trespass  against  a  marshal,  see  Bock  v.  Perkins,  139 
U.  S.  628 ;  Sonnentheil  v.  Brewing  Co.,  172  U.  S.  401.  And 
compare  Walker  v.  Collins,  167  U.  g.  57.  Against  an  internal 
revenue  collector,  see  Venahle  v.  Richards,  105  U.  S.  636; 
Harding  v.  Woodcock,  137  U.  S.  43. 

The  bill  presents  Federal  questions  both  in  its  aspect  of  a 
bill  by  the  State  as  a  sovereign  to  enforce  its  local  statutes, 


540 


194  UNITED   STATES  REPOBTS,  65. 


Argument  for  appellees, 
and  as  a  landowner  and  shipper  for  relief  under  those  stat- 
utes,   xlnd  these  questions  are  the  same  whether  the  State 
sues  as  sovereign  or  as  property  owner  and  shij^per  or  in  both 
of  these  capacities. 

For  cases  analogous  to  tlie  one  at  bar,  see  South  CaroUna  v. 
Coosaw  Mining  Co.,  45  Fed.  Rep.  804;  47  Fed.  Rep.  225;  144 
U.  S.  550,  cited  with  approval  in  In  re  Dehs,  158  U.  S.  564; 
Ames  V.  Komm,  111  U.  S.  449;  Ilardmg  v.  Woodcodc,  187 
U.  8.  4S :  South  Carolina  v.  Fm4  Royal  d?e.  Ry.  Co.,  50  Fed. 
Rep.  ZU ;  People  v.  Rock  Island  (§c.  Ry,  Co.,  71  Fed  Rep. 
753;  Minnesota  v.  Duluth  <&c.  Ry.  Co,,  87  Fed.  Rep.  497; 
Tennemee  v.  Union  Bank,  152  U.  S.  454. 

The  cause  was  properly  removed  because  of  tlie  plaintiff's 
assertion  of  right  and  claim  of  relief  under  the  Constitution 
and  laws  of  the  United  States. 

Besides  the  claims  of  the  State  under  the  full  faith  and 
credit  clause  of  Article  IV  of  the  Constitution,  and  its  claim 
under  the  swamp  land  granting  acts  of  Congress,  the  State 
asserts  a  right  as  a  property  owner  and  as  engaged  in  inter- 
state commerce  to  carry  on  that  cx)mmerce  free  from  obstruc- 
tion by  combinarions  in  restraint  of  commerce  or  by  monopo- 
lies of  such  commerce— substantially  the  same  right  as  that 
asserted  by  the  United  States  in  the  Dehs  Case,  158  U.  S.  564, 
583.  A  citizen's  riglit  to  carry  on  interstate  commerce  is  a 
constitutional  right.  Crutcher  v.  Kentucky,  141  U.  S.  47, 
57 ;  Reid  v,  Colorado,  187  U.  S.  137.  And  there  can  be  n^ 
doubt  that  a  State  has  the  same  right  as  a  citizen. 

[56]  The  bill  plainly  asserts  a  right  under  the  Constitution 
as  well  as  under  the  Anti-Trust  Act,  and  this  gives  jurisdic- 
tion. Whether  the  bill  sufficiently  alleges  continuous  or 
threatened  injury  to  that  right  to  make  a  case  for  the  relief 
prayed  or  for  any  equitable  relief  is  not  a  question  of  juris- 
diction, but  a  question  for  the  court  to  decide  in  the  exercise 
of  jurisdiction.  Swafford  v.  Templeton,  185  U.  S.  487,  493; 
Southern  Pactfic  R.  Co.  v.  California,  118  U.  S.  112;  Hax  v. 
Caspar,  31  Fed.  Rep.  4Q^;Lowry  v.  Chicago,  B.  (&  Q.  R,  Coi 
46  Fed.  Rep.  83. 

The  Circuit  Court  in  a  case  like  this,  upon  acquiring  juris- 
diction of  the  cause  by  reason  of  the  Federal  questions  pre- 
sented by.the  bill  on  the  constitutionality  of  the  state  legisla- 


MINNESOTA   V,    NORTHERN    SECURITIES   CO. 


541 


Opinion  of  the  Court. 

tion  and  on  the  claim  of  rights  under  the  Constitution  and 
laws,  has  jurisdiction  to  decide,  not  only  these  Federal  ques- 
tions, but  every  question.  Federal  or  non-Federal,  that  may 
be  presented  by  the  bill  or  arise  upon  the  other  pleadings  or 
the  evidence.  0 shorn  v.  Bank  of  United  States,  supra.  It 
may  decide  the  cause  on  these  non-Federal  grounds,  without 
deciding  or  even  considering  the  Federal  questions  presented 
by  the  bill.  And  this  is  the  proper  course  where  the  Federal 
questions  are  constitutional  questions.  Santa  Clara  Co.  v. 
Southern  Pacific  R,  R.,  118  U.  S.  394,  410.  Its  jurisdiction 
remains  the  same  although  the  plaintiff  should  fail  to  estab- 
lish by  proofs  the  facts  alleged  as  showing  a  right  under  the 
Constitution  or  laws  or  otherwise  raising  a  Federal  question, 
for  the  jurisdiction  is  determined  by  the  averments  of  the 
bill.  Southern  Paciftc  R.  Co.  v.  California,  118  U.  S.  109, 
112;  City  Ry.  Co,  v.  Citizens  R.  R.  Co.,  166  U.  S.  537,  562. 

And  the  fact  that  the  Federal  questions  may  receive  little 
or  no  attention  in  the  argument  in  this  court,  or  even  in  the 
Circuit  Court,  does  not  affect  the  jurisdiction  of  either  court. 
It  may  pass  by  the  questions  argued  and  decide  the  Federal 
questions. 

Mr.  Justice  Harlan  delivered  the  opinion  of  the  court. 

By  a  statute  of  Minnesota  passed  March  9, 1874,  it  was  pro- 
[67]  vided  that  no  railroad  corporation  or  the  lessees,  pur- 
chasers or  managers  thereof  should  consolidate  the  stock, 
property  or  franchises  of  such  corporation  with,  or  lease  or 
purchase  the  works  or  franchises  of,  or  in  any  waj^  control, 
any  other  railroad  corporation  owning  or  having  under  its 
control  a  parallel  or  competing  line;  nor  should  any  officer 
of  such  corporation  act  as  an  officer  of  any  other  railroad  cor- 
poration owning  or  having  the  control  of  a  parallel  or  com- 
peting line ;  and  the  question  whether  railroads  were  parallel 
or  competing  lines  should,  when  demanded  by  the  party  com- 
plainant, be  decided  by  a  jury  as  in  other  civil  issues.  Laws, 
Miimesota,  1874,  p.  154. 

A  subsequent  statute,  passed  March  3,  1881,  provided  that 
any  railroad  corporation,  either  domestic  or  foreign,  whether 
organized  under  a  general  law  or  by  virtue  of  a  special  char- 
ter, might  lease  or  purchase,  or  become  owner  of  or  control, 


542 


194   UNITED   STATES  KEPORTS,  57. 


Opinion  of  the  Court. 

or  hold  the  stock  of,  any  other  railroad  corporation,  when  the 
respective  railroads  could  be  lawfully  connected  and  operated 
together  "  so  as  to  constitute  one  continuous  main  line,  with 
or  without  branches,"  §  1 ;  and  that  any  railroad  corporation, 
whose  lines  of  railroad,  within  or  without  the  State,  might  be 
lawfully  connected  and  operated  together  to  constitute  one 
continuous  main  line,  so  as  to  admit  of  the  passage  of  trains 
over  them  without  break  or  interruption,  "  could  consolidate 
their  stock  and  franchises  so  as  to  become  one  corporation." 
§  2.  But  by  the  same  statute  it  was  provided  that  no  railroad 
corporation  should  consolidate  with,  lease  or  purchase,  or  in 
any  way  become  owner  of,  or  control  any  other  railroad  cor- 
poration, or  any  stock,  franchises,  rights  of  property  thereof, 
which  owned  or  controlled  "  a  parallel  or  competing  line." 
§  3.  Laws  of  Minnesota,  1881,  p.  109. 

At  a  later  date,  1899,  the  Legislature  of  Minnesota  passed 
another  statute  relating  principally  to  such  restraints  upon 
trade  and  commerce  as  interfered  with  competition  among 
those  engaged  therein.  That  statute  contained  these  provi- 
sions: 

[58]  '*  Sec.  1.  Any  contract,  agreement,  arrangement,  or  conspiracy, 
or  any  combination  in  tbe  form  of  a  trust,  or  otlierwise.  Iiereafter  en- 
tered into  wliich  is  in  restraint  of  trade  or  commerce  within  this  State, 
or  in  restraint  of  trade  or  commerce  l>etween  any  of  the  people  of  this 
State  and  any  of  the  people  of  any  other  State  or  country,  or  which 
limits  or  tends  to  limit  or  control  the  supply  of  any  article,  com- 
modity or  utility,  or  the  articles  which  enter  into  the  manufacture 
of  any  article  [or]  utility,  or  which  regulates,  limits  or  controls 
or  raises  or  tends  to  regulate,  limit,  control  or  raise  the  marlvet 
price  of  any  article,  wmimodity  or  utility,  or  tends  to  limit  or  regulate 
the  production  «»f  any  such  article,  conmiodity  or  utility,  or  in  any 
manner  destroys,  limits  or  interferes  with  open  and  free  competition 
In  either  the  production,  purchase  or  siile  of  anv  conmiodity,  article 
or  utility,  is  hereby  prohibited  and  declared  to  be  unlawful. 

"That  when  any  coriwration  heretofore  or  hereafter  created,  or- 
ganized or  existine:  under  the  laws  of  this  State,  whether  general  or 
special,  hereafter  unites  in  amy  manner  with  any  other  corjwration 
wheresoever  created,  or  with  any  Individual,  whereby  such  corpora- 
tion surrenders  or  transfers,  by  sale  or  otherwise.  In  whole,  or  in 
part,  its  franchise,  rights  or  privileges  or  the  control  or  manage- 
ment of  its  business  to  anv  other  corporation  or  individual,  or 
whereby  the  business  or  the  management  or  control  of  the  business 
of  such  corporation  is  limited,  changed  or  in  anv  manner  affected, 
and  the  pnn>ose  or  effect  of  such  union  or  combination  is  to  limit 
control  or  destroy  competition  in  the  manufacture  or  sale  of  any 
article  or  commodity,  or  is  to  limit  or  control  the  production  of  any 
article  or  commodity,  or  is  to  control  or  fix  the  price  or  marljet  value 
of  any  article  or  conmiodity,  or  the  price  or  market  value  of  the 
material  entering  into  the  production  of  any  article  or  commodity, 
©r   in   case   the   purr>ose   or   effect  of   such   union   or   combination 


MINNESOTA   V,    NORTHERN   SECURITIES   CO. 
Opinion  of  the  Court 


543 


is  to  contrjl  or  monopolize  in  any  manner  the  trade  or  commerce, 
or  any  part  tliereof.  of  this  State  or  of  the  several  States,  such  union, 
combination,  agreement,  arrange-  [59]  ment  or  contract  is  hereby 
prohibited  and  declared  to  be  unlawful.     *     *     * 

"  Sec  3.  Any  corporation  heretofore  or  hereafter  created,  organized 
or  existing  under  the  laws  of  this  State,  which  shall  hereafter  either 
directly  or  indirectly  make  any  contract,  agreement  or  arr.nigenient, 
or  enter  into  any  combination,  conspiracy  or  trust,  as  defined  in 
section  one  of  this  act,  shall,  in  addition  to  the  penalty  prescribed 
in  section  two  of  this  act,  forfeit  its  charter,  rights  and  franchises, 
and  it  shall  thereafter  be  unlawful  for  such  coriwration  to  engage 
in  business,  either  as  a  corporation  or  as  a  part  of  anv  combination, 
trust  or  monopoly,  except  as  to  the  final  disposition  of  its  property 
under  the  laws  of  this  State.     *     *     * 

"  Sec.  6.  That  for  the  pnrpof-e  of  carrying  out  the  provisions  of  this 
act  any  citizen  of  this  State  may,  and  it  is  hereby  declared  to  be  the 
duty  of  the  Attorney  General,  to  institute,  in  the  name  of  the  State, 
proceedings  in  any  court  of  competent  jurisdiction  against  any  person, 
partnership,  association  or  corporation  who  may  be  guilty  of  violating 
any  of  the  provisions  of  section  one  of  this  act,  for  the  purpose  of 
imposing  the  penalties  imposed  by  this  act,  or  securing  the  enforce- 
ment of  section  three  hereof."     Gen.  Laws,  Minnesota,  1899,  c.  359. 

These  statutes  being  in  force,  the  State  of  Minnesota  in- 
stituted this  suit  in  one  of  its  own  courts  against  the  North- 
ern Securities  Company,  a  corporation  of  New  Jersey;  the 
Great  Northern  Railway  Company,  a  corporation  of  Minne- 
sota ;  the  Northern  Pacific  Railway  Company,  a  corporation 
of  Wisconsin,  which,  having  filed  its  articles  of  incorporation 
with  the  Secretary  of  State  of  Minnesota,  became  subject  to 
the  laws  of  that  State  relating  to  railroad  corporations;  and 
James  J.  Hill,  as  President  of  the  Northern  Securities  Com- 
pany, and  individually. 

What  is  the  nature  of  the  case  as  disclosed  by  the  complaint 
filed  in  the  state  court  ? 

The  complaint  alleged — 

That  the  Great  Northern  Railway  Company  and  the  North- 
[60]  ern  Pacific  Railway  Company  each  owned  or  controlled 
and  maintained  a  system  of  railways  connecting  the  Great 
Lakes  and  the  Pacific  Ocean,  their  main  roads  constituting, 
substantially,  parallel  and  competing  lines ; 

That  pursuant  to  an  agreement  between  the  defendant 
Hill  and  other  stockholders  of  the  Great  Northern  Railway 
Company  frepresenting  a  controlling  interest  in  the  stock 
of  that  company)  and  J.  Pierpont  Morgan  and  other  stock- 
holders of  the  Northern  Pacific  Railway  Company  (repre- 
senting a  controlling  interest  in  the  stock  of  that  company) 
the  Northern  Securities  Company  was  incorporated  solely  as 


194   UNITED  STATES  BEPORTS,  60. 
Opinion  of  the  Court 

an  instnimentality  through  which  the  stock,  property  and 
franchises  of  the  Great  Northern  and  Northern  Pacific 
Railway  companies  should  be  consolidated  in  effect,  if  not  in 
form,  and  th(»  management  and  control  of  their  business 
affairs,  respectively,  including  the  fixing  of  rates  and  charges 
for  the  transportation  of  passengers  and  freight  over  any 
and  all  the  lines  of  railway  of  each  of  those  companies,  as 
well  within  as  without  the  State,  be  vested  in  and  controlled 
by  the  Securities  Company,  and  all  competition  in  freight 
and  passenger  traffic  between  the  two  systems  of  railway, 
within  and  without  the  State,  to  be  suppressed  and  removed; 
that  by  means  of  such  arrangement  it  was  sought  and  in- 
tended to  ignore,  evade  and  violate  the  laws  of  the  State 
proliibiting  as  well  the  consolidation  of  the  stock,  property 
or  franchise  of  parallel  or  competing  lines  of  railway 
therein,  and  the  control  or  management  thereof,  as  all  com- 
binations in  restraint  of  trade  or  commerce  within  the  State, 
and  between  the  peoi)le  of  Minnesota  and  the  people  of  other 
States  and  countries;  and,  that  if  the  Securities.  Compjtny 
was  allowed  to  hold  and  control  the  stocks  of  the  constituent 
railway  companies  and  to  carry  out  the  purpose  and  object 
of  its  incorporators,  as  well  as  its  own,  "  full  faith  and  credit 
will  not  be  given  to  the  public  acts  of  this  complainant  and 
it  will  be  deprived  of  a  further  right  guaranteed  to  it  by  the 
Constitution  of  the  United  States;" 

That  the  said  scheme  had  been  consunmiated,  and  said  two 
[61 1  railway  systems  were  now  under  the  absolute  manage- 
ment and  control  of  the  Securities  Company,  and  "  by  reason 
thereof  all  competition  between  said  lines  has  been  destroyed 
and  a  monopoly  in  railway  traffic  in  Minnesota  (as  well  as 
without  said  State)  has  been  created,  to  the  great  and  per- 
manent and  irreparable  damage  of  the  State  of  Minnesota, 
and  to  the  people  thereof,  and  in  violation  of  its  laws,  and  of 
the  laws  of  the  United  States  in  such  case  made  and  pro- 
vided, viz :  The  act  of  Congress  approved  July  2,  1890,  en- 
titled 'An  act  to  protect  trade  and  commerce  against  unlaw- 
ful restraints  and  monopolies ;'  "  and 

That  the  carrying  out  the  above  agreements  and  plan  of 
consolidation  and  monopoly,  and  in  every  step  taken  to  con- 
summate it,  the  officers  and  directors  of  each  of  said  railway 


MINNESOTA   V.    NORTHERN    SECURITIES   CO.  545 

Opinion  of  the  Court. 

<'onipanies  were  severally  fully  advised  and  consented 
thereto,  and,  unless  restrained  by  this  court,  the  Securities 
C\)mpany  would  continue  to  manage  and  control  the  business 
and  affairs  of  the  Great  Northern  and  Northern  Pacific  Rail- 
way companies,  and  to  suppress  all  competition  between 
them  for  freight  and  passenger  traffic,  as  well  as  to  monopo- 
lize railway  traffic  in  that  State,  to  the  irreparable  damage 
of  the  State  and  the  people  thereof. 

The  substantial  ix^lief  asked  was  a  decree  declaring,  among 
other  things,  the  alleged  agreement  and  combination  to  be 
unlawful,  and  alF  acts  done  and  to  be  done  in  pursuance 
theredf  contrary  to  and  in  violation  of  the  laws  of  ]\Iinnesota 
and  of  the  United  States;  prohibiting  the  Securities  Com- 
pany, its  agents  and  officers,  from  acquiring,  receiving,  hold- 
ing, voting  or  in  any  manner  acting  as  the  owner  of  any  of 
the  shares  of  the  capital  stock  of  either  the  Northern  Pacific 
or  the  Great  Northern  Railway  Company,  or  from  exercising 
any  management,  direction  or  control  over  the  constituen't 
companies;  and  enjoining  those  railway  com|..anies  from 
•recognizing  or  accei^ting  the  Northern  SecuriticN  Company 
as  the  holder  or  owner  of  any  shares  of  the  capital  stock  of 
either  of  those  companies,  or  from  ^fecting  any  combination 
or  agreement  [621  that  would  disturb  their  independent 
integrity,  management  and  control,  respect ivf ^ly,  or  that 
would  directly  or  indirectly  destroy  free  and  unlimited  com- 
petition between  them  by  interchange  of  traffic,  poolings  of 
earnings,  division  of  property  or  otherwise. 

The  Securities  Company,  appearing  specially  for  that  pur- 
pose, filed  its  petition  for  the  removal  of  the  case  into  the 
Circuit  Court  of  the  United  States  upon  the  ground  that  the 
suit  was  of  a  civil  nature,  in  equity,  involved,  exclusive  of 
costs,  the  sum  of  two  thousand  dollars,  and  Avas  one  arising 
under  th£  Constitntion  and  laws  of  the  United  States, 

The  state  court  approved  the  required  statutory  bond  for 
removal,  and  made  an  order,  reciting  that  the  case  was  re- 
moved to  the  Federal  court. 

The  Northern  Securities  Company,  appearing  specially  for 
that  purpose,  gave  notice  of  a  motion  to  have  the  service  of 
summons  upon  it  vacated.     Notice  was  also  given  of  a  like 
21220— VOL  2—07  M ^35 


546 


194  UNITED   STATES   REPORTS,  62. 


Opinion  of  the  Court 
motion  as  to  the  service  of  summons  upon  defendant  Hill  in 
his  capacity  as  President  of  that  company.  Subsequently, 
the  company,  and  defendant  Hill  as  its  President,  gave  notice 
that  the  above  notices  were  witlidrawn,  and  they  accordingly 
entered  their  appearance  in  the  cause. 

xit  a  later  date  the  defendants  severally  ansAvered,  and  the 
State  filed  its  replication  to  each  answer.  Proofs  were  taken, 
and  the  cause  having  been  heard,  the  ])ill  was  dismissed  upon 
the  merits.    123  Fed.  Kep.  692. 

After  the  caune  was  argued  here  the  i)arties  were  invited  to 
submit  briefs  upon  the  question  Avhether  the  Circuit  Court  of 
the  United  States  could  take  cognizance  of  the  case  upon 
removal  from  the  state  court.  From  the  briefs  filed  in  re- 
sponse to  that  invitation  it  appeared  that  both  sides  deemed 
the  case  a  removable  one  and  insist  that  this  court  should 
consider  the  merits  as  disclosed  by  the  pleadings  and  evidence. 
But  consent  of  parties  can  never  confer  jurisdiction  upon  a 
Federal  court.  If  the  record  does  not  affirmativelv  show 
jurisdiction  in  the  Circuit  Court,  we  must,  upon  our  own 
[63]  motion,  so  declare,  and  make  such  order  as  will  prevent 
that  court  from  exercising  an  authonty  not  conferred  upon  it 
by  statute.  Mans-field  Q,  <&  L,  M,  Raihcay  Co.  v.  Simn.  Ill 
U.  S.  379, 382 ;  Rohertsoji  v.  Cease,  97  U.  S.  040 ;  Kinf/  Bridr/e 
Co.  V.  Otof^  County,  120  IT.  S.  225 ;  Parker  v.  Ormshj,Ul  U.  S. 
81;  3fatthir/Iy  v.  Northwestern  Va.  R.  /?.,  158  U.  S.  53,  57; 
(rreat  Softhern  Fire  Proof  Hotel  Co.  v.  Jones,  177  U.  S.  449, 
453;  Confhienfal  National  Bank  v.  Bvford,  191  U.  S.  119; 
Defiance  Water  Co.  v.  Defiance,  191  IT.  S.  184. 194. 

We  proceed,  therefore,  to  inquire  whether  the  Circuit  Court 
could  take  cognizance  of  this  case  upon  removal  from  the 
state  court  and  make  a  final  decree  upon  the  merits. 

Of  course,  the  Circuit  Court  could  not  take  cognizance  of 
the  case  as  one  presenting  a  controversy  between  citizens  of 
different  States;  for  the  State  of  Minnesota  is  not  a  citizen 
within  the  meaning  of  the  Constitution  or  the  acts  of  Con- 
gress.   Postal  Tel.  Cable  Co.  v.  Alahama,  155  IT.  S.  482,  487. 

But  the  first  section  of  the  Judiciary  Act  of  1887-8,  24  Stat. 
552,  c.  373 ;  25  Stat.  433,  c.  806,  provides,  among  other  things, 
that  the  Circuit  Courts  of  the  United  States  may  take  original 
cognizance  of  all  suits  of  a  civil  nature  at  law  or  in  equity, 
arising  under  the  Constitution  or  laws  of  the  United  States, 


MINNESOTA   V.    NORTHERN   SECURITIES   CO. 


547 


Opinion  of  the  Court 

where  the  matter  in  dispute,  exclusive  of  costs,  exceeds  in 
value  the  sum  of  two  thousand  dollars.  And  the  second  sec- 
tion provides  for  the  removal  from  a  state  court  of  "  any  suit 
of  a  civil  nature,  at  law  or  in  equity,  arising  under  the  Consti- 
tution or  laws  of  the  United  States  *  *  *  of  which  the 
Circuit  Courts  of  the  United  States  are  given  original  juris- 
diction by  the  preceding  section." 

In  Tennessee  v.  Union  cf'  Planters'"  Bank,  152  U.  S.  454, 
461,  which  involved  the  scope  and  meaning  of  the  acts  of 
1887-8,  in  respect  of  cases  arising  under  the  Constitution  or 
laws  of  the  United  States,  this  court,  after  referring  to  sec- 
tion one,  said :    '*  But  the  corresponding  clause  in  section  2 
allows  removals  from  a  state  court  to  be  made  only  by  de- 
fendants,  and  of  suits  '  of  which  the  Circuit  Courts  of  the 
United  States  are  given   [64]   original  jurisdiction  by  the 
preceding  section.'  thus  limiting  the  jurisdiction  of  a  Cir- 
cuit Court  of  the  United  States  on  removal  bv  the  defendant 
under  this  section  to  such  suits  as  might  have  been  brought 
in  that  court  by  the  plaintiff  under  the  first  section.    24 
Stat.  553;  25  Stat.  434.     The  change  is  in  accordance  with 
the  general  policy  of  these  acts,  manifest  upon  their  face, 
and  often  recognized  by  this  court,  to  contract  the  jurisdic- 
tion of  the  Circuit  Courts  of  the  United  States."    Mexican 
Nat.  Railroad  v.  Davidson,  157  U.  S.  201,  208;  Metcalf  v. 
Watertown,  128  U.  S.  586.    And  in  Chappell  v.  Walerworth, 
155  U.  S.  102,  107,  the  court,  referring  to  Tennessee  v.  Union 
(&  Planters^  Bank,  said  that  it  was  there  adjudged,  upon  full 
consideration,  that,  under  the  act  of  1887-8,  "  a  case  (not 
depending  on  the  citizenship  of  the  parties,  nor  otherwise 
specially  provided  for,)    cannot  be  removed  from  a  state 
court  into  the  Circuit  Court  of  the  United  States,  as  one 
arising  under  the  Constitution,  laws  or  treaties  of  the  United 
States,  unless  that  appears  by  the  plaintiff's  statement  of  his 
owji  claim ;  and  that,  if  it  does  not  so  appear,  the  want  can- 
not be  supplied  by  any  statement  in  the  petition  for  removal, 
or,  in  the  subsequent  pleadings."    To  the  same  effect  are 
Postal  Tel.  Cable  Co.  v.  Alabama,  155  U.  S.  482,  487;  United 
States  V.  American  Bell  Tel.  Co.,  159  U.  S.  548,  553 ;  Oregon 
Short  Line  v.  Skottowe,  162  U.  S.  490,  494 ;  Texas  <&  Pacific 
Railway  Co.  v.  Cody,  166  U.  S.  606,  608 ;  Pratt  v.  Paris  Gas 
Light  ct>  Coke  Co.,  168  U.  S.  255,  258;  Walker  v.  Collins. 

0 


548  194   UNITED   STATES   REPOBTS,  64. 

Opinion  of  the  Court. 
167  U.  S.  57,  59;  Arkiinsas  v.  liffusas  ((•  Texas  Coal  Co.,  183 
U.  S.  185;  Winfem  Union  Tel.  Co,  v.  .1/*/^  Arbor  Railroad 
Co.,  178  TJ.  S.  239.  These  cases  establiijli,  beyond  further 
question  in  this  court,  the  rule  that,  under  existing  statutes 
reguhiting  the  jurisdiction  of  the  courts  of  the  United  States, 
a  cas<3  cannot  l)e  removed  from  a  state  court,  as  one  arising 
iinder  the  Constitution  or  hiws  of  tlie  United  States,  iinhs^ 
the  phuntitrs  comphiint,  liill  or  declaration  shows  it  to  l>e 
a  case  of  that  character.  "  If  it  does  not  appear  at  the  out- 
set,*' this  court  iias  (|uite  recently  said,  '*  that  the  suit  is  one 
of  whicli  the  Circuit  Court  at  tlie  time  its  jurisdiction  [(lol 
is  invoked  conk!  properly  take  cogniziuice,  the  suit  iiinst  Ix^ 
dismissed."  Third  St  cC'  Stflnahnn  Ry.  v.  Letew,  173  U.  S. 
457,  4(>0. 

We  must  then  inquire  whether  the  comphiint  presents  a 
case  arising  nnder  the  Constitution  or  laws  of  the  United 
States,  in  respect  of  whicli  the  original  jurisdiction  of  the 
Circuit  Court  could. have  been  invoked  by  the  state. 

The  real  purpose  of  the  suit  was  to  annul  the  agreement 
and  suppress  the  conil)ination  alleged  to  exist  between  the 
defendant  corporations  upon  the  ground  thjit  such  agre^Miient 
and  combination  were  in  violation,  Hr.-t,  of  the  laws  of  ^lin- 
nesota,  and,  second,  of  the  Anii-Trusf  Aef  of  Cottf/ress,  If 
relief  had  been  asked  upon  the  ground  alone  tliat  what 
the  defendant  corporations  had  done  and  would,  unless  re- 
strained, continue  to  do,  was  forbidden  by  the  statutes  of 
Minnesota,  the  Circuit  Court  of  the  United  States  could  not 
have  taken  cognizance  of  tlie  case:  for  confessedly  such  a 
controversy  would  not  have  l)een  one  lietween  citizens  of  dif- 
ferent States,  nor  could  snch  a  suit  have  l^een  deemed  one 
arising  imder  the  Constitution  or  laws  of  the  United  States. 

The  contention,  liowevcr,  is  that  a  case  aiising  nnder  the 
laws  of  the  United  States  was  presented  by  the  allegation  in 
the  complaint  that  the  combination  and  consolidation.be- 
twwn  the  Great  Northern  and  Northern  Pacific  Railway 
Companies  and  their  control  of  their  affairs  and  operations 
by  the  Northern  Securities  Company,  were  also  in  violation 
of  the  Anti-Trust  Act  of  Congress  of  July  2,  1890.  An  alle- 
gation in  a  complaint  filed  in  a  Circuit  Court  of  the  United 
States  may,  indeed,  in  a  sense,  confer  jurisdiction  to  deter- 
mine whether  the  case  is  of  the  class  of  which  the  court  may 


MINNESOTA   V.    NORTHERN    SECURITIES   CO. 


549 


Opinion  of  the  Court. 

properly  take  cognizance  for  purposes  of  a  final  decree  on 
the  merits.  Newbury  jwrt  Water  Co.  v.  Newbury  port  ^  193 
U.  S.  5G1,  and  Paiific  Electric  Ry.  Co.  v.  Los  Angeles^  post, 
page  112,  decided  at  present  term.  But  if,  notwithstanding 
such  an  allegation,  the  court  finds,  at  any  time,  that  the  case 
does  not  really  and  substantially  involve  a  dispute  or  contro- 
versy within  its  jurisdiction  then,  by  the  [66]  express  com- 
mand of  the  act  of  1875,  its  duty  is  to  proceed  no  further. 
That  is  manifest  from  the  fifth  section  of  that  act,  which 
provides  ^'  That  if,  in  any  suit  commenced  in  a  Circuit  Court 
or  removed  from  a  state  court  to  a  Circuit  Court  of  the 
United  States,  it  shall  appear  to  the  satisfaction  of  said  Cir- 
cuit Court,  at  am^  time  after  such  suit  has  been  brought  or 
remored  thereto,  that  such  suit  does  not  really  and  substan- 
tially involve  a  dispute  or  controversy  properly  Avithin  the 
jurisdiction  of  said  Circuit  Court,  or  that  the  parties  to  said 
suit  have  been  improperly  or  collusively  made  or  joined, 
either  as  plaintiffs  or  defendants,  for  the  purpose  of  creating 
a  case  cognizable  or  removable  under  this  act,  the  said  Circuit 
Court  shall  proceed  no  further  therein,  but  shall  dismiss  the 
suit  or  remand  if  to  the  court  from  ichich  it  icas  remored  as 
justice  ma}^  require,  and  shall  make  such  order  as  to  costs  as 
shall  be  just.*'  18  Stat.,  4:70.  That  provision  has  not  been 
superseded  by  any  subsequent  legislation. 

Does  the  present  suit  really  and  substantially  involve  a 
dispute  or  controversy  properly  within  the  jurisdiction  of 
the  Circuit  Court?  That  is  to  say,  could  the  suit,  as  dis- 
closed by  the  complaint,  have  been  brought  by  the  State 
originally  in  that  court  ?  If  it  could  not,  then,  under  the  act 
of  1887-8  and  the  adjudged  cases,  it  should  not  have  been 
removed  from  the  state  court  and  should  be  remanded. 

Bv  the  first  section  of  the  Anti-Trust  Act  everv  contract, 
combination  in  the  form  of  a  trust  or  otherwise,  or  con- 
spiracy, in  restraint  of  trade  or  commerce  among  the  several 
States,  is  declared  to  be  illegal.  The  second  section  con- 
demns the  monopolizing  or  attempting  to  monopolize,  or 
combining  or  conspiring  to  monopolize,  any  part  of  such  trade 
or  commerce.  By  the  third  section,  every  contract,  combina- 
tion in  the  form  of  trust  or  otherwise,  or  conspiracy  in  re- 
straint of  commerce  in  any  Territory  of  the  United  States 


550 


194  UNITED   STATES   REPOETS,  66. 
Opinioo  of  the  Court. 


or  the  District  of  Columbia,  or  in  restraint  of  trade  or  com- 
merce between  any  such  Territory  and  another,  or  between 
any  such  Territory  or  Territories  and  any  State  or  States  or 
the  District  of  Columbia,  or  [67]  with  any  foreign  States, 
or  between  the  District  of  Columbia  and  any  State  or  States 
or  foreign  nations,  is  declared  to  be  illegal.  A  violation  of 
the  provisions  of  each  section  is  made  a  misdemeanor,  punish- 
able by  a  fine  not  exceeding  five  thousand  dollars  or  by  im- 
prisonment not  exceeding  one  year,  or  by  both  said  punish- 
ments, in  the  discretion  of  the  court.  Of  course,  a  criminal 
prosecution  under  the  act  must  be  in  the  name  of  the  United 
States  and  in  a  court  of  the  United  States— the  District 
Attorney  who  conducts  the  prosecution  being  subject  to  the 
direction  of  the  Attorney  General  as  to  the  manner  in  which 
his  duties  shall  be  discharged.     Kev.  Stat.  3()2. 

The  fourth,  sixth,  seventh  and  eighth  sections  of  the  act  are 
as  follows : 

•*  Sec.  4.  The  several  Circuit  Courts  of  the  United  States  are  hereby 
Invested  with  jurisdictioo  to  prevent  and  restrain  violations  of  this 
act ;  and  it  shall  he  the  duty  of  the  several  District  Attornevs  of  the 
United  States,  in  their  respective  districts,  under  the  direction  of  the 
Attorney  General,  to  institute  proceedings  in  equity  to  prevent  and 
restrain  such  violations.  Such  proceedings  may  be  by  way  of  peti- 
tion setting  forth  the  case  and  praying  that  such  violation  shall  be 
enjoined  or  otherwise  prohibited.  When  the  parties  complained  of 
shall  have  been  duly  notified  of  such  petition  the  court  shall  proceed, 
as  soon  as  may  be,  to  the  hearing  and  determination  of  the  case ;  and, 
pending  such  petition  and  l>efore  final  decree,  the  court  may  at  any 
time  malve  such  temporary  restraining  order  or  prohibition  as  shall 
be  deeme<l  just  in  the  premises." 

"  Sec.  6.  Any  property  owned  under  any  contract  or  bv  any  combi- 
nation, or  pursuant  to  any  conspiracy  (and  l>eing  the  subject  thereof) 
mentioned  in  section  one  of  this  act,  and  being  in  the  course  of  trans- 
portation from  one  State  to  another,  or  to  a  foreign  countrv,  shall  be 
forfeited  to  the  United  States,  and  may  be  seized  and  condemned  by 
like  proceedings  as  those  provided  by  law  for  the  forfeiture,  seizure 
and  condemnation  of  property  imported  into  the  United  States  con- 
trary to  law. 

[68]  "  Sec.  7.  Any  person  who  shall  be  injured  in  his  business  or 
property  by  any  other  person  or  corporation  by  reason  of  anything 
forbidden  or  declared  to  be  unlawful  by  this  act  may  sue  therefor  in 
any  Circuit  Court  of  the  United  States  in  the  district  in  which  the  de- 
fendant resides  or  is  found,  without  respect  to  the  amount  in  contro- 
versy, and  shall  recover  threefold  the  damages  by  him  sustained,  and 
the  costs  of  suit,  including  a  reasonable  attorney's  fee. 

**Sec.  8.  That  the  word  '  i>erson,'  or  'persons,'  wherever  used  in 
this- act,  shall  be  deemed  to  include  corporations  and  associations 
existing  under  or  authorized  by  the  laws  of  either  the  United  States, 
the  laws  of  any  of  the  Territories,  the  laws  of  any  State  or  the  laws 
of  any  foreign  country."    26  Stat  209. 


MINNESOTA   V.   NORTHERN    SECURITIES   CO. 


551 


Opinion  of  the  Court. 

It  thus  appears  that  the  act  specifies  four  modes  in  which 
effect  may  be  given  to  its  provisions.  It  is  clear  that  the 
present  suit  does  not  belong  to  either  of  those  classes.  It  is 
not  a  criminal  proceeding,  (§§  1,  2,  3,)  nor  a  suit  in  equity  in 
the  name  of  the  United  States  to  restrain  violations  of  the 
Anti-Trust  Act,  (§  4,)  nor  a  proceeding  in  the  name  of  the 
United  States  for  the  forfeiture  of  property  being  in  the 
course  of  transportation,  (§  6,)  nor  an  action  by  any  person 
or  corporation  for  the  recovery  of  threefold  damages  for 
injury  done  to  business  or  property  by  some  other  person  or 
corporation.     (§§  7,  8.) 

But  it  is  said  that  as  the  act  of  Congress  was  for  the 
benefit  of  all  the  States  and  all  the  people,  this  case  is  to  be 
deemed  one  arising  under  the  laws  of  the  United  States,  and, 
therefore,  cognizable  by  the  Circuit  Court,  because  one  of  the 
objects  of  the  State  of  Minnesota  by  its  suit  is  to  protect  cer- 
tain of  its  proprietary  interests,  which,  it  is  alleged,  would  be 
injured  by  violations,  on  the  part  of  the  defendants,  of  the 
act  of  Congress.  Let  us  see  what,  in  that  view,  is  the  case 
as  presented  by  the  complaint. 

The  complaint  alleged  that  the  State  is  the  owner  of  more 
than  three  million  acres  of  land,  of  the  value  of  more  than 
fifteen  millions  of  dollars,  obtained,  by  donation,  from  the 
United  States,  and  that  "  the  value  of  said  lands,  and  the 
[69]  salability  thereof,  depends,  in  very  large  measure,  upon 
having  free,  uninterrupted  and  open  competition  in  passen- 
ger and  freight  rates  over  the  lines  of  railway  owned  and 
operated  by  said  Great  Northern  and  Northern  Pacific  Rail- 
way companies." 

The  bill  also  alleges  "  that  many  of  said  lands  are  vacant 
and  unsettled  and  located  in  regions  not  at  present  reached 
by  railway  lines,  and  depend  for  settlement  upon  the  con- 
struction of  lines  in  the  future;  that  it  has  heretofore  been 
the  practice  of  said  Great  Northern  and  Northern  Pacific 
Kailway  companies,  respectively,  to  extend  spur  lines  into 
territory  adjacent  to  each  of  said  roads,  as  well  as  into 
new  territory,  for  the  purpose  of  developing  such  territory, 
as  well  as  to  obtain  traffic  thereform;  that  such  new  lines 
have  been  built  in  the  past  very  largely  by  reason  of  the 
rivalry  heretofore  existing  between  said  companies  for  exist- 


194  UNITED   STATES  REPORTS,  69. 
Opinion  of  the  Court 
ing,  as  well  as  new,  biisineas;  that  tinder  the  consolidation 
and  unity  of  control  hereinafter  set  forth  siicli  rivalry  will 
cease,  and  many  of  the  lands  now  owned  by  the  State  of 
Minnesota  will  not  be  readied  l>y  railroads  foi- years  to  come, 
If  at  all,  owing  to  such  coni!)ination  and  consolidation  remov- 
ing all   rivalry  and  competition  between   said  companies- 
that  the  settlement  and  occupation  of  said  lands  will  add 
very  much  to  their  value,  and  such  occupation  will  dei)end 
entirely  upon  the  accessibility  of  railway  lines  and  trans- 
portation facilities  for  marketing  the  products  raised  there- 
on; that  if  said  lands  are  sold  and  become  occupied,  thev 
will  add  very  largely  to  tlie  taxable  value  of  the  property  of 
the  State,  and  that  said  lands  cannot  be  so  sold,  or  the  inJonie 
of  the  State  increased  therel)y.  without  the  construction  of 
railroad  lines  to  or  adjacent  to  the  same/' 

It  was  further  alleged  that  the  State  is  the  owner  of, 
and  has  maintained  at  large  expense,  a   state   imiversity' 
hospitals  for  tlie  insane,  normal  schools  for  teachers,  a  train- 
ing school  for  lx>ys  and  girls,  schools  for  deaf,  dumb,  blind, 
and  feeble-minded  persons,  a  state  school  for  indigent  and 
homeless  children,  and  a  state  penitentiary:  that  a  great  jyor- 
tion  of  the  supplies  of  every  kind  for  such  institutions  must, 
of  necessity,  be  shipped  |70|  over  the  different  lines  of  rail- 
way owned  and  operated  by  the  Northern  Pacific  and  (Jreat 
Northern    Railway   companies;    that    tlie   amount   of   taxes 
whicli  the  State  must  collect,  and  the  successful   mainte- 
nance of  its  public  institutions,  as  well  as  the  i)erformance 
of  its  governmental  functions  and  affairs,  depend  largely 
upon  tlie  value  of  the  real  and  per.sonal  iJoi)erty  situated 
within  the  State  and  the  general   prosperity  and  business 
succe  s  (.f  its  citizens;  and  that  such  prosi)erity  and  business 
depend   very  largely   upon  maintaining  in  tlie  State   free, 
open  and  unrestricted  competition  between  the  railway  lines 
of  those  two  companies. 

The  in j ury  on  account  of  which  the  present  suit  was  brought 
is  at  most  only  remote  and  indirect ;  such  an  injury  as  would 
come  alike,  although  in  different  degrees,  to  every  individual 
owner  of  projx^rty  in  a  State  by  reason  of  the  suppression,  in 
violation  of  the  act  of  Congress,  of  free  competition  between 
interstate  carriers  engaged  in  business  in  such  State;    not 


MINNESOTA    V.    NORTHERN    SECURITIES   CO. 


553 


Opinion  of  the  Court. 

such  a  direct,  actual  injury  as  that  provided  for  in  the  sev- 
enth section  of  the  statute.  If  Minnesota  may,  by  an  original 
suit,  in  its  name,  invoke  the  jurisdiction  of  the  Circuit  Court, 
because  alone  of  the  alleged  remote  and  indirect  injury  to  its 
proprietary  interests  arising  from  the  mere  absence  of  free 
competition  in  trade  and  commerce  as  carried  on  by  interstate 
carriers  within  its  limits,  then  every  State  upon  like  grounds 
may  maintain,  in  its  name,  in  a  Circuit  Court  of  the  United 
States,  a  suit  against  interstate  carriers  engaged  in  business 
within  their  respective  limits.  Further,  under  that  view, 
every  individual  owner  of  property  in  a  State  may,  upon  like 
general  grounds,  by  an  original  suit,  irrespective  of  any  direct 
or  special  injury  to  him,  invoke  the  original  jurisdiction  of  a 
Circuit  Court  of  the  United  States,  to  restrain  and  prevent 
violations  of  the  Anti-Trust  Act  of  Congress.  We  do  not 
think  that  Congress  contemplated  any  such  methods  for  the 
enforcement  of  the  Anti-Trust  Act.  We  cannot  suppose  it 
w^as  intended  that  the  enforcement  of  the  act  should  depend 
in  any  degree  upon  original  suits  in  equity  instituted  by  the 
States  or  by  [71]  individuals  to  prevent  violations  of  its 
provisions.  On  the  contrary,  taking  all  the  sections  of  that 
act  together,  we  think  that  its  intention  was  to  limit  direct 
proceedings  in  equity  to  prevent  and  restrain  such  violations 
of  the  Anti-Trust  Act  as  cause  injury  to  the  general  public, 
or  to  all  alike,  merely  from  the  suppression  of  competition  in 
trade  and  commerce  among  the  several  States  and  with  for- 
eign nations,  to  those  instituted  in  the  name  of  the  United 
States,  under  the  fourth  section  of  the  act,  by  District  At- 
torneys of  the  United  States,  acting  under  the  direction  of 
the  Attorney  General;  thus. securing  the  enforcement  of  the 
act,  so  far  as  direct  proceedings  in  equity  are  concerned,  ac- 
cording to  some  uniform  plan,  operative  throughout  the  en- 
tire country.  Possibly  the  thought  of  Congi-ess  was  that  by 
such  a  limitation  upon  suits  in  equity  of  a  general  nature  to 
restrain  violations  of  the  act,  irrespective  of  any  direct  injury 
sustained  by  particular  persons  or  corporations,  interstate 
and  international  trade  and  commerce  and  those  carrying  on 
such  trade  and  commerce,  as  well  as  the  general  business  of 
the  country,  would  not  be  needlessly  disturbed  by  suits 
brought,  on  all  sides  and  in  every  direction,  to  accomplish 


t/'tWc 


IfM  UNITED  STATES  KEPORTS,  11. 


Opinion  of  the  Court. 

improper  or  speciiliitive  purposes.  At  any  rate,  the  interpre- 
tation we  have  given  of  the  act  is  a  more  reasonable  one.  It 
is  a  safe  and  conservative  interpretation,  in  view  as  well  of 
the  broad  and  exclusive  power  of  Congress  over  interstate 
and  international  commerce  as  of  the  fact  that,  so  far  as  such 
commerce  is  coiiceriied,  Congress  has  prescribed  a  specific 
mode  for  preventing  restraints  upon  it,  namely,  suits  in 
equity  under  the  direction  of  the  Attorney  General.  Of  the 
present  suit  the  Attorney  General  has  no  control,  and  is  with- 
out any  responsibility  for  the  manner  in  which  it  is  con- 
ducted, altliough,  in  its  essential  features,  it  is  just  such  a 
suit  us  would  be  lirouglit  l>y  liis  direction  when  proceeding 
under  the  fourth  section  of  the  Anti-Trust  Act. 

The  Stale  presents  still  anotluer  view  of  the  question  of 
jurisdiction.  Its  complaint  alleges  that  if  the  Securities 
Company  l>e  allowed  to  hold  and  control  tlie  stocks  of  the 
Great  Northern  [72]  and  Northern  Pacific  Railway  compa- 
nies and  to  carry  out  the  purpose  and  object  of  its  incorpora- 
tion, full  faith  and  credit  will  not  be  given  to  the  i)ublic  acts 
of  tlie  State.  This,  it  is  eontended,  presents  ,i  ease  arising 
under  Article  I\'  of  the  Constitution,  providing  that  '^  f nil 
faith  and  cretlit  shall  bt>  given  in  each  State  to  the  public 
acts,  records  ami  judicial  proceedings  of  every  other  State." 
It  is  said  by  the  state's  counsel  that  the  "  gravamen  of  the 
charge  in  appellant^  complaint  is  that  the  defendants 
created  a  eor[)oration  device  in  New  Jersey  and  used  it  for 
the  purpose  and  with  the  result  that  property  rights  in  Min- 
nesota were  atlVetctl,  in  violation  of  its  laws.  Our  conten- 
tion is  that  Artirle  IV  must  be  so  construed  as  to  make  the 
constitutional  enactment  of  Minnesota  effective  throughout 
the  United  States,  so  far  as  tliey  apply  to  and  affect  property 
rights  within  the  State.  Otherwise  the  policy  and  laws  of 
any  State  may  be  easily  evaded."  We  do  not  think  that  the 
rights  within  the  State.  Otherwise  the  policy  and  laws  of  any 
State  may  be  easily  evaded."  We  do  not  think  that  the  clause 
of  the  Constitution  above  quoted  has  any  bearing  whatever 
upon  the  question  under  consideration.  It  only  prescribes  a 
rale  by  which  courts,  Federal  and  State,  are  to  be  guided  when 
a  question  arises  in  the  progress  of  a  pending  suit  as  to  the 
faith  and  credit  to  lie  given  by  the  court  to  the  public  acts, 


FIELD   V.   ASPHALT    CO. 


555 


Syllabus. 

records  and  judicial  proceedings  of  a  State  other  than  that 
in  which  the  court  is  sitting.  Even  if  it  be  assumed  that  the 
word  "  acts  "  includes  "  statutes,"  the  clause  has  nothing  to 
do  with  the  conduct  of  individuals  or  corporations;  and  to 
invoke  the  rule  which  it  prescribes  does  not  make  a  case  aris- 
ing under  the  Constitution  or  laws  of  the  United  States. 

What  was  the  duty  of  the  Circuit  Court  when  it  ascer- 
tained that  the  suit  was  not  one  of  Avhich  it  could  take  cogni- 
zance ?  The  answer  is  indicated  by  the  clause  of  the  Judici- 
ary Act  of  March  3,  1875,  to  Avhich  we  have  adverted. 

For  the  reasons  stated,  we  are  of  opinion  that  the  suit  does 
not — to  use  the  words  of  the  act  of  1875 — really  and  substan- 
tially involve  a  dispute  or  controversy  within  the  jurisdiction 
of  the  Circuit  Court  for  the  purposes  of  a  final  decree.  Went- 
em  Union  Tel  Co.  v.  Ann  Arbor  R.  R.  Co..  178  U.  S.  239, 
243.  [73]  That  being  the  case,  the  Circuit  Court,  following 
the  mandate  of  the  statute,  shotild  not  have  proceeded  therein, 
but  should  have  remanded  the  cause  to  the  state  court. 

77/6'  decree  of  the  Circuit  Court  is  n  rersed  and  the  case  is 
sent  hack  with  directions  that  It  he  remanded  to  the 
state  court. 


[618]  FIELD  V.  BARBER  ASPHALT  PAVING  COM- 

PAXY.« 

BARBER  ASPHALT  PAVING  COMPANY  v.  FIELD. 

APPEALS  FROM  THE  CIRCUIT  COURT  OF  THE  UNITED  STATIiS  FOR 
THE  WESTERN  DISTRICT  OF  MISSOURI. 


Nos.  201,  202.     Argued  April  11,  1904.— Decided  May  31.  1904. 

[194  U.  S.,  018.] 

Where  there  are  allegations  of  diverse  citizenship  in  the  bill,  but  the 
jurisdiction  of  the  Circuit  Court  is  also  invoked  on  constitutional 
gi-ounds  the  case  is  appealable  directly  to  this  court  under  §  5  of  the 
act  of  March  3,  1891,  as  one  involving  the  construction  or  applica- 
tion of  the  Constitution  of  the  United  States,  and  where  both  parties 
have  appealed  the  entire  case  comes  to  this  court,  and  the  respond- 
ent's appeal  does  not  have  to  go  to  the  Circuit  Court  of  Appeals.^ 


«  Decision  in  the  Circuit  Court  (117  Fed.,  925).    See  p.  192. 

b  Syllabus  copyrighted,  1904,  by  The  Banks  Law  Publishing  Co. 


tJtJd 


194  UNITED   STATES   REPORTS,  618. 
Statonieiit  of  the  Caw. 


It  is  not  the  purpose  of  the  Fourteenth  AnieiKhiieiit  to  prevent  the 
States  from  elassifyins  the  subjects  of  legislation  and  making  dif- 
ferent reguUitions  as  to  the  property  of  different  individuals  differ- 
ently situated.  The  provision  of  the  Federal  Constitution  is  satis- 
fled  if  all  persons  similarly  situated  are  treatetl  alike  in  privileges 
conferred  or  liabilities  imi>osed. 

The  r»rovision  in  §  5080,  Rev.  Stat,  of  Missouri,  that  certain  improve- 
ments are  not  to  he  made  if  a  majority  of  resident  owners  of  prop- 
erty lialde  to  tnxation  protest,  is  not  unconstitutional  because  it 
gives  the  itrivikge  of  i>rotesting  to  them  and  not  to  non-resident 
owners. 

Only  such  acts  as  directly  interfere  with  the  freedom  of  interstate  com- 
nien*  are  prohibited  to  the  States  by  the  constitution,  and  the  Sher- 
nnin  Act  of  July  2,  189(>,  is  not  intended  to  affect  contracts  which 
have  only  n  remote  and  indirect  bearing  on  connnerce  between  the 
States.  The  specification  in  an  ordinance,  not  invalid  under  the 
laws  of  the  State,  that  a  [)arti«ular  kind  of  asphalt  protluced  oiUy 
in  II  foreign  country  does  not  vicdate  any  Federal  right. 

Although  the  agent  of  the  comitany  obtaining  a  paving  contract  may 
have  been  active  and  influential  in  obtaining  signatures  to  the  peti- 
tion, in  the  al)sence  of  proof  of  fraud  and  corruption,  the  levi<\s  will 
not  be  set  -.Kule  after  the  improvement  has  been  comi»leted. 

The  nwessity  for  an  imin-ovement  of  streets  is  a  matter  of  which  the 
proper  municipal  authorities  are  the  exclusive  judges  and  their 
judgment  is  not  to  be  interfered  with  except  in  cases  of  fraud  or 
gross  abuse  of  innver. 

[The  Slid  iticat ion  in  an  ordinance  by  a  municipal  council  that  Trini- 
dad Lake  asphalt  shall  be  useil  for  street  imi»rovement,  does  not 
violate  the  connnerce  clause  of  the  Federal  Constitution  or  the 
Sherman  Anti-Trust  Act  of  July  2.  189()  (26  Stat.  2!X)).  notwith-  ■ 
standing  this  i»articular  kind  of  asi>halt  is  the  iiroduct  of  a  foreign 
conntiy  and  competitive  bidding  was  thereby  rendered  iniiiossible.] 

These  cases  are  appeals  from  the  deci'ee  of  the  Circuit 
Court  of  the  United  States  for  the  Western  District  of  Mis- 
souri. [610]  Richard  H.  Field,  as  owner  of  certain  lands 
abutting  on  Main  street,  Baltimore  avenue  and  Wyandotte 
street  in  Westport,  Missouri,  which  city  was  then  a  suburb, 
and  has  since  become  a  part,  of  Kansas  City,  filed  a  bill  of 
complaint  against  the  paving  company.  The  relief  sought 
was  against  certain  tax  bills,  issued  to  pay  for  the  paving  of 
the  above-named  streets,  held  by  the  defendant  company, 
and  to  have  the  same  declared  void  because  (1)  the  act  under 
which  they  were  assessed  violated  the  Fourteenth  Amend- 
ment to  the  Constitution  of  the  United  States;   (2)  that  the 


FIELD   V.   ASPHALT    CO. 
Opinion  of  the  Court. 


557 


paving  in  question  was  unnecessary  and  the  contract  for  the 
same  was  the  result  of  undue  and  illegal  influence  on  the  part 
of  the  agents  of  the  defendant  company  exercised  upon  the 
board  of  aldermen  of  the  city  of  Westport;  (3)  that  the 
contracts  for  the  paving  required  the  same  to  be  constructed 
of  Trinidad  Lake  asphalt,  thereby  cutting  off  competition 
with  other  kinds  of  asphalt  suitable  for  street  paving;  (4) 
that  the  proceedings  and  agreements  by  which  such  asphalt 
was  designated  in  the  resolutions,  ordinances  and  rules  for 
the  construction  of  said  paAements  were  in  violation  of  the 
interstate  commerce  clause  of  the  Constitution  of  the  United 
States  (Art.  1,  sec.  8);  and  (5)  that  the  said  resolutions, 
ordinances  and  contracts  and  the  action  of  the  defendant 
company  in  securing  the  same  were  in  violation  of  tlie  Fed- 
eral Anti-Trust  Act  of  Julv  2,  1890. 

Upon  the  trial,  the  Circuit  Court  held  against  the  prayer 
of  the  complainant  for  relief  upon  the  Federal  grounds  al- 
leged, but,  holding  that  the  paving  of  Wyandotte  street  was 
unnecessary,  granted  the  prayer  of  the  bill  as  to  the  tax  bills 
issued  for  work  done  on  that  street,  and  dismissed  the  bill  as 
to  the  other  two  streets. 

From  so  much  of  the  decree  as  held  the  tax  bills  for  the 
work  done  on  Wyandotte  street  invalid  the  paving  company 
also  appealed.    (Case  Xo.  202.) 

J/r.  Richard  H.  Field,  attorney  in  person,  for  api>ellant  in 
Ko.  201,  and  appellee  in  Xo.  202. 

[620]  Mr.  William  C,  Scarritt,  with  whom  Mr.  John  K. 
Griffith,  Mr.  Elliott  H.  Jones  and  Mr.  Edward  L.  Searritt 
were  on  the  brief,  for  appellee  in  No.  201,  and  appellant  in 
No.  202. 

Mr.  Justice  Day,  after  making  the  foregoing  statement, 
delivered  the  opinion  of  the  court. 

A  motion  was  filed  by  the  appellant  to  dismiss  the  appeal 
of  the  paving  company,  which  was  postponed  to  the  hearing 
of  these  appeals  upon  the  merits.  An  examination  of  the  mo- 
tion and  a  consideration  of  the  briefs  filed  and  arguments 
made  in  support  of  and  in  opposition  to  the  same  leads  us 
to  the  conclusion  that  it  cannot  be  sustained.    The  appellant 


IW   I'XITED   STATES  REPORTS,  620. 

Opinion  of  tlie  Court 


appealed  directly  to  this  court;  for  while  there  was  an  alle- 
gation of  diverse  citizenship  in  the  bill,  jurisdiction  was  also 
invoked  on  the  constitutional  grounds  above  stated.  This 
made  the  case  appealable  directly  to  this  court  under  section 
5  of  the  act  of  March  3,  1891,  1  Comp.  Stat  U.  S.  549,  m 
one  which  "  involves  the  construction  or  application  of  the 
Constitution  of  the  United  States." 

The  contention  is  that  the  prayer  of  the  complainant  on 
the  constitutional  grounds  having  been  denied,  the  appeal 
of  the  respondent  should  have  been  to  the  Circuit  Court  of 
Appeals.  But  we  cannot  agree  to  this  view.  There  was  no 
cross  bill  filed  in  tlie  case  and  none  was  required.  The  bill 
of  complaint  contained  allegations  sufficient  to  make  a  case 
of  alleged  violation  of  constitutional  rights.  It  is  well  settled 
that  in  such  cases  the  entire  case  may  be  brought  to  this  court 
by  the  appeal.  In  IJoIder  v.  Aultman,  169  IJ.  S.  81,  88,  dis- 
cussing the  act  of  ^larch,  1891,  Mr.  Justice  dray  said: 

"TJiMm  siirh  it  writ  of  error,  differing  in  these  respetts  from  a  writ 
of  erriirju  tlie  liighest  i-oiirt  of  a  State,  the  jurisdiction  of  this  court 
does  not  depend  upon  the  question  whether  the  right  claimed  under 
the  <  oiistitntion  of  the  United  States  has  been  upheld  or  denied  in  the 
court  below:  and  the  jurisdiction  of  this  court  is  not  limited  to  the 
oonstitutional  question,  but  [621]  includes  the  whole  case.  Whitten  v 
TmilmsoiK  l«X»  U.  S.  231.  2?.S;  Penn.  Im.  Co,  v.  Austhu  168  U.  S.  685."' 
I^oeft  V  C<dmnhm  Toicmhip  Trustees,  170  U.  S.  472.  See  also  ChappeU 
T.  C7fiile<l^^ffiff#^  160  U.  S.  409,  509;  Earner  v.  United  States,  No.  2, 
143  U.  S.  £»iO,  4>77. 

If,  therefore,  the  whole  case  can  come  to  this  court  by  di- 
rect appeal  under  the  allegations  of  this  bill,  and  if  all  the 
questions.  Federal  or  otherwise,  may  come  up  on  such  appeal, 
it  must  follow  that  either  party  aggrieved  by  the  decision 
may  appeal,  and  in  this  case  the  complainant  appealing,  a 
cross  appeal  may  be  sued  out  by  the  defendant  as  to  the  mat- 
ters decided  in  the  same  case  against  him.  If  he  fails  to  take 
such  appeal  the  correctness  of  the  decision  as  against  him  will 
be  presumed.  Ma;?  Conrpany  v.  Flanders,  12  Wall.  130; 
Chittenden  v.  Bretmter,  2  Wall.  191, 196. 

The  motion  to  dismiss  the  cross  appeal  must  be  denied. 

Coming  to  the  merits  of  the  case,  the  grounds  of  Federal 
relief  will  first  be  considered.  It  is  claimed  that  certain  sec- 
tions of  the  act  of  the  general  assembly  of  Missouri,  which 
make  the  tax  bills  levied  to  pay  the  contract  price  for  the 
paving  a  lien  upon  the  complainant's  real  estate,  deprive  him 


FIELD   V.   ASPHALfT   CO. 


559 


Opinion  of  the  Court. 

of  his  property  without  due  process  of  law,  and  deny  to  him 
the  equal  protection  of  the  laws.  This  argument  is  predi- 
cated on  section  5989  of  the  Revised  Statutes  of  Missouri. 

The  exact  point  of  objection  is  that  the  improvement  is  not 
to  be  made  if  a  majority  of  the  resident  owners  of  the  prop- 
erty liable  to  taxation  therefor  shall  file  with  iha  city  clerk 
a  protest  against  such  improvement,  which  privilege  of  pro- 
test is  not  given  to  non-resident  owners,  tliereby  discriminat- 
ing against  them.  It  is  well  settled,  however,  that  not  everv 
discrimination  of  this  character  violates  constitutional  rights. 
It  is  not  the  purpose  of  the  Fourteenth  Amendment,  as  has 
been  frequently  held,  to  prevent  the  States  from  classifying 
the  subjects  of  legislation  and  making  different  regulations 
as  to  the  property  of  different  individuals  differently  situ- 
ated. The  provision  of  the  Federal  Constitution  is  satisfied 
if  all  [622]  persons  similarly  situated  are  treated  alike  in 
privileges  conferred  or  liabilities  imposed.  Kcntuck}/  Rail- 
road Tax  Cascfi,  115  IT.  S.  321;  Hayes  v.  MixsoHrl,  120  U.  S. 
68;  Magoun  v.  Illinois  Trust  c&  Savings  Banl\  ITO  U.  S.  283; 
Gulf,  Colorado  d;  Santa  Fe  Railroad  v.  Ellis,  165  U.  S.  150. 
The  alleged  discrimination  is  certainly  not  an  arbitrar^^  one ; 
the  presence  within  the  city  of  the  resident  property  owners, 
their  direct  interest  in  the  subject  matter  and  their  ability  to 
protest  promptly  if  the  means  employed  are  objectionable, 
place  them  on  a  distinct  footing  from  the  non-residents  whom 
it  may  be  difficult  to  reach.  Furthermore,  there  is  no  dis- 
crimination among  property  owners  in  taxing  for  the  im- 
provement. Wlien  the  assessment  is  made  it  operates  upon 
all>  alike.  It  has  been  held  to  be  within  the  power  of  the  leg- 
islature of  Missouri  to  authorize  the  council  to  order  the  im- 
provement to  be  made  without  consulting  j)roperty  owners. 
Buchan  v.  Broadwell,  88  Missouri,  31.  If  the  legislature  saw 
fit  to  give  to  those  most  directly  interested  and  whose  consent 
could  be  most  readily  obtained,  the  right  to  protest,  such  ac- 
tion did  not  deprive  other  persons  of  rights  guaranteed  by 
the  Constitution. 

Further  objection  on  Federal  grounds  is  urged,  in  that  the 
specification  of  Trinidad  Lake  asphalt  for  this  improvement 
is  in  violation  of  the  interstate  commerce  clause  of  the  Con- 
stitution of  the  United  States,  and  of  the  so-called  Sherman 


194   UNITED   STATES   KEPORTS,  622. 
Opinion  of  the  Court. 

Act  of  July,  1890.  The  right  to  provide  for  this  paving  was 
vested  by  the  Missouri  statute  in  the  board  of  aklernien.  The 
right  to  select  the  material  for  the  paving  was  vested  in  that 
body;  they  saw  fit  to  choose  Trinidad  Lake  asphalt  for  the 
paving.  Their  riglit  so  to  do,  inider  the  charter  powers  of 
such  cities  as  AWstport,  notwithstanding  competitive  bidding 
is  thereby  rendered  impossible,  has  been  sustained  by  the  Su- 
preme Court  of  Mi'^souri.  Barber  Asphalt  Parhn/  Co.  v. 
Hunt,  100  ^fissoiiri,  ±1:  WirrrcH  v.  Pifr'nu/  Co.,  115  Missouri, 
57*2:  Verdht  v.  Sf.  Louis,  IHl  Missouri,  2(\.  With  the  wisdom 
of  this  choice  the  courts.have  nothing  to  do,  and  in  this  case 
we  are  only  concerned  to  inquire  as  to  the  alleged  violation  of 
Federal  rights  [623]  in  such  selection.  The  argument  is 
that  Trinidad  Lake  asphalt,  being  a  product  of  a  foreign 
country  and  brought  into  Missouri,  and  there  being  other  de- 
posits in  other  States  within  the  United  States  from  which 
suitable  asphalt  could  be  had,  the  specification  of  this  kind 
of  asphalt  is  an  interference  with  and  a  regulation  of  inter- 
state conunerce,  in  violation  of  the  exclusive  right  of  Con- 
gress conferred  by  the  Constitution.  It  is  inmecessary  to 
cite  largely  from  cases  in  this  court,  which  hold  that  onlv 
such  acts  as  dir.»ctly  interfere  with  the  freedom  of  interstate 
commerce  are  prohibited  to  the  States,  Kkid  v.  Pearson,  128 
IT.  S.  1,  in  which  case,  Mr.  Justice  Lamar,  speaking  for  the 
court,  said  (p.  28) : 

"As  Ims  Iteeii  ofttMi  said  lesislntioii  r^\v  a  Stato]  may  in  a  j?reat 
variety  of  ways  afilVct  ({niiiuorce  and  persons  ciijirajjed  ill  it.  witlioiit 
eonstitntiiiir  a  rcju^.iiation  of  it  witliiii  the  meaning;  of  tiie  ("oiistitii- 
tioii."  /'cmisitfrunia  h\  h\  Co.  v.  fluf/hcH,  101  U.  S.  477.  and  cases 
cited  in  tiie  opiidon. 

Fhe  right  of  a  State  in  the  exercise  of  the  police  power 
to  make  regulations  which  indirectly  affect  interstate  com- 
merce has  been  frequently  sustained.  In  the  i)resent  case 
it  may  Im  that  the  use  of  this  kiiul  of  asphalt,  under  nnmici- 
pal  authoritv  conferred  bv  the  State,  will  in  a  limited  deorree 
affect  interstate  commerce,  but  it  certainly  is  not  one  of  those 
direct  interfeiences  with  the  power  over  and  express  con- 
trol of  the  subject  given  bv  the  Constitution  to  Conofress. 
In  this  day  of  midtiplied  means  of  intercourse  between  the 
States  there  is  scarcely  any  contract  which  cannot  in  a  limited 
or  remote  degree  Ix^  said  to  affect  interstate  conunerce.     But 


FIELD  V.   ASPHALT    CO. 


561 


Opinion  of  the  Court 
it  is  only  direct  interferences  with  the  freedom  of  such  com- 
merce that  bring  the  case  within  the  exclusive  domain  of 
Federal  legislation. 

The  attempt  to  invoke  the  provisions  of  the  Sherman  Act 
m  this  case  is  equally  unavailing.    That  act  has  been  recently 
considered  in  the  Northern  Securities  cases,  decided  at  this 
term,  and  its  construction  and  the  nature  of  the  remedies 
under  it  determined.     It  is  not  intended  to  affect  contracts 
which  have  a  remote  and  indirect  bearing  upon  commerce 
16241  between  the  States.    Hopkins  v.  United  States,  171 
U.  S.  578;  AddystonPipe  Co,  v.  United  States,  175  U.  S.,  211. 
In  addition  to  the  ground  by  which  Federal  jurisdiction 
was  established  in  the  courts  below,  it  is  alleged  that  the  tax 
bills  should  be  held  void  because  they  were  obtained  by  un- 
due influence  of  the  agents  of  the  paving  company,  im- 
properly exercised  to  obtain  the  needed  municipal  action. 
The  court  below  held,  and  an  examination  of  the  testimony 
has  brought  us  to  the  same  conclusion,  that  there  was  nothing 
in  the  case  to  establish  the  charges  of  fraud  and  corruption, 
although  the  record  does  show  that  an  agent  of  the  defend- 
ant company  was  active  and  perhaps  influential  in  obtaining 
signatures  to  the  petition  which  specified  Trinidad  Lake 
asphalt  for  this  improvement;   yet  in  the  absence  of  proof 
of  fraud  or  corruption  we  do  not  think  the  contract  and  re- 
sulting levies  can  be  set  aside  for  this  reason.    It  is  one  thing 
to  disapprove  of  such  measures  as  a  matter  of  propriety  of 
action,  but  quite  another  to  set  aside  a  contract,  especially 
after  the  full  performance  of  its  terms. 

Upon  the  cross  appeal,  the  learned  judge  in  the  court  be- 
low  held  that  the  Wyandott(i  street  tax  bills  were  void  be- 
cause that  street  had  been  previously  paved  with  macadam  in 
the  years  1892-1893,  four  or  five  years  before  the  asphalt 
paving  was  laid,  which  macadam  he  found  to  be  in  good  con- 
dition and  but  little  worn.  The  effect  of  this  decree  was 
while  findmg  against  complainant  as  to  the  allegations  of 
fraud  and  collusion  in  obtaining  the  contract,  to  hold  that, 
m  the  opinion  of  the  trial  judge,  the  repaving  of  Wyandotte 
street  was  unnecessary.  We  think  this  conclusion  overlooks 
the  tact  that  the  power  to  construct,  improve  and  pave  streets 

21220— VOL  2—07  m 36 


562 


ItM   UKITED  STATES  BEPORTS,   624. 


Opinion  of  the  Court. 

was  vested  by  the  law  of  Missouri,  as  it  generally  is,  in  the 
board  of  aldermen.  (Laws  of  Missouri,  1895,  65,  §  85  to 
§95,  inclusive.)  The  necessity  of  such  improvements  is  a 
matter  of  which  they  are  the  exclusive  judges,  and  their 
judgment  is  not  to  be  interfered  with  by  the  courts,  except 
in  cases  of  fraud  or  gross  abuse  of  power.  This  power  of  the 
city  board  is  a  continuing  [625]  one,  and  the  mere  fact  that 
a  pavement  has  been  once  laid  does  not  require  the  inter- 
ference of  the  courts  when  the  governing  body  of  the  city, 
in  the  exercise  of  its  judgment,  has  determined  that  the  neces- 
sity for  repaving  has  arisen.  The  law  has  vested  tliis  power 
in  the  representatives  of  the  city  and  the  courts  are  not  at  lib- 
erty to  determine  whether  the  judgment  is  exercised  wisely  or 
unwisely.  If  this  wei-e  not  so,  a  contractor,  who  acts  under  the 
direction  and  because  of  the  action  of  the  city  authorities  in 
determining  the  necessity  of  an  improvement,  must  lose  his 
compensation,  if,  upon  the  suit  of  a  property  owner,  the 
courts  shall  take  a  different  view  of  the  necessity  of  the  im- 
provement. In  other  words,  the  contractor,  though  acting 
in  good  faith  and  complying  in  all  respects  with  his  agree- 
ment, lawfully  made,  must  abide  the  judgment  of  the  courts 
as  upon  appeal  from  the  tribunal  solely  empowered  by  law 
to  pass  upon  the  necessity  of  the  improvement,  and  to  make 
the  necessary  contracts  to  carry  it  out. 

As  we  have  said,  there  may  be  cases  of  fraud  or  arbitrary 
abuse  of  power,  when  the  courts  will  intervene.  Under  other 
circumstances  the  municipality  and  property  owners  inter- 
ested are  bound  by  the  acts  of  their  agents.  The  authorities 
amply  sustain  this  view.  2  Dillon  Mun.  Corp.  (4th  ed.) 
§  686 ;  Wabash  E.  R,  Co.  v.  Defiance,  167  U.  S.  88 ;  Skinker 
v.  Heman^  148  Missouri,  349;  Warrm,  v.  Paving  Co.,  115 
Missouri,  572,  580. 

Applying  the  principles  settled  by  the  authorities  to  the 
facts  disclosed  in  this  case,  we  do  not  find  such  evidence  of 
fraud  or  gross  abuse  of  power  as  would  warrant  the  setting 
«ride  of  L  tax  biUs  for  this  improvement  The  testimony 
tends  to  show  that  the  macadam  was  considerably  worn;  its 
replacement,  to  the  extent  of  laying  an  asphalt  pavement  on 
top  of  it,  was  deemed  necessary  by  the  city  authorities.  It 
does  not  appear  that  any  protest  or  objection  was  made  dur- 


D.    E.   LOEWE   &   CO.    V,   LAWLOE. 


563 


Syllabus. 

ing  the  progress  of  the  work.  A  majority  of  the  resident 
owners  of  lots  abutting  upon  the  part  of  the  street  to  be  im- 
proved had  petitioned  for  the  asphalt  pavement.  There  is 
considerable  [626]  testimony  tending  to  show  that  the  value 
of  abutting  property  was  enhanced  by  the  improvement. 
These  and  kindred  matters  were  before  the  board.  It  is 
not  our  province  to  review  their  judgment,  and  we  do  not 
think  the  courts  are  authorized  to  interfere  with  the  dis- 
cretion vested  in  them  in  making  the  improvement  under  the 
circumstances  shown.  To  hold  otherwise  would  be,  as  we 
have  said,  to  substitute  the  judgment  of  the  court  as  to  the 
expediency  or  necessity  of  making  such  improvement  for 
that  of  the  body  delegated  by  law  with  the  power  and  re- 
sponsibility of  action  in  the  premises. 

The  court  below,  having  properly  held  that  the  case  alleged 
must  fail  on  the  other  grounds,  shoiild  have  regarded  the 
judgment  of  the  board  of  aldermen  as  to  the  necessity  of  re- 
paving  Wyandotte  street  as  conclusive  upon  it.  The  con- 
clusion reached  renders  it  unnecessary  to  consider  whether 
the  complainant,  having  failed  to  protest  or  object  to  the 
work  before  it  was  begim  or  during  its  progress,  can  be  heard 
in  a  court  of  equity  to  object  to  the  tax  bills  assessed  for  the 
benefit  of  the  contractor  after  the  work  is  completed  in  com- 
pliance with  the  contract. 

We  think  the  court  below  erred  in  adjudging  the  tax  bills 
on  Wyandotte  street  to  be  void,  and  so  much  of  thp  decree  is 
reversed  with  costs,  the  decree  as  to  the  other  streets  is 
affirmed,  and  the  case  remanded  to  the  court  below  with  in- 
structions to  dismiss  the  bill. 


[633]    D.  E.  LOEWE  &  CO.  ^.  LAWLOR  ET  AL.« 

(Circuit  Ck)urt,  D.  Connecticut    June  9,  1904.) 
[130  Fed.,  633.] 

Abatement— Pendency  op  Action  in  State  Coubt  »— Indemnity.— 
The  pendency  of  a  suit  In  a  state  court  cannot  be  pleaded  In  almte- 


«  Motion  to  correct  complaint  denied  (142  Fed.,  216).    See  p.  854. 

6  Pendency  of  action  in  state  or  federal  court  as  ground  for  abate- 
ment of  action  in  the  other,  see  note  to  Bunker  Hill  d  Sullivan  Mining 
S  Concentrating  Co.  v.  Shoshone  Min.  Co.,  47  C.  C.  A.  205. 


564 


130  FEDEBAL   KEPORTER,  633. 
Opinion  of  tlie  Court 


D.   E.   LOEWE  &  CO.   V,  LAWLOR. 


566 


ment  of  an  action  in  a  Circuit  Court  of  the  United  States  to  recover 
treble  damages  under  section  7  of  the  anti-trust  act  (Act  July  2, 
1880,  c.  647,  26  Stat.  210  [U.  S.  Comp.  St  1901,  p.  3202])  since  the 
state  court  is  without  jurisdiction  to  enforce  the  remedy  given  by 
said  section,  and  therefore  the  same  case  cannot  be  depending  in 
both  courts.0 
Attachment — Gbounds  fob  Dissolution — Pbiob  Attachment  ih 
State  Court. — Where  the  state  statute  provides  for  successive  at- 
tachments of  the  same  property,  a  prior  attachment  in  a  state  court 
affords  no  ground  for  the  discharge  of  an  attachment  in  a  federal 
court. 

At  Law.  On  demurrer  to  plea  in  abatement,  setting  up 
lis  pendens  in  state  court,  and  on  motion  to  vacate  attach- 
ments. 

Davenport  c^  Banks,  for  plaintiff. 

Bristol,  Stoddard,  Beach  d*  Fisher ,  De  Forest  cf*  Klein, 
and  Howard  Tf .  Taylor,  for  defendants. 

Platt,  District  Judge. 

It  appears  to  be  conceded  that  when  suits  are  pending  be- 
tween the  same  parties  for  the  same  cause  of  action,  and 
demanding  the  same  relief,  in  the  state  and  federal  courts, 
which  have  concurrent  jurisdiction  in  the  same  territory,  and 
the  federal  jurisdiction  is  based  upon  diversity  of  citizenship, 
a  plea  in  abatement  alleging  the  pendency  of  one  will  be 
futile  as  against  the  other,  upon  the  authority  of  Gordon  v. 
Guilfoil,  99  U.  S.  168,  25  L.  Ed.  383,  and  many  cases  in  line 
therewith  in  the  lower  courts. 

The  point  is  made  in  argument  upon  the  plea  herein  that 
when  diversity  of  citizenship  is  absent  the  reason  for  the  rule 
departs. 

To  maintain  in  the  case  at  bar  that  the  state  and  federal 
courts  are  "  in  a  sense  "  foreign  to  each  other  would  require 
careful  and  conscientious  study.  The  step  from  foreign  re- 
lations to  hostility  is  so  easy  to  be  taken,  and  the  desire 
of  the  federal  authority  to  promote  and  insure  friendship 
and  tranquillity  by  all  honorable  means  is  so  great,  that 
mn  unnecessary  assertion  of  the  inherent  distinctions  at- 


«  Syllabus  copyrighted,  1904,  by  West  Publishing  CJo. 


Opinion  of  the  Court 

[634]  taching  to  its  source  of  power  should  be  declared  only   • 
in  the  last  instance. 

Fortunately,  the  case  in  hand  does  not,  from  the  court's 
point  of  view,  demand  such  exhaustive  examination.  In  the 
Sherman  act  (Act  July  2,  1890,  c.  647,  26  Stat.  209  [U.  S. 
Comp.  St.  1901,  p.  3200])  the  Congress  has  established  a 
new  method  of  obtaining  redress  in  a  matter  relating  to  inter- 
state trade,  over  which  its  jurisdiction  is  plenary.  It  has 
directed  the  parties  to  the  Circuit  Court  for  the  vindication 
of  their  rights. 

Before  sustaining  the  defendants'  plea,  it  is  obviously  nec- 
essary to  accept  their  preliminary  contention  that  the  state 
coiirt  can,  in  the  trial  of  the  cause  therein  pending,  invoke 
section  7  of  the  anti-trust  act  (Act  July  2,  1890,  c.  647,  26 
Stat.  210  [U.  S.  Comp.  St.  1901,  p.  3202]),  and  under  its 
authority  assess  treble  damages.  It  is  not  believed  that  such 
power  exists  in  the  state  court.  Congress  was  dealing  with  a 
delicate  problem  when  it  gave  us  the  Sherman  act,  and  it 
would  seem  to  have  been  the  thought  that  since  a  subject  was 
up  over  which  the  federal  jurisdiction  was  absolute  it  would 
be  well  to  intrust  its  exploitation  to  the  federal  judiciary. 
The  care  exercised  is  plainly  exhibited  when  equitable  relief 
was  provided  for  in  section  4  (26  Stat.  209  [U.  S.  Comp.  St. 
1901,  p.  3201]),  since  such  relief  is  further  hedged  about  by 
the  discretionary  power  afforded  to  the  Attorney  General. 

The  conclusion  is  easily  reached."  The  same  case  is  not  de-* 
pending  in  both  courts.  Watson  v.  Jones,  13  Wall  679  20 
L.  Ed.  666.  ' 

Having  gone  to  this  point,  it  is  unnecessary  to  take  up  in 
detail  the  question  of  attachments.  The  rule  of  comity  can- 
not be  invoked  unless  the  situation  here  will  lead  to  conflict 
with  the  state  court.  No  trouble  about  the  res  can  arise. 
The  attachment  liens  will  be  governed  by  the  rules  applicable 
to  successive  attachments  under  the  state  statutes,  which  fur- 
nish the  rule  of  action  for  this  court,  since  no  federal  statute 
governs  the  matter. 

The  demurrer  to  the  plea  in  abatement  is  sustained,  and 
the  motion  to  vacate  attachments  is  denied,  at  defendants' 
costs  in  each  event. 


566  131   FEDERAL   REPOBTEB,   31. 

Syllabus. 

[81]         DAVIS  ET  AL.  v.  A.  BOOTH  &  CO.- 

(Circuit  Court  of  Appeals,  Sixth  Circuit    August  2,  1904.) 

[131  Fed.,  31.] 

Sales — Good  Will — Equity — Jubisoiction — Multtplioity  of  Suits. — 
Equity  lias  jurisdiction  to  restrain  the  violation  of  an  agreement 
entered  into  as  a  part  of  the  sale  of  a  business,  by  which  the  per- 
sons interested  therein  agreed  not  to  again  engage  in  business  in 
certain  localities  for  a  definite  time,  because  of  the  difficulty  In 
estimating  the  damages  accruing,  and  to  prevent  a  multiplicity  of 
suits.^ 

Same — Validity    of    Contract — Public    Policy. — An    agreement    by 

•  which  the  stockholders  of  a  corporation,  on  selling  its  assets  to 
complainant's  assignor,  agreed  not  to  again  engage  in  a  similar 
business  in  specified  localities  for  a  i)erIod  of  10  years,  or  do  any 
act  tending  to  impair  the  good  will  of  the  business  sold,  was  not 
contrai-y  to  public  policy. 

Same — Anti-Trust  Act. — ^Where  a  corporation  engaged  in  the  busl» 
ness  of  buying  and  selling  fish  sold  out  its  assets  and  good  will  to 
plaintifiTs  assignor,  and  the  seller  no  longer  retained  any  interest 
In  the  property,  so  that  the  sale  was  not  a  mere  combination  of 
owners  and  properties  under  one  management,  the  sale  was  not  in 
violation  of  the  federal  anti-trust  act  of  July  2,  1890,  c.  647,  26 
Stat  209  [U.  S.  Comp.  St.  1901,  p.  3200],  prohibithig  contracts  in 
restraint  of  trade,  though  the  contract  might  incidentally  or  in 
some  remote  degree  injuriously  affect  interstate  commerce. 

Same — State  Statutes — Construction. — 3  How.  Ann.  St.  §  9354 j,  de- 
nominated an  act  prohibiting  certain  trust  combinations,  and  pro- 
viding that  all  contracts,  the  purpose  or  intent  of  which  shall  be  in 

*  any  manner  to  prevent  or  restrict  free  competition  in  the  sale  of 
any  article  or  commodity,  or  in  any  other  branch  of  business  or 
labor,  shall  be  utterly  illegal  and  void,  provided  that  It  shall  not 
invalidate  or  affect  contracts  for  the  sale  of  the  good  will  of  a 
trade  or  business,  does  not  prohibit  a  contract  for  the  sale  of  a 
business  where  It  was  not  intended  that  the  seller  should  there- 
after have  any  interest  in  the  property,  or  an  agreement  by  which 
the  seller's  stockholders  contracted  not  to  again  engage  in  a  similar 
business  In  competition  with  the  buyer  in  certain  places  for  a  speci- 
fied time. 

Same — ^Restraint  of  Competition. — An  agreement  ancillary  to  a  sale 
of  a  corporation's  business,  by  which  the  stockholders,  who  re- 


•  Injunction  granted  (127  Fed.,  875).  See  p.  318.  Modified  and 
afiSrmed  by  Circuit  Court  of  Appeals,  Sixth  Ch-cuit  (131  F.,  31).  Peti- 
tion for  writ  of  certiorari  denied  by  Supreme  Court  (195  U.  S.,  636). 
A  memorandum  decision.    Not  reprinted. 

ft  See  Injunction,  vol.  27,  Cent.  Dig.  §  121. 


DAVIS   V,   A.   BOOTH   &   CO. 
Opinion  of  the  Court 


567 


celved  the  purchase  price,  agreed  that,  hi  order  to  protect  the  good 
will  of  the  business  so  sold,  they  would  not  either  directly  or  indi- 
rectly engage  in  the  same  business  within  certain  distinct  limits 
for  a  period  of  10  years,  was  not  void,  as  an  unreasonable  restraint 
of  competition  in  trade,  at  common  law. 
Same— Construction.— Where  a  contract  ancillary  to  the  sale  of  a 
business  provided  that  the  stockholders  of  the  seller  would  not  again 
engage  in  a  similar  business  [32]  for  a  period  of  10  years  in  the 
territory,  or  the  immediate  vicinity  of  the  territory,  dealt  in  by 
the  corporation,  or  operated  in  by  it  or  its  agents,  or  the  immediate 
vicinity  of  such  territory,  the  localities  guarded  against  were  re- 
stricted to  those  in  which  the  selling  company  had  establishments 
for  doing  business,  and  the  immediate  vicinity  thereof,  and  did  not 
include  all  parts  or  every  one  of  the  United  States  in  which  a 
former  customer  resided,  or  into  which  the  corporation's  corre- 
spondence had  extended,  or  through  which  an  agent  of  the  com- 
pany had  traveled.0 

Appeal  from  the  Circuit  Court  of  tlie  United  States  for  the 
Eastern  District  of  Michigan. 

For  opinion  below,  see  127  Fed.  875. 
Edward  E,  Kane,  and  Fred  A.  Baker,  for  appellants. 
Ee7iry  M.  Duffield  and  Charles  S.  Thornton,  for  appellee. 
Before  Lurton,  Severens,  and  Richards,  Circuit  Judges. 
Severens,  Circuit  Judge. 

The  object  of  this  bill  filed  in  the  Circuit  Court  by  the 
appellee,  A.  Booth  &  Co.,  was  to  obtain  an  injunction  against 
the  appellants  to  restrain  them  from  violating  an  agreement 
made  by  them  with  William  Vernon  Booth,  to  the  benefits 
of  which  the  appellee  claimed  to  be  entitled.  It  states :  That 
the  complainant  is  a  corporation  organized  under  the  laws 
of  Illinois  on  August  1,  1898,  with  a  capital  of  $5,500,000, 
for  the  purpose  of  buying,  catching,  and  selling  fish,  and 
having  its  general  office  at  Chicago.  That  the  Davis  Fresh 
&  Salt  Fish  Company  was  a  corporation  organized  under  the 
laws  of  Michigan  for  a  similar  business,  with  headquarters 
at  Detroit.  That  on  or  about  August  14,  1898,  the  last- 
named  company,  for  the  consideration  of  $17,473.14,  sold  all 
its  properties,  including  the  good  will  of  its  business  con- 

«  Syllabus  copyrighted,  1904,  by  West  Publishing  Co. 


568 


131  FEDERAL  BEPOBTEB,  32. 


Opinion  of  the  CJonrt 

ducted  at  Detroit,  and  gave  a  bill  of  sale,  with  warranty  of 
title,  to  William  Vernon  Booth,  on  September  14,  1898,  and 
Davis  gave  a  personal  guaranty  of  the  contract  of  sale. 
That,  as  an  inducement  to  the  sale,  Davis  and  the  other  stock- 
holders of  the  selling  company  entered  into  the  following 
agreement: 

"This  instrument  witnessetli,  tMt  William  Vernon  Booth  has  pur- 
chased the  plant,  business  and  good  will  of  the  business  of  the  Davis 
Fresh  &  Salt  Fish  Co.,  and  has  paid  therefor  the  sum  of  $17,473.14; 
that  in  making  said  transfer,  and  as  an  mducenient  to  said  William 
Vernon  Booth  to  purchase  said  plant,  business  and  good  will  and  pay 
the  sum  aforesaid  for  the  same,  we  each  have  agreed  that  we  would 
not,  and  we  now  do  agree,  each  for  himself,  jointly  and  severally  with 
him.  the  said  William  Vernon  Booth,  his  heirs  and  assigns,  forever, 
that  we  will  not.  during  the  next  ten  years,  iu  the  territorv  or  the 
Immediate  vicinity  of  the  territory  dealt  in  by  our  company,  or 
operated  in  by  ourselves  or  the  agents  or  employees  of  the  company 
engage  or  In  any  manner  be  interested  iu,  either  directlv  or  indirectly. 
for  ourselves  or  for  others,  the  same  or  like  kind  or  character  of  busi- 
ness as  that  heretofore  conducted  and  now  being  carried  on  by  said 
company,  its  officers,  agents,  employees  and  assigns,  and  that  we  will 
not,  during  the  said  period  of  ten  (10)  years,  either  directlv  or  Indi- 
rectly, be  guilty  of  any  act  Interfering  with  the  business,  its  good  will, 
its  trade  or  its  customers,  or  come  In  comi^etition  with  the  same; 
and  we  will  not.  Jointly  or  severally  either  In  firms  or  coriioratlons, 
or  as  individuals  or  in  any  other  way,  directly  or  Indirectly  Interfere 
with  the  said  trade  or  business,  or  do  any  act  prejudicial  to  the  same 
or  any  part  thereof,  or  interfere  with  the  persons  employed  therein; 
the  meaning  hereof  being  that  the  said  William  Vernon  Booth  is  buy- 
ing and  paying  for  the  good  will  of  the  business  In  the  largest  and 
fullest  scope  of  the  term ;  and  that  we  will  not,  and  each  agrees  that 
lie  will  not,  do  anything  to  interfere  [88]  with  or  injure  the  said  busi- 
ness, but  will,  during  said  period,  lend  his  aid  and  best  Influence  to  the 
promotion  and  advancement  of  the  same. 

•*In  witness  whereof,  we  hereunto  subscribe  our  names  and  affix 
mr  seals,  jointly  and  severally,  this  first  day  of  August,  A.  D.  1898. 

**  Edgar  A.  Davis. 
"James  T.  Donaldson. 
*•  Belle  R.  Harper. 
"  Ed.  E.  Kane. 
"Belle  B.  Davis." 

Which  agreement  was  delivered  and  the  consideration  of 
$17,473.14  paid  on  September  14,  1898,  and  said  considera- 
tion was  then  distributed  among  the  stockholders  of  the  sell- 
ing company.  That  on  September  27,  1898,  said  William 
Vernon  Booth,  for  a  valuable  consideration,  sold  to  the  com- 
plainant all  the  properties  so  purchased  of  the  Davis  Fresh  & 
Salt  Fish  Company,  including  the  good  will  of  the  business, 
and  assigned  to  said  complainant  the  above-quoted  agreement 
of  the  stockholders  of  said  last-mentioned  company.  That  at 
the  time  of  its  sale  to  William  Vernon  Booth  the  Davis  Fresh 


DAVIS  V.   A.   BOOTH   &   CO. 
Opinion  of  the  Court 


569 


&  Salt  Fish  Company  was  conducting  its  business  not  only  at 
Detroit,  but  in  the  following  named  places — either  selling  to 
regular  customers,  or  having  established  agencies  there — 
namely :  "  Cincinatti,  Cleveland,  Columbus,  and  Dayton,  in 
the  state  of  Ohio ;  Louisville,  Kentucky.;  Nashville,  Tennes- 
see ;  St.  Louis  and  Kansas  City,  Missouri ;  Buffalo  and  New 
York  City,  in  the  state  of  New  York;  Grand  Kapids,  Jack- 
son, East  Saginaw,  Battle  Creek,  Lansing,  and  Port  Huron, 
in  the  state  of  Michigan."  That  Davis  became  an  employe 
of  the  complainant,  but  after  a  time  withdrew,  and  with 
Delos  Cook,  Michael  J.  Dee,  and  Alva  M.  Himgerford  or- 
ganized a  limited  partnership  under  the  laws  of  Michigan, 
and  filed  a  certificate  thereof  in  the  office  of  the  clerk  of 
the  county  of  Wayne,  in  that  state.  That  on  August  26, 1898, 
the  complainant  made  a  similar  purchase  of  the  E.  A.  Edson 
Company,  an  Ohio  corporation  doing  a  sunilar  business  at 
Cleveland,  and  also  at  Detroit,  and  that  Edson,  its  president, 
made  a  similar  agreement  with  that  of  the  stockholders  of 
the  Davis  Fresh  &  Salt  Fish  Company,  and  that  it  made  a 
like  purchase  of  the  Buffalo  Fish  Company,  a  New  York 
corporation,  and  obtained  a  similar  agreement  from  its  stock- 
holders. That  Davis,  after  leaving  complainant,  organized 
the  Gopher  Fish  Company  in  opposition  to  complainant,  at 
St.  Paul,  Minn.,  and  induced  Donaldson,  who  was  one  of  the 
signers  of  the  agreement  of  the  Davis  Fresh  &  Salt  Fish 
Company  stockholders,  who  was  subsequently  in  the  employ- 
ment of  the  complainant,  to  take  charge  of  the  said  Gopher 
Fish  Company,  and  also  induced  Hutigerford,  another  of 
said  signers,  to  leave  complainant  and  become  bookkeeper  of 
the  Wolverine  Fish  Company.  That  Davis  and  Edson  made 
public  announcement  that  they  intended  to  "  fight  complain- 
ant in  a  business  wa3\"  and  intended  to  organize  corpora- 
tions in  Detroit,  Cleveland,  New  York  and  other  places, 
which  should  be  under  one  control,  and  act  together  in  busi- 
ness policy,  and  fix  prices  for  the  purchase  and  sale  of  fish, 
whereby  they  could  better  promote  the  interests  of  the  public, 
and  that  they  caused  to  be  published  in  leading  journals 
articles  (which  are  copied  into  the  bill)  indicating  that  they 
intended  to  carry  on,  or  cause  to  be  carried  on,  a  strong  com- 
petition  with  the  complainant   in  [34]  the   fish   business. 


570 


131   FEDERAL   REPORTER,   34. 


Opinion  of  the  Ctourt. 

That  they  characterized  the  complainant  as  a  "  trust,"  the 
contrary  of  which  the  complainant  avers  to  be  the  fact,  and  it 
vouches  a  decision  of  the  Supreme  Cpurt  of  New  York  to 
that  effect.    That  Davis,  Edson,  and  another  have  entered 
actively  into  the  fish  business  in  the  territory,  and  the  vicin- 
ity of  the  territory,  dealt  in  by  their  respective  corporations, 
in  violation  of  their  agreements,  and  organized  companies 
to  prosecute  said  business  at  New  York,  Cleveland,  and 
Detroit.    That  the  Wolverine  Fish  Company  was  organized 
by  Davis  to  more  conveniently  violate  his  agreement,  and 
has  been  and  now  is  conducting  and  threatens  to  conduct  its 
business  in  a  manner  calculated  to  injure  the  complainant, 
and  render  the  good  will  purchased  of  his  company  valueless 
That  he  interferes  with  its  business,  trade,  and  customers. 
That  he  solicits  consignments  of  fish  and  makes  purchases 
thereof  from  the  former  customers  of  his  company,  and  has 
in  many  instances  drawn  away  such  customers  to  the  Wol- 
verine Fish  Company,  and  that  Edson,  Hungerford,  and  Dee 
are  assisting  him.    That  Davis  is  sending  out  to  the  former 
customers  of  his  company  false  statements  injurious  to  the 
complainant's  reputation  for  honesty  and  fair  dealing,  which 
tend  to  the  loss  of  complainant's  business,  and  that  Davis  is 
insolvent,  and  a  judgment  against  him  would  be  uncollecti- 
ble; and  a  considerable  number  of  the  statements  referred  to 
are  set  out,  the  truth  of  which  is  denied.    And  the  complain- 
ant  says  it  has  been  greatly  injured  by  this  conduct 'of  the 
defendants,  and  has  sustained  already  the  loss  of  more  than 
$100,000,  and  will  continue  to  suffer  further  irreparable  loss 
unless  the  defendants  are  enjoined,  etc. 

The  prayer  is  that  the  defendant  Davis  be  compelled  to 
perform  his  agreement  made  with  William  Vernon  Booth, 
and  that  he 


"And  his  agents  and  employes  be  enjoined  duing  the  full  term  of 
^?Jf*l2,^''r  t"^st  1' !898,  from  engaging  or  in  any  manner  being 
interested,  directly  or  indirectly,  for  themselves  or  for  others,  in  the 
city  of  Detroit,  or  in  the  immediate  vicinity  of  any  territory  dealt 
«  Jf  x?-^tP^^^  ***  August  1.  18.98,  or  operated  by  the  said  Davis  Fresh  & 
fi?ir^  Company,  or  the  defendant  Davis,  or  the  agents  or  employes 
of  the  Davis  Fresh  &  Salt  Fish  Company,  In  catching,  buying,  selling, 
handlmg,  or  dealing  in  any  kind  of  flsh  or  other  salt  or  fresh  water 
food  products,  in  the  storage  thereof,  the  manufacture  of,  or  dealing 
In  any  manner  in  flsh  products,  and  from  engaging  in  or  in  any  manner 
being  interested  in,  in  the  territory  aforesaid,  any  other  kind  or  char- 


DAVIS   V,   A.   BOOTH   &   CO. 
Opinion  of  the  CJourt 


571 


acter  of  business,  the  same  as  or  like  that  conducted  and  carried  on 
by  the  Davis  Fresh  &  Salt  Fish  Company  on  and  prior  to  August  1, 
1898,  or  by  its  officers,  agents,  employes,  or  assigns,  and  from  soliciting 
or  inviting,  in  the  territory  aforesaid,  other  persons  to  buy  from  or 
sell  to  or  otherwise  deal  with  them,  or  either  of  them,  in  said  busi- 
ness aforesaid,  and  from  interfering  with  the  business  formerly 
transacted  by  the  Davis  Fresh  &  Salt  Fish  Company,  and  by  it  sold, 
assigned,  and  transferred  to  William  Vernon  Booth,  its  good  will, 
Its  trade,  or  its  customers,  and  from  coming  into  competition  with 
this  complainant's  business  in  the  city  of  Detroit  and  vicinity,  and 
wherever  the  business  of  the  Davis  Fresh  &  Salt  Fish  Company  ex- 
tended at  the  time  of  its  sale  to  and  contract  with  said  Booth,  and 
from  interfering  in  any  way,  directly  or  indirectly,  with  the  said 
trade  or  business,  and  from  doing  any  act  prejudicial  to  the  same,  or 
any  part  thereof,  and  from  interfering  with  the  persons  employed  in 
the  service  of  this  complainant,  and  from  using  their  aid  or  influence 
In  regard  to  this  complainant's  trade  or  business,  otherwise  than  for 
the  promotion  and  advancement  of  the  same,  and  that  the  said  de- 
fendants Eugene  R.  Edson,  Alva  M.  Hungerford,  Michael  J.  Dee,  and 
Wolverine  Fish  Company,  Limited,  their  agents,  servants,  and  em- 
ployes, be  enjoined  during  the  full  period  of  ten  years  from  August  1, 
1898,  from  aiding  the  said  Edgar  [35]  A.  Davis  or  participating  with 
said  Davis  in  and  otherwise,  directly  or  indirectly,  interfering  with 
the  business  of  the  complainant,  or  with  the  persons  employed  therein, 
and  from  using  their  aid  and  influence  in  connection  with  the  said 
Davis,  otherwise  in  regard  to  complainant's  trade  or  business,  other- 
wise than  for  the  promotion  and  advancement  of  the  same,  and  that 
the  said  Edgar  A.  Davis,  Eugene  R.  Edson,  Alva  M.  Hungerford, 
Michael  J.  Dee,  and  the  Wolverine  Fish  Company,  Limited,  be  so  en- 
joined and  restrained  during  the  pendency  of  this  action;  and  that 
this  complainant  recover  from  the  said  defendants  such  sum  as,  upon 
a  proper  accounting,  the  complainant  may  show  it  has  been  damaged 
by  reason  of  the  wrongful  action  of  the  said  defendants,  and  for  such 
other  and  further  relief  as  to  the  court  may  seem  fit." 

Manv  affidavits  and  exhibits  were  attached  to  the  bill  in 
support  thereof.  We  have  stated  the  contents  of  the  bill 
with  considerable  fullness,  in  order  to  show  the  scope  of  the 
controversv. 

The  complainant  moved  for  a  preliminary  ini unction. 
All  the  defendants  except  Edson,  who  was  not  served  or  did 
not  appear,  answered  the  bill,  and  filed  a  large  number  of 
affidavits  of  other  persons  in  opposition  to  the  motion — so 
many  that  we  cannot  take  space  to  array  them.  It  is  suffi- 
cient to  say  that  the  answers  and  affidavits  raise  a  conflict 
of  proof  in  reference  to  several  of  the  matters  stated  in  the 
hill  and  the  affidavits  accompanying  it.  The  arguments 
made  here,  in  the  main,  proceeded  upon  the  broador  aspects 
of  the  controversy.  Besides,  having  regard  to  the  practice 
which  obtains  in  this  class  of  appellate  proceedings,  we 
should  not  go  into  a  nice  balancing  of  proof  or  estimate  of 
particulars.     This  being  an  appeal  from  an  order  granting 


572 


131  FEDEKAL  BEPOBTBR,  35. 
Opinion  of  the  Ctourt 


a  prehrainaiy  injunction,  unless  we  should  see  that  the  court 
below  had  faUen  into  a  positive  mistake  in  regard  to  some 
important  fact,  we  should  not  disturb  its  findings,  and  it  is 
not  claimed  that  such  a  mistake  has  happened.  The  court 
below  granted  this  preliminary  injunction  by  the  order 
following : 

iiJl!?T*  ***®^^^'«'  ^'e  strictly  command  And  enjoin  you  the  said 
Bdgar  A.  Davis,  your  attorneys,  solicitors,  clerks,  servants  and  aee?^ 
raider  the  penalties  that  may  follow  on  you  in  ^se  of  di^obPdfpn^' 
toat  you  forthwith,  and  until  the  furtheforder^f  this  ^iSrt  dS 
from  engaging  or  in  any  manner  being  interest^,  direc^^or  Inm^ 

r^^^I^,'?^  ^?"^'^^'  "^^  ^*»'-  ^^^^^  to  the  city  of  betrSt  oi^in  the 
^mediate  vicinity-  of  any  territory  on  or  prior  trl^guk  1    1^ 

^^11]°,*'''^'^^''^*^  ^^  ^^^  I>*^vis  Fresh  &  Salt  Fish  Compaiiy   de^ 

r*^iln^«  n"\?'  *^'^^,'^*]?5  *^  ^^*«  ^"«*^'  ^'  the  defendan?  Dkvit 
w  the  agents  or  the  employ^  of  the  said  Davis  Fresh  &  Salt  Fish 

S!S^f"^' I,*''  "^'l^,^*'^^'  ^"y^"^'  ««"tog,  handling,  or  deaUng  in  any 
JS1?#  t^'  ^"^  other  salt  or  fresh  water  food  products.  In  thi  s^ora^ 

^^^mln^^^^^'in^^  ""^  ^"  *^"^""^  *"  «°^  ^«"«^^  to  fish  prXS 
WriwJ?^  engaging  in,  or  in  any  manner  being  interested  in,  in  the 

It  i^nl*'lK''?^**^'i*"^  ^^^^^  ^tod  or  character  of  business,  the  same 
as  or  like  that  conducted  and  carried  on  by  the  Davis  Fr^sh  &  Salt 
Fish  Company  on  and  prior  to  August  1,  1898.  or  by  its  office^s^ 
f^^^J'^f''^\.''\ir'^^'  «°**  ^^^"^  «o"«iting  or  inviting,  in  tS 

^?  With  voH  *!^^^  ^^'^  «^^"  ^o  ^^  other^^^ 

t^LllJ^AK^^^  Wolverine  ilsh  Company,  Limited,  or  either  of 
tfiem   in  said  business  aforesaid,  and  from  interfering  with  the  busl- 

rrbfrS^/''''f"!^^  ^^J^'^  ^^^^  ^'^^  &  Salt^ish  (impany, 
S  J^  Im  **^V  ^f  ^^"^'  ""^^  transferred  to  William  Vernon  Booth 
its  good  will,  Its  trade,  or  its  customers,  and  from  coming  into  com 
petition  with  this  complainant's  business  in  the  city  of  Detroit  aSd 
vicmity,  and  wherever  the  business  of  the  Davis  Fiesh  &S^t  Fish 
Company  extended  at  the  time  of  its  sale  to  and  contract  with  said 
2.?l«',a"f  ^*''"  toterfering  in  any  way,  directly  or  InmrecTly   wUh 
^e  said  trade  or  business,  and  from  doing  any  act  prejudicial  to  the 
same  or  any  part  thereof,  and  from  interfering  with  the  iwsous  em 
poyed  in  the  .service  of  this  complainant,  and  [86]  f^-oL'TisSg  you^ 
aid  or  influence  in  regard  to  this  complainant's  trade  or  bulile^ 
otherwise  than  for  the  promotion  and  advancement  of  the  same     Cd 
Sl'i^^rf  MiT  «t^»5tly  «>«^»«and  and  enjoin  you,  the  said  llvaM 
Btoigerford,^Michael  J.  Dee,  and  the  Wolverine  Fish  Company   Lim^ 
ited,  your  attorneys,  solicitors,  clerks,  servants,  and  agents  under  the 

SS?h'^J^''^n  ?K  'f  Tk  ^"  ^^^  *^^  disobedience,  fhaf  you  are  forth 
with  and  until  the  further  order  of  this  court  to  desist  from  aidimr 
the  said  Edgar  A.  Davis,  or  participating  with  said  DaC  in  ^? 

rwiril"***^'*^'^'  interfering  with  the  biTsiness  of  the  cSmplafna^t^ 
or  with  the  persons  employed  therein,  and  from  ushig  your  aid  and 
tafluence  in  connection  with  the  said  Davis  or  otherwise  in  r^ard  to 
compla  nant's  trade  or  business  acquired  under  the  said  ^ntrai? 
otherwise  than  for  the  promotion  and  advancement  of  the  mime.'' 

The  defendants  appeal  from  this  order. 

1.  It  is  assigned  as  error  that  the  court  held  the  biU  of 
conaplaint  to  state  a  case  entitling  the  complainant  to  relief 
by  injunction;  and  it  is  argued  that  the  pro|)er  remedy  is  by 


DAVIS   V.   A.   BOOTH   &   CO. 


573 


Opinion  of  the  Court. 

an  action  at  law,  and  further  that  public  policy  is  opposed  to 
the  enforcement  of  such  contracts.  With  regard  to  the  objec- 
tion that  there  is  a  remedy  at  law,  it  is  quite  clear  that  the 
difficulty  in  estimating  the  damages  in  such  a  case,  and  the 
succession  of  causes  of  action  and  the  multiplicity  of  suits 
likely  to  ensue,  furnish  ample  reasons  for  the  exercise  by  a 
court  of  equity  of  its  power  to  restrain  the  continuance  of 
the  supposed  wrongdoing.  And  if  the  contract  is  not  one 
♦which  should  be  held  by  the  court  unlawful  as  opposed  to 
public  policy,  there  is  no  sufficient  reason  for  withholding 
relief.  We  are  referred  to  the  case  of  Bensley  v.  Texas  <& 
Pac,  Ry.  Co.,  191  U.  S.  492,  24  Sup.  Ct.  164,  48  L.  Ed.  274,  as 
conclusive  of  the  validity  of  this  objection.  A  railroad  com- 
pany had  entered  into  a  contract  that  it  would  not  establish 
another  depot  w  itliin  three  miles  of  one  agreed  to  be  built 
upon  the  plaintiff's  land.  Upon  a  bill  filed  to  restrain  the 
company  from  establishing  a  depot  within  that  distance,  as 
ordered  bv  the  State  Railroad  Commission,  it  was  held 
that  the  injunction  should  not  be  allowed.  The  decision  was 
rested  upon  the  ground  that  the  railroad  company  was  by 
reason  of  its  charter  bound  by  a  public  duty  in  regard  to 
the  location  of  its  depots,  which  it  ought  not  to  be  permitted 
to  disable  itself  from  performing.  In  the  present  case  the 
parties  to  the  contract  were  private  parties,  upon  whom  no 
public  duty  was  imposed,  other  than  such  as  rest  upon  all  pri- 
vate individuals.  The  ground  upon  which  the  decision  cited 
was  based  is  wholly  absent  here.  In  the  case  of  Norcross  v. 
James,  140  Mass.  188,  2  N.  E.  946,  the  contract  sought  to  be 
enforced  was  a  merely  personal  covenant,  and  did  not  run 
with  the  land  subsequently  conveyed  to  the  defendant. 
Whether  the  contract  in  question  is  void  in  law,  upon  the 
ground  that  it  is  in  restraint  of  trade  or  competition  in 
trade,  is  a  question  which  will  be  discussed  further  on. 

2.  One  of  the  principal  grounds  upon  which  it  is  urged  for 
the  appellants  that  the  agreement  in  question  is  void  is  that 
it  was  an  agreement  in  restraint  of  trade,  in  violation  of  the 
anti-trust  act  of  July  2,  1890,  c.  647,  26  Stat.  209  [U.  S. 
Comp.  St.  1901,  p.  3200].  But  that  act,  as  was  held  in  United 
States  V.  E.  G.  Knight  Go,,  156  U.  S.  1, 15  Sup.  Ct.  249,  39  L. 
Ed.  325,  is  leveled  against  contracts  which  have  a  direct  rela- 


574 


131   FEDERAL   KEPORTEB,   30. 


Opinion  of  the  Court. 

tion  to  interstate  commerce,  and  does  not  extend  to  contracts 
which  may  incidentally  or  in  some  remote  way  come  into 
relation  with,  or  become  the  source  of,  interstate  traffic.    In 
that  case  a  New  Jersey  [37]  corporation,  being  already  in 
control  of  a  large  majority  of  the  sugar  refineries  in  the 
United  States,  acquired  the  control,  by  a  purchase  of  their 
stock,  of  four  Philadelphia  refineries,  and  the  question  was 
whether  such  an  acquisition  was  a  violation  of  the  anti-trust 
act.    It  was  not  doubted  that  the  sugar  refined  there  wouldf 
to  a  large  extent,  at  least,  become  the  subject  of  interstate 
traffic,  but  such  traffic  was  not  the  subject  directly  involved. 
We  think  there  is  nothing  in  the  anti-trust  act  which  ren- 
dered unlawful  the  purchase  by  William  Vernon  Booth  and 
his  transfer,  to  A.  Booth  &  Co.,  of  the  plant  of  the  Davis 
Fresh  &  Salt  Fish  Company,  or  which  necessarily  rendered 
invalid  the  agreement  of  the  stockholders  of  the  latter  com- 
pany, which  was  ancillary  to  the  contract  of  sale.    Nor  can 
this  conclusion  be  affected  by  the  fact  that  A.  Booth  &  Co. 
also  purchased  other  plants  and  stocks  to  an  extent  that 
tended  to  create  a  power  to  monopolize  the  fish  market. 
There  is  a  clear  distinction,  which  seems  to  be  lost  sight  of  in 
the  argument  here,  between  the  aggregation  of  properties  by 
purchase  when  the  seller  no  longer  retains  an  interest  in  the 
property,  and  a  combination  of  owners  and  properties  under 
one  management,  where  each  owner's  interest  is  continued 
in  the  combination.    To  this  latter  class  belongs  the  case  of 
Merz  Capsule  Co.  v.  United  Slates  Capsule  Co,  (C.  C.)  67 
Fed.  414,  affirmed  in  71  Fed.  787.    It  may  be  that  the  prac- 
tice of  acquiring  by  a  single  corporation,  through  purchase 
of  a  great  number  of  single  plants  in  several  states,  of  power 
to  control  the  market  of  a  given  commodity  in  a  wide  area  of 
territory,  may  become  injurious  to  the  public;  but,  if  so,  it 
would  seem  that  the  limitations  and  the  means  for  the 
restriction  and  correction  required  must  be  supplied  by  the 
lawmaking  power,  since  the  old  law  against  forestalling  the 
market  has  become  obsolete.    It  is  possible  that  it  may  be 
developed  at  the  final  hearing  that  interstate  traffic  may  be 
directly  involved  in  this  agreement.    But  if  so,  it  will  be 
prudent  to  postpone  final  decision  in  respect  to  the  conse- 
quences thereof  upon  the  validity  of  the  agreement  until  the 


DAVIS   V.   A.   BOOTH   &   CO. 


575 


Opinion  of  the  Court. 

case  is  presented  upon  full  proof,  rather  than  by  ex  parte 
affidavits  as  now. 

3.  It  is  further  contended  that  the  contract  was  rendered 

void  by  the  statute  of  Michigan  of  1889,  which  enacted  that : 

"All  contracts  ♦  *  *  the  purpose,  object  or  intent  of  which 
shall  be  *  *  *  in  any  manner  to  prevent  or  restrict  free  compe- 
tition in  the  sale  of  any  article  or  commodity  produced  by  mining, 
manufacture,  agriculture  or  any  other  branch  of  business  or  labor, 
shall  be  utterly  illegal  and  void  *  *  ♦  provided,  however,  that 
this  section  shall  m  no  manner  invalidate  or  affect  contracts  for 
what  is  known  and  recognized  at  common  law  and  in  equity  as  con- 
tracts for  the  good  will  of  a  trade  or  business." 

But  that  act  contained  a  proviso  excepting  certain  classes 
and  subjects  which  rendered  it  of  doubtful  constitutionality. 
Such  legislation  was  held  void  in  Connolly  v.  Union  Sewer 
Pipe  Co.,  184  U.  S.  540,  22  Sup.  Ct.  431,  46  L.  Ed.  679,  and 
the  Michigan  statute  was  amended  in  1899,  which  was  after 
this  transaction,  so  as  to  remove  the  objection.  The  act  of 
1889  is  denominated  in  3  How.  Ann.  St.  §  9354j,  as  one  pro- 
hibiting "  certain  trust  combinations,"  and  we  have  no  doubt 
it  was  intended  for  such  cases.  We  think  that  the  intent 
which  made  the  contract  or  combination  unlawful  was  one 
in  which  both  parties  participated,  and  that  the  act  was 
not  intended  to  comprise  a  case  where  there  was  a  sale 
[38]  and  purchase  of  property,  after  which  the  seller  should 
have  no  interest  in  the  property,  and  therefore  would  have 
no  intent  as  to  its  further  use.  The  act  of  1899  is  subject 
to  the  same  construction,  but,  as  it  would  not  render  unlaw- 
ful a  contract  which  had  been  lawfully  made,  we  need  not 
consider  it  further. 

4.  But  finally  it  is  insisted  that  the  stipulation  in  question 
contained  in  the  agreement  of  date  August  1,  1898,  is  void 
at  common  law,  for  the  reason  that  it  is  an  unreasonable 
restraint  of  competition  in  trade.  The  agreement  was  an- 
cillary to  the  contract  of  sale  made  by  the  Davis  Fresh  & 
Salt  Fish  Company,  in  which  these  stockholders  had  the 
entire  interest,  and  of  the  fruits  of  which  sale  they  were  the 
beneficiaries.  That  contract  expressly  included  the  good 
will  of  the  business  of  the  seller,  and  the  stipulation  of  the 
stockholders  was  made,  as  it  recites,  to  induce  the  sale;  and 
it  was  for  the  protection  of  the  vendee  in  the  enjoyment  of 
it,  and,  as  it  seems  to  us,  would  pass  by  the  transfer  of  the 


576 


131  FEDERAL  REPORTER,   38. 


OplEiQn  of  the  Court, 
property,  business,  and  good  will  to  William  Vernon  Booth's 
vendee,  to  whom  the  agreement  was  also  assigned.    The 
question  of  the  reasonableness  of  such  a  stipulation  is  one 
which  was  elaborately  discussed  by  Judge  Taft  in  deliver- 
ing the  opinion  of  this  court  in  United  States  v.  Addyston 
Pipe  i&  Steel  Co.,  85  Fed.  2.71, 29  C,  C.  A.  Ml,  46  L.  R.  A.  122. 
It  would  be  useless  to  reiterate  the  grounds  and  reasons  upon 
which  It  was  held  that  such  a  stipulation  is  valid  if  it  goes 
no  farther  than  to  support  and  protect  the  interests  trans- 
ferred by  the  contract  of  sale.    If  tested  by  this  rule  alone, 
we  think  this  stipulation  should  be  held  valid  and  obligatory! 
But  referring  again  to  the  distinction    already  alluded  to 
between  an  aggregation  effected  by  purchase,  and  a  combi- 
nation of  several  owners  to  pool  their  business  and  eliminate 
competition,  it  is  to  be  observed  that  in  the  present  mstance 
It  appears  that  the  purchase  price  paid  to  the  Davis  Fresh  & 
Salt  Fish  Company  consisted  partly  of  cash  and  partly  of 
stock  m  the  corporation  or  A.  Booth  &  Co.,  and  that  there- 
fore the  transaction  was  of  a  mixed  character.    This  is  an 
aspect  of  the  case  which  has  given  us  most  concern,  and  in 
respect  of  which  we  are  not  aware  of  any  decision  precisely 
in  point.    We  are  unwilling  to  decide  a  matter  of  so  much 
importance  at  this  preliminary  stage  of  the  case,  and  espe- 
ciMly  so  because  no  particular  attention  has  been  given  to 
It  in  the  briefs  and  argument  of  counsel.    We  purpose, 
therefore,  to  give  such  directions  in  regard  to  the  continu- 
ance of  the  injunction  as  will  preserve  the  rights  of  parties 
from  serious  impairment  in  the  interim,  and  reserve  this  and 
iino&er  question  i-eserved  in  another  part  of  this  opinion 
until  final  hearing. 

There  are  no  other  questions  which  seem  to  require  inde- 
pendent discussion,  except  one  which  relates  to  the  scope  of 
the  mjunction  awarded  by  the  court  below.  We  are  of  opin- 
ion that  the  proper  construction  of  the  agreement  given  by 
the  stockholders  of  the  Davis  Fresh  &  SaJt  Fish  Company 
requires  that  the  description  of  the  localities  in  which  their 
stipulations  should  be  operative,  stated  in  the  writing  at  the 
beginning  of  said  stipulations,  extends  to  and  qualifies  all 
of  them,  and  that  such  localities  are  restricted  to  those  in 
which  the  company  had  establishments  for  doing  business 


ELLIS   V.   INMAN,   POULSEN   &   CO. 


Opinion  of  the  Court. 


577 


and  the  immediate  vicinity  thereof.  It  could  not  mean  all 
parts  or  every  one  of  tlie  United  States  in  [39]  which  a 
former  customer  resided,  or  into  which  its  correspondence 
had  extended,  or  through  which  some  agent  of  the  company 
had  traveled.  No  definite  or  reasonable  bounds  are  indi- 
cated by  the  contract,  other  than  those  which  we  have  indi- 
cated. Besides,  the  inclusion  made  by  the  words  "  or  the 
immediate  vicinity  of  the  territory,"  etc.,  implies  some  place 
from  which  the  "  immediate  vicinity  "  is  to  be  estimated,  and 
excludes  the  idea  of  reckoning  from  some  indefinite  point. 
The  ordering  part  of  the  injunction  directed  to  the  Wolver- 
ine Fish  Company  is  also  too  broad,  when,  in  addition  to 
forbidding  certain  conduct  in  conjunction  with  Davis,  it 
proceeds  to  forbid  that  company  from  doing  such  things 
"  otherwise."  The  Wolverine  Fish  Company  was  a  stran- 
ger to  the  Davis  agreement,  and,  as  to  anything  in  which 
he  should  not  participate,  it  was  not  affected  thereby.  The 
injunction  should  be  modified  accordingly.  We  think,  also, 
that  the  complainant  should  be  required  to  give  bond  to 
indemnify  the  defendants  from  damages  arising  from  the 
issuance  of  the  writ,  in  case  the  bill  should  not  be  finally 
sustained,  as  a  condition  to  the  continuance  of  the  injunc- 
tion. 

With  these  modifications,  the  order  of  the  Circuit  Court  is 
affirmed.    The  costs  of  this  appeal  will  be  divided. 


[182]  ELLIS  V,  INMAN,  POULSEN  &  CO.  ET  AL. 

(Circuit  Court  of  Appeals,  Ninth  Circuit    June  6,  1904.) 

L131  Fed.,  182.] 
Monopolies — Anti-Trust  Law — Combination  in  Restraint  of  Inter- 
state Commerce. — In  determining  whether  or  not  a  combination  is 
in  violation  of  the  federal  anti-trust  law,  as  in  restraint  of  interstate 
commerce,  it  is  immaterial  that  such  is  not  its  ultimate  object, 
which  is  in  most  cases  to  increase  the  trade  and  profits  of  the  par- 
ties to  such  combination ;  nor  is  it  material  to  ascertain  what  pro- 
portion the  resulting  restraint  of  interstate  commerce  bears  to  other 
results.  The  true  inquiry  is  whether  it  tends  directly  to  appreciably 
restrain  interstate  trade,  and,  if  it  does,  it  is  within  the  statute, 
although  such  effect  may  not  be  so  considerable  as  its  other  effects. 

21220— VOL  2—07  m ^37 


578 


131  FEDERAL  BEPORTEB,   182, 
Statement  of  tlie  Case. 


Same.— A  eoiuplahit  alleged  that  plaintiff  was  a  builder  doing  busi- 
ness in  I»ortlaud,  Or. ;  that  in  such  business  he  purchased  large 
quantities  of  rough  lunil>er  from  mills  located  at  Vancouver,  Wash., 
which  was  seven  miles  from  Portland,  but  that  such  mills  did  not 
manufacture  finished  or  kiln-dried  lumber;  that  defendants,  who 
comprised  all  the  ummifaeturers  and  dealers  in  Portland,  combined 
to  fix  exorbitant  prices  on  all  lumlR-r  sold  by  them,  and  to  c«ompel 
all  consumers  iu  Portland  to  pay  such  priws  by  refusing  to  sell  any 
finished  lumber  at  any  price  to  such  consumers  as  bought  lumber 
of  any  kind  from  other  dealers,  except  on  condition  that  such  con- 
sumer pays  to  defendants  the  difference  lietween  the  price  he  paid 
for  lumi»er  so  liought  from  others  and  the  price  charged  therefor 
l>y  defendants  and  promises  to  buy  all  his  iumljer  thereafter  from 
defendants;  that  the  purpose  and  effect  of  8o<h  comniuation  was 
to  prevent  plaintiff  and  other  consumers  from  buying  luml>er  at 
Washington  mills,  and  to  oirtain  a  monoiK)ly  of  the  trade  in  Port- 
land at  unreasonable  and  exorbitant  prices.    Beld.  that  the  com- 
bination  charged  constituted  a  violation  of  the  federal  anti-trust 
act,  its  effect  l>eiug  to  direi'tly  restrain  interstjiti*  rommerce.  and 
that  the  complaint  stated  a  cause  of  action  thereunder  for  tlie 
recovery  of  damages  alleged  to  have  resulted  to  plaintiff." 

In  Error  to  the  Circuit  Court  of  the  United  States  for  the 
District  of  Oregon. 


For  opinion  below,  see  124  Fed.  956.6 


[188]  The  plaintiff  in  error  brought  an  action  against  the  defend- 
?2^  ^I^^  «!?^*^*'  ^^^  provisions  of  the  act  of  Congress  of  Julv  2 
im  e  647,  26  Stat.  209  [U.  S.  Comp.  St.  1901,  p.  3200],  enmied 
An  act  to  protect  trade  and  commerce  against  unlawful  restraints  and 
monopolies,  to  recover  damages  resulting  from  a  combination  of 
Xl  ^H^^'^fT  ^"^  ^""^^^  *!*  Prevent  him  from  purchasing  liunber  in 
the  tlty  of  Vancouver,  Wash.,  to  be  used  in  the  citv  of  Portland 
?Ji;tTh!..^!^1f^*?"*  averments  of  the  complaint  are  as  follows:' 
K^l  PJamtiff  in  error  is  engaged  in  the  business  of  constructing 
houses  and  other  buildings  in  the  city  of  Portland  and  selling  thi 

ZwTsShiri  ?  '^'  ^".f^^^?  *''  constructing  such  buildin|s  on 
contracts  with  his  customers ;  that  the  defendants  in  error  are  engaged 

LJ^nJ^"'i^v^l**^'^*fY*'*^?'*^«  *"^  ^'"^S  both  rough  lumber  IZ 
seasoned  or  kiln-dried  lumber  at  Portland,  Or.,  and  that  thev  are 

l^hn^^IiT  /"^^^^^-^l^^^-^^P  «f  «"<^h  lumber  in  or  adjacent  to  safd  cUy 
who  sell  lumlKjr  therein;  that  there  are  persons  engaged  in  the  bus^ 
ness  of  manufacturing  and  selling  rough  lumber  at  the  cUy  of  Van- 
eouyer  and  at  other  points  in  the  state  of  Washington  and  that 
until  interfered  with  by  the  acts  and  combination  of  the  defendants 
in  error,  the  plaintiff  in  error  could  and  did  purchai  at  and  im^rt 
from  the  city  of  Vancouver  large  quantities  of  lumber  for  i  [n 
his  business  at  Portland;  that,  in  order  to  carry  on  his  said  business 
it  is  necessary  for  him  to  purchase  and  use  large  quantities  both  of 


a  Syllabus  copyrighted,  1904,  by  West  Publishing  Co. 
"  see  p.  jbOSt 


ELLIS    V.   INMAN,   POULSEN^    &   CO. 
Statement  of  the  Case. 


579 


rough  Imnber  and  of  seasoned  or  kiln-dried  lumber;  that  the  mills 
at  Vancouver  produce  only  rough  lumber,  and  that  the  seasoned  or 
kiln-dried  lumber  required  by  the  plaintiff  in  his  business  can  only 
be   procured   from    the   defendants   in   error,   and   he   is   absolutely 
dependent  upon  them  for  his  supply  thereof;  that  on  July  2.  1902, 
the  other  defendants  in  error  organized  the  defendant  City  Retail 
Lumber  Company,  and  for  the  purpose  and  with  the  intent  of  creating 
a  monopoly  of  the  manufacture  and  sale  of  lumber  for  local  use  in 
the  markets  of  the  city  of  Portland,  and  of  controlling  and  restrict- 
ing tlie  output  of  lumber  from  defendants'  said  mills,  and  fixhig  and 
controlling  the  price  of  lumber  in  said  Portland  market,  and  arbi- 
trarily advancing  said  price  and  demanding  and  receiving  excessive 
and  unreasonable  prices  for  the  lumber  manufactured  and  sold  by 
them,  and  preventing  the  shipment  of  lumber  by  the  said  manufac- 
turers in  the  state  of  Washington  from  said  state  to  the  city  of 
Portland,  and  preventing  the  sale  in  the  city  of  Portland  of  lumber 
manufactured  in  the  state  of  Washington,  and  preventing  the  plahitiff 
in  error  and  all   other  contractors  and  builders   in   Portland  from 
purchasing  lumber  from  any  dealers  other  than  the  defendants,  and 
particularly   from  said  manufacturers   in  the  state  of  Washington, 
did  conspire,  confederate,  and  agree  together  that  they  would  sell 
lumber  in  the  Portland  market  only  through  said  City  Retail  Lum- 
ber Company  at  prices  to  be  fixed  by  it  and  to  persons  to  be  desig- 
nated and  approved  by  it;  that  thereafter  the  entire  sales  of  lumber 
in  the  Portland  market  from  all  the  defendants  in  error  were  placed 
in  the  control  of  said  City  Retail  Lumber  Company  for  the  purpose 
and  with  the  intent  of  preventing  the  plaintitl  in  error  and  other  con- 
tractors and  builders  in  Portland  from  purchasing  lumber  from  said 
manufacturers  in  the  state  of  Washington,  and  that  the  defendants 
in  error  further  conspired  and  agreed  to  adopt  such  means  and  pre- 
scribe and  enforce  such  burdens  and  penalties  as  might  be  necessary 
to  carry  out  said  purpose,  and  thereby  enable  them  to  fix  a  price  on 
lumber  in  the  city  of  Portland,   and   control   the  output  and  sales 
of  lumber  therein;  that  to  carry  out  said  purposes  the  defendants 
in  error  have  employed  agents  to  watch  the  construction  of  all  build- 
ings in  the  city  of  Portland,  and  ascertain  the  sources  from  which 
lumber  used  therein  is  procured,  and  to  report  to  the  City  Retail  Lum- 
l)er  Company  all  buildings  for  the  construction  of  which  any  lumber 
was  procured  from  said  manufacturers  in  the  state  of  Washington, 
and  that  upon  such  report  the  defendants  in  error  would  refuse  to 
supply  any   lumber  upon  any  terms  to  such  contractor,  builder,  or 
other  consumer  who  purchased  any  lumber  for  use  in  Portland  from 
said  manufacturers  in  the  state  of  Washington,  and  have  refused 
to  sell  any  lumber  to  such  contractor,  builder,  or  other  consumer, 
except  upon  the  condition  that  he  pay  them,  in  addition  to  the  price 
charged  by  them  for  lumber  required  from  them,  the  difference  be- 
tween the  price  he  paid  for  the  lumber  so  purchased  in  the  state  of 
Washington  and  the  price  then  charged  by  them  [184]  for  the  same 
quantity    of    similar    lumber,    and    the    further    condition    that    he 
promise  them  to  purchase  no  more  lumber  from  said  manufacturers  in 
the  state  of  Washington,  and  that  in  all  cases  where  the  contractor, 
builder,  or  other  consumer  had  procured  a  sufficient  supply  of  rough 
lumber  from  manufacturers  other  than  the  defendants  in  error,  and 
bought  from  manufacturers  in  the  state  of  Washington,  the  defend- 
ants in  error  have  refused  to  sell  any  finished,   seasoned,  or  kiln- 
dried  lumber  to  such  contractor,  builder,  or  other  consumer,  except 
upon   his  making   such  payment  and   such   promise;  that  by   these 
means  the  defendants  in  error  have  compelled  all   contractors  and 
builders  in  Portland  to  cease  buying  lumber  from  the  mills  in  the 
state  of  Washington,  and  have  been  enabled  to  and  do  control  the 


580 


131   FEDERAL  KEPORTER,  184. 
Statement  of  the  Case. 


output  of  lumber  sold  in  the  market  in  Portland,  and  have  fixed 
extortionate  prices  therefor;  that  in  March,  1903,  in  the  course  of 
his  business,  the  plaintiff  in  error  purchased  from  a  manufacturer 
la  Vancouver,  Wash.,  and  had  shipped  to  and  delivered  to  him  at 
Portland,    a    large   quantity   of   rough    lumber   at   a    price   of   $250 
less  than  vras  then  charged  by  the  defendants  in  error  for  the  same 
quantity  of  like  lumber  in  Portland,  and  the  plaintiff  used  the  same 
in  the  construction  of  buildhigs  ,*  that  on  March  20,  1903,  he  required 
for  use   in   the   construction   of   said   buildings   large   quantities  of 
finished  and  seasoned  or  kiln-dried  lumber,  and  was  and  has  been 
nnable  to  procure  the  same  from  any  manufacturer  or  dealer  other 
than  the  defendants  in  error,  and  that  on  or  about  that  date  he  ap- 
plied to  the  defendants  in  error  to  purchase  such  lumber,  to  wit 
about  7,000  feet  of  flooring,  about  7,000  feet  of  ceiling,  and  about 
9,000  feet  of  rustic,  which  lumber  was  so  needed  by  him  in  his  busi- 
ness, and  offered  to  pay  them  therefor  the  regular  price  charged  by 
them  for  the  same,  but  that  because  of  his  purchase  of  lumber  at 
Vancouver,  Wash.,  the  defendants  in  error  refused  to  sell  him  said 
or  any  lumber  upon  any  terms,  and  so  refuse<l  lor  a  period  of  two 
months,  and  still  refuse,  unless  the  plaintiff  in  error  pay  them,  in 
addition  to  the  prices  charged  by  them  for  the  lumber  which  he 
wished   to   purchase  from   them,   the   sum   of   $250,   the   difference 
between  the  price  he  paid  for  lumber  in  Vancouver  and  the  price 
they  charged  for  the  same  quantity  and  quality  at  Portland,  and  un- 
less, in  addition  thereto,  he  promise  them  in  the  future  to  purchase 
no  lumber  from  any  manufacturer  or  dealer  in  the  state  of  Wash- 
ington;   that   the   plaintiff   in   error   refused   to   comply   with   said 
conditions,  and  was  unable  to  procure  any  lumber  from  the  defend- 
ants in  error;  that  at  all  the  times  mentioned  in  the  complaint  the 
defendants  in  error  have  had  on  hand  and  for  sale  in  the  city  of 
Portland  ample  supplies  of  lumber  of  the  quantity  and  kinds  that 
the  plaintiff  in  error  required,  and  during  all  said  time  the  plaintiff 
in  error  has  been  ready  and  able  and  has  offered  to  pay  therefor  the 
regular  prices  charged  by  the  defendants  in  error,  but'  they  have  so 
refused  to  sell  the  same  hi  pursuance  and  furtherance  of  their  con- 
spiracy, and  for  the  purposes  and  with  the  intent  above  stated,  and 
for  the  reason  that  the  plaintiff  in  error  had  purchased  lumber  from 
said  manufacturers  in  the  city  of  Vancouver,  and  for  the  purpose 
and  with  the  intent  of  preventing  him  from  purchasing  lumber  from 
said  manufacturers  hi  the  city  of  Vancouver  and  forcing   him  to 
purchase  the  same  from  the  defendants  in  error,  and  for  the  purpose 
of  punishing  and  injuring  him  for  having  made  such  purchase  in 
Vancouver,  and  not  for  any  other  reasona    The  plaintiff  in  error 
alleged  that  he  was  damaged  in  the  sum  of  $7,000  through  his  ina- 
bility to  continue  his  business  and  through  loss  of  profit  on  his  busi- 
ness during  the  building  season  of  1903,   and   the   loss  of  custom 
and  good  will  of  his  said  business;  in  the  sum  of  $500  through  the 
delay  caused  in  the  construction  of  two  certain  buildings  and  from 
being  compelled  to  use  unseasoned  and  inferior  lumber  in  their  con- 
struction; in  the  sum  of  $1,000,  caused  by  delay  in  the  construction 
of  a  certain  building  which  he  had  contracted  to  build  for  the  price  of 
14,000,  and  by  the  exposure  of  said  building  to  the  rains,  and  by  behig 
required  to  use  unseasoned  and  inferior  lumber  m  finishing  the  same, 
and  by  being  unable  to  secure  payment  on  his  contract  on  that  ac- 
count ;  hi  the  sum  of  $25  through  behig  compelled  by  reason  of  said 
combhiation  to  purchase  In  the  month  of  April,  1903,  rough  lumber 
from  them  at  their  own  price,  which  was  $25  in  excess  of  the  cost  of 
the  same  lumber  if  purchased  in  Vancouver  and  shipped  therefrom 
to  Portland.    The  defendants  in  error  filed  demurrers  to  the  com- 
plaint on  the  ground  [ISS]  that  it  did  not  state  facts  sufficient  to 


ELLIS   V,   INMAN,   POULSEN   &   CO. 


Opinion  of  the  Court. 


581 


constitute  a  cause  of  action.  The  demurrers  were  sustained,  and 
the  complaint  was  dismissed,  with  costs  to  the  defendants  in  error. 
To  review  that  judgment  the  plaintiff  in  error  has  sued  out  this 
writ  of  error. 

Veasie  <&  Freeman,  for  plaintiff  in  error. 

Cake  (&  Cake^  for  defendants  in  error  Inman,  Poulsen 
&Co. 

Wm.  D.  Fenton,  for  remaining  defendants  in  error. 

Before  Gilbert  and  Ross,  Circuit  Judges,  and  Hawley, 
District  Judge. 

Gilbert,  Circuit  Judge,  after  stating  the  case  as  above, 
delivered  the  opinion  of  the  court. 

The  question  presented  is  whether  the  complaint  states 
a  cause  of  action.  It  alleges  that  an  interstate  trade  in 
lumber  had  existed  between  purchasers  in  the  city  of  Port- 
land, in  the  state  of  Oregon,  and  manufacturers  at  Van- 
couver, in  the  state  of  Washington,  about  seven  miles  distant 
from  Portland,  and  that  the  defendants  in  error,  who  con- 
stitute all  the  manufacturers  of  lumber  in  the  city  of  Port- 
land, formed  a  combination  for  the  purpose  of  preventing 
the  importation  of  lumber  from  the  state  of  Washington 
for  use  in  Portland,  and  that  they  adopted  means  such  as 
to  accomplish  their  purpose.  It  is  contended  by  the  de- 
fendants in  error:  First.  That  the  combination  does  not 
operate  directly  upon  the  manufacture,  sale,  or  transporta- 
tion of  an  article  of  interstate  commerce;  that  it  only  inci- 
dentally and  collaterally  relates  to  or  affects  the  sale  and 
transportation  of  lumber  from  another  state,  and  that  it 
is  therefore  not  within  the  prohibition  of  the  act.  Second. 
That  the  injury  complained  of  by  the  plaintiff  in  error  was 
not  the  direct  or  unavoidable  result  of  an  illegal  combina- 
tion, but  that  such  injury,  if  any,  resulted  from  the  refusal 
of  the  defendants  in  error  to  deal  with  the  plaintiff  in 
error  except  upon  terms  acceptable  to  them.  The  inter- 
pretation of  the  statute  applicable  to  the  case  is  found  in 
Anderson  v.  United  States,  iTl  U.  S.  615,  19  Sup.  Ct.  54, 
43  L.  Ed.  300,  in  which  it  was  said : 

"Where  the  subject-matter   of  the  agreement  does  not  directly 
relate  to  and  act  upon  and  embrace  interstate  commisrce,  and  where 


582 


131   FEDERAL  REPORTER,   l&j. 
Opinion  of  the  CkJiirt 


tlie  undisputed  facts  clearly  show  that  the  purpose  of  the  agreemeut 
was  not  to  regulate,  obstruct,  or  restrain  that  commerce,  but  that  it 
was  entered  into  with  the  object  of  properly  and  fairly  regulating 
the  trawaction  of  the  business  in  which  the  parties  to  the  agree- 
ment were  engaged,  such  agreement  will  be  upheld  as  not  within 
the  statute,  where  It  can  be  seen  that  the  character  and  terms  of  the 
agreement  are  well  calculated  to  attain  the  pun>o8e  for  which  it 
was  formed,  and  where  the  effect  of  its  formation  and  enforcement 
upon  interstate  trade  or  commerce  is  In  any  event  but  indirect  and 
Incidental,  and  not  Its  purpose  or  object  •  »  »  if  an  agreement 
of  that  nature,  while  apt  and  proper  for  the  purpose  thus  intended, 
should  possibly,  though  only  indirectly  and  unintentionally,  affect 
interstate  trade  or  commerce.  In  that  event  we  think  the  agreement 
would  be  good;  othei-wise  there  is  scarcely  any  agreement  among 
men  which  has  intersliite  or  foreign  commerce  for  its  subject  that 
may  not  remotely  be  said  to  in  some  obscure  way  affect  that  com- 
Merce,  and  to  be  therefore  void." 

Also,  ill  United  States  v.  J&ifd  Traffle  Assoi-iation,  171 
U.  S.  568,  19  Sup.  Ct.  31,  43  L.  Ed.  259,  where  it  was  said : 

"The  eft'ec't  upon  interstate  commerce  must  not  be  indirect  or  inci- 
dentol  only.  An  agreement  entered  into  for  the  puriK)Pe  of  promot- 
ing the  legitimate  [188]  business  of  an  individual  or  corporation,  with 
no  purpose  to  thereby  affect  or  restrain  interstate  commerce,  and 
mnich  does  not  direi'tly  restrain  sucli  commerce,  is  not,  as  we  think 
covered  hy  the  act.  altlunigh  the  agreement  may  indirectly  and  re^ 
moteiy  affect  that  wmmerce.*' 

Does  the  combination  which  is  set  forth  in  the  complaint 
in  the  present  case  tend  directly  to  restrain  interstate  com- 
merce?   The  complaint  alleges  that  such  was  its  purpose, 
and  that  such  is  its  effect.    Notwithstanding  these  allega- 
tions, however,  it  is  clear  that,  if  it  can  be  seen  from  the 
facts  set  forth  that  the  restraint  is  only  indirect  and  inci- 
dental, no  cause  of  action  is  stated  within  the  intendment  of 
the  act.    But  it  is  e<pially  clear  that  the  distinct  allegation 
of  the  purpose  of  such  a  combination  may  be  taken  into 
consideration  in  connection  with  the  facts  alleged.    If  it  be 
true  that  the  purpose  of  the  defendants  in  eiTor  was  as  al- 
leged, how  can  it  be  said  of  any  means  which  they  adopt  to 
effectuate  the  purpose  that  they  accomplish  it  only  indirectly 
and  incidentally?    It  is  true  that  the  complaint  alleges  the 
existence  of  another  purpose— the  purpose  to  obtain  ex- 
cessive and  unreasonable  prices  for  lumber;  but  one  of  the 
purposes  alleged  in  attaining  that  end  is  the  purpose  of 
shutting  off  the  Portland  trade  in  Washington  lumber.    In 
determining  whether  or  not  the  restraint  of  trade  is  the  di- 
rect and  necessaiy  result  of  the  combination,  no  assistance 
is  to  be  found  by  pursuing  the  inquiry  further  and  ascer- 


ELLIS   V,   INMAN,   POULSEN    &   CO. 


583 


Opinion  of  the  Court. 

taining  whether  its  main  purpose  and  chief  effect  are  to 
foster  the  trade  and  increase  the  business  of  those  engaged 
in  it.  It  may  be  conceded  that  the  main  purpose  of  all  such 
combinations  is  to  foster  the  trade  and  increase  the  profits 
of  those  who  are  engaged  in  them,  that  the  restraint  of  inter- 
state trade  as  such  is  not  their  ultimate  object,  and  that  the 
effect  of  the  combination  on  interstate  trade  is  to  the  mem- 
bers of  the  combination  an  immaterial  matter.  Nor  is  it 
material,  we  think,  to  inquire  what  is  the  chief  effect  of  the 
combination?  The  true  inquiry  is,  does  it  tend  directly  to 
appreciably  restrain  interstate  commerce?  It  is  not  ma- 
terial to  ascertain  just  what  proportion  the  resulting  re- 
straint of  interstate  commerce  bears  to  other  effects  or  results 
of  the  combination.  Nor  is  the  court  called  upon  to  weigh 
the  effects,  or  to  determine  that,  if  the  effect  in  restraining 
mtei-state  trade  is  not  so  considerable  as  other  effects,  the 
combination  is  not  forbidden.  In  the  case  of  W.  W.  Mon- 
tague (&  Co.  V.  Low7'y  et  al.^  24  Sup.  Ct.  307,  48  L.  Ed.  608, 
in  which  the  Supreme  Court  very  recently  affirmed  the  judg- 
ment of  this  court,  a  combination  was  made  between  certain 
dealers  of  tiles,  mantels,  and  grates  in  the  cities  of  San 
Francisco,  Sacramento,  and  San  Jose,  who  were  members  of 
an  association  formed  for  the  purposes  of  the  combination, 
and  all  of  the  manufacturers  of  such  articles  in  the  other 
states  of  the  Union.  By  the  terms  of  the  agreement  the 
manufacturers  bound  themselves  not  to  sell  goods  in  San 
Francisco,  or  within  a  radius  of  200  miles  therefrom,  to  any 
one  who  was  not  a  member  of  the  association.  There  was 
no  manufacturer  of  such  goods  in  California.  The  plaintiffs 
who  brought  the  action  were  dealers  in  tiles,  but  not  mem- 
bers of  the  association.  They  were  unable  to  purchase  goods 
of  the  manufacturers.  The  only  restraint  on  trade  was  that 
which  resulted  from  the  inability  of  the  plaintiffs  to  buy  goods 
on  equal  terms  with  members  of  the  association  for  use  at 
their  place  of  business  in  San  Francisco.  It  could  not  be 
[187]  demonstrated  in  that  case  that  by  reason  of  the  agree- 
ment the  total  amount  of  interstate  trade  would  be  at  all 
diminished.  But  the  Supreme  Court  held  that  it  was  suf- 
ficient if  it  could  be  seen  that  the  tendency  of  the  combina- 
tion was  such  as  to  diminish  such  interstate  trade.     Said 


584 


131  FEDERAL  REPORTER,   187. 


Opinion  of  the  Court 

the  court,  "The  amount  of  trade  in  the  commodity  is  not 
very  material." 

The  defendants  in  error  admit  that  the  business  of  import- 
ing lumber  from  the  state  of  Washington  into  the  city  of 
Portland  may  be  affected  by  the  combination ;  but  they  say 
that  the  result  is  due,  not  to  their  combination  to  refuse  to 
seU  to  purchasers  in  the  city  of  Portland  who  make  such  im- 
portations, but  to  the  inability  of  the  Washington  mills  to 
supply  the  Portland  market  with  kihi-dried  or  finishing  lum- 
ber; and  that  the  combination  is  not  the  direct  and  proxi- 
mate cause  of  the  inability  of  the  Washington  mills  to  sell 
lumber  in  the  city  of  Portland.    But  that  very  inability  is 
one  of  the  essential  facts  which  aid  to  create  the  situation 
which  is  complained  of.    It  is  a  fact  conceded  to  exist,  and 
it  is  taken  advantage  of  by  the  defendants  in  error.    But  for 
the  existence  of  that  fact,  it  is  safe  to  assert  that  the  combi- 
nation would  not  have  been  formed.    The  facts  must  be 
reckoned  with  as  they  are  found.    Can  it  be  said  that  the 
absence  of  factories  and  plants  outside  of  the  combination 
capable  of  producing  finishing  lumber  so  as  to  compete  with 
the  defendants  in  error  shall  relieve  them  from  responsibility 
for  their  acts?    Does  the  fact  that  the  whole  combination 
and  its  success  are  made  possible  by  the  adventitious  circum- 
stance that  no  one  has  yet  seen  fit  to  invest  the  capital  neces- 
sary to  establish  a  competing  plant  at  Vancouver  render 
the  restraint  of  interstate  commerce  effected  by  the  combina- 
tion any  the  less  direct  and  necessary  ?    If  such  is  the  law,  it 
follows  that,  to  secure  immunity  for  every  such  combination, 
it  is  necessary  only  to  bring  into  it  all  manufacturers  of  its 
line  of  goods,  and  to  intrench  it  behind  the  proposition  that 
the  resulting  restraint  of  trade  comes,  not  from  the  combina- 
tion, bat  from  the  inability  of  others  to  supply  the  market. 
The  mere  statement  of  the  proposition  is  its  refutation. 
With  equal  reason  it  might  have  been  urged  in  the  Monta- 
gue Case  that  the  restraint  of  interstate  trade  was  owing, 
not  to  the  combination,  but  to  the  fact  that  there  was  no  in- 
dependent manufacturer  of  tiles  from  whom  the  plaintiffs 
in  that  case  could  purchase. 

The  opinion  of  the  trial  court  in  sustaining  the  demurrers 
seems  to  have  been  largely  influenced  by  the  argument  that 


ELLIS    V.  INMAN,   POULSEN   &   CO. 


585 


Opinion  of  the  Court. 

if  the  defendants  in  error,  instead  of  combining  to  advance 
prices  and  to  refuse  to  sell  to  certain  purchasers,  had  com- 
bined to  reduce  the  prices  of  all  kinds  of  lumber  to  all  pur- 
chasers, it  would  have  had  an  equal  tendency  to  destroy  the 
trade  in  lumber  between  Vancouver  and  Portland,  and  yet  in 
so  doing  the  defendants  in  error  could  not  have  been  accused 
of  acting  unlawfully  in  restraint  of  that  trade.  But  is  this 
argument  sound,  and  does  it  lead  to  the  conclusion  which  was 
reached  by  the  court?  We  submit  that  a  combination  which 
is  made  for  the  specific  purpose  of  restraining  interstate  trade 
and  which  accomplishes  that  purpose,  restrains  it  directly,  and 
that,  if  such  be  its  intention  and  its  direct  tendency,  it  is 
under  the  ban  of  the  act,  whether  it  include  an  agreement 
to  raise  prices  or  an  agreement  to  lower  them.  The  mere 
agreement  to  raise  or  lower  prices,  as  was  said  by  the  court 
in  the  E.  G.  Knight  Case,  156  U.  S.  16,  [188]  15  Sup.  Ct.  255, 
39  L.  Ed.  325,  might  tend  to  restrain  external  trade,  "  but  the 
restraint  would  be  an  indirect  result,  however  inevitable  and 
whatever  its  extent;  and  such  result  would  not  necessarily 
determine  the  object  of  the  contract,  combination,  or  con- 
spiracy." But  this  is  far  from  saying  that  a  combination 
to  raise  or  lower  prices  aimed  directly  at  the  destruction  of 
a'  particular  branch  of  interstate  trade  would  accomplish 
that  result  indirectly,  and  therefore  lawfully.  In  United 
States  V.  Freight  Association,  166  U.  S.  328,  17  Sup.  Ct.  554, 
41  L.  Ed.  1007,  the  court,  referring  to  the  terms  of  the  act, 
said: 

"Tlie  plain  and  ordinary  meaning  of  sucli  language  is  not  limited 
to  that  kind  of  contract  alone  which  is  in  unreasonable  restraint  of 
trade,  but  all  contracts  are  included  in  such  language,  and  no  excep- 
tion or  limitation  can  be  added  without  placing  in  the  act  that  which 
has  been  omitted  by  Congress." 

The  same  view  was  reaffirmed  in  United  States  v.  Joint 
Traffic  Association,  171  U.  S.  558,  19  Sup.  Ct.  25,  43  L.  Ed. 
259.  In  United  States  v.  Swift  S  Co,  (C.  C.)  122  Fed.  534, 
Judge  Grosscup,  referring  to  the  doctrine  of  the  two  cases 
just  cited,  well  said : 

"  It  is  clear  from  them  that  restraint  of  trade  is  not  dependent  upon 
any  consideration  of  reasonableness  or  unreasonableness  in  the  com- 
bination averred ;  nor  is  it  to  be  tested  by  the  prices  that  result  from 
the  combination.  Indeed,  combination  that  leads  directly  to  lower 
prices  to  the  consumer  may,  within  the  doctrine  of  these  cases,  even 


586 


131  FEDERM^  KEPORTER,  188. 
Opinion  of  the  Court 


as  against  the  consumer,  lie  restFaint  of  trade:  and  combination  that 
leads  directly  to  higher  prices  may,  as  against  the  producer,  be  re- 
straint of  trade.  The  statute,  thus  interpreted,  has  no  concern  with 
prices,  but  loolcs  solely  to  c<imiietitiou,  and  to  the  giving  of  competi- 
tion full  play,  by  making  illegal  any  effort  at  restriction  upon  com- 
petition." 

From  the  recent  case  of  Northern  Securities  Co.  v.  United 
States,  193  U.  S.  197, 24  Sup.  Ct.  436, 48  L.  Ed.  679,  it  would 
api>ear  that  when  the  questions  involved  in  the  opinions  of 
the  Supreme  Court  in  the  two  cases  last  above  quoted  shall 
again  come  before  that  court  for  consideration  the  majority 
of  the  members  of  the  court  may  hold  that  the  rulings  in 
those  cases  should  have  gone  no  further  than  to  decide  that 
the  contracts  there  presented  were  unreasonable  restraint 
of  interstate  trade,  and  were,  as  such,  within  the  scope  of 
the  act.    But  if  we  adopt  that  view  of  the  law,  and  assume 
that  the  purpose  of  the  act  was  to  place  a  statutory  prohibi- 
tion only  on  those  combinations  which  are  unreasonable  and 
against  public  policy,  as  well  as  in  direct  restraint  of  inter- 
state trade,  the  present  combination,  as  it  is  set  forth  in  the 
coniplaint,  clearly  comes  within  the  prohibition.    The  com- 
plaint alleges  that  the  prices  placed  upon  all  lumber  by  the 
defendants  in  error  are  excessive  and  unreasonable,  and  that 
for  unfinished  luml>er  their  price  is  double  the  price  of  Vpi- 
couver  lumber  of  the  same  kind.    The  combination,  as  it  is 
stated  in  the  complaint,  is  more  than  a  mere  agreement  to 
raise  prices.    It  includes  also  an  agreement  to  coerce  pur- 
chasers of  lumber  by  other  means,  and  to  compel  them  to 
desist  from  the  interstate  trade.    Taking  together  all  the 
allegations  of  the  complaint,  it  appears  that  an  active  trade 
in  lumber  between  the  Vancouver  mills  and  the  Portland 
consumers  of  lumber  has  been  restrained  by  the  hcts  of  the 
defendants  in  error.    By  combining  as  tliey  did  they  wielded 
a   power  that  no  individual  action  could   possess.     They 
possessed  the  power  to  \IH^  ruin  the  business  of  any  Port- 
land contractor  who  imported  lumber  from  the  adjoining 
state,  and  they  exercised  that  power.    Restraint  of  the  trade 
resulted  therefrom,  and  the  restraint  was  the  direct  and 
necessary  result  of  a  combination  made  to  carry  out  that 
specific  purpose.    If  the  allegations  of  the  complaint  be  true, 
the  defendants  in  error  have  violated  the  prohibition  of  the 
act,  and  are  answerable  to  the  plaintiff  in  error  in  damages. 


HAERIMAN    IK    NORTHERN    SECURITIES   CO. 


587 


Syllabus. 

The  judgment  of  the  Circuit  Court  is  reversed,  and  the 
cause  remanded  for  further  proceedings  not  inconsistent  with 
these  views. 


[464]  HARRIMAN  ET  AI..  v.  NORTHERN  SECURI- 
TIES CO.  ET  AL.« 

(Circuit  Court,  D.  New  Jersey.    July  15,  1904.) 

[132  Fed.,  464.1 

Injunction— Allowance.— Wliere,  in  a  doubtful  case,  tlie  denial  of  a 
preliminary  injunction  would,  on  the  assumption  that  the  complain- 
ant ultimately  will  prevail,  result  in  greater  detriment  to  him  than 
would,  on  the  contrary  assumption,  be  sustained  by  the  defendant, 
through  its  allowance,  the  injunction  usually  should  be  granted. 

Same. — ^The  balance  of  convenience  or  hardship  ordinarily  is  a  factor 
of  controlliug  importance  in  cases  of  substantial  doubt  existing  at 
the  time  of  granting  or  refusing  the  preliminary  injunction. 

Same. — Such  doubt  may  relate  either  to  the  facts  or  to  the  law  of  the 
case,  or  to  both.  It  may  eiiually  attach  to,  or  widely  vary  in  degree 
as  between,  the  showing  of  the  complainant  and  of  tlie  defendant, 
without  necessarily  bcung  determinative  of  the  propriety  of  allowing 
or  d^n^'ing  the  injimction. 

Same- Preservation  of  Fund. — Where  the  sole  object  for  which  an 
injunction  Is  sought  is  the  preservation  of  a  fund  in  controversy,  or 
the  maintenance  of  the  status  quo,  until  the  question  of  right  be- 
tween the  parties  can  be  decided  on  final  hearing  the  injunction 
properly  may  be  allowed,  although  there  may  b?  serious  doubt  of 
the  ultimate  success  of  the  complainant. 

Same. — While  tlie  consideration  that  an  app?al  does  not  lie  from  an  in- 
terlocutory decree  denying  a  preliminary  injunction  is  entitled  to  no 
weight  where,  on  the  application,  it  clearly  appears  that  the  com- 
plainant cannot  prevail  on  the  final  hearing,  it  is  often  of  conti-ol- 
ling  importance  where,  on  such  application,  there  is  room  for  rea- 
sonable doubt  as  to  the  ultimate  result. 

Same— Novel  Questions  of  Law. — In  accordance  with  the  foregoing 
principles,  held,  that  a  preliminary  injunction  should  issue  in  a 
case  involving  grave,  novel  and  delicate  questions  of  law  and  a 
•  controversy  as  to  material  facts  bearing  upon  the  equities,  regard 
being  had  to  the  comparative  hardship  or  convenience  to  the  re- 
spective parties  resulting  from  the  awardmg  or  denial  of  the  in- 
junction. 

(Syllabus  by  the  Court.) 


o  Reversed  by  the  Circuit  Court  of  Appeals,  Third  Circuit  (1.^ 
Fed.,  331).  See  p.  618.  Decree  of  C.  C.  A.  affirmed  bv  the  Supreme 
Court  (197  U.  S.,  244).     See  p.  669. 


^88  132   FEDERAL   REPOKTEB,   464. 

Opinion  of  the  Court. 
In  Equity. 

E,  V,  Lindahury,  Wm,  D.  Guthrie^  and  E.  S.  Lovett,  for 
complainants. 

Elihu  Eoot^  John  G.  Johnson,  John  W,  Griggs,  Francis  L. 
Stetson,  and  W.  P,  Clough,  for  defendants. 

Bradford,  District  Judge. 

Application  has  been  made  on  bill,  affidavits  and  exhibits, 
for  a  preliminary  injunction  in  a  suit  brought  by  Edward  H. 
Harriman,  Winslow  S.  Pierce,  the  Oregon  Short  Line  Rail- 
road Company  and  The  Equitable  Trust  Company  of  New 
York  against  the  Northern  Securities  Company  and  the 
Northern  Pacific  Railway  Company.     The  present  contro- 
versy grows  out  of  a  situation  created  by  the  final  decree  of 
the  circuit  court  of  the  United  States  for  the  district  of 
Minnesota  in  United  States  v.  Northern  Securities  Co,  et  ak 
(C.  C.)   120  Fed.  721,  and  the  affirmatory  decree  of  the 
Supreme  [465]  Court  of  the  United  States  in  the  same  case. 
193  U.  S.  197,  24  Sup.  Ct.  436,  48  L.  Ed.  679.    That^was  a 
suit  in  equity  brought  by  the  United  States  against  the 
Northern  Securities  Company,  the  Northern  Pacific  Railway 
Company,  the  Great  Northern  Railway  Company,  James  J. 
Hill,  William  P.  Clough,  D.  Willis  James,  John  S.  Kennedy, 
J.  Pierpont  Morgan,  Robert  Bacon,  George  F.  Baker  and 
Daniel  S.  Lamont.    Its  object  was  to  enforce  the  provisions 
of  the  act  of  Congress  of  July  2,  1890,  entitled  "An  act  to 
protect  trade  and  commerce  against  unlawful  restraints  and 
n^onopolies,"  commonly  known  as  the  Anti-Trust  Act.    Act 
July  2,  1890,  c.  647,  26  Stat.  209  [U.  S.  Comp.  St.  1901,  p. 
3200].    Section  1  declares  illegal  *^  every  contract,  combina- 
tion in  the  form  of  trust  or  otherwise,  or  conspiracy,  in  re- 
straint of  trade  or  commerce  among  the  several  States  or 
with  foreign  nations,"  and  provides  that  "  every  person  whtf 
shall  make  any  such  contract  or  engage  in  any  such  combina- 
tion or  conspiracy,  shall  be  deemed  guilty  of  a  misdemeanor, 
and,  on  conviction  thereof,  shall  be  punished  by  fine  not 
exceeding  five  thousand  dollars,  or  by  imprisonment  not 
exceeding  one  year,  or  by  both  said  punishments  in  the  dis- 
cretion of  the  court."    Section  2  provides  that  "  every  per- 


HARRIMAN    V.    NORTHERN   SECURITIES   CO. 
Opinion  of  the  Court. 


589 


son  who  shall  monopolize,  or  attempt  to  monopolize,  or  com- 
bine or  conspire  with  any  other  person  or  persons,  to  monopo- 
lize any  part  of  the  trade  or  commerce  among  the  several 
States,  or  with  foreign  nations,  shall  be  deemed  guilty  of  a 
misdemeanor,"  punishable  in  like  manner  and  to  the  like 
extent  as  offences  under  the  first  section.     Section  3  [U.  S. 
Comp.  St.  1901,  p.  3201]  declares  illegal  "every  contract, 
combination  in  form  of  trust  or  otherwise,  or  conspiracy,  in 
restraint  of  trade  or  commerce  in  any  Territory  of  the  United 
States  or  of  the  District  of  Columbia,  or  in  restraint  of  trade 
or  commerce  between  any  such  Territory  and  another,  or 
between  any  such  Territory  or  Territories  and  any  State  or 
States  or  the  District  of  Columbia,  or  with  foreign  nations, 
or  between  the  District  of  Columbia  and  any  State  or  States 
or  foreign  nations,"  and  declares  that  "every  person  who 
shall  make  any  such  contract  or  engage  in  any  such  combina- 
:;ion  or  conspiracy,   shall   be   deemed   guilty   of  a  misde- 
meanor," punishable  in  like  manner  and  to  the  like  extent 
as  offences  under  the  preceding  sections.    Section  4  provides, 
among  other  things,  that  the  several  circuit  courts  of  the 
United  States  shall  have  "jurisdiction  to  prevent  and  re- 
strain violations  of  this  act,"  and  that  proceedings  under 
the  act  "  may  be  by  way  of  petition."    The  petition  or  biD 
of  complaint  in  the  Minnesota  suit  referred  to  set  forth  in 
substance,  among  other  things,  that  the  Northern  Pacific 
Railway  Company  and  the  Great  Northern  Eailway  Com- 
pany were  common  carriers  of  freight  and  passengers  and, 
as  such  carriers,  were  engaged  in  trade  and  commerce  among 
the  several  states  of  the  United  States  and  with  foreign 
nations;    that  on  and  prior  to  November  13,  1901,  the  de- 
fendants. Hill,  Clough,  James  and  Kennedy,  and  certain 
other  persons  whose  names  were  unknown  to  the  complain- 
ant, thereinafter  referred  to  as  James  J.  Hill  and  his  asso- 
ciate stockholders,  owned  or  controlled  a  majority  of  the 
capital  stock  of  the  Great  Northern  Railway  Company,  and 
the  defendants,  Morgan,  Bacon,  Baker  and  Lamont,  and 
certain  other  persons  whose  names  were  unknown  to  the 
complainant,  thereinafter  referred  to  as  J.  Pierpont  Mor- 
gan and  his  associate  stockholders,  owned   [466]   or  con- 
trolled a  majority  of  the  capital  stock  of  the  Northern 


590 


132   FEDERAL   REPOKTER,   466. 
Opinion  of  the  Court 


HAREIMAN    V,    NORTHERN    SECURITIES   CO. 


591 


Pacific  Railway  Company;    that  these  two  railway  com- 
panies at  and  prior  to  the  doing  of  the  acts  thereinafter  com- 
plained of,  owned  or  controlled  and  operated  two  separate, 
independent,  parallel  and  competing  lines  of  railway,  run- 
ning east  and  west,  forming  the  Northern  Pacific  system 
and  the  Great  Northern  system,  connecting  the  Great  Lakes 
and  the  Mississippi  River  with  Puget  Sound  and  the  Pacific 
ocean;  that  Hill  and  his  associate  stockholders,  and  Morgan 
and  his  associate  stockholders,  acting  for  themselves  as  such 
stockholders  and  on  behalf  of  the  two  railway  companies 
respectively  in  which  they  owned  or  held  a  controlling  inter- 
est, on  and  prior  to  November  13,  1901,  entered  into  an 
unlawful  combination  and  conspiracy  "  to  effect  a  virtual 
consolidation  of  the  Northern  Pacific  and  Great  Northern 
systems,  and  to  place  restraint  upon  all  competitive  inter- 
state and  foreign  trade  or  commerce  carried  on  by  them,  and 
to  monopolize  or  attempt  to  monopolize  the  same,  and  to 
suppress  the  comi^etition  theretofore  existing  between  said 
railway  systems  in  said  interstate  and  foreign  trade  or  com- 
merce," through  the  instrumentality  of  a  holding  company  to 
be  created  under  the  laws  of  New  Jersey  and  to  be  called 
the  Northern  Securities  Company,  with  a  capital  stock  of 
$400,000,000,  to  which,  in  exchange  for  its  own  capital  stock 
upon  a  certain  basis  and  at  a  certain  rate  was  to  be  trans- 
ferred the  capital  stock  or  a  controlling  interest  in  the  capital 
stock  of  each  of  the  two  railway  companies,  with  power  in 
the  holding  corporation  to  vote  such  stock  and  act  as  the 
owner  thereof,  and  do  whatever  it  might  deem  necessary  to 
aid  in  any  manner  such  railway  companies  or  enhance  the 
value  of  their  stock;   that  thus  the  individual  stockholders 
of  the  two  competing  railway  companies  were  to  be  elimi- 
nated, and  the  Northern  Securities  Company,  substituted 
as  a  single  common  stockholder,  the  interest  of  such  indi- 
vidual stockholders  in  the  property  and  franchises  of  the 
railway  companies  being  converted  into  an  interest  in  the 
property  and  franchises  of  the  holding  company;    that  in 
pursuance  of  such  unlawful  combination  or  conspiracy,  and 
solely  as  an  instrumentality  for  effecting  the  purposes  there- 
of, the  Northern  Securities  Company  was,  November  13, 
1901,  created  under  the  laws  of  New  Jersey,  with  an  author- 


Opinion  of  tbe  Court 

ized  capital  stock  of  $400,000,000,  and  on  or  about  the  next 
following  day  was  organized  by  the  election  of  a  board  of 
directors  and  the  selection  of  a  president  and  other  officers; 
that  thereupon  Hill  and  his  associate  stockholders  assigned 
and  transferred  to  that  company  a  controlling  interest  in 
the  capital  stock  of  the  Great  Northern  Railway  Company, 
upon  an  agreed  basis  of  exchange  of  $180  par  value  of  the 
capital  stock  of  the  Northern  Securities  Company  for  each 
share  of  the  capital  stock  of  the  Great  Northern  Railway 
Company,  and  Morgan  and  his  associate  stockholders  as- 
signed and  transferred  to  the  Northern  Securities  Company 
^  majority  of  the  capital  stock  of  the  Northern  Pacific  Rail- 
way Company  upon  an  agreed  basis  of  exchange  of  $115  par 
value  of  the  capital  stock  of  the  Northern  Securities  Com- 
pany for  each  share  of  the  capital  stock  of  the  Northern 
Pacific  Railway  Company;    that  in  further  pursuance  of 
such  unlawful  combination  or  conspiracy  the  Northern  Se- 
curities Company  offered  to  the  stockholders  of  the  two  rail- 
way companies  to  issue  and  exchange  its  capital  stock  for 
the  capital  stock  of  those  companies  [467]  upon  the  above 
mentioned  basis  of  exchange,  no  other  consideration  being 
required;   that  in  further  pursuance  of  such  unlawful  com- 
bination or  conspiracy  the  Northern  Securities  Company  had 
acquired  an  additional  amount  of  the  stock  of  the  two  rail- 
way companies,  issuing  therefor  its  own  stock  upon  the  same 
basis  of  exchange,  and  was  then  holding  as  owner  substan- 
tially all  of  the  capital  stock  of  the  Northern  Pacific  Rail- 
way Company  and  a  majority  of  or  controlling  interest  in 
the  capital  stock  of  the  Great  Northern  Railway  Company, 
and  was  voting  the  same,  collecting  the  dividends  thereon^ 
and  in  all  respects  acting  as  owner  thereof  in  the  organiza- 
tion, management  and  operation  of  such  railway  companies, 
and  in  receipt  and  control  of  their  earnings;    that  thus  a 
virtual  consolidation  under  one  ownership  and  source  of 
control  of  the  Great  Northern  and  Northern  Pacific  railway 
systems  had  been  effected,  a  combination  or  conspiracy  in 
restraint  of  the  trade  or  commerce  among  the  several  states 
and  with  foreign  nations,  formerly  carried  on  by  the  two 
railway  companies  independently  and  in  free  competition 
one  with  the  other,  had  been  formed  and  was  in  operation. 


592 


132  FEDERAL,  REPORTEB,  467. 
Opinion  of  the  Ck>urt 


HARRIMAN    V.    NORTHERN    SECURTTTES   CO. 
Opinion  of  the  Court. 


593 


and  the  defendants  were  thereby  attempting  to  monopolize, 
and  had  monopolized,  such  interstate  and  foreign  trade  and 
commerce,  in  violation  of  the  act  of  Congress  of  July  2, 1890, 
c.  647,  26  Stat.  209  [U.  S.  Comp.  St.  1901,  p.  3200],  above 
i-ef erred  to;  that  no  consideration  whatever  had  existed,  or 
would  exist,  for  the  above  mentioned  transfer  of  the  stock 
of  the  railway  companies  by  their  stockholders  to  the  North- 
era  Securities  Company  other  than  tlie  issue  of  the  stock  of 
the  latter  company  to  them  in  exchange  therefor,  for  the 
purpose,  in  the  manner,  and  upon  the  basis  above  stated; 
that  the  Northern  Securities  Company  was  not  organized 
in  good  faith  to  purchase  and  pay  for  the  stock  of  fhe  two 
railway  ccnnpanies,  but  solely  to  incorporate  the  pooling  of 
the  stock  of  said  companies  and  to  carry  into  effect  such 
unlawful  combination  or  conspiracy;  that  the  Northern 
Securities  Company  was  a  mere  depositary,  custodian, 
holder  and  trustee  of  the  stock  of  the  railway  companies, 
and  its  shares  of  stock  were  but  beneficial  certificates  issued 
against  such  railway  stock  to  designate  the  interest  of  the 
holders  in  the  pool;  and  that  its  scribed  capital  was  but 
$30,000,  and  its  authorized  capital  stock  of  $400,000,000  was 
just  sufficient,  when  all  issued,  to  cover  the  exchange  value 
of  substantially  the  entire  stock  of  the  two  railwav  com- 
panics,  upon  the  basis  and  at  the  rate  agreed  upon,  such 
exchange  value  being  about  $122,000,000  in  excess  of  the 
combined  capital  stock  of  such  railway  companies  taken  at 
par.  Answers  and  replications  were  duly  filed,  evidence  was 
taken  and  such  procedings  were  thereafter  had  in  the  case 
that  a  decree  was  entered  in  the  circuit  court  April  9,  1903, 
pursuant  to  the  prayers  of  the  petition  or  bill,  but  not  includ- 
ing all  the  relief  therein  asked.  In  that  decree  it  was  de- 
clared that  the  defendants,  in  violation  of  the  Anti-Trust 
Act,  had  entered  into  a  combination  or  conspiracy  in  re- 
straint  of  trade  and  commerce  among  the  several  states,  and 
that  all  of  the  stock  of  the  Northern  Pacific  Railway  Com- 
pany and  of  the  Great  Northern  Railway  Company  "  now 
claimed  to  be  owned  and  held  by  the  defendant.  The  North- 
em  Securities  Company,  was  acquired  and  is  now  held  by 
it  in  virtue  of  such  combination  or  conspiracy  in  restraint 
of  trade  and  commerce  among  the  several  States,"  [468]  and 


a  perpetual  injunction  was  granted  restraining  the  Northern 
Securities  Company  from  "  acquiring  or  attempting  to  ac- 
quire further  stock  of  either  of  the  aforesaid  railway  com- 
panies," or  "  voting  the  aforesaid  stock  which  it  now  holds 
or  may  acquire,"  or  "  attempting  to  vote  it,  at  any  meeting 
of  the  stockholders  of  either  of  the  aforesaid  railwav  com- 
panics,  or  "  exercising  or  attempting  to  exercise  any  control, 
direction,  suj^ervision  or  influence  whatsoever  over  the  acts 
and  doings  of  said  railway  companies  or  either  of  them  by 
virtue  of  its  holding  such  stock  therein ;  "  and  restraining 
the  Northern  Pacific  Railway  Company  and  the  Great 
Nortliern  Railway  Company  respectively  and  collectively 
from  "permitting  the  stock  aforesaid  to  be  voted  by  the 
Northern  Securities  Company,  or  in  its  behalf,  by  its  attor- 
neys or  agents  at  any  corporate  election  for  directors  or 
officers  of  either  of  the  aforesaid  railway  companies,"  or 
"  paying  any  dividends  to  the  Northern  Securities  Company 
on  account  of  stock  in  either  of  the  aforesaid  railway  com- 
panies which  it  now  claims  to  own  and  hold,"  or  "  permit- 
ting or  suffering  the  Northern  Securities  Company  or  any 
of  its  officers  or  agents,  as  such  officers  or  agents,  to  exercise 
any  control  whatsoever  over  the  corporate  acts  of  either  of 
the  aforesaid  railway  companies."  Immediately  after  the 
injunctive  portion  of  the  decree  is  the  following  clause: 

But  nothing  herein  contained  shall  be  construed  as  prohibiting  the 
Northern  Securities  Company  from  returning  and  transferring  to 
the  Northern  Pacific  Railway  Company  and  the  Great  Northern 
Railway  Company,  respectively,  any  and  all  shares  of  stock  in  either 
of  said  railway  companies  which  said,  the  Northern  Securities  Com- 
pany, may  have  heretofore  received  from  such  stockholders  in  ex- 
change for  Its  own  stock;  and  nothing  herein  contained  shall  be 
construed  as  prohibiting  the  Northern  Securities  Company  from 
making  such  transfer  and  assignments  of  the  stock  aforesaid  to  such 
person  or  persons  as  may  now  be  the  holders  and  owners  of  its  own 
stock  originally  issued  in  exchange  or  in  payment  for  the  stock 
claimed  to  have  been  acquired  by  it  in  the  aforesaid  railway  com- 
panies." ^ 

It  may  not  be  without  significance,  although  it  is  unneces- 
sary now  to  discuss  the  point,  that  the  relief  prayed  in  the 
petition  or  bill  of  the  United  States  was  in  some  particulars 
broader  than  that  granted  in  the  final  decree.  This  decree 
was  in  all  respects  affirmed  by  the  Supreme  Court  of  the 
21220— VOL  2—07  M 38 


594 


132   FEDERAL   KEPORTER,  468. 
Opinion  of  the  Court 


United  States  March  14,  1904,  "  with  liberty  to  the  Circuit 
Court  to  proceed  in  the  execution  of  its  decree  as  the  circum- 
stances may  require."  Mr.  Justice  Harlan  in  his  opinion 
affirmatory  of  the  decree  of  the  court  below,  among  other 
things,  said: 

"No  valid  objection  can  be  made  to  the  decree  below,  in  form  or 
In  substance.  •  ♦  ♦  The  Circuit  Court  has  done  only  what  the 
actual  situation  demanded.  Its  decree  has  done  nothing  more  than  to 
meet  the  requirements  of  the  statute.  It  could  not  have  done  less 
without  declaring  its  impotency  in  dealing  with  those  who  have 
violated  the  law.  The  decree,  if  executed,  will  destroy,  not  the 
property  interests  of  the  original  stocljholders  of  the  constituent 
companies,  but  the  power  of  the  holdiug  corporation  as  the  instru- 
ment of  an  illegal  combination  of  which  it  was  the  master  spirit,  to 
do  that  which,  if  done,  would  restrain  interstatfe  and  international 
commerce.  The  exercise  of  that  power  being  restrained,  the  object 
of  Congress  will  be  accomplished ;  left  undisturbed,  the  act  in  ques- 
tion will  be  valueless  for  any  practical  purpose." 

No  opinion  is  now  expressed  or  intimated  as  to  the  force 
or  effect  of  the  above  utterance. 

[469]  Thereafter  the  board  of  directors  of  the  Northern 
Securities  Company  adopted  March  22,  1904,  certain  pre- 
ambles and  resolutions,  reciting  that  the  company  "has 
acquired  and  now  holds  1,537,594  shares  in  the  capital  stock 
of  the  Northern  Pacific  Eailway  Company;  and  1,181,242 
shares  in  the  capital  stock  of  the  Great  Northern  Railway 
Company,"  and  "  has  been  enjoined  from  voting  upon  the 
shares  of  either  of  the  said  railway  companies,  and  each  of 
the  said  railway  companies  has  been  enjoined  from  pay- 
ing to  this  company  any  dividends  upon  any  of  the  shares 
of  such  railway  company  held  by  this  company,"  and  that 
"  there  are  now  outstanding  3,954,000  shares  of  its  own  capi- 
tal stock,"  and  that  it  "  desires  and  intends  to  comply  with 
the  decree  in  the  said  suit,  fully  and  unreservedly,  and  with- 
out delay,"  and  declaring  it  "  necessary  and  desirable  for  this 
company  so  to  reduce  its  present  capital  stock  as  will  enable 
it,  without  delay,  in  connection  with  such  reduction,  to 
distribute  among  its  shareholders,  the  shares  of  capital  stock 
of  said  railroad  companies  held  by  it,"  and  advisable  that 
the  fourth  article  of  its  certificate  of  incorporation  should 
be  so  amended  as  to  read  as  follows: 

"  Fourth.  The  capital  stock  of  this  company  Is  hereby  reduced  to  three 
million  nine  hundred  fifty-four  thousand  dollars  ($3,954,000),  and  shall 
hereafter  be  three  million  nine  hundred  and  fifty-four  [thousand]  dol- 


HAKRIMAN    l\    ISTORTHERN    SECURITIES   CO. 
Opinion  of  the  Court 


595 


lars  ($3,954,000),  divided  into  thirty-nine  thousand  five  hundred  and 
forty  (39,540)  shares  of  one  hundred  dollars  ($100)  each.  Such 
reduction  of  capital  stocli  shall  be  accomplished  by  each  holder  of 
outstanding  shares  of  this  company's  stock  surrendering  to  the  com- 
pany, for  retirement,  ninety-nine  per  centum  of  the  shares  held  by 
him.  Upon  the  surrender  to  this  company,  by  any  shareholder,  of 
the  entire  number  of  shares,  and  parts  of  shares,  of  this  company's 
stocli,  which  he  is  hereby  required  to  surrender,  this  company  will 
assign  to  him,  for  each  share  so  surrendered,  thirty-nine  dollars  and 
twenty-seven  cents  ($39.27)  of  the  stock  of  the  Northern  Pacific  Rail- 
way Company,  and  thirty  dollars  and  seventeen  cents  ($30.17)  of 
the  preferred  stock  of  the  Great  Northern  Railway  Company,  and 
proportional  amounts  thereof  for  fractional  shares  of  the  stock  of 
this  company." 

The  resolutions  also  called  for  «  meeting  of  the  stock- 
holders of  the  Northern  Securities  Company,  to  be  held 
April  21,  1904,  for  the  purpose  of  taking  action  upon  the 
proposed  alteration  of  its  certificate  of  incorporation. 

The  bill  in  the  present  suit  sets  forth  in  substance,  among 
other   things,   that   the   total   authorized   capital    stock   of 
the    Northern    Pacific    Railway    Company    in    November, 
1901,   amounted   to   $155,000,000   par  value,  consisting  of 
$75,000,000  par  value  of  preferred  stock  and  $80,000,000  par 
value  of  common  stock;  that  such  proceedings  were  had  in 
November  and  December,  1901,  that  such  preferred  stock 
was  converted  into  common  stock,  so  as  to  make  the  entire 
issue  of  stock  of  the  Northern  Pacific  Eailway  Company 
consist  of  common  stock  to  the  amount  of  $155,000,000  par 
value,  and  such  is  the  authorized  amount  of  its  capital  stock 
issued  and  now  outstanding;  that  the  authorized  capital 
stock  of  the  Great  Northern  Eailway  Company  in  Novem- 
ber, 1901,  was  and  still  is  about  $125,000,000  par  value,  of 
which  abput  $123,000,000  par  value  has  been  issued  and 
was  then  and  is  now  outstanding;  that  the  Northern  Pacific 
and  Great  Northern  railway  systems  are  substantially  par- 
allel and  in  a  position  to  compete  with  each  other  in  the 
transaction  of  interstate  and  foreign  commerce  carried  on 
by  them;  that  the  North-   [470]  ern  Securities  Company, 
although  incorporated  and  organized  in  form  according  to 
and  nominally  for  objects  authorized  by  the  laws  of  New 
Jersey,  in  reality  was  incorporated  and  organized  in  pur- 
suance of  a  combination  in  restraint  of  trade  and  commerce 
among  the  several  states  and  for  objects  prohibited  by  the 
Anti-Trust  Act;  that  prior  to  November   13,   1901,  Hill 


596 


132   FEDERAL   BEPORTER,   #70. 


Opinion  of  tbe  Court 

Morgan,  Clough,  James,  Kennedy,  Bacon,  Baker,  and  La- 
mont,  and  their  a&sociates,  owning  or  controlling  a  majority 
of  the  capital  stock  of  the  Great  Northern  Railway  Com- 
pany and  a  majority  of  the  common  capital  stock  of  the 
Northern  l*acific  Railway  Company,  agreed  to  organize  a 
holding  company  under  the  laws  of  New  Jei'sey,  and  that 
such  holding  company  should  acquire  and  permanently  hold 
a  majority  of  the  shares  of  the  capital  stock  of  those  rail- 
way companies  respectively  and  control  the  oi^ration  and 
management  thereof  in  perpetuity,  and  that  the  then  exist- 
ing holdere  of  such  railway  shares  should  deposit  the  same 
with  such  holding  company  and  receive  in  lieu  thereof  share 
certificates  of  the  holding  company  upon  the  basis  of  $180 
par  value  of  its  stock  for  each  share  of  the  Great  Northern 
Railway  stock,  and  $115  par  value  of  its  stock  for  each  share 
of  the  Northern  Pacific  Railway  stock,  and  that  the  hold- 
ing company  should  act  as  custodian,  deiiositary  or  trust^^ 
of  such  railway  shares  on  Ijehalf  of  the  existing  shai-ehold- 
ers  of  the  two  railway  companies  and  tlieir  associates;  that 
thereuiKin  in  pui-suanee  of  such   agreement   the  Northern 
Securities  Company  was  created  and  organized  under  the 
laws  of  New  Jersey,  for  the  object  of  acquiring  and  holding 
shares  of  the  capital  stock  of  other  corporations,  and  with 
an  authorized  capital  stock  of  ijUOCOOO.OOO,  divided  into  four 
million  shares  of  the  par  value  of  $100  each,  and  forthwith 
agreed  to  acquire  and  hold  the  shares  of  stock  of  the  two 
railway  companies  as  custodian,  depositary  or  trustee,  and 
to  issue  in  exchange  therefor  its  own  share  certificates  upon 
the  above  mentioned  basis;  that  prior  to  April  0,  1903,  about 
$176,822,900  par  value  of  the  stock  of  the  Northern  Securi- 
ties Company  w-as  issued  in  exchange  for  about  $153,759,400 
par  value  of  the  stock  of  the  Northern  Pacific  Railway  Com- 
pany, and  about  $211,057,600  par  value  of  the  stock  of  the 
former  company  w^as  issued  in  exchange  for  about  $118,124,- 
200  par  value  of  the  stock  of  the  Great  Northern  Railway 
Company,  and  about  $7,522,000  par  value  of  the  stock  of 
the  Northern  Securities  Company  was  issued  for  cash  used 
for  the  purchase  of  other  property  and  for  corporate  pur- 
poses;   that  the  Northern  Securities  Company  caused  the 
certificates  for  such  railway  shares  to  be  transferred  to 


HARRIMAN   V.   NORTHERN   SECURITIES   CO. 


597 


Opinion  of  the  Conrt 

and  registered  in  its  own  name  or  the  names  of  its  agents  and 
ever  since  has  held  and  now  holds  the  same  so  registered ; 
that  such  issue  of  capital  stock  of  the  Northern  Securities 
Company    for   the   stock    of   the    two    railway    companies 
was  to  the  then  existing  holders  of  stock  in  such  railway 
companies   in  exchange   for   certificates   for   such   railway 
stock  and  for  the  purpose  of  effectuating  the  above  men- 
tioned scheme  or  combination  whereby  the  Northern  Securi- 
ties Company,  holding  a  majority  of  the  shares  of  stock 
of  the  two  railway  companies,  would  be  enabled  to  con- 
trol  the   operation    and    management   of    the    same;    that 
all  the  persons  to  whom  stock  of  the  Northern  Securities 
Conipany  was  issued  for  shares  of  either  of  the  railway  com- 
panies or  for  cash  had  full  knowledge  of  the  purposes  for 
which  it  was  organized,  and  of  the  fact  that  a  [471]  major- 
ity of  the  capital  stock  of  each  of  the  railway  companies 
had  been  or  was  to  be  deposited  with  it  as  custodian  or 
depositary  in  pursuance  of  the  above  mentioned  agreement; 
that  prior  to  the  time  of  the  incorporation  and  organiza- 
tion of  the  Northern  Securities  Company,  the  Oregon  Short 
Line  Railroad   Company  had   acquired   and   at  that  time 
owned   $37,023,000  par  value   of  the  common   stock,   and 
$41,085,000  par  value  of  the  preferred  stock  of  the  Northern 
Pacific  Railway  Company,  represented  by  certificates  issued 
to  and  registered  in  the  names  of  the  complainants  Harri- 
man  and  Pierce;  that  after  the  incorporation  of  the  North- 
ern Securities  Company  had  been  resolved  upon  Harriman, 
Pierce  and  the  Oregon  Short  Line  Railroad  Company  agreed 
with  the  promoters  and  incorporators  of  the  former '^com- 
pany to  transfer  to  and  deposit  with  it  under  the  terms  and 
conditions  before  stated,  the  shares  of  the  Northern  Pacific 
Railway  Company  of  the  aggregate  par  value  of  $78,108,000 
owned  by  the  Oregon  Short  Line  Railroad  Company,  and 
to  receive  m  exchange  therefor  certificates  of  the  Northern 
Securities    Company    representing   an    interest    therein    of 
$82,491,871  par  value,  and  $8,915,629  in  cash,  and  in  pursu- 
ance of  such  agreement  Harriman  and  Pierce,  acting  for 
the  Oregon  Short  Line  Railroad  Company,  did,  on  or  about 
November  18,  1901,  transfer  and  deliver  to  the  Northern    , 
Securities  Company  certificates  for  $37,023,000  par  value  of 


598 


132  FEDERAL   REPOKTER,   471. 


Opinion  of  the  Court. 

the  common  stock  and  $41,085,000  par  value  of  the  preferred 
stock  of  the  Northern  Pacific  Eailway  company,  owned  by 
the  Oregon  Short  Line  Eailroad  Company,  and  received  in 
exchange  therefor  certificates  of  the  Northern  Securities 
Company  representing  an  interest  of  $82,491,871  par  value, 
and  the  above  mentioned  sum  of  $8,915,629  in  cash;  that 
Harriman  and  Pierce  are  now,  and  ever  since  November 
18,  1901,  have  been,  the  registered  owners  and  holders  of 
the  $82,491,871  par  value  of  the  shares  of  the  Northern  Se- 
curities Company,  and  such  holding  of  stock  is  and  at  all 
times  has  been  by  them  as  trustees  for  the  use  and  benefit  of 
the  Oregon  Shoi-t  Line  Eailroad  Company,  which  is  the 
beneficial  owner  thereof;  that  the  $82,491,871  par  value  of 
the  stock  of  the  Northern  Securities  Company  so  standing  in 
the  names  of  Harriman  and  Pierce,  was  pail  of  the  original 
issue  of  stock  by  that  company;  that  the  above  mentioned 
exchange  was  made  by  Harriman  and  Pierce  and  the  Ore- 
gon Short  Line  Eailroad  Company  in  good  faith  and  in  the 
belief  that  the  organization  of  the  Northern  Securities  Com- 
pany was  not,  and  the  acquisition  and  holding  by  it  of  the 
stock  of  the  two  railways  as  stated  would  not  be,  in  viola- 
tion of  any  statute  of  the  United  States,  and  it  was  owing 
to  such  belief  that  the  complainants  did  not,  pending  the 
final  determination  of  the  suit  brought  by  the  United  States 
in  Minnesota,  take  any  steps  or  institute  any  proceedings 
for  the  protection  of  their  rights  in  the  premises ;  that  the 
Oregon  Short  Line  Eailroad  Company  by  indenture  dated 
July  17,  1902,  duly  pledged  $82,491,000  ^ar  value  of  the 
st«ck  of  the  Northern  Securities  Company  with  The  Equita- 
ble Trust  Company  of  New  York,  as  trustee,  for  an  issue  of 
bonds  of  that  railroad  company,  of  which  bonds  $82,491,000 
face  value  have  been  certified  and  issued  and  are  now  out- 
standing ;   that  the  stock  of  the  Northern  Securities  Company, 
so  issued  to  Harriman  and  Pierce  November  18,  1901,  is  still 
registered  in  their  names  and  the  certificates  therefor  duly 
endorsed  are  now  in  the  actual  cus-   [472]   tody  of  The 
Equitable  Trust  Company  of  New  York  as  pledgee,  and  are 
available  for  tender,  return  or  restoration  to  the  Northern 
Securities  Company;  that  at  the  time  of  such  exchange,  on 
or  about  November  18,  1901,  it  was  agreed  between  Harri- 


HARRIMAN    V,    NORTHERN   SECURITIES   CO. 


599 


Opinion  of  the  Court. 

man  and  Pierce  and  the  Northern  Securities  Company  that 
the  $41,085,000  par  value  of  the  preferred   stock  of  the 
Northern  Pacific  Eailway  Company  should  be  converted  into 
common  stock  of  that  railway  company,  and  such  preferred 
stock  was  subsequently,  in  or  about  December,  1901,  con- 
verted by  the  Northern  Securities  Company  into  such  com- 
mon stock  of  the  same  par  value;  that  certificates  for  $34,- 
709,062  par  value  of  such  common  stock  registered  in  the 
name  of  the  Northern  Securities  Company  on  the  books 
of  the  railway  company  were  substituted  in  lieu  of  the  cer- 
tificates for  such  preferred  stock;  that  the  Northern  Securi- 
ties Company  caused  such  original  common  stock  to  be  trans- 
ferred to  it  upon  the  books  of  the  railway  company,  and  now 
holds  within  the  jurisdiction  of  this  court  certificates  regis- 
tered in  its  name  on  the  books  of  the  railway  company, 
namely,  the  Northern  Pacific  Eailway  Company,  for  such 
common  stock  so  originally  received  from  Harriman  and 
Pierce,  and  for  the  common  stock  into  which  such  preferred 
stock  was  so  converted  and  certificates  substituted  as  above 
mentioned.     The  bill  then  sets  forth  in  substance  the  pro- 
ceedings in  United  States  v.  Northern  Securities  Company 
et  al.    (C.  C.)   120  Fed.  721,  and  the  final  decree  therem 
of  the  circuit  court  and  the  decree  of  the  Supreme  Court 
of  the  United  States  on  appeal.     The  bill  further  alleges 
in   substance   that   the   complainants   were   represented   in 
that  suit  by  the  Northern   Securities   Company   and   the 
Northern    Pacific   Eailway   Company   as   well   as   by   the 
individual    defendants,    Morgan,    Bacon,    Baker    and    La- 
mont,  who  were  named  as  the  representatives  of  original 
holders  and  owners  of  the  stock  of  the  Northern  Pacific 
Eailway  Company  acquired  and  held  by  the  Northern  Se- 
curities Company;  that  the  effect  of  the  decree  of  the  cir- 
cuit court  as  affirmed  by  the  Supreme  Court  of  the  United 
States  was  to  adjudge  that  the  Northern  Securities  Com- 
pany was  not  a  purchaser  or  owner,  but  simply  a  custodian, 
of  the  shares  of  stock  of  the  two  railway  companies  acquired 
and  held  by  it ;  that  it  acquired  and  held  possession  thereof 
in  violation  of  the  Anti-Trust  Act  July  2,  1890,  c.  647,  26 
Stat.  209  [U.  S.  Comp.  St.  1901,  p.  3200]  ;  that  it  acquired 
no  title  thereto  and  cannot  transfer  any  riglits  in  respect 


600 


132  FEDERAL   REPORTEK,   472. 


Opinion  of  the  Court, 
thereof;  that  the  legal  and  equitable  owners  thereof  were 
and  are  the  several  parties  who  originally  exchanged  the 
same  for  stock  of  the  Northern  Securities  Company,  or  their 
assigns;  that  immediately  upon  the  rendition  of  the  deci- 
sion of  the  Supreme  Court  of  the  United  States  the  North- 
ern Securities   Company,  through   its  board  of  directors, 
determined  fully  and  unreservedly  to  abandon  and  terminate' 
the  above  mentioned  combination  and  its  holding  of  such 
railway  stock,  and  to  that  end  to  reduce  the  capital  stock 
of  the  company  by   ninety-nine   per  cent  thereof,  or  to 
$3,954,000  par  value,  and  to  distribute  and  divide  the  stock 
of  the  two  railway  companies  held  by  it,  pro  rata  among  its 
own  stockholders,  but  not  to  return  and  retransfer  to  the 
stockholders  of  those  railway  companies,  resjiectively,  or 
their  assigns,  any  of  the  shares  of  stock  in  either  of  them 
which  it,  the  Northern  Securities  Company,  originally  re- 
ceived from  such  stockholders  in  exchange  for  its  own  stock ; 
that  in  order  to  consummate  such  purposes  [473]  the  board 
of  directoi-s  of  the   Northern  Securities  Company  on  or 
about  March  22,  1904,  adopted  the  preambles  and  resolu- 
tions hereinbefore  referred  to;  that  thereupon  a  circular  or 
notice  was  issued  by  and  on  behalf  of  that  companv  to  its 
stockholders,  notifying  them  of  a  special  meeting  for  the 
purpose  of  voting  upon  the  proposition  submitted  by  the 
directors  in  the  resolutions  adopted;  that  such  meeting  of 
stockholders  was  held  April  21,  1904,  and  at  it  the  stock 
of  the  Northern  Securities  Company  was  reduced  ninety- 
nine  per  cent  by  a  vote  of  more  than  seventy-five  jjer  cent,  in 
interest  of  its  stockholders,  and  by  a  like  vote  the  proposed 
plan  of  pro  rata  distril)ution  was  assented  to,  but  tlie  com- 
plainants then  and  there  duly  protested  that  such  plan  of 
distribution  was  illegal  and  in  violation  of  their  rights; 
that  such  plan  is  unauthorized  by  law,  illegal  and  ultra 
vires  the  Northern  Securities  Company,  in  violation  of  the 
rights  and  equities  of  the  complainants,  and  of  the  laws  of 
the  United  States  and  of  New  Jersey;  that  such  plan  has 
never  been  assented  to  by  the  complainants  and  is  not  bind- 
ing upon  them;  that  the  books  and  records  of  the  Northern 
Securities  Company  show  for  what  purpose  or  considera- 
tion each  outstanding  certificate  of  stock  was  originally  is- 


HARRTMAJSr    V,    NORTHERN    SECURITIES   CO. 
Opinion  of  tbe  Court. 


601 


sued,  whether  for  cash  or  for  stock  of  the  Northern  Pacific 
Eailway  Company  or  of  the  Great  Northern  Eailway  Com- 
pany, and  will  disclose  that  a  large  part  of  the  stock  of  the 
Northern  Securities  Company,  issued  originally  in  exchange 
for  stock  of  those  railway  companies,  is  now  held  in  the 
name  or  on  behalf  of  original  holders  who  exchanged  the 
same  for  stock  of  the  railway  companies,  and,  wherever 
there  have  been  transfers  of  certificates  to  third  parties, 
the  origin  of  each  and  every  outstanding  certificate  of  stock 
of  the  Northern  Securities  Company  so  transferred  to  third 
parties  can  be  so  traced  and  shown  in  and  by  such  books  and 
records  that  the  assignees  of  the  original  holders  can  be 
identified  and  the  stock  of  either  railway  company  originally 
exchanged  by  the  assignors  can  be  delivered  to  such  as- 
signees in  exchange  for  their  present  holdings  of  stock  of 
the  Northern  Securities  Company;  that  the  Northern  Se- 
curities Company  threatens  and  intends  immediately  to  dis- 
tribute the  shares  of  stock  of  each  of  the  two  railway  com- 
panies pro  rata  among  its,  the  Northern  Securities  Com- 
pany's, stockholders  in  disregard  of  the  rights  of  the 
complainants,  and  unless  enjoined  by  this  court  from  so 
doing,  will  forthwith  make  such  distribution,  whereby  stock 
of  the  Northern  Pacific  Eailway  Company  belonging  to 
the  complainants,  and  to  which  they  are  entitled  will  be 
lost  by  them,  and  they  will  thereby  suffer  injury  which 
cannot  be  compensated  in  damages,  in  that  the  shares*  of 
stock  of  that  railway  company  to  which  they  are  so  entitled 
are  registered  on  the  books  of  the  railway  company  in  the 
name  of  the  Northern  Securities  Company,  and  those  rail- 
way company  shares  or  any  like  amount  of  such  shares 
cannot  be  purchased  in  any  market  or  from  any  persons; 
that  the  proposed  distribution  pro  rata  in  lieu  of  the  return 
and  restitution  of  the  stock  of  the  railway  companies  would 
involve  a  loss  of  annual  income  to  the  complainants  amount- 
ing to  over  $1,000,000,  the  dividends  at  the  rate  now  paid 
upon  the  stock  of  the  Northern  Pacific  Eailway  Company 
to  which  they  are  en-  [474]  titled  exceeding  by  more  than 
$1,000,000  per  annum  the  dividends  upon  the  stock  of  the 
Great  Northern  Eailway  Company  and  Northern  Pacific 
Eailway   Company  which   they  would   receive  upon  such 


602 


132  FEDEEAL  EKPOBTEB,  474. 


Opinion  of  the  Cionrt. 
pro  rata  distribution;  that  the  value  of  the  stock  of  the 
Northern  Pacific  Kailway  Company  to  which  the  complain- 
ants are  entitled  now  exceeds  and  at  all  times  mentioned  in 
the  bill  exceeded  by  more  than  $10,000,000  the  aggregate 
value  of  the  pro  rata  share  of  the  stock  of  the  two  railway 
companies  which  they  would  receive  upon  such  pro  rata 
dKtnbution   which  would  be  $32,070,612  par  value  of  stock 
of  the  Northern  Pacific  Kailway  Company  and  $24,638  919 
par  raluB  of  stock  of  the  Great  Northern  Railway  Company, 
instead  of  $78,108,000  par  value  of  stock  of  the  former 
company;     that    the    complainants    are    ready,    able    and 
willing,  and  oflFer,  to  return  and  deliver,  or  cause  to  be 
returned  and  delivered,  and  they  tender,  to  the  Northern 
becunties  Company  all  the  certificates  for  the  shares  of 
Its  capital  stoc^  so  received  by  them,  and  such  part  of 
the  above  mentioned  sum  of  $8,915,629  in  cash,  paid  to 
them  by  or  on  behalf  of  that  company,  as  may  be  just, 
or  such  further  or  other  sum  as  the  court  shall  fix    in 
exchange  for  and  upon  the  return  of  the  common  stock 
of  the  Northern  Pacific  Railway  Company,  delivered  and 
exchan^d    by   them    as    above    stated,    and    the    common 
stock  of  such  railway  company  into  which  the  preferred 
stock  so  exchanged  was  converted,  and  they  offer  to  bring 
mto  court  such  stock  of  the  Northern  Securities  Company 
and  such  moneys  whenever  the  court  shall  direct,  and  in  aU 
r^pects  to  do  equity  and  right  in  the  premises;  and  that, 
after  the  return  and  restoration  of  the  original  depositors 
or  their  assigns  of  all  the  shares  of  stock  of  the  railway 
companies,  acquired  and  held  by  the  Northern  Securiti^ 
Company,  as  above  stated,  there  will  remain  in  the  treasury 
of  that  company  assets  and  funds  sufficient  to  pay  and  re- 
deem all  of  the  $7,522,000  par  value  of  its  stock  issued  for 
cash,  or  to  fully  compensate  any  holders  thereof  if  compen- 
sation be  adjudged.    The  complainants  pray  that  it  may 
be  decreed  that  the  proposed  plan  of  distribution  is  iUe- 
gil  and  in  violation  of  their  rights  and  equities,  and  that 
they  are  entitled  to  the  return  and  transfer  to  them  by 
the  Northern  Securities  Company  of  the  shares  of  common 
stock  of  the  Northern  Pacific  Railway  Company,  which  were 
so  delivered  by  Harriman  and  Pierce,  and  the  shares  of 


HAHKIMAN   V.    NORTHERN   SECURITIES  CO. 


Opinion  of  the  Court 


fi03 


common  stock  into  which  the  preferred  stock  of  that  rail- 
way company  delivered  by  them  were  converted,  in  exchange 
for  the  certificates  of  stock  of  the  Northern  Securities  Com- 
pany so  issued  to  and  now  held  by  the  complainants,  and 
such  sum  in  cash  as  may  be  just;  that  the  Northern  Securi- 
ties Company  may  be  ordered  and  directed  to  endorse  the 
certificates  now  held  by  it  for  such  stock  of  the  Northern 
Pacific  Railway  Company  to  the  Oregon  Short  Line  Rail- 
road Company,  or  in  blank,  and  deliver  the  same  to  The 
Equitable  Trust  Company  of  New  York  in  exchange  for  the 
stock  of  the  Northern  Securities  Company  now  held  by 
such  trust  company,  to  be  subject  to  its  rights  and  lien  as 
trustee;  that  the  Northern  Securities  Company  be  perpetu- 
ally enjoined  and  restrained  from  parting  with,  disposing 
of,  transferring,  assigning  or  distributing  any  part  of  the 
stock  of  [475]  the  Northern  Pacific  Railway  Company  re- 
ceived from  Harriman  and  Pierce,  or  anv  common  stock 
into  which  the  preferred  stock  received  from  them  may 
have  been  converted,  or  the  certificates  now  representing 
the  same  or  any  part  thereof,  except  to  return  the  same 
to  the  complainants  in  exchange  for  its  own  stock  issued 
as  above  stated  and  the  cash  now  tendered  bv  them:  that 
the  complainants  have  such  other  or  further  relief  as  shall 
be  proper  under  the  circumstances;  and  that  the  Northern 
Securities  Company  may  be  enjoined  and  restrained  from 
parting  with,  disposing  of,  transferring,  assigning  or  dis- 
tributing  the  stock  of  the  Northern  Pacific  Railway  Com- 
pany in  question,  or  any  part  thereof,  or  any  certificates  now 
representing  the  same  during  the  pendency  of  this  suit. 

The  defense  controverts  material  allegations  in  the  bill, 
some  of  which  embody  averments  of  fact,  and  others  aver- 
ments of  law.  With  respect  to  some  of  the  alleged  facts, 
important  in  their  bearing  upon  the  equities  of  the  case,  the 
affidavits  and  exhibits. are  conflicting  on  substantial  points. 
On  the  face  of  the  bill  it  is  evident  that  the  final  decision 
necessarily  will  involve  the  consideration  of  grave,  novel 
and  delicate  questions  of  law.  On  the  presentation  of  their 
arguments  for  and  against  the  awarding  of  a  preliminary 
injunction  counsel  on  both  sides  have  with  strong  insist- 
ence urged,  and  with  elaboration  and  signal  ability  dis- 


604 


132  FEDERAL   REPORTER,   475. 


Opinion  of  the  Court, 
cussed,  a  nuinber  of  legal  propositions,  important  and  far^ 
reaching  m  their  scope,  and  by  no  means  free  from  doubt 
Whether  or  not  a  final  decision  will  require  a  determination 
of  all  these  propositions,  the  fact  remains  that  the  eminent 
counsel  advancing  them  have  during  a  hearing  of  nearly 
three  days  pressed  them  with  zeal  and  in  manifest  relianci 
upon  their  soundness  and  materiality.    The  briefs  of  argu- 
ment and  authorities,  containing  nearly  800  printed  pages 
and  principally  devoted  to  the  discussion  of  the  principles  of 
law  and  equity  deemed  applicable  to  the  case,  fairly  may  be 
accepted  as  evidence  that  much  may  seriously  be  said  on 
each  side  about  the  hiw,  if  not  the  facts,  involved     The 
case  not  being  ripe  for  a  final  decision,  the  present  applica- 
tmn  IS  for  a  preliminary  injunction.     The  granting  or  re- 
fusal of  a  preliniinary  injunction,  whether  mandatory  or 
preventive,  calls  for  the  exercise  of  a  sound  judicial  dis- 
cretion in  view  of  all  the  circumstances  of  the  particular 
case.    Regard  should  be  had  to  the  nature  of  the  contro- 
verey,  the  object  for  which  the  injunction  is  sought,  and 
the  comparative  hardship  or  convenience  t«  the  respective 
parties  involved  in  the  awarding  or  denial  of  the  injunction 
The   legitimate   object   of  a   preliminaiy   injunction,   pre- 
ventive m  its  nature,  is  the  preservation  of  the  property  or 
right^  m  controversy  until  the  decision  of  the  case  on  a  full 
and  final  hearing  upon  the  merits,  or  the  dismissal  of  the 
bill  for  want  of  jurisdiction  or  other  sufficient  cause.    The 
injunction  is  merely  provisional.    It  does  not,  in  a  legal 
sense,  finally  conclude  the  rights  of  parties,  whatever  may 
be  Its  practical  operation  under  exceptional  circumstances 
In  a  doubtful  case,  where  the  granting  of  the  injunction 
would,  on  the  assumption  that  the  defendant  ultimately 
will  prevail,  cause  greater  detriment  to  him  than  would 
on  the  contrary  a&sumption,  be  suffered  by  the  complainant' 
^rough  ite  refusal,  [476]  the  injunction  usually  should  be' 
denied.    But  where,  in  a  doubtful  case,  the  denial  of  the 
mjunction  would,  on  the  assumption  that  the  complainant 
ultimately  will  prevail,  result  in  greater  detriment  to  him 
than  would,  on  the  contrary  assumption,  be  sustained  by  the 
defendant   tlirough    its   allowance,   the   injunction   usually 
should  be  granted.    The  balance  of  convenience  or  hardship 


HARRIMAN    V,    NORTHERN    SECURITIES   CO. 


605 


Opinion  of  the  Court. 

ordinarily  is  a  factor  of  controlling  importance  in  cases 
of  substantial  doubt  existing  at  the  time  of  granting  or  re- 
fusing the  preliminary  injunction.  Such  doubt  may  relate 
either  to  the  facts  or  to  the  law  of  the  case,  or  to  both.  It 
may  equally  attach  to,  or  widely  vary  in  degree  as  between, 
the  showing  of  the  complainant  and  that  of  the  defendant, 
without  necessarily  being  determinative  of  the  propriety  of 
allowing  or  denying  the  injunction.  AVhere,  for  instance, 
the  effect  of  the  injunction  would  be  disastrous  to  an  estab- 
lished and  legitimate  business  through  its  destruction  or 
interruption,  in  whole  or  in  part,  strong  and  convincing 
proof  of  right  on  the  part  of  the  complainant  and  of  the 
urgency  of  his  case  is  necessary  to  justify  an  exercise  of  the 
injunctive  power.  Where,  however,  the  sole  object  for 
which  an  injunction  is  sought,  is  the  preservation  of  a  fund 
in  controversy,  or  the  maintenance  of  the  status  quo,  until 
the  question  of  right  between  parties  can  be  decided 
on  final  hearing,  the  injunction  properly  may  be  allowed, 
although  there  may  be  serious  doubt  of  the  ultimate  suc- 
cess of  the  complainant.  Its  allowance  in  the  latter  case 
is  a  provisional  measure,  of  suspensive  effect  and  in  aid  of 
such  relief,  if  any,  as  may  finally  be  decreed  to  the  complain- 
ant. These  views  are  supported  by  abundant  authority  to 
which,  were  it  not  for  the  importance  of  the  case,  I  should 
refrain  from  adverting.  In  Rnssell  v.  Farley,  105  U.  S.  433, 
438,  26  L.  Ed.  1060,  the  court  through  Mr.  Justice  Bradley 
said: 

"It  is  a  settled  rule  of  the  Court  of  Chancery,  in  actinj;  on  appli- 
cations for  injunctions,  to  regard  the  comparative  injury  which 
would  be  sustained  by  the  defendant,  if  an  injunction  were  granted 
and  by  the  complainant,  if  it  were  refused.  Kerr  on  Injunctions' 
209,  210.  And  if  the  legal  right  is  doubtful,  either  in  point  of  law  or 
of  fact,  the  court  is  always  reluctant  to  take  a  course  which  may 
result  in  material  injury  to  either  party." 

In  City  of  Newton  v.  Levis,  79  Fed.  715,  25  C.  C.  A.  161, 
the  circuit  court  of  appeals  for  the  eighth  circuit  through 
Judge  Sanborn  said: 

"The  granting  or  withholding  of  a  preliminary  injunction  rests  in 
the  sound  judicial  discretion  of  the  court,  and  the  only  question  pre- 
sented by  this  appeal  is  whether  or  not  the  court  below  erred  in  the 
exercise  of  that  discretion,  under  the  established  legal  principles 
which  should  have  guided  it  The  propriety  of  its  action  must  be 
considered  from  the  standpoint  of  that  court.  *  *  ♦  The  con- 
trolling reason  for  the  existence  of  the  right  to  issue  a  preliminary 


132  FEDERAL  KEPOBTEB,   476. 


Opinion  of  the  Court 

injunction  is  that  the  court  may  thereby  prevent  such  a  change  of 
the  conditions  and  relations  of  persons  and   property   during  the 
litigation  as  may  result  in  irremediable  injury  to  some  of  the  parties 
before  their  claims  can  be  investigated  and  adjudicated.    When  the 
questions?  to  be  ultimately  decided  are  serious  and  doubtful,  the  legal 
discretion  of  the  judge  in  granting  the  writ  should  be   influenced 
lai^ely  by  the  consideration  that  the  injury  to  the  moving  party  will 
be  certain,  great  and  irreparable  if  the  motion  is  denied,  while  the 
mctmvenience  and  loss  to  the  opposing  partv  will  be  inconsiderable 
and  may  well  be  Indemnified  by  a  proper  bond  if  the  hijunction  is 
grantwl.    A  preliminai-y  injunction  maintaining  the  status  quo  may 
properly  issue  when-   [477]  ever  the  questions  of  law  or  fact  to  be 
ultimately  determined  in  a  suit  are  grave  and  difficult,  and  injury 
to  the  moving  partj'  will  be  immediate,  certain,  and  great  if  it  is 
denied,  while  the  loss  or  inconvenience  to  the  opposing  party  will  be 
compiiratively  small  and  insignificant  if  It  is  granted.    ♦    *    ♦    The 
arguments  and  brief  of  counsel  invite  us  to  a  consideration  of  the 
questions  of  law  which  must  be  finally  determined  upm  a  demurrer 
to  the  bill,  or  upon  a  final  hearing  of  this  case  after  answer     We 
have,  however,  found  it  unnecessary  to  decide  these  questions  on 
this  appeal,  and  we  express  no  opinion  upan  them.    They  are  of  suf- 
ficient importiince  and  difliculty  to  demand  careful  examination  and 
deliberate  consideration,"  etc. 

In  Glmcott  v.  Lang,  3  Myl.  &  C.  451,  455,  Lord  Chancel- 
lor Cottenham  said : 

"  In  looking  through  the  pleadings  and  the  evidence,  for  the  pur- 
pose of  an  injuuetion,  it  is  not  necessary  that  the  court  should  find 
a  case  which  would  entitle  the  plaintiff  to  relief  at  all  events.  It 
is  quite  suflicient  if  the  court  finds,  uixai  the  pleadings,  and  upon  the 
evidence,  a  case  which  malies  the  transaction  a  proper  subject  of 
Investigation  in  a  court  of  equity.'* 

In  Madden  v.  Doohy,  74  Fed.  429,  431,  20  C.  C.  A.  494, 
the  circuit  court  of  appeals  for  the  second  circuit  through 
Judge  Shipman  said: 

"When  the  questions  which  naturally  arise  upon  the  transactions 
make  them  a  proper  subject  for  deliberate  examination,  if  a  stay  of 
proceedings  will  not  result  in  too  great  injury  to  the  defendants,  it 
Is  proper  *  to  preserve  the  existing  state  of  things  until  the  rights  of 
the  parties  can  be  fairly  and  fully  investigated  and  determined '  by 
evidence  and  proofs  which  have  the  merit  of  accuracy." 

In  Great  We%tem  R.  Go,  v.  Birmingham,  etc,  R.  Go,,  2 
Phil.  Ch.  597,  Lord  Chancellor  Cottenham  said : 

"  It  is  certain  that  the  court  will  in  many  cases  interfere  and  pre- 
serve property  in  statu  quo  during  the  pendency  of  a  suit,  in  which 
the  rights  to  It  are  to  be  decided,  and  that  without  expressmg,  and 
often  without  having  the  means  of  forming,  any  opinion  as  to  such 
rights.  It  is  true  that  no  purchaser  pendente  lite  would  gain  a  title- 
but  it  would  embarrass  the  original  purchaser  in  his  suit  against  the 
vendor  which  the  court  prevents  by  its  injunction.  *  ♦  •  It  is 
true  that  the  court  will  not  so  hiterfere,  if  it  thinks  that  there  is  no 
real  question  between  the  parties;  but  seeing  that  there  is  a  sub- 
stantial question  to  be  decided,  it  will  preserve  the  property  until 
such  question  can  be  regularly  disposed  of.  In  order  to  support  an 
injunction  for  such  purpose,  it  is  not  necessary  for  the  court  to  de- 


HABEIMAN   V,   NORTHERN   SECURITIES  CO. 
Opinion  of  the  Court. 


607 


cide  upon  the  merits  in  favor  of  the  plaintiff.  If,  then,  this  bill  states 
a  substantial  question  between  the  parties,  the  title  to  the  injunction 
may  be  good,  although  the  title  to  the  relief  prayed  may  ultimaiely 
fail.  Is,  then,  the  case  stated  by  the  bill  so  clear  in  favor  of  the 
defendants,  and  so  inadequate  to  support  the  relief  prayed  by  the 
bill,  as  to  justify  the  court  in  permitting  it  to  be  disposed  of,  and  new 
titles  or  interests  to  be  introduced,  before  any  decision  can  l)e  ob- 
tained upon  the  case  so  made?" 

In  Shrewsbury  <&  Chester  R,  Go,  v.  Shrewsbury  R.  Go,, 
1  Sim.  N.  S.  *410,  *426,  *427,  *432,  the  Vice-ChanceUor, 
Lord  Cran worth,  said : 

"When  the  court  is  called  on  to  interefere  to  perserve  property 
pendente  lite,  there  are,  I  apprehend,  two  points  on  which  the  court 
must  satisfy  itself.  First,  it  must  satisfy  itself,  not  that  the  plaintiff 
has,  certainly,  a  right,  but  that  he  has  a  fair  question  to  raise  as  to 
the  existence  of  such  a  right.  *  *  ♦  Where  it  is  made  out  that 
there  is  a  point  to  be  decided  which  the  plaintiff  is  fairly  raising, 
still,  there  is  a  further  question,  namely,  whether  interim  inter- 
ference, on  a  balance  of  convenience  and  inconvenience  to  the  one 
party  and  to  the  other,  is  or  is  not  expedient.  Where  the  alternative 
is  interference  or  [478]  probable  destruction  of  the  property,  there, 
of  course,  the  court  will  be  very  ready  to  lend  its  immediate  as- 
sistance, even  at  considerable  risk  that  it  may  be  encroaching  on 
what  may  eventually  turn  out  to  be  a  legal  right  of  the  defendant 
But  where,  on  the  other  hand,  the  only  evil  to  result  from  non-inter- 
ference is,  that  the  plaintiff  may,  by  the  contracts  or  deeds  of  the 
defendant,  be  retarded  or  embarrassed  in  his  litigation,  there  the  court 
will  be  far  more  ready  to  listen  to  any  suggestion  of  the  defendant 
showing  that  interference  during  litigation  will  prejudice  his  rights. 
*  *  ♦  Although  I  am  perfectly  satisfied  of  the  authority  of  this 
court  to  issue  an  injimction,  not  merely  to  restrain  parties  from 
doing  acts,  but  also  from  entering  into  contracts  pending  litigation 
that  may  embarrass  the  plaintiff  in  his  suit,  and  that  the  court  is 
entitled  to  do  so  whenever  it  sees  there  is  a  fair  ground  for  litigation 
raised  by  the  plaintiff,  yet  that  right  of  the  court  must  be  guided 
by  a  discretion  not  to  exercise  it  where  it  sees  that  on  the  balance 
of  convenience  and  inconvenience  between  interim  interference  and 
non-interim  interference  the  balance  greatly  preponderates  in  favor  of 
the  defendant  and  against  the  plaintiff." 

In  the  above  case  a  preliminary  injunction  was  refused 
on  the  ground  of  the  "enormous  preponderance  of  incon- 
venience in  granting  the  injunction  over  any  possible  incon- 
venience in  refusing  it."  The  doctrine  of  the  foregoing 
cases  is  contained  in  many  others  from  which  there  is  no 
occasion  to  quote.  Denver  (&  R.  G,  R,  Go,  v.  Vnited  States, 
124  Fed.  156,  59  C.  C.  A.  579;  Allison  v.  Gorson,  88  Fed. 
581,  32  C.  C.  A.  12;  Buskirk  v.  King,  72  Fed.  22, 18  C.  C.  A. 
418 ;  Sanitary  Reduction  Works  v.  Galifomia  Reduction  Go, 
(C.C.)  94  Fed.  693;  Southern  Pac,  Go.  v.  Earl,  82  Fed.  690, 
27  C.  a  A.  185 ;  New  Memphis  Gas  <&  Light  Go,  v.  Mem- 
phis (C.  C.)  72  Fed.  952;  Indianapolis  Gas  Go,  v.  Indian- 


608 


132   FEDERAL   REPORTEE,   178. 
Opinion  of  the  Court. 


apolu  (C.  C.)  82  Fed.  245;  Georgia  v.  Bm'dsford,  2  Dall. 
402, 1  L.  Ed.  433. 

It  does  not  api>eai%  nor  has  it  been  claimed  or  intimated, 
that  the  granting  of  the  preliminary  injunction  asked  for 
would  interfere  with  the  operation  of  the  Northern  Pacific 
Kailway  Company  and  the  Great  Northern  Railway  Com- 
pany, or  either  of  them,  or  otherwise  prove  detrimental  to 
the  interests  of  the  public.     It  undoubtedly  would,  during 
the  continuance  in  force  of  the  injunction,  preclude  the 
stockholders  of  the  Noithern  Securities  Company,  or  a  con- 
siderable proportion  of  them,  from   directly  or  indirectly 
receiving  dividends  on  the  stock  of  either  of  the  railway 
companies,  unless  under  and  by  virtue  of  some  voluntary 
extrajudicial  arrangement.    But  this  court  has  power  to 
require  of  the  complainants  as  a  condition  precedent  to 
the  issuing  of  the  injunction,  a  bond  in  such  form  and 
amount  as  fully  to  indemnify  all  persons,  wlio  may  ulti- 
mately be  found  entitled  to  such  dividends  against  all  loss  or 
damage  resulting   from   the  suspension   of  their  payment. 
On  the  other  hand,  the  denial  of  a  preliminary  injunction 
would,  if  the  complainants  should  ultimately  prevail,  render 
barren  their  victory  so  far  as  relief  in  this  suit  is  concerned. 
The  stock  of  the  two  railway  companies  would  be  distributed 
pro  rata  among  the  stockholders  of  the  Northern  Securities 
Company  in  accordance  with  the  plan  of  distribution  adopted 
by  the  latter  company.    The  complainants  would  receive,  in- 
stead of  stock  of  the  Northern  Pacific  Railway  Company  of 
the  par  value  of  $71,732,062  claimed  by  them,  stock  of  that 
company  amounting  at  par  to  only  $32,070,612,  and  stock  of 
the  Great  Northern  Railway  Company  of  the  par  value  of 
[479]  $24,638,919.    The  difference  in  the  par  value  between 
the  stock  of  the  Northern  Pacific  Railway  Company  claimed 
by  the  complainants  and  the  stock  of  that  company  which 
they  would  receive  under  the  proposed  plan  is  $39,661,450. 
If  the  complainants  be  sustained  in  their  contention  here 
made  as  to  their  ownership  and  right  to  recover  stock,  such 
right  would  not  extend  to  stock  of  the  Great  Northern  Rail- 
way Company,  but  only  to  stock  of  the  Northern  Pacific 
Railway  Company.    A  pro  rata  distribution  under  the  pro- 
posed plan  of  ihe^  $39,661,450  par  value  of  stock  of  the  latter 


HARRIMAN   V.    KORTHERN   SECURITIES   CO. 


609 


Opinion  of  the  Court, 
company,  included  in  the  amount  now  sued  for,  among  the 
stockholders  of  the  Northern  Securities  Company,  other  than 
the  complainants,  would  not  only  debar  the  latter  from  any 
relief  to  which  they  may  be  entitled  under  their  present  bUl, 
but  to  a  moral  certainty  entail  upon  them  a  burdensome  mul- 
tipLcity  of  suits  attended  with  great  labor  and  expense.    It 
would  also  obviously  be  calculated  to  hinder,  embarrass  and 
probably  or  possibly  defeat  them  in  their  effort  to  recover 
large  quantities  of  such  stock  from  persons  purchasing  the 
same  in  good  faith  and  for  full  consideration,  directly  or 
indirectly,  from  the  stockholders  of  the  Northern  Securities 
Company    participating    in    such    pro    rata    distribution, 
through  the  creation  of  new  equities  on  the  part  of  such  pur- 
chasers.    In  view  of  the  character  of  the  questions  involved 
m  this  case  it  would  be  highly  inequitable  that  the  complain- 
ants should,  in  advance  of  any  final  decision  on  the  merits, 
be  put  in  such  a  position  as  to  be  precluded,  either  wholly  or 
m  large  measure,  from  the  realization  and  enjoyment  of  the 
fruits  which  should  be  theirs  through  the  immediate  result 
of  a  final  decree  in  the  present  case,  should  it  ultimately  be 
determined  in  their  favor. 

It  appears  from  the  bill,  affidavits  and  exhibits,  that,  aside 
from  any  question  of  right  between  the  parties  to  one  kind 
of  stock  in  contradistinction  to  another,  the  real  ^'alue  in 
dispute  is  of  great  magnitude.     For  $37,023,000  par  value  of 
common  stock  and  $41,085,000  par  value  of  preferred  stock 
of  the  Northern  Pacific  Railway  Company  turned  over  by 
Harriman  and  Pierce  to  the  Northern  Securities  Comi^any 
November  18,  1901,  the  latter  company  issued  to  them  $82  - 
491,871  par  value  of  its  stock  and  also  paid  them  $8,915,629 
m  cash.     All  of  the  common  and  preferred  stock  so  turned 
over  by  Harriman  and  Pierce,  aggregating  $78,108,000  par 
value  was  taken  by  the  Northern  Securities  Companv  at  an 
agreed  real  valution  of  $115  for  each  $100  at  par  without 
distinction  between  common  and  preferred  stock     The  plan 
of  pro  rata  distribution  of  the  Northern  Securities  Company 
contemplates  the  transfer  and  assignment  to  all  stockholders 
of  that  company  of  both  preferred  stock  of  the  Great  North- 
ern Railway  Company  and  common  stock  of  the  Northern 
21220— VOL  2—07  m 39 


610 


132  FEDEEAL  KEPORTEB,   479. 
Opinion  of  the  Coort 


HARRIMAN    V.    NORTHERN    SECURITIES   CO. 


611 


Pacific  Railway  CompaEy,  in  such  manner  that  each  and  every 
holder  of  stock  of  the  Northern  Securities  Company  will,  on 
the  basis  of  the  surrender  to  it  for  cancellation  of  1)9  per 
cent,  of  such  stock,  receive  for  each  $100  par  value  of  such 
surrendered  stock  $30.17  par  value  of  the  preferred  stock  of 
the  Great  Northern  Railway  Company  and  $39.27  par  value 
of  the  common  stock  of  the  Northern  Pacific  Railway  Com- 
pany.   Under  the  proposed  plan  [480]  the  holders  of  the  re- 
maining one  hundredth  of  the  stock  of  the  Northern  Securi- 
ties Company  would  also  be  entitled  to  share  in  the  residue 
of  property  in  the  treasury  of  that  company  remaining  after 
the  reduction  of  its  stock  by  99  per  cent.    The  complainants 
hold  $82,491,871  par  value  of  the  stock  of  the  Northern 
Securities  Company,  and,  as  before  stated,  would  receive 
$24,638,919  par  value  of  the  preferred  stock  of  the  Great 
Northern  Railway  Company  and  $32,070,612  par  value  of 
the  common  stock  of  the  Northern  Pacific  Railway  Company. 
The  present  real  or  market  value  of  the  preferred  stock  of 
the  former  company  is  about,  and  is  admitted  to  be,  $170  for 
each  $100  par  value,  while  that  of  the  conunon  stock  of  the 
Northern  Pacific  Railway  Company  is  $135  for  each  $100 
par  value.    Under  the  proposed  plan  the  real  value  which  the 
complainants  would  receive  in  stock  of  the  Great  Northern 
Railway  Company  would  be  $41,886,162,  and  the  real  value 
which  they  would  receive  in  stock  of  the  Northern  Pacific 
Railway  Company  would  be  $41,295,326,  making  a  total  of 
$83,181,488,  aside  from  any  interest  they  might  have  in  any 
undisposed  of  residue  of  property  remaining  in  the  treasury 
of  the  Northern  Securities  Company.    Reference  will  later 
be  made  to  such  undisposed  of  residue.    It  appears  from  the 
affidavits  and  exhibits  that  in  November,  1901,  the  Northern 
Pacific  Railway  Company  adopted  a  plan  for  the  conversion 
of  all  its  preferred  stock  into  common  stock;   the  preferred 
stock  then  amounting  to  $75,000,000  par  value,  and  the  com- 
mon stock  to  $80,000,000  par  value.    Under  this  plan  the 
Northern  Securities  Company,  as  the  holder  of  $37,023,000 
par  value  of  the  common  stock  became  entitled  to  surrender 
preferred  stock  of  the  Northern  Pacific  Railway  Company 
and  receive  therefor  seventy  hve  eightieths  of  its  par  value 
in  the  new  common  stock.    There  is  evidence  furnished  by 


Opinion  of  the  Court. 

the  affidavits  and  exhibits  that  the  Northern  Securities  Com- 
pany exercised  this  right  and  received  of  such  new  common 
stock  $34,709,062  at  par.     If  such  be  the  fact,  the  latter  com- 
pany thereupon  became  the  holder  of  $71,732,062  par  value 
of  common  stock,  the  real  value  of  which  at  $135  for  $100  par 
value  is  $96,838,283.     The  deduction  fi'om  tlte  $41,085,000 
par  value  of  the  preferred  stock  of  the  Northern  Pacific  Rail- 
way Company  of  the  $37,023,000  par  value  of  such  stock, 
the  surrender  of  which  to  that  company  for  cancellation  was 
necessary  for  the  acquisition  of  the  $34,709,062  of  its  new 
common  stock,  left  a  balance  of  $4,062,000  par  value  of  its 
preferred  stock.     If  this  balance  was  sold  or  disposed  of  at 
par, — and  it  may  reasonably  be  inferred  from  the  affidavits 
and  exhibits  that  it  was  not  sold  or  disposed  of  for  less, — 
its  proceeds.  $4,062,000  fairly  may  be  treated  as  an  offset  to 
the  cash   payment   of   $8,915,629,   originally   made   by   the 
Northern  Securities  Company  to  Harriman  and  Pierce.     On 
this  theory  the  balance  of  the  $8,915,629  over  the  $4,062,000, 
amounting  to  $4,853,629,  when  deducted  from  $96,838,283, 
the  present  real  value  of  the  $71,732,062  par  value  of  the 
common  stock  of  the  Northern  Pacific  Railway  Company, 
leaves  a  balance  of  $91,984,654.     From  this  balance  would 
be  deducted  $83,181,488  which  the  complainants  would  receive 
under  the  pro  rata  plan,  leaving  $8,803,166  in  their  fa^or,  less 
the  amount  of  their  share  of  [481]  the  above  mentioned  resi- 
due in  the  treasury  of  the  Northern  Securities  Company  and  a 
just  allowance  of  interest  on  the  cash  balance.     The  above 
mentioned  sum  of  $8,915,629,  paid  by  the  Northern  Securi- 
ties Company  to  Harriman  and  Pierce  November  18,  1901, 
had  been  loaned  to  that  company  by  the  firm  of  J.  P.  Morgan 
&  Company.     On  or  about  January  1,  1902,  $6,375,938  par 
value  of  the  $41,085,000  par  value  of  preferred  stock  of  the 
Northern  Pacific  Railway  Company  originally  transferred 
by  Harriman  and  Pierce  to  the  Northern  Seourities  Com- 
pany, having  previously  been  surrendered  to  the  Northern 
Pacific  Railway  Company  and  retired,  its  proceeds,  amount- 
ing to  its  par  value,  were  paid  by  the  Northern  Securities 
Company  to  J.  P.  Morgan  &  Company  in  partial  liquida- 
tion of  the  cash  loan  of  $8,915,629  made  by  that  firm  to  tlie 


^12  132  FEDERAL  REPORTER,   481. 

Opiiiioii  of  the  Court. 

latter  conipany.    The  affidavits  and  exhibits  furnish  evi- 
dence of  some  weight  that  the  above  mentioned  par  value 
of  $6,375,938  of  preferred  stock  of.  the  Northern  Pacific  Rail- 
way Company  was  deducted  by  the  Northern  Securities  Com- 
pany from  the  $41,085,000  par  value  of  preferred  stock  of 
that  railway  company,  thereby  reducing  the  latter  amount 
to  $34,709,062  at  par,  and  that  the  remaining  preferred 
stock,  namely,  $34,709,062  par  vahie  was,  through  the  in- 
strumentality of  convertible  certificates  issued  by  the  North- 
ern Pacific  Railway  Company  converted  into  new  common 
stock  of  equal  par  value.    If  such  be  the  case,  the  claim  of 
the  complainants  would  extend  to  the  $37,023,000  par  value 
of  the  old  common  stock,  and  the  $34,709,062  par  value  of 
the  new  common  stock,  aggregating  $71,732,062  par  value  of 
common  stock,  having  a  real  value  of  $96,838,283.    The 
deduction  from  this  amount  of  $2,539,691,  representing  the 
difference  between  the  original  cash  payment  of  $8,915,629 
and  $6,375,938,  proceeds  of  preferred  stock  retired,  should 
be  deducted  from  the  total  amount  leaving  a  balance  amoimt- 
ing  in  real   value   to   $94,298,592.     Deducting   from   this 
amount  $83,181,488,  which  the  complainants  would  receive 
under  the  proposed  distribution,  leaves  $11,117,104  in  their 
favor,  less  the  amount  of  their  share  of  the  residue  in  the 
treasury  of  the  Northern  Securities  Company  after  the  pro- 
posed distribution.    There  should  also  be  a  further  deduc- 
tion of  such  sum  by  way  of  interest  on  cash  received  as  above 
stated  by  Harriman  and  Pierce  from  the  Northern  Securi- 
ties Company  as  may  be  just.    This  item,  however,  would 
be  of  comparative  insignificance  in  its  relation  to  the  other 
values  involved  in  the  suit.    In  a  journal  of  the  Northern 
Securities  Company  is  the  following  entry : 

"  1901. 
Novbr.  18th. 

Investment  Account  No.  1. 

^     s^^  «^^         .                               "^^  Capital  Stock  a/c. 
For  410,850  shs.  N.  P.  Pfd.  stock  bought  from  E.  H.  Harri- 
man and  Winslow  S.  Pierce  for «4i  085  000 

I^ess  paid  in  cash  as  per  entry  in  casb  book  this  day 8,'  935]  629 

Balance  paid  in  stock $32, 169, 371 

say  321,693  shs.  &  |71  scrip  issued  as  fully  paid  up  stock 
@  par," 


HARRIMAN    V,    NORTHERN   SECURITIES   CO. 


613 


Opinion  of  the  Court. 

[482]  Whatever  may  be  the  merit  of  this  entry  as  viewed 
from  the  standpoint  of  scientific  bookkeeping,  the  words 
and  figures  "  Balance  paid  in  stock  $32,169,371,"  are,  when 
considered  in  connection  with  other  exhibits  and  the  affi- 
davits, confusing  and  misleading  in  their  bearing  upon  the 
conversion,    whether    directly    or    indirectly,    of    preferred 
stock  of  the  Northern  Pacific  Railway  Company  originally 
turned  over  by  Harriman  and  Pierce  to  the  Northern  Securi- 
ties Company  into  new  common  stock  of  the  former  com- 
pany.    Any  assumption  that  the  above  mentioned  balance 
of  $32,169,371  par  value  of  preferred  stock  of  the  Northern 
Pacific  Railway  Company  was  not  converted,  either  at  par 
or  on  the  seventy  five  eightieths  basis,  into  new  common 
stock  of  that  company,  by  the  Northern  Securities  Company, 
appears  irreconcilable   with   controlling  evidence   touching 
the  conversion  of  preferred  into  common  stock,  furnished  by 
the  affidavits  and  exhibits  considered  as  a  whole.     A  fact, 
which  on  the  present  showing  seems  indisputable,  is  that  the 
Northern  Securities  Company,  in  addition  to  the  $37,023,000 
par  value  of  the  common  stock  of  the  Northern  Pacific  Rail- 
way Company  originally  turned  over  to  the  former  com- 
pany by  Harriman  and  Pierce,  acquired  through  the  instru- 
mentality of  convertible  certificates  issued  by  the  railway 
company  new  common  stock  of  the  par  value  of  $34,709,062. 
It  is  unimportant,  so  far  as  the  point  under  immediate  dis- 
cussion is  concerned,  whether  that  amount  of  new  common 
stock  was  secured,  on  the  one  hand  by  a  surrender  to  the 
railway  company  of  $37,023,000  par  value  of  its  preferred 
stock  on  the  seventy  five  eightieths  basis,  or,  on  the  other, 
by  a  surrender  to  the  railway  company  of  its  preferred 
stock  of  the  par  value  of  $34,709,062  for  its  new  common 
stock  of  the  same  par  value.    It  is  not  claimed  or  suggested 
that  the  balance  of  $32,169,371  par  value  of  preferred  stock, 
mentioned  in  the  journal  entry,  was  sold  by  the  Northern 
Securities  Company  absolutely   for  cash  and  without  in- 
tention on  its  part,  directly  or  indirectly,  to  convert  such 
balance  of  preferred  stock  into  the  new  common  stock  of 
the  Northern  Pacific  Railway  Company.    Any  such  con- 
tention would,  on  the  present  showing,  be  wholly  inadmis- 
sible.    The  affidavits  and  exhibits  fail  to  disclose,  and  coun- 


614 


132   FEDERAL   REPORTER,   482. 


H 


Opliiioii  of  the  Court. 

sel  have  not  attempted  to  explain,  how  that  balance  of  pre- 
ferred stock  was,  or,  on  any  basis  or  theory  justified  by  the 
evidence,  conld  have  been,  converted  intJ  $34,709,062  par 
value  of  the  new  common  stock  of  the  Northern  Pacific 
Kailwa}'  Company.  Yet,  if,  notwithstanding  the  foregoing 
considerations,  it  be  assumed  that  only  $32,169,371  par  value 
of  the  original  $41,085,000  par  value  of  preferred  stock  of 
that  railway  company,  transferred  by  Harriman  and  Pierce 
to  the  Xorthem  Securities  Company  was  converted  into  the 
new  common  stock  of  the  railway  company  of  an  equal  par 
value,  the  old  and  new  common  stock  would  aggregate 
$69,172,371  par  value  or  a  real  present  value  of  $93,409,701. 
The  deduction  from  the  latter  amount  of  the  $83,181,488 
which  the  complainants  would  receive  under  the  proposed 
pro  rata  distribution  would  leave  a  balance  of  $10,228,213  of 
real  value  in  their  favor,  less  the  amount  of  their  participa- 
tion in  the  residue  of  the  property  remaining  in  the  treasury 
of  the  Northern  [483]  Securities  Company.  Or,  further, 
if  it  lie  assumed  that  the  $32,169,371  par  value  of  preferred 
stock  of  the  Northern  Pacific  Railway  Company  was  con- 
verted into  new  common  stock  of  that  company  on  the  basis 
of  seventy  live  eightieths,  it  would  represent  $30,158,785 
par  value  of  new  common  stock,  the  real  value  of  which  is 
$40,714,360.  This  latter  sum  added  to  $49,981,050,  repre- 
senting the  real  value  of  $37,023,000  par  value,  of  the  old 
common  stock  would  aggregate  $90,695,410,  and  the  deduc- 
tion from  this  sum  of  the  $83,181,488  which  the  complain- 
ants would  receive  under  the  proposed  distribution,  would 
leave  a  balance  of  $7,513,922  of  real  value  in  their  favor, 
less  their  share  of  the  residue  of  the  property  in  the  treasury 
of  the  Northern  Securities  Company. 

The  stock  of  the  Northern  Securities  Company  outstand- 
ing April  21,  1904,  and  presumably  now  outstanding,  is  of 
the  par  value  of  $395,400,000,  divided  into  3,954,000  shares 
of  the  par  value  of  $100  eacli.  That  company  now  holds 
1,537,594  shares  of  the  stock  of  the  Northern  Pacific  Rail- 
way Company  and  1,181,242  shares  of  stock  of -the  Great 
Northern  Railway  Company,  of  the  par  value  of  $100  each. 
The  proposed  pro  rata  plan  of  distribution  contemplates  the 
reduction  of  the  total  outstanding  stock  of  the  Northern  Se- 


HARRIMAN    V,    NORTHERN   SECURITIES  CO. 


Opinion  of  the  Court 


615 


curities  Company  by  99  per  cent.  To  accomplish  this  result 
the  Northern  Securities  Company  offers,  on  the  surrender 
to  it  of  that  proportion  of  its  stock,  amounting  at  par  to 
$391,446,000,  to  deliver  or  pay  for  each  $100  par  value 
thereof  surrendered  $39.27  par  value  of  stock  of  the  North- 
ern Pacific  Railway  Company,  and  $30.17  par  value  of  stock 
of  the  Great  Northern  Railway  Company,  and  "propor- 
tional amounts  thereof  for  fractional  shares  of  the  stock  of 
this  company."  $39.27  on  each  $100  of  $391,446,000  so 
closely  approximates  to  the  par  value  of  the  1,537,594  shares 
of  stock  of  the  Northern  Pacific  Railway  Company  that  for 
any  practical  purpose  on  the  present  application  it  may  be 
considered  equal  to  it.  And  $30.17  on  each  $100  of  $391,- 
446,000  so  closely  approximates  to  the  par  value  of  the  1,181,- 
242  shares  of  stock  of  the  Great  Northern  Railway  Company 
that  for  any  such  purpose  it  may  be  considered  equal  to  it. 
Thus,  the  surrender  of  ninety  nine  one  hundredths  of  the 
outstanding  stock  of  the  Northern  Securities  Company  would 
necessarily  involve  the  transfer  and  alienation  by  it  of  prac- 
tically all  the  stock  of  the  Northern  Pacific  Railway  Com- 
pany and  Great  Northern  Railway  Company  now  held  by  it. 
Whatever  of  real  value  the  remaining  one  hundredth  of  the 
par  value  of  the  outstanding  stock  of  the  Northern  Securi- 
ties Company,  $3,954,000,  might  represent,  would  consist 
wholly,  or  practically  wholly,  of  property  other  than  stock 
of  both  or  either  of  the  two  railway  companies.  It  does  not 
appear  from  the  affidavits  and  exhibits  what  amount  of 
property  would  remain  in  the  treasury  of  the  Northern  Se- 
curities Company  after  the  distribution  of  the  railway  stock 
referred  to.  Nor  does  it  appear  whether  the  company  is  or 
is  not  indebted,  nor  whether  there  are  or  are  not  other 
charges  or  expenses  paramount  to  the  claims  of  the  holders 
of  the  remaining  one  hundredth  of  its  stock.  As  between 
the  complainants  applying  for  a  preliminary  injunction,  and 
the  Northern  Securities  Company  resisting  the  application 
1484]  partly  on  the  ground  that  the  real  value  in  dispute  is 
not  sufficient  to  warrant  an  exercise  of  the  injunctive  power, 
the  burden  of  showing  the  amount  of  property  in  which  the 
complainants  would  share  under  the  proposed  plan,  clearly, 
in  view  of  the  fact  that  the  company  is  chargeable  with  full 


616 


132   FEDEBAL   KEPOKTEB,   484. 


Opinion  of  the  Court, 
knowledge  of  the  character,  amount  and  condition  of  its  own 
property  and  finances,  rested  upon  it.    It  must  be  presumed 
to  have  been  able  to  make  such  a  showing.    Its  failure  so 
to  do  gives  rise  to  an  unfavorable  inference.    But  even  if  it 
be  assumed  that  the  real  value  of  the  residue  of  the  property 
would  be  $3,954,000,  the  par  value  of  the  remaining  stock, 
the  complainants  would  under  (he  proposed  plan,  in  the  ab- 
sence of  any  reduction  or  obliteration  of  the  fund  through 
possible  indebtedness  or  other  charges  or  expenses,  receive  as 
their  share  approximately  $824,919.    This  sum,  though  a 
large  amount,  is  but  a  small  proportion  of  the  real  value 
which  the  complainants  would  receive,  if  entitled  to  recover. 
It  is  less  than  one  twelfth  of  $11,117,104;  less  than  one  elev- 
enth of  $10,228,213;  less  than  one  ninth  of  $8,803,166;  and 
less  than  one  eighth  of  $7,513,922.    It  is  unnecessary,  and 
would  be  tedious,  to  discuss  in  this  connection  and  on  the 
present  application  the  subject  of  interest,  as  at  most  it  is  a 
matter  of  comparative  insignificance.    In  leaving  the  dis- 
cussion of  real  values  involved  in  this  suit  it  should  be  borne 
m  mind  that  the  right  of  the  complainants  to  recover,  if  it 
exists,  extends  to  stock  of  the  Northern  Pacific  Railway 
Company,   amounting   on   the   present   showing   to    from 
$69,000,000  to  $71,000,000  approximately  at  its  par  value, 
and  to  a  much  larger  sum  at  its  real  value,  and  that  they  dis- 
claim all  right  to  the  stock  of  the  Gi-eat  Northeni  Railway 
Company  which  the  Northern  Securities  Company  insists 
should  be  taken  by  them,  instead  of  the  larger  amount  of  the 
stock  of  the  Northeni  Pacific  Railway  Company  claimed  by 
them.    From  this  point  of  view  there  possibly  may  be  some 
doubt  of  the  pertinency  of  the  foregoing  discussion  of  bal- 
ances of  real  values  to  the  consideration  of  the  propriety  of 
granting  or  withholding  the  injunction.    On  this  point  no 
opinion  is  expressed.    It  was  urged  by  the  defense  at  the 
hearing  that  the  granting  of  the  relief  sought  by  the  com- 
plainants would  be  injurious  to  many  stockholders  of  the 
Northern  Securities  Company,  other  than  the  complainants, 
who  acquired  their  stock  in  good  faith  and  for  full  consid- 
eration, for  the  reason  that  in  many  instances  and  to  a  large 
amount  stock  of  that  company  had  been  so  issued  or  trans- 
ferred as  to  render  it  impossible  to  trace  or  identify  the  con- 


HARBIMAN   V.   NORTHERN   SECURITIES   CO. 
Opinion  of  the  Court 


617 


sideration  of  such  issue  or  transfer.  It  appears  that  prior  to 
April  9,  1903,  stock  of  the  Northern  Securities  Company  of 
the  par  value  of  $7,522,000  was  issued  for  cash  used  in  the 
purchase  of  stock  of  the  Great  Northern  Railway  Company 
and  other  stocks  held  by  the  Northern  Securities  Company, 
and  also  that  its  stock  to  a  large  amount  has  been  transferred 
from  time  to  time  among  and  is  now  held  by  a  large  number 
of  persons.  The  bill  avers  that  those  becoming  stockholders  of 
the  Northern  Securities  Company,  whether  for  shares  of  the 
Northern  Pacific  Railway  Company  or  the  Great  Northern 
Railway  Company  or  for  cash,  had  full  knowledge  and 
information  of  the  purposes  for  which  the  [485]  first- 
named  company  was  organized,  and  the  aifidavits  are  con- 
flicting on  the  question  whether  or  not  the  nature  and 
amount  of  the  consideration  for  the  issue  or  transfer  of  stock 
of  that  company  can  be  traced  and  identified  on  its  books 
or  otherwise.  It  is  manifestly  improper  that  these  matters 
should  be  decided  on  the  fragmentary  and  inconclusive  evi- 
dence now  before  the  court.  They  require  deliberate  investi- 
.  gation  in  the  accustomed  mode  on  evidence  taken  in  due 
course  and  in  the  light  of  an  examination  of  books  and 
papers  produced  before  a  master.  It  should  also  be  borne  in 
mind  that  this  court,  as  a  court  of  equity,  has  power  so  to 
mold  its  decrees  and  impose  such  terms  as  may  be  necessary 
to  protect  the  equities  of  persons  who  may  be  affected  by  its 
action. 

Language  justly  applicable  to  the  present  case  was  em- 
ployed by  Judge  Sanborn  in  Denver  c§  R.  G.  R.  Co.  v. 
United  States,  124  Fed.  156,  161,  59  C.  C.  A.  579,  584,  as 
follows : 

"  The  case  falls  well  within  the  established  rule  that  a  preliminary 
injunction  maintaining  the  status  quo  may  properly  issue  wheneveV 
the  questions  of  law  or  of  fact  to  be  ultimately  determined  are  grave 
and  difficult,  and  injury  to  the  moving  party  will  be  immediate,  cer- 
tain, and  great  if  it  is  denied,  while  the  loss  or  inconvenience  to  the 
opposing  party  will  be  comparatively  small  if  it  is  granted." 

An  appeal  does  not  lie  from  an  interlocutory  decree  of 
this  court  denying  a  preliminary  injunction.  While  this 
consideration  is  entitled  to  no  weight  where,  on  the  applica- 
tion for  an  injunction,  it  clearly  appears  that  the  complain- 
ant cannot  prevail  on  the  final  hearing,  it  is  often  of  con- 


618 


134  FEDERAL  REPORTEE,  331. 


Syllabus. 

trolling  importance  where,  on  such  application,  there  is  room 
for  reasonable  doubt  as  to  the  ultimate  result.  Under  the 
circumstances,  this  court  would  not  be  justified  in  refusing 
the  injunction  sought.  Such  refusal  would  not  be  an  exer- 
cise of  sound  judicial  discretion.  It  would  not  only  be 
improvident  in  the  extreme,  but  betray  peculiar  insensi- 
bility to  the  fallibility  of  human  judgment  so  often  accen- 
tuated by  differences  of  opinion  in  even  the  highest  judicial 
tribunals. 

An  interlocutory  decree  for  a  preliminary  injunction  may 
be  prepared  and  submitted. 


mi]  NOKTHERN  SECURITIES  CO.  v.  HARRIMAN 

ET  AL.« 

(Circuit  Court  of  Appeals,  Third  Circuit.    January  3,  1905.) 

[134  Fed.,  331.]  • 

Appeal  —  Order  Granting  Preliminary  Injunction  —  Review.— 
Where  the  opinion  of  a  Circuit  Court  in  granting  a  preliminarj^  in- 
junction shows  that  the  judge  regarded  as  of  dontrolling  Impor- 
tance the  fact  that  an  order  denying  the  injunction  would  not  be 
i-eviewable  by  apperfl,  the  rule  that  the  appellate  court  will  not 
interfere  with  the  exercise  of  the  discretionary  power  of  the  court 
of  first  instance  unless  there  is  strong  reason  for  it  does  not  apply, 

and  the  question  of  the  right  to  the  injunction  will  be  determined 
on  the  merits. 6 

Corporations— Purchase  of  Stocks— Construction  of  Contract.— 
A  contract  by  which  defendant,  the  Northern  Securities  Company, 
aciinired  from  complainants  certain  shares  of  stocls  of  the  North- 
ern Pacific  Railway  Coippany.  held,  under  the  evidence,  to  have 
l>een  one  of  puivhaRe  and  sale,  by  which  defendant,  on  payment  of 
the  agreed  price,  became  the  absolute  owner  of  the  shares,  free 
from  any  trust  in  favor  of  the  complainants,  and  free  to  distribute 
the  same  pro  rata  among  all  its  stockholders  upon  the  entry  of  a 
decree  declaring  it  to  be  an  illegal  combination,  and  prohibiting  It 
from  voting  or  receiving  dividends  on  such  stock. 


o  Circuit  Court  awarded  a  preliminary  Injunction  restraining  the 
Northern  Securities  Company  from  disposing  of  certain  shares  of  the 
common  stock  of  the  Northern  Pacific  Railway  Company  (132  Fed., 
464.  See  p.  587.  Reversed  by  the  Circuit  Court  of  Appeals,  Third 
Circuit  (134  Fed.,  331),  which  action  was  affirmed  by  the  Supreme 
Court  im  U.  a,  244).    See  p.  669. 

6  Syllabus  copyrighted,  1905,  by  West  Publishing  Co. 


NORTHERN   SECURITIES   CO.    V,   HARRIMAN. 
Opinion  of  the  Court. 


619 


Same— Manner  of  Distributing  Assets.— Defendant  corporation  hav- 
ing been  adjudged  an  illegal  combination  in  restraint  of  inter- 
state commerce,  and  enjoined  from  voting  or  receiving  dividends  on 
certain  railroad  stock  which  it  owned,  but  permitted  to  transfer 
the  same  to  its  stockholders,  a  plan  adopted  by  its  directoi*s  and 
stockholders  to  distribute  the  same  pro  rata  among  all  its  stock- 
holders was  equitable,  and  its  execution  should  not  be  enjoined. 

Appeal— Order  Granting  Preliminary  Injunction— Review.— It  is 
a  proper  exercise  of  discretion  for  a  court  to  grant  a  preliminary  in- 
junction where  the  bill  and  evidence  present  a  prima  facie  case 
and  raise  important  and  doubtful  questions  of  law  and  fact,  and, 
unless  the  injunction  is  granted  to  preserve  the  status  quo  until  the 
liearing,  the  suit  would  be  ineffective;  and  an  order  for  an  injunc- 
tion, granted  on  such  grouads  after  the  court  has  given  due  con- 
sideration to  the  balance  of  inconvenience  and  injury  which  may 
result  to  one  party  or  the  other,  should  not  l>e  reversed  by  an  ap- 
pellate court  before  the  case  has  been  finally  heard  and  determined 
by  the  court  below  on  full  proofs.  Per  Gray,  Circuit  Judge, 
dissenting. 

Appeal  from  the  Circuit  Court  of  the  United  States  for  the 
District  of  New  Jersey. 

Elihu  Root  and  John  G.  Johnson^  for  appelhuit. 

D.  T.  Watson  and  TFm.  D.  Gtithne^  for  appellees. 

Before  Aciieson,  Dallas,  and  Gray,  Circuit  Judges. 

Dallas,  Circuit  Judge. 

This  is  an  appeal  by  the  Northern  Securities  Company 
from  a  decree  of  the  Circuit  Court  for  the  District  of  New 
Jersey  awarding  a  preliminary  injunction,  by  which  that 
company  was  restrained  from  disposing  of  717.320  shares  of 
the  common  stock  of  the  Northern  Pacific  llailway  Company. 
It  appears  from  the  opinion  of  the  learned  judge  of  the  court 
below  that  in  granting  this  injunction  he  was  materially 
influenced  by  the  consideration  that  the  questions  involved 
were,  as  he  viewed  them,  serious  and  doubtful,  and  that  a  de- 
cision by  him  denying  the  injunction  would,  if  made,  not  be 
reviewable  upon  appeal.  We  think  that  upon  this  ground  he 
was  justi-  [332]  fied  in  requiring  that  the  status  quo  should 
be  preserved,  and  the  subject-matter  of  the  controversy  be 
withheld  from  dissipation  until  the  judgment  of  this  court 
could  be  obtained.     But  now  the  substantial  rights  of  the 


620 


134  FEDEKAI.  BEPOBTEB,  332. 


Opinion  of  the  Court, 
parties  only  need  be  considered,  and  whether  the  injunction 
should  stand  or  be  dissolved  ought,  in  our  judgment,  to  be 
determined  upon  the  merits,  and  without   further  delay. 
Western  Union  Telegraph  Company  v.  Pennsylvania  RaU- 
rmd  Company,  123  Fed.  33-36,  59  C.  C.  A.  113.    There 
have  been  cases,  it  is  true,  in  which  it  has  been  held  that, 
where  thi^  court  of  first  instance  has  unreservedly  exercised 
Its  discretion  in  granting  or  refusing  a  preliminary  injunc- 
tion,  its  action  ought  not  to  be  interfered  with  by  an  ap- 
pellate court,  '*  unless  there  is  some  strong  reason  for  it" 
3imsie  V.  Buck.  128  Fed.  31,  f>2  C.  C.  A.  535.    But  to  the 
circumstances  of  this  case  those  rulings  are  inapposite.    At- 
tentive reading  of  the  opinion  of  the  learned  judge  of  the 
Circuit  Court  has  satisfied  us  that  he  regarded  the  fact  that 
an  appeal  would  not  lie  from  a  denial  of  the  injunction  as 
"  of  controlling  importance,"  and  that  his  decision  was  made 
with  the  understanding  that  the  defendant  below  would  be 
entitled  to  invoke  a  complete  adjudication  of  the  entire  con- 
troversy by  this  court;  and  we  think  that  reason  and  justice 
demand  that  such  an  adjudication  shall  not  be  further  post- 
poned.   The  injunction  complained  of  precludes  the  enjoy- 
ment of  rights  of  ownership  in  property  of  great  value.    The 
facts  upon  which  the  propriety  of  upholding  it  depends  are 
unquestionably  disclosed  in  the  record  before  us,  and  the 
prmciples  by  which  the  legality  of  the  order  awarding  it 
must  be  tested  are  indubitable,  and  may  be  as  readily  ap- 
plied now  as  at  any  time  hereafter.    The  only  substantial 
question  is  as  to  whether  the  decree  below  was  accordant 
with  law,  and  that  question  this  court  could  not  refuse  to 
determine  without,  in  effect,  renouncing  the  appellate  juris- 
diction which  Congress  has  expressly  conferred  upon  it 

In  November,  1901.  the  Northern  Securities  Company  was 
incorporated  under  the  laws  of  the  state  of  New  Jersey. 
Its  total  authorized  capital  stock  was  $400,000,000,  divided 
into  4,000,000  shares  of  the  par  value  of  $100  each  The 
amount  of  the  capital  stock  with  which  the  corporation  could 
commence  business  was  fixed  at  $30,000.  Its  duration  was 
to  be  perpetual,  and  its  objects  were  certified  to  be,  inter  alia 
as  follows:  ' 

«."in!p.t^*.nr«n^  kL'^"'"'"*''^'  ''"''^^^'•'p"*^"  «r  otherwise,  and  to  hold 
as  nnestinent,  any  bonds  or  other  securities  cr  evidences  of  indebted- 


NORTHEBN    SECURITIES    CO.    V.   HARRIMAN. 


621 


Opinion  of  the  Court. 

ness,  or  any  shares  of  capital  stoclv  created  or  issued  by  any  other  cor- 
poration cr  corporations,  association  or  associations,  of  the  state  of 
New  Jersey  or  of  any  other  state,  territory  or  country. 

*'  (2)  To  purchase,  hold,  sell,  assign,  transfer,  mortgage,  pledge,  or 
otherwise  dispose  of,  any  bonds  or  other  securities  or  evidences  of 
indebtedne^rs  created  or  issued  by  any  other  corporation  or  corpora- 
tions, association  or  associations,  of  the  state  of  New  Jersey,  or  of  any 
other  state,  territory  or  country,  and,  while  owner  tliereof,*  to  exercise 
all  the  rights,  powers  and  privileges  of  ownership. 

"  (3)  To  purchase,  hold,  sell,  assign,  transfer,  mortgage,  pledge  or 
otller\vi^e  dispose  of  shares  of  the  capital  stock  of  any  other  corpora- 
tion or  corporations,  association  or  associations,  of  the  state  of  New 
Jersey,  or  of  any  other  state,  territory  or  country ;  and.  while  owner 
of  such  stock,  to  exercise  all  the  rights,  powers  and  privileges  of 
ownership,  including  the  right  to  vote  thereon." 

[333]  The  Securities  Company  was  promptly  organized 
in  pursuance  of  its  certificate  of  incorporation,  from  which 
the  foregoing  clauses  have  been  extracted,  and  very  shortly 
thereafter  the  associate  stockholders  of  the  Great  Northern 
Railway  Company  transferred  to  the  Securities  Company 
a  controlling  interest  in  the  capital  stock  of  the  Great  North- 
em  Eailway  Company  upon  an  agreed  basis  of  exchange 
of  $180  par  value  of  the  capital  stock  of  the  Northern 
Securities  Company  for  each  share  of  the  capital  stock  of  the 
Great  Northern  Railway  Company,  and  the  associate  stock- 
holders of  the  Northern  Pacific  Railway  Company  assigned 
and  transferred  to  the  Northern  Securities  Company  a  ma- 
jority of  the  capital  stock  of  the  Northern  Pacific  Railway 
Company  upon  an  agreed  basis  of  exchange  of  $115  par  value 
of  the  capital  stock  of  the  Northern  Securities  Company 
for  each  share  of  the  capital  stock  of  the  Northern  Pacific 
Railway  Company.  For  the  stock  of  these  railway  com- 
panies, whether  transferred  as  above  stated,  or  subsequently 
acquired  upon  the  same  basis,  and  also  for  about  $7,522,000 
paid  to  it  in  cash,  the  Securities  Company  issued  its  stock 
certificates  in  the  following  form: 

Authorized  Capital  Stock,  $400,000,000. 

No. ,  Shares 

Northern  Securities  Company. 

Incorporated  and  Registered  Under  the  Laws  of  the  State  of  New 

Jersev. 


This  Certifies  that 


is  the  registered  holder  of 


Shares 


of  the  Capital  stock  of  the  Northern  Securities  Company  of  One 
hundred  dollars  each,  transferable  only  on  the  books  of  the  company 
by  the  holder  hereof,  in  person  or  by  duly  authorized  attorney,  upon 
surrender  of  this  certificate. 


622 


134  FEDERAL  BEPORTER,   333. 


Opiniou  of  the  Court. 

This  certificate  shall  not  become  valid  until  countersigned  by  the 
transfer  agent  and  also  bj^  the  registrar  of  transfers. 

In  testimony  whereof,  the  said  company  has  caused  this  certificate 
to  l>e  signed  by  its  President  and  Treasurer  this day  of , 

A*  IX  190—. 


TretfSHrcr. 
Cinintersigned  this 


President. 


day  of 


"■f   JnL*    j_^»    -L«Ji.r~"« 


Countersigned  and  Registered  this 


Transfer  Agent. 
day  of ,  A.  D.  190-. 


Shares,  |100  each. 


By 


Manhattan  Trust  Company, 

Registrar  of  Transfers. 


Secretary. 


In  March,  1902,  a  bill  was  exhibited  by  the  United  States, 
in  the  Circuit  Court  for  the  District  of  Minnesota,  against 
the  Nortliern  Securities  Company,  the  Northern  Pacific 
Railway  Company,  the  Great  Northern  Eailway  Company, 
James  J.  Hill,  William  P.  Clough,  D.  Willis  James,  John  S. 
Kennedy,  J.  Pierpont  Morgan,  Robert  Bacon,  George  F. 
Baker,  and  Daniel  Lamont  The  object  of  this  bill  was  to 
restrain  the  violation  of  the  act  of  Congress  of  July  2,  1890, 
c.  647,  §  1,  26  Stat.  209  [U.  S.  Comp.  St.  1901,  p.  3200],  en- 
titled "An  act  to  protect  trade  and  commerce  against  unlaw- 
ful restraints  and  monopolies,"  and  the  suit  which  it  origi- 
nated was  so  proceeded  with  that  in  April,  1903,  the  said 
Circuit  Court  adjudged  and  decreed : 

"  That  the  defendants  above  named  have  heretofore  entered  into 
a  combination  or  conspiracy  in  restraint  of  trade  and  commerce  among 
the  several  states,  such  as  an  act  of  Congress  approved  July  2.  1890, 
entitled  'An  act  to  [334]  protect  trade  and  commerce  against  unlawful 
restraints  and  monoix)lies,'  denounces  as  illegal ;  that  all  the  stock 
of  the  Northern  Pacific  Railway  Company  and  all  the  stock  of  the 
Great  Northern  Railway  Company  now  claimed  to  be  held  and  owned 
by  the  defendant  the  Northern  Securities  Company  was  acquired  and 
is  now  held  by  it  In  virtue  of  such  combination  or  conspiracy  in 
restraint  of  trade  and  commerce  among  the  several  states;  that  the 
Northern  Securities  Company,  Its  officers,  agents,  servants,  and  em- 
ployes, be,  and  they  are  hereby,  enjoined  from  acquiring  or  attempting 
to  acquire  further  stock  of  either  of  the  aforesaid  railway  companies ; 
that  the  Northern  Securities  Company  be  enjoined  from  voting  the 
aforesaid  stock  which  it  now  holds  or  may  acquire,  and  from  voting 
at  any  meeting  of  the  stockliolders  of  either  of  the  aforesaid  railway 
companies,  and  from  exercising  or  attempting  to  exercise  any  control, 
direction,  suix^rvision,  or  influence  whatsoever  over  the  acts  and 
doings  of  said  railway  companies,  or  either  of  them,  by  virtue  of  its 
holding  such  stock  therein ;  that  the  Northern  Pacific  Railway  Com- 
jiany  and  the  Great  Northern  Railway  Company,  their  officers,  direct- 
ors, servants,  and  agents,  be,  and  they  are  hereby,  respectively  an- 


NORTHERN   SECURITIES   CO.    V.   HAKRIMAN. 


623 


Op'Dion  of  the  Court. 

collectively  enjoined  from  permitting  the  stock  aforesaid  to  be  voted 
by  the  Northern  Securities  Compauy,  or  in  its  behalf  by  its  attorneys 
or  agents,  at  any  corporate  election  for  directors  or  officers  of  either 
of  the  aforesaid  railway  companies,  and  that  they,  together  with 
their  officers,  directors,  servants,  and  agents,  be  likewise  enjoined 
and  respectively  restrained  from  paying  any  dividends  to  the  Northern 
Securities  Company  on  account  of  stock  in  either  of  the  aforesaid 
railway  companies  which  it  now  claims  to  own  and  hold ;  and  that 
the  aforesaid  railway  companies,  their  officers,  directors,  servants, 
and  agents,  be  enjoined  from  permitting  or  suffering  the  Northern 
Securities  Company,  or  any  of  its  officers  or  agents,  as  such  officers 
or  agents,  to  exercise  any  control  whatsoever  over  the  corporate 
acts  of  either  of  the  aforesaid  railway  companies.     ♦     *     ♦     » 

Upon  March  14,  1904,  this  decree  was  affirmed  by  the 
Supreme  Court  of  the  United  States  (193  U.  S.  197,  24  Sup. 
Ct.  436,  48  L.  Ed.  679),  and  thereupon,  viz.,  on  March  22, 
1904,  the  board  of  directors  of  the  Securities  Company 
adopted  the  following  preambles  and  resolutions: 

"  Whereas,  in  the  course  of  its  business,  this  company  has  acquired 
and  now  holds  1,537,594  shares  in  the  capital  stock  of  the  Northern 
Pacific  Railway  Company,  and  1,181,242  shares  in  the  capital  stock 
of  the  Great  Northern  Railway  Company ;  and 

"  Whereas,  in  a  suit  brought  by  the  United  States  against  this 
company,  the  said  railway  companies,  and  others,  this  company  has 
been  enjoined  from  voting  upon  the  shares  of  either  of  the  said  rail- 
way companies,  and  each  of  the  said  railway  companies  has  been  en- 
joined from  paying  to  this  company  any  dividends  upon  any  of  the 
shares  of  such  railway  company,  held  by  this  company ;  and 

"  Whereas,  this  company  has  issued,  and  there  are  now  outstanding, 
3,954,000  shares  of  its  own  capital  stock ;  and 

"  Whereas,  this  company  desires  and  intends  to  comply  with  the 
decree  in  the  said  suit  fully  and  unreservedly,  and  without  delay: 

"  Resolved,  In  consideration  of  the  premises,  it  is  declared  necessary 
and  desirable  for  this  company  so  to  reduce  its  present  stock  as  will 
enable  it,  without  delay,  in  connection  with  such  reduction,  to  dis- 
tribute among  its  shareholders  the  shares  of  capital  stock  of  said 
railway  companies  held  by  it. 

"  Resolved,  That  the  board  of  directors  of  this  company  hereby 
declares  it  advisable  that  article  (4th)  of  this  company's  certificate 
of  incorporation  be  amended,  so  as  to  read  as  follows : 

"'Fourth. — ^The  capital  stock  of  this  company  is  hereby  reduced 
to  three  million  nine  hundred  fifty-four  thousand  dollars  ($3,954,000). 
and  shall  hereafter  be  three  million  nine  hundred  and  fifty-four 
thousand  dollars  ($3,954,000),  divided  into  thirty-nine  thousand  five 
hundred  forty  (39,540)  shares  of  one  hundred  dollars  ($100)  each. 
Such  reduction  of  capital  stock  shall  be  accomplished  by  each  holder 
of  outstanding  shares  of  this  company's  stock  surrendering  to  the 
company,  for  retirement,  ninety-nine  (99)  per  centum  of  the  [835] 
shares  held  by  him.  Upon  the  surrender  to  this  company,  by  any 
shareholder,  of  the  entire  number  of  shares,  and  parts  of  shares  of 
this  company's  stock,  which  he  is  hereby  required  to  surrender,  this 
company  will  assign  to  him,  for  each  share  so  surrendered,  thirty-nine 
dollars  and  twenty-seven  cents  ($39.27)  of  the  stock  of  the  Northern 
Pacific  Railway  Company,  and  thirty  dollars  and  seventeen  cents 
($30.17)  of  the  preferred  stock  of  the  Great  Northern  Railway 
Company,  and  proportional  amounts  thereof  for  fractional  shares  of 


624 


131  FEDERAL  KEPORTER,   335. 
Opinion  of  tlie  Court 


tlie  stock  of  tliis  company.  The  board  of  directors  or  executive 
committee  from  time  to  time  sliall  make  sucli  rules  and  regulations 
as  It  shall  deem  nec^e^sary  or  convenient  for  carrying  out  the  pro- 
visions hereof,  and  all  matters  pertaining  to  the  surrender  and  retire- 
ment (if  the  stock  of  this  company,  or  to  the  assignment  and  transfer 
of  the  stocks  of  the  said  railway  companies,  hereby  contemplated, 
shall  l>e  under  me  direction  of  the  board.  For  the  purposes  hereof, 
the  stockholders  of  this  company,  and  the  number  of  shares  held 
by  them,  respectively,  shall  be  determined  from  the  stock  transfer 
books  of  the  company,  which,  for  such  determination,  shall  be  closed 
at  a  day  and  hour  to  be  determined  by  resolution  of  the  board ' 

**  RegQlved,  That  a  meeting  of  the  stockholders  of  this  companv  for 
the  i>ur|M)ge  of  taking  action  upon  the  said  alteration  of  the  certificate 
of  incorporation  of  this  company,  and  also  upon  such  other  business 
as  may  come  before  the  meeting,  be,  and  is  hereby,  called,  to  be  held 
at  the  general  offices  of  this  company  in  the  city  of  Hoboken,  county 
of  Hudson,  and  state  of  New  Jersey,  at  11  o'clock  a.  m.  on  April  21. 


Notice  of  a  meeting  of  the  stockholders  of  the  Securities 
Company  was  accordingly  given,  and  such  meeting  was  duly 
held  upon  April  21,  1904.  At  that  meeting  the  stock  of  the 
company  was  reduced  99  per  centum,  and  the  proposed  pro 
rata  distribution  of  the  stock  of  the  Northern  Pacific  Railway 
Company  and  of  the  preferred  stock  of  the  Great  Northern 
Railway  Company  to  and  amongst  the  shareholders  of  the 
Securities  Company  was  assented  to.  This  was  followed  by 
the  institution  of  the  present  suit,  wherein  the  complainants 
alleged  "  that  the  defendant  Northern  Securities  Company 
threatens  and  intends  to  distribute  the  shares  of  stock  of  each 
of  said  Great  Northern  and  Northern  Pacific  Railway  com- 
panies pro  rata  amongst  its  stockholders  in  disregard  of  the 
rights  of  your  orators,  and  that,  if  said  defendant  Northern 
Securities  Company  be  not  enjoined  from  so  doing  by  this 
court,  such  distribution  will  be  forthwith  made,  and  the  stock 
of  the  Northern  Pacific  Railway  Company  belonging  to  your 
orators,  and  to  which  they  are  entitled,  will  be  lost  to  your 
orators.  »  ♦  ♦  »  The  biU  accordingly  prayed  for  an 
injunction,  and  thereupon,  and  on  affidavits  and  exhibits,  the 
injunction  now  in  question  was  awarded. 

The  appellees  averred  in  their  bill,  and  their  counsel  have 
contended  in  argument,  that  the  shares  of  railway  stock  in 
question  were  acquired  by  the  Securities  Company  under  and 
subject  to  an  alleged  agreement  (which  will  be  presently 
more  particularly  referred  to)  that  it  would  hold  them  "  as 
custodian,  depositary,  or  trustee,"  and  that  the  "  legal  and 
equitable  owners  of  said  shares  of  stock  of  said  railway  com- 


NOKTHEEN   SECUBITIES   CO.    V.   HARRIMAN. 


625 


Opinion  of  the  Court. 

panics  were  and  are  the  several  parties  who  originally  ex- 
changed the  same  for  stock  of  the  Northern  Securities  Com- 
pany, or  their  assigns."  On  the  other  hand,  the  appellant, 
the  Securities  Company,  insists  that  it  acquired  the  railway 
shares  referred  to  by  absolute  purchase  thereof,  and  that  con- 
sequently it  became  and  now  is  vested  with  the  equitable  as 
well  as  the  legal  title  thereto.  The  issue  thus  presented  is  of 
primary  importance,  and  the  proofs  leave  us  in  no  doubt  as 
to  the  facts  upon  which  it  must  be  determined.  That  the 
transaction,  at  least  in  [336]  form,  and  prima  facie  in  sub- 
stance, was  one  of  purchase  and  sale,  is  manifest.  The  reso- 
lution which  authorized  the  acquisition  of  the  railway  stock 
on  behalf  of  the  Securities  Company  was  adopted  by  its 
board  of  directors  at  a  meeting  at  which  Mr.  Harriman  was 
present  as  a  member  of  the  board,  and  the  only  authority  it 
conferred  was  "  to  purchase  said  stock  *  *  *  at  an  ag- 
gregate price  of  $91,407,500,  payable,  as  to  $82,491,871  thereof, 
in  the  fully  paid-up  and  nonassessable  shares  of  the  capital 
stock  of  this  company  at  par,  and  as  to  $8,915,629  in  cash." 
It  is  obvious  that  this  resolution  contemplated  a  "  purchase," 
and  not  a  bailment  or  trust ;  and  that  it  accuratelv  stated  the 
nature  and  terms  of  the  contract  which  was  actually  made  by 
and  with  the  Securities  Company  is  unequivocally  shown  by 
what  was  done  in  pursuance  of  it.  The  railway  shares  were 
unconditionally  assigned  to  that  company.  The  price  speci- 
fied in  the  resolution  was  paid  by  it,  and  this  payment  was 
made  partly  in  cash  and  partly  in  shares  of  its  own  stock, 
for  which  corporate  certificates  in  the  ordinary  form  were 
delivered  and  accepted.  The  cash  so  paid,  which  amounted 
to  about  $7,522,000,  was  (as  is  stated  in  the  bill)  "  used  for 
the  purchase  of  other  property  and  for  corporate  purposes." 
The  complainants  received  dividends  upon  the  stock  that  was 
issued  to  them,  which  were  paid  out  of  the  general  fimds  of 
the  Securities  Company;  and  by  its  indenture  to  the  Equita- 
ble Trust  Company  of  New -York  the  Oregon  Short  Line 
Railroad  Company  irrefutably  asserted  its  ownership  of  the 
Securities  Company  stock  which  it  thereby  pledged.  It  is 
claimed,  however,  that  notwithstanding  these  facts  the  bene- 
ficial interest  in  the  railwav  stock  was  not  transferred  to  the 


21220— VOL  2—07  m- 


■40 


626 


134  FEDERMi  BEPOBTEB,  336. 


Opinion  of  the  Court. 

Securities  Company,  because,  as  the  appellees  allege,  the 
transfer  was  made  under  the  terms  of  an  agreement  which 
they  say  was  made  by  James  J.  Hill,  J.  Pierpont  Morgan,  and 
others,  owning  or  controlling  a  majority  of  the  capital  stock 
of  the  Great  Northern  Railway  Company,  and  a  majority  of 
the  common  capital  stock  of  the  Northern  Pacific  Railway 
Company,  "  to  organize  a  holding  company,    *    ♦    ♦    and 
that  said  holding  company  should  acquire  and  permanently 
hold  a  majority  of  the  shares  of  the  capital  stock  of  said 
Great  Northern  and  Northern  Pacific  Companies,  and  control 
the  operations  and  management  thereof  in  perpetuity,  and 
that  the  then  existing  holders  of  such  railway  shares  should 
deposit  the  same  with  said  holding  company;"  and  that  "in 
pursuance  of  said  agreement  said  Northern  Securities  Com- 
pany was  organized,      ♦    *    *    and  forthwith  agreed  to  ac- 
quire and  hold  the  shares  of  said  railway  stocks,  as  aforesaid, 
as  custodian,  depositary,  or  trustee,  and  to  issue  in  exchange 
therefor  its  own  share  certificates  upon  said  agreed  basis." 
The  agreement  thus  set  up  is  not  in  accord  with  the  docu- 
mentary evidence  which  has  been  referred  to,  and  to  establish 
its  existence  a  clear  preponderance  of  proof  should  at  least 
be  required,  whereas,  in  our  opinion,  it  conclusively  appears 
that  no  such  agreement  was  ever  made.    Mr.  Harriman  him- 
self has  distinctly  testified  that  the  Northern  Pacific  stock  in 
question  was  sold ;  that  the  transaction  was  not  an  exchange ; 
.  that  he,  principally,  negotiated  the  sale;  and  that  there  was 
not  attached  to  the  negotiations  any  condition  except  as  to 
price.    And  to  the  same  effect  is  his  affidavit  in  this  case,  in 
which  he  deposed  that  he  was  urged  by  Messrs.  Morgan  &  Co. 
to  dispose  of  the  Northern  Pacific  stock  held  by  [337]  the 
Oregon  Short  Line  Company,  and  that  "  they  further  stated 
that,  upon  the  organization  of  the  proposed  holding  com- 
pany," not  that  it  would  take  as  custodian  or  trustee,  but  that 
"  they  would  be  prepared  to  purchase  the  holdings  of  stock 
of  the  Northern  Pacific  owned  by  the  Oregon  Short  Line, 
and  pay  therefor  in  the  stock  of  the  holding  company." 
These  statements  of  that  one  of  the  complainants  having  most 
knowledge  of  the  subject,  confirmed,  as  they  are,  by  the  other 
evidence,  make  it  quite  impossible  to  believe  that  the  railway 
stock  was  received  by  the  Securities  Company  merely  as  a 


NORTHERN   SECURITIES   CO.    V.   HARRIMAN. 
Opinion  of  tbe  Court 


627 


custodian  or  depositary.  The  only  agreement  upon  which  it 
was  transferred  was  an  unqualified  agreement  of  sale,  and  the 
fact  that  the  design  with  which  the  Securities  Company  was 
organized  has  been  compulsorily  abandoned  has  not  divested 
or  in  any  way  affected  the  absolute  title  which,  by  executed 
contract  of  purchase,  it  acquired.  Undoubtedly,  it  was  an- 
ticipated by  the  complainants,  as  by  all  concerned,  that  the 
rights  ordinarily  incident  to  the  ownership  of  stock,  includ- 
ing the  right  to  vote  and  to  receive  dividends,  would  be  exer- 
cisable as  to  this  stock  by  the  Securities  Company.  But 
expectation  is  not  contract,  and  therefore  the  frustration  of 
this  anticipation  cannot  be  said  to  have  occasioned  a  failure  of 
consideration.  The  only  consideration  agreed  upon  was  pay- 
ment of  the  price,  and  admittedly  that  payment  was  made. 
The  situation,  then,  is  this:  The  Northern  Securities  Com- 
pany is  the  owner  of  1,537,594  shares  of  the  stock  of  the 
Northern  Pacific  Railway  Company,  and  1,181,242  shares  of 
the  stock  of  the  Great  Northern  Railway  Company,  which 
it  has  been  restrained,  at  the  suit  of  the  United  States,  from 
voting  or  receiving  dividends  upon,  and  in  view  of  this  re- 
straint all  parties  agree  that  it  should  not  continue  to  hold 
them.  It  accordingly  proposes  to  assign  them  pro  rata  to  its 
shareholders,  including  not  less  than  2,500  persons,  whose 
shares  were  unquestionably  acquired  by  purchase,  and  who 
are  not  parties  to  this  suit;  and  as  such  disposition  of  them 
would  effect  a  ratable,  and  therefore  equitable,  division  of 
them  amongst  all  who  are  entitled  to  participate  in  a  distri- 
bution of  the  corporate  assets,  we  are  of  opinion  that  the 
injunction  which  prohibited  it  should  no  longer  remain  in 
force. 

If  the  question  before  us  had  been  involved  and  decided 
in  the  suit  of  the  United  States  v.  The  Northern  Securities 
Company^  or  if  it  had  been  passed  upon,  though  but  inci- 
dentally, by  the  Supreme  Court  of  the  United  States  in  dis- 
posing of  the  appeal  in  that  case,  we,  of  course,  would  not 
regard  it  as  an  open  one.  But  it  was  neither  decided  nor 
considered  at  any  stage  of  that  litigation.  The  petition  or 
bill  of  the  United  States  did  pray,  inter  alia,  that  the  stock- 
holders of  the  railroad  companies  who  had  exchanged  their 
stock  therein  for  stock  of  the  Northern  Securities  Company 


628 


134  FEDERAL   RBPORTEB,  337. 
Opinion  of  the  Court- 


should  be  required  to  surrender  any  stock  of  the  Northern 
Securities  Company  so  acquired  and  held  by  them,  and  to 
accept  therefor  the  railway  stock  "  in  exchange  for  which  the 
same  was  issued;"  but  the  decree,  in  so  far  as  it  was  man- 
datory, went  no  further  than  to  prohibit  the  doing  of  "  the 
specific  things  which,  being  done,  would  effect  the  result  de- 
nounced by  the  act."  193  U.  S.  356,  24  Sup.  Ct.  466,  48  L. 
Ed.  679.  This  was  all  that  was  requisite,  and  it  was  accom- 
plished by  that  part  of  the  decree  which  has  been  already 
quoted;  and  the  added  clause,  though  apparently  suggested 
[338]  by  the  prayer  of  the  bill  to  which  we  have  referred, 
was  obviously  not  intended  to  have  any  obligatory  effect. 
It  was  permissive  merely,  and  this  so  plainly  appears  from 
its  terms  that  it  is  necessary  only  to  direct  attention  to  them. 
They  are:  "But  nothing  herein  contained  shall  be  con- 
strued as  prohibiting  the  Northern  Securities  Company  from 
returning  and  transferring  to  the  stockholders  of  the  North- 
em  Pacific  Eailway  Company  and  the  Great  Northern  Eail- 
way  Company,  respectively,  any  and  all  shares  of  stock  in 
either  of  said  railway  companies  which  said  the  Northern 
Securities  Company  may  have  heretofore  received  from  such 
stockholders  in  exchange  for  its  own  stock;  and  nothing 
herein  contained  shall  be  construed  as  prohibiting  the  North- 
em  Securities  Company  from  making  such  transfer  and 
assignment  of  the  stock  aforesaid  to  such  person  or  persons 
as  may  now  be  the  holders  and  owners  of  its  own  stock  origi- 
nally issued  in  exchange  or  in  payment  for  the  stock  claimed 
to  have  been  acquired  by  it  in  the  aforesaid  railway  com- 
panies." This  decree  was  affirmed  in  its  entirety,  and  with- 
out modification,  and  thereafter  the  three  principal  com- 
plainants in  the  present  case  applied  to  the  Circuit  Court  for 
the  District  of  Minnesota  for  leave  to  intervene  in  the  suit 
in  which  it  had  been  made.  The  ground  of  that  application 
was  substantially  the  same  as  that  upon  which  this  bill  is 
founded ;  but  in  denying  it  the  court  said : 

••The  decree  was  wholly  prohibitory.  It  enjoined  the  doing  of 
certain  threatened  acts,  and  so  long  as  these  acts  are  not  done  it  en- 
forces itself,  and  no  further  action  looking  to  its  enforcement  is 
deemed  essential.  In  its  bill  of  complaint  the  United  States  prayed, 
among  other  things,  for  a  mandatory  injunction  against  the  Securities 
Company  requiring  it  to  recall  and  cancel  the  certificates  of  stock 
which  it  bad  issued  and  to  surrender  the  stock  of  the  two  railway  com- 


NORTHERN    SECURITIES   CO.    V,   HARRIMAN. 
Opinion  of  the  Court. 


629 


panics  in  exchange  for  which  its  stock  had  been  issued.  This  prayer 
for  relief  was  denied.  The  court  doubted  its  ix>wer  to  command 
stockholders  of  the  Securities  Company,  who  had  not  been  served  with 
process,  and  were  not  before  the  court  otherwise  than  by  representa- 
tion (if,  indeed,  they  were  present  by  representation),  to  surrender 
stock  which  was  in  their  possession  and  to  take  other  stock  in  lieu 
thereof.  It  accordingly  contented  itself  with  an  order  which  rendered 
the  stuck  of  the  two  railway  companies,  so  long  as  it  was  in  the  hands 
of  the  Securities  Company,  valueless  for  the  purpose  of  carrying  out 
the  objects  of  the  unlawful  combination  in  restraint  of  interstate 
trade.  The  government  was  satisfied  with  the  relief  which  it  ob- 
tained, and  expresses  itself  as  fully  satisfied  therewith  at  the  present 
time.  ♦  *  *  It  is  true  that  the  decree  contained  a  provision,  in 
substance,  that  nothing  therein  contained  should  be  construed  as  pro- 
hibiting the  Securities  Company  from  returning  to  the  stockholders 
of  the  Northern  Pacific  Railway  Company  and  the  Great  Northern 
Railway  Company  any  and  all  shares  of  stock  in  either  of  said  rail- 
way companies  which  the  Northern  Securities  Company  had  acquired 
in  exchange  for  its  own  stock,  and  that  nothing  therein  contained 
should  be  construed  as  prohibiting  the  Securities  Company  from  mak- 
ing such  transfer  of  the  stock  aforesaid  to  such  person  or  persons  as 
had  become  the  owners  of  its  own  stock  originally  issued  in  exchange 
for  stock  in  the  two  railway  companies.  But  this  provision  was 
merely  permissive.  It  did  not  command  that  the  stock  should  be 
returned,  or  exclude  other  methods  of  disposing  of  it  that,  in  view 
of  all  the  circumstances,  might  appear  to  be  more  equitable.  The  fact 
that  the  directors  of  the  Securities  Company  have  proposed  to  its 
stockholders  a  plan  of  distributing  the  stock  of  the  two  railway  com- 
panies in  a  manner  somewhat  different  from  that  which  was  tenta- 
tively suggested  by  the  decree,  but  not  commanded,  cannot  be  regarded 
as  a  failure  to  obey  the  decree.  It  was  said  in  argument  that  one 
purpose  of  the  intervention  is  to  have  that  clause  of  the  decree  which 
is  now  merely  permissive  made  mandatory.  But  this  would  be  to 
modify  the  provisions  of  a  decree  which  has  now  become  final  by 
aflirmance,  and  make  an  order  which  we  ex-  [SSg]  pressly.  and  on 
full  consideration,  declined  to  make  when  the  decree  was  entered. 
This  we  must  decline  to  do." 

The  facts  which  have  been  mentioned  negative  the  con- 
tention that  the  question  here  in  dispute  was  adjudicated  in 
the  government  suit,  and  the  further  contention  that  it  was 
at  least  authoritatively  dealt  with  in  the  principal  opinion 
rendered  upon  the  appeal  in  that  case  is,  we  think,  likewise 
fallacious.  Some  phrases  in  that  opinion,  if  considered 
separately,  and  without  reference  to  the  precise  subject  which 
was  under  investigation,  may  seem  to  sanction  the  interpreta- 
tion which  the  appellees  have  sought  to  put  upon  it;  but 
when  it  is  read  as  a  whole  it  becomes  quite  evident  that  it 
was  not  intended  to  resolve  any  question  other  than  that 
which  was  before  the  court.  The  decree  that  was  under  re- 
view had  enjoined  the  Securities  Company  from  using  the 
railway  shares  in  furtherance  of  the  scheme  declared  to  be 


630 


134  FEDERAL  REPOBTEB,  339. 
Opinion  of  the  Court 


unlawful,  but,  as  we  have  seen,  the  right  of  property  in 

those  shares  was  not  at  all  affected  by  that  decree. 

•*The  Circuit  Court  bas  done  only  what  the  actual  situation  de- 
manded. Its  decree  has  done  nothing  more  than  to  meet  the  re- 
quirements of  the  statute.  It  could  not  have  done  less  without  de- 
claring its  Imporency  In  dealing  with  those  who  have  violated  the  law. 
The  decree,  if  executed,  will  destroy,  not  the  property  interests  of 
the  original  stockholders  of  the  constituent  companies,  but  the  power 
of  the  holding  corporation,  as  the  instrument  of  an  illegal  combina- 
tion of  which  it  was  the  master  spirit,  to  do  that  which,  if  done 
would  restrain  interstate  and  international  commerce.  The  exer- 
cise of  that  power  being  restrained,  the  object  of  Congress  will  be 
accomplished;  left  undisturbed,  the  act  in  question  will  be  valueless 
for  any  practical  purpose."  11)3  U.  S.  357,  21  Sup.  Ct.  405,  48  L.  Ed. 
679. 

We  have  been  asked  to  infer  from  this  statement  in  the 
opinion  that  the  learned  justice  who  made  it  intended  to  af- 
firm that  the  property  interests  of  the  original  holders  of  the 
railway  shares  had  not  been  transmuted  by  their  assignment; 
but  no  such  inference  would  be  warranted.  He  was  not 
dealing  with  conflicting  claims  of  title,  but  with  the  decree 
of  the  Circuit  Court;  and  the  plain  and  natural  meaning  of 
the  language  used  is  that  by  that  decree  no  property  interests 
had  been  disturbed.  As  was  said  by  the  learned  judges  who 
made  it : 

"  When  the  decree  was  entered  it  was  assumed  by  the  court  that 
when  the  stock  was  thus  rendered  valueless  in  the  hands  of  th* 
Securities  Company  the  stockholders  of  that  companv  would  be  able, 
and  likewise  disposed,  to  make  some  disposition  of  the  stock  which 
under  all  the  circtunstances  of  the  case,  would  be  fair  and  just,  and 
would  restore  it  to  the  markets  of  the  world,  where  it  would  have 
some  value,  instead  of  being  n  worthless  commodity.  It  was  thought 
that  the  duty  of  thus  disposing  of  it  could  be  safelv  left  to  the 
stockholders  of  the  Securities  Company,  and  that,  if  any  controversy 
arose  in  the  discharge  of  this  function,  in  view  of  the  situation  that 
had  been  created  by  the  decree,  it  would  be  a  controversv  that 
would  proi)erly  form  the  subject-matter  of  an  independent  siiit  l)e- 
tween  the  parties  immediately  interested." 

The  present  suit  is  an  independent  one,  and,  as  its  subject- 
matter  is  distinctly  different  from  that  of  the  suit  in  which 
the  United  States  was  complainant,  the  duty  of  this  court  to 
independently  consider  it  has  seemed  to  us  to  be  both  plain 
and  imperative. 

The  conclusions  reached  upon  the  questions  we  have  dis- 
cussed render  it  unnecessary  for  us  to  express  any  opinion 
upon  the  other  points  argued  by  counsel.  From  what  has 
been  said  it  follows  that  the  decree  of  the  Circuit  Court 
must  be  reversed,  and  therefore  it  is  so  ordered. 


NORTHEBN   SECURITIES   CO.   V.  HARRIMAN. 


631 


Gray,  J.,  dissenting. 
[340]  Gray,  Circuit  Judge  (dissenting). 

I  am  constrained  to  dissent  from  the  judgment  of  the 
majority  of  the  court.  I  do  not  think  the  learned  judge  of 
the  court  below  exercised  other  than  a  sound  judicial  discre- 
tion in  granting  the  motion  for  a  special  injunction,  pen- 
dente lite.  He  has  stated  in  his  opinion  that  important  and 
doubtful  questions  of  law  and  fact  had  been  raised  by  the 
pleadings  and  affidavits,  and  I  cannot  agree  that  these 
questions  should  have  been  so  determined  by  him  on  a 
motion  for  a  preliminary  injunction,  as  to  make  necessary  the 
dismissal  of  the  bill.  I  say,  to  make  necessary  the  dismissal 
of  the  bill,  because  it  is  apparent  that,  to  have  denied  the  in- 
junction pendente  lite,  and  thus  to  have  permitted  the  dis- 
tribution of  the  stocks  of  the  Northern  Pacific  and  Great 
Northern,  in  the  custody  and  control  of  the  defendant  com- 
pany, according  to  the  plan  proposed,  would  have  practically 
frustrated  the  object  of  the  suit,  and  have  rendered  unavail- 
ing a  decree,  as  prayed  for,  in  favor  of  complainants.  Noth- 
ing but  a  clear  conviction  that  complainant's  bill  was  with- 
out equity,  and  should  therefore  be  dismissed  without  further 
hearing,  would  have  justified  the  court  below  in  refusing  the 
preliminary  injunction.  On  the  other  hand,  if  the  court 
were  satisfied  that  a  prima  facie  case  had  been  presented  by 
complainants,  and  that  the  balance  of  advantage  or  disad- 
vantage to  result  to  the  parties  respectively  from  the  granting 
or  withholding  an  injunction  was  such  as  to  sanction  such 
action,  it  was  the  exercise  of  a  sound  judicial  discretion  to 
grant  the  injunction  and  preserve  the  status  quo,  until  there 
was  opportunity,  after  full  hearing,  in  the  orderly  progress 
of  the  suit,  to  consider,  with  the  deliberation  they  demanded, 
the  questions  of  law  and  fact  raised  by  the  pleadings  and 
evidence  in  the  case.  The  responsibility  for  the  exercise 
of  this  power  and  duty  rested  upon  the  court  below. 

Upon  appeal  from  an  order  granting  a  preliminary  in- 
junction, a  reviewing  court  is  not  called  upon,  ordinarily, 
to  enter  into  and  decide  the  merits  of  the  case,  and  unless 
the  court  below,  in  granting  the  preliminary  injunction, 
has  .violated  some  rule  of  equity  or  abused  its  discretion,  or 
acted  iinprovidently,  this  court  should  not  interfere  with 


632 


134  FEDERAL  BEPORTER,  340. 


Gray,  J.,  dissenting. 

its  discharge  of  the  responsibility  and  duty  imposed  upon  it. 
"The  right  to  exercise  this  discretion  has  been  vei?ted  in 
the  trial  courts.    It  has  not  been  granted  to  the  appellate 
courts,  and  the  question  for  them  to  determine  is,  not  how 
they  xvould  have  exercised  this  discretion,  but  whether  or 
not  the  courts  below  have  exercised  it  so  carelessly  or  un- 
reasonably that  they  have  passed,  l^yond  the  wide  latitude 
permitted  them,  and  violated  the  rules  of  law  which  should 
have  guided  their  action."    That  there  was  no  such  abuse 
of  discretion  in  this  case  by  the  learned  judge  of  the  court 
below,  will,  I  think,  be  apparent  from  his  own  statement, 
and  from  the  admission  made  to  that  effect  by  the  majority 
of  the  court.    It  seems  to  me  clear  that  he  should  be  afforded 
the  untrammeled  opportunity  he  sought,  for  a  full  hearing 
and  deliberate  investigation  of  what  he  has  stated  to  be  the 
important  and   doubtful  questions  of  law   and   fact  pre- 
sented by  this  record.    Such  a  course  would  be  consonant 
with  the  genius  of  our  judicial  system,  by  not  depriving 
the  parties,  or  a  reviewing  court,  of  the  benefit  to  result  from 
the  examination  and  judgment  of  a  court  of  first  instance. 
This  salutary  feature  of  our  system  would  be  measurably 
lost,  if  the  right  to  appeal  from  an  interlocutory  [Ul]  de- 
cree for  a  special  injunction,  given  by  the  act  of  Congress, 
should  l>e  so  construed  as  to  allow  courts  of  first  instance 
to  refer,  and  the  api>ellate  opurts  to  assume,  the  determina- 
tion of  questions  arising  on  motions  for  such  injunctions. 
I  cannot  accept  the  view,  that  it  is  our  duty  in  the  case  at 
bar  to  do  more  than  merely  determine  whether  the  sound 
judicial  discretion  of  the  court  below  has  or  has  not  been 
abused,  declining  to  consider  what  ought  to  be  the  decision 
on  the  merits  at  final  hearing.    I  do  not  think  that  the  es- 
tablished general   rule  of  appellate  courts   requires  more 
than  this,  and  I  think  we  can  conform  to  this  general  rule 
"  without  in  effect  renouncing  the  appellate  jurisdiction  con- 
ferred upon  us  by  Congress." 

As  I  am  clearly  of  the  opinion  that  the  court  below,  in 
granting  the  special  injunction,  pendente  lite,  has  given  due 
consideration  and  effect  to  the  balance  of  inconvenience  and 
injury  which  may  result  to  one  party  or  the  other,  and  that 
the  prima  facie  case  was  sufficiently  established  at  the  hearing 


RICE   V,   STANDARD    OIL   CO. 


633 


Opinion  of  the  Court 

to  entitle  the  complainants  to  the  protection  of  such  an  in- 
junction, I  am  in  favor  of  affirming  the  interlocutory  de- 


cree* 


[464]  EICE  V.  STANDAED  OIL  CO. 

(Circuit  Court,  D.  New  Jersey.    January  6,  1905.) 

L134  Fed.,  464.] 

Monopolies — Action  for  Violation  of  Anti-Tbust  Act — ^Pleading. — 
Section  1  of  tlie  Slierman  anti-trust  act  (Act  July  2,  1890,  c.  647,  26 
Stat  209  [U.  S.  Comp.  St  1901,  p.  3200]),  which  declares  illegal 
"every  contract,  combination  in  the  form  of  trust  or  otherwise,  or 
conspiracy  in  restraint  of  trade  or  commerce  among  the  several 
states  or  with  foreign  nations,"  makes  a  distinction  between  a 
contract  and  a  combination  or  conspiracy  in  restraint  of  trade,  and 
a  declaration  in  a  suit  based  on  section  7  (26  §tat  210  [U.  S. 
Comp.  *St.  1901,  p.  3202] )  to  recover  damages  resulting  to  plaintiff 
from  a  violation  of  such  provision,  which  alleges  in  a  single  count 
that  defendant  entered  into  a  "contract,  combination,  and  con- 
spiracy "  in  restraint  of  trade,  is  bad  for  duplicity.^ 

[465]  Same. — A  declaration  in  an  action  brought  under  section  7  of 
the  Sherman  anti- trust  act  (Act  July  2,  1890,  c.  647,  26  Stat  210 
[U.  S.  Comp.  St  1901,  p.  3202] )  to  recover  damages  for  a  violation 
of  section  1  of  the  act,  construed,  and  held  bad  for  indefinitenesa 
and  uncertainty  in  describing  the  alleged  combination  and  con- 
spiracy entered  into  by  defendant  and  the  acts  done  which  resulted 
in  damage  to  plaintiff. 

At  Law.    On  motion  to  strike  out  declaration. 
Charles  W,  Fuller  and  R,  V,  Lindabury^  for  the  motion. 
Charles  E,  Hendrickson^  Jr.^  and  John  Griifln^  opposed. 
Lanning,  District  Judge. 

This  matter  comes  before  the  court  on  a  motion  to  strike 
out  the  plaintiff's  declaration  on  the  ground  that  it  is  irregu- 
lar and  defective,  and  so  framed  as  to  prejudice,  embarrass, 
and  delay  a  fair  trial  of  the  action.  Such  procedure  is  war- 
ranted by  section  110  of  the  New  Jersey  practice  act  (P.  L. 
1903,  p.  569).    The  cause  of  action  set  forth  in  the  declara- 

«  Syllabus  copyrighted,  1905,  by  West  Publishing  Co. 


634 


134  FEDEBAL  BEPORTEB,   465. 


Opiniou  of  the  Court. 

tion  is  supposed  to  be  created  by  section  7  of  the  Sherman 
anti-trust  act,  entitled  "An  act  to  protect  trade  and  commerce 
against  unlawful  restraints  and  monopolies,"  approved  July 
2,  ISm  Act  July  2,  1890,  c.  647,  26  Stat.  210  [U.  S. 
Comp.  St.  1901,  p.  3202].    That  section  is  as  follows: 

"Any  person  who  shall  be  injnreil  In  his  business  or  property  by 
any  other  person  or  corporation  by  reason  of  anything  forbidden  or 
declared  to  be  unlawful  by  this  act  may  sue  therefor  in  any  Circuit 
Court  of  the  United  States  in  the  district  In  which  the  defendant  re- 
sides or  is  found,  without  respect  to  the  amount  in  controversy,  and 
shall  recover  threefold  the  damages  by  him  sustained  and  the  costs 
of  suit.  Including  a  reasonable  attorney's  fee." 

Amongst  the  things  by  the  act  declared  to  be  unlawful 
are  those  mentioned  in  its  first  section  (26  Stat.  209  [U.  S. 
Comp.  St.  1901,  p.  3200]  )j  which  is  as  follows : 

**  Every  contract,  combhiation  in  the  form  of  trust  or  otherwise,  or 
conspiracy,  in  restraint  of  trade  or  commerce  among  the  several 
states,  or  with  foreign  nations,  is  hereby  declared  to  be  illegal.  Every 
person  who  shall  make  any  such  contract  or  engage  in  any  such  com- 
bination or  conspiracy,  shall  be  deemed  guilty  of  a  misdemeanor,  and, 
on  conviction  thereof,  shall  be  punished  by  fine  not  exceeding  five 
thousand  dollars,  or  by  imprisonment  not  exceeding  one  year,  or  by 
both  said  punishments,  in  the  discretion  of  the  court." 

It  is  apparent  that  mere  proof  that  the  defendant  has 
entered  into  a  contract  or  engaged  in  a  combination  or  con- 
spiracy in  restraint  of  trade  or  commerce  among  the  several 
states  will  not  be  sufficient  to  support  a  cause  of  action  under 
the  seventh  section,  for  there  must,  in  addition  thereto,  be 
proof  that  the  plaintiff  has,  by  reason  thereof,  sustained 
damage.  In  his  declaration,  therefore,  the  plaintiff •  must 
aver  not  only  facts  showing  such  a  contract  or  combination 
or  conspiracy  as  is  declared  by  the  act  to  be  unlawful,  but 
facts  showing  that  by  reason  of  such  unlawful  thing  he  has 
been  injured  in  his  business  or  property. 

It  is  further  apparent  that  the  act  makes  a  distinction  be- 
tween a  contract  and  a  combination  or  conspiracy.  In  his 
dissenting  opinion  in  Northern  Securities  Co.  v.  United 
States,  193  U.  S.  197,  Mr.  Justice  Holmes,  after  quoting  the 
words  of  the  first  section  of  the  act,  at  page  [466]  403,  24 
Sup.  Ct.  436,  page  469,  48  L.  Ed.  679,  said :  "  The  words  hit 
two  classes  of  cases,  and  only  two — contracts  in  restraint  of 
trade,  and  combinations  or  conspiracies  in  restraint  of 
trade."    Each  of  these  things  the  act  condemns  as  an  unlaw- 


BICE   V.   STANDASO    OIL   CO. 


685 


Opinion  of  the  Court. 

ful  thing.  They  are  not  confused  in  the  act,  but  are  men- 
tioned as  distinct  offenses.  Good  pleading,  whether  it  be  in 
an  indictment  in  a  criminal  proceeding  or  in  a  declaration 
in  a  civil  suit,  requires  the  same  distinction  to  be  observed. 
If  in  a  single  count  in  an  indictment  the  charge  should  be 
that  the  defendant  entered  into  a  contract,  combination,  and 
conspiracy  in  restraint  of  trade  or  commerce  among  the 
several  states,  it  would  be  bad  for  duplicity.  Compare 
United  States  v.  Cadwallader  (D.  C.)  59  Fed.  677.  So,  in 
a  declaration  in  a  civil  suit  the  confusion  of  the  two  con- 
demned things  in  one  count  must  likewise  be  irregular  and 
defective  for  duplicity.  In  one  count  there  may  be  a  charge 
of  an  unlawful  contract,  and  in  another  a  charge  of  an  un- 
lawful combination  or  conspiracy,  but  the  two  unlawful 
things  cannot  be  declared  upon  as  synonymous  terms  and 
charged  in  a  single  count. 

In  the  declaration  now  before  me  the  plaintiff  sets  forth 
by  way  of  inducement  that  from  1876  to  1904  he  was  a 
refiner  of  crude  petroleum,  and  a  manufacturer  of  the  re- 
fined products  of  crude  petroleum ;  was  engaged  in  trade  and 
commerce  among  the  several  states  of  the  United  States,  sell- 
ing his  manufactured  products  refined  by  him  from  crude 
petroleum  to  tlie  citizens  of  Mississippi  and  Louisiana,  and  a 
large  number  of  other  states  specifically  named,  at  prices 
profitable  to  him,  and  shipping  the  same  to  his  customers  m 
those  states  from  his  refinery  at  Marietta,  Ohio,  by  certain 
common  carriers,  namely,  the  Cincinnati,  Washington  &  Bal- 
timore Eailroad  Company,  and  a  large  number  of  other 
railroad  companies  specifically  named,  and  was  lawfully  en- 
titled to  ship  and  deliver  his  products  to  his  customers  over 
the  railroads  of  these  common  carriers  for  a  reasonable  fee 
or  reward  to  be  paid  by  him  or  his  customers  to  these  com- 
mon carriers ;  that  More,  Cox  &  Lee,  of  Columbus,  Miss.,  and 
Richard  M.  Ong,  of  New  Orleans,  La.,  and  4.000  other  per- 
sons in  the  various  states  named,  became  and  were  his  cus- 
tomers of  products  shipped  over  the  railroads  of  the  com- 
mon carriers  specifically  named,  and  that  he  had  made  con- 
tracts with  his  customers  yielding  him  a  profit  of  $50,000 
per  year,  which  they  would  have  continued  except  for  the 


636 


134  FEDERAL  BEPORTER,  466. 


Opinion  of  the  Court. 

wrongful  acts  and  misconduct  of  the  defendant  and  its  asso- 
ciatas;  that  he  was  possessed  of  a  plant,  refinery,  and  busi- 
ness of  the  value  of  seven  hundred  and  6%  thousand  dol- 
lars; that  on  January  2, 1882,  the  individuals,  firms,  and  cor- 
porations mentioned  in  a  certain  written  contract  annexed 
to  the  declaration,  and  forming  part  thereof,  and  marked 
"  Schedule  A,"  were  engaged  in  lawful  competition  with  the 
plaintiff  and  among  themselves  in  the  same  line  of  business 
as  that  carried  on  by  the  plaintiff;  that,  in  order  that  a  com- 
bination of  these  individuals,  firms,  and  corporations  might 
be  fonned  to  put  an  end  to  competition  and  injure  and 
destroy  the  plaintiff's  business  and  the  business  of  others 
engaged  in  the  same  line  throughout  the  United  States,  and 
drive  the  plaintiff  and  others  out  of  competition  with  them, 
and  unlawfully  secure  for  themselves  the  customers  who 
theretofore  had  traded  or  might  thereafter  trade  with  the 
plaintiff  and  others,  those  individuals,  firms,  and  corporations 
en-  [467]  tered  into  the  above-mentioned  contract;  and  that 
on  January  4, 1882,  they  entered  into  a  further  written  con- 
tract supplemental  to  the  contract  of  January  2,  1882,  which 
supplemental  contract  is  also  annexed  to  the  declaration  as  a 
part  thereof,  and  marked  "  Schedule  B."    The  plaintiff  then 
avers  that  in  pursuance  of  these  two  contracts,  and  as  a  part 
of  the  scheme  of  the  individuals,  firais,  and  corporations 
mentioned  in  them,  the  defendant,  on  August  1,  1882,  was 
incorporated  under  the  laws  of  the  state  of  New  Jersey  with 
a  capital  of  $3,000,000,  under  the  name  "  Standard  Oil  Com- 
pany of  New  Jersey ;"  that  on  June  14, 1889,  the  name  of  the 
company  was  changed  to  "  Standard  Oil  Company,"  and  its 
capital  stock  increased  to  $110,000,000 ;  and  that  the  defend- 
ant, from  the  date  of  its  said  incorporation  down  to  the  time 
of  the  commencement  of  this  suit,  joined  and  co-operated 
with  the  several  individuals,  firms,  and  corporations  men- 
tioned in  the  two  contracts  in  a  general  plan  or  scheme  to 
destroy  the  plaintiff's  business,  to  render  his  plant  worthless, 
to  secure  for  themselves  his  customers,  and  to  destroy  compe- 
tition and  create  a  monopoly  "  by  the  actings  and  doings  and 
in  manner  and  form  as  hereinafter  stated." 
The  first  series  of  averments  concerning  these  "actings 


BICE   V.   STANDARD   OIL   CO. 
Opinion  of  the  Court. 


637 


and  doings,"  which,  for  convenience  of  reference,  I  have 
designated  by  numbers,  is  as  follows: 

"(1)  On  tlie  4th  day  of  August,  1882,  at  Trenton,  in  said  district, 
the  defendant  entered  into  and  became  a  party  to  said  two  con- 
tracts aforesaid,  which  said  contracts  were  and  are  in  restraint  of 
trade  and  commerce  among  the  several  states  of  the  United  States; 
and  (2)  likewise,  to  wit,  on  the  day  and  year  last  aforesaid,  at 
Trenton,  aforesaid,  entered  into  a  combination  in  the  form  of  a  trust 
and  conspiracy  in  restraint  of  trade  and  commerce  among  the  sev- 
eral states  of  the  United  States  with  respect  to  business  of  the  char- 
acter of  the  plaintiff's  aforesaid;  and  (3)  pursuant  to  the  true  intent 
and  purpose  of  said  contracts,  combination  and  conspiracy,  together 
with  the  other  persons,  parties  to  said  agreement,  from  the  day  and 
year  last  aforesaid,  continuously,  day  by  day,  down  to  the  day  of 
the  commencement  of  this  suit,  did,  together  with  other  persons,  par- 
ties to  said  agreements  hereto  annexed  as  ScI:  Jules  A  and  B,  con- 
spire with,  coerce,  intimidate,  and  induce  the  above-named  common 
carriers  (4)  to  discriminate  against  the  plaintiff  in  the  matter  of 
freight  or  carriage  charges,  (5)  and  to  charge  the  said  plaintiff  and 
his  customers  unreasonable,  excessive,  and  exorbitant  sums  of  money 
as  fee  or  reward  for  the  carriage  and  delivery  of  the  plaintiff's  prod- 
ucts aforesaid  to  the  customers  of  the  plaintiff  aforesaid,  to  wit, 
from  fifty  per  cent,  to  three  hundred  and  thirty-three  per  cent,  more 
than  reasonable  fee  or  reward  for  such  carriage  and  delivery,  and 
to  discriminate  in  favor  of  defendant  and  its  associates  aforesaid  by 
charging  said  defendant  and  associates  for  like  carriage  and  delivery 
unreasonably  small  sums,  considerably  less  than  proper  charges  as 
fees  or  rewards  to  be  paid  in  that  behalf  by  the  said  defendant  and 
its  associates  aforesaid  to  the  common  carriers  aforesaid.  (6)  and  to 
charge  the  said  plaintiff  from  fifty  per  cent,  to  three  hundred  and 
thirty-three  per  cent,  more  for  freight  or  carriage  charges  for  trans- 
porting the  same  amount  of  the  plaintiff's  refined  oils  the  same  dis- 
tance to  the  same  points  and  under  the  same  conditions  as  charged 
the  said  defendant  and  its  associates  aforesaid;  and  (7)  in  many 
cases  causing  and  compelling  [grammatically,  the  language  should 
evidently  be  "to  cause- and  compel "]  said  common  carriers  to  pay  to 
said  defendant  and  its  associates  aforesaid  the  excess  of  freight 
charges  charged  the  plaintiff  over  and  above  the  rate  charged  the 
defendant  and  associates  aforesaid,  or  some  part  thereof,  thereby  tak- 
ing from  the  plaintiff  his  money  to  enable  said  defendant  to  oppress 
and  injure  the  plaintiff  in  other  ways,  and  to  enable  the  said  defend- 
ant and  its  associates  aforesaid  to  recoup  the  losses,  or  some  part 
thereof,  sustained  by  it  and  them  by  reason  of  its  and  their  selling 
oil  like  the  [468]  plaintiff's  at  prices  netting  a  loss  for  the  purpose 
of  destroying  the  plaintiff's  market  for  his  oils  and  the  value  of  oil  in 
the  plaintiff's  market  as  hereinafter  stated." 

These  averments,  in  my  judgment,  are  bad  for  duplicity 
and  uncertainty.  The  first  clause  relates  exclusively  to  the 
two  contracts,  copies  of  which  are  annexed  to  the  declaration. 
The  second  clause  relates  to  what  is  called  "  a  combination 
in  the  form  of  a  trust  and  conspiracy."  In  the  third  clause 
it  is  averred  that  "  pursuant  to  the  true  intent  and  purpose 
of  said  contracts,  combination,  and  conspiracy  "  the  defend- 
ant did  certain  things  to  the  injury  of  the  plaintiff.    Here 


638 


134  FEDERAL  KEPORTER,  468. 
Opinion  of  the  Court 


RICE   V,   STANDARD   OIL   CO. 


639 


the  pleader  makes  the  two  distinct  offenses  condemned  by 
the  act  the  basis  of  his  complaint.  This  contravenes  the 
rule  which  forbids  duplicity  in  pleading.  But  the  averments 
are  also  bad  for  indefiniteness  and  uncertainty.  The  third 
clause,  particularly,  is  badly  framed.  It  avers  that  the  de- 
fendant, with  other  persons,  did  "  conspire  with,  coerce,  in- 
timidate, and  induce  the  above-named  conmion  carriers  "  to 
do  the  acts  mentioned  in  the  fourth,  fifth,  sixth,  and  seventh 
clauses.  As  the  conspiracy,  coercion,  intimidation,  and  in-: 
ducement  are  declai-ed  to  have  been  pursuant  to  the  true 
intent  and  purpose  of  the  contracts,  combination,  and  con- 
spiracy mentioned  in  the  first  and  second  clauses,  the  fourth, 
fifth,  sixth,  and  seventh  clauses  must  be  held  to  relate,  not 
to  an  additional  conspiracy,  but  to  acts  done  to  give  effect 
to  the  contracts,  combination,  and  conspiracy  mentioned 
in  the  first  and  second  clauses,  and  thus  to  injure  the  plain- 
tiff in  his  business  or  property.  When  so  read,  we  find  that 
we  have  no  information  concerning  the  combination  and 
conspiracy  mentioned  in  the  second  clause,  except  that  the 
combination  is  in  the  form  of  a  trust,  and  that  the  combina- 
tion and  conspiracy  are  in  restraint  of  trade.  When  they 
were  formed,  or  how,  or  by  whom,  or  for  what  purpose,  is 
not  stated.  The  defendant  cannot  be  required  to  plead  to 
m¥erments  that  are  so  general  and  indefinite.  The  fourth 
clause  is  to  the  effect  that  one  of  the  acts  done  was  "  to  dis- 
criminate against  the  plaintiff  in  the  matter  of  freight  or 
carriage  charges."  This  also  is  too  general  and  indefinite 
to  comply  with  the  rules  of  good  pleading.  The  fifth  clause, 
which  relates  to  alleged  unreasonable  freight  rates  charged 
against  the  plaintiff  and  his  customers,  is  necessarilv  defect- 
ive because  of  its  connection  with  the  preceding^  clauses. 
Whether  it  is  further  defective  because  it  states  none  of  the 
customers  of  the  plaintiff  against  whom  unreasonable  charges 
were  made,  or  because  no  facts  are  stated  tending  to  show 
what  would  be  reasonable  rates,  are  questions  that  need  not 
now  be  considered.  The  great  difficulty,  if  not  impossibility, 
of  formulating  a  rule  which  shall  govern  in  the  matter  of 
determining  what  are  reasonable  mtes  for  transportation  was 
conmiented  on  in  United  States  v.  Freight  Association^  166 
U.  S.,  at  pages  331  and  332, 17  Sup.  Ct.  540,  41  L.  Ed.  1007. 


Opinion  of  the  Court 

Possibly,  the  sixth  clause  might  stand  if  the  clauses  with 
which  it  is  connected  were  not  defective.  The  seventh  clause 
is  too  indefinite,  because  it  relates  to  "  many  cases  "  in  which 
it  is  said  that  conunon  carriers  were  compelled  to  pay  to  the 
defendant  and  its  associates  the  excess  of  freight  charges 
collected  from  the  plaintiff,  without  the  averment  of  any 
fact  tending  to  show  when,  where,  with  whom,  or  in  what 
circumstances  any  such  case  arose.  The  next  averment  in 
the  declaration  is  as  follows: 

[469]  "And  the  said  defendant  and  its  associates  aforesaid  did  also 
conspire  with,  cause  and  compel  the  railroads  and  other  common  car- 
riers aforesaid  and  their  employes  to  harass  the  plaintiff  in  his  busi- 
ness by  delaying  to  furnish  cars  and  to  promptly  ship  the  plaintiff's 
oil  sold  by  the  plaintiff  to  his  customers." 

This  averment  deals  with  a  conspiracy  separate  and  dis- 
tinct from  that  alleged  in  the  preceding  averment,^.  There 
is  no  mention  of  any  time  when  the  alleged  conspiracy  was 
entered  into,  or  when  the  alleged  acts  were  done.  The  de- 
fendant's counsel  have  argued  that  it  should  be  read  in  con- 
nection with  the  preceding  averments,  and  that  it  must  be 
understood  to  relate  to  the  time  which  in  the  preceding  aver- 
ment is  said  to  have  been  "  from  the  day  and  year  last  afore- 
said continuously,  day  by  day,  down  to  the  day  of  the  com- 
mencement of  this  suit."  But  the  language  employed  will 
not  permit  such  a  reading.  The  same  thing  is  true  of  each 
of  the  succeeding  averments  concerning  alleged  conspiracies. 
Other  defects  appear  in  the  conspiracy  averments.  For  ex- 
ample, it  is  said  that  the  defendant  conspired  with  the  other 
persons,  parties  to  the  two  agreements  above  mentioned,  to 
cause  the  plaintiff's  customers  to  cease  purchasing  his  oil 
by  furnishing  oil  like  the  plaintiff's  product  "to  other 
dealers  in  localities  where  the  plaintiff  was  selling  oil  to 
his  customers  at  prices  netting  a  loss  to  said  defendant  and 
its  associates."  But  no  dealer  or  locality  is  named  where 
oil  was  thus  supplied  by  the  defendant,  notwithstanding,  if 
the  averment  be  true,  the  plaintiff  must  have  knowledge  as 
to  who  the  dealers  were  and  as  to  the  localities  in  which 
those  dealers  carried  on  their  business.  Another  averment 
is  that : 

"  The  said  defendant  and  its  associates  aforesaid  also,  in  pursuance 
of  said  conspiracy,  sought  out  and  sold  oil  to  the  plaintiff's  customers 


640 


134  FEDEBAL  REPOKTEB,  469. 
Opinion  of  tlie  Oonrt 


at  prices  less  than  cost,  while  keeping  the  price  of  oil  to  the  defend- 
ant's and  its  said  associates'  customers  in  the  same  localities  up  to 
prices  showing  large  net  profits  on  sales,  which  facts  were  unknown 
to  the  customers  of  defendant  and  its  associates  aforesaid,  thereby 
causing  the  plaintlfTs  customers  to  leave  the  plaintiff,  and  trade  with 
the  defendant  and  its  associates  aforesaid." 

But  the  plaintiff  fails  to  name  any  of  his  customers  who 
were  thus  sought  out  or  to  whom  oil  was  sold  at  prices  less 
than  cost.  Another  averment  is  that  in  further  i)ursuance 
of  the  alleged  conspiracy  the  defendant  did  "  intimidate  the 
customers  of  the  plaintiff  by  threatening  to  boycott  them  in 
their  business  if  they  purchased  oil  of  the  plaintiff."  But 
the  plaintiff  fails  to  name  any  of  his  customers  who  were 
thus  intimidated.  The  next  two  averments  are  to  the  effect 
that  the  defendant  and  its  associates  "  did  also  operate  retail 
stores  for  the  sale  of  groceries,  oil,  and  other  commodities  in 
localities  where  retailers  banded  together  and  agreed  to 
purchase  and  did  purchase  oil  of  the  plaintiff,  for  the  pur- 
pose of  injuring  such  retailers  and  customers  of  the  plaintiff 
by  destroying  their  grocery  or  other  business  so  long  as  they 
should  buy  oil  of  the  plaintiff,"  and  that  they  also  sold  gro- 
ceries and  merchandise  "  to  the  customers  of  the  plaintiff's 
customers  at  such  ruinous  prices  as  to  threaten  ruin  and  loss 
to  the  plaintiff's  customers."  But  the  plaintiff  fails  to  name 
any  of  his  customers  who  were  thus  affected.  Another  aver- 
ment is  that  the  defendant  and  its  associates  "  bribed  and 
bought  out  the  plaintiff's  sales  agents,  and  caused  the  plain- 
tiff's agents  [470]  and  employes  to  betray  the  trust  confided 
to  them  by  the  plaintiff  in  his  said  business,  and  to  wrong- 
fully abandon  the  plaintiff's  service  and  disregard  their  duty 
to  the  plaintiff  in  the  course  of  his  business."  But  none  of 
the  plaintiff's  agents  thus  alleged  to  have  been  bribed  or 
to  have  betrayed  their  trust  is  named.  The  next  averment 
is  that  the  "defendant  and  its  associates  intimidated  mer- 
chants and  others  engaged  in  the  business  of  selling  oil  in 
various  markets,  and  thus  prevented  such  merchants  and 
others  from  purchasing  and  dealing  in  oil  manufactured  by 
the  plaintiff."  The  plaintiff  has  failed  to  name  any  mer- 
chant or  other  person  thus  intimidated,  or  what  the  acts  of 
intimidation  were,  or  any  of  the  markets  in  which  such  prac- 
tice was  carried  on.    The  last  averment  is  that  the  defendant 


SWIFT   AND    COMPANY   V.   UNITED   STATES.  641 

Syllabus. 

and  its  associates  "hampered  the  plaintiff  in  getting  ih^ 
necessary  supplies  of  crude  oil,  and  made  the  said  crude  oil 
more  expensive  to  the  plaintiff,  and  hampered,  delayed,  and 
made  more  expensive  ih^  work  of  the  plaintiff  in  the  con- 
struction of  the  pipe  line  for  his  use."  But  there  is  no 
averment  as  to  the  manner  in  which  the  defendant  and  its 
associates  thus  hampered,  delayed,  or  injured  the  plaintiff. 

It  seems  to  me  clear  that  the  averments  in  the  declaration 
are  too  vague  to  give  to  the  defendant  the  information  to 
which  it  is  entitled  before  being  required  to  plead.  A  decla- 
ration which  was  much  less  indefinite  than  the  one  Defore  me 
was,  in  the  ease  of  Minnuci  v.  Philadelphia  dj  Reading  R, 
R.  Co,,  68  N.  J.  Law,  432,  53  Atl.  229,  declared  to  be  one 
which  would  have  been  stricken  out  on  motion  for  that  pur- 
pose. The  same  thing  was  true  of  the  declaration  in  the  case 
of  Race  v.  Easton  ct'  Amhoy  R.  R.  Co,.  62  N.  J.  Law,  536,  41 
Atl.  710.  See,  also,  Ackeimian  v.  Shelp,  8  N.  J.  Law,  125; 
Stephens  d;  Condit  Trans  p.  Co,  v.  Central  R.  R.  Co,,  34  n! 
J.  Law,  280. 

In  my  opinion,  the  motion  to  strike  out  the  declaration 
must  be  granted,  and  an  order  to  that  effect  will  be  signed. 


[376]  SWIFT  AND  COMPANY  v,  UNITED  STATES.- 

APPEAL    FROM    THE    CIRCUIT   COURT  OF    THE   UNITED   STATES   FOR 

THE   NORTHERN   DISTRICT  OF  ILLINOIS. 

No.  103.     Argued  January  6,  7,  1905.— Decided  January  30,  1905. 

[39G  U.  S.,  375.] 

A  combination  of  a  dominant  proportion  of  the  dealers  in  fresh  meat 
throughout  the  United  States,  not  to  bid  against,  or  only  in  con- 
junction  ^^  ith,  each  other  in  order  to  regulate  prices  in  and  induce 
shipments  to  the  live  stock  markets  in  other  States,  to  restrict  ship- 
ments, establish  uniform  rules  of  credit,  make  uniform  and  im- 
proper rules  of  cartage,  and  to  get  less  than  lawful  rates  from  rail- 
roads to  the  exclusion  of  competitors  with  intent  to  monopolize 
commerce  among  the  States,  Is  an  illegal  combination  within  the 
meaning  and  prohibition  of  the  act  of  July  2,  1890,  26  Stat.  209, 
and  can  be  restrained  and  enjoined  in  an  action  by  the  United  States! 

a  Demurrer  overruled  and  preliminary  injunction"  ^^ted  by  the 
Circuit  Court  (122  Fed.,  529).     See  p.  237. 

21220— VOL  2—07  m 41 


196   UI^ITED   STATES   BEPORTS,   375. 


SylKibus. 

It  does  not  matter  that  a  eombiDation  of  this  nature  embraces  re- 
straint and  monopoly  of  trade  within  a  single  State  if  it  also  em- 
braces and  is  directed  against  commerce  among  the  States.  More- 
over the  effect  of  such  a  combination  upon  interstate  commerce  Is 
direct  and  not  accidental,  secondary  or  remote  as  in  United  States 
V.  E.  C.  Knight  Co.,  156  U.  S.  1. 

Even  if  the  separate  elements  of  such  a  scheme  are  lawful,  when 
they  are  bound  together  by  a  common  intent  as  parts  of  an  unlaw- 
ful scheme  to  monopolize  interstate  commerce  the  plan  may  make 
the  parts  unlawful. 

When  cattle  are  sent  for  sale  from  a  place  in  one  State,  with  the 
expectation  [876]  they  will  end  their  transit,  after  purchase,  in 
another  State,  and  when  in  effect  they  do  so,  with  only  the  interrup- 
tion necessary  to  find  a  purchaser  at  the  stock  yards,  and  when  this 
is  a  constantly  recurring  course,  it  constitutes  Interstate  commerce 
and  the  purchase  of  the  cattle  is  an  incident  of  such  commerce. 

A  bill  in  equity,  and  the  demurrer  thereto,  are  neither  of  them  to  be 
read  and  constnied  strictly  as  an  indictment  but  are  to  be  taken 
to  mean  what  they  fairly  convey  to  a  dispassionate  reader  by  a 
fairly  exact  use  of  English  speech.« 

[49  L.  ed.,  518.]  6 

[A  general  allegation  of  intent  may  color  and  apply  to  all  the  spe- 
cific charges  of  a  bill  which  seeks  relief  against  alleged  violations  of 
the  act  of  July  2,  1890  (26  Stat  L.,  209,  chap.  647,  U.  S.  Comp. 
Stat,  1901,  p.  3200),  to  protect  trade  and  commerce  against  unlaw- 
ful restraints  and  monopolies.] 

[A  bill  charges  a  violation  of  the  act  of  July  2,  1890  (26  Stat  L.,  209, 
chap.  64T,  TJ.  S.  Comp.  Stat,  1901,  p.  3200),  to  protect  trade  and 
commerce  against  unlawful  restraints  and  monopolies,  as  against 
the  objections  of  want  of  equity,  multifariousness,  and  failure  to 
set  forth  sufficient  definite  or  specific  facts,  where  it  avers  the  ex- 
istence of  a  combination  of  a  dominant  proportion  of  the  dealers  in 
fresh  meat  throughout  the  United  States  not  to  bid  against  each 
other  In  the  live-stock  markets  of  the  different  states,  to  bid  upP 
prices  for  a  few  days  in  order  to  Induce  shipments  to  the  stock 
yards,  to  fix  selling  prices,  and  to  that  end  to  restrict  shipments 
of  meat  when  necessary,  to  establish  a  uniform  rule  of  credit  to 
dealers,  and  to  keep  a  black  list,  to  make  uniform  and  improper 
charges  for  cartage,  and  to  secure  less  than  lawful  freight  rates,  to 
the  exclusion  of  competitors.] 


ffl  The  foregoing  syllabus  and  the  abstracts  of  arguments  copyrighted, 
1905,  by  The  Banks  Law  Publishing  Ck>. 

z>The  following  paragraphs  inclosed  In  brackets  comprise  the  sylla- 
bus to  this  case  in  the  U.  S.  Supreme  Court  Reports,  Book  49,  p.  518. 
Copyrighted,  1904,  1905,  by  The  Lawyers*  Oo-Operatlve  Publishing  Co. 


SWIFT   AND   COMPANY   V,   UNITED   STATES. 


643 


Syllabus. 

[A  combination  of  independent  meat  dealers.  In  aid  of  an  attempt  to 
monopolize  commerce  in  fresh  meat  among  the  states,  to  restrict 
the  competition  of  their  respective  agents  when  purchasing  stock 
for  them  in  the  stock  yards,  is  an  interference  with  interstate  com- 
merce, forbidden  by  the  act  of  July  2,  1890  (26  Stat  L.,  209,  chap. 
647,  U.  S.  Comp.  Stat,  1901,  p.  3200),  to  protect  trade  and  com- 
merce against  unlawful  restraints  and  monopolies,  where  such  deal- 
ers and  their  slaughtering  establishments  are  largely  in  different 
states  from  those  of  the  stock  yards,  and  the  sellers  of  the  cattie 
largely  in  different  states  from  either.] 

[Trade  in  fresh  meat  is  sufficiently  shown  to  be  commerce  among  the 
states,  protected  from  restraint  by  the  act  of  July  2,  1890  (26  Stat 
L.,  209,  chap.  647,  U.  S.  Comp.  Stat,  1901,  p.  3200),  by  allegations 
in  a  bill  charging  meat  dealers  with  violations  of  that  act  which, 
even  if  they  import  a  technical  passage  of  title  at  the  slaughtering 
places  in  cases  of  sales,  also  import  that  the  sales  are  to  persons 
in  other  states,  and  that  the  shipments  to  other  states  are  pursuant 
to  such  sales,  and  by  allegations  charging  sales  of  such  meat  by 
their  agents  in  other  states,  which  indicate  that  some,  at  least  of 
the  sales  were  in  the  original  packages.] 

[Vagueness  can  not  be  asserted  of  a  charge  in  a  bill  seeking  relief 
against  an  attempt  to  monopolize  commerce  in  fresh  meat  among 
the  states,  in  violation  of  the  act  of  July  2,  1890  (26  Stat  L.,  209, 
chap.  647,  U.  S.  Comp.  Stat,  1901,  p.  3200),  that  a  combination  ex- 
ists among  independent  meat  dealers  to  restrain  their  respective 
agents  from  bidding  against  each  other  when  purchasing  live  stock 
for  them  in  the  stock  yards.] 

[Interstate  commerce  is  unlawfully  restrained,  in  violation  of  the  act 
of  July  2,  1890  (26  Stat  L.,  209,  chap.  647,  U.  S.  Comp.  Stat,  1901, 
p.  3200),  by  a  combination  of  independent  meat  dealers,  in  aid  of 
an  attempt  to  monopolize  commerce  in  fresh  meat  among  the  states 
to  bid  up  prices  for  live  stock  for  a  few  days  at  a  time,  in  order  to 
Induce  cattle  men  in  other  states  to  make  large  shipments  to  the 
stock  yards,  or  by  a  combination  for  the  same  purpose  to  fix  the 
selling  price  of  fresh  meat,  and  to  that  end  to  restrict  shipments 
when  necessary,  to  establish  a  uniform  rule  of  credit  to  dealers  and 
to  keep  a  black  list,  or  by  a  combination  in  aid  of  such  purpose  to 
make  uniform  and  improper  charges  for  cartage  for  the  delivery 
of  meat  sold  to  be  shipped  to  dealers  and  consumers  in  the  several 
states.] 

[A  combination  to  secure  less  than  lawful  freight  rates,  entered  Into 
by  independent  meat  dealers  with  the  intent  to  monopolize  com- 
merce  in  fresh  meat  among  the  several  states,  is  forbidden  by  the 
act  of  July  2,  1890  (26  Stat  L.,  209,  chap.  647,  U.  S.  Comp.  Stat, 
1901,  p.  3200),  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies.] 


644  196  UNITED  STATES  BEPORTS,  376. 

Ai'pinient  for  :ii>iiel hints. 
The  facts  are  stated  in  the  opinion. 

Mr.  John  S.  Miller^  with  whom  Mr.  Merritt  Starr  was  on 
the  brief,  for  appellants: 

The  charges  in  each  of  the  paragraphs  or  counts  of  the 
bill  or  petition  of  alleged  violations  of  the  Sherman  Act 
are,  respectively,  mere  statements  of  legal  conclusions.  Each 
is  bad  on  demuri-er  for  that  reason. 

These  charges  would  be  bad  on  that  ground,  even  in  an 
indictment  under  this  act.  In  re  Greene,  52  Fed.  Kep.  104; 
United  States  v.  Crmksh(nil\  02  U.  S.  542,  503;  United  States 
V.  Shnmons,  JKi  (T.  S.  m>0;  Uiut(ul  Sfatrs  v.  rarIL  105  U.  S. 
fill;  Unitrd  States  v.  BrittoiK  107  U.  8.  655;  Hazard  v. 
Gnswold,  21  Fed.  Eep.  178.  And  a  fortiori  are  tl\ey  bad 
in  a  bill  or  petition  in  equity,  wliich  is  required  to  state  the 
facts  essential  to  the  cause  of  action.  Lawson  v.  Hewell, 
118  California,  (US:  WHgM  v.  Dame,  22  Pick.  59:  Atnhler 
V.  Choteau,  107  U.  S.  58(i:  Van  WeeJ  v.  Winston,  115  U.  S. 
228,  237 ;  1  Foster  Fed.  Prnc.  §  67. 

The  farts  alleged  are  looked  at  and  not  adjectives  or  ad- 
verbs or  epithets.  Magniaf  v.  Thompson.  2  Wall.  Jr.  209; 
Priee  v.  Voleman,  21  Fed.  Rep.  357;  Van  WrcJ  \.  Winsfon, 
and  Ambler  v.  Choteau^  supra. 

The  importance  of  applying  this  rule  with  strictness  here 
is  more  marked  because  answer  by  the  defendants  under 
oath  is  called  for.  Tliis  point  is  pro^^erly  raised  by  demurrer. 
1  Daniel  Ch.  Pr.  372.  It  was  so  raised  in  Van  Weel  v. 
Winstom^  supm. 

The  decree  complained  of,  which  is  merely  one  of  in- 
junction, is  erroneous  on  like  grounds  of  indefiniteness. 
Laurie  v.  [377]  Laarie,  9  Paige,  234,  235;  Robinson  v.  Clapp, 
65  Connecticut,  365;  Whipple  v.  Hutchinson,  4  Blatchf.  190. 

It  makes  clear  the  misconception  of  the  Sherman  Act  and 
of  Federal  power  to  regulate  commerce  upon  which  the  bill 
and  decree  proceed.  They  appear  to  go  upon  the  theory  that 
under  the  act  of  Congress  the  Federal  courts  are  to  regulate 
commerce,  and  the  decree  enjoins,  not  specific  acts,  but  viola- 
tions of  the  statute  in  terms  as  general  as  the  act  of  Congress 
itself.    A  defendant  cannot  know  from  its  terms  what  he 


SWIFT   AND    COMPANY   V.   UNITED   STATES. 
Argument  for  apimllants. 


645 


may  or  may  not  do  without  making  himself  liable  as  in 
contempt. 

This  makes  the  insufficiency  of  the  bill  more  obvious,  as 
no  valid  decree  could  have  been  entered  upon  its  allegations. 

The  provisions  of  the  Sherman  Act  do  not  contemplate 
such  a  general  proceeding  or  decree  to  interfere  in  advance 
with  future  dealings,  as  interstate  commerce,  which  may  be 
interstate  trade  or  may  be  domestic  trade  according  to  the 
future  and  changeable  intention  of  the  dealers.  United  States 
V.  E.  C,  Knight  Co.,  156  U.  S.  1,  15. 

The  business  of  defendants  of  purchasing  live  stock  and  of 
selling  fresh  meats  produced  therefrom,  as  described  in  the 
bill,  is  not,  upon  the  allegations  of  fact  in  the  bill,  interstate 
or  foreign  commerce. 

The  purchase  of  cattle  as  alleged  and  described  in  the  first 
paragraph  of  the  bill  is  not  alleged  or  shown  to  be  interstate 
commerce. 

The  business  of  defendants  of  selling  such  fresh  meats,  at 
the  several  places  where  they  are  so  prepared,  as  described  in 
the  second  paragraph,  is  not,  under  the  facts  there  alleged,  in- 
terstate trade  or  commerce.  The  sales  and  deliveries,  al- 
though to  dealers  in  other  States  and  Territories,  are  there 
alleged  to  be  made  at  the  places  where  the  meats  are  prepared 
by  defendants,  and  are  domestic  sales. 

The  deliveries  by  defendants  to  the  carriers,  who  are 
agents  of  the  purchasers  in  that  respect,  under  the  allegations 
of  ihe^  bill,  are  deliveries  to  the  purchasers  in  the  State  where 
the  sale  is  made ;  and  the  sales  and  deliveries  are  there  fully 
completed.  [378]  Merchant  v.  Chapman,  4  Allen,  362;  Or- 
cutt  V.  Nelson,  1  Gray,  543 ;  Waldron  v.  Romaine,  22  N.  Y. 
368 ;  Ramsey  (&  Gore  Co,  v.  Kelsea,  55  N.  J.  L.  320 ;  Cotte  v. 
Harden,  4  East.  211 ;  Brown  v.  Hodgson,  2  Camp.  86 ;  Gron- 
ing  V.  Needham,  5  Maule  &  S.  189 ;  2  Kent.  Com.  499 ;  Cross- 
^      man  v.  Lvrman,  192  U.  S.  189,  198. 

The  sellers'  act  in  delivering  the  merchandise  to  the  com- 
mon carrier,  or  carrying  the  merchandise  to  the  carrier's 
depot  (if  that  is  taken  to  be  in  effect  alleged),  is  not  any  part 
of  the  interstate  transportation,  and  does  not  make  the  goods 
the  subject  of  interstate  commerce.  Coe  v.  Erroh  116  U  S 
517,  528. 


040 


196   UNITED   STATES  BEPOBTS,  378. 


Argument  for  appellants. 

The  fact  that  the  sale  is  made  with  a  view  to  the  goods 
being  transported  by  the  buyer's  agent  to  another  State  after 
the  sale  and  delivery  is  fully  completed,  does  not  make  the 
sale  interstate  commerce. 

The  sales  alleged  in  the  third  paragraph  of  the  bill,  by 
agents  of  the  owners  in  other  States  and  Territories  to  whom 
the  owners  of  the  fresh  meats  have  shipped  the  same  for  sale 
there  by  such  agents  on  the  ground,  are  not  incidents  of  inter- 
state commerce.  Goe  v.  EttoI,  116  U.  S.  517,  525;  Kidd  v. 
Pearson,  128  U.  S.  1,  23 ;  United  States  v.  E,  C.  Knight  Co., 
156  U.  S.  1, 13, 17;  Austin  v.  Tennessee,  179  U.  S.  343;  Cross- 
man  V.  Lumian,  192  U.  S.  189,  198;  Am.  Harrow  Co.  v. 
Shaffer,  68  Fed.  Kep.  750;  Stevem  v.  Ohio,  93  Fed.  Rep.  793. 

Under  the  allegations  here  in  question,  it  is  to  be  taken 
that  the  meats,  before  the  sales  here  referred  to  are  made, 
have  come  to  their  place  of  rest  and  are  at  rest  for  an  indefi- 
nite time  awaiting  sale  at  their  place  of  destination,  and  are  a 
commodity  in  the  market  where  the  sales  are  made;  and  that 
the  sales  are  not  in  the  "  original  packages  " ;  and  that  the 
meats,  at  the  time  of  the  sales,  have  become  a  part  of  the 
general  property  in  the  State  where  sold,  and  are  there 
handled  and  sold  as  such.  Southern  Coal  Co.  v.  Bates,  156 
U.  S.  577,  588;  Brown  v.  Houston,  114  U.  S.  623,  632;  Emert 
V.  Missouri,  156  U.  S.  296.  310;  Singer  Mfg.  Co.  v.  WHghty 
97  Georgia,  123. 

The  point  here  made  is  entirely  consistent  with  the  rulings 
[879]  in  many  cases,  that  the  owner  of  merchandise,  who 
transports  it  from  one  State  to  another  for  sale,  has  a  right 
(which  cannot  be  interfered  with  by  state  or  municipal 
laws)  to  sell  it  as  an  article  of  interstate  commerce,  rfe  also 
has  a  right  to  make  such  article  part  of  the  general  property 
of  the  State  into  which  it  is  taken,  and  he  then  has  the  right 
to  sell  and  others  have  the  right  to  purchase  it  as  an  article  of 
domestic  commerce,  which  cannot  be  interfered  with  by 
Federal  law.  The  Sherman  Act  does  not  seek  to  and  could 
not  interfere  with  that  right.  United  States  v.  E.  C.  Knight 
Co,,  156  U.  S.  1, 15,  and  Kidd  v.  Pearson  and  Veazie  v.  Moor^ 
there  cited.  But  this  bill  here  does  seek  to  interfere  with 
that  right.  Again,  the  point  here  made  is  not  touched  by  the 
line  of  decisions  holding  that  state  or  municipal  laws  are 


SWIFT   AND   COMPANY   V.   UNITED   STATES. 
Argument  for  appellants. 


647 


invalid,  which,  by  taxation  or  other  regulations,  discriminate 
against  merchandise  brought  from  another  State,  or  seek  to 
prevent  interstate  commerce  therein,— such  as  Welton  v.  Mis^ 
souri,  91  U.  S.  465;  Walling  v.  Michigan,  116  U.  S.  446; 
Minnesota  v.  Barber,  136  U.  S.  313;  Brimmer  v.  Rehman, 
138  U.  S.  78,  and  Schollenherger  v.  Pennsylvania,  171  U.  S.  1, 
24,25.  ' 

The  bill  of  complaint  does  not  show  any  contract,  combina- 
tion or  conspiracy  in  restraint  of  interstate  trade  or  com- 
merce within  the  meaning  of  the  Sherman  Act. 

It  does  not  allege  any  acts  of  defendants  monopolizing  or 
attempting  to  monopolize  or  combining  or  conspiring  to 
monopolize  such  trade  or  commerce. 

If  the  act  in  question  be  given  a  construction  which  would 
sustain  this  bill  of  complaint,  the  statute  would  be  uncon- 
stitutional. 

The  alleged  offenses  complained  of  are  set  forth  in  the 
sixth,  seventh,  eighth,  ninth,  tenth  and  eleventh  paragraphs 
of  the  bill.  As  to  the  sixth  and  seventh  paragraphs  we 
maintain:  The  allegations  of  combination  and  conspiracy 
here  are  of  mere  legal  conclusions.  That  the  purchases  of 
live  stock  referred  to  in  the  sixth  and  seventh  paragraphs, 
as  therein  alleged,  are  not  interstate  commerce. 

[380]  The  first  paragraph  of  the  bill  in  which  the  busi- 
ness  of  purchasing  live  stock  for  slaughter  is  set  forth  and 
described,  does  not  allege  or  show  that  the  business  is  inter- 
state commerce. 

The  description  of  the  live  stock  in  the  sixth  paragraph,  as 
live  stock  produced  and  owned  principally  in  other  States  and 
Territories,  and  shipped  by  the  owners  to  the  places  where 
sold,  for  sale  to  persons  engaged  in  producing  and  dealing  in 
fresh  meat,  does  not  show  that  the  sales  of  the  live  stock  are 
interstate  commerce.  The  live  stock,  when  offered  for  sale 
in  the  pens  of  the  stock  yards,  are,  under  the  allegations  of 
fact  in  the  bill,  to  be  considered  as  having  become  part  of  the 
general  mass  of  property  of  the  State  where  offered  for  sale. 
The  defendants  purchasing  the  live  stock  have  the  right  so  to 
treat  and  deal  therewith.  Brown  v.  Houston,  114  U.  S.  622. 
632 ;  Pittsburgh  Coal  Co.  v.  Bates,  156  U.  S.  577,  588,  589 ; 
Emert  v.  Missouri.,  120  U.  S.  489,  497.    When  purchased, 


1»>    UNITKD   STATES  REPOETS,   M). 
Argument  for  appellants. 

the  live  stock  is,  under  the  allegations  of  this  bill,  at  rest  for 
an  indefinite  time,  awaiting  sale  at  its  place  of  destination. 
Diamond  Match  Oo.  v.  Ontonagon,  188  U.  S.  82,  92. 

The  defendants  have  as  much  right,  then,  to  treat  and  deal 
with  and  purchase  such  live  stock  as  an  article  of  domestic 
commerce  as  the  State  has  so  to  treat  it  for  the  purposes  of 
taxation  or  regulation.  This  bill  seeks  to  interfere  with  that 
right  under  the  Sherman  Act. 

If  the  sworn  allegations  of  the  bill  in  this  respect  were  to 
be  supplemented  by  other  facts,  as  matters  of  common  knowl- 
edge, with  respect  to  the  situation  of  the  live  stock  when  sold, 
such  as  appeared  in  the  Hftpkins  and  Anderson  cases,  the 
case  of  the  Government  would  be  no  better.  It  would  then 
appear  that  the  cattle  and  other  live  stock  are  shipped  to 
commission  merchants  at  the  stock  yards ;  are  then  placed  in 
the  pens  of  the  stock  yards  companies,  and  there  held,  cared 
for  and  fed  by  the  stock  yards  company  for  the  account  of 
the  commission  merchants,  and  under  the  allegations  here  it 
must  be  taken  that  their  bulk  is  broken  up;  they  are  divided 
into  lots  and  sold  and  delivered  by  the  commission  merchant 
as  the  principal  or  [381]  owner  thereof,  and  so  are  not  pur- 
chased as  articles  of  interstate  commerce. 

But  if  these  purchases  of  live  stock  are  interstate  commerce, 
the  acts  alleged  in  the  sixth  and  seventh  paragraphs  are  not 
violations  of  the  Sherman  Act.  HopMns  v.  United  States, 
171  IT.  S.  591;  Andermn  t.  United  States^  171  U.  S.  604. 
They  are  the  exercise  of  a  constit^itional  right  of  defendants 
to  control  their  own  business. 

There  is  nothing  in  the  bill  to  show  the  proportion  of  the 
entire  number  of  head  of  live  stock  offered  for  sale  at  the 
markets  in  question,  which  is  bought  by  the  defendants  for 
the  purposes  of  the  production  of  fresh  meat ;  and  so  there 
is  nothing  to  show  anything  like  monopoly  or  attempt  at  mo- 
nopoly of  the  live  stock  purchases  by  the  defendants. 

There  is  nothing  in  the  bill  to  show  any  attempt  on  the  part 
of  the  defendants  to  control  or  affect  the  purchases  or  busi- 
ness in  the  purchases  of  live  stock  of  any  other  persons  than 
themselves.  Tlie  alleged  combinations  by  defendants  in  the 
sixth  and  seventh  paragraphs  charged  have  to  do  merely  with 
their  own  business  conduct  in  themselves  baying  live  stock. 


SWIFT   AND    COMPANY   V.   UNITED   STATES. 


649 


Argument  for  appellants. 

or  determining  how  much  they  shall  buy,  at  private  sale  for 
consumption  in  their  own  private  business. 

The  combination  charged  in  the  sixth  paragraph,  for  di- 
recting their  respective  purchasing  agents  "  to  refrain  from 
bidding  against  each  other,  except  perfunctorily,  and  with- 
out good  faith,"  does  not  allege  a  combination  to  restrain 
trade;  or  even  a  combination  to  refrain  from  bidding.  A 
perfunctory  bid,  made  without  good  faith,  is  one  which  the 
seller  could  accept  and  enforce. 

The  alleged  combination  in  the  seventh  paragraph,  "  for 
bidding  up,  through  their  respective  purchasing  agents,  the 
prices  of  live  stock  for  a  few  days  at  a  time  at  the  said  stock 
yards  and  open  markets,"  does  not  charge  a  combination  to 
restrain  trade. 

These  alleged  combinations  do  not  have  the  direct  and  im- 
mediate effect  of  restraining  interstate  commerce,  but  their 
[382]  effect,  if  any,  upon  interstate  trade  in  live  stock  is  in- 
direct and  incidental,  within  the  meaning  of  the  decisions  of 
this  court.  The  effect  is  not  near  so  direct  or  immediate  as 
the  mutual  agreement  of  the  traders  who  were  members  of 
the  Traders'  Exchange  in  the  Anderson  case. 

Obviously  the  supply  of  live  stock  for  fresh  meat  greatly 
varies  in  the  market  at  different  seasons  and  times,  while  the 
demand  for  fresh  meats  for  human  consumption,  for  which 
defendants  purchase  such  live  stock,  is  comparatively  con- 
stant and  uniform. 

It  is  a  public  benefit  and  not  a  public  evil  that  defendants 
should  always  be  able  to  supply  such  constant  demand  for 
their  fresh  meats,  and  that  at  the  same  time  they  shoidd  not 
overstock  the  market  with  their  perishable  meats.  This 
makes  it  proper  that  they  should  act  with  some  concert  and 
common  understanding  in  their  purchases  of  live  stock  for 
that  purpose. 

As  to  the  eighth  paragraph  we  contend:  The  allegation 
of  combination  and  conspiracy  is  of  a  mere  legal  conclusion, 
and  insufficient.  The  sales  of  fresh  meats  by  agents  of  de- 
fendants, as  there  described,  under  the  facts  alleged,  are  not 
interstate  conmierce.  But  if  it  be  interstate  commerce,  no 
violation  of  the  Sherman  Act  is  thereby  shown. 

No  criminal  conspiracy  is  alleged.     The  charge  there  is  not 


650 


196  UNITED  STATES  BEPOBTS,  382. 


Argument  for  appellants. 

of  a  combination  or  conspiracy  to  restrain  trade  (which  the 
statute  forbids),  but  is  of  a  combination  or  con^iracy  to 
do  a  lawful  act,  the  exercise  of  a  constitutional  right,  viz : 
to  raise,  lower,  fix  and  maintain  their  own  prices,  for  their 
own  property,  in  private  sales  thereof  by  themselves.  The 
doing  that  is  not  prohibited  or  made  criminal  by  the  Act  of 
Congress. 

A  criminal  conspiracy  is  an  agreement  of  two  or  more, 
either  to  do  an  act  criminal  or  unlawful  in  itself,  or  to  do 
a  lawful  act  by  means  which  are  criminal  or  unlawful. 
Pettihom  V.  United  States,  148  U.  S.  203 ;  Commonwealth 
V.  Shedd,  7  Cush.  514.  Here  neither  the  act  nor  the  means 
alleged  are  criminal  or  unlawful.  The  allegation  of  intent 
is  immaterial.  Stevenson  v.  Newham,  13  C.  B.  285;  Allen 
V.  Flood,  App.  Cas.  1. 

[383]  Again,  this  point  is  settled  by  the  ruling  in  the 
Knight  Case,  156  U.  S.  1,  16,  that  the  restraint  of  trade,  if 
any,  which  a  combination  by  defendants  to  raise  or  lower 
their  own  prices  would  tend  to  effect  would  be  an  indirect 
result,  and  such  result  would  not  necessarily  determine  the 
object  of  the  contract,  combination  or  conspiracy. 

As  to  the  ninth  paragraph  we  contend :  The  allegation  is 
of  a  conclusion  of  law.  The  cartage  as  there  described  is 
not,  under  the  allegations  of  the  bill,  interstate  commerce. 
State  V.  Kniffhi,  192  U.  S.  1,  21 ;  Detroit  d'c.  Ry.  v.  Interstate 
Comm.  Com.,,  74  Fed.  Rep.  803,  808;  Hopkins  v.  United 
States,  171  U.  S.  578,  592.  The  charge  is  not  of  a  conspir- 
acy either  to  do  a  criminal  or  unlawful  act,  or  to  do  by  un- 
lawful means  the  lawful  act  of  fixing  their  own  charges  for 
cartage.  Nothing  here  charged  has  the  direct,  immediate 
or  necessary  effect  to  restrain  interstate  commerce. 

As  to  the  tenth  paragraph  we  maintain:  The  allegation 
is  of  a  legal  conclusion.  It  also  is  too  indefinite  and  general. 
Sufficient  facts  are  not  alleged.  United  States  v.  Eanley  71 
Fed.  Eep.  G72. 

A  contract  or  combination  among  manufacturers  or  pro- 
ducers of  an  article  which  is  intended  to  become  the  subject 
of  interstate  commerce,  to  raise,  lower  and  fix  prices  of  such 
article,  is  not  necessarily  a  contract,  combination  or  conspir- 
acy in  restraint  of  interstate  trade  or  an  attempt  to  monop- 


SWIFT   AND   COMPANY   V.   UNITED   STATES. 


651 


Argument  for  appellants. 

olize  that  trade  under  the  Sherman  Act.  United  States  v. 
Nelson,  62  Fed.  Eep.  646;  In  re  Greene,  52  Fed.  Rep.  104; 
United  States  v.  E,  C.  Knight  Co.,  156  U.  S.  1,  16;  Gihhs  v. 
McNeeley,  102  Fed.  Rep.  504.  See  also  Distillery  Co.  v. 
People,  156  Illinois,  468;  Glucose  Company  v.  Harding,  182 
Illinois,  551. 

There  was  no  jurisdiction  herein  of  this  charge.  No  com- 
mon contract,  combination  or  conspiracy  of  the  defendants 
with  e^ch  other  is  alleged.  The  allegation  that  "all  and 
each  "  have  made  agreements  for  less  than  lawful  transpor- 
tation rates  is  that  they  did  so  acting  separately.  That  was 
not  unlawful  on  [384]  the  part  of  the  defendants;  much 
less  was  it  any  violation  of  the  Sherman  Anti  Trust  Act. 
There  is  here  no  sufficient  showing  of  an  attempt  to  monopo- 
lize either  the  interstate  transportation  of  live  stock  or  fresh 
meats  or  interstate  trade  in  live  stock  or  fresh  meats.  The 
paragraph  is  multifarious,  and  there  is  therein  a  misjoinder 
of  causes  and  parties. 

As  to  the  eleventh  paragraph  we  submit  that  it  is  too  gen- 
eral and  insufficient  to  require  argument.  It  is  disposed  of 
by  what  has  been  urged  as  to  previous  paragraphs.^ 

Prior  rulings  by/this  court  in  cases  arising  under  the  Sher- 
man Act  do  not  sustain  the  Government's  case  here. 

With  respect  to  the  supposed  limitations  of  the  Sherman 
Act  upon  the  right  of  private  contract,  that  act  is  to  be  in- 
terpreted in  the  light  of  the  principles  of  the  common  law. 
United  States  v.Wong  Kim  A^^k,  169  U.  S.  649;  :\foore  v. 
United  States,  91  U.  S.  270,  274;  iVinor  v.  Happersett,  21 
Wall.  162;  Ex  parte  WUson,  114  U.  S.  417,  422;  Boyd  v. 
United  States,  116  U.  S.  616,  624;  S7nith  v.  Alabama,  124 
U.  S.  465. 

The  bill  of  complaint  is  multifarious;  and  there  is  therein 
a  misjoinder  of  causes  and  of  parties.  Walker  v.  Powers, 
104  U.  S.  251;  B^^own  v.  Guarantee  Trust  Company,  128 
U.  S.  403 ;  Zeigler  v.  Lake  Street  Railway,  76  Fed.  Rep.  662. 

The  bill  is  too  general  and  indefinite  to  require  answer. 
It  does  not  sufficiently  set  forth  definite  or  specific  facts. 

The  demurrers  to  so  much  of  the  bill  as  prays  for  answer 
under  oath,  and  to  so  much  thereof  as  prays  discovery  of  de- 
fendants' books,  papers,  etc.,  are  well  taken. 


652 


196   UNITED   STATES   REPORTS,   384. 
Argiinieiit  for  the  United  States. 


Eights  protected  by  the  Fourth  and  Fifth  Amendments 
are  thereby  infringed.  United  States  v.  Saline  Bank,  1  Pet. 
100;  Boijd  V.  United  States,  116  U.  S.  616;  Counselmnn  v, 
Eiteheock,  142  U.  8.  547;  Livingston  v.  TmnpMns,  4  Johns. 
Ch.  415,  432;  Entick  v.  Carrington,  19  Howell's  St.  Tr. 
1029;  S.  €.,  2  Wils.  275;  Huckle  v.  3Ianey,  2  Wils.  206; 
Mitford  &  Tyler's  Eq.  Pldg.  289. 

Mr,  Attorney  General  Moody,  with  whom  Mr,  William  A, 
[385]  />(///.  Assisfa/tt  to  the  Attorney  General,  was  on  the 
brief,  for  the  United  States : 

The  facts  show  a  combination  which  restrains  or  monopo- 
lizes trade  or  commerce  and  operates  upon  and  directly 
affects  interstate  or  foreign  trade  or  commerce. 

The  combination  or  conspiracy  which  the  Government  is 
seeking  to  destroy  and  which  it  was  the  aim  of  the  petition 
in  this  case  to  set  forth  is  one  between  all  the  principal 
American  producers  or  packers  of  fresh  meats  for  the  pur- 
pose  of  jointly  controlling  the  market  for  those  products 
throughout  the  entire  United  States  so  as  to  maintain  uni- 
form prices  therefor  and  destroy  competition  in  the  sale 
thereof  to  dealers  and  consumers. 

The  combination  set  forth  in  the  bill  is  in  restraint  of 
trade,  for  if  in  the  entire  field  of  the  law  concerning  mo- 
nopolies and  restraints  of  trade'  there  is  a  single  proposition 
to  which  all  courts  now  yield  assent,  it  is  that  a  combina- 
tion, conspiracy,  or  agreement  between  independent  manufac- 
turers or  producers  of  a  necessary  of  life  to  fix  and  maintain 
uniforin  prices  for  their  products,  or  otherwise  to  suppress 
competition  with  each  other,  is  an  unlawful  restraint  upon 
trade.  United  States  v.  E,  C.  Knight  Co,,  156  U.  S.  1,  16; 
United  States  v.  Trans- Missouri  Freight  Association,  166 
V,  S.  290;  United  States  v.  Joint  Traffic  Association,  171 
U.  S.  50^;  Addyston  Pipe  <&  Steel  Co,  v.  United  States, 
175  U.  S.  211;  Northern  Securities  Co.  v.  United  States,  193 
U.  S.  197;  Chesapeake  d;  Ohio  Fuel  Co.  v.  United  States,  115 
Fed.  Eep.  610;  judgments  of  Lord  Bramwell  and  Lord  Han- 
nen  in  Mogul  S,  S,  Co,  v.  McGregor,  L.  R.  App.  Cas.  (1892) 
46,  58 ;  Morris  Eun  Coal  Co,  v.  Barclay  Coal  Co,,  68  Pa.  St 
155,  173;  Nester  et  al,  v.  Continental  Brewing  Co,,  161  Pa. 
St  473;  Salt  Co,  v.  Guthrie,  35  Ohio  St  166;  People  v. 


SWIFT   AND    COMPANY   V,   UNITED    STATES. 


653 


Argument  for  the  United  States. 

Sheldon,  139  N.  Y.  251;  Cvmmings  v.  Union  Blue  Stone 
Co,,  164  N.  Y.  405 ;  Trenton  Potteries  Co.  v.  Olyphant,  58 
N.  J.  Eq.  507;  Craft  v.  McConoughhy,  79  Illinois,  346; 
Noyes  on  Intercorporate  Relations,  p.  513,  note  1,  and  see 
the  cases  collected;  and  necessarily  the  means  agreed  upon 
to  effect  the  unlawful  object  of  the  com-  [386]  bination  of 
conspiracy  are  inseparable  parts  of  the  combination  or  con- 
spiracy itself,  and  along  with  it  fall  within  the  condemna- 
tion of  the  law. 

The  combination  or  conspirac^^  in  controversj^  operates 
upon  intei'^tate  or  foreign  commerce,  and  its  operations  are 
not  confined  to  commerce  carried  on  wholly  within  state 
lines. 

The  sales  of  live  stock  to  the  defendants  and  the  sales  by 
them  of  the  prepared  meats  are  interstate  and  not  intra- 
state transactions. 

As  to  what  is  interstate  commerce,  see  Gibbons  v.  Ogden, 
9  Wheat.  1,  194;  Northern  Secunties  Co.  v.  United  States.^ 
193  U.  S.  197,  337.  If  interstate  commerce  is  commerce 
which  concerns  more  States  than  one,  and  if  a  combination 
of  independent  producers  to  suppress  competition  between  its 
members  is  a  restraint  upon  commerce,  it  must  follow  that 
a  combination  of  independent  producers  to  fix  and  control 
prices  and  suppress  competition  between  each  other  in  an 
area  covering  more  States  than  one  is  in  restraint  of  int(T- 
state  commerce  and  the  petition  in  this  case  discloses  such 
a  combination. 

It  is  impossible  to  say  with  even  a  color  of  reason  that 
the  facts  stated  in  the  bill,  which  cannot  be  denied,  do  not 
show  a  combination  between  the  defendants  to  suppress 
competition  between  themselves  in  an  area  embracing  more 
States  than  one  and  it  is  immaterial  to  inquire  whether  the 
particular  purchases  and  sales  made  by  the  defendants  are, 
technically,  interstate  or  intrastate  transactions.  There  is 
nothing  unreasonable  or  novel  in  the  conclusion  that  a  com- 
bination may  restrain  interstate  commerce,  although  the 
individual  transactions  of  its  members  might,  standing  alone 
and  viewed  separate  and  apart  from  the  purpose  and  nec- 
essary effect  of  the  whole  combination,  be  intrastate  in  char- 
acter.   Montague  <&  Co.  v.  Lowry,  193  U.  S.  38.    The  char- 


196  UNITED   STATES  BEPOBTS,  396. 
Argument  for  the  United  States. 


acter  of  a  combination— that  is,  whether  or  not  it  is  inter- 
state in  its  operation — is  decided,  not  by  the  nature  of  the 
particular  transactions  of  its  individual  members,  but  by  the 
extent  of  the  territory  in  which  it  operates— in  which  it  con- 
trols prices  and  sales  and  [387]  suppresses  competition.  If 
that  territory  embraces  more  States  than  one  the  combina- 
tion restrains  interstate  commerce.  Addyston  Pipe  <&  Steel 
Co,  V.  United  States,  175  U.  S.  211,  240. 

Whether  a  combination  in  restraint  of  trade  operates  upon 
interstate  or  only  intrastate  conmierce  does  not  depend  upon 
whether  the  individual  transactions  of  its  members,  standing 
alone  and  viewed  separate  and  apart  from  the  purpose  and 
necessary  effect  of  the  whole  combination,  are  interstate  or 
Intrastate  in  character,  and  the  petition  here  discloses  a  com- 
bination which  operates  upon  interstate  conmierce;  for  what- 
ever may  be  the  character  of  the  individual  transactions  of  its 
several  members,  it  is  also  true  in  this  case  that  the  individual 
transactions  of  the  members  of  the  combination  do  fall  within 
the  jurisdiction  conferred  upon  Congress  by  the  commerce 
clause  of  the  Constitution.  These  transactions  consist  of  the 
defendants'  purchases  of  live  stock ;  the  sales  and  shipments  of 
fresh  meats  made  directly  by  the  defendants  to  dealers  and 
consumers  in  the  several  States,  and  the  sales  of  fresh  meats 
to  dealers  and  consumei-s  in  the  several  States  by  agents  of  the 
defendants  located  in  those  States. 

From  all  over  the  stock-raising  section,  embracing  many 
different  States,  cattle,  sheep  and  hogs  are  habitually  shipped 
to  the  great  live-stock  markets  at  Chicago,  Omaha,  Sioux  City, 
St.  Joseph,  Kansas  City,  East  St.  Louis  and  St.  Paul  for  sale, 
to  those,  the  defendants  chief  among  them,  engaged  in  the 
business  of  converting  live  stock  into  fresh  meats  for  human 
consumption.  The  shipments  are  made  with  the  express  and 
sole  purpose  of  sale  as  soon  as  market  conditions  will  permit, 
and  the  sales  are  made  while  the  cattle  yet  remain  in  first 
hands,  that  is,  in  the  hands  of  the  owners  or  their  agents,  and 
in  the  ordinary  form  or  condition  in  which  cattle  are  shipped 
from  one  country  or  State  to  another,  which  is  analogous 
to  the  form  or  condition  of  the  original  package  in  the  case 
of  merchandise.    Austin  v.  Tennessee^  179  U.  S.  343,  359. 

[388]  The  cattle  are  not  dealt  with  in  a  commercial  way 


SWIFT   AND   COMPANY  IK   UNITED   STATES. 


655 


Argument  for  the  United  States. 

from  the  time  of  their  arrival  until  their  sale  to  the  defendants 
and  others,  but  are  simply  fed  and  cared  for.  No  act  is  done 
with  reference  to  them  that  would  cause  them  to  become  mixed 
with  the  general  mass  of  local  property.  Now,  it  may  be  that 
a  distinction  should  be  made  between  what  may  be  called  an 
interstate  sale  proper  and  in  the  full  sense  of  the  term— that 
is,  a  sale  between  persons  negotiating  and  dealing  from  two  or 
more  different  States,  and  a  sale,  at  its  destination  and  while 
it  still  remains  in  the  original  state  or  package,  of  an  article 
of  commerce  sent  from  another  State.  But  so  far  as  the  result 
in  this  instance  is  concerned  it  is  a  distinction  without  a  dif- 
ference. If  the  sales  of  live  stock  set  forth  in  the  petition  do 
not  fall  within  the  first  of  these  classes  they  certainly  fall 
within  the  second,  and  that  brings  them  within  the  protection 
of  the  Federal  power  over  commerce  and  therefore  within  the 
protection  of  the  Anti  Trust  Act;  for  the  right  to  transport 
articles  of  commerce  from  one  State  to  another  includes  the 
right  of  the  owner  or  consignee  to  sell  them  in  the  latter  free 
from  any  burden  or  restraint  that  the  States  might  attempt  to 
impose.  Brown  v.  Maryland,  12  Wheat.  419;  Bowman  v. 
Chicago  and  Northwestern  Railway  Co,,  125  U.  S.  465 ;  Leisy 
V.  Hardin,  135  U.  S.  100 ;  Rhodes  v.  Iowa,  170  U.  S.  412,  and, 
a  fortiori,  free  from  any  burden  or  restraint  that  a  combina- 
tion of  individuals  might  attempt  to  impose.  In  re  Debs,  158 
U.  S.  564,  581 ;  Hopkins  v.  United  States,  171  U.  S.  578,  590. 

Paragraph  2  of  the  bill  contains  matter  of  description  and 
inducement,  and  must  be  read  in  conjunction  with  the  stating 
part  of  the  petition,  which  alleges,  inter  alia,  that  "  in  order 
to  restrain  and  destroy  competition  among  themselves"  the 
defendants  have  engaged  in  a  "  combination-  and  conspiracy 
to  arbitrarily  from  time  to  time  raise,  lower,  and  fix  prices, 
and  to  maintain  uniform  prices  at  which  they  will  sell,  di- 
rectly or  through  their  respective  agents,  such  fresh  meats  to 
•dealers  and  consumers  throughout  the  said  States  and  Terri- 
tories and  the  District  of  Columbia  and  foreign  countries." 

[389]  As  the  sales  made  directly  by  the  defendants  to 
dealers  and  consumers  throughout  the  United  States  are  in- 
terstate sales,  and  as  decisions  of  this  court  have  settled  that 
a  combination  to  control  and  suppress  competition  in  such 
sales  is  a  combination  in  restraint  of  interstate  commerce, 


656 


196  UNITED   STATES   REPORTS,   389. 


Argument  for  the  United  States. 

the  petition  in  this  case,  having  shown  that  much,  cannot  in 
any  event  be  dismissed,  even  should  it  be  held  to  have  failed 
in  all  other  respects. 

Paragraph  3  of  the  petition  states  that  the  defendants  are 
engaged  in  shipping  fresh  meats  from  their  plants  in  certain 
States  to  their  respective  agents  at  and  near  the  principal 
maitets  in  other  States  and  Territories  for  sale  by  such 
agents  to  dealers  and  consumers  in  those  States  and  Terri- 
tories. Upon  the  question  whether  or  not  the  sales  made  by 
these  agents  under  the  circumstances  set  forth  are  within  the 
body  of  interstate  commerce,  there  is  nothing  to  add  to  the 
cogent  argument  in  the  opinion  of  the  circuit  judge. 

The  bill  is  not  multifarious  and  does  not  disclose  a  mis- 
joinder of  parties.  14  Ency.  of  PL  and  Pr.  198;  1  Bates 
Fed.  Eq.  Pro.  §§  135,  195.  The  Circuit  Court  did  not  err  in 
sustaining  the  demurrers  to  the  bill  in  its  aspect  as  a  bill  of 
discovery.  The  demurrers  are  demurrers  to  the  whole  bill. 
Livingstone  v.  Story,  9  Pet.  632,  654. 

The  well-settled  rule  of  equity  pleading  is  that  a  demurrer 
to  a  whole  bill  cannot  be  sustained  as  to  part  of  the  bill  and 
overruled  as  to  part,  but  must  be  overruled  as  to  the  whole 
if  any  part  of  the  bill  is  good  and  entitles  the  complainant, 
to  any  relief.  Fletcher,  Eq.  PL  §§  203,  204 ;  Story,  Eq.  PL, 
10th  ed.,  §§  443,  444;  Parker  v.  Simpson,  62  N.  E.  Eep. 
(Mass.)  401;  Metler's  Admn's,  v.  3Ietler,  18  N.  J.  Eq.  270, 
2T3.  When  the  defendants  leveled  their  demurrers  at  the 
relief  as  well  as  the  discovery,  instead  of  answering  as  to  the 
relief  and  demurring  as  to  the  discovery  they  did  so  at  their 
peril.  DanielFs  Chan.  Prac,  3d  Am.  ed.,  568-608 ;  see  also 
Acts  of  Congress  of  February  25,  1903,  32  Stat.  903 ;  of  Feb- 
ruary 11,  1893,  27  Stat..  443,  and  Interstate  Comm.  Com.  v 
Baird,  194  U.  S.  25,  44,  [390]  citing  Brotvn  v.  Walker,  161 
IT.  S.  591;  Boyd  v.  United  States,  116  U.  S.  616. 

Judges  have  differed  as  to  the  validity  of  aggi^egations  of 
capital  effected  by  some  form  of  organic  union  between  sev- 
eral smaller  and  competing  corporations,  and  economists  are 
far  from  agreeing  that  such  aggregations,  within  limitations, 
are  hurtful.  So  too,  associations  of  manufacturers  to  regu- 
late  competition  within  a  restricted  area  have  not  always 
been  condemned  by  courts  and  have  sometimes  been  ap- 


SWIFT   AND    COMPANY   V.   UNITED   STATES. 
Opinion  of  the  Court 


657 


proved  by  publicists.  But  as  yet  no  responsible  voice  has 
been  heard  to  justify,  legally  or  economically,  a  conspiracy 
or  agreement  between  nearly  all  the  producers  of  a  com- 
modity necessary  to  life  by  which  the  confederates  acquire 
absolute  control  and  dominion  over  the  production,  sale  and 
distribution  of  that  commodity  throughout  the  entire  terri- 
tory of  a  nation,  with  the  power,  at  will,  to  raise  prices  to  the 
consumer  of  the  finished  product  and  lower  prices  to  the 
producer  of  the  raw  material.  Yet  such  is  that  now  at  the 
bar  of  this  court.  That  there  is  a  conspiracy  to  control  the 
market  of  the  nation  for  fresh  meats,  that  it  does  control  it, 
aiid  that  its  control  is  merciless  and  oppressive,  are  facts 
known  of  all  men.  The  broad  question  here  is,'Does  the 
Government's  petition,  with  its  statements  of  fact  standing 
unchallenged,  discover  that  conspiracy  to  the  court?  We 
submit  that  it  does  and  that  the  decree  of  the  Circuit  Court 
fhould  in  all  things  be  affirmed. 

Mr.  Justice  Holmes  delivered  the  opinion  of  the  court. 

This  is  an  appeal  from  a  decree  of  the  Circuit  Court,  on 
demurrer,  granting  an  injunction  against  the  appellants' 
commission  of  alleged  violations  of  the  act  of  July  2,  1890, 
c.  647,  26  Stat.  209,  "  to  protect  trade  and  commerce  against 
unlawful  restraints  and  monopolies."  It  will  be  necessary 
lo  consider  both  the  bill  and  the  decree.  The  bill  is  brought 
against  a  number  of  corporations,  firms  and  individuals  of 
different  States  and  makes  the  following  allegations :  1.  The 
defend-  [391]  ants  (appellants)  are  engaged  in  the  business 
of  buying  live  stock  at  the  stock  yards  in  Chicago,  Omaha, 
St.  Joseph,  Kansas  City,  East  St.  Louis  and  St.  Paul,  and 
slaughtering  such  live  stock  at  their  respective  plants  in 
places  named,  in  different  States,  and  converting  the  live 
stock  into  fresh  meat  for  human  consumption.  2.  The  de- 
fendants "  are  also  engaged  in  the  business  of  selling  such 
fresh  meats,  at  the  several  places  where  they  are  so  prepared, 
to  dealers  and  consumers  in  divers  States  and  Territories  of 
the  said  United  States  other  than  those  wherein  the  said 
meats  are  so  prepared  and  sold  as  aforesaid,  and  in  the  Dis- 
trict of  Columbia,  and  in  foreign  countries,  and  shipping  the 

21220— VOL  2—07  m 42 


658 


IW  UHITED  STATES   EEPOBTS,  391. 


Opinion  of  the  Court. 

same  meats,  when  so  sold  from  the  said  places  of  their  prepa- 
ration, over  the  several  lines  of  transportation  of  the  several 
railroad  companies  serving  the  same  as  common  carriers,  to 
such  dealers  and  consumers,  pursuant  to  such  sales."  3.  The 
defendants  also  are  engaged  in  the  business  of  shipping  such 
fresh  meats  to  their  respective  agents  at  the  principal  markets 
in  other  States,  etc.,  for  sale  by  those  agents  in  those  markets 
to  dealers  and  consumers.  4.  The  defendants  together  con- 
trol about  six-tenths  of  the  whole  trade  and  commerce  in 
fresh  meats  among  the  States,  Territories  and  District  of 
Columbia,  and,  5,  but  for  the  acts  charged  would  be  in  free 
competition  with  one  another. 

6.  In  order  to  restrain  competition  among  themselves  as  to 
the  purchase  of  live  stock,  defendants  have  engaged  in,  and 
intend  to  continue,  a  combination  for  requiring  and  do  and 
will  require  their  respective  purchasing  agents  at  the  stock 
yards  mentioned,  where  defendants  buy  their  live  stock  (the 
same  being  stock  produced  and  owned  principally  in  other 
States  and  shipped  to  the  yards  for  sale),  to  refrain  from 
bidding  against  each  other,  "  except  perfunctorily  and  with- 
out good  faith,"  and  by  this  means  compelling  the  owners  of 
such  stock  to  sell  at  less  prices  than  they  would  receive  if 
the  bidding  really  was  competitive. 

7.  For  the  same  purposes  the  defendants  combine  to  bid  up, 
through  their  agents,  the  prices  of  live  stock  for  a  few  days 
at  [i92]  a  time,  "  so  that  the  market  reports  will  show  prices 
much  higher  than  the  state  of  the  trade  will  warrant,"  thereby 
inducing  stock  owners  in  other  States  to  make  large  ship- 
ments to  the  stock  yards  to  their  disadvantage. 

8.  For  the  same  purposes,  and  to  monopolize  the  commerce 
protected  by  the  statute,  the  defendants  combine  "to  ar- 
bitrarily, from  time  to  time  raise,  lower,  and  fix  prices,  and  to 
maintain  uniform  prices  at  which  they  will  sell "  to  dealers 
throughout  the  States.  This  is  effected  by  secret  periodical 
meetings,  where  are  fixed  prices  to  be  enforced  until  changed 
at  a  subsequent  meeting.  The  prices  are  maintained  directly, 
and  by  coUusively  restricting  the  meat  shipped  by  the  defend- 
ants, whenever  conducive  to  the  result,  by  imposing  pen- 
alties for  deviations,  by  establishing  a  uniform  rule  for  the 
giving  of  credit  to  dealers,  etc.,  and  by  notifying  one  another 


SWIFT   AND    COMPANY   V.   UNITED   STATES. 


Oi)iiiion  of  the  Court. 


659 


of  the  delinquencies  of  such  dealers  and  keeping  a  black  list 
of  delinquents,  and  refusing  to  sell  meats  to  them. 

9.  The  defendants  also  combine  to  make  uniform  charges 
for  cartage  for  the  delivery  of  meats  sold  to  dealers  and  con- 
sumers in  the  markets  throughout  the  States,  etc.,  shipped 
to  them  by  the  defendants  through  the  defendants'  agents  at 
the  markets,  when  no  charges  would  have  been  made  but  for 
the  combination. 

10.  Intending  to  monopolize  the  said  commerce  and  to  pre- 
vent competition  therein,  the  defendants  "  have  all  and  each 
engaged  in  and  will  continue  "  arrangements  with  the  rail- 
roads whereby  the  defendants  received,  by  means  of  rebates 
and  other  devices,  rates  less  than  the  lawful  rates  for  trans- 
portation, and  were  exclusively  to  enjoy  and  share  this  unlaw- 
ful advantage  to  the  exclusion  of  competition  and  the  public. 
By  force  of  the  consequent  inability  of  competitors  to  engage 
or  continue  in  such  commerce,  the  defendants  are  attempting 
to  monopolize,  have  monopolized,  and  will  monopolize  the 
commerce  in  live  stock  and  fresh  meats  among  the  States  and 
Territories,  and  with  foreign  countries,  and,  11,  the  defend- 
ants are  and  have  been  in  conspiracy  with  each  other,  with 
[393]  the  railroad  companies  and  others  unknown,  to  obtain 
a  monopoly  of  the  supply  and  distribution  of  fresh  meats 
throughout  the  United  States,  etc.  And  to  that  end  defend- 
ants artificially  restrain  the  commerce  and  put  arbitrary  reg- 
ulations in  force  affecting  the  same  from  the  shipment  of  the 
live  stock  from  the  plains  to  the  final*  distribution  of  the 
meats  to  the  consumers.  There  is  a  prayer  for  an  injunction 
of  the  most  comprehensive  sort,  against  all  the  foregoing  pro- 
ceedings and  others,  for  discovery  of  books  and  papers  re- 
lating directly  or  indirectly  to  the  purchase  or  shipment  of 
live  stock,  and  the  sale  or  shipment  of  fresh  meat,  and  for  an 
answer  under  oath.  The  injunction  issued  is  appended  in 
a  note.** 


0  "And  now.  upon  motion  of  the  said  attorney,  the  court  doth  order 
that  tlie  preliminary  injunction  heretofore  awarded  in  this  cause,  to 
restrain  the  said  defendants  and  each  of  them,  their  respective  agents 
and  attorneys,  and  all  other  persons  acting  in  their  behalf,  or  in  behalf 
of  either  of  them,  or  claiming  so  to  act,  from  entering  into,  taking  part 
in,  or  performing  any  contract,  combination  or  conspiracy,  the  purpose 


mo 


im   UNITED  STATES  REPOBTS,   .m. 


Opinion  of  the  Court 

[8M]  To  sum  up  the  bill  more  shortly,  it  charges  a  combi- 
nation of  a  dominant  proportion  of  the  dealers  in  fresh  meat 
throughout  the  United  States  not  to  bid  against  each  other  in 
the  live  stock  markets  of  the  different  States,  to  bid  up  prices 
for  a  few  days  in  order  to  induce  the  cattle  men  to  send  their 
stock  to  the  stock  yards,  to  fix  prices  at  which  they  will  sell, 
and  to  that  end  to  restrict  shipments  of  meat  when  necessary, 
to  establish  a  uniform  rule  of  credit  to  dealers  and  to  keep  a 
black  list,  to  make  uniform  and  improper  charges  for  cart- 
age, and  finally,  to  get  less  than  lawful  rates  from  the  rail- 
roads to  the  exclusion  of  competitors.  It  is  true  that  the  last 
charge  is  not  clearly  stated  to  be  a  part  of  the  combination. 
But  as  it  is  alleged  that  the  defendants  have  each  and  all 
made  arrangements  with  the  railroads,  that  they  were  exclu- 
sively to  enjoy  the  unlawful  advantage,  and  that  their  intent 
in  what  they  did  was  to  monopolize  the  commerce  and  to  pre- 
vent competition,  and  in  view  of  the  general  allegation  to 

or  effect  of  which  will  l>e,  as  to  trade  and  coumierce  iii  fresh  meats 
between  the  several  States  and  Territories  and  the  District  of  Colum- 
bia, a  restraint  of  trade,  in  violation  of  the  provisions  of  the  act  of 
Congress  approved  July  2,  1890,  entitled  'An  act  to  protect  trade  and 
commerce   against   unlawful    restraints   and   monopolies,'    either   by 
directing  or  requiring  their  respective  agents  to  refrain  from  bidding 
against  each  other  In  the  purchase  of  live  stocis ;  or  collusively  and  by 
agreement  to  refrain  from  bidding  against  each  other  at  the  sales 
of  live  stock;  or  by  combination,  conspiracy  or  contract  raising  or 
lowering  prices  or  fixing  uniform  prices  at  which  the  said  meats  will 
be  sold,  either  directly -or  through  their  respective  agents;  or  by  cur- 
tailing the  quantity  of  such  meats  shipped  to  such  markets  and  agents  • 
or  by  establishing  and  maintaining  rules  for  the  giving  of  credit  to 
dealers  in  such  meats,  the  effect  of  which  rules  will  be  to  restrict  com- 
petition ;  or  by  imposing  unifoi-m  charges  for  cartage  and  delivery  of 
such  meats  to  dealers  and  consumers,  the  effect  of  which  will  be  to 
restrict  competition ;  or  by  any  other  method  or  device,  the  purpo*.e 
and  effect  of  which  is  to  restrain  commerce  as  aforesaid ;  and  also 
from  violating  the  provisions  of  the  act  of  Congress  approved  July  2, 
1890,  entitled  'An  act  to  protect  trade  and  commerce  against  unlaw- 
ful restraints  and  monopolies,*  by  combining  or  conspiring  together 
or  with  each  other  and  others,  to  monopolize  or  attempt  to  monoix)lizJ 
any  part  of  the  trade  and  commerce  in  fresh  meats  among  tlie  several 
States  and  Territories  and  the  District  of  Columbia,  bv  demanding 
obtaining,  or,  with  or  without  the  connivance  of  the  officers  or  agents 
thereof,  or  of  any  of  them,  receiving  from  railroad  companies  or  other 


SWIFT  AND   COMPANY   V.   UNITED   STATES. 


66n 


Opinion  of  the  Court. 

which  we  [396]  shall  refer,  we  think  that  we  have  stated 
correctly  the  purport  of  the  bill.  It  will  be  noticed  further 
that  the  intent  to  monopolize  is  alleged  for  the  first  time  in 
the  eighth  section  of  the  bill  as  to  raising,  lowering  and  fix- 
ing prices.  In  the  earlier  sections,  the  intent  alleged  is  to 
restrain  competition  among  themselves.  But  after  all  the 
specific  charges  there  is  a  general  allegation  that  the  defend- 
ants are  conspiring  with  one  another,  the  railroads  and 
others,  to  monopolize  the  supply  and  distribution  of  fresh 
meats  throughout  the  United  States,  etc.,  as  has  been  stated 
above,  and  it  seems  to  us  that  this  general  allegation  of  in- 
tent colors  and  applies  to  all  the  specific  charges  of  the  bill. 
Whatever  may  be  thought  concerning  the  proper  construc- 
tion of  the  statute,  a  bill  in  equity  is  not  to  be  read  and  con- 
strued as  an  indictment  would  have  been  read  and  construed 
a  hundred  years  ago.  but  it  is  to  be  taken  to  mean  what  it 
farily  conveys  to  a  dispassionate  reader  by  a  fairly  exact  use 

common  carriers  transporting  such  fresh  meats  in  such  trade  and  com- 
merce, either  directly  or  by  means  of  rebates,  or  by  any  other  device, 
transportation  of  or  for  such  means,  from  the  points  of  the  prepara- 
tion and  production  of  the  same  from  live  stock  or  elsewhere,  to  the 
markets  for  the  sale  of  the  same  to  dealers  and  consumers  in  other 
Statics  and  Territories  than  those  wherein  the  same  are  so  prepared, 
or  the  District  of  Columbia,  at  less  than  the  regular  rates  which  may 
be  established  or  in  force  on  their  several  lines  of  transportation,  under 
the  provisions  in  that  behalf  of  the  laws  of  the  said  United  States  for 
the  regulation  of  commerce,  be  and  the  same  is  hereby  made  perpetual. 
"  But  nothing  herein  shall  be  construed  to  prohibit  the  said  defend- 
ants from  agreeing  upon  charges  for  cartage  and  delivery,  and  other 
incidents  connected  with  local  sales,  where  such  charges  are  not  cal- 
culated to  have  any  effect  upon  competition  in  the  sales  and  delivei-y 
of  meats ;  nor  from  establishing  and  maintaining  rules  for  the  giving 
of  credit  to  dealers  where  such  rules  in  good  faith  are  calculated 
solely  to  protect  the  defendants  against  dishonest  or  irresponsible 
dealers,  nor  from  curtailing  the  quantiy  of  meats  shipped  to  a  given 
market  where  the  purpose  of  such  arrangement  in  good  faith  is  to 
prevent  the  over-accumulation  of  meats  as  perishable  articles  in  such 
ma  rivets. 

"Nor  shall  anything  herein  contained  be  construed  to  restrain  or 
interfere  with  the  action  of  any  single  company  or  firm,  by  its  or  their 
officers  or  agents  (whether  such  officers  or  agents  are  themselves  per- 
sonally made  parties  defendant  hereto  or  not)  acting  with  respect  to 
its  or  their  own  corporate  or  firm  business,  property  or  affairs." 


662 


196  UNITED   STATES   REPORTS,  395. 


Opinion  of  the  Court 

of  English  speech.    Thus  read  this  bill  seems  to  us  intended 
to  allege  successive  elements  of  a  single  connected  scheme. 

We  read  the  demurrer  with  the  same  liberality.  There- 
fore we  take  it  as  applying  to  the  bill  generally  for  multi- 
fariousness and  want  of  equity,  and  also  to  each  section  of 
it  which  makes  a  charge  and  to  the  discovery.  The  de- 
murrer to  the  discovery  will  not  need  discussion  in  the  view 
which  we  take  concerning  the  relief,  and  therefore  we  turn  at 
once  to  that. 

The  general  objection  is  urged  that  the  bill  does  not  set 
forth  sufficient  definite  or  specific  facts.    This  objection  is 
serious,  but  it  seems  to  us  inherent  in  the  nature  of  the  case. 
The  scheme  alleged  is  so  vast  that  it  presents  a  new  problem 
in  pleading.    If,  as  we  must  assume,  the  scheme  is  enter- 
tained, it  is,  of  course,  contrary  to  the  very  words  of  the 
statute.    Its  size  makes  the  violation  of  the  law  more  con- 
spicuous, and  yet  the  same  thing  makes  it  impossible  to  fasten 
the  principal  fact  to  a  certain  time  and  place.    The  elements, 
too,  are  so  numerous  and  shifting,  even  the  constituent  parts 
alleged  are  and  from  their  nature  must  be  so  extensive  in  time 
[S96]  and  space,  that  something  of  the  same  impossibility 
applies  to  them.    The  law  has  been  unheld,  and  therefore  we 
are  bound  to  enforce  it  notwithstanding  these  difficulties. 
On  the  other  hand,  we  equally  are  l>ound  by  the  first  prin- 
ciples of  justice  not  to  sanction  a  decree  so  vague  as  to  put 
the  whole  conduct  of  the  defendants'  business  at  the  peril  of  a 
summons  tor  contempt.    We  cannot  issue  a  general  injunc- 
tion against  all  ix)ssible  breaches  of  the  law.    We  must  steer 
between  these  opposite  difficulties  as  best  we  can. 

The  scheme  as  a  whole  seems  to  us  to  be  within  reach  of 
the  law.  The  constituent  elements,  as  we  have  stated  them, 
are  enough  to  give  to  the  scheme  a  body  and,  for  all  that  we 
can  say,  to  accomplish  it.  Moreover,  whatever  we  may  think 
of  them  separately  when  we  take  them  up  as  distinct  charges, 
they  are  alleged  sufficiently  as  elements  of  the  scheme.  It 
is  suggested  that  the  several  acts  charged  are  lawful  and 
that  intent  can  make  no  difference.  But  they  are  bound 
together  as  the  parts  of  a  single  plan.  The  plan  may  make 
the  parts  unlawful.  Aikem  v.  Wiscansin,  195  U.  S.  194,  206. 
The  statute  gives  this  proceeding  against  combinations  in 


SWIFT   AKD   COMPANY    V.   UNITED   STATES. 


663 


Opinion  of  tbe  Court 

restraint  of  commerce  among  the  States  and  against  attempts 
to  monopolize  the  same.  Intent  is  almost  essential  to  such 
a  combination  and  is  essential  to  such  an  attempt.  Where 
acts  are  not  sufficient  in  themselves  to  produce  a  result  which 
the  law  seeks  to  prevent— for  instance,  the  monopoly — but 
require  further  acts  in  addition  to  the  mere  forces  of  nature 
to  bring  that  result  to  pass,  an  intent  to  bring  it  to  pass  is 
necessary  in  order  to  produce  a  dangerous  probability  that 
it  will  hapen.  Commonwealth  v.  Peaslee,  177  Massachusetts, 
267,  272.  But  when  that  intent  and  the  consequent  danger- 
ous probability  exist,  this  statute,  like  many  others  and  like 
the  common  law  in  some  cases,  directs  itself  against  that  dan- 
gerous probability  as  well  as  against  the  completed  result. 
What  we  have  said  disposes  incidentally  of  the  objection 
to  the  bill  as  multifarious.  The  unit}^  of  the  plan  embraces 
all  the  parts. 

One  further  observation  should  be  made.  Although  the 
[397]  combination  alleged  embraces  restraint  and  monopoly 
of  trade  within  a  single  State,  its  effect  upon  commerce 
among  the  States  is  not  accidental,  secondary,  remote  or 
merely  probable.  On  the  allegations  of  the  bill  the  latter 
commerce  no  less,  perhaps  even  more,  than  commerce  within 
a  single  State  is  an  object  of  attack.  See  Leloup  v.  Port  of 
Mobile,  127  U.  S.  640,  647 ;  Crutcher  v.  Kentucky,  141  U.  S. 
47,  59;  Allen  v.  Pullman  Co,,  191  U.  S.  171,  179,  180.  More- 
over, it  is  a  direct  object,  it  is  that  for  the  sake  of  which  the 
several  specific  acts  and  courses  of  conduct  are  done  and 
adopted.  Therefore  the  case  is  not  like  United  States  v. 
E,  C,  Knight  Co.,  156  U.  S.  1,  where  the  subject  matter  of  the 
combination  was  manufacture  and  the  direct  object  monopoly 
of  manufacture  within  a  State.  However  likely  monopoly 
of  conunerce  among  the  States  in  the  article  manufactured 
was  to  follow  from  the  agreement  it  was  not  a  necessarj^  con- 
sequence nor  a  primary  end.  Here  the  subject  matter  is 
sales  and  the  very  point  of  the  combination  is  to  restrain  and 
monopolize  commerce  among  the  States  in  respect  of  such 
sales.  The  two  cases  are  near  to  each  other,  as  sooner  or 
later  always  must  happen  where  lines  are  to  be  drawn,  but 
the  line  between  them  is  distinct.  Montague  <&  Co,  v.  Loiory. 
193  U.  S.  38. 


664 


196  UNITED  STATES  KEPORTS,  391 


Opinion  of  the  Court 
So,  again,  the  line  is  distinct  between  this  case  and  Eop^ 
Mm  V.  United  States,  171  U.  S.  578.    All  that  was  decided 
there  was  that  the  local  business  of  commission  merchants 
was  not  commerce  among  the  States,  even  if  what  the  brokers 
were  employed  to  sell  was  an  object  of  such  commerce.    The 
brokers  were  not  like  the  defendants  before  us,  themselves 
the  buyers  and  seDers.    They  only  furnished  certain  facilities 
for  the  sales.    Therefore,  there  again  the  effects  of  the  com- 
bination of  brokers  upon  the  commerce  was  only  indirect  and 
not  within  the  act.    Whether  the  case  would  have  been  dif- 
ferent if  the  combination  had  resulted  in  exorbitant  charges, 
was  left  open.    In  Anderson  v.  United  States,  171  U.  S.  604^ 
the  defendants  were  buyers  and  sellers  at  the  stock  yards,  but 
their  agreement  was  merely  not  to  employ  brokers,  or  to 
f3981  recognize  yard-traders,  who  were  not  memberFof  their 
association.    Any  yard-trader  could  become  a  member  of 
the  association  on  complying  with  the  conditions,  and  there 
was  said  to  be  no  feature  of  monopoly  in  the  case.    It  was 
held  that  the  combination  did  not  directly  regulate  commerce 
between  the  States,  and,  being  formed  with  a  different  in- 
tent, was  not  within  the  act.    The  present  case  is  more  likf» 
Montagne  &  Co,  v.  Lowry,  193  U.  S.  38. 

For  the  foregoing  reasons  we  are  of  opinion  that  the  carry- 
ing out  of  the  scheme  alleged,  by  the  means  set  forth,  prop- 
erly may  be  enjoined,  and  that  the  bill  cannot  be  dismissed. 

So  far  it  has  not  been  necessary  to  consider  whether  the 
facts  charged  in  any  single  paragraph  constitute  commerce 
among  the  States  or  show  an  interference  with  it.  There 
can  be  no  doubt,  we  apprehend,  as  to  the  collective  effect  of 
all  the  facts,  if  true,  and  if  the  defendants  entertain  the  intent 
alleged.  We  pass  now  to  the  particulars,  and  will  consider 
the  corresponding  parts  of  the  injunction  at  the  same  time. 
The  first  question  arises  on  the  sixth  .section.  That  charges 
a  combination  of  independent  dealers  to  restrict  the  competi- 
tion of  their  agents  when  purchasing  stock  for  them  in  the 
stock  yards.  The  purchasers  and  their  slaughtering  estab- 
lishments are  largely  in  different  States  from  those'  of  the 
stock  yards,  and  the  sellers  of  the  cattle,  perhaps  it  is  not  too 
much  to  assume,  largely  in  different  States  from  either.    The 


SWIFT   AND   COMPANY   V,   UNITED   STATES. 


665 


^Opinion  of  the  Court 

intent  of  the  combination  is  not  merely  to  restrict  competi- 
tion among  the  parties,  but,  as  we  have  said,  by  force  of  the 
general  allegation  at  the  end  of  the  bill,  to  aid  in  an  attempt 
to  monopolize  commerce  among  the  States. 

It  is  said  that  this  charge  is  too  vague  and  that  it  does  not 
set  forth  a  case  of  commerce  among  the  States.  Taking  up 
the  latter  objection  first,  commerce  among  the  States  is  not  a 
technical  legal  conception,  but  a  practical  one,  drawn  from 
the  course  of  business.  When  cattle  are  sent  for  sale  from  a 
place  in  one  State,  with  the  expectation  that  they  will  end 
their  transit,  after  purchase,  in  another,  and  when  in  effect 
[399]  they  do  so,  with  only  the  interruption  necessary  to 
find  a  purchaser  at  the  stock  yards,  and  when  this  is  a  typ- 
ical, constantly  recurring  course,  the  current  thus  existing 
is  a  current  of  commerce  among  the  States,  and  the  purchase 
of  the  cattle  is  a  part  and  incident  of  such  commerce.  What 
we  say  is  true  at  least  of  such  a  purchase  by  residents  in 
another  State  from  that  of  the  seller  and  of  the  cattle.  And 
we  need  not  trouble  ourselves  at  this  time  as  to  whether  the 
statute  could  be  escaped  by  any  arrangement  as  to  the  place 
where  the  sale  in  point  of  law  is  consummated.  See  Norfolk 
i&  Western  Ry.  v.  Sims,  191  U.  S.  441.  But  the  sixth  sec- 
tion of  the  bill  charges  an  interference  with  such  sales,  a 
restraint  of  the  parties  by  mutual  contract  and  a  combination 
not  to  compete  in  order  to  monopolize.  It  is  immaterial  if 
the  section  also  embraces  domestic  transactions. 

It  should  be  added  that  the  cattle  in  the  stock  yard  are  not 
at  rest  even  to  the  extent  that  was  held  sufficient  to  warrant 
taxation  in  American  Steel  d;  Wire  Co,  v.  Speed,  192  U.  S. 
500.  But  it  may  be  that  the  question  of  taxation  does  not 
depend  upon  whether  the  article  taxed  mav  or  mav  not  be 
said  to  ba  in  the  course  of  commerce  between  the  States,  but 
depends  upon  whether  the  tax  so  far  affects  that  commerce 
as  to  amount  to  a  regulation  of  it.  The  injunction  against 
taking  part  in  a  combination,  the  effect  of  which  will  be  a 
restraint  of  trade  among  the  States  by  directing  the  defend- 
ants' agents  to  refrain  from  bidding  against  one  another  at 
the  sales  of  live  stock,  is  justified  so  far  as  the  subject  matter 
is  concerned. 


nm 


196   UNITED  STAIES  REPORTS,   39». 
Opinion  of  the  Court 


The  injunction,  however,  refers  not  to  trade  among  the 
States  in  cattle,  concerning  which  there  can  be  no  question  of 
original  packages,  but  to  trade  in  fresh  meats,  as  the  trade 
forbidden  to  be  restrained,  and  it  is  objected  that  the  trade  in 
fresh  meats  described  in  the  second  and  third  sections  of  the 
bill  is  not  commerce  among  the  States,  because  the  meat  is 
sold  at  the  slaughtering  places,  or  when  sold  elsewhere  may 
be  sold  in  less  than  the  original  packages.     But  the  allega- 
tions of  the  second  section,  even  if  they  import  a  technical 
passing  [400]  of  title  at  the  slaughtering  places,  also  import 
that  the  sales  are  to  persons  in  other  States,  and  that  the  ship- 
ments to  other  States  are  part  of  the  transaction — "pur- 
suant to  such  sales  "—and  the  third  section  imports  that  the 
same  things  which  are  sent  to  agents  are  sold  by  them,  and 
sufficiently  indicates  that  some  at  least  of  the  sales  are  of  the 
original  packages.     Moreover,  the  sales  are  by  j>ersons  in  one 
State  to  persons  in  another.    But  we  do  not  mean  to  imply 
that  the  rule  which  marks  the  point  at  which  state  taxation  or 
regulation  becomes  permissible  necessarily  is  beyond  the  scope 
of  interference  by  Congress  in  cases  where  such  intorference 
is  deemed  necessary  for  the  protection  of  commerce  among 
the  States.    Nor  do  we  mean  to  intimate  that  the  sUitute 
under  consideration  is  limited  to  that  point.    lieyond  what 
we  have  said  above,  we  leave  those  questions  as  we  find  them. 
They  were  touched  upon  in  the  Northern  Seeimties  Com- 
pany's Case,  193  U.  S.  197. 

We  are  of  opinion,  further,  that  the  cliarge  in  the  sixth  sec- 
tion is  not  too  vague.  The  charge  is  not  of  a  single  agree- 
ment but  of  a  course  of  conduct  intended  to  be  continued. 
Under  the  act  it  is  the  duty  of  the  court,  when  applied  to,  to 
stop  the  conduct.  The  thing  done  and  intended  to  be  done  is 
perfectly  definite:  with  the  purpose  mentioned,  directing  the 
defendants'  agents  and  inducing  each  other  to  refrain  from 
competition  in  bids.  The  defendants  cannot  be  ordered  to 
compete,  but  they  properly  can  be  forbidden  to  give  direc- 
tions or  to  make  agreements  not  to  compete.  See  Addyston 
Pipe  cC-  Steel  Co.  v.  United  States,  175  U.  S.  211.  The  in- 
junction follows  the  charge.  No  objection  was  made  on  the 
gi'ound  that  it  is  not  confined  to  the  places  specified  in  tlie 


SWIFT   AND   COMPANY   V.   UNITED   STATES. 


667 


Opinion  of  the  C<?urt. 

bill.  It  seems  to  us,  however,  that  it  ought  to  set  forth  more 
exactly  the  transactions  in  which  such  directions  and  agree- 
ments are  forbidden.  The  trade  in  fresh  meat  referred  to 
should  be  defined  somewhat  as  it  is  in  the  bill,  and  the  sales 
of  stock  should  be  confined  to  sales  of  stock  at  the  stock  yards 
named,  which  stock  is  sent  from  other  States  to  the  stock 
yards  for  sale  or  is  bought  at  those  yards  for  transport  to 
another  State. 

[401]  After  what  we  have  said,  the  seventh,  eighth  and 
ninth  sections  need  no  special  remark,  except  that  the  cartage 
referred  to  in  section' nine  is  not  an  independent  matter,  such 
as  was  dealt  in  Pennsylvania  Railroad  v.  Knight^  192  U.  S. 
21,  but  a  part  of  the  contemplated  transit — cartage  for  de- 
li veiy  of  the  goods.  The  general  words  of  the  injunction 
"  or  by  any  other  method  or  device,  the  purpose  and  effect 
of  which  is  to  restrain  commerce  as  aforesaid,"  should  be 
stricken  out.  The  defendants  ought  to  be  informed  as  ac- 
curately as  the  case  permits  what  they  are  forbidden  to  do. 
Specific  devices  are  mentioned  in  the  bill,  and  they  stand 
prohibited.  The  words  quoted  are  a  sweeping  injunction  to 
obey  the  law,  and  are  open  to  the  objection  which  we  stated 
at  the  beginning  that  it  was  our  duty  to  avoid.  To  the  same 
end  of  definiteness  so  far  as  attainable,  the  words  "  as 
charged  in  the  bill,'-  should  be  inserted  between  "  dealers  in 
such  meats,"  and  "  the  effect  of  which  rules,"  and  two  lines 
lower,  as  to  charges  for  cartage,  the  same  words  fIiouM  be 
inserted  between  ''  dealers  and  consumers  "  and  "  the  efl^ect 
of  which." 

The  acts  charged  in  the  tenth  section,  apart  from  the  com- 
bination and  the  intent,  may,  perhaps,  not  necessarily  be 
unlawful,  except  for  the  adjective  which  proclaim?  them  so. 
At  least  we  may  assume,  for  purposes  of  decision,  that  they 
are  not  unlawful.  The  defendants,  severally,  lawfully  may 
obtain  less  than  the  regular  rates  for  transportation  if  the 
circumstances  are  not  substantially  similar  to  those  for  which 
the  regular  rates  are  fixed.  Act  of  Feb.  4,  1887,  c.  104,  §  2, 
24  Stat.  379.  It  may  be  that  the  regular  rates  are  fixed  for 
carriage  in  cars  furnished  by  the  railroad  companies,  and 
that  the  defendants  furnish  their  own  cars  and  other  necessi- 


668 


196  UNITED   STATES   REPORTS,   401. 


Opinion  ©f  the  CJonrt. 

ties  of  transportation.    AVe  see  nothing  to  hinder  them  from 
combining  to  that  end.     We  agree,  as  we  aheady  have  said, 
that  such  a  combination  may  be  unlawful  as  part  of  the 
general  scheme  set  forth  in  the  bill,  and  that  this  scheme  as 
a  whole  might  be  enjoined.    Whether  this  particular  com- 
bination can  be  enjoined,  as  it  is,  apart  from  its  connection 
with  the  other  [402]  elements,  if  entered  into  with  the  in- 
tent to  monopolize,  as  alleged,  is  a  more  delicate  question. 
The  question  is  how  it  would  stand  if  the  tenth  section  were 
the  whole  bill.     Not  every  act  that  may  be  done  with  intent 
to  produce  an  unlawful  result  is  unlawful,  or  constitutes  an 
attempt.     It  is  a  question  of  proximity  and  degree.    The 
distinction  between  mere  preparation  and  attempt  is  well 
known  in  the  criminal  law.     Commonwealth  v.  Pemhe,  177 
Massachusetts,  267,  272.    The  same  distinction  is  recognized 
in  cases  like  tlie  present.     United  States  v.  E,  C.  Knight  Co., 
156  U.  S.  1,  13;  KMd  v.  Peai^on,  128  U.  S.  1,  23,  24.    We 
are  of  opinion,  however,  that  such  a  combination  is  within 
the  meaning  of  the  statute.    It  is  obvious  that  no  more  pow- 
erful instrument  of  monopoly  could  be  used  than  «n  advan- 
tage in  the  cost  of  transportation.    And  even  if  the  advan- 
tage is  one  which  the  act  of  1887  permits,  which  is  denied, 
perhaps  inadequately,  by  the  adjective  "  unlawful,"  still  a 
combination  to  use  it  for  the  purpose  prohibited  by  the  act 
of  1890  justifies  the  adjective  and  takes  the  permission  away. 
It  only  remains  to  add  that  the  foregoing  question  does 
not  apply  to  the  earlier  sections,  which  charge  direct  re- 
straints of  trade  within  the  decisions  of  the  court,  and  that 
the  criticism  of  the  decree,  as  if  it  ran  generally  against 
combinations  in  restraint  of  trade  or  to  monopolize  trade, 
ceases  to  have  any  force  when  tlie  clause  against  "  any  other 
method  or  device  "  is  stricken  oul.     So  modified  it  restrains 
such  combinations  only  to  the  extent  of  certain  specified 
devices,  which  the  defendants  are  alleged  to  have  used  and 
intend  to  continue  to  use. 

Decree  modified  and  affirmed. 


HARRIMAN    V.    NORTHERN   SECURITIES   CO.  669 

Syllabus. 

[244]  HAEEIMAN  v,  NORTHERN  SECURITIES  COM- 

PANY.« 

CERTIORARI  TO  THE  CIRCUIT  COURT  OF  APPEALS  TOR  THE  THIRD 

CIRCUIT. 

No.  512.     Argued  March  I,  2,  1905.— Decided  March  6,  1905.— Opinion  deliv- 
ered April  H,   190r». 

1197  U.  S.,  244.] 

After  affirmance  of  the  decree  in  the  Northern  Securities  case,  193 
U.  S.  197,  adjudging  the  combination  illegal  under  the  Anti-Trust 
Act,  the  coriwration  adopted  a  resolution  reducing  its  capital  stock 
and  distributing  the  surplus  of  assets  created  by  the  reduction  and 
consisting  of  shares  of  the  Northern  Pacific  and  Great  Northern 
Railway  Companies  ratably  among  its  stockholders.    ComplainanT>> 
objected  to  the  pro  rata  distribution  and  insisted  that  the  Northern 
Pacific  stock  they  had  delivered  to  the  Securities  Company  was  not 
so  delivered  in  pursuance  of  an  absolute  sale  but  to  be  held   In 
trust ;  that  they  were  entitled  to  have  their  stock  returned  to  them ; 
that  the  decree  in  the  Government  suit  practically  so  adjudicated 
and  that  as  they  acted  in  good  faith,  believing  that  the  original 
contract  was  not  within  the  prohibitions  of  the  Anti-Trust  Act,  the 
doctrine  of  in  pari  delicto  did  not  apply.* 
The  Circuit  Court  granted  a  temporary  injunction  against  pro  rata 
distribution  and  the  Circuit  Court  of  Appeals  reversed  the  order 
and  practically  disposed  of  the  entire  case  adversely  to  complain- 
ants.   This  court  granted  a  writ  of  certiorari.     Held,  that : 
Where  the  decree  of  the  Circuit  Court  of  Appeals  in  an  action  in 
equity  only  reverses  an  order  of  the  Circuit  Court  granting  an  in- 
junction, but  the  court,  the  record  presenting  the  whole  case,  prac- 
tically disposes  of  the  entire  controversy  on  the  merits,  certiorari 
may  issue  from  this  court  and  this  court  may  finally  dispose  of  it  bv 
its  direction  to  the  Circuit  Court. 
The  decree  of  the  Circuit  Court  in  the  Northern  Securities  case 
affirmed  by  this  court,  193  U.  S.  197,  did  not  determine  the  quality  of 
the  transfer  as  between  the  defendants,  and  the  provisions  therein 
as  to  return  of  shares  of  stock  transferred  to  it  by  the  railway 
stockholders  were  permissive  only,  and  not  an  adjudication  that 
any  of  the  vendors  were  entitled  to  a  restitution  of  their  original 
railway  shares. 

« Circuit  Court  awarded  a  preliminary  injunction  restraining  the 
Northern  Securities  Company  from  disposing  of  certain  shares  of  the 
common  stock  of  the  Northern  Pacific  Railway  Company  (132  Fed 
404).  See  p.  587.  Reversed  by  the  Circuit  Court  of  Appeals,  Third 
Circuit  (134  Fed.,  331).  See  p.  618.  Decree  of  C.  C.  A.  affirmed  bv 
the  Supreme  Court  (197  U.  S.,  244). 

6  Syllabus  and  abstracts  of  arginnents  and  briefs  copvrighted    1905 
by  The  Banks  Law  Publishing  Co.  .  ,  , 


670 


197   UNITED   STATES   REPORTS,   244. 


Syllabus. 

The  judgment  of  this  court  affirming  the  decree  of  the  Circuit  Court 
In  the  Northern  Securities  case  went  no  further  than  the  decree 
itself,  and  while  it  leaves  the  Circuit  Court  at  liberty  to  proceed 
in  the  execution  of  its  decree  as  circumstances  may  require,  it  does 
not  operate  to  change  the  decree  or  import  a  power  to  do  so  not 
otherwise  possessed. 

General  expressions  in  an  opinion  which  are  not  essential  to  dispose 
of  a  case  are  not  permitted  to  control  the  judgment  in  subsequent 
suits. 

Nothing  in  the  judgment  or  opinion  of  this  court  in  the  Northern 
Securities  [245]  case,  193  U.  S.  197,  enlarged  the  scope  of  the  decree 
Of  the  Circuit  Court  so  as  to  make  it  an  adjudication  that  any  of 
the  vendors  of  railway  stoclvs  were  entitled  to  judicial  restitution 
of  the  stocks  transferred  by  them  to  the  Securities  Company,  or 
that  the  Securtities  Company  could  not  distribute  the  shares  of 
niilway  stock  held  by  it  pro  rata  between  its  own  shareholders. 

The  transaction  between  complainants  and  the  Northern  Securities 
Company  was  one  of  purchase  and  sale  of  Northern  Pacific  Railway 
Company  stock  for  shares  of  stock  of  the  Securities  Company  and 
caFh  and  not  a  bailment  or  trust. 

When  a  vendor  testifies  that  the  transaction  was  an  unconditional 
sale  and  that  he  attached  to  his  negotiations  no  other  conditions 
than  that  of  price,  he  is  estopped  from  afterwards  denying  that  this 
is  a  statement  of  fact  and  claiming  that  he  only  swore  to  a  con- 
clusion of  law. 

Property  delivered  under  an  executed  illegal  contract  cannot  i>e  re- 
covered back  by  any  party  in  pari  delicto,  and  the  courts  cannot 
relax  the  rigor  of  this  nile  where  the  record  discloses  no  special 
considerations  of  equity,  justice  or  public  policy. 

The  fact  that  the  complainants  in  this  case  acted  in  good  faith  and 
without  intention  to  violate  the  law  does  not  exempt  them  from  the 
doctrine  of  in  pari  delicto.  All  the  parties  having  supposed  the 
statute  would  not  be  held  applicable  to  the  transaction  neither  can 
plead  ignorance  of  tlie  law  as  against  the  other  and  the  defendant 
secured  no  unfair  advantage  in  retaining  the  consideration  volun- 
tarily delivered  for  the  price  agreed. 

Where  a  vendor  after  transferring  shares  of  railway  stock  to  a  cor- 
poration in  exchange  for  its  shares  becomes  a  director  of  the  pur- 
chasing corporation  and  participates  in  acts  consistent  only  with 
absolute  ownership  by  it  of  the  railway  stocks,  and  does  so  after  an- 
action  has  been  brought  to  declare  the  transaction  illegal,  his  right 
to  rescind  tlie  contract  and  compel  restitution  of  his  original  rail- 
way shares,  if  it  ever  existed,  is  lost  by  acquiescence  and  laches. 

The  Northern  Facifif  system  taken  in  connection  with  the  Burlington 
system  is  competitive  with  the  Union  Pacific  system,  and,  the  entire 
recoM  considered,  to  deliver  to  the  complainants,  the  Northern 
Pacific  stock  claimed  by  them  and  distribute  the  balance  of  the  stock 
ratably  between  the  other  Securities  Company  stockholders,  would 


HARRIMAN    V.    NORTHERN    SECURITIES   CO. 
Statement  of  the  Case. 


671 


not  only  be  inequitable  but  would  tend  to  smother  competition  and 
thus  contravene  the  object  of  the  Sherman  law  and  the  pui-poses  of 
the  suit  brought  by  the  Government  against  the  Northern  Securities 
Company. 

It  was  the  duty  of  the  Securities  Company  under  the  decree  in  the 
Government  suit  to  end  a  situation  which  had  been  adjudged  un- 
lawful, and  as  this  could  be  effected  by  sale  and  distribution  in  cash, 
or  by  distribution  in  kind,  the  company  was  justified  in  adopting  the 
^atter  method  and  avoiding  the  forced  sale  of  several  hundred 
million  dollars  of  stock  which  would  have  involved  disastrous  results. 

Edward  H.  Harriman,  Winslow  S.  Pierce,  Oregon  Short 
[246 J  Line  Eailroad  Company  and  The  Equitable  Trust 
Company  of  New  York  exhibited  their  bill  against  the  North- 
ern Securities  Company  in  the  Circuit  Court  of  the  United 
States  for  the  District  of  New  Jersey,  April  20,  1904,  on 
which,  with  accompanying  affidavits  and  exhibits,  a  restrain- 
ing order  was  issued,  pending  an  application  for  an  in- 
junction as  prayed  in  the  bill.  April  26  an  amended  bill  was 
filed,  and  the  application  for  a  preliminary  injunction  was 
heard  May  20,  21  and  23  by  Bradford,  J.,  holding  the  Circuit 
Court. 

On  the  fourth  day  of  June  a  second  amended  bill  was  filed, 
and  on  July  15,  1904,  Judge  Bradford  delivered  an  opinion 
sustaining  the  application.     132  Fed.  Rep.  464. 

The  order  for  injunction  was  entered  August  18,  1904,  and 
an  appeal  therefrom  was  prosecuted  to  the  Circuit  Court  of 
Appeals  for  the  Third  Circuit,  which,  on  January  3,  1905, 
reversed  the  order.     134  Fed.  Rep.  331. 

Thereupon  complainants  applied  to  this  court  for  the  writ 
of  certiorari,  which  was  granted  January  30,  and  the  matter 
advanced  for  hearing,  and  heard  March  1  and  2.  The  affirm- 
ance of  the  decree  of  the  Circuit  Court  of  Appeals  was  an- 
nounced March  6,  it  being  added  that  an  opinion  would  be 
filed  afterwards. 

The  Northern  Pacific  Railway  Company  was  the  successor 
through  reorganization  of  the  Northern  Pacific  Railroad 
Company,  and  by  its  charter  it  was  provided  that  its  capital 
stock  might  be  increased  from  time  to  time  by  a  vote  of  a 
majority  of  the  stockholders,  and  that  the  company  might,  by 
a  like  vote,  classify  its  stock  into  common  and  preferred, 
and  might  "  make  such  preferred  stock  convertible  into  com- 


m   UNITKD   STATES  BEPORTS,  246, 
Statement  of  tlie  Case. 

nion  stock  upon  such  terms  and  conditions  as  may  be  fixed 
by  the  board  of  directors."  On  July  1,  1896,  by  the  unani- 
mous vote  of  its  then  stockliolders,  the  capital  stock  was  in- 
creased to  one  hundred  and  fifty-five  million  dollars,  divided 
into  eighty  millions  of  common  stock  and  seventy-five  mil- 
lions of  preferred  stock,  and  it  was  resolved  "  that  such  pre- 
ferred stock  shall  be  issued  upon  the  condition  that  at  its 
option  the  com-  [247]  pany  may  retire  the  same,  in  whole  or 
in  part,  at  par,  from  time  to  time,  on  any  first  day  of  January 
prior  to  1917."  Tlie  plan  of  reorganization  which  was 
adopted  provided  that  as  to  tlie  new  company  which  it  was 
contemplated  should  acquire  the  properties  and  franchises  of 
the  Northern  Pacific  Eaiiroad  Company,  and  the  issue  of 
preferred  stock  by  it, ''  the  right  will  be  reserved  by  the  new 
company  to  retire  this  stoi^k,  in  whole  or  in  part,  at  par, 
from  time  to  time,  upon  any  first  day  of  January  during  the 
next  twenty  years." 

All  the  certificates  of  stock,  whether  common  or  preferred, 
at  that  time  or  subsequently  issued,  contained  this  clause: 
"  The  company  shall  have  the  right  at  its  option,  and  in 
such  manner  as  it  shall  determine,  to  retire  the  preferred 
stock,  in  whole  or  in  part,  at  par,  from  time  to  time,  upon 
any  first  day  of  January  prior  to  1917." 

The  reorganization  had  been  managed  by  J.  P.  Morgan  & 
Co.,  and  the  directory  of  the  Northern  Pacific  Kailway  Com- 
pany were  friendly  to  that  firm.  During  the  same  period 
the  president  of  the  (Jreat  Northern  Railway  Company  was 
James  J.  Hill,  and  its  directors  were  friendly  to  him. 

The  two  companies  were  friendly  to  each  other,  and  in 
April,  1901,  acquired  the  shares  of  the  Chicago,  Burlington 
and  Quincy  Eaiiroad  Company. 

At  this  time  the  Union  Pacific  Railway  system  included  the 
Union  Pacific  Railway,  the  railroad  of  the  Oregon  Short 
Line  Railroad  Company,  and  the  railroad  of  the  Oregon 
Railroad  and  Navigation  Company.  The  Union  Pacific 
Company  was  practically  the  owner  of  the  entire  capital 
stock  of  the  Oi-egon  Short  Line  Railroad  C^ompany,  and  the 
latter  company  was  the  owner  of  practically  the  entire  capi- 
tal stock  of  the  Oregon  Railway  and  Navigation  Company. 
The  interests  in  control  of  the  Union  Pacific  system  might 


HARBIMAN   V.    NORTHERN   SECURITIES   CO. 
Statement  of  the  Case. 


673 


'P» 


properly  be  called  the  Harriman  interests.  Shortly  there- 
after, at  the  instance  of  the  Union  Pacific  Railway  Company 
and  with  money  furnished  by  that  company,  the  Oregon 
Short  Line  Company  purchased  Northern  Pacific  preferred 
stock  to  the  amount  of  $^1,085,000,  [248]  and  common  stock 
to  the  amount  of  $37,023,000,  aggregating  $78,100,000  of 
stock,  being  a  majority  of  the  $155,000,000,  total  capital 
stock  of  the  Northern  Pacific  Company  as  then  outstanding. 
But  the  preferred  stock  was  subject  to  retirement  at  par  at 
the  option  of  the  company,  and  the  370,230  shares  of  common 
stock  was  less  than  a  majority  of  the  total  common  stock, 
which  majority  was  held  by  the  Morgan-Hill  party. 

In  October,  1901,  complainant  Harriman  was  elected  a 
member  of  the  board  of  directors  of  the  Northern  Pacific 
Railway  Company  and  James  Stillman  was  reelected.  They 
were  also  directors  of  the  Union  Pacific  Railway  Company. 
They  both  attended  a  meeting  of  the  Northern  Pacific  board 
on  November  13,  1901,  and  Harriman  was  chosen  a  member 
of  the  executive  committee.  At  this  meeting  resolutions 
were  adopted  providing  for  and  resulting  in  the  retirement 
of  the  preferred  stock  on  January  1,  1902,  by  the  payment 
of  $100  cash  for  each  and  every  share  to  each  and  every 
holder  of  record  on  that  day. 

These  resolutions  declared  that  the  company  thereby  de- 
termined to  exercise  its  right  to  retire  the  preferred  stock; 
provided  that  for  the  purpose  of  raising  the  funds  necessary 
to  do  so,  the  company  should  issue  its  negotiable  bonds  for 
$75,000,000,  convertible  at  par  into  shares  of  the  common 
stock  of  the  company  at  par;  authorized  the  making  of  a 
contract  for  the  sale  of  all  of  such  bonds  at  par  and  accrued 
interest,  the  contract  to  contain  a  provision  giving  to  the 
holder  of  every  share  of  the  common  stock  the  opportunity 
to  receive  from  the  contract  purchaser,  at  par  and  interest, 
such  bonds  to  an  amount  equal  to  seventy-five  eightieths  of 
the  par  amount  of  said  common  stock  at  such  time  owned 
by  such  holder,  and  arranged  for  the  retirement  from  and 
after  December  31,  1901,  of  the  $75,000,000  preferred  stock, 
by  the  payment  to  each  and  every  holder  of  record  thereof 
on  January  1,  1902,  of  $100  cash  for  each  and  every  share. 
21220— VOL  2—07  M 13 


674 


1!>7   UNITED  STATES  BEPOfiTS,   249. 


Statement  of  the  Case. 

On  November  15,  the  executive  committee  of  the  Northern 
[249]  Pacific  Company  authorized  the  execution  of  a  con- 
tract with  the  Standard  Trust  Company  of  New  York  for 
the  sale  and  delivery  of  the  convertible  certificates  for  $75,- 
000,000  provided  for  in  the  resolutions. 

The  preferred  stock  was  subsequently  taken  up  in  accord- 
ance with  the  plan  resolved  upon. 

The  Northern  Securities  Company  was  incorporated  under 
the  laws  of  New  Jersey  in  November,  IDOl,  its  articles  of 
association  having  been  filed  at  Trenton  on  the  thirteenth 
day  of  that  month,  with  a  capital  stock  of  $400,000,000, 
divided  into  4,000.000  shares  of  the  par  value  of  $100  each, 
and  its  objects  being  certified  to  be: 


«•  I 


(1.)  To  acquire  by  purchase,  subscription  or  otherwise,  and  to  hold 
as  investments  anj-  bonds  or  other  securities  or  evidences  of  indebted- 
ness, or  any  shares  of  capital  stocli  created  or  issued  by  any  other 
corporation  or  corporations,  association  or  associations,  of  the  State 
of  New  Jersey  or  of  any  other  State,  Territory  or  country.    - 

"(2.)  To  purchase,  hold,  sell,  assign,  transfer,  mortgage,  pledge,  or 
otherwise  dispose  of,  any  bonds  or  other  securities  or  evidences  of 
indebtedues-s  ereateti  or  issued  by  any  other  corporation  or  corpora- 
tions, association  or  associations,  of  the  State  of  New  .Jersey,  or  of 
any  other  State,  Territory  or  country,  and.  while  owner  thereof,  to 
exercise  all  the  rights,  powers  and  privileges  of  ownership. 

"(3.)  To  purchase,  hold,  sell,  assign,  transfer,  mortgage,  pledge  or 
otherwise  dispose  of  shares  of  the  capital  stocls  of  any  other  corpora- 
tion or  corporations,  association  or  associations,  of  the  State  of  New 
Jersey,  or  of  any  other  State,  Territory  or  country ;  and.  while  owner 
of  such  stock,  to  exercise  all  the  rights,  powers  and  privileges  of 
ownership,  including  the  right  to  vote  thereon. 

"(4.)  To  aid  in  any  manner  any  corporation  or  association  of  which 
any  bonds  or  other  securities  or  evidences  of  indebtedness  or  stocl; 
are  held  by  the  corporation ;  and  to  do  any  acts  or  things  designed 
to  protect,  preserve,  improve  or  en-  [250]  hance  the  value  of  any 
such  bonds  or  other  securities  or  evidences  of  indebtedness  or  stoclc. 

"(5.)  To  acquire,  own  and  hold  such  real  and  personal  property  as 
may  be  necessary  or  convenient  for  the  transaction  of  its  business. 

*'  The  business  or  purpose  of  the  coi-poration  is  from  time  to  time 
to  do  any  one  or  more  of  the  acts  and  things  herein  set  forth. 

"  The  corporation  shall  have  power  to  conduct  its  business  in  other 
States  and  in  foreign  countries,  and  to  have  one  or  more  offices  out 
of  this  State,  and  to  hold,  purchase,  mortgage  and  convey  real  and 
personal  property  out  of  this  State." 


On  the  fourteenth  day  of  November,  1901,  fifteen  gentle- 
men, including  complainant  Harriman  and  two  other 
directors  of  the  Union  Pacific,  James  J.  Hill,  president  of  the 
Great  Northern,  and  two  members  of  J.  P.  Morgan  &  Co., 
were  elected  directors  of  the  Northern  Securities  Company. 
Complainant  Harriman  took  his  seat  at  the  board  and  an 


HAKRIMAN    V,    NORTHERN   SECURITIES   CO. 
Statement  of  the  Case. 


675 


executive  committee  of  five  was  elected,  of  which  he  was 
one. 

_  November  15  resolutions  were  passed  authorizing  the  pur- 
chase of  the  Northern  Pacific  stock  held  by  Harriman  and 
Pierce,  as  follows: 

"The  president  stated  that  he  now  had  an  opportunity  of  acquir- 
ing $37,023,000  par  value  of  the  common  stoclj,  and  $41,085,000  par 
value  of  the  preferred  stock,  of  the  Northern  Pacific  Railway  Com- 
pany, at  an  aggregate  price  of  $91,407,500,  payable,  as  to  $82,491,871, 
m  the  fully  paid-up  and  non-assessable  shares  of  this  company  at 
par,  and,  as  to  the  remaining  $8,915,629,  in  cash. 

"  On  motion,  and  by  affirmative  vote  of  all  the  directors  present  it 
was —  * 

''Resolved,  That  the  president  be,  and  hereby  he  is,  authorized  in 
behalf  of  this  company,  to  purchase  said  stocli— namely  $37,023,000 
par  value  of  the  common  stocli,  and  $41,085,000  par  value  of  the 
preferred  stock  of  the  Northern  Pacific  Railway  Companv,  at  an  aggre 
gate  price  of  $91,407,500,  [251]  payable  as  to  $82,491,871  thereof  in 
the  fully  paid-up  and  non-assessable  shares  of  the  capital  stock  of 
this  company  at  par,  and  as  to  $8,915,029  in  cash;  and  that  the 
officers  of  this  cojnpany  be,  and  herel)y  they  are,  authorized  to  issue 
fully  paid-up  and  non-assessable  shares  of  stock  of  this  company  to 
the  amount  of  $82,491,871,  and  to  pay  $8,915,629  in  cash,  in  con- 
sideration  of  such  $37,023,000  of  the  connnon  stock  and  $41,085,000 
of  the  preferred  stock  of  the  Northern  Pacific  Railway  Company. 

"Resolved,  That  the  president  be,  and  hereby  he  is,  authorized 
at  any  time  to  retire  at  par,  for  cash,  any  and  all  preferred  stock  of 
the  Northern  Pacific  Railway  Company  that  may  be  acquired  by  this 
company,  and  in  case  such  retirement  shall  be  effected  prior  to  Jan- 
uary 1,  3902,  to  allow  interest  up  to  January  1,  1902,  at  the  rate  of  four 
per  cent  per  annum,  on  the  sum  receivable  for  such  preferred  stock. 

''Resolved,  That  the  president  be,  and  hereby  he  is,  authorized  in 
behalf  of  this  company  to  purchase  at  their  par  value  an  amount  of  the 
convertible  certificates  of  the  Northern  Pacific  Railway  Company,  to  be 
issued  pursuant  to  the  resolutions  of  the  board  of  directors  of  the 
Northern  Pacific  Railway  Company,  passed  November  13,  1901,  equal 
to  seventy-five  eiglitieths  of  the  par  amount  of  any  and  all  common 
stock  of  the  Northern  Pacific  Railway  Company  that  shall  have  been 
acquired  by  this  company. 

"  Resolved,  That  the  president  be,  and  hereby  he  is,  authorized  in 
case  of  the  purchase  by  this  company  of  any  of  the  convertible  certifi- 
cates of  the  Northern  Pacific  Railway  Company,  to  convert  the  same 
into  common  stock  of  the  Northern  Pacific  Railway  Company  whenever 
such  conversion  may  be  effected. 

"  Resolved,  That  the  president  be,  and  hereby  he  is,  authorized  to 
borrow,  on  such  terms  as  he  may  arrange,  any  moneys  required  for 
the  purpose  of  carrying  out  the  foregoing  resolutions,  and  to  make  all 
financial  arrangements,  [252]  and  to  do  all  acts  and  things  which  he 
may  deem  needful  in  the  premises." 

Complainant  Harriman  and  his  co-directors  of  the  Union 
Pacific  were  not  present  at  this  meeting,  but  were  present  at 
the  next  meeting  of  the  board  on  November  19,  at  which  the 
minutes  of  the  meeting  of  November  15  were  read  and  on 
motion  were  approved. 


676 


197   UNITED   STATES  KEPORTS,  252. 
Statement  of  the  Case. 


At  a  subsequent  meeting  of  the  executive  committee,  in 
which  Mr.  Harriman  participated,  the  form  of  the  company's 
permanent  stock  certificate,  being  the  usual  fonn,  was  unani- 
mously approved. 

In  the  meantime,  and  on  November  18,  Harriman  and 
Pierce  had  delivered  their  Northern  Pacifia  stock  to  the 
Northern  Securities  Company  and  that  company  had  deliv- 
ered to  them  the  824,000  shares  of  its  stock  and  $8,915,629  in 
casu* 

The  Northei-n  Pacific  stock  certificates  received  from  Har- 
riman and  Pierce  were  surrendered  by  the  Securities  Com- 
pany to  the  Northern  Pacific  Eailway  Company.  The  cer- 
tificates for  the  370,230  shares  of  common  stock  were 
exchanged  for  370,230  shares  of  common  stock  issued  in  the 
name  of  the  Northern  Securities  Company.  The  certificates 
for  the  410,580  shares  of  preferred  stock  were  surrendered 
to  the  Northern  Pacific  Kailway  Company  for  retirement, 
and  paid  for  and  retired  as  provided,  the  transaction  result- 
ing in  the  receipt  by  the  Northern  Securities  Company  of 
certificates  for  347,090  shares  of  new  common  stock.  This 
made  717,320  shares,  and  the  Securities  Company  also  ac- 
quired 820,270  shares,  from  a  large  number  of  separate  indi- 
vidual owners.  And  from  a  large  number  of  stockholders 
of  the  Great  Northern  1,181,242  shares  of  the  stock  of  the 
latter  company. 

At  a  meeting  of  the  board  of  directors  of  the  Northern 
Securities  Company  on  January  22, 1903,  at  which  complain- 
ant Harriman  was  present,  the  sale  by  the  company  of  75,000 
shares  4)f  its  own  stock  for  cash  was  approved.  The  second 
amended  bill  says  $7,522,000  "  was  issued  for  cash  used  for 
the  purchase  of  other  property  and  for  corporate  purposes." 

[2531  From  the  organization  of  the  Securities  Company 
until  the  affirmance  of  the  decree  in  the  Govenunent  suit, 
hereafter  mentioned,  complainants  continued  to  exercise  the 
right  of  holders  of  824,000  shares  of  stock  in  the  Securities 
Company;  received  their  share  of  dividends,  and  gave  their 
proxy  to  vote  at  the  annual  meetings  of  1902  and  1903, 

July  17, 1902,  Harriman  and  Pierce  and  the  Oregon  Short 
Line  Company  pledged  the  824,000  shares  of  Northern  Se- 
curities Company  stock  to  the  Equitable  Trust  Company, 


' 


f 


HAEBIMAN    V.   NORTHERN   SECURITIES   CO. 
Statement  of  the  Case. 


677 


the  Short  Line  Company  executing  a  trust  indenture,  which 
contained  this  clause: 

"  The  deposit  and  pledge  hereunder  of  said  shares  of  stoclt ,  or  of 
any  other  securities  which  shall  become  subject  to  this  indenture, 
shall  not  prevent  the  consolidation,  union  or  merger  with  any  other 
Si'^hlil?''  ""-S  *^^  Se^^^^ies  Company,  or  of  any  other  corporation 
by  which  said  securities  shall  have  been  issued,  or  the  salVof  its 
property  or  the  distribution  of  its  assets.  In  any  such  case  the 
trustees  shall  receive  such  amounts  of  stock,  bonds  or  other  securi- 
ties, or  money,  or  of  either  or  all  of  them,  as  the  holders  of  the  pledged 
shares  of  stock  of  the  Securities  Company  or  other  pledged  securi- 
ties, as  the  case  may  be,  shall  be  entitled  to  receive  and  upon 
receipt  thereof  shall  surrender  the  deposited  stock  certificates  or 
other    securities." 

March  10, 1902,  a  bill  was  exhibited  in  the  Circuit  Court  of 
the  United  States  for  the  District  of  Minnesota  by  the  United 
States  against  the  Northern  Securities  Company,  the  North- 
ern Pacific  Railway  Company,  the  Great  Northern  Railway 
Company,  James  J.  Hill,  William  P.  Clough,  D.  Willis 
James,  John  S.  Kennedy,  J.  Pierpont  Morgan,  Robert  Bacon, 
George  F.  Baker  and  Daniel  S.  Lamont,  to  restrain  the  vio- 
hition  of  the  act  of  Congress  of  July  2,  1890,  26  Stat.  209,  c. 
647,  entitled  "An  act  to  protect  trade  and  commerce  against 
unlawful  restraints  and  monopolies,"  which  resulted  April  9, 
1903,  in  a  decision  in  favor  of  complainants,  120  Fed.  Rep. 
721,  and  a  decree  as  follows : 

"That  the  defendants  above  named  have  heretofore  entered  [254] 
into  a  combination  or  conspiracy  in  restraint  of  trade  and  commerce 
?SS"^  *^^  several  States,  such  as  an  act  of  Congress,  approved  .July  I*, 
1890,  entitled  'An  act  to  protect  trade  and  commerce  against  unlawful' 
restraints  and  monopolies,^  denounces  as  illegal ;  that  all  of  the  stock 
^I  the  Northern  Pacific  Railway  Company  and  all  the  stock 
of  the  Great  Northern  Railway  Company,  now  claimed  to  be  held 
and  owned  by  the  defendant,  the  Northern  Securities  Companv,  was 
acquired  and  is  now  held  by  it  in  virtue  of  such  combination  or  con- 
spiracy m  restraint  of  trade  and  commerce  among  the  several  States  • 
that  the  Northern  Securities  Company,  its  officers,  agents,  servants', 
and  employes,  be,  and  they  are  hereby,  enjoined  from  acquiring  or 
attemptmg  to  acquire  further  stock  of  either  of  the  aforesaid  railway 
companies;  that  the  Northern  Securities  Company  be  enioinAd  from 
voting  the  aforesaid  stock  which  it  now  holds  or  may  acquire  and 
from  attempting  to  vote  it,  at  any  meeting  of  the  stockholders  of 
either  of  the  aforesaid  railway  companies,  and  from  exercising  or 
attempting  to  exercise  any  control,  direction,  supervision,  or  influence 
whatsoever  over  the  acts  and  doings  of  said  railway  companies,  or 
either  of  them,  by  virtue  of  its  holding  such  stock  therein ;  that  the 
Northern  Pacific  Railway  Company  and  the  Great  Northern  Railway 
Company,  their  officers,  directors,  servants,  and  agents,  be,  and  they 
are  hereby,  respectively  and  collectively  enjoined  from  peniiitting 
the  stock  aforesaid  to  be  voted  by  the  Northern  Securities  Company 
or  in  Its  behalf,  by  its  attorneys  or  agents,  at  any  corporate  election 


678 


197  UHITED  STATES  KEPOETS,  2oi. 
Statement  of  the  Case. 


for  directors  or  officers  of  either  of  the  aforesaid  railway  comDaiiies. 
and  that  they,  together  with  their  officers,  directors,  servants,  and 
agents,  be  lilcewise  enjoined  and  respectively  restrained  from  paving 
any  dividends  to  the  Nortliern  Secnrities  Comi>any  on  accc^nt  of 
stoclc  in  either  of  the  aforesaid  railway  companies  which  it  now 
claims  to  own  and  hold;  and  that  the  aforesaid  railway  companies, 
their  officers,  directors,  servants,  and  agents,  be  enjoined  from  per- 
mitting or  suffering  the  Northern  Securities  Company,  or  [255]  any 
of  its  officers  or  agents,  as  such  officers  or  agents,  to  exercise  any  con- 
trol whatsoever  over  tte  wrporate  acts  of  either  of  the  aforesaid  rail- 
way companies. 

"  But  nothing  herein  contained  shall  be  construed  as  prohibiting  the 
Northern  Securities  Company  from  returning  and  transferring  to  the 
stocklmlders  of  the  Northern  Pacific  Railway  Company  and  the  Great 
Northern  Railway  Company,  respectively,  any  and  all  shares  of  stock 
in  eitlier  of  said  railway  companies  which  the  said  Northern  Securities 
Company  may  have  heretofore  received  from  such  stocliholders  in  ex- 
change for  its  own  stock ;  and  nothing  lierein  contained  shall  be  con- 
sti-ued  m  prohibiting  the  Northern  Securities  Company  from  making 
such  transfer  and  assignments  of  the  stock  aforesaid  to  such  person  or 
persons  as  may  now  be  the  holders  and  owners  of  its  own  stock  orig- 
inally Issued  in  exchange  or  in  payment  for  the  stock  claimed  to  have 
been  acquired  by  it  in  the  aforesaid  railway  companies." 

Th©  case  was  brought  to  this  court,  and  March  14,  1904, 
the  decree  was  affirmed.    193  U.  S.  197. 

March  22,  1904,  the  board  of  directors  of  the  Northern 
Securities  Company  adopted  the  following  preamble  and 
resolutions : 

"  Whereas.  In  the  course  of  Its  business,  this  company  has  acquired 
and  now  holds  l,5a7,5{M  shares  in  the  capital  stock  of  the  Northern 
Pacific  Railway  Company;  and  1,181,242  shares  in  the  capital  stock  of 
the  Great  Northern  Railway  Company ;  and 

**  Whereas,  In  a  suit  brought  by  the  United  States  against  this  com- 
pany, the  said  railway  companies  and  others,  this  company  has  been 
enjoined  from  voting  uix)n  tlie  shares  of  either  of  the  said  railway  com- 
panies, and  each  of  the  said  railway  comi»anies  has  been  enjoined  from 
paymg  to  this  company  any  dividends  upon  any  of  the  shares  of  such 
railway  company  held  by  this  company :  and 

«  r^^^?.^^"*^'  '^^^^  cominuiy  has  issued,  and  there  are  now  outstandine 
0,954,000  shares  of  its  own  capital  stock  ;  and 

[256]  "Whereas,  This  company  desires  and  intends  to  complv  with 
the  decree  in  the  said  suit,  fully  and  unreservedly,  and  without  delav  • 
Resolved,  In  consideration  of  the  premises,  it  is  declared  necessary 
and  desirable  for  this  company  so  to  reduce  its  present  stock  as  will 
onahle  it,  without  delay,  In  connection  with  such  reduction,  to  distrib- 
ute among  its  shareliolders,  the  shares  of  capital  stock  of  said  rail- 
road companies  held  by  it. 

"Resolved,  That  the'  Iward  of  directors  of  this  company  hereby  de- 
clares It  advisable  that  article  (Fourth)  of  this  company's  certificate 
of  incorporation  be  amended,  so  as  to  read  as  follows : 

"  Fourth.  The  capital  stock  of  this  company  is  herebv  reduced  to 
three  million  nine  hundred  and  fifty-four  thousand  dollars* ($.3,954  000) 
and  shall  hereafter  be  three  million  nine  hundred  and  fifty -four  thou- 
sand dollars  ($3,954,000),  divided  into  thirty-nine  thousand  five  hun- 
dred forty  (39,540)  shares  of  one  hundred  dollars  ($100)  each  Such 
reduction  of  capital  stock  shall  be  accomplished  by  each  holder  of 


HAllRIMAN    V.    NORTHERN  -SECURITIES   CO. 
Statement  of  the  Case. 


679 


outstanding  shares  of  this  company's  stock  surrendering  to  the  com- 
pany, for  retirement,  ninety-nine  (99)  per  centum  of  the  shares  held 
by  him. 

"Upon  the  surrender  to  this  company,  by  any  shareholder,  of  the 
entire  number  of  shares,  and  parts  of  shares,  of  this  company's  stock, 
which  he  is  hereby  required  to  surrender,  this  company  will  assign  to 
him,  for  each  share  so  surrendered,  thirty-nine  dollars  and  twenty- 
seven  cents  ($39.27)  of  the  stock  of  the  Northern  Pacific  Railway 
Company,  and  thirty  dollars  and  seventeen  cents  ($30.17)  of  the  pre- 
ferred stock  of  the  Great  Northern  Railway  Company,  and  propor- 
tional amounts  thereof  for  fractional  shares  of  the  stock  of  this 
company. 

"The  board  of  directors  or  executive  committee  from  time  to  time 
shall  make  such  rules  and  regulations  as  it  shall  deem  necessary  or 
convenient  for  carrying  out  the  provisions  hereof  and  all  matters  per- 
taining to  the  surrender  and  retirement  [257]  of  the  stock  of  this  com- 
pany, or  to  the  assignment  and  transfer  of  the  stocks  of  the  said  rail- 
way companies,  hereby  contemplated,  shall  be  under  the  direction  of 
the  board.  For  the  purposes  hereof,  the  stockholders  of  this  company, 
and  the  number  of  shares  held  by  them,  respectivelv,  shall  be  deter- 
mmed  from  the  stock  transfer  books  of  the  company,  which  for  such 
determination,  shall  be  closed  at  a  day  and  hour  to' be  determined  bv 
resolution  of  the  board. 

"  Resolved,  That  a  meeting  of  the  stockholders  of  this  company 
for  the  purpose  of  taking  action  upon  the  said  alteration  of  the  certifi- 
cate of  incorporation  of  this  company  and  also  upon  such  other  busi- 
ness as  may  come  before  the  meeting,  be,  and  is  hereby  called,  to  be 
held  at  the  general  offices  of  this  company  in  the  city  of  Hoboken 
county  of  Hudson,  and  State  of  New  Jersey,  at  11  o'clock  a.  m.,  on 
April  21,  A.  D.  1904." 

Notice  was  accordingly  given  that  the  meeting  of  the  stock- 
holders would  be  held  on  April  21,  and  a  copy  of  the  resolu- 
tions and  an  explanatory  letter  were  sent  to  the  Attorney 
General  of  the  United  States.  Early  in  April  the  three  prin- 
cipal complainants  in  the  present  suit  presented  to  the  Cir- 
cuit Court  for  the  District  of  Minnesota  their  petition  for 
leave'  to  intervene  in  the  suit  of  the  United  States  against 
the  Northern  Securities  Company,  setting  up  substantially 
the  same  grounds  as  in  this  suit,  and  seeking  similar  relief. 
This  application  was  heard  at  St.  Paul,  April  12  and  13. 
The  Government  appeared  by  the  Attorney  General,  and 
filed  a  declaration  that  it  was  satisfied  with  the  relief  granted. 
April  19,  1904,  the  court  rendered  its  decision,  denying 
leave  to  intervene.     128  Fed.  Rep.  808. 

Up  to  April  18,  1904,  the  Securities  Company  had  issued 
86,945  certificates  of  stock  and  there  had  been  16,000  trans- 
fers registered  on  the  books  of  the  company.  At  the  closing 
of  the  transfer  books  on  that  day  there  were  3,953,971  shares 
of  stock  outstanding  in  the  hands  of  2,531  separate  holders. 


1 1 


680 


197   UNITED  STATES  REPOBTS,  268. 
Statement  of  tlie  Case. 


[258|  The  meeting  of  the  stockholders  of  the  Northern 
Securities  CJompany  was  duly  held  April  21,  1904 ;  and  at 
that  meeting  the  stock  of  the  company  was  reduced  ninety- 
nine  per  centum,  and  the  proposed  pro  rata  distribution  of 
the  stock  of  the  Northern  Pacific  Eailway  Company  and 
of  the  preferred  stock  of  the  Great  Northern  Railway  Com- 
pany, to  and  amongst  the  shareholders  of  the  Northern 
Securities  Company,  was  assented  to.  Two  million  nine 
hundred  and  forty-four  thousand  seven  hundred  and  forty 
shares  were  represented  and  all  voted  for  the  plan  adopted 
by  the  directors. 

As  has  been  stated,  the  second  amended  bill  was  filed  after 
the  hearing  on  the  application  for  the  preliminary  injunction, 
and  it  was  therein  alleged,  among  other  things,  that  the 
Northern  Securities  Company  was  incorporated  and  organ- 
ized in  pursuance  of  a  combination  in  restraint  of  trade  and 
commerce  among  the  several  States ;  that  the  said  company 
was  to  "  acquire  and  permanently  hold  a  majority  of  the 
shares  of  the  capital  stock  of  said  Great  Northern  and  North- 
em  Pacific  Companies  and  control  the  operation  and  manage- 
ment thereof  in  perpetuity,  and  that  the  then  existing  hold- 
ers of  such  railway  shares  should  deposit  the  same  with  said 
holding  company  and  receive  in  lieu  thereof  share  certifi- 
cates of  said  holding  company  upon  the  basis  of  $180  par 
value  of  its  stock  for  each  share  of  Great  Northern  stock 
and  $115  par  value  of  its  stock  for  each  share  of  Northern 
Pacific  stock,  and  that  said  holding  company  should  act  as 
custodian,  depositary,  or  trustee  of  said  railway  shares  on 
behalf  of  the  existing  stockholders  of  said  railway  compa- 
nies and  their  assigns." 

"  That  prior  to  the  incorporation  of  said  Northern  Se- 
curities Company  your  orator  Oregon  Short  Line  Railroad 
Company,  had  acquired  and  at  the  time  of  the  incorpora- 
tion and  organization  of  said  Securities  Company  owned 
$37,023,000  par  value  of  the  common  stock  and  $41,085,000 
par  value  of  the  preferred  stock  of  the  defendant  Northern 
Pacific  Railway  Company  represented  by  certificates  issued 
to  and  registered  in  the  name  of  your  orators  Harriman  and 
Pierce;  and  that  after  [25d]  the  incorporation  of  the  said 
Northern  Securities  Company  had  been  resolved  upon  as 


HAEBIMAN   V,   NOETHERK   SECURITIES   CO. 


Statement  of  the  Case. 


681 


aforesaid,  your  orators  Harriman,  Pierce  and  Oregon  Short 
line  Railroad  Company  agreed  with  the  promoters  and  in- 
corporators of  said  Northern  Securities  Company  to  trans- 
fer to  and  deposit  with  said  Northern  Securities  Company, 
under  the  terms  and  conditions  aforesaid,  the  said  shares 
of  said  Northern  Pacific  Railway  Company  of  the  aggre- 
gate par  value  of  $78,108,000  owned  by  said  Oregon  Short 
Line  Railroad  Company  as  aforesaid,  and  to  receive  in  ex- 
change therefor  certificates  of  said  Northern  Securities  Com- 
pany representing  an  interest  therein  of  $82,491,871  par 
value  and  $8,915,629  in  cash,  and  in  pursuance  of  said  agree- 
ment your  orators  Harriman  and  Pierce,  acting  for  your 
orator  Oregon  Short  Line  Railroad  Company  did,  on  or  about 
the  eighteenth  day  of  November,  1901,  transfer  and  deliver  to 
said  Northern  Securities  Company  certificates  for  $37,023,000 
par  value  of  the  common  stock  and  $41,085,000  par  value 
of  the  preferred  stock  of  said  Northern  Pacific  Railway 
Company  owned  by  your  said  orator  as  aforesaid  and  re- 
ceived in  exchange  therefor  certificates  of  said  Northern 
Securities  Company  representing  an  interest  in  $82,491,871 
par  value  and  said  cash.    *    *    * 

"  That  at  the  time  of  such  exchange,  on  said  eighteenth  of 
November,  1901,  it  was  agreed  between  said  Harriman  and 
Pierce  and  said  defendant  Northern  Securities  Company  that 
the  said  $41,085,000  par  value  of  said  preferred  stock  of  the 
said  Northern  Pacific  Railway  Company  should  be  con- 
verted into  common  stock  of  said  Northern  I*acific  Railway 
Company;  that  said  preferred  stock  was  subsequently  and 
in  or  about  the  month  of  December,  1901,  converted  by  said 
defendant  Northern  Securities  Company  into  common  stock 
of  said  Northern  Pacific  Railway  Company  of  the  same  par 
value ;  that  certificates  for  $34,709,062  par  value  of  such  com- 
mon stock  registered  in  its  name  on  the  books  of  said  rail- 
way company  were  substituted  in  lieu  and  place  of  the  cer- 
tificates for  said  preferred  stock;  that  said  Northern  Securi- 
ties Company  [260]  caused  said  original  common  stock  to  be 
transferred  into  its  name  upon  the  books  of  said  railway  com- 
pany, and  that  said  Northern  Securities  Company  now  holds 
within  the  jurisdiction  of  this  court  certificates  registered  in 
its  name  on  the  books  of  the  Northern  Pacific  Company  for 


682 


191   UNITED   STATES   BEPOKTS,  260. 
Statement  of  the  Case. 


said  common- stock  so  originally  received  from  your  orators 
Harriman  and  Pierce  and  for  said  common  stock  into  which 
said  preferred  stock  was  so  converted  and  certificates  substi- 
tuted as  aforesaid." 

"  Your  orators  are  advised  by  counsel  and,  therefore,  aver 
that  the  effect  of  said  decree  of  April  9,  1903,  as  affirmed  by 
the  Supreme  Court  of  the  United  States,  was  to  adjudge  that 
the  Northern  Securities  Company  was  not  a  purchaser  or 
owner  but  simply  a  custodian  of  the  shares  of  stock  of  said 
railway  company  acquired  and  held  by  it  as  aforesaid,  that  it 
acquired  and  held  possession  thereof  in  violation  of  said  anti- 
trust act,  that  it  acquired  no  title  thereto  and  cannot  transfer 
any  rights  in  respect  thereof,  and  that  the  legal  and  equitable 
owners  of  said  shares  of  the  stock  of  said  railway  companies 
were  and  are  the  several  parties  who  originally  exchanged  the 
same  for  stock  of  the  Northern  Securities  Company  or  their 
assigns." 

The  prayer  of  the  bill  was  "  that  it  be  decreed  that  said  pro- 
posed plan  of  distribution  is  illegal  and  contrary  to  law  and 
in  violation  of  the  rights  and  equities  of  your  orators,  and 
that  the  complainants  are  entitled  to  the  return  and  transfer  to 
them  by  the  defendant  Northern  Securities  Company  of  the 
shares  of  common  stock  of  said  Northern  Pacific  Kailway 
Company  which  were  so  delivered  by  said  Harriman  and 
Pierce  and  the  shares  of  common  stock  into  which  the  pre- 
ferred stock  of  the  Northern  Pacific  Railway  Companv  deliv- 
ered  by  them  were  converted,  in  exchange  for  the  certificates 
of  stock  of  the  Northern  Securities  Company  so  issued  to  and 
now  held  by  your  orators  and  such  sum  in  cash  as  may  be 
just ;  and  that  the  said  defendant,  Northern  Securities  Com- 
pany, its  directors,  officers  and  agents,  may  be  ordered  and 
directed  to  endorse  [261]  the  certificates  now  held  by  it  for 
said  stock  of  the  Northern  Pacific  Railway  Company  \o  your 
said  orator  Oregon  Short  Line  Railroad  Company  or  in 
blank,  and  deliver  the  same  to  your  orator  The  Equitable 
Trust  Company  of  New  York  in  exchange  for  the  stock  of 
the  Northern  Securities  Company  now  held  by  it  to  be  held 
subject  to  its  rights  and  lien  as  trustee  aforesaid ;   and  that 
the  defendant  Northern  Securities  Company,  its  directors, 
officers,  agents  and  employes  be  perpetually  enjoined  and 


HARRIMAN    V.   NORTHERN   SECURITIES   CO. 


683 


Argument  for  petitioners. 

restrained  from  in  any  manner  parting  with,  disposing  of, 
transferring,  assigning  or  distributing  any  part  of  said  stock 
of  the  Northern  Pacific  Railway  Company  so  received  from 
your  orators  Harriman  and  Pierce  as  aforesaid,  or  any  com- 
mon stock  into  which  the  preferred  stock  received  from  them 
may  have  been  converted,  or  the  certificates  now  representing 
the  same  or  any  part  thereof,  except  to  return  the  same  to  your 
orators  in  exchange  for  its  own  stock  so  issued  as  aforesaid 
and  said  cash ;  and  that  vour  orators  have  such  other  or  fur- 
ther  or  general  relief  against  said  Northern  Securities  Com- 
pany as  shall  be  proper  and  just  under  the  circumstances  of 
the  case. 

"  Your  orators  further  j^ray  that  the  defendant  Northern 
Securities  Company  may  be  enjoined  and  restrained  from 
parting  with,  disposing  of,  transferring,  assigning  or  dis- 
tributing said  stock  of  the  Northern  Pacific  Railway  Com- 
pany- or  any  part  thereof  during  the  pendency  of  this  suit 
or  an}^  certificates  now  representing  the  same." 

The  proofs  embraced  the  pleadings  and  decrees  in  the  suit 
of  United  States  v.  Nortliern  SecKfiiies  Company;  the  eoi 
parte  affidavits  of  Harriman,  Hill,  and  others;  the  deposi- 
tion of  Harriman  taken  before  the  Interstate  Commerce 
Commission  at  Chicago  in  January,  1902;  the  deposition  of 
Harriman  taken  in  the  suit  of  Minnesota  v.  Northern  Securi- 
ties Company  in  December,  1902 ;  extracts  from  the  minutes 
of  proceedings  of  the  board  of  directors  of  the  Northern  Pa- 
cific Railway  Company,  and  of  the  executive  committee  and 
board  of  directors  of  the  Northern  Securities  Company. 

[262]  Mr.  William  D,  Guthrie,  with  whom  Mr,  D.  1\ 
Watson,  Mr.  R.  S.  Lovett,  Mr.  Maxwell  Evarts,  Mr.  John 
F,  Dillon,  Mr.  R,  F.  Lindabury  and  Mr.  Bainhridge  Colby 
were  on  the  brief,  for  petitioners: 

As  to  the  power  of  the  court  to  enter  final  judgment;  this 
case  does  not  fall  under  Smith  v.  Vulcan  Iron  Works,  165 
U.  S.  518,  but  under  the  exceptions  in  Mast,  Foos  Co.  v. 
Stomr  Mfg.  Co.,  177  U.  S.  485,  494,  and  see  BHll  v.  Peckhum 
Motor  Truck  Co.,  189  U.  S.  57,  63. 

The  Northern  Securities  Company,  having  been  organized 
for  an  illegal  purpose  and  having  obtained  possession  of  the 


684 


197  UKITED  STATES  BEPOBTS,  262. 


Argument  for  petitioners. 

railway  stocks  in  pursuance  of  such  purpose,  could  not 
thereby  acquire  the  title  to  and  ownership  of  the  stocks. 

The  whole  transaction  was  illegal,  ultra  vires  and  void 
from  the  beginning  to  the  end.  It  was,  legally  speaking,  a 
nulhty— "an  aggregate  of  nothings."  jScovUI  v.  Thayer, 
105  U.S.  150;  Ashbtiry  %.  Carriage  <&  Iron  Co.  v.  Riche, 
Li.  K.  7  H.  L.  653 ;  Thomas  v.  Railroad  Co,,  101  U.  S.  71 ; 
Oregon  Ry.  Co,  v.  Oregonian  Ry,  Co.,  130  U.  S.  1,  22; 
Penna.  Co.  v.  8t  Z.,  A.  dc,  R,  R.  Co,,  118  U.  S.  290.  ' 

The  contract  is  void;  the  objection  is  not  only  that  the 
corporation  ought  not  to  have  made  it,  but  that  it  could  not 
make  it,  that  the  contract  cannot  be  ratified  or  confirmed  by 
the  .stockholders,  because  it  could  not  have  been  authorized 
by  them,  and  that  no  performance  can  give  the  unlawful 
agreement  any  validity  by  way  of  estoppel  or  otherwise,  or 
be  the  foundation  of  any  right.    Central  Transp,  Co,  v.  Pull- 
man's Car  Co,,  139  U.  S.  24,  60;  McCormich  v.  Market  Bank, 
165  U.  S.  538.  550 ;  California  Bank  v.  Kennedy,  167  U.  S. 
362,  368;  Pullman's  (Jar  Co,  v.  Transportation  Co,,  171  U.  s! 
138.    In  fact  any  contract  made  in  violation  of  a  statute  is 
Toid,  Gihhs  v.  Baltimore  Gas  Co.,  130  U.  S.  396,  410-  Miller 
Y   Ammov,  145  U.  S.  421,  426;  Connolly  v.  Uni^k  Sewer 
Ptpe  Co,,  184  U.  S.  540,  548,  and  it  is  vain  to  contend  that 
any  right  can  be  acquired  under  such  a  contract.    Montgom- 
ery V.  United  States.  15  Wall.  395,  399;  Desmare  v.  United 
mates,  93  U.  S.  [263]  605,  612;  Sprott  v.  United  States,  20 
Wall.  459,  461 ;  United  States  v.  Lapene,  17  Wall.  601,  602, 
603;  United  States   v.    Grossniayer,  9   Wall    72    76*'  The 
Onachita  Cotton,  6  Wall.  521,  532;  and  cases 'cited  in  Bank 
of  the  United  States  v.  Owem,  2  Pet,  527,  541. 

Where  the  purpose  and  consideration  of  a  contract  have 
failed  by  reason  of  illegality  resulting  in  corporate  disabiUty 
to  perform,  the  vendor  may  rescind  and  is  entitled  to  restitu- 
tion  of  his  title.    Chapman  v.  Douglas  County,  107  U.  S 
848;  Am,  TahU  Works  v.  Boston  Machine  Co,,  139  Ma^a- 
chusetts,  5.   When  property  is  transferred  for  an  iUegal  pur- 
pose which  has  been  terminated,  prevented  or  abandoned 
the^older  must  return  the  property  on  demand.    Louisiana 
V.  Wood,  102  U.  S.  294;  Parkershurg  v.  Brown,  106  U  S 
487,  503.    To  deny  a  remedy  to  reclaim  it,  is  to  give  effect  Ui 


HABBIMAN    V,    NORTHERN   SECURITIES   CO. 


685 


Argument  for  petitioners. 

the  illegal  contract.  Davis  v.  Old  Colony  Railroad,  131 
Massachusetts,  258,  275 ;  White  v.  Franklin  Bank,  22  Pick. 
(Mass.)  181;  La  Caussade  v.  White,  7  D.  &  E.  535;  Nat. 
Bank  &  Loan  Co,  v.  Petrie,  189  U.  S.  423 ;  Sittel  v.  Wright^ 
122  Fed.  Rep.  434 ;  Railroad  Co,  v.  Railroad  Co,,  66  N.  H. 
100.  The  contract  having  been  declared  invalid  no  rights 
were  acquired  thereunder.  Cases  supra  and  Jacksonville  &c. 
Ry,Co,  V.  Hooper,  160  U.  S.  514,  524;  D wight  V.  Brewster^ 
1  Pick.  50,  55.  As  to  invalidity  of  contracts  entered  into  in 
violation  of  statutes  see  Langdon  v.  Branch,  37  Fed.  Rep.  449, 
463;  State  v.  Standard  Oil  Co.,  49  Ohio  St.  137, 183;  People 
V.  Chicago  Gas  Trust  Co,,  130  Illinois,  268 ;  People  v.  N.  R. 
S,  R,  Co,,  121  N.  Y.  582;  Cameron  v.  Havemeyer,  25  Abb. 
N.  C.  438,  446 ;  Unckles  v.  Colgate,  148  N.  Y.  529 ;  State  v. 
Distilling  Co,,  29  Nebraska,  700. 

The  question  of  ownership  of  stock  was  involved  and  de- 
cided in  the  Government  suit.  *  193  U.  S.  197,  227 ;  307,  325, 
353,  362.  The  decree  authorized  the  return  of  the  stock,  and 
as  it  also  decided  that  the  combination  was  illegal  it  is  vain 
to  contend  that  any  rights  were  acquired  under  the  contract 
Montgomery  v.  United  States,  15  Wall.  39^. 

The  extent  and  effect  of  the  decision  of  any  court,  as  res 
[264]  ad  judicata  or  as  a  judicial  precedent,  must  be  ascer-^ 
tained,  not  merely  from  the  decree  or  mandate,  but  also  from 
the  pleadings  and  the  opinions  delivered  by  the  court.  It  is 
likewise  proper  to  refer  to  the  evidence  before  the  court  and 
to  the  arguments  of  counsel  whenever  necessary  in  order  to 
determine  exactly  what  points  the  court  has  ruled  upon.  The 
court  is  always  at  liberty  to  refer  to  its  own  records.  Dim- 
mick  V.  Tompkins,  194  U.  S.  540,  548 ;  Bienville  Water  Sup- 
ply Co,  V.  Mobile,  186  U.  S.  212,  217 ;  Butler  v.  Eaton,  141 
U.  S.  240.  Every  question  directly  presented  by  the  issues 
and  discussed  and  passed  upon  in  the  opinions  is  as  much  a 
part  of  the  decision  and  judgment  of  the  court  as  if  it  had 
been  expressly  recited  in  its  decree  or  mandate.  So,  the  man- 
date of  this  court  is  always  to  be  read  in  the  light  of  its 
opinion,  and  it  has  never  been  the  practice  to  recite  in  the 
mandate  any  of  the  points  decided,  but  sunply  to  declare 
the  ultimate  conclusion  of  affirmance,  reversal,  dismissal  or 
qualification  of  the  decree  below.    Last  Chance  Min,  Co,  v. 


686 


197   UNITED   STATES  KEPOBTS,  264. 
Argument  for  petitioners. 


TyUr  Min.  Co,,  157  U.  S.  683,  690;  In  re  Sanford  Fork  <& 
Tool  Co.,  160  U.  S.  247,  256 ;  In  re  Potts,  166  U.  S.  263 ; 
Baker  v.  Cummings\  181  U.  S.  117,  126;  Nat,  Foundry  (&c, 
€o.  V.  Oconto  Water  Supply  Co.,  183  U.  S.  216,  234;  North- 
ern Securities  Co,  v.  United  States,  193  U.  S.  332 ;  Railroad 
Companies  v.  Schutte,  103  U.  S.  118,  143. 

As  stockholders,  the  complainants  were  clearly  not  stran- 
gers to  a  litigation  which  involved  the  right  of  the  corpora- 
tion to  carry  out  the  objects  for  which  it  was  organized  and 
which  aifected  the  title  to  all  its  property,  received  from 
them.  As  depositors,  they  were  represented  by  their  custo- 
dian, agent  or  trustee  as  to  its  right  to  hold  and  the  legality 
of  its  custodianship.  All  identified  in  interest  and  in  privity 
with  one  of  the  litigating  parties  are  concluded  by  a  judg- 
ment and  entitled  to  invoke  its  effect.  New  Orleans  v.  Citi- 
zens' Bank,  167  U.  S.  371,  396.  Even  if  the  decision  in  the 
Government  suit  does  not  constitute  res  adjudicata  in  the 
strict  technical  sense,  it  undoubtedly  should  have  been  re- 
garded as  a  controlling  judi-  [265]  cial  precedent  on  the 
same  facts  sufficient  to  establish  prima  facie  all  that  the  com- 
plainants were  called  upon  to  show  on  the  motion  for  a  pre- 
'  liminary  injunction.  Brill  v.  Peckham  Motor  Truck  Co.^ 
189  U.  S.  57,  59-63;  American  Bell  Telephone  Co.  v.  Na- 
tional Imp.  Telephone  Co,,  27  Fed.  Rep.  663,  664;  Kerr  v. 
New  Orleans,  126  Fed.  Rep.  920,  924. 

A  stockholder  is  so  far  an  integral  part  of  the  corporation 
that  he  is  considered  privy  to  any  legal  proceedings  touching 
its  status  and  powers.  Sanger  v.  Upton,  91  U.  S.  56.  See 
also,  Hawkins  v.  Clewn,  131  U.  S.  319,  329 ;  Glenn  v.  Liggett, 
135  U.  S.  533,  444;  Great  Western  Telegraph  Co.  v.  Purdy, 
162  U.  S.  329,  337 ;  3  Cook  on  Corporations,  5th  ed.  §  750 ; 
Herman  on  Estoppel  and  Res  Judicata,  154,  165;  Hale  v. 
Hardon,  95  Fed.  Rep.  747,  759 ;  Hendrickson  v.  Bradley,  85 
Fed.  Rep.  508,  516 ;  Wilson  v.  Seymour,  76  Fed.  Rep.  678, 
681;  National  Foundry  <&  Pipe  Works  v.  Oconto  Water  Co., 
68  Fed.  Rep.  1006 ;  Secor  v.  Singleton,  41  Fed.  Rep.  725.  As 
the  Securities  Company  was  the  custodian  or  trustee  of  the 
railway  shares  deposited  with  it,  it  represented  the  com- 
plainants as  its  cestui  que  trustent  and  they  are  bound  by 


HARRIMAN    V.    NORTHERN   SECURITIES   CO. 
Argument  for  petitioners. 


687 


1 


the  decree.  Kerrison  v.  Stewart,  93  U.  S.  155,  160;  GraJiam 
V.  Boston,  Hartford  <&  Erie  R.  R.  Co.,  118  U.  S.  161,  179; 
McCamphell  v.  Mason,  151  Illinois,  500,  508;  McElrath  v. 
Pittsburg  and  Steuhenville  Railroad  Co.,  68  Pa.  St.  37, 40, 41. 

In  the  Govenmient  suit  certain  stockholders  of  different 
railroad  companies  were  made  defendants  as  of  their  re- 
spective classes.  The  judgment  therefore  bound  the  whole. 
Smith  V.  Swormstedt,  16  How.  288,  303. 

The  court  below  was  in  error  in  holding  that  the  form  and 
nof  the  legal  effect  of  the  transaction  was  controlling. 

The  assertion  of  a  legal  conclusion  under  such  circum- 
stances never  operates  to  estop  a  party  from  showing  the  real 
facts.  Sturm  v.  Boker,  150  U.  S.  312,  336 ;  Mutual  Life  Ins. 
Co.  V.  Phinney,  178  U.  S.  327,  342 ;  Towle  v.  White,  29  L.  T. 
N.  S.  78;  Heryford  w.  Davis,  102  U.  S.  235,  243,  244,  246; 
Chicago  Railway  Go.  v.  Merchants'  Bank,  136  U.  S.  268,  280; 
McGourkey  [266]  v.  Toledo  <&  Ohio  Railway,  146  U.  S.  536, 
569;  McNamara  v.  Culver,  22  Kansas,  661,  668;  Pugh  v. 
Davis,  96  U.  S.  332,  336. 

The  bill  and  proofs  in  the  Government  suit  were  all  to 
effect  that  the  Northern  Securities  Company  was  organized 
to  effectuate  an  illegal  holding  corporation. 

In  the  case  of  an  illegal  trust  and  combination  entered  into 
and  adjudged  to  be  in  violation  of  an  act  of  Congress,  par- 
ticularly where,  at  the  very  inception  of  any  such  scheme,  its 
legality  is  at  once  publicly  challenged  by  the  National  Gov- 
ernment, justice  and  sound  public  policy  will  be  promoted  by 
decreeing  the  restoration  of  the  status  quo,  and  not  permit- 
ting distribution  on  the  basis  of  alleged  rights  acquired  under 
and  by  virtue  of  the  illegal  contract  and  in  disregard  and 
defiance  of  the  pending  litigation. 

If  Mr.  Hill  and  his  associates  are  to  be  judged  as  other  men 
are  judged  and  are  to  be  presumed  to  have  contemplated  and 
intended  the  consequences  of  their  own  acts,  there  can  be  no 
escape  for  them  from  the  conclusion  that  the  present  pro- 
posed plan  of  distribution  is  a  willful  and  deliberate  attempt 
to  circumvent  the  decree  in  the  Government  suit,  and  was,  in 
fact,  all  along,  the  alternative  intended  as  part  of  their  orig- 
inal unlawful  scheme. 


688 


197   UNITED   STATES   REPORTS,   266. 


Argument  for  petitioners. 

The  Circuit  Court  in  Minnesota  did  not  intend  to  pass 
Upon  or  to  prejudice  or  prejudge  the  merits  of  a  controversy 
which  it  declined  to  consider  or  decide. 

There  has  been  no  equitable  estoppel  created  for  the  benefit 
of  the  Northern  Securities  Company  by  what  the  company 
did  or  continued  to  do  during  the  pendency  of  the  Govern- 
ment suit  and  in  defiance  of  the  serious  claim  therein  made, 
either  as  to  sale  of  stock,  all  of  the  purchasers  having  nbtice 
of  the  situation,  or  by  the  receipt  of  dividends  on  the  North- 
em  Securities  stock  by  the  complainants.  Z.  c6  N.  Railroad 
Co,  V.  Kentucky,  161  U.  S.  677,  691;  ScoviUe  Y.Thayer,  105 
U,  S.  143,  151;  Central  Transportation  Co,  v.  Pullman  Car 
Co.,  189  U.  S.  24,  60;  Tieton  v.  Cofleld,  93  U.  S.  163.  Illegal 
acts  cannot  be  given  validity  by  assenting  to  them  or  acting 
under  [267]  them.  If  so,  a  statute  could  be  abrogated  by 
simply  contracting  to  do  the  prohibited  act.  Cases  supra 
and  Thomm  v.  Railroad  Co,,  101  U.  S.  71,  86;  Veeder  v. 
Mudgett,  95  N.  Y.  295,  310. 

The  Northern  Securities  Company  claims  that  because  it 
now  holds  possession  by  virtue  of  an  illegal  contract  between 
parties  in  pari  delicto,  the  complainants  and  all  other  deposi- 
tors can  be  allowed  no  standing  in  any  court  of  law  or 
equity  to  reclaim  their  property.  This  contention  cannot 
be  sustained.  Its  result  obviously  would  be  that  the  com- 
pany might  dispose  of  and  distribute  at  will  all  the  property 
it  held  without  legal  accountability  to  any  one.  Yarmouth 
V.  France,  19  Q.  B.  D.  647,  653 ;  Northrup  v.  Graves,  19  Con- 
necticut, 548,  554;  2  Stephen  Cr.  Law,  4;  McMullen  v. 
Hoffman,  174  U.  S.  639,  669.  Complainants  acted  in  good 
faith  and  belief  that  the  Northern  Securities  Company  was 
not  an  illegal  combination.  As  to  what  Congress  itself 
contemplated  by  the  statute  is  uncertain.  See  Cong.  Rec, 
51st  Cong.,  1st  Sess.,  vol.  21,  Pt.  3,  pp.  2460,  3146,  4089. 

Where  the  illegal  purpose  cannot  be  continued  and  must 
necessarily  be  abandoned,  the  innocent  owner  of  property 
Iransferred  does  not  forfeit  his  legal  rights  so  that  he  has 
become  outlawed,  and  cannot  maintain  an  action  to  recover 
his  property,  and  the  other  party  may  retain  the  property 
free  from  accountability  and  convert  it  to  his  own  use  or  dis- 
pose of  it  as  he  sees  fit,  and  the  one  in  possession  is  pro- 


HARRIMAN    V,    NORTHERN    SECURITIES   CO. 


689 


Argument  for  petitioners. 

tected  in  appropriating  the  property  by  a  maxim  of  equity. 
.  Nat,  Bank  <&  Loan  Co.  v.  Petrie,  189  U.  S.  423. 

The  rule  as  to  parties  in  pari  delicto  contemplates  the  exist- 
•ence  of  a  delictum,  that  is,  a  wrongful  act  knowingly  done, 
an  intentional  "  transgression  against  positive  law."  Parties 
are  not  in  pari  delicto  when  there  is  concededly  no  intentional 
wrongdoing  or  crime.  Even  in  criminal  cases,  satisfactory 
proof  of  a  mistake  of  the  law,  honestly  held  in  consequence 
of  a  reasonable,  but  erroneous,  construction  of  a  doubtful 
statute,  often  operates  to  prevent  a  conviction.  Queen  v. 
{268]  Tolson,  23  Q.  B.  D.  168,  171;  Taylor  v.  Newman,  4 
Best  &  S.  89;  Regina  v.  Allday,  8  C.  &  P.  136;  Rex  v. 
Twose,  14  Cox  C.  C.  327;  Reg.  v.  SUep,  8  Cox  C.  C.  472; 
Regina  v.  Tinkler,  1  F.  &  F.  513 ;  Rider  v.  Wood,  2  E.  &  E. 
Z^%',  Buckmaster  v.  Reynolds,  13  C.  B.  (N.  S.)  62;  United 
States  V.  Conner,  3  McLean,  573 ;  United  States  v.  Pearce, 
2  McLean,  14;  Hoisted  v.  State,  41  N.  J.  L.  552,  591; 
Cutter  V.  State,  36  N.  J.  L.  125;  Stone  v.  United  States, 
167  U.  S.  178,  188;  Hedden  v.  Iselin,  31  Fed.  Rep.  266; 
Iowa  V.  Sheeley,  15  Iowa,  404;  Commonwealth  v.  Bradford, 
9  Mete.  (Mass.)  268;  State  v.  Hause,  71  N.  Car.  518;  Dot- 
son  V.  State,  6  Coldw.  (Tenn.)  545. 

As  to  whether  the  rule  applicable  to  parties  in  pari  delicto 
applies  where  the  parties  have  acted  in  good  faith  and  under 
a  mutual  mistake  as  to  the  law,  see  SpHng  Co.  v.  Knowlton, 
103  U.  S.  49 ;  St.  Louis  Railroad  v.  Terre  Haute  Railroad, 
145  U.  S.  393 ;  City  of  Detroit  v.  Detroit  City  Ry.  Co.,  60 
Fed.  Eep.  161,  and  Pullman  Palace  Car  Co,  v.  Central 
Transp.  Co.,  65  Fed.  Rep.  158. 

Relief  will  be  granted  from  the  consequences  of  a  mistake 
of  law,  whenever  the  mistake  is  clearly  proved  or  admitted 
and,  by  reason  of  such  mistake,  the  party  against  whom 
relief  is  sought  would  otherwise  secure  an  unfair  advantage. 
Moses  V.  Macferlan,  2  Burrows,  1005,  1012;  Farmer  v. 
Arundel,  2  W.  Bl.  824 ;  Bingham  v.  Bingham,  1  Ves.  Sen. 
126;  Belt's  Supp.  79;  Bize  v.  Dickason,  1  D.  &  E.  285; 
Earl  of  Beauchamp  v.  Winn,  L.  R.  6  H.  L.  223 ;  Re  Saxon 
Life  Assurance  Society,  2  J.  &  H.  408;  Jones  v.  Clifford, 
L.  R.  3  Ch.  D.  779 ;  Allcard  v.  Walker  [1896],  2  Ch.  369,  381 ; 
21220— VOL  2—07  u i4 


690 


197   UNITED   STATES   KEPORTS,"  268. 


Argument  for  petitioners. 

Gruwold  V.  Hazardy  141  U.  S.  260,  284;  Spring  Co.  v. 
Knowlton,  103  U.  S.  49,  60;  S^iell  v.  Insurance  Co,,  98  U.  S. 
85 ;  Htmt  v.  Eousmanier,  8  Wheat.  174,  215 ;  S.  C,  1  Pet.  1, 
17;  State  v.  Paup,  13  Arkansas,  129,  138;  Griffith  v.  Sahas- 
ttan  County,  49  Arkansas,  24,  34;  Northrop  v.  Graves,  19 
Connecticut,  548,  554;  StedweU  v.  Anderson,  21  Connec- 
ticut, 139,  144;  Cnlbreath  v.  Culhreath,  7  Georgia,  64;  Un- 
dencood  v.  Brochman,  4  Dana  (Ky.),  309,  317;  Ray  & 
Thornton  v.  Bank,  3  B.  Mon.  (Ky.)  510;  Stockhridge  Iron 
Com-  [269]  pany  v.  Hudson  Iron  Company,  102  Massachu- 
setts, 45;  Lowndes  v.  Chisholm,  2  McCord  Ch.  (S.  C.)  455; 
Mortimer  v.  Pritchard,  Bailey  Eq.  (S.  C.)  505;  Hopkins 
V.  Masyck,  1  Hill  Ch.  (S.  C.)  242;  250;  MacKay  v.  ^miYA, 
27  Washington,  442. 

When  an  illegal  contract  is  sought  to  be  specifically  en- 
forced or  when  damages  are  claimed  for  its  breach,  un- 
doubtedly the  sound  rule  is  that  the  difference  between 
malum  prohihitum  and  malum  in  se  is  immaterial.  Gihhs  v. 
Baltimore  Gas  Co,,  130  U.  S.  396,  412. 

But  the  distinction  between  malum  prohihitum  and  maluin 
in  se  has  been  often  recognized  by  the  courts  when  consider- 
ing the  right  to  recover  property  transferred  under  an  illegal 
contract,  upon  disaflSrmance  or  termination  of  the  illegal 
transaction,  under  circumstances  which  result  in  a  failure 
of  consideration.  Where  the  transaction  involves  moral 
turpitude,  such  as  the  giving  of  a  bribe,  or  facilitating  the 
commission  of  an  immoral  act  or  a  heinous  crime,  the  party 
is  so  clearly  culpable  and  deserving  of  punishment  that  the 
courts  will  refuse  to  lend  him  any  assistance  against  another 
party  to  the  immoral  transaction,  but  will  leave  both  parties 
where  their  own  immoral  conduct  has  placed  them.  Where, 
however,  the  act  involves  no  moral  turpitude,  but  is  merely 
malum  prohibitum  as  distinguished  from  malum  in  se,  re- 
lief has  often  been  granted  by  restoring  the  status  quo  so  far 
as  practicable.  Pratt  v.  Short,  79  N.  Y.  437,  445.  For  dis- 
tinction between  malum  prohihitum  and  malum  in  se  see 
Stock  Yards  v.  Railroad  Co,,  196  U.  S.  217;  Spring  Co,  v. 
Knmdton,  103  U.  S.  49 ;  McCutchemi  v.  ^Merz  Co,,  71  Fed. 
Eep.  787,  789;  Parkershurg  v.  Brown,  106  U.  S.  487;  Bank 
V.  Townsend,  139  U.  S.  67, 75. 


HARRIMAN   V,    NORTHERN   SECURITIES   CO. 


691 


Argument  for  petitioners. 

In  this  case  the  transaction  was  not  malum  in  se  all  the 
parties  believed  they  were  not  violating  the  law.  The  trans- 
action was  not  forbidden  bv  the  common  law.  In  re  Greene, 
52  Fed.  Rep.  104,  111;  Mogul  Steamship  Company  v.  Mc- 
Gregor, Gow  <&  Co.,  23  Q.  B.  D.  598,  619,  626;  [1892]  A.  C. 
25 ;  United  States  v.  Freight  Association,  166  U.  S.  290,  334 ; 
United  States  v.  Joint  Traffic  Association,  171  U.  S.  505,  572. 
It  was  [270]  also  apparently  legal  according  to  the  law  of 
New  Jersey  where  it  occurred.  New  Jersey  Corporation 
Act,  revision  of  1896,  §§  49,  51;  Dill,  on  Corp.  88,  03;  Tren- 
ton Potteries  Co,  v.  Oliphant,  58  N.  J.  Eq.  507,  524;  Anshoro 
V.  United  States,  159  U.  S.  695.  The  transaction  was  at  most 
malum  prohihitum,  Tappenden  v.  Randall,  2  B.  &  P.  467, 
470;  Ex  parte  Bulmer,  13  Vesey,  313;  White  v.  Franklin 
Bank,  22  Pick.  (Mass.)  181;  Lowell  v.  Boston  and  JjOwell 
Railroad  Corporation,  23  Pick.  (Mass.)  24,  32;  Washington 
Gas  Co,  V.  Uist.  of  Columhia,  161  U.  S.  316,  327 ;  Hanauer  v. 
Doane,  12  Wall.  342;  Douglass  v.  Kavanaugh,  90  Fed.  Rep. 
373. 

Where  money  or  property  has  been  deposited  with  a  trustee 
or  stakeholder  the  doctrine  of  in  pari  delicto  does  not  apply. 
A  mere  custodian  as  was  the  Securities  Company  cannot  take 
advantage  of  the  illegality  of  the  transaction  but  must  return 
the  i^roperty  to  the  owners.  Brooks  v.  Martin,  2  Wall.  70, 
80;  Planters'  Bank  v.  Union  Bank,  16  Wall.  483,  500;  Block 
V.  Darling,  140  U.  S.  234 ;  Pointer  v.  Smith,  7  Heisk.  (Tenn.) 
137,  144 ;  Railroad  v.  Railroad,  66  N.  H.  100,  131 ;  Newhold 
V.  Sims,  2  S.  &  R.  (Pa.)  317;  Jeffrey  v.  Ficklin  and  Bennett, 
3  Arkansas,  227,  236;  Barrett  v.  iVez'Z,  Wright  (Ohio),  472; 
Skinner  v.  Henderson,  10  Missouri,  205 ;  Walker  v.  Chapman,, 
Lofft,  342 ;  Wassermann  v.  Sloss,  117  California,  425 ;  Morgan 
V.  Groff,  4  Barb.  (N.  Y.)  524;  Barnard  v.  Taylor,  23  Oregon, 
416,  422 ;  S,  C,  18  L.  R.  A.  859 ;  Kiewert  v.  Rindskopf,  46 
Wisconsin,  481;  Douville  v.  Merrick,  25  Wisconsin,  688; 
Bone  V.  Ekless,  5  H.  «&  N.  925 ;  Wright  v.  Stewart,  130  Fed. 
Rep.  905,  921 ;  Dauler  v.  Hartley,  178  Pa.  St.  23 ;  Mallory  v. 
Oil  Works,  86  Tennessee,  598,  606;  Dwight  v.  Brewster,  1 
Pick.  (Mass.)  50,  55;  Sampson  v.  Shaw,  Executor,  101 
Massachusetts,  145, 151 ;  Morgan  v.  Beaumont,  121  Massachu- 
setts, 7 ;  Clarke,  Harrison  (&  Company  v.  Brown,  77  Georgia, 


692 


Wt  UliTITED   STATES  BEPOBTS,  270. 
Airgnmeit  for  petitioners. 


HABEIMAN    t\    NORTHERN   SECURITIES   CO. 


69a 


606;  Shannon  v.  Baumer^  10  Iowa,  210;  Taylor  v.  Bowers. 
1  Q.  B.  D.  291 ;  In  re  Crmimire^  ex  parte  Waud  [1898],  2 
Q.  B.  383 ;  Kinsman  v.  Parklmrst,  18  How.  289. 

The  q|>ntention  of  the  Northern  Securities  Company  that 
the  illegal  contract  had  been  executed,  and  that  this  precluded 
[271]  any  relief  to  the  complainants,  is  fallacious  and  can- 
not be  sustained.  Northern  Sectmties  Co,  v.  United  States ^ 
193  U.  8.  197,  357. 

A  universally  recognized  exception  to  the  rule  concerning 
parties  in  pan  delicto  is  that  the  courts  will  permit  the  re- 
covery  of  property  deUvered  and  held  under  an  illegal  con- 
tract  which  has  been  terminated  in  fieri,  when  the  public 
interests  will  be  advanced  thereby.  Starke^s  Exrs.  v.  Little- 
page,  4  Rand.  (Va.)  368;  O^Conner  v.  Ward,  60  Mississippi, 
1025,  1037 ;  5  Thompson  on  Corp.  §  6410 ;  2  Pomeroy's  Eq, 
§941;  Story's  Eq.  Jur.  §  298. 

These  complainants  can  follow  the  common  Northern  Pa- 
cific stock  obtained  by  the  Northern  Securities  Company  by 
the  conversion  of  the  preferred  stock.  Where  specific  prop- 
erty belonging  to  another  is  changed  by  a  custodian,  bailee, 
trustee  or  agent  into  other  property  or  funds,  the  original 
owner  is  entitled  to  follow  it  as  long  as  it  can  be  ascertained 
to  be  such,  and  the  right  only  ceases  when  the  means  of 
ascertainment  fail.  National  Bank  v.  Insurance  Co,,  104 
U.  S.  54,  68.  See  also  Silshury  v.  McCoon,  3  ]^.  Y.  379, 
390;  McLarren  v.  Brewer,  51  Maine,  402,  404. 

The  real  nature  of  the  transaction  was  not  changed  by  the 
conversion  of  stock.  It  was  not  an  independent  subscription 
for  bonds. 

The  issue  of  the  convertible  certificates,  the  retirement  of 
the  preferred  stock,  and  the  conversion  of  the  convertible 
certificates  into  common  stock,  are  shown  to  have  taken 
place  all  on  the  same  day  as  part  of  one  transaction  and  the 
securities  are  traceable.  This  was  the  only  way  it  could  bo 
done  under  the  laws  of  Wisconsin  and  the  corporate  powers 
of  the  Northern  Pacific  Railway  Company.  Weidenfeld  v. 
Northern  Pacific  By,  Go,,  129  Fed.  Rep.  305;  Laws  Wiscon- 
sin, 1895,  ch.  244,  §  10;  Scovill  v.  Thayer,  105  U.  S.  143; 
Hamor  v.  Taylor-Rice  Engineering  Co,,  84  Fed.  Rep.  392: 
Trevor  v.  Whitworth,  L.  R.  12  App.  Cas.  409, 416. 


I 


Argument  for  petitioners. 

There  is  no  merit  in  the  fierce  attack  made  on  behalf  of  the 
[272]  Securities  Company  upon  the  motives  of  the  com- 
plainants in  instituting  this  suit  and  the  announcement  that 
if  complainants  prevailed  and  recovered  their  property,  the 
so-called  Union  Pacific  Railroad  System  would  secure  control 
of  the  Northern  Pacific  Railway  Company  nor  should  this 
consideration  influence  the  court,  change  the  rules  of  law, 
and  produce  a  different  result  than  if  this  feature  did  not 
exist 

This  court  will  not  consider  the  motives  of  parties  in  in- 
stituting legal  proceedings  to  protect  their  alleged  legal  or 
equitable  rights.  Dickerman  v.  Trust  Co.,  176  U.  S.  181, 
190;  South  Dakota  v.  North  Carolina,  192  U.  S.  286,  311. 
There  is  an  uncontradicted  statement  in  the  record  that  the 
roads  are  not  parallel  and  competitive.  And  see  also  Louis- 
ville and  Nashville  v.  Kentucky,  161  U.  S.  677,  698.  The 
real  competitive  lines  are  the  Great  Northern  and  the  North- 
ern Pacific  and  it  has  been  the  motive  of  those  in  control  of 
the  Great  Northern  to  stifle  competition. 

If  the  railway  shares  deposited  are  not  to  be  returned  but 
to  be  regarded  as  assets  of  the  Securities  Company  then  the 
corporation  should  sell  the  stocks  and  make  the  distribution 
in  cash.  Mason  v.  Pewahic  Mining  Co,,  133  U.  S.  50,  63; 
Kean  v.  Johnson,  9  N.  J.  Eq.  401,  408,  409 ;  Coler  v.  Tacoma 
Railway  and  Power  Co,,  64  N.  J.  Eq.  117,  125;  S,  C,  54  Atl. 
Rep.  413.  It  is  so  in  the  case  of  a  partnership.  Lindley  on 
Part.,  555,  and  much  stronger  are  the  reasons  for  such  course 
in  the  case  of  a  corporation.  4  Thompson  on  Corp.  §  4548; 
2  Cook  on  Corp.  §  671.  As  to  §  .54,  Corporation  Act  of  New 
Jersey,  Revision  of  1896,  see  Reals  v.  Hale,  4  How.  37,  54. 

Mr,  D,  T,  Watson  also  for  petitioners : 

This  court,  in  the  Government  case  decided  that  the  Secu- 
rities Company  was  not  the  lawful  purchaser  or  absolute 
owner  of  the  capital  stock  of  the  Northern  Pacific  Railway 
Company  assigned  to  it  by  appellants,  but  held  it  as  custo- 
dian for  the  appellants.  193  U.  S.  325,  334,  346,  353,  361, 
365,  300,  400.  The  decree  authorized  the  return  of  the  stock 
to  the  original  [273]  stockholders  of  the  constituent  com- 
panies.   The  Securities  Company  cannot  hold  the  railway 


694 


197   UNITED   STATES   REPORTS,  273. 


HARRTMAN   V,   NORTHERN   SECURITIES   CO. 


695 


Argument  for  petitioners. 

stock  and  prevent  giving  relief  to  complainants  imder  the 
doctrine  of  in  pod  delicto. 

By  the  affirmance  of  this  court  the  decree  of  the  Circuit 
Court  became  the  decree  of  this  court  and  binding  upon  all 
parties  and  privies  and  other  courts.  In  re  Potts,  166  U.  S. 
265 ;  Durant  v.  Essex  County,  101  U.  S.  555 ;  Sandford  c&c. 
€o.j  Petitioner,  160  U.  S.  247.  The  opinion  of  this  court  is 
part  of  the  record  and  may  be  freely  resorted  to  to  determine 
what  this  court  has  decided.  Foundry  Co.  v.  Water  Co.,  183 
IT.  S.  217;  Baker  v.  Cummings,  181  U.  S.  124;  Mining  Co.  v. 
Mining  Co.,  157  U.  S.  683,  690 ;  So.  Pac.  Co.  v.  United  States, 
183  IT.  S.  519,  532;  United  States  v.  Norfolk  Railway  Co., 
114  Fed.  Eep.  686;  Emsell  v.  Russell,  129  Fed.  Rep.  434; 
West  V.  Brashmr,  14  Pet.  342 ;  DeSollar  v.  Hanscome,  158 
U.  S.  221;  Cromwell  v.  County  of  Sac,  94  U.  S.  U9',  Strong 
V.  Grant,  2  Sup.  Ct.  D.  C.  222 ;  Fulton  v.  Pomeroy,  111  Wis- 
consin, 668 ;  Barton's  Suit  in  Equity,  150 ;  Equity  Rule,  86 ; 
Putnam  v.  Day,  22  Wall.  66. 

As  parties  by  representation  in  the  Government  case,  com- 
plainants are  entitled  in  their  own  right  to  plead  or  give  in 
evidence  against,  and  as  binding  upon,  the  Securities  Com- 
pany, the  conclusions  in  that  case  on  the  same  questions 
which  arise  in  this — even  if  the  cause  of  action,  parties,  testi- 
mony and  measure  of  relief  in  the  two  suits  are  different. 
Cromwell  v.  County  of  Sac,  94  IT.  S.  352;  Lumber  Co.  v. 
Buchtel,  101  U.  S.  638 ;  So.  Pac.  R.  R.  Co.  v.  United  States, 
168  U.  S.  48;  Black  on  Judgments,  609,  614;  Burlen  v. 
Shannon,  99  Massachusetts,  202 ;  Railway  Co.  v.  Schntte,  103 
U.  S.  143;  Duchess  of  Kingston  Case,  20  Howell's  State 
Trials,  355. 

The  appellants,  as  parties  by  representation  in  the  Govern- 
ment case,  are  entitled  in  their  own  right  to  set  up  and  assert 
the  decree  in  that  case  as  against  the  Northern  Securities 
Company  in  this  case.  Story  Eq.  PL  §  372 ;  2  Daniel's  Ch. 
PL  &  Pr.  1539;  Wilton's  Appeal,  97  Pa.  393;  Grifpn  v. 
Spence,  69  Georgia',  397. 

[274]  It  is  not  necessary  that  all  the  parties  to  the  Govern- 
ment suit  should  be  the  same  in  the  subsequent  litigation. 
Thompson  v.  Roberts,  24  How.  240;  Smith  v.  Kemochen,  7 
How.  217;  Wilson  v.  Buell,  117  Indiana,  315,  318;  Wells  on 


Argument  for  petitioners. 

Res  Adjudicata,  §  35;  Lawr^nee  v.  Hunt,  10  Wend.  80; 
Freeman  on  Judgments,  §  154;  1  Greenleaf,  §  523;  Green  v. 
Bogue,  158  U.  S.  478,  502. 

Where  there  are  several  grounds  of  recovery  or  defense  on 
which  the  decree  may  have  been  rested,  it  will  be  conclusive 
on  the  specific  findings,  which  led  up  to  the  proposition,  on 
which  the  court  decided  the  case,  and  what  that  ground  was 
may  be  determined  by  evidence  aliunde  where  the  decree 
itself  is  silent  on  it.  Russell  v.  Place,  94  U.  S.  606 ;  DeSollar 
V.  Hanscome,  158  U.  S.  216;  Flint  Nat.  Bk.  v.  Covington, 
129  Fed.  Rep.  798 ;  Hawes  v.  Water  Co.,  5  Sawyer,  287 ;  Cor- 
coran V.  Ches.  Canal  Co.,  94  U.  S.  741. 

The  former  opinion  and  decree  of  this  court  is  conclusive 
even  on  this  court  when  the  same  case  comes  back  here,  and 
certainly  so  where  that  former  opinion  and  decree  is  set  up 
as  conclusive  in  another  litigation  where  the  parties  are  not 
all  the  same,  and  where  the  complainant  in  the  former  case, 
the  United  States,  is  not  a  party  to  the  second.  Roberts  v. 
Cooper,  20  How.  467,  481 ;  Barney  v.  Winona  c&c.  R.  R.  Co., 
117  U.  S.  231;  United  States  v.  Camon,  184  U.  S.  574; 
Thompson  v.  Maxwell  c&c.  Co.,  168  U.  S.  456 ;  Yazoo  d;c.  Ry. 
Co.  V.  Adams,  180  U.  S.  7;  Great  Western  Tile  Co.  v.  Buma- 
ham,  162  U.  S.  343;  Cha^n  v.  Taylor,  116  U.  S.  567;  Clark 
V.  Keith,  106  U.  S.  464;  Supervisors  v.  Kenniott,  94  U.  S. 
498 ;   Tyler  v.  Maguire,  17  Wall.  283. 

The  appellants  were  by  representation  parties  and  privies 
in  the  Government  case,  as  stockholders  of  the  Securities 
Company,  as  of  class  represented  by  Morgan,  Hill  and  others, 
as  cestuis  que  trust,  and  as  stockholders  of  the  Northern 
Pacific  Railway  they  are  therefore  in  their  own  right  entitled 
to  set  up  the  findings  and  conclusions  of  this  court  in  that 
case  as  res  adjudicafa  in  any  subsequent  litigation  between 
them-  [275]  selves  and  the  Northern  Securities  Company  so 
far  as  regards  the  issues  raised  and  decided  in  that  case.  3 
Cook  on  Corp.  §  750 ;  Hendrickson  v.  Bradley,  85  Fed.  Rep. 
516;  Foundry  Co.  v.  Water  Co.,  68  Fed.  Rep.  1007;  Wilson 
V.  Seymour,  76  Fed.  Rep.  681;  Herman  on  Estoppel,  154- 
165 ;  Secor  v.  Singleton,  41  Fed.  Rep.  725 ;  Gt.  West.  Tel. 
Co.  V.  Purdy,  162  U.  S.  329;  Hawkins  v.  Glenn,  131  U.  S. 
319;    Glenn  v.  Williams,  60  Maryland,  93,  116;    Hancock 


696 


m  UNITED   STATES  REPOBTS,  275. 
Argument  for  petitioners. 


Bank  v.  Farmers,  176  U.  S.  640;  Sanger  v.  Upton,  91  U.  S. 
66;  Whitman  v.  Bank,  176  U.  S.  560;  Flash  v.  Conn,  109 
U.  S.  a7l ;  HaM  v.  Hardon,  95  Fed.  Eep.  759 ;  Fruit  Co,  v. 
RaUroad  Co.,  89  Fed.  Eep.  24;  McElrath  v.  P.  <j&  /S^.  ^.  ^^., 
68  Pa.  St.  40;  Shaw  v.  RaiO/road  Co,,  105  U.  S.  605;  Kern- 
son  V.  Stewart,  93  U.  S.  160;  Veiterlein  v.  5ame5,  124  U.  S. 
169;  BeaU  v.  Railway  Co.,  133  U.  S.  290;  Kent  v.  ZaAj^ 
Superior  Co.,  114  U.  S.  90;  Manson  v.  Duncannon,  166  U.  S. 
642;  /S^mM  v.  Swormstedt,  16  How.  288;  Mcintosh  v.  PtV^5- 
5w^,  112  Fed.  Rep.  705;  Willoughhy  v.  ^'Aa'ca^^?  c&c.  7?.  R. 
Co.,  50  N.  J.  609. 

Complainants  in  this  case  are  entitled  to  set  up  and  plead 
as  res  ad  judicata  the  findings,  conclnsions  and  decree  of  this 
court  in  the  Government  case  as  hereinbefore  enumerated, 
even  if  the  cause  of  action  in  the  Government  case  was  differ- 
ent from  the  cause  of  action  in  the  present  case. 

The  decision  in  the  Government  case  caused  the  present 
litigation.  This  case  is  the  child  of  that  parent.  The  par- 
ties to  the  present  case,  the  appellants  and  the  Northern  Se- 
curities Company,  were  parties  to  the  Government  case,  and 
in  the  same  capacity. 

The  subject  matter  of  the  present  litigation  is  717,320 
shares  of  the  capital  stock  of  the  Northern  Pacific  Railway 
Company,  and  this  identical  capital  stock  was  the  stoci 
which  the  complainants  assigned  to  the  Northern  Securities 
Company  for  the  purpose  of  carrying  out  the  combination. 

The  averments  of  the  bill  and  answers  in  the  Government 
case  distinctly  raised,  inter  alia,  as  material  numerous  ques- 
tions upon  which  the  controversy  turned,  questions  which 
[276]  are  in  substance,  the  same  as  are  now  restated  in  some- 
what different  form. 

These  stocks  in  the  two  railroad  companies  which,  as 
averred  in  the  bill  in  the  Governinent  case,  and  as  found  by 
this  court,  were  transferred  by  Hill,  Morgan  and  other  stock- 
holders to  the  Securities  Company  in  pursuance  of,  and  to 
perfect  the  illegal  combination  to  restrain  trade  and  com- 
merce, included  the  stock  owned  by  the  Oregon  Short  Line 
Railroad  Company,  and  held  in  the  name  of  Harriman  and 
Pierce  as  trustees,  being  the  identical  stock  in  controversy 
in  this  case. 


HARRIMAN    V.    NORTHERN   SECURITIES   CO. 
Argument  for  petitioners. 


697 


This  court  had  before  it  in  the  Government  case  all  the 
testimony  which  was  before  the  Court  of  Appeals  in  the 
present  case  as  to  the  manner  in  which,  and  the  purpose  for 
which,  the  Securities  Company  acquired  the  Oregon  Short 
Line  stock  in  the  Northern  Pacific  Railway  Company,  and 
this  included  the  evidence  of  Mr.  Harriman. 

Not  only  did  the  pleadings  sharply  raise  the  issues  in  the 
Government  case  which  are  also  in  this  case, — and  this  court 
discussed  these  issues  and  decided  them, — ^but  the  evidence 
in  the  Government  case,  including  all  of  Mr.  Harriman's, 
supported  the  conclusions  of  this  court  on  those  issues. 

The  so-called  permissive  portion  of  the  decree  certainly 
did  authorize  the  return  by  the  Securities  Company  to  the 
individual  stockholders  who  assigned  to  the  Securities  Com- 
pany the  identical  stock  so  assigned.  If  it  was  Northern 
Pacific  stock,  then  Northern  Pacific  stock  was  to  be  returned. 

The  St.  Paul  opinion  of  Judge  Thayer  misconstrued  the 
St.  Louis  decree  as  the  St.  Louis  court  did  not  make,  as  the 
controlling  question  in  the  case,  the  distinction  between  the 
real,  substantial  ownership  and  the  mere  holding  of  the  rail- 
road stocks  as  custodian  that  this  court  did. 

The  Court  of  Appeals  erred  in  deciding  that  this  court  did 
not  even  "  incidentally  "  consider  the  question  of  ownership 
and  deciding  this  case  as  if  the  Government  case  had  not 
arisen. 

The  equities  of  the  case  are  with  complainants. 

All  parties  fully  believed  this  plan  to  be  lawful  and  really 
[277]  beneficial  to  commerce,  but  this  court  adjudged  it  was 
a  violation  of  the  Sherman  Act,  and  made  a  decree  which 
restrained  the  Securities  Company  from  carrying  out  the 
scheme  and  rendered  the  railway  stock  worthless  in  its  pos- 
session. This  necessitated  a  dissolution  of  the  Securities 
Company,  as  the  Supreme  Court  foresaw. 

Evidently,  the  scheme  having  failed,  this  put  every  one 
in  statu  quo,  ante  as  to  the  transfer  to  the  Securities  Com- 
pan}^  of  their  respective  stocks — and  this  could  only  be  done 
by  retransf erring  to  each  his  stock,  the  Securities  Company 
still  holds  it — each  still  holds  his  Securities  Company  stock. 
The  retransfer  is  simple.  If  there  be  strangers  who  came  in 
afterwards  and  who  have  equities,  do  what  is  fair  to  them. 


em 


m  UNTTED  BTMXS  BEPOETS,  277. 


Arganient  for  resi)ondeDt. 

Wlioever  bought  stock  after  March  10,  1902,  had  notice 
pendente  lite  and  is  concluded  by  the  decree.  Tilton  v. 
Gofieldy  93  U.  S.  163.  Hill,  Morgan  and  Company  are  taking 
the  property  and  seeking  shelter  behind  either  one  of  two 
innocent  holders.  They  control  the  Securities  Company  and 
therefore  owe  complainants  good  faith  but  having  induced 
complainants  to  put  their  stock  into  the  Securities  Company 
now  thej  intend  to  avail  of  the  situation  to  make  monev 
and  secure  control  of  the  railway  companies  for  themselves. 

The  Securities  Company  cannot  compel  complainants  to 
accept  Great  Northern  stock  in  lieu  of  their  Northern  Pacific. 
The  stockholder  of  a  corporation  upon  dissolution  cannot 
be  compelled  to  accept  a  distribution  of  their  share  of  the 
assets  in  kind.  Post  v.  Beacon  (&c.  Co.,  84  Fed.  Rep.  369, 
375;  Mason  v.  Pewahic  Mining  Co.,  132  U.  S.  50,  58. 

As  to  when  the  Circuit  Court  of  Appeals  may.  on  an  appeal 
from  an  interlocutory  decree,  enter  a  final  one,  see  Forsythe 
V.  Hammond,  166  U.  S.  512;  Bmith  v.  Yulmn  Iron  ^Vorks, 
165  U.  S.  524;  Mast,  Foos  di  Co.  v.  Stover  Mfg.  Co.,  177 
U.  S.  494 ;  Britt  v  Peckham  Motor  Co.,  189  U.  S.  58,  from 
which  it  appears  that  the  present  case  is  not  one  where  the 
Circuit  Court  of  Appeals  on  an  appeal  from  an  interlocutory 
order  granting  a  [278]  preliminary  injunction,  could  enter 
what  is  practically  a  final  decree,  and  finally  dispose  of  the 
case  on  the  merits. 

The  necessity  for  a  hearing  in  the  ordinary  way  where 
each  side  could  put  in  all  its  proofs,  cross-examine  witnesses, 
compel  the  attendance  of  hostile  witnesses  and  the  produc- 
tion of  all  books  and  papers,  is  not  only  apparent  from  the 
complications  in  this  case,  but  is  further  shown  by  the  inac- 
curacy which  the  Circuit  -Court  of  Appeals  fell  into  in 
finally  considering  and  passing  on  the  case  merely  on  an 
interlocutory  hearing  and  upon  ex  parte  affidavits, 

Mr.  Elihu  Root,  with  whom  Mr.  Francis  Lynde  Stetson 
was  on  the  brief,  for  respondent : 

Everything  in  the  record,  by  mere  recital  and  without 
argument,  shows  that  in  fact  and  by  intent  of  both  parties, 
there  was  a  sale  of  the*  Northern  Pacific  stock  to  the  Se- 
curities Company  in  consideration  of  a  stockholder's  interest 


HABRIMAN    V.    NORTHERN   SECURITIES   CO. 
Argument  for  respondent. 


699 


in  that  company,  and  a  large  sum  of  money — i.  e.,  the  issue 
to  Harriman  and  Pierce  of  824,918  shares  of  the  stock  and 
the  payment  to  them  of  $8,915,629  in  cash. 

The  complainants  are  estopped  from  asserting  that  the 
Securities  Compan}^  is  a  trustee  or  bailee.  They  have  pub- 
licly held  out  the  Securities  Company  to  be  the  owner  of  the 
railway  stocks,  and  have  induced  innocent  third  persons  to 
acquire  interests  in  the  corporation  in  reliance  thereupon. 

But  whether  the  Securities  Company  be  a  vendee  or  a 
custodian,  the  complainants  are  not  entitled  to  recover  the 
Northern  Pacific  stock.  The  transaction  was  in  contraven- 
tion of  public  policy  and  a  penal  statute,  and  their  demand 
for  the  return  of  the  stock  by  them  delivered  for  such  illegal 
purpose,  is  barred  by  the  rule  In  pari  delicto  potior  est  con- 
ditio defendentis  et  possidentis.  The  complainants  cannot 
avoid  the  bar  of  the  rule,  if  the  Securities  Company  be  re- 
garded as  vendee.  The  complainants  and  the  Securities 
Company  are  in  pari  delicto. 

Neither  can  the  complainants  avoid  the  operation  of  the 
rule  by  treating  the  Securities  Company  merely  as  custodian, 
[279]  to  hold  a  deposited  stock,  to  collect  dividends,  etc. 
The  Securities  Company  is  in  pari  delicto  with  the  complain- 
ants.   It  was  an  active  party  to  the  illegality. 

The  complainants  assisted  in  placing  the  control  of  the 
railway  companies  in  the  hands  of  the  Securities  Company, 
and  in  maintaining  that  status  until  the  decree  in  the  Grov- 
ernment  suit  was  affirmed  by  the  Supreme  Court.  This  ex- 
ecuted the  illegal  purpose  to  such  a  degree  as  to  bar  the 
assertion  of  any  right  to  withdraw  the  property  deposited. 

Property  delivered  under  an  illegal  contract  cannot  be  re- 
covered back  by  any  party  in  pari  delicto;  certainly  not  in 
any  case  where  the  contract  has  been  executed  in  whole  or 
in  part.  Scott  y.  Brown,  L.  R.  [1892]  2  Q.  B.  724:  EUl  v. 
Freeman,  73  Alabama,  200;  Thomhill  v.  CRear,  108  Ala- 
bama, 299;  Inhabitants  dw.  v.  Eaton,  11  Massachusetts,  368; 
Atwood  V.  Fisk,  101  Massachusetts,  353;  Myers  v.  Meinrath, 
101  Massachusetts,  366;  Horton  v.  Buffington,  105  Massa- 
chusetts, 399;  Cran^on  v.  Goss,  107  Massachusetts,  439; 
Traders^  Bank  v.  Steere,  165  Massachusetts,  389;  White  v. 
Hunter,  23  N.  H.  128 ;  Ellicott  v.  Chamherlin,  38  N.  J.  Eq. 


700 


im  UNITED   STATES  REPORTS,  279. 
Argument  for  respondent. 


604;  Hope  v.  Linden  Asm.,  29  Vroom,  627;  AUehach  v. 
Hunsicker^  132  Pa.  St.  139;  Moore  v.  Kendall,  52  Am.  Dec. 
145 ;  Cohn  v.  Heimhauch,  86  Wisconsin,  176 ;  Bank  of  U.  S, 
V.  Owens,  2  Pet.  527;  VandaMa  case,  145  U.  S.  393;  Central 
Co.  V.  PuUman  Co,,  139  U.  S.  24;  Equitable  Society  v. 
WetheriU,  127  Fed.  Kep.  946;  Pomeroy's  Equity  Juris,  § 
939;  Addison  on  Contracts:  Domat. 

After  delivery  of  the  property  for  an  accepted  considera- 
tion, the  contract  has  ceased  to  be  executory,  even  though 
it  was  entered  into  with  the  expectation  of  a  continuity  of 
benefits  no  longer  susceptible  of  complete  realization.  Kear- 
hy  V.  Thomson,  Jm  K.  24  Q.  B.  D.  742 ;  Herman  v.  Jeuchner, 
L.  R.  12  Q.  B.  D.  561 ;  Harse  v.  Pearl  L.  Co.,  L.  R.  [1904] 
1  K.  B.  558:  Vandalia  case,  145  U.  S.  393;  Equitable  So- 
ciety  V.  WetheriU,  127  Fed.  Rep.  946 ;  Mcintosh  v.  Wilson, 
81  Iowa,  339 ;  Atwood  v.  Fish,  101  Massachusetts,  353 :  Bruer 
V.  Kansas  Ins.  Co.,  100  Mo,  App.  540;  EUicott  v.  Chamberlin, 
38  N.  J.  [280]  Eq.  604;  Pollock,  Principles  of  Contract, 
364 ;  MiUer  v.  Larson,  19  Wisconsin,  463 ;  Martin  v.  Wade, 
37  California,  168. 

The  indisposition  of  the  court  to  grant  relief  is  not  limited 
to  the  cases  in  which  the  plaintiff  is  endeavoring  to  enforce 
the  contract ;  a  party  exhibiting  the  contract  merely  to  de- 
nounce it  as  illegal  will  be  denied  judicial  assistance.  Taylor 
v.  Chester,  L.  R.  4  Q.  B.  309 ;  Brindley  v.  Lawton,  53  N.  J. 
Eq.  259;  Hope  v.  Linden  Associaiion,  29  Vroom,  627;  Her- 
man V.  Jeuchner,  L.  R.  12  Q.  B.  D.  561 ;  Kearley  v.  Thom- 
son, L.  R.  24  Q.  B.  D.  742;  Harse  v.  Pearl  Co.,  L.  R.  [1904] 
1  K.  B.  558 ;  HiU  v.  Freeman,  73  Alabama,  200 ;  Watkins  v. 
Nugen,  45  S.  E.  Rep.  262;  Mcintosh  v.  WUson,  81  Iowa,  339; 
Atwood  V.  Fiskj  101  Massachusetts,  353;  Myers  v.  Meinrath, 
101  Mas?achu>:etts,  366;  Bagg  v.  Jerome,  7  Michijsran,  145; 
White  V.  Hunter,  23  N.  H.  128 ;  EUicott  v.  Chamberlin,  38 
N.  J.  Eq.  604;  Markley  v.  Village,  51  N.  E.  Rep.  28;  Moore 
V.  Kendall,  52  Am.  Dec.  145;  Equitable  Life  Assurance  So- 
eieiy  v.  WetheriU,  127  Fed.  Rep.  946. 

In  all  such  cases  the  defendant's  possession  is  a  sufficient 
answer  to  the  plaintiff's  demand ;  both  because  such  posses- 
sion stands  as  the  equivalent  of  a  title  in  the  defendant,  and 
because  to  discourage  such  transactions,  courts  will  be  deaf 


HARRIMAN    V.    NORTHERN   SECURITIES   CO. 
Argument  for  respondent. 


701 


to  the  clamor  of  a  complainant  in  pari  delicto.  Myers  v. 
Meinrath,  101  Massachus(Btts,  366 ;  Horton  v.  Bufflngton,  105 
Massachusetts,  399;  Bagg  v.  Jerome,  7  Michigan  145;  Smith 
V.  Bean,  15  N.  H.  577;  Watkins  v.  Nugen,  45  S.  E.  Rep.  262; 
Mcintosh  V.  Wilson,  81  Iowa,  339;  Traders*  National  Bank 
V.  Steere,  165  Massachusetts,  389;  Harris,  Sunday  Laws, 
§  169. 

The  condition  of  the  possessor  is  so  much  better  than  that 
even  of  the  original  owner,  that  the  possessor  can  recover 
the  property  not  only  from  a  stranger  but  from  such  original 
owner,  if  by  chance  the  latter  has  been  able  to  repossess  him- 
self of  the  property.  Kinney  v.  McDermntt,  55  Iowa,  674; 
Smith  V.  Bean,  17  N.  H.  577;  Thompson  v.  Williams,  58 
N.  H.  248 ;  Cohn  v.  Heimbauch,  86  Wisconsin,  176. 

[381]  The  distinction  between  mala  in  se,  and  mala  pro- 
hibita  has  been  abandoned,  but  were  this  otherwise,  there  is 
authority  for  regarding  as  malum  in  se  any  act  contraven- 
ing public  policy  and  a  penal  statute.  Irwin  v.  Curie,  171 
N.  Y.  409, 415 ;  Gibbs  v.  Gas  Co.,  130  U.  S.  396 ;  McMullen  v. 
Hoffman,  174  U.  S.  639;  Equitable  Society  v.  WetheriU, 
127  Fed.  Rep.  946. 

The  doctrine  of  locus  pcenitentice  is  available  only  to  those 
who  seasonably  seek  to  make  restitution  and  to  withdraw 
from  their  illegal  executory  contract.  Laches  is  a  fatal  vice. 
Vandalia  case,  145  U.  S.  393;  Union  T.  Co.  v.  Illinois  Co., 
117  U.  S.  434;  In  re  Great  Berlin  S.  Co.,  26  Ch.  D.  616; 
Hardwood  v.  Railroad  Co.,  17  Wall.  80 ;  Twin  Lick  OH,  Co. 
V.  Marbury,  91  U.  S.  587;  Grimes  v.  Sanders,  93  U.  S.  55, 
62;  Hayicood  v.  Nat.  Bank,  96  U.  S.  611,  617;  McLean  v. 
Clapp,  141  U.  S.  429,  432;  Hoyt  v.  Latham,  143  U.  S.  553, 
567;  Townsend  v.  Vanderworker,  160  U.  S.  171;  Ward  v. 
Sherman,  192  U.  S.  168 ;  Rugan  v,  Sdbin,  53  Fed.  Rep.  415, 
418;  Kinney  v.  Welb,  54  Fed.  Rep.  34;  Boston  R.  R,  v. 
New  York  R.  R.,  13  R.  I.  264;  Kitchen  v.  St.  Louis  Ry.  Co., 
69  Missouri,  224 ;  Peabody  et  al.  v.  Flint,  6  Allen,  56 ;  Dun- 
phy  V.  Travelers'  Assn.,  16  N.  E.  Rep.  426 ;  Graham  v.  Birk- 
enhead, 2  McN.  &  G.  156. 

The  rigor  of  the  rule  against  the  complainant  is  never  re- 
laxed out  of  consideration  for  him,  but  only  when  neces- 


702 


197   UNITED   STATES  BEPORTS,  281. 
Argiuuent  for  respondent. 


sary  to  promote  equity  and  justice.  Pullman  Co.  v.  Central 
Co.^  171  XT.  S.  138 ;  Spring  Co,  v.  KMowlton^  103  U.  S.  49. 

In  cases  presenting  no  such  si>ecial  considerations  of  equity, 
justice  or  public  policy,  a  party  even  to  an  unexecuted  il- 
legal  contract  cannot  recover  back  money  paid  or  property 
delivered  thereunder.  Scott  v.  Brown,  L.  K.  [1892]  2  Q. 
B.  724 ;  In  re  Great  Berlin  S,  Co.,  26  Ch.  D.  616 ;  Mcintosh 
V.  Wilson,  81  Iowa,  3.^9;  Bruer  v.  Kansas  Ins  Co,,  100  Mo. 
App.  540;  Thompson  v.  Williams,  58  N.  H.  248;  Markley 
v.  ViUage,  51  ¥.  E.  Eep.  28;  Stor^e  v.  Finkelstein.  46  Ne- 
braska, 477. 

As  to  Northern  Pacific  preferred  stock  retirement  see 
Hachett  v.  Northern  Pacific  Ry.  Co.,  36  Misc.  583. 

[282]  Mr,  John  G.  Johnson,  with  whom  Mr.  John  W, 
Griggs  and  Mr.  W.  P,  Clovgh  were  on  the  brief,  also  for 
respondent : 

On  appeal  from  an  interlocutory  decree  granting  a  special 
injunction  in  a  suit  for  establishing  title  to  property,  if  the 
record  fully  and  fairly  discloses  the  case  on  the  point  of  title, 
the  Appellate  Court  not  only  may,  but  rightfully  should, 
determine  the  question  of  the  injunction  upon  the  merits  of 
plaintiff's  claim.  The  action  of  the  Circuit  Court  of  Ap- 
peals in  this  case  was  controlled  by  that  rule,  and  proceeded 
upon  it.  1  High  on  Injunction,  3d  ed.  §7;  Knoxville  v. 
Africa^  47  U.  S.  App.  74;  Bissell  Co.  v.  Goshen  Co.y  43  C. 
C  A.  47;  Shinhle  v.  Louisville  (&  NashviUe,  62  Fed.  Hep. 
690;  Mast,  Foos  d&  Co,  v.  Stover  Mfg.  Co.,  177  U.  S.  485. 

If,  up  to  the  time  of  argument  of  the  appeal  in  the  Circuit 
Court  of  Appeals,  plaintiffs  had  been  entitled  to  a  stay  of 
the  pro  rata  plan  of  distribution,  until  opportunity  could  be 
given  for  fair  argimient  and  advisement  upon  the  law  points 
involved  in  their  claim,  such  right  was  exhausted  by  their 
opportunity  to  be  heard  in  the  Circuit  Court  of  Appeals. 

In  the  Circuit  Court  of  Appeals,  therefore,  the  whole  case 
for  an  injunction,  pendente  lite,  was  thrown  back  upon  "the 
first  ground  of  the  Circuit  Court,  viz.,  "  grave  and  diflScult " 
questions  of  fact,  for  ultimate  determination. 

The  bill  claims  two  distinct  parcels  of  stock,  one  of  which 
complainants  never  owned. 


HAHRIMAN   V.   NORTHERN   SECURITIES   CO. 
Argument  for  respondent. 


703 


Plaintiffs'  claims  are  self-contradictory  and  can  be  estab- 
lished, if  at  all,  only  under  rules  of  common  law.  Equity 
rules  cannot  be  invoked  in  their  support. 

The  facts  constituting  title  to  the  stock  in  controversy 
liecessarily  consist  of,  and  are  limited  to,  the  things  said  and 
done,  and  mutually  intended,  by  Harriman  and  Pierce  on  the 
one  part,  and  the  Securities  Company  on  the  other.  As  all 
material  facts  in  regard  to  those  sayings,  doings  and  mutual 
intentions  appear  in  this  record,  the  entire  case,  on  both  sides, 
relating  to  title,  must  be  here  and  can  be  disposed  of. 

[283]  The  Union  Pacific  owns  the  Oregon  Short  Line. 
The  latter  owns  the  Oregon  Railwaj^  and  Navigation 
Company. 

As  to  effect  of  acquisition  of  control  of  the  stock  of  a  com- 
peting road  made  by  a  railway  company,  and  by  the  stock- 
holders of  a  railway  company  see  the  Pearsall  case,  161  U. 
S.  646 ;  Kentucky  v.  Louisville  i&  Nashville,  161  U.  S.  676. 

Plaintiffs  in  effect  ask  the  court  to  place  control  of  the 
Northern  Pacific  system  of  railways  in  the  hands  of  the 
Union  Pacific  Railroad  Company.  Of  the  relative  geo- 
graphical positions  of  the  Union  Pacific  and  the  Northern 
Pacific  Railway  systems,  and  of  the  public  laws  of  the  sev- 
eral States  on  the  subject  of  railway  combinations,  as  well 
as  of  the  Federal  laws  on  the  same  subject,  the  court  will 
take  notice  without  proofs. 

The  burden  of  proof  is  on  plaintiffs  to  show,  by  proper 
evidence,  that  the  sale  to  Securities  Company  was  different 
from  what,  on  its  face,  it  appears  to  have  been.  No  such 
proof  was  tendered. 

Plaintiffs  really  found  their  claims  on  what  they  assert  to 
have  been  adjudicated  in  the  Government  suit,  and  not  on 
what  was  actually  done  and  intended  by  the  parties.  The 
plaintiffs  were  strangers  to  that  suit. 

For  the  assumed  adjudication  in  their  favor,  plaintiffs  rely 
not  on  the  decree,  but  upon  the  opinion  of  Mr.  Justice  Harlan 
which  does  not,  however,  mean  what  plaintiffs  claim,  and 
their  alternate  theory,  that  the  title  of  Securities  Company 
was  subject  to  a  condition,  since  broken,  is  unsupported  by 
fact,  law  or  adjudication. 

Where  there  has  been  a  transfer  of  property,  illegal  from 


704 


107  UNITED   STATES  BEPORTS,  283. 


Argumeut  for  respondent. 

any  cause,  and  possession  has  been  delivered  to  the  person  to 
whom  the  title  under  the  transfer  was  intended  ultimately 
to  go,  the  transaction  has  become  executed  on  the  part  of  the 
transferrer,  and  he  cannot  thereafter  repudiate  it  and  reclaim 
the  property  because  of  the  illegality. 

This  rule  governs  under  all  forms  of  illegality ;  whether  in 
doing  something  which  the  laws  positively  prohibit,  or  some- 
thing which  they  merely  omit  to  allow.  Thomas  v.  Railroad 
[284]  Co,,  101  U.  S.  71,  83 ;  Vandalia  case,  145  U.  S.  393, 
390,  408 ;  Central  Co,  v.  Pullman  Co,,  139  U.  S.  24. 

When  complainants  had  transferred  the  Northern  Pacific 
shares  to  the  Securities  Company,  and  the  latter  had  made 
payment  of  the  price  therefor  by  handing  over  to  them  the 
cash  and  the  certificates  for  its  own  stock,  coming  to  them, 
nothing  remained  executory  between  the  parties  save  the 
implied  mutual  obligations  concerning  the  Northern  Securi- 
ties stock  resulting  from  the  relation  of  corporation  and 
stockholder,  thus  created. 

Mr.  ThoTrms  T hacker  also  submitted  a  brief  for  respondent : 

The  injunction  pendente  lite  can  be  justified  only  upon  the 
theory  that  it  is  a  necessary  incident  to  the  granting  of  such 
final'  relief  as  the  complainants  appear  to  be  entitled  to.  The 
right  to  such  final  relief  must  appear;  if  not,  the  injunction 
was  error.  If  such  right  did  not  appear,  the  question  of 
granting  or  denying  the  injunction  was  not  addressed  to  the 
discretion  of  the  court.  If,  upon  the  record,  it  does  not  ap- 
pear that  the  complainants  are  entitled  to  recover  this  stock 
the  order  appealed  from  was  erroneous  and  should  be  re- 
versed. Brooklyn  Club  v.  McGuire,  116  Fed.  Rep.  783; 
Home  Ins,  Co,  v.  Nobles,  63  Fed.  Rep.  643;  Central  Stock 
Yards  Co,  v.  L,  cfe  N,  R.  R.  Co,,  112  Fed.  Rep.  823 ;  Stevens 
V.  M.,  K.  db  T,  Ry,  Co,,  106  Fed.  Rep.  771 ;  Amelm  Milling 
Co,  V.  Tennessee  C,  I.  cfe  R,  Co,,  123  Fed.  Rep.  811. 

In  some  cases  "  a  probable  right "  is  deemed  enough.  New 
Memphis  Oo»  Co,  v.  Memphh,  72  Fed.  Rep.  952 ;  Indianap- 
olis  Gas  Co,  V.  Indianapolis,  82  Fed.  Rep.  245;  Reduction 
Works  V.  Calif omia  Co.,  94  Fed.  Rep.  694;  Georgia  v. 
BraUsford,  2  Dallas,  402 ;  or  a  "  prima  facie  right "  Charles 
V.  Marion,  98  Fed.  Rep.  166;  Cosmos  Exploration  Co,  v. 


HAKRIMAN    V,    NORTHERN   SECURITIES   CO. 
Argument  for  respondent 


705 


Grey  Eagle  Oil  Co,,  104  Fed.  Rep.  20;  Utah  N.  d-  C  R  R 
Co.  V.  Utah  N,  c&  C.  Ry.  Co.,  110  Fed.  Rep.  870.  As  to 
preservation  of  status  quo  see  Allison  v.  Corson,  88  Fed 
Rep.  581 ;  Denver  c&  R.  G.  R.  R,  Co.  v.  Uwited  States,  124 
Fed.  Rep.  156;  H addon  v.  Dooley,  [285]  74  Fed.  Rep.  429; 
Carter sviUe  Light  Go.  v.  Carters  ville,  114  Fed.  Rep.  699,' 
Cohen  V.  Delavlna,  104  Fed.  Rep.  946;  Newton  v.  Levis,  79 
Fed.  Rep.  715;  West.  U,  Tel.  Co.  v.  Pennsylvania  R.  R.  Co 
123  Fed.  Rep.  33. 

On  appeals  from  injunction  orders  the  court  will  not  only 
consider  the  merits  but  dismiss  the  bill,  if  it  can  see  that  the 
complainant  is  not  entitled  to  final  decree.  Smith  v.  Vulean 
Iron  Works,  165  U.  S.  518 ;  Mast,  Fooz  d;  Co.  case,  177  U.  S. 
485;  Castner  v.  Co f man,  178  U.  S.  168;  KnoxvilU  v.  AfHca, 
77  Fed.  Rep.  501 ;  Bissell  Co.  v.  Goshen  Co.,  72  Fed,  Rep. 
545. 

If  the  argument  of  the  complainants,  therefore,  still  rests 
upon  the  theory  of  res  adjudicata,  that  is  upon  the  effect  of 
the  decrees  in  the  Government  suit,  or  upon  any  other  theory 
concerning  which  the  facts  are  substantially  undisputed,  this 
court,  finding  such  theory  unsound,  will  not  simply  reverse 
ihQ  injunction  order,  but  dismiss  the  bill. 

It  was  not  the  legal  effect  of  the  decree  in  the  Government 
suit  that  title  to  the  stocks  of  the  Northern  Pacific  Railway 
Company  and  the  Great  Northern  Railway  Company,  which 
the  Securities  Company  now  holds,  never  passed  to  the  last- 
named  company.  See  opinions  193  U.  S.  197,  321,  324,  397 
334,344,357.  ,        ,        ,    -i, 

It  does  not  foUow  as  matter  of  law,  from  the  facts  shown 
by  the  record,  including  the  decree,  that  title  to  these  stocks 
did  not  pass  to  the  Securities  Company.  The  transaction 
was  not  void  because  illegal.  Harris  v.  Runnels.  12  How. 
79 ;  Mining  Co.  v.  National  Bank,  96  U.  S.  641 ;  National 
Bank  V.  Mathews,  98  U.  S.  621 ;  National  Bank  v.  Whitney, 
103  U.  S.  99 ;  Logan  County  Bank  v.  Townsend,  139  U.  S.  67,' 
76 ;  Thompson  v.  St.  Nicholas  Nat.  Bank,  146  U.  S.  240,  251  • 
Scott  V.  Deweese,  181  U.  S.  202,  211 ;  Burck  v.  Taylor^  1^2 
U.  S.  634,  648 ;  Frits  v.  Palmer,  132  U.  S.  282 ;  McBroom  v 
Investment  Co.,  153  U.  S.  318;  Jarvis  Trust  Company  v. 
21220— VOL  2—07  M 16 


706 


1!>T    UNITED   STATES   REPORTS,   285, 


Opinion  of  the  Couit. 

WilUtoit,  84  Fed.  Rep.  514;  Omtral  Trust  Co.  v.  Columhm 
%.  Co.,  87  Fed.  Rep.  815;  Termifml  Co,  v.  Trmt  Co.,  82 
Fed.  Rep.  IM;  Chattanooga  S.  R.  Co.  v.  Eimm,  66  Fed.  Rep. 
809,  815. 

[286]  The  Sherman  Anti-Trii.st  Act  expressly  contem- 
plates that  contracts  may  be  made  in  violation  of  the  statute 
under  which  property  will  be  owned. 
Nor  was  the  transaction  void  because  ultra  rires. 
The  law  of  New  Jersey  as  declared  by  its  courts  is  that  an 
executed  ultra  rires  transaction  is  not  void.  Cam.  (£•  Atl 
E.  E.  Co.  V.  3Iafs  Landing  dte.  E.  E.  Co.,  48  N.  J.  L.  530, 
567. 

The  place  of  the  transaction  in  this  case  was  New  York, 
and  the  New  York  law  is  to  the  same  effect  as  that  of  New 
Jersey — ^that  an  executed  ultra  vires  transaction  stands  as 
valid.  Whitney  Arms  Co.  v.  Barlow,  63  N.  Y.  62 ;  Woodruf 
V.  Erie  Ey.  Co.,  93  N.  Y.  609 ;  Eider  Life  Eaft  Co.  v.  Eoaeh, 
.97  N.  Y.  378;  Bath  Gas  Light  Co.  v.  Clafy,  151  N.  Y.  24; 
V ought  V.  Eastern  Bldg.  i&c.  Assoc.,  172  N.  Y.  508. 

In  the  Federal  courts,  with  respect  to  the  i)assing  of  title, 
the  law  is  the  same.  See  National  Bank  eases  above  re- 
ferretl  to. 

Even  if  the  transaction  in  which  the  Oregon  Short  Line 
Railroad  Company  parted  with  the  stock  was  void  because 
illegal  or  ultra  vires,  nevertheless  the  complainants  could  not 
recover.  EqtiitaUe  Life  Assurance  Society  v.  Wetheinll,  127 
Fed.  Rep.  947 ;  Smith  v.  Bean,  15  N.  H.  577 ;  Myers  v.  Mein- 
rath,  101  Massachusetts,  366 ;  Vandalia  case,  145  IT.  S.  393 ; 
Higgins  v.  McCrea,  116  U.  S.  671;  White  v.  Barber,  123 
U.  S.  392 ;  Horton  v.  Buffington,  105  Massachusetts,  399. 

The  transaction  has  never  been  abandoned.  The  Securities 
Company  claims  the  ownership  which  was  thus  acquired  and 
proposes  to  exercise  the  rights  of  such  ownership  by  dis- 
tributing the  stocks  as  surplus  assets  among  its  stockholders. 

Mb.  Chief  Justice  Fuller,  after  making  the  foregoing 
statement,  delivered  the  opinion  of  the  court. 

In  applying  to  this  court  for  the  writ  of  certiorari  counsel 
for  complainants  insisted  that  the  Circuit  Court  of  Appeals 
had  practically  disposed  of  the  entire  controversv  on  the 


HARRIMAN    V.    NORTHERN^   SECURITIES   CO. 
Opinion  of  the  Court'. 


7(17 


[287]merits,  although  its  decree  only  reversed  the  order  of 
the  Circuit  Court  granting  the  preliminary  injunction.  We 
accepted  that  view  and  granted  the  writ,  in  the  circum- 
stances, notwithstanding  the  decree  was  not  final.  In.  our 
opinion  the  record  presented  the  whole  case  to  that  court,  in 
such  wise,  that  it  might  properly  have  been  finally  disposed 
of  in  terms  by  its  decree,  in  accordance  with  the  well  settled 
rule  upon  that  subject.  Mast,  Foos  <&  Go.  v.  Stover  Manu- 
facturing Co.,  177  U.  S.  485,  495 ;  Castner  v.  C  off  man,  178 
U.  S.  168,  183;  Mayor  c&c.  of  Knox  mile  v.  Africa,  77  Fed. 
Rep.  501. 

In  Western  Union  Telegraph  Comjyany  v.  Pennsylvania 
Railroad  Company  et  al.,  195  U.  S.  540,  547,  the  Circuit 
Court  had  granted  a  preliminary  injunction,  120  Fed.  Rep. 
981,  which  was  reversed  by  the  Circuit  Court  of  Appeals. 
123  Fed.  Rep.  33.  The  telegraph  company  moved  that  the 
decree  be  modified  so  as  to  direct  the  dismissal  of  the  bill. 
The  motion  was  denied,  and  the  telegraph  company  took  an 
appeal  to  this  court.  Subsequently  the  Circuit  Court  sua 
sponte  entered  an  order  dismissing  the  bill,  and  the  telegraph 
company  appealed  therefrom  to  the  Circuit  Court  of  Ap- 
peals. 195  U.  S.  547.  We  then  granted  a  certiorari,  and, 
considering  both  appeals  t>9gether,  affirmed  the  decree  of  dis- 
missal. 

In  the  present  case  we  granted  the  certiorari,  at  the  in- 
stance of  complainants,  before  the  case  had  gone  back  to  the 
Circuit  Court,  and  shall  do  what  the  Circuit  Court  of  Ap- 
peals might  have  done,  that  is,  finally  dispose  of  the  case  by 
our  direction  to  the  Circuit  Court. 

Complainants  deny  that  the  Securities  Company  became 
the  owner  of  the  Northern  Pacific  Railway  shares,  and  assert 
to  the  contrary  that  the  company  held  the  shares  as  a  trustee 
or  a  bailee  for  complainants. 

And  the  principal  ground  on  which  this  contention  is 
rested  is  that  it  was  so  adjudicated  by  the  Circuit  Court  for 
the  District  of  Minnesota  in  the  Government  suit,  by  the  de- 
cree of  April  9, 1903,  affirmed  by  this  court. 

It  may  be  said  in  passing  that  complainants  were  not  par- 
ties [288]  of  record  to  that  suit,  and  that  they  were  not  par- 
ties by  representation,  if  the  effect  of  the  transfers  as  between 


708 


197  UNITED  STATES  REPORTS,  288. 


Opinion  of  the  Court. 

the  parties  thereto  had  been  in  issue  and  the  vital  conflict 
between  complainants  and  the  corporation,  now  set  up,  then 
existed,  which  would  destroy  the  community  of  interest  on 
which  the  rule  of  representation  is  founded.  And,  on  the 
other  hand,  in  that  suit  the  Northern  Securities  Company,  at 
a  time  when  complainant  Harriman  was  a  director,  answered 
that :  "  Every  share  of  the  Great  Northern  Company  and  the 
Northern  Pacific  Company  acquired  by  this  defendant  has 
been,  and,  so  long  as  it  remains  the  property  of  the  defendant, 
will  continue  to  be,  held  and  owned  by  it  in  its  own  right, 
and  not  under  any  agreement,  promise,  or  understanding  on 
its  part,  or  on  the  part  of  its  stockholders  and  officers,  that 
the  same  shall  be  held,  owned,  or  kept  by  it  for  any  period  of 
time  whatever,  or  under  any  agreement  that  in  any  manner 
restricts  or  controls  to  any  extent  any  use  of  the  same  which 
might  lawfully  be  exercised  by  any  other  owner  of  said 
stocks." 

But  we  are  of  opinion  that  the  Circuit  Court  did  not  deter- 
mine the  quality  of  the  transfer  as  between  the  defendants 
themselves,  nor  was  that  the  purpose  of  the  Government 
proceedings. 

The  decree  of  April  9,  1903,  adjudged  that  defendants  had 
theretofore  entered  into  a  combination  or  conspiracy  in  re- 
straint of  trade  and  commerce ;  that  all  stock  of  either  of  the 
railway  companies  then  held  or  owned  by  the  Securities  Com- 
pany was  acquired  and  held  in  virtue  of  such  combination ; 
and  enjoined  the  Securities  Company  and  the  two  railway 
companies  from  receiving,  or  permitting  the  exercise  of,  any 
control  by  the  Securities  Company  over  either  railway,  or 
any  exercise  of  the  voting  power  of  the  railway  shares,  and 
the  payment  or  reception  of  dividends  upon  the  railway 
shares  held  by  the  Securities  Company;  and  the  Securities 
Company  was  forbidden  from  acquiring  further  stock  of 
either  of  the  railway  companies. 

And  it  was  provided  that  nothing  should  be  construed  as 
fBii]  prohibiting  the  Securities  Company  from  returning 
and  transferring  the  railway  shares  to  the  original  railway 
stockholders  who  had  delivered  their  shares  to  the  Securities 
Company  for  shares  of  its  stock ;  or  to  such  person  or  persons 
as  might  be  the  holders  and  owners  of  its  own  stock  origin- 


HARRTMAN^   V,    25^0RTHERN   SECURTTTES   CO. 
Opinion  of  the  Court. 


709 


ally  issued  in  exchange  or  in  payment  for  the  stock  claimed 
to  have  been  acquired  by  it  in  the  railway  companies. 

This  did  not  involve  a  decision  tliat  any  original  vendor  of 
the  railway  shares  was  entitled  to  a  judicial  restitution 
thereof,  and  such  was  the  view  of  the  Circuit  Court  itself, 
for  in  its  opinion  of  April  19, 1904,  the  court  said  : 

fo  "  ^.^^  ^f  ^'^^.  ^'^^  ^""^^"y  prohibitory.  It  enjoined  the  doing  of  cer- 
l«r,f  ^o^^i^^'^^^i^'^l^^  ^""^  ^^  l^^S  as  these  acts  are  not  done  it  enforces 
essential''     ""^  ''''"''''  ^''''^''"^  ^"^  '^'^  enforcement  is  deemed 

fhinl^  '?  ^'"  ^^  complaint  the  United  States  prayed,  among  other 
thmgs,  for  a  mandatory  mjunction  against  the  Securities  Company 
requirmg  it  to  recall  and  cancel  the  certificates  of  stock  which  it  had 
issued,  and  to  surrender  the  stock  of  the  t>vo  railway  companies  in 
exchange  for  which  its  stock  had  been  issued.  This  prayer  for  relief 
was  denied  The  court  doubted  its  power  to  compel  stockholders  of 
the  Securities  Company,  who  had  not  been  served  with  process,  and 
were  not  before  the  court  otherwise  than  by  representation  (if,  indeed 
they  were  present  by  representation),  to  surrender  stock  which  was  in 
their  possession,  and  to  take  other  stock  in  lieu  thereof.  It  accord- 
ingly contented  itself  with  an  order  which  rendered  the  stock  of  the 
two  railway  companies,  so  long  as  it  was  in  the  hands  of  the  Securities 
Company,  valueless  for  the  purpose  of  carrying  out  the  objects  of  the 
unlawful  combination  in  restraint  of  interstate  trade 

"  The  Government  was  satisfied  with  the  relief  obtained,  and  ex- 
presses itself  as  fully  satisfied  therewith  at  the  present  time.  When 
the  decree  was  entered  it  was  assumed  by  the  court  that  when  the 
stock  was  thus  rendered  valueless  in  the  hands  of  the  Securities  Com- 
pany the  stockholders  of  that  [290]  company  would  be  able,  and  like- 
wise disiw)sed,  to  make  a  disposition  of  the  stock  which,  under  all  the 
circumstances  of  the  case,  would  be  fair  and  just,  and  would  restore 
it  to  the  markets  of  the  world,  where  it  would  have  some  value,  in- 
f^u  ^^J^^^^S.  a  worthless  commodity.  It  was  thought  that  the  duty 
of  thus  disposing  of  it  could  be  safely  left  to  the  stockholders  of  the 
Securities  Company,  and  that,  if  any  controversy  arose  in  the  dis- 
charge of  this  function,  iu  view  of  the  situation  that  had  been  created 
by  the  decree,  it  would  be  a  controversy  that  would  properly  form  the 
fnterest^^  ^"^  independent  suit  between  the  parties  immediately 

,  JJ-*  ^^*^"^.t^^t  the  decree  contained  a  provision,  in  substance,  that 
nothing  therein  contained  should  be  construed  as  prohibiting  the  Secu- 
rities Company  from  returning  to  the  stockholders  of  the  Northern 
Pacific  Railway  Company  and  the  Great  Northern  Railway  Comoanv 
^^^  i"^l?"  ^^'^^^  "^^  ^*^^*^  *^  ^^t^er  of  said  railway  companies  which 
the  Northern  Securities  Company  had  acquired  iu  SSiangffor  fts 
own  stock  and  that  nothing  therein  contained  should  be  construed 
as  prohibiting  the  Securities  Company  from  making  such  transfer  of 
the  stock  aforesaid  to  such  person  or  persons  as  had  become  owners  of 
its  own  stock  originally  issued  in  exchange  for  the  stock  in  the  two 
railway  companies ;  but  this  provision  was  purely  permissive  It  did 
not  command  that  the  stock  should  be  so  returned,  or  exclude  other 
methods  of  disposition  of  it  that,  in  view  of  all  the  circumstance^ 
might  appear  to  be  more  equitable.  The  fact  that  the  directors  of 
the  Securities  Company  have  proposed  to  its  stockholders  a  plan  of 
^^^*^.^*^^?^i°^  *^®  ^^^^^^  ^^  t^®  *w<*  railway  companies  in  a  manner  some- 
what different  from  that  which  was  tentatively  suggested  by  the 


710 


Wl  Ul^ITED   STATES   EEPORTS,  290. 
Opiuion  of  the  Court. 


decree,  but  not  comma ndetl,  cannot  be  regarded  as  a  failure  to  obey 
the  decree.  It  was  said  in  argniment  that  one  purpose  of  the  interven- 
tion Is  to  hare  that  clause  of  the  decree  which  is  now  merely  permis- 
sive made  mandatoi^.  But  this  would  be  to  modify  the  provisions  of 
a  decree  which  had  become  final  by  affirmance,  and  make  an  [291] 
order  wiiich  we  expressly  and  on  full  consideration  declined  to  make 
when  the  decree  was  entered.    This  we  must  decline  to  do." 

The  decree  of  April  9,  1903,  was  affirmed  by  the  judgment 
of  this  court,  which,  of  course,  went  no  further  tlian  the 
decree  itself.  We  did,  indeed,  by  our  judgment  leave  the 
Circuit  Court  at  liberty  "  to  proceed  in  the  execution  of  its 
decree  as  the  circumstances  nuiy  require,"  but  this  did  not 
operate  to  change  the  decree  or  import  a  power  to  do  so  not 
otherwise  possessed. 

Counsel  argue,  howevei*.  that  certain  expressions  in  the 
opinion  of  ^fr.  Justice  Harlan  so  eidarged  the  scope  of  the 
decree  as  to  give  it  the  effect  now  attributed  to  it  by  com- 
plainants. 

This  suggestion  is  inconsistent  with  the  settled  rule  that 
general  expressions  in  an  opinion,  which  are  not  essential  to 
dispose  of  a  ca>^e,  are  not  i)ermitted  to  control  the  judgment 
in  subsequent  suits.  Cohens  v.  Tfrf/inm,  6  Wheat.  2G4,  399; 
CaroU  V.  CaroWn  Lessees,  10  How.  275.  But  we  do  not 
think  that  the  opinion  of  ^Ir.  Justice  Harlan  is  open  to  the 
construction  put  upon  it.  In  speaking  of  the  situation  as 
between  the  Government  and  the  defendants,  the  Securities 
Company  is  sometimes  referred  to  as  the  custodian  of  the 
shares  and  sometiun'>  as  the  absolute  owner,  but  in  the  sense 
that  in  either  view  the  combination  was  illegal.  For  the 
purpos*^s  of  that  suit  it  was  enough  that  in  any  capacity 
the  Securities  Company  had  the  power  to  vote  the  railway 
shares  and  to  recinve  the  dividends  thereon.  The  objection 
was  that  the  exercise  of  its  powers,  whether  those  of  owner 
or  of  trustee,  would  tend  to  prevent  competition,  and  thus 
to  restrain  conunerce. 

Some  of  our  numl>er  thought  that  as  the  Securities  Com- 
pany owned  the  stock  the  relief  sought  could  not  be  granted, 
but  the  conclusion  was  that  the  possession  of  the  power, 
which,  if  exercised,  would  prevent  competition,  brought  the 
case  within  the  statute,  no  matter  what  the  tenure  of  title 
was, 

[292]  Treating  the  question  as  an  open  one,  it  seems  to 


HARRIMAN    V.    NORTHERN    SECURITIES   CO. 
Opinion  of  the  Court 


711 


us  indisputable  that,  as  between  these  parties,  the  transaction 
was  one  of  purchase  and  sale.  The  situation  is  thus  well 
put  by  Dallas,  J. : 

"  The  resolution  which  authorized  the  acquisition  of  the  railway 
stock  on  behalf  of  the  Securities  Company  was  adopted  by  its  board 
of  directors  at  a  meeting  at  which  Mr.  Harriman  Avas  present  as 
a  member  of  the  board,  and  the  only  authority  it  conferred  was 
•  to  purchase  said  stock  *  ♦  *  at  an  aggregate  price  of  ^01,407.500, 
payable,  as  to  $82,4.01,871  thereof,  in  the  fully  paid-up  and  non- 
assessable shares  of  the  capital  stock  of  this  company  at  par,  and 
as  to  $8,91o,«20,  in  cash.'  It  is  obvious  that  this  resolution  con- 
templated a  *  purchai-e.'  and  not  a  bailment  or  trust ;  and  that  it 
accurately  stated  the  nature  and  terms  of  the  contract  which  was 
actually  made  by  and  with  the  Securities  Company  is  unequivocally 
sliown  l)y  what  was  done  in  pursuance  of  it.  Tlie  railway  shares 
were  unconditionally  assigned  to  that  company.  The  price  si»ecitied 
in  the  resolution  was  paid  by  it.  and  this  payment  was  made  partly 
in  cash  and  partly  in  shares  of  its  own  stock,  for  which  corporate 
certificates  in  the  ordinary  form  were'delivered  and  accepted.  *  *  ♦ 
The  complainants  received  dividends  uixm  tlie  stock  that  was  issued 
to  them,  which  were  paid  out  of  tlie  general  funds  of  the  Securities 
Company ;  and  bv  its  indenture  to  the  Equitable  Trust  Company  of 
New  York  the  Oregon  Short  Line  Railroad  Company  irrefutably 
asserted  its  ownership  of  the  Securities  Company  stock  which  it 
tliereby  i)leilged." 

And  the  Securities  Company  sold  75,000  shares  of  its  stock 
for  $7,522,000  cash,  "  used,"  as  stated  in  the  bill,  ''  for  the 
purchase  of  other  property  and  for  corporate  purposes." 

But  assuming  that  the  transaction  was  in  form,  and  at 
least  prima  facie  in  substance,  one  of  purchase  and  sale,  it  is 
denied  that  the  equitable  title  vested  because,  as  alleged  in 
the  second  amended  bill,  there  was  an  agreement  by  the 
promoters  of  the  Securities  Company,  carried  out  by  that 
[293]  comi)any,  that  the  latter  should  "  acquire  and  hold 
the  shares  of  said  raflway  stocks,  as  aforesaid,  as  custodian, 
depositary,  or  trustee,  and  to  issue  in  exchange  therefor  its 
own  share  certificates  upon  said  agreed  basis."  And  here 
again  we  concur  in  the  views  of  the  Circuit  Court  of  Appeals 
as  expressed  by  Judge  Dallas. 

"  The  agreement  thus  set  up  is  not  in  accord  with  the  documentary 
evidence  which  has  been  referred  to,  and  to  establish  its  existence  a 
cle  ir  preponderance  of  proof  should  at  least  be  required,  whereas,  in 
our  opinion,  it  conclusively  appears  that  no  such  agreement  was  ever 
made.  Mr.  Harriman  himself  has  distinctly  testified  that  the  North- 
ern Pacific  stock  in  question  was  sold;  that  the  transaction  was  not 
an  exchange;  that  he,  principally,  negotiated  the  sale;  and  that  there 
was  not  attached  to  the  negotiations  any  condition  except  as  to  price. 
And  to  the  same  effect  is  his  affidavit  in  this  case,  in  which  he  de- 
posed that  he  was  urged  by  Messrs.  Morgan  &  Co.  to  dispose  of  the 


712 


B7   UNITED   STATES   BEPORTS,  293. 
Opinion  of  the  CJonrt 


Nortlieni  Pacific  stoclj  heid  by  the  Oregon  Short  Line  Company,  and 
that  they  further  stated  that,  npon  the  organization  of  the  proposed 
holding  company,'  not  that  it  would  take  as  custodian  or  trustee, 
^\i  ir  5!^^  ^2?^^  ^  prepared  to  purchase  the  holdings  of  stoclc 
of  the  Nortliem  Pacific  owned  by  the  Oregon  Short  Line,  and  pay 
therefor  in  the  stock  of  the  holding  company.'  These  statements  of 
tbat  one  of  the  complainants  having  most  knowledge  of  the  sublect 
confirmed,  as  they  are,  by  other  evidence,  make  it  quite  impossible  to 
believe  that  the  railway  stock  was  received  by  the  Securities  Company 
merely  as  a  custodian  or  depositary.  The  only  agreement  upon  which 
iL^TK*'"Tf^"*®1.,'^**®  *^"  unqualified  agreement  of  sale,  and  the  fact 
£^n  ^J^Zi7^'\''''^''^'l''l  Securities  Company  was  organiz^  hal 
been  compiilsorily  abandoned  has  not  divested  or  in  anv  wnv  affected 
tte  absolute  title  which,  by  executed  contract  of  purchase,  it*  acquired 
Undoubtedly,  it  was  anticipated  by  the  complainants,  as  bv  all  c^I 
ceraed,  that  the  rights  ordinarily  incident  to  the  ownership  of  stock 
Inclnding  the  right  to  vote  and  [894]  to  receive  dividends,  would  be 
exercisable  as  to  this  stock  by  the  Securities  Company.  But  expecta- 
tion IS  not  contract,  and  therefore  the  frustration  of  this  anticioa- 
Mon  cannot  he  said  to  have  occasioned  a  failure  of  consideration, 
i^  .?.  I  consideration  agreed  upon  was  payment  of  the  price,  and 
admittedly  that  payment  was  made." 

Complainants'  counsel  say,  in  respect  of  Mr.  Harriman's 
testimony  that  the  transaction  was  an  unconditional  purchase 
and  sale,  that  he  only  swore  to  his  opinion  on  a  question  of 
law.  This  will  hardly  do  when  applied  to  testimony  as  to 
what  was  said  and  done  in  conference  with  the  alleged  pro- 
moters of  the  Securities  Company.  When  Mr.  Harriman 
testified  that  he  attached  to  his  negotiations  in  the  sale  of 
Northern  Pacific  stock  no  other  condition  than  that  of  the 
price,  and  that  the  transaction  was  completed,  how  can  com- 
plainants be  permitted  to  deny  that  this  was  a  statement  of 
fact?  And  how  can  the  establishment  of  the  contract  and  its 
terms  as  embodied  in  the  resolutions  of  November  16,  1901, 
approved  at  the  succeeding  meeting  by  the  vote  of  Mr. 
Harriman,  and  which  appeared  to  be,  and  were  testified  to 
by  Mr.  Hill,  President  of  the  Securities  Company,  as  con- 
stituting  the  only  contract  which  was  made  and  authorized, 
be  overthrown  in  the  absence  of  any  evidence  to  the  contrary  ? 

The  consideration  received  by  complainants  consisted  of 
money  and  Northern  Securities  stock  certificates.  Those 
certificates  were  in  common  form,  and  each  was  a  muniment 
of  the  holder's  title  to  a  proportionate  interest  in  the  corpo- 
rate estate  vested  in  the  corporation.  By  the  provisions  of 
the  corporation  act  of  New  Jersey,  and  its  certificate  of  in- 
corporation and  distribute  its  assets.  Complainants  sub- 
and  to  hold,  and  at  any  time  to  sell,  the  shares  of  other  corpo- 


HABKIMAN    V,    NOKTHERN   SECURITIES   CO. 


718 


Opinion  of  the  Court. 

rations.  And  under  that  act  it  had  power,  in  the  discretion 
of  its  directors  and  of  the  holders  of  two-thirds  of  its  capital 
stock,  at  any  time,  on  notice,  to  dissolve  and  to  wind  up  the 
corporation  and  distribute  its  assests.  Complainants  sub- 
jected themselves  to  this  power  in  accepting  the  shares  of  the 
[295]  Northern  Securities  Company,  and  their  unqualified 
transfer  of  their  railway  stock  was  inconsistent  with  any 
obligation  of  the  Securities  Company  to  retain  the  railway 
shares  for  any  particular  period. 

In  acquiring  the  Securities  stock,  complainants  acquired 
the  ordinary  rights  of  stockholders  in  New  Jersey  business 
corporations,  including  the  right  to  receive  dividends,  and  to 
share  in  the  distribution  of  the  assets  of  the  corporation  on 
its  dissolution,  or  of  any  surplus  of  assets  on  reduction  of 
its  capital  stock.  In  view  of  the  decree  of  the  Circuit  Court 
for  the  District  of  Minnesota  in  the  Government's  suit  the 
continued  ownership  of  the  railway  shares  became  useless  to 
the  stockholders  of  the  Securities  Company,  and  accordingly 
the  directors  decided  to  reduce  the  capital  stock  and  dis- 
tribute the  surplus  of  assets  created  by  that  reduction,  and 
the  resolutions  to  that  end  were  ratified  by  a  vole  of  iuore 
than  two-thirds  of  the  Securities  shares. 

By  the  transfer  of  the  Northern  Pacific  shares  and  the  pay- 
ment therefor  as  agreed  the  contract  was  executed,  and  the 
implied  obligations  resulting  from  the  relation  of  corpora- 
tion and  stockholder  alone  remained  executory.  And  when 
the  Securities  Company  resolved  to  distribute  these  railway 
shares  ratably  among  all  its  stockholders,  it  did  this  in  per- 
formance of  its  contract  with  them  and  not  in  repudiation  of 
it.  It  is  the  complainants  who  are  seeking  the  determi- 
nation and  repudiation  of  the  contract.  Their  final  con- 
tention in  that  regard  is  that  they  are  entitled  to  a  decree 
rescinding  the  contract  of  purchase  and  sale,  and  directing 
the  return  of  the  railway  shares  parted  with  by  them  thore- 
under,  because  of  the  illegality  of  the  transaction  as  ad- 
judged in  the  Federal  courts. 

And  this  in  defiance  of  the  settled  rule  (hat  property 
delivered  under  an  illegal  contract  cannot  be  recovered  back 
by  any  party  in  pari  delicto.  "The  general  rule,  in  equity, 
as  at  law,"  said  Mr.  Justice  Gray  in  St  Louis,  Vandalia  k- 


714 


197  UNITED   STATES   KEPORTS,  295. 


HARRTMAN    V.    NORTHERN   SECURITIES   CO. 


715 


Opinion  of  the  Court 

Terre  Hmtte  Rmlroad  Company  v.  Terre  Eante  dh  Indian- 
upolis  [2%]  Railroad  Cmipany,  145  U.  S.  393,  '•  is  In  paH 
delicto  potior  est  conditio  defendentis;  and  therefore  neither 
party  to  an  illegal  contract  will  be  aided  by  the  court, 
whether  to  enforce  it  or  to  set  it  aside.  If  the  contract  is 
illegal  affirmative  relief  against  it  will  not  be  granted,  at  law 
or  in  equity,  unless  the  contract  remains  executory,  or  unless 
the  parties  are  considered  not  in  equal  fault,  as  where  the 
law  violated  is  intended  for  the  coercion  of  the  one  party, 
and  the  protection  of  the  other,  or  where  there  has  been  fraud 
or  oppression  on  the  part  of  the  defendant.  Thomas  v. 
Eichmond,  12  Wall.  349,  355;  Spring  Co.  v.  Enowlton,  103 
U.  S.  49 ;  Story  Eq.  Jur.  §  298.     ♦     *     * 

"  When  the  parties  are  in  pan  delicto,  and  the  contract 
has  hjen  fully  executed  on  the  part  of  the  plaintiff,  by  the 
conveyance  of  property,  or  hy  the  payment  of  money,  and 
has  not  been  repudiated  by  the  defendant,  it  is  now  equally 
well  settled  that  neither  a  court  of  law  nor  a  court  of  equity 
will  assist  the  plaintiff  to  recover  back  the  property  con- 
veyed or  money  paid  under  the  contract.  Thomns  v.  Rich- 
mondj  sypra:  AyerH  v.  JenHns,  L.  K.  16  Eq.  275,  284." 

That  Avas  a  suit  in  equity  by  the  maker  of  mi  unauthorized 
lease  of  a  railway  and  franchises,  against  the  lessee,  to 
enforce  an  attempted  repudiation  of  the  lease  by  the  former, 
on  the  ground  of  the  illegality.  The  lease  was  for  nine 
hundred  and  ninety-nine  years,  of  Avhich  but  a  few  years 
had  elapsed  at  the  date  of  the  attempted  rescission. 

The  illegality  of  the  lease  and  the  consequent  breach  of 
public  duty  were  manifest,  but  the  right  of  the  lessor,  there- 
fore, to  maintain  the  suit  was  denied  bv  this  court. 

In  the  present  case  complainants  seek  the  return  of  prop- 
erty delivered  to  the  Securities  Company  pursuant  to  an 
executed  contract  of  sale  on  the  ground  of  the  illegality  of 
that  contract,  l)ut  the  record  discloses  no  special  consider- 
ations of  equity,  justice  or  public  policy,  Avhich  would  justify 
the  courts  in  relaxing  the  rigor  of  the  rule  which  bars  a 
recoverv. 

The  Circuit  Court  decrees  put  at  rest  any  question  that  the 
f297l  ratable  distribution  resolved  upon  was  in  violation  of 
public  policy. 


Opinion  of  the  Court. 

And  it  is  clear  enough  that  the  delivery  to  complainants  of 
a  majority  of  the  total  Northern  Pacific  stock  and  a  ratable 
distribution  of  the  remaining  assets  to  the  other  Securities 
stockholders  would  not  only  be  in  itself  inequitable,  but 
would  directly  contravene  the  object  of  the  Sherman  Law  and 
the  purposes  of  the  Government  suit. 

The  Northern  Pacific  system,  taken  in  connection  with  the 
Burlington  system,  is  competitive  with  the  Union  Pacific 
system,  and  it  seems  obvious  to  us,  the  entire  record  consid- 
ered, that  the  decree  sought  by  complainants  would  tend  to 
smother  that  competition. 

While  the  superior  equities,  as  against  complainants'  pres- 
ent claim,  of  the  many  holders  of  Securities  shares  who  pur- 
chased in  reliance  on  the  belief  that  they  thereby  acquired  a 
ratable  interest  in  all  of  the  assets  of  the  Securities  Company, 
are  too  plain  to  be  ignored. 

The  illegal  contract  could  not  be  made  legal  by  estoppel, 
but  the  ownership  of  the  assets,  unaffected  by  a  special  in- 
terest in  complainants,  could  be  placed  beyond  dispute  on 
their  part  by  their  conduct  in  holding  the  Securities  Com- 
pany out  to  the  world  as  unconditional  owner. 

And,  without  repeating  in  detail  what  has  been  already  set 
out,  it  is  plain  that  right  of  rescission  of  the  executed  contract 
of  November  18,  1901,  even  if  rescission  could  have  otherwise 
been  sustained,  had  been  lost  by  acquiescence  and  laches  at 
the  time  this  bill  was  filed. 

Since  the  transfer  of  that  date  Securities  stock  had  passed 
into  the  hands  of  more  than  2,500  holders,  manv  of  them  in 
Great  Britain,  France  and  other  parts  of  Europe:  nearly  a 
year  after  the  filing  of  the  Government  bill  75,000  shares 
were  sold  for  cash,  complainant  Harriman  concurring;  some 
months  after,  Harriman  and  Pierce  and  the  Oresron  Short 
Line  Company  pledged  their  824,000  shares  to  the  Equitable 
Trust  Company;  notwithstanding  the  decree  of  April  9, 
1903,  they  [298]  stood  upon  their  rights  as  shareholdei-s ; 
and  it  was  not  until  after  March  22,  1904,  when  defendant's 
board  of  directors  resolved  upon  a  ratable  distribution  that 
complainants  undertook  to  change  an  election  already  so 
pronounced  as  to  be  irrevocable  in  itself  in  view  of  the  rights 
of  others. 


716 


191  UNITED   STATES   REPORTS,  298. 


Opinion  of  tlie  Court 

We  regard  the  contention  that  complainants  are  exempt 
from  the  doctrine  in  pari  delicto  because  the  parties  acted  in 
good  faith  and  without  intention  to  violate  the  law  as  with- 
out merit  With  knowledge  of  the  facts  and  of  the  statute, 
the  parties  turned  out  to  be  mistaken  in  supposing  that  the 
statute  would  not  be  held  applicable  to  the  facts.  Neither 
can  plead  ignorance  of  the  law  as  against  the  other,  and  de- 
fendant secured  no  unfair  advantage  in  retaining  the  consid- 
eration voluntarily  delivered  for  the  price  agreed. 

Perhaps  it  should  be  noticed  that  the  bill  sought  the  return 
of  two  parcels  of  Northern  Pacific  common  stock,  the  370,230 
shares  delivered  to  the  Securities  Company,  November  18, 
1001,  and  the  347,090  shares  received  December  27,  1901, 
from  the  Northern  Pacific  Company  on  the  retirement  of  pre- 
ferred stock. 

Early  in  1901  the  Hill-Morgan  party  held  a  majority  of 
the  common  stock,  and  had  asserted  the  intention  to  retire  the 
preferred  stock,  "  without,"  as  Mr.  Harriman  testified,  "  af- 
fording the  holders  of  the  preferred  stock  the  right  to  par- 
ticipate in  any  new  securities  that  might  be  issued." 

With  full  knowledge  of  that  intention  the  proceedings  of 
the  two  companies  followed  in  November,  1901,  and  the  abso- 
lute and  unconditional  sale  and  purchase,  as  we  hold  the 
transaction  to  have  been. 

We  find  no  evidence  of  any  express  agreement  that  com- 
plainants should  be  entitled  to  the  new  common  stock,  and  it 
was  certainly  not  the  natural  increase  of  the  old  stock,  but 
the  result  of  the  exercise  of  the  right  of  subscription.  The 
purchase  by  the  Securities  Company  was  on  its  own  account 
and  not  in  trust,  and  cannot  be  disturbed  because  of  illegal 
purpose  at  the  clamor  of  parties  in  pari  delicto.  And  there 
is  [2901  here  no  offer  of  the  restoration  of  the  status  quo,  if 
that  were  practicable. 

Doubtless  it  became  the  duty  of  the  Securities  Company  to 
end  a  situation  that  had  been  adjudged  unlawful,  and  this 
could  be  effected  by  sale  and  distribution  in  cash,  or  by  dis- 
tribution in  kind,  and  the  latter  method  was  adopted,  and 
wisely  adopted,  as  we  think,  for  the  forced  sale  of  several 
hundred  millions  of  stock  would  have  manifestly  involved 
disastrous  results. 


BOARD   OF   TRADE    V.    CHRISTIE   GRAIN    &  STOCK   CO.        71 7 

Syllabus. 

In  fine,  the  title  to  these  stocks  having  intentionally  been 
passed,  the  former  owners  or  part  of  them  cannot  reclaim  the 
specific  shares  and  must  be  content  with  their  ratable  propor- 
tion of  the  corporate  assets. 

Decree  affirmed;  cause  remanded  to  Circuit  Court  with  a 
direction  to  dismiss  the  hill. 


\2U]  BOARD  OF  TRADE  OF  THE  CITY  OF  CHI- 
CAGO V.  CHRISTIE  GRAIN  AND  STOCK  COM- 
PANY.« 

CERTIORARI  TO  THE  CIRCUIT  COURT  OF  APPEALS  FOR  THE  EIGHTH 

CIRCUIT. 

L.  A.  KINSEY  COMPANY  v.  BOARD  OF  TRADE  OF 

THE  CITY  OF  CHICAGO.^ 

CERTIORARI  TO  THE  CIRCUIT  COURT  OF  APPEALS  FOR  THE  SE^^NTH 

CIRCUIT. 
Nos.  224,  280.     Argued  April  20,  24,  25,  1905.— Decided  May  8,  1905. 

1.198  U.  S.,  236.] 
The  Chicago  Board  of  Trade  collects  at  its  own  expense  quotations  of 
prices  offered  and  accepted  for  wheat,  corn  and  pro\  isions  in  its 
exchange  and  distributes  them  under  contract  to  persons  approved 
by  it  and  under  certain  conditions.  In  a  suit  brought  by  it  to 
restrain  parties  from  using  the  quotations  obtained  and  used  with- 


oln  the  Christie  case  an  injunction  was  granted  by  the  Circuit 
Court  of  the  United  States  for  the  Western  District  of  Missouri,  July 
5,  1902  (116  Fed.,  944),  but  it  was  not  based  in  any  way  upon  the 
anti-trust  law,  and  therefore  the  decision  is  not  reprinted.  On  final 
hearing,  March  19,  1903,  the  court  considered  the  matter  from  the 
standpoint  of  the  anti-trust  law  and  adhered  to  its  original  con- 
clusions (121  Fed.,  608).  See  p.  233.  The  decree  was  reversed  by 
the  Circuit  Court  of  Appeals,  Eighth  Circuit  (125  Fed.,  161)  but  not 
upon  any  ground  related  to  the  antitrust  law.  That  decision  not 
reprinted.  The  action  of  the  Circuit  Court  of  Appeals  was  reversed  by 
the  Supreme  Court,  and  the  injunction  was  allowed  (198  U.  S.,  236). 

&  In  the  Kinsey  case  an  injunction  was  denied  the  board  of  trade 
by  the  Circuit  Court  for  the  District  of  Indiana,  July  14,  1903  (125 
Fed.,  72).  The  decree  was  reversed  by  the  Circuit  Court  of  Appeals 
Seventh  Circuit,  April  12,  1904,  with  direction  to  eater  a  decree  in 
appellant's  favor  (130  Fed.,  507).  Antitrust  law  not  discussed  by 
either  court.  Those  decisions  not  reprinted.  Affirmed  by  the  Supreme 
Court  (198  U.  S.,  236). 


718 


198  UNITED   STATES  BEPOBTS,  236. 


Argument  for  Board  of  Trade. 

out  authority  of  th.3  Board,  defeudauts  contended  that  as  the  Board 
of  Trade  pennitted,  and  the  quotations  related  to.  transactions  for 
tlie  preteudeil  Imyhig  of  grain  without  any  intention  of  actually 
receiving,  delivering  or  iiaying  for  the  same,  that  the  Board  vio- 
lated'the  Illinois  bucket  shop  statute  and  there  were  no  property 
rights  in  the  quotations  which  the  court  could  protect,  and  tliat  the 
giving  out  of  the  quotations  to  certain  persons  makes  them  free  to 
all.    TfvhL  that 

Even  if  such  pretended  huying  and  selling  is  permitted  hy  the  Buard 
of  Trade  it  is  entitled  to  have  its  collection  of  quotations  protected 
by  the  law,  and  to  keep  the  work  which  it  has  done  to  itself,  nor 
does  it  lose  its  property  rights  in  the  (piotations  by  connnunicating 
them  to  ceitain  i)ersons,  even  though  many,  in  confidential  and 
contractual  relations  [237]  to  itself,  and  strangers  to  tlie  trust 
may  be  restrained  from  ol)taining  and  using  the  quotations  by 
including  a  l»reach  of  the  trust." 

A  collection  of  information,  otherwise  entitled  to  protection,  does  not 
cease  to  he  so  l)ecause  it  concerns  illegal  acts,  and  statistics  of 
crime  are  iiroiierty  to  the  same  extent  as  other  statistics,  even  if 
collecrted  by  a  criminal  who  furnishes  some  of  the  data. 

Contracts  under  which  the  Board  of  Trade  furnishes  telegraph  com- 
panies with  its  quotations,  which  it  could  refrain  from  connnuni- 
cating at  all,  on  condition  that  they  will  only  be  distributed  to 
persons  in  contractual  relations  with,  and  approved  by,  the  Board, 
and  not  to  what  are  known  as  bucket  shops,  are  not  void  and 
against  public  policy  as  being  in  restraint  of  trade  either  at  eonnnon 
law  or  under  the  Anti  Trust  Act  of  July  2.  1890. 

The  facts  are  stated  in  the  opinion. 

Mr.  Ilenn/  aS.  Rohhinft  for  jyetitioner  in  Xo.  224  and  re- 
spondent in  Xo.  280 : 

It  is  not  a  good  defense  to  these  suits  that  most  of  the 
transactions,  out  of  which  the  quotations  arise  are  gambling 
transactions.  The  viohition  by  a  plaintiff  of  a  criminal 
statute  of  one  State  does  not  debar  him  from  maintaining 
suits  to  protect  his  property  in  a  Federal  court  in  another 
State.  Penal  laws  do  not  reach,  in  their  effect,  beyond  the 
jurisdiction  of  where  they  were  established.  Commomvealth 
V.  Green  J  7  Massachusetts,  50,  674;  Logan  v.  United  States, 
144  IJ.  S.  263,  303;  State  v.  Pelican  Ins.  Co.,  127  U.  S.  265, 
289 ;  The  Antelope,  10  Wheat.  66, 123 ;  FolUott  v.  Ogden,  1 H. 
Blacks.  123,  135:  FMer  v.  Eerger,  120  Fed.  Rep.  274.  And 
see  also  City  of  Chicago  v.  Stock  Yards,  164  Illinois,  224, 
238;  Eateman  v.  Fargason,  4  Fed.  Rep.  32;  AnfJeg  v.  WU- 

a  Syllabus  copyrighted,  1905,  by  The  Banks  Law  Publisliing  Co. 


BOARD    OF   TRADE    V.   CHRISTIE   GRAIN   &  STOCK    CO.        719 

Argument  for  Board  of  Trade. 

son,  50  Georgia,  121;  Langdon  v.  Templeton,  06  Vermont, 
173;  1  Pom.  Eq.  §  399. 

Petitioner's  misconduct,  if  any,  respecting  the  transactions 
upon  its  exchange,  prejudicially  affects  these  respondents 
only  as  it  does  the  public  at  large. 

The  general  dissemination  of  these  quotations  is  conceded 
to  be  highly  beneficial  to  legitimate  commerce.     Respond- 
ents' answer  so  admits.    So  the  Illinois  Supreme  Court  has 
also  held.     AStoc/.'  Exehaiige  v.  Board  of  Trade,  127  Illinois 
153. 

1 238]  The  Board  of  Trade's  conduct  with  respect  to  the 
quotations,  is  not  at  all  reprehensible.  It  gives  them  to  all 
persons  desiring  them  for  lawful  purposes,  and  only  with- 
holds them,  as  it  lawfully  may,  from  bucket  shops. 

As  to  the  Illinois  bucket  shop  law,  see  Sohy  v.  People,  134 
Illinois,  66.     It  does  not  apply  to  exchanges. 

Market  news,  whose  dissemination  is  helpful  to  commerce, 
is  not  to  be  deemed  infected  with  illegality  or  beyond  judi- 
cial protection,  because  the  owner  of  this  news  maintains  an 
exchange,  where  parties  to  most  of  the  tra?isactions  it  records 
do  not  contemplate  actual  delivery.  The  existence  of  a  prop- 
erty right  in  news  depends  upon  its  source,  rather  than  the 
character  or  utility  of  the  news  itself.  Brooks  v.  Martin,  2 
Wall.  79;  Planters'  Bank  v.  Uiiion  Bank,  16  Wall.  483,  499. 

As  matter  of  fact  it  is  not  true  that  most  of  the  trades, 
Avhose  prices  these  quotations  record,  are  gambling  trans- 
actions. 

As  to  the  principle  and  legality  of  the  systems  of  offset- 
ting or  elimination  of  trades  which  will  be  found  in  most 
commercial  exchanges,  see  Clevs  v.  Jamieson.  182  U.  S.  461; 
Lehman  v.  Feld,  37  Fed.  Rep.  852;  Irwin  y.  Wilbur,  110 
U.  S.  499;  Blhh  v.  Allen,  110  U.  S.  500. 

The  Board  of  Trade  should  not  be  held  responsible  for 
what  gambling  there  is  upon  its  exchange,  and  on  that  ac- 
count be  deprived  of  its  right  to  sue  to  protect  its  property 
in  its  quotations. 

There  is  a  property  right  in  the  quotations  which  equity 
will  protect  by  injunction. 

Both  in  England  and  this  country  market  news  thus  dis- 
tributed as  are  these  quotations,  is  a  species  of  property. 


720 


198  UNITED  STATES  BEPORTS,  238. 
Argument  for  Board  of  Trade. 


which  a  court  of  equity  will  protect  by  injunction.  Ex- 
change  Tel.  Co.  v.  Gregory,  L.  E.  (1896),  1  Q.  B.  147;  Dodge^ 
Co,  V.  Construction  Co,,  183  Massachusetts,  62;  Kieman  v. 
Manhattan  Tel,  Co,,  50  How.  Pr.  194 ;  Nat.  Tel.  News  Co. 
V.  West.  Un,  Tel.  Co.,  119  Fed.  Eep.  294 ;  Illinois  Com.  Co.  v. 
Cleveland  Tel.  Co.,  119  Fed.  Rep.  SOI ;  Cleveland  Tel,  Co,  v. 
Stone,  105  [230]  Fed.  Rep.  594;  Board  of  Trade  v.  Hadden- 
Kf^U  Co.,  103  Fed.  Rep.  902 ;  S.  C,  109  Fed.  Rep.  705 ;  this 
case  below  116  Fed.  Rep.  944. 

Board  of  Trade  quotations  are  a  species  of  property.  Stock 
Exchange  v.  Board  of  Trade,  127  Illinois,  153. 

That  this  market  news  is  too  evanescent  to  derive  any 
protection  from  the  Copyright  Act,  a  perusal  of  that  statute 
will  show.  Nat.  Tel.  News  Co.  v.  West.  Un.  Tel.  Co,,  supra; 
Clayton  v.  Stone,  2  Payne,  382 ;  S.  C,  Fed.  Cas.  2872. 

As  to  the  protection  of  literary  property,  apart  from  the 
statutory  provisions  of  copyright  law,  see  Millar  v.  Taylor, 
4  Burr,  2303 ;  Donaldson  v.  Becket,  4  Burr,  2408 ;  Wheaton 
V.  Peters,  8  Pet.  591 ;  Holmes  v.  Hurst,  174  U.  S.  82;  Tomp- 
kins V.  Halleck,  133  Massachusetts,  32 ;  Palmer  v.  DeWitt,  47 
N.  Y.  532.  See  other  cases  applying  the  same  principle  to 
dramas,  exhibition  of  paintings,  etc.  MacMin  v.  Richardson, 
Ambl.  694 ;  Crowe  v.  Aiken,  2  Biss.  208 ;  S.  C,  Fed.  Cas.  No. 
3441 ;  Albert  v.  Strange,  2  DeG.  S.  &.  M.  652 ;  Turner  v.  Roh- 
inson,  10  Irish  Ch.  121,  And  in  the  case  of  lectures.  Aher- 
mihy  V.  Hutchinson,  1  Hall.  &  Tw.  28 ;  Caird  v.  Simes,  L.  R, 
(1887)  12  H.  L.  326.  See  also  Barthtte  v.  Chittenden,  4 
McLean,  300;   S.  C,  Fed.  Cas.  No.  1082. 

The  contracts  between  the  Board  of  Trade  and  the  tele- 
graph companies  are  not  illegal  and  are  not  in  restraint  of 
trade  under  the  common  law  or  any  state  or  Federal  statute, 
and  as  to  duty  of  the  Board  to  give  out  the  quotations  see 
Stock  Exchange  v.  Board  of  Trade,  127  Illinois,  153;  and 
cmtra,  Ladd  v.  7=^.  C,  P.  <&  M,  Co.,  53  Texas,  172 ;  Delaware 
R.  R.  Co.  V.  Central  Co.,  45  N.  J.  Eq.  50;  StaU  v.  Ass'^d 
Press,  159  Missouri,  424 ;  Re  Renville,  46  App.  Div.  N.  Y.  37 ; 
Central  Exch.  v.  Board  of  Trade,  196  Illinois,  396 ;  Smith  v. 
West.  Un,  Tel,  Co.,  84  Kentucky,  664 ;  Bryant  v.  West.  Un. 
Tel  Co.,  17  Fed.  Rep.  825 ;  Bradley  v.  West.  Un,  Tel.  Co., 
9  Con.  Law  Bull.  223 ;  27  Am,  &  Eng.  Ency.  of  Law,  2d  ed., 


BOARD   OF   TRADE   V.   CHRISTIE   GRAIN   &  STOCK   CO.        721 

Argument  for  Board  of  Trade. 

1039,  1094;  Gray  on  Telegraphs,  19;  Rev.  Stat.  Missouri, 
1889,  §  2338;  Bucket  Shop  Statute  of  Illinois;  State  v.  Bell 
Tel.  Co.,  23  Fed.  Rep.  [240]  539 ;  Am.  Tel,  Co,,  v.  Conn,  Tel. 
Co,,  49  Connecticut,  352;  Sullivan  v.  Post.  Tel,  Co.,  123 
Fed.  Rep.  411 ;  Wilson  v.  N,  Y,  Comm,  Tel.  Co.,  3  N.  Y. 
Supp.  633.  Nor  is  it  a  violation  of  the  Sherman  Act,  or 
illegal  at  common  law  to  impose  restrictions  as  to  use  of  quo- 
tations. Whitwell  V.  Continental  Tolacco  Co.,  125  Fed.  Rep. 
454;  Mitchell  v.  Reynolds,  1  Poere  Williams,  181;  Elliman 
V.  Carrington,  L.  R.  1901,  2  Ch.  Div.  275 ;  Fowle  v.  Park,  131 
U.  S.  88;  Bement  v.  Nat.  Hankow  Co.,  186  U.  S.  70;  United 
States  V.  E.  C.  Knight  Co.,  156  U.  S.  1,  16;  Northern  Secu- 
rities Co.  V.  United  States,  193  U.  S.  197,  338 ;  Hopkins  v. 
United  States,  171  U.  S.  578,  600;  Anderson  v.  United  States, 
171  U.  S.  604,  615 ;  United  States  v.  Joint  Traffic  Associa- 
tion, 171  U.  S.  558 :  Alexander  v.  State,  86  Georgia,  246. 

The  anti-bucket  shop  acts  were  in  force  when  the  Sherman 
Act  was  passed.  They  promote  public  welfare.  They  were 
passed  in  the  exercise  of  the  State's  police  power.  Doubt- 
less that  power  must  yield,  when  necessary,  to  the  paramount 
power  of  Congress  to  regulate  commerce;  but  this  court' 
should  not,  in  the  absence  of  clear  language,  assume  that  Con- 
gress intended  by  this  act  to  nullify  these  state  statutes,  if 
indeed  it  lawfully  might  do  so.  Sherlock  v.  Ailing,  93  U.  S. 
99 ;  Plumley  v.  Massachusetts,  155  U.  S.  461 ;  Patterson  v. 
Kentucky,  97  U.  S.  501 ;  Nashville  Ry.  v.  Alabama,  128  U.  S. 
96 ;  Hennington  v.  Georgia,  163  U.  S.  299. 

Is  it  not  a  more  reasonable  construction  of  this  act  that 
Congress  did  not  intend  to  cover  this  subject  or  invade  this 
field  at  all,  and  that  States  may  still,  under  their  police 
power,  prevent  the  transmission  of  quotations  into  a  State 
for  use  there  in  a  bucket  shop  ? 

Mr.  James  H.  Harkless  and  Mr.  W.  H.  Rossington,  with 
whom  Mr.  Chester  H.  Crum,  Mr.  Charles  S.  Crysler,  Mr. 
Clifford  Hinted,  Mr.  Charles  Blood  Smith  and  Mr.  J.  S.  West 
were  on  the  brief,  for  respondent  in  No.  244. 

Mr.  Lloyd  Charles  Whitman  and  Mr.  E.  D.  Crumpacker, 
with  whom  Mr.  Jacob  J.  Kern,  Mr.  John  A.  Brown  and 

21220— VOL  2—07  M i6 


799 


198  UNITE©   STATES   REPORTS,  241. 


Argument  for  Christie  and  Kinsey  companies. 

[241]  Mr,  Peter  Crumpacker  were  on  the  brief,  for  the  peti- 
tioner in  No.  280 : 

The  quotations  are  not  property  and  cannot  be  impressed 
with  a  right  of  property  by  the  Board  of  Trade.  Sayre  v. 
Moorej  1  East.  Kep.  S61 ;  Jefferys  v.  Boosey,  4  H.  L.  Cas.  815 ; 
Crowe  V.  Aiken^  2  Bissell,  214;  Thompson  v.  Hiibhard^  131 
U.  S.  151;  lolantlie  Cmey  15  Fed.  Kep.  442;  West,  Pub,  Co. 
V.  Lawyers  Coop.  Co.,  64  Fed.  Eep.  364 ;  Stowe  v.  Thomas, 
Fed.  Cas.  No.  13514,  and  cases  cited  bv  counsel  for  Board  of 
Trade. 

The  Board  of  Trade  has  no  property  right  or  interest  in  or 
to  the  knowledge  of  the  quotations,  as  they  arise  from  the 
transactions  of  its  members  on  the  exchange.  Cases  cited 
supra  and  Kerns  v.  Wheatley,  Fed.  Cas.  No.  7644. 

The  right  of  property  to  mental  or  literary  effort  rests 
fundamentally  upon  the  creative  faculty  which  must- have 
been  exercised  by  the  claimant  or  one  through  whom  his 
title  is  derived. 

Nothing  can  be  the  object  of  property  which  has  not  a 
corporeal  substance.  Wheaton  v.  Peters',  8  Pet.  591 ;  nor  be 
the  object  of  property  which  is  not  capable  of  sole  and  ex- 
clusive enjoyment.  Millar  v.  Taylor,  4  Burr,  2361 ;  2  Kent's 
Com.  320;  Webster;  Bouvier,  sub.  "Property";  Sliouler's 
Personal  Property,  §  2;  1  Blackstone,  138;  Jones  v.  Van 
Zandts,  4  McLean,  603.  To  be  property  it  must  be  capable 
of  distinguishable  proprietary  marks.  Jeferys  v.  Boosey,  4 
H.  L.  Cas.  869.  The  Board  of  Trade  cannot  alter  the  essen- 
tial nature  of  the  quotations.  Its  sole  right  of  property  is 
confined  to  the  records  themselves. 

It  has  no  property  interest  in  quotations  made  up  of  trans- 
actions on  its  floor  when  the  transactions  are  not  based  upon 
bona  fide  contracts  of  purchase  and  sale  of  the  commodity 
dealt  in.  The  cases  in  127  Illinois  and  103, 109  and  119  Fed. 
Rep.,  cited  by  counsel  for  the  Board,  are  not  determinative 
of  this  case. 

The  transactions  on  which  the  quotations  are  based  are  so 
[S4:2]  tainted  with  illegality  that  the  Board  cannot  have  a 
property  right  in  them. 

As  to  the  illegality  of  transactions,  where  there  is  no  inten- 


IfOARD   OF   TRADE    V.    CHRISTIE   GRAIN   &  STOCK   CO.        723 
Argument  for  Christie  and  Kinsey  companies. 

tion  of  delivery  of  the  commodity  bought  and  sold,  see  Coun- 
selman  v.  Reichert,  103  Iowa,  430 ;  First  Nat.  Bank  v.  Oska- 
loosa  Co.,  66  Iowa,  41.  As  to  methods  of  the  Board  of  Trade 
see  Central  Stock  Exchange  v.  Board  of  Trade,  196  Illinois, 
396 ;  Higgins  v.  McCrea,  116  U.  S.  671.  The  testimony  shows 
that  no  deliveries  are  intended  in  ninety-five  per  cent  of  the 
transactions.  The  members  of  the  Board  occupy  the  relation 
of  bucket  shops  to  their  customers  and  the  Board  is  a  bucket 
shop  to  the  non-members.  As  to  substitution  of  trade  see 
Cleios  V.  Jamieson,  182  U.  S.  461,  471. 

As  to  how  transactions  between  members  are  to  be  deter- 
mined as  to  the  element  of  wager  see  Irwin  v.  Williar,  110 
U.  S.  499;  Melchert  v.  Am.  Union  Tel.  Co.,  11  Fed.  Rep.  193; 
Bernard  v.  Backhaus,  9  N.  W.  Rep.  585,  596 ;  Dows  v.  Glas- 
pel,  60  N.  W.  Rep.  60;  Whitesides  v.  Hunt,  97  Indiana,  191; 
Edwards  v.  Hoeffinghoff,  38  Fed.  Rep.  639;  Enibrey  v. 
Jamieson,  131  U.  S.  336;  Mohr  v.  Miseni,  49  N.  \^^  Rep.  862; 
Pickering  v.  Chase,  79  Illinois,  328. 

The  Board  of  Trade  does  not  come  into  court  with  clean 
hands.  It  is  violating  the  Illinois  anti-bucket  sliop  act  of 
1887.  1  Starr  &  Curtis  Ann.  Stat.  1304.  That  act  was  con- 
strued in  Sohy  v.  People,  134  Illinois,  68;  Weare  Commission 
Company  v.  People,  111  111.  App.  116,  affirmed  209  Illinois, 
528.  And  see  as  to  the  protection  of  gambling  transactions. 
Beard  v.  Milmine,  88  Fed.  Rep.  868 ;  Schultze  v.  Holtz,  82 
Fed.  Rep.  448. 

The  court  will  not  protect  trade-marks  used  to  deceive  the 
public  or  if  the  owner  cannot  otherwise  come  into  court  with 
clean  hands.  Lawrence  Co.  v.  Tennessee  Co.,  31  Fed.  Rep.  776, 
784;  Krauss  v.  Peebles,  58  Fed.  Rep.  585,  594;  Shnonds  v. 
Jones,  82  Maine,  302;  Joseph  v.  Macowsky,  96  California, 
518 ;  Holman  v.  Johnson,  Cowp.  341 ;  Fetridge  v.  Wells,  4 
Abb.  Pr.  144 ;  Hall  v.  Coppell,  7  Wall.  542,  599. 

[243]  The  Board  cannot  restrict  the  publication;  if  it 
publishes  the  quotations  it  must  publish  for  all.  Ladd  v. 
Oxnard,  75  Fed.  Rept.  703;  Gottsberger  v.  Aldine  Book  Co.y 
33  Fed.  Rep.  381 ;  Keene  v.  Wheatley,  Fed.  Cas.  No.  7644. 

The  Board  realizes  the  full  avails  of  its  property  when  it 
sells  the  quotations  to  the  telegraph  companies  and  the  de- 


724 


J9fc  UKITED   STATES   REPORTS,   243. 


.Ar.i;nnient  for  Christie  and  Kinsey  companies. 

livery  to  those  companies  is  necessarily  a  publication  to  the 
world.  Bryant  v.  West  Un,  Tel.  Co.,  17  Fed.  Eep.  825,  is 
not  applicable ;  the  distinction  between  restricted  and  general 
publication  does  not  extend  to  matter  of  this  kind.  Pierce 
S  Bushnell  v.  Werckmeister,  18  C.  C.  A.  431;  Tribune  v. 
Ass^d  Press,  116  Fed.  Kep.  126. 

Assuming  there  ever  was  a  right  of  property  in  the  Board 
to  these  quotations  they  have  by  usage  become  impressed 
with  a  public  use  and  the  Board  is  estopped  from  discrim- 
inating with  reference  to  such  use.  Exchange  v.  Board  of 
Trade,  127  Illinois,  153 ;  Commission  Co.  v.  Live  Stock  Ex- 
change, 143  Illinois,  239;  Board  of  Trade  v.  Central  Ex- 
change, 196  Illinois,  396;  Munn  v.  Illinois,  94  U.  S.  126,  and 
Rose's  notes  thereto;  State  v.  Gas  Co.,  34  Ohio  St.  572;  Lind- 
sey  V.  Anniston,  104  Alabama,  261;  People  v.  King,  110 
N.  Y.  418;  Eushville  v.  Gas  Co.,  132  Indiana,  575;  Zanesville 
V.  Gas  Co.,  47  Ohio  St.  1 ;  White  v.  Canal  Co.,  22  Colorado, 
198;  Water  Works  Co.  v.  Schotter,  110  U.  S.  347;  Railroad 
Oo.  V.  Wilson,  132  Indiana,  517;  B.  d:  O.  Tel.  Co.  v.  Bell 
Telephone  Co.,  23  Fed.  Rep.  539 ;  Cotting  v.  Stock  Yards  Co., 
183  U.  S.  79.  The  conditions  exacted  of  the  public  in  the 
contract  with  the  telegraph  companies  are  unreasonable  and 
tend  to  create  a  monopoly.  Kalamazoo  Sc.  Co.  v.  Sootsnm, 
84  Michigan,  194;  Railroad  Co.  v.  Langlois,  24  Pac.  Rep.  209; 
Lindsey  v.  Anniston,  104  Alabama^  261;  Lough  v.  Outer- 
bridge,  143  N.  Y.  277;  Railroad  Co.  v.  Bowling  Green,  57 
Ohio  St.  345.  Such  contracts  also  violate  the  Sherman 
Anti-Trust  Act.  Carter-Crume  Co.  v.  Peurrung,  86  Fed.  Rep. 
439.  The  business  of  telegraphing  these  quotations  is  inter- 
state commerce.  Pensacola  Tel.  Co.  v.  West.  Un.  Tel.  Co., 
m  U.  S.  1;  West.  Un.  Tel.  Co.  v.  Texas,  [244]  105  U.  S.  460; 
West.  Un.  Tel.  Co.  v.  Pendleton,  122  U.  8.  347;  Addyston 
Pipe  Case,  175  U.  S.  241;  Gibjfons  v.  Ogden,  9  Wheat.  1, 
189,  210;  Brown  v.  Maryland,  12  Wheat.  447;  Mobile  v.  Kim- 
MU,  102  U.  S.  691 ;  Bowman  v.  Chicago  R.  R.  Co.,  125  U.  S. 
490;  Ferrf/  Co.  v.  Pennsylvania,  114  U.  S.  203;  Hopkins  v. 
United  States,  171  U.  S.  578,  590. 

Mr.  Jtdien  T.  Davies,  Mr.  Abram  L  Elkus  and  Mr.  Gar- 
rard Glenn  by  leave  of  the  court,  submitted  a  brief  in  behalf 


BOARD  OF  TRADE  V.    CHRISTIE  GRAIN  &   STOCK  CO.   725 


• 


Argument  for  Edwin  Hawley  and  Frank  H.  Ray. 

of  Edwin  Hawley  and  Frank  H.  Ray,  solely  on  the  nature 
of  a  wagering  contract. 

Contracts  for  purchase  and  sale  of  a  commodity,  not  to  be 
delivered  but  only  to  be  performed  by  advancing  and  paying 
differences,  are  void  at  common  law  in  the  absence  of  statute. 
Irwin  V.  Williar,  110  U.  S.  499 ;  Ball  v.  Davis,  1  N.  Y.  St 
Rep.  517;  Flagg  v.  Gilpin,  17  R.  L.  Ired.  1,  10;  Rumsey  v. 
Berry,  65  Maine,  575;  Gregory  v.  Wendell,  39  Michigan, 
337;  Mohr  v.  Meisen,  47  Minnesota,  228;  Brua^s  Appeal,  55 
Pa.  St.  294 ;  Cunningham  v.  Bank,  71  Georgia,  400 ;  Cothran 
V.  Ellis,  125  Illinois,  496. 

The  form  of  the  contract  is  immaterial  and  the  test  is  the 
actual  intent  of  the  parties  at  the  time  of  making  the  con- 
tract. Irwin  V.  Williar,  110  U.  S.  499 ;  Biggins  v.  McCrea, 
116  U.-  S.  671 ;  Embrey  v.  Jemison,  131  U.  S.  336 ;  Pierce  v. 
Rice,  142  U.  S.  28 ;  Story  v.  Salomon,  71  N.  Y.  420 ;  Peck  v. 
Doran-Wright  Co.,  57  Hun.  343;  Kenyon  v.  Luther,  4  N.  Y. 
Supp.  498 ;  Cover  v.  Smith,  82  Maryland,  586 ;  Lester  v.  Bv^l, 
49  Ohio  St.  240;  Rumsey  v.  Berry,  65  Maine,  570;  Gregory  v. 
Wendell,  39  Michigan,  337 ;  Flagg  v.  Baldwin,  38  N.  J.  Eq. 
219 ;  Sharp  v.  Stalker,  63  N.  J.  Eq.  596. 

This  intent  may  be  proven  by  the  circumstances  surround- 
ing the  transactions  and  such  proof  is  received  with  great 
liberality.  Kenyon  v.  Luther,  4.  N.  Y.  Supp.  498;  Ball  v. 
Davis,  1  N.  Y.  St.  Rep.  517;  Dwight  v.  Badgely,  60  Hun,  144; 
Peck  V.  Doran-Wright  Co.,  57  Hun,  343;  Yerkes  v.  Salomon, 
11  Hun,  471 ;  Mackey  v.  Rausch,  39  N.  Y.  St.  Rep.  232 ;  In  re 
[245]  Green,  Fed.  Gas.  No.  5751;  Cobb  v.  Prell,  15  Fed.  Rep. 
774 ;  In  re  Chandler,  Fed.  Gas.  No.  2590 ;  Mohr.  v.  Meisen,  47 
Minnesota,  228 ;  Kirkpatrick  v.  Bonsall,  57  Pa.  St.  155 ;  Low- 
rey  v.  Dillmann,  59  Wisconsin,  197;  Carroll  v.  Holmes,  24 
111.  App.  453 ;  Hill  v.  Johnson,  38  Mo.  App.  383 ;  Croner  v. 
Spencer,  92  Missouri,  499 ;  Cothran  v.  Ellis,  125  Illinois,  496. 

Mr.  Justice  Holmes  delivered  the  opinion  of  the  court. 

These  are  two  bills  in  equity  brought  by  the  Ghicago  Board 
of  Trade  to  enjoin  the  principal  defendants  from  using  and 
distributing  the  continuous  quotations  of  prices  on  sales  of 
grain  and  provisions  for  future  delivery,  which  are  collected 


726 


198  UNITED   STATES  REPORTS,  245. 
Opinion  of  the  Court 


by  the  plaintiff  and  which  cannot  be  obtained  by  the  de- 
fendants except  through  a  known  breach  of  the  confidential 
terms  on  which  the  plaintiff  communicates  them.  It  is  suf- 
ficient for  the  purposes  of  decision  to  state  the  facts  without 
reciting  the  pleadings  in  detail.  The  plaintiff  was  incorpo- 
rated by  special  charter  of  the  State  of  Illinois  on  February 
18,  1859.  The  charter  incorporated  an  existing  board  of 
trade,  and  there  seems  to  be  no  reason  to  doubt,  as  indeed  is 
alleged  by  the  Christie  Grain  and  Stock. C!ompany,  that  it 
then  managed  its  Chamber  of  Commerce  substantially  as 
it  has  since.  The  main  feature  of  its  management  is  that  it 
maintains  an  exchange  hall  for  the  exchisive  use  of  its 
members,  which  now  has  become  one  of  the  gi-eat  grain  and 
provision  markets  of  the  world.  Three  separate  portions  of 
this  hall  are  known  respectively  as  the  Wlieat  Pit,  the  Corn 
Pit,  and  the  Provision  Pit.  In  these  pits  the  members  make 
sales  and  purchases  exclusively  for  future  delivery,  the  mem- 
bers dealing  always  as  principals  between  themselves,  and 
being  bound  practically,  at  least,  as  principals  to  those  who 
employ  them  when  they  are  not  acting  on  their  own  behalf. 

The  quotation  of  the  prices  continuously  offered  and  ac- 
cepted in  these  pits  during  business  hours  are  collected  at 
the  plaintiff's  expense  and  handed  to  the  telegraph  com- 
[246]  panics,  which  have  their  instruments  close  at  hand, 
and  by  the  latter  are  sent  to  a  great  number  of  offices.  The 
telegraph  companios  all  receive  the  quotations  under  a  con- 
tract not  to  furnish  them  to  any  bucket  shop  or  place  where 
they  are  used  as  a  baFis  for  bets  or  illegal  contracts.  To 
that  end  they  agree  to  submit  applications  to  the  Board  of 
Trade  for  investigation,  and  to  require  the  applicant,  if 
satisfactory,  to  make  a  contract  with  the  telegraph  company 
and  the  Board  of  Trade,  which,  if  observed,  confines  the 
information  within  a  circle  of  persons  all  contracting  with 
the  Board  of  Trade.  The  principal  defendants  get  and 
publish  these  quotations  in  some  way  not  disclosed  It  is 
said  not  to  be  proved  that  they  get  them  wrongfully,  even 
if  the  plaintiff  has  the  rights  which  it  claims.  But  as  the 
defendants  do  not  get  them  from  the  telegraph  companies 
authorized  to  distribute  them,  have  declined  to  sign  the 
above-mentioned  contracts,  and  deny  the  plaintiff's  rights 


BOARD   OF   TRADE    V.    CHRISTIE   GRAIN   &  STOCK   CO.        727 

Opinion  of  the  Court 

altogether,  it  is  a  reasonable  conclusion  that  they  get,  and  in- 
tend to  get,  their  knowledge  in  a  way  which  is  wrongful 
unless  their  contention  is  maintained. 

It  is  alleged  in  the  bills  that  the  principal  defendants  keep 
bucket  shops,  and  the  plaintiff's  proof  on  that  point  fails, 
exciept  so  far  as  their  refusal  to  sign  the  usual  contracts  may 
lead  to  an  inference,  but  if  the  plaintiff  has  the  rights  which 
it  alleges  the  failure  is  immaterial.  The  main  defense  is 
this.  It  is  said  that  the  plaintiff  itself  keeps  the  greatest  of 
bucket  shops,  in  the  sense  of  an  Illinois  statute  of  June  6, 
1887,  that  is,  places  wherein  is  permitted  the  pretended  buy- 
ing and  selling  of  grain,  etc.,  without  any  intention  of  re- 
ceiving and  paying  for  the  property  so  bought,  or  of  deliv- 
ering the  property  so  sold.  On  this  ground  it  is  contended 
that  if  under  other  circumstances  there  could  be  property  in 
the  quotations,  which  haYdly  is  admitted,  the  subject  matter 
is  so  infected  with  the  plaintiff's  own  illegal  conduct  that  it 
is  capift  lupimim,  and  may  be  carried  off  by  any  one  at  will. 

It  appears  that  in  not  less  than  three-quarters  of  the  trans- 
actions in  the  grain  pit  there  is  no  physical  handing  over  of 
[247]  any  gi^ain,  but  that  there  is  a  settlement,  either  by 
the  direct  method,  so  called,  or  by  what  is  known  as  ringing 
up.  The  direct  method  consists  simply  in  setting  off  con- 
tracts to  buy  wheat  of  a  certain  amount  at  a  certain  time, 
against  contracts  to  sell  a  like  amount  at  the  same  time,  and 
paying  the  difference  of  price  in  cash,  at  the  end  of  the  busi- 
ness day.  The  ring  settlement  is  reached  by  a  comparison 
of  books  among  the  clerks  of  the  members  buying  and  selling 
in  the  pit,  and  picking  out  a  series  of  transactions  which  be- 
gins and  ends  with  dealings  which  can  be  set  against  each 
other  by  eliminating  those  between— as,  if  A  has  sold  to  B 
hvQ  thousand  bushels  of  May  wheat,  and  B  has  sold  the  same 
amount  to  C,  and  C  to  D  and  D  to  A.  Substituting  D  for  B 
by  novation,  A's  sale  can  be  set  against  his  purchase,  on 
simply  paying  the  difference  in  price.  The  Circuit  Court  of 
Appeals  for  the  Eighth  Circuit  took  the  defendant's  view 
of  these  facts  and  ordered  the  bill  to  be  dismissed.  125  Fed. 
Rep.  161.  The  Circuit  Court  of  Appeals  for  the  Seventh 
Circuit  declined  to  follow  this  decision  and  granted  an  in- 
junction as  prayed.     130  Fed.  Rep.  507.    Thereupon  writs 


728 


198  UNITED   STATES  REPORTS,  247. 
Opinion  of  the  Court. 


of  certiorari  were  granted  by  this  Court  and  both  easas  are 
here. 

As  has  appeared,  the  plaintiff's  chamber  of  commerce  is, 
in  the  first  place,  a  great  market,  where,  through  its  eighteen 
hundred  members,  is  transacted  a  large  part  of  the  grain 
and  provision  business  of  the  world.  Of  course,  in  a  modern 
market  contracts  are  not  confined  to  sales  for  immediate 
delivery.  People  will  endeavor  to  forecast  the  future  and  to 
make  agreements  according  to  their  prophecy.  Speculation 
of  this  kind  by  competent  men  is  the  self -adjustment  of  so- 
ciety to  the  probable.  Its  value  is  well  known  as  a  means 
of  avoiding  or  mitigating  catastrophes,  equalizing  prices 
and  providing  for  periods  of  want.  It  is  true  that  the  suc- 
cess of  the  strong  induces  imitation  by  the  weak,  and  that 
incompetent  persons  bring  themselves  to  ruin  by  undertaking 
to  speculate  in  their  turn.  But  legislatures  and  courts 
generally  have  recognized  that  the  natural  evolutions  of  a 
complex  society  are  to  be  [248]  touched  only  with  a  very 
cautious  hand,  and  that  such  coarse  attempts  at  a  remedy 
for  the  waste  incident  to  every  social  function  as  a  simple 
prohibition  and  laws  to  stop  its  being,  are  harmful  and 
vain.  This  court  has  upheld  sales  of  stock  for  future  de- 
livery and  the  substitution  of  parties  provided  for  by  the 
rules  of  the  Chicago  Stock  Exchange.  Clews  v.  Jamieson^ 
182  U.S.  461. 

When  the  Chicago  Board  of  Trade  was  incorporated  we 
cannot  doubt  that  it  was  expected  to  afford  a  market  for 
future  as  well  as  present  sales,  with  the  necessary  incidents 
of  such  a  market,  and  while  the  State  of  Illinois  allows  that 
charter  to  stand,  we  cannot  believe  that  the  pits,  merely  as 
places  where  future  sales  are  made,  are  forbidden  by  the  law. 
But  again,  the  contracts  made  in  the  pits  are  contracts  be- 
tween the  members.  We  must  suppose  that  from  the  begin- 
ning as  now,  if  a  member  had  a  contract  with  another  mem- 
ber to  buy  a  certain  amount  of  wheat  at  a  ceiiain  time  and 
another  to  sell  the  same  amount  at  the  same  time,  it  would 
be  deemed  unnecessary  to  exchange  warehouse  receipts.  We 
must  suppose  that  then  as  now,  a  settlement  would  be  made 
by  the  payment  of  differences,  after  the  analogy  of  a  clear- 
ing house.    This  naturally  would  take  place  no  less  that  the 


BOARD   OF   TRADE    V.    CHRISTIE   GRAIN    &   STOCK   CO.       729 

Opinion  of  the  Court. 

contracts  were  made  in  good  faith  for  actual  delivery,  since 
the  result  of  actual  delivery  would  be  to  leave  the  parties 
just  where  they  Were  before.  Set-off  has  all  the  effects  of 
delivery.  The  ring  settlement  is  simply  a  more  complex 
case  of  the  same  kind.  These  settlements  would  be  frequent, 
as  the  number  of  persons  buying  and  selling  was  compar- 
atively small. 

The  fact  that  contracts  are  satisfied  in  this  way  by  set-off 
and  the  payment  of  differences  detracts  in  no  degree  from  the 
good  faith  of  the  parties,  and  if  the  parties  know  when  they 
make  such  contracts  that  they  are  very  likely  to  have  a  chance 
to  satisfy  them  in  that  way  and  intend  to  make  use  of  it,  that 
fact  is  perfectly  consistent  with  a  serious  business  purpose 
and  an  intent  that  the  contract  shall  mean  what  it  says. 
There  is  no  doubt,  from  the  rules  of  the  Board  of  Trade  or 
the  evidence,  [249]  that  the  contracts  made  between  the 
members  are  intended  and  supposed  to  be  binding  in  manner 
and  form  as  they  are  made.  There  is  no  doubt  that  a  large 
part  of  those  contracts  is  made  for  serious  business  purposes. 
Hedging,  for  instance,  as  it  is  called,  is  a  means  by  which 
collectors  and  exporters  of  grain  or  other  products,  and 
manufacturers  who  make  contracts  in  advance  for  the  sale 
of  their  goods,  secure  themselves  against  the  fluctuations  of 
the  market  by  counter  contracts  for  the  purchase  or  sale,  as 
the  case  may  be,  of  an  equal  quantity  of  the  product,  or  of 
the  material  of  manufacture.  It  is  none  the  less  a  serious 
business  contract  for  a  legitimate  and  useful  purpose  that  it 
may  be  offset  before  the  time  of  delivery  in  case  delivery 
should  not  be  needed  or  desired. 

Purchases  made  with  the  understanding  that  the  contract 
will  be  settled  by  paying  the  difference  between  the  contract 
and  the  market  price  at  a  certain  time,  Embrey  v.  Jemison, 
131  U.  S.  336,  Weave  Commission  Co,  v.  People^  209  Illinois, 
528,  stand  on  different  ground  from  purchases  made  merely 
with  the  expectation  that  they  will  be  satisfied  by  set-off. 
If  the  latter  might  fall  within  the  statute  of  Illinois,  we 
would  not  be  the  first  to  decide  that  they  did  when  the  object 
was  self -protection  in  business  and  not  merely  a  speculation 
entered  into  for  its  own  sake.  It  seems  to  us  an  extraordi- 
nary and  unlikely  proposition  that  the  dealings  which  give 


730 


198  UNITED   STATES   KEPOKTS,  249. 


Opinion  of  the  Court 

its  character  to  the  great  market  for  future  sales  in  this  coun- 
try are  to  be  regarded  as  mere  wagers  or  as  "  pretended  " 
buying  or  selling,  without  any  intention  of  receiving  and  pay- 
ing for  the  property  bought,  or  of  delivering  the  property 
sold,  within  the  meaning  of  the  Illinois  act.  Such  a  view 
seems  to  us  hardly  consistent  with  the  admitted  fact  that  the 
quotations  of  prices  from  the  market  are  of  the  utmost  im- 
portance to  the  business  world,  and  not  least  to  the  farmers ; 
so  important  indeed,  that  it  is  argued  here  and  has  been  held 
in  Illinois  that  the  quotations  are  clothed  with  a  public  use. 
It  seems  to  us  hardly  consistent  with  the  obvious  purposes 
of  the  plaintiff's  charter,  or  indeed  with  the  words  of  the 
statute  invoked.  The  [250]  sales  in  the  pits  are  not  pre- 
tended, but,  as  we  have  said,  are  meant  and  supposed  to  be 
binding.  A  set-off  is  in  legal  effect  a  delivery.  We  speak 
only  of  the  contracts  made  in  the  pits,  because  in  them  the 
members  are  principals.  The  subsidiary  rights  of  their 
employers  where  the  members  buy  as  brokers  we  think  it 
unnecessary  to  discuss. 

In  the  view  which  we  take,  tlie  proportion  of  the  dealings 
in  the  pit  which  are  settled  in  this  way  throws  no  light  on  the 
question  of  the  proportion  of  serious  dealings  for  legitimate 
business  purposes  to  those  which  fairly  can  be  classed  as 
wagers  or  pretended  contracts..   No  more  does  the  fact  that 
the  contracts  thus  disposed  of  call  for  many  times  the  total 
receipts  of  grain  in  Chicago.    The  fact  that  they  can  b^  and 
are  set-off  sufficiently  explains  the  possibility,  which  is  no 
moi-e  wonderful  than  the  enormous  disproportion  between 
the  currency  of  the  country  and  contracts  for  the  payment 
of  money,  many  of  which  in  like  manner  are  set  off  in  clear- 
ing houses  without  any  one  dreaming  that  they  are  not  paid, 
and  for  the  rest  of  which  the  same  money  suffices  in  succes- 
sion, the  less  being  needed  the  more  rapid  the  circulation  is. 
But  suppose  that  the  Board  of  Trade  does  keep  a  plaa*- 
where  pretended  and  unlawful  buying  and  selling  are  per- 
mitted, which  as  yet  the  Supreme  Court  of  Illinois,  we  believe, 
has  been  careful  not  to  intimate,  it  does  not  follow  that  it 
should  not  be  protected  in  this  suit.    The  question  whether 
it  should  be  involved  several  elements  which  we  shall  take  up 
in  turn. 


BOABD   OF   TRADE   V.   CHRISTIE   GRAIN    &  STOCK   CO.       731 

Opinion  of  the  Court 

In  the  first  place,  apart  from  special  objections,  the  plain- 
tiff's collection  of  quotations  is  entitled  to  the  protection  of 
the  law.  It  stands  like  a  trade  secret.  The  plaintiff  has  the 
right  to  keep  the  work  which  it  has  done,  or  paid  for  doing, 
to  itself.  The  fact  that  others  might  do  similar  work,  if  they 
might,  does  not  authorize  them  to  steal  the  plaintiff's.  Com- 
pare Bleistein  v.  Donaldson  Lithographing  Co.^  188  U.  S.  239, 
249,  250.  The  plaintiff  does  not  lose  its  rights  by  communi- 
cating the  results  to  persons,  even  if  many,  in  confidential 
relations  [251]  to  itself,  under  a  contract  not  to  make  it  pub- 
lic, and  strangers  to  the  trust  will  be  restrained  from  getting 
at  the  knowledge  by  inducing  a  breach  of  trust  and  using 
knowledge  obtained  by  such  a  breach.  Exchange  Telegraph 
Co.  V.  Gregory  <&  Co.,  [1896]  1  Q.  B.  D.  147;  F,  W.  Dddge 
Co,  V.  Construction  Information  Co.^  183  Massachusetts,  62; 
Board  of  Trade  v.  C.  B.  Thomson  Commission  Co,,  103  Fed. 
Rep.  902 ;  Board  of  Trade  v.  Hadden-KruU  Co.,  J09  Fed. 
Rep.  705 ;  National  Tel.  News  Co.  v.  Western  Union  Tel.  Co.^ 
119  Fed.  Rep.  294;  Illinois  Commission  Co.  v.  Cleveland  Tel. 
Co.,  119  Fed.  Rep.  301. 

The  publications  insisted  on  in  some  of  the  arguments 
were  publications  in  breach  of  contract,  and  do  not  affect  the 
plaintiff's  rights.  Time  is  of  the  essence  in  matters  like 
this,  and  it  fairly  may  be  said  that,  if  the  contracts  with  the 
plaintiff  are  kept,  the  information  will  not  become  public 
property  until  the  plaintiff  has  gained  its  reward.  A  priority 
of  a  few  minutes  probably  is  enough. 

If  then  the  plaintiff's  collection  of  information  is  other- 
wise entitled  to  protection,  it  does  not  cease  to  be  so,  even  if 
it  is  information  concerning  illegal  acts.  The  statistics  of 
crime  are  property  to  the  same  extent  as  any  other  statistics, 
even  if  collected  by  a  criminal  who  furnishes  some  of  the 
data.  The  Supreme  Court  of  Illinois  has  recognized  in  the 
fullest  terms  the  value  and  necessity  of  the  knowledge  which 
the  plaintiffs  control.  It  must  have  known,  even  if  it  did  not 
have  the  evidence  before  it,  as  to  which  we  cannot  tell  from 
the  report,  what  was  the  course  of  dealing  on  the  exchange. 
Yet  it  was  so  far  from  suggesting  that  the  plaintiff's  work 
was  unmeritorious  that  it  held  it  clothed  with  a  public  use. 


732 


198  UNITED  STATES  BEPOBTS,  251. 


Opinion  of  the  Court 

New  York  di  Chicago  Grain  dh  Stock  Exchange  v.  Board  of 
Trade,  127  Illinois,  153. 

The  defendants  lay  hold  of  the  declaration  in  the  case  last 
cited  and  say,  with  doubtful  consistency,  that  this  informa- 
tion is  of  such  importance  that  it  is  clothed  Avith  a  public 
use,  and  that,  therefore,  they  are  entitled  to  get  and  use  it. 
In  the  case  referred  to  it  was  held  that  the  plaintiif,  which 
Iiad  l»een  re-  [2^2]  ceiving  the  continuous  quotations,  was 
entitled  still  to  receive  them  on  paying  for  them  and  sub- 
mitting to  all  reasonable  requirements  in  relation  to  the  same. 
Perhaps  the  right  of  the  plaintiff  would  have  been  more 
obvious  if  it  had  demanded  an  opportunity  on  reasonable 
conditions  of  collecting  the  information  for  itself,  especially 
if  the  legislature  had  seen  jBt  to  provide  by  law  for  its  doing 
so.  But  it  is  not  necessary  to  consider  whether  we  are  bound 
by  that  decision,  or,  if  not,  should  follow  it,  since  in  these 
cases  the  claim  is  not  qualified  by  submission  to  reasonable 
rules  or  an  offer  of  payment.  It  is  a  claim  of  independent 
rights  and  a  denial  that  the  plaintiff  has  any  right  at  all. 
The  Supreme  Court  of  Illinois  gave  no  sanction  to  such  a 
claim  as  that. 

Finally  it  is  urged  that  the  contracts  with  the  telegraph 
companies  \aolate  the  act  of  July  2,  1890,  c.  647,  26  Stat.  209. 
The  short  answer  is  that  the'  contracts  are  not  relied  on  as  a 
cause  of  action.  They  are  stated  simply  to  show  that  the 
only  communication  of  its  collected  facts  by  the  plaintiff  is* 
a  confidential  communication,  and  does  not  destroy  the 
plaintiff's  rights.  But  so  far  as  these  contracts  limit  the 
communication  of  what  the  plaintiff  might  have  refrained 
from  communicating  to  any  one,  there  is  no  monopoly  or  at- 
tempt at  monopoly,  and  no  contract  in  restraint  of  trade, 
either  under  the  statute  or  at  common  law.  Bement  v. 
National  Hairow  Co,,  186  U.  S.  70;  Fowle  v.  Park,  131  U.  S. 
88;  Elltman  v.  Carrington,  [1901]  2  Ch.  275.  It  was  argued 
that  the  true  purpose  is  to  exclude  all  persons  who  do  not 
deal  through  members  of  the  Board  of  Trade.  Whether 
there  is  anything  in  the  law  to  hinder  these  regulations  being 
made  with  that  intent  we  shall  not  consider,  as  we  do  not 
regard  such  a  general  scheme  as  shown  by  the  contracts  or 
proved.    A  scheme  to  exclude  bucket  shops  is  shown  and 


TIFT   V.    SOUTHERN    BY.    CO. 


783 


Syllabus. 

proclaimed,  no  doubt— and  the  defendants,  with  their  con- 
tention as  to  the  plaintiff,  call  this  an  attempt  at  a  monopoly 
in  bucket  shops.  But  it  is  simply  a  restraint  on  the  acquisi- 
tion for  illegal  purposes  of  the  fruits  of  the  plaintiff's  work. 
Central  Stock  d;  Grain  Exchange  v.  [253]  Board  of  Trade, 
196  Illinois,  396.  We  are  of  opinion  that  the  plaintiff  is 
entitled  to  an  injunction  as  praj^ed. 

Decree  in  No,  224  reversed.    Decree  in  No,  280  affirmed, 

Mr.   Justice   Harlan,   Mr.   Justice   Brewer   and   Mb. 
Justice  Day  dissent. 


[753]  TIFT  ET  AL.  v.  SOUTHERN  RY.  CO.  ET  AL. 

(Circuit  Court,  W.  D.  Georgia,  S.  D.    June  28,  1905.) 

[laS  Fed.,  753.] 

Carbieks— Freight  Charges.— The  general  rule  is  that,  the  greater 
the  tonnage  of  the  commodity  transported,  the  lo\yer  should  be  the 
rate  of  freight  charges  for  such  transportation. 

Interstate  Commerce  Commission— Conclusiveness  of  Findings.— 
Explicit  law,  the  settled  policy  of  the  government,  the  practical 
principles  of  reason  and  justice  require  that,  save  for  controlling 
reasons  of  law  or  fact,  tho  national  courts  should  not  discredit  or 
disparage  the  conclusions  ot  the  interstate  commerce  commission. 

FEd.  Note.— Fcr  cases  in  pjint,  pee  vol.  10.  Cent.  Dig.  Commerce 
§§  138-145.] 

Same— Findings  of  Fact.— The  findings  of  fact  set  forth  in  the  re- 
port of  the  commission  are  in  all  judicial  proceedings  deemed  prima 
facie  evidence  as  to  each  and  every  fact  found. 

[Ed.  Note.— For  cases  in  point,  see  vol.  10,  Cent.  Dig.  Commerce, 
§§  138-145.] 

Prima  Facie  Evidence.— Prima  facie  evidence  of  a  tact  is  such  as,  in 
judgment  of  law,  is  sufficient  to  establish  the  fact,  and,  if  not  re- 
butted, remains  sufficient  for  the  purpose.  Mr.  Justice  Story,  in 
Kelly  V.  Jackson,  6  Pet.  631,  8  L.  Ed.  523. 

Interstate  Commerce  Commission— Report— Presumptions— Burden 
OF  Proof.— The  act  to  regulate  commerce  creates  a  rule  of  pre- 
sumption in  favor  of  the  commission's  report,  which  on  its  introduc- 
tion in  evidence  changes  the  burden  of  proof,  and  casts  it  upon  that 
party  against  whom  the  report  is  made. 

Rules  of  Evidence— Legislative  Control.— The  Legislature,  subject 
only  to  the  limitations  of  evidence  expressly  enshrined  in  the  Consti- 
tution, has  entire  control  over  the  rules  of  evidence,  and  by  statutory 
enactments  may  alter,  change,  or  create  them  anew. 


734 


138   FEDERAL  BEPORTER,   763. 


Syllabus. 

Cabeiebs— ITbeioht  Ghabges. — ^The  reasonableness  of  a  rate  of  charge 
for  transportation  is  eminently  a  question  for  judicial  investigation. 
Justice  Biatchford,  in  Chicago,  M.  &  St.  Paul  R.  R.  v.  Minnesota, 
10  Sup.  Ct.  702,  134  U.  S.  418.  33  L.  Ed.  970. 

Same — ^IIeasonableness. — It  is  no  longer  open  to  question  that  the 
interstate  commerce  commission  is  an  expert  tribunal  empowered 
by  law  to  determine  in  the  first  instance  the  reasonable  or  unrea- 
sonable character  of  the  rate  charged  for  transportation  in  inter- 
state commerce. 

Same — Rate  Association. — ^The  character  of  the  Southeastern 
Freight  Association,  the  effect  of  its  concert  of  action  and  agree- 
ments as  to  freight  rates  in  the  territory  to  which  it  extends,  con- 
sidered and  discussed. 

Same— Advance  of  Rates— [Aobeements  in  Restbaint  of  Tbade.1— 
When  a  number  of  railroads,  acting  under  articles  of  organization, 
by  concert  of  agreement  and  action  advance  the  rates  upon  ship- 
ments of  a  particular  class  throughout  all  the  territory  to  which 
their  organization  and  influence  with  similar  organizations  extend, 
and  when  they  actually  advance  such  rates  and  exact  the  same  of 
shippers,  it  is  of  no  consequence  that  they  have  a  stipulation  in 
such  articles  that  each  and  all  members  can  at  will  and  at  any 
time  withdraw  from  the  agreement.  [Such  a  combination  is  In 
restraint  of  trade.    See  pp.  746,  747.] 

[754]  Same — Reasonabix  (Compensation. — Reasonable  compensation 
for  the  service  actually  rendered  is  all  that  a  common  carrier  is 
IMjrmitted  to  exact.  Justice  Brewer,  for  the  Circuit  Court  of  Ap- 
peals of  the  Eighth  Circuit,  in  Chicago  d  2i,  W.  R.  R.  Co,  v. 
Osbtmte,  3  C.  C.  A.  347,  52  Fed.  014;  Smuth  v.  Afms,  IS  Sup.  Ct 
4ia  109  U.  S.  4C0,  42  L.  Ed.  819. 

Same — Unbeasonable  Incbease.— Where  a  vast  increase  of  lumber 
tnittlc  had  resulted  in  large  increase  of  net  revenue  to  the  carrier, 
the  service  was  inexpensive,  nniuired  neither  rapidity  of  uiovement 
ut)r  specially  equipped  cars,  shippers  were  obliged  to  furnish  and 
l>ay  for  eiiuipment,  railroads  were  neither  to  load  nor  unload,  the 
couiuiodity  was  neither  fragile  nor  perishable,  the  risk  of  damage 
was  inappreciable,  the  industry  affords  a  tonna^^e  second  in  mag- 
nitude to  only  one  other  transported  by  the  carrier,  an  arbitrary  in- 
crease to  points  of  principal  destination  of  two  cents  u  hundred 
pounds  is  unreasonable  and  unlawful.  This  is  especially  clear 
where  the  particular  traffic  la  practically  destroyed  immediately 
lifter  the  advance  is  made. 

Same — Regulation  of  Cuabges. — Railroads  have  no  legal  right  to 
graduate  their  charges  in  proportion  to  the  prosperity  which  at- 
tends Industries  whose  products  they  transport. 

Same — Injunction — Repayment  of  Unlawful  Exactions. — In  this 
case  the  conclusions  of  the  court  agree  with  the  conclusions  of  the 
Interstate  commerce  commission.  The  enforcement  of  the  advance 
will  be  enjoined,  and,  general  counsel  for  respondents  having  stipu- 


TTFT   V.    SOUTHERN   RY.    CO.  735 

Opinion  of  the  Court 

ated  in  judicio  they  would  repay  to  the  shippers  the  sum  total  of 
the  increased  exactions  in  case  such  increase  should  be  held  illegal, 
a  reference  will  be  had  to  ascertain  the  amount  thus  due  the  r-om- 
plainants  respectively,  and  decree  will  be  rendered  therefor. 
(Syllabus  by  the  Court) 

In  Equity. 

Ellis,  Wimhish  di  Ellis,  for  complainants. 

Ed.  Baxter,  for  respondents. 

John  I.  Hall,  for  Georgia  Southern  &  F.  Ky.  Co. 

Dorsey,  Breivsfer  cI-  Howell,  Dessau,  Harris  d^  Harris, 
C.  B.  Northrop,  and  Menel  P.  Callaway,  for  Southern  Rv 
Co.  '  .  •  J'- 

Lawton  d  Cunningham,  for  Central  of  Georgia  %.  Co: 
Kay,  Bennett  di  Conyers,  for  Atlantic  Coast  Line  Ry.  Co. 
Louis  F.  Garrard,  for  Macon  &  Birmingham  Ry.  Co. 
King,  Spalding  di  Little,  for  Louisville  &  Nashville  R.  Co. 
Brown  d  Randolph,  for  Seaboard  Air  Line  Ry. 
Claude  Walker,  for  Nashville,  C.  &  St.  L.  Ry.  Co. 
Mason,  Hill  d  McGill,  for  Southeastern  Freight  Ass'n. 
Speer,  District  Judge. 

An  adequate  statement  of  the  issues  in  this  case  is  given 
in  the  report  of  ihe^  interstate  commerce  commission  which 
a,ppears  in  the  record.  The  Southeastern  Freight  Associa- 
tion is  a  combination  of  common  carriers.  In  the  preamble 
of  its  organic  agreement  it  is  stated  that  its  purposes  are  set 
forth  in  the  "  following  articles."  A  critical  scrutiny  of  the 
articles  will  disclose  its  machinery,  but  we  fail  to  discover 
any  express  statement  of  its  purpose.  It  is,  however,  plainly 
enough  to  fix  and  control  the  rates  to  be  charged  by  each 
and  all  of  its  members  for  the  railway  transportation  of 
freight.  Most  of  the  railways  constituting  its  membership 
are  actively  engaged  in  interstate  commerce,  and  all  of  them 
may  be.  The  territory  to  which  this  association  extends 
1756]  its  dominating  control  comprehends  the  states  of  Vir- 
ginia, North  Carolina,  South  Carolina,  Georgia,  Florida, 
and  those  portions  of  Tennessee  and  Alabama  east  of  a  line 
extending  from  Chattanooga  via  Birmingham,  Selma  and 


736 


138  FEDERAL  REPORTER,   755. 


Opinion  of  the  Court 

Montgomery  to  Pensacola.  In  that  territory,  with  all  of  its 
varied  products,  with  an  area  and  population  vaster  than 
many  empires  of  which  we  have  an  account,  as  regards  every 
interest  dependent  upon  the  transportation  of  commodities, 
the  action  of  the  association  is  more  authoritative  than  the 
firman  of  the  Sultan  or  the  ukase  of  the  Czar.  A  most 
important  industry  of  this  association's  dominion  is  the 
manufacture  of  lumber.  The  tonnage  of  this  product  is 
enormous.  The  cotton  plant  is  indigenous  to  much  of  this 
territory,  but  while  in  the  year  1903  the  railroads  whose 
rates  are  arranged  through  the  Southeastern  Freight  Asso- 
ciation transported  1,274,727  tons  of  cotton,  in  the  same 
year,  of  lumber,  they  moved  9,808,403  tons,  or  nearly  eight 
times  as  much.  Indeed,  in  tonnage  thus  transported  lumber 
was  not  approached  by  any  other  product,  and  was  only  ex- 
ceeded by  bituminous  coal.  This  tonnage  has  been  steadily 
increasing.  In  1901  it  had  been  little  more  than  six  and  a 
half  miUions,  and  two  years  later,  as  we  have  seen,  it  was 
nearly  ten  millions  of  tons.  The  vast  income  from  moving 
this  tonnage,  an  immense  proportion  of  which  was  the 
product  of  the  forests  and  mills  of  Georgia,  poured  into  the 
treasuries  of  the  defendant  companies.  That  it  was  re- 
munerative i%  not  in  dispute.  It  is  charged  in  the  bill  that 
it  was  very  profitable.  In  the  answer  it  is  admitted  that 
it  was  profitable.  The  remunerative  rates  for  which  this 
product  was  transported  could  scarcely  have  been  denied 
in  view  of  the  fact  that  the  rates  themselves  had  been  ad- 
vanced pari  passu  with  the  increase  of  tonnage.  For  their 
convenience,  the  rate  makers  have  divided  their  territory  into 
what  are  termed  "  groups."  From  group  2  of  the  Southern 
Railway  there  has  been  an  increase  of  3  cents  a  hundred 
pounds  on  lumber  since  May,  1894,  2  cents  since  September, 
1899.  From  May,  1894,  to  September,  1899,  the  rate  to 
Cairo  from  that  group  was  13  cents.  This  was  increased  to 
14  cents  from  September,  1899,  to  June,  1903.  From  other 
groups,  generally  speaking,  since  1894,  the  increase  has 
amounted  to  four  cents  a  hundred  pounds.  From  all  the 
groups  the  present  rates  to  Cincinnati,  Louisville,  and 
Evansville  are  greater  than  they  have  been  since  1891.  The 
rate  to  Cincinnati  from  most  of  the  groups  is  now  four 


TIFT    V.    SOUTHERN   RY.    CO. 


737 


Opinion  of  the  Court 
cents  higher  than  it  was  in  1892,  and  from  the  Georgia 
group  on  the  Southern  Railway,  to  Cincinnati,  LouisviUe 
and  Evansville  and  all  Ohio  river  points  the  rates  are  three 
cents  higher  than  they  have  been  since  1891.    This  steady 
and  marked  increase  of  rates  for  the  transportation  of  this 
freight,  coincident  with  the  phenomenal  increase  of  the  ton- 
nage carried,  seems  abnormal.     "  The  general  rule,"  said  the 
mterstate  commerce  commission  in  its  valuable  report  in  this 
case,"  IS  this:  The  greater  the  tonnage  of  an  article  trans- 
ported, the  lower  should  be  the  rate.     No  rule  is  more  firmly 
grounded  in  reason  or  more  universally  recognized  by  car- 
riers."   While  these  conditions  were  existing,  while  the  re- 
spondent railroads  were  engaged  in  the  transportation  of  the 
largest  annual  ton-  [756]  nage  of  lumber  theretofore  known 
m  April,  1903,  the  Southeastern  Freight  Association  and 
other  similar  associations  having  conferred  upon  the  subject, 
the  defendant  companies,  acting  in  concert,  announced  that 
they  would  forthwith  put  into  effect  an  increase  of  two 
cents  a  hundred  pounds  in  the  rate  on  lumber  to  points  on 
the  Ohio  river  and  beyond.     This  announcement  brought 
the  intelligence  of  this  additional  levy  upon  their  products 
to  the  owners  of  every  mill  in  Georgia,  in  Florida,  in  Ala- 
bama, m  Mississippi,  in  Louisiana,  and  in  Arkansas.    On 
the  lumbermen  at  work  in  the  immediate  domain  of  the 
Southeastern  Freight  Association  estimated  on  the  tonnage 
of  that  year  the  assessment  amounted  to  $132,000.     It  is  per- 
haps not  surprising  that  these  men  immediately  sought  pro- 
tection through  the  courts. 

On  the  17th  of  April,  1903,  the  original  bill  was  filed. 
The  complainants  are  H.  H.  Tift,,  W.  S.  West,  J.  Lee  En- 
sign, J.  S.  Betts  &  Co.,  Garbutt  Lumber  Company,  Alapaha 
Lumber  Company,  Southern  Pine  Company,  and  all  other 
members  of  the  Georgia  Sawmill  Association  (a  voluntarv 
association,  not  a  party).  The  averments,  in  brief,  are 
that  the  defendant  companies  had  published,  and  were  to 
immediately  put  into  effect,  an  increase  of  two  cents  a  hun- 
dred pounds  in  the  rate  on  lumber  from  Georgia  points  to 
points  of  delivery  on  the  Ohio  river  and  beyond;  that  the 
threatened  advance  was  unjust  and  excessive,  and  would  re- 
21220— VOL  a— 07  M i7 


738 


138   FEDERAL   REPORTER,   758. 
Opinion  of  the  Court 


TTFT   V.    SOUTHERN   RY.    CO. 
Opinion  of  the  Court. 


739 


suit  in  irreparable  injury.  An  injunction  was  sought  upon 
the  ground  that  the  contemplated  action  of  defendants  was 
in  violation  of  the  act  of  Congress  to  regulate  connuerce. 
A  temporary  restraining  order  was  issued,  with  the  usual 
rule  calling  upon  the  respondents  to  show  cause  why  the 
injunction  sought  by  the  bill  should  not  be  granted.  A  gen- 
eral demurrer  denying  the  jurisdiction  of  the  Circuit  Court 
of  the  United  States  as  such,  and  as  a  court  of  equity,  was 
interposed.  Respondents  also  filed  a  response  to  the  rule. 
A  hearing  was  had  upon  the  demurrer,  and  also  upon  the 
evidence  submitted  by  both  parties.  By  interlocutory  de- 
cree entered  on  the  16th  day  of  May,  1903,  it  was  held  that 
the  court  had  jurisdiction  to  gi*ant  the  relief  sought,  if 
finally  satisfied  of  the  righteousness  of  complainants'  de- 
mand; that  the  demurrer  be  overruled;  that  the  bill,  with 
amendments,  be  retained  in  the  files  of  the  court;  and  that 
the  temporary  injunction  be  dissolved.  The  reasons  which 
moved  the  court  to  take  this  action  Avere  stated  in  the  opinion 
that  day  filed.  Among  them  was  the  statement  that  the 
increase  of  rates  had  not  been  actually  imposed.  The  de- 
cree concluded  with  the  following  clause: 

"In  case  the  respondents  shall  enforce  the  rates  complained  of  and 
the  complainants  shall  nmlve  proper  applic-ation  to  the  interstate  com- 
merce commission  to  redress  their  alleged  grievances,  the  court  will 
entertain  a  renewed  application  on  the  record  as  made,  and  such 
appropriate  additions  thereto  as  may  be  proposed  by  either  party  for 
enjoining  the  enforcement  of  .such  rates  pending  the  investigation  by 
the  commission,  unless  otherwise  dissolved,  and  on  presentation  to 
the  court  of  the  report  of  the  commission  such  other  action  be  taken 
as  will  be  conformable  to  law  and  the  principles  of  equity." 

Upon  the  dissolution  of  the  restraining  order,  to  wit,  on 
the  22d  of  June,  1903,  the  respondents  at  once  made  the 
advanced  rates  effective.  On  the  day  following  the  com- 
plainants presented  to  the  [757]  interstate  commerce  com- 
mission their  complaint  and  their  prayer  that  the  advance 
be  declared  to  be  excessive,  unjust,  and  unreasonable.  Sub- 
sequently complainants  again  sought  from  this  court  an  in- 
junction to  restrain  the  enforcement  of  the  rates  pending  the 
action  of  the  commission.  Upon  this  application  a  f  idl  re- 
hearing of  the  controversy  was  had.  This  involved  an  ex- 
haustive discussion  of  the  jurisdictional  questions  and  the 
facts  as  well.    The  conclusions  of  the  court  may  be  found 


m 


in  123  Fed.  789-796.  Action  upon  the  application  of  com- 
plainants was  withheld.  The  reasons  for  this  course,  as 
stated  on  page  796  of  the  opinion,  are  as  follows : 

i^lje  complainants,  it  appears,  have  appealed  to  the  commission. 
The  respondents  are  all  solvent— probablv  all  of  them  highly 
prospei;ou&— railway  cx)nx)rations.     It  will  be  easilv  competent  for  the 
complauiants  to  keep  careful  account  of  all  the  charges  claimed  to 
be  unreasonable  and  excessive  exacted  by  the  defendants  on  shipments 
ot  lunil)er  to  the  territory  described  in  the  bill.     If  their  contention 
shall  be  mamtained,  it  will  be  competent  for  the  court   iu   its  final 
decree  to  direct  the  respondents,  or  either  of  them,  to  make  restitution 
ot  the  sums  thus  exacted.     Indeed,  the  learned  spec-ial  counsel  for 
the  respondents,  by  his  statement  made  in  judicio,  binds  his  clients  to 
promptly  repay  to  the  complainants  all  such  sums  iu  case  thev  shall 
finally  prevail.     Nor  is  it  likely  that  in  the  interval  which  sliall  re- 
mam  before  the  commission  will  act  there  will   ensue  anv   serious 
impairment  of  the  business  of  complainants,  or  either  of  them      It 
IS  easily  conceivable  that  a  case  or  cases  of  this  general  character 
might  be  presented  on  which  it  would  seem  obligatory  on  the  court  to 
graut  an   immediate   injunction.     Such   in  junctions.  *  however,   should 
not  be  granted  save  in  cases  of  grave  and  compelling  exigencv.     Judi- 
cial action  should  be  conservative,  and  rarelv   is  such  conservatism 
more  plainly  required  than  when  vast  commercial  operations  involved 
m  interstate  transportation  will  be  arrested  or  disturbed  bv  incau- 
tious onlers.     Iu  this  case  the  duty  to  grant  the  extraordiua'rv  order 
sought  does  not  now  seem  imperative.    The  court,  therefore,  in  view 
of  the   record  and  of  the  considerations   mentioned,   will    withhold 
further  judicial  action  upon  the  application  until  properlv  apprised 
of  the  action  of  the  interstate  commerce  commission.     When  we  shall 
have  received  the  valuable  assistance  in  the  performance  of  the  grave 
duty  betore  us  which  must  be  expected  from  the  conclusions  of  that 
authoritative  and  eminent  body,  such  other  and  further  action  will 
be  taken  on  this  application  as  the  law  and  the  principles  of  eciuitv 
will  seem  to  direct." 

It  will  thus  be  seen  that  the  court  did  not  deny  the  injunc- 
tion prayed  for.  It  merely  withheld  action  to  await  the 
report  of  the  commission.  This  has  now  been  submitted. 
After  hearing  and  considering  the  voluminous  evidence, 
that  body,  on  February  7,  1905,  made  its  report.  The 
report  sustains  in  toto  the  contentions  of  the  complainants, 
and  declares  that  the  advance  in  rates  complained  of  was 
unreasonable,  unjust,  and  violative  of  the  act  to  regulate 
commerce.  The  report  was,  however,  not  unanimous.*'  The 
honorable  chairman,  Mr.  Knapp,  and  Commissioner  Fifer 
expressed  their  dissent  as  follows : 

"In  the  view  we  take  of  this  case,  the  conclusions  of  our  associates 
are  not  justified  by  the  facts  and  circumstances  appearing  in  the 
record,  or  otherwise  entitled  to  consideration.  Holding  that  the  rates 
complained  of  have  not  been  shown  to  be  in  violation  of  law  we 
respectfully  dissent  from  the  foregoing  report  and  opinion  " 


740 


13**   FEDERAL  EEPORTER,   757. 


Opinion  of  the  Cioiirt 

It  iis  regrettable  that  the  dissenting  commissioners  did  not 
more  fully  record  the  grounds  of  their  dissent.  It  might 
then  be  possible  for  the  court  to  inquire  to  what  extent  the 
dissent  was  supported  by  [758]  "  facts  and  circumstances 
appearing  in  the  record,"  or  by  facts  and  circumstances  not 
so  apix^ai'ing,  and  which,  therefore,  do  not  appear  to  the 
court.  The  order  of  the  commission  seeking  to  make  effect- 
ive  their  conclusions  declares  the  rates  and  charges  com- 
plained  of  to  l>e  excessive,  unreasonable,  unjust,  and  in  vio- 
lation of  the  provisions  of  the  act  to  regulate  commerce. 
"It  is  further  ordered  that  the  defendants,  the  Southern 
Railway  Company,  Atlantic  Coast  Line  Railway  Company, 
liouisville  &  Nashville  Railroad  Company,  Nashville,  Chat- 
tanooga &  St.  Louis  Railroad  Company,  Seaboard  Air  Line 
Railway,  Central  of  Georgia  Railway  Company,  Georgia 
Southern  &  Florida  Railway  Company,  and  the  Macon  & 
Birmingham  Railway  Company,  be,  and  each  of  them  is 
hereby,  notified  and  required  to  cease  and  desist  on  or  be- 
fore the  1st  day  of  April,  1905,  from  further  maintaining  or 
enforcing  said  unlawful  advance  of  two  cents  per  one  hun- 
dred pounds,  and  the  said  unlawful  rates  and  charges  re- 
sulting therefrom,  for  the  transportation  of  lumber  as 
aforesaid." 

A  certified  copy  of  the  opinion  and  order  of  the  commis- 
sion has  been  duly  filed.  This  is  accompanied  by  an  appli- 
cation for  an  injunction  pendente  lite  and  for  final  decree 
granting  the  relief  prayed  in  the  original  bill.  Counsel  for 
the  respective  parties,  with  meritorious  purpose  to  avoid 
delay  and  to  obtain  a  speedy  hearing  on  the  merits,  entered 
into  a  stipulation  that  the  evidence  taken  before  the  inter- 
state commerce  conmaission  shall  stand  as  the  evidence  in 
this  court,  subject,  however,  to  the  right  of  either  party  to 
apply  to  the  court  for  leave  to  introduce  such  additional 
evidence  as  the  court  may  think  proper  for  a  just  decision 
of  the  case.  On  the  hearing  additional  evidence,  mainly  in 
the  form  of  affidavits,  was  submitted  by  the  respective  par- 
ties. It  is  agreed  that  the  testimony  thus  submitted  shall 
have  the  same  force  and  effect  as  if  it  had  been  regularly 
taken  in  accordance  with  the  rules  in  equity.  With  equally 
meritorious  purpose  counsel  for  the  respective  parties  agreed 


TIFT   V.    SOUTHERN   RY.    CO. 


741 


Opinion  of  the  CJourt. 

that  this  should  stand  for  and  be  the  hearing  for  final  decree 
in  equity.  Counsel  for  the  respective  parties  have  been 
fully  heard.  The  hearing  was  concluded  on  the  22d  inst. 
On  account  of  the  gravity  of  the  questions  involved  and  the 
tremendous  record,  we  have  taken  time  for  consideration. 

The  effect  of  the  commission's  report  was  strongly  contro- 
verted in  the  argument.    Counsel  for  the  complainants  in- 
sisted that  it  must  be  accepted  by  the  court  as  true,  unless  it 
was  wholly  without  evidence  to  support  it.    On  the  other 
hand,  it  was  insisted  that  it  was  only  prima  facie  correct, 
and  "tipped  the  judicial  scale  only  by  a  hair's  breadth.'' 
Our  view  is  that  it  would  be  violative  of  explicit  law, 
the  settled  policy  of  government,  and  the  most  practical  prin- 
ciples of  reason  and  justice  for  the  courts  of  the  nation,  save 
for  controlling  reasons  of  law  or  fact,  to  discredit  or  dis- 
parage the  conclusions  of  the  interstate  commerce  commis- 
sion.   The  act  to  regulate  commerce  (paragraph  14),  declares 
that  the  "  findings  of  fact  set  forth  in  the  report  of  the  com- 
mission shall  in  all  judicial  proceedings  be  deemed  prima 
facie  evidence  as  to  each  and  every  fact  found."    In  para- 
graph 16  this  provision  is  distinctly  reiterated.     [759]  Nor 
are  we  in  any  doubt  as  to  the  import  of  the  expression 
"  prima  facie  evidence."    In  Kelly  v.  Jackson,  6  Pet.  631, 
8  L.  Ed.  523,  Mr.  Justice  Story  declares  that  ''  prima  facie 
evidence  of  a  fact  is  such  as,  in  judgment  of  law,  is  suffi- 
cient to  establish  the  fact;  and,  if  not  rebutted,  remains 
sufficient  for  the  purpose."    The  authority  of  this  case  has 
been  uniformly  recognized.     Rose's  Notes  on  U.  S.  Reports, 
vol.  3,  p.  301.     It  follows  that  the  report  of  the  commission 
declaring  these  advanced  rates  to  be  excessive  and  violative 
of  the  act  to  regulate  commerce  has  such  evidential  effect 
that,  had  complainants  been  content  to  introduce  the  report 
and  to  rest  their  case  without  further  evidence,  it  would  have 
entitled  them  to  the  decree  unless  the  respondents  by  prepon- 
derant and  controlling  evidence  should  rebut  and  disprove  its 
findings.    LilienthaVs  Tobacco  v.  United  States,  97  U.  S. 
268,  24  L.  Ed.  901.    In  other  words,  the  act  of  Congress 
creates  a  rule  of  presumption  in  favor  of  the  coumiission's 
report,  which,  on  its  introduction,  changes  the  burden  of 
proof,  as  in  this  case,  from  the  complainants  to  the  respond- 


742 


138   FEDERAL   REPORTER,   759. 


Opinion  of  the  Court 

ents.  "There  is  not  the  least  doubt,  on  principle,"  says 
the  author  of  the  recent  work  Wigmore  on  Evidence,  "  that 
the  Legishiture  has  entire  control  over  such  rules,  as  it  has 
over  all  other  rules  of  procedure  in  general,  and  evidence  in 
particular,  subject  only  to  the  limitations  of  evidence  ex- 
pressly enshrined  in  the  Constitution."  2  Wigmore  on  Evi- 
dence, par.  1354,  cl.  S.  Elsewhere  in  the  same  compre- 
hensive and  valuable  work,  vol.  1,  par.  7,  it  is  stated:  "Apart 
from  the  constitutional  niles  to  protect  against  statutory 
changes  the  Legislature  has  the  power  to  alter  or  create  any 
rule  of  evidence.'' 

The  wisdom  of  according  to  the  report  of  the  commission 
this  important  effect  is  as  little  open  to  question.  The  ad- 
ministration of  justice,  says  Webster,  "  is  the  chiefest  con- 
cern of  man  upon  earth."  Within  the  scope  of  that  function 
of  government  there  is,  perhaps,  no  single  topic  of  greater 
magnitude  or  moment  than  controversies  which  arise  in  trade 
and  commerce.  Said  Sir  Walter  Raleigh,  "  Whosoever  com- 
mands the  trade  of  the  world  commands  the  riches  of  the 
world,  and  consequently  the  world  itself."  Tn  a  material 
sense,  and  in  our  astonishing  civilization,  nothing  is  more 
important  than  the  transportation  of  commodities  sold  or 
interchanged,  and  in  transportation  the  stability  and  rea- 
sonable character  of  the  rates  charged  therefor  is  scarcely 
less  important  than  transportation  itself.  The  three  grand 
departments  of  government,  legislative,  executive,  and  ju- 
dicial, are  with  steady  and  swerveless  purpose  enacting 
or  enforcing  laws  to  safeguard  the  rights  of  the  general 
public,  and  as  well  as  that  portion  engaged  in  the  business  of 
transportation.  The  shippers  are  appealing  to  government 
to  protect  them  against  imwarrantable  exactions  by  the 
carriers.  Appeal  may  be  made  by  the  carriers  to  protect 
their  interests  from  unremunerative  rates  to  which  they  may 
be  restricted  bv  state  or  other  local  authorities.    In  either 

ft' 

ease  complaint  is  lieard  and  redress  is  given.  Reagan  v. 
Farmers'" Loan  c£*  Trmt  Co.,  154  IT.  S.  362,  14  Sup.  Ct.  1047, 
38  L.  Ed.  1014:  Chicago,  etc.,  Ry.  v.  Mhiucsota,  134  U.  S. 
418, 10  Sup.  Ct.  462,  33  L.  Ed.  970;  Rose's  Notes  on  U.  S.  Re- 
[760]  ports,  vol.  11,  p.  946  et  seq.  It  is  no  longer  doubtful 
that  "  the  question  of  the  reasonableness  of  a  rate  of  charge 


TIFT    V.    SOUTHERN   RY.    CO. 


Opinion  of  the  Court. 


for  transportation  is  eminentl}^  a  question  for  judicial  in- 
vestigation." Justice  Blatchford,  in  Chicago  <&  St.  Paul  Ry. 
V-  Minnesota,  134  U.  S.  418,  10  Sup.  Ct.  462,  33  L.  Ed.  970. 
To  this  end,  in  part,  the  government  has  created  the  inter- 
state commerce  commission.  It  is  a  tribunal  to  hear,  investi- 
gate, and  report  on  the  reasonableness  of  rates,  and  to  attempt 
the  correction  of  inequalities  and  injustice  therein.  Said 
the  Supreme  Court  in  Louis  mile  c&  Nashville  R.  R.  Co.  v. 
Behlmer,  175  U.  S.  675,  20  Sup.  Ct.  219, 44  L.  Ed.  309,  "  That 
body,  in  the  nature  of  its  organization  and  the  duties  im- 
posed upon  it  by  the  statute,  is  peculiarly  competent  to  pass 
upon  the  questions  of  fact  of  the  character  here  arising." 
In  view  of  these  considerations  and  precedents,  it  can,  we 
think,  be  no  longer  open  to  question  that  the  interstate 
commerce  commission  is  the  expert  tribunal  empowered  by 
law  to  determine,  in  the  first  instance,  the  reasonable  or  un- 
reasonable character  of  the  rates  charged  for  transportation 
in  interstate  commerce.  Said  Judge  Taft,  for  the  Circuit 
Court  of  Appeals,  in  East  Tennessee,  V.  d;  G.  R.  R.  Co.  v. 
Interstate  Commerce  Commission,  99  Fed.  64,  39  C.  C.  A.  425 : 

"It  has  been  suggested  that  the  traffic  managers  are  much  better 
able  by  reason  of  their  knowledge  and  exi>erienoe  to  fix  rates  and  to 
decide  what  discriminations  are  justified  by  the  circumstances  than 
the  courts.  This  cannot  be  conceded  so  far  as  it  relates  to  the  inter- 
state commerce  conunission,  which,  by  reason  of  the  experience  of  its 
members  in  this  kind  of  controversy,  and  their  great  opportunity  for 
full  informaton,  is  in  a  sense  an  expert  tribunal." 

We  may  repeat  what  was  stated  by  this  court  in  Com- 
mission V.  Louisville  d*  Nashville  R.  R.  Co.,  118  Fed.  626: 

"The  righteous  orders  of  the  great  commission  which  has  lieen 
primarily  intrusted  by  Congress  with  the  tremendous  duty  should  in 
all  proper  cases  be  respected  and  enforced  by  the  courts  of  the  country. 
While,  on  occasion,  the  railway  or  other  corporation  may  suffer  a 
temporai-y  diminution  of  revenues  from  an  order  of  this  character, 
the  interest  of  the  public,  and  in  the  end  the  interest  of  the  corpora- 
tion itself,  is  conserved.  In  all  such  cases  the  general  welfare  must 
control.    *  Salus  ix)puli  est  suprema  lex.'  " 

It  is  proper  to  observe,  however,  that  the  court  has  con- 
sidered the  entire  record,  and  has  formed  its  conclusions  not 
only  from  the  report  of  the  commission,  but  from  all  the 
evidence  submitted  to  that  body  and  stipulated  into  the  case 
here,  and  from  the  additional  evidence  submitted  de  novo  on 
this  hearing. 


744 


138  FEDEBAl.  BEPOETEB,   760. 


TIFT    V,   SOUTHERN   RY.    CO. 


745 


Opinion  of  tlie  Court. 

•  A  highly  significant  feature  of  this  case  is  the  fact  that 
the  rates  complained  of  are  the  result  of  concert  of  action  on 
the  part  of  the  members  of  the  Southeastern  Freight  Asso- 
ciation. This  organization,  as  we  have  seen,  embraces  as 
members  all  of  the  defendants  except  the  Nashville,  Chat- 
tanooga &  St.  Louis  Kailroad  and  the  Louisville  &  Nashville 
Eailroad  Company.  But  the  latter,  as  colessee  of  the 
Georgia  Eailroad,  while  not  nominally,  is  also  essentially,  a 
member.  The  association  was  a  proper,  thougli  perhaps  not  a 
necessary,  party.  It  might  well  desire  to  be  heard  with  re- 
gard to  the  relating  charges  against  its  character  and  conduct. 
While  in  the  original  bill  there  was  a  prayer  that  this  asso- 
ciation should  be  declared  an  illegal  combination  in  restrain! 
of  interstate  trade,  [7611  and  that  the  defendant  railway 
companies  be  enjoined  from  prosecuting  the  purposes  of 
such  illegal  combination  through  the  medium  of  the  freight 
association,  counsel  for  the  complainant?  in  argument 
properly  abandon  that  prayer.  While  this  is  true,  it  is  also 
true  that  the  methods  of  the  association,  and  the  conduct  of 
its  members  in  this  particular  case,  were  placed  before  the 
commission,  and  are  fully  before  the  court.  In  reply  to  the 
contention  on  the  part  of  the  respondents  that  they  acted 
independently  each  for  itself,  and  not  through  the  agencv 
of  the  Southeastern  Freight  Association,  the  commission 
finds: 

"  Tlie  proof  shows  conclusively  tliat  the  advance  was  the  outcome  of 
concert  of  action  and  previous  understanding  between  the  companies. 
Throui?h  their  authorized  official  representatives,  tbev  conferred  with 
each  other  repeatedly  as  to  the  malving  of  the  advance;  recognized 
the  fact  that,  because  of  competition  in  common  markets  between  the 
lumber  producing  districts  served  by  them,  the  advance  should  be 
from  all  those  districts  or  none ;  and,  finally,  they  all  promulgated  the 
advance  to  take  effect  at  exactly  the  same  date  and  for  exactly  the 
same  amount  This  concurrence  of  action  was  not  only  between  the 
railway  companies,  parties  defendant  in  this  ca^e,  and* in  relation  to 
rates  from  Georgia  shipping  points,  but  was  participated  in  by  the 
lumber-liauling  roads  serving  the  territories  l»oth  west  and  east  of  the 
Mississippi  in  Arkansas,  Louisiana,  Mississippi,  Alabama,  and  Florida," 

The  commission  concludes  that  it  is  its  duty  to  consider  this 
joint,  or  concert  of,  action  of  the  defendants  as  bearing  upon 
the  reasonableness  and  validity  of  the  advanced  rate  which 
results.  It  holds  that  the  element  of  competition  is  elimi- 
nated. In  the  absence  of  legitimate  competition,  destroyed, 
as  we  shall  pfesently  see,  by  methods  obviously  illegal,  the 


Opinion  of  the  Court. 

commission  presumes  that  the  advance  rates  are  higher  than 
legitimate  competition  would  produce.     In  other  words,  the 
marked  increase  of.  charges  for  transportation  of  that  com- 
modity which,  save  one  other,  affords  the  largest  tonnage 
of  freight  to  the  respondent  roads,  did  not  originate  from  a 
normal  or  reasonable  exigency  of  the  respondents'  business. 
On  the  contrary,  it  was  an  arbitrary  exaction,  imposed  by  a 
combination  of  railroad   agents  made  in  restraint  of  the 
natural  movement  of  the  product  in  the  lumber  trade.     This 
combination  or  concert  of  action  on  the  part  of  the  respondent 
railroads  is  plainly  violative  of  that  provision  of  the  inter- 
state commerce  law  which  forbids  pooling.     This  was  en- 
acted, among  other  things,  for  the  purpose  of  securing  com- 
petition.    Pooling  niay  be  as  well  effected  by  a  concert  in 
fixing  in  advance  the  rates  which  in  the  aggregate  would 
accumulate  the  earnings  of  naturally  competing  lines,  as  by 
depositing  all  of  such  earnings  to  a  common  account  and  dis- 
tributing them  afterwards.     That  such  an  association  and 
concert  of  action  between  agents  of  naturally  competing  lines 
is  destructive  of  competition  is  equally  unanswerable.     To 
entertain  any  other  view  is  to  ignoiv  reiterated  decisions  of 
the  Supreme  Court  of  the  United  States  and  many  rulings 
of  the  Circuit  Courts  and  of  the  state  courts.     Perhaps  the 
leading  cases  on  this  subject  are  United  States  v.  Freight 
Association,  166  U.  S.  341,  17  Sup.  Ct.  640,  41  L.  Ed.  1007: 
Joint  Traffic  Association  Case,  171  U.  S.  505, 19  Sup.  Ct.  25, 
43  L.  Ed.  259.     In  the  first  case  the  court  had  under  con- 
sidera-  [762]  tion  the  legality  of  the  Trans-Missouri  P\-eight 
Association.     The   agreement  of  that  body  may   differ   in 
form,  but  its  substantial  purpose  was  the  same  as  that  of 
the  Southeastern  Freight  Association.     It  avowedly  was 
the  "  mutual  protection  to  the  railroads  by  establishing  and 
maintaining  reasonable  rates,  rules,  and  regulations  on  all 
freight  traffic,  both  through  and  local."    After  argument  by 
many  of  the  most  eminent  counsel  in  the  country,  and  after 
exhaustive  consideration,  the  court  held  that  the  anti-trust 
law  prohibiting  contracts,  combinations,  and  conspiracies  in 
restraint  of  trade  or  commerce  among  the  several  states  or 
with  foreign  countries  apply  to  and  cover  common  carriers 
by  r.ulroad,  and  a  contract  between  them  in  restraint  of  such 


746 


138  FEDERAL  REPORTER,   762. 


OpiBion  of  the  Court. 

trade  or  commerce  is  prohibited  even  though  the  contract  is 
entered  into  between  competing  railroads  only  for  the  pur- 
pose of  thereby  effecting  traffic  rates  for  the  transportation 
of  persons  and  property.  It  was  further  held  that,  in  order 
to  maintain  such  a  contention  the  complainant  is  not  obliged 
to  show  that  the  agreement  in  question  was  entered  into  for 
the  purpose  of  restraining  trade  or  commerce  if  such  re- 
straint is  the  necessary  eft'ect,  and  concluded  that  the  anti- 
trust act  applies  to  railroads,  and  that  it  renders  illegal  all 
agreements  which  are  in  restraint  of  trade  or  connnerce. 
The  coiH't  then  proceeds  to  declare  that  the  agreement  of  the 
association  does  in  fact  constitute  such  a  restraint  in  viola- 
tion of  the  law.  It  is  proper  to  state  that  four  judges, 
three  of  whom  are  not  now  on  the  bench  of  the  court,  dis- 
sented from  this  conclusion ;  but  the  opinion  of  the  majority 
is,  of  course,  controlling.  In  the  subs(^quent  case  of  V mted 
States  V.  Joint  Traffle  Association^^  171  U.  S.  505,  10  Sup. 
Ct.  25,  43  L.  Ed.  259,  the  court,  after  full  consideration,  re- 
affirmed its  holding  in  the  Trans-Missouri  Case.  It  further 
declares  that  Congress,  with  regard  to  interstate  connnerce, 
and  in  the  course  of  regulating  it  in  the  case  of  railway  cor- 
porations, has  power  to  say  that  no  contract  or  combination 
shall  be  legal  whicli  shall  restrain  trade  and  connnerce  by 
shutting  out  the  operation  of  the  general  law  of  competition. 
The  tremendous  significance  of  these  findings  is  shown  by 
the  multitude  of  cases  in  which  the  doctrines  announced  have 
been  utilized  and  reaffirmed.  See  Rose's  Notes  on  U.  S. 
Reports,  vol.  12,  p.  1)58  et  seq.;  also  supplement  to  same  i)ub- 
lication,  vol.  B,  p.  795.  Perhaps  the  most  noted  case  on  this 
subject  is  that  of  the  Northern  Seenrifies  Com  pa  m/  v.  United 
Staff. ^,  \m  V.  S.  11)7.  24  Sup.  Ct.  436,  48  L.  Ed.  079.  There 
it  was  held  that  a  contract  l)y  which  a  majority  of  stock  of 
two  companies  who  owned  i){irallel  interstate  railroads  is 
transferred  to  a  corporation  organized  for  the  purpose  of 
holding  and  voting  the  same  and  receiving  dividends  and 
dividing  the  same  pro  rata  among  the  stockholders  of  the 
two  companies,  violates  the  anti-trust  law.  Such  is  the  super- 
abundance of  authority  upon  this  subject  that  further  cita- 
tion will  be  superfluous.  It  may  be  pardonable  to  recall  that 
one  of  the  pioneer  cases  on  this  important  topic  was  that  of 


TIFT   V,   SOUTHERN   RY.    CO. 
Opinion  of  the  Court. 


/4< 


Rowena  Clarke  v.  Central  R.  R.  (&  Banking  Company  of 
Georgia  (C.  C.)  50  Fed.  338,  15  L.  R.  A.  683  et  seq.,  heard  in 
this  district.  This  case  was  decided  in  1892.  Commenting 
upon  similar  conditions,  it  was  there  observed : 

[763]  '*  It  is  not  difficult  to  perceive  that  a  combination  of  corpora- 
tions wliicli  produces  a  condition  so  inequitable  cannot  be  sanctioned 
by  the  law.  We  believe  that  transactions  of  this  character  are  within 
the  spirit,  if  not  within  the  letter,  of  the  act  of  Congress  known  as 
the  *  Sherman  Anti-Trust  Law'  (Act  July  2,  1890,  c.  047,  26  Stat.  209 
lU.  S.  Comp.  St.  1901,  p.  3200]).  It  is  certainly,  as  we  have  seen, 
obnoxious  to  the  law  of  Georgia,  and  it  was  certainlv  as  obnoxious  to 
the  common  law." 

This  decision  was  made  13  years  ago.  The  principles  then 
announced,  which  were  challenged  in  many  influential  quar- 
ters, are  now  imbedded  in  the  country's  jurisprudence  and 
in  the  legislation  of  the  national  Congress.  It  was  insisted 
with  great  earnestness  by  the  learned  special  counsel  for  the 
respondents  that  because  the  various  members  of  the  asso- 
ciation expressly  stipulated  in  the  articles  of  organization 
that  each  and  all  members  could  Ht  will  and  at  any  time 
withdraw  from  the  agreement  to  fix  rates,  it  was  not  a 
combination  in  restraint  of  trade.  This  view  seems  whoUv 
untenable.  That  is  merely  a  recitation  of  a  privilege  which 
any  party  to  an  unlawful  enterprise  inherently  enjoys.  Con-e 
federates  or  conspirators  who  unite  to  do  an  unlawful  act 
or  to  do  a  laAvfnl  act  in  an  unlawful  wav  mav  iointlv  or 
severjilly  abandon  the  project.  The  law  aliords  them  the 
locus -p(enitentia\  If,  however,  the  object  of  the  conspiracy 
is  accomplished,  its  character  is  not  to  be  determined  in  view 
of  the  consideration  that  the  conspirators  might  have  re- 
pented, but  with  an  eye  single  to  the  fact  that  they  did  not 
repent.  Besides,  it  is  indisputable  that  the  agreements  of 
the  association  were  made  to  be  kept,  and  not  to  be  broken, 
(lood  faith  between  the  members,  not  to  mention  a  powerful 
compulsory  force  behind  them,  obliged  that  the  agreements 
be  kept,  and  the  fact  is,  as  the  commission  finds,  they 
were  kept. 

The  cardinal  error  to  which  the  railroads  have  been  com- 
mitted in  this  important  controversy  is  the  apparent  belief 
that  they  have  the  right,  by  abitrarily  increasing  freight 
rates,  to  divert  at  any  time  to  their  own  treasuries  a  share 
of  the  profits  of  successfid  industries  or  occupations.     It 


748 


138  FEDEKAL  BEPORTER,   763. 


Opinion  of  the  CJourt. 

was  not  contended  that  the  antecedent  rates  were  unremu- 
nerative.    As  before  stated,  they  were  conceded  to  be  profit- 
able.   That  additional  revenue  was  needed  to  meet  increased 
expenses  was  the  motive  of  the  advance  was  testified  by  Vice 
President  Culp  of  the  Southern  Railway  Company.    To 
quote  his  language :  They  "  looked  about  to  see  where  "  they 
could  best,  but  without  injury,  get  that  additional  revenue, 
and  one  of  the  commodities  which  they  thought  would  "  bear 
an  advance  "  was  lumber.    But  the  courts  have  more  than 
once  decisively  corrected  this  assumption  on  the  part  of  rail- 
way officials.     It  is  true  that  the  business  of  railway  trans- 
portation is  usually  carried  on  by  private  capital  invested 
ill  corporations.    It  is,  however,  business  of  a  quasi  public 
nature.    As  we  have  seen,  there  is  no  doubt  that  within  the 
limitations  of  the  Constitution  it  is  subject  to  govenmiental 
control.     These  facts  prohibit  the  agents  of  the  railway  from 
charging,  like  the  owners  of  other  property,  any  price  they 
may  choose  to  exact  for  the  use  of  the  railroad.    The  law 
does  not  fail  to  regard  the  enormous  franchises  which  have 
been  granted  to  the  railroads  by  the  public,  their  corporate 
powers,  the  right  to  avail  themselves  of  [764]  the  right  of 
eminent  domain,  the  right  to  protection  against  exorbitant 
restrictions  or  exactions  from   local   authority,  and  other 
similar  considerations.    These  views  are  very  plainly  set 
forth  in  the  opinion  of  Justice  Brewer  sitting  with  the 
Circuit  Court  of  Appeals  of  the  Eighth  Circuit  in  the  case 
of  Chicago  c§  N,  W,  R.  R,  Co.  v.  Oahome,  52  Fed.  914,  3  C.  C. 
A.  347.    The  conclusion  of  the  learned  justice  is  that  rea- 
sonable compensation  for  the  service  actually  rendered  is 
all  that  the  railroad  is  permitted  to  exact.    Five  years  after 
the  decision  just  cited  was  made  the  Supreme  Court  of  the 
United  States  had  before  it  the  same  question.    This  was 
in  the  case  of  Smyth  v.  Ames,  169  U.  S.  466, 18  Sup.  Ct  418, 
42  L.  Ed.  819.    This  was  a  case  of  great  importance.    The 
opinion  was  happily  unanimous.    It  was  argued  for  the 
appellant  by  Mr.  John  L.  Webster  and  by  Mr.  Churchill, 
Attorney  General  of  the  state  of  Nebraska,  and  with  them 
appears  the  famous  name  of  William  J.  Bryan.    For  the 
appellees  there  appeared  J.  M.  Woolworth  and  that  re- 
nowned leader  of  the  American  bar,  the  late  Mr.  James  C. 


TIFT    V.    SOUTHERN   RY.    CO. 


749 


opinion  of  the  Court. 

Carter.  The  case  would  be  additional  authority  for  the 
jurisdiction  of  this  court  in  equity  to  prevent  a  multiplicity 
of  suits,  if  such  additional  authority  was  needed;  but  the 
great  duty  which  fell  upon  the  court  was  to  determine  the 
rule  for  fixing  the  reasonableness  or  unreasonableness  of 
transportation  rates.  The  state  of  Nebraska  had  attempted 
to  determine  this  by  fixing  an  arbitrary  maximum  for  the 
transportation  of  interstate  commerce.  This  the  court  held  it 
could  not  do.  But  in  holding  this  it  announced  certain  princi- 
ples which  the  controlling  officerrs  of  railroads,  charged  as 
they  are  with  such  vital  duties  to  the  commerce  and  welfare 
of  the  country,  might  well  take  to  heart.  "  The  railroad," 
said  the  court,  "  is  a  public  highway,  none  the  less  so  because 
constructed  and  maintained  through  the  agency  of  a  corpora- 
tion deriving  its  existence  and  powers  from  the  state.  Such 
corporation  was  created  for  public  purposes.  It  performs  a 
function  of  the  state.  Its  authority  to  exercise  the  right 
of  eminent  domain  and  to  charge  tolls  was  given  primarily 
for  the  benefit  of  the  public.  It  is  under  governmental 
control,  though  such  control  must  be  exercised  with  due 
regard  to  the  guaranties  for  the  protection  of  its  property." 
It  may  not  "  fix  its  rates  with  a  view  solely  to  its  own  inter- 
ests, and  ignore  the  rights  of  the  public.  But  the  rights  of 
the  public  would  be  ignored  if  rates  for  the  transportation 
of  persons  or  property  on  a  railroad  are  exacted  without 
reference  to  the  fair  value  of  the  property  used  for  the  pub- 
lic, or  the  fair  value  of  the  ser\4ce  rendered,  but  in  order 
simply  that  the  corporation  may  meet  operating  expenses, 
pay  the  interest  on  its  obligations,  and  declare  a  dividend  to 
stockholders." 

After  careful  consideration  of  the  extensive  record,  there 
seems  to  have  been  an  utter  absence  of  excuse  or  justifica- 
tion for  the  concerted  action  of  the  railroads  which  advanced 
the  rates  on  lumber  throughout  the  South.  The  vast  in- 
crease of  the  lumber  traffic  had  resulted  in  large  increase  of 
net  revenue  for  those  roads.  The  service  was  inexpensive. 
It  required  neither  rapidity  of  movement  nor  specially 
equipped  cars,  and  such  simple  equipment  as  was  needed  the 
shippers  were  obliged  to  furnish  and  pay  for.  The  railroads 
[766]   were  required  neither  to  load  nor  unload  the  cars. 


750 


138   FEDERAL   REPORTER,   765. 
Oiiiiiioii  of  the  Court. 


Xliis  was  done  by  the  consignor  and  consignee.  The  lumber 
carried  was  neither  fragile  nor  perishable,  and  the  risk  there- 
fore from  loss  or  damage  was  inappreciable.  Mr.  Tift, 
the  principal  witness  for  the  complainants,  and  one  of  the 
largest  lumber  men  of  the  state,  testified  that  for  30  years 
he  had  not  been  compelled  to  present  a  claim  for  damage 
on  lumber  shipped  fi-om  his  mill.  Nor  were  there  any  ex- 
igencies in  the  financial  condition  of  the  principal  defendants 
which  called  for  so  vast  a  coniribution  to  their  treasuries 
from  an  industry  whose  product  forms  such  a  large  part  of 
their  tonnage,  and  which  is  so  indispensable  to  the  public 
welfare.  On  this  subject  we  may,  perhaps,  with  propriety 
quote  literally  the  figures  and  findings  of  the  commission. 
On  page  573  of  the  report  it  is  said : 

*•  The  financial  eonditlun  of  the  prhicipal  defendants  appears  to 
Mve  steadily  improved  for  a  number  of  years  up  to  and  including 
the  year  VMi,  in  which  the  advance  in  rates  complained  of  was 
made.  They  were  comparatively  pro8i>erous  at  the  date  of  and  for 
years  prior  to  the  advance. 

"The  Southern  Railway  C«>mpany  has  declared  dividends  for  each 
year  from  1807  to  1903,  both  inclusive,  ranging  from  $543,000  ♦  ♦  • 
in  1807,  up  to  $4,500,000   (7^  per  cent,  on  $00,000,000  of  preferred 

?loe  1  ^*o^;^o^?**^^;^2^  **^**^  reports  surpluses  of  from  $404,013  in 
18!)8  to  f  2, 100,80  (  m  1902. 

"The  Louisville  &  Nashville  Railroad  Corapanv  has  declared  divi- 

SJ'i^oJ^  ^^^^  ^'^^^  ^**^*"^  ^^^  ^^  1^^-  *>o^li  inclusive,  ranging  from 
J1^,000  (about  3i  per  cent,  on  $54,912,520  of  common  stock)  in 
i^'  "S,^**  $3,000,000  (5  per  cent  on  $60,000,000  of  common  stock)  in 
lJO,i.  That  road  also  reports  surpluses  of  from  $40,204  in  1899  to 
$2,987,195  in  1903.  ^  y  ^o,-i«  m  loyy  to 

"The  Atlantic  Coast  Line  Railroad  Company  has  declared  divi- 
dends  for  each  year  (except  year  1900)  from  1804  to  1903.  both  in- 
clusive, ranging  from  $318,390  in  1894  (5i  per  cent,  on  $7,021,950  of 
comnion  stock),  up  to  $1,714,075  (5  per  cent,  on  $1,744,100  of  pre- 
ferred stock  and  5  per  cent,  on  $36,650,000  of  common  stock)  in  1903 

;j>i,^j.i,9M  m  1903.  In  1900  no  dividend  was  declared,  but  there  was 
a  surplus  reported  of  $2,152,406. 

/* '^i^*l  ^**^*^^'"**^'  Chattanooga  &  St.  Louis  Railway  Companv  de- 
•tA^'^^Jii!*^^?*^''  ranging  from  $100,000  in  laoo  (being  1  per  cent,  on 
filo^'*^  o/  common  stock)  to  $400,000  in  1895,  1896,  1897,  and 
1898,  being  4  per  cent,  on  $10,000,000  of  common  stock.    For  each 

|I^,9?"1L  1^  S  $^1,48^^^^  ^'^'•^^"^^  ^""^'^^  ^^^- 

"The  Georgia  Southern  &  Florida  Railway  Company  declared  divi- 
dends for  each  year  from  1897  to  1903  ranging  from  $27,360  (beinc 
?nS?^f^?^-  ?"  $*584,000  of  preferred  stock)   in  1897  up  to  .$99,240  in 

1901  (being  5  per  cent,  on  $684,000  of  preferred  stock  and  0  oer  cent 
on  $1,0^4,000  of  preferred  stock)    in  1903.    For  each  of  the  years 

1902  and  1903  it  declared  a  dividend  of  $77,560.  The  suroluses  re- 
ported  from  1896  to  1903  range  from  $9,657  to  $107,060  m  1896  The 
surplus  for  1901  was  $24,105,  for  1902  $41,448,  and  for  1903  $77*968 


TIFT    V.    SOUTHERN   BY.    CO. 
Opinion  of  the  Court. 


751 


"The  Seaboard  Air  Line  Railway  Company  has  der^lared  no  divi- 
dends, but  reports  surplus  of  $252,070  for  1901,  $709,331  for  1902,  and 
$754,431  for  1903.  The  Central  of  Georgia  Railway  Company  de- 
clared no  dividends,  but  reports  surpluses  for  each  of  the  years  1899 
to  1903,  both  inclusive,  ranging  from  $58,888  in  1899  to  $203,506  in 
1903.  The  Macon  &  Birmingham  Railway  Company  has  declared  no 
dividends,  and  reports  a  deficit  for  each  of  the  years  from  1894  to 
1903,  both  inolusive,  ranging  from  $20,0.99  in  1002^  to  $03,715  in  1804. 
The  deficit  reported  for  1901  was  $34,313,  for  1902  .$29,099,  and  for 
1903  $45,949." 

It  is  true,  as  insisted,  that  the  operating  expenses  of  the 
raih-oads  have  grown  hirger,  and  the  percentage  of  operat- 
ing expenses  to  gross  earnings  has  increased.  But  it  is  also 
true  that  both  gross  [766]  and  net  earnings  have  steadily 
increased.  The  statement  made  in  argument  that  the  gross 
earnings  of  the  Southern  Railway  have  increased  from 
$25,353,686  in  1899  to  $42,313,248  in  1903  does  not  seem  to 
have  been  challenged.  In  the  same  j^ear  the  net  earnings,  it 
seems,  had  increased  from  more  than  eight  millions  to  more 
than  twelve  and  a  half  millions,  and  the  net  earnings  per 
mile  have  increased  more  than  one  thousand  dollars.  While 
these  figures  are  most  encouraging,  and  will  afford  gratifi- 
cation to  all  those  who  are  broad-minded  enough  to  rejoice 
in  the  prosperity  of  the  railroads,  which  do  so  much  for  the 
Avelfare  of  the  country  and  the  advancement  of  its  civiliza- 
tion, it  is  also  true  that  this  is  probably  an  understatement 
of  the  real  earnings  of  this  great  corporation.  It  was  in- 
sisted by  Mr.  Baxter  in  his  very  able  argument  for  the 
respondents  that  every  expenditure  of  a  railway,  no  matter 
how  permanent  the  improvement,  must  be  charged  to  the 
expense  account  of  operation.  This  accomplished  lawyer  is 
accustomed  to  speak  authoritatively  with  regard  to  the  mat- 
ters intrusted  to  his  care.  His  statement  in  judicio  may  be 
regarded  as  binding  upon  all  of  the  respondent  companies, 
and,  if  accepted,  when  we  consider  tlie  vast  material  im- 
provements which  have  been  made  in  the  southern  railways 
it  will  be  difficult  to  estimate  the  marvelous  prosperity 
which  they  now  enjoy.  It  is  true  counsel  for  the  railroads 
insist  that  their  net  revenue  did  not  increase  in  proportion 
to  their  gross  earnings,  but,  in  the  nature  of  things,  this  is 
not  to  be  expected  in  any  business.  A  manufacturing  enter- 
prise of  extensive  character  may  make  10  per  cent,  by  the 
product  of  its  mill.    It  may  double  its  capacity  and  double 


138  FEDEBAL   REPORTER,    766. 
Opinion  of  the  Court. 


its  output,  but  it  may  look  in  vain  for  a  double  increase  in 
net  earnings.    How  needless,  then,  was  the  exaction  upon 
the  great  lumber  industry  of  the  South,  which  has  occa- 
sioned this  costly  litigation  with  all  of  its  lamentable  con- 
sequences.   The  hardship  upon  the  complainants  was  incon- 
testable.   The  findings  of  the  commission  show  that  under 
the  old  rates  they  had  built  up  a  prosperous  trade  in  the 
Northwest.     Under  the  new  rates  this  practically  ceased. 
When  the  court,  with  what  was  thought  to  be  caution  con- 
servative of  the  rights  of  all  parties,  retained  the  bill,  but 
declined  to  continue  the  injunction,  and  gave  complainants 
the  opportunity  to  avail  themselves  of  their  right  to  appeal 
to  the  commission,  this  business  was  practically  prostrate. 
Unhappily,  but  no  doubt  necessarily,  there  was  a  delay  of 
19  months  before  the  commission  made  its  finding.    In  the 
meantime,  for  well-known  causes  of  a  political  nature,  there 
had  been  a  gi-eat  and  enthusiastic  revival  in  the  business, 
enterprise,  and  confidence  of  the  country.    A  great  demand 
for  yellow   pine   lumber   had   grown   up   in   all   sections. 
Builders  felt  themselves  obliged  to  have  it,  whatever  the 
price,  and  whatever  the  rate,  and  large  shipments  were 
made  on  the  advance  rates.    This  is  plainly  enough  shown 
by  the  numerous  supplemental  affidavits  offered  by  the  com- 
plainants and  received  as  evidence.    This,  however,  was  in 
no  sense  ascribable  to  the  action  of  the  Southeastern  Freight 
Association  in  imposing  this  rate,  but  was  despite  that 
action.    It  in  no  sense  relates  to  the  reasonableness  or  un- 
reasonableness of  the  rate.    And  it  should  not  be  [767]  for- 
gotten that  while  the  business  of  the  lumbermen  was  re- 
cuperating the  treasuries  of  the  railroads  were  all  the  while 
receiving  a  proportionate  increment  from  the  unreasonable 
increase  of  rates  which  they  had  imposed.    They  have  no 
right  to  graduate  their  charges  in  proportion  to  the  pros- 
perity which  comes  to  industries  whose  products  they  trans- 
port.   With  equal  reason  they  might  demand  an  increase 
of  rates  for  the  transportation  of  cotton  with  every  increase 
in  the  value  of  our  great  staple.    Indeed,  to  concede  the 
principle  for  the  fixation  of  rates  upon  which  the  railroads 
through  the  medium  of  the  Southeastern  Freight  Associa- 
tion have  acted  in  this  case  would  concede  their  power  to 


TIFT   V.   SOUTHERN  RY.    CO. 


753 


Opinion  of  the  Court, 
levy  for  no  better  service  augmentation  of  tolls  for  every  in- 
crease of  profit  in  every  line  of  endeavor  won  by  the  enter- 
prise, sagacity,  and  industry  of  the  American  people.    It  is 
superfluous  to  add  that  a  government  of  laws,  and  not 
ot  men,  will  never  tolerate  such  domination  and  control 
of  the  trade,  manufactures,  and  commerce  of  the  people. 
These  views  relate  exclusively  to  the  facts  before  the  court 
in  this  case  as  proven  incontestably  by  the  evidence  and  as 
tound  by  the  interstate  commerce  commission.    Here  is  no 
attempt  to   discredit   the   incalculable   services   which   are 
hourly  rendered  the  country  by  the  railways.     In  nothing 
do  we  share  the  animus  or  purposes  of  that  sinister,  sefish, 
and  insincere  agitation  which  would  excite,  if  it  could   the 
masses  of  the  people  to  hatred  and  injustice  toward  corpo- 
rations.    Such  a  propaganda  provokes  in  the  justly  bal- 
anced mmd,  and  particularly  in  the  mind  trained  for  the 
administration  of  law,  and  for  the  protection  of  propertv 
and   personal   rights,  disapprobation,   and,   indeed,   abhor- 
rence    With  sincere  enthusiasm  the  judge  of  this  court  has 
elsewhere  testified  to  the  wonderful  material  blessings  be- 
stowed upon  our  once  prostrate  Southland  bv  our  orreat 
railway  systems  in  "economies  of  operation,  in  constant,  if 
gradual,  reduction  of  rates,  in  increased  facilities  and  more 
expensive   accommodations,   in    more    uniform   service    for 
longer  distances  without  change  of  cars,  in  abolition  of  short 
disjomted  hues  under  different  management,  in  augmenta- 
tion of  shipping  facilities,  in  physical  perfection  of  the 
properties  and  consequent  safety  to  the  public,  in  the  steadv 
increase  in  value  of  all  the  securities  of  these  great  hi^h- 

lu  ri.J       f "" 'T"""'''-     *     *     *     And  with  what  re- 
sult?    \Vhere  formerly  asthmatic  engines  attached  to  unsafe 

and  noisome  trams  through  the  solitudes  of  an  impoverished 
country  like  a  wounded  snake  dragged  their  slow  length 
along,  now  we  behold  on  massive  rails  of  gleaming  steel,  on 
roadbeds  of  granitic  ballast,  successive  sections  of  long 
freight  trams  sturdily  steaming  through  a  prosperous  land 
smiling  with  luxuriant  crops,  beautiful  with  neat  and  happv 
homes,  the  chimneys  of  great  factories  giving  employment 
to  thousands,  almost  marking  the  miles;  or  the  admiration 
21220— VOL  2—07  m i8 


754 


138  FEDERAL  REPOETER,   767. 
Opiuion  of  the  Court. 


kindles  and  the  pulse  leaps  as  the  limited  express  laden  with 
its  human  freight  glances  by  on  its  mission  of  progress  and 
civilization/'  In  nothing  do  we  abate  that  enthusiastic  ap- 
proval of  the  services  of  the  railways  to  the  people;  but 
not  moi-e  tlian  any  other  human  agency  is  raih-oad  manage- 
ment infallible.  The  patriotic  and  proper  solution  of  every 
controversy  involving  the  vast  ques-  [768]  tions  of  trans- 
portation is  simply  the  trial  of  each  case  on  its  particular 
facts,  and  with  an  eye  single  to  the  merits  of  the  one  party 
or  the  other.  In  interstate  commerce  this  is  exclusively  a 
duty  of  the  national  tribunals,  and  the  laws  regulating  such 
commerce  are  within  the  exclusive  power  of  Congress. 

Innumerable  ai-e  the  cases  in  which  the  railroads  them- 
selves successfully  invoke  the  identical  principles  here  an- 
nounced for  their  own  protection  against  intemperate  and 
injurious  local  legislation  restrictive  of  their  just  powers 
and  destructive  of  the  just  rights  of  their  stockliolders. 
Such  was  the  case  of  Smyth  v.  Ames,  mpra.  Such  was  the 
case  of  OMeagOj  etc.,  Ry.  v.  Minnesota,  134  U.  S.  418,  10 
Sup.  Ct.  462,  33  L.  Ed.  970.  See,  also,  Central  E.  i?.  v. 
Macon  (C.  C.)  110  Fed.  871;  Iron  Mountain  R,  E.  v.  il/em- 
phis,  96  Fed.  122,  37  C.  C.  A.  410;  Milwaukee,  etc,  Co.  v. 
Milwaukee  (C.  C.)  87  Fed.  577;  BaU  v.  Eutland  (C.  C.)  93 
Fed.  516;  Cleveland  City  Ey.  v.  Cleveland  (C.  C.)  94  Fed. 
401) ;  Chicago,  M..  d:  St,  P,  Ey.  v.  Tompkins,  176  U.  S.  173, 
20  Sup.  Ct.  336,  44  L.  Ed.''  417 ;  Louisville,  etc.,  v.  McChord 
(C.  C.)  103  Fed.  220.  In  all  of  these  cases  and  many  others 
of  pertinent  character  which  might  be  cited,  corporations 
found  themselves  obliged  to  resort  to  the  courts  to  obtain 
protection  against  rates  which  were  unreasonably  low.  The 
courts  of  the  country  will  be  found  prompt  to  protect  them 
in  the  righteous  exercise  of  righteous  powers.  They  will  be 
equally  prompt  in  proper  cases  to  protect  the  public  or  any 
individual  from  unrighteous  exactions,  particularly  when 
invoked  through  the  agency  of  unlawful  combma tions  or 
associations  in  restraint  of  trade  and  commerce,  affecting 
not  onlv  the  welfare  and  happiness  of  the  individual,  but 
the  thrift  and  prosperity  of  entire  communities  and  great 
commonwealths. 

In  this  case  the  conclusions  of  the  court  as  to  the  issues 


BOBBS-MERRILL   CO.    V.   STRAUS. 


756 


Syllabus. 

involved  agree  with  the  conclusions  of  the  interstate  com- 
merce commission  as  expressed  by  their  report.    A  decree 
enjoining  all  the  respondents  against  further  enforcement  of 
the  rates  complained  of  will  be  at  once  entered.     Order 
will  be  taken  referring  to  the  standing  master  the  pleadings 
and  evidence,  with  instruction  to  ascertain  the  sum  total  of 
the  increased  rate  paid  by  each  of  the  complainants  to  either 
or  all  of  the  defendant  companies  since  the  rate  went  into 
effect  and  to  the  end  of  this  litigation,  and  report  such 
amount  to  the  court,  in  order  that,  pursuant  to  the  stipula- 
tion made  by  the  respondents  in  open  court,  in  case  the  com- 
plainants prevail,  decree  of  restitution  shall  be  made.    Be- 
cause of  the  vast  extent  of  the  lumbermen's  business,  and 
the  great  expense  and  inconvenience  which  might  result  to 
them,  to  the  lumber  trade,  and  the  railways  from  the  in- 
stantaneous enforcement  of  this  injunction,  when  respond- 
ents may  have  purpose  to  appeal  from  this  action,  it  will  be 
ordered  further  that  the  decree  now  granted  shall  not  take 
effect  until  10  days  from  this  date  have  elapsed,  in  order 
that  the  respondents  or  either  of  them,  if  they  so  desire,  may 
seek  supersedeas. 


[156]  BOBBS-MERRILL  CO.  v.  STRAUS  ET  AL. 

(Circuit  Court,  S.  D.  New  York,    July  11,  1905.) 

[139  Fed.,  155.] 

Copyrights— Sales— Restriction— Notice— Effect.— Where  the  pub- 
lishers of  a  copyrighted  book  printed  a  notice  on  the  page  following 
.  the  fly  leaf  that  the  price  of  the  book  at  retail  was  $1  net  and 
that  no  dealer  was  licensed  to  sell  it  at  a  less  price,  and  the  sale  at 
a  less  price  would  be  treated  as  an  infringement  of  the  copyright 
such  notice  did  not  purport  to  reserve  to  the  publisher  any  interest 
in  the  book,  or  any  right  to  control  it  or  the  action  of  its  owner 
In  the  use  and  disposition  thereof,  and  was  insufficient  to  constitute 
a  license  agreement  or  contract  restricting  or  modifying  the  abso- 
lute  title  acquired  by  purchasers.a 

[156]  Same— Infringement— Where  a  publisher  of  copyrighted  books 
voluntarily  parted  with  all  control  over  them  by  selling  the  books 
to  purchasers,  such  purchasers  were  neither  licensees  nor  agents  of 


«  Syllabus  copyrighted,  1905,  by  West  Publishing^. 


756 


139  FEDERAL  KEPORTEB,  156. 
Statement  of  the  Case. 


the  publisher,  though  buying  the  l)ooks  for  resale,  and  hence  such 
resale  did  not  c(jns«titute  au  iufriugemeut  of  the  copyright,  under 
Rev.  St  §  4964  [U.  S.  Conip.  St,  1901,  p.  3413],  declaring  that  it  is 
an  infringement  of  a  copyright  to  print  or  publish  a  copyrighted 
book  without  the  consent  of  the  proprietor  given  in  writing,  or  know- 
ingly to  sell  or  expose  for  sale  a  copy  or  copies  of  such  copyrighted 
book  "when  unlawfully  printed  or  imported,"  though  the  books 
so  sold  each  contained  a  notice  that  no  dealer  was  licensed  to  sell 
It  at  a  less  price  than  that  fixed  by  the  publisher,  and  that  a  sale 
at  a  less  price  would  be  treated  as  an  infringement  of  the  copyright. 
[Bd.  Note.— For  cases  In  point,  see  vol.  11,  Cent.  Dig.  Copyrights, 
§§  41,  47.} 

Same.— The  act  of  a  publisher  of  a  copyrighted  book  in  putting  it  on 
the  market  and  selling  it  does  not  constitute  a  license  to  the  pur- 
chaser to  use  and  sell  the  same,  which  the  publisher  is  entitled  to 
restrict  by  a  notice  brought  to  the  attention  of  the  purchaser  that 
the  sale  of  the  book  at  retail  for  less  than  the  price  fixed  by  the 
publisher  shall  be  considered  an  infringement  of  the  copyright. 

Same— Combinations  in  Restraint  of  Trade— Interstate  Com- 
merce.— ^Where  the  publishers  and  booksellers  of  the  Unitetl  States 
organized  tMo  membership  associations,  one  known  as  the  "Ameri- 
can Publishers'  Association,"  and  the  other  as  the  "American  Book- 
sellers' Association,"  and  together  controlled  the  publication  and 
sale  of  at  least  90  per  cent,  of  all  copyrighted  books,  the  objects 
of  which  were  to  compel  owners  and  dealers  of  such  books  to  pur- 
chase them  of  the  members  of  the  combination  at  au  arbitrary 
price  fixed  by  it,  regardless  of  the  actual  value  of  the  books  as 
determined  by  a  demand  in  an  open  market,  or  the  condition  of  the 
books,  and  to  compel  all  publishers  and  dealers  of  such  books  to 
come  into  the  combination,  be  controlled  by  it,  and  sell  Iwoks  at 
prices  fixed  by  it,  regardless  of  the  value  of  the  books  or  of  the 
exigencies  of  the  trade  and  situation  of  the  seller,  or  be  deprived  of 
the  privilege  of  purchasing,  owning,  and  selling  such  books  through 
a  system  of  blacklisting,  etc.,  the  eflfect  of  which  would  be  to  cripple 
the  business  of  any  publisher  or  bookseller  outside  of  the  combina- 
tion, such  agreement  was  a  violation  of  the  Sherman  anti-trust  law 
(Act  Cong.  July  2.  1890,  c.  647,  26  Stat.  209  [U.  S.  Comp.  St.  1901, 
p.  3200]),  declaring  that  every  contract,  combination  in  the  form  of 
a  trust  or  otherwise,  or  conspiracy  in  restraint  of  trade  or  commerce 
among  the  several  states  Is  illegal. 
[Ed.  Note.— For  cases  in  point,  see  vol.  35,  Cent.  Dig.  Monopolies, 


In  Equity. 

Suit  to  enjoin  the  sale  at  retail  of  books  containing  a  copyright 
novel,  "  The  Castaway,"  at  a  price  less  than  $1  for  each  copy  of  the 
book.  Such  sales  of  such  book  are  alleged  to  be  in  violation  of  the 
terms  of  a  notice  printed  in  each  copy  thereof  upon  the  page  imme- 


BOBBS-MERRILL   CO.    V.   STRAUS. 
Opinion  of  the  Court. 


757 


diately  following  the  title-page  and  immediately  below  the  statu- 
tory copyright  notice.  Defendants  insist  that  the  books  containing 
such  novel  have  been  lawfully  printed  for  sale  to  the  general  public 
and  to  be  read  by  the  general  public,  and  put  upon  the  market  and 
sold,  and  that  the  right  of  the  owners  of  such  books  to  sell  same  at 
such  price  as  they  severally  may  see  fit  to  ask  cannot  be  and  is  not 
limited  or  affected  by  the  notice.  They  also  insist  that  this  suit  is  to 
enforce  an  unlawful  combination  and  agreement,  and  press  other 
cieienses. 

Boardman,  Piatt  <&  Soley  (TF.  //.  H,  Miller,  Albert  B. 
Boardman,  and  Henry  IF.  Clark,  of  counsel),  for  com- 
plainant. 

Spiegelherg  c§  Wise  {John  G.  Carlisle  and  Edmond  E. 
Wise,  of  counsel) ,  for  defendants. 

[157]  Eay,  District  Judge  (after  stating  the  facts  as 
above). 

The  main  facts  in  this  case  are  not  disputed.  The}^  may  be 
stated  as  follows : 

(1)  The  Bobbs-Merrill  Company,  the  complainant,  is,  and 
at  all  times  mentioned  in  the  bill  of  complaint  was,  a  cor- 
poration duly  organized  and  existing  under  the  laws  of  the 
state  of  Indiana,  engaged  in  the  business  of  publishing  and 
selling  books,  and  having  its  principal  office  in  the  city  of 
Indianapolis,  in  the  state  of  Indiana. 

(2)  The  complainant  is,  and  at  all  times  mentioned  in  the 
bill  of  complaint  was,  the  owner  and  proprietor  of  a  book 
or  novel  in  one  volume,  entitled  ''  The  Castaway,"  written  by 
Hallie  Erminie  Eives. 

(3)  The  allegations  contained  in  paragraphs  of  the  bill  of 
complaint  numbered  III  to  VI,  inclusive,  relating  to  the 
complainant's  compliance  with  the  copyright  laws  of  the 
United  States,  are  true.    Such  paragraphs  read  as  follows : 

'*  III.  That  your  orator  is  the  proprietor  of  a  copyright  book  or 
novel  in  one  vo  ume,  entitled  and  known  as  '  The  Castaway.'  That 
n^fhnnn?!^''  ^^/^^^^d  book  was  Hallie  Erminie  Rives.  That  prior  to  the 
publication  of  said  book,  and  prior  to  the  month  of  May,  1904  the 
author  thereof,  said  Hallie  Erminie  Rives,  duly  sold,  assigned '  and 
transferred  to  your  orator  all  her  right,  titl^,  intLst,  and  pfopeV^n 
and  to  said  l)ook,  and  your  orator  thereupon  became,  and  at  all  times 
since  said  sale  has  been,  and  still  is,  the  sole  and  exclusive  proprietor 
and  owner  thereof.  ^ 

;*  IV.  That  your  orator,  being  then  proprietor  of  said  book  as  afore- 
said and  desiring  to  secure  a  copyright  thereof,  before  the  day  of 
publication  of  said  book  duly  deposited  in  the  mall  within  the  United 


758 


139   FEDEBAL  BEPOBTER,   157. 


Opinion  of  the  Court 

States,  to  wit,  in  tlie  city  of  Indianapolis,  in  the  state  of  Indiana, 
addressed  to  the  Librarian  of  Congress,  at  Washington,  District  of 
Columbia,  a  printed  copy  of  the  title  of  said  book,  and  duly  paid  to 
said  Librarian  of  Congress  the  fees  required  by  law,  to  wit,  fif^ 
cents,  for  recording  said  title,  and  your  orator  did  also,  not  later 
than  the  day  of  publication  of  said  book  in  this  or  any  foreign  coun- 
try, to  wit,  on  the  24th  day  of  May,  1904,  deposit  in  the  mail  within 
the  United  States,  to  wit,  in  the  city  of  Indianapolis,  in  the  state  of 
Indiana,  addressed  to  the  Librarian  of  Congress,  at  Washington,  Dis- 
trict of  Columbia,  two  copies  of  said  book  printed  from  type  set 
Within  the  limits  of  the  United  States.  " 

"V.  Your  orator  is  informed  and  yerily  believes,  and  therefore 
avers,  that  the  Librarian  of  (ingress  on  the  18th  day  of  May,  1904, 
duly  recorded  the  name  and  title  of  said  copyright  book  in  pursuance 
of  the  statute  in  such  case  made  and  provided. 

"  VI.  That  your  orator  has  given  due  notice  and  information  of  Its 
said  copyright  by  inserting  and  printing  in  each  and  every  copy  of 
said  book  published,  upon  the  page  immediately  following  the  title- 
page  thereof,  the  words  and  figures:  'Copyright  1904.  The  Bobbs- 
Merrill  Company.     May.' " 

(4)  No  copies  of  ''  The  Castaway  "  were  sold  or  otherwise 
issued  prior  to  securing  the  copyright  tliereon. 

(5)  Each  and  every  copy  of  '*The  Castaway"  printed, 
published,  or  issued  by  complainant  contained  at  the  time  of 
such  publication  and  issue  the  following  notice,  printed  upon 
the  page  of  the  book  immediately  following  the  title-page, 
and  just  below  the  statutory  copyright  notice: 

"The  price  of  this  book  at  retal  is  one  dollar  net  No  dealer  is 
licensed  to  sell  it  at  a  less  price,  and  a  sale  at  a  less  price  will  be 
treated  as  an  infringement  of  the  copyright. 

"The  Dobbs-Mebrill  Company." 

[Ili8]  (6)  The  defendants  in  the  course  of  their  business 
procured  copies  of  said  book  before  the  commencement  of 
this  suit  for  the  purpose  of  sale  at  retail.  The  defendants 
purchased  90  per  cent,  of  said  copies  from  dealers  at  whole- 
sale at  a  reduction  from  said  specified  retail  price  of  about 
40  per  cent.,  and  10  per  cent,  of  said  copies  tliey  purchased 
at  retail,  paying  the  full  retail  price  therefor. 

(7)  Defendants  at  the  time  of  their  purchase  of  copies  of  . 
said  book  knew  that  said  book  was  a  copyright  book,  and 
were  familiar  with  the  terms  of  the  notice  printed  in  each 
copy  thereof,  as  described  in  paragraph  5  of  this  statement, 
and  knew  that  this  notice  was  printed  in  every  copy  of 
said  book  purchased  by  them. 

(8)  The  wholesale  dealers,  from  whom  defendants  pur- 
chased copies  of  said  book,  obtained  the  same  either  directly 


BOBBS-MERRILL   CO.    V.   STRAUS. 


759 


Opinion  of  the  Court. 

from  the  complainant  or  from  other  wholesale  dealers  at  a 
discount  from  the  net  retail  price,  and  at  the  time  of  their 
purchase  knew  that  said  book  was  a  copyright  book,  and 
were  familiar  with  the  terms  of  the  notice  printed  in  each 
copy  thereof,  as  described  in  paragraph  5  of  this  statement, 
and  such  knowledge  was  in  all  wholesale  dealers  through 
whom  the  books  passed  from  the  complainant  to  defendants. 
But  said  wholesale  dealers  were  under  no  agreement  or 
obligation  to  enforce  the  observance  of  the  terms  of  said 
notice  by  retail  dealers  or  to  restrict  their  sales  to  retail 
dealers  who  would  agree  to  observe  said  terms. 

(9)  The  defendants  have  sold  copies  of  said  book  at  retail 
at  the  unifonn  price  of  89  cents  a  copy,  and  are  still  selling, 
exposing  for  sale,  and  offering  copies  of  said  book  at  retail 
at  said  price  of  89  cents  per  copy,  without  the  consent  of 
the  complainant. 

(10)  That  during  the  year  1900  a  large  number  of  pub- 
lishers in  the  state  of  New  York  and  throughout  the  states 
of  the  United  States  entered  into  an  agreement  for  the  pur- 
pose of  maintaining  the  net  retail  price  of  copyrighted  books 
published  by  any  of  them  as  designated  by  the  publisher 
of  each  book,  and  to  prevent  the  sale  at  retail  of  any  such 
copyrighted  books  by  any  dealer  at  retail  at  less  than  said 
fixed  net  retail  price.  That  pursuant  to  that  agreement  a 
membership  corporation  was  formed  under  the  laws  of  the 
state  of  New  York  under  the  name  of  the  "American  Pub- 
lishers' Association,"  which  included  among  its  members  the 
complainant  herein  and  a  large  majority  of  the  publishers 
of  all  books,  copyrighted  or  uncopyrighted,  in  the  state  of 
New  York  and  throughout  the  United  States. 

(11)  That  immediately  after  the  incorporation  of  said 
American  Publishers'  Association  a  resolution  was  adopted 
and  its  members  entered  into  agreements  with  each  other 
and  with  the  American  Publishers'  Association,  a  copy  of 
which  is  as  follows  : 

Exhibit  A. 
"  The  American  Publishers'  Association,  15G  Fifth  Avenue,  New  York. 

'f  The  following  plan  to  correct  some  of  the  evils  connected  with 
the  euttmg  of  prices  on  copyright  books  was  adopted  at  the  meeting 
««       -^^erican  Publishers'  Association  held  February  13   1901  • 
I.  That   the   members  of   the   American   Publishers'   Association 


760 


139  FEDERAL  REPORTER,   158. 


Opinion  of  the  Court 

virl^.n  it"r?2gr*^K^fl^r^'  ^'•^*  '^""^  ^y  them  after  May  1. 
ik^h  t.  ^  ^\^V  P^^'^sl^ed  at  net  prices,  wliicli  it  is  recommended 
shall  be  reduced  from  the  prices  at  which  similar  books  have  been 
issued  heretofore:  Provided,  however,  that  there  shall  l^  exempt 
from  his  agreement  all  school  books,  such  works  of  fiction  (not 
jmeniles)  and  new  editions  as  the  individual  publisher  may  desire 
b€K>k8  published  by  snbscriptiou  and  not  through  the  trade,  and  such 
other  books  as  are  not  sold  through  the  trade 

*Nlt"'ii*nWnf  r""''''''*'*^  **"*"*  *^^  ''^t*'"  P^**^  *^^  a  net  book,  marked 
.fiVr^^Jf  "*t^**  **"  ^  P**P^**  wrapper  covering  the  book. 

.  V?'!**^  ***^  members  of  the  association  agree  that  such  net 
copyrighted  books  and  all  other  of  their  books  shall  be  sold  by  them 
to  those  booksellers  only  who  will  maintain  the  retail  price  of  sue™ 
net  copyrighted  lKK)k8  for  one  year,  and  to  tht.se  booksellers  and  job- 
bers only  who  will  sell  their  books  further  to  no  one  known  to  them 
to  cut  such  net  prices,  or  whose  name  has  been  given  to  them  by  the 
aasoeiation  as  one  who  cuts  such  prices,  or  who  fails  to  abide  bv  such 
wI/«  »•*■  «f  ««»>•«?  niles  and  regulations  as  may  be  established  by 
local  associatuius  as  hereinafter  provided.  A  dealer  or  bookseller 
may  be  deflnejl  as  one  who  makes  it  a  regular  part  of  his  business  to 
sell  books  and  carries  stock  of  them  for  public  siile  "»s'"ebs  lo 

"  IV.  That  the  only  exception  to  the  rule  of  maintaining  the  retail 
price  shall  be  m  the  case  of  libraries,  which  mav  be  allowed  a  dis- 
count of  not  more  than  10  per  cent.  Libraries  entitled  to  this  dis- 
count may  be  defined  as  those  libraries  to  which  access  is  either  free 
dlscounr""'^^  subscription.    Book  clubs  are  not  to  be  entitled  to 

"V.  That  the  association  suggests  a  discount  on  net  copyrighted 

books  of  twenty-five  per  cent,  to  dealers  as  a  general  discount,  lea v- 

"1)lish  r*^"^       *^  **'  (iiscount,   however,   entirely   to  the   individual 

*•  VL  That  after  the  expiration  of  a  year  from  the  publication  of 
any  such  net  copyrighted  book  dealers  shall  not  be  held  to  the  above 
restrix^tions,  and  may  sell  such  book  at  a  cut  price ;  but  if,  on  learn 
ing  of  such  action,  the  publisher  shall  desire  to  buv  back  at  purchase 
price  the  cxjpies  then  remaining  in  the  dealers'  hands,  thev  must  be 
so  resold  to  him  on  demand.  * 

,J27Vi '^*''*^  when  the  publisher  sells  at  retail   a  book  published 

cost  of  postage  or  expressage  on  all  books  sent  out  of  the  citv  In 
which  the  publisher  does  business.  ^ 

mUF^'  ^}^tl  **^^'  t***'  Pnipose  of  carrying  out  the  above  plan  the 
directors  of  the  association  be  authorized  to  establish  an  office  and 
engage  a  suitable  person  as  manager,  and  emli-avor  to  secure  from  all 
dealers  m  books  assent  to  the  above  conditions  of  sale  Under  thP 
direction  of  the  board  the  manager  shall  investigate  all  cases  of  cut- 
ting reported,  and  when  directed  shall  send  out  notices  to  the  associa- 
tion, jobbers,  and  the  trade  of  any  persons  violating  the  above 
provisions. 

"  IX.  That  it  shall  be  the  duty  of  all  members  of  the  association 
to  report  immediately  to  the  said  office  all  cases  of  the  cutting  of 
prices  which  may  come  to  their  knowledge. 

"  X.  That  the  association,  through  its  agents  and  membc-rs,  aid  in 
the  formation  of  booksellers'  associations  in  the  important  centers 
and  cities  in  the  United  States,  the  object  of  which  association  shall 
be  to  assist  the  Publishers'  Association  in  maintaining  prices  on  net 
books  as  aforesaid,  and  to  establish  such  lawful  rules  and  regula- 
tions respecting  the  conduct  of  business  in  their  locality  as  will  tend 
to  secure  fair,  honorable,  and  uniform  methods  of  business  in  each 
important  center  or  section  of  the  country.    That  the  association 


BOBBS-MERRILL   CO.    V,   STRAUS. 
Opinion  of  the  Court 


761 


pledge  itself  to  support  such  local  associations  by  every  means  in 
its  power  in  maintaining  such  lawful  rules  and  regulations  as  may 
in  this  way  be  agreed  to. 

"  XI.  That  the  report,  when  adopted  by  the  board  of  directors,  be 
submitted  to  the  association  and  voted  upon  in  accordance  with  the 
association's  rules,  article  II,  section  1." 

(12)  That  thereafter  a  voluntary  association,  called  the 
"American  Booksellers'  Association,"  was  formed,  which 
was  intended  to  and  did  include  a  large  majority,  to  wit, 
about  90  per  cent.,  [160]  both  in  number  and  extent  of 
business,  of  all  wholesale  and  retail  book  dealers  throughout 
the  state  of  New  York  and  the  United  States.  That  the 
avowed  purpose  of  this  association  was  to  cooperate  with  and 
assist  the  American  Publishers'  Association  and  its  members 
in  the  maintenance  of  the  so-called  net  price  or  restricted 
price  system  for  the  sale  of  books  at  retail,  and  to  supply  the 
American  Publishers'  Association  with  the  names  of  book- 
sellers who  cut  the  prices  of  net  price  or  restricted  books  at 
retail,  and  to  refrain  from  selling  such  price-cutters,  or  any 
individuals,  firms,  or  dealers  believed  to  be  price-cutters,  any 
books  of  any  kind,  whether  copyrighted  or  uncopy righted, 
at  Avholesale  or  at  retail  prices.  That  said  American  Book- 
sellers' Association  thereafter  at  its  annual  convention  in 
June,  1901,  adopted  the  following  resolution : 

Exhibit  B. 

"Reform  Resolution  No.  1. 

"  Whereas,  the  American  Publishers'  Association  has  adopte<I  a  net 
price  system  and  entered  into  an  agreement  for  its  maintainance,  by 
which  the  members  of  said  association  will  cut  off  the  supply  of  ail 
their  books,  net.  copyrighted,  or  otherwise,  to  any  dealer  who 'fails  to 
maintain  the  net  price  of  any  or  all  books  published  under  the  net 
price  system : 

"(1)  Now,  therefore,  be  it  resolved,  that  this,  the  American  Book- 
sellers' Association,  in  convention  assembled,  accept  the  said  net  price 
system,  with  the  distinct  understanding  that  it  is  the  intention  of  the 
American  Publishers'  Association  to  include  fiction  under  the  net 
price  system  as  rapidly  as  possible ;  and 

"(2)  Furthermore,  be  it  resolved,  that  all  members  of  the  Ameri- 
can Booksellers'  Association  shall  give  to  each  of  the  members  of  the 
American  Publishers'  Association,  and  to  all  publishers  who  co-operate 
with  them  in  the  maintenance  of  the  net  price  system,  our  most  cor- 
dial supix)rt ;  and  that  to  this  end  we  agree  not  to  buv,  not  to  keep  in 
stoc^,  nor  to  offer  for  sale,  after  due  notification,  the  books  of  anv 
publisher  who  declines  to  support  the  net  price  system. 

"(3)  Furthermore,  be  it  resolved,  that  we  instruct  our  secretary 
promptly  to  notify  all  members  of  this  association  that  this  resolution 
is  applicable  and  in  force  with  reference  to  any  publisher  who  shall 


139  FEDERAL  REPORTER,   160. 


Opinion  of  the  Conrt. 

hare  made  it  manifest  tiiat  he  is  unwilling  to  co-operate  with  this 
association,  and  with  the  members  of  the  Publishers'  Association,  in 
the  maintenance  of  the  net  price  system. 

*'(4)  Furtliermore.  be  it  resolved,  that  this  resolution,  on  being 
ratified  by  two-thirds  of  the  members  of  this  association,  voting  by 
formal  ballot,  shall  immediately  become  a  law  to  each  and  all  of  the 
members  of  this  association;  and  if  it  shall  appear,  upon  the  pre- 
sentment of  any  three  members  of  this  association,  that  a  member 
has  purchased,  put  in  stock,  or  offered  for  stile  the  boolis  of  the  pub- 
lisiier  who  has  been  formally  denounced,  such  member  shall  be  ex- 
pelled from  membership  in  this  a8S€>ciation.  and  all  members  of  this 
association  shall  then  and  tliereafter  be  restrained  from  supplying  any 
books  to  such  expelled  member  at  a  discount  from  the  usual  retail 
price. 

"(5)  Furthernnire.  be  it  resolved,  that  all  members  of  this  asso- 
ciation shall  be  restrained  from  furnishing  any  books  at  less  than  the 
net  or  usual  retail  price  to  any  denier  who  shall  have  been  denounced 
by  the  Publishers'  Association  for  cutting  the  price  of  net  books,  or 
for  otherwise  violating  the  net  price  system,  and  who  shall  have  been 
therefor  cut  off  by  the  members  of  the  Publishers'  Association  from 
the  supply  of  their  books. 

**(«»>  Furthermore,  be  it  resolved,  that  all  members  of  this  associa- 
tion shall  endeavor  to  keep  in  stock  and  push  the  sale  of  net  books  so 
long  as  they  are  reasonably  in  demand,  provided  such  discount  is  al- 
lowed by  the  publishers  to  the  dealers  as  will  yield  them  a  living 
profit:  and  they  shall  maintain  [1611  the  net  prices  of  the  same  in 
accordance  with  the  terms  of  the  publishers'  agreement  for  the  main- 
tenance of  the  net  price  system. 

*•  1  [or  we  J  vote  for  the  adi)ption  of  Reform  Resolution  No.  1  as 
above  stateil. 

**  [Signed]  Name ■ 

"Address " 

(13)  That  thereafter  an<J  in  pursuance  of  said  agreements 
neither  of  said  associations  nor  any  of  the  members  thereof, 
including  the  complainant,  would  sell  or  supply,  or  sanction 
the  sale  or  supply,  of  any  books  at  any  price  to  any  dealer 
in  the  state  of  New  York,  or  elsewhere  in  the  United  States, 
whether  a  member  of  said  associations  or  not,  and  whether 
said  books  were  copyrighted  or  not,  or  were  published  by 
any  of  the  members  of  the  said  American  Publishers'  Asso- 
ciation or  not,  who  did  not  maintain  the  arbitrary  net  retail 
price  on  copyrighted  books  published  by  the  members  of  the 
American  Publishers'  Association,  or  would  resell  or  was 
believed  to  resell  such  copyrighted  books  to  any  dealers  who 
thereafter  sold  the  same  at  less  than  the  arbitrary  price 
named  by  the  publisher  and  maintained  pursuant  to  the  rules 
and  agreements  of  the  two  associations  and  their  members. 

(14)  That  on  or  about  the  8th  day  of  January,  1902,  the 
plan,  resolutions,  or  agreements  of  the  American  Publishers' 


BOBBS-MERRILL   CO.    V.   STRAUS. 


763 


Opinion  of  the  Court. 

Association  were  amended  by  the  addition  thereto  of  the  arti- 
cle relating  to  a  certain  discount  to  be  allowed  from  the 
published  price  of  works  of  fiction  (not  net)  published  by 
members  of  the  said  association,  and  a  change  in  article  4  re- 
lating to  discounts  to  be  allowed  to  libraries,  and  in  article  6, 
and  the  omission  of  article  11  of  the  original  plan.    A  copy 
of  said  resolutions,  with  the  said  amended  articles  indicated 
by  italics,  is  marked  "  Exhibit  C."    Thereafter,  on  the  27th 
day  of  May,  1902,  the  said  plan,  resolutions,  or  agreements 
were  further  amended  by  the  addition  to  article  4  thereof  of 
a  paragraph  relating  to  the  sending  of  a  work  of  fiction 
postpaid,  a  copy  of  which  said  resolutions  as  so  amended  is 
marked  "Exhibit  D."    That  thereafter,  and  on  the  15th 
day  of  January,  1903,  the  said  plan,  resolutions,  and  agree- 
ments were  amended  by  the  addition  to  article  3  of  a  para- 
graph relating  to  the  sale  of  protected  books  in  combination 
with  a  periodical,  and  in  article  12  a  paragraph  was  added 
relating  to  an  agreement  to  be  entered  into  by  all  pur- 
chasers of  books  from  the  members  of  the  Publishers'  Asso- 
ciation.    A  copy  of  said  resolutions  as  amended  is  marked 
"Exhibit  E."    That  thereafter,  and  on  or  about  the  13th 
day  of  February,  1903,  the  said  plan,  resolutions,  or  agree- 
ments were  again  amended  as  to  articles  1  and  4,  so  as  to  pro- 
vide for  the  exclusion  at  the  option  of  a  publisher  of  cer- 
tain cop3^righted  juvenile  books  from  the  class  of  so-called 
net  publications,  and  the  inclusion  of  such  books  in  the  class 
of  copyrighted  works  of  fiction  not  net.    Article  .5  was  like- 
wise amended  so  as  to  grant  libraries  a  discount  on  certain 
juvenile  books   (not  net),  a  copy  of  which  resolutions  or 
agreements  as  amended  is  marked  "  Exhibit  F."    That  there- 
after, on  the  13th  day  of  January,  1904,  the  said  resolutions 
or  agreements  were  amended  as  to  articles  1  and  5,  so  as  to 
apply  to  all  juvenile  [162]  books,  and  article  4  thereof  was 
so  amended  as  to  provide  for  the  publication  and  sale  of  all 
juvenile  books  (not  net)  under  the  system  applying  to  the 
publication  and  sale  of  copyrighted  works  of  fiction,  a  copy 
of  which  said  resolutions  or  agreements  as  so  amended  is 
marked  "  Exhibit  G." 


764  139  FEDERAL  REPORTER,   162. 

Opinion  of  tlie  Court. 

Exhibit  C. 

"The  American  Piiblisliers'  Association,  156  Fifth  Avenue,  New  York. 

"  The  following  plan  to  correct  evils  connected  with  the  cutting  of 
prices  on  copyright  boolis  was  adoptetl  at  a  meeting  of  the  American 
Publishers'  Association  held  February  13,  1901: 

"Amendments  referring  to  Action  were  adopted  at  a  meeting  held 
February  8,  1902. 

"I.  That  the  members  of  the  American  Publishers'  Association 
agree  that  all  copyrighted  books  first  issued  by  them  after  May  1, 
1901,  shall  be  published  at  net  i»rices,  which  it  is  recommended  shall 
be  reduced  from  the  prices  at  wliich  similar  books  have  been  issued 
heretofore:  Provided,  however,  that  there  shall  be  exempt  from  this 
agreement  all  school  books,  such  works  of  Action  (not  juveniles)  and 
new  editions  as  the  individual  publisher  may  desire,  books  published 
by  subscription  and  not  through  the  trade,  and  such  other  books  as 
are  not  sold  through  the  trjule. 

"II.  it  is  recommended  that  the  retail  price  of  a  net  l»ook,  marked 
'  Net,'  be  printed  on  a  pnpev  wrapper  covering  the  book. 

"  III.  That  the  members  of  the  association  agree  that  such  net  copy- 
righted books  and  all  others  of  their  books  shall  be  sold  by  them  to 
those  biKiksellers  only  who  will  maintain  the  retail  price  of  such  net 
copyrighted  books  for  one  year,  and  to  those  booksellers  and  jobbers 
only  who  will  sell  their  bmiks  further  to  no  one  known  to  them  to  cut 
such  net  prices,  or  whose  name  has  been  given  to  them  by  the  asso- 
ciation as  one  who  cuts  such  prices,  or  who  fails  to  abide  by  such  fair 
and  reasonable  rules  and  regulations  as  may  be  established  by  local 
associations  as  hereinafter  provided.  A  dealer  or  bookseller  may  be 
defined  as  one  who  makes  it  a  regular  part  of  his  business  to  sell 
books  and  carries  stock  of  them  for  public  sale. 

"  IV.  That  the  members  of  the  amoeiation  agree  that  on  all  copy- 
righted  works  of  fictioth  (not  net)  puhlished  by  them  after  February 
1st,  1902,  the  greatest  (liseomU  alJouetl  at  retail  for  one  year  alter 
pMblieation  shuU  be  28  per  eent.;  and  all  the  rules  for  the  proteetion 
of  net  books  shall  apply  to  the  protection  of  fiction  to  this  extent. 
The  conditions  governing  the  sale  of  fiction  are  such  that  the  associa- 
tion does  not  attempt  to  fix  a  uniform  price  at  which  irorks  of  fiction 
{not  net)  shall  be  sold,  but  only  to  name  a  maximnm  discount,  uhich, 
'however,  it  is  hoped  it  ill  rarely  be  given, 

"  V.  The  only  i.n,  ytions  to  the  foregoing  rules  shall  be  in  the  case 
of  libraries,  which  may  be  alhurrd  a  discount  of  not  more  than  10  per 
cent,  on  net  books  and  43  IS  per  rent,  on  fiction.  Libraries  entitled 
to  these  disi'onntx  may  be  defined  as  those  libraries  to  which  access 
is  either  free  or  by  annual  subscription.  Book  clubs  are  not  to  be  en- 
titled to  dismnnt  on  net  boohs,  nor  to  any  special  discount  on  fiction. 

"VI.  That  the  assdciaticn  suggests  a  discount  on  net  copvrighted 
books  of  twenty-five  per  cent,  to  dealers  as  a  general  discount,  leav- 
ing the  tiuestion  of  discomit,  however,  entirely  to  the  individual 
publisher. 

"VII.  That  after  the  exi)ir;Ui<;n  «.f  a  year  from  the  publication  of 
any  copyrighted  bioks  issued  under  these  regulations  dealers  shall 
not  be  held  to  the  above  restric  tions.  and  may  sell  such  book  at  a 
cut  price;  but  if,  on  learning  of  such  action,  the  publisher  shall  desire 
to  buy  back  at  i>urchase  price  tlu'  copies  then  remaining  in  the  deal- 
ers* hands,  they  must  l»e  so  resold  to  him  on  demand. 

"VIII.  That  when  the  publisher  sells  at  retail  a  net  boftk  published 
under  the  rules,  it  shall  be  at  the  retail  price,  and  he  shall  add  the 
cost  of  postage  or  expressage  on  all  books  sent  out  of  the  city  in  which 
the  publisher  does  business. 

"  IX,  That  for  the  purpose  of  carrying  out  the  above  plan  the  dl- 


BOBBS-MERRILL    CO.    V.    STRAUS. 
Opinion  of  the  Court. 


765 


rectors  of  the  association  be  authorized  to  establish  an  office  and  en- 
gage a  suitable  [163]  person  as  manager,  and  endeavor  to  secure  from 
all  dealers  in  books  assent  to  the  above  conditions  of  sale.  Under 
the  direction  of  the  board  tlie  manager  shall  investigate  all  cases  of 
cutting  reported,  and  when  directed  shall  send  out  notices  to  the  asso- 
ciation, jobbers,  and  the  trade  of  any  persons  violating  the  above 
provisions. 

"X.  That  it  shall  be  the  duty  of  all  members  of  the  association  to 
report  immediately  to  the  said  office  all  cases  of  the  cutting  of  prices 
which  may  come  to  their  knowledge. 

"XI.  That  the  association,  through  its  agents  and  members,  aid 
in  the  formation  of  booksellers'  associations  in  the  important  centers 
and  cities  in  the  United  States,  the  object  of  which  associations  shall 
be  to  assist  the  Publishers'  Association  in  maintaining  prices  on  net 
books  as  aforesaid,  and  to  establish  such  lawful  rules  and  regulations 
respecting  the  conduct  of  business  in  their  locality  as  will  tend  to 
secure  fair,  honorable,  and  uniform  methods  of  business  in  each  im- 
portant center  or  section  of  the  country.  That  the  association  pledge 
itself  to  support  such  local  associations  by  every  means  in  its  power 
in  maintaining  such  lawful  rules  and  regulations  as  may  in  this  way 
be  agreed  to." 

Exhibit  D. 


4< 


The  American  Publishers'  Association,  15G  Fifth  Avenue,  New  York. 

"  The  following  plan  to  correct  evils  connected  with  the  cutting  of 
prices  on  copyright  books  was  adopted  at  a  meeting  of  the  American 
Publishers'  Association  held  February  13,  1901 : 

"Amendments  referring  to  fiction  were  adopted  at  meetings  held 
January  8,  1902,  and  May  27,  1902. 

"I.  That  the  members  of  the  American  Publishers'  Association 
agree  that  all  copyrighted  books  first  issued  by  them  after  May  1. 
1901,  shall  be  published  at  net  prices,  which  it  is  recommended  shall 
be  reduced  from  the  prices  at  which  similar  books  have  been  issued 
heretofore:  Provided,  however,  that  there  shall  be  exempt  from  this 
agreement  all  school  books,  such  works  of  fiction  (not  juveniles)  and 
new  editions  as  the  individual  publisher  may  desire,  books  published 
by  subscription  and  not  through  the  trade,  and  such  other  books  as 
are  not  sold  through  the  trade. 

"  II.  It  is  recommended  that  the  retail  price  of  a  net  book,  marked 
*  Net,'  be  printed  on  a  paper  wrapper  covering  the  book. 

"III.  That  the  members  of  the  association  agree  that  such  net 
copyrighted  books  and  all  others  of  their  books  shall  l>e  sold  by  them 
to  those  booksellers  only  who  will  maintain  the  retail  price  of  such 
net  copyrighted  books  for  one  year,  and  to  those  booksellers  and  jol)- 
bers  only  who  will  sell  their  books  further  to  no  one  known  to  them  to 
cut  such  net  prices,  or  whose  name  has  been  given  to  them  by  the  asso- 
ciation as  one  who  cuts  such  prices,  or  who  fails  to  abide  by  such 
fair  and  reasonable  rules  and  regulations  as  may  be  established  by 
local  associations  as  hereinafter  i)rovided.  A  dealer  or  bookseller 
may  be  defined  as  one  who  makes  it  a  regular  part  of  his  business 
to  sell  books  and  carries  stock  of  them  for  public  sale. 

"  IV.  That  the  members  ^of  the  association  agree  that  on  all  copy- 
righted works  of  fiction  (not  net)  published  by  them  after  February 
1st,  1902,  the  greatest  discount  allowed  at  retail  for  one  year  after 
publication  shall  be  28  per  cent;  and  all  the  rules  for  the  protection 
of  net  books  shall  apply  to  the  protection  of  fiction  to  this  extent 
The  conditions  governing  the  sale  of  fiction  are  such  that  the  asso- 
ciation does  not  attempt  to  fix  a  uniform  price  at  which  works  of 
fiction  (not  net)  shall  be  sold,  but  only  to  name  a  maximum  discount, 
which,  however,  it  is  hoped  will  rarely  be  given. 


766 


139  FEDERAL   REPORTER,   163. 


Opinion  of  tiie  Court. 

"  Wlieii  a  work  of  fiction  published  under  this  rule  is  sent  postpaid, 
the  price  to  the  purchaser  shall  be  not  less  that  the  miniiuiun  price 
plus  the  postaj^e. 

"  y.  The  only  exceptions  to  the  foregoing  rules  shall  be  in  the  case 
of  libraries,  which  may  be  allowed  a  discount  of  not  more  than  10 
per  cent,  on  net  books  and  33^^  per  cent,  on  fiction.  Libraries  entitled 
to  these  discounts  may  be  defined  as  those  libraries  to  which  access 
Is  either  free  or  l)y  annual  subscription.  Book  clubs  are  not  to  be 
entitled  to  discount  on  net  books,  nor  to  any  special  discount  on  fiction 

[164]  "  VI.  That  the  association  suggests  a  discount  on  net  copy- 
righted books  of  25  per  cent  to  dealers  as  a  general  discount,  leaving 
the  question  of  discount,  however,  entirely  to  the  individual  publisher. 

"  VII.  That  after  the  expiration  of  a  year  from  the  publication  of 
any  copyrighted  book  issued  under  these  regulations,  dealers  shall 
not  be  held  to  the  above  restrictions,  and  may  sell  such  book  at  a 
cut  price;  but  if,  on  learning  of  such  action,  the  publisher  shall 
desire  to  buy  back  at  purchase  price  the  copies  then  remaining  in  the 
dealers'  hands,  they  must  be  resold  to  him  on  demand. 

"  VIII.  That  when  the  publisher  sells  at  retail  a  net  book  published 
under  the  rules,  it  shall  be  at  the  retail  price,  and  he  shall  add  the 
cost  of  postage  or  expressage  on  all  books  sent  out  of  the  city  in 
which  the  publisher  does  business. 

"IX.  That  for  the  purpose  of  carrying  out  the  above  plan  the 
directors  of  the  association  be  authorized  to  establish  an  ofllce  and 
engage  a  suitable  person  as  manager,  and  endeavor  to  secure  from  all 
dealers  in  books  assent  to  the  above  conditions  of  sale.  Under  the 
direction  of  the  board  the  manager  shall  investigate  all  cases  of 
cutting  reported,  and  when  directed  shall  send  out  notices  to  the 
association,  jobbers,  and  the  trade  of  any  persons  violating  the  above 
provisions. 

"  X.  That  it  shall  be  the  duty  of  all  members  of  the  association  to 
report  immediately  to  the  said  oflice  all  cases  of  the  cutting  of  prices 
which  may  come  to  their  knowledge. 

"XL  That  the  association,  through  its  agents  and  members,  aid 
in  the  formation  of  booksellers'  associations  in  the  important  centers 
and  cities  in  the  United  States,  the  object  of  which  associations  shall 
be  to  assist  the  Publishers'  Association  In  maintaining  prices  on  net 
books  as  aforesaid,  and  to  establish  such  lawful  rules  and  regulations 
respecting  the  conduct  of  business  in  their  localitv  as  will  tend  to 
secure  fair,  honorable,  and  uniform  methods  of  business  in  each 
important  center  or  section  of  the  country.  That  the  association 
pledge  itself  to  support  such  local  associations  by  every  means  in 
its  power  in  maintaining  such  lawful  rules  and  regulations  as  may  in 
this  way  be  agreed  to." 

Exhibit  E. 
"  The  American  Publishers'  Association,  156  Fifth  Avenue,  New  York. 

"  The  following  plan  to  correct  evils  connected  with  the  cutting  of 
prices^on  copyright  books  was  adopted  at  a  meeting  of  the  American 
Publishers'  Association  held  February  13,  1901  : 

"Amendments  referring  to  fiction  were  adopted  at  meeting  held 
Januaiy  15,  1903. 

"I.  That  the  members  of  the  American  Publishers'  Association 
agree  that  all  copyrighted  books  first  issued  by  them  after  May  1, 
1901,  shall  be  published  at  net  prices,  which  it  is  recommended  shall 
be  reduced  from  the  prices  at  which  similar  books  have  been  issued 
heretofore:  Provideil.  however,  that  there  shall  be  exempt  from  this 
agreement  all  school  books,  such  works  of  fiction  (not  juveniles)  and 
new  editions  as  the  individual  publisher  may  desire,  books  published 


BOBBS-MERRILL    CO.    V.    STRAUS. 


767 


Opinion  of  the  Court. 

by  subscription  and  not  through  the  trade,  and  such  other  books  as 
are  not  sold  through  the  trade. 

.  XT*  V,'J^  K  recommended  that  the  retail  price  of  a  net  book,  marked 
Net,  be  prmted  on  a  paper  wrapper  covering  the  book. 

"  III.  That  the  members  of  the  association  agree  that  such  net 
copyrighted  books  and  all  others  of  their  books  shall  be  sold  by  them 
to  those  booksellers  only  who  will  maintain  the  retail  price  of  such 
net  copyrighted  books  for  one  year,  and  to  those  booksellers  and 
jobbers  only  who  will  sell  their  books  further  to  no  one  known  to 
thena  to  cut  such  net  prices,  or  whose  name  has  been  given  to  them 
by  the  association  as  one  who  cuts  such  prices,  or  who  fails  to  abide 
by  such  fair  and  reasonable  rules  and  regulations  as  may  be  estab- 
lished by  local  associations  as  hereinafter  provided.  A*  dealer  or 
bookseller  may  be  defined  as  one  who  makes  it  a  regular  part  of  his 
business  to  sell  books  and  carries  stock  of  them  for  public  sale. 

"It  is  further  agreed  by  the  members  of  the  association  that  they 
will  not  themselves  offer,  nor  sell  their  books  to  any  one  w-ho  offers, 
protected  [165]  books  in  cuiul)ination  with  a  periodical  at  less  than  the 
trade  subscription  price  of  such  periodical,  plus  the  net  or  minimum 
retail  price  of  the  book. 

"  IV.  That  the  members  of  the  association  agree  that  on  all  copy- 
righted works  of  fiction  (not  net)  published  by  them  after  February 
3 St,  1902,  the  greatest  discount  allowed  at  retail  for  one  ye.ir  after 
publication  shall  be  28  per  cent. ;  and  all  the  rules  for  the  protection  of 
net  books  shall  apply  to  the  protection  of  fiction  to  this  extent. 
The  conditions  governing  the  sale  of  fiction  are  such  that  the  associa- 
tion does  not  attempt  to  fix  a  uniform  price  at  which  works  of 
fiction  (not  net)  shall  be  sold,  but  only  to  name  a  maximum  discount, 
which,  however,  it  is  hoped  will  rarely  be  given.  When  a  work  of 
fiction  published  under  this  rule  is  sent  postpaid,  the  price  to  the 
purchaser  shall  be  not  less  than  the  minimum  price  plus  the  postair<\ 

"  V.  The  only  exceptions  to  the  foregoing  rules  shall  be  in  the  case 
of  libraries,  which  may  be  allowed  a  discount  of  not  more  than  10 
per  cent,  on  net  books  and  33*  per  cent,  on  fiction.  Libraries  en- 
titled to  these  discounts  may  be  defined  as  those  libraries  to  which 
access  is  either  free  or  by  annual  subscription.  Book  clubs  are  not 
to  be  entitled  to  discount  on  net  books,  nor  to  any  si>ecial  discount  on 
fiction. 

"  VI.  That  the  association  suggests  a  discount  on  net  copyrighted 
books  of  25  per  cent,  to  dealers  as  a  general  discount,  leaving  the 
question  of  discount,  however,  entirely  to  the  individual   publisher. 

"VII.  That  after  the  expiration' of  a  year  from  the  publication 
of  any  copyrighted  book  issued  under  these  regulations,  dealers  shall 
not  be  held  to  the  above  restrictions,  and  may  sell  such  book  at  a 
cut  price ;  but  if,  on  learning  of  such  action,  the  publisher  shall  desire 
to  buy  back  at  purchase  price  the  copies  then  remaining  in  the 
dealers'  hands,  they  must  be  so  resold  to  him  on  demand. 

"VIII.  That  when  the  publisher  sells  at  retail  a  net  book  pub- 
lished under  the  rules,  it  shall  be  at  the  retail  price,  and  he  shall  -idd 
the  cost  of  postage  or  expressage  on  all  books  sent  out  of  the  citv  in 
which  the  publisher  does  business. 

"  IX.  That  for  the  purpose  of  carrying  out  the  above  plan  the  direc- 
tors of  the  association  be  autliorized  to  establish  an  office  and  engage 
a  suitable  person  as  manager,  and  endeavor  to  secure  from  all  dealers^ 
In  books  assent  to  the  above  conditions  of  sale.  Under  the  direction 
of  the  board  the  manager  shall  investigate  all.  cases  of  cuttin*'  re- 
ported, and  when  directed  shall  send  out  notices  to  the  association 
jobbers,  and  the  trade  of  any  persons  violating  the  above  provisions' 
.     "  X.  That  is  shall  be  the  duty  of  all  members  of  the  association  to 


768 


139   FEDERAL   BEPOBTEK,   165. 


Oplniou  of  the  Court 

reiiort  imiBediately  to  the  said  office  all  cases  of  the  cutting  of  prices 
which  may  come  to  their  knowledge. 

"XI.  That  the  association,  through  Its  agents  and  membei-s.  aid 
in  the  formation  of  booksellei-s'  associations  in  the  important  centers 
and  cities  in  the  United  States,  the  object  of  which  associations  sliall 
be  to  assist  the  I'ublishers'  Association  in  maintaining  prices  on  net 
books  as  aforesaid,  and  to  establish  such  lawful  rules  and  regulations 
respecting  the  conduct  of  business  in  their  locality  as  will  tend  to 
secure  fair,  honorable,  and  uniform  methods  of  business  in  each 
important  center  or  section  of  the  country.  That  the  association 
pletlge  itself  to  supiKut  such  local  associations  bv  every  means  in 
Its  power  in  maintaining  such  lawful  niles  and  regulations  as  may 
In  this  way  be  agreed  to. 

**XII.  That  in  making  sales  and  contracts  of  sales  of  their  books 
involving  future  dellver>%  members  shall  stipulate  that  such  delivery 
Is  contingent  on  the  obseiTance  by  the  purchaser  of  the  rules  of  the 
association.'' 

Exhibit  F. 

"  Tlie  American  Publishers'  Aasociatlon,  lot}  Fifth  Avenue,  New  Yoilc. 

''PIm  m  Amended  to  March  4th,  190S. 

"  The  following  plan  to  correct  evils  connected  with  the  cutting  of 
prices  on  coiiyright  books  was  adopted  at  a  meeting  of  the  American 
Publisliers'  Association  held  February  23,  1901 : 

"Amendinents  referring  to  fiction,  juveniles,  and  other  matters  were 
adopted*  at  later  meetings. 

[leej  -  Special  attention  is  called  to  changes  in  the  following  sec- 
tions: 1,  3  (last  i»aragraph),  4,  5,  and  12. 

*'I.  That  the  members  of  the  American  Publishers*  Association 
agree  that  all  copyrighted  books  first  issued  by  them  after  May  1, 
1901,  shall  be  published  at  net  prices,  which  it  is  recommended  shall 
be  reduced  from  the  prices  at  which  similar  books  have  been  issued 
heretofore :  Provided,  however,  that  there  shall  be  exempt  from  this 
apeement  all  school  books,  books  published  by  subscription  and  not 
through  the  trade,  such  other  books  as  are  not  sold  through  the 
trade;  also,  at  the  desire  of  the  individual  publisher,  any  new  edi- 
tions, any  work  of  fiction  (not  juveniles),  or  any  juvenPes  of  the 
class  that  may  be  described  as  board  books,  flat  picture  books,  or  toy 
HOOKS. 

*  J*  II' J^  ^^,  reconunended  that  the  retail  price  of  a  net  book,  marked 
Net,  be  printed  on  a  paper  wrapiier  covering  the  book. 

"III.  That  the  members  of  the  association  agree  that  such  net 
copyrighted  books  and  all  others  of  their  books  shall  be  sold  by 
them  to  those  booksellers  only  who  will  maintain  the  retail  price  of 
such  net  copyrighted  books  for  one  year,  and  to  those  booksellers  and 
Jobbers  only  who  will  sell  their  books  further  to  no  one  known  to 
them  to  cut  such  net  prices,  or  whose  name  has  been  given  to  them 
bj  the  association  as  one  who  cuts  such  prices,  or  who  fails  to  abide 
by  such  fair  and  reasonable  rules  and  regulations  as  may  be  estab- 
lished by  local  associations  as  hereafter  provided.  A  dealer  or  book- 
seller may  be  defined  as  one  who  makes  it  a  regular  part  of  his 
business  to  sell  books  and  carries  stock  of  them  for  public  sale 

"  It  is  further  agreed  by  the  members  of  the  association  that  thev 
will  not  themselves  offer,  nor  sell  their  books  to  any  one  who  offers 
protected  books  in  combination  with  a  periodical  at  less  than  the 
trade  subscription  price  of  such  periodical,  plus  the  net  or  minimum 
retail  price  of  the  book. 


BOBBS-MERRTLL    CO.    V,   STRAUS. 


tr  M* 


76y 


Opinion  of  the  CJourt 
"IV   That  the  members  of  the  association  agree  that  on  all  ronv- 

1st   m2"  and  on  «n^""  ^"^,'  ^^  P"^"«^^^  by^hem  after  FebiX 
1st,  19()2,  and  on  all  .luvenile  board  books,  flat  picture  books  or  tov 

books   (not  net),  published  after  March  Ist,  1903    the  greatest^ 

S    aiTa^fl  tb^'i"  'T  T.  ^'^'  ^"^^  Publicadon  shaTbe  28  Tr 
to  this  extPnl  tn  fhJ"^^'/'';  the  protection  of  net  books  shall  ap^ly 
to  this  extent  to  the  protection  of  fiction  and  juvenile  books  nublishpS 
on  the  same  basis  as  fiction.    The  conditionrgoverning  ^h^^^^^^^ 
fiction  are  such  that  the  association  does  not  attempt  to  fix  a  uniform 

be  given.  """"^      ''''"°*'  ''^^^^^'  ^^^^^^^^'  **  ^«  ^^^  ^^'^»  ^^^ely 

SiZ'  '^^^  ^"1^.  exceptions  to  the  foregoing  rules  shall  be  In  the  case 
of  libraries  which  may  be  allowed  a  discount  of  not  more  than  10^ 
Zl/S  ft.b^^'^^^'^d  33J  per  cent,  on  fiction  and Tnvemie  M 
^^fii  ^^i.  P^^ture  books,  or  toy  books  (not  net).  Libraries  entitted 
to  these  discounts  may  be  defined  as  those  libraries  to  which  accSs 
inm  pf  tn'!f-  ^'  ""l  ^"°"^l  ^"bscription.  Book  clubs  are  not  to  be 
fiction  """  net  books,  nor  to  any  special  discount  on 

hZJJ'  7?^*  l^%  association  suggests  a  discount  on  net  copyrighted 
books  of  twenty-five  per  cent,  to  dealers  as  a  general  discount  leaving 

*^"  ^if  X?'a?;r?h i'  ^"^'T'  ^°*;^^^y  *^  ^^^  indivira!  puilxsher^ 
vii.  mat  atter  the  expiration  of  a  year  from  the  Dublioatinn  nf 

^'Vp^ft^^t^^  ^r'^  •'^"^^.  ^^^^^'  tbese  VegulatioVdea'ier^shlK 
^Ir^ .  hnf  if^  ^^''''^  restrictions,  and  may  sell  such  book  at  a  cut 
price ,  but  If.  on  learning  of  such  action,  the  publisher  shall  desire  to 

ITJ.^'^^  ^*  ^"''''r^  P"'"^  *^^  ^"P^^«  the^  remaining  in  the  dealer^ 
.^^r^T-xi^^J."'"^'  ^"^  ^^  ^*^««'^  to  him  on  demand. 
VIII.  That  when  the  publisher  sells  at  retail  a  net  book  nubli«;hP^ 

Zt'nf  *:?  ?'"''  ^*  '^'"^^  ^'  ^*  *^^  ^^^^^^  P^i^^'  and  he  shalFadd  tS 

K,  u  .J'''^*^^^  '*'*  expressage  on  all  books  sent  out  of  the  citv  in 

which  the  publisher  does  business.  ^  ^ 

Jl  nJVhi^'f  *''''  V?^  purpose  of  carrying  out  the  above  plan  the  direct- 
«  fn?fnh?r  ^^''^^'^t^^^  ^«  authorized  to  establish  an  office  and  engage 
fn  hi^*"^^  person  as  manager,  and  endeavor  to  secure  from  all  dealera 
in  books  ass^ent  to  the  above  conditions  of  sale.  Under  The  dir^tion 
of  the  board  the  manager  shall  investigate  all  cases  of  cuS  r^ 

Zlfrk  and  theZd^T"'  ^'^"  ^^"^-^"^  noticesTthe'  /sTocra^tiot 
11671  "  Y    Thir  ff^  f  n"l  P?.^"*"^  violating  the  above  provisions. 
[167]      X.  That  it  shall  be  the  duty  of  all  members  of  the  asao 

T^Zi^  'Ty'  *"^°^e<^'^tely  to  the  said  office  a^c^of  the  cu?t?ng 
of  prices  which  may  come  to  their  knowledge  suiting 

*u    V     ^?.*^*  the  association  through  its  agents  and  members  nid  in 

cines  m  tne  United  States,  the  object  of  which  associations  «hnii  ha 
to  assist  the  Publishers'  Association  in  maintain?nrpSr  net  b(^k^ 
as  aforesaid,  and  to  establish  such  lawful  rules  and  reguMo^^^^ 
Ing  the  conduct  of  business  in  their  locality  as  will  S  to  s^ure  fa?r" 
honorable,  and  uniform  methods  of  business  in  Aanh  i^J:^J     *       ^ ' 
or  section  Of  the  country.    That  the  asTocTatlon^l^dge  S?o  sim^^ 
such  local  associations  bj.  every  means  in  its  powfr  in  maUa?^^^^ 
'".^VtTS?^  ?^.^'  ^°^  regulations  as  may  in  this  wly  ^  a^^^^ 
XII.  That  in  making  sales  and  contracts  of  sal^  of  tfelrbr^iks 
nvolving  future  delivery,  members  shall  stipulatrthlt  such  deH^^ 
assodaS"'  "  *''  "'^'^"'"^^  '^  ^^^  PurcKr  of  the  ru^^^^^^^^ 
"  Dated  March,  1903." 


21220— VOL  2—07  M- 


-49 


770 


13©  FEDERAL  REPORTER,   167. 

Ol>iiiioii  of  the  CJourt 
Exhibit  G. 


"  The  American  Fublisliers*  Association,  156  Fiftli  Avenue,  New  Yorlc. 


II 


Fliiii  as  Ameii4e4  to  Jmuarif  Uth,  1904, 


The  following  plan  to  correct  evils  connceted  with  the  cutting  of 
prices  on  copyright  Iwoks  was  adopted  at  a  meeting  of  the  American 
Publishers'  Association  held  February  13,  1901 : 

"  Amendments  referring  to  Action,  juveniles,  and  other  matters  were 
adopted  at  later  meetings. 

"Special  attention  is  called  to  changes  In  the  following  sections: 
1,  3  (last  paragraph),  4,  5,  and  12. 

"  I.  That  the  members  of  the  American  Publishers'  Association  agree 
that  all  copyrighted  books  first  issued.by  them  after  May  1,  1901,  shall 
be  published  at  net  prices,  which  it  is  recommended  shall  be  reduced 
from  the  prices  at  which  similar  books  have  been  issued  heretofore: 
Provided,  however,  that  there  shall  be  exempt  from  this  agreement  all 
school  books,  books  published  by  subscription  and  not  through  the 
trade,  such  other  books  as  are  not  sold  through  the  trade ;  also,  at  the 
desire  of  the  individual  publisher,  any  new  editions,  any  work  of  fiction, 
or  any  juvenile. 

"  II.  It  is  recommended  that  the  retail  price  of  a  net  book,  marked 
•  Net,'  be  printed  on  a  paper  wrapper  covering  tlie  book. 

*•  III.  That  the  members  of  the  association  agree  that  such  net  copy- 
righted books  and  all  others  of  their  books  shall  be  sold  by  them  to 
those  booksellers  only  who  will  maintain  the  retail  price  of  such  net 
copyrighted  books  for  one  year,  and  to  those  booksellers  and  jobbers 
only  who  will  sell  their  books  further  to  no  one  known  to  them  to  cut 
such  net  prices,  or  whose  name  has  Ijeen  given  to  them  by  the  associa- 
tion as  one  who  cuts  such  prices,  or  who  fails  to  abide  by  such  fair  and 
reasonable  rules  and  regulations  as  may  be  established  by  local  asso- 
ciations as  hereinafter  provided.  A  dealer  or  bookseller  may  be  defined 
as  one  who  makes  it  a  regular  part  of  his  business  to  sell  books  and 
carries  stock  of  them  for  public  sale. 

"  It  is  further  agreed  by  the  members  of  the  association  that  they 
will  not  themselves  offer,  nor  sell  their  books  to  any  one  who  offers, 
protected  books  in  combination  with  a  periodical  at  less  than  the  trade 
subscription  price  of  such  periodical,  plus  the  net  or  minimum  retail 
price  of  the  book. 

"  IV.  That  the  members  of  the  association  agree  that  on  all  copy- 
righted works  of  fiction  (not  net)  published  by  them  after  February 
1st,  1902,  and  on  all  juvenile  books  (not  net),  published  after  April  1st, 
1904,  the  greatest  discount  allowed  at  retail  for  one  year  after  publi- 
cation shall  be  28  per  cent. ;  and  all  the  rules  for  the  protection  of  net 
books  shall  apply  to  this  extent  to  the  protection  of  fiction  and  juve- 
nile books  published  on  the  same  basis  as  fiction.  The  conditions  gov- 
erning the  sale  of  fiction  are  such  that  the  association  does  not  at- 
tempt to  fix  a  miiform  price  at  which  works  of  fiction  (not  net)  shall 
be  sold,  but  only  to  name  a  maximum  discount,  which,  however,  it  is 
hoped,  will  rarely  be  given. 

[168]  "V.  The  only  exceptions  to  the  foregoing  rules  shall  be  in 
the  cases  of  libraries,  which  may  be  allowod  a  discount  of  not  more 
than  10  per  cent,  on  net  books  and  33^  per  cent  on  fiction  and  juve- 
nile books  (not  net).  Libraries  entitled  to  these  discounts  may  be 
defined  as  those  libraries  to  which  access  is  either  free  or  by  annual 
subscription.  Book  clubs  are  not  to  be  entitled  to  discounts  on  net 
books,  nor  to  any  special  discount  on  fiction  or  juvenile  books. 

"  VI.  That  the  association  suggests  a  discount  on  net  copyrighted 
books  of  twenty-five  per  cent,  to  dealers  as  a  general  discount,  leaving 
the  question  of  discount,  however,  entirely  to  the  individual  publisher. 


BOBRS-MERRILL   CO.    V.   STRAUS. 
Opinion  of  the  CJourt. 


771 


"  VII.  That  after  the  expiration  of  a  year  from  the  Dubllcation  nf 
nof  br,L7f^li'n  ^^^"^^  ^^^^  *^^^^  regZionI,Ta,ers7^^^^^ 
cut  nr1.P  h„t^/^^  f  ^"^^  restrictions,  and  may  sell  such  book  at  a 
?n  hnv  h^'n^oV  '  ^^^^^^'^^^g  «f  such  actiou,  the  publisher  shall  desire 
ir«^hL/  .if *  P"^^^';««  P^'»^  tlie  copies  then  remaining  in  the  deal- 
^""l  vfr'V^^J^^y  "'"^t  '^e  so  resold  to  him  on  demand. 
1-  kV  /^l^'^^^  *^^^  publisher  sells  at  retail  a  net  book  oub- 
add'^ir^tt  i^/  '"I"''  ''  ^^^"  ^^  ^*  '""^  ''^"^'^  price;  and  he  shall 
eft.  in  wh^S.  thi'^' K.^^  '''*  expressage  on  all  books  sent  out  of  the 
eitj  m  ..hich  the  publisher  does  business. 

"IX.  That  for  the  pui-pose  of  carrying  out  the  above  plan  the 

e^^ltZ  llShi^'"""^"*^^^  ^  authorized  to  establish  an  office  and 
engage  a  suitable  person  as  manager,  and  endeavor  to  secure  from 
all  dealers  m  books  assent  to  the  above  conditions  of  sale  UndS 
the  du^ction  of  the  board,  the  manager  shall  investigate  all  casis 
of  cuttng  reported,  and  when  directed  shall  send  out  notices  to  tl^l 
provSnT'  '  '  ^"*'  *^'  *'^^"  ^'  ^'^^^  P^^^^^«  violating  The  above 

"X  That  it  shall  be  the  duty  of  all  members  of  the  association  to 
rep.n"t  immediately  to  the  said  office  all  cases  of  the  cuttinTif  pHces 
which  may  come  to  their  knowledge.  ^ 

"  XI.  That  the  association  through  its  agents  and  members  aid  in 
the  foiwtion  of  booksellers'  associations  in  the  importanrc^ntere 
and  cities  m  he  United  States,  the  object  of  which  asso^iationTshaU 
be  to  assist  the  Publishers'  Association  in  maintaining  prices  on  ne" 
b^oks  as  aforesaid,  and  to  establish  such  lawful  rules  and  i^eguU- 
tions  respecting  the  conduct  of  business  in  their  locality  as  will  tTd 
to  secure  fair  honorable,  and  uniform  methods  of  business  to  ^h 
important  center  or  section  of  the  countrv.  That  the  assodatton 
pledge  itself  to  support  such  local  associations  by  every  means  m 
ts  power  m  maintaining  such  lawful  rules  and  regnlations Ts  may 
in  this  way  be  agreed  to.  ^ 

"  Xll.  That  in  making  sales  and  contracts  of  sales  of  their  books 

r.nnih^  ^*"''  .t'^T^'  ^^^"^^^^^  «^''^"  ^^P^J^-^te  that  such  deli^^ 

issSS^'   ""''         observance  by  the  purchaser  of  the  rules  of  ?h^ 

(15)  That  thereafter,  and  during  the  month  of  February, 
1904,  in  an  action  brought  in  the  Supreme  Court  of  the  state 
of  New  York,  it  being  a  court  of  competent  jurisdiction, 
wherein  the  defendants  in  this  action  were  plaintiffs  and 
the   American   Publishers'  Association  and  the  American 
Booksellers'  Association  and  such  of  their  respective  mem- 
bers as  were  within  the  jurisdiction  of  the  said  court  were 
made  parties  defendant,  the  New  York  Court  of  Appeals  be- 
ing the  highest  appellate  court  in  the  said  state,  rendered  its 
decision  that  the  combinations  and   agreements  described 
m  paragraphs  10,  11,  12,  and  14  of  this  statement  were  un- 
lawful  and  void,  and  contrary  to  the  statute  law  and  public 
policy  of  the  state  of  New  York,  and  more  especially  of  the 
statute  law  of  said  state  known  as  chapter  690,  p.  1514  of 
the  Laws  of  1899,  which  said  law,  for  the  purposes  of  this 


772 


*  139  FEDERAL.  REPORTER,   168. 


Opinion  of  the  Court. 

statement,  is  made  part  of  the  record.  The  prevailing  opin- 
ion of  the  court,  to'  which  reference  is  hereby  made  for  the 
[169]  true  construction  of  said  decision,  reported  177  N.  Y. 
473,  69  N.  E.  1107,  64  L.  R.  A.  701,  101  Am.  St.  Rep.  819, 
is  as  follows : 

^'Isidore  Straus  et  aL,  Composing  the  Firm  of  R.  H.  Macy  d  Company, 
Respondents,  v.  American  Publishers'  Association  et  ah,  Appellants. 

"  Monopolies— An  agreement  Which  in  Eflfect  Prevents  the  Sale  of 
Uncoprighted  Books  in  the  State  is  Illegal  under  the  Anti-Monopoly 
Act  (Laws  1899,  c.  690).  An  agreement  between  publishers  repre- 
senting ninety-five  per  cent  of  the  boolis  published  in  the  United 
States,  and  ninety  per  cent  of  the  business  done  in  the  book  trade, 
that  all  copyrighted  books  published  by  any  of  them  after  a  specified 
date  should  be  published  and  sold  at  retail  at  net  prices ;  that  such  net 
copyrighted  books,  and  all  other  books,  whether  copyrighted  or  not,  or 
whether  published  by  them  or  not,  should  be  sold  by  them  to  those 
booksellers  and  jobbers  only  who  would  maintain  the  retail  net  price 
of  such  net  copyrighted  books  for  one  year,  and  to  those  booksellers 
and  jobbers  only  who  would  furthermore  sell  books  at  wholesale 
to  no  one  known  to  them  to  cut  or  sell  at  a  lower  figure  than  such 
net  retail  price,  or  whose  name  would  be  given  to  them  by  the 
association  as  one  who  cut  such  prices ;  and  that  evidence  shall  not  be 
required  by  the  bookseller  or  jobber  in  order  to  restrain  him  from 
selling  to  one  who  has  been  blacklisted,  but  that  all  that  shall  be  re- 
quired to  govern  his  action  and  to  prevent  him  from  selling  to  such 
persons  shall  be  that  the  name  has  been  given  to  hiui  by  the  associa- 
tion as  one  who  cuts  such  net  prices— is  an  agreement  which,  while 
purporting  to  secure  to  the  owner  and  publislier  of  copyrighted  books 
the  monopoly  permitted  by  federal  law,  may,  and  as  practicallv  con- 
strued by  the  parties  does,  operate  in  fact  so  as  to  prevent  the  sale 
of  books  of  any  kind  or  at  any  price  to  any  dealer  who  resells,  or  is 
suspected  of  reselling,  copyrighted  books  at  less  than  the  arbitrary 
net  price,  whether  such  dealer  be  a  member  of  the  association  or  not. 
Such  an  agreement  undertakes  to  Interfere  with  the  free  pursuit  in 
this  state  of  a  lawful  business  in  which  a  monopoly  is  not  secured  by 
the  federal  statute,  viz.,  that  of  dealing  in  books  which  are  not  pro- 
tected by  copyright  It  is,  therefore,  in  violation  of  chapter  GOO,  p. 
1514,  of  the  Laws  of  1899,  enacted  to  prevent  monopolies  in  articles  or 
commodities  of  common  use,  and  to  prohibit  restraint  of  trade  and 
commerce. 

"  Btraus  v.  AmeHmn  PuhlUhers'  Ass'n,  85  App.  Div.  446,  83  N.  Y. 
Supp.  271,  affirmed. 

"(Argued  January  19,  1904;  decided  February  23,  1904.) 

"Appeal,  by  permission,  from  an  order  of  the  Appellate  Division  of 
the  Supreme  Court  In  the  First  Judicial  Department,  entered  July  30, 
1903,  which  reversed  an  interlocutory  judgment  of  Special  Term  sus- 
taining demurrer  to  the  complaint. 

"  Stephen  H.  Olin  and  Tbaddeus  D.  Kenneson,  for  appellants.  John 
G.  Carlisle  and  Edmond  E.  Wise,  for  respondents. 

"Parker,  C.  J.  Chief  Justice  Marshall  said  long  ago.  In  Orant  v. 
Raymond,  6  Pet  217,  241,  8  L.  Ed.  376 :  *  To  promote  the  progress  of 
useful  arts  is  the  interest  and  policy  of  every  enlightened  government- 
It  entered  into  the  views  of  the  framers  of  our  Constitution,  and  the 
power  "  to  promote  the  progress  of  science  and  useful  arts,  by  securing 
for  limited  times  to  authors  and  fnyentors,  the  exclusive  right  to  their 


BOBBS-MERRILL   CO.    V.   STRAUS. 
Opinion  of  the  Court. 


773 


respective  writings  and  discoveries,"  is  among  those  expressly  given 
to  Congress.  *  *  ♦  It  is  the  reward  stipulated  for  the  advantages 
derived  by  the  public  from  the  exertions  of  the  individual,  and  is 

intended  as  a  stimulus  to  those  exertions.  The  laws  which  are 
passed  to  give  effect  to  this  purpose  ought,  we  think,  to  be  construed 
In  the  spirit  in  which  they  have  been  made,  and  to  execute  the  con- 
tract fairly  on  the  part  of  the  United  States,  where  the  full  benefit 
has  been  actually  received,  if  this  can  be  done  without  transcending 
the  intention  of  the  statute  or  countenancing  acts  which  are  fraud- 
ulent or  may  prove  mischievous.  The  public  yields  nothing  which 
It  has  not  agreed  to  yield.  It  receives  all  which  it  has  contracted  to 
receive.  The  full  benefit  of  the  discovery  after  its  enjoyment  by  the 
discoverer  for  14  years  is  preserved,  and  for  his  exclusive  enjoyment 
of  it  during  that  time  the  public  faith  is  pledged.'  That  case  and 
many  [170]  others  were  considered  recently  by  the  United  States 
Supreme  Court  in  Bement  v.  National  Harrow  Co.,  186  U.  S.  70,  22 
Sup.  Ct  747,  46  L.  Ed.  1058,  Mr.  Justice  Peckham  writing.  After  an 
examination  of  the  cases  which  may  be  said  to  restrict  the  exceptions 
which  grow  out  of  a  proper  exercise  of  the  police  power  of  the  state, 
of  which  Patterson  v.  Kentucky,  97  U.  S.  501,  24  L.  Ed.  1115,  is  an 
illustration,  he  says  (186  U.  S.  91,  22  Sup.  Ct  755,  46  L.  Ed.  1058)  : 

Notwitnstanding  these  exceptions,  the  general  rule  is  absolute  free- 
dom in  the  use  or  sale  of  rights  under  the  patent  laws  of  the  United 
States.  The  very  object  of  these  laws  is  monopoly,  and  the  rule  is, 
with  few  exceptions,  that  any  conditions  which  are  not  in  their  very 
nature  illegal  with  regard  to  this  kind  of  property,  imposed  by  the 
patentee  and  agreed  to  by  the  licensee  for  the  right  to  manufacture  or 
use  or  sell  the  article,  will  be  upheld  by  the  courts.  The  fact  that 
the  conditions  in  the  contracts  keep  up  the  monopoly  or  fix  prices 
does  not  render  them  illegal.'  That  reasoning  is  employed  as  to 
patent  rights.  It  is  equally  applicable  to  copyrights,  the  protection 
of  which  was  perhaps  the  leading  object  of  the  association  and 
agreement  attacked  in  this  action.  And  it  points  to  the  principle 
underlying  the  decision  in  the  Park  d  Sons  Co.  Case,  175  N  Y  1  67 
N.  E.  136,  62  L.  R.  A.  632,  96  xYm.  St  Rep.  578,  upon  which  defendants 
apparently  rest  their  claim  that  the  judgment  of  the  Appellate  Division 
should  be  reversed.  But  there  is  a  feature  in  this  case  not  to  be  found 
in  that  one,  and  which  requires  a  different  judgment' than  the  one 
rendered  therein,  which  will  now  be  pointed  out. 

"  While  the  leading  object  of  this  association  and  agreement  pur- 
ports to  be  to  secure  to  the  owner  and  publisher  of  copyrighted  books 
that  protection  which  the  federal  government  permits  them  to  eniov 
for  the  reasons  stated  by  Chief  Justice  Marshall  (supra),  it  does  not 
stop  there.  It  also  affects  the  right  of  a  dealer  to  sell  books  not  cony. 
^^fi!5^v,^*  *?®  P^^*-'®  ^^  chooses,  or  to  sell  at  all,  if  he  fails  to  comply 
with  the  rules  of  the  association.  A  combination  creating  a  monop- 
oly of  the  sale  of  books  not  protected  by  copyright  offends  against  the 
law  of  this  state  as  much  as  if  it  related  to  bluestone  (Cummin as  v. 
Stone  Co  164  N  Y.  401,  58  N.  E.  525,  52  L.  R.  A.  262,  79  Am.  St  Rep! 
655),  or  to  envelopes  (Cohen  v.  Envelope  Co.,  166  N.  Y.  292,  59  N  E 
906)  ;  and  according  to  this  complaint  which  must  be  accepted  as  true 
on  this  review  such  an  outcome  is  not  only  possible,  but  probable. 
But  It  IS  not  of  moment  whether  such  a  result  is  probable  or  not ;  for 
the  test  to  be  applied  is,  what  may  be  done  under  the  agreement' 
Reference  to  the  complaint  makes  it  clear  that  the  association  has 
undertaken  to  provide  for  the  practical  exclusion  from  the  business  of 
selling  books  not  protected  by  copyright  all  who  refuse  to  be  bound  by 
the  rules  of  the  association;  and  it  appears  from  the  complaint  that 
the  practical  construction  given  to  this  agreement  by  those  operating 


774    * 


139  FEDERAL  BEPORTEE,  170. 
Opinion  of  the  Court, 


together  under  it  is  tliat,  if  a  dealer  is  suspected  of  selling  copyrighted 
books  at  less  than  the  arbitrary  net  price,  it  is  quite  sufficient  to 
exclude  him  from  selling  books  altogether.    The  agreement  nowhere 
suggests  that  it  is  the  object  of  the  association  to  control  the  sale  of 
books  not  protected  by  copyright.    Indeed,  the  object  of  the  associa- 
tion seems  to  be  merely  to  protect  the  copyrighted  books.    But  while 
the  other  part  of  the  scheme  is  apparently  sought  to  be  hidden,  it  is 
after  all  uncovered  by  the  clauses  authorizing  the  exclusion  of  any 
members  of  the  association,  or  those  who  refuse  to  be  bound  by  its 
rules,  from  selling  b<K»ks  of  any  description.    The  fifteenth  paragraph 
of  the  eomplaint  alh-gts  '  that  during  the  year  ir»00  a  uimiber  of  prom- 
inent publishers,  including  defendants,  hereinbefore  described  as  pu!)- 
lishers,  for  the  purpose  of  securhig  to  themselves  an  unreasonable 
and  extortionate  profit,  and  at  the  same  time  with  intent  to  prevent 
ccmipetitiou  in  the  sale  of  books,  and  for  the  purpose  of  establishing 
and  maintaining  the  prices  of  all  bwks  published  by  them,  or  any  of 
them,  and  all  btH)kH  dealt  in  by  them,  or  anv  of  them,  and  preventing 
competition  in  the  sale  of  books,  and  for  the  puipose  of  establishing 
the  public  policy  and  the  statutes  of  the  state  of  New  York    *     ♦    • 
combined  and  assoi-iated  themselves  ttigether,'  etc.    The  sixteenth  par- 
agraph refers  to  the  method  of  organization,  and  the  fact  of  the  adop- 
tion of  a  resolution  and  an  agreement  to  carry  out  their  object,  while 
the  seventeenth  states  the  nature  of  the  agi-eement  as  follows :  *  That 
[171]  as  a  part  of  siiid  unlawful  sclieme  and  combination  the  mem- 
bers of  said  association  agreed  that  such  net  copyrighted  books,  and 
ail  other  botiks,  whether  copyrighted  or  not,  or  whether  published  by 
them  or  not.  should  be  sold  by  them  to  those  booksellers  onlv  who 
would  maintain  the  retail  net  price  of  such  net  copyrighted  books  for 
one  year,  and  to  those  booksellers  and  jobbers  only  who  would  further- 
more sell  books  [the  word  "  copyrighted  "  is  omitted  at  this  point]  at 
wholesale  to  no  one  known  to  them  to  cut  or  sell  at  a  lower  figure 
than  such  net  i-etail  price,  or  whose  name  wcmld  be  given  to  them  by 
the  association  as  oiw  who  cut  such  priws.'    It  will  be  seen  that,  while 
the  leading  object  of  this  portion  of  the  agreement  apparentlv  is  to 
maintain  the  retail  net  price  of  copyrighted  books  it  operates  in  fact 
so  as  to  prevent  the  sale  of  l>ooks  to  dealers  who  sell  books  of  any 
kind  to  one  who  retails  <oi»y righted  books  at  less  than  the  net  retail 
price.    And  the  agreement  further  provides  that  evidence  shall  not  be 
required  by  the  bookseller  or  jobber  in  order  to  restrain  him  from  sell- 
ing to  one  who  has  been  blacklisted,  but  that  all  that  shall  be  re<iuired 
to  govern  his  action  and  to  prevent  him  from  selling  to  such  a  person 
shall  be  that  the  name  has  been  given  to  him  by  the  association  as 
one  who  cuts  such  net  prices.    It  has  been  admitte<l,  and  must  be,  that 
the  agreement  may  be  so  worked  out  as  to  deprive  a  dealer  from  sell- 
ing any  books  whatever,  thus  breaking  up  his  business. 

"  But  it  is  said  that  is  only  intended  as  a  punishment  for  one  who 
refuses  to  be  Iwund  by  the  wishes  of  the  owner  of  the  copyrighted 
book  as  to  its  selling  price;  in  other  words,  that  the  association  in- 
flicts upon  him  the  i)enalty  of  a  destruction  of  his  business  because  of 
his  refusal  to  abide  by  the  rules  of  the  association.  It  is,  of  course, 
of  no  consequence  how  this  course  of  action  may  be  descril>ed  bv  those 
who  invented  it ;  for,  if  it  be  the  fact  that  the  combination  which  agrees 
to  exclude  others  from  an  unprotected  business  violates  the  statute, 
then  it  matters  not  what  excuse  may  be  olTered  for  it.  It  is  the 
excuse,  not  the  statute,  which  must  give  way.  The  eighteenth  para- 
graph of  the  complaint  contains  what  purports  to  be  a  practical 
construction  given  to  this  agreement  by  the  members  of  the  associa- 
tion. It  states:  'That  in  pursuance  of  said  unlawful  combination  and 
agreement  said  American  Booksellers'  Association  and  its  members 
have  continuously  co-operated  with  and  assisted  the  American  Pub- 


BOBBS-MERRTLL   CO.    V.,   STRAUS. 
Opinion  of  the  Com-t 


775 


lishers'   Association   and  the  members  thereof  in   establishing   and 
maintaining  prices  of  such  books,  and  preventing  competition  in  the 
supply  and  sale  of  the  same,  and  still  contmue  so  to  do ;  and  plaintiffs 
say  that  in  compliance  with  said  agreement  neither  said  associations 
nor  any  of  the  members  thereof  will  sell  or  supply  books  at  any 
price  to  any  dealer,  whether  a  member  of  said  association  or  not, 
and  whether  such  books  are  copyrighted  or  not,  or  are  not  published 
by  said  American  Book  Publishers'  Association  or  its  members,  who 
resells,  or  is  suspected  of  reselling,  such  copyrighted  books  at  less 
than  the  arbitrary  net  price  fixed  by  said  unlawful  combination,  nor 
will  the  said  association  nor  any  of  their  members  sell  or  supply  any 
books  whatever  to  any  one  who  resells,  or  is  suspected  of  reselling, 
such  copyrighted  books  to  any  dealer  who  thereafter  sells  the  same 
at  less  than  such  arbitrary  net  price.'    Here,  then,  we  have  a  practical 
construction  of  the  agreement,  one  put  upon  it  by  the  parties  to  it; 
and  it  is  such  a  construction  as  the  language  employed  calls  for.    And 
it  discloses  that  the  parties  who  are  acting  under  the  agreement  assume 
it  to  be  their  right  and  their  duty  by  virtue  of  it  not  to  sell  or  permit 
to  be  sold  books  of  any  kind  or  at  any  price  to  any  dealer  '  who  re- 
sells or  is  suspected  of  reselling  copyrighted  books  at  less  than  the 
arbitrary  net  price,'  whether  such  dealer  be  a  member  of  the  associa- 
tion or  not.    The  intended  effect  of  this  is  to  prevent  any  dealer 
who  is  even  suspected  of  reselling  copyrighted  books  at  less  than  the 
net  price  from  obtaining  books  at  any  price  or  on  any  terms,  whether 
copyrighted  or  not.    And  it  does  not  stop  there,  for  the  members  of 
the  association  agree  not  to  supply  him  any  books  at  any  price,  whether 
he  resells  copyrighted  books  or  not  at  less  than  the  arbitrary  net  price, 
provided  he  is  suspected  of  selling  to  any  dealer  who  thereafter  sells 
the  same  at  less  than  such  arbitrary  net  price.    And  this  means,  inas- 
much as  the  members  represent  95  per  cent,  of  the  publishers  and  90 
per  cent,  of  the  business  done  in  the  book  trade,  that  he  may  be 
practically  driven  out  of  the  business  if  any  one  chooses  to  suspect 
[172]  that  a  dealer  to  whom  he  has  sold  books  has  resold  them  at 
less  than  the  price  fixed.    The  members  of  the  association,  therefore 
have  entered  into  an  agreement  which  by  its  terms— as  we  read  it, 

and  as  they  have  construed  it  in  fheir  evervdav  working  under  it 

undertakes  to  interfere  with  the  free  pursuit'  in  this  state  of  a  lawful 
business  in  Avhich  any  member  of  the  community  has  a  right  to  en- 
gage, a  business  in  which  a  monopoly  is  not  secured  by  the  federal 
statutes,  namely,  that  of  dealing  in  books  which  are  not  protected  by 
copyrights ;  and  hence  it  is  in  violation  of  chapter  690,  p.  1.514,  Laws 
1899,  which  provides:  'Every  contract,  agreement,  arrangement  or 
combination  whereby  a  monopoly  in  the  manufacture,  production  or 
sale  in  this  state  of  any  article  or  commodity  of  common  use  is  or  may 
be  created,  established  or  maintained,  or  whereby  competition  in  this 
state  in  the  supply  or  price  of  any  such  article  or  commodity  is  or  may 
be  restrained  or  prevented,  or  whereby  for  tlie  purpose  of  creating 
establishing  or  maintaining  a  monopoly  within  this  state  of  the  manu- 
facture, production  or  sale  of  any  such  article  or  commodity,  the  free 
pursuit  in  this  state  of  any  lawful  business,  trade  or  occupation  is  or 
may  be  restricted  or  prevented,  is  hereby  declared  to  be  against  oublic 
lK)licy,  illegal  and  void.'  ^ 

"The  order  should  be  affirmed,  with  costs. 

"  Haight,  Martin.  Vann,  and  Werner,  JJ.,  concur  with  Parker  C   J 
Oray  and  Barrett,  J.T.,  read  dissenting  opinions.  '     *    ' 

"  Order  affirmed." 

That  the  judgment  upon  this  decision  was  duly  adopted 
by  the  New  York  Supreme  Court  and  entered  on  its  records. 


776 


139  FEDERAL  BEPOBTEE,   172. 


Opinion  of  tbe  CJourt. 

(16)  That  thereafter,  and  on  or  about  the  13th  day  of 
March,  1904,  the  said  resolutions  or  agreements  were  amended 
as  to  article  3  so  as  to  cover  copyrighted  books  only,  and  so 
as  to  provide  for  the  placing  of  the  seller's  name  on  the  cut- 
off list  of  the  association  only  under  certain  changed  con- 
ditions. A  copy  of  such  resolutions  as  amended,  with  the 
words  stricken  out  by  said  amendment  indicated  by  brackets, 
and  the  words  thereby  added  in  italics,  are  hereto  annexed 
and  marked  "  Exhibit  H." 

Exhibit  H. 

"  The  American  Publisliers'  Association,  156  Fifth  Avenue,  New  York. 

"Plm  a«  Amended  to  April  Jal,  1904. 

*•  The  following  plan  to  correct  evils  connected  with  the  cutting  of 
^ices  on  copyright  books  was  adopted  at  a  meeting  of  the  American 
Publishers'  Association  held  B'ebniary  13,  1901 : 

"Amendments  referring  to  fiction,  juveniles,  and  other  matters  were 
adopted  at  later  meetings. 

"Special  attention  is  called  to  clianges  in  the  following  sections: 
1,  3,  4,  5,  9,  and  12. 

"I.  That  the  meml>ers  of  the  American  Publishers'  Association 
agree  that  all  copyrighted  books  first  issued  by  them  after  May  1, 
1901,  shall  be  published  at  net  prices,  which  it  is  recommended  shall 
be  reduced  from  the  prices  at  which  similar  books  have  been  issued 
heretofore :  Provided,  however,  that  there  shall  be  exempt  from  this 
agreement  all  school  books,  books  published  by  subscription  and  not 
through  the  trade,  such  other  books  as  are  not  sold  through  the  trade  • 
also,  at  the  desire  of  the  individual  publisher,  any  new  editions,  any 
work  of  fiction,  or  any  juvenile. 

.  J*^!  J*  ^^  recommended  that  the  retail  price  of  a  net  book,  marked 
Net,  be  printed  on  a  paper  wrapper  covering  the  book. 
"III.  That  the  members  of  the  association  agree  that  [such  net] 
copyrighted  books  [and  all  others  of  their  books]  shall  be  sold  by 
them  to  those  booksellei-s  only  who  will  maintain  the  retail  price  of 
such  net  copyrighted  books  for  one  year,  and  to  those  l>ooksellers  and 
jobbers  only  who  will  sell  their  copyrighted  books  except  at  retail 
[farther]  to  no  one  who  [known  to  them  to]  cuts  such  [173]  net 
prices  [or  whose  name  has  been  given  to  them  bv  the  association  as 
one  who  cuts  such  prices,  or  who  fails  to  abide  by  such  fair  and 
reasonable  rules  and  regulations  as  may  be  established  bv  local 
associations  as  hereinafter  provided].  A  dealer  or  bookseller  may 
be  defined  as  one  who  makes  it  a  regular  part  of  his  business  to  sell 
books  and  carries  stock  of  them  for  public  sale.  It  is  further  agreed 
by  the  members  of  the  association  that  they  will  not  themselves' 
offer,  nor  sell  their  copyriffhted  books  to  any  one  who  offers,  protected 
books  in  combination  with  a  periodical  at  less  than  the  trade  sub- 
scription price  of  such  periodical,  plus  the  net  or  minimum  retail 
price  of  the  book. 

"  IV.  That  the  members  of  the  association  agree  that  on  all  copy- 
righted works  of  fiction  (not  net)  published  by  them  after  February 
1st,  1902,  and  on  all  juvenile  books  (not  net)  published  after  April 
1st,  1904,  the  greatest  discount  allowed  at  retail  for  one  year  after 


BOBBS-MERRILL   CO.    V,   STRAUS. 


777 


Opinion  of  the  CJourt 

publication  shall  be  28  per  cent. ;  and  all  the  rules  for  the  protection 
of  net  books  shall  apply  to  this  extent  to  the  protection  of  copyrighted 
fiction  and  copyrighted  juvenile  books  published  on  the  same  basis 
as  fiction.  The  conditions  governing  the  sale  of  fiction  are  such  that 
the  association  does  not  attempt  to  fix  a  uniform  price  at  which 
works  of  fiction  (not  net)  shall  be  sold,  but  only  to  name  a  maximum 
discount,  which,  however,  it  is  hoped  will  rarely  be  given. 

"  V.  The  only  exceptions  to  the  foregoing  rules  shall  be  in  cases  of 
libraries,  which  may  be  allowed  a  discount  of  not  more  than  10  per 
cent  on  net  books  and  33i  per  cent,  on  fiction  and  juvenile  books 
(not  net).  Libraries  entitled  to  these  discounts  may  be  defined  as 
those  libraries  to  which  access  is  either  free  or  by  annual  subscrip- 
tion. Book  clubs  are  not  to  be  entitled  to  discount  on  net  books,  nor 
to  any  special  discount  on  fiction  or  juvenile  books. 

"  VI.  That  the  association  suggests  a  discount  on  net  copyrighted 
books  of  25  per  cent  to  dealers  as  a  general  discount,  leaving  the 
question  of  discount  however,  entirely  to  the  individual  publisher. 

"  VII.  That  after  the  expiration  of  a  year  from  the  publication  of 
any  copyrighted  book  issued  under  these  regulations  dealers  shall 
not  be  held  to  the  above  restrictions,  and  may  sell  such  book  at  a  cut 
price ;  but  If,  on  learning  of  such  action,  the  publisher  shall  desire  to 
buy  back  at  purchase  price  the  copies  then  remaining  in  the  dealers' 
hands,  they  must  be  so  resold  to  him  on  demand. 

"  VIII.  That  when  the  publisher  sells  at  retail  a  net  book  published 
under  the  rules,  it  shall  be  at  the  retail  price,  and  he  shall  add  the 
cost  of  postage  or  expressage  on  all  books  sent  out  of  the  city  in 
which  the  publisher  does  business. 

"  IX.  That  for  the  purpose  of  carrying  out  the  above  plan  the  direc- 
tors of  the  association  be  authorized  to  establish  an  office  and  engage 
a  suitable  person  as  manager,  and  endeavor  to  secure  from  all  dealers 
in  books  assent  to  the  above  conditions  of  sale.  Under  the  direction 
of  the  board,  the  manager  shall  Investigate  all  cases  of  cutting  re- 
ported, and  when  directed  shall  send  out  notices  to  the  association, 
jobbers,  and  the  trade  of  any  persons  violating  the  above  provisions, 
after  giving  the  person  accused  of  such  violation  an  opportunity  to 
explain  his  action. 

"  X.  That  it  shall  be  the  duty  of  all  members  of  the  association  to 
report  immediately  to  the  said  office  all  cases  of  the  cutting  of  prices 
which  may  come  to  their  knowledge. 

**  XI.  That  the  association,  through  its  agents  and  members,  aid  in 
the  formation  of  booksellers'  associations  in  the  important  centers 
and  cities  in  the  United  States,  the  object  of  which  associations  shall 
be  to  assist  the  Publishers'  Association  in  maintaining  prices  on  net 
books  as  aforesaid,  and  to  establish  such  lawful  rules  and  regulations 
respecting  the  conduct  of  business  in  their  locality  as  will  tend  to 
secure  fair,  honorable,  and  uniform  methods  of  business  in  each 
important  center  or  section  of  the  country.  That  the  association 
pledge  itself  to  support  such  local  associations  by  every  means  in  its 
power  in  maintaining  such  lawful  rules  and  regulations  as  may  In 
this  way  be  agreed  to. 

"XII.  That  in  making  sales  and  contracts  of  sales  of  their  books 
involving  future  delivery,  members  shall  stipulate  that  such  delivery 
is  contingent  on  the  observance  by  the  purchaser  of  the  rules  of  the 
association." 

[174]  That  thereafter  the  American  Booksellers'  Associa- 
tion passed  a  so-called  Reform  Resolution  No.  2  in  April, 
1904,  which  said  resolution  is  as  follows : 


'"^  139  FEDEBAJL  BEPORTEK,   174. 

Opinion  of  the  CJourt 

Exhibit  I. 

"Ueform  ResolnUm  Mo.  2. 

"Wtiereas,   tlie  American   Publisiiers'   Asaooiatimi    hfl«   n^r^^t^^A 

.U  tteir  copyrighted  lx>oks  to  anT^ekler  who  faIN  to  maiS^h"^ 

"^liX^L^J^'**  'leras-'^a^tJ'rB^r.  %T"'^'''^  «''""' 
dial  support;  and^tat  lo  S  lat^XZJtLyZ^T."''- 

18  applicable  and  m  force  w  tb  refei-enci*  tn  miv  »i,,m!.i!„  ,  "  .'J 
have  made  it  manifest  that  he  is  imuHnin*.  f^^  publisher  who  shall 
association,  and  with  th;  men^^^^^^  Tthe  /nbLlie^^^^^  '^'^ 

the  maintenance  of  the  net  price  sv"teui        "^"**^*^^^   Association,  in 

ratifiJt  h^wrfiTti  ^,  ^*.  resolved,   that  this  resolution,  on  beinir 

fom!f  bn^lit  t^^^^^^^^^  ""^  1?!  T'"'^^'''  «*'  ^^''^  association.  ^^  ing  bj^ 
lormai  ballot  shall  immediatelr  liecome  a  law  ti»  •.nh  «n.i  «ii  J.?*u 

SlutTal-'n'  «--'«"""=  <"><^  'f  it  «tan  aPI^ar  n^Hhe  VeJnt* 
meut  of  any  thrcje  members  of  thk  assocfiifinn  thnf  «   ...      i^eseni;- 

publisher  who  baa  been  formally  deiioniH-ed  luU,  inoi„hp,.^i,,!i?  i^ 
expelled  from  memlK-rship  h,  this  ass^ia^  n.r  «  d  all  uen^^rl  ^ 
this  association  shall  then  and  thereafter  be  restraint  fZ    smfniv 

tjoi/^LIIt'S'ni'Jti^f^^.r;;"^;^^^ 

than  the  net  or  nsnal  retail  prk^  to  any  dealer  wtiS«iMhfv2i^^ 
denounced  by  the  Publishers'  Asi>ciation  fo?  cut  In^  fhfL^^V^'l 
oopyrighted  books,  or  for  otherwise  vIolatinrthfnfniM^^  system  ani 
who  shall  haye  Ijeen  thoivfor  cut  off  by  the  mZin^rs  of  H,/n?.Kn^ 
'^Z^'i^^^^  ^he  supply  of  th^!;!^,^^^;^^  *'*^  Publishers' 

tk*n  «i„ii"^*'""'^***''J**^  ^*  resolved,  that  all  momlx'rs  of  this  associa- 
tion shall  endeavor  to  keep  in  stock  and  push  the  sale  of  net^nv- 

^^ufi.^^l.^}T^  ***  ^^""y  ^^^  reasonably  In  demand  DroWd^ 
Z^**iT-"^  ^'^  "^i?'''^  ^y  ^^^  publishers  to  the  dealers  a8\vllvieM 
them  a  livnig  profit;  and  they  sMll  maintain  the  net  prk^V  of  the 

STli?.?'^"^*'"?.?'*^*^  **^^  ^'""^  «f  the  publishers'  agr^nent  fo? 
the  maintenance  of  the  net  price  system.  «feictfuitnT  lor 

«-ili  o*"/*"^  hereby  vote  to  rescind  Reform  Resolution  No  1  and  to 
adopt  Reform  Resolution  No.  2.  ^  ™ 

"[Signed]  Name 

"Address  ....]'.*.*] 

•*  Bated  March  10,  1904."  * ' ' 


BOBBS-MEERIIiL   CO.    V,   STRAUS. 


779 


Opinion  of  the  Court. 

(17)  That  since  May,  1901,  the  date  that  the  first  resolu- 
tions and  agreements  of  the  American  Publishers'  Associa- 
tion and  the  American  Booksellers'  Association  and  their  re- 
spective members  went  into  effect,  and  until  April,  1904,  a 
large  majority  of  all  the  publishers,  in  numbers  and  extent 
of  business,  including  the  complainant  here-  [175]  in,  and 
a  large  majority  of  all  the  booksellers  throughout  the  United 
States,  consisting  of  about  90  per  cent,  both  in  numbers  and 
in  extent  of  business,  have  obeyed  the  rules  and  regulations 
of  the  two  associations  as  from  time  to  time  amended.  They 
and  each  of  them  refused  to  sell  or  sanction  the  sale  of  any 
books  of  any  kind,  whether  copyrighted  or  uncopyrighted, 
whether  published  by  any  member  of  the  American  Publish- 
ers' Association  or  not,  to  any  dealer  throughout  the  United 
States  who  did  not  maintain  at  retail  the  net  or  restricted 
price  at  which  each  copyrighted  bqok  was  imblished  under 
the  net  price  or  restricted  price  system,  nor  would  they  sell 
or  sanction  the  sale  of  any  books  of  any  kind  to  any  one  who 
was  known  or  believed  to  sell  such  net  or  restricted  copy- 
righted books  at  retail  at  less  than  the  net  or  restricted  price, 
nor  would  they  sell  or  sanction  the  sale  of  any  books  of  any 
kind  to  any  one  who  sold  books  of  any  kind  to  a  price-cutter 
on  copyrighted  books,  or  who  was  loiown  or  believed  to  sup- 
ply a  price-cutter  with  any  books  of  any  kind ;  and  when  any 
dealer  or  person  sold  any  net  price  books  or  restricted  price 
books  at  less  than  the  net  or  restricted  price,  or  any  jobber 
or  wholesaler  supplied  a  price-cutter  with  any  books  of  any 
kind,  or  was  known  or  believed  to  so  su^^ply  him,  the  two 
associations  circulated  and  published  notices  warning  all 
persons  in  the  trade,  whether  members  of  either  of  such 
associations  or  not,  that  the  book  supply  of  such  persons 
had  been  cut  off  pursuant  to  the  rules  of  the  two  associations. 

(18)  That  since  April,  1904,  any  dealer  Avho  does  not 
maintain  the  net  or  restricted  price  at  retail  of  any  copy- 
righted book  published  by  any  member  of  the  Publishers' 
Association  under  the  net  price  or  restricted  price  system 
cannot  purchase  any  copyrighted  books  of  any  kind  fi'om 
any  of  the  members  of  either  of  the  associations  at  less  than 
the  retail  price,  whether  such  copyrighted  book  is  published 
by  any  of  the  members  of  the  associations  or  not,  and  whether 


780 


139   FEDERAL  BEPORTEK,   175. 


Opinion  of  the  CJourt. 

such  copyrighted  book  was  published  under  the  net  price 
system  or  not,  or  prior  thereto. 

(W)  That  the  defendants  were  placed  on  the  cut-off  list 
in  May,  1901,  because  they  refused  to  maintain  the  net  retail 
price  of  $1.40  on  the  copyrighted  book  "  Tarry  Thou  Till  I 
Come,"  published  by  Funk  &  Wagnalls,  but  uniformly  sold 
the  same  at  retail  at  $1.24;  and  since  said  time  their  name 
has  been  circulated  monthly  upon  the  list  of  dealers  whose 
supplies  have  been  cut  off  under  the  rules  of  the  two  asso- 
ciations, and  against  whom  the  trade  at  large  was  warned  as 
price-cutters  and  as  coming  under  the  rules  of  the  two  asso- 
ciations as  dealers  to  whom  books  should  not  be  sold,  and, 
furthermore,  that  books  should  not  be  sold  to  any  one  who  in 
turn  was  known  or  believed  to  resell  the  same  to  these  de- 
fendants.   That  since  March,  1904,  the  rules  have  been 
amended  and  relaxed  as  above  set  forth,  so  as  to  permit  deal- 
ings with  the  defendants  in  uncopyrighted  books  only.    That 
as  to  all  copyrighted  books  of  any  and  all  kinds  the  members 
of  said  associations  are  not  permitted  under  the  rules  to  sell 
to  the  defendants,  nor  to  sell  to  any  one  who  resells  or  is 
believed  to  resell  to  the  defendants ;  and  the  cut-off  lists  or 
blacklists  have  been  published  against  these  defendants  and 
[176]  against  such  other  dealers  as  have  been  cut  off  from 
their  supply  of  books,  copyrighted  or  otherwise,  witheut  any 
interruption  or  intermission  from  the  time  they  were  first 
included  in  the  list  of  dealers  whose  supplies  were  cut  off 
until  the  present  time,  without  any  change  in  the  method  em- 
ployed prior  to  the  passage  of  the  last  amendment,  which 
eliminated  uncopyrighted  books  from  the  rules. 

(20)  That  such  combination  and  agreement  as  hereinbe- 
fore described  are  now  in  force,  and  that  it  is  intended  by  the 
members  of  the  two  associations  and  the  two  associations  to 
continue  them  in  force. 

(21)  That  the  complainant  was,  since  May,  1901,  a  mem- 
ber of  the  American  Publishers'  Association,  and  a  party 
to  all  the  agreements  of  said  association  hereinbefore  set 
forth,  and  obeyed  and  lived  up  to  all  the  rules  and  regula- 
tions of  the  American  Publishers'  Association  hereinbefore 
set  forth,  and  published  all  its  books,  including  "  The  Cast- 


BOBBS-MERRILL   CO.    V,   STRAUS. 


781 


Opinion  of  the  Court. 

away,"  in  acordance  with  the  rules  and  regulations  of  the 
association  above  set  forth. 

(22)  That  the  members  of  the  said  two  associations,  in- 
cluding the  complainant  herein,  do  now,  and  at  all  the  times 
herein  mentioned  have,  resided  and  carried  on  their  business 
of  selling  books  in  many  different  states,  and,  in  the  conduct  of 
their  respective  business  as  publishers  and  wholesale  and  re- 
tail dealers  in  books,  the  members  of  the  said  two  associa- 
tions, including  the  complainant,  were  and  now  are  engaged 
in  the  business  of  purchasing  books,  copyrighted  and  un- 
copyrighted, from  each  other  and  from  other  persons,  in 
many  states  other  than  the  states  in  which  the  purchasers 
resided,  or  now  reside,  and  do  business;  and  all  such  books 
were  and  have  been  transported,  in  compliance  with  the 
contract  of  purchase,  from  the  state  where  such  books  were 
purchased  to  the  purchaser,  and  delivered  to  the  purchaser 
in  the  state  where  he  resided,  or  now  resides  in  and  conducts 
his  business,  and  members  of  both  of  such  associations,  in- 
cluding the  complainant  herein,  also  sell  and  have  sold  books 
to  many  persons  who  are  not  members  of  the  said  associa- 
tions, in  states  other  than  the  ones  in  which  the  sellers  re- 
side and  conduct  their  business,  and  all  such  books  were  and 
have  been  transported,  in  compliance  with  the  contract  of 
purchase,  from  one  state  to  another,  and  then  delivered  to 
the  i^urchaser,  and  all  the  rules,  regulations,  and  agreements 
made  by  the  said  two  associations  and  its  members,  includ- 
ing the  complainant,  as  hereinbefore  set  forth,  were  intended 
to  be  applied  and  be  enforced,  and  have  been  and  are  now 
applied  to  and  enforced,  against  all  publishers  and  dealers 
in  books  throughout  all  the  states  of  the  United  States, 
whether  such  publishers  and  dealers  were  or  were  not  mem- 
bers of  either  of  such  associations,  and  whether  they  pur- 
chased books  in  one  state  for  transportation  and  delivery  in 
another,  or  for  delivery  in  the  state  where  purchased. 

(23)  That  the  members  of  the  said  two  associations,  in- 
cluding the  complainant  herein,  have  heretofore  produced, 
distributed,  and  sold,  and  still  produce,  distribute,  and  sell, 
the  majority  of  all  books  purchased  and  dealt  in  throughout 
the  state  of  New  York  and  all  other  states  and  territories  of 
the  United  States. 


782 


1»  FEDERAL  REPORTER,  177. 


Opinion  of  the  Court 

[177]  From  these  facts,  which  are  conceded,  it  appears  that 
the  original  purpose  of  the  combination  and  agreement  of 
the  association  of  publishers,  including  the  complainant, 
was  (1)  to  maintain  the  net  retail  price  of  all  copyrighted 
books  published  by  the  members  of  such  association,  or  any 
of  them,  at  such  price  per  book  as  might  be  fixed  by  the 
publisher  of  that  book,  and    (2)   to  prevent  the  sale  at 
retail  of  any  one  or  more  of  such  copyrighted  books  by  any 
dealer  in  books  at  retail  at  a  less  price  per  copy  than  that  so 
fixed.    (See  finding  10.)    Thereupon  the  persons,  firms,  and 
corporations  m  the  combination,  including  the  complainant, 
formed  a  corporation  under  the  name  ''American  Publishers' 
Association."    This  corporation  included  a  large  majority 
of  all  the  publishers  of  all  books,  both  copyrighted  and  un- 
wpyrighted,  in  the  United  States.    This  corporation,  imme- 
diately on  its  organization,  adopted  the  resolution  (Exhibit 
A),  and  it  and  its  members  entered  into  an  agi-eement  with 
each  other,  and  combined  together  to  do  the  acts  and  things 
and  refrain  from  doing  the  acts  and  things,  mentioned  in 
such  resolution    (Exhibit  A).     That  subdivision  or  para- 
graph III  thereof  was  illegal  and  in  restraint  of  interstate 
commerce  is  perfectly  plain.     (See  finding  22.)     In  fact 
the  effect  of  the  decision  of  the  Court  of  Appeals  of  the 
state  of  New  York,  quoted  in  the  findings   (finding  15), 
IS  so  to  declare.    By  paragraph  or  subdivision  X  of  such 
resolution  the  combination  to  keep  up  the  price  of  books 
and  limit  and  restrain  interstate  commerce  was  to  be  further 
extended.    Thereupon  the  American  Booksellers'  Associa- 
tion was  formed.     (See  finding  12.)     That  the  object  and 
purpose  as  there  set  forth  was  illegal  cannot  be  doubted.    We 
now  have  the  combination  extended  to  at  least  90  per  cent 
of  the  booksellers  of  the  United  States,  and  including,  not 
only  90  per  cent,  of  all  booksellers,  but  90  per  cent,  of  aU 
publishers  of  books.     The  combination  as  existing  under 
those  resolutions,  etc.,  is  not  confined  to  publishers  and 
sellers  of  copyright  books,  but  includes  the  publishers  and 
seUers  of  all  books.     The  declared  object  and  purpose  of 
this  combination  is   (1)   to  fix  the  retail  price  of  books- 
(2)  to  maintain  such  retail  price;  (3)  to  refuse  to  furnish 
or  sell  any  books  to  any  dealer  in  books  who  does  not  main- 


BOBBS-MERRILL   CO.    V.   STRAUS. 


788 


Opinion  of  the  Court, 
tain  such  prices— that  is,  who  sells  a  book  at  less  than  the 
fixed  price;  (4)  to  compel  all  publishers  and  dealers  in 
books,  in  practical  effect  at  least,  to  come  into  the  combina- 
tion and  enforce  and  maintain  these  prices,  or  be  blacklisted 
and  driven  from  the  business;  (5)  to  drive  out  of  the  busi- 
ness of  general  publishing  and  bookselling  all  who  refuse  or 
neglect  to  maintain  these  prices.  The  freedom  of  the  owner 
of  a  book— any  book,  except  those  specially  excepted— duly 
purchased  and  paid  for  to  sell  the  same,  soiled  or  injured, 
or  read  and  no  longer  desired,  was  thus  attempted  to  be 
destroyed.  The  right  of  a  retail  bookseller  to  sell  to  the 
purchaser  of  50  books  for  his  library  at  a  less  price  than 
to  the  purchaser  of  one  book  must  not  be  exercised  under 
the  pain  and  penalty  of  having  his  supply  of  books  cut  off 
and  of  bemg  driven  from  the  business  and  financially  ruined 
(See  Exhibit  B,  finding  12.)  As  to  what  was  done  in  re- 
straint of  interstate  commerce,  see  finding  13. 

[178]  An  attempt  was  then  made  by  the  American  Pub- 
lishers' Association  to  eliminate  the  vicious  provision  of  th*^ 
written  agreements  and  ^solutions  adopted  by  the  combina- 
tion by  the  substitution  of  article  or  subdivision  III  of 
Exhibit  H.     (See  finding  16.)     This  must  be  read  with  the 
words  included  in  brackets  left  out.    The  American  Book- 
sellers' Association  followed,  with  the  adoption  of  Exhibit 
I,  or  "  Beform  Kesolution  No.  2."    In  finding  17  is  set  out 
what  was  done  up  to  April,  1904.     What  has  been  done  by 
the  combination  since  April,  1904,  is  set  out  in  findin<r  18 
As  appears  from  finding  19,  the  defendants  were  put  on 
the  so-called  cut-off  list,  or  blacklist,  in  May,  1901,  when 
the  unmodified  agreement  or  combination  was  being  enforced 
Its  offense  was  in  refusing  to  maintam  the  retail  price  of  a 
copyrighted  book,  however.    Defendants'  name  has  not  been 
taken  from  the  list  at  any  time.    It  is  found  and  conceded 
that  the  complamant  is  living  up  to  and  enforcing  the  agree- 
ment^, rules  and  regulations  aforesaid,  as  modified,  of  course, 
and  has  published  and  is  publishing  all  its  books,  includ- 
ing    The  Castaway,"  because  thereof,  and  in  accordance 
and  compliance  therewith.     It  follows,  necessarily,  from  the 
facts  recited  from  1  to  23,  inclusive,  and  is  found  as  a  further 
fact,  that  the  notice  in  "  The  Castaway,"  on  the  page  follow- 


784 


139  FEDEKAL  REPORTER,   178. 


Opinion  of  the  Court 

ing  the  fly  leaf,  viz.:   "The  price  of  this  book  at  retail  is 
one  dollar  net.    Mo  dealer  is  licensed  to  sell  it  at  a  less  price, 
and  a  sale  at  a  less  price  will  be  treated  as  an  infringement 
of  the  copyright.    The  Bobbs-Merrill  Company  "—is  an  act 
done  by  the  complainant,  acting  in  combination  with  the  said 
American  Publishers'  Association  and  the  American  Book- 
sellers' Association,  and  the  members  thereof,  in  execution  of 
the  said  combination  and  agreement,  and  for  the  purpose  of 
enforcing  same,  and  because  of  the  said  combination  and 
agreement  as  evidenced  by  the  acts  of,  and  the  resolutions 
and  rules  adopted  and  made  by,  such  associations,  and  agreed 
to  and  being  executed  by  the  members  of  said  association, 
including  this  complainant.     It  also  follows  and  is  found  as 
a  fact  that  such  notice  was  put  in  such  books,  and  that  its  en- 
forcement as  an  alleged  license  agreement  is  attempted,  by 
means  of  this  action,  not  because  the  complainant  reserved  or 
intended  to  reserve  to  itself  any  interest  in  said  books  con- 
taining- such  printed  notices,  nor  because  it  merely  licensed 
or  intended  to  license  the  purchasers  thereof,  who  purchased 
same  in  the  first  instance  from  the  complainant,  to  use  or 
sell  such  books  in  a  certain  way,  or  on  certain  terms  and 
conditions,  or  at  certain  prices,  but  as  an  attempt  by  com- 
plainant, as  a  member  of  said  American  Publishers'  Associa- 
tion, to  enforce  as  against  this  defendant  the  rules  of  such 
associations  and  combination  fixing  prices,  in  an  effort  to 
maintain  them.    It  is  part  of  a  scheme,  and  the  right  of  the 
complainant  to  maintain  this  action  depends  on  the  validity 
of  that  scheme  or  combination.    Is  such  notice  in  such  books 
sufficiently  explicit  in  its  terms  to  constitute  a  license  agree- 
ment or  contract,  or  any  restrictions  on  or  modification  of 
the  absolute  title  thereto  in  the  defendant?     It  does  not 
purport  to  reserve  to  the  complainant  any  interest  in  the 
book,  or  any  right  to  control  it,  or  the  action  of  its  owner 
in  his  use  and  disposition  of  it,  except  by  possible  inference. 
[179]    In   Heaton   Peninsular  Button-Fastener   Co,   v. 
Eureka  Specialty  Co.  et  ah,  77  Fed.  288,  25  C.  C.  A.  267,  85 
L.  E.  A.  72^,  the  owner  of  a  patent  for  fastening  buttons  to 
shoes  with  metallic  fasteners  made  and  sold  the  machines 
with  this  notice  on  a  metal  plate,  so  conspicuously  fastened 


BOBBS-MERRILL   CO.    V.   STRAUS.  785 

Opinion  of  the  CJourt.  ^ 

thereto  that  all  must  see  it,  and  so  securely  fastened  as  to 
constitute  substantially  an  integral  part  of  the  machine,  viz- 

onli/'wYthlLtlets^'m^^^^  ''  ^'^  ^^^  P"--ba«ed  to  use 

this  contract  of  sale.''        ^*°®  immediately  reverts  upon  violation  of 

Here  is  a  plain,  unequivocal  statement,  one  that  cannot 
be  misconstrued  or  misunderstood,  that  there  is  a  condition 
attached  to  the  sale,  viz,  that  the  machine  is  to  be  used  with 
fasteners  of  a  certain  make  only,  and  that  a  use  with  other 
fas  eners  will  be  such  a  violation  of  the  agreement  as  to  de- 
feat the  title  or  right  given.  This  was  seen  by  the  pur- 
chaser, and  he  took  .the  machine  on  that  condition,  and  by 
so  doing  agreed  to  the  condition  and  became  bound  thereby 
He  became  a  mere  licensee.  He  acquired  the  right  to  use 
that  machine  m  a  certain  way  only. 

Jn  Cortelyou  and  Another  and  Neostyle  Company  v. 
Charles  Eneu  Johnson  &  Co,  (recently  decided  bv  this 
I' th  V  ^f'  ''''  ''^  P^*^'^*^^  rotar/neostyle  was  soM 

izcz:^:  "■"*'  ■"•*•  ""'^  "^  "-p-o-^ 

\>^^^t^l\t^^^^  T^  ^y  t^e  Neostyie  Com- 

it  is  licenced  to  be  uLHnlf  wTth  J^!  .f  ^""^^^  understanding  that 
Which  are  Patented  );rdeT^hr^^eo^^^^^^^^^^^ 

When  the  purchaser  took  this  machine  he  assented  to  this 
condition  and  became  bound  by  it,  and  became  a  license!! 
He  IS  told  that  he  is  licensed  to  use  the  machine  in  a  certain 

li^L      )^:":'"'"  "7^^'''  ""^^-    ^^^  ^'  ^---  licensed 
1 1     7^^-*^.*  ^«'  «^^d^  ^n  agent  to  sell-and  empowered 

tW  L'i  I  '"' w  ^A'  ^""  ^"^^'  ''  ''  unquestionably  true 
that,  had  he  violated  the  agreement  by  selling  at  a  lower  or 
even  a  higher,  price,  he  could  have  been  enjoined  Ha^ 
mg  the  so  e  power  to  vend  his  patented  articles,  he  would 
undoubtedly  have  the  right  to  fix  the  price  at  ;hich  £y 
should  be  sold,  and  stop  sales  made  by  his  a^ente  a^d 
licensees  .n  violation  of  the  authority  co'^iferredr   This  t 

Zri'TT''.\^^'^^'^^^*-    ^^---^  y^  National  ffar^ 
row  Co.,  186  U.  S.  70,  88,  92,  93,  22  Sup.  Ct.  747,  46  L.  eI 

21220--VOL  2—07  M 50 


786 


139   FEDERAL   REPORTEK,   179. 


Opioioii  of  the  Court. 

1058.    In  the  opinion  in  that  case  (pages  92-93,  186  U.  S., 

page  755,  22  Sup.  Ct.,46  L.  Ed.  1058),  we  find  the  following: 

"The  contracts  plainly  look  to  the  sale,  and  they  also  determine 
the  price  of  the  article  sold,  throughout  the  United  States,  as  well 
as  to  the  manufacture  in  the  state  of  Michigan.  As  these  contracts 
do,  therefore,  include  interstate  commerce  within  their  provisions, 
we  are  brought  back  to  the  question  whether  the  agreement  between 
these  parties  with  relation  to  these  patented  articles  is  valid  within 
the  act  of  Congress..  It  is  true  that  it  has  been  held  by  this  court 
that  the  act  included  any  restraint  of  commerce,  whether  reasonable 
or  unreasonable.  United  States  v.  Trmis-Missouri  Freight  Associa- 
tion, 166  U.  S.  290,  17  Sup.  Ct.  540,  41  L.  Ed.  1007 ;  United  States  v. 
Joint  Traffic  Association,  171  U.  S.  505,  19  Sup.  Ct.  25,  43  L.  Ed.  259; 
Addy8tone  [180]  Pipe,  etc.  Company,  v.  United  States,  175  U.  S.  211.  20 
Sup.  Ct.  96,  44  L.  Ed.  136.  But  that  statute  clearly  does  not  refer  to 
that  kind  of  a  restraint  of  interstate  commerce  which  may  arise  from 
reasonable  and  legal  conditions,  imposed  upon  the  assignee  or  licensee 
of  a  patent  by  the  owner  thereof,  restricting,  the  terms  upon  which 
the  article  may  be  used  and  the  price  to  be  demanded  therefor. 
•  •  ♦  The  provision  in  regard  to  the  price  at  which  the  licensee 
would  st'll  the  article  manufactured  under  the  license  was  also  an 
appropriate  and  reasonable  condition.  It  tended  to  keep  up  the  price 
of  the  implements  manufactured  and  sold,  but  that  was  only  recog- 
nizing the  nature  of  the  proi)erty  dealt  in,  and  providing  for  its  value 
so  far  as  possible.  This  the  parties  were  legally  entitled  to  do.  The 
owner  of  a  patented  article  can,  of  course,  charge  such  price  as  he 
may  choose,  and  the  owner  of  a  patent  may  assign  it  or  sell  the  right 
to  manufacture  and  sell  the  article  patented  upon  the  condition  that 
the  assignee  shall  charge  a  certain  amount  for  such  article. 

In  Victor  Tulking  Machine  et  al,  v.  The  Fair^  123  Fed. 

424,  61  C.  C.  A.  58,  the  syllabus  reads : 

"  The  owner  of  a  patent,  who  manufactures  and  sells  the  patented 
article,  may  reserve  to  himself,  as  an  ungranted  part  of  his  monopoly, 
the  right  to  fix  and  control  the  pric*es  at  which  jobbers  or  dealers  buy- 
ing from  him  may  sell  to  the  public,  and  a  dealer,  who  buys  from  a 
jobber  with  knowledge  of  such  reservation  and  resells  in  violation  of 
it,  is  an  infringer  of  the  patent." 

And  in  the  opinion,  after  stating  that  the  grant  of  a  pat- 
ent by  its  terms  covers  three  separate  or  separable  fields,  the 
learned  judge  giving  the  opinion  says: 

"The  field  of  sale  is  as  much  within  the  monopoly  as  the  others, 
and  so  it  has  been  decided.  Bement  v.  National  Harrow  Co.,  186 
U.  S.  70,  22  Sup.  Ct.  747,  46  L.  Ed.  1058.  And  in  Edison  Phonograph 
€o.  V.  Kaufman n  (C.  C.)  105  Fed.  960,  and  Same  v.  Pike  (C.  C.)  116 
Fed.  863,  the  holdings  were  that  a  patentee  may  reserve  to  himself, 
as  an  ungranted  part  of  his  monopoly  of  sale,  the  right  to  fix  and  con- 
trol the  prices  at  which  jobbers  and  dealers  may  sell  the  patented 
article  to  the  public,  and  that  whoever  without  permission  enters  the 
reserved  portion  is  an  infringer." 

In  the  Victor  Talking  Machine  Case,  supra,  the  notice 

affixed  to  the  machine  read: 

"Notice. — ^Thls  machine,  which  is  registered  in  oar  books  No. , 

is  licensed  by  us  for  sale  and  use  only  when  sold  to  the  public  at  a 


BOBBS-MEKRILL   CO.    /'.    STRAUS. 


787 


Opinion  of  the  Court. 


price  not  less  than  $- 


1-  , ,  -      •    ^^  license  is  granted  to  ust»  thW  innr>iiinA 

"  ^'iCTOR  Talking  Machine  Co.*' 
In  the  Edison  Phonograph  Company  Oases,  cited  (see 
supra)  by  Judge  Baker  in  the  Victor  Talking  Machme  Case, 
supra,  there  was  a  restrictive  contract,  and  this  was  referred 
to  m  the  following  language  by  a  notice  on  the  box  contain- 
ing the  instrument  when  sold,  viz. : 

Z^^^^'^'^'^^  "-^-  ^^^  -"-  -  -r^^n^^^ige^f 

A  reference  to  the  case  in  116  Fed.  868,  will  show  that  the 
restriction  was  very  clear  and  explicit.     The  notice  in  "  The 
Castaway  "  does  not  suggest  a  restriction  upon  the  title  to 
the  book,  or  that  the  person  or  persons  taking  the  book  for 
sale  are  obtaining  anything  short  of  an  absolute  title,  and 
no  one  would  suppose  that  the  [181]  publisher  of  the  book 
would  attempt  or  assume  to  fix  the  price  at  which  dealers 
should  sell  after  obtaining  absolute  title  to  the  book  from 
such  publisher.    The  words,  "  No  dealer  is  licensed  to  seU 
It  at  a  less  price,"  are  notice  that  licensees,  not  absolute  own- 
ers, are  so  restricted.     The  words,  "  and  a  sale  at  a  less  price 
Will  be  treated  as  an  infringement  of  the  copyright,"  clearly 
do  not  even  tend  to  make  such  a  sale  by  an  absolute  owner 
of  such  books  an  infringement  of  the  copyright. 

It  is  a  close  question  whether  a  copyright  may  be  infringed 
by  selling  in  violation  of  express  and  explicit  restrictions 
placed  on  the  dealer,  expressly  made  an  agent  or  licensee 
only,  as  to  the  mode  of  sale  or  the  price  at  which  same  is  to 
be  sold.  Act  March  3,  1891,  c.  565,  26  Stat.  1106  TU  S 
Coinp.  St.  1901,  p.  3406],  entitled  "An  act  to  amend  title 
sixty,  chapter  three,  of  the  Revised  Statutes  of  the  United 
States,  relating  to  copyrights,"  amends  section  4952  so  as  to 
read : 

"  The  author    ♦    ♦    •    or  proprietor  of  any  book    *    *    ♦    shflli 
SK^J^T^^V'?,  ^**^  *^^  provisions  of  this  chapfer  have  the  ^le 
liberty  of  printing,  reprinting,  publishing,  completing,  (Spying    ^l 
cuting,  finishing,  and  vending  the  same."  a''*^""^'  copymg,  exe- 

Section  7  of  that  act  (26  Stat.  1109  [U.  S.  Comp.  St.  1901, 


788 


139  FEDERAL  REPORTER,   181. 


•  Opinion  of  tlie  Court 

p.  3413] )  amends  section  4964  of  the  Eevised  Statutes  so  as 
to  read  as  follows: 

'•  Every  person,  who  after  the  recording  of  the  title  of  any  book  and 
the  depositing  of  two  copies  of  such  book,  as  provided  by  this  act, 
shall,  contrary  to  the  provisions  of  this  act,  within  the  term  limited, 
and  without  the  consent  of  the  proprietor  of  the  copyright  first 
obtained  In  writing,  signed  in  the  presence  of  two  or  more  witnesses, 
print,  publish,  dramatize,  translate,  or  import,  or  knowing  the  same 
to  be  so  printed,  published,  dramatized,  translated,  or  imported,  sliall 
sell  or  expose  to  sale  any  copy  of  such  book,  shall  forfeit  every  copy 
thereof  to  such  proprietor,  and  shall  also  forfeit  and  pay  such 
damiTges  as  may  be  recovered  in  a  civil  action  by  such  proprietor 
In  any  court  of  competent  Jurisdiction." 

This  section  declares  what  acts  constitute  a  violation  of  the 
copyright  of  a  book.  It  declares  that,  to  constitute  a  viola- 
tion  of  the  copyright,  the  oflfender  must  have,  within  the 
term  limited — that  is,  the  life  of  the  copyright — and  without 
the  consent  of  the  proprietor  thereof,  first  obtained  in  writ- 
ing and  executed  in  the  presence  of  two  or  more  witnesses, 
printed  or  published  or  imported,  contrary  to  the  provisions 
of  the  act,  such  copyrighted  book,  or  contrary  to  the  pro- 
visions of  the  act,  within  such  time  and  without  such  con- 
sent, must  have  sold  or  exposed  to  sale  a  copy  of  such  copy- 
righted book,  knowii  to  have  been  illegally  printed.  In  sub- 
stance this  section  declares  that  it  is  an  infringement  of  a 
copyright  to  print  or  publish  the  copyrighted  book  without 
the  consent  of  the  proprietor,  given  in  writing,  signed  in  the 
presence  of  two  witnesses,  or  to  hnport  a  copy  of  such  book 
without  such  consent,  or  knowingly  to  sell  or  expose  for  sale 
a  copy  or  copies  of  such  copyrighted  book  when  unlawfully 
printed  or  imported.  From  this  it  would  appear  that  an 
infringement  by  the  sale  of  a  copyrighted  book  consists  in 
the  selling  or  exposing  for  sale  of  a  copy  of  such  book  that 
has  been  unlawfully  printed  or  imported.  If  this  be  the 
law,  it  is  not  an  [182]  infringement  of  a  copyright  to  sell 
or  expose  for  sale  a  copy  or  copies  of  such  book,  when  the 
same  was  lawfully  printed  or  lawfully  imported.  The  result 
would  be  that  it  is  not  an  infringement  of  the  copyright  of 
a  book  to  sell  a  copy  or  copies  thereof  lawfully  printed,  as 
in  this  case,  in  violation  of  a  mere  condition  imposed  upon 
a  dealer  by  the  publisher,  by  which  such  dealer  agrees  not 
to  sell  below  a  certain  price;  the  title  to  the  book  having 
been  vested  in  such  dealer  by  the  publisher  thereof,  or  even 


BOBBS-MERRILL   CO.    V,   STRAUS. 


781) 


Opinion  of  thefiaiiit 
in  cases  where  the  absolute  title  had  not  passed  to  the  dealer. 
If  the  publisher  of  the  book,  being  the  proprietor  of  the 
copyright,  parts  with  the  title  to  such  book,  either  a  single 
copy  or  a  number  of  copies,  and  receives  his  pay  therefor,  he 
has  voluntarily  parted  with  all  control  over  that  or  those 
particular  books.     The  owner  of  those  books  is  neither  a 
licensee  nor  an  agent.    He  has  the  absolute  property  therein, 
and  the  absolute  ownership  of  an  article  of  personal  property 
carries  with  it  the  right  to  give  away  or  sell  for  such  con- 
sideration  as  the  owner  sees  fit  to  impose,  prescribe,  or  de- 
.  mand  so  long  as  he  violates  no  law.    This  view  of  the  copy, 
right  laws  of  the  United  States,  as  amended  by  the  act  of 
March  3, 1891,  seems  to  be  taken  by  Macgillivray  in  his  work 
on  the  Law  of  Copyright,  p.  287,  c.  4,  §  2.    He  there  says : 
''Prohibited  Acts  and  Remedies.— It  is  an  infringement    snhiArt  f« 

?L  pSfo^^'InTH^ln.^  *^'  T".  "l^^^^'  ^^t^^^t  the  consloHf 

(1^  tHrint  or  nuS  ^^  '^  ^^S  P'^"^'^"^  ^^  ^'«  witnesses 

rxt^U.     tA\    \        P"i>lish,   (2)   to  dramatize  or  translate-   (3^   to  im 

made  c^tpoS'^^  '"  ^"  "'  '^^^  ">'  ««'«  «>P'-  unlawfuHy 

We  find  no  suggestion  that  it  is  an  infringement  of  the 

copyright  of  a  book  for  the  owner  of  the  book  to  sell  copies 

at  a  price  which  violates  a  valid  contract  between  the  pub- 

isher  of  the  book  and  the  dealer,  and  which  was  made  at  the 

time  such  dealer  became  the  owner. 

In  Harrison  v.  Maynard,  Men-ill  d-  Co.,  26  U  S  Add  W 
CI  Fed.  689   10  C.  C.  A.  17,  the  compldnante,  pubShS 
of  books  and  the  owners  of  a  copyrighted  book,  sent  a  quan- 
tity of  the  printed  and  unbound  sheets  of  such  book  to  the 
bindery  of  one  Alexander  for  binding,  and  such  sheets  were 
to  be  stored  until  complainants  should  order  bound  copies 
Sometimes  they  bound  copies  in  advance.    A  fire  occurred 
in  the  bmdeiy,  and  both  complainants  and  Alexander  sup- 
posed the  commercial  value  as  books  of  all  such  bound  or 
unbound   sheets  of  such   books  in  such   bindery   was  de- 
stroyed.   On  examination  complainants'  agent  so  reported. 
Thereupon  Alexander,  without  objection  from  complainants, 
sold    he  entire  debris  to  one  Fitzgerald,  who,  without  mov- 
ing It,  sold  same  to  some  dealers  in  old  paper.    Alexander 
imposed  no  restriction  or  condition  when  he  sold      Fitz 


790 


139  FEDEKAL  REPOKTER,   182. 


Opinion  of  the  Court 

gerald,  who  had  become  the  owner  of  the  debris,  including 
the  printed  sheets  and  bound  volumes,  put  this  condition 
and  restriction  in  the  bill  of  sale : 

"  It  is  understood  tliat  all  paper  taken  out  of  the  building  is  to  be 
utilissed  as  paper  stoc'li,  and  all  books  to  be  sold  as  paper  stock  only, 
and  not  plaeed  on  the  market  as  anything  else." 

[183]  Harrison,  a  dealer  in  books,  visited  the  place  and 
purchased  of  these  dealers  in  old  paper  some  of  the  volumes 
of  the  copyrighted  book  not  destroyed,  and  put  them  on  the 
market.  He  had  no  notice  of  the  restriction  or  condition 
put  in  the  bill  of  sale  given  by  Fitzgerald.  Complainants, 
owners  of  the  copyright,  brought  suit  to  enjoin  such  sale  by 
Harrison.  On  these  facts  the  court  (Wallace,  Lacorabe,  and 
Shipman,  Circuit  Judges)  held  that,  so  long  as  the  owner 
of  a  copyright  retains  the  title  to  the  copies  of  the  book  which 
he  has  the  exclusive  right  to  vend  by  virtue  of  the  copyright, 
he  can  impose  restrictions  upon  the  manner  in  which  and 
upon  the  persons  to  whom  the  copies  are  to  be  sold.  They 
also  held  that  if  the  agents  of  the  owner  of  the  copyright, 
intrusted  with  the  possession  of  such  books,  violates  his 
instructions  and  fraudulently  sells  to  a  person  who  has 
knowledge  of  the  restrictions,  such  sale  by  the  agent  con- 
stitutes a  fraud  upon  the  owner  of  the  copyright,  and  that 
such  fraud  constitutes  an  infringement  of  the  copyright,  with 
which  the  owner  has  never  parted,  and  that  such  fraud — ■ 
meaning,  of  course,  such  sales — can  be  restrained  by  virtue 
of  the  statutes  applicable  thereto.  The  court  statea  that 
this  right  to  enjoy  the  benefit  of  the  copyright  statutes 
results  from  the  fact  that  the  owner  has  never  parted  with 
the  title  to  the  book  or  the  copyright,  although  he  may  have 
parted  with  the  possession  of  the  book.  The  court  also 
holds  that  the  right  to  restrain  the  sale  of  a  particular  copy 
of  the  book  by  virtue  of  such  statutes  has  gone  when  the 
owner  of  the  copyright  and  of  that  copy  has  parted  with  all 
his  title  to  it,  and  has  conferred  an  absolute  title  to  the  copy 
upon  a  purchaser,  although  with  an  agreement  for  a  re- 
stricted use.  If  this  is  true  of  one  particular  book,  it  is 
also  true  of  a  large  number  of  copies.  The  court  also  says, 
in  substance,  that  the  new  purchaser  cannot  reprint  the  copy, 
but  that,  the  copy  having  been  absolutely  sold  to  him,  the 


BOBBS-MERRTLL   CO.    V.   STRAUS. 
Opinion  of  the  Court. 


791 


ordinary  incidents  of  ownership  in  personal  property,  among 
which  is  the  right  of  alienation,  attaches  to  it.  The  court 
further  says : 

"  If  he  has  agreed  that  he  will  not  sell  it  for  certain  pun^oses  or 
to  certain  persons,  and  violates  his  agreement  and  sells  to  an  innocent 
purchaser,  he  can  be  punished  for  a  violation  of  his  agreement ;  but 
neither  is  guilty  under  the  copyright  statutes  of  an  infringement.  If 
the  new  purchaser  participates  in  the  fraud,  he  mav  also  share  in  the 
punishment." 

The  court  cites  in  support  of  these  statements  Clemens  v. 
.  Estes,  22  Fed.  899.  If  this  be  a  correct  statement  of  the 
law,  and  this  court  does  not  doubt  that  it  is,  we  recur  to  the 
simple  proposition  whether  or  not  the  complainant  in  the 
case  now  under  consideration,  the  Bobbs-Merrill  Company, 
retained  any  title  in  the  books  in  question  by  printing  on  the 
page  following  the  title-page  the  statement,  "  Copyright  904. 
The  Bobbs-Merrill  Company.  May."  And  thereunder  the 
statement : 

The  price  of  this  book  at  retail  is  one  dollar  net.  No  dealer  is 
licensed  to  sell  it  at  a  less  price,  and. a  sale  at  a  less  price  will  be 
treated  as  an  infringement  of  the  copyright. 

"  The  Bobbs-Mebrill  Company.'* 

The  defendants  in  this  case  purchased  90  per  cent,  of  its 
copies  of  this  book  from  dealers  at  wholesale  at  a  reduction 
of  40  per  cent,  from  said  mentioned  retail  price.    The  other 
10  per  cent,  of  their  [184]  copies  they  purchased  at  retail, 
paying  the  full  retail  price  therefor.     The  defendants  knew 
of  the  statement  printed  in  said  books  above  quoted,  and  knew 
that  it  was  printed  in  each  copy  of  the  book.     The  wholesale 
dealers  from  whom  the  defendants  purchased  their  copies  ob- 
tained such  copies  either  from  complainants  direct  or  from 
other  wholesale  dealers  at  a  discount  from  the  above-mentioned 
retail  price.    Such  wholesale  dealers  knew  that  the  book 
was  copyrighted,  and  were  familiar  with  the  said  statement 
printed  in  each  copy  thereof.    The  books  that  came  to  the 
defendants  prior  to  reaching  them  did  not  pass  through 
the  hands  of  any  person  or  persons  who  were  ignorant  of 
the  said  notice  printed  therein.     It  is  expressly  found,  how- 
ever, and  conceded,  that  these  wholesale  dealers  from  whom 
the  defendants  here  obtained  their  copies  were  under  no 
agreement  or  obligation  to  enforce  the  observance  of  the 


792 


139  FEDEBAL  BEPORTER,   184. 


Opinion  of  tbe  Ck>iirt 

terms  of  said  notice  by  retail  dealers,  or  to  restrict  their 
sales  of  copies  of  such  book  to  retail  dealers  who  would 
agree  to  observe  the  said  notice. 

As  has  been  stated,  the  notice  contains  no  suggestion  that 
the  title  of  the  purchaser  to  the  book  is  in  any  way  limited. 
The  notice  is  that  the  price  of  the  book  at  retail  is  one  dollar 
net;  and,  if  the  words  "no  dealer"  are  to  be  construed  as 
referring  solely  to  retail  dealers,  then  the  notice  is  that  the 
Bobbs-Merrill  Company  has  not  licensed  any  retail  dealer 
to  sell  the  book  at  retail  for  less  than  one  dollar  per  copy.. 
The  fair  meaning  of  this  is  that,  in  cases  where  the  Bobbs- 
Merrill  Company  has  granted  a  license  to  some  retail  dealer 
or  dealers  to  sell  the  book,  such  licensee  or  licensees  are  limited 
and  restricted  in  his  or  their  authority ;  but  the  notice  is  not 
a  suggestion  or  an  intimation  to  any  person  that  those  who 
buy  and  pay  for  the  book  in  the  open  market,  or  even  of  the 
Bobbs-Merrill  Company,  without  entering  into  an  express 
license  agreement  different  from  that  suggested  by  this 
notice,  are  bound  or  obligated  in  any  way  to  demand  one 
dollar  per  copy  for  such  book.  It  well  may  be  that  the 
Bobbs-Merrill  Company  has  licensed  or  will  license  certain 
dealers  to  sell  this  book,  and  when  it  grants  a  license  it  has 
the  right  to  impose  conditions  on  its  licensees;  but  this  notice 
does  not  state  or  suggest  that  every  purchaser  of  one  of  these 
books  containing  this  notice  becomes  a  licensee  with  a  limited 
title,  or,  in  fact,  no  title,  to  the  book.  A  person  cannot  be 
both  licensee  and  absolute  owner. 

Again,  it  is  contended  that  the  woi-ds  "  the  price  of  this 
book"  refer  to  the  particular  copy  containing  the  notice, 
and  that  the  words  "  no  dealer  is  licensed  to  sell  it "  refer  to 
the  particular  copy  containing  the  notice.  It  is  further  con- 
tended that  the  court  is  bound  to  give  this  construction  to 
this  language,  and  that  therefore  the  defendants,  having 
knowledge  of  the  notice,  assented  to  the  proposition  and  in 
effect  entered  into  a  contract  or  agreemeilt  with  the  Bobbs- 
Merrill  Company  whereby  they  became  its  agents  to  sell  the 
copies  at  one  dollar  per  volume,  and  no  less,  or  its  licensee  with 
power  to  sell  such  books,  for  which  it  had  paid  the  wholesale 
dealer  the  price  demanded,  at  one  dollar  per  copy  only.  This 
court  refuses  to  give  that  construction  to  this  notice.    This 


BOBBS-MERRILL   CO.    V.   STRAUS. 
Opinion  of  the  Court 


793 


court  declines  to  hold  [185]  that  the  words  in  such  notice 
"  this  book  "  and  "  it "  refer  to  the  particular  copy  of  the 
book  in  which  the  notice  is  found.  The  language  of  the 
notice  is  a  general  statement,  referring  to  the  book  known  as 
"  The  Castaway  "  generally,  and  not  to  any  particular  copy 
or  copies  thereof,  and,  at  best,  is  but  a  notice  that  licensees  of 
the  publishers  are  only  at  liberty  to  sell  such  book  at  one 
dollar  per  copy.  The  notice  forms  no  part  of  a  contract  be- 
tween the  purchaser  from  the  j)ublisher  and  such  publisher, 
nor  does  it  limit  or  restrict  the  title  of  the  purchaser.  And 
this  court  will  say  here  that  it  would  be  lending  itself  to 
the  perpetration  of  a  fraud  upon  the  public  should  it  hold 
differently.  If  the  Bobbs-Merrill  Company,  in  putting  its 
books  upon  the  market,  desires  to  say  to  wholesalers  and  to 
retailers  that  it  is  not  selling  the  entire  title  to  the  copies  put 
upon  the  market,  let  it  say  so  in  plain  and  unambiguous 
terms.  Let  it  say  in  its  notice  that  the  purchaser  of  copies 
of  the  boolc  from  either  the  publisher  or  any  wholesale  or 
retail  dealer  is  obtaining  but  a  limited  or  qualified  title  in 
the  copies  purchased,  or  that  in  purchasing  one  or  more 
copies  such  purchaser  becomes  but  a  mere  licensee  of  the 
publisher,  without  title  to  the  copies,  and  with  power  to  dis- 
pose of  the  same  only  on  receiving  a  specified  sum  of  money. 
The  Circuit  Court  of  Appeals,  in  Harrison  v.  Maynard,  Mer- 
rill (&  Co.^  supra^  also  quotes  with  approval  the  language  of 
Judge  Hammond  in  Henry  Bill  Publishing  Co,  v.  Smythe 
(C.  C.)  27  Fed.  914-925,  viz. :  * 

"  Tlie  owner  of  tlie  copyright  may  not  be  able  to  transfer  the  entire 
proi)erty  in  one  of  his  copies  and  retain  for  himself  an  incidental 
power  to  authorize  a  sale  of  that  copy,  or,  rather,  the  power  of  pro- 
hibition on  the  owner  that  he  shall  not  sell  it,  holding  that  much,  as 
a  modicum  of  his  former  estate,  to  be  protected  by  the  copyright 
statute;  and  yet  he  may  be  entirely  able,  so  long  as  he  retains  the 
ownership  of  a  particular  copy  for  himself,  to  find  abundant  protec- 
tion under  the  copyright  statute  for  his  then  incidental  power  of  con- 
trolling its  sale.  This  copyright  incident  of  control  over  the  sale,  if 
I  may  call  it  so,  as  contradistinguished  from  the  power  of  sale  inci- 
dent to  ownership  in  all  property— copyrighted  articles,  like  anv 
other— is  a  thing  that  belongs  alone  to  the  owner  of  the  copyright 
itself,  and  as  to  him  only  so  long  as  and  to  the  extent  that  he  owns 
the  particular  copies  involved.  Whenever  he  parts  with  that  owner- 
ship, the  ordinary  incident  of  alienation  attaches  to  the  particular 
copy  parted  with  in  favor  of  the  transferee,  and  he  cannot  be  de- 
prived of  it.  This  latter  incident  supersedes  the  other — swallows  It 
up,  so  to  speak— and  the  two  cannot  coexist  in  any  owner  of  the 


794 


139  FEDERAL  BEPORTER,   185. 
Opinion  of  the  Court. 


copy,  except  he  he  the  owner  at  the  same  time  of  the  copyriifht  •  and 
in  the  nature  of  the  thin^,  they  cannot  be  separated,  so  thai  one  m"  y 

i^thTnVrVTuJ'''  **^  tbe  copyright  as  a  limitation  upon  or  denial 
or  the  other  m  the  o^vner  of  the  copy." 

In  Garst  v.  Ball  <&  Lyon  Co,,  179  Mass.  588,  61  N.  E.  219, 
55  L.  R.  A.  631,  decided  October  17,  1901,  without  dissent, 
the  court,  speaking  of  copyrights,  said : 

lills^hnr.i.fnT^'f*'*  !**^  ^^""^  privileges  to  authors  and  pub- 
Hshers  that  do  not  pertain  to  property  which  anybody  may  make  and 
m\\  If  he  can;  but  even  under  the  law  of  copyright,  when  the  owner 
of  a  ctwnght  and  of  a  particular  copy  of  a  book  to  which  it  per- 

ihlnlnt^ff'^f  ^^  ^"  ^'^  ^^^^^  *"  ^^^  »>^^'  ^-^"^  ^^^  conferred  an 
aDsolute  title  to  it  upon  a  purcluiser.  he  cannot  restrict  the  rieht  of 

^l?Z^T'  Tt^^''^  ''  **''^/'*'  ^^^  incidents  of  ownership  in  personal 
property.    Harnmn  v.  Maynard,  61  Fed.  681).  10  C    O    \    17     Spp 

m^U^Tu^'  F''iS..^^i?\f /*^.1^.'^i  ''^'''"  v./^.^e.,- 164' Mass: 

The  same  doctrine  is  plainly  expressed  in  Keeler  v.  Stand- 
ard Folding  Bed  Company,  157  U.  S.  659,  15  Sup.  Ct.  738, 
39  L.  Ed.  848.    In  that  case  it  was  held  that  one  who  pur- 
chases patented  articles  of  manufacture  from  one  author- 
ized to  sell  them  at  the  place  where  sold  becomes  possessed 
of  an  absolute  property  in  such  articles,  unrestricted  in 
time  or  place.    In  that  case  the  complainants  were  the  as- 
signees for  the  state  of  Massachusetts  ol  certain  letters  pat- 
ent granted  to  one  Welch.    This  assigmnent  as  matter  of 
course  gave  to  the  complainants  the  rights  of  the  patentee 
in  and  for  the  state  of  Massachusetts,  viz.,  the  sole  right 
to  make,  use,  and  sell  the  patented  article  in  that  state.    The 
Welch  Folding  Bed  Comimny  owned  the  patent  rights  for 
the  state  of  Michigan,  and  it  of  course  had  the  same  right 
to  make,  use,  and  vend  the  patented  article  in  that  state. 
The  defendants  purchased  a  car  load  of  the  patented  articles 
from  the  Welch  Folding  Bed  Company  at  Grand  Rapids  in 
the  state  of  Michigan.    It  proposed  to  sell  these  articles 
in  the  state  of  Maasachusetfc^,  and  thereafter  did  sell  some 
of  such  articles  in  the  state  of  Massachusetts,  and  was  en- 
gaged in  selling  the  remainder  in  that  state  at  the  city  of 
Boston  when  the  bill  of  complaint  was  filed.    The  Supreme 
Court  held  that  the  defendants,  having  purchased  the  pat- 
ented articles  in  Michigan  from  the  assignee  of  the  patent 
for  the  territory  included  within  the  boundaries  of  the  state 
of  Michigan,  had  the  right  to  sell  them  anywhere  within  the 


BOBBS-MERRTLL.   CO.    l'.    STRAUS. 


795 


Opinion  of  the  Court. 

United  States,  including  the  state  of  Massachusetts,  not- 
withstanding the  fact  that  all  the  patent  rights  for  the  state 
of  Massachusetts  had  been  assigned  to  another  person,  to 
wit;  to  the  complainants.  The  decision  is  based  upon  the 
proposition  that  where  the  patentee,  not  having  parted  with 
his  rights  granted  by  the  patent,  makes  and  vends  a  patented 
article,  the  purchaser  can  use  the  article  in  any  part  of  the 
United  States,  and,  unless  restrained  by  contract  with  the 
patentee,  can  sell  or  dispose  of  the  same  in  any  part  of  the 
United  States.    The  court  says: 

"  It  has  passed  outside  of  the  nionoiwly,  and  is  no  longer  under  the 
peculiar  protection  granted  to  patented  rights." 

The  court  approves  the  language  of  Mr.  Justice  Clifford 
in  Goodyear  v.  Beverly  Rubber  Co.,  1  Cliff.  348-354,  Fed. 
Cas.  No.  5557,  wherein  he  states,  in  substance,  that,  the 
patentee  having  manufactured  the  article  and  sold  it  for  a 
satisfactory  compensation,  the  patentee,  so  far  as  that 
quantity  of  the  product  of  his  invention  is  concerned,  has 
enjoyed  all  the  rights  secured  to  him  by  his  letters  patent, 
and  the  manufactured  article,  and  the  material  of  which  it 
is  composed,  go  to  the  purchaser  for  a  valuable  considera- 
tion, discharged  of  all  the  rights  of  the  patentee  previously 
attached  to  or  impressed  upon  it  by  the  law  under  which  the 
patent  was  granted.     The  court  further  says: 

"  If,  as  is  often  the  case,  the  patentee  has  divided  the  territory  of 
the  ITnited  States  into  20  or  more  specified  parts,  must  a  pers(»n  who 
has  bought  and  paid  for  the  patented  article  in  one  part,  from  a 
vendor  having  an  exclusive  right  to  make  and-  vend  therein,  on  re- 
moving from  one  part  of  the  country  [187"|  to  another,  pay  to  the  local 
assignee  for  the  privilege  of  using  and  selling  his  proiierty,  or  else 
be  subjected  to  an  action  for  damages  as  a  wrongdoer?  And  is  there 
any  solid  distinction  to  be  made  in  such  a  case  between  the  right  to 
use  and  the  right  to  sell  ?  " 

The  court  then  cites  with  approval  several  cases,  and  es- 
pecially the  language  of  Mr.  Justice  Clifford  in  Mitchell  v. 
Hawley,  16  Wall.  544,  546,  547,  21  L.  Ed.  322,  as  follows: 

"  Patentees  acquire  by  their  letters  patent  the  exclusive  right  to 
make  and  use  their  patented  inventions,  and  to  vend  to  others  to  be 
used,  for  the  period  of  time  specified  in  the  patent :  but  when  they 
have  made  one  or  more  of  the  things  patented,  and  have  vended  the 
same  to  others  to  be  used,  they  have  parted  to  that  extent  with  their 
exclusive  right,  as  they  are  never  entitled  to  but  one  royalty  for  a 
patented  machine,  and  consequently  a  patentee,  when  he  has  himself 
constructed  a   machine  and  sold   it  without  any  conditions,   or  an- 


796 


139  FEDERAL  REPORTEB,  187. 
Opinion  of  the  Court. 


^d  n^r«?f  H^"^  to  construct,  sell,  and  deliver  it,  or  to  construct,  use. 
b^  n^id  t  i*in7J*^*?H  Z^  coiiditions.  and  the  consideration  has 
^  fhi  nn?o^!^  ^*'''  J^t  **'^''f  P*t««^ted.  the  rule  is  well  established 
with  i^f  f ?*^^*^  ^«8*  .»>?  understood  to  have  parted  to  that  extent 
with  all  his  exclusive  right,  and  that  he  ceases  to  have  any  interest 
whatever  m  the  patented  machine  so  sold  and  delivered  or  authoS 

the  owner  of  the  machine,  whether  he  built  it  or  purchased  it  if  he 
Ms  also  acquired  the  right  to  use  and  operate  it  during  tl!e  lifetime  of 
the  patent,  may  coutinue  to  use  it  until  it  Is  worn  oi^  in  spite  o?lnv 
asslg^I""^  ^''^**°''**"  subsequently  obtained  by  the  pSen^t^  or  Ws 

At  page  666, 16  Wall.,  21  L.  Ed.  322,  the  court  calls  atten- 
tion  to  the  case  of  Wilson  v.  Boussvau,  4  How.  646, 11  L.  Ed. 
1141,  and  says  that  it  was  there  held  that : 

**A8  between  the  owner  of  a  patent  on  the  one  side,  and  a  ourchaser 
2f.!lf''*^^'^  made  under  the  patent  on  the  other,  the  payment  of  a 
royalty  once,  or,  what  is  the  same  thing,  the  purchase  of  the  articlP 
^m  one  authorized  by  the  patentee  to  sell  it  emancipates  si^^^^ 
ml'^y:^''  **?  ^r^^""'  subjection  to  the  patent  tlinfuXm  thf  entke 
^tml^l^Cn^hC?  ^^  *^t  Jftter  should  be  by  law  subs^uenUy 
^SofiAh  K  ^^^^^"^  existing  at  the  time  of  the  sale;  and  in 
respect  of  the  tmie  of  enjoyment,  by  those  decisions  the  right  of  the 
purchaser,  his  assigns,  or  legal  representatives  is  clearly  established 
s^/?'"'"^''  ''""  '^'''  "°^  '"^^^^  ^*^*™  ^'  t^«  patent^  or  any  at 

The  court  then  says : 

"  Upon  the  doctrine  of  these  cases  we  think  It  follows  that  oha  whn 
buys  patented  articles  of  manufacture  from  one  Sorl^  to  ^U 

JLTictrHirr^o  ^'  "?vf  2J^"*"  P^^P^^^  ^^  «"^»»  ^^^Jes,  u" 
restricted  in  time  or  place.    Whether  a  patentee  may  protect  himself 

and  his  assignees  by  special  contracts  brought  home  to  the  DurcSrs 

is  not  a  question  before  us.  and  upon  which  we  exp^^s  no  op^S 

It  is,  however,  obvious  that  such  a  question  would  arise  as  a  aSiZ' 

In  the  case  now  before  this  court  it  appears  that  the  pub- 
lisher of  the  book  "  The  Castaway  "  printed  and  sold  these 
copies.    It  put  them  upon  the  market.    It  received  its  price 
therefor,  and  reserved  no  right  to  demand  any  further  com- 
pensation.   The  defendants  purchased  in  the  open  market 
and  paid  the  price  demanded.    It  is  conceded  that  the  whole- 
salers of  whom  the  defendants  purchased  were  under  no  con- 
tract or  obligation  to  impose  any  condition  upon  the  defend- 
ants, and  they  did  not.    There  is  no  privity  of  contract  be- 
tween the  defendants  and  the  complainants.    There  is  no 
sag-  [188]  gestion  in  the  notice  that  the  retail  dealer  who 
buys  the  copies  of  the  book  in  the  open  market  enters  mto 


BOBBS-MERRILL   CO.   V.   STRAUS. 


797 


Opinion  of  the  Court. 

any  contractual  relation  with  the  publishers.  It  is  not  stated 
that  the  copy  of  the  book  is  sold  on  condition  that  the  pur- 
chaser will  abide  by  and  enforce  the  price  arrangement.  The 
notice  is  assertive  in  its  terms.  It  is  a  dictum.  It  says  that 
the  price  of  the  book  at  retail  is  one  dollar  net.  The  plain 
meaning  of  this  language  is  that  if  the  signer  of  the  notice 
sells  a  copy  of  the  book,  or  the  book  in  question,  containing 
the  notice,  at  retail,  the  price  is  one  dollar.  The  notice  also 
asserts  that  the  Bobbs-Merrill  Company  has  not  licensed  any 
retail  dealer  to  sell  at  a  less  price.  It  does  not  say  or  suggest 
that  the  Bobbs-Merrill  Company  has  not  sold  millions  of 
copies  of  the  book  for  the  trade,  parting  with  the  title  abso- 
lutely and  unconditionally.  This  court  is  aAvare  that  the 
Keeler  Case,  cited  above,  is  a  patent,  and  not  a  copyright 
case ;  but  the  principle  is  the  same. 

In  a  supplemental  brief  filed  by  the  counsel  for  the  com- 
plainant, he  states  that  he  does  not  consider  the  notice  pub- 
lished in  the  book  as  in  the  nature  of  a  license.    He  says: 

"  In  my  opiuion,  the  putting  of  the  book  upon  the  market  and  selling 
it  1».\  tlie  ownor  of  the  copyright  constitutes  the  license;  and  this 
notice  publisJied  in  tlie  book  is  a  limitation  and  qualification  of  that 
license.  If  the  book  is  put  out  without  any  notice,  the  license  is  un- 
qualified, and  the  sale  is  absolute;  but  my  contention  is  that  the 
owner  of  the  copyright  has  the  authority  to  restrict  the  license,  and, 
being  published  in  this  way,  the  restriction  attaches  to  the  property, 
and  is  a  charge  and  limitation  upon  the  rights  of  all  parties  pur- 
chasing tlie  book  for  resale." 

This  is  a  claim  that  the  owner  of  a  copyright  for  a  book, 
wlio  prints  the  book  and  sells  it  for  a  consideration,  gives  to 
the  purchaser  a  license,  and  does  not  sell  and  convey  a  piece 
of  personal  property  absolutely.  The  contention  here  is  that 
any  notice  printed  in  a  book  and  brought  to  the  attention 
of  the  purchaser  is  a  restriction  of  that  license  to  that  ex- 
tent, and  may  be  enforced,  and  that  a  violation  of  the  obliga- 
tion imposed  by  the  notice  is  an  infringement  of  the  copy- 
right which  may  be  restrained  by  the  federal  courts.  This 
doctrine,  it  seems  to  this  court,  is  contrary  to  the  adjudicated 
cases.  I  do  not  think  this  contention  can  be  sustained  upon 
principle.  Clearly  it  is  opposed  to  public  policy.  The  pur- 
chaser of  an  article  not  patented  may  duplicate  it  if  he  can. 
The  purchaser  of  an  article  made  under  a  patent  right  may 
not  duplicate  it,  but  he  may  use  the  article  purchased  and 


798 


139   FEDERAL  BEPOKTEB,   188. 


BOBBS-MERRILL    CO.    V.    STRAUS. 


799 


Opinion  of  tbe  Court 

sell  the  same  as  his  own  in  any  way  or  for  any  price  he  sees 
fit.  The  purchaser  of  a  book  not  copyrighted' may  duplicate 
it— make  copies  or  a  reprint.  The  purchaser  of  a  copy- 
righted book  may  not  make  or  print  or  publish  a  copy,  as 
this  would  be  an  infringement  of  the  copyright;  but  this 
restriction  in  no  way  interferes  with  the  absolute  ownership 
of  the  particular  copy  of  the  book.  The  owner  of  an  article 
made  under  a  patent  right  or  of  a  book  printed  under  a 
copyright  is  in  no  sense  a  licensee  of  the  patentee  or  of  the 
owner  of  the  copyright. 

"  License,"  with  reference  to  real  estate,  is  a  permission  or 
authority  to  do  a  particular  act  or  a  series  of  acts  on  the  land 
of  another  without  possessing  any  estate  therein.  So,  with 
reference  [189]  to  personal  property,  '*  license  "  implies  and 
carries  the  power  to  do  some  act  upon  or  in  reference  to  or 
to  do  something  with  the  property  of  another.  Herein  it  dif- 
fers from  an  easement.  The  word  "  easement  "  always  im- 
plies an  interest  in  the  land.  See  Words  &  Phrases,  vol.  5, 
tit.  "  License." 

What  is  the  Present  Combination  and  Its  Object,  or 
Purpose? 

1.  The  American  Piiblishers'  Association  has  adoi)ted  a 
net  price  system  for  all  copyright  books  published  or  con- 
trolled by  any  member  or  members  of  the  association  and 
made  an  agreement  to  maintain  it.  By  this  agreement  the 
members  thereof  are  to  cut  off  all  supply  of  their  copyrighted 
books  to  any  dealer  who  fails  to  maintahi  the  net  price  of 
such  books  as  fixed  by  such  association,  or,  what  is  the  same 
thing,  by  its  members.  Li  short,  this  combination  fixes  the 
price  of  copyrighted  books  published  by  its  members,  and 
the  price  at  which  such  books  are  to  be  sold,  both  at  whole- 
sale and  at  retail,  and  agrees  not  to  furnish  or  sell  any  of 
these  books  to  any  dealer  who  fails  to  maintain  such  price ; 
that  is,  demand  and  exact  from  the  purchaser  the  price  so 
lixed. 

2.  Another  association,  the  American  Booksellers'  Associa- 
tion, assents  to  this,  agrees  to  co-operate  and  be  bound  by 
such  system  and  arrangement  and  to  aid  and  assist  in  carry- 
ing it  into  effect,  and  to  this  end  agrees  not  to  buy,  or  keep  in 
stock,  or  offer  for  sale,  the  copyrighted  book  of  any  publisher 


Opinion  of  tlie  Court 

who  refuses  to  join  the  combination  and  enforce  this  price 
system  and  demand  and  exact  of  the  customer  this  price 
fixed  by  the  combination.  Two-thirds  of  the  members  of 
this  association  govern.  If  any  member  fails  to  live  up  to 
the  agreement,  etc.,  he  may  be  expelled,  and  he  is  not  to  have 
books,  and  all  members  are  "restrained"  from  supplying 
books,  etc.  (See  subdivisions  4  and  5  of  Exhibit  I.)  The 
objects  are:  (1)  To  compel  the  would-be  owners  and  readers 
of  copyrighted  books  to  purchase  their  books  of  the  members 
of  this  combination,  made  up  of  two  combinations  embracing 
at  least  90  per  cfent.  of  all  publishers  and  dealers  in  copy- 
righted books,  at  an  arbitrary  price  fixed  by  the  combination, 
regardless  of  the  actual  value  of  the  book  as  determined  by 
a  demand  therefor  established  in  a  free  and  open  market  or 
the  condition  of  the  books.  (2)  To  compel  all  publishers  of 
and  dealers  in  copyrighted  books  to  come  into  the  combina- 
tion, submit  to  and  be  controlled  by  it,  and  sell  books  at 
prices  fixed  by  it,  regardless  of  the  value  of  the  books,  etc., 
or  of  the  exigencies  of  the  trade  and  situation  of  the  seller, 
or  be  deprived  of  the  privilege  of  purchasing,  owning,  and 
selling  such  books.  In  short,  such  as  refuse  to  come  in  are 
to  be  crippled,  or  perhaps  ruined,  in  their  business.  As  the 
combination  extends  throughout  the  United  States  by  the 
very  terms  of  the  agreement,  interstate  commerce  is  neces- 
sarily restrained.  A  judgment  for  the  complainants  in  this 
action  will  restrain  interstate  commerce. 

If  this  suit .  is  one  to  restrain  the  infringement  of  a  copy- 
right, granted  to  the  complainant  and  now  owned  by  it,  by 
the  doing  of  any  act  that  constitutes  infringement  of  that 
right,  and  defendant  has  infringed,  it  is  entirely  immaterial 
that  the  combination  [  190]  described  exists,  or  that  complain- 
ant is  a  member  thereof,  or  that  its  objects  are  those  described. 
It  is  no  defense  to  such  a  trespass  upon  the  complainant's 
rights  that  it  has  violated  and  is  violating  the  Sherman  anti- 
trust law  (Act  July  2, 1890,  c.  647,  26  Stat.  209  [U.  S.  Comp. 
St.  1901,  p.  3200]),  or  some  statute  of  the  state  of  New  York. 
In  General  Electiic  Co.  v.  Wise^  119  Fed.  922-924,  this  court 
so  held,  citing  cases.     This  court  there  said : 

"  It  is  difficult  to  understand  how  or  why  a  violation  of  the  Sher- 
man anti-trust  law  l>y  this  conii)lainant,  if  there  has  been  such  a 


800 


139  FEDERAL  REPORTER,   190. 
Opinion  of  the  Ourt 


vlolHtion,  confers  any  right  on  the  defendant  to  infringe  this  patent. 
That  act  points  out  the  penalties  for  its  violation,  and  it  is  not  under- 
stood that  such  law  denies  the  grantees  of  patents  the  protection  of 
the  law  because  they  may  be  violating  some  statute.  However  that  may 
be,  the  evidence  falls  far  short  of  establishing  such  a  violation  by  this 
complainant.  The  testimony  on  that  subject  is  squarely  contradicted. 
An  individual  cannot  confiscate  the  property  or  property  right  of  a 
corporation  on  the  ground  it  has  violated  that  act.  ^oda  Fountain  Co, 
V.  Cfreen  (C.  C.)  69  Fed.  333;  Columbia  Wire  Co,  v.  Freemm  Wire  Co. 
(C.  C.)  71  Fed.  302;  Bement  v.  Harrow  Co.,  186  U.  S.  70,  88-91,  22 
Sup.  Ct.  747,  46  L.  Ed.  1058.  Harrotv  Co.  v.  Quick  (C.  C.)  67  Fed. 
131,  cannot  be  accepted  as  authority  on  this  question." 

See.  also,  Strait  v.  National  Harroto  Co.  (C.  C.)  51  Fed. 
819. 

But  if  the  complainant  has  turned  over  to  the  combination 
the  fixing  of  prices,  and  has  entered  into  the  combination 
described,  and  becomes  a  party  to  the  agreement  for  the  pur- 
pose described,  and  is  now,  through  this  suit,  attempting,  as 
this  court  holds  it  is,  to  enforce  such  combination  agreement 
in  whole  or  in  part,  and  such  agreement  is  unlawful,  because 
in  violation  of  the  act  referred  to,  then  this  action  cannot 
be  maintained.  The  complainant  confessedly  is  a  party  to 
the  combination  and  the  agreement,  and  cannot,  if  it  be  il- 
legal, have  a  standing  in  a  court  of  equity  to  enforce  any 
part  of  it,  directly  or  indirectly.  When  a  complainant  comes 
into  court,  asking  equity,  it  must  come  with  clean  hands, 
so  far  as  the  transaction  involved  is  concerned.  If  a  party, 
person,  or  corporation,  in  attempting  to  violate  the  rights 
of  the  public  and  the  rights  of  those  persons  who  will  not 
join  in  the  attempted  violation  of  law,  suffers  some  injury 
to  his  property  or  property  rights,  which  are  being  used  by 
his  consent  by  those  who  are  thus  violating  the  law,  in  per- 
petrating such  violation,  at  the  hands  of  one  who  is  lawfully 
resisting  such  attempted  injury,  he  or  it  cannot,  while  con- 
tinuing the  illegal  acts,  have  an  injunction  to  enjoin  the  re- 
sisting acts  resulting  in  such  injury.  Each  owner  of  the 
copyright  of  a  book  has  a  monopoly  of  that  particular  book. 
Copyrights,  like  patents,  are  assignable,  and  hence  a  person 
or  a  corporation  may  lawfully  become  the  owner  of  any 
number  of  copyrights  or  of  all  the  copyrights  of  books  issued 
by  the  United  States,  and  it  is  immaterial  that  the  purpose 
is  to  monopolize  the  whole  business  of  publishing  and  selling 
copyrighted  books.    In  such  case  such  person  or  corporation 


BOBBS-MERRILL   CO.    V.   STRAUS. 


801 


Opinion  of  the  Court. 

would  hold  and  control  all  the  monopolies  for  such  copy- 
rights of  books,  and  he  or  it  could  print  and  sell,  or  print  and 
not  sell,  or  refuse  to  print  at  all,  or  refuse  to  allow  others  to 
print  or  publish.     Should  he  or  it  print  or  publish  one  or 
more  copies  of  these  books,  such  person  or  corporation  could 
appoint  agents  to  sell  and  prescribe  and  limit  their  powers. 
He  or  it  could  1191]  license  one  or  more  persons  to  sell,  and 
prescribe  the  terms  and  conditions  of  such  sale,  and  limit 
the  price  at  which  same  should  be  sold.    Assume  that  such 
person  or  corporation  has  fixed  the  price  at  which  such 
book  shall  be  sold  at  retail  by  such  agents  and  licensees,  and 
may  restrain  a  disposition  of  such  books  in  violation  of  the 
conditions,  we  have  no   combination   or  conspiracy.    One 
man  cannot  combine  or  conspire.     It  takes  two  or  more  to 
make  a   combination  or  a  conspiracy.     So   an   agreement 
by  all  holders  of  copyrights  to  assign  same  to  one  person  or 
corporation  is  but  a  sale  of  their  own,  and  they  may  take 
pay  in  cash,  horses,  scrap  iron,  or  licenses  to  sell  the  copy- 
righted book,  provided  they  actually  sell  their  copyrights. 
If  the  agreement  be  a  mere  pretense,  however,  a  mere  cover 
for  a  combination  to  violate  some  statute,  then  such  agree- 
ment to  sell  their  copyrights  would  be  void,  and  the  whole 
combination  would  be  illegal  and  void.     So  one  person  may 
purchase  and  own  all  the  hay,  oats,  or  potatoes  existing  in 
the  country.    If  he  becomes  such  owner,  he  may  fix  the 
price  at  which  he  will  sell.     Here  there  is  no  conspiracy  or 
illegal   combination.    But  if  the  several  owners  of  such 
produce  combine,  and  agree  that  they  will  fix  prices,  in- 
terfere with  and  limit  interstate  commerce,  drive  all  other 
dealers  and  owners  of  similar  property  who  will  not  join 
them  in  their  purposes  out  of  business,  and  deprive  them,  if 
possible,  of  their  right  to  purchase  and  ship  produce  from 
state  to  state  as  a  part  of  interstate  commerce,  we  undoubtedly 
have  an  illegal  combination,  and  no  member  of  such  a  con- 
spiracy can  enforce  in  a  court  of  equity  any  contract  or 
agreement  made  in  execution,  in  whole  or  part,  of  such  a 
conspiracy.    It  is  evident  that  one  may  do,  in  fixing  and  en- 
forcing prices,  and  in  exacting  tribute  from  the  people  and 
restraining  interstate  commerce,  what  two  or  more  cannot  do 
21220— VOL  2—07  m 51 


802 


139   FEDERAL  REPORTER,   191. 


Opinion  of  the  Court 

in  pursuance  of  an  agi-eement  or  combination.  A  corpora- 
tion, on  becoming:  the  owner  of  several  patents  or  of  several 
copyrights,  may  do  all  acts  under  each  that  the  person  to 
whom  such  rights  were  originally  granted  n>ight  have  done. 
Having  become  the  owner,  it  is  entitled  to  the  benefits  and 
privileges  of  the  monopolies  granted.  But  all  this  affords 
no  sanction  or  support  whatever  to  the  doctrine  that  the 
several  owners  of  distinct  patents,  each  having  a  monopoly 
of  his  particular  patent,  or  the  several  owners  of  distinct 
copyrights,  each  having  a  monopoly  of  his  particular  copy- 
right, may  combine  and  conspire  as  to  their  patented  articles, 
or  as  to  their  copyrights  or  books  published  under  and  pro- 
tected thereby,  to  restrain  interstate  commerce  in  articles 
made  or  produced  thereunder,  A  right  or  privilege  to  form 
such  a  combination  or  conspiracy  is  not  embraced  or  included 
within  the  monopoly  granted.  The  monopoly  of  one  patentee 
cannot  be  extended  and  made  more  of  a  monopoly  by  that 
of  another.  The  grant  of  an  exclusive  right  to  make  and 
vend  a  certain  machine  does  not  include  a  license  to  com- 
bine and  conspire  with  another  having  a  like  exclusive  right 
to  restrain  trade  and  commerce  between  the  states  in  those 
articles,  if  made  and  put  on  the  market,  or  to  conspire  not 
to  put  them  on  the  market.  The  right  to  elect  not  to  make 
or  sell  is  necessarily  included.  The  right  to  combine 
[102]  and  conspire  is  not.  In  any  event  the  so-called  Sher- 
man law  forbids  any  and  all  combinations  in  restraint  of 
such  commerce. 

In  the  case  of  copyrighted  books  it  is  evident  that,  if  the 
publisher  of  one  or  two  should  demand  and  exact  of  the  pur- 
chaser at  retail  a  grossly  unreasonable  price,  he  would  sell 
but  few,  if  any,  copies.  Others  would  supply  the  market, 
for  readers  would  forego  that  book,  or  those  books,  and  find 
reading  matter  elsewhere.  But  when  all  publishers  of  and 
dealers  in  copyrighted  books—and  nearly  all  new  books  are 
now  copyrighted— combine  to  exact  a  fixed,  arbitrary  price, 
etc.,  the  readers  of  books  become  powerless,  if  they  would 
read  at  all,  not  because  of  the  monopoly  granted  or  sanc- 
tioned by  the  government  in  granting  the  copyright,  but 
because  of  the  new  monopoly  (the  conspiracy  of  monopo- 
lists), created  by  the  agreement  and  combination  of  these 


BOBBS-MKRRILL    CO.    l\    STRAUS. 


803 


Opinion  of  the  Court 

monopolists— one  that  is  forbidden  and  denounced  by  Act 
July  2,  1890,  c.  647,  26  Stat.  209  [U.  S.  Comp.  St.  1901,  p. 
3200],  entitled  "An  act  to  protect  trade  and  commerce 
against  unlawful  restraints  and  monopolies."  Section  1  of 
that  act  reads : 

"  Every  contract,  combination  in  the  form  of  a  trust  or  otherwise, 
or  conspiracy,  in  restraint  of  trade  or  commerce  amongst  the  several 
states,  or  with  foreign  nations,  is  hereby  declared  to  be  illegal." 

It  is  not  necessary  that  the  effect  necessarily  be  to  restrain 
trade  or  commerce.  It  is  sufficient  if  the  combination  may 
have  that  effect.  It  seems  to  this  court  impossible  to  hold 
that  this  section  of  the  act  does  not  apply  to  a  combination 
of  patentees  to  restrain  trade  and  commerce  in  patented 
articles  made  under  their  patents  as  much  as  to  such  a  com- 
bination made  by  dealers  in  other  articles  of  connnerce. 

In  1  Page  on  Contracts,  p.  698,  §  445,  after  a  statement 
regarding  the  law  as  to  "Monopoly  Contracts  concerning 
Patents,"  it  is  said: 

"  But  if  the  owners  of  distinct  patents  combine  to  prevent  compe- 
tition in  business,  and  to  control  the  prices  of  the  patented  article, 
such  combinations  and  all  contracts  for  such  purposes  are  as  invalid 
as  if  the  articles  were  not  patented." 

The  following  cases  are  cited  to  sustain  the  statement; 
National  Hafrrow  Co,  v.  Hencli,  83  Fed.  36,  27  C.  C.  A.  349. 
55  U.  S.  App.  53,  39  L.  R.  A.  299;  National  Hankow  Co  v. 
Quick  (C.  C.)  67  Fed.  130;  Vulcan  Powder  Co.  v.  Powder 
Co..  96  Cal.  510,  30  Pac.  1113,  31  Am.  St.  Rep.  242;  Game- 
well,  etc.,  Co.  V.  Crane,  160  Mass.  50,  35  X.  E.  99,  22  L.  R.  A. 
673,  39  Am.  St.  Rep.  458. 

In  1  State  and  Federal  Control  of  Persons  and  Property 
(Tiedeman)  412-413,  it  is  said : 

"But  the  mere  fact  that  the  subject-matter  of  the  monopolistic 
combination  may  be  patent  rights,  covering  machines  employed  in  the 
same  art  or  industry,  will  not  protect  the  combination  from'  the  penal 
provisions  of  the  anti-trust  laws.  If  a  corporation  or  association  is 
formetl  among  manufacturers  and  patentees  of  certain  articles  of 
kindred  charactiBr,  in  order  to  control  the  trade  and  prices  of  such 
articles,  the  combination  is  nevertheless  illegal,  although  the  exclusive 
manufacture  of  the  goods  is  guarantied  by  letters  patent  from  the 
United  States  government." 

At  the  time  of  that  writing  (1900)  the  author  was  not 
aware  of  the  decision  in  Bement  v.  National  Hankow  Co.,  186 
U.  S.  70,  22  [193]  Sup.  Ct.  747,  46  L.  Ed.  1058,  which  modifies 


B04 


139  FEDERAL  REPORTER,   496. 
Syllabus. 


some  of  the  cases  cited  by  him,  but  not  in  respect  to  the 
ICeneral  doctrine  stated. 

In  Bement  v.  Harrow  Co.^  supra,  the  court,  at  page  94, 
186  U.  S.,  page  756,  22  Sup.  Ct.  (46  L.  Ed.  1058),  plainly 
intimates  that  the  several  owners  of  several  patents  may  not 
combine  to  restrain  commerce  in  their  patented  articles 
It  is  unnecessary  to  cite  many  cases.  If  Montague  <&  Co,  v. 
Lowry,  193  U.  S.  38,  24  Sup.  Ct.  307,  48  L.  Ed.  608,  and 
Northern  Securities  Company  v.  United  States^  193  U.  S.  197, 
24  Sup.  Ct.  436,  48  L.  Ed.  679,  are  to  be  respected  as  law  anti 
followed  in  cases  where  there  is  no  hue  and  cry  against  rail 
roads,  this  combination  is  illegal  as  in  restraint  of  interstate 
commerce.  If  anything  can  be  found  in  the  prevailing  opin- 
ion in  John  D.  Park  cfe  Sons  Co.  v.  Wholesale  Druggists- 
Association  et  al,  175  N.  Y.  1,  67  N.  E.  136,  62  L.  K.  A.  632, 
96  Am.  St.  Eep.  578,  supporting  the  contention  of  the  com- 
plainant here,  it  is  sufficient  to  say  that  this  court  does  not 
agree  with  the  prevailing  opinion  or  decision  in  that  case, 
but  does  agree  with  the  dissenting  opinions  of  Martin,  J., 
and  CuUen,  C.  J.,  with  whom  Vann,  J.,  concurred. 

The  defendants  have  not  infringed  and  are  not  threaten- 
ing to  infringe  complainant's  copyright,  nor  have  they  vio- 
lated any  contract.  The  complainant  is  seeking  to  enforce 
against  defendants  an  unlawful  combination  agreement,  to 
which  such  defendants  are  not  parties,  and  by  which  they 
have  not  consented  to  be  bound  to  prevent  defendants  selling 
books  of  which  they  are  the  absolute  owners.  The  same  re- 
sult on  a  similar  state  of  facts  as  to  the  effect  of  such  notice 
was  reached  by  the  court  in  Bohhs-Merrill  Co,  v.  Snellenburg, 
131  Fed.  530. 

The  defendants  are  entitled  to  a  decree  dismissina:  the  com- 
plaint,  with  costs. 


I4M1  IN  HE  HALE.- 

(Circuit  Court,  S.  D.  New  York.    June  8,  1905.) 

11S9  Fed.,  49&] 

Oband    Jury— Powebs— Witnesses — Refusal    to    Testify.— Where, 
after  a  witness  had  refused  to  testify  before  a  grand  Jury  consider- 


aAffirmed  by  Supreme  Court  (201  U.  S.,  43).    See  pw  874. 


IN   BE   HALE. 
Opinion  of  the  Court 


805 


Ing  supposed  infractions  of  the  anti-trust  law,  the  grand  jury  made 
a  presentment  to  the  court  charging  the  witness  with  contempt,  and 
the  court,  after  hearing,  ordered  the  witness  to  answer  the  ques- 
tions, and  to  forthwith  produce  the  papers  required,  the  court's 
action  was  equivalent  to  an  express  instruction  to  the  grand  jury  to 
Investigate  the  matter  referred  to  in  the  presentment,  and  hence  the 
fact  that  the  grand  jury  had  been  previously  acting  beyond  its 
power  was  harmless. 

Witnesses— Privilege— Anti-Tbust  Act— Inquisitions.— An  inquisi- 
tion before  a  grand  jury  to  determine  the  existence  of  supposed  vio- 
lations of  the  anti-trust  act  was  a  "  proceeding  "  within  Act  Cong, 
Feb.  19,  1903,  c.  708,  32  Stat.  848  [U.  S.  Comp.  St.  Supp.  1903,  p. 
365],  providing  that  no  person  shall  be  prosecuted  or  subjected  to 
any  penalty  for  or  on  account  of  any  transaction,  matter,  or  thmg 
concerning  which  he  may  testify  or  produce  evidence  in  any  "  pro- 
ceeding "  under  several  statutes  mentioned,  including  such  anti-trust 
act. 

Unreasonable  Searches  —  Rights  of  Agent  —  Subp(ena  Duces 
Tecum. — A  subpcena  duces  tecum  commanding  the  secretary  and 
treasurer  of  a  corporation  supposed  to  have  violated  the  anti-trust 
act  to  testify  and  give  evidence  before  the  grand  jury,  and  to  bring 
with  him  and  produce  numerous  agreements,  letters,  telegrams,  re- 
ports, and  other  writings,  described  generically,  in  effect  including 
all  the  correspondence  and  documents  of  his  corporation  originating 
since  the  date  of  its  organization,  to  which  19  other  named  corpora- 
tions or  persons  were  parties,  for  the  purpose  of  enabling  the  district 
attorney  to  establish  a  violation  of  such  act  on  the  part  of  the  wit- 
ness' principal,  constituted  an  unreasonable  search  and  seizure  of 
papers,  prohibited  by  Const.  U.  S.  Amend.  4. 

Habeas  .Corpus— Circuit  Courts— Judges — Co-ordinate  Jurisdic- 
tion.—Where  a  subpoena  duces  tecum  was  directed  to  be  issued  by 
a  circuit  judge,  and  the  witness  was  committed  for  contempt  for 
failure  to  obey  the  same,  he  would  not  be  discharged  on  habeas 
corpus  by  another  judge  of  the  same  court,  though  the  latter  was 
of  the  opinion  that  the  subpoena  authorized  an  unconstitutional 
search  and  seizure  of  private  papers.^ 

Henry  W.  Taft,  for  complainant. 

Elihu  Boot  and  De  Lancey  Nicoll,  for  defendant. 

Wallace,  Circuit  Judge. 

This  is  a  proceeding  in  habeas  corpus  to  test  the  legality 
of  the  imprisonment  of  the  petitioner,  pursuant  to  an  order 
of  the  Circuit  Court,  adjudging  him  guilty  of  contempt  in 

o  Syllabus  copyrighted.  1905,  by  West  Publishing  Co. 


806 


139   FEDERAL   REPORTER,   496. 


Opinion  of  the  Court. 

refusing  to  produce  certain  documents  and  writings  and 
answer  certain  questions  as  a  witness  before  the  gi'and  jury 
impaneled  in  that  court.     The  petitioner  was  the  secretary 
and  treasurer,  and  also  a  director,  of  McAndrews  c^  Forbes 
Company,  a  New  Jersey  corporation,  and  had  been  served 
with  a  subjxena  duces  tecum  issued  out  of  that  court  com- 
manding him  to  testify  and  give  evidence  before  the  grand 
jury  upon  the  part  of  the  United  States  of  America  "in 
a  certain  action  now  pending  and  undetermined  '"  in  that 
court  between  the  United  States  of  America  and  the  Ameri- 
can Tobacco  Company  and  the  McAndrews  &  Forbes  [497] 
Company,  and  to  bring  with  him  and  produce  numerous 
agreements,  letters,  telegrams,  reports,  and  other  writings, 
all  of  whicli  were  descril:»ed  generically,  and  may  for  the 
present  purposes  he  described  as  including  all  the  correspond- 
ence and   documents  of  his  corporation  originating  since 
the  date  of  its  organization,  to  which  11)  other  named  cor- 
porations or  persons  were  parties.     He  appeared  before  the 
grand  jury  pursuant  to  the  subpcena,  and  was  then  asked 
several  questions  bearing  upon  the  general  inquiry  whether 
there  was  any  agreement,  arrangement,  or  understanding 
between  his  corporation  and  the  American  Tobacco  Company 
in  relation  to  the  trade  in  licorice  aifecting  the  business  be- 
tween several  states  of  the  ITnited  States,     lie  declined  to 
produce  the  pai)eis  or  to  answer  the  questions,  stating  to 
the  grand  jury  as  a  reason  for  so  doing  that  he  liad  l)een 
advised  by  counsel  that  he  was  under  no  legal  obligation 
to  produce  the  writings,  and  that  the  production   of  the 
papers  or  the  answers  to  the  questions  would  tend  to  crim- 
inate him.    Thereupon   he   was   informed   by   the    United 
States  attorney  that  the  proceeding  was  one  under  the  act 
of  Congress  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies,  and  it  was  not  projjosed  to  prose- 
cute him  or  subject  him  to  any  penalty  or  forfeiture  on  ac- 
count of  anything  to  which  he  should  testify,  or  as  to  which 
he  should  produce  documentary  or  other  evidence,  and  that 
he  (the  district  attorney)  offered  and  assured  to  him  im- 
munity and  exemption  from  any  such  testimony.     The  peti- 
tioner again  declined  to  answer,  for  the  reasons  previously 
stated.    Subsequently  the  grand  jury  made  a  presentment  to 


IN   RE    HALE. 


807 


Opinion  of  the  Court. 

the  court  charging  the  petitioner  with  contempt  because  of 
his  refusal  to  produce  the  writings  and  give  the  testimony 
required,  and  setting  forth  fully  the  facts  relating  thereto. 
When  this  presentment  was  submitted  to  the  court,  the  peti- 
tioner being  present,  the  court  made  an  order  directing  him 
to  answer  the  questions  as  propounded  by  the  grand  jury, 
and  to  forthwith  produce  the  papers.  Upon  his  refusal  to 
comply,  further  proceedings  Avere  taken,  which  resulted  in 
an  order  by  the  court  adjudging  him  in  contempt,  and  com- 
mitting him  to  the  custody  of  the  marshal  until  he  should 
comply  with  its  previous  order. 

It  is  insisted  by  the  petitioner  that  his  imprisonment  and 
restraint  are  without  lawful .  authority  for  reasons  which 
may  be  summaiized  as  follows:  (1)  That  the  grand  jury 
could  only  investigate  specific  charges  against  particular 
persons,  and,  as  there  was  not  any  proceeding  of  that  nature 
before  them,  and  no  cause  or  action  of  anv  kind  whatever 
pending  in  the  court,  they  were  not  in  the  exercise  of  proj^er 
authority  in  prosecuting  the  investigation  when  petitioner 
was  before  them,  and  consequently  he  could  not  be  lawfully 
required  to  testify  or  give  evidence;  (2)  that  petitioner  was 
within  the  protection  of  the  fifth  amendment  of  the  Consti- 
tution in  refusing  to  testify  or  produce  incriminating  evi- 
dence against  himself;  and  (3)  that  the  order  of  the  court 
directing  him  to  produce  the  papers  contravened  the  fourth 
amendment  of  the  Constitution,  and  in  fact  deprived  him 
of  his  right  to  be  secure  against  unreasonable  search  and 
seizure  of  his  papers,  and  was  equivalent  to  a  [A98]  Avar- 
rant  not  issued  upon  probable  cause  or  particularly  describ- 
ing the  things  to  be  seized. 

It  is  manifest  from  the  facts  recited  in  the  presentment 
made  by  the  grand  jury  that  the  investigation  which  they 
were  pjirsuing  Avas  not  based  upon  any  specific  charge 
Avhich  had  been  formulated  and  laid  before  them  by  the 
United  States  attorney,  and  that  it  Avas  not  founded  upon 
their  oAvn  knowledge,  or  upon  information  derived  from  any 
source  that  a  specific  offense  had  been  committed  by  either 
of  the  tAvo  corporations  named  in  the  subpcena.  It  appears 
to  ha\^e  been  one  Avhich  they  Avere  pursuing,  Avith  the  as- 
sistance of  the  United  States  attornev,  directed  to  the  dis- 


808 


139  FEDERAL  REPOBTEB,  498. 


Opinion  of  the  C!ourt. 

covery  of  some  infraction  by  one  or  both  of  these  corpora- 
tions of  the  law  of  Congress  of  July  2,  1890,  "  to  protect 
trade  and  commerce  against  unlawful  restraints  and  mo- 
nopolies," known  as  the  "Anti-Trust  Law"  (Act  July  2, 
1890,  c.  647,  26  Stat.  209  [U.  S.  Comp.  St.  1901,  p.  3200]). 
Consequently  the  first  contention  for  the  petitioner  presents 
the  question  whether  it  is  within  the  competency  of  the 
grand  jury  to  institute  and  pursue  such  an  investigation  in 
the  exercise  of  its  inquisitorial  power. 

The  authority  and  functions  of  a  grand  jury  in  the  courts 
of  the  United  States  in  investigating  criminal  offenses  are 
not  prescribed  by  statute,  but  are  such  as  inhere  in  that  body 
by  the  general  sanction  of  the  common-law  courts.  That  a 
grand  jury  is  not  confined  to  the  investigation  of  an  alleged 
offense  to  which  their  attention  has  been  called  by  the  court, 
or  which  has  been  laid  before  them  in  an  indictment,  or  an 
information  by  the  prosecuting  attorney  of  the  court,  or 
which  is  within  the  personal  knowledge  of  some  of  the  mem- 
bers, is  the  generally  accepted  opinion  of  the  courts  of  this 
country,  unless  in  some  of  the  states  where  there  may  be 
statutory  restrictions  to  the  contrary.  As  said  by  Mr.  Jus- 
tice Brewer  in  Frkhie  v.  The  United  States^  157  U.  S.  160, 15 
Sup.  Ct  586,  39  L.  Ed.  657 : 

"  In  this  country  the  common  practice  is  for  the  grand  Jnry  to  In- 
vestigate any  alleged  crime,  no  matter  how  or  by  whom  suggested  to 
tliem,  and,  after  determining  that  the  evidence  is  sufficient  to  justi^j' 
putting  the  party  suspected  to  trial,  to  direct  the  preparation  of  the 
formal  charge  or  indictment." 

That  they  may  investigate  into  offeiises  which  may  come 
to  their  knowledge,  other  than  those  to  which  their  atten- 
tion has  been  called  by  the  court,  or  which  have  been  sub- 
mitted to  their  consideration  by  the  district  attorney,  is 
shown  by  the  observations  of  Mr.  Justice  Field  in  a  carefully 
considered  charge  to  the  grand  jury  in  the  United  States 
Circuit  Court  for  the  District  of  California.  2  Saw  v.  667, 
Fed.  Cas.  No.  18255.  That  a  grand  jury  has  certain  in- 
quisitorial powers — and  by  this  is  meant  the  power  of  insti- 
tuting an  investigation  to  discover  whether  a  particular 
crime  has  been  committed — is  also  a  proposition  which 
has  been  frequently  affirmed  by  the  courts  of  this  country; 
but  as  to  the  extent  and  limitation  of  this  power  there  is 


IN   BE    HALE. 


Opinion  of  the  C5ourt 


809 


pronounced  divergence  of  opinion.  It  will  suffice  to  refer 
to  a  few  of  the  many  citations  which  counsel  have  with  great 
industry  collated. 

[499]  In  Blaney  v.  The  State  of  Maryland,  74  Md.  153,  21 
Atl.  547,  the  court  said: 

"  However  restricted  the  functions  of  grand  juries  may  be  elsewhere, 
we  hold  that  in  this  state  they  have  plenary  inquisitorial  powers,  and 
may  lawfully  press,  and  upon  their  own  motion  originate,  charges 
against  offenders,  though  no  preliminary  proceeding  has  been  had  be- 
fore a  magistrate,  and  though  neither  the  court  nor  the  state's  attor- 
ney has  laid  the  matter  before  them.  *  ♦  ♦  Though  far-reaching 
and  seemingly  arbitrary,  this  power  is  at  all  times  subordinate  to  the 
law,  and  experience  has  taught  that  it  is  one  of  the  best  means  to  pre- 
serve the  good  order  of  the  commonwealth  and  to  bring  the  guilty  to 
punishment." 

In  Re  Lester,  77  Ga.  143,  the  Supreme  Court,  after  stating 
in  its  opinion  that  it  was  undeniable  that  the  powers  of  the 
grand  jury  are  to  a  certain  extent  inquisitorial,  but  are  to  be 
exercised  within  well-defined  limits,  said : 

"Anything  they  can  find  out  upon  inquiry  and  observation  is  legiti- 
mate and  praiseworthy,  but  they  have  no  authority  to  force  private 
persons  or  the  officers  of  other  courts  to  disclose  to  them  who  have 
violated  the  public  laws,  and  the  names  of  persons  by  whom  such  in- 
fractions can  be  established ;  in  short,  to  make  any  man  the  spy  upon 
the  conduct  of  his  neighbors  and  associates,  and  compel  him  to  violate 
the  confidence  implied  in  holding  social  intercourse  with  his  fellows 
by  forcing  him  to  become  a  public  informer." 

Such  an  exercise  of  power,  the  court  said,  would  be  in  dero- 
gation of  "  rights  regarded  as  sacred  and  paramount  in  the 
intercourse  between  man  and  man;  and  these  rights  have 
been  carefully  guarded,  not  only  by  the  spirit  of  our  law,  but 
by  its  express  enactment." 

In  the  United  States  Circuit  Court  for  the  District  of  Ten- 
nessee (reported  in  Wharton  on  Criminal  Pleading,  p.  224) 
Mr.  Justice  Catron  compelled  witnesses  to  answer  who  had 
been  summoned  by  the  grand  jury,  when  it  did  not  appear 
that  there  was  any  specific  charge  made  against  any  partic- 
ular person,  and  when  the  questions  were  whether  the  wit- 
nesses knew  of  any  person  or  persons  in  the  city  of  Nashville 
who  had  begun,  or  set  on  foot,  or  provided  means  for  a  mili- 
tary expedition  to  the  Island  of  Cuba.    He  said : 

"As  all  these  questions  tend  fairly  and  directly  to  establish  some  of 
the  offenses  made  indictable  by  the  act  of  1818,  and  are  pertinent  to 
the  charge  delivered  to  the  grand  jury,  they  may  be  properly  pro- 
pounded, unless  the  answers  would  tend  to  establish  that  the  witness 
was  himself  guilty." 


810 


139   FEDERAL  REPORTER,   499. 


Opinion  of  tbe  Court 

In  United  States  v.  Kilpatriek  (D.  C.)  16  Fed.  765,  the 
court,  after  proving  the  practice  of  the  state  courts  in  North 
Carolina,  said: 

"  Grand  jnries  cannot  make  inquisitions  into  the  general  conduct  or 
prlYate  business  of  their  fellow  citizens,  and  hunt  up  offenses  by  send- 
ing f<u-  witnesses  to  investigate  vague  accusations  founded  ui>on  sus- 
picions and  indetinlte  rumors." 

He  adds : 

**  Tlie  rights  of  society,  as  well  as  the  nature  of  our  free  institu- 
tions, forbids  such  a  dangerous  mode  of  inquisition." 

In  Thompson  &  Merriam  on  Juries,  §  615,  it  is  said,  refer- 
ring to  authorities  cited : 

[500]  "These  expressions  of  opinion  bristle  with  evidence  of  the 
inquisitorial  i)ower  of  the  grand  jury  to  inquire  of  their  own  motion 
into  offenses  of  every  character  punishable  by  the  court,  of  which  it 
is  a  component  part." 

The  subject  is  summed  up  in  vokmie  17,  Am.  &  Eng.  Enc. 
of  Law  (2d  Ed.)  p.  1279,  as  folloAvs: 

^'Although  it  has  been  sometimes  asserted  that  at  connnon  law  the 
grand  jury  was  charged  with  inquisitorial  duties,  and  was  empowered 
to  institute  iuipiiries  and  investigations  into  criminal  offenses,  accord- 
ing to  the  weight  of  authority  the  power  of  the  grand  jury  to  originate 
criminal  prosecutitms  otherwise^  than  by  a  presentment  based  upcm  the 
personal  knowledge  or  observation  of  the  members  of  that  body  is 
oniinarily  limited  to  cases  in  wliich  individuals  have  been  charged 
with  spwitic  crimes  before  a  magistrate,  in  which  cases  the  accused 
has  a  reHi>onsible  prosecutor  upon  the  record,  who  may.  if  he  swear 
falsely,  be  indicted  for  perjury,  or  to  cases  whi<h  are  called  to  its  at- 
tention by  the  couit  or  the  prosecuting  attorney;  and  it  has  no 
power  of  its  own  motion  to  institute  a  prosecution  by  sunmioning  and 
examining  witn<>ss*»s  for  the  puri>ose  of  obtaining  information  upon 
which  to  base  a  presentment  of  a  supposed  offender." 

The  result  of  the  authorities  seems  to  be  fairly  summar- 
ized in  the  last  citation. 

The  question  wliether  an  impioi^er  exercise  of  the  inquisi- 
torial i>ower  subverts  the  jurisdiction  of  the  court,  or  is  sim- 
ply such  an  irregularity  as  to  enable  the  accused  or  a  witness 
to  invoke  the  intervention  of  the  court,  or  as  may  vitiate  an 
indictment,  has  never  lieen  decided.  Were  it  not  for  the  im- 
plication arising  from  the  treatment  of  the  subject  in  Coun- 
selNHiH  X.  IIitrhrovk\  142  U.  S.  547,  12  Sup.  Ct.  195,  35  L. 
Ed.  1110,  it  would  seem  quite  clear  that  it  could  not  affect 
the  jurisdiction  of  the  court.  The  grand  jury  is  a  part  of 
the  court  in  the  exercise  of  criminal  jurisdiction,  and  their 
proceedings  are  always  subject  to  the  control  of  the  court. 


IN   RE    HALfi. 


811 


Opinion  of  the  Court. 

The  court  can  at  any  time  direct  the  grand  jury  to  consider 
a  particular  accusation,  or  to  investigate  a  supposed  viola- 
tion of  the  •criminal  law;  and  whether  it  does  this  by  direct 
instructions  or  by  directing  the  prosecuting  officer  to  present 
the  matter  for  the  consideration  of  the  grand  jury  is  of  no 
consequence.     If,  in  the  absence  of  such   instructions,  the 
grand  jury  proceeds  of  its  own  motion,  and  is  guilty  of  any 
abuse  of  its  powers,  the  court  can  at  any  time  interv^ene,  and 
correct  or  suppress  the  proceedings.     If  the  conduct  of  the 
grand  jury  is  called  to  its  attention,  and  the  court  approves 
or  disapproves,  whether  its  judgment   may  be  correct  or 
wrong,  it  is  in  the  exercise  of  its  undoubted  jurisdiction; 
and,  though  it  is  erroneous,  it  is  not  void  or  illegal,  and 
cannot  be  reviwed  by  habeas  corpus.     Of  course,  this  is  not 
true  in  cases  where  the  court  transcends  its  authority.     In 
the  Counselman  Case,  Avhich  was  a  habeas  corpus  case,  the 
court  adverted  to  the  contention  that  the  jury  in  the  par- 
ticular case  had  not  been  'Mn vest iga ting  specific  charges 
against  particular  persons,''  but  said  that  it  was  not  neces- 
sary to  intimate  any  opinion  as  to  the  validity  of  the  con- 
tention, and  placed  its  decision  upon  another  ground.     The 
circumstance  that  the  point  was  adverted  to  is  hardly  enough 
to  suggest  that  the  court  considered  it  to  be  a  valid  one. 

[o01|  In  the  i)resent  case  it  does  not  appear  that  the  in- 
vestigation was  initiated  sua  sponte  by  the  grand  jury,  and 
it  may  be  inferred   from  the  participation  of  the   United 
States  attorney  in  the  proceeding  that  it  originated  in  his 
formal  presentation  of  the  charge  to  them.     The  subpoena 
duces  tecum  was  the  process  of  the  court.     As  it  commanded 
the  witnesses  to  appear  l)efore  the  grand  jury,  it  is  manifest 
that  the  recital  about  the  pending  ^^  action ''  could  only  have 
referred  to  a  proceeding  between  the  United  States  and  the 
two  corporations  of  the  only  kind  which  a  grand  jury  can 
entertain,    viz.,    a    preliminary    investigation    to    ascertain 
whether  there  was  sufficient  cause  for  an  indictment.    When, 
after  the  presentment  of  the  alleged  contumacy  of  the  wit- 
ness by  the  grand  jury  to  the  court,  he  was  ordered  by  the 
court  to  answer  questions  and  produce  the  documents,  the 
action  of  the  court  was  equivalent  to  an  express  instruction 
to  the  grand  jury  to  investigate  the  proceedings  mentioned 


812 


Opinion  of  the  CJourt. 


in  the  presentment  While  the  investigation  was  not  di- 
rected to  a  specific  offense,  it  was  directed  to  the  inquiry 
whether  one  of  the  laws  of  the  United  States — ^the  so-called 
Anti-Trust  Law — had  been  violated  by  either  or  both  of  the 
two  corporations  mentioned.  Without  this  intervention  by 
the  court  the  investigation  would  have  been  one  upon  the 
border  line  between  the  legitimate  exercise  and  the  abuse  of 
the  inquisitorial  power  of  the  grand  juiy,  but  not  one  which 
can  be  safely  held  to  have  been  an  ultra  judicial  proceedinff. 
After  the  Lrvention  of  the  court  the  origina'  abuse  !i 
power,  if  there  was  any,  became  innocuous. 

The  contention  for  the  petitioner  that  the  order  of  the 
court  violates  the  constitutional  prohibition  against  com- 
pelling a  pei-son  to  give  evidence  against  himself  in  a  crimi- 
nal case  would  be  clearly  sound  were  it  not  for  the  effect  of 
the  immunity  act  of  Congress  of  February  19, 1903,  c.  708, 32 
Stat.  848  [U.  S.  Comp.  St.  Supp.  1903,  p.  365].  In  view  of 
his  official  relations  with  the  corporation,  it  fairly  may  be 
assumed  that  the  petitioner  had  participated  personally  in 
some  of  the  acts  or  transactions  which  were  the  alleged 
offenses  of  the  corporation,  and  was  therefore  originally 
responsible  himself.  It  is  not  for  this  court  to  question  the 
soundness  of  the  judgment  in  Brown  v.  Walker,  161  U.  S. 
591,  16  Sup.  Ct.  644,  40  L.  Ed.  819,  or  to  weigh  the  value  of 
the  dissenting  opinions.  That  judgment  is  authoritative 
that  such  an  exemption  from  liability  to  prosecution  or  pen- 
alty as  was  secured  to  the  witness  by  the  immunity  act  of 
February  19,  1903,  if  it  extends  to  testimony  given  or 
compelled  before  a  grand  jury,  deflects  the  application  of 
the  fifth  amendment  to  the  Constitution  so  that  the  prohibi- 
tion against  compelling  a  person  to  be  a  witness  against  him- 
self in  a  criminal  case  does  not  protect  him.  The  peti- 
tioner's counsel  do  not  argue  otherwise,  and  their  argument 
is  that  the  immunity  given  by  this  act  does  not  extend  to 
testimony  given  by  a  witness  before  a  grand  jury.  The  pro- 
vision is  that  no  person  shall  be  prosecuted  or  subjected  to 
any  penalty  for  or  on  account  of  any  transaction,  matter,  or 
thing  concerning  which  he  may  testify  or  produce  evidence, 
documentary  or  otherwise,  "in  any  proceeding,  suit,  or 
prosecution "  [503]  under  the  several  statutes  mentioned, 


IN   RE   HALE. 


813 


Opinion  of  the  Court. 

including  the  anti-trust  act.  The  argument  that  a  proceed- 
ing before  a  grand  jury  is  not  such  a  proceeding  as  is 
meant  by  the  provision  has  been  ingeniously  presented, 
and  is  not  without  plausibility.  But  the  word  "  proceed- 
ing" is  a  broad  term,  and  was  apparently  intended  to 
include  some  form  of  judicial  inquiry  other  than  a  "  suit  or 
prosecution."  In  one  sense  it  is  true  a  criminal  proceeding 
is  not  instituted  against  an  accused  person  until  a  formal 
charge  is  made  against  him  by  indictment  or  information,  or 
a  complaint  before  a  magistrate;  and  proceedings  before  a 
grand  jury  are  not,  in  that  sense,  a  criminal  proceeding 
against  an  accused.  Post  v.  United  States,  161  U.  S.  583,  16 
Sup.  Ct.  611, 40  L.  Ed.  816.  But  in  another  sense  any  initial 
step  before  a  judicial  tribunal  preliminary  to  the  commence- 
ment of  a  civil  suit  or  a  criminal  prosecution  is  a  proceeding. 
As  used  in  this  statute,  inasmuch  as  testimony  given  in  a 
suit  or  prosecution  embraces  that  given  not  only  at  the  trial, 
but  upon  all  occasions  incident  to  the  controversy,  the  term 
"  proceeding,"  if  limited  to  some  step  in  the  progress  of  a 
civil  suit  or  a  criminal  prosecution  which  has  been  previ- 
ously instituted,  is  mere  tautology.  A  rational  construc- 
tion seems  to  require  it  to  include  any  preliminary  step 
which  is  incident  to  the  institution  of  a  civil  suit  or  a  crimi- 
nal prosecution. 

The  contention  that  the  order  requiring  the  petitioner  to 
produce  papers  called  for  by  the  subpoena  duces  tecum  was 
made  in  violation  of  the  petitioner's  rights  under  the  fifth 
amendment  to  the  Constitution,  raises  the  question  whether 
such  a  general  inquisition  into  his  private  papers  as  is  per- 
mitted by  the  terms  of  the  subpoena  was  not  such  an  abuse 
of  judicial  process  as  to  amount  to  an  unreasonable  search 
and  seizure.  As  Judge  Cooley  says  in  his  work  on  Constitu- 
tional Limitations : 

"Near  in  importance  to  exemptions  from  an  arbitrary  control  of 
the  person  is  that  maxim  of  the  common  law  which  secures  to  the 
citizen  immunity  in  his  home  against  the  prying  eyes  of  the  govern- 
ment, and  protection  m  person,  property,  and  papers  against  even  the 
process  of  the  law,  except  in  a  few  specified  cases." 

In  Boyd  V.  U.  S.,  116  U.  S.  616,  6  Sup.  Ct.  524,  29  L.  Ed. 
746,  it  was  decided  that  the  law  of  Congress  which  author- 
ized a  court  of  the  United  States  in  revenue  cases  on  motion 


814 


im   FEDERAL   REPORTER,    'M, 


Oiiiuioii  of  the  Court. 

of  tlie  govermnent  attoniey  to  require  a  defendant  to  pro- 
duce in  court  his  private  books,  invoices,  and  papers,  and  per- 
mit the  attomev,  under  the  direction  of  the  court,  to  make 
examination  of  tlie  same,  and  which  provided  that,  if  the 
defendant  refused  to  produce  the  same,  the  allegations  of  the 
attorney  as  to  their  contents  specified  in  his  written  motion 
should  be  taken  as  confessed,  was  unconstitutional  and  void, 
as  being  repugnant  to  the  fourth  and  fifth  amendments  to 
the  Constitution.    The  court  said : 

"  It  is  our  opinion,  therefore,  that  a  conujulsory  proiUiction  of  a 
man's  private  i»apei-s,  to  establish  a  criminal  charge  against  him,  or 
to  forfeit  hin  proi>ert.T.  is  within  the  scope  of  the  fourth  amendment 
to  the  Constitution,  in  all  cases  in  which  a  search  or  seizure  would 
be,  because  it  is  a  material  ingredient  and  affects  the  sole  object  and 
purpose  of  search  and  seizure." 

[50S]  And  the  court  concluded: 

**  We  think  that  the  notice  to  produce  the  invoice  in  this  case,  the 
order  by  virtue  of  which  it  was  issued,  and  the  law  which  authorized 
the  order,  were  unconstitutional  and  void,  and  that  the  inspection  of 
the  district  attorney  of  said  invoice,  when  produced  in  obetlience  to 
said  notice,  and  its  admission  in  evidence  by  the  court,  were  erroneous 
and  unconstitutional  proceedings." 

It  will  be  observed  that  the  statute  in  that  case  did  not 
deprive  the  party  of  the  custody  of  the  books  and  papers 
which  he  was  required  to  produce,  and  authorized  only  such 
an  inspection  of  them  as  the  court  might  direct.  This  judg- 
ment concludes  an  inquiry  by  this  court  as  to  the  validity 
of  two  propositions,  and  it  settles,  first,  that  a  subpoena  or 
an  order  of  the  court  may  be  the  equivalent  of  a  search  and 
seizure  within  the  constitutional  provision;  and,  second, 
that  any  search  or  seizure  for  the  purpose  of  obtaining  in- 
criminating evidence  against  the  party,  is  an  unreasonable 
one  within  the  meaning  of  the  provision.  The  judgment 
would  have  controlled  this  case,  and  would  have  entitled 
the  petitioner  to  be  discharged,  if  the  evidence  sought  to  be 
procured  could  have  been  used  to  incriminate  the  petitioner. 
Is  a  search  and  seizure  any  the  less  unreasonable  when  it 
compels  the  official  custodian  of  all  the  papers  of  his  prin- 
cipal, whose  duty  it  is  to  keep  their  privacy  inviolable,  to 
produce  them  in  order  to  incriminate  his  principal  ?  It  may 
be  conceded  that  his  duty  to  the  state  and  courts  is  para- 
mount; but  is  this  true  when  the  evidence  is  not  to  be  used 


IN   RE    HALE. 
Opinion  of  the  Court. 


815 


against  a  principal  who  is  under  any  criminal  accusation,  or 
against  whom  any  civil  suit  is  pending,  and  is  only  to  be  used 
to  discover  if  possibly  any  ground  of  accusation  can  be  found 
against  him  ? 

If  the  petitioner  had  been  ordered  to  produce  a  single 
document  or  numerous  documents  in  his  possession,  which 
were  adequately  described  to  enable  him  to  find  them,  for  use 
as  evidence  in  a  pending  action,  civil  or  criminal,  it  seems 
plain  that  the  order  would  have  been  unobjectionable,  and 
such  as  the  courts  are  daily  making.  Such  was  the  case  of 
Interstate  Commerce  Commission  v.  Baird,  194  U.  S.  25, 
24  Sup.  Ct.  563,  48  L.  Ed.  860,  where  the  observation  was 
made  by  the  court  upon  which  the  government  relies. 

The  petitioner  was  required  to  produce  a  numerous  array 
of  documents  and  papers  for  the  purpose  of  ascertaining 
whether  they  contained  anything  which  would  tend  to  es- 
tablish the  commission  of  an  offense  by  either  of  the  two 
corporations;  and  it  is  apparent  that  the  object  was  to  en- 
able the  government,  by  inspecting  this  mass  of  the  private 
papers  and  documents  of  the  petitioner's  corporation,  to  find 
something  which  might  induce  the  grand  jury  to  find  an  in- 
dictment against  his  corporation.  It  is  this  which  gives  to 
the  proceeding,  its  color  of  oppression  and  the  attributes  of 
an  unreasonable  search  and  seizure. 

The  legality  of  search  warrants  has  been  sanctioned  on  the 
ground  of  public  necessity,  because  without  them  felons  and 
other  malefactors  would  escape  detection.  But  a  search 
warrant  for  the  papers  of  a  suspected  party,  to  be  used  as 
evidence  against  him,  was  illegal  at  common  law.  Archbold, 
Criminal  Law  (7th  Ed.)  141.  [504]  Because  of  the  ob- 
noxious character  of  the  process,  very  great  particularity  is 
required  in  designating  the  articles  to  be  searched  for  before 
the  officers  of  the  law  are  permitted  to  invade  the  premises 
where  the  articles  sought  are  supposed  to  be.  A  designation 
of  goods  to  be  searched  for  as  "  goods,  wares,  and  merchan- 
dise," without  more  particular  description,  has  been  re- 
garded as  insufficient,  even  in  the  case  of  goods  supposed  to 
be  smuggled,  where  there  is  usually  greater  difficulty  in  giv- 
ing description,  and  consequently  more  latitude  should  be 
permitted,  than  in  the  case  of  property  stolen.    Sandford  v. 


816 


139  PEDEKAL.  REPOBTEB,   504. 


Opinion  of  the  CJonrt. 

NwhoUy  133  Mass.  286,  T  Am.  Dec  151.  Lord  Camden, 
speaking  of  a  warrant  not  specifying  the  particular  papers, 
but  authorizing  the  seizure  of  aU  the  papers  of  the  person 
named  in  it,  described  it  as  "  an  execution  upon  all  the  party's 
papers,"  and  said : 

**  To  enter  a  man's  house  by  virtue  of  a  nameless  warrant.  In  order 
to  produce  evidence,  is  worse  than  the  Spanish  inquisition — ^a  law 
tinder  which  no  Englishman  would  care  to  live  an  hour.'*  Entinck 
V.  €arrinffton,  19  State  Trials,  1029. 

Any  process  which  is  issued  to  perform  the  office  of  a 
search  warrant  should  conform  in  some  remote  degree,  at 
least,  in  certainty  and  specific  description,  to  the  require- 
ments of  a  valid  search  warrant.  The  subpoena  issued  in 
this  case  may  possibly  meet  these  requirements,  but  it  is  not 
too  much  to  say  that  it  resembles  more  nearly  a  general  war- 
rant  to  search  aU  the  private  papers  of  a  witnL.  It  fall, 
but  little  short  of  being  in  substance  and  effect  a  roving 
commission,  devised  by  the  government  to  compel  a  witness 
to  bring  before  the  grand  jury  a  general  mass  of  the  private 
papers  of  his  principal,  in  order  that  the  prosecuting  officer 
might  discover  whether  at  any  time  during  its  corporate  life 
the  principal  had  been  a  party  to  any  act  which  could  afford 
the  basis  of  a  criminal  acpusation.  This  was  a  wanton  as- 
sault upon  the  right  of  privacy,  and  in  my  judgment  the 
process,  in  view  of  the  circumstances  under  which  and  the 
purposes  for  which  it  was  issued,  authorized  an  unreason- 
able search  and  seizui.  of  papers  withm  the  spirit  and 
meaning  of  the  fourth  amendment. 

The  conclusions  thus  indicated  would  ordinarily  lead  to  an 
order  for  the  petitioner's  discharge,  but  the  order  compelling 
him  to  produce  the  papers  alluded  to  in  the  subpoena  was 
made  by  one  of  the  judges  of  this  court,  and  although  it  was 
not  made  under  circumstances  which  afforded  an  oppor- 
tunity for  deliberate  consideration,  the  manifest  impro- 
priety of  reversing  it  indirectly  in  the  same  court,  held  by  a 
different  judge,  is  so  great  that  it  ought  not  to  be  done  if  the 
only  result  will  be  to  shift  the  burden  of  preparing  a  record 
for  a  review  by  a  higher  tribunal  from  the  one  party  to  the 
other.  Whether  the  present  decision  is  in  favor  of  the  peti- 
tioner  or  against  him,  it  is  understood  that  it  will  be  taken 


camors-m'connell  CO.  V.  m'connell.  817 

SyllabuB. 

for  review  to  the  Supreme  Court,  and  pending  that  review 
the  petitioner  will  not  be  confined. 

Under  these  circumstances  an  order  will  be  entered  refus- 
ing the  discharge  of  the  petitioner. 


1412]   CAMORS-McCONNELL  COMPANY  v,  McCON- 

NELL.» 

(Circuit  Court,  S.  D.  Alabama.    August  31,  1905.) 

[140  Fed.,  412.] 

Contracts— Legality— Restbaint  of  Trade.— An  agreement,  as  inci- 
dental to  the  sale  of  property  as  a  business,  that  the  seller  will 
not  enter  into  a  competing  business,  is  valid  and  enforceable,  not- 
withstanding it  is  in  partial  restraint  of  trade.* 

[Ed.  Note.— For  cases  in  point,  see  vol.  11,  Cent.  Dig.    Contracts, 
§§  542-545,  555.] 

Same— Illegal  Purpose  of  Covenantee.— A  contract  by  which  a 
person  sells  his  property  and  business  good  will  to  another  can- 
not be  repudiated  on  the  ground  that  the  purchaser  acquired  the 
property  for  the  purpose  of  obtaining  a  monopoly  of  the  business 
and  in  pursuance  of  an  illegal  combination  in  restraint  of  trade. 

[Ed.  Note.— For  cases  in  point,  see  vol.  11,  Cent.  Dig.    Contracts. 
§§  462-464,  547.] 

Same.— In  order  to  defeat  a  suit  to  enforce  a  contract  on  the  ground 
that  its  enforcement  is  sought  to  aid  and  facilitate  the  carrying 
out  of  an  illegal  combination  in  restraint  of  trade,  it  must  appear 
that  the  contract  is  directly  connected  with  such  unlawful  pur- 
pose, and  not  merely  collateral  thereto. 

Equity— Maxims— Coming  into  Court  with  Clean  Hands.— The 
maxim  that  one  coming  into  a  court  of  equity  must  come  with 
clean  hands  applies  only  in  case  of  fraud  or  misconduct  on  the 
part  of  [413]  complamant  in  regard  to  the  transaction  which  is  the 
subject  of  controversy. 

[Ed.  Note.— For  cases  in  point,  see  vol.  19,  Cent  Dig.    Equity.  §§ 
185-187.] 

Specifio  Performance— Sale  of  Business-^Enjoining  Violation  — 
A  court  of  equity  will  enjoin  a  defendant  from  violating  a  contract 
clearly  shown,  by  which  he  deliberately  obligated  himself  for  a 
valuable  consideration  not  to  engage  in  a  certain  business 


S^^sS^  ^^  ^*^^'*  ^"^"^  ^^  Appeals,  Fifth  Circuit  (140  Fed.,  987). 
»  Syllabus  copyrighted,  1906,  by  West  Publishing  Co. 


21220 — ^vol  2 — 07  m- 


-52 


818 


140   FE1>EBAL   KEPORTER,   413. 
Opinion  of  the  Court. 


In  Equity.    On  motion  for  preliminary  injunction. 

Howe,  Spencer  d;  Ooeke  and  B.  H,  <&  N,  R.  Clarke,  for 
complainant. 

Gregory  L,  <&  H.  T.  Smith,  for  defendant. 

TouLMiN,  District  Judge. 

The  averments  as  to  the  facts  of  tliis  case,  as  set  out  in 
the  bill  of  complaint  are  substantially  admitted  by  the  de- 
fendant,  with  the  exception  that  he  denies  that  the  contract 
of  January  27,  1900  (Exhibit  III  to  the  answer),  was  made 
upon  the  terms  set  out  in  the  contract  of  December  8,  1899 
(Exhibit  A  to  the  bill),  or  that  it  had  any  reference  to  the 
provisions  of  said  last-named  contract,  and  that  the  provi- 
sions of  article  5  therein  were  for  the  use,  benefit,  and  pro- 
tection of  the  complainant.  And  defendant  avers  that  at 
the  time  the  contract  of  December  8,  1899,  was  made  it  was 
understood  that  the  United  Fruit  Company  was  the  real 
party  interested  in  said  contract,  and  that  the  provisions  of 
article  5  therein  were  made  for  its  benefit  and  protection.  It 
does  not  appear  from  anything  now  before  the  court  that 
the  United  Fruit  Company  has  ever  availed  itself  of  the 
provisions  of  article  5,  referred  to,  that  any  consideration 
therefor  ever  passed  or  was  intended  to  pass  from  it  to  the 
defendant,  or  that  said  company  ever  complained  of  the 
^nolations  of  said  contract  by  the  defendant.  The  United 
Fruit  Company  is  not  a  party  to  this  suit,  but  it  appears 
that  it  is  a  stockholder  of  the  Camors-McConnell  Company. 
I  think  that  on  the  bill,  answer,  and  evidence,  as  now  pre- 
sented, there  can  be  no  doubt  that  the  contract  of  December 
8,  1899,  was  made  in  contemplation  of  the  formation  of  the 
corporation  of  Camors-McConnell  Company,  and  of  its  adop- 
tion by  such  corporation  when  organized,  and  that  it  was 
adopted  by  said  corporation,  and  that  the  contract  of  Janu- 
ary 27,  1900,  transferring  the  property,  effects,  business,  and 
good  will  of  Camors,  McConnell  &  Co.,  was  made  in  pur- 
suance of,  and  upon  the  terms  set  out  in,  said  contract  of 
December  8,  1899,  and  that  the  Camors-McConnell  Company 
has  performed  the  obligations  thereby  assumed  by  it,  and  is 
entitled  to  all  the  benefits  accruing  under  said  contracts. 


CAMORS-M 'con NELL   CO.    V.    m'cONNELL. 


819 


Opinion  of  the  Court. 

But  the  defendant  contends  that  the  real  purpose  of  the 
transaction  in  question  was  to  suppress  existing  competition 
between   the  business  conducted   by   the   copartnership   of 
Camors,  McConnell  &  Co.  and  the  United  Fruit  Company, 
and  to  combine  said  business  with  corporations  and  com- 
panies confederated  together  to  monopolize  and  control  the 
business  of  buying,  importing,  and  selling  fruit  throughout 
the  United  States,  and  that  the  contract  sought  to  be  enforced 
is  therefore  illegal  and  void.     The  defendant  further  con- 
tends that  the  com-  [414]  plainant  and  the  United  Fruit 
Company  are  conducting  their  business  in  violation  of  the 
laws  of  the  United  States,  and  that  at  the  time  the  contract 
involved  in  this  suit  was  made  and  entered  into  it  was  for 
the  purpose  of  aiding  and  facilitating  the  United  Fruit  Com- 
pany and  the  Camors-McConnell  Company  and  other  com- 
panies in  combination  with  them  in  conducting  their  business 
in  violation  of  the  laws  of  the  United  States,  and  that  said 
contract   was   made   in   restraint  of  trade   and   commerce 
among  the  several  states  and  with  foreign  nations,  and  for 
the  purpose  of  forming  and  maintaining  a  combination  in 
the  form  of  a  trust,  and  for  that  reason  it  is  illegal  and  not 
enforceable.     The  covenant  here  sought  to  be  enforced  is 
that  wherein  the  defendant  agreed  that  he  would  not,  "  either 
individually   or  by   or   through   a   corporation,   jointly   or 
severally,  directly  or  indirectly,  engage  in  the  growing  or 
importing  or  selling  of  tropical  fruits,  or  any  other  business, 
directly  or  indirectly,  in  competition  with  the  new  corpora 
tion,"  the  Camors-McConnell   Company.     The  test  of  the 
legality  and  validity  of  this  covenant  is  whether  the  main 
contract  is  legal.     If  the  contract  is  illegal,  affirmative  relief 
against  it  will  not  be  granted.     No  court  will  lend  its  assist- 
ance in  any  way  towards  carrying  out  the  terms  of  an  illegal 
contract.    Spri^igr  Co.  v.  Knotclton,  103  U.  S.  49,  26  L.  Ed. 
347;  McMuUen  v.  Hoffman,  174  U.  S.  639,  19  Sup.  Ct.  839. 
43  L.  Ed.  1117;  Harriman  v.  Northern  Secimties  Co    197 
U.  S.  244,  25  Sup.  Ct.  493,  49  L.  Ed.  739. 

A  contract  may,  in  a  variety  of  ways,  affect  interstate  com- 
merce, and  yet  be  entirely  valid,  because  the  interference  pro- 
duced by  the  contract  is  not  direct.  The  fact  Ojat  trade  and 
commerce  might  be  indirectly  affected  is  not  sufficient.    The 


oZU 


140   FEDERAL   REPORTER,  414. 


Opinion  of  the  Court. 

effect  must  be  direct  and  proximate.  Hopkins  v.  U.  S.,  171 
U.  S.  578,  19  Sup.  Ct.  40,  43  L.  Ed.  290;  U,  S.  v.  E.  G. 
Knight  Co.,  156  U.  S.  1,  15  Sup.  Ct.  249,  39  L.  Ed.  325; 
Northern  Securities  Co.  v.  U.  S,,  193  U.  S.  198,  24  Sup.  Ct 
436,  48  L.  Ed.  679.  The  indirect  effect  of  the  contract  under 
consideration  might  be  to  enhance  the  price  of  tropical  fruit, 
but  the  contract  itself  would  not  directly  or  necessarily  for 
that  reason  be  in  restraint  of  interstate  trade  or  commerce. 
While  it  might  tend  to  restrain  such  trade,  the  restraint  would 
be  an  indirect  result.  In  the  sale  of  a  going  business  or  con- 
cern, with  the  good  will  attached,  where,  as  ancillary  and 
incident  thereto,  the  seller  enters  into  a  covenant  with  the 
buyer  that  he  would  not  compete  with  him  in  any  way  as  to 
diminish  the  value  of  the  property  or  business  sold,  although 
such  covenant  may  be  in  partial  restraint  of  trade,  it  should 
be  upheld  and  enforced.  Harrison  v.  Glucose  Svgar  Re- 
fning  Co.,  116  Fed.  307,  53  C.  C.  A.  484,  58  L.  E.  A.  915 ; 
Nat.  Enameling  &  Stamping  Co.  v.  Haherman  (C.  C.)  120 
Fed.  415.  In  U.  S.  v.  Addyston  P.  €&  S.  Co.,  85  Fed.  281, 
29  C.  C.  A.  141,  46  L.  E.  A.  122,  the  court  said : 

"Covenants  In  partial  restraint  of  trade  are  generally  uplield  as 
valid  when  they  are  agreements  by  tlie  seller  of  proi)erty  or  business 
not  to  compete  with  the  buyer  in  such  way  as  to  der«)gate  from  the 
value  of  the  property  or  business  sold.'* 

An  agreement,  as  incidental  to  a  sale  of  property  as  a  busi- 
ness, that  the  seller  would  not  enter  into  a  competing  busi- 
ness, is  valid,  notwith-  [415]  standing  it  is  in  restraint  of 
trade  to  that  extent.  A.  Booth  cC*  Co.  v.  Davis  (C.  C.)  127 
Fed.  875;  S,  Jarvis  Adams  Co.  v.  Knapp,  121  Fed.  34,  58 
C  C.  A.  1 ;  U,  S,  V.  Addyston  P.  <&  S.  Co.,  supra;  Id.,  175 
TJ.  S.  211,  20  Sup.  Ct  96,  44  L.  Ed.  136.  The  sale  and  trans- 
fer by  a  person  of  his  property  and  good  will  to  another 
cannot  be  repudiated  on  the  ground  that  the  purchaser  ac- 
quired the  property  for  the  purpose  of  obtaining  a  monopoly 
of  the  business,  and  in  pursuance  of  an  illegal  combination 
in  restraint  of  trade.  Metcalf  v.  Am,  School  Furniture  Co. 
(C.  C.)  122  Fed.  115.  In  Diamond  Match  Co.  v.  Roeher^  106 
N.  Y.  473, 13  N.  E.  419,  60  Am.  Eep.  464,  the  court  said : 

"We  are  not  aware  of  any  role  of  law  which  makes  the  motive 
of  the  coveiTOtee  the  test  of  the  validity  of  such  a  contract.  On 
the  contrary,  we  suppose  a  party  may  legally  purchase  the  trad© 


camors-m'connell  CO.  V,  m'connell. 

Opinion  of  the  Court 


821 


and  business  of  another  for  the  very  purpose  of  preventing  competi- 
tion, and  the  validity  of  the  contract,  if  supported  by  a  consideration, 
will  depend  upon  its  reasonableness  as  between  the  parties."  Con- 
nolly V.  Union  Sewer  Pipe  Co.,  184  U.  S.  547,  22  Sup.  Ct.  431,  46  L.  Ed. 
r>79;  Knapp  v.  S.  Jarvis  Adams  Co.  (CCA.)  135  Fed.  1008. 

In  the  case  of  an  unlawful  combination  of  the  nature 
asserted  here,  the  remedy  is  by  well-recognized  and  direct 
proceedings.  The  fact,  if  it  be  a  fact,  that  the  complainant 
is  one  of  an  association  or  combination  of  corporations, 
which  constitutes  a  monopoly,  and  that  its  general  business 
is  illegal,  as  one  in  restraint  of  trade,  cannot  be  invoked 
collaterally  to  affect  in  any  manner  its  independent  contract 
obligations  or  rights.  Yarhorough's  Adm^r  v.  Avant,  66  Ala. 
526;  Ware  v.  Curry,  07  Ala.  274;  Johnston  v.  Smith's  Adm\ 
70  Ala.  108.  It  is  held  that  one  who  voluntarily  and 
knowingly  deals  with  the  parties  so  combined  cannot,  on 
the  one  hand,  take  the  benefit  of  his  bargain,  and,  on  the 
other,  defend  against  the  contract  on  the  ground  of  the 
illegality  of  the  combination.  Harrison  v.  Glucose  Sugar 
Refining  Co.,  supra;  Dennehy  v.  McNulta,  86  Fed.  825,  30 
C.  C.  A.  422,  41  L.  R.  A.  609. 

On  the  case  as  now  presented,  and  assuming  that  there 
was  a  combination  or  agreement  between  the  complainant 
and  other  corporations,  which  was  prohibited  by  law  as 
being  in  restraint  of  trade,  I  think  that  the  contract  in 
controversy  between  complainant  and  defendant  was  col- 
lateral to  the  said  unlawful  agreement  or  combination.  More- 
over, I  do  not  think  that  the  direct  or  necessary  operation 
of  said  contract  tends  to  restrain  interstate  or  international 
trade  or  commerce,  or  to  create  a  monopoly  therein.  My 
opinion,  therefore,  is  that  there  is  nothing  illegal  in  the 
consideration  and  performance  of  said  contract,  and  that  the 
defendant  should  not  be  permitted  to  repudiate  it  because 
the  association  of  complainant  with  other  corporations  is 
illegal. 

But  it  is  urged  on  the  part  of  the  defendant  that,  even  if 
the  contract  m  controversy  was,  as  a  separate  and  independ- 
ent contract,  a  lawful  one,  it  was  a  part  of  an  unlawful 
scheme  to  monopolize  interstate  trade  and  commerce  in 
tropical  fruit,  and  it  thereby  became  unlawful.  It  is  true 
there  are  some  cases  in  which  courts  have  held  that  even  the 


Q99 


140  FEDERAL  REPORTER,  415. 


Optnfon  of  tbe  Court. 

fact  that  a  contriiet  is  ooe  for  the  sale  of  property  or  of  busi- 
ness and  good  will  has  not  saved  its  validity,  if  it  was  shown 
that  it  [416]  was  only  a  part  of  a  plan  to  acquire  all  the 
property  used  in  a  business  by  one  management  with  a  view 
to  establishing  a  monopoly.  It  was  held  that  in  those  cases 
the  actual  intent  to  monopolize  must  appear.  It  is  not 
deemed  enough  that  the  mere  tendency  of  the  provisions  of 
the  contract  should  be  to  restrain  competition.  JJ.  8.  v. 
Addyston  P.  S  8*  Co.,  m/pra.  I  think  it  will  be  found  that 
the  cases  referred  to  were  direct  proceedings  against  the  al- 
leged monopolies  wherein  it  was  sought  to  enjoin  them. 
There  are  no  provisions  in  the  contract  here  sought  to  be  en- 
forced which  refer  to  the  restrictions  of  trade,  or  to  the  regu- 
lation of  the  importation,  sale,  and  prices  of  fruit,  evidencing 
an  intent  to  establish  a  monopoly  in  such  trade. 

In  the  case  of  Sioift  c£*  Co.  v.  U.  S.,  196  U.  S.  3T5,  25  Sup. 
Ct.  276,  49  L.  Ed.  51. S,  a  bill  was  filed  by  the  United  States 
to  enjoin  the  defendants'  conunission  of  alleged  violations  of 
the  law  "  to  protect  trade  and  commerce  against  unlawful 
i^estraint  and  monopolies.''  It  charged  a  combination  of  a 
dominant  proportion  of  the  dealers  in  fresh  meats  through- 
out the  United  States  to  do  and  not  to  do  certain  specified 
"things,  with  tlie  intent  to  restrain  competition  among  them- 
selves, and  to  monopoh'ze  the  supply  and  distribution  of  fresh 
meats  throughout  the  United  States.  The  case  was  sub- 
mitted on  bill  and  demurrer  thereto.  The  court  said  it 
seemed  to  them  ''  that  this  allegation  of  intent  colored  and 
applied  to  all  the  specific  charges  of  the  bill,  and  intended  to 
allege  successive  elements  of  a  single  connected  scheme."  In 
the  course  of  the  opinion  the  court  further  said : 

**Tlie  constituent  elements  are  enough  to  give  to  the  scheme  a 
body.  ♦  ♦  *  Moreover,  whatever  we  may  think  of  them  separately, 
when  we  take  them  a.s  distinct  charges,  they  are  sufficient  as  elements 
of  a  scheme.  It  is  suggested  that  the  several  acts  charged  are  lawful, 
and  that  intent  can  make  no  difference.  Bitt  they  are  bound  together 
as  the  parts  of  a  single  plan.  The  plan  may  make  the  parts  unlawful. 
The  statute  gives  this  proceeding  against  combinations  in  restraint  of 
commerce  ainong  the  states  and  against  attempts  to  monopolize  the 
same.  Intent  is  almost  essential  to  such  combination,  and  is  essential 
to  such  an  attempt.  Where  acts  are  not  sufficient  in  themselves  to 
produce  a  result  which  the  law  seeks  to  prevent,  for  instance,  the 
monopoly,  ♦  ♦  ♦  an  intent  to  bring  it  to  pass  is  necessary  in  order 
to  produce  a  dangerous  probability  that  will  happen.    But.  when  that 


camors-m'connell  CO.  V.  m'connell. 

Opinion  of  the  Court. 


823 


intent  and  the  consequent  dangerous  probability  exist,  the  statute 
*  *  ♦  directs  itself  against  the  dangerous  probability,  as  well  as 
against  the  completed  result.  The  charge  is  not  of  a  single  agreement, 
but  a  course  of  conduct  intended  to  be  continued.  Under  the  act  it 
is  the  duty  of  the  court,  when  applied  to,  to  stop  the  conduct.  ♦  *  * 
The  most  innocent  and  constitutionally  protected  of  acts  or  omissions 
may  be  a  step  in  a  criminal  plot,  and,  if  it  is  a  step  in  a  plot,  neither 
its  innocence  nor  the  Constitution  is  sufficient  to  prevent  the  punish- 
ment of  the  plot  by  law."    196  U.  S.  375,  25  Sup.  Ct.  27G,  49  L.  Ed.  518. 

As  I  understand  these  expressions  of  the  court,  they 
amount  simply  to  a  declaration  that  conduct  agreed  upon  to 
effect  an  unlawful  object  may  be  unlawful,  and  that  the  court, 
when  applied  to  in  a  direct  proceeding  therefor,  will  stop 
such  conduct  by  injunction,  as  well  as  punish,  in  proper 
criminal  proceedings,  the  unlawful  act  when  completed,  not- 
withstanding it  may  have  been  accomplished  by  separate  acts 
ever  so  innocent  in  themselves.  Being  steps  in  a  criminal 
plot  or  scheme,  bound  together  by  a  common  intent,  their 
innocence  [417]  is  not  sufficient  to  prevent  the  punishment 
of  the  completed  act.  I  do  not  think  the  decision  in  the 
Swift  Case  has  any  application  to  this  proceeding. 

The  defendant  further  claims  that  the  complainant  has 
entered  into  a  combination  with  various  other  importers  of 
fruit  for  the  purpose  of  acquiring  a  monopoly  in  the  importa- 
tion and  sale  of  the  same,  and  that  the  contract  in  question 
was  to  aid  and  facilitate  that  purpose,  and  he  insist?  that  the 
court  should  for  that  reason  refuse  to  enforce  sucli  contract, 
and  he  invokes  the  maxim  that  he  who  comes  into  a  court 
of  equity  nuist  do  so  with  clean  hands.  The  combination 
referred  to  may  be  an  unlawful  one,  but  the  proposition 
that  the  defendant,  while  violating  a  contract  made  with 
the  complainant,  is  entitled  to  defeat  a  suit  brought  to  enforce 
such  contract,  because  the  complainant  is  carrying  on  its 
business  in  an  unlawful  manner  as  a  monopoly,  seems  to  me 
to  be  unwarranted.  If  the  complainant  had  brought  suit 
against  the  defendant  for  a  breach  of  contract,  or  violation 
of  its  alleged  rights  founded  upon  the  combination,  then  it 
niight  be  pertinent  to  inquire  into  the  character  of  the  com- 
bination, and  ascertain  whether  the  court  would  enforce  any 
rights  growing  out  of  it.  Strait  v.  Harrow  Co.  (C.  C.) 
51  Fed.  819;  Edison  ElectHc  Light  Co.  v.  Sawyer-Man 
Electric  Co.,  53  Fed.  598,  3  C.  C.  A.  605.     Wlienever  it  is 


824 


140  FEDERAL  REPOBTER,  417. 


Opinion  of  the  Court 

necessaiy  for  the  plaintiff  to  prove  an  unlawful  combination 
or  agreement  in  order  to  recover,  no  reeoverj^  or  relief  can 
be  had.    A  contract  connected  with  and  growing  out  of  an 
illegal  act  cannot  be  enforced.    McMullan  v.  Uoifmati  (C. 
C.)  69  Fed.  615.    Such,  in  my  opinion,  is  not  tlie  case  at 
bar  as  now  presented.    "  The  rule  that  one  coming  into  a 
court  of  equity  must  come  with  clean  hands  is  confined  to 
the  conduct  of  the  party  in  the  matter  before  the  court,  and 
not  to  matters  aliunde.    Courts  will  not  refuse  redress  to  the 
suitor  because  his  conduct  in  other  matters,  not  then  before 
the  court,  inay  not  be  blameless.    It  is  enoiigli,  if  the  suitor 
shows  he  has  acted  justly,  fairly,  and  legally  in  the  subject- 
matter  of  the  suit."    ''  The  iniquity  must  have  been  done  in 
regard  to  the  defendant  himself,  and  must  have  been  done  in 
regard  to  the  matter  in  litigation."    Bonsack-Mach,  Co.  v. 
Smith  (C.  C.)  70  Fed.  386,  and  authorities  therein  cited; 
Liverpool  di  L.  ds  G,  Ins,  Co,  v.  Clunie  (C.  C.)  88  Fed.  160; 
Knapp  V.  S.  Jarvis  Adams  Co.  (C.  C.  A.)  135  Fed.  1008. 

The  maxim  of  ecuiity  to  which  defendant  rcfei-s  contem- 
plates some  fraud  or  misconduct  on  the  pan  of  complainant 
in  regard  to  the  transaction  which  is  the  subject  of  contro- 
versy.   '•  It  must  be  evil  practice  or  wroii^r  conduct  in  the  par- 
ticular matter  or  transaction  in  respect  to  which  judicial  pro- 
tection or  redress  is  sought."    Authorities  sttpra;  1  Pom. 
Eq.  Jur.  399.    "It  is  well  settled  that  the  granting  of  a 
provisional  injunction  rests  in  the  sound  discretion  of  the 
trial  court,  and  that  it  is  not  necessary  that  the  court  should, 
before  granting  it,  be  satisfied  from  the  evidence  before  it 
that  the  plaintiff  wiU  certainly  prevail  upon  the  final  hear- 
ing of  the  cause.    On  the  contrary,  '  a  probable  right  and 
a  probable  danger  that  such  right  will  be  defeated,  without 
the  special  interposition  of  the  court,'  is  all  that  need  be 
shown  as  a  [418]  basis  for  such  an  order."    Sanitary  Re- 
dnetion  Works  v.  California  Reduction  Co.  (C.  C.)  94  Fed. 
693;   Georgia  v.  Brails  ford,  2   Dall.  402,   1   L.  Ed.   433; 
1  High  on  Inj.  p.  4.    "  If  there  is  one  thing  more  than 
fcnother  which  is  essential  to  the  trade  and  commerce  of  this 
country,  it  is  the  inviolability  of  contracts  deliberately  en- 
tered into,  and  to  allow  a  person  of  mature  age,  and  not  im- 
posed upon,  to  enter  into  a  contract,  to  obtain  the  benefit 


m'cONNELL   v.    CAMORS-m'cONNELL   CO. 


825 


Opinion  of  the  Coui*t 

of  it,  and  then  to  repudiate  it  and  the  obligation  which  he 
has  undertaken,  is  prima  facie,  at  all  events,  contrary  to 
the  interests  of  any  and  every  country."  "  In  all  such  cases  " 
as  that  now  before  the  court  "  courts  have  uniformly  en- 
joined the  delinquent  party  from  engaging  in  the  business 
from  which  he  has  agreed  to  refrain,  and  from  disclosing 
the  secrets  of  the  business  which,  he  has  thus  acquired." 
Harrison  v.  Glucose  Sugar  Refining  Co.,  116  Fed.  310,  63 
C.  C.  A.  484,  58  L.  R.  A.  915,  and  authorities  therem  cited. 

I  am  of  opinion  that  the  complainant  is  entitled  to 
the  injunction  restraining  H.  L.  McConnell  from  a  breach 
of  his  contract  with  the  complainant  as  set  out  in  the  bill 
of  complaint,  and  an  injunction  will  be  issued  in  accordance 
with  the  prayer  of  said  bill,  except  as  to  so  much  thereof 
as  prays  that  defendant  be  enjoined  from  becoming  or  re- 
maining a  stockholder  of  the  American  Banana  Company, 
as  to  which  an  injunction  is  now  denied. 

Let  a  decree  be  entered  and  a  preliminary  injunction 
issue  in  accordance  with  the  foregoing  opinion,  on  com- 
plainant's giving  a  good  and  sufficient  bond  in  the  sum  of 
$1,000,  conditioned  as  required  by  law  and  rules  of  court 


[9871  McCONNELL  tJ.  CAMORS-McCONNELL  CO. 

(Circuit  Court  of  Appeals  Fifth  Circuit     October  30,  1905.     On  Re- 
hearing, February  6,  1906.) 

[140  Fed.,  987.] 

Appeal  from  the  Circuit  Court  of  the  United  States  for 
the  Southern  District  of  Alabama. 

For  opinion  below,  see  140  Fed.  412.     [See  p.  817.] 

Gregory  L.  Smith  and  Ha'i-ry  T.  Smith,  for  appellant. 

W.  B.  Spencer  and  R.  H.  Clarke,  for  appellee. 

Before  Pardee  and  Shelby,  Circuit  Judges,  and  Maxey, 
District  Judge. 

Per  Curiam.    Without  examining  this  case  now  as  to  its 
merits,  the  court  has  concluded  that  it  is  not  advisable  or 


826 


141   FEDERAL   REPORTER,   922. 


Sta  lenient  of  the  Case.  ^ 

proper  to  interfere  with  the  discretion  of  the  trial  court  in 
the  granting  of  the  temporary  injunction.  Adhering  to  the 
construction  we  have  heretofore  given  the  act  allowing  ap- 
peals in  such  cases,  we  affirm  the  judgment  of  the  Circuit 
Court.  Lehman  v.  Graham,  135  Fed.  39,  67  C.  C.  A.  513 ; 
Eailroad  Comm,  v.  Bosenbaumj  130  Fed.  110,  64  C.  C.  A. 
444;  Kerr  v.  New  Orleans,  126  Fed.  920,  61  C.  C.  A.  450; 
Massie  v.  Buck,  128  Fed.  27,  62  C.  C.  A.  535. 

ON  PETITION  FOR  REHEARING. 

The  judges  who  concurred  in  our  former  decree  are  still 
satisfied  therewith,  and  the  i3etition  for  rehearing  is  denied. 


(tBSl    AMERICAN  BRAKE  BEAM  CO.  v.  PUNGS. 

(Circuit  Court  of  Appeals,  Seventli  Circuit    Jamiary  20,  1905.) 

[141  Fed.  923.] 

Contracts — Legality — Restbaint  of  Trade. — A  contract  recited  that 
plaintiff,  who  was  the  patentee  of  an  invention  relating  to  brakt? 
beams,  for  the  consideration  of  |10,000  to  be  paid  him,  had  assigned 
to  defendant,  which  was  a  corporation  engaged  in  the  manufacture 
of  brake-beams,  a  certain  patent  and  a  pcndiiijr  application  for  a 
second  and  provided  that  plaintiff  during  the  life  of  the  patent 
should  not  become  connected  with  any  company  manufacturing  or 
selling  brake-beams  in  the  United  States  either  as  officer,  employ^ 
or  shareholder  but  reserved  to  him  the  right  to  terminate  such 
part  of  the  contract  at  any  time  by  refunding  the  consideration 
paid  him  by  defendant.  Held,  that  such  agreement  to  remain  out 
of  the  brake-beam  business  did  not  render  the  contract  unlawful 
as  one  in  restraint  of  trade  and  competition  or  creating  a  monopoly 
and  that  plaintiff  could  maintain  an  action  thereon  to  recover  the 
stipulated  consideration. 

[Ed.  Note. — For  cases  in  ijoint  see  vol.  11,  Cent.  Dig.  Contracts, 
|§  550-553.] 

In  Error  to  the  Circuit  Court  of  the  United  States  for  the 

Northern  Division  of  the  District  of  Illinois. 

The  action  in  the  Circuit  Court  was  on  a  written  agreement  between 
Pungs  and  the  Brake  Beam  Company,  wherein  the  Brake  Beam  Com- 


AMERTCAN   BRAKE    BEAM    CO.    V,   PUXGS. 


827 


Statement  of  the  Case. 

pany,  for  certain  considerations  therein  named,  agreed  to  pay  Pungs 
the  sum  of  ten  thousand  dollars,  credit  being  given  for  two  thousand 
five  hundred  dollars  already  paid. 

The  defense  was* the  general  issue,  with  notice  of  special  defenses. 

At  the  trial,  on  motion  of  the  plaintiff,  a  verdict  for  the  plaintiff 
for  the  sum  of  nine  thousand,  one  hundred  and  thirty-five  dollars,  and 
forty-one  cents  was  returned;  and  on  this  verdict,  after  motion  for 
new  trial  was  os^erruled,  judgment  was  entered.  Upon  the  refusal  of 
the  court  to  grant  a  new  trial;  upon  the  court's  direction  to  the  Jury 
to  return  a  verdict  for  the  plaintiff ;  and  uiK)n  the  exclusion  of  certain 
evidence  offered  on  the  trial  by  defendant,  tlie  principal  errors  com- 
plained of  are  assigned. 

The  evidence  showed,  that  beginning  in  1886  as  an  inventor,  and 
1887  as  a  manufacturer,  Pungs  was  in  the  metallic  brake-beam  busi- 
ness until  1892,  when  with  others,  he  organized  the  American  Brake 
Beam  Company,  which  took  over,  along  with  other  companies,  his  pre- 
vious company.  Of  the  American  Brake  Beam  Company,  Pungs  was  a 
stockholder  and  the  manager  until  1894,  when  selling  his  stock  to 
Henry  D.  Laughlin,  the  latter  became  general  manager  of  the  com- 
pany. Until  1897,  however,  Pungs  remained  in  the  employ  of  the  com- 
pany, superintending  its  business  at  Detroit,  Michigan.  On  this  latter 
date  he  was  discliarged. 

January  19th,  1899,  one  of  the  contracts  sued  upon  was  executed  in 
writing  jis  follows : 

"  An  agreement  between  Wm.  A.  Pungs  of  the  city  of  Detroit,  in  the 
state  of  Michigan,  and  the  American  Brake  Beam  Co.,  a  corjioration 
under  the  laws  of  the  state  of  Illinois,  whose  chief  or  home  oflice  is  in 
the  city  of  Waukegan,  in  said  state. 

[924]  Witnesseth:  In  consideration  of  the  mutual  agreements  of 
the  parties,  as  herein  expressed,  they  agree  as  follows : 

•'1st :  Under  the  date  of  .Tune  28th,  1898,  letters  patent  No.  606,298 
were  issued  from  tlie  patent  office  of  the  United  States  to  said  Pungs. 
covering  the  brake  beam  therein  described.  His  application  for  a 
patent  on  another  brake  beam  has  been  allowed  by  the  patent  office,  as 
per  notice  to  hiin  from  Tliomas  S.  Sprague  &  Son,  dated  Nov.  12th, 
1898,  and  hereto  attached.  This  latter  patent,  Pungs  will  cause  to  be 
issued  to  himself  or  the  Brake  Beam  (^o.,  as  his  assignee,  as  may  be 
iigreed. 

"  2nd :  Both  these  patents  said  Pungs  sells  to  said  Company,  and  he 
will  assign  them  in  due  form,  and  also  will  assign  to  the  Company  all 
such  letters  patent  as  may  be  hereafter  granted  to  him  on  any  metallic 
brake  l)eam  or  any  ]mvt  relating  to  a  l)rake  hemii,  and  will  enter  into  a 
written  contract  witli  the  Company  not  to  engage  in  a  l)rake  beam  busi- 
ness in  any  way,  shape  or  form,  and  not  to  be  connected  with  any 
company  manufacturing  or  selling  brake  beams,  either  as  officer 
employ^  or  shareholder  (the  Chicago  Railway  Equipment  Company 
alone  excepted),  all  for  the  price  and  sum  of  Ten  Thousand  Dollars 
($10,000.00)  to  be  paid  to  him  by  said  Brake  Beam  Company  in  four 


828 


141  FEDERAL  REPORTER,  924. 


Statement  of  the  Case. 

equal  installments  of  $2,500.00  each,  the  first  payable  three  mouths 
after  the  date  hereof,  the  second  in  six  months,  the  third  in  nine 
months,  and  the  fourth  in  twelve  months  after  said  date ;  such  stay-out 
contract  to  cover  the  period  covered  by  said  letters  patent  No.  606,298, 
and  to  be  coextensive  with  the  country.  But  he  shall  be  given  the 
right  In  said  contract  to  at  any  time  terminate  it  by  refunding  to  said 
Brake  Beam  CJompany,  its  successors  or  assigns,  said  sum  of  Ten 
Thousand  Dollars  ($10,000.00). 

"  3rd :  In  the  event  said  Pungs  at  any  thne  prior  to  the  expiration 
of  the  term  covered  by  said  letters  patent,  that  is  to  say,  at  any  time 
prior  to  June  28th,  1915,  becomes  an  officer,  agent  or  shareholder  In 
any  company  or  corporation  manufacturing  or  selling  metallic  brake 
beams  of  any  type  whatever,  or  engages  in  the  business  himself,  that 
In  that  case  his  so  doing  shall  be  construed  as  an  election  on  his  part 
to  reftind  to  said  Brake  Beam  Company  the  said  sum  of  Ten  Thousand 
Dollars  ($10,000.00),  forthwith,  and  he  covenants  and  agrees  so  to  do. 

"4th:  This  contract  is  in  no  way  to  affect  the  representative 
claims  of  the  parties  against  each  other  and  shall  not  be  so  treated, 
the  deal  covered  by  it  being  independent  and  alone. 

"  March  22nd,  1899,  a  supplemental  contract  In  writing  was  executed 
as  follows : 

"  An  agreement  between  William  A.  Pungs  of  the  city  of  Detroit,  the 
state  of  Michigan,  and  the  American  Brake  Beam  CJompany,  a  corpora- 
tion under  the  laws  of  the  state  of  Illinois,  whose  chief  olfice  is  in  the 
city  of  Waukegan  in  said  state. 

Witnesseth : 

"  In  consideration  of  the  mutual  agreements  of  the  parties  as  herein 
expressed,  they  agree  as  follows : 

"  1st :  Since  the  execution  of  the  contract  between  the  parties,  dated 
January  19th,  1899,  said  Pungs  has  transferred  to  said  Brake  Beam 
Company  letters  patent  of  the  United  States  No.  006,298  referred  to 
in  the  Ist  paragraph  of  said  contract,  and  has  also  executed  an  assign- 
ment to  said  Brake  Beam  Company  of  his  pending  application  for 
another  patent  on  brake  beams,  which  is  also  referred  to  in  said  Ist 
paragraph,  and  will  without  delay,  cause  the  letters  patent  covering 
his  said  application  to  be  forthwith  issued  to  said  Brake  Beam  (Com- 
pany, as  assignee  of  himself,  and  to  be  duly  delivered  to  the  Company. 

"  2nd.  As  contemplated  in  the  said  second  paragraph  of  said  contract 
of  Jauuai-y  19,  said  Pungs  now  enters  into  this  written  contract  with 
said  Company,  and  by  it  covenants  and  agrees  that  he  will  not  engage 
in  the  brake  beam  business  in  any  way,  shape  or  form  at  any  placo 
within  the  Unitiid  States  of  America,  its  territories,  or  the  District  of 
Columbia  and  that  he  will  not  be  connected  with  any  company  manu- 
facturing or  selling  brake  beams  in  the  United  States,  either  as 
officer,  employe,  or  shareholder  (the  Chicago  Railway  Equipment 
Company  alone  excepted),  at  any  time  during  the  period  covered  by 
said  letters  patent  No.  606,298.  Said  Pungs  reserves  the  right,  how- 
ever, to  at  any  time  terminate  this  contract,  and  thus  to  relieve  him- 


AMERICAN   BRAKE    BEAM    CO.   V.   PUNGS. 


829 


Opinion  of  the  Court. 

self  of  his  stay-out  [925]  obligation,  by  refunding  to  said  Brake  Beam 
Company,  its  successoi-s  or  assigns,  the  sum  of  Ten  Thousand  Dollars 
($10,000,000),  which  is  the  price  to  be  paid  him  by  said  company  for 
said  letters  patent,  and  his  stay-out  obligations,  as  hereinafter  more 
clearly  expressed. 

3rd :  For  the  letters  patent  as  aforesaid  and  the  stay-out  obligation 
aforesaid,  said  Brake  Beam  Company  covenants  and  agrees  to  pay 
to  said  Pungs  the  sum  of  Ten  Thousand  Dollars  ($10,000)  in  four 
equal  installments  of  twenty-five  hundred  dollars  ($2,500)  each,  the 
first  installment  to  be  payable  on  the  19th  day  of  April  A.  D.  1899 ;  the 
second  on  the  19th  day  of  July,  the  "third  on  the  19th  day  of  October, 
1899,  and  the  fourth  and  last  on  the  19th  day  of  January,  1900. 

4th :  In  the  event  said  Pungs  at  any  time  prior  to  the  expiration 
of  the  term  covered  by  said  letters  patent,  that  is  to  say,  at  any  time 
prior  to  June  28,  1915,  becomes  an  officer,  agent  or  shareholder  m  any 
company  or  corporation  manufacturing  or  selling  metallic  brake  beams 
of  any  type  whatever,  or  engages  in  the  business  himself,  then  and  in 
that  case  his  fo  doing  shall  be  construed  as  an  election  on  his  part  to 
refund  to  said  Brake  Beam  Company  said  sum  of  Ten  Thousand  Dol- 
lars ($10,000)  forthwith,  and  he  covenants  and  agrees  so  to  do. 

On  these  contracts,  twenty-five  hundred  dollars,  and  no  more,  have 
been  paid.  The  suit  was  for  the  balance.  Further  facts  are  stated 
in  the  opinion. 

Harry  P.  Weher,  for  plaintiff  in  error. 

B wight  C.  Rexford^  for  defendant  in  error. 

Grosscup,  Circuit  Judge,  after  stating  the  facts,  delivered 
the  opinion  of  the  court.  The  contract,  upon  which  suit 
was  brought,  obligated  the  Brake  Beam  Company  to  pay  an 
indivisible  sum,  ten  thousand  dollars.  The  consideration 
was  the  conveyance  to  the  Brake  Beam  Company  of  certain 
inventions  patented  and  to  be  patented ;  as  also  an  agreement, 
that  during  the  period  to  be  covered  by  certain  of  the  letters 
patent,  Pungs  would  not  engage  in  the  brake  beam  business 
in  any  place  within  the  United  States,  or  be  connected  with 
any  company  engaged  in  such  business.  The  contract  does 
not  disclose  how  much  of  the  consideration  was  for  the 
patents,  or  how  much  for  the  agreement  to  remain  out  of  busi- 
ness. On  the  face  of  the  contract,  either  consideration, 
assuming  that  they  were  both  lawful,  would  sustain  the  con- 
tract, and  entitle  Pungs  to  a  recovery. 

It  is  not  argued  that  the  consideration,  so  far  as  it  is 
embodied  in  the  inventions  transferred,  is  not  lawful.  •  Par- 


830 


111   FEDERAL   KEPOKTER,   925. 


Opinion  of  the  Court 

ties  may  lawfully  assign  inventions  not  yet  patented,  and  even 
future  inventions,  so  far  as  such  future  inventions  are  tribu- 
tary to  the  inventions  assi|j^ied. 

But  it  was  insisted  that  the  agreement  embodied  in  the 
contract  to  remain  out  of  the  brake  beam  business  within  the 
United  States  for  the  time  named,  was  an  attempt  to  illegally 
restrain  trade,  to  illegally  restrict  competition,  and  to  create 
a  monopoly ;  and  was,  therefore,  an  unlaw  fid  consideration ; 
and  evidence  was  offered  tending  to  show  that  though  the 
assignment  of  the  in\"entions  was  stated  to  be  a  part  of  the 
consideration,  the  sole  real  consideration,  as  understood 
between  the  parties  at  the  time,  was  this  agreement  to  remain 
out  of  tlie  brake  beam  business.  This  evidence  was  excluded. 
Evidence,  also,  was  offered  tending  to  show  that  the  inven- 
tioES  were  without  commercial  or  practical  value.  But 
independently  of  its  probative  weight  on  the  issue  whether 
the  agreement  to  remain  out  of  business  was  or  was  not  the 

cat 

sole  real  consideration,  such  evidence  dearly  would  have 
been  immaterial. 

[026]  The  first  question  thus  presented  is  this:  Is  the 
agi-eement  to  remain  out  a  consideration  that  invalidates  the 
contract?  If  the  contract  is  not  thus  invalidated,  the  entire 
case  made  by  plaintiff  in  error  fails. 

It  will  \ye  noted  that  Fungs  actually  transferred  the  pat- 
ents, so  that  the  contract  in  this  respect  was  already  executed ; 
also,  that  the  j>eriod  he  w^as  to  remain  out  of  the  brake  beam 
business  was  just  the  period  the  transferee  wps  to  have  the 
benefit  of  the  patents  transferred;  and,  further,  that  Pungs 
was  at  liberty,  at  any  time  during  the  period  named,  to  return 
to  the  brake  beam  business  upon  refunding  the  ten  thousand 
dollars  paid  him. 

We  do  not  look  on  this  as  a  contract  in  restraint  of  trade. 
It  binds  no  one  to  stay  out  of  the  trade.  At  most,  it  is  an 
agreement,  merely,  that  if  Pungs  renews  his  connection  with 
the  trade,  he  shall  return  the  consideration  received  by  him 
for  the  patents  transfen-ed.  Pungs,  personally,  was  not  a 
manufacturer  of  brake  beams.  He  was  in  no  true  sense  a 
dealer  or  competitor,  commercially,  in  that  business.  His 
connection  with  the  business  was  that  of  inventor  chiefly ;  and 
the  agreement  under  consideration  may  be  considered  as  an 


UNITED   STATES   V.   ATCHISON,    T.   &   S.    F.    BY.   CO.       831 

Syllabus. 

incident,  only,  to  the  connuercialization  of  his  invention. 
Even  in  this  he  has  put  no  mortgage  on  his  inventive  facul- 
ties. He  has  merely  put  himself  where,  without  putting  any 
binding  restraint  on  his  inventive  faculties,  or  for  that  mat- 
ter, upon  his  liberty  as  a  manufacturer,  he  will  realize,  for 
the  time  being,  on  what  he  has  already  invented,  the  largest 
commercial  return. 

This  is  not,  in  our  judgment,  restraint  of  trade.  The 
question  whether  a  given  contract  is  restraint  of  trade 
depends  as  much  upon  the  nature  of  the  business  said  to  be 
restrained  as  upon  the  more  conunonly  mentioned  elements 
of  time  and  place.  Hamson  v.  Glucose  Re-fining  Company, 
116  Fed.  304,  53  C.  C.  A.  484,  58  L.  E.  A.  915.  The  nature 
of  the  contract  under  consideration  comes  plamly  within  the 
principles  of  that  case,  and  of  Morse,  etc.,  Company  v.  Morse, 
103  Mass.  73,  4  Am.  Rep.  513,  and  other  cases. 

In  the  view  thus  taken  of  this  question,  the  other  questions 
raised  and  discussed  become  immaterial.  The  judgment  of 
the  Circuit  Court  is  affirmed. 


1176]   UNITP:D  states  V,  ATCHISOX,  T.  &  S    F 

EY.  CO. 

(Circuit  Court,  W.  D.  Missouri,  W.  D.    December  4,  190.5.) 

[142  Fed.,  176.] 

Injunction— Violation— Contempt— Information.— An  information 
for  contempt  at  the  relation  of  the  United  States  against  a  railroad 
company  for  violation  of  a  temporary  injunction  restraining  it  from 
granting  rebates  is  criminal  in  character.  In  such  proceeding  the 
defendant  is  entitled  to  every  reasonable  doubt  as  to  the  obligatory 
force  of  the  mandate,  and  whether  Its  disobedience  was  willful. 

[Ed.  Note.— For  cases  in  point,  see  vol.  27,  Cent.  Dig.  Injunction 
§  514.] 

Same.— If  the  court  issuing  the  injunction  alleged  to  have  been  vio- 
lated had  no  jurisdiction  of  the  subject-matter  of  relief  prayed  for 
in  the  bill,  the  restraining  order  was  void,  and  no  contempt  could  be 
predicated  of  its  disregard. 

[Ed  Note.-I'or  cases  in  point,  see  vol.  27,  Cent.  Dig.  Injunction, 
§  439.] 

Oabbiebs—Jubisdiction— Enjoining  Gbant  op  Rebates.— Prior  to  the 
enactment  by  Congress  of  the  Elkins  act  (Act  Feb.  19,  1903,  c.  708, 


832 


142  FEDERAL  REPORTER,  176. 


Syllabus. 

82  Stat  847  [U.  S.  Camp.  St  Supp.  1905,  p.  509]),  a  United  States 
Circuit  Court  had  no  jurisdiction  in  equity  over  a  suit  instituted  by 
direction  of  the  Attorney  General  of  the  United  States  to  enjoin  a 
railroad  company  from  granting  rebates  under  the  interstate  com- 
merce law,  especially  where  no  order  had  hitherto  been  made  by  the 
interstate  commerce  commission  on  the  railroad  company  to  discon- 
tinue the  forbidden  act. 

Sams. — ^The  interstate  commerce  act  and  the  act  known  as  the  "  Sher- 
man Anti-Trust  Law  "  are  separate  and  independent  acts,  not  ger- 
mane in  character  and  purpose;  and  therefore  jurisdiction  in  the 
Circuit  Court  of  the  [177]  United  States  over  a  bill  in  equity  to 
enjoin  a  railroad  company  from  granting  rebates  to  favored  shippers 
cannot  be  maintained  upon  the  ground  that  such  act  of  the  railroad 
company  is  a  monoijoly  within  the  meaning  of  the  second  section  of 
said  anti-trust  act  (Act  July  2,  1890,  c.  647,  26  Stat  209  [U.  S. 
Comp.  St  1901,  p.  3200]). 

Statutes — Constbuctive  Pbospective  Operation. — Statutes  are  pre- 
sumed to  be  prospective  in  operation,  and  the  courts  refuse  to  give  a 
retroactive  effect  to  statutes,  unless  the  intention  is  so  clear  and 
positive  as  by  no  reasonable  possibility  to  admit  of  other  construc- 
tion. 

|Bd.  Note. — For  cases  in  point,  see  vol.  44,  Cent  Dig.  Statutes, 
§  344.] 

Same. — ^The  doctrine  of  relation,  like  every  other  fiction  of  the  law,  has 
Its  limitations.  It  can  never  be  applied  where  its  root  was  not 
planted  in  an  antecedent  lawful  right. 

Injunction — Enjoining  Grant  of  Rebates — Violation — Void  Ob- 
BEB — Contempt. — A  suit  in  equity  instituted  by  the  Attorney  General 
of  the  United  States  to  enjoin  a  railroad  company  from  granting 
rebates,  and  a  restraining  order  made  thereon  in  March,  1902,  were 
not  validated  by  the  enactment  of  the  Elkins  acft  in  February,  1903 
(Act  Feb.  19,  1903,  c.  708,  32  Stat  847  [U.  S.  CJomp.  St  Supp.  1905. 
p.  599]).  Held,  further,  that  If  the  suit  could  have  been  continued 
under  the  Elkins  act,  where  the  antecedent  offense  of  the  railroad 
company  was  being  continued  after  February  19,  1903,  an  action  by 
the  United  States  attorn^  In  the  summary  method  authorized  by 
the  latter  act  would  have  presented  an  issue  of  fact  entitling  the  de- 
fendant to  a  hearing  thereon;  and  any  injunction  granted  would 
be  as  to  violations  of  law  then  being  committed,  but  would  not  have 
the  effect  to  vitalize  an  antecedent  Injunctive  order  granted  by  the 
court  when  it  had  no  jurisdiction  to  make  It  Held,  further,  that 
where  no  such  action  was  taken  by  the  United  States  attorney  after 
the  passage  of  the  Elkins  act,  an  Information  for  contempt  filed  by 
him,  based  on  a  violation  of  such  void  order,  has  not  the  effect  to 
bring  It  within  the  operation  of  the  Elkins  act. 

Same — CtoNSTBUcnoN  or  Order— (>)NTEMFr. — ^Where  the  bill  for  an 
injunction  against  a  railroad  company,  at  the  relation  of  the  United 
States  attorney,  for  granting  rebates,  In  Its  specifications  describes 


UNITED  STATES   V,  ATCHISON,   T.   &  S.   F.   RY.   CO.      833 

Motion  to  quash  information, 
only  grain  and  packing-house  products  of  meat  on  which  rebates 
were  being  granted,  followed  by  a  general  allegation  that  the  de- 
fendant was  likewise  granting  rebates  on  other  necessities  of  life, 
the  subjects  of  interstate  traffic,  etc.,  and  the  injunctive  order  spe^ 
cifically  enjoined  the  granting  of  rebates  on  the  specified  articles  of 
traffic  "  or  any  other  interstate  traffic,"  held,  that  the  latter  general 
term,  on  the  rule  of  "  ejusdem  generis  "  and  "  noscitur  a  sociis."  is 
controlled  by  the  antecedent  particularization,  and  is  limited  to 
objects  of  like  kind  with  those  specified ;  and  therefore  an  informa- 
tion for  contempt,  predicated  of  alleged  rebates  granted  by  the  de- 
fendant a  year  or  so  afterwards  in  another  jurisdiction  on  the  com- 
modities of  salt  and  coal,  could  not  be  sustained  under  such  limited 
restraining  order. 

Carriers— Rebates— Traffic  Rates— Division.— Where  a  short  Ime 
railroad,  chartered  by  the  state,  authorized  to  haul  freights  for 
hire,  is  owned  by  stockholders  common  to  said  short  road  and  the 
shipper,  and  a  long  distance  railroad  connecting  therewith  enters 
into  a  joint  traffic  arrangement  with  it  for  the  transportation  of 
interstate  traffic,  and  the  two  roads  file  and  publish  such  joint 
rates,  as  required  by  the  interstate  commerce  law,  and  live  up  to 
the  same— Quaere :  Can  an  information  by  the  United  States  attor- 
ney against  the  interstate  carrier  [178]  for  granting  rebates  to 
such  shipper  be  sustained  on  evidence  tendhig  to  show  that  the 
division  of  the  through  rate  is  grossly  disproportioned  to  the  haul 
over  such  short  line? 

(Syllabus  by  the  Court) 

Motion  to  Quash  Information. 

This  is  a  proceeding  for  contempt,  growing  out  of  a   temporarv 
restraining  order  made  by  this  court  on  March  25,  1902    The  restrain- 
ing order  was  predicated  upon  a  bill  of  complaint   in  equitv  filed 
fSl    Aff^'^'^^'^r.^^*'^*^!  attorney  for  this  district,  under  direction  of 
the  Attorney  General  of  the  United   States,   against  the  detUdant 
railroad  company     The  bill   recited  that  the  Action  was  taken  on 
Iti-  ^T^'^K  ""^^  ^^'f   Interstate   Commerce   Commission.     It   charged 
that  the  defendant  railroad  company,  a  corporation  of  the  state  of 
Kansas,  was  engaged  in  the  transpartation  of  interstate  commerce  • 
that  m  conformity  to  the  requirements  of  the  interstate Tmne^e 
act  of  congress  it  had  filed  with  the  Interstate  CommercrCommils  on 
at  \\ashmgton  City  a  copy  of  schedule  of  rates  and  charges  estat^ 
lished  and  published  by  it  for  the  transportation  of  fre^ht  traffic 
among  other  things  on  cured  meats,  known  as  "  packingXuse  nmd' 
nets,"  and  also  on  dressed  meats,  for  transporting  thf  ^me  from 
Kansas  City,  Mo    and  Kansas  City,  Kan.,  across  the  states  of  MiS 
souri,  Iowa   and  Illinois,  to  the  city  of  Chicago,  111.,  and  other  Dointe 

fnlT.'i.tM?^"^^^  'r°^^^  P"^^*«"'  ^'^^t  the'se  we?e  the  only  Tw- 
ful  rates  for  transporting  such  commodities  between  said  pomts  Drior 
to  January  1902,  to  the  time  of  the  institution  of  the  suU  Tl^at 
notiNithstanding  its  duty  to  ship  at  no  greater  or  le^rl^e  in  that 
regard  the  defendant,  combining  and  confederating  wUh  certam  per- 
sons, to  the  orator  unknown,  to  create  a  monopoly  in  the  trans^or- 
21220— VOL  2—07  m ^53 


-834 


142    FEDEKAL   Bi; PORTER,   178. 
Motion  to  quash  informatioiu 


t.itidii  of  said  ('(inimodities  cii  clefeiKlant's  line  of  railway  between 
the  p  lints  aforesaid,  early  in  the  year  1001.  entered  into  an  agree- 
ment or  agreenv'iits  with  the  i)ers'ins  nnknawu  to  transport  snch 
eonnnodities  between  snch  paints  at  rates  nuieli  less  than  the  pub- 
lished, established  rates  mi  said  commodities.  It  is  then  charged 
that  in  pursuance  nf  said  combination  the  defendant  transported  such 
pack ing-h oust*  prixlu  ts  from  Kansas  City.  Mo.,  to  Chicago  and  Chi- 
cago common  ponits.  billing  the  same  at  the  established  rate  therefor, 
but  in  pursuaii  V  of  said  imlawful  agrei*ment  rebating  to  such  un- 
known pers  ns  the  difference  between  the  rate  agreed  upon  and  the 
established  rate,  aiitl  transported  such  traffic  at  less  than  schetiule 
rates.  In  iwirnicrniihs  5  and  0  th3  bill  charges  that  prior  to  the  1st 
day  of  Jaiuiarv.  1901,  the  defendant  filed  with  the  Interstate  Com- 
merce Connuissiun  its  schedule  of  rates  established  jointly  with 
connecting  railways,  for  the  transportation  of  grain  from  Mississippi 
river  points  tt)  New  York  and  New  York  common  points,  and  from 
Kansas  City.  Mo.,  to  the  Mississippi  river  points  aforesaid,  and  to 
Chicago  and  Chiiai: »  common  punts.  The:5v»  paragraphs  refer  extHu- 
sively  to  grain  and  its  transportation  between  the  points  specified. 
The  seventh  i)aragraph  then  charges  that  the  defendant  grante<l  to 
certain  favored  grain  buyere  and  shippars,  whose  names  are  unknown, 
who  shipped  wheat,  corn,  and  other  grain  over  the  defendant's  line 
between  the  ptints  aforesaid,  large  cnncessions  and  rebates  from  its 
publistied  and  established  schedules,  whereby  such  shippers  obtained 
from  the  defendant  unlawful  rebates  in  respect  to  such  shipments 
on  grain  between  the  points  aforesaid.  There  is  no  charge  in  this 
paragraph  of  any  combination  or  moncpoly;  it  is  simply  a  charge 
for  carrying  grain  for  certain  shippers  below  the  schedule  rates.  The 
ninth  paragraph  charges  that  during  the  period  complained  of  ship- 
pers could  not,  at  tha  points  of  origin,  without  ruinous  loss,  purchase 
at  market  prices  and  pay  transportation  t'o  eastera  destination  at 
tlie  said  published  and  established  rates.  This  charge  refers  to  "said 
commodities  " ;  but  does  not  specify  packing-house  products,  dressed 
meats,  or  grain.  The  bill  prayed  for  special  and  general  injunctions 
against  the  defendant. 

A  temporjiry  restraining  order  was  granted  and  set  for  the  23d 
day  of  June.  1!M)2.  for  further  hearing.  It  recited  tliat  until  that 
date,  or  the  further  order  of  the  court  the  defendant,  its  officers, 
agents,  and  servants,  be  enjoined  and  restrained  from  further  acting 
under  and  enforcing,  or  executing  in  any  manner  whatever,  any 
agreement  to  transport  over  the  defendant's  [179]  railroad,  or  any 
part  thereof,  between  the  states,  any  packing-house  products,  dressed 
meats,  grain,  or  the  products  of  grain,  or  any  other  interstate  traffic, 
at  any  greater  or  less  rate  than  the  rates  named  for  such  services  in 
defendant's  established  schedule  in  force  on  its  lines,  and  at  the  time 
said  traffic  is  transported  on  file  witli  the  Interstate  Conuiierce  Com- 
mission, or  from  departing  from  their  schedule  rates  in  carrying  any 
of  said  above  products  or  traffic  between  the  states,  and  enjoining 
them  from  hereafter  agreeing  with  any  shipper  or  other  person  to 
transport  such  traffic  at  any  other  or  different  rates  than  such  as 
may  be  provided  for  in  its  schedules  as  filed  and  published;  and 
enjoining  them  from  paying  any  rebates,  or  making  any  concessions 
whatever  in  defendant's  rates  and  charges  whereby  any  such  traffic 
transported  by  said  defendant  over  its  railroad,  or  in  respect  to  any 
traffic  in  the  transportation  of  which  said  defendant  may  participate, 
shall  be  carried  by  it  at  any  rate  different  from  the  established  rate 
at  the  time  such  traflSc  shall  be  transported,  "without  prejudice  to 
the  right  of  the  defendant  to  move  at  any  time  to  vacate  this  order 
upon  such  ground  as  it  may  be  advised,  and  no  ground  shall  be 


UNITJ-D   STATES    V.   ATCHISON,    T.    &   S.    F.    RY.   CO.       835 
Motion  to  quash  information. 

deemed  waived  by  reason  of  defendant  not  having  presented  them  in 
opposition  to  this  application."  *   ^^-eiiieti  rnem  in 

On  June  2,  1902,  the  defendant  filed  demurrer  to  the  bill  on  the 
followmg  grounds:   (1)  That  the  complainant  does  not  state  anv  such 

^nnh^r-tf-T^  *'  '"^  TP"**  ""^  equity,.to  entitle  the  complainant  to  anv 
such  relief  as  prayed  for ;  that  the  bill  does  not  contain  any  matter 
of  equit3%  on  account  of  which  this- court  could  grant  any  decree   or 
give  the  complainant   .any   relief  against  the  defendant.     (2)  That 
the  court  has  no  jurisdiction  to  hear  and  determine  the  action :  and 
that  the  court    as  a  court  of  equity,  cannot  take  cognizance  of  the 
matters  set  forth  in  the  bill,  and  has  no  power  or  jurisdiction  to  hear 
or  determine  the  same.     (3)  That  as  to  so  much  of  the  bill  as  seeks 
a  general  injunction  restraining  the  defendant  from  hereafter  agree- 
ing to  pay  rebates,  or  transiwrting  at  less  than  the  published  tariff 
the  court  has  no  jurisdiction  to  hear  and  determine  this  action,  and 
no  power  to  issue  any  general  injunction  as  prayed  for  in  the  bill 
r^is  demurrer  was  not  heard  until  some  time  during  the  early  part  of 
1903 ;  and  on  May  8,  1903,  the  demurrer  was  overruled ;  and  leave 
was  given  to  the  defendant  to  file  answer  to  the  bill  within  30  davs- 
and  in  the  meantime  the  temporary  restraining  order  was  continued 
m  force  until  the  further  order  of  the  court 

On  May  25  1903,  the  defendant  filed  answer,  taking  issue  on  the 
allegations  of  the  bill  respecting  any  combination  or  confederation 
with  other  persons  to  transport  such  commodities  between  such  points 
at  less  than  the  published  rates;  oi-  that  in  pursuance  of  any  such 
niir  /hL  •''|.^;j^"^^°t  it  rebated  or  refunded,  or  paid  back  to  the  ship- 
f,  '  l^f  <J»fference  between  the  established  rates  and  the  amount 
.nieged  to  have  been  agreed  upon,  or  that  it  transported  such  traffic 
at  ess  compensation  than  that  specified  in  the  published  rates,  or  that 
It  in  any  instance  departed  from  the  established  rates ;  or  that  it 
granted  to  favored  shippers,  or  any  other  shippers,  lower  or  different 
rates  than  those  named  in  its  lawful  published  schedule  or  rates  on  any 
traffic.  It  also  denied  any  intent  or  ultimate  purpose  to  continue  in 
the  future  to  transport  traffic  nominally  at  its  published  rates  and 
charges,  and  subsequently  by  unlawful  rebates  or  concessions  to  de- 
part therefrom.  The  answer  also  denied  that  the  complainant  was 
entitled  to  any  relief  in  a  court  of  equity.     No  further  action  was 

lllT,^^,'  ''-S^''  ""l^^l  ^^^"^  ^^"^  appointment  of  an  examiner  to 

take  testimony,  and  no  testimony  has  been  taken 

C5*^/^  ***?  P*^  .^^y  ^^  August,  1905,  the  complainant,  the  United 
States  of  America,  filed  in  this  court  an  information,  charging  the 
^u^^o'ol"*  ^^'^^  *^^  violation  of  said  restraining  order,  in  that  between 
the  26th  day  of  March,  1902,  and  the  1st  day  of  Januw  1904  !n 
violation  of  the  interstate  commerce  law,  and  contrary  t^'theVati^ 
of  traffic  establish^  in  its  published  schedules,  etc.,  the  defendant  its 
officers,  agents   and  servants,  wrongfully  and  knowingly  violated  and 

ftffif/nf rn^i^'r^^'^'^""'*'*"'^-^"^  '^^^^^'  *"  ^^ft  it  Carried  on  . 
its  line  of  road  between  and  among  the  states  and  between  certain 
states  and  territories  of  the  United  States,  salt  at  a  different  and  less 
rate  than  that  named  and  specified  in  its  published  schedules  of  rates 
and  more  particularly  for  the  Hutchinson-Kansas  Salt  Company  a 
Kansas  cor-  [180]  poration.  The  information  charged  That  the 
Hutchinson-Kansas  Salt  Company  was  engaged  in  the  business  of  man 
ufacturmg  salt  at  Hutchinson,  in  the  state  of  Kansas  and  oftSns- 
porting  and  selling  tffe  same  at  all  points  along  the  Missouri  rfver 
and  more  particularly  in  the  states  of  Kansas,  Missouri,  and  Nebraska^ 
that  the  said  Hutchinson-Kansas  Salt  Company  owned  and  conlroll^ 
numerous  salt  wells  in  said  territory,  and  numerous  mills  for  the 
manufacture  of  salt,  about  nine  in  number,  the  largest  of  which  said 


■iiO'd 


142   FEDEKAL  BEPOHTEK,  IW. 


Motion  iit  qusigb  iiiforiiiatioii. 

mills  so  owned  by  said  salt  company  was  known  as  the  "Morton 
Mill " ;  that  the  tracks  of  the  defendant  company  ran  on  one  side  of 
said  mill,  and  the  tracks  of  the  Chicago,  Rock  Island  &  Pacific  Rail- 
way Company  ran  on  the  other  side  thereof,  and  that  there  are  two 
nwltehes  connecting  both  sides  of  said  mill  with  the  tracks  of  said 
lailway  companies;  that  there  is  also  in  connection  with  said  mill 
another  track  known  as  the  "  cinder  track  " ;  that  the  entire  length 
of  these  switches  and  sidings  is  less  than  a  mile  in  length,  and  were 
originally  constructed  by  the  said  Hntchinson-Kansas  Salt  Company 
for  the  pnrpose  of  connecting  said  large  mill  known  as  the  "  Morton 
Miir*  with  both  of  said  railway  systems;  that  s;}id  switches,  etc., 
were  owned  and  maintained  by  said  salt  compjinv,  and  that  no 
switching  charges  of  any  character  were  charged  to  anv  railroad  cor- 
poration for  the  nse  thereof  in  the  transiwrtation  of  the  product  of 
■aid  mills;  that  in  July,  1902,  a  certain  railroad  corporation  was 
organized  known  as  the  "Hutchinson  &  Arkansas  River  Railroad 
Company  "  by  the  officers  and  stockholders  of  the  salt  company ;  that 
the  salt  company  pretended  to  sell  and  did  convey  said  switches  to 
said  last-named  railroad  corporation :  that  for  the  puriio?e  of  evading 
the  temporary  restraining  order  heretofore  referred  to,  and  in  viola- 
tion of  the  terms  thereof,  the  defendant  made  pretended  joint  tariffs 
and  schedules  with  the  Hutchinson  &  Arkansas  River  Railroad  Com- 
pany; that  the  agreement  as  to  such  joint  tariffs  while  nominally 
made  with  the  Hutchinson  &  Arkansas  River  Railroad  Company  was, 
In  truth  and  in  fact,  an  agreement  made  and  entered  into  with  the 
Hntchinson-Kansas  Salt  Company,  i^  hereby  the  salt  companv  was  to 
Feceive  rebates  and  concessions  upon  the  transportation  of  salt  from 
said  city  of  Hutchinson,  in  the  state  of  Kansas,  to  points  upon  the 
Missouri  river.  The  infoi-mation  then  sets  out  the  manner  in  which 
this  was  accomplished.  It  is  thon  charged  that  in  pursuance  of 
such  understanding  the  defendant  on  or  about  the  1st  day  of  August. 
1902,  published  and  filed  with  the  Interstate  Commerce  Commission 
a  joint  tariff  agreement  with  the  Hutchinson  &  Arkansas  River  Rail- 
road Company,  showing  the  rates  on  salt  from  Hutchinson  to  the 
points  aforesaid;  and  that  i>etween  the  1st  day  of  August,  1902,  and 
the  1st  day  of  January,  1904,  the  defendant,  from  time  to  time, 
carried  and  transiKjrted  for  said  salt  company  as  aforesaid,  for  use  in 
the  manufacture  of  packing-house  products  at  the  points  aforesaid, 
and  as  such  business  was  performed  made  settlements  witli  the 
Hutchinson-Kansas  Salt  Company,  in  which  the  defendant  paid  to  the 
salt  company  25  per  cent,  of  said  joint  tariff  rate  on  all  salt  so  trans- 
IJorted,  to  the  extent  of  many  thousands  of  dollars;  all  of  which,  the 
Information  charges,  appears  from  evidence  taken  before  the  Intei-state 
Commerce  Commission  at  hearings  in  Hutchinson.  Kan.,  and  Chicago, 
111.,  on  the  5th  and  22d  days  of  December,  190.3,  whicli  evidence  is 
filed  as  an  exhibit  witli  the  information.  The  information  further 
charges  that  between  tlie  1st  day  of  August,  1902,  and  the  1st  day  of 
January,  1904,  there  were,  in  the  city  of  Hutchinson  and  its  immediate 
▼ieinity,  other  persons,  whose  names  are  unknown,  engaged  in  the 
business  of  manufacturing  salt,  .and  selling  and  siiipping  the  same 
to  Missouri  river  points  over  the  line  of  the  defendant;  that  such 
MTSons  were  compelled  and  required  by  the  defendant  to  pay  the  full 
freight  rates  and  charges  named  in  the  published  and  established 
schedules,  whereby  the  defendant  unlawfully  discriminated  against 
such  other  persons  in  favor  of  the  Hutchinson-Kansas  Salt  Company. 
On  September  16,  1905,  the  defendant  filed  motion  to  quash  th« 
information  upon  tlie  ground  that  the  bill  of  complaint,  on  which 
the  restraining  order  was  Issued,  which  complained  only  of  alleged 
violations  of  the  interstate  commerce  law,  in  respect  of  the  transporta- 
tion of  certain  commodities  prior  to  the  filing  of  the  bill,  was  not 


UNITED  STATES   V.   ATCHISON,    T.    &   S.    F.    RY.   CO.       837 

Opinion  of  the  Court. 

predicated  upon  any  lawful  order  or  requirement  of  the  interstntP 
commerce  commission ;  that  at  the  time  of  filing  the  <^m-  [181  j  plaint 
inH  Jw-  '''"^''^  ?f   *?^  restraining   order   this  ^^T  was  li'^^lont 

Sn  nl'^'order^'il^^^^^^  '^  '°!f'^^"  ^^^^  ^^"'  ^^  '^  ^^^^  «^~ 
straining  order;  that  no  amendment  to  said  bill  was  filed  bv  th^ 

rt^he^provisTuf  ^^^  ^''T^Tl  ^''"^^^"^  ^^^  «bowrng\nfviofatIon 
resect  t^InT  «n.L  H  ^^^^^^^^^  commerce  law  by  defendant  in 
l^t^  }  ^"^  a^eged  departures  from  its  published  tariff  rates  in 
favor  of  any  shippers  after  the  passage  of  an  amendment  to  said 
interstate  commerce  law  known  as  the  "  Elkins  aS  "  a^DroV^  le^ 

sSr  '^n  ^^^^?V\  ''"%  ''  ''^'  ^2  «*^'  S^^Su'Tcomp'^lt 
fcupp.    1905,   p.   o99]), which   said   act   for   the   first   time   crave   this 

court  junsdiction  to  entertain  bills  of  complaint  on  SSialf  of  thl 
ITlfJli'^'  ^^^'""'^  '^"^^y  companies  to  restrain  tSem  from  givlSg 

«^!!r*if  '   ^J^t^^i'   tliat  the  court   was   without  jurisdiction 

after  the  passage  of  the  said  Elkins  act  to  issue  any  injuncdon  cover" 
ing  the  acts  complained  of  in  the  information  filll  iS  for  The 
reason  that  under  said  act  and  section  16  of  the  interstate  ^mmercl 

^ir^  wh!t /' i^J'  ^•,'^'  ^  «^«t-  ^  tU.  S.  Comp  St  mrp 
ol65])  the  defendant  could  be  proceeded  against  in  equity  onlv  in  the 
Jur  sdiction  where  it  had  its  principal  oflici,  or  in  which  the  act  com 

h  n  fitn'^'h'"""  ^«^°^^tt«d'  a°d  there  is  no '  allegation 'n  the  orig^^l 
bill  filed  herein,  or  in  the  information,  that  the  defendant  had  its 
principal  office  within  this  judicial  district,  or  that  the  act  comP^^^^^^^ 
of  was  committed  either  in  whole  or  in  part  within  said  distrTct    bi^ 

™ora«of  ^f  iht  ^l"/'^^.  V^^formation  allege  that  the  defendants 
a  corpoiation  of  the  state  of  Kansas,  and  the  information  avers  that 
the  act  complained  of  was  committed  wholly  within  said  stlte    ^d 
hence  not  within  this  judicial  district    And^further,  that  !n  th^  Wll 
of  complaint  the  only  specific  charge  made  against  the  defendant 
f«r  cH?^''"^  ^"^  departure  from  its  published  ratel  in  favor  of  plS- 
lar  shippers,  was  in  respect  to  rates  concerning  the  transnortation  of 
grain  and  packing-house  products  over  its  lines ;  and  noTharg^^^ 
made  concerning  the  transportation  of  salt,  or  a  deparSire  from  thl 
pub  ished  rates  thereon;  that  said  bill  was  Whol^SSt  to  war 
rant  the  issuing  of  a  restraining  order  in  respect  of  rates ^ncernfng 
the  transportation  of  salt ;  and  that  the  restraining  order  kT  res^ 
of  any  other  commodities  than  grain  or  packing-house  products^ 
unwarranted.    And  further,  that  it  does  not  appear  from  the  infol- 
mation  that  m  the  transportation  of  salt  from  HutchinZ,  kL    the 
defendant  violated  the  terms  of  said  restraining  order!  but  on  the 
fS^^'^F  '^  ^Prr-^  V"^^  *^^  *^^ffl^  mentioned  was  transported  und^ 
l^^  ""^KT^'^^^'V^^  published  tariffs  or  on  joint  published  t^nfff 

«n7alo5  ^^-ll^K^^T^^.^*  ^^"  ^  P^^'  ^^d  ^hich  were  duly  published 
and  filed  with  the  Interstate  Commerce  Commission   and  that  th^  in 
formation  is  otherwise  insufficient  and  uncertain 

Gardiner  Lathrop,  for  the  motion. 

M.  Z>.  Purdy,  Assistant  Attorney  General,  and^.  aS   Van 
Valkenhurgh,  United  States  District  Attorney,  opposed. 

Philips,  District  Judge  (after  stating  the  facts). 

The  United  States  having  no  pecuniary  interest  in  the 
subject-matter  of  the  original  biU  of  complaint,  acting  only 
pro  bono  publico,  the  alleged  contempt  belongs  essentially 


ooo 


142  FEBERAL   REPORTER,  181. 


Opioion  of  the  Court. 

to  what  is  termed  "criminal  contempts,"  to  vindicate  the 
dignity  of  the  court.  In  re  Nevitt,  117  Fed.  448,  458,  54 
CCA.  622,  632;  Bessette  v.  Vonkey  Company^  194  U.  S. 
324,  24  Sup.  Ct.  665,  48  L.  Ed.  997.  As  such  the  proceed- 
ing  is  to  be  strictly  construed  in  favor  of  the  personal  liberty 
of  the  defendant.  As  it  is  to  vindicate  the  dignity  of  the 
court  in  compelling  respect  for  its  mandate,  a  judge  may 
best  demonstrate  his  title  to  respect  by  according  to  the 
accused  the  benefit  of  any  reasonable  doubt  in  his  own  mind 
as  to  the  obligatory  force  of  his  command,  and  whether 
or  not  its  disobedience  was  willful.  In  re  Watts  et  al.^  190 
U.  S.  32,  23  Sup.  [182]  Ct.  718,  47  L.  Ed.  933.  If  the 
court  issuing  the  temporary  restraining  order  had  no  juris- 
diction to  make  it  under  the  bill  of  complaint,  because  it 
was  without  tlie  power  to  proceed  to  final  adjudication  of 
the  matters  embraced  in  the  bill,  the  order  was  one  which 
the  defendant  was  under  no  legal  obligation  to  observe,  and 
could  not,  therefore,  be  adjudged  in  contempt  for  disre- 
garding it. 

In  Re  Sawyer  et  ah,  124  U.  S.  200,  8  Sup.  Ct.  482,  31  L. 
Ed.  402,  one  Parsons,  who  claimed  to  have  been  elected  police 
judge  of  Lincoln,  Keb.,  filed  a  bill  in  equity  in  the  United 
States  Circuit  Court,  praying  for  an  injunction  to  restrain 
the  mayor  and  councilmen  of  the  city  from  proceeding  fur- 
ther with  certain  charges  against  him,  or  taking  any  vote  on 
the  report  of  the  committee  declaring  the  office  of  police 
judge  vacrnt,  or  apixiinting  any  person  to  fill  that  office.  A 
temporary  restraining  order  was  issued  accordingly  which 
the  mayor  and  council  failed  to  obev.  Thev  were  cited  for 
contempt,  found  guilty  and  adjudged  to  pay  a  fine,  and  in 
default  to  stand  committed  to  the  custody  of  the  marshal. 
On  writ  of  habeas  corpus  the  jurisdiction  of  the  Circuit 
Court  over  the  subject-matter  was  challenged,  and  conse- 
quently its  right  to  issue  the  injunction.  The  Supreme 
Court  held  that  the  Circuit  Court  iras  without  jurisdiction  - 
to  entertain  the  bill  in  equity  for  an  injunction.  Mr.  Justice 
Gray  quoted  from  Elliott  v.  Peirsoh  1  Pet.  328,  340,  7  L.  Ed. 
164,  the  following : 

"  Where  a  eoort  has  jurisdiction,  it  has  a  right  to  decide  every  ques- 
tion which  occui*s  in  the  cause;  and  whether  Its  decision  be  correct 


UNITED   STATES   V.   ATCHISON,    T.    &   S.    F.    RY.   CO.       839 

Opinion  of  the  Court. 

or  otherwise  its  judgment,  until  reversed,  is  regarded  as  binding  in 
every  other  court.  But,  if  it  act  without  authority,  its  judgment  and 
orders  are  regarded  as  nullities.  They  are  not  voidable,  but  simply 
void." 

Further  on  he  said : 

"The  Circuit  Court  being  without  jurisdiction  to  entertain  the  bill 
m  equity  for  an  injunction,  all  its  proceedings  in  the  exercise  of  the 
jurisdiction  which  it  assumed  are  null  and  void.  The  restraining 
order,  in  the  nature  of  an  injunction,  it  had  no  pawer  to  make.  The 
adjudication  that  the  defendants  were  guilty  of  a  contempt  in  dis- 
regarding that  order  is  equally  void ;  their  detention  by  the  marshal 
under  that  adjudication  is  without  authority  of  law,  and  thev  avo 
entitled  to  be  discharged." 

To  the  same  effect  are  the  following  authorities:  Ex  parte 
Rowland,  104  U.  S.  604,  26  L.  Ed.  861;  In  re  Ayers,  123 
U.  S.  443,  8  Sup:  Ct.  164,  31  L.  Ed.  216 ;  Worden  v.  Searls, 
121  U.  8.  26,  7  Sup.  Ct.  814,  30  L.  Ed.  853 ;  Ea;  parte  Terry, 
128  U.  S.  289,  9  Slip.  Ct.  77,  32  L.  Ed.  405 ;  Ex  parte  Fisk, 
113  U.  S.  713,  5  Sup.  Ct.  724,  28  L.  Ed.  1117;  Ex  parte  Bus- 
kirk,  72  Fed.  14, 18  C.  C.  A.  410,  25  U.  S.  App.  613. 

So  in  St.  Louis,  etc.,  Railroad  Company  v.  Wear,  135  Mo. 

230,  265,  36  S.  W.  357,  366,  33  L.  R.  A.  341,  the  court  said : 

"It  is  always  permissible  to  show,  upan  process  for  contempt,  that 
the  order  disobeyed  was  beyond  the  jurisdiction  of  the  authority 
from  which  it  emanated.  If  that  showing  is  successfuly  made  no 
punishable  contempt  has  been  committed." 

Growing  out  of  this  established  rule  is  the  further  prin- 
ciple :  The  order  alleged  to  have  been  violated  must  not  only 
come  clearly  within  the  competency  of  the  court  to  make, 
but  the  thing  or  act  enjoined  [183]  must  be  clearly  and 
definitely  defined,  so  as  to  leave  the  party  enjoined  in  no 
reasonable  doubt  or  uncertainty  as  to  Avhat  specific  thing 
or  act  is  prohibited.  Eapal je  on  Contempt,  p.  20 ;  Weeks  v. 
Smith,  3  Abb.  Prac.  211-214;  In  re  Vary,  (D.  C.)  10  Fed. 
622,  note.  Did  the  court  have  jurisdiction  to  maintain  and 
enforce  in  equity  the  relief  prayed  for  in  the  bill  of  com- 
plaint? It  was  filed  at  the  instance  of  the  Attorney  General" 
of  the  United  States  on  behalf  of  the  United  States,  to  en- 
join the  defendant  railroad  company  from  violating  the  in- 
terstate commerce  law  inhibiting  the  granting  of  rebates  by 
the  defendant  carrier  to  favored  shippers  engaged  in  the 
shipping  of  grain  and  packing-house  products  from  Mis- 
souri river  points  to  Chicago,  111.,  and  common  points  of  dis- 
tribution there.    '^ 


'OSv 


142  FEDERAL  REPORTER,  183. 


Opinion  of  the  Court 

It  is  true  that  allegations  of  a  general  character  were  in- 
serted in  the  bill,  with  the  evident  purpose  of  giving  a 
semblance  of  jurisdiction  to  the  United  States  Circuit  Court 
in  equity  as  conferred  by  what  is  known  as  the  "  Sherman 
Anti-Trust  Law."    Act  July  2,  1890,  c.  647,  26  Stat.  209 
[U.  S.  Comp.  St.  1901,  p.  3200].    There  is  a  general  charge 
in  the  bill  that  the  defendant  combined  and  confederated 
with  certain  persons,  unknown,  to  create  a  monopoly  in  the 
transportation  of  said  commodities  on  defendant's  line  of 
railway  between  the  points  aforesaid,  "to  transport  such 
commodities  between  said  points  at  rates  much  less  than  the 
published,  established  rates  on  such  commodities  at  that 
time  filed  with  said  commission  and  in  lawful  force  on  de- 
fendant's line."    This  charge  is  confined  to  packing-house 
products  and  dressed  meats ;  and  the  transportation  involved 
was  only  between  the  specified  points,  and  the  monopoly 
was  to  be  accomplished  by  giving  to  certain  persons  rates 
less  than  the  schedule  rates.    It  is  not  charged  that  such 
persons  were  favored  over  other  shippers,  or  that  these 
rates  were  not  given  to  all  shippers.    This  is  immediately 
followed  by  the  allegation  that  in  pursuance  of  said  combi- 
nation the  defendant  transported  "  such  packing-house  prod- 
ucts" from  Omaha  and  Missouri  river  common  points  to 
Chicago  and  Chicago  common  points,  billing  the  same  at 
the  established  rates,  but  secretly  transported  such  traffic  at 
less  than  scheduled  rates. 

Section  2  of  said  anti-trust  act  is  as  follows: 

*'  Every  person  who  shall  monopolize  or  attempt  to  monopolize,  or 
combine  or  conspire  with  any  other  person  or  persons,  to  monopolize 
any  part  of  the  trade  or  commerce  among  the  several  states  or  with 
foreign  nations,  shall  be  deemed  guilty  of  a  misdemeanor,'  and  on 
*^^l^*^i*??  thereof,  shall  be  punished  by  fine  not  exceeding  five  thou- 
sand dollars,  or  by  imprisonment  not  exceeding  one  year,  or  by  both 
said  punishments  in  the  discretion  of  the  court" 
• 

In  The  United  States  v.  Joint  Tmifle  Association^  171 
U.  S.  505,  568,  19  Sup.  Ct.  25,  31,  43  L.  Ed.  259,  the  court 
said: 

"In  HopkUs  V.  VnUed  States   (decided  at  this  term)   171  U    S 
578,  19  Sup.  Ct.  40,  43  L.  Ed.  290,  we  say  that  the  statute  applies 
only  to  those  contracts  whose  direct  and  immediate  effect  is  a  re- 
straint  upon  Interstate  commerce  and,  that  to  treat  the  act  as  con- 
demning all  agreements  under  which,  as  a  result,  the  cost  of  con- 


UNITED  STATES  V.   ATCHISON,  T.  &   S.  F.  RY.  CO.   841 

Opinion  of  the  Court. 

ducting  an  interstate  commercial  business  may  be  increased,  would 
enlarge  the  application  of  the  act  far  beyond  the  fair  meaning  of  the 
language  used.  The  efiect  upon  interstate  commerce  must  not  be 
mdirect  or  mcidental  only.  An  agreement  entered  into  for  the  our- 
pose  of  promoting  the  legitimate  business  of  an  individual  or  cor- 
poration, [184]  with  no  purpose  to  thereby  affect  or  restrain  inter- 
state commerce,  and  which  does  not  directly  restrain  such  commerce, 
iLi^v  '.f  we  thmk,  covered  by  the  act,  although  the  agreement  mav 
indirectly  and  remotely  affect  that  commerce.  We  also  repeat  what 
IS  said  m  the  case  above  cited,  that  'the  act  of  Congress  must  have 
a  reasonable  construction,  or  else  there  would  scarcely  be  an  agree- 
ment or  contract  among  business  men  that  could  not  be  said  to  have 
indirectly  or  remotely,  some  bearing  upon  interstate  commerce,  and 
possibly  to  restrain  it' "  .  «  « 

Wliile  the  bill  under  review  does  not  allege  an  unlawful 
restraint,  but  a  monopoly,  the  language  and  thought  of  the 
Supreme  Court  used  in  respect  of  the  construction  of  the 
act  as  it  touches  contracts  in  restraint  of  trade,  apply  with 
equal  force  to  an  alleged  monopoly.     The  statute,  by  no 
expression  or  implication,  interdicts  the  increase  of  a  rail- 
road's busmess  by  any  competition,  however  energetic,  eager 
or  grasping.     The  essence  of  the  charge  in  the  bill  of  com- 
plaint is  that  the  defendant,  by  carrying  in  fact  at  a  rate 
below  that  established  and  published,  tried  to  get  all  the 
transportation  it  could  of  the  designated  products.    In  the 
Trans-Missouri  Joint  Traffic  Association  Cases  the  reason- 
ing of  the  court  was  that  the  agreement  there  involved 
directly  tended  to  obstruct  free  competition.     By  the  por- 
tion of  the  bill  here  touching  the  Sherman  act,  it  seeks  to 
enjoin  the  defendant  from  doing  the  very  act  which,  in  the 
Trans-Missouri  Joint  Traffic  Case,  the  court  held  to  be  un- 
lawful in  repressing.     The  truth  is  that,  as  the  Department 
of  Justice  at  Washington  was  somewhat  in  nubibus  in  its 
experiment  with  the  resort  to  equity  in  order  to  escape  the 
embarrassmg  question  of  the  jurisdiction  of  the  court,  gen- 
eral allegations  of  a  monopoly  under  the  anti-trust  act  were 
thrown  out  as  a  possible  life-preserver. 

If,  as  contended  by  the  United  States  attorney  in  his  oral 
argument  and  brief,  the  bill  of  complaint  is  to  be  sustained 
on  the  ground  of  an  allegation  respecting  monopoly  under 
the  Sherman  act,  how  is  this  contempt  proceeding  to  be  sus- 
tamed  on  that  basis?  The  Sherman  anti-trust  act  is  an 
mdependent  statute.  It  cannot  be  eked  out  or.  assisted  by 
the  interstate  commerce  act  to  create  an  offense  under  it. 


142  FEDERAL  REPORTER,  184. 
Opinion  of  the  Court 

As  the  monopoly  charged  was  a  "  combining  and  confeder- 
ating with  certain  persons  who  are  to  the  orator  unknown, 
to  create  a  monopoly  in  the  transportation  of  said  commodi- 
ties (packing- house  products)  on  defendant's  line,"  how  is 
the  information  for  contempt  to  be  sustained  on  the  ground 
that,  between  the  1st  day  of  August,  1903,  and  the  1st  day 
of  January,  1904,  the  defendant  violated  the  injunction  by 
a  device  whereby  it  gi^anted  rebates  to  a  favored  shipper  of 
salt  at  Hutchinson,  Kan  J  The  only  charge  of  a  monoj)oly 
predicated  in  the  bill  of  complaint  was  in  respect  of  pack- 
ing-house products  from  Missouri  river  points  east.  The 
prayer  of  the  bill  in  that  part  known  as  "  the  omnibus 
prayer  for  relief  "  is  that  the  defendant,  its  officers,  etc.,  be 
restrained  "  from  paying  any  rebate  or  making  any  conces- 
sion whatever,  either  by  direct  or  indirect  ii;ieans,  whereby 
any  traffic  transported  by  said  defendant  over  its  railroad^ 
or  in  respect  to  any  traffic  in  the  transportation  of  which 
said  defendant  may  participate  shall  be  carried  by  it  at  any 
rate  different  from  the  lawfully  published  rate  then  estab- 
lished, etc."  And  so  was  the  restraining  order  limited.  The 
[185]  information  does  not  contain  any  allegation  that  the- 
act  in  transporting  salt  constituted  a  monopoly.  And  yet, 
it  is  seriously  contended  that  the  jurisdiction  of  the  court  can 
be  maintained  on  the  ground  of  a  monopoly  interdicted  by 
the  anti-trust  act,  and  of  consequence  the  defendant  can  be 
charged  with  contempt  on  the  ground  of  monopoly  for  hav- 
ing granted  a  rebate.  The  position  is  obviously  untenable. 
The  bill  of  complaint  must  stand  alone  upon  the  interstate 
commerce  act.  The  bill,  as  framed,  and  the  argument  made 
in  support  thereof  at  the  hearing  on  the  demurrer,  were  all 
based  upon  the  broad  proposition  that,  at  common  law,  at 
the  instance  of  the  Attorney  General  of  the  United  States, 
the  United  States  had  the  right,  in  execution  of  the  declared 
public  policy  of  the  general  government  in  respect  of  the 
regulation  of  interstate  commerce,  to  appeal  to  the  equity 
side  of  its  own  courts  for  an  injunction;  that  as  by  its  legis- 
lation it  was  declared  to  be  unlawful  for  anv  railroad,  en- 
gaged  in  the  carriage  of  interstate  commerce,  to  make  dis- 
criminations by  the  method  of  granting  rebates  to  favored 


Ul^ITED   STATES   V.   ATCHISOK,   T.    &   S.    F.    RY.   CO.       843 

Opinion  of  the  Court 

shippers,  it  could  invoke  the  jurisdiction  of  this  court  to 
enjoin  the  offending  railroad  from  doing  such  forbidden  act. 
But  after  argument  and  submission  of  the  demurrer  to  the 
bill  the  Supreme  Court  in  Missouri  Pacific  Railway  Com- 
pany V.  United  States,  189  U.  S.  274,  23  Sup.  Ct.  507,  47  L. 
Ed.  811,  held,  as  expressed  in  the  syllabus,  that  prior  to  the 
passage  of  the  act  of  Congress  "  to  further  regulate  com- 
merce with  foreign  nations  and  among  the  states,"  approved 
February  19,  1903  (Act  Feb.  19,  1903,  c.  708,  32  Stat.  847 
[U.  S.  Comp.  St.  Supp.  1905,  p.  599] ) ,  a  District  Attorney 
of  the  United  States  under  the  direction  of  the  Attorney 
General  of  the  United  States  in  pursuance  of  a  request  by 
the  Interstate  Commerce  Commission  was  without  power  to 
commence  a  proceeding  in  equity  against  a  railroad  corpora- 
tion to  restrain  it  from  discriminating  in  its  rates  between 
different  localities.     And,  therefore,  there  was  error  com- 
mitted below  in  refusing  to  sustain  a  demurrer  of  the  de- 
fendant railroad  company  to  a  bill  filed  by  a  District  At- 
torney of  the  United  States  under  the  circumstances  stated. 

The  third  section  of  the  act  of  February  19,  1903  {Z2  Stat. 
848,  c.  708  [U.  S.  Comp.  St.  Supp.  1905,  p.  600] ) ,  known  as 
the  "  Elkins  Act,"  is  as  follows : 

"Tliat  whenever  the  Interstate  Commerce  Commission  shall  have 
reas'onable  gronnd  for  belief  that  any  connnon  carrier  is  engased  in 
the  carnage  of  passengers  or  freight  traffic  between  given  iwints  at 
less  than  the  published  rates  on  file,  or  is  committing  anv  discrimina- 
tion forbidden  by  law,  a  petition  may  be  presented  alleging  such  facts 
to  the  Circuit  Court  of  the  United  States  sitting  in  enuitv  having 
jnrisdH  tion :  and  when  the  act  coin]>lained  of  is  alleged  to  have  been 
committed  or  is  being  committed  in  part  in  more  than  one  judicial 
district  or  state,  it  may  be  dealt  with,  inquired  of,  tried,  and  de- 
termined in  either  such  judicial  district  or  state,  whereupon  it  shall 
be  the  duty  of  the  court  summarily  to  inquire  into  the  circumstances 
upan  such  notice  and  in  such  manner  as  the  court  shall  direct  and 
without  the  formal  pleadings  and  proceedings  applicable  to  ordinarv 
suits  in  ejuity  *  *  *  and  upon  being  satisfied  of  the  truth  of 
the  allegations  nf  said  petition  said  court  shall  enforce  an  observance 

«Li.  r^"  '^^I*.  ^•'"l"'^^  ^''  '^'"'^''^  ""''^  ^^^"'i-e  ^  discontinuance  of 
Buch  discrimination  by  proper  orders.  *  *  *  it  shall  be  the  dutv 
of  the  several  district  attorneys  of  the  United  States,  whenever  the 
Attorney  General  [186]  shall  direct,  either  of  his  own  moJion  or 
upon  the  re.iuest  of  the  Interstate  Commerce  Commission,  to  insti- 
f!Ii^f'l^^'■T''V*^,/"'l^'  proceedings,  and  the  proceedings  provided 
for  by  this  act  shall  not  preclude  the  bringing  of  suit  for  recovery  of 
damages  by  any  party  injured,  or  any  other  action  provided  by  said 
act  approved  February  fourth,  eighteen  hundred  and  eightv-seven.  en- 
titled An  act  to  regulate  commerce  and  the  acts  amendatory  thereof  " 


1 


142  FEDEKAL  BEPOKTER,  180. 
Opinion  of  the  Court 


Mr.  Justice  White,  in  the  opinion  in  Missouri  Pacific  Rait- 
way  Company  v.  United  States,  supra,  said : 

"Altbough  by  tbe  fonrtb  sectioo  of  the  act  (Act  Feb.  19,  1903,  c. 
708,  32  Stat.  849  [U.  S,  Comp.  St.  Supp.  1905,  p.  601]),  conflicting 
laws  are  repealed,  It  is  provided  *  but  such  repeal  shall  not  affect 
causes  now  pending,  nor  rights  which  have  already  accrued,  but  such 
causes  shall  be  prosecuted  to  a  conclusion,  and  such  rights  enforced 
in  a  manner  heretofore  pmvided  by  law,  and  as  modified  by  the  pro- 
visions of  this  act*  We  think  the  purpose  of  the  latter  provision  was 
to  cause  the  new  remedies  which  the  statute  created  to  be  applicable 
as  far  as  possible  to  pending  and  undetermined  proceedings  brought, 
prior  to  the  passage  of  tiie  act,  to  enforce  the  provisions  of  the  act 
to  regulate  commerce.  In  the  nature  of  things  it  cannot  be  ascer- 
tained, from  the  recoi-d  whether  the  railroad  company  now  exacts 
the  rates  complained  of  as  being  discriminatory  and  which  it  was 
the  purpose  of  the  suit  to  correct ;  but  if  it  does,  of  course  the  power 
to  question  the  legality  of  such  rates  by  a  suit  in  equitv,  brought  like 
the  one  now  here,  clearly  exists.  Under  these  circumstances  we  think 
the  ends  of  justice  will  best  be  served  by  reversing  the  decree  below 
and  remanding  the  cause  to  the  Circuit  Court  for  such  further  pro- 
ceedings as  may  be  consistent  with  the  act  to  regulate  connnerce  as 
originally  enacted  and  as  subsequently  amended,  especially  with  ref- 
erence to  the  powers  conferred  and  duties  imposed  bv  the  act  of  Con- 
gress approved  February  19,  1903,  heretofore  referred  to." 

While  it  must  be  confessed  that  the  paragraph  above 
quoted  is  not  very  perspicuous,  there  is  in  my  mind  no  doubt 
that  it  was  the  thought  and  purpose  of  the  court  that  when 
the  cause  went  back  to  the  Circuit  Court,  if  the  defendant 
railroad  company  was  then  continuing  to  "  exact  the  rates 
complained  of  "  in  the  original  bill,  instead  of  putting  the 
Government  entirely  out  of  court  by  dismissing  the  bill,  it 
might  amend  informally— perhaps  by  motion— pursuant  to 
said  section  of  the  Elkins  act,  by  showing  that  the  railroad 
company  was  continuing  in  the  given  particular,  the  viola- 
tion of  the  interstate  commerce  act,  to  avoid  the  reinstitu- 
tion  of  like  complaint.  In  the  very  nature  of  the  law,  the 
injunction  to  be  granted  would  apply  to  and  operate  alone 
upon  acts  then  being  done  by  the  railroad  company.  It  is 
inconceivable  that  the  court  could  have  intended  to  say  that 
under  the  Elkins  act  an  injunction  could  be  had  for  a  past 
violation  of  the  interstate  commerce  law,  not  being  repeated 
at  the  time  of  granting  the  injunction  under  the  Elkins  act. 
Otherwise  it  would  be  violative  of  rules  of  law  deeply  rooted 
in  the  jurisprudence  of  the  country.  An  injunction  never 
goes  to  restrain  a  past  act,  already  accomplished.  It  acts 
alone  upon  a  wrong  in  fieri.    Again,  aU  legislative  enact- 


UNITED   STATES   V.   ATCHISON,    T.    &  S.   F.   RY.   CO.       845 

Opinion  of  the  Court 

ments  are  presumed  to  be  prospective  in  their  operation,  un- 
less the  contrary  is  expressly  declared.  "  Courts  refuse  to 
give  statutes  retroactive  construction  unless  the  intention 
is  so  clear  and  positive  as  by  no  possibility  to  admit  of  any 
other  construction."  Sedgwick's  Construction  of  Statutes, 
etc.,  166. 

Mr.  Justice  Cooley,  in  his  work  on  Constitutional  Limita- 
tions (page  [187]  76),  says  in  respect  of  the  rule  that  legis- 
lative acts  are  presumed  to  be  prospective  in  their  operation, 
that: 

"It  is  one  of  such  obviaus  convenience  and  justice  that  it  must 
always  be  adhered  to  in  the  construction  of  statutes,  unless  in  cases 
where  there  is  something  on  the  face  of  the  enactment  putting  it 
beyond  doubt  that  the  Legislature  meant  it  to  operate  retrospectivelv 
*  *  Retrospective  legislation  is  ♦  *  *  commonlv  objection- 
able m  prniciple  and  apt  to  result  in  injustice;  and  it  is  a  sr.und  rule 
of  construction  which  refuses  lightly  to  imply  an  intent  to  enact  it" 

In  Fi7iney  v.  Acketman,  21  Wis.  271,  the  court,  speak- 
ing of  the  language  used  in  the  law  of  1865,  which  in  its 
broad  sense  might  perhaps  be  held  to  apply  to  tax  deeds 
previously  executed,  said: 

"  This  language  must,  however,  be  construed  as  applving  to  deeds 

fh^rif  .  'l"^"*  *^^  P.^f  ^P  ^^  *^^  ^^^'-  1'^^  the  rule  is  wSll  settled, 
that  statutes  are  not  to  be  construed  as  having  a  retrospective  effect 
unless  the  mtention  of  the  Legislature  is  clearly  expressed  that  thev 
shall  so  operate.  Scamans  v.  Carter,  15  Wis.  548,  82  Am.  Dec.  696. 
that  mtentit.n  is  not  to  be  assumed  from  the  mere  fact  that  general 
language  IS  used  which  might  include  past  transactions  as  well  as 
future  Statutes  are  frequently  drawn  in  such  a  manner.  Yet  such 
general  language  is  held  to  have  been  used  in  view  of  the  established 
aMmlt'toTmst'^''  ^'"^  construed  as  relating  to  future  transactions, 

See  full  discussion  of  this  question  in  State  v.  Grant,  79 
Mo.  113,  49  Am.  Rep.  218;  Leete  v.  State  Bank  of  St.  Louis. 
115  Mo.  184,  21  S.  W.  788. 

The  doctrine  of  relation,  like  every  other  fiction  of  the 
law,  has  its  limitations.  It  can  never  be  made  to  bear  fruit 
where  its  root  was  not  planted  in  some  antecedent,  lawful 
right.  This  principle  is  aptly  illustrated  by  the  opinion  of 
Judge  Adams  in  Powers  v.  Hurmert,  51  Mo.  136-138 : 

afil!?!?^^*''!'^!,'^  sometimes  allowed  to  prevent  injustice,  as  when  an 
attachment  has  been  issued  and  levied  without  sufficient  affidavit  and 
an  amended  affidavit  is  afterwards  made  it  will  relate  back  so  as 
to  uphold  the  attachment  and  uphold  the  previous  levv^  But  in  that 
case,  the  right  to  the  attachment  and  its  levy  existed  at  the  tine  and 
only  lacked  the  formality  of  a  sufficient  affidavit" 


846 


142   FEDERAI.   REPORTER,   187. 


Opiiiioii  of  tlie  Court. 

When  the  original  bill  was  filed  and  the  I'estraining  older 
was  made,  there  was  no  pre-existing  equity  in  favor  of  the 
United  States,  sua  sponte,  at  the  request  of  the  Interstate 
Commerce  Commission,  to  institute  such  a  proceeding  for 
an  injunction.  The  right  to  maintain  it  at  the  relation  of 
the  Government  at  common  law  did  not  exist.  It  did  not 
attach  under  the  interstate  commerce  statute  for  the  all- 
sufficient  reason  that  under  Act  Feb.  4,  1887,  c.  104,  §  16,  24 
Stat.  384,  as  amended  by  Act  March  2,  1889,  c.  382,  §  5,  25 
Stat.  859  [U.  S.  Comp.  St.  1901,  p.  3165],  it  is  provided : 

"That  whenever  any  common  carrier  ♦  ♦  *  shall  violate,  or 
refuse  or  neglect  to  obey  or  perform  any  luwiul  order  or  retiuirement 
of  the  ccjmmission  *  •  ♦  ft  shall  be  lawful  for  the  commission 
or  for  any  company  or  person  interested  in  such  order  or  require- 
ment to  apply  in  a  summary  way,  by  petition,  to  the  Circuit  Court  of 
the  United  States  sitting  in  equity  in  the  judicial  district  in  which 
the  common  carrier  coniplainetl  of  has  its  principal  office,  or  in  which 
the  violation  or  disobedience  of  such  order  or  reiiuirement  shall  hap- 
pen, alleging  such  violation  or  disobedience,  as  the  case  may  be;  and 
[188]  the  said  court  shall  have  power  to  hear  and  determine  the  mat- 
ter ♦  *  *  and  if  it  be  made  to  appear  to  such  court,  t)n  such 
hearing  ♦  *  *  that  the  lawful  order  or  reiiuirement  of  said  com- 
missitju  drawn  in  question  hae  been  violated  or  disobeyed,  it  shall  be 
lawful  f«»r  such  court  to  issue  a  writ  of  injunction,  etc..  «  ♦  ♦ 
atid  in  case  of  any  disobedience  of  any  such  writ  of  injunction 
*  *  *  it  shall  be  lawful  for  such  court  .to  issue  writs  of  attach- 
ment, or  any  other  process  of  said  court  incident  or  applicable  to 
writs  of  injunction  or  other  proper  process,  mandatory  or  otherwise, 
against  such  common  carrier,  etc." 

Neither  the  bill  of  complaint  nor  the  information  herein 
alleges  that  any  such  order  had  ever  been  issued  bv  the  com- 
mission,  and  it  is  not  claimed  on  behalf  of  the  government 
that  the  commission  ever  proceeded  beyond  a  preliminary 
inquiry.  The  jurisdiction  of  the  United  States  Circuit  Court 
to  gi-ant  such  injunction  was  conditioned  upon  the  ante- 
cedent order  of  the  commission,  and  failure  of  the  defendant 
to  comply  therewith.  Interstate  Commerce  Commission  v. 
Western,  N.  F.  cj&  P.  E,  R.  Co,  (C.  C.)  82  Fed.  192,  196; 
Farmers''  Loan  d?  Trust  Company  v.  Northern  Pacific  Rail- 
way Company  (C.  C.)  83  Fed.  249,  267;  Sheldon  et  al.  v. 
Wahash  Railway  Company  et  al.  (C.  C.)  105  Fed.  785;  In- 
terstate Commerce  Commission  v.  Lake  Shore  db  M.  S,  Rail- 
way et  al,  (C.  C.)  134  Fed.  942,  946;  Interstate  Commerce 
Commission  v.  Louisville  <&  N,  R.  R,  Co.  (C.  C.)  73  Fed. 
409;  Ce^itral  Stock  Yards  Company  v.  Louisville  di  N,  R, 


UNITED  STATES  V.   ATCHISON,  T.  &   S.  F.  RY.  CO.   847 

Opinion  of  the  Court. 

Co.  (C.  C.)  112  Fed.  823,  827,  828.  The  Supreme  court  has 
recognized  the  correctness  of  this  construction  of  the  law, 
in  East  Tennessee,  V.  <&  G.  Railway  Company  v.  Inter- 
state Commerce  Commission,  181  U.  S.  1,  27,  21  Sup.  Ct. 
516,  525,  45  L.  Ed.  719,  the  court  said : 

"  Whilst  the  court  has,  in  the  discharge  of  its  duties,  been  at  times 
constrained  to  correct  erroneous  constructions  which  have  been  put 
by  the  commission  upon  the  statute,  it  has  steadily  r.^fused,  because 
of  the  fact  just  stated,  tt)  assume  to  exert  its  orij^inal  judgment  on 
the  facts,  where  under  the  statute,  it  was  entitled,  iiefore  api)roaching 
the  facts,  to  the  aid  which  must  necessarily  ba  afforded  by  the  pre- 
vi(ms  enlightened  judgment  of  the  conunission  upon  such  subjects." 

So,  in  Interstate  Commerce  Commission  v.  Clyde  Steam- 
ship Company,  181  U.  S.  29-33,  21  Sup.  Ct.  512,  45  L.  Ed. 
729,  the  court  again  declined  to  go  into  an  original  investiga- 
tion, saying  that  that  duty  was  laid  upon  the  commission 
by  the  interstate  commerce  act  in  the  first  instance. 

This  being  conceded  as  correct  law,  as  it  must  be,  there 
was  no  jurisdiction  in  this  court  to  make  the  injunction  order 
in  question.  It  challenges  all  our  conception  of  law  and 
precedent  that  that  which  was  dead  at  common  law  can  be 
regalvanized  and  made  alive  by  a  post  facto  .statute  law.  It 
would  contradict  the  positive  conclusion  reached  after  most 
thorough  investigation  and  discussion  by  Mr.  Justice  TMiite 
in  the  case  of  Union  Pacific  Rdilway  Company  v.  ^Yyler,  158 
U.  S.  285,  15  Sup.  Ct.  877,  39  L.  Ed,  983,  to  attribute  to  his 
ruling  in  Missouri  Pacific  Railway  Company  v.  United 
States,  supra,  the  purpose  to  liold  that  the  original  bill  in 
this  case,  predicated  alone  of  a  common-law  right  to  relief  in 
equity,  could  be  so  amended  as  to  rest  for  its  support  upon  the 
statute  law  enacted  nearly  a  year  after  the  restraining  order 
was  made  under  the  common-law  suit,  so  as  to  give  life  to 
such  [189  J  antecedent  order,  and  subject  the  defendant  to 
prosecution  for  contempt  for  violating  an  order  that  was 
coram  non  judice  when  made.  It  was  expressly  held  in 
Union  Pacific  Railway  Company  v.  ^Yyler,  supra,  that  a 
cause  of  action  based  on  a  common-law  right  could  not  be 
amended  so  as  to  predicate  a  further  proceeding  thereunder 
based  on  a  statutory  right,  for  the  reason  that  it  was  not 
a  continuation  of  the  original  cause  of  action,  but  a  sub- 
stituted cause. 


848 


142  FEDEKAl.  BEPORTER,   189. 


Opinion  of  the  Court. 

The  repealing  section  of  the  Elkins  act,  saving  the  rights 
of  causes  then  pending  and  rights  which  had  already  accrued, 
only  declared  that: 

"  Such  causes  shall  be  prosecuted  to  a  conclusion  and  such  rights 
enforced  in  a  manner  heretofore  provided  by  law  and  as  modified  by 
the  provisions  of  this  act." 

As  there  was  no  manner  provided  by  law,  prior  to  the 
Elkins  act,  enabling  the  United  States  to  maintain  such  a 
bill  in  equity  as  the  one  under  consideration,  it  had  no  rights 
in  the  proceeding  to  be  saved.    The  words  "  as  modified  by 
the  provisions  of  this  act,"  being  subjective  rather  than  active 
in  terminology,  by  no  permissible  liberality  of  construction 
can  operate  to  make  the  Elkins  act  relate  backward,  so  as  to 
vitalize  an  order  which  was  a  dead  letter  when  made.    As 
already  suggested  the  only  comprehensible  thought  in  the 
mind  of  the  court  in  the  Missouri  Pacific  Railway  Case, 
supra,  in  reversing  the  decree  of  the  Circuit  Court,  and  send- 
ing the  case  back,  was  to  allow  the  United  States  attorney 
to  proceed  therein  in  the  summary,  informal  manner  provided 
by  section  3  of  the  Elkins  act,  by  showing  that  the  railroad 
company  was  then  continuing  to  do  the  act  complained  of  in 
violation  of  the  interstate  commerce  law.    If,  after  the  pas- 
sage of  the  Elkins  act,  the  United  States  attorney  might  have 
appeared  in  this  case,  by  motion,  or  otherwise,  alleging  that 
the  defendant  was  continuing  its  alleged  violation  of  the  in- 
terstate commerce  law,  it  must  be  conceded  that  he  would 
thereby  have  presented  an  issuable  fact  on  which  the  defend- 
ant would  be  entitled  to  have  a  hearing;  for,  if  the  essential 
fact  did  not  exist,  there  could  be  no  predicate  for  continuing 
the  proceeding  under  the  Elkins  act.    No  such  movement  has 
ever  been  made  by  the  United  States  attorney.    This  con- 
tempt proceeding,  therefore,  rests  for  its  sole  support  upon 
an  injunctive  order  the  court  had  no  jurisdiction  to  make 
when  issued.    The  only  answer  made  to  this  in  argument  is 
that,  after  the  passage  of  the  Elkins  act,  the  court  by  order 
continued  in  force  the  restraining  order  of  March  25,  1902. 
The  eflect  of  this,  however,  was  not  to  issue  any  new  injunc- 
tion, but  only  to  continue  the  original  order.    The  continu- 
ing order  was  bottomed  alone  upon  the  original  bill  of  com- 
plaint.   If  the  original  order  made  thereon  had  no  force 


UNITED   STATES    V,    ATCHISON,    T.    &   S.    F.    UY.    CO.       849 

Opinion  of  the  Court. 

and  effect  in  law  Avhen  first  made,  the  court,  by  no  post 
mortem  act,  could  vitalize  it. 

If  the  position  of  the  government's  counsel  be  well  taken, 
it  must  obtain  that  if,  in  1910,  the  Interstate  Commerce  Com- 
mission should,  on  investigation,  ascertain  that  the  defendant 
railway  company,  out  on  the  Pacific  Coast  wliere  its  lines 
extend,  was  granting  rebates  on  carloads  of  cattle  or  Califor- 
nia fruits,  or  at  Chicago,  111.,  was  granting  rebates  on  agri- 
cultural implements,  furniture,  or  dry  goods  and  groceries, 
instead  of  the  United  States  attorney  for  California  or  [190] 
Illinois  instituting  proceedings  in  that  jurisdiction,  as  the 
Elkins  act  contemplates  and  provides,  the  United   States 
attoruey  for  the  Western  District  of  Missouri  could  move 
against  the  raih-oad  company  in  this  court  for  contempt  of 
the  restraining  order  made  in  March,  1902,  based  upon  alle- 
gations that  at  that  time  the  defendant  was  granting  rebates 
on  grain  and  packing-house  products  in  this  jurisdiction.     If 
the  restraining  order  of  1902  is  not  itself  restrained  by  the 
rule  ejusdem  generis,  then  as  to  all  the  railroads,  to  Avit,  the 
Atchison,  Topeka  &  Santa  Fe  Railway  Company,  the  Chi- 
cago, Rock  Island  &  Pacific  Railroad  Company,  the  Chicago 
&  Alton  Railroad  Company,  the  Missouri  Pacific  Railway 
Company,  the  Chicago,  Burlington  &  Quincy  Railroad  Com- 
pany, and  the  Chicago,  Milwaukee  &  St.  Paul  Railway  Com- 
pany, which  were  enjoined  under  a  like  bill  and  under  a  like 
order  at  the  same  time,  there  need  never  be  anv  order  made 
on  them  by  the  Interstate  Commerce  Connnission  to  desist 
from  granting  rebates  at  any  place  or  at  any  time,  on  any 
kind  of  commodity  shipped  by  them,  or  any  action  taken 
against  them  by  the  United  States  District  Attorney  in  the 
jurisdiction  where  the  offense  should  be  committed.     But  no 
matter  when,  where  or  how,  or  on  what  subject-matter  of 
interstate  traffic  either  of  said  roads  may  grant  rebates,  a 
resort  in  this  court  to  a  contempt  proceeding  against  the 
company,  under  the  order  issued  in  March,  1902,  predicated 
of  a  suit  in  equity  of  which  this  court  had  no  jurisdiction, 
would  hit  the  blot. 

It  must  be  conceded,  beyond  tolerant  cavil,  that  a  bill 
praying  for  an  injunction  must  be  predicated  of  some  specific 

21220— VOL  2—07  M 54 


850 


142  FEDERAL   REPfmTER,   190: 


Opinion  of  the  Court. 

wrong  then  being  done  by  the  defendant  to  the  complainant. 
The  only  violations  of  the  provisions  of  the  interstate  com- 
merce act  specified  in  the  bill  as  being  committed  at  the  time 
consisted  in  the  granting  of  forbidden  rebates  on  grain  and 
packing-honse  p;>dncts'shipped  from  within  thif  district. 
The  eighth  paragraph  of  the  bill  contained  a  broad,  general 
averment  based  on  information  and  belief,  that  on  many 
other  principal  commodities,  constituting  the  bulk  of  rail- 
road  traffic  between  the  states,  comprising  the  ordinary 
necessities  of  life,  the  said  defendant  grants  unlawful  rebates, 
etc.,  between  the  states  and  between  the  states  and  territories; 
to  certain  other  favored  shippers  whose  names  arte  to  the 
orator  unknown.  No  venue  is  laid  in  this  sweeping  "  omnium 
gatherum  "  charge;  and  no  particular  specification.  It  re- 
quires  no  citation  of  authorities  to  maintain  that  such  indefi- 
nite, general  allegation  without  place,  whether  in  Illinois, 
MisL>Si,  Kansas!  Colorado,  Califoolia,  New  Mexico,  o^ 
Arizona,  through  which  the  defendant's  lines  extend,  would 
not  authorize  the  court  to  grant  an  injunction  predicated 
thereon.  The  restraining  order  enjoined  the  clefendant 
«  from  further  acting  under  and  enforcing  or  executing  in 
any  manner  whatever  any  agreement  to  tlnsport  over  de- 
fen'dant's  railroad,  or  any  paTthereof,  betwee'n  the  states, 
any  packing-house  products,  dressed  meats,  grain,  or  the 
products  of  grain,  or  any  other  interstate  traffic,  at  any 
greater  or  less  rate  than  the  rates  named  for  such  services 
in  defendant's  established  schedule,  etc."  The  authorities 
are  all  agreed  that  the  general  words  "  or  any  other  interstate 
traffic,"  used  in  such  connection,  on  the  rule  of  noscitur  a 
sociis  and  ejusdem  generis,  are  con-  [191]  trolled  by  the  ante- 
cedent  specification,  and  are  limited  to  objects  "  of  like  kind 
with  those  specified."  United  States  v.  Bevons,  3  ^Vheat. 
336,  4  L.  Ed.  404;  St,  Joseph  v.  Porter,  29  Mo.  App.  605; 
State  V.  Bryant,  90  Mo.  534,  2  S.  W.  836 ;  Ftichs  v.  St.  Louis, 
167  Mo.  620,  67  S.  W.  610,  57  L.  K.  A.  136 ;  City  of  St.  Louis 
V.  Laughlin,  49  Mo.  559 ;  Ex  parte  Neet,  157  Mo.  527,  57  S. 
W.  1025 ;  State  v.  Schuchmann,  133  Mo.  Ill,  33  S.  W.  35,  34 
S.  W.  842 ;   Boatmen^s  Bank  v.  FritzUn,  135  Fed.  650,  68 

vy.  xj,  JV.  i&oo* 


,       ITNTTED   STATES   V.   ATCHISON,   T.    &   S.    F.    RY.    CO.       861 

Opinion  of  the  Court. 

True  it  is  that  the  general  evil  struck  at  by  the  interstate 
commerce  act  was  unjust  discriminations  and  rebates;  yet, 
the  specific  subject-matter  predicated  in  the  bill  of  com- 
plaint was  rebates  being  granted  on  grain  and  prepared 
meats  and  their  products,  being  shipped  from  this  jurisdic- 
tion. Allied  products  of  those  specified  commodities  would 
alone  come  within  the  requirements  of  the  rule  of  ejusdem 
eadem.  In  the  case  of  Swift  v.  United  States.  196  U.  S.  375, 
396,  25  Sup.  Ct.  276,  279,  49  L.  Ed.  518,  there  was  an  in- 
junction against  the  defendants,  restraining  them  from 
using  certain  specific  devices  in  violation  of  the  anti-trust 
act,  followed  by  a  general  clause,  not  dissimilar  in  its  im- 
port to  the  general  clause  in  the  restraining  order  herein. 
When  this  general  clause  was  attacked  as  vicious,  in  argu- 
ment before  the  Supreme  Court,  the  Attorney  General  of 
the  United  States  said  in  reply : 

"It  is  not  true  that  this  injunction  broadly  enjoins  them  against 
violations  of  the  law.  It  enjoins  them  against  certain  specific  con- 
spiracies, well  pleaded  in  the  petition,  well  stated  in  the  injunction, 
capable  of  being  understood  by  one  who  desires  to  understand  them. 
The  particular  paragraph  of  which  my  friend  so  much  complains — 
the  language  or  by  any  other  method  or  device,  the  purpose  or  eflfect 
of  which  is  to  restrain  commerce  as  aforesaid — is  not  open  to  the 
objection  which  he  urges  against  it.  There  are  specific  devices  set 
forth  in  the  injunction  and  prohibited,  and  there  is  a  general  pro- 
hibition in  the  clause  against  any  combination  to  restrain  commerce  as 
aforesaid;  that  is,  according  to  the  specific  restraints  which  precede 
Immediately  this  paragraph  of  the  injunction." 

In  the  opinion  delivered  by  Mr.  Justice  Holmes,  he  says: 

"  We  are  bound,  by  the  first  principles  of  justice,  not  to  sanction  a 
decree  so  vague  as  to  put  the  whole  conduct  of  the  defendants'  busi- 
ness at  the  peril  of  the  smnmons  for  contempt.  We  cannot  issue  a 
general  injunction  against  all  possible  breaches  of  the  law.  *  *  * 
The  general  words  of  the  injunction  '  or  by  any  other  method  or  de- 
vice, the  purpose  and  eflfect  of  which  is  to  restrain  commerce  as 
aforesaid,'  should  be  stricken  out.  The  defendants  ought  to  be  in- 
formed, as  accurately  as  the  case  permits,  what  thev  are  forbidden 
to  do.  Specific  devices  are  mentioned  in  the  bill,  and  they  stand 
prohibited.  The  words  quoted  are  a  sweeping  injunction  to  obey  the 
law,  and  are  open  to  the  objection  which  we  stated  at  the  beginning 
that  it  was  our  duty  to  avoid." 

Comment :  This  proceeding  by  contempt  against  the  rail- 
road company  does  not  commend  itself  to  my  sense  of  fair 
play  and  "a  square  deal."  The  Hutchinson  &  Arkansas 
River  Railroad  Company  is  a  railfoad  corporation,  char- 
tered by  the  state  of  Kansas.    As  such,  it  is  presumptively 


852 


142   FEDERAL   REPORTEH,   191. 
Opinion  of  the  Conrt. 


invested  with  the  power  to  exercise  the  right  of  eminent  do- 
main; and  is  presumptively  a  public  carrier,  authorized  t«) 
carry  freights  for  hire,  although  it  may  confine  its  oper- 
sations  to  the  transportation  of  the  output  of  particular  salt 
mills.  No  railroad  [192]  company  connecting  with  or  re- 
ceiving freights  from  it  has  a  right  to  demand  or  expect 
that  it  should  carry  and  deliver  to  it  freight  free  of  charge. 
Whether  its  rates  exacted  are  excessive  and  forbidden  depends 
upon  whether  or  not  the  creative  act  from  the  state  or  the 
state  authority  has  fixed  a  maximum.  If  that  be  exceeded,  it 
rests  for  correction  in  the  right  of  visitation  and  interference 
on  the  part  of  the  state.  Congress  has  not  undertaken  to 
regidate  the  matter  of  an  equitable  division  of  rates  on  a  joint 
tariff  l>etween  two  railroads.  Under  existing  law,  that  is 
entirely  a  matter  of  private  contract  lietween  the  railroads, 
and  if  the  joint  through  rate  be  less  than  the  aggregate  of 
the  local  rates  fixed  under  the  existing  local  laws,  it  is  a 
matter  of  no  concern  to  the  government.  The  interstate 
commerce  act  only  requires  that  the  established  schedule 
shall  be  filed  with  the  commission,  duly  published;  and  that 
it  shall  then  be  adhered  to  by  the  joint  parties.  Any  rail- 
road company  touching  at  Hutchinson,  Kan.,  desiring  to  do 
business  in  carrying  salt,  finds  the  shipper  entrenched  behind 
a  chartered  railroad  connected  with  the  plant  or  plants  of 
the  salt  manufacturer,  which  carries  the  entire  output  to 
the  connecting  roads.  The  shipper  says  to  the  railroad 
soliciting  its  business :  We  w  ill  ship  over  our  short  line  and 
deliver  to  you  on  condition  that  you  will  make  a  joint 
through  rate  agreement  with  us,  or  for  terminal  facilities, 
giving  us  the  lion's  share  of  the  income  or  charge,  which 
may  be  an  exorbitant  exaction.  The  soliciting  railroad 
must  submit  to  the  exaction  or  do  no  business  with  the  large 
shipper.  ^Ylien  thus  coerced,  some  other  shipper  of  salt  at 
Hutchison,  who  does  not  own  any  connecting  short  line 
road,  becomes  jealous  of  his  competitor  in  business,  and  com- 
plains to  the  Interstate  Conmierce  Commission,  charging  that 
the  short  railroad  thus  used  is  but  a  device  by  which  such 
shippers  obtain  a  rebate.  Instead  of  the  government  in- 
voking all  of  the  prohibitory  and  penalizing  provisions  of 
the  statutes  against  the  real  offender— the  shipper— in  such 


UNITED   STATES   V.   ATCHISON,    T.    &   S.   F.    RY.   CO.       853 

Opinion  of  the  Court, 
transactions,  by  directly  proceeding  against  him  in  the 
United  States  Circuit  Court  of  Kansas,  where  the  offense 
was  committed,  it  resorts  to  a  prosecution  for  contempt,  un- 
der an  order  SJ  years  old,  made  in  this  jurisdiction,  predi- 
cated of  an  entirely  distinct  subject-matter  of  traffic,  and  asks 
that  the  interstate  railroad  company  alone  be  punished. 
And  this  court,  in  this  ex  parte  proceeding  against  the  rail- 
road company,  is  asked  to  enter  into  an  investigation  of  the 
character  of  the  railroad  at  Hutchinson,  as  to  who  are  its 
stockholders  and  operators,  and  the  exact  relation  between 
it  and  the  Hutchinson-Kansas  Salt  Company,  and  how  the 
contract  for  through  traffic  rates  l)etween  the  parties  was 
brought  about.  When  the  government  shall  pursue  and  pun- 
ish such  shippers,  if  guilty,  it  will  strike  at  the  verv  root  of 
the  rebate  evil.  And  as  I  doubt  not  the  railroad  companies 
would  profit  by  the  result,  they  can  best  bring  about  the 
desired  consummation  by  opening  instead  of  closing  the 
mouths  of  the  men  under  their  control  when  their  e^ddence 
is  sought. 

There  is  a  second  like  information  against  the  defendant 
railway  company,  growing  out  of  the  rebates  alleged  to  have 
been  conceded  to  the  Colorado  Fuel  &  Iron  Company,  a  cor- 
poration of  Colorado,  on  shipments  of  coal  from  Trinidad, 
Colo.,  and  Gallup  in  the  territory  [193]  of  Xew  Mexico,  to 
points  in  the  territory  of  Arizona,  El  Paso,  Tex.,  and  to 
points  in  the  republic  of  Mexico.  Tliese  shipments  were 
made  in  1903-1904.  This  instance  has  attracted  considerable 
public  attention,  because  of  the  sensational  association  of 
the  names  of  Mr.  Ripley  and  Paul  Morton,  then  president 
and  vice  president,  respectively,  of  the  defendant  company, 
with  the  transaction.  The  record  in  the  case,  however,  con- 
sisting of  the  pleadings  and  the  exhibits  of  evidence  taken 
before  the  Interstate  Commerce  Commission,  fails  to  fur- 
nish any  foundation  for  imputing  to  those  gentlemen  any 
personal  responsibility  for  the  alleged  violation  of  the  inter- 
state commerce  law.  Such  matter,  however,  is  extraneous. 
For  the  reasons  assigned  in  the  foregoing  discussion,  this 
court  cannot  proceed  to  sentence  in  this  contempt  proceeding. 
However  reprehensible  the  conduct  of  the  defendant  rail- 
road company,  if  it  be  as  alleged  in  these  transactions,  may 


854 


142   FEDERAL   REPORTER,  216. 


Opinion  of  the  Court 

have  been,  or  however  much  disposed  this  court  be  to  compel 
obedience  to  its  lawful  mandates,  it  is  persuaded  that  it  is 
without  authority  in  this  proceeding  to  draw  to  it  the  ques- 
tions involved,  rightfully  belonging  to  the  jurisdiction  of  the 
United  States  Circuit  Court  for  the  Districts  of  Kansas  and 
Colorado.  "  Thus  saith  the  law  "  is  a  perpetual  injunction 
upon  the  judge,  when  called  upon  to  exert  judicial  power, 
which  he  may  not  disregard  without  standing  in  contempt  of 
his  own  conscience. 

It  results  that  the  motions  to  quash  the  informations  are 
sustained. 


[216]       LOEWE  ET  AL.  v,  LAWLOR  ET  AL. 

(Circuit  Court.  D.  Connecticut    December  13,  1905.) 

[142  Fed„  210.] 

PLEADIRG — SUiTItlEXCY     OF     COMPLAINT — ACTION     UNDKB     AnTI-TbUST 


Act. — The  complaint,  in  an  action  to  recover  damages  mider  section 
7  of  the  anti-trust  act  (Act  Juiy  2,  1890,  c.  647,  26  Stat.  210  [U.  8. 
Comp.  St.  1901,  p.  3202] ) ,  heM  sufficient  on  a  motion  for  cx)rrectlon 
of  the  same.*" 

At  Law.    On  motion  for  correction  of  complaint. 

See  ISO  Fed.  633.^ 

Damn-port  S  Banks^  for  plaintiffs. 

B'ristol,  Stoddard,  Beach  cfe  Fisher^  De  Forest  d^  Klein, 
and  Howard  IF,  Taylor,  for  defendants. 

Platt.  District  Judge. 

The  dispute  herein  has  not  yet  reached  that  critical  period 
which  warrants  a  recital  of  the  elaborate  complaint  which 
the  motion  attacks.  It  is  enough  to  say  that  the  gist  of  it  is 
somewhat  as  follows,  viz. :  For  many  years  the  plaintiffs  had 
been  opposed  to  the  closed-shop  policy,  and  had  consistently 
refused  to  take  any  action  tending  to  establish  that  policy, 
and  the  defendants  knew  it.  On  July  25, 1902,  the  plaintiffs 
had  a  large  and  profitable  interstate  trade  in  hats.    The  de- 


0  Syllabus  copyrighted,  1906,  by  West  Publishing  Go. 
6  See  p.  563. 


RUBBER   TIRE    WHEEL    CO,    V,    MIL.   R.    W.    CO. 


855 


Syllabus. 

fendants,  with  others  (see  paragraphs  9-18,  inclusive),  had 
a  way  of  making  people  come  to  terms  on  the  disputed  issue, 
which  way  is  described  carefully  and  minutely.  They  had 
been  instrumental  in  using  the  described  way  effectively 
upon  many  individuals,  firms,  and  corporations,  and  had 
boasted  of  their  success,  so  as  to  affect  the  plaintiffs  when 
they  should  come  at  them.  In  1901  they  told  the  plaintiffs 
that,  if  they  did  not  yield  on  the  disputed  issue,  they  would 
treat  them  as  they  had  the  others  and  force  them  to  do  so, 
but  plaintiffs  refused  to  yield.  Thereupon  and  therefore,  on 
July  25,  1902,  defendants  put  into  operation  the  machinery 
before  described,  with  attachments  thereto  and  refinements 
thereof,  and  so  inflicted  serious  injuries  upon  plaintiffs  in 
violation  of  the  Sherman  act  (Act  July  2,  1890,  c.  647,  26 
Stat.  209  [U.  S.  Comp.  St.  1901,  p.  3200]),  under  which  and 
by  virtue  whereof  this  suit  has  been  brought. 

[217]  It  is  not  understood  to  be  one  of  the  functions  of 
the  court,  on  such  a  motion  as  this,  to  compel  the  plaintiffs 
to  state  their  case  in  the  way  most  satisfactory  to  the  de- 
fendants. Indeed,  it  is  not  easy  to  conceive  how  such  a 
complicated  situation,  covering,  as  it  does,  such  an  important 
and  serious  question,  could  have  been  otherwise  set  forth. 
At  any  rate  a  close  scrutiny  of  the  complaint  discloses 
nothing  which  is  so  obviously  wrong  that  it  ought  to  be  ex- 
punged on  motion. 

Motion  denied. 


[631]  KUBBER  TIRE  WHEEL  CO.  v.  MILWAUKEE 

RUBBER   WORKS   CO. 

Cirqnit  Court,  E.  D.  Wisconsin.    January  23,  1906.) 

[142  Fed.,  531.] 

Patents— Licenses— Right  to  Attach  Conditions.— It  is  within  tiif* 
rights  of  the  owner  of  a  patent  to  grant  licenses  conditioned  that 
the  licensees  shall  sell  the  patented  article  only  at  prices  fixed  by 
the  agreement  and  also  restricting  the  production  of  a  licensee,  and 
such  agreements,  if  made  in  good  faith  and  for  the  purpose  of  pro- 
tecting the  patent  monopoly,  are  not  illegal  as  in  restraint  of  trade 
and  commerce,  and  such  good  faith  is  not  impeached  by  the  fact 


856 


142   FEDERAL   REPORTER,  531. 


Opinion  of  the  Court 

that  the  patent  has  been  held  invalid  by  the  federal  courts  In  some 
cirenits.  where  it  has  been  sustained  In  others. 

[Ed.  Note. — Power  of  patentee  to  control  his  invention,  see  note 
to  Eeuton-Peninsular  Button  Fastener  €o,  v.  Eureka  Specialty  Co.. 
25  C.  C.  A.  280.1 
Patents— Licenses— Validity  of  Pbovisions- Restraint  of  Trade. — 
Complainant,  owner  of  a  patent  for  a  rubber  tire  which  had  been 
adjudged  invalid  by  the  Circuit  Court  of  Appeals  for  the  Sixth  Cir- 
cuit, entered  into  license  contracts  with  all  of  the  large  manufac- 
turers of  tires  in  the  United  States,  all  of  whom  were  engaged  in 
Interstate  commerce.     Such  contracts  were  unlfonii.  and  each  made 
a  part  thereof  collateral  contracts  made  at  the  same  time,  one  of 
which  was  between  complainant  on  one  part  and  iill  of  tlie  licensees 
on  the  other.    As  a  whole  the  contracts  provideil  for  tlie  payment  of 
a  royalty  equal  to  4  per  cent,  of  the  net  selling  price  of  tlie  tires 
made  theieunder.  fixed  the  prices  at  wliich  the  tires  .should  be  sold 
at  a  substantial  advance  over  the  then  marlvet  price,  and  also  lim- 
ited the  production  of  each  licensee  to  a  certain  i)er  cent,  of  the  pro- 
duction of  all,  providing  that  if  the  licensee  madv  less  than  his 
"  quota  "  he  should  l>e  paid  a  rebate  of  20  per  cent,  on  the  value  of 
the  shortage,  and  if  he  made  more  he  should  pay  a  rovalty  of  20  per 
cent  on  the  excess.    The  contracts  also  provided  for  a  board  to 
supervise  the  oijerations  of  the  licensees  to  which  one-half  the  roy- 
alties should  be  paid  and  which  should  have  power,  with  the  consent 
of  a  majority  of  the  licensees,  to  pur<-hase  tires  from  any  of  them 
and  resell  at  such  prices  as  it  deemetl  for  the  interest  of  all.    Held, 
that  such  contracts  went  beyond  the  rights  of  complainant  under  its 
patent  monopoly  in  raisii:g  and  maintaining  prices  in  the  states  com- 
posing the  Sixth  federal  circuit,  in  which  the  monoiK)ly  had  no  prac- 
tical existence,  and  in  creating  a  fund  to  l)e  nse<l  to  crusii  competi- 
tion fiy  outside  nianufju-turers.  as  well  in  tlie  Sixth  circuit  as  else- 
where, ai:d  were  illegal  and  void  as  creating  a  cx)mbination  in  re- 
straint of  interstate  trade  and  commerce,  in  violation  of  the  anti- 
trust act   (Act  July  2,  1890.  c.  047,  2ii  Stat.  200  [U.  S.  (\mip.  St. 
1901,  p.  8200.]) 

Winkler  J  Flanders^  Smithy  Bottnm  (&  Fawsett  and  Augus- 
tine L,  HumeSy  for  plaintiff. 

m 

John  F.  Burke  and  Charles  Qnarles^  for  defendant. 

"  Sanborn,  District  Judge.  Action  at  law  to  recover  royal- 
ties nmder  the  Grant  patent.  No.  a54,675,  dated  February 
18,  189(),  for  rul)ber-tiretl  wheels.  The  royalties  claimed 
amount  to  $4,100.42;  but,  deducting  certain  offsets,  the 
plaintiff,  if  entitled  to  recover,  should  have  judgment  for 
$2,517.66  principal,  with  6  per  cent,  interest  from  the  time 
the  several  amounts  of  royalties  going  to  make  up  this  sum 


RUBBEK   TIRE    WHEEL    CO.    V.    MIL.    R.    W.    CO..         857 
Opinion  of  the  Court 

became  due,  with  due  regard  to  the  time  of  the  payment  of  the 
sums  making  up  the  offsets.    The  defenses  are  that  the  license 
contract  securing  the  royalties  is  denounced  as  illegal  by  the 
Sherman  anti-  [532]  trust  act  (Act  July  2,  1890,  c.  647,  2C 
Stat.  209  [U.  S.  Comp.  St.  1901,  p.  3200]),  making  void 
every  contract  combination  in  the  form  of  trust  or  otherwise, 
or  conspiracy  in  restraint  of  trade  or  commerce  among  the 
several  states ;  also  that  the  royalty  contract  is  invalid  under 
section  I791j  of  the  Wisconsin  Revised  Statutes  of  1898,  pro- 
hibiting corporations  organized  under  Wisconsin  laws  from 
entering  into  any  combination,  conspiracy,  trust,  pool,  agree- 
ment, or  contract  intended  to  restrain  or  prevent  competition 
in  the  supply  or  price  of  any  article  constituting  a  subject 
of  trade  or  connnerce  in  Wisconsin.     Defendant  is  a  Wis- 
consin corporation,  and  plaintiff  an  Ohio  corporation.     The 
reply  to  these  defenses,  in  argument,  is  that  they  are  imma- 
terial, because  the  articles  in  question  are  patented,  and  the 
royalties  claimed  are  under  a  patent  monopoly;  hence  the 
license  is  neither  within  the  Sherman  act  nor  the  Wisconsin 
trust  act.     In  rebuttal  to  such  anticipated  reply,  defendant 
pleads  in  its  answer  that  the  several  agreements  between  the 
l^arties  set  out  in  the  complaint  were  intended  to  form  a 
combination  in  restraint  of  trade:  that  the  patent  mentioned 
in  such  agreements  was  void,  and  was  believed  by  all  the 
parties  to  the  agreements  to  be  void;  that  the  patent  had 
been  so  adjudged  by  the  United  States  Circuit  Court  of  Ap- 
peals for  the  Sixth  Circuit,  and  the  Supreme  Court  had  re- 
fused to  review  that  decision;  that  the  patent  vras  resorted 
to  as  a  pretext  merely  to  enable  the  contracting  parties  to 
evade  the  Shenhan  act  and  the  AVisconsin  statute,  and  the 
license  contracts  were  not  in  fact,  nor  intended  to  be,  license 
contracts  under  letters  patent;  but  to  create  such  unlawful 
combinations  that  by  such  contracts  prices  were  raised  beyond 
the  natural  and  legitimate  market  prices,  and  the  amount  of 
manufactures  restricted;  and  that  the  pretended  license  con- 
tracts were  void  under  the  Sherman  act  and  the  Wisconsin 
statute. 

The  three  contracts  pleaded  and  proved  show  a  combina- 
tion in  restraint  of  trade  and  are  in  substance  as  follows: 
On   October   10,   1903,   plaintiff   and   defendant    made    the 


858 


142  FEDERAL.  REPORTER,   532. 
Opinion  of  the  CJoiirt, 


license  agreement.    It  recites  that  plaintiff  is  the  owner  of 
the  patent,  and  that  defendant  desires  to  obtain  the  right  to 
manufacture,  use,  and  sell  vehicle  tires  made  under  the 
patent.    Therefore  it  is  agreed  that  plaintiff  giants  de- 
fendant such  rights  for  one  year,  to  the  extent  set  forth  in 
a  "  supplementary  agreement "  attached  to  the  agreement  of 
license,  in  the  United  States,  except  19  states  and  certain 
counties  and  cities  in  other  states.    Three  counties  in  Ohio 
are  excepted  from  the  grant.    Plaintiff  agrees  to  vigorously 
prosecute  infringements,  except  such  as  may  be  committed  in 
the  Sixth  federal  circuit.     Defendant  agrees  to  pay  a^  roy- 
alty of  4  per  cent,  of  the  net  selling  price  of  tires  made  under 
the  license,  and  the  further  royalty  of  20  per  cent.  over. its 
"  quota  ".  fixed  by  the  supplementary  agreement.    The  sup- 
plementary agreement,  of  even  date  with  the  license,  recites 
licenses  like  the  foregoing  to  17  other  rubber-tire  manufac- 
turing companies,  and  fixes  the  quota  which  defendant  shall 
manufacture  each  month  during  the  license  year  at  2  per 
cent,  in  dollars  and  cents  of  the  aggregate  amount  made  and 
sold  by  all  the  licensees.    The  third  agreement,  made  at  the 
same  time,  called  the  "Licensees'  Agreement,"  is  between 
plaintiff  as  first  [533]  party  and  all  the  licensees  as  second 
parties.     It  recites  the  licenses,  and  that  it  desired  that  the 
right  of  manufacture  shall  be  exercised  on  uniform  terms 
and  conditions,  and  the  operations  of  all  the  licensees  super- 
vised by  an  impartial  administi-ation.    Therefore  it  is  agi'eed 
that  if  any  licensee  shall  sell  more  than  its  quota  it  will  pay, 
in  addition  to  the  4  per  cent,  royalty,  20  per  cent,  on  the 
amount  sold  by  it  in  excess  of  its  quota ;   and,  on  the  other 
hand,  if  it  shall  sell  less  than  its  quota,  it  shall  be  paid  20 
per  cent,  on  the  shortage.     Prices  for  first  quality  tires  are 
fixed  at  €»5  cents  a  pound,  and  for  second  quality  55  cents. 
Plaintiff  agrees  to  employ  a  commission  of  five  persons  to 
supervise  the  operations  of  the  licensees,  and  pay  it  one-half 
the  royalties,  or  2  per  cent.     If  any  licensee  sells  at  less  than 
the  fixed  prices  it  is  to  forfeit  its  right  to  license  rebates 
under  this  contract.    The  licensees  are  to  manufacture  only 
two  grades  of  tires.    The  commissioners  may,  by  written 
consent  of  a  majority  of  the  licensees,  purchase  tires  from 
any  of  them,  and  resell  at  such  prices  as  they  may  deem  for 


Rt^BBER    TIRE    WHEEL    CO.    V,    MIL.   R.    W.    CO.  859 

Opinion  of  the  Court 

the  interest  of  all  the  parties.  These  contracts  most  clearly 
make  a  combination  within  the  Sherman  act,  if  the  subject- 
matter  be  within  that  act.  That  is  the  only  question  in  the 
case. 

The  following  facts  appear  in  evidence:  There  has  been 
considerable  litigation  over  the  patent.  It  was  first  sus- 
tained in  Rubber  Tire  Wheel  Co,  v.  Columbia  Pneumatic 
Wagon  Wheel  Co,,  91  Fed.  978,  in  the  Circuit  Court  for  the 
Southern  District  of  New  York,  decided  in  December,  1898. 
In  May,  1902,  the  patent  was  sustained  by  the  Circuit  Court 
for  the  Southern  District  of  Ohio  (unreported),  but  on  ap- 
peal the  Circuit  Court  of  Appeals  for  the  Sixth  Circuit  held 
it  void  as  an  aggregation  of  old  devices.  Goodyear  Tire  d' 
Rubber  Co.  v.  Rubber  Tire  Wheel  Co.,  116  Fed.  363,  53  C.  C. 
A.  583,  before  Lurton,  Day,  and  Severens,  circuit  judges. 
About  the  same  time,  in  Consolidated  Rubber  Tire  Wheel 
Co.  V.  Fi7ilafj  Rubber  Tire  Co.,  116  Fed.  629,  in  the  Circuit 
Court  for  the  Northern  District  of  Georgia,  Judge  Newman 
sustained  the  patent,  and  also  held  defendant  estopped  to 
contest  the  validity  of  the  patent.  Before  his  opinion  was 
published  his  attention  was  called  to  the  Ohio  case,  but  he 
declined  to  change  his  decision,  as  defendant  was  estopped. 
The  patent  was  also  declared  valid  in  the  Circuit  Court  of 
Appeals  of  the  Republic  of  France,  sitting  at  Paris.  There 
is  also  an  infringement  suit  now  pending  in  the  Southern 
District  of  New  York,  brought  to  stop  infringement  and  also 
for  the  purpose  of  obtaining  either  an  agreement  in  the  va- 
rious circuits  as  to  the  validity  or  invalidity  of  the  patent,  or 
such  disagreement  among  them  as  will  take  the  question  to 
the  Supreme  Court.  That  court  denied  certiorari  to  review 
the  Ohio  decision.  187  U.  S.  641,  23  Sup.  Ct.  842,  47  L.  Ed., 
345.  The  Circuit  Court  of  Appeals  of  the  Sixth  Circuit  also 
held  the  patent  invalid  in  Rubber  Tire  Wheel  Co.  v.  Victor 
Rubber  Tire  Co.,  123  Fed.  85,  59  C.  C.  A.  215,  following 
the  Goodyear  Case.  In  the  case  now  pending  in  New  York, 
the  witness  Stapleton  and  several  other  attorneys  represent 
the  complainants,  one  of  them  being  plaintiff  here.  Soon 
after  the  decision  in  Ohio,  Mr.  Stapleton  advised  plaintiff 
that  the  patent  is  valid,  and  so  advised  it  in  the  early  part  of 


860 


142   FEDERAL   REPORTER,   534. 


Opiuion  of  the  Court. 

1903.    Similar  advice  was  given   [584]   by  Mr.  John  R. 
Bennett,  an  experienced  patent  lawyer  in  New  York. 

The  opinion  of  Mr.  Stapleton  was  based  on  the  fact  that 
the  judges  in  three  of  the  circuits  had  upheld  the  patent, 
and  on  his  opinion  that  the  Court  of  Appeals  of  the  Sixth 
Circuit  based  its  decision  on  wrong  premises.  The  "  tipping 
function  "  of  the  patented  tire,  hereafter  described,  the  court 
held  was  not  disclosed  in  the  patent  specifications.  It  was 
held  that  the  specifications  do  not  state  how  tightly  or 
loosely  the  tire  is  to  be  applied  to  the  wheel,  so  as  to  make 
this  tipping  function  operative.  Mr.  Stapleton  thinks  the 
court  was  mistaken  in  this  respect,  and  for  that  reason  ad- 
vised plaintiff  that  the  patent  will  be  sustained.  It  further 
appears  in  evidence  that  early  in  1903,  before  the  contracts 
in  question  were  made,  the  rubber  tire  market  was  much  de- 
moralized. Prices  were  being  cut  by  many  manufacturers. 
After  the  combination  was  made  the  prices  were  maintained 
m  fixed  in  the  agreement,  and  it  did  away  with  all  competi- 
tion. Before  the  combination  prices  were  50  cents  and  40 
cents,  respectively,  and  afterwards  65  and  55.  After  the 
expiration  of  the  agreement  the  prices  went  back  to  the 
former  rates.  During  the  combination  defendant  made  no 
effort  to  get  any  new  business.  All  the  tire  manufacturers 
were  in  the  pool  except  two  small  concerns.  Defendant's 
tires  were  made  in  Wisconsin  and  sold  in  that  and  many 
other  States. 

The  patent  is  for  a  sjiecific  combination  of  old  devices. 
The  chief  ground  on  which  it  is  sought  to  be  sustained  is 
that  it  produces  a  new  and  useful  result,  a  new  mode  of  oper- 
ation, or  an  old  result  in  a  more  advantageous  way.  The 
new  result  claimed  is  the  neutralizing  of  side  strain,  from 
blows  or  friction,  by  what  has  been  called  the  **  side-tipping 
function,"  not  found  in  the  prior  art.  From  the  cut  of  a 
transverse  section  of  the  tire  and  felloe  it  will  be  seen  that 
side  pressure  on  the  tire,  if  the  retaining  wires  be  not  too 
tightly  drawn,  will  cause  the  tire  to  rise  on  the  side  pressed, 
and  tip  on  the  other,  rising  in  the  channel  and  turning  on  the 
corner  oi'  angle  of  the  opposite  side,  as  upon  a  pivot,  return- 
ing to  its  seat  when  the  pressure  is  removed.  Thus  the  strain 
is  relieved,  and  both  breaking  and  splitting  prevented,  as 


RUBBER   TIRE    WHEEL    CO.    V.    MIL.    R.    W.    CO.  861 

Opinion  of  tlie  Court. 

well  as  the  suiting  of  the  tire  on  the  sloping  flange  or  rim  of 
the  wheel.  In  the  New  York  and  Georgia  cases  this  "  tipping 
function  "  is  held  a  novel  and  useful  result,  sufficient  to  sus- 
tain the  patent.  But  in  the  Ohio  case,  Avhile  it  is  admitted 
that  this  feature,  if  present,  might  sustain  the  patent,  yet 
that  it  is  neither  specified  or  claimed  by  the  patentee.  It  is 
said  by  that  court  to  depend  on  the  proper  tension  of  the  re- 
taining wires,  and  the  specifications  nowhere  show  how  tight 
they  shall  be.    Judge  Lurton  says: 

"  If  tliis  cjipjicitj'  for  side  movement  lu-  n  benettcial  function  plainly 
inherent  in  (Jrant's  combination  and  arrangement  of  old  parts  in  re- 
lation to  each  other,  and  not  a  mere  '  obscure  proi)ertv  lurking  in  some 
a<-cidental  corner  of  his  device,'  it  was  not  esscMitial  that  the  patentee 
should  i)oint  it  out  as  one  of  the  advantages  of  his  structure.  This  is 
because  he  has  invented  a  machine,  structure,  or  manufacture  which 
includes  in  its  necessao'  mode  of  opt^ration  the  function  in  question 
and.  whether  the  inventor  knew  or  not  the  full  measure  of  the  bene- 
ficial function  of  his  structure,  he  is  entitled  to  all  the  uses  of  his 
invention." 

The  court  held  that  the  tipping  fiuiction  was  not  plainly 
inherent  in  his  very  structure  or  device,  because  there  is 
nothing  to  show  how  [535]  tight  the  wires  are  to  be  stretched. 
The  tipping  capacity  is  not  even  pointed  out,  so  that  no  me- 
chanic, following  the  specifications,  would  know  how  tight 
or  loose  the  wires  were  to  be  made.  116  Fed.  375,  376;  53 
C.  C.  A.  583.  On  the  other  hand.  Judge  Newman,  in  the 
Georgia  case,  says  that  the  shape  of  the  tire— that  is,  the  out- 
ward slant  of  the  portion  within  the  rim— its  close  fitting 
against  the  rim,  and  its  angle  below  the  edge  of  the  rim, 
cooperate  with  the  two-part  wire  fastenings  to  cause  the 
rubber  to  rise,  when  exposed  to  extraordinary  lateral  force 
on  one  side,  and  turn  on  the  angle  of  the  other  side,  thus  pro- 
ducing the  tipping  function  and  relieving  the  strain. 

I  have  thus  stated  the  question  of  patentability  for  its 
bearing  on  the  l^elief  and  intent  of  the  parties  to  this  suit, 
their  bona  fide  belief  on  the  question  of  validity,  and  their 
resulting  intent  in  making  the  licenses  and  licensees'  agree- 
ment; in  other  words,  in  forming  the  tire  trust.  Mr.  Staple- 
ton,  believing  that  the  Court  of  Appeals  of  the  Sixth  Circuit 
missed  the  true  construction  of  the  specifications  in  respect 
to  this  new  function,  advised  plaintiff,  before  the  trust  agree- 
ment was  made,  that  the  patent  was,  in  his  opinion,  valid. 


862 


142   FEDERAL   REPORTER,   535. 


Opinion  of  the  Court. 

Certainly  it  is  entirely  probable,  as  it  seems  clear  to  me,  in 
view  of  such  opinion  so  expressed,  the  opinion  of  Mr.  Ben- 
nett, the  character  of  the  question  itself,  the  fact  that  three 
Circuit  Courts  and  the  French  court  have  sustained  the 
patent,  and  the  great  success  which  the  tires  have  been,  in 
practical  effect,  that  the  parties  to  this  suit,  and  to  the 
licensees'  agreement,  may  in  good  faith  have  believed  in  the 
validity  of  the  patent.  There  is  nothing  in  the  character 
of  the  concrete,  though  narrow,  question  of  patentability, 
as  it  seems  to  me,  which  rebuts  the  probability  of  such  honest 
belief.  It  may  well  have  been  supposed,  because  the  tipping 
function  has  an  actual,  practical  existence  in  the  tires  built 
under  the  patent,  that  this  feature,  however  obscurely,  is 
included  in  the  specified  mode  of  operation,  and  that  such 
novel  and  beneficial  result  woukl  save  the  patent  in  the  end, 
notwithstanding  the  Ohio  decision.  The  Grant  tires  are 
wonderful  preservers  of  carriages,  old  and  new.  If  the 
"  one-hoss  shay  "  had  been  equipped  with  them  it  would,  in 
my  opinion,  be  running  yet.  It  is  at  least  possible  that  the 
courts  will  find  in  the  patent  specifications,  by  fair  implica- 
tion, a  function  which  skilled  workmen,  all  over  the  country, 
have  actually  found  in  them;  and  the  owner  and  its  licen- 
sees, though  conscious  that  the  patent  has  been  to  some  ex- 
tent discredited,  and  that  its  validity  rested  on  narrow 
grounds,  might  yet  have  honestly  believed  that  it  would  be 
finally  sustained.  At  all  events,  bad  faith  has  not  been 
proved. 

But,  if  it  be  assumed  that  the  Ohio  decision  was  the  in- 
ducing cause  of  the  combination,  a  more  serious  question  is 
presented.  Likewise,  if  the  combination  went  beyond  what 
was  reasonably  necessary  to  the  enjoyment  of  the  patent 
monopoly.  It  is  impossible  to  restrain  commerce  in  a  thing 
which  has  no  inherent  conmiercial  freedom.  An  existing 
monopoly  can  not  be  monopolized.  The  patentee  having 
brought  forth  the  article  from  the  world  of  mind,  having 
added  so  much  to  the  common  stock  of  property,  may  do  as 
he  chooses  with  it.  Singer  v.  Walmsley^  Fed.  Cas.  No. 
12900.  It  is  the  patented  machine  or  device  itself,  not  merely 
the  mental  conception  producing  it,  which  [536]  is  pro- 
tected from  infringement.    Any  other  rule  would  render 


RUBBER   TIRE    WHEEL    CO.    IK    MIL.    R.    W.    CO.  863 

Opinion  of  the  Court. 

the  patent  protection  wholly  illusory.  Such  protection  ex- 
tends to  assignees  and  licensees  equally  with  the  patentee. 
It  is  not  until  the  patented  device  has  been  sold  and  passed 
out  of  the  dominion  of  the  patent  owner  that  the  monopoly 
limit  is  reached.  Adams  v.  Burke^  17  Wall.  453,  21  L.  Ed. 
700 ;  Keeler  v.  Standard  Folding  Bed  Co..  157  U.  S.  659,  15 
Sup.  Ct.  738,  39  L.  Ed.  848. 

The  Constitution,  in  the  interests  of  invention,  grants  to 
the  patentee  the  absolute  right  to  exclude  or  debar  the  world 
from  making,  using  and  selling  his  device;  and  Congress  by 
passing  acts  in  aid  of  powers  given  it,  like  the  power  to  reg- 
ulate commerce,  can  not  interfere  with  this  constitutional 
right  of  exclusion,  embargo,  or  inhibition.  Having  the 
absolute  power  of  complete  exclusion,  the  proprietor  may 
exclude,  conditionally  or  in  part,  by  imposing  limits  as  to 
time,  place,  price,  or  persons.  He  may  deal  arbitrarily,  may 
sell  or  withhold  from  sale,  vend  to  one  at  one  price  and  to 
another  at  a  different  price,  permit  use  in  one  State  and  not 
in  another,  give  reasons  or  not,  or  deal  fairly  or  unfairly; 
and  in  doing  all  or  any  of  these  he  is  within  his  right,  until 
the  patent  expires  or  is  avoided,  or  the  articles  pass  beyond 
the  limits  of  his  monopoly.  He  may  even  bring  nonpat- 
ented  articles  within  his  monopoly  by  providing  that  the 
patented  device  shall  be  sold  only  in  connection  therewith. 
All  this  is  so  well  settled,  not  only  as  to  patents,  but  copy- 
rights, secret  process  remedies,  and  trade  secrets,  that  it  is 
only  necessary  to  refer  to  a  few  cases.  Victor  Talking  Ma- 
chine Co.  V.  The  Fair,  123  Fed.  424,  61  C.  C.  A.  58 ;  Bement 
V.  National  Harrow  Co.,  186  U.  S.  70,  22  Sup.  Ct.  747,  46 
L.  Ed.  1058 ;  U.  S.  Consol.  S.  R.  Co.  v.  Griffin  <&  Skelly  Co., 
126  Fed.  364,  61  C.  C  A.  334;  Rupp,  Wittgenfeld  Co.  v. 
Elliott,  131  Fed.  730,  65  C.  C.  A.  544 ;  Dr.  Miles  Medical  Co. 
V.  Goldthwaite  (C.  C.)  133  Fed.  794;  Board  of  Trade  v. 
Christie  Grain  (&  Stock  Co.,  198  U.  S.  236,  25  Sup.  Ct.  637, 
49  L.  Ed.  1031.  Like  every  kind  of  arbitrary  power  it  is 
liable  to  abuse,  but  the  power  to  abuse  it  resides  in  its  very 
nature. 

These  observations  apply  only  to  patented  articles  which 
have  not  passed  beyond  the  monopoly  limit  through  sale  by 
the  patentee,  licensee,  or  assignee.     Here  the  monopoly  ends. 


864 


142   FEDERAL   REPORTER,   536. 


Opinion  of  the  Court.  * 

The  articles  are  then  in  the  same  condition  as  if  nnpatented, 
subject  to  all  trade  and  commerce  regulations  like  any  other 
property.  See  Afhrms  v.  Burke^  17  Wall.  453,  21  L.  Ed.  700. 
Nor  do  such  oh-ervations  seem  to  apply  to  sale  or  nianufac- 
ture  in  the  states  composing  the  Sixth  federal  circuit.  .It 
can  not  be  reasonably  said  that  the  proprietor  has  power 
to  exclude  or  debar  the  use,  sale,  or  manufacture  in  Ohio, 
Michigan,  Kentucky,  or  Tennessee,  since  no  court  there  will 
grant  it  an  injunction,  decree  for  infrhigement,  or  account,  or 
judgment  for  damages.  In  those  states  the  i)atent  owner  has 
no  }>o^yer  at  all,  no  dominion  of  market,  no  monopoly.  It 
can  not,  from  a  practical  standpoint,  accomplish  a  single 
one  of  the  things  mentioned  which  flow  from  its  monopoly, 
simply  because  no  remedy  there  exists.  "  Ubi  jus,  ibi  reme- 
(1  i  u  ui ,  et  vice  versa . "' 

What  the  effect  of  a  deirision  avoiding  a  patent  for  lack  of 
novelty  has  upon  the  nine  lives  of  a  patent  is  a  practical  ques- 
tion, not  a  theoretical  one.  Suppose  the  same  thing  had  hap- 
pened to  this  patent  as  [587]  occurred  in  the  Driven  Well 
Cases,  122  IT.  S.  40,  7  Sup.  Ct.  1073,  30  L.  Ed.  10(14,  and  123 
U.  S.  267,  8  Sup.  Ct.  101.  31  L.  Ed.  160:  the  patent  being 
held  void  in  one  and  valid  in  the  other.  If  the  Supreme 
Court  in  one  case  should  hold  the  device  anticipated,  and  in 
the  other,  for  lack  of  evidence,  sustain  the  patent,  the  effect 
would  lie  to  destroy  the  monopoly.  True,  the  patent  would 
still  he  presumptively  good.  Hie  decision  of  the  Supreme 
Court  would  not  even  be  evidence  against  it.  Pleading  and 
proof  would  still  have  to  show  the  j^rior  art:  and  the  patent 
might  in  a  particular  case  he  still  sustained,  even  by  the  same 
high  court  which  formerly  avoided  it.  But  from  the  prac- 
tical standpoint  the  patent  would  be  worthless.  The  owner 
would  not  have  the  presumption  to  attempt  its  enforcement. 
No  Circuit  Court  in  the  country  would  afford  him  a  particle 
of  real  protection.  He  would  be  helpless,  the  patent  lifeless 
•and  despised,  dead  beyond  the  power  of  resurrection,  no  mat- 
ter how  useful  the  machines  or  devices  made  under  it.  Any 
attempt  to  revive  such  a  patent  and  give  it  vitality  would  not 
only  be  futile,  but  would  bring  it  and  its  proprietor  into  fur- 
ther contempt.  But  in  the  rest  of  the  United  States  the  Grant 
patent  stands  on  different  grounds.    The  Sixth  circuit  de- 


RUBBER   TIRE    WHEEL    CO.    V.    MIL.    R.    W.    CO.  865 

Opinion  of  the  Ck)^!.    v 

cision  would  not  afford  the  slightest  evidence  of  its  invalidity, 
however  persuasive  upon  the  court  it  might  be.  Not  only 
this,  but  plaintiff  believed  it  valid.  Nor  is  there  any  evi- 
dence to  show  that  the  decision  of  the  Sixth  Circuit  Court  of 
Appeals  was  the  inducing  cause  of  the  combination.  I  think 
it  was  due  to  the  belief  of  all  the  parties  that  such  a  combina- 
tion was  within  the  riglits  of  the  plaintiff  as  owner  of  the 
patent.  I  do  not  find  any  evidence  of  bad  faith  on  the  part 
of  either  of  the  partias  to  this  suit,  or  any  of  the  licensees. 

But  the  vital  question,  upon  which  I  have  had  much  diffi- 
culty, is  whether  the  combination  goes  so  much  beyond  the 
limits  of  the  patent  monopoly,  and  secures  results  so  unne- 
cessary to  the  patentee's  rights,  as  to  render  the  license  agree- 
ments void.     Do  the  restrictions  of  the  license  asrreements 
add  to  the  patent  monopoly,  or  do  they  only  keep  up  or  con- 
tinue the  monopoly  secured  by  the  patent?     The  patentee 
having  by  his  invention  brought  into  existence  the  patented 
devices,  they  are  not,  in  the  usual  sense,  the  subjects  of 
monopoly.     "A  patent  is  that  which  brings  out  from  the 
realm  of  mind  something  which  never  existed  before  and 
gives  it  to  the  country."    Singer  v.  Walmsley,  1  Fish.  Pat. 
Cas.  558,  22  Fed.  Cas.  207.    Monopoly  restrains  trade  or 
commerce  in  articles  which  before  were  the  subjects  of  trade 
or  commerce.    Patented  articles  were  not  so,  for  thev  did  not 
exist  before.     Hence  they  cannot  be  the  subjects  of  prohib- 
ited monopoly,  unless  the  restriction  be  extended  beyond 
what  the  patentee  secures.    In  re  Greene,  (C.  C.)  52  Fed. 
194 ;  Bement  v.  Harrow  Co,^  186  U.  S.  70,  22  Sup.  Ct  747, 
46  L.  Ed.  1058 ;  U.  S.  Cons,  Seeded  Raisin  Co.  v.  GriHin  <& 
Shelley  Co,,  126  Fed.  365,  61  C.  C  A.  334 ;  National  Phono- 
graph Co,  V.  Schlegel,  128  Fed.  733,  64  C.  C.  A.  594.    What, 
then,  does  the  patent  secure?     What  are  the  true  limits  of 
the  lawful  patent  monopoly  ?     Are  the  license  agreements  in 
their  very  nature  illegal,  because  going  beyond  the  patent 
domain,  and  employing  restrictions  not  essential  to  fortify  or 
sustain  the  patent  right?     As  stated  be-  [538]  fore,  the  pat- 
entee has  the  right  of  exclusion  or  inhibition  against  all  oth- 
ers, in  the  making,  use,  and  sale  of  the  new  devices  he  has  in- 
vented and  newly  produced,  and  within  this  field  his  rights 
21220— VOL  2—07  m 55 


866 


142   FEDERAL   REPOBTEK,  538. 


Opinion  of  the  Court. 

are  unlimited.  The  license  agreements  do  not  attempt  to 
limit  total  production,  nor,  apparently,  the  field  of  production 
or  territory  of  sale.  They  do  not  restrict  competition  between 
the  various  licensees.  They  fix  and  control  prices,  and  the 
quota  of  each  manufacturer — provisions  entirely  lawful,  and 
within  the  patent  monopoly.  They  regulate  the  kinds  of 
tires  to  be  made,  also  permissible.  Thev  create  a  board  of 
arbitration  or  administration,  to  enforce  the  i^erformance  by 
all  the  parties  of  the  terms  of  their  agreements,  which  would 
not  be  subject  to  criticism,  unle&s  designed  to  reach  beyond 
the  patent  field  and  secure  results  not  granted  by  the  patent 
laws. 

But  in  two  important  ways  the  provisions  of  these  con- 
tracts attempt  to  secure  i*esults  not  contained  within  or  flow- 
ing from  the  lawful  monopoly  of  the  patent.  First,  they 
raise  and  maintain  prices,  and  restrict  trade  and  interstate 
commerce,  in  Michigan,  Ohio,  Kentucky,  and  Tennessee, 
where  the  patent  monopoly  has  no  practical  existence;  sec- 
ond, they  create  a  fund  for  crushing  comi)etition  in  interstate 
commerce  throughout  the  whole  country,  as  avoH  in  the  Sixth 
circuit  as  elsewhere,  and  not  only  competition  in  the  Grant 
tires  between  outside  manufacturers  and  those  who  are  in  the 
combination,  but  competition  of  all  other  rubber  tires  against 
the  Grant  tires.  The  arbitrators  may,  with  the  written  con- 
sent  of  a  majority  of  the  licensees,  purchase  tires  from  them 
and  sell  at  any  price.  They  could  thus,  by  selling  at  less  than 
cost,  stamp  out  and  destroy  competition  against  the  licensees 
by  independent  makers  of  any  kind  of  rubber  tires.  In  these 
two  ways  the  contracts  do,  in  my  opinion,  secure  illegitimate 
results,  in  their  nature  unhnvful,  neither  contained  within 
nor  essential  to  the  patent  monopoly.  It  is  true,  as  the  Su- 
preme Court  has  decided,  that  agreements  made  to  promote 
legitimate  business  under  a  patent,  with  no  purpose  to  thereby 
restrain  interstate  commerce,  are  not  within  the  anti-trust 
act,  even  if  they  do  indirectly  and  remotely  affect  such  com- 
merce. United  States  v.  Joint  Tra-ffic  Ass^n,  171  U.  S.  505, 
568,  19  Sup.  Ct.  25,  43  L.  Ed.  259.  Although  I  do  not 
find  in  this  case  express  unlawful  intent,  yet  the  necessary 
result  being  the  restraint  of  interstate  commerce  in  a  prohib- 
ited field,  not  indirectly  or  remotely,  but  directly  and  substan- 


CINCINNATI   PACKET    CO.    V.   BAY. 


867 


Opinion  of  the  Court. 

tially,  it  necessarily  follows  that  the  contracts  were  invalid, 
and  that  the  suit  must  fail. 

Within  the  proper  domain  of  his  monopoly  the  patentee 
may  combine  and  conspire  and  restrict  as  much  as  he  pleases. 
But  I  cannot  conceive  that  enlightened  courts,  under  a  gov- 
ernment of  law,  will  find  it  consonant  with  just  notions  of 
duty  to  permit  a  patentee,  however  worthy  his  invention  or 
large  and  extensive  his  rights,  by  means  of  his  royalties  to 
create  a  fund  for  crushing  lawful  opposition,  destroying 
legitimate  and  proper  competition,  and  restraining  trade  and 
commerce,  not  only  in  the  patented  articles  themselves,  but 
all  others  competing  with  them.  Even  in  territory  lawfully 
subject  to  his  monopoly,  I  cannot  believe  this  possible ;  still 
less  in  a  broad  do-  [539]  main  covering  four  populous  states 
in  which  the  patent  has  become  practically  worthless— a  ter- 
ritory greater  in  extent  than  that  of  the  British  Isles. 

In  view  of  the  conclusion  reached  it  is  unnecessary  to  con- 
sider the  effect  of  the  trust  act  of  Wisconsin.  See,  however, 
U,  S.  Consolidated  Seeded  Raisin  Co,  v.  Gin^n  dt  Shelley 
Co,,  126  Fed.  364,  CI  C.  C.  A.  334;  Columbia  Wire  Co,  v. 
Freeman  Wire  Co.  (C.  C.)  71  Fed.  302. 

Defendant's  attorneys  will  prepare  findings  conforming 
to  this  opinion,  and  directing  judgment  dismissing  the  com- 
plaint, with  costs. 


[179]    CINCINNATI,    PORTSMOUTH,    BIG    S\NDY 
AND  POMEROY  PACKET  COMPANY  /•.  BAY^ 

ERROR  TO  THE  SUPREME  COURT  OF  THE  STATE  OF  OHIO. 
No.  174.     Argued  December  15,  1905.— Decided  January  2,  1906. 

[200  U.  S.,  179.] 

Where  it  appears  from  the  record  of  a  case  in  a  state  court  that  a 
Federal  question  was  raised,  and,  in  the  absence  of  an  opinion  it 
appears  from  a  certificate  made  part  of  the  record  that  it  was  not 
raised  too  late  under  the  local  procedure,  and  that  it  was  necessarily 
considered  and  decided  by  the  highest  court  of  the  State,  this  court 
has  jurisdiction  to  review  the  judgment  on  writ  of  error. 

A  contract  is  not  to  be  assumed  to  contemplate  unlawful  results  unle.ss 
a  fair  construction  rcHjuires  it ;  and  where  a  contract  relates  to  com- 
merce between  points  within  a  State,  both  on  a  boundary  river    it 


868 


200  UNITED  STATES  KEPORTS,  179. 


Argument  for  plaintiffs  in  error. 

will  not  be  construed  as  falling  within  the  prohibitions  of  the  Sher- 
man act  l»ecause  the  vessels  affected  by  the  contract  sail  over  soil 
belonpiig  to  the  other  State  while  passing  between  the  intrastate 
points. 

Even  If  there  is  some  interference  with  interstate  commerce,  a  con- 
tract is  not  necessarily  void  under  the  Sherman  act  if  such  inter- 
ference is  insignificant  and  merely  incidental  and  not  the  dominant 
puriMwe;  the  c*on1ract  will  be  construed  as  a  domestic  contract  and 
its  validity  determhied  by  the  local  law. 

A  contract  for  sale  of  vessels,  even  if  they  arc  engaged  in  interstate 
commerces  is  not  necessarily  void  because  the  vendors  agree,  as  is 
ordinary  in  case  of  sale  of  a  business  and  its  good  will,  to  with- 
draw from  business  for  a  specified  period.* 

[A  purchaser  of  river  craft  cannot  invoke  the  antitrust  act  of  July 
2,  1890  (26  Stat.  L.  209,  chap.  647,  U.  S.  Comp.  Stat.  1901,  p. 
3200),  to  relieve  him  from  his  obligation  to  pay  j:he  purchase  price, 
because  of  his  covenant  to  maintain  the  present  traffic  rates,  which 
is  not  declared  by  the  contract  to  enter  into  the  consideration  of 
the  sale— especially  where  the  rates  referred  to  primarily,  if  not 
exclusively,  relate  to  domestic,  and  not  to  interstate,  business.]* 

The  facts  are  stated  in  tM  opinion. 

Mr.  Ledyard  Lincoln^  with  whom  Mr.  Jitlim  L.  Anderson 
was  on  the  brief,  for  plaintiff  in  error : 

The  contract  is  void  under  the  Sherman  act. 

Repeated  attempts  have  been  made  to  restrict  the  broad 
and  ffeneral  language  of  the  statute,  but  the  Federal  courts 
and  especially  this  court  have  uniformly  held  that  the  act 
means  just  what  it  says  and  cannot  be  confined  to  unreason- 
able restraints  nor  such  as  were  condemned  by  the  common 
[180]  law  before  its  passage.  United  States  v.  Freight 
Assn.,  166  U.  S.  290,  312,  340 ;  United  States  v.  Joint  Traffic 
Assn.^  171  U.  S.  505,  573,  575;  United  States  v.  Addyston 
Pipe  di  Steel  Co.,  85  Fed.  Rep.  271;  S.  C,  175  U.  S,  211; 
Northern  Securities  Co.  v.  United  States,  193  U.  S.  197, 
331,  402;  Ches.  cfe  Ohi^  Fuel  Co.  v.  United  States,  115  Fed. 
Rep.  610,  619. 

The  commerce  restrained  was  interstate.  Both  the  Ports- 
mouth Company  and  the  Bays  were  engaged  in  steamboat- 

«  The  foregoing  syllabus  and  the  abstracts  of  arguments  copyrighted, 
1906.  by  The  Banks  Law  Publishing  Co. 

»  This  paragraph  taken  from  the  U.  S.  Supreme  Court  Reports,  Book 
SO,  p.  428.  Copyrighted,  1906,  by  the  Lawyers'  Co-Operative  Publish- 
ing Co. 


CINCINNATI  PACKET   CO.   V.   BAY. 
Argument  for  plaintiffs  in  error. 


869 


ing  between  ports  in  Pennsylvania,  West  Virginia,  Ohio  and 
Kentucky.  Nor  was  the  element  of  restraint  merely  ancil- 
lary.    Tuscaloosa  v.  Williams,  127  Alabama,  110,  119. 

It  cannot  be  questioned  that  the  transportation  of  persons 
and  property  from  one  State  to  another  is  interstate  com- 
merce. Gloucester  Ferry  Co.  v.  Pennsylvania,  114  U.  S.  196; 
Lottery  Case,  188  U.  S.  321,  345. 

The  transportation  of  goods  on  a  through  bill  of  lading 
from  one  point  in  a  given  State  to  another  in  the  same  State 
by  way  of  an  adjoining  State  or  Territory  is  interstate  com- 
merce,    llanley  v.  Kansas,  187  U.  S.  617. 

The  States  of  Kentucky  and  West  Virginia  extend  to  low 
water  mark  on  the  Ohio  side,  so  that  even  boats  plying 
directly  from  Syracuse  to  Cincinnati  without  stopping  at 
intermediate  points  would  necessarily  at  ordinary  stages  of 
the  river  pass  through  parts  of  West  Virginia  and  Kentucky. 
Indiana  v.  Kentucky,  136  U.  S.  479 ;  Hanley  v.  Anthony,  5 
Wheat.  374;  Booth  v.  Huhhard,  8  Ohio  St.  243;  McFall  v. 
Commonwealth,  2  Metcalf  (Ky.),  394. 

Contracts  not  relating  directly  to  interstate  commerce, 
but  local  in  their  nature,  have  been  held  not  within  the  pro- 
hibition of  the  Sherman  act,  although  the  parties  contract- 
ing in  fact  sold  commodities  or  solicited  business  bej^ond  the 
state  line,  as  tlie  contract  must  affect  interstate  commerce 
directly  and  not  remotely  or  incidentally.  United  States  v. 
E.  C.  Knight  Co.,  156  U.  S.  1 ;  Hopkins  v.  United  States.  171 
U.  S.  578;  Anderson  v.  United  States,  171  U.  S.  604.  But 
see  United  States  v.  Freight  Assn.,  166  U.  S.  290,  325; 
Lufkin  V.  F ring  ell,  [181]  57  Ohio  St.  596;  MonongaheU 
Co.  V.  Jutte,  210  Pa.  St.  288,  and  cases  cited  in  note;  74  Am, 
St.  Rep.  235,  273;  Bement  v.  Harrow  Co.,  186  U.  S.  92. 

The  Sherman  act  prohibits  any  contract  in  restraint  of 
trade  which  would  be  illegal  at  common  law.  As  to  what 
would  be  illegal  see  Homer  v.  Graves,  7  Bingham,  735,  743 ; 
24  Am.  &  Eng.  Ency.  of  Law,  850,  and  as  to  rule  in  the  State 
of  Ohio  see  Lange  v.  Work,  2  Ohio  St.  519,  528.  See  also 
United  States  v.  Addyston  Pipe  Co.,  85  Fed.  Rep.  271,  and 
cases  cited,  p.  290 ;  Texas  v.  Southern  (&c.  Co..  6  So.  Rep. 
888;  Salt  Co.  v.  Guthrie,  35  Ohio  St.  666;  Emen/  v.  Candle 
Co.,  47  Ohio  S.  320;  State  y.  Standard  Oil  Co.,  49  Ohio  St. 


2W  IGNITED   STATES   REPORTS,   181. 


Opinion  of  tlie  Court 

137;  Soffth  Chkago  v.  Calumet,  171  Illinois,  391 ;  Anderson 
T.  Jett,  80  Keiitiicky,  875  (a  case  of  competing  steamboat 
lines). 

Tlie  two  packet  companies  who  signed  the  contract  were 
not  engaged  in  private,  but  in  quasi-public  business,  and 
therefore  any  restraint  upon  such  business  would  be  preju- 
dicial to  the  public  interest  and  cannot  be  sustained.  United 
States  V.  Freight  Amsh.,  ir>r>  U.  S.  338;  Oihhs  v.  BMimore, 
130  U.  S.  396. 

The  Federal  question  was  raised  properly  and  in  time. 

If  the  Federal  or  jurisdictional  question  be  raised  for  the 
first  time,  in  the  assignments  of  errors  in  the  Supreme  Court 
of  the  State,  the  question  is  presented  in  time.  Farmers'' 
Ins,  Co,  V.  Dohney,  18l)  U.  S.  301 ;  Land  cC?  Water  Co.  v.  San 
Jose^  189  D.  S.  179;  C.  B.  d;  Q.  R,  R,  v.  ('hirago,  im  U.  S. 
226,  281 :  RothsehiM  v.  Knight,  184  U.  S.  334,  339 ;  Fnrman 
V.  Niehoh  8  Wall.  44,  56, 

Mr.  Lawrence  Maxwell,  Jr,,  and  3fr.  Joseph  aS'.  (hay don 
for  defendants  In  error : 

No  Federal  question  is  presented  or  was  properly  raised. 

The  vessels  affected'  by  the  contract  were  not  engaged  in 
interstate  commerce.  Hanley  v.  Kansas  City  Railway,  187 
U.  S.  617,  does  not  apply.  See  Lehigh  Valley  v.  Penn.sylna- 
nia,  145  U.  S.  192.  The  court  will  not  assume  facts  to  make 
the  contract  illegal.  Herpolsheimer  v.  Fanke,  95  N.  W.  Rep. 
687;  [1821  Jeicett  Puhlishing  Co.  v.  Butler ^  159  Massachu- 
setts, 517;  Mills  v.  Dunham,  1  Ch.  1891,  576,  586. 

Mr.  Ji  STicE  Holmes  delivered  the  opinion  of  the  court. 

This  is  an  action  upon  a  contract,  brought  by  the  defend- 
ants in  error  to  recover  an  instalment  of  money  due  by  its 
terms.  A  judgment  in  their  favor  was  sustained  bv  the 
Supreme  Court  of  the  State,  although  the  petition  in  error  to 
that  eoiii't  set  up  that  the  contract  was  illegal  under  the  act  of 
Congress  of  July  2,  1890,  c.  647,  26  Stat.  209.  No  opinion 
was  delivered,  but  a  certificate  that  this  objection  was  relied 
upon  and  that  it  necessarily  was  considered  was  made  part  of 
the  record  by  that  court.  Therefore  the  present  writ  of  error 
properly  was  allowed.    The  record  shows  that  the  question 


CINCINNATI   PACKET    CO.    V.   BAY. 


871 


Opinion  of  the  Court. 

was  raised  and  the  certificate  shows  that  it  was  not  treated 
as  having  been  raised  too  late  under  the  local  procedure, 
a  point  upon  which  the  state  court  is  the  judge.  It  is  enough 
that  the  Federal  question  was  raised  and  necessarily  decided 
by  the  highast  court  of  the  State.  Farmers'  d'  Merchants' 
Insurance  Co.  v.  Dobney,  189  U.  S.  301. 

The  contract  was  an  indenture  between  the  Portsmouth 
and  Pomeroy  Packet  Company,  George  W.  and  William 
Bay,  of  the  first  part,  and  the  Cincinnati,  Portsmouth,  Big 
Sandy  and  Pomeroy  Packet  Company,  of  the  second  part. 
By  this  instrument  the  parties  of  the  first  part  sell  to  the 
latter  two  steamers,  two  deck  barges,  two  coal  flats  and  five 
hundred  dollars  in  the  stock  of  the  Coney  Island  T\Tiarf  Boat 
Company,  for  $30,500,  to  be  paid  as  therein  provided.     The 
party  of  the  second  part  also  agrees  to  pay  to  the  Bays 
$3,600  annually  in  advance  for  five  years,  provided,  how- 
ever, that  in  case  of  opposition  to  its  boats  by  other  boats  run- 
ning from  Cincinnati  to  Portsmouth,  Ohio,  or  to  points  above 
Portsmouth,  not  including  points  above  Syracuse,  Ohio,  caus- 
ing it  to  carry  freight  and  passengers  at  certain  exceedingly 
low  rates,  the  time  of  payment  of  the  instalments  shall  be 
postponed  until  the  opposition  has  ceased.     It  is  [183]  fur- 
ther agreed  that  if  the  opposition  continues  for  two  years 
without  interruption,  and  no  annual  payment  be  made,  the 
Bays  may  cancel  the  agreement. 

"  It  is  also  agreed  as  a  part  of  the  consideration  of  this 
agreement "  that  for  five  years  the  parties  of  the  first  part, 
or  either  of  them,  shall  not  be  "  engaged  in  running  or  in 
operating,  or  in  any  way  be  interested  in  any  freight  and 
passenger  j^acket  or  business,  or  either  of  theni.  at  and  from 
Cincinnati,  Ohio,  to  Portsmouth,  Ohio,  and  intermediate 
points;  nor  at  and  from  Portsmouth,  Ohio,  to  Cincinnati, 
Ohio,  and  intermediate  points;  nor  at  and  from  Syracuse 
Ohio,  or  points  between  Syracuse  and  Portsmouth,  Ohio,  to 
or  for  points  below  Portsmouth,  Ohio,"  with  a  qualification 
as  to  the  towing  and  barge  business,  so  long  as  it  does  not 
interfere  with  the  other  party's  freight  and  passenger  busi- 
ness from  Portsmouth  to  Cincinnati.  "  It  is  also  understood 
in  this  agreement  that  the  party  of  the  second  part  will  main- 
tain the  rates  charged  by  the  parties  of  the  first  part  on  busi- 


872 


200  UNITED   STATES   REPORTS,   183. 


Opinion  of  the  Court 

ness  above  Portsmouth,  Ohio,  said  rates,  however,  never  to 
exceed  railroad  rates  between  said  points."  The  last  men- 
tioned covenants,  set  forth  in  this  paragraph,  are  especially 
relied  upon  as  making  the  contract  illegal  as  in  restraint  of 
trade. ,  The  previously  mentioned  suspension  of  instalments 
in  case  of  opposition  rising  to  a  certain  height  also  is  referred 
to  as  a  combination  to  aid  the  purchaser  in  getting  a  monop- 
oly of  river  trade  between  Portsmouth  and  Cincinnati,  in- 
cluding, it  is  said,  some  Kentucky  ports. 

It  might  be  enough,  perhaps,  to  answer  the  whole  conten- 
tion, that  it  does  not  appear  on  the  record  that  the  contract 
necessarily  contemplated  commerce  between  the  States.  It 
would  be  an  extra \agant  consequence  to  draw  from  Hanley 
V.  Kansm  City  Southern  By,,  187  U.  S.  617,  a  case  of  a  State 
attempting  to  fix  rates  over  a  railroad  route  passing  outside 
its  limits,  that  the  contract  was  within  the  Sherman  act 
because  the  boats  referred  to  might  sail  over  soil  belonging 
to  Kentucky  in  passing  between  two  Ohio  points.  It  may 
be  noticed  further  that  Ohio  equally  has  jurisdiction  on  the 
river.  Wedding  v.  Meyler,  192  [184]  U.  S.  573.  A  con- 
tract is  not  to  be  assumed  to  contemplate  unlawful  results 
unless  a  fair  construction  requires  it  upon  the  established 
facts.  Technically,  perhaps,  there  might  be  some  trouble 
in  saying  that  the  Supreme  Court  of  Ohio  did  not  decide  the 
case  on  the  ground  that  the  illegality  was  not  made  out  as 
matter  of  fact. 

But  we  do  not  like  to  put  our  decision  upon  technical  rea- 
soning where  there  is  at  least  a  fair  surmise  that  such  reason- 
ing does  not  meet  the  realities  of  the  case.  We  will  suppose 
then  that  the  contract  does  not  leave  conunerce  among  the 
States  untouched.  But  even  on  this  supposition  it  is  mani- 
fest that  interference  with  such  commerce  is  insignificant 
•nd  incidental,  and  not  the  dominant  purpose  of  the  con- 
tract, if  it  actually  was  thought  of  at  all.  The  route  men- 
tioned is  between  Ohio  ports.  The  contract,  in  what  it  espe- 
cially contemplates,  is  a  domastic  contract  and,  so  far  as  it 
is  so,  is  shown  to  be  valid  under  the  local  law  by  the  decision 
of  the  Ohio  court.  The  chief  and  visible  object  of  its  pro- 
visions has  nothing  to  do  with  commerce  among  the  States. 
That  which  suspends  payment  of  instalments  in  case  of  very 


CINCINNATI   PACKET    CO.    V.    BAY. 
Opinion  of  the  Court. 


873 


serious  opposition  is  security  against  a  losing  bargain,  not  a 
combination  to  gain  a  monopoly.  The  withdrawal  of  the 
vendors  from  opposition  for  five  years  is  the  ordinary  inci- 
dent of  the  sale  of  a  business  and  good  will. 

It  is  argued,  to  be  sure,  that  the  last  mentioned  covenant  is 
independent  and  not  connected  with  the  sale  of  the  vessels. 
The  contrary  is  manifest  as  a  matter  of  good  sense,  and  is 
proved  even  technically  by  the  words  "  it  is  also  agreed  as 
a  part  of  the  consideration  of  this  agreement."  By  these 
words  the  covenant  not  to  do  business  between  Cincinnati 
and  Portsmouth  for  five  years  is  imported  into  the  sale  of  the 
ships,  and  made  one  of  the  conventional  inducements  of  the 
purchase.  The  price  is  paid  not  for  the  vessels  alone  but 
for  the  vessels  with  the  covenant.  So,  still  more  clearlv,  the 
parallel  instalments  for  Hve  years  are  paid  for  the  covenant, 
at  least  in  part.  It  is  said  that  there  is  no  sale  of  good  will. 
But  the  covenant  makes  the  sale.  Presumably  all  that  there 
was  to  sell,  beside  1 185]  certain  instruments  of  competition, 
was  the  competition  itself,  and  the  purchasers  did  not  want 
the  vendors'  names. 

This  being  our  view  of  the  covenant  in  question,  whatever 
differences  of  opinion  there  may  have  been  with  regard  to  the 
scope  of  the  act  of  July  2,  1890,  there  has  been  no  intimation 
from  any  one,  we  believe,  that  such  a  contract,  made  rs  part 
of  the  sale  of  a  business  and  not  as  a  device  to  control  com- 
merce, would  fall  within  the  act.  On  the  contrary,  it  has  been 
suggested  repeatedly  that  such  a  contract  is  not  within  the 
letter  or  spirit  of  the  statute.  United  States  v.  Trans- Missoun 
Freight  Association,  166  U.  S.  290,  329,  United  States  v.  Joint 
Traific  Association,  171  U.  S.  505,  568,  and  it  was  so  decided 
in  the  case  of  a  patent.  Bement  v.  National  Harrow  Co.,  186 
U.  S.  70,  92.  It  would  accomplish  no  public  purpose,  but  sim- 
ply would  provide  a  loophole  of  escape  to  persons  inclined  to 
elude  performance  of  their  undertakings,  if  the  sale  of  a 
business  and  temporary  withdrawal  of  the  seller  necessary  in 
order  to  give  the  sale  effect  were  to  be  declared  illegal  in 
every  case  where  a  nice  scrutiny  could  discover  that  Xh^  cov- 
enant possibly  might  reach  beyond  the  state  line.  We  are  of 
opinion  that  the  agreement  before  us  is  not  made  illegal  by 
either  of  the  provisions  thus  far  discussed. 


»1  UNITED   STATES  REPOBTS^  43. 

Syllabiia 

It  only  remains  to  say  a  word  as  to  the  agreement  to  main- 
tain rates.  This  is  a  covenant  by  the  purchaser,  the  plaintiff 
in  error.  It  is  not  the  covenant  sued  upon.  It  is  not  de- 
clared to  enter  into  the  consideration  of  the  sale.  If  neces- 
sary, we  should  be  astute  to  avoid  allowing  a  party  to  escape 
from  his  just  and  substantially  legal  undertaking  on  such 
ground.  The  argument  on  the  other  side  requires  us  to  im- 
port a  subordinate  undertaking  of  the  buyer  into  considera- 
tion for  that  which  was  the  consideration  of  his  debt  and,  in 
that  roundabout  way,  to  make  the  debt  unlawful.  We  shall 
not  go  into  such  niceties  beyond  noticing  that  they  are  not 
encouraged  by  the  cases.  Oregon  Steam  Navigation  Co.  v. 
Wimor.  20  Wall.  64;  Bank  of  Amtralama  v.  Breillat,  f» 
Moore,  P.  C.  152,  201 ;  Pigofs  Case,  11  Co.  Rep.  2r>7>,  27h, 
The  plaintiff  in  error  did  business  between  [18(>|  Cincinnati 
and  Syracuse,  Ohio,  and  the  rates  referred  to  nuist  he  as- 
sumed to  be  rates  within  those  points.  If  the  covenant  had 
an}'  indirect  bearing  on  commerce  with  another  State,  what 
we  have  said  sufficiently  explains  why  we  deem  it  insufficient 
to  make  the  whole  agreement  void. 

Jadgment  affirmed. 


[43] 


HALE  /'.  HENKEL. 


APPEAL   FROM   THE   CIRCITIT  COURT  OF  THE   IMTIID   STATES   FOR 
THE   SOUTHERN   DISTRICT  OF    NEW    YORK." 

No.  34(1.     Argued  .lanwaiy  4.  5,  1006.— Iieclded  March  12,  1906. 

r201  U.  S..  43.1 

Under  the  practice  in  this  country  the  examination  of  witnesses  by  a 
Federal  grand  Jnrj-  need  not  be  pretedcd  Ijy  a  iiresentnient  or  formal 
indictment,  but  tlie  grand  jury  may  proceed,  cither  upon  tlieir  own 
knowledge  or  ui>on  examination  ot  witnesses,  to  inquire  wliether  a 
crime  cognizable  l\v  the  court  has  been  committed,  and  if  so  they 
may  indict  upon  such  evidence.  In  summoning  witnesses  it  is  suf 
ficient  to  apprise  them  of  the  names  of  the  parties  with  respect  to 
whom  they  will  be  called  to  testify  witliout  indicating  the  nature  of 
the  charge  against  them,  or  laying  a  basis  by  a  fonnal  indictment. 

The  examination  of  a  witness  liefore  a  grand  jury  is  a  "  proceeding  *' 
within  the  meaning  of  the  proviso  to  the  general  appropriation  act 


«Writ  of  habeas  eurpus  dismissed  liy  tlie  (  inuit  Court  (139  Fed. 
4m).     See  p.  ai4. 


HALE    V.    HENKEL. 


875 


Syllabus. 

of  1903,  that  no  person  shall  be  prosecuted  on  account  of  anything 
which  he  may  testify  in  any  proceeding  under  the  Anti-trust  Law. 
The  word  should  receive  as  wide  a  construction  as  is  necessary  to 
protect  the  witness  in  his  disclosmes. 
The  interdiction  of  the  Fifth  Amendment  operates  only  where  a  wit- 
ness is  aslved  to  incriminate  himself,  and  does  not  apply  if  the  crimi- 
nality is  talien  away.  A  witness  is  not  excused  from  testifying 
before  a  grand  jury  under  a  statute  which  provides  for  immunity, 
because  he  may  not  be  able,  if  subsequently  indicted,  to  procure  the 
evidence  necessary  to  maintain  his  plea.  The  law  talies  no  ac-count 
of  the  practical  difficulty  which  a  party  may  have  in  procuring  his 
testimony. 

A  witness  cannot  refuse  to  testify  before  a  Federal  grand  jury  in  face 
of  a  Federal  statute  granting  immunity  from  prosecution  as  to  mat- 
ters sworn  to,  because  the  immunity  does  not  extend  to  prosecu- 
tions in  a  state  court.  In  granting  immunity  the  only  danger  to  be 
guarded  against  is  one  within  the  same  jurisdiction  and  under  the 
same  sovereignty. 

The  benefits  of  the  Fifth  Amendment  are  exclusively  for  a  witness 
compelled  to  testify  against  himself  in  a  criminal  case,  and  he  can- 
not set  them  up  on  behalf  of  any  other  person  or  individual,  or  of  a 
coriKJration  of  wliicli  he  is  an  officer  or  employ^. 

[44]  A  witness  who  cannot  avail  himself  of  the  Fifth  Amendment  as 
to  oral  testimony,  because  of  a  statute  granting  him  inununity  from 
prosecution,  cannot  set  it  up  as  against  the  production  of  Iiooks  and 
papers,  as  the  same  statute  would  equally  grant  him  imumnitj-  in 
respect  to  matters  proved  thereby. 

The  search  and  Kei^ure  clause  of  the  Fourth  Amendment  was  not  in- 
tended to  interfere  with  the  jmwer  of  courts  to  compel  the  produc- 
tion uiK)n  a  trial  of  documentary  evidence  through  a  snhpfrna  (luces 
tecum. 

While  an  individual  may  lawfully  refuse  to  answer  incriminating 
questions  unless  protecte<l  by  an  inununity  statute,  a  coriwration  is 
a  creatiH-e  of  tlie  State,  and  there  is  a  reserved  right  in  the  legisla- 
ture to  investigate  its  contracts  and  find  out  whether  it  has  exceeded 
its  powers. 

There  is  a  clear  distinction  between^an  individual  and  a  corporation, 
and  the  latter,  being  a  creature  o7  the  State,  has  not  the  constitu- 
tional right  to  refuse  to  submit  its  books  and  papers  for  an  exami- 
nation at  the  suit  of  the  State ;  and  an  officer  of  a  corporation  which 
is  charged  with  criminal  violation  of  a  statute  cannot  plead  the 
criminality  of  the  corporation  as  a  refusal  to  produce  its  books. 

Franchises  of  a  coi-poration  chartered  by  a  State  are,  so  far  as  they 
involve  questions  of  interstate  commerce,  exerciseil  in  subordination 
to  the  power  of  Congress  to  rei,ailate  such  commerce;  and  while 
Congress  may  not  have  general  visitatorial  power  over  State  cor- 
porations, its  powers  in  vindication  of  its  own  laws  are  the  same  as 
if  the  corporation  had  been  created  by  an  act  of  Congress. 


876 


201  UNITED   STATES   REPORTS,   H. 


SjllabBS. 

A  corporation  is  but  au  association  of  individuals  with  a  distinct  name 
and  legal  entity,  and  in  organizing  itself  as  a  collective  body  it 
waives  no  appropriate  constitutional  Immunities,  and  although  it 
cannot  refuse  to  produce  its  books  and  papers  it  is  entitled  to  im- 
munity under  the  Fourth  Amendment  against  unreasonable  searches 
and  seizures,  and  where  an  examination  of  its  books  is  not  author- 
ized by  an  act  of  Congress  a  suhpcena  duces  tecum  requiring  the  pro- 
duction of  practically  all  of  its  books  and  papers  is  as  indefensible  as 
a  search  warrant  would  be  if  couched  in  similar  terms. 

Although  the  siibpoena  duces  tecum  may  be  too  broad  in  its  requisition, 
where  the  witness  has  refused  to  answer  any  question,  or  to  produce 
any  books  or  papers,  this  objection  would  not  go  to  the  validity  of 
the  order  committing  him  for  contempt.** 

[50  L.  ed.,  f)52.1  6 

|The  examination  of  witnesses  before  a  grand  jury  need  not  I)e  pre- 
ceded by  a  presentment,  indictment,  or  other  formal  <*liarge.] 

[In  summoning  witnesses  before  a  grand  jury  it  is  sufficient  to  ap- 
prise them  of  the  names  of  the  parties  with  respect  to  whom  they 
will  be  called  upon  to  testify,  without  indicating  the  nature  of  the 
charge  against  such  persons.]  • 

[The  examination  of  witnesses  before  a  grand  jury  concerning  an 
alleged  violation  of  the  antitrust  act  of  July  2,  1890  (20  Stat.  L.. 
209.  chap.  €47,  U.  S.  Comp.  Stat.  1901.  p.  3200).  is  a  "  j>roeeeding" 
within  the  meaning  of  the  proviso  to  the  act  of  February  25,  1908 
(32  Stat  L.,  854-903,  chap.  755,  U.  S. 'Comp.  Stat  Supp.  1906,  p. 
366),  that  no  person  shall  be  prosecuted  or  be  subjerted  to  any 
penalty  or  forfeiture  for.  or  on  account  of,  any  transaction,  matter, 
or  thing  concerning  which  he  may  testify  or  produce  evidence  in 
any  proceeding,  suit  or  prosecution  under  certain  named  statutes,  of 
which  the  antitrust  act  is  one.] 

[The  right  of  a  witness  to  claim  his  privilege  against  self-incrimina- 
tion, afforded  by  U.  S.  Const.,  5th  Amend.,  when  examined  concern- 
ing an  alleged  violation  of  the  antitrust  act  of  July  2,  1890,  Is 
taken  away  by  the  proviso  to  the  act  of  February  25,  1903,  that  no 
person  shall  l>e  prosecuted  or  be  subjected  to  any  penalty  or  for- 
feiture for.  or  on  account  of,  any  transaction,  matter,  or  thing  con- 
cerning which  he  may  testify  or  produce  evidence  in  any  proceeding, 
suit  or  prosecution  under  certain  named  statutes,  of  which  the 
antitrust  act  is  one,  which  furnishes  a  sufficient  immunity  from 
prosecution  to  satisfy  the  constitutional  guaranty,  although  it  may 


«  The  foregoing  syllabus  and  the  abstracts  of  arginnents  copyrighted, 
1906,  by  The  Bamks  Law  Publishing  Co. 

»The  following  paragraphs  inclosed  in  brackets  comprise  the  syl- 
labus to  this  case  in  the  U.  S.  Supreme  C^ourt  Reporter,  Book  50,  p. 
652,  copyrighted,  1906,  by  the  Ijawyers'  Co-Operative  Publishing  Co. 


HALE   V,    HENKEL. 


Statement  of  the  Case. 


877 


not  afford  innnunity  from  prosecution  in  the  state  courts  for  the 
offense  disclosed.] 

[The  difficulty,  if  any,  of  procuring  the  testimony  which  a  person  has 
given  on  his  examination  before  a  grand  jury  concerning  an  alleged 
violation  of  the  antitrust  act  of  July  2,  1890,  does  not  render  the 
imnmnity  from  prosecution  or  forfeiture,  given  by  the  proviso  to  the 
act  of  February  25,  1903,  insufficient  to  satisfy  the  guarantj'  of 
U.  S.  Const,  5th  Amend.,  against  self-incrimination.] 

[The  privilege  against  self-incrimination  afforded  by  U.  S.  Const,  5th 
Amend.,  is  purely  personal  to  the  witness,  and  he  cannot  claim  the 
privilege  of  another  person,  or  of  the  corporation  of  wliieli  he  is  an 
officer  or  employee.] 

[The  protection  against  unreasonable  searches  and  seizures  afforded 
by  U.  C.  Const,  4th  Amend.,  cannot  ordinarily  be  invoke*!  to  justify 
the  refusal  of  an  officer  of  a  corporation  to  produce  its  books  and 
papcis  in  ol>edience  to  a  siihpana  duces  tecum,  issued  in  aid  of  an 
investigation  by  a  grand  jury  of  an  alleged  violation  of  the  anti- 
trust act  of  July  2,  1890,  by  such  corporation.] 

[A  corporation  charged  with  a  violation  of  the  antitrust  act  of  July 
2,  1890,  is  entitled  to  immunity  under  U.  S.  Const,  4th  Amend., 
from  such  an  unreasonable  search  and  seizure  as  the  compulsory 
production  before  a  grand  jury,  under  a  subpoena  duces  tecum,  of  all 
understandings,  contracts,  or  correspondence  between  such  coriwra- 
tion  and  six  other  companies,  together  with  all  reports  and  accounts 
rendered  by  such  companies  from  the  date  of  the  organization  of 
the  corporation,  as  well  as  all  letters  received  by  that  coiiDoration 
since  its  organization,  from  more  than  one  dozen  different  compa- 
nies, situated  in  seven  different  states.] 

This  was  an  appeal  from  a  final  order  of  the  Circuit  Court 
made  June  18,  1905,  dismissing  a  writ  of  habeas  corpus 
and  remanding  the  petitioner  Hale  to  the  custody  of  the 
marshal. 

The  proceeding  originated  in  a  subpoena  duces  tecum,  is- 
sued April  28,  1905,  commanding  Hale  to  appear  before  the 
grand  jury  at  a  time  and  place  named,  to  "  testify  and  give 
evidence  [45]  in  a  certain  action  now  pending  ...  in 
the  Circuit  Court  of  the  United  States  for  the  Southern 
District  of  New  York,  between  the  United  States  of  America 
and  the  American  Tobacco  Company  and  MacAndrews  & 
Forbes  Company  on  the  part  of  the  United  States,  and  that 
you  bring  with  you  and  produce  at  the  time  and  place 
aforesaid  " : 

1.  All  understandings,  agreements,  arrangements,  or  con- 


o^o 


201   UNITED   STATES   REPORTS,   45. 


SMateiiieiit  of  the  Cane. 

tracts,  whether  evidenced  by  correspondence,  nienioninda, 
formal  agreements,  or  other  writings,  between  MacAndrews 
&  Forbes  Company  apd  six  other  firms  and  corporations 
named,  from  the  date  of  the  organization  of  the  said  Macx\ji- 
drews  &  Forbes  Company. 

2.  AH  correspondence  by  letter  or  telegram  between  Mac- 
Andrews  &  Fortes  Company  and  six  other  firms  and  cor- 
porations. 

3.  All  reports  made  or  accounts  rendered  by  these  six 
com|Muiies  or  corporations  to  the  principal  compaiiy. 

4.  Any  agreements  or  contracts  or  arrangements,  however 
evidenced,  between  MacAndrews  &  Forbes  Company  and  the 
Amsterdam  Supply  Company  or  the  American  Tobacco  Com- 
pany or  the  Continental  Company  or  the  Consolidated 
Tobacco  Company. 

5.  All  letters  received  by  the  MacAndrews  &  Forbes  Com- 
pany since  the  date  of  its  organization  from  thirteen  other 
companies  named,  located  in  different  parts  of  the  United 
States  and  also  copies  of  all  corres[K)ndence  with  such 
companies. 

Petitioner  appeared  before  the  grand  jury  in  obedience  to 
the  subpoena,  and  before  being  sworn  asked  to  be  advised  of 
the  nature  of  the  investigation  in  which  he  had  been  sum- 
moned; whether  under  any  statute  of  the  United  States, 
and  the  specific  charge,  if  any  had  been  made,  in  order  that 
he  might  learn  whether  or  not  the  grand  jury  had  any  lawful 
right  to  make  the  inquiry,  and  also  that  he  be  furnished  with 
a  copy  of  the  complaint,  infonnation  or  proposed  indictment 
upon  which  they  were  acting;  that  he  had  been  informed 
that  there  was  no  action  pending  in  the  Circuit  Court  as 
stated  in  the  subpoena,  and  that  the  grand  jury  was  investi- 
gating no  specific  charge  against  [46  J  any  one,  and  he  there- 
fore declined  to  answer:  First,  because  there  was  no  legal 
irarrant  for  his  examination,  and,  second,  because  his  answers 
» might  tend  to  incriminate  him. 

After  stating  his  name,  residence  and  the  fact  that  he  was 
secretary  and  treasurer  of  the  MacAndrews  &  Forbes  Com- 
pany, he  declined  to  answer  all  other  questions  in  regard  to 
the  business  of  the  company,  itvS  officers,  the  location  of  its 
office,  or  its  agreement  or  arrangements  with  other  compa- 


HALE    i'.    HENKEL. 


879 


Argiimeiit  for  apijellaut. 

nies.  lie  was  theieupon  advised  by  the  Assistant  District 
Attorney  that  this  was  a  proceeding  under  the  Sherman  Act 
to  protect  trade  and  commerce  against  unlawful  restraint  and 
monopolies;  that  under  the  act  of  1903.  amendatorv  thereof, 
no  person  could  be  prosecuted  or  subjected  to  any  penalty 
or  forfeiture  on  account  of  any  matter  or  thing  concerning 
which  he  might  testify  or  produce  documentary  evidence  in 
any  prosecution  under  said  act,  and  that  he  thereby  offered 
and  assured  appellant  immunity  from  punishment.  The 
witness  still  persisted  in  his  refusal  to  answer  all  questions. 
He  also  declined  to  produce  the  papers  and  documents  called 
for  in  the  subprena: 

First.^Because  it  would  have  been  a  physical  impossibility 
to  have  gotten  them  together  within  the  time  allowed. 

Second.  Because  he  was  advised  by  counsel  that  he  was 
imder  no  legal  obligations  to  produce  anything  called  for  by 
the  subpoena. 

Third.  Because  they  might  tend  to  incriminate  him. 

Whereupon  the  grand  jury  reported  the  matter  to  the  court, 
and  made  a  presentment  that  Hale  was  in  contempt,  and  that 
the  proper  proceedings  should  be  taken.  Thereupon  all  the 
parties  apj^eared  before  the  Circuit  judge,  who  directed  the 
witness  to  answer  the  questions  and  produce  the  papers.  Ap- 
pellant still  persisting  in  his  refusal,  the  Circuit  judge  held 
him  to  be  in  contempt,  and  conunitted  him  to  the  custody  of 
the  marshal  imtil  he  should  answer  the  questions  and  pro- 
duce the  papers.  A  writ  of  habem-  corpus  was  thereupon 
sued  out,  and  a  hearing  had  before  another  judge  of  the  same 
court,  who  discharged  the  writ  and  remanded  the  petitioner. 

[47]  3Ir.  De  Lancey  Nicoll^  with  whom  Mr,  Junius  Parker 
and  Mr.  John  D.  Lindsay  were  on  the  brief,  for  appellant  in 
this  case  and  in  No.  341  argued  simultaneously  herewith." 

There  were  no  facts  authorizing  the  Circuit  Court  to  enter- 
tain any  charge  against  appellant.  Unless  the  grand  jury  in 
prosecuting  the  investigation  acted  within  its  jurisdiction,  the 
court  had  no  authority  to  punish  the  witness  for  his  supposed 
contumacy  in  refusing  to  answer  questions.  People  v.  Cas- 
seU,  5  Hill,  164;  Ex  parte  Fisk,  113  U.  S.  713 ;  Scott  v. 

«  McAlister  v.  Heiikel.  post.  p.  90. 


880 


201   UNITED   STATES   REPORTS,   47. 


Argument  for  appellant. 

McNeal^  154  U.  S.  34;  Cooley,  Const  Lim.  7th  ed.  p.  575; 
United  States  v.  Terry,  39  Fed  Rep.  355. 

No  judicial  matter  was  pending  in  the  Circuit  Court  when 
appellant  was  required  to  attend  before  the  grand  jury,  or 
when  the  orders  of  May  5  and  May  8  were  made,  in  or  upon 
which  he  could  lawfully  be  required  to  testify  or  produce 
evidence. 

Notwithstanding  the  subpmna  said  "  in  a  certain  action," 
no  action  was  pending;  there  can  be  no  action,  prosecution 
or  criminal  pro^din^,  until  after  someone  has  been  formally 
accused  of  a'cts  constitting  a  criminal  offense  by  indictmen' 
or  by  information.    Post  v.  United  States,  161  U.  S.  583,  587. 

Nor  was  there  any  particular  charge  against  the  corpora- 
tions named  in  the  suhpcena  duces  tecum,  or  under  investiga- 
tion. The  grand  jury  was  merely  engaged  in  an  effort  to 
find  out  whether  they  had  or  had  not  transgressed  the  Sher- 
man Act. 

An  ex  parte  investigation,  based  upon  mere  suspicion, 
without  any  complaint  or  charge,  and  that  may  be  without 
result,  is  not  a  "  case  "  or  «  controversy  "  within  the  meaning 
of  the  Constitution.  Pacific  Railway  Commission  v.  Stan- 
ford, 32  Fed.  Rep.  241;  Kilboum  v.  Thompson,  103  U.  S. 
168;  Interstate  Commerce  Commission  v.  Brimson,  154 
U.  S.  447. 

The  grand  jury  was  not  in  the  exercise  of  its  proper  and 
legitimate  authority  in  prosecuting  the  alleged  investigation ; 
consequently  its  requirement,  and  the  orders  of  the  court, 
based  upon  it  and  the  witness's  refusal,  were  coram  non 
judice  and  void. 

[48]  At  common  law  the  powers  of  grand  juries  were  re- 
stricted to  indictments  returned  after  the  examination  of 
witnesses,  and  presentments  made  upon  their  own  knowledge 
orobserv;tion 

The  former  was  a  written  accusation  of  one  or  more  per- 
sons of  a  crime  or  misdemeanor,  preferred  to,  and  presented 
upon  oath  by  the  grand  jury.    Blackstone,  Bk.  IV,  c.  23. 

The  grand  jury  was  continued  as  a  part  of  our  Federal  in- 
stitutions by  the  Fifth  Amendment;  but  its  powers  and 
duties,  not  being  defined  by  the  Constitution  or  any  Federal 
statute,  are  only  such  as  grand  juries  possessed  at  common 


HALE    V.    HENKEL. 


881 


Argument  for  appellant, 
law,  namely,  of  considering  and  acting  upon  indictments  pre- 
viously framed  and  laid  before  them  by  a  known  prosecutor, 
and  of  presenting  facts  within  their  own  knowledge! 
United  States  v.  Mvndell  Iredell,  J.,  1795,  8  Virdnia  ^6 
Call),  245, 247.  '  '  ^  V 

No  Federal  statute  authorizes  a  grand  jury  to  inquire  into 
matters  called  to  their  attention  by  the  court  or  prosecuting 
attorney,  where  there  is  no  specific  charge  against  one  or 
more  individuals.  Such  a  statute  would  be  unconstitutional, 
and  the  idea  that  a  grand  jury  has  practically  unlimited  in- 
quisitorial power  rests,  upon  various  loose  and  ill-considered 
utterances  in  reported  cases.  17  Am.  &  Eng.  Ency  2d  ed 
1279. 

No  case  in  this  country  holds  that  there  can  be  a  legitimate 
inquiry  without  a  previous  charge;  and  except  in  Tennessee, 
where  there  is  legislative  authority  in  respect  to  certain  of- 
fenses, the  idea  of  general  inquisitorial  power  is  repudiated. 
Re  Lester,  77  Georgia,  143;  Lewis  v.  Commissioners,  74  N. 
Car.  194 ;  Ward  v.  State,  2  Missouri,  120.  See  also  Frishie  v. 
United  States,  157  U.  S.  160;  People  v.  Kelly,  24  N.  Y  74- 
O'Hair  V.  People,  32  111.  App.  277;  ^yehster's  Case,  5  Green- 
leaf,  432;  Post  V.  United  States,  161  U.  S.  585;  Beavers  v. 
Henkel,  194  U.  S.  73,  84. 

Although  a  grand  jury  may  send  for  witnesses  before  in- 
dictment actually  framed,  some  specific  charge  must  be 
pending  before  them  directed  against  a  particular  person 
or  persons.  Covnselman  v.  Hitchcock,  142  U.  S.  547  •  United 
States  V.  laipatrick,  16  Fed.  Kep.  765;  Lloyd  v.  Carpenter, 
3  X  a.  li.  J.  188. 

[49]  A  grand  jury  does  not  possess,  and  cannot,  under  the 
constitution  of  this  State  exercise,  purely  inquisitorial  power, 
because  such  power  is  no  sense  a  judicial  one 

The  greatest  evil  incident  to  the  Star  Chamber  was  its 
inquisitorial  procedure.  Upon  suggestion  or  suspicion  citi- 
;^ns  were  subpcenaed  and  subjected  to  examination  under 
the  ex  oficto  oath.  See  preamble  of  act  for  the  abolition 
of  that  court  (July  5,  1641 ;  16  Charles  I,  c.  10;  5  S.  E.,  110) 
reciting  the  violation  of  the  statute  of  25  Edw.  III. 
To  exercise  judicial  power  there  must  be  parties  to  the 
21220— VOL  2—07  m 56 


ooZ 


201   UNITED   STATES   REPORTS,   49. 


Argument  for  appellant. 

l.roceiH!iii|i:,  a  matter  in  controversy,  an  assertion  and  a  de- 
nial; in  short,  a  distinct  issue  to  be  determined.  Cooley, 
Const.  I  Am,  132;  Matter  of  Pacific  Railway  Commission  v. 
Stanford,  32  Fed.  Rep.  241 :  Interstate  Com.  Com.  v.  Brimr- 
son,  154  IJ.  S.  447. 

The  theory  of  our  criminal  proceeding,  like  that  of  Great 
Britain,  is  accusatory  and  not  inquisitorial.  United  States 
V.  James,  60  Fed.  Rep.  257.  See  opinion  of  Chief  Justice 
Marshall  in  United  States  v.  Hill,  1  Brock.  C.  C.  159. 

Section  1  of  the  act  of  February  25,  1903,  does  not  give 
the  petitioner  immunity  from  prosecution,  on  account  of  the 
transactions  concerning  which  he  was  directed  to  testify 
and  produce  evidence  lief  ore  the  grand  jury,  the  investiga- 
tion before  that  lx>dy  not  being  a  ''  proceeding,  suit  or  prose- 
cation  "  under  either  of  the  acts  referred  to  in  the  act  of 
February  25,  11103;  consequently  the  petitioner  was  within 
(he  legitimate  exercise  of  his  right  under  the  Fifth  Amend- 
ment of  the  Constitution,  when  he  refused  to  testify  or  pro- 
duce evidence  liefore  the  grand  jury  on  the  ground  that  by 
so  doing  he  might  have  criminated  himself. 

The  legislative  guaranty  must  have  a  broad  construction  in 
favor  of  the  right  which  it  is  intended  to  secure.  Counsel- 
man  V.  Hitch eoch.  sttpra. 

See  also  as  to  similar  language  in  the  act  of  February  11, 
1893,  Brown  v.  Walker,  161  U.  S.  591 ;  but  the  immunity  is 
worthless  here  unless  the  language  subsequently  used,  "  pro- 
ceeding, suit,  or  prosecution,"  embraces  a  grand  jury  investi- 
gation. If  it  does  not,  the  witness  is  deprived  of  his  con- 
stitu-  [»0]  tional  rights;  any  reasonable  doubt  on  this  head 
should  be. resolved  in  his  favor. 

A  witness  hereafter  pleading  the  inununity  afforded  by 
this  act  as  a  bar  to  criminal  prosecution  will  be  held  to  strict 
pi-oof,  especially  if  he  seeks  to  plead  this  Federal  statute  as 
a  bar  to  a  state  prosecution.     See  Jack  v.  Kansas,  199  U.  S. 

An  inquiry  liefore  a  grand  jury  is  not  a  '^suit"  nor  a 
•*  prosecution."  Post  v.  United  States,  mipra;  Paid  v.  Vir- 
f/inia,  148  U.  S.  107;  State  v.  Woleott,  21  Connecticut,  279; 
Constitution,  Fifth  Amendment. 

The  act  of  February  25,  1903,  is  unconstitutional  in  that 


HALE    V.    HENKEL. 


883 


Argument  for  appellant, 
it  undertakes  to  deprive  the  various  States  of  their  right 
and  power  to  prosecute  persons  concerned  in  transactions, 
which  violate  their  own  laws,  thus  infringing  upon  the  pro 
vision  of  the  Tenth  Amendment.  Brown  v.  Walker,  supra, 
is  against  this  proposition,  but  see  Jack  v.  Kansas.  199  U.  s! 
372,  where  it  is  in  effect  limited  by  the  improbability  only 
of  state  prosecution  rather  than  the  right  of  the  State  to 
proceed. 

The  order  of  May  5  requiring  appellant  to  produce  the 
papers  called  for  in  the  suhpmna  duces  tecum  was  void  under 
the  Fourth  Amendment.  Its  enforcement  would  amount  to 
the  ancient  seizure  and  search  which  continued  by  usage  in 
England  until  the  decision  of  Lord  Camden  in  Entick  v. 
Carrinr/ton,  19  How.  St.  Tr.  1029.  See  also  Boyd  v.  United 
States,  116  U.  S.  616,  626;  Hartranft's  Appeal,  85  Pa.  St. 
433;  Ex  parte  Broum,  72  Missouri,  83;  In  re  Lester,  77 
Georgia,  143;  In  re  Morer,  101  N.  W.  Rep.  588. 

The  writ  must  also  particularly  describe  the  papers  desired. 
Ex  parte  Brown,  supra;  Sand. ford  v.  Nichols,  13  Massachu- 
setts, 286. 

A  corporation  is  entitled  to  the  same  immunities  as  an 
individual.  It  cannot  be  compelled  to  incriminate  itself. 
Wigmore  on  Evidence,  §  2259 ;  Logan  v.  Penna.  B.  R.  Co., 
132  Pa.  St.  403;  Santa  Clara  County  v.  Railroad  Company, 
118  U.  S.  394;  King  of  Sicilies  v.  Willcox,  7  St.  Tr.  (N  S  ) 
1049. 

By  the  express  provisions  of  the  Sherman  Act  corpora- 
tions [51]  are  deemed  to  be  persons.  Section  8.  A  corpo- 
ration can  only  be  examined  through  its  officers,  directors  or 
agents.  In  the  present  case  the  Government  undertook 
deliberately  by  that  method  to  compel  the  corporation  to 
submit  to  examination,  not  as  a  witness,  but  by  forcing  one 
of  its  oflicers  and  directors  to  produce  its  books  and  papers 
for  the  sole  purpose  of  ascertaining  whether  or  not  the  corpo- 
ration had  connnitted  a  crime  under  the  Sherman  Act. 

The  rule  that  the  protection  of  the  Fourth  and  Fifth 
Amendments  is  the  personal  privilege  of  the  witness  and  can- 
not be  claimed  for  the  benefit  of  another  has  no  possible  ap- 
plication to  the  case  of  an  officer,  director  or  agent  of  a 
corporation  who  seeks  to  secure  to  the  corporation  its  con- 


201    UNITED   STATES    REPOKTS,   51. 


Arguineiit  for  tlie  United  States. 

sfcitutional  rights  and  immunities;  for  these  rights  can  only 
be  asserted  through  its  officers,  directors  and  agents. 

In  this  view  the  witness  is  not  seeking  to  invoke  the  priv- 
ilege of  another,  but  the  corporation  itself  invokes  its  own 
privilege  in  the  only  manner  and  by  the  only  means  it  can 
employ  for  that  purpose. 

If,  under  these  circumstances,  it  could  be  said  that  the  cor- 
poration was  a  witness,  and,  therefore,  entitled  to  the  immu- 
nity afforded  by  the  statute,  this  might,  perhaps,  meet  our 
present  contention.  But  the  position  of  the  Government  is 
that  the  corporation  is  not  protected  by  the  statute.  Its 
avowed  purpose  is  to  use  the  papers  as  the  basis  of  an  indict- 
ment against  the  corporation.  See  Davtes  v.  Lincoln  Na- 
tional Bank,  4  N.  Y.  Suppl.  373;  Rex  v.  Puimell,  Wilson, 
239 ;  In  re  Morse^  101  N.  W.  Eep.  588. 

Mr.  Henry  If.  Taft,  Special  Assistant  to  The  Attorney 
General,  with  whom  The  Attorney  General  and  Mr.  Felix  H. 
Levy,  Special  Assistant  to  The  Attorney  General,  were  on 
the  brief,  for  the  United  States  in  this  case  and  in  No.  341 : 

The  procedure  of  a  grand  jury  in  this  country  at  the  time 
of  the  enactment  of  the  Fifth  Amendment  was,  and,  with 
unimportant  exceptions,  has  remained  quite  different  from 
that  of  [52]  the  similar  body  in  England.  Under  this  pro- 
cedure the  grand  jury  proceeds,  before  a  bill  of  indictment  is 
framed,  to  investigate,  at  the  instance  of  the  court  or  of  their 
own  body  or  of  the  district  attorney,  a  suspected  or  alleged 
crime  and  to  determine  whether  it  has  been  committed,  and, 
if  so,  who  conunitted  it.  In  so  doing  they  exercise  broad  in- 
quisitorial powers.  The  administration  of  the  criminal  law 
m  this  country  necessitates  this  procedure,  and  this  was 
clearly  within  the  common  law  powers  of  a  grand  jury  in 
1791  when  the  Fifth  Amendment  was  adopted  however  dif- 
ferent the  usual  practice  in  England  may  have  been  at  that 
time. 

The  power  of  a  grand  jury  extends  to  the  broadest  kind  of 
an  inquisitorial  proceeding.  Counsel  for  appellant  have  mis- 
taken a  radical  change  of  mere  procedure  for  an  attempted 
enlargement  of  power.  Or  if  it  is  a  question  of  power,  long 
before  1791  the  American  idea  prevailed  that  the  State  and 


HALE    V.    HENKEL. 


885 


Argument  for  the  UDited  States. 

not  the  individual  is  the  agency  which  should  start  a  criminal 
prosecution;  that  this  was  vitally  different  from  the  English 
idea  and  necessarily  involved  radical  changes  in  the  grand 
jury  system  and  the  extension  of  its  powers;  and  that  it  was 
with  reference  to  such  a  system  and  such  powers  that  the 
Fifth  Amendment  was  adopted. 

During  the  first  hundred  years  of  our  independence  pre<;e- 
dents  are  not  numerous  and  authority  for  grand  jury  pro- 
cedure rests  not  so  much  upon  adjudications  of  the  courts, 
as  upon  practice  sanctioned  by  long  usage  and  general  recog- 
nition. 

As  to  power  of  grand  jury  to  find  indictments  on  its  own 
investigations,  see  lectures  delivered  by  Judge  Wilson  in  1791 
and  1792,  Works  James  Wilson,  ed.  1896,  p.  213,  and  charge 
of  Judge  Addison,  1791,  Common  Pleas  Court,  Fifth  Circutt, 
Addison's  Pa.  Eep.  Appx.  38;  but  see  Lloyd  v.  Carpenter] 
1845,  5  Penn.  L.  Jour.  55  and  State  v.  Smith,  1838,  Meigs,  99. 

United  States  v.  Mundel  (1795),  8  Virginia  (6  Call.),  245, 
does  not  support  appellant's  contention.  Its  tendency  is  the 
other  way.  See  also  Ward  v.  State  (1829),  2  Missouri,  120- 
Stat^  V.  Freeman  (1842) ,  13  N.  H.  488.  '        ' 

[53]  It  thus  appears  that  at  the  date  of  the  adoption  of 
the  Fifth  Amendment  and  for  fifty  years  thereafter  under 
the  procedure  sanctioned  by  usage  and  precedent,  an  Ameri- 
can grand  jury  (1)  could  proceed  in  cases  other  than  those 
in  which  a  private  prosecutor  presented  a  duly  engrossed 
indictment,  and  (2)  on  its  own  motion  or  at  the  instance  of 
the  court  or  the  prosecuting  attorney,  could  (and  necessarily 
by  an  inquisitorial  method)  investigate  an  alleged  or  sus- 
pected crime  and  after  the  investigation  direct  an  indictment 
to  be  drawn. 

The  legality  of  the  grand  jury,  without  the  agency  of  the 
district  attorney,  calling  witnesses,  whom  they  interrogated 
as  to  their  knowledge  concerning  a  Cuban  expeditionr  was 
sustained,  and  the  broad  inquisitorial  powers  of  grand  juries 
was  recognized.  See  report  in  note  to  §  337,  Wharton's 
Cnm.  PI.  &  Pr.  8th  ed.,  and  see  also  the  charge  delivered 
by  Justice  Field  to  a  grand  jury  in  California.  30  Fed 
Cas.  994;  2  Sawyer,  667. 

The  limitations  placed  by  Mr.  Justice  Field  upon  the  in- 


886 


201   UNITED   STATES  KEPOKTS,   53. 


Argament  for  the  United  States. 

quisitorial  powers  of  the  grand  jury  do  not  relate  1o  matters 
brought  to  their  attention  either  by  the  court  or  by  the  dis- 
trict attorney,  and  that  they  permit  a  general  investigation 
of  a  crime  upon  the  "  personal  knowledge  "  of  a  juror,  where 
such  knowledge  goes  no  further  than  to  include  "  facts  which 
tend  to  show  "  that  a  crime  has  been  committed,  which,  of 
course,  implies  the  power  to  call  witnesses  other  than  the 
grand  juror  having  such  knowledge.  See  also  United  States 
V.  KimbaUy  117  Fed.  Rep.  156;  Frishie  v.  United  /States,  157 
U.  S.  160;  United  States  v.  Reed,  27  Fed.  Cas.  737;  United 
States  V,  Terry,  39  Fed.  Rep.  355 ;  United  States  v.  McA  voy^ 
18  How.  Pr.  3*80. 

In  the  state  courts  see  State  v.  Terry,  30  Missouri,  368; 
Ex  parte  Brown,  72  Missouri,  83;  Commonwealth  v.  Smyth, 
11  Cush.  473;  State  v.  Wolcott,  21  Connecticut,  272;  State 
V.  Magrath,  44  N.  J.  L.  227;  Blaney  v.  State,  74  Maryland, 
153;  People  v.  Northey,  77  California,  618;  Meddlough  v. 
Oommonicealthj  67  Pa.  St.  30;  Rotvland  v.  Commonwealth, 
82  Pa.  St.  405;  Thompson  and  Merriam  on  Juries,  §§  612, 
615;  Wliartou's  Crim.  PL  &  Pr.  8th  ed.  g  338.  OVJair  v. 
People,  32  111.  App.  277;  State  [54]  v.  Smith,  Meigs,  99; 
Lewis  v.  Board  of  Conun'tssioners,  74  N.  Car.  194,  and  United 
States  V.  Kilpati'ick,  16  Fed.  Rep.  765,  distinguished. 

A  specific  charge  against  a  particular  person  is  not  neces- 
sary to  give  the  grand  jury  jurisdiction.  The  English  prac- 
tice of  private  prosecutors  has  never  prevailed.  The  grand 
jury  acts  on  information  of  the  district  attorney  or  from  its 
own  knowledge  or  information  otherwise  obtained.  Thomp- 
son and  Merriam  on  Juries,  g  609;  1  Bishop's  Crim.  Pr. 
§  278;  charge  of  Mr.  Justice  Field,  30  Fed.  Cas.  994;  The 
King  v.  John  Lnkens,  1  Dallas,  7. 

In  its  beginnings  the  grand  jury  seems  to  have  been  de- 
vised as  a  convenient  method  to  assist  itinerant  justices  in 
England  in  detecting  crime  and  punishing  it.  They  seem 
clearly  to  have  been  expected  to  investigate,  and  originally 
they  indicted  frequentl}^  on  mere  rumor.  See  Pollock  & 
Maitland^s  History  of  the  English  Law,  vol.  2,  pp.  622,  639, 
for  description  of  the  grand  jury  before  tlie  time  of, Edward 
I,  founded  on  Bracton  and  Britton;  Bracton,  "  De  Corona," 
Twiss'  ed.  vol.  2,  c.  22,  fol.  143,  p.  451;  Reeves'  History 


HAIiE    V.    HENKEL. 


887 


Argument  for  the  United  States. 

English  Law,  vol.  1,  p.  457;  Stephens'  History  Crim.  Law, 
vol.  1,  p.  253;  Stubbs'  Constitutional  History  of  England, 
vol.  1,  p.  661  et  seq.;  Earl  of  Macdesfield  v.  Starkey  (1684). 
10  Howell's  State  Trials,  1330. 

A  specific  charge  involves  definiteness.  Date  and  circum- 
stances and  the  technical  accuracy  characteristic  of  an  indict- 
ment are  not  necessary  to  the  exercise  of  jurisdiction  by  the 
grand  jury. 

A  witness  could  object  to  answering  a  question  because  the 
proceeding  Avas  not  properly  inaugurated,  demand  a  ruling 
by  the  court  as  to  whether  under  the  charge  presented  the 
question  was  admissible;  and  thus  an  investigation  begun 
before  the  grand  jury  would  soon  assume  the  asi)ect  of  a 
trial  in  court,  subverting  the  whole  purpose  of  the  grand 
jury  system  and  seriously  affecting  the  administration  of 
justice. 

If  appellant's  claim  be  conceded  that  a  charge  be  necessary, 
it  must  follow  that  he  can  object  to  the  admissibility  of 
evidence  [55]  on  the  ground  that  it  is  not  competent  under 
the  charge.  But  the  granting  of  such  a  right  would  neces- 
sarily result  in  a  violation  of  the  secrecy  of  the  proceedings 
of  the  grand  jury  and  of  the  rule  that  a  witness  has  no  right 
to  question  the  regularity  of  the  proceedings  of  a  grand 
jury.  United  States  v.  Brown,  1  Sawy.  533,  I  ed.  Cas. 
14671;  McGregor  v.  United  States,  134  Fed.  Rep.  187; 
United  States  v.  Cohhan,  127  Fed.  Rep.  713;  United  States 
V.  Farrmgton,  5  Fed.  Rep.  343;  United  States  v.  Ambrose, 
3  Fed.  Rep.  283. 

The  court  will  assume  that  the  district  attornev  and  the 
grand  jury  proceeded  in  accordance  with  their  sworn  duties 
and  in  accordance  with  law.  United  States  v.  Terty,  39 
Fed.  Rep.  355;  United  States  v.  Hunter,  15  Fed.  Rep. 
712;  United  States  v.  Reed,  2  Blatchf.  435. 

A  witness  before  a  grand  jury  has  no  right  to  raise  ob- 
jections as  to  the  constitution  of  that  body,  unless  his  con- 
stitutional rights  are  clearly  in  danger.  Ex  parte  Haymond. 
91  California,  545. 

No  inconvenient  or  imjust  results  can  attend  the  adoption 
of  the  rule  the  Government  contends  for,  and  sound  public 


201   UNITED   STATES    REPORTS,   55. 


Argument  for  the  United  States. 

policy  demands  that  it  be  held  that  the  action  was  properly 
set  in  motion  in  this  case. 

It  was  contended  below  that  to  concede  inquisitorial  pow- 
ers to  a  grand  jury  without  in  every  case  requiring  a  specific 
charge  against  a  particular  person  would  open  up  under  the 
guise  of  the  administration  of  justice  possibiHties  of  wrong 
and  oppression  *'  beyond  conception." 

In  the  many  jurisdictions  where  broader  inquisitorial 
powers  exist  and  have  been  exercised  by  grand  juries,  they 
have  not  been  used  as  an  engine  of  oppression.  The  system 
is  surrounded  with  such  safeguards  that  the  danger  of  abuses 
is  very  remote. 

Tlie  scope  of  the  powers  of  a  grand  jury  is  limited  by  the 
jurisdiction  of  tlie  court  of  which  it  is  an  ap})endage.  United 
States  V.  Hillj  1  Brock.  156.  It  is  also  subject  to  the  direc- 
tion of  the  court  and  cannot  effectually  exercise  some  of  its 
most  [561  important  functions  without  the  interposition  of 
the  court.  It  must  resort  to  the  court  to  enforce  by  suhpce^m 
the  attendance  of  witnesses,  and  it  is  only  through  the  order 
of  the  court  that  witnesses  may  be  punished  for  contumacy. 
Commonwealth  v.  Bannon,  9T  Massachusetts,  214;  Heard  v. 
Pierce^  8  Cush.  3S8.  The  court  may  inquire  whether  the 
grand  jury  has  exceeded  its  powers,  People  v.  Xaughton^ 
7  Abb.  U.  S.  421,  426;  Denning  v.  The  State,  22  Arkansas, 
131,  132,  and  may  punish  the  entire  jury  or  any  of  its  mem- 
bers. Tm-k  V.  State,  7  Ohio  Pt.  II.*  240,  243 ;  State  v. 
Cowan,  1  Head,  280;  lie  EUu,  Hemp.  10.  Thus,  while  the 
grand  jury  is  an  independent  body,  its  indei>endence  is 
confined  within  well-defined  limits. 

Whether  a  cause  or  action  under  the  title  mentioned  in  the 
subpojna  was  pending  is  unimportant.  The  proceeding 
might  have  proceeded  without  a  title.  Titles  of  proceedings 
before  a  grand  jury  are  invariably  fictitious.  United  States 
V,  Reed,  27  Fed.  Cas.  737;  Appeal  of  flartranft.  85  Pa. 
St.  433. 

The  Fourth  Amendment  does  not  relate  to  the  compulsory 
production  of  papers  for  use  as  evidence.  Summers  v. 
Moseh'tj.  i>  Cr.  &  M.  477;  Wertheim  v.  Continental  R.  c&  T, 
Co.,  15  Fed.  Rep.  718;  Adams  v.  United  States,  192  U.  S. 
585 ;  Interstate  Com.,  Com,  v.  Baird,  194  U.  S.  25 ;  In  re  Moser, 


HALE   V.    HENKEL. 
Argument  for  the  United  States. 


889 


101  N.  W.  Eep.  591;  1  Greenleaf,  Evidence,  16th  ed.  §  469a; 
Boyd  V.  United  States,  116  U.  S.  616. 

Unreasonableness  under  the  Fourth  Amendment  cannot  be 
predicated  upon  either  the  indefiniteness  of  the  description  of 
the  books  and  papers  called  for  in  the  subpoena  or  upon  the 
volume  of  evidence  and  the  inconvenience  in  producing  it. 
United  States  v.  Bahcock,  3  Dillon,  567;  In  re  Storror,  63 
Fed.  Rep.  564 ;  United  States  v.  Tilden,  10  Ben.  566 ;  In  re 
Mitchell,  12  Abb.  Pr.  249. 

It  was  not  for  the  witness  to  determine  whether  the  de- 
scription of  the  papers  was  sufficiently  definite  or  the  papers 
themselves  material  to  the  inquiry,  or  whether  the  produc- 
tion of  such  a  volume  of  papers  was  oppressive.  He  must 
comply,  so  far  as  it  was  possible,  with  the  terms  of  the  writ 
and  produce  the  [57]  papers  submitting,  as  he  might  be 
advised,  any  objection  to  their  use  in  evidence.  See  note  by 
John  D.  Lawson,  15  Fed.  Rep.  723;  see  also  Doe  v.  Kelly, 
4  Dowl.  273 ;  Key  v.  Russell,  7  Dowl.  693 ;  Amey  v.  Long,  9 
East,  483;  Holtz  v.  Schmidt,  2  Jones  &  Sp.  28;  Bull  v.  Love- 
land,  10  Pick.  9;  Chaplain  v.  Briscoe,  5  Sm.  &  M.  198; 
Corsen  v.  Dubois,  1  Holt,  239 ;  Field  v.  Beaumont,  1  Swanst. 
209 ;  Mitchell's  Case,  12  Abb.  Pr.  249 ;  Doe  v.  Clifford,  2  C.  & 
K.  448;  In  re  O'Toole,  1  Tuck.  39.  See  also  Wigmore  on 
Evidence,  §  2200,  at  page  2979. 

Every  person  subject  to  the  jurisdiction  of  a  competent 
tribunal  is  bound  to  give  testimony.  This  is  a  "  solemn  and 
important  duty  that  every  citizen  owes  to  his  country." 
Ward  Y.  State,  supra.  He  is  privileged  to  decline  only  in 
case  his  answers  may  tend  to  criminate  him.  Our  system  of 
jurisprudence  does  not  permit  a  witness  to  refuse  to  answer 
because  he  prefers  not  to  or  even  because  his  answer  will  tend 
to  degrade  him,  except,  only,  where  degrading  testimony  is 
interposed  solely  to  affect  his  credibility.  1  Greenl.  on  Ev. 
§§  454,  455.  See  cases  cited.  A^liere  the  reason  of  the  privi- 
lege ceases  the  privilege  also  ceases.  Broom's  Legal  Maxims, 
654;  Brown  v.Walker,  161  U.  S.  597,  599. 

The  protection  of  the  Fourth  and  Fifth  Amendments  is 
based  alone  upon  the  personal  privilege  of  the  witness.  The 
objections  urged  by  the  witness  cannot  be  relied  upon  for  the 
benefit  of  the  corporation  of  which  he  is  an  officer,  and  if 


oiHi 


201  UNITED   STATES   REPORTS,   57. 


Opinion  of  the  Court. 

the  privilege  cannot  be  asserted  in  Ijehalf  of  a  corporation 
under  the  Fifth  Amendment  it  is  plain  that  it  may  not  be  so 
availed  under  the  Fourth  Amendment. 

Where  the  question  of  criminality  is  not  involved,  an 
officer  of  a  corporation  having  the  books  of  the  company  in 
his  custody  is  bound  to  produce  them  in  obedience  to  a  8%ib- 
pmna  duces  tecum,  Werthetm  v.  Continental  Wy  &  Trust 
Co.^  15  Fed.  Eep.  718.  The  same  rule  applies,  even  though 
the  production  of  the  evidence  may  tend  to  incriminate  the 
corporation;  one  of  its  officers  may  not  assert  in  its  behalf 
the  privilege  secured  to  persons  by  the  Fifth  Amendment  of 
the  Constitution.  See  [58]  United  States  v.  Amedy,  11 
Wheat.  412 ;  Beaston  v.  The  Fai^mers''  Bank  of  Delaroare^  12 
Pet.  134.  That  word  in  the  Fifth  Amendment  does  not 
include  corporations,  as  the  mischief  intended  to  be  reached 
did  not  apply  to  corporations. 

The  privilege  embodied  in  the  Amendment  is  upheld  on 
grounds  which  vary  to  some  extent;  but  the  privilege  is 
personal  and  is  based  upon  the  consideration  of  the  law  for 
the  individual  in  his  capacity  as  a  witness.  Brown  v.  Walh- 
er,  161  U.  S.  5%;  Best  on  Evidence,  9th  ed.  p.  113;  3  Taylor 
^  on  Evidence,  §  1453;  1  Greenleaf  on  Evidence,  16th  ed.  § 
469c?,  and  cases  cited  in  notes;  Commonwealth  v.  Shaw,  4 
Cush.  594;  Phillipps  on  Evidence.  4th  Am.  ed.  p.  935; 
Starkie  on  Evidence,  10th  Am.  ed.  4;  Wigmore  on  Evidence. 
§  2263;  State  v.  Wentworth,  65  Maine,  234,  Ml;  Reynolds  v. 
Reynolds,  15  Cox  Cr.  cases,  108,  115;  Bartlett  v.  Lewis,  12 
C.  B.  ("N.  S.)  249,  265. 

While  sporadic  cases  look  in  a  different  direction,  there 
have  been  many  decisions,  both  in  this  country  and. in  Eng- 
land, in  which  the  courts  have  refused  to  permit  the  privileg«; 
to  be  asserted  by  an  officer  or  employe  in  behalf  of  a  corpora- 
tion of  which  he  is  the  representative.  New  York  Life  Ins. 
Co.  V.  People,  195  Illinois,  430 ;  In  re  Moser,  101  N.  W.  Rep. 
591 ;  In  re  Peasley,  44  Fed.  Rep.  271 ;  Gihhons  v.  Waterloo 
Bridge,  5  Price,  491 ;  Rex  v.  Purnell,  Wilson,  239. 

Mb.  Justice  Brown,  after  making  the  foregoing  state- 
ment, delivered  the  opinion  of  the  court. 

Two  issues  are  presented  by  the  record  in  this  case,  which 
are  so  far  distinct  as  to  require  separate  consideration.    They 


HALE    V.    HENKEL. 


891 


Opinion  of  the  CJourt. 

depend  upon  the  applicability  of  different  provisions  of  the 
Constitution,  and,  in  determining  the  question  of  affirmance 
or  reversal,  should  not  be  confounded.  The  first  of  these 
involves  the  immunity  of  the  witness  from  oral  examination ; 
the  second,  the  legality  of  his  action  in  refusing  to  produce 
the  documents  called  for  by  the  subpoena  duces  tecum. 

1.  The  appellant  justifies  his  action  in  refusing  to  answer 
the  [59]  questions  projiounded  to  him,  1st,  upon  the  ground 
that  there  was  no  specific  "  charge "  pending  before  the 
grand  jury  against  any  particular  person;  2d,  that  the  an- 
swers would  tend  to  criminate  him. 

The  first  objection  requires  a  definition  of  the  word 
"  charge  "  as  used  in  this  connection,  which  it  is  not  easy  to 
furnish.  An  accused  person  is  usually  charged  with  crime 
by  a  complaint  made  before  a  committing  magistrate,  which 
has  fully  performed  its  office  when  the  party  is  committed  or 
held  to  bail,  and  it  is  quite  unnecessary  to  the  finding  of  an 
indictment  by  a  grand  jury;  or  by  an  information  of  the 
district  attorney,  which  is  of  no  legal  value  in  prosecutions 
for  felony ;  or  by  a  presentment  usually  made,  as  in  this  case, 
for  an  offense  committed  in  the  presence  of  the  jury;  or  by 
an  indictment  which,  as  often  as  not,  is  drawn  after  the 
grand  jury  has  acted  upon  the  testimony.  If  another  kind 
of  charge  be  contemplated,  when  and  by  whom  must  it  be 
preferred  ?  Must  it  be  in  writing,  and  if  so,  in  what  form  ? 
Or  may  it  be  oral  ?  The  suggestion  of  the  witness  that  he 
should  be  furnished  with  a  copy  of  such  charge,  if  applicable 
to  him  is  applicable  to  other  witnesses  summoned  before  the 
grand  jury.  Indeed,  it  is  a  novelty  in  criminal  procedure 
with  which  we  are  wholly  unacquainted,  and  one  which 
might  involve  a  betrayal  of  the  secrets  of  the  gi^and  jury 
room. 

Under  the  ancient  English  system,  criminal  prosecutions 
were  instituted  at  the  suit  of  private  prosecutors,  to  which 
the  King  lent  his  name  in  the  interest  of  the  public  peace 
and  good  order  of  society.  In  such  cases  the  usual  practice 
was  to  prepare  the  proposed  indictment  and  lay  it  before 
the  grand  jury  for  their  consideration.  There  was  much 
propriety  in  this,  as  the  most  valuable  function  of  the  grand 
jury  was  not  only  to  examine  into  the  commission  of  crimes. 


892 


201  UNITED   STATES   KEPORTS,   59. 


Opinion  of  the  Court. 

but  to  stand  between  the  prosecutor  and  the  accused,  and  to 
determine  whether  the  charge  was  founded  upon  credible 
testimony  or  was  dictated  by  malice  or  personal  ill  will. 

We  are  pointed  to  no  case,  however,  holding  that  a  grand 
jury  [60]  cannot  proceed  without  the  formality  of  a  written 
charge.    Indeed,  the  oath  administered  to  the  foreman,  which 
has  come  down  to  us  from  the  most  ancient  times,  and  is 
found  in  Rex  v.  Shaftsbmy,  8  Howell's  State  Trials,  759, 
indicates  that  the  grand  jury  was  competent  to  act  solely 
on  its  own  volition.     This  oath  was  that "  you  shall  diligently 
inquire  and  true  presentments  make  of  all  such  maters,  ar- 
ticles, and  things  as  shall  be  given  to  you  in  charge,  as  of  all 
other  matters^  and  things  as  shall  come  to  your  own  knowl- 
edge touch'mg  this  present   service,"  etc.*  This   oath  has 
remained  substantially  unchanged  to  the  present  day.    There 
was  a  difference,  too,  in  the  nomenclature  of  the  two  cases 
of  accusations  by  private  persons  and  upon  their  own  knowl- 
edge.   In  the  former  case  their  action  was  embodied  in  an 
indictment  formally  laid  before  them  for  their  consideration ; 
in  the  latter  case,  in  the-  form  of  a  presentmen|:.    Says 
Blackstone  in  his  Commentaries,  Book  IV.  page  301 : 

"A  presentiiipnt  properly  speakini?,  is  a  notice  talcen  bv  a  grancl 
Jury  of  any  offense  from  tlieir  own  knowledge  or  observation,  without 
any  bill  of  indictment  laid  before  them  at  the  suit  of  the  Kinj?  as  the 
premitnient  of  a  nuisance,  a  libel,  and  the  like;  upon  which  the  officer 
of  the  court  nnist  afterwards  frame  an  indictment,  before  the  party 
presented  can  be  put  to  answer  it." 

Substantially  the  same  language  is  used  in  1  Chitty  Crim. 

Ijaw,  162. 

In  United  States  v.  fliU,  1  Brock.  156,  it  was  indicated 
by  Chief  Justice  Marshall  that  a  presentment  and  indict- 
ment are  to  be  considered  as  one  act,  the  second  to  be  con- 
sidered only  as  an  amendment  to  the  first,  and  that  the  usage 
of  this  country  has  been  to  pass  over,  unnoticed,  presentments 
on  which  the  attorney  does  not  think  it  proper  to  institute 
proceedings. 

In  a  case  arising  in  Tennessee  the  grand  jury,  without  the 
agency  of  the  district  attorney,  had  called  witnesses  before 
them,  whom  they  interrogated  as  to  their  knowledge  concern- 
ing the  then  late  Cuban  expedition.  Mr.  Justice  Catron  sus- 
tained the  legality  of  the  proceeding  and  compelled  the  wit- 


HALE    V.    HENKEL. 


Opinion  of  the  Court. 


893 


[61 J  nesses  to  answer.  His  opinion  is  reported  in  AVliar- 
ton's  Criminal  Pleading  and  Practice,  8th  ed.  §  337.  He 
says:  "The  grand  jury  have  the  undoubted  right  to  send 
for  witnesses  and  have  them  sworn  to  give  evidence  gen- 
erally, and  to  found  presentments  on  the  evidence  of  such 
witnesses;  and  the  question  here  is,  whether  a  witness  thus 
introduced  is  legally  boiind  to  disclose  whether  a  crime  has 
been  committed,  and  also  who  committed  the  crime."  His 
charge  contains  a  thorough  discussion  of  the  whole  subject. 

While  presentments  have  largely  fallen  into  disuse  in  this 
country,  the  practice  of  grand  juries  acting  upon  notice,  either 
of  their  own  knowledge  or  upon  information  obtained  by 
them,  and  incorporating  their  findings  in  an  indictment,  still 
largely  obtains.  Whatever  doubts  there  may  be  with  regard 
to  the  early  English  procedure,  the  practice  in  this  country, 
under  the  system  of  public  prosecutions  carried  on  by  officers 
of  the  State  appointed  for  thai  purpose,  has  been  entirely 
settled  since  the  adoption  of  the  Constitution.  In  a  lecture 
delivered  by  Mr.  Justice  Wilson  of  this  court,  who  may  be 
assumed  to  have  known  the  current  practice,  before  the  stu- 
dents of  the  University  of  Pennsylvania,  he  says  (Wilson's 
Works,  vol.  II,  page  213) : 

"  It  has  been  alleged,  that  grand  juries  are  confined,  in  their  in- 
quiries, to  the  bills  offered  to  them,  to  the  crimes  given  them  in  charge, 
and  to  the  evidence  brought  before  them  by  the  prosecutor.  But  these 
conceptions  are  much  too  contracted;  they  present  but  a  very  im- 
perfect and  unsatisfactory  view  of  the  duty  required  from  grand 
jurors,  and  of  the  trust  reposed  in  them.  They  are  not  appointed  for 
the  prosecutor  or  for  the  court;  they  are  appointed  for  the  govern- 
ment and  for  the  people ;  and  of  both  the  government  and  people  it  is 
surely  the  concernment  that,  on  one  hand,  all  crimes,  whether  given 
or  not  given  in  charge,  whether  described  or  not  described  with  pro- 
fessional skill,  should  receive  the  punishment,  which  the  law  de- 
nounces; and  that,  on  the  other  hand,  innocence,  however  strongly 
assailed  by  accusations  drawn  up  in  regular  form,  and  [62]  by 
accusers,  marshalled  in  legal  array,  should,  on  full  investigation,  be 
secure  in  that  protection,  which  the  law  engages  that  she  shall  enjoy 
inviolate. 

"The  oath  of  a  grand  juryman — and  his  oath  is  the  commission 
under  which  he  acts — assigns  no  limits,  except  those  marked  by  dili- 
gence itself,  to  the  course  of  his  inquiries :  Why,  then,  should'  it  be 
circumscribed  by  more  contracted  boundaries?  Shall  diligent  inquiry 
be  enjoined?  And  shall  the  means  and  opportimities  of  inquiry  be 
prohibited  or  restrained  ?  " 

Similar  language  was  used  by  Judge  Addison,  President 
of  the  Court  of  Common  Pleas,  in  charging  the  grand  jury 


an   UNITED  STATES   KEPORTS,  62. 
Oiiiiiiou  of  the  Court. 

lit  the  session  of  the  Common  Pleas  Court  in  1791  (Addison's 
Pa.  Rep.  Appx.  p.  38) : 

*'  If  the  graiMl  jury,  of  their  o^tm  knmcledgc,  or  the  knowledge  of 
any  of  them,  or  frooi  the  extimination  of  witnesses,  know  of  any 
offense  committed  in  the  county,  for  which  no  indictment  is  preferred 
to  them,  it  is  their  duty,  either  to  inform  the  officer,  who  prosecutes 
for  the  State,  of  the  nature  of  the  offense,  and  desire  that  an 
indictment  for  it  be  laid  before  tliem ;  or,  if  they  do  not,  or  if  no  such 
indictment  he  given  them,  it  is  their  duty  to  give  such  information  of 
it  to  tlie  court;  stating,  without  any  particular  form,  the  facts  and 
circumstances  which  constitute  the  offense.  This  is  called  a  present- 
ment" 

The  practice  then  prevailing,  with  regard  to  the  duty  of 
grand  juries,  shows  that  a  presentment  may  be  based  not 
only  upon  their  own  personal  knowledge,  but  from  the  exam- 
ination of  witnesses. 

Wliil©  no  case  has  arisen  in  this  court  in  which  the  question 
has  been  distinctly  presented,  the  authorities  in  the  state 
courts  largely  preponderate  in  favor  of  the  theory  that  the 
grand  jury  may  act  upon  information  received  by  them  from 
the  examination  of  witiicshos  without  a  formal  indictment, 
or  other  charge  previously  laid  before  them.  An  analysis  of 
cases  approving  of  this  method  of  procedure  would  unduly 
burden  this  opinion,  but  the  following  are  the  leading  ones 
upon  the  subject:  Ward  v.  State,  2  Missouri,  120;  State  v. 
7'en*3^,  30  Missouri,  368 ;  Ew  [68]  parte  Brown,  72  Mni^^onri, 
83;  Commonwealth  v.  Smyth,  11  Cushing,  473;  State  v. 
Wolcott,  21  Connecticut,  272,  280 ;  State  v.  Magrath,  44  N.  J. 
L.  227;  Thompson  &  Merriam  on  Juries,  §§  615-617.  In 
Blmiey  v.  Maryland.  74  Maryland,  li53,  the  court  said: 

"  However  restricted  the  functions  of  the  grand  juries  may  be 
elsewhere,  we  hold  that  in  this  State  they  have  plenary  inquisitorial 
powers,  and  may  lawfully  themselves,  and  upon  their  own  motion, 
originate  charges  against  offenders  though  no  preliminary  proceedings 
have  been  had  before  a  magistrate,  and  though  neither  the  court  not 
the  state's  attorney  has  laid  the  matter  before  them." 

The  rulings  of  the  inferior  Federal  courts  are  to  the  same 
effect.  Mr.  Justice  Field,  in  charging  a  grand  jury  in  Cali- 
fornia (2  Sawy.  667),  said  to  the  grand  jury  acting. upon 
their  own  knowledge : 

"Not  by  rumors  or  reports,  but  by  knowledge  acquired  from  the 
evidence  before  you,  and  from  your  own  observations.  Whilst  you 
are  inquiring  as  to  one  offense,  another  and  a  different  offense  may 
be  proved,  or  witnesses  before  you  may,  in  testifying,  commit  the 
crime  of  perjury." 


HALE   V.   HENKEL. 


895 


Opinion  of  the  Court. 

Similar  language  was  used  in  United  States  v.  KimhalL 
117  Fed.  Rep.  156, 161;  United  States  v.  Reed,  2  Blatch.  435^ 
449;  United  States  v.  Terry,  39  Fed.  Rep.  355.  And  in 
Frishie  v.  United  States,  157  IJ.  8.  160,  it  is  said  by  Mr. 
Justice  Brewer: 

"But  in  this  country  it  is  for  the  grand  jury  to  investigate  any 
aneged  crime,  no  matter  how  or  by  whom  suggested  to  them  and 
after  determining  that  the  evidence  is  sufficient  to  justify  putting 
the  suspected  party  on  trial,  to  direct  the  preparation  of  the  formal 
charge  or  Indictment." 

There  are  doubtless  a  few  cases  in  the  state  courts  which 
take  a  contrary  view,  but  they  are  generally  such  as  deal 
with  the  abuses  of  the  system,  as  the  indiscriminate  sunnnon- 
iiig  of  witnesses  with  no  definite  object  in  view  and  in  a 
spirit  of  meddlesome  inquiry.  In  the  most  pertinent  of 
these  cases.  In  re  Lester,  Ti  Georgia,  143,  the  Mayor  of 
Savannah,  who  was  also  ex  [64]  olficio  the  presiding  judge 
of  a  court  of  record,  was  called  upon  to  bring  into  the 
Superior  Court  the  "  Information  Docket "  of  his  court,  to 
be  used  as  evidence  by  the  State  in  certain  cases  pending 
before  the  grand  jury.  It  was  held  "that  the  powers  of 
the  body  are  inquisitorial  to  a  certain  extent  is  undeniable; 
yet  they  have  to  be  exercised  within  well  defined  limits. 
♦  *  *  rpj^g  grand  jury  can  find  no  bill  nor  make  any  pre- 
sentment except  upon  the  testimony  of  witnesses  sworn  in 
a  particular  case,  where  the  party  is  charged  with  a  specified 
offense." 

This  case  is  readily  distinguishable  from  the  one  under 
consideration,  in  the  fact  that  the  subpoena  in  this  case  did 
specify  the  action  as  one  between  the  United  States  and  the 
American  Tobacco  Company  and  the  Mac  Andrews-Forbes 
Company;  and  that  the  Georgia  Penal  Code  prescribed  a 
form  of  oath  for  the  grand  jury,  "that  the  evidence  you 
shall  give  the  grand  jury  on  this  bill  of  indictment  (or  pre- 
sentment, as  the  case  may  be,  here  state  the  case),  shall  be 
the  truth,"  etc.  This  seems  to  confine  the  witness  to  a  charge 
already  laid  before  the  jury. 

In  Lewis  v.  Board  of  Commissione7^s,  74  N.  Car.  194,  the 
English  practice,  which  requires  a  preliminary  inv(  stigation 
whei-e  the  accused  can  confront  the  accuser  and  witnesses 
with  testimony,  was  adopted  as  more  consonant  to  principles 


896 


201   UNITED   STATES   REPORTS,   64. 
Opinion  of  the  Conrt. 


of  justice  and  personal  liberty.  It  was  further  said  that 
none  but  witnesses  have  any  business  before  the  gi-and  jury, 
and  that  the  solicitor  may  not  be  present,  even  to  examine 
them.  The  practice  in  this  particular  in  the  Federal  courts 
has  been  quite  the  contrarv. 

Other  cases  lay  down  the  principle  that  it  must  be  made  to 
iCppear  to  the  grand  jury  that  there  is  reason  to  believe  that  a 
crime  has  been  committed,  and  that  they  have  not  the  power 
to  institute  or  prosecute  an  inquiry  on  the  chance  that  some 
crime  may  be  discovered.  In  Matter  of  Morse,  18  N.  Y. 
Criminal  Eep.  312;  State  v.  Adams,  70  Tennessee,  647  (an 
unimportant  case,  turning  upon  a  local  statute).  In  Penn- 
sylvania grand  juries  are  somewhat  more  restricted  in  their 
powers  than  is  usual  in  other  States,  McCnllongh  v.  Com- 
monwealth, 67  Pa.  St.  [65]  30;  Rowand  v.  Commonwealth, 
82  Pa.  St.  405;  Commonwecdth  v.  Green,  126  Pa.  St.  531, 
and  in  Tennessee  inquisitorial  powers  are  granted  in  certain 
cases  and  withheld  in  others.  State  v.  Adams,  supra;  State 
v.  Smith,  Meigs,  99. 

We  deem  it  entirely  clear  that  under  the  practice  in  this 
country,  at  least,  the  examination  of  witnesses  need  not  be 
preceded  by  a  presentment  or  indictment  formally  drawn  up, 
but  that  the  grand  jury  may  proceed,  either  upon  their  own 
knowledge  or  upon  the  examination  of  witnesses,  to  inquire 
for  themselves  whether  a  crime  co^izable  by  the  court  has 
been  committed ;  that  the  result  of  their  investigations  may 
be  subsequently  embodied  in  an  indictment,  and  that  in 
summoning  witnesses  it  is  quite  sufficient  to  apprise  them  of 
the  names  of  the  parties  with  respect  to  whom  they  will  be 
called  to  testify,  without  indicating  the  nature  of  the  charge 
against  them.    So  valuable  is  this  inquisitorial  power  of  the 
grand  jury  that,  in  States  where  felonies  may  be  prosecuted 
by  information  as  well  as  indictment,  the  power  is  ordinarily 
reserved  to  courts  of  impanelling  grand  juries  for  the  investi- 
gation of  riots,  frauds  and  nuisances,  and  other  cases  where 
it  is  impracticable  to  ascertain  in  advance  the  names  of  the 
persons  implicated.    It  is  impossible  to  conceive  that  in 
such  cases  the  examination  of  witnesses  must  be  stopped  until 
a  basis  is  laid  by  an  indictment  formally  preferred,  when 
the  very  object  of  the  examination  is  to  ascertain  who  shall 


HALE    V.    HENKEL. 


897 


Opinion  of  the  Court. 

be  indicted.  As  criminal  prosecutions  are  instituted  by  the 
State  through  an  officer  selected  for  that  purpose,  he  is  vested 
with  a  certain  discretion  with  respect  to  the  cases  he  will 
call  to  their  attention,  the  number  and  character  of  the 
witnesses,  the  form  in  which  the  indictment  shall  be  drawn, 
and  other  details  of  the  proceedings.  Doubtless  abuses  of 
this  power  may  be  imagined,  as  if  the  object  of  the  inquiry 
were  merely  to  pry  into  the  details  of  domestic  or  business 
life.  But  were  such  abuses  called  to  the  attention  of  the 
court,  it  would  doubtless  be  alert  to  repress  them.  While 
the  grand  jury  may  not  indict  upon  current  rumors  or  unveri- 
hed  reports,  they  may  act  upon  knowledge  acquired'  either 
from  their  own  obser-  [66]  vations  or  upon  the  evidence  of 
witnesses  given  before  them. 

2.  Appellant  also  invokes  the  protection  of  the  Fifth 
Amendment  to  the  Constitution,  which  declares  that  no 
person  "shall  be  compelled  in  any  criminal  case  to  be  a  wit- 
ness against  himself,"  and  in  reply  to  various  questions  put 
to  him  he  declined  to  answer,  on  the  ground  that  he  would 
thereby  incriminate  himself. 

The  answer  to  this  is  found  in  a  proviso  to  the  General 
Appropriation  Act  of  February  25,  1903,  32  Stat.  854,  904, 
that  "  no  person  shall  be  prosecuted  or  be  subjected  to  any 
l)enalty  or  forfeiture  for  or  on  account  of  any  transaction, 
matter  or  thing  concerning  which  he  may  testify  or  produce' 
evidence,  documentary  or  otherwise,  in  any  proceeding,  suit, 
or  prosecution  upder  said  acts,"  of  which  the  Anti  Trust 
Law  is  one,  providing,  however,  that  "  no  person  so  testify- 
ing shall  be  exempt  from  prosecution  or  punislmient  for 
perjury  committed  in  so  testifying." 

While  there  may  be  some  doubt  whether  the  examination 
of  witnesses  before  a  grand  jury  is  a  suit  or  prosecution,  Me 
have  no  doubt  that  it  is  a  "  proceeding  "  within  the  meaning 
of  this  proviso.  The  word  should  receive  as  wide  a  construc- 
tion as  is  necessary  to  protect  the  witness  in  his  disclosures, 
whenever  such  disclosures  are  made  in  pursuance  of  a  judi- 
cial inquiry,  whether  such  inquiry  be  instituted  by  a  grand 
jury,  or  upon  the  trial  of  an  indictment  found  by  them.  The 
word  "  proceeding  "  is  not  a  technical  one,  and  is  aptly  used 
21220— VOL  2—07  m ^57 


OiFO 


201   UNITED   STATES  BEPOKTS,   66. 


Opiuion  of  the  Court. 

by  courts  to  designate  an  inquiry  before  a  grand  jury.  It 
lias  received  this  interpretation  in  a  number  of  cases.  Yates 
V.  The  Q}f€€n,  14  Q.  B.  D.  648;  Hogan  v.  State,  30  Wiscon- 


sin, 4^». 

The  object  of  the  aniendnient  is  to  establish  in  express 
language  and  upon  a  firm  basis  the  general  principle  of 
English  and  American  jurisprudence,  that  no  one  shall  be 
compelled  to  give  testimony  which  may  expose  him  to  prose- 
cution for  crime.  It  is  not  declared  that  he  may  not  be  com- 
pelled to  testify  to  facts  which  may  impair  his  reputation 
for  probity,  or  even  tend  to  disgrace  him,  but  the  line  is 
drawn  at  testimony  that  may  ex-  [67]  pose  him  to  prosecu- 
cntion.  If  the  testimony  relate  to  criminal  acts  long  since 
past,  and  against  the  prosecution  of  which  the  statute  of  limi- 
tations has  run,  or  for  which  he  has  already  received  a  par- 
don or  is  guarantec*d  an  immunity,  the  amendment  does  not 
apply. 

The  interdiction  of  the  Fifth  iimendment  operates  only 
where  a  witness  is  asked  to  incriminate  himself— in  other 
words,  to  give  testimony  which  may  possibly  expose  him  to 
m  criminal  charge.  But  if  the  criminality  has  already  been 
taken  away,  the  Amendment  ceases  to  apply.  The  crimi- 
nality provided  against  is  a  present,  not  a  past  criminality, 
which  lingers  only  as  a  memory  and  involves  no  present 
danger  of  prosecution.  To  put  an  extreme  case,  a  man  in 
Ms  boyhood  or  youth  may  have  committed  acts  which  the  law 
pronounces  criminal,  but  it  would  never  be  asserted  that  he 
would  thereby  be  made  a  criminal  for  life.  It  is  here  that 
the  law  steps  in  and  says  that  if  the  offense  be  outlawed  or 
pardoned,  or  its  criminality  has  been  removed  by  statute, 
the  Amendment  ceases  to  apply.  The  extent  of  this  immu- 
nity was  fully  considered  by  this  court  in  Counselman  v. 
Hitchcock,  142  U.  S.  547,  in  which  the  immunity  offered  by 
Kev.  Stat,  section  860,  was  declared  to  be  insufficient.  In 
consequence  of  this  decision  an  act  was  passed  applicable  to 
testimony  before  the  Interstate  Commerce  Commission  in  al- 
most the  exact  language  of  the  act  of  February  25,  1903, 
above  quoted.  This  act  was  declared  by  this  court  in  Broion 
V.  Wdlher,  161  U.  S.  591,  to  afford  absolute  immunity  against 
prosecution  for  the  offense  to  which  the  question  related,  and 


HALE    V.    HENKEL. 


899 


Opinion  of  the  Court. 

deprived  the  witness  of  his  constitutional  right  to  refuse  to 
answer.  Indeed,  the  act  was  passed  apparently  to  meet  the 
declaration  in  Counselman  v.  Hitchcock,  p.  586,  that  "a 
statutory  enactment,  to  be  valid,  must  afford  absolute  immu- 
nity against  future  prosecution  for  the  offense  to  which  the 
question  relates."  If  the  constitutional  Amendment  were 
unaffected  by  the  immunity  statute,  it  would  put  it  within 
the  power  of  the  witness  to  be  his  own  judge  as  to  what 
would  tend  to  incriminate  him,  and  would  justify  him  in  re- 
fusing to  answer  almost  [68]  any  question  in  a  criminal  case, 
unless  it  clearly  appeared  that  the  immunity  was  not  set  up 
in  good  faith. 

We  need  not  restate  the  reasons  given  in  Brown  v.  Walkei' 
both  in  the  opinion  of  the  court,  and  in  the  dissenting  opin- 
ion, wherein  all  the  prior  authorities  were  reviewed,  and  a 
conclusion  reached  by  a  majority  of  the  court,  which  fully 
covers  the  case  under  consideration. 

The  suggestion  that  a  person  who  has  testified  compulso- 
rily  before  a  grand  jury  may  not  be  able,  if  subsequently  in- 
dicted for  some  matter  concerning  which  he  testified,  to  pro- 
cure the  evidence  necessary  to  maintain  his  plea,  is  more 
fanciful  than  real.     He  would  have  not  only  his  own  oath 
in  support  of  his  immunity,  but  the  notes  often,  though  not 
always,  taken  of  the  testimony  before  the  grand  jury,  as  well 
as  the  testimony  of  the  prosecuting  officer,  and  of  every  mem- 
ber of  the  jury  present.    It  is  scarcely  possible  that  all  of 
them  would  have  forgotten  the  general  nature  of  his  incrimi- 
nating testimony  or  that  any  serious  conflict  would  arise 
therefrom.    In  any  event,  it  is  a  question  relating  to  the 
weight  of  the  testimony,  which  could  scarcely  be  considered 
in  determining  the  effect  of  the  immunity  statute.    The  dif- 
ficulty of  maintaining  a  case  upon  the  available  evidence  is 
a  danger  which  the  law  does  not  recognize.    In  prosecuting 
a  case,  or  in  setting  up  a  defense,  the  law  takes  no  account  of 
the  practical  difficulty  which  either  party  may  have  in  pro- 
curing his  testimony.    It  judges  of  the  law  by  the  facts 
which  each  party  claims,  and  not  by  what  he  may  ultimately 
establish. 

The  further  suggestion  that  the  statute  offers  no  immunity 
from  prosecution  in  the  state  courts  was  also  fully  considered 


900 


201  UNITED  STATES  REPOKTS,  68. 


OpinioB  of  the  Court. 

in  Brown  v.  Walker  and  held  to  be  no  answer.  The  converse 
of  this  was  also  decided  in  Jack  v.  Kansas,  199  U.  S.  372, 
namely,  that  the  fact  that  an  immunity  granted  to  a  witness 
under  a  state  statute  would  not  prevent  a  prosecution  of  such 
witness  for  a  violation  of  a  Federal  statute,  did  not  invalidate 
such  statute  under  the  Fourteenth  Amendment.  It  was  held 
both  by  this  court  and  by  the  Supreme  Court  of  Kansas  that 
l%%\  the  possibilty  that  information  given  by  the  witness 
might  be  used  under  the  Federal  act  did  not  operate  as  a  rea- 
son for  permitting  the  witness  to  refuse  to  answer,  and  that 
a  danger  so  unsubstantial  and  remote  did  not  impair  the 
legal  immunity.  Indeed,  if  the  argument  were  a  sound  one 
it  might  be  carried  still  further  and  held  to  apply  not  only 
to  state  prosecutions  within  the  same  jurisdiction,  but  to 
prosecutions  under  the  criminal  laws  of  other  States  to  which 
the  witness  might  have  subjected  himself.  The  question  has 
been  fully  considered  in  England,  and  the  conclusion  reached 
by  the  courts  of  that  country  that  the  only  danger  to  be  con- 
sidered is  one  arising  within  the  same  jurisdiction  and  under 
the  same  sovereignty.  Queen  v.  Boyes,  1  B.  &  S.  311 ;  King 
of  the  Two  Sicilies  v.  Willcox,  7  State  Trials  (N.  S.),  1049, 
1068;  State  v.  March,  1  Jones  (N.  Car.),  526;  State  v. 
Thomas,  98  N.  Car.  599. 

The  case  of  U^iited  States  v.  Saline  Bank,  1  Pet.  100,  is  not 
in  conflict  with  this.  That  was  a  bill  for  discovery,  filed  by 
the  United  States  against  the  cashier  of  the  Saline  Bank, 
in  the  District  Court  of  the  Virginia  District,  who  pleaded 
that  the  emission  of  certain  unlawful  bills  took  place,  within 
the  State  of  Virginia,  by  the  law  whereof  penalities  were  in- 
flicted for  such  emissions.  It  was  held  that  defendants  wero 
not  bound  to  answer  and  subject  themselves  to  those  penal- 
ties. It  is  sufficient  to  say  that  the  prosecution  was  under 
a  state  law  which  imposed  the  penalty,  and  that  the  Federal 
court  was  simply  administering  the  state  law,  and  no  ques- 
tion arose  as  to  a  prosecution  under  another  jurisdiction. 

But  it  is  further  insisted  that  while  the  immunity  statute 
may  protect  individual  witnesses  it  would  not  protect  the 
corporation  of  which  appellant  was  the  agent  and  repre- 
sentative. This  is  true,  but  the  answer  is  that  it  was  not 
designed  to  do  so.    The  right  of  a  person  under  the  Fifth 


HALE   V.   HENKEL. 
Opinion  of  the  Court. 


1)01 


iVmendment  to  refuse  to  incriminate  himself  is  purely  a  per- 
sonal privilege  of  the  witness.  It  was  never  intended  to 
permit  him  to  plead  the  fact  that  some  third  person  might 
be  incriminated  by  his  testimony,  even  [70]  though  he  were 
the  agent  of  such  person.  A  privilege  so  extensive  might  be 
used  to  put  a  stop  to  the  examination  of  every  witness  who 
was  called  upon  to  testify  before  the  grand  jury  with  regard 
to  the  doings  or  business  of  his  principal,  whether  such  prin- 
cipal were  an  indivddual  or  a  corporation.  The  question 
whether  a  corporation  is  a  "  person  "  within  the  meaning  of 
this  Amendment  really  does  not  arise,  except  perhaps  where  a 
corporation  is  called  upon  to  answer  a  bill  of  discovery,  since 
it  can  only  be  heard  by  oral  evidence  in  the  person  of  some 
one  of  its  agents  or  employes.  The  Amendment  is  limited  to 
a  person  who  shall  be  compelled  in  any  criminal  case  to  be  a 
witness  against  himself,  and  if  he  cannot  set  up  the  privilege 
of  a  third  person,  he  certainly  cannot  set  up  the  privilege  of 
a  corporation.  As  the  combination  or  conspiracies  pro- 
vided against  by  the  Sherman  Anti  Trust  Act  can  ordinarily 
f>e  proved  only  by  the  testimony  of  parties  thereto,  in  the 
person  of  their  agents  or  employes,  the  privilege  claimed 
would  practically  nullify  the  whole  act  of  Congress.  Of 
what  use  would  it  be  for  the  legislature  to  declare  these  com- 
binations unlawful  if  the  judicial  power  may  close  the  door 
of  access  to  every  available  source  of  information  upon  the 
subject?  Indeed,  so  strict  is  the  rule  that  the  privilege  is  a 
personal  one  that  it  has  been  held  in  some  cases  that  counsel 
will  not  be  allowed  to  make  the  objection.  We  hold  that  the 
questions  should  have  been  answered. 

3.  The  second  branch  of  the  case  relates  to  the  non-pro- 
duction by  the  witness  of  the  books  and  papers  called  for  by 
the  suhpmna  duces  tecum.  The  witness  put  his  refusal  on 
the  ground,  first,  that  it  was  impossible  for  him  to  collect 
them  within  the  time  allowed ;  second,  because  he  was  advised 
by  counsel  that  under  the  circumstances  he  was  under  no  obli- 
gation to  produce  them;  and,  finally,  because  they  might 
tend  to  incriminate  him. 

Had  the  witness  relied  solely  upon  the  first  ground,  doubt- 
less the  court  would  have  given  him  the  necessary  time.  The 
last  ground  we  have  already  held  untenable.    While  the 


902 


201    UHITED   STATES  REPORTS,   71, 


Opinion  of  the  Court. 

second  ground  does  not  set  forth  with  technical  accuracy  the 
real  rea-  [71]  son  for  declining  to  produce  them,  the  wit- 
ness could  not  be  expected  to  speak  with  legal  exactness,  and 
we  think  is  entitled  to  assert  that  the  subpoena  was  an  in- 
fringement upon  the  Fourth  Amendment  to  the  Constitu- 
tion, which  declares  that  "  the  right  of  the  people  to  be  secure 
in  their  persons,  houses,  papers  and  effects,  against  unrea- 
sonable searches  and  seizures,  shall  not  be  violated,  and  no 
warrants  shall  issue  but  upon  probable  cause,  supported  by 
oath  or  affirmation,  and  particularly  describing  the  place  txi 
be  searched,  and  the  persons  or  things  to  be  seized. 

The  construction  of  this  amendment  was  exhaustively  con- 
sidered in  the  case  of  Boyd  v.  United  States,  116  U.  S.  616, 
which  was  an  information  in  rem  against  certain  cases  of 
plate  glass,  alleged  to  have  tieen  imported  in  fraud  of  the 
revenue  acts.  On  the  trial  it  became  important  to  show  the 
quantity  and  value  of  the  glass  contained  in  a  niunber  of 
cases  previously  imported;  and  the  district  judge,  under 
section  5  of  the  act  of  June  22,  18T4,  directed  a  notice  to  be 
given  to  the  claimants,  requiring  them  to  produce  the  invoice 
of  these  cases  under  penalty  that  the  allegations  respecting 
their  contents  should  be  taken  as  confessed.  We  held  (p. 
622)  "that  a  compulsory  production  of  a  man's  private 
papers  to  establish  a  crindnal  charge  against  him,  or  to 
forfeit  his  property,  is  within  the  scope  of  the  Fourth 
Amendment  to  the  Constitution,  in  all  cases  in  which  a 
search  and  seizure  would  be,"  and  that  the  order  in  (piestion 
was  an  unreasonable  search  and  seizure  within  that  Amend- 
ment. 

The  history  of  this  provision  of  the  Constitutioii  and  its 
connection  with  the  former  practice  of  general  w^Miants,  or 
writs  of  assistance,  was  given  at  great  length,  and  the  con- 
clusion reached  that  the  compidsory  extortion  of  a  man's 
own  testimony,  or  of  his  private  papers,  to  connect  him  with 
a  crime  or  a  forfeiture  of  his  goods,  is  illegal  (p.  634).  "  is 
compelling  him  to  be  a  witness  against  liimself,  within  the 
meaning  of  the  Fifth  Amendment  to  the  Constitution,  and 
is  the  equivalent  of  a  search  and  seizure — and  an  unreason- 
able search  and  seizure— within  the  Fourth  Amendment. 

[72]  Subsequent  cases  treat  the  Fourth  and  Fifth  Amend- 
ments as  quite  distinct,  having  different  histories,  and  per- 


HALE    V.    HENKEL. 


903 


Opinion  of  tlie  Court. 

forming  separate  functions.  Thus  in  the  case  of  Interstate 
Commerce  Commission  v.  Brimson,  154  U.  S.  447,  the  con- 
stitutionality of  the  Interstate  Commerce  Act,  so  far  as  it 
authorized  the  Circuit  Courts  to  use  their  processes  in  aid 
of  inquiries  before  the  Commission,  was  sustained,  the  court 
observing  in  that  connection : 

"  It  was  clearly  competent  for  Congress,  to  that  end,  to  Invest  the 
Commission  with  authority  to  require  the  attendance  and  testimony 
of  witnesses,  and  the  production  of  booljs,  papers,  tariffs,  contracts, 
agreements  and  documents  relating  to  any  matter  legally  c-ommitted 
to  that  body  for  investigation.  We  do  not  understand  that  any  of 
these  propositions  are  disputed  in  this  case." 

The  case  of  Adams  v.  New  York,  192  U.  S.  585,  which  was 
a  writ  of  error  to  the  Supreme  Court  of  the  State  of  New 
York,  involving  the  seizure  of  certain  gambling  parapher- 
nalia, was  treated  as  involving  the  construction  of  the  Fourth 
and  Fifth  Amendments  to  the  Federal  Constitution.  It  was 
held,  in  substance,  that  the  fact  that  papers  pertinent  to 
the  issue  may  have  been  illegally  taken  from  the  possession 
of  the  party  against  whom  they  are  offered,  was  not  a  valid 
objection  to  their  admissibility;  that  the  admission,  as  evi- 
dence in  a  criminal  trial  of  papers  found  in  the  execution  of 
a  valid  search  warrant  prior  to  the  indictment,  was  not 
an  infringement  of  the  Fifth  Amendment,  and  that  by  the 
introduction  of  such  evidence  defendant  was  not  compelled 
to  incriminate  himself.  The  substance  of  the  opinion  is 
contained  in  the  following  paragraph.  It  was  contended 
that  "  if  a  search  warrant  is  issued  for  stolen  property  and 
burglars'  tools  be  discovered  and  seized,  they  are  to  be  ex- 
cluded from  testimony  by  force  of  these  Amendments.  We 
think  they  were  never  intended  to  have  that  effect,  but  are 
rather  designed  to  protect  against  compulsory  testimony 
from  a  defendant  against  himself  in  a  criminal  trial,  and  to 
punish  wrongful  invasion  of  the  house  of  the  citizen  or  the 
unwarranted  seizure  of  his  papers  and  property,  and  to  [73] 
render  invalid  legislation  or  judicial  procedure  having  such 
effect." 

The  Boyd  case  must  also  be  read  in  connection  with  the 
still  later  case  of  Interstate  Commerce  Commission  v.  Baird, 
194  U.  S.  25,  which  arose  upon  the  petition  of  the  Commis- 
sion for  orders  requiring  the  testimony  of  witnesses  and 


•nrx 


201  UNITED   STATES  REPORTS,   73. 
Opinion  of  tbe  Court 


the  production  of  certain  books,  papers  and  documents. 
The  case  grew  out  of  a  complaint  against  certain  railway 
companies  that  they  charged  unreasonable  and  unjust  rates 
for  the  transportation  of  anthracite  coal.  Objection  was 
made  to  the  production  of  certain  contracts  between  these 
companies  upon  the  ground  that  it  would  compel  the  wit- 
nesses to  furnish  evidence  against  themselves  in  violation  of 
the  Fifth  Amendment,  and  would  also  subject  the  parties 
to  unreasonable  searches  and  seizures.  It  was  held  that  the 
Circuit  Court  erred  in  holding  the  contracts  to  be  irrelevant, 
and  in  refusing  to  order  their  production  as  evidence  by 
the  witnesses  who  were  parties  to  the  appeal.  In  delivering 
the  opinion  of  the  court  the  Boyd  case  was  again  considered  in 
connection  with  the  Fourth  and  Fifth  Amendments,  and  the 
remark  made  by  Mr.  Justice  Day  that  the  immunity  statute 
of  1893  "  protects  the  witness  from  such  use  of  the  testimony 
given  as  will  result  in  his  punishment  for  crime  or  the  for- 
feiture of  his  estate." 

Having  already  held  that  by  reason  of  the  immunity  act 
of  1903,  the  witness  could  not  avail  himself  of  the  Fifth 
Amendment,  it  follows  that  he  cannot  set  up  that  Amendment 
as  against  the  production  of  the  books  and  papers,  since  in 
respect  to  these  he  would  also  be  protected  by  the  immunity 
act  We  think  it  quite  clear  that  the  search  and  seizure 
clause  of  the  Fourth  Amendment  was  not  intended  to  in- 
terfere with  the  power  of  courts  to  compel,  through  a 
mhpcPMa  duces  tecum^  the  production,  upon  a  trial  in  court, 
of  documentary  evidence.  As  remarked  in  Snmmers  v. 
Moseley,  2  Cr.  &  M.  477,  it  would  be  "  utterly  impossible 
to  carry  on  the  administration  of  justice  "  without  this  writ. 
The  following  authorities  are  conclusive  upon  this  question : 
Amey  v.  Long,  9  East,  478;  Bull  v.  Love-  [74]  land,  10 
Pick.  9;  U,  S.  Express  Co.  v.  Henderson,  69  Iowa,  40;  Green- 
leaf  on  Evidence,  469a. 

If,  whenever  an  officer  or  employe  of  a  corporation  were 
summoned  before  a  grand  jury  as  a  witness  he  could  refuse  to 
produce  the  books  and  documents  of  such  corporation,  upon 
the  ground  that  they  would  incriminate  the  corporation  it- 
self, it  would  result  in  the  failure  of  a  large  number  of  cases 
where  the  illegal  combination  was  determinable  only  upon 
the  examination  of  such  papers.    Conceding  that  the  witness 


HALE   V.   HENKEL. 


905 


Opinion  of  the  Court. 

was  an  offi^cer  of  the  corporation  under  investigation,  and 
that  he  was  entitled  to  assert  the  rights  of  the  corporation 
with  respect  to  the  production  of  its  books  and  papers,  we 
are  of  the  opinion  that  there  is  a  clear  distinction  in  this 
particular  between  an  individual  and  a  corporation,  and 
that  the  latter  has  no  right  to  refuse  to  submit  its  books  and 
papers  for  an  examination  at  the  suit  of  the  State.     The 
individrial  may  stand  upon  his  constitutional  rights  as  a 
citizen.    He  is  entitled  to  carry  on  his  private  business  in 
his  own   way.     His  power   to  contract  is   unlimited.     He 
owes  no  duty  to  the  State  or  to  his  neighbors  to  divulge  his 
business,  or  to  open  his  doors  to  an  investigation,  so  far  as 
it  may  tend  to  criminate  him.    He  owes  no  such  duty  to  the 
State,  since  he  receives  nothing  therefrom,  beyond  the  pro- 
tection of  his  life  and  property.    His  rights  are  such  as  ex- 
isted by  the  law  of  the  land  long  antecedent  to  the  organiza- 
tion of  the  State,  and  can  only  be  taken  from  him  by  due 
process  of  law,  and  in  accordance  with  the  Constitution. 
Among  his  rights  are  a  refusal  to  incriminate  himself,  and 
the  immunity  of  himself  and  his  property  from  arrest  or 
seizure  except  under  a  warrant  of  the  law.    He  owes  nothing 
to  the  public  so  long  as  he  does  not  trespass  upon  their  rights. 
Upon  the  other  hand,  the  corporation  is  a  creature  of  the 
State.     It  is  presumed  to  be  incorporated  for    the  benefit  of 
the  public.     It  receives  certain  special  privileges  and  fran- 
chises, and  holds  them  subject  to  the  laws  of  the  State  and 
the  limitations  of  its  charter.     Its  powers  are  limited  by  law. 
It  can  make  no  contract  not  authorized  by  its  charter.     Its 
rights  to  [75]  act  as  a  corporation  are  only  preserved  to  it  so 
long  as  it  obeys  the  laws  of  its  creation.     There  is  a  reserved 
right  in  the  legislature  to  investigate  its  contracts  and  find 
out  whether  it  has  exceeded  its  powers.    It  would  be  a  strange 
anomaly  to  hold  that  a  State,  having  chartered  a  corporation 
to  make  use  of  certain  franchises,  could  not  in  the  exercise 
of  its  sovereignty  inquire  how  these  franchises  had  been 
employed,  and  whether  they  had  been  abused,  and  demand 
the  production  of  the  corporate  books  and  papers  for  that 
purpose.    The  defense  amounts  to  this:  That  an  officer  of  a 
corporation,  which  is  charged  with  a  criminal  violation  of 
the  statute,  may  plead  the  criminality  of  such  corporation 
as  a  refusal  to  produce  its  books.    To  state  this  proposi- 


me 


201   UNITEB  STATES  BEPORTS,   75. 


Opinion  of  the  Court 

tion  is  to  answer  it.  While  an  individual  may  lawfully  re- 
fuse to  answer  incriminating  questions  unless  protected  by  an 
inmiunity  statute,  it  does  not  follow  that  a  corporation, 
rested  with  special  privileges  and  franchises,  may  refuse  to 
4iow  its  hand  when  charged  with  an  abuse  of  such  privileges. 

It  is  true  that  the  corporation  in  this  case  was  chartered 
under  the  laws  of  New  Jersey,  and  that  it  receives  its  fran- 
chise from  the  legislature  of  that  State ;  but  such  franchises, 
so  far  as  they  involve  questions  of  interstate  commerce, 
must  also  be  exercised  in  subordination  to  the  power  of 
Congress  to  regulate  such  commerce,  and  in  respect  to  this  the 
General  Government  may  also  assert  a  sovereign  authority 
to  ascertain  whether  such  franchises  have  been  exercised  in 
a  lawful  manner,  with  a  due  regard  to  its  own  laws.  Being 
subject  to  this  dual  sovereignty,  the  General  Government 
possesses  the  same  right  to  see  that  its  own  laws  are  respected 
as  the  St^te  would  have  with  respect  to  the  special  franchises 
vested  in  it  by  the  laws  of  the  State.  The  powers  of  the  Gen- 
eral Government  in  this  particular  in  the  vindication  of  its 
own  laws,  are  the  same  as  if  the  corporation  had  been  created 
by  an  act  of  Congress.  It  is  not  intended  to  intimate,  how- 
ever, that  it  has  a  general  visitatorial  power  over  state 
corporations. 

4.  Although,  for  the  reasons  above  stated,  we  are  of  the 
[76]  opinion  that  an  officer  of  a  corporation  which  is  charged 
with  a  violation  of  a  statute  of  the  State  of  its  creation,  or 
of  an  act  of  Congress  passed  in  the  exercise  of  its  constitu- 
tional powers,  cannot  refuse  to  produce  the  books  and  papers 
of  such  corporation,  we  do  not  wish  to  be  understood  as 
holding  that  a  corporation  is  not  entitled  to  immunity,  under 
the  Fourth  Amendment,  against  unremonahle  searches  and 
seizures.  A  corporation  is,  after  all,  but  an  association  of  in- 
dividuals under  an  assumed' name  and  with  a  distinct  legal 
entity.  In  organizing  itself  as  a  collective  body  it  waives  no 
constitutional  immunities  appropriate  to  such  body.  Its 
property  cannot  be  taken  without  compensation.  It  can 
only  be  proceeded  against  by  due  process  of  law,  and  is  pro- 
tected, under  the  Fourteenth  Amendment,  against  unlawful 
discrimination.  Gulf  dsc.  Railroad  Company  v.  Ellis^  165 
U.  S.  150, 154,  and  cases  cited.    Corporations  are  a  necessary 


HALE    V,    HENKEL. 


907 


Opinion  of  the  Court 

feature  of  modern  business  activity,  and  their  aggregated 
capital  has  become  the  source  of  nearly  all  great  enterprises. 
We  are  also  of  opinion  that  an  order  for  the  production 
of  books  and  papers  may  constitute  an  unreasonable  search 
and  seizure  within  the  Fourth  Amendment.     While  a  search 
ordinarily  implies  a  quest  by  an  officer  of  the  law,  and  a 
seizure  contemplates  a  forcible  dispossession  of  the  owner, 
still,  as  was  held  in  the  Boyd  case,  the  substance  of  the  offense 
is  the  compulsory  production  of  private  papers,  whether 
under  a  search  warrant  or  a  suhpmna  duces  tecum^  against 
which  the  person,  be  he  individual  or  corporation,  is  enti- 
tled to  protection.    Applying  the  test  of  reasonableness  to 
the  present  case,  we  think  the  suhpwna  duces  tecum  is  far  too 
sweeping  in  its  terms  to  be  regarded  as  reasonable.     It  does 
not  require  the  production  of  a  single  contract,  or  of  contracts 
with  a  particular  corporation,  or  a  limited  number  of  docu- 
ments, but  all  understandings,  contracts  or  correspondence 
between  the  MacAndrews  &  Forbes  Company,  and  no  less 
than  six  different  companies,  as  well  as  all  reports  made, 
and  accounts  rendered  by  such  companies  from  the  date  of 
the    organization    of    the    MacAndrews    &    Forbes    Com- 
[77]  pany,  as  well  as  all  letters  received  by  that  company 
since  its  organization  from  more  than  a  dozen  different  com- 
panies, situated  in  seven  different  States  in  the  Union. 

If  the  writ  had  required  the  production  of  all  the  books, 
papers  and  documents  found  in  the  office  of  the  MacAndrews 
&  Forbes  Company,  it  would  scarely  be  more  universal  in  its 
operation,  or  more  completely  put  a  stop  to  the  business  of 
that  company.  Indeed,  it  is  difficult  to  say  how  its  business 
could  be  caried  on  after  it  had  been  denuded  of  this  mass  of 
material,  which  is  not  shown  to  be  necessary  in  the  prosecu- 
tion of  this  case,  and  is  clearly  in  violation  of  the  general 
principle  of  law  with  regard  to  the  particularity  required 
in  the  description  of  documents  necessary  to  a  search  war- 
rant or  subpcpna.  Doubtless  many,  if  not  all,  of  these  docu- 
ments may  ultimately  be  required,  but  some  necessity  should 
be  shown,  either  from  an  examination  of  the  witnesses  orally, 
or  from  the  known  transactions  of  these  companies  with  the 
other  companies  implicated,  or  some  evidence  of  their  ma- 
teriality produced,  to  justify  an  order  for  the  production  of 


201   UFITEB  STATES  REPOKTS, 


i  /. 


Haiiaii,  J.,  eoncwrring. 

mch  a  mass  of  papers.  A  general  subpoena  of  this  descrip- 
tion is  equally  indefensible  as  a  search  warrant  would  be  if 
couched  in  similar  terms.  Ex  parte  Brovm,  72  Missouri,  83 ; 
BMfUhury  v.  Arrowsmithi  4  Ves.  66;  Lee  v.  Angas^  L.  R. 
2  Eq.  59. 

Of  course,  in  view  of  the  power  of  Congress  over  inter- 
state commerce  to  which  we  have  adverted,  we  do  not  wish  to 
be  understood  as  holding  that  an  examination  of  the  books  of 
a  corporation,  if  duly  authorized  by  act  of  Congress,  would 
constitute  an  unreasonable  search  and  seizure  within  the 
Fourth  Amendment. 

But  this  objection  to  the  subpcena  does  not  go  to  the  valid- 
ity of  the  order  remanding  the  petitioner,  which  is,  therefore, 

Affirmed, 

Mb.  Justice  Harlan,  concurring. 

I  concur  entirely  in  what  is  said  in  the  opinion  of  the  court 
[78]  in  reference  to  the  powers  and  functions  of  the  grand 
jury  and  as  to  the  scope  of  the  Fifth  Amendment  to  the  Con- 
stitution. I  concur  also  in  the  affirmance  of  the  judgment, 
but  must  withhold  my  assent  to  some  of  the  views  expressed 
in  the  opinion.  It  seems  to  me  that  the  witness  was  not  en- 
titled to  assert,  as  a  reason  for  not  obeying  the  order  of  the 
court,  that  the  suhpmna  duces  tecum  was  an  infringement  of 
the  Fourth  Amendment,  which  declares  that  "  the  right  of 
the  People  to  be  secure  in  their  persons^  houses,  papers  and 
effects,  against  unreasonable  searches  and  seizures,  shall  not 
be  violated,  and  no  warrants  shall  issue  but  upon  probable 
cause,  supported  by  oath  or  affirmation,  and  particularly  de- 
scribing the  place  to  be  searched,  and  the  persons  or  things  to 
be  seized."  It  may  be,  I  am  inclined  to  think  as  a  matter  of 
procedure  and  practice,  that  the  suhpmna  duces  tecum  was  too 
broad  and  indefinite.  But  the  action  of  the  court  in  that  re- 
gard was,  at  the  utmost,  only  error,  and  that  error  did  not  af- 
fect its  jurisdiction  to  make  the  order,  nor  authorize  the  wit- 
ness— whose  personal  rights,  let  it  be  observed,  were  in  no 
wise  involved  in  the  pending  inquiry — to  refuse  compliance 
with  the  subpcena,  upon  the  ground  that  it  involved  an  unrea- 
sonable search  and  seizure  of  the  books,  papers  and  records  of 
the  corporation  whose  conduct,  so  far  as  it  related  to  the  Sher- 
man Anti  Trust  Act,  was  the  subject  of  examination.    It  was 


HALE    V.    HENKEL. 


909 


McKenna,  J.,  concurring. 

not  his  privilege  to  stand  between  the  corporation  and  the 
Government  in  the  investigation  before  the  grand  jury.    In 
my  opinion,  a  corporation— "  an  artificial  being,  invisible, 
intangible  and  existing  only  in  contemplation  of  law  "— 
cannot  claim  the  immunity  given  by  the  Fourth  Amend- 
ment; for,  it  is  not'a  part  of  the  "  People,"  within  the  mean- 
ing of  that  Amendment.     Nor  is  it  embraced  by  the  word 
'*  persons  "  in  the  Amendment.     If  a  contrary  view  obtains, 
the  power  of  the  Government  by  its  representatives  to  look 
into  the  books,  records  and  papers  of  a  corporation  of  its  own 
creation,  to  ascertain  whether  that  corporation  has  obeyed  or 
is  defying  the  law,  will  be  greatly  curtailed,  if  not  destroyed. 
If  a  corporation,  when  its  affairs  are  under  examination  by  a 
grand  jury  [79]  proceeding  in  its  work  under  the  orders  of 
the  court,  can  plead  the  immunity  given  by  the  Fourth 
Amendment  against  unreasonable  searches  and  seizures,  may 
it  not  equally  rely  upon  that  Amendment  to  protect  it  even 
against  a  statute  authorizing  or  directing  the  examination  by 
the  agents  of  the  Government  creating  it,  of  its  papers,  docu- 
/nents  and  records,  unless  they  specify  the  particular  papers, 
documents  and  records  to  be  examined  ?     If  the  order  of  the 
court  below  is  to  be  deemed  invalid  as  an  unreasonable 
search  and  seizure  of  the  papers,  books  and  records  of  the 
corporation,  could  it  be  deemed  valid  if  made  under  the 
express  authority  of  an  act  of  Congress?     Congi-ess  could 
not,  any  more  than  a  court,  authorize  an  unreasonable  seiz- 
ure or  search  in  violation  of  the  Fourth  Amendment.     In 
my  judgment  when  a  grand  jury  seeking,  in  the  discharge  of 
its  public  duties,  to  ascertain  whether  a  corporation  has  vio- 
lated the  law  in  any  particular,  requires  the  production  of 
the  books,  papers  and  records  of  such  corporation,  no  officer 
of  that  corporation  can  rightfully  refuse,  when  ordered  to 
do  so  by  the  court,  to  produce  such  books,  papers  and  records 
in  his  official  custody,  upon  the  ground  simply  that  the  order 
was,  as  to  the  corporation,  an  unreasonable  search  and  seizure 
within  the  meaning  of  the  Fourth  Amendment. 

Mr.  Justice  McKenna,  also  concurring. 

I  concur  in  the  judgment  but  not  in  all  the  propositions 
declared  by  the  court.    I  think  the  subpoena  is  sufficiently 


910 


201  UNITED   STATES   REPORTS,   79. 


McKenna,  J.,  concurring. 

definite.    The  charge  pending  was  a  violation  of  the  xlnti 
Trust  Act  of  1890.    The  documents  and  papers  sought  were 
the  understandings  and  agreements  of  the  accused  companies. 
That  the  documents  commanded  were  many  or  evidenced 
transactions  occurring  through  a  period  of  time  are  not  cir- 
cumstances fatal  to  the  validity  of  the  subpoena.     If  there 
was  a  violation  of  the  Aiiti  Trust  Act,  that  is,  combinations 
in  restraint  of  trade,  it  would  be  probably  evidenced  by 
formal  agreements,  but  it  might  also  be  evidenced  or  its 
transactions  alluded  to  in  tele-  [80]  grams  and  letters  sent 
during  the  time  the  combination  operated.     Each  telegram, 
each  letter,  would  contribute  proof,  and  therefore  material 
testimony.    Why  then  should  they  not  be  produced  ?     What 
answer  is  given?     It  is  said  the  subpcena  is  tantamount  to 
requiring  all  the  books,  papers  and  documents  found  in  the 
office  of  the  MacAndrews  &  Forbes  Company,  and  an  em- 
barrassment is  conjectured  as  a  result  to  its  business.     These, 
then,  I  assume,  are  the  detrimental  consequences  that  will 
be  produced  by  obedience  to  the  subpoena.     If  such  conse- 
quences could  be  granted  they  are  not  fatal  to  the  subpoena. 
But  they  may  be  denied.    There  can  be  at  most  but  a  tempo- 
rary use  of  the  books,  and  this  can  be  accommodated  to  the 
convenience  of  parties.    It  is  matter  for  the  court,  and  we 
cannot  assume  that  the  court  will  fail'of  consideration  for 
the  interest  of  parties  or  subject  them  to  more  inconvenience 
than  the  demands  of  justice  may  require. 

I  cannot  think  that  the  consequences  mentioned  are  impor- 
tant or  necessary  to  the  argument.  A  more  serious  matter  is 
the  application  of  the  Fourth  Amendment  of  the  Constitu- 
tion of  the  United  States. 

It  is  said  "  a  search  implies  a  quest  by  an  officer  of  the  law ; 
a  seizure  contemplates  a  forcible  dispossession  of  the  owner." 
Nothing  can  be  more  direct  and  plain;  nothing  more  ex- 
pressive to  distinguish  a  subpoena  from  a  search  warrant. 
Can  a  subpoena  lose  this  essential  distinction  from  a  search 
warrant  by  the  generality  or  speciality  of  its  terms?  I 
think  not.  The  distinction  is  based  upon  what  is  authorized 
or  directed  to  be  done— not  upon  the  form  of  words  by  which 
the  authority  or  command  is  given.  "The  quest  of  an 
officer  "  acts  upon  the  things  themselves— may  be  secret,  in- 


HALE   V,    HENKEL. 


911 


McKenna,  J.,  concurring. 

trusive,  accompanied  by  force.  The  service  of  a  subpoena 
is  but  the  delivery  of  a  paper  to  a  party— is  open  and  above- 
board.  There  is  no  element  of  trespass  or  force  in  it.  It 
does  not  disturb  the  possession  of  property.  It  cannot  be 
finally  enforced  except  after  challenge,  and  a  judgment  of 
the  court  upon  the  challenge.  This  is  a  safeguard  against 
abuse  the  same  as  it  is  of  other  processes  of  the  [81]  law, 
and  It  is  all  that  can  be  allowed  without  serious  embarrass- 
ment to  the  administration  of  justice.  Of  course,  it  con- 
strains the  will  of  parties,  subjects  their  property  to  the  uses 
of  proof.  But  we  are  surely  not  prepared  to  say  that  such 
uses  are  unreasonable  or  are  sacrifices  which  the  law  may 
not  demand. 

However,  I  may  apprehend  consequences  that  the  opinion 
does  not  intend.     It  seems  to  be  admitted  that  many,  if  not 
all,  of  the  documents  may  ultimately  be  required,  but  it  is 
said  "  some  necessity  should  be  shown,  either  from  an  exam- 
mation  of  the  witnesses  orally,  or  from  the  known  transac- 
tions of  these  companies  with  the  other  companies  implicated, 
or  some  evidence  of  their  materiality  produced,  to  justify  an 
order    for   their   production."    This   intimates   a    different 
objection  to  the  order  of  the  court  than  the  generality  of  the 
subpoena,  and,  if  good  at  all,  would  be  good  even  though  few 
instead  of  many  documents  had  been  required  or  described 
ever  so  specifically.     I  am  constrained  to  dissent  from  it. 
The  materiality  of  his  testimony  is  not  open  to  a  witness  to 
determine,  and  the  order  of  proof  is  for  the  court.     Be- 
sides, if  a  grand  jury  may  investigate  without  specific  charge, 
may  investigate  upon  the  suggestion  of  one  of  its  members, 
must  it  demonstrate  the  materiality  of  every  piece  of  testi- 
mony it  calls  for  before  it  can  require  the  testimony?     So 
limit  the  power  of  a  grand  jury  and  you  may  make  it  impo- 
tent in  cases  where  it  needs  power  most  and  in  which  its 
function  can  best  be  exercised. 

But  what  does  the  record  show  ?  It  shows  that  Hale  re- 
fused to  give  the  testimony  that,  this  court  says,  should  have 
preceded  the  order  under  review.  He  refused  to  answer  what 
the  business  of  the  MacAndrew  &  Forbes  Company  was  or 
where  its  office  was,  or  whether  there  was  an  agreement  with 
the  company  and  the  American  Tobacco  Company  in  regard 


<II2 


201   UNITED   STATES  REPORTS,   81. 


MeKenna,  J.,  concurring. 

to  th©  products  of  their  respective  businesses  or  whether  the 
company  he  represented  sold  its  products  throughout  the 
United  States.  The  ground  of  refusal  was  that  there  was  no 
legal  warrant  or  authority  for  his  examination,  not  that  the 
documents  or  tes-  [82]  timony  was  not  material  or  not  shown 
to  be  material.  Besides,  after  objection  made  to  the  laying  of 
a  foundation,  complaint  cannot  be  made  that  no  foundation 
was  laid.  And  it  seems  to  be  an  afterthought  in  the  proceed- 
ings on  Mbem  corptm  that  the  ground  objection  to  examina- 
tion did  not  exclusively  refer  to  the  want  of  power  in  the 
irrand  jury. 

By  virtue  of  its  dominion  over  interstate  commerce  Con- 
gress has  power,  the  opinion  of  the  court  asserts,  over  corpo- 
rations engaged  in  that  commerce.  And  the  power  is  the 
same  as  if  the  corporations  had  been  created  by  Congress. 
And  yet  it  is  said  to  be  a  power  subject  to  the  limitation  of 
the  Fourth  Amendment.  To  this  I  am  not  prepared  to 
assent.  I  have  already  pointed  out  the  essential  distinc- 
tion between  a  suhprnna  duces  tecum  and  a  search  warrant, 
and,  it  may  be,  the  case  at  bar  demands  from  me  no  expres- 
sion of  opinion  of  the  Fourth  Amendment.  And  I  am 
mindful,  too,  of  the  reservation  in  the  opinion  of  the  court 
of  the  power  of  Congress  to  require  by  direct  legislation  the 
fullest  disclosures  of  their  affairs  from  corporations  engaged 
in  interstate  commerce.  While  recognizing  this  may  be 
true,  and,  that  until  such  power  is  exercised,  there  may  be 
reasons  for  holding  that  corporations  are  entitled  to  the  pro- 
tection of  the  Fourth  Amendment,  there  are  reasons  against 
the  contention,  and  I  wish  to  guard  against  any  action 
which  would  preclude  against  their  consideration  in  cases 
where  the- Fourth  Amendment  may  be  a  more  determining 
factor  than  it  is  in  the  case  at  bar.  There  are  certainly 
strong  reasons  for  the  contention  that  if  corporations  can- 
not plead  the  immunity  of  the  Fifth  Amendment,  they  can- 
not plead  the  immunity  of  the  Fourth  Amendment.  The 
protection  of  both  Amendments,  it  can  be  contended,  is 
against  the  compulsory  production  of  evidence  to  be  used  in 
criminal  trials.  Such  warrants  are  used  in  aid  of  public 
prosecutions  (Cooley  Constitutional  Lim.  6th  ed.  364),  and 
in  Boyd  v.  Untied  StateSj  116  U.  S.  616,  a  relation  between  the 


HALE   V,   HENKEL. 


913 


Brewer,  J.,  and  the  Chief  Justice  dissenting. 
Fourth  Amendment  and  the  Fifth  Amendment  was  declared. 
It  was  said  the  Amendments  throw  great  light  on  each 
other,      for  the  '  unreasonable  searches  and  seizures '  con- 
\h6\  demned  m  the  Fourth  Amendment  are  almost  always 
made  for  the  purpose  of  compelling  a  man  to  give  evidence 
against  himself,  which  in  criminal  cases  is  condemned  in  the 
l^ifth  Amendment;  and  compelling  a  man  '  in  a  criminal  case 
to  be  a  witness  against  himself,'  which  is  condemned  in  the 
i^ifth  Amendment,  throws  light  on  the  question  as  to  what  is 
an    unreasonable  search  and  seizure '  within  the  meaning  of 
the  Fourth  Amendment.     And  we  have  been  unable  to  per- 
ceive that  the  seizure  of  a  man's  private  books  and  papers  to 
be  used  m  evidence  against  him  is  substantiallv  different 
from  compelhng  him  to  be  a  witness  against  himself."    Boyd 
V.  United  States  is  still  recognized,  and  if  its  reasoning  re- 
mains unimpaired,  and  the  purpose  and  effect  of  the  Fourth 
Amendment  receives  illumination  from  the  Fifth  or  to  ex 
press  the  idea  differently,  if  the  Amendments  are  the  comple- 
ments of  each  other,  directed  against  the  different  wavs  by 
which  a  man's  immunity  from  giving  evidence  against^im- 
self  may  be  violated,  it  would  seem  a  strong,  if  not  an  inevi- 
table conclusion,  that  if  corporations  have  not  such  immunity 
they  can  no  more  claim  the  protection  of  the  Fourth  Amend- 
ment than  they  can  of  the  Fifth. 

Mr.  Justice  Brewer,  with  whom  the  Chief  Justice  con- 
curred, dissenting. 

With  what  is  said  in  the  opinion  of  the  court  of  the  neces- 
sity of  a  "  charge,"  with  the  proposition  that  the  immunity 
granted  by  the  Federal  statute  is  sufficient  protection  against 
both  the  Nation  and  ih^  several  States,  with  the  holding  that 
the  protection  accorded  by  the  Fifth  Amendment  to  the 
Constitution  is  personal  to  the  individual  and  does  not  ex- 
tend to  an  agent  of  an  individual  or  justify  such  agent  in 
refusing  to  give  testimony  incriminating  his  principal,  and 
also  that  the  subpoena  duces  tecum  cannot  be  sustained.  I 
fully  agree.  ' 

Further,  I  desire  to  emphasize  certain  truths  which  in  this 
and  other  cases  decided  to-day  seem  to  be  ignored  or  depre- 
21220— VOL  2—07  m 58 


914 


Wi   UNITED  STATES  KEPOBTS,  83. 


Brewer,  J.,  and  the  Chief  Justice,  dissenting. 

dated.  The  immunities  and  protection  of  articles  4,  5  and  14 
[84]  of  the  Amendments  to  the  Federal  Constitution  are 
available  to  a  corporation  so  far  as  in  the  nature  of  things 
they  are  applicable.  Its  property  may  not  be  taken  for  pub- 
lic use  without  just  compensation.  It  cannot  be  subjected  to 
unreasonable  searches  and  seizures.  It  cannot  be  deprived 
of  life  or  property  without  due  process  of  law. 

It  may  be  well  to  compare  the  words  of  description  in 
articles  4  and  5  with  those  in  article  14 : 

"Article  4.  The  right  of  the  people  to  be  secure  in  their  persons, 
houses,  papers,  and  effects,  against  unreasonable  searches  and  seizures, 
shall  not  be  violated,  and  no  warrants  shall  issue,  but  upon  probable 
cause,  supported  by  oath  or  affirmation,  and  particularly  describing 
the  place  to  be  searched,  and  the  persons  or  things  to  be  seized." 

"  Article  5.  No  person  ♦  ♦  ♦  shall  be  compelled  in  any  criminal 
case  to  be  a  witness  against  himself,  nor  to  be  deprived  of  life,  liberty, 
or  property,  without  due  process  of  law;  nor  shall  private  property 
be  taken  for  public  use,  without  just  compensation." 

"Article  14.  ♦  ♦  ♦  Nor  shall  any  State  deprive  any  person  of 
life,  liberty,  or  property,  without  due  process  of  law;  nor  deny  to 
any  person  within  its  jurisdiction  the  equal  protection  of  the  laws." 

In  Santa  Clara  County  v.  Southern  Pacific  Railroad^  118 
U.  S.  394,  896,  Mr.  Chief  Justice  Waite  said : 

"  The  court  does  not  wish  to  hear  argument  on  the  question  whether 
the  provision  in  the  Fourteenth  Amendment  to  the  Constitution, 
which  forbids  a  State  to  deny  to  any  person  within  its  jurisdiction  the 
equal  protection  of  the  laws,  applies  to  these  corporations.  We  are 
all  of  opinion  that  it  does." 

See  also  Pemhina  Mining  Company  v.  Pennsylvania^  125 
U.  S.  181;  Missouri  Pacific  Railway  Company  v.  Mackey^ 
127  U.  S..205;  Minneapolis  (&  St,  Louis  Railway  Company 
V.  Beckwithy  129  U.  S.  26 ;  Charlotte  die.  Railroad  v.  Gihbes, 
142  U.  S.  386 ;  Monongahela  Navigation  Company  v.  United 
States,  148  U.  S.  312;  Gulf,  Colorado  c6  Santa  Fe  Ry,  v. 
EUis,  165  U.  S.  150,  154,  [85]  and  cases  cited;  Chicago^ 
Burlington  &  Quincy  Railroad  Company  v.  Chicago,  166  U. 
S.  226. 

These  decisions  were  under  the  Fourteenth  Amendment, 
but  if  the  word  "  person  "  in  that  Amendment  includes  cor- 
porations, it  also  includes  corporations  when  used  in  the 
Fourth  and  Fifth  Amendments. 

By  the  Fourth  Amendment  the  "  people  "  are  guaranteed 
protection    against    unreasonable    searches    and    seizures. 


HALE   V.    HENKEL. 


915 


Brewer,  J.,  and  the  Chief  Justice,  dissenting. 

"Citizens  "  is  a  descriptive  word ;  no  broader,  to  say  the  least, 
than  "  people." 

As  repeatedly  held,  a  corporation  is  a  citizen  of  a  State 
for  purposes  of  jurisdiction  of  Federal  courts,  and,  as  a  citi- 
zen, It  may  locate  mining  claims  under  the  laws  of  the  United 
btates,  McKinley  v.  Wheeler,  130  U.  S.  630,  and  is  entitled 
to  the  benefit  of  the  Indian  Depredation  Acts.     United  States 
y.  Northwestern  Express  Company,  164  U.  S.  686.    Indeed 
Jt  IS  essentially  but  an  association  of  individuals,  to  which  is 
^ven  certain  rights  and  privileges,  and  in  which  is  vested 
the  legal  title.     The  beneficial  ownership  is  in  the  individ- 
uals, the  corporation  being  simply  an  instrumentality  by 
which  the  powers  granted  to  these  associated  individuals 
may  be  exercised.     As  said  by  Chief  Justice  Marshall  in 
Providence  Bank  v.  Billings,  4  Pet.  514,  562 :  "  The  great 
object  of  an  incorporation  is  to  bestow  the  character  and 
properties  of  individuality  on  a  collective  and  chaneinff 
body  of  men."  ^    ^ 

United  States  v.  Amedy,  11  Wheat.  392,  was  the  case  of  an 
mdictment  under  an  act  of  Congress  for  destroying  a  vessel 
with  intent  to  prejudice  the  underwriters.  The  act  of  Con- 
gress declared  that  "  if  any  person  shall  *  *  *  willfully 
and^  corruptly  cast  away  *  *  *  any  ship  or  vessel 
with  intent  or  design  to  prejudice  any  person  or 
persons  that  hath  underwritten,  or  shall  underwrite,  any 
policy,"  etc.  The  indictment  charged  an  intent  to  defraud 
dn  incorporated  insurance  company,  and  the  court  held  that 
a  corporation  is  a  person  within  the  meaning  of  the  act 
saying  (p.  412) :  ' 

"The  mischief  intended  to  be  reached  by  the  statute  is  thP  rnAi 
same,    xyhether    it    respects    private    or    iorp^rate    plrs^n^^^  ffl 
corporations  are,  in  law,  for  civil  purposes,  deemed  pei^ns*  is  un 
unquestionable.    And  the  citation  from  2  list  736^  eSlshe^  that 
they  are  so  deemed  within  the  purview  of  penal  statutes     I^rfcoke 
there    in  <K)mmenting  on  the  statute  of  31   Eliz.  c.  7    resi)^tinffVhp 
erection  of  cottages,  where  the  word  used  is,  '  noVrson  S  ?etc 
says.  *this  extends  as  well  to  persons  politic  and  incoroorate  'af  to 
natural  persons  whatsoever.*  "  "^-"rporaie,  as  to 

Neither  does  the  fact  that  a  corporation  is  engaged  in  inter- 
state commerce  in  any  manner  abridge  the  protection  and  ap- 
plicable  immunities   accorded  by  the  Amendments.     The 


916 


201   UNITED   STATES   REPORTS,    86. 


Brewer,  J.,  and  the  Cliief  Justice,  dissenting. 

corporation  of  which  the  petitioner  was  an  officer  was  char- 
tered by  a  State,  and  over  it  the  General  Government  has  no 
niore  control  than  over  an  individual  citizen  of  that  State. 
Its  power  to  regulate  commerce  does  not  carry  with  it  a  right 
to  dispense  with  the  Fourth  and  Fifth  Amendments,  to  un- 
reasonably search  or  seize  the  papers  of  an  individual  or 
corporation  engaged  in  such  commerce,  or  deprive  him  or 
it  of  any  immunity  or  protection  secured  by  either  Amend- 
ment. 

It  is  true  that  there  is  a  [>ower  of  supervision  and  inspec- 
tion of  the  inside  workings  of  a  corporation,  but  that  belongs 
to  the  creator  of  the  corporation.  If  a  State  has  chartered 
it,  the  power  is  lodged  in  the  State.  If  the  Xation,  then 
in  the  Nation,  and  it  cannot  be  exercised  by  anv  other  author- 
ity.    It  is  in  the  nature  of  the  power  of  visitation. 

In  Angeil  &  Ames  on  Corporations,  \nh  ed.  c.  19,  §§  684, 
685,  the  authors  say : 

**  To  render  tlie  charters  or  constitutions,  ordinances  and  by  laws  of 
corporations  of  perfect  obligation,  and  jjtnierally  to  nuiiutaiii  tlieif 
l)eaee  and  good  government  these  iMxlies  are  subject  to  visitation ;  op. 
In  other  words,  to  tlie  inspection  and  control  of  tribunals  recognlzetl 
by  the  laws  of  the  land.  Civil  coriwratlons  are  visittnl  by  the 
Government  itself,  through  the  medium  of  the  courts  of  justice;  but 
the  internal  affairs  of  ecclesiastical  and  eleemosynarj-  c-oritorations 
are.  In  general,  inspected  and  controlled  Ijy  a  private  visitor. 

[87]  **In  this  country,  where  there  is  no  individual  founder  or 
donor,  the  legislature  are  the  visitors  of  all  corporations  founded  by 
them  for  public  purposes,  and  may  direct  judicial  proceedings  against 
them  for  abuse  or  neglects  which  at  common  law  would  cause  a  for- 
feiture of  their  charters." 

The  matter  is  discussed  in  Blackstone's  Commentaries,  in 
par.  3,  chap.  18,  Book  I,  and  he  says: 

••I  proceed,  therefore,  next  to  Inquire  how  these  corporations  may 
be  visited.  For  corporations,  being  composed  of  individuals,  subject 
to  human  frailties,  are  liable,  as  weU  as  private  persons,  to  deviate 
from  the  end  of  their  institution.  And  for  that  reason  the  law  has 
provided  proper  persons  to  visit,  inquire  into,  and  correct  all  irregu- 
larities that  arise  in  such  corporations,  either  sole  or  aggregate,  and 
whether  ecclesiastical,  civil  or  eleemosynary." 

And  in  respect  to  civil  corporations  he  adds,  same  para- 
graph and  chapter  (*782) : 


••  I 


The  law  Imving  by  immemorial  usage  appointed  them  to  be  visited 
and  Inspected  by  tlie  King,  their  founder,  in  His  Majesty's  Court  of 
King's  Bench,  according  to  the  rules  of  the  common  law,  they  ought 
30t  to  be  visited  elsewhere,  or  by  any  other  authority." 


m  ^-i* 


HALE    V.    HENKEL. 
Brewer,  J.,  and  the  Chief  .Justice,  dissenting. 
In  2  Kent,  *300,  the  author  says : 


917 


th;7u^^  IIT^:^^^\?^  ^S^^Z^  t^«  <>overnment  itself, 

In  Amherst  Academy  v.  Oowls,  6  Pick.  427,  433.  it  was 
neld  that: 

abuses  or  nerippto  whi^i,  L  Jnalelal  process  against  tbem  for 

of  Sr  charter^"  ^  ~""°°  '""^  "'°"'<'  <=««^  «  forfeiture 

The  right  of  visitation  is  for  the  purpose  of  control  and  t« 
se«  that  the  corporation  keeps  within  the  limits  of  its  powers 
It  would  be  strange  if  a  corporation  doing  business  in  a 
dozen  States  was  subject  to  the  visitation  of  each  of  those 
btates,  and  [88]  compelled  to  regulate  its  actions  according 
to  the  judgments— perhaps  the  conflicting  judgments— of 
the  several  legislatures.    The  fact  that  a  state  corporation 
may  engage  in  business  which  is  within  the  general  regulat- 
mg  power  of  the  National  Government  does  not  give  to 
Congress  any  right  of  visitation  or  any  power  to  dispense 
with  the  immunities  and  protection  of  the  Fourth  and  Fifth 
^Vmendments.    The  National  Government  has  jurisdiction 
over  crimes  committed  within  its  special  territorial  limits 
Can  It  dispense  in  such  cases  with  these  immunities  and  pro- 
tections?    No  more  can  it  do  so  in  respect  to  the  acts  and 
conduct  of  individuals  coming  within  its  regulating  power. 
It  has  the  same  control  over  commerce  with  forei<m  nations 
as  over  that  between  the  States.    Boyd  v.  United  States,  116 
U.  b.  616,  arose  under  the  Revenue  Acts,  and  the  applica- 
bility of  the  Fourth  and  Fifth  Amendments  was  sustained. 
In  that  case  is  an  elaborate  opinion  by  Mr.  Justice  Bradlev 
speaking  for  the  court,  in  which  the  origin  of  tho  Fourth 
and  Fifth  Amendments  is  discussed,  their  relationship  to 
each  other  shown,  and  the  necessity  of  a  constant  adherence 
to  the  underlying  thought  of  protection  expressed  in  them 
strenuously  insisted  upon.     I  quote  his  words  (p.  635) : 

thi'nl*  ^\  ^  n¥*.'*  <*''^  proceeding  in  question)  Is  the  obnoxious 
thing  in  its  mildest  and  least  repulsive  form :  but  llle"itimatP  3 
unconstitutional  practices  get  thei;  first  tooting  X^thX^n^m^ 
by  silent  approaches  and  slight  deviations  from  legal  modU  of  nrJ 
cedure.    This  can  only  be  obviated  by  adhering  to  the  rolelhat  ^t 


918 


201  UNITED  STATES  REPOBTS,   88. 


SyUabns. 

BtitiitioDal  provisions  for  the  security  of  person  and  property  sboald 
he  liberally  construed.  A  close  and  literal  coustruction  deprives  them 
Of  lulf  their  efficacy,  and  leads  to  gradual  depreciation  of  the  right, 
ai  If  It  consisted  more  in  sound  than  in  substance.  It  is  the  duty  of 
courts  to  be  watchful  for  the  constitutional  rights  of  the  citizen,  and 
against  any  stealthy  encroachments  thereon.    Their  motto  should  be 

Finally,  as  the  suhpmna  duces  tecum  was  the  initiatory 
step  in  the  proceedings  before  the  grand  jury  against  this 
petitioner,  [89]  as  that  is  the  major  fact  in  those  proceed- 
ings, and  as  it  is  agreed  that  it  is  not  sustainable,  it  seems 
to  me  that  the  order  adjudicating  him  in  contempt  should 
be  set  aside,  and  this  notwithstanding  that  subsequently  he 
improperly  refused  to  answer  certain  questions. 

The  case  is  not  parallel  to  that  of  an  indictment  in  two 
counts  upon  which  a  general  judgment  is  entered,  and  one  of 
which  counts  is  held  good  and  the  other  bad,  for  a  writ  of 
habeas  corpus  is  not  a  writ  of  error,  and  the  order  to  be  en- 
tered threon  is  for  a  discharge  or  a  remand  to  custody.  If 
a  discharge  is  ordered  no  punishment  can  be  inflicted  under 
the  judgment  as  rendered,  and  if  a  new  prosecution  is  insti- 
tuted containing  the  good  count  a  plea  of  former  conviction 
will  be  a  full  defense.  But  in  the  case  at  bar  an  order  for 
a  discharge  will  have  no  such  result.  The  habeas  corpus 
statute,  Eev.  Stat.,  §  761,  provides  that  "  the  court,  or  jus- 
tice, or  judge  shall  proceed  in  a  summary  way  ♦  *  *  to 
dispose  of  the  party  as  law  and  justice  require."  Justice 
requires  that  he  should  not  be  subjected  to  the  costs  of  this 
habeas  corpus  proceeding,  or  be  punished  for  contempt  when 
he  was  fuUy  justified  in  disregarding  the  principal  demand 
made  upon  him. 

.  The  order  of  the  Circuit  Court  should  be  reversed  and  the 
case  remanded  with  instructions  to  discharge  the  petitioner, 
leaving  to  the  grand  jury  the  right  to  initiate  new  proceedings 
not  subject  to  the  objections  to  this. 

I  am  authorized  to  say  that  the  Chief  Justice  concurs  in 
these  views. 


M  ALiSTER    V.    HENKEL. 


Opinion  of  the  Court 


919 


1901    McALISTER    v.    HENKEL,    UNITED    STATES 

MARSHAL. 

APPEAL    rR03[   THE   CIRCUIT   COURT  OF   THE   UNITED   STATES   FOR 

THE  SOUTHERN  DISTRICT  OF  NEW  YORK. 

No.  341.     Argued  January  4,  5,  1900. — Decided  March  12,  1306. 

[201  U.  S.,  90.] 

Hale  V.  Ecnkcl,  ante,  p.  S74,  followed,  as  to  the  inquisitorial  powers  of 
tbe  Fedenil  grand  jury  and  the  extent  of  privilege  and  immuuity  of 
a  witness  under  tbe  Fifth  Aniendnient.o 

TTbe  privilege  against  self-incrimination  afforded  by  United  States 
Constitution,  Fiftb  Amendment,  is  purely  personal  to  tbe  witness, 
and  be  cannot  claim  tbe  privilege  of  anotbcr  i)ei*son  or  of  tbe  cor- 
poratiou  of  wbicb  be  is  an  ollicer  or  employee.     (50  L.  ed.,  G71.)]  • 

The  facts  are  stated  in  the  opinion. 

Mr,  De  Lancey  NicoU,  with  whom  Mr.  Junius  Parker  and 
Mr,  John  D,  Lindsay^  were  on  the  brief,  for  apj)ellant.<' 

Mr,  Henry  W.  Taft^  Special  Assistant  to  the  Attorney  Gen- 
eral, with  whom  The  Attorney  General  and  Mr,  Felix  H, 
Levy^  Special  Assistant  to  the  Attorney  General,  were  on  the 
brief,  for  the  United  States.*' 

Mr.  Justice  Brown  delivered  the  opinion  of  the  court. 

This  case  involves  many  of  the  questions  already  passed 
upon  in  the  opinion  in  Hale  v.  Henkel^  differing  from  that 
case,  however,  in  two  important  particulars :  First,  in  the  fact 
that  there  was  a  complaint  and  charge  made  on  behalf  of 
the  United  States  against  the  American  Tobacco  Company 
and  the  Imperial  Tobacco  Company  under  the  so-called  Sher- 
man Act,  and,  second,  that  the  subpoena  pointed  out  the 
particular  writings  sought  for  (three  agreements),  giving  in 
each  case  the  date,  the  names  of  [91]  the  parties,  and,  in  one 
instance,  a  suggestion  of  the  contents. 

The  witness  McAlister,  who  was  secretary  and  a  director  of 
the  American  Tobacco  Company,  refused  to  ansAver  or  pro- 
duce the  documents  for  practically  the  same  reasons  assigned 


o  Copyrigbtetl,  190G,  by  Tbe  Banks  Law  Publisbing  Co. 
»  Copyrigbtcd.  1900.  by  Tbe  Lawyers*  Co-Oiierative  Tubllsbing  Ck). 
eSee  abstracts  of  argument  in  Hale  y.  Uenkch  ante,  p.  874,  argued 
simultaneously  berewitb. 


920 


201   UNITED   STATES   REPORTS,   92. 


Syllabus. 

by  the  appellant  Hale,  demanding  to  be  advised  what  the 
suit  or  proceeding  was,  and  to  be  furnished  with  a  copy  of 
the  proposed  indictment.  A  copy  of  one  of  the  agreements 
with  three  English  companies  and  certified  by  the  Consul 
General  of  the  United  States  is  contained  in  the  record. 

For  reasons  already  partly  set  forth,  we  think  that  the 
immunity  provided  by  the  Fifth  Amendment  against  self- 
incrimination  is  personal  to  the  witness  himself,  and  that  he 
cannot  set  up  the  privilege  of  another  person  or  of  a  corpora- 
tion as  an  excuse  for  a  refusal  to  answer—in  other  words,  the 
privilege  is  that  of  the  witness  himself,  and  not  that  of  the 
party  on  trial.  The  authorities  are  practically  uniform  oa 
this  point.  Commonwealth  v.  Shaw,  4  Cush.  594 ;  State  v. 
Wentworth,  Co  Maine,  234,  241 ;  Ex  parte  Reynolds,  15  Cox 
Criminal  Cases,  108,  115.  In  New  York  Life  Insurance  Co. 
V.  People,  195  Illinois,  430,  the  privilege  was  claimed  by  a  cor- 
poration, but  the  agent  of  an  insurance  company  was  per- 
mitted to  testify,  in  a  suit  for  the  recovery  of  a  statutory 
penalty,  to  facts  showing  the  performance  by  the  corporation 
of  the  act  prohibited.  Indeed,  the  authorities  are  numerous 
to  the  effect  that  an  officer  of  a  corporation  cannot  set  up  the 
privilege  of  a  corporation  as  against  his  testimony  or  the  pro- 
duction of  their  l>ooks. 

The  questions  are  the  same  as  those  involved  in  the  Hale 
case,  without  the  objectionable  feature  of  the  subpoena,  and 
the  order  of  the  Circuit  Court  is,  therefore, 

Afflrmed. 


I  if  M  J 


NELSON  V.  UNITED  STATES. 

BOSSAED  V,  SAME. 

McNAIR  V.  SAME. 

BMKOR    TO    THE    CIRCUIT    COURT    OF    THE    UNITED    STATES    FOR 

THE    DISTRICT   OF    MINNESOTA. 
Nob.  400.  401.  402.    Argued  January  5,  8,  IDOC— Decided  March  12,  1900. 

1201  U.  a.  92.] 

IM  II  suit  In  tbe  CImilt  Court  of  the  United  States  brought  by  the 
r^nitecl  States  against  coi-porations  for  violations  of  tbe  Antitrust 


NELSON    V.    UNITED   STATES. 


921 


Syllabus. 

Law  of  July  2,  1890,  a  witness  refused  to  answer  questions  or  sub- 
mit boolvs  to  iuFpectiou  before  an  examiner  appointea  by  tbe  court  on 
tbe  ground  of  innnateriality,  also  pleading  tbe  Fifth  Amendment; 
after  tbe  court  bad  overruled  tbe  objections  and  directed  him  to 
answer  be  again  refused  and  judgment  in  contempt  was  entered 
against  him.  On  appeal  to  this  court  held,  that: 
Questions  under  tbe  Constitution  of  tbe  United  States  were  involved 
and  this  court  has  jurisdiction  of  an  appeal  direct  from  tbe  Circuit 
Court. 

In  such  an  action  tbe  boolcs  of  the  various  defendants  both  before  and 
after  tbe  alleged  combination,  and  tbe  contracts  between  them,  as 
well  as  other  papers  referred  to  in  tlie  opinion,  are  all  matters  of 
material  proof,  but  whether  material  or  not  tbe  testimony  nmst  he 
talcen  and  exceptions  can  be  noted  by  the  examiner  and  the  mate- 
riality of  tbe  evidence  passed  on  by  tbe  court. 

Witnesses  cannot  take  objections  to  materiality  of  evidence  in  order  to 
be  relieved  from  testifying.  Tbe  tendency  or  effect  of  tbe  testi- 
mony on  tbe  issues  between  the  parties  is  no  concern  of  theirs. 

Documentary  evidence  in  tbe  shape  of  books  and  papers  of  corpora- 
tions are  in  tbe  i^ossession  of  tbe  oriicers  thereof,  who  cannot  refuse 
to  produce  them  on  the  gi-ound  that  they  are  not  in  their  possession 
or  under  their  control. 

Male  V.  Henlcel,  ante,  p.  874,  followed  to  tbe  effect  that  officers  and  em- 
ployes of  corporations  cannot,  under  tbe  Fourth  and  Fifth  Amend- 
ments, refuse  to  testify  or  produce  books  of  corporations  in  suits 
against  the  coriwrations  for  violations  of  tbe  Anti-trust  Law  of  July 
2.  1890,  in  view  of  tbe  immunity  given  by  tbe  act  of  February  25 
1903.O 

[50  L.  ed.,  073.]  6 

[Evidence,  Avbetber  documentary  or  oral,  sought  to  be  elicited  from 
witnesses  summoned  in  an  action  brought  by  tbe  United  States  to 
enjoin  an  alleged  conspiracy  by  manufacturers  of  pnper  to  snppres.*? 
competition,  in  violation  of  tbe  act  of  Jnly  2,  1890  (20  Stat.  L., 
200,  chap.  047,  U.  S.  Comp.  Stat.,  1901.  p.  3200),  by  creating  a  gen- 
eral selling  and  distributing  agent,  is  material,  where  it  would  tend 
to  establish  the  manner  in  which  such  agent  executed  its  func- 
tions.] 

ITbe  immateriality  of  tbe  evidence  souglit  to  be  elicited  can  not  jus- 
tify tbe  refusal  of  witnesFes  to  obey  tbe  orders  of  the  Federal  cir- 
cuit court,  reipiiring  them  to  answer  tlie  questions  put  to  tlieni, 
and  to  produce  written  evidence  in  their  possession,  on  their  exam- 
ination before  a  special  examiner. 


oTbe  foregoing  syllabus  and  the  abstracts  of  arguments  copyrighted, 
1900.  by  Tlie  Banks  Law  rublisbing  Co. 

6  Tbe  following  paragraphs  inclosed  in  brackets  comprise  tbe  syl- 
labus to  this  case  in  the  U.  S.  Supreme  Court  Reports.  Rook  50,  p.  073. 
Copyrighted,  1900,  by  the  Lawyers'  Co-Operative  Publishing  Co. 


922 


mi  UNITED   STATES   KEPOKTS,   92. 


Statement  of  the  Ca*\ 

(Objections  to  the  materiality  of  the  testimony  are  not  open  to  con- 
sideration on  a  writ  of  error  sued  out  by  witnesses  to  review  a 
judgment  for  contempt,  entered  against  them  for  disobeying  an 
order  to  testify.] 

[The  refusal  of  corporate  officers  to  obey  orders  of  a  Federal  circuit 
court,  requiring  them  to  produce  certain  documentary  evidence,  on 
their  examination  before  a  special  examiner,  can  not  be  justified  on 
the  theory  that  such  evidence  was  not  in  their  possession  or  under 
their  control,  because  their  possession  was  not  personal,  but  was 
that  of  the  corporations,] 

[The  right  of  a  witness  to  claim  his  privilege  against  self-incrimina- 
tion, afforded  by  U.  S.  Const,  fith  Amend.,  when  examined  con- 
cerning an  alleged  violation  of  the  antiti-ust  act  of  July  2,  1800  (20 
Stat.  L.,  200,  chap.  G47,  U.  S.  Comp.  Stat,  1901,  p.  3200),  Is 
taken  away  by  the  proviso  to  the  act  of  February  25,  1903  (32 
Stat  L.,  904,  chap.  755,  U.  S.  Omp.  Stat  Supp.,  1003,  pp.  300. 
307),  that  no  person  shall  be  prosecuted  or  be  subjected  to  any 
penalty  or  forfeiture  for  or  on  account  of  any  transaction,  matter, 
or  thing  concerning  which  he  may  testify  or  produce  evidence  in 
any  proceeding,  suit,  or  prosecution  under  certain  named  statutes, 
of  which  the  antitrust  act  Is  one,  which  furnishes  a  sufficient  im- 
munity from  prosecution  to  satisfy  the  constitutional  gauranty, 
although  it  may  not  afford  immunity  from  prosecution  In  the  state 
couits  for  the  offense  disclosed.] 

These  writs  of  error  submit  for  review  a  judgment  in  con- 
tempt entered  in  the  case  of  United  States  v.  General  Paper 
Company^  described  in  Alexander  v.  United  States^  post^ 
p.  117.  The  judgment  was  based  upon  the  disobedience  by 
the  plaintiffs  in  error  to  orders  of  the  court  requiring  them  to 
answer  certain  [»3]  questions  and  to  produce  certain  books, 
documents  and  papers  in  their  examination  before  the  special 
examiner  in  pursuance  to  a  suhpmna  duces  tecum  duly  issued 
and  served.  The  orders  requiring  the  plaintiffs  to  answer 
were  made  upon  petition  of  the  United  States,  which  exhib- 
ited the  issues  in  the  suit  of  United  States  v.  General  Paper 
Company  et  aL,  stated  the  questions  asked  plaintiffs  in  error, 
and  the  books,  documents  aiid  papers  required  of  them. 

Plaintiffs  in  error  refused  to  obey  the  orders,  and  the  ex- 
aminer reported  their  disobedience  to  the  court  "  for  such  ac- 
tion as  the  court  might  take  for  the  further  enforcement  of  its 
orders."  In  defense  plaintiffs  in  error  filed  separate  an- 
swers, which  respectively  alleged  that  Nelson  was  the  presi- 
dent and  manager  of  the  Hennepin  Paper  Company;   Bros- 


NELSON    V.   UNITED   STATES. 


923 


statement  of  the  Case. 

sard,  manager  and  treasurer  of  the  Itasca  Company,  and 
McNair,  a  director  and  general  manager  of  the  Northwest 
Paper  Company.  In  other  particulars  the  answers  are 
identical  except  so  far  as  the  relations  of  plaintiffs  in  error 
to  their  respective  corporations  made  a  difference.  Plaintiffs 
in  error  are  also  directors  of  the  General  Paper  Company. 
We  insert  the  answer  of  Nelson  in  the  margin.^ 

«Now  comes  Benjamin  F.  Nelson  and  answering  the  order  to  show 
cause  made  in  the  above-entitled  matter  on  the  15th  day  of  September, 
A.  D.  1905,  and  the  petition  heretofore  filed  in  said  matter  by  said 
complainant  upon  which  said  order  to  show  cause  was  made,  alleges 
and  shows  unto  the  court  as  follows : 

That  this  respondent  is  a  director  and  the  president  of  Hennepin 
Paper  Company,  one  of  the  defendants  in  the  above-entitled  raatter, 
and  is  also  the  owner  and  holder  of  stoclv  in  said  company  of  the  par 
value  of  forty-nine  thousand  ($49,000.00)  dollars,  and  that  the  books 
and  papers  referred  to  in  said  order  to  show  cause  and  in  the  petition 
and  schedules  thereto  attached,  upon  which  said  order  to  show  cause 
was  made,  are  the  boolvs  and  papers  of  said  Hennepin  Paper  Company 
and  not  of  this  respondent,  and  are  subject  to  the  control  of  said 
Hennepin  Paper  Company  and  not  of  this  respondent;  that  this  re- 
spondent is  also  a  director  of  General  Paper  Company,  another  of  the 
defendants  in  tlie  above  entitled  matter,  and  the  owner  and  liolder 
of  stock  in  said  General  Paper  Company  of  the  par  value  of  two 
thousand  two  hundred  and  fifty  dollars;  that  said  Hennepin  Paper 
Company  and  said  General  Paper  Company  have  objected  and  do 
object,  and  this  respondent  has  objected  and  does  object,  to  the  pro- 
duction of  said  books  and  papers  for  inspection  by  counsel  fur  said 
complainant  for  the  purpose  of  being  offered  in  evidence  in  said  cause. 
Said  objections  are  based  upon  the  following  i-easons : 

1.  That  the  materiality  of  said  books  and  papers  in  the  case  men- 
tioned in  said  order  to  show  cause  now  pending  in  said  court  has  not 
been  established  so  as  to  authorize  a  court  of  equity  to  order  their 
inspection,  production  and  introduction  in  evidence,  and  that  the  same 
are  not  material,  relevant  or  competent  evidence  in  said  cause;  that 
said  books  and  papers  contain  matters  of  importance  relating  to  the 
business  of  said  Hennepin  Paper  Company  and  said  General  Paper 
Company  in  no  way  bearing  upon  or  touching  the  issues  in  said  cause, 
which  it  would  be  highly  injurious  to  the  business  interests  of  both  of 
said  companies  to  make  public,  and  this  respondent  submits  that  he 
ought  not  to  be  required  to  disclose  any  portions  of  said  l)ooks  or 
papers  except  on  a  proper  showing  that  the  same  are  material  to  said 
cause  to  establish  some  issue  therein,  and  a  showing  that  the  same 
are  not  privileged  for  the  protection  of  the  defendants  above  named. 

2.  That  one  of  the  purposes  of  said  complainant  in  institutin-^  said 


v^^ 


201   UNITED   STATteS  REPORTS,   94. 


Statement  of  the  Case. 

[M]  The  court  required  the  questions  to  be  answered  and 
in©  books  and  documents  to  be  produced  and,  being  of  opin- 
ion that  the  order  did  not  constitute  a  final  decision,  refused 
Z^^  ^^  *Weal  «n^thej)art  of  either  of  the  plaintiffs  in 

cause  and  in  making  the  requests  mentbneTiE^  said  order  to  show 
cause  for  the  inspection,  production  and  introduction  as  evidence  of 
said  books  and  papers,  is  to  establish  and  to  compel  said  Hennepin 
Paper  Company  and  said  General  Paper  Company,  and  this  respondent 
as  such  director  or  officer  of  each  of  said  defendants,  to  furnish  to 
said  complainant  evidence  tending  to  establish  that  said  Hennepin 
Paper  Company  and  said  General  Paper  Company  have  been  -njitv 
of  certain  violations  of  the  act  of  Congress  entitled  "An  act  to"  prJ 
tect  trade  and  commerce  against  unlawful  restraints  and  monopolies  " 
approved  July  2,  1890,  and  the  acts  amendatory  thereof  or  supple 
mental  thereto,  and  to  subject  said  Hennepin  Paper  Company  and 
said  General  Paper  Company  to  the  penalties  for  such  violations  im- 
posed by  said  act,  and  that  to  compel  the  production  bv  said  Henne- 
p^  Paper  Company  or  said  General  Paper  Company,  throngh  th.nr 
officers  or  otherwise,  of  said  books  and  papers  for  inspection  and 
Introduction  as  evidence  in  said  cause,  would  be  contrary  to  the  pro 
visions  of  the  Fifth  Amendment  to  the  Constitution  of  the  United 
States,   which  provides  that  no  person  shall   be  compelled   in   uny 
CTimmal  case  to  be  a  witness  against  himself,  and  also  contrary  to 
the  provisions  of  the  Fourth  Amendment  to  the  Constitution  of  the 
United  States,  which  provides  that  the  right  of  the  people  to  be 
secure  in  their  persons,  houses,  papers  and  effects  against  unreason- 
able  searches  and  seizures  shall  not  be  violated. 

3.  That  the  alleged  acts  of  said  Hennepin ' Paper  Compnnv  com- 
plained of  by  said  complainant  in  its  said  original  petition  or' bill  of 
complaint  in  said  cause,  and  which  said  complainant  is  endeavoring  to 
establish  in  said  cause,  would,  if  committed  by  said  Hennepin  Paper 
Company,  be  violations  of  the  laws  of  the  State  of  Minnesota    and 
would   subject  said   Hennepin   Paper  Company   to  forfeiture  of  its 
charter  and  other  penalities  under  said  laws;  that  to  compel  said 
Hennepm    Paper   Company,    through   this   respondent   as  one   of   its 
officers  or  otherwise,  to  produce  said  books  and  paijers  for  inspection 
and  introduction  as  evidence  in  said  cause  would  be  to  compel  it  to 
fornish  evidence  tending  to  establish  that  it  has  l)een  guilty  of  such 
acts  and  subject  it  to  the  forfeiture  of  its  charter  and  other  penalties 
aforesaid,  wntrary  to  the  provisions  hereinbefore  mentioned  of  the 
Fourth  and  Fifth  Amendments  to  the  Constitution  of  the  United 
States. 

4.  That  in  addition  to  the  matters  above  set  forth,  the  purpose  of 
the  complainant  in  instituting  said  cause  and  in  making  the  requests 
mentioned  in  said  order  to  show  cause  is  to  obtain  from  said  court  a 
decree  enjoining  said  General  Paper  Company  from  carrying  on  the 
business  for  which  It  was  incorporated,  and  to  enjoin  the  carrying 


NELSON    V,    UNITED   STATES. 


925 


Statement  of  the  Cas«>. 

error  or  either  of  [95]  the  defendants  in  the  suit  or  on  the 
part  of  all  of  them  jointly. 

Plaintiffs  in  error  refused  to  obey  the  order  of  the  court, 
and  upon  the  report  of  the  examiner  the  judgment  under  re- 
out  of  and  operation  under  certain  agency  contracts  and  agreements 
existing  between  it  and  said  Hennepin  Paper  Company,  on  the  al- 
leged ground  that  said  contracts  and  agreements  were  made  and  are 
in  violation  of  the  provisions  of  said  act  of  Congress;  that  said  con- 
tracts and  agreements  are  of  great  value,  not  only  to  said  Genenil  Pa- 
per Company  whose  entire  business  practically  rests  uiwn  them,  but 
are  also  of  great  value  to  and  constitute  valuable  property  rights  in 
each  of  the  defendants  respectively  parties  thereto,  including  the  said 
Hennepin  Paper  Company,  and  that  such  injunction  from  carrying  out 
said  contracts  and  agreements  and  their  virtual  annulment  tliei-eby 
occasioned  would  result  in  great  injury,  damage  or  loss,  not  only  to 
said  General  Paper  Company  but  also  to  said  Hennepin  Paper  Com- 
pany and  to  this  respondent  as  a  stockholder  in  each  of  said  compa- 
nies ;  and  that  to  compel  the  production  by  said  Hennepin  Paper  Com- 
pany or  said  General  Paper  Company,  or  either  of  them,  through  this 
respondent  as  such  director  or  officer  or  otherwise,  of  said  t>ooks  and 
papers  for  inspection  and  introduction  as  evidence  in  said  cause  for 
the  purpose  aforesaid,  would  be  contrary  not  only  to  the  provisions 
of  said  Fourth  and  Fifth  Amendments  to  the  Constitution  of  the 
United  States,  but  also  contrary  to  the  well  establislied  rule  of  the 
common  law,  as  well  as  of  equity  jurisprudence,  that  no  person  will 
be  compelled  to  discover  any  fact,  either  by  producing  documents  or 
answering  questions,  which  may  subject  him,  either  directly  or  eventu- 
ally, to  prosecution  for  a  crime  or  to  a  forfeiture  or  penalty,  or  any- 
thing in  the  nature  of  a  forfeiture  or  penalty. 

Further  answering,  this  respondent  alleges  and  shows  unto  this 
court  that  all  the  matters  concerning  which  the  questions  referred 
to  in  said  petition  and  schedules  thereto  annexed  were  asked,  and 
which  this  respondent  refused  to  answer,  as  stated  in  said  petition, 
came  to  this  respondent's  knowledge  exclusively  as  president  and  a  di- 
rector of  said  Hennepin  Paper  Company,  or  as  a  director  of  said  Gen- 
eral Paper  Company,  in  the  conduct  of  matters  entrusted  to  him  as 
such  director  or  president,  and  which  said  companies,  from  the  na- 
ture of  the  case,  were  compelled  to  entrust  to  this  respondent  as 
such  director  or  officer,  and  that  said  Hennepin  Paper  Company  and 
said  General  Paper  Company  have  objected  and  do  object,  and  this 
respondent  has  objected  and  does  object,  to  said  questions  and  to  his 
being  required  to  answer  the  same,  for  reasons  similar  to  those 
already  set  forth  in  respect  to  the  production,  inspection  and  intro- 
duction in  evidence  of  the  books  and  papers  above  mentioned,  that  is 
to  say : 

1.  That  the  materiality  of  said  questions  in  the  cause  above  men- 
tioned has  not  been  established  so  as  to  authorize  a  court  of  equity 


926 


201  UNITED   STATES   REPORTS,   96. 


Statement  of  the  Case. 

view  was  [96]  entered,  fining  plaintiffs  in  error  severally 
$100  "for  their  said  disobedience  of  the  said  order,  said 
fines  to  be  paid  to  the  clerk  of  this  court  for  the  use  of  the 
United  States,  as  punishment  for  such  contempt,"  and  sen- 

to  order  them  to  be  answered,  and  that  the  same  are  not  material, 
relevant  or  competent  evidence  in  said  canse. 

2.  That  the  parpose  of  Baid  complainant  in  instituting  said  cause 
and  in  Asking  said  questions  is  to  establish  and  to  compel  said  Henne- 
pin Paper  Company  and  said  General  Paper  Company,  through  this  re- 
^londent  as  such  director  or  officer,  to  furnish  to  said  complainant" 
evidence  tending  to  establish  that  said  Hennepin  Paper  Company  and 
said  General  Paper  Company  have  been  guilty  of  certain  violations 
of  the  acts  of  Congress  above  referred  to,  and  to  subject  them  to  the 
penalties  for  such  violations  imposed  by  said  acts,  and  that  to  compel 
said  defendants  hereinbefore  named,  or  either  of  them,  through  this 
respondent  to  answer  said  questions  would  be  contrary  to  the  pro- 
visions hereinbefore  referred  to  of  said  Fourth  and  Fifth  Amend- 
ments to  the  Constitution  of  the  United  States. 

3.  That  the  alleged  acts  of  said  Hennepin  Paper  Company  com- 
plained of  by  said  complainants  in  its  original  petition  or  bill  of 
complaint  in  said  cause,  and  which  said  complainant  is  endeavoring  to 
establish  in  said  cause,  would,  if  committed  by  it.  be  violations  of  the 
laws  of  the  State  of  Minnesota,  and  would  subject  It  to  forfeiture  of  its 
charter  and  other  penalties  under  said  laws;  that  to  compel  it  through 
this  respondent  to  answer  the  questions  aforesaid  would  be  to  compel 
It  to  furnish  evidence  tending  to  establish  that  it  has  been  guilty  of 
such  acts  and  subject  It  to  the  forfeiture  of  its  charter  and  other 
penalties  aforesaid,  contrary  to  the  provisions  hereinbefore  referred 
to  of  said  Fourth  and  Fifth  Amendments  to  the  Constitution  of  the 
United  States. 

4.  That  In  addition  to  the  matters  above  set  forth,  the  purpose  of  the 
complainant  in  instituting  said  cause  and  In  asking  the  questions  men- 
tioned in  said  order  to  show  cause  is  to  obtain  a  decree  enjoining  said 
General  Paper  Company  from  carrying  on  the  business  for  which  it 
was  incorporated  and  to  enjoin  the  carrying  out  of  and  operation  under 
certain  agency  contracts  and  agreements  existing  between  it  and  said 
Hennepin  Paper  Company,  on  the  alleged  ground  that  said  contracts 
anil  agreements  were  made  and  are  In  violation  of  the  provisions  of 
said  acts  of  Congress;  that  said  contracts  and  agreements  are  of  great 
value  not  only  to  said  General  Paper  Company,  whose  entire  business 
practically  rests  upon  him.  but  are  also  of  great  value  to  and  consti- 
tute valuable  property  rights  in  each  of  the  defendants  respectively 
parties  thereto,  including  the  Hennepin  Paper  Company,  and  that  such 
injunction  from  carrying  out  said  contracts  and  agreements  and  their 
virtual  annulment  thereby  occasioned  would  result  in  great  injury, 
damage  and  loss,  not  only  to  said  Hennepin  Paper  Company  or  said 


NELSON    V.    UNITED    STATES. 


927 


Statement  of  the  Case. 

tencing  them  to  be  imprisoned  until  [97]  the  order  of  the 
court  requiring  them  to  testify  should  be  complied  with. 

The  questions  on  the  merits  in  these  cases  are  the  same  as 
those  on  ih&me,vit2>m  Alexander y.  United  States, post ^p,  117, 

General  Paper  Company,  and  that  to  compel  said  Hennepin  Paper 
Company  or  said  General  Paper  Company,  through  this  respondent, 
to  answer  the  questions  aforesaid  in  aid  of  the  purposes  aforesaid 
would  be  contrary  not  only  to  the  provisions  hereinbefore  referred 
to  of  said  Fourth  and  Fifth  Amendments  to  the  Constitution  of 
the  United  States,  but  also  contrary  to  the  well  established  rule  of 
the  common  law  as  well  as  of  equity  jurisprudence,  that  no  person  will 
be  compelled  to  discover  any  fact,  either  by  producing  documents  or 
answering  questions,  which  may  subject  him,  either  directly  or  indi- 
rectly, to  prosecution  for  a  crime  or  to  a  forfeiture  or  penalty  or  any- 
thing in  the  nature  of  a  forfeiture  or  penalty. 

Further  answering  this  respondent  alleges  that  he  ought  not  to  be  re- 
quired to  answer  the  questions  or  comply  with  the  requests,  or  pro- 
duce for  inspection  by  counsel  for  the  complainant  or  for  the  purpose 
of  being  offered  in  evidence  the  cause  above  referred  to,  the  books  and 
papers  referred  to  in  said  order  to  show  cause  and  in  the  petition  and 
schedules  thereto  annexed,  upon  which  said  order  to  show  cause  was 
made,  not  only  for  tlie  reasons  hereinabove  set  forth,  but  also  for  the 
following  reasons,  that  is  to  say : 

1.  That  ope  of  the  purposes  of  said  complainant  in  instituting  said 
cause  and  in  seeking  to  require  this  respondent  to  answer  the  questions 
and  comply  with  the  requests  and  produce  for  inspection  by  counsel 
for  the  complainant,  and  for  the  purpose  of  being  offered  in  evidence 
In  said  cause  the  books  and  papers  aforesaid,  is  to  establish  and  to 
compel  this  respondent  to  furnish  to  said  complainant  evidence  tending 
to  establish  that  he  has  been  guilty  of  certain  violations  of  the  acts  of 
Congress  hereinbefore  mentioned  and  referred  to,  and  to  subject  him 
to  the  penalties  for  such  violations  imposed  by  said  acts,  and  that  to 
compel  him  to  answer  said  questions  or  comply  with  said  requests  or 
to  produce  for  inspection  or  for  the  purpose  of  being  offered  in  evidence 
In  said  cause  the  said  books  and  papers  would  be  contrary  to  the  pro- 
visions hereinbefore  referred  to  of  said  Fourth  and  Fifth  Amendments 
to  the  Constitution  of  the  United  States. 

2.  That  the  alleged  acts  of  said  Hennepin  Paper  Company  and  of 
said  General  Paper  Company  complained  of  by  the  complainant  in  its 
said  original  petition  or  bill  of  complaint  in  said  cause,  and  which  said 
complainant  is  endeavoring  to  establish  in  said  cause,  would,  if  com- 
mitted by  said  defendant  companies,  involve  certain  violations  of  the 
laws  of  the  State  of  Minnesota  by  this  respondent,  and  would  subject 
him  to  penalties  and  forfeiture  under  said  laws,  and  that  to  compel  him 
to  answer  the  questions  or  comply  with  the  requirements  aforesaid,  or 
to  produce  for  Inspection,  or  for  the  purpose  of  being  offered  in  evi- 


928 


201   UNITED   STATES   REPORTS,   98. 


Statement  of  the  Case. 
[981  decided  this  day.    In  those  cases,  however,  this  court 
had  no  jurisdiction  and  the  appeals  were  dismissed.    In  the 
present  cases  we  have  jurisdiction,  Bessette  v.  W,  B,  Conkey 

dence  in  said  cause,  tbe  said  books  and  papers,  wouwTbe  to  compel 
liim  to  furnish  evidence  tending  to  establisli  that  he  has  been  guilty  of 
such  violations  of  tlie  laws  of  the  State  of  Minnesota  and  to  subject 
him  to  the  penalties  and  forfeitures  aforesaid,  contrary  to  the  provi- 
sions hereinbefore  referred  to  of  said  Fourth  and  Fifth  Amendments 
to  the  Constitution  of  the  United  States. 

3.  That  one  of  the  purposes  of  said  complainant  in  instituting  said 
cause  and  in  seekin;;  to  require  this  respondent  to  answer  the  questions 
and  comiily  with  tiie  requests,  and  produce  for  inspection  by  counsel 
for  the  complainant  and  for  the  purpose  of  being  offered  in  evidence 
in  said  cause,  the  books  and  papers  above  referred  to,  is  to  establish 
and  compel  this  respondent  to  furnish  to  said  complainant  evidence 
tending  to  establish  the  allegations  of  the  original  petition  or  bill  of 
complaint  in  said  cause,  which,  if  established,  will  result  in  subjecting 
this  respondent  to  loss  or  detriment  in  the  nature  of  a  penalty  or 
forfeiture,  in  that  the  said  Hennepin  Paper  Company,  of  which  this 
respondent  is  a  stockholder  as  aforesaid,  will  be  subjected  under  the 
laws  of  the  State  of  Minnesota  to  the  forfeiture  of  its  charter,  resulting 
in  the  virtual  forfeiture  of  the  stock  of  this  respondent  in  said  de- 
fendant company,  and  to  be  the  loss  and  forfeiture  to  a  large  extent 
of  the  value  of  the  interest  of  this  respondent  in  said  corporation,  and 
in  that  the  contracts  made  through  said  General  Paper  Company  as 
its  sales  agent  by  said  Hennepin  Paper  Company  under  and  pursuant 
to  the  agency  contracts  herein  referred  to  between  said  Hennepin 
Paper  Company  and  said  General  Paper  Company  will  be  virtually 
annulled  and  the  property  rights  of  said  Hennepin  Paper  Company  in 
paid  contracts  destroyed ;   that  there  are  a  large  number  of  such  con- 
tracts outstanding  under  which  large  sums  of  money  are  due  to  said 
Hennepin  Paper  Company,  all  of  which,  as  this  respondent  is  advised 
and  believes,  will  be  or  may  be  forfeited  and  lost  to  said  defendant 
and  to  this  respondent  as  a  stoclsholder  therein  in  case  the  illegal  com- 
bination alleged  in  said  original  petition  or  bill  of  complaint  is  estab- 
lished by  the  decree  or  judgment  in  said  cause;   and  this  respondent 
alleges  that  to  compel  him  to  answer  the  questions  and  comply  with 
the  requests  and  produce  for  inspection  and  for  purpose  of  being 
offered  in  evidence  the  books  and  papers  referred  to  in  said  order  to 
show  cause  and  the  petition  and  schedules  aforesaid,  and  which  he 
has  declined  to  answer  and  comply  with  or  produce,  if  material  to 
said  cause,  would  be  contrary  to  the  provisions  of  said  Fourth  and 
Fifth  Amendments  to  the  Constitution  of  the  United  States,  and  also 
contrary  to  the  well  established  rule  of  the  common  law  and  of  equity 
jurisprudence,  that  no  person  will  be  compelled  to  discover  any  fact 
or  matter  which  may  subject  him  to  forfeiture  or  penalty  or  anything 
in  the  nature  of  a  forfeiture  or  penalty. 


NELSON    V.    UNITED    STATES. 
Statement  of  the  Case. 


929 


Co.,  194  U.  S.  324,  and  direc'tly  from  the  Circuit  Court,  as 
questions  under  the  Constitution  of  the  United  States  are 
involved. 

[99]  In  the  pleadings  in  the  original  suit  brought  in  the 
Circuit  Court  of  the  United  States  for  the  District  of  Minne- 
sota it  is  respectively  alleged  and  denied  that  the  defendant 
corporations,  of  which  plaintiffs  in  error  are  officers,  had 
entered  into  an  agreement,  combination  and  conspiracy  to  con- 
trol, regulate  and  monopolize  not  only  the  manufacture  of 
newsprint  and  other  papers,  but  the  distribution  and  ship- 
ment thereof  through  the  Middle,  Southern  and  Western 
States,  in  violation  of  the  Anti  Trust  Act  of  July  2,  1890. 
The  Ignited  States  sought  to  establish  by  plaintiffs  in  error 
the  truth  of  the  charge,  and  the  subpoena  served  upon  them 
was  explicit  as  to  what  was  required  of  them. 

The  subpamas  required  plaintiffs  in  error  to  produce  the 
account   books,   including  the   journals,   ledgers   and   other 
books  kept  by  or  under  the  control  of  the  companies  re- 
spectively,  of   which    plaintiffs   in   error   were   respectively 
officers,  {a)  showing  the  amounts,  kinds  and  grades  of  paper 
manufactured  by  the  respective  companies  and  sold  by  or 
through  the  General  Paper  Company,  and  were  shipped  since 
the  fifth  of  July,  1900:    {h)  the  prices,  amounts  or  credits 
received  for  such  paper  from  the  paper  company  between 
the  fifth  of  July  and  the  present  time,  including  entries, 
showing  the  manner  in  which  the  prices  and  amounts  re- 
ceived by  the  respective  companies  for  any  and  all  [100]  of 
its  products  so  sold  have  been  equalized  Avith  the  prices  and 
amounts  received  or  realized  of  any  and  all  of  the  other  de- 
fendant companies  for  which  the  paper  company  is  or  has 
been  the  exclusive  agent;  {c)  the  amounts  and  proportions 
of  earnings  or  profits  of  the  paper  company  re<;eived  by  the 
respective  companies  from  and  through  the  paper  company, 
either  in  the  form  of  rebates,  credits  or  otherwise. 

Second.  All  contracts,  agreements,  writings  and  account 
books,  including  journals,  ledgers  and  other  books,  kept 
by  or  under  iho^  control  of  the  respective  companies,  showing 
the  agreement,  arrangement  or  understanding  under  and  pur- 
suant to  each,  and  the  manner  in  which  the  prices  and 

21220- VOL  2—07  m .59 


930 


201   UNITED   STATES  KEPORTS,   100. 
Statement  of  the  Case. 


amoiirits  realized  by  the  respective  companies  upon  the  vari- 
ous kinds  and  grades  of  paper  manufactured  by  it  and  sold 
by  and  through  the  paper  company,  are  and  have  been,  since 
July  5,  1900,  equalized,  or  the  profits  arising  from  the  sale 
of  such  paper  distributed  or  apportioned,  as  between  the  re- 
spective  companies  and  other  defendants  manufacturing  and 
selling  through  the  paper  company  similar  kinds  or  grades 
of  paper,  or  among  all  of  the  defendants  manufacturing 
similar  kinds  or  grades  of  paper,  and  then  and  there  to 
testify  and  the  truth  to  say,  in  a  certain  matter  in  controversy 
in  said  court,  l)etween  the  United  Stat-es  as  complainant 
against  the  General  Paper  Company  et  al.j  defendants,  on 
the  part  of  the  complainant. 

There  is  no  uncertainty,  therefore,  either  in  the  issue  or 
Uie  means  of  proof.  In  other  words,  the  United  States 
charges  a  conspiracy  upon  the  part  of  the  defendant  corpora- 
tions for  the  cessation  of  competition  between  the  manu- 
facturing  defendants  by  creating  a  general  selling  and  dis- 
tributing agent,  the  General  Paper  Company,  which  restricts 
the  output  of  the  mills,  fixes  the  prices  of  their  products, 
determines  to  whom,  and  the  terms  and  conditions  upon 
which,  such  products  shall  be  sold,  into  what  States  and 
places  they  shall  be  shipped,  and  what  publishers  and  cus- 
Lers  each  mill  shall  supply.  The  means  of  proof  of  the 
charge  are  obviously  the  conditions  of  the  companies  before 
and  after  the  formation  of  the  paper  company,  [101]  its 
organization  and  the  purpose  of  its  organization,  the  means 
of  its  operation,  how  and  by  what  means  it  ecjualizes  the 
output  and  price  of  products,  and  the  distribution  of  the 
proceeds  of  their  sale,  and  the  relations  and  accounts  between 
it  and  the  other  defendant  companies,  and  their  books,  ac- 
counts and  minutes  of  proceedings. 

The  questions  were 'directed  "L  these  ends.  They  wen, 
directed  to  ascertain  whether  the  prices  received  for  the  vari- 
ous paper  materials  were  equalized,  and  whether  during  the 
time  the  General  Paper  Company  was  the  selling  agent  of  the 
materials  there  was  in  existence  an  arrangement  whereby  the 
prices  received  through  the  paper  company  were  equalized 
between  the  other  defendant  companies.  The  questions  were 
put  in  various  ways  to  show  such  equalization  and  the  ar- 


NELSON    V,   UNITED   STATES. 


931 


Argiinieiit  for  plaintiffs  in  error. 

rangemeiits  to  equalize,  and  to  show  the  allowances  to  each 
mill,  the  fixing  of  definite  prices,  and  the  distribution  of  the 
balances  received  among  the  companies  on  the  basis  of  their 
average  daily  output  of  the  grade  of  paper  inquired  about. 
And  there  were  also  questions  asked  as  to  whether  the  board 
of  directors  or  the  executive  committee  of  the  paper  company 
fixed  the  prices  of  paper  to  be  paid  to  each  of  the  mills  by  or 
through  the  paper  company,  and  the  compensation  to  be 
paid  to  the  mills  making  butchers'  fibre  paper,  because  it 
was  less  profitable,  and  other  questions  as  to  conversations 
between  gentlemen  representing  the  different  mills  in  regard 
to  the  organization  of  a  corporation  to  act  as  general  selling 
agent  in  order  to  eliminate  competition.     There  were  also 
questions  as  to  whether  the  books  showed  the  things  expressed 
in  the  other  questions.     The  objection  made  to  each  of  the 
questions  before  the  examiner  was  that  the  testimony  sought 
was  irrelevant,   incompetent  and   immaterial,   and  counsel 
advised  the  witnesses  not  to  answer.     As  to  the  books  and 
papers  the  following  is  a  sample  of  the  proceedings : 

"  Q.  Do  the  boolis,  journals  or  ledgers  of  the  Hennepin  Paper  Com- 
pany show  any  agreement  or  arrangement  or  imderstanding  under  and 
pursuant  to  which  and  the  manner  in  which  the  prices  and  amounts 
realized  by  the  Heimepin  Paper  Company  [102]  upon  various  grades 
of  paper  manufactured  by  it  and  sold  by  or  through  the  defendant  the 
General  Paper  Company,  are  and  have  been,  since  the  5th  day  of  July, 
1900,  equalized  or  the  profits  arising  from  the  sale  of  such  paper  dis^ 
tributed  or  apportioned  as  between  the  defendants? 

"  Mb.  Flaindebs  :  All  objections  renewed,  and  I  give  the  witness  the 
same  advice. 

"  (No  answer.) 

"  Q.  Do  you  refuse,  Mr.  Nelson,  to  produce  the  books? 

"  Mb.  Fi^ndebs  :  As  I  said  before,  you  may  assume  for  the  purposes 
of  these  questions  that  the  books  and  all  the  papers  called  for  are 
present  in  court,  but  on  behalf  of  the  Hennepin  Paper  Company  and 
the  witness  and  the  General  Paper  Company  I  decline  to  submit 
those  to  the  inspection  of  the  Government  counsel. 

"  Mb.  Kellogg  :  Or  to  allow  them  or  any  part  of  them  to  be  nut  In 
evidence,  Mr.  Flanders? 

"Mb.  Flandebs:  Yes." 

Other  facts  will  appear  in  the  opinion. 

Mr.  James  G.  Flanders,  with  whom  Mr.  Charles  F.  Faw- 
sett  and  Mr.  William  Bruce  were  on  the  brief,  for  plaintiffs 
in  error  in  these  cases  and  for  appellants  in  Nos.  381,  382, 
383,  384  and  385  argued  simultaneously  herewith.'' 

<i  Alexander  v.  United  States,  post,  p.  945. 


201   UNITED   STATES   BEPORTS,   102. 


Argiiiiieut  for  plaintiffs  in  eri*or. 

Tlie  evidence,  documentary  and  oral,  which  the  witnesses 
were  rec]uii-ed  to  pi*odnce  was  not  shown  to  be  material  to 
plaintiff's  case. 

The  documentary  evidence  called  for  is  the.  proi)ei*ty  of 
tlie  General  Paper  Conii>aiiy  or  some  other  of  the  defendant 
corporations.  The  proceeding,  thei-efore,  is  a  method  of 
comijelling  the  pr<Kliiction  of  lKX)ks  and  documents  belonging 
to  parties  to  the  suit,  and  it  is  governed  by  the  rides  pre- 
scribed for  the  protection  of  parties  from  wht»m  a  discovery 
is  demanded. 

The  right  of  a  plaintiff  in  equity  to  the  l)enefit  of  a  de- 
fendant's oath  is  limited  to  a  discoveiy  of  such  material  facts 
IS  relate  [103]  to  the  plaintiff's  rase  and  does  not  extend  to 
a  discovery  of  the  manner  in  which,  or  of  tlie  evidence  by 
means  of  which,  the  defemlant's  case  is  to  he  established. 
1  DanielFs  Ch.  PL  &  Pr.  5  Am.  ed.  *r>Tl),  580:  AV^igram's 
Law  of  Discovery.  1st  Am.  ed.  la;  Story's  Kti.  PL  JjJ^  .*>(»."), 
568. 

The  plaintiff  must  show  by  clear  averment  the  materiality 
of  the  documents  sought  to  be  disclosed.  This  rule  ai)plies 
to  proceedings  under  a  statute  to  compel  production  upon  or 
in  preparation  for  trial.  23  Am.  &  Eng.  Ency.  of  Law,  ITO; 
Owhyee  Z.  <&  I.  Co,  v.  Tautpham,  109  Fed.  Rep.  .HT:  Condict 
V.  Wood,  25  X.  J.  L.  319;  Bank  v.  MansfiM.  48  Illinois,  494; 
Lester  v.  People^  150  Illinois,  408;  Bvnth'i/  v.  P<'i>ph\  104  111. 
App.  353;  ^Yynn  v.  Taylor,  109  111.  App.  fi03;  Walsh  v.  Prex>< 
Co.,  48  App.Div.  N.  Y.  333;  S,  F,  Copprr  M.  d-  R.  Co.  v. 
Hvmphreyn  111  Fed.  Rep.  772;  Eschhaeh  v.  IJf/fifner,  34 
Maryland,  528,  533;  JenJdns  v.  Bennett,  40  S.  Car.  393,  400: 
Berry  v.  Matthews,  7  Georgia,  457,  462,  463. 

A  plaintiff's  right  to  any  compulsory  production  of  books 
is  strictly  limited  to  such  documents  as  contain  evidence  rele- 
vant to  his  case.  His  right  to  inspect  is  never  larger  than  his 
right  to  read  in  evidence.  The  defendant  is  not  compelled 
to  discover  his  evidence  if  it  cannot  tend  to  establish  affirma- 
tively the  case  of  the  plaintiff.  Hare  on  Discovery,  187, 
198;  Compton  v.  Earl  Gray,  1  Y.  &  J.  154;  Bolton  v.  Liver- 
pool, 3  Sim.  489  ',S,C.,1  My.  &  K. ;  Harris  v.  Harris^  3  Hare, 
450;  Van  Kleeck  v.  Ref.  Dutch  Ch.,  6  Paige,  600;  /S'.  C,  20 
Wend.  458. 


NELSON    V,   UNITED    STATES. 


983 


Argument  for  plaintiffs  in  error. 

Before  the  plaintiff  is  entitled  to  the  production  of  a  given 
document  he  must  show  aliunde  that  its  contents  are  such 
as  to  entitle  him  to  read  it  in  evidence.  He  cannot  compel 
production  in  order  to  prove  that  he  is  entitled  to  produc- 
tion. Wigram's  Law  of  Discovery,  §  293 ;  &tory  v.  Lennox,  1 
Myl.  &.  Cr.  534 ;  Langdell  on  Eq.  PL  §  164 ;  Bligh  v.  Benson, 
7  Price,  205 ;  Stroud  v.  Deacon,  1  Vesev,  27 ;  Barnett  v.  NoUe. 
1  Jacob  &  W.  227. 

Any  party  who  is  required  to  produce  his  books  of  account 
or  other  documents,  may  seal  such  portions  thereof  as  he 
swears  [104]  contain  nothing  relating  to  the  purposes  of  the 
discovery  sought,  and  his  affidavit  that  the  parts  so  sealed 
do  not  relate  to  the  matters  in  litigation  is  sufficient  protec- 
tion. 23  Am.  &  Eng.  Ency.  of  Law,  182;  2  Wait's  Pr.  548; 
Titus  V.  Cortelyou,  1  Barb.  444;  Rohhins  v.  Davis,  1  Blatch. 
238,  242;  Campbell  v.  French,  2  Cox  Ch.  Cas.  28G;  Girard  v. 
Penswick,  1  Wilson  Ch.  '121',  Pynchon  v.  Day,  118  Illinois,  9. 

Under  Rev.  Stat.  §  724  it  has  been  held  that  production  will 
only  be  ordered  where  a  discovery  would  be  decreed  under 
the  same  circmnstances  in  chancery.  Jaiques  v.  Collins,  2 
Blatch.  23.  See  Caspary  v.  Carter,  84  Fed.  Eep.  416;  Blrch- 
offsheim  v.  Brown,  29  Fed.  Rep.  341;  Ryder  v.  Bateman,  93 
Fed.  Rep.  31 ;  Bloede  Co,  v.  Bancroft  d;  Sons  Co.,  98  Fed. 
Rep.  175;  Boyd  v.  United  States,  116  U.  S.  616. 

The  doctrine  is  not  confined  to  documentarv  evidence.  It 
applies  also  to  the  case  of  oral  testimony.  The  materiality 
of  any  question  must  be  made  to  appear  before  a  witness  can 
be  required  to  answer  it  and  before  he  can  be  adjudged  guilty 
of  a  contempt  of  court  for  a  refusal  to  answer.  The  leading 
case  is  Ln  re  William  Judson,  3  Blatch.  148.  Se^  also  In  re 
Allis,  44  Fed.  Rep.  216;  Interstate  Commerce  Cmnrnission  v. 
Brimson,  154  U.  S.  447. 

The  evidence,  documentary  and  oral,  required  to  be  pro- 
duced, if  material  to  the  plaintiff's  case,  is  in  the  nature  of 
incriminating  evidence  which  the  witnesses  and  the  defend- 
ants are  privileged  from  furnishing  to  the  plaintiff  under 
the  Fourth  and  Fifth  Amendments  of  the  Federal  Constitu- 
tion and  the  well  recognized  principles  of  equity  procedure. 

The  discovery  which  by  the  orders  appealed  from  the  wit- 
nesses are  required  to  make,  might  also  tend  to  subject  them 


J/Otc 


201  UNITED   STATES  KEPORTS,  104, 


Argnnient  for  plaintiffs  in  error. 

to  penalties  and  forfeitures  under  the  laws  of  the  State  of 
Wisconsin.  Wisconsin  Statutes  (1898),  §§  1747e,  1747A-/ 
Counselman  v.  Hitchcock^  142  U.  S.  647;  United  States  v. 
8(dine  Bank,  1  Pet.  100. 

It  is  not  within  the  province  of  Congress  to  suspend  the 
operation  of  these  state  statutes  or  to  interfere  with  their 
enforce-  [106]  ment  in  their  relation  to  trade  Avithin  the 
State,  and  therefore  the  immunity  clause  would  be  inef- 
fectual to  relieve  the  appellants  against  liability  under  the 
state  law. 

The  jurisdiction  of  state  authority  over  trade  within  the 
State  is  as  exclusive  and  unqualified  as  the  jurisdiction  of 
Congress  over  trade  between  the  States.  Addyston  Pipe 
Go  V.  United  States,  175  U.  S.  211  (where  injunction  pre- 
viously issued  was  modified  to  make  it  conform  to  this  rule)  ; 
Allen  V.  Pullman  Co.,  191  U.  S.  171 ;  National  Cotton  Oil  Co, 
V.  Texas,  197  U.  S.  115. 

It  is  the  settled  law  of  this  court  that  the  Fifth  Amend- 
ment has  no  application  to  state  courts  and  their  proceedings 
under  state  laws.  Pumpelly  v.  Cheen  Bay  Co,,  13  Wall. 
166;  Brown  v.  Walker,  161  U.  S.  591,  distinguished. 

These  Amendments  to  the  Constitution  were  merely  de- 
claratory of  the  equity  and  common  law  rules  of  evidence, 
and  it  was  firmly  settled  by  them  at  the  time  of  the  adoption 
of  the  Amendments  that  no  person  could  be  compelled  to 
discover  any  fact,  either  by  producing  documents  or  answer- 
ing questions,  which  might  subject  him  either  directly  or 
eventually  to  liability  to  a  penalty  or  forfeiture,  or  anything 
in  the  nature  of  a  penalty  or  forfeiture.  1  Daniell's  Chan- 
cery Pleading  &  Practice,  5th  Am.  ed.  *562,  563 ;  2  Story's 
Eq.  Jur.  §  1494;  1  Pomeroy's  Eq.  Jur.  202;  Limngston  v. 
Harris,  3  Paige,  527;  aff'd  11  Wend.  329;  Northrop  v. 
Hateh,  6  Connecticut,  361,  363;  Livingston  v.  Tompkins,  4 
Johns.  Ch.  432,  and  cases  there  cited;  Vanderveer  v.  Hoi- 
comb,  17  N.  J.  Eq.  91;  United  States  v.  National  Lead  Co,, 
75  Fed.  Kep.  94 ;  Newgold  v.  American  Electrical  (&c.  Co., 
108  Fed.  Rep.  341 ;   United  States  v.  Boyd,  116  U.  S.  631. 

The  consequences  which  must  result  to  the  appellants  from 
the  passing  of  the  decree  prayed  for  in  the  complaint  are  in 
the  nature  of  a  forfeiture.    They  should  not  be  required  to 


KELSON    V.   UNITED   STATES. 


935 


Argument  for  plaintiffs  in  error. 

furnish  the  evidence  to  subject  them  to  such  forfeiture. 
13  Am.  &  Eng.  Ency.  of  Law,  54. 

The  witnesses  were  entitled  to  decline  to  answer  not  only 
on  [106]  the  grotind  of  personal  privilege,  but  also  on  the 
ground  that  their  answers  would  be  the  answers  of  the  Gen- 
eral Paper  Company  and  the  other  defendants  whose  officers 
and  directors  they  were,  and  might  tend  to  subject  said  de- 
fendants to  fines,  penalties  and  forfeitures  and  to  loss  or 
damage  in  the  nature  of  a  forfeiture.  A  corporation  is  a 
person  and  as  such  entitled  to  the  privileges  and  immunities 
of  persons.  Covington  Turnpike  Co.  v.  Sanford,  164  U.  S. 
578.  It  performs  its  functions  only  through  its  officers  and 
agents  and  they  cannot  be  compelled  to  testify.  State  v. 
Simmons  Hardware  Co.,  15  L.  R.  A.  676 ;  Davis  v.  Lincoln 
Natl.  Bank,  4  N.  Y.  Supp.  373 ;  Bank  of  Oldtown  v.  Houlton, 
21  Maine,  502. 

The  orders  are  appealable  under  the  judiciary  act  of  March 
3,  1891,  and  under  the  act  of  February  11,  1903,  to  expedite 
the  determination  of  suits  in  equity  under  the  Anti  Trust 
Act  and  the  Interstate  Conunerce  Act. 

In  appealing  from  the  order  of  the  Circuit  Court  appel- 
lants have  followed  the  practice  indicated  in  the  two  cases 
of  Interstate  Commerce  Commission  v.  Brimson,  154  U.  S. 
447,  and  Interstate  Commerce  Commission  v.  Baird,  194 
U.  S.  25.  In  each  case  it  was  held  that  the  application  by  the 
Interstate  Commerce  Conmiission  made  a  "  case  "  and  that  the 
order  denying  the  application  was  a  final  order  and  therefore 
appealable. 

The  two  cases  cited  differ  from  the  present  ones  only  ia 
this:  that  no  action  was  there  pending  in  any  Circuit  Court 
to  which  the  proceedings  to  compel  the  testimony  of  wit- 
nesses and  the  production  of  books  and  papers  could  be  said 
to  be  ancillary.  Otherwise,  however,  the  proceeding  itself 
was  in  every  substantial  respect  the  same  as  that  adopted  in 
the  present  cases. 

The  words  "  final  decree  "  have  been  given  a  liberal  and 
reasonable  construction  as  respects  the  right  of  appeal.  Eau 
Claire  v.  Payson,  107  Fed.  Rep.  552. 

There  may  he  more  than  one  final  order  and  more  than 
one  appeal  in  the  same  suit.    Trustees  v.  Greenough,  105 


936 


201  UNITED   STATES   BEPORTS,   106. 


Arpunent  for  plaintiffs  in  error. 

U.  S.  527;    TtittU  v.  Claflm,  88  Fed.  Rep.  122;   Rouse  v. 
Letcher,  156  U.  S.  47. 

[107]  These  proceedings  are  not  properly  incidental,  but 
collateral,  having  a  distinct  and  independent  character. 
They  belong  to  the  class  known  as  ancillary,  in  which  the 
form  is  determined  by  the  circumstances  of  each  case.  So 
far  as  the  question  of  appealability  goes,  they  are  subject 
to  the  same  rules  as  original  and  independent  actions.  Krip- 
■pendorf  v.  Hyde,  110  IJ.  S.  276,  280,  287;  Freeman  v.  Howe^ 
24  How.  450,  460;  Ohrktmas  v.  Ru,ssell,  14  Wall.  69,  80; 
Romm  V.  L(4e!ter,  156  IJ.  S.  47.  50;  Stewfirt  v.  fhrnham^  115 
U.  S.  61,  (U;  Carey  v.  Houston  d^c.  Ry,  Co.,  161  U.  S.  115, 
126;  Popr  V.  LonisrUle  d'c,  Ry,  Co,,  178  U.  S.  573. 

The  present  j)roceedings  have  all  the  distinguishing  char- 
acteristics of  any  suit  in  equity  or  action  at  law. 

The  test  of  finality  as  to  any  j^articular  order,  under  the 
decisions  of  this  court,  is  this:  An  order,  to  be  appealable, 
or  final  for  the  purposes  of  ai)peal,  must  be  conclusive  upon 
the  merits  and  must  leave  the  matter  in  controversv  in  such  a 
condition  that  if  there  be  an  affirmance  here  the  court  will 
have  nothing  to  do  but  to  execute  the  order  it  has  already 
entered.  Bontwich  v.  Brinkerhoif ^  106  IJ.  S.  3;  St.  L.  <&c. 
R.  Co.  V.  Smitliem  Expr.  Co.,  108  V.  S.  24;  Winthrop  I.  Co. 
Y.  Meeker,  109  IJ.  S.  180;  Motrer  v.  FJetrher,  114  V.  S.  127; 
Trustees  v.  Cheenmigh^  105  U.  S.  527. 

It  has  been  held  that  the  final  order  or  decree  in  ancillary 

proceedings  is  governed  by  the  same  rules,  in  respect  of 

^appeals  to  the  Supreme  Court,  as  the  decree  in  the  principal 

*suit.    Pope  V.  LouUrille  cfr.  Ry.  Co.y  173  U.  S.  573;  Carey 

V.  Hmiston  d'e.  Ry.  Co.,  161  IT.  S.  115;  Roime  v.  Letrher,  156 

U.  S.  47. 

If ,  however,  there  is  any  question  whether  the  act  of  Febru- 
ary 11,  1903,  applies  to  appeals  in  such  cases  as  the  i)resent, 
there  can  be  no  doubt  of  the  right  of  appellants  to  obtain  a 
review  of  the  ordei-s  apj^ealed  from  by  direct  appeal  to  the 
Supreme  Court  under  the  provisions  of  section  5  of  the  act 
of  March  3, 1891.  Loeh  v.  Towmhip  Trustees.  179  I^.  S.  472 ; 
W.  U.  Tel  Co.  V.  .1.  A.  R.  R.  Co.,  178  U.  S.  239:  P^^,ui.  MuL 
L,  Im.  Co.  V.  Austin,  168  U.  S.  685.  , 


NELSON    v.    UNITED   STATES. 


937 


Argument  for  the  United  States. 

t 

[108  J  Mr.  Frank  B.  Kellogg  and  J/n  James  M.  Beck, 
Special  Assistants  to  the  Attorney  General,  with  whom  The 
Attorney  General  was  on  the  brief,  for  the  United  States  in 
these  cases  and  in  Nos.  381,  382,  383,  384  and  385: 

Whether  finally  admissible  or  not,  the  evidence  should  be 
given  and  received  before  the  examiner,  inasmuch  as  all  ques- 
tions of  materiality,  relevancy  and  competency  must  be  left 
primarily  for  determination  upon  final  hearing  by  the  United 
States  Circuit  Court  for  the  District  of  Minnesota  Avhere  the 
cause  is  pending,  and  ultimately  for  decision  by  this  court 
when  the  suit  shall  b(»  considered  here  on  appeal.  Bleasr  v. 
GarHngton,  92  U.  S.  1. 

Had  the  witnesses,  instead  of  appealing  from  the  order 
and  taking  a  writ  of  error  from  the  judgment  of  contempt, 
sued  out  a  writ  of  haheas  corpus,  this  court  would  have  had 
jurisdiction  on  appeal  from  a  judgment  dischaiging  the 
writ.  Ekiu  v.  United  States,  142  U.  S.  651;  Horner  y. 
United  States.  146  U.  S.  120.  And  it  is  only  the  question  of 
the  validity  of  the  judgment  overruling  their  plea  under 
the  Constitution  that  can  be  considered.  In  re  Tyler,  149 
U.  S.  164;  In  re  Letinon,  166  U.  S.  552.  A  writ  of  error 
from  the  judgment  of  contemj)t  will  bring  up  no  other 
question.     Bessette  v.  Couh-y  Co.,  194  U.  S.  324. 

The  rule  in  Blase  v.  GarUngton  has  been  followed  in 
numerous  cases,  lu  re  All  is.  44  Fed.  Rep.  216,  rontra.  is 
not  in  i)oint,  and  it  does  not  appear  that  Blease  v.  GarUngton 
was  called  to  the  attention  of  the  judge  deciding  the  case. 

The  evidence  was  material  and  admissible.  AVhere  the  ex- 
istence of  the  books  and  papers  desired  is  established,  the  abil- 
ity to  produce  them  is  shown,  and  the  books  and  papers  are 
apparently  impoi-tant  and  material  to  the  case  of  the  moving 
party,  their  production  will  l)e  required.  It  is  obviously  im- 
possible in  applications  of  this  character  to  determine  the 
materiality  of  all  of  the  contents  of  the  books  and  papers  in 
advance.  United  States  v.  Bahcock,  Fed.  Cas.  No.  14484; 
Coit  V.  North  Carolina.  Gold  dc.  Co.,,^  Fed.  Rep.  577. 

There  is  no  doubt  that  as  a  witness  a  party  can  be  com- 
pelled 1109]  by  a  suh poena  duces  tecum  to  produce  books, 
documents  and  papers  in  his  possession  in  the  same  manner 
as  any  other  witness.    Bischoifsluim  v.  Brown,  29  Fed.  Rep. 


938 


201   UNITED   STATES   REPORTS,   109. 


Argument  for  the  Unlteti  States. 

341,  343.  And  the  officers  of  a  corporation  may  be  required 
as  witnesses  to  produce  its  books  when  the  books  are  neces- 
sary evidence.  Wertheim  v.  Continental  Ry.  di  Trust  Co.^ 
15  Fed.  Kep.  716;  Johnson  Steel  Street-rail  Co,  v.  North 
Branch  Steel  Co.,  48  Fed.  Eep.  196 ;  Edison  Electric  Light 
Co.  V.  U,  S.  Electric  Ltg,  Co.,  44  Fed.  Rep.  294;  S.  C,  45 
Fed.  Rep.  55;  Johnson  Co.  v.  North  Branch  Co.,  48  Fed. 
Rep.  191. 

Under  issues  of  the  character  raised  in  this  cause,  the  en- 
tire manner  of  conducting  the  business  of  the  General  Paper 
Company  is  competent  and  material  evidence.  Interstate 
Commerce  Commission  v.  Baird,  194  IT.  S.  25. 

The  claim  of  privilege  is  solely  a  personal  one.  Wigmore 
on  Evidence,  §§  2195-2210;  Brown  v.  Walker,  161  U.  S.  597. 

These  witnesses  cannot  claim  the  privilege  of  silence  either 
under  the  general  principles  of  common  law  and  equity  juris- 
prudence and  procedure,  or  under  the  Fourth  and  Fifth 
Amendments. 

It  is  true  that  under  the  ancient  practice  in  actions  at  com- 
mon law  a  party  might  not  compel  his  opponent  to  furnish 
evidence  as  a  witness.  His  only  remedy  was  by  way  of  a 
bill  of  discovery  in  equity.  Wigmore  on  Evidence,  §§  2217, 
2218.  This  limitation,  however,  never  existed  in  equity. 
1  Greenleaf  on  Evidence,  15th  ed.  §  361 ;  1  Daniells  on  Ch. 
Prac.  5th  ed.  885,  note  6;  Adams  on  Equity,  7th  ed.  36; 
Wigmore  on  Evidence,  §§2218,  2219,  pp.  3012,  3014-3016. 

A  party  will  be  compelled  to  make  a  disclosure  of  all  facts 
within  his  knowledge,  or  books  and  documents  in  his  posses- 
sion, which  tend  either  to  establish  his  opponent's  case  or  to 
refute  the  position  which  he  him^lf  takes.  Bustros  v. 
White,  Eng.  Law  Rep.  Q.  B.  Div.  423;  Atty,  Gen.  v.  Emer- 
son and  another,  Law  Rep.  10  Q.  B.  Div.  191;  Arnold  v. 
Pawtuxet  Y alley  Water  Co.,  18  R.  I.  189. 

Modern  legislation  has  made  the  bill  of  discovery  an  un- 
nec-  [110]  essary  adjunct  even  in  actions  at  law.  Material 
evidence  may  now  be  required  of  a  party  in  such  actions, 
without  resorting  to  this  cumbersome  proceeding.  1  Pom- 
eroy  on  Eq.  Jur.  2d  ed.  §  193 ;  Wigmore  on  Evidence,  §  2219 ; 
14  and  15  Victoria,  c.  99,  §  6 ;  Rev.  Stat,  of  Wisconsin  (1898) , 
§  4183,  as  amended  by  c.  244,  Laws  of  1901 ;  Rev.  Stat.  §  858. 


NELSON   V.   UNITED   STATES. 
Opinion  of  tlie  Court. 


939 


The  guaranty  of  the  Fifth  Amendment  that  no  person  shall 
be  compelled  in  a  criminal  case  to  be  a  witness  against  him- 
self does  not  protect  corporations.  Brown  v.  Walker,  161 
U.  S.  591;  Interstate  Com.  Com.  v.  Baird,  194  U.  S.  25; 
Morgan  v.  Halberstadt,  60  Fed.  Rep.  592;  N.  Y.  Life  Ins. 
Co.  Y.  People,  195  Illinois,  430;  State  v.  Jack,  69  Kansas,  387. 

In  so  far  as  the  penalty  or  forfeiture  may  be  criminal  in 
its  character  the  guaranty  of  the  Fifth  Amendment  applies, 
and  is  entirely  saved  by  the  immunity  statute;  in  so  far  as 
the  penalty  or  forfeiture  is  other  than  criminal,  in  so  far  as 
it  involves  the  loss  or  forfeiture  of  the  claim  to  a  continued 
violation  of  the  laws  of  the  land,  there  is  no  principle  either 
of  constitutional  law  or  of  equity  jurisprudence  which  may 
be  invoked  to  relieve  against  it. 

It  was  settled  at  an  early  date  that  pecuniary  loss  to  the 
witness  was  not  one  of  the  penalties  or  forfeitures  intended 
to  be  protected  against  by  the  Constitution.  See  opinion  of 
Chief  Justice  Shaw  in  Btdl  v.  Loveland,  10  Pick.  9,  which  has 
been  followed  uniformly  by  all  of  the  courts  in  the  United 
States.  1  Greenleaf  on  Evidence,  15th  ed.  §452;  Lowney 
V.  Perham,  20  Maine,  240;  Ward  v.  Sharp,  15  Vermont,  115; 
Harper  v.  Borough,  6  Ired.  30;  Robinson  v.  Neal,  21  Ken- 
tucky, 212. 

'  It  is  also  held  that  a  penalty  of  forfeiture  must  be  penal 
in  its  nature,  as  distinguished  from  pecuniary  loss  suffered 
as  a  consequence  of  civil  liability.  Boyd  v.  United  States. 
116  U.  S.  616;  Lees  v.  United  States,  150  U.  S.  476;  Hunting- 
ton V.  A  ttrill,  146  U.  S.  657 ;  Brady  v.  Daly,  175  U.  S.  148 ; 
City  of  Atlanta  v.  Chattanooga  Foundry  c^  Pipe  Co.,  101 
Fed.  Rep.  900 ;  State  v.  Jack,  69  Kansas,  387 ;  State  v.  Stand- 
ard Oil  Co.,  61  Nebraska,  28;  Southern  Ry.  Co.  v.  Bush,  122 
Alabama,  470;  Levy  v.  Supe-  [111]  rior  Court,  105  Cali- 
fornia,  600;  Ames  v.  Kansas,  111  U.  S.  449;  3  Wigmore  on 
Evidence,  §  256 ;  2  Beach  on  Private  Corporations,  §  840. 

Mr.  Justice  McKenna,  after  stating  thQ>  case  as  above,  de- 
livered the  opinion  of  the  court 

Plaintiffs  in  error  urge  three  main  contentions,  which  we 
will  consider  in  their  order.  \ 


tFjt\F 


201   FNTTED   STATES   REPORTS,   111. 
Opinion  of  the  Court 


I.  That  the  evidence,  documentary  and  oral,  which  the 
witnesses  were  required  to  produce,  was  not  shown  to  be 
material  to  plaintiff's  case. 

1.  There  are  three  answers  to  this  contention.  (1)  The 
evidence  is  clearly  material.  The  charge  of  the  bill  is  that 
the  defendant  manufacturing  corporations  entered  into  a 
conspiracy  and  combination  in  violation  of  the  act  of  July  2, 
18W),  to  suppress  competition  between  themselves,  and  that 
they  accomplished  this  purpose  by  organizing  the  General 
Paper  Company,  and  gave  it  certain  controlling  powers  over 
the  output  of  the  mills  and  the  prices  and  distribution  of 
their  products. 

Before  the  application  to  the  court  for  the  orders  under 
review  there  were  certain  facts  established.  It  was  estab- 
lished that  in  the  fall  of  1889  and  t^e  spring  of  1900  there 
were  preliminary  meetings  of  the  parties  to  ultimately  form 
the  paper  company,  and  that  it  was  subsequently  formed  by 
th(^  representing  the  manufacturing  companies,  who  sub- 
scribed for  the  stock.  In  July,  1900,  the  corporations  as 
represented  in  the  paper  company,  fourteen  in  all,  entered 
into  contracts  with  it,  making  it  their  exclusive  selling 
agent;  that  each  constituent  manufacturing  company  was 
represented  by  one  of  its  principal  officers  upon  the  board 
of  directors  of  the  paper  company,  and  the  number  of  direct- 
ors have  been  increased  as  other  corporations  have  made 
the  paper  company  their  selling  agent.  A  table  of  the  con- 
stituent companies  was  given  and  the  times  the  companies 
became  members  of  the  paper  company.  And  it  was  estab- 
lished that  there  was  an  executive  committee,  comprised 
(112|  substantially  of  the  same  persons  who  constituted  the 
board  of  directors,  and  that  the  paper  company  had  books 
and  records  contaiining  the  minutes  of  the  meetings  of  stock- 
holders, directors  and  the  executive  committee,  and  that  the 
treasurers  and  sales  agents  had  presented  reports  to  the 
stocyiolders,  directors  and  executive  committee.  It  was 
stipulated  that  all  the  subscriptions  to  stock  of  the  paper 
company  were  for  the  benefit  of  some  paper  manufacturing 
company  and  in  its  name,  that  it  was  the  beneficial  owner 
thereof,  and  that  the  dividends  declared  thereon  were  its 
property;  that  said  stock  was  from  time  to  time  allotted  to 


NELSON     /".    U^'^rED    STATES. 
Opinion  of  tlie  Coni-t. 


941 


such  corporations  as  made  contracts  with  the  paper  com- 
pany, making  it  their  exclusive  selling  agent  upon  the  basis 
of  estimated  relative  productions  of  paper.  A  list  of  the  in- 
dividuals to  whom  stock  was  issued,  the  names  of  the  corpora- 
tions represented  by  them,  and  the  days  of  the  issuances  of 
the  stock  were  given. 

The  questions  were  framed  to  prove  the  combination 
charged  in  the  bill,  and  the  powers  and  operation  of  the  Gen- 
eral Paper  Company  and  the  relations  of  the  other  compa- 
nies to  it.  What  the  answers  will  show  we  do  not  know,  nor 
what  the  books  and  documents  will  disclose.  The  orffaniza- 
tion  of  the  paper  company  had  a  purpose,  and  whether  it 
was  a  legal  or  illegal  instrument  for  competing  companies 
to  use  we  do  not  have  now  to  determine.  Bv  the  admissions 
of  the  answers  the  paper  company  entered  into  contracts 
with  those  companies,  became  their  selling  agent,  and  was 
entitled  to  a  certain  percentage  of  the  sales.  Presumably  it 
exercised  its  powers,  made  sales  and  received  profits.  In  all 
that  it  did  the  manufacturing  corporations  were  interested; 
they  owned  its  stock,  were  entitled  to  its  dividends.  This  we 
may  admit  for  argument's  sake,  not  prejudging  in  any  way, 
may  he  -consistent  with  continued  competition  between  the 
companies,  but  it  may  be  otherwise.  At  anv  rate,  the  man- 
ner  in  which  the  paper  company  executed  its  functions  may 
be  links  in  the  evidence  adduced  by  the  United  States,  and 
this  is  enough  to  establish  the  materiality  of  the  evidence. 

It  nmst  not  be  overlooked  that  not  only  an  inspection  of 
the  [113]  books  was  refused,  but  questions  directed  to  ascer- 
tain the  contents  of  the  books  were  objected  to,  not  answered. 
We  have  given  one  illustration;  we  will  give  another. 
Counsel  for  defendant  corporations  stated  at  the  examina- 
tion: "That  for  the  purpose  of  any  question  the  Govern- 
ment counsel  see  fit  to  ask  it  may  be  assumed  that  all  the 
books,  papers  and  documents"  describexi  in  the  subpoena 
"  are  present  here  in  court,  and  we  decline  to  submit  them  to 
the  inspection  of  the  Government  counsel."  The  following 
then  took  place : 

••  Q.  state  whetlier  tliose  boolcs  show  the  anionnts,  Ivinds  or  ijrades  of 
paper  niannfaetnred  by  tlie  defendant  Northwest  Paper  Company  and 
sold  by  or  throngh  the  defendant  General  Paper  Company  as  the  ex- 


Q4.9 


i 


201   UNITED   STATES  KEPORTS,   113. 
Opinion  of  the  C!ourt. 


NELSON    V.    UNTTED   STATES. 


943 


elusive  sales  agent  of  tlie  defendant  Northwest  Paper  Compan\  since 
the  8th  day  of  April,  1902,  or  since  about  the  Ist  of  Mav,  1902,  if  that 
Is  the  date  the  business  commenced. 

"  Same  objections  by  defendants,  and  the  witness  given  the  same 
advice. 

••  Q.  You  decline  to  answer? 

'*A.  I  decline  on  advice  of  attorney. 

**  Q.  Do  the  boolss  also  show  where  the  said  paper  so  manufactured 
was  sold  and  into  what  States  and  Territories  it  was  shipped  since 
the  8th  day  of  April,  1902,  or  the  1st  day  of  May,  1902? 

*•  Mb.  Flandebs  :  I  wish  to  make  the  same  objections,  and  I  give  the 
witness  the  same  advice. 

"  A.  Same  answer." 

And  counsel  for  the  United  States,  not  only  as  to  the 
matters  expressed  in  the  foregoing  questions,  but  as  to  other 
matters  which  the  bill  charged  against  the  companies,  and 
which  had  been  inquired  about,  said,  that  he  desired  to  use 
the  books  and  offer  them  in  evidence  to  show  such  matters. 
An  inspection  of  the  books  was  refused,  and  all  evidence  of 
their  contents  withheld. 

Necessarily  the  books  contained  the  information.  The 
paper  company  was  the  selling  agent  of  the  Northwest  Paper 
Com-  [114]  pany  and  must  have  kept  an  account  of  its  sales 
and  into  what  States  the  paper  of  the  company  was  shipped 
and  sold.  Such  accounts  are  material  and  relevant  to  com- 
plainant's case.  They  may  or  may  not,  in  connection  with 
other  evidence,  sustain  the  charge  of  the  United  States,  but 
they  are  elements  in  the  proof,  having  tendency  enough  to 
sustain  the  charge  to  be  considered  material. 

2.  The  claim  of  immateriality  of  the  testimony  cannot 
avail  plaintiffs  against  the  orders  of  the  Circuit  Court.  The 
procedure  before  an  examiner  and  his  powers  are  explained 
in  Bleme  v.  Garlington^  92  U.  S.  1.  It  is  there  said :  "  The 
examiner  before  whom  the  witnesses  are  orally  examined  is 
required  to  note  exceptions ;  but  he  cannot  decide  upon  their 
validity.  He  must  take  down  all  the  examination  in  writ- 
ing, and  send  it  to  the  court  with  the  objections  noted.  So, 
too,  when  depositions  are  taken  according  to  the  acts  of  Con- 
gress or  otherwise,  under  the  rules,  exceptions  to  the  testi- 
mony may  be  noted  by  the  officer  taking  the  deposition,  but 
he  is  not  permitted  to  decide  upon  them;  and  when  the  tes- 
timony, as  reduced  to  writing  by  the  examiner,  or  the  deposi- 
tion, is  filed  in  court,  further  exceptions  may  be  there  taken. 


Opinion  of  the  CJourt 

Thus  both  the  exceptions  and  the  testimony  objected  to  are 
all  before  the  court  below,  and  come  here  upon  the  appeal  as 
part  of  the  record  and  proceedings  there." 

And  an  application  to  a  court  to  compel  the  delivery  of 
testimony  in  aid  of  the  examination  does  not  change  the 
rule.  The  testimony  is  taken  to  be  submitted  to  the  court 
where  the  suit  is  pending  and  all  questions  upon  the  evi- 
dence, its  materiality  and  sufficiency,  are  to  be  determined 
by  it  and  after  it  by  an  appellate  court.  Even  if  the  trial 
court  permit  the  examination  of  witnesses  orally  in  open 
court  upon  the  hearing  in  cases  in  equity,  as  further  said  in 
BUa^e  V.  Garlington,  the  testimony  must  be  taken  "  down  or 
its  substance  stated  in  writing  and  made  part  of  the  record, 
or  it  will  only  be  disregarded  here  on  an  appeal.  So,  too, 
if  testimony  is  objected  to  and  ruled  out,  it  must  still  be  sent 
here  with  the  record  subject  to  the  objec-  [115]  tion,  or  the 
ruling  will  not  be  considered  by  us."  Blease  v.  Garlington 
has  been  applied  at  Circuit  in  a  numl>er  of  cases.« 

3.  These  writs  of  error  are  not  prosecuted  by  the  parties 
in  the  original  suit,  but  by  witnesses,  to  review  a  judgment 
of  contempt  against  them  for  disobeying  orders  to  testify. 
Being  witnesses  merely,  it  is  not  open  to  them  to  make  ob- 
jections to  the  testimony.  The  tendency  or  effect  of  the  tes- 
tunony  on  the  issues  between  the  parties  is  no  concern  of 
theirs.  The  basis  of  their  privilege  is  different  from  that 
and  entirely  personal,  as  we  shall  presently  see. 

II.  That  the  documentary  evidence  called  for  was  not 
shown  to  be  in  the  possession  or  under  the  control  of  the 
witnesses.  This  contention  is  untenable.  The  ground  of  it 
is  that  the  possession  of  the  witnesses  was  not  personal,  but 
was  that  of  the  respective  corporations  of  which  they  were 

(^Thomson-Houston  Elec.  Co.  v.  Jeffrev  Mfg.  Co.,  83  Fed.  R^ 
614 ;  Maxim-Nordenfelt  Guns  d  Am.  Co.,  Ltd.,  v.  ColVs  Patent  Fire- 
(irms  Mfg.  Co.,  103  Fed.  Rep.  39;  Parisian  Comb  Co.  v.  Eschwege,  92 
Fed.  Rep.  721 ;  Fayerweatlier  v.  Ritch,  89  Fed.  Rep.  529 ;  Appleton  v 
Ecauhert,  45  Fed.  Rep.  281;  Edison  Elec.  Lt.  Co.  v.  U.  8.  Elec.  Ltg. 
Co.,  45  Fed.  Rep.  55,  59;  Johnson  Steel  Street  Rail  Co.  v.  North 
Branch  Steel  Co.,  48  Fed.  Rep.  196 ;  Adee  v.  J.  L.  Mott  Iron  Works, 
46  Fed.  Rep.  39 ;  Lloyd  v.  Pennie,  50  Fed.  Rep.  4 ;  Brown  v.  Worster, 
113  Fed.  Rep.  20 ;  MacWilliam  v.  Conn.  Web.  Co.,  119  Fed.  Rep.  509 ; 
Whitehead  d  Hoag  Co.  v.  O'Callahan,  139  Fed.  Rep.  243. 


201   UNITED   STATES   KEPOKTS,    115. 


Opinion  of  the  Court. 

officers.  Granting  this  to  be  so  and  that  the  witnesses  could 
have  set  up  whatever  privileges  the  corporations  had,  never- 
theless they  had  the  custody  (actual  possession)  of  the  books 
and  were  summoned  from  necessity  as  representing  the 
corporations.  It  is  hardly  necessary  to  observe  that  the  wit- 
nesses had  all  the  possession  human  beings  could  have  had 
or  can  have,  and  if  the  objection  is  to  prevail  the  books  of  a 
corporation  can  be  withdrawn  from  the  reach  of  compulsory 
process. 

It  is  as  useless  as  attempting  to  demonstrate  that  twice  two 
make  four,  to  say  that  a  corporation  can  have  possession  of 
nothing  except  by  the  human  beings  who  are  its  officers,  and 
it  is  to  them,  not  the  intangible  being  they  represent  and  act 
for,  [116]  that  the  law  directs  its  process  of  subpoena  and 
must  procure  its  evidence. 

III.  That  the  evidence,  documentary  and  oral,  required 
to  be  produced,  was  in  the  nature  of  incriminating  evidence 
which  t^e  witnesses  and  the  defendants  are  privileged  from 
furnishing  to  the  plaintiff  under  the  provisions  of  the  Fed- 
eral Constitution  and  the  well  recognized  principles  of 
equity  procedure. 

This  contention  asserts  rights  personal  to  the  plaintiffs 
and  rights  of  the  corporation  defendants  in  the  suit.  The 
basis  of  both  rights  is  the  protection  of  the  Fourth  and 
Fifth  Amendments  to  the  Constitution  of  the  United  States. 

The  argimient  submitted  is  substantially  the  same  as  that 
made  by  appellants  in  Hale  v.  Eenkefand  McAlister  v. 
HpvM.  It  is  insisted  that  the  immunity "  given  by  the  act 
of  Febniary  25,  1903,  is  not  as  broad  as  the  penalties  and 
forfeitures  to  which  the  plaintiffs  in  error  or  the  corpora- 
tions of  which  they  are  officers  will  be  subjected.  If  the 
immunity,  it  is  urged,  protects  from  the  penalties  of  the 
Anti  Trust  Act  of  1890  it  does  not  protect,  nor  has  Congress 


u 


Provided,  that  no  person  shaill  lie  prosecuted  or  lie  subjected  to 
Jiny  itenalty  or  forfeitiu-e  for  or  on  acTOunt  of  any  transnction,  mat- 
ter, or  thing  oonc*erning  which  he  may  testify  or  produce  evidence, 
documentary  or  otherwise,  in  any  proceeding,  suit  or  prosecution 
under  said  acts:  Provided  further,  that  no  person  so  testifying  shall 
\m  exempt  from  prosecution  or  punishment  for  perjurj-  committed 
in  so  testlftring.'*  Act  February  25,  lOaS;  Comp.  Stats!,  Sup.  1903, 
pp.  366,  367. 


ALEXANDEB   V,   UNITED   STATES. 


945 


Syllabus, 
the  power  to  protect,  from  the  penalties  of  the  Minnesota 
laws,  which  make  criminal  a  combination  and  conspiracy 
in  restramt  of  trade  and  subject  to  forfeiture  the  charters 
of  corporations  who  become  parties  to  such  combination  and 
conspiracy.  Sections  6955,  6956,  5962,  Statutes  of  Minne- 
sota, 1894. 

The  extent  of  the  immunity  and  its  application  to  corpora- 
tions was  considered  in  HaU  v.  Henkel  and  McAlister  v. 
Henkel,  and  decided  adversely  to  the  contention  of  plaintiffs 
m  error. 

Judgment  affirmed. 


[117J        ALEXANDEE  v.  UNITED  STATES. 

WHITING  V,  SAME. 

STUAKT  V,  SAME. 

GENERAL  PAPER  COMPANY  v,   SAME. 

HARMON  AND  GENERAL  PAPER  COMPANY  v 

SAME. 

APPEALS  FROM   THE  CIRCUIT  COURT  OF  THE  UNITED  STATES  FOR 
THE  EASTERN    DISTRICT  OF   WISCONSIN. 

NOB.  381,  382.  383,  384,  385.    Argued  January  5,  8,  190e.-DecIded  March  12 

1906.  * 

[201  U.  S.,  117.] 

Vi.'",'*.^/  ^*'''"'*  "^^""^  ^^  *^^  ^''^^^^  States  brought  by  the 
United  States  against  corporations  for  violations  of  the  Anti  Trust 
Law  of  July  2,  1890,  a  witness  refused  to  answer  questions  or  pro- 
duce books  before  the  examiner  on  the  ground  of  immateriality 
also  peading  the  privileges  of  the  Fifth  Amendment;  the  court 
overruled  the  objections  and  ordered  the  witness  to  answer  the 

Trr^rthr""  ^'^ '"'"-  ^^  ^-^^^^^^  ^-^^  ^^-  *^  *^^« 

While  such  an  order  might  leave  the  witness  no  alternative  except  to 
obey  or  be  punished  for  contempt  it  is  interlocutory  in  the  prin- 
cipal suit  and  not  a  final  order,  nor  does  it  constitute  a  practiLry 
independent  proceeding  amounting  to  a  final  judgment  and  an 
appeal  will  not  lie  therefrom  to  this  court. 
21220— VOL  2—07  m 60 


ijrTSt'LP 


201    UMITED    STATES    KEPOKTS,    117. 


Opinion  of  the  CJourt 

If  tlie  witness  refus€»8  to  obey  and  the  court  goes  further  and  punishes 
him  for  contempt  there  is  a  right  of  review,  and  this  is  adequate 
for  his  protection  without  unduly  Impeding  the  process  of  the  case.^ 

15^)  L.  ed.,  ti86.]  » 

[Orders  of  a  Federal  circuit  court  directing  witnesses  to  answer  the 
questions  put  to  them,  and  produce  written  evidence  in  their  pos- 
session, on  their  examination  before  a  special  examiner  appointed  in 
a  suit  brought  by  the  United  States  to  enjoin  an  alleged  violation  of 
the  antitrust  act  of  July  2,  1890  (20  Stat.  L.,  209,  chap.  647, 
U.  S.  Comp.  Stat.  1901,  p.  3200)  lacic  the  finality  requisite  to  sus- 
tain an  appeal  to  the  Supreme  Court.] 

The  facts  are  stated  in  the  opinion. 

Mr,  J  If  Hits  G.  Flanders^  with  whom  Mr.  Charles  F,  Faw- 
sett  and  Mr,  William  Brace  were  on  the  brief,  for  appel- 
knts.« 

« 

.¥n  Frank  B.  Kellogg  and  Mr.  James  M.  Beck^  Special 
Assistants  to  the  Attorney  General,  for  the  United  States." 

[118]  Mr.  Ji  sTicE  McKenxa  delivered  the  opinion  of  the 
court. 

At  the  very  beginning  we  encounter  a  quesion  of  jurisdic- 
tion.  Are  the  orders  of  which  the  appellants  complain  ap- 
pealable?  The  orders  direct  the  appellants  respectively  to 
appear  before  Eobert  F.  Taylor,  special  examiner  in  the 
case,  at  the  time  and  place  to  be  designated,  and  directs  each 
of  them  to  "  ansAver  each  and  every  question  put  to  them 
respectively  by  the  counsel  for  the  complainant,  the  United 
States  of  America,"  and  to  produce  before  such  commis- 
sioner certain  books,  papers,  records,  documents,  reports  and 
contracts,  "  for  the  purpose  of  their  respective  examination 
in  said  cause,  and  for  use  in  evidence  of  the  complaint  of 
the  United  States  of  America  in  said  examination."    And 


a  The  foregoing  syllabus  copyrighted,  1906,  by  The  Banks  Law  Pub- 
lishing Co. 

6  The  following  paragi-aph  comprises  the  syllabus  to  this  case  in  the 
U.  S.  Supreme  Court  Reports,  Book  50,  p.  686.  Copyrighted,  1906,  by 
The  Lawyers'  Co-Operative  Publishing  Co. 

cFor  abstracts  of  arguments  see  abstracts  in  NeUon  v.  United 
States,  dJile,  p.  920,  argued  simultaneously  herewith. 


ALEXANDER    V.    UNITED   STATES. 


H47 


Opinion  of  the  Court. 

it  is  ordered  that  the  complainant's  counsel  shall  have  the 
right  to  inspect  the  said  books,  etc.,  and  to  introduce  them 
or  any  of  them  in  evidence;  but,  except  as  necessary  for  such 
purposes,  the  books,  etc.,  to  remain  in  the  custody  of  the 
appellants. 

A  brief  statement  of  the  proceedings  is  all  that  is  neces- 
sary    The  United  States  by  its  propei*  officers  brought  suit 
in  the  Circuit  Court  of  the  United  States  for  the  District 
of  Minnesota   against   the   General   Paper  Company   and 
twenty-three  other  corporations,  defendants,  under  and  pur- 
suant to  the  provisions  of  the  act  of  Congress  of  July  2 
1890,  entitled  "An  act  to  protect  trade  and  commerce  against 
un  awful  restraints  and  monopolies."     It  is  alleged  in  the 
bill  that  the  defendants,  other  than  the  General  Paper  Com- 
pany and  the  Manufacturers'  Paper  Companv,  were  engaged 
m  the  manufacture  of  manilla  and  fibre  papers  in  active 
competition  with  one  another,  and  that  they  entered  into 
an  agreement,  combination  and  conspiracy  to  control,  regu- 
late and  monopolize,  not  only  the  manufacture  of  news  print 
manilla,  fibre  and  other  papers,  but  also  the  distribution 
and  shipment  thereof  among  and  throughout  the  Middle 
Southern  and  Western  States.     The  General  Paper  Com- 
pany was  the  means  employed  to  execute  the  combination 
and  conspiracy.     That  company  is  a  corporation  organized, 
the  bill  alleges,  by  [119]  the  other  defendants,  under  the 

iioo  nnJ  '•'•!'.'''  ^^  Wisconsin,  with  a  capital  stock  of 
^100,000,  divided  into  one  thousand  shares,  which  were  dis- 
tributed among  and  owned  and  held  by  the  other  defendants 
m  proportions  based  upon  the  average  daily  output  of  the 
mills  of  each  defendant.     It  is  authorized  to  become  at  its 
principal  place  of  business  the  sales  agent  of  the  products 
of  the  defendants'  mills  in  the  Stat^  of  Wisconsin  and  else- 
where.    Absolute  power  is  conferred  upon  it  to  control  and 
restrict  the  output  of  the  mills,  fix  the  price  of  their  prod 
ucts,  and  determine  to  whom  and  the  terms  and  conditions 
upon  which  such  products  shall  be  sold,  into  what  States 
and  places  they  shall  be  shipped,  and  what  publishers  and 
customers  each  mill  shall  supply. 

The  Manufacturers'  Paper  Company,  it  is  alleged,  is  a  New 
York  corporation,  with  its  principal  place  of  business  in 


/ 


f 


948 


201   UNITED   STATES  BEPORTS,   110. 
Opinion  of  the  CJourt. 


Chicago,  and  from  about  the  year  1897  to  1902,  acted  as  the 
sales  agent  of  various  manufacturers  of  paper  for  the  sale  of 
newsprint  and  other  papers;  that  in  1902  it  became  a  party 
to  the  combination  and  conspiracy  alleged  in  the  bill  and 
agreed  with  the  General  Paper  Company  not  to  compete  with 
it  in  certain  territories. 

It  is  admitted  that,  prior  to  the  formation  of  the  General 
Paper  Company,  the  other  defendants  except  the  Manufac- 
turers' Paper  Company,  were  in  active  competition.  The 
formation  of  the  General  Paper  Company  is  also  admitted 
and  that  it  became,  by  contract  with  the  defendants  who 
manufacture  paper,  their  selling  agent.  The  defendants 
deny,  however,  a  purpose  to  violate  the  act  of  July  2,  1890. 
The  violation  of  that  law  is  the  issue  in  the  case,  and  the  bill 
prays  an  injunction  against  the  defendants  and  their  officers 
from  doing  the  acts  or  executing  the  purpose  charged  against 
them. 

In  trial  of  the  issue  thus  made  the  Circuit  Court  appointed 
Robert  S.  Taylor  special  examiner,  with  authority  to  hear 
and  take  testimony  within  and  without  the  District  of  Minne- 
sota, and  made  an  order  fixing  the  time  to  take  the  testimony 
for  the  United  States  the  sixteenth  dav  May.  1905.  at  the 
city  of  Mil-  [120]  waukee.  State  of  Wisconsin.  The  order 
was  duly  served  on  the  counsel  of  the  respective  parties. 
Thereupon  the  United  States  petitioned  the  Circuit  Court  for 
an  order  directing  the  clerk  of  the  Circuit  Court  to  issue  a 
mthpcena  duces  tecum.  The  subpoena  was  duly  issued  and 
served  on  the  appellants  as  individuals  and  as  officers  of  cer- 
tain of  the  defendant  companies.  They  appeared  before  the 
examiner  in  obedience  to  the  subpoena,  but,  under  the  advice 
of  counsel,  they  refused  to  permit  the  use  of  books  or  certain 
parts  of  them,  and  refused  to  answer  certain  questions  put  to 
them,  the  ground  of  this  action  being  the  immateriality  and 
irrelevancy  of  the  evidence  sought  to  be  adduced.  The 
United  States  then  presented  a  petition  to  the  United  States 
Circuit  Court  for  the  District  of  Wisconsin,  which  recited 
the  issues  in  the  case  and  the  statement  of  the  questions  asked 
and  the  parte  of  the  books  and  documents  sought  to  be  used. 
To  this  petition  the  appellants  filed  separate  answers. 

The  answers  may  be  regarded  for  our  present  purpose  as 


ALEXANDER   V.    UNITED   STATES. 
Opinion  of  tbe  Court 


949 


identical.    They  allege  the  immateriality  of  the  evidence  and 
that  Its  materiality  should  be  established  as  a  condition  pre- 
cedent to  Its  production;  that  they  are  officers  of  the  com- 
panies, and  as  such  officers,  the  custodians  of  the  books, 
papers  and  documents,  and  that  the  same  are  of  interest  and 
value  to  the  company  in  its  business,  and  the  company  for- 
bids their  production;  that  the  United  States  seeks  evi- 
dence to  convict  the  company  and  the  individual  appellants 
of  violations  of  the  act  of  July  2, 1890,  to  annul  the  contracts 
and  agreements  of  the  company,  and  subject  it  and  the  other 
appellants  to  the  penalties  prescribed  in  that  act,  and  to  com- 
pel the  company  and  the  other  appellants  to  furnish  evidence 
against  themselves,  contrary  to  the  provisions  of  the  Fifth 
-Ajnendment  to  the  Constitution  of  the  United  States,  which 
provides  that  no  person  shall  be  a  witness  against  himself  • 
also  contrary  to  the  Fourth  Amendment  of  the  Constitution 
of  the  United  States,  which  provides  that  the  right  of  the 
people  to  be  secure  in  their  persons,  houses,  papers  and  effects 
against  unreasonable  searches  and  seizures  shall  not  be  vio- 
lated.   It  is  also  said  that  the  alleged  acts  of  the  [121]  pa- 
per company  complained  of  in  the  original  petition  of  the 
United  States  and  which  the  United  States  is  endeavoring  to 
estabhsh  would,  if  committed  by  the  company,  be  violations 
of  the  laws  of  Wisconsin,  and  would  subject  the  company  to 
forfeiture  of  its  charter  and  other  penalties  under  said  laws 
and  to  compel  it  through  its  officers  to  produce  the  books  and 
documents  sought  would  be  to  compel  it  to  furnish  evidence 
tending  to  establish  that  it  has  violated  the  law  of  the  State 
and  such  purpose  is  contrary  to  the  provisions  of  the  Fourth 
and  Fifth  Amendments  of  the  Constitution  of  the  United 
States. 

As  we  have  said,  the  court  entered  orders  requirmg  the  ap- 
pellants to  answer  the  questions  put  to  them  and  to  produce 
the  books,  papers  and  documents  requested.  Appeals  were 
allowed  to  this  court.  To  justify  the  appeals,  appellants  con- 
tend that  the  orders  of  the  Circuit  Court  constitute  practically 
independent  proceedings  and  amount  to  final  judgments  To 
sustain  the  contention,  Interstate  Commerce  Commission  v 
Bnmson,  154  U.  S.  447,  and  Interstate  Commerce  Commis- 
sion V.  BaiTd,  194  U.  S.  25,  are  cited. 


f 


iPOU 


201   UNITED   STATES   KEPORTS,  121. 


Opinion  of  the  Court. 

Those  cases  rested  on  statutory  provisions  which  do  not  ap- 
ply to  the  proceedings  at  bar,  and,  while  there  may  be  resem- 
blances to  the  latter,  there  are  also  differences.  In  a  certain 
sense  finality  can  be  asserted  of  the  orders  under  review,  so,  in 
a  certain  sense,  finality  can  be  asserted  of  any  order  of  a  court. 
And  such  an  order  may  coerce  a  witness,  leaving  to  him  no 
alternative  but  to  obey  or  be  punished.  It  may  have  the  effect 
and  the  same  characteristic  of  finality  as  the  orders  under  re- 
view, but  from  such  a  ruling  it  will  not  be  contended  there  is 
an  appeal.  I^et  the  court  go  further  and  punish  the  witness 
for  contempt  of  its  order,  then  arrives  a  right  of  revit^w.  and 
that  is  adequate  for  his  protection  without  unduly  impeding 
the  progress  of  the  case.  "Why  should  gi-eater  rights  be  given 
a  witness  to  justify  his  contumacy  when  summoned  before  an 
examiner  than  when  summoned  before  a  court  ?  Testimony, 
at  times,  must  be  taken  out  of  court.  In  instances  like  those 
in  the  case  at  bar  the  officer  who  takes  the  testimony,  having 
no  power  to  [122]  issue  process,  is  given  the  aid  of  the  clerk  of 
a  court  of  the  United  States;  having  no  power  to  enforce  obe- 
dience to  the  process  or  to  command  testimony,  he  is  given 
the  aid  of  the  judge  of  the  court  whose  clerk  issued  the  proc- 
e&s,  and  if  there  be  disobedience  of  the  process,  or  refusal  to 
testify  or  to  produce  documents,  such  judge  may  "  proceed  to 
enforce  obedience  ...  or  punish  the  disobedience  in  like 
manner  as  any  court  of  the  United  States  may  proceed  in  case 
of  disobedience  to  like  process  issued  by  such  court."  Sections 
868,  869,  Revised  Statutes.  This  power  to  punish  being  exer- 
cised the  matter  becomes  personal  to  the  witness  and  a  judg- 
ment as  to  him.  Prior  to  that  the  proceedings  are  interlocu- 
tory in  the  original  suit.  This  is  clearly  pointed  out  by  Cir- 
cuit Judge  Van  Deventer,  disallowing  an  appeal  from  an 
order  like  those  under  review,  in  the  case  of  Nelson  v.  United 
States  (No.  490),  in  error  to  the  Circuit  Court  of  the  United 
States  for  the  District  of  Minnesota.    The  learned  judge  said : 

"  I  am  of  opinion  that  the  mere  direction  of  the  court  to  the 
witnesses  to  answer  the  questions  put  to  them  and  to  produce 
the  w^iitten  evidence  in  their  possession  is  not  a  final  decision ; 
that  it  more  appropriately  is  an  interlocutory  ruling  or  order 
in  the  principal  suit,  and  that  if  the  witnesses  refuse  to  com- 
ply  with  it  and  the  court  then  exercises  its  authoritv  either  to 


UNITED   STATES    V,   ARMOUR   &   CO. 
Syllabus. 


951 


punish  them  or  to  coerce  them  into  compliance  that  will  give 
rise  to  another  case  or  cases  to  which  the  witnesses  will  be 
parties  on  the  one  hand  and  the  Government,  as  a  sovereign 
vindicating  the  dignity  and  authority  of  one  of  its  courts, 
will  be  a  party  on  the  other  hand.  I  have  no  doubt  that  a 
judgment  adverse  to  the  witnesses  in  that  proceeding  or  case 
will  be  a  final  decision  and  will  be  subject  to  review  by  writ  of 
error,  but  not  by  appeal.  My  opinion  is  also  that  the  parties 
to  the  principal  suit  cannot  appeal  or  obtain  a  writ  of  error 
from  that  decision," 

See  also  Logan  v.  Penn,  R.  E,  Co.,  132  Pa.  St.  403, 410. 

This  court  having  no  jurisdiction,  the  appeals  must  be  dis- 
missed, and 

It  is  so  ordered. 


[808]  UNITED  STATES  r.  ARMOUR  &  CO.  ET  AL. 

(District  Court;  N.  D.  lUiuois.     March  21,  11)00.) 

[142  Fed.,  808.] 

Criminal  Law— Immunity  to  One  FurnishixNg  Evidence  or  Infob- 
MATiON— Statutes— Corporations.— A  corporation,  whether  state 
or  federal,  canDot  claim  immunity  from  prosecution  for  violation  of 
the  interstate  connnerce  or  anti-trust  laws  of  the  United  States  be- 
cause of  testimony  given  or  evidence  produced  by  its  officers  or 
agents  before  the  Interstate  Commerce  Commission  or  the  Commis- 
sioner of  Corporations,  or  in  any  proceeding,  suit,  or  prosecution 
under  such  laws ;  the  right  to  immunity  on  account  of  evidence  so 
given  in  the  several  cases  granted  by  Act  Feb.  11,  1893,  c.  83,  27 
Stat.  443  [U.  S.  Comp.  St.  1901,  p.  3173],  and  Acts  Feb.  14,  and 
Feb.  25,  1903,  cc.  552,  755,  32  Stat.  827,  904  [XT.  S.  Comp.  St.  Supp 
1905,  pp.  G8,  602],  being  limited  to  individuals  who  as  witnesses 
give  testimony  or  produce  evidence. 

C809]  United  States— Executive  Departments— Commerce  and 
Labor— Creation-Statutes— Construction.— The  primary'  purpose 
of  Commerce  and  Labor  Act  February  14,  1903,  c.  552,  32  Stat.  825 
[U.  S.  Comp.  St.  Supp.  1905,  p.  63],  was  legislative,  to  enable  Con- 
gress by  information  secured  through  the  work  of  officers  charged 
with  the  execution  of  that  law  to  pass  such  remedial  legislation 
as  might  be  found  necessary,  and  the  act  must  be  construed  in  view 
of  such  purpose. 

Criminal  Law— Immunity  to  One  Furnishing  Evidence  or  Infob- 
mation— Statutes— Hearings   before   Commissioner   of   Corpora- 


952 


142   FEDEEAL  KEPORTEK,   809. 
Syllabus. 


TiONS. — Section  6  of  the  act  creating  the  Department  of  Commerce 
and  Labor  (Act  Feb.  14,  1903,  c.  552,  32  Stat.  827  [U.  S.  CJomp.  St 
Supp.  1905,  p.  68] ) ,  defining  the  powers  and  duties  of  the  Commis- 
sioner of  Corporations,  requiring  him  to  make  investigation  into  the 
organization,  conduct,  and  management  of  the  business  of  all  cor- 
porations or  combinations  engaged  in  interstate  or  foreign  com- 
merce, other  than  common  carriers,  and  giving  him  the  same  powers 
In  that  respect  as  is  conferred  on  the  Interstate  Commerce  Com- 
mission with  respect  to  carriers,  including  the  power  to  subpoena 

,  and  compel  the  attendance  of  witnesses,  and  to  administer  oaths 
and  require  the  production  of  documentary  evidence,  contemplates 
that  he  shall  proceed  by  private  hearings ;  and,  having  such  powers, 
a  person  who  appears  before  him  on  his  demand  or  by  his  request, 
and  gives  testiuMmy  or  produces  documents,  although  not  sworn, 
is  entitled  to  the  same  privileges  and  immunities  as  though  his  at- 
tendance was  compelled  by  subpceua  and  his  testimony  given  under 
oath. 

Same.— Act  Feb.  14,  1903,  c.  552,  creating  the  Department  of  Com- 
merce and  Labor  (32  Stat.  827  [U.  S.  Comp.  St.  Supp.  1905,  p.  G8]) 
by  section  6  requires  the  Commissioner  of  Corporations  to  investi- 
gate all  corporations  and  combinations  engaged  in  interstate  or 
foreign  commerce,  except  common  carriers,  and  provides  that  "all 
the  requirements,  obligations,  liabilities,  and  immunities  imposed 
or  conferred  by  said  'Act  to  regulate  commerce '  and  by  'An  act  In 
relation  to  testimony  before  the  Interstate  Commerce  Commission ' 
•  ♦  *  shall  also  apply  to  all  persons  who  may  be  subpoenaed  to 
testify  as  witnesses  or  to  produce  documentary  evidence  in  pursu- 
ance of  the  authority  conferred  by  this  section."  The  act  last  men- 
tioned (Act  Feb.  11,  1893,  c.  83,  27  Stat.  443  [U.  S.  Comp.  St.  1901, 
p.  3173]),  which  is  supplementary  to  the  interstate  conmierce  act, 
provides  that  **no  iierson  shall  be  prosecuted  or  subjected  to  any 
penalty  or  forfeiture  for  or  on  account  of  any  transaction,  matter 
or  thing  concerning  which  he  may  testify  or  produce  evidence, 
documentary  or  otherwise  before  said  commission  or  in  obedience 
to  its  subpoena  *  ♦  *  or  in  any  such  case  or  proceeding."  Ap- 
propriation Act  Feb.  25,  1903,  c.  755,  32  Stat.  904  [U.  S.  Comp.  St. 
Supp.  1905,  p.  002],  making  provision  for  the  enforcement  of  the 
Interstate  commerce  and  anti-trust  laws,  contains  a  similar  immu- 
nity provision  relating  to  persons  giving  testimony  or  producing 
evidence  in  any  proceeding,  suit,  or  prosecution  under  said  acts. 
By  a  resolution  of  the  House  of  Representatives  of  March  7,  1904, 
the  Commissioner  of  Corporations  was  directed  to  investigate  the 
so-called  "Beef  Trust,"  and  while  proceeding  thereunder  certain 
persons  by  his  request,  but  without  being  subpoenaed  or  sworn,  fur- 
nished testimony  and  documentary  evidence  on  which  he  based  his 
report.  Held,  that  the  Immunity  provisions  of  the  statutes  set  out 
and  applicable  to  such  investigation,  to  be  valid,  must  be  construed 
as  being  as  broad  as  the  privilege  given  by  the  fifth  constitutional 


UNITED   STATES   V.   ARMOUR   &   CO. 
Statement  of  the  Case. 


953 


amendment,  and  that  the  persons  so  furnishing  evidence  could  not 
be  prosecuted  for  violation  of  the  anti-trust  law,  on  account  of  the 
transactions,  matters,  or  things  to  which  such  evidence  related.^* 

Criminal  Prosecution.  On  motion  by  defendants  and 
cross-motion  by  the  United  States  to  direct  a  verdict  on 
trial  of  pleas  in  bar. 

On  the  1st  day  of  July,  1905,  an  Indictment  was  returned  by  the 
grand  jury  of  the  Northeni  division  of  the  Northern  district  of  Illi- 
nois against  the  de-  [810]  fendants,  charging  them  with  conspiring  in 
restraint  of  trade  and  commerce  among  the  states  and  with  foreign 
nations,  and  with  an  attempt  to  monopolize  such  trade  and  commerce, 
in  violation  of  the  Sherman  anti-trust  act.  Pleas  in  abatement  were 
filed  attacking  the  organization  of  the  grand  jury,  and  the  procedure 
In  general,  from  the  time  the  grand  jury  was  impaneled  until  it 
returned  the  indictment.  A  demurrer  was  interposed  to  these  pleas, 
and  on  argument  was  sustained  as  to  all  of  them.  A  demurrer  was 
then  interposed  to  the  indictment  itself,  and  after  full  argument  it 
wfis  overruled  as  to  the  conspiracy  counts  and  sustained  as  to  the 
counts  charging  monopoly.  Later,  on  the  23d  day  of  October,  1905, 
special  pleas  in  bar  were  filed,  setting  up  that  by  virtue  of  a  resolu- 
tion of  the  House  of  Representatives,  adopted  March  7,  1904,  and 
known  as  the  "  Martin  Resolution,"  and  also  by  virtue  of  the  law 
creating  the  Bureau  of  Coi-porations,  James  R.  Garfield,  Commis- 
sioner of  Corporations,  had  made  an  investigation  into  the  business 
of  the  defendants  and  into  the  matters  and  things  alleged  in  the 
indictment,  and  that  the  defendants  upon  the  lawful  requirement  of 
the  Commissioner  of  Corporations  had  furnished  evidence,  documen- 
tary and  othervA  ise,  of  and  concerning  the  matters  charged  in  the 
indictment  The  pleas  are  numerous,  and  are  varied  in  form,  but  the 
above  is  the  substance  of  them.  Replications  were  filed  by  the  United 
States,  traversing  the  averments  of  the  pleas.  A  jury  was  impaneled, 
and  the  taking  of  testimony  was  commenced  on  the  29th  dav  of  Janu- 
ary, 1906. 

The  resolution  of  the  House  of  Representatives  was  as  follows: 
"  Resolved,  that  the  Secretary  of  Commerce  and  Labor  be,  and  he  is 
hereby,  requested  to  investigate  the  causes  of  the  low  prices  of  beef 
cattle  in  the  United  States  since  July  first,  nineteen  hundred  and 
three,  and  the  unusually  large  margins  bet^veen  the  prices  of  beef 
cattle  and  the  selling  prices  of  fresh  beef,  and  whether  the  said  con- 
ditions have  resulted  in  whole  or  in  part  from  any  contract,  combi- 
nation, in  the  form  of  trust  or  otherwise,  or  conspiracy,  in  restraint 
of  commerce  among  the  several  states  and  territories  or  with  for- 
eign countries;  also,  whether  said  prices  have  been  controlled  in 
whole  or  in  part  by  any  corporation,  joint  stock  company,  or  corpo- 
rate combination  engaged  in  commerce  among  the  several  states  or 
with  foreign  nations ;  and  if  so,  to  investigate  the  organization,  capi- 
talization, profits,  conduct,  and  management  of  the  business  of  such 
corporations,  companies,  and  corporate  combinations,  and  to  make 
early  report  of  his  findings  according  to  law."  For  the  act  estab- 
lishing the  Department  of  Commerce  and  Labor,  passed  February  14, 
1903,  see  U.  S.  Comp.  St.  Supp.  1905,  p.  63  (32  Stat.  825,  c.  552). 
For  the  interstate  commerce  act  and  amendments  thereto,  portions  of 
which  are  adopted  and  made  part  of  the  said  act  of  commerce  and 


o  Syllabus  and  statement  of  the  case  copyrighted,  1906,  by  West 
Publishing  Co. 


954 


142   FEDEKAL  KEPORTEB,   810. 


Statement  of  tlie  Case. 

l^mfo^^l  fV}h,f'  ^™P-  ®*-  1^^-  »^-  ^^^  '  Act  March  2,  1889, 
c.  382.  25  Stat  8G1  [U.  S.  (Jump.  St.  1901,  p.  31C8]).  For  tlie  act  in 
relation  to  testimony,  etc.,  being  an  act  supplemental  to  the  inter- 
state eoffimerce  acts,  passed  February  11.  1898,  see  Fed.  St.  .\im.  vol. 
4,  p.  855  (27  Stat.  L.  443,  e.  83  [U.  S.  Comp.  St.  1901.  p.  3173]).  For 
the  Sherman  anti-trust  act,  being  the  act  under  which  the  ind  ctment 

r26\staTlSh?'Sf  lU^^^^^  ^^/^""-  A   '   ~« 

ijljr^priiting' iWoo  ibr  enSm^ent^^^'the  Stiust^and'hiter* 
state  c^nuneree  Fel>ruary  25.   1903,   see  32   Stat 

W4  [U.  S.  (  omp.  St.  Supp.  1JXJ5,  p.  (i02]. 

1  he  resolution  of  the  Houses  of  Representatives,  set  forth  above, 
which  IS  kmn.!,  as  the  "Martin  KesohUiou,"  was  passed  MarcT? 
^\JI^  Pa^««S«^^  and  the  terms  thereof,  and  the  fact  that  the  Com- 
missioner of  Corporatii.ns,  Mr.  James  R.  Garfleld,  was  going  to  Chi- 
cago to  make  the  investigation  of  their  business  theivliv  called  for 
were  known  to  defendants  from  the  public  press.  Their  resnivtive 
counsel  thereopon  investigated  the  law  as  to  the  powers  and  autht,r- 
ity  of  the  Commissioner  of  Corporations,  under  section  i\  of  the  act 
creating  that  bureau  (Act  Feb.  14,  1903,  c.  552.  .{2  Stat.  827  riT  8 
Comp  St  Supp.  1905.  p.  08] ).  to  make  such  investigation  and  to  com- 
pel the  testimony  of  witnesses  and  the  production  of  the  books  and 

J^ilV  •?!?  ^*^^^»^f»t^  f*»'  the  purposes  thereof,  and  advls^l  de 
fendants  with  respect  thereti».  Afterwards,  on  .Vpril  13,  1904  the 
Commissioner  of  Corporations  arrived  in  Chicago  for  that  pnrp.^ 
He  called  upon  Charles  G.  Dawes,  president  of  tlie  Central  Trust 
Company  of  Chicago,  and  told  him  he  had  come  [811]  to  Chicaeo 
to  mej?t  representatives  of  the  packers  and  discuss  with  them  this 
investigation  and  stated  his  purpose  in  coming  to  Chicago  to  meet 
the  representatives  of  the  packing  industries,  and  aske<l  Mr.  Daw^s 
if  he  would  introduce  him  to  certain  of  the  defendant  packers  and 
bring  them  together.  He  also  called  uimui  .Tames  II.  Eckels  pi^si- 
dent  of  the  Commercial  National  Bank  of  Chicago,  and  made  a  sim - 

in'frr,f  /r'*^*?^'-^"  '"*•  ^''^^^•*^^  arrange.l,  and  the  Commissioner 
on  that  day  had.  an  intervit^Nv  with  Louis  C.  Krauthoff,  general  coun- 
*\the^Armour  companies,  ^^h.^  was  authorize<l  bv  his  i-lients  to 
meet  the  Commissioner,  at  which  interview  Mr.  McRoberts  assistant 
rnd^MrVl  i*'*^-  ^iT'^"'  c.>inpanies.  and  Mr.  Dawes,  wer^  pTesen? 
r  tii  :«  '*^^i  "*  "i  Vi?^  "*''"''*^''  «^*i'»»g*^»-  and  the  Commissioner  late^ 
on  the  same  day  held,  separate  meetings  and  interviews  with  Edward 
Swift  vit^e  president  .»f  Swift  &  Co..  with  F^dward  Aforr  s,  vice  nres^ 
dent  of  the  Faiiil»auk  Camiing  Company,  and  with  Jes4  P  r>nmn 
president  of  the  National  Packing  (Vmpanv  J-.^nmn, 

At  these  inteniews  Mr.  Gartield  informni  the  defendants  and  their 
representatives  whom  lie  met  that  he  was  engaged  in  making' ^t^ 
Imes  igat  on  as  Commissioner  of  Corporations  lie  calH  to  the  ? 
attention  the  law  creating  his  bureau  and  the  powers  therebv  vested 
In  him  and  the  Martin  restdution  of  the  House  of  RepresentatTves 
and  mforined  them  that  he  had  come  to  Chicago  to  get  fron  the  de^ 
fendants  the  information  possessed  by  them,  and  access  to  their  books 
and  reccmls,  and  called  upon  them  to  give  him  and  his  an  hori?S 
agents  such  information  and  access.    The  Commiasioner  te^{  fi^  1^ 

Lr^MeT  Jr/h  **!\^T^"^*^"*'  "^«*  ^^  ^""^  substantially  thelime 
toten lew  with  each  of  these  persons:  the  interviews  with  Mr   Swift 

Mr.*  KraJhoff  '*  ^^"'*'"  ^^"^'  *'*'''''^*''''  ^''**^*^"  *^«"  thht  with 

^J^\^f  ??^®*2?*^  ***'  ***®  interviews  on  April  IX  1904.  were  stated  bv 
the  United  States  Attorney  in  his  argument  to  the  <<.urt  upc^  tlie^ 


UNITED   STATES    V.   ARMOUR    &   CO. 


955 


Statement  of  the  Case. 

motions,  as  follows:  "The  Commissioner  secured  an  introduction  to 
them  through  their  banker  and  through  their  mutual  friend,  Mr. 
Dawes  and  Mr.  Eckels.  He  took  the  matter  up  with  them  as  a  busi- 
ness proposition,  and  said  to  them :  '  I  have  come  liere  now  as  Com- 
missioner, and  I  wish  to  make  an  investigation,  and  I  want  you  to  co- 
operate with  me.  I  want  you  to  turn  over  this  evidence.  You  know 
what  my  powers  are,  what  my  duties  are.  You  know  all  alwut  it' 
*  Yes,'  Mr.  Krauthoff  says,  '  we  are  thoroughly  posted  on  that'  He 
took  or  started  to  take  the  law  from  his  pocket  and  hand  it  to  them. 
Mr.  Krauthoff  says :  '  We  understand  all  abaut  the  law.  *  *  ♦ 
We  know  exactly  what  our  rights  are  and  we  know  what  your  rights 
are.  *  ♦  *  You  need  not  discuss  tliat  Mr.  Garfield.  *  *  *  ji^t 
us  know  what  you  want  here.'  Mr.  Garfield  said  to  him,  and  to  tlie 
other  gentlemen :  '  I  want  to  maiie  an  investigation.  That  means 
that  I  must  go  to  your  books  and  papers  and  find  out  what  you  have, 
and  in  order  to  make  it  thorough  I  must  verify  wiiat  is  given  to  me  by 
the  books  themselves.'  He  called  for  a  complete  investigation  and 
examination  of  their  affairs." 

In  these  interviews,  Mr.  Garfield  called  tlieir  attention  to  the  Mar- 
tin resolution  calling  for  the  investigation,  as  well  as  to  the  act  of 
Congress  creating  his  bureau  and  the  powers  thereby  conferred  upon 
him,  and  produced  the  law,  intending  thereby  to  show  what  the 
powers  of  the  bureau  were,  but  was  informed  that  tlie  defendants 
were  aware  of  the  provisions  of  the  law.  He  stated  in  the  interview 
that  by  this  Martin  resolution  the  House  of  Representatives  had  indi- 
cated certain  si^ecific  lines  of  inquiry  that  it  desired  made,  and  in 
connection  with  tlie  general  investigation  he  was  taiving  up  tlie  Martin 
resolution  in  detail;  and  he  stated  that  witliout  the  information  to  be 
obtained  from  the  defendants  and  from  tlieir  books  and  records  liis 
report  would  be  incomplete.  He  stated  that  detective  methods  would 
not  l^e  used,  but  said  he  came  and  would  ciune  directly  to  headquar- 
ters for  such  information  as  he  wished,  and  for  that  i)urp:)se  liad  met 
these  men.  Mr.  Krauthoff  stated  to  him  that  the  Department  of 
Justice  of  the  government  had  obtained  an  injunction  against  the 
defendant  packers,  enjoining  them  from  violation  of  the  Sherman 
anti-trust  act;  and  Mr.  Garfield^testified  that  he  stated  in  that  con- 
ne<*tion  that  his  department  and  bureau  were  not  coiiiie<*ted  with  the 
Department  of  .Justice;  that  eacli  department  was  operating  sepa- 
rately, and  that  the  work  of  the  Bureau  of  Corporations  was  within 
its  own  de-  [812]  partment;  that  he  was  not  acting  with  or  for  the 
Department  of  .Justice.  He  testified  that  he  stated  practically  to  the 
effect  that  the  purpose  of  Congress  in  creating  his  department  was 
not  to  disclose  violati<ms  of  law  or  to  investigate  prosecutions,  or  to 
act  in  connection  with  any  other  department  of  tlie  government,  but 
was  for  the  purpose  of  developing  tacts,  so  that  they  might  be  re- 
ported to  the  President,  and  by  him  to  Congress,  ft»r  legislative  inir- 
poses.  Mr.  Garfield  testified  that,  in  stating  to  Mr.  Krauthoff  that  liis 
department  had  no  connection  or  cu-operation  with  the  Department 
of  Justice,  his  impression  was  that  that  question  had  to  do  with 
whether  or  not  he  was  acting  for  the  Department  of  Justice  in  the 
collection  of  -information,  or  whether  he  was  to  turn  it  over  to  the 
Department  of  Justice,  and  that  the  statement  as  to  the  injunction 
and  as  to  his  connection  with  the  Department  of  Justice  had  to  do 
with  that  subject-matter;  that  he  did  not  recall  saying  in  this  inter- 
view (as  testified  to  for  defendants)  that,  if  it  were  known  that  his 
department  was  used  in  connection  with  or  in  assistance  of  the  De- 
partment of  Justice,  it  would  be  the  destruction  of  the  usefulness  of 
his  department,  but  that  he  had  stated  that,  or  words  to  that  eflfwt. 
In  his  official  reports  that  the  main  object  for  which  section  G  of  the 


956 


142   FEDERAL  KEPOBTER,   812. 


Statement  of  the  Case.     - 

act  creating  the  Department  of  Commerce  and  Labor  was  enacted  was 
to  report  to  Congress  for  legislative  purposes;  that  he  stated  in  the 
interview  with  Krauthoflf,  in  connection  with  his  statement  as  to  the 
purposes  of  the  bureau  in  the  matter  of  this  investigation,  that  he  had 
conferences  with  the  President  and  the  Secretary  of  the  Department, 
and  spolve  with  their  authority  and  consent. 

The  Commissioner  testified  that  he  stated  to  Mr.  Krauthoff  it  would 
be  his  duty,  under  the  law.  to  report  the  data  gathered  bv  him  to  the 
President  as  he  might  require,  who,  under  the  terms  of  the  law,  could 
make  such  parts  public  as  he  should  direct ;  but  that  he  appreciated 
that  there  were  certain  portions  of  the  business  of  the  defendants 
(private  accounts  and  entries  of  their  profit  and  loss  accounts  and  of 
their  detailed  costs— trade  secrets— which  they  would  desire  their 
competitors  not  to  know)  that  were  not  the  proper  subject  of  public 
intimry  and  should  not  be  made  public,  and  that  such  data  would  not 
be  reiwrted  even  to  the  President,  and  that  this  policy  was  under- 
stood and  accepted  by  the  Secretary  of  the  Department,  Mr.  Cortelyou 
and  by  the  President;  that  Mr.  Krauthoflf  asked  him  what  use  the 
President  would  make  of  the  report  made  to  him,  and  he  told  him  as 
to  that  he  could  not  answer.    He  could  simply  sav  the  President 
would  do  what  was  right    He  also  testified  that  he  had  previously 
read  a  pamphlet  of  Mr.  Randolph  (being  an  opinion  by  Carmen  F 
Randolph  on  the  status  and  powers  of  the  Bureau  of  Corporations 
organized  under  section  6  of  the  act  of  Congress  creating  the  Depart- 
ment of  Commerce  and  Labor),  and  had  in  mind,  in  talking  with  Mr 
Krauthoff,  that  there  was  a  line  of  privacy  which,  under  the  Consti- 
tution. Congress  could  not  invade,  and  that  the  question  as  to  his 
investigations  invading  that  line  was  a  matter  for  discussion  between 
them;  that  he  stated  that,  on  the  other  hand,  there  was  a  great  deal 
of  material  of  a  purely  statistical  character,  as  to  which  there  would 
be  no  question  that  it  would  be  available  for  the  purposes  of  the  inves- 
tigation, and  that  as  between  those  two  classes  of  information  or  evi- 
dence (i.  e.,  that  to  which  the  government  would  be  clearly  entitl'Hl 
and  that  to  which  it  would  not  be  entitled)  a  great  many  subi<H'N 
might  come  up  during  the  investigation  as  to  which  there  would  h*- 
question;  that  he  said  to  the  effect  that  the  information  in  ihe  pos- 
session of  the  defendant  packers  as  to  their  business  would  liivid.* 
itself  into  three  classes,  viz.,  that  to  which  the  government  was  clearly 
Mititled  in  and  for  the  purposes  of  said  investigation,  that  to  which 
it  was  clearly  not  entitled,  and  a  third  class  as  to  which  there  might 
pe  doubt  or  question;  that  it  was  not  his  purpose  to  act  arbitrarilv 
In  connection  with  those  matters ;  that  all  matters  concerning  whicli 
Inquiry  might  be  made  by  his  agents,  and  concerning  which  the  pack- 
ers had  any  doubt,  would  be  taken  up  for  conference,  for  determination 
as  to  whether  or  not  the  question  was  proper  and  whether  or  not  the 
information  should  he  given ;  that  as  to  all  those  matters  they  would 
be  referred  to  him  for  conference  with  the  packers;  that  the  determi- 
nation would  result  from  the  conference. 

Krauthoff,  McRoberts  and  Dawes  testified,  in  effect,  that  the  state- 
ment of  Mr.  Garfield  as  to  his  connection  with  the  Department  of 
Justice  was  in  re-  [818]  spouse  to  the  inquiry  of  Mr.  Krauthoff  as  to 
whether  any  of  the  infoi-mation  that  he  might  obtain  from  the  defend- 
ants or  their  books  would  be  used  by  the  Department  of  Justice  or  for 
its  purposes  and  against  the  defendants,  and  that  Mr.  Garfield  said  it 
would  not  be  used  for  that  purpose,  and  that  any  such  use  would  be 
guarded  against,  and  that  such  information  would  be  used  solely  for 
the  purposes  of  the  Department  of  Commerce  and  Labor  and  that 
me  defendants  were  protected  in  that  respect  by  the  law  as'weli  as  by 
the  policy  of  the  department.    These  witnesses  also  testified  that  the 


UNITED   STATES   V.   ARMOUR  &   CO. 


957 


Statement  of  the  Case. 

Commissioner  said  (and  a  number  of  other  witnesses  for  defendants 
testified  that  he  said  to  them)  that  "he  had  the  right  and  power  to  get 
this  information  by  a  hearing  in  the  course  of  which  the  books  of  the 
defendants  would  have  to  be  brt)ught  to  him,  but  the  information 
would  be  thereby  obtained  in  an  indirect  and  incomplete  way.  The 
evidence  was  that  in  such  interviews  Mr.  Garfield  presented  a  plan 
by  which  he  said  he  desired  to  carry  on  the  investigation  in  a  way 
which  would  be  deemed  more  eflicient  and  thorough  and  of  less  incon- 
venien-.-e  and  interruption  to  the  business  of  the  defemlants.  He  said 
that  he  wanted  to  get  at  the  actual  facts  and  in  the  best  wav,  and  for 
that  purpose  desired  to  get  acct^ss  to  the  books  of  tlie  defendants  and 
to  get  their  co-opera tiun  for  the  examination  there jf  in  their  own 
oftic-es,  which  was  the  plan  he  pmpnsed.  He  said  that  he  could  not 
attempt  to  do  tlie  work  personally,  but  would  have  agents,  men  duly 
accredited,  otticers  of  the  Bureau  of  Corporations,  who  were  expt^rt 
in  making  an  investigation  of  this  kind,  to  do  the  work :  that  he  could 
not  accept  as  final  any  statement  made  by  the  defendants  from  their 
books,  but  would  require  that  the  agents  of  the  bureau  go  to  the  books 
and  verify  those  statements,  or  any  statements  that  might  lie  made 
from  the  books  of  original  entry  themselves,  for  the  reason  that  he 
desired,  when  his  report  was  completed,  to  be  able  to  say  that  the 
agents  of  the  bureau  had  examined  the  books  of  the  original  entry. 
And  a  large  number  of  witnesses  for  the  defendants  testified  that  in 
the  interviews  with  the  Commissioner,  as  well  as  with  his  agents  upon 
the  ground,  the  Commissioner  and  his  agents  referred  to  and  asserted 
the  power  of  the  Commissioner,  imder  the  law,  to  compel  the  dis- 
closures and  testimony  of  the  defendants  and  the  production  of  their 
books  and  records. 

At  the  interviews  of  April  13,  1904,  between  Mr.  Garfield  and  the 
defendants,  or  their  representatives,  the  defendants  and  representa- 
tives of  defendants  who  took  part  in  said  interviews  stated  to  Mr. 
Garfield  that  they  would  take  up  the  matter  with  the  defendants  and 
reix>rt  to  him  their  conclusion.  This  was  done,  and  the  defendants 
thereupon  consulted  their  respective  counsel  as  to  their  legal  duty 
and  obligation  to  comply  with  the  call  of  the  Commissioner  of  Cor- 
porations so  made  for  the  disclosure  as  to  their  business  and  for  the 
production  of  their  books  and  records  to  the  Commissioner  and  his 
agents,  and  were  advised  by  their  counsel  with  respect  thereto,  and 
acting  upon  such  advice  they  reported  to  the  Commissioner  that  they 
would  comply  therewith,  and  in  furnishing  information  and  access 
to  their  books  and  records  they  acted  in  accordance  with  that  advice. 
On  the  14th  or  15th  of  April,  1904,  the  Commissioner  brought  to  the 
offices  of  the  respective  defendants  at  the  Union  Stockyards  in 
Chicago,  Mr.  Durand,  a  special  agent  of  the  Bureau  of  Corporations, 
and  introduce*!  him  to  certain  of  the  defendants,  officers  of  the  de- 
fendant corporations,  and  stated  that  Mr.  Durand  would  be  in  charge 
of  the  investigation  in  Chicago  with  the  authority  of  the  Commis- 
sioner to  represent  him.  Thereupon,  a  few  days  afterwards,  Mr. 
Durand,  with  the  authority  of  the  Commissioner,  presented  to  the 
officers  of  Armour  &  Co.,  Swift  &  Co.,  and  the  Fairbank  Canning 
Company  written  memoranda  of  the  information  which  he  desired 
from  the  defendants  and  from  their  books  and  records  at  that  time. 
These  memoranda  were  first  presented  to  officers  of  Armour  &  Co! 
and  to  officers  of  Swift  &  Co.,  and  were  taken  up,  respectively,  by  the 
officers  of  these  companies  among  themselves  and  with  Mr.  Durand, 
and  by  an  officer  of  Armour  &  Co.  with  Mr.  Garfield  at  Washington 
upon  certain  questions  as  to  the  scope  of  the  inquiries  and  as  to 
whether  certain  specific  parts  of  the  information  called  for  was  within 
and  pertinent  to  the  investigation;  and,  these  questions  being  deter- 


«7t/CJ 


142   FEDERAL  REPOBTER,   813. 
Statement  of  the  Case. 


mined,  spei-ial  agents  of  the  Bureau  of  Corporations  were  given  access 
to  the  books  and  records  of  those  companies  containing  such  informa- 
tion, and  a  few  days  later,  upon  [814]  presentation  of  similar  memo- 
randa to  the  officers  of  the  Fairbank  Canning  Company,  the  agents  of 
the  bureau  also  commenced  the  investigation  of  the  books  and  records 
of  that  company  and  were  given  like  access  thereto.    A  little  later 
Mr.  Kobertson,  a  special  agent  of  the  bureau,  by  the  direction  of  the 
Commissioner,  went  to  Omaha  and  applied  to  the  defendant  officer  of 
the  Cudahy  Packing  Company  and  called  for  access  to  the  books  and 
records  of  that  company  for  similar  information,  and  this  call  or  re- 
quest was  complied  with  by  Mr.  Cudahy;  and  also  by  like  direction 
and  authority  said  Kobertson  went  to  the  office  of  the  Armour  Pack- 
ing Company  in  Kansas  (^ity.  and  made  a  similar  call  or  request  of 
that  company,  and  this  call  was  complied  with,  and  access  to  the  books 
and  records  of  that  company  given  by  the  direction  and  authority  of 
Mr.  Charles  W.  x\.rn;our.  president  of  that  company  and  vice  presi- 
dent of  Armour  &  Co.    The  investigation  continued  in  the  offices  of 
the  defendants  at  Chicago  until  January  28,  1905,  and  from  time  to 
time  at  intervals  afterwards  during  the  spring  and  early  summer  of 
1905.     In  the  meantime  other  communications  in  writing,  signed  by 
the  Commissioner,  for  additional    information  according  to   memo- 
randa thei-eof  accompanying  the  letters,  were  presented  to  the  de- 
fendants, and   (after  the  disposition  of  objections  by  certain  of  the 
defendants  to  [wrtions  of  the  information)  the  information  was  fur- 
nished by  the  defendants  so  far  as  retpiired  by  the  Commissioner. 
This  information  was  of  the  facts  of  costs,  expenses,  selling  prices, 
and  proceeds,  and  other  facts  and  data  from  which  the  Commissioner 
aiid  his  experts  were  enabled  to  determine  the  costs,  expenses,  selling 
prices,  and  margin  of  profits  of  the  respective  defendants  in  the  dressed- 
beef  business,  and  also  information  as  to  the  organization,  conduct, 
and  management  of  their  business,  and  much  information  as  to  the 
otlier  branches  and  departments  of  their  business. 

The  agents  of  the  bureau  also  investigated  the  books  of  divers  sub- 
sidiary coriK)rations  of  the  National  Packing  Company,  in  compliance 
with  tlie  interview  and  call  of  the  Commissioner  of  Corporations 
therefor  with  and  upon  the  president  of  that  company,  Mr.  Lyman, 
on  April  13,  IJMH,  and  by  and  with  the  authority  and  direction  of  the 
board  of  directors  of  that  company  acting  under  advice  of  counsel; 
and  the  counsel  of  that  company,  at  the  request  of  the  Commissioner 
addressed  to  that  company,  made  a  statement  of  information  as  to  the 
orgiiuization  of  that  company.  On  January  28,  1005.  the  Commis- 
sioner addressed  eonununications  to  Armour  &  Co..  Swift  &  Co  and 
the  Fairbank  Canning  Company  (or  Morris  &  Co.,  the  owners  of  the 
Fairbank  Canning  Company),  in  which  he  requested  further  informa- 
tion "  which  can  best  be  secured  in  the  form  of  a  written  statement  to 
be  drawn  up  on  the  basis  of  oral  interrogatories  of  an  informal 
character,"  and  stated  that  Si>ecial  Examiner  Durand  was  authorized 
to  address  to  the  proper  representatives  of  those  companies  questions 
covering  the  subjwts  mentioned  in  the  letter,  which  were:  History 
ownership,  and  organization  of  the  National  Packing  Company ;  own- 
ership of  the  securities  of  the  defendant  companies  whose  representa- 
tives should  be  examined;  relation  of  those  companies  and  stock- 
holders to  subsidiary  corporations  and  other  corporations  connected 
with  the  packing  business  or  cattle  industry ;  methods  of  competition 
in  the  purchase  of  cattle  and  the  sale  of  meat  products ;  control  of  the 
large  packers  over  the  prices  of  live  stock  and  of  meat  products-  re- 
lation of  the  prices  of  cattle  and  the  prices  of  beef,  and  the  causes 
affecting  them;  €-ost  of  killing  cattle  and  of  handling  the  products 
thereof;  capital  stock,  bonds,  total  sales,  earnings,  and  dividends  of 


UNITED   STATES    V.   ARMOUR   &   CO. 
Statement  of  the  Case. 


959 


% 


the  companies  whose  representatives  should  be  examined ;  names  of 
private  car  lines  controlled  by  those  companies  or  their  stockholders- 
the  number  of  cars  owned  or  operated,  the  mileage  made  and  the  cost 
of  operation.  And  the  letter  of  the  Commissioner  stated  that  state- 
ments m  reply  to  such  interrogatories  would  be  taken  down  by  a 
stenographer  and  recast  in  systematic  form  by  Mr.  Durand  and  sub- 
niitted  to  the  representatives  of  the  defendant  companies  for  revision 
signature,  and  authentication  by  oath  or  affirmation :  and  if  it  should 
then  be  found  ijecessaiy  to  supplement  the  affidavit  in  anv  way  Mr 
Durand  would  address  inquiries  to  other  representatives  in  the  same 
manner.  Upon  Mr.  Durand  taking  up  this  matter  separatelv  with 
representatives  of  the  diuerent  <H)mpanies  addressed,  Mr.  Durand 
testified  that  counsel  for  one  of  the  companies,  to  whom  certain  of  the 
questions  to  that  company  were  referred,  declined  to  answer  certain 
of  those  questions  [815]  under  oath  or  to  advise  his  clients  so  to  do- 
the  evidence  as  to  such  refusal  and  as  to  the  extent  and  scope  thereof 
and  the  reasons  therefor  being  conflicting.  This  being  reported  bv 
Mr.  Durand  to  the  Commissioner,  Mr.  Durand  was  instructed  by  the 
Commissioner  to  take  all  such  statements  without  oath,  and  he  did 
accordingly  examine  divers  of  the  defendant  officers  of  the  companies 
orally,  but  without  afhiiinistering  or  requiring  anv  oath,  and  took 
down  and  transcribed  and  submitted  to  them  the  statement  of  their 
answers  for  revision,  and  these  statements,  being  revised  and  ap- 
proved, vyere  taken  and  transmitted  by  him  to  the  Commissioner  of 
Corporations. 

On  February  28,  1905,  the  Commissioner  of  Corporations,  having 
reached  the  results  of  his  investigation  for  the  purpose  of  a  report 
thereof  as  required  by  the  Martin  resolution,  came  to  Chicago  with 
Mr.  Durand  and  called  upon  the  defendants  to  produce  their  books 
showing  their  profit  and  loss  accounts  and  the  results  of  their  business 
for  the  purpose  of  comparing  therewith  and  checking  the  computation 
of  the  profits  and  results  of  their  business  at  which  he  and  his  expert 
statisticians  had  arrived.  This  was  complied  with  bv  the  defendants 
and  the  books  and  records  showing  the  profits  of  their  business  and 
ot  the  diflierent  departments  thereof  were  produc*ed  to  and  examined 
by  the  Commissioner  and  Mr.  Durand.  Thereupon  the  Commissioner 
completed  and  submitted  ms  report  of  March  3,  1005,  entitled  "  Report 
of  the  Commissioner  of  Corporations  on  the  Beef  Industry"  which 
was  transmitted  by  the  President  to  Congress  on  that  day  and  pub- 
lished, and  is  referred  to  in  and  made  a  part  of  the  special  pleas 
herein.  The  report  is  accompanietl  by  the  letter  of  the  Commissioner 
/  stating  that  it  is  a  report  made  under  the  direction  of  the  Secretary 
of  Commerce  and  Labor,  "  and  upon  that  portion  of  the  resolution  of 
the  House  of  Representatives  adopted  March  7,  1904,  having  to  do 
with  the  prices  of  cattle  and  dressed  beef,  the  margins  between  said 
pric-es,  and  the  organization,  conduct,  and  profits  of  the  corporations 
engaged  in  the  beef  packing  industry,"  The  evidence  sliowed  that  the 
printed  report  of  the  Commissioner  of  Corporations  was  used  by  the 
United  States  Attorney  before  the  grand  jury  which  found  the  indict- 
ment herein,  in  examining  a  witness  as  to  certain  of  the  subsidiarv 
companies  of  the  National  Packing  Company. 

Commissioner  Garfield  also  testified  that  certain  matter  containing 
tables  compiled  by  Special  Examiner  Durand,  under  his  direction 
from  information  obtained  from  the  books  and  records  of  the  de- 
fendants in  the  course  of  such  investigation,  showing  the  numbers  of 
cattle,  hogs,  and  sheep  from  time  to  time  purchased  and  killed  at  the 
various  stockyards  by  the  different  defendant  companies,  which  made 
made  up  an  additional  chapter  of  his  report  upon  the  evidence  of  a 
combination  between  the  packers,  but  which  was  not  included  in  his 


142   FEDERAL   BEPORTER,   Hh\ 
Statement  of  the  Case. 

SSSIm^SJ  Z^"^  were  on  Cktober  17.  1905,  by  t!.e  direction  of  tHe 
Prwident  turned  over  by  him  in  his  office  to  Mr.  Pagin.  an  assistant 
to  the  Attorney  General,  who  came  to  the  office  of  the  Commissioner 
W  appointment  thn.ngh  the  Attorney  General,  and  at  his  direction  to 
be  taken  by  Mr  Pagin  to  Chicago  for  nse  In  preparation  for  the  t^Ial 
of  the  defendants  upon  this  indictment;  and  that  Mr.  Durand  was  sent 
by  him  to  Chlcag(»  to  «plain  to  tiie  United  States  Attorney  at  Chicago 
these  tables     The  evidence  showed  that  these  tables  were  brought  to 
Uileago  by  Mr,  PagiB  and  turned  oyer  to  the  United  States  Attorney; 
Mr.  Pagm  leaving  Washington  on  the  evening  of  October  17th     Mr 
r*^**"*!*?,^®**^^^**^  ******  compilatiims  from  these  tables,  showlnir  tiie  uni- 
formity in  the  percentages  of  purchases  of  live  stoclc  bv  the  different 
defendant  packing  companies,  and  the  import  thereof* as  tending  to 
show  combination  among  the  packers  in  the  purchases  of  live  stock 
was  the  subject  of  discussion  between  him  and  Mr.  Meeker  one  of  the 
defendants,  at  an  interview  in  the  office  of  the  Commissioner  in  De- 
cember, 1904,  at  which  Mr.  Meeker  was  asked  bv  the  Commissioner 
with  respect  thereto  and  answered  the  same.    Coinmissioner  (iarfleld 
also  testified  that  he  had  had  conferences  with  the  Solicitor  General 
and  Attorney  General  in  the  summer  of  1904  regarding  this  investi<'a- 
tion  and  the  powers  of  the  bureau,  and  that  the  matter  of  tiiruine 
^I®1**^  *''®  Department  of  Justice  the  infonnation  secured  in  progress 
of  the  Investigation  was  involved  in  the  conference  with  the  Attomev 
General  in  September.  1004.     Mr.  Garfield  testified  that  the  snecial 
mmts  of  the  Bureau  of  Corporations,  engaged  In  obtaining  informa- 
tion from  the  defendants  and  in  the  examination  of  the  books  and 
records  of  the  defend-  [816]  ants,  were  also  engaged  in  obtaining  in- 
formation resiM^eting  the  matters  covered  by  the  investigation  from 
outside  sources,  and  made  reports  to  the  bureau,  and  oortain  of  them 
Included  m  their  reports  the  names  of  persons  who  might  be  witnesses 
upon  the  subject-matter  of  a  combination  between  tlie  packers 

Under  date  of  August  16.  1904,  the  United  States  Attorney  at  Chi- 
cago wrote  the  Attorney  General  with  reference  to  obtaining  tesl- 
mony  in  the  "  Beef  Trust  Case,"  and  suggested  tliat  he  ask  the  Com- 
missioner of  Corporations  to  give  the  United  States  Attorney  such  ad- 
ditional  infonnation  as  he  had  upon  the  subject  and  request  his  em-  - 
ployfe  then  in  Chicago  to  rail  upon  him  an<J  furnish  such  hiformation 
a«  tliej  Blight  have.    This  letter  was  communicated  to  the  Commis- 
sioner of  Corporations,  and  under  date  of  August  22,  1004,  the  Com- 
missioner transmitted  to  the  acting  Attorney  General  a  memorandiun 
of  the  names  of  certain  persons  from  whom  the  United  States  At- 
torney "may  be  able  to  obtain  statements  regarding  the  allegations 
that  the  injunction  in  the  Beef  Trust  Case  is  being  violated  "    This 
memorandum  contained  the  names  of  some  30  persons  and  firms     Mr 
Garfield  testified  that  these  names  were  obtained  bv  his  agents  from 
sources  outside  of  the  defendants,  but  that  he  did  not  know  person- 
ally where  his  agents  got  the  names,  but  that  it  was  made  up  from 
flies  in  his  office ;  and  the  testimony  of  a  witness  on  behalf  of  defend- 
ants, an  employ^  of  Swift  &  Co.  who  furnished  infonnation  to  the 
agents  of  the  Bureau  of  Corporations  at  their  request  therefor  and 
?Pp*l  *5®  <^i**^<-'*^*>**  of  his  employer,  was  that  four  of  the  names  upon 
this  list  were  given  by  him  to  Mr.  Carroll,  one  of  the  special  agents  of 
the  Bureau  of  Corporations  engaged  in  such  investigation   at  the  re- 
^^^^^^J^""'  fa*"*-**"-     Mr.  Garfield  also  testified  that  in  January 
1905.  he  turned  over  to  the  United  States  Attorney  for  said  district  a 
similar  list  of  names  of  persons  as  witnesses  who  claimed  thev  knew 
of  alleged  facts  regarding  a  combination  among  the  defendants'  which 
list  was  obtained  in  the  same  manner  from  the  agents  of  the  Bureau 
Upon  the  conclusion  of  the  testimony  a  motion  was  entered  on  be^ 


UNITED   STATES    V.   ARMOUR   &  CO. 
Charge  to  the  Jury. 


961 


#' 


half  of  the  defendants  that  the  court  direct  the  jury  peremptorily  to 
find  the  issues  for  the  defendants.  A  cross-motion  was  also  entered  on 
behalf  of  the  United  States  that  the  court  direct  a  verdict  for  the 
government. 

William  H,  Moody^  Attorney  General,  and  Charles  B. 
Morrison,  United  States  Attorne}^,  and  Assistant  United 
States  Attorneys  Hanchett  and  Godman. 

John  S,  Miller  and  A.  R.  Urion,  for  defendants  Armour  & 
Co.,  Armour  Packing  Co.,  J.  Ogden  Armour,  Patrick  A. 
Valentine,  Arthur  Meeker,  Thomas  J.  Connors,  Samuel 
McRoberts,  and  Charles  W.  Armour. 

William  J.  Haynes  and  Louis  C.  Ehle,  for  defendants 
Swift  &  Co.,  Louis  F.  Swift,  Edward  F.  Swift,  Charles  H. 
Swift,  Lawrence  A.  Carton,  D.  Edwin  Hartwell,  Albert  H. 
Veeder,  Rol>ert  C.  MciVIanus,  and  Arthur  F.  Evans. 

John  C.  Cowin,  Erode  Davis,  and  Moritz  Rosenthal,  for 
defendants  Cudahy  Packing  Co.  and  Edward  A.  Cudahy. 

George  W.  Brown  and  M.  W.  Borders,  for  defendants 
Fairbank  Canning  Co.,  Edward  Morris,  and  Ira  N.  Morris. 

Hu3iPHREY,^District  Judge  (orally). 

A  number  of  acts  of  Congress  are  involved  in  the  case,  and 
have  been  discussed  upon  the  arguments  on  the  motion  and 
cross-motion  to  direct  a  verdict — the  Cullom  act,  the  original 
interstate  commerce  act  of  February  4,  1887  (24  Stat.  379, 
c.  104),  and  amendments  of  March  2,  1889  (25  Stat.  855,  c. 
382),  and  February  10,  1891  (26  Stat.  743,  c.  128,  [U.  S. 
Comp.  St.  1901,  p.  3154] ) ;  the  act  with  regard  to  testimony 
of  February  11,  1893  (27  Stat.  443,  c.  83  [U.  S.  Comp.  1901, 
p.  3173]),  being  supplemental  to  the  Cullom  act;  the  act 
establishing  the  Department  of  [817]  Commerce  and  Labor 
of  1903  (Act  Feb.  14,  1903,  c.  552,  32  Stat.  825  [U.  S. 
Comp.  St.  Supp.  1905,  p.  63]),  and  by  its  terms  adopting 
certain  portions  of  the  two  first-named  acts ;  the  Sherman  act 
(the  anti-trust  law  of  1890) ;  and  Appropriation  Act  Feb. 
25,  1903,  c.  755,  32  Stat.  904  [U.  S.  Comp.  St.  Supp.  1905, 
p.  602].  The  defendants  are  indicted  under  the  Sherman  act 
21220— VOL  2—07  m 61 


962 


lit  FEDERAL   REPOKTER,   817. 
Charge  to  the  Jury. 


(the  anti-trust  act),  charged  with  a  conspiiacy  in  restraint 
of  trade.  They  have  pleaded  that  as  to  them  that  act  is  sus- 
pended and  inoperative  and  does  not  exist,  because  they  were 
compelled  to  furnish  evidence  of  and  concerning  the  matters 
contained  in  the  indictment,  and  that  under  the  law  such 
furnishing  of  evidence  gives  them  immunity.  The  question 
of  guilt  or  innocence  is  not  involved. 

As  to  the  corporations,  the  artificial  persons  named  as  de- 
fendants, the  pleas  cannot  avail  I  regard  that  contention 
as  having  been  met  and  overruled  by  the  late  decision  of  the 
Supreme  Court  in  the  case  of  Efhrhi  F.  Ihde  v.  \ymiaw 
Henh'U  United  States  Marshal.  2(i  Sup.  Ct.  :?70,  ."lO  L. 
Ed.  ,  decided  March  12,  1900,  and  not  yet  officially  re- 
ported. In  the  typewritten  decision  of  that  case  forwarded 
to  the  Attorney  General  and  by  him  presented  to  the  court  I 
tind  the  following  language : 

"But  it  is  further  insisted  that,  while  the  imimuiitv  stntute  may 
liroUH-t  iiHliyianai  witue.v.os,  it  would  not  protect  the  eoriK)ration  ot 
wlu(!li  aiipellaiit  wns  tlie  asenc  and  representative.     Tliis  is  true   but 
the  answer  is  tlmt  it  was  not  de.sij^ned  to  do  s<».     The  right  of  a  person 
uii(h?r  tlie  ftfrli  anienihiient  to  refuse  to  intriminatf  himself  is  nurelv 
a  personal  i>rivile^e  of  the  witness.     It  w.ss  never  intended  to  permit 
hnn  to  plead  the  fact  tliat  some  third  person  might  he  in(  riminated 
Dy  his  testimony,  even  though  he  were  the  ageut  of  such  pers  ju     A 
privilege  ^o  extensive  might  lie  U!=ed  to  put  a  stop  to  the  examina'tion 
of  eveo    witness   who  was  calkHl  uiK>n  to  testifv  before  the  grand 
jury  wiih  regard  to  the  doings  or  business  of  his  principal,  whether 
such   principal   were   an    individual   or   a    corporation.     The   ouestioii 
whether  a   corporation   is  a   "person"   within   the   meaning  of   this 
amendiiient  really  does  not  arise,  except,  perhaps,  where  a  corr)oratioii 
IS  called  upon  to  answer  a  bill  of  discovery,  since  it  can  only  be  heard 
by  oral  tnidence  in  the  person  of  some  one  of  its  agents  or  employes 
the  amendment  is  limited  to  a  person  wlio  shall  be  compelled  in  Imv 
crinuiial  cast^  to  be  a  witness  against  himself,  and,  if  he  cannot  set 
up  the  privilege  of  a  third  person,  he  certainly  cannot  set  up  the 
privilege  of  a  cori>oration.     As  the  combination  or  <'onspiracies  nro- 
fided  against  by  the  Sherman  anti-trust  act  can  ordinarily  be  nroved 
only  by  the  testimony  of  parties  thereto,  in  the  person  of  their  agents 
or  eniployes,  the  privilege  claimed  would  practically  nullifv  the  whole 
act  of  Congress.     Of  what  use  would  it  be  for  the  Legislature  to  de- 
clare these  combinations  unlawful,   if  the  judicial  power  may  close 
the  door  of  access   to  every   available  source  of  information   upon 
the  subject?    *    *    «  ' "" 

*•  If,  whenever  an  officer  or  employe  (»f  a  coriM)ration  were  summoned 
lief  ore  a  grand  jury  as  a  witness,  he  could  refuse  to  produce  the  books 
and  documents  of  such  coiporatiou,  upon  the  ground  that  they  >yould 
incriminate  the  corporation  itself,  it  would  result  in  the  failure  of  a 
large  number  of  cases  where  the  illegal  combination  was  determinable 
only  upon  the  examination  of  such  papers.  But,  conceding  that  the 
witness  was  an  oflleer  of  the  corporation  under  investigation  and  that 
he  was  entitled  to  assert  the  rigiits  of  the  corporation  with  respect 


UNITED   STATES    l\   ARMOUR    &   CO. 


963 


Charge  to  the  iKjr. 

to  the  production  of  its  books  and  papers,  we  are  of  the  opinion  that 
there  is  a  clear  distinction  in  this  particular  between  an  individual 
and  a  corporation,  and  that  the  latter  has  no  right  to  refuse  to  sub- 
mit its  books  and  i)ar>ers  for  an  examination  at  the  suit  of  the  state 
The  individual  may  stand  upon  his  constitutional  rights  as  a  citizen 
He  IS  entitled  to  carry  on  his  private  business  in  his  own  way  His 
power  to  contract  is  unlimited.  He  owes  no  duty  to  the  state  or  to  his 
neighbors  to  divulge  his  business  [818]  or  to  open  his  donrs  to  an 
investigation  so  far  as  it  may  tend  to  criminate  him.  He  owes  no 
such  duty  to  the  state,  since  he  receives  nothing  therefrom  beyond  the 
protection  of  his  life  and  prniierty.  His  rights  are  such  as  existed 
by  the  law  of  the  land  long  antecedent  to  the  organization  of  the 
state,  and  (an  only  be  taken  from  him  by  due  process  of  law  and  in 
accordance  with  the  Constitution.  Among  his  rights  are  a  refusal  to 
incriminate  himself  and  the  immunity  of  himselc  and  his  propert^' 
trom  arre>t  .ind  sei:mre  except  under  a  warrant  of  the  law  He  owes 
nothing  to  the  public  so  long  as  he  does  not  tresiiass  upon  their 
rights.  ' 

"Upon  the  other  hand,  the  corporation  is  a  creature  of  the  state 
It  is  presumed  to  be  incorporated  for  the  benefit  of  the  public  It 
receives  certain  special  privileges  and  franchises,  and  holds  them  sub- 
ject to  the  laws  of  the  state  and  tlie  limitations  of  its  charter  Its 
powers  are  limited  by  law.  It  can  make  no  contract  not  authorized 
by  its  charter.  Its  rights  to  act  as  a  corporation  are  only  preserved 
to  it  so  long  as  it  obeys  the  laws  of  its  creation.  There  is  a  reserved 
right  in  the  Legislature  to  investigate  its  contracts  and  find  out 
whether  it  has  exceeded  its  powers.  It  would  be  a  strange  anomaly 
to  hold  that  a  state,  having  chartered  a  corporation  to  make  use  ot 
certain  franchises,  could  not  in  the  exercise  of  its  sovereignty  inquire 
how  the.^e  franchises  had  been  employed  and  whether  they  had  been 
abused,  and  demand  the  production  of  the  corporate  books 'and  papers 
tor  that  i)urpose.  The  defense  amounts  to  this:  That  an  officer  of 
a  corporation,  which  is  charged  \\\W\  a  criminal  violation  of  the  stat- 
ute, may  i>!ead  the  criminality  of  such  corporation  as  a  refusal  to 
produce  its  books.  While  an  individual  may  lawfully  refuse  to 
answer  incriminating  questions  unless  protected  by  an  immunity 
statute.  It  does  not  fallow  that  a  corporation,  vested  with  special 
privileges  and  franchises,  may  refuse  to  show  its  hand  ^yhen  charged 
with  an  abuse  of  such  privileges. 

"  It  is  true  that  the  corporation  in  this  case  was  chartced  under 
the  laws  of  New  Jersey,  and  that  it  receives  its  franchises  from  the 
Legislature  of  that  state:  but  such  franchises,  so  far  as  they  involve 
questions  of  interstate  commerce,  must  also  be  exercised  in  subordina- 
tion to  the  power  of  Congress  to  regulate  such  commerce,  and  in 
respect  to  this  the  general  government  may  also  as.sert  a  sovereign 
authority  to  ascertain  whether  such  franchises  have  been  exercised 
in  a  lawful  manner,  with  a  due  regard  to  its  own  laws.  Being  sub- 
ject to  this  dual  sovereignty,  the  general  government  possesses  the 
same  right  to  see  that  its  own  laws  are  respected  as  the  state  would 
have  with  respect  to  the  special  franchises  vested  in  it  by  the  laws 
of  the  state.  The  powers  of  the  general  government  in  this  particular 
in  vindication  of  its  own  laws  are  the  same  as  if  the  corporation  had 
been  created  by  an  act  of  Congress.  It  is  not  intended  to  intimate  how- 
ever, that  It  has  a  general  visitatorial  power  over  state  corporations." 

I  regard  this  as  clearly  distinguishing  between  the  corpora- 
tion and  the  individual  who  is  an  officer  of  the  corporation. 
I  cannot  understand  the  opinion  in  an}^  other  way  except  as 


9m 


142   FEDERAL  REPORTEK,   818. 


Charge  to  the  Jury. 

holding  that  there  can  be  no  immunity  for  the  corporation, 

but  that  the  officer  or  agent  of  the  corporation,  if  the  facts 

bring  him  within  the  purview  of  the  law,  may  plead  such 

immunity.    This  disposes  of  the  corporations. 

Now,  as  to  the  individual  defendants :  There  is  a  provision 

in  the  commerce  and  labor  act  providing  for  immunity,  and 

it  refers  for  the  immunity  to  the  Cullom  act  and  the  act 

supplemental  thereto.    The  commerce  and  labor  act  reads: 

"All  the  r^uirements,  obligations,  linbiiities,  and  imnuinlties  im- 
posed or  conferred  by  said  'Act  to  regulate  coinineree,'  and  by  'An 
act  in  relation  to  testimony  before  the  Interstate  Commerce  Com- 
mission, and  so  forth,  approved  Febniary  eleventh,  eighteen  hundred 
and  ninety-three,  supplemental  to  said  *Act  to  regulate  commerce' 
shall  also  apply  to  all  persons  who  may  be  subixenaed  to  testify  as 
witnesses  or  to  protluce  documentary  evidence  in  pursuance  of*  the 

??  Qri*i>^'TTfT*l**y  ^^^  section.-    Act  Feb.  M.  1903,  c.  552,  §  6, 
32  Stat.  827  [U.  S.  Comp.  St.  Supp.  19()5,  p.  «8]. 

[819]  The  act  supplementary  to  the  Cullom  act  has  an  im- 
munity clause  in  the  following  words : 

'*  Biit  no  person  shall  be  prosecuted  or  subjet-ted  to  anv  itenalty  or 
forfeiture  for  or  on  account  of  any  transaction,  matter  or  tiling 
concerning  whicli  lie  may  testify  or  produce  evidence,  docimientary 
or  otherwise,  before  said  commission,  or  in  obedience  to  its  subpoena 

7J\^  K^'if^Z^^  ^o^^LP£  "'^"''  ""^  *"  «"y  »"^**^  «'^«e  or  proceeding." 
Act  Feb.  11.  1893,  c.  83,  27  Stat  443  (U.  S.  Comp.  St.  1901,  p.  3173]. 

Appropriation  Act  Feb.  25,  1908,  c.  765,  §  1,  32  Stat.  904 
[U.  S.  Comp.  St.  Supp.  1905,  p.  602],  for  the  enforcement 
of  the  Cullom  act,  the  Sherman  act,  and  the  Wilson  act, 
exempts  from  prosecution  persons  giving  testimony  in  the 
following  language: 

••Provided,  that  no  person  shall  be  prosecuted  or  be  subjected  to 
any  penalty  or  forfeiture  for,  or  on  account  of  any  transaction  mat- 
ter or  thing  concerning  which  he  may  testify,  or  produce  evidence 
unto  taid^ct**"  ***^*^'^'*^'   *"  ^y  proceeding,  suit  or  prosecution 

It  is  necessary  to  look  into  the  purposes  of  Congress  in 
passing  the  commerce  and  labor  act  in  order  that  the  court 
may  determine  what  construction  will  best  carry  out  the 
l^slative  intent  It  is  the  duty  of  the  court  in  constniing 
an  act  to  give  it  such  construction  as  will  carry  out  the  leg- 
islative purpose  expressed  in  the  act  itself.  It  is  clear  to  my 
mind  that  the  primary  purpose  of  the  commerce  and  labor 
act  was  to  enable  Congress,  by  information  secured  through 
the  work  of  officers  charged  with  the  execution  of  that  law, 
to  pass  such  remedial  legislation  as  might  be  found  necessary. 


UNITED   STATES    V,   ARMOUK   &  CO. 
Charge  to  the  Jury. 


965 


I  regard  this  as  the  primary  purpose,  the  chief  purpose,  a 
legislative  purpose.  It  is  clear  from  the  act  itself  that,  if 
there  be  a  secondary  purpose,  the  primary  purpose,  the  leg- 
islative purpose,  was  vastly  more  important  in  the  mind  of 
Congress  than  any  other.  Congress  wanted  to  know  how 
the  laws  with  regard  to  corporations  were  operating,  how 
they  were  being  evaded,  how  to  strengthen  them,  in  case 
they  needed  strengthening.  In  my  judgment,  the  purpose 
of  every  one  of  these  laws,  the  high  aim  of  Congress  in 
passing  them,  was  a  determined  purpose  that  the  corpora- 
tion, the  creature  of  the  law,  should  not  be  allowed  to  grow 
beyond  the  law.  The  commerce  and  labor  act  is  the  repeated 
attempt  of  Congress  to  bring  to  its  aid  such  information  as 
would  enable  Congress  to  do  whatever  might  be  necessary 
for  the  control  of  corporations.  Perhaps  a  secondary  pur- 
pose was  the  punishment  of  offenders.  It  is  perfectly  clear 
to  my  mind  that  this  was  not  the  main  purpose,  because  there 
were  abundant  laws  already  on  the  statute  books  for  that, 
and  a  great  department  skilled  in  the  work  of  punishing 
offenders.  And  still  I  am  not  able  to  say  but  that  a  second- 
ary purpose  of  the  commerce  and  labor  act  might  have  been 
the  punishment  of  offenders.  And  I  say  this  because  it  is 
not  inconsistent  with  the  act,  or  with  the  declared  primary 
purpose,  that  this  should  be  done  so  far  as  the  corporation 
itself  is  concerned.  This  is  made  pretty  clear  by  the  late 
decision  in  the  Hale  Case.  If  the  statute  is  to  be  so  con- 
strued as  to  carry  out  the  legislative  purpose,  viz.,  secure 
information  for  the  use  of  Congress,  how  can  that  best  be 
done  ? 

The  statute  itself  surrounds  the  Commissioner  with  no 
forms,  puts  no  legislative  limits  upon  his  methods,  gives  him 
unusual  latitude  as  [820]  to  methods.  It  does  not  require 
public  hearings.  I  am  of  opinion  that  the  act  contemplated 
that  he  should  proceed  by  private  hearings,  because  it  pro- 
vides in  express  terms  that  the  President  shall  decide  how 
much  of  his  investigation  shall  become  public.  If  the  Com- 
missioner should  have  public  hearings,  the  President  would 
have  no  chance  to  perform  that  portion  of  the  work  which 
the  act  assigns  to  him.  I  therefore  conclude  that  the  legis- 
lative mind  intended  that  the  Commissioner  should  proceed 


142  FEDEKAL  KEPORXER,   820. 
Charge  to  the  Jury, 
by  private  hearings.    The  powers  of  the  Commissioner  of 
Corporations  are  defined  in  section  6  of  the  act  of  February 
14,  1903  (32  Stat.  827,  c.  552  [U.  S.  Comp.  St.  Supp.  1906, 
p.  68] ) ,  and  are  as  follows : 

"The  said  Coiuinissioner  shall  have  iMiwer  and  authorifv  fa  ni«bo 
rt!  ^*i«  .^^'•^^t'*^"  ''"'i  eontrol  of  the  Sec  re  ary  of  Co  1 
Labor,  diligent  investigation  into  the  organization  conduct  and 
nianagenierrt  of  the  business  of  any  corporation,  jofnt'  stock  commnv 
or  corporate  combination  engaged  in  commerce  among  tLsev^^^^^^^ 
States  and  with  foreign  nations  excepting  connnon  can-ler^  sublect 
to  'An  act  to  regulate  commerce/  approved  Februarv  fourth  eiirht^n 
hundred  and  eighty-seven,  and  to  gather  such  iXmatl^n  and  d^ta 
as  will  enable  the  President  of  the  United  States  to  make  recon^enda 
tions  to  Congress  for  legislation  for  the  regulation  of  such  mm- 
merce,  and  to  rei>ort  such  data  to  the  President  from  time  to  timTas 

It  tt' Prl.1de^t'mav  dhwf 'hTf^^"  "*,  "^^'-^'"^  ^  ^^^^^  ^^^^^^ 
as  iiie  I  resident  may  direct  shall  be  made  public 

of  thVs^[ioS  ""ir^i'.hf.t^'^  ^*- '^^'*^'  '^^^""'^  ^^  t^«  foregoing  part 
01  ijiis  section,  the  said  Commissioner  shall  have  and-  exercise  the 

sjime  power  and  authority  in  respect  to  c.>riiorations,  joinfstock  com 
panies  and  combinations  subject  to  the  provisions  her^f  as  is  (SS 
ferred  on  the  Interstate  Commerce  Commission  in  said  'Ac?  to  rSS- 
carHeTr?^  V"h  "'^  amendments  thereto  in  respect  to  common 
carrieis  so  far  as  tlie  same  may  be  applicable,  including  the  right  to 
tSeTodrtfnn'^Tl  *^*^  ^tt^en^anee  and  testimony  of  witnessefand 
AH    I?»*^*^"^t>pn   of  documentary   evidence   and   to   administer  oaths 

or  clnfer3"hT'"-T  /f  »i^?««»«'  "«-^»>»'ties,  and  immunities  inS 
or  conferred  by  said  'Act  to  regulate  commer(  e '  and  bv  'An  act  in 
relation  to  testimony  before  the  Interstate  Commerce  Commission" 
and  so  forth,  approved  February  eleventh,  eighteen  iSed  and 
ninety-three,  supplemental  to  said  'Act  to  regulatrc^mrrce'  shall 

nZ^'^^J  t  '"  ?"''*^'!f  ^'^^  ^"'^  ^'^  ^ubp^eLed  to  tesmy  as  wi  - 
nesses  or  to  protluce  documentai-j-  evidence  In  pursuance  of  the 
authority  conferred  by  this  section.  Fuisuauce   oi   tne 

"  It  shall  also  be  the  province  and  duty  of  said  bereau,  under  the 
n  fi^ir  V^^  Sf  retary  of  Commerce  and  Labor,  to  gather  compile 
publish,  and  supply  useful  information  concerning  c-orwrations  do  rS 
busmess  within  the  limits  of  the  United  States^nTs'l^aH  engage  "f 
interstate  commerce  or  in  commerce  between  the  United  States  and 
any  foreign  countn-.  includinir  corporations  en-aged  in  hi.i.n^^^^^^^^  and 
to  attend  to  such  other  duties  as  may  be  hereafter  provWed  b^iaw^ 

It  will  be  observed  that  this  section  by  reference  gives  to 
the  Commissioner  of  Corporations  the  same  powers  with 
respect  to  other  interstate  corporations  as  the  Cullom  act 
and  its  amendments  give  to  the  Interstate  Commerce  Com- 
mission over  common  carriers  so  far  as  the  same  shall  be 
applicable.  These  additional  powers  are  contained  in  sec- 
tion 12  of  the  amended  Cullom  act  (Act  Feb.  4,  1887  c  104 
24^  Stat.  383  [U.  S.  Comp.  St.  1901,  p.  3162]),  and  are  as 
follows: 

"Sec.  12.  (As  amended  March  2,  1889  [25  Stat   858   c   '^2    s  qi 
and  February  10,  181)1  [26  Stat  743,  c.  128].)     xLt  the  CoSmil^^^^^^^ 


UNITED   STATES    V.   ARMOUR   &   CO. 


Charge  to  the  Jury. 


967 


hereby  created  shall  have  authority  to  inquire  into  the  management 
of  the  business  of  all  common  carriers  subject  to  the  provisions  of 
this  Act,  and  shall  keep  itself  informed  as  to  the  manner  and  method 
in  which  the  same  is  conducted,  and  shall  have  the  right  [821]  to 
obtain  from  such  common  carriers  full  and  complete  information 
necessary  to  enable  the  Commission  to  perform  the  duties  and  carry 
out  the  objects  for  which  it  was  created;  and  the  Commission  is 
hereby  authorized  and  required  to  execute  and  enforce  the  provisions 
of  this  act ;  and,  upon  the  request  of  the  Commission,  it  shall  be  the 
duty  of  any  district  attorney  of  the  United  States  to  whom  the  Com- 
mission may  apply  to  institute  in  the  proper  court  and  to  prosecute 
under  the  direction  of  the  Attorney  General  of  the  United  States  all 
necessai-y  proceedings  for  the  enforcement  of  the  provisions  of  this 
act  and  for  the  punishment  of  all  violations  thereof,  and  the  costs 
and  expenses  of  such  prosecution  shall  be  paid  out  of  the  appropria- 
tion for  the  expenses  of  the  courts  of  the  United  States;  and  for 
the  purposes  of  this  act  the  Commission  shall  have  power  to  require, 
by  subpoena,  the  attendance  and  testimony  of  witnesses  and  the  pro- 
duction of  all  books,  papers,  tariffs,  contracts,  agreements,  and  docu- 
ments relating  to  any  matter  under  investigation. 

"  Such  attendance  of  witnesses,  and  the  production  of  such  docu- 
mentary evidence,  may  be  required  from  any  place  in  the  United 
States,  at  any  designated  place  of  hearing.  And  in  case  of  dis- 
obedience to  a  subpoena  the  Commission,  or  any  party  to  a  proceed- 
ing before  the  Commission,  may  invoke  the  aid  of  any  court  of  the 
United  States  in  requiring  the  attendance  and  testimony  of  witnesses 
and  the  production  of  books,  papers,  and  documents  under  the  provi- 
sions of  this  section. 

"And  any  of  the  Circuit  Courts  of  the  United  States  within  the 
jurisdiction  of  which  such  inquiry  is  carried  on  may,  in  case  of  con- 
tumacy or  refusal  to  obey  a  subpoena  issued  to  any  common  carrier 
subject  to  the  provisions  of  this  act,  or  other  person,  issue  an  order 
requiring  such  common  carrier  or  other  person  to  appear  before  said 
Commission  (and  produce  books  and  papers  if  fo  ordered)  and  give 
evidence  touching  the  matter  in  question;  and  any  failure  to  obey 
such  order  of  the  court  may  be  punished  by  such  court  as  a  contempt 
thereof.  The  claim  that  any  such  testimony  or  evidence  may  tend 
to  criminate  the  person  giving  such  evidence  shall  not  excuse  such 
witness  from  testifying;  but  such  evidence  or  testimony  shall  not 
be  used  against  such  person  on  the  trial  of  any  criminal  proceeding." 

Section  6  of  the  commerce  and  labor  act  also  by  its  terms 
provides  that  persons  testifying  or  producing  evidence  be- 
fore the  Commissioner  shall  be  entitled  to  the  immunities 
conferred  by  the  act  in  relation  to  testimony  before  the  In- 
terstate Commerce  Commission,  of  February  11,  1893,  called 
the  "  Supplemental  Act."  This  act  contains  the  following 
provision : 

"  But  no  iierson  shall  be  prosecuted  or  subjected  to  any  penalty  or 
forfeiture  for,  or  on  account  of,  any  transaction,  matter  or  thing 
concerning  which  he  may  testify,  or  produce  evidence  documentary 
or  otherwise  before  said  Commission,  or  in  obedience  to  its  subptena. 
or  the  subpoena  of  either  of  them,  or  in  any  such  case  or  proceeding.*' 

All  of  these  immunity  acts  are  relied  upon  by  the  individual 
defendants,  and,  -while  expressed  in  slightly  varying  Ian- 


I 


968 


142   FEDERAL  KEPORTEB,   821. 


Cliarige  to  the  July, 
guage  they  aU  mean  the  same  thing,  and  each  of  them  is  a 
substitute  for  the  privilege  contained  in  that  clause  of  the 
hfth  amendment  to  the  Constitution,  reading: 

wiS  ^Xr^iin^T"  ""  ^^^^"^  *"  ^^^  "^^'^-^  ^^  to  be  a 

This  fifth  amendment  deals  with  one  of  the  most  cherished 
rights  of  the  American  citizen,  and  has  been  construed  by 
the  courts  to  mean  that  the  witness  shaU  have  the  right  to 
remain  silent  when  questioned  upon  any  subject  where  the 
answer  would  tend  to  incriminate  him.    Congress  by  the 
immunity  laws  in  question,  and  by  each  of  them,  has  taken 
away  the  privilege  contained  in  the  amendment,  and  it  is 
m2]  conceded  in  argument  that  this  cannot  be  done  without 
giving  to  the  citizen  by  way  of  immunity  something  as 
broad  and  valuable  as  the  privilege  thus  destroved.    We 
are  not  without  authority  on  this  question.    By  a  previous 
act,  Congress  undertook  to  take  away  the  constitutional 
privilege  by  giving  the  citizen  an  equivalent,  and  the  Su- 

fl^T  qT.I^*'^!^''  *^^  "^"^  ^^  Counselman  v.  Hitcheock, 
142  U.  S.  547,  12  Sup.  Ct  195,  35  L.  Ed.  1110,  that  the  sub- 
stitute so  given  was  not  an  equivalent.  Then,  at  various 
times,  the  immumty  acts  in  question  were  passed  by  Con- 
gress^with  full  knowledge  that  in  furnishing  a  substitute 
for  this  great  right  of  the  citizen,  it  must  give  something  as 
broad  as  the  privilege  taken  away.  It  might  be  broader,  but 
It  could  not  be  narrower. 

Now,  in  my  judgment,  the  immunity  law  is  broader  than 
the  privilege  given  by  the  fifth  amendment,  which  the  act 
was  mtended  to  substitute.  The  privilege  of  the  amend- 
ment  permits  a  refusal  to  answer.  The  act  wipes  out  the 
offense  about  which  the  witness  might  have  refused  to  answer. 
Ihe  privilege  permits  a  refusal  only  as  to  incriminating 
evidence.  The  act  gives  immunity  for  evidence  of  or  con- 
oerning  the  matter  covered  by  the  indictment,  and  the  evi- 
dence  need  not  be  self -incriminating.  The  privilege  must 
be  personally  claimed  by  the  witness  at  the  time.  The  im- 
munity flows  to  the  witness  by  action  of  law  and  without 
any  claim  on  his  part.  Brown  v.  Walker,  161  U  S  591  16 
Sup  Ct.  644,  40  L.  Ed.  819;  Hah  v.  Eenkel  (recentlv  de- 
cided)  26  Sup. Ct. 370,50  L.Ed.-;  State  w. Qmrles.U -Ark. 


UNITED   STATES   V.   ARMOUR   &   CO. 
Charge  to  the  Jury. 


969 


307,  quoted  in  142  U.  S.  567,  12  Sup.  Ct.  199  (35  L.  Ed. 
1110) ;  People  v.  Sharp,  107  N.  Y.  427,  14  N.  E.  319,  1  Am. 
St.  Kep.  851;  Brown  v.  Walker,  approved  in  Lamson  v. 
Boyden,  160  111.  613,  620,  621,  43  N.  E.  781 ;  People  v.  But- 
ler Street  Foundry,  201  111.  236,  248,  66  N.  E.  349. 

I  am  further  of  opinion  that  the  inmiunity  given  by  the 
act  must  be  as  broad  as  the  liabilities  imposed  by  the  act. 
The  act  calls  upon  the  citizen  to  answer  any  "lawful  re- 
quirement "  of  the  Commissioner.  "  Require  "  means  to  ask 
of  right  and  by  authority.  Webster's  Dictionarv.  Tenn. 
Coal  Co.  V.  Waller  (C.  C.)  37  Fed.  545,  547.  Anything  is  a 
requirement  by  a  public  officer  which  brings  home  to  the 
person  called  upon  that  officer  is  there  officially  and  de- 
sires compliance.  "  Demand  "  and  "  require  "  are  synonyms. 
Miller  V.  Davis,  88  Me.  454,  34  Atl.  265.  The  citizen  may  be 
punished  for  refusal  to  answer  such  lawful  requirement.  I 
am  of  opinion  that  when  the  Commissioner  of  Corporations, 
who  has  power  to  compel,  makes  his  demand,  it  is  the  duty 
of  the  witness  to  obey. 

The  contention  has  been  made  that  in  order  to  get  immu- 
nity the  citizen  shall  wait  until  the  compulsion  becomes 
irresistible.    That  is  the  effect  of  the  government  conten- 
tion.    I  am  not  able  to  bring  my  mind  to  accept  that  doc- 
trine.    If  I  am  right  in  saying  that  immunity  flows  from  the 
law,  without  any  claim  on  the  part  of  the  defendant— and 
at  different  times  that  has  been  conceded  here  in  arguments- 
then  no  act  of  any  kind  on  his  part  which  amounts  to  a  claim 
of  immunity,  which  amounts  to  setting  up  a  claim  of  immu- 
nity, is  demanded  by  the  law.     The  law  never  puts  a  prem- 
ium on  contumacy.     A  person  does  not  become  a  favored 
citizen  by  resistance  to  a  lawful  [823]  requirement.    On  the 
contrary,  the  policy  of  the  law  favors  the  willing  giving  of 
evidence  whenever  an  officer  entitled  to  make  a  demand 
makas  it  upon  a  citizen  who  has  no  right  to  refuse.    And  it 
would  be  absurd  and  un-American  to  favor  the  citizen  who 
resists  and  places  obstacles  in  the  way  of  the  government 
as  against  the  citizen  who,  with  a  full  knowledge  of  the  law, 
obeys  without  resistance  the  demand  of  an  officer  who  has 
the  legal  right  to  make  the  demand  for  something  which  the 
citizen  has  no  legal  right  to  refuse.    This,  then,  is  the  proposi- 


970 


142   FEDEBAL  BEPOBTEB,   823. 


Charge  to  the  Jury. 

tion  to  which  we  are  led :  When  an  officer,  who  has  a  legal 
right  to  make  a  demand,  makes  such  demand  upon  a  citizen, 
who  has  no  legal  right  to  refuse,  and  that  citizen  answers 
under  such  conditions,  he  answers  under  compulsion  of  the 
law. 

Is  that  the  situation  here?    Was  there  compulsion  in  this 
case,  or  were  the  defendants  volunteers?    There  is  so  little 
dispute  here  about  the  facts  that  perhaps  it  is  not  necessary 
to  discuss  them  at  all.    I  am  of  opinion  that  the  conference 
between  Mr.  Garfield,  Mr.  Krauthoff,  Mr.  McRoberts,  and 
Mr.  Dawes  is  the  important  matter,  the  important  event, 
which  fixes  the  character  of  condition  under  which  this  evi- 
dence was  given.    There  is  some  little  dispute.    It  may  be 
said  that  Mr.  Garfield  is  an  interested  witness,  as  a  repre- 
sentative of  the  government.    It  may  be  said  that  Mr.  Mc- 
Roberts  and  Mr.  Krauthoff,  they  being  at  the  time  in  the 
employ  of  the  Armour  Company,  and  one  of  them  being  now 
a  defendant,  are  interested  witnesses.     But  there  is  little, 
if  any,  dispute,  perhaps  only  on  one  subject,  between  Gar- 
field and  Dawes,  only  as  to  the  oath,  as  to  the  fact  that  the 
oath  was  discussed.    They  agree  in  substance  on  every  other 
proposition.    Garfield  says  there  was  no  discussion  of  the 
oath.    Mr.  Dawes  agrees  with  Krauthoff  and  McRobei-ts  that 
there  was.    I  am  not  able  to  look  at  the  evidence  which  was 
furnished  in  this  case  as  being  the  voluntary  production  of 
these  defendants.    The  character  of  such  parts  of  it  as  I 
deemed  the  most  important  is  such  that  it  absohitely  dispels 
any  thought  of  that  kind  from  my  mind.     Reasoning  natur- 
ally, reasoning  upon  the  natural  course  which  men  in  like  con- 
dition would  have  taken,  I  am  led  to  the  conclusion  that  the 
defendants  would  have  withheld  that  information  if  they 
could. 

It  is  contended  that  they  were  volunteers  because  they 
higgled  with  Garfield  at  times,  debated,  resisted,  gave  less 
than  he  first  asked,  withheld  some.  Tlie  record  does  show 
this,  but  the  fact  remains  that  every  approach  Avas  made 
by  the  government.  In  no  instance  did  the  defendants 
go  to  Garfield  offering  anything.  Garfield  made  his  de- 
mands, made  them  explicit,  made  them  definite,  and  it  does 
not  to  my  mind  destroy  the  character  of  compulsion  under 


UNITED   STATES    l\   ABMOUB   &  CO. 


971 


Charge  to  the  Jury. 

which  they  acted  that  the  defendants,  after  having  consid- 
ered the  law,  and  after  having  made  up  their  minds  that 
they  had  n^o  legal  right  to  resist,  still  debated  with  the  Com- 
missioner In  the  hope  of  inducing  him  to  minimize  his 
demands  and  take  something  less  than  he  had  originally 
demanded.    This  in  some  instances  was  done.    Garfield  came 
to  them.    They  did  not  go  to  him.    He  demanded  in  writing, 
and  through  his  accredited  representatives;  and  I  would 
not  regard  it  as  proper  to  hold  him  for  any  actions  of  his 
representatives,  the  result  of  which  did  not  flow  straight 
[824]  to  him,  through  them,  from  the  defendants.    But,  so 
far  as  such  results  did  flow  straight  to  him  in  answer  to  his 
demands,  they  were  negotiations  between  him  and  the  de- 
fendants on  his  legal  demands,  which  they  had  no  right  to 
dispute,  or  refuse  to  answer.     He  came  to  the  defendants 
and  presented  them  with  the  law.    He  held  up  before  them 
his  power  as  Commissioner.    The  defendants  loiew  the  law. 
They  had  been  fully  advised.    They  took  further  time  after 
his  first  interview,  and  were  advised  further.     They  saw 
that  the  Martin  resolution,  under  the  eighth  section  of  the 
law,  made  Garfield^s  duty  imperative.     After  the  passage 
of  that  resolution  the  defendants  saw  that  Garfield  was 
compelled  to  act,  compelled  to  demand,  and  they  were  com- 
pelled to  answer. 

I  regard  Garfield  as  having  been  under  the  strictest  legal 
compulsion  by  the  terms  of  the  Martin  resolution.    It  may 
be  said  that  he  could  have  gone  somewhere  else  and  got 
his  information.     The  record  shows  that  he  himself  said 
that  he  could  not ;  that  he  could  not  make  the  investigation 
imposed  upon  him  as  a  legal  duty  by  the  Martin  resolution 
and  the  eighth  section  of  the  law  without  getting  it  from 
these  people.     And  the  investigation  itself  disclosed  that 
they  are  the  authors  of  nearly  one-half  of  all  the  business 
in  their  line  in  the  whole  country.    So  that  I  think  he  was 
compelled  to  demand  from  them,  as  well  as  they  were  com- 
pelled to  answer,  under  this  statute  and  resolution.     Now, 
if  the  defendants  volunteered  nothing,  but  gave  only  what 
was  demanded  by  an  officer  who  had  the  right  to  make  the 
demand,  and  gave  it  in  good  faith  under  a  sense  of  legal 


972 


142   FEDEEAL  KEPORTER,   824. 


Charge  to  the  Jury. 

compulsion,  I  am  of  opinion  that  they  are  entitled  to  immu- 
nity under  the  act. 

But  it  is  insisted  by  the  government  that  they  did  not 
give  under  compulsion,  because  they  did  not  ^ive  under 
what  is  Imown  in  the  law  as  testimonial  compulsion;  and 
it  is  argued  that  testimonial  compulsion  means  compulsion 
furnished  by  the  subpoena  and  oath.    I  can  add  nothing 
to  what  has  been  adduced  by  way  of  argument  here  on  those 
subjects.    The  subpoena  is  not  necessary  where  the  person  is 
present  in  court  or  within  the  verge  of  the  court.    Goodpas- 
ter  V.  Voris,  8  Iowa  (8  Clarke)  334,  74  Am.  Dec.  313;  Leckie 
V.  Sc'ott^  10  La.  412.    So  the  rule  is  the  same  as  to  the  pro- 
duction of  documents.    Hunton  v.  H,  €&  H,  Go,  (Mich.)  76 
N.  W.  1041 ;  Starr  v.  Mayer,  60  Ga.  546.    The  only  object 
of  the  subpoena  is  to  secure  the  attendance.    It  is  superfluous 
when  he  is   present   without   subpoena.     U.  S.  v,  Sanborn 
(C.  C.)  28  Fed.  299,  at  page  302,  per  Mr.  Justice  Gray; 
Eastman  v.  Sherry  (C.  C.)  37  Fed.  844,  845,  per  Jenkins,  J.; 
Farmer  v.  Storer,  11  Pick.    (Mass.)   241.     "  Ijcx  neminem 
cogit  ad  vana  sen  inutilia."    Land  Go.  v.  Peck^  112  111.  408, 
439.    Under  the  judiciary  act,  providing  for  allowance  "  to 
the  witnesses  summoned  in  any  court  of  the  United  States," 
it  was  held  that  the  fees  of  a  witness  who  attended  at  the 
request  of  the  United  States  attorney  without  having  been 
summoned,  were  taxable.    TJ.  S.  v.  Williams,  1  Cranch,  C.  C. 
178,  Fed.  Gas.  No.  16709;  Prouty  v.  Draper,  2  Story,  199, 
Fed.  Gas.  No.  11447;  Whipple  v,  Gttmherland  Cotton  Mfg. 
Go.,  3  Story,  84,  Fed.  Gas.  No.  17515 ;  Hathaway  v.  Roach, 
2  Woodb.  &  M.  63,  73,  Fed.  Gas.  No.  6213,  approved  by  Gray, 
Gircuit  Justice,  in  U.  S.  v.  Sanborn  (C.  G.)  28  Fed.  301. 
So  a  witness  who  attends  without  subpoena  attends  "  pursu- 
[825]  ant  to  law."    U.  S.  v.  Sanborn  (G.  G.)  28  Fed.  299, 
302;  Hanehett  v.  Humphrey  {C.  C)  93  Fed.  895-897;  U.  S, 
V.  Bell  (G.  G.)  81  Fed.  830;  St.  Matthews  Bank  v.  Fidelity 
Go.  (G.  G.)  105  Fed.  161.    I  am  clearly  of  opinion  that  the 
best  judgment  to  be  had  from  all  of  the  authorities  is  that 
the  subpoena  is  a  useless  and  superfluous  thing  after  the 
tribunal  and  the  witnesses  are  together.    And  I  am  also  of 
opinion  that  under  any  of  these  acts  in  question,  these  im- 
munity laws,  the  production  of  books  and  papers  would  be 
legal  evidence  without  the  oath  of  any  person,  when  they 


UNITED   STATES    V.   ARMOUR   &   CO. 


973 


Charge  to  the  Jury. 

are  adduced   as  showing  admissions  against  interest   and 
against  the  party  producing  them. 

Upon  the  authority  in  the  cases  of  Bram  v.  U.  S.,  168  U.  S. 
532,  18  Sup.  Gt.  183,  42  L.  Ed.  568,  and  Boyd  v.  U.  S.,  116 
U.  S.  616,  6  Sup.  Gt.  524,  29  L.  Ed.  746,  legal  compulsion 
does  not  depend  upon  subpoena  or  oath,  and  upon  reason 
this  must  be  so.     Books  and  documents  prove  themselves, 
when   produced    for   the   purpose   of   showing   admissions 
against  interest.     They   are  receivable   as  evidence  in   all 
courts  against  the  party  producing  them.    The  oath  is  not 
always  essential  to  testimony.     Osborne  v.  Detroit  (G.  G.) 
32  Fed.  36.     No  oath  is  essential  to  the  compulsion  to  pro- 
duce documents  in  a  witness'  possession.     A  person  who  is 
required  to  produce  documents  in  his  possession,  and  pro- 
duces them,  need  not  be  sworn  in  order  to  get  from  him  the 
documents.    Perry  v.  Gibson,  1  Ad.  &  Ell.  48 ;  Id.,  3  Nev. 
&  M.  462  (K.  C.  B.) ;  Davis  v.  Dale,  1  M.  &  M.  514;  Simp- 
son V.  Smith,  1  Starkie  on  Ev.  161,  note  (n) ;  Summers  v. 
Mosely,  2  Gromp.  &  Mees.  477 ;.  Wigmore,  §  1894,  note  1. 
Further,  the  oath  may  be  waived,  and  is  waived  by  failing 
to  insist  on  it  or  raise  the  objection.     Moore  v.  State,  96 
•  Tenn.  209,  33  S.  W.  1046 ;  Goldsmith  v.  State,  32  Tex.  Gr. 
R.  112,  22  S.  W.  405;  Birch  v.  Somerville,  2  Ir.  Law  R.  N. 
S.  243;  Richards  v.  Hugh,  51  L.  J.  Q.  B.  361;  Gady  v. 
Norton,  14  Pick.  (Mass)  236;  Slauter  Y..Whitelock,  12  Ind. 
338 ;  State  v.  Hope,  100  Mo.  347,  13  S.  W.  490,  8  L.  R.  A. 
608;  State  v.  Smith  (Iowa)  100  N.  W.  40,  42.     Books  and 
papers  produced   by   these   defendants   as   the   books   and 
records  of  their  business,  and  called  for  as  such,  are  evi- 
dence against  them,  without  any  oath.     If  I  am  right  in 
the  proposition  that  the  immunities  given  by  the  act  are  as 
broad  as  the  liabilities  imposed  by  the  act,  then  the  subpoena 
and  the  oath  were  not  essential.    Garfield  could  make  a 
legal  requirement  without  using  either  the  subpoena  or  the 
oath.     I  think  this  is  clear  from  the  language  of  the  act.     If 
the  Gommissioner  could  make  a  legal  demand  without  a 
subpoena,  then  immunity  would  follow  to  the  witness  answer- 
ing without  a  subpoena.    It  is  true  that  section  6  of  the  com- 
merce and  labor  act  of  February  14,  1903  (32  Stat.  827,  c. 
552  [U.  S.  Gomp.  St.  Supp.  1905,  p.  68] )  says  that  immuiity 


974 


142   FEDERAL.  BEPORTER,   825. 


Cliarge  to  the  Jurj-. 

shall  apply  to  all  persons  "  who  may  be  subpoenaed,"  etc. 
Now  it  would  be  absurd  to  say  that  a  person  subpoenaed 
would  have  immunity  if  he  produced  no  evidence,  and,  as 
the  subpoena  alone  cannot  give  immunity,  so  the  lack  of 
that  alone  cannot  take  it  away. 

The  same  argimient  will  apply  to  the  oath.    The  purpose 
of  the  oath  was  to  secure  the  truth.    That  is  always  tlie 
purpose  of  the  oath.    That  is  the  only  purpose  of  tlie  oath; 
and,  to  be  certain  that  we  get  the  truth,  the  court  always 
starts  out  by  putting  the  witness  imder  oath.    But  the  act 
under  which  Garfield  was  clothed  with  power  did  not  re- 
[826]  quire  him  to  put  anybody  under  oath.    It  required 
him  to  make  investigation.    He  might  make  it  according  to 
legal  forms  or  not.    He  might  use  any  kind  of  evidence 
that  he  chose  that  was  suitable  to  his  purpose.    The  evi- 
dence procured  from  these  defendants,  so  far  as  it  consisted 
of  books  and  pai)ers,  was,  however,  legal  evidence — would 
be  considered  legal  evidence  in  a  court  of  law;  and  under 
any  one  of  these  acts  the  production  of  the  books  and  papers 
is  a  complete  compliance  with  the  law  providing  for  the 
production  of  evidence,  documentary  or  otherwise.    It  is  not 
strange  that  Garfield  was  satisfied  not  to  swear  the  defend- 
ants, although  he  started  out  with  that  intention.    He  dis- 
tinctly told  them  so,  and  his  forms  show  that  fact.    He  ex- 
pected to  put  them  on  oath  if  he  regarded  it  as  necessary, 
if  he  had  any  doubt  about  the  truthfulness  of  the  evidence. 
He  had  access  to  the  books  of  original  entry.    He  was  satis- 
fied of  that  fact.    His  agents  were  satisfied  of  that  fact. 
The  record  shows  this  over  and  over  again  by  repeated 
answers,  and  there  was  not  the  slightest  reason  for  putting 
anybody  under  oath,  so  far  as  the  use  of  those  books  and 
documents  was  concerned.    The  oath  of  any  one  would 
have  made  that  evidence  no  stronger  or  better  that  it  is 
now  without  the  oath. 

If  it  shall  be  said  that  the  act  of  February  14,  1903 
establishing  the  Department  of  Commerce  and  Labor,  allows 
immunity  to  the  witness  only  upon  the  conditions  urged  by 
the  government,  viz.,  that  he  shall  have  resisted  until  regu- 
larly subpoenaed  and  sworn,  no  such  contention  can  fairly 
be  made  as  to  the  immunity  clause  of  the  act  of  February 


UNITED   STATES    V.   ARMOUR   &   CO. 


975 


Charge  to  the  Jury. 

25,  1<)03.  The  record  shows,  and  it  is  not  disputed,  that 
material  evidence  was  procured  by  Garfield  from  the  de- 
fendants upon  the  subject  of  an  unlawful  combination.  I 
have  already  held  that  it  was  given  under  legal  compul- 
sion. The  record  further  shows  that  this  evidence  was  de- 
manded by  the  Department  of  Justice  for  the  purposes  of 
this  prosecution,  and  that  Garfield  declined  to  give  it,  as  he 
had  promised  the  defendants  it  would  not  be  so  used ;  that 
later,  upon  repeated  demands  of  the  Department  of  Justice, 
and  upon  the  order  of  the  President,  he  turned  it  over  to 
that  department.  It  is  contended  that  as  to  all  such  evidence 
the  defendants  are  entitled  to  immunity  under  the  independ- 
ent and  unconditional  act  of  February  25,  1903,  and  I  am  of 
opinion  that  they  are  so  entitled. 

It  is  contended  on  behalf  of  the  government  that  the  con- 
struction here  given  to  the  commerce  and  labor  law  would 
result  in  the  failure  to  convict  individuals  for  the  prosecu- 
tion of  whom  the  Commissioner  of  Corporations  might  be 
assisting,  and  thus  the  law  would  be  nullified;  that  guilty 
persons  would  rush  to  the  officer  with  their  evidence  and 
receive  immunity.     The  answer  to  this  contention  is  that 
the  primary  purpose  of  the  ace  is  to  correct  defective  legisla- 
tion, and,  if  an  additional  purpose  be  the  prosecution  of 
offenders,  such  additional  purpose  is  clearly  secondary.     To 
effect  the  primary  purpose,  viz.,  secure  information  fur  the 
use  of  the   legislative   body,   the  construction   here  given 
would  be  highly  efficient,  as  the  persons  required  to  give 
evidence,  being  personally  immune,  would  probably  testify 
willingly,  while  those  coming  unbidden  would  be  volunteers 
and  not  entitled  to  immunity.    I  am  also  presented  with 
the  argument  that  the  questions  are  of  great  public  interest. 
Therefore  the  defendants  should  be  held  [827]  to  trial,  to 
the  end  that  upon  a  final  judgment,  if  adverse  to  the  defend- 
ants, the  questions  arising  on  the  pleas  might  be  reviewed 
by  the  Supreme  Court,  which  would  not  be  possible  if  the 
decision  be  adverse   to  the  government.    I  know  that  courts 
have  sometimes  yielded  to  this  argument  in  cases  of  public 
importance,  usually  where  property  rights  only  were  in 
volved;  but  I  think  it  should  not  be  the  controlling  motive 
for  the  decision  here.    The  parties  are  entitled  to  the  bes^ 


976 


142   FEDEKAL  KEPOKTER,   1010. 


Syllabus. 

jedgiiient  of  the  court  upon  the  questions  involved.  I  am 
of  opinion  that  the  record  shows  the  individual  defendants 
to  have  given  under  legal  compulsion  evidence  of  and  con- 
cerning the  matters  contained  in  the  indictment,  and  thsit 
they  are  therefore  entitled  to  immunity. 

Gentlemen  of  the  jury,  under  the  law  of  this  case,  th<» 
immunity  pleas  filed  by  the  defendants  will  be  sustained  ai> 
to  the  individual  defendants,  the  natural  persons,  and  denied 
as  to  the  corporations,  the  artificial  persons,  and  your  ver- 
dict will  be  in  favor  of  the  defendants  as  to  the  individuals, 
and  in  favor  of  the  government  as  to  the  corporations 


[1010]  LODER  V,  JAYNE  ET  AL.« 

(Circuit  Court,  E.  D.  Pennsylvania.    January  22,  1906. > 

[142  Fed.,  1010.  j 

Monopolies — Conspiracy — ^Restbaint  of  Trade — ^Burden  of  Proof. — 
The  burden  of  proving  a  combination  and  conspiracy  between  man- 
ufacturers and  wholesale  and  retail  dealers  of  proprietary  medicines 
and  drugs  in  restraint  of  trade,  in  violation  of  Act  Cong.  July  2, 
1800,  c.  647,  26  Stat  209  [U.  S.  Comp.  St.  1901,  p.  .3200],  injurious 
to  plaintiff,  and  that  defendants  were  engaged  and  took  part  in  such 
conspiracy,  was  on  the  plaintiff.^ 

Same — Combinations  in  Restraint  op  Interstate  Commerce — FixiNa 
Prices. — Where  three  voluntary  associations,  composed  of  the  man- 
ufacturers, wholesalers,  and  retailers,  respectively,  of  di*ugs,  pro- 
prietary medicines,  etc.,  were  organized  to  arbitrarily  fix  a  minimum 
retail  price  for  such  articles,  w^hich  were  of  universal  consumption 
and  were  of  absolute  and  daily  necessity,  and  then  restricted  the 
sale  of  such  articles  to  such  retailers  only  as  conducted  their  retail 
busi!iess  in  accordance  with  the  arbitrary  standard  of  prices,  such 
combination  was  in  restraint  of  interstate  commerce  in  the  drug 
trade  in  so  far  as  it  excluded  "aggressive  cutters"  of  prices  and 
those  who  dealt  with  them,  and  was  in  violation  of  Act  Cong.  July 
2,  1890,  c.  647,  26  Stat  209  [U.  S.  Comp.  St  1901,  p.  3200],  prohibit- 
ing monopolies  in  restraint  of  interstate  trade  and  commerce,  etc 


«  Judgment  reversed  and  a  new  trial  awarded  by  the  Circuit  Court 
of  Appeals,  Third  Circuit,  December  S,  1906.  The  opinion  of  the 
court  not  yet  reported  in  the  Federal  Reporter.  The  decision  of  the 
Circuit  Court,  herein  reprinted,  was,  in  the  main,  held  to  be  correct, 
the  error  arising  from  the  attempt  of  the  court,  by  a  resolution  of  the 
verdict  to  eliminate  items  of  damage,  with  regard  to  which  there  was 
admittedly  no  sufficient  evidence. 

»  Syllabus  copyrighted,  1906,  by  the  West  Publishing  Co. 


LODER    V.    JAYNE. 


977 


Syllabus. 

Triai^-Admission  op  Evidence— Order  of  Proof.— In  an  action  to  re- 
cover damages  for  an  alleged  conspiracy  in  restraint  of  interstate 
commerce,  it  was  within  the  discretion  of  the  trial  court  [1011]  to 
admit  evidence  of  acts  and  declarations  of  various  of  the  defendant 
associations,  their  officers,  committees,  members,  and  agents,  made 
in  the  absence  of  many  of  the  other  defendants,  before  a  pruna  facie 
case  of  conspiracy  had  been  established,  and  before  privity  of  some 
of  the  defendants  had  been  proven,  on  condition  that  such  connect- 
ing evidence  should  be  thereafter  given. 
Monopolies— Evidence— Findings.— In  an  action  for  damages  arising 
on  an  alleged  conspiracy  in  restraint  of  interstate  commerce,   in 
violation  of  Act  Cong.  July  2,  1890,  c.  647,  26  Stat  209  [U.  S.  Comp. 
St  1901,  p.  3200],  evidence  held  sufficient    to  establish  the  partici- 
pation of  certain  of  the  defendants  in  such  conspiracy. 
Same— Combinations  in  Restraint  of  Trade— Damages— Burden  of 
Proof.— In  an  action  for  damages  for  conspiracy  in  restraint  of  in- 
terstate commerce,  in  violation  of  Act  Cong.  July  2,  1890,  c.  647,  26 
Stat  209  [U.  S.  Comp.  St  1901,  p.  3200],  the  burden  was  on  plaintiff 
to  show  some  real  actual  damage  to  his  business  by  reason  of  the 
alleged  unlawful  combination. 
Same— Damages— Evidence.— Where,    in   an   action   for   damages   to 
plaintiff's  business  because  of  an  alleged  conspiracy  in  restraint  of 
interstate  commerce,  plaintiff  claimed  $5,000  compensation  to  him- 
self for  extra  work  claimed  to  have  been  required  by  reason  of  such 
unlawful  combination,  but  failed  to  prove  how  much  additional  time 
he  was  required  to  spend  in  his  business  after  the  combination 
went  into  effect,  he  was  not  entitled  to  recover  for  such  alleged  ex- 
tra services. 

Same— Additional  Capital.— Where,  in  a  suit  for  damages  to  plain- 
tiff's business  because  of  an  alleged  unlawful  combination  in  re- 
straint of  interstate  commerce,  plaintiff  claimed  that  because  of 
such  combination  it  was  necessary  to  put  $10,000  extra  capi^l  into 
his  business  from  rents  of  his  building,  which  were  collected  from 
time  to  time,  but  he  testified  on  cross-examination  that  the  pay- 
ments of  interest  and  taxes  on  the  building  were  in  excess  of  the 
amount  paid  into  the  business,  he  was  not  entitled  to  recover  inter- 
est on  such  alleged  additional  capital. 

Same— Increased  Cost.— Where,  by  reason  of  an  unlawful  combina- 
tion in  restraint  of  interstate  commerce  in  violation  of  the  Sherman 
act  plaintiff  was  compelled  to  conduct  his  business  at  a  greater 
cost  though  it  was  greater  in  volume,  and  by  reason  of  the  injury 
he  received  a  less  percentage  of  return,  he  was  entitled  to  recover 
such  additional  cost,  though  by  reason  of  his  increased  efforts  and 
the  natural  increase  of  his  business  he  was  enabled  to  withdraw 
from  the  business  for  hi^  personal  services  an  amount  equal  to,  or 
larger  than,  he  drew  from  the  business  before  the  conspiracy  bectime 
operative. 

21220— vol  2—07  m 62 


978 


142  FEDEBAL  BEPORTER,   lOU. 


Opinion  of  the  CJonrt. 
At  Law.    On  motion  for  a  new  trial. 

IF.  WUson  CarlUe  and  Henry  /.  Scott^  for  plaintiff, 

Morgan  <&  Lewis,  O.  E.  Shannon,  H,  C,  Haines,  F,  M. 
Cody,  Hopper,  Lessig  S  Smith,  W.  H.  Hepburn,,  Charles 
Biddle,  Frank  Savidge,  Henry  Z>.  Paxson,  J,  C,  Jones,  Henry 
La  Barre  Jayne,  Irving  P.  Wanger,  N.  Dubois  Miller,  Joseph 
C.  Fraley,  and  John  G.  Johnson,  for  defendants. 

Holland,  District  Judge. 

The  plaintiff,  C.  G.  A.  Loder,  brought  suit  against  the 
above-named  defendants,  in  this  district,  to  recover  damages 
to  his  retail  drug  business,  which  he  claims  to  have  suffered 
by  reason  of  an  agreement,  contract,  combination,  and  con- 
spiracy into  [1012]  which  the  defendants  entered  and  car- 
ried into  effect,  in  connection  with  other  parties  throughout 
the  United  States,  in  restraint  of  interstate  trade  and  com- 
merce, contrary  to  the  provisions  of  Act  Cong.  July  2,  1890, 
c.  647,  26  Stat.  209  [U.  S.  Comp.  St.  1901,  p.  3200],  entitled 
"An  act  to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopolies."  The  provisions  of  this  act  of 
importance  in  this  case  are  the  following: 

"Section  1,  Every  contract,  combination  In  the  fonn  of  trust  or 
otherwise,  or  conspiracy  in  restraint  of  trade,  or  commerce  among  the 
several  states  or  with  foreign  nations,  is  hereby  declared  to  be  illegal. 
Every  person  who  shall  make  any  such  contract  or  engage  in  such  com- 
bination or  conspiracy  shall  be  deemed  guilty  of  a  misdemeanor  and 
on  conilction  thereof  shall  be  punished  by  fine  not  exceeding  five 
thousand  dollars  or  by  imprisonment  not  exceeding  one  year  or  by 
both  said  punishments,  in  the  discretion  of  the  court. 

**  Sec  2.  Every  person  who  shall  monopolize  or  attempt  to  monop- 
olize or  combine  or  conspire  with  any  other  person  or  persons,  to 
monopolize  any  part  of  the  trade  or  commerce  among  the  several 
states  or  with  foreign  nations,  shall  be  deemed  guilty  of  a  misde- 
meanor, and  on  conviction  thereof,  shall  be  punished  by  fine  not 
exceeding  five  thousand  dollars  or  by  imprisonment  not  exceeding  one 
year,  or  by  both  said  punishments  In  the  discretion  of  the  court" 

"  Sec.  7.  Any  person  who  shall  be  injured  in  his  business  or  prop- 
erty by  any  other  person  or  corporation  by  reason  of  anything  for- 
bidden or  declared  to  be  unlawful  by  this  act  may  sue  therefor  in  any 
Circuit  Court  of  the  United  States  in  the  district  in  which  the 
defendant  resides,  or  is  found,  without  respect  to  the  amount  in  con- 
troversy and  shall  recover  threefold  the  damages  by  him  sustained 
and  the  costs  of  suit,  including  a  reasonable  attorney's  fee."  * 

Under  sections  1  and  2  of  this  act  every  contract,  combina- 
tion, or  conspiracy  in  restraint  of  trade  or  commerce  among 


LODEB   V,   JAYNE. 


979 


Opinion  of  the  Court 
the  several  states,  or  with  foreign  nations,  and  every  com- 
bination or  conspiracy  to  monopolize  any  part  of  the  trade 
or  commerce  among  the  several  states,  or  with  foreign  na- 
tions, is  declared  to  be  illegal,  and  every  person  who  makes 
such  a  contract,  or  engages  in  such  combination  or  conspir- 
acy, or  combines  or  conspires  to  thus  monopolize,  is  declared 
to  be  engaged  in  an  unlawful  act;  and  the  seventh  section 
authorizes  every  person  injured  in  his  business  or  property  to 
brmg  suit  against  such  other  person  or  corporation,  who  may 
be  engaged  in  any  such  unlawful  act,  in  the  Circuit  Court  of 
the  United  States  in  the  district  in  which  the  defendants  re- 
side or  are  found. 

The  plaintiff,  claiming  that  all  these  defendants  were  en- 
gaged in  such  a  combination  and  conspiracy  to  monopolize 
and  to  restrain  trade,  forbidden  by  these  sections,  brought 
suit  under  the  act,  and  filed  his  statement  of  claim.    The 
case  was  put  at  issue,  and  tried  at  the  October  term,  1905, 
and  a  verdict  rendered  in  favor  of  the  plaintiff  agaikst  all 
the  defendants,  excepting  Jayne  &  Son  and  Campion  &  Co., 
for  the  sum  of  $20,738.    Motions  and  reasons  for  a  new  trial 
were  filed  on  behalf  of  all  the  defendants,  excepting  the 
two  above  mentioned,  and,  in  addition,  there  were  filed  mo- 
tions for  judgments  non  obstante  veredicto  upon  the  whole 
record  in  favor  of  H.  K.  Mulford  Company,  Hance  Bros.  & 
White,  and  Warren  H.  Foley.    In  addition  to  the  request  for 
binding  instructions  at  the  trial  in  favor  of  all  the  defend- 
ants, H.  K.  Mulford  Company,  Hance  Bros.  &  White,  and 
Warren  H.  Foley,  by  their  attorneys,  requested  binding  in- 
structions in  favor  of  [1013]  these  particular  defendants, 
which  request  was  refused  by  the  court,  and  under  the  pro- 
visions of  the  act  of  the  General  Assembly  of  the  common- 
wealth of  Fennsylvania,  approved  the  22d  day  of  April,  1905 
(F.  L.  286) ,  they  are  authorized  to  make  this  motion  for  judg. 
ment  non  obstante  veredicto  upon  the  whole  record,  in  their 
favor. 

There  are  in  all  33  reasons  for  a  new  trial,  which  can  be 
considered  under  three  different  heads:  First,  those  which 
raise  the  questions  as  to  whether  or  not  the  plaintiff  charged 
and  proved  a  violation  of  the  Sherman  act,  and  as  to  the  cor- 


980 


142   FEDEKAL  REPORTER,   1013. 
OplBion  of  the  Court 


rectness  of  the  charge  and  rulings  of  the  court  in  this  connec- 
tion; second,  the  admissibility  of  certain  evidence;  third,  the 
sufficiency  of  the  proof  of  the  different  items  of  damage 
claimed. 

In  his  statement  of  claim  Loder  alleges,  and  offered  evi- 
dence to  prove,  that  for  more  than  20  years  he  has  been  en- 
gaged in  the  business  of  dealing  in  drugs  at  wholesale  and 
retail  in  the  city  of  Philadelphia,  buying  and  selling  his  mer- 
chandise in  various  cities  of  the  union  without  any  hindrance 
to  him  by  any  one  until  November  1,  1900,  when  the  injury 
to  his  business  complained  of  began,  and  this  he  says  was 
brought  about  by  the  defendants  and  others  acting  together 
in  a  combination  and  conspiracy,  which  he  lays  in  his  state- 
ment of  claim  in  language  following : 

"The  Proprietary  Association  of  America,  the  National  Wholesale 
Druggists*  Association  and  the  National  Association  of  Retail  Drug- 
gists, their  officers,  delegates  and  members  unlawfully  entered  into 
an  agreement,  combination  and  conspiracy  in  restraint  of  trade  or 
commerce  among  the  several  states  and  with  foreign  countries  in 
this,  to  wit:  that  they  unlawfully  agreed,  contracted,  combined  and 
conspired  to  enhance  and  arbitrarily  to  fix,  regulate  and  determine  the 
wholesale  and  retail  prices  at  which  various  commodities  of  the  drug 
trade  consisting  of  patent  medicines,  drugs  and  proprietary  articles 
manufactured  in  the  several  states  should  be  sold  to  the  retail  drug- 
gists and  by  the  said  retail  druggists  to  the  consumers,  residents  of  the 
several  states  of  the  United  States." 

The  Proprietary  Association  of  America  is  an  unincorpo- 
rated association  composed  of  over  90  per  cent,  of  all  the  man- 
ufacturers and  proprietors  of  patent  medicines  within  the 
United  States;  the  National  Wholesale  Druggists'  Associa- 
tion is  an  unincorporated  association  composed  approximately 
of  05  per  cent,  of  all  the  wholesale  druggists  of  America  who 
are  engaged  in  the  business  of  selling  at  wholesale  drugs  and 
proprietary  articles  to  retailers  for  the  manufacturers  and 
proprietors  of  these  drugs  throughout  the  United  States,  and 
all  the  defendant  wholesalers  are  members  of  this  association ; 
and  the  National  Association  of  Retail  Druggists  is  also  an 
unincorporated  association,  with  headquarters  at  Chicago, 
and  has  a  membership  composed  of  the  local  association  of 
druggists,  the  members  of  these  local  associations  comprising 
about  90  per  cent,  of  the  retail  druggists  in  the  cities,  towns, 
and  counties,  or  districts  throughout  the  United  States  in 
which  local  organizations  are  formed,  and  these  local  associa- 


LODER   V.   JAYNE. 
Opinion  of  the  Court. 


981 


I 


tions  are  represented  in  the  National  Association  by  dele- 
gates periodically  chosen  for  that  purpose.  There  is  also  an 
incorporated  association,  one  of  the  defendants,  the  Philadel- 
phia Association  of  Eetail  Druggists,  composed  of  nearly  all 
the  retail  druggists  in  the  city  of  Philadelphia,  and  with 
which  association  all  the  defendants  named  [1014]  in  this 
suit  who  are  engaged  in  the  retail  drug  trade  are  connected 
either  as  members  or  officers.  This  local  association  is  a  mem- 
ber of  the  National  Association  of  Eetail  Druggists,  and  these 
defendants,  who  are  members,  have  been  acting  in  accordance 
with  the  rules  and  regulations  of  the  National  Association  in 
the  conduct  of  their  business  as  retailers. 

The  burden  of  proving  the  existence  of  this  agreement,  con- 
tract, combination,  and  conspiracy,  and  that  the  defendants 
were  engaged  and  took  part  in  it,  was  upon  the  plaintiff,  and 
for  that  purpose  evidence,  which  was  uncontradicted,  was 
offered  to  prove  that  the  National  Association  of  Retail 
Druggists  had  its  central  office  in  Chicago,  and  received 
financial  support  from  all  the  other  associations  and  many 
of  the  members  belonging  to  them;  that  from  this  central 
point  organizers  were  sent  out  for  the  purpose  of  bringing 
the  local  retail  dealers  into  associations,  and,  as  a  result, 
Philadelphia  retailers  were  organized  into  an  incorporated 
association  known  as  the  Philadelphia  Association  of  Retail 
Druggists.     In  accordance  with  the  plans  suggested  by  the 
organizers  sent  from  Chicago,  the  Philadelphia  retail  drug- 
gists working  with  the  organizers  secured  a  consensus  of  opin- 
ion of  the  retailers  here  from  which  they  fixed  the  minimum 
rate  at  which  drugs  should  be  sold  at  retail  by  the  retail  drug- 
gists in  Philadelphia  and  vicinity.     All  the  retail  dealers 
were  then  notified  of  this  minimum  rate,  and  in  case  the  re- 
tailer cut  below  the  price  so  fixed  his  name,  with  this  infor- 
mation, was  sent  to  the  National  Association  of  Retail  Drug- 
gists at  Chicago,  and  the  secretary,  Mr.  Wooten,  then  placed 
the  name  of  this  retail  druggist  upon  what  was  known  as  an 
"  aggressive  cutter's  "  list,  and  this  aggressive  cutter's  list, 
with  his  name  thereon,  was  sent  to  all  proprietors,  members 
of  the  Proprietary  Association  of  America,  and  all  the  whole- 
salers, members  of  the  National  T^Tiolesale  Druggists'  Asso- 
ciation, with  the  request  that  they  cease  selling  any  drugs 


982 


142   FEDERAL  REPORTER,   1014. 


Opinion  of  the  CJourt 

whatever  to  such  aggressive  cutter ;  and  it  was  further  estab- 
lished, in  case  any  proprietor  or  wholesaler,  after  receiving 
this  notice  from  the  secretary  of  the  National  Association  of 
Retail  Druggists,  failed  to  obey  and  cease  selling  to  such  ag- 
gressive cutter,  this  information  of  his  failure  to  obey  also 
found  its  way  to  the  secretary  of  the  National  Association  of 
Retail  Druggists,  and  such  disobedient  proprietor  or  whole- 
saler was  disciplined  by  being  put  upon  what  was  designated 
as  a  "pink  slip,"  and  his  name  was  sent  to  all  retailers 
throughout  the  United  States  with  the  information  that  he 
had  been  selling  to  aggressive  cutters,  and  the  request  made 
to  the  retailers  throughout  the  country  to  cease  making  any 
further  purchases  from  such  delinquent  wholesaler  or  pro- 
prietor. 

It  is  very  plain  that  this  arbitrary  fixing  of  a  minimum 
retail  price  for  drugs  which  are  of  universal  consumption  and 
of  absolute  and  daily  necessity  and  then  restricting  their  sale 
to  such  retailers  only  who  conduct  their  retail  business  in  ac- 
cordance with  this  arbitrary  standard  of  prices  is  a  clear 
restraint  of  interstate  commerce  in  the  drug  trade  to  the 
extent  of  excluding  the  aggressive  cutters  and  those  who  deal 
with  them,  and  is  in  violation  of  the  act  The  plaintiff  was 
reported  to  Secretary  Wooten,  and  on  November  1,  1900,  his 
nam©  was  placed  upon  an  aggressive  cutter's  list,  from  which 
date  down  [1015]  until  the  28th  day  of  July,  when  suit  was 
brought  in  this  case,  he  was  unable  to  buy  drugs  direct  from 
Mie  proprietors  or  wholesalers  in  the  United  States,  but  was 
compelled  to  purchase  them  in  the  name  of  other  persons  and 
in  various  indirect  ways,  and  even  then  was  unable  to  keep 
his  store  stocked  as  extensively  as  a  retailer  usually  requires. 
Thus  embarrassed,  he  was  compelled  to  secure  these  drugs  at 
1  much  greater  cost  than  he  would  have  paid  had  he  been  able 
to  purchase  in  the  regular  way. 

The  evidence  shows  that  all  the  defendants  against  whom 
the  verdict  was  rendered  were  connected  with  one  or  the 
other  of  these  associations;  were  cognizant  of  the  method 
adopted  to  coerce  the  retailers  to  adopt  the  minimum  rate, 
and  participated  in  the  scheme  of  punishment  visited  upon 
all  who  cut  below  the  price  fixed.  Of  course,  there  was  no 
documentary  evidence  which  the  plaintiff  could  produce  to 


LODEB   V.   JAYNE. 


983 


Opinion  of  ttie  Court. 

show  this  alleged  conspiracy,  except  copies  of  the  kind  of 
"aggressive  cutter's"  lists  and  "pink  slips"  sent  out  by 
Mr.  Wooten,  or,  that  one  of  the  objects  of  these  associations, 
and  the  members  thereunto  belonging  acting  together,  was 
for  this  alleged  purpose,  but  the  court  permitted  him  to  show 
the  close  association  of  all  these  organizations  engaged  in  the 
drug  business,  their  acts  and  declarations  appearing  in  their 
printed  records  of  their  joint  and  separate  meetings,  the 
publications  and  declarations  made  in  their  official  organ  in 
support  of  their  rules  and  regulations  jointly  and  separately 
enacted  for  the  purpose  of  effecting  the  object  of  this  associa- 
tion.    It  nowhere  expressly  appeared  that  one  of  the  objects 
was  to  combine  for  the  purpose  alleged  in  the  plaintiff's 
statement  and  to  carry  it  out  by  the  drastic,  disciplinary 
methods  proven  at  the  trial.     On  the  other  hand,  the  evi- 
dence showed  that  their  reports,  speeches,  declarations,  and 
resolutions  were  usually  couched  in  language  which,  upon 
its  face,  was  not  inconsistent  with  a  lawful  purpose,  but 
taken  in  connection  with  what  afterward  occurred,  and  the 
implicit  obedience  with  which  the  members,  and  particularly 
the  defendants  in  this  case,  obeyed  the  command  of  the  sec- 
retary of  the  National  Association  of  Retail  Druggists,  it  was 
for  the  jury  to  say  whether  or  not  the  evidence  as  a  whole  did 
not  justify  the  finding  that  an  agreement,  contract,  combi- 
nation, and  conspiracy  such  as  charged  existed,  and  whether 
the  defendants   were   engaged   in   it.     The   jury   were   in- 
structed that  if  the  combination  and  conspiracy  set  forth  in 
the  statement  existed,  it  was  in  violation  of  the  Sherman 
act,  and  it  was  for  them  to  say  whether  or  not  the  plaintiff 
had  proven  his  case»    The  jury  found  in  his  favor. 

These  instructions,  upon  a  review,  we  are  convinced  were 
properly  given,  and  that  the  findings  of  the  jury  were  based 
upon  competent  evidence.  Many  acts  and  declarations  of 
the  various  associations,  their  officers,  committees,  memliers, 
and  agents  made  in  the  absence  of  many  of  the  other  de- 
fendants in  the  case  for  the  purpose  of  proving  the  con- 
spiracy were  admitted  before  a  prima  facie  case  of  con- 
spiracy had  been  established  and  before  the  privity  of  some 
of  the  defendants  had  been  proven.    It  is  true  that  the  rule 


e84. 


142  FEDEKAL  HIPOBTEB,  1015. 
Opinion  of  the  CJonrt 


in  tlie  admission  of  evidence  in  conspiracy  cases  is  to  require 
first  the  proof  of  a  prima  facie  case  of  conspiracy  before  the 
acts  and  declarations  of  co-conspirators  made  in  the  absence 
of  defendants  are   admitted   against  them,   although   the 
[1016]  court  may,  in  its  discretion,  permit  evidence  of  the 
declarations  to  be  introduced  out  of  its  order,  upon  condi- 
tion that  it  be  afterwards  followed  by  evidence  of  the  con- 
spiracy, and  in  some  peculiar  instances,  in  which  it  would 
be  difficult  to  establish  defendant's  privity  without  first 
proving  the  existence  of  a  conspiracy,  a  deviation  has  been 
made  from  the  general  rule,  and  evidence  of  acts  and  con- 
duct of  others  has  been  admitted  to  prove  the  existence  of  a 
conspiracy  previous  to  the  proof  of  the  defendant's  privity. 
Substantially  the  same  rule  applies  in  criminal  as  in  civil 
cases  as  to  the  admissibility  of  the  acts  or  declarations  of 
one  conspirator  as  original  evidence  against  each  member 
of  the  conspiracy.    Elliott  on  Evidence,  vol.  4,  §  2939 ;  Id. 
vol.  1,  §  249;  Kice  on  Evidence,  vol.  8,  p.  904,  §  578d.    All 
the  evidence  sought  to  be  stricken  out  by  the  motion  of  de- 
fendants,  which  raised  the  question  of  the  competency  of 
this  evidence,  was  of  this  character  and  clearly  admissible. 
On  the  whole  evidence,  the  combination  and  the  privity  of 
defendants  were  established  by  proof  of  facts  personal  to 
each  connecting  him  therewith.     The  question  of  damage 
will  be  considered  after  disposing  of  the  motions  for  judg- 
ments non  obstante  veredicto. 

It  is  contended  that  upon  the  whole  record  notwithstand- 
ing the  verdict  judgment  should  now  be  entered  by  the 
court  in  favor  of  Hance  Bros.  &  White,  H.  K.  Mulford 
Company,  and  Warren  H.  Foley.  As  we  have  already  con- 
cluded that  the  combination  and  conspiracy  alleged  in  the 
statement  of  claim,  if  proven,  was  in  violation  of  the  act 
of  Congi-ess,  and  the  verdict  of  the  jury  in  favor  of  the 
plaintiff  having  established  its  existence,  the  only  question 
to  be  determined  as  to  these  three  defendants  is  whether 
or  not  there  is  any  evidence  to  show  that  they  or  either  of 
them  were  engaged  in  it.  Hance  Bros.  &  White  and  H.  K. 
Mulford  Company  were  members  of  the  National  Whole- 
sale Druggists'  Association,  and  Warren  H.  Foley  was  a 
member  of  the  Fhiladelphia  Association  of  Ketail  Druggists. 


LODEB   V,   JAYNE. 
Opinion  of  the  Court. 


985 


It  is  not  attempted  to  hold  any  of  these  defendants  through 
the  associations  with  which  they  are  affiliated.  The  suit  as 
to  them  is  directly  against  the  firm  of  Hance  Bros.  &  White, 
the  corporation  of  H.  K.  Mulford  Company,  and  Warren  H. 
Foley  individually.  Tlie  combination  and  conspiracy  in 
which  it  is  alleged  they  were  engaged  and  which  caused 
the  injury  to  the  plaintiff  was  for  the  purpose  of  arbitrarily 
fixing,  regulating,  and  determining  the  wholesale  and  re- 
tail prices  at  which  drugs  should  be  sold  to  retail  druggists, 
and  by  them  to  the  consumers  throughout  the  United  States, 
and  to  carry  into  effect  this  combination  or  conspiracy,  it 
is  claimed  that  these  defendants,  with  others  in  the  suit, 
took  part  in  the  proceedings  of  the  various  organizations 
with  which  they  were  affiliated  in  bringing  about  and  formu- 
lating rules  and  regulations  by  which  delinquents  could  be 
placed  upon  the  aggressive  cutter's  list,  and  pressure  brought 
to  bear  upon  them  for  the  purpose  of  compelling  them  to 
conform  to  the  demands  of  those  engaged  in  the  combina- 
tion and  conspiracy.  Each  of  these  defendants  who  took 
part  in  the  meetings  which  brought  about  this  central  or- 
organization  at  Chicago,  with  power  to  carry  into  effect  these 
disciplinary  measures,  acted  upon  the  commands  of  the  sec- 
retary of  the  National  [1017]  Association  of  Eetail  Drug- 
gists with  regard  to  the  punishment  administered  to  those 
who  were  blacklisted. 

The  evidence  shows  that  these  three  defendants  were  fully 
aware  of  the  methods  pursued  by  the  associations  to  which 
they  belonged  by  which  their  members  strengthened  and  per- 
fected the  system  of  coercion  emanating  from  Chicago,  and 
that  they,  to  a  more  or  less  extent,  participated  and  acqui- 
esced in  the  preliminary  arrangements  leading  up  to  the 
consummation  of  the  plan.  The  Philadelphia  Association  of 
Ketail  Druggists,  of  which  Mr.  Foley  is  a  member,  is  a  cor- 
poration, and  made  a  defendant  in  this  case,  yet  whatever 
part  he  took  as  an  individual  in  the  preliminary  and  final 
steps  taken  to  carry  into  effect  the  combination  and  con- 
spiracy as  charged,  he  must  answer  for  in  his  individual 
capacity.  A\Tiat  part,  if  any,  did  these  defendants  take? 
The  Fhiladelphia  Association  of  Ketail  Druggists,  on  Janu- 
ary 31,  1901,  sent  out  from  the  office  of  the  executive  com- 


f 


986 


142  FEDEBAL  BEPOBTEB,   1017. 
Opinion  of  the  Court 


mittee,  No.  4154  Lancaster  avenue,  Philadelphia,  a  letter 
marked  personal  and  confidential,  as  follows : 

"Being  satisfied  that  the  policy  of  your  firm  is  one  of  fair  and  con- 
siderate dealing  with  the  retail  drug  trade  and  that  you  are  willing 
!L*J^t^T*®,K"i'  t*ie/etail  druggists  along  lines  of  mutual  profi* 
lii^^i?*^  *'''^5*L*'^  inviting  your  attention  to  the  present  unproflt- 
able  condition  of  the  retail  drug  business  in  this  city  and  of  askln« 
^*^«L?^P®'*^**^'*  ^^*^  ^^  effoj'ts  to  better  matters. 
««. J^  situation  is  this:  The  retail  druggists  of  Phila.  have  agreed 
upon  a  schedule  of  prices  for  proprietary  articles  about  10  to  20% 
above  those  now  generally  received,  the  only  one  positively  refusing 
to  be  controlled  by  this  scale  being  Mr.  C.  G.  Loder.  In 'justice  to 
those  druggists  located  near  Loder's  store,  we  have  deferred  putting 
this  schedule  into  effect  until  all  could  be  protected  by  a  common 
selling  price,  and  Mr.  Loder  alone  by  his  refusal,  is  obstructing  this 
movement  and  is  now  preventing  the  druggists  of  this  city  from  obtain- 
ing between  prices  for  proprietary  goods. 

"  ^®,^?^°?*  ^ish  to  coerce  Mr.  Loder  or  to  force  him  into  difficul- 
ties, but  it  does  seem  unfair  that  one  man  alone  should  deprive  all 
the  other  druggists  of  Phila.  of  the  fruit  of  many  months'  labor. 
We  are  willing  to  make  reasonable  terms  with  Loder,  and  have  so 
I?  .V^"\.^^^  intention  evidently  is  to  block  our  plans  that  he  may 
profit  thereby  and  he  refuses  to  agree  with  us. 

"Under  these  circumstances,  we  think  that  we  have  the  right  the 
right  of  self-protection,  to  ask  you  not  to  sell  Mr.  Loder  any  of  Vour 
goods  and  proprietary  articles  until  he  agrees  with  us.  We  believe 
that  when  Mr.  Loder  finds  that  he  is  not  greater  than  all  the  rest  of 
Phila.  druggists  together  nor  entitled  to  more  favor  that  he  will 
listen  to  reason  and  be  willing  to  co-operate  with  us  along  lines  of 
mutual  profits.  We  wish  to  bring  him  to  this  belief,  and  one  of  the 
means  we  are  trying  to  use  is  to  show  him  that  dealers  and  manu- 
facturers will  not  supply  him  with  goods  when  by  so  doing  they  will 
be  injuring  the  business  of  every  other  retail  druggist  in  this  city 
We  do  not  ask  any  one  to  refuse  him  goods  for  any  other  reason  than 
this;  that  the  Interests  and  wellfare  of  all  are  greater  than  those  of 
one  alone! 

"  \Ye  therefore  invite  your  careful  consideration  of  this  question  and 
we  farther  ask  in  reply  a  statement  from  you  of  the  position  you  may 
decide  to  take ;  for,  by  your  action,  you  can  either  greatly  help  or 
materially  retard  the  progress  the  retail  druggists  here  have  made 
towards  the  better  realization  of  better  trade  conditions 
"  Yours  very  truly, 

"  The  Executive  Committee,  Phila.  Association  of  Retail  Drugg." 

To  which  Hance  Bros.  &  White  replied : 

"  The  policy  of  our  house  is  not  to  sell  to  department  stores  If  the 
party  you  mention  sells  our  goods,  he  does  not  get  them  from  us  as 
we  don't  sell  him."  »«    « 

[1018]  Subsequently,  in  June,  1903,  a  resolution  C,  which 
had  been  adopted  by  the  wholesalers,  as  follows  : 

"Resolved,  That  in  accordance  with  the  recommendation  of  Presi- 
dent Sealey,  the  Secretary  is  instructed  to  request  all  manufacturers 
of  chemicals,  pharmaceuticals,  plaster,  dressings  and  like  productfl 
handled  by  the  drug  trade,  to  desist  from  selling  aggressive  cutters 


LODEB   V,   JAYNE. 
Opinion  of  the  Court. 


987 


or  supplies  of  cutters  when  solicited  to  do  so  by  the  respective  local 
associations,  and  that  the  retail  druggists  shall  be  made  acquainted 
with  the  response  in  such  manner  as  the  executive  committee  may 
deem  best." 

— was  sent  out  to  the  drug  trade  in  connection  with  the  fol- 
lowing query : 

"Will  you,  when  specially  requested  by  the  officers  of  the  local 
association  of  retail  druggists  throughout  the  country  that  are  affili- 
ated with  the  N.  A.  R.  D.,  refuse  all  sales  to  these  price  demoralizers 
whom  the  various  manufacturers  of  proprietaries  have  designated 
as  aggressive  cutters?" 

To  which  Hance  Bros.  &  'WTiite,  on  June  24,  1903,  re- 
sponded as  follows:  "  Our  answer  to  the  National  Secretary's 
question  is  '  Yes.' "  The  receipt  of  this  circular  letter,  the 
response  to  the  inquiry  accompanying  resolution  C,  together 
with  other  statements  made  by  Anthony  M.  Hance  as  to  the 
connection  of  his  firm  with  the  alleged  combination  and  con- 
spiracy, show  that  they  are  equally  responsible  with  the  other 
defendants  in  the  case. 

From  the  testimony  of  H.  K.  Mulford,  the  vice  president 
of  the  H.  K.  Mulford  Company,  we  find  that  his  company 
is  an  associate  member  of  the  National  Wholesale  Druggists' 
Association.  It  was  shown  that  this,  with  the  other  associa- 
tions, at  various  times  acted  together  through  committees 
appointed  for  that  purpose,  and  worked  in  entire  harmony 
with  each  other,  and  that  he  received  information  from  the 
very  headquarters  of  the  combination,  to  wit,  the  secretary 
of  the  National  Association  of  Retail  Druggists  at  Chicago, 
and  his  company  acted  in  strict  compliance  with  the  demands 
of  the  alleged  wrongdoers  for  the  reason  that  Loder  was 
demoralizing  business  conditions  and  appeared  upon  the 
aggressive  cutter's  list.  Mr.  Mulford  admitted  that  he  re- 
ceived the  information  as  to  Ix)der  cutting  prices  through 
the  secretary  of  the  National  Association  of  Retail  Druggists, 
and  declared  that  his  company  would  refuse  to  sell  any 
wholesaler  who  was  supplying  Loder  with  goods,  if  his  name 
appeared  upon  the  aggressive  cutter's  list.  The  company's 
connection  with  the  wholesalers'  association,  and  its  action 
in  connection  with  the  disciplinary  rules  administered  to 
delinquents,  was  evidence  to  be  submitted  to  the  jury  as  to 
whether  or  not  it  was,  through  its  officers,  one  of  the  parties 


Sloo 


142  FEDEKAL  BEPOKTEB,   1018. 
Opinion  of  tlie  CSonrt. 


engaged  in  the  alleged  combination  and  conspiracy.    It  is 
not  denied  but  that  the  Mulford  Company,  or  any  other 
defendant,  would  be  privileged  to  buy  from  or  sell  to,  or 
refuse  to  buy  from  or  sell  to,  any  other  person  for  any 
reason  that  might  suggest  itself  without  being  responsible 
in  damages  under  the  Sherman  act,  but  if  the  defendant 
acted  upon  a  policy  in  accord  with  those  shown  to  be  in  a 
combination  and  conspiracy  not  to  sell  to  aggressive  cutters, 
and  received  its  information  from  them,  and  acted  upon  it, 
and,  at  the  same  time,  was  an  associate  member  of  one  of 
the  associations,  there  is  sufficient  evidence  to  submit  to  the 
jury  to  say  whethp-  it  was  part  of  the  combination,  or  acted 
independently,  as  claimed.    The  jury  found  against  the  com- 
pany, and  in  this  I  think  they  were  right. 

[1019]  Mr.  Foley  was  an  active  member  of  the  Philadel- 
phia Association  of  Retail  Druggists,  and  took  part  in  its 
proceedings  at  a  meeting  where  a  resolution  was  offered 
"  advising  the  National  Association  of  Retail  Druggists  to 
exhaust  every  means  before  taking  final  action  disciplining 
the  firm  of  Smith,  Kline  &  French  Company."  It  is  very 
evident  he  knew  the  nature  of  these  disciplinary  measures, 
as  it  appeared  in  the  evidence  that  the  Smith,  Klme  & 
French  Company  were  subsequently  blacklisted  and  pun- 
ished for  disobedience,  and  a  "  pink  slip  "  sent  out  against 
it.  Mr.  Foley,  prior  to  that  time  and  some  time  before  the 
latter  part  of  the  year  1903,  offered  a  resolution,  which  was 
passed  at  a  meeting  of  the  local  association,  as  follows : 

"That  our  delegates  to  the  Convention  of  the  N.  A.  R.  D.  be  In- 
stFucted  to  use  utmmt  endeavors  to  have  resolutions  passed  at  the 
commg  convention  that  the  druggists  of  America  refuse  to  handle 
any  new  proprietaries  unless  protected  in  price." 

The  gist  of  this  resolution  was  enacted  at  the  Boston  con- 
vention of  wholesalers,  and  the  punishment  inflicted  upon 
any  one  who  demoralized  these  prices  is  through  the  very 
association  to  which  his  resolution  appealed.  Surely  he  can- 
not now  be  heard  to  say  that  he  took  no  part  in  brmging 
about  the  creation  of  this  system  of  coercion  to  sustain 
prices.  The  motions  for  judgments  non  obstante  veredicto 
in  favor  of  these  three  defendants,  for  the  reasons  stated 
are  overruled.  ' 


LODER    V,   JAYNE.  989 

Opinion  of  the  Court. 

The  plaintiff's  claim  for  damages  submitted  to  the  jury 
was  made  up  of  the  following  ilems : 

Compensation  to  the  plaintiff  for  extra  time  and  labor 

covering  a  period  of  four  years $20,000.00 

Eight  per  cent,   increased  cost  on  $96,000  of  proprieta- 
ries purchased  during  period  from  November  1,  1900, 

to  July  25,  1904 7,680.00 

Extra  clerk  hire  $1,000  per  year 4  000  00 

Interest  on  $10,000,  extra  capital,  for  4i  years 2,  700. 00 

Loss  of  profits  on  sales  lost  from  June  3,  1904,  to  July  25, 
1904    36,  72 

Making  a  total  of $34, 416.  72 

The  jury  rendered  a  verdict  for  $20,738,  and  the  defend- 
ants contend  that  even  if  it  be  conceded  that  a  combination 
and  conspiracy  prohibited  by  the  act  had  been  established, 
there  was  not  sufficient  evidence  from  which  Hie  jury  could 
find  damages  to  the  extent  of  the  verdict  rendered,  and  it 
is  specifically  urged  that  there  was  no  competent  evidence 
submitted  upon  which  the  jury  could  find  in  favor  of  tho 
plaintiff  for  any  part  of  the  claim  for  extra  labor  of  $20,000, 
increased  cost  on  proprietaries  $7,680,  or  interest  on  extra 
capital  of  $2,700,  and,  further,  that,  even  if  the  plaintiff  had 
proven  the  necessity  for  an  extra  clerk,  his  salary  was  only 
$18  a  week,  and  the  claim  could  only  be  made  for  3j  years. 
The  burden  of  proof  was  upon  the  plaintiff  to  show  som<> 
real  and  actual  damage  to  his  business  by  reason  of  this 
unlawful  combination,  and  it  is  equally  well  settled  that 
unless  they  prove  this  damage  by  a  preponderance  of  comi)o- 
tent  evidence,  the  verdict  must  be  for  the  defendant.  The 
items  of  damage  claimed  must  be  established  by  proof  of 
facts  from  which  they  may  be  rationally  inferred  with  rea- 
sonable certainty  by  the  jury.  Coal  c&  Coke  Co.  v.  Hartman, 
111  Fed.  96,  49  C.  C.  A.  244;  Lowry  v.  Tile,  etc,  Ass'n 
(C.  C.)  106  Fed.  46. 

[1020]  The  plaintiff  claimed  the  sum  of  $5,000  for  extra 
compensation  for  himself  for  extra  work  which  he  claimed 
he  was  required  to  bestow  upon  his  business  by  reason  of 
this  unlawful  combination.  It  was  objected  that  this  was 
not  a  proper  item  of  claim,  but  the  court  permitted  the 
plaintiff  to  offer  such  proofs  of  additional  labor  as  he  desired 
to  submit,  and  the  plaintiff,  instead  of  showing  facts  and 


990 


142  FEDEKAL  REPORTEK,  1020. 


Opinion  of  the  Court. 

circumstances  from  which  the  jury  could  estimate  the  value 
'of  the  extra  services ;    that  is  to  say,  instead  of  proving  the 
amount  of  additional  time  given  to  his  business  by  showing 
how  much  time  he  had  devoted  thereto  prior  to  November 
1,  1900,  and  then  how  much  additional  time  was  required 
of  him  each  day,  or  each  week,  or  each  month,  or  each  year, 
after  the  1st  day  of  November,  1900,  and  during  the  time 
he  was  on  the  aggressive  cutter's  list— he  simply  stated  that 
prior  to  the  injury  complained  of  the  business  was  conducted 
by  him,  giving  it  a  supervision  only,  and  he  was  able  to  go 
abroad  upon  two  occasions,  and  to  devote  some  time  to  rec- 
reation and  pleasure,  whereas,  after  the  combination  went 
into  operation,  he  was  compelled  to  devote  his  entire  time 
to  his  business,  "  except  in  the  afternoon  he  could  take  a 
little  recreation."    There  was  ample  opportunity  offered  the 
witness  to  show  what  additional  labor  he  was  required  to 
bestow  upon  the  conduct  of  his  business,  but  he  offered  no 
evidence  whatever  other  than  the  mere,  vague,  indefinite 
assertion  that  he  was  compelled  to  devote  his  entire  time  to 
his  business  after  he  was  blacklisted  "  except  in  the  after- 
noons he  could  take  a  little  recreation,"  and  that  this  indefi- 
nite bestowal  of  additional  labor  was  worth  $5,000.    There 
was  no  evidence  in  support  of  this  claun  to  submit  to  a  jury 
from  which  they  could  reasonably  estimate  what  compen- 
sation he  should  have  for  any  additional  labor.    From  this 
they  could  only  guess  and  speculate  upon  an  amount  as  to 
this  item  of  claim,  and  this  a  jury  cannot  be  permitted  to  do. 
It  was  claimed  that  it  was  necessary  to  put  extra  capital, 
amounting  to  $10,000,  into  the  business  because  of  the  exist- 
ence of  the  combination,  necessitating  his  paying  cash  for 
many  articles  which  theretofore  he  purchased  on  credit, 
and  that  this  extra  capital  was  placed  in  the  business  from 
rents  collected,  from  time  to  time,  from  tenants  in  his  build- 
ing at  Sixteenth  and   Chestnut  streets  ;  but  upon   cross- 
examination  it  was  shown  that  as  a  matter  of  fact,  instead 
of  proving  that  $10,000  additional  capital  was  added  and 
used  for  ^  years  as  claimed,  the  payments  of  interest  and 
taxes  on  the  building  were  in  excess  of  the  amounts  paid 
in,  and  the  plaintiff  erroneously  assumed  that  he  was  entitled 
to  interest  on  the  rents  paid  in.    A  review  of  the  evidence 


LODER   V.   JAYNE.  991 

Opinion  of  the  Court 

shows  that  in  these  two  items  the  plaintiff  failed  to  prove 
his  claim. 

In  support  of  the  other  three  items  of  claim,  the  plaintiff 
submitted  the  best  evidence  he  could  produce  under  the 
circumstances.  While  the  law  puta  the  burden  of  proof 
upon  the  plaintiff  and  requires  the  proof  of  such  facts  as 
will  enable  the  jury  to  arrive  at  the  amount  of  damage  with 
reasonable  certainty,  it  will  not  permit  the  defendants  who 
are,  through  their  wrongful  acts,  responsible  for  the  plain- 
tiff's injury,  to  carry  this  requirement  beyond  the  measure 
of  proof  thus  stated.  He  is  required  to  prove  his  claim  with 
reasonable  certainty  and  no  more.  We  think  the  plaintiff 
has  complied  with  this  require-  [1021]  ment  as  to  these 
claims.  The  verdict  as  a  whole,  however,  being  far  in  excess 
of  the  total  amount  of  these  three  claims,  which  were  sus- 
tained by  competent  evidence,  under  the  law  it  is  the  duty 
of  the  court  to  either  require  the  plaintiff  to  remit  this  excess 
or  grant  a  new  trial.  The  claim  for  extra  clerk  hire  at  $16 
per  week  to  March  1,  1904,  and  at  $18  per  week  thereafter 
during  the  existence  of  the  combination  would  make  a  total  of 
$3,164,  and  the  damages  claimed  for  extra  cost  of  proprie- 
tary articles,  amounting  to  $7,680,  together  with  the  $36.52 
for  loss  of  profits  on  sales  lost,  make  a  total  of  $10,880.52 
which  was  proven  by  competent  evidence  with  reasonable 
certainty. 

There  is  one  other  question  raised  which  cannot  properly 
be  classed  in  any  of  the  foregoing  propositions,  and  which, 
it  has  been  contended,  has  some  bearing  upon  the  question 
of  whether  or  not  plaintiff  suffered  any  damage.  The  books 
of  the  plaintiff  show  that  beginning  with  the  year  1899  down 
to  the  time  of  bringing  suit  he  drew  out  of  the  business  the 
following  amounts : 

lonn  ^'  663.  GO 

1901  I 1 6,069.00 

iQn9  7,376.00 

IXXq  - 7, 643.  00 

Seven  months  in  1904 111111111"    3  OTl'oO 

It  was  strenuously  argued  to  the  jury  by  counsel  for  the 
defendants  that,  as  Loder  had  been  able  to  take  as  much  out 
of  the  business  for  personal  service  during  the  time  the 


992 


142   FEDEBAIi  REPORTEB,  1021. 
Opinion  of  the  CJourt 


alleged  combination  and  conspiracy  existed  as  before,  he  had 
suffered  no  injury;  and,  the  court  having  failed  to  call  the 
jury's  attention  to  this  fact  in  the  general  charge,  defendants' 
counsel  took  an  exception  to  that  failure,  and  suggested  to  the 
court  before  the  jury  retired  the  propriety  of  calling  their 
attention  to  this  evidence  for  that  purpose.  It  was  shown 
by  the  books  of  the  plaintiff  that,  beginning  with  1897,  to 
November  1,  1900,  he  had  purchased  merchandise  to  the 
amount  of  $223,645,  which  he  sold  at  retail  for  $296,739,  at  a 
gross  profit  of  33  per  cent,  on  the  purchasing  price,  making 
$73,094,  and  during  the  time  he  was  on  the  aggressive  cutter's 
list  he  purchased  merchandise  at  a  cost  of  $265,821  which  he 
sold  at  retail  for  $326,559,  being  a  gross  profit  of  23  per  cent. 
on  the  purchasing  price,  making  a  total  of  $60,738.  It  might 
be  here  remarked  that  in  view  of  the  fact  that  the  evidence 
showed  that  retail  prices  were  generally  higher  during  the 
time  Loder  was  on  the  blacklist,  this  loss  of  10  per  cent,  on 
gross  profits  during  that  time,  as  shown  by  the  books,  is 
strongly  corroborative  of  his  claim  that  he  was  compelled  to 
purchase  his  drugs  at  an  increased  cost  of  8  per  cent. 

But  as  to  the  amount  the  plaintiff  drew  out  and  its  bearing 
upon  the  question  of  damage  it  will  be  remembered  that  he 
did  not  claim  in  this  case  any  damage  for  a  falling  off 
of  either  gross  or  net  income,  because  through  the  extra 
exertion  and  natural  increase  of  his  business,  although  at 
extra  cost  by  reason  of  the  combination,  the  gross  and  net  in- 
come was  kept  up  nearly  to  that  which  he  made  prior  to  the 
combination  on  much  smaller  purchases  and  sales.  Progress- 
ive business  men  start  in  a  small  way  and  through  their 
energy  and  busi-  [1022]  ness  ability  develop  a  small  concern, 
in  a  short  time,  into  one  much  larger  and  bringing  far  greater 
returns.  If,  by  reason  of  a  combination  in  violation  of  the 
Sherman  act,  he  be  made  to  conduct  what  business  he  does 
at  a  greater  cost,  though  it  be  greater  in  volume,  but  by 
reason  of  the  injury  done  him  at  a  less  percentage  of  return, 
and  he  can  show  this,  he  is  entitled  to  collect  it  from  those 
who  have  injured  him.  A  calculation  made  from  the  books 
of  the  plaintiff  in  this  case  shows  that  although  Loder 
through  his  industry  and  perseverance,  notwithstanding  the 
injury  inflicted,  did  a  greater  volume  of  business,  but  was 


LODER    V.   JAYNE. 
Opinion  of  the  Court. 


993 


compelled  to  do  it  at  a  10  per  cent,  less  profit,  and  he  offered 
evidence  to  prove  this  loss  was  the  result  of  this  combination 
and  conspiracy.     So  that,  it  would  seem  to  me,  the  fact  of 
his  drawing  out  an  amount  for  personal  compensation,  which 
did  not  diminish  after  the  combination  went  into  effect,  was 
under  the  circumstances  no  evidence  whatever  of  a  failure 
to  establish  an  injury  to  his  business  in  the  elements  claimed. 
The  natural  increase  of  his  business,  which  was  done  at  a 
greater  cost,  made  his  gross  and  net  income  sufficient  to  enable 
him  to  take  these  amounts  out  for  his  personal  use,  but  these 
amounts  did  not  in  any  way  show  that  either  the  net  or  gross 
income  during  the  time  he  was  on  the  blacklist  was  greater 
in  amount  than  it  was  before,  nor  could  it  in  any  way  throw 
light  upon  the  question  of  the  extra  cost  and  losses  which  he 
sustained  by  reason  of  the  combination,  and  for  that  reason 
the  court  did  not  deem  it  its  duty  to  call  the  jury's  attention 
to  the  evidence  for  the  purpose  indicated  by  the  defendants. 
The  court  being  satisfied  that  the  verdict  is  excessive  in 
amount  and  being  able  clearly  to  establish  by  computation 
the  amount  of  this  excess,  it  is  the  duty  of  thecourt  to  grant 
a  new  trail  to  the  defendants,  unless  the  plaintiff,  within  the 
time  hereinafter  specified,  files  a  remittitur  for  the  excess. 
Pepper  &  Lewis'  Digest  of  Decisions,  23029;  Pleasants  v. 
Fant,  89  U.  S.  116,  22  L.  Ed.  780;   Southern  Pacific  Co,  v. 
Hamilton,  54  Fed.  468,  C.  C.  A.  441. 

A  decree  will,  therefore,  be  entered  that  the  plaintiff  file 
a  remittitur  in  the  amount  of  $9,857.48  on  or  before  February 
1,  1906,  reducing  the  verdict  to  the  sum  of  $10,880.52  or  a 
new  trial  will  be  granted.    In  case  a  remittitur  be  filed  re- 
ducing the  verdict  to  $10,880.52,  the  clerk  is  directed  to  mul- 
tiply the  said  amount,  to  wit,  $10,880.52,  by  three,  and  enter 
judgment  in  favor  of  C.  G.  A.  Loder  and  against  Frederick 
Aschenbach  and  Adolph  William  Miller,  trading  as  Aschen- 
bach  &  Miller;   C.  F.  Shoemaker  and  Miers  Busch,  trading 
as  Shoemaker  &  Busch ;  Richard  M.  Shoemaker,  Thomas  E. 
Shoemaker  and  Benjamin  H.  Shoemaker,  trading  as  Robert 
Shoemaker  &  Co. ;  Smith,  Kline  &  French  Company ;  John 
Wyeth  &  Bro.  (incorporated) ;   Valentine  H.  Smith  &  Co.; 
Henry  K.  Wampole,  Albert  J.  Koch,  S.  Ross  Campbell,  trad- 
21220--VOL  2—07  m 63 


994 


Syllabus. 


ing  as  Henry  K.  Wampole  &  Co. ;  Edward  H.  Hance,  Joseph 
C.  Hance,  Anthony  M.  Hance,  and  Edward  H.  Hance,  Jr., 
trading  as  Hance  Bros.  &  White ;  H.  K.  Mulf ord  Company ; 
William  K.  Warner,  trading  as  W.  E.  Warner  &  Co. ;  Phila- 
delphia Association  of  Retail  Druggists;  and  Thomas  H. 
Potts,  William  L.  Cliffe,  William  E.  Lee,  David  J.  Reese, 
George  W.  Fehr,  Carl  W.  Shull,  [1023]  Nathan  Cozens, 
Augustus  T.  Pollard,  Henry  C.  Blair,  William  H.  Gano, 
Alexander  H.  Frankeberger,  Charles  Leedom,  Richard  H. 
Lackey,  Henry  A.  Kolte,  Walter  A.  Rumsey,  James  C.  Perry, 
E.  C.  Bottume,  Warren  H.  Poley,  Henry  A.  Borell  and 
Charles  A.  Eckles,  defendants,  for  the  sum  of  $32,641.56  and 
im  attorney's  fee  of  $2,500  to  be  paid  to  the  plaintiff's 
attorney. 


[U2\  HADLEY  DEAN  PLATE  GLASS  CO.  v.  HIGH- 
LAND GLASS  CO. 

(Circuit  Court  of  Appeals,  Eighth  Circuit    January  19,  1906.) 

[143  Fed.,  242.] 

Sale — Contract  to  Manufactube  and  Deliver  Goods — "More  or 
Less  "  as  Qualifying  Statement  of  Quantity. — Where,  in  a  con- 
tract for  the  manufacture  and  delivery  of  goods,  the  statement  of 
quantity  is  qualified  by  the  words  "  more  or  less,"  these,  unless  sup- 
plemented by  language  giving  them  a  broader  scope,  apply  only  to 
such  accidental  or  immaterial  variations  in  quantity  as  would  natur- 
ally occur  in  connection  with  such  a  transaction. 

[Ed.  Note. — ^For  cases  in  point,  see  vol.  43,  Cent.  Dig.  Sales,  §  191. 
Contracts  for  sales  of  things  to  be  produced  or  manufactured,  see 
note  to  Star  Brewery  Co,  v.  Horst,  58  C.  C.  A.  363.] 

Damages — Contract — Breach  by  Veni»ee — Measure  of  Damages.-^ 
Where  a  contract  for  the  manufacture  and  delivery  of  goods  is  re- 
pudiated by  the  vendee  before  the  goods  are  manufactured,  the 
measure  of  the  vendor's  damages  is  the  difference  between  the  cost 
of  manufacture  and  delivery  and  the  contract  price. 

[Ed.  Note. — ^For  cases  in  point,  see  vol.  43,  Cent  Dig.  Sales,  §  1106.  | 

Monopolies — Combination  in  Restraint  of  Trade — Missouri  Stat- 
ute is  Without  Application  to  Tntetstate  Commerce. — ^The  anti- 
trust statute  of  Missouri  (Rev.  St  Mo.  1899,  §§  8965-8970)  can  have 
no  application  to  a  contract  for  the  sale  of  goods  to  be  manufactured 
by  the  vendor  in  another  state  and  delivered  to  the  vendee  in  Mis- 
souri, because  such  a  contract  directly  relates  to  Interstate  Com- 


HADLEY   DEAN   P.    G.    CO.    V.   HIGHLAND   G.    CO.        995 

Opinion  of  the  Court. 

merce,  the  regulation  of  which  is  within  the  exclusive  authority  of 
Congress.  • 

Same— Sherman  Anti-Trust  Act— Contract  tor  Sale  of  Goods  by 
MEMBER  OF  Combination.— The  Act  of  July  2,  1890,  c.  647,  §  1,  26 
Stat  209  [U.  S.  Comp.  St  1901,  p.  3200],  known  as  the  "Sherman 
Anti-Trust  Act"  does  not  invalidate,  or  prevent  a  recovery  for  the 
breach  of  a  collateral  contract  for  the  manufacture  and  sale  of 
goods  by  a  member  of  a  combination  formed  for  the  purpose  of  re- 
straining interstate  trade  in  such  goods. 

(Syllabus  by  the  Court) 

^  In  Error  to  the  Circuit  Court  of  the  United  States  for  the 
Eastern  District  of  Missouri. 

Oharles  Ctimmings  Collins  (TT.  F.  Carter^  WUliam  T, 
Jones,  and  A,  R.  Taylor,  on  the  brief),  for  plaintiff  in  error. 

James  C,  Jones  (Lon  O.  Hocker,  C,  P,  Ellerbe,  C,  P.  El- 
Urbe,  Jr.,  and  Frank  A.  Thompson,  on  the  brief) ,  for  defend- 
ant in  error. 

Before  Van  Devanter  and  Hook,  Circuit  Judges,  and 
LocHREN,  District  Judge. 

Van  Devanter,  Circuit  Judge. 

The  Highland  Glass  Company,  a  Pennsylvania  corpora- 
tion, engaged  in  manufacturing  glass  in  that  state,  received 
and  accepted  the  following  order  for  the  manufacture  and 
delivery  of  glass  from  the  Hadley-Dean  Glass  Company,  a 
Missouri  corporation,  carrying  on  the  business  of  a  jobber 
and  dealer  in  glass  at  St.  Louis: 

•*  Book  us  with  200,000  sq.  ft.  i  ribbed  more  or  less  subject  to  sizes 
and  delivery  as  required  at  price  5c.  sq.  ft  cut  to  size  St  Louis  de 
livery  less  1%  cash  10  days  acct  St  L.  World's  Fair  bldgs.  Acc't  Mr 
Torrence.    Ack." 

[243]  23,056  square  feet  of  glass  was  manufactured,  de- 
livered, accepted,  and  paid  for  under  the  contract  so  made. 
The  Hadley-Dean  Company  then  refused  to  furnish  specifi- 
cations for  or  to  accept  the  remaining  176,944  feet,  although 
the  Highland  Company  offered  and  was  ready  and  willing 
to  manufacture  and  deliver  the  same  as  agreed.  In  an  action 
in  the  Circuit  Court  to  recover  damages  from  the  Hadley- 
Dean  Company  for  its  breach  of  the  contract  a  verdict  was 
directed  in  favor  of  the  Highland  Company  for  the  difference 


996 


143   FEDERAL  REPORTER,   243. 


Opinion  of  the  Conrt. 

between  the  cost  of  manufacturing  and  delivering  the  re- 
maining glass  and  the  contract  price,  and  judgment  was 
rendered  on  the  verdict  returned  under  that  direction.  The 
purpose  in  prosecuting  the  present  writ  of  error  is  to  secure 
a  reversal  of  that  judgment. 

It  is  assigned  as  error  that  the  court  held  that  the  order 
was  for  200,000  square  feet  of  glass,  more  or  less,  the  latter 
words  having  their  usual  signification,  and  rejected  the  de- 
fendant's contention  that  the  order  was  for  such  an  amount 
of  glass  as  would  be  required  by  the  defendant  "  to  fulfill  its 
contracts  for  glazing  the  St.  Louis  World's  Fair  Buildings." 
No  reference  to  the  existence  of  any  such  contracts  or  to  the 
amount  of  glass  required  to  fulfill  them  is  made  in  the  plead- 
ings or  in  the  evidence,  and  it  is  conceded  that  the  question 
presented  by  this  assignment  is  to  be  determined  by  an  exam- 
ination of  the  order  alone.  We  think  it  was  properly  in- 
terpreted. The  quantity  of  glass  is  expressed  in  the  word* 
"200,000  sq.  ft.,  i  ribbed  more  or  less."  The  succeeding 
phrase  "subject  to  sizes  and  delivery  as  required,"  merely 
reserved  to  the  defendant  the  right  to  thereafter  designate 
the  sizes  to  which  the  glass  should  be  cut  and  the  times  when 
it  shoidd  be  delivered.  The  still  later  phrase  "  acc't  St.  I^. 
World's  Fair  bldgs.,"  while  explaining  the  use  to  which  the 
glass  was  to  be  applied,  is,  in  point  of  place  and  grammatical 
arrangement,  so  completely  separated  from  the  expression  in 
respect  to  quantity  that  it  could  not  well  have  been  intended 
to  qualify  that  expression.  A  more  reasonable  view  of  its 
purpose  is  that  it  was  intended  to  give  some  indication  of 
when  the  glass  would  be  required  and  to  apprise  the 
plaintiff  of  the  necessity  for  promptly  conforming  to  such 
directions  as  should  thereafter  be  given  for  its  manufacture 
and  delivery.  It  was  common  knowledge  that  the  time  for 
the  completion  of  the  World's  Fair  buildings  was  limited 
and  that  a  failure  to  complete  them  within  that  time  would 
result  in  serious  inconvenience  and  loss.  True  the  quantity 
specified  is  qualified  by  the  words  "more  or  less,"  but  it  is 
well  settled  that  in  a  contract  like  this  these  words,  unless 
supplemented  by  language  giving  them  a  broader  scope, 
apply  only  to  such  accidental  or  immaterial  variations  in 
quantity  as  would  Baturally  occur  in  connection  with  such 


HADLEY  DEAN   P.    G.    00.    /;.    HIGHLAND   G.    CO.         997 
Opinion  of  the  Court. 

a  transaction.  Bmwley  v.  United  States,  96  U.  S.  168,  172, 
24  L.  Ed.  622 ;  Norrington  v.  WHght,  115  U.  S.  188,  204,  6 
Sup.  Ct.  12,  29  L.  Ed.  366 ;  Pine  River  Logging  Co,  v.  United 
States,  186  U.  S.  279,  22  Sup.  Ct.  920,  46  L.  Ed.  1164;  Id.,  32 
C.  C.  A.  406,  89  Fed.  907.  There  is  no  such  broadening 
language  in  the  order. 

It  is  assigned  as  error  that  the  damages  were  not  meas- 
ured by  the  difference  between  the  market  value  of  the  glass 
and  the  con-  [2441  tract  price,  but  the  point  may  be  dis- 
missed with  the  statement  that,  under  the  established  rule 
in  this  jurisdiction,  and  also  in  the  state  of  Missouri  where 
The  controversy  arose,  where  a  contract  for  the  manufacture 
and  delivery  of  goods  is  repudiated  by  the  vendee  before  thtj 
goods  are  manufactured,  the  measure  of  the  vendor's  dam- 
ages is  the  difference  between  the  cost  of  manufacture  and  de- 
livery and  contract  price.  Kingman  v.  Western  Mfg.  Co., 
34  C.  C.  A.  489,  92  Fed.  486;  Philadelphia,  etc.,  Co.  v.  How^ 
ard,  13  How.  307,  344,  14  L.  Ed.  157;  United  States  v.  Speed, 
8  Wall.  77,  84, 19  L.  Ed.  449 ;  HincJcUy  v.  Pittshurg  Steel  Co., 
121  U.  S.  264,  7  Sup.  Ct.  875,  30  L.  Ed.  967 ;  Roehm  v.  Horst. 
178  U.  S.  1,  21,  20  Sup.  Ct.  780,  44  L.  Ed.  953;  BUck  River 
Lumber  Co.  v.  Warner,  93  Mo.  374,  388,  6  S.  W.  210;  Cres- 
cent Mfg.  Co.  V.  Nelson  Mfg.  Co.,  100  Mo,  325,  336,  13  S.  W.  • 
503;  Chapman  v.  Kamas  City,  etc.,  Ry.  Co.,  146  Mo.  481,  508, 
48  S.  W.  646. 

There  was  some  evidence  tending  to  show  that  at  the  time 
of  making  the  contract  the  plaintiff  and  others,  not  includ- 
ing the  defendant,  were  m  an  unlawful  combination  to  stifle 
competition  in  the  sale  of  glass  and  to  arbitrarily  increase  it« 
price,  and  because  of  this  it  is  contended  that  in  directing  a 
verdict  for  the  plaintiff  the  court  failed  to  give  effect  to 
the  anti-trust  statute  of  Missouri  (Rev.  St.  Mo.  1899,  §§ 
8965-8970),  and  to  the  anti-trust  legislation  of  Congress 
(Act  July  2,  1890,  c.  647,  §  1,  26  Stat.  209  [U.  S.  Comp.  St. 
1901,  p.  3200] ;  Act  August  27,  1894,  c.  349,  §§  73-77,  28  Stat. 
570  fU.  S.  Comp.  St.  1901,  pp.  3202,  3203]). 

Of  the  state  stautute  it  is  sufficient  to  say  that  it  can  have 
no  application  to  the  contract  under  consideration  without 
impinging  upon  the  exclusive  authority  of  Congress  to  regu- 
late commerce  among  the  several  states.    Railroad  Co.  v. 


998 


143  FEDERAL  BEPORTER,   244. 
Opinion  of  tbe  Court. 


Hmm,  95  U.  S.  465,  469,  24  L.  Ed.  527;  Leisy  v.  Hardin,  135 
U.  S.  100,  10  Sup.  Ct  681,  34  L.  Ed.  128 ;  Schollenberger  v. 
Pmmylmihia,  171  U.  S.  1,  18  Sup.  Ct.  757,  43  L.  Ed.  49; 
Addyston  Pipe  cC-  Steel  Co.  v.  United  States,  175  U.  S.  211, 
229-233,  20  Sup.  Ct.  96,  44  L.  Ed.  136 ;  Stockard  v.  Morgan^ 
185  U.  S.  27,  22  Sup.  Ct.  576,  46  L.  Ed.  785.  The  contract 
was  for  the  sale  of  glass  to  be  manufactured  by  the  vendor 
in  Pennsylvania  and  delivered  to  the  vendee  in  Missouri, 
and  therefore  directly  related  to  interstate  commerce.  Ad- 
dyston Pipe  <£•  Steel  Co,  v.  United  States,  175  U.  S.  211,  246, 
20  Sup.  Ct.  96,  44  L.  Ed.  136;  Bement  v.  National  Harrow 
Co.,  186  U.  S.  70,  92,  93,  22  Sup.  Ct  747,  46  L.  Ed.  1058; 
Montague  v.  Lowry,  193  U.  S.  38,  47,  24  Sup.  Ct.  307,  48  L. 
Ed.  608. 

The  act  of  Congress  of  August  27,  1894,  is  also  without 
application  because  it  is  confined  to  combinations  "  between 
two  or  more  persons  or  corporations  either  of  whom  is  en- 
gaged in  importing  any  article  from  any  foreign  country  into 
the  United  States." 

The  act  of  July  2, 1890,  is  what  is  popularly  known  as  the 
**  Shennan  Anti-Trust  Act,"  and  declares  illegal  "  every 
contract,  combination  in  the  form  of  trust  or  otherwise,  or 
conspiracy,  in  i-estraint  of  trade  or  commerce  amons:  the 
seve^l  states,  or  with  foreign  nations."  That  it  do^  not 
render  illegal  or  prevent  a  recovery  upon  this  contract  is 
shown  by  Connolly  v.  Union  Sewer  Pipe  Co,,  184  U.  S.  540, 
IM51  22  Sup.  Ct  431,  46  L.  Ed.  679.  In  that  case  the 
plaintiff  sought  to  recover  the  purchase  price  of  sewer  pipe 
sold  by  it  to  the  defendant  and  the  latter  sought  to  defend 
en  the  ground  that  at  the  time  of  the  sale  the  plaintiff  wa^ 
in  an  unlawful  combination  to  restrain  interstate  trade  in 
sewer  pipe.  The  court,  after  holding  that  the  principles 
of  the  common  law  did  not  justify  the  buyer  in  refusing  to 
pay  for  what  he  had  bought  and  received,  on  the  ground 
that  the  seller  was  in  an  unlawful  combination  with  others 
to  restrain  trade  in  the  article  sold,  said  (pages  549,  550,  of 
184  U.  S.,  page  435  of  22  Sup.  Ct.  [46  L.  Ed.  679] ) : 

"The  special  defense  based  upon  the  act  of  Congress  of  July  2, 
1800,  c.  647,  §  1.  26  Stat  209  [TT.  S.  Comp.  St  1001,  p.  3200],  was  also 
properly  rejected.  ♦  ♦  ♦  Much  of  what  has  just  been  said  in 
reference  to  the  first  special  defense,  based  on  the  common  law,  is 


i  t 

I: 


\l 


HAKTMAN    V,   JOHN   D.    PABK   &   SONS   CO. 

Syllabus. 


999 


applicable  to  this  part  of  the  case.  If  the  contract  between  the 
plaintiff  corporation  and  other  named  corporations,  persons,  and  com- 
panies, or  the  combination  thereby  formed,  was  illegal  under  the  act  of 
Congress,  then  all  those,  whether  persons,  corporations,  or  associ- 
ations, directly  connected  therewith,  became  subject  to  the  penalties 
prescribed  by  Congress.  But  the  act  does  not  declare  illegal  or  void 
any  sale  made  by  such  combination,  or  by  its  agents,  of  property  it 
acquired  or  which  came  into  its  possession  for  the  purpose  of  being 
sold — such  property  not  being  at  the  time  in  course  of  transportation 
from  one  state  to  another  or  to  a  foreign  country.  The  buyer  could 
not  refuse  to  comply  with  his  contract  of  purchase  upon  the  ground 
that  the  seller  was  an  illegal  combination  which  might  be  restrained 
or  suppressed  in  the  mode  prescribed  by  the  act  of  Congress ;  for  Con- 
gress did  not  declare  that  a  combination  illegally  formed  under  the 
act  of  1890  should  not,  in  the  conduct  of  its  business,  become  the 
owner  of  property  which  it  might  sell  to  whomsoever  wished  to  buy 
it  So  that  there  is  no  nocossary  legal  connection  here  between  the 
sale  of  pipe  to  the  defendants  by  the  plaintiff  corporation  and  the 
alleged  arrangement  made  by  it  with  other  corporations,  companies  and 
firms.  The  contracts  under  which  the  pipe  in  question  was  sold  were, 
as  already  said,  collateral  to  the  arrangement  for  the  combination 
referred  to,  and  this  is  not  an  action  to  enforce  the  terms  of  such 
arrangement  That  combination  may  have  been  illegal,  and  yet  the 
sale  to  the  defendants  was  valid." 

The  contract  for  the  sale  of  the  glass  being  valid,  it  fol- 
lows as  a  matter  of  course  that  an  action  lies  for  its  breach. 

No  error  is  disclosed  by  the  record,  and  the  judgment  is 
affirmed. 


[358]  HAETMAN  v.  JOHN  D.  PARK  &  SONS  CO. 

(Circuit  Court,  E.  D.  Kentucky.    February  14,  1906.) 

[145  Fed.,  358.] 

Pbopebty — Secbet  Pbocess — Incidents  of  Ownebship. — The  patent 
and  copyright  statutes,  in  conferring  upon  an  inventor  or  author 
the  exclusive  right  to  make,  use,  and  sell  articles  embodying  his 
invention  or  authorship,  create  in  him  a  new  right  and  do  not 
extend  or  continue  a  previously  existing  right  The  owner  of  a 
secret  process  not  patented,  has  no  such  exclusive  right  to  make, 
use,  and  vend  the  article  to  which  it  relates,  but  he  has  the  right 
to  keep  his  knowledge  to  himself  and  to  protection  of  the  same  as 
a  property  right  against  one  who,  in  violation  of  contract  or  through 
a  breach  of  trust  or  confidence,  undertakes  to  apply  the  secret  to 
his  own  use  or  to  impart  it  to  others. 

[Ed.  Note. — For  cases  in  point,  see  vol.  40,  Cent  Dig.  Property, 

§2. 
Disclosure  of  trade  secrets,  see  note  to  8.  Jarvis  Adams  Co.  v. 
Knapp,  58  C.  C.  A.  8.] 
Sales — Right  to  Restbict  Futube  Sales — Effect  of  Patent. — The 
owner  of  a  patent  or  copyright  after  an  absolute  sale  of  the  article 


TOGO 


145   FEDEKAL  KEPORTEK,   358. 


Opinion  of  the  Court. 

covered  thereby  may,  by  virtue  of  the  exclusive  right  given  him 
by  statute,  and  his  right  to  withhold  or  restrict  licenses  under  his 
monopoly,  retain  control  of  future  trade  in  the  article  sold,  as  to 
prices  of  resale,  etc.,  irrespective  of  any  condition  in  the  contract 
of  sale,  but  the  right  to  reserve  such  future  control  by  contract  Is 
not  derived  from  the  statute,  but  exists  if  at  all,  by  the  common 
law,  and  may  as  lawfully  be  exercised  by  the-seller  of  an  unpat- 
ented article. 

CONTBACTS— Restraint  of  Trade— Sale  of  Article  Made  by  Secret 
Process.— Provisions  in  a  contract  for  the  sale  of  a  secret  process 
restraining  its  use  or  its  communication  to  others  are  not  invalid 
as  in  restraint  of  trade,  because  necessary  to  protect  the  property 
right  in  the  subject-matter  of  the  contract,  but  such  considerations 
do  not  apply  to  contracts  for  the  sale  of  the  article  produced  by 
such  process  which  are  subject  to  the  same  rules  as  contracts  for 
the  sale  of  any  other  article  of  manufacture. 

Same.— A  system  of  contracts  made  by  the  manufacturer  of  a  pro- 
prietary medicine  between  him  and  wholesale  dealers,  to  whom 
alone  he  sold  his  medicine,  by  which  they  were  bound  to  sell  only 
at  a  certain  price  and  to  retail  dealers  designated  by  him,  and  be- 
tween him  and  the  retail  dealers  by  which,  in  consideration  of 
bemg  so  designated,  they  agreed  to  sell  to  consumers  only  at  a  cer- 
tain price,  is  not  unlawful  as  in  restraint  of  trade,  but  [359]  is  a 
reasonable  provision  for  the  protection  of  the  manufacturer's  tiade, 
and  he  is  entitled  to  an  injunction  to  restrain  a  defendant  from 
inducing  other  parties  to  such  contracts  to  violate  the  same. 

In  Equity.    On  demurrer  to  bill. 

F.  W.  Hinkle,  F.  F,  Reed,  and  E,  S,  Rodgers,  for  plaintiff. 
IF.  /.  Shroder,  Alton  B,  Parker,  Mmris  (&  Fay,  for  de- 
fendant. 

Cochran,  District  Judge. 

This  case  is  before  me  on  demurrer  to  the  bill  for  want  of 
equity.  The  bill  alleges  in  substance  that  complainant  is 
the  manufacturer  and  seller  amongst  other  medicmes  of  one 
known  as  "  Peruna  "  ;  that  the  formula  by  which  it  is  made 
was  discovered  by  him,  and  is  known  only  to  him  and  his 
trusted  employes;  that  he  puts  it  up  in  bottles,  each  of 
which  is  inclosed  in  a  loose  white  wrapper  bearing  the 
words  "  Peruna  the  Great  Tonic  "  and  has  pasted  on  it  a 
label  giving  its  history,  the  theory  upon  which  it  is  based, 
the  ailments  for  which  it  is  reconmiended,  and  the  directions 
for  taking  it,  and  is  serially  numbered,  the  number  being 
stamped  both  on  the  wrapper  and  label  in  several  places; 


HAKTMAN    V.   JOHN   D.    PARK   &   SONS   CO. 


1001 


Opinion  of  the  Court 

that  he  sells  the  medicine  to  wholesale  druggists  only,  who  in 
turn  sell  to  retail  druggists,  who  in  turn  sell  to  consumers; 
that  the  wholesalers  to  whom  he  sells  contract  with  him  not 
to  resell  except  to  retailers  designated  by  him  and  at  certain 
prices,  and  the  retailers  whom  he  designates  contracts  with 
him  not  to  resell  to  consumers  except  at  certain  prices;  that 
his  prices  to  the  wholesalers  are  uniform  and  so  are  the  prices 
fixed  by  him  of  wholesalers  to  retailers  and  of  retailers  to 
consumers;  that  he  alone  advertises  the  medicine  and  creates 
the  demand  for  it;  that  with  each  package  of  medicine  is 
furnished  a  card  containing  the  serial  numbers  of  the  bottles 
therein  and  the  wholesalers  are  required  to  note  thereon  the 
retailers  to  whom  same  is  sold,  and  to  return  it  to  complain- 
ant; that  the  defendant,  a  Kentucky  corporation,  is  a  whole- 
sale druggist;  that  it  obtains  said  medicine  from  complain- 
ant's wholesalers  and  retailers  by  false  and  fraudulent 
representations,  surreptitious,  and  dishonest  methods  and 
persuading  them  to  break  their  contracts  with  him,  and  sells 
same  to  retailers  operating  "  cut  rate  drug  stores  "  at  less 
than  the  wholesale  prices  fixed  by  him,  who  in  turn  sell  to 
consumers  at  less  than  the  retail  prices  so  fixed ;  that  before 
the  medicine  is  so  sold  to  consumers  the  wrappers  are  re- 
moved and  the  labels  are  defaced  so  as  to  obliterate  the  serial 
numbers  stamped  thereon  and  the  information  thereby 
given ;  and  that  defendant  gives  out  and  announces  that  he 
will  continue  so  to  obtain  said  medicine  and  so  dispose  of  it. 
The  relief  sought  is  an  injunction  against  him  so  doing.* 


* 


[373]  This  brings  us  to  the  other  argument  put  forward  by 
defendant's  counsel  in  support  of  the  contention  that  the  sys- 
tem of  contracts  under  which  he  sells  his  medicine  outright 
and  attempts  at  the  same  time  to  retain  the  control  over  the 
subsequent  trade  therein  is  unlawful.  It  is  that  said  system 
of  contracts  in  so  far  as  it  attempts  to  retain  such  control 
contravenes  the  common-law  rule  invalidating  contracts  in 
restraint  of  trade.  The  general  principle  upon  which  this 
rule  is  based,  as  stated  by  Pollock  on  Contracts,  p.  309,  is 
"that  a  man  ought  not  to  be  allowed  to  restrain  himself 


o  The  matter  omitted  relates  to  patents  rather  than  to  unlawful  re- 
straint of  trade.     See  first  two  paragraphs  of  syllabus. 


1002 


145  FEDERAL  BEFORTER,   3T4. 


C^inion  of  tim  Gourt 

from  exercising  any  lawful  craft  or  business  at  his  own  dis- 
cretion and  in  his  own  way."  It  is  thus  stated  in  the  quota- 
tion made  by  him  from  the  opinion  in  HUton  v.  Eskerley,  6 
K&B.  66,  74,75: 

[874]  "  Prima  facie,  it  is  the  privilege  of  a  trader  in  a  free  country 
In  all  matters  not  contrary  to  law  to  reipilate  his  own  mode  of  carry- 
ing it  [his  trade]  on  according  to  bis  own  disrretiou  and  choice.  If 
the  law  has  in  any  manner  regulated  or  restrained  his  mode  of  doing 
this,  the  law  must  be  obeyed.  But  no  power  short  of  the  general  law 
ought  to  restrain  his  free  discretion." 

The  restraint,  then,  which  the  rule  and  the  general  prin- 
ciple upon  which  it  is  based  have  in  view  is  a  restraint  which 
a  man  puts  upon  himself  by  contract  with  another,  and  not 
a  restraint  which  another  puts  upon  him.  Another  is  with- 
out power  to  put  any  restaint  upon  himself  except  by  force. 
He  alone  can  otherwise  put  restraint  upon  himself,  and  that 
by  contract.  Such  restraint  in  its  initiation  is  put  upon 
him  by  his  own  discretion  and  choice.  The  entering  into 
the  contract  is  voluntary  on  his  part,  and  the  law  in  relieving 
him  from  it  relieves  him  from  the  consequences  of  his  own 
free  act.  It  is  a  restraint,  not  only  as  to  whether  he  shall 
carry  on  any  lawful  craft  or  business,  wholly  or  in  part,  but 
also  as  to  the  way  or  mode  of  carrying  it  on.  The  cases 
which  have  arisen  under  the  rule  have  fallen  into  two  well- 
defined  classes.  One  class  is  where,  as  a  rule  at  least,  the 
contract  is  between  two,  and  but  one  party  thereto  agrees  to 
restrain  himself  in  some  particular  for  the  benefit  of  the 
other  party.  Such  contracts  are  usually  termed  contracts 
in  restraint  of  trade.  The  most  usual  instance  of  cases  be- 
longing to  this  class  is  where  the  owner  of  a  business  sells 
it  to  another  and  agrees  with  such  other  not  to  engage  in  the 
same  business  anywhere  or  only  in  certain  territory. 

Mr.  Justice  Holmes  in  Northern  Secnirities  Co.  v.  United 
States,  193  U.  S.  197-404,  24  Sup.  Ct.  436,  48  L.  Ed.  679,  de- 
fines contracts  of  this  class  as  "  contracts  with  a  stranger  to 
the  contractor's  business  [although  in  some  cases  carrying 
on  a  similar  one]  which  wholly  or  partially  restrict  the 
freedom  of  the  contractor  in  carrying  on  the  business  as  he 
otherwise  would."    To  the  same  effect,  he  says: 

••Contracts  In  restraint  of  trade,  I  repeat,  were  contracts  with 
strangers  to  the  contractor's  business  and  the  trade  restrained  wa» 
the  contractor's.** 


HARTMAN   V.   JOHN   D.   PARK   &   SONS   CO. 


1003 


Opinion  of  the  Court 

The  objection  to  a  contract  of  this  class  is  its  tendency  to 
harm  both  the  contractor  and  the  public.  The  way  in  which 
it  may  harm  the  contractor  is  in  depriving  him  of  his  liveli- 
hood in  whole  or  in  part.  The  way  in  which  it  may  harm 
the  public  is  in  making  him  a  public  charge,  in  depriving 
it  in  whole  or  in  part  of  the  benefit  of  his  activity,  and  in 
furthering  an  attempt  at  monopoly.  Justice  Holmes,  in  the 
opinion  already  quoted  from,  said  that  the  objection  to  such 
contracts  at  common  law  was  primarily  on  the  contractor's 
own  account.  In  earlv  times  the  chance  of  such  a  contract 
doing  harm  was  much  greater  than  now.  Under  existing  con- 
ditions, in  view  of  the  abundant  opportunities  for  one  to  earn 
a  living  and  the  abundance  of  capital  to  go  into  any  profita- 
ble business  and  its  eagerness  to  do  so,  the  chance  of  such  a 
contract  doing  harm  in  either  direction  is  much  lessened. 
But  all  contracts  of  this  class  are  not  invalid,  because  of  the 
restraint  which  they  put  upon  one  party  thereto.  Some  are 
invalid,  and  some  are  not.  Out  of  the  cases  that  have  arisen 
involving  contracts  of  this  kind  a  rule  has  been  evolved  by 
which  it  may  be  determined  whether  the  contract  is  invalid 
or  not.  The  rule  is  [376]  if  the  restraint  is  reasonable  the 
contract  is  valid ;  if  not,  it  is  invalid. 

As  said  by  Judge  Simon  ton  in  Hulse  v.  Bonsack  Machine 
Co.,  65  Fed.  8G9,  13  C.  C.  A.  180,  the  test  is  "  as  it  is  put  in 
Ammunition  Co.  v.  Nordenfelt  (1893)  1  Ch.  630,  and  Match 
Co.  V.  Roehcr,  106  X.  Y.  473,  13  N.  E.  419,  60  Am.  Rep.  464; 
*  Is  it,  in  view  of  all  the  circumstances  of  the  case,  reason- 
able? ' "  In  the  most  usual  instance  of  such  cases;  that  is, 
where  the  owner  of  a  business  sells  it  to  another,  and  agrees 
with  such  other  not  to  engage  in  the  same  business,  what 
determines  the  reasonableness  of  the  particular  restraint  in- 
volved is  whether  it  is  essential  to  protect  the  business  from 
invasion  by  the  contractor.  If  it  is,  it  is  reasonable;  other- 
wise it  is  not. 

Pollock  on  Contracts,  p.  310,  says ; 

"  Public  policy  requires,  on  the  one  hand,  that  a  man  shall  not  by 
contract  deprive  himself  or  the  state  of  his  labor,  skill,  or  talent; 
and,  on  the  other  hand,  that  he  shall  be  able  to  preclude  himself  from 
competing  with  particular  persons  so  far  as  necessary  to  obtain  the 
best  price  for  his  business  or  knowledge  when  he  chooses  to  sell." 


1004 


145   FEDERAL  REPOETER,   375. 
Opinion  of  tlie  Ck)urt. 


Judge  Severens,  in  Jarvw  v.  Knapp^  121  Fed.  34,  58  C.  C. 
A.  1,  says: 

"The  underlying  principle  upon  which  the  modem  cases  upon  this 
subject  are  grounded  is  that,  although  one  cannot  stifle  competition 
by  a  bargain  having  that  purpose  only,  yet  when  he  purchases  some- 
thing or  acquires  some  right,  the  value  of  whiqh  may  be  affected  by 
the  subsequent  conduct  of  the  seller,  the  purchaser  may  lawfully  ob- 
tain the  stipulation  of  the  seller  that  he  will  refrain  from  such- 
conduct." 

The  principle  of  absolute  freedom  of  trade  which  in  cer- 
tain instances  requires  that  a  contract  imposing  restraint 
shall  give  way,  in  sucli  a  case,  enforced  by  the  principle  of 
absolute  freedom  of  contract  requires  that  it  shall  remain 
binding.  But  whilst  this  is  the  most  usual  instance  of  cases 
inTolving  contracts  where  the  restraint  imposed  is  reason- 
able and  the  contract  therefore  valid,  there  are  other  in- 
stances of  such  cases  which  often  arise 

Judge  Taft,  in  United  States  v.  Addyston  Pipe  <&  Steel 
€a.,  85  Fed.  271,  29  C.  C.  A.  141,  46  L.  R.  A.  122,  undertakes 
to  specify  the  instances  of  such  cases.    They  are  as  follows : 


•t 


Agreements  (1)  by  the  seller  of  property  or  business  not  to  com- 
pete with  the  buyer  in  such  a  way  as  to  derogate  from  the  value  of 
the  proi)erty  or  business  sold;  (2)  by  a  retiring  partner  not  to  com- 
pete with  the  firm ;  (3)  by  a  partner  pending  the  partnership  not  to 
do  anything  to  interfere  by  competition  or  otherwise  with  the  busi- 
ness of  the  firm;  (4)  by  the  buyer  of  property  not  to  use  the  same 
in  competition  with  the  business  retained  by  the  seller;  and  (5) 
by  an  assistant,  servant  or  agent  not  to  compete  with  the  master  or 
employer  after  the  expiration  of  his  time  of  service." 

As  to  what  is  essential  to  the  validity  of  such  agreements, 
he  says : 

**  Before  such  agreements  are  upheld,  however,  the  court  must  find 
that  the  restraints  attempted  thereby  are  reasonably  necessary  (1  and 
2)  to  the  enjoyment  by  the  buyer  of  the  property,  good  will  or  interest 
in  the  partnership  bought;  or  (3)  to  the  legitimate  ends  of  the  exist- 
ing partnership;  or  (4)  to  the  prevention  of  possible  injury  to  the 
business  of  the  seller  from  use  by  the  buyer  of  the  thing  sold ;  or  (5) 
to  protection  from  danger  of  lass  to  the  employer's  business  caused 
by  the  unjust  use  on  the  part  of  the  employ^  of  the  confidential  knowl- 
edge acquired  in  such  business." 

Then,  as  to  whether  his  classification  embraces  all  the  pos- 
sible instances  of  such  cases,  he  said : 

[376]  "  It  would  be  stating  it  too  strongly  to  say  that  these  five 
classes  of  covenants  in  restraint  of  trade  include  all  of  those  upheld 
as  valid  at  common  law ;  but  it  certainly  would  seem  to  follow  from 
the  tests  laid  down  for  determining  the  validity  of  such  an  agreement 


I 


HARTMAN    V.    JOHN   D.   PARK   &   SONS   CO. 
Opinion  of  the  Court. 


1005 


that  no  conventional  restraint  of  trade  can  be  enforced  unless  the 
covennnt  embodying  it  is  merely  ancillary  to  the  main  purpose  of  a 
lawful  contract,  and  necessary  to  protect  the  covenantee  in  the  enjoy- 
ment of  the  legitimate  fruits  of  the  contract  or  to  protect  him  from  the 
dangers  of  an  unjust  use  of  those  fruits  by  the  other  party." 

The  other  class  of  cases  which  has  arisen  involving  the  re- 
straint of  trade  rule  is  where  the  contract  is  between  two  or 
more  persons  engaged  in  the  same  business,  sometimes  includ- 
ing all  the  persons  so  engaged  in  a  particular  locality  or 
everywhere;  but  each  one  engaged  separately,  and  with  no 
concern  or  interest  in  the  business  of  any  other  one,  and  each 
one  agrees  to  restrain  himself  in  some  particular  for  the  mu- 
tual benefit  of  all.  Such  contracts  are  termed  by  Page,  in 
his  work  oq  Contracts,  "  monopoly  contracts,"  and  in  Anti- 
Trust  Act,  June  10, 1890,  c.  407, 26  Stat.  [U.  S.  Comp.  St.  1901, 
p.  1886] , "  combinations  or  conspiracies  in  restraint  of  trade." 
Mr.  Justice  Holmes,  in  the  opinion  already  quoted  from,  de- 
fined them  as  "  combinations  to  keep  strangers  to  the  agree- 
ment out  of  the  business."  This  would  seem,  however,  not 
to  be  full  enough.  They  include  combinations  to  enhance 
prices  in  other  ways,  as  by  dividing  territory,  limiting  out- 
put, fixing  prices,  or  in  any  other  way.  Judge  Taft  defines 
them  as  "  contracts  having  no  purpose  but  to  restrain  com- 
petition and  maintain  prices."  Judge  Severens,  in  the  quota- 
tion already  made  from  his  opinion  in  Jarvis  v,  Knapp,  re- 
fers to  them  as  bargains  having  the  purpose  only  to  stifle 
competition.  The  objection  to  contracts  of  this  class,  as 
stated  by  Mr.  Justice  Holmes,  is  "  not  an  objection  to  their 
effect  upon  the  parties  making  the  contract,  the  members  of 
the  combination  or  firm,  but  an  objection  to  their  intended 
effect  upon  strangers  to  the  firm,  and  their  supposed  conse- 
quent effect  upon  the  public  at  large."  Where,  however,  the 
purpose  of  the  contract  is  to  enhance  prices  otherwise  than 
by  keeping  strangers  out  of  the  business  the  objection  to  it 
is  for  its  direct  effect  upon  the  public  at  large.  It  is  in  con- 
tracts of  this  kind  that  the  modern  disposition  to  reduce 
competition  and  create  monopolies  has  mostly  manifested 
itself. 

Page,  in  his  work  on  Contracts  (section  373),  says  that 
such  contracts     are  "  always  illegal."     And  such  I  under- 


; 


1006 


145  FEDERAL   REPORTEB,   376. 


Opinion  of  the  CJonrt. 

stand  to  be  the  drift,  at  least,  of  Judge  Taft's  opinion  in  the 
Addyston  Pipe  &  Steel  Co.  Case. 

In  view,  then,  of  this  difference  between  these  two  classes 
of  cases  as  to  the  validity  of  the  contracts  belonging  to  them, 
in  the  one  class,  the  contract  being  valid  if  the  restraint  is 
reasonable;  in  the  other  class,  the  contract  probably  being 
invalid  without  any  reference  to  the  question  of  reason- 
ableness, it  is  important  to  determine  to  which  class  the  sys- 
tem of  contracts  involved  herein  belongs.    If  it  belongs  to 
the  second  class,  then  probably  we  have  nothing  more  to  do 
than  to  locate  it.    If  it  belongs  to  the  first  class,  then,  if  the 
restraint  is  reasonable,  the  system  of  contracts  is  certainly 
valid.    In  any  event,  it  will  add  to  clearness  of  thought  to 
locate  it.    But  before  attempting  to  do  this,  a  suggestion  of 
complainant's  counsel  [377]  should  be  considered  and  dis- 
posed of.    It  is  that  said  system  of  contracts  is  not  affected 
by  the  restraint  of  trade  rule  solely  because  complainant's 
medicine  to  which  it  is  applied  is  an  article  made  under  a 
secret  process.    They  would  seem  to  contend  that  no  contract 
by  the  purchaser  of  an  article  made  under  a  secret  process 
restraining  himself  as  to  what  he  should  do  with  it  is  within 
the  restraint  of  trade  nde  simply  because  it  is  made  under 
such  a  process.    That  the  nature  of  the  property  sold  may  of 
itself   determine   that   a    restraining   contract   in    relation 
thereto  is  not  affected  by  the  rule,  must  be  conceded.     A 
patentee  may  assign  his  patent  right  and  enter  into  a  con- 
tract restraining  himself  with  reference  thereto. 

In  the  case  of  Central  Transportation  Go,  v.  Pullman  Pal- 
am  Car  Co,,  139  U.  S.  24-48,  11  Sup.  Ct.  478,  85  L.  Ed.  55, 
Mr.  Justice  Gray  said : 

•*A  coTcnant  by  the  assignor  of  letters  patent  for  an  invention  that 
lie  will  not  himself  make,  nse,  or  sell  the  patented  article  is  undoubt- 
edly valid,  because  the  act  of  rongress  which  creates  the  monoix>ly 
expressly  authorizes  it  to  be  assigned  as  a  whole." 

The  same  is  true  as  to  a  grant  by  a  patentee  of  his  patent 
right,  which  is  an  assignment  for  a  particular  territory,  and 
for  the  same  reason.  So  a  patentee  may  grant  a  license  and 
enter  into  such  a  contract  with  reference  thereto. 

In  the  case  of  Vttlcan  Powder  Co,  v.  fferctdes  Powder  Co,. 


HABTMAN   V,   JOHN   D.   PABK   &   SONS   CO. 
Opinion  of  the  Court 


11)07 


} 


^ 


96  Cal.  510,  31  Pac.  581,  31  Am.  St.  Kep.  242,  Judge  McFar- 
land  said: 

"As  a  patent  is  a  sort  of  monopoly  the  owner  may  manufacture  un- 
der it  or  not  as  he  pleases,  and  may  malie  either  a  partial  or  entire 
assignment  of  it,  and  may  protect  his  assignee,  not  only  by  an  agree- 
ment not  to  use  the  patent  (which  would  be  unnecessary,  l)ecause  such 
use  would  be  an  infringement),  but  by  a  covenant  not  to  interfere  in 
any  way  with  the  profits  to  be  derived  from  the  assigned  patent 

To  the  same  effect  are  the  following  cases,  to  wit :  Morse  v. 
Morse,  103  Mass.  73,  4  Am.  Rep.  513;  Good  v.  Daland,  121 
N.  Y.  1,  24  N.  E.  15;  BonsacJc  v.  Machine  Co,  (C.  C.)  70  Fed. 
383. 

Likewise,  in  relation  to  the  patented  thing,  as  v\c  have 
seen,  the  purchaser  thereof  may  be  restrained  as  to  the  use  of 
it  by  him.  This,  however,  is  effected  without  any  restraining 
contract  on  the  part  of  the  purchaser,  simply  by  the  seller, 
the  owner  of  the  patent,  limiting  the  license  as  to  what  the 
purchaser  may  do  therewith.  Again,  a  restraining  contract 
in  relation  to  a  secret  process  is  valid  simply  because  of  the 
nature  of  the  property  to  which  it  relates.  The  existence 
and  value  of  a  secret  process  as  property  depends  upon  the 
fact  that  its  secrecy  can  be  maintained  by  a  restraining  con- 
tract. Hence  one  to  whom  it  is  communicated  by  the  owner 
may  by  contract  restrain  himself  as  to  the  use  he  is  to  make 
of  it. 

In  the  case  of  Harrison  v.  Glucose  Sugar  Refining  Co,,  116 
Fed.  304,  53  C.  C.  A.  484, 58  L.  E.  A.  915,  Judge  Jenkins  said : 

"  In  such  a  case  it  may  well  be  doubted  if  the  rule  with  respect  to 
restraint  of  trade  should  apply,  because  these  secrets  of  business  are 
the  property  of  the  appellee,  to  which  the  public  has  no  right,  and  may 
not  justly  insist  that  it  shall  receive  the  benefit  of  the  appellant's 
services  through  breach  of  confidence.  *  *  *  In  all  such  cases 
courts  have  uniformly  enjoined  the  delin-  [378]  quent  party  from 
engaging  in  the  business  from  which  he  has  agreed  to  refrain  and  from 
disclosing  the  secrets  of  the  business  which  he  has  thus  acquired." 

It  was  on  this  principle  that  it  was  held  by  the  Supreme 
Court  in  Board  of  Trade  v.  Christie  Grain  d&  Stock  Co,,  108 
U.  S.  236,  25  Sup.  Ct.  637,  49  L.  Ed.  1031,  that  contracts  of 
telegraph  companies  with  the  Board  of  Trade  of  Chicago,  by 
which  said  companies  agreed  not  to  conununicate  quotations 
of  prices  for  wheat,  com,  and  provisions  offered  and  accepted 
in  its  exchange  which  they  received  from  it,  to  persons  who 


1008 


145   FEDERAL  BEPORTER,  378. 
Oprnion  of  the  Court 


were  not  in  contractual  relations  with  it  and  approved  by  it, 
were  valid.    Mr.  Justice  Holmes  said : 

"But  80  far  as  ttuMt  contracts  limit  the  communication  of  what  the 
plaintiff  might  have  refrained  from  communicating  to  any  one,  there 
is  no  monopoly  or  attempt  at  monopoly  and  no  contract  in  restraint  of 
trade,  either  under  the  statutes  or  at  common  law." 

So,  likewise,  the  owner  of  a  secret  process  in  selling  it  to 
another  may,  by  contract,  restrain  himself  not  thereafter  to 
use  it  or  to  divulge  it  to  others.  In  the  case  of  Central 
Tramportation  Co.  v.  Pullman  Palace  Car  Co,,  mpra^  Mr. 
Justice  Gray  said : 

"  Upon  the  sale  of  a  secret  process,  a  covenant,  express  or  implied, 
that  the  seller  will  not  use  the  process  himself  or  communicate  it  to 
any  other  person,  is  lawful,  because  the  process  must  be  kept  secret  In 
order  to  be  of  any  value,  and  the  public  has  no  interest  in  the  question 
by  whom  it  is  used." 

In  the  case  of  Ammunition  Co.  v.  Nordenfeldty  1  Ch.  630, 
L.  J.  Bowen  said : 

••  Sales  of  secret  processes  are  not  within  the  principle  or  the  mis- 
chief of  restraint  of  trade  at  all.  By  the  very  transaction  in  such 
cases,  the  public  gains  n  the  one  side  what  it  lost  on  the  other,  and, 
unless  such  a  bargain  was  treated  as  outside  the  doctrine  of  general 
restraint  of  trade,  there  could  be  no  sale  of  secret  processes  of  man- 
ufacture." 

To  the  same  effect  are  the  cases  of  Vickery  v.  Welch,  19 
Pick.  (Mass.)  523;  Jarois  v.  Peck,  10  Paige  (N.  Y.)  125; 
ffard  V.  SeeJey,  47  Barb.  (N.  Y.)  428;  Alcock  v.  Giberton, 
5  Duer.  (N.  Y.)  76;  Tode  v.  GrosSj  127  N.  Y.  480,  28  N.  E. 
469, 13  L.  E.  A.  652,  24  Am.  St  Eep.  475 ;  Simmons  Medicine 
Co.  V.  Simmons  (C.  C.)  81  Fed.  163;  Fowle  v.  Park,  131 
U.  S.  88,  9  Sup.  Ct.  658, 33  L.  Ed.  67. 

It  is  therefore  true,  as  stated  by  Judge  Scott,  in  Standard 
Fire  Proofing  Co,  v.  St,  Louis  Co.,  177  Mo.  §59,  76  S.  W. 
1008,  that: 

"  Patented  inventions  and  secrets  of  art  or  trade  not  patentable  are 
not  within  the  purview  of  the  rule  against  restraint  of  trade." 

But  what  we  have  to  do  with  here  is  not  the  secret  process 
by  which  complainant's  medicine  is  made.  It  is  the  medi- 
cine itself,  made  under  the  process.  The  secret  i.rocess  and 
the  medicine  made  under  it  are  separate  and  distinct  things, 
and  each  is  a  subject  of  ownership.  One  person  may  own 
one  and  another  person  the  other.  The  question  has  been 
argued  whether  a  sale  of  an  article  made  under  a  se(;ret  pro- 


HAETMAN   V.   JOHN  D.   PAKK  &   SONS    CO. 


1009 


Opinion  of  the  Court. 

cess  is  a  publication  of  the  process.    It  is  and  it  is  not.    It 
is,  if  and  when  one  can  by  his  own  ingenuity  ascertain  thei  e- 
from  the  process  by  which  it  is  made.    Until  he  so  ascertains 
it,  there  has  been  no  [379]  publication  of  the  process;  and 
in  the  meantime  the  ownership  of  the  secret  and  the  right  to 
its  protection  is  as  full  and  complete  as  if  no  sale  had 
ever  been  made  of  the  article  embodying  the  secret  process. 
But  still,  as  stated,  such  article  is  not  the  process  and  the 
rights  with  reference  to  each  are  different.    AYhat  is  there, 
then,  in  tJie  nature  of  the  articles  made  under  a  secret  process 
to  occasion  any  difference  between  them  and  articles  not  so 
made  or  between  them  and  articles  which  one  may  not  have 
made  at  all,  but  simply  owns,  in  the  matter  of  the  validity  of 
restraining  contracts  entered  into  by  purchasers  thereof  from 
the  owner  ?     It  is  hard  to  conceive  of  any.     It  is  true  that  the 
manufacturer  and  owner  of  the  articles  made  under  the  secret 
process  may  refrain  from  making  them  and  selling  tliem  to 
purchasers,  and  thus  putting  them  upon  the  market.    Equally 
so,  the  manufacturer  and  owner  of  any  other  articles  may 
refrain  from  so  doing.     So,  also,  the  owner  of  articles  that 
he  has  not  made,  but  has  purchased  or  otherwise  obtained 
from  the  manufacturer  may  refrain  from  selling  them  to 
purchasers  and  thus  putting  them  upon  the  market.     Sup- 
pose that  the  owner  of  a  patent  should  sell  all  the  articles 
made  under  it  to  another  with  license  to  use  or  resell  them, 
thiis  passing  them  outside  of  the  monopoly  of  the  patent  in 
the  hands  of  the  purchaser,  would  the  mere  fact  that  they  had 
been  made  under  the  patent  lend  any  sanctioning  force  to  a 
restraining  contract  entered  into  with  reference  thereto  by 
a  subpurchaser  thereof?     I  must  conclude,  therefore,  that 
the  fact  that  complainant's  medicine  has  been  made  under 
a  secret  process  has  no  effect  whatever  on  the  validity  of 
the  system  of  contracts  involved  herein.    He  has  no  greater 
rights  in  relation  thereto,  as  distinguished  from  the  secret 
process  under  which  it  was  made,  than  the  owner  of  any 
other  tangible  personal  property,  whether  made  by  him  or 
not,  would  have  in  relation  to  such  property.    Nor  can  the 
fact  that  he  sells  it  under  a  trade-mark  and  a  certain  dress, 
which  no  one  else  has  the  right  to  use,  even  if  he  did  by 
his  own  ingenuity  ascertain  the  secret  process  bv  which  it 
21220— VOL  2—07  m 64 


1010 


145   FEDERAL   REPORTER,   379. 
Opinion  of  the  Court. 


is  made  and  thus  became  enabled  to  make  and  sell  it,  make 
any  difference.  No  reason  occurs  to  me  why  the  owner  of 
goods  trade-marked  and  peculiarly  dressed  should  have  the 
right  to  obtaining  a  restraining  agreement  from  the  pur- 
chaser of  his  goods,  and  the  owner  of  goods  not  so  marked 
or  dressed  should  not  have  such  right.  All  goods  have  some 
dress,  and  if  not  trade-marked  are  marked  with  the  name  of 
the  seller.  If,  then,  such  a  system  of  contracts  is  valid,  a« 
applied  to  complainant's  medicine,  it  would  be  equally  valid 
as  applied  to  any  other  article  of  tangible  personal  property 
owned  by  the  one  so  applying  it.  The  validity  of  that 
systeni  dei>ends  entirely,  therefore,  upon  the  question  as 
to  which  of  the  two  classes  of  contracts  involving  the  re- 
straint of  trade  rule  it  belongs,  and  if  it  belongs  to  the  first 
class,  whether  under  all  the  circumstances  it  is  reasonable. 

To  which  class,  then,  does  it  belong?  The  only  ground 
for  claiming  that  it  belongs  to  the  second  class  is  that  its 
purpose  is  to  maintain  the  prices  of  complainant's  medicine 
to  the  retailers  and  consumers.  There  is  nothing  in  them, 
beyond  the  uniformity  of  price  [380]  provided  for,  to  affect 
competition  amongst  different  wholesalers  and  amongst  dif- 
ferent retailers.  The  contracts  are  not  between  persons  en- 
gaged in  the  same  business.  One  set  of  them  is  between  com- 
plainant, who  is  a  manufacturer,  and  wholesale  druggist; 
and  the  other  set  is  between  him  and  retail  druggists.  A  sep- 
arate contract  is  entered  into  between  complainant  and  each 
wholesaler  and  l>etween  him  and  eacli  retailer.  In  each  con- 
tract between  complainant  and  a  wholesaler,  there  is  a  pur- 
chase of  medicine  by  him  and  an  agreement  on  his  part  to 
restrain  himself  as  to  the  persons  to  whom  and  the  price  at 
which  he  resells.  And  in  each  contract  between  complainant 
and  a  retailer  there  is  an  agreement  on  his  part  that  if  he  is 
designated  as  a  purchaser  from  wholesalers  to  restrain  him- 
self as  to  price  at  which  he  resells  to  consumers.  It  is  true 
that  these  contracts  cover  the  entire  trade  in  complainant's 
medicine,  which  fact  defendant's  counsel  emphasize,  but  there 
is  here  no  combination  between  persons  engaged  in  the  same 
kind  of  business  to  regulate  their  respective  businesses  for 
their  mutual  benefit  to  the  harm  of  strangers  or  the  public  at 
large.    It  would  seem  that  each  of  the  contracts  in  complain- 


) 


HARTMAN   V,   JOHN   D.   PARK   &  SONS   CO.  1011 

Opinion  of  the  Court. 

ant's  system  comes  within  the  fourth  of  the  five  subclasses 
into  which  Judge  Taft  divides  the  first  class  of  contracts. 
If  complainant  sold  his  medicine  to  consumers  as  well  as 
manufactured  it,  and  should  make  a  single  contract  with  a 
retailer  in  the  market  where  he  sold  by  which  he  sold  to 
the  retailer  a  lot  of  his  medicine  to  resell  to  consumers, 
and  the  retailer  agreed  not  to  sell  it  at  less  than  the  price 
at  which  complainant  Avas  selling  it,  and  thus  undersell  and 
compete  with  him  for  consumers,  it  would  present  a  case 
clearly  within  said  fourth  subclass,  and  the  validity  of  the 
restraint  which  such  retailer  thus  put  upon  himself  would 
depend  upon  its  reasonableness,  that  in  turn  depending  upon 
whether  the  restraint  was  reasonably  necessary  to  the  pre- 
vention of  possible  injury  to  complainant  from  use  by  the 
retailer  of  the  medicine  sold  to  him.     The  cases  cited  by 
Judge   Taft  in   illustration  of  this   fourth   subclass   each 
involved  a  single  sale  and  agreement.     Those  cases  are  as 
follows,   to   wit:  American  Strawhoard   Co.   v.  Haldeman 
Paper  Co.,  83  Fed.    619,  27  C.  C.  A.  634 ;  Hitchcock  v.  An- 
thony, 83  Fed.  779,  28  C.  C.  A.  80;  Oregon  Navigation  Co, 
V.  Winsor,  20  Wall.  (U.  S.)  64,  22  L.  Ed.  315;  Dunlop  v. 
Gregory,  10  N.  Y.  241,  61  Am.  Dec.  746;   Hodge  v.  Sloan, 
107  N.  Y.  244, 17  N.  E.  335, 1  Am.  St.  Kep.  81(5. 

In  the  American  Strawhoard  Co.  Case,  that  company 
owned  and  operated  a  number  of  strawhoard  mills.  It  con- 
veyed one  of  them  to  the  Haldeman  Paper  Company,  which 
agreed  not  to  manufacture  strawhoard  at  said  mill  for 
20  years.  In  the  Anthony  Case,  Anthony  was  lessee  of 
a  dock  upon  which  he  conducted  the  business  of  dealing 
in  coal  and  fish  and  conveyed  another  dock  near  by  to 
Hitchcock,  a  dealer  in  lumber,  who  agreed  not  to  engage  in 
the  coal  or  fish  business  or  do  anything  that  would  conflict 
with  the  grantor's  business  for  seven  years.  In  the  Oregon 
Navigation  Company  Case,  that  company  was  engaged  in 
navigating  the  Columbia  river  in  Oregon  and  Washington. 
It  had  purchased  the  steamer  New  World  from  the  California 
Navigation  Company,  which  was  engaged  in  navigating 
Cali-[381]fornia  waters,  and  had  agreed  with  it  not  to  em- 
ploy said  steamer  in  California  waters.    It  sold  the  steamer 


1012 


14«  FEDERAL  EIPORTER,  381, 


Opinion  of  tlie  Court 

to  Winsor,  who  was  engaged  in  navigating  Puget's  Sound. 
He  agreed  not  to  use  it  in  California  waters  or  Columbia 
river  for  10  years.  In  the  Gregory  Case,  Gregory,  who  was 
engaged  in  navigating  Hudson  river  between  New  York, 
Albany,  and  Troy  sold  a  two-thirds  mterest  in  steamboat 
Robert  L.  Stevens  to  Dunlop,  who  agreed  not  to  use  it  at  any 
time  thereafter  as  a  passage  boat  on  Hudson  river  above  the 
village  of  Saugerties.  In  the  Hodge  Case,  Hodge's  testator, 
who  was  engaged  in  the  business  of  selling  sand  from  land 
he  owned,  conveyed  a  piece  of  the  land  to  Sloan  who  agreed 
he  would  not  sell  any  sand  from  it.  In  each  case  it  was  held 
that  the  restraining  agieement  was  valid.  Had  there  been 
in  each  case  any  number  of  similar  sales  of  similar  property 
with  similar  restraining  agreements,  each  transaction  would 
have  belonged  to  the  fourth  subclass,  and  the  restraining 
agreement  in  each  would  have  been  dependent  upon  its 
reasonableness  for  its  validity.  Their  numerousness  would 
not  affect  their  nature.  It  may  be  said,  however,  that  com- 
plainant does  not  sell  save  to  wholesalers  to  resell  to  retail- 
ers and  that  therefore  neither  the  wholesalers  nor  retailers 
are  possible  competitors  of  complainant  and  the  restraining 
agreements  entered  into  by  the  wholesalers  and  retailers  are 
not  to  prevent  or  affect  their  using  the  medicine  in  compe- 
tition with  him,  and,  hence,  do  not  come  within  the  letter  of 
that  fourth  subclass,  which  covers  agreements  by  the  buyer 
of  property  not  to  use  the  same  in  competition  with  the 
business  retained  by  the  seller.  This  may  be  true.  But  the 
spirit  of  the  subclass  covei's  restraining  agreements  by  the 
buyers  of  property  to  prevent  their  using  it  in  any  other 
way  than  by  competition  so  as  to  injure  the  business  of  the 
seller.  The  principle  involved  in  this  subclass  is  that,  if  one 
in  business  sells  property  to  another  and  such  property  may 
be  used  by  the  purchaser  in  a  way  to  injure  the  business  of 
the  seller  or  to  render  it  less  profitable  than  it  would  other- 
wise be,  a  restraining  agreement  on  the  part  of  the  pur- 
chaser as  to  the  use  of  it  may  be  reasonable  under  the  cir- 
cumstances of  the  case,  and  if  so,  valid. 
Judge  Taft,  in  Addyson  Pipe  &  Steel  Co.  Case,  in  leading 


HAETMAN   V.   JOHN  D.   PARK  &  SONS   CO.  1013 

Opinion  of  the  Court 

up  to  the  classification  which  he  made  of  the  cases  coming 
within  the  first  class,  said : 

"When  one  in  business  sold  property  with  which  the  buyer  might 
set  up  a  rival  business  it  was  certainly  reasonable  that  the  seller 
should  be  able  to  restrain  the  buyer  from  doing  hun  an  injui-y  which, 
but  for  the  sale,  the  buyer  would  be  unable  to  inflict." 

It  would  be  equally  reasonable  that'the  buyer  should  be 
able  to  restrain  himself  from  using  the  property  in  any  other 
way  than  setting  up  a  rival  business,  so  as  to  do  the  seller  an 
injury  which  but  for  the  sale  he  would  be  unable  to  inflict 
But  whether  or  not  the  system  of  contracts  involved  here 
comes  within  said  fourth  subclass,  they  are  certainly  covered 
by  the  language  used  by  Judge  Taft  to  take  in  any  possible 
omissions  from  the  classification  he  made.    In  each  contract 
the  restraining  agreement  is  ancillary  or  collateral  to  the 
main  purpose  of  a  lawful  contract,  to  wit,  a  sale  of  the  medi- 
cine, [382]  and,  according  to  complainant's  claim,  it  is  neces- 
sary to  protect  him  from  an  unjust  use  of  the  legitimate 
fruits  of  the  contract  by  the  purchaser.    I  therefore  conclude 
that  the  system  of  contracts  involved  herein  belongs  to  the 
first  class,  and  that  its  validity  depends  solely  upon  its  rea- 
sonableness.   Is  it  reasonable,  then,  that  complainant  should 
have  the  right  to  put  in  force  the  system  of  contracts  in- 
volved herein  and  obtain  from  his  vendees  and  subvendees 
restraining  agreements  from  the  vendees,  as  to  whom  and  at 
prices  at  which  they  shall  resell,  and  from  the  subvendees  as 
to  the  prices  at  which  they  shall  resell?    A  question  arises 
here  as  to  the  party  on  whom  lies  the  burden  as  to  the  rea- 
sonableness.   Is  it  on  complainant  to  show  that  the  restraint 
in  question  is  reasonable,  or  is  it  on  defendant  to  show  that  it 
is  unreasonable  ? 

Judge  Simonton,  in  Hulse  v.  Bonsack  Machine  Co.,  supra, 
says: 

"  This  is  not  literally  an  agreement  in  restraint  of  trade,  tl  is  sim- 
ply a  contract  which  by  analogy  can  be  likened  to  one,  and  the  anal- 
ogy should  not  be  pushed  beyond  the  reason  for  it.  There  is  no  pre- 
sumption that  such  a  contract  is  void.  The  presumption  is  in  favor  of 
the  competency  of  the  parties  to  make  the  contract  and  the  burden  is 
upon  the  party  who  alleges  that  it  is  unreasonable  or  against  uubiic 
policy." 


1014 


145   FEDEBAL  REPOBTEK,   382. 
Opinion  of  the  Court 


On  the  other  hand,  Beach  on  Contracts,  vol.  2,  §  1562, 

says : 

"  Many  authorities  declare  in  substance  that  all  restraints  are  nre- 
sumed  to  be  bad.  but,  if  the  circumstances  are  set  forth,  that  presumD- 
JT,^^^\^  excluded  and  the  court  judges  of  these  circumstances 
whether  the  contract  be  void  or  not," 

I  do  not  find  it  essential  in  this  case  to  locate  the  burden, 
as  I  hold  that  under  the  allegations  of  the  bill,  which  are  ad- 
mitted by  the  demurrer,  said  system  of  contracts  as  applied 
to  complainant's  medicine  is  reasonable.    The  circumstances 
which  lead  me  to  this  conclusion  are  these:  That  complain- 
ant's vendees  and  subvendees  should  be  so  restrained  is  ad- 
vantageous to  complainant's  business.    It  would  be  an  injury 
to  it  from  them  not  to  be  so  restrained.    Exactly  how  it  is  so 
advantaged  and  how  it  would  be  injured  by  a  removal  of 
the  restraint  has  not  been  developed  in  the  argument ;  and  I 
do  not  feel  sufficiently  advised  as  to  such  matters  to  say  as  to 
this.    It  would  seem  that  the  existence  of  such  a  system  of 
contracts  in  relation  to  complainant's  medicine  would  tend 
to  prevent  demoralization  in  the  trade  therein  through  com- 
petition amongst  his  vendees  and  subvendees,  and  enable  him 
to  maintain  the  prices  for  his  medicine.    But,  however  this 
may  be,  it  is  alleged  in  the  bill  that  before  complainant 
established  and  put  said  system  in  force  the  "  cut  rate  "  or 
"  cut  price  "  system  had  resulted  in  much  confusion,  trouble, 
and  damage  to  complainant's  business,  and  had  injuriously 
affected  the  reputation  and  depleted  the  sale  of  his  medicine, 
and  that  it  was  established  and  put  in  force  to  protect  his 
trade,  custom,  and  business,  and  the  manufacture  and  sale  of 
his  medicine;  that  it  prevents  cutting  of  prices  and  demoral- 
ization of  trade  both  wholesale  and  retail,  greatly  benefits 
him  by  increasing  the  sales  of  and  demand  for  his  medicine, 
and  is  of  great  value  to  him  in  his  business ;  and  that  it  has 
been  of  gi-eat  benefit  and  advantage  to  him  and  his  business, 
and  has  increased  his  [383]  trade  and  business.    It  is  fur- 
ther alleged  that  the  prices  which  he  and  his  vendees  and 
subvendees  get  for  his  medicine  are  reasonable.    These  alle- 
gations must  be  accepted  as  true.    The  vendees  and  sub- 
vendees would  not  have  the  opportunity  to  sell  his  medicine 


HARTMAN    V.    JOHN   D.    PAEK   &   SONS    CO. 


1015 


Opinion  of  the  Court. 

if  he  did  not  make  and  sell  it.  ^e  thus  brings  trade  to  them. 
By  fixing  a  uniform  price  on  his  medicine  on  sales  by  him- 
self to  the  wholesalers,  on  sales  by  wholesalers  to  retailers, 
and  by  retailers  to  consumers,  all  purchasers,  wholesalers,  re- 
tailers, and  consumers  are  treated  alike,  the  large  wholesalers 
have  no  advantage  over  the  small  ones,  nor  the  large  retailers 
over  the  small  ones.  All  sellers  and  all  consumers  are  treated 
alike.  Complainant  criBates  the  demand  for  the  medicine,  as 
he  alone  advertises  it.  And,  finally,  complainant  could  accom- 
plish the  very  same  result  by  a  different  system,  against  which 
no  legal  complaint  could  be  made.  This  would  be  by  a  sj^stem 
of  agencies.  Though  the  nature  of  complainant's  medicine ; 
i.  e.,  its  being  an  article  made  under  a  secret  process,  may 
not,  without  more,  determine  the  validity  of  the  system  of 
contracts  in  question,  it  cannot  be  said  that  it  does  not  add 
to  the  reasonableness  of  said  system  as  applied  to  it.  Com- 
plainant not  only  owns  it  and  makes  it,  but  no  one  else  can 
make  it,  and  if  they  could  they  could  not  sell  it  under  his 
trade-mark  and  dress. 

How,  then,  does  the  matter  stand  upon  authority?  The 
whole  trend  of  authority  is  favorable  to  the  validity  of  the 
system.  The  sweeping  principle  which  has  taken  form  in 
Judge  Taft's  five  classes  and  in  the  general  statement  to 
cover  any  omissions  therefrom  upholds  it.  But  there  are  a 
number  of  decisions  more  directly  in  point.  They  are  as  fol- 
lows, to  wit:  Elliman  v.  Carrington  (1901),  2  Ch.  275,  84 
L.  T.  (N.-S.)  853;  Garst  v.  Harris,  177  Mass.  72,  58  N.  E. 
174;  Walsh  v.  Dwight  (Sup.)  58  N.  Y.  Supp  91;  Park  c& 
So7is  Co.  V.  National  Wholesale  Druggists,  175  N.  Y.  1,  67 
N.  E.  136,  62  L.  R.  A.  632,  96  Am.  St.  Rep.  578 :  Whitwell 
V.  Tobacco  Co,  125  Fed.  454,  60  C.  C.  A.  290,  64  L.  R.  A. 
689. 

In  Elliman  v.  Carrington,  the  plaintiffs  were  manufactur- 
ers of  Elliman's  Royal  Embrocation  for  horses  and  cattle 
and  Elliman's  Universal  Embrocation  for  human  beings. 
They  sold  it  to  the  defendants,  who  bought  wholesale  to  'sell 
to  others  at  retail.  The  latter  agreed  not  to  sell  below  certain 
prices  and  not  to  sell  to  others  unless  they  agreed  not  to  sell 
below  certain  prices.    They  broke  the  latter  part  of  the  agree- 


1016 


145  FBDEBAL  BEPOBTEB,  383. 


Opinion  of  the  Court 

ment  whicli  was  the  occasion  of  the  suit.    It  was  held  that 
the  agreement  was  valid.    Mr.  Justice  Kekewich  said : 


H  Pill 


The  [plaintiffs]  are  not  l>ound  to  sell  the  embrocation  at  all ;  they 
are  not  bound  to  manufacture  it  They  are  at  liberty  to  do  so  as 
they  please,  and  when  they  have  manufactured  it,  they  are  at  liberty 
to  sell  it  at  whatever  price  they  choose  to  fix,  it  may  be  a  prohibitive 
one  or  it  may  be  such  a  small  price  that  they  cannot  malve  any  profit 
out  of  it  That  is  entirely  for  their  consideration.  There  are  no 
goods  which  the  owner  thereof  may  not  lawfully  retain  or  sell  at  such 
price  as  he  pleases.'* 

Again  he  says: 

**  Why  should  nut  Elliman's  Sons  &  Co.  be  at  liberty'  to  fix  the  price 
in  that  way?  Nobody  has  argued  and  it  could  not  possibly  be  argued 
that  they  are  not  at  liberty  to  fix  the  price  in  the  first  sale  to  Carring- 
ton  &  Son.  Why  [384]  should  they  not  be  at  liberty  to  make  the  fur- 
ther bargain  with  Carrington  &  Son  that  they  shall  not  sell  it  below  a 
certain  price?  It  is  said  that  the  contract  is  in  restraint  of  trade.  In 
one  sense  it  is,  but  it  is  just  as  much  and  no  more  in  restraint  of 
trade  for  Elliman's  Sons  &  Co.  to  say  that  they  will  not  sell  at  all. 
It  ^*eeul.s  to  me.  to  say  the  least,  that  what  is  restraint  of  trade  as  re- 
gards I'arrington  &  Sen  is  really  the  liberty  of  trade  as  regards  Elli- 
man's Sous  &  Co.  The  cases  which  have  been  cited  are  well-known 
authorities  expounding  a  great  principle,  and  showing  what  exceptions 
there  are  to  that  principle.  But  this  case  seems  to  me  not  to  fall 
within  any  principle  or  exception.  I  do  not  thhik  that  it  is  touched 
by  the  authorities  at  all.  It  is  merely  a  question  of  whether  a  man 
is  entitleil  when  he  is  selling  his  own  goods  to  make  a  bargain  as  to 
the  use  to  be  made  of  them  by  the  purchaser.  It  is  said  that  the  con- 
tract is  against  public  iwlicy,  but  that  phrase  merely  embodies  for  the 
present  purpose  the  great  principle  of  restraint  of  trade,  and  to  say 
that  it  is  to  prevent  Elliman's  Sons  &  Co.  from  exercising  their  own 
discretion,  seems  to  me  to  be  applying  a  well-settled  principle  of  law 
to  facts  to  which  it  cannot  have  any  possible  application." 

It  is  to  be  noted  that  though  the  article  which  was  sold  in 
this  case  was  probably  made  under  a  secret  process,  no  em- 
phasis was  laid  upon  the  fact  The  reasoning  applies  equally 
w^ell  to  any  article  which  one  may  own,  whether  he  made  it 
or  not,  and  which  he  sells  for  purpose  of  resale. 

In  Garsi  v.  Hairisy  the  plaintiff  sold  Phenyo-Caffein,  a 
proprietary  medicine,  to  defendant,  who  agreed  not  to  sell 
it  below  a  stipulated  price,  and  a  certain  sum  was  agreed  on 
as  liquidated  damages.  The  action  was  brought  for  a  breach 
of  this  agreement  to  recover  said  sum.  It  was  held  that  the 
agreement  was  valid. 

Holmes,  C.  J.,  said : 

•*  It  Is  .said  that  the  contract  was  unlawful  as  In  restraint  of  trade. 
*    *    ♦    When,  as  here,  there  is  a  secret  composition,  which  the 
defendant  presumably  would  have  no  chance  to  sell  at  a  profit  at  all 
but  for  the  plaintiff's  permission,  a  limit  to  the  license,  in  the  form  of 
a  restriction  of  the  price  at  which  he  may  sell,  is  proper  enough." 


HARTMAN   V.    JOHN    D.    PARK   &   SONS   CO. 


1017 


Opinion  of  the  Court 

It  is  true  that  the  fact  that  the  article  sold  was  a  secret 
composition  was  emphasized.  But  the  reasoning  used  was 
equally  applicable  to  any  other  article;  as  to  any  other  ar- 
ticle sold  the  purchaser  would  not  have  had  any  chance  to 
sell  that  particular  article,  however  it  may  have  been  as  to 
other  articles  of  the  same  kind,  at  a  profit  at  all,  but  by  the 
seller's  permission. 

Point  is  made  as  to  these  two  cases  that  in  each  but  a  single 
contract  was  involved,  and  not  a  system  of  contracts  as  here. 
That  is  true,  but  no  doubt  there  was  a  system  of  contracts  in 
each  of  those  cases  as  here.  A  single  contract;  i.  e.,  a  contract 
with  a  single  purchaser,  would  hardly  have  been  of  any 
value  to  the  seller.  It  was  only  by  a  system  of  contracts ;  i.  e., 
a  contract  with  every  purchaser,  that  he  could  hope  to  ac- 
complish anything.  This  must  have  been  had  in  view  by  the 
court,  as  no  point  was  made  of  the  fact  that  there  was  but  a 
single  contract  involved,  and  the  reasoning  was  applicable 
to  a  system. 

In  Walsh  v.  Dwight^  the  defendants  were  manufacturers 
and  sellers  of  saleratus  and  soda,  articles  in  common  use  and 
capable  of  being  manufactured  by  any  one,  which  was  known 
on  the  market  as"  Dwight's  Cow  Brand  Saleratus  and  Soda." 
They  sold  these  articles  to  job-  [385]  berrf  under  contracts, 
whereby  the  latter,  in  consideration  of  a  certain  discount, 
agreed  not  to  resell  same  or  any  other  saleratus  or  soda  at 
less  than  certain  prices.  The  plaintiffs  were  rival  manufac- 
turers of  saleratus  and  soda,  and  the  suit  was  to  recover 
damages  sustained  by  them  because  of  defendant's  system  of 
contracts.  It  was  assumed  that  plaintiffs  had  a  right  of 
action  if  the  system  of  contracts  was  invalid  and  the  dispo- 
sition of  the  case  was  made  to  turn  on  its  validity.  It  was 
held  to  be  valid.     Judge  Ingraham  said : 

*'  It  is  difficult  to  see  upon  what  gi'ound  it  can  be  claimed  that  such 
a  contract  is  illegal.  That  the  defendants  would  have  the  right  to 
establish  agencies  for  the  sale  of  their  goods,  or  to  employ  others  to 
sell  them,  at  such  prices  as  the  defendants  should  designate,  cannot 
be  disputed.  Nor  can  it  be  that  a  manufacturer  of  merchandise  can- 
not agree  to  sell  to  others  upon  condition  that  the  vendee,  in  selling  at 
retail,  should  charge  a  specified  price  for  the  goods  sold,  or  should  sell 
only  the  manufactured  product  of  the  manufacturer.  If  a  dealer  in 
articles  of  this  kind,  for  his  own  advantage,  agrees  to  confine  his 
business  to  a  particular  line  of  goods,  or  agrees  with  the  manufacturer 
to  charge  a  particular  price  for  the  articles  which  he  sells  in  his  busi- 


lUlo 


14o  FEDERAL  REPORTEB,  3m. 
Opinion  of  the  Court 


ness,  such  an  agreement  is  not  illegal,  as  in  restraint  of  trade  or  as 
tending  to  create  a  monopoly,  as  there  is  nothing  in  the  agreement  to 
prevent  othere  from  engaging  in  the  business,  or  the  manufacturers 
Of  other  articles  from  selling  their  products  to  anv  one  who  is  willing 
to  buy.  There  is  nothing  to  prevent  any  individual  from  selling  any 
property  that  he  has  at  any  price  he  can  get  for  it.  Nor  is  there  any 
reason  why  an  individual  should  not  agree  that  he  will  not  sell 
property  which  he  owns  at  the  time  of  malting  the  agreement,  or  which 
he  thereafter  acquires,  at  less  than  at  a  fixed  price ;  and  certainlv  a 
contract  of  this  Icind  is  not  one  which  exposes  the  parties  to  it  to  any 
penalty,  or  subjects  them  to  any  action  for  damages  bv  those  whose 
business  such  a  contract  has  interfered  with." 

The  case  of  John  I).  Park  dt  Sons  Co.  v.  National  Whole^ 
sale  Druggists  Association  was  a  suit  by  the  defendant 
herein  against  an  association  of  wholesale  druggists  to  recover 
damages  alleged  to  have  been  occasioned  by  said  association 
causing  niannfactiirers  of  medicines  to  refuse  to  sell  to  this 
defendant  on  the  same  terms  as  it  sold  to  members  of  said 
association  unless  it  would  enter  into  a  contract  by  which  it 
agreed  not  to  resell  same  at  less  than  certain  prices,  a  con- 
tract similar  to  that  which  each  member  of  said  association 
had  entered  into  with  said  manufacturers.    It  was  held  that 
the  system  of  contracts  was  valid,  and  this  defendant  was 
not  entitled  to  recover.    There  was  a  dissent  by  three  of  the 
judges.    One  dissent  was  based  upon  the  ground  that,  though 
the  manufacturers  had  a  right  voluntarily  to  put  in  force 
such  a  system  of  contracts,  it  was  illegal  for  the  jobbers  to 
drive  them  to  put  in  force  said  system  by  refusing  to  deal 
with  them  unless  they  did.    Another  dissent  was  based  upon 
the  ground  that  jobbers  required  the  manufacturers  not  only 
to  sell  at  the  same  price  to  each  jobber,  but  to  compel  each 
jobber  to  sell  to  the  consumers  at  the  same  price.    "  It  is  in 
this  respect "  it  is  said  "  that  the  agreement  is  vicious  and 
operates  in  restraint  of  trade  for  it  destroys  competition 
among  the  jobbers."    The  force  of  the  decision  is  weakened 
somewhat  by  the  consideration  that  it  is  not  entirely  clear 
that  the  court  did  not  think  that  the  medicine  to  which  the 
system  of  contracts  was  held  lawfully  applicable  had  been 
patented.    The  reasoning  of  the  opinions  rendered  on  be- 
half of  the  majority  of  the  court,  how-  [386]  ever,  is  not 
based  on  the  fact  that  they  had  been  patented.    It  is  equally 
pertinent  to  proprietary  medicines.    This  case  suggests  that 


HAETMAN   V.   JOHN  D.   PARK   &  SONS   CO. 
Opinion  of  the  Court. 


1019 


possibly  complainant  was  driven  to  adopt  its  system  of  con- 
tracts by  the  organization  of  wholesale  druggists. 

In  Whitwell  v.  Tohacco  Co.^  the  defendant  was  a  manu- 
facturer of  tobacco  and  the  plaintiff  a  jobber  therein.  The 
defendant's  method  of  doing  business  was  to  fix  the  prices  of 
its  goods  so  high  to  those  who  did  not  agree  to  refrain  from 
dealing  in  the  commodities  of  its  competitors  that  their  pur- 
chase was  unprofitable,  while  it  reduced  the  prices  to  those 
who  did  so  agree  so  that  the  purchase  of  the  goods  was 
profitable  to  them.  The  plaintiff  applied  for  a  purchase, 
but  refused  to  so  agree,  and,  upon  his  so  refusing,  the  de- 
fendant refused  to  sell  to  him.  He  then  brought  the  action 
to  recover  damages  for  the  refusal.  It  was  held  that  he 
could  not,  that  such  an  agreement  on  the  part  of  a  jobber 
was  legal,  and  that  the  defendant  had  a  right  to  refuse  to 
sell  to  him  unless  he  would  enter  into  it.  Judge  Sanborn 
said: 

"  The  tobacco  company  and  its  employe  sold  its  products  to  custom- 
ers who  refrained  from  dealing  in  the  goods  of  its  competitors  at 
prices  which  rendered  their  purchases  profitable.  But  there  was  no 
restriction  ui>on  competition  here,  because  this  act  left  the  rivals  of 
the  tobacco  company  free  to  sell  their  competing  commodities  to  all 
other  purchasers  than  those  who  bought  of  the  defendants,  and  free 
to  compete  for  sales  to  the  customers  of  the  tobacco  company  by 
offering  them  goods  at  lower  prices  or  on  l)etter  terms  than  they 
secured  from  that  company.  The  tobacco  company  and  its  employ^ 
were  not  required,  like  competitors  engaged  in  public  or  quasi  public 
service,  to  sell  to  all  applicants  who  sought  to  buy,  or  sell  to  all  in- 
tending purchasers  at  the  same  prices.  They  had  the  right  to  select 
their  customers,  to  sell  and  to  refuse  to  sell  to  whomever  they  chose, 
and  to  fix  different  prices  for  sales  of  the  same  commodities  to  dif- 
ferent persons.  In  the  exercise  of  this  right  they  selected  those  per- 
sons who  would  refrain  from  handling  the  goods  of  their  competitors 
as  their  customers,  by  selling  their  products  to  them  at  lower  prices 
than  they  offered  them  to  others.  There  was  nothing  in  this  selec- 
tion, or  in  the  means  employed  to  effect  it,  that  was  either  illegal  or 
immoral.  It  had  no  necessary  effect  to  directly  and  substantially 
restrict  free  competition  in  any  of  the  products  of  tobacco,  and  it 
did  not  unlawfully  restrain  interstate  commerce,  because  it  in  no  way 
restricted  the  exercise  of  the  rights  of  the  competitors  of  the  tobacco 
company  to  fix  the  prices  of  their  goods  and  the  terms  of  their  sales 
of  similar  products  according  to  the  dictates  of  their  respective 
wills." 

Besides  these  cases  there  is  that  of  Dr.  Miles  Medical 
Co,  V.  Goldthwaite  {C.  C),  133  Fed.  794.  The  force  of 
this  decision,  however,  is  weakened  by  the  fact  that  there 
no  argument  was  made  on  behalf  of  defendant.  I  have  also 
been  referred  to  certain  unreported  decisions  upholding  the 


1020 


145  FEDERAL  BEPORTEB,   386. 


Opinion  of  the  Court 

validity  of  complainant's  system  of  contracts.    There  are 
decisions  by  Judge  Lochren  in  ^  the  case  of  Hartman  v. 
Hughes,  pending  in  the  United  States  Circuit  Court  for  the 
district  of  Minnesota,  rendered  July  14,  1905;    by  Judge 
Kohlsaat,  in  the  case  of  Dr.  Miles  Medical  Company  v.  Piatt, 
pending  in  the  United  States  Circuit  Court  for  the  Northern 
District  of  Illinois,  Eastern  Division,  rendered  19th  day  of 
January,  1906;  and  by  Judge  Tuley  in  the  case  of  Piatt  v. 
National  Association  of  Retail  Druggists,  pending  in  the 
circuit  court  of  Cook  County,  111.,  rendered  January  24,  [387] 
1905.    But  in  none  of  these  cases  apparently  did  the  judges 
have  to  reckon  with  the  line  of  argument  that  is  presented 
here,  and  though  reaching  the  same  conclusion,  I  have  pro- 
ceeded along  different  lines.    It  is  to  be  noted  that  this  is 
not  a  case  where  the  manufacturer  undertakes  to  maintain 
retail  prices  for  the  sale  of  his  goods  by  a  direct  restrictive 
agreement  with  the  wholesaler,  and  by  affixing  labels  to  the 
goods  charging  all  subsequent  transferees  with  notice  of  the 
conditions  under  which  they  were  originally  sold.    A  case 
of  that  sort  presents  the  interesting  question  whether  in 
this  way  the  manufacturer  can  maintain  the  retail  prices  of 
his  goods,  i.  e.,  whether  the  doctrine  laid  down  in  Tulk  v. 
Mokay,  2  Ph.  774,  by  which  covenants  restricting  the  use 
of  land  are  enforced  against  purchasers  with  notice  should 
be  extended  to  chattels. 

The  cases  of  New  York  Bank  Note  Co.  v.  Hamilton,  etc, 
Co.,  28  App.  Div.  411,  50  N.  Y.  Supp.  1093;  Murphy  v. 
Christian  Press,  etc.,  Co.,  38  App.  Div.  426,  56  N.  Y.  Supp. 
597,  have  been  cited  as  holding  that  it  should,  and  the  cases 
of  Taddy  <&  Co.  v.  Stevens  d:  Co.,  20  T.  L.  R.  102,  Eng.  Ch. 
D. ;  Garst  v.  Hall  c§  Lyon  Co.,  179  Mass.  588,  61  N.  E.  219, 
55  L.  R.  A.  631 ;  as  holding  that  it  should  not.  In  the  case 
of  De  Mattos  v.  Gihsmi,  De  Gex  <&  Jmies,  276,  the  doctrine 
was  applied  to  a  steamboat.  Lord  Justice  Knight  Bruce 
saici  z 


41 


Reason  and  justice  seem  to  preseribe  that,  at  least  as  a  general 
rule,  where  a  man  by  gift  or  purchase  acquires  property  from  another 
with  knowledge  of  a  previous  contract,  lawfully,  and  for  a  valuable 
consideration  made  by  him  with  a  third  person,  to  use  and  employ  the 
property  for  a  particular  purpose,  and  in  a  specified  manner,  the  ac- 
quirer shall  not,  to  the  material  damage  of  the  third  person,  in  opposl- 


DELAWAKE,  L.  &   W.  E.  CO.  V.  KUTTEE. 

Syllabus. 


1021 


tion  to  his  contract,  and  inconsistent  with  it,  use  the  property  in  a 
manner  not  allowable  to  the  giver  or  seller.  The  rule  applicable  alike 
in  general,  as  I  conceive,  to  movable  and  immovable  property,  recog- 
nized and  adopted,  as  I  apprehend,  by  the  English  law,  may,  like  other 
general  rules,  be  liable  to  exceptions  arising  from  special  circum- 
stances; but  I  see  at  present  no  reason  for  any  exception  in  the  in- 
stance before  us." 

Here,  however,  the  retailers  enter  into  a  contract  directly 
with  the  complainant  upon  a  valuable  consideration,  to  wit, 
their  being  designated  as  retailers  to  whom  the  wholesalers 
may  sell,  and  the  question  is  whether  they  are  bound  by  such 
contract.  I  therefore  conclude  that  the  complainant's  sys- 
tem of  contracts  is  valid.  The  position  is  taken  in  brief  on 
behalf  of  defendant  that  the  system  of  contracts  is  invali- 
dated by  the  federal  anti-trust  act  of  1890 ;  but  I  understand 
that  this  position  is  not  insisted  on.  I  therefore  make  no 
further  reference  thereto. 

The  general  demurrer  is  overruled.  There  is  a  special  de- 
murrer to  so  much  of  the  bill  as  seeks  an  injunction  restrain- 
ing defendant  from  removing  the  dress  from  complainant's 
bottle  and  mutilating  the  label.  It  is  urged  that  if  the  system 
of  contracts  is  upheld  and  enforced  the  complainant  will 
have  no  occasion  for  such  relief.  This  does  not  occur  to  me 
as  sufficient  reason  for  his  not  obtaining  it. 

The  special  demurrer  is  also  overruled. 


[51]  DELAWAEE,  L.  &  W.  E.  CO.  v.  KUTTER  ET  AL. 

(Circuit  Court  of  Appeals,  Second  Circuit    May  22,  1906.) 

[147  Fed.  51.] 

Appeal  and  Ebbor — Case  Tried  to  Court — General  Finding — Mat- 
ters Reviewable. — When,  upon  a  trial  without  a  jury  in  a  federal 
court,  the  findings  of  fact  and  of  law  by  the  court  are  general,  ex- 
ceptions to  a  ruling  denying  a  motion  for  judgment  for  the  defend- 
ant present  for  the  consideration  of  an  appellate  court  the  question 
whether  upon  the  whole  evidence,  with  all  the  Inferences  which  a 
jury  could  justifiably  draw  from  it,  the  plaintiff  was  entitled  to 
recover;  the  general  finding  is  to  be  accepted  as  equivalent  to  the 
verdict  of  a  jury  on  all  matters  of  fact,  and  the  appellate  court  can- 
not review  the  weight  of  the  evidence. 

Judgment — Matters  Concluded — Second  Action  on  Different  De- 
mand.— When  a  judgment  is  offered  in  evidence  in  a  subsequent 


1022 


147   FEDEBAL  BEPOKTEB,   51. 


Syllabus. 

action  between  the  same  parties  upon  a  different  demand,  it  oper- 
ates as  an  estoppel  only  upon  the  matter  actually  at  issue  and  de- 
-  termined  in  the  original  action,  and  such  matter,  when  not  disclosed 
by  the  pleadings,  must  be  shown  by  extrinsic  evidence;  but  every 
matter  necessary  to  the  disposition  of  the  case  as  made  by  the 
pleadings  is  included  in  the  conclusive  effect  of  the  judgment. 

I  Ed.  Note.— For  cases  In  point,  see  vol.  30,  Cent  Dig.  Judgment. 
If  1248-1258.] 
Same.— An  action  to  recover  a  sum  of  money  alleged  to  be  due  from 
defendant  to  plaintiff  under  a  contract,  and  a  subsequent  action  for 
wrongful  ter-  [52]  mination  of  the  contract  by  defendant,  although 
based  upon  the  same  contract,  are  upon  different  demands,  and 
where  the  only  defense  pleaded  in  the  first  action  was  a  6reach  of 
the  contract  by  plaintiff,  a  Judgment  in  his  favor  therein  is  con- 
clusive only  upon  that  question  in  the  second  action,  unless  it  is 
shown  that  other  matters  were  actually  litigated  and  decided. 

[Ed.  Note.— For  cases  in  point,  see  vol.  30,  Cent  Dig.  Judgment 
II  1248-1258.] 

Railroads— CoNTBACT  to   Secure  Traffic— VALmiTY— Monopolies— 
Carbiebs— Undue   I*beference.— Defendant   railroad   company   en- 
tered into  a  contract  with  plaintiff  for  a  term  of  years  to  build  up, 
develop,  and  conduct  the  business  of  the  transportation  of  milk  on 
Its  lines  of  road.    Plaintiff  was  to  have  full  charge  of  such  business 
and  was  to  receive  as  compensation  a  percentage  of  the  freights 
earned  therein.    It  was  provided  that  he  should  charge  rates  not 
In  excess  of  those  charged  by  competitive  roads,  and  should  be 
granted  the  exclusive  privilege  of  transporting  milk  over  defend- 
ant's lines  "  so  far  as  it  was  permitted  to  do  so  by  law."    In  the 
execution  of  the  contract  all  rates  were  made  by  defendant  and 
plaintiff  was  not  given  a  monopoly  of  the  milk  traffic.    Held,  that 
such  contract  was  not  ultra  vires  nor  void  as  contrary  to  public 
policy,  especially  as  practically  construed  by  the  parties  in  its  exe- 
cution ;  nor  was  it  in  violation  of  the  anti-trust  act  of  July  2,  1890, 
c.  647,  26  Stat.  209  [U.  S.  Comp.  St  1901,  p.  3200],  or  of  section  3 
of  the  interstate  commerce  act  of  Feb.  4,  1887,  c.  104,  24  Stat  380 
[U.  S.  Comp.  St.  1901,  p.  3155]  as  giving  an  undue  and  unreason- 
able preference  to  plaintiff. 

[Ed.  Note.— For  cases  in  point,  see  vol.  41.  Cent  Dig.  Railroads, 
I  434;  vol.  9,  Cent  Dig.  Carriers,  ||  83-85;  vol.  35.  Cent  Dig. 
Monopolies,  ||  10,  12.] 
Contracts- Rules  of  Construction- Legality.— The  fundamental 
rule  is  that  a  contract  will  be  construed,  if  possible,  as  having  been 
made  for  a  legal,  rather  than  for  an  illegal,  purpose  and  it  should 
not  be  relaxed  when  a  vicious  construction  is  sought  for  by  the 
party  who  made  the  contract 

[Ed.  Note.— For  cases  in  point,  see  vol.  11,  Cent  Dig.  Contracts. 
I  734.] 


DELAWARE,   L.    &   W.   R.    CO.    V,    KUTTER.  1023 

Opinion  of  the  Comrt 

In  Error  to  the  Circuit  Court  of  the  United  Stotes  for  the 
Eastern  District  of  New  York. 

W.  D,  Guthrie  and  H.  D.  Hotchkiss^  for  plaintiff  in  error. 

Augustus  Vaidbyck,  for  defendants  in  error. 

Before  Wallace,  Lacombe  and  Townsend,  Circuit 
Judges. 

Wallace,  Circuit  Judge. 

The  plaintiff  in  error  was  the  defendant  in  the  court  be- 
low, and  by  this  writ  of  error  seeks  to  review  a  judgment 
for  the  plaintiffs  in  an  action  tried  by  the  court  without  a 
jury.  The  action  was  brought  to  recover  damages  for  the 
breach  by  the  railroad  company  of  a  contract  dated  JuW  9, 
1886,  made  with  Robert  E.  Westcott,  which  was  to  remain 
in  force  for  the  term  of  10  years,  and  the  duration  of  which 
was  extended  September  30,  1892,  for  the  further  term  of  5 
years. 

By  the  terms  of  the  contract  Westcott  undertook  to  use 
his  best  endeavors  "  to  build  up,  develop,  increase,  facilitate, 
and  conduct  the  business  of  transportation  of  milk"  over 
the  lines  of  the  defendant's  railroad;  that  he  would  be 
wholly  responsible  for  the  milk  transported  over  said  lines, 
and  save  the  defendant  harmless  from  all  claims  arising 
from  or  connected  with  the  milk  business,  except  those  from 
acci-  [63]  dents  and  casualties  to  its  trains  or  its  own  neg- 
ligence ;  that  he  would  save  the  defendant  harmless  from  all 
liability  for  loss  of  life  or  injury  to  any  person  doing  busi- 
ness over  its  lines  on  his  account;  that  he  would  not  charge 
for  transportation  of  milk  "  rates  in  excess  of  those  charged 
by  competitive  railroads  for  similar  services ; "  and  that  he 
should  monthly  pay  over  to  the  defendant  80  per  cent,  of 
all  charges  collected  by  him  for  the  transportation  of  milk 
during  the  preceding  month,  retaining  20  per  cent,  thereof 
in  full  compensation  for  his  own  services.  The  defendant 
on  its  part  undertook  to  receive,  load,  and  transport,  at  and 
from  all  stations  on  its  lines,  all  the  milk  furnished  at  said 
stations  for  transportation,  and  to  transport  the  same  upon 
its  trains  at  such  times  as  might  be  best  calculated  to  pro- 


I  ill 


t* 


1024 


147   FEDERAL   REPORTER,   5:1. 
Opiuiou  of  the  CJourt. 


fill 


mote  its  business ;  that  it  would  not  permit  any  of  its  agents 
or  scrvanl)^  to  do  any  act  to  prevent  or  interfere  willi  llio 
developing,  building  up  and  conducting  of  the  milk  business 
of  Westcott,  and  would  grant  him  the  exclusive  privilege  of 
transporting  milk  over  the  said  lines  "  so  far  as  it  was  per- 
mitted to  do  so  by  law;"  that  it  would  furnish  sufficient 
depot  accommodations  for  the  conduct  of  the  milk  business, 
render  such  assistance  to  the  messengers  of  Westcott  accom- 
panying the  milk  trains  as  might  be  necessary  for  the 
prompt  loading  and  unloading  of  such  milk,  and  promptly 
retransport  and  return  to  the  several  stations  the  empty  milk 
cans  used  in  the  transportation  of  the  milk.  The  contract 
was  by  its  terms  "  subject  to  revision  after  three  years,  and 
at  the  end  of  any  one  year  thereafter  on  giving  three  months' 
notice,"  and  in  case  of  any  difference  between  the  parties, 
provided  for  a  submission  to  arbitration. 

By  its  answer  the  defendant  admitted  the  execution  of  the 
contract  and  alleged  as  a  justification  for  terminating  it  (1) 
that  the  contract  was  ultra  vires,  and  contrary  to  public 
policy;  (2)  that  it  was  made  in  violation  of  the  acts  of  Con- 
gress Imown  as  the  "Anti-Trust  Act "  and  the  "  Interstate 
Commerce  Act;"  and  (3)  that  Westcott  had  violated  the 
contract  by  entering  into  other  contracts  with  competitive 
railroads  inconsistent  with  his  duty  to  the  defendant  and  the 
obligation  of  his  contract." 

«  -*  ♦  *  m  ♦  « 

[621  The  contention  that  the  contract  was  void  by  the  act  of 
Congress  (Act  July  2, 1890,  c.  G47,  26  Stat.  209  [U.  S.  Comp. 
St.  1901,  p.  3200])  to  "protect  trade  and  commerce  against 
unlawful  restraints  and  monopolies,"  may  be  briefly  disposed 
of.  The  contract  undoubtedly  operated  upon  interstate  com-, 
merce  as  well  as  upon  int>erstate  [63]  traffic;  but  if  the  views 
which  we  have  expressed  are  correct  as  to  its  meaning  and 
effect,  it  did  not  have  any  tendency  to  create  a  monopoly,  or 
evidence  any  conspiracy  in  restraint  of  trade.  It  could  only 
operate  in  restraint  of  trade  by  permitting  Westcott  to 
diarge  such  extortionate  rates  to  milk  shippers  as  would  dis- 
courage shippers;  and  this  it  did  not  permit  or  contemplate. 

«The  matter  omitted  does  not  relate  to  anti-trust  law.    See  the  first 
three  paragraphs  of  the  cnyllabus. 


DELAWARE,  L.   &   w.  B.   CO.   V.   KUTTEB.  1025 

Opinion  of  the  Court 
si.mslnt?!M  !Y  "^'  ""''■'"^*  contravened  the  provi- 
a  sposed  of     Ihe  argument  for  the  plaintiif  in  error  is  th«f 

■    fimTfc^'^^TT  *"  "''"-  '  °f  «'«t  act  (Ac"  Feb 
*,  1887,  c.  104,  24  Stat.  380  [U.  S.  Comn  St  1901  \^  qikkix 

Ss^v  th  th.  J"r'*'  "'  transporting  milk.     That  act 

mg  hat  U.e  contract  is  void  if  the  contentiSla't  ifZ  ,„ 
undue  and  unreasonable  preference  is  sound,  the  c2ls   "t 

hibited  by  the  section  ,s  a  discrimination  between  81.10^^ 
It  was  designed  to  compel  every  carrier  to  give^ua   riS 

L  Ed   25«     TU^  ^       «j  ^«<   u.  &.  51b,  17  Sup.  Ct.  822,  42 
1^.  iM.  2oH,    Ihe  mere  circumstance  that  there  19  in  n  J 

within  the  meaning  6f  t^cf  ;r;i";,"~"« 
act'-l'^n'"';  '*"•  7?  """«  "^"^^"  the'inhibitln  S  tVe 

by  ir^gularity  and  partS'^^u^ng^durd'SS 
to  one,  or  undue  disadvantage  to  the  othpr "  ,1"''^^^ 
C^^nerce  Com.  v.  B.  cfi  O.  R.  t ,  us  U  S  2^  282    rf"" 

SnsTh  T^t-  ^i  '''■  ^'"''^■^*'*  *"  the  two  X'prohS- 
;»;due  preference  or  disadvLtait"  rti^s^ 
make  special  rates  looking  ^  hetctl  "STi    k"'-  '^  "^ 


' 


i... 


7 


1 


I 


1026 


147   FEDEKAIi  REFOBTBB,   63. 


Opinion  of  the  Court. 

tent  interests  u|)on  the  same  principles  which  are  regarded  as 
sound  and  adopted  in  other  trades  and  piirsiiits."  Interstate 
Commerce  Com.  v.  Alabama  Mid,  R,  R.  Go,^  74  Fed.  715,  21 
C.  C.  A.  51,  41  U.  S.  App.  453;  Id.,  168  U.  S.  144,  173,  18 
Sup.  Ct.  45,42  L.  Ed.  414. 

The  privileges  accorded  to  Westcott  were  only  those  which 
were  incident  to  the  anomalous  relations  existing  between 
him  and  the  defendant  created  by  the  contract.  It  is  quite 
inconceivable  that  [64]  there  were  or  could  have  been  any 
shippers  of  milk  who  would  have  been  willing  or  able  to 
undertake  his  duties  and  responsibilities.  In  consideration 
of  his  assumption  of  peculiar  obligations  and  hazards,  the 
defendant  gave  him  exceptional  privileges  appertaining  to 
his  relation  as  a  manager  of  the  traffic ;  this  was  not  an  undue 
and  unreasonable  preference. 

The  assignments  of  erroF  which  have  been  considered  arc 
the  only  ones  which  have  been  argued  at  the  bar  or  on  the 
brief  of  counsel.    The  repudiation  of  the  contract  was  with- 
out any  justification,  for  even  if  the  contracts  with  the  New 
York  Central  Eailroad  Company  were  theoretically  competi- 
tive, they  had  been  consented  to  by  the  officers  of  the  defend- 
ant.   The  i*e[>udiatifMi,  as  has  been  snid,  was  aniioiinwd  when 
the  cont^^ct  had  nearly  expired,  and  when  the  defendant 
would  shortly  have  secured  exclusively  for  itself  all  the 
profits  of  the  valuable  traffic  built  up  by  Westcott.    It  was 
repudiated  for  sordid  motives,  and  with  an  arrogance  bom  of 
the  scorn  of  conse<iucnces.    The  appropriation  of  AVcstcott's 
percentage  of  the  money,  which  the  defendant  had  actually 
collected  for  him,  was  morally  no  better  than  larceny.    Al- 
though Truesdale  was  primarily  responsible  for  this  conduct, 
and  the  directors  of  the  defendant  may  not  have  been  person- 
ally oognizant  of  it,  they  cannot  escape  their  share  of  the 
moral  responsibility  which  ensues  from  endeavoring  to  estab- 
lish the  defenses  interposed  in  the  earlier  action  and  in  this 
action.    It  is  conduct  like  Truesdale's,  by  those  who  manage 
the  affairs  of  great  corporations,  that  has  aroused  the  spirit 
of  resentment  in  the  public  mind  which  is  -so  intense  to-day, 
and  which  is  not  unlikely  to  result  in  legislation,  and  in 
municipal  interference,  which  wOl  bring  serious  loss  upon 
stockholders. 


CHICAGO    WALL  PAPEE  MILLS   V.   GENL.   PAPER  CO.        1027 

Syllabus. 
.    We  fin<l  no  error  in  the  rulings  of  the  court  below,  and  the 

Lacombe,  Circuit  Judge. 

I  nm  individ..all.y  of  the  opinio.,  that  the  contract  of  1898 
w.th  the  N.  Y.  Central  Kailroad  was  a  breach  of  the  plain 
ift's  contract  with  the  defe.,da„t,  because  it  was  calculS  to 
expose  the  Delaware,  Lackawanna  &  Western  E.  R.  to  a  coni- 

SrM  /  *f  T^'^  T"^'"  '"  '■'^'^''^  "'«  «'»«""*  «f  its  milk 
traffic.    But  hat  question  .s  no  longer  open  here.    I  concur  in 

the  hnd.ng  that  the  evidence  clearly  shows  that  the  defend- 
ants officers  knew  of  this  contract  and  did  not  disapprove 
^  vX  "I  5'  ^'ff^^  that  the  prior  judgment  has  conclu- 
sively estaWished  the  proposition  that  neither  such  contract 
no,  Its  carrying  out  ,s  a  breach  available  in  defense.  As  to 
the  second  Delaware  &  Hudso,.  contract,  which  I  am  fully 
conv.nced  was  a  competing  contract,  the  circumstance  that 

aft  .  tl  r  '\"«'-*"lV^*  '*  «l>o«W  not  go  into  effect  until 
aflei  the  termination  of  the  contract  in  suit,  which  a<rreement 
was  stxictly  adhei^d  to,  in  my  opinion,  eiiminate^TSl 
consideration  as  a  breach. 

As  to  the  otlicr  defenses  I  concur  in  Judge  Wallace's  opin- 
ion, and  therefore  concur  in  voting  to  affirm. 


[491]  CHICAGO  WALL  PAPER  MILLS  v.  GENERAL 

PAPER  CO. 

(Circuit  Court  of  Appeals,  Seventh  circuit    August  11,  1906.) 

[147  Fed.,  491.] 

MOBOroulCS-UNLAWFUL    CoMmNAT.ON-EFrecT    OM    CoiXAm.4,,    06»- 

Illegal  by  the  fact  that  the  selling  corporation  Is  a  t^st  or  ^ 
nopoly  organzled  lu  violation  of  law,  either  federal  or  stat^-  X 
contract  of  sal*  being  bilateral  and  having  no  dlre^  ^atton  to 
the  unlawful  scheme  or  conibiuntion.  relation  to 

I  mi"'  ^°*-''~^'"  ""^^  '"  P"'"t-  «^  vol.  35,  Cent  Dig.  Monopolies, 

SAME-EnfOBCEMENT     of     SAI.E     CONTEACT-ItUNOIS     STATUTE.-Se,s 

1891,  pp.  20C.  207),  prohibit  any  pool  or  combination  be^een  p^ 
sons  or  coiporations  to  fix  the  price  or  limit  the  production  of 
■ny  article  or  commodity.    Section  4  (page  207)  provides  for  the 


•« 


7 


1028 


141  FBDEKAL  BEPOBTBR,  491. 
Opinion  of  the  Court 


CHICAGO   WALL  PAPER   MILLS  V,   GENL.   PAPER  CO. 


punisliments  of  a  violation  of  section  1  by  fine  or  imprisonment 
Section  5  (page  208)  maizes  any  contract  in  violation  tlicrcof  void, 
and  section  0  (page  208)  provides  tliat  "any  purcliaser  of  any 
article  or  connnodlty  from  any  indlvidnal,  company,  or  corpora- 
tion transacting  business  contrary  to  any  provision  of  the  pre- 
ceding sections  of  this  act  shall  not  be  liable  for  the  price  or  pay- 
ment of  such  article  or  commodity,  and  nmy  plead  this  act  as  a 
defense  to  any  suit  for  such  priw  or  payment."  Held,  that  sections 
4,  5,  and  6  provide  cumulative  or  altcrimtive  penalties  for  a  vio- 
lation of  sections  1  and  2,  and  have  no  other  purpose  or  effect; 
that  sections  1  and  2  can  have  no  extraterritorial  effect  and 
hence  the  fact  that  a  seller  of  merchandise  in  Illinois  is  a  corpora- 
tion formed  for  the  prohibited  purposes  cannot  be  pleaded  as  a 
defense  hi  an  action  to  recover  the  price  unless  such  corporation 
was  organized  in  Illinois  and  was  therefore  unlawful  under  the 
statute. 

[Ed.  Note.~For  cases  in  point,  see  vol.  35,  Cent.  Dig.  Monopolies, 
i  16.] 

In  Error  to  the  Circuit  Court  of  the  United  States  for  the 
Northern  District  of  Illinois. 

The  suit  is  in  assumpsit  brought  by  the  General  Paper  Company, 
a  Wisconsin  corporation,  against  the  Chicago  Wall  Paper  Mills,  a 
corporation  organized  under  the  laws  of  Illinois,  to  recover  some- 
thing over  $4,000  for  certain  wall  paper  sold  and  delivered  by  the 
plaintiff  corporation  to  the  defendant  liolow  In  llio  year  1905.  The 
declaration  contains  (he  connuon  counts. 

To  this  declaration  the  defendant  interposed  the  general  issue, 
and  also  IG  pleas.  These  pleas  set  up  with  great  elaboration  a  de- 
fense under  the  "Anti-Trust  Law,"  so  called,  of  Illinois.  The  facts 
set  up  in  the  pleas  appear  more  at  large  in  the  opinion  of  the  court 
Thereafter,  by  leave  of  court,  another  plea  was  intei-posed,  num- 
bered 17,  which  substantially  reproduced  the  averments  of  the  IG 
pleas,  and  also  set  out  certain  alleged  "confessions"  of  the  plahitiff 
company  made  since  the  suit  was  brought,  which  are  certain  answers 
made  under  oath  in  response  to  interrogatories  which  the  officers 
of  nonresident  corporations  were  compelled  to  make  pursuant  to 
an  act  of  the  General  Assembly  of  Illinois,  entitled,  "An  act  to  regu- 
late the  admission  of  foreign  corporations  for  profit  to  do  business 
In  the  state  of  Illinois."  Laws  1891,  p.  206.  The  plea  of  the  general 
issue  was  withdrawn,  and  the  defense  was  rested  Solely  upon  the  17 
special  pleas. 

Demurrers  were  intei-posed  to  each  of  the  said  17  pleas,  which 
demurrers  were  sustained  by  the  Cirucit  Court,  and  judgment  nihil 
dlclt  was  rendered  in  favor  of  the  plaintiff  and  against  the  de- 
fendant below  for  the  agreed  price  of  the  paper,  and  thereupon  the 
case  was  brought  to  this  court  by  writ  of  error. 

The  sections  of  the  statute  that  are  material  are  as  follows: 


P  *■:■■/  '' 


/" 


/ 


[492] 


11 


statement  of  the  Case. 
I'ooiR,  'j'niRi,  „,„,  Combines  Prolilbltcd. 


1029 


«naerthe.a,rottbroratrorf^.if  """^  ccporatlon  organizS 
or  condnet.„g  any  ^altllM^  TtT.^r"'''  '"'  *™"'^'=""« 
or  Individual  or  otber  assodn  ion^f  "I  ^^  *"■  ^"^  P"taershlp 
enter  Into,  become  a  n.efZr  If  or  n  n,T'.  '*'"'^«-«r.  shall  create, 
n.ent,  con.bination,  collation  or  rdLlX''":','tb""*'  "^"■ 

to"ownt'usrc:r«"ea"::  ^r  ^oT'a^'  """  '"^-^''™"-  *<>  -e  or 
ployees  or  thp  rtirl^f  ?        ^  corporation,  agent,  officer  or  em- 

(Section  3  Imposes  a  fine  upon  the  (x,rporation,  Arm  or  association  ^ 
Sec.  4.  Any  president,  manager  director  „r  «fhl,  "^^'S"*^'*™"-) 

r«9nn^    «1^  +  ^  ^*  ^^^^  *^a^  two  hundred  dollars 

(^200),  nor  to  exceed  one  thousand  dollirs  r«i  (V)n\         i         "^"*^™ 
by  confinement  In  the  county  iTllnnf  I        ^^^'?^)'  ^^  be  punished 

lndIvM;.„?'  ''  P"<=h»««  Of  any  article  or  commodity  from  any 
ludlvidual.  company  or  corporation  transacting  business  contearv  to 
a^y  provision  of  the  prece<.ing  sections  of  this  act  shalfoX  ,'abte 
for  the  price  or  payment  of  such  article  or  commodity,  and  mat  Zh 
this  act  as  a  defense  to  any  suit  for  such  price  or  payment 


1030 


147   FEDERAL  RBPOBTER,  4ir2. 
Opinion  of  the  Court 


**  Sec.  7.  The  fines  hereinbefore  provided  for  may  be  recovered 
In  an  action  of  debt  in  the  name  of  the  people  of  Illinois.  If,  upon 
the  trial  of  any  cause  instituted  under  this  act  to  recover  the  pen- 
laties  as  provided  for  in  section  3,  the  jury  shall  find  for  the  people, 
and  that  the  defendant  has  been  before  convicted  of  the  violations 
of  the  provisions  of  this  act,  they  shall  return  such  finding  with  their 
verdict,  stating  the  number  of  times  they  find  defendant  so  con- 
victed and  shall  assess  and  return  with  their  verdict  the  amoimt  of 
the  fine  to  be  imposed  upon  the  defendant  in  accordance  with-  said 
section  3.  Provided,  that  in  all  cases  under  this  act,  a  preponderance 
of  evidence  in  favor  of  the  people  shall  be  sufficient  to  authorize  a 
verdict  and  judgment  for  the  people. 

**  Sec.  S.  It  shall  be  the  duty  of  the  prosecuting  attorneys  in  their 
respective  jurisdictions,  and  the  Attorney  General,  to  enforce  the 
foregoing  provisions  of  this  act,  and  any  prosecuting  attorney  of 
any  count5%  securing  a  conviction  under  the  provisions  of  this  act, 
shall  be  entitled  to  such  fee  or  salary  as  by  law  he  is  allowed  for 
such  prosecution.  When  there  Is  a  conviction  under  this  act,  the 
former  shall  be  entitled  to  one-fifth  of  the  fine  recovered,  which 
shall  be  paid  to  him  when  the  same  is  collected.  All  fines  recovered 
under  the  provisions  of  this  act  shall  be  paid  into  the  county  treas- 
ury of  the  county  [498]  in  which  the  suit  is  tried,  by  the  person  col- 
lecting the  same,  In  the  manner  now  provided  by  law  to  he  used  for 
county  purposes." 

Approved  June  11,  1891.    Laws  1891,  pp.  20G-208. 

The  rulings  of  the  counrt  below  In  sustaining  the  demurers  to  each 
of  said  17  pleas,  are  assigned  as  errors. 

Ahmm  W,  BulMey^  for  plaintiff  in  error. 
William  Braces  for  defendant  in  error. 

Before  Baker  and  Seaman,  Circuit  Judges,  and  Quakles, 
District  Judge. 

QuABLES,  District  Judge  (after  stating  the  facts). 

We  deem  it  unnecessary  to  consider  the  question  of  plead- 
ing with  respect  to  the  technical  character  of  the  seventeenth 
plea,  whether  it  should  be  construed  as  a  puis  darrein  con- 
tinuance, and  whether,  therefore,  it  supplants  all  defenses 
theretofore  interposed,  because  the  seventeenth  plea  substan- 
tially embodies  all  the  material  averments  of  the  first  16 
pleas,  and  is  sufficient  to  raise  the  vital  question  of  law  upon 
which  this  case  must  turn.  The  material  facts  set  out  in  the 
several  pleas  may  be  put  in  brief  concrete  form  as  follows : 
The  plaintiff  corporation  is  alleged  to  have  been  organized 


CHICAGO    WALL   PAPER   MILLS   V.   GENL.    PAPER  CO.        1031 

Opinion  of  the  CJourt 

on  the  26th  day  of  May,  1900  in  the  state  of  Wisconsin,  for 
the  purpose,  as  stated  in  its  charter,  of  acting  as  exclusive 
sales  agent  for  the  paper  and  paper  products  thereafter  to 
be  produced  by  21  certain  manufacturing  corporations  lo- 
cated in  the  states  of  Wisconsin  and  Michigan  engaged  in 
the  paper  industry ;  that  its  board  of  directors  consisted  of 
representatives  of  the  21  paper  mills,  so  that  for  trade  pur- 
poses there  was  a  practical  amalgamation  of  the  21  producing 
companies;    that  thereupon,  on  the  same  day,  pursuant  to 
such  confederation,  the  plaintiff  corporation  became  the  ex- 
clusive sales  agent  of  all  such  paper  mills,  with  exclusive 
power  to  determine  the  extent  of  the  output,  and  to  fix  prices 
arbitrarily,  and  that  by  such  confederation,  competition  be- 
tween the  21  producing  corporations  was  stifled,  and  the 
plaintiff  corporation  as  such  sales  agent,  put  in  control  of  90 
per  cent,  of  the  paper  and  paper  products  manufactured  west 
of  the  Alleghany  Mountains;    that  immediately  after  such 
plamtiff  corporation  had  been  so  organized  and  equipped,  it 
came  to  the  city  of  Chicago,  complied  with  the  requirements 
of  the  local  law,  secured  a  place  of  business,  and  has  since 
that  time  continued  to  handle  and  sell  such  combined  product 
of  the  21  mills  in  Wisconsin,  Michigan,  Illinois,  and  other 
Western  states,  as  contemplated  by  the  agreement  of  con- 
federation;  that  the  alleged  combination  is  violative  of  the 
statute  of  Illinois,  entitled  "An  act  to  provide  for  the  punish- 
ment of  persons,  copartners  or  corporations  forming  pools, 
trusts  and  combines,  and  mode  of  procedure  and  rules  of 
evidence  in  such  cases,"  approved  June  11,  1891,  in  force 
July  1,  1891  (Laws  1891,  p.  206). 

It  cannot  be  successfully  contended  that  the  contract  in 
suit  falls  within  the  sanction  of  the  fifth  section.  The  con- 
tract thereby  denounced  as  void  is  plainly  one  which  directly 
contravenes  the  earlier  sections;  one  in  which  the  trust  takes 
root,  or  by  which  the  illicit  scheme  is  organized.  The  defend- 
ant below  purchased  the  paper  in  the  ordi-  [494]  nary  course 
of  business.  It  was  a  stranger  to  the  alleged  unlawful  com- 
bination. The  sale  of  the  merchandise  had  no  direct  relation 
to  the  prohibitions  of  sections  1  and  2.  The  same  distinction 
has  been  drawn  under  the  federal  anti-trust  act  {Hopkim  v. 
United  States,  171  U.  S.  578,  592,  19  Sup.  Ct  40,  43  L.  Ed. 


1032 


147   FEDERAL.  REPOBTER,   494. 


Opinion  of  tlie  CJourt 

290;  Anderson  v.  United  States,  171  U.  S.  6(M,  615,  19  Sup. 
Ct.  50,  43  L.  Ed.  300),  and  this  court  has  several  times  held 
that  contracts  founded  upon  a  good  consideration  are  col- 
lateral to  the  unlawful  scheme  or  combination  and  not 
tainted  thereby.  Dennehy  v.  McNuUa,  80  Fed.  825,  30  C.  C. 
A.  422,  41  L.  K.  A.  609 ;  Star  Brewery  Co,  v.  United  Brew- 
eries, 121  Fed.  713,  58  C.  C.  A.  133 ;  Harris&n  v.  Glucose  Co,, 
116  Fed.  304,  53  C.  C.  A.  484,  58  L.  K.  A.  915. 

The  real  defense  tendered  by  the  several  pleas  is  bottomed 
upon  section  6,  and  it  becomes  material  to  analyze  this  part 
of  the  enactment  It  will  be  noted  at  the  outset  that  the 
structure  of  sections  5  and  6,  is  almost  identical.  Both  hinge 
upon  '^  violation  of  any  provisions  of  the  preceding  sections 
of  this  act."  Section  4  metes  out  punislunent  to  officers  of 
the  offending  corporation  for  any  violation  of  section  1.  So 
here  there  are  three  distinct  consequences  that  flow  from  in- 
fringement of  earlier  sections :  Under  section  4,  fine  and  im- 
prisonment; under  section  5,  the  avoidance  of  contract;  and 
under  section  6,  denial  of  civil  remedy  in  the  courts.  They 
partake  of  the  same  nature.  They  are  i>enal  inflictions  of 
different  kinds,  consequent  upon  a  single  transgression.  The 
violation  contemplated  in  either  case  must  be  such  as  will 
sustain  the  penalty  imposed  by  either  section.  In  other 
words,  if  the  combination  effected  in  Wisconsin  constituted 
such  a  violation  of  section  1  as  to  warrant  the  exclusion  of 
the  plaintiff  company  from  the  courts  of  Illinois  under  sec- 
tion 6,  then  a  direct  proceeding  might  have  been  instituted 
under  section  4  to  punish  the  officers  of  such  6ffending  corpo- 
ration. 

The  penal  character  of  section  6  sufficiently  appears  upon 
its  face.  To  debar  trading  corporations  from  all  redress  in 
the  courts  is  a  drastic  infliction.  The  same  conclusion  as  to 
the  nature  of  the  section  is  reached  by  a  legal  inference.  The 
title  of  the  statute  deals  only  with  punishments  and  the  man- 
ner of  their  infliction.  If,  therefore,  section  6  were  of  a  dif- 
ferent character,  it  would  contravene  section  13  of  article  4 
of  the  Constitution  of  Illinois  and  be  of  no  effect.  It  is 
fundamental  and  elementary  that  the  General  Assembly  of 
Illinois  has  no  jurisdiction  to  provide  any  punishment  for  an 
act  done  outside  the  territorial  limits  of  the  state.     It  can- 


CHICAGO    WALL   PAPER   MILLS   V.   GENL.   PAPER   CO.        1033 

Opinion  of  the  Court, 
not  project  its  public  policy  into  another  sovereignty.    The 
dereliction  charged  against  the  plaintiff  below  by  the  several 
pleas  mheres  in  its  contract  relations  with  the  21  producing 
companies  whereby,  as  claimed,  it  was  intended  to  suppress 
competition,  restrict  the  output,  and  arbitrarily  ^x  the  price 
of  paper.    This  illicit  combination  culminated  in  the  organi- 
zation of  the  plaintiff  corporation  and  the  agreement  by 
which  It  was  to  officiate  as  exclusive  sales  agent    Thereby  the 
combine  became  an  accomplished  fact  which,  for  aught  that 
appears,  may  not  have  infringed  the  public  policy  of  Wis- 
consin.   All  these  things  happened  five  years  before  the  con- 
tract in  suit,  and  took  place  within  the  State  of  Wisconsin 
before  [495]  the  plaintiff  entered  upon  any  business  in  Chi- 
cago.   Since  that  time  nothing  has  happened,  certainly  noth- 
ing within  the  stat«  of  Illinois,  of  which  section  1  takes  cogni- 
zance.    It  is  argued  that  the  Illinois  statute  is  unconstitu- 
tional, and  that  a  combination  formed  in  one  state  to  con- 
trol prices  in  another  states  affects  interstate  commerce  and 
therefore  is  not  subject  to  state  regulation.    We  are  not  con- 
cerned with  the  constitutionality  of  this  act,  if  it  can,  in  no 
event,  be  applicable  to  the  case  at  bar.    The  Supreme  Court  of 
Illinois  has  had  occasion  to  interpret  this  statute,  and  the 
doctrine  which  it  lays  down  is  decisive  of  the  issues  here. 

In  People  v.  Butler  Street  Foundry  Co.,  20i  111.  236,  66 
N.  E.  349,  the  court  say  : 

f^"rJnJ''  fundamental  that  the  Legislature  of  this  state  is  powerless 
to  pass  an  enactment  making  an  act  committed  in  a  foreign  state 
punishable  m  that  state,  or  the  Legislature  of  a  foreign  state  to  pass 

able  in  this  state.  It  is  therefore  evident  that  a  violation  of  the 
offensP  h^?f '  forth  in  this  state  cannot  be  punished  as  7n  original 
offense    n  a  foreign  state,  and  that  the  immunity  afforded  bv  the 

ste  L  of'  tTe'^In  nrf  ^"th  '  ^  ^^'1'"''''  ""^^^  '^  ^^^  Of  the  other 

tSodal  effPc^  Whii^^-.  ^?*'*'*"'*  ^^^^^^  ^^  l^^l  ^^«  no  extra- 
territorial effect.    While  its  terms  may  be  broad  enough  to  include 

trusts  pools  combines,  etc.,  formed  with  parties  residing  outsWe  of 
lw5^*^;/^^  '^"'*''  ^^  construing  it,  must  necessari?y  fonSne  it  ?o 
those  matters  upon  which  the  General  Assemblv  has  power  to  act 
niT«  ^T\  ^^^'  combinations,  etc.,  formed  within  the  stlte  of  im: 
nois.  In  the  construction  of  the  statute  the  courts  wHl  exclude  from 
the  operation  thereof  subjects  or  classes  upon  which  the  XteLe^^ 

gene7al^?lrm:  oTthe  tf''^'^''^^'''^''''''^^'^^^ 

general  terms  of  the  act,  unless  the  d  fferent  parts  of  the  Rtatnto 

?hf  f .  «*""?'^t«<i,that  they  cannot  be  separated  wUhontdLtroym^ 
the  evident  intention  of  the  Legislature.  •  •  .  i(  the  Ste  te 
confined  to  its  legitimate  constitutional  scope,   ts  pri^rlonstSctio^ 


1034 


14T   FEDERAL  BEPORTER,  495. 
Opinion  of  tlie  CJourt 


only  requires  the  affidavit  to  state  whether  or  not  the  corporation 
npon  whose  behalf  It  is  made  had  violated  the  statute  by  performing 
some  one  or  more  of  the  acts  therein  prohibited  within  the  state 
of  Illinois,  and  wonld  not  include,  but  would  exclude  all  acts  which 
would  connect  it  with  any  trust,  pool,  combination,  etc.,  formed  out- 
side of  the  state,  and  which  would  violate  the  anti-trust  statute  of 
the  United  States.  •  ♦  •  In  making  the  affidavit  the  affiant  Is 
only  required  to  take  into  consideration  the  acts  of  the  corporation 
while  engaged  in  business  wholly  within  the  state  and  if,  in  connec- 
tion with  that  business,  it  has  not  been  connected  with  any  trust, 
pool,  or  combination  within  the  state,  or  otherwise  violated  the 
Illinois  anti-tmst  statute,  he  can  truthfully  make  the  affidavit  to  that 
effect,  although  the  corporation  at  the  same  time,  In  Its  business  out- 
side the  state,  has  been  connected  with  trusts,  pools,  combinations, 
etc.,  in  violation  of  the  United  States  anti-trust  statute;  that  being 
a  matter  exclusively  within  the  jurisdiction  of  the  United  States  and 
over  which  the  state  has  no  control  and  to  which  the  statute  of  this 
state  does  not  apply.  ♦  *  ♦  We  conclude,  therefore,  that  the  offi- 
cer making  the  affidavit,  and  the  corporation  in  whose  behalf  the 
same  is  made,  are  fully  protected  by  the  statutory  immunity  from  a 
prosecution  by  any  other  state  or  by  the  federal  authorities." 

We  are  reminded  that  section  6  was  not  specifically  in- 
volved in  that  case.  This  is  immaterial.  The  discussion 
above  recited  was  vital  to  the  very  questions  before;  the  court, 
so  that  the  opinion  is  authoritative  and  applies  with  full 
force  to  every  portion  of  the  act. 

There  is  nothing  decided  in  CocH  Co.  v.  People^  214  111.  421. 
73  N.  E.  770,  which  is  inconsistent  with  the  doctrine  of  the 
earlier  case.  [496]  It  may  be  conceded  that  if  a  foreign 
corporation  enter  into  a  combine  within  the  state  of  Illinois 
which  is  forbidden  by  the  statute,  it  must  stand  upon  the 
same  footing  as  a  domestic  corporation,  and  l>e  liable  to  all 
the  pains  and  penalties  of  the  act,  without  regard  to  the 
place  of  its  origin.  It  is  therefore  apparent  that  a  direct 
proceeding  could  not  be  sustained  to  subject  the  ofRcers  of 
the  General  Paper  Company  to  the  penalties  of  section  4  for 
an  alleged  transgression  occurring  in  Wisconsin.  The  same 
reasoning  must  be  fatal  to  a  defense  based  upon  section  6. 

We  adopt  and  foUow  the  conclusion  of  the  Supreme  Court 
of  the  state.  It  results,  therefore,  that  the  Illinois  anti- 
trust act,  so  called,  is  not  available  as  a  defense  to  this  action, 
and  the  judgment  of  the  Circuit  Court  is  affirmed. 


MINES  V,  SCRIBNER  ET  AL.  1035 

Opinion  of  the  Court 

MINES  V.  SCKIBNEE  ET  AL. 

(Circuit  Court.  S.  D.  New  York.    July  7.  190a) 
[147  Fed.,  927.] 

1.  MoNOPOLiEs-AoBEEMENTS  IN  Reotbawt  OP  TBADE.-An  agreement 
by  the  members  of  a  publishers'  association  controlling  90  oer 
cent  Of  the  book  business  of  the  comxtry,  under  which  ^1  ^^ 
not  to  sell  to  anyone  who  would  cut  prices  on  copyrighted  books, 
nor  to  anyone  who  should  be  known  to  have  sold  to  others  who 
cut  prices,  etc.,  was  an  agreement  relating  to  interstate  trade  or 

^  Stat,  209  [U.  S.  Oomp.  St  1901,  p.  3200] 

110^13^'"^°'  ^"^^  '"  ^'"*'  "^  """■  ^'  *^''*-  °'^-  """"P^ 

2.  Samb^-Conspibacy-Restbaint  op  TBADE—Defendants  became 
members  of  an  association  of  book  publishers  controlling  90  per 
cent  of  the  book  business  of  the  country,  which  asLiatlon 
adopted  a  rule  that  they  would  not  sell  to  anyone  who  c7^^Z 
on  copyrighted  books,  nor  to  anyone  who  should  be  known  to 
haje  sold  to  others  at  cut  prices.  A  black  list  was  kept  contain- 
tag  the  names  of  such  persons,  and  no  one  on  the  black  list  could 

rnCTce  «'"^'Wey  to  restraint  of  interstate  trade  or  com- 

M^tlzT"^"^  '"'''  '"  ^"'*'  "^  ^'"-  ^^'  ^°*-  ^'^-  ^""""^ 

8.   C0PTKIGHT-EFPEC1--EXTENT     OF     RIGHTS     AO<JCIEED.-The     rights 

r^wT'f  \  ?""'""''  "'  «'Pyrighted  books  under  the  copyrfght 
law  did  not  Justify  them  to  combtoing  and  agreeing  that  tSlr 
books  should  be  subject  to  the  rules  laid  down  by  the  nn?^ 
owners,  one  of  which  was  that  no  member  of  the  associ^tton 

Theodore  Baumeister,  for  complainant. 
Stephen  H.  OUn,  for  defendants. 

h  JT'  '^'f  *•=*  J"<JS«-  This  is  a  demurrer  to  a  complaint 
brought  under  the  United  States  statute  of  July  2  1890 
(26  Stat.,  209,  c.  647  [U.  S.  Comp.  St.  1901,  p.  32^])',^ 

<■  Syllabus  copyrighted,  1906,  West  Publishing  CJompany. 


1036 


147   FEDEBAL  BEPORTEK,  927. 
Opinion  of  the  Court 


the  facts  alleged  the  case  can  not  be  brought  within  the 
statute,  for  several  i*easons : 

1.  Because  it  does  not  relate  to  interstate  trade  or  com- 
merce.   I  think  that  it  does. 

2.  Because  it  does  not  show  that  the  defendants  have  en- 
tered into  any  contract,  combination,  or  conspiracy  in  re- 
straint of  interstate  trade  or  commerce,  nor  that  they  have 
attempted  to  monopolize,  either  directly  or  by  combination, 
any  article  which  is  the  subject  of  such  trade  or  commerce. 
I  think  that  it  does,  and  let  me  say  just  a  word  in  connection 
with  my  conclusion.  A  rapid  glance  at  the  case  develops, 
among  other  things,  the  following  state  of  affairs:  Defend- 
ants, with  others,  became  members  of  the  American  Pub- 
lishers' Association,  whereby  90  per  cent  of  the  book  business 
of  the  countiy  was  controlled.  A  rule  was  adopted  and 
agreed  to  all  around  that  they  would  not  sell  to  anyone  who 
cut  prices  on  copyriglited  books,  nor  to  anyone  who  should 
be  known  to  have  sold  to  others  who  cut  prices.  A  black  list 
was  to  be  kept,  containing  the  names  of  such  persons,  and  no 
one  on  that  black  list  could  buy  any  books  of  anybody  in  the 
scheme.  Plaintiff  got  on  the  black  list,  could  not  buy,  and 
was  thereby  injured,  and  cliiims  his  treble  damages. 

It  is  tnie  that  this  scheme  does  not  prevent  each  publisher 
from  putting  such  price  as  he  sees  fit  upon  his  copyrighted 
book;  but  it  compels  jobber  and  retailer  to  stand  by  that 
price,  whatever  it  may  be,  and  if  it  is  broken  in  any  instance 
it  puts  such  person  out  of  business.  It  is  not  content  with 
refusing  to  deliver  any  more  copies  of  the  particular  book 
upon  whicli  he  cuts  the  price,  but  it  closes  him  out  of  all 
dealings  on  any  and  every  book,  copyrighted  or  not. 

The  copyright  law  can  not  help  the  defendants,  because,  in 
the  fii*st  place,  the  restraint  is  not  confined  to  copyrighted 
books,  and,  if  it  were,  it  can  not  be  so  that  the  right  given  a 
single  publisher  to  do  as  he  pleases  with  his  copyrighted  book 
can  be  extended,  so  that  he  can  combine  with  other  owners 
of  copyrights  and  permit  his  book  to  be  subject  to  the  rules 
laid  down  by  the  united  owners. 

Let  the  demurrer  be  overruled. 


li^DEX-DIGEST. 

[Volumes  1  and  2.] 


ABATEMENT.      See  Statutes,  70. 

ACQUISITION  OP  PBOPEBTY.    See  Combinations,  etc.,  140-14a 

ACTIONS  AND  DEFENSES. 

I.  Actions. 
/.  By  private  parties. 

1.  Private  Individual  can  not  Su^in  Equity  under  the  Statute- 

Remedy  at  Law.— The  act  "to  protect  trade  and  commerce 
against  unhiwful  restraints  and  monopolies"  (act  Cong. 
July  2,  1890)  confers  no  right  upon  a  private  individual  to 
sue  in  equity  for  the  restraint  of  the  acts  forbidden  by  such 
statute,  an  action  at  law  for  damages  being  the  only  remedy 
provided  for  private  persons,  and  the  right  to  bring  suits 
in  equity  being  vested  in  the  district  attorneys  of  the  United 
States.     PidcocJc  v.  Harrington,  64  F.,  821.  i 377 

2.  Eemedy,  Action  for  Damages— No   Eecourse   in   Equity.— The 

Anti-Trust  Law  of  July  2,  1890,  does  not  authorize  a  court 
of  equity  to  entertain  a  bill  by  a  private  party  to  enforce  its 
provisions,  his  remedy  being  by  an  action  at  law  for  damages. 
Southern  Ind.  Exp.  Co.  v.  V.  8.  Exp.  Co.,  88  F.,  659.  1—862 
8.  A  municipal  corporation  engaged  in  operating  water,  light- 
ing, or  similar  plants,  from  which  a  revenue  is  derived,  is, 
in  relation  to  such  matters,  a  business  corporation  and  may 
maintain  an  action  under  section  7  of  the  Anti-Trust  Act  of 
July  2,  1890  (26  Stat,  210),  for  injury  to  its  "business"  by 
reason  of  a  combination  or  conspiracy  in  restraint  of  inter- 
state trade  or  commerce  made  unlawful  by  such  act.  City 
of  Atlanta  v.  Chattanooga  Foundry  d  Pipexcorks,  127  F.,  23. 

2—299 
4.  Bringing  in  Nonresidents.— The  authority  given  by  section  5  of 
the  act  of  July  2,  1890  (26  Stat.,  209),  to  brulg  in  nonresi- 
dents of  the  district  can  not  be  availed  of  in  private  suits, 
and  the  court  can  acquire  no  jurisdiction  over  them.  Greer, 
Mills  d  Co.  V.  Stoller,  77  F.,  1.  1—620 

11808— VOL  2 06  M 66  ^^^" 


1058 


INDEX — ^DIGEST. 


ACTIONS  ANB  DEFENSES— Continued. 

2,  By  parties  to  the  c'omhination. 

5.  Members  of  the  Kansas  City  Live  Stock  Exchangre  can  not  en- 

join the  board  of  directors  of  that  exchange,  under  the  Anti- 
Trust  Law  of  1890.  from  enforcing:  against  them  certain  by- 
laws of  the  association  claimed  to  be  illegal  and  In  violation 
of  that  act.    Greer,  Mills  d  Co.  v.  Stoller,  77  F.,  1.      1—620 

6.  Where  a  member  of  a  Yolnntary  association  has  been  suspended 

by  the  directors  for  nonpayment  of  a  fine  for  violation  of  the 
by-laws,  his  action  to  be  restored  to  the  privileges  of  mem- 
bership is  founded  upon  the  contract  between  himself  ana 
the  association,  which  he  must  either  accept  in  its  entirety 
or  repudiate.  He  does  not  occupy  the  position  of  a  stranger 
injured  by  the  acts  of  co-trespassers.  ll>. 

7.  Kay  Maintain  Action  to  Set  Aside  Fnlawful  Transfer  of  Prop- 

erty.— A  minority  stockholder  in  a  corporation  may  main- 
tain a  suit  in  equity  in  behalf  of  himself  and  all  other  stock- 
holders similarly  situated  to  set  aside  an  alleged  unlawful 
transfer  of  the  property  of  the  corporation  in  pursuance  of  a 
conspiracy  between  its  officers  and  the  transferee  in  restraint 
of  trade  and  commerc#,  where  it  is  alleged  that  the  corpora- 
tion, on  demand,  has  refused  to  bring  such  suit.  Metcalf  v. 
Amer.  School-Furniture  Co.,  108  F.,  909.  2—75 

8.  Same — Multifariousness. — A  bill  for  such  relief  which  also  seeks 

the  recovery  of  treble  damages  under  the  Anti-Trust  Act  of 
July  2,  1890,  is  multifarious,  since  such  damages  are  only 
recoverable  in  an  action  at  law  by  the  plaintiff  as  an  indi- 
vidual, and  not  as  a  stockholder,  while  the  equitable  relief 
prayed  for  is  in  behalf  of  the  corporation,  and,  if  granted, 
w^ould  inure  to  the  benefit  of  all  the  stockholders.  *  /&. 

9.  Ho  Right  of  Action  Against  Trust  to  Recover  Damages. — Section 

7  of  the  Anti-Trust  Act  (26  Stat,  209),  giving  to  any  person 
injured  by  any  other  person  or  corporation  by  reason  of  any- 
thing forbidden  in  the  act  the  right  to  recover  treble  dam- 
ages, does  not  authorize  an  action  against  an  alleged  trust 
corporation,  by  one  who  was  a  party  to  Its  organization  and 
a  stockholder  therein,  to  recover  damages  resulting  from  the 
enforcement  by  defendant  of  rights  given  it  by  the  alleged 
unlawful  agreement.  Bishop  v.  Amer.  Preservers  Co.,  105  F., 
845.  2—51 

10.  Member  of  a  Combination  in  Violation  of  Anti-Trust  Law  may 
Maintain  Suit  to  Enjoin  Infringement  of  Patent  Owned 
by  Complainant. — That  a  complainant  is  a  member  of  a  com- 
bination in  violation  of  the  Anti-Trust  Law  of  July  2,  1890 
(26  Stat,  209),  does  not  give  third  persons  the  right  to  in- 
fringe a  patent  of  w^hich  complainant  is  owner,  nor  preclude 
complainant  from  maintaining  a  suit  in  equity  to  enjoin 
such  infringement.     OencraJ  Electric  Co.  v.  Wise,  119  F.,  922. 

2—205 


INDEX — DIGEST. 


1039 


ACTIONS  AND  DEFENSES— Continued. 

11.  Recovery  on  Collateral  Contract.—The  act  of  July  2,  1890,  sec- 

tion 1  (26  Stat,  209),  known  as  the  "  Sherman  Anti-Trust 
Act,"  does  not  invalidate,  or  prevent  a  recovei-y  for  the 
breach  of  a  collateral  contract  for  the  manufacture  and  sale 
of  goods  by  a  member  of  a  combination  formed  for  the  pur- 
pose of  restraining  interstate  trade  in  such  goods.  Hadley 
Dean  Plate  Glass  Co.  v.  Highland  Glass  Co.,  143  F.,  242. 

2—995 
See  also  Jayne  v.  Loder,  149  F.,  22. 

3.  By  illegal  combinations. 

12.  Can  not  Enforce  Illegal  Contract.— An  illegal  combination  or 

trust  can  not  resort  to  equity  to  enforce  a  contract  or  sale 
calculated  to  perpetuate  the  illegal  features  of  the  combi- 
nation.   Amer.  Biscuit  &  Mfg.  Co.  v.  Klotz,  44  F.,  721.     1—2 

13.  May  Recover  on  Collateral  Contracts  the  Price  of  Goods  Sold.— A 

violation  of  the  Sherman  Anti-Trust  Act  of  July  2,  1890  (26 
Stat,  209),  by  the  formation  of  a  combination  in  restraint 
of  trade,  by  which  a  penalty  is  incurred  under  the  statute, 
does  not  preclude  the  company  thus  illegally  formed  from 
recovering  on  collateral  contracts  for  the  purchase  price  of 
goods.     Connolly  v.   Union  Sewer  Pipe  Co.,  184  U.  S.,  540. 

!>.    e  2—118 

14.  Same.— Nor  does  the  illegality,  at  common  law,  of  such  a  com- 

bination formed  by  corporations  and  persons  in  restraint  of 
trade,  preclude  it  from  recovering  the  purchase  price  of  goods 
sold  In  the  course  of  business.  75^ 

m 

4-  By  the  United  States. 

15.  The  right  to  bring  suits  in  equity  for  violations  of  the  Anti- 

Trust  Act  of  July  2,  1890,  is  vested  in  the  district  attorneys 
of  the  United  States.    Pidcock  v.  Harrington,  64  F.,  821. 

\ 377 

16.  The  right  to  bring  suits  for  injunction  under  section  4  of  the 

act  of  July  2,  1890  (26  Stat,  209),  is  limited  to  suits  Insti- 
tuted on  behalf  of  the  Government.    Greer,  Mills  &  Co   y 
Stoller,  11  F.,  1.  ^_^^ 

17.  Same.— The  only  party  entitled  to  maintain  a  bill  of  injunction 

for  an  alleged  breach  of  the  Anti-Trust  Act  of  1890  is  the 
United  States,  by  its  district  attorney,  on  the  authority  of 
the  Attorney-General.     Gulf,  C,  d  S.  F.  Ry.  Co.  v.  Miami  8.  S 
Co.,  86  F.,  407.  i_^23 

18.  The  intention  of  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat, 

209),  was  to  limit  direct  proceedings  in  equity  to  prevent 
and  restrain  such  violations  of  the  Anti-Trust  Act  as  cause 
Injury  to  the  general  public,  or  to  all  alike,  merely  from  the 
suppression  of  competition  in  trade  and  commerce  among 


1040 


INDEX — ^DIGEST. 


ACTIONS  ANB  BEFENSES-Contiimed. 

the  several  States  and  with  foreign  nations,  to  those  insti- 
tuted in  the  name  of  the  United  States,  under  section  4  of 
the  act  by  district  attorneys  of  the  United  States,  acting 
nnder  the  direction  of  the  Attorney-General;  thus  securing 
the  enforcement  of  the  act,  so  far  as  such  direct  proceedings 
in  equity  are  concerned,  according  to  some  uniform  plan, 
operative  throughout  the  entire  country.  Minnesota  v. 
Northern  Securities  Co.,  194  U.  S.,  48.    ^  2 — 533 

5.  By  States, 

19.  A  State  can  not  maintain  an  action  in  eqnity  to  restrain  ft 
corporation  from  violating  the  provisions  of  the  act  of  Jnly 
2,  1890|  on  the  ground  that  such  violations  by  decreasing 
competition  would  depreciate  the  value  of  its  public  lands 
and  enhance  the  cost  of  maintaining  its  public  institutions, 
the  damages  resulting  from  such  violations  being  remote  and 
indirect  and  not  such  direct  actual  injury  as  is  provided  for 
in  section  7  of  the  act.  Minnesota  v.  Northern  Securities  Co,, 
104  U.  S..  48.  2—533 

80.  Municipal  Corporation  may  Maintain  Action  for  Damages 
under  Section  7,  Act  of  1890. — A  municipal  corporation  en- 
gaged In  operating  water,  lighting,  or  similar  plants,  from 
which  a  revenue  is  derived,  is,  in  relation  to  such  matters,  a 
business  corporation,  and  may  maintain  an  action  under 
section  7  of  the  Auti-Trust  Act  of  July  2,  1890  (26  Stat, 
210),  for  injury  to  its  "business"  by  reason  of  a  combina- 
tion or  conspiracy  in  restraint  of  interstate  trade  or  com- 
merce made  unlawful  by  such  act.  dtp  of  Atlanta  v.  Chat- 
tanooffa  Foimdru  <l  Pipeworks,  127  F.,  23.  2 — 299 


6.  At  common  law — Damages. 

21.  Action  for  Damages  Must  Show  that  Plaintiff  is  Engaged  in 
Interstate  Commerce. — ^An  action  to  recover  damages  alleged 
to  have  l)een  c;iused  by  acts  done  In  violation  of  the  Anti- 
Trust  Act  (26  Stat,  209)  can  not  be  maintained  when  the 
complaint  falls  to  show  that  plaintiff  is  engaged  in  interstate 
commerce,  and  no  such  showing  is  made  by  an  averment 
that  plaintiff  is  engaged  in  "manufacturing  watch  cases 
throughout  all  the  States  of  the  United  States  and  In  foreign 
countries."  Dneber  Watch  Case  Mfg.  v.  Howard  Watch, 
etc,,  Co,,  55  F.,  851.  1—178 

Case  affirmed,  66  F.,  637  (1—421). 

2S.  Same— Must  Show  Intention  to  Control  Market,  or  a  large  Por- 
tion of  it. — An  agreement  by  a  number  of  manufacturers  and 
dealers  In  watch  cases  to  fix  an  arbitrary  price  on  their 
goods,  and  not  to  sell  the  same  to  any  persons  buying  watch 
cases  of  plaintiff,  is  not  In  violation  of  the  statute;  and  a 


INDEX — ^DIGEST. 


1041 


ACTIONS  AND  DEFENSES— Continued. 

complaint  which,  on  the  last  analysis,  avers  only  these  facts, 
without  averring  the  absorption  or  the  intention  to  absorb 
or  control  the  entire  market,  or  a  large  part  thereof,  states 
no  caupe  of  action.  jj^ 

23.  Action  Alleged  to  be  in  Violation  of  the  Statutes  of  a  State  and 
of  the  United  States  Held  to  be  Founded  upon  Act  of  July  2, 
1890    (26    Stat,   290).— An   action   brought   in   the   United 
States  Circuit  Court  for  southern  New  York  by  a  manufac- 
turing company  against  competitors  in  various  States,  alleg- 
ing the  formation  of  a  combination  and  an  attempt  to  create 
a  monopoly,  "  in  violation  of  the  statutes  of  this  State  and 
the  United  States,"  whereby  plaintiflf's  business  was  injured, 
and  alleging  the  formation  of  the  combination  on  and  prior 
to  November  16,  1887,  but  that,  after  the  passage  of  the  act 
of  Congress  of  July  2,  1890,  defendants  ratified,  renewed, 
and  confirmed  their  previous  contracts,  combinations,  etc, 
and  judgment  being  demanded  for  treble  damages  "under 
and  by  virtue  of  the  statute."    Held,  that  the  action  must 
be  deemed  to  be  founded  upon  the  said  act  of  July  2,  1890. 
Dueber  Watch  Case  Mfg.  Co.  v.  Howard  Watch,  etc.,  Co.,  66 
F.,  637.  1—421 

24.  Same— A  Cause   of  Action  not   Stated.— Where,   in   the   above 
action,  complaint  alleged  that  previous  to  November  16, 1887, 
It  sold  all  its  goods  to  a  great  number  of  dealers  "  throughout 
the  United  States  and  Canada ;  "  that  prior  to  that  date  de- 
fendants had  agreed  with  each  other  to  maintain  arbitrary 
and  fixed  prices  for  their  watch  cases ;  that,  for  the  purpose 
of  compelling  plaintiff  to  join  with  them  therein,  defendants 
on  said  date  mutually  agreed  that  they  would  not  thereafter 
sell  any  goods  to  persons  who  bought  or  sold  goods  manu- 
factured by  plaintiff ;  that  they  caused  notice  thereof  to  be 
served  upon  the  many  dealers  in  such  goods  throughout  the 
United    States    and    Canada,    who    had   formerly    dealt    in 
plaintiff's  goods,  whereupon  many  of  such  dealers  withdrew 
their  patronage  from  plaintiff;  that  after  the  passage  of  the 
act  of  July  2,  1890,  defendants  ratified,  renewed,  and  con- 
firmed their  previous  agreements,  and  served  notice  of  such 
ratification  upon  all  said  dealers  in  plaintiff's  goods,  whereby 
said  dealers  were  compelled  to  refuse  to  purchase  plaintiff's 
watch  cases.    Held,  that   the  complaint  failed  to   state  a 
cause  of  action  under  the  statutes.  /^^ 

25.  ^mt—Held,  that  no  monopolizing  or  combination  to  monopo- 
lize interstate  commerce,  contrary  to  the  second  section  of 
the  act,  was  shown,  for  the  reason  that  the  allegations  did 
not  preclude  the  inference  that  each  defendant  may  have 
sold  his  entire  product  in  the  State  where  it  was  manufac- 
tured. ,, 

/o. 


1042 


IliDEX — DXGEoX* 


ACTIONS  AND  DEFENSES— Continoe<l. 

S6.  Same — HeM^  tliat  tlie  contracts  did  not  produce  an  unlawful 
restraint  of  trade,  under  the  first  section,  because  the  com- 
bination and  agreement  to  fix  arbitrary  prices  did  not  ap- 
pear to  include  all  manufacturers  of  watch  cases,  but  was 
only  a  partial  restraint  in  respect  to  an  article  not  of  prime 
necessity,  and  therefore  came  within  the  recognized  limits 
of  lawful  contracts.  /6. 

87.  Same — Held,  that  the  further  agreement  not  to  sell  to  customers 

of  plaintiff  was  a  lawful  means  of  enlarging  and  protecting 
the  business  of  the  defendants.  /&. 

SMpman,  Cir.  J.,  conourrinff,  on  the  ground — 

88.  That  the  acts  of  the  defendants,  whether  viewed  as  an  attempt 

to  create  a  monopoly  or  as  a  contract  in  restraint  of  trade, 
were  not  shown  to  concern  interstate  commerce,  because 
there  were  no  allegations  showing  the  residence  of  any 
dealers  who  withdrew  their  patronage  from  complainant, 
and  it  therefore  did  not  directly  appear  that  any  of  them 
resided  outside  of  the  State  where  plaintiff's  goods  were 
manufactured.  /». 

Wallace,  dr.,  dissentinff,  on  the  ground — 

89.  That  the  allegations  were  sufKcient  to  show  that  the  attempts 

to  monopolize  and  restrain  did  operate  upon  interstate  com- 
merce, /ft. 

80.  That,  while  the  contracts  might  not  !>e  unlawful  in  themselves, 

yet  the  purpose  for  which  they  were  alleged  to  be  made, 
namely,  to  compel  plaintiff  to  join  in  the  agreement  for  fix- 
ing arbitrary  prices,  and  to  injure  and  destroy  its  business 
if  it  refused  to  do  so,  was  oppressive  and  unjust,  and  ren- 
dered the  acts  of  defendants  unlawful  under  both  sections 
of  the  statute.  16. 

81.  The  Only  Bemedy  to  Party  other  than  the  United  States  is  a 

Suit  for  Damages. — Under  the  act  of  July  8,  1890,  entitled 
"An  act  to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopolies,"  the  only  remedy  given  to  any 
other  party  than  the  Government  of  the  United  States,  is  a 
suit  for  threefold  damages,  costs,  and  attorney's  fees.  Oulf, 
C,  &  8.  F.  Ry.  Co.  v.  Miami  8,  8.  Co.,  86  F.,  407.  1—823 

38.  The  only  remedy  of  a  private  individual  to  restrain  acts  for- 
bidden by  the  Anti-Trust  Act  of  1890  is  an  action  at  law  for 
damages.    Pidcock  v.  Harrington,  64  F.,  821.  1 — 377 

33.  The  remedy  of  a  private  party  under  the  Anti-Trust  Act  of  1890 

is  an  action  at  law  for  damages.  Southern  Ind.  Exp.  Co.  ▼. 
11.  8.  Ewp.  Co.,  88  F.,  659.  1—862 

34.  By  Direct  Action. — A  recovery  of  the  treble  damages  authorized 

by  the  Sherman  Anti-Trust  Act  of  July  2,  1890,  section  7  (26 
Stat.  L.,  209,  chap.  647),  in  case  of  injury  sustained  by  vio- 
lation of  the  act,  can  be  had  only  by  direct  action,  and  not 


INDEX — ^DIGEST. 


104a 


ACTIONS  ANB  DEFENSES— Continued. 

by  way  of  set-off  in  an  action  brought  for  the  price  of  goods 
by  a  company  illegally  formed  in  violation  of  the  act— espe- 
cially when  the  State  practice  does  not  permit  the  set-off  of 
unliquidated  damages.  Connolly  v.  Union  8etcer  Pipe  Co., 
184  U.  S.,  540.  8—118 

35.  Municipal    Corporation    may    Maintin    Action    for    Damages 
under  Section  7,  Act  of  1890. — A  municipal  corporation  en- 
gaged in  operatiDg  water,  lighting,  or  similar  plants,  from 
which  a  revenue  is  derived,  is,  in  relation  to  such  matters,  a 
business  corporation,  and  may  maintain  an   action  under 
section  7  of  the  Anti-Trust  Act  of  July  2,  1890   (26  Stat, 
210),  for  injury  to  its  "business"  by  reason  of  a  combina- 
tion OP  conspiracy  in  restraint  of  interstate  trade  or  com- 
merce made  unlawful  by  such  act.    City  of  Atlanta  v.  Chat- 
tanooga Foundry  cC-  Pipeworks,  127  F.,  23.  8 — ^299 
38.  Statutory  Limitations  Governed  by  the  Laws  of  the  State  in 
which   Action   is   brought. — An   action   under   section   7   of 
the  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209),  providing 
that  "any  person  who  shall  be  injured  in  his  business  or 
property  by  any  other  person  or  corporation  by  reason  of 
anything  forbidden  or  declared  to  be  unlawful  by  this  act  may 
sue   therefor   in   any   circuit   court   of   the   United    States, 
♦     *     ♦     and  shall  recover  threefold  the  damages  by  him 
sustained,"   is  not   an  action  for  a  penalty  or   forfeiture, 
within  section  1047,  Bevised  Statutes,  prescribing  a  limita- 
tion of  five  years  for  a  "  suit  or  prosecution  for  any  penalty 
or  forfeiture,  pecuniary  or  otherwise,  accruing  under  the 
laws  of  the  United  States,"  but  one  for  the  enforcement  of  a 
civil  remedy  for  a  private  injury,  compensatory  i^  its  pur- 
pose and  effect,  the  recovery  permitted  in  excess  of  damages 
actually  sustained  being  in  the  nature  of  exemplary  damages, 
which  does  not  change  the  nature  of  the  action,  and  such 
action  is  governed  as  to  limitation  by  the  statutes  of  the 
State  in  which  it  is  brought     City  of  Atlanta  v.  Chattanooga 
Foundry  and  Pipe  Co.,  101  F,,  900.  8—11 
Affirmed  by  Circuit  Court  of  Appeals,  127  F.,  23   (8—299). 
The  judgment  of  the  circuit  court  was,  however,  reversed, 
but   upon   other  grounds — a   construction   of   section  4470, 
Tennessee  Code. 
Affirmed  by  Supreme  Court  (208  U.  S.,  390). 
37.  Same— Every  Member  of  the  Combination  Liable  for  Damages.— 
Every  member  of  an  illegal  combination  in  restraint  of  inter- 
state trade  or  commerce  in  violation  of  the  Anti-Trust  Act  is 
liable  for  the  damages  resulting  to  the  business  or  property 
of  a  plaintiff  by  reason  of  such  combination,  and  it  is  imma- 
terial that  there  were  no  direct  contract  relations  between 
plaintiff   and   defendant     City  of  Atlanta   v.    Chattanooga 
Foundry  and  Pipe  Works,  127  F.,  23.                             8-299 


INDEX^ — ^DIGEST. 


ACTIONS  AND  DEFENSES— Continued. 

38.  Same — Measure  of  Recovery  for  Injury  to  Business.— If  the  ef- 

fect of  an  illegal  combioation  between  manufacturers  to 
prevent  competition  in  tlie  sale  of  a  commodity  which  is  a 
subject  of  interstate  commerce  l>e  to  enhance  the  price  of 
such  commodity  to  a  purchaser,  he  is  entitled  to  recover  the 
difference  between  the  price  paid  and  the  reasonable  price 
under  natural  competitive  conditions,  as  an  injury  to  his 
business,  whether  such  business  is  interstate  or  not,  provided 
the  transaction  by  which  the  purchase  was  made  was  in- 
terstate. 16. 

39.  Conspiring   to   Injure   Another   in   Business — Mailing   Printed 

Circulars. — The  action  of  an  aasociation  of  manufacturers  in 
adopting  a  resolution  denouncing  a  dealer  in  the  product 
they  manufactured,  who  bought  and  shipped  such  product 
to  customers  in  other  States  and  foreign  countries,  and  In 
printing  such  resolution  in  circulars,  and  mailing  the  same  to 
other  manufacturers  and  customers  of  the  dealer,  whereby 
his  business  was  injured,  constituted  an  illegal  combination 
or  conspiracy  in  resti-aint  of  interstate  and  foreign  coumierce, 
and  gives  the  person  injured  a  right  of  action  in  a  circuit 
court  of  the  United  States,  under  the  Anti-Trust  Law  of 
1890,  to  recover  the  damages  sustained.  Q-ihbs  v.  McNeeley, 
102  F.,  594.  2—23 

Verdict  for  defendant  directed.  107  F.,  210  (2—71),  but 
Reversed  by  Circuit  Court  of  Appeals,  118  F.,  120  (2—194). 

40.  Complaint  Fatally  Defective  where  it  Fails  to  Show  that  Plain- 

tiff Suffered  Bamage. — A  complaint  in  a  civil  action,  based 
on  the  Anti-Tnist  Law  of  1890,  alleging  an  illegal  combina- 
tion by  defendants  in  restraint  of  trade,  is  fatally  defective 
where  it  fails  to  show  that  plaintiff  has  suffered  damage  by 
reason  of  such  combinatibn.  lb. 

41.  Treble  damages  are  recoverable  under  the  Anti-Trust  Act  of 

1890  only  in  an  action  at  law  by  the  plaintiff  as  an  indi- 
vidual and  not  as  a  stockholder  in  a  corporation  violating 
that  act.  Metcalf  v.  Jmer.  Bchoo!  Furniture  Co.,  308  F., 
900.  a— 75 

48.  Where  Manufacturer  Refused  to  Sell  because  Complainant 
was  not  a  Member  of  Trust  Association. — ^A  dealer  in  tiles, 
mantels,  and  grates  in  San  Francisco,  to  whom  a  manufac- 
turer in  another  State  refused  to  sell  tiles  on  the  sole 
ground  that  he  was  not  a  member  of  an  association  to 
which  he  belonged,  which  association  sought  to  control  the 
output  and  regulate  the  prices  thereof  in  California  and 
adjoining  States,  Held,  entitled  to  damages  under  section  7 
of  the  Anti-Trust  Act  of  1890.  Montague  v.  Lowrp,  115  F., 
27.  2—112 

Affirmed,  193  U.  S.,  38  (2—327). 

See  also  Bishop  v.  Amer.  Preservers  Co.,  105  F.,  845.        2—51 


INDEX ^DIGEST. 


1045 


ACTIONS  AND  DEFENSES— Continued. 

7.  Equity — Injunctions,  etc. 

43.  Private  Individuals  no  Remedy  in  Equity  under  the  Statute. — 

The  Anti-Trust  Act  of  July  2,  1890,  confers  no  right  upon 
private  individuals  to  sue  in  equity  for  the  restraint  of  acts 
forbidden  by  that  statute.  PidcocJc  v.  Harrington,  64  F., 
821.  1—377 

44.  Private  Party  no  Remedy  in  Equity. — The  Anti-Trust  Act  of 

July  2,  1890,  does  not  authorize  a  court  of  equity  to  enter- 
tain a  bill  bj'  a  private  party  to  enforce  its  provisions. 
Southern  Ind.  Exp.  Co.  v.  JJ.  S.  Exp.  Co.,  88  F.,  659. 

1—802 

45.  The  right  to  bring  suits  for  injunction  under  section  4  of  the 

act  of  July  2, 1890  (26  Stat,  209),  is  limited  to  suits  instituted 

on  behalf  of  the  Government.    Greer,  Mills  d  Co.  v.  Stoller, 

.  77  F.,  1.      .  1—620 

48.  The  only  party  entitled  to  maintain  a  bill  of  injunction  for  an 
alleged  breach  of  the  act  of  July  2,  1890  (26  Stat,  209),  is 
the  United  States,  by  its  district  attorney,  on  the  authority 
of  the  Attorney-General.  Gulf  C.  d  S.  F.  Ry.  Co.  v.  Miami 
8.  8.  Co.,  86  F.,  407.  1—824 

47.  Suit  Enjoining  Infringement  Maintainable  by  Owner  of  Patent 
though  Member  of  Illegal  Combination. — Complainant 
though  a  member  of  a  combination  in  violation  of  the  Anti- 
Trust  Law  of  July  2,  1890,  can  maintain  a  suit  in  equity  to 
enjoin  an  infringement  of  a  patent  owned  by  him.  General 
Electric  Co.  v.  Wise,  119  F.,  922.  2—205 


8.  Purchases  from,  or  services  rendered  hy,  illegal  corporations. 

48.  Can  not  Retain  Goods  and  Recover  Price  Paid. — One  purchas- 

ing liquors  from  an  illegal  combination  of  distillers,  which 
controls  the  marliet  and  prices,  though  impelled  thereto  by 
business  needs  and  policy,  enters  into  the  contract  voluntar- 
ily, and  can  not  retain  the  goods,  and  recover  the  price  paid, 
or  any  part  of  it,  either  on  the  ground  that  the  combination 
was  illegal,  or  the  price  excessive.  77  Fed.,  700,  affirmed. 
Dennehy  v.  McNulta,  86  F.,  825.  1 — 855 

49.  Rebate  vouchers  issued  by  a  distilling  company  to  customers,  by 

which  it  promised  to  refund  a  certain  sum  per  gallon  on 
their  purchases  at  the  end  of  six  months,  on  condition  of 
their  purchasing  exclusively  from  the  company  during  that 
time,  can  not  be  enforced,  either  at  law  or  in  equity,  where 
the  condition  has  not  been  performed,  though  such  condition 
be  illegal,  as  in  restraint  of  trade ;  there  being  no  other  con- 
sideration for  the  promise.    77  Fed.,  700,  affirmed.  lb. 


1046 


INDEX — ^DIGEST. 


ACTIONS  AHB  DBFENSES-t'outinueii. 

m.  Must  Pmy  Heatonable  Value  of  Services— Towage— One  who  re- 
quests and  accepts  the  services  of  a  tug  for  towage  purposes 
can  not  escape  paying  the  reasonable  value  of  the  services 
rendered  on  the  ground  that  the  tug  owners  are  members  of 
an  association  which  Is  illegal  under  the  act  of  July  2,  1890, 
relating  to  trusts  and  monopolies.  The  Charles  E.  Wise- 
wall,  74  F.,  802.  1—608 
Afflnned.  86  F..  671  (1.-850). 


II. 


S8. 


9.  Patents — Actiont  for  infrlnffement. 

Third  Party  ean  not  Enjoin  Combination  from  Bringing  Suit 
for  Infringement  of  its  Patents.— The  fact  that  a  corporation 
owning  letters  patent  upon  a  particular  liind  of  machinery 
has  entered  into  a  combination  with  other  manufacturers 
thereof  to  secure  a  mohopoly  in  its  manufacture  and  sale, 
and  to  that  end  has  acquired  all  the  rights  of  other  manu- 
facturers for  the  exclusive  sale  and  manufacture  of  such 
inachines  under  patents,  will  not  entitle  a  stranger  to  the 
combination  to  enjoin  the  corporation  from  bringing  any 
suits  for  infringement  against  hhn  or  his  customers.  Strait 
V.  yaltoiiai  Harrow  Co.,  51  F.,  819.  1—62 

Bee  also  National  Folding  Box  d  Paper  Co.  v.  Robertson,  m  W„ 
985  (2 — 4)  ;  and  Otis  Elevator  Co,  v.  Qeiger,  107  F.,  131 
(2—66). 

Owner  of  Patent,  though  Member  of  Illegal  Combination,  ean 
Maintain  Action  for  Infringement.— That  a  complainant  is  a 
member  of  a  combination  In  violation  of  the  Anti-Trust  Law 
of  July  2,  1890,  does  not  give  third  persons  the  right  to  in- 
fringe a-  patent  of  which  he,  the  complainant,  is  owner,  nor 
preclude  complainant  from  maintaining  a  suit  in  equity  to 
enjoin  such  Infringement  General  Electric  Co.  v.  Wise, 
119  F.,  922.  2—205 

Combination  Organized  to  Receive  Assignments  of  Patents  can 
not  Maintain  Action  for  Infringement  against  Assignor. — 
A  combination  among  manufacturers  of  spring-tooth  har- 
rows, whereby  a  coi-poration,  organized  for  the  purpose,  be- 
comes the  assignee  of  all  patents  owned  by  the  various  man- 
ufacturers, and  executes  licenses  to  them,  so  as  to  control 
the  entire  business  and  enhance  prices,  is  void  lx)th  as  to  the 
assignments  and  licenses,  so  that  the  corporation  can  not 
maintain  a  suit  against  one  of  its  assignors  who  violates  the 
agreement,  for  infringement.  National  Harrmc  Co.  v. 
Hench.,  84  F.,  226.  1—746 

^ee  also  National  Harrow  Co.  v.  Quick,,  67  F.,  130  (l— 443). 


INDEX — DIGEST. 


1047 


ACTIONS  AND  DEFENSES— Continued. 

10.  Oenerally. 

S4#  What  must  be  Shown.— To  vitiate  a  combination,  such  as  the 
Anti-Trust  Act  condemns,  it  need  not  be  showU  that  the  com- 
bination, in  fact,  results,  or  will  result,  in  a  total  suppres- 
sion of  trade  or  in  a  complete  monopoly,  but  it  is  only  essen- 
tial to  show  that  by  its  necessary  operation  it  tends  to  re- 
strain interstate  or  international  trade  or  commerce,  or  tends 
to  create  a  monopoly  in  such  trade  or  commerce,  and  to  de- 
prive the  public  of  the  advantages  that  flow  from  free  compe- 
tition. Northern  Securities  Co.  v.  United  States,  193  U.  S., 
197.     (Harlan,  Brown,  McKenna,  Day.)  2 — 340 

55.  Same. — In  order  to  maintain  this  suit  the  Government  is  not 

obliged  to  show  that  the  agreement  in  question  was  entered 
into  for  the  purpose  of  restraining  trade  or  commerce,  if 
such  restraint  is  its  necessary  effect.  U.  8.  v.  Trans-Mo.  Ft. 
Assn.,  166  U.  S.,  290.  1—649 

See  also  Pleading  and  Practice. 

56.  A  suit  brought  by  the  Attorney-General  of  the  United  States  to 

declare  the  Northern  Securities  Co.  combination  illegal  under 
the  act  of  July  2,  1890,  is  not  an  interference  with  the  con- 
trol of  the  States  under  which  the  railroad  companies  and 
the  holding  company  were,  respectively,  organized.  Northern 
Securities  Co.  v.  United  States,  193  U.  S.,  197  (Brewer, 
concurring ) .  2 — 342 

57.  No   Eight   of  Action   Growing   out   of   Suits   against  Plaintiif 

which  have  not  been  Decided.— The  Anti-Trust  Act  of  July  2, 
1890  (26  Stat,  209),  which  gives  a  right  of  action  to  any 
person  injured  by  acts  in  violation  of  its  provisions,  does  not 
authorize  suit  where  the  only  cause  of  action  is  the  bringing 
of  two  suits  which  have  not  been  decided.    Bishop  v.  Amer. 

Preservers'  Co.,  51  F.,  272.  1 49 

See  also  Indictments. 


II.  Defenses. 

1.  Indeflniteness,  duplicity. 

58.  Indeflniteness. — In  an  action  by  a  corporation  for  the  infringe- 
ment of  elevator  patents,  an  answer  alleging  as  a  defense 
that  the  plaintiff  is  an  unlawful  combination  in  restraint  of 
trade  and  in  violation  of  the  Sherman  Anti-Trust  Law  (26 
Stat,  209),  but  which  fails  to  state  who  are  in  the  combina- 
tion in  the  agreement  characterized  as  unlawful,  and  does 
not  disclose  fully  and  in  detail  that  the  combination  was  en- 
tered into  after  the  act  took  effect,  and  all  the  facts  neces- 
sary to  show  its  illegality,  is  insuflicient  for  indeflniteness. 
Otis  Elevator  Co.  v.  Geiger,  107  F.,  131.  2—66 


1048 


INDEX — ^DIGEST. 


ACTIONS  AND  DEFENSES -Continued. 

II.  Defenses— Continued. 

in.  Duplicity. — A  declaration  in  an  action  brought  under  section  7 
of  the  Sherman  Anti-Tnist  Act  (act  July  2,  1890,  c.  647,  26 
Stat,  210)  to  recover  damages  for  a  violation  of  section  1 
of  the  act,  which  alleges  in  a  single  count  that  defendant  en- 
tered into  a  "  contract,  combination,  and  conspiracy  "  in  re- 
straint of  trade,  is  bad  for  duplicity.  Rice  v.  Stwndard  Oil 
Co,,  134  F.,  464.  2—633 

60.  Same.— The  Anti-Trust  Act  of  1890  makes  a  distinction  between 
a  contract  and  a  combination  or  conspiracy  in  restraint  of 
trade.  /j. 

MULTIFABIOUSNESS.      8€€  PLEADING  AND  PRACTICE. 

2.  Contract  in  violation  of  Anti-Trust  Act,  or  of  an  act  of  Congress. 

81.  The  defense  that  a  contract  is  in  violation  of  the  act  of  Con- 
gress of  July  2,  1890  (26  Stat,  209),  to  protect  trade  and 
commerce  against  unlawful  restraints  and  monopolies,  which 
malies  illegal  every  contract  violative  of  its  provisions,  may 
be  set  up  by  a  private  individual  when  sued  thereon,  and,  if 
proved,  constitutes  a  good  defense  to  the  action.  Bement  v. 
Kational  Harrow  Co.,  186  U.  S.,  70.  2 — 170 

02.  Same. — ^Anyone  sued  upon  a  contract  may  set  up  as  a  defense 
that  it  is  a  violation  of  an  act  of  Congress.  /&.  (169) 

3.  Illegal  cohihinaiion — Purchases  from,  services. 

«3.  Payment  for  Services  can  not  be  Avoided  because  Performed  by 
a  Trust — ^Towage. — One  who  requests  and  accepts  the  serv- 
ices of  a  ing  for  towage  pui^joses  can  not  escape  paying  the 
reasonable  value  of  the  services  rendered  on  the  ground 
that  the  tug  owners  are  members  of  an  association  which  Is 
illegal  under  the  act  of  July  2,  1890,  relating  to  trusts  and 
monopolies.  The  Charles  E.  Wiseicall,  74  F.,  802.  1—608 
Affirmed,  86  F.,  671   (1—850). 

64.  Payment  of  Note  for  Goods  Purchased  can  not  be  Avoided  be- 
cause Bought  from  a  Trust.— A  note  made  for  a  balance  due 
on  goods  bought  from  a  corporation  can  not  be  avoided 
merely  because  the  latter  is  a  trust  organized  to  create  and 
carry  out  restrictions  in  trade  contrary  to  the  Anti-Trust 
Act  of  July  2,  1890,  as  that  only  covers  contracts  which  are 
themselves  in  restraint  of  trade,  and  does  not  affect  those 
which  "merely  indirectly,  remotely,  incidentally,  or  collat- 
erally regulate,  to  a  greater  or  less  degree,  interstate  com- 
merce between  the  States."  Union  Sewer-Pipe  Co.  v.  Cofi- 
nellp,  99  F.,  354.  ^—l 

Affirmed,  184  U.  S.,  540  (2—118). 
iSfee  also  Dennehy  v.  McNulta,  86  F.,  825  (1—885). 


INDEX — DIGEST. 


1049 


ACTIONS  AND  DEFENSES— Continued. 

II.  Defenses  —Continued. 

65.  A«  contract  for  the  sale  of  merchandise  is  not  rendered  illegal 

by  the  fact  that  the  selling  corporation  is  a  trust  or  mo- 
nopoly organized  in  violation  of  law,  either  Federal  or  State ; 
the  contract  of  sale  being  collateral  and  having  no  direct 
relation  to  the  unlawful  scheme  or  combination.  Chicago 
Wall  Paper  Mills  v.  General  Paper  Co.,  147  F.,  491.  2—1027 
See  also  Continental  Wall  Paper  Co.  v.  Lewis  Voight  d  So)i8 
Co.,  148  F.,  940. 

66.  Recovery  on  Collateral  Contract  by  Member  of  Combination  in 

Restraint  of  Interstate  Trade.— The  act  of  July  2,  1890,  sec- 
tion 1  (26  Stat,  209)  does  not  invalidate  or  prevent  a  recov- 
ery for  the  breach  of  a  collateral  contract  for  the  manufac- 
ture and  sale  of  goods  by  a  member  of  a  combination  formed 
for  the  purpose  of  restraining  interstate  trade  in  such  goods. 
Hadley  Dean  Plate  Glass  Co.  v.  Highland  Glass  Co.,  143  F., 
242.  2—995 


Patents — Illegal  combination. 


67.  Infringement   of   Patent— No   Defense   that   the   Owner   is   an 

Illegal  Corporation  under  Anti-Trust  Law. — The  fact  that 
the  owner  of  a  patent  is  a  corporation  alleged  to  have  been 
formed  in  violation  of  the  Anti-Trust  Law%  and  that  the 
patent  is  alleged  to  have  been  assigned  to  it  in  furtherance 
of  the  illegal  purpose  to  create  a  monopoly  and  control  the 
price  of  an  article  of  commerce,  is  not  available  to  an  in- 
friiiger  of  such  patent  to  defeat  a  suit  for  the  infringement. 
National  Folding-Bow  d.  Paper  Co.  v.  Robertson,  99  F.,  985. 

2—4 

68.  Same. — In  an  action  by  a  corporation  for  the  infringement  of 

elevator  patents,  a  private  defendant  was  not  entitled  to 
urge  as  a  defense  that  plaintiff  was  a  corporation  organized 
merely  for  the  purpose  of  holding  the  legal  title  to  various 
elevator  patents  alleging  to  have  been  infringed,  for  the  pur- 
pose of  controlling  sales  and  enhancing  prices  of  elevators 
and  apparatus,  without  itself  engaging  in  the  manufacture 
and  sale. of  such  appliances,  in  violation  of  the  Sherman 
Anti-Trust  Law  (26  Stat.,  209),  since  until  the  United  States 
has  acted  and  sought  to  prosecute  the  plaintiff  for  violation 
of  such  act  an  infringer  of  the  plaintiff's  patent  will  not  be 
permitted  to  raise  such  issue  as  a  defense  thereto.  Otis 
Elevator  Co.  v.  Geiger,  107  F.,  131.  2 — 66 

69.  Infringement  Suit  can  not  be  Maintained  by  Combination  of 

Patent  Owners  against  Assignor. — ^A  combination  among 
manufacturers  of  spring-tooth  harrows,  whereby  a  corpora- 
tion, organized  for  the  purpose,  becomes  the  assignee  of  all 
patents  owned  by  the  various  manufacturers,  and  executes 
licenses  to  them,  so  as  to  control  the  entire  business  and  en- 


t  ARA 


INDEX — DIGEST. 


ACTIONS  AHB  I>EFEirSB8~€ontiiiiie<l. 

II.  Bmifsis— Oontincied. 

liance  prices,  ts  void  botli  as  to  the  assignments  and  licenses, 
so  that  the  corporation  can  not  maintain  a  suit  against  one 
of  its  assignors  who  violates  the  agreement  for  infringe- 
ment. National  Harrow  Co.  v.  Hmch,  84  F.,  226.  1—746 
See  also  National  Harrow  Co.  v.  Quick,  67  F.,  130  (1 — 443) ; 
and  Actions  and  Dirnses  51-63. 

5.  Agrmmmt  not  to  engage  in  bmineMs, 

70.  Suit  to  eiiforoe.~In  a  snit  to  enjoin  a  defendant  from  violating, 

a  contract  by  which  for  a  valuable  consideration  he  cove- 
nanted not  to  engage  in  business  for  himself  or  another  In 
competition  with  that  of  complainant  for  a  term  of  years, 
and  to  enjoin  a  codefendant  from  employing  his  services  In 
a  competing  business,  It  Is  bo  defense  that  liii  codefenda&t 
hired  Mm  in  ignorance  of  the  eontract,  and  will  suffer  dam- 
age if  deprived  of  his  services.  A.  Booth  d  Co.  v.  Da^, 
127  F.,  875.  »— 319 

Affirmed,  131  F.,  31  (a-526). 

See  also  BoUnmn  v.  SnMrhan  Brick  Co.,  127  F.,  804  (t— 312). 

0.  OeneruUif. 

71.  That  Combination  has  not  been  Injurious  to  the  Public— It  Is 

no  defense  to  a  suit  to  dissolve  a  combination  as  illegal, 
under  the  Antitrust  Law,  that  it  has  not  been  productive  of 
Injury  to  the  public  or  even  that  it  has  been  beneficial,  by 
enabling  the  combination  to  compete  for  business  in  a  wider 
field.  V.  S.  Y.  Chesapeake  d  O.  Fuel  Co.,  105  F.,  93.  »— 34 
Affirmed.  115  F.,  610  (»— 151). 
71.  Ihat  Combination  is  in  the  Worm  of  a  Corporation  or  Holding 
Company.— The  fact  that  the  purpose  of  an  Illegal  combina- 
between  stockholders  of  two  railroad  companies  operat- 
ing parallel  and  competing  interstate  lines,  to  secure  unity 
of  interest  and  control  of  such  companies,  and  to  prevent 
competition,  has  been  accomplished  by  the  formation  of  & 
corporation  which  has  acquired  the  ownership  of  a  majority 
of  the  stock  of  each  of  the  companies,  can  not  be  urged  to 
defeat  a  suit  by  the  United  States  to  restrain  the  exercise  of 
the  power  lo  illegally  aotiuired  by  the  corporation  through 
such  combination,  as  Imposing  a  restraint  upon  interstate 
commerce  In  violation  of  the  Anti-Trust  Law  (act  July  2, 
1890,  26  Stat.  209).    V.  8.  v.  Northern  Securities  Co..  120  F 

2 ^215 

71.  Same— auestlomt  of  Benefit  to  the  TubUo— Public  PoUcy.— 
Where  the  eifect  of  a  combination  Is  to  directly  prevent  com- 
petition between  two  parallel  and  naturally  competing  ]In«i 


INDEX — DIGEST.  1051 

ACTIONS  AND  DEFENSES— Continued. 

II.  Defenses — Continued. 

of  railroad  engaged  in  interstate  business,  it  is  in  restraint 
of  interstate  commerce,  and  a  violation  of  the  Anti-Trust 
Act  (act  July  2,  1890,  26  Stat,  209),  and  the  court,  in  a  suit 
to  enjoin  it  as  such,  can  not  consider  the  question  whether 
the  combination  may  not  be  of  greater  benefit  to  the  public 
than  competition  would  be;  that  being  a  question  of  public 
policy,  to  be  determined  by  Congress.  .  /ft. 

Afl^irmed,  193  U.  S.,  197  (2—338). 
74.  The  pendency  of  a  suit  in  a  court  can  not  be  pleaded  in 
abatement  of  an  action  in  a  circuit  court  of  the  United 
States  to  recover  treble  damages  under  section  7  of  the 
Anti-Trust  Act  of  July  2,  1890  (26  Stat,  210),  since  the 
State  court  is  without  jurisdiction  to  enforce  the  remedy 
given  by  said  section,  and  therefore  the  same  case  can  not 
be  depending  in  both  courts.    Loewe  v.  Lawlor,  130  F.,  633. 

2—563 

AGREEMENTS  NOT  TO  ENGAGE  IN  BUSINESS.    See  Actions 
AND  Defenses,  70 ;   Combinations,  etc.,  152-159. 

AGREEMENTS  NOT  TO  COMPETE  IN  BIDDING.    See  Combina- 
tions, ETC.,  39-52. 

ALLEGATIONS  AND  PROOF.    See  Pleading  and  Practice,  12-15. 
ANTICIPATED  PROFITS.    See  Damages,  3. 
APPEAL.    See  Coubts,  23,  36,  38,  40,  42,  43. 

APPORTIONMENT,  DIVISION,  OR  RESTRICTION  OF  TERRI- 
TORY.   See  Combinations,  etc,  39,  136,  137,  166. 

ATTACHMENT. 

Grounds  for  Dissolution— Prior  Attachment  in  State  Court.— 
Where  the  State  statute  provides  for  successive  attachments 
of  the  same  property,  a  prior  attachment  in  a  State  court 
affords  no  ground  for  the  discharge  of  an  attachment  in  a 
Federal  court.    Lotce  v.  Lawlor,  130  F.,  633.  2-563 

ATTORNEY-GENERAL.     See  Acjtions  and  Defenses,  17,  18.  55; 
Pabties,  7. 

ATTORNEY'S  FEES.    See  Costs. 

AVOIDANCE  OF  PAYMENT.    See  Actions  and  Defenses,  63,  64. 

BAILMENT.    See  Sale,  4. 

BIDDING,    AGREEMENTS   NOT    TO    COMPETE.    See    Combina- 
TiONS,  etc,  39-52. 


1052 


INDEX— DIGEST. 


BILL.    See  Equity,  2, 4 ;  Pleading  and  Practice,  1, 2, 6-9, 1^17, 19, 20. 
BOOKSELLERS.    See  Combinations,  etc.,  28,  96. 
BOYCOTT.    See  Combinations,  etc.,  124,  213. 
BXTB.DEN  OF  PROOF.    See  Evidence,  3,  4. 

CARRIERS. 

1.  Common  Carriers  Kot  Included  Within  the  Statute. — It  was  not 

the  intention  of  Congress  to  include  common  carriers  sub- 
ject to  the  act  of  February  4,  1887,  within  the  provisions  of 
the  act  of  July  2,  1890,  which  is  a  special  statute,  relating 
to  combinations  in  the  form  of  trusts  and  conspiracies  in 
restraint  of  trade.  U.  S.  v.  Trans-Mo.  Ft.  Assn.,  53  F.,  440. 
Case  reversed,  166  U.  S.,  290  (1— C48).  1—80 

2.  May  Demand  Prepayment  of  Freight  from  One  Connecting  Car- 

rier and  Not  from  Another. — ^A  common  carrier  engaged  in 
intei-state  commerce  may  at  connnon  law,  and  under  the  In- 
terstate commerce  law,  demand  prepayment  of  freight 
charges,  when  delivered  to  it  by  one  connecting  carrier,  with- 
out exacting  such  prepayment  when  delivered  by  another 
connecting  carrier,  and  may  advance  freight  charges  to  one 
connecting  carrier  without  advancing  such  charges  to  an- 
other connecting  carrier.  Oiilf,  0.  d  S.  F,  Ry.  Co,  v.  Miami 
S.  S.  Co.,  86  F.,  407.  1—823 

8.  Same — Through  Transportation — Joint  Rates  and  Billing. — 
Such  carrier  may  enter  into  a  contract  with  one  connecting 
carrier  for  through  transportation,  through  Joint  traflSc, 
through  billing,  and  for  the  division  of  through  rates,  with- 
out being  obligated  to  enter  into  a  similar  contract  with  an- 
other connecting  carrier.  /6. 

4.  Not    Required    to    Receive    Goods    Without    Prepayment    of 

Charges. — The  rules  of  the  common  law  do  not  require  a 
carrier  to  receive  goods  for  carriage,  either  from  a  consignor 
or  a  connecting  carrier,  without  prepayment  of  its  charges 
if  demanded,  nor  to  advance  the  charges  of  a  connecting  car- 
rier from  which  it  receives  goods  in  the  course  of  transpor- 
tation ;  nor  can  it  be  required  to  extend  such  credit  or  make 
such  advances  to  one  connecting  carrier  because  it  does  so  to 
another.  Sonthem  Ind.  Exp.  Co.  v.  U.  S.  Exp.  Co.,  88  F., 
659.  1—S62 

5.  Same — Express  Companies. — ^The  interstate  commerce  act  does 

not  apply  to  independent  express  companies  not  operating 
railway  lines.  lb. 

See  also  Combinations,  etc.,  100-111,  189-200. 

CERTIORARI.    See  Courts,  48. 

COAL.    See  Combinations,  etc.,  25-27,  59. 


INDEX — DIGEST. 


1053 


COMBINATIONS,     CONSPIRACIES,     CONTRACTS,     ETC..     IN 
RESTRAINT   OF   TRADE   AND    COMMERCE.       » 

I.  In  General. 
1.  Distinction. 

1.  Distinction  Between  a   Contract   and   a   Combination  or   Con- 

spiracy in  Restraint  of  Trade.— Section  1  of  the  Anti-Trust 
Act  of  July  2,  1890  (26  Stat,  209),  which  declares  illegal 
"  every  contract,  combination  in  the  form  of  trust  or  other- 
wise, or  conspiracy  in  restraint  of  trade  or  commerce  among 
the  several  States  or  Vith  foreign  nations,"  makes  a  distinc- 
tion between  a  contract  and  a  combination- or  conspiracy  in 
restraint  of  trade.    Rice  v.  Standard  Oil  Co.,  134  F.,  464. 

2—633 

2.  Declaration  which  Made  no  such  Distinction  Bad  for  Duplicity. 

A  declaration  in  a  suit  based  on  section  7  (26  Stat.,  210)  to 
recover  damages  resulting  to  plaintiff  from  a  violation  of 
such  provision,  which  alleges  in  a  single  count  that  defend- 
ant entered  into  a  "contract,  combination,  and  conspiracy'' 
in  restraint  of  trade,  is  bad  for  duplicity.  /ft. 

2.  Legality — How  determinable — Test. 

3.  The  test  of  the  validity  of  contracts  or  combinations  in  re- 

straint of  trade  is  not  the  existence  of  restriction  upon  com- 
petition imposed  thereby,  but  the  reasonableness  of  that  re- 
striction under  the  facts  and  circumstances  of  each  par- 
ticular case.  Public  welfare  is  first  considered,  and,  if  the 
contract  or  combination  appears  to  have  been  made  for  a 
just  and  honest  purpose  and  the  restraint  upon  trade  is  not 
specially  injurious  to  the  public  and  is  not  greater  than  the 
protection  of  the  legitimate  interests  of  the  party  in  whose 
favor  the  restraint  is  imposed  reasonably  requires,  the  con- 
tract or  combination  is  not  illegal.  Shiras,  District  Judge, 
dissenting,  on  the  ground  that  this  rule  is  not  applicable  to 
corporations  charged  with  public  duties.  U.  8.  v.  Trans-Mo. 
Ft.  Assn.,  58  F.,  58.  1—186 

Case  reversed,  166  U.  S.,  290  (1—648). 

4.  Provisions  Apply  to  all  Contracts  in  Restraint— Not  Merely  to 
Unreasonable  Restraints.— The  prohibitory  provisions  of  the 
said  act  of  July  2,  1890,  apply  to  all  contracts  in  restraint 
of  interstate  or  foreign  trade  or  commerce  without  exception 
or  limitation,  and  are  not  confined  to  those  in  which  the 
restraint  is  unreasonable.  U.  S.  v.  Trans-Missouri  Freight 
Association,  166  U.  S.,  290.  1—649 

6.  Any  restraint  of  interstate  trade  or  commerce,  if  it  be  accom- 
plished by  a  conspiracy,  is  unlawful.  V.  S.  v.  Debs,  64  F., 
'  "•  1 322 

6.  In  a  suit  to  restrain  alleged  violations  of  the  law  of  July  2, 
1890,  against  trusts  and  monopolies  affecting  interstate  com- 
11808— VOL  2—06  M 67 


INDEX — ^DIGEST. 


COMBINATIONS,  CONSPIRACIES,  CONTRACTS,  ETC.— Cont'd. 

I.  Ix  General— Continued. 

merce,  the  existence  of  an  illegal  combination  among  tbe 
defendants  is  to  be  determined  not  alone  from  what  appears 
on  the  face  of  the  preamble,  rales,  and  by-laws  of  their  asso- 
ciation, but  from  the  entire  situation,  and  the  practical  work- 
ing and  results  of  their  methods  of  doing  business,  as  dis- 
closed by  the  evidence.     V.  8.  v.  Hopkins,  82  F.,  529.    1—725 

7.  The  only  question  in  each  case  where  the  validity  of  a  contract 
or  combination  under  the  la^  is  involved  is  whether  or  not 
its  necessary  effect  is  to  restrain  interstate  commerce. 
Chesapeake  d  O.  Fuel  Co.  v.  U.  8.,  115  F.,  610.  2—151 

S.  In  determining  whether  or  not  a  combination  is  in  violation  of 
the  Federal  Anti-Trust  Law,  as  in  restraint  of  interstate 
commerce,  it  is  immaterial  that  such  is  not  its  ultimate  ob- 
ject, which  is  in  most  cases  to  increase  the  trade  and  profits 
of  the  parties  to  such  combination;  nor  is  it  material  to 
ascertain  what  proportion  the  resulting,  restraint  of  inter- 
state commerce  bears  to  other  results.  The  true  inquiry  is 
whether  if  tends  directly  to  appreciably  restrain  interstate 
trade,  and,  if  it  does,  it  is  within  the  statute,  although  such 
effect  may  not  be  so  considerable  as  its  other  effects.  Ellis 
v.  Inman,  Poulsen  d  Co.,  131  F.,  182.  2 — 577 

».  The  test  of  the  violaJ:ion  of  the  Anti-Trust  Act  of  July  2,  1890 
(26  Stat,  209),  by  a  contract  or  combination  is  its  effect  upon 
competition  in  commerce  among  the  States.  If  its  necessary 
effect  is  to  stifle  or  to  directly  and  substantially  restrict  in- 
terstate commerce,  it  falls  under  the  ban  of  the  law,  but  if 
it  promotes  or  only  incidentally  or  indirectly  restricts  com- 
petition, while  its  main  purpose  and  chief  effect  are  to  pro- 
mote the  business  and  increase  the  trade  of  the  makers,  it 
is  not  denounced  or  avoided  by  that  law.  Phillips  v.  lola 
Portland  Cement  Co.,  125  F.,  593.  2—284 

10.  To  render  a  combination  unlawful  under  the  Anti-Trust  Act  of 

1890  it  need  not  be  one  which  by  its  terms  refers  to  inter- 
state commerce,  but  it  is  sufficient  if  its  purpose  and  effect 
are  necessarily  to  restrain  interstate  trade.  Oibhs  v.  Mc- 
Weeletf,  118  F.,  120.  2—194 

11.  Act  Includes  every  Combination  which  Directly  and  Substan- 

tially Restricts  Interstate  Commerce. — ^The  generality  of  the 
language  used  in  the  Anti-Trust  Act  of  1890  (26  Stat,  209), 
declaring  illegal  '*  every  contract,  combination,  or  conspiracy 
in  restraint  of  trade  or  commerce  among  the  several  States 
or  with  foreign  nations,"  indicates  the  purpose  of  Congress 
to  include  in  the  prohibition  every  combination  which 
directly  and  substantially  restricts  Interstate  commerce, 
whatever  its  form.  V,  8,  v.  Northern  Securities  Co.,  120  F., 
721.  2—215 


INDEX — ^DIGEST. 


1055 


COMBINATIONS,  CONSPIRACIES,  CONTRACTS,  ETC. -Cont'd. 

I.  In  General— Continued. 

12.  Same— Applies  to  Interstate  Carriers.— The  Anti-Trust  Act  (act 

July  2,  1890,  2G  Stat,  209)  applies  to  interstate  carriers  of 
freight  and  passengers,  and  any  contract  or  combination 
which  directly  and  substantially  restricts  the  right  of  such 
a  carrier  to  fix  its  own  rates  independently  of  its  natural 
competitors  places  a  direct  restraint  upon  interstate  com- 
merce, in  that  it  tends  to  prevent  competition,  and  is  in 
violation  of  the  act,  whether  the  rates  actually  fixed  be 
reasonable  or  unreasonable.  /^ 

Decree  affirmed,  193  U.  S.,  197  (2—338). 

13.  Same.— The  act  is  not  limited  to  restraints  of  interstate  and 

international  trade  or  commerce  that  are  unreasonable  in 
their  nature,  but  embraces  all  direct  restraints,  reasonable 
or  unreasonable,  imposed  by  any  combination,  conspiracy,  or 
monopoly  upon  such  trade  or  commerce.  U.  8.  v.  Northern 
Securities  Co.,  193  U.  S.,  197.  2—340 

14.  When  the  direct,  immediate,  and  intended  effect  of  a  contract 

or  combination  among  dealers  in  a  commodity  is  the  en- 
hancement of  its  price,  it  amounts  to  a  restraint  of  trade  in 
the  coumiodity,  even  though  contracts  to  buy  it  at  the  en- 
hanced price  are  being  made.  Addyston  Pipe  d  8teel  Co. 
V.  Utiiicd  States,  175  U.  S.,  211.  1—1010 

15.  It  does  not  matter  that  a  combination  embraces  restraint  of 

trade  within  a  single  State  if  it  also  embraces  and  is 
directed  against  commerce  among  the  States.  Sivift  d  Co. 
V.  United  States,  196  U.  S.,  375.  2— C41 

8ce  also  U.  8.  v.  Mac  Andrews  d  Forbes  Co.,  149  F.,  824. 
3.  Contracts  not  enforceable. 

16.  Contracts  that  were  in  unreasonable  restraint  of  trade  at  com- 

mon law  were  not  unlawful  in  the  sense  of  being  criminal,  or 
as  giving  rise  to  an  action  for  damages  to  one  prejudicially 
affected  thereby,  but  were  simply  void  and  not  enforceable. 
V.  8.  V.  Addyston  Pipe  and  Steel  Co.,  85  F.,  271.  1—772 

17.  A  contract  made  in  pursuance  or  a  combination  of  manufac^ 

turers  seeliing  to  restrict  the  production  and  keep  up  the 
prices  of  wooden  dishes  throughout  the  counti-y,  whereby  a 
manufacturer  was  guarantied  a  certain  sum  as  dividends  on 
his  stock  in  the  central  company,  in  consideration  of  the 
closing  of  his  factory  for  a  year,  held  to  be  contran^  to 
public  policy,  and  therefore  unlawful,  and  not  enforceable 
by  the  courts.    Cravens  v.  Carter-Vrumc  Co.,  92  F..  479. 

1 933 

18.  Can  not  Enforce  Sale  of  a  Business  Which  was  to  Constitute 

Part  of  an  Illegal  Combination  or  Trust.— Defendant  and  his 
partner  sold  their  bakery  business  to  complainant  corpora- 
tion, receiving  payment  in  its  stock,  and  defendant  leased  to 
it  the  premises  ^^'llere  the  business  was  conducted  and  con- 


1056 


INDEX — DIGEST. 


COMBIHATIOirS,  OOlfSPIBACIBS,  CONTRACTS,  ETC  — Cunt'd. 

I.  In  Gbneril — Ck>ntiniied. 

tracted  to  carry  it  on  as  the  purchaser's  ageot,  for  a  salary. 
After  operating  under  this  arniugement  for  a  time,  he  re- 
pudiated the  sale,  resumed  possession  under  the  old  firm 
name,  and  refused  to  account  to  complainant.  The  bill  was 
brought  to  enjoin  him  from  asserting  a  hostile  claim,  for  an 
accounting,  and  a  receiver.  Defendant,  and  his  partner  as 
intervenor,  tiled  a  cross-bill  for  rescis-^iion  of  the  sale  for 
fraudulent  representations,  and  tendereil  back  the  stock. 
Complainant  was  practically  a  "  trust,"  organized  to  mo- 
nopolize the  business,  and  had  already  secured  control  of  35 
leading  bakeries  in  12  different  Statw.  Held,  that,  while  a 
case  was  made  for  a  receiver,  pending  litigation  between 
ordinary  parties,  the  prayer  would  be  denied,  as  equity 
would  not  encourage  a  combination  in  restraint  of  trade, 
and  probably  illegal,  under  act  of  Congress,  July  2,  1890,  "  to 
protect  trade  and  commerce  against  unlawful  restraints  and 
monopolies,"  and  act  of  Ijouisiana,  July  5,  1890,  for  the  same 
purpose.    Amer,  Biscuit  d  Ufg,  Co.  v.  Klotz,  44  F..  721. 

1—2 

19.  A  railroad  company,  belonging  to  an  illegal  combination  in 
violation  of  the  Anti-Trust  Law,  can  not  invoke  the  aid  of  a 
Federal  court  of  equity  for  the  protection  of  its  Tighti 
claimed  under  contracts  which  were  the  direct  result  and 
evidence  of  such  unlawful  combination.  Delaware,  L.  <C-  W. 
E.  Co.  V.  Frank,  110  F.,  689.  2—82 

90.  Illegal  Condition  as  Consideration — Effect  of  Nonperformance. — 
Bebate  vouchers  issued  by  a  distilling  company  to  customers, 
by  which  It  promised  to  refund  a  certain  sum  per  gallon  on 
their  purchases  at  the  end  of  six  months,  on  condition  of 
their  purchasing  exclusively  from  the  company  during  that 
time,  can  not  be  enforced,  either  at  law  or  in  equity,  where 
the  condition  has  not  been  performed,  though  such  condition 
be  illegal,  as  in  restraint  of  trade,  there  being  no  other  con- 
sideration for  the  promise.  77  Fed.,  700,  affirmed.  Dennehy 
V.  McNuUa,  86  F.,  825.  1—855 

4.  What  constitutes  monopolizing,  unlawful  comhinatimi,  etc. 

SI.  To  constitute  the  offense  of  "monopolizing,  or  attempting  to 
monopolize,"  trade  or  commerce  among  the  States,  within 
the  meaning  of  section  2  of  the  Anti-Trust  Act  of  1890,  it  is 
necessary  to  acquire,  or  attempt  to  acquire,  an  exclusive 
right  in  such  commerce  by  means  which  will  prevent  others 
from  engagaing  therein.     In  re  Greene,  52  F.,  104.         1 — 55 

82.  "Unlawful  Combination. — To  render  a  combination  unlawful 
under  the  Anti-Trust  Act  of  1890  it  need  not  be  one  which 
by  its  terms  refers  to  interstate  commerce,  but  it  is  suifi- 
cient  If  its  purpose  and  effect  are  necessarily  to  restrain  in- 
terstate trade.    (Hbhs  v.  McNeeley,  118  F.,  120.  2—194 


INDEX — ^DIGEST. 


1057 


COMBINATIONS,  CONSPIRACIES,  CONTRACTS,  ETC. -Cont'd. 

I.  In  General — Continued. 

28.  Combination  of  lawful  Elements  of  an  Unlawful  Scheme.— 
Even  if  the  separate  elements  of  a  scheme  are  lawful, 
when  they  are  bound  together  by  a  common  intent  as  parts 
of  an  unlawful  scheme  to  monopolize  interstate  commerce 
the  plan  may  make  the  parts  unlawful.  Swift  d  Co.  v. 
United  States,  196  U.  S.,  375.  2—641 

5.  Liability. 

24.  Liability  of  Members  of  Combination. — Every  member  of  an 
illegal  combination  in  restraint  of  interstate  trade  or  com- 
merce in  violation  of  the  Anti-Trust  Act  is  liable  for  the 
damages  resulting  to  the  business  or  property  of  a  plaintiff 
by  reason  of  such  combination,  and  it  is  immaterial  that 
there  were  no  direct  c-ontract  relations  bet\^'eeu  plaintiff 
and  defendant.  City  of  Atlanta  v.  Chattanooga  Foundry  d 
Pipe  Works,  127  F.,  23.  2—299 

Enfobcement  of  Contracts  and  Collection  of  Debts.  See 
Actions  and  Defenses. 

Recoveby.    See  Actions  and  Defenses. 

Defenses.    See  Actions  and  Defenses,  II. 

II.  Prohibited. 

J.  Agreements,  contracts,  or  comhinations  to  establish,  maintain,  raise, 
or  control  the  prices,  production,  or  output  of 
.  articles  or  commodities. 
25.  Coal — Agreement  Between  Mining  Companies  and  Coal  Dealers 
to  Control  the  Price  of  Coal.— An  agreement  hcttvcen  coal- 
mining companies  operating  chiefly  in  one  State  and  dealers 
in  coal  in  a  city  in  another  State,  creating  a  coal  exchange 
to  advance  the  interests  of  the  coal  business,  to  treat  all 
parties  to  the  business  in  a  fair  and  equitable  manner,  and 
to  establish  the  priee  of  coal,  and  change  the  same  from 
time  to  time,  by  which  it  was  agreed  that  the  price  of  the 
coal  at  the  mines  should  be  4i  cents,  the  freight  being  4 
cents,  and  the  margin  of  the  dealer  should  be  4i  cents,  mak- 
ing the  price  to  the  consumer  13  cents,  and  that,  whenever 
the  price  of  the  coal   is  advanced  beyond  an  advance  in 
freights,  one-half  the  advance  shall  go  to  the  mine  owner 
and  the  other  half  to  the  dealer,  and  a  penalty  was  provided 
by  fine  of  any  member  selling  coal  at  a  less  price  than  the 
price  fixed  by  the  exchange,  and  by  which  it  was  forbidden 
for  oimiers  or  operators  of  mines  to  sell  coal  to  any  person 
other  than  members  of  the  organization,  and  for  dealers  to 
purchase  of  miners  who  were  not  members,  but  exempting 
coal  used  for  manufacturing  and  steamboat  purposes  from 
the  prices  prescribed  until  all  the  mines  tributary  to  that 
market  should  come  into  the  exchange,  or  until  the  exchange 


1058 


INDEX — DIGEST. 


COMBINATIONS,  CONSPIBACIES,  CONTRACTS,  ETC.-Cont'd. 

II.  Froiiibited— Cotitinued. 
could  control  the  prices  of  coal  used  by  manufacturers,  is 
within  the  4anguage  of  act  of  July  2,  1890,  declaring  "  every 
contract  or  combination  in  the  form  of  a  trust  or  otherwise, 
or  conspiracy  in  restraint  of  trade  or  commerce  among  the 
several  States,"  and  also  the  monopolizing,  or  combination 
with  another  to  monoixjlize,  trade  or  commerce  among  the 
several  States  a  misdemeanor.  V.  8.  v.  Jellico  Mtn.  Coal  & 
Coke  Co.,  46  F.,  432.  i_9 

M.  A  combination  between  importers  of  coal  from  other  States 
and  foreign  countries  with  a  local  coal  dealers'  association, 
regulating  arbitrarily  the  retail  prices  of  coal  and  providing 
against  free  competition,  is  one  in  restraint  of  interstate 
commerce  within  the  meaning  of  the  act  of  1890.     U.  S,  v. 

Coal  Dealers'  Assn.  of  Cal,  85  F.,  252.  1 749 

S7.  Contract  Between  a  Fnel  Company  and  a  Combination  of  Coal 
Producers  who  Sought  to  Regulate  the  Production  and  Price 
of  Coal. — ^A  contract  by  which  a  corporation  agrees  to  take 
the  entire  product  of  a  number  of  independent  persons,  firms, 
and  corporations  engaged  in  mining  coal  and  maldng  colie 
in  a  certain  district,  which  is  intended  for  "western  ship- 
ment" over  a  leading  route  of  transportation,  to  sell  the 
same  at  not  less  than  a  minimum  price,  to  be  fixed  by  an 
executive  committee  appointed  by  the  producers,  and  to  ac- 
count for  and  pay  over  to  such  producers  the  entire  proceeds 
above  a  fixed  sum  per  ton  to  be  retained  as  "compensation," 
the  stated  purpose  being  to  *'  enlarge  the  western  market," 
and  under  which  the  shipments  are  made  into  other  States, 
is  illegal  under  the  Anti-Trust  Law,  as  in  restraint  of  inter- 
state commerce,  and  as  tending  to  create  a  monopoly.  U.  S. 
V.  Chempeake  d  Ohio  Fuel  Co.,  105  F.,  93.  2—34 

Affirmed,  115  F.,  CIO  (2—151). 
L  Copyrighted  Books— Combination  of  Publishers  and  Book- 
sellers Throughout  the  Fnited  States  for  the  Purpose  of 
Maintaining  Prices  on  Copyrighted  Books.— Tlie  organization 
and  combination  of  the  publishers  and  booksellers  of  the 
United  States  into  two  membei-ship  associations,  one  known 
as  the  "American  Publishers'  Association  "  and  the  otheif 
as  the  "American  Booksellers'  Association,"  whereby  they 
together  controlled  the  publication  and  sale  of  at  least  90 
per  cent  of  all  copyrighted  books,  the  object  being  to  compel 
owners  and  dealers  of  such  books  to  purchase  them  of  the 
members  of  the  combination  at  an  arbitrary  price  fixed  by  It. 
regardless  of  the  actual  value  of  the  books  as  determined  by 
a.  demand  In  an  open  market,  or  the  condition  of  the  books, 
and  to  compel  all  publishers  and  dealers  of  such  books  to 
co»e  int*  the  combination,  be  controlled  by  it,  and  sell  books 
at  prices  fixed  by  it,  regardless  of  the  value  of  the  books  or 


INDEX — DIGEST. 


1059 


COMBINATIONS,  CONSPIRACIES,  CONTRACTS,  ETC.— Cont'd. 

II.  Prohibited — Continwed. 

of  the  exigencies  of  the  trade  and  situation  of  the  seller,  or 
be  deprived  of  the  privilege  of  purchasing,  owning,  and  sell- 
ing such  books  through  a  system  of  blacklisting,  etc.,  the 
effect  of  which  would  be  to  cripple  the  business  of  any  pub- 
lisher or  bookseller  outside  of  the  combination — was  in 
violation  of  the  Anti-Trust  Law  of  July  2,  1890  (26  Stat., 
209).    Bohhs-Merrill  Co.  v.  Straus,  139  F.,  155.  2—755 

29.  Drugs — Combination  of  Separate  Associations  of  the  Manufac- 

turers, Wholesalers,  and  Retailers  of  Drugs,  to  fix  Arbitrarily 
the  Prices  of  Such  Articles. — Where  three  voluntary  associa- 
tions, composed  of  the  manufacturers,  wholesalers,  and  re- 
tailers, respectively,  of  drugs,  proprietary  medicines,  etc., 
were  organized  to  arbitrarily  fix  a  minimum  retail  price  for 
such  articles,  which  were  of  universal  consumption  and 
were  of  absolute  and  daily  necessity,  and  then  restricted  the 
sale  of  such  articles  to  such  retailers  only  as  conducted 
their  retail  business  in  accordance  with  the  arbitrary  stand- 
ard of  prices,  such  combination  was  in  restraint  of  inter- 
state commerce  in  the  drug  trade  in  so  far  as  it  excluded 
"aggressive  cutters"  of  prices  and  those  V ho  dealt  with 
them,  and  was  in  violation  of  act  of  July  2,  1890  (26  Stat., 
209),  prohibiting  monopolies  in  restraint  of  interstate  trade 
and  commerce,  etc.  Loder  v.  Jayne,  142  F.,  1010.  2 — 970 
Judgment  reversed  by  the  Circuit  Court  of  Appeals  (149  F., 
21 ) ,  but  upon  other  grounds  than  aljove. 

30.  Lumber — Combination    of    Local    Lumber    Dealers    Seeking    to 

Raise  and  Maintain  Price  of  Lumber  by  Refusing  to  Sell  to 
Consumers  who  Bought  from  Outside  Parties,  some  of  such 
Mills  being  Located  in  a  Neighboring  State. — A  complaint 
alleged  that  plaintiff  was  a  builder  doing  business  in  Port- 
land, Oreg. ;  that  in  such  business  he  purchased  large  quan- 
tities of  rough  lumber  from  fliills  located  at  Vancouver, 
Wash.,  which  was  7  miles  from  Portland,  but  that  such 
mills  did  not  manufacture  finished  or  kiln-dried  lumber; 
that  defendants,  who  comprised  all  the  manufacturers  and 
dealers  in  Portland,  combined  to  fix  exorbitant  prices  on  all 
lumber  sold  by  them,  and  to  compel  all  consumers  in  Port- 
land to  pay  such  prices  by  refusing  to  sell  any  finished  lum- 
ber at  any  price  to  such  consumers  as  bought  lumber  of  any 
kind  from  other  dealers,  except  on  condition  that  such  con- 
sumer pays  to  defendants  the  difference  between  the  price  he 
paid  for  lumber  so  bought  from  others  and  the  price  charged 
therefor  by  defendants  and  promises  to  buy  all  his  lumber 
thereafter  from  defendants;  that  the  purpose  and  effect  of 
such  combination  was  to  prevent  plaintiff  and  other  consum- 
ers from  buying  lumber  at  Washington  mills,  and  to  obtain  a 
monopoly   of   the   trade   in    Portland   at   unreasonable   and 


INDEX — ^DIGEST. 


COMBINATIONS,  CONSPIRACIES,  CONTBACTS,  ETC. -Cont'd. 

II.  Proh I BiTKi>— Continued . 

exorbitant  i)riees.  Held,  that  the  combination  charged  con- 
stituted a  Tiolation  of  the  Federal  Anti-Tmst  Act,  its  effect 
being  to  direitly  restrain  interstate  commerce,  and  that  the 
complaint  stated  a  cause  of  action  thereunder  for  the  re- 
covery of  damages  alleged  to  have  resulted  to  plaintiffs. 
Ellis  V.  Itiman,  PouUen  d  Co,,  131  F.,  182.  il— 577 

Reversing,  124  F.,  956  {8—208). 

II.  Same.— In  determliiiiig  whether  or  not  a  oomhination  fs  in 
¥iolation  of  the  Federal  Anti-Tmst  Law,  as  in  restraint  *of 
interstate  commerce.  It  is  immaterial  that  such  is  not  its 
uHiniate  object,  which  is  In  most  cases  to  increase  the  trade 
and  profits  of  tlie  parties  to  such  combination;  nor  is  It 
material  to  ascertain  what  proportion  the  resulting  restraint 
of  interstate  commerce  bears  to  other  results.  The  true 
inquiry  Is  whether  it  tends  directly  to  appreciably  restrain 
interstate  trade,  and,  if  it  does,  it  is  within  the  statute, 
although  such  effect  may  not  be  so  considerable  as  its  other 
effects.  /6. 

St.  medCedaj  SMngles.— An  association  of  manufacturers  of  and 
dealers  in  red  cedar  shingles  in  the  State  of  Washington 
formed  for  the  purpose  of  controlling  the  production  and  the 
price  of  such  shingles,  which  are  made  only  in  that  State, 
but  are  principally  sold  and  mied  in  other  States,  and  which, 
by  its  acticn  in  closing  the  mills  of  Its  memliers,  has  re- 
duced the  production,  and  has  also  arbitrarily  increased  the 
prices  at  which  the  product  is  sold,  is  a  combination  in  re- 
straint of  interstate  conmierce,  and  unlawful  under  the  Anti- 
Trust  Law  of  July  2,  1890.    Oibhs  v.  McXeeleu,  118  F.,  120. 

fl>      HVi 

A        I  trt 

3S.  Tiles— Combinations  to  Raise  Prices  of  Tiles,  etc.,  and  Control 
Output.— A  complaint  alleging  that  members  of  an  associa- 
tion have  conspired  and  combined  to  raise  the  prices  of  tiles, 
mantels,  and  grates,  to  control  the  output,  and  to  regulate 
the  prices  thereof,  with  the  intent  to  monopolize  the  trade 
and  commerce  between  the  other  States  and  California  in 
regard  thereto,  as  well  as  to  arbitrarily  fix  their  prices  in- 
dependently of  their  natural  market  value,  brings  the  case 
within  the  Anti-Tmst  Act  of  July  2,  1890  (26  Stat,  209). 
Loicrif  V.  Tile,  Mantel  d  Qrate  Asm.  of  Cal,  98  F.,  817. 

1—995 
34.  Same— Combination  of  Tile  Manufacturers  in  California  and 
Adjoining  States  Agreeing  not  to  Sell  to  or  Purchase  from 
Dealers  not  Members.— The  Tile,  Mantel  and  Grate  Associa- 
tion of  California  was  organized  by  defendants,  who  were 
dealers  in  tiles  and  similar  articles,  for  the  declared  purpose 
of  uniting  "all  acceptable  dealers"  in  tiles,  fireplace  fix- 
tures, and  mantels  in  San  Francisco  and  vicinity   (within 


INDEX — ^DIGEST. 


1061 


COMBINATIONS,  CONSPIRACIES,  CONTRACTS,  ETC.— Cont'd. 

II.  Prohibited — Continued, 
a  radius  of  200  miles),  and  all  American  manufacturers  of 
tiles  and  fireplace  fixtures.  The  articles  prescribed  that 
other  local  dealers  who  had  an  established  business  and  car- 
ried a  stock  of  a  stated  Value,  and  who  were  "  acceptable," 
might,  on  motion  of  a  member,  be  permitted  to  join,  and  that 
all  manufacturers  of  tiles  in  the  United  States  might  become 
members  by  signing  the  constitution  and  paying  an  entrance 
fee.  The  local  members  were  bound  by  the  articles  not  to 
buy  goods  from  any  manufacturer  who  was  not  a  member 
nor  to  sell  goods  to  other  dealers  not  members  at  less  than 
list  price,  which  was  about  double  the  market  price,  and  the 
manufacturing  members  were  bound  not  to  sell  to  any  dealer 
within  the  prescribed  territory  who  was  not  a  member. 
Held,  That  such  association  was  a  combination  in  restraint 
of  trade  among  the  States,  illegal  under  section  1  of  the 
Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209),  and  also  an 
attempt  to  monopolize  a  part  of  the  trade  and  commerce 
among  the  States,  within  the  prohibition  of  section  2,  by 
shutting  out  from  such  trade  all  local  dealers  who  were  not 
.  member?,  and  that  defendants  were  liable  in  damages,  under 
section  7  of  the  act,  to  such  a  dealer  to  whom  a  manufac- 
turer in  another  State  refused  to  sell  tiles,  as  it  had  pre- 
viously done,  on  the  sole  ground  that  such  dealer  was  not  a 
member  of  the  association.    Motftague  v.  Loicry,  115  F.,  27. 

2—112 
Affirming  Lowry  v.  Tile,  Mantel  and  Grate  Assn.  of  CaL,  106 
F.,  38  (2—53). 

35.  Same — An  Association  of  Dealers  in  Tiles  Agreeing  Not  to  Pur- 
chase from  Nonmembers  or  to  Sell  to  Them  Except  at  an 
Advance  of  50  per  cent  on  Price  to  Members.— An  association 
of  wholesale  dealers  in  tiles,  mantels,  anxl  grates  in  Cali- 
fornia and  vicinity,  and  manufacturers  in  other  States,  of 
tiles  and  fireplace  fixtures,  in  which  the  dealers  agree  not 
to  purchase  from  manufacturers  not  members  of  the  associa- 
tion, and  not  to  sell  unset  tile  to  nonmembers  for  less  than 
list  prices,  which  are  more  than  50  per  cent  higher  than 
prices  to  members,  while  the  manufacturers  agree  not  to  sell 
their  products  or  wares  to  nonmembers  at  any  price,  under 
penalty  of  forfeiture  of  membership,  is  an  agreement  or 
combination  in  restraint  of  trade  within  the  meaning  of  the 
Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209).  Montague  d 
Co.  V.  Lowry,  193  U.  S.,  38.  2—327 

86.  Same— Where  the  Sales  were  Made  within  the  State.— Although 
the  sales  in  question  were  within  the  State  of  California 
and  although  such  sales  constituted  a  very  small  portion  of 
the  trade  involved,  the  agreement  of  manufacturers  without 
the  State  not  to  sell  to  anyone  but  members  was  part  of 


1062 


INDEX — DIGEST. 


COMBINATIONS,  CONSPIRACIES,  CONTRACTS,  ETC.-Cont'd. 

II.  Pbohibited — Continued. 
a  scheme  which  included  the  enhancement  of  the  price 
of  unset  tiles  by  the  dealers  within  the  State,  and  the 
whole  thing  was  so  bound  together  that  the  transactions 
within  the  State  were  inseparable  and  became  a  part  of  a 
purpose  which  when  carried  out  amounted  to,  and  was,  a 
combination  in  restraint  of  interstate  trade  and  commerce. 
AMyston  Pipe  &  Steel  Co.  v.  United  States,  175  U.  S.,  211» 
followed;  Hopkins  v.  United  States,  171  U.  S.,  578 j  Ander- 
son V.  United  States,  171  U.  S.,  G04,  distinguished.  lb. 
87.  Same. — The  parties  aggrieved,  being  a  firm  of  dealers  in  tiles, 
mantels,  and  grates,  in  San  Francisco,  whose  members  had 
never  been  aslvcd  to  join  the  association  and  who  bad  never 
applied  for  admission  therein,  and  which  did  not  always 
carry  |3,0C0  worth  of  stock,  as  required  by  the  rules  of  the 
association  as  one  of  the  conditions  of  membership,  are  en- 
titled to  recovery  under  section  7  of  the  act  of  July  2,  1890. 

[b. 

38.  Wooden  Dishes. — A  contract  made  in  pursuance  of  a  combina- 

tion of  manufacturers,  seelving  to  restrict  the  production 
and  keep  up  the  prices  of  wooden  dishes  throughout  the 
.country,  whereby  a  manufacturer  was  guaranteed  a  certain 
sum  as  dividends  on  his  stock  in  the  central  company  in 
consideration  of  the  closing  of  his  factory  for  a  year,  was 
contrary  to  public  policy  and  therefore  unlawful,  and  would 
not  be  enforced  by  the  courts.  Cravens  v.  Carter-Crume  Co,, 
92  F.,  479.  1—983 

Wall   Papeb.    See  Continental  Wall  Papeb  Co.   v.   Lewis 
VoiGHT  &  Sons  Co.,  148  F.,  939. 

Licorice   Paste.    See   U.    S.   u.   MacAndrews   &   Forbes   Co., 
149  F.,  824. 

2.  Combinations,  contracts,  etc.,  eliminating  competition   in   bidding. 

39.  Combination    of   Manufacturers — Dividing    Territory    and   Al- 

lotting Contracts  by  Pretended  Bids. — The  formation  of  a 
combination  by  a  number  of  companies  manufacturing  iron 
pipe  in  different  States,  whereby  the  territory  in  which  they 
operate  (comprising  a  large  part  of  the  United  States)  is 
divided  into  "  reserved  "  cities  and  "  pay  "  territory,  the  re- 
served cities  being  allotted  to  particular  members  of  the 
combination,  free  of  competition  from  the  others,  though 
provision  is  made  for  pretended  bids  by  the  latter  at  prices 
previously  arranged,  and  when  all  offers  to  purchase  pipe 
in  the  pay  territory  are  submitted  to  a  committee,  which 
determines  the  price,  and  then  awards  the  contract  to  that 
member  of  the  combination  which  agrees  to  pay  the  largest 
"  bonus,"  to  be  divided  among  the  others,  is  unlawful,  both 
at  common  law  and  under  the  act  of  1890,  against  trusts  and 


INDEX — DIGEST. 


1063 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont'd. 

II.  Prohibited — Continued. 

monopolies.  U.  S.  v.' Addpston  Pipe  and  Steel  Co.,  85  F., 
271.  1—772 

Reversing,  78  Fed.,  712  (1— C31). 

40.  Combinations  to  Enter  into  Public  Bidding  for  Contracts,  but 

Where  only  One  of  the  Combination  Really  Bids,  the  Others 
Being  Required  to  Bid  Above  Him. — An  agreement  or  com- 
bination between  corporations  engaged  in  the  manufacture, 
sale,  and  transportation  of  iron  pipe,  under  which  they  enter 
into  public  bidding  for  contracts,  not  in  truth  as  competitors, 
but  under  an  arrangement  which  eliminates  all  competition 
between  them  for  the  contract  and  permits  one  of  their  num- 
ber to  malvc  his  own  bid,  while  the  others  are  required  to  bid 
over  him,  is  in  violation  of  the  Anti-Trust  Act  of  July  2, 
1890,  so  far  as  it  applies  to  sales  for  delivery  beyond  the 
State  in  which  the  sale  is  made.  Addiston  Pipe  and  Steel 
Co.  V.  U.  S.,  175  U.  S.,  211.  1—1000 

Allirming  85  F.,  271  (1—772). 

41.  Same. — A  combination  may  Illegally  restrain  trade  by  prevent- 

ing competition  for  contracts  and  enhancing  prices,  although 
it  does  not  prevent  the  letting  of  any  particular  contract.    lb. 

42.  Same — Where  Goods  are  to  be  Delivered  in  the  State.-^A  com- 

bination to  restrain  competition  in  proposals  for  contracts 
for  the  sale  of  certain  articles  which  are  to  be  delivered  in 
the  State  in  which  some  of  the  parties  to  the  combination 
reside  and  carry  on  business  is  not,  so  far  as  those  members 
are  concerned,  in  violation  of  the  Anti-Trust  Law,  although 
the  contract  may  be  awarded  to  some  party  outside  the 
State  as  the  lowest  bidder.  lb. 

43.  Same. — Any  agreement  or  combination  which  directly  operates, 

not  alone  upon  the  manufacture,  but  upon  the  sale,  trans- 
portation, and  delivery  of  an  article  of  interstate  commerce, 
by  preventing  or  restricting  its  sale,  thereby  regulates  inter- 
state commerce  to  that  extent,  and  thus  trenches  upon  the 
l)ower  of  the  national  legislature,  and  violates  the  statute. 

lb. 

44.  Same. — When  the  direct,  immediate,  and  intended  effect  of  a 

contract  or  combination  among  dealers  in  a  commodity  is 
the  enhancement  of  its  price,  it  amounts  to  a  restraint  of 
trade  in  the  commodity,  even  though  contracts  to  buy  it  at 
the  enhanced  price  are  being  made.  •  /ft 

45.  Same. — The  contracts  considered  in  this  case,  set  forth  in  the 

statement  of  facts  and  in  the  opinion  of  the  court,  relate  to 
the  sale  and  transportation  toother  States  of  specific  articles, 
not  incidentally  or  collaterally,  but  as  a  direct  and  imme- 
diate result  of  the  combination  entered  into  by  the  defend- 
ants; and  they  restrain  the  manufacturing,  purchase,  sale, 
or  exchange  of  the  manufactured  articles  among  the  several 


1064 


INDE^ — ^DIGEST. 


COMBINATIONS,    CONSPIBACIES,   CONTBACTS,   ETC.— Cont'd. 

II.  Prohibiteii — Continued. 
States,  and  enhance  their  value,  and  thus  come  within  the 
provisions   of   the    "act    to   protect   trade   and   commerce 
against  unlawful  restraints  and  monopolies."  lb, 

46.  Same.— The  judgment  of  the  court  below,  which  perpetually 

enjoined  the  defendants  In  the  court  below  from  maintain- 
ing the  combination  in  cast-iron  pipe  as  described  in  the 
petition,  and  from  doing  any  business  under  such  combina- 
tion, is  too  broad,  as  it  applies  equally  to  commerce  which  is 
wholly  within  a  State  as  well  as  to  that  which  is  interstate 
or  international  only.  /ft. 

47.  Agreement  Between  live-Stock  Buyers  not  to  Bid  Against  Each 

Other,  etc. — ^An  agreement  tetween  corporations  and  indi- 
viduals, etc.,  engaged  in  buying  live  stock  at  divers  points 
thronghont  the  TTnited  States,  to  refrain  from  bidding  against 
each  other  in  the  purchase  of  cattle  is  combination  in  re- 
straint of  trade;  so  also  their  agreement  to  bid  up  prices 
to  stimulate  shipments,  intending  to  cease  from  bidding 
when  the  shipments  have  arrived,  and  the  same  result  fol- 
lows from  the  conibiuiition  of  defendants  to  fix  prices  upon 
and  restrict  the  quantities  of  meat  shipped  to  their  agents 
•  or  their  customers.  Being  restriction  upon  competition,  such 
agreements  are  combination  in  restraint  of  trade.  U.  8.  v. 
Swift  d  Co.,  122  F.,  529.  2—237 

48.  Same.— Eestraint  of  trade  is  mot  dependent  upon  any  considera- 

tion of  reasonableness  or  nnreasonableness  in  the  combina- 
tion averred,  nor  is  it  to  be  tested  by  the  prices  that  i-esult 
from  the  combination.  The  statute  has  no  concern  with 
prices,  but  looks  solely  to  competition  and  to  the  giving  of 
eomi)etition  full  play  by  making  illegal  any  effort  at  re- 
striction upon  competition^  /ft. 

4S.  Same. — A  combination  of  a  dominant  proportion  of  the  dealers 
in  flresh  meat  thronghont  tlie  United  States  not  to  bid 
against,  or  only  in  conjunction  with,  each  other  in  order  to 
regulate  prices  in  and  Induce  shipments  to  the  live-stock 
markets  in  other  States,  to  restrict  shipments,  establish  uni- 
form rules  of  credit,  make  uniform  and  improi)er  rules  of 
cartage,  and  to  get  less  than  lawful  rates  from  railroads 
to  the  exclusion  of  comi^etitors  with  Intent  to  monopolize 
commerce  among  the  States,  is  an  illegal  combination  within 
tlie  meaning  and  prohibition  of  the  act  of  July  2,  1890  (26 
Stat,  209) ,  and  can  be  restrained  and  enjoined  in  an  action 
by  the  United  States.  Stvift  d  Co,  v.  United  States,  196 
U.  S.,  375.  a— 041 

iO.  Same. — It  does  not  matter  that  a  combination  of  this  nature 
embraces  restraint  and  monopoly  of  trade  within  a  single 
State  if  it  also  embraces  and  is  directed  against  commerce 
among  the  States.  /ft^ 


INDEX — DIGEST. 


1065 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont'd. 

II.  Prohibited— Continued. 

51.  Same.— The  effect  of  such  a  combination  upon  interstate  com- 

merce is  direct  and  not  accidental,  secondary,  or  remote  as 
in  Vmtcd  States  v.  E.  V.  Knight  Co.,  156  U.  S.,  1.  /ft. 

52.  Same.— Even  if  the  separate  elements  of  such  a  scheme  are  law- 

ful, when  they  are  bound  together  by  a  common  intent  as 
parts  of  an  unlawful  scheme  to  monopolize  intei-state  com- 
merce the  plan  may  make  the  parts  unlawful.  /ft. 

53.  Same.— When  cattle  are  sent  for  sale  from  a  place  in  one  State, 

with  the  expectation  they  will  end  their  transit,  after  pur- 
chase, in  another  State,  and  when  in  effect  they  do  so,  with 
only  the  interruption  necessary  to  find  a  purchaser  at  the 
stock  yards,  and  when  this  is  a  constantly  recurring  course, 
it  constitutes  interstate  commerce,  and  the  purchase  of  the 
cattle  is  an  incident  of  such  commerce.  /ft. 

S,  Contracts,  etc.,  in  restraint  of  interstate  trade  or  commerce. 

54.  Contracts,  Combinations,  etc..  Against  Public  Policy  and  Void 

Under  the  Common  Law.— The  contracts,  combinations  in  the 
form  of  trust  or  otherwise,  and  conspiracies  in  restraint  of 
trade  declared  to  be  illegal  in  the  Anti-Trust  Act  of  July  2, 
1890   (26  Stat,  209),  are  the  contracts,  combinations,  and 
conspiracies  in  restraint  of  trade  that  had  been  declared  by 
the  courts  to  be  against  public  policy  and  void  under  the 
common  law  before  the  passage  of  that  act.     V.  S.  v.  Trans- 
Mo.  Ft.  Assn.,  58  F.,  58.  1—186 
Case  reversed,  1G6  U.  S.,  290  (1—648). 
65.  Same.— The  test  of  the  validity  of  such  contracts  or  combina- 
tions is  not  the  existence  of  restriction  upon  competition 
imposed  thereby,  but  the  reasonableness  of  that  restriction 
under  the  facts  and  circumstances  of  each  particular  case. 
Public  welfare  is  first  considered,  and,  if  the  conti-act  or 
combination  appears  to  have  been  made  for  a  just  and  hon- 
est purpose,  and  the  restraint  upon  trade  is  not  specially  in- 
jurious to  the  public,  and  is  not  greater  than  the  protection 
of  the  legitimate  interests  of  the  party  in  whose  favor  the 
restraint  is   imposed  reasonably  requires,  the  contract  or 
combination  is  not  illegal.     Shiras,  district  judge,  dissent- 
ing on  the  ground  that  this  rule  is  not  applicable  to  corpora- 
tions charged  with  public  duties.  /^ 

56.  Agreements  Legal  when  Made  which  Violate  Act  of  1890.— 

The  agreement  of  the  Trans-Missouri  Freight  Association, 
in  regard  to  establishing  and  maintaining  railroad  rates' 
though  legal  when  made,  became  illegal  on  the  passage  of 
the  act  of  July  2,  1890,  and  acts  done  under  it  after  that 
statute  became  operative  were  done  in  violation  of  it 
U.  S.  V.  Trans-Mo.  Ft.  Assn.,  166  U.  S.,  290.  1—648 

57.  Contracts  in  Restraint  of  Trade— At  Common  Law.— Contracts 

that  were  in  unreasonable  restraint  of  trade  at  common  law 


1066 


INDEX — DIGEST. 


COMBINATIONS,    CONSPIBACIES,    CONTRACTS,   ETC.— Cont'd. 

II.  Prohibited— Continued. 
were  not  unlawful  in  tke  sense  of  Siting  criminal,  or  as  giv- 
ing rise  to  an  action  for  damages  to  one  prejudicially  affected 
tliereby,  but  were  simply  Void  and  not  enforceable.     U.  S.  v. 
AMi/-^ion  Pipe  and  Steel  Co.,  85  ¥.,  271.  1—772 

S8.  Same. — ^The  effect  of  the  Anti-Trust  Law  of  1890  is  to  render 
such  contracts,  as  applied  to  interstate  connnerce,  unlawful 
in  an  affirmative  or  positive  sense,  and  punishable  as  a  mis- 
demeanor, and  also  to  create  a  right  of  civil  action  for  dam- 
ages in  favor  of  persons  Injured  thereby,  and  a  remedy  by 
injunction  in  favor  both  of  private  i)ersons  and  the  public 
against  the  execution  of  such  contracts  and  the  maintenance 
'  of  such  trade  restraints.  /&. 

S0.  Contracts  or  combinations  which  impose  any  restraints  what- 
ever upon  interstate  commerce  are  unlawful  under  the  Anti- 
Trust  Law  of  July  2,  1800 ;  and  it  is  immaterial  whether  or 
not  the  restraint  is  a  fair  and  reasonable  one,  or  whether  it 
has  actually  resulted  in  increasing  the  price  of  the  commodity 
dealt  in.     V.  IS.  v.  Coal  Deulcrn'  Ahsu.  of  CaL,  85  F.,  252. 

1—719 

60.  Contracts  which  operate  as  a  restraint  upon  the  soliciting  of 

orders  for,  and  the  sale  of,  goods  in  one  State,  to  be  deliv- 
ered from  another,  are  contracts  in  restraint  of^iterstate 
commerce,  within  the  meaning  of  the  act  of  July  2,  1890. 
U.  S.  V.  E.  C.  Kniffht  Co.,  15  Sup.  Ct,  249 ;  15G  U.  S.,  1,  dis- 
tinguished.    U.  S.  V.  A4dyston  Pipe  d  Steel  Co.,  S5  F.,  271. 

1—772 

61.  To  render  a  combination  unlawful  under  the  Anti-Trust  Act  of 

1890  it  need  not  be  one  which  by  its  terms  refers  to  inter- 
state commerce,  but  it  is  sufHcient  if  its  purpose  and  effect 
are  necessarily  to  restrain  interstate  trade.  Oihbs  v.  Mc- 
Neeley,  118  F.,  120.  2-194 

6S.  Every  Contract,  Combination,  or  Conspiracy,  in  Whatever  Form, 
of  Whatever  Nature,  and  Whoever  May  be  Parties  to  it, 
which  Directly  or  of  Necessity  Operates  in  Restraint  of  In- 
terstate Trade  or  Commerce. — Although  the  act  of  Congress 
known  as  the  Anti-Trust  Act  has  no  reference  to  the  mere 
manufacture  or  production  of  articles  or  commodities  within 
the  limits  of  the  several  States,  it  embraces  and  declares  to 
be  illegal  every  contract,  combination,  or  conspiracy,  in 
whatever  form,  of  whatever  nature,  and  whoever  may  be 
parties  to  It  which  directly  or  necessarily  operates  in  re- 
straint of  trade  or  commerce  among  the  several  States  or 
with  foreign  nations.  Northern  Securities  Co.  v.  United 
States,  193  U.  S.,  197  (Harlan,  Brown,  McKenna,  Day). 

2—339 

63.  Same. — The  act  is  not  limited  to  restraints  of  interstate  and 
international  trade  or  commerce  that  are  unreasonable  in 


INDEX— DIGEST. 


1067 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont'd. 

II.  Prohibited — Continued. 

their  nature,  but  embraces  all  direct  restraints,  reasonable 
or  unreasonable,  imposed  by  any  combination,  conspiracy, 
or  monopoly  upon  such  trade  or  commerce.  lb. 

64.  Railroad  carriers  engaged  in  interstate  or  international  trade 

or  commerce  are  embraced  by  the  act.  /&. 

65.  Combinations,  even   among  private   manufacturers   or  dealers, 

whereby  interstate  or  international  commerce  is  restrained, 
or  commerce  are  embraced  by  the  act.  lb. 

66.  Every  combination  or  conspiracy  which  would  extinguish  com- 

petition between  otherwise  competing  railroads,  engaged  in 
interstate  trade  or  commerce,  and  which  would  in  that  way 
restrain  such  trade  or  commerce,  is  made  illegal  by  the  act. 

lb. 

67.  The  natural  effect  of  competition  is  to  increase  commerce,  and 

an  agreement  whose  direct  effect  is  to  prevent  this  play  of 
competition  restrains  instead  of  promotes  trade  and  com- 
merce, jif 

68.  The  Northern   Securities  Company  combination  is  a   "  trust " 

within  the  meaning  of  the  act  of  Congress  of  July  2,  1890, 
known  as  the  Anti-Trust  Act ;  but  if  not,  it  is  a  combination 
in  restraint  of  interstate  and  international  commerce,  and 
that  is  enough  to  bring  it  under  the  condemnation  of  the  act 

lb. 

69.  Every  contract,  combination,  or  conspiracy,  the  necessary  effect 

of  which  is  to  stifle  or  to  directly  and  substantially  restrict 
competition  in  commerce  among  the  States,  is  in  restraint 
of  interstate  commerce  and  violates  section  1  of  the  act  of 
July  2,  1890  (26  Stat,  209).  Whitwell  v.  Continental  To- 
bacco Co.,  125  F.,  454.  2—271 

70.  Same.— Every  attempt  to  monopolize  a  part  of  interstate  com- 

merce, the  necessary  effect  of  which  is  to  stifle  or  to  directly 
and  substantially  restrict  competition  in  commerce  among 
the  States,  violates  section  2  of  the  act  of  July  2,  1890  c  647 
(26  Stat,  209).  '   /^ 

For  what  acts  and  combinations  do  not  violate  the  act,  see 
same  case,  and  CoMmNATioNs,  etc.,  III. 

71.  Monopolies  Prohibited  are  Those  Engaged  in  Interstate  Com- 

merce—Not Merely  Because  the  Commodity  is  a  Necessity 
of  Life.— The  monopoly  and  restraint  denounced  by  the  act 
of  July  2,  1890  (26  Stat,  209)  "  to  protect  trade  and  com- 
merce against  unlawful  restraints  and  monopolies,"  are  a 
monopoly  in  interstate  and  international  trade  or  commerce, 
and  not  a  monoiwly  in  the  manufacture  of  a  necessary  of 
life.     U.  S.  V.  E.  C.  Knight,  156  U.  S.,  1.  1—379 

78.  Any  Restraint  of  Interstate  Trade  or  Commerce  if  Accom- 
plished by  Conspiracy.— The  act  of  July  2,  1890  (26  Stat, 
209),  section  1,  declaring  illegal  "every  contract,  combina- 


1068 


INDEX — ^DIGEST. 


COMBINATIONS,    CONSFIBACIES,   CONTBACTS,   ETC.— Cont'd. 

II.  Pbohibited — Continued. 

tion  in  tlie  form  of  trust,  or  otlienvise,  or  conspiracy  "  in 
restraint  of  trade  or  commerce  among  the  States,  or  witli 
foreign  nations,  ia  not  aimed  at  capital  merely  and  com- 
binations of  a  contractual  nature,  wbich  by  force  of  the 
title,  "An  act  to  protect  trade  and  commerce  against  unlaw- 
ful restraints  and  monopolies,"  are  limited  to  such  as  tlie 
courts  have  declared  unlawful,  the  words  '*  in  restraint  of 
trade "  having,  in  connection  with  the  words  "  contract," 
and  "  combination,"  their  common-law  significance,  but  the 
term  "  ccmspiracy  "  is  used  in  its  well-settled  legal  meaning, 
so  that  any  restraint  of  trade  or  commerce,  if  to  be  accom- 
plished by  consipracy,  is  unlawful.     U.  8.  v.  Dehs,  64  F.,  724. 

1—322 

78.  Same — Construction. — The  construction  of  the  statute  is  not 

aflfected  by  the  use  of  the  phrase  "in  restraint  of  trade," 

rather  than  one  of  the  phrases  "to  injure  trade"  or  "to 

restrain  trade."  II). 

74.  Same. — The  word  "  commerce,"  in  the  statute,  is  not  synony- 

mous with  "  trade,"  as  used  in  the  common-law  phrase  "  re- 
straint of  trade."  but  has  the  meaning  of  the  word  in  that 
clause  of  the  Constitution  which  grants  to  Congress  power 
to  regulate  interstate  and  foreign  commerce.  /b. 

75.  Supreme  Court  does  not  Bissent  from  Above  Conclusions. — The 

court  enters  into  no  examination  of  the  act  of  July  2,  1890 
26  Stat.  209),  on  which  the  Circuit  Court  mainly  relied  to 
sustain  its  jurisdiction ;  but  it  must  not  be  understood  that  it 
dissents  from  the  conclusions  of  that  court  in  reference  to 
the  scope  of  that  act,  but  simply  that  it  prefers  to  rest  its 
judgment  on  the  broader  ground  discussed  In  its  opinion,  be- 
lieving it  imiwrtant  that  the  principles  underlying  it  should 
be  fully  stated  and  fully  affirmed.  In  re  Dehs,  158  U.  S., 
504.  1—505 

'  7i.  A  contract  by  wMcli  a  corporation  agrees  to  take  the  entire 
product  of  a  number  of  persons,  firms,  and  corporations  en- 
gaged in  mining  coal  and  making  coke  in  a  certain  district, 
which  is  intended  for  "  western  shipment,"  to  sell  the  same 
at  not  less  than  a  minimum  price,  to  be  fixed  by  an  executive 
committee  appointed  by  the  producers,  and  to  account  for 
and  pay  over  to  such  producers  the  entire  proceeds  above  a 
fixed  sum  per  ton,  to  be  retained  as  "compensation" — ^the 
stated  purpose  being  "to  enlarge  the  western  market" — 
and  under  which  the  shipments  are  made  into  other  States, 
it  one  affecting  interstate  commerce,  and  Is  subject  to  the 
provision  of  the  Anti-Trust  Law.  U,  S,  v.  Chesapeake  d  O. 
Fmel  Oo.,  105  F.,  93.  %—M 

Afllrmed,  115  F.,  610  (»— 151). 
77.  Effect   of  Illegal   Provisions— Divisibility.— Stipulations   in   a 


INDEX — DIGEST. 


1069 


COMBINATIONS,    CONSPIBACIES,    CONTBACTS,    ETC.— Cont'd. 

II.  Prohibited— Continued, 
contract  which  are  invalid  as  in  restraint  of  trade,  if  capa- 
ble of  being  construed  divisibly,  do  not  affect  the  validity  of 
other  provisions.     TJ.  S.  Consolidated  Seeded  Raisin  Co.  v. 
Orim  d  Skelley  Co.,  126  F.,  364.  2—288 

See  also  Contracts. 

4.  Live-stock  associations,  and  exchanges,  etc. 
78.  An  Association  of  Commission  Merchants.— An  association  of 
men  engaged  in  receiving,  buying,  selling,  and  handling,  as 
commission  merchants.  Jive  stock  received  at  the  Kansas 
City  stock  yards  from,  and  sold  for  shipment  to,  various 
States  and  Territories,  which  yards  furnished  the  only  avaU- 
able  public  market  for  that  purpose  for  an  exceedingly  large 
area,  and  which  by  its  rales  fixed  a  minimum  rate  of  com- 
missions to  be  charged  by  members  of  the  association,  and 
prohibited  the  employment  by  any  commission  firm  or  cor- 
poration of  more  than  three  persons  to  travel  and  solicit 
business,  and  prohibited  the  sending  of  prepaid  telegram  or 
telephone  messages  quoting  the  markets,  and  shut  out  all 
dealings  and  business  intercourse  between  members  and  non- 
members,  and  boycotted  ai\d  blacklisted  persons  attempting 
to  carry  on  business  without  joining  the  exchange,  thus 
effectually  preventing  them  from  securing  or  transacting 
business,  held  to  be  an  illegal  combination  to  restrict,  monop- 
olize, and  control  that  class  of  trade  and  commerce.  U.  8.  v. 
Hopkins,  82  F.,  529.  1—725 

Reversed,  171  U.  S.,  578  (1—941). 

79.  Same — Reasonableness  of  Restraints. — The  act  of  Congress  is 

aimed  against  all  restraints  of  interstate  commerce,  and  its 
purpose  is  to  permit  comuierce  between  the  States  to  flow  in 
its  natural  channels,  unrestricted  by  any  combinations,  con- 
tracts, conspiracies,  or  monopolies  whatsoever.  The  reason- 
ableness of  the  restrictions  in  a  given  case  is  immaterial. 

/b. 

80.  Agreement  Between  live-Stock  Buyers  Not  to  Bid  Against  Each 

Other,  etc.— An  agreement  between  corporations  and  indi- 
viduals, etc.,  engaged  in  buying  live  stock  at  divers  points 
throughout  the  United  States,  to  refrain  from  bidding 
against  each  other  in  the  purchase  of  cattle  is  combination 
in  restraint  of  trade;  so  also  their  agreement  to  bid  up  prices 
to  stimulate  shipments,  intending  to  cease  from  bidding 
when  the  shipments  have  arrived,  and  the  same  result  fol- 
lows from  the  combination  of  defendants  to  fix  prices  upon 
and  restrict  the  quantities  of  meat  shipped  to  their  agents  or 
their  customers.  Being  restriction  upon  competition,  such 
agreements  are  combination  in  restraint  of  trade.  V.  S.  v 
Swift  d  Co.,  122  F.,  529.  2—237 

Affirmed,  196  U.  S.,  375  (2—641). 
1180&— VOL  2—06  M 68 


1070 


INDEX — DIGEST. 


OOmilllATIOllS,   OairSFI&ACIES,   COHTBACTS,   etc.— <k)iit'd. 

II .  FROHiBiTiD--f oiitiimeti. 

81.  Sane. — ^Eettraimt  of  trade  it  mot  dependent  upon  any  considera- 
tion of  reasonableness  or  unreasonableness  in  tbe  combina- 
tion averred,  nor  is  it  to  be  tested  by  the  prices  that  result 
from  tbe  combination.  Tbe  statute  has  no  concern  with 
prlees,  but  loolcs  soiely  to  conn>etition  and  to  the  giving  of 
competition  full  play  by  making  illegiil  any  effort  at  re- 
striction upon  competition.  lb. 

S8.  A  combination  entered  into  by  independent  meat  dealers  to 
secure  less  tliam  lawful  freight  rates,  with  the  intent  to 
monopoiize  conmierce  in  fresh  meat  among  the  several 
States,  is  forbidden  by  the  Anti-Trust  Act  of  July  2,  1890 
(26  Stat.  2«)9).  Swift  d  Co,  v.  rnitcd  States,  196  U.  S.. 
375.  2—643 

5.  Compiracif  to  iniure  in  brntincifH. 

8S.  Frinting  and  Mailing  Circulars. — The  action  of  an  association 
of  manufacturers  in  adopting  a  resolution  denouncing  a 
dealer  in  the  product  they  manufactured  (shingles),  who 
bought  and  shipped  such  product  to  customers  in  other 
States  and  foreign  countries,  and  in  printing  such  resolution 
j  in  circulars  and  mailing  the  same  to  other  manufacturers 

and  customers  of  the  dealer,  whereby  his  business  was  in- 
jured, constituted  an  Illegal  combination  or  conspiracy  In 
restraint  of  interstate  and  foreign  conmierce,  and  gives  the 
person  injured  a  right  of  action  in  a  circuit  court  of  the 
United  States,  under  the  Anti-Trust  Law  of  1890,  to  re- 
cover the  damages  sustained.  Oihb»  v.  McXccley,  102  F., 
594.  2—25 

6.  Stockholdinff  mmpanies  or  corporationtt. 

8C  Holding  Companies  to  Tote  Stock  In  the  Interests  of  a  Bail- 
road  Combine. — Where  one  company  (The  (Jeorgiu  Company 
of  North  Carolina)  acquired  a  majority  of  the  stocli  of 
the  Central  Railroad  Company  of  Georgia,  which  it  deposited 
with  a  trust  company  of  New  Yorli,  and  transfen-ed  to  the 
Terminal  Company,  a  system  conposed  of  several  competing 
lines  of  railroads,  which  latter  company  and  the  Georgia 
Company  relinquished  to  the  trust  company  any  right  they 
might  have  to  vote  such  stocls.  Held,  That  the  trust  com- 
pany was  a  mere  stakeholder  and  that  the  relinquishment 
did  not  entitle  it  to  a  vote.  Clarke  v.  Central  R.  R.  d  Bank- 
ing Co.  of  Ga„  50  F.,  3.%.  1-17 

85.  Same — Disqualifying  Interests. — ^The  fact  that  the  Terminal 
Company  has  no  appreciable  interest  in  the  stock  of  the 
Central  Railroad  Company,  because  of  a  mortgage  on  the 
railroad  executed  by  the  Terminal  Company,  does  not  re- 
move the  objection  to  its  voting  in  person  or  by  representa- 
tive in  the  election  of  the  directors  of  that  railroad  com 


INDEX — ^DIGEST. 


1071 


OOMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.A>)ntU 

II.  Prohibited— Continued, 
pany,  in  view  of  the  fact  that  it  has  large  pecuniary  inter- 
ests in  two  directly  competing  lines  of  railroad.  lb. 
88.  Same — Anti-Trust  Law. — ^Transactions  of  this  character  are 
within  the  spirit,  if  not  within  tlie  letter,  of  the  "  Sherman 
Anti-Trust  Law,"  act  of  July  2,  1890  (26  Stat.,  209).  lb. 

87.  northern  Securities  Co. — Any  contract  or  combination  by  which 

a  majority  of  the  stock  of  two  railroad  companies  owning 
.  and  operating  parallel  and  competing  interstate  lines  of  road 
is  transferred  to  a  corporation  organized  for  the  purpose  of 
holding  and  voting  the  same  and  receiving  the  dividends 
thereon,  to  be  divided  pro  rata  among  the  stockholders  of 
the  two  companies  so  transferring  their  stock,  directly  and 
substantially  restricts  interstate  trade  and  commerce,  and  is 
in  violation  of  the  Anti-Trust  Act  of  July  2,  1890  (26 
Stat,  209),  since  it  destroys  any  motive  for  competition  be- 
tween tbe  two  roads;  and  it  is  immaterial  that  each  com- 
pany has  its  own  board  of  directors,  which  nominally  directs 
its  operations  and  fixes  its  rates.  V.  8.  v.  Northern  Securi- 
ties Co.,  120  F.,  721.  2—215 

88.  Northern  Securities  Company — Corporation  Organized  to  Hold 

Majority  of  Stock  of  two  Competing  and  Parallel  lines  of 
Railroad  for  the  Purpose  of  Preventing  Competition. — Stock- 
holders of  tbe  Great  Northern  and  Northern  Pacific  Railway 
companies — corporations  having  comi)eting  and  substantially 
parallel  lines  from  the  Great  Lakes  and  the  Mississippi 
River  to  the  Pacific  Ocean  at  Puget  Sound— combined  and 
conceived  the  schone  of  organizing  a  corporation,  under  the 
laws  of  New  Jersey,  which  should  hold  the  shares  of  the 
stock  of  the  constituent  companies,  such  shareholders,  in 
lieu  of  their  shares  in  those  companies,  to  receive,  upon  an 
agreed  basis  of  value,  shares  in  the  holding  corporation. 
Pursuant  to  such  combination  the  Northern  Securities  Com- 
pany was  organized  as  the  holding  coriwration  through 
which  that  scheme  should  be  executed;  and  under  that 
scheme  such  holding  corporation  became  the  holder— more 
properly  speaking,  the  custodian — of  more  than  nine-tenths 
of  the  stock  of  the  Northern  Pacific,  and  more  than  three- 
fourlhs  of  the  stock  of  the  Great  Northern,  the  stockholders 
of  the  companies,  who  delivered  their  stock,  receiving,  upon 
the  agi-eed  basis,  shares  of  stock  in  the  holding  corijoratiou. 
Held,  That  the  arrangement  was  an  illegal  combination  in 
restraint  of  interstate  commerce  and  fell  within  the  prohi- 
bitions and  provisions  of  the  act  of  July  2,  1890,  and  it  was 
within  the  power  of  the  Circuit  Court,  in  an  action,  brought 
by  the  Attorney-General  of  the  United  States  after  the  com- 
pletion of  the  transfer  of  such  stock  to  it,  to  enjoin  the 
holding  company  from  voting  such  stock  and  from  exercising 


1072 


INDEX — DIGEST. 


COMBINATIONS,   CONSPIBACIES,    CONTRACTS,   ETC.—Confd. 

II.  Phohibited — Continued. 

any  control  whatever  over  the  acts  and  doings  of  the  rail- 
road companies,  and  also  to  enjoin  the  railroad  companies 
from  paying  any  dividends  to  the  holding  corporation  on 
any  of  their  stock  held  by  it  Northern  Securities  Co,  v. 
United  States,  193  U.  S.,  197.  2—338 

S».  Same. — Necessarily,  the  constitnent  companies  ceased,  under 
this  arrangement,  to  be  in  active  competition  for  trade  and 
commerce  along  their  respective  lines,  and  became,  practi- 
cally, one  powerful  consolidated  corporation,  by  the  name  of 
a  holding  corporation,  the  principal,  if  not  the  sole,  object 
for  the  formation  of  which  was  to  cany  out  the  purpose  of 
the  original  combinatiou  under  which  competition  between 
the  constituent  companies  would  cease.  lb, 

90.  Same. — A  combination  by  stockholders  in  two  competing  inter- 

state railway  companies  to  form  a  stockholding  corporation 
which  should  acquire,  in  exchange  for  its  own  capital  stock, 
a  controlling  interest  in  the  capital  stock  of  each  of  such 
railway  companies,  violates  the  Anti-Trust  Act  of  July  2, 
1890  (26  Stat.,  209),  which  declares  illegal  every  combina- 
tion or  conspiracy  in  restraint  of  interstate  commerce,  and 
forbids  attempts  to  monopolize  such  commerce  or  any  part 
of  it.     (48  L.  ed.,  679.)  2—342 

91.  Same. — Where  no  Individual  investment  is  involved,  but  there 

Is  a  combination  by  several  Individuals  separately  owning 
stock  in  two  competing  railroad  companies  engaged  in  inter- 
state commerce,  to  place  the  control  of  both  in  a  single  cor- 
poration, which  is  organized  for  that  purpose  expressly  and 
as  a  mere  instrumentality  by  which  the  competing  rail- 
roads can  l»e  combined,  the  resulting  combination  is  a 
direct  restraint  of  trade  by  destroying  competition,  and  Is 
Illegal  within  the  meaning  of  the  act  of  July  2,  1890. 
(BreM-er,  concurring.)  2 — 341 

7.  Patent  im4  copyright  monopolies — Illegal  combinations  and 

contracts. 

92.  A  corporation  organized  for  the  purpose  of  securing  'assign- 

ments of  all  patents  relating  to  "spring-tooth  harrows,"  to 
grant  licenses  to  the  assignors  to  use  the  patents  upon  pay- 
ment of  a  royalty,  to  ilx  and  jregnlate  the  price  at  wlllch 
such  harrows  shall  be  sold,  and  to  take  charge  of  all  litiga- 
tion and  prosecute  all  infringements  of  such  patents,  is  an 
illegal  combination,  whose  purposes  are  contrary  to  public 
policy,  and  which  a  court  of  equity  should  not  aid  by  en- 
tertaining infringement  suits  brought  In  pursuance  thereof. 
National  Harrow  Go.  v.  Quick,  67  F.,  130.  1—443 

98.  Corporation  Organized  to  Receive  Assignments  of  Patents. — 
A  combination  among  manufacturers  of  spring-tooth  har- 
rows, by  which  each  manufacturer  assigns  to  a  corporation 


INDEX — ^DIGEST. 


1073 


COMBINATIONS,    CONSPIBACIES,    CONTRACTS,   ETC.— Cont'd. 

II.  Prohibited — Continued, 
organized  for  the  purpose  the  patents 'under  which  he  Is 
operating,  and  takes  back  an  exclusive  license  to  make  and 
sell  the  same  style  of  harrows  previously  made  by  him,  and 
no  other,  all  the  parties  being  bound  to  sell  at  uniform  prices, 
held  to  be  an  unlawful  combination  for  the  enhancement  of 
prices  and  in  restraint  of  trade.  National  Harrow  Co.  v. 
Hench,  76  F.,  667.  1—610 

Affirmed,  83  F.,  36  (1—742). 

94.  Same. — Though  the  fact  that  several  patentees  are  exposed  to 

litigation  justifies  them  in  composing  their  differences,  they 
can  not  make  the  occasion  an  excuse  or  cloak  for  the  crea- 
tion of  monopolies  to  the  public  disadvantage.    lb.      1 — 743 

95.  A  combination  among  manufacturers  of  spring-tooth  harrows, 

whereby  a  corporation  organized  for  the  purpose  becomes  the 
assignee  of  all  patents  owned  by  the  various  manufacturers, 
and  executes  licenses  to  them,  so  as  to  control  the  entire 
business  and  enhance  prices,  is  void  both  as  to  the  assign- 
ments and  licenses,  so  that  the  corporation  can  not  maintain 
a  suit  against  one  of  its  assignors,  who  violates  the  agi-ee- 
ment,  for  infringement.  National  Harrow  Co.  v.  Hench,  84 
F.,  220.  i_746 

96.  An   agreement   by  the   members   of   a   publishers'   association 

controlling  90  per  cent  of  tlie  book  business  of  the  country, 
under  which  all  agreed  not  to  sell  to  anyone  who  would  cut 
prices  on  copyrighted  books,  nor  to  anyone  who  should  be 
known  to  have  sold  to  others  who  cut  prices,  etc.,  was  an 
agreement  relating  to  interstate  trade  or  commerce  within 
the  Anti-Trust  Act  of  July  2,  1890  (26  Stat.,  209.    Mines  v. 

Scribner,  147  F.,  927.  2 1035 

07.  Same— Conspiracy— Restraint  of  Trade.— Defendants  became 
members  of  an  association  of  book  publishers  controlling  90 
per  cent  of  the  book  business  of  the  country,  which  associa- 
tion adopted  a  rule  that  they  would  not  sell  to  anyone  who 
cut  prices  on  copyrighted  books,  nor  to  anyone  who  should 
be  known  to  have  sold  to  others  at  cut  prices.  A  blact  list 
was  kept  containing  the  names  of  such  persons,  and  no  one 
on  the  black  list  could  not  buy  any  books  of  anybody  in  the 
scheme.  Held,  That  such  scheme  constituted  a  conspiracy 
in  restraint  of  interstate  trade  or  commerce.  /ft. 

98.  Same— Copyright— Effect— Extent    of    Rights    Acquired.— The 

rights  acquired  by  publishers  of  copyrighted  books  under  the 
copyright  law  did  not  justify  them  in  combining  and  agree- 
ing that  their  books  should  be  subject  to  the  rules  laid  down 
by  the  united  owners,  one  of  which  was  that  no  member  of 
the  association  sliould  sell  any  books  to  a  blacklisted  pur- 
chaser who  was  known  to  cut  prices.  /ft. 

99.  license  Contracts   by  Patentee  in   District   where   Patent  De- 


1074 


INDEX — DIGEST. 


COMBINATIONS,   €X>NSPIBACIES,   CONTRACTS,   ETC.— Confd. 

II.  Prohibited — Continued. 

t 

clared  Illegal  and  in  Creatinsr  a  Fnnd  to  Cmsli  Competi- 
tion.— License  contracts  entered  into  by  the  owner  of  patent 
on  a  rubber  tire,  which  patent  had  been  adjudged  invalid 
by  the  Circuit  Court  of  Appeals  for  the  Sixth  Circuit,  with 
all  of  the  large  manufacturers  of  such  tires  in  the  United 
States,  all  of  whom  were  engaged  in  interstate  commerce,  to 
manufacture  the  same  on  a  royalty  and  to  sell  at  prices 
above  the  then  market  price,  and  providing  for  a  system  of 
rebates,  and  for  the  appointment  of  a  board  to  receive  one 
half  of  the  royalties,  to  be  used  in  purchasing  said  tires  and 
selling  them  at  prices  deemed  to  be  for  the  best  interest  of 
all.  Held,  that  smeh  oontraett  went  beyond  the  rights  of  com- 
plainant under  its  patent  monopoly  in  raising  and  maintain- 
ing prices  in  the  States  composing  the  sixth  Federal  cir- 
cuit, in  which  the  monopoly  had  no  practical  existence,  and 
in  creating  a  fnnd  to  be  used  to  crush  competition  by  outside 
manuf.icturer**,  as  well  in  the  sixth  circuit  as  elsewhere,  and 
were  illegal  and  ¥oid  as  creating  a  combination  in  restraint 
of  interstate  trade  and  commerce,  in  violation  of  the  Anti- 
Tnist  Act  of  July  2.  1S90  (26  Stat,  209).  Rubber  Tire 
Wheel  Go.  v.  Milwaukee  Rubber  Works  Go.,  142  F.,  681. 
Bee  also  Combinations,  etc.,  183-188.  11—866 

a  Railroads — Rates,  etc 

100.  Anti-Tmtt  Act  Applicable  to  mallroads.— The  provisions  re- . 

specting  contracts,  combinations,  and  conspiracies  in  re- 
straint of  trade  or  commerce  among  the  several  States  or 
with  foreign  countries,  contained  in  the  act  of  July  2,  1890 
(26  Stat,  209),  "to  protect  trade  and  commerce  against  un- 
lawful restraints  and  monopolies,"  apply  to  and  cover  com- 
mon carriers  by  railroad.  U,  8.  v.  Tram-Mo,  Ft.  Assn.,  108 
U.  S..  290.  1—648 

101.  Contracts  Between  Ballroads  Affecting  Kates.— A  contract  be- 

tween railroads  in  restraint  of  interstate  trade  or  commerce 
is  prohibited,  even  though  the  contract  Is  entered  into  be- 
tween competing  railroads,  only  for  the  purpose  of  thereby 
aflfecting  traffic  rates  for  the  transportation  of  persons  and 
property.  j^, 

108.  Same— No  Authority  Therefor  Under  Act  to  Bcgnhite  Com- 
merce.—The  act  of  February  4, 1887,  "  to  regulate  commerce," 
Is  not  Inconsistent  with  the  of  July  2, 1890,  as  it  does  not  con- 
fer upon  competing  railroad  companies  power  to  enter  into 
a  contract  in  restraint  of  trade  and  commerce,  like  the  one 
which  forms  the  subject  of  this  suit  /ft. 

108.  Eight  to  Beviate  from  Bates  Prescribed.— The  right  of  a  rail- 
road company  in  a  joint  traffic  association  to  deviate  from 
the  rates  prescribed,  provided  it  acts  on  a  resolution  of  its 
board  of  directors  and  serves  a  copy  thereof  on  the  managers 


INDEX — DIGEST. 


1075 


\  > 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont'd. 

IJ.  Prohibited — Continued. 
of  the  association,  who,  upon  its  receipt,  are  required  to  "  act 
promptly  far  the  in-otection  of  the  parties  hereto,'  does  not 
relieve  the  association  from  condemnation  as  an  illegal  re- 
straint of  competition,  as  the  privilege  of  deviating  from 
the  rates  would  be  exercised  upon  pain  of  a  war  of  competi- 
tion against  it  by  the  whole  association.  U.  S.  v.  Joint 
Traffic  Assn.,  171  U.  S.,  505.  1—869 

Reversing  7G  F..  895  (1—615). 

104.  An  agreement  of  railroad  companies  which  directly  and  effec- 

tually prevents  competition  is,  under  the  statute,  in  restraint 
of  trade,  notwithstanding  the  possibility  that  a  restraint  of 
trade  might  also  follow  unrestricted  competition,  which 
might  destroy  wealier  roads  and  give  the  survivor  power  to 
raise  rates.  /^, 

105.  The  statute  applies  only  to  contracts  whose  direct  and  imme- 

diate effect  is  a  restraint  upon  interstate  commerce,  and  not 
to  contracts  made  to  promote  legitimate  business,  though 
they  may  indirectly  or  incidentally  affect  such  commerce. 

lb. 

106.  Similar  to  Trans-Missouri  Case. — So  far  as  the  establishment  of 

rates  and  fares  is  concerned  there  is  no  substantial  differ- 
ence between  the  agreement  in  this  case  and  the  one  set 
forth  in  the  Trans-Missouri  case.  lb. 

107.  Congress,  with  regard  to  the  interstate  commerce,  and  in  the 

course  of  regulating  it  in  the  case  of  railroad  corporations, 
has  the  power  to  say  that  no  contract  or  combination  shall 
be  legal,  which  shall  restrain  trade  and  commerce,  by  shut- 
ting out  the  operation  of  the  general  law  of  competition. 

lb. 

108.  Any  contract  or  combination  between  interstate  carriers  which 

directly  and  substantially  restrict  the  right  of  such  a  car- 
rier to  fix  its  own  rates  independently  of  its  natural  com- 
l^etitors  places  a  direct  restraint  uiion  Interstate  commerce 
in  that  it  tends  to  prevent  competition  and  is  in  violation  of 
the  act,  whether  the  rates  actually  fixed  be  reasonable  or 
unreasonable.     U.  S.  v.  Noi'thern  Securities  Co.,  120  F.,  721. 

2—215 

109.  Contract  or  Combination  Prescribing  Rates  to  be  Maintained. 

Any  contract  or  arrangement  between  railroad  companies 
for  the  puipose  and  having  the  effect  of  preventing  com- 
petition by  fixing  rates  to  be  maintained  by  the  parties  is 
in  violation  of  the  provisions  of  the  Minnesota  anti-trust 
act  of  1899,  which  is  substantially  the  same  language  as 
the  Sherman  Anti-Trust  Act  of  1890.  Minnesota  v.  Northern 
Securities  Co.,  123  F.,  692.  2—246 

110.  Agreements  Between  Railroads  to  Raise   Rates  upon   Certain 

Class  of  Shipments. — When  a   number  of  railroads,   acting 


1076 


INDEX — ^DIGEST. 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,   ETC.— CJont'd. 

II.  Prohibitbi>— Continued, 
under  articles  of  orgaoization,  by  concert  of  agreement  and 
action  advance  the  rates  upon  shipments  of  a  particular 
class  throughout  all  the  territory  to  which  their  organiza- 
tion and  influence  with  similar  organizations  extend,  and 
when  they  actually  advance  such  rates  and  exact  the  same  of 
shippers,  it  is  of  no  consequence  that  they  have  a  stipulation 
in  such  articles  that  each  and  all  members  can  at  will  and 
at  any  time  withdraw  from  the  agreement.  Such  a  com- 
bination is  in  restraint  of  trade.  Tift  v.  Southern  Railway 
Co.,  138  F.,  753.  2—734,  746 

See  also  Gabbiebs. 

111.  Combinations  of  Railroads  to  Prevent  Competition,  Pooling  Pas- 
senger Receipts— No  Relief  in  Equity  Against  Ticket 
Brokers. — In  a  suit  by  a  railroad  company  to  enjoin  the  de- 
fendants, who  were  ticket  brokers,  from  dealing  in  special 
tickets  issued  by  c-omplainant  on  account  of  the  Pan-Ameri- 
can Exposition,  which  were  by  their  terms  nontransferable, 
it  appeared  from  the  showing  made  on  a  motion  for  a  pre^ 
liminjiry  injunction  that  complainant  was  a  member  of  a 
combination  known  as  the  "  Trunk  Line  Association."  formed 
by  a  number  of  railroads  operating  in  different  States  for 
the  purpose  of  preventing  competition;  that  the  passenger 
receipts  of  all  such  roads  were  pooled  and  divided  on  an 
agi-eed  basis;  and  that  the  special  rates  made  on  account  of 
the  exposition  were  fixed,  and  the  terms  of  the  ticliets  which 
were  the  basis  of  the  suit  were  prescribed,  by  such  associa- 
tion through  its  passenger  committee.  Held,  That  such 
combination  was  illegal,  as  in  violation  of  the  Federal  Anti- 
Trust  Law  (26  Stat,  209),  and  tliat  complainant  could  not 
invoke  the  aid  of  a  Federal  court  of  equity  for  the  protec- 
tion of  rights  claimed  under  contracts  which  were  the  direct 
result  and  evidence  of  such  unlawful  combination.  Dela- 
ware, L.  d  W.  R.  Co.  V.  Frank,  110  F.,  689.  2—82 

lit.  A  combination  to  secure  less  than  lawful  freight  rates,  entered 
into  by  independent  meat  dealers  with  the  intent  to  monopo- 
lize commerce  in  fresh  meat  among  the  several  States,  is  for- 
bidden by  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209). 
Sirift  cC-  Co.  V.  United  States,  196  U.  S.,  375.  2—643 

9.  Labor  eomhlnations. 
118.  Anti-Trust  Act  Applies  to  Combinations  of  laborers.— The  act 
declaring  illegal  "  every  contract  or  combination  in  the  form 
of  trust,  or  otherwise  in  restraint  of  trade  or  commerce 
among  the  several  States  or  with  foreign  nations,"  (26  Stat, 
209)  ar>plies  to  combinations  of  laborers  as  well  as  of  capital- 
ists. I.  S.  V.  Workingmen's  Amalg.  Council,  54  F.,  994. 
Case  affirmed,  57  F.,  85  (1—184).  1— 11() 


INDEX — DIGEST. 


1077 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,   ETC.— Cont'd. 

11.  Prohibited — Continued. 

114.  Same — lawful  Combinations  Turned  to  Unlawful  Purposes. 

The  fact  that  a  combination  of  men  is  in  its  origin  and  gen- 
eral purposes  innocent  and  lawful  is  no  ground  of  defense 
when  the  combination  is  turned  to  the  unlawful  purpose  of 
restraining  interstate  and  foreign  commerce.  /ft. 

115.  Same — Labor  Strikes. — A  combination  of  men  to  secure  or  com- 

pel the  employment  of  none  but  union  men  l)ecomes  a  combi- 
nation in  restraint  of  interstate  commerce,  within  the  mean- 
ing of  the  statute,  when,  in  order  to  gain  its  ends,  it  seeks 
to  enforce,  and  does  enforce,  by  violence  and  intimidation, 
a  discontinuance  of  labor  in  all  departments  of  business,  in- 
cluding the  transportation  of  goods  from  State  to  State,  and 
to  and  from  foreign  nations.  75. 

116.  Same— Injunction— When    Granted.— Where    an    injunction    is 

asked  against  the  interference  with  interstate  commerce  by 
combinations  of  striking  workmen,  the  fact  that  the  strilce 
is  ended  and  labor  resumed  since  the  filing  of  the  bill  is  no 
ground  for  refusing  the  injunction.  The  invasion  of  rights, 
especially  where  the  lawfulness  of  the  invasion  is*  not  dis- 
claimed, authorizes  the  injunction.  75. 

117.  Railroad   Employees— Agreements   not   to   Handle  Property  of 

Railroad  Against  which  Action  is  Taken. — Rule  12  of  an 
association  of  locomotive  engineers,  styled  the  "Brother- 
hood of  Locomotive  Engineers,"  which  provides  "  that  here- 
after, when  an  issue  has  been  sustained  by  the  grand  chief, 
and  carried  into  effect  by  the  Brotherhood  of  Locomotive 
Engineers,  it  shall  he  recognized  as  a  violation  of  obligations 
if  a  member  of  the  Brotherhood  of  Locomotive  Engineers 
who  may  be  employed  on  a  railroad  run  in  connection  with 
or  adjacent  to  said  road,  to  handle  the  property  belonging 
to  said  railroad  or  sj^stem  in  any  way  that  may  benefit  said 
company  with  which  the  Br<jtherhood  of  Locomotive  Engi- 
neers are  at  issue,  until  the  grievances  or  issues  or  differ- 
ences of  any  nature  or  kind  have  been  amicably  settled  "— 
is  plainly  a  rule  or  agreement  in  restraint  of  trade  or  com- 
merce, and  violative  of  section  1  of  the  act  of  Congress  of 
July  2,  1890.     WaterhouHe  v.  Comer,  55  F.,  149.  1—119 

118.  Same— Conspiracy— Section  5440  R.  S.— Construing  several 
clauF-es  cf  the  intorstate-commerc^e  law  recited  in  the  opin- 
ion with  section  5440  of  the  Revised  Statutes,  it  follows  that 
a  combination  of  persons,  without  regard  to  their  occupation, 
which  will  have  the  efl-'ect  to  defeat  the  provisions  of  the 
interstate-commerce  law,  inhibiting  discriminations  in  the 
transportation  of  freight  and  pas.sengers,  and  further  to 
restrain  the  trade  or  commerce  of  the  country,  will  be  ob- 
noxious to  the  penalties  therein  prescribed.  /&. 


1078 


INDEX — DIGEST. 


COMBINATIOlfS,   CONSPIBACIBS,   CONTRACTS,   ETC.— CJontU 

O.  PiioHiBiTEij-Coiitinued. 

119.  Same— Hcceivers— Advice  of  Court.— In  this  case,  the  movants 
having  avowed  their  purpose,  in  open  court,  to  submit  to  the 
eonPtructioij  to  be  made  by  the  court  relating  to  rule  12  of 
the  Brotherhood,  the  receiver  is  directed  to  enter  into  an 
appropriate  contract  with  them,  sul>ject  to  the  general  opera- 
tion of  this  decision  with  reference  to  said  rule.  lb, 

ItO.  A  combination  of  labor  organizations  whose  professed  object  is 
to  arrest  the  operation  of  the  railroads  whose  lines  extend 
from  a  great  city  into  adjoining  States  until  such  roads  ac- 
cede to  certain  demands  made  upon  them,  whether  such  de- 
mands are  in  themselves  reasonable  or  unreasonable,  just  or 
unjust  ii  an  unlawful  conspiracy  in  restraint  of  trade  and 
commerce  among  the  States,  within  the  act  of  July  2,  1890, 
and  acts  threatened  in  pursuance  thereof  may  be  restrained 
by  injunction,  under  section  4  of  the  act.  U,  8,  v.  Elliott, 
62  F.,  801.  1—262 

Demurrer  overruled.  tVi  F.,  27  (1— ,'511). 

181.  Same— Interference  with  Mails  and  Interstate  Commerce.— A 
•combination  by  railroad  employees  to  prevent  all  the  rail- 
roads of  a  large  city  engaged  in  carrying  the  United  States 
mails  and  in  interstate  commerce  from  carrying  freight 
and  passeugei-8,  hauling  cars,  and  securing  the  services  of 
persons  other  than  strikers,  and  to  Induce  persons  to  leave 
the  service  of  such  railroads,  it  within  section  1  of  the  a«t 
of  July  2,  1890,  and  is  illegal.     17.  8,  v.  ElUoU,  64  F.,  27. 

1--311 

ISS.  Combination  of  Railroad  Employees  Interfering  with  OperatioB 
of  Eailroad  in  Hands  of  a  Keceiver— Instigating  Strike- 
Maliciously  inciting  employees  of  a  receiver,  who  is  operat- 
ing a  railroad  under  order  of  the  court,  to  leave  his  employ, 
In  pursuance  of  an  unlawful  combination  to  prevent  the  op- 
eration of  the  road,  thereby  inflicting  Injuries  on  its  business, 
for  which  damages  would  be  recoverable  if  it  were  operated 
by  a  private  corporation,  is  a  contempt  of  the  court.  Thoma$ 
V.  G4n.,  W.  O.  d  T.  P.  Rp,  Co.,  62  F.,  803.  1—266 

183.  Same — Combination  to  Compel  Breach  of  Contract.— A  combina- 

tion to  inflict  pecuni<iry  injury  on  the  owner  of  cars,  oper- 
ated by  railway  companies  under  contracts  with  him,  by 
compelling  them  to  give  up  using  his  cars,  in  violation  of 
I  their  contracts,  and,  on  their  refusal,  to  inflict  pecuniary 
injurj-  on  them  by  inciting  their  employees  to  quit  their 
service,  and  thus  paralyze  their  business,  the  existence  of 
the  contracts  being  known  to  the  parties  so  combining,  is 
an  unlawful  conspiracy.  f5. 

184.  Same — Boycott.— A  combination  by  employees  of  railway  com- 

panies to  injure  in  his  business  the  owner  of  cars  operated 
by  the  companies  by  comiiellipg  them  to  cease  using  his 


INDEX DIGEST. 


1079 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont*d. 

II.  Prohibited — Continued. 
cars  by  threats  of  quitting  and  by  actually  quitting  their 
service,  thereby  inflicting  on  them  great  injury,  where  the 
relation  between  him  and  the  companies  is  mutually  profit- 
able, and  has  no  effect  whatever  on  the  character  or  reward 
of  the  services  of  the  employees  so  combining,  is  a  l)oycott 
and  an  unlawful  conspiracy  at  common  law.  76. 

125.  Same — ^A  combination  to  incite  the  employees  of  all  the  rail- 
ways in  the  country  to  suddenly  quit  their  service,  without 
any  dissatisfaction  with  the  terms  of  their  employment, 
thus  paralyzing  utterly  all  railway  traffic,  in  order  to  starve 
the  railroad  companies  and  the  public  into  compelling  an 
owner  of  cars  used  in  operating  the  roads  to  pay  his  em- 
ployees more  wages,  they  having  no  lawful  right  so  to  compel 
him,  is  an  unlawful  conspiracy  by  reason  of  its  purpose, 
whether  such  purpose  is  effected  by  means  usually  lawful 
or  otherwise.  /&. 

186.  Same — Kestraint  of  Interstate  Commerce. — Such  combination, 

its  purpose  being  to  paralyze  the  interstate  commerce  of  the 
country,  is  an  unlawful  conspiracy,  within  the  act  of  July  2, 
1890,  declaring  illegal  every  contract,  combination,  or  con- 
spiracy in  restraint  of  trade  or  commerce  among  the  several 
States.     V.  8.  v.  Patterson,  55  Fed.,  605,  disapproved.        76. 

187.  Same — Obstructing  Mails.— .Such  combination,  where  the  mem- 

bers intend  to  stop  all  mail  trains,  as  well  as  other  trains, 
and  do  delay  many,  in  violation  of  Revised  Statutes,  section 
3995,  punishing  any  one  willfully  and  knowingly  obstructing 
or  retarding  the  passage  of  the  mails,  is  an  unlawful  con- 
spiracy, although  the  obstruction  is  effected  by  merely  quit- 
ting employment.  /j. 

128.  Combination  or  Conspiracy  to  Prevent  Passage  of  Trains — Ob- 
struction of  Interstate  Commerce. — ^Any  combination  or  con- 
spiracy on  the  part  of  any  class  of  men  who  by  violence  and 
intimidation  prevent  the  passage  of  railroad  trains  engaged 
in  interstate  commerce  is  in  violation  of  act  July  2,  1890,  de- 
claring illegal  every  contract,  combination  in  the  form  of 
ti-ust  or  otherwise,  or  conspiracy  in  restraint  of  trade  or 
commerce  among  the  States.    In  re  Grand  Jury,  62  F.,  840. 

1—301 

189.  Mail— Obstructing  Passage  of  Mail  Trains.— It  is  a  violation  of 
section  995,  Revised  Statutes,  declaring  it  an  offense  to 
knowingly  and  willfully  obstruct  or  retard  the  passage  of 
the  mail,  for  one  to  prevent  the  running  of  a  mail  train  as 
made  up  ,though  he  is  willing  that  the  mail  car  shall  go  on, 
and  his  purpose  is  other  than  to  retard  the  mails.  7b, 

180.  Same.— The  railway  is  a  groat  public  highway,  and  the  duty  of 
the  railroad  company  as  a  common  carrier  is  first  to  the  pub- 
lic. The  road  must  be  kept  in  operation  for  the  acommoda- 
tion  of  the  public,  if  it  is  possible  to  do  so  with  the  force  and 


1080 


INDEX — ^DIGEST. 


COMBINATIONS,   CONSPIBACIES,   CONTBACTS,  ETC.— Confd. 

II.  Pbohibitkd— Continued. 

appliances  within  reach.  Any  negligence  in  this  respect  is 
not  excused  by  temporary  difficulties  capable  of  being 
promptly  removed.  Jft. 

131.  Same. — Where  the  transportation  of  the  mails  and  interstate 
commerce  has  long  been  interi-upted  by  the  refusal  of  the 
employees  of  the  railway  company  to  move  ti'ains  carrying 
Pullman  cars,  it  is  the  duty  of  the  railway  company  to  use 
every  effort  to  moire  the  mails  and  interstate  commerce,  with- 
out regard  to  the  make-up  of  regular  trains;  and  any  willful 
failure  to  perform  this  duty  is  a  violation  of  the  statute.    /6. 

lat.  Bailway  Employees— Strikes  for  the  Purpose  of  Injuring  a  Third 
Party. — It  is  unlawful  for  the  employees  of  railway  com- 
panies to  combine  and  quit  work  for  the  purpose  of  com- 
pelling their  employer  to  withdraw  from  his  relations  with 
a  third  party,  for  the  purpose  of  injuring  that  third  party. 
They  have,  however,  a  right  to  organize  for  mutual  benefit 
and  protection,  and  for  the  purpose  of  securing  the  highest 
wages  and  the  best  conditions  they  can  command.  They 
may  appoint  officers,  who  shall  advise  them  as  to  the  course 
to  be  taken  in  their  relations  with  their  employer,  and  they 
may,  if  they  choose,  repose  In  their  officers  authority  to 
order  them,  or  any  of  them,  on  pain  of  expulsion  from  their 
union,  peaceably  to  leave  the  employment  because  the  terms 
thereof  are  unsatisfactory.  Thomas  v.  Railway  Co.,  62  F., 
817,  followed.     V.  8.  v.  Cassidy,  G7  F.,  698.  1^462 

188.  Strike— Obstruction  of  Mails— Restraint  of  Interstate  Trade  or 
Commerce. — ^A  strike,  or  a  preconcerted  quitting  of  work,  by 
a  combination  of  railroad  employees  is,  in  itself,  unlawful 
If  the  concerted  action  is  knowingly  and  willfully  directed 
by  the  parties  to  it  for  the  purpose  of  obstructing  and 
retarding  the  passage  of  the  mails,  or  in  restraint  of  trade 
and  commerce  among  the  States.  /ft, 

III.  Not  Prohibited. 

1.  Agreements,  combinations,  etc.,  only  wtcidentally  affecting  interstate 

commerce. 
184.  Agreements  to  Raise  Prices  of  lumber,  Not  Involving  an  Ab- 
sorption of  the  Entire  Traffic- An  agreement  between  a 
number  of  lumber  dealers  in  different  States  to  raise  the 
price  of  lumber  50  cents  per  thousand  feet  in  advance  of  the 
market  price  can  not  operate  as  a  restraint  upon  trade 
within  the  meaning  of  the  act  of  Congress  "  to  protect  trade 
and  commerce  against  unlawful  restraint  and  monopolies" 
(26  Stat,  209)  unless  such  agreement  involves  an  absorption 
of  the  entire  traffic  and  is  entered  into  for  the  purpose  of 
monopolizing  trade  in  tfiat  commodity  with  the  object  of 
extortion.     V,  8,  v.  Nelson,  52  F.,  646.  1—77 

But  tec -Combinations,  etc.,  8-15. 


TXDEX — DIGEST. 


1081 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,    ETC.— Cont*d. 

III.  Not  Prohibited— Continued. 
136.  A  combination  between  all  the  lumber  manufacturers  of  a  city 
to  raise  and  maintain  the  price  of  lumber  to  local  consumers, 
and  to  refuse  to  sell  lumber  to  consumers  who  purchase  any 
part  of  their  supply  from  outside  mills,  some  of  such  mills 
supplying  the  local  market  being  situated  in  another  State, 
is  not  in  violation  of  the  Sherman  Anti-Trust  Law,  as  in 
restraint  of  interstate  commerce,  its  effect  on  such  commerce 
being  indirect  and  incidental  only.  Ellis  v.  Inman,  Poulsen 
d  Co.,  124  F.,  956.  2—268 

Reversed,  131  F.,  182  (2—577). 

186.  Apportionment  of  Territory— Agreements  Not  to  Compete— Iron 

Pipe. — The  combination  of  several  corporations  engaged  In 
the  manufacture  of  cast-iron  pipe  whereby  they  agree  not  to 
compete  with  each  other  in  regard  to  work  done  or  pipe 
furnished  in  certain  States  and  Territories,  and,  to  make 
effectual  the  objects  of  the  association,  agree  to  charge  a 
bonus  upon  all  work  done  and  pipe  furnished  within  those 
States  and  Territories,  which  bonus  was  to  be  added  to  the 
real  market  price  of  the  pipe  sold  by  those  companies,  was 
not  a  violation  of  the  Anti-Trust  Act,  as  it  affected  inter- 
state commerce  only  incidentally.  U.  8.  v.  Addyston  Pipe 
and  Steel  Co.,  78  F.,  712.  1—631 

Reversed,  85  F.,  271  (1—772)  ;  175  U.  S.,  211  (1_1009).    See 
Combinations,  etc.,  39-^6. 

187.  Same. — In    the   examination    of   such    a    contract,    fraud   and 

illegality  are  not  to  be  presumed,  but  must  be  proved,  as  in 
all  other  cases.  75, 

188.  Acts,  contracts,  and  combinations  which  promote,  or  only  inci- 

dentally or  indirectly  restrict  competition  in  commerce 
among  the  States,  while  their  main  purpose  and  chief  effect 
are  to  foster  the  trade  and  increase  the  business  of  those 
who  make  and  operate  them,  are  not  in  restraint  of  inter- 
state commerce,  or  violative  of  section  3  of  the  act  of  July  2, 
1890  (26  Stat,  209).  Whitwell  v.  Continental  Tobacco  Co.] 
125  F.,  454.  2—271 

139.  Same. — Attempts  to  monopolize  a  part  of  commerce  among  the 
,     States   which   promote,   or  only   incidentally   or   indirectly 

restrict,  competition  in  interstate  commerce,  while  their 
main  purpose  and  chief  effect  are  to  increase  the  trade  and 
foster  the  business  of  those  who  make  them,  were  not 
intended  to  be,  and  were  not,  made  illegal  or  punishable  by 
section  2  of  the  Anti-Trust  Act  of  July  2,  1890,  chapter  647 
(26  Stat,  209),  because  such  attempts  are  indispensable  to 
the  existence  of  any  competition  In  commerce  among  the 
States.  jj^  ' 

140.  Combination  to  Monopolize  Refining  and  Selling  Sugar  by  Buy- 

ing up  all  Competitors  not  a  Violation  of  the  Statute.— A 
combination  whose  object  is  to  enable  a  single  company  to 


1082 


INDEX — ^DIGEST. 


COMBINATIONS,    CONSPIBACIES,    CONTBACTS,   ETC.— CJout'd. 

III.  Not  Prohibited — Continued. 

monopolize  and  control  the  business  of  refining  and  selling 
sugar,  by  buying  up  all  competing  concerns  in  the  United 
States,  Is  net  in  violation  of  Federal  Anti-Trust  Act  of  July 
2, 1890,  for  it  constitutes  no  restriction  upon,  or  monopoly  of, 
commerce  between  the  States,  but,  at  most,  only  makes  it 
possible  for  the  promoters  of  the  combination  to  restrict  or 
monopolize  such  commerce,  should  they  so  desire.  17.  8.  v. 
E.  C.  Kniffht  Co.,  60  F.,  306.  1—250 

141.  Same. — ^The  purchase  of  stock  of  sugar  refineries  for  the  pur- 
pose of  acquiring  control  of  the  business  of  refining  and 
selling  sugar  in  the  United  States  does  not  involve  monopoly, 
or  restraint  of  interstate  or  foreign  commerce,  within  the 
meaning  of  the  act  of  July  2,  1890.  U.  8.  v.  E.  C.  Kniffht  Co., 
60  F.,  934.  1—258 

148.  Farchase  of  Similar  Establishments  in  other  States  and  thus 
Securing  a  Monopoly  Bears  no  Direct  Belation  to  Interstate 
or  Foreign  Commerce. — Although  the  American  8ugar  Refin- 
ing Company,  a  corporation  existing  under  the  laws  of  the 
State  of  New  Jersey,  obtained  through  the  purchase  of 
stock  in  four  Philadelphia  refineries  such  disposition  over 
those  manufactories  throughout  the  United  States  as  gave 
it  a  practical  monoixily  of  the  business,  Held,  that  the  ac- 
quisition of  those  refineries  by  the  New  Jersey  corporation, 
and  the  business  of  sugar  refining  in  Pennsylvania,  bear  no 
direct  relation  to  commerce  between  the  States  or  with  for- 
eign nations ;  and  that  the  result  of  the  transaction  was  the 
creation  of  a  monopoly  in  the  manufacture  of  a  necessary  of 
life,  which  could  not  be  suppressed  under  the  Anti-Trust 
Act  of  July  2,  1890  (26  Stat,  209).  17.  8.  v.  E.  C.  Knight 
Co.,  156  U.  S.,  1.  1—379 

148.  Corporate  Bights  as  Begards  Acquisition  of  Property  to  an  Ex- 
tent which  Gives  Control  of  Traffic  Therein  Among  the  States 
Mot  Prohibited. — Congress  has  no  authority,  under  the  com- 
merce clause  or  any  other  provision  of  the  Constitution,  to 
limit  the  right  of  a  corporation  created  by  a  State  in  the 
acquisition,  control,  and  disposition  of  property  In  the  several 
States,  and  it  is  immaterial  that  such  property,  or  the  prod- 
ucts thereof,  may  become  the  subjects  of  interstate  com- 
merce. It  is  apparent  that  by  the  act  of  July  2,  1890,  in  rela- 
tion to  monopolies,  Congi-ess  did  not  intend  to  declare  that 
the  acquisition  by  a  State  coriwration  of  so  large  a  part  of 
any  species  of  property  as  to  enable  the  owners  to  control  the 
traffic  therein  among  the  several  States,  constituted  a  crimi- 
nal offense.    In  re  Oreene,  52  F.,  104.  1 — 55 

144.  Contract  by  wMoh  Stockholders  of  a  Corporation  Agree  Not  to 
Enter  Into  Competition  With  Purchaser  of  the  Business  of 
the  Company.— The  Anti-Trust  Act  of  July  2,  1890  (26  Stat., 
209)  has  no  application  to  a  contract  by  which  the  stock- 


INDEX — DIGEST. 


1083 


COMBINATIONS,    CONSPIRACIES,    CONTBACTS,    ETC.— Cont'd. 

III.  Not  Prohibited— Continued. 

holders  of  a  corporation  engaged  in  dealing  in  fish  at  differ- 
ent places,  in  consideration  of  the  purchase  of  the  business 
and  good  will  of  the  company  by  another,  agreed  not  to  enter 
into  competition  with  him  in  such  business  for  the  term  of 
ten  years.    A.  Booth  d  Co.  v.  Davis,  127  F.,  85.  2—318 

145.  Same. — Such  a  covenajjt  by  the  stockholders  rests  upon  a  good 

consideration  and  is  lawful,  and  the  right  of  the  purchaser  to 
enforce  it  can  not  be  affected  by  the  question  whether  he 
has  conducted  the  business  lawfully  since  his  purchase,    /ft. 

146.  Same — Suit  to  Enforce — Defenses. — In  a  suit  to  enjoin  a  defend- 

ant from  violating  such  a  contract  and  to  enjoin  a  codefend- 
ant  from  employing  his  services  in  a  competing  business,  it 
is  no  defense  that  his  codefendant  hired  him  in  ignorance 
of  the  contract,  and  will  suffer  damage  if  deprived  of  his 
services.  /^^ 

147.  Same— Corporation  Selling  Out  Assets  and  Good  Will  and  There- 

by Incidentally  or  Bemotely  Affecting  Interstate  Commerce. — 
Where  a  corporation  engaged  in  the  business  of  buying  and 
selling  fish  sold  out  its  assets  and  good  will  to  plaintiff's  as- 
signor, and  the  seller  no  longer  retained  any  interest  in  the 
property,  so  that  the  sale  was  not  a  mere  combination  of 
owners  and  properties  under  one  management,  the  sale  was 
not  in  violation  of  the  Federal  Anti-Trust  Act  of  July  2, 
1890  (26  Stat,  200),  though  the  contract  might  incidentally 
or  in  some  remote  degree  injuriously  affect  interstate  com- 
merce.    Davis  v.  A.  Booth  d  Co.,  131  F.,  31.  2—566 

148.  Same. — An  agreement  ancillary  to  such  sale  of  a  c-orporation's 

business,  by  which  the  stocli holders,  who  received  the  pur- 
chase price,  agreed  that,  in  order  to  protect  the  good  will  of 
the  business  so  sold,  they  would  not  either  directly  or  indi- 
rectly engage  in  the  same  business  within  certain  distinct 
limits  for  a  perod  of  ten  years,  was  not  void,  as  an  unreason- 
able restraint  of  competition  in  trade,  at  common  law.        76. 

149.  Contract  for  Entire  Product.— A  contract  with  an  independent 

manufacturer  of  wooden  ware  for  the  entire  product  of  his 
plant  is  not  in  itself  a  contract  in  illegal  restraint  of  trade. 
Carter-Cnime  Co.  v.  Perrung,  68  F.,  439.  1 845 

150.  Same. — If  an  independent  manufacturer  contracts  to  sell  his  en- 

tire product,  without  knowledge  of  similar  contracts  made  by 
the  buyer  with  other  manufacturers,  and  without  any  knowl- 
edge of  the  fact  that  such  contract  was  intended  by  the  buyer 
as  one  step  in  a  general  scheme  for  monopolizing  the  trade 
in  that  article  and  controlling  prices,  such  independent 
manufacturer  can  not  be  held  to  have  conspired  against  the 
freedom  of  conmierce,  or  to  have  made  a  contract  in  illegal 
restraint  of  trade.  /^^ 


1084 


INDEX — DIGEST. 


OOMBHTATIOHS,   COMSPIBACIBS,   COHTBACTS,  ETC.— Cont'd. 

III.  Not  Pbouibiteo — Continued. 

151.  Wliere  the  subject-matter  of  the  airireement  does  not  directly 

relate  to  and  act  upon  and  embrace  interstate  commerce,  and 
wliere  the  undisputed  facts  clearly  show  that  the  purpose  of 
the  agreement  was  not  to  regulate,  obstruct,  or  resti-ain  that 
commerce,  but  that  it  was  entered  into  with  the  object  of 
properly  and  fairly  regulating  the  transaction  of  the  busi- 
ness in  which  the  parties  to  the  agreement  were  engaged. 
such  agreement  will  be  upheld  as  not  within  the  statute, 
where  it  can  l»e  seen  that  the  character  and  terms  of  the 
agreement  are  well  calculated  to  attain  the  purpose  for  which 
it  was  formed,  and  where  the  effect  of  its  formation  and 
enforcement  upon  interstate  trade  or  commerce  is  In  any 
event  but  indirect  and  incidental,  and  not  its  purpose  or 
object  Anderson  y.  Uniteii  States,  171  U.  S.,  604.  1—067 
See  aho  Combinations,  etc.,  9,  105.  174,  176,  and  Statutes, 
7,  8, 14,  44,  49. 

2.  Agreements  not  to  en  gaffe  in  business, 

152.  Agreements  Not  to  Engage  in  Business  within  a  Radius  of  50 

Miles. — A  covenant  in  a  contract  by  which  the  owners  of 
brickmaklug  plants  conveyed  them  to  a  corporation  in  ex- 
change for  its  stock,  binding  the  sellers  not  to  engage  in 
competing  business  within  a  radius  of  50  miles  from  the 
place  of  business  of  the  corporation  for  a  term  of  ten  years, 
la  valid,  and  may  be  enforced  in  a  court  of  equity  by  a  suit 
to  enjoin  Its  violation.  Rohmson  v.  Suburban  Brick  Co.,  127 
P..  804.  2—312 

153.  Same. — Such  a  covenant  is  personal,  and  is  not  brought  within 

the  statutes  of  a  State  other  than  that  in  which  the  contract 
was  made  by  the  fact  that  the  property  sold  was  situated  In 
such  State.  lb. 

154.  A  contract  for  sale  of  vessels,  even  if  they  are  engaged  in  inter- 

state commerce,  is  not  necessarily  void  because  the  vendors 
agree,  as  is  ordinary  in  case  of  sale  of  a  business  and  its 
good  will,  to  withdraw  from  business  for  a  specified  period. 
Cincinnati,  etc.,  Packet  Co.  v.  Bap.  200  U.  S..  179.        2—868 

155.  Contract  by  which  Stockholders  of  a  Corporation  Agree  Not  to 

Enter  into  Competition  with  a  Purchaser  of  the  Business  of 
the  Company. — A  covenant  by  the  stockholders  of  a  corpora- 
tion which  sold  its  property,  business,  and  good  will,  that,  in 
consideration  of  such  sale  and  as  an  inducement  thereto, 
they  would  not  directly  or  indirectly  engage  in  the  same 
or  like  kind  of  business  as  that  carried  on  by  the  company 
in  the  same  territory  or  in  the  immediate  vicinity  of  such 
territory  for  ten  years  after  the  sale,  rests  upon  a  good 
consideration  and  is  lawful,  and  the  right  of  the  purchaser 
to  enforce  it  can  not  be  affected  by  the  question  whether  he 


INDEX — ^DIGEST. 


1085 


COMBINATIONS,    CONSPIBACIES,    CONTRACTS,   ETC.— Cont'd. 

III.  Not  Prohibited— Continued. 


has  conducted  the  business  lawfully  since  his  purchase. 
A.  Booth  &  Co.  V.  Dams,  127  F.,  875.  2—318 

156.  Same— Suit  to  Enforce— Defenses.— In  a  suit  to  enjoin  a  defend- 

ant from  violating  a  contract  by  which  for  a  valuable  con- 
sideration he  covenanted  not  to  engage  in  business  for 
himself  or  another  in  competition  with  that  of  complainant 
for  a  term  of  years,  and  to  enjoin  a  codefendant  from  em- 
ploying his  services  in  a  competing  business,  it  is  no  defense 
that  his  codefendant  hired  him  in  ignorance  of  the  contract, 
and  will  suffer  damage  if  deprived  of  his  services.  lb 

157.  An  agreement  by  which  the  stockholders  of  a  corporation,  on 

selling  its  assets  to  complainant's  assignor,  agreed  not  to 
again  engage  in  a  similar  business  in  specified  localities  for 
a  period  of  ten  years,  or  do  any  act  tending  to  impair  the 
good  will  of  the  business  sold,  was  not  contrarv  to  public 
policy.     Davis  v.  A.  Booth  d  Co.,  131  F.,  31.         '        2—566 

158.  Same— Construction.— Where  such  contract  ancillary  to  the  sale 

provided  that  the  stockholders  of  the  seller'  would  not 
again  engage  in  a  similar  business  for  a  period  of  ten 
years  in  the  territory,  or  the  immediate  vicinity  of  the 
territory,  dealt  in  by  the  corporation,  or  operated  in  by  it 
or  its  agents,  or  the  immediate  vicinity  of  such  territory, 
the  localities  guarded  against  were  restricted  to  those  in 
which  the  selling  company  had  establishments  for  doing 
business,  and  the  immediate  vicinity  thereof,  and  did  not 
include  all  parts  or  every  one  of  the  United  States  in  which 
a  former  customer  resided,  or  into  which  the  corporation's 
correspondence  had  extended,  or  through  which  an  agent  of 
the  company  had  traveled.  j^ 

159.  Assignment  of  Patent— Agreements  to  Remain  out  of  Business  — 

A  conti-act  recited  that  plaintiff,  who  was  the  patentee  of  an 
mvention  relating  to  brake  beams,  for  the  consideration  of 
$10,000  to  be  paid  him,  had  assigned  to  defendant,  which 
was  a  corporation  engaged  in  the  manufacture  of  brake 
beams,  a  certain  patent  and  a  pending  application  for  a  sec- 
ond and  provided  that  plaintiff  during  the  life  of  the  patent 
should  not  become  connected  with  any  company  manufactur- 
ing or  selling  brake  beams  in  the  United  States  either  as 
officer,  employee,  or  shareholder,  but  reserved  to  him  the 
right  to  terminate  such  part  of  the  contract  at  any  time  by 
refunding  the  consideration  paid  him  by  defendant.  Held 
That  such  agreement  to  remain  out  of  the  brake-beam  busi- 
ness did  not  render  the  contract  unlawful  as  one  in  restraint 
of  trade  and  competition  or  creating  a  monopoly  and  that 
plamtiff  could  maintain  an  action  thereon  to  recover  the 
stipulated  consideration.  American  Brake  Beam  Co  v 
Pungs,  141  F.,  923.  ^^l^ 

11808— VOL  2— 06  m 69 


1086 


INDEX — ^DIGEST. 


COMBINATIONS,    CONSPIRACIES,   CONTRACTS,   ETC.— Cont'd. 

III.  Not  Prohibited— Continued. 

3,  Manufacturer's  right  to  regulate  prices  and  restrict  sale  of  his  own 

products. 

1«0.  Contracts  Made  by  Manufacturer  with  Wholesale  Dealers  to  Sell 
Proprietary  Medicines  at  a  Certain  Price  Only.— A  system  of 
contracts  made  by  the  manufacturer  of  a  proprietai-y  med- 
icine between  him  and  wholesale  dealers,  to  whom  alone  he 
sold  his  medicine,  by  which  tbey  were  bound  to  sell  only  at 
a  certain  price  and  to  retail  dealers  designated  by  him,  and 
between  him  and  the  retail  dealers  by  which,  in  considera- 
tion of  being  so  designated,  they  agreed  to  sell  to  consumers 
only  at  a  certain  price,  is  not  unlawful  as  in  restraint  of 
trade,  but  is  a  reasonable  provision  for  the  protection  of  the 
manufacturer's  trade,  and  he  is  entitled  to  an  injunction  to 
restrain  a  defendant  from  inducing  other  parties  to  such  con- 
tracts to  violate  the  same.  Hartman  v.  John  D.  Parks  d 
Sons  Co.,  145  F.,  358.  2—1000 

See  also  Dr,  Miles  Medical  Co.  v.  Jaynes  Drug  Co.,  149  F.,  838. 

lei.  Agrreement  for  Eebate  if  Price  is  Maintained,  where  Purchaser 
was  not  Bound  in  any  way.— An  arrangement  whereby  a  dis- 
tillery company  promised  persons  who  purchased  from  its 
distributing  agents  that  if  for  the  ensuing  six  months  they 
would  purchase  their  distillery  products  exclusively  from 
such  agents  and  would  not  resell  the  same  at  prices  less  than 
those  fixed  by  the  company,  then,  on  being  furnished  with  a 
certificate  of  compliance  therewith,  it  would  pay  a  certain 
rebate  on  the  amount  of  such  purchases,  did  not  constitirte  a 
contract  in  restraint  of  trade,  within  the  meaning  of  section 
1  of  said  act,  since  the  purchaser  was  not  in  any  way  bound 
to  the  performance  of  the  conditions  named;  nor  did  such 
arrangement  operate  to  "  monopolize,"  or  "  as  an  attempt  to 
monoi)olize,"  trade  and  commerce,  within  the  meaning  of 
section  2  of  said  act.    In  re  Greene,  52  F.,  104.  1—56 

162.  Same — No  Offense  even  after  Compliance  with  the  Conditions. 

Nor  was  there  any  offense  under  the  statute,  even  after  the 
purchaser  complied  with  the  conditions  of  the  promise,  and 
thereby  became  entitled  to  the  rebate,  for  such  compliance 
had  no  retroactive  effect  to  create  a  valid  contract  between 
the  parties  prior  thereto.  /j. 

168.  Same.— Even  if  the  promise  could  be  considered  as  a  binding 
contract  between  the  parties,  the  restraint  thereby  imposed 
was  only  partial  and  reasonable  in  the  protection  of  de- 
fendant's business,  and  was  not  of  the  general  character 
necessary  to  constitute  an  unlawful  contract  in  restraint  of 
trade.  Mogul  8.  8.  Co.  v.  McGregor  [1892],  App.  Cas.,  pt.  1. 
p.  25,  approved.  /j, 

164.  A  manufacturer,  a  corporation,  and  its  employee  restricted  the 
sales  of  its  products  to  those  who  refrained  from  dealing  In 


INDEX — ^DIGEST. 


1087 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,   ETC.-Confd. 

III.  Not  Pboiiibited — Continued. 

the  commodities  of  its  competitors  by  fixing  the  prices  of  its 
goods  to  those  who  did  not  thus  refrain  so  high  that  their 
purchase  was  unprofitable,  while  it  reduced  the  prices  to 
those  who  declined  to  deal  in  the  wares  of  its  competitors  so 
that  the  purchase  of  the  goods  was  profitable  to  them.  The 
plaintiff  applied  to  purchase,  but  refused  to  refrain  from 
handling  the  goods  of  the  corporation's  competitors,  and  sued 
it  for  damages  caused  by  the  refusal  of  the  defendants  to 
sell  their  commodities  to  him  at  prices  which  would  make  it 
profitable  for  him  to  buy  them  and  sell  them  again.  Held, 
The  restriction  of  their  own  trade  by  the  defendants  to 
those  purchasers  who  declined  to  deal  in  the  goods  of  their 
competitors  was  not  violative  of  the  Anti-Trust  Act.  Whit- 
well  V.  Continental  Tobacco  Co.,  125  F.,  454.  2—271 

165.  Sales.— The  owner  of  goods  may  dictate  the  prices  at  which  he 

will  sell  them,  and  the  damages  which  are  caused  to  an 
applicant  to  buy  by  the  refusal  of  the  owner  to  sell  to  him 
at  prices  which  will  enable  him  to  resell  them  at  a  profit 
constitute  no  legal  injury,  and  are  not  actionable,  because 
they  are  not  the  result  of  any  breach  of  duty  or  of  contract 
by  the  owner.  j^ 

166.  Contracts  Restricting  Territory  within  Which  Purchasers  may 

Sell.— A  contract  of  sale  by  a  manufacturer  to  jobbers  of 
some  of  its  product,  to  be  shipped  across  State  lines  to  the 
latter,  whereby  the  parties  agree  that  the  purchasers  shall 
not  sell,  ship,  or  allow  any  of  the  product  thus  purchased  to 
be  shipped  outside  of  a  certain  State,  is  not  in  restraint  of 
trade  or  illegal  under  the  act  of  July  2,  1890.  Phillips  v. 
lola  Portland  Cement  Co.,  125  F.,  593.  2—284 

4.  Live-stock  associations  a/nd  commission  merchants. 

167.  A  combination  of  commission   merchants   at   stock   yards,   by 

which  they  refuse  to  do  business  with  those  who  are  not 
members  of  their  association,  even  if  it  is  illegal,  is  not  sub- 
ject to  the  act  of  Congress  of  July  2,  1890,  to  protect  trade 
and  commerce,  since  their  business  is  not  interstate  com- 
merce. Hopkins  v.  U.  8.,  171  U.  S.,  578.  1—941 
Reversing  82  F.,  529  (1—725). 

168.  Same.— In  order  to  come  within  the  provisions  of  the  statute, 

the  direct  effect  of  an  agreement  or  combination  must  be  in 
restraint  of  trade  or  commerce  among  the  several  States  or 
with  foreign  nations.  j^^ 

169.  Same.— A   by-law  of  the   Kansas   City   Live-Stock   Exchange! 

which  regulates  the  commissions  to  be  charged  by  members 
of  that  association  for  selling  live  stock  is  not  in  restraint 
of  interstate  commerce  or  a  violation  of  the  act  of  July  2, 
1890,  to  protect  commerce  from  unlawful  restraints.  Ih. 


1088 


INDEX — ^DIGEST. 


COMBINATIONS,   CONSPIBACIBS,   CONTBACTS,   ETC.— Cont'd. 

III.  Not  Pkohibited— Continued. 

170.  Same.— A  commission  agent  who  sells  cattle  at  their  place  of 

destination,  which  are  sent  from  another  State  to  be  sold,  is 
not  engagred  in  interstate  commerce;  nor  is  his  agreement 
with  others  in  the  same  business,  as  to  the  commissions  to 
be  charged  for  such  sales,  void  as  a  contract  in  restraint  of 
that  commerce.  j^^ 

171.  Same.— The  bnsiness  of  agents  in  soUciting  consignments  of 

«jattlc  to  commission  merchants  in  another  State  for  sale  is 
not  interstate  commerce;  and  a  by-law  of  a  stoclj  exchange 
restricting  the  number  of  solicitors  to  three  does  not  re- 
strain that  commerce  or  violate  the  act  of  Congress.  /6. 

172.  Uve-Stock   Exchange— Agreement   not    to    do    Bnsiness    with 

Other  Yard  Traders  who  are  not  Members  of  the  Exchange.— 
An  agreement  among  persons  engaged  in  the  common  busi- 
ness, as  yard  trader,  of  buying  at  a  city  stock  yard  cattle 
which  came  from  diflferent  States,  that  they  will  form  an 
association  for  the  better  conduct  of  their  business,  and  that 
they  will  not  transact  business  with  other  yard  traders  who 
are  not  members,  or  bay  cattle  from  those  who  also  sell  to 
yard  traders  who  are  not  members  of  the  association,  is  not 
In  violation  of  the  act  of  July  2,  1890,  to  protect  trade  and 
commerce  against  unlawful  restraints  and  monopolies. 
.    Afidersm  v.  U.  8.,  171  U.  S.,  604.  1—967 

178.  Same.^ — A  rule  of  a  live-stock  exchange  that  its  members  shall 
not  recognize  any  yard  trader  who  is  not  also  a  member  of 
the  exchange  is  not  in  restraint  of,  or  an  attempt  to  mo- 
nopolize, trade,  where  the  exchange  does  not  itself  do  any 
business,  and  there  is  nothing  to  prevent  all  yard  traders 
from  being  members  of  the  exchange  and  no  one  is  hindered 
from  having  access  to  the  yards  or  having  all  their  facilities, 
except  that  of  selling  to  members  of  the  exchange.  /6. 

17A  Same. — Rules  to  enforce  the  purpose  and  object  of  such  ex- 
change, if  reasonable  and  fair,  can  not,  except  remotely, 
affect  interstate  trade  and  commerce,  and  are  not  void  as 
violations  of  the  act  of  July  2,  1890.  /ft. 

17i.  Same.- In  order  to  come  within  the  provisions  of  the  statute 
the  direct  effect  of  an  agreement  or  combination  must  be  in 
restraint  of  that  trade  or  commerce  which  is  among  the 
several  States  or  with  foreign  nations.  /». 

176.  Same.— Where  the  subject-matter  of  the  agreement  does  ndt 
directly  relate  to  and  act  upon  and  embrace  interstate  com- 
merce, and  where  the  undisputed  facts  clearly  show  that  the 
purpose  of  the  agreement  was  not  to  regulate,  obstruct,  or 
restrain  that  commerce,  but  that  it  was  entered  into  with  the 
object  of  properly  and  fairly  regulating  the  transaction  of 
the  business  In  which  the  parties  to  the  agreement  were  en- 
gaged, such  agreement  will  be  upheld  as  not  within  the 


INDEX — DIGEST. 


1089 


1/ 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,   ETC.— Cont'd. 

III.  Not  Prohibited— Continued, 
statute,  where  it  can  be  seen  that  the  character  and  terms 
of  the  agreement  are  well  calculated  to  attain  the  purpose 
for  which  it  was  formed,  and  where  the  effect  of  its  forma- 
tion and  enforcement  upon  interstate  trade  or  commerce  is 
in  any  event  but  indirect  and  incidental,  and  not  its  purpose 
or  object  jj 

5.  Stock  exchanges— Contract  for  distribution  of  quotations, 

177.  A  contract  between  a  board  of  trade,  having  a  property  right 

in  the  quotations  made  on  its  exchange,  and  a  telegraph  com- 
pany relating  to  the  transmission  and  distribution  of  such 
quotations  by  the  latter  is  not  in  violation  of  the  Anti-Trust 
Act  of  1890  (26  Stat,  209),  as  in  restraint  of  trade  and  com- 
merce, because  of  a  provision  that  the  quotations  shall  only 
be  furnished  to  persons  who  sign  an  agreement  to  the  effect 
that  they  shall  not  be  used  in  the  conduct  of  a  bucket  shop. 
Board  of  Trade  v.  Christie  Grain  &  Stock  Co.,  121  F.,  608. 

2— 3.S3 

178.  Contracts  under  which  the  Chicago  Board  of  Trade  furnishes 

telegraph  companies  with  its  quotations,  which  it  could  re- 
frain from  communicating  at  all,  on  condition  that  they  will 
only  be  distributed  to  persons  in  contractual  relations  with, 
and  approved  by,  the  board,  and  not  to  what  are  known  as 
bucket  shops,  are  not  void  and  against  public  policy  as  being 
in  restraint  of  trade  either  at  common  law  or  under  the 
Anti-Trust  Act  of  July  2,  1890.  Board  of  Trade  v.  Christie 
Grain  and  Stock  Co,,  198  U.  S.,  236.  2—717 

179.  Same— Property  Right  in  Quotations— Entitled  to  Protection.— 

In  a  suit  brought  by  the  Chicago  Board  of  Trade  to  restrain 
parties  from  using  the  quotations  obtained  and  used  without 
authority  of  the  board,  defendants  contended  that  as  the 
board  of  trade  permitted,   and   the  quotations   related   to, 
transactions  for  the  pretended  buying  of  grain  without  any 
intention  of  actually  receiving,  delivering,  or  paying  for  the 
same,  that  the  board  violated  the  Illinois  bucketshop  statute 
and  there  were  no  property  rights  in  the  quotations  which 
the  court  could  protect  and  that  the  giving  out  of  the  quota- 
tions to  certain  persons  makes  them  free  to  all.    Held.  That 
even  if  such  pretended  buying  and  selling  is  permitted  by 
the  board  of  trade  it  is  entitled  to  have  its  collection  of  quo- 
tations protected  by  the  law  and  to  keep  the  work  which  it 
has  done  to  itself,  nor  does  it  lose  its  property  rights  in  the 
quotations  by  communicating  them  to  certain  persons,  even 
though  many,  in  confidential  and  contractual  relations  to 
itself,  and  strangers  to  the  trust  may  be  restrained  from  ob- 
taining and  using  the  quotations  by  including  a  breach  of 
the  trust.  r^ 


1090 


INDEX— DIGEST. 


INDEX — DIGEST. 


1091 


COMBINATIONS,    CONSPIBACIBS,   CONTBACTS,   ETC.-CJonfd. 

III.  Not  Prohibited— Continued. 
180.  Same— Entitled  to  Protection  Though  it  Concerns  Illegal  Acts.— 
A  collection  of  information,  otherwise  entitled  to  protection, 
does  not  cease  to  be  so  because  it  concerns  illegal  acts,  and 
statistics  of  crime  are  property  to  the  same  extent  as  other 
statistics,  even  if  collected  by  a  criminal  who  furnishes  some 
of  the  data.  /^ 

6,  Siochholdinff  corporations— Minnesota. 

ISl.  Anti-Trust  Law  of  Minnesota  Should  Eeceive  Same  Construction 
as  Sherman  Anti-Trust  Law.—The  anti-trust  law  of  Minne- 
sota (Laws  1899,  p.  487,  ch.  359),  making  unlawful  any  con- 
tract or  combination  In  restraint  of  trade  or  commerce  within 
the  State,  is  in  substantially  the  same  language  as  the  Anti- 
Trust  Act  of  July  2,  1890  (26  Stat,  2()9),  and  must  receive 
a  similar  construction.  Minnesota  v. '  Northern  Securities 
Co.,  123  F.,  692.  2—246 

Reversed,  194  U.   S.,  38.    Circuit  Court  had  no  jurisdiction 
(2—533). 

182.  Same — Stockholding  Corporation. — A  holding  corporation  or- 
ganized by  individual  stockholders  of  two  railroad  companies 
owning  and  operating  substantially  parallel  and  competing 
lines  of  railroad  within  the  State  of  Minnesota,  for  the  sole 
purpose  of  acquiring,  by  the  exchange  of  its  own  stock  there- 
for, stock  of  the  two  companies,  and  holding  and  voting  the 
same,  but  having  no  power  or  franchise  to  operate  a  rail- 
road, is  not  in  violation  of  the  Minnesota  anti-trust  law 
(Laws  1899,  p.  487,  ch.  359),  which  provides  that  "any  con- 
tract, agreement,  arrangement,  or  conspiracy,  or  any  com- 
bination in  the  form  of  a  trust  or  otherwise  *  *  *  which 
is  in  restraint  of  trade  or  commerce  within  this  State 
♦  *  *  is  hereby  prohibited  and  declared  to  be  unlawful," 
where  the  purpose  of  its  promoters  was  thereby  to  acquire 
and  retain  in  the  same  hands  a  majority  of  the  stock  of  one 
or  both  companies,  to  insure  uniformity  of  policy  and  stabil- 
ity of  management,  although  it  in  fact  acquired  the  con- 
trolling interest  in  both,  in  the  absence  of  any  evidence  that 
it  ever  exercised  its  power  to  prevent  competition  between 
the  two  roads,  or  to  interfere  in  any  manner  with  the  fixing 
of  rates  by  either  company.  /j, 

7.  Patents— Comhinations,  etc.,  to  keep  up  the  mmopolies. 

183.  Holding  Company.— Contracts  by  which  a  number  of  patents 
covering  similar  inventions  are  conveyed  by  the  several  own- 
ers to  one  of  the  parties,  which  grants  licenses  under  all  to 
the  others,  are  not  void  as  against  public  policy  or  as  in 


\ 


COMBINATIONS,    CONSPIBACIES,    CONTRACTS,    ETC.— Cont'd. 

III.  Not  Prohibited— Continued, 
violation  of  the  Sherman  Anti-Trust  Law,  because  of  pro- 
visions intended  to  protect  and  keep  up  the  patent  monop- 
oly by  requiring  the  licensor  to  prosecute  all  infringers, 
limiting  the  licenses  to  be  granted  to  such  licensees  as  shall 
be  agreed  on,  and  imix)sing  conditions  on  each  licensee  as  to 
the  use  and  ownership  of  the  patented  machines,  and  pro- 
hibiting him  from  using  any  others.  V.  S.  Consolidated 
Seeded  Raisin  Co.  v.  Ghiffin  <&  Skelley  Co.,  126  F.,  364.    2—288 

184.  Conditions  imposed  by  the  patentee  in  a  license  of  the  right  to 

manufacture  or  sell  the  patented  article,  which  keep  up  the 
monopoly  or  fix  prices,  do  not  violate  the  act  of  Congress  of 
July  2,  1890  (26  Stat,  209),  to  protect  trade  and  commerce 
against  unlawful  restraints  or  monopolies.  Bement  v. 
National  Harrow  Co.,  186  U.  S.,  70.  2—170 

185.  Keasonable  and  legal  conditions  imposed  by  the  patentee  in  a 

license  of  the  right  to  manufacture  and  sell  the  patented 
article,  restricting  the  terms  upon  which  the  article  manu- 
factured under  such  license  may  be  used  and  the  price  to  be 
demanded  therefor,  do  not  constitute  such  a  restraint  on 
commerce  as  is  forbidden  by  the  act  of  Congress  of  July  2, 
1890  (26  Stat,  209),  to  protect  trade  and  commerce  against 
unlawful  restraints  and  monopolies.  /b. 

186.  The  agreement  of  the  licensee  of  a  patent  for  improvements  re- 

lating to  float  spring-tooth  harrows  not  to  manufacture  or 
sell  any  other  such  harrows  than  those  which  it  had  made 
under  its  patents  before  assigning  them  to  the  licensor,  or 
which  it  was  licensed  to  manufacture  and  sell  under  the 
terms  of  the  license,  except  such  other  style  and  construction 
as  it  may  be  licensed  to  manufacture  and  sell  by  such 
licensor,  is  not  void  as  an  unlawful  restraint  on  trade  or 
commerce  forbidden  by  the  act  of  Congress  of  July  2,  1890 
(26  Stat,  209),  since  the  plain  purpose  of  this  provision  is 
to  prevent  the  licensee  from  infringing  on  the  rights  of 
others  under  other  patents,  and  not  to  stifle  competition  or 
prevent  the  licensee  from  attempting  to  make  any  improve- 
ment in  harrows.  j^^ 

187.  An  agreement  by  the  licensor  of  a  patent  for  improvements  re- 

lating to  harrows  not  to  license  any  other  person  than  the 
licensee  to  manufacture  or  sell  any  harrow  of  the  peculiar 
style  and  construction  then  used  or  sold  by  such  licensee 
does  not  violate  the  act  of  Congress  of  July  2,  1890  (26 
Stat,  209),  to  protect  trade  and  commerce  against  unlawful 
resti-aints  and  monopolies.  /^ 

188.  The  very  object  of  these  laws  is  monopoly,  and  the  rule  is,  with 

few  exceptions,  that  any  conditions  which  are  not  in  their 
very  nature  illegal  with  regard  to  this  kind  of  property, 
imposed  by  the  patentee  and  agreed  to  by  the  licensee  for 


1092 


INDEX — ^DIGEST. 


COMBIlTATIOlfS,    CONSPIBACIES,   CONTRACTS,    ETC.— Cont'd. 

III.  XoT  Pkohibitei) — Contimied. 

the  right  to  manufacture  or  use  or  sell  the  article,  will  be 
upheld  by  the  courts.  The  fact  that  the  conditions  in  the 
contracts  keep  up  the  monopoly  or  fix  prices  does  not  render 
them  illegal.  Bement  v.  National  Harrow  Co.,  186  U.  S., 
70,  91.  2—189 

See  also  Combinations,  etc.,  92-99. 

8,  Bailroads—Rates—Qontracts,  etc.,  favoring  particular  roads  or 

individuals. 

lt».  Combinations  to  Maintain  Kailroad  Kates,  but  not  Preventing 
or  Illegally  Limiting  Competition,  not  a  Violation  of  Section 
1  of  Statute.— An  agi-eement  between  several  competing  rail- 
way companies  and  the  formation  of  an  association  there- 
under for  the  purpose  of  maintaining  just  and  reasonable 
rates,  preventing  unjust  discriminations  by  furnishing  ade- 
quate and  equal  facilities  for  the  interchange  of  traffic  be- 
.  tween  the  several  lines,  without  preventing  or  illegally  limit- 
ing competition,  is  not  an  agreement,  combination,  or  con- 
spiracy in  restraint  of  trade  in  violation  of  the  act  of  July 
2,  1890,  section  1.  U.  8.  v.  Trms-MUsouri  Freight  Assn,,  53 
F.,  410.  1—80 

Beversed,  166  U.  S.,  290  (1—648). 
190.  Same — Hot  a  Violation  of  Section  2  as  Tending  to  a  Monopoliza- 
tion, etc. — ^Nor  is  such  an  agreement  in  violation  of  section  2 
of  such  act  tending  to  the  monopolization  of  trade  and  com- 
merce. *  /5 
Ifl.  Same— Separate  Organizations,  etc.— Where  each  company,  by 
such  agreement,  maintains  its  own  organization  as  before, 
elects  its  own  officers,  delegates  no  powers  to  the  association 
to  govern  in  any  respect  the  operations  or  methods  of  trans- 
acting the  routine  business  of  the  several  competing  lines, 
bnt  simply  requires  that  each  company  shall  charge  just  and 
reasonable  rates,  and  provides  for  certain  regulations  in  re- 
gard to  changes  in  such  rates,  such  contract  or  agreement 
Is  not  forbidden  by  public  policy  as  amounting  to  a  transfer 
of  the  franchises  and  corporate  powers  of  such  companies. 

lb, 

19i.  Same. — A  contract  between  railroad  companies  forming  a 
freight  association  that  they  will  establish  and  maintain 
such  rates,  rules,  and  regulations  on  freight  traffic  between 
competitive  points  as  a  committee  of  their  choosing  shall 
recommend  as  reasonable ;  that  these  rates,  rules,  and  regu- 
lations shall  be  public;  that  there  shall  be  monthly  meetings 
of  the  association,  composed  of  one  representative  from  each 
railroad  company ;  that  each  company  shall  give  five  days' 
notice  before  some  monthly  meeting  of  every  reduction  of 


INDEX— DIGEST. 


1093 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,   ETC.— Cont'd. 

III.  Not  Prohibited — Continued, 
rates  or  deviation  from  the  rules  it  proposes  to  make ;  that 
it  will  advise  with  the  representatives  of  the  other  members 
at  the  meeting  relative  to  the  proposed  modification,  will  sub- 
mit the  question  of  its  proposed  action  to  a  vote  at  that 
meeting,  and,  if  the  proposition  is  voted  down,  that  it  will 
then  give  ten  days'  notice  that  it  will  make  the  modification 
notwithstanding  the  vote  before  it  puts  the  proposed  change 
into  eflfect;  that  no  member  will  falsely  bill  any  freight,  or 
bill  any  at  a  wrong  classification ;  and  that  any  member  may 
withdraw  from  the  association  on  a  notice  of  thirty  days, 
appears  to  be  a  contract  tending  to  make  competition  fair 
and  open,  and  to  induce  steadiness  of  rates,  and  is  in  accord 
with  the  policy  of  the  Interstate  Commerce  Act.  Such  agree- 
ment can  not  be  adjudged  to  be  a  contract  or  conspiracy  in 
restraint  of  trade  under  the  Anti-Trust  Act  when  it  is  ad- 
mitted that  the  rates  maintained  under  the  same  have  been 
reasonable  and  that  the  tendency  has  been  to  diminish 
rather  than  to  enhance  rates,  and  there  is  no  other  evidence 
of  its  consequences  or  effect.  Shiras,  district  judge,  dissent- 
ing.    53  Fed.   Rep.,  440,  affirmed.     U.  8.  v.  Trans-Mo.  Ft. 

Assn.,  58  F.,  58.  i ige 

Reversed,  ]6G  U.  S.,  290  (1—648). 
198.  Same. — No  monoiwly  of  trade  or  attempt  to  monopolize  trade 
within  the  meaning  of  the  Anti-Trust  Act  is  proved  by  such 
a  contract.  /^^ 

194.  Same. — The  railroad  companies  who  are  parties  to  such  a  con- 

tract do  not  thereby  substantially  disable  themselves  from 
the  discharge  of  their  public  duties.  n. 

195.  A  contract  by  which  a  railroad  company  arranges  with  another, 

to  the  exclusion  of  still  others,  for  the  interchange  of  pas- 
sengers and  freight  by  through  tickets  and  bills  of  lading 
is  not  a  contract  in  unlawful  restraint  of  trade,  within  the 
meaning  of  the  act  of  July  2,  1890.  Prescott  d  A.  C.  R.  Co. 
V.  Atchison,  T.  &  8.  F.  R.  Co.,  73  F.,  438.  1— 004 

196.  Contract  Between  Railroad  Company  and  Individual  Giving  to 

Latter  Exclusive  Control  of  Shipment  of  Milk  Over  its  Lines, 
Including  the  Fixing  of  Rates.— Defendant  railroad  company 
entered  into  a  contract  with  plaintiff  for  a  term  of  years  to 
build  up,  develop,  and  conduct  the  business  of  the  transpor- 
tation of  milk  on  its  lines  of  road.  Plaintiff  was  to  have 
full  charge  of  such  business  and  was  to  receive  as  compensa- 
tion a  percentage  of  the  freights  earned  therein.  It  was 
provided  that  he  should  charge  rates  not  in  excess  of  those 
charged  by  competitive  roads,  and  should  be  granted  the  ex- 
clusive privilege  of  transporting  milk  over  defendant's  lines 
"  so  far  as  it  was  permitted  to  do  so  by  law."  In  the  exe- 
cution of  the  contract  all  rates  were  made  by  defendant,  and 


1094 


INDEX — DIGEST. 


COMBINATIONS,    CONSPIRACIES,    CONTRACTS,   ETC.-ContU 

in.  Not  Prohihitei)— Continueil. 
plaintiff  was  not  given  a  monopoly  of  the  milk  traffic.  Held, 
That  such  contract  was  not  ultra  vires  nor  void  as  contrary 
to  public  policy,  especially  as  practically  construed  by  the 
parties  in  Its  execution ;  nor  was  it  in  violation  of  the  Anti- 
Tmst  Act  of  July  8,  1890  (26  Stat,  209).  Delaware,  L.  d 
W.  R,  Co.  V.  Kutter,  147  F.,  51.  2—1022 

1»7.  Contracts  or  combinations  between  railroad  companies  which  do 
not  directly  and  necessarily  affect  transportation  or  rates 
therefor  are  not  in  restraint  of  trade  or  commerce,  nor  within 
the  Minnesota  antl-tnist  law  of  1899,  which  is  in  substan- 
tially thasame  language  as  the  Sherman  Anti-Trust  Law  of 
1890,  even  though  they  may  remotely  and  indirectly  appear 
to  have  some  probable  effect  in  that  direction.  Minnesota  v. 
Worthern  Securities  Co.,  123  F.,  692.  8—246 

198.  Joint  Trailic  Associations— Proportionate  Bates  and  Division  of 

Traffic— A  combination  of  railroad  companies  into  joint 
traffic  aasociations,  under  articles  of  agreement  by  which 
each  road  carries  the  freight  it  may  get  over  its  own  line,  at 
its  own  rates,  and  has  the  earnings  to  itself,  though  provid- 
ing proportional  rates  or  proportional  division  of  traffic,  is 
not  a  pooling  of  traffic  on  freights  or  division  of  net  proceeds 
of  earnings,  within  the  prohibitions  of  the  Interstate  Com- 
merce Law,  nor  of  the  act  of  1890  (26  Stat,  209),  against 
unlawful  restraints  and  monopolies.  U.  8.  v.  Joint  Traffic 
Assn.,  76  F.,  895.  1—615 

Reversed,  171  U.  S.,  505  (1—869). 

199.  Tlirongh  Transportation— Prepayment  of  Freight.— A  common 

carrier  engaged  in  interstate  commerce  may  at  common  law 
and  under  the  Interstate  Commerce  Law  demand  prepayment 
of  freight  charges,  when  delivered  to  it  by  one  connecting 
carrier,  without  exacting  such  prepayment  when  delivered 
by  another  connecting  carrier,  and  m<iy  advance  freight 
charges  to  one  connecting  carrier  without  advancing  such 
charges  to  another  connecting  carrier.  Gulf,  C.  d  8.  P.  Ry. 
Co.  V.  Miami  8.  8.  Co.,  86  F„  407.  1—823 

800.  Same— Joint  Bates  and  Billing.— Such  carrier  may  enter  into  a 
contract  with  one  connecting  carrier  for  through  transporta- 
tion, through  joint  traffic,  through  billing,  and  for  the  divi- 
sion of  through  rates,  without  being  obligated  to  enter  into 
a  similar  contract  with  another  connecting  carrier.  16. 

901.  Same— Bemedy  not  by  Injunction,  but  by  Suit  for  Damages.-l 
The  remedy  of  a  party  injured  by  such  an  agreement  is 
not  by  bill  of  injunction,  but  by  a  suit  for  threefold  damages 
under  the  act  of  1890,  the  only  party  entitled  to  maintain  a 
bill  of  injunction  under  that  act  being  the  Government  of 
the  United  States.  jj^ 

See  also  Cabriers. 


INDEX — ^DIGEST. 


1095 


COMBINATIONS,    CONSPIBACIES,    CONTBACTS,   ETC.— Cont'd. 

III.  Not  Prohibited— Continued. 
9.  ComNnations,  etc.,  operating  within  a  State. 

202.  A  combination  or  trust  between  the  owners  of  tugs  operating 
entirely  within  the  confines  of  a  State  is  not  a  combination 
in  restraint  of  trade  or  commerce  among  the  several  States 
or  with  foreign  nations,  so  as  to  come  within  the  condemna- 
tion of  the  statutes  of  the  United  States,  although  most  of 
the  owners  held  coasting  licenses.  The  Charles  E.  Wiswall, 
86  F.,  671.  i__g5o 

208.  A  contract  for  the  purchase  of  certain  river  craft  to  run  be- 
tween certain  points  in  the  same  State,  where  the  vessels 
necessarily  pass  over  the  soil  of  adjoining  States,  which 
provides  for  the  maintenance  of  existing  traffic  rates,  and  the 
vendors  agree  to  withdraw  from  competition  for  five  years, 
is  not  a  contract  in  restraint  of  interstate  trade  under  the 
Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209),  and  the  pur- 
chaser is  not  relieved  from  bis  obligation  to  pay  the  pur- 
chase price.  Cincinnati,  etc.,  Packet  Co.  v.  Bay,  200  U.  S., 
1'3'9.  2—867 

204.  Same.— A  contract  is  not  to  be  assumed  to  contemplate  unlawful 

results  unless  a  fair  construction  requires  it.  lb. 

205.  Same.— Even  if  there  is  some  interference  with  interstate  com- 

merce, a  contract  is  not  necessarily  void  under  the  Sherman 
Act  if  such  interference  is  insignificant  and  merely  inci- 
dental and  not  the  dominant  purpose;  the  contract  will  be 
construed  as  a  domestic  contract  and  its  validity  determined 
by  the  local  law.  See  U.  8.  v.  Trans-Mo.  Ft.  Assn.,  166,  U.  S., 
290,  329;  V.  8.  v.  Joint  Traffic  Assn.,  171  U.  S.,  505,  568;  and 
Bement  v.  'S'atimial  Harrow  Co.,  186  U.  S.,  70,  92.  /». 

206.  Same.— A  contract  for  sale  of  vessels,  even  if  they  are  engaged 

in  interstate  commerce,  is  not  necessarily  void  because  the 
vendors  agree,  as  is  ordinary  in  case  of  sale  of  a  business 
and  its  good  will,  to  withdraw  from  business  for  a  specified 
period.  jj^^ 

207.  The  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209),  does  not 

apply  to  a  contract  or  combination  relating  to  the  business 
of  manufacturing  within  a  State.  Rohinson  v.  Suhurhan 
Brick  Co.,  127  F.,  804.  2—312 

808.  Agreements  not  to  Engage  in  Business— Contracts  in  Partial  Be- 
straint  of  Trade.— A  covenant  in  a  contract  by  which  the 
owners  of  brickmaking  plants  conveyed  them  to  a  corpora- 
tion in  exchange  for  its  stock,  binding  the  sellers  not  to  en- 
gage in  competing  business  within  a  radius  of  50  miles  from 
the  place  of  business  of  the  corporation  for  a  term  of  ten 
years,  is  valid,  and  may  be  enforced  in  a  court  of  equity  by 
a  suit  to  enjoin  its  violation.  /^, 

209.  A  combination  to  restrain  competition  in  proposals  for  con- 
tracts for  the  sale  of  certain  articles  which  are  to  be  de- 


1096 


INDEX — DIGEST. 


COMBINATIONS,    CONSPIKACIES,   CONTRACTS,    ETC.-ContU 

III.  Not  Pbohibited— Continued, 
llvercd  in  the  State  In  wliicli  some  of  the  parties  to  the  com- 
bination reside  and  carry  on  business  is  not,  so  far  as  those 
members  are  concerned,  in  violation  of  the  Anti-Trust  Law 
of  Congress,  although  the  contract  may  be  awarded  to  some 
party  outside  the  State  as  the  lowest  bidder.  Addyston  Pipe 
imd  Steel  Co.  v.  V,  8„  175  IT.  S..  211.  1—1009 

»10.  Same— Jurisdiction  of  Congress.— Although  the  jurisdiction  of 
Congress  over  commerce  among  the  States  is  full  and  com- 
plete, it  is  not  questioned  that  it  has  none  over  that  which  is 
wholly  within  a  State,  and  therefore  none  over  combinations 
or  agreements  so  far  as  they  relate  to  a  restraint  of  such 
trade  or  commerce ;  nor  does  it  acquire  any  jurisdiction  over 
that  part  of  a  combination  or  agreement  which  relates  to 
commerce  wholly  within  a  State  by  reason  of  the  fact  that 
the  combination  also  covers  and  regulates  commerce  which  is 
interstate.  j^_ 

111.  An  association  of  manufacturers  of  shingles  \^thin  a  particular 
State,  formed  for  the  purpose  of  securing  concerted  action 
between  its  members  to  prevent  overproduction  and  establish 
uniform  prices  and  grading,  is  not  an  illegal  combination  in 
restraint  of  interstate  or  foreign  commerce,  within  the  mean- 
ing of  the  Anti-Trust  Law  of  1890,  or  subject  to  Federal  con- 
trol ;  and  the  fact  that  through  the  action  of  the  association 
the  mills  of  its  members  were  closed  for  a  certain  time,  and 
the  price  of  shingles  was  raised,  but  not  to  an  extent  alleged 
to  be  unreasonable  or  exorbitant,  does  not  give  a  dealer  In 
shingles  for  export  a  right  of  action  against  it  or  its  members 
under  such  law.    OiUs  v.  McNeeley,  102  F.,  594.  2—25 

212.  A  combination  controlling  not  only  the  manufacture  of  an  arti- 

cle in  the  State,  but  also  the  sale  of  the  manufactured  article, 
is  not  one  in  restraint  of  interstate  commerce,  so  as  to  give 
a  right  of  action  against  it,  under  the  Anti-Trust  Law  of  July 
2,  1890,  to  one  injured  by  a  resolution  passed  and  circulated 
by  it  denouncing  him  for  cutting  prices,  its  sales  being  within 
the  State,  and  any  transportation  and  sale  of  the  article  in 
other  States  being  by  other  agencies.  QihU  v.  McNeeley, 
107  F.,  210.  2    71 

Reversed  by  Circuit  Court  of  Appeals,  118  F.,  120  (2—194). 

10.  Labor  combinations. 

213.  Combination  Between  Local  Labor  Union  and  Labor  Organiza- 

tion Covering  Many  States— Boycott  on  Ooods  Sent  to  Other 
States.— The  action  of  the  members  of  a  labor  union  in  at- 
tempting to  compel  a  hat  manufacturer  to  unionize  his  fac- 
tory by  leaving  his  employment  and  preventing  others  from 
taking  employment  therein,  and  also,  with  the  assistance  of 
the  members  of  affiliated  organizations,  by  declaring  a  boy- 
cott upon  his  goods  in  other  States  into  which  such  goods 


INDEX — DIGEST. 


1097 


COMBINATIONS,  CONSPIRACIES,  CONTRACTS,  ETC.— Cont'd. 

III.  Not  Prohibited— Continued, 
have  been  shipped  for  sale  at  retail,  does  not  have  such  rela- 
tion to  interstate  commerce  as  to  constitute  a  combination  or 
conspiracy  in  restraint  of  such  commerce  in  violation  of  the 
Sherman  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209). 
Loewe  v.  Lawlor,  148  F.,  924.  (Decision  not  in  print  when 
body  of  this  book  went  to  press.) 
See  also  Combinations,  etc.,  112-133. 

11.  Municipal  contracts — State  monopolies. 

214.  Contract  Limiting  Character  of  Material  to  be  Used  to  that 

Controlled  by  a  Single  Corporation. — Where  the  contract  for 
the  paving  of  a  street  with  asphalt  limited  the  kind  of  as- 
phalt to  be  used  to  Trinidad  asphalt,  such  fact,  and  the  fur- 
ther fact  that  such  asphalt  was  controlled  by  a  single  cor- 
poration was  not  violative  of  the  commerce  clause  of  the 
Constitution  or  of  the  Federal  anti-trust  statutes,  and  did  not 
atfect  the  validity  of  the  contract.  Field  v.  Barber  Asphalt 
Pav.  Co.,  117  F.,  925.  2—193 

215.  Same. — The  specification  in  an  ordinance  by  a  municipal  council 

that  Trinidad  Lake  asphalt  shall  be  used  for  street  improve- 
ment, does  not  violate  the  commerce  clause  of  the  Federal 
Constitution  or  the  Sherman  Anti-Trust  Act  of  July  2,  1890 
(26  Stat,  209) ,  notwithstanding  this  particular  kind  of  asphalt 
is  the  product  of  a  foreign  country  and  competitive  bidding 
was  thereby  rendered  impossible.  Field  v.  Barber  Asphalt 
Paving  Co.,  194  U.  S.,  618.  ,  2—555 

216.  Same. — The  necessity  for  an  improvement  of  streets  is  a  matter 

of  which  the  proper  municipal  authorities  are  the  exclusive 
judges  and  their  judgment  is  not  to  be  interfered  with  except 
in  cases  of  fraud  or  gross  abuse  of  power.  rb. 

217.  State  Monopoly  of  Liquor  Traffic— The  act  of  July  2,  1890  (26 

Stat.,  209)  is  not  applicable  to  the  case  of  a  State  which,  by 
its  laws,  assumes  an  entire  monopoly  of  the  traffic  in  intoxi- 
cating liquors  (act  S.  C,  Jan.  2,  1895).  A  State  is  neither  a 
"person"  nor  a  "corporation,"  within  the  meaning  of  the 
act  of  Congress.    Lowenstein  v.  Evans,  69  F.,  908.        1—598 

COMMERCE.    See  Interstate  Commerce. 

COMMON  CARRIERS.    See  Carriers. 

COMMON  LAW. 

I.  Common-Law  Oflfenses—Deflnitions.— There  are  no  common-law 
offenses  against  the  United  States,  and  the  offenses  cogniza- 
ble in  the  Federal  courts  are  only  such  as  the  Federal  stat- 
utes define,  provide  a  punishment  for,  and  confer  jurisdie- 
tion  to  try ;  but  when  Congress  adopts  or  creates  a  common- 
law  offense  the  courts  may  properly  look  to  the  common  law 
for  the  true  meaning  and  definition  thereof,  in  the  absence 
of  a  clear  definition  in  the  act  creating  it  In  re  Greene 
52  F.,  104.  i_^ 


lyiFo 


INDEX — ^DIGEST. 


OOMHOir  IiAW-Coiitiiiu«l. 

t.  Cominoii-Law  />ffense  Adopted  by  Congrress— Presumption— In- 
terpretation.—Wbere  Congress  adopts  or  creates  a  common- 
law  oflfense,  and  In  doing  so  uses  terms  whicb  have  acquired 
a  wen-understood  meaning  by  judicial  interpretation,  tbe 
presumption  is  that  tlie  terms  were  used  in  that  sense,  and 
courts  may  pmperly  look  to  prior  decisions  interpreting  them 
for  tlie  meaning  of  the  terms  and  the  definition  of  the 
offense  where  there  Is  no  other  diflnition  in  the  act  U  S  v 
Trans-Mo.  Ft.  Assn.,  58  F.,  58.  1—im 

Case  reversed.  166  V.  S..  290  (1—648). 
1.  Common-Law  anlc.— The  ground  on  which  certain  classes  of 
contracts  and  combinations  In  restraint  of  trade  were  held 
Illegal  at  common  law  was  that  they  were  against  public 
policy.  j^ 

4  Public  Policy— How  Determined.— The  public  policy  of  the  na- 
tion must  be  determined  from  its  Constitution,  laws,  and 
judicial  decisions.  t* 

5.  Bailroad  Companies— Arrangementi  for  Through  Billing.— There 
Is  mo  principle  of  common  law  which  forbids  a  single  railroad 
corporation,  or  two  or  more  of  such  corporations,  from  select- 
ing, from  two  or  more  other  coi-porat  ions,  one  which  they  will 
employ  as  the  agency  by  which  they  will  send  freight  beyond 
their  own  lines,  on  through  bills  of  lading,  or  as  their  agent 
to  receive. freight,  and  transmit  it  on  through  bills  to  their 
own  lines,  and  without  breaking  bulk;  and  the  right  to 
make  gmeli  selection  li  not  taken  away  by  the  Interstate 
Commerce  law.  New  York  c§  N.  Ry.  Co,  v.  New  York  d  N.  E. 
R.  Co.,  50  F.,  867,  explained.  Prescott  d  A..  €.  B.  Co.  v 
Atchison,  T.  d  8.  F.  R.  Co.,  73  F.,  438.  1—604 

9,  Prepayment  of  Preiglit.— A  common  carrier  engaged  In  inter- 
state commerce  may  at  common  law,  and  under  the  Interstate 
Commerce  Law,  demand  prepayment  of  freight  charges, when 
deli¥ered  to  it  by  one  connecting  carrier,  without  exacting 
MCli  prepayment  when  delivered  by  another  connecting  car- 
rier, and  may  advance  freight  charges  to  one  connecting 
carrier  without  advancing  such  charges  to  another  connect- 
ing carrier.  &uin  €.  Ji  8,  F,  Rp.  Co.  v.  Miami  8.  8.  Co., 
86  F.,  407.  1_«23 

1.  Same.- The  rales  of  the  common  law  do  not  require  a  carrier 
to  receive  goods  for  carriage,  either  from  a  consignor  or  a 
connecting  carrier,  without  prepayment  of  Its  charges  if 
demanded,  nor  to  advance  the  charges  of  a  connecting  car- 
rier from  which  it  receives  goods  In  the  course  of  transporta- 
tion ;  nor  can  it  be  required  to  extend  such  credit  or  make 
such  advances  to  one  connecting  carrier  because  it  does  so 
to  another.  8outhem  In4.  Exp.  Co.  v.  V.  8.  Exp.  Co.,  88  F., 
®^'  1--862 


INDEX — ^DIGEST. 


1099 


COMMON  LAW— Continue<l. 

8.  Contracts  in  Restraint  of  Trade— At  Common  Law.— Contracts 

that  were  in  unreasonable  restraint  of  trade  at  common  law 
were  not  unlawful  in  the  sense  of  being  criminal,  or  as 
giving  rise  to  an  action  for  damages  to  one  prejudicially 
affected  thereby,  but  were  simply  void,  and  not  enforceable. 
U.  8.  V.  Addyston  Pipe  and  Steel  Co.,  85  F.,  271.  1 772 

9.  Same.— No  contractual  restraint  of  trade  is  enforceable  at  com- 

mon law  unless  the  covenant  embodying  it  is  merely  ancil- 
lary to  some  lawful  contract  (involving  some  such  relations 
as  vendor  and  vendee,  partnership,  employer  and  employee), 
and  necessai-y  to  protect  the  covenantee  in  the  enjoyment  of 
the  legitimate  fruits  of  the  contract,  or  to  protect  him  from 
the  dangers  of  an  unjust  use  of  those  fruits  by  the  other 
party.  The  main  purpose  of  the  contract  suggests  the 
measure  of  protection  needed,  and  furnishes  a  sufficiently 
uniform  standard  for  determining  the  reasonableness  and 
validity  of  the  restraints.  But  where  the  sole  object  of  both 
parties  in  making  the  contract  is  merely  to  restrain  competi- 
tion, and  enhance  and  maintain  prices,  the  contract  is  void. 

lb. 

See  also  Continental  Wall  Paper  Co.  v.  Lewis  Voighi  & 
Sons  Co.,  148  F.,  939. 

10.  The  illegality,  at  common  law,  of  a  combination  formed  by 

corporations  and  persons  in  restraint  of  trade,  does  not  pre- 
clude it  from  recovering  the  purchase  price  of  goods  sold  in 
the  course  of  business.  Connolly  v.  Union  Sewer  Pipe  Co , 
184  U.  S.,  540.  2—118 

11.  Note  to  Trust— Avoidance.— A  note  made  for  a  balance  due  on 

goods  bought  from  a  corporation  can  not  be  avoided  merely 
because  the  latter  is  a  trust  organized  to  create  and  carry 
out  restrictions  in  trade  contrary  to  the  common  law.  Union 
Sewer  Pipe  Co.,  99  F.,  354.  2— 1 

Affirmed,  184  U.  S.,  540  (2—118). 

COMPETITION.     See  Statutes,  22,  23,  31. 
C0N6BESS. 

1.  Debates  in  Congress  are  not  appropriate  sources  of  information. 

from  which  to  discover  the  meaning  of  the  language  of  a 

.       statute  passed  by  that  body.    U.  8.  v.  Trans-Mo.  Ft.  Assn., 

166  U.  S.,  290.  1—648 

2.  Power  to   Prohibit   Combinations  to  Establish  and  Maintain 

Baih-oad  Bates.— Congress  has  the  power  to  prohibit,  as  in 
restraint  of  interstate  commerce,  a  contract  or  combination 
between  competing  railroad  companies  to  establish  and  main- 
tain interstate  rates  and  fares  for  the  transportation  of 
freight  and  passengers  on  any  of  the  railroads  parties  to  the 


1100 


INDEX — ^DIGEST. 


CONGBESS— Continued. 

contract  or  combination,  even  though  the  rates  and  fares 
thus  established  are  reasonable.  IJ,  S.  v.  Joint  Traffic  Assn., 
171  U.  S.,  505.  1—869 

»*  Same— Combinations  by  Means  of  Which  Competition  is  Pre- 
vented.—Congress  has  the  power  to  forbid  any  agreement  or 
combination  among  or  between  competing  railroad  companies 
for  interstate  commerce,  by  means  of  which  competition  was 
prevented.  jj^^ 

4.  The  Anti-Tnist  Law  Is  a  legitimate  exercise  of  the  power  of 
Congress  over  interstate  commerce,  and  a  valid  regulation 
thereof.  /5, 

i.  lower  to  Legislate  Fpon  the  Subject  of  Private  Contracts  in 
Kespect  to  Interstate  Commerce. — The  power  of  Congress  to 
regulate  interstate  or  foreign  commerce  includes  the  power 
to  legislate  upon  the  subject  of  private  contracts  in  respect 
to  such  commerce.  AtldyslQu  Piite  &  Steel  Co.  v.  United 
mutes,  175  U.  S.,  211.  1—1009 

6.  Same. — Congress  may  enact  such  legislation  as  shall  declare 

void  and  prohibit  the  performance  of  any  contract  between 
individuals  or  corporations  where  the  natural  and  direct 
,  effect  of  such  a  contract  shall  be,  when  carried  out,  to 
directly  and  not  as  a  mere  incident  to  other  and  innocent 
purposes,  regulate  to  any  substantial  extent  interstate  or 
foreign  commerce.  /j. 

7.  Same.— The  power  of  Congress  to  regulate  interstate  commerce 

comprises  the  right  to  enact  a  law  prohibiting  the  citizen 
from  entering  into  those  private  contracts  which  directly 
and  substantially,  and  not  merely  indirectly,  remotely,  in- 
cidentally, and  collaterally,  regulate,  to  a  greater  or  less 
degree,  commerce  among  the  States.  /ft. 

8.  Same— Ho  Jurisdiction  Over  Commerce  Wholly  Within  a  State. 

Although  the  jurisdiction  of  Congress  over  commerce  among 
the  States  is  full  and  complete,  it  is  not  questioned  that  it 
has  none  over  that  which  is  wholly  within  a  State,  and  there- 
fore none  over  combinations  or  agreements  so  far  as  they 
relate  to  a  restraint  of  such  trade  or  commerce ;  nor  does  it 
acquire  any  jurisdiction  over  that  part  of  a  combination  or 
agreement  which  relates  to  commerce  wholly  within  a  State, 
by  reason  of  the  fact  that  the  combination  also  covers  and 
regulates  commerce  which  is  interstate.  .  /&. 

t.  Congress  did  not  exceed  its  power  under  the  commerce  clause 
of  the  Federal  Constitution  in  enacting  the  Anti-Trust  Act 
of  July  2,  1890  (26  Stat,  209),  declaring  illegal  every  combi- 
nation or  conspiracy  in  restraint  of  interstate  commerce,  and 
forbidding  attempts  to  monopolize  such  commerce  or  any 
part  of  it,  although  such  statute  is  construed  to  embrace  a 
combination   of  stockholders   of  two   competing   interstate 


INDEX — DIGEST. 


1101 


CONGRESS— Continued. 

railway  companies  to  form  a  stock-holding  corporation  which 
should  acquire,   in  exchange  for  its  own  capital  stock    a 
controlling  interest  in  the  capital  stock  of  each  of  such  rail- 
way companies.    Northern  Securities  Co.  v.   United  States 
193  U.  S.,  197  (48  L.  ed.,  279).  ^^^ 

10.  Had  Power  to  Enact  Anti-Trust  Law—Under  its  powers  to 
regulate  commerce  among  the  several  States  and  with  for- 
eign nations  Congress  had  authority  to  enact  the  Anti-Trust 
Act  of  July  2,  1890.  Northern  Securities  Co.  v.  United  States, 
193  U.  S.,  197  (Harlan,  Brown,  McKenna,  Day).  2—340 

See  United  States  v.  E.  C.  Knight  Co.,  156  U.  S..  1 ;  United 
States  V.  Trans-Missouri  Freight  Association,  166  U.  S.,  290; 
United  States  v.  Joint  Traffic  Association,  171  U  S  '  505  • 
Hopkins  V.  United  States,  171  U.  S.,  578;  Atideison  v.  United 
States,  171  U.  S.,  604 ;  Addyston  Pipe  d  Steel  Co.  v.  United 
States,  175  U.  S.,  211 ;   Montague  d  Co.  v.  Lowry,  193  U.  S., 

oo. 

11.  The  constitutional  guarantee  of  liberty  of  contract  does  not 

prevent  Congress  from  prescribing  the  rule  of  free  competi- 
tion for  those  engaged  in  interstate  and  international  com- 
merce. J, 

12.  Congress  may  protect  the  freedom  of  interstate  commerce  by 

any  means  that  are  appropriate  and  that  are  lawful  and  not 
prohibited  by  the  Constitution.  i^ 

18.  If  in  the  judgment  of  Congress  the  public  convenience  or  the 
general  welfare  will  be  best  subserved  when  the  natural  laws 
of  competition  are  left  undisturbed  by  those  engaged  in 
mterstate  commerce,  that  must  be,  for  all,  the  end  of  the 
matter,  if  this  is  to  remain  a  government  of  laws,  and  not 
of  men.  _ 

14.  When  Congress  declared  contracts,  combinations,  and  conspira^ 

cies  m  restraint  of  trade  or  commerce  to  be  illegal,  it  did 
nothing  more  than  apply  to  interstate  commerce  a  rule  that 
had  been  long  applied  by  the  several  States  when  dealing 
with  combinations  that  were  in  restraint  of  their  domestic 
commerce.  ^ 

15.  The  power  of  Congress  over  interstate  and  international  com- 

merce is  as  full  and  complete  as  is  the  power  of  any  State 
over  its  domestic  commerce,  subject,  of  course,  to  such 
restrictions  as  are  imposed  by  the  Constitution  upon  the 
exercise  of  all  power.  ,j 

16.  No  State  can,  by  merely  creating  a  corporation,  or  in  any  otht^ 

mode,  project  its  authority  into  other  States,  so  as  to  prevent 
Congress  from  exerting  the  power  it  possesses  under  the 
Constitution  over  interstate  and  international  commerce  or 
so  as  to  exempt  its  corporation  engaged  in  intei-state  com- 
merce  from  obedience  to  any  rule  lawfully  established  by 
Congress  for  such  commerce ;  nor  can  any  State  give  a  cor- 
1 1808— VOL  2—06  M 70 


1102 


INDEX — ^DIGEST. 


CONGBESS— Continued . 

poration  created  under  its  laws  authority  to  restiain  inter- 
state or  international  commerce  against  the  will  of  the 
nation  as  lawfully  expressed  by  Congress.  Every  corpora- 
tion created  by  a  State  is  necessarily  subject  to  the  supreme 
law  of  the  land.  /ft. 

17.  Whilst  every  instrumentality  of  domestic  commerce  is  subject 

to  State  control,  every  instruineiitality  of  interstate  com- 
merce may  be  reached  and  controlled  by  national  authority, 
so  far  as  to  compel  it  to  respect  the  rules  for  such  commerce 
lawfully  established  by  Congress.  /&. 

18.  Congress  has  the  power  to  establish  rules  by  which  interstate 

and  international  commerce  shall  be  governed,  and  by  the 
Anti-Trust  Act  has  prescribed  the  rule  of  free  competition 
among  those  engaged  in  such  commerce.  /&. 

19.  CSongress  may  Prohibit  Private  Contracts  which  Bestrain  Inter- 

state Commerce. — Congress  may,  in  the  exercise  of  the  power 
conferred  by  the  commerce  clause  of  the  Constitution,  pro- 
hibit private  contracts  which  operate  to  directly  and  sub- 
stantially restrain  interstate  commerce.  V,  8.  v.  Northern 
Securities  Co.,  120  F.,  721.  J^-216 

20.  It  is  the  declared  policy  of  Congress,  which  accords  with  the 

principles  of  the  common  law,  to  promote  individual  competi- 
tion in  relation  to  interstate  commerce,  and  to  prevent  combi- 
nations which  restrain  such  comi)etition  between  their  mem- 
bers ;  and  it  is  no  defense  to'an  action  to  dissolve  such  a  com- 
bination as  illegal  under  the  Anti-Trust  Law  that  it  has  not 
in  fact  been  productive  of  injury  to  the  public,  or  even  that 
it  has  been  beneficial,  by  enabling  the  combination  to  com- 
pete for  business  in  a  wider  field.  f7.  8.  v.  Chesapeake  d  O. 
Fuel  Co.,  105  F.,  93.  2—34 

Aflirmed,  115  F.,  610  (2—151). 

21.  Authority  over  State  Corporation. — Congress  has  no  authority, 

under  the  commerce  clause  or  any  other  provision  of  the 
Constitution,  to  limit  the  right  of  a  corporation  created  by 
a  State  in  the  acquisition,  control,  and  disposition  of  property 
in  the  several  States,  and  it  is  immaterial  that  such  property, 
or  the  products  thereof,  may  become  the  subjects  of  inter- 
itate  commerce;  and  it  Is  apparent  that  by  the  act  of  July 
2, 1890,  in  relation  to  monopolies,  Congress  did  not  intend  to 
declare  that  the  acquisition  by  a  State  corporation  of  so  large 
a  part  of  any  species  of  property  as  to  enable  the  owners  to 
control  the  traflUc  therein  among  the  several  States  consti- 
tuted a  criminal  offense.  In  re  Greene,  52  F.,  104.  1 — 55 
2S.  While  Congress  may  not  have  general  visitatorial  power  over 
State  corporations,  its  powers  In  vindication  of  its  own  laws 
are  the  same  as  If  the  corporation  had  been  created  by  an 
act  of  Congress.    Male  v.  Henkel,  201  U.  S.,  43.  2 — 847 


INDEX — ^DIGEST. 


1103 


CONGRESS— Continued. 

28.  Franchises  of  a  corporation  chartered  by  a  State  are,  so  far  as 
they  involve  questions  of  interstate  commerce,  exercised  in 
subordination  to  the  power  of  Congress  to  regulate  such  com- 
merce, jj, 

See  also  Injunctions,  16.  * 

CONSENT  OF  PARTIES.     See  Courts,  14. 

CONSPIRACY. 

1.  A  conspiracy  consists  in  an  agreement  to  do  something;  but  in 
the  sense  of  the  law,  and  therefore  in  the  sense  of  the  act 
of  1890,  it  must  be  an  agreement  between  two  or  more  to  do, 
by  concerted  action,  something  criminal  or  unlawful,  or,  it 
may  be,  to  do  something  lawful  by  criminal  or  unlawful 
means.  A  conspiracy,  therefore,  is  in  itself  unlawful,  and, 
in  so  far  as  this  statute  is  directed  against  conspiracies 
in  restraint  of  trade  among  the  several  States,  it  is  not 
necessary  to  look  for  the  illegality  of  the  offense  in  the  kind 
of  restraint  proposed.  Any  proposed  restraint  of  trade 
though  it  be  in  itself  innocent,  if  it  is  to  be  accomplished  by 
conspiracy,  is  unlawful.     U.  8.  v.  Debs,  64  F.,  724,  748. 

1— :i52 
See  also  U.  8.  v.  MacAndrews  &  Forbes  Co.,  149  F.,  823,  831. 
2.  Conspiracy  to  Commit  Offenses  Against  the  XTnited  States— Re- 
vised Statutes,  Section  5440.— The  statute  relating  to  conspir- 
acies to  commit  offenses  against  the  United  States   (Rev. 
Stat,  sec.  5-140)   contains  three  elements,  which  are  neces- 
sary to  constitute  the  offense.    These  are:   (1)  The  act  of 
two  or  more  persons  conspiring  together;  (2)  to  commit  any 
offense  against  the  United  States;  (3)  the  overt  act,  or  the 
element  of  one  or  more  of  such  parties  doing  any  act  to 
effect  the  object  of  the  conspiracy.     V.  8.  v.  Cassidy,  67  F 

8.  Same— Conspiracy  Defined.— A  conspiracy  is  a  combination  of 
two  or  more  persons  by  concerted  action  to  accomplish  a 
criminal  or  unlawful  purpose,  or  some  purpose  not  in  itself 
criminal,    by    criminal    or    unlawful    means.    Pettihone   v 
U,  S.,  148  U.  S.,  203,  cited.  jj^' 

4.  Same— Manner  of  Conspiring.— The  common  design  is  the  es- 
sence of  the  charge ;  but  it  is  not  necessary  that  two  or  more 
persons  should  meet  together  and  enter  into  an  explicit  or 
formal  agreement  for  an  unlawful  scheme,  or  that  they 
should  directly,  by  words  or  in  writing,  state  what  the  un- 
lawful scheme  was  to  be,  and  the  details  of  the  plan  or  the 
means  by  which  the  unlawful  combination  was  to  be  made 
effective.  It  is  sufficient  if  two  or  more  persons,  in  any  man- 
ner or  through  any  contrivance,  positively  or  tacitly,  come 
to  a  mutual  understanding  to  accomplish  a  common  and 
unlawful  design.  7~ 


1104 


INDEX — ^DIGEST. 


CONSPIBACY— Continued. 

5.  Same— Parties  to  Conspiracy.— Where  an  unlawfnl  end  Is  sought 
to  be  effected,  and  two  or  more  persons,  actuated  by  the  com- 
mon purpose  of  accomplishing  that  end,  work  together  in 
any  way  in  furtherance  of  the  unlawful  scheme,  every  one 
of  said  persons  becom'es  a  member  of  the  conspiracy,  al- 
though the  part  any  one  was  to  talte  therein  was  a  subordi- 
nate one,  or  was  to  be  executed  at  a  remote  distance  from 
the  other  conspirators.  /j. 

8.  Same.— Anyone  who,  after  a  conspiracy  is  formed,  and  who 
knows  of  its  existence,  joins  therein,  becomes  ^s  much  a 
party  thereto  from  that  time  as  if  he  had  originally  con- 
conspired.  U.  8,  V.  Bahmckr  Fed.  Cas.  No.  14487,  3  Dill., 
cited,  j^^ 

7.  Same — ^Eirideiice — ^Acts  of  One  Farty. — Where  several  persons 
are  proved  to  have  combined  together  for  the  same  illegal 
purpose,  any  act  done  by  one  of  them,  in  pursuance  of  the 
original  concerted  plan,  and  with  reference  to  the  common 
object,  is,  in  the  centemplation  of  the  law,  the  act  of  the 
whole  party,  and  therefore  the  proof  of  such  act  will  be 
evidence  against  any  of  the  others  who  were  engaged  in 
the  conspiracy.  /j, 

S.  Same—Declarations  by  Parties.— Any  declaration  made  by  one 
of  the  parties  during  the  pendency  of  the  illegal  enterprise, 
is  not  only  evidence  against  himself,  but  against  all  the  other 
conspirators,  who,  when  the  combination  is  proved,  are  as 
much  responsible  for  such  declarations,  and  the  acts  to 
which  they  relate,  as  if  made  and  committed  by  themselves. 
This  rule  applies  to  the  declaration  of  a  co-conspirator, 
although  he  may  not  himself  be  under  prosecution.  76. 

9.  Same— Conspiracy  as  Distinct  Oflfense.— The  law  regards  the  act 
of  unlawful  combination  and  confederacy  as  dangerous  to 
the  peace  of  society,  and  declares  that  such  combination  and 
confederacy  to  commit  crime  requires  an  additional  restraint 
to  those  provided  for  the  commission  of  the  crime  itself. 
It  therefore  makes  criminal  the  conspiracy  itself,  with  pen- 
alties and  punishments  distinct  from  those  it  attaches  to  the 
crime  which  may  be  the  object  of  the  conspiracy.  Ih. 

10.  Same— Means  Contemplated— Allegations  and  Proofs.— It  is  not 

incumbent  upon  the  prosecution  to  prove  that  all  the  means 
set  out  in  the  indictment  were  in  fact  agreed  upon  to  carry 
out  the  conspiracy,  or  that  any  of  them  were  actually  used 
or  put  in  operation.  It  is  sufficient  if  it  be  shown  that  one 
or  more  of  the  means  described  in  the  indictment  were  to 
be  used  to  execute  that  purpose.  /j,. 

11.  Same — Overt  Acts.— While  at  common  law  it  was  not  necessary 

to  aver  or  prove  an  overt  act  in  furtherance  of  a  conspiracy, 
yet,  under  the  statute  relating  to  conspiracies  to  commit  an 
offense  against  tlie  United  States,  the  doing  of  some  act  in 


INDEX — DIGEST. 


1105 


CONSPIBACY-Continued. 

pursuance  of  the  conspiracy  is  made  an  ingredient  of  the 
crime,  and  must  be  established  as  a  necessary  element 
thereof,  although  the  act  may  not  be  in  itself  criminal. 
V.  S.  V.  Thompson,  31  F.,  331,  12  Sawy.,  155,  cited.  75. 

12.  Same.— It  is  not  necessary,  however,  to  a  verdict  of  guilty,  that 

the  jury  should  find  that  each  and  every  one  of  the  overt 
acts  charged  in  the  indictment  was  in  fact  committed;  but  it 
is  sufficient  to  show  that  one  or  more  of  these  acts  was  com- 
mitted, and  that  if  was  done  in  furtherance  of  the  con- 
spiracy, j^ 

13.  A  combination  of  labor  organizations  whose  professed  object  is 

to  arrest  the  operation  of  the  railroads  whose  lines  extend 
from  a  great  city  into  adjoining  States  until  such  roads 
accede  to  certain  demands  made  upon  them,  whether  such 
demands  are  in  themselves  reasonable  or  unreasonable,  just 
or  unjust,  is  an  unlawful  consjjiracy  in  restraint  of  trade  and 
commerce  among  the  States,  within  the  act  of  July  2,  1890, 
and  acts  threatened  in  pursuance  thereof  may  be  restrained 
by  injunction,  under  section  4  of  the  act  U.  8.  v.  ElliotL 
62  F.,  801.  i_262 

14.  A  combination  to  incite  the  employees  of  all  the  railways  in 
the  country  to  suddenly  quit  their  service,  without  any 
dissatisfaction  with  the  terms  of  their  employment,  thus 
paralyzing  utterly  all  railway  traffic,  in  order  to  starve  the 
railroad  companies  and  the  public  into  compelling  an  owner 
of  cars  used  in  operating  the  roads  to  pay  his  employees 
more  wages,  they  having  no  lawful  right  so  to  compel  him, 
is  an  unlawful  conspiracy  by  reason  of  its  purpose,  whether 
such  purpose  is  effected  by  means  usually  lawful  or  other- 
wise.    Thomas  v.  Cin.,  .N.  O.  <&  T.  P.  Ry.  Co.,  62  F.,  803. 

IK    o  1—266 

18.  Same.— Such  combination,  its  purpose  being  to  paralyze  the 
interstate  commerce  of  the  country,  is  an  unlawful  con- 
spiracy, within  the  act  of  July  2,  1890,  declaring  illegal  every 
conti-act,  combination,  or  conspiracy  iii  restraint  of  trade 
or  commerce  among  the  several  States.  U.  8.  v.  Patterson, 
55  F.,  605,  disapproved.  ^^' 

16.  Same— Obstructing  Mails.— Such  combination,  where  the  mem- 

bers intend  to  stop  all  mail  trains  as  well  as  other  trains, 
and  do  delay  many,  in  violation  of  Revised  Statutes,  section 
3995,  punishing  anyone  willfully  and  knowingly  obstructing 
or  retarding  the  passage  of  the  mails,  is  an  unlawful  con- 
spiracy, although  the  obstruction  is  effected  by  merely 
quitting  employment.  j^ 

17.  Any  combination  or  conspiracy  on  the  part  of  any  class  of  men 

who  by  Violence  and  intimidation  prevent  the  passage  of 
railroad  trains  engaged  in  interstate  commerce  is  in  viola- 
tion of  act  of  July  2,  1890,  declaring  illegal  every  contract 


1106 


INDEX — ^DIGEST. 


OONSPIBACY— Continued. 

combination  in  the  form  of  trust  or  otlierwlse,  or  conspiracy 
in  restraint  of  trade  or  commerce  among  tlie  States.  In  re 
Orund  Jury,  62  F.,  840.  1—301 

IS.  A  combination  of  persons,  without  regard  to  their  occupation, 
which  will  haye  the  effect  to  defeat  the  provisions  of  the 
interstate  commerce  law,  inhibiting  discriminations  in  the 
transportation  of  freight  and  passengers,  and  further  to 
restrain  the  trade  or  commerce  of  the  country,  will  he 
obnoxious  to  the  penalties  prescribed  in  section  5440,  Revised 
Statutes,  relating  to  conspiracy.  Waterhouse  v.  Comer,  55 
F.,  149.  1 — 120 

19.  The  term  "  conspiracy,"  in  section  1  of  the  act  of  July  2,  1890 

(26  Stat,  209),  is  used  in  its  well-settled  legal  meaning,  and 
any  restraint  of  trade  or  commerce,  if  to  be  accomplished  by 
conspiracy,  is  unlawful.    17.  8.  v.  Debs,  64  F.,  724.        1—322 

20.  Conspiracy  to  Injure  in  Business.— The  action  of  an  association 

of  manufacturers  in  adopting  a  resolution  denouncing  a 
dealer  in  the  product  they  manufactured,  who  bought  and 
shipped  such  product  to  customers  in  other  States  and  for- 
eign countries,  and  in  printing  such  resolution  in  circulars, 
and  mailing  the  same  to  other  manufacturers  and  customers 
of  the  dealer,  whereby  his  business  was  injured,  constituted 
an  illegal  combination  or  conspiracy  in  restraint  of  interstate 
and  foreign  commerce,  and  gives  the  person  injured  a  right 
of  action  in  a  circuit  court  of  the  United  States,  under  the 
Anti-Trust  Law  of  1890,  to  recover  the  damages  sustained. 
Gibhs  V.  McNeelep,  102  F.,  594.  »— 25 

See  also  Statutes,  40. 

CONSTITTJTIOir. 

1.  Constitutional  Guaranty  of  Bight  of  Assembly  and  Pree 
Speech.— Inciting  the  employees  of  a  receiver,  who  is  op- 
erating a  railroad  under  the  order  of  a  court,  to  leave  his 
employ,  in  order  to  carry  out  an  unlawful  conspiracy,  is 
not  protected  by  constitutional  guaranties  of  the  right  of 
assembly  and  free  speech,  and  is  not  less  a  contempt  be- 
cause effected  by  words  only,  if  the  obstruction  to  the  opera- 
tion of  the  road  by  the  receiver  is  unlawful  and  malicious. 
Tnomus  V.  Cin.,  N.  O.  d  T.  P.  Ry.  Co.,  62  F.,  803.       1—266 

8.  The  constitutional  freedom  of  contract  as  to  the  use  and  man- 
agement of  property  does  not  include  tli#  right  of  railroad 
companies  to  combine  as  one  consolidated  and  powerful  asso- 
ciation for  the  purpose  of  stifling  competition  among  them- 
selves, and  of  thus  keeping  their  rates  and  charges  higher 
than  they  might  otherwise  be  under  the  laws  of  competition, 
even  if  their  rates  and  charges  are  reasonable.  U,  8,  v. 
J&tnt  Traffic  Assn.,  Ill  U.  S.,  505.  1-^869 


INDEX — ^DIGEST. 


1107 


CONSTITUTION^Continued. 

3.  Legislation  which  renders  unlawful  contracts,  the  direct  effect 

of  which  is  to  shut  out  from  interstate  commerce  the  opera- 
tion of  the  general  law  of  competition,  is  not  an  interference 
with  the  general  liberty  of  contract  possessed  by  the  citizen 
under  the  fifth  amendment  to  the  Constitution.  /&. 

4.  The  constitutional  guaranty  of  liberty  of  the  individual  to  enter 

into  private  contracts  does  not  limit  the  power  of  Congress 
so  as  to  prevent  it  from  legislating  upon  the  subject  of  con- 
tracts in  restraint  of  interstate  or  foreign  commerce.  Ad- 
dyston  Pipe  and  Steel  Co.  y.  U.  8.,  175  U.  S.,  211.        1—1009 

5.  The  provision  in  the  Constitution  regarding  the  liberty  of  the 

citizen  is  to  some  extent  limited  by  the  commerce  clause  ;  and 
the  power  of  Congress  to  regulate  interstate  commerce  com- 
prises the  right  to  fenact  a  law  prohibiting  the  citizen  from 
entering  into  those  private  contracts  which  directly  and  sub- 
stantially, and  not  merely  indirectly,  remotely,  incidentally, 
and  collaterally,  regulate,  to  a  greater  or  less  degree,  com- 
merce among  the  States.  /j. 

6.  Constitutional  Right  of  Private  Contract  limited  by  Interstate 

Commerce  Clause. — ^The  constitutional  guaranty  of  liberty  to 
,  the  individual  to  enter  into  private  contracts  is  limited  to 
some  extent  by  the  commerce  clause  of  the  Constitution,  and 
Congress  may,  in  the  exercise  of  the  power  conferred  by 
such  clause,  prohibit  private  contracts  which  operate  to 
directly  and  substantially  restrain  interstate  commerce. 
V.  8.  V.  Northern  Securities  Co.,  120  F.,  721.  2 ^215 

7.  The  constitutional  guaranty  of  liberty  of  contract  does  not  pre- 

vent Congress  from  prescribing  the  rule  of  free  competition 
for  those  engaged  in  interstate  and  international  commerce. 
Northern  Securities  Co.  v.  United  States,  193  U.  S.,  197] 
(Harlan,   Brown,  McKenna,  Day.)  2—340 

8.  Same.— The  constitutional  guaranty  of  liberty  of  contract  is 

not  infringed  by  a  Federal  court  decree  enjoining  the  North- 
ern Securities  Co.,  a  corporation  formed  in  pursuance  of 
a  combination  of  stockholders  in  two  competing  interstate 
railway  companies  for  the  puri^ose  of  acquiring  a  controlling 
interest  in  the  capital  stock  of  such  companies,  from  exercis- 
ing the  powers  acquired  by  such  corporation  by  virtue  of  its 
acquisition  of  such  stock.     (48  L.  ed.,  679.)  2—342 

9.  Only  such  acts  as  directly  interfere  with  the  freedom  of  inter- 

state commerce  are  prohibited  to  the  States  by  the  Constitu- 
tion. Field  V.  Barber  Asphalt  Co.,  194  U.  S.,  618.  2—555 
10.  Article  IV— Has  Nothing  to  do  with  the  Conduct  of  Individuals 
or  Corporations.— Article  IV  of  the  Constitution  of  the  United 
States  only  prescribes  a  rule  by  which  courts.  Federal  and 
State,  are  to  be  guided  when  a  question  arises  in  the  prog- 
ress of  a  pending  suit  as  to  the  faith  and  credit  to  be  given 
by  the  court  to  the  public  acts,  records,  and  judicial  proceed- 


1108 


INDEX — ^DIGEST. 


CONSTirUTION-Continiiecl. 

imgs  of  a  State  other  than  that  in  which  the  court  is  sitting. 
It  has  nothing  to  do  with  the  conduct  of  individuals  or  cor- 
porations.   Minnesota  v.  Northern  Seouriiies  Co,,  194  U.  S., 

^  8—533 

11.  loartli  Amendment.    See  Immunity,  14,  15;  Witnesses,  8>  20; 

Seabch,  2-4 ;  Cobpobations,  14,  25 ;  and  Coubts,  22. 
It.  Hfth  Amendment.  See  Immunity,  1,  3,  7,  9,  16;  and  Wit- 
nesses, 1,  2,  4,  11-13, 15,  16,  20,  23. 
IS.  Fourteenth  Amendment.— It  is  not  the  purpose  of  the  four- 
teenth amendment  to  prevent  the  States  from  classifying  the 
subjects  of  legislation  and  making  different  regulations  as 
to  the  property  of  diflfereut  individuals  differently  situated. 
The  provision  of  the  Federal  Constitution  is  satisfied  if  all 
persons  similarly  situated  aife  treated  alike  in  privileges 
conferred  or  liabilities  imposed.  Field  v.  Barher  Asphalt 
Paving  Co.,  194  U.  S.,  618.  2—555 

14.  Same.— A  State  statute  which  provides  that  certain  improve- 

ments are  not  to  be  made  If  a  majority  of  resident  owners  of 
property  liable  to  taxation  protest,  is  not  unconstitutional 
because  it  gives  the  privilege  of  protesting  to  them  and  not 
to  nonresident  owners.  ,      /ft. 

15.  Same.— Discrimination  in  favor  of  agricultural  products.    See 

Connolly  v.  Union  Sewer  Pipe  Co.,  184  U.  S.,  540.        »— 119 
CONTEMPT. 

1.  Interference  with  Receiver—Impeding  Operation  of  Railroad.— 
Any  willful  attempt,  with  knowledge  that  a  railroad  is  in  the 
hands  of  the  court,  to  prevent  or  impede  the  receiver  thereof 
appointed  by  the  court  from  complying  with  the  order  of  the 
court  in  running  the  road,  which  is  unlawful,  and  which,  as 
between  private  individuals,  would  give  a  right  of  action  for 
damages.  Is  a  contempt  of  the  order  of  the  court.  Thomas  v. 
Cin.,  N.  O.  d  T.  P.  R.  Co.,  62  F.,  803.  1—266 

S.  Same— Instigating  Strike— Unlawful  Combination.— Maliciously 
Inciting  employees  of  a  receiver,  who  is  operating  a  railroad 
under  order  of  the  court,  to  leave  his  employ,  iu  pursuance  of 
an  unlawful  combination  to  prevent  the  operation  of  the 
road,  thereby  inflicting  injuries  on  its  business,  for  which 
.  damages  would  be  recoverable  if  it  were  operated  by  a  pri- 
vate corporation,  is  a  contempt  of  the  court.  •  /6. 

3.  Same— Constitutional  Guaranty  of  Right  of  Assembly  and  Free 

Speech.— Such  Inciting  to  carry  out  an  unlawful  conspiracy 
is  not  protected  by  constitutional  guaranties  of  the  right  of 
assembly  and  free  speech,  and  Is  not  less  a  contempt  because 
effected  by  words  only,  If  the  obstruction  to  the  operation 
of  the  road  by  the  receiver  is  unlawful  and  malicious.        lb. 

4.  Contempt— Proceeding  in  Equity— Conclusiveness  of  Answer. 

In  proceedings  for  contempt  In  equity,  a  sworn  answer,  how- 
ever full  and  unequivocal,  is  not  conclusive,  even  In  the  case 


INDEX — ^DIGEST. 


1109 


CONTEMPT— Continued. 

of  a  stranger  to  the  bill  for  the  injunction  which  has  been 
violated.     U.  8.  v.  Dehs,  64  F.,  724.  1—322 

5.  Same — Justification — ^Irregularities. — Where  a  court  had  juris- 

diction of  an  injunction  suit,  and  did  not  exceed  its  powers 
therein,  no  irregularity  or  error  in  the  procedure  or  in  the 
order  can  justify  disobedience  of  the  writ.  lb. 

6.  Same. — In  a  proceeding  for  contempt  in  disobeying  an  injunc- 

tion, the  sufficiency  of  the  petition  for  the  injunction,  in 
respect  to  matters  of  form  and  averment  merely  can  not  be 
questioned.  /j. 

7.  Contempt— Trial  by  Court.— Though  the  same  act  constitute  a 

contempt  and  a  crime,  the  contempt  may  be  tried  and  pun- 
ished by  the  court.  /j. 

8.  Contempt — Violation    of    Injunction — Conspiracy. — Where    de- 

fendants, directors,  and  general  officers  of  the  American 
Railway  Union,  in  combination  with  members  of  the  union, 
engaged  in  a  conspiracy  to  lx)ycott  Pullman  cars,  in  use  on 
railroads,  and  for  that  purpose  entered  into  a  conspiracy 
to  restrain  and  hinder  interstate  commerce  in  general,  and, 
in  furtherance  of  their  design,  those  actively  engaged  in  the 
strike  used  threats,  violence,  and  other  unlawful  means  of 
interference  with  the  operations  of  the  roads,  and,  instead 
of  respecting  an  injunction  commanding  them  to  desist,  per- 
sisted in  their  purpose,  without  essential  change  of  conduct, 
they  were  guilty  of  contempt.  /ft. 

9.  Same — Interference  with  Receiver. — Any  improper  interference 

with  the  management  of  a  railroad  in  the  hands  of  receivers 
is  a  contempt  of  the  court's  authority  in  making  the  order 
appointing  the  receivers,  and  enjoining  interference  with 
their  control.  /ft. 

10.  The  order  of  the  Circuit  Court  finding  the  petitioners  guilty  of 

contempt,  and  sentencing  them  to  imprisonment,  was  not  a 
final  judgment  or  decree.    Ir  re  Dehs,  158  U.  S.,  564.     1—565 

11.  Violation  of  Injunction — Contempt. — ^An  injunction  having  been 

issued  and  served  upon  the  defendants,  the  Circuit  Court  had 
authority  to  inquire  whether  its  orders  had  been  disobeyed, 
and  when  it  found  that  they  had  been  disobeyed,  to  proceed 
under  Revised  Statutes,  section  725,  and  to  enter  the  order 
of  punishment  complained  of.  /ft. 

12.  Same — ^Habeas   Corpus. — The  Circuit  Court  having  full  juris- 

diction in  the  premises,  its  findings  as  to  the  act  of  disobe- 
dience are  not  open  to  review  on  habeas  corpus  in  this  or 
any  other  court.  /ft^ 

18.  Witness— Incriminating  Evidence.— Where  a  witness  is  com- 
mitted for  contempt  in  refusing  to  answer  all  of  a  series  of 
questions,  for  the  reason  that  the  answers  would  tend  to 
criminate  him,  and  some  of  the  answers  would  have  that 
tendency,  he  should  not  be  denied  relief  on  habeas  corpus 


1110 


IKDBX — ^DIGEST. 


CONTEMPT— Continued. 

because  some  of  the  questions  might  be  safely  answered. 

Foot  V.  Buchanm,  113  F.,  156.  2  104 

14.  Although  the  subpoena  duces  tecum  may  be  too  broad  in  its 
requisition,  where  the  witness  has  refused  to  answer  any 
question,  or  to  produce  any  boolss  or  papers,  this  objection 
would  not  go  to  the  validity  of  the  order  committing  him 
for  contempt.    Hale  v.  Henkel,  201  U.  S.,  43.  2—874 

VOWTRACTS, 

1.  Contract  for  Entire  Product.— A  contract  with  an  independent 

manufacturer  for  the  entire  product  of  his  plant  is  not  in 
Itself  a  contract  in  illegal  restraint  of  trade.  Oarter-Crume 
Co.  V.  Perrung,  68  F.,  439.  1-^845 

2.  Same.— If  an  independent  manufacturer  contracts  to  sell  his 

entire  product,  without  knowledge  of  similar  contracts  made 
by  the  buyer  with  other  manufacturers,  and  without  any 
knowledge  of  the  fact  that  such  contract  was  intended  by 
the  buyer  as  one  step  in  a  general  scheme  for  monopolizing 
the  trade  in  that  article  and  controlling  prices,  such  inde- 
pendent mannufacturer  can  not  be  held  to  have  conspired 
against  the  freedom  of  commerce,  or  to  have  made  a  con- 
tract in  illegal  restraint  of  trade.  /&. 

3.  Purchase  of  Business— Combination  in  Restraint  of  Trade.— A 

contract  by  which  a  person  sells  his  property  and  business 
good  will  to  another  can  not  be  repudiated  on  the  ground  that 
the  purchaser  acquired  the  property  for  the  purpose  of  ob- 
taining a  monopoly  of  the  business  and  in  pursuance  of  an 
Illegal  combination  in  restraint  of  interstate  trade  and  com- 
merce.   CamorS'McConnell  Co.  v.  McConnell,  140  F.,  412. 

2—817 

4.  Same.— In  order  to  defeat  a  suit  to  enforce  such  a  contract  on 

the  ground  that  its  enforcement  is  sought  to  aid  and  facili- 
tate the  carrying  out  of  an  illegal  combination  to  monopolize 
interstate  trade  and  commerce,  it  must  appear  that  the  con- 
tract is  directly  connected  with  such  unlawful  purpose,  and 
not  merely  collateral  thereto.  / j, 

5.  Same.- Although  the  combination  may  be  unlawful,  an  action 

for  the  performance  of  the  contract  can  not  be  defeated  upon 
the  ground  that  plaintiff  is  carrying  on  its  business  in  an 
unlawful  manner  as  a  monopoly.  /j. 

S.  Same.— An  agreement,  as  incidental  to  the  sale  of  property  as  a 
business,  that  the  seller  will  not  enter  into  a  competing  busi- 
ness, is  valid  and  enforceable,  notwithstanding  it  is  in  partial 
restraint  of  trade.  j^^ 

7.  Same— Specific  Performance— Sale  of  Business— Enjoining  Vio- 
lation.—A  court  T»f  equity  will  enjoin  a  defendant  from  vio- 
lating a  contract,  clearly  shown,  by  which  he  deliberately 
obligated  himself  for  a  valuable  consideration  not  to  engage 
In  a  certain  business.  jj 


INDEX — ^DIGEST. 


nil 


CONTRACTS— Continued. 

8.  Purchaser  of  River  Craft  not  Relieved  from  Obligation  to  Pay 

Purchase  Price  Because  of  His  Agreement  to  Maintain  Pres- 
ent Traffic  Rates. — A  purchaser  of  river  craft  can  not  in- 
invoke  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209),  to 
relieve  him  from  his  obligation  to  pay  the  purchase  price,  be- 
cause of  his  covenant  to  maintain  the  present  traffic  rates, 
which  is  not  declared  by  the  contract  to  enter  into  the  con- 
sideration of  the  sale — especially  where  the  rates  referred  to 
primarily,  if  not  exclusively,  relate  to  domestic,  and  not  to 
interstate,  business.  Cincinnati,  etc,  Packet  Co.  v.  Bay,  200 
U.  S.,  179.  2—867 

9.  Same. — ^A  contract  is  not  to  be  assumed  to  contemplate  unlawful 

results  unless  a  fair  construction  requires  it.  76. 

10.  Same. — ^Where  a  contract  relates  to  commerce  between  points 

within  a  State,  both  on  a  boundary  river,  it  will  not  be  con- 
strued as  falling  within  the  prohibitions  of  the  Sherman 
act  because  the  vessels  affected  by  the  contract  sail  over  soil 
belonging  to  the  other  State  while  passing  between  the  intra- 
state points.  76. 

11.  Same. — Even  if  there  is  some  interference  with  interstate  com- 

merce, a  contract  is  not  necessarily  void  under  the  Sherman 
Act  if  such  interference  is  insignificant  and  merely  incidental 
and  not  the  dominant  purpose;  the  contract  will  be  con- 
strued as  a  domestic  contract  and  its  validity  determined  by 
the  local  law.  /&. 

12.  Same. — A  contract  for  sale  of  vessels,  even  if  they  are  engaged 

in  interstate  commerce,  is  not  necessarily  void  because  the 
vendors  agree,  as  is  ordinary  in  case  of  sale  of  a  business  and 
its  good  will,  to  withdraw  from  business  for  a  specified 
period.  /ft. 

13.  Any  contract  or  combination  which  directly  and  substantially 

restricts  the  right  of  an  interstate  carrier  to  fix  its  own  rates, 
independently  of  its  natural  competitors,  places  a  direct  re- 
-  straiiit  upon  interstate  commerce,  in  that  it  tends  to  prevent 
competition,  and  is  in  violation  of  the  act,  whether  the 
rates  actually  fixed  be  reasonable  or  unreasonable.  U.  8.  v. 
Northern  Securities  Co.,  120  F.,  721.  2 215 

14.  Contracts — Proprietary  Medicines. — A  system  of  contracts  made 

by  the  manufacturer  of  a  proprietary  medicine  between  him 
and  wholesale  dealers,  to  whom  alone  he  sold  his  medicine, 
by  which  they  were  bound  to  sell  only  at  a  certain  price  and 
to  retail  dealers  designated  by  him,  and  between  him  and 
the  retail  dealers  by  which,  in  consideration  of  being  so  desig- 
nated, they  agreed  t^,  sell  to  consumers  only  at  a  certain 
price,  is  not  unlawful  as  in  restraint  of  trade,  but  is  a  rea- 
sonable provision  for  the  protection  of  the  manufacturer's 
trade,  and  he  is  entitled  to  an  injunction  to  restrain  a  defend- 


1112 


INDEX — ^DIGEST. 


OOlfTBACTS— Continued. 

ant  from  inducing  other  parties  to  such  contracts  to  violate 
the  same.  Hartmm  v.  John  D.  Parki  d  Sons  Co.,  145  F., 
358.  8—1000 

See  also  Dr.  Miles  MediciH  €o,  v.  Javnes  Drug  Co.,  149  F., 
83a 
11.  A  contniol  for  the  sale  of  merchandise  is  not  rendered  Ulegal  by 
the  faet  that  the  selling  corporation  is  a  trust  or  monopoly 
organized  in  Tiolation  of  law,  either  Federal  or  State,  the 
contract  of  sale  being  collateral  and  having  no  direct  relation 
to  the  unlawful  scheme  or  combination.  Chicago  Wall  Paper 
Mills  V.  General  Paper  Co.,  147  F.,  491.  2—1027 

1«.  Contracts  Limiting  Character  of  Material  to  be  ITsed  to  that 
Controlled  by  a  Single  Corporation.— Where  the  contract  for 
the  paving  of  a  street  with  asphalt  limited  the  kind  of 
asphalt  to  be  use  to  Trinidad  asphalt,  such  fact,  and  the 
further  fact  that  such  asphalt  was  controlled  by  a  single 
corporation,  was  not  violative  of  the  commerce  clause  of  the 
Constitution  or  of  the  Federal  Anti-Trust  Statutes,  and  did 
not  aifect  the  validity  of  the  contract  Field  v.  Barjyer 
Asphalt  Pav.  Co.,  117  F.,  025.  S— 193 

Affirmed,  194  U.  S.,  618  («— 555). 
If.  niegal.— Parties  to  a  transaction  adjudged  to  violate  the  Anti- 
Trust  Act  of  July  2,  1890  (26  Stat,  209).  ate  not  exempt 
from  the  doctrine  in  pari  delicto  on  the  theory  that  they 
acted  in  good  faith  and  without  intent  to  violate  the  law, 
where,  witli  knowledge  of  the  facts  and  of  the  statute,  they 
acted  under  the  mistaken  supposition  that  the  statute  would 
not  be  held  applicable  to  the  facts.  HarHman  v.  Northern 
Securities  Co.,  197  U.  S.,  244.  2—669 

Affirming,  134  F.,  331  (2—618). 
Heversing,  132  F.,  464  (2—587). 
18.  Same— Property  delivered  under  an  executed  illegal  contract 
can  not  be  recovered  back  by  any  party  in  pari  delicto,  and 
the  courts  can  not  relax  the  rigor  of  this  rule  where  the 
record  discloses  no  special  considerations  of  equity,  justice, 
or  public  policy.  /^. 

1».  Same.— Where  a  vendor  after  transferring  shares  of  railway 
stock  to  a  corporation  in  exchange  for  its  shares  becomes  a 
director  of  the  purchasing  corporation  and  participates  in 
acts  consistent  only  with  absolute  ownership  by  it  of  the 
railway  stocks,  and  does  so  after  an  action  has  been  brought 
to  declare  the  transaction  illegal,  hit  right  to  rescind  the 
contract  and  compel  restitution  of  his  original  railway 
shares,  if  it  ever  existed,  is- lost  by  acquiescence  and  laches. 

lb. 


INDEX — DIGEST. 


1113 


CONTRACTS— Continued. 

20.  Effect  of  Illegal  Provisions — Bivisibility.— Stipulations  in  a 
contract  which  are  invalid  as  in  restraint  of  trade,  If 
capable  of  being  construed  divisibly,  do  not  affect  the 
validity  of  other  provisions.  U.  S.  ConsoUdated  Seeded 
Rasin  Co.  v.  ariffin  &  Skelley  Co.,  126  F.,  364.  2—288 

81.  Same — Validity — When  Question  for  Jury. — Conceding  that  a 
contract  legal  in  its  terms  and  in  its  consideration  may  be 
rendered  illegal  as  against  public  policy  by  reason  of  the 
intention  of  the  parties  to  so  use  it  as  to  commit  civil  injury 
to  third  persons,  where  the  evidence  as  to  such  intention  is 
conflicting,  the  contract  can  not  be  declared  illegal  by  the 
court  as  matter  of  law.  76. 

28.  Effect  of  Anti-Trust  Law  upon  Contracts  in  Restraint  of  Trade 
which  at  Common  Law  were  Not  Unlawful. — The  effect  of 
the  Anti-Trust  Law  of  1890  is  to  render  contracts  in  re- 
straint of  trade,  as  applied  to  interstate  commerce,  unlaw- 
ful in  an  affirmative  or  positive  sense,  and  punishable  as  a 
misdemeanor,  and  also  to  create  a  right  of  civil  action  for 
damages  in  favpr  of  persons  injured  thereby,  and  a  remedy 
by  injunction  in  favor  Iwth,  of  private  persons  and  the 
public  against  the  execution  of  such  contracts  and  the  main- 
tenance of  such  trade  restraints.  V.  S.  v.  Addyston  Pipe  d 
Steel  Co.,  85  F.,  271.  1—772 

See  also  Continental  Wall  Paper  Co.  v.  Lewis  Voight  &  Sons 
Co.,  148  F.,  939. 

88.  The  statute  is  not  limited  to  contracts  or  combinations  which 
monopolize  Interstate  commerce  in  any  given  commodity, 
but  seeks  to  reach  those  which  directly  restrain  or  impair 
the  freedom  of  interstate  trade.  The  law  reaches  contracts 
and  combinations  which  may  fall  short  of  complete  control 
of  a  trade  or  business,  and  does  not  await  the  consolidation 
of  many  small  combinations  into  the  huge  "trust"  which 
shall  control  the  production  and  sale  of  a  commodity.  Chesa- 
peake d  O.  Fuel  Co.  V.  United  States,  115  F.,  610,  624. 

2—168 

84.  Applies  to  Common  Carriers  by  Railroads — Contracts  Affecting 
Rates. — The  provisions  respecting  contracts,  combinations, 
and  conspiracies  in  restraint  of  trade  or  commerce  among 
the  several  States  or  with  foreign  countries,  contained  in 
the  act  of  July  2,  1890,  apply  to  and  cover  common  carriers 
by  railroad;  and  a  contract  between  them  in  restraint  of 
such  trade  or  commerce  is  prohibited,  even  though  the  con- 
tract is  entered  into  between  competing  railroads,  only  for 
the  purpose  of  thereby  affecting  traffic  rates  for  the  trans- 
portation of  persons  and  property.  U.  S.  v.  Trans-Mo.  Ft. 
Assn.,  166  U.  S.,  290.  1—648 


1114 


INDEX — ^DIGEST. 


CONTBACTS— Continued. 

85.  Act  Applies  to  All  Contracts  in  Restraint  of  Interstate  or  For- 
eign Commerce— Not  Confined  to  Unreasonable  Restraints.— 
The  prohibitory  provisions  of  the  said  act  of  July  2,  1890, 
apply  to  all  contracts  in  restraint  of  interstate  or  foreign 
trade  or  commerce  without  exception  or  limitation;  and 
are  not  confined  to  those  in  which  the  restraint  is  unreason- 
able,    t/.  8.  V.  Tram-Mo.  Ft.  Assn.,  1G6  U.  S.,  290.        1—648 

26.  Test  of  Legality  of  a  Contract   or  Combination.— The  Anti- 

Trust  Act  of  July  2,  1890  (26  Stat,  209).  does  not  leave 
to  the  courts  the  consideration  of  the  question  whether  the 
restraint  is  or  is  not  unreasonable  and  such  as  would  have 
rendered  the  contract  invalid  at  common  law.  The  only 
question  in  each  case  where  the  validity  of  a  contract  or 
combination  under  the  law  is  involved  is  whether  or  not 
its  necessary  effect  is  to  restrain  interstate  commerce.  Ches- 
apeake d  Ohio  Fuel  Co.  v.  V.  S.,  115  F.,-  610.  2—151 

27.  Same.— The  test  of  the  violation  of  the  Anti-Trust  Act  of 

July  2,  1890  (26  Stat.,  209),  by  a  contract  or  combination, 
is  its  effect  upon  competition  in  commerce  among  the  States. 
If  its  necessary  effect  is  to  stifle  or  to  directly  and  sub- 
stantially restrict  interstate  commerce,  it  falls  under  the 
ban  of  the  law,  but  if  it  promotes,  or  only  incidentally  or 
indirectly  restricts,  competition,  while  its  main  purpose 
and  chief  effect  are  to  promote  the  .business  and  increase 
the  trade  of  the  makers,  it  is  not  denounced  or  avoided  by 
that  law.    PhilUps  v.  lola  Portland  Cement  Co.,  125  F.,  593. 

2—284 

28.  The  Sherman  Act  of  July  2,  1890,  is  not  intended  to  affect 

contracts  which  have  only  a  remote  and  indirect  bearing 
on  commerce  between  the  States.  Field  v.  Earlier  Asphalt 
Paving  Co.,  194  U.  S.,  618.  2—555 

29.  The  Anti-Trust  Act  of  July  2,  1890  (26  Stat.,  209),  does  not 

apply  to  a  contract  or  combination  relating  to  the  business 
of  manufacturing  within  a  State.  Robinson  v.  8uburha/n 
Brick  Co.,  127  F.,  804.  2—312 

SO.  The  act  of  July  2,  1890,  commonly  known  as  the  "Anti-Trust 
Act,"  does  not,  and  could  not  constitutionally,  affect  any 
monopoly  or  contract  in  restraint  of  trade,  unless  it  inter- 
feres directly  and  substantially  with  interstate  commerce, 
or  commerce  with  foreign  nations.  V.  8.  v.  Addyston  Pipe 
d  Steel  Co.,  78  F.,  712.  1—630 

81.  What  Contracts,  Combinations,  or  Conspiracies  Violate  Anti- 
Trust  Act.— Every  contract,  combination,  or  conspiracy  the 
necessary  effect  of  which  is  to  stifle  or  to  directly  and  sub- 
stantially restrict  competition  in  commerce  among  the  States 
is  in  restraint  of  interstate  commerce,  and  violates  section 
1  of  the  act  of  July  2,  1890  (26  Stat,  209).  Whitwell  v. 
Continental  Tobacco  Co.,  125  F.,  454.  2 ^271 


INDEX — ^DIGEST. 


1115 


CONTBACTS— Continued. 

32.  What  Acts,  Contracts,  and  Combinations  Do  Not  Violate  Anti- 
Trust  Act. — Acts,  contracts,  and  combinations  which  promote, 
or  only  incidentally  or  indirectly  restrict,  competition  in 
commerce  among  the  States,  while  their  main  purpose  and 
chief  effect  are  to  foster  the  trade  and  increase  the  business 
of  those  who  make  and  operate  them,  are  not  in  restraint  of 
interstate  commerce  or  violative  of  section  1  of  the  act  of 
July  2,  1890  (26  Stat,  209).  /». 

88.  Section  1  of  the  Sherman  Anti-Trust  Act  of  July  2,  1890  (26 
Stat.,  209),  makes  a  distinction  between  a  contract  and  a 
combination  or  conspiracy  in  restraint  of  trade.  Rice  v. 
8ta/ndard  Oil  Co.,  1.34  F.,  464.  2—633 

84.  Contract  for  Sale  of  Goods  by  Member  of  Combination.— The 
act  of  July  2,  1890,  section  1  (26  Stat.,  209),  known  as  the 
"Sherman  Anti-Trust  Act"  does  not  invalidate  or  prevent 
a  recovery  for  the  breach  of  a  collateral  contract  for  the 
manufacture  and  sale  of  goods  by  a  member  of  a  combination 
formed  for  the  purpose  of  restraining  interstate  trade  in 
such  goods.  Hadley  Dean  Plate  Glass  Co.  v.  Highland  Glass 
Co.,  143  F.,  242.  2—995 

In  Restraint  of  Tbade.    See  Combinations,  etc.,  54-77. 

Not  Enforceable.    See  Combinations,  etc.,  16-20. 

Freedom  of  Contract— Right  of  Private  Contract.  See 
Constitution,  2-8 ;  and  Congress,  5-7,  11,  19. 

Contracts  fob  Entire  Product.  See  Combinations,  etc  149 
150. 

Agreements   not  to  Engage  in  Business  or  Compete.    See 

Combinations,  etc,  144-146,  148,  159,  208. 
Contracts   in   Violation   of  Anti-Tbust  Act.    See   Actions 

AND  Defenses,  61,  62. 
Defenses.    See  Actions  and  Defenses. 

COPYRIGHT. 

The  rights  acquired  by  publishers  of  copyrighted  books  under 
the  copyright  law  did  not  justify  them  in  combining  and 
agreeing  that  their  books  should  be  subject  to  the  rules 
laid  down  by  the  united  owners,  one  of  which  was  that  no 
member  of  the  association  should  sell  any  books  to  a  black- 
listed  purchaser  who  was  known  to  cut  prices.  Mines  v. 
Scribner,  147  F.,  927.  2—1035 

See  also  Combinations,  etc,  28,  96-98. 

COVENANTS.    See  Combinations,  etc,  152,  153,  155. 
CORPOBATIONS. 

1.  A  corporation,  while  by  fiction  of  law  recognized  for  some  pur- 
poses as  a  person  and  for  purposes  of  jurisdiction  as  a  citi- 
zen, is  not  endowed  with  the  inalienable  rights  of  a  natural 


1116 


INDEX— DIGEST. 


COBFOBATIONS— Continued. 

person,  but  it  is  an  artificial  person,  created  and  existing  only 
for  the  convenient  transaction  of  business.  Northern  Se- 
curUies  Co,  v.  United  States,  193  U.  S..  197  (Brewer  con- 
curring). .  2—341 

t.  Stockholding— Corporations    to    Acquire    Stock    of    Competing 
Eailroads— Legality.— The  real  control  of  a  corporation  is  in 
its  stockholders,  who  have  the  power  to  determine  all  im- 
portant corporate  acts  and  policies,  and  any  contract  or 
combination  by  which  a  majority  of  the  stock  of  two  rail- 
road companies  owning  and  operating  parallel  and  competing 
interstate  lines  of  road  is  transferred  to  a  corporation  or- 
ganized for  the  purpose  of  holding  and  voting  the  same, 
and  receiving  the  dividends  thereon,  to  be  divided  pro  rata 
among  the  stockholders  oT  the  two  companies  so  transfer- 
ring their  stock,  directly  and  substantially,  restricts  inter- 
state trade  and  commerce,  and  is  in  violation  of  the  Anti- 
Trust  Act  of  July  2,  1890  (2G  Stat.,  209).  since  it  destroys 
any  motive  for  competition  between  the  two  roads ;  and  it  is 
immaterial  that  each  company  has  its  own  board  of  direct- 
ors,  which  nominally  directs  its  operations  and  fixes   its 
rates.     V.  S.  v.  Northern  Securities  Co.,  120  F.,  721.    2—215 
8.  Same. — The  fact  that  the  purjwse  of  an  illegal  combination  be- 
tween stockholders  of  two  railroad  companies  operating  par- 
allel and  competing  interstate  lines,  to  secure  unity  of  inter- 
est and  control  of  such  companies,  and  to  prevent  competi- 
tion, has  been  accomplished  by  the  formation  of  a  corpora- 
tion which  has  acquired  the  ownership  of  a  majority  of  the 
stock  of  each  of  the  companies,  can  not  be  urged  to  defeat 
a  suit  by  the  ITnited  States  to  restrain  the  exercise  of  the 
power  so  illegally  acquired  by  the  corporation  through  such 
combination,  as  imix)sing  a  restraint  upon  interstate  com- 
merce In  violation  of  the  Anti-Trust  I^aw  <act  July  2,  1890, 
26  Stat,  209).  jj, 

Affirmed,  193  U.  S.,  197  (2—338). 
4.  Powers  of  Corporations- Kew  Jersey  Statutes.— The  language  of 
the  New  Jersey  enabling  act  (Laws  1899,  p.  473),  author- 
ing the  organization  of  corporations  "  for  any  lawful  pur- 
l>ose,"  imposes  a  limitation  upon  the  powers  of  any  corpo- 
ration organized  thereunder,  however  broad  may  be  the 
terms  of  its  articles  of  incorporation.  /&. 

«.  northern  Securities  Company— Bistribution  of  Stock— Purchase 
and  Sale.— A  contract  by  which  defendant,  the  Northern  Se- 
oirities  Company,  acquired  from  complainants  certain  shares 
of  stock  of  the  Northern  Pacific  Railway  Company  (193  U.  S. 
197),  Held,  under  the  evidence,  to  have  been  one  of  purchase 
and  sale,  by  which  defendant,  on  payment  of  the  agreed 
price,  became  the  absolute  owner  of  the  shares,  free  from 


* 


INDEX — DIGEST. 


1117 


CORPORATIONS— Continued. 

any  trust  in  favor  of  the  complainants,  and  free  to  distribute 
the  same  pro  rata  among  all  its  stockholders  upon  the  entry 
of  a  decree  declaring  it  to  be  an  illegal  combination,  and 
prohibiting  it  from  voting  oi*  receiving  dividends  on  such 
stock.     Northern  Securities  Co.  v.  Hatriman,  134  F.,  331. 

2—618 
Afllrmed,  197  U.  S.,  244  (2—669). 

6.  Same — Should  not  be  Enjoined  from  Distributing  Stock. — De- 

fendant corporation  having  been  adjudged  an  illegal  combi- 
nation in  restraint  of  interstate  commerce,  and  enjoined 
from  voting  or  receiving  dividends  on  certain  railroad  stock 
which  It  owned,  but  permitted  to  transfer  the  same  to  its 
stockholders,  a  plan  adopted  by  its  directors  and  stockholders 
to  distribute  the  same  pro  rata  among  all  its  stockholders 
was  equitable,  and  its  execution  should  not  be  enjoined.      76. 

7.  Same. — The  decree  of  the  Circuit  Court  in  the  Northern  Securi- 

ties case,  affirmed  by  this  court  (193  U.  S.,  197),  did  not 
determine  the  quality  of  the  transfer  as  between  the  defend- 
ants, and  the  provisions  therein  as  to  return  of  shares  of 
stock  transferred  to  it  by  the  railway  stockholders  were 
permissive  only,  and  not  an  adjudication  that  any  of  the 
vendors  were  entitled  to  a  restitution  of  their  original  rail- 
way shares.  Harriman  v.  Northern  Securities  Co.,  197  U.  S., 
244.  2—669 

8.  Same. — The  judgment  of  the  Supreme  Court  in  the  Northern 

Securities  case  went  no  further  than  the  decree  of  the 
Circuit  Court  itself,  and  while  it  leaves  thfrt  court  at  liberty 
to  proceed  in  the  execution  of  its  decree  as  circumstances 
may  require,  it  does  not  operate  to  change  the  decree  or 
import  a  power  to  do  so  not  otherwise  possessed.  lb. 

9.  Same. — The  judgment  or  opinion  of  the  Supreme  Court  in  this 

case  did  not  enlarge  the  scope  of  the  decree  of  the  Circuit 
Court  so  as  to  make  it  an  adjudication  that  any  of  the 
vendors  of  railway  stocks  were  entitled  to  judicial  restitu- 
tion of  the  stocks  transferred  by  them  to  the  Securities 
Company,  or  that  the  Securities  Company  could  not  dis- 
tribute the  shares  of-  railway  stock  held  by  it  pro  rata 
between  its  own  shareholders.  76. 

10.  Same. — The  transaction  between  complainants  and  the  Northern 

Securities  Company  was  one  of  purchase  and  sale  of  North- 
ern Pacific  Railway  Company  stock  for  shares  of  stock  of 
the  Securities  Company  and  cash  and  not  a  bailment  or 
trust.  lb, 

11.  Same — Duty  of  Securities  Company  to  Distribute  Stock. — It  was 

the  duty  of  the  Securities  Company  under  the  decree  in  the 
Government  suit  to  end  a  situation  which  had  been  adjudged 
unlawful,  and  as  this  could  be  effected  by  sale  and  distribu- 
tion in  cash,  or  by  distribution  in  kind,  the  company  was 
11808— VOL  2—06  M 71 


1118 


INDEX — ^DIGEST. 


COBPOBATIOirS-ContiniifH!. 

justified  in  adopting  the  latter  method  and  avoiding  the 
forced  sale  of  several  hundred  million  dollars  of  stock  which 
would  have  involved  disastrous  results.  /ft. 

IS.  Unreasonable  Search  and  Seizure  of  Contracts  and  Correspond- 
ence—Immnnity— Grand  Jury.— A  corporation  charged  with  a 
violation  of  the  Anti-Trust  Act  of  July  2,  1890,  is  entitled  to 
immunity  under  the  fourth  amendment  of  the  Constitution 
from  such  an  unreasonable  search  and  seizure  as  the  compul- 
sory production  before  a  grand  Jury,  under  a  s>(bp(tna  duces 
tecum,  of  all  understandings,  contracts,  or  correspondence 
between  such  coi-poration  and  six  other  companies,  together 
with  all  reports  and  accounts  rendered  by  such  companies 
from  the  date  of  the  organization  of  the  coriwration,  as  well 
as  all  letters  received  by  that  corporation  since  its  organiza- 
tion, from  more  than  one  dozen  diflferent  companies,  situated 
in  seven  different  States.    Hale  v.  Henkel,  201  U.  S.,  43. 

18.  Same.— A  corporation  is  but  an  association  of  individuals  with 
a  distinct  name  and  legal  entity,  and  in  organizing  itself  as 
a  collective  body  it  waives  no  appropriate  constitutional  im- 
munities, and  although  it  can  not  refuse  to  produce  its  books 
and  iwpers  it  is  entitled  to  immunity  under  tlie  fourth  amend- 
ment against  unreasonable  searches  and  seizures,  and  where 
an  examination  of  its  books  is  not  authorized  by  an  act  of 
Congress  a  subpoena  duces  tecum  requiring  the  production  of 
practically  all  of  its  books  and  papers  is  as  indefensible  as 
a  search  warrant  would  be  if  couched  in  similar  terms.      lb. 

14.  Same.— The  protection  against  unreasonable  searches  and  seiz- 

ures afforded  by  the  Fourth  Amendment  can  not  ordinarily 
be  invoked  to  justify  the  refusal  of  an  officer  of  a  corpora- 
tion to  produce  its  books  and  papers  in  obedience  to  a  sub- 
pcma  duces  tecum,  issued  in  aid  of  an  investigation  by  o 
grand  juiy  of  an  alleged  violation  of  the  Anti-Trust  Act  of 
July  2,  1890,  by  such  corporation.  jj,^ 

15.  Same— Contempt.— Although  the  subpoena  duces  tecum  may  be 

too  broad  in  its  requisition,  where  the  witness  has  refused 
to  answer  any  question,  or  to  produce  any  books  or  papers, 
this  objection  would  not  go  to  the  validity  of  the  order  com- 
mitting him  for  contempt.  jj, 

le.  Same— Eeserve  Eight  to  Investigate  Contracts  of  a  Corpo- 
ration.- A  corporation  is  a  creature  of  the  State,  and  there  is 
a  reserved  right  in  the  legislature  to  investigate  its  contracts 
and  find  out  whether  it  has  exceeded  its  powers.  ib. 

17.  Same.— There  is  a  clear  distinction  between  an  individual 
and  a  corporation,  and  the  latter,  being  a  creature  of  the 
State,  has  not  the  constitutional  right  to  refuse  to  submit  its 
books  and  papers  for  an  examination  at  the  suit  of  the  State. 

/ft. 


INDEX — ^DIGEST. 


1119 


CORPORATIONS— Continued. 

IS.  Same. — An  officer  of  a  corporation  which  is  charged  with  crimi- 
nal violation  of  a  statute  can  not  plead  the  criminality  of  the 
corporation  as  a  refusal  to  produce  its  books.  Ib. 

19.  Franchises  of  a  corporation  chartered  by  a  State  are,  so  far  as 

they  involve  questions  of  Interstate  commerce,  exercised  in 
subordination  to  the  power  of  Congress  to  regulate  such  com- 
merce ;  and  while  Congress  may  not  have  general  visitatorial 
power  over  State  corporations,  its  powers  in  vindication  of  its 
own  laws  are  the  same  as  if  the  corporation  had  been  created 
by  an  act  of  Congress.  Ib. 

20.  In  an  action  against  corporations  for  violations  of  the  Anti-Trust 

Law,  the  books  of  the  various  defendants  both  before  and 
after  the  alleged  combination,  and  the  contracts  between 
them,  as  well  as  other  papers,  referred  to  in  the  opinion,  arc 
all  matters  of  material  proof,  but  whether  material  or  not  the 
testimony  must  be  taken  and  exceptions  can  be  noted  by  the 
examiner  and  the  materiality  of  the  evidence  passed  on  by 
the  court.    Nelsori  v.  United  States,  201  U.  S.,  92.        2—920 

21.  Corporate  Officers — ^Production  of  Documentary  Evidence. — The 

refusal  of  corporate  oflicers  to  obey  orders  of  a  Federal 
circuit  court  requiring  them  to  produce  certain  documentary 
evidence,  on  their  examination  before  a  special  examiner, 
can  not  be  justified  on  the  theory  that  such  evidence  was  not 
in  their  possession  or  under  their  control,  because  their  ix)s- 
session  was  not  personal,  but  was  that  of  the  corporations. 

Ib. 

22.  Same. — Documentary  evidence  in  the  shape  of  books  and  papers 

of  corporations  are  in  the  possession  of  the  officers  thereof. 

76. 

23.  Same — Officers  and  Employees  Can  Not  Refuse  to  Testify  or  Pro- 

duce Books,  etc. — Hale  v.  Henkel  (vol.  2,  p.  874)  followed,  to 
the  effect  that  officers  and  employees  of  corporations  can 
not,  under  the  fourth  and  fifth  amendments,  refuse  to  testify- 
or  produce  books  of  corjiorations  in  suits  against  the  corpo- 
rations for  violations  of  the  Anti-Trust  Law  of  July  2,^  1890, 
in  view  of  the  immunity  given  by  the  act  of  February  25, 
190.3.  Ib. 

24.  Corporation  can  not  Claim  Immunity  Because  of  Testimony  or 

Evidence  Furnished  by  its  Officers. — A  corporation,  whether 
State  or  Federal,  can  not  claim  immunity  from  prosecution 
for  violation  of  the  interstate  commerce  or  anti-trust  laws  of 
the  United  States  because  of  testimony  given  or  evidence  pro- 
duced by  its  officers  or  agents  before  the  Interstate  Commerce 
Commission  or  the  Commissioner  of  Corporations,  or  in  any 
proceeding,  suit,  or  prosecution  under  such  laws ;  the  right  to 
immunity  on  account  of  evidence  so  given  in  the  several 
cases  granted  by  act  February  11,  1893  (27  Stat,  443),  and 
acts  February  14  and  February  25,  1903  (32  Stat,  827,  904), 


1120 


INDEX — ^DIGEST. 


COBPOBATIONS-Continued. 

being  limited  to  individuals  who  as  witnesses  give  testimony 
or  produce  evidence.  United  States  v.  Armour  d  Co.,  142  F., 
^^  8—951 

M.  Article  IV  of  the  Constitution  of  the  United  States    has  noth- 
ing  to  do  with  the  conduct  of  individuals  or  corporations 
It  only  prescribes  a  rule  by  which  courts.  Federal  and  State 
are  to  be  guided  when  a  question  arises  in  the  progress  of  a 
pending  suit  as  to  the  faith  and  credit  to  be  given  by  the 
court  to  the  public  acts,  records,  and  judicial  proceedings  of 
a    State,   other  than   that   in   which   the   court   is   sitting 
Minnesota  v.  Northern  Securities  Co.,  194  U.  S.,  48.    2-53a 

m  Indictment— Criminal  Ecsponsibility-^oinder  of  Defendants- 
Corporation  and  its  OlBcers.  See  V.  8,  v.  MacAndrews  d 
Forbes  Co.,  149  F.,  823,  836. 


COSTS. 


The  discretion  of  the  trial  court  under  section  7  of  the  Anti- 
Trust  Act  of  July  2.  1890  (26  Stat,  209),  to  allow  a  reason- 
able  attorney's  fee  to  the  successful  plaintiff  in  an  action 
brought  under  that  section  to  recover  damages  for  a  viola- 
tion of  the  provisions  of  that  act  against  combinations  in 
restraint  of  trade,  is  not  abused  by  an  allowance  of  ?750 
although  the  verdict  was  but  for  f500,  where  the  trial  took 
five  days,  and  from  the  proof  offered  it  appeared  that  from 
f  150  to  $1,000  would  be  a  reasonable  sum.  Montague  v 
Lmiry^  193  U.  S.,  38.  ^__3^ 


COVBTS. 


I.   FeDEBAL  CoUBTS   in   GENEaA]>-JUBISDICTION 

AND   POWEB. 


1.  Jurisdiction  over  Nonresident  Defendants  in  Private  Suits  — 
The  authority  given  by  section  5  of  the  act  of  July  2,  1890 
(26  Stat,  209),  to  bring  in  nonresidents  of  the  district  can 
not  be  availed  of  in  private  suits,  and  the  court  can  not 
acquire  Jurisdiction  over  them.    Greer,  MiUs  d  Co.  v.  Stoller 

«  '  ^'  1— 6*>() 

J^'J^^i/tion  to  Private  Suit.  Against  a  State  for  Violation  of 
Anti-Trust  Law— Necessary  Parties— Where  a  person  brings 
an  action  under  section  7  of  the  Anti-Trust  Law  of  July  2 
1890,  against  the  officials  of  a  State,  to  recover  damages  for 
acts  done  under  authority  of  a  State  statute,  which  gives 
the  State  an  entire  monopoly  of  the  traffic  in  intoxicating 
liquors  (act  S.  C.  Jan.  2,  1895),  the  State  itself  is  a  necessary 
party  thereto,  and  conseijuently  the  Federal  courts  would 

mZ  °li"^*^^^"«°  ^'^  *^«  «<^«on.    Loicenstein  v.  Evans, 
69K,  90a  ^ 


INDEX — DIGEST. 


1121 


COURTS— Continued. 

I.  Federal  Courts  in  General— Continued. 

3.  Court  of  Equity  can  not  Entertain  Bill  of  Private  Party  to 

Enforce  Anti-Trust  Law.— The  Anti-Trust  Law  of  July  2, 
1890,  does  not  authorize  a  court  of  equity  to  entertain  a  bill 
by  a  private  party  to  enforce  its  provisions,  his  remedy  be- 
ing by  an  action  at  law  for  damages.  Southern  Ind.  Exp. 
Co.  V.  V.  S.  Exp.  Co.,  88  F.,  659.  1—862 

4.  The  United  States  can  not  maintain  a  bill  in  equity  to  restrain 

an  association  of  railroads  from  carrying  into  effect  an  agree- 
ment alleged  to  be  illegal  under  the  Interstate  Commerce 
Law,  when  it  appears  that  it  did  not  grant  the  charter  of, 
and  has  no  proprietary  interest  in,  any  of  the  roads.  Its 
right  is  to  prosecute  for  breaches  of  the  law,  not  to  provide 
remedies.     U.  S.  v.  Joint  Traffic  Assn.,  76  F.,  895.  1—615 

Case  reversed,  171  U.  S.,  505  (1—869).  . 

5.  Jurisdiction  After  Admission  of  Territory  as  State. — In  1895  the 

plaintiff  in  error  was  indicted,  with  others,  in  a  district 
court  of  the  Territory  of  Utah,  under  section  3  of  the  act  of 
July  2,  1890  (26  Stat,  209),  which  declares  illegal  "every 
♦  *  *  combination  *  *  *  in  restraint  of  trade  or 
commerce  in  any  Territory."  In  January,  1896,  Utah  was 
admitted  as  a  State,  and  thereafter  the  case  was  transferred 
to  the  Federal  court  for  the  district  of  Utah,  where,  after 
hearing  on  demurrer  to  the  indictment,  the  plaintiff  in  error 
was  tried  and  convicted.  Held,  on  writ  of  error,  that 
neither  under  the  act  of  Congress  authorizing  Utah  to  form 
a  State  government  (28  Stat,  111,  112),  nor  the  constitution 
of  Utah  (art  24,  sec.  7),  nor  by  other  legislation,  was  juris- 
diction conferred  upon  the  Federal  court  to  proceed  with  the 
case.     Moore  v.  U.  S.,  85  F.,  465.  1—815 

6.  S&me.—Held,  further,  that  the  case  did  not  come  within  the 

provisions  of  Revised  Statutes,  section  13,  regulating  the 
effect  of  the  repeal  of  statutes,  for  the  admission  of  Utah 
as  a  State  did  not  operate  to  repeal  the  act  of  July  2,  1890, 
which  still  applies  to  the  Territories  of  the  United  States.    lb. 

7.  Court  of  Equity— Adjustment  of  Difficulties  Between  Receiver  of 

Railroad  and  Employees.— Whel-e  the  property  of  a  railway 
or  other  corporation  is  being  administered  by  a  receiver 
under  the  superintending  power  of  a  court  of  equity,  it  is 
competent  for  the  court  to  adjust  difficulties  between  the 
receiver  and  his  employees,  which,  in  the  absence  of  such 
adjustment,  would  tend  to  injure  the  property  and  to  defeat 
the  purpose  of  the  receivership.  Waterhouse  v.  Coiner,  55  F.. 
149.  1—119 

8.  Same.— It  follows,  then,  that  it  is  in  the  power  of  the  court,  in 

the  interest  of  public  order  and  for  the  protection  of  the 
property  under  its  control,  to  direct  a  suitable  arrangement 
with  its  employees  or  officers,  to  provide  compensation  and 


1122 


INDEX — DIGEST.- 


COUBTS— Continued. 

I.  Federal  Ccwets  in  Obneral— Continoeil. 
conditions  of  their  employment,  and  to  avoid,  if  possible,  an 
interruption  of  their  labor  and  duty,  which  will  be  disastrous 
to  the  trust  and  injurious  to  the  public.  /&. 

S.  A  Conrt  of  Equity  Should  Hot  Aid  by  Entertaining  Infringe- 
ment Suits  Brought  by  an  Illegal  Corporation.— A  corpora- 
tion organized  for  the  purpose  of  securing  assignments  of 
all  patents  relating  to  "spring-tooth  harrows,"  to  grant 
licenses  to  the  assignors  to  use  the  patents  upon  payment  of 
a  royalty,  to  fix  and  regulate  the  price  at  whfch  such  hai- 
rows  shall  be  sold,  and  to  take  charge  of  all  litigation,  and 
prosecute  all  infringements  of  such  patents  as  an  illegal 
combination,  whose  purposes  are  contrary  to  public  policy, 
and  which  a  court  of  equity  should  not  aid  by  entertaining 
infringement  suits  brought  in  pursuance  thereof.  National 
Harrow  Co.  v.  Quick,  67  F.,  130.  1     143 

10,  Jurisdiction  of  a  Court  of  Equity  can  not  be  Invoked  to  Enforce 

a  Contract  Arising  out  of  an  Unlawful  Combination  of  Bail- 
roads— Ticket  Brokers. — In  a  suit  by  a  railroad  company  to 
enjoin  the  defendants,  who  were  tickQ^  brokers,  from  deal- 
ing in  special  tickets  issued  by  complainant  on  account  of 
the  Pan-American  Exposition,  which  were  by  their  terms 
nontransferable,  it  appeared  from  the  showing  made  on  a 
motion  for  a  preliminary  injunction  that  complainant  was  a 
member  of  a  combination  known  as  the  "  Trunk  Line  Associ- 
ation," formed  by  a  number  of  railroads  operating  in  differ- 
ent States  for  the  purpose  of  preventing  comiM?tition ;  that 
the  passenger  receipts  of  all  such  roads  were  pooled  and 
divided  on  an  agreed  basis:  and  that  the  special  rates 
made  on  account  of  the  exposition  were  fixed,  and  the  terms 
of  the  tickets  which  were  the  basis  of  the  suit  were  pre- 
scribed by  such  association  through  its  passenger  com- 
mittee, HeM,  That  such  combination  was  illegal,  as  in 
violation  of  the  Federal  Anti-Trust  Law  (26  Stat,  209), 
and  that  complainant  could  not  invoke  the  aid  of  a  Federal 
court  of  equity  for  the  protection  of  rights  claimed  under 
contracts  which  were  the  direct  result  and  evidence  of  such 
unlawful  combination.  Delaware,  L.  d  W.  R.  Co.  v.  Frank, 
110  F.,  (^.89.  2    82 

11.  A  railroad  company,  belonging  to  an  illegal  combination  in 

violation  of  the  Anti-Trust  Act  of  1890,  can  not  invoke  the 
aid  of  a  Federal  court  of  equity  for  the  protection  of  its 
rights  claimed  under  contracts  which  were  the  direct  result 
and  evidence  of  such  unlawful  combination.  /ft. 

IS.  Will  Enjoin  a  Combination  Between  Two  Parallel  and  Competing 
lines  of  Railroad— Question  of  Public  Policy.— Where  the 
effect  of  a  combination  is  to  directly  prevent  competition 
between  two  parallel  and  naturally  competing  lines  of  rail- 


INDEX — DIGEST. 


1123 


COURTS— Continued. 

I.  t^EDERAL  CoiKTs  ix  Gexeral — Continued, 
road  engaged  in  interstate  business,  it  is  in  restraint  of 
interstate  commerce  and  a  violation  of  the  Anti-Trust  Act 
of  July  2,  1890  (26  Stat.,  209),  and  the  court,  in  a  suit  to 
enjoin  it  as  such,  can  not  consider  the  question  whether  the 
combination  may  not  be  of  greater  benefit  to  the  public 
than  competition  would  be;  that  being  a  question  of  public 
.ix)licy  to  be  determined  by  Congress.  U.  *S'.  v.  Northern 
Securities  Co.,  120  F.,  721.  2—216 

13.  May    Restrain   Violations    of   Anti-Trust    Act    and    Frame   its 

Decree  to  Accomplish  Practical  Results. — Although  cases 
should  not  be  brought  within  a  statute  containing  criminal 
])rovisious  that  are  not  clearly  embraced  by  it,  the  court 
should  not  by  narrow,  technical,  or  forced  construction  of 
words  exclude  eases  from  it  that  are  obviously  within  its 
provisions,  and  while  the  act  of  July  2,  1890,  contains  crim- 
inal provisions,  the  Federal  court  has  power  under  section 
4  of  the  act  in  a  suit  in  equity  to  prevent  and  restrain 
violations  of  the  act,  and  may  mold  its  decree  so  as  to 
accomplish  practical  results  such  as  law  and  justice  demand. 
Northcni  SccKritics  Co.  v.  United  States,  193  U.  S.,  197. 

2—^9 

14.  Consent  of  Parties  can  Never  Confer  Jurisdiction  upon  a  Federal 

Court.  If  the  record  does  not  attirmatively  show  jurisdiction 
in  the  circuit  court,  this  court  must,  upon  its  own  motion, 
so  declare,  and  make  such  order  as  will  prevent  the  circuit 
court  from  exercising  an  authority  not  conferred  upon  it  by 
statute.    Minnesota  v.  'Northern  Securities  Co.,  194  U.  S.,  48. 

2—533 

15.  A  State  is  not  a  citizen  within  the  meaning  of  the  provisions  of 

the  Constitution  or  acts  of  Congress  regulating  the  jurisdic- 
tion of  the  Federal  courts.  /O. 

16.  A  case  can  not,  under  existing  statutes  regulating  the  jurisdic- 

tion of  the  courts  of  the  United  States,  be  removed  from  a 
State  court,  as  one  arising  under  the  Constitution  or  laws  of 
the  United  States  unless  the  plaintiff's  complaint,  bill,  or 
declaration  shows  it  to  be  a  case  of  that  character.  /&. 

17.  While  an  allegation  in  a  complaint  filed  in  a  circuit  court  of 

the  United  States  may  confer  jurisdiction  to  determine 
whether  the  case  is  of  the  class  of  which  the  court  may  prop- 
erly take  cognizance  for  purposes  of  a  final  decree  on  the 
merits,  if  notwithstanding  such  allegation,  the  court  finds, 
at  any  time,  that  the  case  does  not  really  and  substantially 
involve  a  dispute  or  controversy  within  its  jurisdiction  then, 
by  the  express  command  of  the  act  of  1875,  its  duty  is  to 
proceed  no  further.  And  if  the  suit,  as  discussed  by  the 
complaint  could  not  have  been  brought  by  plaintiff  originally 
in    the   circuit   court,    then,    under   the    act   of    1887-88   it 


1124 


IHDEX — DIGEST. 


COUaTS— Continued. 

I.  Federal  Courts  in  General— Continued. 

should  not  have  been  removed  from  the  State  court  and 
should  be  remanded.  jj, 

IS.  A  State  can  not,  by  a  suit  in  its  own  name,  invoke  the  original 
jurisdiction  of  a  Federal  circuit  court  to  restrain  and  pre- 
vent violations  by  competing  interstate  railway  companies, 
of  the  Anti-Trust  Act  of  July  2.  1890  (26  Stat,  269),  because, 
alone,  of  the  alleged  remote  and  indirect  injury  to  its  pro- 
prietary interests  arising  from  the  mere  absence  of  free  com- 
petition in  trade  and  commerce  as  carried  on  by  such  car- 
riers within  its  limits.  /j^ 

1».  Article  IV  of  the  Constitution  of  the  United  States  only  pre- 
scribes a  rule  by  which  courts,  Federal  and  State,  are  to  be 
guided  when  a  question  arises  in  the  progress  of  a  pending 
suit  as  to  the  faith  and  credit  to  be  given  by  the  court  to  the 
public  acts,  records,  and  judicial  proceedings  of  a  State, 
other  than  that  in  which  the  court  is  sitting.  It  has  nothing 
to  do  with  the  conduct  of  individuals  or  corporations.        lb. 

20.  Allegation  of  Amount  in  Controversy.— It  is  not  essential  that  a 

bill  in  a  Federal  court  should  state  the  amount  or  value  in 
controversy,  if  it  appears  to  be  within  the  jurisdictional  limit, 
from  the  allegations  of  the  bill,  or  otherwise  from  the  record,* 
or  from  evidence  taken  in  the  case  before  the  hearing  of 
objections  to  the  jurisdiction.  RoUmon  v.  Suburban  Brick 
Co.,  127  F.,  804.  2-^12 

21.  Abatement— Pendency  of  Action  in  State  Court.— The  pendency 

of  a  suit  in  a  State  court  is  not  a  bar  to  one  on  the  same 
cause  of  action  in  a  Federal  court  /&. 

22.  Production  of  Bocuments.— The  search  and  seizure  clause  of 

the  fourth  amendment  was  not  intended  to  interfere  with 
the  power  of  courts  to  compel  the  production  upon  a  trial  of 
documentary  evidence  through  a  subpcena  duces  tecum. 
Hale  V.  Henlcel,  201  U.  S.,  4.3.  2—874 

See  also  Search,  and  Witnesses. 
28.  Orders  of  a  Federal  circuit  court  directing  witnesses  to  answer 
the  questions  put  to  them  and  produce  written  evidence  In 
their  possession  on  their  examination  before  a  special  ex- 
aminer appointed  in  a  suit  brought  by  the  United  States  to 
enjoin  an  alleged  violation  of  the  Anti-Trust  Act  of  July  2, 
1890  (26  Stat,  209),  is  interlocutory  in  the  principal  suit, 
and  therefore  not  appealable  to  the  Supreme  Court.  An  ap- 
peal does  lie,  however,  from  a  Judgment  of  contempt,  at- 
tempting to  enforce  the  order.  Alexander  v.  UnitPd  States, 
201  U.  S.,  117.  2—945 

See  also  Nelson  v.  United  States,  201  U.  S.,  92  (2—920). 
24.  Admission  of  Evidence — Order  of  Proof.— In  an  action  to  recover 
damages  for  an  alleged  conspiracy  in  restraint  of  interstate 
commerce,  it  was  within  the  discretion  of  the  trial  court  to 


INDEX — DIGEST. 


1125 


COURTS— Continued. 

I.  Federal  Coikts  in  General — Continued, 
admit  evidence  of  acts  and  declarations  of  various  of  the 
defendant  associations,  their  officers,  committees,  members, 
and  agents,  made  in  the  absence  of  many  of  the  other  de- 
fendants, before  a  prima  facie  case  of  conspiracy  had  been 
established,  and  before  privity  of  some  of  the  defendants  had 
been  proven,  on  condition  that  such  connecting  evidence 
should  be  thereafter  given.    Loder  v.  Jayne,  142  F.,  1010. 

2—977 

II.  Circuit  Courts. 

25.  Jurisdiction  to  Restrain  and  Punish  Violations  of  Anti-Trust 

Act. — The  circuit  court  have  jurisdiction  under  the  Anti- 
Trust  Act  of  July  2.  1890,  to  issue  injunctions  to  restrain 
and  punish  violations  of  that  act     U.  S.  v.  Affler,  62  F.,  824. 

1—294 

26.  Jurisdiction — Habeas  Corpus — Removal  of  Prisoner. — Where  a 

prisoner,  arrested  under  warrant  based  upon  an  indictment 
in  a  distant  State  and  district  is  held  pending  an  applica- 
tion to  the  district  court  for  a  warrant  of  removal  for 
trial,  the  circuit  court  of  the  district  in  which  he  is  held 
has  authority  on  habeas  corpus  to  examine  such  indictment 
and  to  release  the  prisoner,  if  in  its  judgment  the  indictment 
should  be  quashed  on  demurrer.     In  re  Terrell,  51  F.,  213. 

1—46 

27.  Habeas  Corpus — Removal  of  Prisoner — Examination  of  Indict- 

ment.— It  is  the  right  and  duty  of  the  circuit  court  on  an 
application  for  habeas  corpus  for  the  purpose  of  releasing 
a  person  held  under  a  warrant  of  a  United  States  commis- 
sioner to  await  an  order  of  the  district  judge  for  his  re- 
moval to  another  district  to  answer  an  indictment,  to  ex- 
amine the  indictment  to  ascertain  whether  it  charges  any 
offense  against  the  United  States,  or  whether  the  offense 
comes  within  the  jurisdiction  of  the  court  in  which  the  in- 
dictment is  pending,     /v?  re  Greene,  52  F.,  104.  1—54 

28.  Jurisdiction— Obstruction  of  the  Mails. — ^The  circuit  court  had 

power  to  issue  its  process  of  injunction  upon  complaint  which 
clearly  showed  an  existing  obstruction  of  artificial  highways 
for  the  passage  of  interstate  commerce  and  the  transmission 
of  the  mails,  not  only  temporarily  existing,  but  threatening 
to  continue.     In  re  Debs,  158  U.  S.,  565.  1—565 

29.  Same — Violation  of  Injunction — Contempt. — Such  an  injunction 

having  been  issued  and  served  uiwn  the  defendants,  the  cir- 
cuit court  had  authority  to  inquire  whether  its  orders  had 
been  disobeyed,  and  when  it  found  that  they  had  been  dis- 
obeyed, to  proceed  under  Revised  Statutes,  section  725,  and 
to  enter  the  order  of  punishment  complained  of.  lb. 

30.  Same— Habeas  Corpus.— The  circuit  court  having  full  jurisdic- 

tion in  the  premises,  its  findings  as  to  the  act  of  disobedi- 


INDEX — ^DIGEST. 


COUBTS— Continued. 

II.  CiRcriT  CorKTs— Continued. 

enee  are  not  aimi  to  review  on  habeas  wrpus  In  this  or  any 
other  court.  /6. 

31.  The  circuit  court  has  power,  in  an  action  brought  by  the  At- 
torney-General, to  enjoin  the  Northern  Securities  Company, 
a  corporation  organized  to  hold  the  majority  of  the  stocli  of 
two  competing  and  parallel  lines  of  railroad  for  the  purpose 
of  preventing  conifietltlon,  from  voting  such  stock,  and  from 
exercising  any  control  \^hatever  over  the  acts  and  doings  of 
the  railroad  companies  in  question,  and  also  to  enjoin  them 
from  paying  any  dividends  to  the  holding  corporation  on  any 
of  the  stock  so  held  by  it.  yorthern  Securities  Co.  v. 
Ifiited  Slates,  193  U.  S.,  197.  2—338 

32.  The  circuit  court  can  have  no  jurisdiction  of  a  suit  instituted 
by  a  State,  because  of  an  allegation  in  the  complaint  that  fnll 
faith  and  credit  will  not  be  given  to  its  public  acts  if  a  Hew 
Jersey  corporation  organized  for  the  purpose  of  acquiring 
the  control  of  two  competing  interstate  railway  companies 
engaged  in  business  within  its  limits  is  allowed  to  carry  out 
the  object  of  its  incorporation.  Minnesota  v.  Northern  Se- 
curitieif  Co.,  194  U.  8.,  48.  2 533 

38.  The  Jurisdiction  of  the  circuit  court  to  entertain  a  suit  to  en- 
Join  a  combination  of  persons  from  interfering  with  and  pre- 
venting shipowners  from  shipping  a  crew  may  be  maintained 
on  the  ground  of  preventing  a  multiplicity  of  suits  at  law, 
and  for  the  reason  that  damages  at  law  for  interrupting  the 
business  and  intercepting  the  profits  of  pending  enterprises 
and  voyages  must,  in  their  nature,  be  conjectural  and  not 
susceptible  of  proof.  ,54  Fed.  Rep.,  40.  affirmed.  BUndell  v. 
HiiSfan.  r.f>  F.,  09(».  i 182 

34.  The  jurisdiction  of  the  circuit  court  over  a  bill  in  e<iuit}'  to 

enjoin  a  railroad  company  from  granting  rebates  to  favored 
shippers  can  not  be  maintained  uiwn  the  ground  that  such 
act  of  the  railroad  company  is  a  monopoly  within  the  mean- 
ing of  the  second  section  of  said  Anti-Trust  Act  (act  July 
2,  1890,  26  Stat.,  209).  Imte4  States  v.  Atchison,  T.  d  j8f.  F. 
JIf.  Co.,  142  F.,  176.  2—831 

35.  The  pendency  of  a  suit  in  a  State  court  can  not  be  pleaded  in 

abatement  of  an  action  in  a  circuit  court  of  the  United 
States  to  recover  treble  damages  under  section  7  of  the  Anti- 
Trust  Act  of  July  2,  1800  (26  Stat,  210),  since  the  State 
coiirt  is  without  jurisdiction  to  enforce  the  remedy  given  by 
said  section,  and  therefore  the  same  case  can  not  be  depend- 
ing in  both  courts.     Lorive  v.  LanJor.  130  F..  633.      2—563 

36.  Appeal  to  Supreme  Court.— Where  there  are  allegations  of  di- 

verse citizenship  in  the  bill,  but  the  Jurisdiction  of  the 
circuit  court  is  also  invoked  on  constitutional  grounds,  the 
case  is  appealable  directly  to  the  Supreme  Court  under  sec- 


INDEX — DIGEST. 


1127 


. 


COURTS— Continued.  • 

II.  Circuit  Courts— Continued, 
tion  5  of  the  act  of  March  3,  1891,  as  one  involving  the  con- 
struction or  application  of  the  Constitution  of  the  United 
States,  and  where  both  parties  have  appealed  the  entire  case 
comes  to  this  court,  and  the  respondent's  appeal  does  not 
have  to  go  to  the  Circuit  Court  of  Appeals.  Field  v.  Barber 
Asphalt  Paving  Co.,  194  U.  S.,  6ia  2—555 

III.  CntcuiT  Court  of  Appeals. 

37.  The  Circuit  Court  of  Appeals  will  not  reverse  an  interlocutory 

order  granting  or  continuing  a  temporary  injunction  unless 
it  is  clearly  shown  that  the  same  was  improvidently  granted 
and  is  hurtful  to  the  appellant  Workingmen's  Amalg.  Coun- 
cil V.  U.  8.,  57  F.,  85.  1—184 

IV.  Supreme  Court. 

38.  Jurisdictiqn — Appeal — Dissolution  of  Illegal  Association. — The 

dissolution  of  the  freight  association  does  not  prevent  this 
court  from  taking  cognizance  of  the  appeal  and  deciding  the 
case  on  its  merits;  as,  where  parties  have  entered  into  an 
illegal  agreement  and  are  acting  under  it,  and  there  is  no 
adequate  remedy  at  law,  and  the  jurisdiction  of  the  court 
has  attached  by  the  filing  of  a  bill  to  restrain  such  or  like 
action  under  a  similar  agreement,  and  a  trial  has  been  had 
and  judgment  entered,  the  appellate  jurisdiction  of  this  court 
^  is   not   ousted   by   a   simple  dissolution  of  the   association 

effected  subsequently  to  the  entry  of  judgment  in  the  suit. 
L\  8.  V.  Trans-Mo.  Ft.  Assn.,  166  U.  S.,  290.  1—648 

89.  Same. — While  the  statutory  amount  must  as  a  matter  of  fact  be 
in  controversy,  yet  the  fact  that  it  is  so  need  not  api>ear  in 
the  bill,  but  may  be  shown  to  the  satisfaction  of  the  court. 

lb. 

40.  Jurisdiction — Appeal — ^Refusal  of  Witness  to  Answer  Questions 

in  Anti-Trust  Investigation — Fifth  Amendment. — In  a  suit 
in  the  Circuit  Court  of  the  United  States  brought  by  the 
United  States  against  corporations  for  violations  of  the  Anti- 
Trust  Law  of  July  2,  1890,  a  witness  refused  to  answer  ques- 
tions or  submit  books  to  inspection  before  an  examiner  ap- 
pointed by  the  court  on  the  ground  of  immateriality,  also 
pleading  the  Fifth  Amendment ;  after  the  court  had  overruled 
the  objections  and  directed  him  to  answer  he  again  refused 
and  judgment  in  contempt  was  entered  against  him.  On  ap- 
peal to  the  Supreme  Court,  Held,  That  questions  under  the 
Constitution  of  the  United  States  were  involved  and  the 
court  has  jurisdiction  of  an  appeal  direct  from  the  circuit 
court.    Nelson  v.  United  Stales,  201  U.  S.,  92.  2 — ^920 

41.  Same. — In  such  an  action  the  books  of  the  various  defendants, 

both  before  and  after  the  alleged  combination,  and  the  con- 
tracts between  them,  as  well  as  other  papers  referred  to  in 
the  opinion,  are  all  matters  of  material  proof,  but  whether 


1128 


INDEX — ^DIGEST. 


COUBTS— Continued. 

IV.  SupHEME  Court — Continued. 
material  or  not  the  testimony  must  be  taken  and  exoeptiam 
can  be  noted  by  the  examiner  and  the  materiality  of  the 
evidence  passed  on  by  the  conrt.  /j, 

42.  Jurisdiction— The  Order  of  a  Judge  of  the  Circuit  Court  to  a 
Witness  to  Answer  or  be  Punished  for  Contempt  is  Interlocu- 
tory and  Not  Appealable  to  Supreme  Court.— In  a  suit  in  a 
circuit  court  of  the  United  States  brought  by  the  United 
States  against  corporations  for  violations  of  the  Anti-Trust 
Law  of  July  2,  1890,  a  witness  refused  to  answer  questions 
or  produce  books  before  the  examiner  on  the  ground  of  im- 
materially, also  pleading  the  privileges  of  the  Fifth  Amend- 
ment;  the  court  overruled  the  objections  and  ordered  the 
witness  to  answer  the  questions  and  produce  the  books ;  an 
appeal  was  taken  to  this  court.    Held,  That  while  such  an 
order  might  leave  the  witness  no  alternatiye  except  to  obey 
or  be  punished  for  contempt  it  is  interlocutory  in  the  prin- 
cipal suit  and  not  a  final  order,  nor  does  it  constitute  a  prac- 
tically independent  proceeding  amounting  to  a  final  judg- 
ment, and  an  appeal  will  not  lie  therefrom  to  this  court. 
Alexander  v.  United  States,  201  U.  S.,  117.  8—945 

4S.  Same— But  an  Appeal  from  a  Judgment  of  Contempt  is  Review- 
able.—If  the  witness  refuses  to  obey  and  the  court.goes  fur- 
ther and  punishes  him  for  contempt  there  is  a  right  of  re- 
view, and  this  is  adequate  for  his  protection  without  unduly 
impeding  the  process  of  the  case.  [See  al?o  Nelson  v.  United 
males,  201  U.  S.,  92  (2—920).]  /^ 

44.  The  Jurisdiction  of  the  Supreme  Court  of  the  United  States  on 

writ  of  error  to  a  circuit  court,  under  the  Circuit  Court  of 
Appeals  act,  when  the  constitutionality  of  a  State  statute  is 
in  question,  extends  to  all  cases  in  which  such  a  question  is 
decided  against  the  claim  of  either  party,  and  therefore  in- 
cludes a  case  in  which  the  writ  of  error  is  taken  by  a  de- 
fendant who  set  up  in  defense  of  the  action  a  statute  which 
the  court  held  unconstitutional.  Connolly  v.  Union  Sewer 
Pipe  Co.,  184  U.  S.,  54.  g— 118 

45.  Same.— If  a  claim  is  made  in  the  circuit  court  that  a  State  en- 

actment is  invalid  under  the  Constitution  of  the  United 
States,  and  that  claim  is  sustained  or  rejected,  the  Supreme 
Court  may  review  the  judgment  at  the  instance  of  the  unsuc- 
cessful party.  .- 

46.  Consent  of  Parties  can  Never  Confer  Jurisdiction  upon  a  Federal 

Court.— If  the  record  does  not  aflirmativelv  show  jurisdic- 
.  tlon  in  the  circuit  court,  the  Supreme  Court  must,  upon  its 
own  motion,  so  declare,  and  make  such  order  as  will  prevent 
the  circuit  court  from  exercising  an  authority  not  conferred 
upon  it  by  statute.  Minnesota  v.  Northern  Securities  Co 
194  U.  S.,  48.  2_g3^ 


INDEX — ^DIGEST. 


1129 


COURTS -Continued. 

IV.  SrpREME  Court— Continued. 

47.  The  findings  of  fact  made  in  a  State  court  in  a  suit  in  equity 

are  conclusive  upon  the  Supreme  Court  of  the  United  States 
on  writ  of  error  to  that  court.  Bement  v.  National  Hmrow 
Co.,  186  U.  S.,  70,  83.  ^^^^^  ^gj 

48.  Certiorari.-Where  the  decree  of  the  Circuit  Court  of  Appeals 

in  an  action  in  equity  only  reverses  an  order  of  the  Circuit 
Court  granting  an  injunction,  but  the  court,  the  record  pre- 
sentmg  the  whole  case,  practically  disposes  of  the  entire  con- 
troversy  on  the  merits,  certiorari  may  issue  from  the  Su- 
preme Court  and  that  court  may  finally  dispose  of  it  by  its 
direction  to  the  Circuit  Court.  Harriman  v.  Northern  Se- 
cunties  Co.,  197  U.  S.,  244.  2—669 

CREDIBILITY  OP  WITNESSES.    See  Jury,  2. 
DAMAGES. 

1.  Damages  Recoverable—Only  actual  damages,  established  by  the 
proof  of  facts  from  which  they  may  be  rationally  inferred 
with  reasonable  certainty,  are  recoverable  under  the  Sher- 
man Anti-Trust  Law  (26  Stat.,  209).  Speculative,  remote 
or  contingent  damages  can  not  form  the  basis  of  a  lawful 
judgment.     Central  Coal  &  Coke  Co.  v.  Hartman,  111  F.,  96. 

8.  Same— Speculative  Damages— Evidence— Sufficiency.— The  ^ti- 
mates,  speculations,  or  conjectures  of  witnesses  unfounded 
m  the  knowledge  of  actual  facts  from  which  the  amount  of 
the  damages  could  have  been  inferred  with  reasonable  cer- 
tainty will  no  more  sustain  a  judgment  than  the  conjectures 
or  a  jui"y.  ^ 

3.  Same-Anticipated  Profits— When  Recoverable.— The  general 
rule  is  that  the  anticipated  profits  of  a  commercial  business 
are  too  remote,  speculative,  and  dependent  upon  changing 
circumstances  to  warrant  a  judgment  for  their  loss  There 
IS  an  exception  to  this  rule  that  the  loss  of  profits  from  the 
interruption  of  an  established  business  may  be  recovered 
where  the  plaintiff  makes  it  reasonably  certain  by  compe- 
tent  proof  what  the  amount  of  his  actual  loss  was  ih 

4.  Same-Profits  of  Established  Business-Evidence-Indispensable 
to  Recovery.-Proof  of  the  expenses  and  of  the  income  of  the 
busmess  for  a  reasonable  time  antenor  to  and  during  the 
mterruption   charged,  or  of  facts  of  equivalent  import,   is 
indispensable  to  a  lawful  judgment  for  damages  for  the  ioss 
of  the  anticipated  profits  of  an  established  business.        /ft 
Same-Loss  of  Profits.-The  plaintiff  testified  that  the  acts  of 
the  defendants  had  greatly  diminished  his  business    ore- 
vented  him  from  making  contracts  for  future  delive'ry  of 
coal    and  diminished  his  sales  from  15  to  20  carioads  ner 
month,  on  which  he  would  have  made  a  profit  of  from  ^2 
to  $20  per  car :  that  he  could  not  tell  what  the  volmne  of  his 


1130 


INDEX — ^DIGEST. 


BAMA6ES— Continueci 

businefts  was  before  or  after  the  acts  complained  of,  and  that 
he  had  no  books  or  papers  which  would  show  this  fact.  He 
produced  no  evidence  of  the  exi)enses  or  income  of  his  busi- 
ness before  or  after  the  acts  complained  of.  Held,  That  the 
evidence  was  insufficient  to  sustain  a  verdict  for  damages  for 
the  loss  of  anticipated  profits.  16. 

6.  Burden  of  Proof. — In  an  action  for  damages  for  conspiracy  111 

restraint  of  interstate  commerce  la  violation  of  act  of  Con- 
gress of  July  2,  1890  (26  Stat,  209),  the  burden  was  on 
plaintiff  to  show  some  real  actual  damage  to  his  business 
by  reason  of  the  alleged  unlawful  combination.  Loder  v. 
Joime,  142  F.,  1010.  2—977 

7.  Same — Compensation  for  Extra  Work— Evidence.— Where,  in  an 

action  for  damages  to  plaintiff's  business  because  of  an 
alleged  conspiracy  in  restraint  of  interstate  commerce,  plain- 
"  tiflf  claimed  $5,000  compensation  to  himself  for  extra  work 
claimed  to  have  been  required  by  reason  of  such  unlawful 
combination,  but  failed  to  prove  how  much  additional  time 
lie  was  required  to  spend  in  his  business  after  the  combina- 
tion went  into  effect,  he  was  not  entitled  to  recover  for  such 
alleged  extra  services.  16. 

8.  Same — ^Additional  Capital. — Where,  in  a  suit  for  damages  to 

plaintiff's  business  because  of  an  alleged  unlawful  combina- 
tion in  restraint  of  interstate  commerce,  plaintiff  claimed 
that  because  of  such  combination  it  was  necessary  to  put 
$10,000  extra  capital  into  his  business  from  rents  of  his 
building,  which  were  collected  from  time  to  time,  but  he 
testified  on  cross-examination  that  the  payments  of  interest 
and  taxes  on  the  building  were  In  excess  of  the  amount  paid 
Into  the  business,  he  was  not  entitled  to  recover  interest  on 
such  alleged  additional  capital.  16. 

9.  Same — Increased  Cost. — Where,  by  reason  of  an  unlawful  com- 

bination in  restraint  of  interstate  commerce  in  violation  of 
the  Sherman  Act,  plaintiff  was  compelled  to  conduct  his 
business  at  a  greater  cost,  though  it  was  greater  in  volume, 
and  by  reason  of  the  Injury  he  received  a  less  percentage  of 
return,  he  was  entitled  to  recover  such  additional  cost, 
though  by  reason  of  his  increased  efforts  and  the  natural  in- 
crease of  his  business  he  was  enabled  to  withdraw  from  the 
business  for  his  personal  services  an  amount  equal  to,  or 
larger  than,  he  drew  from  the  business  before  the  conspiracy 
became  operative.  16. 

10.  The  owner  of  goods  may  dictate  the  prices  at  which  he  will 
sell  them,  and  the  damages  which  are  caused  to  an  appli- 
cant to  buy  by  the  refusal  of  the  owner  to  sell  to  him  at 
prices  which  will  enable  him  to  resell  them  at  a  profit  con- 
stitute no  legal  injury,  and  are  not  actionable,  because  they 
are  not  the  result  of  any  breach  of  duty  or  of  contract  by 


INDEX — DIGEST. 


1131 


DAMAGES— Con  tin  ued. 

the  owner.     Whitwell  v.  Continental  ToMcco  Co.,  125  F., 
454.  2_27j 

Actions  fob  Recovery.    See  Actions  and  Defenses,  21-42; 
Statutes  62-71. 

DECLARATIONS. 

1.  Averments. — A  declaration  in  an  action  for  damages  under  the 
Anti-Trust  Act  of  1890,  which  does  not  aver  that  the  goods 
manufactured  by  plaintiff,  and  in  respect  of  which  be  claims 
to  be  injured,  are  a  subject  of  interstate  commerce,  or  that 
the  acts  complained  of  have  anything  to  do  with  any  con- 
tract in  restraint  of  trade,  or  that  the  parties  are  citizens 
of  different  States,  is  demurrable.  Bishop  v.  American  Pre- 
servers Co.,  51  F.,  272.  1 ^9 

2.  Duplicity.— A  declaration  in  a  suit  based  on  section  7  of  the 
Anti-Trust  Act  of  July  2,  1890  (26  Stat,  210),  to  recover 
damages  resulting  to  plaintiff  from  a  violation  of  such  pro- 
vision, which  alleges  in  a  single  count  that  defendant  en- 
tered into  a  "contract,  combination,  and  conspiracy"  in  re- 
straint of  trade,  is  bad  for  duplicity.  Rice  v.  Standard  Oil 
Co.,   134   F.,   464.  2—633 

See  also  Pabties,  3. 

DEFENSES.    See  Actions  and  Defenses. 
DEFINITIONS.    See  Words  and  Phrases. 
DEMUBBEB. 

A  bill  in  equity,  and  the  demurrer  thereto,  are  neither  of  them 
to  be  read  and  construed  strictly  as  an  indictment,  but  are 
to  be  taken  to  mean  what  they  fairly  convey  to  a  dispas- 
sionate reader  by  a  fairly  exact  use  of  English  speech. 
Swift  &  Co.  V.  United  States,  196  U.  S.,  375.  2—642 

See  Declarations,  1 ;  Habeas  Corpus,  1. 

DfBECT  AND  IMMEDIATE  EFFECT. 

Direct.  See  Combinations,  etc.,  14,  19,  30,  43,  51,  63,  67,  91, 
168,  175;  Constitution,  9;  Interstate  Commerce,  32,  37; 
Statutes,  11,  19,  23. 

Direct  and  Immediate.    See  Combinations,  etc,  14    44   45 
105.  '       »       . 

Directly  and  Appreciably.  See  Combinations,  otc,  8,  31; 
Statutes,  26. 

Directly  and  Effectually.    See  Combinations,  etc.,  104. 
Directly  and  Necessarily.    See  Combinations,  etc,  9,  197: 
Statutes,  17.  •  ' 

Directly  and  Substantially.  See  Combinations,  etc,  9,  11, 
12,  69,  70,  87,  108;  Congress,  7;  Statutes,  10,  11,  14  15  lo' 
43,  48.  '      »      • 

DIVISION  OF  TEBBITOBY.     See  Combinations,  etc,  39,  136,  137. 


1132 


INDEX — ^DIGEST. 


BOCVMENTABY  E VIBENCE.    See  Evidence,  8,  9 ;  md  Peoductiow 
OF  Documents. 

BBIJGH3.    See  Combinations,  etc.,  29,  160. 

Elll'OBCEMENT.    See  Injunctions,  5,  8,  9,  13,  20,  21;  Combina- 
tions, ETC.,  16-20. 

EQUITY. 

1.  Equity  will  not  encouragre  a  combination  in  restraint  of  trade 

and  probably  illegal  under  the  Federal  Anti-Trust  Act  of 
July  2,  1890.    Amer.  Biscuit  Mfg.  Co,  v.  Klotz,  44  F.,  721. 

1—3 

2.  liiri8diotion.-^Eqnity  has  jurisdiction  to  restrain  public  nui- 

sances on  bill  or  information  filed  by  the  proper  officer  on 
behalf  of  the  people.     V.  8.  v.  Dehs,  64  F.,  724.  1—322 

S.  Same — Mght  to  Jury. — ^The  power  given  by  act  of  July  2, 
1890,  to  circuit  courts  "  to  prevent  and  restrain  violations  " 
of  the  act  is  not  an  invasion  of  the  right  of  trial  by  Jury, 
as  the  jurisdiction  so  given  to  equity  will  be  deemed  to  be 
limited  to  such  cases  only  as  are  of  equitable  cognizance. 

lb. 

4.  A  bill  in  equity  and  the  demurrer  thereto  are  neither  of  them 
to  be  read  and  construed  strictly  as  an  indictment,  but  are 
to  be  talien  to  mean  what  they  fairly  convey  to  a  dispas- 
sionate reader  by  a  fairly  exact  use  of  English  speech. 
Swift  d  Co.  V.  United  States,  196  U.  S.,  375.  2—642 

See  also  Parties  ;  Courts  ;  Pleading  and  Practice, 

EVIDENCE. 

1.  Admissibility-r-Froclamations  of  Various  Government  Officers — 

Newspaper  Reports. — In  order  to  sustain  the  allegations  of  a 
bill  praying  an  injunction  against  a  combination  in  restraint 
of  interstate  commerce,  the  complainant  may  offer  in  evi- 
dence, as  matter  of  history,  the  official  proclamation  of  the 
various  Government  officers  and  also  newspaper  reports  sup- 
ported by  affidavits  containing  manifestoes  and  declarations 
of  the  respondents.     U.  8.  v.  Workitigmen's  Amalg.  Council, 

Case  affirmed,  57  F.,  85  (1—184). 

2.  Admission  of  Evidence — Order  of  Proof. — In  an  action  to  re- 

cover damages  for  an  alleged  conspiracy  in  restraint  of  inter- 
state commerce  it  was  within  the  discretion  of  the  trial 
court  to  admit  evidence  of  acts  and  declarations  of  various 
of  the  defendant  associations,  their  officers,  committees, 
members,  and  agents,  made  in  the  absence  of  many  of  the 
other  defendants,  before  a  prima  facie  case  of  conspiracy  had 
been  established,  and  before  privity  of  some  of  the  defend- 
ants had  been  proven,  on  condition  that  such  connecting  evi- 
dence should  be  thereafter  given.  Loder  v.  Jayne,  142  F., 
1010.  2—977 

8.  Same — ^Burden  of  Proof. — The  burden  of  proving  a  combination 
and  conspiracy  between  manufacturers  and  wholesale  and 


INDEX — DIGEST. 


1188 


EVIDENCE— Continued. 

retail  dealers  of  proprietary  medicines  and  drugs  in  re- 
straint of  trade,  in  violation  of  act  of  Congress  of  July  2, 
1890  (26  Stat,  209),  injurious  to  plaintifif,  an^  that  defend- 
ants were  engaged  and  took  part  in  such  conspiracy,  was  on 
the  plaintiflF.  *  j^^ 

4.  Same— Damages— Burden  of  Proof.— In  an  action  for  damages 
for  conspiracy  in  restraint  of  interstate  commerce,  in  viola- 
tion of  act  of  Congress  of  July  2,  1890  (2G  Stat.,  209),  the 
burden  was  on  plaintiff  to  show  some  real  actual  damage  to 
his  business  by  reason  of  the  alleged  unlawful  combination. 

lb. 
6.  Same — Compensation  for  Extra  Work — Evidence. — Where,  in  an 
action  for  damages  to  plaintiff's  business  because  of  an  al- 
leged conspiracy  in  restraint  of  interstate  commerce,  plaintiff 
claimed  ^5,000  compensation  to  himself  for  extra  work 
claimed  to  have  been  required  by  reason  of  such  unlawful 
combination,  but  failed  to  prove  how  much  additional  time 
he  was  required  to  spend  in  his  business  after  the  combina- 
tion went  into  effect,  he  was  not  entitled  to  recover  for  such 
alleged  extra  services.  /&, 

6.  Sufficiency — Injunction  Pendente  Lite. — Evidence  that,  by  rea- 

son of  the  action  of  a  combination  of  persons,  the  crew  left 
complainants'  ship  as  she  was  about  to  sail,  and  that  another 
crew  could  not  be  procured  for  nine  days,  and  then  only  with 
the  assistance  of  the  police  authorities  and  the  protection  of 
a  restraining  order,  while  other  vessels  in  the  vicinitj^  had 
no  difficulty  in  getting  crews,  is  sufficient  to  authorize  the 
court  to  enjoin  interference  with  the  business  of  the  com- 
plainants by  such  combination  pendente  lite.  BlindcU  v. 
Hagan,  56  F.,  GOG.  1—182 

Affirming  54  F.,  40  (1—106). 

7.  Acts  of  One  Party. — Where  several  persons  are  proved  to  have 

combined  together  for  the  same  illegal  purpose,  any  act  done 
by  one  of  them,  in  pursuance  of  the  original  concerted  plan, 
and  with  reference  to  the  common  object,  is,  in  the  con- 
templation of  the  law,  the  act  of  the  whole  party,  and  there- 
fore the  proof  of  such  act  will  be  evidence  against  any  of  the 
others  who  were  engaged  in  the  conspiracy.  U.  8.  v.  Ccs- 
sidy,  67  F.,  698.  l-^t4^ 

8.  Documentary   or   Oral— Materiality.— Evidence,   whether  docu- 

mentary or  oral,  sought  to  be  elicited  from  witnesses  sum- 
moned in  an  action  brought  by  the  United  States  to  enjoin 
an  alleged  conspiracy  by  manufacturers  of  paper  to  suppress 
competition,  in  violation  of  the  act  of  July  2,  1890  (26  Stat, 
209),  by  creating  a  general  selling  and  distributing  agent,  is 
material,  where  it  would  tend  to  establish  the  manner  in 
which  such  agent  executed  its  functions.  Nelson  v.  United 
States,  201  U.  S.,  92.  2—920 

11808— VOL  2—06  M 72 


1134 


INDEX — ^DIGEST. 


K  VIBENCE— ( 'oiitinuetL 

9.  Same. — ^Documentary  evidence  in  the  shape  of  books  and  papers 
of  corporations  are  in  the  possession  of  the  officers  thereof, 
who  can  not  refuse  to  produce  them  on  the  ground  that  they 
are  not  in  their  possession  or  under  their  control.  lb. 

10.  Same. — ^The  immateriality  of  the  evidence  sought  to  be  elicited 

can  not  justify  the  refusal  of  witnesses  to  obey  the  orders 
of  the  Federal  circuit  court,  requiring  them  to  answer  the 
questions  put  to  them  and  to  produce  written  evidence  In 
their  possession,  on  their  examination  before  a  special  ex- 
aminer, lb. 

11.  Same. — Objections  to  the  materiality  of  the  testimony  are  not 

open  to  consideration  on  a  writ  of  error  sued  out  by  wit- 
nesses to  review  a  judgment  for  contempt,  entered  against 
them  for  disobeying  an  order  to  testify.  lb. 

OvEBT  Acts — Cumulative  Evidence,  See  V,  8.  v.  MacAndrewa 
S  Forbes  Co.,  149  F.,  836. 

See  also  Witnesses. 

EXPRESS  COMPANIES.    See  Statutes,  83. 

FAIR   AND   REASONABLE    RESTRAINTS.    See    Combinations, 
ETC.,  59,  174,  191. 

FISH.    See  Combinations.  144,  147. 

FORFEITURE  OF  GOODS.    See  Seizure  ;  Statutes,  59. 

FRANCHISES.    See  Corporations,  19. 

0RAND  JURY. 

Powers — ^Witnesses — ^Refusal  to  Testify — Contempt. — Where, 
after  a  witness  had  refused  to  testify  before  a  grand  jury 
considering  supposed  infractions  of  the  Anti-Trust  Law,  the 
grand  jury  made  a  presentment  to  the  court  charging  the 
witness  with  contempt,  and  the  court,  after  hearing,  ordered 
the  witness  to  answer  the  questions  and  to  forthwith  pro- 
duce the  papers  required,  the  court's  action  was  equivalent 
to  an  express  instruction  to  the  grand  jury  to  investigate 
the  matter  referred  to  in  the  presentment,  and  hence  the 
fact  that  the  grand  jury  had  been  previously  acting  beyond 
its  power  was  harmless.    In  re  Hale,  139  F.,  496.        2 — 804 

Order  affirmed.    Hale  v.  iare«fce^  201  U.  S.,  43  (2^874). 

See  also  Immunity. 

•BTAU'liAg  coRPirs. 

I.  Removal  of  Prisoner — Jurisdietion  of  Circuit  Courts. — Where  a 
prisoner,  arrested  under  warrant  based  upon  an  indictment 
in  a  distant  State  and  district,  is  held  pending  an  applica- 
tion to  the  district  court  for  a  warrant  of  removal  for  trial, 
the  circuit  court  of  the  district  in  which  he  is  held  has 
authority  on  habeas  corpus  to  examine  such  indictment  and 


INDEX — DIGEST. 


1185 


HABEAS  CORPUS— Continued. 

to  release  the  prisoner,  if  in  its  judgment  the  indictment 
should  be  quashed  on  demurrer.    In  re  Terrell,  51  F.,  213. 

1^46 

2.  Same.— On  habeas  corpus  to  release  a  person  held  under  a 

warrant  of  a  United  States  commissioner  to  await  an  order 
of  the  district  judge  for  his  removal  to  another  district  to 
answer  an  indictment,  it  is  the  right  and  duty  of  the  circuit 
court  to  examine  the  indictment  to  ascertain  whether  it 
charges  any  oflfeuse  against  the  United  States,  or  whether 
the  offense  comes  within  the  jurisdiction  of  the  court  in 
wliich  the  indictment  is  pending.    In  re  Cheene,  52  F.,  104. 

1—54 

3.  Witness — Contempt — ^Incriminating    Evidence. — Where    a    wit- 

ness is  connuitted  for  contempt  in  refusing  to  answer  all  of 
a  series  of  questions,  for  the  reason  that  the  answers  would 
tend  to  criminate  him,  and  some  of  the  answers  would  have 
that  tendency,  he  should  not  be  denied  relief  on  habeas 
corpus  because  sojue  of  tlie  questions  might  be  safely  an- 
swered.    Foot  v.  Buchanan,  113  F.,  15G.  2—104 

4.  Witness  Committed  for  Contempt  by  One  Judge  Would  Not  be 

Discharged  by  Habeas  Corpus  by  Another  Judge   of  Same 
Court. — Where  a  subpcena  duces  tecum  was  directed  to  be 
/  issued  by  a  circuit  judge,  and  the  witness  was  committed 

for  contempt  for  failure  to  obey  the  same,  he  would  not  be 
discharge  on  habeas  corpus  by  another  judge  of  the  same 
court,  though  the  latter  was  of  the  opinion  that  the  sub- 
poena authorized  an  unconstitutional  search  and  seizure  of 
private  papers.    In  re  Hale,  139  F.,  496.  2—804 

Order  atfirnied  in  Hale  v.  Henkel,  201  U  .S.,  43  (2—874). 

5.  Jurisdiction  of  Circuit  Courts  in  Contempt  Proceedings. — Where 

the  circuit  court  has  full  jurisdiction,  its  findings  as  to  the 
act  of  disobedience  of  its  orders  are  not  open  to  review  on 
habeas  corpus  in  the  Supreme  Court  or  any  other  court.  In 
re  Debs,  15S  U.  S.,  564.  1— .56G 

HOLDING  COMPANIES. 

To  Vote  Stock.    See  Combinations,  etc.,  84-91,  181,  182. 
To  Receive  Assignments  of  Patents.    See  Combinations,  etc, 
92-95,  183. 

IMMUNITY. 

1.  Of  Witnesses  Before  the  Grand  Jury.— Act  of  Congress,  Febru- 
ary 11,  1893  (27  Stat,  443),  providing  that  no  person  shall 
be  excused  from  testifying  in  a  proceeding  growing  out  of  an 
alleged  violation  of  an  act  to  regulate  interstate  commerce, 
approved  February  4,  1887,  on  the  ground  that  his  testimony 
will  tend  to  incriminate  him,  and  that  no  person  shall  be 
prosecuted,  etc.,  on  account  of  anything  concerning  which 
he  may  testify  in  such  proceeding,  appUes  only  to  proceed- 
ings connected  with  the  act  of  February  4,  1887,  and  does 


UM 


IKDEX — ^DIGEST. 


nOOmiTY— Continued. 

aot  apply  to  a  prosecution  for  violation  of  the  Anti-Trust  Aot 
(26  Stat,  209),  so  as  to  abrogate  In  relation  thereto  the 
Fiftli  Amendment  to  the  Constitution,  providing  that  no  per- 
son shall  be  compelled  in  a  criminal  ease  to  be  a  witness 
against  himself.    Foot  v.  Buchanan,  113  F.,  156.  2—104 

S.  Same — Question  of  Incrimination  one  for  Judge. — Where  a  wit- 
ness claims  that  the  answer  to  a  question  will  tend  to  in- 
criminate him,  it  is  not  for  the  witness,  but  for  the  judge, 
to  decide  whether,  under  all  the  circumstances,  such  might 
be  the  effect,  and  the  witness  entitled  to  tlie  privilege  of 
silence.  /t,^ 

S.  Same.— Where  a  person  has  already  been  indicted  for  an  offense 
about  which  he  is  to  be  examined  as  a  witness,  and  the  ques- 
tions asked  him  tend  to  connect  him  with  such  offense,  the 
testimony  sought  is  within  the  inhibition  of  the  Fifth  Amend- 
ment to  the  Constitution  providing  that  no  person  shall  be 
compelled  in  any  criminal  case  to  be  a  witness  against  him- 
self, /ft, 

i.  Same — ^Witness  not  Compelled  to  act  ¥pon  an  Assurance  of 
Judge.— Where  a  witness  before  a  grand  jury  declines  to 
answer  certain  questions,  and  Is  taken  before  the  judge,  who 
assures  him  that  he  can  safely  answer,  as  his  testimony  can 
not  be  used  against  him,  he  is  not  compelled  by  such  assur-  \ 
ance  to  relinqqish  his  constitutional  privilege,  where  the 
answer  may  tend  to  criminate  him.  /ft. 

0.  Same.^ — An  inquisition  before  a  grand  jury  to  determine  the  ex- 
istence of  supposed  violations  of  the  Anti-Trust  Act  was  a 
"proceeding"  within  the  aot  of  February  19,  1903  (32  Stat, 
848),  providing  that  no  person  shall  be  prosecuted  or  sub- 
jected to  any  penalty  for  or  on  account  of  any  transaction, 
matter,  or  thing  concerning  which  he  may  testify  or  produce 
evidence  in  any  "proceeding"  under  several  statutes  men- 
tloned,  including  such  Anti-Trust  Act.  In  re  Hale,  139  F., 
49a  2—804 

i.  Same.— The  examination  of  witnesses  before  a  grand  jury  con- 
cerning an  alleged  violation  of  the  Anti-Trust  Aot  of  July 
2,  1890  (26  Stat.  209),  is  a  "proceeding"  within  the  mean- 
ing of  the  proviso  to  the  act  of  February  25,  1908  (32  Stat, 
854r^903),  that  no  person  shall  be  prosecuted  or  be  subjected 
to  any  penalty  or  forfeiture  for,  or  on  account  of,  any  trans- 
action, matter,  or  thing  concerning  which  he  may  testify  or 
produce  evidence  In  any  proceeding,  suit,  or  prosecution 
under  certain  named  statutes,  of  which  the  Anti-Trust  Act 
is  one.  The  word  "proceeding"  should  receive  as  wide  a 
construction  as  is  necessary  to  protect  the  witness  in  his 
disclosures.    Hale  v.  Henkel,  201  U.  S.,  43.  2—874 

7.  Same.— The  interdiction  of  the  Fifth  Amendment  operates  only 
where  a  witness  ii  asked  to  incriminate  himself,  and  does 
mrt  apply  If  the  criminality  ii  taken  away.  /». 


INDEX — ^DIGEST. 


1137 


IMMTJNITY-Continued. 

8.  Same. — A  witness  is  not  excused  from  testifying  before  a  grand 

jury  under  a  statute  which  provides  for  immunity,  because 
he  may  not  be  able,  if  subsequently  indicted,  to  procure  the 
evidence  necessary  to  maintain  his  plea.  The  law  takes  no 
account  of  the  practical  difficulty  which  a  party  may  have  in 
procuring  his  testimony.  /j, 

9.  Same. — The  difficulty,  if  any,  of  procuring  such  testimony  does 

not  render  the  immunity  from  prosecution  or  forfeiture, 
given  by  the  proviso  to  the  act  of  February  25,  1903,  in- 
sufficient to  satisfy  the  guaranty  of  the  Fifth  Amendment  to 
the  Constitution  against  self-incrimination.  /6. 

10.  Same. — A  witness  can  not  refuse  to  testify  before  a  Federal 

grand  jury  in  face  of  a  Federal  statute  granting  immunity 
from  prosecution  as  to  matters  sworn  to,  because  the  immu- 
nity does  not  extend  to  prosecutions  in  a  State  court.  In 
granting  immunity  the  only  danger  to  be  guarded  against 
is  one  within  the  same  jurisdiction  and  under  the  same 
sovereignty.  75, 

11.  Same. — The   privilege   against    self-incrimination    afforded   by 

the  United  States  Constitution,  Fifth  Amendment  is  purely 
personal  to  the  witness,  and  he  can  not  claim  the  privilege 
of  another  person,  or  of  the  corporation  of  which  he  is  an 
officer  or  employee.  [To  same  effect,  McAlister  v.  Henkel, 
201  U.  S.,  90  (2—919).]  /&. 

12.  Same.— Under  the  practice  in  this  country  the  examination  of 

witnesses  by  a  Federal  grand  jury  need  not  be  preceded  by  a 
presentment  or  formal  indictment,  but  the  grand  jury  may 
proceed,  either  upon  their  own  knowledge  or  upon  examina- 
tion of  witnesses,  to  inquire  whether  a  crime  cognizable  by 
the  court  has  been  committed,  and  if  so,  they  may  indict 
upon  such  evidence.  75, 

18.  Same. — In  summoning  witnesses  before  a  grand  jury  it  is 
sufficient  to  apprise  them  of  the  names  of  the  parties  with 
respect  to  whom  they  will  be  called  upon  to  testify,  without 
indicating  the  nature  of  the  charge  against  such  persons.    76. 

14.  Same. — ^A  corporation  charged  with  a  violation  of  the  Anti- 
Trust  Act  of  July  2,  1890,  is  entitled  to  immunity  under  the 
Fourth  Amendment  to  the  Constitution  from  such  an  un- 
reasonable search  and  seizure  as  the  compulsory  production 
before  a  grand  jury  under  a  subpoena  duces  tecum  of  all 
understandings,  contracts,  or  correspondence  between  such 
corporation  and  six  other  companies,  together  with  all  re- 
ports and  accounts  rendered  by  such  companies  from  the 
date  of  the  organization  of  the  corporation,  as  well  as  all 
letters  received  by  that  corporation  since  its  organization, 
from  more  than  one  dozen  different  companies,  situated  in 
seven  different  States.  /j. 


1138 


INDEX — ^DIGEST. 


IMMXmiTY— Continiiwi 

15.  Same.— The  protection  against  unreasonable  searches  and  seiz- 

ures afifonied  by  United  States  ConstitutioD,  Fourth  Amend- 
ment, can  not  ordinarily  be  invoked  to  justify  the  refusal  of 
an  officer  of  a  corporation  to  produce  its  books  and  papers 
in  obedience  to  a  sultpcma  duces  tecum,  issued  in  aid  of  an 
investigation  by  a  grand  jury  of  an  alleged  violation  of  the 
Anti-Trust  Act  of  July  2.  1890,  by  such  coiporation.  lb, 

16.  Same.  Hale  v.  Henkel  (vol.  2,  p.  874)  followed  as  to  the  inquis- 

itorial powers  of  the  Federal  grand  jury  and  the  exteut  of 
privilege  and  immunity  of  a  witness  under  the  B'ifth  Amend- 
ment.   McAUster  v.  Henkel,  201  U.  S.,  90.  2—019 

17.  Persons  who  furnished  evidence  in  the  "  beef  trust "  investi- 

gation conducted  by  the  Commissioner  of  Corporations  pur- 
suant to  a  resolution  of  the  House  of  Representatives  of 
March  7,  1904,  although  they  did  so  without  being  sub- 
poenaed or  sworn,  can  not  be  prosecuted  for  violation  of  the 
Anti-Trust  Law  on  account  of  the  transactions,  matters,  or 
things  to  which  such  evidence  relates.  United  States  v. 
Armour  d  Co,,  142  F.,  808.  2—951 

18.  Same— Scope   of   Immunity   Provisions   of   Statutes.— The    Im- 

munity provisions  of  the  various  statutes  applicable  to  the 
investigation,  to  be  valid,  must  be  as  broad  as  the  privili'ge 
given  by  the  Fifth  Amendment  to  the  Constitution.  lb. 

1».  Same. — Section  6  of  the  act  creating  the  Department  of  Com- 
merce and  Labor  (act  Feb.  14,  1903,  32  Stat,  827),  de- 
fining the  powers  and  duties  of  the  Commissioner  of  Cor- 
porations, requiring  him  to  make  investigation  into  the 
organization,  conduct,  and  management  of  the  business  of 
all  corporations  or  combinations  engaged  in  interstate  or 
foreign  commerce,  other  than  common  carriers,  and  giving 
him  the  same  powers  in  that  respect  as  is  conferred  on  the 
Interstate  Commerce  Commission  with  respect  to  carriers, 
including  the  power  to  subpoena  and  compel  the  attendance 
of  witnesses,  and  to  administer  oaths  and  require  the  pro- 
duction of  documentary  evidence,  contemplates  that  he  shall 
proceed  by  private  hearings.  /ft. 

to.  Same.— Section  6  (32  Stat,  827)  provides  that  "all  the  re- 
quirements, obligations,  liabilities,  and  immunities  imposed 
or  conferred  by  the  *  act  to  regulate  commerce '  and  by  *  an 
act  in  relation  to  testimony  before  the  Interstate  Commerce 
Commission '  shall  also  apply  to  all  persons  who  may  be  sub- 
poenaed to  testify  as  witnesses  or  to  produce  documentary 
evidence  in  pursuance  of  the  authority  conferred  by  this 
section."  j^ 

SI.  Same.— The  act  of  February  11,  1893  (27  Stat.,  443),  which  is 
supplementary  to  the  Interstate  Commerce  Act,  provides  that 
"no  person  shall  be  prosecuted  or  subjected  to  any  penalty 
or  forfeiture  for  or  on  account  of  any  transaction,  matter, 


INDEX — DIGEST. 


11^^9 


IMMUNITY— Continued. 

or  thing  concerning  which  he  may  testify  or  produce  evi- 
dence, documentary  or  othei*wise,  before  said  commission  or 
in  obedience  to  its  subpoena    *    *    *    or  in  any  such  case 
or  proceeding.  I^- 

22.  Same. — And  the  appropriation  act  of  February  25,   1903    (32 

Stat,  90i),  making  provision  for  the  enforcement  of  the  in- 
terstate commerce  and  Anti-Trust  Laws,  contains  a  similar 
immunity  provision  relating  to  persons  giving  testimony  or 
producing  evidence  in  any  proceeding,  suit,  or  prosecution 
under  said  acts.  /&• 

23.  Corporations  can  not  Claim  Immunity  because  of   Testimony 

Given  or  Evidence  Furnished  by  its  Officers  or  Agents. — ^A 
corporation,  whether  State  or  Federal,  can  not  claim  im- 
munity from  prosecution  for  violation  of  the  interstate  com- 
merce or  Anti-Trust  Laws  of  the  United  States  because  of 
testimony  given  or  evidence  produced  by  its  officers  or  agents 
before  the  Interstate  Commerce  Commission  or  the  Commis- 
sioner of  Corporations,  or  in  any  proceeding,  suit,  or  prose- 
cution under  such  laws;  the  right  to  immunity  on  account 
of  evidence  so  given  in  the  several  cases  granted  by  act  of 
February  11,  1893  (27  Stat,  443),  and  acts  of  February  14 
and  25,  1903  (.32  Stat,  827,  904),  being  limited  to  indi- 
viduals who  as  witnesses  give  testimony  or  produce  evi- 
dence.    United  States  v.  Armour  d  Co.,  142  F.,  808.    2—951 

IN  PARI  DELICTO.     See  Sale,  6,  7. 

INCIDENTALLY,  INDIRECTLY,  OR  REMOTELY.  See  Combxt 
NATioNS,  ETC.,  9,  105,  135,  136,  138,  139,  142,  151,  174,  176, 
205 ;  Congress,  7 ;   Statutes,  7,  8,  14,  44,  49. 

INCITING  STRIKES.     See  Combinations,  etc,  119-125. 

INCRIMINATING  EVIDENCE.    See  Witnesses;  Immunity. 

INDICTMENTS. 

1.  Failure  to  Allege  that  Defendants  Monopolized  or  Conspired  to 
Monopolize  Trade  and  Commerce  Among  the  Several  States, 
etc. — An  indictment  under  section  2  of  the  Anti-Trust  Act 
of  July  2,  1890  (26  Stat,  209),  which  fails  to  allege  that  de- 
fendants monopolized,  or  conspired  to  monopolize,  trade  and 
commerce  among  the  several  States,  or  with  foreign  nations, 
fails  to  state  an  offense,  even  though  it  does  allege  that 
they  did  certain  acts  with  intent  to  monopolize  the  traffic 
in  distilled  spirits  among  the  several  States,  and  that  they 
have  destroyed  free  competition  in  such  traffic  in  one  of 
the  States  and  increased  the  price  of  distilled  spirits  therein. 
U,  S.  V.  Oreenhut,  50  F.,  469.  1—30 


1140 


INDEX — DIGEST. 


INDICTMENTS-C'ontinue<l. 

f .  Failure  to  Chargrc  a  Crime.—An  indictment  under  tlie  act  of 
July  2,  1890,  relating  to  monopolies,  averred  that  defend- 
ants, in  pursuance  of  a  combination  to  restain  trade  in  dis- 
tilleiT  products  l>etwecn  the  States  and  monopolize  the  traffic 
therein,  acquired  by  lease  or  purchase,  prior  to  the  passage 
of  the  act,  some  70  distilleries,  producing  three-quarters  of 
the  distillery  products  of  the  United  States,  and  that  they 
continued  to  operate  the  same  after  the  passage  of  the  law, 
and  by  certain  described  means  sold  the  product  at  increased 
prices.  Held,  That  no  crime  was  charged  in  respect  to  the 
purchase  or  continued  operation  of  the  distilleries,  since 
there  was  mo  averment  that  defendants  obligated  the  vendors 
of  tie  distilleries  not  to  build  others,  or  to  withhold  their 
capital  or  experiemce  from  the  business.  In  re  Corn  in  ff,  51  P., 
3a  1__33 

».  Same.— The  indictment  further  averred  that  defendants,  in  pur- 
suance of  the  combination,  shipped  certain  of  tlic  products  to 
Massachusetts,  and  sold  them  there  through  their  distribut- 
ing agents  to  dealers,  who  were  promised  a  rebate  of  5  cents 
per  gallon  on  their  purchases,  provided  such  dealers  pur- 
chased their  distillery  products  exclusively  from  the  distrib- 
uting agents,  and  sold  them  no  lower  than  the  prescribed  list 
prices,  said  rebate  to  be  paid  when  such  dealers  should  sign 
a  certificate  that  they  had  so  purchased  and  sold  for  six 
months;  and  that  by  this  means  defendants  had  controlled 
and  increased  the  price  of  distillery  products  In  Massachu- 
setts. Held,  That  no  crime  was  charged  with  respect  to  such 
sales,  since  there  was  no  averment  of  any  contract  whereby 
the  purchasers  bound  themselves  not  to  purchase  from  others, 
or  mot  to  sell  at  less  than  list  prices.    /6.  1—34 

i.  Failure  to  Charge  a  Crime.— An  indictment  under  the  act  of  July 
2,  1890,  relating  to  monopolies,  averred  in  the  fourth  count 
that  defendants,  in  pursuance  of  a  combination  to  restrain 
trade  In  distillery  products  between  the  States,  shipped  cer- 
tain whisky  to  Massachusetts  and  sold  it  there  through  their 
distributing  agents  to  dealers  under  a  contract  whereby  said 
dealers  were  promised  a  rebate  of  5  cents  per  gallon  on  their 
purchases,  providing  such  dealers  purchased  their  distillery 
products  exclusively  from  the  distributing  agents  and  sold 
them  no  lower  than  the  prescribed  list  prices ;  said  rebate  to 
be  paid  when  such  dealers  should  sign  a  certificate  that  tliey 
had  so  purchased  and  sold  for  six  months ;  and  that  by  ihis 
means  defendants  had  controlled  and  Increased  the  price  of 
distillery  products  in  Massachusetts.  Held,  That  no  crime 
was  charged  with  respect  to  such  sales,  since  there  was  no 
averment  of  amy  contract  whereby  the  dealers  bound  them- 


INDEX — DIGEST. 


1141 


INBICTMENTS— Continued. 

selves  not  to  purchase  from  others,  or  not  to  sell  at  less  than 
list  prices.  In  re  Corning,  51  F.,  205,  approved.  In  re 
Terrell,  51  F.,  213.  1—46 

5.  Failure  to  Allege  Contract  or  Means  of  Compulsion — Vague- 

ness.— In  an  indictment  under  section  1  of  the  act  of  July  2, 
1890,  to  protect  trade  and  commerce  against  monopolies,  one 
count  alleged,  in  substance,  that  on  a  specified  date  de- 
fendants, under  the  guise  of  the  Distilling  and  Cattle  Feed- 
ing Company,  sold  to  certain  persons  in  Boston  a  quantity  of 
alcohol,  then  in  Illinois,  and  that,  by  reason  of  the  fact  that 
said  company  controlled  the  manufacture  and  sale  of  75  per 
cent  of  all  distillery  products  in  the  United  States,  defend- 
ants fixed  the  pricf^  at  which  the  purchasers  should  and  did 
•sell  such  alcohol,  and  "  did  compel  "  said  purchasers  "  to  sell 
said  alcohol  at  no  less  price  than  that  fixed  "  by  them,  but 
there  were  no  allegations  as  to  the  means  of  compulsion. 
Held,  That  it  could  not  be  assumed  from  these  allegations 
that  the  means  used  was  a  contract  with  the  purchasers,  and 
the  count  was  bad,  as  being  too  vague  to  charge  any  contract 
or  restraint  of  trade  between  the  States.  Jn  re  Oreene,  52 
F.,  104.  1—55 

6.  Indictments  which  Simply  Follow  the  Language  of  the  Stat- 

ute— Tested  by  Specific  Facts  Alleged. — Under  the  act  of 
July  2,  1890,  "  to  protect  trade  and  commerce  against  unlaw- 
ful restraints  and  monopolies,"  an  indictment  simply  follow- 
ing the  language  of  the  statute  would  be  wholly  insufficient, 
for  the  words  of  the  act  do  not  themselves  fully,  directly, 
and  clearly  set  forth  all  the  elements  necessai*y  to  constitute 
•the  offense ;  and  the  indictment  must,  therefore,  be  tested  by 
the  specific  facts  alleged  to  have  been  done  or  committed.  7&. 

7.  Indictment  of  Stockholders  for  Acts  of  Corporation — Omission 

to  State  Relation  Defendants  Bore  to  the  Corporation. — In 
indictments  of  individuals  under  the  said  statute,  where  all 
the  acts  alleged  to  constitute  the  ofl'euse  are  charged  to  have 
been  done  by  a  corporation,  an  omission  to  state  what  rela- 
tion defendants  bore  to  the  corporation,  other  than  that  of 
stockholders,  is  fatal,  since  mere  stockholders  can  not  be  held 
criminally  responsible  for  the  acts  of  the  corporation.      76. 

8.  Must  Contain  Description  of  the  Offense  and  a  Statement  of 

the  Facts  Constituting  Same — ^Words  of  Statute. — An  indict- 
ment under  the  act  of  Congress,  "  to  protect  trade  and  com- 
merce against  unlawful  restraint  and  monopolies  "  (26  Stat, 
209),  must  contain  a  certain  description  of  the  offense,  and  a 
statement  of  facts  constituting  same,  and  it  is  not  sufficient 
simply  to  follow  the  language  of  the  statute.  U,  8.  v.  Nelson, 
52  F.,  040.  1—77 


■1  X4:iS 


IKDEX — DIGEST. 


IWBICTMENTS— Continued. 

9.  An  indictment  under  the  anti-trust  law  should  describe  some- 
thing that  amounts  to  a  conspiracy  under  that  act  conform- 
ably to  the  rules  of  pleading  at  common  law,  as  perhaps 
modified  by  general  Federal  statutes.  V,  8.  v.  MacAndrews 
d  Forbes  Co.,  149  F.,  823,  831. 

10.  Must  Show  Means  Whereby  it  Is  Sought  to  Monopolize.— In  an 

indictment  under  the  Anti-Trust  Act  of  1890  it  is  not  suffi- 
cient to  declare  In  the  words  of  the  statute,  but  the  means 
whereby  it  is  sought  to  monopolize  the  market  must  be  set 
out,  so  as  to  enable  the  court  to  see  that  they  are  illegal. 
U.  S.  V.  Patterson,  55  F.,  605.  1—133 

Rehearing  on  general  demurrer,  59  F.,  280  (1—244). 

11.  Allegations  of  what  was  done  in  pursuance  of  an  alleged  con- 

spiracy are  irrelevant  in  an  indictment  under  this  statute, 
and  are  of  no  avail  either  to  enlarge  or  to  take  the  place  of 
the  necessary  allegations  as  to  the  elements  of  the  oiTensc. 

lb. 
18.  Scope  of  the  Statute.— The  words  "  trade  "  and  **  commerce,"  as 
used  in  the  Anti-Trust  Act  of  1890,  are  synonymous.  The 
use  of  botli  terms  in  the  first  section  does  not  enlarge  the 
meaning  of  the  statute  beyond  that  employed  in  the  common- 
law  expression,  "  contract  in  restraint  of  trade,"  as  they  are' 
analogous  to  the  word  "  monopoliie,"  used  In  the  second  sec- 
tion of  the  act.  /j, 

13.  The  word  "monopolize"  is  the  basis  and   limitation  of  the 

statute,  and  hence  an  indictment  must  show  a  conspiracy  in 
restraint  by  engrossing  or  monopolizing  or  grasping  the 
marliet.  It  is  not  sufficient  simply  to  allege  a  purpose  to 
drive  certain  competitors  out  of  the  field  by  violence,  annoy- 
ance, intimidation,  or  otherwise.  /ft. 

14.  Acts  of  Violence.— Where  counts  in  such  indietiiient  allege  a 

pui-pose  of  engrossing  or  monopolizing  the  entire  trade  in 
question,  acts  of  violence  and  intimidation  may  be  alleged  as 
the  means  to  accomplish  the  general  puipose.  lb. 

15.  Surplusage  in  an  indictment  can  not  be  reached  by  demurrer 

of  any  character;  but,  if  it  be  assumed  that  a  special  de- 
murrer will  lie,  it  must  point  out  the  specific  language  ob- 
jected to,  and  not  require  counsel  and  the  court  to  search 
through  the  indictment  for  what  is  claimed  as  demurrable. 
IL  8.  V.  Patterson,  59  F.,  280.  1—244 

l«.  An  indictment  for  conspiracy  to  monoiwlize  interstate  com- 
merce in  cash  registers  need  not  negative  the  ownership  of 
patents  by  defendants,  or  aver  that  the  commerce  proposed 
to  be  carried  on  is  a  lawful  one.  /ft. 

17.  Averments.— It  is  unnecessary  to  set  out  in  detail  the  opera- 
tions supposed  to  constitute  interstate  commerce,  and  in  this 
respect  it  is  sufficient  to  use  the  language  of  the  statute,    /ft. 


INDEX — ^DIGEST. 


1143 


\f 


INDICTMENTS— Continued. 

18.  It  is  unnecessary  to  allege  the  existence  of  a  commerce  which 
.     defendants  conspire  to  monopolize,  as  the  statute  does  not 

distinguish  between  strangling  a  commerce  which  has  been 
born  and  preventing  the  birth  of  a  commerce  which  does  not 
exist.  /ft. 

19.  The  indictment  need  not  show  that  the  purpose  of  the  con- 

spiracy was  to  grasp  the  commerce  into  the  hands  of  one  of 
the  defendants,  or  that  defendants  were  interested  in  behalf 
of  the  party  for  whose  benefit  they  conspired,  or  what  were 
their  relations  to  such  party.  /ft. 

20.  Grand  Jury — Finding — ^Indictment. — An  indictment  should  only 

be  found  where  the  grand  jury  believe  that  the  evidence  be- 
fore them  would  warrant  a  conviction.  In  re  Grand  Jury,  62 
F.,  840.  1—310 

See  also  U.  S.  v.  MacAndrews  <&  Forbes  Co.,  149  F..  823. 

INDIRECTLY.     See  Incidentally. 

INFRINGEMENT  OF  PATENTS.     See  Patents. 

INJUNCTIONS. 

1.  Must  be  Brought  by  the  Government. — The  act  of  July  2,  1890 

(26  Scat,  209),  does  not  authorize  the  bringing  of  injunc- 
tion suits  or  suits  in  equity  by  any  parties  except  the  Gov- 
ernment.   Blindell  v.  Hagan,  54  F.,  40.  1 — 106 
Case  affirmed,  56  F.,  696  (1—182). 

2.  Same.— The  intention  of  the  Anti-Trust  Act  of  July  2,  1890  (26 

Stat.,  209),  was  to  limit  direct  proceedings  in  equity  to  pre- 
vent and  restrain  such  violations  of  the  Anti-Trust  Act  as 
cause  injury  to  the  general  public,  or  to  all  alike,  merely 
from  the  suppression  of  competition  in  trade  and  commerce 
among  the  several  States  and  with  foreign  nations,  to  those 
instituted  in  the  name  of  the  United  States,  under  section  4 
of  the  act,  by  district  attorneys  of  the  United  States,  acting 
under  the  direction  of  the  Attorney-General;  thus  securing 
the  enforcement  of  the  act,  so  far  as  such  direct  proceedings 
in  equity  are  concerned,  according  to  some  uniform  plan, 
operative  throughout  the  entire  country.  Minnesota  v. 
Northern  Securities  Co.,  194  U.  S.,  48.  2 — .533 

3.  The  right  to  bring  suits  for  injunction  under  section  4  of  the 

act  of  July  2,  1890  (26  Stat,  209),  is  limited  to  suits  insti- 
tuted on  behalf  of  the  Government.  Oreer,  Mills  d  Co.  v. 
StoUer,  77  F.,  1.  i — 620 

4.  The  fourth  section  of  the  xinti-Trust  Act   (26  Stat,  209)   in- 

vests the  Government  with  full  power  and  authority  to  bring 
a  suit  to  set  aside  an  agreement  between  competing  railroads 
for  the  regulation  of  rates  and  to  have  an  association 
founded  for  that  purpose  dissolved  and  its  members  en- 
joined from  carrying  out  the  terms  of  the  agreement  U.  8. 
y.  Trans-Missouri  Ft.  Assn.,  166  U.  S.,  290.  1 64S 


1144 


INDEX — DIGEST. 


INJUNCTIONS— Continued. 

5.  Jurisdiction  of  Circuit  Courts.— The  circuit  courts  have  juris- 
diction  under  the  Anti-Tnist  Act  of  July  2,  1890,  to  issue 
iujuuctioas  to  restrain  and  punish  violations  of  that  act. 
U,  8.  V.  Agler,  62  F..  824.  1—294 

e.  Same— Technical  Befects  in  Bill.— That  a  bill  for  such  iujunc- 
tion  contains  no  prayer  for  process,  this  being  a  mere  tech- 
nical defect,  although  it  renders  the  bill  demurrable,  does 
not  affect  the  jurisdiction  of  the  court  or  render  the  injunc- 
tion issued  thereon  void.  ^^ 

7.  Same— Befendants  Not  Named  in  Bill,  nor  Served  with  Sub- 

pcena.— An  injunction  for  such  purpose  becomes  binding,  as 
against  one  not  named  in  the  bill,  and  not  served  with  sub- 
IMKna,  when  the  injunction  order  is  served  on  him  as  one  of 
the  unknown  defendants  referred  to  in  the  bill.  2b. 

8.  Same— Proceedings   to  Punish   Violation.— An    information   to 

punish  violation  of  such  an  injunction  oi-der  which  fails  to 
allege  that  the  order  was  a  lawful  one,  in  the  language  of 
the  statute,  or  that  the  person  charged,  not  named  in  the 
order,  was  one  of  the  unknown  parties  referred  to  therein, 
or  that,  either  by  his  words  or  his  acts,  he  was  engaged  in 
aiding  the  wmmon  object  with  other  members  of  the  al- 
leged combination,  lacks  the  necessary  certainty.  lb. 

9.  Equity  Jurisdiction— Power  to  Enjoin— Eight   to  Jury.— The 

power  given  by  section  4  of  the  act  July  2,  1890.  to  circuit 
courts  "  to  prevent  and  restrain  violations "  of  the  act,  is 
not  an  invasion  of  the  right  of  trial  by  jury,  as  the  jurisdic- 
tion so  given  to  equity  will  be  deemed  to  be  limited  to  such 
cashes  only  as  are  of  equitable  cognizance.  U.  S.  v.  Debs 
m  F.  724.  i_323 

See  also   U.  8.  v.  Elliott,  04  F.,  27   (1-311),  and   V.  S.  v. 
Affter,  t>2  F.,  824  (1—294). 

10.  Obstruction  of  Mails— Jurisdiction  of  Circuit  Court.— The  cir- 

cuit court  has  iwwer  to  issue  its  process  of  injunction  upon  a 
complaint  which  clearly  shows  an  existing  obstruction  of 
artificial  highways  for  the  passage  of  interstate  commerce 
and  the  transmission  of  the  mails,  not  only  temporarily 
existing,  but  threatening  to  continue.  In  re  Debs,  158  U  S 
""**  1 5Q5 

11.  Same— Violation  of  Injunction— Contempt.— Such  an  injunction 

having  been   issued  and  served  upon  the  defendants,   the 
circuit  court  had  authority  to  inquire  whether  its  orders 
had  been  disobeyed,  and  when  It  found  that  they  had  been 
disobeyed,  to  proceed  under  Revised  Statutes,  section  725, 
and  to  enter  the  order  of  punishment  complained  of.         lb. 
It.  Sane— Habeas  Corpus.— The  circuit  court  having  full  jurisdic- 
tion in  the  premises,  its  findings  as  to  the  act  of  disobedience 
are  not  open  to  review  on  habeas  corpus  In  this  or  any  other 
court.  -. 

10. 


INDEX ^DIGEST. 


1145 


INJUNCTIONS— Continued. 

13.  Enforcement— Contempt.— The  proceeding  by  injunction  is  of  a 

civil  character,  and  may  be  enforced  by  proceedings  in  con- 
tempt. 76. 

14.  Such  proceedings  are  not  in  execution  of  the  criminal  laws  of 

the  land.  /ft. 

15.  Penalty  for  Contempt   no   Defense   in   Criminal   Action.— The 
•        penalty  for  a  violation  of  an  injunction  is  no  substitute  for, 

and  no  defense  to,  a  prosecution  for  any  criminal  offense 
committed  in  the  course  of  such  violation.  lb. 

16.  Obstruction  of  Railroads. — An  injunction  will  lie  under  section 

4  of  the  Anti-Trust  Act  of  July  2,  1890,  to  restrain  a  com- 
bination w^hose  professed  object  is  to  arrest  the  operation 
of  the  railroads  whose  lines  extend  from  a  great  city  into 
adjoining  States  until  such  roads  accede  to  certain  demands 
made  upon  them,  whether  such  demands  are  in  themselves 
reasonable  or  unreasonable,  just  or  unjust.  Such  a  combina- 
tion is  an  unlawful  conspiracy  in  restraint  of  trade  and  com- 
merce among  the  States,  within  the  meaning  of  section  4  of 
that  act.     U.  8.  v.  Elliott,  02  F.,  801.  1— 2G2 

Demurrer  overruled,  C4  F.,  27  (1 — 311). 

17.  Same— Power  of  Congress  to  Authorize.— Act  of  July  2,  1890, 

section  4,  which  provides  that  the  circuit  courts  of  the 
United  States  have  jurisdiction  to  restrain  combinations  and 
conspiracies  to  obstruct  and  destroy  interstate  commerce, 
before  such  objects  are  accomplished,  is  not  void  for  want 
of  pow  er  in  Congi'ess  to  authorize  such  proceedings.  U.  8.  v. 
Elliott,  G4  F.,  27.  1—311 

18.  Injunction  Order— Persons  not  Named  in  Bill.— Under  act  of 

July  2,  1890,  section  5,  an  injunction  order  in  an  action  to 
enjoin  an  illegal  conspiracy  against  interstate  commerce  may 
provide  that  it  shall  be  in  force  on  defendants  not  named  in 
the  bill,  but  who  are  within  the  terms  of  the  order,  where  it 
also  provides  that  it  is  operative  on  all  persons  acting  in 
concert  with  the  designated  conspirators,  though  not  named 
in  the  writ,  after  the  commission  of  some  act  by  them  In 
furtherance  of  the  conspiracy,  and  service  of  the  writ  on 
them.  /ft^ 

19.  Strike — ^Interference  with  Interstate  Commerce. — Where  an  in- 

junction is  asked  against  the  interference  with  interstate 
commerce  by  combinations  of  striking  workmen,  the  fact 
that  the  strike  is  ended  and  labor  resumed  since  the  filing 
of  the  bill  is  no  ground  for  refusing  the  injunction.  The 
invasion  of  rights,  especially  where  the  lawfulness  of  the 
invasion  is  not  disclaimed,  authorizes  the  injunction.     V.  8. 

V.  Workingmen's  Amalg.  Council,  54  F.,  994.  1 HO 

Case  affirmed,  57  F.,  85  (1—184). 


1146 


INDEX — ^DIGEST. 


Hf JUNCTIONS-Cont  i  luieil 

20.  Injunction  in  Northern  Securities  Case  no  Invasion  of  States' 
Mights  to  Create  Corporations.— The  enforcement  of  the  pro- 
visions of  the  Anti-Tnist  Act  of  July  2,  1800  (2G  Stat.,  209). 
by  a  Federal  court  decree  enjoining  a  coriwratiou  organized 
In  pursuance  of  a  combination  of  stockholders  in  two  com- 
Ijeting  interstate  railway  companies  for  the  pnnwse  of  ac- 
quiring a  controlling  interest  in  the  capital  stock  of  such 
companies*,  from  exercising  the  power  acquired  by  such*  cor- 
poration by  virtue  of  its  acquisition  of  such  stock,  does  not 
amount  to  an  invasion  by  the  Federal  Government  of  the 
reserved  rights  of  the  States  creating  the  several  corpora- 
tions. Northern  Securities  Co.  v.  United  States,  193  U.  S., 
197  (48  L.  ed.,  679).  Z—M2 

ai.  Same.—A  Federal  court,  by  its  decree  in  a  suit  instituted  under 
tlie  authority  of  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat., 
209),  section  4,  to  prevent  and  restrain  violations  of  the  act, 
may  properly  enjoin  a  corporation  organized  in  pursuance  of 
a  combination  of  stockholders  of  two  competing  interstate 
railway  companies  for  the  purpose  of  acquiring  a  controlling 
interest  in  the  capital  stock  of  such  companies,  from  acquir- 
ing any  further  stock  therein,  from  voting  such  stock  as  it 
then  holds  or  may  subsequently  acquire,  and  from  exercis- 
ing any  control  over  the  railway  companies  by  virtue  of  Its 
holdings,  and  may  restrain  the  railway  companies  fi-om  per- 
mitting or  suffering  any  such  action  on  the  part  of  the  stock- 
holding coiporation,  and  from  paying  any  dividends  on  ac- 
count of  the  stock  held  by  it.  jj. 

22.  Allowance— Comparative    Hardship   or   Inconvenience.— In    an 

application  for  a  preliminary  injunction  to  prevent  the 
Northern  Securiti.es  Company  from  parting  with,  disposing 
of,  transfening,  assigning,  or  distributing  the  stock  of  the 
Northern  Pacific  Railway  Company,  or  any  part  thereof,  by 
reason  of  the  decision  of  the  Supreme  Court  in  the  Northern 
Securities  Company  ease  (193  U.  S.,  197),  during  the  pend- 
ency of  a  suit  to  determine  the  rights  of  the  Northern  Pa- 
cific Company  in  regard  to  such  return  or  distribution,  Held, 
That  tlie  preliminary  injunction  should  issue,  regard  being 
had  to  the  comparative  hardship  or  convenience  to  the 
respective  parties  resulting  from  the  awarding  or  denial  of 
the  Injunction.  Harriman  v.  Northern  Securities  Co.,  132  F., 
464.  2_5jj7 

Reversed  by  Circuit  Court  of  Appeals,  134  F.,  S.'^l  (2—619). 
Action   of   Circuit   Court   of   Appeals   aflfirmed    by    Supreme 
Court,  197  U.  S.,  244  (2—669). 

23.  Same.— Where,  in  a  doubtful  case,  the  denial  of  a  preliminary 

Injunction  would,  on  the  assumption  that  the  complainant 
ultimately  will  prevail,  result  in  greater  detriment  to  him 


INDEX — DIGEST. 


1147 


U 


INJUNCTIONS— Continued. 

than  would,  on  the  contrary  assumption,  be  sustained  by  the 
defendant,  through  its  allowance,  the  injunction  usually 
should  be  granted.  lb. 

24.  Same. — The  balance  of  convenience  or  hardship  ordinarily  is  a 

factor  of  controlling  imi)ortauce  in  cases  of  substantial  doubt 
existing  at  the  time  of  granting  or  refusing  the  preliminary 
injunction.  /ft. 

25.  Same. — Such  doubt  may  relate  either  to  the  facts  or  to  the  law 

of  the  case,  or  to  both.  It  may  equally  attach  to,  or  widely 
vary  in  degree  as  between,  the  showing  of  the  complainant 
and  of  the  defendant,  without  necessarily  being  determina- 
tive of  the  propriety  of  allowing  or  denying  the  injunction. 

lb. 

26.  Same. — Preservation  of  Fund. — Where  the  sole  object  for  which 

an  injunction  is  sought  is  the  preservation  of  a  fund  in 
controversy,  or  the  maintenance  of  the  status  quo,  until  the 
question  of  right  between  the  parties  can  be  decided  on  final 
hearing  the  injunction  properly  may  be  allowed,  although 
there  may  be  serious  doubt  of  the  ultimate  success  of  the 
complainant  lb. 

27.  Same. — While  the  consideration  that  an  appeal  does  not   lie 

from  an  interlocutory  decree  denying  a  preliminary  injunc- 
tion is  entitled  to  no  weight  where,  on  the  application,  it 
clearly  appears  that  the  complainant  can  not  prevail  on  the 
final  hearing,  it  is  often  of  controlling  importance  where,  on 
such  application,  there  is  room  for  reasonable  doubt  as  to  the 
ultimate  result,  /&. 

28.  Preliminary  Injunctions— Where  Material  Allegations  are  De- 

nied.—Where  the  material  allegations  of  a  bill  filed  by  the 
United  States  against  various  coal  companies,  under  act  of 
Congress,  July  2,  1890,  to  enjoin  their  combination  in  re- 
straint of  trade,  are  denied  by  defendants'  affidavits,  a 
preliminary  injunction  will  not  be  granted,  as  plaintiff  gives 
no  indemnifying  bond  in  case  the  injunction  should  be 
dissolved.     U.  8.  v.  JelHco  Mtn.  Coke  &  Coal  Co.,  43  F.,  898. 

1—1 

29.  Injunction  Pendente  Lite— Evidence. — Evidence  tliat,  by  reason 

of  the  action  of  a  combination  of  persons,  the  crew  left  com- 
plainants' ship  as  she  was  about  to  sail,  and  that  another 
crew  could  not  be  procured  for  nine  days,  and  then  only  with 
the  assistance  of  the  police  authorities  and  the  protection  of 
a  restraining  order,  while  other  vessels  in  the  vicinity  had 
no  difliculty  in  getting  crews,  is  sufficient  to  authorize  the 
court  to  enjoin  interference  with  the  business  of  the  comr 
plainants  by  such  combination  pendente  lite.  54  F.,  40, 
affirmed.    Blimdell  v.  Hagan,  56  F.,  696.  1 183 


/ 


1148 


INDEX — DIGEST. 


IN  JUNCTIONS-G  .ntinued. 

80.  Bestraining:  Orders—May  Issue  Without  Notice.— Under  section 
4  of  the  Auti-Trust  Law  of  July  2,  1890,  a  restraining  order 
may  be  issued  without  notice,  under  the  circumstances  sanc- 
tioned by  the  established  usages  of  equity  practice  in  other 
cases.     V.  S.  v.  Coal  Dealers'  Asm,  of  Cal,  85  F.,  252. 

1—749 
SI.  Preliminary  Injunctions— Beview.— Where  the  opinion  of  a 
circuit  court  in  granting  a  preliminary  injunction  shows 
that  the  judge  regarded  as  of  controlling  importance  the 
fact  that  an  order  denying  the  injunction  would  not  be  re- 
viewable by  appeal,  the  rule  that  the  appellate  court  will  not 
interfere  with  the  exercise  of  the  discretionary  power  of  the 
court  of  first  instance  unless  there  is  strong  reason  for  it 
does  not  apply,  and  the  question  of  the  right  to  the  injunc- 
tion will  be  determined  on  the  merits.  Northern  Securities 
Co,  V.  Harriman,  134  F.,  331.  2—618 

Reversing  132  F.,  4G4  (2—581). 
3S.  iame— Should  Not  be  Enjoined  from  Distributing  Assets.— De- 
fendant corporation  having  been  adjudged  an  illegal  com- 
bination in  restraint  of  interstate  commerce, -and  enjoined 
from  voting  or  receiving  dividends  on  certain  railroad  stock 
•        which  It  owned,  but  permitted  to  transfer  the  same  to  its 
stockholders,   a  plan  adopted  by  its   directors  and  stock- 
holders to  distribute  the  same  pro  rata  among  all  its  stock- 
holders was  equitable,  and  its  execution  should  not  be  en- 
joined, j^, 
38.  Same— Bissent. — It  is  a  proper  exercise  of  discretion  for  a  court 
to  grant  a  preliminary  injunction  where  the  bill  and  evidence 
present  a  prima  facie  case  and  raise  important  and  doubtful 
questions  of  law  and  fact,  and,  unless  the  injunction  is 
granted  to  preserve  the  status  quo  until  the  hearing,  the  suit 
would  be  ineffective ;  and  an  order  for  an  injunction,  granted 
-    om  such  grounds  after  the  court  has  given  due  consideration 
to  the  balance  of  inconvenience  and  injury  which  may  result 
to  one  party  or  the  other,  should  not  be  reversed  by  an  ap- 
pellate court  before  the  case  has  been  finally  heard  and  de- 
termined by  the  court  below  on  full  proofs.    Per  Gray,  Cir- 
cuit Judge,  dissenting.                                                            /(,, 
84.  Beview  of  Order  Granting  Temporary  Injunction.— The  Circuit 
Court  of  Appeals  will  not  reverse  an  interlocutory  order 
granting  or  continuing  a  temporary  injunction  unless  It  Is 
clearly  shown  that  the  same  was  improvldently  granted  and 
is  hurtful  to  the  appellant.    Workingmen^s  Amalg.  Council 
V.  U.  8.,  57  F.,  85.                                                                1—184 
See  also  Dr.  Miles  Medical  Co.  v.  Jaynes  Drug  Co.,  149  F.,  838. 


INDEX — DIGEST. 


1149 


INTERSTATE   COMMERCE. 

1.  Commerce    Defined. — The   word   '*  commerce,"    as   used    in    the 

Anti-Trust  Act  of  July  2,  1S90,  and  in  the  Constitution  of  the 
United  States,  has  a  broider  meaning  than  the  word 
"  trade."  Commerce  among  the  States  consists  of  intercourse 
and  traffic  between  their  citizens,  and  includes  the  trans- 
portation of  persons  and  property,  as  well  as  the  purchase, 
sale,  and  exchange  of  commodities.  V.  S.  v.  Cassidy,  67  F., 
698.  1 — 452 

2.  Scope   of   Anti-Trust   Act.— AVhile   the   primary   object  of  the 

statute  was  doubtless  to  prevent  the  destruction  of  legiti- 
mate and  healthy  competition  in  interstate  commerce,  by  the 
engrossing  and  monopolizing  of  the  markets  for  commodi- 
ties, yet  its  provisions  are  broad  enough  to  reach  a  combina- 
tion or  conspiracy  that  will  interrupt  the  transportation  of 
such  commodities  and  persons  from  one  State  to  another. 
U.  8.  V.  Workmgmeii^  Amalgamated  Councih  54  F.,  995, 
cited.  /(>. 

8.  Pullman  cars  in  use  upon  railroads  are  instrumentalities  of 
"commerce."     I.  8.  v.  7)e6s,  \'A  F..  763,  cited.  Jh. 

4.  Commerce — Definition. — Commerce  is  the   sale  or  exchange  of 

commodities,  but  that  which  the  law  looks  ui>on  as  the  body 
of  commerce  is  not  restricted  to  specific  acts  of  sale  or  ex- 
change. It  includes  the  intercourse— all  the  initiatory  and 
intervening  acts,  instrumentalities,  and  dealings — that  di- 
rectly bring  about  the  sale  or  exchange.  U.  8.  v.  8wift  & 
Co.,  122  F.,  .^i29.  2—237 

5.  Interstate  Commerce  Includes  Purchase,  Sale,  and  Exchange  of 

Commodities. — Interstate  commerce  consists  of  intercourse 
and  traffic  between  the  citizens  or  inhabitants  of  different 
States,  and  includes  not  only  the  transportation  of  persons 
and  property  and  the  navigation  of 'public  waters  for  that 
purpose,  but  also  the  purchase,  sale,  and  exchange  of  com- 
modities. Addyston  Pipe  and  8teel  Co.  v.  United  States,  175 
U.  S.,  211.  1—1009 

6.  Same — What  Constitutes  a  Violation  of  the  Statute. — Any  agree- 

ment or  combination  which  directly  operates,  not  alone  upon 
the  manufacture,  but  upon  the  sale,  transportation,  and  de- 
livery of  an  article  of  interstate  commerce,  by  preventing  or 
restricting  its  sale,  thereby  regulates  interstate  commerce 
to  that  extent,  and  thus  trenches  upon  the  power  of  the  na- 
tional legislature,  and  violates  the  Anti-Trust  Act  of  1890  (2(5 
Stat,  209).  /ft, 

7.  Commerce  Between  Two  Points  in  Same  State — ^Vessels  Passing 

Over  Soil  of  Adjoining  States.— Where  a  contract  relates  to 
commerce  between  points  within  a  State,  both  on  a  boundary 
river,  it  will  not  be  construed  as  falling  within  the  prohibi- 
1 1 808— vo).  2—06  M 73 


1150 


INDEX — ^DIGEST. 


INTBJEtSTATE  COMMERCE— Continued. 

tions  of  the  Sherman  Act  because  the  vessels  affected  hy  the 
contract  sail  over  soil  belonging  to  the  other  State  while 
passing  between  the  interstate  points.  Cincinnati,  etc.. 
Packet  Co.  v.  Bay,  200  U.  S.,  179.  2—867 

8.  Same. — Even  if  there  is  some  interference  with  interstate  com- 

merce, a  contract  is  not  necessarily  void  under  the  Sherman 
Act  if  such  interference  is  insignificant  and  merely  inci- 
dental and  not  the  dominant  purpose;  the  contract  will  be 
construed  as  a  domestic  contract  and  its  validity  determined 
by  the  local  law.  jft. 

9.  Same. — A  contract  for  sale  of  vessels,  even  if  they  are  engaged 

in  interstate  commerce,  is  not  necessarily  void  because  the 
¥endors  agree,  as  is  ordinary  In  case  of  sale  of  a  business 
and  its  good  will,  to  withdraw  from  business  for  a  specified 
period.  /6. 

10.  Policy  of  Congress.— It  is  the  declared  policy  of  Congress,  which 

accords  with  the  principles  of  the  conmion  law,  to  promote 
individual  competition  in  relation  to  interstate  commerce, 
and  to  prevent  combinations  which  restrain  such  competition 
between  their  members,  or  between  such  members  as  individ- 
uals and  outside  competitors.    V,  8.  v.  Chesapeake  d  O.  Fuel 

Co,,  105  F..  93.  s 34 

Affirmed,  115  F..  610  (8—151). 

11.  Policy  of  the  Nation  in  Eegard  to.— It  has  been  the  public  policy 

of  this  nation,  from  the  date  of  the  passage  of  the  Interstate 
Commerce  Act  of  1887,  to  regulate  that  part  of  interstate 
commerce  which  consists  of  transportation,  and  to  so  far  re- 
strict competition  in  freight  and  passenger  rates  between 
railroad  companies  engaged  therein  as  shall  be  necessary 
to  make  such  rates  open,  public,  reasonable,  uniform,  and 
steady,  and  to  prevent  discriminations  and  undue  preferences. 
U.  8,  V.  TranS'MUsouH  Freight  A88*n.,  58  F.,  58.  1—186 

Decision  reversed,  166  U.  S.,  290  (1—648). 

11.  The  Anti-Trust  Act  of  July  2,  1800,  embraces  and  declares  to  be 
illegal  every'contract,  combination,  or  conspiracy,  in  what- 
ever form,  of  whatever  nature,  and  whoever  may  be  parties 
to  it.  which  directly  or  necessarily  operates  In  restraint  of 
trade  or  commerce  among  the  several  States  or  with  foreign 
nations.  Northern  SecuHties  Co,  v.  United  States,  193  U.  S„ 
197.     (Harlan,  Brown,  McKenna,  Day.)  8 339 

IS.  Combinations,  even  among  private  manufacturers  or  dealers, 
whereby  interstate  or  international  commerce  is  restrained, 
are  equally  embraced  by  the  act.  /ft. 

14^  Every  combination  or  conspiracy  which  would  extinguish  com- 
petition between  otherwise  competing  railroads,  engaged  in 
interstate  trade  or  commerce,  and  which  would  in  that  way 
restrain  such  trade  or  commerce,  is  made  illegal  by  the 
act.  jft^ 


INDEX — ^DIGEST. 


1151 


INTERSTATE  COMMERCE— Continued. 

m 

15.  Congress  may,  in  the  exercise  of  the  power  conferred  upon  it 

by  the  commerce  clause  of  the  Constitution,  prohibit  private 
contracts  which  operate  directly  and  substantially  to  restrain 
interstate  commerce.  U,  8.  v.  Northern  Securities  Co.,  120  F., 
721.  2—216 

16.  The  power  of  Congress  to  regulate  interstate  commerce  com- 

prises the  right  to  enact  a  law  prohibiting  the  citizen  from 
entering  Into  those  private  contracts  which  directly  and  sub- 
stantially and  not  merely  indirectly,  remotely,  incidentally, 
and  collaterally,  regulate  to  a  greater  or  less  degree  com- 
merce among  the  States.  Addyston  Pipe  A  Steel  Co.  v. 
United  States,  175  U.  S.,  211,  229.  1—1009 

17.  A  State  can  not  invest  a  corporation  organized  under  its  laws 

with  the  power  to  do  acts  in  the  corporate  name  which  would 
operate  to  restrain  interstate  commerce.  U.  S.  v.  Northern 
Securities  Co.,  120  F.,  721.  2—215 

18.  Powers  of  the  United  States — Transmission  of  the  Mails. — While 

the  United  States  is  a  Government  of  enumerated  powers, 
it  has  full  attributes  of  sovereignty  within  the  limits  of 
those  powers,  among  which  are  the  power  over  interstate 
commerce  and  the  power  over  the  transmission  of  the  mails. 
In  re  Dchs,  1.58  U.  S.,  564.  1—565 

19.  Same. — The  powers  thus  conferred  are  not  dormant,  but  have 

been  assumed  and  put  into  practical  exercise  by  Congres- 
sional legislation,  /^^ 

20.  Same — Removal    of    Obstructions. — In    the    exercise    of    those 

powers  the  United  States  may  remove  everything  put  upon 
high\^'ays,  natural  or  artificial,  to  obstruct  the  passage  of 
interstate  commerce,  or  the  carrying  of  the  mails.  76. 

81.  Same— Executive  Power  May  Appeal  to  Civil  Courts.— While  it 
may  be  competent  for  the  Government,  through  the  executive 
branch  and  in  the  use  of  the  entire  executive  power  of  the 
nation,  to  forcibly  remove  all  such  obstructions,  it  is  equally 
within  its  competency  to  appeal  to  the  civil  courts  for  an 
inquiry  and  determination  as  to  the  existence  and  the  char- 
acter of  any  of  them,  and  if  such  are  found  to  exist  or 
threaten  to  occur,  to  invoke  the  powers  of  those  courts  to 
remove  or  restrain  them,  the  jurisdiction  of  courts  to  inter- 
fere in  such  matters  by  injunction  being  recognized  from 
ancient  times  and  by  indubitable  authority.  /ft. 

88.  Same— Circuit  Court  had  Power  to  Issue  Injunction.— The  com- 
plaint filed  in  this  case  clearly  shows  an  existing  obstruction 
of  artificial  highways  for  the  passage  of  interstate  commerce 
and  the  transmission  of  the  mails,  not  only  temporarily  ex- 
isting, but  threatening  to  continue,  and  under  it  the  circuit 
court  had  power  to  issue  its  process  of  injunction.  /ft. 


1152 


INDEX — ^DIGEST. 


UTTEBSTATE  COHMEBCE— continued. 

23.  Carriers — Connecting  Lines — Prepayment  of  Freight. — ^A  com- 
mon carrier  engaged  in  interstate  commerce  may  at  common 
law,  and  under  the  Interstate  Commerce  Law,  demand  i>re- 
payment  of  freight  charges,  when  delivered  to  it  by  one  con- 
necting carrier,  without  exacting  such  prepayment  when 
delivered  by  another  connecting  carrier,  and  may  advance 
freight  charges  to  one  connecting  carrier  without  advancing 
such  charges  to  another  connecting  carrier.  Gulf,  C.  d  S.  F. 
Ry.  Co.  V.  Miami  S.  8.  Co.,  8G  V.,  407.  1—823 

M.  Railroad  Companies — Arrangements  for  Through  Billing. — 
There  is  no  principle  of  common  law  which  forbids  a  single 
railroad  corporation,  or  two  or  more  of  such  corporations, 
from  selecting,  from  two  or  more  other  corporations,  one  which 
they  will  employ  as  the  agency  by  which  they  will  send 
freight  beyond  their  own  lines,  on  through  bills  of  lading, 
or  as  their  agent  to  receive  freight,  and  transmit  it  on 
through  bills  to  their  own  lines,  and  without  breaking  bulk ; 
and  the  right  to  make  such  selection  is  not  taken  away  by 
the  Interstate  Commerce  Law.  (New  York  &  N.  Ry.  Co.  v. 
New  York  &  N.  E.  R.  Co.,  50  Fed.,  867,  explained.)  Prescott 
d  A.  C.  B.  Co,  V.  Atchison,  T.  d  S.  F.  R.  Co.,  73  F.,  438. 

1—604 

25.  Kansas  City  Live  Stock  Association — Engaged  in  Interstate 
Commerce. — Where  the  shipments  of  live  stock  from  growers, 
dealers,  and  traders  in  various  States  and  Territories  to 
the  defendants,  the  Kansas  City  Live  Stock  Association, 
was  solicited  by  the  latter  chiefly  through  personal  solicita- 
tion of  traveling  agents,  and  through  advertisements,  the 
couree  of  business  involving  frequent  loans  to  shippers  In 
other  States,  secured  by  chattel  mortgages  on  herds,  and 
frefiueiit  drafts  drawn  by  shippev^  on  the  defendants,  and 
discounted  at  their  local  banks  in  other  States  on  the 
strength  of  bills  of  shipment  attached  thereto,  shipments 
being  made  to  Kansas  City,  and  the  loans  or  drafts  paid 
from  proceeds  of  sale,  and  the  balance  remitted  to  the 
shippers,  and  sales  at  Kansas  City  were  made  for  shipment 
to  markets  in  other  States,  as  well  as  for  slaughter  at  pack- 
ing houses  near  by,  the  traffic  being  of  immense  proportions, 
and  defendants  active  promoters,  and  frequently  interested 
parties,  gathered  in  for  sale  and  slaughter  millions  of  cattle, . 
sheep,  and  hogs ;  and  their  rules  and  regulations  covered  the 
entire  business,  and  extended  over  the  whole  field  of  opera- 
tion, held,  that  defendants  were  engaged  in  commerce  be- 
tween the  States,  and  were  subject  to  the  provisions  of  the 
law  of  July  2,  1890,  against  trusts  and  monopolies.  V,  8.  v. 
Hopkins,  82  F.,  529.  1—725 

Reversed,  171  U.  S.,  578  (1—941). 


INDEX — ^DIGEST. 


1153 


INTERSTATE  COMMERCE— Continued. 

26.  Same. — Live  stock  shipped  from  various  States  to  the  yards  of 

a  stock-yards  association  in  another  State,  by  the  solicitation 
and  procurement  of  the  members  thereof,  to  be  there  sold 
or  to  be  reshipped  to  other  States,  if  the  market  should  be 
unsatisfactory,  does  not  cease  to  be  a  subject  of  interstate 
commerce  as  soon  as  it  reaches  such  yards  and  is  there  un- 
loaded, nor  until  it  has  been  further  acted  upon  so  as  to 
become  mingled  with  the  mass  of  property  in  the  State.    76. 

27.  Same. — The  fact  that  the  place  of  business  of  an  association  is 

located  upon  both  sides  of  the  line  dividing  two  States  is 
in  itself  of  no  material  importance  in  determining  whether 
the  business  transacted  by  it  is  commerce  between  the 
States.  /6. 

28.  Same.— The  fact  that  a  State  line  runs  through  stock  yards, 

and  that  sales  may  be  made  of  a  lot  of  stock  in  the  yards 
which  may  be  partly  in  one  State  and  partly  in  another, 
has  no  effect  to  make  the  business  of  selling  stock  interstate 
commerce.    Hopkins  v.   Uiiited  8tates,  171  U.  S.,  578. 

1—941 

29.  Same.— The  business  of  buying  and  selling  live  stock  at  stock 

yards  in  a  city  by  members  of  a  stock  exchange  as  commission 
merchants  is  not  interstate  commerce,  although  most  of  the 
purchases  and  sales  are  of  live  stock  sent  from  other  States, 
and  the  members  of  the  stock  exchange  are  employed  to  sell 
by  letter  from  the  owners  of  the  stock  in  other  States,  and 
send  agents  to  other  States  to  solicit  business,  and  advance 
money  to  the  cattle  owners,  and  pay  their  drafts,  and  aid 
them  in  making  the  cattle  fit  for  market.  Hopkins  v. 
United  States,  171  U.  S.,  578.  1—941 

Reversing,   82   F.,   578    (1—725). 

30.  Same.— A  by-law  of  the   Kansas   City   Live   Stock   Exchange, 

which  regulates  the  commissions  to  be  charged  by  members 
of  that  association  for  selling  live  stock  is  not  in  restraint 
of  interstate  commerce,  or  a  violation  of  the  act  of  July 
2,  1890,  to  protect  commerce  from  unlawful  restraints.  lb. 
81.  Same. — A  commission  agent  who  sells  cattle  at  their  place  of  des- 
tination, which  are  sent  from  another  State  to  be  sold,  is  not 
engaged  in  interstate  commerce;  nor  is  his  agreement  with 
others  in  the  same  business,  as  to  the  commissions  to  be 
charged  for  such  sales,  void  as  a  contract  in  restraint  of  that 
commerce.  /j^ 

32.  Same. — In  order  to  come  within  the  provisions  of  the  statute, 

the  direct  effect  of  an  agreement  or  combination  must  be  in 
restraint  of  trade  or  commerce  among  the  several  States 
or  with  foreign  nations.  75, 

33.  Same. — Restrictions  on  sending  prepaid  telegrams  or  telephone 

messages,  made  by  a  by-law  of  a  live-stock  exchange,  when 


1154 


INDEX — ^DIGEST. 


INTEBSTATE  COMMKBCB-Ck)ntiimed. 

these  restrictions  are  merely  for  the  regulation  of  the  business 
of  the  members,  and  do  not  affect  the  business  of  the  tele- 
graph company,  are  not  void  as  regulations  of  interstate 
commerce.  /5. 

84.  Same. — ^The  business  of  agents  in  soliciting  consignments  of 
cattle  to  commisison  merchants  in  another  State  for  sale  is 
not  interstate  commerce,  and  a  by-law  of  a  stock  exchange  re- 
stricting the  number  of  solicitors  to  three  does  not  restrain 
that  commerce  or  violate  the  act  of  Congress.  /ft. 

55.  Same. — A  combination  of  commission  merchants  at  stock  yards, 

by  which  they  refuse  to  do  business  with  those  who  are  not 
members  of  their  assocfation,  even  if  it  is  illegal,  is  not  sub- 
ject to  the  act  of  Congress  of  July  2,  1890,  to  protect  trade 
and  commerce,  since  their  business  is  not  interstate  com- 
merce, /j^ 

56.  Beef  Trust— Combination  to  Monopolize  Interstate  Commerce  in 

Iresh  Meats. — Interstate  commerce  is  unlawfully  restrained, 
in  violation  of  the  act  of  July  2,  1890  (26  Stat,  209),  by  a 
combination  of  independent  meat  dealers,  in  aid  of  an  at- 
tempt to  monopolize  commerce  in  fresh  meat  among  the 
States,  to  bid  up  prices  for  live  stock  for  a  few  days  at  a 
time,  in  order  to  induce  cattle  men  in  other  States  to  make 
large  shipments  to  the  stock  yards,  or  by  a  combination  for 
the  same  purpose  to  fix  the  selling  price  of  fresh  meat,  and 
to  that  end  to  restrict  shipments,  when  necessary,  to  estab- 
lish a  uniform  rule  of  credit  to  dealers,  and  to  keep  a  black 
list,  or  by  a  combination  In  aid  of  such  purpose  to  make 
uniform  and  improper  charges  for  cartage  for  the  delivery 
of  meat  sold  to  be  shipped  to  dealers  and  consumers  in  the 
several  States.    Swift  d  Co.  v.  United  States,  196  U.  S.,  376. 

JJ~~o»5 

if.  The  effect  upon  interstate  commerce  of  a  combination  of  a 
dominant  portion  of  the  dealers  in  fresh  meat  throughout 
the  United  States  not  to  bid  against,  or  only  in  conjunction 
with,  each  other  in  order  to  regulate  prices  in  and  induce 
shipments  to  the  live-stock  markets  in  other  States,  to 
restrict  shipments,  etc.,  with  intent  to  monopolize  commerce 
among  the  States,  is  direct  and  not  accidental  or  secondary 
as  in  U.  S.  v.  E.  (7.  Knight  Co.,  156  U.  S.,  1.  Swift  &  Co,  v. 
United  States,  196  U.  S.,  375.  »— 641 

88.  When  cattle  arc  sent  for  sale  from  a  place  in  one  State,  with 
the  expectation  they  wiU  end  their  transit,  after  purchase, 
in  another  State,  and  when  In  effect  they  do  so,  with  only 
the  interruption  necessary  to  find  a  purchaser  at  the  stock 
yards,  and  when  this  is  a  constantly  recurring  course,  It 
constitutes  interstate  commerce  and  the  purchase  of  the 
cattle  is  an  incident  of  such  commerce.  /ft. 


INDEX — DIGEST. 


1155 


INTEBSTATE  COMMERCE-Continued. 

39.  Although  the  jurisdiction  of  Congress  over  commerce  among 
the  States  is  full  and  complete,  it  is  not  questioned  that  It 
has  none  over  that  which  is  wholly  within  a  State,  and 
therefore  none  over  combinations  or  agreements  so  far  as 
they  relate  to  a  restraint  of  such  trade  or  commerce;  nor 
does  it  acquire  any  jurisdiction  over  that  part  of  a  combina- 
tion or  agreement  which  relates  to  commerce  wholly  within 
a  State  by  reason  of  the  fact  that  the  combination  also 
covers  and  regulates  commerce  which  is  interstate.  Addy- 
ston  Pipe  and  Steel  Co.  v.  U.  S.,  175  U.  S.,  211.  1—1009 

Power  of  Congress  Over.    See  Congress. 

Prepayment  of  Freight.    See  Carriers. 

See  also  Corporations,  2,  3;  Actions  and  Deii:nses,  72,  73; 
and  Combinations,  etc.,  generally,  particularly  paragraphs 
54-76,  134^151. 

IRON  PIPE.    See  Combinations  ftc,  136. 

JOINT  RATES  AND  BILLING.    See  Carriers. 

JOINT    TRAFFIC    ASSOCIATIONS.    See    Combinations,    103-104, 
189-192. 

JUDGMENT. 

General  expressions  in  an  opinion  which  are  not  essential  to 
dispose  of  a  case  are  not  permitted  to  control  the  judgment 
in  subsequent  suits.  Harriman  v.  Northern  Securities  Co., 
197  U.  S.,  244.  2—669 

JURISDICTION. 

1.  In  a  suit  instituted  in  the  name  of  the  United  States,  under  the 

Anti-Trust  Law,  jurisdiction  depends  alone  upon  the  act,  and 
the  court  is  concerned  with  no  case  between  private  persons 
or  corporations,  where  jurisdiction  depends  on  other  condi- 
tions, and  in  which  proceeding  a  common-law  remedy  might 
become  available.  U.  S.  v.  Addyston  Pipe  d  Steel  Co.,  78  F., 
712.  i_63l 

2.  Nonresidents.~The  authority  given  by  section  5  of  the  act  of 

July  2,  1890  (26  Stat,  290),  to  bring  in  nonresidents  of  the 
district  can  not  be  availed  of  in  private  suits,  and  the  court 
can  acquire  no  jurisdiction  over  them.  Greer,  Mills  <t  Co.  v. 
Stoller,  77  F.,  1.  1—620 

See  also  Courts;  States,  8,  10;  United  States. 
JURY. 

1.  Reasonable  Doubt. — A  reasonable  doubt  is  one  arising  out  of 
the  evidence ;  not  an  imaginary  doubt,  a  fanciful  conjecture, 
or  strained  inference,  but  such  a  doubt  as  a  reasonable  man 
would  act  upon  or  decline  to  act  upon  when  his  own  concerns 
are  involved — a  doubt  for  which  a  good  reason  can  be  given, 
which  reason  must  be  based  upon  the  evidence  or  want  of 
evidence.    17.  S,  v.  Cassidy,  67  F.,  698.  1— i52 


1151$ 


INDEX — DIGEST. 


XintY-Continue«l. 

2.  Credibility  of  Witnesses.— Tho  Jary  are  the  exclusive  Judges  of 
the  credibility  of  the  witnesses.  A  witness  is  presumed  to 
spealc  the  truth,  but  this  presumption  may  be  repelled  by  the 
manner  in  which  he  testifies,  by  the  character  of  his  testi- 
mony, or  by  the  evidence  affecting  his  character  for  truth, 
honesty,  or  integrity,  or  his  motives,  and  by  contrary  evi- 
dence. But  the  power  of  the  Jury  to  Judge  of  the  eflfect  of 
evidence  is  not  arbitrary;  it  must  be  exercised  with  legal 
discretion,  and  in  subordination  to  the  rules  of  evidence.    /&. 

S.  Talidity  of  Contract— When  Question  for  Jury.— Conceding  that 
a  contract  legal  in  its  terms  and  in  its  consideration  may  be 
rendered  illegal  as  against  public  policy  by  reason  of  the 
Intention  of  the  parties  to  so  use  it  as  to  commit  civil  injury 
to  third  persons,  where  the  evidence  as  to  such  intention  Is 
conflietlig  the  contract  can  not  be  declared  illegal  by  the 
court  as  matter  of  law.  U.  8,  v.  Consolidated  Seeded  Raisin 
Co.,  126  F..  364.  2—288 

See  also  Witnesses  ;  Grand  Jury. 

IiABOB  OBOAinZATIOlTS. 

1.  The  employees  of  railway  companies  have  a  right  to  organize 
for  mutual  benefit  and  protection,  and  for  the  purpose  of 
securing  the  highest  wages  and  the  best  conditions  they  can 
command.  They  may  appoint  oificers,  who  shall  advise 
them  as  to  the  course  to  be  taken  in  their  relations  with 
their  employer,  and  they  may,  if  they  choose,  repose  in  their 
ofllcers  authority  to  order  them,  or  any  of  them,  on  pain 
of  expulsion  from  their  union,  peaceably  to  leave  the  employ- 
ment because  the  terms  thereof  are  unsatisfactory.  But  it  is 
unlawful  for  them  to  combine  and  quit  work  for  the  pur- 
pose of  compelling  their  employer  to  withdraw  from  his  re- 
lations with  a  third  party,  for  the  purpose  of  injuring  that 
third  party.    Thomas  v.  Railway  Co.,  62  Fed.,  817,  followed. 

U,  8,  V.  Cassidy,  67  F.,  698.  i 452 

Same.— A  strike,  or  a  preconcerted  quitting  of  work,  by  a  com- 
bination of  railroad  employees,  is,  in  Itself,  unlawful,  if  the 
concerted  action  is  knowingly  and  willfully  directed  by  the 
parties  to  it  for  the  purpose  of  obstructing  and  retarding 
the  passage  of  the  mails,  or  in  restraint  of  trade  and  com- 
merce among  the  States.  /^^ 

See  also  Combinations,  etc.,  in  Restraint  of  Trade,  ll.S-133 
213;  Courts,  7,  8. 

LIABILITY.    See  Statutes.  64. 

LICOBICE  PASTE  TEUST.    See  U.  S.  v.  MacAndrews  &  Forbes  Co. 
140  F..  823. 


8. 


UMITATIOlf  OF  ACTION. 


See  Actions  axh  Defexsks,  30. 


INDEX — DIGEST. 


1157 


LIQUOB  TBAFFIC.    See  Combinations,  etc.,  217;  Courts,  2. 

LIVE-STOCK    ASSOCIATIONS    AND    EXCHANGES,    ETC.     See 

Combinations,  etc.,  78-81,  167-176. 

LUMBEB.     See  Combinations,  etc.,  30-32,  134,  135,  211,  212. 
MAILS,  OBSTBUCTION  OF.     See  Combinations,  etc..  127,  129,  133. 
MABKET  QUOTATIONS.    See  Combinations,  etc.,  177-180. 

MANUFACTUBEBS. 

Right  to   Regulat|:  Prices   of  Their   Own    Products.    See 
Combinations,  etc,  160-106. 

MINNESOTA. 

1.  Anti-trust  Law  of  Minnesota   Should  Receive  the  Same  Con- 

struction as  the  Sherman  Anti-Trust  Law. — ^The  anti-trust 
law  of  Minnesota  (Laws  1899,  p.  487,  c.  359),  making  un- 
lawful any  contract  or  combination  in  restraint  of  trade  or 
commerce  within  the  State,  is  in  substantially  the  same 
language  as  the  Sherman  Anti-Trust  Law  of  July  2,  1890 
(20  Stat.,  209),  and  must  receive  a  similar  construction. 
Minnesota  v.  Nmthcrn  Securities  Co.,  123  B\,  092.  2 — ^246 
Case  reversed,  194  U.  S.,  48,  and  remanded  to  State  court. 
Circuit  court  without  jurisdiction  (2—533), 

2.  Following  the  decisions  of  the  United  States  Supreme  Court 

construing  the  latter  act,  the  Minnesota  law  applies  to  rail- 
roads, and  any  contract  or  arrangement  between  railroad 
companies  for  the  purpose  and  having  the  effect  of  prevent- 
ing competition  by  fixing  rates  to  be  maintained  by  the  par- 
ties is  in  violation  of  its  provisions;  but  contracts  or  com- 
binations which  do  not  directly  and  necessarily  affect  trans- 
portation, or  rates  therefor,  are  not  in  restraint  of  trade  or 
commerce,  nor  within  the  statute,  even  though  they  may 
remotely  and  indirectly  appear  to  have  some  probable  effect 
in  that  direction.  .  /ft. 

8.  Same — Stockholding  Corporation. — A  holding  corporation  or- 
ganized by  individual  stockholders  of  two  railroad  compa- 
nies, owning  and  operating  substantially  parallel  and  com- 
peting lines  of  railroad  within  the  State  of  Minnesota,  for 
the  sole  puriwse  of  acquiring,  by  the  exchange  of  its  own 
stock  therefor,  stock  of  the  two  companies,  and  holding  and 
voting  the  same,  but  having  no  power  or  franchise  to  operate 
a  railroad,  is  not  in  violation  of  the  Minnesota  anti-trust  law 
(Laws  1899,  p.  487,  c.  359),  which  provides  that  "any  con- 
tract, agreement,  arrangement,  or  conspiracy,  or  any  com- 
bination in  the  form  of  a  trust  or  otherwise  *  ♦  * 
which  is  in  restraint  of  trade  or  commerce  within  this 
State    *     *     *    is   hereby   prohibited   and   declared   to    be 


1158 


r 


INDEX — DIGEST. 


MINlfESOTA-C^oiitiimed. 

unlawful,"  where  the  purpose  of  its  promoters  was  thereby 
to  acquire  and  retain  in  the  same  hands  a  majority  of  the 
stock  of  one  or  both  companies,  to  insure  uniformity  of 
policy  and  stability  of  management  although  it  in  fact  ac- 
quired the  controlling  interest  in  both,  in  the  absence  of 
any  evidence  that  It  ever  exercised  its  power  to  prevent 
competition  between  the  two  roads,  or  to  interfere  in  any 
manner  with  the  fixing  of  rates  by  either  company.  /ft. 

4.  Same— Enforcement  of  Statute—Jurisdiction  or  Equity.— The 
anti-trust  law  of  Minnesota  (Laws  1899,  p.  487,  c.  359)  im- 
poses severe  penalties  for  its  violation,  but  contains  no  pro- 
vision for  restraining  or  enjoining  violations,  and  without 
such  statutory  authority  a  court  of  equity  has  no  jurisdic- 
tion to  enjoin  an  act  which  constitutes  a  criminal  offense. 

lb, 
MONOPOLY. 

1.  Heed  not  be  a  Complete  Monopoly.  In  order  to  vitiate  a  contract 
or  combination  it  is  not  essential  that  its  result  should  be  a 
complete  monopoly ;  it  is  sufficient  if  it  really  tends  to  that 
end  and  to  deprive  the  public  of  the  advantages  which  flow 
from  free  competition.     U,  S.  v.  E.  G.  Knight  Co.,  156  U.  S. 

1—392 
8.  Congress  did  not  attempt  by  the  act  of  July  2,  1890,  to  assert 
the  power  to  deal  with  monopoly  directly  as  such;  or  to 
limit  and  restrict  the  rights  of  corporations  created  by  the 
States  or  the  citizens  of  the  States  in  the  acquisition,  con- 
trol, or  disposition  of  property;  or  to  regulate  or  prescribe 
the  price  or  prices  at  which  such  property  or  the  products 
thereof  should  be  sold ;  or  to  malie  criminal  the  acts  of  per- 
sons in  the  acquisition  and  control  of  property  which  the 
States  of  their  residence  or  creation   sanctioned   or  per- 
mitted.   Aside  from  the  provisions  applicable  where  Ck)n- 
gress  might  exercise  municipal  power,  what  the  law  struck 
at  was  combinations,  contracts,  and  conspiracies  to  monopolize 
trade  and  commerce  among  the  several  States  or  with  for- 
eign nations.  j^ 
S.  The  word  "  monopolize  "  was  not  intended  to  be  used  with  ref- 
erence to  the  acquisition  of  exclusive  rights  under  Govern- 
ment concession,  but  the  word  was  used  to  mean  "  to  aggre- 
gate "  or  "concentrate"  in  the  hands  of  few,  practically, 
and,  as  a  matter  of  fact,  and  according  to  the  known  results 
of  human  action,  to  the  exclusion  of  others;  to  accomplish 
this  end  by  what,  In  popular  language,  is  expressed  in  the 
word  "  pooling,"  which  may  be  defined  to  be  an  aggregation 
of  property  or  capital  l>elonging  to  different  persons,  with 
a  view  to  common  liabilities  and  profits.    Amer,  Biscuit  d 
Mfg,  €o.  V.  Klotz,  44  F.,  721,  724.                                   i_7 


INDEX — ^DIGEST. 


1159 


'' 


u 


. 


MONOPOLY— Continued. 

4.  To  constitute  the  offense  of  "monopolizing,  or  attempting  to 

monopolize,"  trade  or  commerce  among  the  States,  within 
the  meaning  of  section  2  of  said  act,  it  is  necessary  to  ac- 
quire, or  attempt  to  acquire,  an  exclusive  right  in  such  com- 
merce by  means  which  will  prevent  others  from  engaging 
therein.    In  re  Qreene,  52  F.,  104.  i— 54 

5.  A  "  monopoly,"  in  the  prohibited  sense,  involves  the  element  of 

an  exclusive  privilege  or  grant  which  restrained  others  from 
the  exercise  of  a  right  or  liberty  which  they  had  before  the 
monopoly  was  secured.  In  commercial  law,  it  is  the  abuse 
of  free  commerce,  by  which  one  or  more  individuals  have 
procured  the  advantage  of  selling  alone  or  exclusively  all  of 
a  particular  kind  of  merchandise  or  commodity  to  the  detri- 
ment of  the  public.    /&.  1 71 

6.  The  word  "  monopolize,"  used  in  section  2  of  the  act  of  1890,  is 

the  basis  and  limitation  of  the  statute,  and  hence  an  in- 
dictment must  show  a  conspiracy  in  restraint  by  engrossing 
or  monopolizing  or  grasping  the  market.  It  is,  not  sufficient 
simply  to  allege  a  purpose  to  drive  certain  competitors  out 
of  the  field  by  violence,  annoyance,  intimidation,  or  other- 
wise.    U.  8.  V.  Patterson,  55  F.,  605.  1—133 

7.  The  statute  is  not  limited  to  contracts  or  combinations  which 

monopolize  interstate  commerce  in  any  given  commodity,  but 
seeks  to  reach  those  which  directly  restrain  or  impair  the 
freedom  of  interstate  trade.  The  law  reaches  combinations 
which  may  fall  short  of  complete  control  of  a  trade  or  busi- 
ness, and  does  not  await  the  consolidation  of  many  small 
combinations  into  the  huge  "trust"  which  shall  control 
the  production  and  sale  of  a  commodity.  Chesapeake  d  O. 
Fuel  Co.  v.  United  States,  115  F.,  610,  624.  2—168 

8.  Monopoly  Not   Necessary— Tendency   Sufficient.— It  is  not  re- 

quired, in  order  to  violate  this  statute,  that  a  monopoly  be 
created.  It  is  sufficient  if  that  be  the  necessary  tendency  of 
the  agreement.  jj^ 

S.  Every  attempt  to  monopolize  a  part  of  interstate  commerce,  the 
necessary  effect  of  which  is  to  stifle  or  to  directly  and  sub- 
stantially restrict  competition  in  commerce  among  the  States, 
violates  section  2  of  the  act  of  July  2,  1890  (26  Stat,  209). 
Whitwell  V.  Continental  Tobacco  Co.,  125  F.,  454.  2—271 
10.  Attempts  to  monoi)olize  a  part  of  commerce  among  the  States 
which  promote,  or  only  incidentally  or  indirectly  restrict, 
competition  in  interstate  commerce,  while  their  main  purpose 
and  chief  effect  are  to  increase  the  trade  and  foster  the  busi- 
ness of  those  who  make  them,  were  not  intended  to  be,  and 
were  not,  made  illegal  or  punishable  by  section  2  of  the  Anti- 
Trust  Act  of  July  2,  1890  (26  Stat,  209),  because  such  at- 
tempts are  indispensable  to  the  existence  of  any  competition 
in  commerce  among  the  States.  /j. 


1160 


IHDEX — DIGEST. 


MONOPOLY-^V.iitinued. 

11.  Statute  Operates  Oaly  on  Monopolies  in  Interstate  Commerce, 

and  Hot  Because  Commodity  is  a  Necessary  of  Life. The 

monopoly  and  restraint  denounced  by  the  act  of  July  2,  1890 
(26  Stat.  200),  "to  protect  trade  and  commerce  against  un- 
lawful restraints  and  monopolies/'  are  a  monopoly  in  Inter- 
state and  international  trade  or  commerce,  and  not  a  monop- 
oly in  the  manufacture  of  a  necessary  of  life.  IJ.  8,  v, 
E.  €,  Knight  Co.,  156  U.  S.,  1.  1—379 

It.  Aebate  to  Exclusive  Purcliasers.— An  arrangement  whereby  a 
distillery  company  promised  persons  who  purchased  from  its 
distributing  agents  that  if,  for  the  ensuing  six  months,  they 
would  purchase  their  distillery  products  exclusively  from 
such  agents  and  would  not  resell  the  same  at  prices  less  than 
those  fixed  by  the  company,  then,  on  being  furnished  with  a 
certiQcate  of  compliance  therewith,  it  would  pay  a  certain 
rebate  on  the  amount  of  such  purchases,  did  not  operate  to 
"  monopolize,"  or  "  as  an  attempt  to  monopolize."  trade  and 
commerce,  within  the  meaning  of  section  2  of  said  act.  In  re 
Greene,  52  F.,  104.  i__^ 

18.  A  monopoly  of  trade  embraces  two  essential  elements:  (1) 
The  acquisition  of  an  exclusive  right  to,  or  the  exclusive 
control  of.  that  trade;  and  (2)  the  exclusion  of  all  others 
ft^m  that  right  and  control.  U.  8.  v.  Trms-Mo.  Ft  Assn., 
58  P.,  58,  82.  i_218 

14.  State  Konopoly  of  liquor  Traffic— The  Anti-Trust  Act  is  not 
applicable  to  the  case  of  a  State  which  by  its  laws  assumes 
an  entire  monopoly  in  the  traffic  in  intoxicating  liquors  (S.  C. 

act  of  Jan.  2,  1895).    Lowenstein  v.  Evans,  69  F.,  908.    1 589 

If.  Talidity  of  Sale  of  Property  where  Object  is  Monopoly.— The 
sale  and  transfer  by  a  corporation  of  its  property  and  good 
will  to  another  corporation,  where  such  sale  was  within  its 
powers,  can  not  be  repudiated  on  the  ground  that  the  pur- 
chaser acquired  the  property  for  the  purpose  of  obtaining 
a  monopoly  of  the  business  and  in  pursuance  of  an  illegal 
combination  in  restraint  of  trade.  Metcalf  v.  Amer.  School 
Furniture  Go,,  122  P.,  115.  %—2U 

See  aim  Combinations,  etc.,  in  Restraint  of  Tbade,  II  and 

MULTIFAKIOUSNESS.    See  Actions  and  Defenses,  8;  Pleading 
AND  Pbactice,  19,  20. 

MUNICIPAL  CONTBACTS.    See  Combinations,  etc.,  214-216. 
MITNICIPAX  OBDINANCE. 

The  specification  in  an  ordinance,  not  invalid  under  the  laws 
of  the  State,  that  a  particular  kind  of  asphalt  produced  only 
In  a  foreign  country  shall  be  used  for  street  improvements 


INDEX — DIGEST. 


1161 


MTJNICIPAL  ORDINANCE— Continued. 

does  not  violate  the  Sherman  Anti-Trust  Law  or  any  Fed- 
eral right.  Field  v.  Barher  Asphalt  Paving  Co.,  194  U.  S., 
618.  2—555 

NEW  JERSEY.     See  Corporations,  4. 

NEW  TRIAL.     See  Jayne  v.  Lodeb,  149  P.,  21. 

NONRESIDENTS.    See  Statutes,  58. 

NOTE.     See  Actions  and  Defenses,  04. 

NOTICE.    See  Statutes,  55. 

OBSTRUCTION  OF  MAILS. 

1.  Obstructing  the  Mails — Section  3995  Revised  Statutes. — Al- 
though the  law  (section  3995  Revised  Statutes)  which  makes 
it  an  ofifense  to  obstruct  and  retard  the  passage  of  the 
United  States  mails  was  originally  passed  prior  to  the  in- 
troduction into  the  United  States  of  the  method  of  trans- 
porting mail  by  railroads,  and  the  phraseology  of  the  law 
conforms  to  conditions  prevailing  at  that  time  (March  3, 
1825),  yet  it  is  equally  applicable  to  the  modern  system  of 
conveyance  and  protects  alike  the  transportation  of  the  mail 
by  the  "limited  express"  and  by  the  old-fashioned  stage- 
coach, v.  S.  V.  Cassidy,  67  F.,  698.  1 — i51 
8.  Same. — The  statute  applies  to  all  persons  who  "  knowingly  and 
willfully  "  obstruct  and  retard  the  passage  of  the  mails  or 
the  carrier  carrying  the  same;  that  is,  to  those  who  know 
that  the  acts  performed,  however  innocent  they  may  other- 
wise be,  will  have  the  efifect  of  obstructing  and  retarding 
the  mail,  and  who  perform  the  acts  with  the  intent  that 
such  shall  be  their  operation.  U.  S.  v.  Kirhy,  7  Wall.,  485, 
cited.  /?,. 

3.  Same. — The  statute  also  applies  to  persons  who,  having  in  view 

the  accomplishment  of  other  purposes,  perform  unlawful  acts, 
which  have  the  effect  of  obstructing  and  retarding  the  pas- 
sage of  the  mails.  In  such  case,  an  intent  to  obstruct  and 
retard  the  mails  will  be  imputed  to  the  authors  of  the  un- 
lawful act,  although  the  attiiinment  of  other  ends  may  have 
been  their  primary  object.  V.  S.  v.  Kirby,  7  Wall.,  485, 
cited.  /ft. 

4.  Same— Mail  Trains.— A  mail  train  is  a  train  as  usually  and 

regularly  made  up,  including  not  merely  a  mail  car,  but 
such  other  oars  as  are  usually  drawn  in  the  train.  If  the 
train  usually  carries  a  Pullman  car,  then  such  train,  as  a 
mail  train,  would  include  the  Pullman  car  as  a  part  of  its 
regular  make-up.  Therefore,  if  such  a  train  is  obstructed 
or  retarded  because  it  draws  a  Pullman  car,  it  is  no  defense 


1162 


Iin>EX^ — ^DIGEST. 


OBSTRUCTION  OF  MAILS-Continued. 

that  the  parties  so  delaying  it  were  willing  that  the  mail 
should  proceed  if  the  Pullman  car  were  left  behind.  U  8  y 
Clark,  Fed.  Cas.  No.  14805,  23  Int.  Rev.  Rec.,  306,  followed! 

«.  Same— Any  train  which  is  carrying  mail,  under  the  sanction 
of  the  postal  authorities,  is  a  mail  train,  in  the  eye  of  the 
law. 

6.  Same— Intent.— It  is  not  necessary  that  defendants  should  be 
shown  to  have  had  knowledge  that  the  mails  were  on  board 
of  a  train  which  they  have  detained  and  disabled.  On  the 
contrary,  they  are  chargeable  with  an  Intent  to  do  what- 
ever is  the  reasonable  and  natural  consequence  of  their  acts ; 
and  as  the  laws  make  all  railways  postal  routes  of  the 
United  States,  and  it  is  within  everyone's  knowledge  that 
a  large  portion  of  the  passenger  trains  carry  mail,  it  is  to 
be  presumed  that  any  person  obstructing  one  of  those  trains 
contemplates,  among  other  intents,  the  obstruction  of  the 
mail.    U.  8,  V.  Debs,  65  F.,  211,  followed.  /&. 

See  also  Combinations,  etc.,  121,  127,  129. 
PABTIES. 

1.  Parties  to  Conspiracy.— Where  an  unlawful  end  is  sought  to 
be  effected,  and  two  or  more  persons,  actuated  by  the  com- 
mon purpose  of  accomplishing  that  end,  work  together  in  ■ 
any  way  in  furtherance  of  the  unlawful  scheme,  every  one 
of  said  persons  becomes  a  member  of  the  conspiracy,  although 
the  part  any  one  was  to  take  therein  was  a  subordinate  one, 
or  was  to  be  executed  at  a  remote  distance  fi-om  the  other 
conspirators.     U.  8,  v.  Oassidp,  67  F.,  698.  1-450 

».  Same.— Any  one  who,  after  a  conspiracy  is  formed,  and  who 
knows  of  its  existence  Joins  therein,  becomes  as  much  a 
party  thereto  from  that  time  as  if  he  had  originally  con- 
spired.    U.  8.  V.  Babcock,  Fed.  Cas.  No.  14487,  3  Dill    586 
cited.  •'  ^' 

S.  Same.— Any  declaration  made  fey  one  of  the  parties,  during  the 
pendency  of  the  illegal  enterprise,  is  not  only  evidence 
against  himself,  but  against  all  the  other  conspirators,  who 
when  the  combination  is  proved,  are  as  much  responsible  for 
such  declarations,  and  the  acts  to  which  they  relate  as  if 
made  and  committed  by  themselves.  This  rule  applies  to 
the  declaration  of  a  coconspirator,  although  he  may  not 
himself  be  under  prosecution.  jj 

4.  Necessary  Parties— Directors  of  ITnincorporated  Associations.— 
All  the  directors  of  an  unincorporated  association  are  neces- 
sary parties  to  a  suit  against  it  arising  out  of  contractual 
relations,  even  though  a  less  number  are  authorized  by  the 
association  to  transact  business.    Qreer,  Mills  d  Go  v  stol 


INDEX — ^DIGEST. 


1163 


PARTIES— Continued. 

5.  Parties  in  Equity — Unincorporated  Association. — In  a  suit  in 

equity  to  restrain  an  alleged  unlawful  combination  acting  as 
an  unincorporated  association,  it  is  sufficient  that  the  asso- 
ciation, together  with  a  large  number  of  its  members,  as 
individuals  and  officers  of  the  association,  are  made  parties 
defendant.     U,  8.  v.  Coal  Dealers'  Assn.  of  Cal.,  85  F.,  252. 

1—749 

6.  Indictment — Joinder  of  Defendants. — In  an  indictment  under 

the  Anti-Trust  Law,  the  offenses  thereunder  being  made 
misdemeanors,  all  who  aid  in  their  commission  may  be 
charged  as  principals,  and  a  corporation  and  its  officers, 
who  personally  participates  in  committing  the  same,  may  be 
joined  as  defendants,  although  their  acts  may  have  been 
separate.     V.  8.  v.  MacAndrews  d-  Forbes  Co.,  149  F.,  824. 

7.  Injunction — Government  Only  can  Bring  Suit  for. — ^The  Anti- 

Trust  Act  of  1890   (26  Stat,  209)   does  not  authorize  the 
bringing  of  injunction  suits  or  suits  in  equity  by  any  parties 
except  the  Government    Blmdell  v.  Hagan,  54  F.,  40.    1—106 
Case  affirmed,  56  F.,  696  (1—182). 

8.  Injunctive  Relief— TTnited  States  Attorney. — ^The  only  party  en- 

titled to  maintain  a  bill  in  equity  for  injunctive  relief  for 
violating  the  provisions  of  the  Anti-Trust  Act  is  the  United 
States  attorney,  at  the  instance  of  the  Attorney-General. 
Metcalf  V.  Amer.  8chool  Furniture  Co.,  122  F.,  115.      2 235 

9.  The  State  is  a  necessary  party  to  an  action  under  section  7  of 

the  Anti-Trust  Act  of  July  2,  1890,  against  the  officials  of  a 
State  to  recover  damages  for  acts  done  under  the  authority 
of  a  State  statute,  which  gives  the  State  an  entire  monopoly 
of  the  traffic  in  intoxicating  liquors  (act  of  S.  C.  of  Jan.  2, 
3895).    Lowenstein  v.  Evans,  69  F.,  908.  1—598 

10.  Consent  of  parties  can  never  confer  jurisdiction  upon  a  Federal 

court    Minnesota  v.  Northern  8ecurities  Co.,  194  U.  S.,  48. 

2—533 

11.  Monopolies— Suit  by  Private  Individual.— The  act  "to  protect 

trade  and  commerce  against  unlawful  restraints  and  monopo- 
lies "  (act  Cong,  July  2,  1890)  confei-s  no  right  upon  a 
private  individual  to  sue  in  equity  for  the  restraint  of  the 
acts  forbidden  by  such  statute,  an  action  at  law  for  damages 
being  the  only  remedy  provided  for  private  persons,  and  the 
right  to  bring  suits  in  equity  being  vested  in  the  district 
attorneys  of  the  United  States.  Pidcock  v.  Harrington,  64 
F.,  821.  1—377 

8ee  also  Actions  and  Defenses,  1-20. 

PATENTS. 

1.  A  corporation  organized  for  the*  purpose  of  securing  assign- 
ments of  aU  patents  relating  to  "spring-tooth  harrows,"  to 
grant  licenses  to  the  assignors  to  use  the  patents  upon  pay- 


1164 


INDEX — ^DIGEST. 


PATENTS— Cuntiimed. 

uieiit  of  a  roj^Uty,  to  fix  imc!  regulate  the  price  at  which  such 
harrows  shall  be  sold,  and  to  take  charge  of  all  litigation, 
and  prosecute  all  infringements  of  such  patents,  is  an  illegal 
combination,  whose  purposes  are  contrary  to  public  policy, 
and  which  a  court  of  efiulty  should  not  aid  by  entertaining 
infringement  suits  brought  in  pursuance  thereof.  National 
Harrow  Co.  v.  Quick,  67  F.,  130.  1-^43 

8.  Corporation  Organized  to  Receive  Assignments  of  Patents.— 
A  combination  among  manufacturers  of  spring-tooth  har- 
rows, by  which  each  manufacturer  assigns  to  a  corporation 
organized  for  the  purijose  the  patents  under  which  he  Is 
operating,  and  takes  back  an  exclusive  license  to  make  and 
sell  the  same  style  of  harrows  previously  made  by  him,  and 
no  other,  all  the  parties  being  bound  to  sell  at  uniform  prices, 
held  to  be  an  unlawful  combination  for  the  enhancement  of 
prices,  and  in  restraint  of  trade.    National  Harrow  Co.  v. 

HetKh,  70  F.,  667.  i qiq 

Affirmed,  83  F.,  36  (1—742). 

8e€  also  Indiana  Mfg.  Co.  v.  J.  L  Cme  Thra><hiHi/  Mmh.  Co., 
148  F.,  21. 

8.  Same.— Though  the  fact  that  several  patentees  are  exposed  to 
litigation  justifies  them  in  composing  their  difl'erences,  they 
can  not  make  the  occasion  an  excuse  or  cloak  for  the  creation 
of  monopolies  to  the  public  disadvantage.  National  Harrow 
Co,  V.  Hench,  83  F.,  36.  1—743 

4.  Same — ^Infringement  Suit. — ^A  combination  among  manufactur- 
ers of  spring-tooth  harrows,  whereby  a  corporation  organized 
for  the  purpose,  becomes  the  assignee  of  all  patents  owned 
by  the  various  manufacturers,  and  executes  licenses  to  them, 
so  as  to  control  the  entire  business  and  enhance  prices,  is 
void  both  as  to  the  assignments  and  licenses,  so  that  the 
corporation  can  not  maintain  a  suit  against  one  of  its  as- 
signors who  violates  the  agreement,  for  infringement. 
National  Harrow  Co.  v.  Hench,  84  F.,  226.  1—746 

«.  Contracts  by  which  a  number  of  patents  covering  similar 
inventions  are  conveyed  by  the  several  owners  to  one  of  the 
parties,  which  grants  licenses  under  all  to  the  others,  are 
not  void  as  against  public  policy,  or  at  in  violation  of  the 
Sherman  Anti-Trust  Law,  because  of  provisions  intended  to 
protect  and  keep  up  the  patent  monopoly  by  requiring  the 
licensor  to  prosecute  all  infringers,  limiting  the  licenses  to 
be  granted  to  such  licensees  as  shall  be  agreed  on,  and  impos- 
ing conditions  on  each  license  as  to  the  use  and  ownership  of 
the  patented  machines,  and  pi-ohibiting  him  from  using  any 
others.  U.  S.  Consolidated  Seeded  Raisin  Co.  v.  Griffin  d 
Bkelley  Co.,  126  F.,  364.  2—288 


INDEX — DIGEST. 


llf^5 


PATENTS— Continued. 

6.  Same. — Eights  acquired  under  the  patent  laws  of  the  United 

States  can  not  be  affected  by  a  State  statute.  n, 

7.  The  object  of  the  patent  laws  is  monopoly,  and  the  rule  is,  with 

few  exceptions,  that  any  conditions  which  are  not  in  their 
very  nature  illegal  with  regard  to  this  kind  of  property, 
imposed  by  the  patentee,  and  agreed  to  by  the  licensee  for 
the  right  to  manufacture  or  use  or  sell  the  article,  will  be 
upheld  by  the  courts;  and  the  fact  that  the  conditions  in 
the  contracts  keep  up  the  monopoly  does  not  render  them 
illegal.  The  prohibition  was  a  reasonable  prohibition  for 
the  defendant,  who  would  thus  be  excluded  from  making 
such  harrows  as  were  made  by  others,  who  were  engaged  in 
manufacturing  and  selling  other  machines  under  other 
patents;  but  it  would  be  unreasonable  to  so  construe  the 
provision  as  to  prevent  the  defendant  from  using  any  letters 
patent  legally  obtained  by  it  and  not  infringing  patents 
owned  by  others.  Bement  v.  National  Harrow  Co..  186  U. 
S.,  70.  •  a— 160 

8.  Conditions  imposed  by  the  patentee  in  a  license  of  the  right  to 

manufacture  or  sell  the  patented  article,  which  keep  up  the 
monopoly  or  fix  prices,  do  not  violate  the  act  of  Congress  of 
July  2,  1890  (26  Stat.,  209),  to  protect  trade  and  commerce 
against  unlawful  restraints  or  monopolies.  lb. 

9.  Eeasonable  and  legal  conditions  imposed  by  the  patentee  in  a 

license  of  the  right  to  manufacture  and  sell  the  patented 
article,  restricting  the  terms  upon  which  the  article  manu- 
factured under  such  license  may  be  used  and  the  price  to  be 
demanded  therefore,  do  not  constitute  such  a  restraint  on 
commerce  as  is  forbidden  by  the  act  of  Congress  of  July  2, 
1890  (26  Stat.,  209),  to  protect  trade  and  commerce  against 
unlawful  restraints  and  monopolies.  lb. 

10.  The  agreement  of  the  licensee  of  a  patent  for  improvements  re- 
lating to  float  spring-tooth  harrows  not  to  manufacture  or 
sell  any  other  such  harrows  than  those  which  it  had  made 
under  its  patents  before  assigning  them  to  the  licensor,  or 
which  it  was  licensed  to  manufacture  and  sell  under  the 
terms  of  the  license,  except  such  other  style  and  construction 
as  it  may  be  licensed  to  manufacture  and  sell  by  such 
licensor,  is  not  void  as  an  unlawful  restraint  on  trade  or 
commerce  forbidden  by  the  act  of  Congress  of  July  2,  1890 
(26  Stat,  209),  since  the  plain  purpose  of  this  provision  is 
to  prevent  the  licensee  from  infringing  on  the  rights  of 
others  under  other  patents,  and  not  to  stifle  competition  or 
prevent  the  licensee  from  attempting  to  make  any  improve- 
ment in  harrows.  n^ 

11808— VOL  2—06  M 74 


1100 


INDEX — DIGEST. 


INDEX — DIGEST. 


1167 


PATENTS— Coiitiiiue<l. 

11.  An  agreement  by  the  licensor  of  a  pateut  for  iiiiprovements  re- 
lating to  harrows  not  to  license  any  other  person  than  the 
liceusee  to  nianufacture  or  sell  any  harrow  of  the  peculiar 
style  and  construction  then  usecl  or  sold  by  such  licensee 
does  not  violate  the  act  of  Congress  of  July  2,  1890  (26 
Stat.,  209),  to  protect  trade  and  commerce  against  unlawful 
restraints  and  monopolies.  /ft. 

IS.  Licenses— Eight  to  Attach  Conditions.— It  Is  within  the  rights 
of  the  owner  of  a  patent  to  grant  licenses  conditioned  that 
the  licensees  shall  sell  the  patented  article  only  at  prices 
fixed  by  the  agreement  and  also  restricting  the  production 
of  a  licensee,  and  such  agreements,  if  made  in  good  faith 
and  for  the  purpose  of  protecting  the  patent  monopoly,  are 
not  illegal  as  in  restraint  of  trade  and  commerce,  and  such 
good  faith  is  not  impeached  by  the  fact  that  the  patent  has 
been  held  inTalid  by  the  Federal  courts  in  some  circuits, 
where  it  has  been  sustained  in  others.  Rubber  Tire  Wheel 
Co.  V.  Miltcaukee  Rubber  Works  Co,,  142  F.,  531.  2 — 855 

13.  Same. — Such  patent  monopoly  does  not  include,  however,  the 

right  of  the  patentee  to  enter  into  a  combination  in  the 
form  of  license  contracts  with  manufacturers  throughout  the 
United  States,  not  only  to  raise  and  maintain  the  prices  of 
such  articles,  being  articles  of  interstate  commerce,  above 
the  normal  market  price,  but  to  crush  out  competition  by 
outside  manufacturers.  ib. 

14.  Suit  for  Infringement— Defenses.— The  fact  that  the  owner  of 

a  patent  is  a  corporation  alleged  to  have  been  formed  in 
violation  of  the  Anti-Trust  Law,  and  that  the  patent  is 
alleged  to  have  been  assigned  to  it  in  furtherance  of  the 
illegal  purpose  to  create  a  monopoly  and  control  the  price  of 
an  article  of  commerce,  is  not  available  to  an  infringer  of 
such  patent  to  defeat  a  suit  for  the  infringement.  National 
Folding-Box  d  Paper  Co.  v.  Robertson,  99  F.,  985.  8—4 

15.  In  an  action  by  a  corporation  for  the  infringement  of  elevator 

patents,  a  private  defendant  was  not  entitled  to  urge  as  a 
defense  that  plaintiif  was  a  corporation  organized  merely 
for  the  purpose  of  holding  the  legal  title  to  various  elevator 
patents  alleging  to  have  been  infringed,  for  the  purpose  of 
controlling  sales  and  enhancing  prices  of  elevators  and 
apparatus,  without  itself  engagaing  in  the  manufacture  and 
sale  of  such  appliances,  in  violation  of  the  Sherman  Anti- 
Tmst  law  (26  Stat,  209),  since  until  the  United  States 
has  acted  and  sought  to  prosecute  the  plaintiff  for  violation 
of  such  act  an  infringer  of  the  plaintiff's  patent  will  not  be 
permitted  to  raise  such  issue  as  a  defense  thereto.  Otis 
Elevator  Co,  v.  Geiger,  107  F.,  131,  2—66 


^M* 


^f 


1 


1^ 

I 


FATENTS-Continued. 

16.  Infringement  of  Patent  Belonging  to  Member  of  a  Corporation 
in  Violation  of  Anti-Trust  Law. — That  a  complainant  is  a 
member  of  a  combination  in  violation  of  the  Anti-Trust  Law 
of  July  2,  1890  (26  Stat,  209),  does  not  give  third  persons 
the  right  to  infringe  a  patent  of  which  complainant  is 
owner,  nor  preclude  complainant  from  maintaining  a  suit 
in  equity  to  enjoin  such  infringement  General  Electric  Co, 
V.  Wise,  119  F.,  922.  2—205 

PATENT  MEDICINES.    See  Combinations,  etc.,  29,  160. 

PAYMENT.    See  Actions  and  Defenses,  63,  64. 

PLEADING  AND  FBACTICE. 

1.  Bill  and  Answer — Waiver  of  Oath. — Where  the  bill  for  injunc- 

tion waives  the  oath  of  the  respondents,  an  answer,  under 
oath,  denying  all  the  equities  of  the  bill,  can,  under  the 
amendment  to  equity  rule  41,  be  used  at  the  hearing  with 
probative  force  of  an  affidavit  alone.  Whether  the  injunc- 
tion should  issue  must  be  determined  by  the  whole  evi- 
dence submitted.  U.  S.  v.  Workingmen's  Amalg.  Council, 
54  F.,  994.  1—110 

Case  affirmed,  57  F.,  85  (1—184). 

2.  Hearing  on  Bill  and  Answer — Evidence. — When  a  suit  is  heard 

on  bill  and  answer,  the  allegations  of  fact  in  the  bill  that 
are  denied  in  the  answer  are  to  be  taken  as  disproved,  and 
the  averments  of  fact  in  the  answer  stand  admitted.  U.  8. 
V.  Trans-Mo.  Ft.  A8sn.,'58  F.,  58.  1 — 186 

8.  Same. — ^Where  the  contract  is  admitted,  but  the  allegations 
tending  to  show  its  sinister  purpose,  tendency,  and  effect  con- 
tained in  the  bill  are  denied  by  the  answer,  and  averments 
tending  to  show  a  just  and  honest  purpose,  tendency,  and 
effect  are  made,  the  latter  averments  contained  in  the  an- 
swer stand  admitted,  and  the  contract  will  be  presumed  to 
have  been  made  for  an  honest  and  legitimate  purpose,  unless 
the  provisions  of  the  agreement  clearly  show  the  contrary. 
In  the  examination  of  such  a  contract,  fraud  and  illegality 
are  not  to  be  presumed.  /&. 

4.  Notice — Restraining  Order. — Under  section  4  of  the  Anti-Trust 

Law  of  July  2,  1890,  a  restraining  order  may  be  issued  with- 
out notice,  under  the  circumstances  sanctioned  by  the  es- 
tablished usages  of  equity  practice  in  other  cases.  U.  8.  v. 
Coal  Dealers'  Assn.  of  Cal.,  85  F.,  252.  1 — 749 

5.  Allegations. — ^A  complaint  alleging  that  members  of  an  asso- 

ciation have  conspired  and  combined  to  raise  the  prices  of 
tiles,  mantels,  and  grates,  to  control  the  output,  and  to  reg- 
ulate the  prices  thereof,  with  the  intent  to  monopolize 
trade  and  commerce  between  the  other  States  and  California 


1168 


INDEX — ^DIGEST. 


INDEX — DIGEST. 


1169 


PLEADING  AND  PBACTICE— Continued. 

in  regard  thereto,  as  well  as  to  arbitrarily  fix  their  prices 
independently  of  their  natural  market  value,  brings  the  case    " 
within  the  Anti-Tmst  Act  of  July  2,  1890  (26  Stat,  209). 
Lowry  v.  Tile,  Mantel  d  Chafe  Asm.  of  Cat,  98  F.,  817. 

1—995 

6.  Averments. — A  bill  charsres  a  Yiolation  of  the  Anti-Tmst  Act  of 

July  2,  1890  (26  Stat,  209),  as  against  the  objections  of  want 
of  equity,  multifariousness,  and  failure  to  set  forth  sufficient 
definite  or  specific  facts,  where  it  avers  the  existence  of  a 
combination  of  a  dominant  proportion  of  the  dealers  in  fresh 
meat  throughout  the  United  States,  not  to  bid  against  each 
other  in  the  live-stock  markets  of  the  different  States,  to  bid 
np  prices  for  a  few  days,  in  order  to  induce  shipments  to  the 
stock  yards,  to  fix  selling  prices,  and  to  that  end  to  restrict 
shipments  of  meat  when  necessary,  to  establish  a  uniform 
rule  of  credit  to  dealers,  and  to  keep  a  black  list,  to  make 
uniform  and  improper  charges  for  cartage,  and  to  secure  less 
than  lawful  freight  rates,  to  the  exclusion  of  competitors. 
Swift  d  Co.  V.  United  States,  196  U.  S.,  375.  2—643 

7.  Same. — ^Trade  in  fresh  meat  is  sufficiently  shown  to  be  commerce 

among  the  States,  protected  from  restraint  by  the  act  of  July 
2,  1890  (26  Stat,  209),  by  allegations  in  a  bill  charging  meat 
dealers  with  violations  of  that  act,  which,  even  if  they  import 
a  technical  passage  of  title  at  the  slaughtering  places  in  cases 
of  sales,  also  import  that  the  sales  are  to  persons  in  other 
States,  and  that  the  shipments  to  other  States  are  pursuant 
to  such  sales,  and  by  allegations  charging  sales  of  such  ^ 
meat  by  their  agents  in  other  States,  which  indicate  that 
some,  at  least,  of  the  sales  were  in  the  original  packages    lb. 

8.  Same. — ^A  general  allegation  of  intent  may  color  and  apply  to 

all  the  specific  charges  of  a  bill  which  seeks  relief  against 
alleged  violations  of  the  Anti-Trust  Act  of  July  2,  1890  (26 
Stat,  209).  /6. 

9.  Same. — ^Vagueness  can  not  be  asserted  of  a  charge  in  a  bill  seek- 

ing relief  against  an  attempt  to  monopolize  commerce  in 
fresh  meat  among  the  States,  in  violation  of  the  Anti-Trust 
Act  of  July  2, 1890  (26  Stat,  209),  that  a  combination  exists 
among  independent  meat  dealers  to  restrain  their  respective 
agents  from  bidding  against  each  other  when  purchasing  live 
stock  for  them  in  the  stock  yards.  /6. 

10.  Sufficiency  of  Complaint — ^Action  Under  Anti-Trust  Act. — The 
complaint,  in  an  action  to  recover  damages  under  section  7 
of  the  Anti-Trust  Act  (act  July  2,  1890,  c.  647,  26  Stat,  210), 
which  sets  forth,  among  other  things,  that  defendants  are 
members  of  a  local  labor  union,  which  is  a  branch  of  a  larger 
organization  covering  several  States,  which  in  its  turn  is 
subordinate  to  the  American  Federation  of  Labor,  which 


<•  H 


PLEADING  AND  PRACTICE— Continued. 

covers  still  other  States ;  that  defendants,  by  reason  of  such 
membership,  were  able  to  compel,  and  undertook  to  compel, 
and  did  compel,  plaintiffs,  against  their  will,  to  unionize  their 
factory,  by  withdrawing  from  plaintiffs'  employment,  by  pre- 
venting others  from  working  for  them,  and  by  boycotting, 
with  the  aid  of  their  associates,  plaintiffs'  goods  in  the  hands 
of  plaintiffs'  customers  in  other  States.  Held  sufficient  on 
motion  for  correction  of  same.  Loewe  d-  Co.  v.  Lawlor  et 
al.,  130  F.,  633.  2—854 

StJFFiciENCY — /Injunction.    See    Db.    Miles    Medical   Co.    t. 
Jaynes  Drug  Co.,  149  F.,  838. 

11.  What  Must  be  Shown. — In  order  to  maintain  a  suit  under  the 
Anti-Trust  Act  the  Government  is  not  obliged  to  show  that 
the  agreement  in  question  was  entered  into  for  the  purpose 
of  restraining  trade  or  commerce,  if  such  restraint  is  its 
necessary  effect.    C.  S.  v.  Trans-Mo.  Ft.  Assn.,  166  U.  S.,  290. 

1—649 

13.  Allegations  and  Proofs — ^Means  Contemplated. — It  is  not  in- 
cumbent upon  .the  prosecution  to  prove  that  all  the  means 
set  out  in  the  indictment  were  in  fact  agreed  upon  to  carry 
out  the  conspiracy,  or  that  any  of  them  were  actually  used 
or  put  in  operation.  It  is  sufficient  if  it  be  shown  that  one 
or  more  of  the  means  described  in  the  indictment  were  to 
be  used  to  execute  that  purpose.  U.  S.  v.  Cassldy,  67  F., 
698.  1—450 

13.  Same — Overt  Acts. — While  at  common  law  it  was  not  necessary 

to  aver  or  prove  an  overt  act  in  furtherance  of  a  conspiracy, 
yet,  under  the  statute  relating  to  conspiracies  to  commit  an 
offense  against  the  United  States,  the  doing  of  some  act 
in  pursuance  of  the  conspiracy  is  made  an  ingredient  of  the 
crime,  and  must  be  established  as  a  necessary  element 
thereof,  although  the  act  may  not  be  in  itself  criminal. 
U.  S,  v.  Thompson,  31  Fed.,  331,  12  Sawy.,  155,  cited.        lb. 

14.  Same. — ^It  is  not  necessary,  however,  to  a  verdict  of  guilty, 

that  the  jury  should  find  that  each  and  every  one  of  the 
overt  acts  charged  in  the  indictment  was  in  fact  committed; 
but  it  is  sufficient  to  show  that  one  or  more  of  these  acts 
was  committed,  and  that  it  was  done  in  furtherance  of  the 
conspiracy.  lb, 

16.  Allegation  of  Amount  in  Controversy. — It  is  not  essential  that 
a  bill  in  a  Federal  court  should  state  the  amount  or  value 
in  controversy,  if  it  appears  to  be  within  the  jurisdictional 
limit,  from  the  allegations  of  the  bill,  or  otherwise  from  the 
record,  or  from  evidence  taken  in  the  case  before  the  hearing 
of  objections  to  the  jurisdiction.  Robinson  v.  Suburban 
Brick  Co.,  127  F.,  804.  2—312 


♦  « 


1170 


INDEX — DIGEST. 


FLEABIlfO  AND  FBACTICE— Continued. 

16.  Technical  Befects  in  Bill.— That  a  bill  for  injunction  contains 

no  prayer  for  process,  this  being  a  mere  technical  defect, 
although  it  renders  the  bill  demurrable,  does  not  affect  the 
jurisdiction  of  the  court  or  render  the  injunction  issued 
thereon  void.     V.  8,  v.  Agler,  62  F.,  824.  1—294 

17.  Same— Befendants  not  Named  in  BiU,  nor  Served  with  Snb- 

p<ena. — An  injunction  for  such  purpose  becomes  binding,  as 
against  one  not  named  in  the  bill,  and  not  served  with  sub- 
pcena,  when  the  injunction  order  is  served  on  him  as  one  of 
the  unlcnown  defendants  referred  to  in  the  bill.  /ft. 

IS.  Same — ^Proceedings  to  Punish  Violation.— An  information  to 
punish  violation  of  such  an  Injunction  order  which  fails 
to  allege  that  the  order  was  a  lawful  one,  in  the  language 
of  the  statute,  or  that  the  person  charged,  not  named  in  the 
order,  was  one  of  the  unknown  parties  referred  to  therein, 
or  that,  either  by  his  words  or  his  acts,  he  was  engaged  In 
aiding  the  common  object  with  other  members  of  the  alleged 
combination,   lacks  the  necessary  certainty.  lb, 

19.  Multifariousness.— A  bill  setting  up  a  claim  for  damages  under 
the  Anti-Trust  Law  of  July  2,  1890,  and  also  asking  an  in- 
junction restraining  defendant  from  using  complainant's 
trade-mark  and  trade  name,  is  multifarious,  as  joining  two 
distinct  causes  of  action,  having  no  connection  with  each 
other,  and  one  of  which  is  triable  at  law.  Block  v.  Stand- 
mra  Distillmg  rf  Distributinff  Co.,  95  F.,  978.  1—993 

W,  Multifariousness  of  BiU.— A  bill  for  relief  by  a  minority  stock- 
holder, on  behalf  of  himself  and  all  other  stockholders  simi- 
larly situated,  to  set  aside  an  alleged  unlawful  transfer  of 
the  property  of  the  corporation  in  pursuance  of  a  conspiracy 
between  its  officers  and  the  transferee  in  restraint  of  trade 
and  commerce ;  and  which  also  seeks  the  recovery  of  treble 
damages  under  the  Anti-Trust  Act  of  July  2,  1890,  is  multifa- 
rious, since  such  damages  are  only  recoverable  in  an  action  at 
law  by  the  plaintiff  as  an  Individual,  and  not  as  a  stock- 
.  holder,  while  the  equitable  relief  prayed  for  is  in  behalf  of  the 
cotporatiou.  and.  if  granted,  would  inure  to  the  benefit  of 
all  the  stockholders.  Metcalf  v.  Amer.  School  Furniture 
Oo,,  108  F.,  909-  j|_75 

tl.  Indetniteness.— In  an  action  by  a  corporation  for  the  infringe- 
ment of  elevator  patents,  an  answer  alleging  as  a  defense 
that  the  plaintiff  is  an  unlawful  combination  in  restraint  of 
trade  and  in  violation  of  the  Sherman  Anti-Trust  Law  (26 
Stat.,  2(t9),  but  which  fails  to  state  who  are  in  the  com- 
bination in  the  agi-eemeut  characterized  as  unlawful,  and 
does  not  disclose  fully  and  in  detail  that  the  combination 
was  entered  into  after  the  act  took  effect,  and  all  the  facts 
necessary  to  show  its  illegality,  is  insufficient  for  indeflnite- 
ness.    Otis  Elevator  Co.  v.  aeiger,  107  F.,  131.  z—m 


INDEX DIGEST. 


1171 


• 


PLEADING  AND  PRACTICE— Continued. 

23.  Buplicity. — A  declaration  in  an  action  brought  imder  section 
7  of  the  Sherman  Anti-Trust  Act  of  July  2,  1890  (26  Stat., 
210),  to  recover  damages  for  a  violation  of  section  1  of  the 
act,  which  alleges  In  a  single  count  that  defendant  entered 
into  a  "  contract,  combination,  and  conspiracy  "  in  restraint 
of  trade,  is  bad  for  duplicity.  Rice  v.  Standard  Oil  Co., 
134  F.,  464.  2—633 

23.  Same. — The  Anti-Trust  Act  of  1890  makes  a  distinction  be- 

tween a  contract  and  a  combination  or  conspiracy  in  re- 
straint of  trade.  fft. 
See  also  V.  S.  v.  MacAndreics  d  Forbes  Co.,  149  F.,  824. 

24.  Under  the  practice  in  this  country  the  examination  of  wit- 

nesses by  a  Federal  grand  jury  need  not  be  preceded  by  a 
presentment  or  formal  indictment,  but  the  grand  jury  may 
proceed,  either  upon  their  own  knowledge  or  upon  examina- 
tion of  witnesses,  to  inquire  whether  a  crime  cognizable  by 
the  court  has  been  committeed,  and  if  so,  they  may  indict 
upon  such  evidence.    Hale  v.  Henkel,  201  U.  S.,  43.      2 — 874 

25.  In  summoning  witnesses  it  is  sufficient  to  apprise  them  of  the 

names  of  the  parties  with  respect  to  whom  they  will  be 
called  to  testify  without  Indicating  the  nature  of  the  charge 
against  them,  or  laying  a  basis  by  a  formal  indictment    lb. 
See  also  Witnesses  ;  and  Grand  Jury. 

26.  In  an  action  against  corporations  for  violations  of  the  Anti- 

Trust  Law  the  books  of  the  various  defendants  both  before 
and  after  the  alleged  combination,  and  the  contracts  be- 
tween them,  as  well  as  other  papers  referred  to  in  the 
opinion,  are  all  matters  of  material  proof,  but  whether  ma- 
terial or  not  the  testimony  must  be  taken  and  exceptions 
can  be  noted  by  the  examiner  and  the  materiality  of  the 
evidence  passed  on  by  the  court.  Nelson  v.  United  States, 
201  U.  S.,  92.  2—921 

PBELIMINABY  INJUNCTIONS.     See  Injunctions,  28,  31,  34. 

PREPAYMENT  OF  FREIGHT.     See  Carriers. 

PROCEDURE.     See  Pleading  and  Practice. 

PRODUCTION  OF  DOCUMENTS.     See  Corporations,  12-15,  17,  18, 

20-23 ;  Witnesses,  8,  16,  20,  23 ;  Search,  2-A. 

PROFIT  AND  LOSS.     See  Damages,  3,  5. 

PUBLIC  POLICY. 

1.  Public  Policy — ^How  Determined. — The  public  policy  of  the  na- 
tion must  be  determined  from  its  constitution,  laws,  and 
judicial  decisions.     U.  S.  v.  Trans-Mo.  Ft.  Assn.,  58  F.,  58. 

1—186 
Case  reversed,  166  U.  S.,  290  (1—648). 


1172 


INDEX — DIGEST. 


FTTBLIC  POLICY— Continued. 

2.  Same — ^Interstate  Commerce.— The  act  of  February  4,  1887,  en- 
titled "An  act  to  regulate  commerce,"  demonstrates  the  fact 
that  from  the  date  of  the  passage  of  that  act  it  has  been 
the  public  policy  of  this  nation  to  regulate  that  part  of 
interstate  commerce  which  consists  of  transportation,  and 
to  so  far  restrict  competition  in  freight  and  passenger  rates 
between  railroad  companies  engaged  therein  as  shall  be 
necessary  to  make  such  rates  open,  public,  reasonable,  uni- 
form, and  steady,  and  to  prevent  discriminations  and  undue 
preferences.  /6. 

8.  Contracts — ^Public  Policy. — Freedom  of  contract  is  as  essential 
to  unrestricted  commerce  as  freedom  of  competition,  and 
one  who  asks  the  court  to  put  restrictions  upon  the  right  to 
contract  ought  to  make  it  clearly  appear  that  the  contract 
assailed  is  against  public  policy.  Ih. 

See  Actions  and  Defenses,  73 ;   Combinations,  92,  157. 

PUBLISHERS.     iSee  Combinations,  etc.,  28,  9G. 

PURCHASE  AND  SALE.    See  Sale,  4. 

PROPRIETARY  PATENT  MEDICINES.  See  CoMniNATioNS.  etc, 
29,  160. 

RAILROADS    See  Combinations,  etc,  100-111,  189-201. 

RAILROAD  EMPLOYEES.     See  Combinations,  etc,  117-133. 

RATES.     See  Railboads. 

REASONABLE  DOUBT.    See  Jury,  1. 

RKASONABLENESS  OR  UNREASONABLENESS.  See  Combina- 
tions, etc.  3,  4,  13,  48,  55,  59,  63,  79.  81,  163.  174;  Statutes, 
5,  6,  13,  16.  19,  31. 

REBATES.  See  Actions,  49,;  Combinations,  etc,  161,  162;  Inmct- 
ments.  3,  4. 

RECEIVERS.     See  Courts,  7;  Contempt,  1,  2;  Combinations,  etc., 

RECOVERY.    See  Actions  and  Defenses,  11,  13,  14,  38,  39,  41,  66. 

.REMEDIES. 

1.  Suit  by  Private  Individual  Must  Be  at  law.— The  act  "to  pro- 
tect trade  and  commerce  against  unlawful  restraints  and 
monoi>olies"  (act  Cong.  July  2,  1890)  confers  no  right  upon 
a  private  individual  to  sue  in  equity  for  the  restraint  of 
the  acts  forbidden  by  such  statute,  an  action  at  law  for 
damages  being  the  only  remedy  provided  for  private  persons, 
and  the  right  to  bring  suits  in  equity  being  vested  in  the  dis- 
trict attorneys  of  the  United  States.  Pidcock  v.  Harrington, 
64  F.,  821  1-^77 


INDEX — ^DIGEST. 


1173 


' 


k 


REMEDIES— Con  tin  ued . 

2.  Voluntary  Associations — Suspension  of  Members. — Where  a 
member  of  a  voluntary  association 'has  been  suspended  by 
the  directors  for  nonpayment  of  a  fine  for  violation  of  the 
by-laws,  his  action  to  be  restored  to  the  privileges  of  mem- 
bership is  founded  upon  the  contract  between  himself  and 
the  association,  which  he  must  either  accept  in  its  entirety 
or  repudiate.  He  does  not  occupy  the  iwsition  of  a  stranger 
injured  by  the  acts  of  cotrespassers.  Q-reer,  Mills  d  Co,  v. 
Stoller,  77  F.,  1.  1—620 

See  also  Actions  and  Defenses. 

REMOTELY.    See  Incidentally.  Indirectly,  and  Remotely. 

REMOVAL  FROM  STATE  COURT.     See  Coubts,  16. 

REMOVAL  OF  PRISONERS. 

1.  From  One  State  to  Another  for  Trial.— On  an  application  to  a 

Federal  court  for  the  removal  of  a  resident  of  the  district 
to  a  distant  State  and  district  for  trial,  it  is  the  duty  of 
the  court  to  scrutinize  the  indictment,  disregarding  tech- 
nical defects,  but  to  refuse  the  warrant  if  the  crime  alleged 
is  not  triable  in  the  district  to  which  a  removal  is  sought, 
or  if  the  indictment  fails  to  charge  any  offense  under  the 
law.    In  re  Corning,  51  F.,  203.  1 — ^33 

2.  Habeas  Corpus— Jurisdiction  of  Circuit  Courts.— Where  a  pris- 

oner, arrested  under  warrant  based  upon  an  indictment  in  a 
distant  State  and  district,  is  held  pending  an  application 
to  the  district  court  for  a  warrant  of  removal  for  trial,  the 
circuit  court  of  the  district  in  which  he  is  held  has  authority 
on  habeas  corpus  to  examine  such  indictment,  and  to  re- 
lease the  prisoner,  if,  in  his  judgment,  the  indictment  should 
be  quashed  on  demurrer.    In  re  Terrell,  51  F.,  213.        1 — 46 

3.  Same. — On  habeas  corpus  to  release  a  person  held  under  a  war- 

rant of  a  United  States  commissioner  to  await  an  order  of 
the  district  judge  for  his  removal  to  another  district  to 
answer  an  indictment,  it  is  the  right  and  duty  of  the  cir- 
cuit court  to  examine  the  indictment  to  ascertain  whether 
it  charges  any  offense  against  the  United  States  or  whether 
the  offense  comes  within  the  jurisdiction  of  the  court  in 
which  the  indictment  is  pending.    In  re  Greene,  52  F.,  104. 

1—54 

RESTRAINING  ORDERS.    See  Injunctions,  30. 

RESTRAINT  OF  TRADE. 

See  Combinations,  etc.,  in  Restraint  of  Trade,  particularly 
paragraphs  1,  3-5,  7-16,  18,  20,  22,  23,  43,  48,  54-77,  79.  81, 
91.  107,  108.  133-150,  etc. ;  mid  Statutes,  5-7,  10,  11,  13,  17. 

•     19.  21-24,  26,  28,  31,  35.  36,  43,  44,  48,  49. 


•■ 


1174 


mDEX — ^DIGEST. 


BIQHT  OF  ACTION.    Sec  Actions  and  Defenses,  9,  57. 

BXTBBEB  TIBES.    See  Combinations,  etc.,  99. 

BUIiBS  OF  LABOR  VHIONa    See  Combinations,  etc.,  117. 


1.  Validity  of  Sale— Tbe  sale  and  transfer  by  a  corporation  of  its 
property  and  good  will  to  another  corporation,  where  such 
sale  was  within  its  powers,  can  not  be  repudiated  on  the 
fronnd  that  the  purchaser  acquired  the  property  for  the 
purpose  of  obtaining  a  monopoly  of  the  business  and  in 
pursuance  of  an  illegal  combination  in  restraint  of  trade. 
Metealf  v.  Amer.  School  Furniture  Co,,  122  F.,  115.      2—234 
S.  A  contract  for  sale  of  vessels,  even  if  they  are  engaged  in  inter- 
state commerce.  Is  not  necessarily  void  because  the  vendors 
agree,  as  is  ordinary  in  case  of  sale  of  a  business  and  its 
good  will,  to  withdraw  from  business  for  a  specified  period. 
Cineinnati,  rfc.  Packet  Co.  v.  Bay,  200  U.  S.,  170.        2—867 
8.  Contract  for  Sale  of  Goods  by  Member  of  Combination.— The 
act  of  July  2,  1890,  section  1  <26  Stat,  209),  Icnown  as  the 
**  Sherman  Anti-Tnist  Act,"  does  not  invalidate  or  prevent 
a  recovery  for  the  breach  of  a  collateral  contract  for  the 
raanufactui-e  and  sale  of  goods  by  a  member  of  a  combination 
formed  for  the  purpose  of  restraining  interstate  trade  in 
such  goods.    Eadlep  Dean  Plate  Glass  Co.  v.  Highland  Class 
Co.,  143  F.,  242.  2—995 

4  The  transaction  between  the  complainants  and  the  Worthem 
Securities  Company  by  which  the  former  parted  with  and 
delivered  to  the  latter,  as  a  holding  corporation,  certain 
shares  of  the  stock  of  the  Northern  Pacific  Railway  Com- 
pany and  received  in  exchange  certain  other  shares  of  the 
Securities  Company  stock,  held  to  be  one  of  purchase  and 
sale  of  the  Northern  Pacific  stock,  and  not  a  bailment  or 
trust.  Harriman  v.  Northern  Securities  Co.,  197  U.  S.,  244 
Affirming  134  F.,  331  (2—618).  2—669 

5.  Same.— When  a  vendor  testifies  that  the  transaction  was  an 
unconditional  sale  and  that  he  attached  to  his  negotiations 
no  other  conditions  than  that  of  price,  he  is  estopped  from 
afterwards  denying  that  this  is  a  statement  of  fact  and 
claiming  that  he  only  swore  to  a  conclusion  of  law.         lb, 

e.  Same.-^Property  delivered  under  an  executed  illegal  contract 
can  not  be  recovered  back  by  any  party  in  pari  delicto,  and 
the  courts  can  not  relax  the  rigor  of  this  nile  where  the 
record  discloses  no  special  considerations  of  equity,  justice 
or  public  policy.  '  jJ 

7.  Same.~The  fact  that  the  complainants  in  this  case  acted  ia 
good  faith  and  without  intention  to  violate  the  law  does 
not  exempt  them  from  the  doctrine  of  in  pari  delicto.    All 


INDEX — ^DIGEST. 


1175 


^  ^ 


SALE— Continued. 

the  parties  having  supposed  the.  statute  would  not  be  held 
applicable  to  the  transaction  neither  can  plead  ignorance 
of  the  law  as  against  the  other  and  the  defendant  secured 
no  unfair  advantage  in  retaining  the  consideration  volun- 
tarily delivered  for  the  price  agreed.  lb. 

8.  Same. — ^Where  a  vendor  after  transferring  shares  of  railway 

stock  to  a  corporation  in  exchange  for  its  shares  becomes  a 
director  of  the  purchasing  corporation  and  participates  in 
acts  consistent  only  with  absolute  ownership  by  it  of  tlie 
railway  stocks,  and  does  so  after  an  action  has  been  brought 
to  declare  the  transaction  illegal,  his  right  to  rescind  the 
contract  and  compel  restitution  of  his  original  railway 
shares,  if  it  ever  existed,  is  lost  by  acquiescence  and  laches. 

Ih. 

9.  Restriction  of  Sales  of  Goods. — A  manufacturer,  a  corporation, 

and  its  employee  restricted  the  sales  of  its  products  to  those 
who  refrained  from  dealing  in  the  commodities*  of  its  com- 
petitors by  fixing  the  prices  of  its  goods  to  those  who  did 
not  thus  refrain  so  high  that  their  purchase  was  unprofit- 
able, while  it  reduced  the  prices  to  those  who  declined  to 
deal  in  the  wares  of  its  competitors  so  that  the  purchase 
of  the  goods  was  profitable  to  them.  The  plaintiff  applied 
to  purchase,  but  refused  to  refrain  from  handling  the  goods 
of  the  corporation's  competitors,  and  sued  it  for  damages 
caused  by  the  refusal  of  the  defendants  to  sell  their  commod- 
ities to  him  at  prices  which  would  make  it  profitable  for 
him  to  buy  them  and  sell  them  again.  Held,  the  restriction 
of  their  own  trade  by  the  defendants  to  those  purchasers 
who  declined  to  deal  in  the  goods  of  their  competitors  was 
not  violative  of  the  Anti-Trust  Act.  Whitwell  v.  Continental 
Tobacco  Co.,  125  F.,  454.  2—271 

10.  Same. — The  owner  of  goods  may  dictate  the  prices  at  which 
he  will  sell  them,  and  the  damages  which  are  caused  to 
an  applicant  to  buy  by  the  refusal  of  the  owner  to  sell  to 
him  at  prices  which  will  enable  him  to  resell  them  at  a 
profit  constitute  no  legal  injury,  and  are  not  actionable, 
because  they  are  not  the  result  of  any  breach  of  duty  or  of 
contract  by  the  owner.  /ft. 

See  also  Combinations,  etc.,  18. 

SEABCH  AND  SEIZURE. 

1.  Unreasonable  Searches — Subpoena  Duces  Tecum — Bights  of  an 
Agent. — A  subpcena  duces  tecum  commanding  the  secretary 
and  treasurer  of  a  corporation  supposed  to  have  violated  the 
Anti-Trust  Act  to  testify  and  give  evidence  before  the  grand 
jury,  and  to  bring  with  him  and  produce  numerous  agree- 
ments, letters,  telegrams,  reports,  and  other  writings,  de- 


117H 


INDEX — DIGEST. 


SBARCH  AND  SEIZUBE-Continued. 

scribed  generically,  in  effect  including  all  the  correspondence 
and  documents  of  his  corporation  originating  since  the  date 
of  its  organization,  to  which  nineteen  other  named  corpora- 
tions or  persons  were  parties,  for  the  purpose  of  enabling  the 
district  attorney  to  establish  a  violation  of  such  act  on  the 
part  of  the  witness*  principal,  constituted  an  unreasonable 
search  and  seizure  of  papers,  prohibited  by  Fourth  Amend- 
ment to  the  Constitution.    In  re  Hale,  139  F.,  496.       2—804 
2.  Same.— A  corporation  charged  with  a  violation  of  the  Anti-Trust 
Act  of  July  2,  1890,  is  entitled  to  immunity  under  the  Fourth 
Amendment  to  the  Constitution  from  such  an  unreasonable 
search  and  seizure  as  the  compulsory  production  before  a 
grand  jury,  under  a  subpcena  duces  tecum,  of  all  under- 
standings, contracts,  or  correspondence  between  such  cor- 
poration and  six  other  companies,  together  with  all  reports 
and  accounts  rendered  by  such  companies  from  the  date  of 
the  organization  of  the  corporation,  as  well  as  all  letters 
received  by  that  corporation  since  its  organization,   from 
more  than  one  dozen  different  companies,  situated  in  seven 
different  States.    Hale  v.  Henkel  201  U.  S.,  43.  2-^74 

8.  The  search  and  seizure  clause  of  the  Fourth  Amendment  was  not 
intended  to  interfere  with  the  power  of  courts  to  compel  the 
production  upon  a  trial  of  documentary  evidence  through  a 
subpoena  duces  tecum.  /^^ 

4.  The  protection  against  unreasonable  searches  and  seizures  af- 
forded by  the  Fourth  Amendment  tothe  Constitution  can  not 
ordinarily  he  invoked  to  justify  the  refusal  of  an  oificer  of 
a  corporation  to  produce  its  books  and  papers  in  obedience 
to  a  subpcena  duces  tecum,  issued  in  aid  of  an  investigation 
by  a  grand  jury  of  an  alleged  violation  of  the  Anti-Trust  Act 
of  July  2,  1890,  by  such  corporation.  /&. 

f.  In  a  suit  in  equity  brought  by  the  United  States  to  enjoin  the 
carrying  out  of  a  contract  or  combination  in  restraint  of 
interstate  commerce,  under  the  act  of  1890,  there  can  be 
no  seizure  of  goods  in  course  of  transportation  pursuant  to 
the  unlawful  contract.  Such  seizure  can  only  be  made  under 
the  sixth  section  of  the  act.  which  authorizes  seizures  and 
condemnation  by  like  proceedings  to  those  provided  in  cases 
of  property  imported  Into  the  United  States  contrary  to  law. 
U.  8,  V.  Addyston  Pipe  d  Steel  Co.,  85  F.,  271.  1—773 

SHINGLES.    See  Combinations,  etc.,  32,  211,  212. 

SOUTH   CAROLINA   DISPENSABY   LAWS.    See   Lowetistein   v 
Evans,  60  F.,  908  (1—598). 

SPECIFIC  PEBFORMANCE.      See  Contracts,  7. 


INDEX — ^DIGEST. 


1177 


SPECULATIVE  DAMAGES.    See  Damages,  2. 

STATES. 

1.  Bight  to  Create  Corporations — Interstate  Commerce. — ^A  State 

can  not  invest  a  corporation  organized  under  its  laws  with 
the  power  to  do  acts  in  the  corporate  name  which  wonld 
operate  to  restrain  interstate  commerce.  U.  S.  v.  Northern 
Securities  Co.,  120  F.,  721.  2—216 

2.  Same. — No  State  can,  by  merely  creating  a  corporation,  or  in 

any  other  mode,  project  its  authority  into  other  States,  so 
as  to  prevent  Congress  from  exerting  the  power  it  possesses 
under  the  Constitution  over  interstate  and  international 
.  commerce,  or  so  as  to  exempt  its  corporation  engaged  in 
interstate  commerce  from  obedience  to  any  rule  lawfully 
established  by  Congress  for  such  commerce ;  nor  can  any 
State  give  a  corporation  created  under  its  laws  authority 
to  restrain  interstate  or  international  commerce  agaitust 
the  will  of  the  nation  as  lawfully  expressed  by  Congress. 
Every  corporation  created  by  a  State  is  necessarily  subject 
to  the  supreme  law  of  the  land.  Nortlieim  Securities  Co.  v. 
United  States,  193  U.  S.,  197  (Harlan,  Brown,  McKenna. 
Day).  2—341 

3.  Bight  to  Create  Corporations — Injunction  in  Northern  Securi- 

ties Case  no  Invasion. — ^The  enforcement  of  the  provisions 
of  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209),  by  a 
Federal  court  decree  enjoining  a  corporation  organized  in 
pursuance  of  a  combination  of  stoclvbolders  in  two  com- 
peting interstate  railway  companies  for  the  purpose  of  ac- 
quiring a  controlling  interest  in  the  capital  stock  of  such 
companies,  from  exercising  the  power  acquired  by  such 
corporation  by  virtue  of  its  acquisition  of  such  stock,  does 
not  amount  to  an  invasion  by  the  Federal  Government  of 
the  reserved  rights  of  the  States  creating  the  several  cor- 
I)orations.  Northern  Securities  Co.  v.  United  States,  193 
U.  S,,  197  (48  L.  ed.,  679).  2—342 

4.  Jurisdiction  of  Federal  Courts. — A  State  is  not  a  citizen  within 

the  meaning  of  the  provisions  of  the  Constitution  or  acts 
of  Congress  regulating  the  jurisdiction  of  the  Federal  courts. 
Minnesota  v.  Northern  Securities  Co.,  194  U.  S.,  48.      2 — ^533 

5.  Same. — A  State  can  not  maintain  an  action  in  equity  to  re- 

strain a  corporation  from  violating  the  provisions  of  the 
act  of  July  2,  1890,  on  the  ground  that  such  violations  by 
decreasing  competition  would  depreciate  the  value  of  its 
public  lands  and  enhance  the  cost  of  maintaining  its  public 
institutions,  the  damages  resulting  from  such  violations 
being  remote  and  indirect  and  not  such  direct  actual  injury 
as  is  provided  for  in  section  7  of  the  act.  lb. 


J  1 1  o 


INDEX — ^DIGEST. 


STATES— Continued. 

«.  State  Corporations— Power  of  Congress. — Congress  has  no  au- 
thority, under  the  conmierce  clause  or  any  other  provision 
of  tile  Constitution,  to  limit  the  right  of  a  corporation  cre- 
ated by  a  State  in  the  acquisition,  control,  and  disposition 
of  property  in  the  scTeral  States,  and  it  is  immaterial  that 
such  property,  or  the  products  thereof,  may  heeonie  the  sub- 
jects of  interstate  commerce:  and  it  is  apparent  that  by 
the  act  of  July  2,  1890,  In  relation  to  monopolies,  Congress 
did  not  intend  to  declare  that  the  acquisition  by  a  State 
coriwrsition  of  so  large  a  part  of  any  species  of  property 
as  to  enable  the  owners  to  control  the  traffic  therein  among 
the  several  States  constituted  a  criminal  offense.  In  re 
Greene,  52  F.,  104.  i_55 

7.  State  Corporations — Interstate  Commerce — ^Power  of  Congress. 

Pranchises  of  a  corporation  chartered  by  a  State  are,  so  far 
as  they  involve  questions  of  interstate  commerce,  exercised 
in  subordination  to  the  power  of  Congress  to  regulate  such 
commerce.  While  Congress  may  not  have  general  visita- 
torial power  over  State  corporations,  its  powers  in  vindica- 
tion of  its  own  laws  are  the  same  as  if  the  corporation  had 
been  created  by  an  act  of  Congress.  Hale  v.  Henkel,  201 
U.  S.,  43.  *  ji    874 

a.  State  courts  are  without  jurisdiction  of  a  suit  to  recover  dam- 
ages under  section  7  of  the  Federal  Anti-Trust  Act  of  1890. 
Loetce  v.  Lawlor,  130  F.,  633.  »— 563 

a  A  State  is  neither  a  "  person  "  nor  a  "  corporation,"  within  the 
meaning  of  the  Anti-Trust  Act  of  1890,  and  the  provisions 
of  that  act  are  not  applicable  to  the  case  where  the  State 
by  its  laws  assumes  a  monopoly  of  the  traffic  in  intoxicating 
liquors.    Lowenstein  v.  Evans,  69  F.,  908.  1—598 

10.  Where  an  action  Is  brought  against  the  officials  of  a  State 

under  section  7  of  the  Anti-Trust  Law  of  July  2,  1890,  to 
recover  damages  for  acts  done  under  authority  of  a  State 
statute  which  gives  the  State  an  entire  monopoly  of  the 
traffic  in  Intoxicating  liquors  (act  S.  C,  Jan.  2,  1895),  the 
State  itself  is  a  necessary  party  thereto,  and  consequently 
the  Federal  courts  would  have  no  jurisdiction  of  the  action. 

/&. 

11.  Xanufactures  within  a  State.— The  Anti-Trust  Act  of  1890  has 

no  reference  to  the  mere  manufacture  or  production  of  ar- 
tides  or  commodities  within  the  limits  of  the  several  States. 
Northeni  SecuHties  Co,  v.  United  States,  193  U.  S..  197. 

2—339 
■TATE  XOirOPOLIXS.    See  States,  9.  . 


INDEX—DIGEST. 


1179 


STATUTES. 


I.  Anti-Trust  Act  of  July  2,  1890. 
1,  Construction  and  operation — In  general. 


1.  Act  Operates  on  Monopolies  in  Interstate  Commerce,  and  Not 

Because  Commodity  is  a  Necessary  of  Life. — ^The  monopoly 
and  restraint  denounced  by  the  act  of  July  2,  1890  (c.  (>47, 
26  Stat,  209),  "to  protect  trade  and  commerce  against  un- 
lawful restraints  and  monopolies,"  are  a  monopoly  in  inter- 
state and  international  trade  or  commerce,  and  not  a  monop- 
oly in  the  manufacture  of  a  necessary  of  life.  U.  8.  v. 
E.  C.  Knight  Co.,  156  U.  S.,  1.  1—379 

2.  The  statute  is  not  limited  to  contracts  or  combinations  which 

monopolize  iiiterstate  commerce  in  any  given  commodity, 
but  seeks  to  reach  those  which  directly  restrain  or  impair 
the  freedom  of  interstate  trade.  The  law  reaches  combina- 
tions which  may  fall  short  of  complete  control  of  a  trade  or 
business,  and  does  not  await  the  consolidation  of  many  small 
combinations  into  the  huge  "  trust "  which  shall  control  the 
production  and  sale  of  a  commodity.  Chesapeake  d  O.  Fuel 
Co.  v.  United  States,  115  F.,  610,  624.  2—168 

8.  Common  Carriers  Not  Included  Within  the  Statute. — It  was  not 
the  intention  of  Congress  to  include  common  carriers  sub- 
ject to  the  act  of  February  4,  1887,  within  the  provisions  of 
the  act  of  July  2,  1890,  which  is  a  special  statute,  relating 
to  combinations  in  the  form  of  trusts  and  conspiracies  in 
restraint  of  trade.  U.  8.  v.  Trans-Mo.  Ft.  Assn.,  53  F.,  440. 
Case  reversed,  166  U.  S.,  290  (1—648).  1—80 

4.  Applies  to  Common  Carriers  by  Railroads — Contracts  Affecting 

Bates. — ^The.  provisions  resjiecting  contracts,  combinations, 
and  conspiracies  in  restraint  of  trade  or  commerce  among 
the  several  States  or  with  foreign  countries,  contained  in 
the  act  of  July  2,  1890,  "  to  protect  trade  and  commerce 
against  unlawful  restraints  and  monopolies,"  apply  to  and 
cover  common  carriers  by  railroad ;  and  a  contract  between 
them  in  restraint  of  such  trade  or  commerce  is  prohibited, 
even  though  the  contract  is  entered  into  between  competing 
railroads,  only  for  the  purpose  of  thereby  affecting  traffic 
rates  for  the  transportation  of  persons  and  property.  U.  8. 
V.  Trans-Mo.  Ft.  Assn.,  166  U.  S.,  290.  1 — 648 

5.  Act  Applies  to  All  Contracts  in  Bestraint  of  Interstate  or  For- 

eign Commerce— Not  Confined  to  Unreasonable  Bestraints.— 
The  prohibitory  provisions  of  the  said  act  of  July  2,  1890, 
apply  to  all  contracts  in  restraint  of  interstate  or  foreign 
trade  or  commerce  without  exception  or  limitation;  and 
are  not  confined  to  those  in  which  the  restraint  is  unreason- 
able. /6. 


1180 


INDEX — ^DIGEST, 


BTATTITES— Contiiiueil. 

I.  Act  of  1890— ContinutHl. 

i.  Aet  Aimed  at  all  Bestralnts — Eeasonableness  of  Restraints  Im- 
material.— ^The  act  of  Congress  is  aimed  against  all  restraints 
of  interstate  commerce,  and  its  purpose  is  to  permit  com- 
merce between  the  States  to  flow  in  its  natural  channelB, 
'  unrestricted  by  any  combinations,  contracts,  conspiracies,  or 

monopolies  whatsoever.  The  reasonableness  of  the  restric- 
tions in  a  given  case  is  Immaterial.  U,  8.  v.  Hopkins,  82  F., 
529.  1—725 

Reversed,  171  U.  S.,  579  (1—941). 

7.  Tett  of  Validity  of  Contract  or  Combination  under  Anti-Trust 
Act. — The  test  of  the  violation  of  the  Anti-Trust  Act  of 
July  2,  1890  (26  Stat,  209,  c.  647),  by  a  contract  or  combina- 
tion, is  its  effect  upon  competition  in  commerce  among 
the  States.  If  its  necessary  effect  is  to  stifle  or  to  directly 
and  substantially  restrict  interstate  commerce,  it  falls  under 
the  ban  of  the  law,  but  if  it  promotes,  or  only  incidentally 
or  indirectly  restricts,  competition,  while  its  main  purpose 
and  chief  effect  are  to  promote  the  business  and  increase 
the  trade  of  the  makers,  it  is  not  denounced  or  avoided  by 
that  law.    PhiUips  v.  lola  Portland  Cement  Co.,  125  F..  593. 

2—284 

«.  The  Sherman  Act  of  July  2,  1890,  is  not  intended  to  affect 
contracts  which  have  only  a  remote  and  indirect  bearing 
on  commerce  between  the  States.  Field  v.  Barber  Asphalt 
Paving  Co.,  194  U.  S.,  618.  2—555 

9.  The  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209),  does  not 
apply  to  a  contract  or  combination  relating  to  the  business. 
of  manufacturing  within  a  State.    Rohinson  v.  Suburban 
Brick  Co.,  127  F.,  804.  2—312 

10.  The  act  of  July  2,  1890,  commonly  known  as  the  "Anti-Trust 

Act,"  does  not,  and  could  not  constitutionally,  affect  any 
monopoly  or  contract  in  restraint  of  trade,  unless  it  inter- 
feres directly  and  substantially  with  Interstate  commerce, 
or  commerce  with  foreign  nations.  U.  8.  v.  Addyston  Pipe 
d  Steel  Co.,  78  F.,  712.  1—630 

11.  Any  agreement  or  combination  which  directly  operates,  not 

alone  upon  the  manufacture,  but  upon  the  sale,  transporta- 
tion, and  delivery  of  an  article  of  interstate  commerce  by 
preventing  or  restricting  its  sale  thereby  regulates  interstate 
commerce  to  that  extent,  and  thus  trenches  upon  the  power 
of  the  national  legislature  and  violates  the  statute.  Addys- 
ton Pipe  d  Steel  Co.  v.  V.  S.,  175  U.  S..  211.  1—1009 
18.  Effect  of  Anti-Trust  Law  upon  Contracts  in  Restraint  of  Trade 
which  at  Common  Law  were  Kot  Unlawful. — The  effect  of 
the  Anti-Trust  Law  of  1890  is  to  render  contracts  in  re- 
straint of  trade,  as  applied  to  interstate  commerce,  unlaw- 
ful in  an  affirmative  or  positive  sense,  and  punishable  as  a 


INDEX — ^DIGEST. 


1181 


♦  k 


STATUTES— Continued. 

I.  Act  op  1890— Continued, 
misdemeanor,  and  also  to  create  a  right  of  civil  action  for 
damages  in  favor  of  persons  injured  thereby,  and  a  remedy 
by  injunction  in  favor  both  of  private  persons  and  the 
public  against  the  execution  of  such  contracts  and  the  main- 
tenance of  such  trade  restraints.  U.  8.  v.  Addystcm  Pipe  d 
Steel  Co.,  85  F.,  271.  1—772 

18.  Test  of  Legality.— The  Anti-Trust  Act  of  July  2,  1890  (26  Stat, 
209),  declaring  all  contracts  and  combinations  illegal  if  in 
restraint  of  trade  or  commerce  among  the  States,  does  not 
leave  to  the  courts  the  consideration  of  the  question  whether 
the  restraint  is  or  is  not  unreasonable  and  such  as  would 
have  rendered  the  contract  invalid  at  common  law.  The 
only  question  in  each  case  where  the  validity  of  a  contract 
or  combination  under  the  law  is  involved  is  whether  or  not 
its  necessary  effect  is  to  restrain  interstate  commerce.  Ches- 
apeake d  Ohio  Fuel  Co.  v.  U.  S.,  115  F.,  610.  2—151 

14.  Same.— The  test  of  the  violation  of  the  Anti-Trust  Act  of  July 

2,  1890  (26  Stat,  209),  by  a  contract  or  combination  is  its 
effect  upon  competition  in  commerce  among  the  States.  If 
its  necessary  effect  is  to  stifle  or  to  directly  and  substan- 
tially restrict  interstate  commerce,  it  falls  under  the  ban 
of  the  law,  but  if  it  promotes,  or  only  incidentally  or  in- 
directly restricts,  competition,  while  its  main  purpose  and 
chief  effect  are  to  promote  the  business  and  increase  the 
trade  of  the  makers,  it  is  not  denounced  or  avoided  by  that 
law.  Phillips  v.  lola  Portland  Cement  Co.,  125  F.,  593. 
(See  also  Combinations,  etc.,  9-15.)  2 — 284 

15.  Construction — Act  Includes  Every  Combination  which  Directly 

and  Substantially  Restricts  Interstate  Commerce. — The  gen- 
erality of  the  language  used  in  the  Anti-Trust  Act  of  1890 
(act  July  2,  1890,  26  Stat,  209),  declaring  illegal  "every 
contract,  combination,  or  conspiracy  in  restraint  of  trade 
or  commerce  among  the  several  States  or  with  foreign 
nations,"  indicates  the  purpose  of  Congress  to  include  in  the 
prohibition  every  combination  which  directly  and  substan- 
tially restricts  interstate  commerce,  whatever  its  form.  U, 
8.  V.  Northern  Securities  Co.,  120  F.,  721.  2 — ^215 

16.  Same.— The  Anti-Trust  Act  (act  July  2,  1890,  26  Stat.,  209)  ap- 

plies to  interstate  carriers  of  freight  and  passengers,  and 
any  contract  or  combination  which  directly  and  substantially 
restricts  the  right  of  such  a  carrier  to  fix  its  own  rates,  in- 
dependently of  its  natural  competitors,  places  a  direct  re- 
straint upon  interstate  commerce,  in  that  it  tends  to  prevent 
competition,  and  is  in  violation  of  the  act,  whether  the 
rates  actually  fixed  be  reasonable  or  unreasonable.  76. 

17.  Same.— The  Anti-Trust  Act  of  July  2,  1890,  embraces  and  de- 

clares to  be  illegal  every  contract,  combination,  or  con- 
11808— VOL  2— 06 75 


1182 


STATUTES— Continuecl. 


INDEX — ^DIGEST. 


I.  Act  of  1890— Continued. 

splracy,  in  whatever  form,  of  whatever  nature,  and  whoever 
may  be  parties  to  it,  which  directly  or  necessarily  operates 
in  restraint  of  trade  or  commerce  among  the  several  States 
or  with  foreign  nations.  Northern  Securities  Co.  v.  United 
States,  193  U.  S.,  197.     (Harlan,  Brown,  McKenna,  Day.) 

2—^39 

18.  That  act  has  no  reference  to  the  mere  mannfactnre  or  pro- 
dnction  of  articles  or  commodities  within  the  limits  of  the 
several  States.  Ih. 

10.  The  act  is  not  limited  to  restraints  of  interstate  and  inter- 
national trade  or  commerce  that  are  unreasonable  in  their 
nature,  but  embraces  all  direct  restraints,  reasonable  or 
unreasonable,  imposed  by  any  combination,  conspiracy,  or 
monopoly  upon  such  trade  or  commerce,  Ih. 

20.  Railroad  carriers  engaged  In  interstate  or  international  trade 
or  commerce  are  embraced  by  the  act.  11k 

fll.  Combinations,  even  among  private  manufacturers  or  dealers, 
whereby  interstate  or  international  commerce  is  restrained, 
are  equally  embraced  by  the  act.  /© 

22.  Every  combination  or  conspiracy  which  would  extinguish  com- 

petition between  otherwise  competing  railroads,  engaged  in 
interstate  trade  or  commerce,  and  which  would  in  that  way 
restrain  such  trade  or  commerce,  is  made  illegal  by  the 
act.  JI>. 

23.  The  natural  effect  of  competition  is  to  increase  commerce,  and 

an  agreement  whose  direct  effect  is  to  prevent  this  play  of 
competition  restrains  instead  of  promotes  trade  and  com- 
merce. 16. 

24.  The  act  of  July  2,  1890,  was  leveled,  as  appears  by  its  title,  at 

only  unlawful  restraints  and  monopolies.  Congi-ess  did 
not  intend  to  reach  and  destroy  those  minor  contracts  in 
partial  restraint  of  trade  which  the  long  course  of  decisions 
at  common  law  had  affirmed  were  reasonable  and  ought  to 
be  upheld.  Northern  Securities  Co.  v.  United  States,  193 
TJ.  S.,  197.     (Brewer,  concurring.)  2—341 

25.  The  general  language  of  the  act  is  limited  by  the  power  which 

each  individual  has  to  manage  his  own  property  and  deter- 
mine the  place  and  manner  of  its  investment.  Freedom 
of  action  In  these  respects  is  among  the  Inalienable  rights 
of  every  citizen.  /^. 

28.  In  determining  whether  or  not  a  combination  is  in  violation 
of  the  Federal  Anti-Trust  law,  as  in  restraint  of  interstate 
commerce,  it  is  immaterial  that  such  is  not  its  ultimate  ob- 
ject, which  is  in  most  cases  to  increase  the  trade  and  profits 
of  the  parties  to  such  combination ;  nor  is  it  material  to  as- 
certain what  proportion  the  resulting  restraint  of  inter- 


\ 


INDEX — ^DIGEST. 


1183 


STATUTES— Continued. 


r 


I.  Act  of  1890— Continued. 

state  commerce  bears  to  other  results.  The  true  inquiry  is 
whether  it  tends  directly  to  appreciably  restrain  interstate 
trade,  and,  if  it  does,  it  is  within  the  statute,  although  such 
effect  may  not  be  so  considerable  as  its  other  effects.  Ellis 
V.  Inman,  Poulsen  d  Co.,  131  F.,  182.  2—577 

27.  The  statute  under  review  (act  of  July  2,  1890)  is  a  legitimate 

exercise  of  the  power  of  Congress  over  interstate  commerce, 
and  a  valid  regulation  thereof.  U.  S.  v.  Joint  Traffic  Assn., 
171  U.  S.,  505.  1—869 

28.  Section  1  of  the  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209), 

makes  a  distinction  between  a  contract  and  a  combination  or 
conspiracy  in  restraint  of  trade.  Rice  v.  Standard  Oil  Co,, 
134  F.,  464.  j^_633 

29.  The  Interstate  Commerce  Act  and  the  act  known  as  the  "  Sher- 

man Anti-Trust  Law"  are  separate  and  independent  acts, 
not  germane  in  character  and  purpose ;  and  therefore  juris- 
diction in  the  circuit  court  of  the  United  States  over  a  bill 
in  equity  to  enjoin  a  railroad  company  from  granting  re- 
bates to  favored  shippers  can  not  be  maintained  upon  the 
gi'ound  that  such  act  of  the  railroad  company  is  a  monopoly 
within  the  meaning  of  the  second  section  of  said  Anti-Trust 
Act  (act  July  2,  1890,  26  Stat,  209).  United  States  v. 
Atchison,  T.  &  S.  F.  Ry.  Co.,  142  F.,  176.  2—831 

80.  Acts  done  under  an  agreement  legal  when  made,  but  which  be- 

came illegal  on  the  passage  of  the  act  of  July  2,  1890,  are 
done  in  violation  of  that  act  U.  S.  v.  Trans-Mo.  Ft.  Assn., 
166  U.  S.,  290.  1—669 

81.  The  statute  has  no  concern  with  prices,  but  looks  solely  to 

competition  and  to  the  giving  of  competition  full  play  by 
making  illegal  any  effort  at  restriction  upon  competition. 
Restraint  of  trade  is  not  dependent  upon  any  consideration 
of  reasonableness  or  unreasonableness  in  the  combination 
averred,  nor  is  it  to  be  tested  by  the  prices  that  result  from 
the  combination.     U.  S.  v.  Sioift  &  Co.,  122  F.,  529.        2—237 

82.  The  Anti-Trust  Act  should  have  a  reasonable  construction — 

one  which  tends  to  advance  the  remedy  it  provides  and  to 
abate  the  mischief  at  which  it  was  leveled.  Whitwell  v. 
Continental  Tobacco  Co.,  125  F.,  454.  2 — ^271 

33.  Scope  of  the  Statute. — The  words  "  trade  "  and  "  commerce,"  as 

used  in  the  Anti-Trust  Act  of  1890,  are  synonymous.  The 
use  of  both  terms  in  the  first  section  does  not  enlarge  the 
meaning  of  the  statute  beyond  that  employed  in  the  con- 
mon-law  expression  "  contract  in  restraint  of  trade,"  as  they 
are  analogous  to  the  word  "  monopolize,"  used  in  the  second 
section  of  the  act     U.  8.  v.  Patterson,  55  F.,  605.         1 — 133 

34.  Same. — The  word  "  monopolize  "  is  the  basis  and  limitation  of 

the  statute,  and  hence  an  indictment  must  show  a  conspiracy 


1 1 84 


STAinrrBS—Continued. 


IITDBX — ^DIGEST. 


vVki 


87. 


I.  Act  of  1890— Continued. 

in  restraint  by  engrossing  or  monopolizing  or  grasping  tlie 
market  It  is  not  sufficient  simply  to  allege  a  purpose  to 
drive  certain  competitors  out  of  tlie  field  by  violence,  annoy- 
ance, intimidation,  or  otherwise.  /ft. 

Scope  of  the  Statute— Contpiraoy.—The  act  of  July  2,  1890  (26 
Stat,  209),  section  1,  declaring  illegal  "every  contract,  com- 
bination in  the  form  of  trust  or  otherwise,  or  conspiracy  "  in 
restraint  of  trade  or  commerce  among  the  States  or  with 
foreign  nations,  Is  not  aimed  at  capital  merely  and  combina- 
tion* of  a  contractual  nature,  which  by  force  of  the  title, 
"An  act  to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopolies,"  are  limited  to  such  as  the  courts 
have  declared  unlawful,  the  words  "  in  restraint  of  trade  " 
having,  in  connection  with  the  words  "  contract "  and  "  com- 
bination,*' their  common-law  significance,  but  the  term 
"  conspiracy "  is  used  in  its  well-settled  legal  meaning,  so 
that  any  restraint  of  trade  or  commerce,  if  to  be  accom- 
plished by  conspiracy,  is  unlawful,  t/.  S.  v.  Debs,  64  F., 
724.  1 — 322 

Same — Construction. — The  construction  of  the  statute  is  not 
affected  by  the  use  of  the  phrase  "in  rettraint  of  trade," 
rather  than  one  of  the  phrases  "to  injure  trade"  or  "to 
restrain  trade."  /j. 

Same. — ^Thc  word  "commerce,"  in  the  statute,  is  not  synony- 
mous with  "  trade,"  as  used  in  the  common-law  phrase  "  re- 
straint of  trade,"  but  has  the  meaning  of  the  word  in  that 
clause  of  the  Constitution  which  grants  to  Congress  power 
to  regulate  interstate  and  foreign  commerce.  15. 

Supreme  Court  Boes  Not  Dissent  from  Conclusions  in  IT.  S.  ▼. 
Debs.— The  court  enters  into  no  examination  of  the  act 
of  July  2,  1890  (26  Stat,  209),  on  which  the  circuit 
court  mainly  relied  to  sustain  its  jurisdiction;  but  it  must 
not  be  understood  that  it  dissents  from  the  conclusions  of 
that  court  in  reference  to  the  scope  of  that  act,  but  simply 
that  it  prefers  to  rest  its  judgment  on  the  broader  ground 
discussed  in  its  opinion,  believing  it  important  that  the 
principles  underlying  it  should  be  fully  stated  and  fully 
aflirmed.    In  re  Debs,  158  U.  S.,  564.  1—565 

While  the  primary  object  of  the  Anti-Trust  Act  of  1890  was 
doubtless  to  prevent  the  destruction  of  legitimate  and 
healthy  competition  in  interstate  commerce  by  the  engross- 
ing and  monopolizing  of  the  markets  for  commodities,  yet 
its  provisions  are  broad  enough  to  reach  a  combination  or 
conspiracy  that  will  interrupt  the  transportation  of  such 
commodities  and  persons  from  one  State  to  another.  U.  8. 
V.  WorMngmen^B  Amalgamated  Council,  54  F.,  995,  cited. 
U,  S.  V.  Casaidv,  67  F.,  698.  1^ — 452 


INDEX — DIGEST. 


1186 


f  w 


STATUTES— Continued. 


I.  Act  of  1890— Continued. 
Section  1. 

40.  Conspiracy  in  Restraint  of  Interstate  Commerce. — ^A  combina- 

tion by  railroad  employees  to  prevent  all  the  railroads  of 
a  large  city  engaged  in  carrying  the  United  States  mails 
and  in  interstate  commerce  from  carrying  freight  and  pas- 
sengers, hauling  cars,  and  securing  the  services  of  persons 
other  than  strikers,  and  to  induce  persons  to  leave  the 
service  of  such  railroads,  is  within  act  of  July  2,  1890,  sec- 
tion 1,  which  provides  that  every  contract,  combination  in 
the  form  of  trust  or  otherwise,  "  or  conspiracy  in  restraint 
of  trade  or  commerce  "  among  the  States  is  illegal.  U.  S.  v. 
Elliott,  64  F.,  27.  1—311 

41.  Same.— Act  of  July  2,  1890   (26  Stat.,  209),  section  1,  is  not 

aimed  at  capital  merely  and  combinations  of  a  contractual 
nature,  which  by  force  of  the  title,  "An  act  to  protect  trade 
and  commerce  against  unlawful  restraints  and  monopolies," 
are  limited  to  such  as  the  courts  have  declared  unlawful. 
U.  8.  V.  Debs,  64  F.,  724.  1-^^ 

42.  Same. — The  term   "conspiracy"    in   section   1   of   the   act  of 

July  2,  1890  (26  Stat,  209),  is  used  in  its  well-settled  legal 
meaning,  so  that  any  restraint  of  interstate  trade  or  com- 
merce, if  accomplished  by  conspiracy,  is  unlawful.  76. 

43.  What  Contracts,  Combinations,   or  Conspiracies  Violate  Anti- 

Trust  Act. — Every  contract,  combination  or  conspiracy  the 
necessary  effect  of  which  is  to  stifle  or  to  directly  and  sub- 
stantially restrict  competition  in  commerce  among  the  States 
is  in  restraint  of  interstate  commerce,  and  violates  section 
1  of  the  act  of  July  2,  1890  (26  Stat,  209).  Whitwell  v. 
Continental  Tobacco  Co.,  125  F.,  454.  2—271 

44.  What  Acts,  Contracts,  and  Combinations  Do  Not  Violate  Anti- 

Trust  Act. — Acts,  contracts,  and  combinations  which  promote, 
or  only  incidentally  or  indirectly  restrict,  competition  in 
commerce  among  the  States,  while  their  main  purpose  and 
chief  effect  are  to  foster  the  trade  and  increase  the  business 
of  those  who  make  and  operate  them,  are  not  in  restraint  of 
interstate  commerce  or  violative  of  section  1  of  the  act  of 
July  2,  1890  (26  Stat,  209).  lb. 

45.  Section  1  of  the  Sherman  Anti-Trust  Act  of  July  2,  1890  (26 

Stat,  209),  makes  a  distinction  between  a  contract  and  a 
combination  or  conspiracy  in  restraint  of  trade.  Rice  v. 
Standard  Oil  Co.,  134  F.,  464.  2—633 

46.  Contract  for  Sale  of  Ooods  by  Member  of  Combination. — ^The 

act  of  July  2,  1890,  section  1  (26  Stat,  209),  known  as  the 
"  Sherman  Anti-Trust  Act"  does  not  invalidate  or  prevent 
a  recovery  for  the  breach  of  a  collateral  contract  for  the 
manufacture  and  sale  of  goods  by  a  member  of  a  combination 


1186 


INDEX — ^DIGEST. 


STATUTES— Continued. 

I.  Act  of  1890— Continued, 
fonned  for  the  purpose  of  restraining  Interstate  trade  in 
such  goods.    Hadley  Dean  Plate  Glass  Co.  v.  Highla/nd  Glass 
Co.,  143  F.,  242.  2—995 

See  also  Indictments,  5. 

Section  2, 

47.  Monopolies. — ^To  constitute  the  offense  of  "monopolizing,  or 

attempting  to  monopolize,"  trade  or  commerce  among  the 
States,  within  the  meaning  of  section  2  of  the  Anti-Trust 
Act  of  1890,  it  is  necessary  to  acquire,  or  attempt  to  acquire, 
an  exclusive  right  in  such  commerce  by  means  which  will 
prevent  others  from  engaging  therein.  In  re  Greene,  52  F., 
104.  1^55 

48.  Every  attempt  to  monopolize  a  part  of  interstate  commerce,  the 

necessary  effect  of  which  is  to  stifle  or  to  directly  and  snb- 
stantially  restrict  competition  in  commerce  among  the  States, 
violates  section  2  of  the  act  of  July  2,  1890  (26  Stat,  209). 
Whitwell  V.  Continental  Tobacco  Co.,  125  F.,  454.  8—271 
4».  Same. — ^Attempts  to  monopolize  a  part  of  commerce  among  the 
States  which  promote,  or  only  incidentally  or  indirectly  re- 
strict, competition  in  interstate  commerce,  while  their  main 
purpose  and  chief  effect  are  to  increase  the  trade  and  foster 
the  business  of  those  who  make  them,  were  not  intended  to 
be,  and  were  not,  made  illegal  or  pnnishable  by  section  2 
of  the  Anti-Trust  Act  of  July  2,  1890  (c.  647,  26  Stat,  209), 
because  such  attempts  are  indispensable  to  the  existence  of 
any  competition  in  commerce  among  the  States.  lb. 

See  also  Indictments,  1 ;  Monopoly. 

Section  4. 

50.  Power  of  Congress  to  Authorize  Injunction.— Act  of  July  2, 
1890,  section  4,  which  provides  that  the  circuit  courts  of  the 
United  States  have  jurisdiction  to  restrain  combinations 
and  conspiracies  to  obstruct  and  destroy  interstate  com- 
merce, before  such  objects  are  accomplished,  is  not  void  for 
want  of  power  in  Congress  to  authorize  such  proceedings. 
U.  8.  V.  Elliott,  64  F.,  27.  1^311 

il.  Government  Has  Power  to  Bring  Suit.— The  fourth  section  of 
the  act  of  1890  Invests  the  Government  with  full  power  and 
authority  to  bring  suit  against  the  Trans-Missouri  Freight 
Association ;  and,  if  the  facts  alleged  are  proved,  an  injunc- 
tion should  issue.  V.  8.  v.  Trans-Mo.  Ft.  Assn.,  166  U.  S„ 
290.  1—649 

58.  Who  May  Sue  to  Eestrain.— The  intention  of  the  Anti-Trust 
Act  of  July  2,  1890  (26  Stat,  209),  was  to  limit  direct  pro- 
ceedings in  equity  to  prevent  and  restrain  such  violations 
of  the  Anti-Trust  Act  as  cause  injury  to  the  general  publi'^. 


INDEX — DIGEST. 


1187 


STATUTES— Continued. 


1 4 


I.  Act  of  1890— Continued. 

or  to  all  alilie,  merely  from  the  suppression  of  competitioa 
in  trade  and  commerce  among  the  several  States  and  with 
foreign  nations,  to  those  instituted  in  the  name  of  the 
United  States,  under  section  4  of  the  act,  by  district  attor- 
neys of  the  United  States,  acting  under  the  direction  of 
the  Attorney-General;  thus  securing  the  enforcement  of  the 
act,  so  far  as  such  direct  proceedings  in  equity  are  con- 
cerned, according  to  some  uniform  plan,  operative  through- 
out the  entire  country.  Minnesota  v.  Northern  Securities 
Co.,  194  U.  S.,  48.  8—533 

53.  The  right  to  bring  suits  for  injunction  under  section  4  of  the 

act  of  July  2,  1890  (26  Stat.,  290),  is  limited  to  suits  insti- 
tuted on  behalf  of  the  Government.  Greer,  Mills  &  Co.  v. 
Stoller,  11  F.,  1.  1—620 

54.  Although  the  act  of  July  2,  1890,  contains  criminal  provisions, 

the  Federal  court  has  power  under  section  4  of  the  act  in  a 
suit  in  equity  to  prevent  and  restrain  violations  of  the  act, 
and  may  mold  its  decree  so  as  to  accomplish  practical  re- 
sults such  as  law  and  justice  demand.  Northern  Securities 
Co.  V.  Vnited  States,  193  U.  S.,  197.  8—339 

55.  Restraining  Order — Notice. — ^Under  section  4  of  the  Anti-Trust 

Law  of  July  2,  1890,  a  restraining  order  may  be  issued 
without  notice,  under  the  circumstances  sanctioned  by  the 
established  usages  of  equity  practice  in  other  cases.  U.  S. 
V.  Coal  Dealers'  Assn.  of  Cal.,  85  F.,  252.  1—749 

56.  Injunction. — A  combination  whose  professed  object  is  to  ar- 

rest the  operation  of  the  railroads  whose  lines  extend  from 
a  great  city  into  adjoining  States  until  such  roads  accede 
to  certain  demands  made  upon  them,  whether  such  demands 
are  in  themselves  reasonabe  or  unreasonabe,  just  or  unjust 
is  an  unlawful  conspiracy  in  restraint  of  trade  and  com- 
merce among  the  States,  within  the  act  of  July  2,  1890, 
and  acts  threatened  in  pursuance  thereof  may  be  restrained 
by  injunction  under  section  4  of  the  act  TJ.  8.  v.  Elliott, 
62  F.,  801.  1—262 

See  also  Injunctions,  9,  16,  17,  21. 

Section  5. 

57.  Injunction  Order — Persons  Not  Named  in  Bill. — Under  act  of 

July  2,  1890,  section  5,  an  injunction  order  in  an  action  to 
enjoin  an  Illegal  conspiracy  against  interstate  commerce 
may  provide  that  it  shall  be  in  force  on  defendants  not 
named  in  the  bill,  but  who  are  within  the  terms  of  the  order, 
where  it  also  provides  that  it  is  operative  on  all  persons 
acting  in  concert  with  the  designated  conspirators,  though 
not  named  in  the  writ,  after  the  commission  of  some  act  by 


1^    - 


1188 


INBBX— DIGEST. 


STATUTES— Continued. 

L  Act  of  1800— Continued. 


58. 


them  In  fnrtlierance  of  the  consplraqy,  and  service  of  the 
writ  on  them.    U.  8.  v.  Elliott,  64  F..  27.  1—311 

The  authority  given  by  section  5  of  the  act  of  July  2,  1890 
(26  Stat,  290),  to  hrlng  Im  nonresidents  of  the  district  can 
not  he  availed  of  in  private  suits,  and  the  court  can  acquire 
no  jurisdiction  over  them.  Greer,  Mills  d  Go,  v.  Stoller, 
77  F.,  1.  I g20 

See  also  In  junctions,  18. 

Section  6. 

Forfeiture  of  Property.— The  provision  of  act  of  July  2,  1890, 
section  6,  for  forfeiture  of  "  any  property  owned  under  any 
contract  or  by  any  combination,  or  pursuant  to  any  con- 
spiracy (and  being  the  subject  thereof)  mentioned  in  this 
act,  and  being  in  the  course  of  transportation  from  one 
State  to  another  or  to  a  foreign  country,"  does  not  imply 
that  only  cases  in  which  property  shall  be  found  subject  to 
forfeiture  shall  be  deemed  within  the  scope  of  the  act. 
V.  S.  V.  Deb«,  64  F.,  724.  1—322 

Seizure  of  goods  in  course  of  transportation  pursuant  to  the 
unlawful  contract  can  only  be  made  under  the  sixth  section 
of  the  act  of  1890,  which  authorizes  seizures  and  condemna- 
tion by  like  proceedings  to  those  provided  in  cases  of  prop- 
erty imported  Into  the  United  States  contrary  to  law. 
V.  8,  V.  Addv9ton  Pipe  d  Steel  Co.,  85  F.,  271.  1—773 

There  can  be  no  such  seizure  In  a  suit  in  equity  brought  by  the 
United  States  under  the  act  of  1890  to  enjoin  the  carrying 
out  of  a  contract  or  combination  In  restraint  of  interstate 
commerce.  n,^ 

Section  7, 

necessary  Parties— Jurisdiction  of  Federal  Courts.— Where  a 
person  brings  an  action  under  section  7  of  the  Anti-Trust 
Law  of  July  2,  1890.  against  the  offleials  of  a  State  to  re- 
cover damages  for  acts  done  under  authority  of  a  State 
statute  which  gives  the  State  an  entire  monopoly  of  the 
traffic  In  intoxicating  liquors  (act  S.  C,  Jan.  2,  1895),  the 
State  itself  is  a  necessary  party  thereto,  and  consequently 
the  Federal  courts  would  have  no  jurisdiction  of  the  action. 
Lowenstein  v.  Evcms,  69  F.,  908.  1—598 

A  municipal  corporation  engaged  in  operating  water,  lighting, 
or  similar  plants,  from  which  a  revenue  is  derived,  Is,  in  re- 
lation to  such  matters,  a  business  corporation,  and  may 
maintain  an  action  under  section  7  of  the  Anti-Trust  Act  of 
July  2,  1890  (26  Stat,  210),  for  injury  to  its  business"  by 
reason  of  a  combination  or  conspiracy  In  restraint  of  inter- 
state trade  or  commerce  made  unlawful  by  such  act.  dtp 
of  Atlanta  v.  Chattanooga  Foundry  d  Pipeworks,  127  F.,  23. 

Affirmed,  203  U.  S.,  390.  8—299 


INDEX — ^DIGEST. 


1189 


»W 


I' 


STATUTES— Continued. 

1.  Act  op  1890 — Continued. 

64.  Same — ^Who  Liable. — Every  member  of  such  an  illegal  combina- 

tion is  liable  for  the  injury  resulting  to  the  business  or 
property  of  a  plaintiff  by  reason  of  such  combination,  re- 
gardless of  any  contract  relation  between  the  plaintiff  and 
defendant.  lb, 

65.  Does  Not  Authorize  an  Action  for  Damages  by  Party  to  the 

Trust.- Section  7  of  the  Anti-Trust  Act  (26  Stat,  209),  giv- 
ing to  any  person  injui'ed  by  any  other  person  or  corpora- 
tion by  reason  of  anything  forbidden  in  the  act  the  right  to 
recover  treble  damages,  does  not  authorize  an  action  against 
an  alleged  trust  corporation  by  one  who  was  a  party  to  its 
organization  and  a  stockholder  therein  to  recover  damages 
resulting  from  the  enforcement  by  defendant  of  rights  given 
It  by  the  alleged  unlawful  agreement  Bishop  v.  American 
Preservers  Co.,  105  F.,  845.  2—51 

Affirming  51  F.,  272  (1—49). 

66.  For  an  action  for  recovery  under  this  section  brought  under 

this  section  against  an  association  of  manufacturers  of  and 
dealers  in  tiles,  mantels,  and  grates,  where  the  party  suing 
was  not  a  member  of  the  association,  and  the  sales  were 
made  within  the  State,  see  Montague  v.  Loiory,  193  U.  S., 
38.  a— 327 

67.  Attorneys'  Fees. — ^The  discretion  of  the  trial  court  under  the 

Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209),  section  7,  to 
allow  a  reasonable  attorney's  fee  to  the  successful  plaintiff 
In  an  action  brought  under  that  section  to  recover  damages 
for  a  violation  of  the  provisions  of  that  act  against  combina- 
tions in  restraint  of  trade,  is  not  abused  by  an  allowance  of 
$750,  although  the  verdict  was  for  but  $500,  where  the  trial 
tool£  five  days,  and  from  the  proof  offered  it  appeared  tliat 
from  $750  to  $1,000  would  be  a  reasonable  sum.  Ih. 

68.  A  recovery  of  the  treble  damages  authorized  by  the  Sherman 

Anti-Trust  Act  of  July  2,  1890,  section  7  (26  Stat.,  209),  in 
case  of  injury  sustained  by  violation  of  the  act,  can  be  had 
only  by  direct  action,  and  not  by  way  of  set-off  in  an  action 
brought  for  the  price  of  goods  by  a  company  illegally  formed 
in  violation  of  the  act,  especially  when  the  State  practice 
does  not  permit  the  set-off  of  unliquidated  damages.  Con- 
nolly V.  Union  Sewer  Pipe  Co.,  184  U.  S.,  540.  2—118 

69.  A  declaration  in  a  suit  based  on  section  7  of  the  Anti-Trust 

Act  of  1890  (26  Stat,  210),  to  recover  damages  resulting 
to  plaintiff  from  a  violation  of  such  provision,  which  alleges 
in  a  single  count  that  defendant  entered  into  a  "  contract, 
combination,  and  conspiracy"  in  restraint  of  trade,  is  bad 
for  duplicity.    Rice  v.  Standard  Oil  Co.,  134  F.,  464.    18—633 

70.  The  pendency  of  a  suit  in  a  State  court  can  not  be  pleaded  in 

abatement  of  an  action  in  a  circuit  court  of  the  United 


1190 


IlfDEX — ^DIGEST. 


STATUTES— Coiitiuiied. 

I.  Act  of  1890— Continued. 

States  to  recover  treble  damages  under  section  7  of  the 
Anti-Tnist  Act  of  July  2,  1890  (26  Stat,  210),  since  the 
State  court  is  without  jurisdiction  to  enforce  the  remedy 
given  by  said  section,  and  therefore  the  same  case  can  not 
be  depending  in  both  courts.    Loewe  v.  Lawlor,  130  F.,  633. 

2—56.^ 
71.  Limitation.— An  action  under  section  7  of  the  Anti-Trust  Act 
of  July  2,  1890  (26  Stat,  209),  providing  that  "any  person 
who  shall  be  injured  in  his  business  or  property  by  any  other 
person  or  corporation  by  reason  of  anything  forbidden  or 
declared  to  be  unlawful  by  this  act  may  sue  therefor  in 
any  chrcuit  court  of  the  United  States,    *    *    ♦    and  shall 
recover  threefold  the  damages  by  him   sustained,"  is  not 
an  action  for  a  penalty  or  forfeiture  within  Revised  Statutes, 
section  1047,  prescribing  a  limitation  of  five  years  for  a 
"  suit  or  prosecution  for  any  penalty  or  forfeiture,  pecuniary 
or  otherwise,  accruing  under  the  laws  of  the  United  States," 
but  one  for  the  enforcement  of  a  civil  remedy  for  a  private 
injury,  compensatory  in  its  purpose  and  effect  the  recovery 
permitted   in  excess  of  damages  actually  sustained  being 
In  the  nature  of  exemplary  damages,  which  does  not  change 
the  nature  of  the  action,  and  such  action  is  governed  as  to 
limitation  by  the  statutes  of  the  State  in  which  it  is  brought. 
City  of  Atlanta  v.  Chattanooga  Foundry  d  Pipe  Co.,  101  F., 
9^-  2 1^ 

Affirmed,  127  F.,  23  (2—299). 

Affirmed,  203  U.  S.,  390. 

Fob  Combinations,  etc.,  PBOHiBrrED,  see  Combinations*  Cow- 
spiBAciES,  Contracts,  etc.,  in  Restbaint  of  Tbade,  II. 

Fob  Combinations,  etc.,  not  within  the  Statute,  see  Com- 
binations, CONSFIBACIES,   CONTBACTS,  ETC.,  IN  RESTRAINT  OF 

Trade,  III. 

Fob  Actions,  Defenses,  ob  Parties,  see  Actions  and  De- 
fenses; AND  Parties. 

For  Jurisdiction  of  Federal  Courts,  see  Courts. 

For  Damages,  see  Actions  and  Defenses,  21-42;  and  Dam- 
ages. 

II.  Immuntty  Statutes. 
Act  of  February  11,  189$. 

7S.  Immunity  of  Witnesses.— Act  of  February  11,  1893  (27  Stit, 
443),  providing  that  no  person  shall  be  excused  from  tesU- 
fying  in  a  proceeding  growing  out  of  an  alleged  violation 
of  an  act  to  regulate  interstate  commerce,  approved  Feb- 
ruary 4,  1887,  on  the  ground  that  his  testimony  will  tend 
to  incriminate  him,  and  that  no  person  shall  be  prosecuted, 
etc.,  on  account  of  anything  concerning  which  he  may  tes- 


INDEX — ^DIGEST. 


1191 


> 


STATUTES— Continued. 

II.  Immunity  Statutes — Continued, 
tify  in  such  proceeding,  applies  only  to  proceedings  con- 
nected with  the  act  of  February  4,  1887,  and  does  not  apply 
to  a  prosecution  for  violation  of  the  act  of  July  2,  1890  (2G 
Stat,  209),  so  as  to  abrogate  in  relation  thereto  the  Fifth 
Amendment  to  the  Constitution,  providing  that  no  person 
shall  be  compelled  in  a  criminal  case  to  be  a  witness  against 
himself.    Foot  v.  Buchanan,  113  F.,  156.  2 — 104 

78.  The  act  of  February  11,  1893  (27  Stat,  443),  which  is  supple- 
mentary to  the  Interstate  Commerce  Act,  provides  that  "no 
person  shall  be  prosecuted  or  subjected  to  any  penalty  or 
forfeiture  for  or  on  account  of  any  transaction,  matter,  or 
thing  concerning  which  he  may  testify  or  produce  evidence, 
documentary  or  otherwise,  before  said  Commission  or  in 
obedience  to  its  subpoena  *  *  *  or  in  any  such  case  or 
proceeding."    V.  8.  v.  Armour  &  Co.,  142  F.,  808.    ,  2—951 

Act  of  February  19,  1903. 

74.  Immunity  of  Witnesses — Anti-Trust  Act — ^Inquisitions. — An  in- 

quisition before  a  grand  jury  to  determine  the  existence  of 
supposed  violations  of  the  Anti-Trust  Act  was  a  "proceed- 
ing" within  act  of  Congress,  February  19,  1903  (ch.  708, 
32  Stat,  848),  providing  that  no  person  shall  be  prosecuted 
or  subjected  to  any  penalty  for  or  on  account  of  any 
transaction,  matter,  or  thing  concerning  which  he  may  tes- 
tify or  produce  evidence  in  any  "  proceeding  "  under  several 
statutes  mentioned,  including  such  Anti-Trust  Act.  In  re 
Hale,  139  F.,  496.  2—804 

Act  of  February  25,  1903. 

75.  The  examination  of  witnesses  before  a  grand  jury  concerning 

an  alleged  violation  of  the  Anti-Trust  Act  of  July  2,  1890 
(26  Stat,  209),  is  a  "  proceeding  "  within  the  meaning  of  the 
proviso  to  the  act  of  February  25,  1903  (32  Stat,  854-903), 
that  no  person  shall  be  prosecuted  or  be  subjected  to  any 
penalty  or  forfeiture  for  or  on  account  of  any  transaction, 
matter,  or  thing  concerning  which  he  may  testify  or  produce 
evidence  in  any  proceeding,  suit,  or  prosecution  under  cer- 
tain named  statutes,  of  which  the  Anti-Trust  Act  is  one. 
Hale  V.  Henkel,  201  U.  S.,  43.  2—874 

76.  The  right  of  a  witness  to  claim  his  privilege  against  self-in- 

crimination, afforded  by  the  Fifth  Amendment  to  the  Con- 
stitution, when  examined  concerning  an  alleged  violation  of 
the  Anti-Trust  Act  of  July  2,  1890  (26  Stat,  209),  is  taken 
away  by  the  proviso  to  the  act  of  February  25,  1903  (32 
Stat,  904),  that  no  person  shall  be  prosecuted  or  be  sub- 
jected tp  any  penalty  or  forfeiture  for  or  on  account  of  any 
transaction,  matter,  or  thing  concerning  which  he  may  tes- 


1192 


STATUTES— Continued. 


INDEX — ^DIGEST. 


7T. 


II.  Immunity  Statutes— Continued. 

tiiy  or  produce  evidence  in  any  proceeding,  suit,  or  prosecu- 
tion under  certain  named  statutes,  of  whicli  the  Anti-Trust 
Act  Is  one,  which  furnishes  a  sufficient  immunity  from 
prosecution  to  satisfy  the  constitutional  guaranty,  although 
it  may  not  afford  immunity  from  prosecution  in  the  State 
courts  for  the  offense  disclosed.  [See  also  Nelson  v.  United 
States,  201  U.  S.,  92  (a— »20).]  if,, 

Immimity  ProYision.— The  appropriation  act  of  February  25, 
1903  (32  Stat,  904),  making  provision  for  the  enforcement 
of  the  Interstate  Commerce  and  Anti-Trust  Laws,  contains  an 
Immunity  provision  relating  to  persons  giving  testimony  or 
producing  evidence  in  any  proceeding,  suit,  or  prosecution 
under  said  laws.     U.  8.  v.  Armour  d  Co.,  142  F.,  808.    2—952 

III.   COMMEECE   AND  LABOB   ACT. 

Act  of  February  i^,  190S, 

78.  The  primary  purpose  of  Commerce  and  Labor  Act  of  February 

14,  1903  (32  Stat,  825),  was  legislative,  to  enable  Congress. 
by  information  secured  through  the  work  of  officers  charged 
with  the  execution  of  that  law  to  pass  such  remed'al  legis 
lation  as  might  be  found  necessary,  and  the  act  must  be 
construed  in  view  of  such  purpose.  United  States  v.  Ar- 
mour d  Co.,  142  F.,  808.  »— 951 

79.  Commissioner  of  Corporations— Investigation  of  Corporations  or 

Combinations.— Section  6  of  that  act  (32  Stat,  827),  defining 
the  powers  and  duties  of  the  Commissioner  of  Corporations, 
requiring  him  to  make  investigation  into  the  organization, 
conduct,  and  management  of  the  business  of  all  corporations 
or  combinations  engaged  in  interstate  or  foreign  commerce 
other  than  common  carriers,  and  giving  him  the  same  powers 
In  that  respect  as  is  conferred  on  the  Interstate  Commerce 
Commission  with  respect  to  carriers,  including  the  power  to 
subpoena  and  compel  the  attendance  of  witnesses,  and  to 
administer  oaths  and  require  the  production  of  documentary 
evidence,  contemplates  that  he  shall  proceed  by  private 
hearings;  and,  having  such  powers,  a  person  who  appears 
before  him  on  his  demand  or  by  his  request,  and  gives  testi- 
mony or  produces  documents,  although  not  sworn,  is  entitled 
to  the  same  privileges  and  immunities  as  though  his  attend- 
ance was  compelled  by  subpoena  and  his  testimony  given 
under  oath.  ^^ 

80.  Same— Immunity.— Section  6  (32  Stat,  827)  requires  the  Com- 
missioner of  Corporations  to  investigate  all  corporations 
and  combinations  engaged  in  interstate  or  foreign  commerce, 
except  common  carriers,  and  provides  that  "  all  the  require- 
ments, obligations,  liabilities,  and  immunities  Imposed  or 


INDEX — ^DIGEST. 


1195 


STATUTES— Continued. 

III.  Commerce  and  Labob  Act — CJontinued. 

conferred  by  said  'Act  to  regulate  commerce '  and  by  'An  act 
in  relation  to  testimony  before  the  Interstate  Commerce 
Commission »  *  *  *  shall  also  apply  to  all  persons  who 
may  be  subpcenaed  to  testify  as  witnesses  or  to  produce 
documentary  evidence  in  pursuance  of  the  authority  con- 
ferred by  this  section."  /&. 

IV.   INTEBSTATE  COMMEBCE  ACT. 


Act  of  February  4,  188t. 

81.  Public  Policy.— The  act  of  February  4,  1887,  entitled  "An  act 

to  regulate  commerce,"  demonstrates  the  fact  that  from 
the  date  of  the  passage  of  that  act  it  has  been  the  public 
policy  of  this  nation  to  regulate  that  part  of  interstate 
commerce  which  consists  of  transportation,  and  to  so  far 
restrict  competition  in  freight  and  passenger  rates  between 
railroad  companies  engaged  therein  as  shall  be  necessary 
to  make  such  rates  open,  public,  reasonable  uniform,  and 
steady  and  to  prevent  discriminations  and  undue  prefer- 
ences. U.  8.  V.  Trans-Mo.  Ft.  Assn.,  58  F.,  58.  1 — 186 
Case  reversed,  166  U.  S.,  290  (1—648). 

82.  Hot  Inconsistent  with  Anti-Trust  Act. — The  act  of  February  4, 

1887  (24  Stat,  379),  "to  regulate  commerce,"  is  not  incon- 
sistent with  the  act  of  July  2,  1890,  as  it  does  not  confer 
upon  competing  railroad  companies  power  to  enter  into  a 
contract  in  restraint  of  trade  and  commerce,  like  the  one 
which  forms  the  subject  of  this  suit  U.  8.  v.  Trans-Mo. 
Ft.  Assn.,  166  U.  S.,  290.  1--648 

83.  Express   Companies. — The  Interstate  Commerce  Act   does  not 

apply  to  independent  express  companies  not  operating  rail- 
way lines.  Southern  Ind.  Exp.  Co.  v.  U.  8.  Exp.  Co.,  88  F., 
659.  1—862 

V.  Revised  Statutes. 

84.  Section  725. — ^Where  an  injunction  had  been  issued  and  served 

upon  the  defendants,  the  circuit  court  had  authority  to  in- 
quire whether  its  orders  had  been  disobeyed,  and  when  it 
found  that  they  had  been  disol)eyed,  to  proceed  under  Re- 
vised Statutes,  section  725,  and  to  enter  the  order  of  pun- 
ishment complained  of.    In  re  Debs,  158  U.  S.,  564.      1 — ^566 

85.  Section  1047. — ^An  action  under  section  7  of  the  Anti-Trust  Act 

of  July  2,  1900  (26  Stat,  209),  to  recover  threefold  the  dam- 
ages, is  not  an  action  for  a  penalty  or  forfeiture,  within  Re- 
vised Statutes,  section  1047,  prescribing  a  limitation  of  five 
years  for  a  "suit  or  prosecution  for  any  penalty  or  for- 
feiture, pecuniary  or  otherwise,  accruing  under  the  laws  of 
the  United  States,"  but  one  for  the  enforcement  of  a  civil 


INDEX — ^DIGEST. 


STATUTES— Ck^ntinuecl. 


V.  Revised  Statutes— Contiiiiied. 

remedy  for  a  private  injury,  compensatory  in  its  purpose  and 
eirect,  the  recovery  permitted  in  excess  of  damages  actually 
sustained  being  in  the  nature  of  exemplary  damages,  which 
does  not  change  the  nature  of  the  action,  and  such  action 
is  governed  as  to  limitation  by  the  statutes  of  the  State  in 
which  it  is  brought  Atlamia  v.  Chattanooga  Foundry  d 
Pipe  Co,,  101  F.,  900.  n—n 

Affirmed,  127  F.,  23  (2—299). 

Affirmed,  203  U.  S.,  390. 

86.  ieetion  3995.— Obstructing  the  Mails.— Although  the  law,  which 

now  appears  in  Revised  Statutes,  section  3995,  and  which 
makes  it  an  offense  to  obstruct  and  retard  the  passage  of  the 
United  States  mails,  was  originally  passed  prior  to  the  in- 
troduction into  the  United  States  of  the  method  of  trans- 
porting mail  by  railroads,  and  the  phraseology  of  the  law 
conforms  to  conditions  prevailing  at  that  time  (Mar.  3, 
1825),  yet  it  is  equally  applicable  to  the  modern  system  of 
conveyance  and  protects  alike  the  transportation  of  the  mail 
by  the  "limitel  express"  and  by  the  old-fashioned  stage- 
coach.    U.  8.  V.  Cassidy,  67  F.,  698.  1 449 

87.  Same. — ^The  statute  applies  to  all  persons  who  "  knowingly  and 

willfully  "  obstruct  and  retard  the  passage  of  the  malls  or 
the  carrier  carrying  the  same;  that  is,  to  those  who  know 
that  the  acts  performed,  however  innocent  they  may  other- 
wise be,  will  have  the  effect  of  obstructing  and  retarding  the 
mall,  and  who  perform  the  acts  with  the  intent  that  such 
shall  be  their  operation.     U.  8.  v.  Kirby,  7  Wall.,  485,  cited. 

lb. 

88.  Same.— The  statute  also  applies  to  persons  who,  having  in  view 

the  -accomplishment  of  other  purposes,  perform  unlawful 
acts,  which  have  the  effect  of  obstructing  and  retarding  the 
passage  of  the  mails.  In  such  case,  an  intent  to  obstruct  and 
retard  the  mails  will  be  imputed  to  the  authors  of  the  un- 
lawful act,  although  the  attainment  of  other  ends  may  have 
been  their  primary  object.  U.  8.  v.  Kirby,  7  Wall.,  485. 
cited.  ijf 

88.  Section  5440— Conspiracy. — Construing  several  clauses  of  the 
interstate  commerce  law  recited  in  the  opinion  with  sec- 
tion 5440  of  the  Revised  Statutes,  it  follows  that  a  combina- 
tion of  persons,  without  regard  to  their  occupation,  which 
will  have  the  effect  to  defeat  the  provisions  of  the  interstate 
commerce  law,  inhibiting  discriminations  in  the  transporta- 
tion of  freight  and  passengers,  and  further  to  restrain  the 
trade  or  commerce  of  the  country,  will  be  obnoxious  to  the 
penalties  therein  prescribed.  Waterhouse  v.  Comer,  55  F., 
149.  1_119 


INDEX — DIGEST. 


1195 


ST  ATUTES— CJonti  nued. 

V.  Revised  Statutes — Continued. 

90.  Same. — The  statute  relating  to  conspiracies  to  commit  offenses 

against  the  United  States  (Rev.  Stat,  sec.  5440)  contains 
three  elements  which  are  necessary  to  constitute  the  offense. 
These  are:  (1)  The  act  of  two  or  more  persons  conspiring 
together;  (2)  to  commit  any  offense  against  the  United 
States ;  (3)  the  overt  act,  or  the  element  of  one  or  more  of 
such  parties  doing  any  act  to  effect  the  object  of  the  con- 
spiracy.    U.  8.  V.  Cassidy,  67  F.,  698.  1 — 449 

VI.  8tate  Laws. 

91.  The  anti-trust  law  of  Minnesota   (Laws  1899,  p.  487,  c.  359), 

making  unlawful  any  contract  or  combination  in  restraint 
of  trade  or  commerce  within  the  State,  is  in  substantially 
the  same  language  as  the  Sherman  Anti-Trust  Law  of  July 
2,  1890  (26  Stat,  209),  and  must  receive  a  similar  construc- 
tion.   Minnesota  v.  Northerti  Securities  Co.,  123  U.  S.,  692. 

a— 246 
Decision  reversed,  194  U.  S.,  38.    Circuit  court  had  no  juris- 
diction  (2—533). 

STATUTORY  CONSTRUCTION. 

1.  When  Congress  adopts  or  creates  a  common-law  offense,  the 

courts  may  properly  look  to  the  common  law  for  the  true 
meaning  and  definition  thereof,  in  the  absence  of  a  clear 
definition  in  the  act  creating  it.    In  re  Oreene,  52  F.,  104. 

1— d5 

2.  Where  Congress  adopts  or  creates  a  common-law  offense,  and  in 

doing  so  uses  terms  which  have  acquired  a  well-imderstood 
meaning  by  judicial  interpretation,  the  presumption  is  that 
the  terms  were  used  in  that  sense,  and  courts  may  properly 
look  to  prior  decisions  interpreting  them  for  the  meaning  of 
the  terms  and  the  definition  of  the  offense  where  there  is  no 
other  definition  in  the  act.  U.  8.  v.  Trans-Mo.  Ft.  Assn.,  58 
F.,  58.  1—186 

3.  Every  statute  must  be  read  in  the  light  of  the  general  laws 

upon  the  same  subject  in  force  at  the  time  of  its  enactment 
U.  8.  V.  Trans-Mo.  Ft.  Assn.,  58  F.,  58.  1—186 

4.  The  Anti-Trust  Act  should  have  a  reasonable  construction — one 

which  tends  to  advance  the  remedy  it  provides,  and  to  abote 
the  mischief  at  which  it  was  leveled.  Whitwell  v.  Conti- 
nental Tobacco  Co.,  125  F.,  454.  2 — 271 

5.  Debates  in  Congress  are  not  appropriate  sources  of  information 

from  which  to  discover  the  meaning  of  the  language  of  a 
statute  passed  by  that  body.  V.  8.  v.  Trans-Mo.  Ft.  Assn., 
166  U.  S.,  290.  1—648 

STOCK   AND    STOCKHOLDERS.    8ee    Corporations,    2-11;    Com- 
binations, 177-182. 


?- 


INDEX — ^DIGEST. 


ST  ATXJTE8— Continued . 


V.  Revised  Statutes — Continued. 

remedy  for  a  pxivate  injury,  compensatory  in  its  purpose  and 
effect,  tlie  recovery  permitted  in  excess  of  damages  actually 
sustained  being  in  tlie  nature  of  exemplary  damages,  whicli 
does  not  change  tlie  nature  of  the  action,  and  such  action 
is  governed  as  to  limitation  by  the  statutes  of  the  State  in 
which  it  is  brought  Atlanta  v.  Chattanooga  Foundry  d 
Pipe  Co,,  101  F.,  900.  jt— 11 

Affirmed,  127  F.,  23  (2—299). 

Affirmed,  203  U.  S.,  390. 

Section  3995.— Obstructing  the  Mails.— Although  the  law,  which 
now  appears  in  Revised  Statutes,  section  3995,  and  which 
makes  it  an  offense  to  obstruct  and  retard  the  passage  of  the 
United  States  mails,  was  originally  passed  prior  to  the  in- 
troduction into  the  United  States  of  the  method  of  trans- 
porting mail  by  railroads,  and  the  phraseology  of  the  law 
conforms  to  conditions  prevailing  at  that  time  (Mar.  3, 
1825),  yet  it  is  equally  applicable  to  the  modern  system  of 
conveyance  and  protects  alike  the  transportation  of  the  mail 
by  the  "limitel  express"  and  by  the  old-fashioned  stage- 
coach.    V.  8.  V.  Cassidy,  67  F.,  698.  1 — 449 

87.  Same. — ^The  statute  applies  to  all  persons  who  "  knowingly  and 

willfully"  obstruct  and  retard  the  passage  of  the  mails  or 
the  carrier  carrying  the  same;  that  is,  to  those  who  know 
that  the  acts  performed,  however  innocent  they  may  other- 
wise be,  will  have  the  effect  of  obstructing  and  retarding  the 
mall,  and  who  perform  the  acts  with  the  intent  that  such 
shall  be  their  operation.    U.  8.  v.  Kirby,  7  Wall.,  485,  cited. 

/&. 

88.  Same.— The  statute  also  applies  to  persons  who,  having  in  view 

the  -accomplishment  of  other  purposes,  perform  unlawful 
acts,  which  have  the  effect  of  obstructing  and  retarding  the 
passage  of  the  mails.  In  such  case,  an  intent  to  obstruct  and 
retard  the  mails  will  be  imputed  to  the  authors  of  the  un- 
lawful act,  although  the  attainment  of  other  ends  may  have 
been  their  primary  object.  C7.  8,  v.  Kirby,  7  Wall.,  485, 
cited.  /ft. 

L  Section  5440 — Conspiracy. — Construing  several  clauses  of  the 
interstate  commerce  law  recited  in  the  opinion  with  sec- 
tion 5440  of  the  Revised  Statutes,  it  follows  that  a  combina- 
tion of  persons,  without  regard  to  their  occupation,  which 
will  hare  the  effect  to  defeat  the  provisions  of  the  interstate 
commerce  law,  inhibiting  discriminations  in  the  transporta- 
tion of  freight  and  passengers,  and  further  to  restrain  the 
trade  or  commerce  of  the  country,  will  be  obnoxious  to  the 
penalties  therein  prescribed.  Waterhouse  v.  Comer,  55  F., 
149.  1—119 


T   < 


INDEX — ^DIGEST.  1195 

STATUTES— Continued. 

V.  Revised  Statutes — Ontinued. 

90.  Same. — The  statute  relating  to  conspiracies  to  commit  offenses 

against  the  United  States  (Rev.  Stat,  sec.  5440)  contains 
three  elements  which  are  necessary  to  constitute  the  offense. 
These  are:  (1)  The  act  of  two  or  more  persons  conspiring 
together;  (2)  to  commit  any  offense  against  the  United 
States;  (3)  the  overt  act,  or  the  element  of  one  or  more  of 
such  parties  doing  any  act  to  effect  the  object  of  the  con- 
spiracy.    U.  8.  V.  Cassidy,  67  F.,  698.  1—449 

VI.  State  Laws. 

91.  The  anti-trust  law  of  Minnesota  (Laws  1899,  p.  487,  c.  359), 

making  unlawful  any  contract  or  combination  in  restraint 
of  trade  or  commerce  within  the  State,  is  in  substantially 
the  same  language  as  the  Sherman  Anti-Trust  Law  of  July 
2,  1890  (26  Stat,  209),  and  must  receive  a  similar  construc- 
tion.   Minnesota  v.  Northern  Securities  Co,,  123  U.  S.,  692. 

S^— 246 

Decision  reversed,  194  U.  S.,  38.    Circuit  court  had  no  juris- 
diction  (2—533). 

STATUTORY  CONSTRUCTION. 

1.  When  Congress  adopts  or  creates  a  common-law  offense,  the 
courts  may  properly  look  to  the  common  law  for  the  true 
meaning  and  definition  thereof,  in  the  absence  of  a  clear 
definition  in  the  act  creating  it    In  re  Qreene,  52  F.,  104. 

1—65 

S.  Where  Congress  adopts  or  creates  a  common-law  offense,  and  in 
doing  so  uses  terms  which  have  acquired  a  well-understood 
meaning  by  judicial  interpretation,  the  presumption  is  that 
the  terms  were  used  in  that  sense,  and  courts  may  properly 
look  to  prior  decisions  interpreting  them  for  the  meaning  of 
the  terms  and  the  definition  of  the  offense  where  there  is  no 
other  definition  in  the  act  U.  8.  v.  Trans-Mo.  Ft.  Assn.,  58 
F.,  58.  1—186 

3.  Every  statute  must  be  read  in  the  light  of  the  general  laws 

upon  the  same  subject  in  force  at  the  time  of  its  enactment 
U.  8.  V.  Trans-Mo.  Ft.  Assn.,  58  F.,  58.  1—186 

4.  The  Anti-Trust  Act  should  have  a  reasonable  construction — one 

which  tends  to  advance  the  remedy  it  provides,  and  to  abate 
the  mischief  at  which  it  was  leveled.  Whitwell  v.  Conti- 
nental Tobacco  Co.,  125  F.,  454.  2—271 

5.  Debates  in  Congress  are  not  appropriate  sources  of  information 

from  which  to  discover  the  meaning  of  the  language  of  a 
statute  passed  by  that  body.  U.  8.  v.  Trans-Mo.  Ft.  Assn., 
166  U.  S.,  290.  1—648 

STOCK   AND    STOCKHOLDERS.    See    Corporations,    2-11;    Com- 
binations, 177-182. 


1196 


IKDEX^ — ^DIGEST. 


STOCK  QirOTATIOlfS.    See  CoMfflNATiONS.  177-180. 

STBIKEa    8ee  Gombinations^  etc.,  115, 116, 121-127, 132, 133,  213. 

SUBPiEirA  BXrCES  TECUM.    See  Cobpobations,  12-15;  Coubts.  22. 

SXraAB.    See  E,  0.  Knight  Co.  case.  Vol.  I,  pages  250,  258,  379. 

SXriT.    See  Actions  ahb  Defenses. 

TELEGRAMS   AUTD  TELEPHONE   MESSAGES.    See   Intebstate 

COMMEBCE,  33. 

TESTIMONY.    See  Witnesses. 

THBOUGH  TBANSFOBTATION.    See  Cabbiebs, 

TICKET  BBOKEBS.     See  Combinations,  etc.,  111. 

TILES.    See  Combinations,  33-37. 

TOBACCO  TBUST  CASES. 

Whitwell  V.  Continental  Tobacco  Co.,  125  F.,  454  (2—271). 
In  re  Hale,  139  F.,  496  (2--804). 
Hale  V.  Henkeh  201  U.  S.,  43  (2—874). 
McAlister  y,  Henkel,  201  U.  S.,  61  (8—918). 

TBAKSPOBTATION.    See  Cabbiebs;  and  Statutes,  81, 

TBEBLE  BAMAOES.    See  Actions  and  Defenses  21-42 ;  Statutes, 
62-71. 

TBINIBAB  ASPHALT.    See  Combinations,  etc.,  214-216. 
TEirSTS.    flfee  Wobds  and  Phbases. 
UNITED  STATES. 

The  (Sovernment  of  the  United  States  has  jurisdiction  over 
every  foot  of  soil  within  its  territory,  and  acts  directly 
upon  each  citizen.    In  re  Dehs,  158  U.  S.,  564.  1—566 

See  also  Actions  and  Defenses,  15-ia  ♦ 

UNSEASONABLE  SEABCHEa    See  Seabch  and  Seizube. 
WAGES,  ETC.,  OF  EMPLOYEES.    See  CCubts,  8. 

WALL  PAPEB  TBirST.    See  Continental  Wall  Papeb  CJa  v.  Lewis 
Voight  &  Sons  Co.,  148  F.,  989. 

WITNESSES. 

1.  Incriminating  Evidence— Protection— Constitution— Statntc.— A 
witness  before  the  grand  jury  can  not  be  required,  under 
the  Fifth  Amendment  to  the  Constitution,  to  answer  as  to  his 
participation  in  and  knowledge  of  a  combination  to  regulate 
and  control  the  price  of  cotton  seed  and  the  product  and 
price  of  oil  throughout  certain  States,  In  violation  of  the 
act  to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopolies    (26  Stat,  209),  notwithstanding 


INDEX — DIGEST. 


1197 


WITNESSES— C^ontiuued. 

section  8G0,  Revised  Statutes,  providinj;  that  no  evidence 
obtained  from  a  witness  by  means  of  a  judicial  proceeding 
shall  be  given  in  evidence  or  in  any  manner  used  against 
bim  in  any  court  in  any  criminal  proceeding,  since  such  sec- 
tion does  not  exempt  the  witness  from  prosecution  for  tlie 
offense  which  may  be  disclosed  by  his  testimony.  Foot  v. 
Buchanan,  113  F.,  15C.  2—103 

8.  Same— Immunity  of  Witnesses.— Act  of  February  11,  1893  (27 
Stat.,  443),  providing  that  no  person  shall  be  excused  from 
testifying  in  a  proceeding  growing  out  of  an  alleged  violation 
of  an  act  to  regulate  interstate  commerce,  approved  Febru- 
ary 4,  1887,  on  the  ground  that  his  testimony  will  tend  to 
incriminate  him,  and  that  no  person  shall  be  prosecuted,  etc.. 
on  account  of  anything  concerning  which  he  may  testify  i»i 
such  proceeding,  applies  only  to  proceedings  connected  with 
the  act  of  February  4,  1887,  and  does  not  apply  to  a  prosecu- 
tion for  violation  of  the  act  of  July  2,  1890  (26  Stat.,  200). 
so  as  to  abrogate  in  relation  thereto  the  Fifth  Amendment  to 
the  Constitution,  providing  that  no  person  shall  be  compelled 
in  a  criminal  case  to  be  a  witness  against  himself.  Ih. 

8.  Same — Question  of  Incrimination  for  Judge  to  Decide. — Where 
a  witness  claims  that  the  answer  to  a  question  will  tend  to 
incriminate  him,  it  is  not  for  the  witness,  but  for  the  judge, 
to  decide  whether,  under  all  the  circumstances,  such  might 
be  the  effect,  and  the  witness  entitled  to  the  privilege  of 
silence.  I^'- 

4.  Same. — ^Where  a  person  has  already  been  indicted  for  an  offense 

about  which  he  is  to  be  examined  as  a  witness,  and  the 
questions  aslied  him  tend  to  connect  him  with  such  offense, 
the  testimony  sought  is  within  the  inhibition  of  the  Fifth 
Amendment  to  the  Constitution,  providing  that  no  person 
shall  be  compelled  In  any  criminal  case  to  be  a  witness 
against  himself. 

5.  Same — Assurance  of  Safety— Relinquishment  of  Privilege — Can 

Not  Be  Compelled. — Where  a  witness  before  a  grand  jury 
declines  to  answer  certain  questions,  and  is  taken  before 
the  judge,  who  assures  him  that  he  can  safely  answer,  as 
his  testimony  can  not  be  used  against  him,  he  is  not  com- 
pelled by  such  assurance  to  relinquish  his  constitutional 
privilege  where  the  answer  may  tend  to  criminate  him.    76. 

6.  Same  —  Contempt  —  Commitment  —  Habeas    Corpus  —  Relief. — 

Where  a  witness  is  committed  for  contempt  in  refusing  to 
answer  all  of  a  series  of  questions,  for  the  reason  that  the 
answers  would  tend  to  criminate  him,  and  some  of  the 
answers  would  have  that  tendency,  he  should  not  be  denied 
relief  on  habeas  corpus  because  some  of  the  questions  might 
be  safely  answered.  /6. 


11808— VOL  2--06  M- 


-76 


1 


INDEX — DIGEST. 


WITNESSES— Conti  iiuw! . 

7.  Imnnmity  of  Witnesses— Anti-Trust  Act— Inqnlsitions.— An  in- 

quisition before  a  grand  jury  to  determine  the  existence  of 
supposed  violations  of  the  Anti-Trust  Act  was  a  "proceed- 
ing "  within  act  of  Congress  of  February  19,  1903  (32  Stat, 
848),  providing  that  no  person  shall  be  prosecuted  or  sub- 
jected to  any  penalty  for  or  on  account  of  any  transaction, 
matter,  or  thing  concerning  which  he  may  testify  or  produce 
evidence  in  any  "proceeding"  under  several  statutes  men- 
tioned, including  such  Anti-Trust  Act.  In  re  Rale,  139  F., 
49a  2—804 

8.  Same — Unreasonable  Searches — Bights  of  an  Agent — Subpoena 

Duces  Tecum. — A  subpcena  duces  tecum  commanding  the 
secretary  and  treasurer  of  a  corporation  supposed  to  have 
violated  the  Anti-Trust  Act  to  testify  and  give  evidence  be- 
fore the  grand  jury,  and  to  bring  with  him  and  produce 
numerous  agreements,  letters,  telegrams,  reports,  and  other 
writings,  described  generically,  in  effect  including  all  the 
correspondence  and  documents  of  his  corporation  originating 
since  the  date  of  its  organization,  to  which  nineteen  other 
named  corporations  or  persons  were  parties,  for  the  purpose 
of  enabling  the  district  attorney  to  establish  a  violation  of 
such  act  on  the  part  of  the  witness'  principal,  constituted  an 
unreasonable  search  and  seizure  of  papers,  prohibited  by 
the  Fourth  Amendment  to  the  Constitution.  Ih, 

9.  Same — Habeas  Corpus. — Where  a   subpcena  duces  tecum  was 

directed  to  be  issued  by  a  circuit  judge,  and  the  witness 
was  committed  for  contempt  for  failure  to  obey  the  same,  he 
would  not  be  discharged  on  habeas  corpus  by  another  judge 
of  the  same  court,  though  the  latter  was  of  the  opinion  that 
the  subpoena  authorized  an  unconstitutional  search  and 
seizure  of  private  papers.  Ih. 

10.  Protection  of  Witness — ^Aot  of  February  25,  1903   (32  Stat, 

905). — The  examination  of  witnesses  before  a  grand  jury 
conoeming  an  alleged  violation  of  the  Anti-Trust  Act  of  July 
2,  1890  (26  Stat,  209),  is  a  "proceeding"  within  the  mean- 
ing of  the  proviso  to  the  act  of  February  25,  1903  (32  Stat, 
903),  that  no  person  shall  be  prosecuted  or  be  subjected  to 
any  penalty  or  forfeiture  for,  or  on  account  of,  any  trans- 
action, matter,  or  thing  concerning  which  he  may  testify 
or  produce  evidence  in  any  proceeding,  suit,  or  prosecution 
under  certain  named  statutes,  of  which  the  Anti-Trust  Act 
is  one.  The  word  "proceeding"  should  receive  as  wide  a 
construction  as  is  necessary  to  protect  the  witness  in  his  dis- 
closures.   Hale  V.  Hmkel,  201  U.   S.,  43.  2—874 

11.  The  constitutional  right  of  a  witness  to  claim  his  privilege 
:  against  self-incrimination,  afforded  by  the  Fifth  Amendment, 


INDEX — DIGEST. 


1199 


WITNESSES— Continued. 

when  examined  concerning  an  alleged  violation  of  the  Anti- 
Trust  Act  of  July  2,  1890  (2G  Stat,  209),  is  taken  away  by 
the  proviso  to  the  act  of  February  25,  1903  (32  Stat,  904), 
that  no  person  shall  be  prosecuted  or  be  subjected  to  any 
penalty  or  forfeiture  for,  or  on  account  of,  any  transaction, 
matter,  or  thing  concerning  which  he  may  testify  or  produce 
evidence  in  any  proceeding,  suit,  or  prosecution  under  certain 
named  statutes,  of  which  the  Anti-Trust  Act  is  one,  which 
furnishes  a  sufficient  immunity  from  prosecution  to  satisfy 
the  constitutional  guaranty,  although  it  may  not  afford  im- 
munity from  prosecution  in  the  State  courts  for  the  offense 
disclosed.  [See  also  Nelson  v.  United  States,  201  U.  S.,  92 
(2—920).]  '6- 

12.  The  interdiction  of  the  Fifth  Amendment  operates  only  where  a 
witness  is  asked  to  incriminate  himself,  and  does  not  apply 
if  the  criminality  is  taljen  away.  A  witness  is  not  excused 
from  testifying  before  a  grand  jury  under  a  statute  which 
provides  for  immunity,  because  he  may  not  be  able,  if  sub- 
sequently indicted,  to  procure  the  evidence  necessary  to 
maintain  his  plea.  The  law  takes  no  account  of  the  practi- 
cal difficulty  which  a  party  may  have  in  procuring  his 
testimony.  I^' 

IS.  The  difaculty,  if  any,  of  procuring  the  testimony  which  a  person 
has  given  on  his  examination  before  a  grand  jury  concern- 
ing an  alleged  violation  of  the  Anti-Trust  Act  of  July  2,  1890, 
does  not  render  the  immunity  from  prosecution,  or  forfeiture, 
given  by  the  proviso  to  the  act  of  February  25,  1903, 
insufficient  to  satisfy  the  guaranty  of  the  Fifth  Amendment 
against  self-incrimination.  .  i&. 

14.  A  witness  can  not  refuse  to  testify  before  a  Federal  grand  jury 

in  face  of  a  Federal  statute  granting  inuuunity  from  prosecu- 
tion as  to  matters  sworn  to,  because  the  immunity  does  not 
extend  to  prosecutions  in  a  State  court.  In  granting  immu- 
nity, the  only  danger  to  be  guarded  against  is  one  within  the 
same  jurisdiction  and  under  the  same  sovereignty.  /&. 

15.  The  privilege  against  self-incrimination  afforded  by  the  Fifth 

Amendment  is  purely  personal  to  the  witness,  and  he  can  not 
claim  the  privilege  of  another  person,  or  of  the  corporation 
of  which  he  is  an  officer  or  employee.  [To  same  effect 
McAUMer  v.  Henkel,  201  U.  S.,  90  (2—919).]  Ih. 

16.  A  witness  who  can  not  avail  himself  of  the  Fifth  Amendment  as 

to  oral  testimony,  because  of  a  statute  granting  him  immu- 
nity from  prosecution,  can  not  set  it  up  as  against  the 
production  of  books  and  papers,  as  the  same  statute  would 
equally  grant  him  immunity  in  respect  to  matters  proved 
thereby.  l^- 


INDEX — ^DIGEST. 


IS. 


10. 


WITMBSSSS— (.  Joii  t  i  1 1  UiM.1 . 

17.  OorporatioBt  Can  Not  BefnM  to  Answer  Unlets  Protected  by 
Immunity  Statute. — Wlille  an  individual  may  lawfully  re- 
fuse to  aiis%¥€r  lucrliniiintiug  questions  unless  protected  by 
1111  iiiiuiunity  statute,  a  corporation  Is  a  creature  of  tbe  State, 
end  tbere  Is  a  roRerved  right  in  tbe  legislature  to  investigate 
its  eontraets  and  find  out  wbetber  It  bas  exceeded  its  i)ower8. 

Under  tbe  iiracttce  In  tbls  country  tbe  examination  of  witnesses 
by  a  federal  graid  Jury  need  not  be  preceded  by  a  present- 
ment or  formal  indictment,  but  tbe  grand  Jury  uiny  proceed, 
either  ution  tbetr  own  knowledge  or  upon  exauiination  of 
wltne«Me»,  to  liif]uire  whether  a  crime  cognlasable  by  tbe 
court  bit  beti.  coinmlttal,  and,  If  so,  tbey  may  indict  upon 
iucb  eTidenfW.  lb. 

In,  summoning  witnesses  before  a  grand  Jury  it  is  sufficient  to 
apprise  them  of  tbe  names  of  tbe  parties  with  respect  to 
whom  tbey  wiU  be  called  to  testify  without  indicnting  tbe 
iMture  of  tlie  charge  atrnitiMt  tlii>iii.  or  laying  a  basis  by  a 
fomial  Indlctnient.  ib. 

Bale  V.  Mmikei  (vol.  2,  page  874)  followed  to  the  effect  that 
•Aecrt  and  employees  of  corporations  oaa  net,  under  the 
Fk)urtb  and  Fifth  Auiendmeiits,  refuse  to  testify  or  produce 
books  of  corporations  iu  suits  against  tbe  coriK)rntions  for 
violations  of  the  Anti-Trust  Ijaw  of  July  2.  1800.  in  view 
of  tbe  imumulty  given  by  the  act  of  February  25,  1903. 
NelgfM  V.  Vtiitcd  8iai€$,  201  U.  8.,  D2.  J^-920 

Witnesses  can  not  by  objections  to  materiality  of  CYldence  be 
relieved  from  testifying.  Tbe  tendency  or  effect  of  the  testi- 
mony on  the  issues  between  the  parties  is  no  concern  of 
tlieln?.  lb. 

Objections  to  the  matexiality  of  tbe  testimony  are  not  open  to 
consideration  on  a  writ  of  error  sued  out  by  witnesses  to 
review  a  Judgment  for  contempt  entered  against  them  for 
disobeying  an  order  to  testify.  Ib, 

Befusal  to  Answer  or  Produce  Books — Order  of  Circuit  Court 
to  Answer  or  be  Held  in  Contempt  Hot  Reviewable  by 
Supreme  Cottrt.--In  a  suit  In  a  circuit  court  of  the  United 
Stateii  brought  by  the  United  States  against  cori>orations 
for  violations  of  tbe  AntlTrust  Law  of  July  2.  1890,  a  wit- 
neas  refused  to  answer  ciuestions  or  produce  books  before 
the  exaiiilner  on  the  ground  of  immateriality,  also  pleading 
tlie  privileges  of  the  Fifth  Amendment;  the  court  ovenniled 
the  objections  and  orderwi  the  witucKH  to  answer  the  ques- 
tions mid  prothice  the  books;  an  apijeal  was  taken  to  this 
court.  Held,  that  while  such  an  order  might  leave  tbe  wlt- 
iiits  no  aiteriintlve  except  to  obey  or  be  punished  for  con- 
tempt It  is  interlocutory  in  the  prIncliMil  suit  and  not  a 


SI. 


INDEX — DIGEST. 


1201 


WITNESSES— Continued. 

final  order,  nor  does  It  constitute  a  practically  independent 
proceeding  amounting  to  a  final  judgment,  and  an  appeal 
will  not  lie  therefrom  to  this  court.  Alexander  v.  United 
States,  201  U.  S.,  117.  2— Oi5 

24.  Same — But  an  Appeal  from  a  Judgment  of  Contempt  is  Review- 
able.—If  the  witness  refuses  to  obey  and  the  court  goes 
further  and  punishes  him  for  contempt  there  is  a  right  of 
review,  and  this  is  adequate  for  his  protection  without  un- 
duly impeding  the  process  of  the  case.  l^Sfee  also  Nchon 
V.  United  States,  201  U.  S.,  92  (8—920).]  Ib. 

Credibility.    See  Jury,  2. 
Immunity.    See  Immunity. 

WOODEN  WARE.    See  CJombinations,  etc.,  38,  149. 

WOSDS  AND  PHRASES. 

1.  "  Boycott." — A  combination  by  employees  of  railway  companies 
to  injure  in  his  business  the  owner  of  cars  operated  by  the 
companies,  by  compelling  them  to  cease  using  his  cars  by 
threats  of  quitting  and  by  actually  quitting  their  service, 
thereby  inflicting  on  them  great  injury,  where  the  relation 
between  him  and  the  companies  is  mutually  profitable,  and 
has  no  effect  whatever  on  the  character  or  reward  of  the 
services  of  the  employees  so  combining,  is  a  boycott,  and  an 
unlawful  conspiracy  at  common  law.  Thomas  v.  Cin.,  N.  O. 
d  T.  P.  Rih  Co.,  G2  F.,  803.  1— 2G7 

%.  "Commerce." — The  word  "commerce,"  in  the  statute,  is  not 
synonymous  with  "  trade,"  as  used  in  the  common-law  phrase 
"restraint  of  trade,"  but  has  the  meaning  of  the  word  in 
that  clause  of  the  Constitution  which  grants  to  Congress 
power  to  regulate  Interstate  and  foreign  commerce.  U.  8. 
V.  Debs,  64  F.,  724.  1—322 

8.  Same.— The  word  "commerce,"  as  us'ed  in  the  act  of  July 
2,  1890,  to  protect  trade  and  con^uerce  against  unlawful 
restraints  and  monopolies,  and  in  the  Constitution  of  the 
United  States,  has  a  broader  meaning  than  the  word  "  trade." 
Commerce  among  the  States  consists  of  intercourse  and 
trnillc  between  their  citizens,  and  includes  the  transportation 
of  persons  and  property,  as  well  as  the  purchase,  sale,  and 
exchange  of  commodities.     U.  S.  v.  Cassidy,  67  F.,  698. 

1—452 

4.  Same.— Commerce  is  the  sale  or  exchange  of  commodities, 
but  that  which  the  law  looks  upon  as  the  body  of  com- 
merce is  not  restricted  to  specific  arts  of  sale  or  exchange. 
It  includes  the  intercourse— all  the  Initiatory  and  inter- 
vening acts,  instrumentalities,  and  dealings— that  directly 
bring  about  the  sale  or  exchange.  U.  S.  v.  Sioift  d  Co., 
122  F..  520.  a— 237 


i 


A  juxJm 


IBDEX — ^DIGEST. 


WOBBS  AND  PHBASES— Continued. 

i.  "  Conspiracy." — ^The  term  "  conspirncy,"  in  section  1  of  the  act 
of  July  2,  1890  (26  Stat.  209),  Is  used  in  its  well-settled 
legal  meaning,  and  any  restraint  of  interstate  trade  or  com- 
merce, if  accomplished  by  conspiracy,  is  unlawful.    17.  8,  t." 
Dehs,  64  F.,  724.  -  1—322 ' 

6.  Same. — A  conspiracy  consists  in  an  agreement  to  do  something ; 
but  in  the  sense  of  the  law,  and  therefore  in  the  sense 
of  this  statute.  It  must  be  an  agreement  between  two 
or  more  to  do,  by  concerted  action,  something  criminal  or 
unlawful,  or,  it  may  be,  to  do  something  lawful  by  criminal 
or  unlawful  means.  A  conspiracy,  therefore,  Is  in  itself 
unlawful,  and,  in  so  far  as  this  statute  is  directed  against 
conspiracies  in  restraint  of  trade  among  the  several  States, 
it  is  not  necessary  to  look  for  the  illegality  of  the  oflfense 
in  the  kind  of  restraint  proposed.  Any  proiwsed  restraint 
of  trade,  though  it  be  in  itself  Innocent,  if  it  is  to  be  ac- 
complished by  conspiracy,  Is  unlawful.  lb.  (1—352) 

T.  Mmmi — A  conspiracy  is  a  combination  of  two  or  more  per- 
sons by  concerted  action  to  accomplish  a  criminal  or  un- 
lawful purpose,  or  some  purpose  not  In  itself  criminal,  by 
criminal  or  unlawful  means.  Peitibone  v.  V.  «.,  13  Sup.  Ct, 
§431  i  148  V.  8.,  208,  cited,     m  S,  T.  Oamim.  67  F*,  098. 

1—449 

1.  Sanit. — Unlike  "  coniMnjitlon,"  "  conspiracy  "  is  a  term  of  art. 
In  t*ie  Anti  trust  Law  it  in  to  fm  Interpreted  Imleperidedtljr 
of  the  iirecedfripf  words,  and  m  UuiMmmii  theretmder  sltould 

ih^Mar^  dmi'tilm  mmiiiiU^  ftmi  nummt§  to  ft  oohsiilraey 
titider  Urn  act  «ififor*fifttil.t  to  tlie  Win  af  tiipnditif*  ai  ^otii- 

imii  tmi  m  mtiinim  tmiim&i  hp  mmmi  Mi^m  MtiUiim 

i;  ''M  iciifflii  m  ttnAt" flm  wmtk  *'ln  fmmm  nt  mm/* 

in  mllm  i  ttf  ih¥  m^i  nt  Mi  %  im  (m  m^  '^m^  Mm 
lit  mmmkm  wHh  ilm  wmin  *ummi-firir  «Mrt  "mubittik' 
1.1m/*  IM§  mmmm4m  mmi'mut,  um  lim  mm  "#«*■ 
0¥m.f ''  if  m»i  III  fi«  wHi^-NititM  lipl  Mmiim  ^  fliit 
am  ¥mi¥n:m  ai  mm  *w  <m,. .,,»**'<*.  a  in  im  mminW^M 

ililf  111  iU¥  J<Nw<«i<  "  til  rrf:h  Mini  ni  h  ,  .      ,  aim  llmii  iiiii  ill 


lirlf " Willi  ill'  •',.!,.. 


*"  iilitw  ifidn "  iir "  III  fm^HUi  imk"      ly, ,, 


fflllfet  Hfr        ■ 


ttiii  tl#l   til#t¥lir  »i   H"Hl  fdl';  Mil  mHi 

'/  iknwu  Ui  f("       Ml     If  {U¥  ii'Hfii 

MUHMI  illFi   »!♦*«(♦  mirU  (|h(u.  t\ii  ^  (||{{| 

I'UitlMHh     >    .il         111-     IM' 


INI^X — DIGEST. 


1203 


WORDS  AND  PHRASES— Continued. 

the  parties  so  delaying  it  were  willing  that  the  mail  should 
proceed  if  the  Pullman  car  were  left  behind.  U.  S.  t.  Clark, 
Fed.  Cas.  No.  14805,  23  Int.  Rev.  Rec,  306,  followed.  17.  S 
V.  Cassidy,  G7  F.,  G98.  1—44'.) 

12.  Same.— Any  train  which  is  carrying  mail  under  the  sanction 
of  the  postal  authorities  is  a  mail  train  in  the  eye  of  the 

law.  ^  ^''• 

18.  «  Monopolize."— The  word  "  monopolize  "  can  not  be  intended  to 
be  uSed  with  reference  to  the  acquisition  of  exclusive  rights 
under  Government  concession,  but  that  the  lawmaker  has 
used  the  word  to  mean  "  to  aggregate  "  or  "  concentrate  "  in 
the  bauds  of  few,  practically,  and,  as  a  matter  of  fact,  and 
according  to  the  known  results  of  humsui  action,  to  the  ex- 
clusion of  others ;  to  accomplish  this  end  by  what,  in  popular 
language,  is  expressed  in  the  word  "  pooling,"  which  may  be 
defined  to  be  an  aggregation  of  property  or  capital  belonging 
to  different  persons,  with  a  view  to  com.  ^n  liabilities  and 
profits.     Amer.  Biscuit  d  Mfg.  Co.  v.  Klotz,  44  F.,  724.     1—7 

14.  "Monopolizing,  or  Attempting  to  Monopolize."— To  constitute 
the  offense  of  "  monopolizing,  or  attempting  to  monoi)olize," 
trade  or  commerce  among  the  States,  within  the  meaning  of 
section  2  of  said  act,  it  is  necessary  to  acquire,  or  attempt 
to  acquire,  as  exclusive  right  In  such  commerce  by  means 
which  will  prevent  others  from  engaging  therein.  In  fc 
Oreen,  52  F.,  104.  1—55 

ill  Hwiopoly  of  trade  embraces  two  essential  elements:  (1)  The 
acquisition  of  ah  exclusive  right  to,  or  the  exclusive  eijutrul 
of,  that  trade;  tttid  (2)  the  exclusion  of  all  others  from  that 
riifat  tthd  cohtl-ol;  V.  B.  t.  ttans-Moi  Pt  A««»f.,  08  f^t  B8, 
§4  i-*i^ 

III  **  MKttl«lpi  §«if §fili«i/'=A  ih«hiei|irtl  t«i-liOl'fttluh  eiigai^ed 

'  tfevehtie  is  derivml,  k,  iu  i*eltttioh  to  i^tit^li  iiittitei*fi<  a  imwrnA 
tui'pdt'ttlioii^  wild  i««i'  ihttihtttih  h«  ttetlmi  timlei'  mi\\i\\  t  «f 
iim  Atiti  THist  Aet  «f  July  9,  ifm  (m  stittu  aio),  i^ui'  iujut«y 

^  ittt "  liUf^iii^M ''  \i^  renf^oii  ni  »  (M^iubiimKoii  ur  L<uuf^it(rm>)r 

li  I'^fitl'ttlllt  (ii  lUl«l'6{tti^  tl'«d«  Ul'  tHUIIIII^lM'e  lUiUl^  UlllHHfUl 

by  m*\\  H(4<   Viiif  ot  Aihmiik  i.  Vhaiimmn^  hmuUy  A 

If.  "Mofi  «f  toi.'^  Wttei%  ifi  ft  sfiHtfiH  hi'  iUe  Hittuurfteiui'i  ftHd 
4«Uviry  0f  i9dii<  ilie  i^iHii'iiit'iii  of  iiiimiiIii^  m  iiuullttml  liy 
tl(^  vrmU  "iiiui'§  ur  leiiii/'  Wmm  uitlt^si^  ritiiiiilt^iiti^iiit^d  iiy 
liiiiKiiMMi'  giving  ilit<ui  u  i  'm'  moim.  Hitply  uuiy  Iu  BmiH 
iiiAl  01'  iuiiuiiii^i'iH)  j'dMtfil^itfi  III  4H]ftf(iifJ^i<4  ^;iH«iM 
UHiM.Hii,  .,'  Ill  pjMiiimil4<^Maijf4u1iNiii'|inif{iHli»ii  'rfV'l^ 
li0im  i'tMfr  ninHtt  (^n,  V,  4il|/M(iM<l  Uki^n  Pm  .  HH  ^'m  U4ll 


VMM!  V  },,)Vtil  f  I 

j>!  |.i  .V.  !•!  V 


INDEX — DIG|:ST. 


WORDS  ANB  PHRASES— Coiitmued. 

IS.  "Trust." — What  is  commonly  termed  a  "trust"  is  a  species 
of  combination  organized  by  Individuals  or  corporations  for 
the  purpose  of  monopolizing  the  manufacture  of  or  traffic  in 
various  articles  and  commodities,  which  were  well  Ituowu  and 
fully  understood  when  the  Anti-Trust  Act  was  approved. 
U.  8.  V.  Northern  Securities  Co.,  120  F.,  721,  724.  2—220 


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Thla  book  is  due  on  the  date  Indicated  below*  or  at  the 
explitHon  of  a  definite  period  after  the  date  of  borrowing,  as 
provided  by  the  library  rules  or  by  special  arrangement  with 
the  Librarian  in  charge. 

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Un3944 
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Federal  anti-trust  decisions. 


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APR  1 21994 


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